Yisroel Pensack: Tax-Increment Financing for Transit Vetoed by Gov. Schwarzenegger

California Assembly Bill 338 (TIF for TOD) was vetoed by Gov. Arnold Schwarzenegger on Oct. 11.

“This bill would eliminate voter approval requirements for the creation of an Infrastructure Financing District (IFD) and the issuance of tax allocation bonds by an IFD,” the governor said in his veto message.

The measure’s supporters said it would have allowed local governments to use Tax-Increment bond Financing to create Transit-Oriented Development to help communities deal with the potential negative externalities of unrestricted growth and sprawl such as growing traffic gridlock, commuting times, the loss of open space, and increased air and water pollution. The San Francisco Bay Area Rapid Transit (BART) system was listed as sponsor of the measure on the website of Assemblywoman Fiona Ma (D-San Francisco, Daly City, Colma, Broadmoor), who introduced the legislation in Sacramento earlier this year.

“By permitting local governments to use this innovative financing method, money will be made available to build transit stations, parks, and other important public amenities,” said a statement issued by Ma’s office under the heading, “Growing The Economy.”

“With this bill, projects like Balboa Park Station will have a secure funding source to get off the ground,” the statement from Ma’s office said.  The Balboa Park Station is not new, but above-ground improvements are planned there, according to Ma’s office.  Ma is the Assembly majority whip.  

Yisroel Pensack notes:  Transit infrastructure projects such as BART stations tend to dramatically boost land values in the areas served.  Land values enhanced by public infrastructure spending should rightfully be recouped for the public via a property tax on land values only.

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