Joseph: The Overlooked Value of BusConnects

In 2017, the new BusConnects plan was launched in response to Dublin’s chronic congestion problems. With a €2 billion allocation in the National Development Plan the project is ambitious in scope and involves the implementation of a radial bus rapid transit system, next generation bus corridors, and more space for cycling and walking. This means that Dublin’s roads need to be restructured with the project, in its original guise, proposing to cut down trees and compulsorily purchase front gardens in order to facilitate the new routes.

The predictably venomous response in suburban Dublin has tapped into primal notions of ownership and aversion to change. Apparently, nothing mobilises people quite like cutting down trees and annexing land. Remarkably, the National Transport Authority (NTA) has yet to even mention BusConnect’s trump card in response to objections: building public transport infrastructure increases nearby land values, and the uplift tends to flow directly to local property owners – the same group who, in the case of BusConnects, oppose the project. In fact, this fundamental truth of transport planning has been totally absent from the BusConnects debate.

Whether or not the promise of increasing the value of their homes would be enough to placate opponents of BusConnects is open for debate. Either way, a proper conversation about what we are going to do with the value BusConnects will create is urgently needed, lest it all disappear into the coffers of private landowners who have done nothing to earn it. Unless a decision is made about what to do with this value, it will be the state sponsored, publicly funded creation of private wealth through cannibalising public goods.

International and Domestic Evidence

We need to broaden the BusConnects conversation beyond whose trees and gardens are at risk. This starts by recognising that urban transport infrastructure projects like BusConnects create private wealth. Basic estimates by Daft.ie suggest that property prices have increased by 15 to 20 percent as a result of proximity to the Luas line. In London, the mere announcement of the new Crossrail line led to a 31 percentincrease in house prices near stations. In Bogota, a Bus Rapid Transit project similar to BusConnects had such a significant impact on land values that it led to gentrification and displacement of existing residents who could not afford the higher rents it brought.

The impact of BusConnects may be even more extreme as it will not only provide more efficient transportation. The project also involves improvements to the public realm: greening, new footpaths and bike lanes, all of which will create value that will flow to nearby land, and will ultimately be capitalised in house prices.

It’s the land, not the property, that increases in all of these examples. Property prices are a proxy for what is actually happening: the value of the land underneath the property is increasing. When property prices rise, the value of the actual property generally remains the same, or more likely falls, since bricks and mortar decay over time, but the land value increases. BusConnects is about to expedite this mechanism and, alarmingly, does not involve a plan about how to democratise the new value this publicly funded project will create.

Who Is paying for BusConnects?

In terms of the new equipment required for BusConnects (leaving aside operational costs) the capital funding for the €2 billion project comes from the NTA. The NTA administers, on behalf of the Department of Transport, Tourism and Sport, Public Service Obligation (PSO) contracts for “socially necessary” public transport services in Ireland. The NTA’s PSO budget will fund BusConnects. The NTA is funded by the Department of Public Expenditure and Reform (DPER) via the Department of Transport, Tourism and Sport. DPER is funded by the taxpayer so, in short, the taxpayer is paying for BusConnects, and will be funding the associated increases in nearby private property values.

A Failure of the Tax System

BusConnects and the flows of value it will create demonstrates the incongruity of our tax system with the wider impacts of urban development. Public infrastructure is funded by the taxpayer, mostly through income tax, but because our tax system prioritises taxing labour rather than fixed assets (in this case land) the value created by this income tax funded project flows into assets which are left largely untouched by the tax system, resulting in state funded private wealth creation.

Ireland does have a property tax, and a self-commissioned report has been sitting on the minister of finance’s desk for the last two years arguing that increasing the property tax and lowering income tax – taxing wealth rather than labour – is both fairer and more efficient than our current system. Unfortunately, property tax has become such a political football that politicians of all persuasions fall over themselves to proclaim that they will fight tooth and nail to avoid increasing, or even reviewing it.

Local Solutions

Suffice it to say that the tax system will not be reformed in order to ensure that the value created by BusConnects is democratised to benefit the public that funded it. In practice, the most viable solution to this impasse is local. The support for participatory budgeting in Dublin City Council, and – whatever your point of view – the mobilisation of civil society that the consultation on BusConnects has provoked, are cause for optimism that there is potential to start to invest in public infrastructure in a way that creates more equitable outcomes.

Taking BusConnects as an exemplar, the project could be broken up into smaller parcels thereby allowing for a clear assessment of its impact on local land values. The value generated by the new infrastructure could then be used to fund the project itself, rather than wastefully flowing directly to local landowners after the fact, as is currently the case. Local areas could own and invest in their BusConnects parcels — like community shares or cooperative investment funds. This would give locals affected by BusConnects a meaningful say in what they think their neighbourhoods need from the project: more green space, cycle lanes, or space for bus lanes. Residents could form local investment groups, which would use the value created by the project, and vote for the kind of BusConnects that is most suited to their area.

The local governance structures for this are, in many areas, already in place. For instance, a community group in Inchicore have submitted an alternative plan to the NTA which would limit space devoted to private cars locally in order to save trees. Why not give these same groups a say in what they would like to do with the value created by BusConnects in their area?

For those who own property, a digital property deed could link the investment in BusConnects to the additional value it creates in their home, allowing homeowners to exchange a portion of this uplift in value to cover the investment. This could only be realised and shared at the point of sale. Property values could be calculated on a regular basis, with owners voting on and sharing a part of their uplift – say 10 percent – to the local fund in the form of equity.

If this sounds fanciful it is not because the value BusConnects will create is not available to be accessed by local communities in this way. If it sounds fanciful, it is only because the political economy of infrastructure investment in Dublin has for so long accepted without question that the value these projects create should flow to private landowners. In fact, such is the level of acceptance of this mechanism, that the BusConnects consultation does not even remark upon the issue, let alone seek views on it.

With a dawning realisation at the national level that we need to invest in sustainable transport infrastructure if we are to have a successful climate transition, redesigning the nature of how we invest in this infrastructure is vital to ensuring that the transition is just and does not further concentrate wealth. BusConnects gives Dublin an opportunity to make a democratic decision about where we want the value, which we have all created, to end up.