Denver Regional Council of Governments Proj ect Number 903010/503008 Contract Number 8X09081

Assessment of Denver Regional Transportation District 201,0 FasTracks Financial Plan

Final Report

July 21,2010

Prepared by

[Jrban Engineers, Inc.

In association with

First Southwest Company Table of Contents

I. Introduction Page L

il. Executive Summary Page 3

III. Capital Cost Assessment Page 7

IV. Operating Cost Assessment Page 16

V. Revenue Assessment Prge 22

VI. f inancing Assessment Page 39

VII. Summary Assessment - Overall Financial Plan Page 46 VIil. Appendix A - Reference Data Prge 49 IX. Appendix B - Tabtes (6) Page 51 Key Terms

ADA - Americans with Disabilities Act GMP - Guaranteed Maximum Price AGC - Association of General Contractors of IIOV - High Occupancy Vehicle America LOI - Letters of Interest Annual Report - Regional Transportation LRT - Light Rail Transit District's 2009 Annual Report to DRCOG on MPO - Metropolitan Planning Organization FasTracks dated April2010 OCIP - Owner Controlled Insurance Program APE - RTD's Annual Performance O&M - Operations and Maintenance Evaluation OSPB - Office of State Planning and Budgeting ARRA American Recovery and P3 or PPP - Public Private Partnership Reinvestment Act PE - Preliminary Engineering BNSF Burlington Northern -Santa Fe Penta-P - The Federal Transit Administration's Railroad Public Private Partnership Pilot Program BRT - Bus Rapid Transit Plan - RTD's FasTracks Financial Plan CAFR - Comprehensive Annual Financial PPI - Producer Price Index Report RFP - Request for Proposal CEM - Cost Estimate Methodology RFQ - Request for Quotation CIP - Capital Improvement Plan ROW - Right of V/ay CPI - Consumer Price Index RTD or the District - Regional Transportation CRMF Commuter Rail Maintenance District of Denver, Colorado Facility S&P - Standard & Poor's DIA - Denver International Airport SAF'ETEA-LU Safe, Accountable, and DMU - Diesel Multiple Unit (Commuter Flexible Efficient Transportation Equity Act: A Railcar) legacy for users signed into law on 8/1005 DBFOM Design-Build-Finance-Operate- State - State of Colorado Maintain TABOR - Taxpayer's Bill of Rights; a set of DRCOG Denver Regional Council of voter approved constitutional provisions in 1992 Governments to limit revenue growth for state and local DUS - Denver Union Station governments in Colorado and to require that any Eagle Project - Collective term given to tax increase be approved by the voters of the RTD FasTracks Commuter Rail network that affected government is planned as a P3 initiative TDP - Transit Development Plan EMU - Electric Multiple Unit (Commuter TIC - True Interest Cost Railcar) TCRP - Transit Cooperative Research Program FFGA - Full Funding Grant Agreement TIFIA - Transportation Infrastructure Finance Financial Plan - The Regional and Innovation Act of 1988 Transportation District's (RTD's) FasTracks T-REX - Denver's Southeast Corridor Light Rail 2010 Financial Plan dated April 13, 2010 Transit FRA - Federal Railroad Administration UPRR - Union Pacific Railroad FRSC - Front Range Systems Consultants Urban - Urban Engineers, Inc. FTA - Federal Transit Administration USDOT United States Department of First Southwest - First Southwest Company Transportation GARYEE Grant Application Revenue Vehicle Bond I. INTRODUCTION

NI{,ERFN I Fomulatíng E r ce llenc ê Introduction

Colorado Senate Bill 90-208, passed by the Colorado legislature in 1990 requires that a Metropolitan PlanningOrganrzation ("MPO") approve the financing and technology for all fixed guideway projects. The Denver Regional Council of Governments ("DRCOG") acts as the designated MPO for the FasTracks project and is responsible for the operation and maintenance of a continuing, comprehensive transportation planning process, including the preparation and adoption of transportation plans and programs. The Regional Transportation District ("RTD") has developed the FasTracks Plan, which provides a comprehensive, region-wide plan for transit development in the greater metropolitan Denver area and has assumed the ownership role for this highly complex program. As part of DRCOG's responsibility to continually assess and evaluate the FasTracks project, DRCOG contracted with Urban Engineers, Inc. (in association with First Southwest Company) to provide an independent and objective Assessment of RTD's 2010 Financial Plan.

The original budget and plan for FasTracks, established in 2004, totaled $4.7 billion and called for 28 miles of light rall, 94 miles of commuter rail and 18 miles of bus rapid hansit improvements to be developed between 2005 and 2017. On an annual basis, through the Annual Program Evaluation ("APE") process, RTD updates the FasTracks Financial Plan with new revenue and cost projections, reflecting the most up-to-date economic conditions and technical advancements. RTD's 2010 Financial Plan, dated April 13, 2010 provides a revision to the FasTracks budget resulting in a current estimated cost of approximately $6.7 billion. This figure indicates a reduction from the $6.9 billion budget in 2009, primarily resulting from project progression and modifications to material, right-of-way, frnancing, and labor cost estimates. According to the 2010 Financial Plan, RTD's "...ability to implement the FasTracks plan depends on a variety of financial assumptions and projections which have been developed using the best available current estimates of costs, reasonable anticipated federal funding based on current federal law and regulations, and revenues from other sources including RTD sales tax and fare collections". The 2010 Financial Plan goes on to say that,"...on April 13, 2010, the RTD Board of Directors adopted a financial plan scenario for the 2010 FasTracks APE that assumes the passage of 0.4o/o sales and use tax increase commencing January 2013 and successful receipt of an additional Full Funding Grant Agreement (FFGA) for the East and Gold Line Public Private Partnership Corridors (EAGLE Project) in the amount of $1 billion. This scenario results in the completion of the full FasTracks program by 2019 .. .." It should be noted that the current schedule indicates a two-year delay from the original FasTracks schedule (Plan) which had proposed a full program completion date in 2017. Further, RTD recognizesthat in the event its Board elects to not seek the proposed tax increase, or if the tax initiative were to be voted down, the Financial Plan would need to be updated atthat time to reflect the opportunities and constraints that would exist. Lastly, RTD states that ít, "...cannot guarantee that each separate assumption (in the Financial Plan) will be met, and expects that over a nine year time- frame (2010 - 2019) certain adjustments and modifications will be required".

As part of the contractual engagement, Urban and First Southwest reviewed the RTD's 2009 Amual Report to DRCOG, which includes the 2010 FasTracks Financial Plan. Further, in performing the independent assessment of RTD's 2010 Financial Plan, Urban and First Southwest met with representatives from DRCOG and RTD and reviewed many documents provided by RTD in support of the assumptions and projections which formed the basis for the current Financial Plan. A list of documentation reviewed is presented as Appendix A to this report.

The contracted Scope of Services called for Urban and First Southwest to review RTD's Core Financial Assumptions that formed the basis for the Financial Plan, and to analyze and opine on a host of questions within five subsections, titled:

1. Capital Cost Estimates 2. Operating Cost Estimates 3. Revenue Estimates 4. Financing 5. Summary Assessment of Overall Financial Plan

This report is formatted to present an analysis and assessment of each of these subsections, with the final Summary Assessment providing a more consolidated review of the overall 2010 Financial Plan.

2 II. EXECUTIVE SUMMARY

\\I*E.RFN I Fomulatittg E r c e llerc ê Executive Summary A. Capital Costs The construction item unit costs and estimating methodology for construction costs incorporated in the 2010 Annual Program Evaluation ("APE") exhibit a reasonablyhigh level of detail relative to the design stages and progress of the various corridors. The construction cost estimates are based on a combination of historical unit prices derived from bids (top down), and bottom up estimating, which is based on more refined FasTracks corridor attributes broken down by particular cost elements. In 2010, with the exception of four corridors, RTD was able to employ the use of bottom up estimating methodology, which generally yields a higher level of confidence in the estimating and budgeting.

As in past years, RTD relied predominantly on an independent report on the cost estimates for commuter railcar (Electric Multiple Unit - "EMIJ" and Diesel Multiple Unit - "DMU") procurements. While Urban did not review the model in depth due to its similarities to the report that was assessed last year, the assumptions are considered appropriate and reasonable for estimating rail vehicle costs as it is generally based upon accepted industry practices.

RTD has successfully advanced the acquisition of land to support the FasTracks program in the last year, with special recognition for RTD's purchase of the Right-of-V/ay (ROW) needed from Union Pacific Railroad (UPRR) to build the North Metro Corridor. This significant milestone reduces a large element of risk associated with this corridor. 'West Additionally, RTD has indicated that 86Yo of the properties for construction of the Corridor have been acquired. Although RTD has indicated that the actual cost for settling on ROV/ acquisitions is closely approximated its internal estimates to date, Urban still considers ROV/ costs to be a significant element of risk to the overall program with over 73To of property requiring acquisition still to be settled upon.

In contrast to last year's assessment, Urban believes that the FasTracks program has advanced sufficiently in the last year that an appropriate level of contingency is being applied to the capital costs for the various coridors. Urban has pointed out the RTD has not consistently applied contingency to cost variables in some cases and that a more conservative approach should be calculated, however, the relative value of this issue is not considered significant to the overall capítal budget. RTD has indicated its intent to use consistent applications of contingency in future years APEs.

As a result of concerns over the volatility of price increases and inflationary-events that are often unforeseen and difficult to predict, RTD assembled a panel of regional engineers and transit financial experts for a Construction Inflation Workshop in December 2009. At this workshop, the panel was in agreement that RTD's current methodology (and forecast values) for estimating construction cost inflation was well founded and reasonable. From the 'Workshop, it was agreed that the material cost escalation for 2010 shouldbe 2o/o. And that material cost escalation rates for the years 2011 to 2017 should average 5Yo per annum. Later, when extending the construction through 2019, RTD set the escalation at 2.66%o for 2018 and 2019. While Urban continues to have concems over sudden commodity price spikes, RTD's average rates and estimating methodologies appeff conservative and reasonably acceptable. 'Workshops Although RTD's facilitation of Construction Inflation was a worthwhile and astute method of confirming the reliability of material price forecasts, Urban believes that RTD would be well served to expand the use of sensitivity analysis to other capital cost components to proactively manage variables having the greatest influence or risk on the overall FasTracks budget.

B. Operating Costs As in past years, RTD's operating and maintenance cost projections for the base system are based largely on accurate historical data that has been extrapolated into the future using reasonable escalation factors. It is inevitable that some degree of variability will occur due to the volatility of worldwide variables that are beyond RTD's control and which can greatly influence operating expenses for a transportation agency.

For the new and added service lines and corridors, projections are much more predicated on best assumptions and comparable data from similar services lines (e.g. using existing RTD light rail operating costs for commuter rail projections) and industry benchmarked information. RTD's extrapolation of historical bus and light raíl data for added service on these areas appears reasonable. For projections of new commuter rail operating and maintenance cost, RTD again relied upon a report from an outside consultant, who based much of their forecast on extrapolated light rail service cost currently being realized by RTD. Although some of these commuter rail costs will likely be passed onto the selected P3 concessionaire, Urban believes that commuter rail operating and maintenance costs tend to run higher than comparable costs for light rail operations, particularly with regard to labor costs. Urban also believes that RTD should look to expand on the detail and support for some of its assumptions and new services projections, particularly as it pertains to apparent economies-of-scale savings in areas such as administration. These concepts are more fully described in the Operating Cost Assessment section of this report.

C. Revenues RTD's 2010 FasTracks Financial Plan justifies sources of funds to enable the RTD to complete the project within the current estimated budget of $6.7 billion and within the revised schedule of completion in 2019. While many of the revenue sources are fairly reliable and are predicated on already enacted and approved operating and funding measures, there remains substantial risk in other large sources not being fúly realized or being advanced at a lesser degree than currently projected in the Plan.

The Plan continues to anticipate voter approval of an added 0.4%o Sales and Use Tax increase, dedicated to the FasTracks program, to become effective by January 2013. As RTD readily admits, if RTD's Board elects to not seek the tax referendum or if the added tax is voted down in a public election, an updated Financial Plan will be necessary, recognizing the new opportunities and constraints at that time. However, in the event that the tax increase is not enacted, it is likely that the FasTracks program would not be fully complete by 2019, as currently planned.

4 According to RTD's APE, Sales and Use Tax revenue provides approximately 650/o of RTD's total annual revenues. Due to a substantial decline in Sales & Use Tax revenue in recent years, RTD convened a working group of regional economists and financial experts in Iate 2009 to review the methodologies and forecasts for extrapolating Sales and Use Tax revenues into future years. As a result of this working Broup, RTD is estimating Sales & Use Tax increases at arate averaging 3.7o/oper year forthe 2010 FasTracks Financial Plan and subsequent plans going forward. While this assumed rate of growth in sales taxes thereafter is more reasonable than in the previous Financial Plan, no subsequent recessions and/or reduction in sales tax receipts is provided for. While RTD may realize the average rate of growth assumed, it will not realize such growth on a level annual basis potentially exposing FasTracks to challenges as a result of declines in sales taxes due to recessions in future.

RTD has developed a multi-year, capital financing plan for FasTracks that is based on reasonable assumptions relative to both the timing of receipt and amount of each of the sources identified above. However, for RTD to issue up to $1.68 billion in sales tax-backed revenue bonds and finance up to $2.1 billion in pay-as-you-go capital, voters will need to approve a0.4o/o increase in the regional sales tax. If voters fail to approve the increase, then the revenue bond and pay-as-you-go funding assumptions would necessarily be considered unreliable as the existing 0.4% sales tax could not support this level of debtþay-as-you-go investment. Further, absent such approval of the voters, there is insufficient TABOR authorization to permit the issuance of the contemplated bonds needed to fund required capital expenditures related to the FasTracks program. RTD has also noted the lack of TABOR authorization for such proposed bond issues in its financing plan.

The P3 concessionaire is expected to finance roughly $541 million of projected capital costs for the FasTracks program. IVhile this figure includes alarge degree of volatility and risk, the apparent recent successful completion of RTD's P-3 procurement lends increased hope that this level of financing can be reasonably achieved.

D. Financing RTD's 2010 Financial Plan adequately identifies and estimates reasonable provisions and assumptions for the cost and timing of debt. Since many significant funding issues are tied to new and evolving revenue initiatives identified in the Financial Plan, it is difficult to develop precise or reliable debt financing provisions until these revenue streams become clearer. While recognizing that confidently predicting RTD's future borrowing costs is impossible, UrbanÆirst Southwest believe that RTD's assumptions with respect to debt instruments included in the Financial Plan are conservative. A more detailed discussion follows in the Financing Assessment Section of the report.

E. Overall Financial Plan The RTD's 2010 FasTracks Financial Plan provides a thorough, well written and adequately supported model for the current $6.7 billion project. RTD has thoroughly reviewed and provided rationale for all cost elements from both a capital and operating standpoint. Further, by facilitating the use of peer working groups to evaluate risk issues such as Inflation Indexes and Sales and Use Tax projections, RTD has proactively tackled areas that may have lacked appropriate analysis and rationale in previous years Plans. Urban/First Southwest believe that RTD has sufficiently attempted to mitigate risk issues and that the budget is appropriate and reasonable.

The primary risk factors that continue to confront RTD lie in the realization of several large funding source assumptions. As adequately stated and supported in the Financial Plan, if the FasTracks-dedicated Sales and Use Tax increase fails to advance or receive voter approval, the completion of the entire FasTracks program by the planned date of 2019 is in jeopardy and the Plan would need to be revisited in its entirety. There continues to be risk associated with the approval and attainment of Federal New Starts and TIFIA funds, as well as the projected $541 million investment that would result from the P3 concessionaire initiative. As a result of the vulnerability of these funding sources, RTD's financing assumptions become less reliable and are subject to change as funding assumptions advance. III. CAPITAL COST ASSESSMENT

.NURBRN NTENGTNEERS lFomulating Ercellercê CAPITAL COST ASSESSMENT

Wat is the cunent cost estimøte to complete the FasTrøcks Programs? Whut expenditures have been made to date since the initiation of FasTracks prograrn? What ß the current percent of work completed?

The current estimate for the program, according to the Regional Transportation District (RTD) FasTracks Financial Plan Update (Plan Update), dated April 13, 2010, is approximately $6.7 billion. The table below, from the Plan Update, summarizes the current program costs for each corridor, as compared to the original estimated costs for the FasTracks program in2004.

FasTracks Projected Capital Costs by Gonidor (ln Millions of Year of Expenditure Dollars) Corridor 2010 FasTracks Program Costs West Corridor - Federal Projectl $511.8 $642.3 West Corridor - Third Party Funded Projects2 $17.8 West Corridor - Additional RTD Costs3 $28.0 West Corridor - ARRA Funding $o.o $8.8 Northwest Rail Corridor $565.1 $729.4 Gold Line $463.5 $s17.0 l-225 Corridor 8442.3 $670.1 East Corridor $702.1 $1,232.9 North Metro Conidor $420.0 $977.6 Central Corridor Extension $68.7 $65.4 Southeast Corridor Extension $136.8 $180.4 Southwest Corridor Extension $134.9 $177.2 U.S. 36 BRT - Phase 1 $23.3 U.S. 36 BRT - Phase 2 $204.1 $208.5 U.S. 36 BRT - Phase 2 ARRA Funding $0.0 $7.6 Denver Union Stationa 9283.4 Light Rail Maintenance Facility $100.4 $28.9 Commuter Rail Maintenance Facility $80.4 $178.6 Bus Maintenance Facility $71.7 $0.0 Other FasTracks Project Costs $524.7 $767.9 Total FasTracks Program Gosts 94,7'17.1 $6,745.1

According to RTD's 2010 FasTracks Financial Plan, P3 Scenario, Version 45.I, dated Aprll 12, 2010, the total un-inflated cost estimate for the overall project is now $5.8 billion, which is comprised on the sum of $5.0 billion for FasTracks program costs and $0.8 billion for right-of- way (ROW) costs. This summary table is can be viewed in Appendix B, Table 1.

According to RTD's 2010 FasTracks Financial Plan summary table (once again, see Appendix B, Table 1), the total expenditures to date, from program initiation in 2005 through 2009 is $736.3 million. This amount is comprised of the sum of $531.5 million for FasTracks program costs and $204.8 million for ROW costs. The total current percent complete is calculated as 12.7o/o, based on the total expenditures through 2009 of $736.3 million versus the total un-inflated program costs of $5.8 billion.

Are the unit costs reasonøble? Are they consístent wíth cuwent local and nationøl prìce trends?

Construction Costs The estimating methodologies employed by RTD in the 2010 FasTracks Annual Program Evaluation (APE) were both "Top Down" and "Bottom IJp" methods.

The "Top Down" method employs comprehensive unit costs for definable elements of a project. As an example, in a "Top Down" estimate a single unit cost is used for track work, encompassing all aspects of track construction (i.e., sub-ballast, ballast, ties, rails, and surfacing). This is an appropriate estimating method at an early stage of design. RTD represented that the estimates for four corridors utilized the "Top Down" method because these projects had yet to reach the 30o/o design threshold at the end of 2009. Urban's review of RTD's "Top Down" unit costs revealed that most were in an acceptable and expected range, or were more conservative than Urban's model for similar prices. Urban's price range model was modified, where necessary, from that used in the 2009 assessment and was largely the result of an upward movement shown in various construction indices. Urban's modified price range model is shown in Appendix B, Table 2.

According to RTD's 2009 Annual Report that was instrumental in producing the 2010 FasTracks Financial Plan, $1.4 billion of the $6.7 billion total capital cost forecast was determined using the "Top Down" estimating methodology, or 20.8% of the total value.

The "Bottom IJp" estimating methodology is a more precise method of forecasting construction costs, and is typically used when a project's design efforts are more advanced and refined. According to RTD, the "Bottom Up" methodology is used for estimating capital costs once the design has reached 30% complete. At this point, RTD's staff is able to sufficiently estimate quantities (units) of work for each corridor and costs for labor, material, equipment, and productivity rates for the work efforts can then be defined. Urban's review of sample estimates revealed that the unit rates for labor and equipment are reasonable for the greater Denver metropolitan area. The costs for materials also appeared to be reasonable and consistent with local and national price indexes and trends.

Vehicle Costs Similar to the assessment of RTD's 2009 Financial Plan, the Commuter Rail EMU and DMU cost estimates are largely tied to an independent report prepared by the consultant, Front Range Systems Consultants ("FRSC"). FRSC developed the Commuter Rail and DMU cost estimates based on the mean value of projections calculated using five different methods:

1. Escalated Average of Recent Procurements 2. Manufacturing Cost Buildup of Recent Procurements a J. Cost Build-up Based on the Recent Procurement of a Near Compatible Car 4. Cost Build-up Based on a Future Procurement of a Near Compatible Car 5. Escalation of Past RTD Vehicle Cost Estimates

FRSC's model did not indicate appreciable change from that reviewed by Urban in the assessment of the 2009 FasTracks Financial Plan, and as such, Urban did not revisit the model in depth. However, Urban considers the model appropriate and reasonable for estimating rail vehicle costs as it is generally based upon accepted industry practices.

