NOTE: The Sunbeam Times inadvertently re-sent a 2011 story of a $6.3 million property tax hike by PSTA. We have corrected the technical problem that caused this unintentional email.
Greenlight Pinellas advocates hype the “economic growth” benefits of transit as a means to gather votes for the highest sales tax in the state to build a St. Petersburg-Clearwater Train. Yet a true evaluation of the facts and science reveals that the only benefits are to those who live within the narrow rail corridor. Further, their benefit is at the expense of others: taxpayers, those denied easier development outside the corridor, those wanting to avoid increased density in the county, those whose property is taken by eminent domain for development, those suffering the increased congestion from the train’s interference with traffic patterns and more. The Sunbeam Times continues it series on the failure of rail development to produce economic development. Earlier we showed how GDP growth is no different in rail vs. non-rail cities, and how local Berkley Transit expert has published his findings that there is no “new” economic growth from transit, but only redistribution of dollars to preferred areas. Today we focus on the fact that growth, when it occurs is merely around the rail stations and that many others will be paying for that who don’t live anywhere near the train.
Randall O’Toole of the Cato Institute has published extensively on the lack of new overall economic growth in areas building rail. On June 3, 2014 he published “The Worst of Both: The Rise of High-Cost, Low-Capacity Rail Transit summarizing many rail problems. He points to an analysis he performed showing that even with increased spending on building rail and other transit projects in the ‘90’s, population still went down in the nation’s 64 largest urban areas. He does point out that other factors could certainly contribute, but this data stands in stark contrast to the claims of Greenlight advocates that transit spending helps overall economic and population growth. How can an economy grow when its population is shrinking? The fact is that Pinellas county population density is already the highest in the state with experts projecting no growth over the next several decades.
In Minneapolis, researchers have shown that development within ½ mile of the “Blue-Line” rail stations was limited and did not occur for vacant lots, multi-family or commercial properties. Only single-family residential and industrial properties increased and again this was only within ½ mile of the line. The less than robust development along the Blue line may be because the that line has only five downtown stations, that had already undergone development when the Green line was built. These findings are consistent with findings of Cervero that development around rail lines is predominately located in downtown areas. As Cervero states, “Urban rail transit investments rarely ‘create’ new growth, but more typically redistribute growth that would have taken place without the investment.” (Cervero & Seskin, FTA Report #TCRP-7). An evaluation of transit oriented development in San Diego revealed that if properties were in the rail zone, “commercial properties accrued small or even negative capitalization benefits.” That means that developers who bought up land (with political insider information) and developed it got the benefit, while those outside the rail zone actually saw no help or a negative financial impact.
O’Toole points to the fact that the paying for development around rail often requires the use of “Tax Increment Financing”, a phenomenon highlighted on this blog in the past. Basically, the government borrows money by placing the anticipated FUTURE tax revenues down as “collateral” but takes the loan money and doles it out to the winners it picks for developing property. In this scenario, the ones paying the interest on the loan are the taxpayers. In this way the developers don’t actually have to invest as much of their own money. Government run “economic development” is most often just a game whereby the developers are highly subsidized by taxpayers. The “smart” investor doesn’t risk their own money on these public economic development programs. They get a massive infusion of taxpayer dollars for the investment, decreasing their cost, while ensuring they get profits that are far greater than could be earned on their own. This is the true “crony corporatist” nature of rail’s “economic development”. This phenomenon has been highlighted St. Petersburg own cheerleading squad for rail, the Tampa Bay Times. One wonders what makes it okay to risk taxpayer money on Greenlight development, but not others the Times deems less worthy. It must be based on who is picking the winners and the losers, or perhaps if the person doling out the taxpayer money is a gubernatorial candidate they don’t prefer.