4.3. SR 04-19-1999 - Laserfiche WebLink

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. I. INTRODUCTION This report outlines options available to the Northstar Corridor Development Authority (NCDA) to finance the construction and operation of commuter rail service in the State of Minnesota's Northstar Corridor between Minneapolis and the cities of St. Cloud and Rice. This report presents strategies used by a peer group of similar new-start commuter rail systems to finance both capital and operating costs. Other innovative financing techniques are also presented. II. CAPITAL COST FUNDING The initial capital cost of the commuter rail system alternatives presented in the System Plan section of this document, including railroad capacity improvements, rolling stock, maintenance facilities, stations, park-and-ride lots and other elements, is estimated to be in the range of $146 million to $175 million. This is near the median cost of five other contemporary new-start commuter rail systems included in the peer group evaluated in the Summary section of this document. . Most new-start commuter rail operations also make substantial ongoing capital investments during their early years of operation. These investments cover items such as track upgrades, addition of passing sidings, conversion of single track to double track, extensions, new stations, additional parking, and additional rolling stock to support more frequent or expanded service. The development concept presented in this preliminary feasibility study makes no explicit assumptions about ongoing capital expenditures after service is initiated. PEER GROUP SYSTEM EXPERIENCE The capital cost financing sources of the peer group of five new-start commuter rail systems of similar scope to that planned in the Northstar Corridor are summarized in this section. The first four systems were opened for service in the last ten years. The last system, the Seattle Sounder, is scheduled to open in late 1999. Although the lntermodal Surface Transportation Efficiency Act (ISTEA) and the Transportation Equity Act for the 21 st Century (TEA-21) allow for up to an 80% federal share of capital funds needed for development of new-start commuter rail systems, most recent systems have actually used considerably less. This reflects in part the high level of competition between rail systems. around the country for scarce federal funds and the priority given to projects with local funding shares that exceed federal minimums. In addition, qualifying for federal funding also imposes additional development costs in the form of more stringent procedural requirements, including environmental documentation. Railroad companies, specializing in freight transportation, have rarely contributed substantial shares of the costs of providing passenger service over their lines. In some cases, costs of . providing passing sidings or upgrading signal systems have been shared when improvements Northstar Commuter Rail Feasibility Study March 23, 1999 9-1 Financial Analysis