Even as he was giving his presentation on the proposed Red Line Regional Rail Project with a view "From The Other Side of the Tracks" Tuesday night, Cornelius resident Kurt Naas knew there were those in the room who were, in his words, "holding their powder because the Red Line is different."
Naas appeared at the invitation of the Cornelius Rail Task Force to provide a word of caution to the group that will advise the Cornelius Town Board of Commissioners as to whether it should participate in the five-municipality, two-county and state project that would bring a hybrid commuter/freight rail project from downtown Charlotte to Mount Mourne, and eventually to points farther north.
He compared the projections by consultants for the project to the only other local passenger rail system in the state, the LYNX Blue Line light rail from downtown Charlotte to just north of Pineville. He told the task force — with the consultants and North Carolina Deputy Secretary of Transit Paul Morris in the room — that, historically, rail projects bring about half of the anticipated development and associated tax revenues, and the Blue Line was no different.
"By almost every measure, the Blue Line appears to be a great success" in terms of development mix and volume, Naas said. But a closer look, he said, indicates that the bulk of that new development occurred in downtown Charlotte, and the majority of that square footage — ImageinOn, Time Warner Cable Arena and the downtown UNC Charlotte campus — would have occurred with or without the light rail. In all, roughly 30 percent of available land along the Blue Line has been developed, Naas said.
But wait — consultants Mark Briggs of Parsons Brinckerhoff and Katherine Henderson of KKH Consulting would later say, though not in those words — the Red Line is different. The Blue Line is a 15-station, 11-mile urban light rail corridor and the Red Line Phase I is an 11-station, 25-mile, suburban commuter rail. The Blue Line is effectively an urban renewal project while the Red Line has developers lined up and waiting to plow virgin land for mega-projects, and the four Lake Norman towns have been customizing zoning for some 15 years in anticipation of commuter rail.
Granted, Naas conceded before turning the program over to Briggs, Henderson and Morris, the Red Line is different; and what if, he added, it all comes to fruition as anticipated, including the $4.9 billion-plus in new development along the corridor from which the joint powers authority created by all the jurisdictions will reap a billion extra dollars over a 30-year period above and beyond what is needed to pay for the project.
What is the net effect, he asked, on the property owners in the unified benefits district (UBD), and can Cornelius, with the growth that the Red Line is projected to bring, pay for all the infrastructure and municipal services required to accommodate the higher density residential and commercial uses in its portion of the UBD?
To the last question, Cornelius Assistant Town Manager Andrew Grant pointed out that the $452 million capital budget for the Red Line includes $6.9 million the town would need to expand the road network around the transit station area just outside the Antiquity development, along with other support projects.
"Cornelius doesn't project much development before 2017-18," said Briggs, adding that, in meetings with town staff, it was determined proposed projects most likely will not begin until the commuter train is up and running. "You will have already gotten the $6.9 million in station-area improvements before the point where you will really have any issues. Cornelius, I think, is in a very enviable position for the benefit that will come versus what the costs are."
More traffic
Okay, but what about all the new vehicle trips per day the high-density development along the rail corridor will bring? Naas said in his presentation that, if all the projected new housing is built, it will generate 48,000 new vehicle trips per day, and all the new employment will generate 46,000 more daily trips. Minus the 5,000 projected riders per day on the commuter rail, he concluded that all the new development along the rail corridor will generate 89,000 new vehicle trips per day. Currently, the traffic counts through the area of exits 23, 25 and 28 on I-77 show 84,000 vehicles per day.
"There are no additional north-south corridors planned, so to reach their destination, how will people access this new development? Up and down I-77," Naas said during his presentation.
That prompted task force chairman and Cornelius Commissioner Jeff Hare to press Morris on the status of plans to widen I-77, and to suggest that his group's recommendation to the town board could well hinge on knowing when the discussed widening of the interstate through the area will be completed, suggesting it should be around the same time.
Task Force member and Cornelius commissioner Dave Gilroy then challenged Morris on his assertion that the Red Line — which has enjoyed a rebirth because of the state's interest in establishing the short line as a key to increasing the state's competitiveness in global freight logisticts — will relieve the equivalent of one lane of traffic on I-77 during peak commuting hours.
"The logic is incontrovertible," argued Gilroy. "If you assume $5 billion in new development along the corridor, to think the rail relieves I-77 when in fact it brings high-density development and puts extra pressure on I-77. Even with a new lane, it doesn't make sense."
