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The Federal Transportation Program: NAR Adopts a Policy Position

June 9, 2014

With the six-year federal transportation spending bill up for renewal this year, major changes could be in the offing. For the first time ever Congress is entering this reauthorization debate with its main repository of federal transportation funds, the Highway Trust Fund, insolvent. At the same time America is changing demographically and socially, leading to shifts in the kinds of transportation options that people want. Congress will have to meet these new needs and find new sources of funding. Because these issues affect community livability so much, for the first time the National Association of REAL.TORS® has adopted a detailed policy position on the reauthorization of the federal bill.

Every few generations, innovations in transportation spur a revolution in how people and goods move around, with profound implications for how and where we build our cities and towns, and ultimately, how we live. In 2009 the federal transportation law is up for reauthorization, and in the face of a population dissatisfied with our current car-based transportation system, it may be time for some big steps. In the last year, two Congressionally-appointed commissions, key members of Congress, road builders, the U.S. Chamber of Commerce and large advocacy coalitions such as Transportation for America all have declared the current program exhausted and in need of a major rethink. Many of those following the issue believe that this year may be a turning point akin to that of 50 years ago.

The Interstate Highway Act

In 1956, when gasoline was just 20 cents a gallon, President Eisenhower signed what came to be called the Interstate Highway Act, an ambitious program that linked America’s cities and states with a network of long-distance superhighways. Faced with what seemed like a never-ending demand for automobile travel, the government created policies that accommodated and even promoted the growth of suburbs and sprawling car-dependent urban areas.

What worked 50 years ago, however, is causing major problems today. Volatile gas prices burden household budgets and roil the real estate market; spread-out metro areas require a car to reach services and jobs; older Americans and members of low-income communities find themselves increasingly isolated due to unreliable public transportation networks. Americans no longer live how--or where--they did 50 years ago, and future transportation policies will need to address the new needs of a changing population.

Shifts in Travel Needs

It is estimated that by 2030, one in four Americans will be 65 or older. As older Americans leave the work force, stop commuting and begin to restrict the hours and distances they travel from home, they generally drive less than the population as a whole. In the baby-boom era of car-oriented suburbs, half of all households had a mom, dad, and kids. Today that share has shrunk to less than a third, while the proportion of single-person households edged past it. Fewer soccer moms and dads shuttling the kids around also will mean fewer miles driven overall.

Another significant change from the 1950s is that 75 percent of Americans now live in metropolitan areas. The largest 100 metropolitan areas alone account for 65 percent of the population and 78 percent of economic activity. In coming years, the population is projected to become even more heavily concentrated in urban areas. The challenge these days is not so much getting between cities, or from farm to market, as traveling within increasingly crowded metro areas.

Americans’ driving habits are also increasingly shaped by realities of climate and limited energy supply. As oil becomes less plentiful and more hotly contested in coming decades, reducing per-person consumption will be part of the nation’s plan to insulate ourselves from volatile energy markets and potentially hostile oil-producing countries. Proposed measures to curb greenhouse gas emissions--whether a carbon tax or a cap-and-trade system--may also increase the cost of driving. Higher prices, in any event, will lead Americans to drive less, as they did when prices spiked dramatically last summer and fall.

A Changing Real Estate Market

These changes in travel patterns, demography, and cultural preferences are being reflected in an evolving real estate market, says Christopher Leinberger, a real estate consultant and developer, and the author of The Option of Urbanism: Investing in a New American Dream.

He notes that in the current, down market, properties on the exurban fringe with long commutes to job centers are languishing even at drastically reduced prices, while those closer to transit stations and employment concentrations are holding value. Recent high gas prices have exacerbated a trend away from places with long, expensive commutes, says Bob McNamara, senior policy representative with the National Association of REALTORS®.

“That ‘drive ‘til you qualify’ idea was based on a calculus, and that calculus is broken, as many people are finding to their dismay,” McNamara says. “Although gas prices have dropped recently, people are much more conscious of the cost of transportation.”

