September 9, 2014 --

The U.S. Transportation Department notified Congress on Tuesday that it will award Detroit's $136 million Woodward Avenue streetcar project a $12.2 million award that will help complete the project.

In April, the city of Detroit applied for a $12.2 million grant for M-1 - after receiving $25 million from the U.S. Transportation Department in January 2013 - and warned in its application that without additional federal funding "it is doubtful that the project - to which so much time, energy, and financial commitment has been dedicated by all its partners - will be able to go forward."

The Detroit News obtained the notice confirming the award.

The Transportation Department notified the Senate Appropriations Committee that M-1 is getting $12.2 million.

Several of Michigan's congressional Democrats - including both U.S. Sens. Carl Levin, D-Detroit and Debbie Stabenow, D-Lansing - made a major push to get funding, writing the White House chief of staff, Obama adviser Valerie Jarrett and other top advisers on the project. Both senators repeatedly pushed administration officials to consider the project, which they believe is essential to helping boost Detroit economic development.

While waiting for a decision, M-1's board decided to move forward in early June with construction and M-1 broke ground in late July on the 3.31-mile project still at least $12.2 million short of funds. But its CEO, Matt Cullen, said it was essential to move forward - and added if M-1 failed to move, it would miss another year of construction and access to federal tax credits critical to the project.

"We've been figuring it out all along; every time we're confronted with a circumstance, we figure out how to deal with it and to move forward with the project," M-1 CEO Cullen said in a telephone interview last week. He didn't return messages seeking comment Tuesday.

The Transportation Department is expected to formally announce the latest TIGER grants on Friday. A spokeswoman declined to comment Tuesday.

The Detroit News obtained the 30-page application the city filed with the Transportation Department under the Freedom of Information Act.

The application - which hasn't previously been disclosed publicly - shows the city sought $9.3 million for a vehicle storage and maintenance facility and associated track, $1 million for fiber duct to support broadband upgrades at research and educational institution in Detroit and $280,000 to complete streets upgrades to enhance non-motorized and connectivity to the system. The application also sought a 15 percent contingency fund .

The application also shows M-1 has faced other financial issues.

The application filed in April disclosed new details on financing for the project from its nearly two dozen benefactors, from Michigan taxpayers to Wayne State University to Detroit's most influential corporations and foundations. Corporate, foundation and state supporters have pledged $121.75 million toward the project's $135.95 million construction and other capital needs, and $20 million for a reserve fund.

M-1 is planning to hold an event Sept. 15 touting its progress with members of Congress.

In a Detroit News interview last week, Cullen said he was "cautiously optimistic" that the project will get the additional federal and added he's in talks with prospective donors to add at least another $6 million in contributions - with $4 million earmarked for the reserve fund and $2 million for the capital fund.

With the new funds, M-1 says it expects to have $24 million for the reserve fund - but plans to have $25 million by the time the first street car heads down Woodward in late 2016. The reserve fund is intended to cover operating and maintenance costs, which are expected to initially exceed fares collected from riders, for six years.

M-1 expects about 1.8 million riders in its first 12 months of operation.

Cullen said new donors, whom he declined to identify, will be announced after funding agreements are signed.

The application document filed in April discloses the project's biggest donors - Quicken Loans, Penske Corp. and the Kresge Foundation - agreed to boost funding to its reserve fund by $8 million, but the project's capital fundlost $4.5 million in donations when the Kellogg Foundation opted not to go through with a $3 million contribution and Compuware cut its planned donation in half to $1.5 million.

Dana Linnane, a spokeswoman for the Battle Creek-based Kellogg Foundation, said while it had written a letter in support of the project, and its own staff had recommended a $3 million grant, the foundation board did not approve the contribution. The foundation, she said, generally does not fund construction projects. Compuware didn't immediately respond to a request for comment.

The Kresge Foundation agreed to boost support for the project in June and has now committed $49.6 million to the project - significantly more than previously known, the foundation and M-1 confirm. Lesser amounts are promised by all three Detroit automakers, as well as Quicken Loans, Penske Corp., hospitals and health care insurer Blue Cross Blue Shield, banks and others.

Earlier this year, Quicken and Penske were each listed by M-1 as contributing $3 million. Cullen said Quicken and its Rock Financial unit have upped their total contributions to the project to $10 million and $7 million by Penske.

Quicken has agreed to contribute $2 million to the capital project and $5 million to the operating reserve, while Kresge is contributing $2 million to the capital project and $2 million to the operating reserve.

"In order to move forward in the way that we did and when we did, different people made decisions to step up to continue to support the project," Cullen said.

The project is expected to reach another milestone when it closes on about $8 million in "New Market Tax Credits" in two phases, with the first installment closing on Tuesday and the second in late October, M-1 chief financial officer Jenilyn Norman said. But that's less than the $16 million the project first predicted and the $10 million it estimated it would receive earlier this year. As a result, M-1 will close that gap with $2 million of the $6 million in planned new donations it has said they have been in talks to receive.

The New Markets Tax Credit Program was established by Congress in 2000 to spur new or increased investments into operating businesses and real estate projects located in low-income communities. It permits individual and corporate investors to receive a tax credit against their federal income tax return in exchange for making equity investments in specialized financial institutions.

Quicken Loans, Penske and Kresge contributions include funds for expenses not covered by the $136 million budget or $24 million operating reserve fund, Cullen said.

Cullen emphasized that M-1 made the decision to launch construction even as he acknowledged the project was still awaiting on a major funding decision. It shifted some money from its operating reserve fund to capital funds when it decided to move forward with construction.

The Kresge Foundation, the project's largest donor, in 2009 approved $34.6 million for the M-1 project and in June approved another $15 million, making the foundation's total $49.6 million, said Laura Trudeau, a spokeswoman for the foundation. Of that, $38.4 million is part of the $136 million budget and the operating reserve - with other Kresge funds used allocated for prior project early stage development costs, project management and insurance costs, and other expenses required to build the project, said Norman, M-1's CFO.

"It's been a tremendous balancing act to keep this all in place," Cullen said of the dozens of funding pieces. "We're underway and as we committed all along, we were going to get it done.... The exact (funding) algorithm changes from time to time - not surprising over seven years."

Cullen said that during the project's seven-year history, its finances have changed many times. It reduced its operating reserve fund budget this year, for example, from $25 million to $20 million, "in order to be able to commit to move forward with the project" while awaiting a decision on the $12.2 million federal grant, Cullen said. "We couldn't lose another construction season."

Although construction did not begin until mid-summer, crews have been making significant progress. The first mile of track has been delivered. Sections of track are being welded and are be moved to the Woodward Avenue construction site by this week.