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4.3. SR 06-16-2003
13065 0r0n0 Parkway Elk River, MN 55330 TO: FROM: DATE: SUBJECT: Mayor and City Co~ Scott Harlicker, Sen June 16, 2003 Northstar Corridor LI MEMORANDUM Item# 6.3. ~ference call from > Northstar but stated re is a need for options. was passed directing 'oup to further study the ~f the study are due by Jncil ior Plannel~~' At the NCDA meeting held on June 5th Govemor Pawlenty. The Govemor gav that congestion along the corridor is a c No funding was included in the 2003 le MNDOT, in conjunction with the NC[ feasibility of commuter rail utilizing 20C January 15, 2004. )date the Authority received a co: no specific commitment t< xonic concern and that the islative session. Legislation A, to convene a working g, 0 Census data. The results c The Federal Transit Authority (FTA) c},anged the rating of the No~hstar Corridor Rail project to not recommended. The rating is based on the lack of statO financial commitment, not on the merits of the project. The rating is likely to improve if th~ State comes through with funding in 2004. / / State funding for the commuter bus ser~4'ce will be discontinued as o.f October 2003 In order to keep the service operating for :a~other year $104,000 is needed from local sources to match federal funds. The NCDA will b. discussing possible lundin, sources over the next couple of months. Phone: 763.441.7420 Fa.x: 763.441.7425 DOCUMENT2 www. ci.eJk-river, ran.us NCDA Agenda .~une 5, 2003 ~4:30 p.m. Sherburne Ciounty Government Center Elk River, MN ~ Action Requested Minutes of the March 6 and May 1, 2003 Meetings* Executive Committee Reporti a. Grant Agreement with Mn/DOT* 2003 Legislative Session: ReSults Northstar: Where Do We Go ~rom Here? / RFP for Updated Ridership, S~ation Feasibility Studies in Ramsey and Sauk Rapids, ~nd FTA Issues* 6. Other: July Meeting Date Approval Approval Information Discussion Information · Documentation enclosed Please attend this importantimeeting to discuss the future of Northstar. DRAFT DRAFT DRAFTI DRAFT NORTHSTAR CORRIDOR DEVELOPMENT AUTHORITY Regular Meeting Minutes ,i March 6, 2003 The Northstar Corridor Development]Authority met on March 6,] 2003, in regular session at the Sherburne County Government Center, Elk River, Milmesota. The follo~vi.ng members, alternates m,~d citizens were present: M~u'y Richardson, Bob Barnette, Jason Tidemmm, Brian Bensen, Peg Aho, Steve Novak, Steve Billings, David Loch, Paul McCarron, Dan Erhart, Robert Kirclmer, Dem~is Berg, Tom Ganiec, Bruce Nawrocki. Paul Ostroxv, Scott Harlicker, Duane Grandy, Tim Yantos, Lewis Stark, Felix Schmiesing, Ewald Petersen, Jolm Norgren, Patrick Cairns, Gary Hammer, Woody Bissett, Bob Johnson, Kaye Bechtold, Greg Bruestle, Dan Lieser, Art Daniels, Jolm Himle, Jim Barton, Luci Botzek. Jeff Dehler Duane Grandy, Chairperson,'c A motion was made by Ewald unanimously to approve the at 2003. -]lied the meeting to order at 4:35 p.m. Petersen, seconded b,y., Levels Stark and carried enda of March 6,200.~, and the minutes of January 9, Executive Committee Report: i a. A motion was made by Jol'n Norgren, seconded by P4tll Ostrow and carried unanimously to appro_v,e thc recommendation of the E.~ecutive Committee tlxat the NCDA authorize the Chai~q to finalize negotiations an~i execute the contract amendment with Anton, LObov & Associates, Inc. by iextending the term of the Agreement through June 30, 2003, increasing the contract amount by $8,500.00, and modifying the scope of services, and also waive tl~e insurance requirements in Section E paragraph 1 of tlle original agreement. Bob Johnson asked staff for clarification of expanded services to be performed by paul Anton. Mary Richardson noted that the expanded scope of services would provide additional strategic and advisory services on the project including documentation and presentation of findings to 9olicymakers. State Update: Report on Briefing of Governor Pawlenty: John Himl~presented an update on the meeting with Governor PaWlenty at United Defense. Ne noted that the economic analysis was very compelling to the Governor and his staff and that we should know soon if they embracel the issues. Tim Yantos hal~ded out a copy of the power point presentation made and an informational sheet on conclusions made by some of the presenters. Bob Johnson noted that the Governor was itl St. Cloud 7 or 10 days following tile presentation and when asked about Northstar, he referenced all incorrect cost benefit ratio. Mr. Johnson asked what steps are being taken to ensure that this issue Nortlnstar Corridor Developrnent Authority March 6, 2003 Minutes Page Two and the correct data is out there. Tim Yantos noted that the NCDA is making a list of answers to all questions received from the presentation for future discussion with the Governor and his staff. Mr. Yantos also noted that Paul Anton will be making a presentation to the Legislature sometime this session. Legislative Activities: Bill Schreiber handed out a list of bills which include appropriations for the Northstar Project and copt)' of HF 688 which would abolish regional rail road authorities. Steve Novak noted that the Senator Dean Johnson is positive that the Senate will allow the NCDA to make a presentation to the Transportation Committee which will give the Project an opportunity for a flee press conference. Jolm Himle noted that Northstar Corridor updates will be sent out to over 11,000 people this week and over 350,000 people will receive the next Corridor Nexvsletter. Mr. Himle als© noted that staff and Mr. McCarron are starting a whole new series of media tours throughout the State and that a videotape will be sent out to over 120 cable stations. 5. Legislative Update: FY 2003 Appropriations: Paul McCarron provided an update on the fiscal year 29003 appropriations. He noted that on February 13, 2003, it was announced that Minnesota will receive $164.16 million in federal funding. Of this amount, Northstar Commuter Rail Project will receive $5 million. FY 2004 Appropriations Request and Reauthorization Request: Discussion was held on the fiscal yem' 2004 appropriations request and reauthorization request. Paul McCarron noted that Congressman Sabo and Oberstar will coordinate getting the Northstar Project onto the funding list. Congressman Kennedy is taking the lead on this issue. Tim Yantos noted that the reason why the Project did not get recommended status is because the Project did not get the State match. Other: Next Meeting: The next meeting of the Northstar Corridor Development Authority is scheduled for Thursday, April 3, 2003, at 4:30 p.m. at the Sherburne County Government Center. A motion was made by Paul Ostrow, seconded by Patrick Cairns and carried unanimously to adjourn the meeting at 5:20 p.m. Duane Grandy, Chairperson Date I I:Admndata COM MITTE*~:C't~rrid~r NCDA~2003 Minutes 0320603 NCDA Dral't. DRAFT DRA] NORTHSTAR CORR Reg ?T DRAFT IDOR DEVELOPMENT ular Meeting Minutes May 1, 2003, DRAFT AUTHORITY The Northstar Corridor Development {uthority met on May 3.2003, in regular session at the Sherburne County Government Cente] Elk River, Minnesota. I / The following members, alternates anal citizens ;vere present: Pe~ Aho, Duane Grandy, Lewis Stark, Dennis Berg, Dan Erhart, Ewal~l Petersen, Terry :Nagorski, Arne Engstrom, Dan Lieser, LeRoy Pauley, Felix Schmiesing, Patrick Cairns, Kaye Bechtold~Paul Danielson, Mike Rogers, Jean Keely, Gary Erickson, Ross Olson, Mary Richardsoh, Scott Harlicker, Bruce Nawrocki, Tom Gamec, Robert Kirchtaer, Lona Schreiber, Paul McCarron, David Loch, Ken Stevens, Todd Rapp, Steve Novak Duane Grandy, Chairperson, called the meeting to order at 4:40 p.m. Agenda items needing action by the NCDA (Minutes of tlie Marcia 6. 2003 meeting and Mn/DOT Grant Agreement) were held over until the next quorum. State Legislative Update: Lon{a Schreiber gave an update Ms. Scln'eiber noted that the Project needs $47 million ftc forward. Members asked if there had been any feedback, Governor Pawlenty in February. Ms. Schreiber noted tha his financial staff to review thd numbers in Paul Anton's ~ that members should be talking to their Legislators and as the Senate bonding bill includes monies for building and modes of public transportationl Federal Legislative Update: E!liott Perovich gave an upd meeting due to lack ora on State legislative activities. m the State to keep moving )n the presentation to the Governor had directed eport. Ms. Schreiber noted king them to make sure that ~perating present and fnture ite on federal legislative activities. Mr. Perovich noted l~hat he will be going back tO Washington in June to attend the MN Transportation Alliance which should be about the same time the bill should be going tln'ough revisions. Recognition of Lewis Stark, Departing Executive Committee Member: Chair Grandy reviewed Lewis Stark's tenure ~as a member of the NCDAi and noted that Mr. Stark has played an active role in the formation and development of~ the NCDA as an Executive Committee Member and has also played a key role in the St. Cloud station planning commission. Other: Article regarding Northstar Corridor Project in thel St. Cloud Technical High School's Montage: Greg Brue~tle handed out copies oftlle March 2003 Montage which contained an article prepared by Leah Hunczak entitled: "Northstar line on its way". Other: Media Events: Patti McCarron noted that he has been promoting the Northstar Project at many media events throughout the State. o 10. Public Information Update: Jeff Dehler gave an update on public information activities for the Project. He noted that a newsletter will be sent out to citizens and officials throughout the State and that new features have been added to the NCDA web site which allows citizens to locate contact information on their legislators. Todd Rapp noted that over 315,000 individuals are now on the Northstar newsletter mailing list and over 100,000 individuals on the list of supporters. Construction of the Hiawatha LRT Project Update: Gary Erickson gave a power point presentation on the Hiawatha LRT Project. He noted that the project is on schedule. A motion was made by and carried unanimously to adjourn the meeting at 6:00 p.m. Duane Grandy, Chairperson Date \\NtserverXcompany\NCDA\Minutes\050103 