Toro! Toro!   Tim Kaine is upset that the Federal Transit Administration turned down funding for Tysons-Dulles heavy rail. But the project had more red flags than a bull-fighting ring.   The Dulles Rail line, a proposed 11.6-mile Metrorail extension in the Dulles Corridor from the existing West Falls Church Metrorail station through Tysons Corner to Reston at Wiehle Avenue, has become the subject of intense controversy. In a January 24 letter, FTA Administrator James Simpson notified Virginia Governor Tim Kaine that the Dulles Rail project in its current form would receive an overall New Starts rating of "Medium-Low," which would render it ineligible to advance into Final Design and receive federal assistance of up to $1.5 billion (a $900 million New Starts grant, plus a $375 million TIFIA loan and a $200 million line of credit to be used if needed).   Besides the project’s low cost-effectiveness, the letter also questioned the soundness of the capital financial plan and the management arrangements under which the project would be implemented. "I have serious concerns whether it would be appropriate to continue further investment of federal New Starts funds in this project," Simpson’s letter concluded.   The project’s convoluted history no doubt contributed to Mr. Simpson’s skepticism. In November 2002, the region adopted the Metrorail extension in the Dulles Airport Corridor as the "locally preferred alternative." In June 2004, FTA approved Virginia's request to initiate preliminary engineering of the first phase of the rail line (to Reston). Preliminary engineering was completed in the Spring of 2007. In March 2007, the Commonwealth of Virginia accepted a proposal from the Metropolitan Washington Airports Authority to assume responsibility for construction of the project and to complete the rail line (to Dulles Airport) using toll road revenues from the Dulles Toll Road to finance the project.   Formal transfer of the project and the toll road to the Airports Authority has begun. In the meantime the cost estimate for Phase I rose from $1.52 billion in December 2004 to $2.4-2.7 billion in March 2007.   Over the years, a succession of FTA Administrators and Acting Administrators has monitored progress of the Dulles Corridor planning process and has given incremental approvals to advance the rail project through its successive stages. Concerns about the viability of the project began to surface last year. In its FY 2008 New Starts Report to Congress released in February 2007, FTA rated the project "medium-low" for cost-effectiveness.   That should have been a red flag to the project sponsors. Under FTA’s New Starts evaluation guidance, a rating of at least "medium" for cost-effectiveness is necessary to move a project into final design and recommend it for funding.   A July 2007 report by the Inspector General’s Office ran up another red flag. The report observed that the project has experienced substantial growth in estimated costs and large schedule slippages — clear risk indicators that merited FTA’s close monitoring, the report warned. Specifically, the Inspector General recommended that FTA exercise "extra vigilance" in assessing the risks posed by the Airport Authority (MWAA) takeover of the project.   Stated the report: "The Boston Central Artery/Tunnel Project (ed note: commonly known as the "Big Dig") which experienced massive cost overruns and schedule delays, presents many lessons learned regarding the project sponsor’s ineffective oversight. These lessons are relevant in light of the MWAA’s lack of experience in managing a mass transit project."   Simpson’s letter seemed to cause genuine consternation among local and state officials and the project’s private boosters. In a reply to Secretary Mary Peters, Gov. Kaine noted, "In the last ten years there have been numerous decision points whereby FTA has signaled approval of the project’s ongoing progress." The letter listed 19 separate occasions since 1999 when FTA signaled its concurrence with the project development process.   Wrote the governor, "One year ago, we were told that cost was the sole remaining issue to resolve. With FTA’s guidance, we took steps to reduce cost and were then given clear communication that we had hit the target. To find out on January 24 that the cost issue was once again challenged, and that a whole series of additional issues stood as fatal roadblocks to federal partnership, was deeply discouraging."   But, as FTA’s Guidelines for New Starts Evaluation and Rating Process state: "...Project evaluation and rating is an on-going process. As New Starts projects proceed through the project development process, information concerning costs, benefits, and impacts is refined and the ratings may be updated to reflect new information."   We assume that Administrator Simpson’s decision was based on information developed during the last 12 months, after he had given the positive sign mentioned by the governor. Specifically, Simpson could not ignore the July 2007 warnings from the Department’s own Inspector General. Whether the misunderstanding could have been avoided had Simpson’s predecessors flagged their concerns earlier, we can only speculate.   Generally speaking, applicants try to resolve any potential problems during preliminary engineering. Once that phase has been successfully completed, the project is allowed to proceed into Final Design. The Dulles Rail sponsors may have assumed that their project would glide along that customary path. However, there were enough red flags raised during the last 12 months to put the project sponsors on notice that not all problems had been resolved and that an automatic advance into Final Design could not be taken for granted.   In his letter, Gov. Kaine offered to make additional adjustments — "small or large" -- to alleviate FTA’s concerns. A February 1 letter from James Bennet, CEO of the Airports Authority attempts to answer many of these concerns.   Our advice to both parties is to take this opportunity to undertake a more fundamental reassessment. Specifically, the parties should consider staging the project over a longer period of time. The initial "operable segment" would terminate at Tysons Corner. The initial rail segment would include a tunnel section in the Tysons Corner area, as urged by many local officials, property owners and citizen groups. From Tysons Corner, travelers would be offered frequent express bus service to Dulles Airport on a dedicated roadway, designed for eventual retrofit to rail.   In the intermediate period, Bus Rapid Transit, using a busway equipped with off-line stations, could provide a level of service similar to that of rail transit at a fraction of the $5 billion cost of the full rail alternative. Eventually, after ridership in the corridor reached a high enough level, the intermediate stage busway would be converted to a rail line.   "No party should be wedded to any particular approach" in seeking to move the project forward, Governor Kaine said in his letter. A staged bus-rail project could be the creative solution the governor is looking for.   -- February 11, 2008