DALLAS - The Harris County, Tex., Metropolitan Transit Authority will invest $1.5 billion to build 20 miles of light rail under a plan approved by the board of directors Wednesday.

The funding will create 60,000 jobs in the area by the time the construction is expected to be completed in 2012, officials said.

The project won a green light through approval of a contract with the Parsons Transportation Group to build four light-rail lines that will join the current seven-mile line that runs on Houston's Main Street.

"These light-rail lines, along with the highly successful Main Street line, will serve as the backbone for a regional system that will serve commuters across the entire Metropolitan area, and across county lines, for generations to come," said David S. Wolff, chairman of the authority commonly known as Metro.

The first phase of construction will cost $632 million and is designed to create 25,000 jobs. The board has not considered a bond issuance schedule yet.

The first phase includes a combined $90 million in utility work on the north and southeast corridors and $390 million in total costs for the east end corridor, including an overpass at Harrisburg for light rail, construction of a service and inspection facility, and rail cars.

Metro president and chief executive officer Frank J. Wilson said the total contract calls for 35% of eligible program contracts to go to local small businesses, which will amount to $335 million.

The Parsons Transportation Group, he added, will be responsible for designing, building, operating, and maintaining the four new light-rail lines.

"Parsons has the market strength to get this project done on time and on budget," Wilson said. "By operating the lines for five years, Parsons is responsible for any latent defects and overall system performance."

Parson Transportation Group has worked on similar projects in Dallas, Minneapolis, Los Angeles, and Kuala Lumpur, Malaysia. Parsons is also building a $259 million people mover at Miami-Dade International Airport in Florida.

Metro's decision to withhold the cost of the project until Wednesday's vote on the contract brought protests from some Houstonians, including the Texas Watchdog public interest group.

"You absolutely should have a right to know about contracts that public officials are voting on and to make your feelings known to those officials before they vote," Watchdog's Jennifer Peebles wrote in her blog.

The first phase will use $150 million in lease-back agreements to get the project started. Metro will sell railcars, buses, and other assets to banks and lease them back at a lower cost. That will allow the banks to depreciate the assets as tax deductions.

The stimulus effect of the federal funds for the new rail lines will be compounded by an additional $92 million in federal stimulus funds recently approved by Congress. That money can be used for rail cars or other costs.

Metro provides regional transportation services to 14 cities within Harris County. The service area spans more than 600 square miles and a population of more than four million. The authority operates a fixed-route bus service, paratransit service, commuter bus service, high occupancy vehicle lanes, light-rail service, and a commuter vanpool service.

Standard & Poor's rates Metro's lease-revenue debt AA-minus with a stable outlook while Moody's Investors Service rates the bonds Aa2.

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.