Early morning commuters board and disembark an Orange Line train at the Court House Station in Arlington, Va. (Nikki Kahn/The Washington Post)
Metro officials and the District’s chief financial officer painted a grim financial picture for members of the D.C. Council on Friday, warning that in a worst-case-scenario, local governments could have to bail out the beleaguered transit agency to keep trains running.
Metro is due to repay three lines of credit totaling about $230 million to three banks in June. Council member Jack Evans (D-Ward 2), who sits on Metro’s board, said the agency expects to get an extension on two of those lines but will probably have to repay the third one — about $70 million.
Transit officials who attended the meeting in the chambers of Phil Mendelson (D), the council chair, said Metro could scrape together that amount.
But there’s nothing in writing yet, and if the agency does not get extensions on the other two credit lines, that could spell trouble.
Metro “is living paycheck to paycheck in some degree,” said Jeffrey DeWitt, chief financial officer. “That’s not how you run a sustainable organization.”
Evans said, “there is cause for concern, but not for alarm. But it could be [cause for alarm] one day.”
The money crunch is just the latest difficulty for the Washington Metropolitan Area Transit Authority. Last March, a Federal Transit Administration review raised a number of flags about Metro’s finances, including questions over the agency’s handling of billions in federal grant money.
As a result, FTA stopped the automatic flow of cash to Metro and instead required the agency to manually draw down all grant money and comply with grant application procedures.
That means that the money the agency is slated to get is trickling in slowly and inconsistently.
The agency has spent about $400 million in grant money that it hasn’t yet received — and may never receive. So far, it’s applied to be reimbursed for only $175 million of that $400 million.
Corbett Price, a D.C. representative to the Metro board, said the agency will probably not receive the entirety of the $400 million because it does not have the necessary time-sheet records to be reimbursed for some of the labor costs that the grants are supposed to cover.
“This company has been building on a sandy foundation for a long period of time now,” Price said.
Metro also is months behind in a federally mandated internal audit of its finances for fiscal year 2014. Until the audit passes federal muster, the agency cannot borrow money from the bonds market, which further stymies its cash flow.
“Obviously Metro is working hard to resolve these issues, and they could turn very bad,” Mortimer Downey, Metro board chairman, said in an interview. “But right now we are hoping we can move things along in a favorable way.”
Metro has been under heightened scrutiny since January, when a tunnel near L’Enfant Plaza filled with smoke. One passenger later died.
On Friday, council member Anita Bonds (D-At Large) asked whether the agency’s financial woes could threaten safety. Officials assured her that safety, and safety-related construction projects, are still a priority.
“I understand that it’s a priority,” Bonds said. “But are you able to follow through on that priority with the resources that you have?”