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Commuter rail costs skyrocket
Jul 14, 2005 12:00 am
July 13, 2005
Sudden and unforeseen cost increases associated with the operation of the Music City Star are expected to fuel new discussion regarding the annual operating costs associated with the Nashville to Lebanon commuter rail line.
Under an agreement between all government entities involved, annual operating costs are to be shouldered by federal, state and local governments. Costs during the rail line's first year are anticipated to weigh in at roughly $3 million.
Regional Transportation Authority Marketing Representative Hanne Flippen said revenues will fund 30 percent of the cost; the federal government will cover 25 percent; state government will pick up 15 percent and the remaining 30 percent will be split between Lebanon, Mt. Juliet, Wilson County and Metro Nashville.
However, under legislation approved by each of the Wilson County governmental entities, none plan to spend a total of more than $100,000 total during the first five years of rail service – leaving Wilson County's local governments very short on their share of operational costs.
"It's going to cost $3 million to run the trains," Mt. Juliet City Manager Robert Shearer said. "Fare box revenue is going to be about $900,000. (Tennessee Department of Transportation) assistance is going to be about $430,000. We have some demonstration funding for the first three years … that's about $750,000. That leaves, in the first year, $884,000."
Sixty percent of the $884,000 would be the responsibility of Metro Nashville, leaving the three local governments responsible for a combined total of approximately $350,000 in first-year operational costs.
The updated costs estimates were made available to members of the Eastern Corridor Oversight Committee just over a week ago, Shearer added. Since then, Shearer said Lebanon and Mt. Juliet governments have been notified of the new numbers.
"We're wrestling with how we work through these numbers," he said. "I'm actually going to be asking the ECOC to review the whole operating budget just to make sure that we are adequately providing for everything but not over (providing)."
He noted there are three factors behind the increase, and chief among them is the projected cost of liability insurance for the commuter rail line – a line item that will consume roughly 20 percent of the line's annual operating budget.
"We had originally thought we could do this for perhaps $150,000 a year as a premium … The estimates we're getting right now are $600,000 a year. I'm not sure what we can do about it, but it will in fact be the second most expensive item in our budget," Shearer said.
The second factor is the "tremendous" increase in fuel costs. Shearer said rail officials had initially envisioned spending around $150,000 on fuel each year. Now, that estimate has eclipsed the $300,000 mark.
Finally, he concluded, the federal government's decision against providing an additional $6.2 million for rail construction means the commuter rail operation will have to borrow those funds and cover the interest.
"Because we have not been able to secure federal funding for the remaining $6.2 million, we anticipate at this point having to go borrow that money to complete all of the construction projects," Shearer said. "To pay that money back, the interest is probably going to be approximately $300,000 a year."
As projected costs have risen and forecasted revenues have remained the same, Shearer said rail officials will have to take another look at some aspects of the commuter rail line.
"Now, all of a sudden, the budget has changed. Your revenue hasn't changed any," he said. "We've got to re-examine the whole fare structure. Obviously, the cost of the commute – the cost of parking, the cost of operation of the vehicle into Nashville has changed – I think we need to re-examine the fare structure. I don't know that that's the answer, but I think it is one of the things that should be looked at."
Staff Writer Brian Harville can be reached at 444-3952 ext. 16 or by e-mail at email@example.com.