Dive Brief:
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The U.S. Surface Transportation Board (STB) has rejected a plan to build an $8 billion rail bypass around Chicago, according to Peoria Public Radio.
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The agency said developer Great Lakes Basin Transportation did not have the financial assets necessary to take on the proposed 261-mile line, the Chicago Tribune reported. Great Lakes' application showed net assets of $151.
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Great Lakes claimed it could significantly reduce rail congestion around Chicago, but the project drew opposition from those in the projected path.
Dive Insight:
Federal approval is essential for any major transportation project, not only for the construction process but also for future financing, as the government is a primary source of grants and loans for major infrastructure initiatives. The ability to capture some sort of federal funding is often the "make or break" component.
After the Massachusetts Bay Transportation Authority (MBTA) blew its budget, fired its contractors and decided to reboot the $2.3 billion Green Line light-rail extension project in Boston, the local agency had to prove the project was still viable to the Federal Transit Administration, which was holding back a $1 billion grant until the MBTA could make that case. The FTA eventually reauthorized the funds. If it had decided as the STB did in the Great Lakes case, the Green Line would have likely not been able to move forward.
Even when the federal government approves funding and the local agency has the money in hand — sometimes even already spent it — certain conditions have the potential to stop a project in its tracks. A federally-approved, $9.5 billion commuter rail project in Hawaii could have to return $800 million in government grants and forego an additional $700 million if state lawmakers can't agree on how to fill a $3 billion shortfall in its budget by Sept. 15. The project, which is only half finished, is supposed to connect Honolulu with outlying areas, but critics say the project won't deliver enough benefits to justify its costs.