Charlotte Commuter Rail Finance

Innovative Financing Points the Way Ahead for a Rail Project in Charlotte

» In addition to transit-oriented development, Charlotte’s planners envision a system that appeals to freight users.

In the case of Charlotte, necessity may be the mother of invention.

Lacking sufficient revenues to construct the planned Red Line commuter railroad designed to connect Center City Charlotte with its northern suburbs, planners working for local transit agency CATS have developed a unique vision for its financing.

The $452 million upgrade of the existing Norfolk Southern O Line would allow a significant expansion of capacity not only for passenger trains, but also for freight trains running on the same tracks. In doing so, this agency’s planners are suggesting that the sometimes rivalry between the two types of transportation should really be approached hand-in-hand, especially for a project whose primary right-of-way extends far beyond dense urban neighborhoods that characterize the zones around most successful transit links. Perhaps for the first time so directly, transit-oriented development is proposed to be joined by “freight-oriented development.”

Charlotte’s ambitious transit plans — once scheduled to include five rapid transit lines radiating from downtown — have been significantly scaled back by the economic downturn, which hit this financial hub especially hard. Sales tax revenues have fallen far below initial expectations, delaying the completion of anything other than the initial Blue Line light rail corridor, which opened in 2007 between downtown and the southern suburbs. While the northeastern extension of the Blue Line and a short version of the downtown streetcar will move forward thanks to federal funding guarantees, the Red Line’s ridership forecasts of about 4,000 to 5,000 a day were not sufficient to meet relatively tough guidelines from Washington.

The Red Line’s 25 miles of new service, though, will be made possible thanks to a combination of state contributions (25% of the cost), local sales taxes already collected by CATS (25%), and value capture (50%), which would come in two forms. A tax-increment financing (TIF) district around stations would allow increases in property values in the area to be directed toward paying back the cost of the project. This would be done with no increase in the property tax rate but rather through a redirection of increases towards the project.

Similarly, a special assessment district is being considered to pay for the service. Unlike TIFs, these districts* would require property owners to agree to pay a marginal increase in their property taxes to be devoted directly to the Red Line.

The new “Unified Benefit District” that would be affected by these value capture mechanisms would take advantage of both the significant population growth expected north of Charlotte over the next few years and encourage freight-oriented development — which would together make the project financeable. The plan would include significant space to locate new development around stations — indeed, 10,000 housing units are either already under construction or planned. Certain developments would be built in collaboration with CATS.

More intriguingly, businesses that require rail freight access would be encouraged to locate between stations. They would be able to connect their own tracks directly to the main rail line. The argument made by the project’s planners is that the area along the line’s right-of-way includes plenty of space for infill industrial space. Why not take advantage of the increase in rail capacity?

As the map below demonstrates, it does seem logical to encourage walkable residential and office space around stops and freight-based industrial space between the stations.

Transit services, taking a total of 40 minutes, would be provided every half-hour at peak and every hour off-peak. The improvements planned for the corridor would therefore make it possible to run more freight trains at off-peak hours without disrupting the primary travel needs of riders. Operations will have to be coordinated, but with positive train control and other safety measures in place, it is hard to see what would prevent this project from adapting to the needs of both passengers and freight.

Ten stations, several of which will be within Charlotte city limits but others of which will serve suburban towns including Huntersville, Cornelius, Davidson, and Mooresville, will be connected by 2017 if construction begins as planned in 2014. In order to make that possible, however, each of these municipalities — in addition to Mecklenburg and Iredell Counties — will have to get on board with the tax plan. That will not necessarily be an easy task, at least considering debates in recent years over the relative importance of different transit projects in the Charlotte region. Commissioners of Iredell County, significantly, have been less than thrilled at the idea of sacrificing tax dollars to aid CATS.

In addition, the special tax districts that will be necessary to complete the line will require at least half of affected property owners, controlling two-third of land value, to agree to the deal. It is not altogether evident that there is universal agreement on the need to improve access for passenger and freight railroads in the metropolitan area. Will they agree that the benefits of the new rail line are worth the increased taxes they are being asked to contribute to construct the project?

