BART, East Bay, Economic Stimulus, Oakland, Oakland Airport Connector, Transit Funding

Is the Oakland Airport Connector a Good TIGER-TIFIA Project? (Part 2)

In Part 1 of this post, we gave a little background on the TIFIA and TIGER federal funds that BART will pursue so that it will have enough money to build the Oakland Airport Connector (OAC). In order to tap into both the TIGER and TIFIA pots of money, the OAC will have to pass muster under both programs individually. At the beginning of the last post, I suggested that the OAC was not “not exactly” a good TIGER-TIFIA project. To flesh out why, we’ll go straight to the criteria for both programs, which USDOT will use to evaluate both the OAC and other project proposals.

TIGER (TIFIA Payment)

MTC has prioritized the Oakland Airport Connector for a $5 million TIGER TIFIA payment to support a $100 million TIFIA loan. This is a special type of TIGER Discretionary Grant, which the OAC is eligible for, since it is a transit project. TIGER Discretionary Grants, like all ARRA stimulus funds, are intended to be distributed to projects that fulfill the core goals of the stimulus: job creation/preservation, and encouraging the construction of infrastructure projects that improve both public benefits and increase economic vitality.

Superimposed upon this general philosophy are tiers of selection criteria that are specific to TIGER Discretionary Grants. Going backwards, there are two “Secondary Selection Criteria”: (i) extent to which the project uses innovative technology, and (ii) extent to which the project encourages public/private collaboration, and collaboration between different levels of government. We’ll touch on these points later in this post. Weighed more heavily are the “Primary Selection Criteria,” which fall into two categories:

  • Long-Term Outcomes: In order for a TIGER project to move forward in the evaluation, there must be significant long-term benefit. No (or insignificant) long-term benefit, no TIGER grant. Projects should have a national or regional impact, preferably with respect to at least one of the following five long-term outcomes: (i) state of good repair; (ii) economic competitiveness; (iii) livability; (iv) sustainability; or (v) safety.
  • Job Creation & Economic Stimulus: Once USDOT determines that a project will likely have a significant long-term benefit in one of the five categories listed above, then it can consider this category, which focuses on “rapid economic impact” — the short-term job creation potential that sort of typifies the federal stimulus package.

Evaluating the primary criteria will come down to determining how “significant” the national or regional impact is. There is no doubt that the OAC, as it stood in 2002, would have done a much better job of meeting these criteria than it can today. Looking to the first long-term outcome, it would be a bit much to call the OAC a mere “upgrade,” since it’s really an expansion project that will not contribute positively to state of good repair. Moreover, with the two intermediate stations stripped from the project, the line will provide minimal economic and land use benefits to the Hegenberger corridor — even in the long-term. Thus, the OAC’s impact lies in its ability to affect travel patterns. But even in this respect, the OAC does not seem significant. The latest travel time estimates are comparable to bus service because speeds have been reduced. TIGER projects are subject to a cost-benefit analysis, and the OAC is unfortunately a classic case of fairly minimal benefits for extremely high cost (here, about $175 million per mile). Upgrading the current AirBART bus (with queue jump lanes and signal priority) would improve reliability, and would increase ridership to near the OAC projections — but could be built for 10% of the cost of the OAC.

The third outcome, livability, considers factors like enhanced mobility/connectivity, and improved access for disadvantaged populations. This sounds promising, until we recall changes to the OAC. Travel time has increased, and the simple, direct connection between the Airport and the Airport OAC station has been removed, forcing patrons to descend to ground level to access the Airport. So the OAC will not actually improve mobility and connectivity; an improved bus link, along the lines of the RapidBART proposal, would provide a superior connection, and low-floor vehicles would ensure disabled access. Projects with significant long-term livability benefits should also “improve[ ] the quality of the living and working environment of the [affected] community.” The OAC does no such thing; the elevated transitway would shadow the corridor, but would provide no benefits to the community in the form of intermediate stations.

