Is the Oakland Airport Connector a Good TIGER-TIFIA Project? (Part 1)

Short answer: not exactly. But with the suspense now cleared from the air, let’s back up a bit.

As we’ve discussed here a few times before, BART is about $100 million short of the funds it needs to build the Oakland Airport Connector (OAC), a gap which accounts for approximately 20% of the total capital cost. To fill that gap, BART intends to take out a TIFIA loan, basically as a last resort measure. The Transportation Infrastructure Finance and Innovation Act (TIFIA) and associated regulations outline a program in which the U.S. Department of Transportation (USDOT) provides credit assistance (loans, loan guarantees, or lines of credit), to ease and accelerate the completion of significant surface transportation projects. Many different types of applicants are eligible for TIFIA assistance, including local governments, state DOTs, transit agencies, and private parties.

Last month, the Metropolitan Transportation Commission also identified the OAC as one of four regional priorities for the purposes of bringing a limited amount of TIGER stimulus funds (one component of many in the American Recovery and Reinvestment Act) into the Bay Area’s transportation coffers.

Although it remains to be seen whether Caltrans will include the OAC in its Governor-endorsed consensus list of projects (discussed in this post), MTC has suggested that only a small amount of TIGER funds be allocated to the OAC — just $5 million out of the $133 million it requested. The TIGER program specifically allows USDOT to use up to $200 million (of the $1.5 billion total TIGER funds) toward what are known as “TIGER TIFIA payments” — smaller sums of money that would cover subsidy and administrative costs, to support about $2 billion of TIFIA credit assistance for projects that are well-aligned with the goals of the TIGER program. That’s what the $5 million requested for the OAC would be: a TIGER TIFIA payment to support the roughly $100 million TIFIA loan that BART is seeking.

So we have the TIGER stimulus money, and then we have this TIFIA loan. These two federal programs have been linked to each other via the TIGER TIFIA payments, but they are nonetheless distinct programs. Applicants seeking both a TIGER TIFIA payment and a TIFIA loan must apply to the two programs separately. To receive funding, project proposals must pass muster under both programs.

It’s not the end of the world to take advantage of a TIFIA loan; plenty of places around the country do, and there are some projects that are particularly well-suited to it. In fact, many of the approved TIFIA loans from around the country have taken out loans much larger than the $100 million loan BART needs. But it’s also not something to take lightly. In order to qualify for the loan, the project must be backed by a dedicated revenue source, like user fees. In this case, that revenue source is the the exorbitantly high $6 one-way/$12 round-trip fare BART intends to charge passengers who will ride the OAC.

If the Oakland Airport Connector were going to provide truly significant benefits, a TIFIA loan might be a good way to get the project moving. If the choice is between postponing a beneficial project, on the one hand, and repaying the loan, on the other hand, the loan might be the right choice. That way, the public could enjoy the project’s benefits that much sooner, particularly if the funding relief attracts additional private investment. But the current state of the OAC provides few benefits over the status quo. The benefits that would have been provided, as documented in the Environmental Impact Report certified in 2002 — intermediate stations, quick travel time, a seamless terminal connection at Oakland International Airport, and high ridership — are no longer a reality. The intermediate stations are gone; the travel time between Coliseum BART and the Airport is, frankly, a wash as compared to a bus; and the seamless Airport connection has been eliminated. Ridership, now a fraction of what was once predicted, will not be substantially higher than AirBART. And then there is the matter of the high fare. At $522-552 million, the OAC just isn’t a strategic investment.

I won’t rehash all these details again, but if you haven’t done so already, please read about them in this earlier post. The details are important, because they also speak to the Connector’s potential TIGER and TIFIA eligibility. Given how the OAC has (d)evolved, is the project, in its current state, a promising candidate for federal funds? Answering that question will require looking at the criteria that USDOT itself will consider. More on that in the next post.