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CorneliusNews.net: Red Line Sales Pitch Begins; Will This Rail Project Fly?

Map shows locations of potential stations and financing districts. Click to view larger.

Map shows locations of potential stations and financing districts. Click to view larger. MOORESVILLE - Supporters of the Red Line Regional Rail Project north of Charlotte began their sales campaign in earnest Tuesday at a meeting of about 150 area elected and appointed officials. Leaders from across the region were there to hear the pitch, from Charlotte Mayor Anthony Foxx and Mecklenburg County Commission chair Harold Cogdell to town commissioners from the Lake Norman area. There were plenty of skeptics in the crowd at the Charles Mack Citizens Center: local officials with questions about financing, retirees worried about higher taxes, and conservatives philosophically opposed to rail transit. But the most important skeptics may have been those who didn't even show up: members of the Iredell County Commission. Their support is essential to pulling off the $452 million project. But after a meeting last month with project representatives, some appeared cool to the plan. Organizers were disappointed - and concerned. Talking to reporters before Tuesday's meeting, Red Line Task Force chair John Woods described what's at stake: "If one jurisdiction opts out of this program, it will not work. Period." Paul Morris of the NC DOT answers a question at the Red Line Summit Tuesday. With him, from left, consultant Mark Briggs, Red Line Task Force chair John Woods, and consultant Katherine Henderson. (David Boraks/CorneliusNews.net) Tuesday's 4-hour "summit" was hosted by the Lake Norman Transportation Commission. The half-day of slide presentations and Q&A sessions offered details of a business plan that calls for upgrading the Norfolk Southern tracks, buying trains and running a freight and commuter rail line - all without federal money. That's a fact of life transit planners have had to live with: Trains are not a national priority right now, and the federal government really isn't spending money on this kind of project. So the business plan that consultants and the Red Line Task Force have been promoting recently calls for the state Department of Transportation and Charlotte Area Transit System (CATS) both to pay 25 percent of the cost, or $113 million each. The towns and county governments have to come up with 50 percent - or $226 million. The latter - local governments' share - was the focus of Tuesday's meeting. Under the financing plan shown Tuesday, the towns and counties would pay their portion by creating special tax districts along the line. Property in these districts would presumably gain value because of the rail line, and provide future revenue to help finance the project. The towns and counties could tap that in two ways: Tax increment financing - This would apply only to commercial properties near the line, within perhaps 1/2 mile. Property owners would not face any change in their tax rates, but any increased property values would translate into additional tax revenues. Those could be "captured" to help pay for the rail line. The rail line would get 75 percent of the new revenues (not all tax revenues) while the towns and counties would get 25 percent to help pay for town services and infrastructure needed because of growth. (In answer to questions Tuesday, officials clarified that it would include any income-generating property, including rental housing.) Special assessment districts - Again, this would apply only to commercial property in designated districts, and it would be voluntary. A majority of commercial property owners in each district could agree to a fee or tax surcharge that would help fund the line. Red Line supporters say the incentive would be increased value and potential for their rail-side properties. Paul Morris, a deputy secretary with the N.C. Department of Transportation, explained it this way: "When a public infrastructure investment like a regional rail project is made, it stimulates unique and extraordinary investment. It's the catalyst for activity that would likely not otherwise happen here. And because of that, the developers and businesses that benefit from it want to participate in seeing it come. They want to realize the premium benefit for having seen that infrastructure happen." Those two potential revenue streams then could be bundled and sold to investors in the form of bonds. Mark Briggs, a vice president and director of finance at consulting firm Parsons Brinkerhoff, said there are billions of investor dollars "on the sidelines" right now, and the investors he has talked to are interested in this kind of project. The towns and counties, along with CATS and the NC DOT, would govern and operate the rail line through a regional agreement, called a Joint Powers Authority (JPA). The JPA would actually issue the debt and manage operating costs. Mr. Morris said the state would act as a "backstop," protecting local governments by providing loans if revenues ever fell short of financing or operating costs. Mr. Woods, who also is Davidson's mayor, said Tuesday's meeting was the first of many in the coming months that will give local officials and citizens a chance to learn about and comment on the project. Officials and consultants will tweak the business plan based on those comments. Mr. Woods hopes a new "consensus" plan can be ready by April. Then it would go back to elected officials from Charlotte to Mooresville, as well as the Mecklenburg and Iredell county commissions, for a final vote. Those meetings in the coming weeks could spell the success or failure of the project. Mayor Woods described the strategy: "We want to create a disciplined approach to the raft of questions that already exist, to make sure we answer those