Using TIFs to fund the streetcar could help the city expand transit more equitably. Courtesy of DART

Transportation

The Council Nearly Killed the Oak Cliff Streetcar, Then They Realized They Can’t

The modern streetcar remains a strain on the city's budget, but it won't become sustainable until the network expands beyond Oak Cliff

For the first hour or so of Tuesday’s meeting of the Dallas City Council’s Transportation Committee, council members listened as the region’s top transportation official and the assistant city manager who oversees transportation discussed the need for a more integrated approach to long-range planning.

They proposed an approach to transportation planning that allowed for other city investments and services – like improved traffic signals, reconstituted streetscapes, and expanded access to high-speed internet – to be incrementally built into the system. The idea was to design each transportation project not as a single, standalone investment, but as a component of a broader network of iterative improvements.

Then, the council pivoted and nearly killed the Oak Cliff Streetcar, a pilot trolley line that the city has long hoped will someday evolve into a modern streetcar network covering downtown and the surrounding inner-city neighborhoods. It was a paradoxical juxtaposition of planning philosophies and something of a case study in what works – and what doesn’t work – with city planning in Dallas.

Council members are understandably frustrated that the Oak Cliff Streetcar is leaking money. The streetcar connects the far southwest corner of downtown at the Eddie Bernice Johnson Union Station with the Bishop Arts District. It is short nearly $1 million of its $2.3 million annual operating budget. Staff proposed the council draw from the city’s general fund to cover the gap, but only North Oak Cliff representative Chad West was vocal in supporting that idea; the streetcar is in West’s district. In the end, the council voted to delay action – but not before the committee kicked the tires on giving up on the streetcar altogether.

The streetcar has been something of a nuisance for City Hall since before it was even built. The idea originated not at council or among city staff, but from a neighborhood organization that dreamed of returning old streetcars that once crisscrossed Oak Cliff.

In 2010, the group applied for a federal TIGER grant and won it, somewhat surprisingly, forcing the city to take over the project with help from the North Central Texas Council of Governments, the region’s municipal planning organization. When the Oak Cliff Streetcar opened in 2016, the city handed operations over to Dallas Area Rapid Transit, though the city of Dallas is responsible for paying for most of the operational expenses.

For the first four years of its existence, the council begrudgingly contributed money from the general fund to help support the fledgling streetcar; it was free for residents to ride. In 2020, the council had enough, and they voted to cease general fund support after instituting a $1 one-way fare to ride the streetcar in 2018. The city hired a consultant to come up with new ways to support the public transit line. Their findings, which were presented to the council committee at Tuesday’s meeting, were underwhelming, to say the least.

After reviewing several options – ranging from a “transportation utility fee” paid by residents living along the streetcar line, to selling off city property – the consultant determined the only realistic short-term option was selling advertising and naming rights in and around the streetcar and stops. That might produce around $50,000 for the 2022 budget and another $100,000 to $200,000 the following year. Even with that new revenue, however, the city projected the streetcar would require more than $1 million in general fund support in 2022 and 2023.

Council members weren’t having it.

For a few minutes during the meeting, it looked like West would move to approve the funding for the streetcar and drag the rest of the council quietly, if begrudgingly along with him. But then North Dallas council member Cara Mendelsohn began to question the value of spending $1 million on a line that, during the COVID-19 lockdown, only carried around 375 passengers a day.

Mendelsohn is not exactly a strident public transit advocate. She was a fierce opponent to DART’s expansion of the Cotton Belt line through her district. She said during today’s meeting it was only fair that the city provide parking in places like downtown and Deep Ellum because people from her part of Dallas were never going to take transit.

But Mendelsohn’s comments resonated, particularly during a meeting that also saw staff tell council members that the city will need to spend $100 million a year for the next 5 years to avoid an “F-grade” in street pavement quality and an additional $20 million a year for the next 15 years to adequately modernize traffic signals.

But spending $1 million for a streetcar so a few hundred Oak Cliff hipsters could cruise downtown? That wasn’t flying.

“This is a vanity project for D1,” said Councilman Lee Kleinman, the North Dallas representative. “It is great for District 1, it is great for that part of town, but we can’t use this kind of taxpayer dollars so a few hundred people a day can use it.”

