Tuesday, December 13, 2011

The huge significance of the Red Line proposal

MOORESVILLE – "Revolutionary is not too strong a word for plans being laid out today to a room full of government officials, consultants and interested laypeople. We're at a "summit" to discuss ideas for reviving a long-stalled proposal to build a commuter rail line to Iredell County.

For starters, the plan involves regional cooperation. Second, the current public money crunch has forced a creative new way of thinking about transportation financing.

Even for a region that's had plenty of regional "discussions" for decades, what's being proposed is a major leap forward for working across county boundaries. The complicated proposal depends, in part, on seven governmental bodies agreeing to form a new legal entity, called a joint powers authority. Members would be Mecklenburg and Iredell counties, and Charlotte, Huntersville, Cornelius, Davidson and Mooresville.(The JPA wouldn't have taxing authority.)

Not since the great Mecklenburg annexation/spheres of influence agreements of the 1980s and the formation of the Mecklenburg-only Metropolitan Transit Commission in the 1990s have so many local governments been asked to come to a formal, legal agreement of this sort. And this time the agreement must cross county lines. That's a rare proposition around here, where crossing the county line can put you into a place with an entirely different political culture, and where most of the counties outside Mecklenburg harbor, if not fear, then at least wariness of Charlotte's behemoth footprint.

But if there's to be any hope of prudently guiding this huge and sprawling metro region away from financially unsupportable growth, it's going to have to come with a large dose of inter-county cooperation. The choices at hand are these: Cooperate, and continue to progress? Or maintain geographic silos and find the region bypassed by other, more cooperative metro regions?

Viewed that way, what happens to the Red Line proposal could well be a harbinger of the region's future.

The other reason today's summit and the Red Line plan carries major significance is this: For the first time since the 1998 transit sales tax campaign, the MTC and member governments are putting on their thinking caps about financing.

Here's a link to the slide show presentation Tuesday.

Until now, most people here pretty much figured transportation money – including roads, not just transit – would eternally flow down from the feds and the state. For transit, you'd also add in the local revenue stream from the half-cent sales tax, collected only in Mecklenburg. (Individual cities, of course, also use local tax money for local street projects that aren't part of the vast state road network.)

Even before the 2008 financial crash, it was starting to look as if the MTC couldn't build out its five-corridor plan in 25 years without more money than it could expect from the half-cent sales tax and expected state and federal funds. Since then, the recession and continuing high unemployment have battered the sales tax revenue. Until a year ago the MTC appeared to believe it had few options beyond delaying transit construction for decades, pushing for a politically unlikely sales tax increase or passively hoping the sales tax revived.

Finally, with help from the N.C. Department of Transportation and some savvy consultants, it has gotten smarter and more creative about finding money. They have looked around the country at other metro areas that are building transit systems. Two important words arose: Value capture.

That means recognizing that building infrastructure such as highways and transit lines makes nearby property more valuable.  (It's why land speculators like to buy property 20 years before the state highway goes through.) Instead of letting public spending enrich private landowners with little monetary benefit to the public, why not "capture" some of that increased value for public purposes?

A value-capture set-up would use some of the new, higher tax revenues from the now-more-valuable property to pay off bonds sold to build those same infrastructure improvements. The Washington Metro, the Dallas Area Rapid Transit System and the Portland, Ore., streetcar system have all used value capture in their construction.

The Red Line plan proposes two value-capture techniques. One is tax-increment financing (TIF) – using some of the expected higher property taxes to pay off bonds.  Another is a special assessment district, formed when a majority of the income-producing property owners (i.e. not owner-occupied residential homes) along the Red Line rail line agree to an extra property tax (.75 per $100 in assessed property value is what's been proposed).  Most of that tax revenue would help fund construction, but 25 percent would go to the general fund of the local governments.

The proposals laid out today must undergo weeks of examination and discussion among elected officials before any decisions. And nothing is certain. For instance, Iredell County is a key player, yet not one Iredell County commissioner was at today's meeting in Mooresville.  All other affected elected bodies had representatives in the room.  What does that mean for the proposal's chances?

But even if the proposal ultimately fails, the precedents it's setting, in pushing for smarter transit financing and in pushing for cross-county cooperation, will have far-reaching resonance.


Mary Newsom said...

This comment comes from Walter Turner, historian at the N.C. Transportation Museum Foundation in Spencer:

"As you pointed out, regional cooperation is essential to the success of creating the Red Line rail route. In addition, leaders of the effort should involve Norfolk Southern Corporation more in the planning process. And the related project to separate the Norfolk Southern and CSXT tracks just north of Charlotte’s proposed Gateway Station needs to be completed by 2017, a requirement of the funding source."

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