by Richard Slife
This is an update to last week’s article, “S.A. Streetcar a Losing Proposition” (full text follows below).
What: South Texas Alliance for Progress Press Conference on San Antonio Streetcar Funding Swap
When: Monday, January 27, 2013 at 12:30 PM
Where: VIA Offices at 1021 San Pedro Ave, San Antonio 78212
Point of Contact: George Rodriguez, 210-367-2058
The South Texas Alliance for Progress will hold a press conference at 12:30 PM on Monday, January 27th, at the VIA Metropolitan Transit Offices located at 1021 San Pedro.
The purpose of the press conference is to detail the reasons why the Metopolitan Planning Organization (MPO) should reject the proposed swap of Advanced Transportation District (ATD) funds with Texas Dept. of Transportation (TxDot) funds for the VIA streetcar project.
Our elected officials have been mesmerized by feel-good stories about a streetcar that voters do not want. Officials are so focused on providing funds for construction that voters cannot stop, they have not bothered to look at the future costs of operation. Every entrepreneur knows that prior to investing his capital he wants to see an assessment of the expected return on his investment. But then entrepreneurs are investing their money.
City Council bowed to pressure from the business community and voted to eliminate the special assessment district included in the 2011 ordinance committing the city to the streetcar project. This provision was designed to raise $15 million from the property owners who would benefit from the increased property values produced by the streetcar, and who had already received $17.5 million in tax incentives.
The value that property owners place on the streetcar can be measured by their reaction to this special assessment district. As WOAI reported, “Wording on a city memo reads ‘private sector support amongst downtown businesses does not exist at this time.’” Randall O’Toole of the CATO Institute pointed out in his policy brief, “The Streetcar Fantasy,” that “streetcars do not produce transit oriented development.” The development is there because of tax incentives.
Since no elected official has asked about the impact of the streetcar on VIA’s future financial health, the South Texas Alliance for Progress has provided the council with an analysis. VIA’s 2011 financial statement documents 75 percent of VIA’s bus operating costs are covered by tax subsidies, and VIA still had to reduce its reserves by $13.9 million to balance the books. VIA’s bus operations are not financially viable with the current subsidy, and residents can look for VIA to plead for more tax dollars in the future.
It is on this financially sick organization officials plan to overlay the streetcar. In “The Streetcar Fantasy,” O’Toole documents “transit agencies spend anywhere from 2 to 8 times as much moving passengers one mile by streetcar as by bus.”
VIA’s financial analysis indicates the streetcar will lose $22.7 million in the first five years with the yearly loss increasing each year after the start-up year. But there is another cost transit advocates hide: infrastructure repairs. Cities with older rail systems typically spend $1 on major repairs for every $2 they spend on operations. So as the system ages, costs will increase
Absent a thorough five-year pro forma financial assessment, one can only conclude that VIA will need a massive increase in tax subsidies. But our officials have turned a blind eye to this issue.
What will it take for our leaders to realize the streetcar is a reprise of the Alamodome? Back then politicians also focused on the good news and did not consider future costs of operation that still suck up tax dollars. San Antonio has an effective bus system, and politicians should not jeopardize its operation by bolting a streetcar system onto it.
The core mission of government is to deliver essential services without discrimination to all citizens.
Unfortunately citizens have allowed the Bexar County Commissioners Court to drift away from its core mission—spending tax dollars on projects and programs that benefit only a few future residents of San Antonio and a handful of downtown real estate developers.
The VIA downtown rail project is a case study of the Commissioners Court breaking the public trust to reward the few at the expense of the many. The people voted 70/30 in 2000 against light capacity rail transit. In 2004, VIA put forth and voters approved a 1/4 cent increase in the sales tax to fund an Advanced Transportation District (ATD). During the election, VIA promised not to use the revenue to fund rail transit, or toll roads, and that funds would be split 50/50 on roads and transit. In fact, 12 road projects were identified to be accelerated by as many as 11 years with ATD funding. To date, the county has been able to use the 25% of the ATD revenues designated for use by TxDOT to match with state and federal funds to complete the six projects promised on Blanco and Culebra.
Fast forward to 2011. The county, with the blessing of the VIA board, has consigned the next 10 years of ATD revenues promised for road construction to help fund the construction of a $200 million, 5-mile rail line on a few downtown San Antonio streets. The county contends that the rail system will increase economic development along Broadway and help reduce traffic congestion. But the city is already providing $17.5 million in taxpayer subsidies to a handful of developers to build condominiums in the Broadway corridor. VIA projects that the line will serve, at most, 2000 riders per day.
Senator Wentworth and other local officials recently sent a letter “strongly urging” Judge Wolff and Mayor Castro to reconsider the use of the county share of the ATD funds on transit. Because Judge Wolff and Mayor Castro are gambling that a $200 million starter rail system will induce federal grants to build out the complete system, they rejected Senator Wentworth’s urging. As a result, on March 26, Senator Wentworth requested a formal opinion from the Texas Attorney General as to whether the promises made by VIA during the 2004 election form a contract with the voters, and preclude the county and VIA from using ATD funding for the rail lines. Senator Wentworth’s request will be assigned to the Opinion Committee. In addition to researching the law, the Committee welcomes additional briefs and any written commentary from the public. This option for additional comments provides citizen organizations and local officials the opportunity to have their views factored into the final decision that the Attorney General will issue in about 6 months.
In the meantime, the county has lost its ability to leverage the funds TxDOT has recently made available to complete the remaining 6 projects promised to the voters in 2004. These projects, which are detailed at attachment 1, will improve traffic flow for the 91% of area commuters who depend on cars and vans to get to work. Based on past history, the $100 million of ATD funding would generate another $400 million of state or federal funds for Bexar County road construction.
Local leaders have called on the county, pending an opinion from the attorney general, to release the ATD funds for badly need road construction that will benefit the many—not the few. Small city mayors will have an opportunity at the Greater Bexar County Council of Cities meeting in May to pass a resolution supporting Senator Wentworth’s call for the county to reallocate its ATD funds to road construction, and directing the VIA board members representing the Greater Bexar County Council of Cities to call on VIA and the county to abide by the promises made to the voters in 2004. To view “The Rest of the Story” in PowerPoint, please click here.