Friday, February 3, 2012

Did you know?

Fourteen percent of Washington, D.C.’s Metrorail line extension to Dulles Airport will be funded through a voluntary special assessment on business and industrial property owners.

Innovative Financing for Transit: Special Assessment

Construction of the Dulles Metrorail extension at sunrise in Tysons Corner (Metropolitan Washington Airports Authority)

Transit agencies across the country are facing severe budget challenges as infrastructure ages, demand increases, and new federal funding commitments are uncertain and even on the decline. To supplement fare box revenue and other traditional funding sources, one strategy to generate revenue for transit and improve the surrounding community is value capture.

Value capture mechanisms are a type of public financing where increases in the private land values generated by nearby public transportation investments are “captured” to repay the cost of the public investment over time. Because transit investments increase surrounding land values, it is sound policy to use value capture strategies to pay for them. Numerous types of value capture strategies for transportation exist. The last edition of Talking Transit featured tax increment financing; this edition explores special assessments.

A special assessment is an additional tax or assessment on the full value of a property, usually paid by property owners within a defined Special Assessment District that benefit from a specific public improvement. It can be used to fund a wide variety of infrastructure improvements including transit.

One of the nation’s largest projects to use special assessment financing for transit is the Dulles Metrorail expansion in the Washington, D.C. region. The Dulles Corridor, located in northern Virginia west of the nation's capital, is home to Dulles International Airport and Tysons Corner, a massive retail shopping and employment center. Projections show that over the next 25 years, the population in the corridor will grow by 45 percent and employment by 63 percent. The increases in travel demand that correspond with this kind of growth will strain the already overburdened traffic system, resulting in more gridlock, environmental degradation and threatening local economic opportunities and livability.

As part of the solution to maintain the corridor’s quality of life and regional competitiveness, the Washington Metropolitan Area Transit Authority (WMATA) is constructing a 23-mile extension of the existing Metrorail system to Dulles Airport, serving Tysons Corner and the communities of Reston and Herndon, two of the region’s other major employment centers. 

The extension is estimated to cost $5.2 billion and will be built in two phases. Because the rail expansion will benefit businesses in the corridor and their customers, commercial landowners petitioned to establish a special assessment district to fund the local share of Phase 1 and 2 construction. During Phase 1, commercial and industrial (not residential) real estate in the assessment zone around Tysons Corner will be charged an additional 22 cents per $100 of assessed value (in addition to normal property taxes). There is a $400 million cap on the amount that can be raised through the Phase 1 special assessment. Phase 2, which will build the line through Reston and Herndon and to Dulles Airport, will be funded in part with a special assessment of five cents per $100 of assessed value in the Phase 2 zone in 2010, rising to 20 cents per $100 of assessed value in 2013. The Phase 2 special assessment is capped at $330 million.

Importantly, these funds generated by the special assessment districts in Phase 1 and 2 will cover the local match needed to leverage federal dollars and service debt.

Dulles is not the only special assessment district for transit in the D.C. region. The city implemented a special assessment district around the New York Avenue metro rail station, contributing $35 million of the $110 million total cost. And it paid off: The area was transformed into a vibrant neighborhood with mixed-use housing, shops, restaurants, and a farmer’s market. Assessed value of the area increased from $535 million in 2001 to $2.3 billion in 2007. More than 15,000 jobs have been created and $1.1 billion in private dollars invested. Realizing the economic benefit they would receive from the investment in the South Lake Union Streetcar, 750 property owners in Seattle approved a special assessment district to provide $25 million, half of the total capital costs to build the streetcar. Construction of Portland’s initial 4.8-mile streetcar totaled $87 million, most of it coming from local funds including $14.6 million in a one-time special assessment imposed on businesses within the district. Interestingly the additional levy assessed for each property was defined based on their size and proximity to the line. The availability of local funds meant construction moved quickly avoiding the lengthy federal funding process.

Illinois law permits special assessments on property taxes via two mechanisms, special service areas (SSA) (35 ILCS 200/27) and special assessment districts (SA) (65 ILCS 5/9). Both allow a governing body to levy additional real estate taxes to fund additional services in a defined area rather than the entire community. The establishment of an SA in Illinois is a complicated process in which a municipality must demonstrate a specific benefit to property owners who will pay the assessment. SAs are most often used to finance debt service on bonds used to pay for the cost of public infrastructure in new developments.

