Reinvestment zones to fund rail in D/FW?

251 miles of FW rail projects

Jon Boyd, Oct 25, 10.

Some transportation advocates are prescribing reinvestment zones, special property tax zones to pay for development, to leverage local and regional rail projects in the Fort Worth area, according to Gordon Dickson of the Fort Worth Star-Telegraph.

With state constitutional proscriptions against using the state motor fuels taxes and motor vehicle registration fees for building transportation alternatives, there are currently no state revenue sources to fund capital transit projects.

Transportation reinvestment zones would provide a tool for generating local revenue, according to the Fort Worth Star-Telegram:

Transportation advocates are considering using reinvestment zones, a popular financial vehicle used to rebuild neighborhoods and promote development, to spur passenger rail service in cities that are looking for alternatives to traffic jams.

Rail advocates say they’ll push during the legislative session that begins in January to expand the state law that allows cities or counties to create reinvestment zones. The zones use increases in property tax proceeds to pay for development. The change would allow the creation of transportation reinvestment zones for commuter train projects.

A reinvestment zone like that could speed up construction of the proposed commuter rail line from southwest Fort Worth to Grapevine and Dallas/Fort Worth Airport. It could also lead to development of the Cotton Belt line to Wylie, northeast of Dallas.
Supporters hope the public views transportation reinvestment zones as a more palatable way to pay for rail than raising taxes and fees. Rail projects are typically paid for with local sales taxes and federal grants backed by motor fuels taxes, but recent attempts to raise taxes for transit have failed.

“It is important to note that a transportation reinvestment zone does not result in a tax increase,” Brian Cassidy, an Austin lawyer who has represented regional mobility authorities and other entities involved in toll projects, told a state Senate committee during a recent hearing.

Yet not all Fort Worth rail supporters are eager to use reinvestment zones, writes Dickson:

Fort Worth Councilman Jungus Jordan is a strong rail supporter, but he worries that the city already has 11 tax increment financing districts, which use property taxes in an area for public improvements. The more money that goes into any kind of special tax district, the less money available for citywide services.

Jordan also opposes sending new property tax revenue to a governing body outside the city’s control. For example, under current law if counties create a transportation reinvestment zone, a road utility district must be created to oversee the activity in the zone.

“I think we’re going to have to pay close attention to who’s in charge of the money and how it’s used,” he said.

Update, October 25, 10
Tax-increment financing could expedite rail projects in Dallas-Fort Worth from 2030 to 2013, says Steve Berg of MinnPost.com:

What happens when the appetite for rail transit keeps growing while traditional revenue dries up?

The answer may come in the form of new public/private arrangements that capture tax values from future real-estate projects to help finance the laying of track and the buying of train sets.

That’s what’s happening in Dallas-Fort Worth where public and private investors are looking into borrowing from the expected housing, retail and office developments generated by a new Cotton Belt commuter rail line. Waiting for traditional funding (sales tax) wouldn’t produce a new rail line until 2030, given all the other projects underway. So, the regional planning agency and potential private investors are investigating more than 120 potential funding sources with, perhaps, a special eye toward real estate. The plan is to get trains rolling by as early as 2013.

[snip]

What happens when the appetite for rail transit keeps growing while traditional revenue dries up?

The answer may come in the form of new public/private arrangements that capture tax values from future real-estate projects to help finance the laying of track and the buying of train sets.

That’s what’s happening in Dallas-Fort Worth where public and private investors are looking into borrowing from the expected housing, retail and office developments generated by a new Cotton Belt commuter rail line. Waiting for traditional funding (sales tax) wouldn’t produce a new rail line until 2030, given all the other projects underway. So, the regional planning agency and potential private investors are investigating more than 120 potential funding sources with, perhaps, a special eye toward real estate. The plan is to get trains rolling by as early as 2013.

“The development potential in this corridor is absolutely staggering,” said Steve Salin, DART’s vice president for rail planning. If the growth is going to explode, he asked, why not concentrate as much of it as possible along the Cotton Belt corridor as a way to save energy and infrastructure costs, as well to preserve the environment?

“It’s a way to encourage incremental growth in a unified way so that everyone benefits rather than having individual cities competing for growth,” he said.