The Red Line — proposed as a commuter rail line between downtown Charlotte and southern Mooresville — didn’t qualify for any known federal funding pools and, despite costing one-third the estimated cost to extend the Blue Line light rail to University City, couldn’t capture the attention of the Charlotte-centric body that runs the transit system, the Metropolitan Transit Commission (MTC).
That was before the Lake Norman Transit Commission brought an Urban Land Institute panel to the area for an intensive, three-day workshop that resulted in a report that began to change the course of the local rail transit discussion — the Red Line is as much, if not more, about land use and economic development than it is about transportation alternatives.
In a humming economy of a decade ago with an unknown false bottom, land use along the five proposed transit corridors was regarded as an ulterior motive by critics of commuter and light rail. And with a capacity of a few thousand riders per day, the billions of dollars in public investment could not justify the little difference rail transit could make on congestion.
Today, with a stagnant property tax base and little job growth, Red Line proponents have revived and refocused the discussion about the corridor’s potential to spur economic growth. And it’s gotten noticed in Charlotte and, perhaps more importantly, in Raleigh.
The Red Line has friends in high places, and they don’t get much higher than the office of North Carolina Transportation Secretary Gene Conti, who has ambitions of expanding the state’s freight rail capacity, with the old Norfolk and Southern “O” line, on which the Red Line would run, playing a key role in that effort. The tracks must be upfitted for regular freight use and, by no coincidence, must also be upgraded for passenger use as well.
But there’s another friend at the North Carolina Department of Transportation in Paul Morris, the new deputy director of transit and current consultant — hand-picked by Conti himself — to the Red Line Task Force of the MTC. Through the end of the year, he will remain as the Red Line’s consultant until his contract, through Greenleaf Strategies, expires. That places him in the unique position of simultaneously helping to design a financing strategy for the Red Line and advocating for it from an official, high-ranking position.
Morris’ involvement to date is hailed as a key to reviving the Red Line by its supporters.
“Until Paul got involved, I felt like the North Line was on a ‘do not resuscitate’ order,” says Cornelius Mayor Jeff Tarte, a member of the Red Line Task Force and, like all mayors in Mecklenburg County, a representative to the MTC. “Paul is a critical success factor for the north rail corridor. I have tremendous regard for Paul’s abilities and knowledge as a rail transit subject matter expert. Paul’s appointment demonstrates NCDOT’s, and specifically Secretary Conti’s, commitment to seeing a complete and robust multiple modality system in our region.”
Value capture
Morris first became involved in the Red Line nearly a decade ago when he worked with Cherokee Partners, a company that specializes in assembling financial deals for infrastructure improvements. That’s when tax increment financing (TIF) was first discussed as a method to help pay for a portion of the cost to upfit the Norfolk and Southern tracks for commuter rail use and to build the 14 stations along the corridor between Charlotte and Mt. Mourne in southern Iredell County.
That form of financing is one of several “value capture” mechanisms that can be applied to the Red Line, which at present has no identifiable federal funding pool available to pursue. Because of the nature of commuter rail versus light rail, ridership figures — the current benchmark for federal rail transit funding — falls short of minimum requirements.
Among the leading value capture options proposed by Morris to the task force are TIFs and special assessment districts (SADs). And rather than having municipalities individually raise their own piece of capital for what could be upwards of $200 million in “local” investment to pay for their share of the estimated $360 million project — the balance equally divided between the NCDOT and CATS — Morris recommended jurisdictions along the corridor take a unified approach to funding the project.
That approach can’t, and won’t, include an additional tax burden on residents. Those revenues would be derived from private investment in the corridor and by taxes, in the form of TIFs or SADs, on undeveloped or underdeveloped property along the corridor where higher density residential, commercial and — with the “dual benefit” approach of passenger and freight —
industrial and shipping would be drawn.
“Value capture is how you make investment in infrastructure that causes development to occur that can pay for the investment that was necessary to create the infrastructure,” says Huntersville Transportation Planner and Red Line Task Force member Bill Coxe. “By the end of the year, we will have estimated the amount of dollars that have been well vetted that we think we can generate out of the development that we are conservatively comfortable will come. All of that becomes part of the backbone if you go to the private sector for funding. They want to know you have your figures worked out.”
The Urban Land Institute panel report that was released in the spring of 2010 predicted transitoriented development along a completed commuter rail corridor would result in $2.4 billion worth of investment generating $31 million in property taxes and creating 12,915 jobs. These figures resulted from meetings with developers of five proposed projects along the corridor, and don’t include any additional development beyond those five.
How valid these figures remain is unknown as the developers were not identified, and what impact a lagging economy has had on these plans, which existed only on the drawing board, is also murky. Coxe says the region is poised for growth when the economy does eventually revive, and he promotes concentrating that growth along the rail corridor as opposed to continued suburban sprawl. Having that growth help pay for the infrastructure that serves it, Red Line proponents say, is a bonus.
Balkan state
Among Morris’ four-point action plan that was unanimously approved by the Red Line Task Force last month was his recommendation of a unified approach to the local financing of the corridor. That means getting Mecklenburg County, Charlotte, Huntersville, Cornelius and Davidson — along with Mooresville and a heretofore disengaged Iredell County — to agree on that methodology.
That is further exacerbated by the fact that whatever value capture method works in one jurisdiction may not be as effective in another. So, Morris recommended a “Joint Powers Authority” to act on behalf of the individual entities along the corridor.
Similar to the partnership of the three north Mecklenburg towns in the Commerce Station industrial park in Huntersville, the jurisdictions would share authority in the financial aspects of the corridor.
Davidson Mayor John Woods, who chairs the Red Line Task Force, knows that could be tricky.
“It’s always a challenge getting separate entities to agree to an implementation plan,” says Woods. “Nevertheless, we are so clearly focused on the economic development opportunities that complement the transportation improvement that I am hopeful we can come to grips with the various interests and details. When you get down to it, especially right now in this economy, everyone is particularly interested in the development of jobs and capital investment.”
Which is the essence of the renewed focus on rail transit.
“What is finally occurring,” says Coxe, “is a recognition that this is not about strictly a transportation project, but about investing in an infrastructure that will then engender economic development.”
In the end, says Cornelius Mayor Tarte, the construction of the Red Line, as well as the buildout of the entire transit system around Charlotte, will come down to one issue ... dollars and minimal risk to the towns and their residents.
“The dollars associated with the cost to build and the return-on-investment associated with development and job creation,” says Tarte. “Last, it will take creativity to harvest $200 million from private sector partnerships necessary to see this vision come to fruition. Municipalities cannot and should not fund this level of investment.”
