PROVIDENCE, R.I. (WPRI) – While Mayor Jorge Elorza and Council President Luis Aponte are bullish about a proposed $100.2-million streetcar project in downtown, state leaders say they have made no commitment about setting aside funding for the 1.6-mile line.
The city has secured $13 million in federal funding and wants to borrow $57.7 million through tax increment financing (TIF) to pay for its share of the project, but it would still need another $30 million to cover the projected construction costs of the streetcar line. City officials have said they plan to seek state support and additional federal aid.
On Wednesday, spokespeople for Gov. Gina Raimondo and House Speaker Nicholas Mattiello said no agreement has been reached regarding state funding for the streetcar.
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“The governor’s staff is having productive discussions with city officials, and exploring additional information about the feasibility of the project and its impact on the city and state,” Raimondo press secretary Marie Aberger told WPRI.com. “We look forward to continuing a dialogue in the weeks ahead.”
“The speaker said this is not on his agenda for this session,” Larry Berman, a spokesman for Mattiello, said.
The City Council Finance Committee is scheduled to hold a public hearing Thursday at 6 p.m. in City Hall to discuss establishing a TIF district in downtown, the first step toward borrowing the $57.7 million for the project.
TIF revenue bonds are a commonly used economic development tool that allows cities to borrow money for large projects and then pay it back using earmarked tax dollars from a designated area that would benefit from the plan. In the case of the streetcar line, the TIF district would include about 980 acres of land in College Hill, downtown, the Jewelry District and Upper South Providence.
Once the TIF district is approved, the city’s tax assessor will assign a baseline value to all taxable property within the area. All tax revenue from the baseline value of the district would go to the city’s general fund, just like property taxes in all other parts of the city. A portion of the revenue beyond the baseline would go toward paying the debt service on the $57.7 million the city wants borrow over the next 25 years. Any leftover funds would also go to the general fund.
If the council approves the district, it would still need to vote to borrow the $57.7 million, according to Planning Director Bonnie Nickerson. The city’s plan is to secure the remaining funds over the next 18 months, Nickerson said.
Elorza has called the streetcar “an opportunity to bring a proven economic development tool to Providence while expanding and enhancing public transportation.” Aponte has called it a project that “makes sense” for improving transportation around the city.
But critics have raised concern about whether the cash-strapped city can afford a streetcar, noting that if the city doesn’t see a spike in tax revenue within the district, taxpayers will still be forced to pay off the bond. In an op-ed in The Providence Journal this week, former Mayor Joe Paolino called the streetcar an “unnecessary and risky project.”
A 2014 study released by the city estimated that the district could see a $734 million increase in value of taxable property over the next 20 years if the line is built. Using current city tax rates, the study predicted that the incremental tax revenues in the district could top $17 million by 2034. (That study assumed a 30-year TIF district; the current proposal is for a 25-year district.)
City planning department officials say a proposed route change would not alter the proposed TIF district, which would encompass all parcels that fall within a quarter-mile of the streetcar line.
That change has reduced to estimated price tag from $117.8 million to $100.2 million, in part because the city is no longer planning stops on College Hill in the first phase of its plan. Future extensions of the line would include the East Side and Dudley Street in South Providence.
The first phase of the streetcar line includes nine stops in each direction that would begin at the Providence train station and continue down Washington Street before turning onto Empire Street in downtown. The line would continue to Chestnut Street in the Jewelry District before making its way to Rhode Island Hospital
The new route still needs to be approved by the federal government, which has committed $13 million to the project.
Last month, the city announced it was seeking proposals for “planning and engineering services” that would include a preliminary design of the streetcar line. City officials say that study will give a better idea of the exact cost of the project.
At $2 per ride, the city has projected its daily ridership will be 2,896. It hopes to begin service in 2019.