Charlotte City Council
Transportation & Planning Committee
Meeting Summary for March 18, 2013
COMMITTEE AGENDA TOPICS
I.
Subject:
Capital Investment Plan Referrals
Action: Passed unanimously
II.
Subject:
Draft FY2014 Focus Area Plan
Action: Passed unanimously
III.
Subject:
MPO Update
Action: For information only
COMMITTEE INFORMATION
Present:
Time:
David Howard, John Autry, Michael Barnes
1:30 pm – 3:00 pm
ATTACHMENTS
Handouts
Agenda
DISCUSSION HIGHLIGHTS
Committee chair Howard called the meeting to order at 1:30 and asked everyone in the room to
introduce themselves.
I.
Capital Investment Plan Referrals
Howard: I would like to spend a little time talking about the financing options that we didn’t get
to at the last meeting.
Hall: The Cross-Charlotte Trail, NECI, East/Southeast Corridor, and the two bridges in the NE
Corridor still await committee action. Assuming the Committee recommends the remaining
projects, we will provide summaries for Mr. Howard and the Committee members to have at the
workshop on Wednesday. We had discussions at a couple of your earlier committee meetings
regarding alternative funding models and how they link to the projects that we discussed. We
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Meeting Summary for March 18, 2013
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gave you a narrative form of the models, so we thought to close this discussion, we’d have Mr.
Harrington and Mr. Richardson talk about the options in greater detail.
Mr. Harrington started the presentation with slide 2.
Howard: Why haven't we done a TIF up to now?
Hall: TIFs cost more money, are more time consuming and are harder to achieve. The interest
rates are higher and it costs more to borrow the money.
Howard: So, financing our own projects is better?
Hall: Yes. The second issue is time. It takes time to develop the district, put together the
development plan, interact with the property owners, and finally to get approval from the Local
Government Commission (LGC).
Howard: Do the property owners have to vote?
Harrington: There is no vote, but it does require quite an extensive development plan that
identifies the partners who are going to be involved in the development that gives the LGC the
confidence there is going be enough revenue coming in to repay the loan.
Hall: The third part is the level of difficulty. There is a rigorous set of conditions to get it
approved by the LGC.
Howard: Would the 5% cap we put on TIFs fall under this too?
Hall: There is currently a 3% City policy on your business investment grants and synthetic TIFs,
which has to do with value. This particular 5% is on geography. It’s a different rule required by
the local government.
Howard: For instance, we have station area plans around each one of the stops, which are
defined geographic areas. I’m trying to figure out why we don't even try TIFs around some of
our projects like Denver does.
Hall: Because their authority to do TIF districts is easier than the authority we have to do TIF
districts. They don't have to go through state approval to define their districts.
Howard: That makes me think we need to go back to Raleigh for some changes.
Hall: Many other cities across the country use charter authority to create financing tools and
they are able to have much more flexibility in what they are able to achieve.
Howard: If you think about the fact that we have station area plans all the way up the Blue Line
Extension now. There is value to be captured from development around those areas that could
possibly be used for the NECI improvements at each station. I think we have to be more
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Meeting Summary for March 18, 2013
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creative. We’ve been talking about this for a year and we could have had it done by now. We
should add this to the legislative agenda to ask for some flexibility.
Barnes: The challenge I gleaned from the material with respect to NECI, for example, is once
you get into University City, you encounter the university partner MSD, which we wouldn’t
want to double or triple tax. Then with regard to that portion of that alignment that’s outside of
the UCP MSD, I'm not sure the value is there to do what you talked about. You’d have to get
the private sector to build and commit to it in order for it to be taxed under a STIF scenario. I
don’t think we get much sympathy from the legislature right now to do a traditional TIF. I don't
sense there is any indication that they give us any authority to do anything creative, including
saving our own football team.
Howard: We can figure out ourselves how to use TIFs, STIFs and TIGs.
Barnes: What if a developer said, “Rather than building within a half-mile of the station, I’m
going to build a half-mile plus ten feet?” Would there be any incentive for them not to be a part
of it as opposed to being a part of it.
Howard: I like the idea of TIF areas and I don’t want to let that go.
Harrington: The only thing I’ll add is with the STIF, you identify what properties are going to
repay the debt, but the city is taking on the debt associated with that project. Under the TIG,
you’ve got the developer who is fronting the full cost and risk associated with building the
infrastructure, and then the city reimburses a portion of that cost based of the incremental taxes
generated from that development. The TIF is its own entity, and the STIF hits on our overall
city debt capacity.
Brad: You’ll see TIGs as infrastructure reimbursement agreements.
