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Thursday, May 19, 2011

Dulles Metrorail In Flux, The Bond Buyer, May 19, 2011

Loudoun County Weighs Pullout

Thursday, May 19, 2011

WASHINGTON — Loudoun County, Va., is looking at the possible impact of withdrawing its funding for the Washington, D.C., Metrorail extension to Dulles International Airport.
The county board told its staff Tuesday night to study how ­pulling out would affect the rail extension and the airport’s ­operation.
Loudoun Board of Supervisors chairman Scott York says the project is beginning to “derail” because of what he sees as intransigence at the Metropolitan Washington Airports Authority in negotiating lower costs.
“This group seems not to care where the money’s coming from and seems hell-bent on ignoring the cost for their little wish-list,” he said.
The part of the “wish list” that has supervisors of Loudoun and neighboring Fairfax County fuming is an underground station at the airport estimated to cost about $330 million more than an above-ground station.
Robert Brown, chairman of the MWAA’s finance committee, said “we continue to be very optimistic that we can find a solution.” He said the underground station was in the design and funding plans which Loudoun and Fairfax counties signed at the beginning of the project.
Loudoun County is expected to pay 4.8% of the cost, neighboring Fairfax County has committed to financing 16.1%, and the airports authority is scheduled for 4.1%. The rest would come from federal and state funds and tolls. The project is being built in two stages and the fighting is over phase two. None of phase one is in Loudoun County so it has no funding role.
The MMWA has issued $1.3 billion of bonds in two offerings for its stage-one financing and plans more borrowing later this year or early in 2012. The Fairfax County Economic Development Authority has issued $205.7 million in bonds, slightly more than half its $400 million phase-one contribution.
The original budget estimate for phase two, in 2010, was $2.5 billion. In September, the airports authority raised the cost estimate to $3.5 billion. Both Loudoun and Fairfax counties sent letters to the authority in April warning they might pull out. Loudoun has now taken that threat one step further. Board chairman York expects the staff report by the end of June, but intends to continue meeting with MWAA and Fairfax County officials in the meantime.
Fairfax County Board of Supervisors chairwoman Sharon Bulova says “we fully intend to continue efforts to identify cost reductions to bring the Phase 2 estimate more in line with original estimates.”
The MWAA’s Brown listed several options under discussion, including a smaller rail yard at the end of the line at Dulles Airport. Design changes at stations and their accompanying parking garages could also save money.
In the current economy, Brown thinks construction bids will come in significantly lower than when the estimates were made. The borrowers are also benefitting from lower rates.
Leo Schefer, president of the nonprofit Washington Airports Task Force, says the continuing cost negotiations are what matter.
“A Loudoun pullout is probably irrelevant, because if the costs aren’t reduced, our fear is there would be no project,” he said. “And if the costs are reduced, we are hopeful that Loudoun County will remain in the project.”

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