South Shore Line board restructured in last-minute bill amendment

Revisions to the budget bill in the eleventh hour of the Indiana General Assembly session will mean a cash infusion for improvements to the South Shore Line, but also substantial changes to the body that regulates it.

That concerns some who say the measure diminishes local control of the commuter railway, which runs through four northern Indiana counties as it connects Chicago with South Bend.

A conference committee on Tuesday inserted language in the bill that shrinks the size of the Northern Indiana Commuter Transportation District (NICTD) board from 11 members to five, allowing Indiana Gov. Eric Holcomb to appoint all members of the board. And with the budget bill’s passage Wednesday, Holcomb’s signature is all that’s left for it to become law.

The move includes $185 million, as well as up to $20 million more, that was freed up in the state’s transportation budget after Holcomb’s amending of the Indiana Toll Road lease last year.

That money is planned to leverage federal matching money for major railway improvements, including double-tracking between Gary and Michigan City and extending lines through Lake County as a part of the West Lake Corridor Project. The proposal for double-tracking has yet to be submitted, but is expected to be turned in to the Federal Transit Administration (FTA) by mid-summer.

In a report published last month, the FTA gave the project a “medium-high” rating for receiving the federal grant for 2020. Only one competing project received a higher rating, but seven other projects from around the country were also given overall ratings of “medium-high.”

According to state budget director Jason Dudich, a line in the FTA’s rating report specified the federal match for a project might be lower than the expected 49%.

“In mid- to late-March we were notified that it would be a 38% match,” Dudich said.

That meant going “back to the board and looking at all of our options” for making sure the state funding requirement was satisfied for a prospective grant, Dudich said.

Since the state would have to pony up more money, which it ultimately did with the $185 million infusion, Dudich said the restructuring of the NICTD board would allow more state input and streamline collaboration with the Indiana Finance Authority and Northwest Indiana Regional Development Authority.

“It was late, it wasn’t done on purpose to just slide this in,” Dudich said. “It was really due to the timing of FTA ratings and finding options that folks could live with in terms of funding.”

The proposed changes to the NICTD board would shrink the number of representatives for Lake, Porter, LaPorte and St. Joseph counties. Currently, the board has two members from each county appointed by the county council president and commissioner president, and three members appointed by the governor.

The new makeup would include one representative from each county, all appointed by the governor comprising of two Democrats and two Republicans, and the Indiana Department of Transportation commissioner.

Mike Noland, president and general manager of the South Shore Line, said Thursday that he found out about the funding boost and board restructure plans Tuesday.

“That’s when they let me know,” Noland said, “that they’d secured a couple hundred million to backstop both projects, and how that funding was going to work.”

He acknowledged the restructure was “a disappointment” for current board members, but also noted that the additional cash is critical in improving the odds of both projects receiving federal dollars.

“This funding puts us in extremely competitive position that separates us out from perhaps others in the country,” Noland said. “The state has now spoken very loudly that it’s behind these projects and will do what it takes to get them done.”

Rep. Ryan Dvorak, a Democrat representing South Bend, sees it differently, calling the last-minute change a “cynical, unprecedented” power grab by Republicans.

“Taxpayers are funding this project and now lose the ability to have oversight of it,” Dvorak said. “I’m concerned that it jeopardizes the viability of the project.”

Rep. Ross Deal, D-Mishawaka, also cried foul.

“We’ve already seen this year the governor take private flights with casino magnates and work with coal companies to try to shut down renewable energy projects. We’re seeing it again,” Deal said. “The one project we were able to work together on, in a bipartisan way, he now thinks he can come in and steal the project for political gain.”

Deal and Dvorak both suggest that contracts for South Shore improvements will now be controlled by Holcomb, who could award them to political allies.

Mark Catanzarite, the St. Joseph County Council representative on the NICTD board since 2003, said he is satisfied with the progress of the South Shore over the years and that the most recent move “came out of the blue” for the board members.

Republican Commissioner Andy Kostielney said his understanding of the rationale was it could help the NICTD board be more competitive in receiving FTA grant money.

“One of the fears we’ve had is if the (FTA) moves the double track forward but not at the 50% (match) that we saw it at,” Kostielney said. “At least the state is entertaining the possibility of picking up that cap.”

Kostielney said he’s happy the board will continue to include equal representation for each of the four counties, and hopes some members from the current NICTD board will continue to serve.

“If it helps strengthen our proposal on the double track, that’s fine by me,” Kostielney said. “The key point is this could be one of the most significant economic development projects in Northern Indiana history.”