Funding transit from TIF's

A new paper(pdf) by Andrew Heidel proposes using TIF money to fund development of new stations along existing CTA rail lines. He identifies a number of potential sites, implements a simple method of ranking them based mainly on past TIF growth and ridership potential.

It’s good that the potential of TIF’s as a transit funding tool is recognized, but the paper presents problems both for Georgists and for transit rider advocates.

For Georgists the big concern is that, though Heidel does cite work by Bill Batt, and Jeff Smith/Tom Gihring(pdf), he doesn’t seem to recognize the difference between land and improvements. A related concern is that his evaluation assumes that past trends in each TIF’s value predict the future trend, which is to say that the possible new transit station will have no effect on value.

For transit rider advocates, it is bothersome that he rejects restoration of closed stations on the Congress line because, after all, they were closed due to low ridership.  That seems to assume that little new development will take place.  As a result, most of the stations he considers are at sites where service was discontinued in the 1950s, rather than the 1970s. No rationale is provided for this decision.

It is also striking that he was informed, apparently by CTA, that the cost to build a station on an existing line is $165,000, and the maintenance cost is $50,000/year.  In fact, can anyone report a cta station built or rebuilt for less than $5 million in recent years?

Still, at least someone is paying attention to the fact that the value created by transit facilities can be recovered for the community thru the real estate tax.

Heidel presented his paper at the 2008 Transport Chicago Conference.  Most of the papers presented there are here.

One thought on “Funding transit from TIF's”

  1. Taxpayer,

    Stumbled across your write up of my paper while doing some follow up work for it. Thanks for taking notice! I’d just like to respond to a couple points, and ask for your help on a couple others:

    *First, something you could possibly help with: I’d like to think I’m generally well informed as far as the difference of land vs improvements when it comes to property taxation, but you seem to think that this distinction is lost in the paper. What, particularly, do you think needs to be made clearer?

    *I agree that the analysis focuses on past performance rather than past results; this was intentional. A key point is that the DEA/FPM analysis presented in the paper is not meant to rank the top performing stations as a comprehensive real estate and economic analysis, but to identify those locations that it would be unwise to invest further resources in these kinds of studies (e.g., those at the bottom). Granted, the same analysis could be conducted with these sort of projected measures as outputs(even taking into account the new station, as you suggest), but by this point the richness of data available would make the results more of a confirmation of what planners would already know then a definitive cutting or ranking.

    *You mention that the stations that were cut from the analysis were closed in the 1950s as opposed to the 1970s; this is really at the heart of the rationale for excluding these stations in the first place (besides the fact that their negligible up-front capital costs always shot them to the top, overriding any of the other factors). For the most part, these stations were built not as a result of a service planning need, but to political pressure to find replacements for stations from the former (pre-expressway) Congress Line. If the couldn’t even survive in the 1950s, when the city and (theoretically) transit were at their peak, no amount of (usually lower density than original development) infill development could generate the necessary traffic at this point. Additionally, from a service planning perspective, the stations are ineffecient being that a number of them are 2 blocks or less from adjacent stations.

    *The numbers, indeed from CTA, may be misleading, a point I attempted to clear up in the presentation. The DEA/FPM analysis works best when inputs/outputs are at the same magnitude. The actual numbers from CTA were $16,500,000 to construct a new (elevated) station on existing structure, and $500,000/yr in ongoing maintence and operation costs (and even these were general, rough numbers – each situation will obviously be different).

    Again, thank you for taking the time to read and comment, and finding some validity in the idea though some of the details were unclear.


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