RTD eyes privatizing rail lines

FasTracks corridors could be put up for bid

Kevin Flynn, Rocky Mountain News

Tuesday, June 12, 2007

RTD took one giant leap and one baby step Monday toward corralling the rising costs of its $6.2 billion FasTracks program.

A board committee recommended hiring a financial advisory team from JPMorgan and Goldman Sachs to put together bid packages under which private companies could take over all or some of the new commuter-rail transit corridors that are part of FasTracks.

RTD staff believe it could save hundreds of millions of dollars under the plan.

The committee also recommended restoring the original plan for the West Corridor project's Sheridan Boulevard crossing after concluding it could still save $7.7 million while satisfying neighborhood concerns over the crossing.

RTD's staff believes that letting international construction and finance companies develop the rail projects serving the northern half of the metro area has the greatest potential for making up a $670 million deficit in the 12-year program.

The advisory team is represented by Bob Doherty of JPMorgan's Denver office and Tim Romer, son of former Gov. Roy Romer, who is with Goldman Sachs' Los Angeles office.

The team has worked on some of the largest private conversions of transportation projects in the nation, including long-term concession leases under which foreign partnerships operate the Indiana Toll Road and the tolled Chicago Skyway.

Board member Dave Ruchman voted against recommending the advisory team to the full board, not out of concern over its qualifications but because he wanted RTD staff to share more information about the other three finalists: Merrill Lynch, RBC Capital and UBS.

If approved by the full board in two weeks, the Goldman/JPMorgan team would be paid a $50,000 monthly retainer to devise the most cost-effective package of bids to save RTD money on the program. It could hit the market in a year to 18 months.

The team then would earn a "success fee" of 0.625 percent of any savings realized. If $100 million is saved, for example, the advisers would earn $625,000.

Under the original West Corridor plans, light-rail trains were to go under a new Sheridan overpass near 10th Avenue. But during cost-cutting sessions, RTD proposed saving $7.7 million in construction costs by leaving Sheridan at ground level and running the light-rail line on a smaller bridge over the roadway.

But nearby residents protested because of traffic concerns and other issues.

RTD has worked out a modified plan that restores the original design but saves the same amount of money. It will mean more traffic congestion during construction and require an infusion of cash from Denver.