SMART cites its grant haul of more than $300 million in tax renewal pitch
SMART officials are touting their ability to pull in hundreds of millions of dollars in future grant funding to complete the system’s rail line north of Windsor, despite concerns from some board members that they cannot make such guarantees as the agency crafts its pitch to voters for early renewal of a sales tax in March.
Sonoma-Marin Area Rail Transit has secured more than ?$300 million in outside funding to help develop the commuter rail system, which launched in August 2017 with 43 miles of the planned 70-mile line. Officials say they expect to remain competitive as they seek additional federal, state and regional dollars to extend the line north.
“I want to emphasize that we’re like a bad penny - we won’t go away,” Farhad Mansourian, SMART’s general manager, told the 12-member SMART board. “So the only way these grant agencies can get rid of us is pay us the first time. So if (we’re) not successful, we’re going to keep going until we get it right.”
But the recession-era challenges that SMART’s budget and development schedule experienced as its sales-tax revenue shrunk have made some longtime board members wary of offering assurances about future build-out. SMART has the money it needs to get to Windsor by the end of 2021, but to reach the final 22 miles to Healdsburg and Cloverdale it will cost an estimated $364 million. As much as $270 million of that sum is expected to come from outside sources, according to SMART.
Based on past success pulling in grant funding, SMART’s top officials say they remain confident they’ll be able to win those funds.
But some board members have voiced concerns about the competitive prospects of SMART’s funding bids for Healdsburg and Cloverdale, given the smaller size of the two cities, home to far fewer potential passengers than larger cities to the south.
And to date, no SMART official has been willing to say when the agency could get to either Healdsburg or Cloverdale if it were able to secure the outside funds.
“I do not want to promise anything that we can’t deliver,” said Sonoma County Supervisor David Rabbitt, a SMART board member. “We know better now, and what things cost and what money we have. I appreciate that people want a definitive date, but it’s impossible to tell them that. I’d rather not go out and give them a date, and not be able to meet it.”
The approach represents a potential stumbling block with voters come March, when the rail agency will need a two-thirds majority to renew the quarter-cent sales tax that largely funds day-to-day operations. Without early renewal, SMART administrators have warned, the system won’t be able to restructure mounting debt costs and will face the twin prospects of drawing heavily on its reserves in the near term and making deep cuts to service within three years.
So while tight-lipped on their expansion schedule, SMART officials are sounding out key notes of a campaign focusing on their past track record with grant funding and construction of the current line over the 11 years since voters authorized the commuter rail system and approved its ?20-year sales tax.
Officials have pointed to the roughly $23 million amassed in outside grant funds for the paved bicycle and pedestrian path meant to span the rail corridor. Today, the path sits about a third complete, with several other segments funded and expected to be finished over the next two years.
SMART plans to seek $35 million more for the path over the next 10 years, officials said, in addition to the $270 million for the rail line.
“At least there’s some positive history, so it’s not wide-eyed, wishful thinking,” said San Rafael Mayor Gary Phillips, who is chairman of the SMART board. “But I’m not in the business of making commitments that I can’t honor and there is no way, in my view anyway, we can say with certainty that funding will be made available. I don’t think anybody can.”
Together, the six cities on the current line are home to about 400,000 residents. The combined population of Healdsburg and Cloverdale, meanwhile, is about 20,000, a potential limiting factor in the hunt for future grant funding, several board members suggested.
“The parts of the line that have been built out and we’ve received grants for are also the most populated, which may have made it a little easier a time getting those grants,” said Santa Rosa Vice Mayor Chris Rogers, a recent SMART board member. “Based on the track record, I understand why the general manager is as confident as he comes across. We also have to be real with the public. We have a good understanding of the frequency of grant funding so far, but there’s no guarantee that will continue in the future.”
Renewal of the sales tax would free up $5 million needed to operate service to the north county, according to SMART. That sustained funding for operations is valuable in pursuing grants for capital construction, said Erin McGrath, SMART’s chief financial officer.
“There are a lot of grant funds out there for capital. There are very few, if any, grants out there for operations,” she told the board Wednesday. “We won’t be able to go to the state to get more operating funds. That isn’t the history of what the state or anybody else provides.”
The agency anticipates $39 million in revenue this year from its current tax measure that sunsets in 2029. About $17 million this year will go to cover debt tied to construction over the past decade.
And that annual payment is rising, to a projected ?$18 million in 2022, putting pressure on SMART to tap its $17 million reserve within the next two years. Early reauthorization of the sales tax - over either a 20- or 30-year term - would allow SMART to restructure its debt, reducing the amount of its annual payment to about $6 million in 2023 while lengthening its repayment schedule over more years, McGrath said.
“More time is basically always better than less,” she said, supporting a ?30-year extension. “For now, we do have a stable funding revenue source, but it ends in 2029. The goal is to make sure that the rail and the pathway is here for the people of Sonoma and Marin (counties) well into the future.”