Why funding Charlotte’s streetcar is tough

Maybe this item’s headline should be Yet Another Problem with Single-Use Zoning.

There’s been chatter among city policy types about finding some creative finance tools for Charlotte to use to build the second phase of what would ultimately be a Beatties Ford Road-West/East Trade Street-Hawthorne Avenue-Central Avenue streetcar route.One tool being talked of is a special tax assessment district.

(For the purposes of this post, let’s set aside whether said streetcar is a good or bad idea. I tend to think it’s a good idea, as a way to shape and lure development to parts of the city that could use a development boost, but I know others disagree with that. Topic for another day. For now, let’s talk about financing.)

Because of a reluctance to use regular property taxes (for reasons that have not been clearly articulated, at least not in my hearing, but that seem to be taken as gospel), some folks have talked of special tax assessment districts, akin to those that fund Charlotte Center City Partners or University City Partners, along the streetcar route. It’s a tool used around the country to help municipalities pay for infrastructure seen as helping specific neighborhoods.

But here’s why that tool isn’t very sharp in Charlotte, at least not along the part of the streetcar route that is already
funded and ready to start construction this year (Presbyterian Hospital up to the Transportation Center at Brevard Street) as well as the proposed-but-unfunded second leg (from Presbyterian out Hawthorne to Sunnyside Avenue and from the Transportation Center up West Trade Street to Johnson C. Smith University). If you know what’s along that route you’ll notice that huge chunks of land along it are tax-exempt, owned by government or educational or other nonprofit institutions. The hospital. Independence Park. Central Piedmont Community College. The I-277 right-of-way. The old county courthouse. The Charlotte-Mecklenburg Police Department. Old City Hall. The Federal Reserve Building. The Transportation Center. The arena is city-owned, too. Once you pass The Square you’ve got First Presbyterian Church, the federal courthouse and Johnson & Wales University land. The I-77 right-of-way and, a few blocks later, Johnson C. Smith U.

Yes, there are some taxable parcels along the route, too. I’m just saying …

Years ago, the old and lamentably too-well-followed Odell Plan for uptown Charlotte called for a zone of government buildings, mostly on urban-renewed land appropriated from what once was a black neighborhood called Brooklyn. By creating a district of mostly government buildings, we’ve created a district without much privately owned land. And thus lowered any potential tax revenue for projects like the streetcar. It’s a good illustration of why a fine-grained urban fabric (meaning a lot of different, smaller uses close to each other, instead of huge-footprint, single-use projects) really does seem to be healthier, economically, in the long run.

Of course once you get past JCSU to the west and hit Central Avenue on the east, the amount of potential redevelopable land is much greater. But those sections aren’t even in the city’s long-range capital plan (which hasn’t been adopted anyway).

Want to read more about the streetcar’s potential economic impact under varying scenarios? To download the first part of a 2009 economic development study click here. For the second part click here.

Transit? ‘It’s going to take decades and decades’

Streetcar in Portland, Ore. Can Charlotte’s project find funding? (Photo: David Walters)

The big picture may have gotten buried Tuesday as Charlotte City Council members chewed over, and chewed and chewed, different alternative revenue strategies that might enable the city to build the second leg of its proposed streetcar.

Most of the discussion was about finding ways to pay for the streetcar project that weren’t a simple, citywide property tax increase. But here’s the big picture, as articulated by City Manager Curt Walton: “The Blue Line Extension is likely to be the last project of its kind.”

That $1.1 billion project recently won federal funding for half its cost.

Don’t expect Congress to continue to fund a public transit program that pays half the cost of building, Walton said. As for the other proposed 2030 Plan transit projects the Red Line commuter rail, the Silver Line corridor to the southeast, the West corridor  toward the airport, Walton said, “We’re not going to get those anytime soon. It’s going to take decades and decades and decades.”

The first streetcar leg from Presbyterian Hospital to the Transportation Center on East Trade Street is being built with a $25 million federal grant and $12 million in city funds. The $119 million second leg from the Transportation Center to Johnson C. Smith University and from the hospital to Sunnyside Avenue near Central Avenue was a piece of a $926 million, eight-year Capital Improvement Plan that did not win council support in June. The whole CIP would have required a 3.6-cent increase in the city property tax.

