Port Authority officials appear ready to move ahead with a light-rail extension to the North Shore and may have found the extra money to cover soaring, inflation-driven costs.

Clues about their intentions for the multimillion-dollar undertaking surfaced at authority board committee meetings yesterday.

Henry Nutbrown, manager of engineering-construction, said the Federal Transit Administration is ready to sign a full-funding agreement for its share of the costs; that a pre-award meeting is scheduled next week with the low bidder to bore twin tunnels beneath the Allegheny River, an indication that a contract is pending; and that the project will be submitted to Congress in June for a 60-day review, typically little more than a bureaucratic formality.

He said he expects to hear good news.

But, he cautioned, "I'm the eternal optimist. The board makes the final decision, and the board has not done that."

If all goes as Mr. Nutbrown outlined, the board is expected to approve a $156.5 million contract to launch construction at its May 26 meeting, five days before a 120-day limit expires on a joint bid by West Mifflin-based Trumbull Corp. and Japan-based Obayashi Corp.

The bid was $21.5 million over engineering estimates. But the Federal Transit Administration, reacting to unprecedented impacts on construction brought about by high energy, cement and steel costs on projects across the nation, is said to be willing to provide more money.

The last cost estimate for extending the light-rail system to the North Shore and building three stations stood at $393 million, with $314.4 million from the FTA and other federal sources. The money cannot be used for operating expenses or transferred to other capital projects.

Mr. Nutbrown refused to divulge the latest estimate or discuss how much extra federal funding the authority may receive.

"These are sensitive issues" still in various stages of negotiations and approvals, he said.

The pending contract covers about half of the civil work needed to build the 1.5-mile extension north of Gateway Center station, Downtown. It includes boring twin tunnels under the Allegheny and constructing 1,200 feet of cut-and-cover tunnel along the western side of PNC Park and a station shell there.

Mr. Nutbrown said the project has to be run past Congress again because of changes that included dropping a spur from Steel Plaza station to the David L. Lawrence Convention Center and "right-sizing" on the North Shore Connector to bring costs closer to budget.

The authority rejected a first round of bids for the twin tunnels last September as too high. The contract was repackaged, but the bids opened in February also exceeded budget.

On May 26, the board can award the $156.5 million contract "conditionally," with an understanding that the Federal Transit Administration will come through with approvals and funding as anticipated. Another option is to get the low bidder to agree to an extension, not likely given rapid inflationary increases in the construction industry.

While twin tunnels and the North Shore alignment have triggered some criticism, proponents of the project argue it is a key to continuing development and interest in the North Shore and tying it to Downtown, similar to how the T has helped shape Station Square.