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KRM debate switches to development (VIDEO)

By Sean Ryan

Competing predictions of commuter rail in southeast Wisconsin are casting the project as either a development mirage or a dream come true for struggling builders.

“That puts construction people to work, and a lot of the projects that happen with rail, it’s prevailing wage work,” said Jeff Van Koningsveld, president of the International Brotherhood of Electrical Workers Local 430, Racine. “And it’s prevailing wage work unions can compete for.”

The Chicago and Northwestern Railway train station in Racine was remodeled in 2006. The depot now operates as a waiting room for bus riders at the Racine Transit Center. It would be one of two train stations in Racine if commuter  rail service were extended from Kenosha to Milwaukee. (AP Photo/Journal Times, Mark Hertzberg)

The Chicago and Northwestern Railway train station in Racine was remodeled in 2006. The depot now operates as a waiting room for bus riders at the Racine Transit Center. It would be one of two train stations in Racine if commuter rail service was extended from Kenosha to Milwaukee. (AP Photo/Journal Times, Mark Hertzberg)

Opponents of the Kenosha-Racine-Milwaukee commuter rail project say it is an empty promise that new development will sprout up around commuter rail.

Other rail projects, particularly those in Portland, Ore., needed government subsidies to generate new development around stations, said Randal O’Toole, a senior fellow at the Cato Institute, a nonprofit research foundation in Washington, D.C. He said there would not be enough people getting off at the train stations for the proposed KRM line to spark projects.

“Do you think the few people who will be getting off in Racine will be enough to stimulate economic development?” O’Toole said. “Of course not.”

O’Toole spoke at a meeting of the Racine Taxed Enough Already Party on Tuesday night in Franksville. The group is organizing against the proposed $232.7 million KRM project. The project would rely primarily on federal money, but it would require up to $40 million through new car rental fees and include a new sales tax to pay for buses.

Randal O’Toole, a senior fellow at the Cato Institute, speaks Tuesday night in Franksville during a meeting of the Racine Taxed Enough Already Party. The group is organizing against the proposed $232.7 million Kenosha-Racine-Milwaukee commuter rail project. (Photo by David W. Hoel)

Randal O’Toole, a senior fellow at the Cato Institute, speaks Tuesday night in Franksville during a meeting of the Racine Taxed Enough Already Party. The group is organizing against the proposed $232.7 million Kenosha-Racine-Milwaukee commuter rail project. (Photo by David W. Hoel)

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But construction labor unions are lining up in support of the transit proposal to reap the benefits of jobs they say the KRM project and development around the stations would create. Van Koningsveld, who said about 30 percent of his members are out of work, predicted construction of coffee shops and restaurants around a station in Racine and new housing projects sprouting on the city’s undeveloped land.

“Racine is so green,” Van Koningsveld said. “We could put subdivisions in that are green that have new technologies, and there’s so many things we can do.”

O’Toole said those new developments would happen anyway, just not around train stations. Cities such as Portland use incentives such as tax-incremental financing to attract projects around the new stations, he said.

Portland, O’Toole said, invested roughly $2 billion through TIF districts to spawn projects around streetcar and rail stations.

“It’s not the trains,” he said. “It’s the tax-incremental financing.”

TIF districts let municipalities borrow money for projects and pay off the debt with the increased property taxes generated by the new development. O’Toole warned that those districts would divert money from other government services, such as police and fire protection.

Train stations attract developers, and new developments around stations in Denver and Charlotte, N.C., show the potential, said Kerry Thomas, executive director of Transit NOW, a coalition of Wisconsin business and community associations.

The KRM project will generate 71,000 jobs through development around the commuter line, according to plans from the Southeastern Wisconsin Regional Transit Authority, which is overseeing the project.

“It’s not going to occur without the transit line there,” Thomas said.

A regional transit authority bill under consideration in the Wisconsin Legislature would let the RTA approve new taxes to pay for buses. New sources of money for buses will improve the KRM project’s chances of getting $140 million in federal grants.

Van Koningsveld said the new taxes would put people to work, which in turn would put money into the state budget.

“The thing is, people have to understand that there’s money to be had,” he said, “but you have to do things to get it.”

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14 comments

  1. Who to trust? A published author who has been studying transportation issues on a world wide level for years, or a union head stumping for work for his union?

