Work-From-Home Trends Should Have Bay Area Rethinking Rail Projects
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Work-From-Home Trends Should Have Bay Area Rethinking Rail Projects

Lower tax revenue, stagnating population growth and tech companies' increased willingness to let people work from home, might mean costly rail extensions in San Jose and San Francisco shouldn't move forward.

With the prospect of fewer commuters and less tax money as the state grapples with the coronavirus pandemic and economic downturn, Bay Area transit planners should take a hard look at the multi-billion dollar rail projects on the drawing board. While connecting additional stops on the transit maps is attractive to riders and engineers, costly rail extensions in San Jose and San Francisco may no longer make financial sense— if they ever did in the first place.

In June, after years of delays and cost overruns, the Bay Area Rapid Transit (BART) is scheduled to finally reach northern San Jose. Planners now hope to build on the Berryessa extension by adding three more stations in San Jose and a new terminus in Santa Clara. If completed, the six-mile extension would “ring the bay” with rail stops. East Bay BART commuters would be able to reach Caltrain stations in the peninsula with a single transfer at Diridon Station.

The Santa Clara Valley Transportation Authority (VTA) estimates that the BART extensions will cost $5.6 billion and begin carrying passengers in 2030. But by then, the Bay Area’s workforce could look very different.  For example, half of Facebook workers could be working remotely, according to Facebook CEO Mark Zuckerberg.

“We need to do this in a way that’s thoughtful and responsible, so we’re going to do this in a measured way,” Zuckerberg recently said. “But I think that it’s possible that over the next five to 10 years — maybe closer to 10 than five, but somewhere in that range — I think we could get to about half of the company working remotely permanently.”

Facebook’s announcement follow’s Twitter’s announcement that some employees could work from home “forever.”

“The past few months have proven we can make that work,” Twitter Vice President Jennifer Christie said. “So if our employees are in a role and situation that enables them to work from home and they want to continue to do so forever, we will make that happen.”

And other Bay Area-based technology companies will transition to remote work even faster: Gitlab, Invision and Zapier are among the tech firms that had already gone all-remote, even before the COVID-19 pandemic emerged.

If the transition to remote working continues, daily passengers on the planned San Jose-Santa Clara BART extension by 2035 may not materialize. Aside from the fact that VTA has been chided in the past for exaggerating ridership projections, this forecast may fall victim to changing work and travel patterns, as well as a potential exodus of tech workers from the Bay Area in search of lower living costs and cheaper housing elsewhere.

The region’s population was already stagnating in the late 2010s and could start shrinking this year. The result would be a smaller tax base to pay the debt service on bonds issued to build new transit infrastructure and to subsidize operating losses when service eventually begins.

Rather than break ground on a costly new rail extension, VTA might be able to serve riders more cost-effectively by enhancing express bus services between BART’s new Berryessa terminus, downtown San Jose and Diridon Station. While that would mean an inconvenient three-seat trip for some commuters, timed transfers could ameliorate some of the resulting inconvenience.

A second project worth re-examining is the extension of Caltrain to the new Salesforce Terminal in downtown San Francisco. The 1.3-mile extension (which includes an underground station at 4th and Townsend Streets, a bus facility and a pedestrian connector to BART) was recently projected to cost $4.2 billion, but the San Francisco Chronicle quoted unnamed officials who expected a $6 billion price tag. Assuming funding is assembled, service could begin in 2028 or 2029.

But the travel benefits of this extension are limited.  Aside from simply walking 1.3 miles, commuters can reach downtown by switching to Muni Metro streetcar service across the street from San Francisco Caltrain Station and should soon have access to a nearby stop of the Central Subway. Although years late, the $1.6 billion subway link to San Francisco Chinatown and Powell Street BART is nearly complete and expected to begin service next year.

While the proposed Caltrain extension provides limited convenience, officials have been anxious to build it, in part, so that they can eventually bring high-speed rail service to the now unused station already awaiting it in the new $2.2 billion Salesforce Terminal.

But there are two problems with this objective. The recently completed train station at Salesforce Terminal is what economists call a sunk cost and should not be considered when deciding whether to make future investments. The fact that a terminal station already exists does not affect the question of whether it makes sense to spend $6 billion on a 1.3-mile rail extension.

Second, there is no assurance that the state’s high-speed rail project will ever reach San Francisco. The oft-delayed and over budget first bullet train segment is not expected to be completed until 2028, at the earliest, and funding has not been identified to connect that initial operating segment in the Central Valley to Silicon Valley.

In the absence of intercity passengers arriving on the bullet train anytime soon, the extension would mostly serve commuters traveling between the peninsula and San Francisco’s downtown. But more and more San Francisco technology and financial companies may also turn to remote working by the time service begins.

The Salesforce Terminal is adjacent to Salesforce Tower. And, although Salesforce has not made any announcements about remote working, its research division has been tracking the phenomenon. Salesforce Research recently reported that home-based work during the pandemic has resulted in only a 1 percent loss of productivity and 40 percent of workers would prefer to work remotely full time in the future.

By the time a downtown extension is ready to whisk peninsula commuters to the Salesforce Tower, many of those potential commuters may be happily and productively working from home. Like the San Jose BART extension, the San Francisco project could end up servicing a disappointingly small number of riders once it opens.  Under the circumstances, now is a good time to reassess these two projects.

Marc Joffe is a senior policy analyst at Reason Foundation.