From AnnArbor.com

State Sen. Rebekah Warren, D-Ann Arbor, joined today in announcing the introduction of a three-bill package to create a regional transit authority in Southeast Michigan.

Of the 41 largest metropolitan areas in the nation, the Metro Detroit region is the only one lacking a so-called RTA, Warren and other sponsors of the legislation said.

Rebekah Warren

“Simply put, our tax dollars are financing economic investment in other states,” Warren said. “Studies show that for every dollar invested in mass transit, $4 to $8 is returned in economic development. We’ve missed out on this activity for far too long.”

The legislation has bipartisan support with Sen. Bert Johnson, D-Detroit, and Tom Casperson, R-Escanaba, joining as co-sponsors.

Read more: http://www.annarbor.com/news/sen-rebekah-warren-co-sponsoring-legislation-to-form-regional-transit-authority-in-southeast-michiga/

From Crain’s Detroit Business

Until an accord is reached on critical aspects of the Woodward light-rail line, a consortium of private-sector donors who have pledged $100 million toward the project’s $528 million capital costs won’t commit any money.

“We’ll wait to see if there’s a project that makes sense and is viable. Then we’ll be prepared to invest,” said Matt Cullen, CEO of M1 Rail, the coalition of project financial backers who mainly favor a curbside alignment for the line rather than the median-running layout apparently preferred by the city.

And until the debate is resolved, the $100 million exists largely as just a series of informal “soft” commitments from donors, some of which have lapsed because the 9.3-mile, streetcar-style line between Hart Plaza and Eight Mile Road still remains in the planning stages.

“It isn’t like this money was in a box,” Cullen said.

The M1 money accounts for 47 percent of the project’s $210 million required local match needed to leverage $318 million in federal funding to build the line.

The impasse over the line’s alignment — M1 Rail prefers slower curbside service that delivers people to the sidewalk, while the Detroit Department of Transportation is pushing for a purely center-of-street line that travels at higher speeds — continues behind the scenes, sources familiar with the situation told Crain’s.

Until those details are resolved, M1 Rail isn’t going to firm up its financing commitment, Cullen said, nor will the group commit money to a project that it doesn’t philosophically agree with.

Cullen is quick to add that he expects the city and M1, along with the Federal Transit Administration staffers advising DDOT on the project, to come to an accord.

“Everybody on our side of the project wants it to happen and will be reasonably flexible about it,” he said, adding that preliminary plans for a mostly median-running line have begun to circulate in recent weeks, and project engineering is only about 10 percent complete.

“All the funders, including the city, M1 and FTA, have to have a project they’re all comfortable with,” he said, noting that the line will be a hybrid curbside-median layout that will likely loop west to include the Rosa Parks Transit Center at Cass and Michigan avenues.

The $100 million is part of the required local match needed by DDOT to leverage funding under the Federal Transit Administration’s New Starts program, aimed at partially funding qualified local fixed guideway transit projects such as rail. Washington would fund $318 million if the project’s New Starts application — expected to be made late in the summer — is approved. (See box.)

DDOT is confident it will develop a project that satisfies concerns and that M1 Rail will come through with its funding commitment.

“The city is not concerned about whether they’re going to do that,” said Bob Berg, a partner and vice president of Detroit-based Berg Muirhead and Associates, which does media relations work for the city.

The alignment will be laid out based on federal project criteria and what makes the most sense based on public comments collected during the environmental impact process, Berg said.

Mayor Dave Bing will make the final decision on the route, alignment, stations and other details, based on recommendations made to him by Detroit CFO Norm White, who is leading the rail project.

Decisions on the alignment and other details are expected this summer, and construction could begin later this year. Organizers say the line will be operational by 2015.

The money

M1 Rail assembled its $100 million in financial commitments largely from pledges to buy the advertising rights for the line’s stops, foundation gifts and federal tax credits.

The organization’s major individual donors are deep-pocketed, powerful Detroit advocates with downtown business commitments: Penske Corp. founder Roger Penske, who is chairman of the project; Peter Karmanos Jr., founder of Detroit-based software company Compuware Corp.; Mike Ilitch, owner of the Detroit Tigers and Detroit Red Wings and co-founder of Little Caesar Enterprises Inc.; and Quicken Loans/Rock Financial founder Dan Gilbert, the project’s co-chairman.

Those four have committed $3 million each for the display advertising rights to a station along the route.

