Greater Greater Washington

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DDOT streetcar missteps boost calls for new authority

DDOT has made a number of missteps on the streetcar project in the past year, and has been opaque about plans for funding future lines. This is prompting calls for a new independent authority to plan, build and/or run the streetcar.


Photo by tracktwentynine on Flickr.

DDOT only has 3 cars today, and a procurement snafu means they might not have enough to run 10-minute headways. Couple that with problems nailing down the Union Station connection, tracks being deleted from the 11th Street Bridge, and more, and councilmembers are understandably nervous.

Councilmember Mary Cheh (ward 3) proposes splitting the streetcar off from DDOT into a new authority. Creating new boards and authorities can just replace old problems with a set of new problems, but unless DDOT shows it has the project under control soon, a separate authority may be the best way to ensure the project's success.

At a roundtable last week, Director Terry Bellamy did little to reassure Cheh and Tommy Wells (ward 6) that DDOT has the project under control or that it is any closer to working out financing mechanisms for future lines.

There's no time to waste. As I argued in a previous post and my testimony, we must couple promises to build a streetcar with a promise from local neighborhoods to help support it. Once a neighborhood's planned streetcar line gets close enough to reality, there's no incentive for local commercial property owners to agree to a value capture system, or local residents to agree to selective extra density along the commercial strip.

Cheh has introduced a bill to create a task force to make recommendations for a permanent governance structure. In her opening statement, Cheh noted that:

The system is still without a long-term financing and governance plan. ... Continued development will require a dedicated operating outlay and significant capital investment. Though the District expects some federal financial support along the way, development of a clear plan is crucial to moving the project forward. Still, there has been only quite limited movement to resolve some of the larger outstanding issues.

The 2010 streetcar system plan noted that DDOT would immediately begin to convene a governance task force composed of private sector, public sector, industry and community leaders to propose a an appropriate governance structure for the streetcar. Now it is almost 2 years later and the task force has not been created, and we are still without a concrete plan.

Later in the hearing, Wells fretted that the streetcar might open without enough cars to run it effectively. Right now, DDOT has only 3 cars, which would only support running a streetcar every 18 minutes on the H Street line, or less if one breaks down. Plans call for a car every 10 minutes.

DDOT solicited bids to buy 2 more, which would support the 10-minute headways. Portland-based United Streetcar and Czech company Inekon both bid. DDOT chose United, but Inekon appealed, saying that it received a higher overall score, which combined price and technical merit. United was better on price, but Inekon got a better technical score.

Also, Inekon said United fell below a minimum technical threshold set out in the procurement. DDOT decided to cancel the contract. Regardless of which vendor would have been best, this now means DC has to scramble to get more cars by the planned opening in July 2013.

Bellamy said DDOT is looking into "piggybacking" on another city's purchase, but that's more difficult and potentially expensive since other cities likely have slightly different requirements. And he couldn't give much reassurance that this was going to actually happen.

People of H Street have waited patiently for a long time for the streetcar. If it opens and succeeds, then the wait will have been worthwhile, and other neighborhoods will clamor for the streetcar. But if it fails, it will get an early reputation as a boondoggle that will be very difficult to shake. Wells said,

If they start with 3 [cars] the headways are ridiculous, and often 1 car needs to be worked on. It would just be a tourist ride. ... If you start it with only 2 or 3 cars, I'm not with you. ...

If you actually open the system at half capacity, I think that's the story, and we don't need that. ... We're the nation's capital. We're rolling out the first leg of a 37-mile system. This is really a big deal. ... It's got to be done right.

If we start with 3 cars ... It will be a symbol of failure for this administration that it does not need.

Here is the video from the segment of the hearing about the number of cars:

DDOT still has time to procure the cars, if no additional obstacles pop up. This delay might force them to postpone the opening by a few months to later in 2013, but the current July timeline is already aggressive. Maybe the schedule will slip anyway, and the streetcar procurement will provide a good cover.

Creating an authority can bring significant advantages. Local business groups, like the Downtown Business Improvement District, and advocacy groups like the Sierra Club have been leading the way in building support for the streetcar. Yet many advocates say DDOT hasn't engaged with them much at all in recent months.

DDOT has been secretive about progress and especially about setbacks. When the Federal Transit Administration told DDOT it couldn't put tracks on the 11th Street Bridge without stopping the project for expensive and time-consuming new studies, DDOT kept the news secret for months until we broke the story. And how long did DDOT know that running the tracks under the Hopscotch Bridge was a no-go?

Creating a financing and governance plan is complex, and Bellamy said DDOT has been working on the problem. But all discussions have happened behind the scenes, and insiders familiar with the matter I've spoken with say they don't have much confidence in the process so far. Plus, this isn't a decision that should happen in secret. Residents and advocates are stakeholders that need to be involved as well.

Some of the current problems may come from DDOT having no streetcar head. Scott Kubly left in July, and DDOT just hired Carl Jackson a month ago.

