Posts about Metro Matters

Under the proposed agreement, WMATA would also need to secure a line of credit. This would cover any short-term cash flow issues between when WMATA has to pay for work on a project and when they bill jurisdictions. Jurisdictions will pay when WMATA expends the money rather than with a fixed, quarterly upfront payment. WMATA estimates a relatively low cost of $5 million over the FY 2011-16 time frame to cover this line of credit, since they will only need to draw on it for short periods of time.

This reduces jurisdictional capital payments in the near term, as expenditures lag obligation, and then increase them over the long term, as projects really get underway. Jurisdictions had previously criticized the fact that much of the Metro Matters money was sitting around unobligated.

As a result, WMATA will have to work harder to obligate and expend funds, which makes sense. GM Richard Sarles has proposed hiring additional staff to accelerate the contracting and compliance process.

It also means that rather than regular fixed amount payments that can be planned and budgeted for, jurisdictions will have to prepare for potentially widely varying payments based on actual expenditures.

The WMATA Chief Financial Officer can approve re-programming of projects within each category, but when the level reaches 50% of a category, they will have to notify the WMATA Jurisdictional Coordinating Committee and get approval from the Board is required. Unexpended funds from completed projects will be rolled into the following year.

Debt service and "state of good repair" projects have first claim on all funds for which they are eligible. Multi-year projects will have first call on available funding sources in the out years.

The crucial issue in this Metro Matters renewal will be whether the terms of the "annual review" will permit subversion of the six year plan. Except for that potential loophope, this agreement seems to be a good one. The six-year $5 billion funding level is likely the highest amount that jurisdictions can afford at this time. Provisions that require WMATA to obligate and spend its capital funds at a higher rate are welcome aspects of the proposed agreement.

Maryland has determined that it will defer a portion of its capital funding for WMATA this year, a sum of $28 million, until the money is actually required rather than make an up-front payment to WMATA. The reason is simple. WMATA simply can't spend the capital dollars it already has. In this fiscal year, the agency is budgeted to spend $623 million on capital improvements under the Metro Matters part of its budget. As of April, with just three months left in the budget year, it had spent only 40 percent of that money. The reality is that WMATA won't be able to spend the remaining 60 percent.

This is not unusual for transit properties. Planning, design, engineering and other factors can experience unforeseen delays. But the fact remains, $375 million is in WMATA's bank account, just sitting. Given the impact of the economic downturn, Maryland cannot allow its funds to simply sit. We are using our existing taxpayer dollars to fund shovel-ready, job-creating projects. To divert money from those worthy projects to sit idle in a bank account would be a drag on the regional economy.

It's indeed true that WMATA has some unspent capital floating around, but as Craig Simpson argued, it's not quite the mismanagement it sounds like. The Board has discussed ways to either speed up the process or hold back some funds. It's reasonable to discuss ways to fix this problem. However, while it's true the $28 million deferral this year won't slow down repairs and upgrades, the expected deferral for next year, and the suddenly smaller capital budget, will.

Maryland essentially hit the capital budget three times. Just one of the three isn't harmful, but all three together sure are. Swaim-Staley is just defending the one and not addressing the others. She does talk about holding WMATA more accountable, and that's laudable. There's probably some fat in the capital budget. Maryland representatives could say what that is, and outline some specific ideas for reform. But just cutting off funds to replace dangerous and aging railcars won't magically increase accountability. It's just penny pinching.

Until recently, everyone had been expecting the new Metro Matters program to keep funding levels about the same as the 2006-2010 program. That provided about $645 million per year, excluding $200 million in FY10 stimulus money. Add to that the $300 million in "dedicated funds," half from the federal government and half from local jurisdictions, and WMATA would have about $9.5 billion over 10 years.

WMATA has identified capital needs of about $11 billion, leaving it $1.5 billion short. Maybe some of that isn't really necessary, but the $9.5 billion almost certainly is.

Knowing that Maryland (and the other jurisdictions, to a lesser extent) faced short-term budget problems because of the economy, WMATA offered to "back-load" the next capital budget, with smaller payments now growing to larger ones in future years. It would also have scaled the entire budget back to total about $9 billion over 10 years, leaving a $2 billion gap.

However, when Maryland announced it wanted even smaller commitments, WMATA again scaled back the capital budget by $460 million over 6 years, delaying or canceling many projects including replacing the 1000-series railcars, upgrading power systems to accommodate 8-car trains, which are necessary to avoid overcrowding, and the test track and commissioning facility needed to get 7000-series cars into service fast enough to open the Silver Line on time.

