CA: High-Speed Rail wants to capture taxes around stations, a big part of downtown Fresno

Citing the need to deliver high-speed rail more efficiently, the state agency in charge of the California project is seeking control over land-use and tax revenues within a half-mile of its future stations — a radius that in Fresno would include the entire core of downtown and Chinatown.

The details of the idea have not been fleshed out, but the California High-Speed Rail Authority says it wants to capture the increase in property and sales tax revenues generated in an area by the arrival of a station. That would mean city and county budgets do not capture those extra property and sales tax dollars, which typically pay for police, fire and other essential public services.

The rail authority says it needs these powers to ensure the necessary infrastructure — including streets, utilities and grade separations — are in place when its stations open. Otherwise, its investment could be put at risk, the agency says.

The idea is already running into scrutiny from local politicians and experts who advocate for local government.

“As much as I have been supportive of high-speed rail in the past, any attempt to take revenue from the City of Fresno and transfer it to HSR will be strongly opposed,” Fresno Mayor Jerry Dyer said in a statement to The Fresno Bee.

Ben Triffo, revenue and tax legislative advocate for the League of California Cities, says the idea “seeks to unconstitutionally divert sales and property tax away from cities” to pay for things the rail authority should be paying for itself.

The high-speed rail project has grown controversial since California voters in 2008 approved $9.95 billion in bonds for a train that would connect the state’s major metro areas at a total cost of about $45 billion. Today, after years of delays and cost increases, the focus is first on completing a 171-mile Merced-to- Bakersfield segment that the rail authority estimates will cost at least $36.75 billion alone.

The rail authority last year started pitching ideas — including control over land-use and the ability to capture local tax revenue — that it says will help quicken construction and avoid unexpected cost increases as it seeks to accomplish the original vision of a Los Angeles-to- San Francisco train. It will need the state Legislature’s support for these ideas, which rail authority CEO Ian Choudri has listed in his monthly public reports.

“The program has never been fully funded, and it is our responsibility to seek funding opportunities to deliver the project as soon as possible,” the agency said in a statement to The Bee.

CA High-Speed Rail says stations areas have great need, financing district necessary

The rail authority says it would work with cities and counties to establish enhanced infrastructure financing districts, or EIFDs, or something similar. Local governments, including the city of Fresno and adjacent Madera County, have used these special districts to raise money for necessary infrastructure projects by pooling a percentage of the additional property tax revenues, known as tax increments, as land values rise.

Madera County, for example, has two special districts that capture 25% of the annual increase in county property tax revenue that is generated by development within the Riverstone and Tesoro Viejo communities. Those districts have raised millions of dollars to help pay for improvements on Highway 41.

It’s not yet clear how much of the sales and property tax increments the rail authority wants to capture, and the agency says cities would still control “land-use vision, housing goals and affordability standards.” But the agency says it needs to make sure streets, utilities, grade separations, bike and pedestrian access and transit connections are in place early.

The agency says station areas underperform when infrastructure is delivered in fragments. This proposal would reduce that risk, so “stations open as complete, connected places — not isolated facilities waiting for improvements,” the agency says.

According to an August report from its CEO, the rail authority also wants “certain regulatory powers, including zoning and land-use permitting controls,” over land within a half-mile of its stations, in addition to land it owns.

“What this concept provides are limited, defined tools — in very specific geographies — to coordinate infrastructure and development around land the Authority owns and within a half-mile of stations, where the success of the rail system and the community are inseparable,” the agency says.

In Fresno, a half-mile radius from the site of the planned high-speed rail station includes Chukchansi Park, Chinatown, the Brewery District and the Fulton Street corridor.

Would proposal negatively impact cities planned for high-speed rail station?

Triffo, of the League of California Cities, says there is no precedent for a state agency capturing local tax increments to finance public transportation projects in California.

Though the rail authority says it does not intend to override local general plans and divert local revenues, Triffo says the agency’s idea would divert away critical tax dollars “without voter approval.”

Triffo says cities planned for stations are aware of the economic benefits high-speed rail could create and share an interest in developing successful station areas. He added that those cities have the tools “needed to make the development of station areas a reality without state intervention.”

“They (the cities) are not supportive of the State backfilling the high-speed rail project’s budgetary challenges with dollars that hurt local budgets and deprive our residents of essential services,” he said.

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