Project Title Or Company Name

Southwest Ohio Regional Transit Authority

Discussion Document

Reliance Restricted 21 June 2018 | Version 1.0 (Draft) 21 June 2018 | Version 1.0 (Draft)

Reliance Restricted

Cincinnati USA Regional Chamber 3 E 4th St, Cincinnati, OH 45202

Cincinnati Business Committee 3 E 4th St, Cincinnati, OH 45202

Ernst & Young LLP Southwest Ohio Regional Transit Authority (“SORTA”) 21 June 2018 312 Walnut St Cincinnati, OH This report (the “Report”) has been prepared by Ernst & Young LLP (“EY” or “we”), from information and material 45202 supplied by Southwest Ohio Regional Transit Authority (“SORTA”) for use by Cincinnati USA Regional Chamber & Cincinnati Business Committee (separately and combined, “Client”), for the sole purpose of assisting Client in completing a business assessment of SORTA historical financial performance, benchmarking versus certain peer agencies and 10 year financial projections developed by SORTA management. The nature and scope of our services was determined solely by the Agreement between EY and Client dated February 22, 2018 (the “Agreement”). Our procedures were limited to those described in that Agreement. Our work was performed only for the use and benefit of Client and should not be used or relied on by anyone else. Other persons who read this Report who are not a party to the Agreement do so at their own risk and are not entitled to rely on it for any purpose. We assume no duty, obligation or responsibility whatsoever to any other parties that may obtain access to the Report. The services we performed were advisory in nature. While EY’s work in connection with this Report was performed under the standards of the American Institute of Certified Public Accountants (the “AICPA”), EY did not render an assurance report or opinion under the Agreement, nor did our services constitute an audit, review, examination, forecast, projection or any other form of attestation as those terms are defined by the AICPA. None of the services we provided constituted any legal opinion or advice. This Report is not being issued in connection with any issuance of debt or other financing transaction. In the preparation of this Report, EY relied on information provided by SORTA including financial reports, budgets, management presentations, financial projection models, internal analysis, discussion with SORTA management and other information as requested or publicly available resources, and such information was presumed to be current, accurate and complete. EY has not conducted an independent assessment or verification of the completeness, accuracy or validity of the information obtained. Any assumptions, forecasts or projections contained in this Report are solely those of SORTA and its management (“Management”) and any underlying data were produced solely by SORTA and its Management. Client management has formed its own conclusions based on its knowledge and experience. There will usually be differences between projected and actual results because events and circumstances frequently do not occur as expected and those differences may be material. EY takes no responsibility for the achievement of projected results.

Southwest Ohio Regional Transit Authority: Discussion Document | Page 2 of 42

Prepared solely for Cincinnati USA Regional Chamber & Cincinnati Business Committee. Reliance restricted. Does not constitute assurance or legal advice. Please refer to limitations and restrictions on page 2. 21 June 2018 | Version 1.0 (Draft) 1 Overview

Southwest Ohio Regional Transit Authority: Discussion Document | Page 3 of 42

1 Overview Southwest Ohio Regional Transit Authority’s history and recent cost saving initiatives

History Recent Initiatives

► Southwest Ohio Regional Transit Authority, ► SORTA recently created a new strategic plan for the organization, including an updated vision “20 (“SORTA”), is the public transport agency million rides by 2021”. The plan focuses on operational excellence, strategic alignment and partnering, serving Cincinnati and its Ohio suburbs organizational sustainability, and innovation

► SORTA is primarily funded through ► In conjunction with the above initiative, SORTA also developed a 10 year projection model to forecast Cincinnati's city earnings tax, with additional future funding requirements and ascertain the level of capital investment required to both maintain and funding obtained through passenger fares, potentially enhance or expand current operations and system footprint federal, state and local grants and ► Given the current funding structure and operational challenges, SORTA has undertaken and completed subsidies, and other various sources a number of process improvement initiatives:

► In 2017, SORTA provided approximately 14 ► Continued deferral of capital projects to allow for additional operational funding million rides, including Metro transit bus ► SORTA completed an organizational restructuring, eliminating lower performing service routes and non-critical service and Access paratransit service positions, while enhancing their financial analysis and strategy skillsets

► SORTA also manages the Cincinnati ► SORTA has completed a risk review project, to enhance appropriate risk mitigation and insurance coverage Bell Connector streetcar system in levels downtown Cincinnati on behalf of the ► Transitioned to self-funded health insurance; including a no smoking policy for all employees yielding year 1 City estimated savings of $1.2 million, 2017 budget versus commercial quote.

► SORTA management is currently projecting ► In an effort to broaden their revenue streams, SORTA continued selling advertisement on Metro buses and a $184 million operating and capital deficit began selling on allowable bus shelters in 2017

over the next 10 years, ~$62m and ~$122m ► Completed a review of rolling stock and parts inventory, which allowed for disposal of obsolete/under-used respectively assuming annual fare equipment including two vintage trolley buses, and reduced parts inventory levels while selling or scrapping increases. The deficit is projected due to excess and obsolete parts declining ridership and continuing annual ► SORTA has considered additional restructuring of service across local and express routes (KPI driven) operating deficits. The operating deficits have been partially offset by limiting annual ► Since May 2006, SORTA has hedged its diesel consumption (approximately 3 million gallons per year) capital investments, which has led to an with Energy Forward Pricing Mechanisms (EFPM). This program’s objective is to manage a large aging bus fleet and deteriorating portion of Metro’s exposure to fuel price swings infrastructure ► SORTA recently completed a reconciliation of all restricted cash accounts and deemed some to be no longer required or completed with a fund balance. These dollars were released back to the general operating account

Source: SORTA Comprehensive Annual Financial Reports (“CAFR”) and management team Southwest Ohio Regional Transit Authority: Discussion Document | Page 4 of 42

1 Overview SORTA’s financial picture over the last few years has been impacted by the following items

Revenue Sources Ridership FTE and employee costs

► Metro Fare revenue has continued to ► Ridership has trended downwards since 2012 ► Salaries and wages make up approximately decrease due to lower ridership, slightly offset and is projected to decline 3.7% in 2018 vs 46.9% of SORTA’s operating budget and have by smaller increases in fare revenue related to 2017 consistently increased annually, driven in part Access and Cincinnati Public Schools (“CPS”) by the current union contract ► The decline in ridership can be attributed to ► The City of Cincinnati income tax dedicated to low public engagement of mass transit in the ► Operator wages are the largest component support transit operations is a fixed region, acceptable levels of congestion during of salaries and wages consisting of core percentage of earnings that must be requested key commute times, lack of frequency and transit operations hourly employees from and approved annually by the City. The reliability of existing routes ► Transit operations headcount has income tax subsidy has increased over the ► Proposed further restructuring of local and decreased or stayed flat due to more years as the local economy expanded, express routes could also contribute to a stringent policies and a more competitive however it is not fully sufficient to address both further deterioration of ridership job market. Management asserts this has the operating deficit and capital needs caused an increase in overtime required

Pension & Benefits Bus Fleet Capital Assets

► Pension and benefit costs continue to increase ► In 2017 there were 357 buses in the fleet with ► Net capital assets figures reflect the value of annually, driven by inflation, statutory an average age of 7.6 years. The average age all buses and SORTA infrastructure less requirements, and CBA contract obligations has continued to increase since 2015 accumulated depreciation ► Medical and workers comp are managed ► More than half of the Metro’s fleet buses have ► Prioritizing turnover of the aging fleet has through self insured progams, along with a an accumulated mileage of over 300,000 miles caused infrastructure improvements to lag portion of dental ► Buses acquired during 2012-2015 have the ► SORTA would need to invest ► Medical and dental self insurance highest average mileage per year most likely approximately $14-15m per year to match occurred in 2017, yielding estimated year due to their age and fuel economy, however average annual depreciation levels 2014- 1 savings of $1.2m over commercial this could cause maintenance costs to 2016. This level of annual investment does insurance renewal quotes increase in future years not include any expansion or ► During 2015, SORTA adopted GASB enhancement of operations, which would Statement 68 which resulted in a non-cash increase the investment requirement annual fluctuation recorded on the balance ► Actual capital investment 2014-2016 sheet as well as the income statement, under averaged approximately $12m per year “OPERS”

Source: SORTA CAFRs and management team Southwest Ohio Regional Transit Authority: Discussion Document | Page 5 of 42

1 Overview Revenue Sources Summary

SORTA Revenue 50% $120 Metro Fare Revenue ► Metro fare revenue continues to decline 2018 vs 94.4 96.2 98.1 40% Farebox Recovery% $100 90 92 94 94.0 2017 at a rate of 6.15%, in line with decline in ridership of 3.70% for the same period $80 30% Access Fare Revenue

