Orange County leaders learned Thursday they face some tough questions about a $250 million funding gap for the now-$1.87 billion Durham-Orange light-rail project and a December deadline to move ahead.
The funding gap is expected between 2020 and 2028 because of changes to state and federal funding, GoTriangle representatives told county, Chapel Hill, Carrboro and Hillsborough officials at the Assembly of Governments meeting.
The regional transit agency is asking Orange and Durham counties to pay another $175 million after construction begins on the roughly 17-mile rail line from UNC to Alston Avenue in Durham. The work could start in 2020, project manager Danny Rogers said.
Orange County’s share could be up to $4 million a year for 10 years, GoTriangle spokesman Mike Charbonneau noted Friday. Durham is being asked to pay up to $13.5 million a year for 10 years, he said.
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The counties will be asked for a written commitment to work with GoTriangle and other community partners to find the necessary funds, Charbonneau said. They will meet with Durham commissioners on Nov. 29 and Orange commissioners on Dec. 5, and the regional Metropolitan Planning Organization on Dec. 14.
The Federal Transit Administration, under a previous plan, was expected to provide $125 million a year, but that fell to $100 million in the last few weeks, Rogers said. It would be a reduction of $200 million over the eight-year construction period, he said.
The federal government could reimburse 50 percent of the light-rail development money – once the project is approved for full funding.
“Under the $100 million a year, the construction period actually doesn’t take as long as it does for FTA to pay out their share, therefore, we will have to front the money and incur not only the money up front but the borrowing costs to do that, so that was a significant effect on what we’re trying to do,” he said.
It is uncertain at this point what effect President-elect Donald Trump’s administration will have on federal transit funding. Trump pledged during his campaign to spend $1 trillion on the nation’s infrastructure, but did not specifically mention buses or trains.
The $175 million also will help cover a reduction in state funding, Charbonneau said Friday.
The state initially was expected to pick up 25 percent of the light-rail cost – or $467.5 million in current dollars. However, the legislature agreed this year to pay only 10 percent, or $187 million.
That leaves a $280.5 million state funding shortfall and increases the share for Orange and Durham counties from 25 percent to 40 percent. Orange County’s share of that local cost is roughly 23 percent, based on its share of the rail line.
Orange County’s share of bus and rail infrastructure and vehicle costs also rose, to 54 percent, and it is now slated to pay 30 percent of bus-rapid transit costs for a line along the Martin Luther King Jr./South Columbia Street corridor in Chapel Hill.
Filling the gap
Commissioners Chairman Earl McKee said another $40 million for light rail could raise Orange County’s property tax rate by at least 3 cents, a burden on homeowners who already struggle to pay their taxes.
While citizens approved the quarter-cent sales tax for transit, McKee said, they did not approve covering “a gap that is not of their making.”
“This gap from the state, I do not believe will be corrected, given the composition of the legislature, regardless of the governor’s race. We still have the same legislature we had in 2014,” he said. “If they do anything, I see more likely they are going to cut it back to zero, and then are we going to be asked to pick up the entire $400 million?”
GoTriangle officials hesitated but agreed with McKee’s suggestion of an independent financial analysis. They warned that could take several months.
The agency has been working for the past three months with a Funding and Community Collaborative to seek alternative financing and donated land for the light-rail line. The group, which includes university, government and private individuals, could have committed partners by mid-2018, Charbonneau said.
The goal is to fill at least $54 million of the funding gap through that work, while seeking another $25 million in public land donations and other federal funding.
GoTriangle must submit a plan to the federal engineering phase by Dec. 31 with commitments for at least 30 percent of the local and state cost, Rogers said. Project officials also are studying an extension to N.C. Central University and have included those costs in the latest figures, he said.
If the engineering phase is not approved by March, the project will fall out of the Federal Transit Administration’s New Starts transit funding program.
“Obviously, it doesn’t look good if you fall out of the program (for your) ability to do the project,” Rogers said. “More than that, if you’re not in the program, money you’re spending to advance the project or to get it back into the program is no longer eligible for federal reimbursement.”
That could include money for a $60 million to $70 million engineering contract set for April, he said.
Opportunities and holes
Chapel Hill Mayor Pam Hemminger, a member of the collaborative, said she wants the plan to work, but there are a lot of unknowns, including the possibility of future legislative changes and the economic benefit that development around the light-rail stations will bring.
The Gateway station, just inside Durham County, has the most development opportunity and is within walking distance of the former Blue Cross and Blue Shield campus – now the State Employees Credit Union – and the proposed Wegmans Food Market in Chapel Hill. UNC owns three other stations that aren’t expected to see more development in Orange County, and a fourth station, at Glen Lennox, is already developed.
“There’s a lot of opportunities and there’s a lot of holes, so I guess this funding gap is the hardest part, because if we are committing to funding those numbers we’re going to figure out how to do it realistically,” Hemminger said.
Carrboro Mayor Lydia Lavelle, Commissioner Bernadette Pelissier, also a collaborative member, and others advocated for taking the next step. It’s reasonable to give the process a few more months considering the strong support for the transit tax, Lavelle said.
Commissioner Barry Jacobs suggested the county negotiate a better cost-sharing formula with Durham County.
“However worthy, and it is worthy, to extend the line further in Durham, that doesn’t necessarily mean that the taxpayers of Orange County should pay 23 percent of it,” Jacobs said.