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Coming back to the US90A rail extension

Lots of talk, and a case for action sooner rather than later.

HoustonMetro

A Metro rail extension from southern Houston to Missouri City is gaining momentum, fueled by rare near-unanimous support from local, state and federal officials who represent the area.

The hope is one day whisking commuters from Fort Bend County into the Texas Medical Center and other nearby job hotspots. But as the rail project picks up speed, a few officials worry the transit agency might get ahead of itself, to the detriment of other possible bus and rail improvements as money and resources perhaps shift to the rail line.

“I don’t know that I see it as being the next project,” said Metro board member Lisa Castaneda, who urged officials to slow down on some aspects of studying the rail link and soliciting possibilities for private investment in it.

The issue earlier this week touched off a sometimes-contentious exchange between Metropolitan Transit Authority board members, though most were supportive of moving forward with some of the rail plan. Still, even those eager to advance the line stress Metro has not made any final decisions, and still has no firm way for how to pay for the line despite vocal support from U.S. Reps. Al Green, D-Houston, and John Culberson, R-Houston.

[…]

At a Metro committee meeting last week, board members had what one called a “spirited” discussion about potential private investment in local commuter rail projects. The discussion was prompted by a request for information prepared by Metro staff, which could be circulated to gauge interest in development deals.

Metro board chairwoman Carrin Patman said while staff was authorized to release the request without board approval, she sought their input before sending it out. The action, however, was delayed when board members, primarily Castaneda, chafed at moving ahead.

While not opposed to the rail line – as it requires much more study – Castaneda balked at some of the eagerness other board members showed to press ahead and seek proposals from private developers interested in joining with Metro for a Missouri City rail line.

“I am not optimistic we are going to get a back a product that doesn’t require a lot of commitment from Metro,” she said.

Patman countered during the discussion that transit officials won’t know their options unless they explore them, especially when local elected leaders are eager to press ahead. Mayors, including those outside the Metro service area such as Stafford Mayor Leonard Scarcella, have offered full-throated support for the line for more than a decade.

“The lost capital of not doing something… is going to send I believe the wrong signal, and I believe a very costly one,” Patman said.

Green, who has committed to use his role in Congress to muster support and potentially federal money for the line, said “it is my hope that the real prospects for this continue to move forward judiciously as well as expeditiously.”

See here for some background. The main issue here is how to pay for this line, as for once there’s basically no political opposition. Metro has no more funds available from the 2003 referendum, and the short-term budget outlook is not optimal. Metro could float another bond referendum, but I can’t see them doing so until they have a full rail package put together to vote on all at once. There would likely be some federal money available for this, but that would not cover the whole thing. Metro will have to come up with something, which includes the money needed to do environmental impact statements. There’s also the question of how this would work inside Fort Bend County given that Fort Bend is not part of Metro. (Look for my interview with County Commissioner Richard Morrison next week, as this question will come up with him.) A public-private venture is certainly one option, one that we may also consider when and if a rail line connecting the proposed high speed rail terminal to downtown happens. I’d like to see this line get built – it makes a lot of sense, and we did vote for it back in 2003 – but I want it done in a way that works for Metro as well as for the potential riders. Let’s keep this moving, but don’t rush it. Get it right and go from there.

Metro revives US90A commuter rail line

The possibility of it, anyway. No promises or commitments at this time.

HoustonMetro

Metropolitan Transit Authority board members on Thursday approved a resolution authorizing transit officials to “place” the project in the “Federal Transit Administration process” and look for ways to pay for it. When officials essentially placed the project on inactive status in September 2012 after spending $1 million on feasibility studies, it was estimated to cost about $400 million to build the rail line.

Board members stressed restarting the project was not tacit approval of it, or a promise for a single dollar toward building it.

“I just want to make sure we are clear,” Metro board member Cindy Siegel said. “This is to allow the possibility of federal funding, but isn’t a commitment.”

Since voters approved the project in 2003, plans for a train line along U.S. 90A from south Gessner Road to Metro’s Fannin South rail station south of Loop 610 have been the exception among Houston’s contentious rail plans. For example, unlike intense opposition to a proposed rail line on Richmond Avenue that has been a point of contention among lawmakers, the 90A project enjoys robust support from Houston officials, elected officials in smaller cities and the area’s congressional delegation.

Rep. Al Green, D-Houston, who represents the southwest Houston area where the rail line would run, has long called it one of his district’s top transportation priorities.

Rep. John Culberson, R-Houston, who has been a constant opponent of the Richmond rail project, last year said the 90A line should be Metro’s first priority once it has sufficient money for rail projects. Culberson’s office on Thursday did not respond to a reporter’s request for comment.

[…]

In reviving the dormant rail project, Metro chairwoman Carrin Patman said it was important to gauge support for it and move forward. Technically, as the project remains approved by voters from the 2003 referendum, Metro officials can talk to federal transit officials anytime about its prospects.

“I don’t think it was absolutely necessary,” Patman said of the fresh resolution, “but I wanted to involve the board in the decision. I wanted to make sure everybody was on the same page.”

The vote, she said, was “a clear mandate for us to get back in the process.”

How to pay for the project, Patman said, will be worked out later. “There is no financial commitment to this point,” she said.

Patman says later in the story that a public/private partnership is possible. We’ll see how that goes. Another question is how much preliminary work would have to be re-done. Metro had been working towards getting a Draft Environmental Impact Statement as recently as 2012, but the project was put on hold in September of that year (the “Current Projects page” on Metro’s website that used to document it and that had announced its suspension no longer exists). There’s also the question of whether the line would have to end at the Harris/Fort Bend County line or if it could be extended (at greater cost) into Fort Bend County. Metro would need to seek legislative approval to expand into Fort Bend, which ought to be doable but is never a guarantee. All of this is to say we’re a ways off from anything happening. I’m glad to see this step being taken, but it’s very much the first step of a long journey, if indeed we embark on that journey.

One more thing: As you know, since Metro reached its detente with Rep. Culberson, I’ve asked about the status of his promises to help change federal laws to allow Metro to apply some funds it has already spent on other rail projects as matching funds for the proposed US90A line. I asked Carrin Patman about that at the meeting a group of us bloggers had with her some weeks ago. She said that Culberson did indeed work towards making that happen, but his efforts were ultimately unsuccessful. C’est la vie, I guess. Perhaps he can try again now, or try some other tactic to help Metro move forward on this. I hadn’t written anything about Metro rail projects since then, so I wanted to note here that he did keep his word on that. KUHF has more.

Feds rescind Universities line funding

Not a surprise at this point.

A proposal for a light rail line along Richmond Avenue, long left for dead because of strong opposition and years of languishing, has lost its shot now for funding from the Federal Transit Administration.

In a letter released Friday by U.S. Rep. John Culberson, R-Houston, FTA associate administrator Lucy Garliauskas confirmed federal money is no longer available for the University Line light rail project “due to inactivity and lack of demonstrated progress on the project’s design and local financial commitment over the last several years.”

Culberson, a long-time opponent of the line proposed in his west Houston district because it runs along Richmond, applauded the decision.

“My primary responsibilities as a congressman include protecting the taxpayers and protecting the quality of life in our neighborhoods,” Culberson said in a statement.

[…]

The effect is limited, however, because the University Line plan had been bogged down for years, and could be revived at any time should Metropolitan Transit Authority restart the process and gain voter approval for more transit funding.

Metro officials received notice of the funding recision earlier this month, spokesman Jerome Gray said.

“I am not sure it does anything with the project because the project was dormant,” Metro chairwoman Carrin Patman said.

[…]

Culberson and Metro officials last year came to an agreement that any further rail development using federal funds in the Houston region first will go back to the voters. If Metro receives approval and the local money needed, transit officials could go back to Washington looking for funding.

Patman, who took over as Metro chairwoman last month, said inaction on the University Line should not be construed as the end of a broader discussion about better transit in Montrose and along U.S. 59.

“A corridor between downtown and the Galleria and Post Oak is a priority, and I expect that to be a part of the regional transportation plan,” Patman said, referring to Metro’s interest in assessing area-wide bus and rail needs. “We are looking at alternatives, of course, to going down Richmond… And we’re looking at what mode would be best.”

See here, here, here, and here for the background on the Culberson/Metro peace accord, which was announced just over a year ago. Because of the terms of that agreement, Metro was always going to have to go back to the voters to get a Universities line going, and in fact then-Metro Chair Gilbert Garcia, who negotiated the treaty with Culberson, was already talking about a sequel to the 2003 rail referendum. New Chair Carrin Patman has also spoken of a need to go back to the voters for more bonding authority. If I had to guess, such a vote is a couple of years out, almost certainly after Mayor Turner has had one to repeal or modify the revenue cap. When that happens, if it passes, Metro will have to start from scratch, including the designation of an actual route, but given how old the existing work was by now, that’s probably for the best anyway. I choose not to cry over spilled milk but to work for a better outcome next time.

Two things to think about as we look towards that hoped-for future day. First, here’s a Google Earth view of the area around Westpark at Newcastle:

Westpark at Newcastle

Westpark at Newcastle

The original Universities line route had shifted over to Westpark at Timmins, so the line was on Westpark at this point, and there would likely have been a stop at Newcastle. (My in-laws live near there, so I’m quite familiar with this area.) Notice all the apartments west of Newcastle and south of Westpark, as well as the HCC campus. Those would all be easily accessible from a train station at Westpark and Newcastle, except for one tiny thing: There’s no sidewalk on Newcastle south of Westpark. Any pedestrians would have to walk in the street, which is a two-lanes-each-way thoroughfare, or on the grass. Once you cross into the city of Bellaire, just south of Glenmont Drive, there’s a beautiful, wide sidewalk that’s basically a hike-and-bike trail that goes all the way to Braeswood, but until you get there you’re on your own if you’re on your feet. What you could do is move the fence back ten feet or so on the empty lot on the south side of Newcastle – I suspect this is Centerpoint property; the lot on the north side of Newcastle has power grid equipment on it – and build a nice sidewalk there to at least get you to Pin Oak Park, which has its own sidewalks and can get you to the other places from there. The Westmore apartment complex between Pin Oak Park and Glenmont fronts on the street so you’d have to close off a lane on Newcastle to extend this hypothetical sidewalk further, but it’s not like this is a heavily-trafficked section of road. It’s all doable if one has eminent domain power and a reason to take action. If we’re going to talk about near-future rail referenda and Universities Line 2.0, I hope someone other than me is thinking about this sort of thing as well.