► Access Fare revenue is related to paratransit. $60 Increase is driven by increase in annual rides of 20% approximately 76,800 from 2012 to 2018 ($ in millions) in ($ $40 CPS Contract Revenue 10% $20 ► SORTA has recently renewed a 5 year contract (and two 1 year options) with CPS to provide low cost transit for students, (2017-2022). The $- 0% contract provides for annual adjustments of 2012A 2013A 2014A 2015A 2016A 2017P 2018B 2.0% based on increased operating costs Metro Fare Revenue Access Fare Revenue CPS Contract Revenue Non-Transportation Revenue Non-Transportation Revenue Transit Fund Operating Subsidy Revenue ► Revenue related to advertising, billboards, RTC Farebox Recovery Ratio FY 18 Target Farebox Recovery park lot income and investment income Actuals Prelim Budget ($ in thousands) 2012 2013 2014 2015 2016 2017 2018 Transit Fund Operating Metro Fare Revenue $ 22,326 $ 21,695 $ 21,179 $ 20,225 $ 18,997 $ 17,846 $16,749 ► Fixed formula City of Cincinnati income tax dedicated to support transit operations, must be Access Fare Revenue 668 728 817 871 921 944 937 requested and approved annually by the City Total Fares 22,993 22,423 21,997 21,096 19,919 18,790 17,686 Subsidy Revenue CPS Contract Revenue 7,522 7,487 7,602 7,453 7,599 7,963 7,629 ► SORTA receives other governmental support Non-Transportation Revenue 1,301 1,215 1,270 1,462 1,528 1,457 1,683 via subsidies, which include Federal cash Transit Fund Operating 42,237 44,704 45,440 48,293 49,490 53,516 56,433 grants, State cash grants, Other local. These funds are utilized for both capital and Subsidy Revenue 15,883 16,499 17,773 16,074 15,429 14,490 14,631 operations. A portion of this funding may Total Revenue 89,936 92,327 94,081 94,377 93,963 96,216 98,061 require matching local funds to support the 1. Farebox Recovery Ratio includes fare revenues, fare deals, and special program fares over expenses less paratransit expenses. award Source: FY2012-2016 data audited SORTA general ledger accounts. FY2017 data from preliminary SORTA general ledger accounts. FY2018 data from SORTA internal projections Southwest Ohio Regional Transit Authority: Discussion Document | Page 6 of 42 Prepared solely for Cincinnati USA Regional Chamber & Cincinnati Business Committee. Reliance restricted. Does not constitute assurance or legal advice. Please refer to limitations and restrictions on page 2. 21 June 2018 | Version 1.0 (Draft)

1 Overview Estimated ridership is projected by management to decrease by 528,000 or 3.7% from 2017 to 2018, despite steady service levels

Ridership (in millions)

20.0 12.0 Revenue Revenue miles (inmillions) 18.0 17.39 16.77 16.43 15.96 16.0 15.01 10.0 14.27 13.74 14.0 8.0 12.0 10.0 6.0 8.0 6.0 4.0 4.0 2.0 2.0 0.0 0.0 2012 2013 2014 2015 2016 2017 2018 Ridership Revenue Miles

Source: FY2012-2016 data audited SORTA CAFR. FY2017 data from SORTA’s internal files. FY2018 data from SORTA’s projected internals

Ridership

► The budgeted decline in 2018 ridership can be attributed to low public Revenue Miles engagement of mass transit in the region, acceptable levels of ► Revenue miles have been fairly flat over the timeframe displayed above congestion during key commute times, lack of frequency and reliability of which could indicate consistent route and service levels despite a existing routes continual decline in ridership ► Current funding is not sufficient to expand or enhance current ► Proposed service route changes could further impact both revenue miles operations. However management believes riders desire additional and ridership numbers routes, specifically routes that don’t require connections through downtown’s Government Square transit center

Southwest Ohio Regional Transit Authority: Discussion Document | Page 7 of 42

1 Overview Operating expenses continue to increase driven primarily by employee wages and benefits

Operating Expenses 120.0 Operating Expenses SORTA expenditures can be classified into six 98.1 key categories: employee wages, employee 100.0 benefits, purchased transportation, fuels & 92.8 94.2 94.0 89.1 90.4 90.2 9.3 lubricants, parts & supplies, and other 7.5 8.2 9.7 Operating expenses have been trending higher 7.9 8.2 8.6 6.1 5.4 5.5 5.8 year over year, approximating a 1.08% CAGR 80.0 6.3 5.4 6.1 5.5 from 2012-2017. The 2018 Budget assumes a 7.0 6.3 9.3 6.5 larger expense increase year over year of 8.4 9.1 8.4 6.2 5.4 6.0 approximately $4m or 4.29% from 2017 levels, 5.5 5.1 5.7 primarily driven by additional headcount 60.0

($ in millions) in ($ 24.5 24.2 Assuming total bargaining unit wages were 22.0 22.3 20.7 21.5 18.5 approximately $35m in 2017, the annual 2% CBA increase would be $700k in 2018 40.0

46.2 20.0 40.4 41.0 42.5 42.9 43.7 44.1

Employee Benefits

- Employee benefits decrease in 2015 from 2014 2012A 2013A 2014A 2015A 2016A 2017P 2018B primarily driven by $1.2m decrease to adjust pension accrual, $0.6m decrease in workers Employee Wages Employee Benefits Purchased Transportation comp as a result of a favorable actuarial review Fuel & Lubricants Parts & Supplies Other and $0.4m decrease in health insurance expense due to changes in the plan design for represented employees Source: FY2012-2016 data audited SORTA general ledger accounts. FY2017 data from preliminary SORTA general ledger accounts. FY2018 data from SORTA internal projections .

Southwest Ohio Regional Transit Authority: Discussion Document | Page 8 of 42

1 Overview Full time employee recruitment and retention have become more challenging given stronger employment climate and more stringent employee policies

Full Time Equivalent Headcount 1000 913 920 900 869 830.5 814.5 818 840.5 806.5 806 799 784 805 800 700 600 500 400 300 200 100 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018B Vehicle Operations Vehicle Maintenance Non-Vehicle Maintenance General Admin Paratransit Services Source: FY2012-2016 data audited SORTA CAFR. FY2017 data from SORTA’s internal files. FY2018 data from SORTA’s projected internals

FTE Headcount Actual Prelim Budget (in thousands) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Vehicle Operations 579 585 513 505 509 514 511 496.5 528 503.5 505 547 Vehicle Maintenance 195 202 187 187 182 182 185 182 173 169 168 182 Non-Vehicle Maintenance 34 30 34 27 24 25 26 28 35 26 45 44 General Admin 90 93.5 89 80 85.5 88 91 86.5 100 81 83 90 Paratransit Services 15 9.5 7.5 7.5 5.5 5.5 5 6 4.5 4.5 4 6 Total 913 920 830.5 806.5 806 814.5 818 799 840.5 784 805 869

1. FY2017 budget assumed 859 FTE headcount Source: FY2012-2016 data audited SORTA CAFR. FY2017 data from SORTA’s internal files. FY2018 data from SORTA’s projected internals Southwest Ohio Regional Transit Authority: Discussion Document | Page 9 of 42

1 Overview Other operating expenses have remained relatively flat in dollars but have increased as a percentage of total fares

Other Operating Expenses 35.0 180% 28.1 28.3 28.8 28.2 160% 30.0 27.8 27.3 of % fare revenue 25.7 140% 25.0 7.9 8.2 8.2 8.6 9.7 120% 7.5 9.3 20.0 100% 6.3 5.4 5.4 6.1 15.0 5.5 5.8 6.1 80% ($ in millions) in ($ 60% 10.0 8.4 9.1 9.3 8.4 7.0 6.3 5.5 40% 5.0 20% 5.5 5.1 5.4 5.7 6.0 6.2 6.5 - 0% 2012A 2013A 2014A 2015A 2016A 2017P 2018B Purchased Transportation Fuel & Lubricants Parts & Supplies Other

Source: FY2012-2016 data audited SORTA general ledger accounts. FY2017 data from preliminary SORTA general ledger accounts. FY2018 data from SORTA internal projections . Purchased Transportation Fuel & Lubricants

► Purchased transportation relates to paratransit operations, where SORTA ► Fuels & lubricants is predominantly diesel fuel. Declines in the most recent has a federal requirement to provide services to riders within their service years are driven by a combination of lower overall oil commodity prices and coverage area. As part of this mandate, SORTA has contracted with MV SORTA fuel hedging efforts Transport to provide the services. The contract expires in February 2020 and Other provides for an administration fee along with a variable component based upon the actual volume of rides provided and total miles driven ► The “Other” category includes expenses such as services, utilities, casualty and liability, fuel taxes, leases/rentals, and other miscellaneous. The largest Parts & Supplies contributors to the dollar cost include outsourced services, utilities and fuel ► Parts and supplies consist primarily of revenue (bus) vehicle parts and tire taxes lease expense. Declines in 2016 and 2017 are driven primarily by optimized purchasing practices and reduction of parts purchased for inventory Southwest Ohio Regional Transit Authority: Discussion Document | Page 10 of 42

1 Overview SORTA’s average bus fleet age has continued to increase since 2015

Average Age of Bus Fleet (years) Average Mileage of Current Bus Fleet 8 500,000 32 400 8 23 38 346 355 356 357 357 357 7.5 400,000 300 7 31 67 6.5 300,000 200 7 44 6 15 33 200,000 100 5.5 37 100,000 0 5 22 2012 2013 2014 2015 2016 2017 0-4 Buses 5-8 Buses 9-12 Buses - 13+ Buses Average Age

Note: Certain years omitted in graph above due to unavailability of data Mileage of Current Bus Fleet Average Mileage Per Year of Current Bus Fleet 120 70,000 100 60,000 100 85 50,000 80 75 40,000 64 30,000 60 20,000 40 10,000 Number ofbuses Number 25 20 - 8 0 0-100 100-200 200-300 300-400 400-500 500-600 FTA's Recommended Avg Mileage in thousands Note: Certain years omitted in graph above due to unavailability of data Source: : FY2012-2016 data audited SORTA CAFR. FY2017 data from SORTA internal files Southwest Ohio Regional Transit Authority: Discussion Document | Page 11 of 42 Prepared solely for Cincinnati USA Regional Chamber & Cincinnati Business Committee. Reliance restricted. Does not constitute assurance or legal advice. Please refer to limitations and restrictions on page 2. 21 June 2018 | Version 1.0 (Draft) 2 Benchmarking (data from 2011- 2016)