Barnes: It doesn’t strike me that staff were suggesting that these alternatives were necessarily
good options on the projects for this part of the CIP. Would that be fair to say?
Harrington: They are all potentially feasible options, but some have strengths and weaknesses in
terms of their application to the project that one makes one option the better fit than another
option.
Barnes: As you did the analysis, did you have the sense that a STIF, a SAD, a TIG, or a TIF
would fit well for any project and be cheaper than the typical historical CIP property tax
methodology?
Hall: We looked at all of these alternative funding models when we were making
recommendations 18-months ago, because they all have really strong ways of putting together
combinations. One of the reasons we landed on doing the straight forward property tax increase
is it was the cheapest financing method we had available. General obligation debt is the lowest
cost debt we could borrow. Secondly it was the fastest, meaning that we could get projects out
of the ground the quickest by going forward with that model. That is not to say these options are
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Meeting Summary for March 18, 2013
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not viable going forward with another set of projects or another CIP, but our thinking was about
the timing of the CIP and being able to do the financing at its lowest cost level. Any of these
options, including the SADs and the MSDs just take more time. We can trade that off going
forward if the Council wants to.
Howard: My concern is that where this may be the easiest from an administrative standpoint, it
is not easy politically. It’s hard to explain to the public the difference between the easiest thing
to do and the cheapest thing to do. All they see is the tax increase. We should have done a value
capture on the baseball stadium, but we didn’t. We just gave them money we had sitting
somewhere already because no one wanted to talk property tax while talking about baseball.
That wasn’t the cheapest way to do it, but it was easiest politically. The public wants us to try
different things.
Barnes: What I would say in response to what you just said is that right now police and fire
occupy two-thirds of our general fund. There is really no creative way to pay for policemen and
firemen other than through property tax. We’ve used the President’s stimulus money over a
course of three years to finance fifty positions or so, but it's not a practical source of funding for
policemen. From time to time, we use grants for fire items, but it's not a permanent funding
source and with regard to the Cross-Charlotte Trail, bridges, or any other hard items in the CIP
is really not practical to fund them in any other way than what we proposed because they are
essentially hard assets that are being put into the ground and they are there to stay. If you want
us to borrow money at a higher rate or to spend more money to save money, we can do that. But
the logistics of getting that done complicate the ultimate goal for the general public, which is to
have more stuff in their city that makes their city more livable and more enjoyable.
Howard: It's hard to hear suggestions that we find multiple funding sources for some projects
but not all of them. There is development on either side of the bridges that can help to pay for
them. We know that each station will yield development over time to take care of the NECI
projects. It’s not the easiest thing, but it’s hard to pick and choose.
Barnes: The Ballantyne bridge was something that the Bissell Company wanted to advance
quickly. They said we want it now and if the city can pay some money later that will be fine.
With the two NECI bridges we’re talking about, the difference is on the Belgate side of I-85,
you have what is now a distressed property owned by DDR Company, and on the other side you
have undeveloped land behind some CMS property that leads to BECO that was bought in a
distressed state. They have not come to us saying they want to advance the bridges. We get
potential economic development value from them, especially the north bridge opening up the
University Research Park, but none of the private sector land owners have come to us and said
they want to advance the project.
Mr. Harrington resumed the presentation with slide 5.
Howard: How does an MSD get approved?
Harrington: Council has the ability to make those decisions. It doesn’t require a vote or a
petition from property owners.
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Meeting Summary for March 18, 2013
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Howard: How do you backstop it?
Harrington: You'd have revenue identified at a particular tax rate for a particular project and
you’d calculate a tax rate that would pay for debt service on a particular project or projects.
Howard: Do you have the list of projects?
Richardson: Yes. It's attached to your agenda on page three of the Q&A from the February 11,
2013 meeting. It does require public input and public hearing and requires staff to develop a
plan for the use of funds, and then you have a choice to manage it yourself or outsource it.
Mr. Harrington resumed the presentation with slide 5.
Howard: Do you have the right to exempt anyone?
Harrington: My understanding is that we do not have the ability to exempt. The law doesn’t
allow that.
Howard: If churches or non-profits are exempt from paying property taxes, would they be
exempt from this?
Richardson: No.
Howard: What is the difference between an MSD and a SAD?
Richardson: The prescriptive geography around where you can draw an MSD based upon some
things in the legislation is generally carved around commercial uses. SADs are typically for
those who benefit directly from the service, such as sidewalks and roads.