  2. O’Toole fails to grasp that the money captured from tax increment financing wouldn’t have been generated without the development. Those districts wouldn’t have gotten the money if redevelopment didn’t increase property values, and therefore property taxes. And is it so bad that development is directed toward areas served by transit, where it will do the most good, instead of in sprawl?
    Here in Portland, we’ll gladly put the accomplishments of our publicly funded transit system against Cato’s kooky libertarian schemes. Don’t hate us because we’re beautiful.

  3. If you want to show me a vdieo along with an article and call it objective, you better have a video showing boths sides of the issue. Does anybody even have to think about spending $40 mil and getting $270 mil into the economy for it? So what will you have at the end of the day? IMO, improved public transportation in a critical corridor of the state.

  4. Of the boring Robin Vos, whose brain has been stuck in neutral forever, what you see is what you get. Robin Vos is just a local lapdog mouthpiece for powerful business and political interests.

    But Randal O’Toole’s so-called “Thoreau Institute” is funded by oil, asphalt, and pipeline money. The man is paid to lead his jihad against all rail transit, funded by Big Business and far-right sources and depending upon continuing emotional appeals to angry blue-collar types like the Tea Partiers who are not apt to dig deep into the primary funding sources of O’Toole’s outfit to see where he’s coming from.

    (The term “useful idiots” may be offensive but it’s an actual insider political term for the blind followers who are all too willing to shout and picket on behalf of any candidate, issue and/or political movement without bothering to look behind the curtain).

    According to Media Transparency’s research, O’Toole’s Thoreau Institute is based in Oak Grove, Oregon, and received major grants totalling $321,100 between 1997-2005. Here’s a tabulation of the organization’s main funding sources in that period.

    12/31/2005
    $50,000
    Sarah Scaife Foundation

    01/01/2002
    $50,000
    Sarah Scaife Foundation

    01/01/2002
    $10,000
    Charlotte and Walter Kohler
    Charitable Trust

    01/01/2001
    $50,000
    Sarah Scaife Foundation

    01/01/1999
    $50,000
    Sarah Scaife Foundation

    01/01/1999
    $10,000
    Charlotte and Walter Kohler Charitable Trust

    01/01/1998
    $50,000
    Charles G. Koch Charitable Foundation

    11/11/1997
    $22,550
    The Lynde and Harry Bradley Foundation, Inc.

    08/11/1997
    $22,550
    The Lynde and Harry Bradley Foundation, Inc.

    04/07/1997
    $3,000
    The Lynde and Harry Bradley Foundation, Inc.

    04/07/1997
    $3,000
    The Lynde and Harry Bradley Foundation, Inc.
    ==========
    Who are these donors? Media Transparency provided information on three out of the four. (No information was available on the Kohler Charitable Trust):

    The Sarah Mellon Scaife Foundation is “a foundation financed by the Mellon industrial, oil and banking fortune”, according to Media Transparency. At one time, its largest single holding was stock in Gulf Oil Corporation. it was estimated some years ago to be a $200 million foundation. it became active in supporting conservative causes in 1973, when Richard Mellon Scaife became chairman. Since then, Scaife has been a leading financier of New Right causes.
    ========
    The Charles G. Koch Foundation is deeply rooted in the petroleum and petrochemical industries.

    According to Media Transparency,
    David and Charles Koch, sons of the ultraconservative founder of Koch industries, Fred Koch, direct the three Koch family foundations: the Charles G. Koch Foundation, the David H. Koch Charitable Foundation, and the Claude R. Lambe Charitable Foundation. David and Charles control Koch industries, the second-largest privately owned company and the largest privately owned energy company in the nation; they have a combined net worth of approximately $4 billion, placing them among the top 50 wealthiest individuals in the country and among the top 100 wealthiest individuals in the world in 2003, according to Forbes.
    ==========
    Koch industries, Inc. has primarily been involved in petroleum and chemicals. its website boasts that “Koch companies have been involved in the petroleum business since 1940, growing refining capacity more than 80-fold in six decades. Today, the Flint Hills Resources group of businesses, subsidiaries of Koch industries, are engaged in petroleum refining, chemicals and lube oil production, crude oil supply and trading, and wholesale marketing and trading of fuel oil, base oils, gasoline, petrochemicals, chemical intermediates, asphalt and other products. A subsidiary of Koch Supply & Trading also produces jet fuel, gas oil, naphtha and residual fuel in Europe. As a result of Flint Hills Resources’ various interests in production facilities in the petroleum chain, the company has expanded its marketing capability regularly to create value for customers. An example of that expansion is the 2003 entry into the base lube oil business following the purchase of a half-interest in Louisiana- based Excel Paralubes. The lube oil business is a natural extension of Flint Hills Resources, and has introduced it to a new customer base. The company’s products are used in motor oil, agriculture oils and marine oils, among others.”