Nonetheless, these plans point to a potentially groundbreaking financing deal that could reshape the way commuter rail lines are built throughout the United States. Running along a corridor that is not particularly dense, it would likely be too costly and inefficient to provide very frequent passenger trains between stops. Yet connecting Charlotte to its northern suburbs, allowing the central city to expand its core and promoting dense downtown districts in the outlying town, is in the region’s interest.

Freight rail transport is more ecologically friendly than its truck-based competitor, but there is not enough capital in industrial activities in the Charlotte area alone to invest hundreds of millions in new tracks.

By combining the Red Line project’s public transport mission with that of encouraging economic development in industrial activities, the project becomes more realistic. Half a billion dollars in track improvements will go not only to passengers but also to freight. Incentives for new development will go not only to residential but also to warehousing. Those represent an exciting pooling of resources towards mutually beneficial goals.

* Similar to those often used in downtowns as Business Improvement Districts, or BIDs.

Image above: Red Line corridor map, from CATS

64 replies on “Innovative Financing Points the Way Ahead for a Rail Project in Charlotte”

Interesting, but there is an inherent tension between TOD and “FOD”. FOD relies on a low frequency of passenger service so that there is room for freight operations at different speeds, without stops, and so on. TOD relies on high frequency of passenger service, because transit is only competitive with the car when you do not have to plan your trip around a bus/train arriving at a certain time. Not only will the low frequency make TOD difficult, but the goal with TOD is to eventually create the demand for high frequency – in which case, the TOD industries will find themselves cut off from the line which supplies them.

The passenger service will cover 25 miles in 40 mins, for an average speed of 37.5mph. Therefore, if you operate freight trains at that speed (or thereabouts), there will be minmial conflict between the train types.

Further, building the line to allow for trains every 10 would be very easy. (Headways below 5 mins are when things start getting tricky). So, even with trains every 20 minutes (which would count as “frequent”), you could still have three freight trains every hour.

It is not like that. Freight trains of kind operated in US have much longer acceleration and braking zones, average speed is not really relevant in the case.

Moreover, any interval longer than 6-8 minutes don’t actually qualify as “frequent” service (for a 40min route).

There certainly cannot be a hard and fast rule based on end to end travel time without considering the median trip travel time. The same schedule gap will have a larger impact on a 40 minute route with a median of 10 minute trips, and a smaller impact on a 40 minute route with a median of 30 minute trips.

And it also matters whether the route is 40 minutes through a continuous CBD, or 40 minutes connecting several small CBD’s with one larger one, since that changes the character of the trips being taken ~ schedule gaps at the beginning and end of a commute have less total impact than the same schedule gaps at the beginning and end of a lunch break.

How expensive, and how helpful, would it be to add bypass tracks or switches at stations so that freight trains would not have to stop when passenger trains do?

With one train per hour, a slow freight (which is likely a long freight) may well need a long siding to allow it to sit before entering the shared zone (if its single track outside the zone, that could just be an extension of the double track zone by a sufficient length past the terminus station). Then if it follows directly after the passenger train, or after a faster freight chasing the passenger train, it can still be in the passenger zone when the next train bound in that direction starts ~ so long as it has cleared the zone before the passenger train has reached that end. The higher the passenger train frequency, the less leeway there is for the average speeds to be out of sync, and at some frequency the freight path between successive passenger trains closes down.

Then the more trains per hour, the narrower the slot into which freight trains can run. The stopping at the stations means that when stopped, they are approached by the freight behind them and left behind by the freight ahead of them, and then when they leave the station, they increase the gap with the freight behind them and narrow the gap with the freight in front of them.

Having a freight pass a passenger train stopped at station means that the passenger train will have to be stopped at that station far more than one or two minutes, because the freight train cannot be allowed to run just a minute or two behind the passenger train. In the NSW Australia Main North, on the same track with passenger train headways of three minutes, the coal train headways are eight minutes, and with those headways and the station rubber band effect, a clockface four trains per hour would effectively close off most freight use of the corridor.

At the outer terminus on a double tracked corridor, a central platform siding between two tracks could possibly get the passenger trains out of the way of trailing freight one way without putting it in the way of freight coming the other way that will be running in front of the passenger train … but that’s a bit of capital works for a 2 trains per hour peak, 1 train per hour daytime schedule. More likely is a switch across for passenger trains to use track as platform track for a single terminal platform, and a switch the other way for freight trains to run past the terminal platform.

