Board members were deciding whether to advance Metro’s plan to sell $360 million in bonds this year to help pay for more than $22 billion in construction, replacement, expansion and renovation projects over the next decade. Their biggest cause for concern: the unknown future of transit after the pandemic and a bruised economy that has limited fare revenue and regional tax dollars that Metro relies upon.
Ultimately, members of the board’s Finance Committee unanimously approved the bond sales proposal, a first step in its approval. The board also increased Metro’s capital budget this fiscal year by $255 million because of a multiyear platform replacement project that transit officials expedited because of reduced ridership.
It’s the second time since June that Metro has sought to sell bonds to finance capital projects. While government agencies have done so for years, Metro’s foray into the bond market was made possible after D.C., Maryland and Virginia made permanent in 2018 an annual dedication of capital project money for Metro.
With a reliable stream of money, the agency has sought to get hundreds of millions of dollars upfront to pay for the backlogged projects.
The bonds would be paid back over 25 years using the dedicated funding from jurisdictions served by Metro. The agency also sold $534 million in bonds over the summer.
While the money will finance a slate of projects, most immediately it will be used to pay for new platforms at 20 stations with a price tag of $431 million. Because Metro moved up the project’s timetable, the agency needs more money upfront to pay contractors.
Other projects include purchasing the latest model of rail car, replacing escalators and station lighting, buying 90 new buses and rolling out a mobile fare payment system and app.
Over the next 10 years, Metro has projected it will need to spend $6.8 billion in modernization costs and nearly $16 billion to keep the transit system in what the agency calls a “state of good repair.” While transit officials have spent the past six years reprioritizing safety over expansion and performance, Metro estimates it’s still about $5 billion behind where it should be.
While board members support the system improvements, some worried about going deeper into debt to complete them. The transit agency this fiscal year is operating using $1.3 billion from two federal coronavirus relief packages, and Metro officials say they believe it will need a third stimulus by the end of the year to bridge a more than $170 million budget gap.
Metro board member Michael Goldman suggested Thursday that Metro pause on the scheduled purchase of 100 buses and redeploy that money to Metro’s platform project.
“While we all have a sense of euphoria and expectation and hope that Congress is going to enact this $30 billion in covid-related relief funding for transit . . . until that actually happens, I think we’re running some risk here,” he said.
Pausing on bus purchases, he said, would give Metro time to shift future purchases to more environmentally friendly electric buses.
Metro Board Chairman Paul C. Smedberg said money from bond sales would not only help Metro keep up with maintenance but also take advantage of a period of low transit usage. The system would be better poised to help the region recover once the pandemic ends, he said.
“Don’t we have platforms that are quite literally and figuratively crumbling?” he asked Metro staff members. “Aren’t there efficiencies in doing some of this work while ridership is low and in getting sort of ahead of this so we are ready when people do come back?”
Metro Board Vice Chairwoman Stephanie Gidigbi Jenkins said she wanted to avoid limiting bus improvements. She said Metro should focus more on improving Metrobus, which is disproportionately used more by service workers and lower-income residents.
“Metrobus is a critical aspect for essential workers to be able to get to where they need to go to,” she said. “Just as much as we’re raising the notion of ‘state of good repair’ as it relates to Metrorail, I hope that we will hold that same consideration as we talk about Metrobus.”
Other board members said they worried about Metro’s later capital needs if the transit agency used all of its credit in more recent years.
“I’m concerned about the period from that point — ’28 to ’31 — where apparently we will have expended all of our dedicated funds,” said board member and Loudoun County Supervisor Matthew F. Letourneau (R-Dulles). “Then how do we fund the capital program? So we need to start thinking about that.”
The full board is expected to vote on the bond sale proposal this spring.
Board members on Thursday also heard updates on the completion of the long-delayed Silver Line extension to Dulles International Airport and Loudoun County.
Construction is being supervised by the Metropolitan Washington Airports Authority, which had estimated the project would be ready to hand over to Metro this spring. But Laura Mason, Metro’s executive vice president of capital delivery, said Thursday that several construction issues remain unresolved or incomplete.
Those include incorrect distances between insulated joints and signals, malfunctioning fans and station platform pavers that leak water. Mason on Thursday estimated the Silver Line would be complete in June, and then Metro would need five months to test the system.
The assessment, board members said, meant the extension would not be ready to operate until at least November — four months beyond the last tentative opening date the transit system had set for Phase 2.
“So November 1 would be a reasonable day based on your schedule?” Goldman asked. “What I think I hear you saying is it could be a little earlier or it could be somewhat later.”
“Correct,” Mason replied.