How Denver Leaders Pulled Off a Public Transit Miracle

Voters agreed to tax themselves for a commuter rail network. Then a budget shortfall almost doomed the whole project. Now it’s on track to completion.

DENVER-The city's light rail system, FasTracks, is slated to be complete by 2018. Voters agreed to a tax increase to finance it in 2004. Photo by Fawn Johnson/National Journal.
National Journal
Fawn Johnson
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Fawn Johnson
Oct. 1, 2014, 10:04 a.m.

This art­icle is part of a Next Eco­nomy series on Den­ver and its grow­ing mil­len­ni­al pop­u­la­tion.

DEN­VER—Bill Sirois de­scribes the first four months of 2007 in his of­fice as “chaot­ic.” The re­gion­al trans­it au­thor­ity where he works as a seni­or man­ager had just learned that they were $1.5 bil­lion over budget on a light-rail sys­tem that they had prom­ised to de­liv­er with­in a dec­ade. Three years earli­er, Col­or­ado voters had ap­proved a high-pro­file bal­lot meas­ure to raise $4.7 bil­lion through sales taxes to build the train sys­tem called Fas­Tracks. Now the costs were pro­jec­ted to run well over $6 bil­lion.

The money from avail­able tax rev­en­ues might al­low the rail net­work to be fin­ished by 2042, in­tern­al ana­lysts told the Re­gion­al Trans­port­a­tion Dis­trict (RTD).

“So there was kind of like, ‘Ah, what are we do­ing?’ ” Sirois re­mem­bers. ” ‘We got it passed by the voters, and how can we even tell them that we can’t do it when we said we were go­ing to do it?’ “

The pro­ver­bi­al doo-doo hit the fan when the short­fall went pub­lic. Voters were un­der­stand­ably up­set. Crit­ics of Fas­Tracks didn’t hes­it­ate to say, “I told you so.” At one point, the cost of the pro­ject grew to al­most twice the ori­gin­al price. The RTD man­ager who had planned the whole pro­ject even­tu­ally resigned.

The re­ces­sion of 2008 hit not long after, which took the scape­goat spot­light off of RTD. But the trans­it au­thor­ity was still stuck with a big rail plan and about half the money they needed to build it. They had two op­tions. They could scrap their con­struc­tion sched­ule and build one line at a time as tax rev­en­ues trickled in. Or they could get cre­at­ive.

Bill Owens, the Re­pub­lic­an gov­ernor at the time, wanted the first op­tion, ar­guing that it was the re­spons­ible and eco­nom­ic­al way to go. Den­ver’s may­or dis­agreed, ar­guing that the trans­it sys­tem was de­signed to bol­ster the re­gion as a whole and not just the lucky areas that got their rail lines first.

The cre­at­ive op­tion won out. “The may­or said, ‘No, we’re go­ing to build the whole god­damned thing at one time,’ ” says Tom Clark, CEO of the Metro Den­ver Eco­nom­ic Group, a re­gion­al co­ali­tion that pushed for Fas­Tracks for more than a dec­ade.

That may­or, by the way, was John Hick­en­loop­er, who was also the face of the voter cam­paign three years earli­er to raise sales taxes for Fas­Tracks. He is now Col­or­ado’s gov­ernor and a prom­in­ent na­tion­al Demo­crat. Hick­en­loop­er was one of many busi­ness and civic lead­ers in metro Den­ver who viewed mass trans­it as the key to mak­ing the city a ma­jor met­ro­pol­it­an force. They didn’t want Den­ver to be prom­in­ent just in the United States. They wanted to com­pete with cit­ies throughout the world. You need people movers for that, or busi­nesses won’t loc­ate in your re­gion.

That prin­ciple con­tin­ues to be em­braced by Hick­en­loop­er’s suc­cessors. City plan­ners say that a trans­it net­work is the only way to foster dens­er pop­u­la­tions, which are crit­ic­al to a grow­ing urb­an eco­nomy, without snarling up traffic.

“We need to em­brace a cul­ture of trans­it. Not just mass trans­it, but you see a lot of fo­cus on bikes, bike shar­ing, and the like,” says Paul Wash­ing­ton, ex­ec­ut­ive dir­ect­or of May­or Mi­chael Han­cock’s of­fice of eco­nom­ic de­vel­op­ment. “How we de­vel­op this city is in the spir­it of sus­tain­ab­il­ity and ver­tic­al­ity. So we want to be a much more dense city and grow up rather than out.”

City lead­ers also have the fu­ture of Den­ver in mind. Trans­it is the pre­ferred meth­od of trans­port­a­tion (along with bi­cycles) for young adults, a group that the city has ag­gress­ively and suc­cess­fully cour­ted. Den­ver is a top-tier des­tin­a­tion for mil­len­ni­als, ac­cord­ing to demo­graph­ers. One thing mil­len­ni­als don’t seem to want is to own cars. Even when they do own cars, they cer­tainly don’t want to com­mute in them.

