Charlotte, 2008 and Beyond

[CharlotteLightRail]

Last year at this time we all discussed the many benefits of the transit system.

This year the CATS system is looking at covering a 12 million shortfall (so far) and it may be worse as costs escalate, and note fuel prices have dropped like a rock so it must be the existing costs of current equipment and operation IE. Light Rail. This loss of revenue is due to the falling sales and lack of sales taxes.

CATS Chief Parker has already said they are looking for revenue streams outside of the half cents sales tax.

To put our problems in perspective, Chicago almost closed down their transit and then the government instituted another half cent sales tax on the many half cent sales taxes they currently have. Denver is in the same situation as Charlotte and is about 12 million in the red and is seeking additional revenue. Funny how the recent front Sunday page article on transit in Denver did not mention that fact. All rail transit systems are bleeding red and relief is not in sight.

So now we can look at transit in the light of business and how it is just that a business.

Of course it is akin to a charity but as the recent travails at the United Way has shown, we need to take into account the benefit of providing that charity and weigh it with the costs of that benefit and see if it can be done for lest cost and with more benefits to the actual user or client.

So today if Charlotte were to start shrinking due to let's say a major bank closing its operation here, then we could sell off buses as they are cross functional. Sadly light rail is too specific and tailored to the customer buying them. They would provide tons of raw steel.

What we need to discuss is that many people have already moved and even the condo boom has all but stopped. The suburbs have whole developments sitting and waiting for buyers and yet we still are discussing expanding the rail and light rail.

What about our discussion last year of buying the land for transit corridors and running buses until we can afford the trains and the necessary density has been created. Or how about the street cars being halted to save money?

Of course the deal with the Black Political Caucus for their support of the half cent sales tax and promise that these would be the first rail vehicles to come about, running up and down Beatties Ford Road, Central Avenue, would be a big roadblock to stopping these streetcars from being first. Plus the fact the City Council can handle all of this funding with Tif's. You remember Tax Increment Financing. Saying they will make more tax money off of the improved areas than they do now to off set the expenses.

I left the Citizens Transit Committee this year. My time was up and I failed to be the cheerleader for anything transit. So today I write you as a common man. One who has tried to contain cost and get CATS to operate as a business.

So let's see how the discussion goes this time around?

[monsoon]

I think you hit the nail on the head. The first thing that needs to happen is that CATS should be held accountable for results vs the amount of money they spend. We do have a transit tax in Mecklenburg but CATS spends 100%+ of it just on operations. It's the reason it is taking so long to build out the rest of the system as there is scant little of this tax, except in a long term basis, to use towards capital projects.

When CATS blew the budget to to build the South LRT, by $100M, the city should have cleaned house in the CATS upper management ranks. Instead, Tober didn't even get a slap on the wrist, he retired from the system, and then they turned around and gave him another goverment job with CATS to put the trolley back on the tracks. Both the Mayor and the City Manager continued to do nothing about it.

[atlrvr]

I'm not sure that there was a proposal in all of that, or just a summatation of the state of public transit funding, but I'll offer this.

If we were discussing private business, then I would agree prudent economic sense is for a reduction of investments until economic conditions improve. However, the government isn't a business, so the same logic does not follow.

The role of the government is to protect the citizens and to provide necessary services that the private sector can't or won't. The often spewed cliche of "If transit was so beneficial, then a private company would operate it" is ridiculous. We don't have private police forces, don't require our children to go to private schools, and 99.9% of roads are built and maintained by the public. And, they all operate at a deficit. Should we cut police officers, stop building schools, and tell people that we won't fix roads, whenever the economy is in decline? No, because the government isn't private business, so we rationalize our decisions based on long term benefits to society as opposed to investor profits.

I'm not promoting finances be damned, full steam ahead. But now is the time to invest, with prudence of course As you related, contractors are submitting lower bids, building material prices are declining. I can't imagine a better time to negotiate contractor at-risk contracts. If financing (which granted, will have worse terms than last year) can be secured that results in a net lower annual debt service due to lower contract costs, then the government should proceed, regardless of doomsday prophets.

Economies are cyclical. Anyone who is using the current economy as a central argument for not making infrastructure investments that will last 10 more economic cycles, is simply using the current climate of fear to further a short-sighted goal.

[CharlotteLightRail]

I'm not sure that there was a proposal in all of that, or just a summatation of the state of public transit funding, but I'll offer this.

