To Raise Funds for Transit, Denver Can Follow the Lead of Seattle and LA

At a Rail~Volution panel, the people who helped pass a transportation funding measure explained how they got it done.

Photo: David Sachs
Photo: David Sachs

The Hancock administration is working on big plans to expand and improve the city’s bus and train network with its Denveright planning initiative. One of the key questions going forward is how to pay for these upgrades. RTD, the region’s transit provider, doesn’t have the resources on its own to provide all the transit service that Colorado’s densest population center needs.

Denver’s November bond measure won’t be enough either. It will generate $431 million for streets and transportation, which will be a boon for sidewalks, bike lanes, and the East Colfax bus rapid transit project, but pales in comparison to the resources other cities are generating.

A ballot measure enacted by voters in metro Seattle last November will raise $54 billion for transit and complementary walking and biking connections. In Los Angeles, 71 percent of voters approved Measure M, which will generate at least $120 billion for transportation.

Denver could learn a thing or two from the campaigns to overhaul the transportation systems in these cities. Fortunately, leaders from both cities are in town this week for Rail~Volution, a national conference about all things transit. Streetsblog heard directly from the people who helped pass those ballot measures in LA and Seattle — here’s a digest.

Denver needs a political champion

The first thing you need is a leader dedicated to getting the job done in the face of inevitable push-back, said Phil Washington, CEO of the Los Angeles County Metropolitan Transportation Authority. (Washington formerly helmed RTD and oversaw the implementation of Denver’s FasTracks program.)

“Everyone knows you need a political champion when trying to do something like this,” Washington said. “Mayor [Eric] Garcetti was that political champion.”

A transit ballot measure would also need the support of Denver community leaders. An earlier ballot measure in LA, Measure J, failed, Washington said, in part because proponents didn’t have important constituencies on board. Neither black churches nor the Sierra Club supported Measure J.

“I made a point to go out and reach out to minority communities — specifically the African American clergy community in south LA,” Washington said. “We actually asked and convinced the African American clergy in support of Measure M.”

The Sierra Club also came around on Measure M because unlike Measure J, which included a lot of funds for roads, it focused heavily on transit.

Good transit is a “must-have” not a “nice-to-have”

People who don’t ride transit don’t always grasp how essential it is. They see it as an amenity for a few, not a cornerstone of economic prosperity, opportunity, and fairness that benefits the whole city. If that’s how most voters view transit, a big ballot measure will be in trouble.

“One of the common pieces of push-back we got is that transit is a shiny nice-to-have, not a must-have,” said Abigail Doerr, who helped get the Seattle region’s tax passed as advocacy director for Transportation Choices Coalition. “We had to make sure that we were making the case that this wasn’t a nice-to-have but a must-have for our region to prosper and move forward.”

In a city like Denver, there simply isn’t enough space for bigger roads. We need to make more efficient use of the street space we have — and that means moving people with transit, not cars. Even Denverites who never ride transit will benefit from the continued growth that good transit will make possible for years to come.

“We talked a lot about this idea of leaving an infrastructure inheritance for our children like the infrastructure our forefathers left us,” Washington said. “And that actually resonated.”

Be honest about congestion

Transit does not eliminate congestion. But frequent buses and trains with dedicated right-of-way give people options to bypass it.

“‘Removing traffic’ was not something that we could say,” said Jessica Duboff, who helped run LA’s campaign with the Center for Business Advocacy. “It actually isn’t true. What we were doing — building light rail — won’t reduce the amount of cars on the road. As our region grows, it’s not going to get less congested. So we were very disciplined about saying this is a reliable option to get out of traffic and get to where you need to go. It’s a small distinction but a really important one.”

Denver’s traffic isn’t even that bad compared to other cities, despite the hyperbole you may have heard. The question is whether the city will invest in solutions before it gets much worse.

“If you don’t like what congestion you’ve been facing the last five years, you really need to think about where it’s heading, and get ahead of it to the extend that you can,” said Peter Rogoff, CEO of Sound Transit in the Seattle region. “And that’s what really expected our board of directors to go big. The core catalyst in our region, I believe, was the fact that congestion had worsened to a community that was not accustomed to it.”

