June 12, 2014 at 11:52 pm

Bill would exempt Detroit rail system from taxes

Lansing— State lawmakers have advanced bills that will pave the way for a 3.1-mile light rail system that will provide public transit service between downtown Detroit and the city’s New Center area.

A key bill in legislative package, approved Wednesday night by the Senate, would exempt the $137-million rail line from state and local taxes.

The Senate Fiscal Agency estimates it would save the rail line $5.8 million a year in property taxes alone.

But the nonprofit organization set up to bring transit service to fruition also would be exempt from sales, use and income taxes on the utility.

Backers of the project raised $84 million and plan to use $31 million in federal grants and tax credits to make the new rail line viable. It includes a $25-million federal grant announced in January 2013.

The transit line, which will have 20 stations and 12 stops on Woodward, is being built by a public-private partnership led by businessmen Roger Penske, Dan Gilbert and Matt Cullen.

They have pushed the project with support from the Detroit Downtown Development Authority and several corporations and philanthropic groups.

It will feature a recirculating streetcar carrying commuters between Larned and West Grand — a scaled-back version of earlier plans for a rail line stretching nine miles to 8 Mile on Detroit’s northern border.

The goal of its supporters is to have the system operating by late 2016. They say it will spur economic development along the Woodward corridor, but some question its long-term viability.

The streetcar is expected to operate on $5.1 million annually — 80 percent of which is to be financed by fares and advertising, according to planners.

M-1 Rail, the nonprofit overseeing the project, pledged to endow a $10 million fund to privately support operating costs for up to 10 years.

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