Development patterns changed and they found out the original plan wasn’t the corridor they needed to build. So they were sitting with money that could only go toward regionally significant projects. They thought of extending the light rail but there were those firewalls in place to prevent the Prop 400 monies from being used for that. There was one big pot of Prop 400, state monies and federal monies. Once in that pot, the federal money had no silos.
“I think it was in President Reagan’s years that they allowed trade-offs,” he said. They looked at the possibility of taking that street monies that they were never going to use and repurpose it to do the 2-mile extension. “We had a lot more in street funds than we had allocated for the cost of the 2-mile extension,” Smith said.
“They’re not our monies, but they’re basically our money to decide the priorities with the acquiescence and approval of everyone else in the region.” Smith said it was one overpass and they didn’t need it anymore, it would have been a waste of money to build. But if they used the monies and allocated it to the light rail extension, then everybody wins. “Because unlike a local street system that is regional in nature, but it’s really local, we are adding to what is truly a regional light rail. Light rail is not a local system; by definition it’s a regional system.”
Smith said they got widespread support because people understood the approach. What they needed next was a funding mechanism to allow acceleration of construction to bring it all on at one time.
Ten or 15 years ago Smith said they came up with a mechanism, Highway Project Advancement Funds, at the federal level, TIFIA funds. “If you have a dedicated stream of funds coming in, it allows you to issue bonds right now, build the project now and take from the stream of money to repay,” said Smith.
“We’ll issue these bonds so that they’re interest-only for the next 6 years,” Smith explained. “The city will pay the interest than the normal cash flow will pick up and will pay off the debt. That way we accelerated the construction.
“We went through the legislature and expanded the program … so it includes … anything related to transportation.”
And there were detractors. With the risk, they were questioning what if the monies never show up? Smith sees it as a calculated risk with a certain amount from the federal government. He said every calculated risk taken so far, the development revenues and success has far outweighed the risks.
“By doing this now we’ve saved so much money that actually the savings pay for the interest,” said Smith. “We’ll be able to build it less expensively than if we waited so we think it’s worth the risk.”
Light Rail Changing a City
“We have four liberal arts colleges from around the country that are setting up campuses in downtown Mesa,” he said. “They are looking for a place to expand and they’re coming to downtown Mesa.” He stressed, “Every single one of them said without light rail, we’re not coming to downtown Mesa.
He also mentioned the Barry & Peggy Goldwater Library and Archives is going to be built in downtown Mesa and the reasons were that there were four colleges coming in and there was light rail coming in. Smith also mentions that the last private investment in resident stock had been an apartment complex built almost 30 years ago and that in the last 10 months, there are four projects not going in that are in excess of $50 million, purely because of light rail. He said, “These are things that would not have happened.”
Even though Valley Metro’s light rail system is nearly five years running, the novelty still hasn’t worn off, Smith said. People go down just to ride the light rail. And, they’re taking cars off the street where people are adjusting their lifestyle.
“In every great metro area you have options,” said Smith. “You’re never going to get rid of freeways, you don’t want to get of those because that’s not how people want to live. But, there are a lot of people who want to live in a more urbanized [area], a lot of businesses that want to congregate and cluster around transit corridors and light rail is the one they want to be around.
“When you have that option, it creates a lot of economic opportunities and that’s how we look at it.”