Tag: transit funding

incremental transit

Dan AllisonLeave a comment

I wrote a blog post for Sacramento Transit Advocates and Riders (STAR), How to build successful transit, in August 2025, a year ago. It is probably one of the most valuable and insightful posts STAR made, as important today as it was then.

I attended the last SacRT Board meeting on July 27. On the agenda was authorization for SacRT staff to negotiate a grant from the state for a study of bus rapid transit (BRT) to the Sacramento airport (agenda item 2.11 on consent calendar “Authorizing the General Manager/CEO to Execute Agreements with the California Department of Transportation for the Sustainable Transportation Planning Grant Award for the Green Line Bus Rapid Transit to Sacramento International Airport”. The item was not pulled from consent, but three board members commented and said that they were supportive of the study, but still absolutely committed to light rail to the airport. I suspect the other board members felt the same way, but did not comment. The board and many SacRT staff continue to promote light rail to the airport, though they have finally admitted that there is no likelihood of it happening in the near future due to two major issues: lack of agreement with the city and county for crossing the American River, and funding for a bridge at Truxel Road, and the overall cost of the project. The last time it was estimated, it was $2 billion dollars, a cost that will continue to rise and accelerate over the years. The entire capital budget for SacRT, which includes light rail modernization and bus replacement, and fare technology, as well as a large number of other activities, is only $2 billion per year. That portion of the budget includes mostly funding from federal and state sources and grants; it is mostly not Sacramento County Measure A or other local sources. That means, as a practical matter, that the Green Line would zero out an entire year’s budget for everything else, or if spread out over 10 years, 10% of the budget, every year. And the estimate of cost is very conservative.

The public has said, throughout the Transit Idea Exchange process (A Community Collaboration to Shape the Future of Transit), that they did not want huge investments in infrastructure, but instead wanted better and more frequent bus service. How to build better and more frequent bus service? Well, by incrementally improving transit. Back to the STAR model:

I’ve decided to call this incremental transit. As the STAR post noted, the concept did not originate with STAR, but comes from Strong Towns, The Strong Towns Approach to Public Investment, and the ideas presented by Jarrett Walker in Human Transit (the book and the website).

The SacRT Board and many of the SacRT staff want to jump from step 1, or actually, step 0.5, since the frequency of bus service to the airport is hourly, not 30 minutes, to step 5, bypassing all steps in between. That is a mistake. Not only does the approach put any solution off for years, it risks turning the public off to any service to the airport since nothing so far has been successful (the bus is mostly empty). Light rail might be mostly empty as well.

value capture for transit funding

Dan AllisonLeave a comment

Common Ground California has produced a white paper Transit Value Capture for California, by Derek Sagehorn and Joshua Hawn. In my previous posts about funding transit and transportation (how to fund transit in Sac county, transportation funding ideas, no Measure A in 2020, Against Measure A, etc.), I had not really looked at this option because I didn’t understand it very well. But the white paper and additional research has given me a better understanding.

“Regressive consumption taxes instituted by local and state governments to fund public transit investment are approaching legal and political limits.”

Transit Value Capture for California, December 2020, Derek Sagehorn & Joshua Hawn, Common Ground California

The first of the tax options is a Land Gain Tax, basically a capital gains tax on sales of property, applied through the capital gains section of California’s personal income tax. The paper presents some models, based on the distance from rail stations and major bus hubs, with Transit Value Capture Districts, and the type of property (commercial or owner-occupied). This tax would be implemented at the state rather than local level, because it is an income tax which counties and cities in California are not permitted to levy, so the funds would be redistributed to the transit agencies. This option would require some legislation, but not anything on the level of a constitutional amendment.

The second option is a Regional Real Estate Transfer Tax, a tax on the transactions like a county or city level tax, but intended to fund large infrastructure projects of regional significance. For the Sacramento region, that might be enhancements to Capitol Corridor and San Joaquins train service, and bringing high speed rail to Sacramento. This option would also require some legislation.

…windfall gains due to increased development potential to affected landowners.

Transit Value Capture for California, December 2020, Derek Sagehorn & Joshua Hawn, Common Ground California

Several other options are mentioned in the paper. Regular real estate transfer tax (RETT), implemented at the county or city level in some but not all locations (City of Sacramento is one), though the percentages are generally low except in a few cases. But counties can set their levels, and could allocate the increase to transit. It is not clear to me whether any transit agencies have the authority to levy this tax, but of course funds could still be used for transit. The state documentary transfer tax is an insignificant source of income, and it appears to go into the general fund.

2020 Proposition 15 would have removed the Proposition 13 property tax reductions for commercial property, resulting in $billions of dollars in state income, much of which would have gone to education but some to other uses such as transit. It did not pass, but it will be back on the ballot in the future.

Mello Roos community facilities taxation districts can be established around specific projects, as was attempted for the Sacramento Riverfront Streetcar. I don’t know enough about these to say whether they are useful or appropriate.

The other major mechanism the paper presents is development value capture, where the transit agency is directly involved in development, the profits of which can go to transit capital and operations. Since in the Sacramento region almost all transit agency owned property is associated with SacRT’s light rail system, the use of existing properties would be limited to those properties that are excess or are currently used for underutilized parking lots. SacRT has preferred to sell off properties, which has a one-time income impact, but can’t lead to ongoing income. They have been encouraged to become involved as leads or partners in development, but have so far resisted. The transit agency most involved in development in California has been BART in the bay area. Legislation has allowed them more flexibility and types of involvement than most transit agencies have, though even they have some unfortunate restrictions. To be effective, additional legislation would be required.

Of these options, the one over which people at the local level have significant control is the Real Estate Transfer Tax. But having transit agencies, cities and counties getting behind legislation necessary to ease or implement the other value capture ideas would be very worthwhile.

As with all my posts on transit and transportation funding, I am not presenting myself as an expert. If you have corrections to fact or implication, please let me know.