    in 2005, Flint Hills Resources began operating a system of strategically located asphalt terminals, formerly owned by Koch Materials Company, to market product from the Minnesota refinery. This refinery’s production of asphalt sparked Koch companies’ 1979 entry into asphalt marketing.

    Koch further emphasizes its roots in the oil. gas, and chemical pipeline industry: “As part of a 1946 refining acquisition, Koch industries’ predecessor company acquired a small crude oil pipeline system in southwestern Oklahoma. Over the years, Koch companies have bought or built and sold pipeline systems transporting crude oil and refined products, as well as natural gas, natural gas liquids and anhydrous ammonia. Today, Koch Pipeline Company, L.P. owns and operates pipelines carrying crude oil, refined products and natural gas liquids.

    Major donors to Randal O’Toole’s anti-transit, pro-sprawl campaign stand to gain from continuing overwhelming dependency on motor vehicle mobility, and from sprawl development which reinforces that dependency. Through its involvement in asphalt production, Koch industries profited from highway construction, such as the huge Marquette Interchange in Milwaukee, which was largely paid for by state taxpayers.

    Media Transparency said about the Koch family’s political ideology and “charitable” investment policies:

    “Following in the footsteps of their father, a member of the John Birch Society, the Kochs clearly have an ultra-conservative bent. Charles Koch founded the Cato Institute, and David Koch co-founded Citizens for a Sound Economy (CSE) [now FreedomWorks], where he serves as chairman of the board of directors. David also serves on the board of the Cato Institute. The Koch foundations make substantial annual contributions to these organizations (more than $12 million to each between 1985 and 2002) as well as to other influential conservative think tanks, advocacy groups, media organizations, academic institutes and legal organizations, thus participating in every level of the policy process. Their total conservative policy giving exceeded $20 million between 1999 and 2001. David Koch even ran for president as the Libertarian Party candidate in 1980. The brothers’ orientation comes as no surprise, given their ownership of Koch industries, an oil and gas corporation.”
    ==========
    About the Lynde and Harry Bradley Foundation, Inc., Media Transparency said “With $516 million in assets (2004), the Lynde and Harry Bradley Foundation of Milwaukee, Wisconsin is the country’s largest and most influential right-wing foundation.” As of the end of 2004 it was giving away more than $33 million a year. Its financial resources, its clear political agenda, and its extensive national network of contacts and collaborators in political, academic and media circles has allowed it to exert an important influence on key issues of public policy. While its targets range from Affirmative Action to Social Security, it has seen its greatest successes in the areas of welfare “reform” and attempts to privatize public education through the promotion of school vouchers.

    More than three years ago, the article “Exposing Those Far-Right Propaganda ‘Think Tanks'” pointed out, “Throughout the USA, public transportation is virtually under siege” – calling attention to “a veritable barrage of misinformation, directed especially against rail transit services and proposals, coming from so-called ‘think tanks’ with warm and fuzzy ‘heartland’-style or ‘academic’-redolent names….
    Despite their ‘grassroots’ pretenses, these groups’ high intensity of pricey activities belie heavily endowed bank accounts: a steady stream of ‘surveys’, supposedly erudite research projects and reports, cash channelled into local anti-transit efforts, and visits by national ‘hired gun’ transit assassins like Wendell Cox and Randal O’Toole.”

    Gradually, with more and more information coming to light, all the dots are being connected. And what’s becoming clearer and clearer is that the efforts to roadblock the development of rail transit such as the long-promised (thirty years!) KRM Line are directly linked to powerful, extremely wealthy interest groups that stand to profit substantially from thwarting rail transit and other major public transport investments and from maintaining dependency on private motor vehicle transport and suburban sprawl land development patterns in perpetuity.

