New Town Railway Development Subsidy System
This system supports real estate companies that promote housing development in conjunction with railway services. Since the end of World War Two, the Japanese population has continued to concentrate in and near Tokyo, creating serious housing problems. Since new housing is only available in areas distant from the city center, there has been a need for "new town" assistance to ensure such developments have reasonable access by railway to nearby railway stations. Railway operators once developed housing themselves in conjunction with railway services in Tokyo and Osaka, but skyrocketing construction costs made it impossible for them to continue. This system has been implemented since 1973.
When the Japan National Railway is privatized as the JR Group, one of the issues discussed was how to operate local railway services. A total of 175 line sections with a transportation density of 4000 people per kilometer per day or below were defined as local routes and separated, in principle, from the JR Group. Of these, 83 lines were converted to bus service, while others maintained railway service under the Third Sector system, in which prefectural and municipal governments as well as local businesses jointly provided operating funds. Railway services maintained by the Third Sector and other corporate systems are called "converted railways." Of the 83 routes operated in the Third Sector system, 38 services are railways, the rest having been converted to bus service. Now the management of these converted railways is struggling, creating a new problem.