M-1 officials decline to discuss funding problems; taxpayers on the hook

Photo by Steve Neavling.
Photo by Steve Neavling.

Although federal taxpayers forked over $37.2 million to help fund the delayed M-1 streetcar project in Detroit, rail officials have refused so far to disclose the budget or operating costs.

That’s important because metro Detroit voters are being asked in November to begin paying for operations of the streetcars in 2024 as part of a larger regional transit plan.

Motor City Muckraker requested a copy of the M-1 construction and operating budgets after a member of the M-1 Board of Directors expressed serious concerns about the project. The board member, who spoke on condition on anonymity, said the $179.4 million project is costing more than anticipated because of slower-than-expected construction. As a result, M-1 has less money to finance the operations, which originally were targeted at $5.5 million a year.

“There are some serious questions about paying for the operations,” I wrote in an e-mail to M-1 officials last week. “Right now operations are pegged at an estimated $5.5 million a year. Do you guys have an operating budget, may I see it and how much money does M-1 have in hand to operate the system? “

Sommer Woods, director of external relations, responded bluntly on Wednesday: “We don’t share budget information publicly.”

But after I contacted M-1 officials about her response, Woods apologized and pledged to provide “details” Thursday. That never happened.

On Monday, M-1 had yet to turn over any information.

A review of other streetcar projects found that operations often exceeded the anticipated costs, largely because of bloated ridership estimates and slow streetcars. M-1, for example, will take 25 minutes to travel from New Center to downtown, despite earlier pledges that it would take 8-12 minutes.

The Regional Transit Authority of Southeast Michigan (RTA) is asking voters to increase their property taxes to finance transportation improvements, bus rapid transit and M-1 operations.

According to the RTA, here are the estimated costs of operating the system, if ridership estimates prove to be correct:

2024: $6.2 million
2025: $6.3 million
2026: $6.3 million
2026: $6.4 million
2027: $6.5 million
2028: $6.6 million
2029: $6.6 million
2030: $6.7 million
2031: $6.8 million
2032: $6.9 million
2033: $7.0 million
2034: $7.1 million
2035: $7.2 million

The RTA pledged transparency.

“RTA is a public agency, and we are a people-based agency,” RTA spokesman Travis Gonyou told me. “We want to hear from people and make sure we do this right.”

M-1 officials insist their budget information is not public because most of the funding comes from private groups, which stand to profit from a project that still relies on tax dollars.

The streetcars were originally scheduled to open this month, but construction delays have pushed back the date to early 2017. But even that may be overly optimistic since the rail lines are still being built, the overhead electrical lines have not been installed and safety officials typically require two to three months of testing and training before passenger service begins.

The delays have hurt businesses along the rail line and caused traffic snarls.

The M-1 Board of Directors is led by two billionaires – Dan Gilbert and Roger Penske. The president and CEO of the M-1 is Matthew P. Cullen, who happens to be the CEO of Gilbert’s Rock Ventures.

Gilbert owns more than 80 buildings in downtown Detroit, has a stake in nearly 20,000 parking spaces and is embarking on a major housing project in Brush Park, which borders the M-1.

Steve Neavling

Steve Neavling lives and works in Detroit as an investigative journalist. His stories have uncovered corruption, led to arrests and reforms and prompted FBI investigations.

  • Alexbensky

    “If ridership meets expectations, these are the costs.” I am willing to give you good odds that the ridership will not in fact reach expectations. The only rail system where this has happened seems to be Portland, and I have read that there they deliberately came in with a low estimate.

    On the other hand, Steve, are you sure about this? I mean, we were promised that no tax money was going to be used on this, weren’t we?

  • Syri Simpson

    This project sucks for Detroit. We have had our historical and most traveled thoroughfare stolen in the name of development. The project has decimated areas that will never benefit from that development . It lines the pockets of those whose pockets are already over-flowing at our expense.
    It was known years ago, that the maintenance of this “street-car” would fall on the tax-payers, and that as a development project it would never be self-supporting. Rapid Transit was always envisioned as travelling the Woodward corridor from Downtown Detroit to Pontiac. How rapid or useful to Detroit can the final RT system be with 3.5 miles taken up by a system that only moves at 11 miles an hour, and does not carry a significant number of riders?
    Costly studies of transit alternatives indicated that Bus Rapid Transit was the most practical, cost effective beginning to Regional Transit in South East Michigan. It would have cost far less, caused fewer environmental issues, and inconvenienced far fewer commuters.
    The tax-payer money sucked into this trivial toy, was a Federal grant which was supposed to enhance employment opportunities in SE Michigan. It could have been far more productively used to bolster the existing DDOT and SMART systems whose deterioration cost many tax-payers their jobs.

    • Alexbensky

      Syri, Eindhoven and Haifa use dedicated busways that can handle the passenger load of a rail system, are much cheaper to build, and can fairly cheaply be taken out if circumstances change. I grant they aren’t cool and the opportunities for graft and corruption are less.

      Even a line up Woodward to the suburbs is problematic. It might cannibalize some ridership from the buses. But say you live in Southfield or Warren and work downtown–are you going to drive down to the New Center, pay to park, and then pay to ride the train?

