Transportation & Planning Committee
Monday, March 18, 2013
1:30 – 3:00 p.m.
Charlotte-Mecklenburg Government Center
Room 280
Committee Members:
Staff Resource:
David Howard, Chair
Michael Barnes, Vice Chair
John Autry
Warren Cooksey
Patsy Kinsey
Ruffin Hall, Assistant City Manager
AGENDA
I.
Capital Investment Plan Referrals – 45 minutes
Staff Resource: Ruffin Hall
Consider a recommendation on CIP Projects referred to the Committee in preparation for the
March 20 Council Budget Workshop.
Action: Committee Recommendation
Attachment: 1. Q&A from the February 11 Committee meeting.doc
II.
Draft FY2014 Focus Area Plan – 30 minutes
Staff Resources: Debra Campbell, Planning
Danny Pleasant, Transportation
The Committee will review and finalize the Focus Area Plan
Action: Committee Recommendation
Attachment: 2. Draft-FY2014 Strategic Focus Area Plan.doc
III.
MPO Update – 15 minutes
Staff Resource: Bob Cook, Planning
Staff will provide the Committee with the latest updates.
Action: For information only
Next Scheduled Meeting: Thursday, March 28, 2013 – 12:00 p.m.
Future Topics-Blue Line Extension Station Area Plans, Parking and Housing Issues Near Colleges and
Universities, Park Woodlawn Area Plan
Distribution:
Mayor & City Council
Transportation Cabinet
Robert Cook
Julie Burch, Interim City Manager
Debra Campbell
Leadership Team
Danny Pleasant
Questions and Answers
February 11, 2013
Transportation & Planning Committee Meeting
Question 5 (Howard and Cooksey): What are the options for using alternative financing
tools such as TIFs, TIGs, STIFs, MSDs, and SADs to fund the Cross-Charlotte Trail, the
East/Southeast Corridor, the two bridges in the Northeast Corridor, and NECI?
Below are descriptions and staff assessments of each of the alternative financing tools that
could be considered for funding the Cross-Charlotte Trail, the East/Southeast Corridor, the
two bridges in the Northeast Corridor, and NECI. Staff assessments are based on the
authorized use and purpose of these financing tools, as well as on the financial and
practical viability of each tool in conjunction with the specific project areas.
Tax Increment Financing (TIF) – Tax Increment Financing is a debt-financing tool
authorized by a constitutional amendment approved by North Carolina voters in 2004. In a
true TIF, a district is legally established, funds are borrowed and used for public
improvements in the district, and incremental taxes (i.e., property taxes collected from the
district above the amount collected in the area prior to establishment of the district) are
pledged as security for the debt. In a TIF, a municipality pledges incremental taxes from
an area with multiple property owners, all of whom are impacted somehow by the project
financed by the TIF. The City could then issues bonds, typically 20 to 30 years in length of
term, backed by the incremental taxes created by the multiple properties. The bonds
could be issued before the project occurs and be used to pay for the project up front.
TIF Assessment: Transportation infrastructure development is an eligible public use of
funds generated by the TIF powers articulated in Chapter 159 of the State General
Statutes. NECI, the Northeast Corridor Bridges, the East/Southeast Corridor streetscape
and road improvements would likely qualify for TIF financing. The Cross Charlotte Trail
may also qualify for a TIF Assessment but staff will need to conduct further research to
confirm whether this type of facility is eligible under the current statute.
Some considerations for using TIFs for these projects include:
•
Charlotte has never done a true TIF since interest rates are typically higher than
more traditional financing devices (e.g., COPs, GO Bonds, special obligation bonds)
due to the speculative nature of incremental taxes.
•
Because a TIF is subject to oversight from the Local Government Commission
(LGC), the State of North Carolina has developed specific rules and limits on a TIF.
The most notable is that no more than 5% of a municipality’s land mass can be
subject to a TIF. If the 5% land area threshold is neared, the City would be unable
to use TIF for other projects until the existing TIF expires. Additionally, the City
would be required by the LGC to create a development plan for the TIF district that
outlines the planned development and expected incremental valuation growth to
repay the debt on the infrastructure investments.
•
The City would be required to guarantee the bonds from other sources if the project
does not generate enough incremental tax revenue to cover bond payments over
the life of the bond. Unlike the TIG structure, the City carries the risk for the debt
with a TIF.