If we were discussing private business, then I would agree prudent economic sense is for a reduction of investments until economic conditions improve. However, the government isn't a business, so the same logic does not follow.

The role of the government is to protect the citizens and to provide necessary services that the private sector can't or won't. The often spewed cliche of "If transit was so beneficial, then a private company would operate it" is ridiculous. We don't have private police forces, don't require our children to go to private schools, and 99.9% of roads are built and maintained by the public. And, they all operate at a deficit. Should we cut police officers, stop building schools, and tell people that we won't fix roads, whenever the economy is in decline? No, because the government isn't private business, so we rationalize our decisions based on long term benefits to society as opposed to investor profits.

I'm not promoting finances be damned, full steam ahead. But now is the time to invest, with prudence of course As you related, contractors are submitting lower bids, building material prices are declining. I can't imagine a better time to negotiate contractor at-risk contracts. If financing (which granted, will have worse terms than last year) can be secured that results in a net lower annual debt service due to lower contract costs, then the government should proceed, regardless of doomsday prophets.

Economies are cyclical. Anyone who is using the current economy as a central argument for not making infrastructure investments that will last 10 more economic cycles, is simply using the current climate of fear to further a short-sighted goal.

[kermit]

So now we can look at transit in the light of business and how it is just that a business.

[uptownliving]

CharlotteLight Rail where are you getting your $12M budget shortfall number for FY2009? Last I heard the budget shortfall was closer to $2M for FY2009 due to the increase in gas prices.

[CharlotteLightRail]

OK, I'll play.

As an example of this phenomena I offer 3030 South (look it up using Polaris http://polaris.mecklenburgcountync.gov/web...sign/viewer.htm ). This was a brownfield parcel which lies between industrial space, a gas station and a 'country club' built around a putputt course. A quick drive by reveals that there is little that is attractive about the location but the new condos are adjacent to the New Bern LRT station. Polaris does not show how much the parcel sold for before it was developed but lets generously estimate its preconstruction (2001) value as $1 million (it was a contaminated site). Polaris reveals that there are 99 (give or take a few) condos now on the site and they appear to be assessed for around $186,000 each (I did not look up the tax value of each of the condos). So the new tax value for the parcel is 99 x $186,000 = $18 million.

[CharlotteLightRail]

CharlotteLight Rail where are you getting your $12M budget shortfall number for FY2009? Last I heard the budget shortfall was closer to $2M for FY2009 due to the increase in gas prices.

[monsoon]

But let's look at just the interest on the 463+ million plus the other close to 80 million hidden in other parts of the city budget to build this rail and then the added estimated operating costs of 15+ million a year......

[CharlotteLightRail]

Your logic fails to take into account that $198M of this came from the federal government and another $100M came from the state of NC. The rest came from the county, not the city. So even if you re-direct your argument towards the county government, they invested $116M to get back ~$300M in outside funding they otherwise would not have gotten. Using your own argument, that is that government spending should be judged on the opportunity potential of the investment (your comments in interest), then this was a fantastic return on a county funded enterprise.

I have my issues with the way CATS mismanages money, but that is not a reason not to build transit.

[monsoon]

^You are arguing county debt load vs the construction cost of building the South LRT. The two are not related to each other. First the country did not borrow ANY money to build the LRT and the cost to build the LRT was $462.7 million. Second this number was controlled and audited by the federal government. CATS, the city, nor the county were not allowed to spend more than this without triggering substantial penalties by the Feds. That did not happen.

I recommend that if you are coming here because you want to make some argument about building transit then please be prepared to backup what you say. First you said that CATS had a $12 shortfall, and when asked about that you responded for the party to call 311. Then you made a big argument about city debt and when informed this project was not funded by the city, you switched to nebulous unrelated arguments on county debt. You are also now claiming the coat to build the LRT was $528M but have not provided any numbers for that either.

So I am not sure what your point is. You are stringing together an bunch of unrelated and incorrect facts. Are you against the South LRT? Are you against building the furtuer planned system? You said that everyone should have listened to the "real facts" but you have yet to provide us any.

[Spartan]

Also did you know our County could not sell some bonds a few months ago as the market thinks Mecklenburg has too much debt? So what they will do is repackage them with a higher interest rate payable. You know not getting the low interest rate credit card but being so desperate we get the market to give us a higher rate credit card. But you can still use it so what's the difference?

What is really funny is that we just got that new bond package approved with flying colors. But again so the interest rate we will pay is higher on those millions, so what's the difference?