DART: Rail Projects Safe, but Construction Costs Add Debt: While Rail Construction Costs Soar, Agency Looks for Financial Solutions
By Michael A. Lindenberger and Brandon Formby, The Dallas Morning News
Jan. 23–Higher construction costs won’t keep DART from building its rail lines to Irving and Rowlett on time, agency officials said Tuesday.
Nor will the financial solutions the board is considering delay projects in downtown Dallas or south Oak Cliff, DART president Gary Thomas told board members in a three-hour presentation.
But the agency acknowledged that costs for all four projects have risen, thanks to higher-than-expected construction costs. To pay for those rail lines, the agency will need to take on significant new debt, Mr. Thomas and others said Tuesday.
Exactly how much more borrowing will be needed isn’t clear, but officials said the totals — likely in the range of $300 million to $500 million — would be well within the agency’s debt capacity.
The agency has also taken steps to reduce the cost of the Irving and Rowlett projects through a series of engineering changes.
The DART staff did not present a specific set of recommendations. Instead, it laid out a series of alternatives and said it would bring more specifics to the board in February.
In the meantime, the Irving and Rowlett projects will proceed as scheduled, DART executive vice president Doug Allen said. Construction on the first phase of the Irving project will begin by the end of the year, he said.
Rail service is set to begin there in 2011 and in downtown Rowlett by 2012, he said.
Officials from Dallas, Irving and Rowlett who attended an afternoon DART committee meeting said they were pleased with what they heard.
The prospect of additional borrowing may sound scary, but the alternative is worse, said Dallas City Council member Linda Koop.
“We have got to get people out of their cars,” she told board members after hearing the DART staff proposals. “So I urge you to consider the bold step, the big ideas.”
Irving Mayor Herbert Gears said the important thing to Irving is that the rail lines be delivered on time. The plans announced Tuesday appear to make that possible.
Greater Irving-Las Colinas Chamber of Commerce president and CEO Chris Wallace said several developments worth a total of more than $4 billion are awaiting the arrival of the Orange Line. Some developments are just beginning, but others already sit along the planned route, waiting for the passengers who developers hope will one day peruse retail shops that are empty.
Such considerations have prompted leaders in Irving and Rowlett to press, cajole and, in some cases, wine and dine DART board members and staff, all to urge the agency to keep the projects on time.
And when Mr. Thomas initially suggested that keeping the Orange Line on schedule could mean delays for the Dallas projects, city officials from Dallas reacted with anger.
DART officials conceded Tuesday that the costs for those projects — a second rail alignment in downtown Dallas by 2018 and a Blue Line extension to south Oak Cliff by 2015 — have also gone up by about $200 million total.
On Tuesday, board members pressed Mr. Thomas and others for reassurance that the projects now promised will be built.
“We’ve already disappointed a lot of people,” said Angie Chen Button of Garland. “We can’t afford to do that again. We must keep our promises.”
But by borrowing the additional money, DART officials said, the agency will be able to pay for all the projects it has promised to build in the next 10 years, including the Rowlett, Irving and Dallas lines.
In addition to the added borrowing, DART is going to recommend pursuing new deals with private companies that could be asked to build, operate and maintain — and perhaps finance — some of DART’s future rail lines.
Already, Mr. Allen said the agency will probably use a milder form of the so-called public-private partnerships to build the Irving line.
Instead of designing the rail line itself and then asking a company to build it, DART will probably offer one large contract to a company, or team of companies, to design, build and maintain the Orange Line for perhaps 20 years.
The agency would shift some of the risk for rising costs and other contingencies onto the private firm but would surrender significant control over the details of how the team would design and build the rail line.
Mr. Allen said that given the tight schedule for the Irving line, due to open in December 2011, such an approach is all but required.
The DART board will next meet Feb. 5, and discussions on the Irving and Rowlett projects will resume.
BORROWING OPTIONS
Among the options DART is considering to borrow hundreds of millions of dollars to finance expansion:
— Asking voters to raise the cap on sales tax-supported bonds they imposed in 2000 when approving a $2.9 billion bond package.
— Asking the Legislature in 2009 to change state law to permit DART to issue long-term debt against sales taxes without asking for voter approval.
— Issuing bonds secured by fare-box receipts or by about $48 million in annual federal grants it receives. Such a move would not require voter or lawmaker approval.
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