DALLAS - With construction and fuel costs soaring, metro Denver's Regional Transportation District is considering five options for covering a $2.3 billion funding shortfall for the FasTracks rail system.
Since the first bond issue of $600 million in 2006, the estimated cost of the system has soared from the original $4.7 billion to $7.9 billion, officials told the RTD board in a planning session this week.
The session was designed to create a list of options for dealing with the funding shortage to be discussed in a series of public information sessions.
"The escalation of construction costs and rising fuel prices are severely impacting a program like FasTracks," said FasTracks spokeswoman Pauletta Tonilas. "And the slumping economy is causing sales taxes to not keep pace with projections."
At the current rate, sales tax revenue would fall $2 billion short of projections when the rail program was approved by voters in 2004.
To build the system as planned by 2017 would require a 0.2-cent to 0.3-cent increase in the district's sales tax, which is currently 0.4 cents per a dollar, Tonilas said. Three other options call for various degrees of completion of the five rail lines in development or extending the construction program to 2034. Another option is to use single tracks instead of double tracks on some routes, which would reduce the traffic on a given route and reduce ridership.
RTD board member Bill McMullen supports the program, but said the district should consider halting the program completely now. Given the current national economic crisis, members of the public are likely to propose that action anyway, he said.
However, the five proposals all include completion of the program, which will be funded by $1 billion in federal subsidies. The funding is part of the Federal Transit Administration's Penta-P program, designed to encourage the use of public-private partnerships on transportation projects.
FasTracks calls for 122 miles of new rail lines, 18 miles of Bus Rapid Transit, 31 new park-n-rides with 21,000 parking spaces, an enhanced bus network and transit hubs, and redevelopment of downtown Denver's historic Union Station.
In developing plans for the system, the RTD is working with an advisory team that includes Goldman, Sachs & Co. and JPMorgan, with legal services coming from the firm Freshfields.
The district expects to send out requests for qualifications for private development teams by Oct. 4 and requests for proposals by next summer. By early 2010, the district plans to choose a development team from an anticipated four finalists.
The RTD is not alone is struggling with the rising costs of the system. Dallas Area Rapid Transit has also recently had to make adjustments to provide the service promised to the suburbs for several years.
In hindsight, the RTD's decision to issue a large tranche of debt in 2006 at favorable interest rates looks prescient. The district estimates that it saved $200 million of interest costs by issuing the bonds that year, Tonilas said.