Saturday, October 17, 2015

Is it possible to use Tax Increment Financing to finance mass transit?

Is it possible to use Tax Increment Financing to finance mass transit? I don't know but a local neighborhood leader who was active in the Stop Amp organization and has remained active in transit issues, reports that it may be.  She writes this on a local Google Group:

In my Transit Citizen Leadership class tonight, we had a transit engineer guest speaker from out of state, knowledgeable in FTA funding rules for transit. A rarity.

He mentioned one possible funding method for mass transit - use a TIF. He gave a brief overview of what that means, in layman's terms. He said a geographical boundary is drawn around the transit route. Usually a wide patch of land, but it follows the proposed transit line. The population votes whether to approve channeling calculated increases  in property values into a fund. This fund is reserved to pay the local match cost, and yearly operating costs, for operating the transit system. The transit system is the reason for the rise in land value.

Land values are calculated to rise, based on the things built and generating new tax revenue around the proposed transit stops.  If no transit comes to the route, then the land value won't rise as calculated (in the TIF).

My question to that info, tonight: since Nashville has a lot of downtown TIF Districts already in place -- can a transit TIF be created on top of an existing TIF? Basically, no. Its possible, but not likely. Voters would need to approve it and that's getting expensive. TIF diverts cash away from local services for decades. Voters usually want to see a benefit in their lifetime. He did say, though, theoretically a TIF on top of a TIF was possible. Just not very wise.

Now that I'm reading of the TIF meeting today (excellent work, council!), my next questions would be to that committee (or maybe to MDHA?), see if you can get these answers:

(1) If Nashville has TIF's already in existence downtown - what is the land value increase calculation? What portion of that calculation is dependent upon a transit system running through the TIF boundary?  Another way to put this: Are any of the existing TIFs downtown, already transit TIFs?

I fear the MDHA may need to give up their TIF proceeds for the transit dependency requirement in the TIF. I hope not - as there is no transit planned in most downtown TIF boundaries - that I am aware of.

(2) If the downtown TIFs do NOT have land increase calculations based upon a Transit system, WHAT is the reason the land values will "go up" in those TIFs? The trigger is...what? Cannot just be population increase it has to be some infrastructure or job/gold mine.
This in interesting news. Until reading this, I did not know TIF could even be used to fund mass transit but it makes a lot of sense. The AMP was the wrong corridor to build a transit route, in my view. Perhaps the people living in East Nashville would have ridden the AMP, but I do not believe those more affluent people living along West End Avenue were ever going to give up their cars to ride the bus. Also West End is so highly developed already and runs through some of the most expensive and stable neighborhoods in the city, that I do not think there was much opportunity for new development to occur along that route. 

I  think there are corridors such as Nolensville Road, Dickerson Pike, or Charlotte Avenue that could benefit from a mass transit development. I also think it would make a lot of sense to build a transit system in conjunction with planning that encourages development around major transit stops by offering density or height bonuses or relaxation of parking requirement and some TIF financing for the development around the major stops.

Downtown is certainly not "blighted" and I think TIF is being misused by continuing to be available downtown.  Some of our major corridors however are low income and underdeveloped and could more rationally be considered "blighted."  There ought to be a better use for the property along Nolensville Road than tote-the-note used car lots.  I hope the administration and the Council will explore the opportunity of using TIF to finance mass transit and see mass transit as a means of improving our major corridors. 

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