**South Corridor LRT**

**Charlotte, North Carolina**

(November 2003)

# Description 

The Charlotte Area Transit System (CATS), in cooperation with the city
of Charlotte, is proposing to design and construct a light rail transit
(LRT) line extending from Uptown Charlotte (the city's central business
district) to Interstate 485 in south Mecklenburg County near the South
Carolina state line. A 3.7-mile portion of the proposed system --
between Uptown and Scaleybark Road -- would operate on an abandoned
Norfolk Southern right-of-way owned by the city of Charlotte. The
remainder of the planned system (5.9 miles) would operate on separate
tracks generally paralleling the right-of-way. Seven proposed stations
from I-485 north to Scaleybark Road would include park-and-ride lots
with over 3,600 spaces in total, and would serve as transfer points for
local and express bus service.

[]{.mark}

The South Corridor generally parallels Interstate 77 and South
Boulevard, the primary roadway options used by commuters traveling
north-south in the corridor. Both roadways are currently operating at
extremely high levels of congestion during the morning and evening peak
hours, with no expansion of capacity programmed for either facility due
to physical constraints that make such improvements very expensive. The
proposed project would provide a transit alternative to these congested
roads. In addition, the city of Charlotte is actively involved in a
number of transit-oriented development and urban redevelopment
activities, and the South Corridor project is expected to facilitate
such development along the alignment.

The project would serve a variety of travel markets including inbound
and reverse commute work trips, as well as leisure trips to the
Charlotte Arena (home to the future NBA Bobcats), Ericsson Stadium (home
to the NFL Panthers) and the historic South End. The project is
estimated to generate approximately 3,900 hours of weekday travel-time
benefits in 2025 as compared to improved bus service in the corridor,
with the majority of these benefits accruing to work trips attracted to
the central business district.

+------------------------------------+---------------------------------+
| **Summary Description**            |                                 |
+------------------------------------+---------------------------------+
| **Proposed Project:**              | Light Rail Transit              |
+------------------------------------+---------------------------------+
| ** **                              | 9.6 Miles, 15 Stations          |
+------------------------------------+---------------------------------+
| **Total Capital Cost (\$YOE):**    | \$385.9 Million                 |
+------------------------------------+---------------------------------+
| **Section 5309 New Starts Share    | \$193.0 Million (50%)           |
| (\$YOE):**                         |                                 |
+------------------------------------+---------------------------------+
| **Annual Operating Cost (2025      | \$27.0 Million                  |
| \$YOE):**                          |                                 |
+------------------------------------+---------------------------------+
| **Ridership Forecast (2025):**     | 17,900 Average Weekday          |
|                                    | Boardings                       |
+------------------------------------+---------------------------------+
| ** **                              | 7,000 Daily New Riders          |
+------------------------------------+---------------------------------+
| **Opening Year Ridership Forecast  | 9,100 Average Weekday Boardings |
| (2006):**                          |                                 |
+------------------------------------+---------------------------------+
| **FY 2005 Finance Rating:**        | # Medium-High                   |
+------------------------------------+---------------------------------+
| **FY 2005 Project Justification    | **Medium**                      |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+
| **FY 2005 Overall Project          | **Recommended**                 |
| Rating:**                          |                                 |
+------------------------------------+---------------------------------+

The overall project rating of ***Recommended*** is based upon the strong
transit-supportive land use plans and policies in place along the
corridor, as well as the strength of the project's capital and operating
financial plans. The overall project rating applies to this *Annual
Report on New Starts* and reflects conditions as of November 2003.
Project cost estimates and proposed New Starts share are developed by
local project sponsors and are not FTA assumptions. Project evaluation
is an ongoing process. As New Starts projects proceed through project
development, estimates of cost, benefits, schedules and impacts are
refined. FTA's ratings and recommendation will be updated annually to
reflect new information, changing conditions, and refined financing
plans.

FTA is continuing to work with CATS to examine strategies to maintain --
or reduce -- the project's current capital cost estimate and increase
the probability of an on-schedule delivery of a cost-effective transit
improvement.

