Trains in a second, but first taxes. And risk.
I was talking to banking expert Chris Whalen last week for a piece I did on the mortgage rate-freeze insanity. Whalen is a risk analyst and his firm first honed in on problems in bank mortgage portfolios back in 2005. Simply put, the banks were ignoring the risk they were taking on, acting as if their borrowers — prime and subprime — were genetically incapable of turning out to be bad credit risks. Whalen noticed this, pointed it out, and was basically told he did not understand modern finance.
Turns out all the fancy number swinging could not change the underlying reality of lending. Score one for Whalen.
Now Whalen relates that he is telling every local authority or entity he can find to prepare for a pull-back in property tax revenue as a result of a general decline in the real estate market. Figure 5 to 10 percent about everywhere, perhaps more in spots with localized bubbles that burst.
This brings us to Huntersville and the North line. The plans for building the $470 million North commuter rail line — that’s $261 million first phase, $112 second phase, plus $97 million for station infrastructure — count on a strong and robust real estate market throwing off ever-increasing amounts of property tax revenue. Otherwise there is no way to generate the $70 million or so in financing secured by future property tax revenue needed for the project.
If Huntersville officials were concerned before about making those numbers — and they were — they should be downright scared about the train plans given the current real estate environment. Which brings us to CATS wheelin’ and dealin’.
Steve Harrison reports that CATS is trying to woo Huntersville with a stripped-down North line — fewer stations and less service. This once again indicates that our current train-building transit plan has nothing to do with actually moving people and everything to do with changing land-use patterns while building out CATS’ empire.
The “full” North line was only going to move a paltry 4600 riders a day by 2030, just two percent of the traffic expected on I-77 by then. A North line lite — with four fewer stations and less frequent service — would barely register at all in terms of congestion reduction in the corridor. But it would still cost more than $250 million to build — an insanely out-of-whack expenditure.
Predictably, CATS does not seem to be talking about the ridership of the North Lite plan. Of course that is because CATS’ first priority is to get something underway in the corridor lest the Gateway Station project be left trainless and to otherwise keep the momentum going on train-building.
Huntersville officials should not be fooled, however. This latest offer would still be a tremendous waste of their limited tax base and hook them for decades to paying for rail transit. Meanwhile, the feds continue to show every interest in combo bus-rapid transit HOT projects that would much better serve the I-77 corridor — and possibly come with federal funds attached.
The folks in Huntersville need to ask themselves why CATS is so intent on pushing a Nerfed train proposal when other, better solutions lurk on the horizon.
