Many value capture mechanisms generate small funding streams over long periods of time. However, transit projects are expensive projects and may not begin to generate value increment until they're substantially completed or operating. Thus, the money trickles in slowly long after the construction funding has been spent. That's a big disconnect.
Folks in Northern Virginia overcame the timing problems associated with value capture the same way we often do in our personal lives. They took out a loan. Just like a mortgage that will be repaid in small amounts over time, the Fairfax County officials have agreed to a federally-backed TIFIA Loan that will provide much needed up-front construction funds and be repaid by a property-based improvement district.
Fairfax officials will use money from the Dulles Rail Phase 2 Transportation Improvement District and Commercial and Industrial Tax Fund to repay the loan. The county use $218.2 million from this voluntary tax district and $185.1 million in commercial and industrial taxes.
Through the TIFIA program, the federal government provides significantly better terms than bond markets would allow. Repayment is delayed (the same offer you might get on a new TV) and interest rates are low (think about a federally backed mortgage versus a private mortgage).
Expect to see more talk about TIFIA in the near future as more loans complete the program's complex process following a program expansion that occurred several years ago.
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.