With the advancement of the P-3 procurement, RTD should shortly be able to confirm the realistic vehicle cost for the EMU's that will be manufactured and provided as part of the concessionaire's agreement. As the FRSC report indicates, RTD would be well served to have all commuter rail vehicles (EMUs and DMUs) manufactured by the same firm to offer continuity of service, maintenance, and operation, however, this may not be achievable as the DMUs are not included in the P-3 procurement and will need to be procured independently under competitive means.

Eneineeriney'Desi qn Costs Project engineering costs for transit projects typically range from 8% to t2%o of ßâl construction costs, including environmental impact studies, preliminary engineering, and final design. A review of the sample estimates provide by RTD showed that the project engineering costs were consistent with this range.

Construction Manaeement/Construction lnspection Costs Typically, construction management and construction inspection (CIU/CI) consulting costs for transit projects have a range similar to project engineering, So/o to l2o/o oî overall construction costs. A review of the sample estimates provided by RTD showed the range for CI¡VCI between l0o/o and I2o/o, with one exception indicating a budget of 5%o for CI\{/CI for the Southeast Corridor. These CM/CI percentages are considered reasonable.

Insurance Costs Owner Controlled Insurance Program (OCIP) costs typically range îrom 2o/o to 5%io of the value of total construction costs for transit projects. A review of the estimates provided by RTD showed the insurance estimates ranged from 2Yo to 3Yo, with one exception. The one exception was the insurance amount for the East Corridor, which was shown tobe Io/o, or $4.8 million of a $483 million estimated construction costs. This amount is considered acceptable considering the size of the East Corridor project.

Right of V/ayÆroperty Acquisition Costs According to RTD's 2010 FasTracks un-inflated sunmary table (see Appendix B, Table 1), $204.5 million of $765 million budgeted for property acquisition has been spent or 26.7% of the planned total. It was noted in RTD's 2009 FasTracks Annual Report "...[i]n December 2009, RTD purchased the right-of-way (RO!Ð needed from Union Pacific Railroad (tlPRR) for a total of $118 million to build the North Metro Corridor." This is a significant milestone and reduces a large element of risk that was associated with this corridor. It is presumed that this purchase is captured in the 5204.5 RTD reports as having been expended on ROW to date.

9 Additionally, RTD has indicated that 86% of the properties for construction of the'West Corridor have been acquired. According to RTD, the Fair Market Value plus contingency for 168 properties was $32,596,500 and the acquisition for these properties was $32,836,401, 0.74% difference. Assuming that RTD can continueto realize ROV/ purchase ratios similar to what has been achieved to date on the West Corridor, the Financial Plan is reasonably estimated in this regard. However, Urban and First Southwest still consider ROW costs to be a significant element of risk to the overall program with over 73o/o of property requiring acquisition still to be settled upon.

Are the "Bottom Up" cost estimates reøsonøble? Are they consistent with cunent local and natíonøl prÍce trends?

In RTD's 2009 Annual Report to DRCOG on FasTracks, RTD's estimating procedure for "Bottom Up" estimates was provided as an appendix. RTD indicated that the "Heavy Bid" estimating software, licensed by HCSS, was used for producing the estimates for all but four corridors, Southeast, Southwest, Central Corridor Extension, and North Metro, which were estimated using the "Top Down" method. The HCSS software package is a well-respected software program, utilized by the construction industry for bidding Heavy/Civil projects. As indicated in its Annual Report, RTD established pre-programmed unit costs for the various factors included in its cost estimates: labor, material, equipment, and production rates.

RTD provided one example of a "Bottom IJp" estimate for the Northwest Rail to South 'Westminster Station corridor. It is presumed that this estimate is a representative sample of all the other "Bottom Up" estimates. A review of the estimate showed that the labor and equipment rates were consistent with current local rates. Additionally, the material costs appeared to be consistent with the current market pricing, both locally and nationally.

RTD coordinated its estimates with regional current wage rates, equipment rates, crew sizes, and material costs. RTD indicated that it will continually monitor all the contributing factors affecting the various estimating factors. RTD also will consult with raiVtransit industry experts to "obtain their input related to crew assemblies (labor and equipment), along with typical production rates that the crews are capable of obtaining in various scenarios (tight ROV/, limited work areas, large work areas , large work areas [sic], interfaces with third parties, typical things to "watch out for", etc.)." If RTD provides continual monitoring and evaluation of these various cost inputs, the level of confidence in the estimates will be enhanced and should maintain reasonable proj ections.

RTD further stated that its "Bottom Up" estimating procedure will include evaluating "big ticket" items that comprise 80% of the total estimate, performing detailed quantity takeoffs, and comparing these with the designer's planned quantities as a "rough check."

The "Heavy Bid" software utilizes an internal price tool named "Spread" that applies contractor home office and profit markup amounts to the various activity costs. RTD indicatedthat a I5%o was applied for this markup. While aI5Yo markup for home office and profit may be considered

10 reasonable or even a slightly conservative projection in current economic times, Urban suggests that this ratio may be low when the economy improves and the construction industry becomes busy again. Urban suggests increasing the markup by 2-3% to reflect a more conservative approach in projecting construction contracts that will need to be awarded a few years from now.

According to RTD, it will establish an independent quality check that will be performed by an estimator who has not previously worked on any FasTracks estimate as a "fresh set of eyes" reviewer. This procedure is considered a good quality control practice. Further, it is an opportunity for RTD to have their work audited for inconsistencies, mistakes, and other effors thatmay be overlooked by the original estimator.

Are the "Top Down" cost estimøtes reasonable?

RTD provided its procedures for "Top Down" estimates as an appendix in its 2009 Annual Report to DRCOG on FasTracks. RTD only employed this method of estimating for those corridors/projects that were less than 30Yo progressed from a design standpoint. RTD indicated that only four corridor estimates were calculated using this method: Southeast, Southwest, North Metro, and the Central Corridor Extensions. Thus, it is presumed these corridors had a design progress status below 30%o complete at 12131109.

RTD developed standard unit rates for definable features of work, such as earthwork, reconstruction/construction, bridge/structures, retaining walls, traclcwork, and signals, among others. These features were further broken down to specific work items. According to RTD, the rates were developed by a team comprised of staff from major disciplines within RTD, each responsible for unit rates within their respective discipline of expertise.

The unit rates developed by RTD incorporated a markup of l5%o for home ofÍice overhead and profit. For field office overhead and other project direct costs, a I7o/o additive was applied to the overall "Construction Bid Items" (CBI) costs, and was accounted for under a separate line item in these estimates.

Similar to our comments offered in the assessment of RTD's 2009 FasTracks Financial Plan, the unit costs for the "Top Down" estimates in the 2010 Financial Plan are generally within the expected raîge, and very often more conservative (higher) than the range that Urban considers reasonable.

What ømount of contingency høs been ìncorporated in the costs estimates? Given the cuwent level of design detail and scope deJínítíon of the FssTracks projects, øre the contingencies reasonable?

Based on the sample of estimates provided by RTD, the unallocated contingency was either calculated as 25o/o of direct construction costs, or as 25o/o of direct construction costs plus indirect costs (sometimes identified as mobilization). Urban has concerns with the inconsistency of this calculation. For example, the Gold Line contingency is 25o/o of direct construction costs

1l of $315.3 million, or $78.8 million. However, if indirect costs were included, the total construction cost is increased to $368.9 million and the contingency would be calculated as 5922 million, an increase of $13.4 million. The concern is that the contingency levels are too low for those projects where indirect costs are not included in the contingency calculation. RTD has acknowledged this inconsistency in their approach to providing contingency for various projects and will adjust in future years APE. While Urban recoÍrmends that RTD use the more conservative approach of applying the contingency rate to the estimated construction cost that is inclusive of indirect cost estimates, there is no indication that the failure to employ this approach was prevalent. ln this regard, the failure to apply contingency consistently to all direct and indirect costs is deemed to be deminimus in value to the overall FasTracks capital budget, but should be corrected in future years.

Urban had previously expressed concern that 25o/o contingency might be too low for the design stage of most corridors at what was perceived to be an early stage of design. This concern was primarily founded on studies issued by the Federal Transit Administration (FTA) and Transit Cooperative Research Program (TCRP), specifically, "The Predicted and Actual Impacts of New Starts Projects - 2007." In this report, it was stated that "the average as-built capital costs are about 40.2 percent higher than the AA/DEIS (or PE entry) inflation-adjusted estimúe...", however, it continued,"... about 11.8 percent overthe FEIS (or final design entry)..." Thus, considering that the current progress of most corridors is beyond the Preliminary Engineering stage, 25Yo contingency may now be considered appropriate and reasonable.

What øssumptÍons høve heen møde with respect to the effects of inflatíon and construction / møteriøls price fluctuatíons? Are they reusonøble?

According to RTD, "...[t]he greatest challenge continues to be the fluctuating economic climate, which gives rise to uncertainty in accurately forecasting revenues." Thus, RTD recognizes the difficulty with addressing inflation and price fluctuations.

In December 2009, RTD assembled a panel of engineers and transit financial experts for a workshop to evaluate and recommend modifications to RTD's forecasting methodology. At this workshop, the panel was in agreement that RTD's current methodology (and forecast values) for estimating construction cost inflation was well founded and reasonable. It was determined, at this workshop, that the material cost escalation for 2010 should be 2%u The panel also agreed that the material cost escalation for 20ll to 2017 should average 5o/o per annum. It should be noted that the panel based their discussion on the previous schedule of completing FasTracks construction in20t6. V/ith construction now going into 2018, there would be two additional years of the potential for price escalation. For the years 2018 and20l9 RTD's assumption was 2.66% escalation. The escalation percentages were primarily based on Moody's Economy.com Consumer Price Index (CPÐ forecasts for labor, fuel, O&M, etc.

According to market studies, the pricing fluctuations for most raw materials returned to historic highs after a year of downward adjustments during 2008, especially for copper and crude oil. These commodities returned to prices near their 2007 highs. The pricing for other raw materials has increased a small percentage over the past year. This relatively slight change of pricing

12 appears to correspond with the forecast of the December 2009 workshop. While Urban continues to have concerns over sudden commodity price spikes that cannot be foreseen, RTD's average escalation methods and resultant rates appear to be conservative enough to reasonable spread the concern of price volatility out over enough years to compensate for this concern.

Are cost-hedgíng methods proposed? Are they reøsonahle keepíng in mind the estimated build-out date for the FøsTrøcks progrøm?

As reported in the assessment of the 2009 Financial Plan, it appeared that the major cost hedging methodology proposed by RTD was the Public Private Partnership Pilot Program (Penta P), using the Design-Build-Finance-Operate-Maintain (DBFOM) procurement delivery method for the Eagle project, which includes the Gold Line, East Corridor, and the Commuter Rail Maintenance Facility (CRMF). The FTA approved the use of this delivery method in August 2007. According to RTD, participation in the Penta P "...is expected to provide an accelerated Federal approval process including reduced time as a result of the FTA's expectation that the due diligence performed by private equity and debt providers will reduce the need for Federal oversight." The key to this procurement delivery method is that it provides access to private- sector funding for the project. Additionally, this method transfers certain risks to the private sector, provides budgetary certainty, and provides the assurance ofFederal support through the Penta P program. RTD is currently in the final stages of procurement evaluation and anticipates providing a Notice-to-Proceed to the awarded consortium for the Eagle Project in late suÍrmer 2010. There are currently two teams being considered for award and it should be noted that a third team dropped out of the procurement because it lost some key partners due to corporate decisions about the North American P3 market.

In the 2010 Financial Plan RTD indicated that FTA provided strong support for this delivery *...by method in February 2010 including $40 million each for the East Corridor and Gold Line projects in the present FY 2011 budget request, and listing these projects as 'New Full Funding Grant Agreement Funding Recommendations'."

Previously, RTD had reported the use of the Design-Build and Construction Manager/General Contractor (CMGC) with Guaranteed Maximum Price as procurement delivery methods. However, the 2010 Financial Plan did not address these delivery methods in general terms, but noted use of these procurement delivery methods in certain individual projects. These contract packagingldelivery methods have demonstrated some ability of cost-hedging for construction contracts. While Design-Build is more widely recognized and accepted alternative procurement method for attempting to achieve cost and schedule efficiencies, CMGCs with Guaranteed Maximum Price are gaining notoriety for their ability to provide cost/schedule-hedging strategies. RTD's consideration and advancement of CMGCs is considered a proactive and non- traditional means for minimizing cost and schedule creep.

I3 Is the cost estimøting methodology valid?

The cost estimating methodology employed by RTD in the 2010 FasTracks Financial Model is reasonable and valid. As stated in the 2009 assessment of the FasTracks Financial Plan, the overall cost estimating methodology exhibits a high level of detail and sophistication relative to design stages of various corridors. Furthermore, based on the progress of the program, there is now less dependence on "Top Down" estimating and more emphasis on "Bottom llp" estimating.

As stated in last year's assessment, Urban was concerned with RTD's reliance on historical data to adjust unit prices, as this method might fail to capture specific escalated provisions associated with certain unit prices. However, this concern was addressed by RTD through the "FasTracks 'Workshop," Construction Inflation held on December l, 2009. This workshop included participants from RTD, senior transit consultants, representatives from local governments and regional agencies, and the Chief Economist from the Association of General Contractors. The workshop addressed RTD's cost estimating methodologies and current method for analyzing, forecasting, and estimating construction cost inflation and sales tax revenue. The general agreement was that RTD's current estimating method and forecasting of values was "well founded, responsible, pragmatic, and as prudent as any methodology currently being used by similar transit agencies for a similar purtrlose."

The workshop demonstrated RTD's proactive approach to addressing the adjustments for unit prices that various price indices fail to capture, which tend to rely exclusively on historic pricing.

RTD appears to generally rely on the "Rental Rate Blue Book," for construction equipment costs. These rates tend to be generally conservative.

As indicated previously, Urban reviewed a sample "Bottom Up" estimate provided by RTD, for the Northwest Rail project. The cost estimate was formulated through use of a common and well respected construction cost estimating software, "Heavy Bid". The direct cost estimate appeared to be well detailed, similar to a contractor type estimate. The crew composition was rational. The productivity rates appeared reasonable. The material prices also appeared to be acceptable.

Díd RTD perþrm ø sensítívit1t analysis on the cost estimøtes? What did it "test?" Do sensítívity results address any reasonsbleness íssues thøt were idenffied in príor questíons? llhøt øre the best and worst case scensrios for capitøl costs presented ín the jìnøncial plan?

RTD has indicated that per the direction of the December 2009 "FasTracks Construction lnflation Workshop," a sensitivity analysis was performed related to material cost escalation. RTD indicated that in one extreme sensitivity scenario, a projected spike in material cost escalation rates in 20II and 2012 were estimated at l0%o. RTD then added that, " .. . Similarly to what happened in 2008, an assumption that growth in materials escalation would drop considerably in the years following the 10% spike was also applied." With these assumptions, RTD concluded that the current escalation assumptions included in the Financial Plan result in

74 similar projections as when altemative scenarios are contemplated. RTD's conclusions appear reasonable.

However, the construction market in general has exhibited significant volatility over the past few years. Since 2007, the construction industry has experienced a substantial drop in output of approximately 30o/o, or $360 billion, according to the AGC. Further, the Chief Economist for the AGC indicated, in the spring of 2010, that the impacts of last year's Federal economic stimulus package were beginning to be noticed with an increase of employment opporfunities. Although the number of major heavy contractors capable of participation in mega-projects such as those that will be contracted for in the FasTracks program has not increased, the heavy construction environment remains a buyers market.

The need to continue analyzing the capital program budget with respect to parameters that will be drivers of large cost changes is evident. The 2010 FasTracks Financial Report, the financial 'Workshop model supporting the report, ffid the Construction Inflation examined various components of cost within the current capital budget. While RTD performed a sensitivity analysis of material cost drivers, Urban recommends that additional sensitivity analyses of other capital cost components (e.g. ROW acquisition costs) be performed in the future to allow RTD to better manage variables having the greatest influence or risk on the overall FasTracks budget. Such analyses would provide RTD a focus on future events that might affect the budget in developing mitigation and hedging strategies to address potential large cost changes.

15 IV. OPERATING COST ASSESSMENT

NltBRnnlau*u*rgE;uãrne OPERATING COST ASSESSMENT

How much does RTD spend annually on operøting ønd maintaining the bus ønd existing líght røíI systems? lVhøt ønnuøl røtes of operøtíng cost ìncreuse ønd møíntenance cost increase have been assumed? Are these assumptions reasonable and consístent wíth nutìonøl ønd local pøst trends and forecøsts?

Whøt is the estímøted amount of ønnaøl fandíng necessøry to operate ønd møintain the completed FasTracks rail systems ønd ødditionøl bus servíce? Are these øssumptions reasonuble and consístent with national and locøl pøst trends ønd forecøsts? What expectatíons about the private sector operations/møintenønce (from the public-privøte pørtnershíp) are embedded in these estímøtes? Are these assumptíons reøsonable?

Comments on the Commuter Rail Cost Model

The methodology as detailed in Version 7 of the Commuter Rail Cost Model has not changed since the previously reviewed version (Version 5) and appears to be very thorough and well thought out. The current version reflects changes in assumptions based on advancement of the design of the infrastructure and adopted changes in the service plans, i.e. headways and train consists. These changes include:

o A correction in the number of stations from 33 to 31 to reflect the accurate figure. RTD indicated that the previous model included an inaccurate figure. o Acceleration and braking rates were reduced from 75%o of full throttle and breaking to 50Yo, affecting running times and fleet requirements. Changes in proposed service levels including increase of peak headways on the Gold line from 7.5 to 15 minutes. Reduction in Northwest headways during some midday, evening and late evening hours. o Reduction in train lengths including elimination of 4-car EMU trains. a Improvement in rail car usage (daily hours of service per car) ranging îrom 23o/o for EMU's in 2015 to 75o/o for DMU's in 2030. There is no clear explanation for this improvement. Equalization and mostly small increases in the ntrnber of annual mechanic hours per car between the initial years and later years. The previous cost model showed lower numbers for years I to 3 than years 4 through 30. Increased hours would correlate with higher car utilization. Reduced staffing levels for service workers and mechanics would correlate with reduced fleet requirements.

The following comments address comments made on the previous version of the model:

o It was previously noted that maintenance, inspection, cleaning, and servicing that occur on a daily basis per vehicle are projected based on 365 days per year. The service plans in the model show longer headways on weekends for some services. Assuming kains are

16 shorter on those days; some vehicles may be idle and not require those activities. Thus the annual cost may be overstated to some degree. o The staffing levels for vehicle maintenance employees are based on different levels of productivity. For example service workers are assumed off or non-productive for 22.5 days per year and electro-mechanics are assumed off or non-productive for the equivalent of 60 days per year. The difference is equivalent to 7.5 forty hour weeks. It would be helpful if the model report broke this down to indicate how much of this difference is attributable to training, vacation, sick leave, etc.

The following risk items remain:

o Risk ltem: The commuter rail operating costs remain primarily estimated based on RTD's hourly rates for LRT operators. As noted in last year's assessment, because of the higher degree of training and certification typically required for commuter rail operators and competition for such employees from other railroad operators (freight and commuter), higher pay scales may be necessary to attract adequate staff. The FRSC report on the O & M cost differential between RTD and contracted out operation acknowledges this issue. Risk ltem: The energy costs estimated for commuter ralI arc l5o/o of total O & M costs. The environmental, technological, and geo-political issues affecting the cost and availability of energy are complex and diffrcult to predict over the long term. Given the current state and somewhat volatility of these issues, energy costs could be significantly higher in the future. Risk ltem: To the extent that the commuter rail services will share some corridors with freight rail operations, the possibility of disruptions to the operating plans due to incidents such as freight derailments could have a negative impact on O & M costs. o Risk ltem: The cost model has been revised to eliminate the so called "hone¡rmoon" differential on labor costs for equipment maintenance in the early years, but there still remains the risk that problems or high early component failures due to unexpected manufacturing defects or design flaws that require costly and disruptive fixes and retrofits could be experienced. Although these kinds of problems should be covered by warranties, they could have extended impacts on the operating plans and schedules resulting in additional O & M costs that may be difficult to recover.

Comments on the Bus and LRT Cost Model

The June 22, 2009 update of the Bus and LRT cost model was reviewed. The methodology is logical and similar to cost models used by other transit agencies, with vehicle hours, vehicle miles, and peak vehicles being the primary cost drivers. Comments are as follows:

o The model states that bus operator costs are driven by revenue bus-hours. The model should state that a factor for non-revenue (i.e. pull inlpull out or "dead head") time is included. The same comment applies to vehicle miles. o The term "directional route miles" is confusing. The more conventional terms are simply route miles and track miles.

t7 The following listing indicates differences in 2007 base system operating costs as reported in various sources:

RTD Cost Model Summary Worksheet: $307 million 2007 Actual per RTD 2009 Adopted budget: $347 million 2010 FasTracks Financial Plan: $336 million

The source of the differences among the above numbers is difficult to discern due to the different ways in which costs are categonzed and grouped in each.