The divison's other staff, many of whom are very talented, have to juggle many other competing priorities, like the Circulator, Capital Bikeshare, and oversight of WMATA. The Circulator and Capital Bikeshare are huge successes, and there have been few complaints about the way DDOT has handled these projects.

Cheh said this is a reason to support creating an authority. Maybe the streetcar, unlike the Circulator and CaBi, is just too large and complex to be part of another agency. She noted, "DDOT does an enormous amount, and it dos it very well. It gets a lot done, and a lot correct. But it's humongous." A separate authority would have staff and budget dedicated solely to the streetcar.

But separate authorities can also bring problems. If a project requires multiple agencies to cooperate to achieve a goal, it's a lot more complex. Staff at the agencies might not get along, or if they do, their bosses might have competing priorities or desires. If they're not all under the Mayor, there's no one person who can order everyone to get moving or resolve disputes.

Understandably, staff with limited time end up focusing on projects they can achieve themselves, without needing a lot of buy-in from people outside the building. Likewise, if DDOT is running the streetcar, its director, the mayor, and councilmembers can make sure the project succeeds and get credit for success. If there's a separate authority, will those agencies focus their energy on other priorities which live entirely in-house?

Finally, our mayorally appointed boards don't always act in harmony with the admini­stration's priorities. For example, the Historic Preservation Review Board can single-handedly facilitate or derail many development projects, and the Zoning Commiss­ion actually sets DC's zoning policy in ways the council and mayor cannot. But even a very pro-development, anti-delay mayor like Adrian Fenty still appointed HPRB and Zoning Cmmission members more on personal relationships than on any policy alignment.

Who would be on this streetcar board? DDOT officials? Business leaders? Community members? What about people who aren't so enthusiastic about the streetcar? Will the board focus on getting the system done, or will it devolve into a forum for battles over the pace of change?

We have an authority for transit alreadyWMATA. It's not exactly a paragon of efficiency, and government officials in DC, Maryland, and Virginia grumble about handing over money year after year without as much power to fix problems as they have over local agencies. The streetcar authority wouldn't be an interstate compact, but could it develop some of the same problems?

We can certainly imagine an authority effectively shepherding this complex project to great success. Certainly DDOT's recent management of the project sets a low bar for an authority to surmount. But we can also envision the authority turning into another awkward structure that needs reform a few years down the road.

Can the council design the authority to capture the benefits of a separate structure but avoid many of the pitfalls? Portland seems to have done so, for example; an independent authority successfully manages its streetcars. The details of the plan will determine whether an authority in DC would lead to similar success, or not.

Cheh's bill properly proposes a public conversation about whether to create an authority, and how. It's good to explore whether an authority could better serve the goal of implementing and operating an efficient, sustainable, innovative streetcar system. If it can, DC should set one up. But it should not be a foregone conclusion.

David Alpert is the Founder and Editor-in-Chief of Greater Greater Washington and Greater Greater Education. He worked as a Product Manager for Google for six years and has lived in the Boston, San Francisco, and New York metro areas in addition to Washington, DC. He loves the area which is, in many ways, greater than those others, and wants to see it become even greater. 

Comments

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Am I correct in pointing out that they STILL do not have a way to actually power this system?

by Dave on Feb 28, 2012 1:51 pm • linkreport

Can't DC just use eminent domain authority on Amtrak? Amtrak is owned by the feds, but it's legally a corporation, not a federal agency, so the District's rights should trump.

by tom veil on Feb 28, 2012 2:04 pm • linkreport

Good thing we didn't keep Klein. I'm struggling to think of a single thing Bellamy has done, except mistakes.

by H Street Landlord on Feb 28, 2012 2:10 pm • linkreport

Too bad you keep getting it wrong. The 11th St Bridge project was a FEDERAL HIGHWAYS project. FEDERAL HIGHWAYS was asked to approve installation of foreign rail and they said no for two reasons: it was not Buy America compliant and the operation of streetcars was not analyzed in the NEPA document. Buy America is more important now than ever -keeping the work in the US-why should foreign rail be allowed!! And NEPA is a law to protect the environment and inform the public about impacts caused by federal actions (a federally funded bridge)-we should always expect our government to be in compliance! FHWA did the right thing, but it was FHWA not FTA. As you said, DDOT has some very talented staff over there, who by the way are well versed in Buy America and NEPA. Suggest those skills get engaged and serve the citizens.

by Watchful on Feb 28, 2012 2:21 pm • linkreport

@Dave:
You are not correct.

The H Street line will be powered by overhead catenary. The DC Council exempted that line from the wire ban.

The catenary has not yet been installed in the corridor, however.

by Matt Johnson on Feb 28, 2012 2:28 pm • linkreport

Very happy to hear that. Now to get on to the rest of the problems...

by Dave on Feb 28, 2012 2:35 pm • linkreport

As I've said before, the District has never actually intended to run streetcars. Rails were only installed to induce development, that's it.

