Derailed

Just about a year ago, a modern streetcar system in Fort Worth seemed likely, even imminent. The city had been studying streetcars for 15 years, and the panels and task forces of prominent business leaders were gung ho. A majority of the city council agreed that the project was a no-brainer,

The city had hired an engineering firm to study routes and funding, then won a $25 million federal grant from the Federal Transit Administration to cover about a third of the cost of the starter lines. All seemed to be in place: A 2009 city survey of residents found 75 percent favored a modern streetcar system, downtown business leaders were in favor of lines that originated downtown, and real estate developers who liked the city’s “urban village” concept were merely waiting for construction to start.

But things started to change as summer rolled into fall this year. The city council suddenly wasn’t sure it wanted to accept the federal grant and put off a decision until December. Downtown business interests, according to several sources, didn’t like the designated starter lines that would head out of downtown to the Near South Side and North Side because they feared that tourists and downtown workers might decide to eat and drink on Magnolia Avenue or North Main instead of in Sundance Square. The proponents argued that the streetcars run both ways, but their voices fell on deaf ears.

And just like that it was killed. The council voted on Dec. 7 not even to proceed with the third phase of the study, which would have examined environmental, engineering, and funding issues. Finishing the study wouldn’t have obligated the city to anything more: The council could have approved the study and still chosen, down the road, not to move forward with the streetcar plan.

“Every single group in this city — from the Fort Worth Chamber of Commerce to the downtown business interests to residents of the inner city — had lined up to support this project last year and wanted the city to move forward with the study,” said local real estate developer Fran McCarthy, who served on two streetcar task forces. “We had studies that projected the economic development within one quarter mile of the lines would generate about $350 million in additional economic development over 15 years.

“We had funding in place that would not raise any property taxes and not dip into the city’s general fund,” McCarthy said. “And then city council decided to vote against it. And the question is, why?”

Getting an answer to that question is difficult. Mayor Mike Moncrief and the four council members who voted against continuing the study cited the current economic climate and questioned, despite all the years of study that had already been done, whether the city even needed better mass transit options. This is not the right time to invest in streetcars, several of them said.

“This has been a real struggle for me,” Moncrief said at the meeting. “The bottom line is, many of us are still wrestling with concerns over funding.”

Moncrief also suggested that perhaps the only way to do the streetcar plan was through 100 percent private investment. But modern transportation projects — from toll roads to airports to commuter rail lines — have always been done with some public funding. In this case, the public portion would come from two tax increment financing districts, or TIFs, entities that are allowed to keep tax dollars within certain geographic areas to help fund public infrastructure there.

What’s more, the city actually had in hand an offer from private investors to guarantee the streetcar system’s costs — but at least one council member said he’d never heard about it until Fort Worth Weekly started asking questions for this story.

There were other factors at play. Downtown business leaders deny that they worked against the streetcar project, but others said the Sundance Square interests actually feared the economic development that many expected and welcomed along streetcar lines, because it might represent more competition for downtown.

Fort Worth’s historical attitude of giving little value to mass transit was probably a factor in the decision as well. Funding for the Fort Worth Transportation Authority (The T) has also been on the low side compared to other cities, and the accepted view has always been that it’s mostly poor people who ride the bus — another reason the system gets little respect. Thus, better mass transit options have always been considered pretty much off the political radar screen

But there also appeared to be a very odd lobbying ploy in play. According to one council member, who asked that his name not be used, a proposed rodeo arena backed by billionaire Ed Bass was portrayed as a competing interest to the streetcar system, even though the funding for the two projects would have come from different pots. Public funding for the rodeo arena (somewhere in the $100 million to $150 million range) would have to be approved by city voters in a bond election, while the streetcars would be funded by the already approved federal grant and special tax districts already in place.

“The argument made to me by the downtown business interests was that this project was too expensive and would take business out of downtown,” said the council member. “And I was told that many citizens saw the streetcar as a luxury, and voters down the road might not have the appetite to vote for funding another luxury item like the arena.”

