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Cap Metro lacks money for streetcar line

City, state, UT sought as possible partners.
Ben Wear

You might have heard that Capital Metro is working on plans for a Central Austin streetcar line.

What you might not have heard is that the transit agency has no way to pay for it. Capital Metro says it could rustle up at most 20 percent of the $233 million estimated cost of the 6.5-mile line from sales taxes, bus fares and other local income.

Federal transit money has become an increasingly competitive arena, one that Capital Metro declined to enter for a different rail project — a commuter line from downtown Austin to Leander. So the agency will be hard pressed to say what, if any, help Uncle Sam can give.

Given that, state Rep. Mike Krusee, a rail supporter, and others have been talking to the City of Austin, state government and the University of Texas about getting them to become major partners in Capital Metro's streetcar project.

The situation is unusual for a passenger rail project, which typically is financed 100 percent by a transit agency using local funds, borrowed money and federal grants. The uncertainty, several officials say, means that a November transit election is no longer in the cards.

"We're just not ready," said Leander Mayor John Cowman, a Capital Metro board member. "Too many things are still up in the air. Now, 2007, the latter part of it? Maybe."

The key, Krusee said, is figuring out the economic impact of building the line, which is envisioned as two sets of tracks (one in each direction) going from the Seaholm Power Plant area near Town Lake up Congress Avenue and San Jacinto Boulevard through UT, then east on Manor Road and on to the mix of housing, hospital facilities and commercial space being developed on 700 acres at the old Mueller airport site.

In the past couple of weeks, the city hired economic consultant Charles Heimsath to determine what sort of development streetcars would spark along various routes and what the tax impact could be for the city. Then, somehow, the city might be induced to contribute to the project based on that predicted boost.

Some wonder just how much development the line could generate, given the proposed route. Congress Avenue north of where the line would enter it at Fourth Street is already well stocked with skyscrapers. Then the line would pass by a row of state buildings and parking garages and on through the university.

At the proposed route's tail end, construction at Mueller has already begun, though having rail would allow greater density under city rules because it would reduce car traffic. That leaves the mostly residential stretch of Manor Road, and the affected neighborhood associations have grown restive in recent weeks over what might happen to their area.

"I'm skeptical," said Austin City Council Member Lee Leffingwell, newly appointed to the Capital Metro board. "Capital Metro was formed to finance public transportation. And if they don't have the means to finance the line, maybe their finance system isn't adequate."

Capital Metro officials have acknowledged in recent months that the agency's finances are inadequate. About 80 percent of Capital Metro's revenue comes from a sales tax capped at 1 percent by state law. That revenue boomed in the late 1990s, sagged in 2002 and 2003 and has been on an upswing in the past couple of years.

The anticipated sales tax take this fiscal year is more than $130 million, at least $12 million more than last year.

But operating expenses grew precipitously over the past few years because of a contract that guaranteed bus drivers 4 percent raises for five years during an economic downturn, costs associated with commuter rail and tens of millions of dollars spent on park-and-ride lots and other new facilities.

The agency, looking to maintain political support, has also given away more than $200 million in recent years to other local governments.

That leaves very little to invest in rail.

"We do know that Capital Metro cannot afford to pay for the entire cost of the streetcar," Cynthia Hernandez, Capital Metro's chief financial officer, said last week. "We do want to have partners to help pay."

So why would Capital Metro unveil a plan it can't pay for without substantial help? An extension of the commuter line on existing track to Manor, for instance, no doubt would have been much cheaper.

But urban rail supporters, who loved a light rail plan with multiple Central Austin routes that was defeated in a 2000 election and gritted their teeth to support the suburban-centric commuter rail that voters approved in 2004, turned out in force at public meetings to decide what should come after the line to Leander.

Capital Metro, aside from its own preferences regarding streetcars, is responding to that pressure.

"Capital Metro made a commitment to the community after the (2004) election to study future connections," spokesman Adam Shaivitz said in an e-mail response to the funding question. "The study was necessary to understand the magnitude of the required solution before we can decide how to fund it."

Krusee, a Williamson County Republican who heads the state House transportation committee and has become an energetic rail booster in recent years, has been actively engaged in seeking funding partners. He said he's talked to Austin City Manager Toby Futrell and Mayor Will Wynn, to UT staff members and to state officials.

Pat Clubb, UT's vice president for employee and campus services, said that though initial talks have occurred, any university commitment would first require a multilayered committee review. And unlike the city, which might directly benefit financially from development triggered by streetcars, the impact on UT would be more amorphous.

State law requires public approval before Capital Metro can build a passenger rail expansion, including the streetcar system. Several officials said the agency almost certainly would need to nail down the funding sources before putting the project on the ballot or would risk defeat.

"My mission is basically to do as much as I can to move the process along so our community can make a decision," Krusee said. "When are we going to be at that point? I don't know. I'm working as hard as I can."