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ChineseNeed $5 billion for subway? Here’s how.
[tags]los angeles, purple line, beverly hills, santa monica, los angeles times[/tags]
Credit: FredCamino
Developer Ken Kahan may have a way. He suggested to the Los Angeles Times’s Steve Hymon to use property tax increment financing which would pay for a subway construction bond. It was the second item, preceded by Los Angeles Councilman Tom Labonge’s frequent travel schedule.
Kahan, the president of California Landmark Group, suggested this method after purchasing land in West L.A., hoping to turn it into a condominium. This is currently used by redevelopment agencies, but laws would have to be changed to allow development to fund a future rail line.
It’s not easy to explain, so here’s a chunk of the article:
When those units are sold, Kahan expects the building will generate about $2 million in property taxes annually. Under his plan, the overall increase in property taxes would go to a fund, which in turn finances a bond to pay for the subway.
…
The downside is that the plan depends on continued turnover of properties along Wilshire and will likely invite critics who say it will bring too much density and redevelopment to Wilshire.
“Forget the development, it’s going to happen anyway and you might as well use the increment for what people are crying and screaming about,” Kahan said, referring to the Westside’s constipated streets.
See also:
- Bottleneck Blog: Subway to Sea: Show me the money!
- MetroRiderLA: Woo hoo
Discussion
Both comments and pings are currently closed.
Please keep discussions civil: exercise Troll Controll.
$5b bond. Annual servicing @ 4.5% triple tax free is $250m per year. They’d need about $300 billion in added taxable property within the zone. The largest the potential zone could be extended would cover approx 4 sq miles. Call it 3000 acres. Added value to pay for the subway $100,000,000 per acre. Want to go hog wild and change all the rules? Fine. TIF everything within a full 1/2 mile of the corridor and not just the usual 1/4 mile from stations. You still cannot get below multiple tens of millions of dollars per acre in improvements necessary for TIF to work. Math is hard, transit math is so much more pliable.
An email asked. TIF is Tax Increment Funding. The subway needs to come from increases in the tax base not the existing tax base. This makes for an interesting problem if property starts selling for lower.
Still, no responses? Crickets chirping? Is there a math error? Okay then adjust to be 5.4% double tax free and $6.5 billion and smaller cachement area.
I don’t think this measure was seriously intended to carry the entire $5 billion price tag, but instead as a means of offsetting that cost. As is the case with previous and current rail projects, the brunt of the cost will (hopefully) be borne by standard transportation initiatives at the county, state, and federal levels. Another option for raising money is to design future stations with commercial space, which the MTA could sell in advance. Many European metro stations have gigantic underground shopping areas at certain busy stops.
Rob, I can’t help but wonder why you still live around here. While everyone else is asking what it will take to get a subway built, you seem to be the only one concerned with decrying “transit math”, most of which you conveniently distort. Perhaps you should move a few miles up the coast to Santa Barbara, a town whose “death before growth” philosophy makes for a city where even doctors qualify for affordable housing. Or better yet, move to Sao Paolo. That way, absolutely none of your money would go to that silly Wilshire subway, and you could commute by helicopter.
Rob, can you come up with a formula to raise $5 billion, with all your excellent math skills?
I am just curious what would happen if we had you on our side, and you came up with creative ways to get the Red Line built, instead of shooting down everyone else’s ideas. Maybe they are dumb, half-brained schemes, so show us how it should be done.
I don’t shoot down ideas. I analyse them. I would most certainly use TIF as part of financing a Red Line to the sea. I would also use A & C money and promote a closed end single use county bond initiative. A lot of Da Governators transportation bond money is unclaimed. I’d also “steal” gobs of cash from the very first Prop 5 but that’s an esoteric issue. I’d co-opt a chunk of the transportation bond with legislative wording about rail proportions and then end-run the CA-HSR people who are in disarray. I’d form a public corp to put the Moscone Center or South Boston Trade Group to shame and propose a Santa Monica/Venice coastal destination venue. Federally I’d fire half our lobbists and then make it clear to our Ds in Congress that it is bacon time. 19 of the last 20 years CA has been on the short end of the Federal balance of funding. We don’t have anything like Tip O’Neil but we have numbers. I’d use EPA standards to convince the3 Feds that a showcase is the path of least resistance rather than risk losing decades of their creeping increase of authority in a power showdown they might lose in the courts. I’d use that to basically disenfranchise any potential NIBY objections by forcing any complaints to the Federal Courts where the expense and delay will discourage half and another 1/4th will be dismissed and the rest will be discouraged and too late.
Okay, with politics and funding secured it is time to build the sucker. The engineer in me says cut’n'cover a lot more than is envisioned in a serial fully disruptive fashion at the same time pushing inland from the “Rand” terminus by boring. Let the costs determine the meet up. Cost control and in the spirit of the Transcontinental Railway.