Current and Future O & M Costs - Financial Plan

The operating costs for the base services and the FasTracks services were reviewed on the transfer sheets in the Financial Plan and compared with the operating costs in the previous financial model. The following significant differences were noted:

The 2009 Plan specifically stated annual inflation rates included a uniform 3.3o/o per year after 2012, and this was reflected in the operating costs for both the base and FasTracks services. The 2010 Plan does not state specific rates, but the core financial assumptions rely on Moody's CPI forecasts. The 2010 Plan reflects varying annual escalation rates, specifically on those line items that consistently showed 3.3o/o in the 2009 Plan. Although a straight line inflation rate forecast would normally be used for long term forecasting, RTD has relied on Moody's forecasts to be consistent with data sources used for sales and use tax forecasts \Mithin the Financial Plan. The 2010 Plan clearly reflects delays in startup of services from the anticipated dates in the 2009 Plan. The 2010 Plan also clearly reflects the reduction in service levels on the Gold line, i.e. peak headways increasing from 7.5 minutes to 15 minutes. On the other hand, the cost of increased service levels on the Northwest rall appear to be offset by greater cost reductions, such as the lower inflation rate incorporated into the current plan. As with the 2009 Plan, the annual costs spike in certain years, presumably to coincide with 10 year service overhauls and 15 year midlife overhauls. However some of the non- commuter rail services show permanent stepped up increases in annual operating costs. It is assumed that these correspond to planned increases in service levels. Beginning in 2011 and continuing through 2022 the total base system costs show an annual operatingladministrative cost reduction. The reduction varies significantly from year to year; the cumulative amount is $245,794,000. The Plan should clarify the sources of this proposed reduction in cost. The 2009 Financial Plan listed specific annual and total increases in FasTracks rubber tire and ADA service commitments. The current Plan is not specific, but refers to forecasted demand.

The O & M costs for the FasTracks program are projected to be $151.7 million ín2020 and$239 million for 2030. The year 2020 ís used to represent a year when the full FasTracks program

18 appears to be in service. The numbers for 2030 show temporarily large increases for some of the Southwest Corridor enhancements, which appear to correspond to 15 year mid-life vehicle overhauls. The commuter rail O & M cost report discusses such non-recurring costs as being part of a capital funding program, so it is not clear whether they should be included in O & M costs for commuter rail or other modes. Table A below shows the 2030 costs per the Financial Plan, and also normalized to not include the temporary spike in costs for that year. The temporary spikes in costs are highlighted. Temporary spikes also occur in other years which are assumed to correspond to l0 year and 15 year overhauls.

Table A also includes the 2009 amended and 2010 adopted operating budget for RTD as published on their website. The significant difference between the Financial Plan base operating costs for those years and the budget numbers are believed to include items such as interest payments, vacancy savings, and unallocated expenses. The difference between the modified total and the Financial Plan total is believed to be due to items such as general counsel, administration, public affairs, General Manager, and board offices. Differences in the structuring, presentation, and grouping of costs between the published budget and the FasTracks Financial Plan make exact comparisons difficult.

T9 Table A

FROM I.AS IRACKS I-INANçIAL 'f 000ì 2009 LVo 2010 LYo 2020 L% 2030 o/n 2030 FROM 2020 FROM^ 2020 NORM

ITD BUS OPERATIONS 120 -5.6u/t 1 14,13! 29.go/t 148,262 30.40/, 193.26t 30.41 193,26 ]RIVATE CARRIER OPERATIONS 92,85f -0.4o/o 92,472 -'12.4V, 80.981 28.601 104,174 28.601 104,17t ]ECURITY & FACILITIES MAINT. 23,513 -3.1r 22.74ç 32.6o/t 30,21 29.8y, 39,21i 29.80/, 39.211 ]OST SHARE AGREEMENTS 3.4 7.3% 3.67( 33.401 4,89i 29.801 6.3 29.4o/. 6.35( :ASTRACKS BUS ADJUSTMENTS -3.764 o.o% -3,764 31.30/, -4.94î 29.3"1 -6.39i 29.3o/c -6,39i \DA OPERATIONS 32,582 13.60/, 36.9 T -T'A 39.85Í 29.40/, 51,55Í 29.40/, 51.55( :ASTRACKS ADA ADJUSTMENTS -4.44 45.Qo/t -6,44ç 100.oo1 ,RT OUTSIDE SE CORRIDOR 18.548 7 801 4ô OOr 33.50/, 26.68t 29.801 34.63( 29.8o/. 34,63( 29.80/, 30.04( -RT IN SE CORRIDOR r7.39€ o.70/, 17.511 32.20tr 23.151 29.801 30,04( ]THER FACILITIES & SECURIry 2.911 168.5% 7,817 - 12 frel 2.13( 29.80/, 2.771 29.80/, )77 ]OST OF INSURANCE 4,78Ê 53.801 7.36t 33.501 9.82 29.80/, 1? t5Í 29.8o/(. 'l?.75f qDMINISTRATIVE EXPENDITURES 47.O2ç 26.101 59.31t 11.901 66,36( 29.80/, a6.121 29.Aor 86.'l2t PER,/ADMIN COST REDUCTIONS 17.34( -1oo oor

IOTAL BASE 355, 4.501 371.86i '1o.301 410 35.2"1 554,50{ 35.2" 554,50r

ìoutheast Enhancements Conidor 8,94Í 123.7Yc 29.Aor 1 outhwest-CPV-Central Conidor 9.561 1O1.4Yc 29.801 12,41 ìouthwest Conidor Extension 4.74{ 53.6% 734 53.6% 7.34¿ ruest Con. - Without CNPAs 16,77 35.201 22,661 35.2V. 22.66', /vest L;or- - UNPA - Non-umer Funoeo ruest Con. - CNPA - Funded bv Others 0 -225 Coßidor '14,14 66.401 23,52ç 66.40/, 23 iest Coridor 18.6't ì 49.501 27.835 49.501 27,831 toth and 40th Extension 1.83ç 39.1o/t 2,559 39.101 2.55( J.S. 36 Corridor - Northwest Rail 22,O59 73.70/ 38.30€ 73.701 38 I S 1^ l:ñrr¡.|ñr - FìR-I 17.155 29.avt 22.264 29.801 22,264 Sold Line 1 1.905 30.701 15,55( 30 70/, 15.55f {orth MetrÕ Râil 12,502 70.30/, 2'1.29i 70.301 21.29i, 7.16Í -one Tree 4.38ç 63.20/ 7,16î 63.2o/' )enver Union Station 3,087 29.8V1 4,00( 29.4o1 4 iiâintenânæ Fecilit¡es - Commuter Ra¡l 35.'lV, 4.441 35.101 4,481 vle¡ntenânce Facilities - LRT and Bus vliscellaneous 2,66( 29.80/, 3,45Í 29.8i \dministrat¡ve Costs *

IOTAL FASTRACKS 151.731 58.001 239.72! 4t.9% 224,46t

IOTAL SYSTEM 355.79( 4.5"1 ó/ 1,öþC ct 561,ð1 41.40/, 794.233 34.7% 774.99i

@rrucluDEs vEHrcLE ovERHAUL cosrs 4UU 4U( INTERES'T 64,1ô8 73,05i VACANCY SAVINGS -4.186 -1 86i

The transfer sheets for both the base and FasTracks services do not show the coffect cumulative totals for operating costs 2005 througþ,2035. Appendix B, Table 3 shows the year to year percent changes in O & M costs. The cumulative totals for years 2005-2035 have been corected. Appendix B, Table 4 indicates the difference between the 2009 and 2010 Financial PlanO&Mcosts.

The projected operating and maintenance costs appear to be reasonable and properly take into account scheduled overhauls, increases in service levels, and inflation. As previously noted, the projected costs include elements of risk such as pay scales for commuter rail operators and energy costs. The assumed inflation factor is a major element affecting the cost. It was reduced from a straight line 3.3%o in the previous Financial Plan to a lower, annually variable factor in the crurent Plan, reportedly based on Moody's forecasts. This reduction amounts to $172 million annually in O&M costs for the base system in 2035 assuming no change in the planned service

20 levels for the base system between the previous and current Financial Plans. The impact of the difference in inflation assumptions on the O&M costs for FasTracks services is less clear due to changes in service levels and other operating assumption between the previous and current financial plan. While the Moody's forecasts are widely accepted, respected, and reasonable as a reference source, unforeseen conditions and events over time will likely result in a different actual rate of inflation, which could be higher or lower.

Private Sector Operations

The O & M cost model for commuter rail is based on using RTD labor at RTD wage rates. Two noted exceptions are farc inspectors, which are assumed to be contracted out similar to current LRT fare inspectors, and outsourcing of most additional labor required for capitalized maintenance programs. However the model does not assume a differential in costs for those outsourced services.

The FRSC report on the difference in cost between RTD and contracted out O & M services concludes with caveats stating that there would be a net increase in cost if the entire commuter rail operation was outsourced. However, the item with the largest disadvantage to outsourcing is for train operations, which assumes RTD LRT wage rates for train operators. It is not clear that commuter train operators can be attracted at those LRT wage rates. If higher rates are required, the in-house advantage for this function would be reduced or potentially disappear.

Since the outsourcing has cost advantages and disadvantages for different parts ofthe operation, a mixed approach may be optimum, but until the system goes into operation and has some experience under its belt, the right mix may not be apparent. It would be beneficial for labor agreements to allow the flexibility for changing between in-house and outsourcing of the different O & M components.

Because of the integrated nature of the LRT components of FasTracks with the existing LRT system, outsourcing of train operations and vehicle maintenance would not likely be feasible. Although some route-specific maintenance of way might be contracted out, such as station maintenance, there would likely be economy of scale advantages to keep those activities in- house.

Since RTD already utilizes private sector operators, continuing outsourcing some of the bus services may be advantageous.

2t V. REVENUE ASSESSMENT

ñ{ttBRnn lFomulatíng Ercellercê REVENUE ASSESSMENT

llhat is the estìmøted ømount offunding availablefor baildíng FøsTracks?

The overall funding commitments are clearly stated in the 2009 Annual Report to the DRCOG on FasTracks dated April 2010 (the "Report"). The RTD expects to fund the program from various sources, including: (i) revenue bonds; (ii) certificates of participation; (iii) a U.S. Department of Transportation TIFIA loan; (iv) Pay-as-you-Go funds; (v) private concessionaires; (vi) Federal New Starts grants; and other federal grants. The RTD has taken necessary steps to evaluate the annualized funding sources anticipated to fund construction of FasTracks. The Report reflects adjustments made to the costs of materials and tax revenrle forecast as a result of the recent downturn in the economy and anticipated recovery. The Report states that capital costs are approximately $2.0 billion higher than those in the original estimate presented to voters in 2004. The table below summarizes the sources of funds anticipated to be used to pay for the$6.745 billion FasTracks program.

RïD FasTracks Financial Han (Fgures in $000s) 2007 2008 2009 Vaianæ Fbvenue Bond ftoceeds 1,976,143 2,085,768 1,683,588 (402,180) @Fs Roceeds 379,921 77,155 229,999 152,844 ïFlALoan froceeds 212,409 308,086 325,532 17,446 Pay-as-you-go Gpital 1,414,469 1,824,087 2,148,516 324,429 fuderal lrle,v Sart Gants 1,262,309 1,339,126 1,339,126 Other fuderal Gants 163,811 277,791 292,828 15,037 local Match tunding 126,174 140,591 135,112 (5,47e) Other Local funding 32,257 32,257 tubl i c-fr i vate làrtnershi ps 547.816 897,807 541.014 (356,7e3) n TOTA FasTracks Flogram tundi ng ' 6,083,052 6,982,668' 6,727,972 lzs+,0s6-l Third Partv tunded froiects 29.749 17.097 17.097 TOT/aL FasTracks F nanci al Fl an

The Financial Plan shown above assumes voter approval of a0.4%o increase in the sales and use tax, with the increase going into effect in January 2013. If the tax increase is not approved by voters, RTD has indicated they will not be able to complete the fulIFasTracks program by 2019. As reflected in the table above, the Plan assumes the issuance of $1.68 billion in sales and use tax revenue-backed bonds, which represents a $400+ million decrease in such bond financing as compared to RTD's 2008 Financial Plan. Other keys assumptions include:

o P3 funding totaling $541.0 million, roughly 40% less than was included in RTD's 2008 Financial Plan; and o An additional 5324.4 million in pay-as-you-go capital financing.

Funding more of the overall project costs from "pay-as-you-go" capital rather than from bonds will necessarily lower RTD's debt service expense going forward.

22 In addition to consideration of a sales and use tax increase, RTD has indicated it continues to evaluate, monitor, and pursue potential additional funding sources, with the goal "to build as much as we can, as fast as we can." They have also stated that adjustments to future funding opportunities and constraints will be made as needed, with the full understanding tha| a shift in variables such as schedule may occur.

Whøt local fundíng is expected by specíJìc funding source (e.g., søles und use tax, fare box revenue, locøl government contributions, other sources)? What øre the rates ønd amounts? Is the søles and use tax methodology proposed by RTD's FasTrøcks SøIes and Use Tax Methodology Working Group, øs øpplied by RTD in the Financial Pløn, and the resultíng forecøsts reasonøble? D¡d the Fínancial Pløn present rønges for søles ønd use tsx?

Please refer to the response to the preceding question for a detailed breakdown of the capital funding sources of the FasTracks Plan. The Plan is heavily reliant on sales and use tax revenue collections; as such revenues will serve as the principal source of repayment for $1.68 billion in revenue bonds, $325 million in a subordinate lien TIFIA loan, and $230 million in appropriation- backed Certificates of Participation. In addition, such revenues will fund RTD's pay-as-you-go capital investments of over $2.15 billion. Thus, roughly 650/o oî the total funding of the FasTracks Plan will be derived from or supported by local sales and use tax collections.

The financing plan of the FasTracks progr¿Ìm is heavily dependent on the shength of the local economy and its collections of sales and use taxes. As the U.S. economy shows signs of recovery, the Denver metropolitan arca is sluggishly recovering after experiencing economic stagnation. According to the Colorado Legislative Council Staff report as of March 2010, the Denver region consumer spending has begun to slowly improve and losses have been mitigated. However, credit conditions and a weak housing market will contribute to a slow recovery, but conditions are not as severe as they were in 2008 and 2009. The following table illustrates the economic indicators for the region.

Metro-Denver Region Economic lnd icators March 2010

Gatesory Employment Growth 2.10% 1.00% 4.40o/o Unemployment 4.00% 4.90o/o 7.80o/o Housing Starts -21.10% -38.40o/o 52.80o/o Growth Value of Nonresidential Const 33.20% -11.40o/o -30.30% Retail Trade Sales Growth 6.40o/o -1 .OOo/" -11.10o/"

(1) Colorado Legislatiw Council Stafi, March 2010

According to RTD's Comprehensive Annual Financial Report, December 2009 (the "Audit"), sales and use tax revenue provides approximately 650/o of RTD's total revenues, which was

23 approximately $371.4 million. The sales and use tax plummeted approximately 54I.4 million (- 10.17o) in 2009 as compared to a slight decline of $5.6 million (-1.37o) in 2008. In 2009, the decline in sales and use tax revenue reflected the severe downturn in the economy due to the continued credit crisis and global recession. Positive growth in sales and use tax revenue is expected to have a very modest recovery over a three year period.

Due to the substantial decline in sales and use tax revenues in 2009, the RTD formed a working group to review the methodology used to forecast its sales and use tax revenues due to the changing economic environment. The working group was charged with reviewing the forecasting for CPI and accounting for demographic shifts to create alternative methodologies and suggested variables create statistically valid regression models to forecast sales and use tax revenue growth through Year 2035. In their review, thirty seven (37) model runs were conducted and four (4) finat models were selected to conduct the forecast. The final forecasting method used included variables such as (i) employment change; (ii) personal income change; (iii) emptoyment and personal income change; (iv) employment and national goods GDP change. The following table reflects the results of modeling the various categories to forecast sales and use tax revenue.

Sales Tax Results - Annual Use Tax Results - Annual Model Average Growth 2009 - Average Growth 2009 . 2035 2035 Employment 4.3Vo 4.47o

Employment and National 3.17o 3.7Vo Goods GDP

Personal Income and 2.8Vo 2.97o Employment

Personal Income l.l7o 0.07o Source: FasTracks Sales and Use Tax Forecasting Methodology Working Group, Dec. 10, 2009.

As a result of the findings, the RTD has revised its forecasting approach to reflect high, medium and low forecasting rates with an initial declining sales tax period, a recovery period (2-3 years) and average growth thereafter. The working group generally agreed that the forecasting methodology that produced a range of growth values from2.87o to 4.3Vo per year, and a medium value of 3.77o per year is reasonable to use for the 2010 FasTracks Financial Plan and subsequent plans going forward. Further the working group recommended it reconvene on an annual basis to revisit the model parameters and make changes if warranted. Furthermore, the Financial Plan assumes the passage of 0.47o sales and use tax increase coÍlmencing in January 2013 to fund the FasTracks project. The table below depicts RTD's sales and use tax growth in the Financial Plan Update:

24 SalesTax P ctions 2010 Base System FasTrack Total Sales Tax Sales Tax Sale Tax Year Projection Projection % Change 2005 233,645 152,782 386,427 2006 239,867 159,691 399,558 3.40% 2007 251,044 167,363 418,407 4.72"/" 2008 247,695 165,130 412,824 -1.33% 2009 222,673 148,448 371,121 -10.10% 2010 233,369 155,579 388,949 4.80% 2011 239,306 159,537 398,843 2.54o/" 2012 247,360 164,907 412,267 3.37%

2014 268,824 358,432 627,255 4.21% 2015 280,823 374,431 655,254 4.46o/" 2016 293,037 390,716 683,753 4.35% 2017 305,408 407,211 712,619 4.22% 201 I 318,387 424,516 742,903 4.25% 2019 332,161 442,881 775,042 4.33% 2020 346,833 462,444 809,276 4.42% 2021 362,027 482,703 844,731 4.38% 2022 377,822 503,762 881,584 4.36% 2023 394,241 525,654 919,895 4.35% 2024 411,350 548,467 959,817 4.34% 2025 429,346 572,462 1,001,808 4.37o/" 2026 448,088 597,451 1,045,539 4.37% 2027 467,658 623,544 1,091,202 4.37% 2028 488,241 650,988 1 ,139,230 4.40% 2029 509,556 679,408 1 ,188,965 4.37% 2030 532,013 709,351 1,241,364 4.41"/" 2031 555,486 740,649 1 ,296,135 4.41% 2032 579,863 773,150 1,353,013 4.397" 2033 605,265 807,020 1,412,285 4.38% 2034 631,891 842,521 1,474,411 4.40% 2035 659,288 879,051 1,538,339 4.34%

]1Ñbs an sales tax increas e oî 0.4o/" in Year 2013. Source: FasTrack Financial Model 45v 1 - 2035.

25 The rate of growth in sales tax receipts reflects some recovery in 2010 and relatively lower I growth in2011 and 2012, reflecting the current economic recession, and after 2012 is projected to fully recover to a 4+%o growth rate per year. There is a risk that RTD assumes sales tax growth returns to levels realizedprior to the recession. Further, no recession is assumed to occur in the future, with sales taxes assumed to gtow by 4+% annually after 2012. While the assumed rate of growth in sales taxes thereafter is more reasonable than the prior plan, no subsequent recession and reduction in sales tax receipts is provided for in the model. While RTD may realize the average rate of growth assumed, it will notrcalize such growth on a level annual basis potentially exposing FasTracks to challenges as a result of declines in sales taxes due to recessions in frrture.

As reflected in the Sales Tax Projections table above, RTD is assuming annual collections beginning in 2013 will realize year-over-year growth of no less than 4.2o/o each year through 2035. While such growth is roughly a fulI percentage point below the average annual growth realized since 1992 (5.3%), it is nearly two percentage points higher than the average rate of growth realized over the last 10 yearc (2.3Yo). It should also be noted that for the period 1992- 2000, the region enjoyed significant economic expansion, and sales tax revenue collections realized very robust average annual growth of 9.5Yo during that nine-year period. Realizing consistent annual growth of greater than 4o/o over such an extended future period of time may prove challenging.

The following table provides an historical overview of regional sales tax collections since 1992.

RTD Sales Tax Collections (excl. 0.47o increase in '05)

1992 108,389 t993 l2l,6ll t2.2% 1994 134,431 105% 1995 142,274 s.8% r996 153,807 8.2% 1997 164,565 7.0% 1998 179,990 9.4% 1999 202,303 12.4% 2000 224,182 t0.8% 2001 224,648 0.2% 2002 213,668 -49% 2003 210,447 -r5% 2004 221,276 5.t% 2005 231,856 4.8% 2006 239,735 3.4% 2007 251,044 4.7% 2008 247,694 -t.3%

Avg Annual Growth (1992-2008): 5.3% Avg Amual Growth (1992-2000): 95% Avs Affiual Growth (1999-2008): 2.3%

26 RTD contends their assumptions are reasonable, valid, and representative of the assumptions, methodology and findings of the Sales and Use Tax Working Group. They also acknowledge the difficulty in projecting the exact timing of both recessions and high-growth periods, and have not attempted to do so in their sales and use tax revenue growth estimates. RTD used a regtession model based on forecast growth of two independent variables: employment and personal income. The forecasts of the independent variables have not incorporated cyclical variations, so the dependent sales and use tax forecasts would lack cyclical variations as well.