##### Status

In November 1998, a local referendum was passed authorizing a dedicated
local sales tax of ½ percent for funding transit service in the region.
A major investment study identifying light rail as the locally preferred
alternative was completed the following year. FTA approved the South
Corridor project for preliminary engineering in August 2000. CATS issued
a Draft Environmental Impact Statement (EIS) in October 2002. The Final
EIS was published in April 2003, and a Record of Decision was issued in
May 2003. FTA approved the project's entry into final design in August
2003.

Since last year's *Annual Report on New Starts*, the capital cost
estimate of the project has increased from \$370.8 million to \$385.9
million, due to an increase in right-of-way costs and several minor
design changes. FTA is currently undertaking a risk analysis of the
project's cost estimate. It is anticipated that a new cost estimate will
be developed in early 2004 to reflect the latest design progress,
adjusted contingencies, and accepted risk mitigation measures. FTA
further notes that the project schedule is very aggressive and that
capital costs are likely to change if the schedule slips. An agreement
between CATS and Norfolk Southern for use of the right-of-way is
expected by December 2003.

As a promising project, Charlotte's South Corridor LRT project has been
recommended for funding in the President's FY 2005 Budget to continue
project development.

TEA-21 Section 3030(a)(8) authorized the Charlotte North-South Corridor
Transitway for final design and construction. Through FY 2003, Congress
has appropriated \$30.60 million in Section 5309 New Starts funds for
this project.

####### Evaluation 

The following criteria have been estimated in conformance with FTA\'s
*Reporting Instructions for the Section 5309 New Starts Criteria*,
updated in June 2003. The project will be re-evaluated for next year's
*Annual Report on New Starts*.

+---------------------------------------+--------------+--------------+
| **Project Justification Quantitative  |              |              |
| Criteria**                            |              |              |
+---------------------------------------+--------------+--------------+
| **Mobility Improvements Rating:       |              |              |
| Medium**                              |              |              |
+---------------------------------------+--------------+--------------+
| **Average Employment Per Station**    | **[New Start |              |
|                                       | vs.          |              |
| **Average Low Income Households Per   | Baseline]{.  |              |
| Station**                             | underline}** |              |
|                                       |              |              |
| **Transportation System User Benefit  | 4,834        |              |
| Per Project Passenger Mile            |              |              |
| (Minutes)**                           | 108          |              |
|                                       |              |              |
|                                       | 3.23         |              |
+---------------------------------------+--------------+--------------+
| **Environmental Benefits Rating:      |              |              |
| Medium**                              |              |              |
+---------------------------------------+--------------+--------------+
| **[Criteria Pollutant                 | **[New Start |              |
| Reduced]{.underline} (Tons)**         | vs.          |              |
|                                       | Baseline]{.  |              |
| **Carbon Monoxide (CO)**              | underline}** |              |
|                                       |              |              |
| **Nitrogen Oxide (NO~x~)**            | 29           |              |
|                                       |              |              |
| **Volatile Organic Compounds**        | 2            |              |
|                                       |              |              |
| **Particulate Matter (PM~10~)**       | 2            |              |
|                                       |              |              |
| **Carbon Dioxide (CO~2~)**            | 8            |              |
|                                       |              |              |
| **[Annual Energy Savings]{.underline} | 4,298        |              |
| (millions of BTU)**                   |              |              |
|                                       | 493,830      |              |
+---------------------------------------+--------------+--------------+
| **Cost Effectiveness Rating:          |              |              |
| Low-Medium**                          |              |              |
+---------------------------------------+--------------+--------------+
| **Cost per Transportation System User | **[New Start |              |
| Benefit (current year dollars/hour)** | vs.          |              |
|                                       | Baseline]{.  |              |
|                                       | underline}** |              |
|                                       |              |              |
|                                       | \$23.84      |              |
+---------------------------------------+--------------+--------------+
| **Operating Efficiencies Rating:      |              |              |
| Medium**                              |              |              |
+---------------------------------------+--------------+--------------+
| **System Operating Cost per**         | > **         | **[New       |
|                                       | [Baseline]{. | Start]{.     |
| **Passenger Mile (current year        | underline}** | underline}** |
| dollars)**                            | >            |              |
|                                       | > \$0.76     | \$0.79       |
+---------------------------------------+--------------+--------------+

# Project Justification 

**[Rating: Medium]{.underline}**

The *Medium* project justification rating reflects the strong
transit-supportive land use policies in place to support the proposed
light rail project tempered by the project's relatively weak cost
effectiveness. FTA notes that CATS' forecast of new riders and user
benefits reflects a significant share of induced non-home-based trips.
This is a market that traditional travel forecasting procedures have not
typically addressed; as such, the project's travel forecasts and
subsequent estimate of cost effectiveness entail some risk.

