Cap Metro not counting many expenses related to commuter system, and originally, opening in 2008 was set a half-year earlier.
By Ben Wear
AMERICAN-STATESMAN STAFF
Sunday, November 25, 2007
Is Capital Metro's commuter rail project on time and on budget, as agency officials have said repeatedly over the past several months?
On time, maybe. Capital Metro's estimated opening date of fall 2008 is about a half-year after the original estimate. And hitting the current target date depends on a couple of late-starting stations getting under way soon and the Federal Railroad Administration approving a key permit allowing freight and passenger trains to share the track.
Whether it's on budget depends on who is doing the counting and what they count. Capital Metro estimates that the project will come in right at $90 million, which is the sum of the $60 million project cost trumpeted to voters in 2004 and another $30 million that Capital Metro said at the time it would spend on six rail cars.
But Capital Metro, in hitting that $90 million target for the 32-mile line from Leander to downtown Austin, is not counting as project costs significant expenditures that either grew out of the commuter rail project or will directly benefit the operation.
Taken together, these off-book costs — for items such as park-and-ride lots at stations, consultants advising the agency on "commuter rail startup," shuttle buses devoted to ferrying customers to and from the stations and other sizable items — total more than $33 million.
And on the revenue side, Capital Metro fell another $30 million short when it decided not to seek federal grants that it had told voters would be part of the funding package. Seeking the money would have delayed the project, and such grants have become much harder to land in recent years. That money instead had to come out of local taxes and fares.
"So they're already $30 million in the hole," said John Lewis, an Austin real estate investor who supported the commuter rail initiative in 2004 after opposing a light rail plan in 2000. "They're trying to lay off all the cost of the park-and-rides. And that's not realistic or being honest with the taxpayers."
Not so, say top Capital Metro officials.
Some of the expenditures in question, including two of the park-and-ride lots that currently serve bus riders, began before the 2004 election. Other items they charge wholly or mostly to the freight rail operation that has run for years on the same tracks where passenger trains will be. In other cases, they say that because the original $90 million estimate did not include a particular type of expenditure — the shuttle buses, for instance — it is not legitimate to include it in the accounting now.
"If we didn't get rail, we were going to build the park-and-ride lots anyway," said Fred Gilliam, Capital Metro's CEO and general manager. "When we developed the budget (for building commuter rail), it did not include the buses. At that point, there was not a perceived need to include all those things."
Austin City Council Member Brewster McCracken, who has filled one of the city's two spots on the Capital Metro board since June 2006, said the agency has had what he considers an excessive focus on staying at or below $90 million for the project.
"At times it seems that Capital Metro engages in accounting gymnastics to try to say that something is not a commuter rail expense," McCracken said. "But these are investments that are extremely necessary to make the commuter rail system succeed."
Less expensive rail plan won favor
To understand the significance of the $60 million-plus-the-train-cars figure, you have to go back to 2000.
That year, Capital Metro put a 52-mile light rail system before voters at a cost of $1.9 billion. Many of those miles would have been on city streets, taking away car lanes or sharing them with vehicles. The ballot issue failed by a couple of thousand votes.
Then Capital Metro came back four years later and said it could build a 32-mile line on existing off-street rail for what seemed, in contrast, a negligible cost: $60 million.
That number — just 3.1 percent of the 2000 estimate — was much publicized, while the $30 million cost of the cars was typically grouped in as annual lease payments that would be part of operating expenses. Politically, $60 million was a potent number — combine it with the cars, and you're still dealing with eight figures, not nine — and the commuter rail initiative passed with 62 percent of the vote.
Most people probably had no idea what components were wrapped up in that $60 million.
Asked now for a copy of the $60 million cost estimate, Capital Metro provided a 2004 document with just five categories: track work, a rail car maintenance facility, right of way, stations and program management. The five items add up to $60 million. There was no money set aside as a contingency.
But, as typically happens in any government project that takes four years from estimate to fruition, there were unexpected costs for commuter rail: an extra $5 million for the Swiss-manufactured cars, some of that due to the falling value of the dollar versus the euro; $6.9 million for an overpass at the intersecting Union Pacific rail line to avoid delays for commuters; about $10 million for management and environmental work rather than the $6 million program management estimate; $6.5 million for a permanent maintenance facility (and another $2.1 million for related materials) rather than the $2.4 million temporary facility in the pre-election estimate.
And construction costs in general have seen double-digit inflation each year since 2004.
With no contingency, and those unexpected costs as well as others, hitting the $60 million/$90 million target would have required either extraordinary cost cutting or, some say, creative accounting.
"If you're both smart and honest, you build a contingency into your budget because you're going to have unexpected and unintended costs," said Peck Young, a retired Austin political consultant who advised many governments seeking to pass bonds for projects and who now serves on a committee overseeing the Austin school district's 2005 bond program.
If the costs do exceed the target on a project, Young said, that can be difficult in subsequent elections. But "fudging your numbers," he said, is even worse.
"Pretending that an overrun isn't an overrun, if it's sound and it's publicized, is a death knell," Young said. "To me, it's not only dishonest, which it is obviously; it's also stupid."
Some costs shifted to freight lines
Gilliam, asked why several items are not in the agency's list of commuter rail expenditures, defended each decision. He said the agency had no intention to mislead anyone about the project's cost.
Among the items at issue:
Park-and-ride lots. When the rail line opens in fall 2008, there will be large parking lots at the three most outlying stations: Leander, Lakeline and Howard/MoPac.
The Lakeline lot opened in January 2004, months before the commuter rail election but long after the agency had made it clear it would like to have passenger rail running on the existing freight line. The lot was built far away from any development at the time but right by the railroad. However, the lot has now been in use for almost four years by bus commuters, giving credence to the agency's decision not to allocate its $8 million cost to the rail project.
