Can Char­lotte af­ford $8B in fu­ture rail lines?

Char­lotte Area Tran­sit Sys­tem will ex­plore new taxes

The Charlotte Observer (Sunday) - - Front Page - BY ELY POR­TILLO ely­por­[email protected]­lot­teob­server.com

‘‘ WE’RE GO­ING TO HAVE TO HAVE A CON­VER­SA­TION WITH VOT­ERS IN MECK­LEN­BURG AND MAYBE THE RE­GION.

Char­lotte Area Tran­sit Sys­tem CEO John Lewis

A year af­ter the Blue Line ex­ten­sion opened, there’s an $8 bil­lion ques­tion loom­ing: As the city em­barks on an am­bi­tious ex­pan­sion plan over the next decade, how will Char­lotte pay for the next rail line?

In its first year, the $1.2 bil­lion light rail from up­town to UNC Char­lotte has proven to be a tremen­dous draw for de­vel­op­ers, with some $800 mil­lion worth of new projects com­pleted or un­der­way.

But rid­er­ship has re­mained con­sis­tently below the ini­tial pro­jec­tion of 38,300 av­er­age week­day rid­ers in the first year, gen­er­ally hov­er­ing be­tween 24,000 and 27,000 a month.

Char­lotte Area Tran­sit Sys­tem CEO John Lewis said the first year of the Blue Line ex­ten­sion’s op­er­a­tion has been largely suc­cess­ful. The tran­sit agency has dealt with chal­lenges in­clud­ing storm dam­age that shut down much of the train sys­tem for two weeks last fall and on­go­ing con­struc­tion that lim­ited ac­cess to the 36th Street and Sugar Creek sta- tions, ex­pected to be two of the most pop­u­lar on the new line.

“Our rid­er­ship is trend­ing up,” Lewis told the Ob­server. Over the past three months, av­er­age rid­er­ship has in­creased from 22,720 to about 27,500, beat­ing the pre­vi­ous high point of 27,109 av­er­age rid­ers in Au­gust 2018.

But he said the num­ber of rid­ers isn’t the only mea­sure CATS uses to eval­u­ate the line. “You don’t spend $1.2 bil­lion just to move 30,000 peo­ple ... Just as im­por­tant is the amount

of de­vel­op­ment that goes on. We are lit­er­ally trans­form­ing that cor­ri­dor.”

Lewis ac­knowl­edged that build­ing the next phase of tran­sit will “ab­so­lutely” re­quire more lo­cal fund­ing, pos­si­bly through an in­crease in the cur­rent half-cent sales tax in Meck­len­burg County, or through new al­lo­ca­tions of prop­erty taxes along tran­sit cor­ri­dors.

“We have to make sure we have lo­cal fi­nan­cial sup­port for these cor­ri­dors,” he said. “We’re go­ing to have to have a con­ver­sa­tion with vot­ers in Meck­len­burg and maybe the re­gion.”

City Coun­cil mem­ber Ed Driggs called how to pay for the Sil­ver Line “the $8 bil­lion ele­phant in the room” at a re­cent bud­get meet­ing.

The Met­ro­pol­i­tan Tran­sit Com­mis­sion last month ap­proved an up­date to CATS’ 2030 plan, al­low­ing the agency to move for­ward with the Sil­ver Line. The cen­ter­piece of the next phase of rail, it’s planned to run from Matthews to up­town, skirt­ing the city’s cen­ter along I-277 and 11th Street be­fore run­ning west to Char­lotte Dou­glas In­ter­na­tional Air­port and across the river to Bel­mont. In a first for the sys­tem, CATS plans to talk with neigh­bor­ing coun­ties such as Union and Gas­ton about chip­ping in funds.

The agency’s plans also in­clude:

● Bus rapid tran­sit north

to Mooresville in­stead of the com­muter rail that was ear­lier planned for the Red Line. Com­muter rail still re­mains CATS’ longterm plan, but the agency needs to com­plete an agree­ment with Nor­folk South­ern to share the freight com­pany’s tracks.

● The ex­pan­sion of the Gold Line street­car to 10 miles, run­ning west to I-85 and east to the for­mer East­land Mall site.

● Bring­ing Am­trak ser­vice to the planned Gate­way Sta­tion up­town.

