DETROIT (WWJ/AP) – A proposed passenger rail system running from downtown Detroit to the city’s New Center area won’t get a $25 million grant that supporters were seeking, but the project remains in the running for equal funding from other programs, U.S. Transportation Secretary Ray LaHood said.

In a letter to Roger Penske, who heads the M-1 Rail group backing the project, LaHood said there were lingering concerns about the project and how its operations will be financed. LaHood said the project wouldn’t receive the grant under the Transportation Investment Generating Economic Recovery program, according to reports.

LaHood met earlier this month in Detroit with Mayor Dave Bing, Gov. Rick Snyder and members of the private M-1 Rail group. He left them with questions to answer about costs and about who would eventually run the 3.3-mile, $137 million rail line project.

At the time, LaHood was interested in finding out whether a regional transportation authority would take the reins at some point and what the long- and short-term operating costs would be. All sides said they would meet again with LaHood within 60 days.

The M-1 group says it has raised most of the funds needed to get the project going. The group is led by Penske, chairman of Penske Automotive Group, and other Detroit business leaders.

LaHood wants all the parties to answer questions and concerns, Snyder said Tuesday in Lansing.

That is “a natural part of this process,” Snyder said. “We need to do a little more work in terms of what’s going on in Michigan with the M1 group, the city the state all working together. I believe the Department of Transportation believes there could be funding for this project.”

U.S. Sen. Carl Levin said the announcement was “positive news” for the rail project because LaHood remains committed to light rail in Detroit and to finding alternate funding.

TM and © Copyright 2012 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2012 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed. The Associated Press contributed to this report.


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