NCDA Draft.doc MEMORANDUM NCDA Agenda Item #2a DATE: TO: FROM: RE: May 30, 2003 NCDA Members Executive Committee Mn/DOT Grant Agreement It is anticipated that Mn/DOT will be submitting to the FTA a grant application for the 2000 - 2001 Congressional A~ppropriations for the Twin Cities Transitways. The NCDA's share of this l~und ng will be $4,077,850. In order to access these funds, the NCDA mustlenter into a Grant Agreement with Mn/DOT. The proposed scope! of work and budget for the grant agreement is attached. Action Requested: That the Authority authorize its chair to finalize and execute a grant agreement with the Minnesota Department of Transportation for $4,077,850 which incorporates the scope of work as attached. Northstar Corridor Development Authority 2100 3'" Avenue, Anoka, Minnesota 55303-2265 (763) 323-5700 Fax: (763) 323-5682 www.northstartrain.org NORTHSTAR CORRIDOR SCOPE OF WORK FFY2000 Grant and Local Match 1. Update Ridership i $187~500 The current ridership forecast is based upon the 1990 census da{a because it was the only data available at the time. Also, the forecast process is somewhat unique since it includes elements from two separate metro areas i.e., Twin Cities and StI Cloud with addition of some assumptions about home based work trips from the non-modeled area between the Twin Cities Metro area and St. Cloud. The ridership, or demand forecast, is one of the critical data elements used to calculate service requirements and cost effectiveness 0f the project. The FTA has raised some questions regarding calculations for incremental ridership, i Since the 2000 census data is now available and FTA has raised the issue, it is prudent to review the forecast process and recalculate the ridership demand basediupon current census data. Since the FTA will require an update duriag final design it would be Useful to have the process reviewed and information developed, as soon as possible , 2. BNSF Negotiations and Related Research I $375~000 In order to construct and operate the Northstar Commuter Rail l}roject on the freight railroad owned by BNSF, it will be necessary to negotiate long-term agreements with the BNSF relating to capacity improvements, railroad usage rights, construction, risk and liability allocation and operations. Additional research is necessary regarding capacity modeling, risk management, tax and other legal issues. In addition, agreements must be drafted and negotiated with the BNSF. 3. Value Engineering $187~500 VE is a process of systematically applying standardized techniques to review design, products, or services and to identify improvements and means to achieve them. VE must achieve the desired program functions at the lowest possible life cycles cost. The VE exercise follows Preliminary Engineering and will involve certified value engineers and technical representatives from oversight agencies, BNSF, and appropriate members of the PE consultant team. The VE effort will review trackway and systems designs, rolling stock, commuter rail operations and interface with freight rail, and station facilities. The products of the VE session will be recommendations to reduce costs and to iimprove the effectiveness of the proposed commuter rail system. VE is required by FTA. 4. Public Involvement $250~000 Public involvement has been a key element of the success of the proposed commuter rail in the Northstar Corridor Ongoing activities to keep the pubhc ~nformed and ~nvolved ~n decision making during next phase of work will include additional newsletters, public meetings, project updates, travel to operating systems, small group meetings with affected property owners, operating and maintaining the website, and other tools as necessary. In addition, funds may be used to promote the Northstar Commuter Bus, which is operating as a precursor to the rail, in order to build ridership over the next several years. 5. Transit Oriented Development $93~750 Transit Oriented Development (TOD) is the development that occurs around (typically ¼ to ½ mile) transit stations. Ideally, it is compact mixed use development that supports the individual city development plan but also contributes to increased ridership for the transit system. TOD activities to date have included developing information and assisting corridor cities in amending comprehensive plans, developing zoning ordinances and otherwise supporting city efforts to develop and maximize the transportation investment in the best interest of the city and the transit project. FTA considers land use, and particularly TOD, one of the foremost criteria in evaluating transit projects. The Northstar TOD efforts to date have been very favorably received by FTA. Such efforts have also resulted in concrete development scenarios for stations at Coon Rapids- Riverdale, Anoka, and Elk River. The budgeted task would continue the TOD education and coordination effort. 6. Station Studies $100~000 The Northstar Project occupies 82 miles of the BNSF railway between Rice and Minneapolis with eleven stations. The station locations and physical design elements have been developed, reviewed, and approved by; each city, the NCDA Board, and Mn/DOT, all as required by Minnesota law. The Ramsey station has been included in the draft environmental analysis. While the station is not included in the final project definition, the City of Ramsey has done extensive study and planning for a new town center and transit station. The City has concluded that a slightly revised station location meets their needs and has therefore requested that NCDA reconsider addition of a commuter rail station in Ramsey. NCDA has previously eliminated the Ramsey Station in favor of stations at both Anoka and Coon Rapids-Riverdale. The Board has, however, agreed to re-evaluate the feasibility of a Ramsey station in the revised location on the basis of the new information and a request from the City. The budgeted funds would enable a review of all prior information together with the new information developed by the City. Representatives of the City of Sauk Rapids have requested addition of a station directly serving the Sauk Rapids community. Very little analysis of station sites has been completed to date. The proposed funding would provide a feasibility analysis including review of potential sites, site evaluation, site selection, and project impacts. 7. Administration/Project Management $170~000 Administrative support will be required for consultant selection, contract administration, and other administrative functions. 2 8. Right of Way Acquisition Acquire real property at designated station locations. $729~250 Total FFY2000 Grant and Local Match for Northstar Corridor I $2~093~000 SUMMARY OF PROJECTS FOR FFY12000 Responsible Description Federal Dollar Local Total Dollar Agency Grant Share Project Request Met Council Central Corridor $500,000 $125,000 $625,000 Mn/DOT Red Rock Corridor ,$709,500 $187,500 $897,000 Mn/DOT Northstar Development $1,655,500 $437,500 $2,093,000 Authority Mn/DOT Mn/DOT , $135,000 I - $135,000 Total for FFY 2000 $3,000,000 , ! $750,000 $3,750,000 NORTHSTAR CORRIDOR SCOPE OF WORK FFY2601 Grant and Local Match 1. Procurement for Final Design $125~000 Analyze and develop appropriate contract packages for final design including but not limited to commuter rail stations, maintenance and layover facilities, track and signal improvements, and rolling stock. Requests for proposals including scope of work for final design of selected contract packages would be developed. 2. Vehicle/Equipment Procurement and Specifications i $62~500 Outline specifications for rolling stock have been prepared as part of Preliminary Engineering. Considerable experience in the specification and acquisition of locomotives and passenger coaches has been gained over the last ten years as new commuter rail projects have come on line. The Northstar Project proposes to review and evaluate the curreht outline specifications, evaluate various acquisition scenarios, and develop specifications and an acquisition strategy for locomotives and coaches for the Northstar Project. 3 3. Administration/Proiect Management $180,000 Administrative support will be required for consultant selection, contract administration, project financial administration, and other general project oversight. 4. Right of Way Acquisition Acquire needed property at designated station locations $2~698~600 Total FFY2001 Grant and Local Match for Northstar $3~066~100 SUMMARY OF PROJECTS FOR FFY 2001 Responsible Description Federal Local Total Agency Dollar Share Dollar Grant Project Request Met Council CentralCorridor $1,225,000 $306,250 $1,531,250 Mn/DOT Red Rock Corridor 987,650 262,500 1,250,150 Mn/DOT Northstar Development 2,422,350 643,750 3,066,100 Authority Mn/DOT 215,000 - 215,000 Total for 2001 $4,850,000 $1,212,500 $6,062,500 4 MEMORANDUM May 30, 2003 To: From: Subject: Northstar Corridor Development Authority Staff RFP for Advanced Preliminary Engineering Services NCDA Agenda Item #5 The Northstar Corridor Project has completed Preliminary Engineering and the Final Environmental Impact Statement including a Record of Decision by the Federal Transit Administration (FTA) and the State of Minnesota. The next step in project development is to refine information developed through the preliminary engineering and environmental review process and provide updated project data to the FTA Section 5309 New Starts Program. Specifically, the travel demand forecast must be brought up to date with 2000 census data, two potential additional stations must be evaluated, and results reported to NCDA, Mn/DOT, and FTA. The NCDA issued a request for proposals for Advanced Preliminary Engineering services on May 23, 2003. The RFP has been mailed to 12 firms and a notice of request for proposals was published in the Minnesota State Register, the Construction Bulletin, the Anoka Union and the Minneapolis Star Tribune. The scope of work for this project includes: a travel demand forecast which would include opening year and twenty year forecasts of commuter rail and TSM bus ridership for the Northstar Corridor and forecasts of ridership with additional potential station sites; a recommendation for station location within the cities of Sauk Rapids and Ramsey and a report