Alameda Rail Plan Picks Up Steam

After almost 15 years of groundwork, the agency in charge of the $2.4-billion Alameda Corridor project approved a package of measures Wednesday, clearing the way for construction of the long-awaited high-speed rail link to serve the county’s burgeoning ports.

In one session, the Alameda Corridor Transportation Authority’s board unanimously passed nine major items that bring the project significantly closer to reality.

“I have never seen such unity and commitment,” said James C. Hankla, the authority’s chief executive officer. “I am confident we will produce the most efficient public works project in the United States.”

The key measures included a budget, a railroad operating agreement, a new ceiling of $1.3 billion on bonded indebtedness and a $712-million contract with a venture headed by Tutor-Saliba Corp. to build the main phase of the corridor.

The project is basically a toll road for trains that haul cargo to and from the busy ports of Los Angeles and Long Beach. It will stretch 20 miles along Alameda Street from the harbor to intercontinental freight yards near downtown Los Angeles.

The largest and most expensive phase of the project is a 10-mile section of concrete-lined trench that will pass through the most urbanized portions of the route. A series of overpasses will be built over the subterranean structure to eliminate traffic congestion now caused by slow-moving freight trains.

Corridor proponents, including Los Angeles Mayor Richard Riordan, have said the project is crucial to the region’s economy and continued participation in Pacific Rim commerce. Analysts also say the project is a significant step toward providing rail service right on the docks for shippers.

“This is arguably one of the most important economic engines for the 21st century,” Riordan said. “The corridor will make our ports competitive. It will be cheaper to send goods to New York through our ports than sending them through the Panama Canal.”

Financing for the project is coming from a number of quarters, including $394 million from the ports, a $400-million federal loan and $347 million from the Metropolitan Transportation Authority.

The bulk of the funding will be raised, however, from the sale of at least $1 billion in revenue bonds, perhaps as early as January. Under a measure approved Wednesday, the corridor authority can now sell up to $1.3 billion in bonds, if more money is needed to pay for unexpected problems encountered during construction. The ceiling used to be $800 million.

Corridor officials say the ability to pay off the enormous debt hinges on the continued expansion of port business, at 3% to 5% per year--a rate they described as conservative given Asia’s trade potential.

The corridor authority anticipates that during the first years of the rail link’s operation both ports will have to lend the project millions of dollars to help pay the debt service until cargo volumes provide enough revenue to cover the payments.

Although a federal study released earlier this year questioned the ability of the authority to finance the project, corridor officials said Wednesday that exhaustive analysis indicates the undertaking is a good credit risk and will attract buyers for the bonds.

“We feel very comfortable that the volume of cargo going through the corridor will be more than sufficient to cover the debt service obligations,” said Jonathan Y. Thomas, a member of the authority board who has helped develop the financial package. “Eventually, the project will pay for itself.”

Of importance to the economically depressed cities along the corridor are provisions approved Wednesday designed to enhance employment opportunities for the disadvantaged.

Under the Tutor-Saliba team’s contract, 30% of all work hours spent building the trench section will be allocated to people living within a defined area along the project’s path.

The requirement replaces a confusing policy that some critics say would have provided very little opportunity for the unemployed. Gil V. Hicks, general manager of the corridor authority, said the details of the new plan are still being formulated.

The authority’s pledge to provide jobs for the disadvantaged has been under scrutiny by state Sen. Quentin Kopp (I-San Francisco), who is planning public hearings on that issue and other corridor matters in November. Kopp says he fears that the job projections for the project have been greatly exaggerated.