Based on 2000 Census data, there are an estimated 1,614 low-income
households within a ½-mile radius of the proposed LRT, which is roughly
17 percent of total households within ½ mile of the proposed stations.
There are an estimated 72,515 jobs within ½ mile of the proposed
stations. The Charlotte metropolitan area is designated as a moderate
maintenance area for ozone and a maintenance area for carbon monoxide.
The South Corridor LRT project has an incremental cost per incremental
trip value of \$13.23.

####### Transit-Supportive Existing Land Use and Future Patterns

**[Rating: Medium-High]{.underline}**

The *Medium-High* land use rating reflects the strong policies employed
by the region to implement transit-supportive land use development in
the Charlotte-Mecklenburg metropolitan area and the demonstrated results
of those policies. The rating also acknowledges the region's unified
cooperative approach across agencies to realize this goal.

**Existing Conditions:** The predominant land uses along the proposed
corridor are commercial, industrial, and multi- and single-family
housing, along with lower-density office and institutional uses. The
northern terminus of the project is the Charlotte central business
district, which contains 14 million square feet of office space and over
55,000 employees. The central business district contains other major
trip generators including Ericsson Stadium, the Charlotte Convention
Center, and the North Tryon arts and entertainment district. The
southern portions of the corridor are low density and
automobile-oriented with land uses that are a mixture of light
industrial, newer multi-family residential, and commercial, including a
large regional retail facility.

**Future Plans, Policies and Performance:** The region has proactively
supported and developed land use plans and policies that are considered
supportive of transit in the adoption of the *2025 Integrated Land
Use/Transit Plan*. The plan is designed to concentrate growth within
designated transit corridors (the South Corridor being the first of five
such corridors to feature such development) and promote urban
redevelopment in an older section of the city. Local measures have been
approved to support the plan, including a pedestrian overlay zone and
transit-oriented development regulations, which are expected to be
adopted by the end of 2003. Station area plans have progressed with
significant public input. The South Corridor Infrastructure Project (an
infrastructure investment program) includes an ambitious reconfiguration
of the street and pedestrian network to support more transit-oriented
uses and more accessible and pedestrian-oriented transportation
facilities.

Redevelopment and infill development are continuing in the Charlotte
region, especially high-density development along the future light rail
corridor. New developments in the South End demonstrate the
incorporation of transit-oriented design concepts such as higher
development densities and building heights, shorter setbacks and
streetwalls, active uses at ground level, and the location of parking to
the rear of development sites. Over the past five years, 20 projects
representing over \$250 million in private sector development have been
built or designed around the northern end of the alignment in
anticipation of the future light rail line. New developments around the
southern end of the alignment are beginning with isolated housing and
commercial developments.

#### Local Financial Commitment 

# [Rating: Medium-High]{.underline}

The *Medium-High* rating for local financial commitment was determined
by the strong current financial condition of CATS, the strength of its
dedicated local sales tax, and the commitment of all of the State and
local funding for the project.

**Proposed Non-Section 5309 New Starts Share of Total Project Costs:
50%**

# [Rating: Medium]{.underline} 

CATS proposes to cover 50 percent of project costs with Section 5309 New
Starts funds. Remaining funding would come from the North Carolina
Transit Trust Fund and dedicated local sales tax revenues.

