T vows it can pay more for Silver Line

MBTA officials are revising their financial proposal for the $760 million construction of phase III of the Silver Line after the Federal Transit Administration raised serious concerns about the agency's finances and downgraded the project to the lowest possible rating.

The federal agency, which has already paid for a significant amount of the project's first two phases, informed the Massachusetts Bay Transportation Authority of the changed status to "not recommended" in November, said MBTA spokesman Joe Pesaturo.

Tina Burke, spokeswoman for the Federal Transit Administration, said that the rating "does not mean the end of the project in any way" and that federal officials believe the project is "very promising."

She said the agency could revise the rating next year if the MBTA clears up the financial concerns.

Neither the MBTA nor the federal agency would specifically identify the financial concerns yesterday. But in a recent letter to federal officials on the matter, US Representative Michael E. Capuano, a Somerville Democrat whose district includes much of Boston, said that "chief among FTA's concerns is that the MBTA may not have the financial resources to both maintain its transit system and fund this new project."

A report last year by the Massachusetts Taxpayers Foundation said the MBTA remains in deep debt and in need of significant changes to avoid a financial meltdown.Phase III of the Silver Line is considered one of the MBTA's top priorities. The project calls for state-of-the-art buses to run in two tunnels under Chinatown, starting near New England Medical Center, by 2010.

Pesaturo said that the MBTA would be able to provide money for the project and that part of the revised plan the authority will submit in coming months calls for splitting funding 50-50 with the federal agency on the final phase. The previous proposal called for the MBTA to pay 40 percent.

The federal agency paid for 80 percent of the second phase.

Asked whether he thought the MBTA had the ability to pay for 50 percent of the project, Capuano said: "Right now, the FTA doesn't think they do. The concern is real."

Michael Widmer, president of the taxpayers' foundation, said that after two studies on the MBTA's finances, he thinks the authority's "participation in this project was questionable at 40 percent and is even more so at 50 percent."

He added that "the T's capital budget is under enormous pressure and if they go ahead and fund 50 percent of this it will either jeopardize their long-term financial stability or require sacrificing upgrades, maintenance, and modification of the current system."

Pesaturo, however, disagreed.

"We have the financial capacity to do this," he said, declining to say how the authority would do so, except to note that "we have the highest bond rating of any state agency, including the Commonwealth itself."

MBTA general manager Michael Mulhern, in a letter to the federal agency in December, said the issue may be just a misunderstanding.

"We are very concerned that FTA's analysis may be incomplete or may be based on a misunderstanding of the financial information provided by the MBTA for this project," he wrote.

Asked yesterday to describe the FTA's specific concerns, Pesaturo said, "We're talking about accounting principles here."

When finished, the tunnels would link the Silver Line's already completed Washington Street route from Dudley Square to subway lines near New England Medical Center, Downtown Crossing, and South Station.

Another set of tunnels, expected to open this year as part of the project's second phase, will extend the bus line from South Station to South Boston and eventually to Logan Airport.

Ultimately, the Silver Line is slated to offer commuters a "one-seat ride" from Roxbury and the South End to South Boston and the airport.

MBTA officials and Boston business leaders have said that completing the Silver Line's third phase would help determine the success of bus rapid transit in Boston and the growth and economic success of the South Boston waterfront and the Massachusetts Convention Center.

Burke, Federal Transit Administration spokeswoman, said the agency's officials would work closely with the MBTA to "reach what we hope is a workable solution to improve the financial plan."

"We're not in the business of sabotaging transit projects," she said. "We want to make sure tax dollars are being spent wisely and that we're getting the best plan."

Burke also said the new rating would not stop the flow of any already-appropriated funding for the project. Pesaturo said the MBTA anticipated receiving $2 million earmarked for design and engineering plans this year.