News: CJ Exclusives

A City With Queenly Aspirations

Various Charlotte projects constitute a risky gamble with taxpayers’ money

Charlotte is North Carolina’s “Queen City” — or at least a city with queenly aspirations.

The main difference may be that instead of peasants strewing the queen’s path with rose petals, working folks are paving Charlotte’s progress with tax dollars.

The other phrase that often surfaces in conversations about Charlotte’s future is “world-class city.” Business and civic leaders use the expression freely, usually without any clear definition of which of the world’s commercial and cultural capitals Charlotte should emulate.

Perhaps “world-class city” is simply a coded message for “city with big-league sports.” Or maybe it is actually a question — “why can’t we have everything that Atlanta has?”

Whatever insecurities Charlotte might have about its own identity, it has maintained its reputation as a fine place to live and do business — even though recent trends suggest that the city is well on its way to abandoning the economic freedom that made it a prime example of “New South” prosperity.

Instead, the city’s future will be determined largely by massive public spending programs, notably various downtown arts projects estimated at $130 million and a light-rail system that is already forecast at more than $400 million. Cost estimates for the light rail have more than doubled since it was first put on the table during the 1990s.

This is typical of light-rail projects anywhere in the United States. A 2004 report by the Reason Foundation exposed light-rail systems as virtually bottomless money pits that generally carry no more than 1 to 2 percent of the commuter traffic in their communities. More to the point, researcher Ted Balaker explained that North Carolina’s cities are particularly ill-suited for this type of mass transit, simply because they are decentralized.

This is the “urban sprawl” despised by municipal planners. Rather than acknowledging that it is a spread-out community and living with the fact, Charlotte officials seem determined to use light rail to roll back decades of existing development so that the city can become the Manhattan of the South. This is despite the fact that downtown Charlotte has yet to make its nostalgic trolley system pay for itself — the trolley will have to close for several months this year to make room for the first phases of light-rail construction.

Also, Charlotte is starting light-rail construction just a few months after opening high-occupancy vehicle lanes on Interstate 77. The lanes will be closed to single-passenger vehicles. In other cities, high-occupancy lanes have been used as a means to speed up bus service, which might have provided a moderate-cost alternative for Charlotte’s mass-transit needs.

But Charlotte is forging ahead into the world of light rail, without the sure knowledge that there is any pent-up demand for the service. Under these circumstances, it may be understandable that the independent small businessmen who are supposedly the backbone of any local economy are becoming nervous.

Take, for example, Bryan Taylor, a foundation executive, who predicts that the transit system will be a fiscal disaster. He also questions, on common-sense grounds, the assumption that Charlotte has to have everything other cities have.

“We can be Charlotte. We can be just Charlotte and that can be just fine. We don’t have to be something we’re not. When you try to be something you’re not, a lot of times you miss your target completely.

“If Charlotte is good at what it does best — being a good community to live in — then Charlotte promotes itself,” Taylor said.

The mainstream business media, perhaps dazzled by the fact that the city is home to Bank of America and Wachovia, don’t seem to have noticed that Charlotte isn’t really a low-cost area anymore.

For example, Expansion Management magazine in December ranked Charlotte fourth in its annual “America’s 50 Hottest Cities” survey. The poll is geared toward businesses looking to either relocate or expand their operations over the next two to three years. Charlotte shared its laurels with nearby Gastonia and Rock Hill, S.C., virtually a suburb across the state line.

Significantly, the Expansion Management ranking hinges largely on subjective judgments. It’s compiled mainly from an opinion survey of site consultants who advise businesses about which communities would make desirable locations. These people’s opinions naturally carry a great deal of weight with the top executives who make the final decisions. However, the survey is not based on hard demographic or economic data.

It might therefore be asked whether Charlotte maintains its reputation because of its sterling past.

For example, business leaders elsewhere in the nation may have yet to notice that Charlotte carries the heaviest tax burden in North Carolina, highlighted by a whopping 7.5 percent combined state and local-option sales tax. The John Locke Foundation’s By the Numbers report on the cost of municipal government shows that Mecklenburg County residents fork over nearly 5.7 percent of their income in local taxes and fees. The trend has been steadily worsening — and with the Democrats back in control of the county commission, more demands on the taxpayers surely lie ahead.