  5. Randal O’Toole should stick to stand-up comedy — the schtick with the dog and the snow was quite funny, if all you were looking for was jokes, But hey, seriously, folks … what’s he bringing up light rail for? The KRM Line will be a diesel commuter train. But since he implied the Portland light-rail trains run empty except for an occasional stray dog, I checked further, and found:

    Between 1990-97 Portland’s Tri-Met ridership grew 40% faster than its population growth. In all, 83% of riders choose Tri-Met over their car. Four fifths of Tri-Met riders have a car, but choose to ride MAX or the bus. The line has become a magnet, attracting nearly 7,000 housing units and more than $500m in new transit-oriented communities within an easy walk of the stations. In 2006, ridership on the Airport MAX passed the one million mark, an 11% increase on 2005. (The) 5.8 mile line (Yellow Line) carried 3.9 million passengers in its first year from the 10 stations on the route. The Yellow Line runs between Expo Center and Rose Quarter in North Portland, with trains traveling through downtown Portland. Trains operate every 10 minutes during rush hour. All the vehicles employed on Portland MAX have a maximum speed of 55mph. In 2004 the MAX system carried 31.9 million passengers, and the Eastside MAX carried 199 million passengers in 19 years, whilst the Westside MAX has carried 62 million passengers since completion.

  6. Funny thing about O’Toole – in Madison the following night, he admitted taking the commuter line from Chicago to Kenosha, and said he would have taken it to Racine, were the option available.

    Of course, there *is* bus service from Chicago to Racine. Guess O’Toole didn’t think to use that instead.

  7. O’Toole has even admitted that roads are there regardless of economic conditions. So why are Tea party types not freaking out about the “socialism” in front of their houses that they are driving on?

  8. Mr. O’Toole does not understand the way TIF works in Wisconsin. The site is a vacant building, a brownfield, and an structure. The goal is to refurbish the site with a going business that will pay property and income taxes. The TIF is a loan against FUTURE property taxes (that will be higher) to help the developer get a new building in place.

    Without the TIF (i.e., using strict “free” market rules) the site is left as is, brown, vacant, decaying for whatever number of years until the long term investors get out of bed and sell it to someone. The TIF is useful because it subtracts the years of waiting, does NOT reduce the current property taxes of the owner, and the city gets more revenues after a short period of development.

    At all times the owners of the site are responsible for current (pre-development) property taxes, but they have now an opportunity to bunch new taxes into a future time line when there is revenue from the project. The City benefits by having a going concern and tax revenue in place years earlier than the “free” market would provide.

    Given that the levy is about 2.5% of the value of the property, the arrangement provides a cost-effective loan to the developer and a faster return on the property to the City.

    No City service gives money to the developers, as O’Toole likes to claim. It is just smart future thinking to use this tool when it is appropriate.

  9. I have no political bias on this issue. I think Dems and Cons are equally childish these days. That said, I have seen and heard this view (that commuter rail is always a good thing/never a bad thing) disproved in many other regions of our country. The main reason the KRM is so touted by its supporters is for the projected economic boost to areas immediately surrounding the train stations. Overlooked however is the enormous cost to operate it in an area that cannot yet AFFORD to operate it…and also the large amount of sprawl that commuter rail can actually CREATE as it has done in places like California. Suburban sprawl, one of the things that rail is supposed to help curb, it actually creates.

    Look where these trains will be stopping in SE Wisconsin. Most of the stations will be located in largely residential areas, not even business districts. Proponents will argue that the train has to be up and running first and the economic growth will follow. Well, let’s take an example of a local city that has been fully connected to a large metro by commuter rail for over 100 years-Kenosha. Kenosha has grown by leaps and bounds in population, especially in the last 20 years, however that growth is very obviously far away from the commuter Metra station and its downtown area, where Kenosha stopped growing years ago. Overall, there are very few benefits to most of Kenosha County citizens that can be attributed to commuter rail, even though Kenosha is linked to one of the largest cities in Ameirca, Chicago. The downtown Kenosha area and areas nearest the commuter rail station are virtual ghost towns smattered with struggling businesses and older neighborhoods of delapidated bungalows. Crime abounds in areas near the trains in places like Kenosha and Waukegan. The addition of a marina and new condos near Kenosha’s commuter station several years ago has done little to nothing for Kenosha’s downtown. The downtown doesn’t grow because Pleasant Prairie, considered a suburb of Kenosha, is where business is booming….near the interstate highway. Also, in order for this whole thing to work, entire swaths of these cities and villages are going to need to be re-zoned for business, and neighborhoods gradually demolished. All in the name of what? Congestion? Overcrowding? Higher taxes? Smaller living conditions? And what’s more..how much cash is going to actually be flowing OUT of these communities if this is built?

