Can a city with one of America’s most innovative public transit systems afford to keep it running? San Francisco may soon find out, as increased ridership and improved service collide with a multimillion-dollar deficit.

Transit Innovation and Smart Mobility

The San Francisco Municipal Transportation Agency (SFMTA) is gaining ground in the post-pandemic era: reliability is up, buses are faster, and more riders are returning. SFMTA is widely regarded as a leader in mobility innovation, pursuing strategies that reduce congestion while promoting equity and sustainability. The SFMTA transit division, commonly known as “Muni”, operates a diverse network of fuel-efficient buses, light rail, trolleybuses, historic streetcars and cable cars.

In the past decade, San Francisco implemented AI-powered service improvements, public outreach campaigns, protected bikeways, and dedicated transit-only lanes. The city has twice as many transit-only lane miles per capita as New York City. Bus rapid transit and priority corridors cut travel times significantly; up to 36% faster on one of the busiest traffic corridors. Equity-focused fares help in making the system more inclusive, and electrification of the bus fleet improves alignment with climate goals.

But these gains are at risk. Without stable funding, Muni faces service cuts that could unravel this hard-won progress.

Legacy, Density and the Street Grid Advantage 

San Francisco’s dense Victorian-era street grid, compact size, and hilly topography laid the groundwork for its early private transit systems. Muni was established in 1912, making it one of the oldest publicly owned transit agencies in the U.S.

With nearly 19,000 residents per square mile, San Francisco is the second most densely populated U.S. city, giving it a natural advantage in transit suitability. An estimated 17% of the city’s commuters rely on transit, and Muni reached 75% of its pre-pandemic ridership in early 2025.
 

A Model Recognized Globally 

San Francisco ranked first in the Urban Mobility Readiness Index (Oliver Wyman Forum and UC Berkeley). As a leader in mobility innovation, the city claimed the top spot in the technology adoption sub-index, and scored high for investment in electric mobility —aiming for “25% of all new registered vehicles to be electric by 2030.” San Francisco fosters urban air mobility solutions and promotes the adoption of autonomous vehicles. 

In 2024, the city’s Van Ness Bus Rapid Transit project earned a Silver designation from the Institute for Transportation and Development Policy (ITDP)—recognizing world-class passenger experience, economic value, and environmental benefit.

Service Gains, Rider Growth and Green Leadership

Muni recorded its highest customer satisfaction in over 20 years, with 72% of riders rating service as good or excellent. A survey noted improvements in frequency and reliability, while ridership in 2024 reached 158 million trips—an annual increase of 13.5 million. “When we get the basics right, people will take public transit,” said Mayor Daniel Lurie.

San Francisco also leads in fleet decarbonization. Muni operates the greenest transit fleet in North America, powered largely by renewable electricity. The city’s ambitious target is a 100% emissions-free transport system by 2040.
 

Car Culture versus Public Safety   

Even with leadership in transit reform and innovation, San Francisco remains tethered to car culture. About 70% of households in the city own or lease a car, and pedestrian safety is a serious concern—with speed a leading factor in fatalities and injuries. 

 Traffic deaths reached a 10-year high in 2024, and the city’s Vision Zero initiative—intended to eliminate traffic fatalities—was allowed to lapse. In response, a coalition of civic groups is demanding its reinstatement, calling for stronger enforcement and renewed leadership.

Still, signs of a cultural shift are visible. In a bold move, the city closed two miles of the Great Highway to vehicles, transforming it into Sunset Dunes Park—a 55-acre space now ranked as San Francisco’s third-most-visited park.
 

Climate Threats Expose Gaps in Transit Resilience

California ranks among the world’s most climate-vulnerable regions, and San Francisco’s transportation system is directly in harm’s way. According to the XDI Climate Risk Dataset, California joins Florida and Texas as the only U.S. states in the global top 20 most at risk from climate impacts. San Francisco has a 72% chance of a major earthquake by the early 2040s, according to the U.S. Geological Survey. The city’s vital transit corridors are exposed to seismic events, extreme weather, and flooding. Infrastructure vulnerable to sea-level rise includes over 80 miles of Muni transit lines, operations and maintenance facilities, transit stops, bike lanes, and bridges. To improve infrastructure resilience, SFMTA works closely with partner agencies through the city’s Waterfront Resilience Program.

Infrastructure projects such as seawall reinforcements are underway, requiring a long-term horizon. In the meantime, SFMTA is upgrading its digital infrastructure and strengthening the physical resilience of transit facilities.
 

Budget Cliff and a Path Forward

Despite ridership gains, the fiscal outlook is grim. Muni faces a projected operating deficit exceeding $300 million, with mounting pressure to cut service. 

