FY 2010 Business Plan (Including FY 2010 Annual Budget and Twenty-Year Financial Plan) Dallas Area Rapid Transit Board of Directors
Seated: John Danish (Secretary), City of Irving; Randall Chrisman (Chair), Cities of Carrollton and Irving; Robert Strauss (Vice Chair), City of Dallas; and Pamela Gates (Assistant Secretary), City of Dallas. Standing: Scott Carlson, City of Dallas; Claude R. Williams, City of Dallas; Faye Wilkins, Cities of Dallas, Plano, Glenn Heights, and Cockrell Hill; William Velasco, City of Dallas; Angel Reyes, City of Dallas; Raymond Noah, Cities of Addison, Highland Park, Richardson, and University Park; Loretta Ellerbe, City of Plano; William Tsao, City of Dallas; Jerry Christian, City of Dallas; and Mark Enoch, Cities of Farmers Branch, Garland, and Rowlett. Not pictured: Tracey M. Whitaker, City of Garland.
400-023-79 CW
Dallas Area Rapid Transit
FY 2010 Business Plan (Including FY 2010 Annual Budget and Twenty-Year Financial Plan)
FY 2010 Business Plan (09/22/09) Table of Contents
TABLE OF CONTENTS FY 2010 BUSINESS PLAN
Section 1 – Executive Summary System Development Progress……..……………………………... EX-4 Financial Planning and Management Progress……….……………. EX-6 Strategic Priority I: Strive to Exceed Customer Expectations…….. EX-8 Strategic Priority II: Manage System Development and Maintain Infrastructure……………………………………………………….. EX-9 Strategic Priority III: Build & Maintain DART’s Regional Transportation Leadership…………………………………………. EX-11 Strategic Priority IV: Drive Change Through Employee Engagement………………………………………………………… EX-12 Strategic Priority V: Maximize Funding Resources………………. EX-12 Strategic Priority VI: Use Technology to Integrate & Advance Services & System…………………………………………………. EX-14 Section 2 – FY 2010 Annual Budget Overview…………………………………………………………... BUD-1 Sources and Uses of Funds…………………..……………………. BUD-1 Revenues……………………...…………………………………… BUD-2 FY 2010 Operating Budget………….…………………………….. BUD-4 FY 2010 Capital Budget…………………………………………… BUD-7 FY 2010 Net Debt Service Budget………………………………… BUD-13 Position Summary…………………………..……………………… BUD-14 DART Key Performance Indicators………..……………………… BUD-16 Focus on the Customer-DART’s First Priority.…………………… BUD-16 Activity-Based Costing Initiative……………..…………………… BUD-20 Section 3 – FY 2010 Twenty-Year Financial Plan Introduction………………………………………………………... FP-1 Board Approvals…….……………………………………………... FP-1 Overview………………………..….……………………………... FP-2 Sources and Uses of Funds.………………………………………... FP-5 Structural Balance of the Budget…………………………………... FP-6 Sources of Funds…………………………………………………... FP-8 Uses of Funds……………………………………………………… FP-15 Operating Expenses.………………….………………………….. FP-15 Capital and Non-Operating Expenses…………………………….. FP-18 Debt Program……….……………………………………………. FP-20 Supplemental Financial Information…….………………………… FP-22 Major Financial Plan Assumptions………………………………… FP-23 Potential Risks and Opportunities……………….………………… FP-28
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FY 2010 Business Plan (09/22/09) Table of Contents
TABLE OF CONTENTS FY 2010 BUSINESS PLAN
Section 4 – Agency-wide Overview Purpose of Business Plan…………………………………………... AW-1 Board and Policy Direction………………………………………... AW-1 Business Planning Process…………………………………………. AW-7 Budget and Financial Plan Approval and Amendments…………… AW-8 Budget Basis and Presentation of Amounts and Years……………. AW-9 Related Reports…………………………………………………….. AW-9 Acronyms…………………………………………………………... AW-9 Overview of DART’s Strategic Alignment Structure…………….. AW-10 Management Action Plans and Performance Measurements……… AW-10 Employee Performance…………………………………………….. AW-13 Customer Focus……………………………………………………. AW-14 Safety/Security………………………………………..…………… AW-16 Safety Programs……………………………………………………. AW-21 Provide Customer-Driven Service…………………………..…….. AW-24 Employee Focus………………………………….………………... AW-27 Technology…………………………………………………..…….. AW-30 Stakeholder Focus……….……………………….………………... AW-34 Section 5 – Customer – Bus Overview…….…………………………………………………..… BUS-1 Bus Scorecard – Key Performance Indicators…...……..………….. BUS-1 Bus Ridership Trends………….……..….………………………… BUS-2 Support the First Phase of System Build-Out.…………..………… BUS-3 Ridership Development Action Plan…………………….………… BUS-4 Subsidy Per Passenger……………………………………………... BUS-10 DART Innovative Services…...……………………………………. BUS-11 Activity Center Shuttles……....……………………………………. BUS-11 Bus Cost Model……………..………………..……………………. BUS-12 Section 6 – Customer – LRT Overview…………………………………………………………... LRT-1 Light Rail Scorecard – Key Performance Indicators………………. LRT-1 LRT Ridership……………………………………………………... LRT-4 LRT Subsidy Per Passenger………………………….……………. LRT-5 LRT Expansion…………………………………………….………. LRT-5 LRT Costs…………………………………………….……………. LRT-13 LRT Cost Model………………………..…………….……………. LRT-13
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FY 2010 Business Plan (09/22/09) Table of Contents
TABLE OF CONTENTS FY 2010 BUSINESS PLAN
Section 7 – Customer – Commuter Rail & Railroad Management Overview…………………………………………………………... CR-1 Commuter Rail – TRE Scorecard-Key Performance Indicators.….. CR-1 TRE Ridership…………….…..…………………………………... CR-3 Commuter Rail – TRE Costs and Subsidy Per Passenger….……… CR-5 Departmental Overview…………….……………………………... CR-6 Commuter Rail and Railroad Management Cost Model………..… CR-11 Section 8 – Customer – Paratransit Services Overview…………………………………………………………... PAR-1 Paratransit Services Scorecard – Key Performance Indicators……. PAR-2 Paratransit Ridership……………………………………………….. PAR-2 Paratransit’s Productivity………………………………………….. PAR-5 Purchased Transportation Contract………………………………... PAR-6 Paratransit Costs and Subsidy Per Passenger……………………… PAR-7 Paratransit Cost Model………….…………………………………. PAR-7 Section 9 – Customer – HOV/General Mobility HOV Overview……….………………………………………………... HOV-1 HOV Scorecard – Key Performance Indicators…………….…… HOV-2 HOV Projects...…………………………………………………... HOV-2 Ensure I-30 HOV Lane Opens on Time…………………………. HOV-7 Stemmons HOV Gates to Improve Safety………………………. HOV-7 LBJ and Central HOV Operations…………….…………………. HOV-7 HOV Service has Lowest Subsidy Per Passenger…………..…… HOV-7 General Mobility Overview ………………………………………………………... HOV-8 Vanpool Scorecard………………..……………………………... HOV-8 General Mobility – Road Improvement Programs………………. HOV-10 Section 10 – Appendix