•
Implementing a true TIF is a timely process that could take 12 to 24 months to
complete. The statutorily defined process includes creating a project development
financing plan, establishing the base valuation of the proposed district, providing
written public notice to all property owners in the defined district, holding a public
hearing, and obtaining approval from the LGC and Secretary of Commerce.
Tax Increment Grant (TIG) – is a local funding option Charlotte has used to capture
incremental taxes as part of an economic development agreement with a developer or
business. Typically the grant is paid over a series of years to either reimburse the
developer for constructing public improvements (such as streets) as part of their project,
or for creating jobs and increasing the tax base. In this model, the developer or business
takes the risk of not being fully reimbursed or compensated if it is not successful in
generating sufficient incremental taxes. Examples include reimbursing the developer for
the cost of raising and improving Eighth Street as part of the Levine First Ward project, the
Ballantyne Road improvements infrastructure reimbursement agreement, and grants made
to businesses through the Business Investment Program.
TIG Assessment: The City has used TIGs, but only in the context of a reimbursement
agreement with a developer or business making a significant private capital investment.
The proceeds from the incremental taxes are paid over a series of years to reimburse a
developer for their initial investment.
Some considerations for using TIGs for these projects include:
•
A TIG would be a viable financing tool for the transportation CIP projects if a known
private developer was willing to front the capital costs and provide additional
development whose incremental property tax revenue could be used to reimburse
the developer for a portion of the upfront capital costs.
•
Staff is currently unaware of any developer interest to fund construction of the
Cross Charlotte Trail, the East/Southeast Corridor, the two Northeast Corridor
Bridges, or NECI.
Synthetic Tax Increment Financing (STIF) – Synthetic Tax Increment Financing is a local
policy device that mimics a TIF but takes advantage of the lower interest rates of more
traditional financing devices. A STIF works similar to a TIF in that the projected
incremental taxes are identified as the source of debt service, but are not pledged as
security for the debt. An example of a STIF is the cultural arts facilities project where the
City financed the acquisition of the four facilities (i.e., Bechtler, Mint, Gantt, and Knight)
with COPs, but developed a financing model that uses incremental taxes from the Duke
Energy Center tower (guaranteed by Wachovia/ Wells-Fargo) along with funds made
available from the vehicle rental tax to service the debt.
STIF Assessment: The City has also used STIFs, but as with the TIG, they have so far only
been used in the context of a public private partnership with a developer or business
making a significant private capital investment to provide sufficient incremental new
property taxes to finance the infrastructure cost. However, because STIFs are a City policy
device rather than a statutorily regulated financing tool, the City does have more flexibility
to initiate a STIF mechanism to fund City infrastructure projects without private investment
participation. To be successful, a City-defined STIF district would need to generate
significant-enough growth in incremental tax revenues to support the cost of the City’s
capital investments.
Some considerations for using STIFs for these projects include:
•
Portions of the Cross-Charlotte Trail, particularly around the potential development
nodes, may see sufficient future growth in incremental taxes to support some of the
costs of this project. Other predominantly residential portions of the Trail may not
be appropriate for a STIF mechanism, and likely would not generate sufficient
incremental tax revenue growth.
•
There are also potentially significant development opportunities for the properties
around the NECI project corridor and the two Northeast Corridor bridges that could
ultimately generate sufficient incremental tax revenues to support the cost of
constructing these projects.
•
Incremental taxes from some of the properties around the South Bridge are already
dedicated to the City’s IKEA Boulevard infrastructure reimbursement agreement and
would not be available for use as tax increment boundaries for any additional
project. See Attachment 2 showing the IKEA Blvd tax increment boundaries.
•
The proceeds from incremental taxes generated by subsequent economic
development occurring around the City’s capital investment would not be realized
for some time, until after the projects are complete. As a result, initial revenue
from the STIF areas would not be sufficient to support the cost of constructing the
capital projects nor the initial debt service payments. The City would need to
identify another funding source for the initial investment.
•
One potential hybrid use of a STIF approach could be for the designation of STIF
districts around the areas of the proposed capital investments with the incremental
property tax revenue “banked” to fund other, future capital investments.
•
Due to the speculative nature of potential incremental tax growth resulting from the
City’s capital investments, debt service on the funds borrowed to pay for these
projects would be more costly than traditional financing tools.
