Illustration by Raul Arias

At a Sunset Park “visioning meeting” for Mayor de Blasio’s Brooklyn-Queens Connector waterfront streetcar plan — a/k/a BQX — last June, one local resident responded with exasperation when asked how new transit would help his neighborhood. “You should get the neighborhoods like Canarsie and East Flatbush!” he complained. “There’s not a lot of trains over there.”

BQX’s location far from the city’s transit deserts has been one criticism of the plan, which has otherwise drawn cheers from advocates eager for any new mass transit construction. While some gentrification-wary residents suspect a stealth ploy by developers like David Walentas’s Two Trees Management — which not only first concocted the idea, but continues to play a central role in planning discussions — the city has a simpler explanation: BQX may not be the transit system New York City most needs, but it’s the one we can get. By building in a hot neighborhood along the waterfront, officials insist, they can use the magic of “value capture” to grab increased property tax receipts to pay for the project’s estimated $2.5 billion construction cost, getting the city a new light rail line entirely for free.

But a Voice investigation of the economic studies underpinning the proposed BQX finances, along with interviews with development experts and the project’s planners, finds that claims of the BQX paying its own way rely on untenably optimistic assumptions and creative bookkeeping. The neighborhoods that the BQX would pass through, from Astoria to Sunset Park, currently generate about $1 billion a year in residential property taxes and have risen another 17 percent in just the past two years, according to city figures. To pay off a $2.5 billion construction nut, a streetcar would need to single-handedly boost these values by another 17 percent — and if that failed to materialize, the city would have to pay the debt out of its general fund.

“People see it as ‘I’m not even going to worry about the money, because it’s self-sustaining,’ ” says Lauren Fischer, a Columbia University Ph.D. candidate who has written extensively on transit and property values. “But the truth is, it’s not.”

The premise of value capture is fairly simple: Build it, and they will come — and pay more in taxes. A 2016 study by the city Economic Development Corporation estimated that the “transit premium” would generate enough cash flow to pay off $2.5 billion in bonds; a separate Friends of the BQX study projected 86,000 new jobs between now and 2045. Cities that have built streetcars in recent years have seen increased economic activity in districts served by the new rail lines, according to HR&A, Friends of the BQX’s consulting firm.

But development and tax experts note two reasons why New York might not get the same boost. First off, most economic studies show only correlation between streetcars and economic growth, not causation; it’s possible that hot areas with rising property values, such as San Francisco’s SoMa district, are the ones most likely to receive new transit improvements in the first place. Plus, other cities such as Portland have sparked new construction by building light rails in largely undeveloped neighborhoods — which, needless to say, does not describe the white-hot Brooklyn and Queens waterfront.

“New York is doing this backwards in some ways: They have the real estate development that’s gone all along the water; they rezoned all that stuff in Williamsburg ten years ago,” says Fischer. “They have the demand, they have the people — and now they’re putting in the transportation.” Given New York’s already pricey real estate and crowded streetscape, she says, “there’s a lot more reason to be skeptical” of whether the projected gains will be realized: “In Detroit, if they weren’t doing construction, there’d be hay bales rolling around.”

In fact, the EDC’s own study doesn’t claim that a streetcar would cause waterfront property values to surge above their already healthy clip — it just predicts they’d rise from what they are now, but not relative to what they would be without the BQX. (While the EDC report didn’t reveal its methodology, an EDC spokesperson confirmed this.) This runs the risk that the streetcar could end up siphoning off new tax receipts that the city could otherwise spend elsewhere.

According to EDC, BQX would use a similar funding mechanism to what Mayor Bloomberg used for the 7 train extension to 11th Avenue. There, the city chose to exempt all new development in the Hudson Yards district from taxes, then levy payments in lieu of taxes — PILOTs — to pay off the subway extension, which the MTA had balked at funding with its own money.

“At Hudson Yards,” says city Independent Budget office chief of staff Doug Turetsky, “money that once went to the city’s general fund to help meet needs citywide is now being used just to pay for the improvements on the far west side of Manhattan.” We don’t know that the case will be exactly the same with the BQX, says Turetsky, “but a similar scenario is plausible, where all or some of the property tax revenues that were once applied citywide would instead go just to fund the trolley. That’s a tradeoff that may benefit one part of the city at the expense of others.”

The danger of double-booking revenues is one reason why many development experts view tax increment financing — value capture’s original name — skeptically. “TIFs have been used for everything under the sun in Chicago,” says University of Illinois-Chicago urban planning professor Rachel Weber, who co-authored a report on the TIF districts that now cover 30 percent of that city. The difficulty, she says, is knowing how much an area’s property values would rise regardless: “You need to be able to make some kind of speculative judgment on how property values are going to increase.”

The flip side is that property values could indeed soar — but at the cost of massive redevelopment and displacement of residents and businesses BQX is ostensibly intended to serve. The streetcar’s advocates have reassured residents of waterfront neighborhoods that it won’t jump-start gentrification, but merely allow buildings like Sunset Park’s largely derelict Brooklyn Army Terminal to be fully occupied by start-ups and other businesses that rely on transit to bring their workers to the office.

Fischer, though, says that wouldn’t be enough to feed the value capture kitty. “To get the value gains they’re talking about, you need major changes in intensity use,” she says. “Not just taking a four-story building where one story is not used as efficiently — you need that four-story building to become a fifteen-story building.” And once cities cut open their roadbeds and discover the state of the water mains and other infrastructure underneath, she warns, “you can often double the cost of these projects.”

None of which is to say that a new streetcar wouldn’t have benefits. Friends of the BQX estimates that it would cut commutes by eighteen minutes for those traveling from the Astoria waterfront to midtown — albeit possibly at the cost of an additional fare, since BQX would be separate from the MTA and isn’t guaranteed to take MetroCards. (BQX advocates say they’re working on a free-transfer plan.) But once you dispense with the “it’ll pay for itself” argument, all sorts of other options present themselves: The Regional Plan Association’s long-discussed Triboro Line proposal, for example, would connect underserved areas of southern Brooklyn, central Queens, and the Bronx for an estimated $1 to $2 billion — and is projected to reduce interborough travel times by as much as half an hour.

Or the city could scrap trains entirely and build dedicated express bus lanes, which would provide similar time savings for a fraction of the cost. (A recent Select Bus Service route in the Bronx cost just 1.2 percent of the per-mile cost of a streetcar.) Friends of the BQX director Ya-Ting Liu does note that the buses can only carry half as many passengers as light rail, and can run fewer trips per hour — but even that figure might still be a better bang for the buck.

Either way, Weber agrees that it’s foolish to expect a big jump in property values in an already hot area like the Brooklyn-Queens waterfront. If there’s one lesson from value capture programs, she says, it’s “don’t trust any argument that says ‘it’ll pay for itself.’ That’s a recipe for disaster.”