Henry Ford Hospital and Wayne State University also have committed $3 million each for a station, Cullen said.

Four other donors have withdrawn their informal $3 million station commitments, Cullen said. He declined to name those donors and said he believes they can be persuaded to recommit once there is a finalized design for the rail line.

“There are other softer commitments that we had in place and we have to get back in place,” he said. “We couldn’t get certainty on all of the funding sources.”

Also pledging funds to M1 are the Troy-based Kresge Foundation ($35 million) and Detroit’s quasi-public Downtown Development Authority ($9 million).

The final portion of the $100 million wasn’t cash at all but $20 million from the U.S. Treasury Department‘s New Market Tax Credit program, which annually awards credits against federal income taxes for qualified organizations that invest in low-income communities.

The credits are for a year and must be reapplied for if they aren’t used. M1 qualified for the credits twice but isn’t applying again until the rail project plans are in place, Cullen said.

“We are confident we can put them back in place,” he said. Originally, M1 Rail said it had arranged for $125 million in financial commitments, but $25 million was from a federal transportation stimulus grant that was signed over to DDOT for the project.

Currently, all of the funding commitments exist informally.

“We don’t have binding funding agreements,” Cullen said. “Have we had people coming in and out of that? Yes we have. Is that surprising? No. It’s all predicated on people being comfortable with the project.”

He attributed some of the lapsed commitments to changes in personnel at those businesses or organizations, and the recession.

The concerns

Cullen said M1 wants to see three main things:

• What does the project look like?

• Can it be built within its budget?

• Is it financially sustainable?

“All of this other discussion and noise, ultimately it has to be addressed by those three things,” he said. “It’s got to make sense holistically.”

DDOT has assembled a variety of financial resources to handle the annual operating costs. (See box.)

M1 Rail originally intended to unilaterally finance a rail line from Hart Plaza to Grand Boulevard but stepped aside in 2010 to allow DDOT to lead the larger project.

Source: http://www.crainsdetroit.com/article/20110529/SUB01/305299991/private-money-on-the-line-woodward-rail-donors-wait-for-layout-they#

From Detroit Crain’s Business

The Local Money
Here’s how the federally required $210 million local funding match for the $528 million Woodward rail project breaks down:

• $73 million from the forthcoming sale of $125 million in Capital Grant Receipts Revenue Bonds by the Detroit Department of Transportation.
The estimated annual $10 million interest payment on the bonds will be paid from other annual federal grants received by DDOT.
• $12 million from previously received federal transportation grants to DDOT, which will pay for planning and preliminary engineering.
• $25 million from a Transportation Investment Generating Economic Recovery grant, federal stimulus funding aimed at surface transportation projects. The grant was given to the Michigan Department of Transportation and then turned over to DDOT.
• $100 million in cash donations and tax breaks (such as federal New Markets Tax Credits) assembled by the M1 Rail consortium of private backers and foundations.
• The above funding is 40 percent of the total capital costs and makes the project eligible for $318 million in federal funding under the Federal Transit Administration’s New Starts program. The city must apply for the funding.

Annual Costs
The rail line’s yearly operations and maintenance costs are estimated to start at $2.1 million when the route begins service in 2015 and are expected to hit $16 million by 2030. An analysis of the project prepared for the Detroit City Council forecasts the line will carry 1.8 million riders annually — a number kept flat through 2030 in revenue and expense projections as a conservative estimate, the city has said. The city’s plan to cover the line’s cost breaks down as:

• $2.8 million from fares (at $1.50 per rider).
• $5 million from federal Congestion Mitigation and Air Quality grants.
• $2 million from the state’s Public Act 51, which is transportation project funding.
• $5 million from other state pledges.
• $1 million from federal Section 5309 Fixed Guideway Modernization Funds.
• $2 million from city’s general fund.

Source: http://www.crainsdetroit.com/article/20110529/SUB01/305299991/private-money-on-the-line-woodward-rail-donors-wait-for-layout-they#

From The South End
(Wayne State student newspaper)

Questions about the purpose and design of the Woodward Light Rail project have arisen while it slowly but surely makes its way through the planning and approval phases.

One vision by area entrepreneurs is for the train to run trolley-style down the sides of Woodward Avenue at slow speeds to promote local retail and commerce. Transportation advocates, on the other hand, are promoting a high-speed train moving down the center of Woodward to effectively move people in and out of the downtown area.