Increased trip time — along with a projected slump in air traffic, and California High-Speed Rail, which will directly compete with about 40% of the air traffic at Oakland Airport — are reflected in the 2009 ridership projections, which were revised downward to between 3,770 and 4,670 total riders by the year 2020 (compared to 13,540 riders projected in 2002); and most of those are not new riders. These numbers suggest that OAC will not significantly alter existing travel patterns.

So does the OAC have a significant regional impact? Symbolically, perhaps, but not if you look at the numbers. The daily ridership of the OAC will be well under 1% of total daily transit trips around the region, and a tiny drop in the bucket of all trips. Nor would the OAC itself significantly induce additional trips to Oakland Airport. The fact of the matter is, the vast majority of people going to Oakland Airport will not be interested in taking the OAC. They might, however, point to it while driving on Hegenberger.

Next question: is the Oakland Airport Connector a good match for the TIFIA loan program?

TIFIA Loan

The proposed $100 million TIFIA loan would cover about 20% of the Oakland Airport Connector cost, which is well under the 33% cap set by the federal legislation. The cost of the OAC is well over $50 million, and fares would constitute the required dedicated revenue source. In order to qualify for federal funding, a project must also be prominently featured as a priority in regional and state transportation plans. Here, the OAC is receiving State Transportation Improvement Program (STIP) funding, and is also a committed transit expansion project in the Regional Transportation Plan. Applicants for TIFIA loans must also provide a preliminary rating opinion letter from a nationally recognized credit agency that speaks to creditworthiness.

Urban Habitat has previously raised the possibility of a Title VI claim (PDF) concerning the Connector, which raises an obvious problem; the OAC cannot receive federal funds, like the TIFIA loan, if Title VI of the Civil Rights Act has been violated. Here, for simplicity, we’ll assume that the OAC meets all the threshold eligibility requirements — including general federal requirements for transit projects, and compliance with background federal legislation like Title VI and the National Environmental Policy Act. Then, USDOT will score the application according to eight weighted criteria. The first three are most important, accounting for 60% of the score.

Significance (20%): This important criterion asks whether the proposed project is of national or regional significance.

  • It’s easy to look at the OAC on the surface and conclude that it is significant on a regional level and even national level, because it connects BART to one of the region’s three major airports. But once you consider the details of how the OAC has been diluted over the years, it looks less significant. There are a number of factors that speak to a project’s significance — including economic benefit and transportation connectivity. On both counts, there is good reason to believe the OAC’s benefits will not be especially significant. See: the TIGER discussion directly above.
  • As it turns out, another factor that contributes to “significance” of a project is the extent to which the community supports the project. The OAC does not have widespread support among the community (as indicated by the long list of citizens who signed this anti-OAC petition, urging BART to abandon the OAC and pursue a more cost-effective rapid bus solution). The City of Oakland and community members long ago made very clear that their support for this project was tied to the intermediate stations. Removing the stations at Edgewater and Doolittle has prompted renewed outcry from the community. (BART has indicated a future station might be built at Doolittle, but it’s anyone’s guess where the money will come from.) Many members of the public who spoke at MTC against the OAC opposed the project’s elevated guideway, which would loom over Hegenberger without providing any economic benefit to the corridor. Others spoke against using half a billion dollars to build a project that benefits comparatively few people, when service cuts and fare hikes affect way more people. Basically, almost no one actually likes the Connector for what it is. Even MTC doesn’t like it, but voted to fund it anyway, because that’s just how things go down at 101 8th Street.

Private Participation (20%): Another important criterion, this considers whether the TIFIA loan would encourage public-private partnerships and attract private investment.

  • BART seriously began considering the idea of private financing in 2005, so that it could close the funding shortfall. In 2007, BART issued an RFP for a Design-Build-Finance-Operate (DBFO) contract, and that same year, $25 million from FTA’s Penta-P program for public/private partnerships was added to OAC funding. But by 2008, all of the three pre-qualified teams had withdrawn. Once that happened, the OAC looked like it might be a dead duck, until stimulus funds became available in 2009.
  • One of the defining motivations of the TIFIA program is to use federal credit assistance as a means of leveraging and encouraging private investment in surface transportation. But in the case of the OAC, BART is pursuing a TIFIA loan precisely because private investment wanted nothing to do with the financing of this project. So BART will instead pursue a Design-Build-Operate-Maintain (DBOM) contract, using a combination of ARRA stimulus funds and TIFIA to close the funding gap that emerged once it was clear private financing was no longer an option. This is still a public/private partnership, but the OAC should not score as highly as it otherwise might.