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FY 2010 Business Plan (09/22/09) Table of Contents
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Section 1 Executive Summary Index of Exhibits
Exhibit 1.1 FY 2010 Financial Plan Measures Comparison…………………….. EX-2
Exhibit 1.2 FY 2010 Twenty-Year Financial Plan-Key Comparisons as of 8/11/09…………………………………….……………….…….….. EX-3
Exhibit 1.3 FY 2010 Financial Plan Measures Comparison for FY 2028………. EX-4
Exhibit 1.4 Staffing Growth – 2007-2014………………………………………. EX-5
FY 2010 Business Plan (09/22/09) Executive Summary
Executive Summary
Fiscal Year 2009 was one in which firm foundations were developed to support the substantial, sustainable expansion of DART systems and services.
• The DART Board of Directors adopted a new set of Strategic Priorities to provide focus for the DART team over the next five to ten years. • The Twenty-Year Financial Plan was restructured to ensure that DART would be able to meet its scheduled development of new light rail lines through 2013. • Design-Build contracts were awarded for the Orange Line (Irving) and the Blue Line extension (Rowlett). Construction remained on schedule for the Green Line with the inaugural segment opening from the Dallas Central Business District (CBD) to Fair Park on September 14, 2009. • New fares were adopted that will go into effect September 14, 2009. • The bus modernization and procurement process was fully evaluated and will result in a new formal procurement, to be developed with the benefit of clear policy guidance that came from the original effort in early FY 2009. • DART sold $1 billion in bonds, the largest issue in its history, maintained its Triple-A bond rating, and achieved an interest rate of 4.0167% by taking advantage of the newly- introduced Build America Bond program. • A near-term, five-year financial plan was implemented to address the current economic downturn and ensure that DART would emerge in 2014 with strong financial underpinnings and fully capable of meeting its expanded system and service obligations.
The operating budget and capital budget for FY 2010 have been developed in the context of both the overall five-year financial management strategy and the Twenty Year Financial Plan (the Plan). Agency management was successful in meeting the target FY 2010 operating budget of $403 million, revised downward from earlier forecasts of $412 million. The overall capital budget plan for FY 2010 has been increased by $89 million over the prior estimates incorporated in the Amended FY 2009 Twenty Year Financial Plan adopted in May 2009. Most of the increase is due to timing differences associated with construction progress payments that will be made in FY 2010 versus FY 2009.
A comparison of the May Plan to the proposed FY 2010 Plan is provided in Exhibit 1.1. It should be noted that total annual debt service will be lower by more than $15 million, largely as a result of the lower long-term costs achieved in the June 2009 bond issue. This also improved the external coverage ratio.
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FY 2010 Business Plan (09/22/09) Executive Summary
Exhibit 1.1 FY 2010 Financial Plan Measures Comparison ($ in millions) FY09 FY09 (May Proposed (November) Amendment) FY10 Sales Tax Receipts $452.8 $387.8 $387.8 Operating Expenses $412.0 $403.6 $402.8 Capital Expenditures $1,169.2 $1,051.5 $1,140.0 Total Debt Service $134.6 $156.0 $140.8 Debt Outstanding $3,174.9 $2,999.9 $2,731.1 External Coverage Ratio 4.44 2.49 2.79 Internal Coverage Ratio 1.59 0.99 0.93 Net Available Cash $665.2 $614.9 $527.2
DART will not be able to achieve a positive Internal Coverage Ratio for the first three years of the Plan, however. Operating and other recurring revenues have continued to soften and will require the Agency to operate through 2012 with internal coverage ratios under 1.0. The Internal Coverage Ratio is a very important measure contained as a goal in the Board-approved Financial Standards. The ratio measures the extent to which recurring annual revenues meet or exceed the sum of annual operating expenses and debt service. A ratio of less than 1.0 cannot be sustained for an extended period of time. The current Plan forecasts that DART will re-establish a positive ratio in 2013.
The five-year forward financial outlook for DART forecasts an operating budget in 2014 of $477 million, approximately $40 million less than was projected in the original FY 2009 Twenty-Year Financial Plan adopted in the fall of 2009. This downward revision has been achieved through the combination of four factors: 1) lowered fuel prices that have been fully hedged through 2013; 2) lower interest costs as a result of the benefits of the Build America Bond program; 3) reduced operating costs due to the elimination of “duplicative bus routes” that are being replaced by the introduction of light rail service; and, finally 4) reduced staffing additions due to further refinements in the operating and maintenance model that utilizes annual hours and miles to forecast required staffing levels. The incorporation of more current operating data has permitted the model to be optimized and resulted in lower future headcount additions.
