Internal documents reveal details of transit options
May 2024 presentation contained detailed cost estimates for differing rail plans, streetcar and buses
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CATS consultant: Both the Red Line and the Silver Line to Matthews are feasible — with only slightly more money for trains
By Steve Harrison
WFAE
This spring, Charlotte officials told the town of Matthews that there wouldn’t be enough money to build both the Red Line commuter trail to Lake Norman and the Silver Line light rail from uptown to Matthews under a proposed funding formula that limits spending on trains to 40% of the revenue from a new, one-penny sales tax.
But an internal document obtained by Transit Time shows the Charlotte Area Transit System could build both train lines if it spent just slightly more money — 44% of new sales tax revenue — on rail transit.
At four-one-hundreths of a penny on the sales tax rate, it comes out to about $13 million a year. The one-cent sales tax would generate about $360 million in its first year.
The city’s annual general fund budget is nearly $900 million. On top of that, the CATS’ annual budget is $260 million.
To be sure, building the Silver Line to Matthews and the Red Line would involve trade-offs: It wouldn’t leave enough money to build the Silver Line west to the airport, and would also cut other projects like the streetcar expansion.
The document, created in May by a CATS consultant, Infrastrategies, bolsters Matthews’ contention that the Silver Line East train can be saved by allocating more sales tax money to rail transit or by shortening the length of the line to save money.
For example: Shorten the Silver Line by a mile or two and then increase the amount rail funding to, say, 42.5% of sales tax revenue in order to build the Red Line simultaneously. The city could also contribute some money from its general fund, which is how it built both segments of the Gold Line streetcar.
The Infrastragies final models were presented to Charlotte officials, Mecklenburg County Manager Dena Diorio and the managers of the six Mecklenburg towns during closed-door meetings in May. Some of the information was shared with the Metropolitan Transit Commission at an Oct. 23 meeting.
You can read the full presentation here.
Dispute over funding
In an effort to get support from Republican lawmakers in Raleigh who favor spending on roads, the managers agreed in the spring on a funding formula that would spend 40% of new revenue on roads and no more than 40% of new revenue on trains. The rest — 20% — could be spent on other transit, like buses.
It’s unclear if the 40-40-20 split was a mandate from Raleigh, or just the city’s effort to address the priorities of GOP leaders. Charlotte has made no formal presentation to the General Assembly about its tax plan. City leaders had hoped that the General Assembly would consider the proposal this year, but that now seems unlikely. They’re hoping a referendum could be placed on the ballot in Mecklenburg in the fall of 2025.
CATS said in a statement that it believes four-hundredths of the penny tax is “significant” and “equates to hundreds of millions of dollars above the current split.”
(The entire one-cent sales is projected to generate nearly $20 billion over the next 30 years.)
What the presentation says
The Infrastrategies document emphasizes that the 40% rail cap makes it impossible to build both the Red Line and the Silver Line to Matthews. It says the two “cannot be implemented,” regardless of the timing:
That is consistent with the city’s messaging.
But the presentation also includes the other funding scenarios that give a clear picture of how much it would cost to build the Red Line and Silver Line East together:
Scenario 1 is how much money it would take to build everything the city has proposed: the Silver Line from uptown to the airport; the Silver Line from uptown to the Central Piedmont Community College campus in Matthews; the Red Line commuter train to Lake Norman; a streetcar extension; and more bus service. It puts the total cost at $25 billion.
That’s 9/10ths of a penny, or 90% of all new sales tax revenue. Republican leaders have said that’s not enough money for roads and a non-starter.
Scenario 2 is how much it would cost to build the Red Line and the Silver Line East to Matthews, along with some bus improvements, but without any of the other projects. It puts the cost of that scenario at $14.2 billion. The cost to build and operate the two trains is the equivalent of 0.44 cents on the sales tax rate, or 44% of a 1 penny sales tax increase. That’s above the favored 40% cap on rail, but not by much.
Matthews proposes alternatives
Matthews Mayor John Higdon has asked that CATS consider different funding allocations, such as 45% for trains, 45% for roads and 10% for buses.
CATS interim chief executive Brent Cagle said in October he doesn’t know if new funding models can be run before the legislation is brought to Raleigh. He also said that construction costs are going up, and that new estimates will be higher than those from May.
That could make the May estimate of building the Red Line and Silver Line with a 44% share of the sales tax revenue obsolete.
Higdon has also said that Matthews would be willing to shorten the Silver Line to save money. Instead of having the train go all the way to Central Piedmont Community College’s Levine Campus near the Union County line, the train could stop north of downtown Matthews, eliminating three stops and saving hundreds of millions of dollars.