Hall: There are two other key differences for SAD. Unlike the MSD where the Council can set a
district by vote and a public hearing, the SAD is a petition where you have to get signatures
from 50% of property owners covering 66% of the assessed value. But the allowable and
statutory concepts are broader and are more transit oriented. The SAD legislation expires in
July, so this is on your legislative agenda. To your point, Mr. Howard, about creative financing
and for your Transit Work Group, the SAD tool is much better suited for transit, so we need that
legislation.
Howard: Why haven’t we used it?
Hall: It is new legislation that was approved 4 or 5 years ago. The other reason is the threshold
of the petition process.
Harrington: The petition process associated with SAD might involve thousands of properties.
It's not insurmountable, but it’s one of the challenges associated with the tool.
Barnes: When we extended the Center City Partners boundaries down to the South End, we
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Meeting Summary for March 18, 2013
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initially included some single family homes at the southern end. We got a lot of push back so
we drew the boundaries back up because people didn’t want to be included. The impression I
got from feedback from staff was that none of the people along the alignment were interested in
being part of the SAD.
Mr. Richardson resumed the presentation with slide 7.
Howard: Which tool is less risky to the City?
Harrington: The TIG is less risky.
Mr. Richardson continued the presentation with slide 8.
Howard: Could we have used any of the tools if raising property taxes were not an option?
Hall: The instruments that match up best with the transit oriented things are the SAD and the
STIF, but those financing tools cannot fund the projects that are in the CIP. You could draw a
boundary around a corridor and by policy, take that increment, set it aside and put it toward
projects in the future. You couldn’t use that revenue to front the money to pay the debt right
away because the increment would not have occurred yet; but you could bank it for later.
Howard: You'd have to do it that way if you couldn’t raise the taxes to pay for it.
Hall: You would have to raise the property tax rate in order to borrow the debt and put it on the
bonds to build that investment. You can capture that value and set it aside for future projects
later by policy. Looking at the new SAD particularly as it relates to transit corridors makes the
most sense assuming we can get an extension of the legislation. Both instruments just take more
time.
Howard: If you can't get it done, you'll have the time anyway.
Hall: Could we vote on the remaining four projects?
Howard: That would be the Cross-Charlotte Trail, NECI, East/Southeast Corridor, and the two
bridges in the NE Corridor.
Barnes: I would like to make a motion that we recommend to the full Council for inclusion in
the CIP this year the Cross-Charlotte Trail, NECI, East/Southeast, and the NE corridor bridges.
Committee Member Autry seconded the motion.
The motion carried unanimously.
Transportation & Planning Committee
Meeting Summary for March 18, 2013
Page 7 of 8
II.
Draft FY2014 Focus Area Plan
Hall: There was a lot of good discussion at the last committee meeting, particularly as it relates
to how we’re looking at some of our measures going forward. I’ll turn it over to Debra
Campbell and Danny Pleasant for any comments.
Mr. Pleasant began walking through the Focus Area Plan (FAP) comparing 2013 to 2014 (see
attachment DRAFT – FY2014 Strategic focus Area Plan.
Autry: We heard Washington’s Mayor Gray speak to us last week about their city’s
sustainability plan. What struck me were his comments about mode share and what they were
looking for in implementing that within the city. He actually set out percentages of using other
modes of transportation with aspiration for the citizenry. Is that something we could look at here
in Charlotte?
Pleasant: I think we can. Our staff does your travel demand forecasting and we make some
assumptions about mode share. We glean some of that information from actual surveys and
behavior of the transportation system that we know about. I believe your Transit System Plan
assumes that mode share in the Center City will be about 25% at some point as the system
builds out. We have those kinds of goals already built in and we can certainly bring them into a
focus area environment. We’ll see if we can bring that in to the FAP and the Transportation
Action Plan (TAP) for the next cycle. The FAP is derived and linked very closely to the TAP
that you readopted at its 5-year increment last year.
Autry: Is this an area to set aside for the sustainability plan?
Hall: You can certainly talk about that. The Environment Committee talked about the
Community Sustainability Plan and how you have framework of the TAP, which has a lot more
quantitative and programmatic things in it and that links to your FAP. The Community
Sustainability Plan could be similar to the TAP in terms of laying out some of the programs and
initiatives that the community would like to go forward with. Transportation and modes of
transportation are part of the framework of what you’re talking about regarding sustainability
for the community.
Autry: Thank you.
Barnes: I move to approve the FAP by the Transportation & Planning Committee and that it be
submitted for approval by the full Council.
Committee Member Autry seconded the motion.
The motion passed unanimously.
Transportation & Planning Committee
Meeting Summary for March 18, 2013
Page 8 of 8
III.