Farebox Revenues:

The FasTracks Plan assumes RTD will implement the following fare increases through 2035:

Projeded RID ãre lncreaæs

Year lncreaæ 2011 4.75% 2012 5.00% 2014 10.00% 2017 8.80% 2020 8.20% 2023 8.30% 2026 8.20% 2029 8.00% 2032 7.70% 2035 7.30%

As reflected above, FasTracks ridership fares are projected to initiate at a significant level in 2014 (10%), and increase by an average of more than 8o/o every third year through 2035. The planned fare increases are fairly consistent - from a percentage standpoint - with RTD's historical fare rate increases. From initial annual revenue of approximately $50.6 million in 2019, annual FasTracks fare revenue is projected to increase to $138.7 million by 2035. The assumption that fares will be increased every three years to withstand an assumed annual inflation rate of 2.7%o is reasonable.

W/høt ømount of federøl funding is expected by source (e.9., New Størts, eørmarks/díscretíonøryfunding, DRCOG-awardedfederalfunds)? Over what time períod?

The Financial Plan Update dated April 13, 2010 identifies four categories of federal funds as capital funding for various FasTracks projects during the listed years.

27 Type ofFederal Federal Purpgse '($ooo¡ Years of Receipt Fundin-g

New Starts West Coridor $308,680 2009-2013 New Starts East Corridor $850,446 2010-20t8 New Starts Gold Line $180,000 2010-20t8 Subtotal $1,339,126 CMAO & ARRA Various $167,438 2009-2018 SAFETEA-LU U.S.36 Con BRT (Phase I $7.000 2009-20t0 SAFETEA-LU Denver Union Station (RTD costs only) $13,141 2009-2010

Future Authorization Various $10s,248 201t-2017

Subtotal s292.8n TOTAL $1,631,953 N/A = not applicable

In addition, the Financial Model includes federal "Guideway Modernization" funding to be received beginning in 2011 and extending through 2035. Only $34 million of these funds, however, are anticipated to be received during the FasTracks construction period through 2018. These are not prograÍrmed as capital funding sources for FasTracks projects and are discussed at the end of this section.

CMAO The Congestion Mitigation and Air Quality Improvement Program was first authorized in 1990 and has become an on-going formula-based funding source for metropolitan areas throughout the U.S. This funding is received by and subject to programming by the DRCOG. During SAFETEA-LU, FTA reports that DRCOG has received $18 million per year. The FasTracks plan assumes this approximate annual amount will continue. More than 557o of the total CMAQ funds for FasTracks are anticipated from2}I4 through 2018 and would derive from two future federal surface transportation authorizations. While the RTD Financial Plan describes the source from DRCOG as CMAQ, DRCOG may deliver some of these funds as STP-Metro. Regardless, the amount of funds assumed is generally consistent with DRCOG expectations.

SAFETEA-LU The two items of SAFETEA-LU funding, which total approximately $20 million, represent funding from the 2005 surface transportation authorization and are prograÍlmed to be fully received by the end of the current fiscal year.

Future Authorizations The Financial Plan Update includes $15 million in each of 201I-2017 that is anticipated to be derived from future re-authorizations of the Federal Surface Transportation program. As this is a longstanding federal program, it is likely that Congress will approve continued authorizations. The amount assumed is somewhat optimistic compared to previous years' awards, but not unreasonable.

New Starts A key focus of our review is the $1.3 billion of funding during the next eight years from the Federal Transit Administration ("FTA") "New Starts" program. The West Corridor amount

28 ($308.68 million) has already been memorialized in a Full Funding Grant Agreement ("FFGA"), which FTA signed in January 2009. According to the most recent FTA Annual Report on Funding Recommendations for Fiscal Year 2011, 87Vo of this grant had been appropriated through FFY 2010 and the President's Budget for FFY 2011 includes the remuning I3Vo. Therefore, all of the Federal funding anticipated for the West Corridor project should be available if RTD meets the conditions for draw downs of the funds.

RTD plans to sign new FFGA's with FTA for the East Corridor and the Gold Line. The FTA recommended in its Annual Report on Funding Recommendations for Fiscal Year 20ll that a FFGA be developed for each of the East Corridor and the Gold Line in the same amounts that are included in RTD's Financial Plan Update. FTA provided each RTD project an Overall Project Rating of "Medium." The FTA also reported that the President's Budget for FFY 2011 includes an initial $40 million appropriation for each project. It is typical that Congress may appropriate funding for a project prior to FTA signing a FFGA for the project. A FFGA cannot be signed by FTA and the RTD until after various project details are finalized.

The following table summarizes the 67 FFGA's issued since New Starts FFGA's began in FFY 1993 and 10 pending FFGA's. The previously authorized FFGA's include RTD's FFGA's for the Southwest Extension in 1996 ($tZO million), the Southeast Corridor in 2000 ($525 million) and the'West Corridor in 2009 ($309 million). The pending FFGA's include the recommended FFGA's for RTD's East Corridor ($850 million) and Gold Line ($180 million). This table is a compilation from a FTA sunìmary of FFGA's signed through September 30, 2007 and information in Appendix A of the FTA Annual Report on Funding Recommendations for Fiscal Year 2011 released in early 2010. The table reflects the size of any amended FFGA's and excludes FFGA's that were subsequently cancelled.

Number Total Total Total Range of of Nów FFGA Project FFGA FFGA's to Federal City Fiscal Year Starts Value Cost' Yaltte as Vo Project FFGA'S lS millions) lS millions) Total Cost Cost r993 Washinqton, DC (4) 4 $1,290 $2,06s 627o 627o-63Vo t994 Dallas, Jacksonville, 4 s638 $1,204 537o 407o-'75Vo New York City, San Francisco r995 Atlanta (2), t2 $3,611 95,792 627o 317o-80%o Baltimore, Boston, Houston, Los Angeles (3), Maryland, New Jersey, Pittsburgh, Salt Lake Citv g2,t'77 r996 Denver, San Jose, -1 $610 28Vo I97o-687o San Juan r99',1 New Jersey, Portland, 5 s2.339 $3,987 59Vo 507o-727o Sacramento, San Francisco, St. Louis 1998 0 t999 0 1990 Dallas, Fort 6 $1,2s8 $1,951 647o 347o-ll7o Lauderdale. Newark,

29 Range oï Number Totat Total ,, Total,¡ , . Fedcral ofNew FFGA Project FFGÁ. FFGA's to' City Fiscal Year Starts' Value , Cost Yalueas 7o Project FFGA?S l$ millions) ($ millions) Total Cost Cost' ' Portland, Salt Lake City, San Diego 2001 Baltimore, Chicago, 8 92,220 $4,301 52Vo 41Vo-\O%o Denver, Memphis, Minneapolis, Northern New Jersey, Pittsburgh, 'Washinston DC. 2002 Chicago (3), Salt 4 $373 $648 587o 527o-607o Lake City 2003 New Orleans, San 2 $281 $5 13 557o 437o-8OVo Dieeo 2004 Chicago, Los J $1,236 $3,866 327o 2l7o-55Vo Anseles- Seattle 2005 Charlotte, Cleveland, J $862 $2,043 427o 427o-497o Phoenix 2006 Dallas, Pittsburgh, J $1,425 $2,4s3 587o 507o-807o Salt Lake Citv

2001 New York City, -1 $3,036 $8,079 38Vo 367o-607o Oreson. Portland 2008 New York Citv I $ 1,300 $4,867 27Vo 217o 2009 Denver, Northern 4 $2,4s0 $6,335 39Vo 297o-807o Virginia, Salt Lake Citv. Seattle Signed 67 $r4,441 $35,056 417o

2010 (p) Houston (2), 4 $4,079 $10,636 38Vo 347o-60Vo Northern New Jersey, Orlando 2011 (r) Denver (2), Hartford, 6 $4,264 $10,921 397o 257o-6OVo Honolulu, St. Paul- Minneapolis, San Francisco Pendinq 10 $8.342 $21,557 397o (p) = Previously recommended and pending (r) = Recommended in FY 2011 Annual Report

During the past two New Starts annual review cycles, FTA has recofirmended 10 projects for $8.3 billion of FFGA's. RTD's two pending FFGA's represent only l2Vo of the $8.3 billion of recommended FFGA's. The recommended FFGA's as a percentage of the total project cost stated by FTA range from a low of 257o for the RTD Gold Line to 597o for the Houston North Corridor LRT and 6O7o for the San Francisco Central Subway LRT. Although the recommended $850 million FFGA for the RTD East Corridor is larger than any other RTD FFGA, it is only the 3rd largest of the 10 pending FFGA's. Further, the recommended East Corridor FFGA equals 48Vo of the total cost that FTA lists for this project - a lower percentage than five of the other nine pending FFGA's. Note that the total cost used by FTA for New Starts requests includes additional elements beyond the capital construction cost reported by RTD in the 2010 Financial Plan and used earlier in this document. Thus, the FTA's stated FFGA-to-total cost percentage is lower than when this ratio is calculated using RTD's capital construction cost.

30 The 10 pending FFGA's together amount to 57Vo of the total dollar value of the 67 FFGA's that FTA has signed from 1993 through 2009. Therefore, the size of the 10 pending FFGA's might raise some concerns whether FTA has the requisite funding available, particularly given the current absence of a multi-year authonzation of the federal surface transportation program. In this regard, it is worth noting that FTA was operating under temporary program authorizations for nearly two years prior to the adoption of SAFETEA-LU in July 2005. But between October 2003 and July 2005 FTA signed six FFGA's totaling nearly $2.1 billion for projects in Charlotte, Chicago, Cleveland, Los Angeles, Phoenix and Seattle. In early 2009 - the final year of the SAFETEA-LU authoization with no multi-year re-authorization in sight - FTA signed four FFGA's totaling $2.4 billion for projects in Northern Virginia, Salt Lake City and Seattle, in addition to RTD's FFGA for the'West Corridor.

Guideway Modernization In addition to the above $1.6 billion of federal funds reflected in the Financial Plan update as capital funding for FasTracks, RTD's Financial Model v45.1-2035 assumes that RTD will receive $777 million of federal Guideway Modernization funds from 2011 through 2035 fot improvement and modernization of RTD assets. Approximately 887o of this federal funding, however, is projected to be received after 2024, as shown in the following table.

RTD Anticipated Federal GuÍdewav Modernization FundÍng, 20ll'2035 Fiscal Years Amount (Annual Averase) ($000) Period Vo ofTofa.l 20tt - 2014 $3,224 ($806) O.4Vo 2015 - 2021 $ss,s29 ($7,933) 7.17o 2022-2024 $41,575 ($13,858) 5.37o '7.8Vo 2025 -2026 $60,908 ($30,4s4) 2027 -2035 $615,517 ($68,391) 19.2Vo

Federal Fixed Guideway Modernization funds are currently allocated by formula which includes age, route miles, and revenue vehicle miles; projects become eligible for funding after seven years of operation. As more transit systems around the nation become operational and later require rehabilitation, Denver and other cities will be competing for these funds. The current FTA Administrator, Peter Rogoff recently stated that funding the rehabilitation of existing transit lines should be a higher federal priority than funding extensions or new systems. Since the most significant annual levels of fixed guideway modernization funding begin to appear in RTD's Financial Model 14 years from now, based on the FasTracks corridors entering revenue service between 2016 and2Ol8, there are many years for federal funding debates and decisions to occur, before RTD anticipates receiving significant annual amounts of these funds to keep FasTracks assets in a state of good repair. The amount of funding available is assumed to equal RTD's cuffent receipts per one-way mile on its existing fixed guideway corridors, adjusted for inflation.

A new authorization ma! not be passed for another !e&r or tnore. How has RTD ad.dressed. that in its financíal plan? What are the øssociated rßlß?

The short-term authorizations of the federal surface transportation programs since October 1, 2009 have involved continuations of existing programs such as the CMAQ program that RTD has anticipated in its Financial Plan. Moreover, as discussed previously under the "New Starts"

3t section, FTA has in the past signed FFGA's in years when a multi-year transportation was not in place. Funding of transit assets is a major priority of the current Administration, under its emphasis on livability and sustainability goals. Further, even with delays in re-authoization,we believe there is sufficient liquidity in the Financial Plan to absorb any temporary delays in expected federal funding.

What ømount of privøte sector funding is expected from the pablic-private pørtnership? Is thís assumptio n reøsonøble?

RTD's Financial Plan update of April 13,2010 stated the assumption that the selected P3 partner will finance up to $541 million of projected capital costs. Each P3 proposer prepares its own financing plan, which reflects its own calculations of the cost and schedule of the work it is to perform, as well as the amount and timing of contributions it proposes to receive from RTD during construction. Please see the "Financing Assessment" section below for discussion of the P3 partner's financing responsibilities.

Are there íssues that commonly arise during Jinøl P3 negotíøtíons that could pose problems príor to ftnøncial close?

RTD has conducted what is commonly termed a"hardbid" procurement, which includes detailed technical, financial and legal specifications and requests bidders to provide committed annual amounts for separate elements of RTD's Service Pa¡rment. The final P3 bid documents - the Instructions to Proposers and the Concession Agreement - effectively were pre-negotiated with the qualified bidders and generally do not involve subsequent negotiations prior to financial close. This does not guarantee, however, that issues will not arise or events will not occur that could create problems for reaching financial close.

The bid evaluation process provides RTD the opportunity to question and request clarifications of proposers' statements, which may reveal inconsistencies or non-responsive proposal elements. In addition, prior to submission of its financial proposal on May 14, each bidder had the opportunity to provide RTD with a final draft (or a long form term sheet) of its design/build contract, rolling stock contract, designated credit agreements, and O & M contract, so that RTD could verify that these documents are consistent with the indicative terms set out in the Concession Agreement and would be consistent with the Financial Model the bidder submitted to RTD as part of its financial proposal. RTD has not stated whether such draft agreements were submitted or whether any inconsistencies have been identified during the evaluation of the technical proposal and financial proposal. Although minor issues typically may be identified, the preferred bidder and RTD could resolve such issues without jeopardizing the integrity of the P3 procurement process or the financial close.

The quality of the financial proposal accounted for only 8 of the 100 evaluation points. "Quality" was defined in the ITP as evaluation of, among other things: (i) the executability of the financing plan; (ii) the level of commitments by equity investors and contractors; (iii) the robustness of the financing to withstand downside risks over time; and, (iv) any hedging

32 strategies and their value to RTD. Although the relative small score for "Quality''might appear to introduce significant risk to a successful financial close, we do not view this as a major risk. Each bidding team had a significant internal incentive to include an executable financing plan in its financial proposal so that its proposal would be deemed responsive and, if named the preferred bidder, the significant costs of bid preparation would not be wasted through a failed financial close.

The general level of interest rates in the debt market remains outside both RTD's and the preferred bidder's control. RTD is providing its P3 partner significant protection against changes in general market interest rates between the rates reflected in its financial proposal and market conditions when the financing actually occurs. The mechanism for this protection is each bidder's provision to RTD, two weeks prior to the submission of the financial proposals, of one or more benchmark interest rate indexes, which RTD was to approve prior to the submission of the financial proposals. RTD covers changes in benchmark interest rates through an adjustment in the annual Service Payment, unless the adjustment results in the Service Payment exceeding specified TABOR limits.

A second credit market issue that exposes RTD to financing risk and that could lead to discussion between RTD and the preferred bidder is that a financial proposal that is based on Private Activity Bonds was not required to be a "firm underwriting" at a committed credit spread to the benchmark interest index. Section 8.4 of the ITP allows the preferred bidder to request that RTD adjust the Service Payment to reflect 80% of the change in the credit spread (up to 60 basis points of change) on its actual bond pricing, compared to the assumed credit spread that was reflected in the submitted financial proposal. The preferred bidder has the burden to prove any such proposed change is "on-market." RTD has stated that its financial advisors can help provide independent views to ensure that the Concessionaire is receiving market pricing. Again, an adjusted Service Payment cannot violate RTD's affordability limit.

If a major change in credit market conditions were to occur prior to the expected P3 financing this summer (such as the market disruptions in fall 2008 that persisted into early 2009), it is possible that the adjusted Service Payments would not be acceptable to RTD, which would give 'Whether RTD the right to cancel the Concession Agreement. the actual debt financing by the preferred bidder could result in the TABOR limits being exceeded depends on how much the financial proposal is below the affordability limit. RTD will evaluate this risk during its review of the financial proposals; RTD requested bidders to provide a +50 basis point interest rate sensitivity scenario. When the RTD Board selected the preferred proposer on June 15, 2010 and authorized the RTD General Manager to sign a Concession Agreement, the RTD staff recommendation memo stated that the nominal value of the Concession Agreement could be increased by 5Yo, reflecting that there is some margin for increased interest rates on the P3 financing compared to the financial proposal submitted in May 2010.

Nationally, two recent P3 procurements did not reach financial close on the expected schedule due to (i) the government's inability to deliver as promised in the bid documents and/or (ii) significant disruptions in the financial markets. Nevertheless, both delayed projects eventually reached financial close after significant creative work by the preferred bidder, the governmental owner, and their respective advisors to restructure the original financing plan.

JJ The Florida DOT's Port of Miami Tunnel availability payment P3 concession did not reach the scheduled financial close in the latter half of 2007, after receiving "hard bids" in April 2007, because a portion of the governmental funding that had been promised to the P3 bidders was not yef avallable. Although the P3 bidders extended the validity of their bids until the governmental funding could be arranged, the preferred bidder's major equity partner became financially troubled and the 2008 financial crisis occurred. Despite these severe negative events, Florida DOT eventually accepted a replacement equity partner and the preferred bidder successfully achieved financial close, after amajor restructuring of the financing plan, whose terms to FDOT reportedly still remained within the original P3 procurement bid parameters.

A different set of circumstances required the preferred bidder's proposed financing plan for Florida DOT's I-595 project to be restructured. The financial bids for the concession were submitted just weeks before the Lehman Brothers bankruptcy filing on September 15, 2008. The resulting market disruptions prevented the scheduled financial close, but the preferred bidder creatively restructured its financing plan and reached financial close in February 2009. Again, the terms to FDOT reportedly remained within the original P3 procurement bid parameters.

There are other examples of P3 projects that received committed bids but did not reach financial close, e.g., concessions for Midway Airport and the Pennsylvania Turnpike. However, the d¡mamics of a P3 monetization of an existing infrastructure asset are much different than those for a P3 concession to construct and operate a new asset. In today's world, it is possible to envision multiple events that could disrupt reaching financial close on the Eagle P3 Project this suÍrmer. But, we believe that RTD's P3 procurement has been structured and conducted with commercially reasonable terms and has the opportunity to represent a path-breaking example of a successfully-closed P3 project.

Whøt other funding sources are expected (e.9., TIFIA, COPS)? Whøt is the avøíløbílíty of these sources? lVhøt is the competítíon? Are assumptions reøsonuble?

Fundine Sources

The $6.745 billion FasTracks capital plan includes receipt of a TIFIA loan with a total par amount of $325.5 million, and approximately $230.0 million in proceeds through the issuance of Certificates of Participation ("COPs").

TIFIA is a Federal credit program for eligible transportation projects deemed to be of national or regional significance under which the US Department of Transportation may provide three forms of credit assistance - secured (direct) loans, loan guarantees, and standby lines of credit. RTD will seek such credit assistance in the form of a direct loan. The loan will represent subordinate debt of the RTD, and the proceeds of such loan will be used to fund a portion (33%) of the total cost of the North Metro project. The loan represents less than 5o/o of total FasTracks capital costs. For further information on the TIFIA program, please refer to the 2009 Assessment report submitted to DRCOG.

34 RTD has previously issued $81.0 million in 2005 COPs to fund a portion of the West Corridor capital costs. The COPs are not secured by sales tax revenues and therefore debt service on the COPs does not count against the maximum principal amount of debt to be used and the maximum total debt service costs for such borrowings permitted under the TABOR authorization granted by voters in Novemb er 2004. As opposed to being secured by sales and use tax revenues directly, the COPs are secured by the underlying leased assets and a commitment by RTD to appropriate sufficient funds each year to meet its COP debt service obligation. As previously noted, sales and use tax revenues represent 65o/o of the total RTD operating revenues. The FasTracks plan assumes the issuance of an additional $181.8 million in COPs later this year for corridor vehicles.

It can be reasonably expected that RTD will become increasing reliant on the issuance of COPs to debt finance capital expenditures not currently contemplated in the FasTracks Financial Plan (including with respect to the base system), absent additional voter authonzation to enter into a multi-year fiscal obligation given the remaining TABOR authorization of $621.68 million with respect to the maximum total debt service costs for such borrowings approved by voters in November 2004.

Availability

Funding for the TIFIA program is included in the multi-year federal transportation funding bill approved by Congress. The last funding authoization, the Safe, Accountable, Flexible, Efficient, Transportation Equity Act, a Legacy for Users ("SAIìETEA-LU") expires this year. As RTD notes in its Financial Plan Update dated April 13, 2010, "The TIFIA program...is subject to reauthonzafion, and its availability to provide support to the (FasTracks) Plan is dependent on its reauthorization."

