From the Detroit Free Press:
The private-sector group that wants to build a light-rail line on Woodward Avenue from downtown Detroit to New Center said Monday that it has raised most of the money it will need to build it — and pledged to pay for the bulk of the cost of operating the system for the first 10 years.
The M-1 Rail group outlined the details in a report sent to the federal government, making a business case for a streetcar system on 3.3 miles of Woodward, a shortened version of the original plan that called for rail out to 8 Mile Road.
The private investors and philanthropic groups behind the effort said they would commit to paying 80% of the estimated $5.1-million annual cost of operating the rail line through 2025.
That’s a significant step for the project, because paying for operations has been a sticking point in light of Detroit’s financial condition. The city is under a consent agreement in which the state oversees its finances, and on Monday, city officials proposed slashing $250 million from the budget.
M-1 Rail CEO Matt Cullen said Monday that backers of the plan believe private development of a new rail line would be a big part of a strategy to promote growth along a corridor that connects many of the city’s most vital business and civic areas and its prime arts, entertainment and sports venues.
“We think the timing is perfect for this kind of initiative,” Cullen told the Free Press. “We really believe that the symbolism of growth is represented by this project.”
M-1 said it believes the project could be done for $137 million, although projects of this size risk running above initial estimates based on preliminary engineering that cannot account for unknown elements, such as old utilities below Woodward that are not on maps.
Private and philanthropic groups have chipped in $84 million toward the project, M-1 said.
Initially envisioned as a streetcar line, M-1 Rail would be built with expansion in mind and could be converted into a commuter rail system later if metro Detroit decides to build one, Cullen said. In 2025, the M-1 group would donate the project’s assets to the appropriate agency, such as a regional transit authority that Gov. Rick Snyder and the Legislature are working to create for southeast Michigan.
The project still would require nearly $40 million in federal grants that M-1 Rail said the government has said it could award for construction. The plan also calls for some state funding for operational costs not covered by fares, advertising, naming rights and private donations.
M-1 said it would endow a $10-million fund, in part through naming rights to stations, to maintain and operate the rail line for 10 years. Construction would begin in conjunction with the Michigan Department of Transportation’s planned rebuild of about 2.5 miles of Woodward between Sibley, near I-75, and Chandler, just north of Grand Boulevard.
M-1 Rail leaders have been battling back after Detroit Mayor Dave Bing and Gov. Rick Snyder said in December they were pulling their support for the rail project, which at the time would have extended north to the city’s border near the state fairgrounds. They said the city was better off working with the suburbs to build a rapid-transit bus system.
Snyder and Bing later relented and said they would support a privately built, smaller version of the Woodward rail line. Bing’s office said Monday that Detroit cannot now afford to operate light rail, but he would support the private effort.
U.S. Transportation Secretary Ray LaHood gave the M-1 group 90 days to conduct a feasibility study showing that there was sufficient need — and private funding — for a rail line. M-1 Rail said it submitted the 1,200-page report Friday.
“We embarked on this to make sure in our own minds that we knew what it took to build this and we had the capacity to do it,” Cullen said. “We came out of it very confident that it’s a viable and sustainable project, something very important to the city of Detroit. … Rarely has there been an example of the entire community coming together in such a strong way to support something.”
The Troy-based Kresge Foundation is the largest donor to the effort, at $35 million. Other major contributors, many of whom pledged $3 million or more, are Dan Gilbert’s Quicken Loans, the Ilitch Cos., Roger Penske’s Penske Corp., Peter Karmanos’ Compuware, the Detroit Medical Center, Wayne State University and the Henry Ford Health System. New backers include Chevrolet, Blue Cross Blue Shield of Michigan, Wayne County, the Ford Foundation and the Kellogg Foundation.
Megan Owens, executive director of the advocacy group Transportation Riders United, said she was encouraged by the pledge from the investor group and supports keeping light rail in the mix of options available to help boost public transit in metro Detroit.
“It’s a substantial investment, and it just goes to show you how essential they think it is to revitalizing downtown,” Owens said.
LaHood’s office said the U.S. Transportation Department “welcomes M-1 Rail’s final proposal and will take the time to give it the thorough review it deserves. Secretary LaHood looks forward to meeting with Gov. Snyder, Mayor Bing and M-1 Rail to discuss the plan in the next few weeks.”