Andy Taft, president of Downtown Fort Worth, Inc, a nonprofit organization that promotes downtown business interests, said he never heard such arguments. “There were very serious questions about funding from downtown business leaders, but I never heard anyone question the streetcars hurting downtown businesses or competing with a rodeo arena,” he said.

“There was definitely an age gap on this issue,” said Bernie Scheffler, who owns Trinity Bicycles on South Main Street, where one of the starter lines would have run. “City council has been asking us to buy into moving back into the central city, and many of us have. But the younger workers want better transportation options, and this decision goes against the city’s comprehensive long-term plan.

“If the downtown business interests opposed this behind the scenes — and I am hearing they did — it is very shortsighted on their part,” Scheffler continued. “Because the streetcar line goes both ways. Many people would be using it to come into the downtown areas.”

Fort Worth Assistant City Manager Fernando Costa, a longtime proponent of the streetcar plan and urban infill development, said he also noticed “the demographic difference between those who were for streetcars and those against. It was almost a debate about whether we provide different tools for urban economic development or not.

“The debate about streetcars was, and is, a debate about understanding the future of Fort Worth in a broader subtext,” Costa said. Those differing visions of the city “came to the surface on this issue and will likely come to the surface on other issues. It’s about planning for the long-term future or doing things as we always have.”

Ron Slate, 71, is a retired military officer who lives on the city’s far West Side. He spoke at both hearings and was adamant that streetcars “are not needed, a bad use of taxpayer money, and the costs will always go higher once they get started with the first lines.

“Public transportation is hard to do in the U.S. because people want convenient and viable transportation, and that revolves around their cars,” Slate said. “The buses are empty in Fort Worth, and I don’t see why people will be getting out of their cars to ride a streetcar a few miles down the road. This is a luxury for a very few people that right now we cannot afford.”

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But what of the studies that say that “choice riders” (meaning those who have a car and choose not to use it), will use rail mass transit — be it commuter, light, or streetcars — in far greater numbers than they ride buses?

“I just don’t think we get a return for the cost of paying for this,” Slate said. “If we want to improve mass transit options, then we should invest in a better bus system, which can be done cheaper. The study said about 2,000 riders a day would use the streetcars. I don’t think $80 million of taxpayer money should be spent on such a few people.”

T board member Gary Havener spoke against the streetcar proposal at the town hall meeting. “First and foremost is the cost for this,” he said. “The consultant did a study of the cost of funding a rubber-tired trolley like Molly the Trolley currently in use downtown,” he said. “The rubber-tired trolleys running along the same lines of the streetcar would come in at between $4 and $5 million.

“The $80 million streetcar cost is basically about real estate development and not better transportation,” Havener said. “I didn’t think the city warranted that type of investment during these economic times. We wouldn’t get a return on this huge taxpayer-funded investment in a decent period of time. I couldn’t see how this was economically viable right now.”

Former council member Clyde Picht also spoke up at both hearings, calling the streetcar proposal “the wrong thing at the wrong time.

“This wasn’t about transportation, it was about economic development,” Picht said. “Southside real estate developers wanted something that would benefit them for free. The rest of the city pays the bulk of the costs, and [those citizens] wouldn’t even use it. And as far as economic development, the West Seventh Street corridor has done that without streetcars.

“Older people are against this because they see all the money going downtown, and they get little benefit from it,” Picht said. “They get irritated by road problems in their neighborhoods and then are told the city wants to spend $80 million on a transportation project that has no real benefit for them or the city. I think that was the main issue, and we could see the frustration from these people coming to a head.”

Don Woodard Sr., 84, a local insurance executive and prolific letters-to-the-editor writer, put it more succinctly. “It is a stupid idea,” he said. “They will be tearing up the streets and adding to congestion. Buses are flexible. Streetcars are a dead horse.”