There is no issue of "availability'' relative to the issuance of COPs by RTD absent a significant disruption in the capital markets. Given the high credit ratings of "4a3", "AA-" and "A+" assigned to COPs issued by RTD as of June 1,2010 by Moody's Investors Service ("Moody's"), Fitch Ratings ("Fitch"), and Standard & Poor's ("S&P") and RTD's history of market access, we do not anticipate RTD will have any problem successfully issuing COPs later this year.

Competition

As we have noted above and in prior assessment reports provided to DRCOG, receipt of TIFIA funding is extremely competitive. That being said, the North Metro project will certainly be viewed as an integral component of the overall FasTracks project which clearly has regional significance and should receive strong consideration for such direct loan financing.

For the COPs financing, there is no "competition" issue involved in the issuance of such securities; thus, we do not anticipate RTD having arry difficulty issuing such debt in the capital markets absent a market dislocation.

35 Reasonableness of Assumptions

Since we anticipate that Congress will continue to authorize the federal surface transportation authorization progËm and that there will not be any market event that will interfere with RTD's ability to issue debt in the capital markets this year, the RTD assumptions relative to its TIFIA and COPs funding are reasonable.

Comment on the reliabílíty of each of the above sources. Identify which of the above sources have been commítted. Identify needed steps to secure thefunds for those not yet commítted.

The following table provides an overview of the sources of capital funding for the FasTracks Plan:

RTD FasTracks Financial Han (Hguresin $000s) m Fbvenue Bondsfroæeds 1^6S3"588 OFsRoæeds m,w TlFlALoan Roæeds 325,532 Pay-asyou-go Gpital 2,1Æ,516 fuderal NewSartsGants 1,339,126 Other fuderal Gants æ2,8% Local Match funding 135,112 OtherLocal funding 32,257

fu bl i c,Ri vate Fart nerdri ps &1,014 - FasTracksRograî funding 6,727,972 Third Farty funded Rojeds 17,æ7 TOTAL- fuTrad€FnancialHan 6,715,069

RTD has developed a multi-year, capital financing plan for FasTracks that is based on reasonable assumptions relative to both the timing of receipt and amount of each of the sources identified above. However, for RTD to issue up to $1.68 billion in sales tax-backed revenue bonds and finance up to $2.1 billion in pay-as-you-go capital, voters will need to approve a 0.4o/o increase in the regional sales tax. If voters fail to approve the increase, then the revenue bond and pay-as- you-go funding assumptions would necessarily be considered unreliable as the existing 0.4% sales tax could not support this level of debtþay-go investment. Further, absent such approval of the voters, there is insufficient TABOR authonzation to permit the issuance of the contemplated Series 2013 Sales Tax Revenue Bonds in the principal amount of $1.64 billion and the Series 2018 Sales Tax Revenue Bonds in the principal amount of $100 million to fund required capital

36 expenditures related to the FasTracks program. RTD has appropriately noted the lack of TABOR authorization for such proposed bond issues in its financing plan.

As previously stated, the Federal grant funding assumptions included in the plan are reasonable, and we anticipate RTD will be successful in securing such funding in the future. It should be noted that this funding is obviously reliant on future Federal funding atthonzations, and thus may only be deemed reliable up to the point at which the RTD receives formal Federal grant funding approval. Funding in the amount of $308.68 million has been memorialized in a full funding grant agreement last year. Úr addition, the FTA has recommended a FFGA for both the East Corridor and Gold Line projects, representing an additional $1.03 billion in such grant funding.

Similar to Federal grant funding, my TIFIA loan funding will be contingent upon: (a) approval of a new federal transportation reauthoizatíon bill, and (b) approval of the specific North Metro proj ect loan application.

Have sensítÍvity analyses been performed on the revenue estímates? Summarize the ønølyses and the results. Wat is the best and worst case scenarios for eøch source as presented ín the Jìnøncíal plan?

First Southwest was not provided any sensitivity analysis relative to the FasTracks revenue estimates. However, recognizing how critical the accuracy of the Plan's forecasted sales tax revenue growth estimate was to RTD's ability to complete the FasTracks program by 2019, RTD led an extensive effort to determine a consensus on a future forecasting method. RTD held several work sessions with a broad group of state and local economic advisors prior to the release of its latest Financial Plan Update. The group analyzed numerous scenarios using a range of annual growth rates (2.8%ó - Low; 3.7% - Medium; 4.3% - High) to project revenues. Ultimately, the group of advisors recommended an average annual growth rate of 3.7To for use in the Financial Plan.

RTD has indicated that while the FasTracks Financial Plan was developed using the medium growth scenario (3.7%), sensitivity analyses were rul using the high, medium, and low scenarios to determine the capital funding gap for the program. No additional revenues were assumed, and the date for fuIl build out was kept at 1213112017 (note this date was subsequently revised with the April 13, 2010 FasTracks Financial Plan Update that indicates completion of the fulI FasTracks program by 2019). Based on these assumptions, RTD determined the following:

Overall, the tax revenues did not change significantly through 2017 among the three scenarios; When the high sales and use tax growth assumption is used, the funding gap is $2.43 billion; 'When . the medium and low tax growth assumptions are used, the gap is $2.45 billion; and o The differences in tax revenue projections begin to build in the later years, following construction.

As previously stated above, Urban/First Southwest was not provided such analyses for review.

37 It should be noted that the Plan assumes annual sales tax growth in excess of 4.0%o ftom 2012 through 2035. The way the average annual growth of the aforementioned3.To/o is achieved is by including the I}.IYo decline in collections realized in 2009, and the 2.5o/o and 3.4%o increases forecast in 20Il and 2012.

In the event voters fail to approve a 0.4o/o increase in the regional sales tax, RTD has stated its need to reconsider the FasTracks program in light of the significant reduction in contemplated revenues available to finance the program and maintain the system and new opportunities that would exist.

38 VI. FINANCING ASSESSMENT

Ñ,{t*ERnn lFomulating Ercellercê FINANCING ASSESSMENT ll/hat debt íssuønce ínstruments øre being used to Jinønce the FøsTracks Program ønd in whøt amounts? ll/hat are the debt retírement schedules of eøch? Are the revenue sources beìng used to service the debt cleørly ídentífted? Are other proiects beíng fanded from the søme sources? What interest røtes and coverage røtes høve been øssumed? Are they reasonable?

As previously stated in RTD's FasTracks Financial Plan Update, the $6.7 billion Plan "...requires significant debt and lease purchase financings." As reflected in the FasTracks Plan, RTD anticipates issuing approximately $2.78 billion in debt to meet a portion of its overall funding needs. The following table lists all the debt instruments included in the FasTracks Program:

Arþunt Fml lntercdÈte ÈstaHe l$üxb) Maturitv Èvenueh¡rce As¡r¡nÉiqrs (YedNo) glestaxes Bond froceeds 1,683,588 3035Years 5.85% Yes æ,æP 'l2years RlDappropriations 5.85% Yes Proceeds 3%,5P. 3sYears 9les taxedfarebox revennues 5.7ú/o Yes fublioft¡vate Fartner*rips V1,O14 AÈyeæ lease agreement Slestaxes Yes

As stated in RTD's FasTracks Financial Plan, "sales tax revenue bonds are the "backbone" of RTD's financing program because the security provided by the pledged sales taxes provides strong security to investors and thus the lowest long-term borrowing cost to RTD". The sales tax revenue bonds constituting 25o/o of the sources of funds expected to pay for the FasTracks Plan's $6.7 billion of project expenditures, are secured by and payable from the receipts generated by the Novemb er 2004 voter-approved 0.4o/o Sales and Use Tax increase, and the assumed (but yet to be proposed and voted upon) additional 0.4% Sales and Use Tax increase. Reflecting the strength and security of the pledged sales and use taxes, as of June 1, 2010 RTD's sales tax ,"rr"to" bonds have been assigned credit ratings of "Aa2" by Moody'S, "AJA-{" by S&P, and "AA*" by Fitch, with Fitch distinguishing between its sales tax revenue bonds and those issued to finance its FasTracks Plan through the assignment of a rating of "AA" to such bonds.

As described in its FasTracks Plan, the proposed Series 2013 and 2018 sales tax revenue bonds with an aggregate par amount of $2.33 billion are assumed to bear a fixed rate of interest to maturity. A true interest cost ("TIC") of 5.85% is assumed for both the Series 2013 (having a35 year final maturity) and the Series 2018 bonds (having a 30 year final maturity), which reflects an interest rate of 115 basis points over the 10 year historical estimated financing cost of RTD. The lQ-year historical estimated financing cost for RTD of 4.70% is based on the aYetage of the 3g-year Municipal Market Data Index ("MMD") of 4.70%o from June 1, 2000 through and inciuding June 1, 2010 which itself is 70 basis points higher than the 3}-yeat MMD Index as of June 1,2010.

39 While the borrowing costs for the proposed Series 2013 and Series 2018 sales tax revenue bonds are uncertain, RTD's interest rate assumption appears reasonable and sufficient to accommodate certain unanticipated upward movement in rates over the near term, or any increase in borrowing costs attributed to a downgrade of the RTD credit rating to the "4" category. As of June 1,2010, we estimate sales tax revenue bonds assigned a credit rating of "AA" would bear an interest rate of MMD plus 85 basis points, as opposed to the assumed 115 basis points used by RTD. On such basis, the bonds would have an estimated financing cost of 4.85% given 3O-year MMD being 4.00% on June 1,2010. If the l0-year average of the 30-year MMD of 4.70Yo is utilized, or the Z}-year average of 5.27Yo as a means of discounting the exceptionally low interest rate environment experienced the last several years, the proposed bond issues would have an estimated financing cost of 5.55% and 6.120/o, respectively, based on the current credit rating of "AA" assigned to sales tax revenue bonds of RTD. Lr the unexpected event that the credit rating assigned to the sales tax revenue bonds of RTD were reduced to "A+", we find the spread to MMD assumed in the plan would continue to be reasonable based upon current sales tax revenue bonds bearing an interest rate of MMD plus 105 basis points as of June 1, 2010. It should be noted that First Southwest believes it is extremely unlikely the RTD sales tax revenue bond credit rating will fall to the "4" level.

The assumed amofüzation of the proposed sales tax revenue bonds is appropriate given the expected useful life of the given project component being funded with debt. Such amortization periods are consistent with municipal market standards in the transportation sector.

RTD has incorporated a TIFIA loan in the amount of $325.5 million representing 33% of the North Metro project costs. However, RTD may choose to program a different corridor for federal participation depending on project delivery strategy at the time of implementation. The advantage of the TIFIA program is that it allows RTD to borrow on a subordinate basis, defer repayment of the loan to accommodate cash flows needs, and offers repayment term of 35 years following project completion with no penalty for early repayment.

Further evidence of RTD's conservative financing assumptions is reflected in the TIFIA rate used in calculating the anticipated costs of a direct loan from the US DOT. An interest rate of 5.70% has been assumed by RTD based on the 10-year average of the 3O-year US Treasury rate plus 65 basis points. If RTD were to close on a TIFIA loan on June 1, 2010, the interest rate on the subordinate lien loan received from the federal government would be 4.23 percent - well below the 5.70 percent rate used in the FasTracks Plan.

The assumed anofüzation of the proposed TIFIA loan is appropriate given the expected useful life of the given project component being funded with debt. The 35 year amortízationperiod is consistent with municipal market standards in the transportation sector and the TIFIA program.

As a result of the regional significance of the FasTracks Plan and other factors, we are confident that RTD will qualify for TIFIA funding at some level. The significance of the FasTracks Plan has been recognized by the Federal government through its financial support of the Denver Union Station Project, a component of the FasTracks Plan. To date, RTD has not submitted a "Lefrer of Interest" to the US DOT seeking such funding. We understand RTD plans to apply for

40 a TIFIA loan to finance North Metro project costs in 20ll or 2012, with an anticipated loan closing in2013, assuming voter approval of a 0.4Yo increase in the regional sales tax.

Omitted from the 52.78 billion of debt instruments identified in the table set forth above, is the issuance of cash flow borrowings, anticipated to commence in 2011, in the principal amount of approximately $298 million secured by sales and use taxes as a means of providing interim funding until receipt of Federal New Start Grants for the Eagle Project. The assumed interest rate on the cash flow borrowing is 5.85yo, which is the same interest rate assumed for the sales tax revenue bonds by RTD. While detailed information has not been provided for the anticipated issuance of the contemplated cash flow borrowing, we believe that RTD will be able to structure a transaction secured by the sales and use taxes in such a fashion to receive a credit rating of 664A" with respect to such obligations. On the basis of such belief, the assumed interest rate of 5.85% is considered conservative. Please see the preceding discussion regarding the interest rate assumption on sales tax revenue bonds for additional analysis of the assumed interest rate of 5.85%.

In summary, while recognizing that confidently predicting RTD's future borrowing costs is impossible, especially during these extraordinary times, we believe that the assumptions with respect to the debt instruments included in the FasTracks Plan are conservative.

The debt instruments include the debt repayment portion associated with the Eagle Public Private Partnership of the availability payment as a multi-year fiscal commitment by RTD. RTD is using existing TABOR authorization to secure the capital portion of the availability payments. The service payment portion of the availability payments are subject to deduction due to sub- standard performance. Please refer to the discussion herein regarding Public-Private Partnerships for additional discussion related to the Eagle Project and such availability payments.

The revenue sources required to enable repayment of outstanding and planned debt instruments are clearly and reasonably defined. Specifically, revenues generated from the November 2004 voter approved and FasTracks dedicated 0.4% sales and use tax increase (and the yet to be proposed or voted upon additional0.4o/o sales and use tax increase) are pledged to the repayment of the sales tax revenue bonds issued to finance the FasTracks Plan. In the event the electorate fails to approve the additionaI0.4%io sales and use tax increase, as stated previously, RTD will be unable to issue its proposed Series 2013 arñ Series 2018 sales tax revenue bonds due to insufficient TABOR authoization given its proposed plan of finance, as noted by RTD. Further, in the event assumptions regarding growth in sales and use taxes are not met, bond covenants for RTD's outstanding sales tax revenue bonds could limit the amount of additional debt secured by sales and use taxes that could be issued by RTD. Consequently, the assumed principal amount of debt financing included in the FasTracks plan would need to be reduced unless RTD were to issue subordinate lien sales tax revenue bonds, with all debt outstanding to date and currently contemplated to be issued having a senior lien on sales and use tax receipts. However, the issuance of subordinate lien sales tax revenue bonds would bear a higher interest rate relative to the senior lien sales tax revenue bonds. Consequently, absent additional sales tax revenues, the amount of sales tax receipts available to fund operations and maintenance expenses would be reduced.

4l Pursuant to TABOR, the sales tax receipts generated from the November 2004 voter approved increase in sales and use tax of 0.4Yo (and a potential future increase of 0.4o/o in the sales and use tax) are restricted in their use to the repayment of the debt issued to finance a portion of the FasTracks Plan, with a portion of the tax increase after the FasTracks system is built and all debt repaid allowed to be retained by RTD to fund operating costs of the expanded transportation system. TABOR imposes a limitation on both the principal amount of debt payable from such sales and use tax receipts as well as the amount of principal and interest payable from such receipts. RTD is being advised by counsel on establishing a financing plan within the constraints imposed upon RTD by TABOR.

Gross debt service coverage for the $1.68 billion in sales tax-backed revenue bonds to be issued to fund a portion of the capital costs of the FasTracks Plan is projected to be very strong, with gross debt service coverage for the bonds no less than3.49x in any year through 2035. But given the RTD's heavy reliance on sales tax revenues to fund its operating costs, it is more fiscally prudent to calculate debt service coverage levels on a net revenue basis. RTD understands this, and has developed its financing plan such that projected net revenues will be able to support all of its debt obligations.

As indicated above, the sales tax-backed revenue bonds do not represent all of the debt included in this Financing Plan. In addition to the sales tax-backed bonds, the Plan includes the following debt obligations/financing commitments for both the Base and FasTracks systems:

o Certificates of Participation . Commercial Paper . Capital Leases o TIFIA Loan o DUS Lease Payment o Capital Portion of the Service Payment o Garvee

The following table highlights the estimated debt service coverage RTD is forecasting for both the Base and FasTracks programs through 2035.

RTD FasTracks Financing Plan Debt Service Coverage (Base/FasTracks) ($000s) Net Annual Net Annual Year Revenues Debt Service Coverage Year Revenues Debt Service Coverage 2010 232,389 146,677 1.58 2023 488,866 326,369 1.50 20tt 226,285 140,969 1.61 2024 513,541 313,604 t.64 2012 225,636 146,880 1.54 2025 536,475 313,607 t.11 2013 408,475 143,192 2.85 2026 565,435 303,250 1.86 2014 474,438 152,475 3.11 2027 606,402 289,138 2.t0 2015 478,365 155,093 3.08 2028 637,240 343,653 1.84 2016 450,190 136,52',7 3.30 2029 663,679 343,651 1.93

42 RTD FasTracks Financing Plan Debt Service Coverage (Base/FasTracks) ($000s) Net Annual Net Annual Year Revenues Debt Service Coverage Year Revenues Debt Service Coverage 2017 419,112 206,264 2.03 2030 704,277 343,657 2.05

201 8 432,409 307,689 l.4t 2031 700,681 343,658 2.04 2019 438,243 314,340 1.39 2032 756,459 343,659 2.20 2020 455,951 351,003 1.30 2033 823,185 337,526 2.44 202t 418,540 340,619 1.40 2034 863,739 337,530 2.s6 2022 488 326,369 1.50 2035 829 337,528 2.67

As you will note, coverage levels range from a high of 3.1lx in2014, to a low of 1.30x in2020. Such coverage levels are based on a variety of factors, including the annual sales tax revenue growth rate expected during this period. As previously noted, for the period 2013-2035, the FasTracks Plan assumes sales and use tax revenue collections will realize average annual growth of roughly 4.36%. Coverage levels would necessarily decline if actual collections fall short of projections. For instance, if actual average annual $owth is just one percentage point lower than the forecasted growth rate, total revenues for the period would fall by over $2.6 billion; for a two percentage point drop, total collections would fall by $4.9 billion. While the coverage levels above could necessarily absorb declines in annual revenues of this magnitude, it would reduce the amount of available funds RTD would have to maintain the system through pay-as-you-go capital investments.

últhøtJìnancing role does the public-private partnership play? Descríbe how thøt ís intended to worlc Are the assumptions reasonøble?

RTD's Financial Plan Update of April 13,2010 stated the assumption that the selected P3 partner will finance up to $541 million of projected capital costs. These costs represent only a portion of the FasTracks work that the P3 partner is requested to perform. The P3 partner's FasTracks work responsibilities generally consist of six elements: (i) the East Corridor; (ii) commuter rail vehicles; (iii) the Commuter Rail Maintenance Facility; (iv) the Denver Union Station Rail Segment; (v) the Northwest Rail Electrified Section; and (vi) the Gold Line (collectively, the "Eagle P3 Project"). RTD has divided the Eagle P3 Project into two phases.

Phase I consists of design of all six elements and construction and acquisition of the first four elements listed above. Phase 2 consists of construction of the final two elements listed above. In addition to the assumed $541 million of capital costs to be financed by the P3 partner, RTD committed in its P3 Instructions to Proposers (the "ITP") to provide the selected P3 partner with up to $580 million of Phase 1 construction payments and up to $512 million of Phase 2 construction payments. RTD assumed in the Financial Model v45.I-2035 provided to First Southwest that P3 project costs would total $1.675 billion, which includes $275 million of unallocated contingency. The $1.675 billion total estimated capital costs in the Financial Model

43 are 542 million more than the sum of the Financial Plan Update's P3 capital costs to be financed by the P3 partner and the maximum construction payments listed in the ITP, which therefore represents a reasonable Financial Model assumption. These costs represent only design, construction and acquisition capital costs, and exclude the P3 partner's interest during construction, working capital, reserves, and other financing-related costs.

The Financial Plan Update assumes that the capital costs would be financed by the selected P3 partner with third-party debt plus equity investment by one or more members of the selected P3 partner. Although the Financial Plan Update states that the P3 partner's debt is assumed to be taxable debt, RTD applied to USDOT for an allocation of tax exempt Private Activity Bonds on behalf of qualified P3 bidders. RTD reports that it received a $1.1 billion allocation from USDOT and that this was communicated with the qualified P3 bidders. RTD committed to provide the resources that the selected P3 partner would use to repay its third-party debt through what the Concession Agreement calls the "TABOR Portion" of RTD's Service Pa¡rment, which is composed of "secured Principal" and "Secured Interest" payment streams.

The P3 partner's equity return, as well as its operating and maintenance costs, would be funded from the portion of the RTD's Service Payment that is subject to RTD annual appropriation.

