The escalating costs of the Durham-Orange light rail project are very disturbing.
Our county commissioners and GoTriangle told us in 2012 that the project cost would be $1.4 billion. Now it is $2.5 billion.
The cost sharing assumed was federal share 50 percent, state 25 percent and local 25 percent. The assumption that the state would pay 25 percent turned out to be false in 2016, when the NC General Assembly capped the state share at 10 percent. That raised the local share of costs to 40 percent.
Instead of going back to the public for feedback on the higher costs, as they should have, the commissioners decided on their own to keep the project going at the much higher cost and to borrow funds over a 45-year period to cover increased costs. This has added another $890 million in interest charges to the total cost, bringing it to over $3.3 billion.
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More recently the state has capped its share at $190 million, meaning that the local share is now 42 percent. This has created an additional funding gap.
An Orange County commissioner stated that Orange County cannot put additional funds into light rail, and that Durham and GoTriangle are responsible for filling the additional gap left by the General Assembly.
The project cost is prohibitive.
At a current total local cost of $1.9 billion, including borrowing costs, the per-resident cost for Orange and Durham counties averages about $4,750.
It will require 1 billion passengers to get the per passenger construction cost down to $3.30. Taking GoTriangle’s assumption of 22,000 passengers/day, 45,454 days or 124 years will be required to reach 1 billion passengers. This is a very high cost to Durham/Orange County residents, since only about 6 percent will use light rail daily (assuming the 22,000/day). The remaining 94 percent of the residents will use light rail infrequently if at all.
One real reason our political leaders badly want this project is that it will spur development along the track. This will greatly raise property values and property tax revenues.
Unfortunately, at the same time, this development will spur population growth to an unnecessarily higher rate that the current 2 percent plus rate/year. It will spur massive construction of huge condos, apartment buildings and multistory parking garages, and raise population density and traffic congestion to and from the rail line.
We already have a serious affordable housing problem, and the light rail will make it worse. The developers will want to construct expensive apartments and condos and charge high rents. There is no way the city will be able to sufficiently counteract this affordable housing problem with more subsidies, and low- to modest-income families will not be able to afford to live near the light rail track without subsidies.
The local cost of the light rail project is five times as costly as it was when we had the sales tax referendum in 2012, But Instead of asking our citizens whether they still approve the project, and now also the massive borrowing necessary out to Year 2062, our commissioners on their own decided to keep chasing ever higher costs and to scour various possible new means of funding them.
It’s like a person agreeing to buy a house at $250,000, but then the owner doubles the price, and the buyer agrees to the higher price. Then the owner raises the price again, and the buyer still looks for more funds to meet even this price. That is irresponsible. A sensible person wouldn’t play that game.
The voters for the sales tax increase in 2012 did not intend to give the county commissioners a blank check for light rail.
Durham County does not currently have the funds to cover the cost of light rail. The county officials are counting on continued future projected healthy sales taxes and revenue increases and borrowing to cover the project. At least Orange County commissioners now have stated that enough is enough regarding the costs, and refuse to pay more. But our commissioners still strain and stretch to find more funding to meet the higher costs.
There is the real danger that Durham County commissioners will eagerly pick up a higher share of the tab to keep Orange County in the project. Our commissioners should clearly state now what the limit is that Durham will pay, or better yet, shelve the project for the above reasons.
Rod Gerwe lives in Durham.