  • TakeFive

    I know when numbers get thrown around they’re, well, just numbers. But the numbers for both Seattle and Los Angeles are optimistically leveraged numbers counting on YUGE Federal $’s. ST3 estimates raising $27 billion in revenue from local taxes over 25(?) years. Measure M, I never dug deep enough to fully understand but I recall reading it would raise local funding by about $900 million per year (which meant a doubling) to something less than $2 billion.

    To reiterate Seattle and also with Los Angeles, both were metro-wide taxes. With respect to just the city of Seattle they did pass Move Seattle, a $900 milion bonding for transportation projects with an emphasis on mobility in 2015.

    IMO the best model for creating transportation revenue $’s for Denver would be Phoenix. Metro-wide MAG in Phoenix (DRCOG’s sister) is working with $22 billion of investment over 20 years while the City of Phoenix passed $17 billion in new taxes for transportation funding through 2050 hoping to leverage that up to over $30 billion. That would equate to $8.5 billion in Denver. When MAG renews in 2024 the amount should be at least $30 billion for the next 20 years. How the money is spent is ofc up to each city/metro.

    • toofatforyou

      Your tax cost estimates for Sound Transit are way, way low. Where did you get them? Try locating an accurate tax cost estimate, which will be a function of the number of years the board pledges to collect the full range of taxes at the maximum rates as security for the 40+ year terms of the debt it will issue over the next several decades. Good luck — Sound Transit’s staff keeps its estimates buried deeply in a dark silo.

      • TakeFive

        Best I can recall that’s an estimate for 25 years. I’d love a good source so help me out.

        • toofatforyou

          Sound Transit doesn’t aggregate for the public the amount of taxing its bond sale covenants require.

          The existing contracts provide the taxing will last 15 years beyond the 25-year build-out period. If you go to the “soundtransit [dot] org” website and look at the Nov. 29, 2016 bond sale resolutions you’ll see that’s what the board committed to (those new “green” bonds are secured by 40 years of taxing at the maximum rates).

          Over the next 12 months the RTA expects to haul in about $1.4 billion of tax revenue. Assume a tax revenue growth rate of 5%. Basic algebra then allows an estimate of the aggregate of the annual tax revenue figures over that four-decade stretch. The sum of a 40-term geometric series, with a common ratio of (1.05), where the initial value is $1.4 billion, equals $169 billion.

          A calculator here helps with the algebra: ( http://keisan.casio.com/exec/system/1234231998 ).

          • TakeFive

            What part of those taxes come from ST3?

          • toofatforyou

            The way it worked is that most of the ST1, ST2, and ST3 sales taxes and annual vehicle taxes were used as security for the post-ST3 debt. The new property tax began being imposed later, and as of yet it is not being used to secure debt.

            Here is one of the ST3 bond sales ordinance staff reports, part of the TIFIA loan resolution:

            http://www.soundtransit.org/sites/default/files/Resolution%20R2016-36.pdf

            “The TIFIA Master Credit Agreement pledges to the payment of the TIFIA loans the total agency Sales Tax, MVET and Rental Car Tax, including the ST3 taxes [ ]. . . . .

            “From 2040 through final maturity (the 35th anniversary of the earlier of the scheduled or actual completion of the Project), principal and interest are payable in equal semi-annual installments. The final maturity of the loans is expected to range from 2055 to 2059.”

          • TakeFive

            I asked my BFF and a quick google stated:

            Funding. Sound Transit 3 would cost a total of $53.845 billion in 2041 dollars, using $27.7 billion in new local taxes raised during the 25-year construction phase.

            So I wasn’t totally crazy. They also mention various other sources most notably FTA Grants. The Wikipedia page also mentions bonding. https://en.wikipedia.org/wiki/Sound_Transit_3#cite_note-49

            A portion of the plan would be funded through $11 billion in bonds, which would need repayment before taxes could be repealed. Estimates for full repayment and repeal range from 2048 to 2068, based on financial models from Sound Transit.

            It sourced a Seattle Times article I hadn’t previously read which added some clarity. ( http://www.seattletimes.com/seattle-news/transportation/breaking-down-the-54-billion-sound-transit-3-initiative/ ) ST3 essentially doubled the taxes for transit. While ST3 doesn’t have a sunset clause it is limited to building and operating the specified projects in the initiative. Bonding ofc establishes debt which will need be repaid but that’s not the same as revenue raised from taxes. They aren’t relying as heavily on federal funding as I had thought though.

