Tuesday, October 30, 2012

Transit? ‘It’s going to take decades and decades’

Streetcar in Portland, Ore. Can Charlotte's project find funding? (Photo: David Walters)
The big picture may have gotten buried Tuesday as Charlotte City Council members chewed over, and chewed and chewed, different alternative revenue strategies that might enable the city to build the second leg of its proposed streetcar.

Most of the discussion was about finding ways to pay for the streetcar project that weren't a simple, citywide property tax increase. But here's the big picture, as articulated by City Manager Curt Walton: "The Blue Line Extension is likely to be the last project of its kind."

That $1.1 billion project recently won federal funding for half its cost.

Don't expect Congress to continue to fund a public transit program that pays half the cost of building, Walton said. As for the other proposed 2030 Plan transit projects the Red Line commuter rail, the Silver Line corridor to the southeast, the West corridor  toward the airport, Walton said, "We're not going to get those anytime soon. It's going to take decades and decades and decades."

The first streetcar leg from Presbyterian Hospital to the Transportation Center on East Trade Street is being built with a $25 million federal grant and $12 million in city funds. The $119 million second leg from the Transportation Center to Johnson C. Smith University and from the hospital to Sunnyside Avenue near Central Avenue was a piece of a $926 million, eight-year Capital Improvement Plan that did not win council support in June. The whole CIP would have required a 3.6-cent increase in the city property tax.

Meeting for the second in a series of budget-specific sessions, the council spent most of two hours talking about different revenue tools for the streetcar. Although the streetcar project (from Beatties Ford Road at Interstate 85 to the former Eastland Mall site) is a part of the Metropolitan Transit Commission's 2030 transit plan, it's far down the list of projects, and the transit sales tax isn't bringing in enough revenue to let the MTC build any projects after the Blue Line Extension, due to start construction next year.

 So the City Council decided to move ahead on its own with the streetcar project, using only city money. But council members haven't agreed how or whether to pay for the extension. Tuesday, most council members agreed to keep looking for tools such as Tax Increment Financing, Synthetic Tax Increment Financing, Special Assessment Districts and Municipal Service Districts to help with the streetcar funding. (To read more about what all those things are, click here to download the city staff's presentation from Tuesday. Bonus: You'll get a copy of a consultant's economic analysis of the streetcar's development potential from 2009.) All are essentially property taxes but would use the higher property tax revenues from the development the streetcar is expected to lure to the route. For instance, a Municipal Service District assesses a special property tax over a certain part of the city, to be used for specific purposes to improve that area. Examples are Charlotte Center City Partners and University City Partners.

Unlike cities in some other states, Charlotte council members aren't empowered can't decide to raise sales taxes or create a local income tax, or even create a parking space surcharge. In North Carolina, cities have little leeway beyond property taxes and some specific fees (water/sewer services and development-related fees) for raising revenue. (For more about the ways cities around the U.S. lack the ability to chart their own financial destinies, see this AtlanticCities.com piece,"To Fix Municipal Finances, States Need to Back Off.")

Some city council members have asked city staff for more information about the possibility of using a Business Privilege License Tax  (which N.C. cities can levy, under certain conditions) that would apply to parking businesses, on a per-space basis. The city staff said its very rough estimate of what would be needed to raise $5 million a year via the BPL tax on parking spaces would cost roughly $110 per space per year.

My prediction: This will not be the last time you hear of all those tools TIFs, MSDs, STIFs, SADs, BPLs, and so on discussed as possible ways to pay for transit projects. As Walton warned, cities across America will have to look to urban-region taxpayers to fund their own transit projects. Whether that's fair or wise national transportation policy is a question for another day. Regardless of the answers, it's likely to be reality for the coming decades.