Light-rail bills due soon, but Norfolk unsure how to pay

NORFOLK

The city must begin writing checks to Hampton Roads Transit later this year to pay off a $28 million light-rail deficit, and Norfolk leaders say they are unsure where they will find the cash.

That's not all the city's on the hook for. It must also come up with $6 million to $9 million a year to operate the trains and feeder buses when they start running through Norfolk next May.

After learning in December that the latest round of cost overruns would total $50 million, Mayor Paul Fraim and City Council members said they hoped they could bridge the gap without dipping into Norfolk's coffers.

But that has not happened. Last week, the Hampton Roads Transportation Planning Organization agreed to shift $2 million in reserve federal grant money to the project. The state had previously chipped in $20 million.

That brings Norfolk's share of the shortage to $28 million.

"The city is in the lead on how to fill that gap," HRT president and CEO Philip Shucet said. "My job and HRT's job is to finish construction on time and within budget."

City leaders have not asked the state for additional funding, said Thelma Drake, a Norfolk resident who heads the Virginia Department of Rail and Public Transportation. The state has met its obligation to provide 25 percent of light rail's construction costs, Drake said.

"It would only be prudent on their part to be out looking for other sources of funding," she said.

City Manager Regina V.K. Williams said she hopes that payments to HRT can be delayed until the next fiscal year, which begins July 1. That would allow the city to pay for most of the cost overruns with borrowed money.

However, Shucet said his agency will need to start receiving some of the money as early as late November to pay construction bills. HRT is building and managing the project for Norfolk.

"We don't need the money all at one time," Shucet said. "There is a cash flow expectation there."

Earlier this year, Norfolk leaders struggled to balance the city's current $1.1 billion budget, which included the elimination of more than 200 jobs and a 5 percent spending reduction.

"I will tell you there is no plan in writing or in my head that says here's where we will come up with $15 million, or whatever number, if we need it for light rail," Williams said. "We don't know how much the final number will be. But we've always known we're the source of last resort. We're going to look every place we can."

Light rail's initial price tag was $232 million. But in less than two years, the cost escalated to $338 million. Federal and state authorities kicked in additional money to help cover the overruns. Thus far, $167 million has flowed from federal sources, $87 million from the state and $54 million from the city.

The budget includes a $10 million contingency fund. Shucet said he has not tapped into the fund and hopes he won't have to.

If the contingency remains intact, Shucet said he's not certain whether the city, state or federal governments would get to use the credit. Fraim has said he's hopeful that the credit would flow to the city, and thus reduce its debt by $10 million.

Meanwhile, Norfolk also must spend an extra $6 million to $9 million a year for light rail and feeder bus operations and maintenance. That's in addition to the $9.5 million a year it now pays HRT to run buses, NET bus shuttles, ferries and HandiRide in the city.

Norfolk is to pay HRT $1.4 million for the two months the trains are expected to run in May and June of this fiscal year.

The city's operating costs are projections based on a number of assumptions, said Ray Amoruso, HRT's senior vice president for planning. Decisions expected to be made by the council in the next few months about transit service could push the costs higher or lower, he said.

Those decisions include, among other things, whether to establish a free fare zone downtown to encourage ridership and whether to adjust feeder bus service hours to match light-rail hours.

Debbie Messina, (757) 446-2588, debbie.messina@pilotonline.com

Harry Minium, (757) 446-2371, harry.minium@pilotonline.com