Municipal Service District (MSD) – As established in NC §160A-536, MSDs may be
established by City Council for the purposes of providing one or more of the statutorily
authorized services, facilities, or functions in addition to or to a greater extent than
provided in the rest of the city:
Statutory purposes of an MSD
(may provide one or more services/facilities/functions)
beach erosion control and flood and
hurricane protection works
sewage collection and disposal systems
downtown revitalization projects
drainage projects
urban area revitalization projects
off-street parking facilities
transit-oriented development projects watershed improvement projects
Successfully designed MSDs have easily identifiable geographies to generate revenues to
finance, provide, enhance, and maintain the economic vitality and quality of life in the
central business district or other commercial areas. MSD revenues are generated through
an ad valorem property tax paid by the property owners (residential and commercial) in
the designated districts and must be spent on programs and services that enhance the
quality of the districts.
MSD Assessment: Municipal Service Districts can be a viable option for generating revenue to
support the cost of City investments in economic and transit-oriented development projects.
The City currently has five active MSDs that are successfully supporting and promoting
economic development and urban revitalization in Center City, South End, and University City.
State statutes define very specific purposes for establishing an MSD, and the proposed CIP
projects have varying degrees of eligibility and appropriateness for their use.
Some considerations for using MSDs for these projects include:
•
The City has local authority to create and define the boundaries of an MSD and to
set the appropriate ad valorem tax rate through City Council approval.
•
The statutorily defined process for establishing and implementing an MSD, including
notifying affected property owners, obtaining community input, and holding a public
hearing, would likely require 12 – 18 months to complete. Once a district is
established though, the City could begin collecting MSD tax revenues immediately.
•
Unlike with tax increment financing tools, MSD revenues can be used to support the
cost of the City’s capital investments without the need for upfront private
investments.
•
Based on the defined statutory purposes of an MSD, it is unclear whether the entire
Cross-Charlotte Trail would qualify as an urban area revitalization or transitoriented development. Staff would need to conduct a legal assessment to verify the
eligibility of funding of the Trail through an MSD.
•
The East/Southeast Corridor road improvements likely qualify as urban area
revitalization and transit-oriented development projects under the MSD statutes,
but may not be the best candidates for MSDs due to their proximity to
predominantly residential communities, which would bear the brunt of the additional
tax assessment.
•
The two Northeast Corridor Bridges and the NECI project corridor would be ideal
candidates for an MSD. However, both bridges and a portion of NECI are already
within the existing University City MSD. Properties within this MSD already have a
dedicated property tax of 2.79 cents which generates approximately $640,000
annually and is used to fund the operations of University City Partners, Inc. See
Attachment 3 showing the current boundaries of the University City MSD.
•
Increasing the current University City MSD tax rate to support the cost of the NECI
and bridge projects would require a higher tax rate on the property owners within
the district. For example, in order to pay for the $14.5 million South Bridge from
IBM Drive to Ikea Blvd, the tax rate for the University City MSD would need to
increase from 2.79 cents to 9.13 cents. This additional 6.34 cent tax rate would
cost property owners $63.40 in additional annual taxes for every $100,000 in
property value. A property valued at $200,000 would pay $126.80 in additional
property tax each year to support the South Bridge project.
•
A new or expanded MSD boundary could also be established along the remaining
NECI project corridor that lies outside the existing University City MSD.
Special Assessment Districts (SADs) – Similar to MSDs, Special Assessment Districts pay
for public improvements that benefit the property affected by the improvement. The City
levies a special assessment related to the benefit received by the property owner. There
are two types of Special Assessments – Traditional and New. The information below
provides further detail on Traditional Special Assessments, New Special Assessments, and
the difference between New Special Assessments and MSDs
Traditional Special Assessments - As established in NC § 160A-216, these Special
Assessments may be approved by City Council for the purposes of providing one or
more of the statutorily authorized services or functions in addition to or to a greater
extent than provided in the rest of the city. The City must pay for the full costs of the
public improvement upfront, and then may recoup costs through the assessment once
the project is complete.
Statutory purposes of Traditional Special Assessments
(may provide one or more services/functions)
beach erosion control and flood and
hurricane protection works
water systems
curbs and gutters; streets
sewage collection and disposal systems
Sidewalks
storm sewer and drainage systems
New Special Assessments - During the 2008 and 2009 legislative sessions, the
General Assembly granted a new level of assessment authority – entitled “special
assessments for critical infrastructure needs.” This new assessment authority is effective
August 3, 2008 until July 1, 2013.
