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Rail News Home Passenger Rail

January 2009

Rail News: Passenger Rail

Rising Material Costs, Falling Sales Tax Revenue put Denver RTD's FasTracks Program in Flux

By Angela Cotey, Associate Editor

In 2004, Denver metropolitan-area voters approved a sales tax increase to fund FasTracks, the Regional Transportation District of Denver’s (RTD) 12-year, $4.7 billion plan to bring transit service to the entire region. Business leaders and elected officials also strongly supported the program, which RTD officials have touted as “innovative.”

Why? Because in those 12 years, RTD would add 122 miles of new light- and commuter-rail service, including six new lines and extensions to three existing corridors — a feat for any transit agency, and especially for one that currently operates just 34 miles of rail service. And those new lines — which would have taken 70 years to construct if built one at a time — will help the metro region handle the additional

1 million residents expected during the next two decades.

But in all their planning, RTD officials didn’t expect that the cost of materials — steel, copper, concrete — would jump to astronomical levels. Or that the country would suddenly find itself in the worst economic recession since the Great Depression. As a result, FasTracks construction costs have soared to $7.9 billion by RTD’s last estimate and sales tax revenue projections are 5.5 percent lower than anticipated, leaving a more than $2 billion program budget deficit.

“We’re attempting to reconcile and manage the project budget, but we’re dealing with a moving target,” says RTD General Manager Cal Marsella.

And those ever-changing budget figures are leaving the program, or at least portions of it, in flux.

In the “good news” department, material costs are beginning to drop; in early December, the price of copper had fallen from a high of well over $2 a pound to $1.47, still nowhere near what RTD had originally estimated, but at least moving in the right direction, says Marsella. But with the economic crisis worsening by the day, there’s also no telling how low the sales tax revenues will go.

So, during the past several months, RTD officials have been devising contingency plans. They’re also awaiting recommendations from a FastTracks task force. Nobody’s sure exactly how the program will play out, but there will be a program, execs say. In the meantime, program officials are advancing all the projects as originally planned until the board directs otherwise.

“In these unprecedented times, the likes of which are pretty rare, there’s really no certainty, so we’re looking to use the best available information and we’re literally monitoring things daily,” says Marsella.

Close to the Core

For RTD, at least one thing is certain: The core of the FasTracks system needs to remain in place. That includes building the West, East and Gold lines — which have the strongest ridership projections and likely will receive federal funding — as well as redeveloping Denver Union Station and building all maintenance facilities.

“We don’t want to do anything that would jeopardize the potential for receiving federal money,” says Rick Clarke, RTD’s assistant general manager for planning and development, and FasTracks implementation director.

To keep the core system in place, RTD has developed several options to complete the program with the current cost and revenue projections, such as building what they can by 2017, constructing all lines as originally outlined but over a longer period of time, shortening some of the lines or going back to voters with another tax increase proposal.

The options likely won’t end there — and RTD won’t be making a final decision on its own. The Metro Mayors Caucus — a group of 37 Denver metropolitan area mayors that meet monthly to discuss and help resolve regional issues — has formed a task force to help RTD address FasTracks problems and have been charged with issuing recommendations to the RTD board early this year.

“We’re taking a trust-but-verify approach,” says Lakewood Mayor Bob Murphy, who chairs the task force.

The 20-member Metro Mayors Caucus FasTracks Task Force comprises mayors from cities that will be served by the FasTracks program, county representatives, two RTD board members, a finance and modeling expert, and representatives from the business and environmental communities, and a local transit advocacy group. The group began meeting in October and spent about two months gathering information about the FasTracks program, including RTD’s cost and revenue assumptions, and financing mechanisms.

“The stated mission is to build FasTracks out in an equitable manner as was promised to voters in 2004,” says Murphy. “But what is equitable? How do you define it? By cost per mile? Number of passengers per mile? Percentage of dollars per line promised in 2004 vs. now? If we try to base the solution solely upon that, we’re going to be much like the hospital board who decides who gets the kidney.”

Searching for Solutions

This month, the task force will begin discussing all possible solutions to the FasTracks dilemma. And they do mean all possible solutions, says Murphy. The task force plans to look into using the public-private partnership (PPP) approach RTD is taking with two of the FasTracks lines on other corridors and extending a stadium tax that could generate up to $40 million annually. They’re also hoping for help through a proposed federal economic stimulus bill that could provide funding for ready-to-go infrastructure projects; the task force has submitted funding applications for the Denver Union Station project and FasTracks maintenance facilities.

“There’s also a theory that perhaps more infrastructure funding will be available for projects ready to go in the next two years,” Murphy says. “So, we might suggest that RTD speed up the preparatory process so that every corridor is ready to go as soon as possible so we can seek additional funding.”

The task force might recommend eventually seeking additional revenue through another sales tax increase, but members “want to pursue all other alternatives first,” says Murphy.

