Metro to publicly finance HOV toll lane project for Santa Clarita Valley

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We posted last year about a Measure R project to add tolled HOV lanes to 13.5 miles of the 5 freeway in the Santa Clarita Valley between the 14 freeway and Parker Road. Vehicles with one or two occupants would pay a toll while vehicles with three or more occupants could use the lanes for free; tolling the lanes allows the project to be built well before the original Measure R completion date of 2040.

Today we have this update: Metro and Caltrans have decided to publicly finance the project instead of seeking a public-private partnership (known as a PPP). Why? It’s less expensive to publicly finance the project by using $352 million in now-available Measure R and other funds and a federal low-interest loan for $175 million.

Under a PPP, a private firm or firms would have paid for the construction of the project and then been repaid, in part, by collecting and managing tolls from the lanes for 35 years. In this case, public financing will allow Metro to borrow less money and secure a lower interest rate on the needed loan.

This project as originally proposed was also unusual because it included new sound walls for the 210 freeway in Pasadena and Arcadia and the 170 and 405 freeways in Los Angeles, and adding extra lanes for a short stretch of the 71 freeway in Pomona. Under the public financing deal, those projects will be built separately. The toll revenues would be reinvested and used for transit services and traffic operations in the 5 freeway corridor in the Santa Clarita Valley.

The current forecast calls for the HOV lanes on the 5 to open in 2021, the soundwalls to be completed in 2019 and for the additional lane on the southbound side of the SR-71 to be done in 2021 and the lane on the northbound 71 to be finished in 2028.

 

Graphic: New Starts funding for Metro over the years — and finally on the rise again!

New Starts Appropriations Graph

The above graphic is certainly worth a look. It shows the amount of federal New Starts money received by Metro on an annual basis since 1993. New Starts is a federal program that helps local transit agencies pay for big, expensive projects and most of the money shown above went to the existing Red/Purple Line subway and the Eastside Gold Line.

The graphic is also missing a critical piece of good news. President Obama’s proposed transportation budget for fiscal year 2015 (which begins Oct. 1, 2014), which was announced today, includes $100 million for the Regional Connector and $100 million for the Purple Line Extension. If the budget is approved by Congress, the $200 million in New Starts money for Metro would be the most received in any given year.

The $100 million for the Regional Connector is part of the eventual $670 million in New Starts money that the project will receive. That was the big news a couple of weeks ago when Metro and the U.S. Department of Transportation finalized the New Starts deal. A similar deal for $1.25 billion in funding for the Purple Line Extension project should also be completed soon. Both projects are also drawing on funds from Measure R, the local sales tax increase approved by Los Angeles County voters in 2008.

Stepping back, let’s look at the big picture. The Connector and Purple Line Extension also plan to use federally-backed TIFIA loans that will help Metro get lower interest rates than if they borrowed money for construction at market rates. That’s significant because it shows the degree to which the federal government under President Obama is getting involved in helping local areas build transit. It may not all be grant money — i.e. money Metro doesn’t have to pay back — but the loans still help Metro take on less debt and thus spend less on already pricey projects.

The loans are part of Metro’s America Fast Forward [AFF] proposal that has found its way into President Obama’s proposal for a multi-year transportation funding bill. AFF would expand the loan program and also create federally-subsidized bonds that local agencies could use when building projects. And that’s what I want readers to understand: the loans, the bonds, the New Starts money and Measure R combined — that’s the big kahuna here, folks. Those four things together give Metro the resources to build the expanded transit network many readers here want.

Finally, and on a very related note, I wanted to pass along a thank you from Metro officials to President Obama and Senators Barbara Boxer and Dianne Feinstein for helping Metro secure the federal funds and advocating for expanded transit funding in Los Angeles and other cities across the nation.

Both parts of America Fast Forward initiative are in President Obama’s proposal for four-year transportation bill!

Earlier today in Minnesota, President Obama announced his proposal for a four-year transportation spending bill that would include both parts of Metro’s America Fast Forward initiative. If Congress was to vote the bill into law — and that’s a big ‘if’ — that could be a boon to Metro and other transit agencies around the nation that would have new financial tools to use when building big, pricey transportation projects.

Photo: Minneapolis Star-Tribune.

Photo: Minneapolis Star-Tribune.

America Fast Forward includes two components. The first is a federally-backed loan program called TIFIA that is designed to give agencies access to loans with interest rates lower than can be found on the open market.

The second part is a bond program described in the graphic below. In a nutshell: those who invest in transportation bonds receive federal tax credits instead of interest, a good way for investors to lower their tax burden and a good way for transportation agencies to save on interest costs.