evaluating the project impacts of one or both station additions and a conceptual layout of the proposed station sites; and, assistance to the NCDA and Mn/DOT on collection, assimilation and presentation of data and information required by FTA Section 5309 New Starts Criteria and Request to Begin Final Design. The Request for Proposal process schedule is as follows: a. Request for Proposals Issued b. Pre-proposal Conference c. Proposals Due d. Interviews, if any e. Selection of Proposers by Executive Committee f. NCDA Approval and Execution of Agreement May 23, 2003 June 16, 2003 June 23, 2003 June 27, 2003 July 3, 2003 July 3, 2003 It is anticipated that this project would commence on July 7, 2003 and continue through October 1, 2004. The proposed project budget would not exceed $350,000.00. Action Requested: Information. Northstar Corridor D~velopment Authority 2100 3'" Avenue, Anoka, Minnesota 55303-2265 (763) 323-5700 Fax: (763) 323-5682 www. northstartrain.org U.S. Department of Transportation Federal Transit Administration Headquaflem 400 Seventh St., S.W. Washington, D.C. 20590 Michael Schadauer, P.E. .project Manager Passenger Rail Transit Office Minnesota Department of Transportation 395 John Ireland Boulevard, Mail Stop - 475 St. Paul, Minnesota 55155 Re: Northstar Corridor Rail Project Dear Mr. Schadauer: On February 3, 2003, the Federal Transit Administration (FTA) published the FY 2004 Annual Report on New Starts. The Annual Report, which supplements the President's FY 2004 budget request for major transit capital investments, includes a profile of each project in preliminary engineering and final design pursuing Section 5309 New Starts funding. Except for projects that are exempted from FTA's New Starts criteria, these project profiles summarize FTA's evaluation and rating of each proposed investment, as required by the Transportation Equity Act for the 21~t Century (TEA-2 i). Over the past several years, the FTA Office of Planning and Environment has provided annual feedback to local project sponsors on the assigned project ratings, in addition to offering numerous New Starts Workshops and distributing guidance on planning and project development. We are continuing our program of ongoing feedback and outreach again this year. Enclosed please find a set of materials related to FTA' s evaluation and rating of the Interstate 71 Corridor LRT project for the FY 2004 Annual Report on New Starts. These materials include: The project's Financial Assessment, including a summary of recommendations for improving the rating for the local financial commitment criterion; and, The project's Land Use Assessment, including a summary of recommendations for improving the rating for the transit supportive land use and future patterns criterion. -2- The Northstar Corridor Rail project is rated Not Recommended in the FY 2004 Annual Report on New Starts. The rating is primarily based on the inability of project sponsors to obtain a local financial commitment to construct and operate the proposed commuter rail line. The overall project rating applies to the FY 2004 Annual Report on New Starts and reflects conditions as of November 2002. Project evaluation is an ongoing process. As New Starts projects proceed through development, the estimates of costs, benefits, schedules and impacts are refined. The FTA's ratings and recommendations will be updated annually to reflect new information, changing conditions, and refined financing plans. The project will be re-evaluated for next year's Annual Report on New Starts and when it is ready to advance into final design. I hope that you will find the information provided here helpful in your continuing project development activities. If you have any questions, please do not hesitate to contact me at (202) 366-2360 or the FFA Regional Administrator, Mr. Joel Ettinger, at (312) 353-2789. Sincerely, Ronald T. Fisher Director, Office of Project Planning, Methods & Analysis Divisions Enclosures COUNTY OF ANOKA Office of Public Services Division Administration GOVERNMENT CENTER 2100 3rd Avenue · Anoka, MinnesOta 55303-2265 (763) 323-5700 JON G. OLSON, P.E. Division Manager Direct #763-323-5789 Fax #763-323-5682 Mobile #612-850-4106 jon.olson @co.anoka.mn.us June 5,2003 MEMO T,,~/~ FROM: ~ SUBJECT: Northstar Corridor Development Authority Jon Olson, Division Manager, Public Services NORTHSTAR COMMUTER COACH UPDATE, JUNE 5,. 2003 AS OF JUNE 5, 2003, DONNA ALLAN OF MNDOT HAS CONFIRMED OUR COST NUMBERS FROM MY MARCH 11,2003 MEMO. THIS MEMO EXPANDS ON THAT INFORMATION IN LIGHT OF THE LEGISLATION PASSED THIS YEAR. THE FOLLOWING REFLECTS THE FUNDING REMAINING AND NEEDED TO CONTINUE COMMUTER COACH SERVICE FROM ELK RIVER AND RIVERDALE TO DOWNTOWN MINNEAPOLIS AFTER SEPTEMBER 30, 2003, ALONG WITH THE SOURCE OF THOSE FUNDS. USAGE EACH BUS HAS A CAPACITY OF EIGHT (8) BUSES RUN IN EACH DIRECTION DAILY 57 PERSONS X 8 BUSES TOTAL PASSENGER CAPACITY 456 PASSENGERS RIDERSHIP WAS NEARLY 700 PER DAY IN OCTOBER. SINCE JANUARY THE AVERAGE HAS BEEN 558 PER DAY OR 279 EACH WAY (SEE ATTACHED SHEET). PERCENTAGE OF CAPACITY: 558/912 = 61% FULL ACTUAL RIDERSHIP BY PICKUP LOCATION IS SHOWN ON THE ATTACHED SHEET. BASICALLY 73% RIDE FROM ELK RIVER AND 27% FROM RIVERDALE. COST OF SERVICE MONTHLY BUS LEASE (80% FEDERAL): TRIP RATE FOR 9-30-03 TO 9-30-04 IS $137.90 PER TRIP TIMES 16 TRIPS PER DAY TIMES 21 DAYS PER MONTH: MONTHLY ADMINISTRATIVE FEE TO RUN SERVICE: $43,169 $46,335* $10.752 Contract Issues with Laidlaw TOTAL MONTHLY COST: $100,226' FAX: 763-323-5682 Affirmative Action / Equal Opportunity Employer TDD/TTY: 763-323-5289 Memo Continued Page 2 Northstar Corridor Commuter Coach Update TOTAL FUNDING AVAILABLE FEDERAL FUNDS FOR MONTHLY BUS LEASE: FARE BOX RECOVERY: METRO TRANSIT FARE CARD (FARE BOX RECOVERY): TOTAL MONTHLY REVENUE: MONTHLY OPERATING SUBSIDY MONTHLY SUBSIDY ($100,226 LESS $63,185): THE CURRENT LEGISLATION INDICATES THAT THE LOCAL UNIT OF GOVERNMENT MUST PROVIDE THE MATCH FOR THE FEDERAL FUNDS, THAT AMOUNTS TO $8,634 PER MONTH. THE LEGISLATION PROVIDES FOR THE STATE TO PAY THE REMAINDER OF APPROXIMATELY $28,407 PER MONTH. ANNUAL OPERATING SUBSIDY ANNUAL LOCAL COST TO PROVIDE SERVICE $8,634 TIMES 12 MONTHS: $34,535** $ 3,650* THESE COSTS HAVE BEEN PAID BY MNDOT FROM THE "ADVANTAGE FOR TRANSIT" FUNDS THAT WERE PUT IN PLACE DURING THE LAST ADMINISTRATION; THEY LAPSE ON 9-30-03. ANNUAL COST TO THE STATE TO PROVIDE THE SERVICE $28,407 TIMES 12 MONTHS: $25.QQQ* I Agreement with Met I Council needed $63,185* $37,041' $ 8,634 $28,4O7 $103,608 I Annualcostto LGU $340,884*** I Annual cost to State * THESE COSTS VARY EACH MONTH DEPENDING ON THE NUMBER OF WEEK DAYS IN THE MONTH ** AS OF 9-30-03 THERE WILL BE APPROXIMATLY $700,000 OF FEDERAL FUNDS REMAINING AND $350,000 IN MATCHING FUNDS FROM THE STATE. *** AS Of 9-30-04, THE STATE MATCH WILL END WITHOUT ADDITIONAL LEGISLATION THE LOCAL COST TO CONTINUE THE SERVICE WOULD THEN INCREASE TO $37,041 PER MONTH OR $296,328 THROUGH MAY 30, 2005 *** AFTER 5-30-05, THE FEDERAL FUNDS WILL BE DEPLEATED, THE COST TO CONTINUE THE SERVICE WILL INCREASE TO $71,576 MONTHLY OR $858,912-PLUS ANNUALLY, UNLESS ADDITIONAL FEDERAL FUNDS BECOME AVAILABLE JO:kr Attachment Northstar commuter coach update.doc MONTH o3-Jan 03-Feb 03~Mar 03-Apr 03-May NORTHSTAR COMMUTER COACH RIDERSHIP 2003 TOTAL PASSENGERS ER PASS# RD PASS# TOTAL PASS: DAYS OF SERV. 8,778 3,422 12,200 22 8,380 3,107 11,487 20 8,902 3,205 12,107 21 9,323 3,149 12,472 23 8,522 2,904 11,426 21 AVG. MONTHLY RIDERSHIP MONTH o3-Jan 03-Feb 03-Mar 03-Apr 03-May 8,781 3,157 11,938 AVERAGE RIDERSHIP PER DAY ELK RIVER RIVERDALI: TOTAL 399 156 555 419 155 574 424 153 577 405 137 542 406 138 544 MONTH o3-Jan 03-Feb 03-Mar 03-Apr 03-May % ER RATIO OF PASSENGERS %RD 72% 28% 73% 27% 74% 26% 75% 25% 75% 25% northstar 03 ddership.xls 05/15/03 [COUNSEL ] PSW SCH0956A-4 1 Senator ..... moves to amend the SCH0956A-3 amendment to 2 H.F. No. 956 as follows: Page 20, delete lines 19 to 36 and insert: 4 "Subd. 8. North Star Commuter Rail To acquire real property and lease right-of-way for, and to plan, design, engineer, construct, and equip a commuter rail line between the city cf Rice and downtown Minneapolis. 47,700,000 10 No more than $20,000,000 of this 11 appropriation may be spent before the 12 commissioner of transportation has 13 executed a full-funding grant agreement 14 with the Federal Transportation 15 Administration that provides for 16 constructing and equipping the line. 17 The legislature anticipates that the 18 federal government will contribute at 19 least $151,000,000 for the line, and 20 that the 2004 legislature will 21 appropriate approximately $75,500,000 22 as the final state contribution to 23 constructing and equipping the line. 24 This appropriation must be spent for 25 purposes as set forth in the Minnesota 26 Constitution, article XI, section 5, 27 clause (a), to acquire and better 28 public lands and buildings and other 29 public improvements of a capital 30 nature, and for purposes as set forth 31 in the Minnesota Constitution, article 32 XI, section 5, clause (i), to improve 33 and rehabilitate railroad rights-cf-way 34 and other rail facilities, whether 35 public or private." Correct the section total, the appropriation summary, and 37 the bond sale authorization 4.43 4.44 4.45 4.46 4.47 4.48 4.49 4.50 5.1 5.2 5.3 The commissioner shall provide funding up to $350,000 for the operation of the Northstar commuter coach from October 1, 2003, to September 30, 2004, using accumulated fare revenue, if a local government unit or the Northstar Corridor Development Authority: (1) agrees to operate the service beginning October 1, 2003; and (2) provides the local match for federal funding for the service. 