Meeting for the second in a series of budget-specific sessions, the council spent most of two hours talking about different revenue tools for the streetcar. Although the streetcar project (from Beatties Ford Road at Interstate 85 to the former Eastland Mall site) is a part of the Metropolitan Transit Commission’s 2030 transit plan, it’s far down the list of projects, and the transit sales tax isn’t bringing in enough revenue to let the MTC build any projects after the Blue Line Extension, due to start construction next year.

 So the City Council decided to move ahead on its own with the streetcar project, using only city money. But council members haven’t agreed how or whether to pay for the extension. Tuesday, most council members agreed to keep looking for tools such as Tax Increment Financing, Synthetic Tax Increment Financing, Special Assessment Districts and Municipal Service Districts to help with the streetcar funding. (To read more about what all those things are, click here to download the city staff’s presentation from Tuesday. Bonus: You’ll get a copy of a consultant’s economic analysis of the streetcar’s development potential from 2009.) All are essentially property taxes but would use the higher property tax revenues from the development the streetcar is expected to lure to the route. For instance, a Municipal Service District assesses a special property tax over a certain part of the city, to be used for specific purposes to improve that area. Examples are Charlotte Center City Partners and University City Partners.

Unlike cities in some other states, Charlotte council members aren’t empowered can’t decide to raise sales taxes or create a local income tax, or even create a parking space surcharge. In North Carolina, cities have little leeway beyond property taxes and some specific fees (water/sewer services and development-related fees) for raising revenue. (For more about the ways cities around the U.S. lack the ability to chart their own financial destinies, see this AtlanticCities.com piece,”To Fix Municipal Finances, States Need to Back Off.)

Some city council members have asked city staff for more information about the possibility of using a Business Privilege License Tax  (which N.C. cities can levy, under certain conditions) that would apply to parking businesses, on a per-space basis. The city staff said its very rough estimate of what would be needed to raise $5 million a year via the BPL tax on parking spaces would cost roughly $110 per space per year.

My prediction: This will not be the last time you hear of all those tools TIFs, MSDs, STIFs, SADs, BPLs, and so on discussed as possible ways to pay for transit projects. As Walton warned, cities across America will have to look to urban-region taxpayers to fund their own transit projects. Whether that’s fair or wise national transportation policy is a question for another day. Regardless of the answers, it’s likely to be reality for the coming decades.

Taxpayers lose $4 billion on sports venues

One of many links someone shared with me last week during the DNC, when I was too busy hopping from event to event to sit reading links, is this from Bloomberg.com, which adds up some VERY BIG sums of what U.S. taxpayers really pay to subsidize sports stadiums and arenas: “In Stadium Building spree, U.S. Taxpayers Lose $4 Billion.”

With groundbreaking Friday for the Charlotte Knights ballpark in uptown Charlotte, it’s particularly timely reading. Bloomberg reporters looked primarily at tax-exempt muni-bonds issued for places including Charlotte’s Time Warner Cable Arena, where the NBA Bobcats play.

The reporters write: “During the past decade, studies by Grant Long; Robert Baade of Lake Forest College near Chicago; Victor Matheson, an economist at College of the Holy Cross in Worcester, Massachusetts; and others have found that stadiums are poor municipal investments. Nonetheless, political leaders are still willing to offer taxpayer-funded aid to team owners including muni-bond financing to lure or avoid losing a franchise and the civic pride and event-related jobs that go with it.”

The link takes you to a 2006 article in Growth and Change: A Journal of Urban and Regional Policy, where the article abstract says: “The evidence presented here is that the presence of a new or renovated stadium has an uncertain impact on the levels of personal income and possibly a negative impact on local development relative to the region.”

Note: The Knights ballpark is getting direct subsidies from Mecklenburg County worth some $20 million (depending on how one values 8.6 acres uptown for $1 a year), $8 million over 20 years from Mecklenburg County, and $7.25 million from the City of Charlotte. I’m fairly sure tax-free municipal bonds aren’t being used. If someone knows different, please alert me.

Many people say the money is worth it: Bringing baseball to uptown Charlotte will enliven the city and spur development, they say.

