South Shore cars come in over budget

CHESTERTON | Bids for the purchase of 14 new two-story passenger railroad cars came in nearly $10 million over budget this week, and Northern Indiana Commuter Transportation District officials are working with the lone bidder to pare down the price.

"We were hoping for a $45 million bid. The base bid was somewhat shocking to us," NICTD General Manager Gerald Hanas told board members Friday.

The base bid came in at $54.6 million. Sumitomo Corp. of America, the single bidder, provided ideas as alternatives to pare down the cost to $49.9 million, said Hanas, adding they are looking at other ways costs could be cut.

In addition, officials are working to get financing in place. It is likely they will have to seek $26 million to $30 million in outside funding, said William Sheldrake, president of Policy Analytics, LLC, a consulting firm. That funding could be through a bond or municipal finance lease.

NICTD has no secure funds in hand.

Last spring, Hanas said, NICTD thought it would receive $31 million from the Indiana Department of Transportation for funding of the new cars. INDOT said no. Now NICTD officials are estimating they could get $3 million from the state.

"We still have no official word from INDOT on funding," said Hanas.

NICTD also has requested $17.5 million from the Northwest Indiana Regional Development Authority. If received, $6 million would have to be set aside in a debt reserve.

A $4.5 million request from the Northwestern Indiana Regional Planning Commission has also been made.

Any loan -- either through bonds or a lease -- would have to be paid back through projected federal funding, said Hanas, which makes it a little riskier proposition for investors and, likely, a higher interest rate.

The NICTD board approved a resolution to allow Hanas to continue working with Sumitomo Corp. and on potential funding sources in order to secure the deal. NICTD officials hope to be able to bring back a finalized deal to the board early in January.