CRA Approves $8.4 Million for Streetcar
LA Streetcar Inc
Rendering of the proposed L.A. Streetcar project on Figueroa next to Staples Center
DOWNTOWN LOS ANGELES — Efforts to bring a streetcar back to Downtown L.A. stayed on-track this morning as the Community Redevelopment Agency approved $8.4 million in funds previously set-aside for the project.
Added to $1.6 million the agency had previously put into the streetcar effort and $1 million approved last week by City Council, the funds enable the streetcar project to complete environmental work and preliminary engineering. Metro has been contracted to manage the environmental process, and should be selecting a firm to perform to work this month.
Part of the money will go toward the creation of a Community Facilities District that will levy a special tax on properties near the line and help pay for both its construction and operation. L.A. Streetcar, Inc is in charge of planning for the district.
Like the assessment for a Business Improvement District, the levy would be added to property taxes.
The vote to create the district, however, is most likely to end up in the hands of all registered voters living inside the boundaries rather than just those who own property. While the exact boundaries have not been set, a spread of just a few blocks would encompass most residents of the Historic Core, South Park and Bunker Hill.
Still, that doesn't mean the owners won't be involved in shaping the district and assessment over the upcoming months.
"It's not like we're going to put it to a vote if the property owners don't want it," said Dennis Allen, director of the streetcar non-profit. He emphasized that only once the project had the backing of a majority of owners would the district be created.
The funding agreement now goes to City Council for approval. That is likely to come next week.
The streetcar project is estimated to cost $125 million. A recently-released economic study said that the project would generate $1.1 billion in new development and 2,100 permanent jobs.
Simon Ha on March 04, 2011, at 12:10AM – #1
Great! The only question I have is how do you fairly draw a boundary for the community facility district? Do businesses closer to the line pay more than those who are a block away?
Business Improvement District fees go toward services that are beneficial to all businesses equally like trash collection or public safety. I think the street car would affect businesses differently based on proximity...
The most benefit seemingly would go to the anchors like LA Live, Convention Center, and Music Center. Can event tickets, hotel rooms, or other end user products/services be taxed instead of business owners?
Let's say average ticket price is $150 for Lakers tickets. If 2% tax was levied for 30,000 tickets and 41 home games, that's about $3.7 million per season. This plus Clippers, Kings, convention tickets, concert/show tickets both at LA Live and Music Center, and hopefully NFL games, that should cover the cost for the street car. A single seat paying $3 extra for a Lakers game, distributed up to 41 people per season vs. taxing businesses that will be obligated month to month???
There has to be a better way to pay for this.
Russell Brown on March 04, 2011, at 01:51AM – #2
he exact formula has not been finalized. There continues to be discussion with the property owners and discussion of the options.
ALL the BIDs, CCA, the Broadway theater owners, AEG and a number of large property owners are involved in the formation process.
Part of the monies approved today will continue and complete the analysis on the Community facilities district (assessment district). It will take about 6 months for study and 6 months for the approval, voting and certification process.
The balance of the funds will be for technical, engineering and other required studies and plans. This funding gets the project to 100% of shovel readiness. Completion of EIR, engineering and design work will take about 2 years. Actual construction will take 18-24 months.
Portland's experience was a block each 2 weeks for laying tracks, in one lane of the street. This is significantly different, easier and faster than heavy and light rail construction
No funds will actually be collected until near the opening of the streetcar system. That occurs by building capitalized interest into the project so that the assessment is paid as the benefit of the streetcar comes online.
This mechanism is possible by using the dedicated revenue stream to bond borrowed funds. The construction money is funded from those proceeds. This is basically similar to a home mortgage for construction of a new home with a dedicated revenue stream. The payment does not start until occupancy.
Although not finalized, significant framework for the assessment has been agreed to. The assessment will be on all properties along the route and adjacent streets. This is similar to the assessment that was implemented for the Red Line subway stations which recently expired. The assessment will be about 1/3 of that fee.
The assessment is graduated so that those properties directly on the route pay the higher assessment and it decreases for each block away from the route. Probably a 3 block limit of the benefit zone from the route.
The assessment includes land square footage and building square footage. So larger properties pay proportionally different assessments based on size. Thus AEG and stadium would be the largest single assessment, although property companies with a large number of high rise buildings may have a larger combined assessment.
California laws are now very strict and detailed about approval of taxes and assessments, thus a vote of the registered voters in the district. A 2/3rds approval is required (just like the Measure R transit sales tax vote). However, the property owner’s approval is critical to moving the project forward.
All buildings, commercial and residential will benefit so all will pay a portion of the fees. All new development will also be assessed as new projects come online. Thus the more development, the less that existing properties will pay.
The total budget to be financed by the assessment district is dependent on the share that the federal government funds and the amount of other funds committed by other sources. It is anticipated about half will be federal share and less than half will be assessment.
There are also guarantees for budgets, over-site and required federal matches to move forward.
Simon Ha on March 04, 2011, at 07:50AM – #3
Russ, maybe tax is not the correct word here. A downtown circulation improvement fee can be charged for all event ticket sales in venues located in the community facilities district.
If ticketmaster can charge $10 to $20 service fee to tickets, adding a buck or two is drop in a bucket. Just a thought.
If that's unpopular, go after parking lots and pass the buck down to people who bring cars to downtown.
Simon Hartigan on March 05, 2011, at 04:00PM – #4
Simon Ha, I like the idea on taxing cars. People bringing cars into downtown lower the quality of life for DTLA.
Douglas Kelso on March 06, 2011, at 03:43PM – #5
Portland covered half the cost of its first streetcar line with bonds that were repaid from metered street parking and city-owned paid parking structures. A portion of parking meter revenue also goes to support streetcar operations.
I don't know enough about paid parking in downtown LA to comment on whether it could work the same way ... but there IS precedent for building a streetcar line with parking money.
Russell Brown on March 10, 2011, at 02:32AM – #6
Not sure the specific requirements of other broader assessment regulations.
The voters of CA just imposed a 2/3 requirement on all fees and taxes in the last Nov 2010 cycle.
You are correct that other cities out of state have used a broader mechanism to pay for streetcars. Parking meters and garages were part of the mix. But any tax and fee would need city council approval and voter approval.
Look at the battle just to restore the funding for libraries without increasing any taxes, just creating a small percentage change in the dedication of the total revenues.
It was probably decided the severe heartburn, migraines and complexity of having all voters vote on a downtown project was not worth the effort.
Maybe someone else is more knowledgeable? Not sure if a fee can be imposed on private ticket sales?
Since the land and financing under the stadium and new convention are city owned, a facilities fee that is dedicated to traffic improvements for a downtown-wide benefit makes sense. The streetcar will be greatly used to connect these facilities to hotels and parking spaces throughout downtown. Seems there is an easy nexus of benefit that can be shown.
Most cities have parking assessment districts where the fees can stay within the district for community benefit. However, in LA this would require a equal withdrawal of available funds to the general fund, which is where they go now. With a $350 million deficit in fiscal 2011, that seems a significant no go right now.