Red Line Chronicle Chapter 2 - "Why the rush?"

As far as transportation projects go, the Red Line is moving like a Japanese bullet train.  In a few short months it has gone from being DOA in the emergency room, to the project sucking up all the oxygen in town halls, boardrooms, and public hearings across the land.

How did this happen and why the rush all of a sudden?  The answer…as always…is money.

You see, the clock is ticking.  Cinderella’s carriage (or in this case, the Red Line) turns back into a pumpkin at midnight – midnight of June, 30th 2013 to be exact.  If you, the citizen, don’t buy now, you won’t have the opportunity after mid-2013 to take advantage of this wonderful offer.   For only $452 million, you can take home a new train, and we’ll even throw in a maintenance plan under a new government entity called a Joint Powers Authority to manage it for you.

All kidding aside, this project does have the feel of a high-pressure sales pitch, and not enough has been said to explain why.  The party-line answer is that on July, 1^st 2013 the state legislation which authorizes a spending mechanism eyed as a major source of funding for the project is set to expire.   After that, it will be impossible to go forward.   Unless of course, it’s not impossible.

The spending mechanism in question is the proposed Special Assessment District (SAD) implemented under Article 10a of Chapter 160a of the NC General Statutes.  It provides an additional way for local governments to raise money for “critical infrastructure projects”.   The legislation has never been used in NC, but the Red Line plans to be the first.

One question that should be asked is…”Why has this never been used if it’s so great?”

There have certainly been other opportunities haven’t there?  Yet, it sat unused for years.  Now we are supposed to rush, rush, rush to get things done before it expires.

One prime example of where the SAD legislation could have been used, but wasn’t, is right in our backyard – the Kannapolis Research Park.

At the time this legislation was passed, the City of Kannapolis was struggling to sell some Tax Increment Financing bonds to support the Kannapolis Research Park being built by billionaire David Murdock’s Castle and Cooke development firm.  The market had slowed dramatically due to the financial crisis, and the changes in the Special Assessment law could have provided an alternative.  This was a perfect opportunity to use the special assessment legislation, and it STILL wasn’t used.  Not by a billionaire.  Now, the RLRR supporters want to use this same legislation to push local small businesses to take the plunge.

Interestingly, the RLRR website documentation mentions the Kannapolis project on page 60 of the Value Capture memo.  It actually uses this project as an example of approved TIFs in North Carolina – even though the TIF bonds were never sold from that original proposal.  The Kannapolis Research Park originally wanted to raise $168 million in TIF financing.  What the RLRR documentation doesn’t mention is that this plan fell through because those TIF bonds were unsalable in the marketplace.  It wasn’t until January of 2011 that a much smaller offering of TIF supported bonds was issued on a scaled back set of uses at the site.  (Incidentally, Tax Increment Financing (TIF) is the other half of the Red Line’s financing plan, but delving into that will have to wait until another day.)

So, what does all this mean?  In part, it means that the June 2013 deadline is fiction, but it is being used as leverage to force this project forward.

The SAD legislation in question was enacted once and relatively quickly as far as legislation goes.  Certainly, that legislation could be extended.  There’s nothing stopping that from happening, and there are a lot of reasons to see why it could and would.  First of all, Mecklenburg County has several senior officials in the Legislature.   If this needs to get done, it probably could.   Second, NCDOT has stated repeatedly at public meetings that the Red Line project is critical to North Carolina’s strategic freight transportation plans.  If this needs a few more months, one would think a critical and strategic need would certainly justify that.  And third, officials are already beginning to hint in the direction of an extension.  Mayor Tarte of Cornelius alluded to the possibility of requesting an extension from the legislature as he kicked off the "rebuttal" of the Randall O'Toole presentation last week.

Oh, and add to all that the fact that Norfolk Southern recently said the current timeline is not realistic.  They own the line.  They build these things.  They know.

Plan on extending the timeline.  It's the right thing to do rather than rushing headlong into a half billion dollar project that will be with us for decades to come.

So again, why the rush?