Southwest Ohio Regional Transit Authority: Discussion Document | Page 12 of 42

2 Benchmarking (data from 2011- 2016) Scope of the Benchmarking Analysis

► This presentation is based on transit agencies information as reported by Analysis Categories National Transit Database. Data has been collected for 12 cities (including all transit agencies that serve a particular city) for six years from 2011 to 2016. 1. Fleet 2. Service 3. Operational ► Southwest Ohio Regional Transit Authority (SORTA) has reported Characteristics Performance Performance information on three modes, namely:

► Bus (MB) . Fleet Age . Passenger/Hour . Major Mechanical

► Demand Response (DR) . Lifetime Miles per . Load Factor Failures Vehicle . Average . Other Mechanical ► Streetcar Rail (SR) . Active Fleet Passenger Trip Failures ► Each of the modes has been analyzed with a set of comparator transit Length . Revenue Miles agencies that have been shortlisted taking into consideration the fleet . Annual Ridership between Major size and the population that the agency serves. Mechanical ► The modes have been analyzed on multiple parameters so as to provide Failures a holistic perspective on the performance. The analysis herein considers . Vehicle fleet characteristics, reliability, safety, service performance measures, Maintenance per operational performance measures, operating costs, and capital 4. Fiscal 5. Costs & Labor Revenue Mile expenses. Sustainability Expenses . Vehicle Operations ► The following are the over-arching assumptions used for the analysis. All per Revenue Mile of the results should to be analyzed in the context of these assumptions: . Capital Expenses . Operating Costs . Vehicle Revenue per Revenue Mile ► Where a given mode operates with multiple types of service and Fare Miles per FTE (Purchase Transportation and Department Owned), weighted average Revenues . Unlinked has been considered to report the final number. . Operating Costs Passenger Trips ► The analysis is basis data as reported by the National Transit per Revenue Mile per FTE Database and the data is not audited. . Farebox Recovery . Hours per FTE ► Only the data reported by urban reporters has been included in the Ratio . Total Operating analysis, not reduced or rural reporters. . Operating Subsidy Salary Expenses per Passenger Trip per FTE ► MTA Bus Company and MTA New York City Transit data have been merged and are reported under MTA New York City Transit. . Realized Fare per Passenger Trip

Southwest Ohio Regional Transit Authority: Discussion Document | Page 13 of 42

2 Benchmarking (data from 2011- 2016) Comparator Transit Agencies

For analysis of bus, SORTA has been benchmarked with the following transit agencies:

► Austin, Capital Metropolitan Transportation Authority (CMTA) WA VT ME ► Columbus, Central Ohio Transit Authority (COTA) MT ND NH OR MN ► MA Charlotte, Charlotte Area Transit System (CATS) ID WI NY SD MI ► Detroit, City of Detroit Department of Transportation (CODDOT) WY RI IA PA CT ► Seattle, Central Puget Sound Regional Transit Authority (CSRTA) NE OH NJ NV IL IN DE UT WV ► Kansas, Kansas City Area Transportation Authority (KCATA) CO VA MD CA KS MO KY ► Baltimore, Maryland Transit Administration (MTA) NC TN OK ► Pittsburgh, Port Authority of Allegheny County (PAAC) SC AZ NM AR ► Santa Clara, Santa Clara Valley Transportation Authority (SCVTA) GA MS AL ► San Antonio, VIA Metropolitan Transit (VIA) TX LA ► Nashville, Metropolitan Transit Authority (MTA) FL ► Indianapolis, Indianapolis and Marion County Public Transportation (IMCPT)

► Both Bus (MB) and Commuter Bus (CB) modes have been combined for the purpose of this study and analyzed under a single category of Bus Combined (BC).

► Some of the transit agencies have reported their data under the mode of Bus (MB) in spite of having a majority of inter-state routes and hence both Bus and Commuter Bus data have been considered together (as applicable) to target comparable terms.

► Among the comparator agencies, Central Puget Sound Regional Transit Authority, Capital Metropolitan Transportation Authority, Charlotte Area Transit System and Maryland Transit Administration have reported data under both Bus (MB) and Commuter Bus (CB) modes.

Southwest Ohio Regional Transit Authority: Discussion Document | Page 14 of 42

3 Benchmarking (data from 2011- 2016) Comparator Transit Agencies

Tax Funding City Agency Name Organizational Relationship Funding Model Year est. Geography Served Oper. Exp. Dollars Coverage Southwest (in millions) Ohio Regional City of Cincinnati mayor, with approval of Hamilton County; small City of Cincinnati earnings tax of Cincinnati Transit City Council, appoints a voting majority of 1972 portions of Clermont, Warren $ 50 $ 120 42% 0.3% Authority, the Board & Butler counties Cincinnati Central Ohio Permanent 0.25% sales and use Franklin County; small City of Columbus mayor, with approval of Transit tax + 10 year renewable 0.25% portions of Delaware, Columbus City Council, appoints a voting majority of 1999 131.8 150.2 88% Authority, sales tax levy applicable to Fairfield, Licking & Union the Board Columbus service area counties Port Authority Appointed by the County’s Chief of Allegheny Downtown Pittsburgh to Pittsburgh Executive and confirmed by the County 1% fixed sales tax 1964 408.9 1,658.5 25% County, Oakland , Allegheny County Council. Pittsburgh Metropolitan Board of Directors, appointed by the Transit 2.25% sales tax of Davidson Nashville and Davidson Nashville Mayor of the Metropolitan Government 1973 44.6 93.1 48% Authority, County County and approved by the Metropolitan Council Nashville Board of Directors of IPTC consists of Indianapolis City of Indianapolis, Marion seven members, three of whom are and Marion County, Pike, Washington, appointed by the Mayor of the City of 0.25% income tax will begin Indianapolis County Public 1973 Lawrence, Wayne, Center, 50.0 74.5 67% Indianapolis and four of whom are collection October 1, 2017 Transportation, Warren, Decatur, Perry, appointed by the City of Indianapolis- Indianapolis Franklin Marion County Council (Council) Capital Austin, Manor, San Leanna, Metropolitan Sales tax increased to 1% in Jonestown, Lago Vista, Board appointed in accordance with Austin Transportation 1995, from an earlier 0.75%, 1985 Leander, Point Venture and 221.3 261.5 85% Section 451.5021, Transportation Code. Authority, applicable to service area portions of Travis and Austin Williamson counties Metropolitan Transit Commission (MTC) is CATS’ governing board and is responsible for reviewing and Charlotte Area recommending all long-range public Transit transportation plans. The Citizens Transit Charlotte 0.5% sales tax 1999 City of Charlotte 89.6 166.3 54% System, Advisory Group (CTAG) is an advisory Charlotte committee of MTC. Transit Services Advisory Committee makes recommendation to MTC and provides input into short-range transit operations.

Source: National Transit Database, SORTA CAFRs, and management team Southwest Ohio Regional Transit Authority: Discussion Document | Page 15 of 42

3 Benchmarking (data from 2011- 2016) Comparator Transit Agencies

Tax Funding City Agency Name Organizational Relationship Funding Model Year est. Geography Served Oper. Exp. Dollars Coverage Municipal tax: Annualized 2.4% City of Detroit (in millions) Organized as an enterprise fund of the (resident individuals), 1.2% on Department of Detroit City of Detroit and subsidized and income earned by resident 1922 City of Detroit $ - $ 140.8 0% Transportation, consolidated in City financials individuals and 2% for Detroit corporations Taxes are levied at a rate of 18-member board, 17 of whom are 1.4% for sales and use, 0.8% Central Puget appointed by the respective member on rental car revenue, 1.1% for Sound Regional county executives and confirmed by King, Pierce and Snohomish Seattle motor vehicle excise and a 1993 838.8 408.3 205% Transit Authority, council. The final board position is held counties property tax in the amount of Seattle by Washington’s Secretary of $0.25 per $1,000 of assessed Transportation property value Kansas City Board of Commissioners consists of five 0.38% Transit Sales tax Area Serves four Missouri Kansas members from the state of Missouri and account Missouri through the Transportation 1965 counties and three Kansas 62.4 100.1 62% City five from the state of Kansas Public Mass Transit Fund (0.5% Authority, counties sales tax) Kansas Maryland Transit Appointed by the Governor and the 6% State's Sales Tax and 66 Maryland’s 23 counties, Baltimore Administration, Secretary, who is ex officio and serves and 2/3% Vehicle Excise Tax 1971 Annapolis, Baltimore City 2,772.3 3,832.6 72% Baltimore as the Chairman. (Titling) and Ocean City Sales tax revenue represents the collection of a half-cent for each taxable sales dollar spent in the County, a 1/8-cent sales Santa Clara VTA is governed by a 12-member Board tax to fund the operating and Santa Valley of Directors consisting maintenance costs of the BART 1972 County of Santa Clara 460.3 439.4 105% Clara Transportation of elected officials appointed by the Extension, and a 1/2-cent sales Authority jurisdictions they represent. tax to fund activities on enhancing transit, highways, expressways and active transportation

VIA: 0.5% sales and use tax VIA Metropolitan Appointed by the City of San Antonio, San levied in San Antonio ATD: Transit, San Bexar County Commissioners Court, and 1978 Bexar County 201.4 248.1 81% Antonio Authorized to impose sales and Antonio Suburban Council of Mayors. use tax of 0.25%

Source: National Transit Database, SORTA CAFRs, and management team Southwest Ohio Regional Transit Authority: Discussion Document | Page 16 of 42

2 Benchmarking (data from 2011- 2016) Benchmarking Summary Slide – SORTA performs at or above the peer average on many of the following metrics

The following is the summary of SORTA benchmarking vis-à-vis its peers on multiple metrics. All the information is basis data as reported by National Transit Database. Where available, data for the agencies has been collected for six years from 2011 to 2016.