At the grassroots level, there’s more discontent than the local leadership is willing to acknowledge, said Jason Lewis, conservative radio commentator on Charlotte’s WBT-AM. Lewis said he at least has plenty of anecdotal evidence that professionals are leaving Charlotte for lower taxes and more affordable housing in South Carolina.

Lewis said that he came to Charlotte in 2003 from Minneapolis, a city with a typical Rust Belt reputation for high taxes and big government. He soon found that Charlotte is in many respects worse. The high sales tax alone can be a shock for new residents.

Lewis said that as long as neighboring counties keep their cost of government down, residents and businesses will at least be able migrate from the center city to more affordable suburbs. That’s why he sees continued calls for more “regionalism” in development policy as being particularly insidious. Getting the whole cluster of counties that make up Greater Charlotte to adopt identical development policies would have the effect of choking off market forces and artificially concentrating development in downtown Charlotte.

Lewis aired his dissent from prevailing boosterish sentiments in a recent guest column in the Charlotte Business Journal. His conclusion: “Charlotte’s political and business elite should understand the frustration is reaching critical mass, and some of the most productive men and women among us are voting with their feet.”

Yet Mecklenburg County voters effectively guaranteed more of the same by electing three new Democratic commissioners in the 2004 general election. Two incumbent Republicans, Ruth Samuelson and Dan Ramirez, lost their seats.

Considering that members of the new 6-3 Democratic majority have said that their top priority is increasing school funding, the remaining Republican commissioners are bracing themselves for a rear-guard action against an almost certain tax increase.

Ramirez said he’s disappointed but philosophical about his loss and added that already supporters are urging him to run again the next time an at-large seat comes open.

Ramirez credited the surprising Democratic victory to a massive get-out-the-vote effort. Ironically, this tried-and-true Democratic game plan worked in Mecklenburg County, even while in other parts of the country, Republicans were proving they could also play get-out-the-vote. But in Charlotte-Mecklenburg, there still seems to be a good deal of truth to the conventional wisdom that Republicans do best when turnout is low.

Ramirez has owned and operated a land surveying business in Mecklenburg County for 25 years. He notes that in all this time, Charlotte has never really known a serious economic downturn compared to other parts of the country. There was a construction boom through most of the 1990s, with a leveling off during the recent recession.

Now, construction is booming again, and the prospect of big public construction projects holds the promise of several more fat years, Ramirez said. But ultimately, the bills will have to be paid, a much less-inviting prospect for all Charlotte residents.

Ramirez said that during his tenure on the commissioners, he always tried to operate on the principle that Charlotte’s prosperity didn’t translate into a license for unlimited spending. “We’re at a point where our economy could become a victim of its own success,” Ramirez said.

If Charlotte is on the brink of a mass exodus to outlying tax havens, Jim Cherry anticipated the trend by 15 years, when he decided to move his apparel wholesale business to neighboring Union County.

“Don’t get me wrong. I love Charlotte. I still live in Charlotte. But when it came time to make a decision for my business 15 years ago, I was afraid that Charlotte was going to tax me through the roof,” Cherry said.

That’s exactly what happened in the following years. But Cherry said he noted a new wrinkle in the last general election —the victorious Democrats ran their campaigns on the promise of tax increases and the voters somehow bought it. “That would have been death to any campaign in Charlotte just a few years ago,” Cherry said.

Union County is prospering as a business location, precisely because “it doesn’t try to be Charlotte,” Cherry said. Much the same could be said for nearby South Carolina communities such as Fort Mill. Indeed, Cherry echoed Lewis’s comment about regionalism by predicting that there will be pressure on surrounding counties to be more like Charlotte — and those that resist the pressure are most likely to do well in coming years.

Still, not every Charlotte-area small business faces the same competitive pressures. For some businesses, the tax-and-spend ways of local government provide some indirect benefits.

Gary Anderson, owner of Anderson’s Restaurant, Charlotte’s oldest continually operating eatery, said he is looking forward to increased downtown traffic with the construction of a new NBA basketball arena. He said his business has been helped by a good location on Elizabeth Avenue, near Presbyterian Hospital, which guarantees him a certain level of traffic each day.

Anderson said that his business has been helped indirectly by various city efforts to make downtown more enticing to tourists. Anderson said he’s not sure whether the light-rail system will create the same benefit.

Bob Fliss is a contributing editor of Carolina Journal.