“Conference calls for mass transit in Detroit” by Daniel Duggan Crain's Detroit Business October 7, 2008 Alan Jacobson ● ECO 5520

Detroit's competing mass transportation plans were the subject of discussion at a conference on urban redevelopment sponsored by the Detroit chapter of the Urban Land Use Institute held at Wayne State on Monday, October 6. George Jackson, CEO of the Detroit Economic Growth Corp., discussed two plans for a light rail system for Detroit's Woodward corridor. One is a publicly financed plan through the Michigan Dept. of Transportation and the other a privately funded project. “I'm personally pushing for the private plan, since the other will probably happen after I retire,” said Jackson.

Public Transport in Detroit – Background Detroit is often seen as the prime culprit of how public transportation has taken a back seat to private modes, typically the single occupant automobile. The graphic shows levels of public transportation utilization in various US cities. Detroit is only one of a large number of cities who rely greatly on private modes of transportation. The difference between Detroit and other major urban areas is the relative lack of transportation options. Public transportation in the Detroit area is almost exclusively made up of bus lines part of two separately run systems with limited cooperation between them. Source:

Public Transport in Detroit – Background Transportation Riders United, a consumer group promoting diversification of Detroit transit options, published these illustrations to show how transportation choices in Detroit compare to other cities in spending and costs to households. The third illustration shows that Michigan spends virtually all its transportation appropriations on auto related infra- structure. TRU's website:

The Plans The publicly funded effort, initiated by the Detroit Department of Transportation (DDOT), may rely on using property tax funding to repay bonds floated to pay for the capital costs of building the system. This form of funding, known as tax increment financing, could also be used to generate operating funding. As discussed in a June 23 article in Crain's Detroit Business, redevelopment spurred by the transit expansion would leverage property values and create jobs around the project's immediate vicinity. The anticipated scope of the public project would run light rail from downtown to Eight Mile. A study was commissioned by DDOT as a first step toward seeking Federal transportation funding.

The Plans The privately funded plan is an initiative linked to several key business leaders and is part of a broader tri-county initiative led by former state Senate leader John Hertel. Few details on the regional plan are available at this time but are expected by the end of the year. This proposal would build a 3.4 mile light rail line from downtown to midtown, with approximately 12 stops for a total of 23 stations including the terminal at Hart Plaza. Private contributions, sponsorships and foundation grants would fund the $103 million cost of construction. Sources of funding for operations have not been made public at this time. Legislation required to establish a public/private transit authority to proceed with the effort was approved by the legislature on October 7. This effort may also utilize the tax increment funding mentioned before for some part of the overall funding.

Economic Analysis The public plan, and possibly even the privately funded plan, relies heavily on the generation of new property tax revenue for funding some or all construction and operating costs. The additional cost would be offset by the increased property values, increase in jobs, quality of life, etc, noted as Q 1. The danger is if it does not, in which case effected citizens will be forced to divert spending to pay for the new tax, noted as Q 2. TAX OTHER ITEMS Q1Q1 Q2Q2 Incr in Benefits Incr in Cost (Tax)‏