Indiana officials celebrated the completion of the first of three major commuter railway projects in the northwest part of the state.
The Double Track Northwest Indiana project, a $650 million endeavor, involved the creation of a double track on the South Shore Line from Michigan City to Gary. It is now completed and producing revenue, Indiana Public Finance Director Dan Huge told The Bond Buyer.
The West Lake Corridor project, which will total $852 million in construction costs, would extend the South Shore Line's southern branch into Lake County, Indiana, according to
And the downtown Chicago connection project, with a $200 million budget, is a collaboration with Metra, the Chicago area's suburban commuter rail service.
The Double Track project included $173 million in funding from the Federal Transit Administration's New Starts program and $24 million in American Rescue Plan Act funds. More than $340 million came from the state; local governments supplied $80 million; and the Northern Indiana Commuter Transportation District contributed $30 million, according to a
For the West Lake project, the state is supplying $148 million of funding. The Northwest Indiana Regional Development Authority is providing $311 million, and the FTA is contributing $393 million in grant dollars, Huge said.
The South Shore Line is paying for the Metra connection project, separately from the Double Track and West Lake projects, according to Huge.
Northern Indiana Commuter Transit District President Mike Noland, who oversees the South Shore Line, said his agency is responsible for roughly 95% of the funding. The rest is coming from Metra.
"We're using federal funding to pay for the Metra project, and we received additional funding for our capital program from the Bipartisan Infrastructure Law," he said. "And because of that increase, we have room in our capital plan… so we wound up with $160 million in bond proceeds to allow us to build the Metra project."
The bonds, issued through the NICTD, received a rating of A-plus from
"The state portion for both Double Track and West Lake was cash funded, with a mix of state appropriation dollars and then ARPA dollars," Huge said. "[The] Northwest Indiana [Regional Development Authority portion] was a [Railroad Rehabilitation and Improvement Financing] loan through the Build America Bureau, and ... then the cash contributions."
Huge said the state issued no bonds for the projects.
"We were fortunate to be able to utilize RRIF — we appreciated the lower interest rate and a number of other things about RRIF, so we were happy to go the RRIF route as opposed to traditional bond finance," he said.
Huge praised the RRIF staff, Indiana's partners at the FTA and Indiana's Congressional delegation, which he said were "really helpful with the funding at the federal level." They had worked with the federal government to obtain Transportation Infrastructure Finance and Innovation Act and Water Infrastructure Finance and Innovation Act funds previously, he said, and that prepared them for the RRIF process.
"We did have a very detailed tri-party governor's agreement that laid out each entity's role in how the funding would occur and showed all the safeguards," he said. "Once we got RRIF and even the FTA to understand the key components of our funding process and the governance agreements, everything went really well. … We couldn't be more pleased with the experience."
"The FTA knew that we had a very strong partnership with the state of Indiana and with the Northwest Indiana Regional Development Authority," Noland said. "And I think that was a part of the successful recipe that helped us across the finish line. We got two full funding grant agreements from the FTA in a 90-day period, one for West Lake and one for Double Track."
Noland had three pieces of advice for state and local governments looking to duplicate that rare success: Build grassroots support, get legislative support and find a champion.
"We had huge local support before we even sought state funding. And then we had incredible support from our northwest Indiana delegation [in] the General Assembly… the vote was 145 to 5," he said, noting that the team clearly communicated the economic benefit -- $4 of return investment to the general fund for every $1 that the state has contributed, due to the expected private investment -- to legislators.
"Governor Eric Holcomb [was] our not-so-secret weapon," Noland added. "He was cheering us on, providing very vocal support every step of the way.
"When the federal government switched from offering to pay half the project costs to supplying 36% and asking Indiana to come up with the other 64%," Noland said, the governor and the General Assembly moved swiftly to make up the difference. Retired congressman Pete Visclosky also served as an advocate locally and at the federal level, he said.
Prior to the Double Track project, most of the 26-mile stretch from Gary to Michigan City was a single track with two-way traffic crowded onto it. The expansion of service and improved travel times, Noland said, opens up opportunities for both Chicagoans and Hoosiers to take advantage of more attractions that northwest Indiana has to offer.
The Double Track and West Lake projects, which represent an investment of $1.5 billion, together were the largest commuter rail undertaking in the history of Indiana, said Sherri Ziller, president and CEO of the Northwest Indiana Regional Development Authority, which was created in 2006 by Indiana's General Assembly to fund regional infrastructure projects and address multi-jurisdictional challenges.
"Double Track, we're proud to say, was completed on time and on budget," she said. "It's really a game changer for northwest Indiana."
Ziller said officials estimate those two projects will bring $2.7 billion in development for northwest Indiana over the next 20 years. Local governments expect over $400 million in added property tax revenues. And Ziller predicted a half-billion-dollar jump in sales and income tax for the state as a result of the rail upgrades.
"We're very confident that those projections are going to turn out to be low," Ziller said. "There's already more than half a billion dollars of construction underway."
The upgrades are spurring transit-oriented development projects all along the rail lines, both Huge and Ziller said. And Ziller said most of the development projects are in Indiana's brand-new transit development districts, which function similarly to tax increment financing districts, of which 10 have been established, with three more expected.
"This has been a yearslong process, and I just appreciate the partnership of the South Shore, the Northwest Indiana Regional Development Authority, and our governor's office and our legislative body for allowing all these things to happen," said Huge. "It was a bold project, and we're really happy to see one of the [upgrades] done, and looking forward to seeing West Lake done sometime next year."
