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Chapter 7. Special Assessment Examples

7.1 The Seattle Waterfront LID⁶⁷

Location: Seattle, Washington

The transformation of Seattle’s central waterfront—beginning with the replacement of the Alaskan Way Viaduct with a deep bore tunnel, followed by the replacement of the seawall, removal of the viaduct, and the creation of a multipurpose boulevard with parks and open spaces—was an expensive and controversial project.

The impetus for this project was the 2001 Nisqually earthquake that damaged the viaduct and its supporting seawall. In 2009, Washington State authorized $2.8 billion from State and Federal sources for a deep bore tunnel to replace the viaduct.⁶⁸ An additional $200 million would be raised by tolls, and the Port of Seattle would contribute about $267 million to fund the $3.35-billion tunnel.⁶⁹

The remainder of the project, replacing two piers, reconstructing Alaskan Way as a boulevard with substantial pedestrian amenities, and other items, was estimated to cost about $728 million.⁷⁰ The replacement of the viaduct with a tunnel would free up some real estate for development. In particular, pedestrian amenities and parks connecting the Seattle waterfront to adjacent areas of the downtown were expected to enhance the economic vitality of the area. This expectation of special benefits for properties in the project area raised the possibility that the benefiting properties should help pay for the project through a special assessment levied in what Seattle refers to as a LID. There are six improvements that Seattle anticipated would be partially funded by the LID: 1) the Promenade, 2) the Overlook Walk, 3) the Pioneer Square Street Improvements, 4) the Union Street Pedestrian Connection, 5) the Pike/Pine Streetscape Improvements, and 6) Pier 58 (collectively, the “LID Improvements”).⁷¹

The Waterfront Seattle Project Special Benefit Feasibility Study was commissioned to assess the value of private real estate in this area prior to the project and its likely value afterward, to determine if the proposed improvements would create any special benefit for these properties and, if so, by what amount. It is reasonable to assume that the removal of the viaduct, by itself, might enhance real estate values in adjacent inland areas. However, for purposes of the LID studies, only the impacts of the six improvements listed above were considered.⁷² The feasibility study concluded that the proposed improvements would likely provide between $300 and $420 million in special benefits to nearby properties.⁷³

Seattle then commissioned the Waterfront Seattle Project Formation Special Benefit/Proportionate Assessment Study for Local Improvement District. This study performed a parcel-by-parcel analysis of the properties in the downtown Seattle area to determine whether any properties would receive a special benefit from the LID improvements and if so, which ones. Key points from the study include the following:

“As discussed further within the report, in the ‘without LID’ (existing) situation, there is poor connectivity between the Puget Sound shoreline/Alaskan Way vicinity and the higher elevation city streets (i.e., Western Avenue) due to topography, historical street layout and other issues. With the LID project completed, accessibility to the waterfront from nearby areas including the Pike Place Market, downtown business district and Pioneer Square will vastly improve. On an overall basis, referring to the economic studies and rating system discussed herein, the waterfront area in general improves from a subjective quality rating of average in the ‘before’ scenario to excellent with the LID project completed.

Special benefit to affected properties is derived from enhanced relative location provided by the LID improvements, superior waterfront amenities/market appeal and other factors. This is strongly supported by study of numerous projects with elements of similarity to the Seattle waterfront improvements that have been completed in other cities (New York, Boston, Chicago, Vancouver BC, Portland and San Francisco). These studies, along with others, were also utilized in the condominium valuation process.

The difference in estimated market value of individual parcels without the improvement project and again with the project assumed completed, as of the same date, is the special benefit estimate. Estimated value ranges without and with the LID project are refined into valuation conclusions based on factors affecting market value of individual parcels. Examples of such factors include changes in locational characteristics and differing highest and best use or development potential before/after completion of the LID improvements. … For each assessable parcel within the LID boundary, this basis of valuation results in a special benefit estimate, which is the difference in value before (or without) the project as compared to the same parcel after (or with) the project.

Proportionality is an important element in any special benefit study. Properties with similar highest and best use, location and physical characteristics should experience a roughly similar special benefit on an overall property basis. Both land value for a specific parcel and overall improved property value are analyzed as part of this study. Many properties within the LID boundary are improved but, due to high land values, the existing improvements may not contribute to overall property value. Also, because zoning within the downtown core often allows new construction at high density (i.e., skyscrapers built on relatively small parcels of land), investors/developers are acquiring underimproved (currently developed at low density) properties for redevelopment or investment hold.

