In February 2009, Pennsylvania Governor Ed Rendell called Pittsburgh’s North Shore Connector “a tragic mistake,” leaving taxpayers wondering why the project recently received a $62.5 million windfall from the U.S. Department of Transportation. The project would allow the Port Authority of Allegheny County to extend the city’s light rail under the Allegheny River to the new Rivers Casino, as well as to its two professional sports arenas, PNC Park (home of the Pirates) and Heinz Field (home of the Steelers). Unfortunately, the North Shore Connector has been plagued with problems since its inception, making it seem in this case that federal officials are throwing good money after bad.
Almost immediately, the North Shore Connector went over budget, blowing through cost projections at alarming rates. Original estimates put the final tally at approximately $390 million, but quickly ballooned. Pennsylvania auditor Jack Wagner noted in a 2007 audit that, “In mid-2005, the [Federal Transit Administration] directed the Port Authority to solicit bids for construction of the [North Shore Connector] under the Allegheny River. Three firms responded -the lowest of the three bids was 24 percent higher than the engineer’s previous estimate” (original emphasis).
To deal with the cost overruns, officials dropped plans to extend the rail to the convention center, reducing costs by $85 million. Despite that, current estimates put the final cost at $529 million, far exceeding the $435 million total estimated just last February. Even after removing the convention center portion, project costs are more than a third greater than original estimates. State auditor Wagner blamed the cost overruns on “poor planning,” adding later that it is “a waste of taxpayers’ resources.”
The North Shore Connector has become a political hot potato. The Pittsburgh Tribune Review labeled the project a “tunnel to nowhere” and warned taxpayers years ago to expect “state, local and federal politicians to be there trying to take credit for the jobs and growth they’ve ‘created’” by pouring tax dollars down this “runaway tunnel project.”
Federal money has covered the vast majority of costs, with the Federal Transit Administration (FTA) agreeing to provide $348 million—nearly the full original cost—leaving state and local governments responsible for a small fraction. Even with that level of assistance, the Port Authority still threatened to shut down the project due to the enormous cost overruns.
With an infusion of more than $62 million in stimulus money, the project was taken off life support. But whether it will provide a true benefit to the city is also a matter of controversy, given that it will primarily serve to bring commuters to sporting events and a casino. Rivers Casino, however, is struggling financially and may turn into a drag on the city’s finances. Since the $780 million casino opened in August 2009, Standard and Poor’s rating service has downgraded the company three separate times, most recently to Selective Default, below speculative grade. S&P projects that the casino may not be able to pay its taxes or provide funding for the new hockey arena for the Pittsburgh Penguins, per an agreement with the city.
Reflecting on the project, Governor Rendell commented bluntly, “I wish the project had never started. I think it’s a huge – I won’t say waste of money – but there’s so many ways that money could have been applied to the transportation needs of this region in a more beneficial fashion.” Kathleen Connolly, local resident of suburban Pittsburgh, added, “They’re not hiding the fact that it’s for entertainment. It’s not for commuter ease.”