The Federal Transit Administration approved Ariz.-based Valley Metro Rail’s request to enter project development for Tempe Streetcar, a 2.6-mile extension of the Valley Metro system. This marks the first step in receiving federal project approval and ultimately federal funds to build the extension.

The streetcar is currently planned to travel as a one-mile downtown loop along Mill and Ash Avenues and south to Apache Boulevard, with two route modifications to be explored.

The approval of project development allows for the completion of the environmental study and initiation the engineering phase.

The project cost is estimated at $130 million. At this time, more than half of the funding has been identified through Proposition 400 regional transit tax and federal air quality dollars. The city of Tempe’s local transit tax funds all operations costs with a portion of the cost offset by passenger fare revenue.