The downside to Scenario 2 is that other projects aren’t built, such as a train to the airport; light rail to Ballantyne; and a streetcar extension.
(An upside to building the Silver Line to Matthews is that CATS has already spent $43 million designing the Silver Line light rail. If it’s not built, most of that money will be wasted.)
The presentation contains other interesting information.
The possibility of no federal money for the Red Line
CATS officials have told City Council members that a key reason to push forward with the transit plan is that there are billions of federal matching dollars just waiting to be secured. They don’t express doubt or concern that the Charlotte projects might not qualify.
But Infrastetgies examined the possibility of receiving no federal money. While four of its five funding scenarios call for the Red Line commuter rail line to receive federal funding, one scenario includes an option for “Red Line NO CIG.”
CIG means Capital Investment Grant, which is the main funding program from the Federal Transit Administration.
Under that scenario, the Red Line would need 0.07 cents of the sales tax increase, up from 0.05 cents. The bus-rapid transit line to Matthews would receive less money, as would the Silver Line light rail to the airport.
The scenario doesn’t say how those two projects would be impacted with less money.
Infrasrategies does not have scenarios in which the other large projects don’t receive federal funding.
Updated capital costs for the various projects
Throughout the summer and fall, CATS has said it doesn’t have capital costs for rail projects and that it’s working to have those by January.
But the Infrastrategies document from May does have cost estimates:
Gold Line streetcar east extension: $365m
Gold Line streetcar west extension: $325m
Red Line: $850m
Blue Line extension to Ballantyne: $1.26b
Silver Line West from uptown to airport/I-485: $2.3b
Silver Line East from uptown to Matthews: $5.75b
New federal grant formula could be good for Charlotte. Will Trump undo that?
Infrastrategies is optimistic about changes coming to the Federal Transit Administration’s formula used to distribute grants for large capital projects, like rail lines.
The consultant anticipates the FTA will change its formula to update new COVID ridership trends, which are lower across the nation. That is good news for Charlotte, where ridership has declined more than most cities.
The new formula will also reward affordable housing near train stations. This is also good for Charlotte, which is eager to build housing. There would also be a few focus on “communities at risk.” That might not benefit the Red Line, which will mostly serve high-income areas in north Mecklenburg.
The FTA said it anticipates finalizing the changes by the end of the year.
But: These adjustments were made under the Biden administration.
Will President Trump reduce funding for transit? Would his FTA change the formula back, with more of a focus on ridership?
That would be bad for Charlotte.
Big money for bus system
CATS wants to expand and improve bus service, a project it calls “Better Bus.”
CATS officials have said repeatedly they don’t know how much that will cost, but Infrastrategies put an estimate on it: $650 million in capital costs and $77 million in additional operating dollars.
In response to a question from Transit Time, CATS said the $650 million was essentially a placeholder, representing a $50 million annual capital investment over roughly a dozen years. It said it will have more information on Better Bus in January.
Even without knowing the details, it’s a breathtaking amount of money for the bus system.
CATS has a fleet of about 230 buses, according to the federal government’s profile of CATS from fiscal year 2023. If it replaced all of those buses with new electric buses, and then bought 100 more, that would cost about $260 million. Published reports have said electric buses can cost roughly $750,000; CATS has said it spends about $1 million for each electric bus.
How would the rest of the money be spent?
CATS wants to build “micromobility hubs” — small bus stations with places for passengers to switch to ride-share; places to lock their bikes; etc.
It also wants to improve bus stops across the county, many of which don’t have benches, shelters or other simple amenities.
The estimate for $77 million in new operating costs is also large.
In fiscal year 2023, CATS spent $121 million operating its bus network. That cost will be higher for this year — in part due to inflation and a new labor contract with its bus drivers that makes them among the highest paid in the Southeast.
But are there enough passengers to support that much new service?
Consider: From 2013 to 2023, the amount of money CATS spends operating its bus system grew by nearly 50%, while bus ridership fell by 65%.
Steve Harrison is a reporter with WFAE, Charlotte’s NPR news source. Reach him at sharrison@wfae.com.
➡️ You can read the full presentation here.
Related Transit Time articles:
“The plan for buses to Matthews faces doubts” (Aug. 15)
“The basics of Charlotte’s new transit plan” (Aug. 22)
“Charlotte scrambles to contain Silver Line blowback” (Aug. 29)
“Transit plan could be a windfall for Mecklenburg’s towns” (Sept. 5)
“Answering your questions on the transit plan” (Sept. 12)
“Matthews’ mayor, commissioner Leigh Altman trade barbs over transit plan” (Sept. 19)
“Outlook for transit plan: more delays ahead?” (Sept. 26)
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