Category Benchmark (data as of 2016) SORTA Peer Average Fleet Age (1) 6.64 8.09 Fleet Characteristics Lifetime miles per vehicle 256,209 345,400 Active fleet 357 443 Passengers/Hour 23.2 28.1 Service Performance Load factor 9.4 10.6 Average passenger trip length 5.32 5.31 Major mechanical failures 1,537 2,042 Other mechanical failures 350 1,844 Operational Revenue miles between major mechanical failures 8,764 8,645 Performance Vehicle maintenance per revenue mile $2.29 $2.61 Vehicle operations per revenue mile $5.12 $5.74 Capital expenses per revenue mile $1.75 $2.42 Operating costs per revenue mile $8.86 $9.88 Fiscal Farebox recovery ratio 35.8% 19.7% Sustainability Operating subsidy per passenger trip $3.19 $3.87 Realized fare per passenger trip $1.76 $0.96 Vehicle Revenue Miles per FTE 12,349 13,017 Costs and Unlinked Passenger Trips per FTE 21,887 26,055 Labor Expenses Hourly wage rate $26.25 $27.20 Hours (k hr) per FTE 2.03 1.93

Source: National Transit Database (1) As of January 2018 SORTA’s average Fleet Age was 8.6 years Southwest Ohio Regional Transit Authority: Discussion Document | Page 17 of 42 Prepared solely for Cincinnati USA Regional Chamber & Cincinnati Business Committee. Reliance restricted. Does not constitute assurance or legal advice. Please refer to limitations and restrictions on page 2. 21 June 2018 | Version 1.0 (Draft)

2 Benchmarking (data from 2011- 2016) Fleet Characteristics - SORTA’s fleet is in line with peers, however, the fleet continues to age from 2016 metrics

CAGR for SORTA Lifetime Miles per Vehicle (As on 2016) 654 from 2011 to 2016: Active Fleet (As on 2016) 1,012 0.98% 454 727 Average: 345,500 387 630 340 353 358 359 287 300 306 463 463 511 256 Average: 443 209 228 331 357 365 248 292 174 182

Fleet Age (As on 2016) 11.99 Observations 10.51 10.53 . As of 2016, SORTA is in line with the peer averages in regards to quantity 8.91 9.18 of rolling stock, average age of fleet and lifetime miles per vehicle. Average: 8.09 . Note that data is the most recent available as of 2016 and SORTA’s fleet 7.37 7.12 7.18 7.26 continues to age. As of early 2018 SORTA’s average fleet age was 8.6. 6.52 6.64 6.79 . SORTA has committed funding for buses over the next few years - 27 in 5.18 2018, 30 in 2019, 19 in 2020, 17 in 2021. . SORTA projects federal / local funding matches for 21 buses each year 2022-2028

Definitions: . Active Fleet: Vehicles available to operate in revenue service at the end of an agency’s fiscal year, including spares, vehicles temporarily out of service for routine maintenance and minor spares. . Lifetime miles per vehicle: Average lifetime distance travelled per vehicle in the active fleet. . Fleet Age: Average age of an agency’s fleet.

Source: National Transit Database Southwest Ohio Regional Transit Authority: Discussion Document | Page 18 of 42 Prepared solely for Cincinnati USA Regional Chamber & Cincinnati Business Committee. Reliance restricted. Does not constitute assurance or legal advice. Please refer to limitations and restrictions on page 2. 21 June 2018 | Version 1.0 (Draft)

2 Benchmarking (data from 2011- 2016) Service Performance – SORTA has endured more significant ridership losses than many systems

Service Performance Annual Ridership (Index = 100 in 2011) 130.0 Peak in gas prices nationwide (July ’14) CAGR for SORTA Seattle (CSRTA) from 2011 to 2016: 120.0 - 4.38%

Nashville (MTA) 110.0

Baltimore (MTA) Santa Clara (SCVTA) Indianapolis (IMCPT) 100.0 Pittsburgh (PAAC) Columbus (COTA)

Charlotte (CATS) 90.0

Austin (CMTA) San Antonio (VIA) 80.0 Kansas (KCATA) Cincinnati (SORTA) – RED LINE Detroit (CODDOT) 70.0 2011 2012 2013 2014 2015 2016

Observations Definitions:

. Annual Ridership: Ridership, measured in terms . Approximately half of the systems included in the analysis experienced ridership declines of Unlinked Passenger Trips, is defined as in the 2011 though 2016 period. number of passengers who board public transportation vehicle in an year. . SORTA has experienced a larger decline than almost every other system, except Detroit. . Passengers are counted each time they board . SORTA’s CAGR for annual ridership displays a 4.38% annual decline over the period. vehicles, no matter how many trips they use to travel from their origin to destination.

Source: National Transit Database Southwest Ohio Regional Transit Authority: Discussion Document | Page 19 of 42 Prepared solely for Cincinnati USA Regional Chamber & Cincinnati Business Committee. Reliance restricted. Does not constitute assurance or legal advice. Please refer to limitations and restrictions on page 2. 21 June 2018 | Version 1.0 (Draft)

2 Benchmarking (data from 2011- 2016) Operational Performance – SORTA experienced fewer mechanical failures than peers, leading to higher revenue miles between failures

Revenue Miles CAGR for SORTA Major Mechanical 55.72% Other Mechanical 19.39% between Major -35.32% Observations from 2012 to 2016: Failures Failures Mechanical Failures

. SORTA Mechanical Failures and Revenue Miles between Major Mechanical Failures (Average from 2012 to 2016) experienced 10,000 16,000 fewer mechanical 9,000 failures than the 14,000 majority of 8,000 systems. 12,000 7,000 . SORTA is in the

Failures 10,000 top 5 as it relates 6,000 to revenue miles 5,000 8,000 achieved between major mechanical 4,000 6,000

failures. TotalMechanical 3,000 4,000 2,000 Failures Major Mechanical MilesRevenue Between 1,000 2,000 - - Detroit Indianap San Santa Cincinnat Columbu Baltimore Pittsburg Nashville Austin Charlotte Seattle Kansas (CODDO olis Antonio Clara i s (COTA) (MTA) h (PAAC) (MTA) (CMTA) (CATS) (CSRTA) (KCATA) T) (IMCPT) (VIA) (SCVTA) (SORTA) Other Mechanical failures 2,098 470 1,317 2,421 3,746 320 309 350 1,738 850 8,334 1,948 77 Major Mechanical failures 4,000 1,653 2,132 3,756 3,341 2,826 749 1,737 1,537 2,592 862 845 511 Avg Revenue Miles between Major Mechanical Failures 2,696 4,190 5,082 6,969 7,039 7,062 7,196 8,764 10,212 10,503 13,407 14,230 15,039

Major Mechanical failures Other Mechanical failures Avg Revenue Miles between Major Mechanical Failures Definitions: . Major Mechanical Failures: A failure of some mechanical element of the revenue vehicle that prevents the vehicle from completing a scheduled revenue trip or from starting the next one. . Other Mechanical Failures: A failure of some other mechanical element of the revenue vehicle that, because of local agency policy, prevents the revenue vehicle from completing a scheduled revenue trip or from starting the next one. . Total Mechanical Failures: Sum of major and other mechanical failures. . Vehicle Revenue Miles: The miles that vehicles travel while in revenue service. Vehicle revenue exclude deadhead, operator training, maintenance testing, and school bus and charter services.

Source: National Transit Database Southwest Ohio Regional Transit Authority: Discussion Document | Page 20 of 42 Prepared solely for Cincinnati USA Regional Chamber & Cincinnati Business Committee. Reliance restricted. Does not constitute assurance or legal advice. Please refer to limitations and restrictions on page 2. 21 June 2018 | Version 1.0 (Draft)

2 Benchmarking (data from 2011- 2016) Operational Performance – SORTA spends less than the peer average on maintenance and operations, measured by revenue mile

CAGR for SORTA Maintenance Spend per Revenue Mile (Average from 2012 to 2016) Fleet Age (As on 2016) 11.99 from 2012 to 2016: $4.40 0.86% $4.11 $4.32 10.51 10.53 9.18 $3.36 Average: 8.09 8.91 Average: $2.61 7.12 7.18 7.26 7.37 6.52 6.64 6.79 $2.27 $2.28 $2.29 $2.13 $2.20 5.18 $1.73 $1.77 $1.48 $1.62

Vehicle Operations Spend per Revenue Mile (Average from 2012 to 2016) Observations CAGR for SORTA $9.58 from 2012 to 2016: 0.41% . As of 2016, SORTA spent slightly less than the average for $7.86 maintenance and vehicle operations per revenue mile. $6.97 . However, the dollars spent by SORTA per revenue mile are in line Average: $5.74 with several of the systems at $2.29 maintenance spend and $5.12 $5.26 $5.39 $4.91 $5.08 $5.12 $5.15 $5.18 $5.25 vehicle operations spend. $4.35 $4.44 . The lower than average spend may be influenced by the slightly lower fleet age versus other systems as of 2016. . The SORTA CAGRs for maintenance and vehicle operations indicate that the system has managed spending levels, with minimal growth. Definitions: . Maintenance spend: Maintenance spend includes both Vehicle and Non Vehicle maintenance. . Vehicle Operations spend: Vehicle Operations spend includes wages, salaries and expenses related to all activities associated with dispatching and running vehicles to carry passengers, including management, administrative and clerical support.

