If everything plays out as it does on paper, the Red Line would be a regional project mostly paid for through a local transit system and by taxes generated by enhanced property values and new development along the corridor. The model fits its new name, the Red Line Regional Rail Project.
North Carolina Speaker of the House Thom Tillis likes the idea in concept. In fact, it's the kind of new thinking he would like to see statewide, where regional cooperatives are created to take responsibility for regional transportation initiatives, keeping some highway taxes and other funds locally — as well as accountability — and largely getting the state's bureaucratic hands out of it.
That's radical thinking in a state that has always maintained iron-fisted control over local and regional transportation projects through a cumbersome process that determines how all transportation tax money collected statewide is used, forcing local jurisdictions to line up and compete with one another for a continually dwindling supply of state dollars.
Tillis spoke with members of the Lake Norman Transportation Commission Nov. 9, applauding the idea of a local rail authority that, if created, would oversee a two-phase project that would expand the Charlotte Area Transit System's (CATS) passenger service by adding a commuter rail line from downtown Charlotte to southern Mooresville and a hybrid commuter/freight system that would eventually extend to just north of I-40 in Statesville.
The funding plan for the $440 million, first 25-mile phase of the Red Line would include 25 percent funding each from CATS and the state, with the rest funded by private investment that would be repaid, with interest, through the increased property tax revenues resulting from new development and redevelopment of land along the corridor.
By the end of the year, the Red Line Task Force and its consultants will submit to the Metropolitan Transit Commission, and shortly thereafter to all nine "agencies" along the corridor, a plan to create a joint powers authority (JPA), effectively a limited powers jurisdiction to plan, build, implement and operate the Red Line. An unspecified number of potential private investors have been identified and, according to LNTC Executive Director Carroll Gray, several developers around planned station areas have committed to help pay for the stations themselves.
Gray told Tillis that the funding model will not put the towns on the hook for any revenue shortfalls to repay investors, but rather ask all jurisdictions along the corridor that a majority of the extra taxes generated by development — perhaps two-thirds — go to repay the bond with the towns keeping the rest to address local infrastructure needs associated with the growth.
"The idea that this might roll back eventually on the municipalities and the counties would not be something that would be desired," said Gray, who will resign his position with the LNTC at the end of the year. "The idea would be a no-recourse series of bonds that would generate roughly $225 million.
"What we don't know," Gray continued, "is if there is enough coverage without both freight and transit districts that it would project enough growth and value to yield the revenue necessary to repay the bond holders. We're still waiting to hear that equation. The greater the potential upload to the bond holders, the safer the concept becomes to them. There must be significant coverage for the bond holders to buy the bonds."
Members of the panel wondered aloud how high the interest might be in investment in what is essentially a new form of industrial revenue bond, effectively a loan from a private financing entity to build or buy a facility or buy land and/or equipment. In this case, the loan would not be repaid by all local taxpayers, but by the additional taxes spun off by redeveloped land located within the JPA district. It isn't a new concept nationally, but it is in North Carolina.
"If they aren't going to invest in this, there's a message there," said Cornelius Mayor Jeff Tarte. Answered former Mooresville Mayor Bill Thunberg, an ad hoc member of the LNTC, "And if they are going to invest, there's a message there, too."
The concept of a hybrid commuter/freight system emanated from the office of North Carolina Department of Transportation Secretary Gene Conti, and resuscitated the Red Line from its death bed. The line fits the NCDOT's heightened interest in growing the region's freight capacity, provides freight access to the Lowe's Home Improvement distribution center in Statesville, among others, and would provide an alternative to I-77 as plans continue to widen the interstate first to Mooresville, and eventually to Statesville.
All good ideas, said Tillis, who stopped short of committing $110 million from the state.
"The other thing we have to talk about is what's in it for the state other than we like you guys, and I live here," said Tillis. "Nobody in Raleigh I know of is lining up to give the $100 million Charlotte needs to build commuter rail."
How that funding fight plays out is yet to be seen, but Tillis gave credit to the concept of the region looking to go its own way to enhance its own transportation network, and it may serve as a model for things to come in North Carolina.
"I love the idea of shifting this to the regional level and getting the state out of it," said Tillis. "The idea of collecting the revenue locally and not sending it to Raleigh gets the state out of it and brings it closer to the people. It's a more efficient and accountable government because, if you're not spending your money wisely, your replacements can repeal the tax and kill the project. I think in many ways the state is used as a shield by local governments."
Unanimous approval of nine agencies is required for implementation of the JPA. They are NCDOT, CATS, Charlotte, Huntersville, Cornelius, Davidson and Mooresville along with Mecklenburg and Iredell counties. The next step in the process is a presentation on the recommended financing model to the Red Line Task Force on Wednesday, Nov. 30.