Gray 2014!

by @SamuelMoore on Feb 28, 2012 2:38 pm • linkreport

DDOT didn't earn the public's trust on streetcars when Klein was at the helm. I would imagine that most of these problems could have been resolved had the initial idea been planned and executed in much different fashion.

I thought I remember reading a post here talking about the 11St Bridge/environmental analysis thing and I asked then, "why didn't they know this."

So yeah, I imagine DDOT hasn't (ever) earned the public's trust.

by HogWash on Feb 28, 2012 2:42 pm • linkreport

not a lot of new information here. seems like all things we knew. isn't 11th street an FHWA project and how would it connect to H street or any other "planned" section?

by me on Feb 28, 2012 2:47 pm • linkreport

Buy American = economic illiteracy and jingoism all wrapped into one neat package.

by Fitz on Feb 28, 2012 2:55 pm • linkreport

This is what happens when a major project is bum-rushed without some common-sense assessment and planning.

Fenty and Klein got so hyped on the "coolness", "hipness" and the supposed "development potential" of streetcars that they ran it through without adequate planning and study.

To name a few mis-steps:

Ignoring local overhead wiring prohibitions

Not buying American-made rolling stock - in a time when economic stimulus money from American taxpayers was being used to fund transportation.

Sidestepping environmental protection statutes.

And who's bright idea was it to run the H Street tracks along the curb - where parking and deliveries are done - instead of in middle of the street?

If anyone tried to bum-rush a highway like this, folks would be howling. But rail? Full speed ahead! Who cares about realities or consequences? Anyone who doesn't like is an "anti".

Personally, I think the streetcars are a great idea. But they're being done in an unprofessional manner (see David's post) and for the wrong reasons - "spurring development", "promoting density", and increasing the already-high property values of the affluent as opposed to simply providing mobility for those who need it.

All these supposed new problems, currently being blamed on the Gray administration, may very well be karma.

by ceefer66 on Feb 28, 2012 3:07 pm • linkreport

@ceefer66 The H Street / Benning Rd line has been on the planning books since Barry was Mayor... it wasn't bum rushed.

by @SamuelMoore on Feb 28, 2012 3:19 pm • linkreport

Buy America is more important now than ever -keeping the work in the US-why should foreign rail be allowed!!

Wait, I'm confused. I thought the USA was all about economic Darwinism and the wondrous workings of the Invisible Hand.

by oboe on Feb 28, 2012 3:31 pm • linkreport

I think the streetcars are a great idea. But they're being done in an unprofessional manner (see David's post) and for the wrong reasons - [...] increasing the already-high property values of the affluent

I'm interested in your plan to dramatically enhance DC's infrastructure while decreasing property values. If you're worried about high property values, you should be calling your councilmember every morning for the rest of your life demanding they make it easier for developers to build market-rate housing units.

by oboe on Feb 28, 2012 3:36 pm • linkreport

"Wait, I'm confused. I thought the USA was all about economic Darwinism and the wondrous workings of the Invisible Hand."

the invisible hand, properly applied on this issue, would look to optimal allocation of resources. In general, that means free trade - but NOT with high unemployment, when the nominal prices of labor does not represent a real opportunity cost.

Thats not right wing stuff, I think Krugman would agree with it.

by AWalkerInTheCity on Feb 28, 2012 3:53 pm • linkreport

@ Watchful: Funny that the same argument is used by Škoda's (CZ) lobbyists in the Czech procurement for new nuclear reactors, in which Westinghouse (US) is taking part. Seems that there are people caught in the paradigm of 1930s on the both sides of Atlantic...

by Bungameng on Feb 28, 2012 3:57 pm • linkreport

The former DDOT director, "Mr. Zipcar," was no manager and really screwed up the streetcar project. DC will be paying for that for Gabe Klein's mistakes for a long time. Chicago can keep him.

by Axel on Feb 28, 2012 4:03 pm • linkreport

Bungament - thats because its economically logical to do so in times of inadequate aggregate demand. Sometimes beggar thy neighbor makes sense.

free trade advocates would do well to encourage measures to increase aggregate demand in order to restore those conditions where the Econ 101 argument for free trade holds. IE where the price of labor genuinely reflects an opportunity cost

by AWalkerInTheCity on Feb 28, 2012 4:05 pm • linkreport

Boy, oh boy. Flawed concept, flawed execution. From the hallowed halls of the DC Government. Who coulda seen that coming?

by Phil on Feb 28, 2012 4:12 pm • linkreport

@AWalker

Tempting argument, even in a recession. But all Buy America does is raise costs here and give us inferior rolling stock.

See:

http://pedestrianobservations.wordpress.com/2011/08/09/buy-america-is-a-scam/

http://marketurbanism.com/2010/09/18/a-comment-on-rolling-stock-protectionism/

You'd be better off taking the money you save from free trade transit vehicle procurements and just writing checks to the workers you want to help instead.