  10. This is patently false: “Kenosha has grown by leaps and bounds in population, especially in the last 20 years, however that growth is very obviously far away from the commuter Metra station and its downtown area, where Kenosha stopped growing years ago.” — No, Kenosha’s downtown population has burgeoned with thousands of new residences. More falsehoods: ” Overall, there are very few benefits to most of Kenosha County citizens that can be attributed to commuter rail, even though Kenosha is linked to one of the largest cities in Ameirca, Chicago.” Kenosha’s Metra ridership has risen dramatically despite a general downturn throughout the balance of the Metra network. Kenosha’s largest private employers are in Illinois! I’m wondering how Jason S. could possibly say the following: “The downtown Kenosha area and areas nearest the commuter rail station are virtual ghost towns smattered with struggling businesses and older neighborhoods of delapidated bungalows. Crime abounds in areas near the trains in places like Kenosha and Waukegan. The addition of a marina and new condos near Kenosha’s commuter station several years ago has done little to nothing for Kenosha’s downtown.” NONE of the preceding is true, but judge for yourselves and visit these areas. I’m all for healthy debate no matter the topic, but facts count, not shoot-from-the-hip falsities!

  11. The latest poll: How would you vote on the proposed advisory transit referendum?
    Journal Times staff | Posted: Tuesday, April 13, 2010 6:00 am
    Should any new tax to support transit or rail services, such as a sales tax or local vehicle registration fee, be permitted in any part of Racine County?
    Yes 59% (339 votes)
    No 41% (238 votes)
    Total Votes: 577
    ===========
    Daily Reporter SURVEY:

    Do you welcome rail projects to Wisconsin?
    Yes 59% (158 votes)

    No 31% (84 votes)

    High speed, but not regional 4% (10 votes)

    Regional, but not high speed 6% (16 votes)

    Total Votes: 268

  12. UPDATE as of today:
    “Do you welcome rail projects to Wisconsin?”
    Yes 174 votes 60%
    No 88 votes 30%
    High speed, but not regional 11 votes 4%
    Regional, but not high speed 17 votes 6%

    (When do we get to vote in a poll on highways?)

  13. I can quote two worn-out suburban shopping malls that were revived through rail — in Englewood, Colo., and Gresham, Ore., respectively. The revitalizations both used light rail as a catalyst to help bring a bigger vision to the table.

    Englewood’s Cinderella City mall opened in 1968, and in six years it accounted for 52% of local sales tax revenue. But by 1994, it produced only 2.6% in sales-tax revenue. These dead malls number about 400 nationally, called “Greyfield” sites by the Congress for New Urbanism.

    Denver had planned light rail to the edge of the mall but revised it to an 800,000 square-foot multiple-use TOD with office, residential, retail and civic use, not a single-use property as was seen with the mall.

    Englewood is a lower- to middle-income community, so financing was a concern. They recycled a mall department store building from the mid ’80s and made it a civic center and took bonds out on the building and used the bonds to help finance nearby site development along with general funds and land sales to developers, and thereby raised the $38 million it needed. It’s called CityCenter, and Englewood Station carries 3,400 passengers a day to downtown Denver and suburbs.

    Then there’s Gresham, outside Portland. Alongside city hall there was a pond, an old factory, a Kmart and a few homes. Phase one was the $2.5 million Gresham Station with 320,000 square feet of retail and office space alongside the MAX light rail line. There was opposition to the plans from those pessimistic about the cost of the development but with tax abatements, system development charge reimbursements and help from the city, they built the station, Civic Drive and the central plaza for about $11 million plus the Gresham Civic Neighborhood of 130 acres bisected by the MAX rail line, a transit-oriented community with high densities and 10-year property tax exemptions available for qualifying new developments. With the central light rail station and the pedestrian-friendly environment, everything is close by, like a new downtown of mixed-use, centered around rail transit.

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