“He was way off base suggesting [only private investment],” said McCarthy. “My taxes are used for roads I might never drive on, but transportation projects are funded with public money for the greater good.”

In an e-mail to one of his constituents (forwarded to the Weekly), council member Carter Burdette expressed his view that “economic development dollars would not be realized by the TIFs — if at all — until 10 or 15 years down the road … and “therefore the $85 million needed to build the ‘starter line’ would have to be borrowed by the city.”

That is not the case, said Paul Paine, president of Fort Worth South Inc. TIFs, by state law, can adopt a pay-as-you-go model, or the TIF agency can borrow against future revenues. The city would not be the borrowing entity; the TIF district would, he said.

And private investment firms could also float the note. In a letter sent on Aug. 23 to Jay Chapa, director of the city’s Department of Housing and Economic Development, the CEO of ORIX Capital Markets in Dallas offered to help privately finance part of the streetcar project.

“We are extremely interested and have the current capacity to provide the entire $28 million (or such other amount as may be required) needed to match the federal grant and finance the project,” wrote ORIX CEO Michael J. Moran. “[W]e are comfortable securing repayment of our financing arrangement with TIF [funds], and would not require the backing of the full faith and credit of the city.”

Chapa told the Weekly that he forwarded a copy of the ORIX letter to council in late August or early September. Neither Moran or Moncrief returned calls from the Weekly seeking comment on the ORIX letter.

But council member Sal Espino, who voted to fund the rest of the study, said he was unaware of ORIX’s letter to Chapa.

“I never heard of this until right now,” he said last week. “I don’t know if it would have changed votes on council, but it would have been nice to know the city would not be on the hook if the TIFs didn’t have enough revenue to pay for the streetcars.”

The city had already spent $100,000 on the first two phases, so the Dec. 7 vote was merely about whether to fund the third phase with $100,000. At that same meeting, council approved more than $200,000 to purchase five heavy-duty pickup trucks for various city departments. There was no discussion about whether $40,000 per vehicle was too much to pay.

And then there was the issue of the $25 million FTA grant. Several city council members said they feared that by approving the last part of the study, they would be forced to accept the grant and construct the streetcars. But Costa said that if council completed the study and then decided against streetcars next year, they could still give the $25 million back.

“The FTA would have reserved the funding for us, and if we decided not to go with the streetcars, we would have just given it back,” he said.

In a letter to Moncrief last week, FTA officials said the recent vote was “unsupportive of the proposal the FTA selected,” and the $25 million the FTA “had allocated for the project will, necessarily, be directed to essential public transportation needs in other communities.”

(According to several sources, the North Central Texas Council of Governments will ask FTA to steer the money to Dallas for one of that city’s streetcar proposals.)

Another misconception was that property taxes from throughout Fort Worth would fund the city’s $60 million portion of the project. But that money would have come from the Trinity River Vision and Near Southside TIFs and not from the city’s general fund, which gets its money mostly from sales and property taxes.

TIFs can be complicated, but they essentially work this way: Property tax revenue is frozen at a certain level, and when tax values increase beyond that, the resulting additional tax revenue then stays within the district for infrastructure projects. So if a property was worth $100,000 a decade ago when the TIF was formed and worth $150,000 today, the property taxes from the additional $50,000 in value would stay within that TIF district.

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The TRV and Southside TIFs would have used that funding mechanism to pay for the starter lines. The two downtown TIFs would not contribute to streetcar funding, even though a streetcar loop would run through downtown.

Some were angry that the council was, in effect, deciding what TIFs could spend their money on. “The funding mechanism was approved by the TIF board, and it is what our district thought was the best way to spend it,” said Phillip Poole, a Southside real estate developer and TIF board member. “If we didn’t spend it on streetcars, we would be spending it on something else. The streetcar TIF funding would have no impact on anyone else’s property taxes. In fact, the economic growth that would come near the streetcar lines might actually have reduced property taxes.

