Capital Programs Continue to Drive Rail Projects Forward

The financial fallout of the past year had the potential to decimate transit agencies’ capital programs. For agencies with capital intensive rail networks, the threat to budgets wasn’t just a halt or pause in expansion plans, but a possible deferral of key maintenance practices, as well. The emergency relief provided by the U.S. government within a trio of bills eased the financial stress on operating budgets and freed agencies to refocus and revisit proposals of long planned and long sought-after projects. What follows is a sample of what rail systems have planned in 2021 for their capital programs.

Sound Transit

Sound Transit has one of the largest rail expansion plans in North America in terms of both scope and cost under its Sound Transit 2 and Sound Transit 3 plans. The transit agency remains on track to nearly triple its light-rail system by 2024 with 40 additional miles of rail infrastructure and 28 new stations. However, the impacts of the COVID-19 pandemic combined with surging real estate and construction sector costs have forced a recalibration of how Sound Transit pursues expansion projects not already under construction.

The process, called realignment, will evaluate how plans for future projects will be revised to address the challenges and financial pressures.

“As an agency and region, we find ourselves whiplashed by a unique recession that has decimated revenue sources such as sales taxes, but without slowing our red-hot property and construction markets,” Sound Transit CEO Peter Rogoff wrote in a February 2 blog post. “Other capital programs in rapidly growing regions are also experiencing this double bind that is beyond anything we’ve seen before.”

Sound Transit is facing a significant revenue shortfall through 2041 based on reduced fare earnings and lower tax receipts. The agency needs to bridge an $11.5-billion gap to deliver the full expansion program, as of press time for this issue. The shortfall estimate is expected to be updated at the end of April.

The loss in revenues is compounded by an estimated 42 percent to 50 percent increase in cost estimates of three future rail projects due to mounting construction costs and the region’s soaring real estate values. Cumulatively, the cost estimates for the rail projects – the West Seattle and Ballard Link Extensions, the Tacoma Dome Link Extension and the Link Operations and Maintenance Facility South – are between $4.8 billion and $6.2 billion above 2019 estimates.

Realignment is not an unfamiliar process to Sound Transit, which took on a similar process in 2010 to find a way to bridge a $3.9 billion funding gap brought on by the Great Recession, which is nearly one-third of the gap the agency is currently facing.

In the current realignment process, the Sound Transit Board describes a two-pronged approach that will include pursuing expanded financial capacity through new federal and state funding, as well as cost relief. The second prong will involve project timing by evaluating delayed delivery of projects, phased delivery, reduced scopes and suspending or deleting projects (an option that exists but has not been discussed).

The board will evaluate future projects based on several criteria including ridership potential, socio-economic equity, a project’s ability to connect regional centers, how long voters have been waiting for a project, secured or the opportunity to secure outside funding, if a project advances the development of a regional high-capacity transit spine, if a project represents a “next step” beyond the spine and if a project can be constructed and opened for service in phases.

“The ballot measure approved by voters requires this process when we know the program is not affordable. And the revenue challenge in combination with the growth in cost estimates makes it very clear that it isn’t affordable,” wrote Rogoff. “We owe a transparent and honest reading on what can be accomplished in what timeframe to the voters, taxpayers and communities that have waited so long for high-capacity transit.”

The board is targeting July 2021 to have a realignment plan finalized and ready for action, but the transit authority is unwavering in its commitment to deliver expanded transit projects to the region. Sound Transit believes transit construction will support economic recovery.

“This construction will help our region's economy recover from the COVID-19 recession, just as transit construction helped fuel our recovery from the Great Recession,” the agency said. “Family-wage jobs offered by Sound Transit's construction projects will help thousands return to the workforce, and in turn, will support even more retail and service jobs in the community. As the economy recovers, investments in these new transit infrastructure projects can help deliver tens of thousands of daily riders to work and other destinations.” 

Washington Metropolitan Area Transit Authority

The Washington Metropolitan Area Transit Authority (WMATA) was one of the first transit agencies to issue a statement following passage of the American Rescue Plan Act, which included $30.5 billion in emergency relief for the transit industry, revoking its planned service cuts and layoffs. At the time, WMATA Board of Directors Chair Paul Smedberg explained the transit provider would move forward with the authority’s FY22 budget public comment period and would vote on a revised FY22 budget in April with the new funding taken into consideration.