Second, among the things that Culberson and Metro agreed upon last year were the following:

Second, Congressman Culberson will begin work right away to change federal law so that METRO can use all of the federal dollars not yet drawn down from the $900 million in previously approved federal transit grants for corridor specific transit projects, particularly the new North and Southeast rail lines as well as the 90A commuter rail line. These proposed changes will be consistent with the goals of the FTA in order to allow METRO to match these funds with credits from the original Main Street Line or other Transportation Development Credits so that local funds will be freed up for new projects to improve mobility in the Houston area.

Third, Congressman Culberson will begin work right away to change federal law so that METRO can count $587 Million in local funds spent on the East End Rail Line as the local matching credit for a commuter rail line along 90A, and secondarily for any non-rail capital project, or any other project included in the 2003 Referendum. Rail on Richmond Avenue west of Shepherd Drive or Post Oak Boulevard would only be eligible to utilize these credits once approved in a subsequent referendum.

Fourth, Congressman Culberson will begin work right away to help secure up to $100 million in federal funds for three consecutive years for bus purchases, park and ride expansion and HOV lane improvements. These funds will also facilitate METRO’s expanded use of the 2012 referendum increment to pay down debt. All of these efforts will enhance and improve the bus system that is already one of the best in the nation.

Anyone know if any of these things are happening or have happened? I would hate to think that Congressman Culberson has not kept his word. An update on these items would be nice to hear.

“Go, Texans” OK’ed

Well, that‘s a relief.

County Treasurer Orlando Sanchez’s quest to ban “Go Texans” and other messages from Metro’s digital bus marquees has ended unsuccessfully with a pass from the Federal Transportation Administration and a scathing letter from the Metro board chairman.

Last fall, Sanchez asked the federal agency and the Harris County Attorney’s office to determine whether Metro was “misusing federal transit dollars” or somehow breaking the law by displaying certain messages on the destination signs on the fronts and sides of its buses. Sanchez argued that messages like “Go Texans” were not appropriate because they promoted a privately owned company on publicly owned property.

Both entities looked into Sanchez’s inquiry and concluded that Metro’s current policy is legally sound, with the federal agency saying the only applicable prohibitions of marquee messages would be the ones adopted by Metro itself.

In a letter to Sanchez this week, Metro Board Chairman Gilbert Garcia described the inquiry as “unnecessary” and said it jeopardized Metro’s relationship with the federal transportation agency, which he described as “a critical partner that provides crucial funding for projects that help move people throughout the region.”

“We hope to avoid distractions as we continue to keep the Houston area moving,” Garcia wrote. “Rather than pursuing unnecessary inquiries, we hope you will join us to positively address the transit needs in our community.”

Sanchez expressed no regrets, pointing out that “prior to my inquiry, Metro had no policy” on bus marquee messaging.

See here for the background. Sanchez apparently complained to the FTA after the Metro board adopted its policy to allow for these sporting messages plus other generic ones such as “Happy Holidays”, which seems a little petty to me. I just hope we have a football team that’s worthy of the exhortation this fall.

I got those “can’t get my rail cars built on time” blues

Actually, I don’t, but Metro does.

The company building 39 new Metro railcars has yet to deliver an acceptable vehicle almost six months after the original due date, potentially delaying full service for rail lines scheduled to open later this year.

The first car hasn’t passed a required water leak test and exceeds the maximum weight specified in the builder’s contract with the Metropolitan Transit Authority. In a Dec. 30 letter to CAF USA, the American subsidiary of the Spanish train-building giant, interim Metro CEO Tom Lambert demanded that the company explain how it will deliver all the cars by the Sept. 25 deadline.

“It is imperative that CAF demonstrate to Metro that it is seriously willing and able to meet its obligations,” Lambert wrote. Metro is withholding a $12.8 million payment until an acceptable rail car is delivered, he wrote.

In a reply, CAF’s worldwide CEO, Jose Maria Baztarrica, assured Lambert that U.S. representatives of the company would come to Houston to “fix all the various issues.”

Continued delay would leave Metro officials with options for opening the lines on time, but possibly not on a full schedule. Fewer railcars ready to hit the street could mean that trains operated less frequently or failed to cover the entire route.

“We can work through it, and we will,” Metro board chairman Gilbert Garcia said, stressing the important factor is that CAF deliver high-quality vehicles. “We have to be prepared that the cars are delayed and now we need to have a plan going forward of what we’re going to do.”

The railcar manufacturer is now promising swift action to get this resolved.

“If they are having a problem, then to me it is a big problem, even if it is a minor fix,” said Andres Arizkorreta, CEO of Construcciones y Auxiliar de Ferrocarriles, commonly known as CAF. “These are things we must do.”

[…]

Arizkorreta flew to Houston on Wednesday. On Thursday morning, he assured Metro officials the water leak would be fixed within 10 days by installing a gasket

Remedying the leak, which was minor, is necessary before the car can enter service by undergoing weeks of on-track testing, interim Metro CEO Tom Lambert said.

“The best thing we can do now is get this one at the test track,” Lambert said. “The sooner we do that, the sooner we can build the others.”

Additional cars might come at a brisker pace. Manufacture of the cars will accelerate as CAF U.S.A. expands its Elmira, N.Y., plant, Arizkorreta assured Metro.

Officials said they were pleased with the quick corrections.

“I am convinced this is moving in the right direction,” Metro chairman Gilbert Garcia said.

About 100 workers will be hired specifically to handle Houston railcar building, roughly doubling the staff now handling the order. CAF agreed in writing Thursday to give Metro a revised delivery schedule by Feb. 15.

That all sounds good, but the weight issue remains a problem. It’s not clear how that will be fixed. I’m going to be optimistic and say that this will mostly get worked out before the Southeast and Harrisburg lines open, but we’ll know more in a month. I hope it doesn’t cause any operational problems, or force reduced frequencies when the new lines open. Metro had already set its schedule back by a year after nearly blowing its Full Funding Grant Agreement due to the shenanigans of previous CEO Frank Wilson, who was trying to circumvent the FTA’s Buy American requirements. It’s possible that in the absence of those requirements, or at least in the absence of Metro trying to get around them and getting caught at it, that we’d be farther along now. Nothing can be done about any of that now, so let’s keep CAF’s feet to the fire and hope they have good news in February.

Metro gets more money

Good news.

Southeast Line

Congress has appropriated $189 million for two of our light-rail lines – the North/Red Line extension and the Southeast/Purple Line.

Each line will receive $94.5 million. The funds are part of the $900 million Full Funding Grant Agreements signed by federal officials in November 2011.

METRO Board Chairman Gilbert Garcia called this appropriation vital. “This is another key development in our progress towards building light rail for Houston. We want to extend thanks to our Congressional delegation and the many people who have supported efforts to improve the METRO transit system,” he said.

We expect to begin receiving this latest appropriation within the next 30 days. We’ll be spending the money to complete the 5.3-mile extension of the North/Red Line, which is an extension of our current Main Street Line. We’ll also be using the funds to build the Southeast/Purple Line, a 6.6 mile-line traveling through historic African-American communities, connecting to Texas Southern University and the University of Houston.

“Congress is giving us a critical tool with this funding, and we are taking every step we can to make sure these dollars are well spent,” said Tom Lambert, METRO interim president & CEO.

The North/Red Line is scheduled to open in December, and the Southeast/Purple Line and the East End/Green Line are expected to open in 2014. The locally-funded East End/Green Line is 3.3. miles, running from downtown to Magnolia Park Transit Center.

Here’s more on the full funding grant agreement they received from the FTA in 2011. Metro received a similar amount of money in 2012. Nice to know Congress isn’t so dysfunctional yet that simple stuff like this gets derailed, no pun intended.

On a tangential note, The Highwayman ponders the question of how much a ride on a Metro bus or train should cost.

Two concepts seem to bog down any debate about buses and trains.

1. Transit doesn’t pay for itself.

2. The fare system is terrible, so we should just make it free and then more people will ride it.

As a story in Monday’s paper pointed out, the Metropolitan Transit Authority is planning to make all buses and trains free for Labor Day weekend. The agency hopes to lure some riders to try the bus, and it hopes some of them will stay. Many transit agencies do the same thing. So does Netflix. It’s a marketing tool, and the reason I used AOL CDs as drink coasters in college.

It also opens up discussion of the two points noted above, which seem stuck in already-drawn conclusions.

Both premises miss the point of what transit is about and compare it to things it really isn’t. Public transit agencies are not businesses, they are governmental entities. Even in the best of cases, like New York and San Francisco, the systems do not pay for themselves.

Neither do roads, libraries, parks or other amenities that some people think make a community more livable.

Based on 2011 federal data, fares pay for 19 percent of Metro’s operating budget. That’s higher than any other major public transit system in Texas, but far lower than more robust transit systems on the coasts. We score about as well as Phoenix, which like Houston isn’t exactly a transit town yet.

On the other hand, Metro can’t just give it away, though some people argue that fare evasion on light rail is so rampant that the rides might as well be free. Federal officials want to see local officials make some effort to help pay for the system.

I discussed the matter of eliminating fares here; short answer, I think making transit free would cause it to be stigmatized by certain elements as a form of welfare, and that would ultimately be very bad for the concept of mass transit. I don’t have a problem with Metro doing the occasional free-ride promotion, but I think its plans to redesign and extend the bus system will be much more successful at boosting ridership; the addition of the three new rail lines will help, too. I carpool with my wife downtown these days, but I wind up taking the bus home about once a week because she needs the car after work for various errands. It’s convenient and fairly quick, and having that option prevents us from doing stupid and wasteful things like driving (and parking) two cars downtown. I commuted by bus, ferry, and subway for four years of high school in New York, so this idea isn’t strange to me. I think many people are reluctant to be without their car under any circumstances, and that’s an obstacle to be overcome if we want more transit usage in Houston. A lot of younger folks are not getting drivers licenses these days, at least not as early as folks my age did, so perhaps there will be a generational effect to help boost Metro a bit. I wouldn’t expect to see much of that anytime soon, however.

If only it were that easy to get our act together

Outgoing Transportation Secretary Ray LaHood has some blunt words for Houston about light rail.

U.S. Transportation Secretary Ray LaHood likes Houston’s light rail that’s up and running but warns that regional transit officials have squandered opportunities the past decade by not building greater consensus.