Source: National Transit Database Southwest Ohio Regional Transit Authority: Discussion Document | Page 21 of 42 Prepared solely for Cincinnati USA Regional Chamber & Cincinnati Business Committee. Reliance restricted. Does not constitute assurance or legal advice. Please refer to limitations and restrictions on page 2. 21 June 2018 | Version 1.0 (Draft)

2 Benchmarking (data from 2011- 2016) Operational Performance – SORTA invested less on capital than most peers due to operational expense requirements

Capital Expenses per Revenue Mile (Average from 2011 to 2016) Observations Seattle (CSRTA) $4.44

Nashville (MTA) $4.19 . SORTA spent less on capital expenses per revenue mile, at $1.75 versus the average of Columbus (COTA) $3.91 $2.42.

Baltimore (MTA) $3.59 . Based upon the CAGR, SORTA appears to have reported a declining capital expense spend YoY Pittsburgh (PAAC) $2.39 for the 2011 to 2016 period, which could indicate a Santa Clara (SCVTA) $2.20 continuing decline of investment dollars over the years. Indianapolis (IMCPT) $1.82 CAGR for SORTA from 2011 . Many of these expenses are long lived assets, so Detroit (CODDOT) to 2016: $1.81 analysis over a short timeframe could be misleading. Cincinnati (SORTA) $1.75 - 12.91% Charlotte (CATS) $1.53 . Systems with newer capital may have less spend on repair and replacement while older systems, Kansas (KCATA) $1.51 who defer investment, could have higher repair Austin (CMTA) $1.22 and replacement expenses. Average: $2.42 San Antonio (VIA) $1.18 Definitions:

. Capital Expenses: Capital Expenses include the following Fleet Age (As on 2016) Average: 8.09 11.99 major expense categories: 10.51 10.53 8.91 9.18 . Stations and Administrative Buildings 6.64 6.79 7.12 7.18 7.26 7.37 6.52 . Maintenance Buildings 5.18 . Passenger Vehicles

. Guideway

. Fare Collection Equipment

. Communication and Information Systems

Source: National Transit Database Southwest Ohio Regional Transit Authority: Discussion Document | Page 22 of 42 Prepared solely for Cincinnati USA Regional Chamber & Cincinnati Business Committee. Reliance restricted. Does not constitute assurance or legal advice. Please refer to limitations and restrictions on page 2. 21 June 2018 | Version 1.0 (Draft)

2 Benchmarking (data from 2011- 2016) Fiscal Sustainability - SORTA operating expenses were less than the peer average, with one of the strongest FRRs (FRR includes CPS and paratransit)

Operating Cost Per Revenue Mile (Average from 2011 to 2016) CAGR from 2011 to Expenses & Revenues for SORTA 2016: Santa Clara (SCVTA) $15.23 90,000,000 Pittsburgh (PAAC) $14.23 80,000,000 Baltimore (MTA) $12.62 Operating 2.36% 70,000,000 Expenses Detroit (CODDOT) $11.55 Austin (CMTA) $9.17 60,000,000 Fare 50,000,000 -1.64% Columbus (COTA) $9.13 Revenues Seattle (CSRTA) $9.04 40,000,000 Kansas (KCATA) $8.86 CAGR for SORTA 30,000,000 Cincinnati (SORTA) $8.67 from 2011 to 2016: 20,000,000 Nashville (MTA) $8.09 10,000,000 1.40% Indianapolis (IMCPT) $7.57 - Charlotte (CATS) $7.47 2011 2012 2013 2014 2015 2016 Average: $9.88 San Antonio (VIA) $7.02 Observations Farebox Recovery Ratio (Average from 2011 to 2016) 35.8% CAGR for SORTA . SORTA was a top performer in operating cost per revenue mile 30.2% from 2011 to 2016 - 7.1% 27.3% at $8.67 versus the overall average of $9.88 during the analysis (percentage points): 25.8% period. In addition, the CAGR at 1.40 indicates that SORTA 23.0% 20.1% managed the growth in expenses to a minimal level. 18.0% 15.2% 15.3% . SORTA farebox recovery included CPS and paratransit, which Average: 11.8% 12.6% 10.3% 11.6% may be misleading in assessing farebox recovery levels. Not all 19.7% systems have comparable contracts as SORTA has with CPS.

Definitions: . Fare Revenues: All income received directly from passengers, paid either in cash or through pre-paid tickets, passes etc. It includes donations from those passengers who donate money on the vehicle. . FRR (Farebox Recovery Ratio): Proportion of the amount of revenue generated through fares as a percentage of total operating expenses.

Source: National Transit Database Southwest Ohio Regional Transit Authority: Discussion Document | Page 23 of 42 Prepared solely for Cincinnati USA Regional Chamber & Cincinnati Business Committee. Reliance restricted. Does not constitute assurance or legal advice. Please refer to limitations and restrictions on page 2. 21 June 2018 | Version 1.0 (Draft) 3 SORTA Management’s 10 Year Projections

Southwest Ohio Regional Transit Authority: Discussion Document | Page 24 of 42

3 SORTA Management’s 10 Year Projections SORTA continues to update and revise the forecast for changes in key assumption inputs – current projected deficits are comparable

Transit Fund Operating Subsidy Fare Increase & Timing Ridership

► Projections utilize City of Cincinnati earnings ► The original projections included an ► SORTA has seen an average decline of tax projection report completed by UC assumption for a fare increase each year 3.88% in ridership from 2012-2017 (University of Cincinnati). Income tax growth starting in 2018 ► SORTA continues to refine and validate it’s projected to be (7.68)% 2019, 4.99% 2020, ► No fare increase has been implemented for ridership data sources 6.54% 2021 and approximately 2.3% for 2018, therefore, SORTA projects the first fare subsequent years ► Projections anticipate continued ridership increase in 2019 declines averaging 2.51% per year 2019-2028 ► The City of Cincinnati updates their income ► Current projections include annual fare tax receipt estimates monthly based upon ► Proposed further restructuring of local and increases between $.15-.20 from 2019-2028 actual receipts express routes may also contribute to a ► Base fare increases from $1.75 in 2018 to further deterioration of ridership ► SORTA’s finance team extracts updated $3.30 in 2028. income tax data monthly in order to update ► SORTA ridership is off 6.8% YTD April versus the projections, as needed the prior year

Wages & Benefits Surplus / (Deficit) Bus Fleet Funding

► Salaries and wages make up approximately ► The total operating deficit from 2018-2028 ► The original projections included a 27% 46%-47% of SORTA’s operating budget and approximates $61.9 million average match for 2018-2028, which is in line have consistently increased annually, driven with historical match levels. ► The final deficit amount for the period will in part by the current union contract fluctuate based upon adjustments noted on ► SORTA allocated $3.8 million of uncommitted ► The current Union contract expires at the end this slide, including updated labor funds to committed bus match funding for of October 2018 assumptions 2019 providing for 30 buses at a total investment of $15.7 million ► The current projections assume labor is flat ► SORTA completed a balance sheet review YoY and will require updated assumptions which resulted in identification of $7.9 million ► Future access to bus funding dollars or federal once a final contract has been negotiated and in undesignated cash bus match dollars awarded to SORTA will ratified. require udpates to the projections, which will ► $4.1 million designated for contingency reserve also impact the level of capital deficit ► SORTA is self insured for health, however, which can support future operating or capital projected many of the benefits are driven off wage needs, bringing the total reserve to $6.4 million levels, therefore, if wages increase, benefits ► $3.8 million designated for 2019 bus match will also be impacted in the projections providing for 30 buses Source: SORTA CAFRs and management team Southwest Ohio Regional Transit Authority: Discussion Document | Page 25 of 42

3 SORTA Management’s 10 Year Projections Operating Profit and Loss Statement – 10 Year Projections

CAGR ($ in thousands) 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019-2028 Total Ridership (in 000s) 13,738 13,265 12,890 12,539 12,210 11,899 11,604 11,324 11,056 10,800 10,555 -2.51% 131,881 Operating Summary Total Revenue 98,061 95,031 95,704 99,883 102,496 104,902 107,177 109,394 111,468 113,730 115,945 2.23% 1,153,792 Total Expenses 98,061 100,044 102,324 104,711 107,215 109,840 112,598 115,496 118,543 121,751 125,130 2.52% 1,215,714 Net Income (Deficit) - (5,013) (6,620) (4,828) (4,719) (4,938) (5,421) (6,102) (7,076) (8,021) (9,185) 6.96% (61,923)

Capital Summary Surplus/Deficit Bus Funding (25,823) 5,234 (24,748) (10,526) 3,997 (16,464) 6,655 (1,872) (10,284) 6,620 6,819 2.98% (60,392) Paratransit Funding ------0.00% - SORTA Infrastructure (1,564) (11,196) (6,994) (2,616) (3,883) (18,984) (944) (825) (6,001) (7,824) (928) -24.17% (61,760)

Total Funding Surplus/(Deficit) (27,387) (10,976) (38,362) (17,970) (4,605) (40,386) 290 (8,799) (23,360) (9,225) (3,295) -12.52% (184,075)

Cumulative Deficit

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 $-

$(40) (27.4) (38.4) $(80) (76.7) $(120) (94.7) (99.3)

(139.7) (139.4) $(160) (148.2) (171.6) $(200) (180.8) (184.1) Operating Net Income (Deficit) Transportation Capital Deficit Paratransit Capital Deficit SORTA Infrastructure Capital Deficit

Source: FY2018-2028 data from SORTA internal projections Southwest Ohio Regional Transit Authority: Discussion Document | Page 26 of 42