And if you were uptown during the Democratic National Convention you saw an event that would not have happened if George Shinn had not taken his Charlotte Hornets elsewhere, and the city decided it really did need a new uptown arena.

But isn’t it better to have those debates when you know the full cost of things? Are sports arenas the best use of $4 billion in U.S. treasury funds or should there be other priorities? Depends, I suppose, on how much you love pro football, basketball and baseball.

Tree-planting’s great; but look at big picture, too

Davis Cable, former head of the Catawba Lands Conservancy, just gave an intriguing presentation to the Charlotte City Council, about a new initiative to try to plant 50,000 trees across the city, to help the city with its adopted goal of having 50 percent of the city land under a canopy of trees by 2050. The city canopy now is about 46 percent. If the city is built out according to current zoning, the canopy will shrink to 45 percent.

It’s a public-private venture – not a new nonprofit being formed but an initiative called Tree Charlotte, Cable explained. The Foundation for the Carolinas has given $20,000; so has the John S. and James L. Knight Foundation. The idea: Get the community involved and engaged in planting trees.

It’s probably the best warm-fuzzy idea I’ve heard emerge from this windowless chamber in the government center in ages. Who could be against this idea?

But as I analyze why Charlotte has lost so much of its canopy, one inescapable conclusion is that a huge amount of the loss has to do with new development, mostly in the suburbs. Duh, right? But think about how much of any new retail development is that huge surface parking lot. Yes, the city requires trees sprinkled through it, but it’s not the same as the woods that had to get cleared to build it. If we could drive less, we could save a lot of trees.

And what about subdivisions that spring up with no rezoning needed, because all the undeveloped land in the city got automatically zoned for subdivisions (or more intense development) about 30 years ago? There is no zoning for farms or woods or protected areas. Most subdivisions are virtually clearcut. To be sure, the city has a new tree ordinance that requires new developments to save small amounts of trees on the site. That’s better than nothing. Still …

And all that new commercial development that serves those new subdivisions means new or expanded roads, which mow down trees. (And I do mean roads in this instance, not city streets, which of course should all have street trees.) Streets, parking lots and rooftops mean more stormwater runoff, which requires big pipes and stream “restoration” projects that take out even more trees.

In short, more city-style development – with multi-story buildings close to each other, so you can easily walk to places you need to go, with parking decks instead of surface lots, and a vastly improved transit system – would result in a lot more trees saved on the edge of the city, as many of those  suburban developments wouldn’t be getting built.

Meanwhile, if multiple developers are to be believed – and I think they’re probably not making this up – redeveloping inside more urban-style areas is really, really tough, and made harder by some well-intentioned but bizarrely enforced zoning and inspection standards.

As Cable made his presentation to a receptive City Council, here’s what I was sending out via Twitter: 
Good presentation to #cltcc [Twitter-speak for Charlotte City Council] on Charlotte tree canopy. Push on to plant more trees, says Dave Cable. But much is going unsaid … (cont)
Cont. … Re tree canopy: Shouldn’t city look at its devt rules that allow/encourage major spread into undeveloped (treed) areas? 
Good pix of a Peachtree Hills retrofit plan, adding back trees in clearcut subdivision. Worthy effort. BUT … it’s after-the-fact.
Yes, plant trees. Also save em: Build city streets, not huge ROW-sucking highways. End auto-pilot OK for subdivisions on city fringe.
AND, to encourage more tight, urban-style infill stop requiring suburban-style “buffers” and berms in urban areas.
I applaud the tree-planting effort. It’s a good idea and will help.
But it’s the rules of development that shape how the city grows. If Charlotte wants to be a place that isn’t always trying to catch up to its tree loss by planting thousands of new trees, shouldn’t it take a holistic look at what sort of development the city is allowing, and where?

Major bike trail among city’s ‘zombie’ projects

The proposal to keep building Charlotte’s long-planned streetcar route is now officially a zombie. It’s among the living dead, or maybe in the “not dead – yet” category. But so is a $35 million proposal in which the city would have helped the county build out its greenway system, including a bike trail to run from UNC Charlotte to Pineville.