Any questions?
Well thought out, but I would recommend against the cut and cover method being used at all. I used to wonder myself why we couldn’t use that method, if it was good enough to use in New York City.
Well, it was 100 years ago, and they used immigrant labor that they paid almost nothing, and dozens of laborers were killed getting that first IRT line built. So. Can’t do that these days.
Next, the tubular tunnels of the deep bore method are better able to withstand earthquakes than the square tunnels of cut-n-cover. Because, 1, they are deeper, and the earthquakes are less prone to cause damage, and 2, they are circular, and the earthquake shock waves don’t have any flat surfaces or corners to grab on to on their journey from deep underground to the surface. They just bounce off the round tunnel walls and continue in another direction.
I admit that the station boxes do have corners and flat surfaces, which would be more vulnerable, but in a deep-bore tunnel method, the station boxes represent only about 1-2% of the total subway system, 98% is round tunnel walls.
It means less convenience, going further underground on longer escalators to get to the trains, but makes the system more durable in the long run. Of course, in New York, they don’t have to worry about earthquakes.
The MTA should allow vendors to rent space in their stations, just as they do in Russia and other Europeans countries. It won’t generate $5 billion, but this agency should be doing everything it can to get anything it can. This would be a start — and a start that could be implemented in a matter of months.
Scott, cut’n'cover doesn’t imply square tunnels. Part of my reasoning has to do with rebuilding intersections and not just cost and speed. I didn’t mention it but part of the bone to mortorists would include several critical flyover intersection improvements as part of the station ingress/egress construction.
To be honest round or square doesn’t matter as much regardless of conditions. We are really that much better at building stuff like this that it is a near thing based upon costs and time and not safety.
Oh and NY is not much less siesmicaly active than LA. That’s a different discussion. NY has some of the best ground. We have some of the shittiest ever discovered.
Rob, I have one more question. Do you want to see the Red Line built?
Bert,
With all due respect that’s an impossible question. The subway to the sea and the obvious connection to a Beach Cities Loop via the Expo Line are one of the few hail mary hopes for the Greater LA area to hold onto their world class city status. That becomes an almost religious question. I don’t think LA deserves the urban future the transit advocates envision. No. Let me correct. I don’t think LA deserves the future the transit advocates are pushing. They deserve what is promised and then some but I know that future is not available via the transit path.
Rather than ask me if I want the Red Line built ask if the public would have allowed the existing Red Line to be built if they were told the truth. You and every person who can look in the mirror will surely admit that fully informed not only would the subway not exist but that A & C would not have passed.
Bert. Don’t you see the problem? I just outlined how the Red Line could be built and in short order. I answered the question straight and there’s people out there trying to get their jaws off the floor. Be honest. If you could get a knowledgeable, intelligent, connected, respected, ambitious person with the kind of vision I outlined you can get your the Subway to the Sea. What do you get? Racist philanderers and petty barons who fill the ranks with mediocrity. The cost of short term poltics is long term greatness. LA unfortunately has the society it ask for rather than the society it deserves.
How about we just get the money we are supposed to receive from the state for transportation. Didn’t have increase the L.A. County sales tax in the 80’s for this purpose? Okay, reaise your hand if you voted for Arnold.
Rob Dawg wrote:
You and every person who can look in the mirror will surely admit that fully informed not only would the subway not exist but that A & C would not have passed.
But it did. The point is moot.
However, Robert and everyone here should follow the news in Charlotte. This is the most prominent case of a local transit sales tax being repealed.
The goal of the anti-tax groups supporting the referendum is to stop light rail construction and dismantle the starter line before it can even run. It’s not clear if that can be done, but the tax has also gone into expanding the CATS bus system, and the rollback would slash bus service. This would be also likely, since the service hours can be rolled back, and the buses and/or options sold to other transit agencies.
Zev’s law also originally intended to repeal the sales taxes. Lobbying by the munis stopped that, since they now pay for their bus service out of local return funds rather than their general fund.
Robert: You and every person who can look in the mirror will surely admit that fully informed not only would the subway not exist but that A & C would not have passed.
Chris: But it did. The point is moot.
Exactly my position. I was asked to build the subway to the sea. I answered honestly. Give me a little credit. Even better give me enough money and I’ll get it done. You need to ask a bunch of difficult questions. An internet idiot for free in a few minutes between clients managed to outline a plausible strategy for getting the bigger redder hole in the ground built. I didn’t even go into the megajuicy details to keep the politicos fat and happy.
