...even though gas prices have fallen, “so far, we’re holding onto our customers.” CATS’ average daily ridership of 16,000 is nearly double the expected 9,100. CATS is expanding its preliminary engineering plans for an 11-mile extension to northeastern suburbs by incorporating three-car platforms into its 13 stops, and elevating more sections. Still, budget challenges remain. One of the revenue streams, a half-cent sales tax, “was going great until a few months ago,” says Parker. With fuel prices affecting bus operations, the authority had to boost fares.

Larry Davenport, senior vice president of finance and administration for Hampton Roads Transit, is equally confident about the future of the Tide, a new 7.4-mile light-rail line under construction in Norfolk, Va. But while more than 70% of the $232.1-million project is covered by federal funding, Davenport worries whether the city of Norfolk and the state will be able to pay their shares.

Federal grants helped the Charleston Area Regional Transit Authority cope with a 21% increase in ridership and a $2.4-million fuel bill that was nearly twice as much as expected, says CARTA executive director Howard Chapman. “We were able to get some additional federal grants for our job- access, reverse-commute and supplemental paratransit services. We were able to finish our fiscal year in the black.”

Also on target is Valley Metro’s $1.4-billion, 20-mile Phoenix-area light-rail line that opens on Dec. 27. The 33-station line is within budget, thanks to a $177.2-million contingency fund that now is largely exhausted. Spokesperson Hilary Foose says plans are under way for a 37-mile extension. Maricopa County’s Regional Transportation Plan, financed under the one-half-cent sales-tax extension, identifies 57 miles of transit corridors to be implemented by 2026. A 4.6-mile northwest extension will break ground in 2009 and finish by 2012.

Financial Questions

Cliff Henke, a Parsons Brinckerhoff senior analyst and APTA member, says APTA has requested $123 billion in the the 2009 expected six-year reauthorization of the federal transportation trust fund. “How that will be funded is a big issue,” Henke says. “There are a number of ideas on the table [such as] additional revenue from fuel-tax increases, climate-change revenue, carbon tax or revenue from carbon exchange.”

At APTA’s annual conference in October, Federal Transit Administration chief James Simpson said the industry is “missing profound opportunities” in public-private partnerships and urged members to look at how other countries are investing billions of dollars in rail projects with private partners.

“We are working with all of our contractors to determine better terms and conditions.”
— Michael Horodniceanu,
President Of Mta Capital Construction Co., New York City

“We’re limited in what we can do with the PPPs,” says APTA’s Millar, citing a need for better tax incentives for private investors. “The Internal Revenue Service tries to penalize us, and [the Bush] administration is talking out of both sides of its mouth.”

Cal Marsella, general manager for Denver’s Regional Transportation District, offered some hope when he told APTA members RTD received three statements of qualifications for a 50-year concession to build two lines of the $7-billion, 12-year FasTracks program. Although FTA once “had basically said private equity is ‘at risk,’ what we’re now learning is that FTA may remove it from the cost index,” he said. FTA officials told APTA the agency plans to hold workshops on PPPs, and has created a specific internal position.

Transit officials also would like to see an overhaul of FTA’s New Starts grant process. “We would welcome a more expedited project-approval process so available FTA and local funds can be put to use more quickly,” says Metro Atlanta Rapid Transit Authority spokesperson Andrea Coleman. It would help if FTA broadened eligibility criteria “to give greater weight to land use, economic development and environmental benefits,” she adds. Charlotte’s Parker concurs. “There’s no such thing as a close- second,” he says of the cost-benefit requirements. “If you’re off by one cent, you’re out.”

Another pressing transit issue is related to the banking-industry meltdown. The Washington Metropolitan Area Transit Agency was among 30 transit systems that became entangled in the mess when American International Group Inc., New York City, no longer could guarantee billions of dollars of financing deals with banks. The FTA-approved deals had allowed the agencies to sell railcars and other assets to lenders, and apply the cash to infrastructure upgrades, while leasing the assets back.

The downgrade of AIG’s credit rating in October put many deals in technical default, allowing banks to demand immediate repayment. WMATA alone faced $400 million of sale-leaseback obligations, including a $43-million payment call from KBC Group NV, Brussels. “That would have taken most of our capital budget for the year, which would have been devastating,” says WMATA spokesperson Candace Smith. The agency reached a settlement with KBC.

Transit agencies are urging the federal government to provide assistance through the $700-billion troubled-assets relief program, or take any other action to discourage the banks’ demands of immediate payment.

Rob Healy, APTA’s director of government affairs, says the group has appealed to federal agencies to back the securities. “There is no risk,” he says. We’re not asking for funding, just a guaranty. This is a period of dramatic growth of ridership. If agencies have to come up with millions for the banks, then they will have to cut operating budgets or services—or raise fares. That’s the last thing they want to do.”