This doesn't sound like Maryland "deliver[ing] for WMATA when needed." Cutting important projects out of the 6-year plan isn't keeping what's needed. If Maryland wants to push for an agreement where they actually pony up money closer to the time it's actually needed, but which maintains the previous 10-year spending timeline, fine. The previous Metro Matters agreement doesn't need to be renewed exactly as is.

However, the O'Malley administration can't ask WMATA to cut its repair and upgrade schedule for vital components and then say the state will be there for WMATA. It just doesn't ring true.

The way to ensure the state will fund a project is to make a firm commitment. With the Intercounty Connector, the state borrowed against its future tolls and federal aid, making it impossible for them to reverse course even when the economy turned and their budget situation became dire. They shouldn't shortchange transit by forcing WMATA to beg for jurisdictional dollars every year when highway projects that are bankrupting the Transportation Trust Fund get their guaranteed share.

The O'Malley administration should sign a commitment to provide funds up to at least the $9 billion level on some schedule, a commitment that would withstand any shifts in circumstances. Anything else doesn't deliver.

The Airports Authority says spreading the design costs evenly across the 64 railcars for Tysons, the 300 for 1000-series replacement, and the 64 cars for the Dulles/Loudoun extension would bring the average railcar price to $2.7 million. That would increase the cost to Metro by about $60 million, but would decrease the cost to MWAA by about $166 million.

Officials at MWAA say that unless Metro eliminates the $75 million increase in the overall price of the first 64 cars, they won't okay the purchase.

If MWAA decides to go it alone on the purchase, they probably won't end up getting a better deal, and they will certainly delay the arrival of the cars.

Commissioning facility delayed

Another rough patch for the 7000 series are delays to the Railcar Commissioning Facility. Because of the volume of railcars being purchased and the short timeframe, Metro needs to construct a commissioning facility.

This facility is expected to cost $60 million, and will be located at the Greenbelt Rail Yard. It will include a 2.25 mile test track between Greenbelt and College Park. It will allow WMATA to process 16-20 new railcars per month and will eliminate the need to single-track revenue trains while cars are being tested. The test track will run along the west side of the Green Line from Greenbelt Yard to Paint Branch Creek, just north of College Park Station. No new land will be needed for the commissioning facility or the test track.

Unfortunately, due to the inability or unwillingness of Maryland to commit to a new capital funding program, Metro is deferring the Commissioning Facility and other projects. This will severely hamper the ability of Metro to test and accept new railcars, and inconveniences passengers.

Without the facility, Metro will only be able to accept 8-12 railcars per month and riders on the Green Line will face single-tracking for long periods, although not at rush hour. With the facility, Metro said they could accept the full order of 748 7000 series cars in 5 years. Without it, only half as many cars can be accepted per month. That could mean that it would take a decade to commission the new fleet.

Delays due to the lack of a commissioning facility will keep new railcars from riding the rails. It will delay new cars for the Tysons extension and it will delay replacement of the aging 1000 series cars.

Delays could threaten Silver Line

Time is running short to order the new 7000 series cars for the Tysons extension of the Metro. Without fleet expansion, the line may not be able to open.

The railcars take time to manufacture and be tested. The 4 prototype cars are expected to arrive in Greenbelt in December 2012. The remaining 60 cars for Tysons are expected to begin arriving in Summer 2013. Without a commissioning facility, Metro will only be able to process 8-12 cars per month. Best case scenario (12 cars per month) means the 60 cars will be ready in November. Of course, Metro's own schedule doesn't call for the base order of 64 cars to be complete until April 2014.

With the Silver Line expected to open in December 2013, any delays could mean that not enough cars will be ready. The line can probably open with fewer than the full compliment of railcars initially, because it will take time for demand to increase, but the fleet does need to increase to some degree initially in order to keep from cannibalizing service on other lines.

Delays could crop up because of manufacturing or acceptance delays, or especially if WMAA goes it alone on the railcars. And that worst-case scenario could mean that even if the rail line is finished, opening could be delayed until enough railcars are made available.

This happened in Atlanta. The initial MARTA segment was supposed to open in December 1978, but the lack of railcars, which were delayed at the manufacturer, pushed the start of service back to June 1979. Even then, service was limited to only a few hours each day, with no weekend service.