The Plan also confirms that the Internal Coverage Ratio will return to a positive number (above 1.0) by 2013, albeit only slightly positive. The challenge throughout the 2013 to 2020 period will be to improve this operating ratio to a higher level.
The five-year plan, which is fully incorporated into the Twenty-Year Financial Plan, now provides for full funding of the Irving-3 rail extension to Terminal A at DFW International Airport. This extension was previously short of a full funding allocation and assumed the receipt of federal funds to make up the shortfall. Once again, the June bond sale results were the contributing factor to remove the dependency on external funding.
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FY 2010 Business Plan (09/22/09) Executive Summary
Exhibit 1.2 provides an overview of key information for the next five years from the proposed FY 2010 Twenty-Year Financial Plan.
Exhibit 1.2 FY 2010 Twenty-Year Financial Plan Key Comparisons as of 8/11/09 ($ in millions) 2010 2011 2012 2013 2014 Operating Expenses $402.8 $422.8 $441.6 $460.2 $477.4 Capital Expenditures $1,140.0 $549.4 $299.8 $430.8 $389.2 Total Debt Service $140.8 $154.0 $170.0 $179.7 $198.8 Debt Outstanding $2,731.1 $3,142.3 $3,322.6 $3,671.8 $3,867.3 External Coverage Ratio 2.79 2.77 2.61 2.68 2.60 Internal Coverage Ratio 0.93 0.96 0.92 1.05 1.05 Net Available Cash $527.2 $375.0 $298.4 $362.0 $307.2
The Plan also provides for a limited amount of funding for preliminary feasibility, planning, environmental, and engineering studies for the Cotton Belt line, a 54-mile DART-owned rail corridor traveling east-west from Collin to Tarrant counties. This allocation will permit DART to position this regional rail program for an accelerated service opening date in the event that the public/private partnership initiative currently under discussion materializes. It will be difficult to make progress toward such an arrangement without the completion of preliminary engineering and feasibility analysis.
The Twenty Year Financial Plan incorporates provisions for the orderly development of a second light rail alignment in downtown Dallas (CBD-2) and the SOC-3 light rail extension in Oak Cliff (Blue Line). It should be noted, however, that 50% federal funding is now assumed for the CBD-2 alignment to fully accommodate a potential alignment that would pass by the new Convention Center Hotel in Dallas. The SOC-3 funding allocation has been increased by slightly more than $100 million to reflect updated estimates of potential costs for the segment. The Plan continues to assume that Cotton Belt service will be introduced in FY 2028, with actual construction commencing in 2025.
The updated Plan now forecasts that the total debt outstanding in FY 2028 will be nearly $215 million lower than the May 2009 Amended Plan. Internal coverage ratios will have returned to Financial Standard levels and the external coverage ratio, the key ratio evaluated by bondholders, will continue to move well beyond the minimum ratio of 2.0.
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FY 2010 Business Plan (09/22/09) Executive Summary
Exhibit 1.3 is a comparison of certain Financial Plan measures with FY 2028.
Exhibit 1.3 FY 2010 Financial Plan Measures Comparison for FY 2028 ($ in millions) FY09 FY09 (May Proposed (November) Amendment) FY10 Sales Tax Receipts $1,091.6 $1,091.6 $1,091.6 Operating Expenses $769.8 $714.9 $736.5 Capital Expenditures $1,319.6 $1,319.6 $1,303.5 Total Debt Service $484.3 $477.9 $460.5 Debt Outstanding $6,901.4 $6,913.0 $6,698.2 External Coverage Ratio 2.80 2.28 2.44 Internal Coverage Ratio 1.29 1.39 1.38 Net Available Cash $419.9 $442.2 $244.7
The following information is intended to provide a more complete overview of the major milestones that were met in FY 2009 and the major areas of emphasis for the DART team in the upcoming fiscal year. It is important to continue to emphasize how much work the Agency is undertaking in calendar year 2010. The Agency has never put into service this much new light rail capacity in a twelve-month period. This will significantly tax the resources of all departments. Concurrently, the Agency will be moving into the major construction phases for both the Orange Line and the Blue Line extension to Rowlett. And, of course, we must ensure that our existing bus, light rail, commuter rail, HOV, paratransit, and vanpool services continue to provide the level and quality of service we are committed to provide.
SYSTEM DEVELOPMENT PROGRESS
The Agency made great progress on the advancement of the development of the Orange Line to Irving and the extension of the Blue Line to Rowlett in FY 2009. The Rail Program Development and Procurement teams utilized a design-build procurement process to successfully solicit contractors to build the two segments. Contracts were awarded in late 2008 and early 2009, and the lines will be completed and ready for revenue service in time to meet commitments to our member cities.
The Orange Line will begin service to the Las Colinas Urban Center by December 2011, followed by service to Belt Line Road in December 2012. Service to Rowlett on the Blue Line will commence in December 2012.
The DART team successfully worked through the final alignment issues associated with the extension of the Orange Line into DFW Airport. The final plan was the result of many meetings with representatives from the DFW International Airport, the Fort Worth T, North Central Texas Council of Governments (NCTCOG), the City of Irving, and other member cities. Environmental studies are now underway, and final arrangements for award of a design-build contract on the final segment of the Orange Line will be a major initiative for the Rail Program Development team for completion within the next year.
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FY 2010 Business Plan (09/22/09) Executive Summary
Equally important, the DART team, working in close collaboration with the City of Dallas, has significantly advanced the analysis relating to the second rail alignment in the CBD. This alignment will be one of the major projects the Rail Planning staff will address in the upcoming fiscal year.
The Orange Line requires an operational Green Line. The Green Line, the longest light rail project under construction in North America, will become fully operational by December 2010. The first phase of the new Green Line, operating between Fair Park/South Dallas and Victory Station, will begin revenue service on September 14, 2009. The roll-out of service for the Green Line, including final staffing, training, marketing of the new service, planning opening events, communications, and media relations, will consume significant Agency staff time, materials, and other resources over the next fifteen months.