3 SORTA Management’s 10 Year Projections Transportation Capital Summary – 10 Year Projections

CAGR 2019- ($ in thousands) 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2028 Total Transportation (including 5307 funding) Amount Funded Identified/Committed $ 12,723 $ 15,674 $ 10,222 $ 9,418 $ 11,991 $ 12,348 $ 12,705 $ 13,104 $ 13,497 $ 13,902 $ 14,319 -1.00% $139,903 Number of Buses 27 30 19 17 21 21 21 21 21 21 21 240 Buses Required Cost (12 yr. useful life) 38,546 10,440 34,970 19,944 7,994 28,812 6,050 14,976 23,781 7,282 7,500 -3.61% 200,295 Number of Buses 80 20 65 36 14 49 10 24 37 11 11 357 Cumulative Bus Funding Surplus/(Deficit) (25,823) (20,589) (45,337) (55,863) (51,866) (68,330) (61,675) (63,547) (73,831) (67,211) (60,392) 2.98% (60,392)

Paratransit Vehicles Required Cost $ 1,050 $1,081 $1,013 $1,147 $1,182 $443 $342 $470 $1,330 $1,245 $1,411 3.00% $10,714 Number of Paratransit Vehicles 11 11 10 11 11 4 3 4 11 10 11 0.00% 97 Amount Funded Identified/Committed 840 865 810 918 945 354 274 376 1,064 996 1,129 3.00% 8,571 Local Capital Match 210 216 203 229 236 89 68 94 266 249 282 3.00% 2,143 Paratransit Funding Deficit ------

1 # of Buses 2 Local Bus Match 3 Paratransit 4 5307 Funds 5 Deficit

SORTA assumes replacement of Local bus match is assumed to be at Paratransit is assumed to be fully SORTA receives 5307 funds annually Deficit is projected at $60 million, their entire current fleet of 357 buses an average of 27% over the funded through a combintaion of local to support capital purchases, which assumes 117 buses are paid over the projection period 2018-2028 projection period. and federal matches. however since 1998 SORTA has 100% by SORTA with no federal diverted these funds to cover matching. operating deficits. These funds can be used to purchase buses but not as a local match

Source: FY2018-2028 data from SORTA internal projections Southwest Ohio Regional Transit Authority: Discussion Document | Page 27 of 42

3 SORTA Management’s 10 Year Projections Infrastructure Capital Summary – 10 Year Projections

CAGR 2019- ($ in thousands) 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2028 Total SORTA Infrastructure

Capital Maintenance Buses $550 $561 $571 $100 $ - $ - $ - $ - $ - $ - $ - 1,782 Security Projects 34 34 34 34 34 34 34 34 34 34 34 0.00% 374 Computer Equipment & Software - 449 2,983 150 231 405 245 334 260 260 260 -5.90% 5,575 Support Vehicles 100 325 304 - - - 244 - - 300 - 1,273 Mechanical & Misc. Equipment 475 584 722 757 724 295 222 180 278 30 435 -3.23% 4,700 Facilities Upgrades 405 3,244 2,381 1,575 1,895 250 200 27 430 200 200 -26.62% 10,806 Queensgate Roof ------7,000 - 7,000 Queensgate HVAC south end - 6,000 ------6,000 Development of Transit Centers - - - - 1,000 18,000 - 250 5,000 - - 24,250 Funding Available ------SORTA Infrastructure Surplus/(Deficit) (1,564) (11,196) (6,994) (2,616) (3,883) (18,984) (944) (825) (6,001) (7,824) (928) -24.17% (61,760)

1 Computer 2 Mechanical & 3 Facility 4 Queensgate 5 Transit Centers 6 Deficit Equip. & Software Misc. Equipment Upgrades Roof & HVAC

Total spend of $5.6 million Equipment includes Facility upgrades includes full Queensgate roof and HVAC SORTA projects development Total deficit of $61.8 million includes a new ERP and replacement of multiple garage concrete drive replacement at are assumed to require of 3 transit centers at $6 driven by deferred replacement of Maximo, hydraulic bus lifts, numerous QG at $6 million, bus washers replacement over the million each and 1 park and maintenance combined with combined total of $2.75 million. garage cranes and other and other building repairs and projection period and total $13 ride at $5 million. optional improvements such as Other routine equipment and various equipment. upgrades. million the park and rides. software upgrades are $2.85 million.

Source: FY2018-2028 data from SORTA internal projections Southwest Ohio Regional Transit Authority: Discussion Document | Page 28 of 42 Prepared solely for Cincinnati USA Regional Chamber & Cincinnati Business Committee. Reliance restricted. Does not constitute assurance or legal advice. Please refer to limitations and restrictions on page 2. 21 June 2018 | Version 1.0 (Draft) 4 Trend Projections – historical 6 year period and SORTA projected 5 year period

Southwest Ohio Regional Transit Authority: Discussion Document | Page 29 of 42

4 Trend Projections – historical 6 year period and SORTA projected 5 year period Profit and Loss Statement

CAGR CAGR 2012- 2018- ($ in thousands) 2012A 2013A 2014A 2015A 2016A 2017P 2018 2019 2020 2021 2022 2017 2022 Ridership (in 000s) (2) 17,390 16,769 16,426 15,964 15,013 14,266 13,738 13,265 12,890 12,539 12,210 -3.88% -2.90% Revenue Metro Fare Revenue (2) $ 22,326 $ 21,695 $ 21,179 $ 20,225 $ 18,997 $ 17,846 $ 16,749 $ 17,871 $ 18,594 $ 19,271 $ 19,902 -4.38% 4.41% Access Fare Rev 668 728 817 871 921 944 937 1,027 1,095 1,163 1,231 7.17% 7.07% Total Fares 22,993 22,423 21,997 21,096 19,919 18,790 17,686 18,898 19,690 20,434 21,133 -3.96% 4.55%

CPS Contract Rev 7,522 7,487 7,602 7,453 7,599 7,963 7,629 7,782 7,938 8,096 8,258 1.15% 2.00% Non-Transportation Revenue 1,301 1,215 1,270 1,463 1,528 1,457 1,683 1,683 1,683 1,683 1,683 2.29% 0.01% Transit Fund Operating (3) 42,237 44,704 45,440 48,293 49,490 53,516 56,433 51,884 51,455 54,574 56,165 4.85% -0.12% Subsidy Revenue 15,883 16,499 17,773 16,074 15,429 14,490 14,631 14,784 14,939 15,096 15,256 -1.82% 1.05% Total Revenue 89,936 92,327 94,081 94,379 93,964 96,216 98,061 95,031 95,704 99,883 102,496 1.36% 1.11%

Expenditures Employee Wages 40,371 41,026 42,530 42,938 43,689 44,121 46,219 46,219 46,219 46,219 46,219 1.79% 0.00% Employee Benefits (1) 20,680 21,550 21,961 21,020 22,346 24,165 24,521 25,348 26,241 27,205 28,245 3.16% 3.60% Purchased Transportation 5,522 5,136 5,424 5,708 5,999 6,222 6,469 6,637 6,836 7,041 7,252 2.42% 2.90% Fuel & Lubricants 8,403 9,077 9,254 8,367 7,029 6,252 5,498 5,633 5,956 6,298 6,661 -5.74% 4.91% Parts & Supplies 6,290 5,412 5,442 6,060 5,504 5,756 6,082 6,204 6,328 6,454 6,583 -1.76% 2.00% Other 7,861 8,167 8,183 8,625 9,677 7,513 9,272 10,003 10,745 11,494 12,254 -0.90% 7.22% Total Expenses (4) 89,126 90,368 92,793 92,718 94,244 94,029 98,061 100,044 102,324 104,711 107,215 1.08% 2.26% Prior Year Reserves - - - - 515 ------Net Income (Deficit) 810 1,959 1,288 1,661 234 2,187 - (5,013) (6,620) (4,828) (4,719) OPERS Adjustment (1,265) 3,490 Adjusted Net Income (Deficit) 810 1,959 1,288 2,926 (3,256) 2,187 - (5,013) (6,620) (4,828) (4,719)

Projected Operating Deficit, Cumulative - (5,013) (11,633) (16,461) (21,180) 1. Employee benefit excludes an OPERS adjustment of -$1.27 million and $3.5 million in FY2015 and FY2016 respectively according to the GASB Statement 68 2. Ridership and Metro Fare Revenues exclude access rides and revenues 3. Transit Fund Operating includes a one time change in collection in 2017 of $2.4 million and in 2018 $2 million of City Reserves were budgeted 4. Due to a one time vendor payment total expenses decreased $1.2 million in 2017. Adjusted Total Expense CAGR for 2012-2017 would be 1.34% Source: FY12-FY16 data audited SORTA general ledger (“GL”) accounts. FY17 data from preliminary SORTA GL accounts. FY18-FY22 data from SORTA internal projections Southwest Ohio Regional Transit Authority: Discussion Document | Page 30 of 42

4 Trend Projections – historical 6 year period and SORTA projected 5 year period Service levels flat, ridership continues to decline without investment

Ridership

20.0 $1.80 17.4 18.0 16.8 $1.60 16.4 16.0 Revenue per passenger 16.0 15.0 14.3 $1.40 13.7 14.0 13.3 12.9 12.5 12.2 $1.20 12.0 $1.00 9.7 9.6 9.6 9.6 9.6 9.6 9.6 10.0 9.4 9.5 9.6 9.6 $0.80 8.0 $0.60

6.0 Ridership in millions in Ridership 4.0 $0.40

2.0 $0.20

0.0 $- 2012A 2013A 2014A 2015A 2016A 2017P 2018B 2019 2020 2021 2022 Ridership Revenue Miles Revenue Per Passenger

