Regional Transit Capital Needs Reach $36 Billion

(Chicago)  Despite ranking at the top of the list nationally in service efficiency and effectiveness in operating cost per passenger mile, mass transit providers in Northeastern Illinois do not receive the funds necessary from federal and state sources to address reinvestment needs according to a study released by the Regional Transportation Authority (RTA).  This underinvestment in recent years has led to a multi-billion dollar shortfall in mass transit funding, delaying new equipment purchases and infrastructure improvements, and is projected to increase over the next decade without a significant increase in the amount of capital funding.

The RTA’s recently released Capital Asset Condition Assessment Report provides an overview of the current physical condition and 10-year capital reinvestment needs of capital assets owned and operated by the RTA, CTA, Metra and Pace as of December 31, 2013.  According to the report, transit providers in Northeastern Illinois will need $1.66 billion per year over the next ten years in order to fund normal replacement, rehabilitation and capital maintenance needs.  Nevertheless, in recent years, the amount of capital received from federal and state sources has been lacking. 

In addition to the $16.6 billion needed over the next ten years, the region has $19.5 billion of deferred investment also known as “capital backlog.” This amount, combined with the growing 10-year needs, has created a $36.1 billion region-wide capital need over the next decade.  The capital needs of the CTA account for 62% of the regional needs while Metra’s capital needs account for 32.4% and Pace’s capital needs account for 6.3%.  

The level of capital investment the region will receive in state and federal funds is estimated to be between $563 million and $765 million annually over the next 20 years; this is half of what will be needed to assure the region’s capital backlog does not grow. Most recently, the Services Boards have supplemented much needed federal and state funds with federal loans under the Transportation Infrastructure and Innovate Act (TIFIA) program, issuance of State of Illinois bonds and local funding. While federal formula funding sources are relatively predictable and stable, the availability of federal discretionary, state of Illinois, and local funding sources is not reliable for capital programming purposes.  Based on these projected annual average capital funding levels, the current backlog will grow over time, potentially increasing from $19.5 billion as of December 31, 2013 to more than $25 billion in 2030.

Despite the tremendous underinvestment in transit in Northeastern Illinois, the system is still performing well. The report notes that the Chicago area is home to the nation’s second largest transit network by passenger miles traveled, serving nine million residents and providing approximately two million rides each work day.   Vehicles used by the CTA, Metra and Pace traveled the furthest among their peers without experiencing major mechanical failures, despite the fact that 30 percent of the system’s vehicles have reached their minimum useful life as defined by the Federal Transit Administration (12 years for buses; 25 years for rail cars).   

Nonetheless, the report highlights that the consequences of maintaining the current level of underinvestment in mass transit in Northeastern Illinois are significant and imminent. 

“With the Chicago area operating some of the oldest equipment of any mass transit system in the nation, it’s critical that significant reinvestment is made to attain and maintain our system in a state of good repair,” said RTA Executive Director Leanne Redden. “CTA, Metra and Pace are operating well, especially when compared to other cities, but without upgrades and repairs, it will cost the Service Boards more in the long run to operate day to day. The only way to meet the needs of our region is through a reliable source of funding so our transit systems can continue to deliver efficient, reliable and safe service.”

Recently, the RTA and Service Boards have been proactive in attempting to address the capital underinvestment in the system.  To provide assistance in the short-term, the RTA Board of Directors recently approved preliminary funding estimates that allow the agency to issue up to its full bonding capacity through 2017.  In addition, each Service Board is issuing bonds, taking out federal loans and/or exploring alternative financing options.

Furthermore, in order to assess and prioritize transit capital needs and long-term objectives within the Regional Transit Strategic Plan, the RTA developed the Capital Optimization Support Tool (COST) in collaboration with the Service Boards with the goal of ensuring financial viability for public transportation in the region.

In addition, to encourage more capital funding, the RTA organized the Getting America to Work (GATW) coalition less than two years ago.  GATW is a broad coalition of commuters, businesses, officials and transportation agencies that support vital investments in public transit and advocate for the capital funding necessary to bring America’s public transit systems into a state of good repair.