It is important to note the multi-year reduction in operating budget estimates does not imply that the Agency will avoid significant staffing additions over the next five-year period. To support the introduction of all of the new light rail service, DART will be required to continue to augment staffing levels in Transportation, Maintenance, Police, Customer Service, and Revenue collection. Exhibit 1.4 shows the absolute number of staffing additions, by function, that are included in the FY 2010 Plan. Even though the proposed staffing increases are lower than was estimated in the last Financial Plan, it is important to note that the increases still represent an additional 301 positions over the next five years, and a total of 685 positions since 2007. Given the severe fiscal circumstances other local governmental agencies are currently experiencing, DART is fortunate to be able to not only maintain but also increase our workforce so significantly.
Over 95% of the staffing increases between 2007 and 2014 are directly in support of system expansion. While those areas that are affected the most are detailed below, the areas included under “All Other Departments” also include buildout support positions in project management, rail safety, revenue collection, recruiting, HOV operations (supporting additional HOV miles in operation). Staffing increases in the general and administrative support areas are almost non- existent. All of these teams will be expected to accommodate the higher workload volumes through either the greater utilization of technology or workflow process improvement.
Exhibit 1.4 Staffing Growth 2007 – 2014
FY07 Approved Total 2008 - Grand Department Pos i ti ons FY0 8 FY0 9 FY1 0 FY1 1 -1 4 2014 Total % Change Maintenance 779 46 77 87 47 257 1,036 33% DART Police 227 43 52 42 35 172 399 76% Transportation 1,576 68 61 25 33 187 1,763 12% Customer Service 65 2 3 9 7 21 86 32% Materials Management 73 - 0 10 0 10 83 14% All Other Departments 617 22 10 5 1 38 655 6% Workforce Additions 181 203 178 123 685 Total Workforce 3,337 3,518 3,721 3,899 4,022 4,022 21%
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FY 2010 Business Plan (09/22/09) Executive Summary
We are proposing to maintain our compensation policies and benefits program for our workforce. The FY 2010 Annual Budget provides for the orderly continuation of performance-based merit and bonus programs. Additionally, employees will not be required to absorb any increase in health or life insurance in the upcoming year.
The DART Board, through Resolution No. 080114, directed staff to immediately begin the definition, development, and implementation of the business opportunity on the Cotton Belt corridor. Therefore, a Request for Information was solicited on May 21, 2009, to identify individuals and firms interested in a Public Private Partnership (PPP) for the Cotton Belt Commuter Rail Line. The PPP is to design, construct, operate, maintain, and finance a cross- regional passenger rail service starting on or about 2013.
DART staff must fully integrate significant service additions into the current system over the next four years. Every calendar year from 2009 through 2013 will bring new light rail openings. With each will come not only the work associated with new openings but also the work involved in redesigning bus system schedules and communicating the continual system changes to our riders.
FINANCIAL PLANNING AND MANAGEMENT PROGRESS
By any measure DART has been buffeted by extremely challenging financial forces during the past 12 months. Fortunately, the Agency has achieved considerable success in addressing the long-term financial obligations of the Agency while managing the more immediate challenges associated with a significant decline in sales tax revenues.
DART was materially aided in its ability to meet these challenges by the passage of the American Recovery and Reinvestment Act of 2009 (ARRA). By virtue of the passage of the ARRA, DART received nearly $61.5 million in unanticipated new funds as well as an advance reimbursement of $78.5 million in grant funding for the Green Line that was originally scheduled for 2014.
An even more significant benefit of the ARRA was a little-discussed provision called Build America Bonds (BABs) that provided government bond issuers the ability to access the corporate bond market while receiving a 35% tax credit to offset the higher interest costs of taxable bonds. DART was able to utilize this new debt category as part of a $1 billion bond issue sold and funded in June 2009, for a net effective interest rate of 4.0167%, which is nearly 124 basis points under what was contained in the approved Financial Plan. The inclusion of this form of debt resulted in a net savings of nearly $220 million in total interest costs when compared to what traditional tax-exempt borrowing would have required.
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FY 2010 Business Plan (09/22/09) Executive Summary
The financial circumstances described above served to offset some of the burden imposed by the economic downdraft impacting sales tax revenues. The FY 2009 Annual Budget anticipated $431 million in annual receipts. The downturn resulted in a revision down to $385 million, or a $46 million reduction in anticipated receipts. Even worse for the Agency was the effect on subsequent years’ annual operating budgets. Sales tax receipts for the upcoming fiscal year are unlikely to exceed the revised 2009 totals, thus resulting in a reduction of nearly $68 million below what had been previously forecast for FY 2010. Similar reductions must be anticipated for subsequent fiscal years. Our independent economists do not forecast a return to prior annual estimates until 2018. A ten-year history of DART sales tax receipts is shown at Exhibit APX.6.
The anemic economy has not only affected the sales taxes but also carries into other categories, including advertising revenue and natural gas drilling leases. As a consequence, it was important in the spring of 2009 to undertake a comprehensive review of the entire Twenty-Year Financial Plan, with a special emphasis upon the next five years encompassing the majority of the next phase of system expansion.
As a result of this review, the DART executive team developed an overall five-year fiscal strategy that sought to achieve an operating expense level in 2013 that was approximately $35 million lower than the Twenty-Year Financial Plan adopted in November 2008. The strategy is incorporated in the Amended FY 2009 Twenty-Year Financial Plan adopted in May. It seeks to achieve lower expenditure levels through a combination of selective service eliminations on routes that will be made redundant by the introduction of light rail service, reduced overall staffing ratios for hours and miles of service based upon updated actual experience, and productivity improvements made possible by the introduction of new technology and improved workflow processes.
Finally, DART management and the Board undertook the comprehensive updating of the DART fare structure. Fare increases ranged from 18% to 33%, with an even higher adjustment in the corporate annual pass program. The increases in the TRE commuter rail program approached 50%. Discussion of increases in the current economic environment was difficult but necessary. The adopted fare structure, which will take effect in September, will generate nearly $12 million in increased annual revenues which are especially needed in the face of the current decline in sales tax receipts. A history of DART’s fare structure is provided at Exhibit APX.7.