“The region needs to get its act together,” LaHood said during a brief question and answer session after an unrelated news conference Wednesday in Houston.

Metropolitan Transit Authority board Chairman Gilbert Garcia conceded a tarnished transit image and political opposition has slowed progress, but the past three years have seen Metro make significant progress.

“It may not go the pace we all want but we’ve gone very far,” he said.

Going further, Garcia said, will take more buy-in from local congressional and statehouse lawmakers.

Though the Main Street line has been a success, and three more lines are under construction, LaHood said the area is coming up short because more hasn’t been done to extend lines to the suburbs where most people live.

He said he spent the morning in Houston talking about projects to extend transit farther from the downtown area. Suburban taxpayers who supported referendums in 2003 and 2012 especially have demonstrated a desire for development, only to have officials shortchange them.

“The fact that these people voted for a referendum and are paying these taxes and have never seen any benefit from it is just not right,” LaHood said.

LaHood, who is stepping down as transportation secretary as soon as a successor is confirmed, said in other cities that have won rail funding, it’s been because everyone from City Hall to Capitol Hill has shown their support for transit funding. In Houston, that hasn’t been the case, and that’s going to hamper getting federal funds.

“If there is not going to be universal agreement then it is not going to happen,” LaHood said.

I certainly agree that as long as we are all rowing in different directions, we’re going to get nowhere, and that’s very much to our detriment. But that’s the reality we live with. Rep. John Culberson is a staunch opponent of the University Line, and has done everything he can to block its construction. While I appreciate Secretary LaHood’s honest assessment, the best thing he could have done to help us all get on the same page would have been to use whatever Republican street cred he had left to have a come-to-Jesus meeting with his former colleague Culberson and tell him to quit being such a jackass. The sad fact is that there is no leverage to be had on Culberson. The voters he answers to agree with him, and if there’s a way for someone else to put pressure on him, I don’t know what it is.

Now to be sure, there’s plenty of responsibility for the excruciatingly slow progress on light rail in Houston that extends beyond Rep. Culberson. Metro itself did a lot of things wrong in the years immediately following the 2003 referendum, including the BRT flipflop, the Buy America fiasco, and just generally being lousy at community engagement and communication. Bill White did a lot of good things as Mayor, but Metro was broken on his watch – it wasn’t until after he’d left office that it became clear just how badly Metro was broken during his tenure – and even if it had been a well-oiled machine, he never spent much time or energy pushing the light rail expansion projects. Commissioners Court, in particular Steve Radack, has been another burdensome obstacle for Metro. Metro is in much better shape now, thanks in large part to the Board that Mayor Parker selected and the tenure of George Greanias as CEO. Radack got what he wanted in the Metro referendum from last year. It would be delightful to get Metro, the city, Commissioners Court, and the entire Congressional delegation all on the same page, but as long as some members of that group are pushing for the opposite of what everyone else wants, I have no idea how to make that happen.

Finally, Secretary LaHood’s comment about suburban taxpayers struck me as a bit odd. For one thing, Metro has spent a ton of money on the park and ride network, which very much serves the suburbs. For another, though I don’t have precinct data from the 2003 referendum in front of me, I’d bet money that the suburban parts of Houston voted against Metro’s 2012 Solutions plan. What he’s talking about sounds a lot like commuter rail, which strictly speaking outside of the US90/Southwest Corridor rail project, which was part of the 2012 Solutions plan and for which work continues, commuter rail is outside Metro’s scope, at least as far as planning and seeking funds go. Still, any viable commuter rail plan will also require everyone to work together in perfect harmony, so in a larger sense it does speak to LaHood’s overall point. Ultimately, we work together or we get nothing done. The message is clear, it’s just a matter of what we’re going to do about it.

Whither the University Line?

Is the University Line in doubt? Some people think so.

Over the last decade, METRO spent $71 million of your dollars to build a rail line. But the agency recently took that project off the table for at least another decade and no work has been done.

So where did all that money go?

Ten years ago, METRO promised to build a light rail line starting out on Hillcroft through Montrose, downtown, out past TSU, UH and stopping just east of 45.

Ten years later, nothing’s been built on the University Line and nothing will be built until at least 2025 if METRO gets its way.

“It think this is a sad day for Houston,” said David Robinson with the Neartown Houston Association.

Robinson lives along the route in Neartown. He patiently waited, even supported METRO’s plan to wait. But now he feels duped.

“We don’t understand how we were sold out,” Robinson said.

[…]

“We’re trying to close the gap,” METRO Board Chairman Gilbert Garcia said.

METRO says they simply don’t have the money to do this now and won’t for more than a decade. But METRO’s already spent $71 million on the project, even as recently as last year.

“We believe that every dollar of taxpayer money, whether it comes from the fare box, tax money or federal money, we need to spend it as wisely as possible,” METRO CEO George Grenias said.

In fact, if METRO hadn’t spent the money on studies and land and lawyers and meetings and newspaper ads, they could’ve taken $71 million bills and laid them down along the route, paving it from curb to curb and then some with your money.

“It’s an enormous amount of money,” Garcia said.

The agency spent $14 million studying on environmental studies that will soon be out of date. METRO spent another $2.5 million on land appraisals, and they’re no good anymore. So that’s $16.5 million gone. And METRO spent $54 million studying possible routes and picking the final one, only some of which may be useful in 10 years, but who knows.

“We’re not going to get ahead of ourselves,” Grenias said.

I have appointments to do interviews with Metro Chair Gilbert Garcia and with Houston Tomorrow‘s David Crossley to discuss the upcoming Metro referendum, and I can assure you that the subject of the University Line will be thoroughly covered. But aren’t we overlooking something in this story? Metro cannot build the University Line without federal funding, which has not been appropriated yet. The money that it has spent so far on environmental studies and whatnot is money that it is required to spend in order to qualify for FTA grant money. In 2010, Metro received a Record of Decision from the FTA, which is the final approval of those environmental studies and which allows Metro to move forward with utility work and the like. This is the last step needed to be able to receive federal funding, but as we all know, resistance from Congress has made that extra difficult, and recent maneuvering by sworn University Line opponent John Culberson threatens that funding for the foreseeable future. Why is there no mention of this in the story?

I get that people are frustrated and tired of waiting for this. I am, too. I understand that critics of the upcoming referendum believe that anything but a complete removal of the GMP payments will leave Metro with insufficient funds to build the University, Uptown, and other planned light rail lines. I’m not sure I agree with that view, but it’s a valid concern. Metro’s ability to receive federal funds for the University Line are also contingent on its ability to handle its debt load, which Metro CEO George Greanias called a “heavy lift” when he first came on board. There are a lot of moving parts here, and Metro is responsible for its past decisions as well as its current ones and the effect they may have on the promises they made a decade ago. There’s a lot more to this than what the story covers. For a related discussion of the Metro referendum, see Nancy Sims.

FTA writes another check for light rail construction

Keep ’em coming.

I still hope we get to have all this some day

The expansion of Houston Metro got another boost from the federal government with the allocation of $188 million in additional construction funding for the North and Southeast light rail lines.

Congressman Gene Green, the Houston Democrat who is dean of the metropolitan area’s House delegation, said the money is part of Houston Metro’s full funding grant agreement with the Federal Transit Administration.

“I’ve been a long time supporter of light rail in these areas because it will greatly increase people’s transportation options and incentivize economic development along the routes,” said Green, a career legislator who served in the Texas legislature before election to Congress.

“I am glad to see these projects moving forward.”

Metro had signed the full funding grant agreement with the FTA last November, and had received some funds for the North and Southeast lines last June. I don’t recall if that was an advance on the FFGA or if was separate; I suspect the former but the details are fuzzy to me at this point. Either way, there’s still a lot more of those funds to come. Rep. Green has definitely been a strong advocate for Metro and these lines, which run through parts of his district. I’ve begun work on my candidates interviews for the fall, and he happened to be first in line, so you can hear him talk a bit about this when I run his interview on Monday. Those of you who live in CD07 and would like to see your rail lines built while you’re still young enough to use them, I hope someday you’ll have a member of Congress like Gene Green who’ll work with you to get it. KUHF has more.

Metro signs Full Funding Grant Agreement

Full speed ahead.

The head of the Federal Transit Administration on Monday signed $900 million in grant agreements to help pay for two Houston light-rail lines under construction by the Metropolitan Transit Authority.

The grants, the first federal funds ever provided for rail in Houston, were formally approved in a ceremony attended by the FTA chief, Peter Rogoff, Mayor Annise Parker, Metro officials, local members of Congress and others. They will pay half the costs of the North and Southeast lines, scheduled for completion in 2015, which will extend Houston’s light-rail network by 12 miles.

Local officials have been trying to secure the federal funds since voters approved a plan to expand Metro’s rail network in 2003.

It took a hell of a long time, and it nearly got derailed thanks to the previous Metro regime and its Buy America foolishness, but it got done. And remember, some people said it would never happen.

Here’s Metro’s press release:

METRO Inks Houston’s First Ever Full Funding Grants for Light Rail

Houston’s light-rail expansion is now cleared to receive $900 million dollars as part of two federal Full Funding Grant Agreements (FFGA).  A special signing ceremony for the grants was held [Monday] morning at a rail expansion construction site overlooking downtown. The observation at 800 Burnett St. brought METRO officials together with FTA Administrator Peter Rogoff and a host of elected officials to sign long-awaited FFGAs for the North and Southeast rail lines.

Gilbert Garcia, chairman of the New METRO’s Board of Directors says, “The rail expansion team, METRO Board members, past and present and our entire staff, past and present, should be proud of accomplishing an enormous task. We’ve never lost sight of the prize and finally it is Houston’s. We thank all the community patriots for all their help in making this day happen. This is a major investment in the region that will not only create jobs but boost economic development.”

METRO President & CEO George Greanias says “The $900 million federal grants more than double the local dollars being used to construct the 5.3 mile North (Red) extension* and the 6.6 mile Southeast (Purple)* lines and mark the first time rail projects here have received FFGAs. This is a great example of how we can leverage our local dollars to improve mobility in the region.”

The total construction cost for the two lines is $1.6 billion dollars. Each line is receiving a $450 million dollar FFGA. The federal government has already set aside $484.5 million dollars for the two projects as part of the FFGAs. Of that amount, METRO has received $84.5 million dollars. The transit agency expects to continue receiving the federal funding over the next few years.

