Valley Metro Light Rail Economic Development Claims “Fall Flat”

Phoenix light rail [Photo from Valley Metro YouTube]

The Arizona Free Enterprise Club recently released a study in which the speculative claims made by Valley Metro that light rail has spurred $11 Billion in economic development were examined

The study, authored by transportation policy expert Randal O’Toole, “Valley Metro Light Rail Economic Development Claims Fall Flat” took a look at the 344 developments the transit agency cites as economic development attributable to light rail.

[Read “Valley Metro Light Rail Economic Development Claims Fall Flat”]

O’Toole’s study shows that the vast majority of these projects would have happened anyway, happened only because they were subsidized or were government buildings and that the cost of rail construction exceeded any actual economic development created by light rail.

 

O’Toole offered several examples of projects cited in Valley Metro’s economic development report that have no reasonable connection to light rail, including:

  • Two QuikTrip Gas Stations
  • A Car Wash
  • The Tesla Car Dealership
  • Several Parking Garages
  • Maricopa County Sheriff Headquarters
  • The Phoenix Police Forensic Lab
  • The Arizona Department of Child Safety Building
  • Renovations at Manzanita Hall and other ASU student Housing
  • The Renovations at the Memorial Union

According to O’Toole, Valley metro included billions worth of projects that were heavily subsidized, were government funded, or were more than ½ mile from a light rail stop:

  • 85 projects worth $3.8 Billion received a subsidy–either a GPLET (Government Property Lease Excise Tax) property tax abatement, a lease-back of ASU property which advantaged the property with a property tax abatement, affordable housing tax credits, or another type of subsidy;
  • 46 projects worth $2.1 Billion were government buildings;
  • 46 projects worth $2.7 Billion were Arizona State University buildings such as the remodeling of Sun Devil Stadium;
  • 17 projects worth $317 Million that were located more than a half mile from the light rail station and 2 projects worth $61 Million of developments built before light rail was.

“After removing these unrelated and subsidized projects, what you are left with is less than $2 Billion of development that likely would have been built anyways,” said Aimee Yentes, Vice President of the Arizona Free Enterprise Club. “Furthermore, light rail has cost taxpayers over $2 Billion to build and nowhere in Valley Metro’s analysis do they include the detrimental effects light rail construction has had in displacing or shuttering small businesses along the construction of the line.  The juice just hasn’t been worth the squeeze.”

“Virtually every project on Valley Metro’s list would have been built somewhere in the Phoenix metropolitan area without light rail,” stated O’Toole of his findings. “In fact, considering light rail fares only cover 28 percent of the costs of operations and maintenance, it is hard to classify light rail as a ‘productive investment’.”

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