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Funding the future October 2017
The document discusses transportation funding in New Jersey and Pennsylvania, focusing on changes such as a gas tax increase and initiatives like Pennsylvania's Act 89 aimed at enhancing transit funding. It highlights the critical role of the Greater Philadelphia area's transportation infrastructure in supporting economic growth, along with funding challenges and the impact of changing market conditions, including increases in ridesharing. It also presents various funding approaches from different U.S. cities, emphasizing the necessity for a shared vision for effective investment in infrastructure.
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Funding the future October 2017
- 1. Funding the Future RichardVoith President & Principal
- 2. New Jersey &Pennsylvania – Major Players $0.23/gal Tax Increase $1.23B in Annual Revenue 2nd Lowest Gas Tax in Nation 8th Highest Gas Tax in Nation New Jersey Public Question 2: 54.5% approved 2
- 3. Pennsylvania & NewJersey – Major Players PA Act 89: • Enacted Nov. 2013 • 5 Year Goal: Add $2.3B to existing $2.4B in State Transit Fund • Sufficient Funding to Maintain Current System • In 2017, the Road Maintenance and Preservation (Road MaP) program launched • A further $2.1 billion to be invested over next decade 3
- 4. Threat to Act89 Trust Fund Raid: • GOP House budget proposal proposed major cuts to transportation • Some Legislators view the Transportation Trust Fund as potential source of revenue to fill the State’s revenue shortfall 4
- 5. 5 Greater Philadelphia Area Transportationfunds ae crucial to the region, which is the engine for the State’s economy: • > 100% of statewide population growth 2010-2016 • 40% of Gross State Product
- 6. • Moody’s Analytics: Philadelphiain the top 3 Metro areas for Amazon’s HQ2 • Transportation was viewed as one of the Region’s strongest assets Changing Markets & Demands 6
- 7. Federal Uncertainty 7 • FASTAct signed in December 2015 – $305 billion through 2020 • New Administration considering additional $1 trillion in infrastructure funding. – PPPs likely to play big role.
- 8. Transit Infrastructure inthe Region 8
- 9. 40 34 30 46 CIRA SOUTH ONE UCITYSQUARE 3601 MARKET APARTMENTS3737 CHESTNUT APARTMENTS 3737 MARKET OFFICES TRANSIT ORIENTED DEVELOPMENT EXAMPLE: UNIVERSITY CITY 9M Sq Ft Underway or Completed 90 ACRE “Innovation District” SANSOM STREET FLATS 4415 CHESTNUT ST PROVIDENT MUTUAL LIFE INSURANCE BUILDING FUTURE “INNOVATION DISTRICT” ∆ IN POPULATION MFL/BSL Tracts Rest of City Citywide 2000 350,000 1,167,000 1,517,000 2015 379,000 1,189,000 1,567,000 Growth 28,000 22,000 50,000 ∆ 8.0% 1.9% 3.3% 3400 MARKET 3800 MARKET STREET 3711 SCIENCE CENTER 9
- 10. Transit Ridership GrowthBetween 1998-2016 23.0M 25.0M 27.0M 29.0M 31.0M 33.0M 35.0M 37.0M 39.0M 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 FISCAL YEAR REGIONAL RAIL +52% 36.0M 38.0M 40.0M 42.0M 44.0M 46.0M 48.0M 50.0M 52.0M 54.0M 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 FISCAL YEAR MARKET-FRANKFORD +41% 24.0M 25.0M 26.0M 27.0M 28.0M 29.0M 30.0M 31.0M 32.0M 33.0M 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 FISCAL YEAR BROAD STREET LINE +29% 10
- 11. Transit Infrastructure: NewJersey 11
- 12. Changing Markets &Demands • Growth in the City of Philadelphia – Growth driven by millennials & immigrants • Growing Importance of City & Suburban Centers 12
- 13.
- 14. Bus Ridership Decline 14 •Recent decline in bus ridership (nationally and in Philadelphia) • Ridesharing is one reason for decline • Ridesharing does not replace transit
- 15. 15 15 Ridesharing and Cities •Ridesharing depends on same density dynamics as transit to operate efficiently • Ridesharing cannot support same volume of trips and density as transit • Loss of agglomeration effects that make cities attractive bus
- 16. & Can Affordto Make Transit Investments Greater Philadelphia Region is an Economic Powerhouse 16
- 17. Funding Approaches: CaseStudies 17
- 18.