It is not certain that sales tax receipts will stabilize in the upcoming fiscal year. Nor can we be certain that the projected increase in farebox revenues will materialize. Therefore, it is incumbent upon DART management to closely monitor the performance of these revenue streams. Management must be prepared to take additional cost-cutting measures in the event that conditions worsen.
On balance, we believe that sufficient steps were taken in the current fiscal year by management and the Board to permit the Agency to proceed forward in an orderly manner with the expansion of our light rail services as well as maintaining a high level of service and customer satisfaction on our current offerings.
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FY 2010 Business Plan (09/22/09) Executive Summary
To ensure that we meet this aggressive work program and maintain congruence with the mandates of the Board, we have developed and will be implementing a new five-year strategic plan in support of the Board’s recently adopted Strategic Priorities. These new priorities are the backbone of this Business Plan. DART’s programs and activities will be tied to the Board’s priorities.
We look forward to a very productive, if challenging, FY 2010. It would not be an overstatement to say that the work program outlined over the next five years is the most aggressive and demanding in our history. The DART team believes it is prepared for the upcoming challenges and very much appreciates the support of the Board in this undertaking.
The following information will highlight the major program activities in which the DART team will be working, arranged by the relevant Board defined Strategic Priority.
Strategic Priority I: Strive to Exceed Customer Expectations
DART customers have come to expect a high level of service. This in itself provides us with the challenge to just meet those expectations. There are several projects in FY 2010 which we believe will provide our customers with improved communications, service, security, and convenience.
• Where’s My Bus?® technology, which gives near real-time updates on bus locations and estimated arrival times, was implemented in late FY 2009 and will be enhanced in the upcoming year. This technology has already become a hit with our customers. • The implementation of additional cameras at our rail stations and on future bus purchases will provide improved security; and the Traffic Signal Prioritization project will improve DART Rail trip times through downtown Dallas. • DART is working with regional partners to study the feasibility of Smartcard technology for convenient payment of transit fares, tolls, parking, and city services. Dubbed the RapidCard, the study will provide a budget and recommendations for the Agency. • The level-boarding initiative, along with the introduction of Super Light Rail Vehicles will positively impact customers with disabilities and customers with strollers and/or luggage.
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FY 2010 Business Plan (09/22/09) Executive Summary
Strategic Priority II: Manage System Development & Maintain Infrastructure
LIGHT RAIL
With the Green Line, Orange Line, and extension of the Blue Line light rail projects under construction, FY 2010 will be the busiest year DART has ever experienced. The opening of the new rail lines will cause service changes that impact both bus and rail.
• The Service Scheduling Division in the Planning Department is experiencing record-breaking levels of activity as a consequence of so many major system changes and the need to develop rider-friendly and cost-effective routes. They will be closely monitoring the implementation of the new Board-approved service program that will become effective in September 2009. Additional revisions will be prepared to address the opening of the Green Line in 2010 to better align the bus system to complement DART’s expanding rail system.
• DART’s administrative areas, such as Procurement, Human Resources, and Finance are working stride for stride with our Maintenance, Transportation, Police, and Rail Program Development areas to ensure there is sufficient staff, contracts, purchase orders, and funding to ensure that opening dates are met. • In addition to the projects under construction, DART’s Rail Planning Department is in the final stages of alternatives analysis for the second rail alignment in the Dallas Central Business District and the Orange Line’s DFW Airport station. Both are high profile projects and will have a major impact on both DART and the region.
REGIONAL RAIL
DART is involved in several new regional rail initiatives.
• Denton County Transportation Authority (DCTA) has plans to connect with DART’s Green Line stations in Carrollton in December 2010. DART management has been in active discussions with DCTA regarding rail right-of-way, leased rail cars, and revenue sharing agreements. • In addition, strong interest in regional rail has brought public private partnership (PPP) discussions into play for DART’s Cotton Belt project. Extensive discussions are currently underway and will continue throughout FY 2010 with respect to the acceleration of regional rail service on the Cotton Belt corridor. DART is pursuing this initiative in concert with the Fort Worth T, with which it already collaborates on the TRE corridor.
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FY 2010 Business Plan (09/22/09) Executive Summary
HOV
In addition to the growing rail system, the Planning Department’s General Mobility Division is performing a comprehensive review of the entire High Occupancy Vehicle (HOV) program. During the last five years, 55 miles of HOV lanes have opened. These lanes benefit HOV users, DART, and non-users by taking cars off the roads. The introduction of a variety of HOV lanes has brought new challenges for DART. This is especially true in regard to the “buffered lanes” approach which does not utilize physical barriers but rather relies upon double-striped lines or pylons spaced at intervals to denote the HOV lane. Incidence of HOV violations is twice to three times as high on such lanes and poses significant enforcement challenges for the DART Police. To ensure the maximum effectiveness of the lanes, DART, the Texas Department of Transportation (TxDOT), and the North Texas Council of Governments (NCTCOG) will be working together to review the entire program. At the culmination of this review, the necessary adjustments will be made to achieve levels of proper utilization and reduce the non-compliance that is currently being observed.
BUS
An extensive bus procurement process was undertaken during FY 2008 and FY 2009. The relative merits of diesel versus natural gas fueling options were thoroughly evaluated. A determination was made to defer a final decision until the fall of 2009 when more would be known about the possible extension of federal fuel credits currently available for natural gas users. At the time of this deferral, extension of these credits could have made the difference in determining which technology is most cost effective.
In the interim, energy markets have shifted considerably. Natural gas is currently the lower cost option even without the benefit of a fuel tax credit. New federal legislation has been introduced and is currently pending that would extend the fuel credit for another 10-20 years. It now seems likely that DART can proceed with a procurement in the next six to nine months that will be based upon natural gas.