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The hope at Metro is to potentially use a combination of TIFIA loans, America Fast Forward bonds, some federal New Starts money (New Starts is a grant program in which the federal government matches local funds to help build big projects) and Measure R tax revenues to accelerate transit projects — in particular the second- and third-decade Measure R projects. Some of those projects: an extension of the Eastside Gold Line, the Airport Metro Connector, the South Bay Green Line Extension and the second and third phases of the Purple Line Extension.

Of course, it should be noted that President Obama’s bill proposal is just that — a proposal.  Transportation bills are designed to guide spending over several years but they have been contentious in Congress in recent years. A four-year bill that expired in 2009 was temporarily extended more than 10 times before Congress in 2012 voted to approve a new two-year bill, which expires at the end of September.

So we’ll see — getting bills approved by Congress is never an easy task. Nonetheless, the fact that President Obama has included both parts of America Fast Forward into his proposal is good news for Metro and officials I spoke with here today expressed their extreme gratitude for the President’s recognition of the program.

Click here to see the entire bill proposal on the White House website.

Video from this morning’s Regional Connector event

Here’s our original post along with the Metro news release.

And here’s the FTA’s news release.

And the non-government view of things? Here’s the L.A. Times article.

And here’s the FTA news release on the funding agreements for the Regional Connector

Public officials with a rendering of the Full-Funding Grant Agreement for the Regional Connector. Photo by Juan Ocampo for Metro.

From left: Former Metro Board Member Richard Katz, Rep. Xavier Becerra, Santa Monica Mayor and Metro Board Member Pam O’Connor, L.A. Councilmember and Metro Board Member Paul Krekorian, Metro Board Member Jackie Dupont-Walker, FTA Deputy Administrator Therese McMillan, Duarte Councilmember and Metro Board Member John Fasana, Rep. Lucille Roybal-Allard, Sen. Dianne Feinstein, L.A. Mayor and Metro Board Vice Chair Eric Garcetti, Supervisor and Metro Board Member Mark Ridley-Thomas, Lakewood Councilmember and Metro Board Chair Diane DuBois, Supervisor and Metro Board Member Zev Yaroslavsky, Los Angeles Councilmember and Metro Board Member Mike Bonin and Metro CEO Art Leahy. Photo by Juan Ocampo for Metro.

From our friends at the Federal Transit Administration:

LOS ANGELES – The U.S. Department of Transportation’s Federal Transit Administration (FTA) today celebrated the signing of a $670 million construction grant agreement to help build the Regional Connector light rail transit line in the heart of downtown Los Angeles. The two-mile rail segment will connect three existing transit lines, offering thousands of area residents more efficient and convenient access to jobs, education, and other ladders of opportunity. FTA Deputy Administrator Therese McMillan took part in the signing event along with Senator Dianne Feinstein, Congressman Xavier Becerra, Congresswoman Lucille Roybal-Allard, Mayor Eric Garcetti, and other state and local officials.

“LA’s Regional Connector will help make this city and region a better place for tens of thousands of Angelenos by ensuring that public transit not only works for everyone, but that it works better than ever,” said U.S. Transportation Secretary Anthony Foxx. “This Administration is committed to ensuring that every American has access to ladders of opportunity that lead to success—and access to public transportation is essential to making that happen.”

The Los Angeles County Metropolitan Transportation Authority (LACMTA) will use FTA’s grant funds to build an underground connection between the existing Metro Gold line in Little Tokyo and the Exposition and Blue light rail lines, which currently terminate at Flower and 7th Streets. The grant also includes four new light rail vehicles to augment the existing fleet. The project will reconfigure Metro’s three existing LRT lines into two lines, one primarily running north to south, and one east to west. The project reconfiguration will eliminate the need for riders to make cumbersome transfers from light rail to the Metro Red or Purple Line subway system, and then back onto light rail, to reach their destinations.

“The Regional Connector will improve the quality of LA’s light rail service by offering a one-seat ride that cuts travel times from Long Beach to Azusa and from East Los Angeles and the San Gabriel Valley to Santa Monica,” said FTA Deputy Administrator McMillan. “The traffic gridlock of Los Angeles has been the roadblock for many residents who need better, more reliable access to the jobs and educational opportunities offered across the metropolitan area, which is why we are proud to be a partner in the greater transit vision for the future of the Los Angeles region.”

LACMTA estimates the Regional Connector will open in 2020 and initially handle roughly 60,000 trips or more each weekday. In addition to the $670 million that FTA has committed to the project through its Capital Investment Grant (New Starts) Program, LACMTA will receive $64 million in other U.S. Department of Transportation (DOT) funds and a loan of up to $160 million from the DOT’s Transportation Infrastructure Finance and Innovative Action (TIFIA) loan program. The remainder of the roughly $1.4 billion project will be funded with state and local resources.

