Good News For RTD?

The headlines in the run up to elections for the RTD Board of Directors have focused on how RTD will deal with cost overruns in the FasTracks light rail expansion project.

But, good news is on the horizon. Plunging oil prices are freeing up funds in the RTD operating budget, yet the increased fares, and consumption reducing choices of consumers driven by high gasoline prices in recent months to live closer to work, buy more fuel efficient vehicles, and start using transit, remain in place.

Another key factor in rising construction prices has been the rising cost of materials like the metals that go into light rail lines. Metal prices are down 18% from a month ago, and 33% from a year ago, according to The Economist commodity-price index.

It also seems likely that the sustained slump in the construction industry will eventually restrain soaring labor costs on this project. Many steel heavy downtown construction projects are being cancelled. Workers with the skills to make high rises also have the skills to make light rail lines.

Even falling real estate prices are good for FasTracks, because they reduce property acquisition costs.

Now, the news isn't all good. Sales tax revenues are quite cyclical, so sales tax revenues can be expected to fall. But, the Denver metro area's economy as a whole, because it is now diversified, offers hope that the tax revenue slump will be more mild in Denver than it will be in a city like New York that relies overwhelmingly on taxes from an industry that has crashed.

While I have little doubt that there will have to be some action to address FasTracks shortfalls, there is reason to hope that the problems RTD is now facing is not as bad as it now seems.