Nicollet-Central Streetcar

[Andrew_F]

So, does anyone know when the AA is supposed to be complete? Does the city need the AA in hand before applying for TIGER V?

[mattaudio]

I think the phrase "district" is a little misleading in this case...

[lordmoke]

I think the phrase "district" is a little misleading in this case...

Fair point. How about districts, as there are several, each one parcel?

[TWA]

how far along in the process is this project?

[alleycat]

So does this mean we're going to have to hope that the legislature grants a new TIF "district" every time we want to build one of these? I had hoped they would find a consistent revenue stream for more than one line when Rybak said he was figuring out a funding mechanism. I guess it's the Minnesota way of funding transit.

[RailBaronYarr]

What boggles my mind is that when promoting the Ryan plan for DTE, Rybak explicitly said how "no TIF was necessary" for it, acknowledging that's a GOOD thing. But on the flip side it's totally cool to use the exact same tool but in a really messed up way - targeting specific parcels that were already being developed irrespective of if this streetcar line goes in, and only on specific parcels instead of an entire area. Just so odd.

[MNdible]

Not that boggling.

He's not comfortable with TIF funds directly benefiting a particular private developer. I don't think he's opposed to the mechanism of TIF financing on its face.

[mullen]

the city was advocating for this TIF capture to be available to all cities but the final legislation only allowed for this one pilot project. we're taking baby steps with streetcars.

[helsinki]

From the Minnpost:

http://www.minnpost.com/cityscape/2013/ ... -and-turns

Ms. Harris describes this as "a done deal", by which I think she means that the city has decided on the financing mechanism that it will submit with its application to the FTA.

[helsinki]

From the Daily:

http://www.mndaily.com/politics/minneso ... s-traction

[Andrew_F]

Council to vote on TIF today:http://www.startribune.com/local/west/211920211.html

[twincitizen]

Paul Ostrow like a BOSS-trow: http://www.startribune.com/local/blogs/211817701.html

This guy is pretty smart. I got to know him at a (Indepence Party sponsored) state budget charrette back in 2011.

He should be running for Ward 1 (which he represented for 3 terms) right now. Fiscally, he might actually come off as too conservative for the average Minneapolis DFLer these days. But seeing as how other stadium yes votes lost the DFL endorsement, he'd probably have had no trouble getting the nomination over Kevin Reich.

[mulad]

Does anyone have a good explanation of the difference between TIF and value capture? (Value capture is what is being done here, or at least that's what the city is calling it.) I believe David Levinson has said that value capture has advantages over TIF, though I'm not quite sure what they are. Of course, the article linked by DaPerpKazoo above mentions that TIF is not available to fund transit under MN state law (though the legislature did pass something specifically for this value capture thing, right?)

[twincitizen]

This is TIF, and it is being redirected into something that does not directly create additional tax base. It is not value capture. The City specifically identified 4 or 5 parcels already under development and is redirecting those future tax revenues (above current baseline) to pay off streetcar bonds for 25 years.

The hope is that
a. The increased taxes on those 4-5 parcels will in fact raise enough money to pay off the streetcar bonds, without requiring additional general fund dollars.
b. The streetcar will cause development to occur elsewhere along the line, which will actually provide increased tax base to the City and not be redirected.

It would be considered "value-capture" if we were borrowing against future development that has not yet been planned or approved, and truly influenced by the presence of the streetcar. That might actually be an even worse idea, since said development may never occur or be delayed by market conditions, neighborhood opposition, etc.

If the City was being honest, they would decide that streetcars are a thing we want/need and put it on the budget. Hiding the costs in a TIF district of existing development instead of allowing those funds to be added to the general fund is pretty corrupt.

Alas, the chance this doesn't pass is nil. So we're gonna need like all of you to move to Whittier and get on the neighborhood board to support the development this thing is supposed to bring.

[Andrew_F]

As I understand it, TIF that we're used to seeing here in MN involves forgiving a development's property taxes or a portion of its property taxes for a set number of years in order to make the development more financially viable/attractive.

This deal would create "value capture districts" whose property taxes are redirected from the general fund towards the streetcar project.



Is the above correct? I don't care so much whether it's technically called TIF or Value Capture, just that the mechanics are correct.

[Andrew_F]

If the City was being honest, they would decide that streetcars are a thing we want/need and put it on the budget. Hiding the costs in a TIF district of existing development instead of allowing those funds to be added to the general fund is pretty corrupt.

Ehh, is it the most responsible way to finance it? No. Is it the most respectful of the political process? Not really. Is it corrupt? I don't think so.

Alas, the chance this doesn't pass is nil. So we're gonna need like all of you to move to Whittier and get on the neighborhood board to support the development this thing is supposed to bring.

Someday, hopefully.

[twincitizen]

The "value capture" being described in this thread is still TIF. That's what TIF does. It "captures" an expected increase in property Tax "value" and in most cases directs that increase or Increment towards the Financing of the project/district itself. Rarely is TIF used to pay for something other than the actual development from which the increased taxes are generated.

That's why people are taking issue with this funding scheme, even if they generally support the streetcar plan.

Not trying to be snotty, just putting on a TIF clinic. (Thanks JSA!)

[mattaudio]

I think those of us saying this isn't "true" value capture are critical of TIF in general. TIF would be actual value capture if it was able to quantify the value created by infrastructure/investment and use that to pay for the investment. Such as if we could quantify how much value was added to the entire corridor by the presence of a streetcar, versus the alternative of not having a streetcar, and that marginal value was used to fund the streetcar. It's sort of the Strong Towns approach (I'm sure MNdible will love to hear that).

Anyways, I'd love to see TIF narrowed to only the marginal value of a project, not the value of land adjacent to a project (or especially not four developments that are already under construction regardless of if Nicollet ever sees a streetcar).

[Andrew_F]

The "value capture" being described in this thread is still TIF. That's what TIF does. It "captures" an expected increase in property Tax "value" and in most cases directs that increase or Increment towards the Financing of the project/district itself. Rarely is TIF used to pay for something other than the actual development from which the increased taxes are generated.

That's why people are taking issue with this funding scheme, even if they generally support the streetcar plan.

Not trying to be snotty, just putting on a TIF clinic. (Thanks JSA!)

Not taken as being snotty at all. I'm curious.

Perhaps this is continuing to delve further off topic, but in the typical TIF that we see, does the city actually take out financing or bond for the project and then collect the taxes towards that financing, or is there just no tax collected and it is assumed that the money is going towards debt service?

[twincitizen]

I would imagine in most cases bonds are sold, because construction has to be paid for now. The increase in tax revenue then pays off those bonds over a set time frame, rather than going into the general fund. In theory. Sometimes it doesn't work and the property doesn't generate enough tax revenue to pay off the bonds. Sometimes the TIF district pays off the bonds early or is able to direct additional revenue to something else.

Back to the matter at hand, here's some stuff: http://www.minneapolismn.gov/meetings/tpw/WCMS1P-109562