More than 30 percent of commuters heading into the downtown area and the Texas Medical Center ride METRO. The rail expansion approved by Houston voters in 2003 includes the North (Red) Line and extends the current Main St. Line starting at UHD to the Northline Transit Center, Houston Community College and Northline Commons Mall. The Southeast (Purple) Line connects downtown with local universities including Texas Southern University and the University of Houston central campus. The two federally funded lines and a third, locally funding East End (Green) Line currently under construction, are all expected to be completed by 2014.

For PDFs of work being performed see: METRORail North Line Construction Map – Nov. (PDF) METRORail Southeast Line Construction Map – Nov. (PDF)

The Harrisburg line is also under construction, but it is using only local funds. Still out there waiting their turn are the Universities line, the Uptown line, which will also be built with local funds but is entirely dependent on the completion of the Universities line to be feasible, and the Inner Katy Line, which was on the 2003 referendum but was not officially part of the 2012 Solutions plan. The Universities line received a Record of Decision (ROD) on the Universities line last July, and now awaits final design approval, which had been hung up to a degree by the other Metro projects in the queue ahead of it and now is waiting for Congress to get its act together and pass an adequate transportation bill so there will be more New Starts funds to grant. An Inner Katy line will likely be part of a larger next phase project – Metro Solutions 2020 or some such – that may be packaged together for another vote. I’m mostly speculating here, but such a line makes all kinds of sense and is already supported by the neighborhood. What it needs now is a funding source.

That’s something farther out to look forward to. For now, we have the North and Southeast lines and their historic funding agreement. It’s a good day for Metro and for Houston. The Metro blog and Dallas Transportation have more.

Signing date for Full Funding Grant Agreement announced

From the Metro blog:

On Monday, Nov. 28, METRO will be joined by federal officials, along with members of Houston’s congressional delegation, to sign the long-awaited Full Funding Grant Agreements (FFGA) for the North and Southwest light-rail lines.

President & CEO George Greanias announced the signing date [Wednesday] at the Greater Houston Partnership’s luncheon.

This is the first time rail projects in Houston have received FFGAs. These are matching federal funds that help us leverage local dollars to complete the construction of the North Line (extension of the Main St. Red Line) and the Southeast Line (Purple Line).

It’s a beautiful thing, isn’t it? And they said it couldn’t be done. Well, some people said it wouldn’t be done, anyway. Here’s one of those people, who’s been saying it for a long time:

Local attorney and light-rail critic Bill King said it’s foolish to bank on that money, given the tenuous status of the federal budget, especially New Starts funding.

“With what’s going on in Washington, can you see that they’re going to come down here and say, ‘Here’s $1 billion to go build light rail in Houston?’ ” King said. “That seems so fanciful to me, and I certainly wouldn’t bet on it.”

And you would have lost that bet if you’d made it, Bill. You were wrong, and on November 28, we’ll get to see the FTA and a bunch of other people prove it. In the meantime, you can see video of Greanias’ speech here, and the accompanying presentation, which includes some cool time-lapse photography and video of the rail line expansions, here.

On spending and jobs

What exactly was the point of this story?

About 600 workers already are on the job building the North, Southeast and East End lines, according Metro.

“This is an opportunity for Metro to create thousands of jobs in Houston for local contractors, construction workers, and engineers,” Mayor Annise Parker said in a recent blog post on her re-election campaign website.

In addition to direct hires for construction, Metro says light-rail projects will create other jobs as workers spend money, a process economists call a “multiplier effect.” Citing research by the U.S. Bureau of Economic Analysis, Metro President and Chief Executive Officer George Greanias said the agency’s $900 million in federal grants, nearing approval in Washington, is expected to create 18,000 jobs over six years ending in 2014.

“According to the bureau, for every $1 million you spend, you will create 20 jobs over the life of the project,” Greanias said.

But Barton Smith, University of Houston economics professor emeritus, said the multiplier effect doesn’t apply to local tax funds, which will pay for all of the East End line and part of the other two.

“We have to recognize the tax money you and I are spending to cover the cost of (locally funded) projects is money that won’t be spent on other things in Houston,” he said. “I’m a strong believer that any public investment ought to be judged on its own merits and not whether it’s a job creator.”

Where to even begin? First, Dr. Smith is specifically talking about local tax funds, but Metro is talking about federal grant money, which whatever else you may have to say about it didn’t have to be spent in Houston. Second, even if we were talking about local tax funds, not all such spending is equal from a job creation perspective. To cite a ridiculous example, we could take the money Metro is spending on the Harrisburg line, as that one is not receiving any New Start grant money, and use it instead to purchase artwork from the Menil Collection so they could be hung at City Hall. I’m pretty sure building the Harrisburg line would do more for employment than that would. Finally, since we are talking about spending money on new infrastructure, the benefit goes on past the time when the money is being spent on construction. That’s dicier to calculate, and less important when your focus is getting people back to work now, but it’s still an important consideration.

It’s also a consideration that Dr. Smith mentions subsequently in the story. My quibble isn’t with him, it’s with the bizarre way this article is framed. But there is another consideration that neither Dr. Smith nor the story’s author mentions:

Also, Smith said, this is a good time to do public-sector investment that’s needed because there’s a ready labor supply and construction costs are low.

One reason why construction costs are low is that interest rates are at historically low levels. It may never be this cheap to borrow money again. That makes the case for federal infrastructure spending stronger than for local infrastructure spending, since the federal government is not bound by artificial accounting deadlines for “balancing” its budget, but if you have any need for building new stuff or repairing old stuff, now is the time. And if you do it by floating debt instead of dipping into general revenue, you avoid the made-up conflict that was the basis for this story. See how easy that was?

Metro officially back on track with the FTA

The “Buy America” nightmare is now history for Metro.

In September 2010, the FTA announced that the process Metro had used to award a rail car contract to CAF USA, the U.S. subsidiary of a Spanish company, violated federal law and “Buy America” requirements that were designed to protect U.S. jobs.

To requalify for federal funds on the two lines, the FTA said Metro had to cancel its contract with CAF USA and solicit new proposals for rail cars. Metro complied.

Last week the FTA notified four congressional committees – House Transportation and Infrastructure; Senate Banking, Housing and Urban Affairs; and House and Senate Appropriations – of its plan to execute two grant agreements that could bring Metro a total of $900 million over five years.

[…]

FTA spokesman Paul Griffo confirmed that the agency sent notice to Congress on Sept. 7. The next day, President Barack Obama mentioned Houston public transit construction in his nationally televised jobs speech.

Hallelujah. Even before this delay, the process of getting the full funding grant agreement had been excruciatingly slow, but at least there has been some progress lately, and actual track has been laid for the Southeast line. Going back through the archives, the first wind of trouble came in May of 2010, about a week before then-CEO Frank Wilson took a powder. The “New Metro” and new CEO George Greanias received a second chance from the FTA in September of 2010; the prediction that this would tack on a year to the production schedule has proven eerily accurate. Metro settled with CAF in December, and had funds appropriated to them in the President’s budget in January. It’s true that the rest of the funding will depend on the whims of Congress, and that there’s still the opportunity for the transportation bill in Congress to get screwed up by the radicals in the Republican Party, but that’s no reason to be a party pooper:

Bill King, a Houston attorney and light-rail critic, said the rail funding was not guaranteed even if the FTA signs the agreement.

“The real issue is always whether Congress will fund it or not,” King said.

Yes, as noted, Congressional Republicans could always screw things up. But why fixate on that? An asteroid could collide with the earth and wipe us all out like the dinosaurs at the end of the Cretaceous Era. Global warming could accelerate and put the entire city under eight feet of water by the end of the decade. Terrorists could start blowing up light rail lines. Rick Perry could be elected President and prove that the Mayans were right all along. There’s no end to the doomsday scenarios, so what’s the point in worrying about them? There’s plenty of things you can control to worry about.

Laying track

This has been a long time coming.

For the first time in 10 years, workers this morning poured concrete for a new section of Metro light-rail track.

The 80-foot section of steel rail will be part of the 6.6-mile Southeast Line. The line, scheduled for completion in 2014, will extend from Smith Street downtown to the Palm Center in southeast Houston at Griggs and Beekman Roads.

It’s taken way too long to get to this point, but at least we’re here. For now, let’s be happy with reaching this stage of the journey, however later than we originally thought we’d reach it. Write On Metro has more.

UPDATE: A later version of the story contains this:

Metro officials said they are expecting approval soon of a $900 million federal grant delayed last year by the agency’s violation of a federal Buy American requirement in procuring light-rail cars from a Spanish company. The agency’s confidence is sufficient to include money from the grant in next year’s budget, and to prepare to sell rail-construction bonds for the first time in more than two years.

Metro President and CEO George Greanias said Wednesday he couldn’t provide details about the timing of the federal grant, known as a Full Funding Grant Agreement under the New Starts program.

[…]

At Metro’s July 28 board meeting, just before Greanias began a one-week suspension for visiting sexually explicit websites on his personal computer through the Metro Internet system, he and other agency officials spoke with guarded optimism about the grant.

“They are now in the process of being reviewed by the executive team at the Federal Transit Administration,” he told the board. “That is the last step before they go out the door. I’m not about to predict what day of the week they’ll go out, but I think it’s going to be in the near future.”

Also at the July 28 meeting, the board approved a bond sale of up to about $463 million for rail construction. Greanias said those bonds likely will be sold in September.

Talk about things that are long overdue. Keep your fingers crossed.

San Antonio rail progress

I’m glad to see them continue to move forward.

VIA Metropolitan Transit has hired a program manager to oversee its high-capacity transit initiative, a move that board and staff members say will help usher in the agency’s plans for an urban rail line, possibly within the next five to seven years.

The board voted to hire engineering and architecture firm HNTB Corp. at a special meeting Wednesday. HNTB, a national firm with an office in San Antonio, will work as VIA’s in-house consultants on urban rail.

The firm will oversee the entire process, from deciding the type of rail lines — streetcar or light rail, for example — the level of technology that will be adopted and where those rail lines should go.

You can see more about their long-range transit plans here. The comprehensive plan is about more than just rail, but that’s where their rail info is.

While VIA has the financial capacity to continue the same level and quality of its current bus service, the agency needs more money to become a true multi-modal agency, President and CEO Keith Parker said. Parker was hired to head VIA in 2009 after helping to bring light rail to Charlotte, N.C., as chief executive there.

