More Lies in Light Rail

Phoenix voters will decide next month whether to extend the current transit sales tax (set to expire in 2020) through 2050 and increase it by 75 percent (from 0.4 percent to 0.7 percent). This would supposedly be enough to fund at least three more light-rail lines plus several bus-rapid transit lines.

According to Valley Metro, this beautiful vacant lot across the street from a light-rail station is Escala on Camelback, a mixed-use development with 160 condos and 15,000 square feet of retail space that was supposed to be completed in Fall, 2010. It remains vacant today.

The big argument from rail advocates is that Phoenix’s first light-rail line, which opened in December, 2008, generated $7 billion in economic development. Not so much. A new report from the Arizona Free Enterprise Club shows that the light rail generated very little, if any, new development.

First, although numerous public officials have clearly stated that the light rail led to $7 billion in new development, this came from a 2009 document from Phoenix’s transit agency, Valley Metro, that says the agency went back to 2001 to find $7.4 billion in “recently completed, under construction, and planned projects” along the light-rail line. Many of the projects have never been built, many of the rest were subsidized, and most if not all of the remainder would have been built even if there were no light-rail line. For example, Valley Metro proudly pointed to a large residential project called Escala on Camelback. Yet the company that planned to build this project is out of business (or at least inactive) and the site is large, vacant lot.

Recognizing some cancelled projects, Valley Metro eventually reduced its claim to $6.9 billion, but even then it included many projects that would never be build. For example, Valley Metro bragged about a mixed-use development called Sycamore Station in Mesa. The developers of this project sought low-income housing subsidies from the state; they were apparently denied, as they put the vacant land up for sale less than a month ago.

Recall that up until a couple of months before the light rail opened, Phoenix was in the middle of a speculative housing bubble. People were buying everything builders could build, and in many cases they expected to flip the homes for higher prices after a few months. As a result, developers had planned new developments all over Phoenix, not just on the light-rail line, but any of those plans that had not begun construction by October, 2008, when the financial system crashed, were shelved indefinitely.
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To keep projects going, Phoenix, Tempe, and Mesa tried to subsidize them. Valley Metro openly laments that Arizona does not allow cities to use tax-increment financing to subsidize transit-oriented projects. But, Sycamore Station notwithstanding, cities did use low-income housing subsidies, below-market land sales, and other techniques to support many projects.

Many other projects would have been built with or without the light rail. For example, a new high school was built near the light-rail line. Does anyone really think that Phoenix would not have needed a new high school if light rail hadn’t been built? Phoenix also expanded the city’s convention center, which happened to be on the line. The city made the decision to do so before voters had approved the light rail, and there’s no reason to think that the expansion only happened because of the light rail.

While there may be some project whose location was influenced by the light rail, there’s no reason to think that any particular project was built only because of the light rail. If Phoenix voters agree to fund new light-rail lines, it will simply be an additional tax burden on the region.

The tax measure also promises to increase bus service, but similar promises were made when the current tax was put in place a decade ago. In fact, those improved bus services never happened, mainly because of light-rail cost overruns: it was originally projected to cost $300 million and ended up costing $1.9 billion.

As previously noted here, Phoenix transit ridership has declined since the year the light rail opened, partly because of increases in bus fares and cuts in bus service. It turns out the Antiplanner predicted this would happen five years ago, as service cuts were already taking place.

Phoenix’s transit plan calls for 75 miles of new bus-rapid transit lines. The capital cost of each mile of light rail is expected to be 140 times as much as a mile of bus-rapid transit while the operating costs are expected to be nearly six times as much. While the existing 0.4 percent transit tax, if extended, would be sufficient to operate the existing system and make all of the proposed improvements in bus service, Valley Metro wants to increase the tax so it can build the light-rail lines. If voters agree, contractors will rejoice but transit riders will probably not get the new bus-rapid transit routes they are promised.

The Antiplanner will be in Phoenix the week of July 27 to talk with people about this plan. If you are in Phoenix at that time, I hope to see you there.