SMART May Never Come to San Rafael

Do you expect the SMART train will ever make it to downtown San Rafael?  If you do, you may want to revise your expectations.

The plan to provide passenger rail service from Larkspur to Cloverdale has imploded.   Larkspur is off the table.  So are Cloverdale, Healdsburg, and Windsor.  Whether any rail service will occur is now up for grabs because SMART’s finances are in shambles.  At this very moment, the number of cities it can afford to serve is shrinking.  Even the bike path, long promised to believers in the “multi-use” path concept, is in jeopardy of being deferred until an alternative source of funding can be found to construct it. 

In a recent review of SMART’s finances conducted by the regional Metropolitan Transportation Commission, the SMART Board was told that in order to receive $22 million dollars in “bridge toll” (a.k.a. RM-2) funds, SMART will have to provide passenger service at a minimum between the two major downtowns of Santa Rosa and San Rafael.

It sounds like a deal, but isn’t, because SMART does not currently have the funds to construct this segment.  Based on the calculations MTC conducted, SMART faces at least a $62 million funding gap that it must close in order to build the rail line and operate trains between these two cities.

SMART’s operating plan was always premised on the issuance of a multi-hundred million dollar construction bond in 2010, supported by future sales tax revenues.  As everyone knows, sales tax revenues are way down due to the Great Recession.  But what really reduces the SMART project is that the future outlook for sales tax revenues is bleak. 

Even as the economy recovers, households are expected to save more than they have in the past.  For sure, they won’t be financing current consumption by borrowing against equity in their homes.  In addition, the growth of Internet sales has reduced the revenues all local government agencies can expect, including SMART.  The result:  the size of the bond SMART can expect to support with future sales tax revenues and the size of the project have dwindled.  As of today, neither the board nor the public know the size of the bond that can be issued and how much of the rail line can be constructed.  While SMART’s PR machine suggests otherwise, they are now in financial limbo.

What about a federal bailout? MTC’s report also noted SMART should not count on federal funding.  Transit projects that have received federal funding have far superior economics than SMART’s proposed rail line.  Moreover, SMART’s economics have gotten worse, not better.  Costs have doubled and expected ridership, should passenger service ever be started, is about half of what the agency projected in 2008.  As a consequence, SMART’s cost per “revenue mile” has now quadrupled in the two years since voters approved Measure Q.

The SMART Board meets only once a month.  So far, it has not been provided a list of cost saves that would allow it to serve Santa Rosa and San Rafael.   However, it’s not hard to see what’s potentially on the chopping block.  Around $40 million in construction costs could be saved if the bike path construction was “deferred.”   The MTC report suggested deferring construction of two rail stations (north Novato and Corona Rd. in Petaluma).  Weekend service has been cut by almost every transit agency in the Bay Area and could be in the cross hairs.   So may free shuttle service.

The Novato City Council and Marin Board of Supervisors separately called for SMART to produce a credible and detailed financial plan prior to authorizing issuance of the bonds.  Some rail advocates are anxious to get the bonds to market and “get started.”   Their attitude appears to be there is no need to have a financial plan in place showing what services could be funded with the bonds.  Their motto is akin to “build it and the funding will come.” 

The SMART Board is in a hurry.  They know that there is no rail project without bond financing and that even if that as long as they begin construction of the rail line, voters won’t learn until 2015 or after that rail services will have to be downsized to pay for the debt service.  The board also knows that the longer the delay, more Marin residents will realize that if the project proceeds Marin taxpayers will be subsidizing Sonoma residents to commute within Sonoma County. 

Will prudency or haste prevail?  If you’re interested, the next SMART Board meeting is January 19th at 1:30 p.m. in the San Rafael City Council chambers.  Come and see for yourself whether the SMART Board intends to listen to the concerns of Marin’s taxpayers, the Board of Supervisors and the Novato City Council.