Denver Builds a Rail System to Grow on for the Mile High City

Feb 20, 2014

Denver's Union Station facility.

When discussions began nearly a decade ago in Denver of creating a modernized transit system to address the metropolitan area's sprawling growth, the business community braced for the kind of divisive debate that can derail major infrastructure projects.

But then something surprising happened. Local businesses, developers, environmentalists, residents and their elected officials got together and worked through their differences to create the conditions necessary to build a rail network that has brought widespread benefits to the Mile High City.

Rob Cohen, CEO of Denver-based IMA Financial Group, Inc., recalls how support from the community "forced a higher level of discussion" among leaders.

“The way the project came together is really something to marvel at,” said Cohen. “Everyone understood we were doing something that would change the landscape of city not just for a few years but for decades to come, and that cooperation only happens when you have the business community behind the project.”

Laying the Groundwork for Public Support

When the drive to develop a transportation system spanning the Denver metropolitan area’s eight counties began in 2004, private and public sector leaders discussed how to fund and build support for the ambitious project.

Recognizing the need for consensus, community leaders launched a campaign to inform the public. That’s where the Denver Metro Chamber of Commerce came in, pooling resources from the business community to help get the project, now called FasTracks, off the ground.

“The Chamber did everything from fundraising, researching and polling to revealing the proposal for building FasTracks. They also recommended changes to the project and mobilized businesses throughout the state and metro area,” said Kelly Brough, president and CEO of the Denver Metro Chamber of Commerce. The Chamber contributed $500,000 to help kick start FasTracks in 2004, a key early contribution for a project transit officials estimate has cost more than $7 billion.

FasTracks, which already includes six commuter and light rail lines, remains a work in progress. Four more lines are on track to be added in the coming years, and the system will cover 122 miles of commuter and light rail and 18 miles of bus rapid transit service once it is finished. More than 328,000 people use the six lines daily, according to the Regional Transportation District of Denver (RTD). 

Local Business Gets Behind FasTracks

From the start, local businesses have supported the project. In turn, they have benefitted along with the broader Denver community from the development. The program has injected $2.8 billion into the local economy and created more than 11,000 direct jobs, the RTD estimates. Every dollar invested in FasTracks’ infrastructure is expected to translate into a $4 economic boost over a 20-year period.

Several Fortune 500 companies, such as DaVita HealthCare Partners Inc., relocated their headquarters to Denver to take advantage of the city’s connectivity. DaVita moved near Union Station, at the heart of the rail system, creating hundreds of jobs for area residents.

Since employees of DaVita are active in local philanthropy — supporting more than two dozen charities and nonprofits in 2013 — the centrally located office makes traveling a cinch.

“Engaging with the community would be so much harder if we weren’t here,” said Rebecca Griggs, vice president of operations and innovations at DaVita.

DaVita has also provided RTD with valuable feedback since the project began, participating in meetings with transit authority officials and completing surveys about the system.

IMA moved its headquarters inside Union Station, from just a block and a half away, to take advantage of the efficient rail system.

“Once I got a sense of the project at Union Square, it didn’t take me long to figure out where I wanted to build the new corporate headquarters,” Cohen said. “The benefits of mass transit have been huge for our associates.”

Rapid development near lines doesn’t appear to be slowing down anytime soon, with RTD planning to open the highly anticipated East Rail line in 2016, a part of the Eagle project that will connect Union Station to the Denver International Airport.

“We’ve seen interest from businesses in the Eagle project stations, especially along the airport line, even though those stations won’t open till 2016,” said Kevin Flynn, public information manager for the Eagle project. “The investments are really taking off.”

A Private-Public Model of Financing

The Eagle project—which encompasses the East Rail, a Gold line to connect Denver to Wheat Ridge, and a commuter rail maintenance facility — also represents an innovative public-private financing partnership.

Under the financing arrangement, called P3 for public-private partnership, RTD pays a private-sector team to finance, operate and maintain the two lines and facility over the next 30 years in exchange for the upfront capital costs of the project. Denver Transit Partners (DTP), a consortium that includes Fluor Enterprises, Uberior Investments and Laing Investments, contributed $450 million in private bonds and cash equity to the project’s $2.2 billion cost. The remainder of the cost comes from public, private, and local funds.

Flynn said the P3 deal—more common in Europe—is the largest in the U.S. for the transit industry. “In the U.S., we’ve been accustomed to turning to the public sector, but for this project, we’re looking for innovation to get things done and that means using a P3,” Flynn said.

The economic gains from the Eagle project alone have been substantial, he said. The project generated $840 million in contracts to Colorado businesses over a three-year period.

The stimulus, both now and in years to come, is a win-win for businesses and residents alike, Flynn said. “We really need this to cement our position as a city that can grow responsibly and reliably.” 

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