Completing a separate land value analysis offers comparisons between the land and improvements components of these redeveloped sites. It also maintains proportionality of the estimated increase in market value (special benefit). Therefore, properties improved to their highest and best use (not underimproved) such as office/retail buildings, apartments and condominiums—typically multi-storied structures—specially benefit in a proportionate manner; this is, there is benefit to both the land and to the improvements.”⁷⁴

The Formation Study recommended a LID boundary that encompassed approximately 6,200 properties in the downtown Seattle area and estimated a total special benefit to properties within the recommended LID boundary of $447,908,000.⁷⁵

The total estimated LID-funded improvements cost is $346 million. Seattle set a cap of $160 million plus financing costs ($175,500,000 total) as that portion of the total cost to be paid by the owners of property specially benefited by the project. As mentioned above, special assessment payments by property owners cannot exceed the benefits that they receive from the project. Dividing the $175,500,000 special assessment cap by the total estimated special benefit to the assessable property of $447,908,000 yields an assessment/benefit ratio of 39.20 percent. In other words, each parcel receives one dollar in market value increase (special benefit) for each $0.39± of LID assessment. Multiplying the individual special benefit estimates for the affected parcels by this constant ratio results in recommended proportionate final assessments to each parcel.⁷⁶

7.2 NoMa-Gallaudet U Metrorail Station SAD and Adjacent Streets⁷⁷

Location: Washington, DC

During the 1960s and 1970s, the central business district of the District of Columbia (the District) experienced significant disinvestment and a reduction in both private business employment and population, like many other cities. During the 1980s, there was a resurgence of interest in the District’s downtown. In 1988, the renovation of Union Station near the U.S. Capitol focused development interest on the downtown’s previously neglected east end. North of Union Station were many vacant parcels adjacent to the railroad tracks. These had been the site of freight railroad sidings for the loading and unloading of rail freight. This activity had stopped during the 1960s. By the end of the 1980s, the railroad trestles and tracks had been removed, leaving large empty parcels adjacent to the west side of the tracks leading into Union Station.

After Union Station’s renovation, some of the landowners near the intersection of New York Avenue and Florida Avenue (about one mile north of Union Station) sought permits to develop office buildings on these vacant lots. The permits were denied. The landowners requested an explanation. The permit office noted that the only vehicular access to these sites was from New York Avenue, North Capitol Street and Florida Avenue. These streets were already overburdened with rush hour traffic. The permit office concluded that granting office development permits for these parcels would generate unacceptable levels of traffic congestion in this area. The permit office noted, however, that the Metrorail transit tracks were immediately adjacent to these parcels and, if there was transit access to these sites, the permit office would reconsider. At that time, the closest Metrorail transit stops were at Union Station (one mile south) and at Rhode Island Avenue (one mile north).

In 1997, landowners arranged a meeting with District Government officials, requesting the development of a new transit station at this location. One District official noted that the District was close to bankruptcy. (Congress had just created a special appointed body to oversee and approve all District Government spending.) Furthermore, the creation of a new Metrorail station at this location was likely to substantially increase the value of nearby land. The official suggested that the landowners should share in the cost of developing the station if they wanted the project to proceed. The landowners appeared unhappy with this news and ended the meeting.

Dr. Marc Weiss, an economic development official, organized the landowners to support a new transit station. (Weiss also named the surrounding area “NoMa”—North of Massachusetts Avenue). Several months later, landowners offered $25 million for construction of the new transit station (about one-third of the preliminary cost estimate). The landowners and the District Government agreed that the District would sell $25 million in general obligation bonds to obtain construction funds and that a special assessment district would be established whereby the nearby commercial landowners would pay off the debt service (principal and interest) over the 30-year duration of these bonds.

