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New TIF districts may greenlight Belmont flyover, other transit projects

New legislation that will allow the city of Chicago to create special taxing districts to pay for rail projects should greenlight the CTA’s massive Red-Purple Line modernization project, which includes the controversial flyover north of Belmont station.

That’s because revenue generated as a result of the legislation will create a pool of local matching funds needed to release federal dollars for the project, which would create a bypass carrying Brown Line trains over Red and Purple Line trains. Until now, the planned flyover and other major transit projects hadn’t gotten off the ground because of state budget problems.

Last week’s passage of the bill, which Gov. Bruce Rauner’s office said he will sign, came as a relief to public officials and transit advocates, who have been agonizing over the lack of matching funds and the risk of leaving federal transit money on the table. It also handed Mayor Rahm Emanuel a victory in a time of rising crime and other civic problems.

“The good news is we have a match, and this taps the federal dollars which we had no way to get otherwise,” Emanuel said in a telephone interview. He said he has booked a trip to Washington, D.C., next week to meet with Secretary of Transportation Anthony Foxx about transit funding.

The tax increment finance legislation, whose approval was part of a compromise on the stopgap budget bill, gives the mayor and the City Council discretion to create districts within a half-mile on each side of 46 miles of “L” tracks, and within a half-mile of the center of the Union Station building. The districts could remain in place for up to 35 years and would remove a portion of increased property tax revenues within their boundaries to pay for the projects.

“Barring the availability of these funds, I cannot see another source,” said Peter Skosey, executive vice president of the Metropolitan Planning Council, a nonprofit focused on regional growth that has pushed for this type of “value capture” legislation for about three years. “I cannot see another path forward for these projects. … It’s critical for people going to and from work.”

The projects to be covered by new TIF districts are the planned $2.1 billion modernization of the CTA Red and Purple lines, an upgrade for the Blue Line Forest Park Branch, renovation of Union Station and the much-discussed extension of the Red Line south of 95th Street.

Democratic Illinois Rep. Dan Lipinski, a member of the Transportation and Infrastructure Committee, said he was “a little surprised” the legislature went for the TIF idea, because such districts have been controversial, but he was happy the state came up with a way forward.

“The capital needs are very great in terms of rehabbing and hopefully expanding some of the service,” Lipinski said.

A TIF district allows the city to divert future property tax revenue increases from a district toward a public improvement project in the community, in this case a transit project. This assumes that property values will increase as a result of the project. TIFs have been subject to criticism because they direct new property tax revenue away from other public services, such as public schools.

The transit TIF legislation tries to allay that concern by continuing to give schools their portion — 54 percent — of any increased revenues. Of the rest of the increase, 80 percent would go to transit funding, while the other 20 percent would flow back to libraries, parks and other services.

Of the four projects, the Red-Purple Line modernization is the furthest along in terms of planning and needs $1 billion in federal money, but a local match is necessary to secure it. That could come from new TIF revenues, which could pay for a bond issue, as well as other funds, said CTA spokesman Brian Steele.

“Once we determine the amount of the TIF proceeds, it’s likely that it could back bonds,” Steele said.

The project, among the largest in CTA history and intended to increase capacity along the system’s busiest line, would involve rebuilding infrastructure and four stations from Lawrence to Bryn Mawr along with building the bypass north of Belmont. The flyover aims to ease the bottleneck at the Clark Junction, where the Brown, Red and Purple lines intersect, by routing the Brown Line above the other two.

The CTA has said the flyover will cut wait times by about three minutes at the Belmont stop and have a ripple effect in cutting delays along the line, though residents have questioned whether it is worth the cost and the disruption to the Lakeview neighborhood. The agency will need to acquire 21 properties to build the flyover, 16 with buildings.

Emanuel said he has made modernizing the Red Line, which has viaducts and bridges that are more than 100 years old, a goal of his administration “These are tremendous opportunities,” said Emanuel, adding that the project would create thousands of jobs.

The first phase of Union Station renovation could cost around $400 million and is in the planning stages. A TIF district for station renovations could provide access to a low-interest federal Railroad Rehabilitation and Improvement Financing loan — TIF revenues could pay off the loan, said Metra Board Chairman Martin Oberman.

“It’s a very big step in the right direction,” Oberman said of the TIF legislation.

The city, the Regional Transportation Administration, Metra and Amtrak have been working to identify what needs to be done to improve Union Station — the third-busiest rail terminal in the country. Among the goals are widening platforms, fixing the ventilation system and improving the concourse, Oberman said.

Amtrak also is seeking a master developer for parcels in and outside the station — including a parking lot to the southeast, air rights over the tracks and construction on top of the station building.

Blue Line improvements and Red Line south expansion are in the early planning stages. The CTA is looking at possible places to expand the Red Line south, which could be either on the east or west side of the existing Union Pacific rail corridor to 130th Street, Steele said. The expansion project could cost $2.3 billion.

The idea of “value capture” for public transit projects is new to Chicago but has been done in other parts of the country, including Denver, San Francisco and Washington, D.C.

A special tax district for transit improvements makes sense because whenever transportation facilities are improved, the biggest gainers are the people who own land nearby, said Ian Savage, professor of economics and transportation at Northwestern University. Land value near train stations has been going up since the pioneer days.

The City Council still has to work out how and when the districts would be implemented, and money generated will depend on how much property values would actually rise.

Skosey sees “an extremely low risk” that land values around improved transit will not go up.

“The areas in the city around transit continue to perform well — that’s why this tool makes sense,” Skosey said.

mwisniewski@tribpub.com

Twitter @marywizchicago