Sam's comments to Council during today's work session:
Thank you for participating in this work session, where we will have the opportunity to discuss at length the status of the city, state, regional and federal efforts to secure capital and operating funds for the Portland Streetcar Loop Project.
This discussion is extremely important for many reasons, not the least of which is the fact that we have assembled more outside matching funds for this project than any previous Portland streetcar project. A big thank you is in order to U.S. Representatives Earl Blumenauer and Peter DeFazio for their efforts on the federal level and to the Oregon State Legislature for helping us get to where we are today.
If we can come up with an additional $18 million in tax increment funds, we have the potential of leveraging $128 million in matching federal, regional, state and local resources to build Portland's first eastside streetcar line from River District to OMSI.
This new streetcar line would move us towards meeting our Peak Oil and global warming goals and provide more Portlanders with a new cost effective transportation choice. Based on current zoning, this project will also help Portland meet its regional growth management targets by leveraging 2.4 million square feet of new development including opportunities for a large workforce housing component. It is estimated that this new streetcar line would incent an estimated $700 million in increased private development along its corridor.
While we do not have to finalize the details of exactly how we will fund our commitment to the Federal Transit Administration (FTA) until December, 2007, in order to seize this opportunity, Portland City Council must to be ready to make a commitment to FTA for a total of $33 million by September 7, 2007. That said, I know I speak for all involved when I state that it is preferable that we are as clear as possible right now with how we plan to make good on our commitment to the FTA in the future.
In light of my ongoing conversation with Portlanders about the need for more resources to pay for basic street maintenance and safety requirements, as part of this discussion I want to emphasize that the proposed resources for this eastside streetcar expansion will not come from funds that could be devoted to basic street or bridge maintenance: lottery; tax increment; MTIP transit funds and FTA resources by law cannot be used for basic street and bridge maintenance.
The cost estimates you will hear about today should be treated as low confidence estimates. To date, we have built streetcars on-time and on-budget. However, this proposed streetcar line has two unique challenges: we have to put tracks on an existing draw bridge, the Broadway Bridge, and construct a new bridge over the Union Pacific railroad tracks from Martin Luther King, Jr. Blvd. and Grand to OMSI. We will have 50% preliminary engineering work done by January, 2008, at which point we can generate cost estimates that can be treated with higher confidence for accuracy.
If the 50% preliminary engineering design work shows that the project cannot be built with the $146 million in resources on hand, I will return to the Portland Development Commission and the Portland City Council with budget balancing options to increase resources or to reduce the project's scope, including the possibility of reducing the length of the alignment.
The Portland City Council will have the ultimate say on whether or not to approve the construction contract in Spring. To ensure the reliability and stability of project cost estimates, I anticipate that this project will be built with an incentive-based or guaranteed maximum price contracting approach.
The proposal before you today is not without risks but I want to compliment Ken Rust, Bruce Warner, Greg Jones, Vicki Diede and Rick Gustafson for helping to draft a proposal that appears to be prudent, workable and a good investment for PDC, City government and the businesses and citizens of Portland.
I now want to highlight a few key issues pertaining to the proposal being discussed today:
River District Urban Renewal District
The $17 million request from River District Urban Renewal District ($2.5 million of which is currently in the River District Urban Renewal District Plan) would be used for rail alignment construction and a needed expansion of the streetcar storage and maintenance facilities under the I-405 bridge.
This would be the River District Urban Renewal District's first streetcar contribution. The River District Urban Renewal District did not exist when the first streetcar through the River District was constructed. With $38 million in parking garage bond and system development charge (SDC) proceeds, the Westside streetcar has helped leverage the Pearl District's portion of the $2.5 billion in private investment leveraged.
The current $17 million streetcar request of the River District Urban Renewal District can be achieved without impacting other budgeted tax increment projects and programs by raising the debt limit of the district when we consider expanding its boundaries.
Oregon Convention Center Urban Renewal District
The $4 million request from Oregon Convention Center Urban Renewal District ($2.5 million of which is currently in the Oregon Convention Center Urban Renewal District Plan). The request to the Oregon Convention Center Urban Renewal District is limited due to its looming expiration date.
Central Eastside Urban Renewal District
The $6.2 million request from Central Eastside Urban Renewal District ($4 million of which is currently in the Central Eastside District Urban Renewal District Plan). The streetcar request of Central Eastside Urban Renewal District is limited to reduce short-term impacts to other budgeted projects in the District.
The overall value of the proposed projects within Central Eastside Urban Renewal District currently exceeds the increment projected to be created within the district. Because of this, the timing and cash-flow issues that already exist within the district will likely be further complicated by the funding needs of the streetcar project. On the other hand, however, it is important to note, that unlike other projects currently slated for the area, the streetcar is projected to generate a net positive amount in tax increment proceeds.
