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November 12, 2008 > BART Oakland Airport Connector battered by economic downturn

BART Oakland Airport Connector battered by economic downturn

By Simon Wong

BART delivered disappointing news about the Oakland Airport Connector (OAC) Project at a Transportation Forum hosted by the Alameda County Transportation Improvement Authority (ACTIA), the public body that administers the County's Measure B half-cent transportation sales tax, and its Citizens Advisory Committee (CAC) on October 16, 2008.

The OAC will be an elevated Automated Guideway Transit (AGT) system connecting Coliseum BART station to a new station at Oakland International Airport. It will replace the current AirBART shuttle bus and relieve traffic congestion in the area. The 3.2 mile connector will run parallel with Hegenberger Road and operate driverless trains. The technology is proven, safe, and reliable and has low operational and maintenance costs and has the capacity to carry anticipated passenger levels. The Driverless Automated People Mover system will integrate seamlessly with BART.

The fare for using the OAC will be between $4 and $5 which is what the AirBART shuttle fare is likely to be by the time the system enters revenue service in August 2012.

The BART Board adopted the project in 2002 with the requirement that this transit corridor should generate enough revenue to cover operational and maintenance costs. Typically, transportation systems are loss-making.

In 2005, private financing was sought and, in 2006, BART pre-qualified three prospective concessionaire teams, thus, making the OAC the first transportation project to operate as a public-private partnership (P3) in the US.

When a Request for Proposals (RFP) for the Design-Build-Operate-Maintain-Finance process was issued to the pre-qualified teams in May 2007, Oakland International Airport was one of the fastest growing airports in the country and the economy was stable.

Since then the airline industry has contracted and is still undergoing change. Between 2007 and 2008, Oakland Airport has seen a year-on-year fall in the number of passengers from 14.7 million to 12.7 million and the AirBART shuttle has seen annual ridership decline from 1.3 million 1.1 million. Competition from San Francisco Airport, particularly with discount airlines, has also contributed to the downturn. Projected ridership of AirBART and of the OAC, pre- and post-revenue service, respectively, has been revised downwards though the overall trend will rise as the economy recovers.

Air travel within the US and the Bay Area is dynamic and subject to many local, national and global factors. Financial markets remain volatile and consumer confidence, low.

The deadline for responding to the RFP was extended for a fifth time to October 28, 2008. Currently, only one pre-qualified team remains in negotiation with BART.

The Metropolitan Transportation Commission 3434 Strategic Plan, which was adopted in September 2008 to expedite successful completion of transportation projects, will contain $35 million in an unrestricted reserve as delivery for the OAC project is re-evaluated.

Escalating costs continue to be a challenge. BART and the OAC Project Team are exploring potential savings through refinement of station design and in other areas and are applying financial modelling to evaluate the impact of different implementation strategies.

The project is being reassessed to align revenue projections with financing options. Additional public funding may be sought. Other revenue sources are being considered as are financing options based on current ridership. The procurement approach might also be modified.

Funding stakeholders will hear and discuss a project status report and consider alternative delivery strategies on October 24, 2008. BART, the project's sponsor, will brief the ACTIA Board in January 2009.

On a positive note, an agreement with the Coliseum should be secured and executed by the end of 2008.

The total cost of the OAC Project is expected to be $469 million, excluding purchase of equipment. Of this, ACTIA has committed $98 million of [escalated] Measure B funding with Federal, State, regional, local and other sources accounting for the remainder.

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