Battle Heats Up Over Providence Streetcar Proposal
Wednesday, May 13, 2015
The proposal for a Providence streetcar proposal will be the subject of two city council meetings this week, and at least one council member -- and a former Mayor -- are voicing their opposition to the $100 million plus project.
On Wednesday, the City Council Bond Study Commission will review an ask for $58 million in new bonding authority for the streetcar -- and on Thursday, the Council Finance Committee will review the city's proposal which they say would create 6,000 new jobs in twenty years.
"While I am intrigued by the project's potential benefits and increasing public transit options for our residents, I am cautious about the timing and risk associated with a proposed streetcar," said Councilman David Salvatore in a message to constituents. "In a time when our schools and roads are in desperate need of infrastructure upgrades, it would be irresponsible for our City to add additional borrowing costs to the City's budget without a guaranteed return on investment."
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTProvidence Mayor Jorge Elorza has been on the record in support of the project. In a questionnaire for the Greater Providence Chamber of Commerce during the campaign, Elorza said he supported a tax increment financing (TIF) district to fund the city's portion of the project.
"If federal TIGER grant funds are awarded to support the streetcar initiative, I will support the creation of a TIF district to provide the City’s portion of financial support for the project," wrote Elorza in the questionnaire, prior to the city being awarded a $13 million grant by the U.S. Department of Transportation. "As the project gets underway and proves successful, I will direct my administration to further develop the strategy to expand the streetcar lines to connect more neighborhoods."
While the current Mayor has expressed his support, a former Mayor -- and real estate developer -- is continuing his stuanch opposition.
"It's ill advised, and ill-timed," said former Mayor Joseph Paolino on Tuesday. "Quite frankly, I'm surprised that it got this far. It's too expensive for the city. Would it be a nice amenity? If we were flush, perhaps. People think there's just one meeting this week on it [on Thursday], but there's two -- and I'll be at tomorrow's bond study commission hearing."
Nuts and Bolts
In Providence, Council members on the Special Commission to Study the City's Bond Finance Program will be reviewing the project on Wednesday
"This week and next is to review all the possible bond financing projects in the hopper," said Councilman Sam Zurier. "In additions to streetcars, the commission will be reviewing possible bonds for streets, sidewalks and schools will on the the 20th."
Zurier noted that the commission was tasked with looking at both pending bonds -- and future bonds -- as part of a "larger picture."
"My questions will be about how does TIF work, how is the model constructed? That's certainly something we need to look at," said Zurier. "Just to be clear, the bond study commission is not necessarily going to have a detailed evaluation of every bond finance project. Our goal is to have the menu in one place, to see what all the choices are -- do we want this, or do we want to save more money for that -- that type of analysis."
Salvatore explained the TIF structure -- and costs associated with the project.
"What is tax increment financing (TIF)? TIF is a mechanism commonly used by municipalities to pay for large projects from the proceeds of revenue bonds. The new or incremental taxes that are generated from development and increased property value in the designated district help finance the project," wrote Salvatore. "In the case of the proposed streetcar ordinance, the City's administration and some City Council members are asking us to authorize nearly $58 million in new debt service. In other words, the City would borrow $57.7 million to pay for the streetcar's upfront costs and will not be subject to taxpayer approval, unlike general obligation bonds."
Paolino on TIF
Paolino noted that the Providence Foundation, of which he is a board member, voted not to take a position on the project.
"The Providence Foundation did not take a position - normally they come out and endorse proposals, but the they stayed away from it," said Paolino. "There was a heated debate and there was a decision made not to endorse.
"I did the city's first TIF in [1986] for Corliss Landing," said Paolino. "It was an empty factory building paying $30,000 a year in taxes. By turning it into residential and commercial condos we could get $300,000. The developer said that the surrounding streets were a disaster and needed better sidewalks, a path to the water, and that's why we did the TIF. And now that area is thriving. We floated a 2.1 million bond that's been paid off. We knew that development was taking place, and we did the TIF in anticipation of those tax dollars."
"This is much different, they want $59 million, and another $40 million no one knows where it's coming from," said Paolino. "I look around, and there are no shovels, no cranes, nothing to bank on. The city needs new development to take place to ease the existing tax burden, not fund a trolley car."
The city however is touting the economic impact of the project
According to the city's streetcar website. "The City’s investment in the permanency of fixed-rail infrastructure will spur development and growth in the core of our city and increase transit use in Providence. Phase 1 of Providence Streetcar is expected to spur 3.6 million square feet in new development, equating to nearly $1.1 billion in additional property value and over 6,000 permanent jobs over 20 years."
The status of exsisting -- and proposed -- streetcar projects was the subject of a recent look by the New York Times' Eugene Meyer, who in March wrote, "Streetcar Revival is Wavering in Some Cities."
"First, suburban Arlington, Va., abandoned long-laid plans last fall to build a streetcar line its leaders hoped would help revitalize a neglected corridor, wrote Meyer in his introduction. "Now, across the Potomac, the District of Columbia is rethinking the whole idea, after spending $160 million to bring the trolleys back to the nation’s capital, after more than half a century."
City Council President Luis Aponte noted this week's hearings were just one stop in the process in whether to determine to mover forward.
"Thursday's a public hearing," said Aponte. "The [committee] will reconvene next week or following to go over presentations. As part of the Federal grant process, there has to local contribution, the bond proceeds if passed would be that local contribution."
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