“What the city was essentially telling us with this vote against streetcars is that our TIF district can’t decide what we want to use that money for in a system that the city set up,” Poole said. “They listened to downtown business interests and people not in our district and decided what we could and couldn’t do. That’s not how the city’s TIF policy was set up.”

“You don’t ask for a grant and then turn it down without good reason and expect more,” said one local real estate developer who asked not be named. “That’s basic economics and how the federal government works.”

Added Costa: “I think it is evident that some of the federal officials were puzzled that the city applied for a grant and then turned it down. If we lose funding for other projects, that would be regrettable.”

The T has been seeking federal funding for a commuter rail line that would run on existing freight lines from southwest Fort Worth up to Dallas/Fort Worth International Airport. The cost is likely to be about $500 million, and the transit agency has already applied to the FTA to help fund environmental, engineering, and funding studies. Fort Worth had ranked this commuter rail project as a higher priority than the streetcars.

Michael Morris, director of transportation for the North Central Council of Governments, which oversees local grant applications, said he doesn’t know whether the city’s decision to give back the streetcar FTA grant will have any impact on the commuter rail grant application or other future projects.

“We have other business with the federal government and a good track record of doing projects with grant money with success,” Morris said. “I don’t think the decision to return the streetcar money will hurt us — or maybe I hope it won’t hurt us. But I have to admit there is a potential risk.”

Woodard said the federal officials should be rewarding Fort Worth for “doing the right thing and giving back taxpayers’ money for an incredibly stupid project. We should be the example they use for conscientious use of federal tax money during these tough budget times.”

Kevin Buchanan, a local information technology worker and blogger at fortworthology.com, predicted federal money will be more difficult to come by for future projects. “The FTA awarded the grant for streetcars because it connected to the Trinity Railway Express commuter line and the planned line up to the airport,” he said. “They were looking at funding mass transit projects that connect to one another. But they might look at the situation now and have the perception that Fort Worth is not ready to move forward on any mass transit projects.”

Agencies like the FTA, under the Obama administration, are placing a high priority on urban rail mass transit projects. And competition among cities is getting fierce. For the streetcar grant program, the FTA received 65 applications, and Fort Worth was among only six that were accepted.

“I’ve been told privately by some of our local congressional representatives that there will be ‘ramifications’ … [for] other transportation projects, including funding for highways and roads,” said Poole. “But that was never discussed by city council. The council always talks about the importance of highway and road projects, so their silence on what might be the consequences of the decision was perplexing.”

Last year, DFWI president Andy Taft sent a letter with the city’s federal grant application stating the project’s importance to the city.

“Fort Worth’s streetcar network will be a strong catalyst for the types of walkable, high-density, mixed-use neighborhoods needed to attain the goal of a more sustainable future for our country,” he wrote.

Then in a letter to Mayor Mike Moncrief dated Dec. 3, the day after the town hall meeting and a few days before the council vote, Taft wrote that an informal poll of the group’s members indicated that a majority were in favor of doing the third phase of the study.

“DFWI supports continued assessment within a Phase 3 study in order to provide the community and stakeholders with additional information pertaining to the business plan, operational plan, preliminary engineering, and environmental review for the streetcar starter line,” he wrote.

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But he also said, in the same letter, “I am not able to provide you with an official position of Downtown Fort Worth, Inc., as our next board of directors meeting is not until Dec. 16, 2010.” Of course, that was nine days after the deciding vote.

Also included in the grant application last year was a supportive letter from the Fort Worth Chamber of Commerce. President Bill Thornton wrote,  “We would appreciate support for this very important community project, which will improve economic opportunities for all residents and the sustainability of the region.”

This fall, Thornton did not speak at either the town hall or city council meeting. “We did not take a formal position on streetcars,” he said. When asked if the chamber had changed positions since 2009, Thornton said the earlier letter “was merely asking the federal government to be fair and open about the process, but not support either way.”

