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14 SECTION 3.0 Current and Potential Sources of Local and Regional Funding for Public Transportation 3.1 Local and Regional Public cant and whose participation is acceptable in a political Transportation Funding sense. Section 3.3 describes these sources. Typology and Definitions · Revenue streams from projects. This category includes various arrangements that can be used to capture revenue While the NTD serves a very useful purpose in aggregating primarily from the income streams of private business and transit operating and financial data, it is somewhat less useful related development activities benefiting from proximity in informing users about the practical details surrounding to specific transit facilities and services. These include var- local and regional funding and financing initiatives.3 From a ious forms of joint development, value capture, and bene- broader literature review, a typology of local and regional fit assessment, as well as newly emerging public-private transit funding sources has been developed and is presented partnerships (also called PPP arrangements)--all of which in Table 3.1. The typology differentiates five major types of are described extensively in the literature and summarized funding for the purposes of this project. The broad categories below. Significant sources in the literature are provided for are described below, and brief descriptions of individual readers' reference. sources in Table 3.1 are provided in the sections that follow. · New "user" or "market-based" funding sources. Expanded tolling, congestion pricing, emission fees, and VMT fees · Traditional tax- and fee-based transit funding sources. applied at the local and/or regional level have become the This category includes all traditional forms of broadly based, subject of greatly expanded research and analysis, although tax- and fee-based, and related revenue-raising mechanisms implementation has been limited and revenue flows to tran- that have been available or used for transit capital invest- sit rare, with the exception of "toll credits" used as a local ment or to support transit operations since transit began to match based on state authority.4 References to this literature be transformed from a private business into a public service also are provided. in the 1960s. These "traditional" sources are those in which · Financing mechanisms. These are the growing variety of there is generally a direct and broadly accepted rationale for long-term "debt" instruments that are increasingly being making expenditures on transportation, including public issued to support major local and regional transit projects transportation. Section 3.2 describes these sources. and programs. Financing mechanisms most often com- · Common business, activity, and related funding sources. mit future streams of revenue from many of the types of This category includes broadly based tax- and revenue- raising mechanisms that are somewhat less widely used to support transit in various settings. The use of these revenue- 4In the glossary of terms for Financing Freight Improvements, toll credits are raising mechanisms represents, in part, a recognition that defined as follows: "Section 1044 of the Intermodal Surface Transportation funding public transportation is a responsibility that is Efficiency Act permitted states to apply the value of certain highway expen- shared broadly and that meeting this responsibility requires ditures funded with toll revenues toward the required state match on current contributions of funds from sources whose yield is signifi- federal aid projects. States may only substitute toll credits for state match if they demonstrate that a state's prior year highway spending equaled or exceeded the average of the previous three years' expenditures." (Buxbaum, J., I. N. Ortiz, and C. Keenan. Financing Freight Improvements. FHWA- HOP-06-108. Prepared by Cambridge Systematics, Inc. for FHWA, U.S. 3 The limitations of the NTD in this regard are discussed in more detail in DOT, 2007. Glossary available online at http://ops.fhwa.dot.gov/freight/ Appendix C. publications/freightfinancing/sect5.htm.).

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15 Table 3.1. Potential local and regional public transportation revenue sources. Traditional Tax- and Fee-Based Transit Funding Sources General Revenues Sales Taxes (variable base of goods and services, motor fuels) Property Taxes (real property, includes vehicles) Contract or Purchase-of-Service Revenues (by human service agencies, school/universities, private organizations, etc.) Lease Revenues Vehicle Fees (title, registration, tags, and inspection) Advertising Revenues Concession Revenues Common Business, Activity, and Related Funding Sources Employer/Payroll Taxes Car Rental Fees Vehicle Lease Taxes and Fees Parking Fees Realty Transfer Taxes/Mortgage Recording Fees Corporate Franchise Taxes Room/Occupancy Taxes Business License Fees Utility Fees/Taxes Income Taxes Donations Other Business Taxes Revenue Streams from Projects (Transportation and Others) Transit-Oriented Development/Joint Development Value Capture and Beneficiary Charges Special Assessment Districts Community Improvement Districts/Community Facilities Districts Impact Fees Tax-Increment Financing Districts Right-of-Way Leasing New "User" or "Market-Based" Funding Sources Tolling Congestion Pricing Emissions Fees VMT Fees Financing Mechanismsa General Obligation (GO) Bonds Private Activity Bonds (PABs) Tax Credit Bonds Grant Anticipation Notes (GANs) Grant Anticipation Revenue Vehicles (GARVEEs) Revenue Anticipation Notes (RANs) Certificates of Participation (COPs) State Infrastructure Bank (SIB) Loans a While some financing mechanisms may be authorized and applied statewide, they typically require some commitment of future revenues by local borrowers as well as other local commitments to satisfy borrowing requirements and debt servicing.