Mayor's Nashville transit plan requires $9B for all expenses — nearly double the construction price tag

Mayor Megan Barry's mass transit plan calls for $5.4 billion to build an ambitious light rail system for Nashville over the next 15 years. But billions more would be needed to cover other expenses.

When also including money to operate the system over that same period, enhance the current bus network and cover maintenance, interest and debt payments incurred for construction, the total cost is estimated to be $8.95 billion through 2032, nearly double the price tag for just the construction.

The cumulative forecast is spelled out in the mayor’s Transit Improvement Program report released last month.

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Barry is seeking Metro Council approval in the coming weeks to hold a public referendum on four tax increases — including a hike on the sales tax — in May to create a dedicated funding source to help pay for the system. The plan's highlights include light rail on five major corridors and a tunnel beneath downtown.

The breakdown on spending for the transit plan, dubbed Let's Move Nashville, from 2018 to 2032 is projected to be:

$5.4 billion for light rail on five corridors, the downtown tunnel and other related costs (61.2 percent)

$1.1 billion for enhancements to the city’s current bus system (12.8 percent)

$1.2 billion for interest, principal repayment on debt and financing costs (13.2 percent)

$934 million for operating and maintenance (10.4 percent)

$211 million for reserves (2.4 percent)

The report also says a number of other factors could increase the cost of the transit plan over time, including inflation.

“The transit improvement program represents a $5.4 billion infrastructure investment in the future of Nashville,” Barry spokesman Sean Braisted said in an emailed statement. “Just like when you buy a house, if you add in long-term operating, interest, maintenance and other costs, the initial purchase price looks higher.

“The mayor has proposed a comprehensive transportation solution with a dedicated source of revenue that will ensure future mayors and Metro Councils don’t have to use the general fund to supplement operations and maintenance over the long term."

Transit plan relies on more than $2.1 billion in federal sources

A public hearing on the transit plan before the council is set for Jan. 9. If the council approves Barry's referendum proposal, Nashville voters would vote on the plan and its tax proposals May 1.

How would the $8.95 billion be covered?

Locally, to generate dedicated funding, Barry has proposed a 0.5 percent increase on the sales tax that would graduate to a full 1 percent in 2023 as the largest local funding stream. She’s also targeted three additional increases to the city’s hotel occupancy tax, business tax and local rental car tax. Each were enabled by the state legislature’s passage last year of Gov. Bill Haslam’s IMPROVE Act.

Nashvillians would be voting on these new funding streams if the council votes to add the measure to the ballot in May.

But according to Barry’s Transit Improvement Program, the four new surcharges would only account for $3.4 billion of the expected $8.95 billion.

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The second largest funding stream would be more than $1.58 billion that Barry’s administration has assumed in federal grants between 2018 and 2032. The plan calls for $1.43 billion to come from the federal Capital Investment Grant (CIG) Program, which outlines discretionary spending, and an additional $153 million from various federal formula grants.

Barry's transit plan also leans on $500 million from the federal Transportation Infrastructure Finance and Innovation Act, which offers credit assistance for transportation projects.

Trump budget lacks funding for new transit projects

The CIG program provides funding for “fixed guideway investments,” according to the mayor’s office, such as new and expanded light rail, commuter rail and bus rapid transit. There are two categories: New Starts projects for capital costs estimated to be $300 million or more and Small Starts projects, which is reserved for capital projects estimated to be less than $300 million.

Other revenue sources outlined in the mayor's Transportation Improvement Budget include $3 billion from financing through bonds and public-private partnerships.

But there are questions over the availability of federal funding for transit in the short-term.

As the Nashville Business Journal reported last month on the plan's dependence on federal funds, President Donald Trump’s proposed federal budget doesn’t include funds for new mass transit projects.

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Although a president's budget rarely gets approved — and this one might be no different — Trump has slashed spending for transit projects elsewhere. Most recently, the Trump administration reneged on a prior funding agreement for the planned tunnel under the Hudson River between New York City and New Jersey.

FTA: Premature to comment on Nashville's proposal

A Federal Transit Administration spokesperson called it "premature" to comment on Nashville's transit proposal because the agency is not in possession of it.

"The president’s Budget for FY 2018 proposed to limit funding for the CIG program to projects with existing construction grant agreements only; it includes no funding for new CIG projects," FTA said in a statement, "and thus project sponsors that do not yet have construction grant agreements acknowledge they are undertaking additional work at their own risk which may not receive CIG funding."

Braisted said the situation in New York should not be seen as a sign that federal funding won't be available for other transit projects. He pointed to the December release of $100 million in federal grant funding for a rail project in Cambridge, Mass.

"Let’s Move Nashville is a long-term proposal that uses conservative estimates to anticipate local and federal funding over the course of the program," he said. "Implementation will take place over the course of multiple presidential and mayoral administrations.

"I don’t think you can take issues with one project with a complex political history as an example of all future federal funding to come."

Barry's transit plan also calls for $262 million collectively from the Nashville Airport Authority, Nashville Convention Center Authority and investment income.

The airport authority's contribution would cover the cost to build a light rail line connecting to the Nashville International Airport. The convention center authority would chip in to pay for the southern entrance to the downtown connection tunnel for the light rail system.

The full breakdown of revenue sources in the mayor's transit plan is:

$3.4 billion — Four local option tax increases (37.8 percent)

$192 million — Farebox revenue (2.1 percent)

$3 billion — Financing through bonds and public-private partnerships (33.8 percent)

$500 million — Transportation Infrastructure Finance and Innovation Act (TIFIA) (5.6 percent)

$1.43 billion — Federal Capital Investment Grant program (16 percent)

$153.3 million — Federal formula and capital replacement grants (1.7 percent)

$262 million — Nashville International Airport participation, Nashville Convention Center Authority, and investment income (2.9 percent)

Reach Joey Garrison at 615-259-8236, jgarrison@tennessean.com and on Twitter @joeygarrison.