In addition to the Regional Connector, the FTA is advancing two other major transit expansion projects in the Los Angeles metropolitan area: the Crenshaw/LAX light rail transit corridor project and Section I of the Westside Purple Line Extension. The $2 billion Crenshaw project, which broke ground in January, is funded in part with a $545.9 million TIFIA loan and approximately $130 million in other FTA and DOT funds. DOT has approved a TIFIA loan of up to $856 million for the Westside project, which is also in line to receive funding through FTA’s Capital Investment Grant Program later this year.

Federal government approves $670-million grant and $160-million loan for Regional Connector

Officials from Metro and the Federal Transit Administration signed a pair of agreements Thursday that will provide a $670-million federal grant and a $160-million federally-backed loan for the Regional Connector light rail project. The total budget of the project is $1.37 billion.

A media event with public officials is being held at 10 a.m. next to the Gold Line’s Little Tokyo station. We’ll post photos and video later today.

In practical terms, the agreements clear the way for construction to begin later this year on the 1.9-mile underground light rail line in downtown L.A. that will tie together the existing Blue Line, Expo Line and Gold Line with tracks between 7th/Metro Center and Little Tokyo. When the project is complete — forecast for 2020 — passengers on those lines will be able to travel through downtown without having to transfer to another line.

The project will also allow trains to run more frequently through downtown. Blue Line and Expo Line trains currently must turn around at 7th/Metro Center, a time-munching maneuver.

Utility relocations on the project are already underway with construction expected to begin later this year after the Metro Board of Directors selects a contractor to build the line. Metro already has three light rail projects currently under construction — the Crenshaw/LAX Line, the Expo Line and the Gold Line Foothill Extension. The first phase of the Purple Line Extension of the subway is also expected to sign funding agreements with the federal government later this year, allowing the Metro Board to select a contractor to build that project.

That means that within the next calendar year, Metro could have an unprecedented five rail projects being built simultaneously that will add about 29 miles of rail to the existing 87-mile Metro Rail network. All five projects are also receiving significant funding from Measure R, the half-cent sales tax increase approved by 68 percent of Los Angeles County voters in 2008.

The Connector is the first Metro project to receive a federal New Starts grant since the Eastside Gold Line, which opened in 2009. New Starts is a federal program designed to help local transit agencies build expensive transit projects.

The loan is coming from the federal TIFIA program, which helps local areas secure low-interest loans that are cheaper than loans found on the open market. The TIFIA program is part of Metro’s America Fast Forward initiative that was expanded in the most recent federal multi-year transportation bill. Metro is seeking to have the program renewed and expended in the next bill, which Congress is expected to debate this year.

The Connector was originally envisioned as a rail project that would run at street level through downtown. Public opinion, however, swayed Metro to put the line underground, which increased costs but will also provide faster travel speeds and eliminate the need for a rail undercrossing at Alameda Street. The increased cost is the reason that federal funding is crucial for the project.

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The news release from Metro is after the jump.

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Video of this morning’s groundbreaking event for the Crenshaw/LAX Line

And here is video of this morning’s groundbreaking for the Crenshaw/LAX Line.

There are nice comments about mobility — and the need for more of it — from U.S. Transportation Secretary Anthony Foxx, U.S. Senator Barbara Boxer and Los Angeles Mayor Eric Garcetti.

Metro would like to extend a special thank you to Secretary Foxx and Senator Boxer for making the trip to Los Angeles on Tuesday and for their help — and they were both personally involved — in getting this project off the ground.

RELATED POSTS:

And so it begins: ground is broken for the 8.5-mile Crenshaw/LAX Line

Social media roundup for Crenshaw/LAX Line groundbreaking

And so it begins: ground is broken for 8.5-mile Crenshaw/LAX Line

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The groundbreaking of the Crenshaw/LAX Line was held Tuesday morning adjacent to the Expo Line’s Crenshaw station. Video is coming later today and we posted to our Twitter and Instagram feeds during the event; see this post for social media coverage of the event.

Here is Metro’s news release:

Construction began Tuesday morning on the Crenshaw/LAX Transit Project, an 8.5-mile, $2.058-billion light-rail line that will run between the Metro Expo and Green lines and is expected to open in 2019. The project will also bring Metro Rail closer to Los Angeles International Airport.

The groundbreaking bought together top officials from federal, state and local government, including U.S. Transportation Secretary Anthony Foxx and California Senator Barbara Boxer.

One of the old Yellow Cars at Crenshaw & 54th in 1954. Photo by Alan Weeks via Metro Transportation Library and Archive.

One of the old Yellow Cars at Crenshaw & 54th in 1954. Photo by Alan Weeks via Metro Transportation Library and Archive.

The event was held at the intersection of Crenshaw and Exposition boulevards, where the first of the project’s three underground stations will be built. Demolition of some existing structures will be among the first work done, with heavy construction expected to begin this spring.

