Thursday, January 3, 2013

Why funding Charlotte's streetcar is tough

Maybe this item's headline should be Yet Another Problem with Single-Use Zoning.

There's been chatter among city policy types about finding some creative finance tools for Charlotte to use to build the second phase of what would ultimately be a Beatties Ford Road-West/East Trade Street-Hawthorne Avenue-Central Avenue streetcar route.One tool being talked of is a special tax assessment district.

(For the purposes of this post, let's set aside whether said streetcar is a good or bad idea. I tend to think it's a good idea, as a way to shape and lure development to parts of the city that could use a development boost, but I know others disagree with that. Topic for another day. For now, let's talk about financing.)

Because of a reluctance to use regular property taxes (for reasons that have not been clearly articulated, at least not in my hearing, but that seem to be taken as gospel), some folks have talked of special tax assessment districts, akin to those that fund Charlotte Center City Partners or University City Partners, along the streetcar route. It's a tool used around the country to help municipalities pay for infrastructure seen as helping specific neighborhoods.

But here's why that tool isn't very sharp in Charlotte, at least not along the part of the streetcar route that is already
funded and ready to start construction this year (Presbyterian Hospital up to the Transportation Center at Brevard Street) as well as the proposed-but-unfunded second leg (from Presbyterian out Hawthorne to Sunnyside Avenue and from the Transportation Center up West Trade Street to Johnson C. Smith University). If you know what's along that route you'll notice that huge chunks of land along it are tax-exempt, owned by government or educational or other nonprofit institutions. The hospital. Independence Park. Central Piedmont Community College. The I-277 right-of-way. The old county courthouse. The Charlotte-Mecklenburg Police Department. Old City Hall. The Federal Reserve Building. The Transportation Center. The arena is city-owned, too. Once you pass The Square you've got First Presbyterian Church, the federal courthouse and Johnson & Wales University land. The I-77 right-of-way and, a few blocks later, Johnson C. Smith U.

Yes, there are some taxable parcels along the route, too. I'm just saying ...

Years ago, the old and lamentably too-well-followed Odell Plan for uptown Charlotte called for a zone of government buildings, mostly on urban-renewed land appropriated from what once was a black neighborhood called Brooklyn. By creating a district of mostly government buildings, we've created a district without much privately owned land. And thus lowered any potential tax revenue for projects like the streetcar. It's a good illustration of why a fine-grained urban fabric (meaning a lot of different, smaller uses close to each other, instead of huge-footprint, single-use projects) really does seem to be healthier, economically, in the long run.

Of course once you get past JCSU to the west and hit Central Avenue on the east, the amount of potential redevelopable land is much greater. But those sections aren't even in the city's long-range capital plan (which hasn't been adopted anyway).

Want to read more about the streetcar's potential economic impact under varying scenarios? To download the first part of a 2009 economic development study click here. For the second part click here.