Environment (20%): The last of the three important criteria, this factor considers the extent to which a project maintains or protects the environment, and how much environmental mitigation it requires. To some extent, this overlaps with the “sustainability” long-term outcome for TIGER funds. For this factor, the OAC will probably fare well.

  • Given the large number of road projects across the country that have obtained TIFIA loans, environmental protection does not appear to be an insurmountable obstacle. In any case, the OAC probably will score higher just by virtue of being a transit project. But it is worth mentioning that the OAC’s environmental benefits — which in large part consist of the project’s ability to reduce vehicle miles traveled — are less significant now that ridership projections are lower than they were in 2002.
  • An elevated guideway in a street right-of-way is not generally a recipe for an environmentally damaging project. The OAC’s impacts include noise, construction, vibration, and growth-inducing impacts — along with the elevated guideway itself, which is a significant and unavoidable visual impact. All in all, though, the environmental issues and potential mitigation measures are not extensive or complicated.

Creditworthiness (12.5%): The Secretary of Transportation will determine whether or not sufficient security measures are present to safeguard repayment of the loan. The creditworthiness evaluation also considers other relevant factors, e.g. the project team’s qualifications, whether the completion schedule is reasonable, and whether the proposed financial plan is reasonable. Meanwhile, BART has claimed that even under reduced ridership projections, the OAC fares will still net a surplus while paying off the loan:

oac_tifia_service
Courtesy of BART.

Project Acceleration (12.5%): The OAC will score well for this factor. The project already takes advantage of several types of funding made available at various levels of government (the funding is listed under the “Background” heading of this post). OAC funding even includes specialized one-time stimulus funds. And yet, without TIFIA, there would still be a funding gap. It’s not clear what alternative sources of funding are available, nor is it clear how long it would take to assemble about $100 million (or more, if stimulus money is lost, and as costs escalate over time). The TIFIA loan presents a good opportunity to close the funding gap and accelerate project delivery on the fast schedule required by ARRA stimulus funds.

Other Factors (5+5+5 = 15%): Three other factors are included in the analysis: (i) use of innovative technology, (ii) amount of budget authority consumed, and (iii) reduction in federal grant assistance. These factors are not worth much in the total equation but could provide a small bonus for the OAC, since the $100 million loan BART is seeking is small by TIFIA standards.

Conclusion

This is a really long post, so congratulations if you’ve made it this far. Where do we end up? The Oakland Airport Connector is a good fit for a couple of the less important criteria. Environmentally, the project is uncomplicated and potentially beneficial, so it might score well on that; but it is not really a slam dunk for the three most important TIFIA criteria. The OAC, which connects an important airport to a regional rail system, might seem to be regionally significant at first glance — symbolically, in the abstract. But the changes that have occurred to the project since 2002 minimize both its effectiveness as a transit operation and its potential to transform Hegenberger into a denser, more productive transit corridor, thereby diminishing its significance. The OAC is a public/private partnership, but it has failed to attract private financing, which is one of the underlying goals of TIFIA credit assistance program. It should not be lost on us that a large part of the reason we are talking about TIFIA loans in the first place is that private partners were not interested in financing this project.

We would strongly encourage USDOT to consider carefully the history of the Oakland Airport Connector, and to consider the substantial changes that have occurred since the EIR/EIS was certified in 2002, before awarding the TIGER/TIFIA funding. Those changes certainly minimize the OAC’s potential public benefits — but they also appear to hinder the OAC’s ability to fully satisfy the evaluation criteria that are used to evaluate TIFIA loan applications.

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  1. Pingback: Complaint Filed with the FTA Against the OAC « Transbay Blog - 4 September 2009

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