Several commercial real estate experts were enlisted to determine which parcels would obtain special benefits from the creation of a new Metrorail Station at New York and Florida Avenues. As a result of this expert input, legislation was drafted to create a special assessment district for the partial funding of this project.⁷⁸ Owners of land upon which the station would be constructed agreed to donate the land in lieu of requiring public purchase or condemnation. Others temporarily granted free access for construction and staging activities. These donations sped up the process and reduced costs, ultimately benefiting the property owners who ended up with a transit station at their front door.⁷⁹

Construction proceeded. The station was named “NoMa—Gallaudet U” after the neighborhood and the nearby college. Several issues associated with the creation of the special assessment district are worth noting:

• Setting boundaries: There were existing Metrorail stations one mile north and one mile south. It was important that properties that were already benefiting from proximity to existing stations would not be burdened for the creation of a new station which would not provide any additional benefit. Reliance on commercial real estate experts was very helpful in this regard.
• Including and excluding properties within the SAD: According to the real estate experts, the primary property value benefits associated with creating the station would accrue to commercial properties. So existing residences were exempted from the special assessment.
• The special assessment prompted request for relief from “double taxation:” As the special assessment district was being finalized, commercial landowners complained that they would be “double-taxed.” They noted that after the station would be completed, the value of their land would increase, and they would end up paying higher property taxes. They argued that this constituted an unfair double taxation and requested that they receive a credit for special assessment payments against any future property tax increases.

The District officials who received this request were sympathetic and inclined to grant the credit against future tax increases. The District official who initially suggested the landowner contribution objected. He noted that commercial property taxes returned only about $1.85 per year for every $100 of enhanced land value. Using a present value calculation, property tax payments would return less than 20 percent of the publicly created land value.⁸⁰ Granting the property owners the credit they requested would have merely advanced to the District the property taxes that the landowners would have paid anyway, resulting in very minimal compensation to the public for creating an enormous increase in private land values.

District officials agreed to have an economist study the situation. The resulting study examined “optimistic,” “most likely,” and “pessimistic” assumptions about future development. Under the “most likely” scenario, the total commercial property value within 2,500 feet of the proposed station would increase from $190 million to over $1 billion, with over $800 million in increased property value attributable to the new Metrorail station.⁸¹

Table 1. Economic Impact of the Proposed Transit Station on Nearby Commercial Properties.⁸²

	Optimistic	Most Likely	Pessimistic
Annual Growth in Property Value (years 2–10/years 11–20)	7%/3%	5%/3%	4%/3%
Landowner Contribution* (Special Assessment)	$41.4 million	$41.4 million	$41.4 million
Incremental Property Value	$1,237 million	$822 million	$536 million
Property Value/Special Assessment	28.84	18.83	11.92
Assessment as a % of Annual Rents	1% to 2%	2% to 3%	2% to 3%

* $41.4 million is the total principal and interest on $25 million bond over 30 years.

Even under the “pessimistic” assumption about future growth, the increase in future property value was estimated to be almost 12 times the amount of the special assessment. The special assessment amounted to be from 1 percent to 3 percent of projected annual rents.

According to this analysis, there was no risk of overpayment resulting from subsequent property tax increases. Furthermore, there are other examples of infrastructure that is subject to both fee payments and property tax assessment. Water and sewer services are paid for by user fees. Yet, the existence of water and sewer services increases property values, resulting in higher property tax payments as well. In some areas, commercial property owners pay a fee to the neighborhood business improvement district (BID). BID services are expected to increase the value of properties within its service area, thereby leading to higher property taxes. Yet it is rare to hear property owners complain that they are “double-taxed” for water or for BIDs. Property owners solicited the creation of the Metrorail station and offered to contribute $25 million because they assumed that the value of the station would exceed what they were paying for it.⁸³ Indeed, the report suggested that the District might want to implement additional value capture mechanisms to compensate for the enormous private wealth being created by public infrastructure.

• Adjacent properties pay for street extensions: The new NoMa-Gallaudet U Metrorail station entrance was located adjacent to the railroad tracks. Providing vehicular access to the station required a one-block extension of 2nd Street, NE from Florida Avenue south to the station entrance and a one-block extension of N Street, NE from 1st Street, NE east to its intersection with 2nd Street. These street extensions terminated at the railroad tracks. Therefore, they primarily served as access roads for two large properties, one north of the N Street extension and one south of it.