I wrote a piece for PlanCharlotte.org – the website I direct at the UNC Charlotte Urban Institute – which was also picked up by The Charlotte Observer last Saturday. The PlanCharlotte piece is here: “Finding a lesson in city’s budget, streetcar impasse.

Far less publicity has gone to the other community proposals that also were not adopted and, given electoral politics,  are likely to stay in cold storage until after the 2013 City Council elections. Here’s a link to a lot of details from the proposed Capital Improvement Program. The cross-county multi-use trail is one proposal whose demise (for now) has drawn sharp disappointment in some quarters. (Want to see a map? Here’s a link to City Manager Curt Walton’s PowerPoint, with the trail on page 15.) It’s also reproduced below.

Two students I know both said the trail and other projects were the sort that would attract young, educated people to Charlotte, or keep them here. That’s not scientific research, just anecdotal evidence to ponder.

Is a streetcar speedy? And other red herrings

Courtesy Charlotte Area Transit System

Here’s the thing about the proposed Charlotte streetcar expansion, the one the City Council today is probably going to pitch from the city’s five-year capital improvements plan. A streetcar is not only about speedy transportation. To judge it from that point of view is to miss the point almost entirely.

A streetcar is about economic development and trying to buttress the city’s tax base. Which, let me point out, grew only about 7 percent overall 2003-2011, with a frighteningly high proportion of the city’s acreage seeing declining home property values, not rising ones. (See map at end.)

That point seems to be lost amid debate about streetcar speed and the fact that it stops at traffic lights. Even my former colleagues at the Charlotte Observer’s editorial board seem to be assessing the streetcar’s value by whether it’s faster than driving, as in Sunday’s editorial, “Now is not the time to take streetcar ride,”  which pooh-poohs the proposed 2.2-mile extension of the streetcar’s Phase I, a 1.5-mile segment due to start construction at the end of the year. The streetcar, it says, “would operate on regular streets, stopping for red lights and traffic congestion. It wouldn’t be faster than a bus. It would merely be a very expensive, but very pretty, bus. What the city is buying is an aesthetic.”

But lost in that analysis, and in remarks by some that a streetcar is just a toy, is this: Development reacts to streetcars very differently from the way it reacts to bus routes.

Cities all over the country have built or are building streetcars and seeing them lure development. These are not all big places like Seattle, which has seen revitalization along its South Lake Union  streetcar. They’re places like Little Rock, Ark., where North Little Rock has benefited from streetcar-induced development.

If streetcars are just silly aesthetics, then a whole lot of cities are being scammed, including Tampa, Dallas, Denver, Tucson, Philadelphia and, yes, Little Rock, all of which have streetcars operating. Cities with streetcar lines under construction include Atlanta, Cincinnati and expansions in Seattle, Tucson, New Orleans and Portland, Ore.

Cities with streetcars planned but not yet built (although in some cases already funded) include Oklahoma City, Phoenix, Sacramento, San Antonio and Fort Lauderdale.

Illogical though it may seem, people are more willing to ride public transportation on rails than city buses. I know people who’ll drive 10 or 15 minutes to park and ride the Lynx light rail to uptown Charlotte, driving past multiple bus stops on the way.

And not just riders are lured. Rail transportation brings development in a way buses don’t. After all, city buses ran regularly up and down South Boulevard for years, and still do, but development didn’t blossom in what’s South End until the nonprofit Charlotte Trolley ran a demonstration project along the rail line that today holds the Lynx.

Johnson C. Smith University president Ron Carter got it right in his piece in today’s Observer,
Streetcar would bring critical development to westside.

So love it or hate it, the streetcar should be debated based on what it would do for development, not as if its only role is to convey people along a city street. We could debate the value of trying to catalyze development along Beatties Ford Road versus other city areas, such as uptown (where the city just offered up almost $8 million in public money for a baseball stadium and the county some $28 million in similar subsidies).   Others may simply think now is not the time to build a streetcar, or they may not like the way it’s funded. Those are legitimate debate points.

Would Charlotte see the development other cities have? Why or why not? How would today’s development climate affect things?  Is  the long-term streetcar route, planned before the death of Eastland Mall, still appropriate? For a map, click here. Is the funding City Manager Curt Walton proposed, paying for the streetcar the way the city pays for its street and road projects, appropriate? Some cities have used a combination of funding tools, such as public-private partnerships, municipal parking deck revenues and special tax districts.