RTD reported that it received technical proposals on April 15,2010 and financial proposals on 'We May 14, 2010 from two of the three qualified bidders. understand that both financial proposals were based on tax exempt Private Activity Bonds, rather than taxable bank loans. RTD staff and consultants evaluated the technical proposals and financial proposals as to responsiveness to the P3 bid requirements, cost, consistency and quality. The RTD review team recoÍrmended and the RTD Board selected Denver Transit Partners ("DTP") as the preferred proposer on June 15, 2010. The preferred bidder is supposed to sign the Concession Agreement and deliver other constitutive documents to RTD within 14 days of its selection. The ITP states that the "Successful Proposer and RTD will each use best efforts to achieve Financial Close as expeditiously as possible." RTD reports that it expects financial close will be achieved by August 30,2010.

The UrbanÆirst Southwest team has not received or reviewed the two financial proposals and cannot comment or opine on their content or responsiveness to the P3 bid requirements. The staff recommendation Report to the Board, which RTD provided to First Southwest, stated that preferred bidder's financial proposal is structured "...within the FasTracks Financial Plan adopted by the Board in April 2010 and affordability limits governing (a) aggregate and annual construction payments to be made fby RTD] during the design/build period, (b) secured principal (in year of expenditure dollars), (c) aggregate TABOR portion payments (in year of expenditure dollars) and (d) annual TABOR portion payable in any yeat."

The proposed TABOR Portion of the Service Payment is a function of many elements, including: (i) the cost of the work to be performed by the P3 partner's design-build joint venture; (ii) the schedule under which that work will be accomplished (which affects, among other things, the timing of the P3 partner's first expected receipt of an RTD Service Payment and therefore the amount of interest during construction that the P3 partner must finance); (iii) the P3 partner's cost of debt; and, (iv) other structural features of the P3 partner's debt. The cumulative Service

44 Payments are a function of the TABOR Portion plus the P3 partner's required return on equity and its anticipated operating, maintenance and repair and rehabilitation costs of the assets for which it is responsible.

Urban/First Southwest received and reviewed the P3 bid documents as they were amended and finalízed after their original distribution to qualified bidding teams on September 30, 2009. Because of the recognized competition between the two eventual P3 bidding teams and the specificity of RTD's bidding parameters, First Southwest anticipates that the preferred bidder's financial proposal would be within the parameters assumed in the RTD's Financial Plan Update and Financial Model.

45 VII. SUMMARY ASSESSMENT * OVERALL FINANCIAL PLAN

.NURBRN N/E NGTNEERS lFomulatbg Ercellencê SUMMARY ASSESSMENT

Are øll øssumptions cleørly described? Are øll sources and uses offunds clearþ identìft.ed?

The 2010 FasTracks Financial Plan and the model supporting the Plan are exhemely detailed in providing rationale for budget and revenue assumptions. The FasTracks program has progressed in design, land acquisition, and some construction since its origin in2004. kr light of the project progression, RTD's Financial Plan has concurrently evolved into a well-documented and rationally-supported annual document that has gradually improved from lessons learned in prior year assessments conducted by DRCOG and questions/comments posed from various stakeholders. While the Financial Plan might be better served in describing the key core assumptions employed in a bit more narative in the Executive Summary, Urban and First Southwest found that RTD was able to answer most questions posed on the origins of budget or revenue assumptions with corresponding documentation and support.

RTD clearly identified the planned sources and uses of funds to enable the successful completion of the Plan by 2019 in various tables contained within the Financial Model and within the Executive Summary, dated April 13, 2010. A copy of the planned uses of funds by individual project or corridor is provided within the Capital Cost Assessment portion of this report, while the summarized sources of funds needed to successfully meet the capital budget of $6.7 billion is included in the Revenue Assessment section of the report. Urban and First Southwest were able to trace the source and use figures back to their detailed levels of support and documentation in performing the current assessment.

Analyze the cash flow and índicøte yeørs of surplus/deJìcit. If there øre deJìcits, whut is their magnítude? Are they (or how øre they) covered?

Appendix B, Tables 5 and 6, provide Pro Forma Cash Flow Statements for both the base transportation system and the added FasTracks system and are included in RTD's Financial Model supporting the 2010 Financial Plan. As can be expected there are wide variations in cash surpluses and deficits on a year-by-year basis, but RTD is projectingtha| there will always be a cumulative surplus to compensate for years that have deficits. As the FasTracks program evolves, it will be critical for RTD to revisit these projections, particularly if the current trend of reduced Sales and Use Tax revenues continue or if the projected 0.4o/o Sales and Use Tax increase dedicated to the FasTracks project is not implemented by 2013. In evaluating Cash Flow's for future years, RTD would greatly benefit from expanded sensitivity analysis in proactively managing and preparing for source and use variations that are often out of their control and relatively unforeseen.

Are there contingency plans to øddress unanticípated funding shortfølls? ll¡høt consíderøtìons were assumed? llthat do these contingency pløns show?

The Financial Plan is an evolving document that continues to require evaluation and refinement at least on an annualized basis. As the FasTracks project continues to progress, some of the

46 uncertainties, variable cost elements, and risk items are reduced or overcome in their entirely. From the capital budget side, RTD has made tremendous progress in adding appropriate levels of rationale and conservative projections to the Financial Plan. Urban believes that expanded exercises of sensitivity analysis, particularly as it relates to the ROV/ acquisition, would benefit the Financial Plan, and if nothing else, add support to RTD's projections for the remaining real estate which still remain at over 70% of allproperty to be acquired for the FasTracks program.

As noted in more detail in the report, much of the FasTracks capital budget and the sources for operating and maintenance cost associated with the base and expanded FasTracks system are dependent on revenue streams that are still in a large part uncertain, and are subject to wide degrees of variation. As such, the greatest risk facing the FasTracks program remains the risk of reduced or denied revenue sources that are currently contemplated in the Plan. RTD has repeatedly acknowledged the volatility of predicted revenue sources and recognizes the ultimate effect such volatility will have on the FasTracks program if not realized as planned. RTD continues to explore alternatives for potential funding shortfalls, but as expressed in the 2010 Financial Plan, remains hopeful of the passage of a 0.4o/o Sales and Use Tax increase dedicated to the FasTracks project and successful receipt of an additional FFGA for the Eagle Project from the FTA. If either of these major revenue sources does not matenalize as planned, RTD would need to reevaluate the FasTracks Financial Plan and overall project in light of the opportunities and constraints that exist at that point in time.

Overøll Sammary

As previously mentioned RTD's 2010 FasTracks Financial Plan provides a thorough, well written, and reasonably supported model for the $6.7 billion project. The capital and operating budgets provide great detail and rationale thought in arriving at projected future costs. RTD has facilitated the use of expert Working Groups to provide additional analysis and lend further reliability to assumptions regarding material cost escalations and Sales and Use Tax revenue projections. Similar to any financial forecast, there is always some risk of cost deviation, however, based on the datathat was used to support the curent Plan, Urban believes that RTD has sufficiently attempted to mitigate this risk and that the budget is reasonable. Additional sensitivity analysis is recommended to proactively manage changes that may occur outside of the Denver regional area, but that could greatly impact the FasTracks Financial Plan.

The primary risk facing RTD and DRCOG, relative to the FasTracks Financial Plan, lies in the advancement and fruition of several large funding source assumptions that are largely out of RTD's control. From a funding standpoint, the Plan appears to properly characteize the likely source of funds, as well as acknowledge the variability and unreliability of a few larger sources that are somewhat outside the immediate control of the RTD (e.g. a FasTracks-dedicated Sales and Use Tax increase). Like any budget, RTD's 2010 Financial Plan is predicated on the best available data to support methodologies and assumptions at a particular point in time. Some degree of variability and vulnerability is normal and expected, particularly in regards to capital cost and revenue assumptions that are controlled by outside influences such as economic conditions, demographics, governmental funding sources, and Sales and Use Tax revenues. As stated in the Executive Summary to the Financial Plan, if the FasTracks dedicated Sales and Use

47 Tax increase fails to be advanced or receive voter approval by the effective date of January 2013, the full completion of the FasTracks program by 2019 is seriously jeopardized. Although RTD has received favorable indications on the approval of the forecasted $1.0 billion in Federal New Starts funds, these funds remain at risk and RTD needs to compete against many other national requests to the FTA for full funding grant agreements. Further, while the recent progression of the P3 procurement increases hope that the contracted concessionaire will be able to meet RTD's projections for capital cost investment to the FasTracks project, there continues to be a risk to the program associated with this large funding source, that is yet to be executed. As a result of the vulnerability of these funding sources, RTD's debt financing assumptions become less reliable and are subject to change as funding assumptions advance.

48 VIII. APPENDIX A * REFERENCE DATA

ñ.ì!{,ERnn lFomutatíng Excellercê Appendix A - Reference Datr

In performing the Assessment of the Regional Transit District's 2010 FasTracks Financial Plan, Urban Engineers, Inc., in association with First Southwest Company, reviewed the following documentation and information (listed in no particular order of significance) as provided by RTD and DRCOG:

1. RTD's 2009 Annual Report to DRCOG on FasTracks (April 2010), including: i. Appendix A: SB 208 Legislation and DRCOG Resolutions (2004,2008 and 200e). ii. Appendix B: RTD's 2010 Financial Plan Update (dated April 13, 2010). iii. Appendix C: Cost Estimating Methodologies iv. Appendix D: Sales & Use Tax White Paper

2. FasTracks Financial Plan - P3 Scenario Model, v45.1(2010 APE,2012 ST Increase), dated ApnIl2,20I0

3. RTD's lntegrated Financial Model Specifications Booklet, dated }day 20,2010.

4. RTD's Annual Program Evaluation (APE) Summary 2010

5. RTD's 2010 APE Slide Presentation, dated January 5,2010.

6. RTD's 2010 APE Capital Costs by Corridor Presentation, dated January 5,2010.

7. RTD's 2010 APE Slide Presentation Follow-Up, dated January 26,2010.

8. RTD's Core Assumption Support Spreadsheets, including: o 2009 North Metro Corridor o 2010 APE Baseline Estimates o 2010 APE BRT Estimates o 2010 APE Central Corridor Extension o 2010 APE Central Enhancements o 2010 APE Central Platte Valley Enhancements c 2010 APE Commuter Rail Maintenance Facility o 2010 APE Light Rail Transit Maintenance Facility o 2010 APE Northwest Rail o 2010 APE Southwest Corridor c 2010 APE Southwest Enhancements o 2010 Phase I Value Engineering Analysis o 2010 RTD General Ledger Value Engineeringl2-2l-}9 o 2010 Southeast LRT Corridor Value Engineering Analysis o East Corridor 30% 2015 Estimate 12-22-09 o Final 2010 APE Summary of Agencies Escalation (from Construction Inflation Workshop).

49 9. Construction Inflation Workshop Meeting Notes l2-I-09 (from DRCOG).

10. Agendas, Meeting Notes, Presentations and Reference Documents from several RTD- 'Workshops facilitated Sales & Use Tax conducted from October to December 2009.

11. RTD's RFP 18FH012 FasTracks Eagle P-3 Project, Addendum #6, dated January 15, 20t0.

12. AllAddendums to RTD's RFP 18FH012 FasTracks Eagle P-3 Project.

13. RTD Board of Directors Resolution No. 8, Series of 2010, Authorizing P3 Agreement and June 15,2010 Staff Report to the RTD Board of Directors.

14. RTD's Core Financial Assumptions to be used in the 2010 FasTracks Financial Plan.

15. FRSC Memorandum, "Backup Data for Commuter Rail EMU and DMU Vehicle Unit Cost Estimates as Requested by RTD for DRCOG/Urban Engineers", dated May 20, 2010.

16. RTD Sample Corridor Estimates and Unit Rates.

50 IX.APPENDIXB.TABLES

.NUHBRN N/ENGINEERS I F omulatíng E x c e llenc ê Appendix B

Table L Denver RTD - v45.I (APE 2010, 2012 T ax Increase Revised) FasTracks System ($000s¡ FasTracks Expenditures Summary

Totâl Fiscal Year 2006 2007 2009 2005-2035

FasTracks Exp. By Conidor (Uninfated) Southeast Enhancements Corridor 4,614 8,324 977 11,861 'l ,806 42,937 Southwest-CPVCentral Conidor 134 1,577 987 13,987 2,826 54,435 Southwest Conidor Extension 9 13,725 3,218 142,452 West - W¡thout CNPAS 38,451 18,865 25,571 70,569 94,673 642,275 West - CNPA - Not Funded by Others - 7,304 28,O17 West - CNPA - Funded by Others - 1,572 17,756 l22SComdor 49 1,',t54 41,2M 8,489 555,1 19 East Corridor 70 2,950_ 20,350 12,949 3,846 1,114,925 40th and 40th Extension 6,653 1,286 55,035 U.S. 36 Conidor - Northwest Ra¡l 21t 2,474 1,098 4,562 3,864 613,801 U.S. 36 Corridor - BRT 5,649 214 806 1,'150 7,627 1e9,778 Gold Line 2,090 2,307 5,612 318 460,675 801,669 North Metro Rail 1 ,156 6,280 2,878 53,172 Lone Tree 16,309 3,7U 146,580 Denver Union Station 2,782 3,U2 't5,114 18,247 32,827 112,065 Maintenance Facilities - Commuter Rail 118 51 3,857 1,765 718 157,966 Maintenance Facilíties - LRT and Bus 105 4U 705 757 5,346 28,543 Miscellaneous 2,6s5 8,203 e,484 7,710 .79,921- 615,189 Total FasTracks Exp. (Un¡nflated) (1) 54,835 50,277 88,697 229,979 312,552 5,779,218

ROW (Uninflated) Southeast Enhancements Conidor SouthwesÞCPV-Central Coridor 2,800 Southwest Corridor Extension I 3,207 12 4,000 West - Without CNPAS n .: s,zo6 14,423- ,å,lil 51,455 West - CNPA - Not Funded by Others 14,725 West - CNPA - Funded by Others - 2,214 l-225 Corndor 52,000 East Conidor 14,995_ 1,331 132,346 40th and 40th Extension U.S. 36 Conidor - Northwest Rail 6 51,790 U.S. 36 Conidor - BRT 3,146 10 237 3,397 Gold Line 53 86,960 North Metro Rail 2,67; 300 49,996 119,537 Lone Tree - 500 Denver Union Station 10,990 28 - 11,017 Maintenance Fac¡lit¡es - Commuter Rail 3,749 333 36 5,582 Maintenance Facilities - LRT and Bus Miscellaneous - - ,?1'119 Æ Total ROW (Uninflated) 42 38,137 19,622 143,837 765'299 --3,1U FasTracks Exp. Less ROW (Uninflated) Southeast Enhancements Corridor 4,614 8,324 977 11,861 1,806 42,937 Southwest-CPV€entral Conidor 134 1,577 987 13,987 2,826 51,635 Southwest Conidor Extension - 10,518 3,206 138,452 West - \Mthout cNPAs 38,413 1A,A26 19,864 56,146 7A,679 590,820 West - CNPA - Not Funded bY Others 1,304 13,292 West - CNPA - Funded by Others I,533 15,542 l-225Comdor 49 1,154 41,244 8,489 503,1 19 East Conidor 70 2,950 5,355 11,617 3,801 9A2,578 40th and 40th Extension 6,653 1,286 55,035 U.S. 36 Conidor - Northwest Ra¡l 218 2,474 1,098 4,562 3,858 562,012 U.S. 36 Conidor - BRT 2,503 210 795 1,150 7,390 186,381 Gold Line 2,090 2,307 5,612 265 373,715 North MeÍo Rail I,156 3,602 2,578 3,176 682,131 Lone Tree 16,309 3,7U 146,080 Denver Union Station 2,782 3.U2 4,124 1A,220 32,827 í01,048 Maintenance Facilities - Commuter Rail 118 51 108 1,432 682 152,385 Maintenance Facilities - LRT and Bus 105 4U 705 757 5,346 28,543 Miscellaneous 2.695 8,203 9,4U 7,710 6,458 388,214 Total FasTracks Exp. Less ROW @ 50,s61 210357 168,715 5,013'920

51 Table 2

Unit Cost Table for Capital Costs

2AOS z91tt ufpan Et nt6t Ë6tow wftln AþOV9 llnlt RTg Unll ]'flOC RTD Unlt Ptlc€ Htgn Pnæ Rânde Rânde Ranco

tf sv s10-or c7.221 14.2 x 11 x rav€ment rêmoval - ÞccÞ (aasume 1 l" th) sv $15.0r sl 11.4: lh^ dÂmôlltlôr cl wotl( ac 64, 54.250.O1 s2.521.9. 5E.12I.gt x cy s7.5t 57 5b.6r s19.41 x fl E17.0t sl5.0t s11.21 $17.? x x " c¡àff E't0.0f 917.51 x ßo s2.41 x orade DreDârat¡oI sv tn / conslfucllon ton ü60.u1 ÐÞÞ,91 Ã !9u.9i "------s-Ã d -,__...... r-t-â1:q¿r' ql --t--

$ 16.0t sl6.0t $8.7( ßr9 E: x x $ $15-0r sl l.at & outler í x ldewalk 6V s37.00 937.0r s32.3, s32-O! x p s12.9: x loâ8 / Structuros --S1631 9241.3 x .RT etructurês (sÞans < 140 ñ, no curye) al $160.61 al s1/ $295.5( x

Bf s71.Ol $59.0 951.4t s74.91 _.L_ E g5q6 ôf s64í 0 $696.( tf s1.499.C 5l_611-0 s't.177.9 $1,753. x 10 to 20'cantllever x 20' ønlllever tf $3,095. s3.351.0( s2,557.2 s3-o19.O: É 52 $0.0t x lf $3,303-01 s1.970.4t 92,758 x ¡l s3 558 0r 93.603.0r $3.310. s3.461-51 x . beltæt wail concrete. rebaL ând anll øßffÌtl coatln tf

lt $1.620.01 s1,557.01 $748.51 s1,o24.6. x s2,o25.Ol 9945 s1.216.4: x s2.360. $1.567.7 x ùc 100 - 120 sf s2. $2,430.O1 lf s2.557.21 ü,420. x ff ------$3240¡cf s $2,666.41 x x ¡l ï1,773 s2-545.1t x rcí80 - 200 6f It ---$,l.óm¡¡t-----54tuo-¡

RTD UI !e 200s 2010 lJdrân neel Eetow wmtn Above Unll RTD UNIt PÍICE Rm Unlt Prlce LOW Pflæ Hton Pnce Renqe Ranoe Rende

5445_l x rble bâllasbd Aack - LRT fi s4420 s483.0( $400.5 s4a5 1 $572.9i iouble ballested lrack - fr€¡oht / c¡mra¡l lt $599.0t 9411.2t $606.1 x iouble direcl fixat¡on track - LRT H $659.0r $668. 1 x ldrhle trâck relâ¡nêcl - LRI tf $481.0t 5570_Ot $424.O'' $51 9920 9t lôublê embeddêd track - fre¡oht / æmrail ¡î $950.01 s954.0{ $792.4 s574.21 r lrâck relâlned - l16lõht / æmra It 5547ßt s791.0t tÐ2.

s76_750.01 $81,386.8 x Í 6 tumout (LRT) æ 877.900.0 s73.676.U 59t x f I turnout ILRTI e - 51 $103.800.01 886,527.1 ea s1v $133,500 s96.4O7.51 9107.088.0 x s102-804.41 9197,8 x ¿ rô hrrnôú l¿om / freiohtì ø s205.000.0 $176,680-0 Ì1?) 749 1 6 crôssover ILRTì æ $155,000.0 s132.750.O x s2fJ4 s149.600.0 s155 928.1 s171.UO.81 x ¡ I crossver ILRTI øa 9173-O54-2 I'10 crossover (LRT) â s268.000-0 ï167,44 sl9r.90r.7r s36: þ1t I s211 $.2b9.V I.Ct Ê 20 CTOSSOVeT (æm / rfelgnl ea

st $788.167.6t sr.576 mt ^ Btem Wlde Elemenls x râd¡ôñ êþdmrrlrôh ßvqrem LK! ml N/l 52.Sà. 1 221 659. 51

â 92.210-820.O1 $5.111. s3.251.19 1.6 x sl 90't 4 x fâl¡on - lrl ê $l $1-556.631.1', e s4.695,990.0r È4-275.409.61 5,231,46.2.9 x È1 546 779 I 901.454-5 x lnd of l¡ne stat¡on - lrt æ sr.167.565-O

52 Table 3

1 Flnancial Plan op.r¡tlng cost3 ($1,000'sl rUNG PERCENT CHANGE FROM YEAR T(

Þdús JtÞruI gur Operaüons 3.859( r19,370 3.949 124,075 2.t39 127,465 2i3491 '130,452 2.599 RID OpeElions r06,216 4,28q I 10,757 6.9,l9 118,412 6319 125,S83 -3.91% r20,959 -5.649 l'14,139 0.7r9( 114,U4 :ì.459 85,691 -16 47q 71.577 0.999 Pfivate Carl€r Op€Elions 75.489 5.439 79,589 3-959 92.733 r0¡r9 91,346 't.65% 92,855 ¡.419 92,472 -3-75q 89,008 -2.88* 86,444 85,195 0.5s9 3.60C 3.21i 24,959 2.s9e 25.680 2.8'Ir1 26.417 2.S81 Sécurity end Facniliæ Mãhtenanæ 18,170 8.829 19,77 1 s.919 21,513 5.959 22,792 3.169É 23,513 -3.089 22,789 2.Æq 23,v2 24,'t83 4,162 2.879t 4,282 2.889 CGt Share Agæments 2,741 13.199 3,102 -0.049 3, t01 0.899 3,129 s-3296 3,420 7259 3,670 3.10q 3.783 3.607 3,920 3.2't9 4,045 2.899 a 119 FesTEcks Ssryiæ Adiwbn€nt- 86 t 1't 8:19 4 Âlq G766 201q qr:ä Iotal 9B OÞe6llons lr.vu7