● Ex­tend­ing the Blue Line over I-485 to Pineville and Bal­lan­tyne.

The cur­rent es­ti­mate for ex­pand­ing the tran­sit sys­tem of up to $8 bil­lion is based on “back of the en­ve­lope” math, Lewis said. Now that CATS can start plan­ning the ex­act Sil­ver Line route, more clar­ity should emerge on the to­tal cost in the next sev­eral years. If all went ac­cord­ing to plan, con­struc­tion could be­gin in the late 2020s, with the line open­ing by 2030.

But CATS of­fi­cials ad- mit that’s an am­bi­tious time­line. And CATS is counting on the fed­eral govern­ment to pick up 50 per­cent of the cost through the Fed­eral Tran­sit Ad­min­is­tra­tion pro­gram that funds new tran­sit lines. The FTA paid for about half of both the $462 mil­lion orig­i­nal Blue Line and the $1.2 bil­lion ex­ten­sion.

But un­der the Trump ad­min­is­tra­tion, fed­eral dol­lars for new tran­sit have been in doubt. The ad­min­is­tra­tion pro­posed cut­ting all new funds in its first two bud­gets, but Congress con­tin­ued fund­ing the FTA grants. Jeff Davis, se­nior fel­low at the Wash­ing­ton, D.C.-based Eno Cen­ter for Trans­porta­tion, said the FTA has also been slow to ap­prove new projects and dis­burse the money it does have.

“The Cap­i­tal In­vest­ment Grant pro­gram is in flux right now be­cause the Trump ad­min­is­tra­tion has not been in­ter­ested in ad­min­is­ter­ing the pro­gram in the way Congress wants it to be ad­min­is­tered,” he said. “The cur­rent ad­min­is­tra­tion is not par­tic­u­larly en­thu­si­as­tic.”

It will be sev­eral years be­fore CATS is in a po­si­tion to ap­ply for the needed bil­lions in fed­eral fund­ing. By then, there could be a new ad­min­is­tra­tion, or a new po­si­tion to­ward fund­ing tran­sit.

“There’s a good deal of un­cer­tainty around the fed­eral role,” Lewis ac­knowl­edged. “We’ll con­tinue to go as if the rules have not changed.”

Even if CATS wins fund­ing from the fed­eral govern­ment, the agency will need to raise more money lo­cally to com­plete its plans. While the state picked up 25 per­cent of the cost of both the orig­i­nal Blue Line through South End and then ex­ten­sion to UNC Char­lotte, the Repub­li­can-con­trolled leg­is­la­ture has since capped spend­ing on new light rail projects at no more than 10 per­cent of the to­tal.

That would leave CATS look­ing to find fund­ing to re­place hun­dreds of mil­lions of dol­lars worth of state con­tri­bu­tions the tran­sit agency can no longer count on. That could leave Char­lotte on the hook for a lo­cal share of around 40 per­cent of the to­tal, or around $3 bil­lion.

Lewis said CATS could ask the Gen­eral As­sem­bly to in­crease the half-cent sales tax, pos­si­bly by an­other half-cent or even a full cent, to help fund ex­pan­sion. The cur­rent half-cent sales tax brought in $103 mil­lion last year. Lewis said CATS will work to nail down an ex­act to­tal cost for the Sil­ver Line be­fore de­cid­ing how much of an in­crease they would need.

Vot­ers would ul­ti­mately have to ap­prove such a pro­posal, though they have backed the half-cent tax when it’s been brought to the bal­lot.

VALUE CAP­TURE

An­other pro­posal: Al­lo­cat­ing some of the in­creased prop­erty taxes col­lected from de­vel­op­ments along the Blue Line and other fu­ture tran­sit cor­ri­dors to­ward CATS.

“There’s a lot of in­crease in the real es­tate value in the vicin­ity of the sta­tions,” said Jean-Claude Thill, a UNC Char­lotte pro­fes­sor who stud­ies tran­sit. “The cur­rent sit­u­a­tion is such that CATS re­ally doesn’t ben­e­fit from this.”

Called “value cap­ture,” this strat­egy is in­creas­ingly be­ing used by tran­sit sys­tems to gen­er­ate lo­cal money to pay for more projects.

