There. That answers all questions about financing for CATS’ Destination 2030 plan. The $9 billion transit plan can absolutely be funded by the half-cent transit tax — and the half-cent tax alone. The bankers say so.
The same bankers in the process of shedding thousands of workers precisely because their previous financial assumptions did not hold up.
The same bankers who evidently look at the North line commuter rail financing plan approved in July that includes $70 million in debt secured by future property taxes and do not see $70 million in debt secured by future property taxes.
This is Enron or Beazer Homes style money management. Take a little bit of money upfront — ideally a government-secured dedicated revenue stream — and hang a ton of debt off of it. Does not matter in the slightest what the out-years say, you sell the bonds and present the government bodies — ie the taxpayers — with the bill. Either they pay it or they default on the debt and crater their debt rating for all time.
Folks up in North Meck are getting nervous about this and listening very carefully to pro-repeal candidates on this front. As The Rhino Times reported last week, there is a $555 million gap between what CATS and its consultants and bankers say development around the train line will spin off and what the town planners and officials say that development value will be.
That’s a difference of about $7 million a year in property tax revenue. Recall that the city of Charlotte raised property taxes a couple years ago for less than $5 million worth of new police officers. Supposedly.
What do you think will happen when debt service for the train is eating a hole in the budget?
This scam that has worked repeatedly all across America. The only way out of it is not to issue the debt. The only way not to issue the debt is not to build the projects. We’ve got a chance to avoid more train projects by repealing the half-cent enabling tax.
Which explains why the bankers are going nuts trying to save it.
Bonus Observation: Steve Harrison inexplicably pegs the cost of the North line at $250 million. That is wrong. Phase I alone will cost that, actually $261 million if the line is built all the way out past Davidson — and Davidson and everyone else wants that outcome. Phase II of the project would add another $112 million to the cost and start about 2019.
Per a direct question to CATS on this point, ONLY Phase I and Phase II — combined cost of $370 million — get the North line to the 4600 ridership number. There exist no ridership projections for Phase I alone. I know, I asked.
So the Observer story is incorrect to claim:
This is a $250 million commuter rail line to the Lake Norman area that will run with diesel-powered trains on existing Norfolk-Southern tracks. The federal government declined to pay for construction costs — it didn’t have enough riders — so CATS is bridging that gap by using property tax revenue generated from high-density development along the line. CATS believes the state will pay for 25 percent of the construction costs. It hopes to open the train in 2012. It’s estimated to have 4,600 daily riders in 2030. That is much fewer than the South Boulevard light-rail line, though almost all of the riders will be during rush hour.
The cost to get to 4600 riders is at least $370 million. You see, that number does not include $97 million in required infrastructure costs around the train stations. This brings the total public cost of the North line to $470 million-ish and that is the number I have used repeatedly these past few months and have yet to have anyone challenge that accounting.