Bruce how many 100 car coal trains is post industrial suburban Charlotte going to host? Garbage going to the dump 50 miles outside of town twice a week and recyclables once a week… maybe but even that would be a stretch. Beer, lumber and drywall in? With a car or two of aggregate now and then?

Coal trains was just the example from Newcastle NSW ~ given that its among the world’s largest coal export ports. It may not be coal on the O-line in Charlotte, but if the industrial development targeting freight rail customers is successful, it’ll be something. Seems unlikely you’ll attract rail freight customers and then they’ll refrain from using the rail corridor for rail freight.

Supposing its containers trains or oversized manufactured items on flatbeds, the headways may be a bit smaller, but they will still be longer than passenger rail headways, and combined freight and passenger train capacity will still be below either capacity as an exclusive freight or exclusive passenger line.

the two freight trains a day can move in the dead of night like they do on the River Line in New Jersey.

Yes, that is the compromise that the River line reached to use an existing lightly used freight line, not without complaint about the constraints it places on the service.

OTOH, that’s 9 freight development sites they are targeting. I don’t know what potential interest they might attract, and what rail access each of those user might wish to have. If you’ve got more info on the industrial development markets that Yonah is talking about being targeted, don’t sit on the info: spill the beans.

I don’t have any information about Charlotte. Post industrial cities don’t have industries that need 20 car cuts of trains twice a day. How long are the sidings at these industrial sites. If it’s three cars here and two cars there and five cars some other place you are running the kind of service that happens along the Peninsula in the San Francisco Bay Area. Or on the River line…

So you are solving the problem by assuming that the industrial sites in Charlotte will fit in your stereotype of a post-industrial city.

I was answering Eric’s question in more general terms, without making conflict disappear by assumption.

To my mind, the answer that siding platform tracks or some other form of freight bypass around the platform does not offer any benefit to mixing local passenger trains and freight trains is a more complete answer than that its probably workable to ban freight during passenger operation hours and probably OK to get by with no passenger night trains, if we assume that all nine industrial sites are “post-industrial”.

There’s a heavy status quo bias in the second answer, assuming that the market niches that rail freight was limited to in the age of cheap oil are the only market niches that rail freight will ever be useful for. But whether and under what service pattern its appealing to an industrial customers to bypass the truck queue and have back door direct access to the big freight yard a couple of miles down the road is something that companies looking at individual industrial site projects will sort out for their own circumstances. And if the possibility of a mid-morning and/or a mid-afternoon service run is of interest to any of them, then closing that possibility out by design up front reduces the value of the FOD industrial site.

There isn’t going to be a coal mine in downtown Charlotte, or a steel mill or even a nice clean automobile assembly plant. The really big independent lumber yard is going to get drywall and plywood. The beer distributor is going to get beer. Once they decide that they can’t dump the garbage just outside of town there will be a garbage train to the dump 40 miles outside of town. There isn’t going to be great big thundering herds of freight trains running up and down the line. Find 20 users that want to locate along the line and each of them want three cars a day to come in… that’s a train or two.

So then it’s two or three a day that can either move in the dead of night or wedge themselves in mid morning and mid afternoon….

While Eric is correct that there is an inherent tension between TOD and FOD, the Red line in Charlotte is a bit different. This is commuter rail, and the current development and transit usage patterns of this area do not lend themselves to TOD. Current usage in Charlotte makes true TOD really possible only when there is about a 15 minute ride time to the center city. With proper planning, such as creating the rail ROW wide enough to accomidate a third line, or allowing room to make switching stations so as certain trains would only run the more frequent service to closer stations, TOD and FOD could live together.

Perhaps more cities and metropolitan ares can find equally, if not even more, innovative ways to pay for the construction of new rail transit lines. Some states to perhaps.

Among Charlotte’s suburbs, the northern Towns are really just that, TOWNS with historic, walk-friendly centers around the proposed stations. The Town of Davidson, in particular, is well-known nationally for being a model of smart growth.