          • toofatforyou

            I didn’t say you were crazy, and I certainly didn’t mean to suggest it.

            “ST3 essentially doubled the taxes for transit.” It doubled the rates for Sound Transit, but extended by decades the period the combined rates would be collected. That means the amounts of taxing is several times greater than before. Bear in mind as well that there is additional dedicated bus taxing here, by King County Metro. Right now in Seattle the bus and train taxing is a 2.4% sales tax, three annual car taxes, and two property taxes.

            Also, the Sound Transit board has discretion to use revenues (from all sources) for projects in addition to those identified in the ballot measure.

            No metro region in the country targets households for dedicated transit taxes anywhere near as heavily as is done here. It’s many times heavier than how general taxes are used to finance buses and trains elsewhere.

          • TakeFive

            Eh, nothing personally taken. I was admittedly going from memory which can always be a little dicey.

            I do understand the gist of what you’re saying. It was an unusual lapse by the voters to OK such a wild proposal.

            With respect to the bonds which are at least limited to $11 billion writing them for 40 years sounds smart given the friendliness of the Bond Market. Like any loan they can be paid off early.

          • toofatforyou

            There’s no limit to the bonding, and the tax rollback (according to staff) is expected between 2055 and 2059. That’s FAR more regressive taxing than usual, and we here in the northwest could not be prouder of our leaders who’re subjecting the community to really heavy regressive taxing (just kidding — they suck). Are you familiar with the RTD’s work? Just try to describe any aspect of it that is not vastly superior to how Sound Transit manages capital construction and financing. That $6 BLN for 137 miles of rapid transit (mostly rail) is soooo much better than what Sound Transit is up to it’s not even funny.

          • TakeFive

            LOL, I do happen to be a fan of RTD’s use of capital. They do have their issues and fair criticism but to your point I recently posted this in their defense: http://forum.skyscraperpage.com/showthread.php?p=7918771#post7918771

            There seems to be some valid reasons for Sound Transit spending so much but it is an eye opener and one has to wonder. For comparison this is interesting: http://forum.skyscraperpage.com/showthread.php?p=7917265#post7917265

          • toofatforyou

            The spending per mile for the past couple of completed segments was in excess of $800 million. That’s not the real jaw-dropper though, it’s the taxing. Look, RailVolution is all about getting new rails systems built, and extensions approved. The Sound Transit model of an appointed board and 1.4% sales tax (that can be used to secure an unlimited amount of 40+ year muni debt), car value taxes and property taxes is how to get the local revenue streams that would jumpstart rail in any number of municipalities. The guts of how Sound Transit is structured — from a financial standpoint — needs to be widely understood. It’s unique, and it means big, big business for the stakeholders.

  • TakeFive

    It’s also important to recognize (and appreciate) what Denver already has. While I understand the focus on (central) Denver but given the recent negative publicity and discussion around RTD, I recently made an eloquent 🙂 and robust defense of what RTD HAS accomplished which can be read Here: http://forum.skyscraperpage.com/showthread.php?p=7918771#post7918771 To put that into a comparative context of RTD’s $57 million per mile cost for FasTracks rail transit, I have this recent update: http://forum.skyscraperpage.com/showthread.php?p=7917265#post7917265

    In many respects Denver is waaay ahead of many, many places but it’s also very true there is much unfinished business.

  • SveDenver

    You point to huge funding number, which means significant more taxes being taken off the working citizens. Yet you fail to mention any improvements to the congestion or traffic.
    RTD light rail has been a bigger failure than ever imagined. The amount of money stolen from the tax payers is unimaginable and the benefits are non existent. Traffic has not decreased and the light rail is at deplorable low all while reducing choice and flexibility for transit users. Light rail is nothing more than a crony capitalism project used to line the pockets of political contributors.
    We should not allow these politicians to steal another penny from the working people for their ill conceived projects.

    • Chris

      CDOT’s road widing has been a bigger failure than ever imagined. The amount of money stolen from the tax payers is unimaginable and the benefits are non existent. Traffic has not decreased and the extra traffic lanes are already crammed full all while reducing choice and flexibility for transit users. Extra car lanes are nothing more than a crony capitalist project used to line the pockets of political contributors.
      We should not allow these politicians to steal another penny from the working people for their ill conceived projects.