  The Federal government’s General Services Administration (GSA) purchased the land to the north of the N Street right-of-way for the creation of a new headquarters building for the Bureau of Alcohol, Tobacco and Firearms. GSA had security concerns about the street extensions and alignment. The District Government explained that the street extensions would primarily provide access to the new headquarters. The District also demonstrated that the cost of operating and maintaining these street segments, over time, would dwarf the initial construction costs. After negotiation, GSA agreed to construct these streets to DC standards, with the understanding that the District Government would operate and maintain them after construction was completed.

  This arrangement is yet another example of a local government prevailing on a property owner to pay for infrastructure construction. As in the case of the Metrorail station itself, the District Government realized that the street extensions were primarily a benefit to the adjacent properties and bargained successfully for those properties to pay the construction costs. One of the keys to successful value capture is for government infrastructure providers to understand ahead of time that they are creating value for nearby properties and to negotiate fair compensation for doing so.

  Although optimistic projections about the results from infrastructure and private sector investments are common, these projections are rarely revisited after project completion. The business improvement district for this area and the Urban Land Institute hired RKG Associates to produce a report about the economic outcomes surrounding the station in 2014, ten years after it opened in 2004. The transformation of this derelict industrial area into a vibrant collection of offices, apartments, hotels, and retail uses is astonishing. Some of the findings from the 2014 report are as follows:

  • “Projects in the NoMa Station Impact Study Area and spurred by the NoMa–Gallaudet U Metro Station include approximately 3.8 million SF of office space, 183,000 SF of retail, 3,057 residential units and 622 hotel rooms. (Many other projects may also be influenced by proximity to the NoMa Gallaudet–U Metro Station but are outside the scope of this analysis.) Significantly too, over the next five years (2015-2019), another 2.4 million SF of office space, 285,000 SF of retail, and 2,624 new residential units are projected for delivery in the same area.
  • Approximately 14,338 direct, indirect and induced jobs were created between 2004 and 2014 as a result of the NoMa construction spending. In addition, another 15,168 permanent jobs (direct, indirect and induced jobs) have been created as of 2014, resulting in a total job impact of 29,506 jobs.
  • Our study found a strong correlation between the NoMa–Gallaudet Metro Station and the tremendous growth that has occurred in NoMa since 2004. Indeed, the $4.7 billion of total economic output ($2.2 billion in cumulative construction output and $2.5 billion in permanent output in 2014), $330 million of municipal revenue and millions of square feet of development that has come since 2004 would not have been possible without the investment in the NoMa–Gallaudet Metro Station. We concluded from our research that development catalyzed by the NoMa–Gallaudet Metro Station has been one of the District of Columbia’s most important new economic drivers over the past decade.”⁸⁴

7.3 Potomac Yard Metrorail Station

Location: Arlington and Alexandria, Virginia

This is a counterpoint example to the NoMa–Gallaudet U Metrorail station mentioned above. Across the Potomac River from Washington, DC, and immediately south of National Airport was a large, 300-acre freight railroad switching yard. After railroad operations at the yard ended in 1989, the pension fund that owned the land sought to develop it to generate revenues. The fund proposed a mixed-use development for the site. However, development permits were denied because the only access to the project was US Route 1, a roadway that was already highly congested during rush hour. The Metrorail Yellow and Blue Line trains ran right through the east side of the site. The pension fund was informed that a Metrorail station at that location would allow for the granting of the development permit. The pension fund estimated that it would be profitable for the pension fund to pay 100 percent of the cost of a new transit station to obtain development permits. This made a big headline in the American Public Transit Association (APTA) newsletter.⁸⁵

Why did the pension fund offer to pay 100 percent of the transit station costs? As the owner of a 300-acre site, the lion’s share of the land values created by a new station would accrue to the pension fund. It is unusual for a single landowner to be able to “internalize” most of the positive externalities from new infrastructure. But regardless of unitary or fragmented land ownership, it is clear that some infrastructure projects can create land value in excess of their costs. If there are multiple landowners (as is most often the case), this does not negate infrastructure’s value creation potential. It simply makes it more difficult to organize and coordinate. However, with intention and skill, State and local governments can accomplish this.

When residents on the other side of Route 1 heard about this proposal, they were concerned that it would be too “dense” and would generate too much traffic. (Due to its location adjacent to an airport, buildings could not be very tall.) Residents successfully petitioned elected officials to “downzone” the site. As a result, there was no longer enough development potential to justify the cost of creating a new transit station. The pension fund subdivided Potomac Yard into large parcels (landbays) and sold them. Landbay F was developed pursuant to the new zoning as a complex of big box stores with acres of parking. The downzoning resulted in auto-oriented development that generated much more traffic than the original transit-oriented development proposal.

