Northwest Indiana needs resolve (and cash) to build commuter rail

Enterprising plans for the same kind of development around Metra stations in Illinois have turned into reality only when local officials have swallowed hard and plunged in, often using local taxpayer funds to leverage private development, according to officials there.

In Orland Park, officials did that four years ago when they approved borrowing $63 million to have a developer build the five-story Ninety7Fifty luxury apartment building adjacent to its 143rd Street Metra station, said Karie Friling, Orland Park director of Development Services.

Today, the bonds used to borrow the money are being paid back out of revenues generated by the building, and Orland Park has even realized a profit. But if that hadn't worked out, precious local sales tax revenues may have been needed to pay back the bond.

"Very few communities are willing to take that risk, or have the capability to take that risk," Friling said.

Local governments in Northwest Indiana lack many of the funding tools available in Illinois. Most notable is Indiana's lack of any local sales tax.

That will make it much harder to undertake transit-oriented developments like Orland Park's. Illinois communities have also used local funds to augment Metra's when building new stations.

The city of Gary is laying plans for transit-oriented development in its Miller neighborhood centered on the South Shore stop there and Lake Street, according to Gary Mayor Karen Freeman-Wilson. Developments like the 18th Street Brewery, Miller Bakery Cafe and others have already started a turnaround for the area, Freeman-Wilson said.

"Our transit-oriented development plan on Lake Street will enhance and drive traffic to the Miller section of Gary," she said. "The goal is to add residents and retail and make Miller a destination."

The city is working on an application for a federal grant to help pay for a new station with a high-level boarding platform at the Miller stop, which will get trains in and out more quickly. There is only a ground-level shelter there now. It also may ask for funding from the Northwest Indiana Regional Development Authority.

The RDA has $17.5 million in annual local funding contributed by cities and counties. But some of those funds are also earmarked to develop the Lake Michigan shoreline.

The Northern Indiana Commuter Transportation District, operator of the South Shore, is also in the hunt for funds for the Gary project.

Gary's effort to cobble together funds to improve the Miller South Shore stop will probably be typical of projects all along the South Shore commuter rail line. NICTD's 20-year strategic business plan calls for $183 million in so-called "market expansion" improvements along the 75 miles of rail line in Indiana.

The two-year budget bill passed last week in the Indiana Senate would direct $6 million per year to the RDA each year for 30 years to be used for funding the South Shore expansion to Dyer and for transit-oriented development. However, the steep $571 million price tag for the expansion could eat up the bulk of that funding.

At the April meeting of NICTD trustees, General Manager Michael Noland laid out a plan to basically max out the railroad's current bonding capabilities to meet new federal mandates for computerized train control, which is listed as a $43 million project in the strategic business plan.

No steady funding source in NWI

Noland pointed out to trustees the South Shore is hobbled by the fact it has no source of regular regional funding, such as the Metra system does in Illinois. He said the same thing the month before at a meeting of the Northwestern Indiana Regional Planning Commission.

Metra is part of the Regional Transportation Authority, which also oversees the CTA transit system in Chicago and the suburban Pace bus system. The RTA gets its own slice of sales tax in Chicago and surrounding counties, producing about $1.1 billion in revenue annually to distribute among its member agencies.

Much of that money is used for operating expenses, but it can also serve to free up resources and money for capital expenditures.

The sales tax in Illinois also spurs development in another way, Noland said. Because local communities get their own share of the sales tax in Illinois, they have an incentive to increase retail and restaurant opportunities. They are sometimes choosing to do that around train stations.

"What the villages were seeing was their local tax base was eroding," Noland said. "They saw the opportunity to strengthen their communities by developing those areas around rail stations and in their downtowns."

There is no doubt Indiana communities are faced with a different set of circumstances when it comes to funding commuter rail improvements and the development that can happen around train stations, according to Bill Hanna, RDA chief executive officer.

But he believes the RDA, NICTD, local communities and private developers can raise the funds necessary to improve and extend the South Shore.

"In the end, hopefully, this will put us on a little more even playing field, competitively, with the Illinois suburbs," Hanna said.