The stakes are highest for low-income, transit-dependent communities that rely on Muni for access to jobs, schools and essential services. Devon Anderson, president of a local transport workers’ union, told Bay City News: "Cuts to public transportation don't just inconvenience riders. They threaten economic stability, environmental progress and social equality." 

To avoid a fiscal cliff, California’s latest budget includes a $750 million loan to help transit agencies stay afloat. But advocates stress this is only a stopgap. Structural reforms and new revenue streams are essential in San Francisco to sustain an equitable transit system that supports climate goals and adapts to evolving mobility needs.

What truly makes a city “smart”? For years, the answer has revolved around terms like digitalisation, connectivity, and sustainability. But today, citizens seem to have a different view—less abstract and more tangible. According to the Smart City Index 2025, published by the IMD (International Institute for Management Development), affordable housing and high-quality public transport have emerged as the most pressing priorities in dozens of advanced urban centres.

The report, which captures the direct perceptions of over 30,000 citizens across 142 cities worldwide, reveals an increasingly close link between housing and mobility. Affordable homes and efficient public transport are frequently cited together—as two sides of the same coin. Cities that fail to provide a viable alternative to private car use face rising congestion, longer commute times, and, as a result, a higher social and economic cost of living. In this context, we have examined five emblematic cities—Munich, Taipei, Tel Aviv, Shenzhen, and Prague—that are placing these issues at the heart of their urban strategies.
 

Munich: German Efficiency Under Strain

Bavaria’s capital and one of Europe’s strongest economic hubs, Munich ranks 11th globally in the Smart City Index. Yet behind this strong performance lie mounting tensions. The average property price has exceeded €9,000 per square metre—among the highest in Germany—forcing many residents to move to the outskirts. At the same time, the city’s extensive public transport network—one of the most developed in Europe—is under strain: delays, construction work, and overcrowding have become everyday problems. In response, the city has launched the “Zukunftsbahnhof München” project, which involves major upgrades to the S-Bahn and investments in trams and electric buses. In addition, the introduction of capped fares for monthly travel passes aims to encourage public transport use, particularly among young people and low-income families.
 

Taipei: A Metro System That Reshapes Urban Living

In Asia, Taipei stands out for an integrated housing-transport model that others are now seeking to replicate. Over the past two decades, Taiwan’s capital has invested heavily in a punctual and expansive metro system, now considered among the world’s most efficient. Seventy-five per cent of surveyed residents regard public transport as an absolute priority. This has enabled the development of new residential neighbourhoods along metro lines, helping to rebalance property prices and ease pressure on the city centre. In 2024, a public housing programme was launched to deliver over 20,000 new units near metro stations, with capped rents and priority given to single-parent families and young workers.
 

Tel Aviv: Expensive City, Lagging Transport

Tel Aviv is one of the most dynamic cities on the Mediterranean—but also one of the most expensive. Rents have reached record highs, and road congestion is a chronic problem. 

Historically underdeveloped, the city’s public transport system is now undergoing a transformation: in 2023, the first light rail line became operational, and two more are planned in the coming years to connect suburbs with the city centre. The Smart City Index reveals that over 60% of residents demand urgent action on transport and housing costs. Authorities have responded with a plan to build 80,000 affordable housing units by 2030, many of them integrated into urban development projects directly linked to new tram stops.

Shenzhen: Electric Mobility and New Housing Models

Shenzhen is often cited as a symbol of Chinese innovation. It was the first metropolis in the world to operate a fully electric bus fleet, and today over 99% of its taxis produce zero emissions. But perhaps most interesting is how the city is experimenting with new housing models, including co-living spaces, micro-apartments, and social housing for young migrant workers. Electric mobility, combined with a continually expanding metro network (now with 17 operational lines), is reshaping the city to become more accessible. The local government has also introduced a long-term rent control scheme to curb property speculation—one of the most pressing issues for the younger generation.
 

Prague: A City Investing in Trams

Prague is often overlooked in smart city rankings, yet it is pursuing an ambitious path. The Czech capital boasts one of Europe’s most extensive tram networks and a public transport system that covers over 90% of the urban area. According to the IMD, residents identify “affordable housing” and “road congestion” as key challenges. In response, the city’s 2023–2030 strategic plan includes over €1 billion in transport network investments and an expansion of public and cooperative housing, with a particular focus on semi-central areas. The goal? To reduce motorised commuting and revive a more compact, liveable form of urban life.

The Verdict of the Smart City Index 2025 Is Clear

A city cannot be considered smart simply because it is connected, digital, or green. Above all, it must be liveable. And for citizens, this means access to reasonably priced housing and the ability to move around using fast, reliable, and integrated public transport. The most advanced smart cities—from Taipei to Munich—have grasped this: housing is not an isolated commodity, but part of an urban ecosystem where mobility is the key to inclusion.