Now, 25 years later, Alexandria is now seeking to transform its portion of Potomac Yard into a transit-oriented development. Construction for the new station broke ground in 2019, with an estimated cost of $320 million.⁸⁶

Figure 2. Potomac Yard Station Map. (North is to the left)⁸⁷

Source: © 2021 Google

As mentioned above, Potomac Yard was divided up into large parcels (landbays) and sold to various interests.

Figure 3. Landbay Map Showing Tier I & Tier II Special District Assessments (prior to removal of Tier II)

© 2021 Google, Imagery © 2021 CNES / Airbus, Commonwealth of Virginia, District of Columbia (DC GIS), Maxar Technologies, Sanborn, U.S. Geological Survey, USDA Farm Service Agency, Map data © 2021

Note: North is roughly to the left. The proposed north station entrance is at the top edge of this graphic above (east of) Land Bay G.]⁸⁸

The City’s adopted plan requires that station costs be paid for by revenue generated from new real estate development surrounding the station in designated areas in Potomac Yard. This revenue is allocated to a dedicated station fund and is generated by several mechanisms, including net new taxes from the ongoing development, two tiers of special tax assessments based on proximity to the station, and negotiated developer contributions on new construction closest to the station.⁸⁹ In particular:

• Net new tax revenue: For any new development taking place in Potomac Yard after January 1, 2011, the incremental tax revenue resulting from this new development is allocated to the station fund after accounting for the cost of City services associated with the new development. The baseline of tax revenue generated by uses in existence prior to January 1, 2011, continues to go to the City’s General Fund and is not counted as available for Metrorail station financing. For new tax revenue generated by new development (in landbays F, G, H, I, J, and L), a fixed percentage (37.5 percent of residential, 16 percent of retail, 12 percent of office, and 7 percent of hotel tax revenue) is allocated to the General Fund to pay for City and school services that the new residents and businesses in Potomac Yard may require. These percentages are based on a fiscal impact study conducted for the City, and represent the amount necessary to cover the cost of the City’s services for the new development.
• Special assessment districts:⁹⁰ Initially, two special assessment districts (Tier I and Tier II) were established to generate further revenue for the Station Fund. All taxable real property in both districts was to be assessed, with no exemptions. At the time, landbay L was the only area not included in a special district.
• Tier I: Special assessment of 20 cents per $100 of valuation applied to Landbays F, G, H, and the multifamily portion of I, with collections beginning in 2011.
• Tier II: Special assessment of 10 cents per $100 of valuation applied to the non-multifamily development in Landbay I and all of Landbay J. Prior to the elimination of Tier II, collections were planned to commence the first calendar year after the station opening. In 2018, the proposed South entrance to the Potomac Yard Metrorail Station was eliminated, and the Tier II special assessment was eliminated as well.
• Developer contributions and shortfall guarantee: The third primary source of revenue is from developer contributions made by the various owners of the landbays. In 2010, the owner of landbay F pledged to contribute $10 per square foot (2010 dollars) of new development for up to 4.9 million square feet of development, indexed to inflation. In order to reduce the risk that the City may need to draw upon General Fund revenue, the owner of landbay F also agreed to cover any station fund cash flow shortfall for Alternative B or Alternative B-CSX should the station fund level be insufficient to cover annual debt service. This guarantee is capped at a cumulative amount of $32 million of the life of the bond issuance, and cannot exceed $10 million in any single calendar year.

7.4 State Route 28⁹¹

Location: Fairfax and Loudon Counties, Virginia

Fairfax and Loudoun counties formed Virginia’s first transportation improvement district (TID), which is a form of special assessment district. The Route 28 TID accelerated highway improvements that otherwise would have relied on pay-as-you-go funding. The improvements, conducted over decades and multiple phases, generally included widening and interchange improvements throughout the corridor.

The TID encompasses 14,800 acres of land, approximately 14 miles along Route 28 in the two counties. A surcharge of up to $0.20 per $100 of assessed value is levied annually on the general property tax on commercial and industrial property within the TID. The billing, collection, penalties, and other procedures are the same as those for the general property tax.