MPO Update
Cook: This is on agenda for the MOU subcommittee for discussion. The subcommittee asked
that we provide some accounting of how much money the MPO puts out and how much the
City subsidizes the MPO for its activities. There is no action being requested Wednesday night.
Hall: We will have to figure out how to get the directed vote.
Howard: When is the next meeting?
Hall: March 28. We’ll be talking about the Blue Line Extension Area Plan, Parking and
Housing near Colleges and Universities, and the Park Woodlawn Area Plan.
The meeting adjourned at 2:38
Transportation & Planning Committee
Alternative Financing Tools
March 18, 2013
Overview
1. Summarize and define alternative revenue
options:
–
–
–
–
–
Tax Increment Financing (TIF)
Synthetic Tax Increment Financing (STIF)
Tax Increment Grants (TIG)
Municipal Service Districts (MSD)
Special Assessments Districts (SAD)
2. Outline feasibility for use of alternative revenue
options on following projects:
–
–
–
–
Cross Charlotte Trail
East/Southeast Corridor
Northeast Bridges
Northeast Corridor Improvement Program (NECI)
1
Summary & Definitions
• Tax Increment Financing (TIF)
– City borrows money to fund public improvements with the
purpose of attracting private investment in a designated
area; debt incurred is both secured and repaid from the
additional property tax revenue resulting from the area’s
new private development
• Synthetic Tax Increment Financing (STIF)
– Works similar to a TIF in that projected incremental
property taxes are identified as the source of debt
service, but are not what are pledged as security for debt
• Tax Increment Grant (TIG)
– Developer builds public infrastructure and City reimburses
developer for portion of cost based on generation of
incremental taxes; developer assumes risk
Local Examples
TIF – No local examples
STIF – Cultural Facilities
TIG – Metropolitan
2
Summary & Definitions
• Municipal Service District (MSD)
– Geographic area created to fund, through additional ad
valorem property tax levy, services, facilities or
functions in addition to or to a greater extent than
provided in other parts of a city
• Special Assessment Districts (SAD)
– Assessment on property to pay for all or a portion of the
cost of public improvements that benefit adjacent
properties
– Assessments are a lien on the property and may be paid
off over an extended period of time
Local Examples
MSD – University City Partners
SAD – Wright Ave. Street Assessment
SAD –
3
Feasibility of Financing Tools
TIF
For All
Projects
Cross
Charlotte
Trail
East/SE
Corridor
NE
Bridges
NECI
TIG
STIF
• Local Gov’t Commission
requires detailed
development plan
• 1-2 yrs. to get approval
• Higher interest rates
• Limited use across NC
• Requires developer
to front costs of
infrastructure
• Low risk to City;
Private developer
carries debt risk
• Requires expected
private development
to create property
tax increment to pay
debt service
• May not legally qualify
• No known developer
interest
• Only some costs
potentially supported
• Limited development
opportunities due to
residential proximity of trail
• No known developer
interest
• Need to identify TIF
boundary that can generate
sufficient revenue; 5%
geography limitation on
City
• No known developer
interest
• Need to identify STIF
dev. and boundary
that can generate
sufficient revenue
• Strong development
opportunities
• No known developer
interest
• Strong development
opportunities
• Overlaps existing Ikea tax
increment boundary, thus
limiting revenue for bridges
• Strong development
opportunities; 5% limit
• Overlaps existing
Ikea tax increment
boundary
• No known developer
interest
• Strong development
opportunities
Feasibility of Financing Tools
MSD
For All
Projects
Cross
Charlotte
Trail
East/SE
Corridor
NE Bridges
• Upfront private
investment not
required
New SAD
• Allows assessment
on all property
owners
• Requires initial City
funding source
• Limited statutory
uses
• Law currently sunsets July
1, 2013
• Requires approval of over
50% of all property
owners who represent at
least 66% of all value
• Broader uses allowed
• Lower commercial
component may limit
MSD qualification
• “Sidewalks” and
“Streets” are legal
uses; some legal
uncertainty for Trail
• Likely qualifies under
statute, but some legal
questions remain
• District boundaries
may be mostly
residential
•
• Strong revenue ability
• Boundaries overlap
existing MSD
• Boundaries overlap
existing MSD
• May not meet
statutory purpose
• May not meet statutory
purpose
• NECI’s high cost
would likely require
high assessments
• NECI’s high cost would
likely require high
assessments
• Generates revenue
immediately
• MSD tax rate increase
est. at 3 times
current rate of 2.79¢
• Strong revenue ability
NECI
Traditional SAD
“Unique benefits”
requirement may
limit boundaries
•
“Unique benefits”
requirement may limit
boundaries
4
Questions
5
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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500
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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