ADA Opomtlons ' 33.905 34.861 2.8r9 ADA OpeËtiong 23 806 t8-379 28.178 7.9rq 30.408 9-'l'19 33,1 78 -1.90q 32.582 13.561X 36,999 -1623q 30.994 2_659i 31,817 3-409{ 32,S9S 3 0s% 2.4* FssTßcl$ Sðrvlce AdlusFnont - ADÀ 12 ÂÂÊ Íotãl ADA Oponüonó ¿ó,1t ë 'l'@¡ 3.069t

LRT Op€ratloil8 '!.039 23.329 2.S81( Outslde goulheast Corddtr '19.453 æ.639 23.466 -21.lgótr 18,355 0.649 18,473 0.419 19,548 7.809 19,995 20,202 4-669( 21,143 4.n9 22,152 2.389r 22,679 2.8î* '17 i ilq ,7 aqn o 6Rq 17 617 17 18 529 19.'t24 ,frq Sor¡thsest Corldtr B2g 17.127 S5 fotsl LRT Opoflllon3 tc.ow ''*1 ollEr lteml 't.576 -0-639 -21-670t 1,475 2.899( 1,518 g.Em 2,028 -5_1 r9( F8cifnj€s t Securlty - Olhgr 1,204 8t1.169 2,176 -27.580J 9:t29 1,729 68.379 2,911 168-$9ú 7,817 -75.769 1,895 1,883 Olhsr DlEcl Coãtg i D€pailwnt CGlg . . Peshreugh CMAQ cosls .13.8S9 3.21C 8,'119 2.899f 8,354 23191 s,594 2.889( Cæt of lnsuEnco 6,993 -18n9 5,820 .9.039 5-029 5,560 4,7S8 53.8296 7.365 3.'t09 7,591 3-609 7,467 áa rrq 5A 018 , AAq AdminìsHlvs Erpendllur€s 45 72â 16 s9 4i 92? -7 65q ¿7 0?9 5S 315 Tofal Otìer llemr

(21.651 (23,499 (36.3791 (30,625) (15,168 OpsrcllnglAdf, ln Cæt Rãductlons

53 Table 3

,çr lÉe.v^. ¡ ^r9'v{Ù.r Flnancial Plân Oporatlng Gæ

Þuw Jy5rHtr lG opmtlons 't55.640 't59,742 3.08q 1ô4,665 3_1 19 t69.778 LW9 174.605 1.369( RlÐ OpsE[ons 1æ.828 3.04% 137,893 2.3191 141,O74 .2.659 t44.Bt4 238% 148,262 2.2704 15r,634 2549r 2.649ó 84,780 l.¡t5% 86,013 6.039r 91,196 0.88!t 92.000 1.42t 93,303 3.1rç PriwÞ G€rler Opm[ore 72,242 i2EEo 74,630 1.459 75,715 5-989 80,246 0.92% 80.984 1.47q 82,176 3.1701 30.215 2_6SC 31,029 2699¡ 31,865 2æ% 32,721 2.67q 33,595 2.649r 34,483 2.649 35,394 2.68 S€drily and Faclilies Melnlmanæ 2f ,1TT 2:t8v1 27,933 2.669t 28,6n 2.639 2S,43f 2.67 4.897 2.69q 5,029 2.609 5.165 2.6996 5.3tH 2.6701 5,4,t5 2.6491 5,589 z-6/.9 5,737 2.62q Cost ShaE Aqmmnts 4,405 2:tgga 4,524 2,669 4,648 2.63i 4,770 2.67 2mq ø 452 IÃ A1A ) 61q total Bus Operotions

ÀDA Opemtlons 40,901 2659( 4't,s85 2.659t 43.097 2-649( 44,236 2.e1 45,396 z-oox 4ô.5r¡ 2.õOq ADA Op€Etions 35,842 2.8r9 36.848 2.72E 37,851 LË20¡ 38,844 2.609( 39.853 2.ô39{ AI]A fol¡l ÀOA Opsütlon8 w,@J ¿s¡

LRT OpsEtion8 2.699 24140 z6!)% 28,897 2.679{ 29,669 2'649 30,453 z.o¡* 31,258 2.629 OubÉe Southeæt Corüor 24,000 2:t8X 24.669 2,669t 25.326 2.63C 25,991 2.6?q 26.684 2:69X 27l02 , aa* ?Mq )1 q7a t1 16l )4 n71 2 67q )q 7Á1 27.1m 2r.403 s.uff tÕtdl LRÌ OpoEtlom

Othor ltms 2.197 2.69?6 2,256 2.69% 2.317 2.6?% 2.379 2.6496 2,442 264S 2,506 2.629É Facllltl€s & SecuñV - Otñ€I 1,924 2.7S% 1.978 2.669t 2.031 2.639 2.084 2.67 2,139 2,6996 Olh€r Dirsct Cæls D€pårtrEtrt cæts ' Påsüreugh CMAQ cæts 10,094 2.69% 10,366 2.6996 10.644 2.6796 10,92s 2-64fi 11218 2.64* 11.514 2.629( Cosl ol lnsuEnca 8,841 2.18'rr s,0s7 2.66S 9,329 2.639 9,574 2.67% I.829 2.69% tÐ* , ÂÃq 62 aA? t Âaq 6q r¿7 71 863 tA4 71 7n? 77 745 Toiûl Olìqr ttms

(16,466 (16.8901 (17,349 (17,817 (18,296 Opsrâüno,lAdmln CGt Reductionð (15.6051 (16,033

54 Table 3

)cnvor RTD - v45.1 {2010 API l0l0 Flnanclal Plan Op€ratlng Cos IUñWNê ÞFÞ¡ìFIÙT l!HÂN.l:F FÞI

uds s)Eetr¡

Ðus oporallonc 209,88'f 2.34Æ 214,795 102.229 4,763,085 RTD OpeEüons 176,981 2 1&2,072 187,699 2-97q r93,267 2.329 197,744 1-6496 200,993 2.Ozq 205.048 2.36$ 117,113 55.1491 Privats C€ri€r Op€ndoß 96,201 t 97,525 5.97S 103,345 0.s09 104,174 1.3(Iì I 05,529 zs7 r08,665 1,2.1 109,988 5:gl9{ 116,367 0.64% e$¡,t,631 43, t90 2-37 44,213 143.349 96?,662 Secu¡iv end FacilÌies Malntemnæ 36,323 37,270 2-59ß 38,235 2.569 39,213 2.51i 40,'197 2.4696 41.188 i,4zq 42,1U 2.399{ 7,000 2:37q; 7, t66 161.4S9 153,5¿l!¡ Cæt SheB Agmm€nts 5,887 6.041 2.5996 6,197 2-56q 6.356 2_5t9 6,515 2t¿696 6,676 2.42q 6,837 2-æ* aM4 /A 711 al6tR Iotsl Bus OpeEtloß

ADA OpsEllons 47.787 49,02 $,278 2.55q 51.559 251 52,855 z17q 54,161 2-43' 55,476 2.3996 56.801 i3691 58,t41 144.æ9 r'277,135 ADA Op€Etions (r3.565 FasTEclF Sery¡B Adlustn€nt - ADA r263,5a0 fotål ÂDA Op*allons

LRT Opemti@8 39.046 849,988 oltblde soulheast corddor 32.078 2.6096 32.914 33.767 256ç 34,630 2.5r9Ê 35,499 2.469( 36,374 2.42v' 37,2V 2,399t 38,143 2.37q 1@14 Âon ?¡Àq ?r q6a it( 2.370t 11 nU Southwl Conftttr 27 831 t Er* { 274.869( Tolll LRT Operulloß +È¿

Othor lt€mg '2.42V 3,058 2319 3,131 r59.r69 76,1m Fec¡lìtlés & secuìty - OlhêÌ 2,572 2 2,639 2,707 2.5ô9{ 2,r77 2.5r9t 2,S46 2.469( 2,916 2,987 2,397 OthBr DlEct CGts Dêpertmenl Cæls PashÌouqh CMAQ CGls r4,050 2..379 11.383 105.689 il15,545 CGt ol lñsurðM 11.816 12,124 2 12,438 2.56r 12,756 25f9i 13,07ô 2.¡t6X 13,399 2.42V 13,723 2399 on ¿qn ) ¿2q q? M6 97 103 21 1r.tl6 admlnlshãtvë EIMdlhrEs 81 853 t€.töÌ Totrl Othor ltemå op€nüno¡Adnln cæt Reducüons t¿4sJ9l

55 Table 4

Denver - v45.1 (2010 APE, 2012Tax Gosts ($1,000's) IN O&M COSTS BETWEEEN 2O1O AND 2OO9 PLANS

RTD Operat¡ons Private Canier Operations Security and Facilities Maintenance Cost Share Agreements FasTracks Ssrv¡ce Adjustment - Bus al Bus Operatlons

A Opcrations ADA Operations FasTracks Service Adjustrnent - ADA

Outside Southeast Conidor Southeast Conidor

Facilities & Security - Other 2,028 (2e.12e) Oth6r Dìrecl Costs (¡t4,360) D€partment Costs Pasthrough CMAQ Costs Cost of lnsurance A

56 Table 4

- v45.1 (2010 Costs ($1,000's) IFFERENCE IN O&M COSTS BETI

RTD Operations Private Canier Operations Securily and Facilities Maintenance Cost Share Agreements FasTracks Serv¡ce Adjustrnent - Bus al Buo Oporatlons

A Operations ADA Operations FasTracks Service Adjustment - ADA

Outside Southeast Conidor Southeast Conidor

Facilitìes & Security - Other Oth€r Dìrect Costs Department Costs Pasthrough CMAO Costs Cost of lnsurance Administrative Expenditures otal Othol ltemg

51 Table 4

Denver RTD - v45.1 (2010 APE Operatlng Costs ($1,000's) DIFFERENCE IN O&M COSTS BEN EEI YTEI ztt.ta UNÐ EASe Systêm

8u3 Operatlons (39,4s5 RTD Operations (23,832) (24,0961 (25,6s71 (30,206; {33,216) (37.266) \374,77s (BB,S8't (1,288,653 Private Canier Operations (68,1s2) (71,0411 (74.131' f¿7,614, (81,012) (85.356) Security and Facilities Maìntenance 2,517 2,316 2,082 1,815 1,512 1,176 812 $,8rr (s8B) (672 Cost Share Agreements (254) (3081 (369, (435, (5os) 1,266 r5 552 FasTracks Service Adjustmenl - Bus Â34 914 997 I 086 1.183 1.286 1 3S5 (126,903 (1,592,/:t8l Total Bus Operatlons tüu,ööJ (v¿,2 rc, (9r,ulöl (105,414 (112,0r'.2) (120.749)

ADA Operations (4,498) (5.181 4,5'63 ADA Operations (1,836 (2,2751 (2,755) (3,2U (3,865) FasTracks Service Adjustment - ADA TotalADA Operations (1,U3n) l¿,¿(5) (z,rÐcj (3,284 (3,86s1 (4,4Yö, (J, rö r, 4.563

LRT opertuons (5.212" (5,740, (50,r13, Outside Southeast Conidor (3,0s2) (3,,1451 (3.8321 {4,2s5 (4,716, /A no?' tA 561 11 o¿.F' t7 573' tR l?1' 193_315 Southeast Conidor Iq,7Aì 15 Ê6ß' (143,428) Total LRT Ope¡¡tions (ü,JUö' (9,112) {v,cz4, (10,806) (1 1, ftrl ) (12, /üþ) (1J,ör l

Other ltems 76,102 Facilitìes & Security - Other 2,707 2,777 2,846 2,916 2,S87 3,058 3,131 (53,981) (s5.762 (1,r04,8921 Othsr D¡r€ct Costs (45,892) (47,406) (48.971) (50,587) (52,256) (82.204) (84,917 (1,672,281: Dêpartment Costs (ô9,886) (72,192) (74,5751 ffi,036) (7e,578) Pasthrough CMAQ Costs f/,633, 14.050 14,383 305,535 Cost of lnsurance 12,438 12.756 13,076 13,399 13,723 q) 646 97 103 2.111.716 Adminishativs Expenditures 83 974 86_122 88 ?83 90 458 94.856 (26,062 otâl Othor ltoms (16,65e1 (1 4,9¿Fl, (19,:J4Ui (zu,ü49, l¿¿,4rë, (24,22OJ {.¿Y1,¿rÐJ,

Coet Reductions

rrhtal¡l Bæa ODåÌ¡llnõ lj3e3 ll16.7¡l{ a't;¿1 t129.1 ¡1¿t¡ t150_1¡t6t ra6a 26rt t1 12 u1¿ at

58 Table 5

Denver RTD - v45.1 (201 0 APE, 201 2 Tax lncresse Rev¡sed) Base System {$000s) cesh Flow Pro Fome

Fundlrìg Souræ Op€Eting Sour€s 90.417 99,353 100,343 101,3¿12 110'74 NfrADA Bus Farebox Revru 49,318 56,897 60,275 69,9&t 73,996 73,996 Tt.511 81,387 81,387 89.525 89,525 2,6$ 2'6$ 2'690 ¿911 AOA Bus Ftrebox Rev€nue t;076 1,370 1,44D t,¡gt Z,Ut 2,044 2,141 2,248 2,248 2,473 2,473 2,473 23,375 23,608 23,843 26'055 Rail Farebox Rerenæ t,244 7,944 15,4't2 16,461 17.409 r?,409 18,236 19,148 1sj48 21,063 21,063 21,273 4,488 4,613 4J36 4.860 4.w0 Nfr Faæbox OpEEtirE ReHue b.i03 3,311 4,382 4,124 4.399 4,11't 4,14s 4:180 a,211 42a1 4.362 Faæ Revenue Adjustnent Psrling Revenue Tolsl Op€Etiûg Soure¡Rownue 0-10% t.0396 t.üi16 9.0116 Grcwlrt to81% 17.24% 13-27 5.90"/6 0.1æ4 4.5896 LWt 0.0æ6 9-6496 l.lonÐpeatirq Souæs 305,408 318,387 332.161 346,833 Use 233,645 239,867 251,044 247,695 222,673 233,359 æ9,306 247,360 257,966 26S,824 280,823 æ3,037 0.6% Salss ard Td ' tt-46ffi 4.Z2tt 4339ú 4-4& G@wth z-6ffi i.ffiÅ -t.3J -10.1t% 4-80% 2.5¿15 33f)6 ¿t.2W6 4.21% d-35% 4-?5% 83,585 85'752 88.009 F€d€El GEnts 57,517 49,Êt4 47,662 50,437 86,977 130:88 68,237 70,654 72,887 74,963 77.082 79,267 81,U4 ',1.918 1,973 2,A2A 2.082 2,137 2194 Othor NffiOpeEting ReYru€s 12.,957 9,026 16,107 3,106 3,140 1,644 1,695 1,7û 1,812 1,865 SoutlEast SoùrG 80.653 54.697 114.381 39,2æ 7,351 8,239 COP Prcæsds - 61.455 - æ.5/5 Pri€te Leas Prcæeds lnvostnerìt lncme TotålNFoperctirg Sæs

Fmdhg Usos Uss Openting 233,239 2¿0,410 245,420 254'U4 259.¡lt6 Bre Operatim 202,616 211,333 221,762 æ9.385 236,984 229,305 227.239 22i,gu 2U,178 238,787 228,398 36,848 37,&51 38,844 39'8s3 ADA Opqstìons 23,s06 28,17g 30,408 30:s12 28,132 30,550 30:994 3r,817 32,89s 33,90s 34,861 35,M2 44,a23 46,071 47.N 48.541 49,835 LRT Opeolioos l9:4s3 23¡66 33,062 3s;800 3g:946 37,s12 38,087 39,672 41,T16 42,355 43,5-/0 2.031 2,084 2,1æ Faciliti6 Maìntænæ r,æa 2,176 1,576 1,725 2,911 7,A17 1,895 1.883 1,475 1.518 2,028 1,924 1,978 8.841 9,087 9,3æ 9'574 9'829 othÞr D¡Ed CÆsb 6,993 5,8æ 5,295 s,soo 4,788 7,355 ?,593 7,W I,119 8,354 8,594 59,686 61,348 6¿983 64.637 06'360 Adm¡nistråtivo OverhÈed 40:s34 4s:,72s 43,688 s0:922 4T,o2s 59.3is s2.998 54,92s 55,031 56.301 58,018 OpeEting CGt Ad¡Gbnmb Totsl OpeBling Uses -9.1(¡ zs$x 297t6 ¿WrÉ 3.231â 96 Grcwltr 7.W% 6.03% 83r% -2.2396 4.5m 1.5p'l -1.7394 4.16j6 2.n% CapìtalUs 72j21 128'600 73'918 Bæ 54,478 72.099 61,280 34¡89 10.345 149.701 7.427 27,798 97,169 103,263 17jú 78,961 7s,514 Sq¡thsãst Cfüdt Total Cspitál Uss Capitåliz€d lnteEst 770 Fin8nc¡ng Costs 591 241 830 Dsbt S€N¡æ 8,467 8,467 7,989 6,047 6,082 6.670 6'673 BGo R€W Eord Dobtsewi@ 9,940 4,003 4.007 3.997 3.993 3's0 Bæe COP DsU Swiæ 18.603 19,186 19,318 19:2s1 19,299 19.295 t9:23i 19:æs 13,949 1r,315 4,011 Bffi C4iÞlLoas 204 28,627 28,381 28.385 28'384 Søheast Rev€nus Bond DS 5,635 9¡91 14,321 27,887 28.000 27.388 28,774 28,7?0 28J-12 28.773 28,n2 28,763 14,059 14,057 14.058 '14'057 14'059 So¡heast CQP D€bt Swiæ o.æ¡ ?,614 4,786 o,o¿s o,oæ ßl,szt 14,0ss r4,os9 i4,056 14,058 14.057 SdthBast CP D€bt SeMæ 2.555 3.519 26,050 25,652 26,505 23,140 Nsw COP D€bt S€Niæ {1) lohlMl S€wiæ

5.281 (9,90?) - (¿000)

67,461 58.07 68,928 69,441 79A5-I 79'454 Restticted R6eru 160,243 1¿6,624 161,594 139,323 110,018 71,572 5¡,696 57,199 51,530 68.968 Unus€d GOP PDcaeds Unus€d South8ast Project Funds 107.437 47,926 44,179 46,247 23,905 G€pitrlAcqubitim R6ere 8,449 - 40,381 11,571 14,000

(1) Los cap¡t8liz€d int€E! if åry; (2) lndud€s ñrtuE year $ryi6, 2005 sl€s tax bof,ds w frmd¡Dg, and rEt pqEin

59 Table 5

Denver RTO - v45,1 (2010 AP¡ Basc System ($000s1 Cash Flow Pro Forma

Fundlrg Smrcæ Opemting Sources 171,701 3,¿1S1,776 NæADA Bus Farcbox Revaw f11,848 112,962 123,556 124,786 126,029 137,722 139,094 14,479 '153,228 154:155 t56296 170,007 173,411 187,923 3,967 3,967 8?.511 ADA Bus Far€box Revmw 2,911 2,911 3,152 3,152 3,152 3,41',t 3,411 3,4.11 3,684 3,6M 3.684 3.967 4257 40,396 81¿¡178 Rail FäÞbox Rewnue 26,315 26,5n æ,063 29,359 29,651 32,402 32,725 33,051 36,050 36109 36,n2 39,998 40,799 44213 NFFarebox Opeutìg Rwmre 5.124_ t,r= s¡01 u.*: u.u1 t,*: 5,se8 6,155 6,314 6.476 6,638 6,8m 6,966 7,132 7.301 16¿,919 FaE R€vflus Adjusbnmt 798 Psrking RBYflue 634 686 7Ll Teld OpeEtirE Sourcæ/tlewruo %GDwlt¡ 9tn6 1.0it96 l.Offi 9.0â6 1.O3% 1-0316 8,æì% I.tã 8.5116 1.On6 Non-OpeEtjng Soums 11.770,533 0.6% Sales and Us Til 362,027 3n,8?2 394,241 411,350 429,346 ,148,088 467.658 48,241 509,556 532,013 555186 579,863 605,265 631,891 659288 %Gmwth 4.3æ6 4-36É 1.35% 4_94% 4.i7 4.37 4.37 4.&% 4.3Ì94 4.41% 4.41% 4.39% 438fr 14Ur4 4.3{91 g2,7g 100,287 102,908 105,580 108,302 111,080 113,893 116,124 119,573 122,4æ 125,333 128,275 2.834.e63 FedælGEnb 90,350 95,217 97,712 2:172 Oth€r NtrOpüatìng Rèvêrues *i ti *',_ SwlheãslSdffi "*._ '"-. "': '*: ''": '*: '": '*: "*: "': "': ff,ff COP PocBqds Private L€æs PDcæds lnvæbnent lnæm Totd NfrOpèEting SouË

