The state's claim against Charlotte for walking away from the I-77 South toll lanes is $69,577,547.67, City Attorney Andrea Leslie-Fite told council on Monday night, and the money would have to come out of the Municipal Debt Service Fund. That is the fund the city has already programmed for its next affordable housing and public facilities bonds.
None of it is owed yet. The law exempts any local government that votes to reinstate its support on or before October 5, and council takes that vote next Monday. Monday night was the first time anyone put a price on the other option.
Fighting the claim may not postpone the cost. Chief Financial Officer Matt Hassett told council that if the city challenges the law and its outside auditors decide payment is more likely than not, the auditors can require the expense recorded on the balance sheet before the fiscal year ends. The fund balance drops on paper. The money becomes restricted and unavailable for anything else.
"So it would be the same as us having written sort of the check out the door," Hassett said.
The number
For two months the size of the claim has been an estimate. This paper's August coverage reported board members disputing a $60 million figure; in July it was $64 million.
The $69,577,547.67 is what the North Carolina Department of Transportation has identified as preliminary costs on the project, dating back to 2018. Under Session Law 2026-41, enacted July 7, a local government that unilaterally removes a project from the state Transportation Improvement Program, or prevents it from being delivered as programmed, has to reimburse the department.
The city does not accept the 2018 start date. Leslie-Fite told council Charlotte would argue the clock should begin in 2024, when the Charlotte Regional Transportation Planning Organization adopted the resolution supporting the public-private partnership, and that the city "continues and will continue to explore all available legal remedies."
CRTPO is the regional board that decides which road projects in and around Mecklenburg County get built with state money, and its members are the towns, the county and the transit commission rather than individual voters. Nine of them voted to rescind support on May 20: Charlotte, Cornelius, Davidson, Huntersville, Matthews, Mecklenburg County, Mint Hill, Monroe and the Metropolitan Transit Commission. Together they carry 47 weighted votes. Leslie-Fite said some have already signaled an intent to reinstate.
How much of the claim lands on Charlotte is not settled. Leslie-Fite said the obligation is apportioned by weighted vote and that Charlotte holds 31 percent of the vote. Hassett put the city's own share at between $59 million and $69 million. Neither official explained how a 31 percent share produces a $59 million floor, and no council member asked.
Council's item next Monday, September 21, comes in two parts with a public hearing: one vote on whether to reinstate support, and one instructing Charlotte's representative how to cast the city's vote at CRTPO, which meets Wednesday, September 23.
Where the money would come from
Hassett told members that money raised under the PAVE Act, the state law that funds Charlotte's road program, is use-restricted. It can only go toward financing, constructing, operating or maintaining road systems, and the city attorney's office has advised that it likely cannot cover a reimbursement. What Leslie-Fite called "the cleanest and most defensible path" is unrestricted money, which in practice means the Municipal Debt Service Fund.
That fund held about $171 million at the close of fiscal 2025, roughly $161 million of it in cash or cash equivalents. Most is restricted by state statute or committed to the city's equipment financing loan program. What is actually available for appropriation is about $55 to $56 million.
"That does not mean that it is free and clear," Hassett said. The money is not needed for the current bond cycle, but it is already programmed for future referendums supporting the affordable housing program and the public facilities program.
So paying the claim does not just spend the money once. It draws the fund down, and the fund then has to be refilled from somewhere else. Working from a round $60 million, Hassett gave council three ways to do that, and said a combination is possible.
Raise property taxes by roughly a tenth of a cent, permanently, beginning with the fiscal 2028 budget. That generates about $2.35 million a year.
Move about $2.35 million a year out of the general fund or pay-as-you-go revenue instead.
Or cut what the fund is for. The adopted steady state for the affordable housing bond is $100 million every other year, starting in calendar 2028. Under this option it drops to about $92 million and stays there. Public facilities funding would go from about $45 million a year to about $41 million.
Hassett was careful that these are point-in-time approximations. Steady-state debt modeling depends on interest rates and revenue projections nobody will know until next year's budget, and he noted the Federal Reserve is now weighing a rate increase that was not on the table a year ago.
He raised one more consequence. Charlotte carries a AAA bond rating, and a significant spend-down of available fund balance would require a conversation with the rating agencies. It would also narrow the city's room to respond to an emergency. His example was specific: after the large SouthPark fire, Charlotte used debt service fund balance to buy fire trucks that were needed immediately.