Source: FY2012-2016 data audited SORTA CAFR. FY2017 data from SORTA’s internal files. FY2018-FY2022 data from SORTA’s projected internals

Actuals Prelim Budget Projections ($ in thousands) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Ridership 17,390 16,769 16,426 15,964 15,013 14,266 13,738 13,265 12,890 12,539 12,210 Revenue Miles 9,351 9,465 9,669 9,559 9,623 9,588 9,639 9,639 9,639 9,639 9,639 Revenue Per Passenger $ 1.28 $ 1.29 $ 1.29 $ 1.27 $ 1.27 $ 1.25 $ 1.22 $1.35 $1.44 $1.54 $1.63

Southwest Ohio Regional Transit Authority: Discussion Document | Page 31 of 42

Southwest Ohio Regional Transit Authority: Discussion Document | Page 32 of 42

5 Sensitivities Ridership levels directly impact revenues and significantly drive the level of projected surplus/deficit, as of YTD April ridership is off projections by (6.8%)

Metro Ridership only 12.0 (in thousands) 2018 2019 2020 2021 2022 CAGR

-5.0% 11,579 11,000 10,450 9,927 9,431 -5.00% 11.5

-4.0% 11,579 11,115 10,671 10,244 9,834 -4.00% 11.0

SORTA Projections 11,579 11,087 10,712 10,362 10,032 -3.52% 10.5 -2.0% 11,579 11,347 11,120 10,898 10,680 -2.00% 10.0 -1.0% 11,579 11,463 11,348 11,235 11,122 -1.00%

Ridership in millions in Ridership 9.5 Revenue Per Passenger $1.45 $1.61 $1.74 $1.86 $1.98 9.0 2018 2019 2020 2021 2022 -5.0% -4.0% Projections -2.0% -1.0%

Metro Fare Revenue as impacted by ridership sensitivities Change (in thousands) 2018 2019 2020 2021 2022 CAGR from Total Notes

-5.0% $ 16,749 $ 17,730 $ 18,139 $ 18,463 $ 18,709 2.81% $ (2,598)

-4.0% 16,749 17,916 18,523 19,052 19,509 3.89% (638)

SORTA Projections 16,749 17,871 18,594 19,271 19,902 5.07% - RMP Model with Fare Sensitivity

-2.0% 16,749 18,289 19,302 20,267 21,186 6.05% 3,408

-1.0% 16,749 18,476 19,698 20,894 22,064 7.13% 5,495 Source: FY2018-FY2022 SORTA internal Projection files (1) Ridership is paid Metro fare, excludes CPS and paratransit

Southwest Ohio Regional Transit Authority: Discussion Document | Page 33 of 42

5 Sensitivities Higher levels of ridership than projected could have a significant impact on operating deficits

Metro Ridership only (in thousands) 2018 2019 2020 2021 2022 CAGR 14.0 SORTA 13.5 Projections 11,579 11,087 10,712 10,362 10,032 -3.52% 13.0 -2.0% 11,579 11,347 11,120 10,898 10,680 -2.00% 12.5

0.0% 11,579 11,579 11,579 11,579 11,579 0.00% 12.0 11.5 2.0% 11,579 11,810 12,046 12,287 12,533 2.00% 11.0

4.0% 11,579 12,042 12,523 13,024 13,545 4.00% 10.5 Ridership in millions in Ridership 10.0 Revenue Per 9.5 Passenger $1.45 $1.61 $1.74 $1.86 $1.98 2018 2019 2020 2021 2022

Projections -2.0% 0.0% 2.0% 4.0%

Metro Fare Revenue as impacted by ridership sensitivities Change (in thousands) 2018 2019 2020 2021 2022 CAGR from Total Notes SORTA Projections $ 16,749 $ 17,871 $ 18,594 $ 19,271 $ 19,902 4.41% $ - RMP Model with Fare Sensitivity -2.0% 16,749 18,289 19,302 20,267 21,186 6.05% 3,408 0.0% 16,749 18,663 20,098 21,534 22,969 8.22% 7,627 2.0% 16,749 19,036 20,910 22,852 24,863 10.38% 12,023 Source: Internal Projection files 4.0% 16,749 19,409 21,738 24,223 26,871 12.55% 16,604

Source: FY2018-FY2022 SORTA internal Projection files (1) Ridership is paid Metro fare, excludes CPS and paratransit

Southwest Ohio Regional Transit Authority: Discussion Document | Page 34 of 42

5 Sensitivities Wage projections are not yet final pending union contract negotiations as the contract expires this October

Labor Change (in thousands) 2018 2019 2020 2021 2022 in Total CAGR Notes Observations

3.0% 46,219 47,606 49,034 50,505 52,020 14,288 3.00% Final union contract wages will drive benefits. Current benefit 2.0% 46,219 47,143 48,086 49,048 50,029 9,431 2.00% Old Union Contract costs run at approximately 53% of wage levels as of 2018 1.0% 46,219 46,681 47,148 47,619 48,096 4,668 1.00% SORTA The majority of fringe benefits are Projections 46,219 46,219 46,219 46,219 46,219 - 0.00% variable and will fluctuate based on wage levels. Accounting for the -1.0% 46,219 45,757 45,299 44,846 44,398 (4,576) -1.00% inclusion of benefits the wages and benefits expenses are 72% of total -2.0% 46,219 45,295 44,389 43,501 42,631 (9,061) -2.00% expenses -3.0% 46,219 44,832 43,487 42,183 40,917 (13,456) -3.00%

Benefits as impacted by Labor sensitivities Change (in thousands) 2018 2019 2020 2021 2022 in Total CAGR Notes

3.0% 24,521 25,771 27,100 28,514 30,017 4,364 5.19%

2.0% 24,521 25,630 26,811 28,069 29,409 2,880 4.65%

1.0% 24,521 25,489 26,524 27,632 28,818 1,426 4.12% SORTA Projections 24,521 25,348 26,241 27,205 28,245 - 3.60%

-1.0% 24,521 25,207 25,960 26,785 27,689 (1,398) 3.08%

-2.0% 24,521 25,066 25,682 26,374 27,149 (2,767) 2.58%

-3.0% 24,521 24,924 25,406 25,972 26,626 (4,110) 2.08%

Source: FY2018-FY2022 SORTA internal Projection files Southwest Ohio Regional Transit Authority: Discussion Document | Page 35 of 42

5 Sensitivities Potential lower expenses, delay of bus purchases and capital investment still indicates significant funding shortfalls as early as 2019, bouncing back in 2023-2027

5 Year Sensitivity Projections 2018 2019 2020 2021 2022 Total Net Income Operating deficit Net Income (Deficit) sensitivities assume that SORTA can lower their total Operating Deficit - (5,013) (6,620) (4,828) (4,719) (21,180) expenses. SORTA projects SORTA Projected Expenses 98,061 100,044 102,324 104,711 107,215 512,355 expenses at the average growth rate from 2011-2016 1.5% Growth Expense 98,061 99,532 101,025 102,540 104,078 505,236 at 2.52%. However if Growth Expense Difference - 512 1,299 2,171 3,136 7,119 SORTA grew their expenses at a smaller Adjusted Operating Deficit - (4,501) (5,321) (2,657) (1,583) (14,062) growth rate of 1.5% it could save $7.1 million from 2018-2022. Projected Bus Purchases

SORTA Projected Bus Deficit (25,823) 5,234 (24,748) (10,526) 3,997 (51,866) Bus Purchases Delay of Bus Purchases 25,823 (5,234) 24,748 10,526 (3,997) 51,866 The 5 year sensitivity assumes that SORTA Adjusted Bus Purchase Deficit ------defers all its bus purchases not already funded into 2020 and onwards SORTA Infrastructure Projected SORTA Infrastructure Deficit (1,564) (11,196) (6,994) (2,616) (3,883) (26,254) SORTA Infrastructure Delay of Transit Center & Park and Delaying the planning of Rides - - - - 1,000 1,000 three transit centers, low priority insfrastructure Delay of lower priority expenditures 396 788 1,011 272 - 2,466 upgrades and ERP Delay of updating ERP system - - 1,500 - - 1,500 implementation could save Adjusted SORTA Infrastructure SORTA almost $5 million in the first five years Deficit (1,168) (10,409) (4,484) (2,344) (2,883) (21,288)

SORTA Projected Total Deficit (27,387) (10,976) (38,362) (17,970) (4,605) (99,300) Total Adjustments 26,219 (3,934) 28,558 12,969 139 63,951 Adjusted Total Deficit (1,168) (14,910) (9,805) (5,001) (4,466) (35,349)

Source: FY2018-2028 data from SORTA internal projections Southwest Ohio Regional Transit Authority: Discussion Document | Page 36 of 42

Southwest Ohio Regional Transit Authority: Discussion Document | Page 37 of 42

6 Hypothetical Opportunities for Cash Flow, Cost Savings and Revenue Enhancements Actions taken by SORTA to date

Action Timing Description Impact

Moved to a collaborative approach holding Increased accuracy and improved visibility of Revised Budget Process 2017/2018 individual departments accountable for performance revenue and expenses versus budget

An analysis of insurance costs was conducted and Medical budgeted at $10.5m for 2017, commercial compared to historical actual claims to determine if Insurance Review 2017 renewals were quoted at approximately $11.7m, potential savings exist for a self funded insurance yielding potential $1.2m savings in year 1. program.

Rolling Stock and non- During 2017, a review of rolling stock was 64 vehicles identified as E&O and sold generating 2017 operating vehicle review completed. $160k.

