Charlotte Envisions New Streetcar - But Needs More Revenue

Center City Streetcar cannot be fully supported by existing 1/2¢ sales taxCharlotte Streetcar Map

As discussed last week on the transport politic, Charlotte’s sales tax revenue for transit isn’t providing enough revenue to ensure the timely completion of the city’s ambitious 2030 plan for five rapid transit corridors around the city. To make matters worse, the city’s drop in tax receipts is forcing the transit agency (CATS) to cut service on its very popular new Blue Line light rail corridor, which opened in 2007. And yet, some members of the city council, as well as many of the city’s citizens, are pushing for the construction of the center city streetcar component of the plan, which had previously been delayed. In order for the streetcar to enter into operations, though, the city would have to find hundreds of millions of dollars from some as-of-now unknown source.

The city’s streetcar project would run roughly north-south, from Beatties Ford road, through “Uptown” along Trade Street, and along Central Avenue to Eastland Mall. The city’s downtown has grown quickly in recent years with the rise of the city’s two major banks, Bank of America and Wachovia (which has now been absorbed by Wells Fargo), but the other areas to be served by the 10-mile route are relatively poor. The service would therefore not only provide access to the city’s dynamic growth engine, but also to some of the city’s most mobility-deprived individuals.

The project’s costs have risen to about $372 million, an amount that could be covered by the sales tax – but only by 2018 for the first phase and 2023 for the complete corridor. Neighborhood groups and the downtown steering group, however, want to see its completion pushed forward to 2013. The fact that the city is currently laying streetcar tracks along part of the route anyway (as part of a streetscaping project) only adds to the pressure to get things moving.

So the city has developed the idea of creating a transit-oriented district that would allow some property taxes from homes and businesses along the line to be diverted to paying for the streetcar. This would work similarly to the tax allocation district Atlanta is currently using to pay for its signature Beltline project. Yet even those extra property taxes – derived from increasing growth along the line – would only cover 20 to 30 percent of the total line’s cost.

What to do, then, in a city like Charlotte that wants to build more transit lines but that cannot find the revenue to sponsor them?

One possible source of revenue could be the stimulus plan, which will probably increase the funds available to the New Starts and Small Starts programs, which could theoretically support such a project. But Charlotte’s engineering on the proposal probably isn’t advanced enough to merit the “ready-to-build” designation that is supposed to be met by projects being funded by the stimulus money. Nor can Charlotte easily divert money from the other proposed transit projects in the city: a northeastern extension of the light rail line and a northern commuter rail line. Mayor Pat McCrory addressed the problem in the Charlotte Business Journal:

“I’m a little nervous about segregating one project within just the city when it still says ‘CATS’ on it. I don’t have an answer, I’m just stating the issue at hand.”

The fundamental problem for the city is that the governing board of CATS is the regionwide MTC, with representatives from Charlotte, but also from Mecklenburg County and the four relatively tiny surrounding towns neighboring Charlotte. The vast majority of sales tax revenues for the system come from the big city, and rightfully, the vast majority of transit service also goes to the big city. But in choosing how to expand the transit system, the board’s large representation by small towns means that good projects in Charlotte alone – such as this streetcar – are pushed back in favor of arguably less valuable projects that serve the small towns, such as that northern commuter rail line just mentioned.

Charlotte, then, finds itself in a bit of a bind, unable to control the use of its own sales tax revenue, having to prioritize the region’s needs over the more pressing demands of the inner city. Charlotte’s experience serves as a lesson for other cities: it created a regional coalition to sponsor the growth of a new transit network, hoping to attract state and county money more easily, something that it has done relatively successfully. In the process, though, the city has had to sacrifice its priorities. Was it worth it?

Image above: Charlotte Streetcar Plan, from CATS Rapid Transit 2030 Plan

2 Comments | Leave a Reply »
  • As someone who’s been a planning consultant to several core city governments, I can assure you that this problem exists all over the US and Canada. It’s quite common to see funding formulas quite explicitly stacked against the core city. See the notorous “40-40-20” policy at King County Metro, which decrees that Seattle residents will have less service per capita than people in the suburbs. We can complain about the unfair make-up of some regional transit agency boards, but ultimately, core cities are going to need the right, and the willpower, to tax themselves at higher rates to create funding sources that the city can control.

  • Rick

    It seems funny to me that this is seen as a “problem”. When the original transit tax was passed in Mechlenburg County it barely passed. If the towns had been excluded from equal decision making authority it would have failed. Additionally, the towns currently send more to CATS than they receive in service – the exact opposite of the example Jarrett provided. Finally, this is a state issue more than anything else. In North Carolina, sales tax increases are controlled by the states. Property tax increases are owned by the counties and municipalities.

    As to this statement “ultimately, core cities are going to need the right, and the willpower, to tax themselves at higher rates to create funding sources that the city can control”, they already do. The issue is that they don’t have the stones to do it because it would be too obvious. Raising property taxes or adding municipal tax districts around transit becomes too obvious and politically undoable. The issue you really seem to have is how to hide the tax increase, and sales tax is the best way to do it. Fortunately for us here in NC that is not an easy option.

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