The Office of Management and Finance (OMF) has worked with Eric Hovee to prepare financial projections of future tax increment revenues in the Central Eastside Urban Renewal District based on investments in the Streetcar Loop Project. Based on Hovee's analysis, the one-time $6.184 million investment from Central Eastside TIF for the proposed streetcar project will induce, conservatively, a $54 million increase in the area's assessed property values by FY 2019-20. This translates into a minimum of $840,000 a year in additional property taxes collected in the area by year 2020. In today's dollars (using a total net present value analysis calculation) the investment in the Central Eastside streetcar line will create a roughly $7.3 million return to the public coffers. In other words, investing in an eastside streetcar line will pay for itself and then generate an additional $1.165 million for other public priority projects within the Central Eastside that would not otherwise be available.
Operating Costs
In terms of operations, the Portland Streetcar Loop Project service between OMSI and NW Hoyt Street is projected to cost $3.6m annually. The City and TriMet have agreed to pay for this annual operation from the following sources:
- $1 million from TriMet general fund
- $430,000 from savings from changes to the line 6 bus enabled by the new streetcar
- $945,315 from net new streetcar revenue
- $1 million from City of Portland -- likely source will be parking revenues
- $175,000 in sponsorship
Funding Idea for Future Rail Transit Projects
The discussion of funding this project, the Milwaukie to Portland lightrail line, and my vision to more rapidly expand Portland's streetcar system begs the question of how will we fund future transit rail projects.
While I am still early in my thought process, I am working with staff on a possible new rail transit funding tool. My idea is to create a funding tool conceptually similar to the existing tax increment mechanism but unique in that it would take only 30% of the annual increment created in a district, leaving the rest to be collected by the school districts, the City, and the County. I would also include a modest ongoing amount to pay for continued operations in the future.
For the City, County and school districts it would mean they would immediately start receiving their annual portion of the 70% of the increased property taxes leveraged by the streetcar or lightrail line investments. There is still much to flesh out, but want you to know I am working on the challenge and that I look forward to discussing potential solutions with you further in the future.
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The Council identified the following questions and necessary follow-up items for staff for the unfolding streetcar project:
- Bicycle Facilities - Commissioner Leonard made clear that he wanted to explore adding bicycle facilities on all of the bridges that are a part of this project. There are two new bridges slated for this project: one to cross railroad tracks near OMSI, and one that will cross the Willamette and connect OMSI with the SouthWaterfront. The Willamette bridge is already being designed with the expectation that it will have bike and ped facilities, but that was in doubt for the OMSI rail crossing.
- Project Management Clarification - Mayor Potter asked that a line-item on the submitted budget be further broken down. On page 14 of the PowerPoint (document attached below), a chart identifies $10.66 million for design engineering and project management. Project management is overseen by Portland Streetcar, Inc. (PSI), which in turn subcontracts with another company for day-to-day management. Mayor Potter was interested in seeing the breakdown of design engineering and project management costs, as well as PSI's subcontract.
- Creation and Expansion of an East-West URA- Commissioner Leonard questioned PDC staff on the city's ability to extend the River District from NW Portland across the river into east portland - in order to have the flexibility to use funds collected in one area for project needs that exist in other areas.
- Beef up accounting oversight - PDC recommended that the project manager be required to engage the services of a project accountant who would in turn ensure that all of the funding sources being used are spent in accordance with the various conditions and legal restrictions that exist for each funding source.
- Unused Financial Cost - Since OMF uses conservative figures and assumptions in its financial analyses, the question arose of what would happen should it turn out that the actual financing costs for the project ened up being less than is currently estimated and budgeted. What would happen with those excess funds if this were the case? Similarly, if the contigency funding currently included in the project cost goes unspent, where would that money go?
- Fareless Square Reevaluation - Fred Hansen of TriMet discussed with council his desire to have a seamless fare system between TriMet and Streetcar, but explained that a conversation about the role of fareless square would have to be part of the discussion. Fare revenues are very low for the existing streetcar line because it is almost entirely inside of fareless square. Discussions about the operation costs of a growing streetcar system would need to revisit this issue.
- Light Rail Funding - Mayor Potter raised the question of where the funding would come from for the city's expected contribution to the construction of the new MAX line to Milwaukie. Sam explained that since it doesn't substantially go through any urban renewal districts, the traditional methods of tax increment financing would not be possible for this project. There is no easy answer to the mayor's question at this time, but Sam reiterated that he and staff are working vigorously on finding a solution.
To view the PowerPoint presentation given at the council work session earlier today, it is attached below as a pdf file.
| Attachment | Size |
|---|---|
| Streetcar Loop Presentation 8.09.071.pdf [1] | 1.55 MB |