January 11, 2017

Chicago Transit Authority awarded $1 billion in funding

On January 9, 2017, the Federal Transit Administration (FTA) announced that it would award $957 million to the Chicago Transit Authority (CTA) for Phase I of the Red and Purple Modernization Program (RPM).  The RPM, which will rebuild aging infrastructure and add new capacity to support additional Red and Purple line service between the Belmont and Linden stations on Chicago's north side and nearby suburbs, is a prioritized major capital project in GO TO 2040.  Phase I will focus on improvements between the Lawrence and Bryn Mawr stations, as well as the Red-Purple bypass north of the Belmont station.  The RPM represents substantial progress in the CTA's efforts to maintain a state of good repair on its rail network, which positions the region to pursue strategic capacity expansion.

Funding package

The total funding package for Phase I of the RPM -- which is estimated to cost more than $2 billion total -- relies on a number of innovative sources.  The $957 million full funding grant agreement announced this week comes through the FTA's core capacity program, which supports major rehabilitation projects that increase the capacity of a transportation corridor by at least 10 percent.  First established five years ago, the core capacity program was a significant policy change, broadening the focus of FTA's competitive capital investment grants to include not only new facilities but also major improvements to existing facilities.

According to federal law, the core capacity program is limited to 60 percent of a project's total cost, requiring other funding sources to support the entire project.  CMAP awarded an additional $125 million to the RPM from the Congestion Mitigation and Air Quality Improvement (CMAQ) program, which is programmed through a competitive regional process.  The CTA also plans to rely on some $400 million in bond revenues.

The remaining funding, more than $800 million, will come from local property tax revenues.  In summer 2016, the Illinois General Assembly passed legislation allowing value capture for transit projects in Chicago and adjacent municipalities.  Value capture uses a portion of increased property values created by a major transportation project to help pay for the project's upfront capital cost, similar to the commonly used tax increment financing (TIF) districts.  Compared with a typical TIF, the new law limits the scope and revenue: All revenues must be spent on transit facilities, and all revenues that would be designated to the Chicago Board of Education and other jurisdictions will continue to be allocated in full. 

Regional priorities

The Red Purple Modernization project supports numerous GO TO 2040 priorities.  In addition to directly supporting one of the region's few major capital projects, the RPM supports the plan's goal of achieving a state of good repair for the system.  It also contributes to the plan's land use and economic development goals, including support for compact, mixed-use development, reinvestment in existing communities, and improved access to jobs.  Further, the RPM's funding mix takes advantage of innovative revenue sources.  GO TO 2040 called for federal and state policies that have been implemented by the core capacity program and value capture districts.

The CTA has made significant strides in recent years to maintain a state of good repair on its system, including major reconstructions of the Brown Line and the south branch of the Red Line.  It is currently improving the O'Hare branch of the Blue Line, continuing its track improvement program, and improving downtown and neighborhood ‘L' stations.  With the completion of the RPM, most of the CTA rail network will have been recently renovated or reconstructed.  Achieving a state of good repair on the existing system allows the CTA to move forward on capital expansion projects, including the Red Line south extension, which is also prioritized as a GO TO 2040 major capital project.  CTA is also testing innovative new options, such as bus rapid transit and Loop Link.  Continued innovation and modernization are key to a well-functioning transit system.

Access to competitive federal funding has been key to this recent progress, and so it is critical that Congress and the incoming Administration continue to support these programs.  While the core capacity program has been authorized through 2020, it requires annual appropriations.  Other discretionary programs, such as the Transportation Investments Generating Economic Recovery (TIGER) program, which supported the CTA's recent Blue Line improvements, also continue to receive federal funding.  CMAP's federal agenda explicitly supports legislative initiatives that provide more resources for the transit system.  CMAP recommends continued investment in the region's existing transit system, and continued federal funds remain key to achieving state of good repair, modernization, and expansion goals.