“We have enough money to stay as we are,” Parker said. “But that’s not why I came here.”

One of HNTB’s key roles will be to ensure VIA has the financial capacity to build a rail system, something the Federal Transit Administration will require before providing matching funds.

“As program manager, we will help you find the money,” Keahey said Wednesday in a presentation to the board before its vote.

The FTA advises that urban rail projects of this nature, involving federal dollars, can take seven to 10 years to become fully operational, Keahey said.

But Parker wants to see urban streetcar here even sooner — possibly by 2015 or 2016.

Given that the proposed Republican transportation reauthorization bill represents a 33% cut in funding from current levels, I don’t know how realistic that is. I wish San Antonio well, though I must admit it will chap my hide a bit if they get something done that quickly while we’re still working to fulfill the promises of the 2003 light rail referendum.

Metro gets more light rail funds

From the US Department of Transit:

U.S. Transportation Secretary Ray LaHood today announced $1.58 billion for 27 transit projects nationwide that will improve public transportation access for millions of Americans while reducing our dependence on foreign oil and curbing air pollution.

“Investing in a modern transportation network is a key part of President Obama’s strategy to win the future by out-building and out-competing the rest of the world,” Secretary LaHood said. “America’s long-term economic success requires investing now in transportation infrastructure capable of moving people and goods more safely, efficiently and quickly than ever before.”

“Our investments in expanding America’s transit networks will not only improve reliable transportation access for communities across the country, they will support construction jobs and economic development,” said Federal Transit Administrator Peter Rogoff. “And, a more efficient and reliable transit network means new opportunities for Americans to keep more of their paychecks in their wallets and spend less at the gas pump.”

Twenty-seven transit projects across America are on a path to receive funding under the New Starts program, through which Federal Transit Administration (FTA) provides federal support for major capital construction projects such as subways, light rail, streetcars, and bus rapid transit.

Among those projects, all of which you can see here, are Metro’s North Line and Southeast Line, each of which are slated to get $75 million each. Note that this is happening even though the Full Funding Agreement is still pending with the FTA, though as I heard Metro CEO George Greanias say at a Livable Houston presentation in May, you’d think that after giving Metro all this money up till now they’re probably not going to reject the FFA at this point. This announcement comes as Metro gets ready to start laying actual tracks for the Southeast Line, too. Great to see such progress being made. Via Houston Tomorrow.

More on Metro’s rail to Fort Bend plan

Here’s a story from the first of the public meetings Metro is holding on the proposed US90A rail line to Fort Bend.

Planners of a proposed project to extend light rail service from Houston to Missouri City are hopeful about securing $1 million federal funding for the undertaking.

Kimberly Slaughter, senior vice president of the Metropolitan Transit Authority of Harris County, said U.S. Rep. Al Green has been pushing for the funds to be allocated from either this year’s or next year’s presidential budget.

[…]

The plan drew loud applause from those attending a Metro public meeting Tuesday night in Missouri City that was held to seek public comments as the authority prepares a draft environmental impact statement as part of its effort to seek federal funding for the project.

“Not a day goes by that I’m not asked by someone, ‘Mayor, when are we going to get on the train?'” Owen said.

Although the current proposal wouldn’t stretch the line beyond Missouri City, mayors Leonard Scarcella of Stafford and Joe Gurecky of Rosenberg also have been pushing for light rail to be expanded further west into Fort Bend County.

For sure, the projected ridership of the line would be far greater if it extended into Sugar Land, which is where most of the people are. Metro doesn’t operate in Fort Bend and would need to be brought in to collaborate in some fashion that’s not fully defined, but clearly there’s ample support for this to happen. We’ll see how it goes.

In related news, as noted earlier, Metro has received the $14 million it was owed by CAF from their settlement, and PDiddie wrote up his account of meeting with Metro folks at the Rail Operations Center. Which is right across the street from the Fannin South station, which is where the US90A line would meet up with the rest of the light rail system.

Metro in the President’s budget

They did all right.

Houston Metro’s expansion is getting a $200 million boost in Obama’s budget request to Congress. The money for the North Corridor and the Southeast Corridor projects is $50 million more than the $150 million set aside by Obama in his last two budget proposals.

The Metro project is part of a wider bid by the administration to upgrade transportation infrastructure nationwide so that 80 percent of Americans have “convenient access” to a high-speed passenger rail system within 25 years.

Metro is pretty happy about this as you can see in their press release. This isn’t the final budget, of course, and much can happen between now and its adoption, but this is a reminder that the President considers transit to be a priority, so just because some Republicans want rail defunded doesn’t mean it will happen.

I should add that I had the same opportunity that Neil and several other bloggers had yesterday to visit with Metro board members (Board President Gilbert Garcia, board member Christof Spieler, and board member Allen Watson), CEO George Greanias, and numerous other Metro folks at the Rail Operations Center. It’s an impressive facility and deserves a post of its own, but I’m bringing it up here because I had the chance in the conversation we had to clear up a couple of things from this story. One is that the money being appropriated for the North and Southeast lines counts towards the $900 million New Starts grant for those lines, though the full funding agreement is still pending the rebid process for rail cars (for which notice went out over the weekend, according the Greanias) and some other procedural matters; if all goes well, it should be in hand before the end of the year. You don’t get the full grant all at once, you get it in portions as you proceed with construction, with the last check usually coming in after completion. Having the full funding grant agreement means you’re not subject to the whims of the appropriations process, but the fact that Metro got even more money from that this time around is a strong sign they’re back in the FTA’s good graces. And now we have some confirmation of that.

Federal Transit Administrator Peter Rogoff said this afternoon that the Obama administration would not have proposed $200 million for Houston light rail projects “if we didn’t feel like we were getting to the finish line.”

[…]

Last year, the city of Houston replaced five of the nine Metro board members, who in turn brought in new CEO George Greanias. Rogoff called the FTA’s communications with Metro “honest, straightforward, productive dialogue.”

“They have been very willing partners in rectifying the problems that we identified in our audit,” Rogoff said. Metro canceled the contract with the Spanish firm and is preparing a new procurement plan for FTA approval.

Metro has proceeded on the two rail lines at half speed as it awaits the full funding grant agreement. Rogoff said he expects that agreement to be finalized by the end of fiscal year 2012 but would not be more specific.

That’s genuinely good news and a testament to the hard work they’ve been doing at Metro since Greanias and the new board were put in place. Hair Balls has more.

The President’s budget, while it contains a lot of funding for transit projects, does not have anything to do with the University line, which has been qualified to receive funding but has not gone through the competitive process yet. In addition, Congress must authorize the next transportation bill before there is any further funding for New Starts. That’s where things could potentially get dicey with the slash-and-burn elements of the Republican Congress. That said, Houston Tomorrow notes that US Transportation Secretary Ray LaHood is optimistic that Congress will pass a “sweeping bill to authorize funding for road and transit” by August. So we’ll see.

Overall the transportation budget has some good things, like an emphasis on safety and a prioritization of repairs to existing infrastructure, but it avoids the question of paying for it with an increase to the gas tax. That’s a discussion that really can’t be avoided.

Oh, and one more thing: Remember that settlement with CAF, the Spanish rail car builder that the old Metro violated Buy America with? Metro was to receive $14 million from CAF as part of that settlement. Greanias told us that as of that morning, the funds were now sitting in Metro’s coffers. So again, it’s been a pretty decent week for them.

Yet another threat to light rail expansion

Great.

The House could vote as soon as mid-February on a plan by the conservative House Republican Study Committee to end the 35-year-old Federal Transit Administration’s “New Starts” program,” which pours $2 billion-a-year into urban transit projects such as Houston Metro’s bid to complete five light rail lines across the 579-square-mile city of 2.3 million.

Many Republican deficit-hawks see those costly projects as perfect targets for large savings.

Indeed, Houston Metro is caught in a political squeeze that suddenly endangers projects in dozens of metropolitan areas. The reason: Republicans elected from suburban and rural congressional districts are targeting federal mass transit programs that traditionally benefit Democratic metropolitan congressional districts on the West and East Coasts.

[…]

Houston Mayor Annise Parker said she remained confident the federal government would enable her to fulfill the commitment to Metro expansion made by predecessors.

“We believe that Congress would not act in bad faith for cities – not just Houston but cities across the country – that have expended funds with the expectation that those funds would be reimbursed,” Parker said.

Metro also was counting on another $740 million from the FTA program for future development of the University line.

“Cuts in federal transportation spending are on the way,” says Joshua Schank, director of transportation research for the Bipartisan Policy Center, a think tank created by four former Senate majority leaders. “Historically there have been few partisan battles over transportation, but that’s changing – and not everyone realizes it.”

Actually, I have no trouble believing that the Republican Congress will act in bad faith on this. They don’t care. I didn’t include John Cornyn’s crocodile tears quote about how they’d just love to honor their commitments if only they had the money for it, but you can expect that to be the prevailing attitude.

Having said that, there is some evidence that the issue is overstated. The RSC’s proposal isn’t universally accepted by Republicans, and there are Republicans in Congress that support high speed rail, which is a different kettle of fish but which might translate to support for other forms of rail as well. And of course, the Senate gets a say, the President has a veto pen, and the Democratic phrase of the moment is infrastructure, by which they mean “jobs”. So I’m not going to panic just yet. But as with everything else lately, we’ll have to do it the hard way if we want to get anything done.

In the meantime, the Metro board has voted to increase the capital budget for rail this year, having completed several requirements for doing so, and pointed out that suspending work until it has all of the promised federal funds in hand presents risks and carries costs of its own.

If rail plans were canceled, the $600 million to $700 million Metro already has spent would gain the Houston area little more than some newly paved streets and underground utilities, President-CEO George Greanias said.

“If I were to say to the board and the board accepted the idea we’re stopped today, we’d be walking away from $900 million (in federal money), we’d be walking away from everything we invested already, we’d be walking away from any chance to get (federal) money for University,” Greanias said. “That, to me, is not a logical response. The logical response is to say, ‘We’ll move forward prudently, managing the risk.’ ”

[…]

Much like public officials who suggest that demolishing the Astrodome instead of rehabilitating it still would involve big costs for taxpayers, Metro officials said it would cost $150 million just to clean up the work in progress and close up shop. Meanwhile, there are costs to delay as well, they said.

