A business model for SunRail?

A Prada store in a Hong Kong MTR Mall

About 25 years ago, I was in a German city visiting some friends, when the issue of a forgotten birthday came up. It was a Sunday night, and after 7, but there was no problem getting a cake I was told, “We will just go to the train station!” I had my doubts because I had been to lots of train stations, but sure enough, when we went to the “new” train station, as opposed to the much older one in the city center, there were all sorts of gleaming open shops in it. Because of the strict blue laws in that city the only shopping allowed after 5 pm was window shopping and because the train station was owned by the Federal government and exempt from city laws, these shops had carved out a niche for themselves — that niche being that they were open 24/7. There were other differences.

The new train station had a parking lot in it, where the old one didn’t. The old station was on one floor whereas the new station was multilevel. The old station’s businesses were strictly oriented towards the traveler and closed up after most of the commuters left for the day (around 6 or 7, mostly closed on weekends). The new station had all types of shops in it including a green grocer and the bakery we visited. The new station was a place that generated it’s own foot traffic, not just because it was a station, and not just because it was open late, but because the shops were so diversified.

The birthday cake crisis was averted, but I was reminded of this new type of station, when I heard a fellow named Alex Marshall on a radio station WNYC podcast discussing the New York City’s Metropolitan Transportation Authority’s, which operates the buses and subways, financial woes and how they compared to Hong Kong’s transit  rail system.

Hong Kong has a new light rail system and it makes money. How? It owns most of the land around the stations and it developed the commercial land for lease. There are all sorts of problems trying to do that in New York since the valuable land around the subway stations is all in private hands and was developed years ago, whereas in Hong Kong, commercial development was planned from the beginning and the train system opened in 1979.

Something was said near the end of the show that got my attention because it reminded me of something else I had forgotten. The New York Port Authority is self supporting and needs no tax money to survive. It built and owns the Trade Towers and many other income producing properties. It operates the seaports and the airports.

This is not unique to NYC. Our local port authority does pretty much the same thing. GOAA leases Orlando Executive Airport owned property along East Colonial Drive as well as leasing space to retailers, restauranteurs, and various adjacent businesses in the main airport. The FBO’s pay rent at both (they are the ones authorized to operate refueling and repair facilities).

GOAA has many sources of income, but taxes are not among them. This is not true at all airports and seaports. In many places, sales taxes or property taxes are collected for the purpose of operating the ports, which was the old model.

Until the, 60’s through the ’80’s,  tax money was collected in Florida to operate the ports as well. The ports were taxing districts in some places and in others they were funded by the County Commissioners. It was eventually recognized that tax money could not be counted on as a steady source of income, so they all followed the the same model and went into commercial development.

This is not to say that the Florida model is as well done as Hong Kong’s, since our ports still rely on grant money from the state and federal governments for improvements, a practice that I would encourage them to stop, but at least they don’t have to go down to the County or City Commissioners and beg for money every year, the way they used to have to do just to keep operating.

Property prices are already increasing along the announced Sunrail corridor. Is it too much to ask that the producer of this new found wealth share in it? If the new model is to be considered, it needs to be NOW before we end up like NYC — all built up and no money for expansion or operating costs.