That’s what I find most peculiar about this proposal, that they chose a commuter rail lines that served unsuburbanized towns. Granted, Charlotte has only a handful of suburbs that are large enough to be considered suburban cities, none of which can be considered to be an “inner ring” suburb; this makes it hard to plan suburban rail service in the metropolitan area. This fact, along with the existence of population centers, however small, along a rail line, makes the proposed Red Line probably the only actual rail transportation corridor that Charlotte could develop.

The end result would probably be a ‘smart growth’ corridor clustered around the downtowns since you have downtowns to work from but an otherwise largely clean slate. The disadvantage to this plan though is that the smart growth corridor would essentially consist of exurban towns.

This was proposed BY the unsuburbanized towns, if I remember correctly. They (a) expect to become suburbanized and (b) want to be connected to Charlotte by TRAIN rather than by car so that they don’t sprawl.

Can someone explain how the land along the line is held? If it is by private owners, doesn’t this plan all depend upon owners selling to developers at prices which can make such a project work? How do you control that variable?

What is the variable to be controlled, those presently with property for sale suddenly deciding to hold onto it and not sell it because of increased demand for the property?

That seems sufficiently unlikely that there’s no pressing need to control for that variable.

I hope they’re not counting on too much revenue from freight users. It just doesn’t sound plausible. Only the very largest industrial facilities — like an auto plan or a food processor — need or can economically benefit from a direct rail spur. The vast majority of industrial users will prefer to collect their freight, by truck, at the nearest intermodal rail yard.

It’s not the size of the individual industry, but rather the amount of business on the branch that determines the viability of having a freight spur. Businesses prefer the truck/intermodal solution because it increases the frequency at which freight can be picked up and delivered. Many businesses would not warrant having an train engine pick up their goods or dropping off wagons more than once per week, but by being on a line with frequent local freight service, the frequency of movements and schedule flexibility are much improved.

Then, I doubt several small yards along a 40 mile corridor are more efficient than just one big, highly automated yard with side-platforms equipped with fast-moving cranes to tranship containers into trucks.

But Alan was addressing the economics of a direct rail spur ~ it depends on not just carloads received/shipped per day at the spur for each potential site, but also the network economies of the users at spurs along the same branch.

Direct rail sidings for car load shipments are still a viable business for railroads. There are lot of new sidings built to serve new industrial sites every year.

Really interesting idea!

Would freight trains be able to run at all hours or be limited to normal waking hours. I could imagine that a train going by at 11 or 12pm could be a nuisance to people living nearby.

Wouldn’t the trains on the NS O-line presently be running at any hour of the night? Its not like the proposal involves bringing freight into a corridor that has not previously had rail freight.

Typically, the local trains would get out and work mid-day between the rush hours – and would clear up for the off peak commuter trains.

It’s an interesting idea, but if Charlotte wants to try out commuter rail, why don’t they start with infill stations on the line used by the Carolinian? Frankly, I don’t think either of them are great candidates for commuter rail, but at least a Carolinian commuter line would have the advantage of also serving UNC Charlotte, and should be pretty cheap.

I agree a commuter line along the NCRR routing from Gateway (downtown), UNCC, Harrisburg, Concord, Kannapolis and Salisbury seems like a logical service to provide, particularly once the ARRA funded double tracking is completed along the route. Unfortunately it is not likely to be cheap. NS / NCRR require that their be no new pedestrian or vehicle crossings on the tracks so some type of pedestrain bridge / tunnel or siding setup would probably be necessary at each station.

One potential benefit would be a connection between the blue line extension around I485 (not currently funded for LRT)or Sugar Creek and the NCRR since the Piedmont / Carolinian service will actually have no direct connection to Charlotte’s light rail (a bad mistake IMO).

Tunnels are better, because of people require less headroom than trains, but cheapest when built in up front. But in any event pedestrian bridges are pretty cheap compared to track and switches. Assuming simple side platforms are good enough, a 1:10 ramp up from one side and stairs up from the other to the pedestrian bridge and the same on the other side is straightforward.

Or if you don’t want to put in new crossings, put the station next to an existing crossing. Existing crossings tend to be the place people congregate anyway… to cross the tracks…

The NCRR/NS/Amtrak line is (a) planned for higher-speed intercity rail, (b) heavily used by NS for long-haul freight, and (c) parallel to the planned extension of Charlotte’s light rail line.