As for the Leander park-and-ride — price tag: $7.4 million — Capital Metro bought the land and then awarded the construction contract two months before the 2004 election, all of this occurring during planning for commuter rail.
And the Leander lot, when it opened this spring, replaced a rental lot at a church on Crystal Falls Parkway, two miles closer to Austin, meaning some bus commuters now have to go in the opposite direction from their ultimate destination to get to it.
The 600-space lot, which on a recent Tuesday midmorning was less than 20 percent full, is right alongside the railroad at the station on the line's northernmost point. Capital Metro in 2004 said it probably would cancel several express bus routes in the area when commuter rail began, meaning that the lot would then almost exclusively serve train passengers.
Randy Hume, the agency's chief financial officer, now says that is not necessarily the case. "We'll still run some express buses, but I don't know the exact number," he said.
As for the Howard/MoPac lot, Capital Metro is still in negotiations to acquire the land at the corner of Howard Lane and the Loop 1 tollway, McCracken said.
Even in that case, Gilliam and Hume said, the $3.5 million cost should not be assigned to the commuter rail project because it will also serve bus routes.
Dallas Area Rapid Transit, which has numerous park-and-ride lots alongside light rail stations on the 11-year-old system, includes the entire expense of the lots in its rail projects, spokesman Jeff Hampton said. And Houston Metro likewise included the cost of its huge Fannin park-and-ride lot in the $324 million construction cost of the project, said spokeswoman Raequel Roberts.
"The cost includes the tracks, the stations and the parking," Hampton said. "The stations and lots were planned as part of the big picture, and we knew before construction which ones were going to be part of it."
Transit-oriented development. The agency has spent or budgeted more than $6 million to encourage development of shops, offices and multifamily residences adjacent to the commuter rail stations, including hiring several staff members and consultants.
Such developments, rail advocates routinely assert, can sprout up only near rail stations, not bus stops, because then the developer can be assured that the transit option will not move later.
Gilliam said this isn't a commuter rail cost.
"In the early part of 2004, (transit-oriented development) was not nearly the buzz word it is today," Gilliam said. "It was only after the election that a lot of this started picking up."
But the agency in the months before the election hired Hank Dittmar, author of a book on transit-oriented development, to advise it on the subject, paid part of consultant (and former Capital Metro board member) Scott Polikov's fee for advising Leander on transit-oriented development and named staff member John Hodges as interim manager of transit-oriented development. The City of Austin, working with Capital Metro, before the election began development of an ordinance for such "transit villages."
The agency this year, in its fiscal 2008 capital budget, set aside $1.7 million for "commuter rail startup." Despite being listed as capital, that $1.7 million is an operating cost, not a commuter rail project cost, Capital Metro said.
Agency officials earlier this fall recommended building several miles of chain-link fence alongside the rail line for about $380,000, saying that the fast, relatively quiet commuter trains would be more dangerous for pedestrians than stodgier freight trains that already use the tracks. They raised the specter of iPod-wearing schoolkids, earphones in place, crossing the tracks and failing to perceive the new trains approaching.
Not a commuter cost, Gilliam said in an interview. "I think it's more for the freight because of the speed of the freight is increasing," he said. "On the commuter, they can stop faster."
North Austin Operations and Maintenance Center. The agency had originally intended to put a temporary rail maintenance center on its property by the track in Cedar Park, estimating it would cost $2.4 million. Midstream, Capital Metro decided to put it instead on a new facility it was building for bus maintenance off Burnet Road north of U.S. 183.
The agency spent about $19 million buying that land, knocking down existing buildings and altering nearby roads, and the rail operation will use more than 11 percent of the land area. The agency is allocating none of those costs to commuter rail.
Freight allocations. Capital Metro is allocating to commuter rail 25 percent of $6.8 million spent on traffic control devices on the line, a system meant to keep trains — freight or passenger — from crashing into each other.
On a typical weekday, there will be about 20 commuter train runs a day on the line. Right now, no more than six freight trains a day run on any given stretch of the 32-mile run. That will increase soon to eight a day, the agency said.
Asked about allocating 75 percent of this cost to freight, Hume said that the freight trains are much longer — 100 cars or more — and much heavier than the single-car commuter trains.
The agency also is attributing to commuter rail just $178,000 of the $5.4 million it is spending on so-called quad gates, which are considered safer because they have four arms that come down to block traffic rather than the typical two. Quad gates also, under federal law, can allow engineers to pass a street crossing without blowing the train horn. The agency had installed a handful of the special gates in 2004 but will put in many more now.
On a typical day, those gates will come down many more times for a commuter train than they will for a freight train.
Nonetheless, installing the gates, Gilliam said, "benefits freight more it than benefits commuter."
Rail's opening awaits Swiss cars
As it turns out, the on-time claim for the commuter rail project is also open to question.
Capital Metro has been saying for a couple of years that the line will open in the fall of 2008. That's still their estimate.
Capital Metro spokesman Adam Shaivitz acknowledged that before the election, the agency was saying it would take three years after voter approval to begin service. By that measure, the commuter trains should be running right now.
But after the election the agency found that, in particular, getting the cars designed, built, delivered and tested would take longer than thought earlier.
The first two of six cars, built in Switzerland, were delivered only a few weeks ago, and the last of them won't hit Austin for several months. Given that, the opening estimate was moved back to fall 2008.
"From our perspective," Shaivitz said, "that's on time."
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Yeah I would have to go with the Mayor on this on. But at 10:30 am it should be ok! to Move trucks in and out of there. Most office hrs downtown start about 7:00 to 10:am. I know here in Downtown Dallas. Traffic is running smoothly by this time. Remember there should be around 20 to 25 thousand people in downtown Austin. The buildings will have to be built.
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