In early April, the revised FY22 budget was approved by the WMATA Board of Directors Finance and Capital Committee and is expected to gain the board’s approval.

The FY22 budget includes $2.6 billion for capital work and invests “in safety and service improvements, critical repairs to platforms and structures and system state of good repair needs.”

Work to progress under the capital budget includes platform rehabilitation at Green and Yellow Line stations this summer, which is part of a four-year initiative to reconstruct 20 deteriorated outdoor platforms. Work will begin in late summer on the Red Line to upgrade the decades-old tunnel ventilation system and this fall, construction will begin on the Red Line to repair aerial structures and bridges.

While not within WMATA’s capital budget, an exciting development for its rail system was news that the Metropolitan Washington Airports Authority intends to turn the second phase of the Silver Line Metrorail project over to WMATA by Labor Day weekend. The 23-mile extension will link Reston and Ashburn in Loudoun County, Va.

“We are preparing to welcome back customers as part of a return to normalcy, and welcome new customers who have long awaited the convenience of the Silver Line and new stations serving their communities and workplaces,” said WMATA General Manager and CEO Paul J. Wiedefeld. “I am especially looking forward to beginning rail service to Dulles Airport as people resume travel to and from the nation’s capital as one of the great destinations in this country.”

Metropolitan Transportation Authority

In September 2019, the New York Metropolitan Transportation Authority (MTA) approved a $51.5-billion 2020-2024 Capital Plan, which was the agency’s largest capital program in history and increased planned infrastructure spending by 70 percent. Less than six months later, the pandemic halted all but essential travel in New York City and the authority pushed pause on its record capital program as the financial pressure from increased expenses and reduced revenues began to build.

Despite the financial stress, MTA completed $4.3 billion in projects in 2020, which were funded by previous four-year capital programs and awarded $5.4 billion in new capital work. While impressive given the financial situation, the new awards represent one third of the $13 billion MTA intended to award in 2020.

Federal emergency funding from three separate packages supplied the agency with a combined $14.4 billion, which provided significant operating income relief to stave off severe service cuts and layoffs.

MTA’s five-year capital program restarted in early 2021 with MTA Construction and Development President Janno Lieber reporting at MTA’s February board meeting that the authority intends to award $6.2 billion in work in 2021. More than half of the commitment goal, $3.8 billion, is scheduled for New York City Transit/Staten Island Railway projects, while $485 million is scheduled for Long Island Rail Road (LIRR) and $777 million for Metro North projects. Lieber noted priority will be given to State of Good Repair work, normal asset replacement and system improvements deemed critical such as signal modernization and ADA enhancements.

MTA intends to commit $1.44 billion to station work in 2021, $3.25 billion to infrastructure investment, $625 million in track renewal, $172 million in bridges and tunnels and $472 million in rolling stock, such as electric and standard buses, as well as locomotives.

In a March update before the board, MTA’s capital program was reported to be on target to meet its first quarter goal of awarding $865 million in work, with MTA agencies committing $353 million for the purchase of Metro-North locomotives, $22 million for normal signal replacement on LIRR and $45 million for Main Line high-speed track turnouts.

MTA is also on track to complete $7.2 billion of work in 2021, which includes 51 major projects. One recent project to reach completion is the F Subway Line tunnel rehab under the East River. The project is significant as it is the final of MTA’s 11 under-river tunnels ravaged by Superstorm Sandy to be repaired and made more resilient.

Funding for the capital program will be financed in part through bond revenues. MTA Chief Financial Officer Bob Foran said at the March board meeting that while he couldn’t give an exact number, the expected revenue generated from the bonds would be significant.

An unknown about MTA’s financial picture is if or when congestion pricing could be approved. Revenues from the tolls were expected to contribute up to $15 billion to the five-year capital program. At the end of March, the Federal Highway Administration indicated the next step for the plan would be to undergo an environmental assessment, but a timeframe for when that review will be completed is not definitive.

After the March board meeting, MTA Chairman and CEO Patrick Foye said the authority’s goal is to deliver each project in the five-year capital program.

“We don’t want to retreat on any project,” said Foye.

He also noted MTA has a more optimistic outlook for infrastructure investment at the federal level.

“We’re encouraged by the fact that this president is focused on a substantial infrastructure bill and understands the importance of making America infrastructure at a 21st century level. It’s important for customers, it’s important for job retention and for prosperity in the United States,” said Foye.