Region poised to back away from Metro good repair

The consensus emerging from months of negotiations between area jurisdictions that fund Metro is for fewer dollars for capital projects and diminished guarantees that the dollars committed will actually materialize.

The WMATA board will be updated today and presented with three possible capital funding agreement renewal options. All them provide fewer dollars and fewer guarantees than the current Metro Matters agreement.

All involve WMATA purchasing a line of credit to pay for certain projects and then billing the local jurisdictions. And all include lower funding commitments from jurisdictions immediately, starting with $95 million less than originally budgeted for FY11.

Under the Metro Matters agreement, jurisdictions agreed to certain levels of payment for certain projects (though the projects could be changed or moved by agreement). The agreement worked well. WMATA obligated and spent capital funds at a much faster rate than before Metro Matters.

After years of poor maintenance, system repairs began to move in the right direction. The jurisdictions planned in advance for the payments that would be due and the system worked well until this year when the O’Malley administration decided not to make its payments in a timely way, then began resisting renewing its commitments.

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.