Federal Rail Loan Launches DART Cotton Belt Line
DALLAS – Dallas Area Rapid Transit will bring the 26-mile commuter rail line closer to the Cotton Belt this week with a $ 908 million federal loan, officials said.
“The loan really made the project possible,” said DART vice chairman Paul Wageman, who represents Plano, a city north of Dallas served by the rail line. “The interest rate seems very favorable to us.
DART expects to complete its loan agreement with the Federal Railroad Administration’s Railway Rehabilitation and Improvement Funding Program on December 20. the debt would provide, preserving DART’s debt capacity for future projects.
Eligible borrowers for the RRIF program include railways, state and local governments, government authorities and sponsored companies, joint ventures that include at least one railroad, and limited option freight shippers that have the intention to build a new rail connection.
Direct loans can finance up to 100% of a railway project with repayment periods of up to 35 years and interest rates equal to the cost of borrowing to the government.
“It’s like a TIFIA loan for rail projects,” said DART Treasurer Dwight Burns, referring to the federal Transportation Infrastructure Finance and Innovation Act grant program, often used to public-private toll motorway projects. “First, the interest rate is quite favorable, and second, it offers flexibility in when you can withdraw the funds.”
Since 2002, FRA has committed around $ 5.4 billion to rail projects across the country. The most recently announced price was $ 5.95 million in October for a rail freight line at the Port of Everett, Wash. The biggest loan for 2018 was $ 220 million for the Massachusetts Bay Transportation Authority. This project also received a TIFIA loan of $ 162 million.
“We have several other projects underway,” said Duane Callender, director of the credit program for the Build America Bureau at the US Department of Transportation.
Pending applications include All Aboard Florida’s $ 3.7 billion Brightline Miami-Orlando passenger rail project.
As with TIFIA loans, applicants for RRIF loans must obtain an investment rating, even if no bonds are actually issued.
Moody’s Investors Service gave the loan its Aa2 rating on par with DART’s $ 3.1 billion of outstanding senior sales tax bonds. S&P Global Ratings and Kroll Bond Ratings Agency rate AA-plus debt. The outlook is stable.
“While additional $ 3 billion in new long-term debt is expected over the next 20 years, including the current supply, annual debt service coverage is expected to remain above 2.51x on the basis of the assumption of DART’s 20-year financial plan of 3.9% revenue. compound annual growth rate of taxes, ”wrote KBRA CEO Harvey Zachem.
DART plans to issue $ 27 million of new short-term debt in 2019 to further develop the Cotton Belt, and $ 30 million of cash will be used to withdraw cash-backed commercial paper.
DART provides bus, light rail, commuter rail, and other services to 13 municipalities in a 700 square mile service area with an estimated population of 2.4 million. The system was established by electoral referendum in 1983 and is governed by a 15-member council appointed by municipalities on a population-based formula, with no city able to appoint more than 65% of the council.
Wageman, a former chairman of the North Texas Tollway Authority which represents the booming town of Plano in Collin County, said federal cotton belt funding leaves DART in a better position to issue bonds for a project major in downtown Dallas known as the D2 metro, expected to cost around $ 1.2 billion. The start date for the project is around two years, Wageman said.
The Cotton Belt, slated to open in 2022, is DART’s first rail project to expand primarily from east to west. The line follows an existing freight line from its easternmost platform at Plano to its westernmost point at Dallas Fort Worth International Airport. It is named after an old freight railway that once used the line.
The service was originally scheduled to begin in 2035, but federal funds have allowed DART to advance the 13-year project. At the same time, changes increased the cost of the line from $ 2.9 billion in the FY16 plan to $ 1.1 billion in the FY2018 plan.
“While this will have the effect of tightening financial resources over the next 15 years, it opens up much greater financial capacity for projects that can be recommended in the 2040 Transit System Plan and its subsequent updates. “said DART in its annual report.
The cotton belt’s heavier commuter trains will cross DART’s north-south light rail lines, providing rail service to the office parks of the long-time member city of Addison for the first time.
The cost of the project is considerably lower than comparable projects such as Colorado Regional Transportation District’s Eagle P3 because DART already owns the right-of-way.
At DFW Airport, the Cotton Belt will connect to a 27-mile TexRail commuter line from Fort Worth which is nearing completion. TexRail is overseen by the Fort Worth Transportation Authority, commonly known as “The T”. The airport is also served by DART’s Orange Line light rail that carries passengers to downtown Dallas and connecting lines.
At a December 11 board meeting, DART awarded an $ 815 million contract to Archer Western Herzog 4.0 for the project, subject to securing the federal loan.
Archer Western Herzog 4.0 is a joint venture between Atlanta-based Archer Western and Missouri-based rail and highway manufacturer Herzog Contracting Group. The consortium includes Jacobs Engineering Group as a designer.
Archer Western Herzog 4.0 was among five organizations that responded when DART released plans in March 2017 to convert the old freight line.
DART is a key player in the North Texas 13 County Regional Transportation Plan designed to improve the efficiency and planning of intergovernmental projects.
The cotton belt is part of a 25-year, $ 136 billion regional transportation plan that received approval from the U.S. Department of Transportation last month. The plan known as Mobility 2045 includes major highway projects in the Dallas-Fort Worth area.
The Regional Transportation Council representing the governments of 12 counties approved Mobility 2045 in June 2018. The plan allocates $ 17.5 billion in more spending than Mobility 2040, which the new plan replaces.
A multi-year list of projects in the Dallas-Fort Worth area for 2019-2022 has also been approved for federal, state and local funding. The program identifies road and public transport projects scheduled for construction over the next four years.
DART bonds are secured by a 1% voter authorized sales and use tax which has been collected since early 1984. The Texas Comptroller acts as a collection agent and sends the proceeds monthly to support the DART operations.
DART predicts sales tax revenue growth of 4.8% in 2019 and no growth in 2020, in line with its practice of incorporating the assumption of a mild recession every seven years, according to S&P.
“We view these projections as reasonable and potentially conservative given recent trends,” wrote S&P analyst Jenifer Garza. “However, DART’s projected growth is still stronger than our forecast for retail sales for the southwestern region of the United States.”
After falling sharply after the 2008 recession, sales tax revenues have rebounded sharply since 2010, analysts said.
“In KBRA’s view, continued growth in population and business activity will likely continue to support promised income growth at a rate well above the rate of inflation,” Zachem wrote.