Project costs are funded by the Route 28 TID (75 percent) and Virginia Department of Transportation (DOT) (25 percent). To cover the Route 28 TID portion, several series of bonds have been issued repayable from the TID revenues. To provide credit support to the bonds, each county covenants to make up any deficiencies in revenues to ensure debt service is paid.

The TID is created pursuant to the Multicounty Transportation Improvement Districts Act (Virginia Code Section 15.2-4600 et seq.). A district is formed upon the joint petition of commercial and industrial landowners of at least 51 percent of the land area or assessed value of real property within the contiguous TID. The Route 28 TID joint petition was filed in 1987 and outlined the following:

• Certain transportation improvements would be constructed in the TID;
• Virginia DOT would provide design, planning, and construction of improvements;
• A special improvement tax would be imposed and collected by the counties on commercial and industrial property in the TID; and
• Revenues would be used solely for annual payments required under the Virginia DOT contract.

The Route 28 TID, like all TIDs in Virginia, is governed by a nine-member commission—four each of the elected members of the Board of Supervisors of Fairfax County and Loudoun County and the Commonwealth of Virginia’s Secretary of Transportation. The TID chairman is elected by and from among its members. The commission is advised by an advisory board composed of 12 taxpayer representatives.

The Route 28 TID is an example of many forms of partnering. The two counties came together to form the TID. The landowners signed on via the petition and participated on the advisory board. The Commonwealth worked with the counties and the landowners to advance the project construction. In addition, the Commonwealth’s Northern Virginia State Highway Allocation bridged a funding gap in 1988 and 1989 when the TID saw declining property values. The public sector also partnered with the private sector to deliver a substantial portion of the project. In 2002, the Shirley Design Build Team was awarded the first Public-Private Transportation Act project to be implemented in the Northern Virginia area by Virginia DOT, which meant a public-private partnership would complete the remaining improvements in the corridor.

Over multiple phases and projects beginning in 1988 and continuing through today, the TID supported several hundred million dollars of improvements years before they would have been realized through traditional funding. The project made a significant difference in a corridor where a local match was needed to leverage Federal funds.

7.5 Reno Rail Transportation Access Corridor (ReTRAC) SAD ⁹²

Location: Reno, Nevada

Reno is situated on a major rail corridor linking west coast ports, especially the Port of Oakland, to inland destinations. Prior to the Reno Transportation Rail Access Corridor (ReTRAC) project, dual mainline, at-grade rail tracks passed directly through the City’s downtown, creating a number of concerns. By depressing a 2.25-mile downtown stretch of the rail corridor into a 1.75-mile, 54-foot-wide by 33-foot-deep trench, the ReTRAC project resolved numerous environmental, public health, and safety issues. An adjacent access road, relocation of the City’s Amtrak station, and utility relocation was also included in the project.⁹³

The ReTRAC project eliminated 10 at-grade street crossings by replacing them with bridges and constructing one new bridge over the trench, minimizing emergency vehicle delay, vehicular delay, impacts from pedestrian conflicts, whistle warning noise, and air quality impacts. The project also increased property tax revenues by raising residential, commercial, and industrial property values along the corridor. New, developable real estate amounted to 120 acres.⁹⁴

The project allows Union Pacific to improve freight capacity by increasing train lengths to 8,000 feet with double-stacked containers. Greater train frequency is also possible, facilitating Nevada’s warehousing industry.

Figure 4. ReTRAC Construction⁹⁵

Project benefits include the following:

• Eliminated train, car, and pedestrian accidents
• Improved traffic flow
• Enhanced emergency vehicle access
• Increased adjacent property values
• Generated 120 acres of developable real estate
• Various environmental benefits

The ReTRAC project began in the mid 1990s as a way to mitigate traffic congestion and improve safety for residents of Reno and took 10 years to bring forward until completion at the end of 2005. Hundreds of planning meetings were held as the project progressed. The costs for the $265 million dollar project were paid through a hotel room tax, special downtown assessment district,⁹⁶ a sales tax increase, city bond, and $17 million in Union Pacific and Federal funds. It was completed on time and under budget.⁹⁷

Initial financing was sought through three loans from the U.S. Department of Transportation pursuant to the Transportation Infrastructure Finance and Innovation Act of 1998 (TIFIA), including:

• $50.5 million secured by County sales and City hotel room taxes;
• $18.5 million secured by tax assessments on real property in a downtown business district; and
• $5 million secured by lease income from property contributed by Union Pacific.