Legitimate questions. Too bad so many people are focused, instead, on stoplights and speed.

____________________________

Map of city single-family property valuations 2003-2011, is below:
(For a slightly larger view, click on the image.)

And click here to see my interview this morning on Fox News Rising, discussing the streetcar.

Was light rail at root of odd council budget vote?

A source with good Charlotte City Council information tells me this morning it’s highly likely the bizarre 6-5 City Council vote Monday night to spike the proposed city budget (but proposing no other budget, either) was related to an attempt in the N.C. Senate to kill any state funding for Charlotte’s Blue Line Extension project. (Click here for more on the council’s budget vote.)

The proposed Senate budget, released Monday, as reported by the N.C. Metropolitan Mayors Coalition, would cut the state’s transit programs by eliminating the New Starts Program and transferring the $28.9 million to the General Maintenance Reserve. The Charlotte light rail Blue Line Extension is the only project in the New Starts Program. The budget bill specifically says public transportation appropriations shall not be expended on any fixed guideway project in Mecklenburg County. There is an additional provision that says fixed guideway projects can compete for Highway Trust Fund dollars under the equity formula.
 
What’s the connection to the city budget? My source believes the issue is Republican opposition to the city’s proposed streetcar project, which would have cost $119 million, part of the almost $1 billion, multiyear capital projects budget City Manager Curt Walton proposed. The capital program is what would have required a property tax increase of 3.6 cents per $100 in property value.

Council member Michael Barnes, a strong supporter of the BLE, which would run through his district, asked several questions during the council meeting to make Charlotte Area Transit System chief Carolyn Flowers  specify publicly that the 30-year CATS plan, funded with a countywide sales tax, does not include money for the proposed streetcar project, which would come from city money only.

My source speculates that the four council members who raised barely a peep against the budget through months of council discussion and who were part of a 9-2 straw vote for it May 30, but then voted against it Monday Barnes and at-large members Patrick Cannon, Claire Fallon and Beth Pickering will try to get the streetcar removed from the capital budget. Why? Because influential Republicans at the state level don’t like it, and may be using the BLE as a bargaining chip. I won’t identify whom my source named as behind it until I can get that person’s comments.

And I’m seeking comment from some of those council members. Will update this when I have more information.

What’s up with the federal courthouse?

The majestic federal courthouse on West Trade Street, while stilled used by the federal courts, is owned by the City of Charlotte now. Monday night the City Council unanimously OK’d a change to the city’s agreement with Queens University of Charlotte, which has an option to purchase the building.

The previous agreement was for Queens to use the building as a future law school.  Now that the for-profit Charlotte School of Law has opened, Queens requested a change in the agreement to give the school more leeway in what it could use the building for.

The Charles R. Jonas Federal building, built in 1917 and expanded in 1934, is not a local historic landmark although by most definitions of the term it should be, given its role in such historic federal cases as Judge James McMillan’s Swann v. Charlotte-Mecklenburg Board of Education, 1971. And the building also holds the only remaining courtroom that looks and feels like a courtroom.  Whatever happens, let us hope Queens honors its history and ambiance.

The U.S. General Services Administration plans eventually (I am not holding my breath) to build a new courthouse at 500 E. Trade Street, over in the part of uptown that has been steadily deadened with courthouses, the Federal Reserve building, the government center and the jail. Not much room over there for many uses that will help create lively sidewalks along East Trade or Fourth or Third Streets, other than Occupy Charlotte at Old City Hall (which if you take the long view is temporary) and the occasionally excellent people-watching in front of the new Mecklenburg County Courthouse way down at McDowell and Fourth streets.

City panel endorses bike-share demo program for DNC

A Charlotte City Council committee today is expected to recommend whether the city should start work on launching a bike-sharing program for uptown, as a demonstration project during the Democratic National Convention in September 2012.

City Department of Transportation staffer Dan Gallagher was to give the Transportation and Planning Committee a presentation at its noon meeting today. Here’s a link to Gallagher’s PowerPoint presentation. City staffers are recommending that the city collaborate with partners on a demo project (estimated time to launch is six months) and spend the next eight months on a feasibility study to let the city transition to an ongoing bike share program, assuming the program is deemed feasible.