“The market has begun to shift,” Leinberger says. “For 50 years there was pent-up demand for drivable suburban product, and it was a new product. We had a very good run of that, but now the pendulum has swung. Today there is pent-up demand for another product we haven’t addressed for decades--walkable urban.”

Places designed to be “walkable” allow residents to meet many, or even all, daily needs within walking distance or by transit, according to Leinberger. Recently, the real estate Web site Zillow.com began posting walkability ratings for its listings, created by WalkScore.com, which bases the score on how many activities and services are located within walking distance. 

“It’s not that everyone wants walkable neighborhoods, but we clearly are not meeting the demand, and it’s only going to grow,” Leinberger says. Meeting that demand will require “a balanced transportation system: rail transit, walking, biking, as well as cars.”

NAR’s Position on Federal Transportation Policy

These transportation issues have begun to loom so large in the real estate and housing equation that, for the first time, NAR has adopted a detailed policy position on the reauthorization of the federal bill.

“The reauthorization legislation doesn’t touch directly on real estate transactions, so there is not a direct stake,” McNamara says. “The REALTORS’® interest in this stems from their interest in community livability, in smart growth, and--in looking at the polling we’ve done--the fact that housing consumers would like more options and different options. If we’re successful in providing those options, communities will be more prosperous and more livable and that’s got to be good for real estate.”

In another first, the NAR also has joined a diverse coalition of nearly 300 national, state and local organizations with a stake in the federal transportation bill. The Transportation for America coalition (online at T4America.org) aims to represent the broad range of transportation system users, as distinct from the industry groups that usually follow the debate closely. The T4America coalition includes well-known organizations such as AARP, the American Public Health Association and the National Trust for Historic Preservation, as well as key groups with a focus on issues including rural and small town concerns, affordable housing, the environment, social equity, public transportation, bicycling, and walking. A number of elected officials and state and local entities are also involved.

Major Questions

James Corless, the director of T4America, says the big challenge for coming decades will be developing and funding a program to build “the second half” of the transportation system--the intercity trains, light rail and bus lines, and walking and biking infrastructure that have lagged over the years--while maintaining and maximizing the efficiency of existing highways, bridges, and transit lines. Such steps will make communities more livable, helping to address the pent-up demand for real estate with good access to transportation options. Some major policy questions include:

  • How to meet the pent-up demand for public transit, particularly rail, rapid bus and streetcar projects, many of which have local funding but must wait years for their federal match;
  • How to give metropolitan areas the latitude to solve their congestion and mobility issues, while holding them accountable for being fair and inclusive and making timely progress on national goals;
  • How better to serve rural areas and small towns, which were especially hard hit when gas prices soared, and whose chronically underfunded bus and shuttle services leave many stranded;
  • How finally to start to coordinate development and growth patterns with transportation investment, to ensure that people can find homes near jobs, that highways don’t become overburdened by bad planning, and that we make the most of transit investments; and
  • How to streamline the programs and delivery systems--the transport agencies at all levels who must implement the new vision--so that projects get built quickly, yet still according to smart planning.

And the biggie, of course: How to pay for it all.

“This is the first time we’ve gone into an authorization debate with the highway trust fund insolvent,” notes John Horsley, executive director of AASHTO, the association of state departments of transportation. “Usually there have been reserves deep enough that congress could take its time and keep extending the existing law till they reached agreement.” But even as the insolvency question adds to the urgency: “There is a desire by the White House and the Congressional leadership to make a transformational bill.”

Horsley says he thinks Congress should debate a vision and establish funding authorizations at a level sufficient to fulfill it, an estimated half-trillion dollars (nearly double the current level), then work through the politics of actually raising the money in the next couple of years. The bill itself should encourage experimentation with new funding sources: charging a “vehicle-miles traveled” tax based on how much you drive, rather than how much fuel you buy; funding some rail transit projects by recapturing increased land values; charging “congestion tolls” for those driving at peak times; and plowing that money into providing alternative modes of travel in the same corridor.

Whatever the mechanism, Corless says, Americans are likely to pay if it results in giving them cleaner, smarter, cheaper, and more convenient options.

“In the end, you should still be able to choose to drive,” he says, “but it shouldn’t be your only option.”