- 19. Sound Transit • Overhalf of funding is local • Multiple sources of local funding o Sales Tax o Motor Vehicle Excise Tax o Property Tax o Rental Car Tax o Will cost the average adult $14 per month ($169 per year) in new taxes. o Passed with 54% of the vote Funding Approaches: Seattle 19
- 20. Sound Transit • Overhalf of funding is local • Multiple sources of local funding o Sales Tax o Motor Vehicle Excise Tax o Property Tax o Rental Car Tax • 4 separate ballot measures, each 0.5% of sales tax • Generates approximately $3 billion per year • Measure R passed in 2016 with 69.8% Funding Approaches: Los Angeles 20
- 21. Sound Transit • Overhalf of funding is local • Multiple sources of local funding o Sales Tax o Motor Vehicle Excise Tax o Property Tax o Rental Car Tax Funding Approaches: Los Angeles 21 35% 55% 65% 65% 25% 20% 19% 40% 25% 20% 15% 16% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Prop A Prop C Measure R Measure M Transit Highway Discretionary Local Return
- 22. Sound Transit • Overhalf of funding is local • Multiple sources of local funding o Sales Tax o Motor Vehicle Excise Tax o Property Tax o Rental Car Tax $1,250.0 $856.0 $366.0 $77.0 $0.0 $500.0 $1,000.0 $1,500.0 $2,000.0 $2,500.0 $3,000.0 $2,643.0 Westside Purple Line Extension Los Angeles, CA Other LA Metro Funds LA Metro Reserve Funds City of Los Angeles Measure R (sales Tax) TIFIA Loan Federal 47.7% Local - Loans 32.4% State 0.1% Local 19.8% Local Total 52.1% Funding Approaches: Los Angeles 22
- 23. Sound Transit • Overhalf of funding is local • Multiple sources of local funding o Sales Tax o Motor Vehicle Excise Tax o Property Tax o Rental Car Tax • 122 miles of commuter rail and light rail • 0.4% local sales tax approved in 2004 • $4.1 billion in sales tax for transit • Project being completed using PPPs. Funding Approaches: Denver 23
- 24. Sound Transit • Overhalf of funding is local • Multiple sources of local funding o Sales Tax o Motor Vehicle Excise Tax o Property Tax o Rental Car Tax • Funded by 1 percent sales tax • Local-sales tax revenue comprises 66% of the budget • 90 miles of light rail • Highly subsidized on per trip basis Funding Approaches: Dallas 24
- 25. Sound Transit • Overhalf of funding is local • Multiple sources of local funding o Sales Tax o Motor Vehicle Excise Tax o Property Tax o Rental Car Tax • Half cent sales tax • $250 million local funding of $ 1.16 billion project Funding Approaches: Charlotte 25
- 26. Sound Transit • Overhalf of funding is local • Multiple sources of local funding o Sales Tax o Motor Vehicle Excise Tax o Property Tax o Rental Car Tax $580.0 $299.1 $250.1 $0.0 $200.0 $400.0 $600.0 $800.0 $1,000.0 $1,200.0 $1,160.1 Lynx Blue Line Charlotte, NC City of Charlotte - In- kind City of Charlotte - Infrastructure Funds 1/2 Sales Tax State Full Funding Federal 50.0% Local 24.2% State 25.7% Funding Approaches: Charlotte 26
- 27. Funding Summaries ofSelect Projects 47.7% 32.7% 59.4% 52.3% 50.0% 6.4% 11.6% 23.8% 26.7% 25.8% 13.6% 32.4% 67.5% 11.4% 31.2% 19.8% 58.8% 20.8% 16.7% 5.0% 24.2% 48.8% 5% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Westside Purple Line (CA) WMATA Silver Line Phase I (VA) WMATA Silver Line Phase II (VA) Portland - Milwaukie Light Rail (OR) Regional Connector Transit Corridor (CA) Lynx Blue Line (NC) Crenshaw LAX (CA) Federal-Grants State Local - Loans Local Other 27
- 28. Transit Funding FromLocal (Regional) Sources 28 8% 36% 43% 44% 18% 23% 56% 76% 64% 66% 39% 40% 66% 0% 10% 20% 30% 40% 50% 60% 70% 80% Greater Philadelphia Peer Average Washington, DC San Francisco New York Miami Los Angeles Houston Denver Dallas Chicago Boston Atlanta
