DavidsonNews.net: Consultant Says Red Line Financing Plan Can Be Revised
From left: Mark Briggs, Jeff Hare and Callan Bryan (LKN Chamber photo) Consultants and officials continue to gather community feedback about the proposed Red Line Regional Rail Project financing plan, and on Friday consultant Mark Briggs said the project task force already has identified one area for potential revisions: timing of the fees to be paid by commercial property owners in Special Assessment Districts along the line. Mr. Briggs's comments came during a Focus Friday issues forum on the Red Line at the Lake Norman Chamber in Cornelius. Under one funding scenario being discussed, local governments are being asked to create Special Assessment Districts (SADs) along the line. Commercial property owners in those districts would be asked to vote on whether to accept an additional fee or tax that would help pay for the line. RED LINE MEETINGS MONDAY, FEB. 6 - 4 p.m.,Huntersville Town Board pre-meeting discussion with consultants, Huntersville Town Hall; 6 p.m., Mooresville Town Board, Mooresville town hall; 7 p.m., Cornelius Town Board meeting, Cornelius Town Hall. TUESDAY, FEB. 7 - 7:30 a.m., Mooresville Rotary Club looks at the Red Line at its meeting, Ten O'Clock Charlies, Water Tower Center, 455 E. Plaza Drive; 9:30 a.m., Red Line QA, Mooresville Town Hall; 10:30 a.m., Mooresville Review Committee, Mooresville Town Hall; 11:45 a.m., Industry Roundtable lunch with consultants, presented by Lake Norman Regional Economic Development Corp., The Range, 10913 Bailey Rd., Cornelius. WEDNESDAY, FEB. 8 - 9 a.m., Red Line presentation and public forum, with Randall O'Toole of Cato Institute, who will present an analysis of the Red Line business and finance plan.; 6:30 p.m., Lake Norman Transportation Commission meeting, Mooresville Town Hall. Details on these as well as additional meetings in February may be found on the RedLineRegionalRail.org calendar page. The proposed fee would be an extra $0.75 per 100 dollars of assessed value, and Red Line proponents believe the potential for increased business will incentivize owners to opt in to the special districts. Revenues collected in the SADs would be bundled, along with other revenue from tax increment financing (TIF), and used to sell bonds to investors and finance construction of the rail. So commercial property owners' support is critical to the success of the project's funding strategy, project advocates say. Some business and commercial property owners over the last month have questioned the plan to assess fees beginning in 2013, four years before rail service would start, resisting the idea of paying for something before they see the benefits. Rail task force members are studying whether there is a way to delay the start of the assessments, Mr. Briggs said. BUSINESS IMPACT Questions about the project's impact on business and property owners drew a crowd of about 30 to Friday's meeting, and small business owners in the room raised questions about town resources, roads, east/west connectivity in Cornelius, and the impact of the special assessment taxes. Mr. Briggs said land and business owners in transit-oriented development sites stand to see increases in revenue of as much as 15 to 20 percent. Meanwhile, the costs for small business and land owners would increase only about 5 1/2 to 6 percent, he said. But one business owner was skeptical. "For some businesses, that's all we make," he said. A veterinarian at the meeting noted that his business, near the rail line at N.C. 73 and N.C. 115, would be in one of the Special Assessment Districts. He was concerned that he would be paying the extra assessment, while his competitors - two other local vets - would not. "They don't have skin in the game," he said, and questioned whether that was fair. He suggested planners consider a broader tax impact, perhaps an incremental decrease in special taxes as you get farther from the line. He also noted that people would not be traveling via rail with their pets, so while he would benefit long-term from population growth as a result of the rail (more people, more pets, more customers), he would not benefit from easier access to his business the way some other owners would. COST/BENEFIT FOR INVESTORS Cornelius Commissioner Jeff Hare also spoke at the meeting. He is the chair of the Cornelius Rail Task Force, formed to analyze the proposed plan and determine whether Cornelius should support it. He has extensive experience in securities and underwriting development projects. From an investment standpoint, you need to look at whether the projected cash flows will support the debt, he said. He asked Mr. Briggs for the model his team used. "You get to a point in your growth cycle as a region where you need rail line," he said, "you can't just keep widening roads." But the financing model - which would involve an agreement and cost sharing among seven towns, N.C. DOT and Charlotte Area Transit System - must be sound, he said. "Uncertainty does not provide steady cash flows for paying down debt," Mr. Hare said, and investors will look at the state's involvement in the funding model. The state has said it would act as a "backstop," protecting local governments by providing loans if revenues ever fell short of financing or operating costs - a point that is critical for attracting potential investors, Mr. Hare said. Wes Southern, former Cornelius Mayor and Cornelius Rail Task Force member, said N.C. DOT is the "elephant in the room," and has a history of making promises for projects without follow through. "The legislature needs to tell them what they can and cannot do," Mr. Southern said. NORFOLK SOUTHERN A 'KEY PLAYER' Another concern, Mr. Southern said, is a recent letter from Norfolk Southern to N.C. DOT Deputy Secretary Paul Morris, released last week, in which the rail company lists multiple concerns about the structure, cost and timing of the project. Norfolk Southern owns the existing tracks, 25 miles of which would be upgraded for Red Line commuter and freight rail service. County Commissioner Karen Bentley also asked about the letter. "Isn't it putting the cart before the horse if the key player has not rendered its opinion of the plan?" she asked. Cornelius Mayor Jeff Tarte said Norfolk Southern's response to the plan thus far is "classic business negotiations." "They're trying to put as little as possible on the table for maximum benefit," he said. Cornelius Commissioner Dave Gilroy rejected the mayor's claim, saying "Norfolk Southern is nowhere on this." "What we should be talking about is who is going to win the Super Bowl next weekend," he said, calling the plan "completely nonsensical." Mayor Tarte stressed that the back-and-forth, criticisms and analysis of the rail plan are normal parts of any contract negotiation. He asked Commissioner Gilroy whether any changes would make the plan acceptable to him. "I don't see anything, Jeff," Commissioner Gilroy said. MORE TIME TO DECIDE? Several people expressed concern about the timeline in which towns are being asked to make decisions about the plan. The towns were given 90 days to review the proposed plan and provide feedback, and planners hope to proceed to a "consensus period" later this spring. The project does face some time constraints. A key state law governing SADs will expire in June 2013. "Why aren't we working to get the legislature to push the sunset date later?" Mr. Southern asked. Mr. Briggs said that now is the time to start the project, as waiting will see revenue lost from development that occurs in the meantime and also could see project costs increase. In opening statements Friday, both Mr. Briggs and Mayor Tarte said the decision is not whether or not the rail will be built - it's when, and who is going to pay for it. RELATED LINKS Jan. 25, 2012, "Davidson hearing airs concerns about Red Line project." The Lake Norman Chamber's Focus Friday monthly issues series is sponsored by DavidsonNews.net and CorneliusNews.net.