To establish an SSA a local government must notify all affected taxpayers of the proposed SSA ordinance by mail and hold a public hearing. Land owners in the proposed SSA can defeat the ordinance by submitting a petition within 60 days of the public hearing signed by at least 51 percent of registered voters and 51 percent of property owners residing in the proposed SSA. If no opposition arises, the ordinance is adopted by a simple majority vote by the local governing body. The City of Chicago contracts with local nonprofits to manage SSAs. There are 44 active SSAs in Chicago with budgets ranging from $10,000 to $2.7 million and an average budget of $540,000. Funds are used to finance a range of projects from streetscaping to planning.

During a time when our cash-strapped transit agencies are searching for ways to stretch every dollar – and experiencing increased demand for their services - special assessment districts along transit corridors are an innovative financing strategy. Examples from across the country prove that homeowners and businesses will pay more for access to transit in their communities. Locally, the Regional Transportation Authority has offered some suggestions on using special assessments to fund transit station development and transit-oriented development through the creation of special “corridors” along a transit line. The Chicago Metropolitan Agency for Planning also has called for pursuing this strategy in its GOTO 2040 comprehensive regional plan for the Northeastern Illinois. 

MPC Headlines

Value capture case studies: What is value capture?
With the advancement of the federal long-term reauthorization stuck in Congress, and no increase for traditional transportation funding sources like the gas tax on the table, it’s up to states, cities, and regions to think differently about how to fund transportation projects. One tool in the transportation funding toolbox is value capture.

Value capture case ctudies: San Francisco’s Transbay Transit Center
Once constructed, the new $5.2 billion Transbay Transit Center in downtown San Francisco will accommodate more than 100,000 passengers each weekday and more than 45 million people per year, adding an estimated 10,000 daily transit trips in the Caltrain corridor by 2030, about 80 percent of which will be diverted from auto travel. The final environmental impact statement estimates that the project will reduce vehicle miles traveled by 260,000 miles per day and reduce emissions by 28,200 tons per year. The project will generate more than 125,000 construction jobs and 27,000 permanent jobs. $1.4 billion of the project is funded through tax increment financing.

MPC releases 2012 policy agenda
With the U.S. recession officially over, cities and regions, including metropolitan Chicago, are confronting a new economic reality. MPC—which, for 78 years, has been dedicated to helping shape a sustainable, prosperous and equitable metropolitan Chicago region—has set forth an ambitious 2012 policy agenda, with tangible ideas to bolster the region’s economy. 

Placemaking Case Study: Westhaven Park Community Garden
Placemaking Principle #9: Start with the petunias. Complete with night-light installations and fruits and vegetables of all kinds, the now green 100’x130’ lot in the middle of the Westhaven Park housing development represents the fundamental concept and purpose behind a successful community garden. 

House transportation bill to be marked-up today
U.S. House Transportation and Infrastructure Committee Chairman, John Mica (R-Fla.), has released the House Republican's $260 billion five-year transportation proposal entitled the American Energy and Infrastructure Jobs Act.  The transportation and infrastructure portion of the bill will be marked up in committee today.  While the House bill does maintain current funding levels, it is a major step away from the multi-modal, performance-based program this country needs.



CTA updates train tracking feature
CTA Train Tracker — the answer to "Where's my train?" — is marking its first anniversary, and transit officials will flip the switch on a new text-messaging feature.

City launches winter snow plow tracker web site
The city announced the launch of, a website that will help Chicago residents with winter preparedness, including a GPS function to track snow plows and a program to help share shovels.

Forest Park adopts active transportation plan
The council approved a resolution to adopt the Forest Park Active Transportation Plan, developed by the consulting firm Active Transport with grant money from Cook County Model Communities. The 60-page plan provides a list of short- and medium-term recommendations to encourage walking and biking in the village.

Grand station rehab was worth the wait, aggravation
The city finished its three-year rehabilitation of the Red Line's Grand/State station on time in December. Mayor Rahm Emanuel made it official at a press conference at the busy River North station. It took about $74 million and various detours and traffic configurations at Grand and State, but the wait was worth it.

Illinois Tollway Awards More Than $60 Million in Construction and Construction Management Contracts for 2012 Season
The Illinois Tollway Board of Directors today approved the award of five new construction contracts and three new construction management contracts worth nearly $61 million to jumpstart the agency’s 2012 construction season.

City sets timetable for $212 million in new downtown CTA stations
Construction will begin by April 2013 on three new or totally rebuilt Chicago Transit Authority train stations downtown, officials announced with some pretty big smiles. At a news conference to officially reopen the rebuilt Grand Avenue Red Line subway station, Mayor Rahm Emanuel and others unveiled the timing and other details on $211.6 million in other projects


House Republicans to unveil transportation bill
House Republicans will present a long-awaited plan to fund the nation’s transportation system on Tuesday, a proposal that would shift more decision-making authority to state governments, dramatically reduce the time spent on environmental reviews and encourage private companies to expand the highway system by building toll roads. 