+------------------------+----------------------+----------------------+
| **Locally Proposed     |                      |                      |
| Financial Plan**       |                      |                      |
+------------------------+----------------------+----------------------+
| **[Proposed Source of  | **[Total Funding     | **[Percent of        |
| Funds]{.underline}**   | (\$mil               | Total]{.underline}** |
|                        | lion)]{.underline}** |                      |
+------------------------+----------------------+----------------------+
| **Federal:**           | \$193.0              | 50.0 %               |
|                        |                      |                      |
| Section 5309 New       |                      |                      |
| Starts                 |                      |                      |
+------------------------+----------------------+----------------------+
| **State:**             | \$96.5               | 25.0 %               |
|                        |                      |                      |
| Transportation Trust   | \$96.5               | 25.0 %               |
| Fund                   |                      |                      |
|                        |                      |                      |
| **Local:**             |                      |                      |
|                        |                      |                      |
| Dedicated Sales and    |                      |                      |
| Use Tax                |                      |                      |
+------------------------+----------------------+----------------------+
| **Total:**             | **\$385.9**          | 100.0 %              |
+------------------------+----------------------+----------------------+

**NOTE:** Funding statements reflected in this table have been made by
project sponsors and are not DOT or FTA assumptions. Sum of figures may
differ from total as listed due to rounding.

####### Stability and Reliability of Capital Financing Plan

**[Rating: High]{.underline}**

The *High* rating reflects the strong financial condition of CATS, the
strength of the dedicated sales tax, and the fact that 100 percent of
State and local funding has been committed to the proposed project.

**Agency Capital Financial Condition:** CATS is an agency of the city
government. The financial condition of both the city and CATS is very
strong. Charlotte is one of the select few jurisdictions nationwide with
an AAA credit rating. The city also has the authority to issue debt or
enter into leases to meet long-term financial obligations without
holding a referendum. When combined with the region's strong dedicated
tax source, this creditworthiness and funding capacity provide CATS with
significant financial resources to meet capital needs. The average age
of the current bus fleet is under six years, which indicates that the
condition of CATS' capital assets is good.

### Capital Cost Estimate and Contingencies: The capital cost estimate for the proposed project has increased from \$370.8 million to \$385.9 million due to an increase in right-of-way costs and several minor design changes. Preliminary results from the project's risk analysis indicate some outstanding risk due to potential additional real estate costs, which could result in cost increases. CATS has a sizable existing cash balance because of the strength of the dedicated local sales tax. This cash balance, which will continue to grow in the future, combined with CATS's access to debt through the bond market, provides the agency with the ability to fund cost overruns or funding shortfalls of 50 percent or more of the project cost.

Existing and Committed Funding: All non-Section 5309 New Starts funding
for the South Corridor project is existing and committed. Revenues from
the local dedicated sales tax will provide 50 percent of the non-Section
5309 New Starts funding. The remaining 50 percent will be provided
through a State Full Funding Grant Agreement. The source of funds for
the State share is a \$120 million Transit Trust Fund created by the
North Carolina Legislature in 2001, with revenue transfers from the
North Carolina Department of Transportation Highway Fund.

New and Proposed Funding Sources: The South Corridor LRT project's
capital financial plan does not include any new or proposed sources of
funding.

# Stability and Reliability of Operating Finance Plan 

**[Rating: Medium-High]{.underline}**

The *Medium-High* rating reflects CATS' healthy operating condition.
Revenues to operate the proposed South Corridor light rail project are
strong.

**Agency Operating Financial Condition:** CATS is undergoing a
significant expansion of transit services throughout the region and is
funding these improvements through dedicated sales tax revenues. While
CATS bus expansion and corridor development programs appear very
ambitious, the agency's financial capacity to undertake these
investments is substantial. CATS has experienced positive operating
balances over the past five years. Charlotte's current ratio of assets
to liabilities was very high (9.0) in FY 2002, the most recent audited
financial statements available.

### Operating Cost Estimates and Contingencies: Operating cost estimates appear reasonable for this stage of project development. In forecast year 2025, annual operating costs for the South Corridor LRT project are projected to be \$27.0 million. This represents a minor portion of the cost of the entire regional transit expansion planned for the region by 2025. The projections assume a farebox recovery ratio of roughly 25 percent for the LRT system and 28 percent for the bus system. 

###  

Existing and Committed Funding: Sixty-nine percent of the proposed
sources of operating funds for the South Corridor LRT are existing and
committed. These sources include CATS' dedicated sales and use tax,
passenger fares, and other revenues. The remaining 31 percent of the
proposed sources of operating funds are existing and considered
budgeted. These include Maintenance of Effort payments from the city of
Charlotte and other jurisdictions, State Maintenance Assistance, and
interest earnings on surplus balances.

New and Proposed Funding Sources: All operating revenues are from
existing sources.

MAP