North Corridor Commuter Rail The Case For Tax Increment Financing Mecklenburg County May 2007

North Corridor Commuter Rail Project Snapshot Project – Upgrade of existing tracks on existing right-of-way – 10 stations – 39 Public Crossings – 5 trainsets (420 seats each) Service – 22 trains per day (Phase 1) – Two-way service – 30-minute headway during rush – Hourly service off-peak – Top Speed: mph

North Corridor Commuter Rail Igniting The Region’s Economic Engine 83,000 jobs within ½ mile of North Corridor Stations by ,000 new residential units at planned TODs $2 billion in identified TOD projects 250,000 residents within the corridor by 2030 – North Mecklenburg/South Iredell Growth: 179% 4,600 daily riders – Most riders new to transit – Assumes completion of I-77

The Simple Facts I-77 Headed For Breakdown Lane Traffic Volume Is Exploding – Interstate : 87,000 vehicles per day 2030: 170,000 vehicles per day – Local Trips 2007: 490, : 1,241,700 I-77 Expansion A Distant Hope – Cost: $ million in today’s dollars – No funding for design & construction – Completion: 2030 More I-77 Shutdowns – More than 1,000 traffic accidents on I-77 (Exits 10-42) in 2004

Davidson Mount MourneTerminus Project Cost Funding State (25%) CATS (34%) Charlotte Gateway Station Iredell County/Mooresville 18 Unfunded North Corridor Commuter Rail Project Costs & Funding

Leveraging Incremental Tax Revenues To Fund Rail & Local Improvements Proposal: – Create Tax Increment Finance (TIF) Districts – Use incremental taxes generated within the TIF District to fund cost of rail & other local improvements Bond Proceeds Would Fund – – Local road, utility & parking improvements to enhance & support transit and downtown development – North Corridor Commuter Rail Station & Crossing Costs Source of Bonds – TIF (Amendment One) – Local Certifications of Participation (COPS) – Railroad Infrastructure Financing (RIFF)

Justifying The Use of Incremental Tax Revenues Transit & Local Improvements Generate New Tax Revenue More multi-family housing (TOD vs. Existing Zoning) Greater quality & concentration of retail & office Faster build-out around transit station (3-5 years) Faster, greater sales tax revenues from construction & commercial activities TOD property increases value faster than surrounding areas – San Jose: +23% for commercial – Dallas: +39% for residential & 53% for office Funds Local “Catalyst” Projects With No Near-term Funding Source Road improvements Parking Utility upgrades

Example Of Incremental Tax Revenue Generated By Transit Griffith Lakes – 70-acre parcel at proposed Harris Station – Plan A: No Transit 200,000 sq. ft of warehouse Tax Value: $12 million Tax revenues: $152,000 per year – Plan B: With Transit 1,800 homes; 800,000 sq. ft commercial Tax Value: $610 million Tax revenues: $7.8 million per year

Example Of Incremental Tax Revenue Generated By Transit Gandy’s Eastfield Station Project at proposed Eastfield Station – Plan A: No Transit 460 homes; 25,000 sq. ft commercial Tax Value: $80 million Tax revenues: $1,024,000 per year – Plan B: With Transit 950 homes; 35,000 sq. ft commercial Tax Value: $158 million Tax revenues: $2,022,400 per year

Understanding TIF 1.Bonds issued to fund the transit and catalyst projects 2.Only incremental taxes – taxes collected in excess of current tax base -- can be used to service bond debt 3.Only a portion of incremental taxes can be used to pay debt service Typical TIF: % or more of taxes used for debt service North Corridor: 35-50% of new taxes reserved for County services North Corridor: 20% of new taxes reserved for Town/City services

North Corridor Financial Analysis Identify TIF Districts Sized To Fund Infrastructure Needs Analyze Existing Assessed Value of Property Within TIF District Calculate Future Growth Without Any TIF Investment – As-Of-Right zoning – Existing development plans – National TOD experience Calculate Future Growth With TIF Investment – Local and adopted plans – TOD projects already underway or planned – Reasonable growth on developable sites Calculate Bonding Capacity Funded By Incremental Taxes Generated By Future Growth

Building Off Experience Cherokee Investment Partners – Experienced Master/ Brownfield Developer – Experts in Tax Increment Financing – Significant real estate investments – Major project financing expertise Cherokee is Helping To: – Quantify future value of the property – Assess availability of TIF to finance rail and local infrastructure needs

Davidson Future Growth Scenario Current Assessed Value of TIF District − $ million − 11.5% of Total Tax Base Future Build Out − 1,445 residential units − 212,000 sq. ft office − 227,000 sq. ft. retail Future Assessed Value ($ 2007) − $ 472 million Incremental Growth Value − $ million Incremental Taxes − $ 2.4 million/year

Davidson Candidate Projects For Funding Total Potential Candidate Projects$ 22 million – Rail Improvements ($10 million) – Local CIP Projects Potts Sloan Area Improvements ($1 million) Downtown Parking Deck ($6 million) Downtown Road Improvements ($5 million)

Cornelius Future Growth Scenario Current Assessed Value of TIF District − $ 32.6 million − 1% of Total Tax Base Future Build Out − 1,439 residential units − 540,000 sq. ft commercial Future Assessed Value ($ 2007) − $ 478 million Incremental Future Value − $ million Incremental Taxes − $2.8 million