As for the allegations by some that powerful downtown business interests worked behind the scenes to kill streetcars because it might take spending out of downtown, Taft said, “I never heard that from anyone. We did have questions about funding sources for the operations and if the TIF money would work out, but that was just us doing due diligence on a project of this magnitude. But we didn’t oppose getting all the facts from the last phase of the study.”

McCarthy’s response? “That’s bullshit,” he said. He recalled a meeting downtown in late November when Taft and others “blindsided” streetcar proponents with questions about ridership and operational funding issues that wouldn’t be addressed until after HDR completed its study.

The original streetcar plan called for just a self-contained downtown loop. But HDR also recommended the lines going out north and south. That’s when downtown’s position changed, McCarthy said.

Downtown business interests “were for it when the streetcars were just downtown, but as soon as other parts of town were considered, they were against it,” he said. “The fact that no one from downtown spoke up at either meeting is proof that they were opposed to it but didn’t want to say so publicly.”

Also failing to weigh in was President Dick Ruddell of The T, whose agency had committed $1.6 million annually for five years to fund the streetcars’ operational costs.

“[We] didn’t feel we needed to speak out either way because were going to support whatever Fort Worth wanted to do,” said The T’s spokeswoman Joan Hunter.

The debate over streetcars and other mass transit rail projects has always been based in part on whether they represent a good investment that would draw future development. Proponents for streetcars usually point to Portland, Ore., and its decade-old Pearl District line. City studies indicate that that line has been a vital component in creating $3.5 billion worth of economic development along the routes.

But Fort Worth needs only to look about 30 miles to the east to see what effect mass transit might have on economic growth. In a 2009 study of the economic impact since the first DART lines started running in 1996, through the projected build-out in 2014, the Center for Economic Development and Research at the University of North Texas predicted that about $4 billion in economic activity will be realized. The mixed-use development near the Mockingbird Station stop northeast of downtown Dallas is a testament to
the economic development potential of mass transit.

“We do about 60,000 passengers on light rail lines daily, and the Green Line should add about 30,000 a day,” said DART spokesman Morgan Lyons. Buses in the DART system get about 143,000 riders a day, and the Trinity Railway Express (operated jointly by The T and DART), has about 10,000 daily riders, Lyons said.

The T, on the other hand, has just about 25,000 weekday riders on its buses. The huge difference in riders between the two mass transit agencies is all about funding. DART has an annual budget of $1.25 billion in 2011, while The T’s budget will come in at about $60 million.

“I think developers see these rail lines with a sense of permanence that allows them to know what factors will come into play many years down the road,” Lyons said. “Tracks and overhead power lines are seen as being around for 50 years, and that knowledge allows developers to make decisions on investments with more certainty.”

But those opposed to the Fort Worth streetcar plan thought the “flexibility” of buses was better than the “permanence” of light rail or streetcar plans. “What if development changes over time and the streetcars don’t go to the places that need them?” asked William (Zim) Zimmerman. “Then we would have to rip up the street and start over. Buses have the flexibility to change as the city changes over time.”

As Costa pointed out, the streetcar debate here was in part an exercise in thrashing out Fort Worth’s vision of its future. It pitted urban infill development against sprawl on the outer edges, a completely car-centric city versus one with more mass transit options.

McCarthy said, “We will look at alternative ways to do streetcars, but I don’t expect it [will come about in a new form] if the current council stays as is.”

“We can’t just keep building more roads at billions of dollars in cost to solve our transportation needs,” said Espino. “I didn’t think the investment of about $60 million in TIF money for the economic development we’d get was all that big. And it would have promoted more urban development, which is far less expensive when you factor in the new infrastructure costs that come with suburban sprawl development.

“Fundamentally, the streetcar debate was about what we want Fort Worth to be in the future,” Espino said. “Do we want to have a complete focus on encouraging sprawl and more cars, or do we also want to focus on urban development favored by younger workers who want more mass transit? We can do both. This shouldn’t be about one or another, which was what this debate turned into.”