“A recommendation to go to voters this year is very unlikely to be high on our list of priorities,” he says.

There’s even an idea floating around in the private sector that could provide “a giant solution,” says Murphy, but he declined to discuss details.

“We need to think outside the box and be bold enough to at least consider breaking some paradigms to take a whole new look at ways to deliver transportation,” he says.

The task force expects to presents its recommendations to the RTD board in February; RTD plans to adopt a revised strategy in March.

In the meantime, FasTracks officials are going about business as usual — at least, as best they can under the current circumstances.

“We still have a big program, it’s still very exciting, we’re beginning construction on major elements and we’re showing a lot of progress,” says Clarke.

RTD currently is conducting “early construction” activities on the West Corridor, a 12.1-mile light-rail line that will run between the Auraria Campus in downtown Denver and the Jefferson County Government Center in Golden, Colo. The agency officially broke ground on the line in May 2007, when it began removing old trolley tracks and relocating utilities. Now, the agency is building light-rail and pedestrian bridges.

This month, RTD expects to receive a $308 million Full Funding Grant Agreement from the Federal Transit Administration for the corridor. The agency plans to begin construction in April and launch service in 2013.

Next up: redeveloping Denver Union Station, which will serve as the hub for several FasTracks rail lines. Master developer Union Station Neighborhood Co. — a joint venture between Continuum Partners L.L.C. and East West Partners — will renovate the historic station, as well as add plazas, public space, walkways and pedestrian connections. Scheduled to begin in mid-2009, the project also calls for adding eight rail tracks. Construction is expected to be complete in 2013.

Private-Sector Participation

RTD also is advancing plans for the East Corridor and Gold Line, which will be completed under a design-build-operate-maintain-finance package with a private-sector partner. The East Corridor is a proposed 23.6-mile electrified commuter-rail line between Union Station and Denver International Airport. The Gold Line is a proposed 11.2-mile electrified commuter-rail line that would run from Union Station through northwest Denver, Adams County, Arvada and Wheat Ridge.

In October, RTD short-listed three consortiums to pursue a PPP for the lines: Mile High Transit, a consortium between John Laing, HOCHTIEF PPP Solutions, Bombardier, Flatiron Corp., Archer-Western, Aldridge Electric DMJM-Harris/AECOM and CH2M-HILL; Denver Transit Partners, which comprises Flour Enterprises Inc., Macquarie Capital Group Ltd., Ames Construction, Balfour Beatty Rail Inc., Alternate Concepts Inc., HDR Global Design Consultants, Arup, Gannett Fleming, Orrick, Herrington & Sutcliffe L.L.P., Interfleet Technology Inc., and Romero and Wilson; and Mountain Air Transit Partners, a consortium between Babcock & Brown, Siemens, Veolia, Kiewit, Herzog, Stacy and Witbeck, HNTB Corp., Mass. Electric Construction Co., Millibank, Tweed, Hadley & McCoy, Citi and Merrill Lynch.

RTD plans to issue a final request for proposals in May 2009, with the consortiums submitting proposals by 2009’s end. The agency expects to award a contract by June 2010.

“It will help us meet our financial plan,” says Clarke. “Not only are they bringing in private-sector money, but the life of the concession agreement will be 50 years, so it will spread out

our payments.”

The chosen consortium will build both lines, as well as supply rolling stock. The lines are scheduled to be complete by 2015.

Beyond the core elements of the FasTracks system, RTD plans to build three additional rail corridors and extend three existing light-rail lines.

This year, the agency expects to complete environmental work for the North Metro Corridor, an 18-mile commuter-rail line between Union Station and 162nd Avenue, serving Denver, Commerce City, Thornton, Northglenn and Adams County.

RTD plans to issue a request for proposals in 2010 and complete the line in 2015.

RTD also will complete environmental work for the Northwest Rail Corridor by 2009’s end. The 41-mile Longmont-to-Boulder commuter-rail line will operate along BNSF Railway Co. tracks and is scheduled to be complete in 2014.

Environmental work for the I-225 corridor should be complete by the end of next year, too.

The 10.5-mile light-rail corridor would connect the existing Southeast Corridor light-rail station with the East Corridor. A portion of the alignment would run in the I-225 median, then travel through the Aurora City Center area.

RTD expects to award a design/build contract for the line in 2010. Construction is scheduled to be complete in 2015.

And, RTD currently is conducting environmental work for small extensions to the existing Southeast, Southwest and Central Corridor lines. Construction on all the FasTracks components originally was scheduled to be complete in 2016.

And while the unexpected material cost increases and revenue shortfalls now have left several elements of the program up in the air — at least for the time being — RTD and local officials say that support for FasTracks is still there, perhaps stronger than ever. The current re-evaluation might help make the program even better yet.

“Crisis is a terrible thing to waste,” says Murphy. “This is an opportunity to have a fundamental discussion about the future of transportation in our region and our state.”

Contact Progressive Railroading editorial staff.