Better yet, just have the government massively invest in these infrastructure projects. That will end up boosting aggregate demand far more effectively than just adding confusing and counter-productive language to rolling stock procurements about where the final assembly occurs. Part of what killed the American rail rolling stock industry was a collapse of domestic demand as cities dismantled streetcar networks and only a handful of cities had subway systems.

by Alex B. on Feb 28, 2012 4:17 pm • linkreport

I'm generally in favor of an authority. It doesn't directly increase efficiency but at least increases accountability. Heads should roll if thing doesn't get implemented better. I like to be able to fire the people/govt who work for me.

Also, implementing a streetcar project requires specialist skills and knowledge which an authority is best suited to deliver. Coordination will undoubtedly be harder but focus and visibility will be greater.

by Falls Church on Feb 28, 2012 4:17 pm • linkreport

in theory DDOT should handle the system. An authority is just another independent possibly disconnected agency. In places like SF or London, the transportation agency handles all of these reponsibilities (roads, bikes, streetscape, transit, taxi).

The issue is probably DDOT's personnel. E.g., I know nothing about Carl Jackson, but were it my decision, I would have hired someone with experience with streetcars and other innovative transportation system construction and operation experience.

That ends up being a function of the administration.

by Richard Layman on Feb 28, 2012 4:20 pm • linkreport

This is an excellent report on the current state of streetcars in DC.

Now is the time for streetcar proponents to stop, assess, plan and implement...something that was never done to date on this mess. Fingerpointing and recriminations may be satisfying, design-build may sound efficient and cool, but for something as complicated as a 37-mile transportation system (or is it a 37-mile economic development program, that's never been clear to me), it might take a few months or really hard work to get this planned, financed, etc.

I'm still rooting for the streetcar. Sometimes a huge setback, such as last week's shocking oversight hearing, is just what the doctor ordered. Now everything can come out in the open and DC can have an authentic discussion about this, with less "let's pretend" and more transparency.

by Trulee Pist on Feb 28, 2012 7:04 pm • linkreport

The idea that Fenty and Gabe Klein should have left office 13 months ago with absolutely everything completed on the streetcar implementation is absurd. There were always going to be issues that arose and problems to solve. This is entirely on the Gray administration. It was on Gray to finish the job and he has team have dropped the ball again and again.

by Dcspur on Feb 28, 2012 9:38 pm • linkreport

Exactly dcspur.

Somehow Klein managed to get hired by a much larger city's mayor who was the chief of staff for the POTUS.

Meanwhile he was let by a guy who has, as far as I can tell, done nothing except chair an extremely scandal-ridden (indicted!) DC council. And I've yet to hear from a Gray supporter anything Bellamy has done.

by H Street Landlord on Feb 28, 2012 9:46 pm • linkreport

The idea that Fenty and Gabe Klein should have left office 13 months ago with absolutely everything completed on the streetcar implementation is absurd.

How hilarious. So the idea that they began to implement a flawed system is Gray's fault? And he wasn't even mayor at the time? Sounds to me that these are OLD problems..not new one's caused by this administration.

Find another anti-Gray/ProKing Fenty/Klein talking point please.

by HogWash on Feb 29, 2012 9:40 am • linkreport

"Better yet, just have the government massively invest in these infrastructure projects. "

without even checking your links I would say of course. (as would Krugman, certainly) Protectionism, ESPECIALLY in govt procurement, is a very backdoor kind of keynsianism, and I imagine (this is where your links come in I expect) could be particularly inefficient in particular industries.

I have only two responses - we live in the world we live in. There has been no real prospect of additional direct fiscal stimulus of that type since november 2010 - maybe there is some hope for it now, but I suspect whatever is passed will still be inadequate given the scope of unemployment, and the massive headwinds in the form of continued private sector deleveraging (and Europe). So for the time being the opportunity cost of labor will still be significantly less than its nominal cost. It may still be preferable to import transit rolling stock, but the standard Econ 101 proofs for free trade won't apply - you will actually have to look at the market specifics, not engage in free trade sloganeering (which sloganeering I approve of, WHEN the labor market is tighter)

by AWalkerInTheCity on Feb 29, 2012 9:49 am • linkreport

"but for something as complicated as a 37-mile transportation system (or is it a 37-mile economic development program, that's never been clear to me), "

If I had a dollar for every time I heard a fairfax county official point the benefits of Fairfax county schools to Fairfax county homeowners pocketbooks, I would go ahead and buy a townhouse in Dupont Circle. Somehow no one objects to investment in an education system being justified by financial payback in the form of property values - but when it happens with transportation, people get their panties in a twist. Why is that?

by AWalkerInTheCity on Feb 29, 2012 9:53 am • linkreport

The best thing an independent board could do is set streetcar priority based on transportation need, rather than based on percieved developers priorities.

by charlie on Feb 29, 2012 9:53 am • linkreport

@AWalker

Buy America is not a stimulus requirement, it's been around a lot longer than that.

