Charlotte’s streetcar projected to cost more than bus, light rail

When Charlotte was planning to build its streetcar line last decade, one touted benefit was cost savings. The idea was that an electric-powered streetcar is cheaper than a diesel-powered bus and that a larger streetcar provides more economies of scale than a smaller bus.

But as the costs of a 4-mile streetcar line are coming into focus, an analysis shows that the streetcar will likely be more expensive to operate than city buses and the Lynx Blue Line.

To carry a passenger a mile on the streetcar, the Charlotte Area Transit System projects it will cost $1.58 in 2019, when the second phase of the project would open. For comparison, in 2012, it cost CATS 77 cents to move a bus passenger one mile. A Lynx Blue Line passenger’s 1-mile trip was 68 cents, according to a federal database.

The cost analysis wasn’t part of the City Council agenda material prepared by city staff for a Monday streetcar vote. The Observer conducted an analysis about the costs for each mode of transportation and confirmed the findings with CATS.

Moving people and cutting costs aren’t the only goals of the streetcar, now known as the Gold Line. Proponents have said it will spark the same kind of economic development that has been seen along the light-rail line in South End, where hundreds of new apartments have been built.

The benefits of such development are difficult to evaluate in a cost-benefit analysis of a transit project.

The streetcar’s construction and operating costs have come under scrutiny from some City Council members, in part because the city – not CATS – will pay the bill. The transit system told the city earlier this decade it can’t afford to build or maintain the line.

CATS leaving the project, at least financially, means the city will have to use sources of money that can also be used for things such as roads, police and fire, affordable housing and tree planting.

Operating costs mounting

The city estimates the 4-mile segment will cost $6.2 million to operate annually. Charlotte also needs about $1 million a year for a maintenance fund.

The City Council voted Sept. 8 to apply this week for a federal grant for half of the extension’s $150 million in construction costs. In preparing for the grant application, the city projected how it might pay for those operating costs.

• Fares revenue could generate $1.5 million. Selling naming rights and advertising could bring another $293,000, according to the city.

• The city could create what’s known as a Municipal Service District, which is a special area of the city that has a higher property tax. Center City Partners is funded with such districts.

If the city levied an extra property tax of 2 cents on property near the line it could generate $1.2 million.

• The biggest pot of money would come from the city’s portion of the Motor Vehicle License fee. The city receives $5 of a $30 annual fee for registering a vehicle. It goes into the general fund to pay for services like police, fire and roads.

The proposal to fund the first segment of the streetcar would divert $2.84 of this $5 fee. By using all of the money, the city could raise $3.2 million. That money from motor vehicles could be used for almost any purpose, including roads, sidewalks, police and affordable housing.

The city also needs to build up a reserve maintenance fund. The city has proposed creating what’s known as a TIF – tax-increment financing – district. The city would use new property taxes from development that occurs near the line and funnel it back to the project.

Ultimately, more costly

In 2012, CATS spent about $79 million operating its bus system, according to a city report filed with the federal government. That averaged out to $100 for each hour a bus picked up passengers. CATS estimates it spent 77 cents to carry a bus passenger one mile.

The Lynx Blue Line costs more. The transit system spent $376 for each hour the light rail picked up passengers. But because the light-rail line can carry large numbers of people, its cost per passenger mile was less, at 68 cents.

The streetcar’s operating cost is projected to be $190 an hour. CATS has estimated the streetcar’s per-mile cost will be $1.59.

Olaf Kinard, a marketing manager for CATS, notes that if the streetcar is analyzed on a cost-per-trip basis, it’s $3.18. That’s cheaper than the bus ($3.45) or light-rail line ($3.59).

The reason, however, is that the expected length of each streetcar trip is shorter than a bus or train ride.

The long-term plan is to build 10 miles of streetcar, from the Rosa Parks transit center to the site of the old Eastland Mall.

If the entire streetcar is built, CATS would be able to phase out some of the city’s most heavily traveled bus routes and move passengers to the streetcar. For now, buses would run alongside the streetcar. (CATS will be able to stop operating the free Gold Rush shuttle if the 4-mile streetcar is built.)

“When you go to Phase 3 (of the streetcar) you will start replacing some buses,” Kinard said. “All that ridership that was on the bus will move over to the streetcar.”

The City Council voted 7-4 Sept. 8 to apply for a federal grant to pay for 50 percent of construction costs of the $150 million second phase.

During the debate, proponents such as Vi Lyles and Al Austin didn’t focus on the economics of the streetcar. They instead said the project would bring economic development to east and west Charlotte. “Seven thousand people have moved (to the South End) because of the convenience of the streetcar,” Lyles said.

Critics warned that the city might have to raise property taxes to pay for the streetcar operating costs. “Mark my words, it will raise taxes,” said council member Kenny Smith. Smith said he thought that for CATS to focus on the cost per trip – rather than analyzing the cost per mile – is “reaching.”

“It feels like one of those sports stats they create to make a player sound better than he may actually be," Smith said.

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