To complete the region’s transit system – including a streetcar to the airport, commuter rail to Lake Norman, and rapid transit along Independence Boulevard – the county may need an additional half-cent sales tax for transit, according to a draft report released Monday.
The transit funding task force also suggested the Charlotte Area Transit System be creative in how it funds the projects, including using low-interest federal and state loans that could allow construction to begin quickly. Another option being considered was to partner with a private developer, as Denver has done for a 36-mile commuter rail line.
Charlotte Mayor Anthony Foxx suggested creating a task force earlier this year to find ways to pay for promised transit projects that are impossible to build without more money.
Transit projects in Charlotte are primarily funded by the existing half-cent sales tax for transit, which voters approved in 1998. But during the recession, consumers cut back on spending, leaving CATS with a massive shortfall. Once CATS finishes building the Lynx Blue Line extension to UNC Charlotte in 2017, the transit system will be tapped out financially, at least for several years.
The task force estimated CATS would need to find $3.3 billion to build the remaining transit corridors, as well as $1.7 billion to operate and maintain the lines through 2024.
The draft report says that if all of the transit projects were to be built and maintained solely with a new transit tax, it would have to be levied at an additional .78 cent.
Any increase in the sales tax would need approval from the General Assembly in Raleigh. That could be difficult, as the GOP-dominated legislature rebuffed a city effort to increase the prepared food and beverage tax to help the Carolina Panthers pay for renovations at Bank of America Stadium.
But the task force suggested the tax hike be limited to a half-cent, and that other methods be used to raise additional money. The transit tax increase would grow to include other goods and services that are exempt today.
Some of the suggestions to supplement the sales tax revenue include:
• Using a federal program known as TIFIA – Transportation Infrastructure Finance and Innovation Act – to start construction quickly. A TIFIA loan could pay for 33 percent of the streetcar project, as well as 30 percent of a rapid transit line along Independence Boulevard. That money must be repaid to the federal government, but it could allow CATS to begin collecting new property taxes from projects built along the rail line.
Those new property taxes could then be used to pay off the loan.
• Expanding advertising on train cars and buses. The report also suggests CATS study selling naming rights and sponsorships.
• Entering a partnership with a private company that would help finance part of the project. Denver is using this method – known as P3 – to build a rail line from Denver International Airport to downtown.
The draft report looked at the specific projects and how they might be built.
One change is that the task force assumed that light rail would be built along Independence Boulevard. The Metropolitan Transit Commission had voted for bus-rapid transit along Independence, with the possibility of a complementary streetcar on Monroe Road.
Building light rail in the median of Independence Boulevard would cost more than $1.5 billion, according to the study group’s report.
The report also suggests tying the city’s two streetcar projects together. The city today is trying to build a streetcar line from Beatties Ford Road to Eastland Mall. A second part of the line would be built to Charlotte Douglas International Airport.
Much of the public focus today is on the Beatties Ford to Eastland segment, which has divided the Charlotte City Council as to whether the project is worth paying for with property taxes. The airport segment along Wilkinson Boulevard could get more support.
The study suggests that airport revenue, known as Passenger Facility Charges, could be used for the small part of the project that would run on airport property, according to the draft report. That wouldn’t violate federal law that prohibits the use of airport revenue for nonairport purposes.
The draft study said it seeks “cooperative funding” with the airport.
Olaf Kinard, a marketing manager for CATS, said in an interview that the early design work for the Wilkinson Boulevard streetcar line has it stopping before it reaches airport property.
He said if airport leaders wanted the streetcar to come onto airport property, transit officials could seek financial help from the airport.
The task force assumed that the streetcar line could be eligible for a $75 million federal New Starts grant. The federal government has already chipped in $25 million to build the first 1.5-mile streetcar segment between Time Warner Cable Arena and Novant Health Presbyterian Medical Center in Elizabath.
Foxx could be in a position to help the city get that money. President Barack Obama has nominated him to be U.S. Secretary of Transportation.
The 30-member task force of former elected officials and business leaders is expected to present a final report to the Metropolitan Transit Commission in a few weeks.
The task force is chaired by Charlotte City Council member David Howard, a Democrat, and Huntersville Mayor Jill Swain, a Republican.
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