The now $435 million North Shore Connector project to extend the Light Rail Transit system via twin tunnels under the Allegheny River has received two key approvals -- from outgoing U.S. Transportation Secretary Norman Mineta and the Office of Management and Budget.

The Port Authority received notification yesterday from Washington, D.C.

The last three approvals appear on the way -- from the authority's nine-member board of directors, which has scheduled a special meeting for Thursday to award the first construction contract; from Congress after a 60-day review, which started yesterday and is usually a formality; and from the Southwestern Pennsylvania Commission, which is expected to amend the region's transportation funding program July 31 to officially authorize the extra North Shore Connector spending.

The flurry of bureaucratic activity puts the project on track for a fall groundbreaking, followed by more than three years of work.

It also sets the stage for the Federal Transit Administration to sign a full-funding agreement in September, committing it to a $348 million share of costs.

The elevated First Avenue station that opened several years ago notwithstanding, the 1.2-mile extension will be the most transit work Downtown since the early 1980s, when Port Authority built the subway.

This time, the authority will excavate only two blocks on Stanwix Street, compared with more than 10 blocks on Liberty and Sixth avenues two decades ago, when major intersections through the heart of the city also were restricted.

Work on the T extension was supposed to have been under way by now, based on the original timetable, but low bids have twice exceeded budget.

The first round -- 25 percent over budget -- was rejected. The contract was repackaged and rebid.

In the second round, the low bidder extended a 120-day deadline to June 30 and then July 15 while the authority worked with local, county and state sources to cover a 14 percent overage.

When it meets Thursday, the board will beat the deadline by only two days. Several members are said to be skeptical, but a majority is expected to prevail and award a $156.5 million contract to the joint venture of West Mifflin-based Trumbull Corp. and Japan-based Obayashi Corp.

Allegheny County Chief Executive Dan Onorato, also said to have reservations, could not be reached for comment.

Although the Trumbull-Obayashi bid is $21.5 million over budget, the contract covers a significant amount of the total project.

Included are boring twin tunnels under the river and lining them with concrete; excavating 1,200 feet to transition the tracks to ground level west of PNC Park; excavating Stanwix Street between Fort Duquesne Boulevard and Liberty Avenue to extend the subway north of Gateway Center station; and building new station shells Downtown and next to PNC Park.

"We're very pleased that the project continues to meet all necessary approvals," Port Authority spokesman Bob Grove said. "The federal government, the primary funder of the project, continues to lend full support."

Budget-busting costs, which led the authority to eliminate a proposed spur from Steel Plaza station to the David L. Lawrence Convention Center and the purchase of eight light-rail vehicles, have been attributed to high energy, steel and cement prices causing civil construction costs worldwide to soar.

Records show $48.4 million has already been spent or authorized for various stages of planning, environmental clearance and engineering since 1999.

The final cost breakdown for the $435 million project: $348 million from the federal government, $72.5 million from the state, and $14.5 million from the county, to be paid in installments through 2010, when the 1.2-mile line is to be completed.