“The businesses and the residents along these lines are saying to us, ‘Get this done as quickly as you can. We want to be back to having a street that has no orange barrels, no construction equipment, no pavement torn up,’ ” said Metro board member Christof Spieler. “Every bit of delay we do to sort out contingencies is another month that that business has more difficult access.”

They say they have a Plan B to scale things back in the event of a worst-case, RSC-approved budget. Let’s hope they never have to use it.

We’ll take it if you don’t want it

Dallas would like the FTA to know that they will gladly take any federal streetcar funds that Fort Worth doesn’t want.

That’s the message the Regional Transportation Council, with the support of Dallas leaders, is sending to the Federal Transit Administration this month in the wake of Fort Worth’s decision to shelve its streetcar plan.

“We’re going to write a letter, and we hope the FTA sees it our way,” said Dallas City Council member Linda Koop, who is also a member of the RTC.

[…]

Dallas won its own $23 million grant back in February, when [Transportation Secretary Ray] LaHood announced that the government would help build a loop beginning at Union Station and traveling across the Trinity to Oak Cliff, near Methodist Dallas Health Center and back.

Dallas leaders, working with the RTC and DART, soon must send the FTA a clear plan for how it would spend the money and where the additional $15.8 million in required local funds will come from.

Koop said those funds have been identified and that the $38.8 million project will proceed alongside a more ambitious effort to develop a full network of downtown streetcars. That system will likely connect to the soon-to-be-upgraded M-Line trolleys that run between Uptown and the Arts District, as well as tie into downtown light-rail service.

Some of the money earmarked for the starter line to Oak Cliff will pay for planning that can also lay the groundwork for that larger effort, Koop and others said. In all, the larger project could easily cost more than $100 million.

The RTC is also soliciting private funds to get this going, which is something that will be worth watching. All I know is that I felt this same way about high-speed rail funds after watching Republican governors in Ohio and Wisconsin turn their noses up at them, but sadly Texas didn’t get a piece of it. I wish Dallas better luck.

Metro restarts some light rail construction

As if to punctuate Gilbert Garcia’s op-ed, the news for Metro at the start of 2011 is good.

Last month, the Federal Transit Administration sent the first $50 million of the grant money for use on the North and Southeast lines. Last week, the FTA issued pre-clearance letters Metro needed before it could proceed with more than $12 million worth of projects for which it is relying on federal reimbursements. Ultimately, the FTA will pay about half the cost of the North and Southeast lines.

“This is just further evidence that we’re on track and the relationship with the FTA is progressing,” said Metro board Chairman Gilbert Garcia, one of five board members appointed by Houston Mayor Annise Parker last year to try to rescue the jeopardized federal grant money.

The pre-clearance letters are a bureaucratic step, but they also put construction crews to work almost immediately to get the orange cones off streets Metro left scarred when it put the brakes on rail construction last year.

A subsequent press release from Metro spells out where these construction crews will be:

Construction activity for the North Line includes the start of communications duct banks, concrete pavement, sidewalks and asphalt paving on Fulton Street from Cavalcade to IH – 610, and from Boundary to Collingsworth. In addition, construction can begin on the new bridge over the Union Pacific Railroad and the retrofit of the Main Street Bridge at the University of Houston-Downtown.

Work on the Southeast Line includes the start of communications duct banks, concrete pavement, sidewalks and asphalt paving on Martin Luther King Jr. Blvd from Winnetka to just north of Griggs Road and on Scott Street from Polk to Coyle.

Also as part of the North Line project, new construction activity will occur at METRO’s Rail Operations Center at Fannin South, including installation of tracks for rail vehicles in the maintenance yard, construction of an expanded parking lot for maintenance vehicles and expansion of the building.

Next up, hopefully, is the FTA’s blessing on the new plan for buying rail cars, which would begin this month if allowed. The current timeline, which has these routes opening in late 2014, will be much more secure if that happens.

Garcia writes about the New Metro

Metro Board Chair Gilbert Garcia wrote an op-ed for the Sunday Chron that outlined what Metro did in 2010 and plans to do in 2011. If you’ve already listened to my interview with Garcia and Board member Christof Spieler, what he has to say will be familiar. And if you haven’t listened to it, you might want to do so after reading his op-ed, since we didn’t have to worry about space limitations and thus covered a lot more ground in it. As things stand right now, the main story for 2011 will be action by the FTA on the original $900 million New Starts grants, and on the University line; that latter is also dependent on Congressional authorization of the funds in the next budget. Metro has done a lot to put its house in order, at a time when a lot of the things it depends on are out of its control. We’ll see what happens.

Metro reaches settlement with CAF

Fresh from the inbox:

The Metropolitan Transit Authority announced today that it has reached a settlement with CAF USA, Inc. (a subsidiary of the Spanish Firm Construcciones y Auxiliar de Ferrocarriles, S.A.) over two disputed contracts for the construction of light rail cars for its North and Southeast Corridor lines. Under the agreement, the contracts are canceled and CAF will forego any additional payments for unpaid work and lost profits. In addition, CAF will refund $14 million to METRO. The agreement was ratified by the METRO board this morning.

“This is $14 million more for public transportation than we had yesterday,” said METRO Chairman Gilbert Garcia. “More importantly, it’s another step forward from old legacy issues to the safe, reliable and affordable public transit and mobility services that our customers and taxpayers deserve.”

The full press release is here. Given that I was afraid Metro would ultimately owe money to CAF, this is outstanding news. Cross off one more thing from their to-be-cleaned-up list. The rebidding process is set to open in January, so that will be the next step forward.

UPDATE: A copy of the settlement agreement is here.

UPDATE: The Chron story is here. Of interest:

The agreement is the latest of several steps Metro has taken in recent weeks that signal its intent to revive its stalled rail expansion plans in 2011.

In Friday’s meeting, the board also approved boosting rail project spending over the next nine months from $143 million to $345 million. The spending increase will accelerate construction on three lines and restart design work on a fourth.

Very good to hear.

Moving on at Metro

Frank Wilson is gone at Metro, and others are following him out the door.

“A number of the senior appointees that Frank Wilson brought in are no longer here,” said George Greanias, Wilson’s successor, but he did not describe it as a purge. The positions of the five people who have left were abolished, and they were not offered other positions within the agency, Greanias said, saving the agency $500,000.

Greanias said he hopes that restructuring the organization, which he described as “a six-cylinder engine that was operating on two cylinders,” will help it do a better job providing customer service and building a better transit system.

CFO Louise Richman left Dec. 3. Other participants in the management exodus include Tom Hickey, associate vice president; Dick White, acting vice president of infrastructure and service development; Joanne Wright, chief of staff; and Rich Lobron, director of strategic technologies. George Smalley, vice president of communications and marketing, leaves at the end of the month.

“I think it’s very significant. This is what he (Greanias) knows how to do,” said board Chairman Gilbert Garcia. Greanias had been a business consultant. “He has come in and looked at the organization and has been willing to reshuffle the deck.”

Metro needed changes, and they’ve gotten them. Most of what has been happening over there has been positive, and I expect that to continue.

In other Metro news, they got some dough from the FTA; basically, they got reimbursed for work done with money fronted by Metro on the North and Southeast lines that would have been covered by the $900 million New Starts grant and was done before the funds were rescinded thanks to Frank Wilson’s Buy America shenanigans. The board is also considering changes to the Q card program, specifically bringing back day passes, which a lot of people have been requesting. Finally, I’ll have some Metro-related news to bring you next week, and no it has nothing to do with this.

The Bill King alternative to light rail

In case you missed it, Bill King wrote a column lat week that was based on an email exchange he had with me awhile back in which he laid out his alternate vision for what Metro ought to be doing. Some of the items on his list are things I’d support, like adding amenities to park and ride stops. Some are things that sound interesting but I’d need to know more about before I could comment on, like his trolley-bus-circulator idea. Some are things that I would consider to be a waste of money for no discernable purpose, like elevating the Main Street line through the Medical Center.

Most of the rest are things I don’t have any strong feelings about one way or the other. One reason for that is because they would not do anything to improve mobility for people like me who live and work inside the Loop. As I’ve said many times on this blog, I believe a critical function of an expanded light rail network in Houston is to add capacity to the congested-and-getting-worse street grid of Houston’s inner core. We cannot address this problem the same way we’ve done for our highways, which is to build more lanes, because there isn’t the room for it. (There’s not the room for it any more on most of the highways, either, but that’s another story.) I don’t want to rehash all of that here because I don’t have anything new to add to what I’ve already written, but to me any plan or vision that doesn’t include a solution to this problem is completely inadequate. I’m open to the idea that there’s something other than light rail that can achieve this, but what King proposes ain’t it.

I should also note that King is trying to pull a little sleight of hand when he says “We must also ask what else we could do with that $3 billion to $4 billion”. That money he’s referring to comes from FTA grants specifically geared towards the construction of new rail lines; hence the name New Starts grants:

The New Starts program funds new and extensions to existing fixed guideway transit systems in every area of the country. These projects include commuter rail, light rail, heavy rail, bus rapid transit, streetcars, and ferries.

With the possible exception of the LRT elevation, to which he tacks on the commuter rail to Fort Bend proposal, I don’t see any of King’s suggestions meeting that requirement for the money that Metro is still waiting to get. There may be other grants available for the remaining items, but Metro would have to apply for them and beat out other hopefuls. If there’s one thing we’ve definitively learned from the Buy America debacle, it’s that the FTA very much expects its funds to go to the things it says they must go to. To imply that some of this money could be repurposed for things like rebuilding the I-45 South HOV or the FM1960 corridor is highly misleading. Peter Brown, who responded to King on Facebook, has more.

Metro to try mediation with CAF

Whatever works.

The Metropolitan Transit Authority plans to negotiate the cancellation of a $331 million contract with a Spanish rail car manufacturer through mediation, local transit bosses said Wednesday.

That is why, despite the agency’s announced intention to cancel the contract, no action [was] proposed on [Thursday’s] agenda, explained Metro President George Greanias and board Chairman Gilbert Garcia.

They said they hope to begin mediation next month and begin soliciting new bids in January to provide 105 light rail cars.

[…]

The Metro board will deal with the rail car contract on a future agenda. Regardless of whether mediation succeeds, Greanias and Garcia explained, the contract with Construcciones y Auxiliar de Ferrocarriles, or CAF, will be canceled.

“We are going to terminate this contract,” Greanias said. “We’re just trying to do it in the most businesslike, efficient manner we can.”

And if they can avoid litigation and minimize the cost of doing so, all the better.