However, as soon as the council began asking staff tough questions about their options, they discovered, somewhat awkwardly, how wedded Dallas is to its little Oak Cliff trolley. Because the project was funded through a federal TIGER grant, the city is obligated to operate the streetcar for 30 years. If the city reneges on that commitment, operation of the streetcar would be handed over to the Council of Governments. That wouldn’t be good for the city’s relationship with the COG or with DART, staff said, not to mention it could damage the city’s future chances at federal grants.

With trashing the streetcar off the table, council members tried to hunt for couch change. Southern Dallas Council member Tennell Atkins saw that staff had managed to secure 2021 funding commitments of $475,000 from the Oak Cliff Gateway Tax Increment Financing District and another $100,000 from Downtown Dallas Inc. He introduced a resolution that would force the Oak Cliff TIF to pick up the rest of the bill, but after that motion passed, staff informed the committee that the TIF didn’t have enough money in the bank to cover the bill. The council committee was forced to vote to rescind Atkins’ motion before opting to delay any further action on the item until their next meeting.

And so, we wait, but not before another messy day at the city’s digital office. It was one that wound up revealing much about what Dallas does right – and what it does wrong – when it comes to transportation planning. I get the council’s frustration over the streetcar. When the streetcar was first proposed, I criticized it for many of the same reasons raised by council members today. It was expensive, served a limited geographical area, and the same money could more effectively improve public transportation if invested in upgrading the city’s bus network.

In the years since, I’ve changed my mind. DART eventually came around on the bus idea, and the streetcar has proven incredibly effective in achieving its real intended goal: driving economic development. The tracks that run down Zang have catalyzed an incredible rush of development, bringing the kind of density that could, eventually, support public transit.

But the city has also gotten two things wrong with the project. The first is the long delay in expanding the line – particularly a new loop through downtown – that would expand the streetcar’s reach and usability.

Dallas won’t realize the real value of the streetcar investment, to see it as anything but an Oak Cliff “vanity project,” until it connects through downtown to the McKinney Avenue Trolley and, eventually, branches out into West Dallas, the Cedars, South Dallas, and up Ross Avenue into East Dallas. What I underestimated in my opposition years ago, but what was made so clear yesterday, is that a streetcar line plants an unmovable flag in the ground. Now that it is built, Dallas can’t get out of its commitment to the streetcar. Rather than starve it of funds, the only way to realize the full value of that investment is to go all-in on its expansion.

The other thing the city got wrong was not putting adequate value-capture mechanisms in place from the start so that areas most primed for redevelopment catalyzed by the streetcar could support its operations. Council members are right to be frustrated that they are being asked to cough up $1 million in precious city funds to prop up a streetcar whose prime advantage to the city so far is helping to stimulate millions of dollars in North Oak Cliff real estate investment.

It makes sense that the first place Atkins might look for funding support is the Oak Cliff Gateway TIF. But that TIF predates the idea of the streetcar, and it wasn’t designed to support it. No new TIFs or Public Improvement Districts (PIDs) have been created specifically to capture the value generated by the streetcar. This is the same grave mistake DART has made time and time again with its light rail expansion.

Now it’s too late. The consultants hired by the city dismissed the idea of a transportation utility fee because it would be perceived as a new tax. PIDs have failed to pass, and staff said that trying to convince property owners to opt into a self-tax in the midst of a pandemic and economic slowdown is politically far-fetched.

That leaves few options. The council can continue to prop up the streetcar, or they can starve it, reducing operation to the bare minimum required by the TIGER grant terms, which would essentially mean returning to running the car infrequently between Union Station and Methodist Hospital.

There is, however, one more option that wasn’t raised at yesterday’s meeting. Fiscal sustainability can be achieved not by shrinking the streetcar’s budget, but by expanding it. Accelerating plans to connect the current line to downtown and the adjacent neighborhoods would simultaneously create opportunities to institute the kinds of value capture tools that can generate additional funding for future operations. The streetcar will remain a financial burden to the city’s coffers as long as it remains an Oak Cliff vanity project. The only way to fix that is to make it something more.

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