On a non-transit basis I want Prop C up for a revote because of the sunset question. Even if I approved of how the money was being spent I’d still want a revote. I know it would fail. That’s not my concern so much as I am concerned for the Republic. That’s not hyperbole. We almost lost Washington in 1917. This time it might be a disenfranchised lower middle class withholding consent.
We cannot afford a subway to the sea. I was asked how to get one. That is different. Charlotte is doing to transit what Ventura County did to land use 8 years ago.
Rob, I don’t see the problem. Yeah, politicians are mediocre egomaniacs. What’s new about that? Do you think any other city in the world operates any differently? It’s all a big, dysfunctional mess just about everywhere you go.
Yet, things get built, and cities grow and change. I suspect your position is more ideological than pragmatic. That’s why I asked if you wanted to see it built. You’ve answered my question. Thank you.
Rob Dawg wrote:
That’s not my concern so much as I am concerned for the Republic.
New neocon talking point: America could have won the Iraq war if L.A. hadn’t built the subway.
Rob Dawg gets that last paragraph without any further explanation.
For everyone else, here it is.
Robert is concerned that the subway is the tipping point that would drive the nation into ruin.
Let’s play the Republic card.
The worst problems of the subway are fortunately behind us. L.A.’s economy has not collapsed, transit ridership is growing on all modes, and what I had predicted was going to happen in maybe 20-25 years — revisiting the subway issue and expanding it — happened in less than a decade. Heck, even bus service in the San Fernando Valley improved because of the subway, since so many buses do not have to be committed to getting across the Cahuenga Pass.
Meanwhile, the United States, under the stewardship of George Bush the Lesser, is presently and in the future going to face geopolitical, environmental and economic calamity of biblical proportions.
The Iraq war is increasingly looking to be the greatest military failure in human civilization. Militarily, financially, morally … failures at all levels. Read the work of William Lind, a civilian theorist of military strategy and prominent conservative transit advocate. He’s got something for every MRLA reader.
Economically, Bush oversaw the bottom fall out of the American marketplace. He’ll go down in history as having the most anemic economic tenure, but in the hopes of encouraging stimulus at any cost, allowed policies that will cause a global collapse of capital.
The world will see their economies suffer the same fate of Argentina’s.
Meanwhile, on the environmental end, the Malthusian crisis shifts from food to petroleum. OK, peak oil sounds so Kunstlerian, but our future will be shaped by dwindling supplies of a necessary commodity with no equal replacement ready to go. Every solution to the petroleum problem creates at least two additional problems. This does not include adaptations to natural or manmade disasters.
The political response to this has been to exacerbate these problems.
And, to come full circle, did not Bush carry Ventura County?
I don’t think that Rob is a reflexive Republican, at least not in the Bush mode. His reference to 1917 indicates an anti-taxation position. That was the year the income tax passed (some say illegally, and there is some merit to that claim).
I agree that taxation issues are the crux of our current problems, creating the inability to get things done, but my position is opposite Rob’s.
Prop 13 changed the relationship of the state to local government forever, forcing local governments to raise funds through sales taxes and user fees. The state usurped the power to decide property tax levies; took it away from the local governments. Now every locality wants a big box store to be able to pay the bills. Ugh.
I am not anti-taxation, but the methods used by the anti-tax folks over the years have made government more dysfunctional than it ever was. I don’t have a problem with the 2/3 majority required to raise taxes, but why the hell do we need all kinds of other restrictions, which just encourage mediocre politicians to try all kinds of funny business to get funds into public coffers.
The anti-tax movement should take a lot of credit for the mess we are in. It demonstrates a lack of faith in democracy.
1917 was the year the US entered WW-I which subsequently led to the “Bonus Army” march on Washington, D.C. in 1932. The parallels are almost irresitable.
That said I think you’ve misconstued the impact of Prop 13. Localities can eaise property taxes all the way up to 1% if they wish. at no time did Prop 13 lower revenues to municipalities. The local usurpation you speak of also happened in 1978 but via the courts and not the balloot box. That was when local funding of local schools under local controls was made illegal. At the time California had one of the best primary and elementary school systems in the nation. A scant 13 years, one cycle, later we had among the worst. We went from funding the best schools to rewarding the worst schools with the result of lowest common denominator outcomes. Sound familiar? Yep, transit funding.
California is so viciously overtaxed at every turn it is a wonder it still attracts. Unfortunately it also repels. Why so few Fortune 500 companies? And why are so many of them considering leaving? High taxes, poor schools, failing infrastructure, unresponsive government and misplaced priorities. The restrictions against additional taxation have proven inadequate so I’m not inclined to trust our leaders with any more lattitude.