Aside from Cali­for­nia, rail trans­it in the West is a re­l­at­ively new idea. Phoenix’s light rail line be­came op­er­a­tion­al in 2008. The Las Ve­gas mono­rail, which is only 4 miles long, came on­line in 2004. The cul­ture of these cit­ies is built on cars. Den­ver res­id­ents think noth­ing of driv­ing a few hours to the mul­tiple moun­tain re­sorts nearby. Throughout the en­tire moun­tain West, the rur­al spaces between smal­ler towns and large met­ro­pol­it­an areas are vast. Even the Den­ver In­ter­na­tion­al Air­port—the metro re­gion’s pride and joy—is in the middle of nowhere. It is 25 miles from down­town, sur­roun­ded by, well, a cow field.

The driv­ing cul­ture of Den­ver sug­gests that an in­ter­con­nec­ted rail net­work was nev­er a giv­en here. That may be why city lead­ers are still awed that it is ac­tu­ally hap­pen­ing. Maybe it was the sheer polit­ic­al ef­fort—from an un­likely co­ali­tion of busi­nesses, en­vir­on­ment­al­ists, and city plan­ners—that sold Den­ver res­id­ents on a rail sys­tem. Or maybe it was the stub­born­ness of Hick­en­loop­er and his fol­low­ers in in­sist­ing that the Den­ver re­gion be built up as a whole, rather than neigh­bor­hood by neigh­bor­hood.

Whatever the im­petus was, it was strong. A new head of RTD, Phil Wash­ing­ton, took over in 2009. He plunged all of his ef­forts in­to build­ing every line on the rail sys­tem with whatever money the agency could scrounge up. Where the funds came from didn’t mat­ter (as long as it was leg­al). RTD has fin­anced pieces of the net­work with fed­er­al grants that nobody knew about, and oth­er pieces by tak­ing out a mort­gage to the land as­sets. One small sub­urb of Den­ver offered to pony up $30 mil­lion to $40 mil­lion for a fast build-out of a rail con­nec­tion to down­town, which then al­lowed RTD to seek match­ing in­vestors. 

RTD is the first trans­it agency in the coun­try to suc­cess­fully at­tract private-sec­tor in­vest­ment for a light-rail sys­tem. In the world of pub­lic-private part­ner­ships, tolling ar­range­ments for drivers are more com­mon be­cause they are prof­it­able for the in­vestor and be­ne­fi­cial to the city. Trans­it, al­most by defin­i­tion, is a rev­en­ue-neut­ral pro­pos­i­tion at best and a money loser at worst. After all, the idea be­hind trans­it is to provide af­ford­able mo­bil­ity to every­one in a re­gion, ideally to wherever they want to go, even the poor areas. That’s ex­pens­ive, even though the es­tab­lish­ment of such a sys­tem can be a boon to a re­gion’s eco­nomy. 

RTD man­aged to win the trust of a few prom­in­ent in­fra­struc­ture firms by so­li­cit­ing their design ideas first. RTD’s Phil Wash­ing­ton in­vited a slew of busi­ness lead­ers to an event in down­town Den­ver seek­ing their in­put. Then RTD ar­ranged the gov­ern­ment pro­cure­ment sys­tem around those ideas.

Clark says it was a geni­us move on Wash­ing­ton’s part. “He calls me up and he says, ‘I’m go­ing to in­vite about 700 CEOs in­to Den­ver and tell them that we’re wide open at RTD to mon­et­ize any­thing we’ve got.’ And I star­ted laugh­ing and said, ‘Phil, so you’re try­ing to pimp these guys for money.’ And he says, ‘You bet!’ “

Now, RTD has a con­tract with a mul­tina­tion­al busi­ness group—part rail com­pany, part Brit­ish bank, part glob­al en­gin­eer­ing firm—to build the rail line to the air­port. That’s slated to be fin­ished in 2016. The agree­ment came about be­cause RTD ac­cep­ted a bid for them to build the line in which they use their de­sign­ers’ vis­ion to save money, with­in a set time frame, and with­in cer­tain para­met­ers. Den­ver com­mit­ted to pay a flat fee. The con­ces­sion­aire could de­cide how to use it. Every­body’s happy.

“We’re ba­sic­ally pay­ing them a lease pay­ment every year. And so they priced it. I don’t know what their pri­cing is. They priced it, and we agreed to that price,” Sirois says.

This stitched-to­geth­er fin­an­cing plan will al­low Fas­Tracks to be al­most en­tirely com­plete by 2018, just one year after the ini­tial pro­jec­tion made in 2004, be­fore the eco­nomy tanked, be­fore the budget short­falls nearly sank the whole pro­ject. In the trans­it world, that’s al­most un­heard of.

Clark, a self-pro­fessed policy geek, says he has spent a lot of time try­ing to fig­ure out just how it happened. He hasn’t yet come up with a sat­is­fact­ory an­swer. “A lot of this is really about good things gone bad gone good. It’s about the re­si­li­ency of the com­munity.”

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