Charlotte and federal officials broke ground Wednesday on the city’s streetcar project, saying it will create another transit option and spur development along the line.

But even as officials celebrated the start of construction on the initial 1.5-mile route, many questions remain about whether the city will be able to expand the project.

Debate over the streetcar – namely the approval of $119 million to add 2.5 miles to the line – has been a major factor in a six-month stalemate over the city’s next capital spending plan.

Mayor Anthony Foxx offered two proposals this week, one of which would cut the streetcar money. The mayor has said he would support either plan, but has long been one of the biggest champions of the streetcar.

On Wednesday, Foxx said the project will help reduce the overall cost of the city’s transit system, improve the quality of life for residents and connect different parts of the city.

Still, Foxx acknowledged that fully realizing those benefits and having a sizeable ridership will require building more than the initial 1.5-mile line.

“The benefits will only grow as we extend the line out,” Foxx told reporters.

The first leg of the streetcar will run from Presbyterian Hospital in Elizabeth to the Charlotte Transportation Center and Time Warner Cable Arena in uptown, and could start service in 2015. About a half-mile of track has already been laid.

The $37 million “streetcar starter” is being funding primarily by a nearly $25 million federal grant. The remaining $12 million is being paid for by the city.

U.S. Transportation Secretary Ray LaHood on Wednesday praised the city’s work in pushing for the streetcar, saying it will help diversify transit as people seek other modes of transportation. But he also said the streetcar route will become an economic corridor and attract businesses along the route and jobs as the line is being built.

LaHood said he thinks once people begin riding the streetcar and perceive it as convenient or affordable, they’ll want to make sure the entire line is completed.

“This is not about another road, it’s not about another highway,” LaHood said. “It’s about the next generation of transportation for the next generation. People here have a vision, and when you have a vision, then there’s no turning back.”

Supporters of the streetcar have said the project also will be more environmentally friendly, and that it will help spark development on the city’s distressed east and west sides. Ultimately, backers want the streetcar to extend 10 miles from the Rosa Parks Place Transit Center on Beatties Ford Road and the Eastland Mall Transit Center.

But critics say the streetcar is too costly, and have questioned just how much the streetcar would relieve congestion because the trains would run in mixed traffic and would stop at traffic signals with other vehicles.

The city already runs buses along the streetcar’s initial 1.5-mile route.

Asked how the project will fit in with other transit, Foxx repeated that the streetcar will help bring down the long-term costs to the transit system. But he said the initial route is just the first step.

“Are you going to get 20,000 riders a day on this mile-and-a-half stretch? No you’re not,” Foxx said. “But if you extended it to Johnson C. Smith, the four-mile stretch we’ve been talking about, you would see a significant group of thousands and thousands of people using that system (daily).”

Council talks to resume

Any future expansion of the streetcar still must pass City Council. The board is holding another budget workshop on Monday where it’s expected to consider Foxx’s proposals or alternate plans.

The mayor’s budget proposal eliminating the streetcar calls for a property tax rate hike of 1.97 cents for every $100 of taxable value. It would allow the city to spend $463.4 million through 2016. Foxx has described the plans as a “bare-bones effort.”

The second proposal offered by Foxx includes the streetcar and calls for $803 million in spending. It would require a 3-cent property tax hike.

Each of the proposals is smaller than the $926 million capital plan first pitched by outgoing City Manager Curt Walton this spring.

Five council members have said they’d support a robust capital plan, including a streetcar. Four other members support a capital plan, but are hesitant about or against building the streetcar.

The two Republicans, for now, are against any plan that requires a property-tax increase.

Foxx said Monday’s meeting is not a make-or-break session for the capital plan, but would help the city provide some guidance to staff ahead of next spring’s budget costs.

The new year also could bring more discussion about how else to fund the city’s 2030 transit plan. At the groundbreaking ceremony, developer Clay Grubb said now may be a time for the community to consider raising its sales tax to pay for transit, which he said would help future generations. Steve Harrison contributed.