Buy America also is not about redirecting work here that would otherwise happen elsewhere, it's about blocking parallel imports.

Please do check out the links mentioned. The end result of these policies is counter productive, particularly in the transit case. The costs to the transit agencies are higher, the barriers to entry for new companies are higher (since Buy America does not favor American firms, really - it just favors large firms with a pre-established American presence), and the product is often inferior (though a great deal of that can be attributed to other American regulatory issues with trains and transit).

Please do check the links.

by Alex B. on Feb 29, 2012 9:58 am • linkreport

@alex

I checked the links. Only one attempts to quantify the costs (the other merely cites the structural problems). And it does so for only certain classes of equipment, not the ones at issue here.

And yes, Buy America predates the recession, and is not based on Keynsian logic (it was passed by congress, not by macroeconomists).

My response here is more intellectual than practical - even if it was the case that buy america was an inefficient way to create jobs in transportation rolling stock of any kind (and I would note that writing checks to workers does not address issues of skills deterioration associated with long term UE) the arguments being made by most here are incorrect - not arguments about the particular structure of the rolling stock industry, but glib citations of Econ 101 logic - logic which DOES apply in most labor market conditions, but which does NOT apply now. And this intellectual issue is not completely impractical, at a time when there is considerable confusion about our macro condition (for example some politicians when asked what they would do about UE, suggest passing free trade agreements - such agreements may be net positive for total welfare, but they do NOT create aggregate demand or address cyclical UE)

by AWalkerInTheCity on Feb 29, 2012 10:21 am • linkreport

My response here is more intellectual than practical

That's the problem - the issues with Buy America and US transit are entirely practical.

It inhibits the actual development of a true transit industry here because it effectively raises the startup costs to do so. It protects existing players, but they do not follow the spirit of the law, only the letter of the law (i.e. they do 'final assembly' in the US, all the real work is still done overseas).

The worst part about it is that the act makes the development of new transit systems more difficult, which then makes it harder for those systems to expand, which would help grow demand for such systems in the US, which would grow the market for more rolling stock providers here.

by Alex B. on Feb 29, 2012 10:53 am • linkreport

@alex

The misunderstanding of the way microeconomic analysis based policy prescriptions, on issues from free trade agreements to BCA of infrastructure to UE insurance are changed by current labor market conditions, impacts the general policy discourse and is a practical concern.

Ergo, the distinction between critiquing the application of Buy America under current conditions based on the structural issues of the US rolling stock industry, and doing so based on the application of Econ 101 principles without consideration of the cyclical environment, matters. Practically.

by AWalkerInTheCity on Feb 29, 2012 11:06 am • linkreport

I'm not critiquing BA on current conditions, I'm critiquing it in general.

The broad point is that it's protectionism for an industry that has nothing left to protect. The practical result is that the only foreign bidders who compete are the ones who have enough resources to bypass the rule.

It produces inferior outcomes across the board.

by Alex B. on Feb 29, 2012 11:13 am • linkreport

@alex - and I was not addressing your critique, but Fitz's and bungamens (and to some degree Oboe's, thought that wasnt really a critique).

BTW, though, BA applies to many categories other than rolling stock does it not? and to sectors of govt procurement other than transit?

by AWalkerInTheCity on Feb 29, 2012 11:19 am • linkreport

but when it happens with transportation, people get their panties in a twist. Why is that?

Because we're talking about transportation and naturally people aren't going to personalize it as they would education.

by HogWash on Feb 29, 2012 12:12 pm • linkreport

The 11th St Bridge project was a FEDERAL HIGHWAYS project. FEDERAL HIGHWAYS was asked to approve installation of foreign rail and they said no for two reasons: it was not Buy America compliant

That's kind of like the pot calling the kettle black, seeing as the 11th St Bridges are being built by a foreign contractor.

by andrew on Feb 29, 2012 1:15 pm • linkreport

This thread has been hijacked. Buy America debaters, your obsessions have only very little to do with the crisis facing DC Streetcar.

H Street merchants and residents suffered an extended rebuild in order to get tracks laid. Now there are insufficient cars available to run on that line, due to a procurement snafu in which DDOT failed to read the contract it had signed when it purchased the first 3 cars.

The Anacostia line has been orphaned by the 11th Street Bridge snafu. No element of a Streetcar system can survive unless it links to a broader system. I heard no testimony whatever at that disastrous hearing about how the Anacostia line will link to the 37-mile system.

If there is a agreement on where most of the 37 miles of track are to be lain, I missed it. The connection from Anacostia to H Street will be along 8th Street, or will it? There will not be a Wisconsin Avenue, or will there be one?

There will be a new authority established that will extract "property value" windfall taxes from residents and businesses along the streetcar--what could possibly go wrong with that, and who might object strenuously?