An analysis of total inventory was conducted to $500k of E&O inventory removed from balance determine appropriate targeted levels of inventory Inventory Review 2017 sheet; 25% reduction in parts volume; $31k cash and determine potential levels of excess or obsolete generated from disposition. inventory.

A detailed analysis of all projects with reserved and Exercise resulted in initially identifying $1.5m in committed cash was conducted with projects dated projects no longer deemed a priority, reducing Balance Sheet Review 2017 from 2009 to present. The goal was to identify and projects from 138 to 93 to be tracked on a go confirm all cash balances held for approved capital forward basis. $1m of the $1.5m was committed to expenditure or project spend. unfunded repairs for Rail Right of Way bridges.

Source: Discussions with SORTA management and internal SORTA files Southwest Ohio Regional Transit Authority: Discussion Document | Page 38 of 42

6 Hypothetical Opportunities for Cash Flow, Cost Savings and Revenue Enhancements Initial Observations – Key Areas of Opportunities & Risks

Area Description

SORTA utilizes a 5 year economic projection done for the City of Cincinnati by the University of Cincinnati, which City Transit Funding estimates income tax funding at a 2.3% year over year growth rate for 5 years, SORTA carried forward 2.3% for the full 10 year projection

Fares Fares are projected to increase annually by $0.15-.$0.20 in 2019-2028

SORTA projects a continual 1.3% annual decline in ridership through 2028 with an additional decline due to fare Ridership increase sensitivity, resulting in 2.51% decline 2019-2028

The current union contract expires October 2018.The projections do not include any change in future labor costs driven Union Contract by the current contract renewal negotiations

Diesel Fuel SORTA projected diesel fuel expense growing at an annual rate of 6.0% 2019-2028

Bus purchase levels (number of buses) are expected to be 27, 30 and 19 in 2019, 2020, 2021, respectively. SORTA Bus Replacement projects future bus match purchases at a rate of 21 per year through 2028

Capital Infrastructure SORTA projects over $60 million in infrastructure spending required through 2028

Source: Discussions with SORTA management and internal SORTA files Southwest Ohio Regional Transit Authority: Discussion Document | Page 39 of 42

6 Hypothetical Opportunities for Cash Flow, Cost Savings and Revenue Enhancements Considerations for Immediate and Mid-Long Term Action (Green-Low, Yellow-Medium, Red-High)

SORTA expected Timing Area Description degree of difficulty SORTA should consider the achievability and the potential stabilizing factors of instituting a new Immediate Funding Sources funding stream and diversifying funding sources for operations Fares should be reviewed on an annual and multi year basis to achieve a targeted level of fare box Immediate Fare Box Recovery recovery based upon anticipated performance of the transit system

Discounted & Dynamic Additional fare options should be investigated with a goal of balancing annual fare increases with stable Immediate Fares ridership levels

An analysis of potential outsourcing of repair and maintenance operations should be analyzed and Immediate Repair & Maintenance updated on a periodic basis Analysis, development and implementation of an overtime reduction strategy should be a top priority. Immediate Overtime Optimization Overtime costs for 2017 were approximately $2.5m due to operating staffing below budgeted levels

Bus Replacement Immediate A more consistent level of annual bus purchases would provide a stronger and balanced operating fleet Schedule

Immediate Policy & Procedures Further development and refinement of organizational policies and procedures should be completed

Mid-Long Fares Consideration of incremental fare increase to offset short term deficits – i.e.: $0.30 vs $0.15 Term Mid-Long Park and Rides Consideration of charging riders for parking at SORTA’s park and rides Term Mid-Long Advertising Additional advertising on benches, buses, rights of way, etc. Term Mid-Long Potential leasing of cell towers on infrastructure, bus shelters, park and rides. The roll out of 5G will Cell Tower Leasing Term require higher volume of towers over an area, increasing demand for lease space Mid-Long Additional analysis of Wi-Fi rollout options may be beneficial, with a goal of increasing revenue and/or Wi-Fi Rollout Term decreasing costs of ongoing Wi-Fi usage and capital investment required Source: Discussions with SORTA management and internal SORTA files Southwest Ohio Regional Transit Authority: Discussion Document | Page 40 of 42 Prepared solely for Cincinnati USA Regional Chamber & Cincinnati Business Committee. Reliance restricted. Does not constitute assurance or legal advice. Please refer to limitations and restrictions on page 2. 21 June 2018 | Version 1.0 (Draft)

6 Hypothetical Opportunities for Cash Flow, Cost Savings and Revenue Enhancements Considerations for Budget Deficit Reduction (Green-Low, Yellow-Medium, Red-High)

SORTA Potentia Risk Area Observations Impact / Risk Ability to l Impact Factor Control

Funding - Unforeseen circumstances or a liquidity emergency; SORTA $6.4- Release of SORTA ($6.4m) and/or City of Cincinnati (up Cash Board can release their reserves via vote; ability of City to Medium 12.0m to $5.6m) reserves to fund operations through 2020 Reserves change reserve restrictions, SORTA has no control over City

Request for one-time cash support from the City of Funding – City and public acceptance of funding, identification of TBD Cincinnati to help bridge the short term operating deficit Medium funding sources available; current City budget deficit City Funding through 2020

Implementation of a higher fare increase, $0.35 to $0.40 Operations - Fare increase requires approval of SORTA Board and City of $1.0- in 2019 and 2020 vs. $0.20 and $0.15, respectively. Fare Cincinnati; likely additional ridership decline of 454k to 568k Medium Potential fare revenue increase of $1.0-$3.0m for the two 3.0m riders Increase years. Adjusted operating deficit of $7.2m 2019-2020.

Operations - Current benchmarking indicates wage and benefit levels Current union contract pending negotiations, recruiting / Wages & TBD are in line with peer agencies, current contract under High retention, public perception Benefits negotiation for wages and benefits for future periods

Operations - Savings may be offset by higher overtime costs. Hold the Lack of balanced work schedules, operator shortages, higher TBD current FTE head count, no additional FTEs through overtime costs, further operator attrition, stress on existing High Hiring Freeze 2020 operators, impacting operations and financial performance

Operations – SORTA could reduce overall operating expense by Reductions may lead to reduced ridership, further decline in Reduce TBD Medium reducing service levels rider access, lower customer service levels Service

Impact to current and future federal funding match, total Capital - lifecycle cost of bus acquisition, future bus capital increases / $20.6- Deferral of all capital bus purchases / bus leasing to Defer Bus lack of balanced fleet age, higher annual repair and High 45.3m reduce short term cash outflows to bridge to 2020 purchases maintenance costs, increased bus failure, damage, rider experience

Capital - $12.8- Defer all capital infrastructure purchases - largest TAM assessment results, unforeseen replacement/repair, Defer deferrals in 2020 would be the Queensgate HVAC building/equipment failures, risk to employees/others, Medium 19.8m Infrastructure system ($6m) and facilities upgrades ($3.2m) increased repair and maintenance costs Source: Discussions with SORTA management and internal SORTA files City reserve estimate from Transit Fund Projection CY 18-19-20 City Budget 2-28-18. Southwest Ohio Regional Transit Authority: Discussion Document | Page 41 of 42 Prepared solely for Cincinnati USA Regional Chamber & Cincinnati Business Committee. Reliance restricted. Does not constitute assurance or legal advice. Please refer to limitations and restrictions on page 2. 21 June 2018 | Version 1.0 (Draft)

6 Hypothetical Opportunities for Cash Flow, Cost Savings and Revenue Enhancements Potential release of cash reserves, fare increase and freezing of all capital spending still leaves a potential deficit in 2020

5 Year Adjusted Projections – Hypothetical Options

2018 2019 2020 2021 2022 Total Cash Reserves & Fares Depletion of all cash reserves Net Income (Deficit) significantly increases liquidity risk for SORTA and the City. Operating Deficit - (5,013) (6,620) (4,828) (4,719) (21,180) SORTA reserve of $6.4m Cash Reserves Release - 3,964 2,436 - - 6,400 shown as absorbed. City reserve of up to $5.6m by Fare Increase - $0.35 in 2019/2020 - 1,049 1,049 1,049 1,049 4,196 beginning of 2020 not included Other ------in this analysis and would be incremental. Adjusted Operating Deficit - - (3,135) (3,779) (3,670) (10,584) Higher fare increase could impact a decline in annual ridership from current levels, further exacerbating operating Projected Bus Purchases efficiencies such as load Projected Bus Deficit (25,823) 5,234 (24,748) (10,526) 3,997 (51,866) factor. Delay of Bus Purchases 25,823 (5,234) 24,748 10,526 (3,997) 51,866 Bus Purchases Adjusted Bus Purchase Deficit ------Many of the buses are already committed and matched by federal funds. Declining the SORTA Infrastructure match could have negative consequences on future bus match funding awards and Projected SORTA Infrastructure Deficit (1,564) (11,196) (6,994) (2,616) (3,883) (26,253) could further deteriorate the current bus fleet. Delay all Infrastructure 1,564 11,196 6,994 2,616 3,883 26,253 Adjusted SORTA Infrastructure SORTA Infrastructure Deficit ------Delaying all infrasturtcure is aggressive as routine repair and replacement needs are Projected Total Deficit (27,387) (10,975) (38,362) (17,970) (4,605) (99,299) unlikely to be eliminated, potentially causing higher Total Adjustments 27,387 10,975 35,227 14,191 935 88,715 costs in the future. Adjusted Total Deficit - - (3,135) (3,779) (3,670) (10,584)

Source: FY2018-2028 data from SORTA internal projections Source: Discussions with SORTA management and internal SORTA files Southwest Ohio Regional Transit Authority: Discussion Document | Page 42 of 42

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