Fundlrlg Usæ Openting Uæs Bw OpeEtioË 264,794 272,240 278,432 289A13 296,219 303,261 309,465 316,828 329,241 3æ,617 343,435 350,812 357,186 369,405 376.088 t.5'26.?s 1.260,570 ADA Oær¿lìons 40.901 41,985 ,13,097 44,236 45,396 46,5T1 47,787 49,021 50278 51,559 52,855 54,161 55,476 56,801 58,141 71,236 -12,921 l,@¿16 LRT OpeEtiæ 51,tTt 52,556 53,968 55,410 56,875 58,377 59,910 61,470 63,063 64,676 66,299 67,933 69,576 Facilitiæ Mainþmnæ 2,197 2,256 2.3't7 2,379 2442 2.5ffi 2,572 2,609 2,707 2,7Tî 2,846 2,916 2,987 3,058 3,131 76,1tt2 318.535 Othsr Dìræt Cosls 10,09lr f0,366 10,6¿4 10.929 11,218 11.514 11,816 12,124 12,4æ 12.756 13.076 13,399 13,723 14,050 14,383 Adminbbative Overhæd 68,147 69,982 71,863 73.783 75,7U n,735 79,Tt5 81,853 83,974 6.122 88283 $,458 92,416 94,856 97.103 ¿111,716 Operatirts CGtAd¡GtÌHb _.--: 6,795 9.678 Ta,tul OpeEting Usæ z2T% 3.Ot% 2.UlX G@wth z2w4 2.76P8 0.78 3.44?d 246ffi 2-49% 22r% 2-4r% 3.rr9l 2.m zmx CäpitalUs ut,to: 91,835 3.'ttrt,i11 Bæe 74,750_ 47,955 63,785 84,154 258,802 240,120 64,401 104,208 402,508 214,U2 182.313 Sqjtheag Cwidor Totsl Capilal Uw CapihlÞëd lnteÞst 3¡65 F¡nsncirE CGb D€btSery¡æ m236 Bæe RflÐw Bmd D€bt S€Nìce ãF.664 Bæo COP Dobtswiæ t*a 24 Bæe Capital Lem 15¡,m SoutheEsi Rovenm Bond DS ?2,896 9,584 e,58: t.*: 14,057 14,054 ães6o Sq¡tleasl COP DeH Swice 'l07.rtZ0 SdrüEast CP DEbl S€ilìæ t6 New COP D€bt S€Mæ (1) 31.179 lotsl Debt S€ryiæ

Rætrìcted R6Èes 82,621 73,176 75,512 75,111 68.941 61.919 tJnusad COP Pmeeds t nus€d Siltheæl PÞiect Funds Cåpital Arqu¡sitid R@M

60 Table 6

RTD - v¡13.1 12010 lncruas. Rev¡s6dl s Systgm (S000r) Cash Flow Pro Fom¡

13,OS æ.86S 41,ffi FrFtox tuHF (OìM $En k Ë GoH) 8{Þ , 6,4re 6,67ô Fdùx tu68 (Ea8t) 62S FEEb¡ RêHH(W) - ¿m 2,ffi 1æ9 Foùx-BESdæ lncÉ€' FåÈbx -trccsH-ffi|llcl@' *, trl t:î t.*j CffiQGråñl-Nñffi' ffing Rænu6' Tdswt, Opwting Soüer N@-@iruSou@ 374,431 390,716 ÆT211 424'516 44æ1 ö 4% Sæ d lJæ Tsx 152782 r59,69r t67.S3 165.130 14€.,H8 lS5ß 159,537 1il,902 343,5 3S,432 %tuffi lffi 1.M -1.ffi -rO.1æ LW ZW 33ú |æ.ffi L2t% 1-ffi 4ffi 122X 12fr !J* RmrugqdlM - 62,95 - - 1.ffi.1751_ffi-16 1m,m COP hæds 85.ffi - 181'8ã) TIULoånM - - ,r,roi 161,æ n,ui - - - GAR\EE Pro@ds 13,1S 63,7æ m,ß2 65,491 37,94€ 3,13 150,0m îs,m - FaffilN6wMftfr 75,59r 10,519m,519 æ,At? 17,3æ 13,3?9 1S,m0 rs,m0 150,0m ,i t*.*i ærF#lGd Æ,310 æ.7S 23,S1 21,W 21,612 s,g3 4,ffi 41,ø8 112s7 %,42î 8,1S 50,4ä 13,460 15,6t1 16.517 25,665 X242 16.176 6.68 4,& L@ldThid turtyCmblhlM (æ.S0) (28,036) CorEdmaiÉ Rwutly - Ld¡g Tm lEast) s:97 12€.746 100,137 30,32 n5,745) "i 5.082 (16¡m) o . CMmæ RéPôr6HfrY - Lru Tm (N) 12æ 2r58r 71,9 67,47 U¡56 CorEBrlmdE Rwbfit - Lq Tm (CFlrF) lnffilnm¡

114,S (Oth€.0Ð Eorl, ffi t CRllìF) 22,r)67 ã.m 37¡4r S.TS 73,02 09,cæ hybGil(Al) ' 12'174 3S,S 4,2A S,æ2 QærngC6-Ad 43,755 47.ru 4¿133 Orcling C6b - AEI Ply tu CQH Cd IEBr) 1¡,58 21,69 2,m oFdDq c6b - aEl Pry h OûM (old) ___t'*i 21.356 23,S 23,308 oFstng C6t! -Àd Fày to C@ hb (GoH) r.uui 5,S59 6,9 ?,212 Osutnq c6b - AEt Pry fû cfi (CRMF) : - - orehgcñ -ad PryhcrËu (N(mÐ 6.ru t,3ð r.3n ffihbffiNr g,ffi sãvi{€ lnñl$ | Tod O@tE U& sdvto PrWt la$,lrs PE riHt i,958 5,5?O 10,7Q 13,55 lS,Tr 1qø 2?,901 S.W s5,0ã e'sd æ292 30,8S6 11¿0rÐ 121.N Op€çEthq U& E¡dudkE SwiÞ 11Æ fi9.1& lt.98x tt¡ñ 9l Grcefà 1U.4% S.otr 26.& 422& 3,ü* &.O& TZ10r3 {a9* t6.4SS 5t.3tr C4Èlh B0.4€6 2¿'5S7 214'îæ F6T6dG Exp. (Othr thu¡ Eæl Gdd t CfAIF) 51,S7 {t.186 6¿,184 ãß,6s1 310,85 S72S 3ta.ru2 1S4,¡J9 SÌ,G2S 6ll:æ d¡7,G86 70 2.9S æ,$0 12.99 3,96 161.514 :tl,ltl æ,815 22,637 168.91 7638 9'2p tuft*úÞ.(EB0 9'7S FrsT6.*! E&. (ffi) 2,m 2.m 5.612 318 æ.871 {2m l@,N 1æ,029 95¡85 4€'S3 462 FãrTEdrÈ Eæ. (cF$¡Fl ti 51 3,857 1,765 71ø 6,858 8.903 æ,ffi 98,517 17,€2 13,1ffi 11d 14:51 oDgohg c6Þ. uaht. (tu|tun Eåd øË & cRt FI 1ß 10ô s 3,32? 5,739 sslsdd veildc më lffi M æ) (1)' æ,tæ 3,m 14,ffi sùælffibl V$H Êì¡ldr@ (EaBl) 'i tuþlrffitvdde Púr|Ës ' prthg c6aËÎã)17(ffiM Ede NXI)' HúE Codr Atur æ17 {Eaet - 6rd ROW) Pffig Cdb ,Àt€r ð17 (E!!t - rcVÚ) Hrhg CGts Aft¡æ17 (w - qd ROV0 C@b Albr ã)l I (@d - RoW) Púthg : NoccodkCÐtd CGls (O\ rotd C¡pltrl lh C@ìþlÞ€d lnt!@l t:50 tuncnE øltr *,a* u,ao æ,1Ð 17,m Íllbt ScriF 28,0S 28.0ã 28,026 2A,O27 28.0æ 126,182 iæ,9 R@r BoidË f¿) 2€,llg æ,026 20,030 28,02e æ,026 æ,514 ã),$7 taT coA G) z,ga. 5,95 .,T trl rr?: 15¿1S æ.531 æ,9 æ,s17 æ.4s 1¿s, DUSLÑlãÍËt 12.0m 12,06 tr,o* 12,m6 i2,0æ 12.006 12.ffi 12,ffi üRE 4 500 Tord IH¡t Sd!h!

ãÌs3?4 o 9S,t16 s527 H.æ

61 Table 6

D.nvêr RTD - v¡t0.1 f2010 APE, 2012 Tax lncl FNTEcks System (S000sl Cosh Flow Pro Fomo

æ:6r 41,æ g.s0 87,ffi 97,€ 1m,fl9 lo3'H F6Etèx hm E@t t w) 6,124 47,e90 ß,721 S,g(H s8.038 ffi¿53 67,58D u,s tuEn@ IOM 12,373 12,753 13,16 14,59 IS,OS 15,S1 (ãd) 7,Æ 7,676 7,91? 8,æ2 I,r03 9,S? r0¡B îo,ru t1,115 F6Gbx þênÞ 4,369 4,466 4,931 5,91 5,ts s.6n 5.8m 5,9æ Fðñx tuwnE (Gold) 3.195 3.æ6 3,9) 3,€97 3,ng- 3,8Ê4 1,274 g,æ - 4,m9 82m 12,49 18,110 2,æ1 25,F5 29,N 31,8Ë FsGbox - BB Swh lnæ' 2.r; r:a: 2,eÊ_ 2þ14- 3,163 3,613 3,8r 5 4,O2 4,ffi 4,Æ t,*1 F¡[email protected]!æ' t,.T 1.72;. t,tti '.tT CMAO Gtl - Nm'Cdrüq' P61llrì9 Rõwnü6' TñOË€ttESoffi -;.-æÈ it.lw alw gtx ts.ztx 6.w L& rzr# 1.t8 {ffi 9É G@å äi;" ä'ãiå ä.'ä ;î& i.'dn Ndopmlhg Sot6 0.496 Sslu d ue Tù 462'&482.7035ß.762f5.6s4s,46?57¿46259?351ü3'${46s.s8m.4087æ'3517{'99n3,1flm7'0æ€42'fl' Í ftwlh 4'1x1.ffi4.ffi4.3*1.w1-3ñ1-3ñ1.3É1.&1.w1.41*111x(3096438964ffi RèwBdh@ds copPoffi TIRALffiP@* GARWE PmC6!ú F6d6Bl Nñ SM GEtrb 6î,ñ9 €3,ffi 65,010 66,672 68,346 70'0r r,ni n o:s OüÞr Fdrûl G[ü hlddnidPdyCmffi -h 23,S2 aa.a* g,tts CÆ@hõ¡É RèælbU'V. bq (Eãd) - 23.æ Con65¡onsjd Rffilbiity - LorE T€m (dd) Con€s¡ff0j6 RGFrÉ¡MiV - Lmq Tam (CRMF) lMftnllncm' 1

u& 147'00e 151,015 1G1d):' 191'044 1¡€'€45 181'?Ë1 1ðG',?[6 191'tG0 C6b (Otur tlm Elrl GoU A CR¡F) 117,889 t2¿84€ 127,Í¿t 131,424 13f'jâ2 13).076 !€,0ã) OørUnq sz,ss6oess¡ß4ao76,4flrs.zsl83201æ.991$'21493.997.P2101.2ffi105,097108,s1'2'Æ116.676 oplEÈE C6b - amil tàY lt Otl¡l {&ú) q¡,ræ ¿r.uæ ¿z'm 17'ß 47.Ê3 47,Ê3 47'713 4¿133 47'æ 47ru - avrH hyto. csptd hb (Eal) ;t:taã 47,n3 ¡¡.æ: +1|tæ 47,733 oprEthg cñ 51 53'193 ss',om 56'9?4 (Gdd) 35,7{ 37,æs æ,ge¿ +o,sza 42,319 {,0S 45'821 47521 191ry 3æ opcdüno corb - av.l hY for oüÌ, 30,s9 31221 z:,w ¡'fl9 æ'sB 23'3ß 23'3ß 2l's - (Go{d} ãã:s¿ àloe æ,os æ.æa ã.æe æ,¡os zr':99 æ;st ?!'199 OpoDthg C6b Awil hy td CStâl hb -õ:6t r¡,¡er r¡.gæ ra,cx 1s,ffi4 1s.645 162s 16'8U¡ iln 18'e3 opr6kE C!Éd! - AEìl PaY for Oül {cilR õ,OZO rr,¡OZ fi,ero ì2,æs rz.æz z,:z¡ 7'373 ?.38 7'3ß 7,373 7,373 7,373 ?',3æ 7 38 7',3ß l'38 QoEthg C@b - Àhl PaY lú cQH Ccb (cm¡n 7,373 7,373 7.373 7,313 A(fnlrÈffittÆ CGb' 5¡¡6hdtgæ' ToU OËaÈü U6 ñãËi Ëäõ iõ.d; ru:òÈ æ.4s ã5,m ãt,7a ä,616 23?$3 mæ 24.!q! ã1'6 ã'sz æ3'rro 2mmr sri€ Ply¡Ëd 176J12 iæ,SoS rgt,¡s æ¡,se+ zs.gos æ,¡os 260.?67 31{,559 3l0,l0o æs'glx) s5'¿18 36¿07i OpoEliq UsB Exdtd.E SdE P6YíM ts.145 t61,928 169,019 læ 5-e s-w 1m â6ts to'& o'ffi 3ffi 1& t.æ 9€ G¡M to-4* 3.1ffi 8ffi T-ffi r.g c4ld UG F.rT6(k FJA. (Offi M EGl, ffi A CilrÐ F6lTdcL Es (Ead) FæT6cb Ero (Gdd) FBrTmds E¡p- (CRMF) 19,465 S5,16? 99,34j i5,025 15,430 t5,g t6268 16.698 17,139 ft,æ T,2n 18,515 18,988 4'911 GEohg Cap. MdnL (ffis hn Ed Gdd t CilF)' 12,H2 49,219 5O,S slÐplffiH Vrffi ô M (khu Ed) {1)' æ,æ0 ?3,902 - 33.9H 3'71s Spphffibl Voìs Fì¡Id'M (Eaì) 120,932 160,18? 116'823 RèdDadErit V€lda*c fìtEh¡s ' l¿084 35.m{ 38'l}16 psrting (OüË - 20,?13 Gts Alìer 201? thü Eset û Goldxl )r - 3l,s €s,626 9q,p5 ã1 17 (E4eì qcl ROW Pa*lr€ Coðt! AId - 17,tm Prdd¡g CGT! Ànd ml? Gæt- ROvÛ - 6,073 16,61ð1S,179___:: Pdldry Cæb Añsr 2017 (Gold - €xd ROW Hrc CEt! An!r:017 (e¡d - RW) MCoFSrCop(U CÉ{1}r fotd CúCtól Us coptdH hffist FIEndng C@ts Dlbl SdvlË 17s,ss1 179,!!9 1P'fl! lll'sl (21 129,5932s,se3 tæ,sesræ,595 tæ,S94ræ,se4 1æ.ss21æ.592 12e.se3 131,763 t!1.191 r7s,s76 l?s,q!! 1i9's9 1i9'It Rnw! BqÈ6 it,qta17,4t1 ìt¡t¿rzizo ri6z17,467 13109 æ,?s' æ,249 28rse 28,74A247€ 2S,?5¡ 2S,749 COP! (¿) r7.4sõ:;õ ì;,;sì12.41 it:;är7.4zs 13,1!9 ?9.191?€¡sl -,-s'1*31'440 ?g.fP31,40 3'H4'7sz31'!19 31lX31&0 3r,ffi3r'ffilglJ: 1.e']:*31,{0 f3t,40 i; llNA L@ iì'¿iò ¡r.ø sr.qo ¡t,øo ii,øõ ¡l'so 31;&o 3r.aa0 1?,m6 12.m6 l¿m 12,m6 12,06 12,0m 12,ffi OUS Læ PayE¡t 12.006 12,006 12,ffi 12,ffi GAR\€E Tohl Dlbt SeM6

Fäll#Bdh6!d3

62 Table 6

Denver RTD - v4õ.' FæTEck3 Syståm (l( Cosh Flow Pro Foma I Obla æ0t2035

Fmdlrg 3Nl6 oprGEIt su@ FrÞbox Reü@ (ms ftu E4t A Go¡d) li5,0s r,315.6s FüGbox Rc6æs (E ú) 17,14X 21¿mf FsEbx M@ (Gôld) 6.5& 81,758 F6ùx- g6SeÑc lnc6ôs I 39.767 2Æ,222 FlEbox - lcar*Ride ltløæ' 5.676 59,976 CmQ Gnnl - Nù-Cdrdd' - 1162 Parllng Rsmué t 5,OS 59,2& Totd OËltiü 50ü6 189.160 1,9{7,06 %ffit, 11-6ffi NffOpadlnq Súc6! 0.4% S€l€o qd Ue Td 879,051 14,114¡B %Gñffi 1.3ú Re""ru gdìd PÞd! - 2'364'f æ COpRoffi - 267.226 IruLoanM - 325,S2 GAFwEEPrctdd! 2Gs,521 tucEl¡ltrstldcEû - 1'sì9'1æ ærF!óËt frú 75,174 1,W,5m L@rûd nid P4ty cøfibrÙffi 1e¡66 Con@imaiÉ Rwbil'V - Long Tm (Esd) - 3:,0,042 ønñ¡fffrR@rblrtv-LwIm(Gdd) - 1u,6s øn6!¡ondE fGÞoñrbllÍv . Long Tm (cFl¡rF) 141'1U lNêûrÊntlncmr 52.022 7¡6'/24 ÌoH Nø¿pdEtnq Sú€ I .006:46 21 ,S1 ¡æ Blg sdm Fmdtu hñSvclnc I 183.7î6 1,172,649 E Fhdlng urê! op6mg u@ ø66drg cort! (oùËr thü E!4 GoM a cR vlF) 195.9q) 2,929,0æ (Þ¿Eung c6b - avrll Pry fo{ oeU (Eo!t) 108,772 1.587,832 O0€Gtng CBb - avt[ Psy b C¡pld Cñ (€ad] 61.5S sr6,767 op6Etng co!i! - Avsll Pay lbr oet[ (coH) 52,138 tw242 OFEting C6b - Avlil Pry fq ctpi¡l Coeb (GoH) 30.0Ð {7,669 oFõüñg Coñ - avrll Pày fo. o&M (CRMF) 1 6¡93 2{6,812 q.Eüng Coût! . Âvrll tuy tr Copld N {CRMÐ 1ô1,610 Adm¡nbt8tÉ C@b r ""7 127,H S€rvìæ ln@46 ' rrxr.716 1.r€4¡83 ToH ODd!üDg U6 s7,187 8.W,378 Srrvlæ Paymd ?76.5Ð 14,974.867 (Þ€Edng Um Exdudtlg hi€ Pqndl 38ù.SS¡ æ.S1,90r 9l Gø#, a9$6 CÐilllU@ FIBTE* AÞ- (OtF hm East, Gold & CRMÐ - 4.il8,694 F!!T6cß Ap. (Eãtl) - 1232,882 F$TE* ãp- (Gold) . 516,975 F'ITEdÊ EÐ, (CRMF) - 170,565 ClEþrE Gp. kht. (olhs hn Ed GoE a cRHÐi 21.4q) ffi,493 Swple|Mtd V6hide Þudrg8 (ffi M Ed) (1lr - 113,393 SedsMtd volilde Putirla@ (Eæt) - 115,816 Rcplffitvdid! Rrcl@!' 149,216 g7,rE8 pdbE c€b Anq ær7 (ffi tM Erü & WXl¡ - 103,818 Pül¡g Gb añá 2017 (Eart - dcl ROW - 215,745 Pstihg CGh 4fi6 ãll7 (Eåd - Rolry) - 17,16Ð P6rklry C6b And æi7 (Gd - qd ROW) - 41,87i Ps*¡rE Cd Añ* ãt17 {Gold - ROV$ ' s'291 ¡þFcotrftd csÀd Cñ (l)' 14,973 3{þ,??8 ToÞ CeitEl uer 181i.028 8,6{12.137 CÐn!Ìad lnt!6ll - 1n,t4t FhEncing C@b - 1,18.571 ÈtSôrYlø R€l@r Bqú (2) t79,580 3,09'1,874 cotu(2) 2q750 600'sl TtFtALÐ 31,1{0 503,031 DusLrlllPrrcnt 12.ffi 312,169 caRVËË 2.818 360,9i1 ToHÞlbtsNì6 ?54,314 4.88S851 R6qcìhglteÈ ' 11.954

tût ot!ñrng csù Flm

Re¡tlctÈdR¡!ùffi æ9.063 UÞùæd FñÌürt! Bsd! rì@adr Ful6ch CûlimÞq RrFm ÈñF¡tæãtd

63