There will be still another authority established that will design and/or operate the streetcar--anytime soon?

This whole DC Streetcar plan remains very half-baked, a little more than a year from its already-delayed start date.

If the H Street line never connects to Union Station, that's a problem, no? This article failed to note that in his testimony, Terry Bellamy said he "thought" the agreement to enter the parking structure at Union Station was still in place, but he could not say for sure because the person at Amtrak with whom DDOT was negotiating has retired. Huh? Therefore all progress on negotiations stops?

Proponents of DC Streetcar benefit from an article such as this one that exposes the incredible obstacles facing DC Streetcar and the absence of any real planning (outside OP's Land Use study). Reference to theoretical texts and academic studies about light rail do not substitute for a practical study designed for setting the strategy for this streetcar system in this city.

by Trulee Pist on Feb 29, 2012 4:58 pm • linkreport

Thank you for posting this, David.

Just wanted to add in light of the issues you raise here, streetcars in Anacostia is an obsolete make-believe fantasy land. Which will happen first Anacostia gets street cars or Poplar Point is developed? How about as it looks now neither will happen for years, if not decades!

Now only if the city's libraries could got so much attention....

by John Muller on Feb 29, 2012 9:10 pm • linkreport

I did not understand how Tax Increment Financing for DC Streetcar, proposed by David Alpert and the downtown BID guy at this hearing, was going to work. That's why I commented:

There will be a new authority established that will extract "property value" windfall taxes from [current] residents and businesses along the [proposed] streetcar--what could possibly go wrong with that, and who might object strenuously?

Now I have read this excellent article, http://onforb.es/xuHBr2 which explains how TIF works in Chicago to bring nearby residents on-board for new development and defeats NIMBY-ism.

If I understand the Forbes article by Josh Barro, TOTAL property tax collections for DC should be frozen in the Streetcar TIF areas. New development will come along the streetcar line, inevitably pushing TOTAL revenues collected within TIF boundaries beyond the TOTAL lid for the TIF. That encourages local businesses and homeowners to support the development, as the new revenues beyond the TOTAL lid can be captured and spent on local benefits and amenities. My property tax won't go up with a streetcar, it will go down (or, at least, my taxes are frozen but new TIF revenues pour into my community in the form of benefits and amenities).

Unfortunately, what David is proposing is the opposite--make residents and businesses along the Streetcar TIF pay lots more now, to pay for building the streetcar they may or may not want in the first place. David writes:

Property owners could agree to a "value capture" system, where if their property increases in value as a result of the streetcar, some of that extra value goes back to the streetcar to pay for construction.

So nearby residents who already may have objections to putting the streetcar in their back yard now have another objection: They have to agree to higher property taxes in exchange for having the streetcar nearby.

Otherwise, as David writes, Want a streetcar sooner? Then work out changes to help pay for one. Don't want any change? Then maybe DC should put the streetcar elsewhere, at least for a while. To me, that sounds like a recipe for supercharging NIMBY opposition to the streetcar--I'm not sure I want it here, but if I get it here, my property tax goes up? Then I really don't want it here.

Maybe if the TIF for streetcars were designed properly, Chicago-style, it would work. What's been proposed here for Streetcar TIF, unfortunately, is as half-baked as most of the DC Streetcar "thinking."

by Trulee Pist on Mar 1, 2012 11:31 am • linkreport

@Trulee Pist

Your understanding of TIFs is a little off. Your property taxes will increase if your property value increases. The difference is that the amount that goes to the city remains the same, and all the money collected from increases goes only to projects in the TIF district the money came from.

E.g your property taxes are $5000/yr. The TIF is set up. Your property value increases and now your property taxes ar $5500/yr. $5000 of that goes to the city and $500 goes to the TIF fund.

by MLD on Mar 1, 2012 11:39 am • linkreport

"They have to agree to higher property taxes in exchange for having the streetcar nearby."

their property tax rates, IIUC would stay the same. What DA is suggesting is that some of the increased tax revenues from rising assessments would be dedicated to the street car, instead of general revenues. The chicago system gives property owners a windfall, since their tax payments are capped even as their home values rise - thats essentially a bribe to overcome NIMBYISM. It helps politically, but narrows the sources of funding, since it all has to come from new development. Plus in an area where home values were raising anyway, its a particularly big bribe, since in that case the street car means the property tax payments will actually be LOWER than they otherwise would be.

Thats even better than what fairfax county homeownersin places like Vienna and Reston will get out of the Silver Line

by AWalkerInTheCity on Mar 1, 2012 11:44 am • linkreport

@ MLD Obviously you did not read the Forbes article linked. In Chicago-style TIF, my property tax cannot increase, as TOTAL property tax collections in the TIF area are frozen (for 23 years!), as a bribe to me and fellow potential NIMBY current homeowners and businesses to sit down and shut up and let the development occur.