77 5 77 6 77 7 77 8 77 9 77 10 77 11 Sec. 75. [NORTHSTAR COMMUTER RAIL STUDY.] The commissioner of transportation, in conjunction with the Northstar Corridor Development Authority, shall convene a work group to further study the feasibility of constructing the Northstar commuter rail. The work group shall update ridership forecasts for the commuter rail based on 2000 census data and seek updated information from the Burlington Northern Santa Fe 77.12 77.13 77.14 77.15 77.16 77.17 railroad regarding capacity improvements, railroad usage rights, construction, risk and liability allocation, and other related issues. By January 15, 2004, the commissioner shall report the work group's findings to the chairs and ranking members of the legislative committees having jurisdiction over transportation and capital investment. The commissioner of transportation 77.18 77.19 shall not pay for any outside consultant expenses related to this work. Capital Investment Committee May 27, 2003 NEW BONDING 2003 (add 000 to each number) Article I Proiect Fund SF2 Agreement U0fM HEAPR 0 0 Jones Hall Renovation 8,000 8,000 Minneapolis Translational Research 24,700 24,700 Morris Social Science Renovation 8,600 8,600 Minneapolis Teaching & Tech Center 3,000 3,000 Research & Outreach - Facility Improvement 2,438 2,438 St Paul Veterinarian Diagnostic Lab 1,500 1,500 Morris Swine Facility 70 70 Genomics Predesign 0 400 Bond 48,308 48,708 state Share 40,974 MnSCU Systemwide Land Acquisition 10,000 10,000 HEAPR 10,000 0 Bemidji SU/NWTC Co-location 1,000 1,000 NVVTC Moorhead - Health 400 400 St Cloud SU Centennial 10,000 10,000 MSU Mankato Athletic Facility 8,400 8,400 Southwest SU Library 9,200 9,200 Hennepin TC Remodeling 2,000 2,000 Virginia NEHED Lab 5,496 5,496 Lake Superior C&TC Services Design 700 700 Winona/Red Wing SETC Student Services 580 580 Dakota TC Design 500 500 St Cloud TC Design 700 700 Ridgewater C&TC Science Lab 2,880 2,880 Faribault/Mankato SCTC Labs Design 300 300 Fergus Falls CC Student Services Design 760 760 Worthington MnWest CTC Science 6,300 6,300 Inver Hills CC Student Services Design 500 500 Bond 69,716 59,716 State Share 39,816 CFL EC Headstart Facility Grants 2,000 0 Library Access Grants 1,000 1,000 Minnesota Planetarium 9,500 0 Asian Community Center 1,000 0 Colin Powell Youth Center 700 0 Neighborhood House 5,000 5,000 Trollwood Performing Arts School 5,500 5,500 Southwest Integration Magnet Schools 1,000 0 Bond 25,700 11,500 Page I CaPital Investment Committee May 27, 2003 NEW BONDING 2003 (add 000 to each number) Article I Project Fund DNR Warren & Hay Creek Flood Mitigation Wild Rice River Watershed Red River State Recreation Area Big Bog State Recreation Area IFish Hatchery Improvements Crookston Dam Blue Earth County Rapidan Dam Reforestation Metro Greenways & Natural Areas Scientific & Natural Areas Acquisition & Dev Seminary Fen Stream Protection & Restoration Water Access Acquisition & Fishing Piers Gitchi Gami Trail Shooting Star Blazing Star Trail Goodhue Pioneer Trail Paul Bunyon Trail Fisheries Acquisition & Improvement State Park & Recreation Area Acquisition Native Prairie Bank Easements State Forest Land Acquisition Lake Superior Safe Harbor Natural & Scenic Area Acquisition Grants State Trail Connections New UIm Trail St. Louis Park Trail Lake K~ronis Trail Como Park Conservatory Wabasha Bald Eagle Center Greater MN Regional Parks Red Rock Rural Water System Lewis & Clark Rural Water System IOffice of Environmental Assistance Solid Waste Capital Assistance Program JBond J SF2 Agreement 1,405 1,405 1,250 0 2,900 0 1,600 0 300 0 1,050 1,050 100 0 1,500 0 1,000 0 1,000 500 1,500 1,500 1,000 500 1,500 0 725 0 450 0 600 0 475 475 500 0 500 0 3,000 1,000 1,000 1,000 500 0 1,100 0 1,000 0 500 0 500 0 492 0 365 0 2,700 2,700 500 500 4,000 0 125 125 180 0 35,317 10,755 180 0 35,137 10,755 3,600 J 0 Page 2 Capital Investment Committee May 27, 2003 NEW BONDING 2003 (add 000 to each number) Article I Project Fund Water & Soil Resources Board RIM Conservation Easements Local Govt Road Wetland Replacement Shoreland Protection Program Stillwater Browns Creek Lazarus Creek Floodwater Retention IAgriculture Metro Greenhouse Expansion Bond SF2 Agreement Zoological Gardens Zoo Master Plan Design/Construction 2,000 1,000 2,700 2,700 750 0 1,300 1,300 1,500 1,400 8,250 6,400 Administration CAPRA Governor's Residence Renovation Governor's Residence Relocation Expense Olmsted Co Master Plan Amateur Sports Commission National Volleyball Center Mt Itasca Biathlon Training Facility National Sport Event Center IBond I Arts Bloomington Center for the Arts Minneapolis Children's Theater Guthrie Theater GF GF Bond IBond I IMilitary Affairs Camp Ripley Anti-Terrorism Facility GF GF Bond IBond I 8,184 I 0 0 4,246 0 45 0 700 0 4,991 0 45 0 4,946 0 3,000 0 250 0 5,OOO 5,OOO 8,250 5,000 1,000 0 5,000 5,000 26,000 25,000 32,000 30,000 1,000 0 31,000 30,000 500 I 0 Page 3 Capital Investment Committee May 27, 2003 NEW BONDING 2003 (add 000 to each number) Article I Project Fund Transportation DM&E Study Savage Ports Winona Ports Duluth Aerial Lift Bridge Greater MN Transit Port Development Assistance Town Road Signs Local Share Trunk Hwy Projects :Local Routes Regional Significance i Local Road Improvement Program - Loan Northstar Commuter Rail Statewide Public Safety Radio System Metropolitan Council Central Corridor Transitway Livable Communities Grant Program Park & Ride Facilities Northwest Busway IBond I IHealth Dental Clinic at State Colle~les & Univ IBond I Human Services Brainerd RTC Building 20 People, Inc. GF Bond ICorrections Bayport Sewer IBond I SF2 Agreement 500 0 3,500 0 3,500 3,500 1,000 0 2,000 1,000 3,000 2,000 1,000 0 10,000 0 10,000 0 20,000 10,000 0 13,000 0 57,500 26,500 500 0 20,000 57,000 6,500 1,000 0 9,000 0 500 0 0 1,000 10,500 1,000 775 775[ 6,305 0 375 0 6,680 0 375 0 6,305 0 Page 4 Capital Investment Committee May 27, 2003 NEW BONDING 2003 (add 000 to each number) Article I Project Fund Trade & Ec Dev :Rural Business Development Infrastructure Redevelopment Grant Program Little Falls Hennepin Paper Company Fairmont Sports Complex Grand Rapids Children's Museum Olivia Minnesota Center for Ag Innovation Mpls Empowerment Zones St Cloud Civic Center Expansion St Paul Roy Wilkins Auditorium St Paul Phalen Boulevard St Paul 2004 Renaissance Project Wastewater Infrastructure $1.5M Northshore Wastewater Infrastructure Administration IIRRRB Mesabi Station IBond I MN Historical Society County & Local Preservation Grants Pipestone County Museum Fort Belmont New Brighton Caboose & History Center GF' GF Bond I Finance - Bond Sale Expenses SF2 Agreement 12,000 7,500 3,000 0 1,000 1,000 500 0 300 0 1,000 0 3,000 0 3,250 0 4,000 2,300 8,000 4,000 2,000 0 30,000 15,000 600 0 68,650 29,800 600 0 68,050 29,800 1,500 I 0 300 300 125 0 200 200 100 0 725 500 100 0 625 500 Bond 40=] 23sl Article I Summary - Agencies Total 393,390 230,890 - Agencies Bonding 390,590 230,890 - Agencies Gen Fund 2,800 0 Total 393,390 230,890 Bond Proceeds-General Fund Debt Service 363,088 183,256 Bond Proceeds-User Financed Debt Service 27,502 47,634 General Fund 2,800 393,390 230,890 Page 5 Capital Investment Committee May 27, 2003 NEW BONDING 2003 (add 000 to each number) Article I Project Fund Article II - Roseau Flood Trade and Economic Development Minnesota Investment Fund Petroleum Cleanup-Buyout, Rehab Public Infrastructure Capital Project Grant Total Housing Finance Agency Economic Dev and Housing Challenge Natural Reso'urces \ Flood Hazard Mitigation Grants: Capital Improvement Projects Studies, Planning, Engineering, Improvmts Buy Out Flood Damaged Property Ring Dikes-Flood Prevention Total Transportation Construction-Roads and Bridges Polk County Structure Repair Total Article II Summary - Agencies Total -Agencies Gen Fund -Agencies Bonding -Agencies Petro Fund Article II Total Bond Proceeds-General Fund Debt Service General Fund Petro Fund Total - S.F. 2 Articles I and II Bond Proceeds - User Financed Debt General Fund Petro Fund Bond Proceeds - General Fund Debt Service SF2 Agreement 3,375 0 750 0 1,125 1,125 7,500 500 12,750 1,625 3,000 0 4,050 2,000 1,825 0 1,000 1,000 500 0 7,375 3,000 1,000 1,000 400 400 1,400 1,400 24,525 6,025 9,700 0 14,075 6,025 750 0 24,525 6,025 14,075 6,025 9,700 0 750 0 27,502 47,634 12,500 0 750 0 377,163 189,281 Page 6 Philip Krinkie State Representative District 53A Ramsey and Anoka Counties May 8, 2003 Minnesota House of Representatives HAND DELIVERED The Honorable Governor Tim Pawlenty 130 State Capitol St. Paul, MN 55155 Dear Governor Pawlenty: Just as former Governor Carlson was misled on the true cost of the Hiawatha LRT, we the undersigned are gravely concerned that you are being intentionally misled on the benefits and costs of the proposed Northstar commuter rail line. Quite simply, we believe the proposed line has no economic justification. We are convinced that a fair, impartial analysis would demonstrate that fact. One such recent analysis we have shows a benefit cost ratio of.47, meaning the public would get only 47 cents of benefit for every dollar invested. This is a vastly different result than the analysis proponents of the project produced. An analysis that was done by an economist who is a proponent of $2 billion in higher state taxes, as is reported in the Star Tribune today. An analysis done using a discount rate much lower than the one the Federal Transit Administration (FTA) requires, which - to nobody's surprise - has the effect of overstating the benefit/cost ratio. This is why the FTA said the following when they rated the Northstar project as "Not Recommended" in their most recent New Starts Report: "However, FTA has serious concerns about the information submitted for this measure; the underlying assumptions used by the project sponsor may have produced an inaccurate representation of the benefits of the project." Were you told at your meeting with the paid proponents of Northstar (and other rail systems) that the FTA had these concerns and that the project was "Not Recommended"? If you were not, it certainly would raise questions about whether or not you are receiving complete and accurate information. You have a vast array of resources at your disposal. We have highly competent state employees who have training in economics and benefit/cost analysis. The University has enormous talent at the Center for Transportation Studies. There are numerous others who would advise you on the true costs of the Northstar project. We urge you in the strongest way possible to withhold support of the Northstar commuter rail line until you have a professional, impartial analysis of the project. Sincerely, tke Beach Drive, Shoreview, Minnesota 55126 ~fice Building, 100 Constitution Ave., St. Paul, Minnesota 55155-1298 FAX (651) 296-3869 TTY (651) 296-9896 Email: rep.phil.krinkie @ house.leq.state.rnn.us (651) 481-8355 (651) 296-2907 Review of the Anton, Lubov Benefit-Cost Analysis of Northstar Commuter Rail by Randal O'Toole (rot~ti.org) The Thoreau Institute (ti.org) How do I critique thee? Let me count the ways. The "benefits and costs, of Northstar commuter rail" computed by Anton, Lubov & Associates contains sO many flaws that it is hard to know where to begin. In brief, the analysis exaggerates the benefits of commuter rail, ignores many of the costs of commuter rail, and inflates the costs of alternatives. Northstar commuter rail is a proposal to operate commuter trains from Minneapolis to Rice, 82 miles away. The Minnesota Department of Transportation (MnDOT) estimates that running eighteen trains per day along this route will attract about 9,600 passengers per day, or about 533 per train. Since most passengers presumably travel round trip, this means that the commuter rail line would serve about 4,800 people. All previous analyses of this project indicated that its costs would exceed its benefits. However, Anton, Lubov managed to conclude that its benefits would be about 15 percent greater than its costs. It reached this conclusion by relying on highly erroneous data supplied to it by MnDC)T and then compounding those errors with highly suspicious changes in assumptions about the project. This critique of Anton, Lubov's analysis will cover flaws in four areas: · Overestimated benefits of commuter rail; · Underestimated costs of commuter rail; · Overestimated costs and underestimated benefits of alternatives to commuter rail; · Other flaws in Anton, Lubov's calculations. While not all of the flaws can be quantified, taking into account those that can be reduces the benefit-cost ratio from Anton, Lubov's 1.15 to 0.48. Even this is probably too high considering other flaws that cannot be quantified. Overestimates in Benefits of Commuter Rail The Anton, Lubov analysis includes six benefits of commuter rail: · Time savings to commuters; · Vehicle operating cost savings; · Vehicle accident cost savings; · Pollution cost savings; Review of Benefit-Cost Analysis of Northstar Commuter Rail 2 · Parking cost savings; · Future value of depreciated capital stock. Nearly all of these supposed benefits are exaggerated due to errors in assumptions about costs and operations. The analysis also ignores the fact that most of these benefits accrue to only a few thousand people, while everyone in Minnesota will be asked to pay the costs. Time savings-A 1998 Parsons-Brinckerhoff study of a truncated Northstar commuter rail line estimated that people who use the commuter train woul~t actually spend at least six minuteS more en route than if they drove. In 2002, the state of Minnesota reduced this to a two-minute loss in 2007, but projected that train riders would save two minutes in 2022. In other words, the state estimates that traffic congestion on 1-94 and US 10 will slow driving on those routes, giving rail an advantage in 2022 that it would not have in 2007. This estimate is almost certainly wrong. It assumes, first, that the state will do nothing to relieve increasing congestion between 2007 and 2022. While the state in 2002 may have had a policy of discouraging auto driving by letting congestion increase, this policy is not likely to survive voter scrutiny. If any congestion relief is provided, a large portion of the supposed benefits of commuter rail will evaporate. A second implicit assumption is that people will respond to increasing congestion by simply living with the waste of their time. In fact, people respond to congestion in many ways, including changing their employment locations, their home locations, their work hours, and the routes they travel to work. When these options are available, it is unlikely that the average commuter will accept a four-minute loss in travel time between 2007 and 2022. On top of this, Ar~:~.ton, Lubov makes an additional estimate that the state did not make: that the commuter train would take enough cars off the road to save auto commuters an average of 3 minutes per trip in 2007 and 8 minutes per trip in 2022. This assumption accounted for nearly two thirds of the $92.3 million benefit attributed to time savings. Once again, this estimate presumes that the state will do nothing to relieve congestion on 1-94 and U.S.' 10. If the state does do something to relieve congestion other than run a commuter rail line, then this benefit will disappear. The estimate also presumes that commuter rail will lead no one to change their behavior other than, in a few instances, ride commuter rail. As noted, however, people respond to traffic congestion by changing their work hours, routes of travel, and work or home locations. If commuter rail leads some people to stop Review of Benefit-Cost Analysis of Northstar Commuter Rail 3 driving during the peak hour, this will lead other people to shift their work hours, routes, or locations. The net effect will be a minimal change in travel delays. Vehicle operating cost savings-Savings in vehicle operating costs represented the largest benefit calculated by either MnDOT or Anton, Lubov. The crucial assumption for this benefit is that motor vehicles cost an average of 28.8 cents per mile to operate. This high cost, however, is not the true operating cost of a motor vehicle; instead, it is the cost of ownership. In other words, it includes both variable operating costs, such as tires and gasoline, and fixed ownership costs, including insurance and depreciation. According to the American Automobile Association, when only variable costs are counted, the average cost of operating an automobile is around 13.1 cents per passenger mile3 Because gasoline represents only about half of this cost, even the most fuel-inefficient sport-utility vehicles cost only one or two cents more than this. For example, AAA says that a Chevrolet Trailblazer costs 13.5 cents per mile to operate. Unless MnDOT can make a convincing case that commuter rail will lead significant numbers of people to give up their automobiles completely, the 28.8 cent cost that it assumes is more than twice the real operating cost. Since commuter rail operates only in a narrow corridor and only during rush hour, few people are likely to give up their automobiles because of the Northstar rail line. Thus, the benefit calculated for vehicle operating cost savings must be reduced by more than half. Vehicle accident cost savings-MnDOT estimates that auto drivers suffer 1.19 accidents per million miles of travel, an estimate that Anton, Lubov retained. I do not know the source of this estimate. However, it is worth noting that interstate highway travel tends to be much safer than travel on other roads. If the 1.19 number is based on a state-wide average, it is likely to be far greater than the accident rate on 1-94, the principle alternative to Northstar commuter rail. Pollution cost savings-MnDOT estimated that the Northstar commuter rail would lead to $33.4 million worth of air pollution benefits. Since Anton, Lubov accepted this number, its report does not say how it was calculated. However, the benefit is dubious, as the EPA says that Minnesota has no 'nonattainment areas" for any air pollutant, meaning that it has no serious air pollution problems. According to the U.S. Department of Transportation, people in the Mirmeapolis- St. Paul and St. Cloud urban areas drive more than 63 million miles a day. If the Northstar commuter rail carries 9,600 people an average of 22.1 miles a day, and Review of Benefit-Cost Analysis of Northstar Commuter Rail 4 if most of those people would otherwise be driving single-occupancy vehicles, then the Northstar rail will reduce driving in the region by about 200,000 miles, or 0.3 percent of the total. If that amount of driving produces $33.4 million worth of air pollution, then the air pollution generated by all driving in the region must cost the region nearly $11 billion a year. This is extremely unlikely. Parking cost savings-Anton, Lubov estimates that people who ride commuter rail will save a total of $58.9 million in parking costs, which is more than twice the savings estimated by MnDOT. The difference is that MnDOT estimated that cost of building new parking, while Anton, Lubov estimated the cost of parking to individuals. The difference between the cost of providing parking and the cost to individuals is profit. Since profit is a benefit, not a cost, Anton, Lubov is incorrect in counting this as a cost. MnDOT's methodology is superior, which means that parking benefits should be reduced by at least $34.6 million, which is the difference between MnDOT's and Anton, Lubov's estimates. Future value of depreciated capital stock-MnDOT estimates that the capital cost of the Northstar commuter rail equipment will be $277.9 million and that, after fifteen years, the depreciated value of this equipment will be $134 million. By counting this depreciated value as a benefit, MnDOT effectively only counted the difference-$143.9 million--as the cost of the commuter rail project. Anton, Lubov retained these numbers. This depreciated value is highly questionable. If MnDOT plans to shut down the commuter rail program in 2022 and thinks it can find a buyer who will pay $134 million, then it could credit this $134 million to the project. But it is more likely that MnDOT plans to continue running the rail line after 2022. In this case, any future value is purely imaginary, especially since the rail operations are expected to require continued subsidies forever. In fact, everitually all equipment will need to be replaced, at which time a huge cost would have to be added to the system. Even if this depreciated value made sense, there are some flaws in MnDOT's (or Anton, Lubov's) calculations of the value. At a 4.5 percent discount rate (the rate used by MnDOT), a capital good would have to be worth $309 million in 2022 for its present value to be $134 million. This is 111 percent of the original capital cost, suggesting that MnDOT thinks that it will appreciate, not depreciate, over the next nineteen years. Anyone who has ridden on fifteen-year-old train cars knows that they do not appreciate over time. Confusingly, Anton, Lubov's analysis refers to the $134 million as the "future value of depreciated capital stock in 2002.' The term future value means the value Review of Benefit-Cost Analysis of Northstar Commuter Rail 5 in the future, while the value today is the present value. If $134 million is the future value, then it will have depreciated by 57 percent in fifteen years, which makes more sense than an Il-percent appreciation. In that case, however, the $134 million must be discounted to the present'for nineteen years by the annual interest rate. At the 4.5 percent interest rate used by MnDOT, this would reduce it to $58.1 million. At the 2.5 percent interest rate used by Anton, Lubov, this would reduce it to $83.8 million. Yet Anton, Lubov's table 4 uses $134 million for both the MnDOT and Anton, Lubov analysiS. Apparent]y, Anton, Lubov does not understand how to use discount rates. Summary-While all of the assumed benefits of the commuter rail line are questionable, three of the flaws in the analysis are quantifiable. · First, the benefit of vehicle operating cost savings must be reduced bY 54.5 percent, or $106.8 million, to account for the difference between variable vehicle operating costs of 13.1 cents and the 28.8 cents presumed in the analysis. · Second, the benefit of parking cost savings must be reduced by $34.6 million, which is the difference between MnDOT's and Anton, Lubov's calculations of this benefit. Since Anton, Lubov's methodology includes social benefits, not costs, its method is flawed. · Third, the future value of depreciated capital stock should be zeroed out. In 2022, when this future value is supposed to be achieved, MnDOT will want to continue running the commuter rail system at an operational loss, so its actual value at that time will be zero or negative. Making these three changes reduces total benefits by $275.8 million. Underestimates in Costs of Commuter Rail MnDOT and Anton, Lubov count only two costs: the capital cost of equipment and the annual operating cost. One difference between MnDOT and Anton, Lubov is that the latter adds $24 million in capital costs for connecting the commuter rail line with the Hiawatha light-rail line. Capital costs-With respect to capital costs, it should be noted that most rail projects end up costing far more than the original estimates. A recent study of public works projects found that North American rail projects cost an average of 41 percent more than their original estimates.2 While it is impossible to predict the cost overrun for any given project, it is worth noting that the habit of underestimating costs biases any benefit-cost analysis in favor of alternatives with a high capital cost. An alternative of simply running commuter buses on existing roads, for example, would appear even more favorable relative to commuter rail if the costs of rail were higher than predicted. Review of Benefit-Cos! Analysis of Northstar Commuter Rail 6 Operating costs-MnDOT's calculations of operating costs are flawed in that they only count the first fifteen years of those costs. By doing so, MnDOT allows itself to claim that the depreciated value of rail equipment after fifteen years represents a benefit of $134 million. But if MnDOT continues to run commuter rail for another few years, the equipment will be fully dePreciated. MnDOT says that operating costs for the first fifteen years will be $199.5 million, or $13.3 million a year. Adding another fifteen years of operating costs to this and discounting them by 4.5 percent for fifteen years (because they will begin fifteen years after the first fifteen years of costs) increases operating costS' by $103.1 million. At Anton, Lubov's discount rate of 2.5 percent, $137.7 million must be added to the total. That is not all. After twenty-five years to thirty years, all of the rail equipment will be fully depreciated (dilapidated is more like it), and will need to be completely replaced. If the cost is the same as the cost today and replacement takes place in 2037, then $74.2 million should be added to the total cost at MnDOT's 4.5 percent discount rate and $13Z5 million should be added at Anton, Lubov's 2.5 percent discount rate. In short, instead of counting the $134 million equipment value after fifteen years as a benefit, MnDOT should add $103.1 million to operating costs. Because of the lower discount rate, Anton, Lubov should add $137.7 million to operating costs. Operating and capital costs can be added after thirty years, but it is reasonable to cease adding costs when the proposed equipment is fully depreciated and hope that future generations will be smart enough to not waste their money on replacement equipment. Other costs-Although MnDOT counts pollution and vehicle accident costs for autos, it apparently ignores such costs for the rail line. Rural interstate freeways average 7.9 fatalities and 39.9 serious injuries per billion passenger miles. Urban interstates are lower: about 3.9 fatalities and 32.8 serious injuries. Commuter rail averages 8.1 fatalities and 31.7 injuries per billion passenger miles. Thus, the North Star rail line will probably cause as many accidents as it avoids and is likely to kill more people. Similarly, it is possible that the Diesel locomotives pulling the Northstar commuter rail will generate more pollution than may be saved by any reduction in auto driving. An environmental audit of a commuter rail line in Vermont found that the rail service produced a net increase in sulfur dioxide, nitrogen oxides, particulates, and other pollutants.3 Review of Benefit-Cost Analysis of Northstar Commuter Rail 7 SummarY-while it is impossible to predict by how much the capital cost of commuter rail will exceed estimates, it is clear that the operating cost of commuter rail should be increased by $137.7 million. Alternatives to Commuter Rail Anton, Lubov calculated the costs of two alternatives to Northstar commuter rail. One alternative was to build a new lane on U.S. 10 for the entire 82 miles of the Northstar rail route. At $13 million a mile, Anton, Lubov estimated that this would cost $1,068 million. The other alternative was to build exclusive bus lanes for 41 miles of the route. Along with stations and new buses, this was estimated to cost $525 million. These costs are far too high. Moreover, particularly in the case of a new highway lane, they compare apples with oranges because a new highway lane would carry far more traffic than could be carried by a commuter rail line. Anton, Lubov assumed that a new lane on U.S. 10 would cost an average of $13 million per mile. An exclusive bus lane was assumed to cost nearly the same, or about $11 million per mile. Such costs are unrealistically high, particularly since most of U.S. 10 goes through rural areas where land costs are low. Highway costs can be very expensive when there is a lot of tunneling or bridgework involved, as in the Boston Central Artery project. But when Los Angeles completed its Century Freeway in 1993, many called it the most expensive road in the world. Yet it cost only about $15 million per lane mile, much of which went to mitigate the impacts of the highway on nearby neighborhoods, not for actual construction.4 In general, limited access freeways such as Interstate 94 will cost an average of $5 million per lane mile, while arterials such as U.S. 10 will cost an average of $2.5 million a lane mile. Anton, Lubov's $13 million per lane mile cost is probably five times higher than is realistic. In reality, the alternative to Northstar commuter rail is not new construction but simply to run comfortable, long-distance commuter buses on 1-94 between Rice, St. Cloud, and Minneapolis-St. Paul. Buses have the advantage that they are more flexible than four-car trains. While a four-car train would be nearly empty along part of its route, buses could be run in the numbers needed for each segment of the route between Rice and Minneapolis. Buses could also continue onto St. Paul, Bloomington, or other major points in the Twin Cities. Anton, Lubov estimates total capital costs of its alternative busway of $525 million, of which about $450 million is for construction of exclusive bus lanes. Review of Benefit-Cost Analysis of Northstar Commuter Rail 8 This means the capital cost of new buses and stations alone is only $75 million. These buses could carry passengers at highway speeds along the Northstar route. This would leave more than $200 million of the proposed Northstar capital cost left over for removal of bottlenecks on the highways and other congestion relief. In general, one dollar invested in highways does many times more transportation work than a dollar invested in rail transit. According to the U.S. Department of Transportation, freeways in the Twin Cities carry more than 28,000 passenger miles per lane mile each day.5 Major arterials such as U.S.'i'10 carry around 10,000 passenger miles per lane mile a day.6 By comparison, the Northstar commuter rail is expected to carry less than 2,600 passenger miles per route mile (9,594 daily passengers times 22.1 miles average trip length divided by 82.2 route miles). The Northstar commuter rail line is expected to cost about $3.4 million per route mile, which is more than the cost of a lane-mile of arterial, yet it would carry only about a quarter as many people each day (and virtually no freight). While it would cost a little less than the cost of a lane mile of freeway, it would carry only about 10 percent as many people (and again no freight). Rather than measure daily traffic, the Anton, Lubov analysis compares peak- period capacities. To compare passenger miles, it counts 1.1 passengers per car. While this is a reasonable number for commuter traffic, most of the traffic on the road,, even at rush hour is not commuter traffic. The average occupancy of non- commuter cars is about 1.75, so the average occupancy for all cars on the road at rush hour is around 1.3 to 1.4. Even at the low occupancies assumed by Anton, Lubov, the analysis admits that freeways carry far more people than commuter rail while arterials such as U.S. 10 carry about two-thirds as many people. If peak-period congestion is the problem, there are much better ways of dealing with that problem than opening a commuter rail line. If congestion is caused by a few bottlenecks, one is to fix those bottlenecks. If