Report calls FasTracks financing shaky

Date: Nov. 30th, 2009
Contact: Cathy Proctor at Denver Business Journal
The Regional Transportation District’s ambitious FasTracks program rests on a shaky financial structure, and the agency should shift to building pieces of the project’s six new rail corridors with the money it has available, Thornton Mayor Erik Hansen said Monday.

RTD’s plan to build FasTracks on a corridor-by-corridor basis jeopardizes the last lines on the schedule, particularly the North Metro line that’s planned to run from downtown to 162nd Avenue roughly parallel to Interstate 25, Hansen said. That path includes Thornton.

Hansen spoke Monday at a press conference held by the North Area Transportation Alliance (NATA), which represents areas north of Denver, to release its report on FasTracks’ finances. NATA commissioned a report from BBC Research & Consulting of Denver for $6,500.

Hansen said he isn’t swayed by RTD’s preliminary work on the line, including the completion of a draft environmental impact study (EIS) and spending $118 million to buy right-of-way for the line. Hansen is a speaker at an RTD celebration on Tuesday for acquiring the right of way.

“An EIS doesn’t make a line,” Hansen said, saying he wants to see construction start.

RTD spokesman Scott Reed said FasTracks’ financial trouble isn’t new information, and the agency is working on a new financial analysis of the project, expected in early January.

Reed said the agency explored the possibility of shortening the lines, and building only what RTD can afford to do with the existing 2004 sales tax revenues, but rejected the idea because it might jeopardize federal funding.

“We remain focused on delivering the entire FasTracks plan and are working closely with our partners to make that a reality,” Reed said. “Our approach is to build out the entire plan as a system.”

But NATA’s report from BBC said RTD needs to examine alternatives.

“RTD needs to contemplate and discuss Plan B, and perhaps Plan C and Plan D,” the report said.

FasTracks, a $6.9 billion, 12-year construction project to lay more than 100 miles of passenger rail throughout Denver, has a gap of more than $2 billion between forecast revenue and forecast construction costs.

RTD has said it hopes to close the gap, and keep a 2017 deadline for finishing FasTracks, through a grant of up to $1 billion in federal funding, a public-private partnership with a consortium of construction companies to build two major lines, and asking voters to approve a second ballot issue to raise money for the project. Voters in 2004 approved a 0.4 percent sales tax to pay for FasTracks.

But the report issued Monday criticized RTD’s faith in those plans.

“Completion of the system relies on federal funding from a program that isn’t currently in place; from a public-private partnership that has never been accomplished on this scale anywhere in the United States; from an unlikely increase in sales tax rates to unprecedented levels, and from fare box revenue that is dependent on a fully functioning system,” the report said.

If any one of those revenue streams fails to meet projects, considered a “real possibility,” the others will be jeopardized, the report said.

Those tracks at the end of the phased construction schedule — particularly the northern lines to Thornton, Boulder and Longmont — carry more risk than other pieces of the project, the report said.

It added that communities paying the sales tax for FasTracks “carry all the accumulated risk and a reasonable probability of not seeing return from their tax contributions,” it said.

RTD’s Reed said the agency isn’t prepared to start work on a “Plan B.”

“We’re not at a point where we should be doing so, since we’re working to deliver the entire FasTracks program,” Reed said, adding that the appropriate time to look at alternatives is “if we do not secure federal funding, if we do not secure the public-private-partnership, or if we are unsuccessful in moving forward with the sales tax election.”

According to NATA, the group includes elected representatives from Brighton, Commerce City, Dacono, Erie, Firestone, Frederick, Longmont, Northglenn, Thornton, Westminster, Broomfield and the Metro North Chamber of Commerce. Businesses in the group include developer Jonathan Perlmutter, of Jordon Perlmutter & Co., and Todd Steward, CEO of HCA-HealthOne’s North Suburban Medical Center, representing the chamber.