Detroit’s M1 Rail project could jeopardize future federal funding, city warns
CrainsDetroit Business
May 26, 2009
By Bill Shea
Detroit wants to put the brakes on a privately funded $125 million light rail plan for Woodward Avenue.
Mayor Dave Bing’s office issued a statement warning that the project’s goal of starting construction by the end of this year could jeopardize future federal funding for a wider transit system.
During a media briefing about the private M1 Rail plan on Thursday, project CEO Matt Cullen said his group and the city were cooperating to rectify differences between the private plan and a $371 million Detroit Department of Transportation project that would extend light rail from downtown to the State Fairgrounds at Eight Mile.
The private funding could account for the required local matching funds for federal money needed to finish the city’s “Detroit Transit Options for Growth” rail project, Cullen said.
That won’t happen if the environmental studies aren’t complete, and such work won’t be done this year, the city warned.
“If M1 begins construction of its project later this year, before the environmental review is complete, the federal government will not recognize funds raised for the abbreviated M1 project as local matching funds for federal funds for the route to Eight Mile,” the city statement said.
M1 Rail issued a statement today on the situation through its Troy-based outside public relations firm, Eisbrenner Public Relations: “The accelerated timeline that M1 Rail has followed is not consistent with that of a federal project. M1 Rail is committed to continuing to work with DDOT and our congressional delegation to create a solution that will allow the funds raised for Phase 1 to serve as the eligible local match for the federal grant the city is seeking.”
The statement from Bing’s office also included a warning from Susan Borinsky, associate administrator of planning and environment for the Federal Transit Administration.
“If Phase I is constructed without the completion of an environmental impact analysis as required by the National Environmental Protection Act, then the $125 million raised to leverage Phase I cannot be used as matching funds for Phase II,” Borinsky was quoted as saying.
Phase I is the 3.4 mile section (a 12-stop route from Hart Plaza to Grand Boulevard in New Center) of Woodward targeted by the private backers during two years of planning.
The environmental impact analysis in question is part of the DDOT project, not the private effort.
M1 Rail’s backers include Penske Corp. founder Roger Penske Peter, who is chairman of the project; Peter Karmanos Jr., founder of Detroit-based software maker Compuware Corp.; Mike Ilitch, owner of the Detroit Tigers and Detroit Red Wings and co-founder of Little Caesar Enterprises Inc.; and Quicken Loans/Rock Financial founder Dan Gilbert, who’s the project’s co-chairman.
Cullen is also president and COO of Gilbert’s Rock Enterprises holding company.
Approximately $180 million has been raised towards the estimated $220 million needed to match a federal grant of the same amount, including the $125 million raised by M1 Rail and $55 million programmed by DDOT, the city said.
“While there is overwhelming support for bringing rail to Woodward Avenue, key issues remain before funds from the privately funded M1 Rail project can be used as local match to secure federal funds for an expanded system,” Detroit CFO Norm White, who has taken the lead on city efforts to develop a comprehensive light rail system, was quoted as saying in the statement.
“These include compliance with federal environmental law that requires a thorough review of environmental impacts before federal funds can be associated with a project.
White said he is continuing his discussions with both the FTA and M1 Rail to find a solution, according to the statement.
Since the private plan was first made public by Crain’s in February 2008, it was evident there were enough differences in the projects to put them at loggerheads, including different types of trains and a DTOG center-of-street layout versus curbside for M1 Rail.
Both rail plans are designed to feed into other transit modes, such as buses, commuter trains and the People Mover, and are intended be to part of a $10.5 billion regional transit plan for Wayne, Oakland and Macomb counties.
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