Charlotte also cannot spread the cost. Leslie-Fite told council that under North Carolina law every expenditure of city funds must serve a public purpose with the primary benefit flowing to the city's own residents, so paying another jurisdiction's reimbursement would violate the state constitution. Council member Malcolm Graham, who represents District 2 and chairs the budget committee, had already ruled it out on his own terms.
"I'm not willing to pay their legal fees or any fines associated with their reversal," he said. "That is not Charlotte's responsibility. As the chairman of the budget committee, I can tell the citizens that we don't have $60 or $70 million laying around."
A dollar for 1.16 acres on Freedom Drive
About two hours later, in the business meeting downstairs, council sold land.
The two parcels, at 3924 and 3932 Freedom Drive in District 2, go to Prosperity Freedom Drive LLC for one dollar. The developer will build at least twelve for-sale townhomes, priced for households earning 60 percent of the area's median income and for households earning under 80 percent of it. The affordability runs 20 years.
Council member LaWana Mayfield, who serves at large and chairs the housing and neighborhood services committee, asked whether the townhomes would carry a homeowners association fee. T. Warren Wooten of Housing and Neighborhood Services said the site will be subdivided and will most likely need interior streets, so it most likely will.
Mayfield has watched that math before. She cited a townhome project off Ashley, priced for households at 80 percent of median income and below, where a $263 monthly HOA fee pushed the homes back out of reach. "That's doing honestly very little to nothing," she said, "because townhomes don't necessarily come with a whole lot of amenities."
Council member Reneé Johnson, who represents District 4, pressed the same point from the lender's side. Wooten said underwriters and the city's affordable lending partners evaluate the full monthly payment including the HOA fee, so buyers are not being set up to fail. Johnson asked whether the city had that in writing. Wooten said it would not be in writing with the developer, because it is part of the lender process.
"Because we are giving this land away for $1," Johnson said. "We can't get it back. This is significant. So we hold the leverage."
Council member Joi Mayo, who represents District 3, put the parcel's value at close to a million dollars, said the appraisal in the council materials differs from the original conversation by almost $200,000, and objected to the length of the commitment. "I don't think a 20 year deal is the best that we could do," she said, calling it a missed opportunity on generational wealth.
Mayor pro tem James Mitchell moved to send the item to the housing and neighborhood services committee. Council member Ed Driggs, who represents District 7, objected that the project was well down the road, attempted a substitute motion and withdrew it for lack of a second. The referral failed, four to six. The sale then passed.
Mayfield used the vote to put the rest of it on the record. The city's home ownership line, she said, is down to $364,000 in total, and the account it uses for down payment assistance is at zero. The next money is the $125 million housing bond on the November ballot, which she noted is not guaranteed.
"We don't have enough in the budget right now to buy a single home in the city of Charlotte," she said, "much less to help with down payment assistance."
The housing money has been tight for a while. In May, staff proposed covering a $5.6 million overrun on the 2024 housing bond by pulling from supportive housing, shelter and innovation.
What council is deciding without
Staff took no position Monday. Deputy City Manager Rebecca Hefner said so at the start of the presentation and again at the end.
The independent alternatives analysis council asked for in May was never procured. Hefner told members there was not enough time to run a credible one inside the deadline, which is what this paper reported in August. What council got instead was an existing-conditions analysis, promised in that week's packets. Members vote Monday without the study they ordered.
No developer has been selected either. The procurement is unfinished, which is why the community benefits attached to the project are still not enforceable. Asked directly by Johnson what obligates the state to deliver them, Leslie-Fite said: "At this time, there is no agreement or requirement by NCDOT." The request for proposals would be the binding document, with an agreement to follow. Mitchell told council he is looking forward to supporting the project, but said his support depends on benefits language being written into the council request, and that the request as drafted does not carry it.
Council member JD Mazuera Arias, who represents District 5, named the shape of it. "Either raise our taxes and burden our residents," he said, "or pass the project."
Council member Victoria Watlington, who serves at large, put it in terms of what the city is prepared to spend. "We can talk all day long about how we want them to be binding, what we hope, what we expect," she said of the benefits. "We don't have any leverage that we're willing to use."
Eight of the project's eleven miles run through District 3. Mayo, who represents it, described watching a man in a motorized wheelchair cross a bridge over the interstate to reach South Tryon on her way to work, and called the bridge work a positive in the project: seventeen of the corridor's twenty-two bridges and over or underpasses are proposed to be replaced.
She has not said how she will vote. She asked her colleagues more than once on Monday to read the whole thing before they decide. They have six days, and the city has not yet said how much of the $69,577,547.67 is Charlotte's.