Politics & Government

After the Blue Line, what’s next? More rail lines – and possibly more taxes

Here's what the light rail in Charlotte will look like in 2030

CATS CEO John M. Lewis is looking ahead to the next three lines in the system's light rail lines. Lewis is wanting to build the next three lines at the same time, in hopes of keeping the schedule of 5 light rail lines by the year 2030.
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CATS CEO John M. Lewis is looking ahead to the next three lines in the system's light rail lines. Lewis is wanting to build the next three lines at the same time, in hopes of keeping the schedule of 5 light rail lines by the year 2030.

The Lynx Blue Line Extension opens to passengers at 10 a.m. Friday, the culmination of a decade of planning and construction.

But the Charlotte Area Transit System isn’t finished. CATS chief executive John Lewis wants to build three new transit lines at once: to the airport, to Matthews and to Lake Norman. He has said that would cost between $5 billion and $7 billion.

▪ The line from uptown to Matthews has been called the Silver Line and would run along Independence Boulevard and Monroe Road.

▪ The line from uptown to the airport would most likely run along Wilkinson Boulevard. It would be an extension of the Silver Line, but CATS doesn’t know how they would connect and how the airport line would pass through uptown. Options include running on the street or passing through uptown with a tunnel.

A consultant, WSP, is studying how the train should pass through uptown.

▪ There is also the Red Line train to Lake Norman. The original plan was to use Norfolk Southern’s freight tracks, but the railroad has so far refused. WSP is studying alternative routes from uptown to Mooresville. Some north Mecklenburg mayors, including Huntersville’s John Anarella, have said they want the train on the freight tracks as planned – or they don’t want it at all.

At Anarella’s request, the Metropolitan Transit Commission is scheduled to vote March 28 on whether to direct CATS to end the Red Line study.

▪ And finally, there is the streetcar, a city-funded project that CATS manages. Its cost isn’t part of the estimated $5 billion to $7 billion price tag Lewis has cited.

In the past year, CATS has been mum on how it might pay for the expansion, which has been called “The Big Bang.”

“It will be time to have a very vibrant conversation (after the Lynx extension opens),” said CATS chief executive John Lewis. “I want to build all three lines at one time. It will take some unique partnerships.”

CATS Public Relations Manager Krystel Green shares three things people should know before riding the Lynx light rail

Charlotte has often looked to Denver as a model for transit, and that city also embarked on an ambitious plan to build several rail lines simultaneously. Denver is building three transit lines in a public-private partnership, which Lewis has said he would consider.

Denver offers a good road map for how Charlotte might pay for its plan. It also shows that Charlotte would likely need large tax increases to raise the same amount of money, which could be politically challenging.

Denver’s FasTracks program cost $5.6 billion. Here is how Denver pays for FasTracks:

Sales tax

Denver has a special transit sales tax of 1 percent. It’s levied not only in Denver, but in seven surrounding counties, and raised just under $598 million last year.

Of that, 40 percent – $240 million a year – is set aside for FasTracks.

How hard would it be for Charlotte to find $240 million a year?

For perspective, CATS has a half-cent sales tax for transit levied in Mecklenburg that raised just under $93 million last year. If CATS were able to get an additional half-cent increase to the sales tax, that would raise an additional $93 million. It would also increase Mecklenburg’s total sales tax to 7.75 percent. (The sales tax would be even higher on restaurant and bar tabs because of a 1 percent prepared food and beverage tax.)

“The dream that (CATS CEO John Lewis) sells is the 2030 plan,” said Ned Curran, the former chair of the N.C. Board of Transportation. “And a new half-cent tax won’t get you there.”

The existing half-cent sales tax is almost entirely accounted for: it pays for bus and train and service and covers debt from light-rail construction. So to put CATS on equal footing with Denver in terms of sales tax revenue, Mecklenburg would need to raise its sales tax by about 1.5 cents.

That’s probably not realistic.

CATS Public Relations Manager Krystel Green talks about how to buy a fare for the Lynx light rail using a ticket vending machine or an app.

Like Denver, could CATS get neighboring counties to raise their sales tax? That could be a difficult sell.

The Silver Line planned for Matthews doesn’t leave Mecklenburg County, so Union County would have little interest in contributing. CATS has discussed eventually bringing the airport line to Gaston County, but it wouldn’t leave Mecklenburg in the current plan. The Red Line to Lake Norman could extend to Iredell County, but officials there have been reluctant to pay.

light rail extension
Staff graphic

Lewis said he’s seen increasing interest from neighboring counties.

“But I don’t know if that will lead to more revenue today,” Lewis said.

In 25 years, CATS may be in a position to expand rapid transit to neighboring counties. But not today.

“How are we convincing people in the surrounding counties that this is worthwhile?” Curran said.

What about the federal government?

Denver didn’t count on the Federal Transit Administration for as much money as CATS did for the Blue Line and the Blue Line extension.

Of the $5.6 billion for Denver’s FasTracks, the federal government is paying 30 percent. Scott Reed, assistant manager of communications with Denver’s Regional Transportation District, said some of Denver’s new transit lines might not have qualified for federal funding, so Denver paid for them on its own.

The Federal Transit Administration paid half of the cost – about $780 million – for the Lynx Blue Line and the extension.

As Charlotte moves forward with transit lines, it may not get as much federal support. The Trump administration has said it wants to reduce federal money for transit projects from 50 percent to 30 percent.

Under that scenario, Charlotte could get $1.8 billion from the federal government.

That puts Charlotte roughly equal with Denver, at least in terms of federal funding.

Denver Union Station
As part of its FasTracks project, Denver renovated its Union Station downtown. Denver Regional Transportation District

What about the state?

State support is one area in which CATS has an edge over Denver.

The state of Colorado contributed only $18 million. On the other hand, the N.C. Department of Transportation paid for about 25 percent of both the Blue Line and the Blue Line extension – about $380 million.

A new state law restricts state financing of light-rail projects to 10 percent of their cost. That would slash the state’s future contribution.

But if CATS received $600 million from the state, that could save the transit system a sizable chunk of money, perhaps between $20 million and $30 million a year in financing.

University of Colorado A Line - Airport
Denver’s transit system built a new rail line to the airport as part of its FasTracks program that Charlotte may follow. Denver Regional Transportation District

What about private money?

In Denver, three of the rail projects were bundled together into what Denver calls the “Eagle P3 Project.”

The transit system entered into an agreement with Denver Transit Partners to design, build and operate the three lines. The Regional Transportation District still owns the lines.

Denver Transit Partners brought $450 million of private money to the deal.

The benefit of bringing in a private company was speed and simplicity: Denver Transit Partners did much of the heavy lifting that the transit system would have had to do on its own.

But Denver must make guaranteed payments to the developer each year. Much of that money comes from the $240 million in annual sales tax revenue.

At this point, Charlotte doesn’t have enough money to pay back a private developer.

Other options?

A proposed light-rail line from Chapel Hill to Durham would be paid for, in part, through a higher car rental tax and vehicle registration fees.

CATS has also floated an idea known as “value capture,” in which commercial property owners near rail stations pay higher property taxes. That money would be funneled to CATS to help pay for construction costs. Those financing options could help CATS generate between $20 million and $30 million a year.

Steve Harrison: 704-358-5160, @Sharrison_Obs