congestion is more general, another solution is to pay for new lanes of traffic using value-priced tolls-that is, tolls that vary by time of day. In the case of the 82 miles between Minneapolis and Rice, it is likely that a few bottlenecks is a major problem, one that a commuter rail line will not solve. Other Problems with Anton, Lubov's Analysis There are at least two other major problems with Anton, Lubov's analysis. One has to do with the use of discount rates. Another has to do with Anton, Lubov's assessment of "the return to the state of Minnesota." Review of Benefit-Cost Analysis of Northstar Commuter Rail 9 Discount rates-While MnDOT used a discount rate of 4.5 percent, Anton, Lubov used a rate of only 2.5 percent. A lower discount rate has the effect of making future benefits and coSts more important than otherwise. Because most of the costs of commuter rail are in the near future and most of the projected benefits are in the more distant future, the lower rate makes the investment appear more attractive. Anton, Lubov says that the lower rate increased benefits by $81 million and costs by only $43 million. Yet in reducing the rate, Anton, Lubov went in the wrong direction. According to the Federal Transit Administration, the appropriate rate for evaluating transit projects is not 2.5 or 4.5 percent, but 7.0 percent.7 At this higher rate, benefits would be reduced by more than costs, leading to an even lower return than calculated by MnDOT. Beyond this, it appears that Anton, Lubov does not understand how to use discount rates. With a lower rate, all values in the analysis should change, because all the benefits and costs take place some time in the future. Yet most of the benefits and costs presented by Anton, Lubov are identical to those calculated by MnDOT. Of the eight benefits or costs, five-the vehicle operating cost savings, vehicle accident rate savings, pollution cost savings, the value of depreciated capital stock, and the operating costs- are identical. The capital costs also differ only by $24 million, which Anton, Lubov's estimated cost of connecting the Hiawatha light rail to the Northstar commuter trains. This means Anton, Lubov used the same capital cost (and therefore the same discount rate) as MnDOT. Considering that all of these costs are in the future, they should all be different if a different discount rate is used. Even the capital costs would be spent over the next four years and therefore should be slightly different from the MnDOT costs. Clearly, Anton, Lubov did not correctly account for the change in discount rates. Without seeing MnDOT's and Anton, Lubov's spreadsheets, it is impossible to tell how this affects the analysis. However, since discount rates are fundamental to any benefit-cost analysis, this error does not reflect well on the analysis as a whole. Return to Minnesota-In addition to miscalculating the benefit-cost ratio of Northstar commuter rail, Anton, Lubov goes on to estimate "the return to the State of Minnesota." This is the alleged benefit of the commuter rail line divided by' the share of the cost paid by the state, as opposed to the federal government. This analysis is flawed in at least two ways. Review of Benefit-Cost Analysis of Northstar Commuter Rail First is the assumption that the federal share of the cost is not paid by Minnesota residents. In fact, the federal share is paid out of federal gasoline taxes, and Minnesota residents pay as much federal gas tax as anyone else. Second is the assumption that commuter rail is the only way that Minnesota can capture federal transportation dollars. In fact, Minnesota can use its share of federal transportation funds for a wide variety of projects. Some of them would actually produce a greater "return" than commuter rail. For example, while the federal government will fund only 50 percent of commuter rail projects, it iVil-1 fund up to 90 percent of any expansions to Interstate 94. Other problems-A more detailed analysis could identify even more problems. For example, MnDOT's estimate of 9,594 daily riders is probably too high. After two-and-a-half years of operations, Seattle's commuter rail line is carrying fewer than 3,000 riders per day. In order to achieve 9,594 riders per day, the Northstar rail line would have to carry more than 2,400 passenger miles per directional route mile. In urban areas comparable to the Twin Cities-areas such as San Jose, Dallas, and Seattle- commuter rail lines are carrying just 200 to 1,200 passenger miles per directional route mile. Finally, the entire premise of this analysis--that only social benefits of commuter rail should be compared against only dollar costs. An alternative analysis would compare the amount that potential riders are willing to pay for riding a commuter rail line with the costs. Fares aren't even considered in the MnDOT and Anton, Lubov analysis, but fares fail to cover costs in any new commuter rail line in the U.S. Conclusions More information will be needed to correct many of the flaws in the Anton, Lubov analysis. However, at least four flaws can be corrected immediately: · The benefit of vehicle operating cost savings must be reduced by $106.8 million. · The benefit of parking cost savings must be reduced by $34.6 million. · The $134 million "future value of depreciated capital stock" should be eliminated from the benefits. · The operating cost of commuter rail should be increased by $137.7 million. Fixing these errors reduces benefits from $578.9 million to $301.9 million and increases costs from $501.4 million to $639.4 million. This changes the benefit- cost ratio from 1.15 to 0.47. In other words, for every dollar invested in Northstar commuter rail, only 47 cents will be returned. Review of Benefit-Cost Analysis of Northstar Commuter Rail 11 As much as two thirds of this supposed return will go to just 4,800 people, but everyone will pay the cost. While the Northstar commuter rail is not a good investment for thOse 4,800 people, it is a terrible investment for everyone else. 1. American Automobile Association, "Your Driving Costs 2003," http://www.aaamissouri.com/news/library/drivingcost/driving.html. 2. Bent Flyvbjerg, Mette Skamris Holm, and Soren Buhl, "Underestimating Costs in Public Works Projects: Error or Lie?" Journal of the American Planning Association 68(3):279-295, table 2. 3. Neil Schnickner, "Audit of the Champlain Flyer Commuter Rail Service," Vermont Joint Fiscal Office, attachment D, table 10. 4. Joseph Dimento, Drusilla Van Hengel, and Sherry Ryan, "The Century Freeway: Design by Court Decree," Access, 9 (Fall, 1996): 7. 5. US DOT, Highway Statistics 2001 (Washington, DC: US DOT, 2002), table HM-72. Passenger miles calculated by multiplying vehicle miles by 1.6. 6. Texas Transportation Institute, "Mobility Data for Minneapolis-St. Paul," http://mobility.tamu.edu/urns/study/mobility_data/tables/minneapolis.pdf. 7. Federal Transit Administration, Reporting Instructions for the Section 5309 New Starts Criteria (Washington, DC: FTA, 2001), section 3.4.2, footnote 6, http://www.fla.dot.gov/library/policy/ns/2001/34.html. In the letter from Representative Krinkie, the Federal Transit Administration (FTA) New Starts Report on Northstar is quoted out of context. After stating that economist Paul Anton overstated the benefit/cost ratio of the Northstar project by using a lower discount rate than the FTA, the letter states: "This is why the FTA said the following when they rated the Northstar project as 'Not Recommended' in their most recent New Starts Report: 'However, FTA has serious concerns about the information submitted for this measure; the underlying assumptions used by the project sponsor may have produced an inaccurate representation of the benefits of the project.'" The FTA's rating of"Not Recommended" for Northstar has nothing to do with Mr. Anton's figures. As that same FTA reporti says on page A-338: "The Not Recommended rating is primarily based on the inability of the project sponsors to obtain a local financial commitment to construct and operate the proposed project." This is because the State of Minnesota failed to commit its share of the capital funding for the Northstar project in the 2002 legislative session. The quote from the New Starts report regarding the benefits of the project refers to a completely different project measure. That project measure was computed long before Mr. Anton conducted his economic study of the project. The project measure in question is a new criterion used by the FTA to compare projects, and is called the Cost per Transportation System User Benefit, or just User Benefit for short. The User Benefit describes the cost for a given project to save an hour of a traveler's time. Because it was the first time for this measure to be computed for transit projects across the country, the FTA hired consultants to compute the measure for all projects. FTA's consultant determined in September 2002 that Northstar would save travelers 11,646 hours per day resulting in a User Benefit of $7.28/hour. Because this equates to over one hour per Northstar passenger trip per day, the FTA rightly questioned if this could be correct. In other words, the FTA is questioning the software model and its assumptions as used by its consultants in determining this User Benefit. With the results in question, the FTA then issued a "Not Rated" mark for the Mobility Improvements category of the Northstar project, which inclUdes the User Benefit measure. The above quote from the New Starts report refers to the User Benefit measure of the project, not to any Benefit/Cost work. It is misused in the letter. The project intends to address the FTA's questions about the User Benefit when funding is available to hire consultants knowledgeable in the new measure. ~ Annual Report on New Starts, Proposed Allocations of Funds for Fiscal Year 2004; Report of the Secretary of Transportation to the United States Congress Pursuant to 49 U.S.C. 5309(o)(1); Prepared by the Federal Transit Administration, 2003; Report Number FTA-TBP10-2003-02 May 14, 2003 The Honorable Governor Tim Pawlenty 130 State Capitol 75 Dr. Rev. Martin Luther King Jr. Blvd. St. Paul, MN 55155 Dear Governor Pawlenty: On behalf of the Northstar Corridor Development Authority (NCDA), thank