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On Tuesday, the San Francisco Municipal Transportation Agency's (SFMTA) board approved the financial plan for the Central Subway, which is the second phase of the SFMTA's Third Street light-rail project.

The board's approval is a crucial step toward submitting the plan in February to the Federal Transit Administration (FTA) for the New Starts program, SFMTA officials said in a prepared statement. The agency's goal is to obtain a full-funding grant agreement with the FTA by year's end.

SFMTA closed the project's $137 million funding gap with federal, state and local fund sources, and now is on track to receive the full-funding grant agreement that will secure $942.2 million of federal New Starts funds for the project, said Nathaniel Ford Sr., SFMTA's executive director and chief executive officer.

The Central Subway has received $72 million in New Starts funding to date. The FTA granted environmental clearance in November 2008 and granted approval to begin the final design in January 2010. The total project cost is expected to reach $1.57 billion, with the federal government contributing close to $1 billion.

When Central Subway service begins, the 1.7-mile extension of the existing T Third rail line will connect communities from Visitacion Valley to Chinatown with light-rail service.