Translink and Real Estate, Take 2
A couple of months back daijimin at STB and I went back and forth
over Vancouver's proposal to become a real-estate developer. At the time I argued that it was illegal because TIF is barred in our state constitution. Daijimin said, in response, that "if it's illegal, we might as well go ahead with the even shadier plan of buying the land with eminent domain, building light rail then selling it after the prices go up. That way you capture all of the gains."
Well, now that more details of the plan have emerged, I think daijimin may have been on to something: Translink has, it seems, gone with the "shadier" approach.
The nickel version of the idea is this: Translink needs funding to build new rail lines, and they know that the property around the stations is going to be in demand, so why not go the extra step and develop the property yourself and use that money to finance the project? It's certainly more attractive than more property or sales taxes.
There are a couple of problems...
The first is eminent domain. Giving a property developer that kind of power sounds like a recipe for a massive conflict of interest. Already Translink is saying that the only way to reall make it work is to buy the property on the sly:
To build three rapid transit lines in a decade, TransLink will need to secure high-density zoning from municipalities to feed ridership and create opportunities to profit from the real estate appreciation, Jacobsen explained.
To acquire the land cheaply and beat out developers and speculators, TransLink will have early discussions about alignments and station locations and then quickly and quietly buy the land where stations are to be built.
Shady! Especially if, as a government agency they have access to the records about property transactions that private developers don't have.
The second issue is that property development is itself a risky business. I know that Vancouver (and Cascadia generally) is supposed to be The Land Of Eternally Rising Property Value, but reality doesn't work that way. Developers go belly-up all the time. Do we really want the trains to stop running if the real-estate market tanks?
Now, Vancouver's planners are hella smart and I wouldn't be surprised if they've thought of these things. Or maybe it's just different in Canada and the idea of giving a government agency that much power doesn't make anyone sweat. After all, they've already done it in Hong Kong, apparently.
But if we're looking for a potential solution for our own fair city, it seems like a LID is a safer, more reliable revenue stream, but one that effectively accomplishes the same thing. Of course, a LID requires all the property owners to approve. Even in South Lake Union, where the vast majority of the property is held by a single owner who was in favor of the tax, there was significant opposition from some property owners.
In short: there are no free lunches!
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IMHO, there is a little confusion here, that tends towards more confusion downstream.
First of all, with the obvious exception of agencies like the FBI, which has recently been illegally wiretapping about 50,000 of us, government agencies do not have "access to records of property transactions that private developers don't have". Property transactions,census records, and assessments, are matters of public record by definition.
In fact, if there is one constant in American life, it is the relentless assertion by private developers that they have access to information the government doesn't have, that the government records are "out of date" or don't reflect this or that startling assertion made by some researcher or pollster.
Secondly, an LID is just that- a Local Improvement District. This mechanism is suited to paving one street, fixing a sidewalk, or putting in a short shuttle trolley. It is not a good way to build a transit network where you need absolute uniformity of standards and equipment over an area of hundreds of square miles.
Thirdly, why was eminent domain just fine when railroads were granted that power (or, in our modern context, the Port of Seattle) but it suddenly becomes a horrible thing when the government of the people wants to use it?
When railroads use eminent domain, they first buy all the land they will later want to sell to developers, which they actually can do in secret, because they are (no matter how much public money they receive) private companies. Then they go to the legislature and say "We need eminent domain to buy this land for our rail line and for all of the sidings, yards, and interchanges we might install in the future".
Yes, I know this will come as a shock to some, but the railroads had no intention of discovering 30 years down the road that they would have to pay extra for a piece of land they had neglected to buy at the outset. Their locating and engineering departments were very careful to secure land and easements they might need decades in the future.
Now, before we go one step further, it is necessary to point out that the map you saw once, with broad ribbons across the US depicting the land the railroads got from the land-grant laws, was totally false and fraudulent. Where the land was granted, which was not the full length of the railroads as shown by that map, it was granted in alternate sections, and the railroads paid the full value of the land (or more) with free haulage for the government, most of it provided during WW I.
And the highway builders who distributed that fraudulent map had no problems with eminent domain- when Boston build freeways in the 50s and 60s they just took the land with no compensation at all to homeowners. A Federal judge who reviewed the U of W land grab (then called urban renewal) towards the University Bridge called it the biggest theft he had ever seen.
Today the pendulum has swung against eminent domain. The Port of Seattle does not want to condemn and pay for the land and housing that will be ruined by takeoffs from the third runway. Why pay for the land when you can use it for free? The rightwing sees eminent domain as an issue that can block new transit systems in their tracks. Legislators don't want to spend the necessary for future interchanges when postponing the problem might allow them to retire before the chickens come home to roost. None of this, in my opinion, adds up to a reasoned or effective argument against the use of eminent domain by transit systems to build viable transportation.
I'm not arguing that transit systems shouldn't have the power of eminent domain. I'm just saying that it's risky to have a public agency with the power of eminent domain that's also in the real estate development business? Do you disagree?
Well, it seems to me that any utility or transit agency is in the development business (unless you're like the City of Shelton, desperately trying to catch up to yesterday). The only real question in my mind is how it will all be managed.