Answering the big questions when it comes to Sacramento's proposed $150 million streetcar line

Are streetcars in Sacramento a good investment, or just the latest urban amenity du jour? Proponents of a planned Sacramento streetcar line say the project will help spur new housing and other central-city development. Critics like transit researcher Gregory Thompson say these sorts of streetcar systems “are essentially amusement park rides enhancing small, trendy districts of some cities.”

Downtown property owners are being asked to tax themselves to build the 3.3-mile streetcar line, connecting downtown and West Sacramento. The city of Sacramento has mailed out ballots for an advisory vote by property owners, which are due back in mid-February. If the property owners say yes, the question will be put to registered voters who live inside the boundaries of the proposed streetcar district.

SN&R had several questions about the costs and benefits of the proposed line.

Why streetcars?

Three reasons, says city planner Fedolia “Sparky” Harris. First, the city’s general plan calls for restoring streetcar lines, which were the premier mode of public transit in the pre-auto days. Second, the federal government is giving away lots of money to cities to build streetcar systems. Finally, Harris says, streetcars produce “pretty significant” economic benefits, in the form of increased development. More on that idea below.

Who is going to pay for it?

The cost of the line is $150 million. About $75 million is expected to come from federal grants for bus and rail transit. That funding isn’t guaranteed, but if the feds don’t put it in the budget for 2016, the boosters plan to re-apply in 2017. The next biggest chunk, about $30 million, will come from a proposed new property-tax assessment district downtown. The tax will vary based on a property’s distance from the new streetcar line—up to three blocks away.

Another $25 million is coming from West Sacramento, where voters approved a sales-tax increase in 2008 to help fund streetcars. The city of Sacramento agreed to kick in $7 million, the state and the county of Sacramento are being asked to contribute $10 million and $3 million, respectively.

City Hall watchdog group Eye on Sacramento raised alarms when the city released documents showing that the Kings would pay only five cents per square foot on the arena building—a third of what other commercial properties would pay—and nothing at all on the land under the arena. But now the city says the lower building rate was just a typo, and that the arena will pay the full rate on the building. However, the Kings won’t pay any streetcar tax on the land under the arena. That’s because the city holds the title to the land.

What is the difference between streetcars and light rail?

Light rail is a commuter service, moving people from the city center to suburbs, while the streetcar serves to circulate people around downtown.

Streetcars are single cars, and often have a much lower step than a light-rail car. But in many ways streetcars and light rail look very similar. And in downtown areas like Sacramento, light-rail trains may stop about as frequently as streetcars.

Streetcars will operate in traffic along with the cars and trucks downtown. That’s part of the reason that critics say streetcars are a poor transit choice. “Circulator streetcars are designed to go slow,” says Gregory Thompson, a transportation-planning scholar and chairman of the light rail transit committee of the national Transportation Research Board (part of the National Academy of Sciences).

Thompson is in the process of moving to Sacramento from Florida, and was invited by Eye on Sacramento to review the plan.

Because of the streetcar’s low speeds and circuitous route, Thompson predicts ridership will be low. “This is not well thought-out as a transportation mode. It’s basically a piece of kinetic art.”

But Sacramento Regional Transit’s general manager Mike Wiley calls streetcars a “pedestrian accelerator,” extending the range that people can walk and explore and spend money downtown.

Streetcar proponents estimate it will only cost a dollar to ride, a big difference from the $2.50 it costs to get on a light-rail train. But RT had $1 fares in the central city as recently as 2009, and with the introduction of its new “connect card,” new distance-based fares are possible.

Who will operate the streetcar?

Not clear. Many of the same downtown developers who are pushing the streetcar have also recently been vocally critical of Regional Transit, and called on the agency to “clean up its act.”

A nonprofit organization will be formed to actually operate the streetcar line, though Regional Transit might be contracted to provide the operators. It’s not clear if that nonprofit would be required to open its books to the public or comply with public records and public meeting laws.

It’s also not clear where the operating budget for the streetcar system is going to come from. According to Harris, it will cost up to $4 million every year to run the streetcar system. About $1 million will come from that West Sacramento sales tax. About $1 million could come from fares. The source of other $2 million annually is to be determined. Harris said the rest of the operating budget might come out of Regional Transit’s budget.

Do streetcars really spur development?

A paid consultant for the streetcar project estimates that the line will generate $235 million to $441 million in increased property values in Sacramento, and $78 million to $154 million in West Sacramento.

Unfortunately, the consultant’s model is something of a black box, and phone calls to ask about the model’s assumptions went unreturned. Thompson says there are no empirical studies showing circulator streetcars have an impact on property development.

Portland is cited as a streetcar success story. But as noted in Eye on Sacramento’s report, there are a wide array of tax incentives and other policies that can be credited with the growth in Portland’s urban neighborhoods.

In short, Thompson says streetcars are frequently credited with encouraging investment where it likely would have happened anyway. “Everybody knows that streetcars encourage property development. But unfortunately, that’s just mythology.”

The streetcar economic study also did not compare possible economic benefits of less costly transit improvements downtown, like better bus service, increased light-rail service, or reduction in central-city fares.

On the other hand, one of downtown’s biggest property owners, David Taylor, says he is convinced the streetcar will make him money. He says downtown property owners can charge higher rents in their properties along the streetcar line. “That increase in rent will produce a return four to five times the assessment. I think it’s worth it,” Taylor remarked at a recent pitch to property owners.