The need to complete the procurement within the next year is becoming increasingly apparent. Although the DART fleet is well-maintained, it is nonetheless an aging fleet. Ridership on the bus network will be subjected to less-than-satisfactory service unless an orderly change-out of the fleet occurs. With the completion of the procurement, the new buses will begin arriving in the latter part of 2013.
PARATRANSIT
DART purchased the Paratransit operating facility in the summer of 2007. Since that time, several capital projects have been undertaken to improve the site, parking lots, and fueling facilities. If the Board chooses natural gas technology for the bus fleet, the Paratransit operating facility will also be converted to natural gas by 2012.
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FY 2010 Business Plan (09/22/09) Executive Summary
Strategic Priority III: Build & Maintain DART’s Regional Transportation Leadership
DART can be rightly assumed to be the regional and state transit leader. DART has been successful in developing a multi-modal system that is properly maintained and highly coveted by customers, stakeholders, and political leaders. DART will continue to exercise leadership responsibilities over the next year in a number of specific areas:
• There will be an elevated level of coordination among DART, the Fort Worth Transportation Authority (the T), and Denton County Transportation Authority (DCTA) as the three systems work through rail right-of-way agreements, regional rail car considerations, and the development of “seamless transit services” for riders. • The demonstrated interest in expanded passenger rail service in North Texas, as evidenced by the level of effort expended by the North Texas cities and counties during the last two legislative sessions, argues for seeking solutions that would permit advancing the Cotton Belt project. This will require close collaboration with not only our member cities but non-DART cities, the T, and DCTA. • A regional rail car philosophy has been generally discussed by the three transit agencies. This concept will assist the transit properties in lowering maintenance and operating costs by providing economies of scale. Significant efforts by Rail Program Development staff will be expended to advance this effort within the next year. • This regional partnership emphasis is also being used as the transit properties work with North Texas Toll Authority (NTTA) and the City of Dallas in exploring the RapidCard as a regional transportation payment card. • DART’s HOV program continues to expand and will begin to incorporate managed lane options as well as the current types of HOV lanes. Management of this program requires close coordination among TxDOT, NCTCOG, DART, and the jurisdictions through which these projects extend.
• There is a statewide mandate and strong regional interest to implement Person-Centered Mobility Management. This entails coordination of transportation resources across transit and social service agencies. The objective is to enhance transportation for persons with disabilities and seniors beyond the requirement of the American with Disabilities Act of 1990. This will require collaboration among DART, the Fort Worth Transportation Authority, Denton County Transportation Authority, Human Services agencies, and the North Central Texas Council of Governments.
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FY 2010 Business Plan (09/22/09) Executive Summary
Strategic Priority IV: Drive Change through Employee Engagement
• Meeting the goals associated with this initiative will be especially important as DART ramps up its hiring in support of light rail expansion. Between FY 2008 and FY 2014, DART projects to add approximately 685 employees. The hiring, training, and integration of this many employees represents a 21% growth of the Agency and will be largest employment program undertaken by DART. • In striving to continually improve communications with our employees, the Employee Communication Committee was established. This 13- member committee has provided an additional communication avenue for the Agency and is considered to be very successful by employees.
• DART, like most companies, has the challenge of succession planning and multi- generational staffing. In order to assist in developing qualified applicants for leadership positions, a Leadership DART program was developed with 15 positions available. Forty-two applications were received, and a very diverse and qualified group of 15 individuals was selected for the first class. This class was so successful that a new class is being recruited to begin in October 2009. The inaugural class is scheduled to graduate in December 2009. Similar types of succession planning programs were implemented in the Transportation Department last year for bus and rail operators. The programs, BOSS and ROSS (Bus Operator or Rail Operator Succession to Supervision) have proven to be successful. To date, 23 operators have graduated from the program, and 12 have been promoted into supervisory positions.
Strategic Priority V: Maximize Funding Resources
DART has been successful in maximizing the available funding resources as evidenced by the Green Line’s $700 million Full-Funding Grant Agreement, and the many other federal grants awarded to the Agency, including the recent $61.5 million ARRA grants. This strategic initiative, along with the creation of a Board-level Revenue Committee, provides strong encouragement to the staff to bring forward creative ideas to be discussed and vetted. It also supports maintaining vigilance over our traditional funding sources to ensure they are not diminished by actions of others.
• The new fare structure will be fully implemented in FY 2010 along with new ticket vending machines (TVMs) being installed on the Green Line and in downtown Dallas. These new TVMs will provide the ability to issue weekly and monthly passes in addition to the day pass. The TVMs will also accept credit or debit cards.
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FY 2010 Business Plan (09/22/09) Executive Summary
• A comprehensive parking fee strategy is currently under development in recognition of the recent adoption of legislation that permits differential parking fees throughout our system. A comprehensive plan is scheduled for consideration by the Board by mid- FY 2010. • Smartcard technology will be reviewed and the impact on our riders and DART’s revenues will be analyzed during the upcoming fiscal year. It is anticipated that the program will permit the simplification of the overall fare structure and a significant reduction in fare evasion. • The federal stimulus programs have provided several new opportunities for additional funding. DART was the first to submit grant proposals under the new program and has been approved to receive all funding currently available to DART. We are also prepared to submit requests for funding not used by other transit properties when it becomes available. An additional ARRA award for a four-year anti-terrorism program enhancement grant was announced in early August. DART is currently working on funding requests under the Transportation Investment Generating Economic Recovery (TIGER) and Transportation Investments for Greenhouse Gas and Energy Reduction (TIGGER) programs and will continue to pursue additional funding that becomes available. • DART has shown that Texans will use rail and that increased development will occur around stations that are properly marketed. Transit Oriented Development (TOD) is still dependent on our member cities, but DART’s member cities have proven that proper planning can produce significant development potential. There are active TOD projects in planning or underway in Garland, Richardson, Plano, Addison, Farmers Branch, Carrollton, and Irving as well as the City of Dallas. DART staff has identified a number of DART-owned properties with TOD potential and will be pursuing opportunities during the upcoming fiscal year for public/private development efforts that will create new revenue streams for DART. Equally important, these initiatives will also increase the availability of transit accessible communities within the DART Service Area. • DART drives economic development. A new study by Dr. Terry Clower and Dr. Bernard Weinstein from the University of North Texas was completed in July 2009. The study shows that for the period from FY 2009 – FY 2013, DART’s Light Rail construction activities have/will generate more than $4 billion in local economic activity, including 32,100 employment years (one job for one year equals one employment year). Its ongoing operations generate another $543 million in economic activity on an annual basis, and nearly 5,000 jobs.
