Two more cities cancel elections on exiting Dallas transit agency

Bloomberg News

The number of Texas cities threatening to end Dallas Area Rapid Transit funding and services shrank to three this week from six after Irving and Farmers Branch joined Plano in cancelling May elections on a potential withdrawal from the agency.

DART, which uses 1% sales tax contributions from its 13 member cities to provide bus, rail and other transit services in a more than 700-square-mile area, has been working to stop exodus efforts that began in November.

Irving, which along with Plano are DART's biggest tax contributors after Dallas, pulled its May 2 election in a 7-2 vote Thursday night by the city council, which also approved an agreement under which the agency will return an estimated $54.48 million to the city to support transportation-related projects over the next six years.

DART's agreement with Plano, which took action on Monday to cancel its election, will return 10% of the city's tax contributions over six years for transportation projects.

The Farmers Branch City Council on Tuesday rescinded its election and approved an agreement with DART that will provide a "defined allocation of DART sales tax revenue over a structured six-year period to fund locally directed mobility and infrastructure projects," according to a city statement.

Also on Tuesday, Addison's city council, which was offered just over $8 million during a six-year period by DART, voted 5-2 to keep the May 2 election it set in January.

"This decision is too big for this board to make … for the residents, and I agree that the right to vote is important, and these are tax dollars that the citizens of this town should decide how they want those tax dollars spent now," Council Member Howard Freed said.

The other two cities with May elections on DART membership are University Park and Highland Park. 

The main reason the six cities cited to ditch DART was inequity between their sales tax contributions and transit services they receive. Historically, the cities accounted for 32% of DART's sales tax revenue, which is expected to total $937.5 million in fiscal 2026. Any city that drops out of DART would still be on the hook for its share of outstanding debt.

Rating analysts have said the cities' exodus would subject DART to budget and credit pressures. 

The transit agency has been scrambling to address member concerns, including securing $75 million over five years from north central Texas' Regional Transportation Council and supporting governance changes, pending state legislative approval, that would give each city representation on DART's board and eliminate Dallas' majority status. It also announced a moratorium on new long-term debt issuance in January.

DART has said it plans to issue about $2.5 billion of bonds over the next six years primarily for light-rail vehicle and bus replacement, system modernization and remaining project costs from the Silver Line commuter rail service that launched in October.

The agency had $3.86 billion of senior lien sales tax revenue bonds outstanding as of Sept. 30. It last issued bonds in 2021: $1 billion of tax-exempt and taxable debt in two deals rated Aa2 by Moody's, AA-plus by S&P Global Ratings, and AAA by KBRA — all with stable outlooks.