August 24, 2017

The Trump Administration will sign a grant agreement promising $572 million in future federal appropriations for the Maryland Purple Line light rail project, Governor Larry Hogan (R) announced this week.

Hogan held talks through last weekend with U.S. Transportation Secretary Elaine L. Chao and convinced her to sign the “full funding grant agreement” (FFGA) for the Purple Line this week in order to give Maryland access to the $328 million that Congress appropriated for the project in fiscal year 2017 and prior years. The prior appropriations plus future appropriations promised by the FFGA total $900 million from the Federal Transit Administration’s Capital Investment Grant program, which will be matched with $450 million in Maryland taxpayer dollars, $36 million in other federal funding, and $1.02 billion from a public-private partnership (PPP) ($875 million of which is backstopped by a federal TIFIA loan).

Without access to the $328 million in prior federal appropriations this month, Maryland officials said that layoffs and contract cancelations would be necessary.

Secretary Chao’s signature on the grant agreement will increase the total amount of future federal general fund appropriations in 2018 and subsequent years promised to new rail transit projects to an even $6 billion – $4.95 billion promised by agreements signed by the Obama Administration, $474 million for the Caltrain project in Northern California approved by Chao in May of this year, and now $572 million for the Maryland Purple Line. 60 percent of that $6 billion ($3.615 billion) is for transit projects in California and the rest is dedicated for projects in Colorado, Illinois, Massachusetts, North Carolina, Oregon, Texas and now Maryland.

(It cannot be overemphasized that the promises made in these grant agreements for future appropriations are not legally binding on Congress – that is the whole point of annual “discretionary” appropriations. See this recent ETW article and this history funding for of the program for why funding large multi-year capital projects out of annual discretionary appropriations is (a.) not the best way to do things and (b.) somewhat ahistorical.)

President Trump’s fiscal 2018 budget proposed to limit funding for the FTA’s CIG program “to projects with existing full funding grant agreements only. Future investments in new transit projects would be funded by the localities that use and benefit from these localized projects.” But since that time, Secretary Chao has signed two new FFGAs – Caltrain electrification and now the Maryland Purple Line. But both of those are, to some extent, special cases:

• Caltrain was supposed to get its FFGA signed under the Obama Administration, but some last-minute delays in local governments signing off on the revised project share pushed the agreement’s signing window just past January 20, 2017. Congress had already appropriated $173 million for the project, 27 percent of the $647 million total. Failure to sign the FFGA would have resulted in existing contracts being canceled.
• The Maryland Purple Line was supposed to get its FFGA signed by the Obama Administration over a year ago – the signing ceremony had already been scheduled and was days away when a federal judge issued a last-minute injunction putting the project on hold. That injunction was stayed by an appeals court last month. And the Purple Line has even more of its funding already in the bank (36 percent of the $900 million needed – see Mikulski, B.).

The Maryland project may also have benefitted from the fact that the Trump Administration’s infrastructure plans are all about encouraging the use of public-private partnerships for infrastructure, and the Purple Line is one of the rare mass transit projects that is using PPP financing. (Most PPP’s are on the highway side.) Purple Line Transit Partners, a three-way venture between Meridiam, Fluor, and Star America, is putting up the largest share of the funding for the project.

Now that Caltrain electrification and Maryland Purple Line construction are out of the way, we are out of “legacy projects” that were on the verge of getting their FFGAs signed by the previous Administration. What next for the CIG program?

If the amount of money pre-appropriated by Congress is a metric, then things look good for one pending project – the Santa Ana, California streetcar. Congress has already appropriated $50 million towards the project, which is one-third of its $149 million federal share (being a streetcar, it is cheaper than a light rail or heavy rail project – only $298 million total project cost, half of which is the CIG program share).

But looking beyond Santa Ana, the amount of money pre-appropriated dries up. According to the FTA’ s updated project list, there are eight other projects in the engineering or development pipeline that anticipate getting their FFGAs signed in FY 2017 or 2018, and the amount of future federal appropriations needed for those projects is another $5 billion.

The only pre-appropriations so far are the Seattle Lynwood Link, where $100 million of an estimated federal CIG share of $1.17 billion has been appropriated so far (8.5 percent), and the Minneapolis Southwest LRT project, where $15 million of an estimated $929 million federal CIG share has been appropriated (1.6 percent). None of the other projects anticipating getting a FFGA in 2017-2018 have had any money pre-appropriated to date.

(Ed. Note: The North Portal Bridge for New Jersey Transit also got a $14.5 million TIGER grant two years ago from the Obama Administration, but that money is not counted towards the $811 million CIG share so it is not reflected in the table above. And BTW if you want a real example of leverage from the state/local level, New Jersey and the Port Authority of NY/NJ have done it with this project – they are only putting up 4.8 percent of the construction cost up front.)

Beyond that, Congress has not yet appropriated any money towards the third segment of the other Purple Line (Los Angeles Westside) or any of the other projects expecting FFGAs in this budget cycle, the total federal CIG commitments for which total over $3 billion. Once we get to the FY 2019 cycle, the San Francisco Bay Area will be expecting somewhere from $2.5 to $3.5 billion in FFGA commitments, and the Hudson River Tunnel between New York and New Jersey will be asking for an Extremely Large Number as the CIG share of that $13 billion project.