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Gold Line misses grant, city mulling other options

Skipped over this year for federal grant, city officials looking at options for streetcar expansion funding

CHARLOTTE – City officials have begun looking at possible alternative options for funding its Gold Line streetcar expansion project, but have not given up on receiving a federal grant.

Construction on Phase 1 of the streetcar project is underway, but the city has yet to receive any federal funding for Phase 2. Photo by Payton Guion

Construction on Phase 1 of the streetcar project is underway, but the city has yet to receive any federal funding for Phase 2. Photo by Payton Guion

Last week, the U.S. Department of Transportation handed down the list of recipients of $474 million in federal money for transportation projects nationwide.

Two projects in the state received some grant money from TIGER – an acronym for Transportation Investment Generating Economic Recovery – but Phase 2 of Charlotte’s CityLynx Gold Line streetcar project was left off the list.

The city budget for the $126 million project, however, anticipated half of that money to come from the federal government, which so far has not granted any.

The Gold Line was a pet project for former Mayor Anthony Foxx, who now is the secretary of transportation. However, Foxx isn’t permitted to discuss any of his previous work – i.e., Charlotte streetcar – as secretary, according to his office.

Current city officials aren’t flinching after missing out on the $24 million they applied for from the TIGER Grant, as Charlotte transportation projects have overcome TIGER hurdles before. But the initial rejection has caused them to look at other possible grant options.

Carolyn Flowers, CEO of the Charlotte Area Transit System, said the streetcar project always was a longshot to receive money from the 2013 round of TIGER money.

“We took a chance in a very short window to apply, plus we’ve already been a recipient of federal money,” Flowers said. “There are a lot of projects out there right now. There were more than 500 applicants for $474 million and a portion of that funding was set aside for rural use. It was a small pot of money.”

The 585 projects vying for the TIGER money were asking for roughly $9 billion in federal assistance, according to the U.S. DOT. Only 52 projects in 37 states were awarded grant money.

Susan Hendricks, deputy press secretary for the U.S. DOT, said less than 9 percent of projects that applied for the TIGER program actually received funding. Those projects that weren’t chosen to receive funding this round are strongly encouraged to reapply next year, she said.

So, CATS is using this year’s rejection as a learning experience and will resubmit an application next year for a TIGER Grant, hoping for a better result. But city officials in the past have found that grant approval is not easy to come by.

The city in December 2011 was awarded $18 million in TIGER money for a capacity expansion on the Lynx Blue Line light rail, but only after applying three times for the assistance. Flowers said the city and CATS are prepared to apply and reapply in order to get the grant money needed for Phase 2 of the streetcar.

Phase 2 of the Gold Line streetcar will extend two miles west of uptown Charlotte to French Street at Johnson C. Smith University and 0.5 miles east to Sunnyside Avenue. Phase 1, approved in 2010 and partially completed, runs from Novant Health Presbyterian Medical Center on Hawthorne Lane to the Charlotte Transportation Center on Trade Street. Phase 1 has been fully funded.

TIGER Grants aren’t the only avenue for federal money for Phase 2 and the city has been determining other options, Flowers said. Small Starts and New Starts grants are possibilities, she said. According to the U.S. DOT, those grants are for capital costs associated with new, fixed guide-way systems, extensions, and bus corridor improvements. Requests must be for under $75 million in New Starts funds and total project costs must be under $250 million, according to the U.S. DOT.

“We have options that other competitors didn’t have and we can go after other pools of money,” Flowers said. “All I have to say is we have to put together a project that’s valuable and worthy of investment. There are cities all around the country that want a streetcar project and we’ve got to make sure ours is competitive.”

Being overlooked for federal funding is just the latest setback for Phase 2 of the controversial Gold Line, which divided the City Council in the past.

Under former City Manager Kurt Walton’s 2012 plan, the city’s portion of the Gold Line cost would have come partially from a hike in property taxes.  That proposal caused the council to balk at the whole of Walton’s Capital Investment Plan at a meeting in June 2012. The plan was later adopted without any streetcar money.

On May 28, the council adopted new City Manager Ron Carlee’s streetcar plan, which requires no property tax increase and won’t pull any money from the city’s general property tax fund. Charlotte’s portion is to come from unallocated money in the city’s Pay-As-You-Go and the Debt Service funds, which come from property taxes but are used for capital improvement projects. The other half of the Phase 2 money is supposed to come from the federal grants.

But while the city is waiting for its chance to garner federal funding, a completely different issue could affect the project. This fall, Charlotte residents will be voting for a new mayor and for City Council seats, some of which are being vacated by their current holder, which means there will be new faces.  The new council could vote to put the divisive streetcar-allocated money toward other interests.

Ruffin Hall, assistant city manager, wouldn’t speculate on the likelihood of this happening, but said City Council has the power to do exactly that. It remains a possibility for a contentious project that still lacks federal funding.

Even if the new-look City Council doesn’t renege on the streetcar funding, there remains the eventuality the city receives no federal money. But Flowers said she’s spent time thinking about that outcome.

If the feds decide not to give the streetcar any funding – which Flowers said isn’t likely – the city could look into a public-private partnership, bringing in a developer with deep pockets to work with the city on the streetcar. Or the city could look into charging a sort of value-added tax to businesses that will benefit from the streetcar, she said.

“It’s the kind of thing where a business owner might say, ‘If transit is here, it increases the value of my business and I’m willing to pay a higher tax,’” she said, but added that the additional tax is just an idea that’s been tossed around and isn’t close to being a reality.

Flowers said that while federal funding is still the first – and most-likely – option to finish Phase 2 of the streetcar, the city must be prepared for any circumstance.

“Those are the kinds of things that we need to explore if we’re going to look at how we move this project forward.”

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