Logic May Prevail in Tysons Tunnel Project

Zounds! I never thought it possible: A sliver of economic logic has entered into the discussions over how to finance the Rail-to-Dulles project — in particular, how to pay for the heavy-rail tunnel that everyone in Tysons Corner prefers to running above-ground. The Washington Post reports that the Governor’s office will receive a two-month study tomorrow by a panel of independent engineers and that a go/no go decision on the tunnel is imminent. Although digging the rail line for four miles underground would add $200 million to the $4 billion price tag of the entire Rail-to-Dulles project, it would contribute to the vision of Tysons as a walkable, urban-style business center.

Richmond is leaning toward the tunnel option, sources tell writer Alec MacGillis, which raises another question: how to pay for it.

The funding option getting the most attention, at least for now, is to increase the tax being paid by landowners along the Tysons portion of the line, who are contributing $400 million to the project through a special tax district. The landowners — the owners of shopping malls, office buildings and car dealerships, among others — agreed to the contribution partly because Fairfax zoning rules will allow many of them to build more densely once rail is in place.

The landowners are likely to gain even more from a tunnel, because an elevated track would be less aesthetically pleasing and would limit development along the route. That is why they are a natural candidate to contribute even more toward a below-ground approach, said Fairfax Board of Supervisors Chairman Gerald E. Connolly (D).

Some of the financing is anticipated to come from a special tax district already. But here’s the kicker, says MacGillis: “There is also talk of creating a second district that would apply only to those with land closest to the four planned stations at Tysons. The argument for the second approach is that those nearest the stations would be granted the biggest increases in allowed building density.” (My emphasis.)

Please forgive me for engaging in a little self-congratulation. That is almost exactly the logic I laid out in a column “Rail Rip-off” back in May 15! It is very, very encouraging to see public officials embrace the core principle that those who benefit from a transportation project are those who should pay for it, even if in a limited way.

No surprisingly, Macerich East Development president John Anderson told MacGillis that he is open to paying more for a tunnel. “We’d need to see the details … but . . . we would certainly give a tax district change our best consideration.” Of course, Macerich would go with the plan. The company is getting higher density and a Metro station out of the deal! Macerich would be willing to pay up a lot more than its share of just $200 million, I would suggest. Even with this deal, the state could be leaving a lot of money on the table. But it’s a step in the right direction.

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3 responses to “Logic May Prevail in Tysons Tunnel Project”

  1. Anonymous Avatar

    How about if we start with the core principle that those who DON’T benefit shouldn’t have to pay for it. That would let about 200 million people off the hook.

    Then maybe the people who do benefit will pay for more than in just “a limitied way”.

  2. red garland Avatar
    red garland

    Taxpayers should keep an eye out on this, from the Loudoun Mirror:

    “Kaine said last week that there ‘have been some discussions’ about easing the federal standards.”

    This translates to adding language to an Appropriations bill exempting Dulles Rail from minimum federal criteria that makes a project eligible for funding, including ridership projections and cost effectiveness.

    Sen. Warner already exempted Dulles Phase I once from cost effectiveness criteria…if they tunnel costs too much, someone will propose this option again.

  3. Toomanytaxes Avatar

    Jim, I suspect you are quite right when you state “Macerich would be willing to pay up a lot more than its share of just $200 million.” The Company’s land (Tysons Corner Shopping Center and some adjacent parcels) is zoned retail. Accordingly, absent a zoning change from the county, there is not much the Company could build.

    Similarly, the other 20+ requested amendments to the Comprehensive Plan submitted for Tysons request substantial increases in density from FARs of 1.0 and sometimes less to FARs of 2.0 to 3.5.

    What are such land use changes worth to the owners? Probably quite a bit of money. One would think that the landowners would be willing to pay a large amount towards construction of the rail extension. A lot more than is on the table now, I suspect.

    A potential fly in the ointment is the federal statute that requires specific cost/benefit showings for federal funding to be available. Any increase in cost pushes against federal funding regardless of who pays the cost increases.

    The Federal Transit Administration tightened its cost/benefit standard after the Dulles Metro proposal was filed. Senator Warner and Congressman Wolf added legislative language to preserve the old standard for the project on the ground that it would be unfair to change rules in the middle of the game.

    In May of this year, Congressman Wolf told his constituents that he would not intervene legislatively again by providing the project with an even less vigorous standard. He indicated that the proposal would rise or fall based on the standard in effect when it was first proposed. His position seems consistent. Whether rail boosters could obtain manipulative legislation without Mr. Wolf’s assistance is unknown.

    While many feel that the project without a tunnel would pass the FTA’s requirements, I sense that the proposal’s chance of success is less certain than boosters are ready to admit, especially as interest rates increase. Or, at least, that’s what local real estate interests opposed to the Silver Line have informed me.

    Adding the tunnel probably increases the likeilhood that the project cannot pass the FTA’s test. I suppose one option would be for the State and local jurisdictions to go it alone, but that would require an additional $900 M. Is that doable? I don’t know.

    As one who has strong concerns about the appropriateness of spending at least $4 B to build something that does not improve traffic congestion, but would trigger a huge increase in density at Tysons and nearby areas to the detriment of existing residents and their real estate tax bills, I nevertheless view this latest proposal for the benefited landowners to pay for the tunnel to be a positive development. It seems much more fair for those who would likely reap a financial windfall from the construction of the Silver Line to pay more for its construction.

    However, there still remains the issue of cost overruns. It is inconceivable that construction of the Silver Line, with or without the tunnel, will cost substantially more than what is now forecast. Who will pay the difference? At most, the feds will pay $900 M. The business interests may well pay more than $400 M, but I cannot imagine that their liability will not still be capped. That leaves only toll road users and local real estate taxpayers to fund the cost overruns. It’s clear that the General Assembly will not likely offer any tax dollars to fund Metro’s extension.

    Our elected officials, especially Governor Kaine, should be addressing this issue now. Who pays for the cost overruns?

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