Value Capture And Tax-Increment Financing Options For Streetcar Construction
D.C. Surface Transit commissioned the Brookings Institution to look at funding alternatives for a proposed streetcar. Brookings then subcontracted with Reconnecting America for assistance. Out of that collaboration came “Value Capture and Tax-Increment Financing Options for Streetcar Construction.”
The study shows it is hypotheticaly possible to forgo federal funding and fully pay construction costs ($140 million) using three value capture tools.
- $46.6 million of Tax Increment Financing (TIF).
- $46.6 million of a traditional special assessment district.
- $46.6 million from a “never-done-before” sharing of private property value increases.
The study draws upon the experiences of Portland, Tampa and Seattle in case studies undertaken by Reconnecting America. These case studies examined property value appreciation in the years following the streetcar line opening and the geography along the lines and at station stops which were affected by the streetcar opening.
Findings of the case studies, which appear in Appendix II of the document, should be of interest to those looking to develop streetcar lines through redeveloping and existing neighborhoods close to existing downtowns.
One key finding in these studies was that underutilitized land near transit can see phenomenal growth in value, but areas already built out might see increases, albeit less impressive. In underutilitized areas in Seattle, Tampa and Portland, property value increases in excess of 400 percent were common.
On the other hand, existing single family residential property values grew at a much slower rate than industrial, commercial or multi-family properties. As an example, in Portland's Pearl District, existing residential property values were less likely to see greater increases until after the streetcar had been in operation for a few years. This supports the hypothesis that existing properties see the value of the line after operations commence while developable land sees value increase after the alignment is announced.
The case studies also showed that commercial property does not increase in value in the same manner as multi-family and industrial property or undeveloped land. "After an initial rise for the first six years of Portland's streetcar planning and opening, [commercial property] values compared to the rest of the county leveled out showing an opposite movement from the residential properties discussed above," the report notes. This is similar to the situation in Ybor City in Tampa, where property values accelerated at lower rates than the rest of the county, proving that while the streetcars usually give property values a boost, that is not always the case depending on the local context.
Finally, the study shows that destinations have a major impact on the success of the system and improvements the addition of a streetcar can bring to a corridor.
"It can’t be expected for the streetcar to do all the work of rehabilitating a corridor and increasing land values. In Seattle, Portland, and Tampa many investments were made in infrastructure and planning for the line. And residents need to be able to use the line to get somewhere. Just putting a line in anywhere is not likely to replicate the development returns that each of these cities has realized. There needs to be value in the transportation also," the report concludes.