This makes it a questionable commuter rail target, even apart from station costs. The commuter rail would have to run express beyond the limits of the light rail, but have stations spaced closer together than the intercity rail…

What might make that more workable is that the NCRR owns the RR. That gives them considerable leverage with NS. Something along the lines of the BNSF “racetrack” west out of Chicago is good example of how to manage a mixed use rail corridor.

One other element of the freight plan is that this line will join the NS main about 4 miles north of the new NS intermodal terminal which is being constructed as part of their Crescent Corridor fast freight initiative. While this is an interesting geographic coincidence I do have a hard time seeing a reason to load a container onto a train for a 10 mile ride to the intermodal terminal — I would think such a move would be cheaper and certainly faster by truck.

That would depend on the type of delivery schedule they are working to. If they can bring a set of containers in at one time in a short consist, or else hand off a set of container in at one time in a short consist, running it on the rail corridor would be effective relative to a container trailer at a time.

Now, it seems like it would be cheaper to do on either the receipt side or the shipping side, and more expensive to do on both sides, so either some form of processing task with a direct container delivery of materials, or some heavy manufacturing task with a direct shipment of finished product (whether containerized or individual assemblies too large to containerize).

Even if the terminal has some form of parallel container loading (eg, the European pallet loading system), there’s a break-even in terms of how many trailers you are moving at one time where avoiding the truck loading side is a net win.

That’s pretty much unrelated…and you are correct – nobody is going to load a container on a rail car for a 10 mile trip.

Most of the freight on the O line is going to be carload (Box cars, gondolas, covered hoppers). Think inbound supplies for food processing, construction materials, etc. The freight play is industrial development. There is still quite a bit of industrial development going on around car load shipments with traditional rail sidings.

Maybe I’m missing something, but this strikes me as “making a virtue of necessity.” I don’t see how freight in any meaningful way facilitates this transit project, aside from supplying the ROW — which simply makes it equivalent to run-of-the-mill North American commuter rail. The ability to operate freight doesn’t seem to be facilitating the funding or approval process in any way, does it? And running freight certainly doesn’t make transit operations any better than they might be without freight, does it? What am I missing?

Commercial property (meaning industrial users) around the line will be hit with a special assessment (if 60% (?) of owners agree to it — not a small hurdle) so some funding will be generated that way. This levy is in addition to a TIFF placed on residential space around stations

The biggest advantage of the freight strategy is actually political. Iredell County (the county just to the north of Charlotte / Mecklenburg) has been adamant in their refusal to fund any passenger rail connections to Charlotte. However, the Iredell county commissioners are enthusiastic about industrial development opportunities so the repackaging of the project allows them to chip in for trackwork.

This project provides an interesting glimpse into the politics of economic development in NC. All economic transformation is framed in a modernizer vs. traditionalist perspective. The traditionalists want to cling to North Carolina’s low wage status as a means of attracting new factory jobs. They are reluctant to encourage high wage job creation (like those in downtown Charlotte) since they fear those jobs will drive up wages throughout the state. Its insane…..

To the contrary, it strikes me as seeking stronger ROI. If CR operations are limited along what otherwise is a fully upgraded corridor, why not leverage the investment?

I would say this dual-benefits strategy is not much different than a Parks Department that is building a greenway also partnering with a Storm Water Agency for a range of improvements to a stream corridor.

My apologies for the lack of clarity in my initial post, I think the mixed freight/ pax strategy is a very good idea in this corridor. The insanity I was referring to was the unwillingness of most counties in North Carolina to support any kind of white-collar economic development or its spouse, urban growth.

1. Freight trains can be separated from passenger operations by time windows outside of normal commuter hours (this is done in several instances to include LRT in Baltimore and San Diego).

2. Depending on type of grade crossing protections/separations whistle/horn warnings can be minimized/eliminated. I have lived flush against rail lines both here and in Germany (Frankfurt-Nuremberg mainline) and within a few days you never think about the trains.

