According to a recent Sac Bee news report, the Sacramento Kings stadium developers are planning to fund $500,000 of the total cost of a planned 3-mile, ~$130M rail line through downtown Sacramento. The legal justification for the payment is a mitigation for the proposed development's transportation impacts on roadways near the proposed arena (a remedy for negative externalities). There is no stated nexus between the value that the streetcar will generate for the property and the payments made to fund the streetcar (classic value capture). However, "but for" the streetcar, it would appear that the property owners would not be allowed by the City of Sacramento to use the property for the proposed land use, potentially reducing the value of the asset if an arena is the highest and best use for the land at this time. It will be interesting to see if property assessment districts help fund the streetcar (as has happened elsewhere). That way, the stadium operators might contribute significant funds to the project through another value capture mechanism.
Ian Carlton is a transportation and land use expert specializing in transit-oriented development (TOD). He helps clients - including transit agencies, planning departments, and landowners - optimize real estate development around transit.
Special thanks to Burt Gregory at Mithun for permission to use the Portland Streetcar image above.