If They Only Had a Streetcar

Kansas City sold $295 million worth of TIF bonds to revitalize a part of the city known as the Power & Light District. The developer who benefitted from this money says “the development was successful as part of a broader effort to re-energize the city’s downtown.” Unfortunately, tax revenues are less than a third of what was projected, with the result that city taxpayers are having to make up the difference (as if city taxpayers wouldn’t be paying for it anyway).

The city naturally blames the problems on the recession. But recessions happen. Here’s the difference between private developments and government-subsidized developments: If the private developer guesses wrong, only the investors lose. If the government planners guess wrong, every taxpayer in the city or region loses.
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The Wall Street Journal article about this boondoggle doesn’t mention it, but Kansas City wants to spend another $100 million on a two-mile-long streetcar line connecting Power & Light with other parts of downtown Kansas City. No doubt that will fix the problem. While they are at it, how about an aerial tramway, maybe a new sports stadium or two? Just what the city taxpayers need: more places to sink their money.

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

14 Responses to If They Only Had a Streetcar

  1. FrancisKing says:

    “Unfortunately, tax revenues are less than a third of what was projected, with the result that city taxpayers are having to make up the difference (as if city taxpayers wouldn’t be paying for it anyway).”

    If it had worked, I don’t think there would be any complaints.

    “as if city taxpayers wouldn’t be paying for it anyway”

    I’m not sure what this means. The original plan was for income from the development to pay back the loan.

    • Dan says:

      Here in Merka, Tax Increment Financing means the developer pays fewer taxes. The remainder of taxpayers thus make up the difference.

      Nevertheless, we were there about 6 weeks ago and it is a nice development in a cr*ppy area, cut off from everything and auto-dependent (should be favored on this site), even though there are nice lofts there. That place and that market aren’t set up for “dense” urban living at that level, IMHO, so it is a good idea in the wrong place and there is a good chance it won’t work. Just because they built it doesn’t mean they will come. Maybe I’m wrong and rich people and trustifarians will move there eventually.

      DS

      • markusmedusa says:

        It is not a good idea. The fact that it is a planned community makes it a bad idea.

        • Dan says:

          The fact that it is a planned community makes it a bad idea.

          Please share with us how the design would be different if brave patriot developers acting rationally would have had the freedom to build as they wished, instead of crushed under the powerful bootheel of ever-more-powerful planners controlling the world.

          Specifics, please.

          DS

    • FrancisKing said, “I’m not sure what this means. The original plan was for income from the development to pay back the loan.”

      No, the original plan was for taxes from the development–taxes that would otherwise go for schools, fire, libraries, and other urban services–would pay back the loan. Because the development consumes urban services, every other taxpayer in the city must either pay higher taxes or accept a lower level of urban services. See my paper on tax-increment financing for more details.

      • C. P. Zilliacus says:

        Randal, I really appreciate your work in exposing tax-increment financing.

        It is (in my opinion) a scam, as it is “marketed” to elected officials and taxpayers generally as being without cost, even though there is clearly substantial cost associated with TIF.

        The examples cited in your paper should make even the most enthusiastic supporter of “urban ‘renewal'” projects funded by TIF think twice.

        • Dan says:

          Any developer worth their salt is going to ask for sweetener, and hint if they don’t get it they’ll walk to the next town over.

          That is the “economic development” game. That is how human nature works. It works so well, we get well-publicized incidents where highly profitable corporations pay little or no fed tax and continue to receive subsidies despite huge profits (and CEO pay goes up while productive workers’ wage stagnates and and and and and).

          The only difference now is that apparently we are too distracted to care.

          DS

  2. metrosucks says:

    The examples cited in your paper should make even the most enthusiastic supporter of “urban ‘renewal’” projects funded by TIF think twice.

    I wouldn’t be so sure, unfortunately. Randal has criticized many ridiculous TIF plans on this blog, yet Dan has been there every time, mocking the Antiplanner and defending TIF.

  3. metrosucks says:

    Btw, I like the sarcastic tone the Antiplanner has started using in these posts. There’s little sense in treating some of these proposals with a straight face.

    On a side note, here is something that may be of interest to the Antiplanner, and the readers here:

    http://www.oregonlive.com/pacific-northwest-news/index.ssf/2012/05/us_20_highway_straightening_pr.html

    While the mishandling of the project is distateful, what I find interesting is that a 5.5 mile long road project, involving the moving of huge amounts of dirt, constructing new bridges, retaining walls, and cuts, only costs 50% more than the on-paper per mile cost of the Milwaukee to Portland light rail line??? Comments anyone?

    • the highwayman says:

      Construction costs are about the same for railroads and roads. So things like more earth works, more bridging and more tunneling add to project costs.

    • Mountains move. It is very hard to build railroads or roads in moving mountains. This isn’t so much a matter of mishandling as it is one of terrible terrain. BNSF has the same problems in the Columbia River Gorge; ODOT has similar problems on the Umpqua River Highway and 101.

  4. metrosucks says:

    Thanks for the reply, Randal. I guess I miss-stated that. Good points on the terrain challenges.

    What I should have really said….how come 5.5 miles of road, in a rugged area, on a new alignment with multiple bridges, costs significantly less per mile than a light rail project with only one major bridge and flat terrain? Am I missing something here, or is it pork/free federal money at work?

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