This is the real threat facing the Silver Line. The region cannot afford to defer projects like the Commissioning Facility, nor can it afford squabbling over funding. All three of the jurisdictions need to step up to the plate and fund Metro.

And Metro needs to smooth feathers with MWAA. This hiccup over costs needs to be worked out as soon as possible. While the Silver Line has a contingency fund, this dispute is really about the equity of the bill, not the amount. And Maryland needs to fully fund Metro so that as new cars arrive in the area, they can be put into service with all haste.

Weir also notes that "The board is using the annual $300 million to displace about $138 million of the local contributions by jurisdictions, says Jack Corbett, of the MetroRiders.org transit group. "Congress intended this as new money, not replacement money," he said.

Congress approved $150 million a year in new capital money as long as it was matched by jurisdictions, one-third from each. Some, including Corbett, expressed fears at the time that jurisdictions would just count some of their existing capital "overmatch" from Metro Matters toward their $50 million. At January's RAC meeting, I specifically asked WMATA Board Chairman and Maryland member Peter Benjamin whether Maryland would do this; he said they would not. Clearly, a lot has changed.

At today's DC Council budget hearing on DDOT, Committee Chairman and DC WMATA Board member Jim Graham strongly emphasized that DC does not want to see the capital budget cut and he is not pleased with the sudden windfall of capital money DC won't be giving WMATA.

Graham also said the WMATA General Counsel has issued an opinion on a technical but important question: Whether Maryland's lack of payment for capital obligations in FY2010 is a "failure to pay" or a "failure to appropriate." Apparently, Metro Matters says that if a jurisdiction doesn't pay what is promised, WMATA can borrow the money on its behalf and charge interest, but if the legislature of that jurisdiction just never appropriates the money, they can't. There was some question about which it was, and for at least some of the money, the General Counsel believes it's a "failure to pay."

I'm trying to get a copy of the letter. As is sadly the case with most of this sordid saga, it was handed out to Board members in executive session. This is a legal opinion so it could be valid, but WMATA management and the Board continue to keep many details from the public.

As Craig explained yesterday, WMATA staff also presented three options for renewing the Metro Matters agreement, all of which are much worse than the current agreement, dropping the long-term commitments for capital funding that has helped Metro make much more progress on repairs than it could before. DC and Virginia were prepared to renew that agreement with only minor changes; the O'Malley Administration has sabotaged that as well.

It's disappointing that WMATA staff just went along with this. They didn't raise the alarm to the Board, saying that the capital program was being compromised; they just went and trimmed the program. When questioned, interim GM Richard Sarles agreed that WMATA needs the money, but said that they are working from what's available. Clearly frustrated, Arlington's Chris Zimmerman said "The money is never there, you have to go get it."

When Sarles came in, there was much hope that he could make the tough decisions since he wouldn't be afraid to lose his job. Maybe he still will internally, but he doesn't seem willing to push back against the "race to the bottom" situation where the cheapest jurisdiction dictates the quality of transit service for its own residents and the rest of the region.

It's also disappointing that Board Chairman Peter Benjamin has been pushing this plan to sacrifice safety, and doing so in secret. There weren't any public hearings on the capital budget. In fact, Maryland kept secret the fact that they had requested to defer some FY2010 capital payments for months, and WMATA staff were complicit in keeping quiet. While Benjamin was loudly pronouncing that taking money from capital was "mortgaging our future," on behalf of the O'Malley Administration he was simultaneously telling WMATA that Maryland wouldn't make its payments.

The WMATA Board should not permit this utter capitulation. We know why Maryland is in trouble: they mortgaged their transportation solvency to build the ICC and widen I-95. Now they want to put the pain of these choices on everyone who wasn't contributing to traffic by riding transit, and everyone who doesn't even live in Maryland.

The Maryland legislature passed a bill to form a committee to recommend long-term transportation funding solutions, to report back after the election. If Governor O'Malley and other state leaders don't want to make the tough calls now, they should do the same thing they did for the road projects: borrow the money themselves, instead of making WMATA do it, and pay that money back with the funds raised if the Legislature can pass a fix next year.

The three jurisdictions can still renew the Metro Matters agreement as is, with direct contributions from DC and Virginia as they are prepared to do, and borrowing from Maryland that is a state obligation rather than a WMATA obligation. If Governor O'Malley isn't willing to do this, voters should seriously question whether he's capably leading the State of Maryland or not.