Improvements in tunneling present alternative construction methods that limit surface-level disruption in severity and length of time. Large staging areas are still needed, and the largest court hurdle remains traffic impact and evening disruption. But cost, in many respects is more attributed to the lack of capital — rather, lack of impetus to leverage our assets to provide much needed capital up front. The level of funding necessary to build the Purple line extension in 2010 dollars ($2-3 billion) can only be found by grabbing from a much larger tax base. The more you take from, the more to whom you must give. To put it another way, easier to pass a $15 billion dollar bond for 5 lines than a $3 billion dollar bond for one.
And the benefits to air quality, the real estate market and traffic relief all justify the increased investment. We’re a polycentric city, so “lines” will never deliver the returns transit advocates continue to state (or more appropriately “hope”) they will. Only a “system” can. And system planning takes tools and vision that are seriously lacking currently.
In my opinion, it begins with replacing some of the politicians, but it’s easier to begin with replacing a lot of their staff. Despite traffic being the #1 voting issue in the region, the majority of even the best transportation deputies are turnovers from Caltrans and LADOT.
Improvements in tunneling present alternative construction methods that limit surface-level disruption in severity and length of time.
But not cost. Say it. Deal with it. This isn’t even criticism, it is analysis. This is exactly why I suggested a Rand Terminus run towards the Wilshire corridor for the modern deep bore technology.
There is another “train” of thought that suggests a “little” surface disruption is a good thing. For $200m extra we can incorporate 4-5 Wilshire flyovers that will do many times more to fix congestion than the subway itself.
“There is another “train” of thought that suggests a “little” surface disruption is a good thing. For $200m extra we can incorporate 4-5 Wilshire flyovers that will do many times more to fix congestion than the subway itself.”
We can fix the intersections while destroying the characters of the neighborhoods with the construction and operation flyovers.
Rob Dawg wrote:
That said I think you’ve misconstued the impact of Prop 13. Localities can eaise property taxes all the way up to 1% if they wish. at no time did Prop 13 lower revenues to municipalities.
Proposition 13 is a big contributor in making California business-unfriendly as you have described.
The problem with it was that it wasn’t anti-government enough. Prop. 13 only restricted revenues, it never mandated any dissolution of government. Ergo, local governments got more creative at generating revenue. Thus, the fiscalization of land use was born. Cities put sales tax generation at a high premium, thereby making business more burdensome for low-yield businesses.
The local usurpation you speak of also happened in 1978 but via the courts and not the balloot box. That was when local funding of local schools under local controls was made illegal. At the time California had one of the best primary and elementary school systems in the nation. A scant 13 years, one cycle, later we had among the worst.
The problems in schooling weren’t fiscal, but sociological.
You know, the b-word.
We went from funding the best schools to rewarding the worst schools with the result of lowest common denominator outcomes.
On the other hand, California also heavily subsidizes one of the finest higher education systems in the world.
How many places can lay claim to so many top-caliber private and public four-year schools? But the real gold mine is the community college system.
It makes a college education affordable to the masses, and the colleges have the added responsibility of fundamental education (i.e., ESL) and un-learning (to correct the damage caused by 13 years of public education).
Ironically, the California collegiate program is the best argument for school vouchers.
Yet it also explains why California is so darn expensive. It’s not the tax burden so much as it is the proven fact that higher education commands higher wages, thereby increasing prices for everything.
It’s rare when Coté and I agree, but his lengthy post on all the ways to fund a subway extension is very much on the mark.
Money is going to have to come from a variety of sources, not just for the Purple Line but for practically every major transportation infrastructure project from now on.
And personally, I think Henry Waxman needs to be our cheerleader in Congress to get as much federal funding as possible, because if it hadn’t been for his original meddling, that extension would have been built more than a decade ago, and (obviously) cost less than it will now.
“But not cost. Say it. Deal with it.”
Actually there are reductions in costs. In spite of increase in raw material cost, and cost of labor increases, the cost of tunneling has gone down considerably since ‘94 and ‘98 in this city and abroad, when considering inflation.
“For $200m extra we can incorporate 4-5 Wilshire flyovers that will do many times more to fix congestion than the subway itself.”
That’s a loaded statement. I’d suggest you expand on it so we can adequately respond.
Regarding the crossovers: you’re using freeway widening logic, the results of which are clear to whomever is willing to actually look. In the case of Wilshire, crossovers would simply relieve a bottleneck at an intersection(s) just to exacerbate the condition at another - both on Wilshire and the crossing streets.
Unless it results in wider streets - from the local circulators to the thoroughfares, at best, the benefit is to get cars to streets with limited capacity faster — shifting the gridlock, not eliminating it or providing an improvement in travel times or air quality, let alone land use capabilities - all things that justify investment in transportation infrastructure.
Everything has a capacity limit. The limits for 6-car subways are multiples greater. The more cars added (longer the platform and more portals) the wider the gap becomes.