The sales and room tax loan closed in 2002 and was funded in 2004. Negotiations concluded in 2005 on the assessment district loan, although litigation prevented its closing. The City elected not to proceed with either of the two smaller TIFIA loans. Instead, Reno issued $13.9 million in publicly offered bonds. The City repaid the original $50.5 million loan with interest in May 2006.⁹⁸

According to the city of Reno, “The change in Downtown Reno is astounding. No more train/car/pedestrian accidents in the ReTRAC area, traffic flow is greatly improved, emergency vehicle access is enhanced, property values of buildings adjacent to the trench have significantly increased and there are even various environmental benefits.”⁹⁹

The process in Reno for creating a special assessment district can be found at https://www.reno.gov/government/departments/public-works/capital-projects/special-assessment-districts.

Footnotes

⁶⁷ Seattle Office of the Waterfront and Civic Projects. “Local Improvement District.” https://waterfrontseattle.org/local-improvement-district

⁶⁸ Washington State Legislature. SB 5768. https://apps.leg.wa.gov/billsummary/?BillNumber=5768&Year=2009&Initiative=false

⁶⁹ Washington State Department of Transportation. (2020). “Budget.” https://www.wsdot.wa.gov/Projects/Viaduct/Budget

⁷⁰ Seattle Office of the Waterfront and Civic Projects. “Budget and Schedule.” https://waterfrontseattle.org/about/budget-schedule

⁷¹ Seattle Central Waterfront Improvement Program, Local Improvement District Assessment Hearing, Hearing Examiner Findings and Recommendation, p. 7. http://clerk.seattle.gov/~CFS/CF_321780.pdf

⁷² Summary of Final Special Benefit/Proportionate Assessment Study for Waterfront Seattle Project Local Improvement District (LID), Transmittal letter, p. 3. https://waterfrontseattle.blob.core.windows.net/media/Default/WFS%20LID/2019_1204_report_delivered.pdf.pdf

⁷³ Seattle Central Waterfront Improvement Program, Local Improvement District Assessment Hearing, Hearing Examiner Findings and Recommendation, p. 7. http://clerk.seattle.gov/~CFS/CF_321780.pdf

⁷⁴ Waterfront Seattle Project: Summary of Final Special Benefit/Proportionate Assessment Study for Waterfront Seattle Project Local Improvement District (LID) Seattle, Washington (Nov. 18, 2019) pp. 3–6 of 237.
https://waterfrontseattle.blob.core.windows.net/media/Default/WFS%20LID/2019_1204_report_delivered.pdf.pdf

⁷⁵ Seattle Central Waterfront Improvement Program Local Improvement District Assessment Hearing Hearing Examiner Findings and Recommendation, p. 8 of 123. http://clerk.seattle.gov/~CFS/CF_321780.pdf

⁷⁶ City of Seattle. Waterfront Seattle Project Final Special Benefit/Proportionate Assessment Study Executive Summary, (2019) p. 13. https://waterfrontseattle.blob.core.windows.net/media/Default/WFS%20LID/2019_1204_report_delivered.pdf.pdf p. 119 of 237.

⁷⁷ Rybeck, R. “Using Value Capture to Finance Infrastructure and Encourage Compact Development,” Public Works Management & Policy, Vol. 8, No. 4, April 2004, pp. 249–260. https://www.mwcog.org/asset.aspx?id=committee-documents/k15fVl1f20080424150651.pdf. Also, the recollections of the author.

⁷⁸ Council of the District of Columbia. (2001). “New York Avenue Metro Special Assessment Authorization Act of 2001.” https://code.dccouncil.us/dc/council/laws/docs/14-44.pdf

⁷⁹ FHWA. “Project Profile: NoMa—Gallaudet U Metrorail Station.” https://www.fhwa.dot.gov/ipd/project_profiles/dc_noma.aspx