The options for the next agreement include:

• No funding agreement, line of credit instead: WMATA would take out a $900 million line of credit ($500 for railcars, $400 general). Pros: This would permit multi-year projects, provide jurisdictions with flexibility, and allow for increases in capital funding. Cons: It means a reduced jurisdictional commitment, allows for decreases in capital funding, and the cost of the line of credit could be as much as $55 million.

• Partial agreement for long-term contracts only: Jurisdictions agree to fund some longer term projects, and WMATA takes out a $250 million line of credit to support annual program. Pros: It permits savings for multi-year projects, gives jurisdictions flexibility, and allows for increases in capital funding. Cons: It creates separate classes of projects, may privilege ribbon-cutting projects over basic maintenance, allows for decreased capital funding, the cost of line of credit could be about $12 million, and there's an incentive to "pack" projects into partial agreements to assure their funding.

• Flexible six-year agreement: Jurisdictions make a minimum funding agreement to match federal funds, plus an annual evaluation of additional funds; WMATA akes out a $250 million line of credit to support the annual program. Pros: Allows jurisdictions some flexibility, provides a minimum commitment, allows flexibility of having all projects under "one roof," and allows for increases in capital funding. Cons: This establishes only a minimum commitment, allows for the decrease of capital funds, and requires annual discussions with jurisdictions for additional funds above federal match.

Worse, there will apparently be less money available over the coming years. About $460 million less over the next six years is projected to be available due to decreased assumptions on the availability of federal formula grants and, significantly lower contributions from jurisdictions.

The documents show what important projects WMATA management proposes to defer or cancel based on jurisdictions' recalcitrance:

The new capital budget adds about $300 million worth of new projects. Net, the new capital budget has $460 million less for projects.

All of these will affect service quality in some way that affects riders, but some of the most significant are delaying the replacement of some 1000-series railcars and delaying entirely for five years power upgrades needed to support more 8-car trains, which is necessary to add capacity and reduce crowding.

Before to this latest proposal, WMATA was projected to be about $3.5 billion short of its ten year capital needs, providing level federal and jurisdictional funding and the $300 million per year in federal funds matched by jurisdictions. This latest development pushes that number to about $4 billion short.

Prior to the Metro Matters agreement, the rail system that began operation in 1976 had aged and had fallen into disrepair without funds for replacement and upkeep. The bus system continued to run archaic buses out of prehistoric garages.

Former General Manager Richard White led the campaign for rehabilitation of infrastructure and equipment that resulted in the Metro Matters agreement that provided for partial funding of WMATA's capital needs. The 2005-10 agreement provided for substantial increases in funds along with guaranteed payments to WMATA by the jurisdictions for specified capital improvements.

The campaign continued under John Catoe with the successful passage of WMATA Compact amendments last year that provided for $150 million in federal capital funds to be matched by $150 million in local funds in addition to the Metro Matters funds. These current proposals are a step backwards at the worst of all possible times.

This doesn't mean that the $80 million had no purpose. There are projects designated to get that money. But it does mean that the money isn't being put to work at the moment, except for interest payments that WMATA receives. And by the time WMATA spends that money, it will have gotten more from jurisdictions.

It's not mismanagement. If you're doing an IT upgrade and find that the project that you had been planning for has been eclipsed by technology, you have to put it off, re-write the specs and re-advertise the contract (unobligated and unexpended). On the contract compliance end, if you find a railcar doesn't meet specifications, you're not going to make final payment (obligated but unexpended) until it does.

You can also do no more than you have resources for. You can't take all the the contract compliance personnel away and put everybody to work on the front end letting contracts.

At last week's meeting, federal member Mort Downey suggested that WMATA might obligate its funds by a percentage greater than 100% in order to maximize the use of capital dollars and accelerate capital spending since actual expenditures trail obligations by a significant margin.

On the other hand, DC member Jim Graham suggested that jurisdictions could redirect this balance to operating funds by contributing a little less to capital and spending the savings on operating contributions instead. Doing that wouldn't stop any capital projects.

The points of view of both board members have validity. If WMATA is able to accelerate its obligations (contracts) for capital projects, more will get done sooner and at a lower cost. If WMATA adopts a more realistic obligation/expenditure timetable, then jurisdictional capital contributions could be reduced (freeing up some money for operating) without delaying capital projects. In view of WMATA's dire capital needs and stressed operating budget, perhaps there's a middle ground that satisfies both points of view.

Craig Simpson is the Legislative and Political Representative for ATU Local 689. Opinions posted here are his own and not the offcial position of ATU Local 689.