- 29. Local and RegionalFunding Sources Type of Tax or Fee Place Tax or Fee Sales Tax Denver, Colorado 0.40% in Denver Regional Transportation District Chicago, Illinois 1.25% in Cook County and 0.75% in bordering counties Los Angeles, California 2.0% Las Vegas, Nevada 0.25% in Las Vegas Seattle, Washington 0.90% received by Sound Transit Excise Tax Phoenix, Arizona 0.50% in Maricopa County Seattle, Washington 0.30% of vehicle value received by Sound Transit Property Tax Toledo, Ohio $2.5 million funding to Toledo Regional Transit Authority Real Estate Transfer Tax/ Mortgage Recording Tax Chicago, Illinois Increase in real estate transfer tax for the Chicago Transit Authority New York, NY MTA uses a mortgage recording tax Income Tax Lafayette, Indiana 0.02% to create funding to region Car Rental Fees Seattle, Washington 0.8% levied by Sound Transit Parking Fees San Francisco, California Parking fees at municipal facilities Business License Fees Louisville, Kentucky 0.2% received by the Transit Authority of River City Impact Fees San Francisco, California Transit Impact Development Fee (TIDF)- One-time fee on development within a delineated area Hotel Tax Las Vegas, Nevada Room tax dedicated to the “resort corridor”
- 30. Success Rates ofReferenda 71% 68% 69% 73% 79% 73% 77% 73% 77% 66% 65% 0% 20% 40% 60% 80% 100% 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Referendum Approval Rates2016 Approved Ballot Initiatives SEATTLE, WA $54.0B Sales & Motor Vehicle Tax LOS ANGELES, CA $120.0B Sales Tax ATLANTA, GA $2.5B Sales Tax 30
- 31. Potential Local andRegional Funding Sources PA Only Regional Estimates Tax Tax Rate Annual Revenue- Year 1 (millions) Bondable Amount (millions) Annual Revenue- Year 1 (millions) Bondable Amount (millions) Regional Sales Tax Revenue (All) 1.00% $280.0 $3,210 $392.2 $4,496 Regional Sales Tax Revenue (Motor Vehicles Only) 1.00% $50.0 $610 $70.0 $854 Real Estate Transfer Tax 1.00% $180.0 $2,060 $252.1 $2,886 Property Tax Surcharge 0.10% $350.0 $3,970 $490.3 $5,561 Tolls $0.01 / mile $50.0 $620 $70.0 $868 VMT Tax $0.01 / mile $230.0 $2,660 $322.2 $3,726 Regional Fuel Tax 6.00% $150 $1,700 $210 $2,381 Regional Personal Income Tax 0.10% $120 $1,410 $168 $1,975 Earned Income Tax Surcharge 0.10% $100 $1,090 $140 $1,527 Telecommunications Surcharge $1 per month $30 $470 $42 $658
- 32. For Less theCost of a Cup of Coffee a Week 32 Annual Revenue Bondable Amount Comparable Tax $1/week ($52 per year) $217 million $2.5 billion Half-cent sales tax increase $2/week ($104 per year) $436 million $4.9 billion Property tax surcharge of 0.1% $3/week ($156 per year) $653 million $7.4 billion 2 cent sales tax increase
- 33. Value Capture 33 The Kingof Prussia Rail Project • Transit Revitalization Investment District (TRID) • City Revitalization and Improvement Zone (CRIZ) • King of Prussia Business Improvement District (BID) Tax Tax Rate Annual Revenue- Year 1 Aggregate Amount Value Capture – TRID All incremental property taxes $0.6 to $1.1 million $135 to $235 million Value Capture – TRID (State) $350,000 per year $0.4 million $4 million BID Assessment 0.10% $1.3 million $19 million
- 34. The Importance ofa Unified Vision • New investment is constrained by lack of local funding sources • One-size may not fit all • Need for a shared vision – Not necessarily a single funding source • Infrastructure takes time—compelling vision and timeline allows all areas to participate 34
- 35. 35 Questions? Richard Voith President, EconsultSolutions voith@econsultsolutions.com Thank you
Editor's Notes
- #3 The ballot question requires that all gas tax funding be deposited into the trust fund.
- #5 PADOT called the cuts “cataclysmic” GOP proposal would take $357 from Public Transit Trust Fund SEPTA fiscal budget formed with the expectation to receive $725 million from Commonwealth this year SEPTA Deputy GM Rich Burnfield warns of fare increases and a 20% cut or roughly 500 of the 9,200 employees
- #7 One of advantage of Philadelphia vs the competition = Transportation
- #8 With an estimated 40 percent of buses and 25 percent of U.S. rail transit assets considered to be in marginal or poor condition, helping transit agencies maintain bus and rail systems in a state of good repair remains an FTA priority. The FAST Act increased annual funding for FTA’s State of Good Repair (5337) program for rail from $2.1 billion to $2.5 billion. https://www.transit.dot.gov/FAST
- #22 A large portion is dedicated to transit. Includes both operating and capital
- #23 The funding has enabled several large scale projects to be undertaken simultaneously.
- #24 Revenues have come in less than expected. PPPs have been used to help speed up the completion. The first PPP was unsolicited.