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South Shore Commuters

A westbound South Shore Line train prepares to depart the East Chicago train station. The Regional Development Authority on Thursday approved an agreement committing itself to the financial plan for the railroad's West Lake Corridor project.

MERRILLVILLE — The Northwest Indiana Regional Development Authority started a process Thursday that puts the financing plan for the South Shore Line's West Lake Corridor project on track to be locked-in by mid-August.

The RDA Board of Directors approved a governance agreement that commits it to responsibilities that will allow the Indiana Finance Authority to sell bonds to finance the project, which will extend commuter rail service from Hammond south to Dyer.

The agreement is scheduled to be voted on by the boards of the IFA July 19 and the Northern Indiana Commuter Transportation District July 20. It will then be on the state Budget Committee's agenda Aug. 15 to confirm the state's participation.

The South Shore is asking for a Federal Transit Administration grant that would cover half the construction cost of the project, assumed in the agreement to be $764.3 million, a substantially higher number than previously estimated. The higher figure allows for the FTA's relatively high contingency requirements that would cover unexpected expenses and cost-increases, and allows for inflation over a longer time frame, according to RDA and railroad officials.

RDA President and CEO Bill Hanna said the cost estimate is deliberately high. "There's an abundance of caution in here from a fiscal perspective," he said.

South Shore Line President Michael Noland said he hopes to complete the project below the budgeted amount, and in less time than projected.

The local and state contribution to the project includes a variety of sources, including income tax revenue from most municipalities and Lake County expected to be about $4 million per year, about $10 million annually of the RDA's own funds, and a yearly $6 million contribution from the state.

The governance agreement and accompanying resolutions finalize those commitments in a manner the Federal Transit Administration requires as part of its grant process.

"This is that piece I've talked about that puts it all together," South Shore President Michael Noland said of the agreement. 

The agreement sets up a leasing structure similar to ones the Indiana Finance Authority has used with other state projects, allowing it to take on debt without violating the state constitution. And the agreement sets a schedule for meetings among the RDA, South Shore and IFA leaders and for periodic written reports on the project's progress.

The RDA also commits to cover the expected operating deficits during the early years of West Lake's operation, using money for that will come from the state.

Noland said the railroad is preparing to ask the FTA to move West Lake from the project development phase of the grant process to the engineering phase, and to give the project an official rating later this year. If the FTA rates it a "medium" or better, the South Shore can then ask for a full funding grant agreement. Noland said that could be accomplished in mid-2019 if all goes as planned, and the project could be complete by late 2023 or early 2024.

The governance agreement's requirements include the South Shore's double-tracking project, though the RDA, NICTD and the IFA will need to make further action on that project.

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Transportation Reporter

Andrew covers transportation, real estate, casinos and other topics for The Times business section. A Crown Point native, he joined The Times in 2014, and has more than 15 years experience as a reporter and editor at Region newspapers.