Among the many projects the Trump administration has put on hold in U.S. cities controlled by Democrats, the nearly $2 billion in federal money slotted for the Red Line Extension on Chicago’s Far South Side is among the most high-profile.
We don’t endorse the administration’s bullying tactics of using the federal purse to induce behavioral and policy changes from cities, law firms, universities and other entities not in favor with President Donald Trump. Far from it.
What’s more, after the federal government shutdown ends and courts get involved, we would expect that Red Line money to get reinstated.
In the meantime, though, the Trump-induced uncertainty surrounding the project, combined with the push in Springfield this month to reform the Chicago area’s transit agencies and infuse them with more revenue as they face budget shortfalls, should resurface the lingering and legitimate questions about the wisdom of the Red Line Extension. Even if that nearly $2 billion is restored, the overall project cost that now sits at $5.75 billion — an ungodly $1 billion per mile, about twice what an above-surface train line should cost — is impossible even for fervent transit advocates to justify.
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We’ve spoken in recent weeks to officeholders with a keen interest in the initiative, among them state Rep. Kam Buckner and U.S. Rep. Mike Quigley, both of Chicago. What we heard from both — and they clearly reflect how many others in local and federal government feel — is disbelief and consternation about how high the RLE cost has gotten but fatalism, too, that Chicago simply can’t afford to say no to $2 billion in federal cash.
Buckner, who knows this part of the city well, went beyond criticizing the eye-watering price tag to questioning whether extending the Red Line from its current 95th Street terminus south to the city limits makes practical sense. The neighborhoods through which that extension would run simply are hollowed out, and while project advocates hope the line will galvanize development and repopulation, there’s plenty of reason to be highly skeptical. The risk of a new $5.75 billion (or likely higher when all is said and done) train line that serves just a smattering of riders is high.
We understand the point of view that so much federal help is politically difficult to refuse, but we also disagree with it. A project that only a few years ago was penciled at $3.7 billion now requires even more than that total in financing from the Chicago Transit Authority and other local resources — and that’s after the $2 billion in federal cash.
Even if city officials are able to reverse the Trump administration’s decision, does the RLE make sense anymore given the cost?
Consider: The CTA plans over the next six years to float $1.7 billion in bonds for the project. If that sounds like a lot, it is. That level of indebtedness comes to half of the total $3.4 billion that CTA has issued in capital bonds over the past 24 years, according to budget documents. In other words, CTA plans to add half the capital debt over the coming six years that it amassed in nearly a quarter century up to now.
At an interest rate between 4% and 5% (and we’ll see how interest rates move in the next few years), $1.7 billion in bonds will mean upward of $70 million in additional interest payments a year by the time all the bonds are floated. And it wouldn’t be a shock to see that pile of needed bonds grow as project costs continue to rise.
The agency tells us it intends to maintain “level debt service across the entire portfolio” even as it’s adding RLE debt well beyond levels it’s done possibly ever — and certainly in this century. That sounds highly unlikely, but there are ways to accomplish that, at least in the short term, when you’re amassing lots of new IOUs. Typically, however, they entail bond-repayment structures that are fiscally imprudent (see the city of Chicago’s bid to lower its near-term borrowing costs by literally paying investors nothing for the first two years on hundreds of millions in capital bonds for which it won City Council approval earlier this year).
If the RLE extension goes forward, critics’ concerns that the substantial needs for other CTA capital priorities, like upgrading the ancient Blue Line tracks to Forest Park, will get squeezed out seem extremely well founded.
So the confluence of the Trump administration’s saber rattling and the coming to a head of Springfield’s transit deliberations strike us as a time to get hardheaded about this potential boondoggle.
At the very least, lawmakers should be demanding that CTA reduce the RLE costs while the agency is in Springfield, hat in hand. Whether that means renegotiating design and engineering vendor contracts that have been well-documented as exorbitant or perhaps reducing the number of planned stations along the line, that cost-cutting demand should be nonnegotiable.
And if the answer comes back that $5.75 billion or $6 billion or more is just how it’s got to be in order to get the RLE built, then policymakers should be prepared to say no and call for cheaper alternatives to better serve the transit needs of the Far South Side — and they do exist. (Metra and South Shore lines already are there and easily could be augmented at a more reasonable cost to improve transit options for Far South Siders.)
Turning down nearly $2 billion in federal cash is hard, we’ll allow. But holding the future capital needs of CTA potentially hostage to this wildly overbudget project is hard, too. There has to be a better way, and instead of responding with fatalistic shrugs, transit advocates in Springfield and Chicago need to get to work finding that better way.
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