Austinites who vote for the city's rail-and-roads proposition will be making a $50 million bet...A safe bet, rail officials insist. But one in which the payout could be less -- or take longer -- than officials hope.
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Austin, Texas To Seek Fed. Funding for Light Rail Project
Oct. 20 --Austinites who vote for the city's rail-and-roads proposition will be making a $50 million bet.
A safe bet, rail officials insist. But one in which the payout could be less -- or take longer -- than officials hope.
City officials estimate it will cost at least $50 million , and perhaps as much as $70 million , to do the environmental study, detailed engineering and design, and other work needed to apply for federal matching funds for the proposed $1.4 billion light rail line, if voters give the initial green light Nov. 4 . But there's no guarantee the city would secure its desired amount of money from the Federal Transit Administration , although rail planners here profess confidence.
"We met with them last month to give them an update of the project, and they certainly encouraged us to move forward," said Kyle Keahey , a consultant leading the rail planning effort for Project Connect, a partnership of the city and Capital Metro. "They're very interested in hearing how the election turns out."
The Austin project faces stiff competition for the so-called New Starts federal money from cities across the nation looking to initiate or expand light rail systems, commuter train lines, streetcars, aging and overcrowded subways, or rapid bus lines. Even if Austin's proposed rail project fares well in the transit agency's scoring system -- and Project Connect officials argue that it will -- a recent history of congressional foot-dragging on transportation funding and a potential changing of the guard in the U.S. Senate could shrink the pool of available dollars just as Austin gets ready to make the light rail plunge.
The ballot language of the city's $1 billion proposition stipulates that Austin would borrow the bulk of $600 million for rail (the remainder after that $50 million to $70 million for planning and engineering) only if it gets "grants or match funding" from the federal or state government. Match funding, according to public statements when the City Council set the ballot in early August, was understood to mean 50 percent of the project's overall cost.
But based on a review of New Starts grants and projects waiting in line for approval, the federal transit agency has often offered grants well short of a one-for-one match. And the funding picture has been even darker for more expensive projects such as what Austin is contemplating, a federal transportation official told a congressional committee in late 2013.
"For the very largest projects, with total costs of $1 billion or more, the federal share has fallen even further, to an average of about 33 percent per project," testified Peter Rogoff , who was then the head of the Federal Transit Administration and is now the undersecretary for policy at the U.S. Department of Transportation .
Looking only at the 12 New Starts projects listed by the agency as having final deals with the transit administration, the cities or transit agencies building them received on average just over 40 percent of the total project costs.
So Austin , which would be hoping for $600 million or more of federal money to match the local contribution, might find itself several years from now looking to fill a financial void left by an insufficiently generous federal offer. Texas state government has so far mostly shied away from funding urban transit projects.
"We haven't gotten there," Keahey said. "But I would guess that if the funding level remains constrained, we would be encouraged (by the federal agency) to provide more than 50 percent."
If so, that could mean trouble for the project down the road. Business leaders who demanded that matching funds caveat in return for their public support of the proposition have made it very clear that they consider that a legally enforceable covenant with the voters. A shortfall in federal dollars and a resultant call for significantly more local funds could put the project in the courthouse.
"Anything less than 50 percent would not meet that condition," said Brian Cassidy , an Austin transportation lawyer and the Real Estate Council of Austin's vice president for regional infrastructure.
On the other hand, that requirement could work to Austin's advantage. Federal transit officials, the argument goes, might choose to give Austin the full 50 percent to avoid a legal tangle.
"It's possible that the requirement on the ballot could help the city secure a greater match from the feds, but that was not the intent," Cassidy said. "The intent was to solidify the commitment."
The city ballot proposition contemplates a 9.5-mile, double-tracked line running from Austin Community College's Highland campus at the nearly defunct Highland Mall , through the University of Texas and downtown, across a new bridge over Lady Bird Lake in the Trinity Street corridor and then along East Riverside Drive to a point about two miles east of Interstate 35 , at Grove Boulevard .
Aside from the $600 million , which the city would raise by selling bonds backed by a property tax increase, the proposition would require that the city "provide funds" for $400 million in highway projects and studies. Overall, the city would borrow $1 billion over the next five or so years, necessitating a property tax increase of about $217 a year on a $200,000 home to make at least 20 years of debt payments.
To qualify for the federal money, Project Connect would have to conduct an environmental impact study and, more or less at the same time, refine its engineering and design for the project from the current sketch level -- about 5 percent complete -- to the 30 percent level. That would take until late 2017 or early 2018, and by then Austin would have officially applied to the Federal Transit Administration for New Starts money.
From the point Austin makes that simple application -- basically a letter, Keahey said -- its planning expenses would be eligible for potential reimbursement from the federal agency, but only at the percentage of federal participation ultimately agreed upon. And that would only kick in if the Austin proposal reaches the New Starts finish line -- a cherished document called a "full-funding grant agreement."
Project Connect at that point, somewhere around 2019, Keahey said, would know what it is getting from federal and local funds, would have a final design and could put out construction bids. Officials hope to have trains running by 2022.
But all of that is based, in the end, not only on next month's election results, but also on Congress and whoever becomes president in 2017 sticking with something close to the current level of federal transit funding, about $2.1 billion in 2014. Given some Republican opposition to using federal gasoline taxes on transit -- current law directs about 15 percent of that 18.4-cents -a-gallon levy to transit -- the strong possibility that the GOP would control both houses of Congress in the next session has sparked fear of a transit funding rollback.
That said, the number allocated to New Starts has actually edged up in recent years, a period when Republicans have controlled the U.S. House . As recently as 2007, New Starts funding was $1.55 billion a year.
But there are also plenty of applicants. The transit administration's current project list, which includes both projects with final grant agreements and others going through the process, shows 25 in the New Starts queue. Austin is not yet on that list. Taken together, those 25 projects would require $22.3 billion in federal funds.
Available agency records don't make it clear how much has already been dispersed to the dozen with grant agreements. But at least two of them, with about $1.4 billion in New Starts funding, are close to their opening date. Remove those two from the math and, at current annual funding levels, the line still appears to be at least 10 years long.
"I think it's really likely that they're going to get through the planning and approval process" to qualify for federal money, said Roger Falk with the Travis County Taxpayers Union , which opposes the city ballot proposition. "But the funding would be a whole bunch later in time. And I think the total will be far less than what they're banking on."
Ben Wear , who has covered transportation for the American-Statesman for more than a decade, provides the most authoritative reporting on the urban rail proposition on the Nov. 4 ballot. For previous coverage on how the route was chosen and how the proposal could affect roads, visit statesman.com/urban-rail .
By the numbers
25 -- Public transit projects already in the queue for New Starts federal transportation funding
$22.3 billion -- Total federal funding those 25 projects would require
$2.1 billion -- New Starts funding available in 2014
50 percent -- Portion of Austin light rail project requiring federal or state funds
33 percent -- Average federal funding provided to large projects with a total cost over $1 billion
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