“Try­ing to re­cap­ture some of the wind­fall that will come to lo­cal real es­tate in­ter­ests from the tax­pay­ers putting this at their doorstep is gen­er­ally con­sid­ered a good prac­tice,” said Davis.

Lewis said that there has been $2.7 bil­lion worth of de­vel­op­ment along the orig­i­nal Blue Line, and the pace of de­vel­op­ment along the north­ern ex­ten­sion is even faster, with $800 mil­lion un­der­way al­ready, ac­cord­ing to the agency’s cal­cu­la­tions. To be sure, it’s dif­fi­cult to sep­a­rate de­vel­op­ment that would have hap­pened any­way in fast-grow­ing ar­eas like NoDa, but de­vel­op­ers have of­ten cited the Blue Line ex­ten­sion as a ma­jor rea­son they’re build­ing at a fu­ri­ous pace in the cor­ri­dor.

Lewis said he will pro­pose not in­creas­ing prop­erty taxes, but get­ting a piece of the higher taxes col­lected from prop­erty along tran­sit cor­ri­dors ear­marked for tran­sit.

“I’ve got my eye on a por­tion of that,” said Lewis. “Should not a por­tion of those new tax rev­enues that are com­ing in the city and the county go into the sys­tem that’s cat­alyzed that?”

He em­pha­sized, how­ever, that the rev­enue from new de­vel­op­ment alone won’t cover the cost of the next phases.

“This is not a sil­ver bul­let,” Lewis said. “All of that de­vel­op­ment is not go­ing to build us an­other cor­ri­dor.”

THE BEST ROUTE?

Last month, the Met­ro­pol­i­tan Tran­sit Com­mis­sion, which over­sees CATS, de­cided on a fi­nal route for the Sil­ver Line. It voted to go around the edge of up­town rather than tun­nel­ing un­der the city cen­ter via Trade Street.

CATS has faced crit­i­cism about the route. Tak­ing rid­ers straight to the city’s cen­ter, rather than to a north­ern edge still largely dom­i­nated by sur­face park­ing lots, would draw more rid­ers, groups such as tran­sit and en­vi­ron­men­tal ad­vo­cate Sus­tain Char­lotte ar­gued.

“A net­work is only as good as the con­nec­tiv­ity be­tween all the dif­fer­ent nodes on the sys­tem,” said Thill. “The route that’s been se­lected re­ally will not be the best for the rid­er­ship.”

Ben Fried, of the New York-based non­profit Tran­sitCen­ter, agreed.

“We think the CATS board made a mis­take choos­ing that align­ment,” he said. “Even if it costs more money, it would have been worth it to take that line di­rectly to the down­town.”

Lewis, how­ever, said the de­ter­mi­na­tion to go along up­town’s north­ern and west­ern edges was made to max­i­mize eco­nomic de­vel­op­ment po­ten­tial of the new line.

“I think this is just an area where we’re go­ing to agree to dis­agree,” he said. Lewis pre­dicted that by the time the Sil­ver Line is com­plete in more than a decade, the north­ern edge of up­town will look very dif­fer­ent, akin to how Stonewall Street has boomed with thou­sands of new apart­ments, a Whole Foods and new of­fice tow­ers and ho­tels over the past five years.

“We’re build­ing not for

to­day’s geog­ra­phy. We’re build­ing for the city of 2030,” he said. He also said he doubts a tun­nel, which could add a bil­lion dol­lars or more to the project’s cost, would be cost-ef­fec­tive.

“Spend­ing an ex­tra few bil­lion for a one-mile track un­der the city, I think would make it hard for us to com­pete at the fed­eral level,” he said. Lewis said the Gold Line street­car run­ning along Trade Street will also ful­fill much of the same role. The sec­ond phase of the street­car, run­ning from John­son C. Smith Uni­ver­sity to Cen­tral Av­enue, is ex­pected to open next Au­gust.

“Bring­ing the align­ment through cen­ter city to­day would be a worth­while goal,” he said. “But we al­ready have an align­ment on Trade Street with our Gold Line, which is un­der con­struc­tion to­day.”

DAVID T. FOS­TER III dt­fos­[email protected]­lot­teob­server.com

A Lynx train pulls into the 9th Street Sta­tion dur­ing a me­dia tour of the Lynx Blue Line Ex­ten­sion when it opened a year ago.

CATS

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