Statutory purposes of New Special Assessments, effective until July 1, 2013
(applies to capital costs)
Auditoriums, coliseums, arenas, stadiums,
art galleries, museums
Public transportation facilities, including
equipment, buses, railways, ferries, and
garages
Housing projects for low to moderate income
Sanitary sewer systems
On- and off-street parking and parking
facilities
Streets and sidewalks
Other differences between the new special assessment method and traditional special
assessment method include:
• Requires a petition signed by at least a majority of property owners to be assessed
who represent at least 66% of the assessed value
• Authorizes borrowing money to front the costs of projects for which assessments
may be imposed according to one or more of the following methods: revenue
bonds, project development financing debt instruments, general obligation bonds
• Allows special assessment before the projects being financed are complete
• Does not expressly limit the bases upon which the assessment may be made
Instead, leaving the bases of the assessments within the discretion of the governing
board, subject to the requirement that the assessments bear some relationship to
the amount of benefit that accrues to the assessed property.
• Authorizes governing board to allow assessments to be paid in up to 30 annual
installments, with interest
Key Differences between New Special Assessments and MSDs
• Special Assessment projects are typically more focused and specialized in nature;
for example, a Special Assessment may fund a sidewalk, while an MSD may fund an
urban area revitalization
• For a Special Assessment, both private and non-profit entities pay the established
assessment rate (with the exception of property owned by the federal government);
conversely, for an MSD, non-profit entities such as Presbyterian Healthcare,
Johnson & Wales University, and Johnson C. Smith University, would be exempt
from paying property taxes
• The process for a Special Assessment begins with a petition signed by at least a
majority of property owners to be assessed who represent at least 66% of the
assessed value; whereas, the MSD process is initiated by a proposal or report from
City Council.
SAD Assessment: Special Assessment Districts could also be a viable option for generating
revenue to support the cost of some transportation capital investments. An advantage of
using a SAD is that, unlike MSDs, tax assessments within the district would be applied to
all property owners. SADs do not exempt non-profit entities from the tax assessment as
MSDs do. With the possible exception of the Cross-Charlotte Trail and the two Northeast
Corridor Bridges, Staff believes Special Assessment Districts could be used to support the
funding of the proposed transportation-related projects.
Some considerations for using a New SAD for these projects include:
•
The NECI project, which is essentially transportation improvements around the BLE
transit station areas including streets, curb and gutter and other road improvements
would likely qualify for both a Traditional and a New SAD, but boundaries for a potential
SAD district along the NECI corridor would overlap the existing University City MSD,
potentially adding to the existing tax burden on property owners in those areas.
•
Within the East/Southeast Corridor, the Monroe Road Streetscape, Idlewild
Road/Monroe Road Intersection, and the Sidewalk and Bikeway Improvement
projects would likely qualify for both a Traditional and a New SAD. However, the
New SAD regulations limit the district boundaries to property owners which show a
unique benefit from the public improvement. With these East/Southeast Corridor
projects spread throughout the Corridor, creating a defensible SAD boundary
around all of the projects that generates the necessary revenue to pay for them
while adhering to the unique benefits requirement would be difficult.
•
It is unclear whether the Cross-Charlotte Trail or the two Northeast Corridor Bridges
would meet the statutorily defined purposes of Traditional or New Special
Assessment Districts. Both types of assessment districts allow the use for street
and sidewalk projects, and much of the Cross-Charlotte Trail will be comprised of
urban trail components such as paved walking trails, which may fall within the
allowed uses. However, neither assessment district mentions bridges as an
approved purpose for establishing a SAD, but the “public transportation facilities”
allowed under a New SAD could be interpreted to include bridges. Staff would need
to conduct a legal assessment to verify the eligibility of funding of the CrossCharlotte Trail and the two bridges through a SAD.
•
A significant impediment to the use of a New SAD for any of the CIP projects is that
the statutory authorization for creating a New SAD expires July 1, 2013. Extension
of the New SAD authorization would require State legislative approval. City
Council’s approved 2013 State Legislative Agenda includes a proposal to extend the
sunset date of the Special Assessments for Critical Infrastructure Needs Act from
July 1, 2013 to July 1, 2018.
•
Another consideration for use of New Special Assessment Districts is that any
assessment must be approved by a majority of the property owners who also
represent at least 66% of the proposed district’s assessed value.
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Attachment 2
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Attachment 3
Map of MSD for University City
DRAFT - FY2014 Strategic Focus Area Plan
“Charlotte will be the premier city in the country for
integrating land use and transportation choices.”
Safe, convenient, efficient, and sustainable transportation choices are critical to a viable community.
