Mayor: Transit sales tax funding may be at risk

Riders await the Lynx Blue Line at the Sharon Road West station. Photo: Nancy Pierce

It was an attention-getting moment Monday night: The Charlotte City Council voted 7-4 to apply for a $75 million* federal grant for the second phase of its controversial streetcar project.

As is typical, council members said why they supported or opposed the project. Council member Michael Barnes, for example, said, “I don’t think it’s in the best interest of the city,” and part of his reasoning was that the streetcar is part of the Metropolitan Transit Commission’s 2030 transit plan. It should be part of the MTC’s process and funded with the county’s half-cent sales tax for transit, he said. (See news articles from Charlotte Business Journal and from the Charlotte Observer.)

That position, which others have adopted as well, sidesteps the elephant in the room. After the Blue Line Extension is finished, the MTC can’t afford to build any more pieces of its 2030 transit plan, including any streetcar. No Red Line rail to north Mecklenburg, no Silver Line through southeast Charlotte, no rail link to the airport. Nada. The MTC has blessed the city’s streetcar project, since it’s building a part of the plan that otherwise has no funding.

Some 12 hours after that City Council vote, in the room above the council chambers, a very different discussion took place, and one that drew virtually no local attention. But it included a bleak warning from Mayor Dan Clodfelter that even today’s transit funding may be at risk.

 “Every one of the traditional pots of money is in jeopardy,” he told the Transit Funding Working Group, a committee of the MTC. “Every one of them.”

The Blue Line and Blue Line Extension light rail projects were funded with federal and state transit grants and the county’s half-cent sales tax. But today’s Republican-controlled N.C. General Assembly is not a friend of mass transit projects. Federal transit funds are ever more competitive. And the county’s half-cent sales tax, passed by Mecklenburg voters in 1998, took a huge hit in the 2008 financial downturn and revenue projections sank. (See chart at bottom.)

But there’s more. Clodfelter, who spent 14 years in the N.C. Senate before becoming mayor in April, recounted a phone call he’d had during the summer, the night before a provision was introduced in the N.C. General Assembly to put strict limits on counties’ previously granted authority to seek sales tax increases. (The complicated provision ended up not passing. Read more here.)

One of the sponsors phoned him, Clodfelter said, to let him know the legislators “had a long debate and decided NOT to change your half-cent transit tax.”

The important message to absorb, Clodfelter told the committee, was this: “There was a serious discussion about taking our existing half cent and using it for education purposes.”

Committee members asked his advice about the best strategy for moving ahead with alternative funding ideas. “I think it's to keep your head down and stay out of sight,” the mayor advised the group.

Despite that pessimistic advice, the group spent a couple of hours discussing other possibilities.

Committee co-chairman David Howard, an at-large Charlotte City Council member, said the work group had studied transit financing strategies from around the country, looking especially at Denver, where a regional rail transit project has used as many as a dozen funding sources.

“We’ve got us a new funding term,” Howard joked. “It's called ‘cobble.’ ”

The group also discussed the need to:

  • Resurrect regional nature of the original transit plan, which in the 1990s envisioned support from surrounding counties and towns. That support has not materialized. Although some surrounding towns such as Mooresville have been enthusiastic, surrounding county governments have been cool to the idea of higher taxes.
  • Develop stronger relationships with legislators. N.C. Rep. Rodney Moore, D-Mecklenburg, also attended Tuesday, and he urged the group to stay in better contact with state legislators across party lines.
  • Look for new financing tools.  Several federal loan programs are available for rail projects, for example, such as through the Transportation Infrastructure Finance and Innovation Act (TIFIA) and the Railroad Rehabilitation and Improvement Financing (RRIF) program. CATS and MTC officials are exploring which might be feasible for Mecklenburg projects

In addition, CATS official Tina Votaw described to the group the transit agency’s explorations of the possibility of using the increased property values along the Blue Line to help finance future projects. That kind of financing is complicated, but at heart it means targeting the extra property taxes from the higher property values for use on specific parts of a project. She said CATS is also looking at whether to try to sell some of its parking lot properties to developers, who would agree to supply commuter parking for CATS as part of a development. That’s common among transit agencies around the country, she said.

 “WMATA [the Washington Area Metropolitan Transit Authority] makes millions of dollars from the use and air rights of their parking lots,” she told the group.

* Due to a typographical error, an earlier version of this article said the grant request would be $75,000. It's $75 million.