If as promised the streetcar brings new development to the TIF area, my property tax can only go down (or more likely, remain frozen while the TIF corridor enjoys a shower of benefits and amenities from property tax collections in excess of the TOTAL property tax lid for the TIF area).

This is not about extracting higher taxes due to increased property values from current homeowners and businesses. A TIF for streetcars set up your way would only increase the fervor with which current homeowners and businesses would oppose a streetcar, no?

by Trulee Pist on Mar 1, 2012 11:52 am • linkreport

@AWalker

Yes, Chicago-style, TIF residents enjoy a windfall. That's the bribe to get them to go along with the streetcar.

Do you want a streetcar or not?

by Trulee Pist on Mar 1, 2012 11:55 am • linkreport

@Trulee Pist
This is what the Forbes article says:
When a TIF district is created, the amount of property tax revenue that the district sends to the city is frozen for 23 years. Increases in property tax receipts are instead directed into a special fund that can only be used for projects within the TIF district boundaries—and new developments tend to mean significant increases in property tax collections.
(Bolding mine)

I don't think that describes your scenario. If everyone's property taxes stay the same, how the heck do they collect any more money for the TIF fund?

by MLD on Mar 1, 2012 12:03 pm • linkreport

"Do you want a streetcar or not?"

I want DC to build street cars in corridors where it makes sense (Im not certain thats the entire 37 mile network, but I'm pretty sure its a large portion of it) In order to do so, they need to overcome local opposition, AND to settle financing. To the extent those needs conflict, I'm not sure which way they should lean, or how far.

I think David As point is to use the prioritization as leverage - basically in areas that will drop opposition for a more reasonable bribe, go ahead first. Those who insist on the largest bribes will go to the end of the line. I'm not enough of a GMU "public choice" kinda guy to be sure that will lead to an optimal outcome, but it sure sounds practical.

by AWalkerInTheCity on Mar 1, 2012 12:12 pm • linkreport

If everyone's property taxes stay the same, how the heck do they collect any more money for the TIF fund?

DEVELOPMENT!

Imagine a graph with a line rising at a 45 degree angle, left to right. That's status quo increase in property tax collection and property value increases in the current crappy neighborhood.

Now thanks to this bribe, the revised line follows the 45 degree angle for a while *during contruction* and then when the new construction starts generating tax revenues, the line shoots up like a Titan rocket.

This DC Streetcar TIF plan is penny-ante. You're trying to redirect that 10% increase in my property value, at current property tax rates, to the TIF. Your plan does nothing to tamp down my NIMBY instincts.

Chicago-style is thinking big. Forget redirecting the 10% increase from the crappy houses of me and my neighbors. In fact, put a lid on TOTAL property tax collections for a long time. Thanks for the bribe, now I am on board for you building huge developments, streetcars, giant condos and office buildings, whatever you can cram into my TIF. By bribing me to keep quiet, development is enormously greater, and TIF collections are way, way beyond what you'd get by redirecting property value-driven revenue increases from my property.

Of course, for this to work as a way to *pay for construction* of DC Streetcar, you'd have had to thought of this years ago, and tipped me off to the bribe and why the bribe means I should support the streetcar. DC Streetcar proponents missed that chance.

In his testimony, David explicitly states that current homeowners and businesses should be expected to *pay* for the streetcar coming to their neighborhood. Bad sales job for the TIF.

by Trulee Pist on Mar 1, 2012 12:23 pm • linkreport

@Trulee Pist

You've offered nothing that says that individuals' property taxes stay the same and in doing some searching I haven't found anything about Chicago TIFs that says that property taxes do not increase for individuals. Can you point to me where it says in the Forbes article that individuals' property taxes won't increase? It only says that the amount the district pays to the city won't increase, and any increased get funneled to the TIF fund.

by MLD on Mar 1, 2012 12:29 pm • linkreport

@MLD Under both Chicago-style TIF and DC Streetcar TIF, the puny increase in MY tax bill continues, and is redirected a dribble at a time to a special fund (in DC, a streetcar fund). Penny-ante. Whats in it for me.

This is about salesmanship.

If DC Streetcar had come along 3 or 4 years ago and said, "We are freezing TOTAL revenues TO THE CITY from property taxes collected in the TIF corridor. If your home increases in value, any increase in revenues is held for streetcar development and benefits and amenities in your own neighborhood. But the real money will come when development occurs along the streetcar line. ALL the property tax revenues from that development remain in the TIF corridor..."

Well, sir, that's a pretty attractive offer. Much better than "people along the streetcar line have to pay for building the streetcar, or we'll build it somewhere else."

by Trulee Pist on Mar 1, 2012 12:41 pm • linkreport

trulee

you make two assumptions

A. That the increase in residential property values near a street car will be minor - no more than 10%. Im not convinced that will be the case everywhere

B. That what is at issue is purely SFH or modest TH residential districts - there is a street car line proposed, IIUC, for the high value parts of K street. Thats mostly built out, but those office buildings could increase significantly in value, and that could amount to a very large portion of the increased value along that line. Indeed, to the extent we build lines "for transportation" - IE in already built out areas - that increase in value will be decisive.

by AWalkerInTheCity on Mar 1, 2012 12:47 pm • linkreport

I think that was CM Cheh's point. This is going too slow. We've missed the chance to capture the puny revenue increases along H Street NE due to increasing property values.