The City of Charlotte takes a proactive approach to land use and transportation planning. This can be
seen in the Centers, Corridors and Wedges Growth Framework, the Transportation Action Plan and the
2030 Transit Corridor System Plan that provide the context for the Transportation Focus Area Plan.
The City’s strategy focuses on integrating land use and transportation choices for motorists, transit
users, bicyclists and pedestrians.
A combination of sound land use planning and continued
transportation investment will be necessary to accommodate Charlotte’s growth, enhance quality of
life and support the City’s efforts to attract and retain businesses and jobs.
Focus Area
Initiative
Measure
Reduce annual hours of
congestion per traveler, as
measured by Texas
Transportation Institute, for
the Charlotte Urban Area
compared to top 25 cities
Reduce Vehicle Miles
Travelled (VMT) per capita
Enhance multimodal mobility,
environmental
quality and
long-term
sustainability
Decrease commute times
Accelerate implementation of
2030 Transit Corridor
System Plan as conditions
allow:
1. LYNX BLE
FY 2012
Actual
FY 2013
Mid-Year
Status
.8%
increase
Charlotte:
0.7%
Top 25:
.7%
Top 25:
- 3.4%
NA
NA
40.8%
NA
FY2014
Target
Any increase will be less
than 5-year average of
top 25 cities
Reduce VMT per
capita from prior
year
Increase the
percent of Charlotte
commuters with a
commute time of
less than 20
minutes.
DEIS
Complete
FFGA
Approved
1. Begin construction
by 6/30/14
2. Streetcar Starter
Project
PE
Complete
Construction
underway
2. Complete
construction by June
30, 2015
3. Transit Ridership
3% Goal
6.4% Actual
0% Goal
0.3% YTD
Oct 2012
3. Increase by 2%
4. Red Line
Advanced
Work Plan
NA
4. Participate in
NCDOT/NS Corp “O”
Line Capacity Study
Transportation | 1
Focus Area
Initiative
Measure
Improve Charlotte’s
walkability and bicyclefriendliness
Promote
transportation
choices, land
use objectives,
and
transportation
investments
that improve
safety, promote
sustainability
and livability
Communicate
land use and
transportation
objectives as
outlined in the
Transportation
Action Plan
(TAP)
Seek financial
resources,
external grants,
and funding
partnerships
necessary to
implement
transportation
programs and
services
Decrease vehicle accidents
per mile traveled by
monitoring crashes annually
and identifying, analyzing
and investigating hazardous
locations and concentrating
on patterns of correctable
crashes
Improve City Pavement
Condition Survey Rating
Increase % of transportation
bond road projects
completed or forecast to be
completed on schedule
Complete and present TAP
Annual Report to the City
Council
The City will work with
MUMPO to initiate the 2040
Long Range Transportation
Plan to help advance
economic development and
regional land use goals.
Collaborate with regional
partners on CONNECT, to
plan for future growth and
development.
Work with legislative
partners and stakeholders to
consider new revenue
sources to fund
transportation
improvements.
Develop CIP funding
strategy for transportation
improvements
FY 2012
Actual
NA
(New)
FY 2013
Mid-Year
Status
NA
(New)
NA
(New)
NA
(New)
NA
(New)
NA
(New)
NA
(New)
18.8
sidewalk
11.1
bikeways
NA
(New)
13.4
sidewalk
2.5
bikeways
-23.5%
NA
(Reported
at end of
year)
88
85.4
Achieve Survey Rating of 90
79%
73%
90% or better
Met
Met
Complete by January 2014
FY2014
Target
Increase Charlotte’s walk score
relative to peer cities.
Increase Charlotte’s walk score
in mixed-use activity centers
and transit station areas.
Complete a scan of City policies
and practices impacting
walkability and recommend
needed improvements by June
2014.
Implement 15 or more
pedestrian safety and/or
crossing projects by June 2014.
Implement 10 miles of new
sidewalk and 10 miles of new
bikeways annually.
Decrease vehicle accidents per
mile traveled below prior year
Complete project ranking by
August 2013
N/A
N/A
MPO approval of 2040 LRTP by
March 2014
Collaborate with CONNECT
Partners to engage the public in
developing a consensus growth
scenario by June 2014.
N/A
(New)
N/A
(New)
Continue to evaluate the
legislative environment
regarding new revenue sources
and lend support to acceptable
solutions.
N/A
(New)
N/A
(New)
Develop project list for CIP
bond funding.
Transportation | 2