A ‘daunting’ billion-dollar puzzle. New Charlotte light rail funding faces debate.

Charlotte City Council is expected to decide Monday whether to take the first step toward the region’s largest infrastructure project, a 26-mile light rail line running from Matthews to Belmont in Gaston County.

The council’s approval of a $50 million contract to start preliminary work on the Silver Line would merely dip a toe in deep water.

The cost of the rail line is unknown, but it’s the biggest in a suite of projects the Charlotte Area Transit System hopes to complete by 2030, at an estimated total cost of $6 billion to $8 billion.

Those numbers not only dwarf the $1.6 billion CATS’ existing light rail lines have cost but are more likely to be shouldered locally. Federal and state transit funding has dropped since the Blue Line from uptown to Interstate 485 opened in 2007; its extension to UNC Charlotte started service last year.

“It’s much more daunting now than it was then,” said retired CATS chief executive Ron Tober, who led development of the Blue Line. “We did it in an era of 50% federal funding and 25% state funding. Well, now that’s gone. There’s a bigger nut that they’ve got to make up.”

Tober expects CATS will get federal and state grants to cover 40% to 50% of the Silver Line’s costs. But CATS also has new options to raise local financing, he added, including some that didn’t exist two decades ago.

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Worries over funding

Uncertainty over the line’s ultimate cost, which isn’t likely to be known for about five years, already has some Charlotte City Council members worried about Monday night’s vote.

“I’ve been asking this question for a couple of years,” council member Ed Driggs said at an Oct. 14 presentation on the preliminary contract. “Now we’re at the point where we’re actually going to spend $50 million and we still haven’t addressed the issue of what the big picture solution for funding this looks like.”

Added fellow Republican Tariq Bokhari: “Ultimately we’re going to get to a point where we run out of money, we don’t know where to go because we haven’t had these (funding) conversations and ... it’s going to feel like we’re forced into moving forward.”

Based on the $1.2 billion cost of the 9.3-mile Blue Line extension to UNCC, the Silver Line would cost more than $3 billion. City officials caution against comparing the two, though, since the new line could face now-unknown construction challenges.

CATS chief executive John Lewis said he hopes to have firm estimates of the project’s total costs in about five years, when 65% of design work would be completed. The initial work to be voted on Monday would produce a rough cost estimate, establish the line’s route and where stations would be.

Having a firm local financial plan would help persuade the federal government to pay more of the Silver Line’s costs, Lewis said.

“They are the most important partner in this,” he said. “Whether it’s 48% or 50%, without this federal partner everything else we’re doing is for naught.”

‘Buffet of options’

The Silver Line is the biggest, but not the only, transit project CATS hopes to complete by 2030.

Expansion of the Gold Line streetcar line and the Gateway Station transportation hub, which will bring Amtrak service to uptown, are both under construction.

Lewis also still hopes to build a commuter rail line to northern Mecklenburg County. Because CATS hasn’t been able to reach agreement on the use of Norfolk Southern Railway’s lines, a rapid-bus alternative is now planned. CATS may also extend the Blue Line to Pineville and Ballantyne.

With less federal and state financing expected for rail, CATS will look to new ways to locally finance its construction.

“Whatever our funding plan turns out to be, it will be a buffet of options,” Lewis said. “We’re talking about the largest project this region has ever undertaken, in the billions of dollars. There will be no easy answer and no single funding source for that.

“It will be probably be a combination of (sources) along with a public-private partnership on the delivery.”

New approaches

Among those options: Charlotte could ask legislators for permission to hold a referendum on raising the half-cent sales tax that finances transit. The tax brought in $107 million in fiscal 2019.

Smaller federal transit grants have “led more cities to turn to these referendums for transit funding, and in some cities it’s worked out really well,” said Ben Fried of TransitCenter, a New York foundation that advocates for better transit. Seattle and Indianapolis are national models for using public votes to expand services and ridership, he said.

A portion of property tax revenues from the new development that springs up along rail lines could be used to help build and operate the Silver Line.

CATS could enter into public-private partnerships to help finance the line, as has been done in Denver and other cities. In August, officials announced that U.S. Bank would contribute $1 million toward an $11.5 million pedestrian bridge over Interstate 277, connecting uptown to South End.

Gaston and Union counties, or towns within them that connect to the line, might also agree to contribute toward its construction.

Belmont and Gastonia, in Gaston County, and Indian Trail and Stallings in Union County have passed resolutions supporting light rail connections, Lewis said. A regional transit study that’s expected to launch by year’s end will assess those linkages and how they would be paid for.

Lewis called rail financing more complicated than it was at the genesis of the Blue Line.

Three entities were involved then: the federal and state governments and local government. The Silver Line will require more partners.

“We’ve got to get creative not only in delivery methods like public-private partnerships but also different funding sources,” he said. “We will be looking at ... other potential sources of revenue, infrastructure financing districts, whatever it takes to cobble together the funding we need.”

Bruce Henderson writes about transportation, emerging issues and interesting people for The Charlotte Observer. His reporting background is in covering energy, environment and state news.