you for the opportunity to respond to the issues raised in the letter and supporting documents you received from Representative Phil Krink_ie and other legislators dated May 8, 2003. In general, the letter and .the O'Toole/Thoreau Institute analysis are seriously flawed, provide misinformation, and gossly distort the position of the Federal Transit Authority (FTA) and the costs and benefits of the commuter rail proposal for the Northstar corridor. FTA Status As you know, in November 2002 the FTA downgraded the stares of the Northstar project from "Recommended" to "Not Recommended." Their justification, found on page A-338 of the 2003 News Starts Report, states "The Not Recommended rating is primarily based on the inability of the project sponsors to obtain a local financial commitment to construct and operate the proposed project." The FTA decision was not related in any way to Mr. Anton's analysis, which was completed two months after the release of the 2003 New Starts Report. Representative Krinkie references a quote about concerns expressed by the FTA. Those concerns relate to the computation of Cost Per Transportation System User Benefit, a new measure used by the FTA to determine the v/ability of the project. Other projects throughout the country have also not been rated in this category as a result of the computation formula and are in similar discussions with the FTA. MnDOT and the NCDA will recalculate this measure later this year when new ridership projections are completed. Mr. O'Toole's Qualifications The depth of Mr. O'Toole's work has been on forestry issues -- aggressively opposing the President's plan for thinning national forests as a method to prevent forest fires. He has also proposed private ownership of animals as a preferred method of managing endangered species. Northstar Corridor Development Authority 2100 3rd Avenue, Anoka, Minnesota 55303-2265 (763) 323-5700 Fax: (763) 323-5682 www. northstartrain.org As a representative of the Thoreau Institute, Mr. O'Toole has also been published as a strong supporter of roads and automobiles. In our review of his publications, Mr. O'Toole consistently opposes commuter rail projects regardless of their economic value. O'Toole's Analysis of Northstar In reviewing O'Toole's work, it is clear he has not studied the specifics of the Northstar commuter rail project or the growth issues faced by residents of the corridor. Specifically, his analysis falls short in the following areas: General Methodology. O'Toole's analysis selectively uses national data where Minnesota- specific data is available, cherry-picking the information to prove his thesis. His lack of knowledge of the Northstar project is further evidenced by his statement on page 3 that 1-94 is "the principle [sic] alternative to Northstar commuter rail," when US-10 is the primary alternative. He also believes that the rail system will not carry freight, meaning he is unaware that the tracks are already in place and currently carry up to 70 freight trains each day. Benefits of vehicle operating cost savings. O'Toole wants to reduce the value of saved vehicle operating costs by $106.8 million, claiming that the proper measure of saved cost is only about 13 cents per mile instead of the 28.8 cents used in the study. His version of saved costs includes the variable cost of items like tires and gasoline but excludes costs of ownership like insurance and depreciation. While this may sound plausible initially, it flies in the face of standard transportation analysis and accounting/tax practices. The higher figure is the proper measure because it accounts for how a car is actually used: a car that is driven more miles will wear out faster and will need to be replaced sooner Parking cost savings benefit. He argues that the total benefits should be reduced by an additional $34.6 million, reflecting his belief that the capital cost of providing new parking facilities should be used for the parking benefit rather than the avoided cost of parking fees. Mr. Anton believes his method is preferable in this case because parking fees cover both capital and operating costs of additional parking facilities. If you used the method recommended by Mr. O'Toole, the benefit-cost ratio would only be reduced from 1.15 to 1.08. Future value of depreciated capital stock. O'Toole wants to eliminate the present value of the end-of-period capital stock of Northstar rail from total benefits. Including the capital stock is a standard practice and Mr. O'Toole's approach is equivalent to assuming that all of the cars, stations, switches, and track improvements disappear at the end of 15 years when their useful lives are actually much longer. In a subsequent analysis comparing expected costs and benefits over 30 years with the end value of the capital stock assumed to be zero, the benefit-cost ratio was actually 1.32, compared to 1.15 in the 15-year calculations included in the original Anton study. Operating costs. He argues that the operating costs should be increased by $137.7 million to reflect the present value of the operating costs of Northstar Commuter Rail for the second 15 years of its existence. This makes absolutely no sense because he does not also recommend adding an additional 15 years of benefits to total benefits. He wants to compare 15 years of benefits to 30 years of costs. Discount rates. The Anton, Lubov analysis used a discount rate of 2V2 percent because discount rates measure the current dollar value of future benefits and should be determined with the prevailing rates at the time of analysis. A 7 percent discount rate was applicable in the early 1990's, but is not appropriate in the current low interest rate market. In a separate review of the Anton, Lubov study, Abigail McKenzie of MnDOT argued that, because interest rates are near record low levels, she would have preferred to use a rate of around 3 percent. O'Toole's recommendation of 7 percent is far outside the reasonable range of discount rates for 2003. Return for Minnesota. O'Toole lacks knowledge of current federal funding alternatives. The State of Minnesota's practice is to maximize federal highway or federal transit dollars according to the most appropriate use for a specific corridor. The federal funding for Northstar Commuter Rail cannot be used for highway construction; therefore it does not make sense to reject the Northstar project under the premise that the state could capture federal dollars for other road projects. Governor, I urge you to reject Representative Krink_ie's request to further delay this project. As you know, the studies comparing the transportation alternatives in the Northstar corridor have undergone rigorous review by MnDOT, the Met Council, local governments and the FTA. We do not believe additional studies are necessary, and continued delays will result in increased project costs for Northstar Commuter Rail. I hope this information clarifies some of the main issues raised by Representative Krinkie and the O'Toole/Thoreau report. If you would like more information or have questions, please feel free to contact me. We appreciate the time you continue to put into reviewing the Northstar project. Sincerely, Tim Yantos Project Manager, NCDA /sky Northstar - · Necessary Steps Prior to Construction 1. BNSF Agreements Work Completed Capacity modeling Development · of key principles Draft Business Points · To Do Agreement on necessary capacity improvements, and Negotiate a construction agreement and operating agreement 2. Design and Engineering 30% Design (Preliminary Engineering) 30 - 100% (Final Design) 3. Environmental Review Final Environmental Impact Statement (Completed) 4. Financial Plan 10% of capital cost committed by local government · 40% commitment of State · Capital finance plan · Operating finance plan 5. Property Acquisition Partial acquisition of 3 station sites (commuter bus) · Remaining station sites, layover and maintenance facilities' sites 6. Project Management Plan FTA Approved Plan showing technical capability and capacity to design, construct and operate the project. · Rail Fleet Management Plan · New Project Management Plan 7. FTA New Starts Review "Recommended" ratings in 2000, 2001, and 2002 "Not Recommended" 2003 · Submit project documentation (due August 2003) showing financial commitment, cost- effectiveness, revised ridership and user benefits · Restore recommended rating · Negotiate full funding grant agreement NOTE: The bolded steps require the scrutiny and approval of the Federal Transit Administration. May 14, 2003 Northstar/Federal Transit Administration (FTA) Development Process NOTE: Process completed under oversight of FTA with project approvals at critical stages, prior to final approval to start construction. Major Investment Study (Alternative Analysis) 1998-1999 December 1999 Strategy in St. Cloud APO, Metropolitan Council and Mn/DOT Plans Preliminary Engineering I Complete ElS 2OOO June 2000 2000-2002 Financial Commitment / BNSF Capacity Improvements Identified 2003 Revised~~.Ridership and Other Studies ROW Acquisition 2003 - 2004 Construction Plans I Full Funding Grant Agreement ~ Late 2004 May 2003 Construction and Vehicle Procurement 2005-2006 ~ Pr~ected: Operations December2006 - FTA Approval Northstar vs. Seattle Sounder May16,2003 Northstar Sounder Source of Funds · Federal New Starts · Local Property Tax · State Bonding Local Sales Tax (State withdrew funding commitment requiring renegotiations with BNSF) Federal Oversight Project Management Oversight - Final Design through Construction None Federal Approvals Needed · Consentto Begin Final Design · Full Funding Grant Agreement for $151 million · Limited federal funding for vehicles · Did not follow New Starts Process Environmental Concerns None Significant issues with Puget Sound and endangered species for Northern extension Timing of Operations/ Full Implementation Anticipated late, 2006 Limited operations commenced prior to completion of construction Delays due to ROW constraints, complex BNSF and Port negotiations, environmental concerns and changes in funding sources Project Complexity · Straightforward, one railroad, one storage yard One of most complex sections of urban railroad in U.S., includes two port authorities, two railroads and one storage yard