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They just want to encourage more development, which happens with both LRT and RRT so they just chose the cheaper option.
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I find myself concerned with this perspective as well. LRT is definitely going to bring more rail stations than perhaps an option that integrates a SkyTrain expansion, but at the same time we've already got a lot of new rail expansion to build off of in Metro Vancouver. The M-Line is still fairly ripe for development; there are several stations on the C-Line, and the E-Line is also coming in. Bringing any sort of rail rapid transit into Surrey is going to do more to kill off one of the big reasons that developers are coming there in the first place: the land is cheaper, the fees are cheaper, the taxes are lower, and it's just cheap cheap cheap. Rapid transit isn't cheap, and the effects created by rapid transit are rather against cheap. In my view, it may take longer than Surrey expects for the development-related benefits to be seen if an LRT is built - because Surrey could end up being put on the waitlist until the rest of the rapid network is built first. There's just so much opportunity still existing to build and attract buyers around the current SkyTrain network... plus SkyTrain is better and more convenient transit anyway.
The fact that most employment is North of Fraser (particularly in Vancouver) and will remain that way for quite awhile doesn't help either.
I think that Surrey should only expect to REALLY be able to compete against the rest of Metro Van in gaining those development dollars with the same kind of rapid transit forte and more employment in both Surrey's own city core and outlying town centres. The latter would very much be helped by the former. Faster access of the town cores would make reverse commutes from the north of Fraser more viable, naturally opening up an opportunity for more dense TOD office spaces throughout the city - which can benefit Surrey residents too.
Lastly: Not that I'm for BRT that much, but Surrey is adept at making use of the "buses don't attract development like rail does" argument to discredit BRT even if its capacity provision actually could meet the demand on the corridor for that type of service. A lot of notable transit consultants/experts suggest otherwise.