      • TakeFive

        Horse pucky. How much of Colorado are you even familiar with? Given their limited funding and among state DOT’s it’s hard to beat CDOT. Aside from ADOT which does have good funding which state DOT’s would you rate higher?

      • CDOT is greatly underfunded thanks to TABOR. We haven’t seen a fuel tax increase since 1992 when Metro Denver only had 2/3rds of its current population. We are the lowest State for fuel tax rate of any State with an urban area in-excess of 2 million people. There are States that charge triple what Colorado does for fuel tax.

        If you want better roads then why not vote for a 10-cent fuel tax increase which would get Colorado road funding up to close to the median among US States rather than at our current bargain basement level?

        • TakeFive

          Good stuff

  • toofatforyou

    The difference between RTD and the municipality that does the taxing/planning in the metro Seattle area is accountability. RTD in Denver has an elected board. Sound Transit is controlled by political appointees. They have no tax sunset terms, no spending budget constraints, no timelines within which projects must be delivered, and no limits to how many billions of dollars of sales tax backed bonds they can issue. The tax costs of the financing plan to pay for $54 BLN in capital expenditures and operating subsidies during the anticipated 25-year buildout likely will be $170 billion, and require imposing sales taxes at the full 1.4%, the car value taxes annually, and the property tax, through 2055. Too bad the story here didn’t describe the nature or terms of the Sound Transit financing plan . . . it’s staggering.

    • Grace

      Please provide the source of your estimated $170 billion total build-out cost projection for the Sound Transit capital expenditures.

    • FissionZero

      What’s even more staggering is your decades-long obsession with this issue, toofat.

      As well as the incredible disconnect you have with reality.

      The RTD board might be an elected body. But their projects are funded by a 1.0% sales tax. You know, the kind of regressive tax you whine about all the time. And – just like in Seattle – that tax was the result of public votes.

      So, whether you have an elected board putting a funding measure on the ballot for public approval, or you have an appointed board putting a funding measure on the ballot… sales tax is still the source. And you think all transit agencies should include a sunset clause? Even those with “accountable” elected boards? Well, you’re outta luck with that one, too, toofat.

      Furthermore, a big chunk of ST’s tax revenue comes from MVET, which is a much more progressive tax. Unless, of course, you think everybody should have the right to drive a $40k BMW.

      Other fun facts: the RTD has been around since 1969. Sound Transit: 1995. Oh, and also: Denver is flat, and enjoys all kinds of wide right of way, many with existing un-used railroad track. Seattle is a giant, hilly hourglass, surrounded by water on two sides, requiring lots of deep tunnels. Guess which city is more expensive to build light rail in?

      Oh, wait. I forgot. The reason it’s way cheaper to build rail in Denver is because of the elected board. Geography and geology are only minor considerations.

      Strong arguments, as always, toofat.

      • toofatforyou

        $FasTracks had like a .4% sales tax increase for 137 miles of rapid transit (mostly rail) and a capital costs of about $6 BLN for a 12 year buildout. Sound Transit hauls in 1.4% sales tax, plus annual car value taxes, plus a property tax, for 30-some miles of light rail and there’s a 25 year buildout, plus decades of continuing taxing after that. The RTA’s managment — especially its grossly-excessive taxing in comparison to how all the peers finance bus and train service — is terrible. Estimate the tax cost of the ST3 financing plan — let’s see if you can come up with something other than the $170 BLN I did. Relish the taxing! Own it — you’re proud of it!

        • And FasTracks wildly overspent on grandiose projects and as a result, 40 miles of the original 137-mile plan has no funding to build, and won’t have funding for another 25 years, while other planned segments are also severely delayed too.

          Now RTD is trying to cut service to a couple of segments of FasTracks that haven’t seen the level of projected ridership now that RTD is flat broke. RTD is even cutting bus service now too.

          And some here think that we Denver Metro voters should trust that another tax increase won’t be frivolously-wasted on grand projects that overrun the original budget by 300-500%? Sure.

          It would be far quicker for Boulder and Broomfield Counties to pass their own tax increase, and fund their own rail mass transit system, than to give RTD any more money to pay back its wild grandiosity that didn’t benefit us one bit.

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