questions and that misinformation is not being spread," he said. QUESTIONS Two question-and-answer sessions with the experts were offered Tuesday, and brought out a wide range of concerns - from how the project might affect individual homeowners to whether it has the potential to bankrupt the cities and towns if the project revenues don't materialize. One of the first speakers to get the microphone posed an even more basic question: Why do we even need rail? Jay Privette, a Charlotte resident who ran unsuccessfully for Charlotte City Council in November, asked: "Just from a practical standpoint of passenger rail, what use is passenger rail to me if I'm going someplace that's not within a few blocks of the station?" CATS' Red Line project manager Brian Nadolny said the line would end in downtown Charlotte, where commuters could take a bus or ride the Lynx Blue Line light rail to other locations around town. Some speakers were concerned that the towns could wind up on the hook for the debt if the system doesn't meet revenue expectations. Katherine Henderson, a consultant and the project's manager and urban planner, said the Joint Powers Authority agreement would specifically state that the towns and counties are not liable for the debt. "This is probably the most important thing you'll hear me say: The JPA explicitly protects all member jurisdictions from financial recourse. So no local government would be at risk from any of the financing from the JPA," she said. That's a key reason why local government would want to approve the JPA governance structure, she added. Some wanted to know if this would mean a tax increase for individual homeowners. Officials emphasized that it won't affect tax rates. No new taxes would be levied to pay for the line, and homeowners would continue to pay taxes as they always have, officials said. Dora Dubose was in the spotlight as she asked a question. (David Boraks/CorneliusNews.net) But the Rev. Dora Dubose of Davidson raised a related concern, wondering if the increased value of homes along the line could harm long-time residents, especially those in African American neighborhoods in Cornelius and Davidson. They'd have to pay more property taxes if their homes are worth more, and that could be trouble. Vivian Lester, who lives on West Side Terrace in Davidson, not far from a proposed commuter rail station, added: "I'm retired and taxes continue going up. And if you're living on fixed income, you'd be in a predicament." Rev. Dubose, who commuted to Charlotte for years, said she's "open to improved transportation." But she said officials should consider how they might help "keep existing people where they are." Pam Pearson of Davidson asked if the owners of rental property would be affected. Officials replied that those and all "income producing" properties would be included. If the property is within a "tax increment," or TIF district, "You would continue to pay your property taxes as always," Mr. Briggs said. But the amount of that tax could be higher if the property gains value. If the property lies within a Special Assessment District, landlords would vote along with other commercial property owners whether to levy an annual assessment over 30 years. "That's a voluntary process," Mr. Briggs said. Cornelius Commissioner Jeff Hare. (David Boraks/CorneliusNews.net) Jeff Hare and John Bradford, two newly elected commissioners in Cornelius, both wanted to know more about whether there's a demand for the freight line. Mr. Hare asked how an upgraded line north of Charlotte might connect to the rest of the regional transportation network. "This is a relatively new and somewhat evolving industry," Mr. Morris said. Rail freight is migrating from individual, entrepreneurial shipping companies to a consolidated industry as manufacturers look for ways to cut costs and speed deliveries. This has led to the development of "freight villages," built around shared spurs, sidings and freight yards. Mr. Bradford wondered if freight carriers really would use the line. "What kind of commitments are freight carriers making?" he asked. Officials said Norfolk Southern is extremely interested. The track from Charlotte to Iredell County is actually considered "second-class," but the freight company sees an opportunity for new business if it is brought up to the quality of other track in the region. In fact, Mr. Briggs said, Norfolk Southern has expressed interest in competing for a contract to upgrade the track and operate the freight and rail system once it's done. One of the biggest concerns is whether the cost of this project, like other public infrastructure projects, could spiral out of control. Rodney Graham, a newly elected commissioner in Davidson, asked: "How confident are you about the 452 (million dollar estimate)?" "This is a 'not-to-exceed cost," Mr. Morris replied. "The project will not exceed $452 million in 2018 dollars." (The project is currently estimated to cost about $350 million, he explained, but the figure has been escalated for inflation and other additions.) If the cost is heading higher, officials are committed to scaling the project back to stay within budget, he said. RELATED LINKS Dec. 13, 2011, WFAE.org, "Red Line Moves Forward" - Reporter Julie Rose of our news partner WFAE was also at Tuesday's meeting and provides a text and audio report. Dec. 9, 2011, CorneliusNews.net, "Area officials to get a look at Red Line biz plan Tues." Dec. 1, 2011, CorneliusNews.net, "Homeowners won't see tax hike in Red Line plans, consultants say" Nov. 22, 2011, CorneliusNews.net, "Town seeks task force to review rail plans." Nov. 23, 2011, Statesville Record & Landmark, "Iredell leaders skeptical about Mooresville-to-Charlotte train" RELATED DOCUMENTS Town of Davidson Red Line Task Force page, with these and other related documents, www.ci.davidson.nc.us/redline