DALLAS — Amid pleas from area politicians to keep planned light-rail extension projects on schedule, Dallas Area Rapid Transit executives continue to explore all options available to close a funding gap and keep promises of new rail service to the suburbs of Irving and Rowlett.

One possible solution involves having a private contractor handle the design, construction, and maintenance of the projects under a public-private partnership. Another alternative is to ask the Texas Legislature to change DART’s enabled legislation and increase sales-tax debt capacity above the current $2.9 billion cap. A third possibility is to use alternative types of debt to help mitigate soaring construction costs.

“We’re continuing to refine our plans in finding a solution to keep all our projects on schedule” DART president and executive director Gary Thomas told board members at a meeting Tuesday. “There are a lot of people that want to make sure we get service to their community.”

Almost two months ago, DART said extensions of its Orange Line from downtown through Irving to Dallas-Fort Worth International Airport and of the existing Blue Line to Rowlett would cost close to $1.9 billion. Previous projections pegged costs at $988 million, but spikes in the prices for concrete, copper, and steel resulted in the increase.

Irving Mayor Hebert Gears said the best solution to completing the projects on time appears to be asking for the change in legislation, even though state lawmakers don’t convene again for their regular biennial session until 2009.

Rowlett Mayor John Harper told the board his city’s downtown development is languishing as it awaits the light-rail link.

Dallas City Council member Linda Koop urged the board “to take the bold steps” necessary to complete the projects. “The air quality of the area is in non-attainment,” she said. “We have to get people out of their cars and need to put more people in mass transit.”

DART officials expect to issue requests for qualifications for builders within 30 days, and award the notice to proceed in December. That time line insures the first phase of the Orange Line opens in December 2011 with the Blue Line extension and the second phase of the Irving project opening a year after that.

DART executive vice president Doug Allen assured the 15-member board Tuesday that another project through Dallas’ central business district and third phase of a South Oak Cliff line would remain on schedule despite the costs increases.

Allen extolled the merits of a public-private partnership, citing inherent advantages such as the possibility of beginning construction of the extensions while still in the overall design phase and the ability to define project and performance standards up front. He said P3s “are gaining momentum in the industry ... and are the wave of the future.”

Bob Estrada, chairman of Estrada Hinojosa & Co., DART’s financial adviser, outlined several financing options for the board, including the issuance of debt using farebox revenue or federal formula grant funds, both of which don’t require voter approval.

Estrada said the agency could leverage farebox revenue to between $300 million and $500 million of debt. It could also issue grant anticipation notes of up to $200 million. But he advised against using notes right away as the securities would be more marketable if offered at the beginning of a funding cycle, which doesn’t occur again until 2012.

Estrada told the board Tuesday that by 2010 sales tax revenue could support debt of $5 billion. He also suggested the board adjust some “overly conservative” sales-tax projections and leverage that into increased capacity to borrow.


Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.