3. Proposal freight use is not mainline but rather industrial so most movements will not be lengthy as freight cars are shuttled back and forth between Red Line industrial sites and the classification yard in Charlotte.

4. The concept is viable. As always, the devil will be in the details. Good planning, inter-jurisdictional cooperation and private sector investment can make it happen.

this is done in several instances to include LRT in Baltimore and San Diego.

Two lines in New Jersey too. I forget whether the line in Austin has freight on it.

but it does have passenger trains on it. Off the shelf-ish ones like the ones in New Jersey and San Diego.

This is a commuter rail line we’re talking about – not light rail. And, this isn’t a main through route for NS, although it probably is a good one for some industrial development.

So, mixed operation is possible and it likely will be a pair of local trains at most, working mid-day. Operation would be very similar to many NJT and MetroNorth commuter lines. Even the NEC has locals that scoot along and hide during daylight hours.

Mixed operation, even on lines with abundant freight traffic and heavy rush hour commuter service is possible. The ex-CB&Q line out of Chicago often hosts a freight train or two running right into the teeth of the evening rush.

What NJT and Austin did wrong was to use light rail equipment when they should have used standard commuter equipment. All that silly temporal separation wouldn’t be necessary – and, in the case of the NJT line, they could have had seamless service from New York/Trenton to Atlantic City.

Atlantic City line to the NorthEast Corridor line to Trenton to Newark and New York is faster. Trolley cars carrying 150 people every 15 minutes is much better than running a commuter train with 800 empty seats every hour and half. 900 seats total and 100 passengers who find once every 90 minute service acceptable.

Also, NJT needed to get the RiverLine into downtown Camden — to the Aquarium, even — and the only way to do that was street running.

Temporal separation means you can’t run the light rail line north of Camden after 9 PM, so, an evening at Tweeter, or the Aquarium or Riversharks? Nope. Staying after work a bit in NYC or seeing a show? Nope. An evening at AC from Princeton? Nope.

Also, you didn’t need street running to get to the Aquarium. You can get there from the north end or the south end with a little bit of rehab of existing lines. You’d have a block or two walk to the Rand, though.

Someone in Princeton who wants to get to Atlantic City gets on the bus that leaves from Nassau Street. If they don’t like buses they drive. If they don’t like buses and don’t have a car they get on the train that goes to Trenton and get on the train that goes to Philadelphia and transfer to Atlantic City line there, both of them.

The RiverLine carries about 9000 people a day, most during the morning and evening rush. Mid-day frequency is every 30 minutes. A real commuter rail line could have done the same thing with hourly service. And, it could operate some trains to 30th St or AC directly from Trenton. More single seat rides rather than having a transfer to PATCO and PATCO/NJT.

The costs for a “real commuter line” on the RiverLine route were non-viable, given the non-existence of FRA-compliant DMUs — and it wouldn’t have connected well at the termini in Camden.

Of course, the real solution is FRA reform. In any other country, the RiverLine tram-trains would be interlaced with freights using a PTC signal system.

I’d have started with locomotive hauled trains, but you are right about the FRA silliness. There are lots of places where in Germany where they mix and don’t have PTC – just plain vanilla reactive inductive train stop.

There is a considerable difference in perceived quality between a hourly service and a half-hourly service. Every 30 minutes is about where the “I don’t have to plan around the schedules” begins. And that’s where transit also starts to begin to become an aspect of quality of life.

Yeah, passenger-freight conflicts were never an issue because the frequency for both would be relatively low (especially for freight).

I have to take issue with your Austin statement though. Austin’s Red Line is supposed to be a light rail-like service that happens to run on FRA-regulated track. Ideally, it should have been a full fledged light rail rapid transit line and not a commuter rail service (which is more suited for serving metropolitan regional traffic). However FRA regulations have forced MetroRail to use a ‘commuter train-lite’ model and forced them to use temporal separation.

Using real DMUs would solve the problem for Austin. Temporal separation is real killer for both the passenger and freight operation. It just kills any industrial development – most places want their stuff switched in daylight.

The FRA didn’t “force” Austin. They chose light rail (why?) and then had to play by the current rules. Actually, the didn’t even do that. They are operating on a waiver. Existing FRA rules don’t actually include temporal separation.

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