⁸⁰ With regard to property taxation in particular, see Dick Netzer, Economics of the Property Tax, Brookings, 1966, pp. 74-85. See also, Dick Netzer, “Impact of the Property Tax Effect on Housing, Urban Land Use, Local Government Finance, Prepared for the consideration of the National Commission on Urban Problems” (May 1968) pp. 13–18, in which Netzer notes that property taxes, viewed as a sales tax, are much higher than “sin taxes” on alcohol or tobacco and range between 20 and 33 percent. This extraordinary tax burden is reduced for affluent homeowners to the extent that they itemize tax deductions and deduct State and local property taxes from Federal income taxes. This reduction in tax burden was minimized by recent tax reform legislation and has never been available to homeowners who do not itemize nor to tenants whose property tax payments are embedded in their rents and are nondeductible. Source accessed at https://www.jec.senate.gov/reports/90th%20Congress/Impact%20of%20the%20Property%20Tax%20-%20Its%20Economic%20Implications%20for%20Urban%20Problems%20(417).pdf.

⁸¹ Huestis, T.F. “Economic Analysis of the Proposed New York Avenue Metrorail Station,” Prepared for the DC Office of Planning and Economic Development, 2000. Note: “New York Avenue” was the original name of the station. It was later changed to “NoMa—Gallaudet U.”

⁸² Id.

⁸³ Id.

⁸⁴ RKG Associates. (2014). “NOMA: Success Built on Transit.” https://www.nomabid.org/wp-content/uploads/2017/09/MetroAnniversaryReport_RKG.pdf

⁸⁵ APTA Newsletter. (1995). “Private Developer To Build $20 Million VA Metro Station: Public-Private Partnership Is Lauded.”

⁸⁶ Washington Post. (2019). “Metro and Virginia Kick Off Major Construction on Potomac Yard Metro Station.” https://www.washingtonpost.com/local/trafficandcommuting/metro-and-virginia-kick-off-major-construction-of-potomac-yard-metro-station/2019/12/18/8391758e-203f-11ea-bed5-880264cc91a9_story.html

⁸⁷ Alexandria Gazette Packet. (2018). “Off the Rails in Alexandria: Citizens Express Outrage over Potomac Yard Metro Changes.” http://www.connectionnewspapers.com/news/2018/may/19/rails-alexandria

⁸⁸ City of Alexandria. (2019). “Potomac Yard Metrorail Station Cost/Revenue Summary.” p. 3. https://www.alexandriava.gov/uploadedFiles/City2ndVDEQAddlInfoReqAttGPYMSCostRevSum20190429.pdf

⁸⁹ City of Alexandria. (2019). “Potomac Yard Metrorail Station Cost/Revenue Summary.” https://www.alexandriava.gov/uploadedFiles/City2ndVDEQAddlInfoReqAttGPYMSCostRevSum20190429.pdf

⁹⁰ Although the Alexandria City Government refers to these as “special tax districts,” these special assessments constitute “fees” and not “taxes.”

⁹¹ The National Academies of Sciences, Engineering, and Medicine. “Guidebook to Funding Transportation Through Land Value Return and Recycling.” NCHRP Report #873. http://www.trb.org/Main/Blurbs/177574.aspx

⁹² The National Academies of Sciences, Engineering, and Medicine. “Guidebook to Funding Transportation Through Land Value Return and Recycling.” NCHRP Report #873. http://www.trb.org/Main/Blurbs/177574.aspx.

⁹³ FHWA. “Project Profile: Reno Transportation Rail Access Corridor.” https://www.fhwa.dot.gov/ipd/project_profiles/nv_retrac.aspx

⁹⁴ Ibid.

⁹⁵ The special assessment was based upon reductions in noise pollution, with commercial properties adjacent to the rail lines receiving the largest benefit. Information obtained via correspondence on October 7, 2020, with John Flansberg, P.E., Director, Public Works Department of Reno, NV.

⁹⁶ Lisa Loftus-Otway et al. (2008). “Protecting and Preserving Rail Corridors Against Encroachment of Incompatible Uses.” TxDOT. p. 155.

⁹⁷ FHWA. “Project Profile: Reno Transportation Rail Access Corridor.” https://www.fhwa.dot.gov/ipd/project_profiles/nv_retrac.aspx

⁹⁸ Lisa Loftus-Otway et al. (2008). “Protecting and Preserving Rail Corridors Against Encroachment of Incompatible Uses.” TxDOT. p. 155.

⁹⁹ Ibid., photo credit: Schnabel Foundation Company

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