DART Projects Costs for Light Rail to DFW Airport Will Double to $1.9B

DALLAS — The Irving City Council recently found out that a proposed light-rail line through the city will cost $1.9 billion, or nearly twice as much as officials from Dallas Area Rapid Transit previously projected. DART officials cited “escalating costs of construction materials and services worldwide” and said they plan to go “back to the drawing board this week to trim up to $900 million” in expected costs for extensions to its Orange Line through Irving’s northern parts, as well as other projects. “It’s been a real slap in the face to the city of Irving, and it caught all of us off guard,” city council member Rose Cannaday said. “We’ve been a part of DART since its inception and have contributed more than $40 million and all we have to show for it are our buses. Now I’m worried that they’ll try to do something on the cheap here in Irving.”DART officials realized the increased costs following a planned update of the project after 10% of the design work had been completed. Similar project updates will be provided at various levels of development.“Fortunately, our process allows us to anticipate significant challenges very early,” said Gary Thomas, DART president and executive director. “This affords us an opportunity to examine the projects from multiple perspectives and mitigate thoughtfully.”Thomas said the agency’s 20-year financial plan, which projected costs for extensions to the Orange Line at $988 million, includes a somewhat conservative 4% increase in annual construction costs. While that’s served DART well historically, recent spikes in prices of concrete, copper, and steel have resulted in the higher costs of the light-rail project.“The question now is 'How do we solve this?’” Thomas said. “We’re taking a three-pronged approach. First, we’ll look at our assumptions of the project to see if we can adjust anything. Second, we’ll look at our 20-year financial plan to see if any projects can be deferred, delayed, or even deleted. We’ll also see if we can change things in our operating budget without reducing the level of service our customers have come to enjoy. And lastly, we look at other sources of funding.” He said those additional funding sources may include a public-private partnership, identification of new funding partners, and expansion of advertising opportunities.Thomas also said DART may ask the Texas Legislature to change the agency’s enabled legislation so officials can issue debt to finance projects without first gaining voter approval. But Texas lawmakers don’t reconvene in Austin again for a regular session until 2009.The Orange Line eventually would provide millions of North Texans with rail access to the Dallas-Fort Worth International Airport. The project was initially expected to be completed by 2013.The opening of the first phase of the 14-mile Orange Line — a roughly five-mile stretch from just north of Dallas’ Love Field west to the Las Colinas area of Irving — was pushed back a year to 2012. The second and third phases are still expected to be completed on time. Cannaday said Irving already has “several billion dollars of development springing up around the proposed route and it’s all based on that 2011 completion date” for the first phase of the project. She said it’s the largest transit-oriented development in the country and added the city plans to break ground on a new convention center sometime in January or February.DART still plans to open its 28-mile, $1.7 billion Green Line in September 2009. That project will traverse from southeast Dallas through downtown and north to Farmers Branch and Carrollton.The transit authority has the ability to issue up to $2.9 billion of sales tax revenue bonds, and expects to do so over the next 10 years to complete projects that will double the track mileage of the light-rail system to more than 90 miles. The light rail accounts for about two-thirds of the agency’s 20-year, $5.3 billion capital program.The long-term debt is secured by revenue from a 1% sales tax in the 13 member cities of DART. About $385 million is expected in collected revenue for fiscal 2007 while next year’s revenue is estimated at $403 million. First Southwest Co. and Estrada Hinojosa & Co. Inc. are DART’s co-financial adviser. Vinson & Elkins LLP and West & Gooden PC are co-bond counsel.