Monday, June 28, 2010

New look at old problem: Paying for transportation

RED WING, Minn. – Planning consultant Scott Polikov from Fort Worth, Texas, has an idea that needs a bigger audience. It's about how you find money to build transit systems. That's a problem Charlotte is facing, along with dozens of other U.S. cities. Based on his thinking it's something Charlotte has possibly mismanaged, along with many other places.

The key understanding is that building a transit system (or any transportation system, whether it's highways or canals) creates huge profits for real estate interests. Example: A transit authority will announce it's building a line, and where the stations will be. Then it will go out and buy right of way, often through eminent domain, along that planned route, paying now-higher land prices, since the building of the line will make that land worth more.

"In Europe, the landowner pays for the right to have the station," he said.

Why shouldn't the government (that is, all of us, since we are the government) capture some of the value that it's creating (that we're creating) by building that infrastructure?

Indeed, in the pre-crash era there were developers who were seriously thinking about putting up millions to build Charlotte's proposed commuter rail transit lines, because they knew it would make their development significantly more valuable. The same was true for the Triangle Transit proposed transit line.

Sometime, credit for real estate development will re-emerge. When that happens, why shouldn't the Charlotte Area Transit System, for instance, auction off the development rights at the transit stations? And then use that money as a revenue stream? (Yeah, yeah there are a lot of legal issues involved, not to mention political ones.)

Consider how development has occurred along the Lynx light rail line through South End. The line was fixed. In an understandable effort to lure transit-oriented development at the station areas, the city has doggedly gone in and pro-actively up-zoned land to the TOD zoning – thereby giving away huge land value to the property owners. It also gave away any real power the city planners might have had to force better urban design onto that TOD development. If you're already allowed by right to do your TOD, why should you listen to the city's request that you do something different – for instance, including some affordable housing units?

(I'm at a yearly conference among people affiliated with the Citistates Associates, a loose coalition of planners, economists, think-tankers, current and former elected officials, Chamber of Commerce execs, etc., who share an interest in metro region growth issues.)

8 comments:

consultant said...

Race is not the big bugaboo it once was, but it's still pretty big.

In the good old USA, we have an almost impossible time getting ANY mass transit funded because many 'whites' feel they are funding something that a) they won't be using and b) will be used by large numbers of blacks.

Funding mass transit today is difficult in cities that have very low black populations. That's an indication of how thoroughly "the Right" has destroyed the concept of investment in community in this country (billions for Iraq and Afghanistan-zero for back here at home).

Race prejudice and "I don't care about nobody but myself." Those two attitudes continue to be the major barriers to financing and constructing any type of sensible mass transit systems in this country.

JAT said...

Mary, could you expand on this a little more. It sounds like a lament that cities don't get paid twice (or more?) for building LTR -- once thru higher property tax revenue via higher densities/more intensive use and once for...the privilege of building what city staff wants you to build? Confused.

Besides, we've blown past that issue with regard to our $500m. streetcar. It has been taken off of CATS' balance sheet in order to keep the NE and North lines on life-support.

In other words, CATS ALREADY HAS cashed and passed on any assumed development bonus onto the city -- booking a whopping number too. The city obviously thinks the project will nearly pay for itself in increased property and sales tax revenue -- or has a secret plan for additional revenue sources.

Also, you are actually talking about paying for transit -- which is a subset of transportation.

Knut Bøe said...

Public money cannot pay for everything. Choice,Priority; Also regarding how to make us use public transport. Heard about physical restrictions in certain congested time periods? please see: http://trafikklogistikk.com
TrafficLogistics is the answer; a future oriented city traffic system.

regards

Knut Bøe

Bob said...

Sounds like a job for TIF...

The trick is getting the valuations before bond issuance to make real-world sense.

Mary Newsom said...

JAT, you're right, I'm talking about funding transit, though the principle might be transferable to other transportation forms such as highways, or even canals or greenways. But transit tends to produce more of the dramatic, high-intensity development, compared with streets and roadways, where the bang for the buck might be less. I think the point is that infrastructure builds land value, and the entity creating the infrastructure (i.e. we the people) shouldn't just be making freebie donations of that value to the lucky (or politically connected) property owners along the route.

J said...

There are a few things in this world that are set and will never change:

The sun will always rise in the east.
If you throw something in the air, it will always come down.
Consultant will blame every single problem that ever ocurrs on this planet on Republicans.

I love your assumption that all right-wingers are racists and no racism of any sort occurs on the left. You're giving Al & Jesse WAY too much respect.

I have no doubt that there are plenty of right-wing white folks who don't want to be anywhere near black folks and therefore won't support mass transit. But I also know that many right-wingers like myself simply believe the liberal view that government should pay for everything, and just "increase taxes on the rich" to pay for it all, is completely unsustainable.

Is what Mary has written in this post the answer to funding public transit? I don't know. More info may be needed. But to simply say that everything would be perfectly funded if not for the evil Republicans is definitely not the answer.

ThrowDownYourLeavyScreens said...

@J:

You left out Death and Taxes.

@Consultant:

If supermajority-white cities don't generally fund transit, please explain how Portland (OR), Seattle, Denver, Burlington (VT), and Albuquerque all have some incarnation of rail transit without significant numbers of blacks.

But more fundamentally, Mary's original post never mentioned race. It only discussed who should benefit from the added value that public infrastructure does (or does not) bring to adjacent land. How is race even relevant?

JT Lancer said...

RE: "Why shouldn't the government (that is, all of us, since we are the government)..."

The greatest delusion of them all.