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The Federal Transit Administration (FTA) as approved Valley Metro Rail's request to enter the project development phase for a 2.6-mile streetcar system in Tempe, Ariz.

The FTA's approval enables Valley Metro to complete an environmental study and initiate the engineering phase for the $130 million Tempe Streetcar project, which would be an extension of Valley Metro's system, agency officials said in a prepared statement.

The proposed streetcar would travel along a one-mile downtown loop along Mill and Ash avenues and south to Apache Boulevard. Two route modifications are being explored: Rio Salado Parkway west to Mill Avenue, downtown loop to Apache Boulevard and east to Rural Road; and downtown loop to Apache Boulevard and east to Terrace Road.

Currently, more than half of the project's funding has been identified through Proposition 400 regional transit tax and federal air quality dollars. The city's local transit tax funds all operational costs with a portion of the expense offset by fare revenue.

"The streetcar in downtown Tempe serves as a critical connection to the existing transit system and provides additional mobility options for a community having a high demand for transit," said Valley Metro Vice Chair Shana Ellis.