Los Angeles, California is the latest in a slew of cities across the country to adopt a plan for a downtown streetcar line. With voter approval and project funding finally in place, construction is slated to begin in 2014, with a 2016 opening. With this project, Los Angeles joins Fort Lauderdale, Cincinnatti, Kansas City, and others in the country’s streetcar renaissance.
A few key pieces of legislation have also helped L.A. put their streetcar plan into action, including a newly designated Mello-Roos District. Also referred to as a Community Facilities District (CFD), a Mello-Roos is a special property tax levied on property owners in a designated district to help pay for local community improvement projects. It is levied as a gradient, meaning property owners closest to the proposed streetcar line will pay more than those further out. In addition, the tax must receive two-thirds of the vote in the district in order to be implemented. This approval rate has proved difficult to achieve in urban areas, which made last year’s approval of the measure by Downtown L.A. residents even more monumental. Revenues produced by the Mello-Roos District will provide critical funding for the streetcar project.
Measure R, a half-cent sales tax increase passed in November 2008, provides funds for transportation projects and improvements in Los Angeles. Over the thirty-year life of the tax, it is expected to generate $40 billion in revenue. Of that amount, 60% is dedicated entirely to transit, including new rail projects, commuter rail, bus operation, and bus rapid transit. Because Downtown L.A. is expected to become a regional transit hub with double the population over the next decade as a result of Measure R, it has played an important role in supporting the streetcar line through its rejuvenation of downtown.
It is important to note, however, that funding for the new streetcar is not coming from L.A. Metro, the local transit agency. In addition to the Mello-Roos, private businesses and developers will also contribute funds and support to the project. As a result, economic development is the driving force behind the streetcar line, not increased mobility. This approach has been dubbed “development-oriented transit” by Shiraz Tangri, general counsel for L.A. Streetcar Inc. For example, Broadway used to be Downtown L.A.’s top shopping district, but has struggled to get in on the downtown revitalization. It is estimated that the Broadway corridor has 1 million square feet of vacant, unused building space. Largely because of these reasons, Broadway was chosen as the focal point of the new streetcar line.
As streetcar projects take off in increasing numbers of U.S. cities, it will be important to look at the effectiveness of the new lines as transit circulators, as well as economic development stimulators. While we have already seen a few success stories, in Portland, OR for example, over the next few years several more major cities will have completed streetcar lines up and running and we will have a clearer picture of how effective they are as a tool for development.