Now for the bad news:

[Metro’s] president, George Greanias, announced that the light rail expansion budget for this year has been cut by close to 70 percent, from $458 million to $143 million.

That means more than a hundred construction, engineering, small business and community outreach contracts are being reduced or suspended.

The changes stem from Metro’s financial woes and the Federal Transit Administration’s announcement in September that Metro had violated Buy American rules, delaying its federal funding even further.

“These are difficult and regrettable decisions,” Greanias said. “We’ve taken the agency down to the foundation to start from a totally financially sound base.”

But, he added, “It’s going to be a very difficult path as we move forward.”

Utility work will continue on the North and Southeast lines until the end of this year, and utility and road work go on as planned in “select areas” on the East End line. The rest is going the way of the buffalo. At least for now.

Because Greanias and Metro’s board chairman, Gilbert Garcia, stressed that the light rail plans aren’t completely shutting down. That would be more expensive — costing about $200 million, according to Greanias — than suspending the operation until the federal funding picture becomes more clear.

This was expected, but it’s still lousy to see happen. All we can do is hope that the FTA funding that we’ve been counting on all along comes through sooner rather than later.

Feds reject CAF’s review request

I smell a lawsuit coming.

Federal officials on Friday rejected a Metro contractor’s bid to preserve its $330 million deal to supply rail cars, setting the stage for possible litigation over the soon-to-be-canceled contract.

Dorval R. Carter Jr., the chief counsel of the Federal Transit Administration, said the contractor, CAF USA, failed to provide any new facts or points of law in its Sept. 17 request.

The company, a subsidiary of a Spanish firm, had asked the FTA to reconsider its determination that the Metropolitan Transit Authority had conducted the rail car procurement improperly. Metro must cancel the contract with CAF USA and solicit new proposals to be eligible for federal funding to build two light rail lines, the FTA said.

Nell McGarity, a spokeswoman for CAF USA, said the company would have no immediate comment.

Actually, I’m sure that there’s a number Metro could whisper into CAF’s ear to make this all go away. Not too big a number, I hope – surely CAF sees that it’s unlikely to gain much by rolling the dice in the courts. But a little something for their trouble, to send them off happy. Then maybe Metro can try to collect some of that from Frank Wilson.

How Metro nearly cost itself $900 million

It’s an impressive feat, for some sense of the word.

In the first months of the procurement process, documents show, [former Metro CEO Frank] Wilson intended to use local rather than federal funds to buy the light-rail vehicles, possibly in the hope that this would avert the need to comply with federal requirements.

“FJW (Wilson) stated … since Metro is purchasing the vehicles there will be no FTA involvement,” Metro official John Coulter said in an e-mail to a colleague, Navin Sagar, on June 29, 2007.

The use of local funds to buy the cars, however, wouldn’t have exempted the purchase from Buy America rules because Metro intended to use the vehicles on the federally funded North and Southeast rail lines.

Nevertheless, Metro’s initial request for proposals didn’t include a Buy America provision, and Metro told bidders they wouldn’t have to follow federal rules other than those in the Americans with Disabilities Act.

On Dec. 4, 2007, in the first of at least four similar warnings or advisories, the FTA told Metro it must follow Buy America rules and federal procurement guidelines.

Yet Metro continued with the procurement based on the original request for proposals without Buy America language. Of the six firms that submitted initial technical proposals, Metro invited five to submit pricing offers.

It’s kind of amazing that no one on the inside ever blew the whistle on this. Must have been some seriously heavy discipline in there, which goes a long way towards explaining why morale was reportedly so low.

It’s hard to understand why Wilson thought he could do this when he was repeatedly told by the FTA that he couldn’t. He’s not talking, and I rather doubt he will. What is clear is that the board didn’t challenge him on this – David Wolff has been a staunch defender of Wilson’s, and he’s unlikely to change that tune. I’ll say again, it’s a measure of the respect the FTA must have for George Greanias and Gilbert Garcia, as well as a measure of their belief in the merits of the projects in question, that the agency wasn’t completely disqualified from getting the New Starts grants at all. It sure is hard to see how CAF changes the FTA’s mind about requiring Metro to cancel their contract. I hope that sometime after CAF sues Metro over the loss of their contract that Metro cancels any further buyout payments to Wilson. Let him sue to recover them, maybe being deposed will finally get him to explain his motives here.

CAF asks FTA to reconsider

Don’t know how much good this will do them, but I guess it can’t hurt to try.

Metro’s rail car contractor formally asked federal officials Friday to reconsider their decision that the company’s $330 million contract must be canceled in order to preserve federal funding for light-rail expansion in Houston.

The company, CAF USA, said the Federal Transit Administration’s decision was based on incomplete or erroneous information — starting with the name and nationality of the firm holding the contract.

Throughout its report on its investigation of the procurement, the company said in a letter to the federal agency, the FTA refers to CAF – an acronym for the Spanish company Construcciones y Auxiliar de Ferrocarriles – which is the parent company of CAF USA.

“It is troubling to CAF USA that, after a four-month investigation, the name of one of the key contracting parties was incorrectly stated giving the impression that Metro was negotiating with CAF USA’s Spanish parent. CAF USA is a U.S. company, pays U.S. taxes, employs U.S. workers and has a production facility in Elmira, N.Y.,” the letter states.

They also claim that the FTA mischaracterized the deal for the two prototype LRVs that was one of the key points in the FTA’s decision. Like I said, I have a hard time imagining the FTA reading this and saying “oh yeah, you’re right, our bad, sorry about that”, but with $300 million at stake I might take a shot, too.

Metro responds to FTA, and CAF responds to Metro

Over the weekend, Metro posted a letter from CEO George Greanias to the FTA in response to the findings of the FTA from their investigation into Buy America compliance. Basically, Metro says they agree with the FTA’s findings, have issued to a stop-work notification to Spanish vendor CAF, and will work to terminate their contract with them. As you might expect, given the size of the contract, CAF isn’t too happy about that.

“Since the FTA concluded their analysis of Houston Metro’s contract with CAF USA, new information has come to light that could persuade the federal agency to reconsider their conclusions,” CAF said in a statement issued by its American subsidiary.

The statement, CAF’s first public comments since the FTA announced its findings Wednesday, didn’t describe this new information.

[…]

Scrapping the contracts now, the company’s statement said, would potentially risk millions of dollars in taxpayer funds. Metro said last week it had paid CAF $40 million for work done since the contracts were awarded in 2009; CAF’s statement put the figure at $50 million.

Greanias said last week it was unclear whether any of the money paid to CAF could be recovered.

CAF’s statement asked Metro to join the company in seeking a review of the FTA decision.

“While we know there was a review of the process undertaken by the FTA with the cooperation of Houston Metro, CAF USA was not a part of that review and we are confident there are facts the company can provide that were overlooked and accommodations that could have been made” that would preserve the federal grant while permitting existing contracts to continue, James Maiwurm, CAF USA counsel, said in the statement.

I hate to say it, but this sounds like the groundwork for litigation. I’m sure there’s some amount of money that Metro can throw at CAF to avoid a lawsuit, the question is how much and whether it would be a better bet to roll the dice in court. Clearly, this sage isn’t over yet.

On the matter of where Metro stands with the FTA and the New Starts grants it hopes to get, I asked the a few questions before the weekend. I have since received responses from George Smalley and George Greanias. Here’s what I got from Smalley:

We are now preparing a plan for the FTA about how we will conduct a new rail car procurement. We expect to transmit that plan to the FTA within a couple of weeks. Once the FTA accepts that plan, they will then resume their review of several outstanding Letters of No Prejudice (LONPs) for construction activity on the North and Southeast lines – work like paving that requires an LONP to enable METRO to be reimbursed. Once the LONPs have been executed, then the FTA will resume consideration of the Full Funding Grant Agreement (FFGA). We’re not in a position yet to know when that FFGA would be executed.

And from Greanias:

My understanding on the LONPs is that the FTA will get back to those at the latest once they’re OK with our plans regarding the process for moving forward on the reprocurement. On resuming negotiations towards a Full Funding Grant Agreement, our understanding is that the FTA will get that under way once they are comfortable with our plan for the reprocurement. So clearly getting the procurement process nailed down quickly is a top priority. Fortunately, and as I’ve said publicly, the FTA has indicated that METRO’s procurement manual and policies are not the problem; it’s that they weren’t followed. Likewise, there is a considerable amount of guidance available regarding the federal rules on procurement. So we have plenty of guidance on how to do things right.

In theory, the process for Metro could be back on track within a few weeks. Obviously, we don’t know how long the FTA will take to make its decisions, and of course the answer could still be No. But all signs seem to point to Metro being back on the right path. We’ll see how it plays out from here.

UPDATE: Did I say something about potential litigation?

While acknowledging that persuading the FTA to reverse course would be a challenge, CAF USA’s counsel, James Maiwurm, said the stakes were high enough to merit the effort.

“This contract wasn’t let yesterday; we’re 14 months into it,” Maiwurm said. Considerable work has been done at the company’s American manufacturing facility in Elmira, N.Y., suppliers and subcontractors in several states have mobilized, and CAF has begun moving employees to Houston to fill as many as to 100 maintenance jobs, Maiwurm said.

The company threatened possible legal action in a letter sent to Metro on Sunday.

“Unless the Notices are promptly rescinded, CAF USA, Inc. will have no choice but to make claims for equitable adjustment and otherwise under the Contracts and applicable law to recover damages resulting from the issuance of the Notices,” they wrote in the letter.

Yeah, this is a long way from over.

Add another year to the construction schedule

Metro may have dodged a bullet with the FTA, but they’re still going to feel the effect of the federal agency’s decision in the Buy America case.

The Metropolitan Transit Authority today retracted its acting president’s statement that the agency could complete construction of three rail lines by October 2013, saying a delay of up to a year is expected.

“Following additional consultation with project managers, it is now clear that meeting the October 2013 completion date is not feasible,” Metro said in a statement.

George Greanias, Metro’s acting president and CEO, had said Wednesday that he was sticking to Metro’s original schedule calling for completion of the lines by that date.

