US officials seek answers on Detroit rail project

DETROIT (AP) -- Detroit business magnet Dan Gilbert envisions downtown's Woodward Avenue lined with grocery-type markets, cool retail shops, destination restaurants on the caliber of those in New York City — and a clean, efficient public light-rail system.

The founder and chairman of Quicken Loans is firm in his belief that businesses will soon follow people into Detroit's growing downtown and Midtown. But questions remain on whether Gilbert and other prominent business leaders, along with Detroit's mayor and Michigan's governor, have persuaded the U.S. Department of Transportation to let go of a $25 million federal grant to move forward on Detroit's M-1 rail project.

Transportation Secretary Ray LaHood met Monday morning at City Hall with Mayor Dave Bing, Gov. Rick Snyder and members of the private M-1 Rail group. He left them with questions to answer on costs and about who would eventually run the 3.3-mile, $137 million rail line project connecting downtown with the burgeoning Midtown residential district.

"If you go to Denver. If you go to San Diego, to Minneapolis, this is a proven formula," Gilbert told The Associated Press in recent interview at his office downtown. "If you put this light rail in, it is an economic boom ... almost automatically."

Detroit has a problem-plagued public bus system and no rapid transit. Buses often break down, leaving riders waiting an hour or more to be picked up at stops across the city. To cut costs, Bing has eliminated some sparsely used routes and cut back on hours of operations along others.

Many leaders say that for Detroit to grow, public transportation has to improve. A light rail along Woodward, the city's primary business and commercial corridor, has been discussed for years, but some say it has become a necessity with recent moves of thousands of jobs downtown by Quicken Loans and other employers.

"It promotes commerce within downtowns in a big way that you're not going to see if you don't have it," Gilbert said of a light rail system.

The M-1 Rail group has raised most of the $137 million needed to get the project going.

The city is facing a $265 million deficit and is under a consent agreement with the state to get its finances under control. Without any funding from the city, the future of the light rail project was in doubt until Penske Automotive Group chief Roger Penske, Gilbert and other business leaders stepped up.

On Monday, LaHood was interested in finding out whether a regional transportation authority would take the reins at some point and what the long- and short-term operating costs would be. All sides are expected to meet again with LaHood in 60 days.

LaHood didn't attend a news conference after the meeting, and his office didn't immediately return a message seeking comment late Monday afternoon.

"There were no game stoppers," said Penske, who attended Monday's meeting with LaHood. "Hopefully in 60 days we'll have the final answer."

Penske, a member of the M-1 Rail group, said about $131 million already has been raised privately.

About $6 million is still needed for that first 3.3-mile phase. The M-1 Rail group presented its plans to LaHood's office in April.

"This is a natural process of going through this," Snyder said after the meeting. "The federal government has now done a very thoughtful review of the good hard work done by the M-1 team. Now we're getting to the point of saying 'what's the last pieces that need to come together to tie it together in some constructive way.'"

Early on, the project had a 2016 completion date. Some plans included eventually extending it several more miles to Detroit's northern city limits to Oakland County. The Detroit City Council has approved issuing $75 million in bonds to provide a local match for the work.

"We have to have a program that will operate once we make these capital expenditures. We want to be sure this program will go on," Penske said.

Gilbert anticipated the system would be well-used. He said about 10,000 people now work in Campus Martius in the heart of downtown.

Quicken has relocated about 5,000 employees to its downtown headquarters and other offices as part of Gilbert's plan to help revitalize downtown. He also has bought several downtown buildings in recent years with an eye toward using them for office and retail space.

Chrysler plans to lease the top two floors of the 23-story Dime Building, which is owned by Gilbert's Rock Ventures LLC. And nearly 600 Blue Cross Blue Shield of Michigan workers moved earlier this year to the nonprofit health insurer's downtown offices.

"We all share a vision of a hustling, bustling attractive urban downtown corridor with entrepreneurial growth companies and also mature companies that want to put offices in place here," Gilbert said.