Understanding the Red Line discussions
by Staff Writer
CORNELIUS – With Iredell County Commissioners and now Norfolk Southern unsure about the proposed Red Line Regional Rail project, and area municipalities’ task forces continuing to explore the plan in depth, here’s a look at the most common questions being asked by residents, and their answers:
What is the Red Line project?
The Red Line Regional Rail is an initiative to upgrade a 25-mile section of the Norfolk Southern Railroad “O” line in the north corridor of the Charlotte metropolitan area. The plan would include 10 stops between Charlotte and Mooresville, with possible future expansion north to Statesville.
How much does it cost?
The estimated cost for the project, which consultants have said will not be exceeded, is $452 million. There are several means of funding proposed, including tax increment financing and special assessment districts.
What is tax increment financing?
Project consultants have said the Red Line will increase property value along the rail in what they call the Unified Benefit District, which encompasses different areas in each affected town. In the Unified Benefit District, whatever the property value increases to, the town will take 25 percent of that increase as revenue, and give 75 percent of it to the joint powers authority – which is made up of Cornelius, Davidson, Mooresville, Huntersville, Charlotte, Charlotte Area Transit System, Mecklenburg and Iredell counties, and the state.
What are special assessment districts?
These are districts already established near the Red Line, which will benefit from its development, like businesses and mixed-use developments. A special assessment district requires the approval of 50 percent of property owners who make up 66 percent of the assessed values to be established. If the property owners approve, they would be levied a .75 cent per $100 of assessed value tax, which would go to the joint powers authority and help fund the construction of the Red Line. If, however, property owners do not approve the creation of a special assessment district, the entire project would fall apart, project consultants said. The special assessment districts would only be created in Charlotte, Huntersville, Cornelius, Davidson and Mooresville. The .75 cents per $100 of assessed value will never go up, but if ever the joint powers authority has too much money in reserves, that rate can be reduced.
How will tax increment financing and special assessment districts affect property owners?
Project consultants say the tax increment financing won’t affect property owners because they presently pay, and will continue to pay property taxes. But those in the special assessment district will likely require a four to seven percent increase in rent to cover the annual assessment cost. The percent increase equates to about .07 or .13 cents per square foot, per month. Consultants have said they know any increase is hard to swallow but that that research they’ve conducted shows an average premium on apartments of 18 percent, 20 percent for retail, and 15 percent for offices – which would, in an ideal world, more than offset the increase in rents.
Are there other funding sources?
The project will seek bonds to fund the project, and the N.C. Department of Transportation will serve as the backstop so that the municipalities, which make up the joint powers authority, will have no financial recourse. That means if the joint powers authority was unable to pay back it’s debt, the individual municipalities would not be held responsible and would not be forced to pay off the debt.
How much development is necessary to fund the Red Line?
Many serving on the task forces created to look at the financing plan have asked if the Red Line will require too much development thereby straining the existing infrastructure. But consultants have said each local municipality controls the growth through it’s land use plans – and the $452 million project has stationary improvements built in for each municipality to help reduce the impact of suddenly having a rail line, increased traffic and development.
How will the Red Line impact traffic?
Red Line consultants have said the project will reduce the equivalent of one lane of traffic from Interstate 77 during peak hours. But because the Red Line will bring new developments, and a lot more people to each town, skeptics say the majority of those new and existing residents wont use the Red Line, which is why the N.C. Department of Transportation has said it will simultaneously be working on widening I-77 which would include adding toll lanes for non high-occupancy vehicles.
Will the additional taxes keep development from happening along the railway?
Project consultants say no because the Red Line creates desirability for the area where people will want to live, work and do business. That question is what municipalities and property owners have to weigh: Are the costs worth the benefits?