Morris answered, "During peak hours, ridership on the train will eliminate one lane of traffic that will be there. That doesn't mean you won't need another lane (on I-77.)"
Plans are moving forward to widen I-77, but just what that final form will take is unclear. Money has been identified to partially pay for widening the interstate by a lane from about Mile Marker 19 to the lake, utilizing electronic tolling technology to create two high occupancy toll (HOT) lanes — including the existing high-occupancy vehicle (HOV) lane plus the new lane — to help pay for the project. State officials are looking to see how that project could be extended south to the Brookshire Freeway in downtown Charlotte and north perhaps as far as Exit 36 in Mooresville.
SAD facts
The financing model for the Red Line calls for private investment of $226 million — half of the capital costs — in the form of industrial revenue bonds to be repaid from additional revenues spun off from new development along the corridor. Those revenues would come from a combination of special assessment districts (SAD), which would be in effect from the day the project is approved, and tax increment financing (TIF) on the improved value of income-producing property within the unified benefits district.
Both revenue streams are required by any interested investment firms, with SAD revenues necessary to provide immediate cash flow, and TIF revenues beginning to flow, as the name suggests, incrementally as new development is built.
"I've done 200 public/private partnerships, and in every case, it all comes down to cash flow," said Briggs.
The joint powers authority (JPA), which would have to be unanimously created by the seven taxing authorities — five municipalities and two counties — along the corridor would oversee construction, collect and allocate revenues and manage other general aspects of the project. The JPA would be created by those local governmental entities and its powers limited to those it is given by them. It cannot tax, but eligible properties within the special districts would pay the equivalent of 75 cents per $100 in valuation, effectively in exchange for the benefit being located along the rail corridor will provide in terms of enhanced property value.
The JPA also provides a layer of financial protection to the towns, say the consultants who have repeatedly stated that, by contract, the state would back up the bonds with no financial recourse borne by the towns should revenues fall short of what is required to repay the bonds.
Both one-half of property owners and owners representing 66 percent of the land mass within the UBD would have to voluntarily create the SAD, which would result, said Briggs, in an increase of cost to them of 5 to 7 percent. In exchange, he said, they will more than exceed those costs in the premium they can charge in rent for office space, retail space and apartment rentals.
Above and beyond that, 75 percent of the additional taxes on the improved property value, in the form of TIFs, would go to repay the bond holders with 25 percent reverted back to the JPA for local use. Once operations and maintenance costs are met, the remainder would revert back to Charlotte, the towns and the counties for their own use. Eventually, the balance of SAD and TIF financing could be adjusted, or even reduced should the JPA determine that to be prudent.
Naas likened property owners paying for SAD and TIF financing to double taxation, saying it's not practical. "We're expecting to get twice as much juice squeezed out of the same orange," he said.
Briggs answered that the developers with whom he has met are amenable to the special assessment, even though they will be paying it in some cases years in advance of actually earning income on their investments.
But what of the small business owner whose building is located within the UBD and who will see his costs increase even though he has no plans to sell his property for redevelopment or to rent his office space to a tenant?
"We were asked how about those people who own a building and use it themselves, and they don't pass that (additional cost) on to tenants. They charge no premium and they have to pay it themselves," said Briggs. "Their cost is increased by 5 to 7 percent. We asked the jurisdictions to give us a whole series of real examples of ... commercial property and where somebody converted a house (into an office). The question was how much sales had to increase per year to pay the special assessment. In every case, their sales didn't even have to increase one percent annually to pay their additional costs based on special assessment."
Briggs tried to allay fears that the Red Line would bring about runaway development in Cornelius, saying that each town along the UBD will still be in control of all development, and that the revenue model that was created was based on zoning and projects already approved and requires no new projects or rezoning.
"The reason you get to the figure of $4.9 billion (in new development) is you have the two main nodes plus projects already poised to develop," said Briggs. "The notion that this project will somehow take over development control is inaccurate."
The next meeting of the Cornelius Rail Task Force will be held Thursday, Jan. 26, at Cornelius Town Hall Room 204.
Next: Why is the state "backstop" to the financing model necessary to the bond market and what role might Norfolk and Southern Railroad, which owns the right of way for the proposed Red Line, play in the proposed project.
New Web site
This Friday, a new Web site regarding the Red Line Regional Rail project will go live. It will include dozens of frequently asked questions and the answers to those questions provided by the project's consultants. The address is www.redlineregionalrail.org.
