Kate Nash When Gov. Bill Richardson announced a plan in 2003 to finance several state highway projects — labeled Governor Richardson's Investment Partnership, or GRIP — it was received with fanfare and a sense that the state had a smart way to get some key projects done while employing thousands.
And get things done it did: There's a commuter train thanks in large part to GRIP, and new highway lanes and interchanges around New Mexico.
But seven years later, questions remain about projects that didn't get done, and the costs.
Critics say the number of jobs promised didn't pan out and the money now owed is too high.
"In my estimation, it wasn't worth it," said Rep. Larry Larrañaga, R-Albuquerque, a former highway department secretary. "What they didn't do is plan."
Larrañaga and other critics say the plan has left the state paying too much in debt service on bonds, and they lament that not all the projects planned got done.
Department of Transportation Secretary Gary Girón defends the program, calling it no small feat and the largest transportation infrastructure program the state has undertaken.
"By proactively investing in GRIP in 2003, the department was able to get ahead of many critical need road projects. In the last few years, with state and federal funding both down, the benefit of GRIP has been clearly visible," he said in a statement.
"Many roads have been rehabilitated and reconstructed that we would not have been able to fund without the GRIP program," he said.
The debt on the bonds is paid for through the state's road fund and with federal funds that are dedicated to debt service. Money for the road fund comes from taxes on gasoline and diesel fuel, a weight-distance tax and vehicle registration fees.
The most expensive GRIP project of all — the Rail Runner passenger train service — started service in metro Albuquerque in 2006 and expanded service from Belen to Santa Fe by late 2008.
Of all the GRIP projects, it is perhaps the most criticized, but among the most used. The fiscal year that ended June 30 was the train system's most successful to date, although one-way ridership between the second quarter of last year and the second quarter of this year dropped from 329,874 to 284,667.
Other projects also have been lauded, and Girón said New Mexico this year was ranked fourth in the nation for best roads by Reader's Digest, and recognized by the American Association of State Highway and Transportation Officials and the Federal Highway Administration.
Still, some question the cost of long-term bonding for highway projects, something Sen. John Arthur Smith said became popular in New Mexico under former Gov. Gary Johnson.
Smith, chairman of the Senate Finance Committee and a Deming Democrat, said he didn't like the idea back when Johnson pushed it.
"I think both administrations have robbed Peter to pay Paul and build new highways and not take care of the existing systems we have," he said.
Just on the first phase of spending, known as GRIP I, the total amount financed was $2.5 billion, which includes principal, interest and associated fees. The state still owes almost $2.2 billion, which it will pay through 2027.
And Larrañaga questions the way the bonds were structured.
"Some of those bonds are out there 20 years ... when the life of the road isn't that long," he said.
Girón, however, said that's standard practice.
The road to GRIP
To finance the projects, the Department of Transportation partnered with the New Mexico Finance Authority. Planners envisioned projects all around the state, including rebuilding large parts of U.S. 84/285 between Pojoaque and Española, a new interchange at Interstate 40 and Coors Boulevard in Albuquerque, and fixing up U.S. 60 from Abo to Willard.
The hype was big, and the impact was expected to be large.
But by December 2005, the program was already short on cash for everything it planned, and criticism mounted. Supporters at the time blamed rising construction costs in part for increased prices to finish the projects.
Adding to the situation was the increasing cost of the $425 million Rail Runner Express, originally estimated to have a price tag of about $300 million.
Even with a mounting deficit, by April 2007, Richardson was ready for round two of the program. Lawmakers balked, refusing to sign off at first on more spending.
"We just flat didn't have the money, and here we were moving to GRIP 2," Smith said.
They later agreed to a smaller amount in a special session, amid great political pressure, Smith said.
"There was an awful lot of pressure to go GRIP 2," he said. "It flew out of the House like it was on twin jet engines."
Smith and others in the Senate worked to trim back the scale of the second round, and to require more funding in local matches than the House wanted.