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FY 2010 Business Plan (09/22/09) Executive Summary
Strategic Priority VI: Use Technology to Integrate & Advance Services & System
Technology is used in almost every aspect of transit.
• With the hiring of DART’s first Chief Information Officer, a consolidation of resources is currently being implemented so that all technology initiatives are coordinated within one department rather than fragmented throughout the Agency.. • A Technology Steering Committee has been established and will begin the development of a comprehensive technology master plan for the Agency which will guide the future selection and deployment of technology resources. • An off-site alternative processing facility will be completed and placed in service within the next fiscal year. This facility is a critical component of our business continuity plan and will greatly assist the Agency in maintaining operational network capabilities under a variety of adverse conditions. • As previously discussed, DART is pursuing the feasibility of a regional smartcard system which will allow the Agency to better structure and collect fares while providing our customers with a safer and a potentially more convenient method of payment. Rewards for our frequent riders and service demand pattern data are two of the byproducts that would positively impact our customers. Moreover, other agencies have reported substantial reductions in fare evasion and fare avoidance after implementation of the new services. • The Where’s My Bus?® program can be accessed by computer or by most cell phones. The program was developed internally and provides bus customers with up-to-date information about the location and estimated arrival time of their bus. This allows customers to better manage their time and has the potential to reduce complaints about early or late buses. The program will be refined and enhanced during FY 2010.
• The Traffic Signal Priority (TSP) project and the radio system upgrade are two other projects of considerable importance to the advancement of Agency objectives which will be in active development during the upcoming year. o The TSP project is vital to the smooth operation of our light rail system in that it will allow DART to travel within the required headways through downtown Dallas. The Technology Department is spearheading the project and will work closely with the Rail Program Development Department, DART’s operations departments, and the City of Dallas. o The radio system upgrade is a highly complex implementation that will involve the total conversion of the radio systems within the Agency and will result in greatly expanded network communications capabilities that will affect the bus, rail, and paratransit fleet as well as DART Police communications.
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FY 2010 Business Plan (09/22/09) Executive Summary
With these new services and so many major initiatives underway and in the development stages, coupled with the financial challenges of the current economy, FY 2010 will be one of the most demanding years in DART’s history. But, with challenges come the rewards of success. And, with success, as the next decade unfolds, DART stands poised to again transform the landscape of North Texas.
Exhibit APX.9 in the Appendix is a description of acronyms used in this report.
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FY 2010 Business Plan (09/22/09) Executive Summary
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Section 2 FY 2010 Annual Budget Index of Exhibits
Exhibit 2.1 FY 2010 Annual Budget……………...……….…….……………… BUD-1
Exhibit 2.2 FY 2010 Sources and Uses of Funds….……………………………. BUD-1
Exhibit 2.3 FY 2008-FY 2010 Revenue Comparison..….……………………… BUD-2
Exhibit 2.4 Sales Tax History………….……..……………………..……….….. BUD-3
Exhibit 2.5 Operating Expense Budget by Expenditure Category……………… BUD-5
Exhibit 2.6 Capital and Non-Operating …………………………..…………….. BUD-7
Exhibit 2.7 Capital and Non-Operating Project Budget List……...…………….. BUD-8
Exhibit 2.8 Net Debt Service Budget…………………………………………… BUD-13
Exhibit 2.9 Full-Time Position Summary – By Department……………..….….. BUD-14
Exhibit 2.10 FY 2010 Budgeted Positions by Mode…..….……………………… BUD-15
Exhibit 2.11 Agency Scorecard-Key Performance Indicators………..……….….. BUD-16
Exhibit 2.12 Fixed-Route Ridership……………………………………………… BUD-17
Exhibit 2.13 Total System Ridership-All Modes…………………..…………….. BUD-17
Exhibit 2.14 Subsidy Per Passenger-Fixed-Route..………………...…………….. BUD-18
Exhibit 2.15 Subsidy Per Passenger-All Modes..………………………………… BUD-18
Exhibit 2.16 Subsidy Per Passenger Comparison………………………....….….. BUD-19
FY 2010 Business Plan (09/22/09) FY 2010 Annual Budget
FY 2010 Annual Budget
Overview
The budget as outlined in Exhibit 2.1 is divided into three categories totaling $1.67 billion: Operating Expense Budget, Capital and Non-Operating Budget, and Net Debt Service Budget. Exhibit 2.1 FY 2010 Annual Budget (In Millions) FY10 Description Budget Operating Expense Budget $402.8 Capital and Non-Operating Budget 1,140.0 Net Debt Service 123.4 $1,666.2
Sources and Uses of Funds
The purpose of this section is to provide a detailed review of DART’s sources and uses of funds for FY 2010 and variances between the FY 2009 and FY 2010 Budgets.
Exhibit 2.2 shows total funding sources for FY 2010 projected at approximately $815 million, $1.3 billion (61.5%) lower than the FY 2009 Budget. The decreases are primarily due to Debt Issuances ($1.17 billion). More information can be found in the Financial Plan section, subsection Sources of Funds.
