Arlington Scraps Streetcar Projects

Rendering of a Columbia Pike streetcar.

Rendering of a Columbia Pike streetcar.

by James A. Bacon

Arlington County’s surprise decision yesterday to cancel proposed streetcar projects for Columbia Pike and Crystal City should not be seen as a rejection of the concept of streetcars but a rejection of the funding mechanism chosen by the board that asked taxpayers to bear the fiscal risks while property owners enjoyed the benefits.

Arlingtonians, who voted John Vihstadt to the County Board earlier this month in an election that had become a referendum on the streetcar projects, questioned whether the $550 million price tag justified the purported economic development benefits. Board Chair Jay Fisette cited the decisive election results in canceling the project for which he and other board members had spent 15 years shepherding through the planning and fund-raising process.

One big problem for streetcar backers was defending the Columbia Pike project in the face of escalating cost estimates. The $358 million price tag was up $48 million from a federal cost estimate last year and up $100 million from a previous county estimate. County officials, with years of planning invested in the project, maintained that the benefits still outweighed the costs. A substantial majority of citizens were skeptical, and they said the county’s transportation needs could be met more cost-effectively with improved bus service.

Streetcar advocates said that the investment in fixed streetcar assets would encourage property owners along Columbia Pike to invest in upgrades and infill along the route. In theory, rising property tax revenues would more than offset the county’s $170 million share of the capital costs as well as ongoing operating costs. Moreover, the county’s share of the funds would come from a special commercial real estate tax dedicated to transportation projects.

That is not an unreasonable argument to make, although the forecast of rising property values does require a leap of faith. In effect, county officials were willing to to invest local funds for both streetcar lines in the belief that the revenue from increased property values ultimately would exceed the costs. In effect, they were saying, “Trust us. Build it and the development will come.” It became harder to maintain that the project would be a net fiscal benefit when the estimated cost jumped $100 million.

County officials could have changed the political dynamic if they’d embraced the logic espoused here on Bacon’s Rebellion — moving to a system in which users and beneficiaries pay for the project. In previous columns, I advocated funding the project through a special tax district on property owners along Columbia and a separate district in Crystal City.

If the Columbia Pike streetcar will do as much to stimulate increased property values as claimed, the property owners along the route will be the main beneficiaries. Why should property owners enjoy a massive windfall without contributing anything directly toward the project? (The special commercial tax that would pay for the project comes from all over Arlington, not just the area affected.) If property owners believe that the value created would exceed the projected cost, they should be willing to bear that cost themselves. The county could add sweeteners in the form of increased density allowances, as needed. Using special tax districts to finance the streetcar projects would place the burden and the risk where it belongs: on the property owners who collectively stand to gain hundreds of millions, if not billions, of dollars in economic value, not the general taxpayers.

If the County Board had structured the deal this way, taxpayers would have had no cause to bellyache. The projects never would have been politicized in the way they were.

Of course, structuring the projects around special tax districts would create a political risk that property owners would not support them. But if the chief beneficiaries refused to support the project, what signal would that send? It would send the signal that the projects won’t have the wealth-creating effects claimed for it, that the projects cannot be economically justified, and that the projects shouldn’t be built.

Instead of giving up,  the Arlington Board should restructure the deal as a special tax district in which the local funding share is paid for by property owners affected by the project (rather than commercial property owners throughout the county). If the property owners bite, they’ll have a project. If the property owners balk, then it’s time to acknowledge that the putative benefits aren’t there.

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6 responses to “Arlington Scraps Streetcar Projects

  1. My first thought in reading this was to think about how some highway projects are thought of in the same light with the same disconnect between who pays and who benefits.

    Then I think back to how the railroads were created in this country – with the govt giving them land and money to build the rail – in return for the govt to ultimately get it’s money back from taxing resulting economic activity.

    Think of the US AID highways – the ones that are signed as US as in US 50 or US 29 – and how when Congress was developing the law, setting up funding, and determining what roads would be so designated – that cities across the US lobbied intensely to have those roads go through their city.

    I agree with Bacon’s idea of a transportation district but in Va – you have to get 51% of the property owners inside the drawn district boundary to agree which it looks like the property owners are not willing to put their money where their mouths are ….

    we have transportation districts down our way that were required in return for approval of large mall projects.

    we should keep in mind that transportation districts are little more than having the businesses inside of those districts paying a supplementary tax – which they, in turn, obtain by increasing the price of their goods and services so that ultimately it is the the citizens who buy from businesses that are funding the taxes.

    The other option would be a TIF district which is not that different in functionality – supplemental tax – it alls gets retained for use in the district.

    Finally, to also point out that VDOT in it’s new prioritization process – also considers economic development.

    Let me also say that Jim complains about cities “restricting” development which in turn makes housing less affordable.

    Is there a link between things like street cars and affordable workforce housing? Should there be?

    what is the proper role of govt in these issues?

  2. Jim, I knew personally a commercial property owner who had extensive holdings near (enough) to the Silver Line stations that he was clobbered with significant property tax increases to help pay for the construction of the line (I use past tense because he died before the first segment was completed).

    This was, of course, in addition to the greatly increased tolls on the Dulles Toll Road.

    He was extremely bitter about the entire process, and felt that a rail transit line would not in any way benefit him as a property owner in Fairfax County.

  3. Let me caution against drawing strong conclusions for anybody else from the Tempest in Arlington’s Trolley Tea-Pot. Our situation was one of remarkable incompetence from the trolley advocates, several other things going on in the County (a gold plated swimming venue contemplated, transparently about the DC bid for the Olympics rather than about neighborhood needs, a staggering failure to plan for school expansion needs, AND a proposal to convert popular park space to affordable housing) which knocked a whole lot of habitual Dem Sample Ballot voters loose from their usual inclinations and towards anybody else.

    The really big problem which was specific to the trolley proposal is the inability to have a dedicated lane, rendering the thing vulnerable to any stopped Fed Ex truck or donut-seeking cop. So for other communities’ trolley proposals, dedicated lane is something to think about. But the other stuff has to do with political malpractice by our Board majority, and is not really transferable.

  4. Spending hundreds of millions of taxpayer dollars on transportation for economic development is the functional equivalent of Rachel from Credit Card Services. It’s generally fraud. Builders should make profits from constructing high-quality buildings. It’s outrageous for taxpayers to fund transportation facilities that allow landowners massive increases in density. The beneficiaries of the added density should pay the lion’s share of the costs of the new or expanded facilities. Taxpayer subsidies are wrong whether Democrats, Republicans or both are involved.

    And Dave Schulz is correct. What good is a trolley or BRT without dedicated RoW?

  5. Pingback: Skeptical about Streetcars? You’re a Racist! | The Antiplanner

  6. Pingback: D.C. Streetcar: Follow Arlington’s Lead

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