To be clear, the two GRIP programs sound the same, but are set up differently.
GRIP 1 took on large projects, while GRIP 2 focused on local and tribal road projects. Under GRIP 2, the state provides between 55 percent and 90 percent of the funding, and a local government matches the rest.
While the new projects are generally well received by the public, some lawmakers said they had little say in the projects that were chosen.
"I think most of that was pre-engineered at the highway department and on the fourth floor," Smith said, referring to the Governor's Office in the Capitol.
Girón said 97 construction projects worth $1.2 billion have been awarded as part of GRIP. Fifty-four of those are done, and 88 percent have been awarded to New Mexico contractors.
The two packages included projects all around the state, and GRIP 2 included more than $12 million for Santa Fe County road projects, including roughly $4.7 million in drainage and paving improvements to Cerrillos Road.
All that work means the GRIP projects put many New Mexicans to work, no doubt. But was it as many as pledged?
A 2003 news release about the program from Richardson's office quoted estimates that 63,000 new jobs would be created. A few months later, though, the projection was revised to 50,000.
Girón said last week that 4,559 people were directly employed by the Department of Transportation on GRIP projects.
But Mike Gibson, executive director of the Associated Contractors of New Mexico, said that when all the secondary jobs such as subcontractors and suppliers are counted, the number of people employed by GRIP work is as high as 25,000.
"The GRIP program was a major economic development tool for the state," he said. "It sent a huge message to business and industry not only in New Mexico but in surrounding states that New Mexico is serious about transportation infrastructure."
And, Gibson said, had the state been able to do all the projects it planned, he thinks the number of employed would have been close to original estimates.
Along with better roads, the GRIP program has a political legacy as well.
In August 2008, questions surfaced about the company that four years prior had won the contract to handle the financing of the program.
Federal investigators wanted to know how Beverly Hills-based CDR Financial Products got hired to work on the bond issue.
CDR was part of a team of banking, investment and financial advisers selected by the New Mexico Finance Authority to put together the bond financing deal for the projects, which was approved in 2003.
It later was reported that the firm didn't have a contract for the bond work.
CDR owner David Rubin made two contributions to political organizations close to Richardson around the time his company was getting work with the state.
Richardson has denied any wrongdoing, and the U.S. Justice Department decided not to seek indictments of Richardson or his top aides.
While a Richardson spokesman at the time said the governor was "gratified that this yearlong investigation has ended with the vindication of his administration," U.S. Attorney Greg Fouratt said the move to not bring charges "is not to be interpreted as an exoneration of any party's conduct."
GRIP AT A GLANCE
Total projects: 39
Total amount contracted: $1.3 billion
Total paid to date: $950 million
Total shortfall to complete all projects: $445 million
Biggest road project in this phase: I-40 and Coors Boulevard interchange, which cost nearly $96 million
Most expensive project overall: The Rail Runner Express, which cost $425 million
Smallest project in this phase: $606,590 to install 0.2 mile of Intelligent Transportation Systems equipment for monitoring traffic and driving conditions on I-40 in Albuquerque
Examples of projects left undone: State officials say these are mostly reconstruction projects such as areas along U.S. 54 between Tularosa and Vaughn, which is currently a two-lane road with no shoulders, no passing zones and various deficient areas.
Total projects: 47 done, 24 under construction and 13 either designed or being designed
Total original contract amount: $110.5 million, $9 million of which was rescinded in a budget-trimming measure this year that voided inactive capital-outlay projects
Total paid to date: About $69 million
Total shortfall to complete all projects: About $41 million to complete 17 projects
Biggest project in this phase: $4.7 million of GRIP 2 funds went to an $8.5 million project on Cerrillos Road, which included installing a 66-inch storm drain system, bike lanes and median reconstruction.
Smallest project in this phase: The town of Hope spent about $27,000 of GRIP 2 funds on $30,000 in pothole repairs.