Durham City Council members experienced some sticker shock Thursday, when GoTriangle presented them with an update on the long-planned light-rail system to connect Durham and Chapel Hill. Previously, the project had been estimated at $1.8 billion, but that was in terms of dollars at the time those estimates were made. Adjusting for inflation—and a few recent tweaks to the plan itself—it’s more like $2.5 billion.
But yesterday, a new number came into play: $3.3 billion. That’s the cost of light rail once decades of interest on loans and bonds are taken into account.
Council member Charlie Reece said he heard that figure before from residents, who had some questions about the growing price tag.
“I’ve had Durham residents email me about it before, but until I dug into the report a couple days ago, I hadn’t really seen how that added up,” he said. “The way it adds up is that there are a lot more borrowing costs than originally implicated in the plan.”
A rendering of a Durham light rail station.
Construction of the seventeen-mile, eighteen-station system is set to begin in 2020 and conclude in 2028. Durham and Orange counties are still working out exactly how they will split the cost, but it’s clear that the bill will be larger for Durham, where more of the system’s infrastructure will go. Each county will pay for its portion with revenue from a half-cent transit tax, car rental fees, and vehicle registration taxes. Light rail is part of a larger transit plan
to connect Durham, Orange, and Wake counties, along with buses and commuter rail.
“More than anything else we are working on, this is going to define what our region is like for the next fifty, one hundred years,” said council member Steve Schewel.
GoTriangle staff spent about an hour fielding council members' questions on what exactly Durham and Orange counties would be forking over.
A few factors contributed to the $3.3 billion price tag
First, partners in the project decided to add a stop at N.C. Central, at a cost of $133 million. Second, the Federal Transit Authority said that it would reimburse no more than $100 million in project costs each year, forcing GoTriangle to stretch out the project to maximize reimbursements. Third, the legislature passed a law limiting state funding for all rail projects to 10 percent of the project cost, as opposed to the 25 percent GoTriangle originally thought it would get.
Council members on Thursday stressed that no tax increases would be needed to cover the difference. Instead, GoTriangle will have to borrow more to complete the project.
The ratio for how Durham and Orange will split the bill will also change.
Aside from state and federal money, the project calls for about $1.9 million in local funding. Under a 2012 agreement, Durham would pay 77 percent of those costs and Orange 23 percent. But because Orange County’s tax revenues aren’t expected to grow at the same rate as Durham’s, that arrangement left little money in the pot for Orange County to contribute to light rail later on. Additionally, Durham got the new station at NCCU, and one station was removed from the Orange County portion of the line. Now, the counties are considering a scenario in which Durham pays 82 percent and Orange pays 18 percent.
The Federal Transit Authority has given GoTriangle an April 30 deadline to submit updated cost estimates, cost-share ratios, and transit plans for both Durham and Orange counties in order to apply for a federal grant. Once those items are submitted, the project can move on to the engineering phase. If that deadline isn’t hit, the FTA could delay the project by a year or more.
When the FTA set that deadline, it also told GoTriangle
that it needed to clarify the changing project cost and get local governments to actually commit money to the project rather than just discuss it.
"Quite frankly, that's how it was sold to us: we're not committing you to anything, we're just agreeing to talk about it," Reece said.
The Durham and Orange county commissioners will hold public hearings on their transportation plans on April 11 and April 18, respectively.