CA Assembly Gives the Green Light to LA Metro’s K Line

• Kerri West
• Communications Director
• (916) 319-2044
• [email protected]

Much Needed Local Funds Coming to Bring Project to Life

Sacramento, CA-Meeting California's ambitious climate goals is not possible if California does not adequately invest in a robust public transportation network. That's a tall ask in a bad budget year, but Assemblymember Laura Friedman (D-Burbank) has proposed a solution: AB 761, a local funding bill that could bring much-needed billions to California's public transportation systems. The bill passed the California State Legislature today on a vote of 71-0 and now heads to the Governor's desk.

LA Metro is in the middle of one of the largest regional transit expansion projects in the nation, but the pace of that expansion is outstripping the pace of available state and federal funding. Which means that local governments need to find new sources of funding.

AB 761 takes advantage of a funding source first created in 2014 by SB 628 (Beall), known as tax increment financing. Tax increment financing is essentially guided tax money. It functions by freezing property tax revenues from a designated area that's established as an enhanced infrastructure financing district (EIFD) at the current level. Any additional revenues created in future years are diverted into a separate pool of money, which can be used to pay for improvements directly or to pay back bonds or loans that were made against the tax increment financing district.

The beauty of tax increment financing is twofold: revenues are generated by organic growth in an area, not by increased taxes, meaning there is no additional cost to taxpayers and property owners. Crucially, tax increment funds can be used for a wide range of public works projects that cities and counties desperately need: roads, highways, bridges, public transit, transit-oriented development projects, affordable housing, environmental mitigation, water facilities, and more.

AB 761 is revolutionary in that it provides an extended local funding source for critical projects. In a bipartisan effort to increase transportation and infrastructure spending, President Biden extended the term of a federal Transportation Infrastructure Finance and Innovation loan from 45 years to 75 years. "AB 761 follows President Biden's bipartisan effort to increase transportation funding and increases the term of TIFDs from 45 years to 75 years," said Assemblymember Laura Friedman. "The additional 30 years of funds that AB 761 will create will finally bring much-needed California transportation projects to life."

One of the largest regional public transportation projects in the country has already broken ground in Los Angeles. Projected to ferry some 250,000 people between work, home, school, and entertainment daily, LA Metro's K Line Northern Extension is a voter-approved Measure M project and the backbone for Metro's future expansion. But even with federal funds, state funds, and the $2.24 billion provided by Measure M, LA Metro will fall short of its funding needs.

"Rising costs are increasingly limiting the pace of expansion, meaning more support from local cities and counties will be needed to keep projects and climate goals on schedule," said West Hollywood Mayor John Erickson. "This common sense bill will have a massive impact on local governments' ability to address mobility, congestion, and climate."

"Assemblymember Friedman's bill unlocks the potential of Enhanced Infrastructure Financing Districts to meaningfully invest in community-building and place-making throughout Los Angeles County," said Lindsey P. Horvath, Chair, Los Angeles County Board of Supervisors. "Extending the term of EIFDs from 45 to 75 years for passenger rail projects leads to lower annual payments and increased financing capacity, making them more viable tools for jurisdictions pursuing critical transit investments. As the K Line Northern Extension moves through the public process, and we work to expedite project completion, having extended terms for EIFDs, as well as federal support made possible by the Biden-Harris Administration, will be invaluable to realizing this transformational line. I'm grateful for Assemblymember Friedman's leadership in championing legislation for more connected, greener communities."

The City of West Hollywood, a sponsor of the bill, estimates that AB 761 will allow them to raise $2.2 billion over 75 years to assist in building LA Metro's K Line Northern Extension. If the City and County of Los Angeles also take advantage of the 75-year EIFD that AB 761 will enable them to create, both cities and the county could raise $22 billion. Added to state and federal funding, AB 761 will make the K Line's Northern Extension and LA Metro's expansion plans a reality.

LA Metro projections show that two-thirds of the riders using the new rail line will come from equity-focused communities, which are communities for whom universities and job opportunities are currently out of reach. This expansion could drastically grow economic opportunities for the socioeconomically disadvantaged communities it serves. According to a 2020 study conducted by the American Public Transportation Association, every $1 billion of money spent on creating new public transportation has the potential to create 12,600 jobs; which means the K line alone could create 186,480 jobs for residents in largely underserved and underprivileged communities.

"The economic opportunities brought by AB 761 cannot be understated," said Assemblymember Laura Friedman. "EIFD funds have a massive impact in spurring job growth and increasing access to educational opportunities and entertainment."

Among the myriad other beneficiaries of EIFD funds and the projects they create, one is of paramount importance: our climate. California has some of the most ambitious emissions reduction goals in the country. To meet those goals though, California says it must reduce driving in the state by 25% by 2030. And the only way we can do that is to go all in on public transportation. Nearly forty percent (39%) of the state's greenhouse gas emissions are due to surface transportation alone. One recent study says California is poised to miss its emissions goals unless it triples the rate at which it is cutting emissions between now and 2030. Investing in public transportation is the obvious answer. A single person that switches from a 20-mile commute to and from work will reduce their annual CO2 emissions by 20 pounds per day or 4,800 pounds per year.

California is doing a lot to slash emissions and make the state more resilient in a warming climate, but among the tools in the toolbox, AB 761 stands out. At a time when our climate stands on the brink and the economy sometimes feels uncertain, AB 761 is a bill that addresses both. It is a must pass bill.

Governor Newsom will have until September 30th to sign the bill into law.

Laura Friedman represents 44th Assembly District, which includes the cities of Burbank, Glendale, and Los Angeles, as well as the communities of La Crescenta, Lake View Terrace, Montrose, North Hollywood, Shadow Hills, Sherman Oaks, Sunland-Tujunga, Studio City, Toluca Lake, and Valley Village.