Megan Owens, director of Transportation Riders United, a nonprofit advocate for public transportation, said that the differences between the two plans lie in timeliness and reliability.

If the train runs along the side, then it would have to compete with traffic, cars trying to parallel park and double-parked vehicles, which could potentially delay the train. On the other hand, Owens said, if the train runs in a center lane on Woodward, it wouldn’t be blocked by traffic and would thus be more reliable.

Another concern is how the light rail train would affect bicyclists.

“By law, bicycles are supposed to travel on the road in the slow lane, on the side lane,” Owens said. “If there are train tracks in that lane, it makes it very unsafe for bicycles and really ends up barring bicycles from Woodward Avenue.”

She said TRU supports having the Woodward Light Rail run in the center of Woodward Avenue.

Matt Cullen, CEO of the M-1 group of private investors who are partially funding the project, said that while transportation is important, members of the M-1 group are “fundamentally…certainly keenly focused on the economic development in the downtown core.”

People and corporations constituting the M-1 group of investors include Quicken Loans, Roger Penske, Wayne State, Henry Ford Hospital, Peter Karmanos Jr., the Illitches, Compuware, the Kresge Foundation and Detroit Economic Growth Corporation.

In five years, Cullen said, the Woodward Light Rail will hopefully have major economic benefits for Detroit.

“We’ll be starting to see economic development resulting from the ability to move people to and from jobs, and from being able to move people within the downtown so that they can take advantage of the attractions that are within the downtown,” he said.

Ideally, Cullen said, the Woodward Light Rail would not only transport local people, but also work in conjunction with a high-speed train between Detroit and Chicago to help bring visitors to the downtown area.

Cullen said the M-1 investors decided to fund the light rail after seeing the potential for such a transit system in the city.

“I think people just fundamentally believed that a transit project in Detroit was a compelling need and that (it) would really help the development within the city of Detroit,” he said.

He said it was difficult to persuade federal government officials to approve funding because of some of the “failed history within the region of transit.”

Detroit’s People Mover could be considered an example of such a failure. Although the 2.9-mile system charges each passenger 50 cents, it costs $4.28 to move a passenger one mile, according to statistics from the 2009 National Transit Database.

Bob Berg, partner and vice president of Berg Muirhead and Associates, which handles media relations work for Detroit, said the People Mover was never intended to be a stand-alone system. When it was designed in the 1980s, it was intended to work in conjunction with a light rail train, “so it’s never really realized the potential that was envisioned when it was first designed and built,” he said.

Berg said the ultimate design of the light rail system will be decided by the planning process and the federally-deemed criteria concerning the impact on the surrounding area, traffic, pedestrian safety and the environment.

“The idea is to let the process make the determination,” Berg said. “Once you’re done with the process, the decision sort of makes itself.”

The next step, he said, is to receive the final environmental impact statement, which is projected to be finished by the end of June. After the green light is given for preliminary engineering work, groundbreaking on the project could start during the later half of next year.

Originally, the light rail was supposed to be constructed in two phases: from downtown Detroit to West Grand Boulevard, and then from West Grand Boulevard to Eight Mile Road. Now, Berg said, the project will be completed as one project running from the downtown area to Eight Mile Road.

Approximately $500 million — upwards of 60 percent of total funding – is coming from the Federal Transit Administration, Berg said. The rest of the money will come from the private funding of the M-1 group and from Detroit’s general fund. Additionally, he said the annual estimated operating cost is about $10 million. Approximately $8 million will come from federal funding, while $2 million will come from city funds.

The light rail system could have significant economic ramifications. For every dollar invested in a light rail system, Berg said, there is $8 in private investments in restaurants, homes, offices and retail.

Owens said Detroit’s spending on public transit runs far behind spending on transit in other places. The average metropolitan area spends over $200 per capita per year on public transit, she said, while the Detroit region spends only $75.

“We get what we pay for,” Owens said.

She added that right now, city officials are evaluating the public’s input from the public comment stage, which began January 28 and ended March 14.

“I can tell you that we did get unofficial word that they were almost entirely positive,” she said. “All but a handful were in support of developing a light rail.”

Cullen said that although a balance needs to be found between the two visions for the light rail train, he did not think there was a “fundamental difference” between the two viewpoints.

“I don’t think that there’s a choice that it’s one or the other,” Cullen said. “I think clearly the reality is that it needs to be both. It needs to be a bit of a hybrid.”