“Thousands of hard-working families and seniors living in Crenshaw depend on public transportation every day to get to work, to school, and to obtain medical care,” said Secretary Foxx.  “Bringing light rail to this community will create jobs, spur local economic development and make it easier than ever for residents to access downtown Los Angeles and beyond.”

The new Crenshaw/LAX Transit Project will be the first rail line to serve Crenshaw Boulevard and the city of Inglewood since the streetcars of the Los Angeles Rail Line (known as the “Yellow Cars”) stopped running in 1955. In some places, the new light rail line will use the old alignment for the streetcars.

“The Crenshaw Line is a top priority for me because it will provide a crucial transportation link, create over 18,000 jobs, help connect communities, reduce air pollution, and provide economic development and economic opportunities,” said Senator Barbara Boxer (D-CA), Chairman of the Senate Environment and Public Works Committee.

The new light-rail line will serve the Crenshaw Corridor, Inglewood, Westchester and the area around Los Angeles International Airport with eight stations, a maintenance facility and park-and-ride lots.

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Measure R committee OKs recommendation to advance TIFIA loan financing for Regional Connector Project

Measure R Oversight CommitteeThe Measure R Independent Oversight Committee this morning approved Metro’s financing plan aimed at securing $160 million in federal Transportation Infrastructure Finance and Innovation (TIFIA) loans for the Regional Connector project.

The committee, which is charged with reviewing the cost-effectiveness of financing Measure R projects, determined this type of federal loan by leveraging Measure R funds would provide a very low interest rate and flexible repayment terms. The TIFIA loan would help supplement needed funding to build the approximately two-mile, $1.399 billion underground light rail project that would connect the Metro Blue, Gold and Expo Lines and streamline rail travel through downtown Los Angeles.

Metro’s treasurer reported that the agency seeks to lock in a low interest rate under the current market environment. Actual loan draws may be deferred for up to five years after the loan is executed, with interest accruing only as proceeds are used and with no change in the original interest rate.

A similar TIFIA loan financing recommendation for the Purple Line Extension project is expected to come before the committee next spring.

The America Fast Forward provision in the most recent multi-year federal transportation bill enhanced the TIFIA program last year, making it possible for Metro to take advantage of low-cost financing with greater flexibility than is available in the public credit markets. Metro plans to seek up to $3.5 billion in these type of loans to build road and transit projects. Read earlier Source post on the TIFIA prgram here.

The committee’s finding will now be considered by the full Metro Board at its Oct. 24 meeting. See committee item here.

State of California proposes legislation to keep federal transit funds flowing to Metro and other agencies

Some good news: it appears that a temporary solution has emerged to prevent Metro from losing $3.6 billion in federal funds due to an ongoing dispute over pension reform between the state of California and the U.S. Department of Labor.

The solution involves a state bill exempting transit agencies from pension reform while allowing for the Labor Department’s ruling to be challenged in court.

Some quick background:

U.S. Labor Secretary Thomas Perez said earlier this year that pension reform signed into law in California last year (known as PEPRA) violates the collective bargaining rights of transit workers represented by the Amalgated Transit Union.

That, in turn, would violate the Federal Transit Act, meaning that Metro and other large transit agencies in California are ineligible to receive most federal funding.

That could cost Metro $3.6 billion in funds that would be used for everything from day-to-day operations to key grants and loans absolutely vital to build such projects as the Purple Line Extension and Regional Connector.

Here is the news release from California Gov. Jerry Brown; please note that the $1.6 billion in the first paragraph does not include the full array of funds that transit agencies could lose.

And here is the legislative update from Metro CEO Art Leahy:

PEPRA/13C UpdateGovernor Brown Proposes Legislation to Keep Federal Transit Money Flowing; Will Defend Pension Reforms in CourtAs outlined in our recent communications on this issue, Sacramento Regional Transit today was notified by the United States Department of Labor that they are now decertified from receiving federal funds.

Governor Brown has also now proposed legislation which would exempt other transit agencies from the pension reform law so that federal funds would continue to flow while the litigation proceeds.

The legislation AB 1222 will be carried by Assembly Member Bloom.

I would like to thank our Board Chair Diane DuBois and Director Zev Yaroslavsky for meeting with the office of Governor Brown, Assembly Speaker Perez, Senate President Pro Tem Steinberg and Assembly Member Bloom during their recent trip to Sacramento as well as Director Pam O’Connor who also worked with Assembly Member Bloom on this issue.

I would also like to thank Mayor Eric Garcetti for his outreach to the Administrations of President Obama and Governor Brown. We will continue our advocacy efforts with Assembly Member Bloom and legislative leaders in both houses to move this bill through the legislative process.

Concurrently, we will continue to work with the U.S. Department of Transportation and U.S. Department of Labor to ensure the free flow of federal transportation dollars. The favorable resolution of this issue will safeguard over $3 billion in federal grants, new starts fund agreements, and loans that we anticipate receiving in the next twelve months.