Orange County

GoTriangle says ‘medium’ is good news for Durham-Orange light rail line

The Federal Transit Administration approved moving ahead this week with engineering work for the $2.47 billion Durham-Orange light-rail transit project.
The Federal Transit Administration approved moving ahead this week with engineering work for the $2.47 billion Durham-Orange light-rail transit project. Contributed

GoTriangle officials say a “medium” rating from the federal government is a good sign for the $2.47 billion Durham-Orange Light-Rail Transit project.

The Federal Transit Administration rating, announced Friday, is the minimum required to move the 17.7-mile project into the engineering phase. The rail line would connect UNC in Chapel Hill with Duke and N.C. Central University in Durham, and points in between.

The FTA bases its ratings on local money dedicated to the project, whether a project is ready for engineering, and how it meets other criteria, like congestion relief.

“Our overall rating is good news and keeps Durham and Orange County’s project on track to be eligible for more than $1 billion in federal investment,” Jeff Mann, GoTriangle general manager, said in an email.

FTA documents released Monday rated GoTriangle “medium-high” on current capital and operations, and “medium” for having 39 percent of the local and state money committed at this point.

The FTA also rated GoTriangle’s financial estimates “medium-low,” noting that cost projections and expected revenues from a half-cent transit sales tax are reasonable. However, it questioned the “optimistic” outlook for vehicle registration and car rental fee revenues, the anticipated growth in light-rail operating costs, and fare revenue projections.

FTA officials do not comment publicly about proposed projects but said in an email that “project ratings are ‘point in time’ evaluations, and as projects advance through the program, costs and benefits may change.” All projects get a new rating before grants are awarded.

Although most transit projects since 2010 were rated “medium-high” when they got federal grants, Charlotte’s LYNX Blue Line and Blue Line Extension projects were rated “medium” when approved for engineering. Both maintained “medium” ratings for project criteria, but their financial plans were upgraded to “medium high” prior to being funded in 2002 and 2012.

GoTriangle’s light-rail project manager Danny Rogers also led Charlotte’s light-rail extension project.

“We’re very much in the same boat as we were in Charlotte when we did that (project),” Rogers said. “The names of the phases are a little different, but it’s still the same thing.”

Looking ahead

Q. What happens next?

An FTA-appointed project management oversight contractor and GoTriangle will complete the project’s design, schedule and costs, and confirm that state and local funding is available. A formal risk assessment could be done over the next six months.

If all goes as planned, GoTriangle could submit the project for a federal budget recommendation in 2018, and it could be approved for a $1.2 billion from the 2019-2020 federal budget. The money would be paid in $100 million installments over the next 12 years.

Q. What could the state pay?

The state legislature has capped light-rail project funding at 10 percent of the total cost, or $237 million. However, the final amount of state funding will depend on how the N.C. Department of Transportation scores the project.

Q. How will we pay the local share?

Orange and Durham counties will split 40 percent of the project’s final cost, estimated at $990 million. Plans for short- and long-term debt could generate $913 million more in interest, repayable through 2062.

Orange County’s share would be roughly $332 million, while Durham County would pay about $1.5 billion. That money will come from a half-cent transit sales tax and vehicle registration and car rental fees. The agreement between GoTriangle and the counties states no other tax dollars have to be used for the project.

A public-private Funding and Community Collaborative is seeking cash and land donations that could cover $100 million of the local construction cost.

Q. What is the financial risk?

GoTriangle has spent roughly $33 million so far, primarily for a required environmental impact study. Another $70 million is being spent on engineering. The FTA could reimburse half of the money if the project gets a federal grant.

Q. What happens if there are cost overruns, or the local, state or federal money isn’t there?

The light-rail project budgets an amount equal to roughly 30 percent of the construction cost for unexpected expenses. The FTA’s project management oversight contractor monitors the project and changes in the cost estimates, helping GoTriangle find ways to cut costs if necessary.

The project probably won’t be built without the anticipated state and federal money, GoTriangle has said.

Q. How will the federal budget affect the light-rail plan?

The Congressional Research Service reports a lot of debate at the federal level about whether the benefits of Capital Investment Grant projects, such as light rail, justify the cost. However, congressional committees recently rejected President Donald Trump’s budget plan that phases out the CIG program.

The Senate and House appropriations committees recently approved draft Transportation, Housing and Urban Development, and Related Agencies funding bills that direct the FTA to continue moving projects through the CIG funding pipeline.

The Senate bill includes $2.13 billion for CIG projects next year – $380 million more than the House version but $168 million less than now authorized.

The full House and Senate still must approve the committee recommendations, and Trump has to sign the final bill. Negotiations could begin in September.

Tammy Grubb: 919-829-8926, @TammyGrubb