My additional point to CM Cheh's is that there was a chance to turn around NIMBY thinking along, for instance, the 8th Street streetcar corridor (and Hine Jr High development along that corridor, while we are at it) by failing to promise that ALL incremental tax increases due to an 8th Street Streetcar and/or Hine development will remain in the neighborhood for benefits and amenities in the neighborhood, at least for the duration of the 23-year bribe to the neighborhood.

Don't like the bribe? Then suffer the NIMBY backlash.

by Trulee Pist on Mar 1, 2012 12:48 pm • linkreport

This is about saying to the neighbors, "We are going to build great things, benefits and amenities, from a 23-year stream of property tax revenues on new development in this TIF corridor. All the taxes on the new guys go to neghborhood benefits and amenities during the 23-year freeze on tax revenues TO THE CITY from development in your TIF corridor."

Cool.

As the late, great Senate Finance Committee Chair Russell Long liked to say, "Don't tax you, don't tax me, tax that fellow behind the tree."

by Trulee Pist on Mar 1, 2012 12:55 pm • linkreport

The city doesn't enjoy the windfall until Year 24. For 23 years, all the windfall stays in the neighborhood.

Again, better than telling the neighbors, "You pay for the streetcar in your neighborhood." That's NIMBY bait.

by Trulee Pist on Mar 1, 2012 1:01 pm • linkreport

As the late great Kim Jung Il once said, "the more you think I'm insane, the more I can get for making concessions"

by AWalkerInTheCity on Mar 1, 2012 1:01 pm • linkreport

There are two elements that are getting confused here.

TIF does not increase the tax rate. It is merely a dedication of future projected revenue growth to a fund. This does not mean that a property's taxes will remain the same in terms of the amount paid, merely that the rate will be the same and as the property value increases (and therefore the annual payment also increases), a portion of that new revenue will be dedicated to a fund.

A special assessment is, in effect, an actual increase in the tax rate. The NY Ave Metro stop's private contribution was funded via a special assessment - based on terms agreed upon by the landowners.

Both are methods of value capture. Both present different challenges to cash flow, bonding, etc.

As for bribing local residents to subdue NIMBY concerns, I don't see any evidence of that in the Forbes article. Instead, there is political influence due to the TIF revenue that must be spent in a given area, and the growth projections that need to be met to actually grow the values so that TIF works. Therefore, Chicago Aldermen aren't as swayed by the NIMBY concerns of their constituents because they see the real cost of those NIMBY concerns.

What I think Trulee is actually discussing (and has been discussed academically, but not to my knowledge in practice) of using TIF to pay off homeowners.

Say there's a project that will add value. You slap a TIF on it, and 25% of the increment goes to finance the project, while another 25% goes to property tax rebates for individual homeowners. This paper discusses such a framework:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1990353&http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1990353

Call it a bribe if you like, but when homeowners are complaining about impacts to their property values, money talks.

by Alex B. on Mar 1, 2012 1:04 pm • linkreport

I'm thinking a giant ice skating rink IN THE SUMMER at Eastern Market, converted into a giant heated swimming pool IN THE WINTER. Paid for by new developers who are not here now, but will be here soon.

Junk like that. Bribes.

by Trulee Pist on Mar 1, 2012 1:04 pm • linkreport

and the problem with bribes to overcome complaints (vs proffers to meet objective impacts) is that they create an incentive to lodge complaints, even against a project one likes, simply to induce a bribe. Thats okay, as long as their is some risk to bluffing like that - which is why anything that amounts to a bribe has to balanced against the threat to take the project (and any bribe) elsewhere.

by AWalkerInTheCity on Mar 1, 2012 1:09 pm • linkreport

David's dedication to a 'greater Washington' is admirable...and appreciate his good efforts through this website...but the suggestions are ALWAYS about more and more government, subsidies, special taxes, etc.

Funny how the street car systems of old carried lots of passengers but not a single one was ever used by a local government to blackmail businesses along the lines to provide a kickback so the city could hire over-paid union employees to run a subsidized streetcar system.

It's obvious this whole program has been a disaster since the beginning...which is sad...because I do feel some of these streetcar systems or light rail can be helpful. This one won't be. It's already a mess because it is dictating from on high. These programs need a groundswell of support from the citizenry not the government...then and only then...will they be used.

Right now you have inadequate streetcar stock that will roll back and forth to nowhere. What a waste.

by Pelham1861 on Mar 2, 2012 5:14 pm • linkreport

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