The council has been talking about this idea since at least August. Here’s my August report. And here’s the report from September, when it was on the committee’s agenda, but the committee spent so much time discussing transportation funding that it had to postpone bike-sharing.
I’ll update this when I get a report on what the committee opts to recommend to the full council.

Update: The committee voted to have staff proceed with planning for the demonstration project and continue to work on feasibility planning for an ongoing bike-share program. The other two options on the PowerPoint, involving longer-term studies, didn’t win the committee’s endorsement. Gallagher said the full council will be briefed on the bike-share proposals at a dinner meeting in the future.

Bike-sharing deferred, but tax talk moves forward

Did I mention that a Charlotte City Council committee scheduled to discuss a possible bike-sharing program this afternoon was also going to talk about “finding new revenues” for roads? I believe I did.  And you don’t have to be a political science professor to know elected officials won’t breeze quickly through any talk of new or higher taxes.

The result: Much information about higher registration fees, new sales taxes, new toll roads and even a vehicle-miles-traveled tax. (For details, see below.) The council’s transportation and planning committee voted to refer the whole topic to the council’s budget committee and to urge city staff to make sure the topic comes up during the council’s retreat next winter.

But no bike-sharing discussion. The committee ran out of time. That discussion is now scheduled for the committee’s Oct. 10 meeting.

For transportation policy geeks and tax policy geeks (I plead guilty), the how-to-fund-it-all discussion was meaty and even, well, sort of fun. The presentation from developer Ned Curran, who chaired a 2008-09 citizen group called the Committee of 21, is here. (For details, read that PowerPoint.)  In a nutshell, the Transportation Action Plan, adopted five years ago and due for an update, lays out a series of countywide transportation improvements. The Committee of 21 concluded the gap between identified road needs and known funding sources (federal, state and local) over 25 years is $12 billion. So … how do you find that money?

Curran, CEO of the Bissell Cos., made clear that the committee’s charge was to look specifically at roads, not at other transportation modes. They looked at 19 different revenue options, such as sales tax and gas tax increases, driveway taxes, impact fees, sin taxes and even parking surcharges. (The full list is on page 6 of the presentation on the committee agenda.) They assessed the options based on how related they were to driving, how much revenue they’d produce, how easy to implement and operate, political reality, etc.

The Roads Final Four:

  1. Doubling the $30 vehicle registration tax from $30 to $60 = $18 million a year.
  2. A half-cent Mecklenburg sales tax increase for roads = $81 million. Note, that estimate was before sales tax revenues plunged in 2009. A more recent estimate would be $55 million, Charlotte Department of Transportation chief Danny Pleasant said.
  3. Tolls on all existing interstates in the county = $52 million a year. This, obviously, depends on the toll assessed and what revenue-splitting agreements would be forged with the federal and state governments. 
  4. A vehicle miles traveled (VMT) tax. Curran said this option has gotten plenty of national discussion and would likely have to take place nationally, but as federal and state gas tax revenues sink due to more efficient cars and and people driving less, the VMT tax will get more credence. Privacy concerns? “If any of us have our phones on in our car, we’re being tracked anyway,” Curran quipped.

As Curran and Pleasant discussed the toll roads situation, it got interesting. A multistate agreement is in the works, they said, with which other states would agree to help each other capture the cents-per-mile tolls if, say, a New York driver zipped through North Carolina on I-95 and didn’t pay the tolls. New York would collect the money (how? that wasn’t clear) and send it to N.C.  Meanwhile, North Carolina is one of several states applying for a program to inaugurate tolls on parts of I-95. With more tolls and more states cooperating – and with innovations such as a High Occupancy Toll lane being planned for I-77 in north Mecklenburg – pretty soon you’ve got a VMT anyway.

One doubter about all this: Council member Michael Barnes. “There has never been the political will among elected officials to deal with it [funding transportation],” he said. “I am tired of it.” Count him among skeptics who think council members will, once again, after discussion fail to enact any specific measures to fund the city’s plans for transportation.