The big picture may have gotten buried Tuesday as Charlotte City Council members chewed and chewed and chewed on 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 werent an uncomplicated (other than politically, of course,) citywide property tax increase. But heres the big picture, as articulated by City Manager Curt Walton: The Blue Line Extension is likely to be the last project of its kind.
The $1.1 billion BLE, which will run from uptown Charlotte to the UNC Charlotte campus, recently won its long-awaited federal funding for half its cost. Half of the rest of the cost will come from the state and the other half will be paid with the countywide half-cent sales tax for transit.
Walton cautioned the council not to expect Congress to keep funding a public transit program paying half the cost of building. As for the other proposed 2030 Transit Plan projects the Red Line commuter rail, the Southeast Silver Line corridor, the West corridor toward the airport, Walton said, Were not going to get those anytime soon. Its 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 part 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 property tax increase. 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 entire 10-mile streetcar project is a part of the Metropolitan Transit Commissions 2030 Transit Plan, the transit tax isnt bringing in enough revenue to let the MTC build any projects after the Blue Line Extension. So the city is moving ahead on its own with the streetcar. Council members havent agreed on how or whether to pay for the extension, and that lack of agreement led to Junes vote against the whole Capital Improvement Plan.
TIFs, STIFs and SADs
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. All are essentially property taxes but would use the higher property tax revenues from the development the streetcar is expected to lure. For instance, a Municipal Service District assesses a special property tax over a certain area, to be used for improvements. Examples are Charlotte Center City Partners and University City Partners.
In addition, council member Michael Barnes pressed to seek cooperation from some of the educational and nonprofit institutions along the streetcar route: Presbyterian Hospital, Central Piedmont Community College, Charlotte Center City Partners, Johnson & Wales University and Johnson C. Smith University. Under several of the alternative finance strategies, those property owners are exempt from paying property taxes. So, Barnes said in essence, why not ask them to pony up. He noted that UNC Charlotte had contributed $4 million in land and in-kind contributions to help the Blue Line Extension. Other U.S. local governments have been eyeing a strategy known as Payment in Lieu of Taxes, in which institutions exempt from property taxes make voluntary contributions to local government coffers. Both the Town of Davidson and the city of Durham have received Payment in Lieu of Taxes.
Unlike cities in some other states, N.C. cities arent empowered to raise sales taxes or create a local income tax, or even create a parking space surcharge. Those moves must come from the N.C. General Assembly. 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. And it cautioned that the N.C. General Assembly has made noises about doing away with the Business Privilege License tax statewide.
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 thats fair or wise national transportation policy is a question for another day. Regardless of the answers, its likely to be reality for the coming decades.