DALLAS — Denver will commit up to $8 million per year for 20 years to secure a $300 million federal loan for redeveloping its Union Station train terminal as a hub for an ambitious mass-transit system.
The moral pledge, approved by the City Council Monday night, was required for the loan, even though Denver may not have to provide any of its general revenue funds for the project.
The pledge serves as a backup if project revenue proves insufficient to cover the debt between the years 2020 and 2042.
Denver chief financial officer Claude Pumilia said the project would need to produce only 44% of projected revenues to cover debt service.
Federal funding is a critical component of the $6.5 billion FasTracks mass transit project under development by the Regional Transportation District as a public-private partnership.
The plan calls for the historic Union Station to serve as the hub of the RTD system with six FasTracks rail lines, district buses, and commercial buses and trains.
A commuter rail segment known as the Gold Line would connect Union Station with Denver International Airport northeast of the city.
Along with the transportation services, the project will include commercial development in the lower downtown section, which has become an entertainment and urban lifestyle magnet.
The Union Station redevelopment is expected to cost $480 million, creating 1,000 construction jobs this year, 7,000 construction jobs within the first four years, and 31,000 jobs of various types during the life of the project.
The FasTracks project, originally expected to cost $4.7 billion and be completed by 2017, was approved by voters in 2004.
Since then, the estimated cost has grown to $6.5 billion. RTD officials say the program cannot be completed by the target date unless voters agree to double the 0.4-cent sales tax authorized in 2004.
The project includes 119 miles of rail lines, rapid bus lanes, park-and-ride lots, and other facilities.
In addition to FasTracks, the RTD has a six-year, $511 million capital plan that it expects to fund from various revenues, including federal funds and certificates of participation.
Standard & Poor’s notes the RTD’s large need for debt issuance as an offsetting factor in its AAA rating with a stable outlook
Current plans for FasTracks include sales-tax bond issuance of $2.1 billion to $2.7 billion and $1.8 billion in pay-as-you-go capital.
The pay-go portion includes principal payments for the construction of the new Denver Union Station, $187 million of which would be the responsibility of the RTD.
