Major Rail Issures Remain Unresolved, Rob Whitfield, Fairfax Times, May 30, 2014 (UPDATED)

Rob Whitfield, Dulles Corridor Users Group, wrote a detailed letter in last week's Fairfax Times noting that there are several important unresolved issues in the financing of the Silver Line.  A breakdown in any of these issues could result in a failure to obtain $1.9 billion in low-cost TIFIA financing, and thereby undercut the reductions in tolls that MWAA, elected officials, and others have been recently been pounding their chests about.  We present below his letter with the updates highlighted in red. 

Despite all the hoopla about the Metropolitan Washington Airports Authority (MWAA) turning over control of Dulles Rail Phase 1 to the Washington Metro Area Transit Authority (WMATA), several major unresolved issues remain:

 

1. We have yet to see the proposed business terms and conditions for the Dulles Rail Transportation Infrastructure Finance and Innovation Act (TIFIA) loan. A U.S. Department of Transportation official said last week that the public would not be allowed to see the agreement until after all terms have been negotiated and an agreement signed. This exemplifies the approach of former House Speaker Nancy Pelosi to government actions: “We have to pass the bill so that you can find out what is in it.”

 

The TIFIA Program is governed by the Federal Credit Reform Act of 1990 (FCRA), which requires the U.S. Department of Transportation to establish a capital reserve, or “subsidy amount,” to cover expected credit losses before it can provide TIFIA credit assistance. Congress places limits on the annual subsidy amount available.

 

Moving Ahead for Progress in the 21st Century Act (MAP-21) authorizes $750 million in FY 2013 and $1 billion in FY 2014 in TIFIA budget authority from the Highway Trust Fund (HTF) to pay the subsidy cost of TIFIA credit assistance. An MWAA financial advisor for the Dulles Rail project indicates that the capital reserve required is typically only 10% of the total TIFIA credit assistance amount. He expects closure before September 30, 2014 but if a delay in closure occurs, given the potential for the HTF to run out of funds later in 2014, the public should not assume that TIFIA credit assurance for Dulles Rail is a certainty, particularly at levels needed to complete the Dulles Rail project by 2018.

2. MWAA has yet to fund any of its 4.1 percent Dulles Rail capital cost share from Airport Revenues. Over five years have passed since Phase 1 construction started and months since Phase 2 work commenced. Chairpersons Bulova and York plus Virginia officials have yet to demand a specific MWAA payment plan. The 2007 Capital Cost Funding Agreement provided no proposed schedule for MWAA payments to be made. Where were our politicians?

Based on what was revealed at the MWAA Board meeting last month, it appears that some airlines are balking at the proposed use of Passenger Facility Charges at Reagan National to pay for MWAA’s share of Dulles Rail capital costs. Similar concerns exist at Dulles International Airport where passenger charges are the highest in the region and among highest in the entire USA.

 

3. The capital costs of Phase 2 within Dulles Airport will be at least $1 billion, including two stations. MWAA’s share of project cost obligations set by the 2007 “agreement” remain under $250 million while the future costs for Dulles Toll Road(DTR) users will skyrocket from 2006 projections made by MWAA - TIFIA notwithstanding. Why have our political leaders not demanded that MWAA and WMATA pay a fair share of overall capital costs? Is subsidizing those who live and work inside the Capital Beltway more important to our politicians than the thousands of dollars in additional tolls to be paid with after tax funds by those who must rely on the Dulles Toll Road for commuting?

 

4. MWAA next month plans to select the contractor for a $260 million Dulles Maintenance facility to be built for maintenance and storage of not only 128 Silver Line Series 7000 railcars being paid for by MWAA (mostly from DTR funds) but at least one half of the 300 (planned 420) additional Series 7000 railcars to be delivered to WMATA over the next five years.

Officials from MWAA, WMATA and USDOT have been asked repeatedly for over two years, when, if at all, are MWAA and WMATA going to negotiate for WMATA to pay for its share of facility capital costs. Nobody wishes to acknowledge responsibility for this matter.

5. MWAA has yet to fulfill certain terms of its January 2006 proposal to the Commonwealth to “Operate the Dulles Toll Road and Build Rail to Loudoun County.” An audit should be conducted to confirm compliance by MWAA with all provisions of the 2006 proposal.

 

6. MWAA plans to lease land for development adjacent to the two Metrorail stations on Dulles Airport property. This land is leased from the federal government. MWAA intends for 100 percent of revenue generated to be used solely to defray Dulles Airport expenses--with no revenues to be used to offset DTR tolls needed for MWAA Dulles Corridor Enterprise bonds. A MWAA Board member helped negotiate revisions to Federal Aviation Administration Congressional funding provisions. It appears possible that MWAA will be able to use its powers to benefit airport development on terms detrimental to development of nearby land whose owners pay property taxes. MWAA claims it pays fees in lieu of taxes but no independent accounting of the adequacy of such fees appears to have occurred.

 

These issues, and others, must be resolved BEFORE Virginia funds the proposed $300 million in further financial assistance, approved by the Virginia General Assembly in 2013, to offset proposed toll cost increases. Remember, in 2006. MWAA claimed that no further assistance would be needed from the Commonwealth for the Dulles Rail project. Various MWAA officials in office prior to 2010 lied repeatedly to Virginians about costs and funds needed from DTR users. Why should we expect that the lies won’t continue, particularly because the MWAA Board is controlled by D.C. and Maryland political appointees who don’t give a flying fig about the costs for Virginia taxpayers who live and work in the Dulles Corridor.

 

The failure of nearly ALL Virginia politicians, both Democrats and Republicans, to address these matters in a timely manner is the last straw in the series of outrageous failures in accountability by everybody involved in Dulles Rail during the last decade. Maybe it reflects the culture of corruption that pervades most political actions in Richmond and Washington, D.C. as well as those taken by many or most Northern Virginia elected officials.

 

Last Friday the Dulles Corridor Advisory Committee met. In the past DCAC members have acted as a rubber stamp to MWAA proposals.  Unfortunately, DCAC members continued to shirk their obligations to those who live and work in the Dulles Corridor as they have since 2006 by not insisting on answers to these issues.

 

Rob Whitfield, Dulles Corridor Users Group