Several years ago when I was serving on the Triangle Transit Authority’s Board of Trustees, I attended a Raleigh City Council meeting.
One of the Republican council members said,” I want to hear more about this project. Did you know that Fairfax County, Virginia, collects 45 percent of its total ad valorem taxes from within a half-mile of its light rail stations?”
Preparing for this article I checked on this figure. Today Fairfax County collects over 65 percent f its total ad valorem tax from the half-mile radius of its light rail sites. In fact, since the inception of light rail service, ad valorem tax rates have been reduced over 30 percent, despite no reductions in budgetary expenditure by the county!
If you ever needed a quantitative proof of the value of light rail, how about having your real estate taxes REDUCED even if you don’t live close to, or even ride the rail service.
Seeking further proof, and closer to home, I contacted a college friend of mine who lives in Charlotte. My question was simple: “Is there interest in rail station area development, and, if so, are such properties appreciating more so that non rail located properties? “
He said that not only were land values rapidly escalating along the existing line, but there was a bid war along the proposed South Line. (I had an appraiser tell me that some of the most vocal opponents to the North Line (and light rail in general) are now using the increased values along the North Line in condemnation arguments for the new South Line!)
Light rail projects have created very substantial real estate appreciation along their respective corridors, appreciation that WOULD NOT have occurred in the absence of light rail. Such projects in Fairfax County, Denver (Charlotte’s model), Salt Lake City, Dallas and now Nashville have made a substantial contribution to the real estate tax base of the local jurisdictions, creating the ability of many of the taxing authorities, if they so choose, to REDUCE the ad valorem tax rate for all their citizens. (This after covering any light rail operating short falls.)
No amount of predisposed studies can overcome the quantitative and factual results of light rail projects.
To that point, Charlotte has seen over 10 MILLION square feet of new residential and commercial development just on its Blue Line. How much ad valorem tax revenue is in this one number? (Answer: over $1.25 million annually minimum.)
Some things to consider in building light rail:
• Rail is not bus. Rail stations are permanent fixtures, and are not apt to being changed like bus routes. It is a proven fact that a developer will commit (as noted above) his capital much more readily based on the permanence of a light rail station.
• Rail covers, on average 70 percent of its operating expense, versus bus which might get to 28 percent on a good day.
• Rail-oriented development is far more tax efficient than a four lane highway, and is a lot more land efficient than an Interstate. Rail takes up, at most, 60 feet in width for every forward foot of line. Compare this to the width per foot for either highway project and you should quickly realize the loss of taxable land PER FOOT in a highway project, condemned and never to be in the tax base of that city/county again.
Additionally, one needs to consider the cost of utilities in land development.
A town manager told me recently that to break even on providing water, sewer and other services to a single family residence on a quarter acre lot dictated that the house and lot value had to exceed $350,000. Any less value was a perpetual drain on the municipality.
By contrast, the verticality provided by intense development, such as that provided by planning and zoning regulations for Light Rail, greatly magnifies the utility return per foot of line, thus potentially (and indeed factually) reducing the average cost of the utility user for the service provided. Put another way, for the minimally more expensive bigger sewer pipe, the cash flow from a five story condominium is 400 percent more than a single family residence on the same land foot print. (Think what a cost the Efland sewer project is to the Orange County tax payer under this fact!).
It must be noted that these economic facts were also specifically EXCLUDED in the “think tank” article sent out as to sprawl.
Mayor Pat McCrory successfully defended an attempt to repeal the sales tax increase and won the referendum 70 percent to 30 percent. I would suggest to you this speaks to the satisfaction of the average Mecklenburg County voter about their light rail.
It is my opinion that a vote for the transit sales tax is in your best financial interest.
As I have said many times before, it is fine to be a fiscal conservative, but it is far more important to be economically literate.
W. Lewis Hannah Jr. lives in Efland.