This letter was sent to Providence City Countil Finance Committee Chairman John Igliozzi in support of the TIF Ordinance for the proposed Providence Streetcar:
Grow Smart Rhode Island supports the proposed Tax Increment Financing (TIF) ordinance for the City of Providence’s streetcar initiative, provided that it is coordinated effectively with other major pending transit initiatives and that supplementary financing options are explored.
Grow Smart is a statewide nonprofit policy research and advocacy organization focused on promoting enduring and sustainable economic growth that capitalizes on Rhode Island’s many place-based assets. One of the principal ways we pursue this objective is by promoting policies and investments that advance vibrant, walkable and transit-friendly urban and town centers.
We believe that the proposed Providence Streetcar has strong potential to enhance real estate development activity and economic opportunity in our capital city, while also expanding the use of mass transit, providing tangible benefits in reducing congestion and improving air quality in the nation’s 2nd most urbanized state. We further believe that the availability of a streetcar would attract new riders to RIPTA’s existing bus service and the MBTA commuter rail service.
We have reviewed the Economic Impact Analysis prepared for the City and RIPTA dated January 2012. This was conducted by a firm with significant experience analyzing the economic impact of streetcar projects around the country. Absent any convincing evidence to the contrary, we believe the forecasted benefits warrant the investment by the city and state in the kind of “value capture” financing offered through Tax Increment Financing (TIF).
Indeed, we look to examples of other successful streetcar projects in several cities across the U.S. and we believe that Providence offers comparatively favorable metrics for population and employment density as well as developable property to ensure a significant community benefit and return on investment.
We are particularly encouraged by reports from Kansas City about the early positive economic impact of a streetcar line there scheduled to open next year.
Investments of more than $790 million in 35 projects have reportedly been announced within a quarter mile of the proposed streetcar’s route. And this seems to be far from a coincidence. In fact, developers of 21 of these 35 projects noted in interviews conducted by Kansas City municipal staff that the streetcar either directly impacted their decision making or was the key reason for their location decision.
In order to be successful for all concerned, however, we believe the streetcar project should require equitable investment from major tax-exempt institutions served within the proposed TIF district and from the State of Rhode Island. Under the proposed financing plan, the State of Rhode Island would share approximately 25% of the capital investment, while projected TIF revenues from taxable property in Providence would cover approximately 58% of the capital investment. We believe it would be appropriate for a “state” Tax Increment Financing mechanism (as proposed by the Raimondo Administration to support capital investments in economic development) to also be considered as a way to better balance the cost/benefit for the city and the state.
It is also important that development of a streetcar not come at the expense of RIPTA’s existing statewide bus service or the implementation of service enhancements outlined in RIPTA’s 5-Year Strategic Plan.
And we believe it is critical that development of the streetcar project should be integrated with and not come at the expense of the intermodal Transit Hubs initiative that earned more than 60% voter support in a November 2014 statewide referendum.
If these conditions can be met and our suggested supplementary financing options explored, then Grow Smart believes the city’s proposed TIF ordinance would be more equitable and help to achieve a more prosperous future for Providence and Rhode Island.
As a broad coalition of diverse interests, Grow Smart looks forward to the benefits this project will bring to our Capital City and the entire region.