The extension to Lowell would be cheaper to build and would attract more riders than the one to Valparaiso, and it meets federal funding criteria now.
The Northern Indiana Commuter Transportation District, which operates the South Shore, is counting on the half a billion dollars in federal grant money to get the extension project off the ground.
That money is from a program run by the Federal Transit Administration called the New Starts program. It's the same one that helped fund Valparaiso's express bus service to Chicago.
Competition for New Starts' limited grant dollars is high and growing, however, and the transit administration uses a strict cost-benefit analysis to shrink the pool of acceptable applications.
To pass muster, projects must save a commuter an hour of travel time for less than $23.
NICTD hired a consultant to work the numbers, and he was unavailable last week to provide specific details on the costs and savings analysis.
But the basic formula is straightforward: add up the cost of building and operating your project and divide it by all the hours saved by all the riders expected to use it. If the bang for the buck is big enough -- or, rather, if the number of bucks for the bang is low enough -- the project is eligible.
It's that cost-benefit analysis that's driving the switch from building both legs at the same time to building them separately.
The Lowell line comes out to $18 spent for every hour saved, while the Valparaiso line costs $23 for every hour it saves a commuter. And those are based on 2006 construction costs, which are sure to have increased.
More importantly, perhaps, is the fact that the cost effectiveness drops even further when both lines are considered together. As the proposed Lowell and Valparaiso tracks meet in Munster before heading north and joining with the main line in Hammond, they start attracting the same pool of riders. Residents in Schererville, for instance, would be equally close to either line, and so the two services start to cannibalize themselves.
As a result, the overall project needs $26 to save a commuter one hour of travel time.
The reason the Lowell line scores so much better than the Valparaiso line is two-fold. The Lowell branch is where the population is -- running through Munster, Dyer, St. John and Cedar Lake -- meaning the construction and operating cost would be spread out over a greater number of commuters.
NICTD spokesman John Parsons estimates the Lowell line would be able to attract 95 percent of the riders of both new lines put together.
Further, building Lowell line is cheaper. It will cost roughly $120 million less than building the line to Valparaiso since NICTD will be able to run trains on an existing CSX Corp. track.
NICTD would only have to add some extra side tracking (essentially passing lanes for trains) and pay for the use of the 19.3 mile line.
The route to Valparaiso, however, would involve building 24.6 miles of new track on Canadian National's right-of-way, a $79 million proposition in 2006 dollars.
"It's more of a cost issue," Parsons said about the disadvantages of the Valparaiso line. "It's a long way and it's a completely new railroad."
That leaves the Lowell line as the only option that's ready to go now.
So rather than wait, while New Starts funding is awarded to other projects, NICTD has decided to move ahead with Lowell.
Rep. Chet Dobis, D-Merrillville, informed a panel of state lawmakers in charge of appropriations last month about the change in plans.
The cost and distance of the Munster-to-Valpo line has led NICTD to look into an alternate route that promises a shorter trip to Chicago (which would boost the project's benefit) without having to build a new railroad (which would reduce the cost).
The idea they've seized on is to use the Chicago, Fort Wayne & Eastern railroad, which runs northwest from Valparaiso to Gary, to link with the existing South Shore line near the Gary/Chicago International Airport.
NICTD is currently studying the feasibility of this alignment, and expects to have its analysis done by the end of the year.
If the costs that come back are promising, it could mean rail sooner rather than later for Valparaiso. If not, it could be a long wait.
Costs for the current Valparaiso alignment aren't going to go down, so the only way to bring the cost-benefit ratio low enough to be grant eligible is to wait for Valparaiso's population to grow, thus spreading those costs over more riders.
"It may be several years before the (population) forecasts generate the ridership for Valparaiso," Parsons said.