Source: http://thesouthend.wayne.edu/index.php/article/2011/05/woodward_light_rail_faces_tough_questions

From the Detroit Free Press

In his 1936 essay “The Crack-Up,” novelist F. Scott Fitzgerald said real intelligence is the ability to “see that things are hopeless and yet be determined to make them otherwise.” Seventy-five years later, anyone who has fought for mass transit in southeast Michigan can still feel him.

Despite a soul-shriveling history of detours and dead-ends, transit advocates throughout the suburbs and in this great city keep pushing. (And, yes, I consider Detroit a great city. If that makes me deluded as well as intelligent, I’ll gladly accept both tags.)

The latest shot of hope is the Woodward Light Rail Project, a $500-million public-private partnership to run electric rail cars 9.3 miles up and down Woodward, from Hart Plaza to 8 Mile. As a city resident, I want this as much as anyone.

But it’s not a done deal, despite the unwavering confidence of Mayor Dave Bing and his project point man, Chief Financial Officer Norman White, who expect construction to start next year. The city and region can still blow this, and another failure would be near-fatal to efforts to build mass transit in this region.

Getting the money

The most immediate obstacle is collecting the $100 million pledged by private investors to complete Detroit’s local match for federal New Starts money. City leaders and private investors continue to work out differences over design, alignment and other issues. Maybe half the cheddar — including $35 million from the Kresge Foundation and $9 million from the Detroit Economic Growth Corp. — is a sure bet.

Not getting the full $100 million would not kill the project, but to compete with other cities, Detroit must get most of it. Meeting with the Free Press editorial board in mid-April, the mayor told me he needs investors to commit within 30 days. Thirty days have passed and nothing definitive has happened. A spokesperson for the M-1 Rail leadership team declined to comment through an e-mail on Friday, other than to say “they are not comfortable commenting on something the mayor said in a meeting they were not present at.”

Here’s an even bigger problem: Detroit’s application for federal assistance must explain how the city will pay to operate light rail. Fares will bring in maybe $3 million a year, but running the system will cost at least $10 million more. Facing a $150-million deficit, the city can’t do it alone. For now, there is no plan for a regional transit tax — or even a regional transit authority. That conversation must start now. With the rail line ending at 8 Mile, some suburban leaders are asking what’s in it for them.

The Woodward rail system could tap Michigan’s Comprehensive Transportation Fund, which helps run local transit agencies, including SMART. With only $160 million a year, however, the fund now covers only one-third of the costs of Michigan’s 75 transit agencies — dozens of which are near bankrupt or cutting service to stay solvent. Any plan to take loot from transit agencies around the state to pay for light rail in Detroit would likely set off a fight in the Legislature. Suburban leaders are already beefing about the 65/35 split in state and federal transit money between Detroit and its suburbs.

Federal Congestion Mitigation and Air Quality Improvement (CMAQ) money could also help pay operating costs. But the rail project would likely get only $1 million or $2 million a year — southeast Michigan receives only $6 million for transit altogether — and CMAQ funding is good for only three years.

More obstacles

Finally, the Federal Transit Administration won’t allow Detroit to weaken its already inadequate bus system to build a rail system — nor should it. More than 25% of Detroiters don’t have vehicles. Their needs come first. Besides, a rail line needs decent bus service to feed it.

City Council did the right thing in approving a bond issue that included $73 million for light rail. Still, repaying the 15-year issue with annual federal transportation grants carries some risks. It’s money that would otherwise go to Detroit’s bus system.

Federal New Starts grants are highly competitive. It’s not enough to have a good plan — only about one in five transit projects nationwide receive funding. No doubt, the Obama administration has taken a special interest in Detroit’s rail project. The feds want it to move forward, but the project still must compete with hundreds of others and get congressional approval.

All that said, I still believe this can happen. Light rail in Detroit could jump-start a first-class regional transit system and generate hundreds of millions of dollars of development, as White told me. But Detroit’s leaders must work out these problems now, maybe with some help from their regional partners.

Things might look hopeless at times, but transit advocates in Detroit and southeast Michigan must determine to make them otherwise.

JEFF GERRITT is a Free Press editorial writer.

Source: http://www.freep.com/article/20110522/OPINION02/105220456/Jeff-Gerritt-Obstacles-ahead-light-rail-worth-work?odyssey=nav%7Chead