Transportation, jobs, and the 2012 State of the Union
In his State of the Union address, President Obama laid out his blueprint for an American economy built to last, his ideas for repairing and upgrading our transportation system. He also outlined plans for putting workers in the hard-hit construction industry back on the job.

U.S. Transportation Secretary LaHood Announces $77 Million in Transportation Research and Education Grants
U.S. Transportation Secretary Ray LaHood announced $77 million in grants to 22 University Transportation Centers (UTCs) to advance research and education programs that address critical transportation challenges facing our nation.

Commuters Who Resolve to Save Money in 2012 Take Note: Transit Riders Save More As Gas Prices Increase
Public transit riders take advantage of savings as gas prices rose nearly 10 cents in the last month, giving those who switch from driving to taking public transit in the new year the opportunity to save even more. According to the American Public Transportation Association’s (APTA) January Transit Savings Report, individuals who ride public transportation instead of driving can save, on average, $816 dollars this month, and $9,790 annually.

Alabama governor says he plans to ask voters to OK borrowing $2 billion for roads, bridges
Gov. Robert Bentley said today he intends to seek voter approval to borrow maybe $2 billion to repair roads and bridges.

Federal transportation video highlights Utah's I-15 project
A new Transportation TV video released today by the American Association of State Highway and Transportation Officials, Innovation in Motion, Utah DOT's I-15 CORE Project, showcases the Utah Department of Transportation's cutting-edge solutions to deliver a 24-mile, $1.725 billion interstate improvement faster, safer, and cheaper.

SunRail construction to kick off Jan. 27
Shovels are set to hit the ground for Central Florida’s commuter rail. Construction for the first phase of the $1.3 billion, 61-mile SunRail project is scheduled to begin with an official groundbreaking ceremony on Jan. 27.


Sweden: Bombardier Partnership Project Outlines Green Train of the Future
New generation trains running on existing track can easily combine higher speeds, lower energy consumption, reduced noise and lower costs. These are the findings reported by Swedish researchers in Stockholm after concluding a four-year project, with Bombardier Transportation as one of three major partners.

KazakhstanA Beautiful, Futuristic New Subway System
Just last month, Kazakhstan became home to the newest subway system in the world. Construction on the Almaty Metro in Kazakhstan began in the Soviet era in 1988. After the fall of the USSR, the massive project came to a halt. The dream of an 8.5 km underground railway finally resumed track in 2005, and on December 1, 2011, the Almaty Metro opened its shining glass doors to the city.

Canada: A new Toronto transit proposal delivers more bang for the $8.2 billion buck
A new transit proposal from TTC chair Karen Stintz that would kick-start construction on three new transit lines using already-committed provincial dollars is gaining support. The plan would provide transit to tens of thousands more TTC riders than the existing understanding between Queen’s Park and Mayor Rob Ford.

Bangladesh: Bus Rapid Transit’ soon in city
Construction works of 20-kilometre ‘Bus Rapid Transit (BRT)’ from Airport to Gazipur is going to be begun soon involving $255 million in bid to curb the traffic jam in the city.

Dhaka: Construction works of 20-kilometre ‘Bus Rapid Transit (BRT)’ from Airport to Gazipur is going to be begun soon involving $255 million in bid to curb the traffic jam in the city. The decision came from a meeting between of Communications Minister Obaidul Quader and a delegation of Asian Development Bank (ADB) at his office in the city.

China: Xiamen's public bike-sharing system to be launched this year
Xiamen is planning its own public bicycle rental system and the first one may debut in the Yundang Lake area this year according to a government online interview on 13th January, reports Xiamen Daily.

South Africa: Rustenburg joins rapid transport race
In recognition of the need for highly specialised skills to ensure the success of the Rustenburg Rapid Transport (RRT) project, the Transport Rustenburg Incubation Programme (TRIP) has been launched for local graduates to receive mentorship and formal training that will enable them to actively manage the future RRT system.

Metropolitan Planning Council
Talking Transit is sponsored by Bombardier

Tell Congress to Support the Commuter Transit Benefit

Urge Congress to take immediate action to pass legislation restoring parity between transit and parking commuter benefits!

The monthly limit of the transit portion of the commuter benefit was reduced from $230 per month to $125 per month on January 1, 2012, because Congress failed to enact legislation to extend the higher level.  In the meantime, the monthly limit for the parking portion of the commuter benefit increased from $230 per month to $240 per month due to an automatic cost of living increase. 

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