      Meanwhile, I often use the bus to go downtown because I live in downtown Royal Oak and the bus station is a few minutes walk away. But if I had a job in Southfield, getting there by bus is possible but lengthy and bothersome. But bus riders don’t offer much in the way of opportunities to line pockets.

  • Dongald Trumpenis

    Snyder’s non-transparency mandate applies to everything.

  • Wonbo Shim

    This article is shit. That picture is several months out of date. The rail is laid out nearly all the way north to Warren Ave. Sensationalist clickbait.

    • Third World Detroit

      Since he used a representative photo of the M-1’s construction, Third World Detroit residents won’t be tapped to pay for New Detroit’s finger-popping fun? Is that it?

      • javierjuanmanuel

        Yeah, muck needs to go make a dedicated trip, show current status of the build, or financing and maintenance costs cannot be true. Dude needs to lay off the edibles. He is blitzed out of his mind

    • javierjuanmanuel

      Its practically a stock photo. All that matters is , as predicted it will cost 50 percent more, to maybe double, go shorter, take longer, go slower.

      Its a fucking disaster, pretend train, so hipster jackholes with cars, can park their car, pretend they live in dc, chicago, nyc, abd post pics on social media, and use words like #vibrant. #density #urban renewal. While riding a train they would refuse to pay the actual cost per trip to keep it going.

      This is all fake.

      Stop this train! They are having a sale on mustache wax, and barrels to churn your own butter in !

  • Wonbo Shim

    This article is shit. That picture is several months out of date. The rail is laid out nearly all the way north to Warren Ave. Sensationalist clickbait.

  • If you talk to them more, ask them how their business plan projects that they’ll cover 50% of the cost of the M1 system from fares when the People Mover is 13.27%, no transit system in Metro Detroit does better than 18% and the industry average is 25%. Even the RTA’s own rosy projections discount that to 35% once they take over the M1.

    • Syri Simpson

      And if the project is not maintained, Woodward has still lost its usefulness for almost 4 miles in Detroit. Businesses along its route have been forced out of business. Bus riders can not get to 36th District Court, to downtown banks, or jobs in the entertainment district. Downtown Detroit has gone from a place for Detroiters to live, work, and enjoy their city, to a playground for the privileged and a cash cow for wealthy exploiters

  • imara hyman

    This is why I donated to the Muckraker Fund. Neither of the papers will report this because they’re too busy boosting the “new Detroit”. However, it’s old Detroit tax money that’s paying for this. Between the tax abatements that the developers and buyers in selected neighborhoods get, along with the grant money and tax money that folks receive start/maintain their businesses and housing, new Detroit does little to add to the coffers in this city. No one talks about that. I was just looking at a development in my neighborhood. On their website they offer buyers a 12 year tax abatement! But folks who bought in the neighborhood a long time ago are still saddled with high taxes that get very little in the way of services.

  • imara hyman

    This is why I donated to the Muckraker Fund. Neither of the papers will report this because they’re too busy boosting the “new Detroit”. However, it’s old Detroit tax money that’s paying for this. Between the tax abatements that the developers and buyers in selected neighborhoods get, along with the grant money and tax money that folks receive start/maintain their businesses and housing, new Detroit does little to add to the coffers in this city. No one talks about that. I was just looking at a development in my neighborhood. On their website they offer buyers a 12 year tax abatement! But folks who bought in the neighborhood a long time ago are still saddled with high taxes that get very little in the way of services.

    • Third World Detroit

      Appeal your property taxes. It’s easy.

  • Note that they stopped the annual operating costs estimates juuuuuuust before the standard 20-year “repair and replace everything” milestone for rail systems. That’s a huge capital expense that the RTA – meaning taxpayers – will be on the hook for.

  • Note that they stopped the annual operating costs estimates juuuuuuust before the standard 20-year “repair and replace everything” milestone for rail systems. That’s a huge capital expense that the RTA – meaning taxpayers – will be on the hook for.

  • dtwclipper

    The naysayers are having a field day. I firmly believe that the 3.5 miles is just a starting point for a much larger system. We have already seen proposals for development within “walking” distance of the line, and IMHO this is just the starting point. Alas, until L. Brooks leaves Oakland county, we won’t see it extended past 8 mile. I am really looking forward to being able to use the QLine next year.

    • javierjuanmanuel

      How many billion to get to 8 mile. Then how nany billion to get to 15 or 16 mile ?

      How long will it take to get down town, and can a fat dude on a mountain bike beat the train ?

  • el tortuga

    Yeah, well, who didn’t see this coming.
    My condolences to all the businesses that the toy train has sent into BK.
    I ride the 53 bus, or at least, I try to. I have no idea how this boondoggle will be of any help to me.
    A fortune will be squandered on this piece of vanity.
    Hey Muckraker, look into this fairgrounds give away….that’s where the transit center should be. Something is very rotten there……even worse than the Q-line.

  • Third World Detroit

    No.

    • javierjuanmanuel

      Why?

  • Jack Ramsey

    Detroit Interurban train lines 100 years ago. If only we still had those rails. I hear the streetcars still are running in Mexico city. Thanks, GM.

    Sorry, just needed to be said once again…

    • muckraker_steve

      Great map. Thanks!!

  • maggiemay

    One of Gilberts dummer ideas.