Again, considering that the FTA could have completely disqualified Metro from getting the $900 million in New Starts grants, which would have left the 2012 Solutions plan dead in the water, this seems like a relatively light punishment. What’s not clear to me at this time is how this affects when the FTA will allow Metro to get that money. The letter from Peter Rogoff says the following:

Assuming that METRO provides us with written affirmation of your intention to terminate the existing contracts with CAF and re-procure LRVs, and a detailed plan explaining how you intend to achieve full compliance with all Federal requirements, FTA is prepared to take a number of steps designed to keep METRO’s expansion projects moving forward and keep workers on the job. FTA will be prepared to restart consideration of METRO’s pending requests for Letters of No Prejudice (LONPs) through which work on the North and Southeast projects that is separate from the railcar procurement can be initiated with the potential for Federal reimbursement. At present, there is more than $50 million in funding already appropriated that can be granted to METRO for engineering and design work on these two projects. Finally, FTA will be prepared to resume its financial analysis and our negotiations for Full Funding Grant Agreements, pending your development of a sound and viable plan for a new LRV procurement.

What this says to me is that Metro doesn’t have to go all the way through the re-bid and purchase process of the LRVs to get back on track with the FTA. Metro just has to say, in writing, that they will cancel the CAF contract and begin rebidding, and to write out a plan to fix the other things the FTA flagged, to get back in their good graces. That strikes me as something that need not take an excessive amount of time. How far along Metro needs to be in the re-procurement process to get the FFGAs going again, and whether the FTA will start over from scratch with them or will more or less pick up where they left off are unanswered questions at this time. I’ve posed them to Metro, and they’ve promised to get back to me on them, so we’ll see.

FTA gives Metro a second chance

That sound you hear is a bullet whizzing past Metro’s ear

Metro violated federal laws in making a deal with a Spanish company to purchase 103 rail cars, and must re-bid the purchase in order to qualify for a $900 million grant, the nation’s top transit official said today.

Peter Rogoff, the administrator of the Federal Transit Administration, delivered the news in a meeting with Mayor Annise Parker and top Metro officials.

The FTA’s letter to the Metropolitan Transit Authority called the procurement process “alarming and disturbing,” saying it violated both federal procurement laws and “Buy America” provisions intended to protect the national economy.

Metro began soliciting proposals for the rail cars several years ago, and starting the process from scratch would be time-consuming and costly.

The FTA’s letter said the federal agency wanted to work with Metro to continue construction during this process, but didn’t specify how.

You can find all of the documents related to this case here or here. Specifically, here’s the FTA press release, the report of the investigation, the letter from the FTA chief counsel, and the letter from FTA Administrator Peter Rogoff. For the most part, what you need to know is in that last letter. Basically, for all the bad things the FTA determined Metro did, they still believe that that the North and Southeast Corridor projects have merit, and that they are prepared to work with Metro to keep these projects moving forward if Metro cancels the contract with CAF and re-bids it according to Buy America rules. To say this could have been a hell of a lot worse for Metro is to understate. The FTA must have a lot of faith in George Greanias and his ability to not be Frank Wilson for them to have declined to cut Metro off at the knees. I think we can finally close that chapter and say that the New Metro is fully up and running.

UPDATE: Here’s Metro’s statement:

Today at a press conference hosted by Houston Mayor Annise Parker, METRO’s leaders commented on the findings of the Federal Transit Administration’s (FTA) “Buy America” investigation and review of plans to purchase 103 new light rail vehicles.

Mayor Parker first acknowledged Houston’s need for a first class transit system and expressed confidence that the FTA supports METRO’s rail-expansion program. “There is a path forward. It is steep and rocky, but we can do it,” Mayor Parker said.

METRO Chairman Gilbert Garcia echoed comments by Mayor Parker that the NEW METRO was committed to resolving issues left over from the previous administration, including the FTA investigation. “We knew there would be challenges and we are attacking them one at a time,” Garcia said. “We are changing the culture at METRO to rebuild trust.”

Acting President & CEO George Greanias said that today’s FTA findings provide several positive outcomes, while acknowledging the challenges ahead. “First, the FTA made clear that they support METRO’s rail expansion program. Also, they laid out a plan to make funds available to keep the program moving forward. And, they provided a roadmap for how to move forward, including a re-procurement of the rail car contract. It will be a steep climb but we can accomplish it,” Greanias said.

Congress Member Sheila Jackson Lee, who also attended today’s press conference, expressed strong support among Houston’s Congressional delegation to see that METRO ultimately receives the $150 million in the President’s FY 2011 proposed budget for rail expansion.

Greanias underscored that construction currently underway on three light-rail lines will continue – the North, Southeast and East End lines. He acknowledged previously that METRO has slowed some work activity on the North and Southeast lines while awaiting funding commitments from the FTA. He also said future construction slowdowns are possible in light of cash constraints. He said a new procurement to purchase rail cars was not directly linked to construction and that it could take up to 20 months to complete and have initial vehicles begin arriving for testing.

“We treat what the FTA says very seriously,” Greanias added. “The NEW METRO is committed to building a strong working relationship with the FTA and to build trust.”

Finally, Chairman Garcia thanked members of Houston’s Congressional delegation who attended a meeting this morning with the FTA, including Congress Members Sheila Jackson Lee, Al Green, Gene Green and John Culberson. Senator Kay Bailey Hutchison also sent a representative. “We are truly appreciative of all their hard work on our behalf,” Garcia said.

More on Metro’s finances

The Chron reports on Metro’s current financial situation. I think you can largely sum this up as follows:

“Clearly, Metro is burning through its cash,” said Steven Craig, a University of Houston economics professor specializing in public finance.

Craig said the declines in Metro’s reserves are “frightening” because its growing light rail network will require the agency to spend more on operations and to pay off debt.

Metro’s decision to begin construction on three light rail lines without assurance of the $900 million federal grant was aggressive and risky, Craig said. Metro had expected the grant to be finalized in April.

Greanias said FTA authorized it to proceed with certain projects, which he said historically means that an expected grant is forthcoming. Greanias said he has instructed his staff to review how Metro would respond if the grant is delayed much longer or even rejected.

When the FTA grants come through – I’m going to be optimistic here – these questions largely go away. If for whatever the reason that doesn’t happen, or if it takes a sufficiently long time for it to happen, then a day of reckoning arrives, and it won’t be pretty. Metro will surely join the ranks of transit agencies that have had to cut service and/or raise fares in that case. Far as I can tell, it’s as simple as that. There’s a special board meeting scheduled for today, so perhaps there will be some news related to that afterward.

Metro’s cash crunch

From last week, a story about how times are tough at Metro.

Facing a $49 million budget shortfall this fiscal year, the Metropolitan Transit Authority has begun to slow construction on two light rail lines and may embrace more drastic measures in the coming months as uncertainty grows over a $800 million grant from the Federal Transit Administration.

Senior Metro officials emphasized that they did not anticipate any cuts to services due to the financial pressures and expressed confidence the FTA grant needed to pay for an estimated 30 miles of additional rail in Houston is forthcoming. But they nevertheless have begun to weigh the impact of continued delays on construction plans that anticipated completion in 2013.

“There’s going to be some tough choices that we’ll be making here, no doubt,” Metro Chairman Gilbert Garcia said.

So far, officials said, the work that has been put off has been minimal on the North line, which is expected to run from north Houston to the Texas Medical Center and Reliant Park. Metro has delayed road reconstruction work on Fulton Street and has put off awarding a contract for the expansion and construction of a rail facility on Fannin at the south end of the line near Reliant Park and the 610 Loop.

All things considered, this could be worse. I directed some questions at Metro about this and another story (more on that in a minute), and one of the things I got back was this statement from Metro’s Raequel Roberts:

It’s important to clarify the financial report given in [this] board meeting.

In actuality, METRO does not have a cash shortfall.

METRO began FY 2010 with $136 million in its fund balance and had originally projected ending the year with $68 million. Current projections show that balance coming in at $87 million, which is a $49 million reduction from the beginning balance.

This represents far more than the 15 percent of its operating budget that METRO keeps in its fund – or “rainy day” – balance.

Of critical note to our customers, this means there will be no service reduction or fare increase.

In other words, this isn’t any different than what the city of Houston has done the past two years, and what the state will almost surely do next year. Obviously, you can’t keep this up forever, but the whole reason to have a reserve fund is to cushion the bump during hard times. According to Metro’s Chief Financial Officer Louise Richman, with whom I had the chance to speak earlier this week, sales tax collections were higher than what they had projected for this year, so the trends are in the right direction. In addition, the work that Metro had been doing on the North and Southeast lines that they will be suspending is work that is supposed to be paid for by the FTA funds they’re waiting for. Metro was basically fronting itself the cash to get started on this work in anticipation of getting the funds later, but as it is taking longer than expected they’ll have to wait. Put all that together, and assuming the FTA funds come through in a still somewhat timely fashion, and things look a lot better.

Of course, there was also an Examiner story from last week about Metro’s investment portfolio, which could affect its ability to get those funds:

The decline in unrestricted cash could spell problems for Metro beyond the obvious ones.

As a condition of receiving funding as part the Federal Transit Authority’s New Starts program, which includes the already-under-construction North and Southeast lines, an applicant must receive at least a “medium” accumulated rating based on five categories.

One of the categories, “current operating financial condition” requires a liquidity ratio (cash, accounts receivable and nonrestricted investment portfolio vs. current liabilities) of at least 1-to-1 to avoid receiving a “low” rating for that category.

Based on the June 2010 unaudited report, Metro’s rating for 2009 appeared to be about 0.79-to-1, having fallen from 1.55-to-1 in 2007 to 1.03-to-1 in 2008, according to Metro financial reports for those years.

The main reason why I contacted Metro to ask about this stuff was because I didn’t see a comment from them in the story. There’s an updated version now in which CFO Richman discusses the cash balance, and the liquidity ratio is corrected to be 0.86 to 1 instead of 0.79, but the main question I had was whether or not this particular metric meant disqualification for the New Start funds, and they said no, it does not. CFO Richman also reiterated what Metro CEO George Greanias said in that updated story, that the “quick ratio” isn’t the only metric used, and she went into some more detail about how liquidity can be determined. I was not in a position to be able to take notes while she was speaking to me, and I’m not quite able to reconstruct it all from my memory, but the gist of it was that they strive to make conservative calculations that still leave them above the 1-to-1 mark, that they make these calculations both with and without certain federal funds and required expenditures, and that they feel confident that they are still meeting the FTA guidelines. The bottom line for me was that I asked if what was reported in this Examiner story was a cause for concern regarding the FTA funds they’re waiting for, and they said no, it was not. So there you have it.