New tax revenue from offices, housing and retail along a proposed central Charlotte streetcar line could pay for about 25 percent of the streetcar’s construction cost, a consultant told City Council Monday night.
The new development created by the streetcar has been described as significant. But those new tax dollars may not be enough to build the 10-mile, $373 million streetcar by 2013 as hoped. In tight economic times, the Charlotte Area Transit System and the city will likely struggle to find $275 million to pay for the rest of the project.
The consultant, Bay Area Economics of San Francisco, examined the streetcar’s proposed route, from Beatties Ford Road to Eastland Mall, via uptown on Trade Street. It estimated the amount of new development that would likely be built in the corridor without a streetcar, and then projected the additional growth from having one.
Under an aggressive growth projection, the streetcar would, by 2035, attract 73 percent more housing units, a 17 percent increase in office space and a 54 percent increase in retail space along the route.
If the city created a special taxing district along the route, and if it skimmed off part of the property taxes from the new development, it could generate between $209 million and $332 million over the next 25 years. But when placed in today’s dollars – and when you consider the streetcar’s cost would be bonded over several years – the new revenue would pay for 20 to 30 percent of the cost.
Peter Zeiler, who works in the city’s economic development office and has worked on the study, said that percentage is in line with other streetcars studied, such as in Portland, Ore.; Seattle; and Memphis, Tenn.
The streetcar would generate the most impact uptown – about half of the new housing, retail and office space. The second-most lucrative area would be Elizabeth and Plaza Midwood, followed by Eastland Mall. The Beatties Ford Road corridor would generate the least amount of new development.
It’s possible only part of the 10-mile streetcar line could be built at first – perhaps from Johnson C. Smith University to Presbyterian Hospital. The consultant wasn’t asked to determine the economic impact of only building part of the streetcar line.
The streetcar would replace buses on some of CATS’ most heavily traveled routes. Supporters also argue it would attract new riders who would be drawn to a streetcar instead of a bus, and it would spark new economic development.
The entire route would have 26 stops and would take 40 minutes from start to finish.
But the streetcar would have several differences from the Lynx Blue Line, the city’s first light-rail line, which opened last year and has exceeded ridership projections.
Streetcars would operate in the street, in traffic, which means they would stop at red lights and be vulnerable to congestion. In uptown, streetcars would replace CATS’ successful Gold Rush shuttle, which already moves a large number of people.
CATS’ long-range construction plan calls for the first phase of a streetcar line to open in 2018, but the city is interested in trying to build it sooner. It hired BAE last year to gauge the feasibility of using new tax dollars to speed up the project.
Complicating the issue is the economy. CATS last month projected that its half-cent sales tax would generate $252 million less over the next 10 years than projected.
The transit system’s next two scheduled projects – a commuter train to the Lake Norman area and an 11-mile Lynx extension – may be delayed because of the economy. Streetcars could suffer a similar fate.
CATS hopes streetcars could get state and federal funding, but there are no guarantees.
Charlotte City Council member Anthony Foxx said the city needs to build the line soon or it will become too expensive. He said people in the community expected the streetcar system to be built when they voted to keep the half-cent sales tax in November 2007.
“If you wait, it may get out of reach,” Foxx said.
The city’s Streetcar Advisory Committee will explore whether the city should try and raise new money for the project, and make a report to City Council by June. It also will explore which segment of the streetcar line should be built first, if it has to be built in pieces.
