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Thriving Communities / News & Views / Should road projects offer a return on investment?

Should road projects offer a return on investment?

First need to understand how to measure return.

Local Motion | September 12, 2013 | By James Bruckbauer

About the Author

The Regional Rider is a monthly update on the efforts to coordinate transit service in the six-county Grand Vision region. It’s published by the Michigan Land Use Institute’s transportation policy specialist, James Bruckbauer. For feedback, or to receive an emailed version every month, contact James at  james@mlui.org or follow him on Twitter at @jimbruckb. Follow him on Twitter at @jimbruckb. Reach him at james@mlui.org.

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Depends who you talk to. If you’re concerned about massive federal and state-level spending, you might want your taxpayer dollars to offer a return.

If a major transportation project doesn’t offer a return, it’s called “spending”—and sometimes spending is OK. But if a major transportation project offers a financial return and the government that’s paying for the project is able to cover the project’s costs and the services - like water and sewer - needed for the development around the project, then it’s an investment.

No return, no investment. But how communities should measure 'return on investment' is still unclear.

StrongTowns is a nonprofit dedicated to helping communities become more financially resilient by evaluating the true costs of infrastructure projects. Its founder, Chuck Marohn, says before we talk about the financial return of a project, we first need a common understanding of how to measure return.

Here’s a short video that compares how local officials typically think about return vs. the actual financial returns a project might provide.

You can find more short videos that describe how to calculate transportation's ROI here.

At a time when transportation budgets are crippled, and state and federal governments struggle to dig themselves out of major deficits, should we begin measuring the true return on transportation projects?

Right now, the state and local communities have very little evaluation criteria in place. Is it time for better measurements?

For a related story, check out my Forum in the Traverse City Record-Eagle about a revived proposal to build a major road bypass around Traverse City.

James Bruckbauer is the Michigan Land Use Institute’s transportation policy specialist. Reach him at james@mlui.org

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