Exhibit 2.2 FY 2010 Sources and Uses of Funds (In Millions) % Description FY09 Budget FY10 Budget $ Variance Variance Sales Tax Revenues $384.8 $387.8 $3.0 0.8% Debt Issuances 1,170.0 - (1,170.0) -100.0% Federal Funds 366.3 249.1 (117.2) -32.0% Operating Revenues 65.9 70.8 4.9 7.4% Interest Income 29.4 17.5 (11.9) -40.5% Other Sources 97.3 89.7 (7.6) -7.8% Total Sources of Funds $2,113.6 $814.8 ($1,298.8) -61.5% Operating Expense Budget $377.0 $402.8 $25.8 6.8% Capital and Non-Operating Budget 1,181.3 1,140.0 (41.3) -3.5% Debt Service 101.5 140.8 39.4 38.8% Total Uses of Funds $1,659.8 $1,683.6 $23.8 1.4%
BUD-1
FY 2010 Business Plan (09/22/09) FY 2010 Annual Budget
Also included in Exhibit 2.2 is a summary of the Uses of Funds. The operating budget increased by $25.8 million (6.8%) over the FY 2009 Budget. Details can be found on pages BUD-5 through BUD-7. The FY 2010 Capital Budget decreased $41.3 million (3.5%) from the FY 2009 Budget and is primarily a function of the Phase II LRT Build-out cashflow projections. The Debt Service Budget increased by $30.0 million (24.6%) principally due to the increased debt service from the issuance of $1 billion in long-term debt in June 2009. See Exhibit 2.8 for more detail on the Net Debt Service Budget.
Revenues
Exhibit 2.3 provides a more detailed summary of the sources of funds listed in Exhibit 2.2. The changes to each major category are discussed in more detail following the chart.
Exhibit 2.3 FY 2008 - FY 2010 Revenue Comparison (in Thousands)
FY09 Amended FY08 Actuals Category Budget FY10 Budget $ Inc/(Dec) % Variance Operating Revenues $48,957 Passenger Revenues $51,804 $59,667 $7,863 15.2% $2,784 Rental Income - TRE Corridor $3,159 $2,551 ($608) -19.2% 1,623 Rental Income - Other 1,740 1,648 (92) -5.3% 4,503 Advertising Revenue 4,540 2,700 (1,840) -40.5% 1,320 Rental Income - LRT 929 929 0.0% 183 Miscellaneous 36 184 148 405.7% 116 Concession/Vending Revenue 109 96 (13) -11.7% $10,529 Advertising /Rental Income/Other Revenues $10,513 $8,109 ($2,404) -22.9% $2 Grant Revenue (other) $1,784 $1,572 ($213) -11.9% 1,303 Vanpool Grant Revenue 1,364 1,413 49 3.6% 94 Grant Revenue (COPS) 0.0% $1,399 Operating Grant Revenues $3,148 $2,985 ($163) -5.2% $60,885 Total Operating Revenue $65,466 $70,760 $5,295 8.1% $416,148 Sales Tax Revenue $431,170 $387,759 ($43,411) -10.1% 21,715 Interest Income 29,991 17,486 (12,505) -41.7% 8,322 Contributions for TRE Operations 9,548 8,862 (686) -7.2% 460 Other Non-Operating revenues 0.0% $446,645 Total Other Non-Operating $470,709 $414,107 ($56,602) -12.0% $507,530 Total Revenues $536,174 $484,867 ($51,307) -9.6% Other Sources of Funds $571,415 Debt Issuances $1,170,000 $ ($1,170,000) -100.0% Federal Funds 74,497 Formula Federal Funding 125,910 156,091 30,181 24.0% 95,878 Discretionary Federal Funding 240,363 93,028 (147,335) -61.3% Other Sources Sub-recipient fees 40 10 (30) 0.0% 506 Mineral Rights and DFW Oil/Pipeline 928 240 (688) -74.1% Contributions to Capital Projects 85,982 80,546 (5,436) -6.3% $742,296 Total Other Sources $1,623,223 $329,915 ($1,293,308) -79.7% $1,249,826 Grand Total $2,159,397 $814,782 ($1,344,615) -62.3%
BUD-2
FY 2010 Business Plan (09/22/09) FY 2010 Annual Budget
Sales Tax Revenues are the largest source of revenue for the Agency. Exhibit 2.4 includes actual and projected revenues from FY 2005 through FY 2011. A ten-year history of sales tax receipts is included at APX.6.
Exhibit 2.4 Sales Tax History ($ in millions) $600.0 30.0%
25.0% $500.0 $431.2 $416.1 $389.1 20.0% $384.8 $358.2 $387.8 $409.1 $400.0 $342.7 15.0%
10.0% $300.0 8.6% 6.9% 5.0% 4.5% 5.5% $200.0 2.8% 3.6% 0.0% 0.8% -5.0% $100.0 -10.0% -10.8% $0.0 -15.0% 2005A 2006A 2007A 2008A 2009B 2009P 2010B 2011P Sales Tax Revenues Sales Tax Growth
Between FY 2005 and FY 2008, sales tax receipts grew by an average of 6.7% per year, from $342.7 million to $416.1 million. FY 2008 growth was budgeted at 5% ($108.6 million), but actually grew by 6.9%. Growth for FY 2009 was projected at $431.2 million (3.6% above the FY 2008 actuals), but is now predicted to decline to $384.8 million (10.8%) due to market conditions. FY 2010 is predicted to essentially remain flat (<1% growth) over 2009, with an economic recovery taking hold beginning in FY 2011.
Operating Revenues are estimated to increase 7.4% due to increases in fixed route passenger revenue due to a fare increase effective September 2009 and a projected increase in ridership as SE-1 opens. Average fare is projected to increase from $0.71 per fixed-route passenger to $0.88 in FY10 and $0.90 in 2011 when the approved fare change is fully implemented.
Interest Income is expected to decline due to lower interest rates than were projected last year.
Debt Issuances - In FY 2009 Management made the decision to upsize the June 2009 long-term debt issuance and as a consequence, it is not anticipated that DART will issue any debt during FY 2010.
BUD-3
FY 2010 Business Plan (09/22/09) FY 2010 Annual Budget
FY 2010 Operating Budget
The following assumptions were used to develop the operating budget and are tied to the FY 2010 Board goals where possible: