GoTriangle Financial Plan
Version 1
Durham-Orange Light Rail Transit Project
December 2016
GoTriangle Financial Plan
Version History
Version Date Description 0 02/24/2016 Initial document to FTA to demonstrate Engineering Readiness 1 12/29/2016 Document submittal to FTA for request to Enter Engineering
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | i GoTriangle Financial Plan
Table of Contents
Executive Summary ...... 8
1. Introduction ...... 1-1 1.1 Project Sponsor ...... 1-1 1.2 County Transit Plans ...... 1-5 1.3 Relationship of County Transit Plans to New Starts Financial Plan ...... 1-6 1.4 New Starts Project: D-O LRT Project ...... 1-7 1.5 Relationship of GoTriangle to Local Transit Systems ...... 1-10 1.5.1 GoDurham ...... 1-10 1.5.2 Durham County ACCESS ...... 1-10 1.5.3 Chapel Hill Transit ...... 1-10 1.5.4 Orange Public Transportation ...... 1-10 1.5.5 GoRaleigh ...... 1-11 1.5.6 GoCary ...... 1-11 1.6 GoTriangle Historical Data ...... 1-11 1.6.1 Capital Expenses ...... 1-11 1.6.2 Capital Funding ...... 1-13 1.6.3 Operating Expenses ...... 1-13 1.6.4 Operating Revenues ...... 1-15 1.6.5 Dedicated Local Revenues ...... 1-15 1.6.6 Service Levels and Ridership ...... 1-16 1.7 Regional Economic Conditions ...... 1-17 1.7.1 Population ...... 1-17 1.7.2 Employment ...... 1-18 1.7.3 Inflation ...... 1-19 1.7.4 Raleigh-Durham International Airport Passengers ...... 1-20 1.8 Updates to Financial Plan from Previous Submittal ...... 1-22 1.8.1 Modifications to D-O LRT Project ...... 1-22 1.8.2 Durham and Orange Transit Plans in Financial Model ...... 1-22 1.8.3 N-S BRT Project ...... 1-23 1.8.4 State Funding for D-O LRT Project ...... 1-23 1.8.5 Article 43 Sales Tax Forecast ...... 1-23 1.8.6 New Local Funding Sources ...... 1-23 1.8.7 Source of Historical Data in Financial Model ...... 1-23
2. Capital Plan...... 2-1 2.1 D-O LRT Project Capital Cost Assumptions, Estimates, Reviews, and Contingencies ...... 2-1 2.2 Project Capital Funding Sources ...... 2-2 2.2.1 Federal ...... 2-2 2.2.2 State ...... 2-2 2.2.3 Local...... 2-3 2.2.4 Financing ...... 2-8 2.2.5 Summary ...... 2-12
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | ii GoTriangle Financial Plan 2.3 State of Good Repair Reserves ...... 2-12 2.4 System Capital Cost Estimates and Assumptions ...... 2-12 2.5 System Capital Funding Sources ...... 2-15 2.6 Mitigations for Potential Capital Funding Shortfalls or Cost Increases ...... 2-16 2.7 20-Year GoTriangle System Capital Plan ...... 2-17
3. Operating Plan ...... 3-1 3.1 Service Level Projections ...... 3-1 3.2 D-O LRT Project O&M Costs ...... 3-1 3.3 System O&M Costs ...... 3-2 3.4 O&M Funding Sources ...... 3-3 3.4.1 Fare Revenues ...... 3-5 3.4.2 Federal ...... 3-6 3.4.3 State ...... 3-6 3.4.4 Local...... 3-7 3.5 Cash Reserves for Potential O&M Funding Shortfalls or Cost Increases...... 3-11 3.6 20-Year GoTriangle System O&M Plan ...... 3-11
4. GoTriangle System 20-Year Cash Flow ...... 4-1 4.1 GoTriangle System Sources and Uses of Funds ...... 4-1 4.2 Sensitivity Analysis ...... 4-3 4.2.1 Key Risks in Financial Plan ...... 4-3 4.2.2 Reserves ...... 4-3 4.2.3 Additional Funding Sources included in Sensitivity Analysis ...... 4-4 4.2.4 Cost Reduction Strategies ...... 4-8 4.2.5 Sensitivity Test 1: D-O LRT Project Cost Increase ...... 4-8 4.2.6 Sensitivity Test 2: Lower Sales Tax Revenues ...... 4-9 4.3 Sensitivity Analysis Conclusions ...... 4-11
5. Conclusion ...... 5-12
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | iii GoTriangle Financial Plan
List of Tables Table 1-1: GoTriangle Board of Trustees ...... 1-3 Table 1-2: GoTriangle Special Tax Board ...... 1-3 Table 1-3: GoTriangle Bus-Related Capital Expenditures by Type, 2005-2015 (YOE Millions) ...... 1-12 Table 1-4: GoTriangle Regional Rail Capital Expenditures by Type, 2005-2015 (YOE Millions) ...... 1-12 Table 1-5: GoTriangle Capital Funding Sources, 2005-2015 (YOE Millions) ...... 1-13 Table 1-6: GoTriangle Operating Costs by Mode, 2005-2015 (YOE Millions) ...... 1-14 Table 1-7: GoTriangle Operating Revenues, 2005-2015 (YOE Millions) ...... 1-15 Table 1-8: GoTriangle Farebox Recovery Ratio, 2005-2015 ...... 1-15 Table 1-9: GoTriangle Dedicated Tax and Fee Revenues, 2006-2016 (YOE Millions) ...... 1-16 Table 1-10: GoTriangle Service Levels by Mode, 2005-2015 ...... 1-17 Table 1-11: GoTriangle Ridership, 2005-2015 (Thousands) ...... 1-17 Table 1-12: Population Forecast for DCHC Metropolitan Area and the D-O Corridor ...... 1-18 Table 1-13: Employment Forecast for DCHC Metropolitan Area and the D-O Corridor ...... 1-18 Table 1-14: Unemployment Rates, 1990-2015 ...... 1-19 Table 2-1: D-O LRT Project Cost Estimates ...... 2-2 Table 2-2: D-O LRT Project Cost Schedule (YOE Millions) ...... 2-2 Table 2-3: Local Revenues Dedicated in the Durham and Orange Transit Plans ...... 2-4 Table 2-4: Proposed Schedule for 2017 Approval of the Updated Durham and Orange Transit Plans ...... 2-7 Table 2-5: Financing Plan (YOE Millions) ...... 2-9 Table 2-6: D-O LRT Project Capital Funding Sources, Base Case (YOE Millions) ...... 2-12 Table 2-7: System Capital Funding Sources ...... 2-15 Table 2-8: System Capital Plan (YOE Millions) ...... 2-18 Table 3-1: GoTriangle Revenue-Miles Forecast ...... 3-1 Table 3-2: GoTriangle Revenue-Hours Forecast ...... 3-1 Table 3-3: D-O LRT Project O&M Cost Model Inputs ...... 3-1 Table 3-4: System O&M Cost Forecast, 2017-2036 (YOE Millions) ...... 3-3 Table 3-5: System O&M Funding Sources ...... 3-4 Table 3-6: GoTriangle Fares ...... 3-5 Table 3-7: SMAP Funding to GoTriangle, 2007-2016 ...... 3-6 Table 3-8: Comparison of Article 43 Half-Cent Sales Tax Revenue Forecasts, 2017-2036 (YOE Millions) ...... 3-8 Table 3-9: Vehicle Registration Fee Revenue Forecast, 2017-2036 (YOE Millions) ...... 3-9 Table 3-10: System Operating Plan (YOE Millions) ...... 3-13 Table 4-1: System Cumulative Cash Flow Balance, 2016-2036 (YOE Millions) ...... 4-2 Table 4-2: Federal Funding Allocations to DCHC-MPO, 2006-2019 (YOE Millions) ...... 4-5 Table 4-3: Sensitivity Test #1, D-O LRT Project Cost Increase of 10% (YOE Millions) ...... 4-9 Table 4-4: Sensitivity Test #2, Sales Tax Growth Reduction (YOE Millions) ...... 4-10
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | iv GoTriangle Financial Plan
List of Figures Figure 1-1: GoTriangle System Map ...... 1-2 Figure 1-2: GoTriangle D-O LRT Project Organization Chart ...... 1-4 Figure 1-3: D-O LRT Project Alignment ...... 1-9 Figure 1-4: GoTriangle Operating Costs by Expenditure Type, 2005-2015 (YOE Millions) ...... 1-14 Figure 1-5: Unemployment Rates, 2000-2015 ...... 1-19 Figure 1-6: Consumer Price Index (CPI), United States and Southern States, 2000-2015 ...... 1-20 Figure 1-7: Year-over-Year Percent Change in Monthly RDU Airport Passengers, 2011-2016 ...... 1-21 Figure 1-8: Annual Passengers at RDU Airport, 1990-2015 ...... 1-22 Figure 2-1: Municipal Market Data (MMD) Index Rates, 1996-2015 ...... 2-10 Figure 2-2: Historical Rate Changes: 30-Year Treasury Bond Rates, 1996-2015 ...... 2-11 Figure 3-1: Article 39 One-Cent Sales Tax Net Collections, 2006-2015 (YOE Millions) ...... 3-8 Figure 3-2: Vehicle Registration Fee Revenues, 2004-2016 (YOE Millions) ...... 3-9 Figure 3-3: Vehicle Registrations in the Triangle Region, 2000-2013 ...... 3-9 Figure 4-1: Sensitivity Test #1, Cumulative Fund Balance (YOE Millions) ...... 4-9 Figure 4-2: Sensitivity Test #2, Cumulative Fund Balance (YOE Millions) ...... 4-10
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | v GoTriangle Financial Plan List of Acronyms and Abbreviations BOCC Board of County Commissioners BRT Bus Rapid Transit CAGR Compounded Annual Growth Rate CAFR Comprehensive Annual Financial Report CAMPO Capital Area Metropolitan Planning Organization CAT Capital Area Transit CATS Charlotte Area Transit System CBO Congressional Budget Office CCI Construction Cost Index CHT Chapel Hill Transit CIG Capital Investment Grant CMAQ Congestion Mitigation and Air Quality Improvement Program CPI Consumer Price Index C-Tran Cary Transit (now GoCary) DATA Durham Area Transit Authority DCHC Durham-Chapel Hill-Carrboro DCHC-MPO Durham-Chapel Hill-Carrboro Metropolitan Planning Organization D-O Durham-Orange D-O LRT Durham-Orange Light Rail Transit D-W CRT Durham-Wake Commuter Rail Transit FAST Fixing America’s Surface Transportation Act FEIS/ROD Final Environmental Impact Statement/Record of Decision FFGA Full Funding Grant Agreement FTA Federal Transit Administration FY Fiscal Year GDP Gross Domestic Product I-40 Interstate 40 ITS Intelligent Transportation System LGC Local Government Commission LINC Log Into North Carolina LOB Limited Obligation Bond LOI Letter of Intent LPA Locally Preferred Alternative LRT Light Rail Transit MIS Major Investment Study MMD Municipal Market Data MOU Memorandum of Understanding MPO Metropolitan Planning Organization NC North Carolina NCCU North Carolina Central University NCGA North Carolina General Assembly
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | vi GoTriangle Financial Plan NCDMV North Carolina Department of Motor Vehicles NCDOR North Carolina Department of Revenue NCDOT North Carolina Department of Transportation NCRR North Carolina Railroad Company NCSU North Carolina State University N-S BRT North-South Corridor Bus Rapid Transit NTD National Transit Database O&M Operations and Maintenance OPT Orange Public Transportation PMOC Project Management Oversight Contractor RDU Raleigh Durham International Airport SCC Standard Cost Category SMAP State Maintenance Assistance Program STAC Special Transit Advisory Commission STI Strategic Transportation Investments STIP Statewide Transportation Improvement Program STBGP Surface Transportation Block Grant Program STP Surface Transportation Program STP-DA Surface Transportation Program – Direct Attributable TDM Transportation Demand Management TIFIA Transportation Infrastructure Finance and Innovation Act TJCOG Triangle J Council of Governments UNC University of North Carolina at Chapel Hill US United States USC United States Code USDOT United States Department of Transportation UZA Urbanized Area YOE Year of Expenditure
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | vii GoTriangle Financial Plan Executive Summary GoTriangle has prepared this Financial Plan for the Durham-Orange Light Rail Transit (D-O LRT) Project pursuant to the requirements of the Capital Investment Grant (CIG) program of the Federal Transit Administration (FTA). As a prerequisite to entering the next phase of the FTA program – the Engineering phase – this document and the referenced supporting materials describe GoTriangle’s financial capacity to implement the D-O LRT Project as a New Starts project. The cost of constructing and maintaining this light rail line is discussed holistically within the broader context of existing and upcoming commitments for transit investments in the Durham-Orange region. The Financial Plan provides up-to-date information related to capital cost estimates, revenue streams, financing strategies, operations and maintenance needs, and cash flow projections. Based on the data, forecasts, and analysis contained in the Financial Plan, GoTriangle has demonstrated the capacity to implement the D-O LRT Project while meeting the capital and operating demands of existing and expanded service.
Project Sponsor The Research Triangle Regional Public Transportation Authority d/b/a GoTriangle, formerly Triangle Transit (GoTriangle), is a regional public transportation authority serving Durham, Orange, and Wake counties in the Research Triangle region of North Carolina. GoTriangle’s mission is to improve the region’s quality of life, “by connecting people and places with reliable, safe, and easy-to-use travel choices that reduce congestion and energy use, save money, and promote sustainability, healthier lifestyles, and a more environmentally responsible community.” GoTriangle provides regional bus service, paratransit service, and vanpool and commuter resources over a 1,525‐square‐mile service area. In addition to its own existing services (General Services), GoTriangle coordinates the implementation of county transit plans, which identify new revenue sources to fund expanded bus services, small capital investments, and fixed guideway projects. GoTriangle’s role is to administer these new revenue sources and disburse them to partnering transit providers according to the county transit plans. In addition to this administrative role, GoTriangle manages some of the expansion services and projects in the county transit plans. This Financial Plan includes GoTriangle’s General Services as well as its role in implementing the Durham and Orange Transit Plans (Durham-Orange).
New Starts Project The D-O LRT Project is the largest project in the Durham and Orange Transit Plans that GoTriangle manages. The D-O LRT Project includes light rail transit service between the University of North Carolina at Chapel Hill (UNC) Hospitals and North Carolina Central University (NCCU), covering a distance of approximately 17.7 miles of new, dual light rail tracks with 18 stations. The implementation period for the D-O LRT Project is planned to be from 2014 through 2028, including Project Development, Engineering, Construction, Testing, and Start-up. Construction is anticipated to begin in 2020. On February 11, 2016, FTA signed the combined Final Environmental Impact Statement/Record of Decision (FEIS/ROD) for the D-O LRT Project. On December 14, 2016, the Durham-Chapel Hill-Carrboro Metropolitan Planning Organization (DCHC-MPO) passed a resolution amending the locally-preferred alternative (LPA) for the D-O LRT Project corridor, adding an approximately one-half mile section of alignment and a station at NCCU. On that same day, FTA signed an amended ROD for the project reflecting the changes to the LPA.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | viii GoTriangle Financial Plan System Capital Plan GoTriangle’s 20-year (2017-2036) system capital plan includes projects to support GoTriangle’s existing and expansion bus services, expansions to GoTriangle’s vehicle fleet while maintaining an average bus age below six years, implementation of the D-O LRT Project, and the necessary resources to maintain GoTriangle’s system in a state of good repair. The plan also includes GoTriangle’s disbursements to other transit providers to fund capital investments associated with the Durham and Orange Transit Plans. Total General Services and Durham-Orange capital revenues are projected to be $2,686.5 million Year of Expenditure (YOE) from state, federal, and local sources in addition to $820.2 million YOE from the balance of operations. Total General Services and Durham-Orange capital expenditures (including debt service and disbursements to transit providers) are estimated at $3,466.7 million YOE over the 20-year cash flow period. The system capital plan is balanced; surplus revenues are represented in the system cash balance.
D-O LRT Project Capital Plan The largest component of GoTriangle’s 20-year system capital plan is the D-O LRT Project. The design of the D-O LRT Project is currently at 30 percent, consistent with FTA requirements for the level of design completion at entry into Engineering. The D-O LRT Project cost estimates have been developed in base- year (2016) dollars based on the FTA Standard Cost Categories and inflated to YOE dollars after including contingency. Base-year dollars have been converted to YOE dollars assuming an inflation rate of 3.1 percent based on the 20-year average of the Construction Cost Index (CCI) at the national level. Total capital costs, including contingency and financing costs, for the D-O LRT Project are estimated at $1,937.7 million in 2016 dollars and $2,476.3 million YOE. Multiple independent reviews of the costs estimates have concluded that the estimates are reasonable. The project cost estimate includes appropriate levels of contingency that are consistent with this stage of design. Total contingency, $421.4 million in 2016 dollars, is equivalent to 29 percent of the construction cost, excluding contingency or financing costs. As project costs are further developed in Engineering, contingency assumptions will be refined and reduced. GoTriangle will request a 50 percent federal funding share from FTA Section 5309 New Starts program. Nearly half1 of the anticipated non-federal funding share for the D-O LRT Project has been committed. This commitment is based on four local taxes and fees that are dedicated to the Durham and Orange Transit Plans: a half-cent sales tax for transit, a portion of GoTriangle’s vehicle rental tax, a seven dollar vehicle registration fee, and a three dollar vehicle registration fee. These revenues will fund the D-O LRT Project with a combination of financing and pay-as-you-go funding. Additional, planned non-federal funding sources for the project include local and private capital grants for joint development activities, in- kind right of way donations, state capital grants, and additional financing repaid by the dedicated local revenues. Additional financing is planned to be used for temporary cash flow needs created by the anticipated timing of state and federal funding disbursements. All borrowing in the Financial Plan is anticipated to be in the form of traditional limited obligation bonds (LOBs) and a subsidized loan through the federal Transportation Infrastructure Finance and Innovation Act (TIFIA) program. Total federal participation in the D-O LRT Project capital costs is less than the 80 percent maximum allowed by FTA. The Financial Plan maintains a healthy minimum net debt service coverage ratio of 1.15 as well as reserves for debt service.
1 49.8 percent, which is 24.9 percent of the total D-O LRT Project capital cost
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | ix GoTriangle Financial Plan System Operations and Maintenance Plan GoTriangle’s 20 year (2017-2036) system operating plan includes GoTriangle’s existing and expansion bus services, the D-O LRT Project, and a cash reserve equal to three months of system operations and maintenance (O&M). It also includes funds for other transit providers’ operating expenses associated with the Durham and Orange Transit Plans. One hundred percent of the funds needed to operate the system have been committed. Total General Services and Durham-Orange O&M revenues from 2017 through 2036 are projected to be $2,056.1 million YOE from federal, state, and local sources. Of this total, fare revenues account for almost seven percent. Dedicated local revenues from the sales tax, vehicle registration fees, and Durham-Orange portion of the vehicle rental tax account for 81 percent. Other local sources account for approximately 8.4 percent. State and federal grants account for four percent of the total O&M funding sources. Over the 20-year period, total General Services and Durham-Orange O&M expenditures are estimated at $1235.9 million YOE. By 2036, O&M for the D-O LRT Project will account for 39 percent of annual system O&M costs. The system operating plan is balanced; after funding the O&M reserves, surplus revenues are transferred to capital. The balance of operations transferred to capital will be $820.2 million YOE over the 20-year cash flow period.
Reserves The Financial Plan includes reserves to support the D-O LRT Project in a state of good repair. Annual reserve deposits, which will start upon the completion of the D-O LRT Project, are equivalent to the lower of either 30 percent of annualized capital asset replacement costs or 50 percent of the cash balance. The Financial Plan also includes cash reserves for O&M equivalent to three months of the annual system operating budget, which can be used to meet unexpected increases in operating costs. As debt is issued according to the Financial Plan, GoTriangle will maintain debt service reserves equal to 10 percent of the par amount for the LOBs and the maximum annual debt service for the TIFIA loan.
GoTriangle System 20-Year Cash Flow Assumptions used to forecast revenues and expenditures are consistent with historical data and account for current and future economic conditions that may affect the assumptions. The 2017-2036 system cash flow demonstrates GoTriangle’s capacity to implement the D-O LRT Project while meeting the capital and operating demands of existing and expanded service. The cash flow includes appropriate reserves for debt service, state of good repair, and O&M. When the balance of operations and GoTriangle’s FY 2016 cash balance are incorporated into the cash flow, a cumulative surplus of $16.4 million is estimated by 2036. This cash balance is in addition to $22.4 million in O&M reserves, $170.2 million in state of good repair, and $39.2 million in debt service reserves.
Sensitivity Analyses With a diversity of dedicated local revenue sources that can be used in various combinations to support both operating and capital needs for existing and new transit services, the Financial Plan is significantly more resilient than a plan that is exclusively dependent on a single revenue stream. However, because uncertainty is inherent in long-range financial plans, the Financial Plan includes sensitivity analyses for the
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | x GoTriangle Financial Plan two greatest risks: an increase in the D-O LRT Project capital cost, and a decrease in the half-cent sales tax forecast. To address the cash flow needs created by these variable changes, the sensitivity analyses include proposed additional revenues to be added to the Financial Plan. These additional revenues are not included in the base case Financial Plan. Neither the sensitivity analyses nor the base case include cost reduction strategies to provide a conservative analysis. However, GoTriangle will study cost reduction strategies early in the Engineering stage of the D-O LRT Project. The sensitivity analyses indicate that adverse changes to expenditure and revenue assumptions would have the most impact at the end of the D-O LRT Project construction period. Major changes to Financial Plan assumptions in earlier years may lead to deficits in years 2027, 2028, and 2029 unless costs are lowered or revenues are raised accordingly. However, after construction is completed, GoTriangle’s cash balance will begin to increase significantly as the financial demands are reduced; the primary expenditures at that time will be O&M, debt service, fleet replacement, and maintaining a state of good repair for the D-O LRT Project.
Conclusions The Durham-Orange Light Rail Transit Project is a major, vital investment in the transportation future of the rapidly-growing Research Triangle region. Delivering a project of this magnitude requires careful financial planning and a combination of federal and non-federal resources. This Financial Plan sets forth a financially sound path for the D-O LRT Project’s construction and future operations and maintenance, and it establishes sufficient local financial commitment to advance the D-O LRT Project into the Engineering phase in 2017. As the D-O LRT Project progresses, GoTriangle will continue working diligently to secure the full non-federal funding share, with the goal of executing a federal Full Funding Grant Agreement in 2020.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | xi GoTriangle Financial Plan 1. Introduction
1.1 Project Sponsor The 1989 session of the North Carolina General Assembly enabled the creation of the Research Triangle Regional Public Transportation Authority (operating as GoTriangle, formerly Triangle Transit) as a regional public transportation authority serving Durham, Orange, and Wake counties.2 The new unit of local government was chartered by the North Carolina Secretary of State on December 1, 1989.3 GoTriangle’s mission is to improve the region’s quality of life, “by connecting people and places with reliable, safe, and easy-to-use travel choices that reduce congestion and energy use, save money, and promote sustainability, healthier lifestyles, and a more environmentally responsible community.” GoTriangle currently provides service for 14 regional bus routes, 10 express bus routes, and four Research Triangle Park shuttle routes over a 1,525‐square‐mile service area spanning Wake, Durham, and Orange counties. According to the 2014 National Transit Database (NTD), GoTriangle operated over 2.3 million vehicle revenue-miles on its fixed route service, accommodating more than 1.8 million passenger trips. In addition to fixed‐route services, GoTriangle provides paratransit service and leases 52 passenger vans to commuters who have at least one end of their trip in the region. GoTriangle also provides commuter resources, an emergency ride home program, and hosts GoTransitNC.org and GoTriangle.org. A map of the GoTriangle system is shown in Figure 1-1. GoTriangle’s three most recent annual budgets and three most recent Comprehensive Annual Financial Reports (CAFR) are included in the supporting documentation.4 Additionally, the supporting documentation includes the financial model that GoTriangle has used to develop this Financial Plan.5
2 0706_NCGS_GoTriangle-Enabling-Legislation-§160A-600-through-629 3 0706_APRV_GoTriangle-Articles-Incorporation_891201 4 0706_BUDG_GoTriangle-FY15_150000_v2; 0706_BUDG_GoTriangle-FY16_160000_v2; 0706_BUDG_GoTriangle- FY17_170000; 0706_RPT_GoTriangle-CAFR-FY14_140000; 0706_RPT_GoTriangle-CAFR-FY15_150000; 0706_RPT_GoTriangle-CAFR-FY16_160000 5 0704_FMOD_GoTriangle-20-Year-Cash-Flow-Model-Baseline_161229
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-1 GoTriangle Financial Plan Figure 1-1: GoTriangle System Map
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-2 GoTriangle Financial Plan
GoTriangle is governed by a 13-member Board of Trustees. The Board of Trustees possesses the general legislative powers of GoTriangle. As shown in Table 1-1, 10 members are appointed by the region’s principal municipalities and counties to staggered four-year terms. Up to three ex officio non-voting members are appointed by the North Carolina Secretary of Transportation.6 Currently, the Board of Trustees only has 12 members, because the Secretary has only appointed two members. Table 1-1: GoTriangle Board of Trustees
Board Member Position Affiliation Jennifer Robinson Chair Town of Cary Ellen Reckhow Vice Chair Durham City/County William A. Allen III Secretary City of Raleigh Ed Harrison Treasurer Town of Chapel Hill Mary-Ann Baldwin City of Raleigh William V. “Bill” Bell City of Durham James “Jim” Crawford, Jr. NC Board of Transportation Fred N. Day IV Wake County Fred Foster Jr. Durham County Vivian A. Jones Wake County Barry Jacobs Orange County Jeff Sheehan NC Board of Transportation In addition to the Board of Trustees, GoTriangle also has a Special Tax Board consisting of two members appointed from each of the Boards of County Commissioners of Durham, Orange and Wake counties, as shown in Table 1-2. The Special Tax Board meets in January each year to elect officers; additional meetings may be called if needed. The Special Tax Board approves the levy of taxes and issuance of bonds. Table 1-2: GoTriangle Special Tax Board
Board Member Affiliation Matthew Calabria Wake County James West Wake County Ellen Reckhow Durham County Vacant Durham County Mia Burroughs Orange County Mark Dorosin Orange County GoTriangle’s organization chart is shown in Figure 1-2.
6 0706_POL_GoTriangle-By-Laws-Last-Amended_130828
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-3 GoTriangle Financial Plan Figure 1-2: GoTriangle D-O LRT Project Organization Chart
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-4 GoTriangle Financial Plan
1.2 County Transit Plans In addition to its own existing agency operations and services (“General Services”), GoTriangle helps to implement new regional transit improvements as a member of the GoTransit family of services (see Section 1.5 for more information about the transit providers in the region).7 These regional transit improvements are guided by the Durham County Bus and Rail Investment Plan (Durham Transit Plan), The Bus and Rail Investment Plan in Orange County (Orange Transit Plan), and the Wake County Transit Plan (Wake Transit Plan). The process for developing these county transit plans began in 2008, when a blue- ribbon group of Triangle leaders (the Special Transit Advisory Commission, or STAC), began meeting. In 2009, the STAC unanimously recommended a regional vision for bus and rail investments. One year later, the region’s two Metropolitan Planning Organizations (MPO), Durham-Chapel Hill-Carrboro MPO (DCHC- MPO) and Capital Area MPO (CAMPO), fully incorporated the STAC recommendations into their long- range transportation plans. In August 2009, Governor Beverly Purdue signed into law the Congestion Relief and Intermodal Transport Fund Act (House Bill 1488), which enabled local governments and transit authorities to levy new revenues in support of transit. In the ensuing years and with extensive public engagement, each county developed a transit plan which was then adopted by the respective board of county commissioners, the respective MPO, and the GoTriangle Board of Trustees. The Durham Transit Plan9, approved in June 2011, aims for GoDurham, Durham County, and GoTriangle to provide 70,000 additional annual bus hours in Durham County by 2035. To support the increase in bus hours, the Durham Transit Plan also includes additional vehicles and bus-related capital projects such as park-and-rides. The Durham Transit Plan also includes Durham’s planned shares of the Durham-Orange Light Rail Transit (D-O LRT) Project and Durham-Wake Commuter Rail Transit (D-W CRT) Project. Annually, GoTriangle compiles a progress report for the Durham Transit Plan.10 The Orange Transit Plan11, approved in October 2012, aims for Chapel Hill Transit, Orange Public Transportation, and GoTriangle to provide 40,590 additional annual bus hours in Orange County by 2035. As with the Durham Transit Plan, the Orange Transit Plan includes the additional vehicles and infrastructure investments needed to implement the expanded bus hours. The Orange Transit Plan includes the share of the D-O LRT Project not covered by the Durham Transit Plan. It also includes the proposed North-South Corridor Bus Rapid Transit (N-S BRT) Project in Chapel Hill and proposed Hillsborough Amtrak Station. Annually, GoTriangle compiles a progress report for the Orange Transit Plan.12 The Wake County Transit Plan was adopted in June 2016. Beginning in early 2017, GoTriangle in conjunction with partner agencies will conduct a Major Investment Study (MIS) to identify suitable bus rapid transit (BRT) corridors for potential New and/or Small Starts funding. The MIS will also evaluate previous work on the proposed D-W CRT Project as a possible New Starts project. The MIS will provide a prioritization framework for how to implement these projects as a system. The resulting program of
7 https://gotransitnc.org/ 8 0706_NCGS_HB148_090827 9 0706_TPLAN_Durham_ 110600 10 0706_RPT_Durham-Plan-Annual-FY14_140000; 0706_RPT_Combined-GoTriangle-Durham-Orange-Plan-Annual- FY15_150000; 0706_RPT_Durham-Plan-Annual-FY16_160000 11 0706_TPLAN_Orange_121002 12 0706_RPT_Orange-Plan-Annual-FY14_140000; 0706_RPT_Combined-GoTriangle-Durham-Orange-Plan-Annual- FY15_150000; 0706_RPT_Orange-Plan-Annual-FY16_160000
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-5 GoTriangle Financial Plan transit capital projects will be coordinated with plans to develop an 83-mile frequent bus network in Wake County.
1.3 Relationship of County Transit Plans to New Starts Financial Plan The county transit plans are intended to expand upon existing transit investments. As transit providers implement the new projects and services designated to them by the county transit plans, they must maintain their existing transit investments and financial commitments. This Financial Plan includes the existing transit investments and financial commitments that GoTriangle is required to maintain as it implements expansion services and projects. These existing commitments are referred to in the Financial Plan as GoTriangle’s “General Services.” To help transit providers implement expansion projects and services, the county transit plans identify and dedicate new local funding sources, including the taxes and fees authorized by House Bill 148. GoTriangle’s statutory role is to manage these new local transit taxes and fees and provide general oversight of the implementation process. It collects these revenues and disburses them to each transit provider to fund the local share of their expansion projects and services. This Financial Plan includes these dedicated local revenues and disbursements to the transit providers, which are shown in GoTriangle’s financial model as outflows. The disbursements of dedicated local revenues to each transit provider are determined by interlocal implementation agreements among the signatories to the Durham and Orange Transit Plans: Durham County or Orange County, DCHC-MPO, and GoTriangle. Orange County’s implementation agreement13 allocates funding for bus services as 64 percent to Chapel Hill Transit, 24 percent to GoTriangle, and 12 percent to Orange Public Transportation. It also allows Chapel Hill Transit and Orange Public Transportation to redirect a limited portion of their funds to the increased cost of their existing services instead of expansion services. Durham County’s implementation agreement14 also allows GoDurham to fund a limited portion of its increased cost of existing services (its allocations were already defined in the Durham Transit Plan). These provisions do not change the total disbursements from GoTriangle to these agencies. Both implementation agreements call for GoTriangle to create county Staff Working Groups, comprised of staff from each of the transit providers, to discuss developments to the county transit plans. These groups are now meeting jointly to update the county transit plans (see Section 2.2.3). The county transit plans anticipate that the transit providers will cover the full costs of their designated services and projects with their own state and federal grants in addition to the disbursements from GoTriangle. Thus, the full cost of each transit provider’s designated expansion projects and services is reflected in its own financial documents. For example, the proposed N-S BRT Project, a Small Starts project, is managed by Chapel Hill Transit (CHT); GoTriangle’s Financial Plan includes the dedicated local revenues that comprise CHT’s local share of the project. This is shown in the model as an outflow from GoTriangle to CHT. The Financial Plan includes neither the full cost of the N-S BRT Project nor the Small Starts revenues that CHT would receive for the project (see Section 2.4 for more information about the N-S BRT Project). CHT’s financial documents would reflect the disbursement from GoTriangle, the Small Starts revenues, and the full cost of the project. As a transit provider, GoTriangle also receives a portion of the dedicated local revenues to implement transit expansion. These investments include bus services, associated capital investments, and the D-O
13 0706_AGMT_Orange-Plan-Implementation_121024 14 0706_AGMT_Durham-Plan-Implementation_130326
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-6 GoTriangle Financial Plan LRT Project. The full cost of these investments, as well as anticipated corresponding grant revenues, are included in GoTriangle’s financial model. The dedicated local revenues, disbursements to transit providers, and GoTriangle’s share of these disbursements associated with the Durham and Orange Transit Plans are referred to in the financial model as “Durham-Orange” (”D-O”). This Financial Plan includes neither the Wake Transit Plan nor the D-W CRT Project shared by the Durham and Wake Transit Plans. Per interlocal agreement15, Wake Transit Plan revenues and expenditures must be entirely separate from those of the Durham and Orange Transit Plans. Additionally, key planning decisions about the D-W CRT Project and the rest of the Wake Transit Plan have yet to be made; these decisions will be informed by the outcomes of the MIS as described in Section 1.2. For these reasons, potential new revenues and expenditures associated with the Wake Transit Plan are not included in the Financial Plan at this time.
1.4 New Starts Project: D-O LRT Project The largest component of the Durham and Orange Transit Plans is the D-O LRT Project, which is managed by GoTriangle. The implementation period for the D-O LRT Project is planned to be from 2014 through 2028, including Project Development, Engineering, Construction, Testing, and Start-up. On February 11, 2016, the Federal Transit Administration (FTA) signed the combined Final Environmental Impact Statement/Record of Decision (FEIS/ROD) for the project. On December 14, 2016, DCHC-MPO passed a resolution amending the locally-preferred alternative (LPA) for the D-O LRT Project corridor, adding an approximately one-half mile section of alignment and a station at North Carolina Central University (NCCU). Also on December 14, 2016, FTA signed an amended ROD for the project reflecting the changes to the LPA. Construction is anticipated to begin in 2020. The D-O LRT Project includes light rail transit service between the University of North Carolina at Chapel Hill (UNC) Hospitals and NCCU, covering a distance of approximately 17.7 miles of new, dual light rail tracks with 18 stations. The alignment, which would be double-tracked throughout (one track for each direction of travel), would operate primarily at grade in a dedicated right-of-way parallel to existing roadways, with elevated sections throughout due to local topography, to mitigate potential traffic impacts, or to mitigate impacts to environmental features as needed. Figure 1-3 illustrates the light rail alignment, which generally follows Mason Farm Road from UNC Hospitals, turning northeast along Fordham Boulevard, before turning east along North Carolina (NC) 54. The alignment follows along the NC 54 right-of-way eastward past the William and Ida Friday Center for Continuing Education and crosses Little Creek within the NC 54 right-of-way then turns northward, following the right-of-way of George King Road, then eastward to the future Leigh Village development. From Leigh Village, the alignment parallels Interstate 40 (I-40) before turning northeast and north, generally following United States (US) 15-501 toward Duke University. From Duke University, the alignment follows Erwin Road before crossing NC 147 and running on the south side of the existing North Carolina Railroad Company (NCRR) Corridor east through downtown Durham. At Grant Street, the alignment exits the NCRR Corridor and turns south, crossing over NC 147, entering the median of Alston Avenue just south of the existing freeway interchange, and terminating at the NCCU Station at the
15 0706_AGMT_Wake-Transit-Governance_ILA_160000
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-7 GoTriangle Financial Plan intersection of Alston Avenue and Lawson Street. A rail operations and maintenance facility is proposed to be located along I-40 adjacent to Farrington Road. The light rail system would operate at 10-minute headways during peak hours, 20-minute headways during off-peak hours, and 20-minute and 30-minute headways on weekends. End-to-end travel time is estimated to be approximately 44 to 46 minutes.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-8 GoTriangle Financial Plan Figure 1-3: D-O LRT Project Alignment
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-9 GoTriangle Financial Plan
1.5 Relationship of GoTriangle to Local Transit Systems
1.5.1 GoDurham GoDurham (formerly the Durham Area Transit Authority, or DATA) has a fixed route system and a complementary paratransit service called GoDurham ACCESS that transports clients to various places within the City of Durham. By contract with the City of Durham, GoTriangle is responsible for overseeing GoDurham’s fixed route and paratransit operations, service planning, daily management, and marketing.16 The final approval of all GoDurham routes, GoDurham’s operating budget, and major policy decisions rests with the Durham City Council as part of its annual budget process. GoTriangle’s Fiscal Year (FY) 2017 budget estimates annual GoDurham oversight costs at $875,95417. The Financial Plan assumes that GoTriangle will continue to provide oversight of GoDurham services over the analysis period and will continue to be reimbursed for 100 percent of the associated costs. The Financial Plan also includes the dedicated local transit revenues that GoTriangle will reimburse to GoDurham per the Durham Transit Plan.
1.5.2 Durham County ACCESS Durham County ACCESS is a separate service from GoDurham ACCESS; it serves areas of the County not covered by GoDurham ACCESS. It is managed by Durham County Cooperative Extension. However, the GoDurham and Durham County ACCESS services are coordinated and share the same brand, fleet, and garage. Through a contract between the City of Durham and Durham County, GoDurham includes the operations of Durham County ACCESS service in its own contract with GoTriangle. GoTriangle does not have direct financial responsibilities for the general and daily operations of Durham County ACCESS as it does with GoDurham ACCESS. However, the Financial Plan includes the dedicated local transit revenues that GoTriangle will reimburse to Durham County ACCESS per the Durham Transit Plan.
1.5.3 Chapel Hill Transit Chapel Hill Transit (CHT) is a multijurisdictional agency formed by a partnership of the Town of Chapel Hill, Town of Carrboro, and the University of North Carolina at Chapel Hill. CHT is responsible for regular and express bus and demand-response service in the Chapel Hill, Carrboro, and the University area. CHT also provides regional express bus service to Hillsborough, in cooperation with GoTriangle. GoTriangle does not have financial responsibilities for the general and daily operations of CHT. However, the Financial Plan includes the dedicated local transit revenues that GoTriangle will reimburse to CHT per the Orange Transit Plan.
1.5.4 Orange Public Transportation Orange Public Transportation (OPT) is a County agency that provides demand-response service in unincorporated Orange County and circulator service within Hillsborough in cooperation with the Town of Hillsborough. OPT is responsible for providing transportation services to all residents of unincorporated
16 0706_CONTR_GoDurham-Fixed-Route; 0706_CONTR_GoDurham-Demand-Response 17 0706_BUDG_GoTriangle-FY17_170000 (p.34)
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-10 GoTriangle Financial Plan Orange County, the Town of Hillsborough, and a portion of the City of Mebane with destinations within and beyond Orange County’s borders. GoTriangle does not have financial responsibilities for the general and daily operations of OPT. However, the Financial Plan includes the dedicated local transit revenues that GoTriangle will reimburse to OPT per the Orange Transit Plan.
1.5.5 GoRaleigh GoRaleigh (formerly Capital Area Transit, or CAT) provides local, express, and circulator fixed‐route and demand‐response bus service throughout the City of Raleigh. GoTriangle does not have financial responsibilities for the general and daily operations of GoRaleigh. This Financial Plan does not include new revenues or expenditures that may arise from the Wake Transit Plan, as described in Section 1.3.
1.5.6 GoCary GoCary (formerly Cary Transit or C‐Tran) provides fixed‐route bus and demand-response service within the Town of Cary. GoTriangle does not have financial responsibilities for the general and daily operations of GoCary. This Financial Plan does not include new revenues or expenditures that may arise from the Wake Transit Plan, as described in Section 1.3.
1.6 GoTriangle Historical Data
1.6.1 Capital Expenses Table 1-3 summarizes GoTriangle’s capital expenses associated with bus, vanpool, and paratransit services by type for FY 2005 through FY 2015, as reported by NTD. Between 2008 and 2010, GoTriangle spent most of its capital budget on replacing and adding vehicles to its bus and vanpool fleet. In 2012, GoTriangle spent the majority of its capital budget on the acquisition of revenue vehicles for replacement. Expenses in 2014 and 2015 included investments in communication systems. Table 1-4 shows the expenditures incurred between 2005 and 2007 associated with previous efforts to implement high capacity regional service (regional rail) within the GoTriangle service area, in Year of Expenditure (YOE) Millions.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-11 GoTriangle Financial Plan Table 1-3: GoTriangle Bus-Related Capital Expenditures by Type, 2005-2015 (YOE Millions)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total
Guideway $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Passenger $0.0 $0.0 $0.0 $0.2 $1.3 $0.1 $0.0 $0.0 $0.0 $0.0 $0.0 $1.6 stations Administrative $0.0 $0.0 $0.9 $0.0 $0.1 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $1.0 buildings Maintenance $0.0 $0.0 $0.9 $1.3 $0.1 $0.1 $0.0 $0.0 $0.4 $0.05 $0.8 $3.7 buildings Revenue vehicles $0.0 $0.0 $0.0 $7.7 $5.6 $3.1 $0.5 $6.4 $0.5 $0.0 $0.1 $23.9 Fare revenue collection $0.0 $0.0 $0.0 $0.0 $0.05 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.1 equipment Communication information $2.6 $0.7 $0.4 $0.2 $1.0 $0.6 $0.4 $0.4 $0.3 $0.06 $0.2 $6.9 systems Other (includes $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.03 $0.0 $0.0 service vehicles) Total $2.6 $0.7 $2.2 $9.4 $8.2 $3.9 $0.9 $6.8 $1.2 $0.1 $1.1 $37.1 Source: National Transit Database. Note: Totals may not sum exactly due to rounding. Table 1-4: GoTriangle Regional Rail Capital Expenditures by Type, 2005-2015 (YOE Millions)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total
Guideway $0.0 $0.0 $4.5 ------$4.5 Passenger $0.0 $0.0 $2.0 ------$2.0 stations Administrative $0.0 $0.0 $0.0 ------$0.0 buildings Maintenance $0.0 $0.0 $0.0 ------$0.0 buildings
Revenue vehicles $0.0 $0.0 $0.0 ------$0.0 Fare revenue collection $0.0 $0.0 $0.0 ------$0.0 equipment Communication information $0.0 $0.0 $0.0 ------$0.0 systems Other (includes $23.2 $24.5 $0.0 ------$47.7 service vehicles) Total $23.2 $24.5 $6.5 ------$54.2 Source: National Transit Database. Note: Totals may not sum exactly due to rounding.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-12 GoTriangle Financial Plan 1.6.2 Capital Funding Table 1-5 summarizes the federal, state, and local funding sources used for GoTriangle’s capital investments for FY 2005 through FY 2015, as reported to NTD. During this period, close to 52 percent of capital funds were from federal formula and capital grants. Details of each capital funding source are provided in Section 2.5. Table 1-5: GoTriangle Capital Funding Sources, 2005-2015 (YOE Millions)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total Federal FTA capital $15.0 $8.6 $5.9 $3.4 $0.5 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $33.40 programs
FTA formula $0.0 $0.0 $0.0 $2.6 $0.7 $3.2 $0.5 $4.9 $1.0 $0.08 $0.8 $13.78
USDOT $0.0 $0.0 $0.0 $0.0 $3.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $3.00
Total federal $15.0 $8.6 $5.9 $6.0 $4.1 $3.2 $0.5 $4.9 $1.0 $0.08 $0.8 $50.08
State
General funds $10.8 $5.0 $2.4 $1.0 $1.7 $0.5 $0.1 $0.9 $0.06 $0.06 $0.2 $22.72
Local
General funds $0.0 $0.0 $0.0 $1.7 $0.2 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $1.90
$5 vehicle registration fee and $4.0 $4.2 $0.4 $0.0 $0.0 $0.3 $0.5 $1.0 $0.2 $0.0 $0.0 $10.60 vehicle rental tax
Other $0.0 $7.5 $0.0 $0.7 $2.1 $0.0 $0.0 $0.0 $0.0 $0.0 $0.1 $10.40
Total local $4.0 $11.7 $0.4 $2.4 $2.2 $0.3 $0.5 $1.0 $0.2 $0.0 $0.1 $22.70
Total capital $29.8 $25.3 $8.8 $9.4 $8.1 $4.0 $1.1 $6.8 $1.3 $0.15 $1.1 $95.85 funds Source: National Transit Database. Note: Totals may not sum exactly due to rounding.
1.6.3 Operating Expenses GoTriangle operates bus, vanpool, and paratransit services. Table 1-6 summarizes operating expenses for FY 2005 through 2015, as reported to NTD. During this period, overall operating costs increased at an average annual growth rate of 10.9 percent. However, this period includes an increase in service levels of approximately 4.1 percent; costs per revenue-hour increased at 6.6 percent. On a per revenue-hour basis, bus service expenditures increased significantly from 2005 through 2008. Between 2008 and 2010, despite service level increases, costs per revenue-hour declined due to the procurement of 22 new buses which replaced inefficient and unreliable vehicles previously in operation. In addition, a drop in fuel prices after fairly significant increases in 2008 contributed to the lower cost per revenue-hour. Since 2010,
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-13 GoTriangle Financial Plan operating expenses have risen due to increases associated with salaries and other operating costs (Figure 1-4). Table 1-6: GoTriangle Operating Costs by Mode, 2005-2015 (YOE Millions)
CAGR 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (2005- 2015) Operating expenses Bus $7.0 $8.2 $8.9 $9.6 $9.7 $10.0 $11.5 $12.5 $13.1 $14.5 $19.3 10.6% Vanpool $1.5 $1.6 $1.9 $2.1 $2.3 $2.5 $2.7 $2.9 $3.1 $3.4 $3.4 8.2% Paratransit $0.4 $0.5 $0.9 $0.9 $1.2 $1.4 $1.6 $1.8 $2.0 $2.4 $2.8 $20.0% Total $9.0 $10.3 $11.6 $12.6 $13.3 $13.9 $15.8 $17.2 $18.2 $20.3 $25.4 $11.0% O&M cost per revenue hour Bus $77.6 $90.9 $93.6 $104.1 $98.2 $96.9 $105.0 $116.7 $120.2 $125.5 $150.2 6.8% Vanpool $63.4 $61.2 $79.8 $78.2 $72.1 $91.7 $102.4 $100.4 $106.9 $118.2 $114.7 6.1% Paratransit $72.7 $86.2 $137.8 $131.7 $124.3 $113.8 $113.0 $111.0 $115.7 $120.8 $127.0 5.7% Total $74.5 $84.3 $93.3 $100.2 $94.2 $97.4 $105.3 $113.0 $117.2 $123.7 $141.6 6.6% Year-over- year 7% 13% 11% 7% -6% 3% 8% 7% 4% 6% 14% - growth Source: National Transit Database. Figure 1-4 shows O&M costs by expenditure type. Salaries, wages, and benefits account for about 60 percent of the total O&M costs, materials/supplies account for about 16 percent and other operating costs account for approximately 24 percent. Figure 1-4: GoTriangle Operating Costs by Expenditure Type, 2005-2015 (YOE Millions)
$30
$25
$20
$15
Millions $10
$5
$0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Salary, Wages, Benefits Materials and Supplies Other Operating Costs
Source: National Transit Database.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-14 GoTriangle Financial Plan 1.6.4 Operating Revenues Table 1-7 summarizes the sources of funding for operating expenditures at the federal, state, and local levels for FY 2005 through FY 2015. Descriptions and details of these revenue sources are provided in Section 3.4. Federal funding (including FTA formula funds for preventive maintenance) and state operating assistance each accounted for approximately 19 percent of total operating funds over this period. Dedicated local revenues from GoTriangle’s vehicle registration fees and vehicle rental tax accounted for 45 percent. Farebox revenues comprised about 15 percent of operating revenues. The farebox recovery ratio including all modes was 15 percent on average during this period. Table 1-8 shows GoTriangle’s farebox recovery ratio by mode. Table 1-7: GoTriangle Operating Revenues, 2005-2015 (YOE Millions)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Federal FTA formula $2.0 $1.4 $1.7 $1.9 $1.7 $2.2 $2.4 $4.9 $1.3 $2.1 $1.7 Other FTA $1.7 $1.5 $1.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $2.5 Total federal $3.7 $2.9 $2.7 $1.9 $1.7 $2.2 $2.4 $4.9 $1.3 $2.1 $4.2 State Operating assistance $3.1 $2.3 $3.7 $2.2 $2.2 $2.2 $2.6 $2.3 $2.5 $2.1 $2.5 Local Farebox revenues $1.2 $1.6 $1.8 $1.9 $2.3 $2.5 $2.6 $2.9 $2.7 $2.8 $2.9 Local operating $0.0 $1.5 $1.2 $0.9 $0.9 $0.3 $0.0 $0.0 $0.0 $0.0 $8.7 assistance Dedicated taxes $0.9 $0.9 $5.0 $5.4 $5.4 $4.4 $4.7 $6.8 $11.4 $12.9 $8.2 Other $0.1 $1.1 $0.9 $0.6 $1.6 $2.5 $3.8 $0.5 $0.4 $0.4 $0.7 local/miscellaneous Total local $2.3 $5.1 $8.9 $8.8 $9.0 $9.7 $11.1 $10.2 $14.5 $16.1 $20.4 Total operating funds $9.0 $10.3 $15.3 $12.9 $12.9 $14.1 $16.0 $17.4 $18.3 $20.3 $27.0
Source: National Transit Database. Table 1-8: GoTriangle Farebox Recovery Ratio, 2005-2015
Farebox Recovery 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Avg. Ratio Bus 0.09 0.12 0.12 0.11 0.12 0.13 0.13 0.14 0.15 0.14 0.11 0.12 Vanpool 0.32 0.32 0.36 0.34 0.38 0.35 0.29 0.26 0.23 0.20 0.21 0.30 Paratransit 0.30 0.25 0.06 0.18 0.15 0.24 0.18 0.18 0.02 0.02 0.01 0.14 Total 0.14 0.16 0.15 0.15 0.17 0.18 0.16 0.17 0.15 0.14 0.11 0.15
Source: Data analysis from National Transit Database.
1.6.5 Dedicated Local Revenues Until 2013, GoTriangle had two dedicated local revenues: a $5 vehicle registration fee and a 5 percent vehicle rental tax. Today, under authorization from House Bill 148, GoTriangle collects three more
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-15 GoTriangle Financial Plan dedicated local revenues in addition to the $5 vehicle registration fee and vehicle rental tax: a 0.5 percent local sales tax and vehicle registration fees of $7 and $3. These additional revenues are only collected in Durham and Orange counties, and they are only used to implement the Durham and Orange Transit Plans. A portion of the vehicle rental tax has also been dedicated to the Transit Plans. Table 1-9 summarizes the receipts from these revenue sources since 2005. Further information about these revenues can be found in Section 3.4. Table 1-9: GoTriangle Dedicated Tax and Fee Revenues, 2006-2016 (YOE Millions)
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Vehicle registration fees - $5.1 $5.5 $5.4 $5.4 $5.2 $5.5 $5.5 $5.6 $5.6 $6.0 $6.0 $5 Vehicle rental tax $7.9 $8.8 $9.2 $8.2 $7.4 $8.4 $8.6 $9.0 $9.6 $9.9 $10.7 Vehicle registration fees ------$0.7 $1.0 $318 Vehicle registration fees ------$1.7 $2.3 $2.3 $719 Local sales tax20 ------$4.7 $28.5 $30.6 $31.5 Total $13.0 $14.2 $14.6 $13.6 $12.6 $13.9 $14.1 $19.3 $45.4 $49.5 $51.5 Source: GoTriangle Comprehensive Annual Financial Reports and GoTriangle staff.
1.6.6 Service Levels and Ridership Table 1-10 summarizes GoTriangle service levels (vehicle revenue-miles and vehicle revenue-hours) from 2005 through 2015 by mode, as reported to NTD. By 2011, bus service levels had increased to 109,000 vehicle revenue-hours. In terms of vehicle revenue-miles, system wide revenue-miles reached 3.8 million vehicle revenue-miles by 2010, remained stable through 2013, and increased to 4.2 million vehicle revenue-miles by 2015. The average annual growth over the 2005 through 2015 period for bus services is estimated at 3.6 percent for vehicle revenue-hours and 3.7 percent for vehicle revenue-miles.
18 Collection began in October 2014 (FY 2015). 19 Collection began in July 2013 (FY 2014). 20 Collection began in April 2013 (FY 2013).
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-16 GoTriangle Financial Plan Table 1-10: GoTriangle Service Levels by Mode, 2005-2015
CAGR 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (05- 15) Vehicle revenue-miles (millions) Bus 1.8 2.0 2.0 2.0 2.1 2.3 2.3 2.2 2.2 2.4 2.6 3.7% Vanpool 1.0 1.1 1.0 1.1 1.3 1.2 1.1 1.1 1.1 1.0 1.1 1.0% Para- 0.2 0.2 0.2 0.2 0.2 0.3 0.3 0.4 0.4 0.5 0.5 9.6% transit Total 2.9 3.2 3.1 3.3 3.6 3.8 3.7 3.7 3.7 3.9 4.2 3.8% Vehicle revenue-hours (thousands) Bus 90.5 89.9 94.7 92.0 99.3 102.9 109.3 107.7 109.5 115.3 128.4 3.6% Vanpool 24.1 26.3 23.5 26.6 31.7 27.1 26.4 29.4 29.1 28.8 29.3 2.0% Para- 6.2 5.7 6.5 7.2 10.1 12.3 14.6 15.9 17.1 19.8 21.9 13.5% transit Total 120.7 121.9 124.7 125.8 141.1 142.3 150.4 153.0 155.9 163.9 179.6 4.1% Source: National Transit Database. Table 1-11 summarizes GoTriangle ridership levels by service. In 2015, GoTriangle served over 2.1 million passenger trips, with bus service accounting for 84 percent (1.8 million) of those trips. Overall, ridership grew 7.6 percent annually over this period. When accounting for service level increases (based on passengers per vehicle revenue-miles), bus ridership growth is estimated at 6 percent annually. Table 1-11: GoTriangle Ridership, 2005-2015 (Thousands)
CAGR 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (05- 15) Bus 723.2 780.3 802.6 842.3 939.3 1,118.4 1,091.6 1,287.0 1,578.5 1,769.2 1,843.7 9.8% Vanpool 320.8 375.5 415.9 380.5 469.9 533.1 418.2 367.9 350.9 338.3 310.3 -0.3% Para- 8.1 10.8 10.9 12.8 17.2 18.6 25.2 29.1 29.1 28.3 34.9 15.7% transit Total 1,052.1 1,166.6 1,229.5 1,235.6 1,426.4 1,670.1 1,535.1 1,684.1 1,958.7 2,135.9 2,188.9 7.6% Source: National Transit Database.
1.7 Regional Economic Conditions
1.7.1 Population The Triangle region (comprised of eight counties: Chatham, Durham, Franklin, Granville, Harnett, Johnston, Orange, and Wake) has experienced significant population growth over the last decade, and this trend is expected to continue through 2040. Similarly, the counties that GoTriangle primarily serves (Durham, Orange, and Wake, the “GoTriangle service area”) have experienced significant growth in population. From 2000 through 2015, population increased at an average annual growth rate of 2.7 percent in the Triangle region and at 2.8 percent per year in the GoTriangle service area. Growth was particularly high in Wake County, with a 3.3 percent average annual growth rate for the 2000-2015 period. This level of growth is higher than the annual growth experienced in the state of North Carolina (1.5 percent) and the United States (0.9 percent) over the same period.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-17 GoTriangle Financial Plan The Durham-Chapel Hill-Carrboro (DCHC) metropolitan area is also growing rapidly; population growth is expected to be 37 percent from 2016 through 2035. The D-O Corridor is located in the heart of the forecasted growth; its population is expected to grow by nearly 50 percent in the same time frame. Table 1-12 summarizes the population growth estimates. The anticipated high growth is due to a strong economic base driven by major employment centers such as Research Triangle Park, Raleigh-Durham International Airport, and educational institutions (e.g. Duke University, UNC, and North Carolina Central University) as well as a diversity of urban, rural, and residential settings that offer a high quality of life. Table 1-12: Population Forecast for DCHC Metropolitan Area and the D-O Corridor
Percent Change Population 2016 2035 CAGR 2016-2035 Metropolitan area (DCHC-MPO) 434,200 595,600 37.2% 1.7% D-O Corridor 67,600 97,600 44.4% 1.2% D-O LRT Project stations (1/2-mile) 42,600 64,400 51.2% 2.2% Source: DCHC-MPO,2040 Metropolitan Transportation Plan,21 Transportation Analysis Zones as reported in the New Starts Land Use Template for the D-O LRT Project (December 2016).
1.7.2 Employment The major employers in the Triangle region include institutions of higher education and their associated medical centers, technology firms, and state and local governments. Over 90 percent of the region’s employment is located in the three-county GoTriangle service area. According to data from the Bureau of Economic Analysis,22 employment in Durham, Orange, and Wake counties increased at an annual average growth rate of almost 2.3 percent from 2000 through 2015, with most of the growth occurring in 2004 through 2007. Since 2010, employment has steadily increased, growing at an average annual rate of 3 percent through 2015. Table 1-13 summarizes the Triangle region employment forecast developed by the DCHC-MPO. Average annual employment growth in the DCHC metropolitan region is forecasted at 2.0 percent. Growth within the D-O Corridor is in line with the employment growth at the metropolitan area level. Table 1-13: Employment Forecast for DCHC Metropolitan Area and the D-O Corridor
Percent Change Employment 2016 2035 CAGR 2016-2035 Metropolitan area (DCHC-MPO) 270,500 393,300 45.4% 2.0% D-O Corridor 106,100 151,800 43.1% 1.9% D-O LRT Project stations (1/2-mile) 79,200 113,500 43.3% 1.9% Source: DCHC-MPO,2040 Metropolitan Transportation Plan,23 Transportation Analysis Zones as reported in the New Starts Land Use Template for the D-O LRT Project (December 2016). Unemployment in the three-county GoTriangle service area reached its highest rate in 2009, at 8.2 percent. The rate of unemployment in the GoTriangle service area has generally tracked lower than the state and the nation over the last decade, as shown on Figure 1-5. In 2015, the unemployment rates for Durham, Orange and Wake counties were 5.0, 4.6, and 4.7 percent, respectively; the North Carolina
21 0407L_ATT_DCHC-MTP2040-DOLRT-Excerpt_161200 22 Cambridge Systematics analysis of BEA data from Regional Economic Accounts, available at http://www.bea.gov/. 23 0407L_ATT_DCHC-MTP2040-DOLRT-Excerpt_161200
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-18 GoTriangle Financial Plan unemployment rate was 5.7 percent in the same period. Table 1-14 summarizes the unemployment rates for the GoTriangle service area counties, North Carolina, and the United States for selected years. The Congressional Budget Office (CBO) forecasts that the unemployment rate in the United States will drop to 4.5 percent in FY 2017. By the end of 2026, the unemployment rate is projected to remain relatively stable at around 4.9 percent.24 Figure 1-5: Unemployment Rates, 2000-2015
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
3-Cty NC US
Source: Bureau of Labor Statistics. Table 1-14: Unemployment Rates, 1990-2015
Three- North United Year Durham Orange Wake County Carolina States 1990 2.7 2.5 2.6 2.6 4.2 5.6 1995 3.1 2.0 2.4 2.5 4.4 5.6 2000 3.0 2.5 2.4 2.6 3.7 4.0 2005 4.4 3.8 4.1 4.1 5.3 5.1 2010 8.0 6.5 8.4 8.1 10.6 9.6 2015 5.0 4.6 4.7 4.7 5.7 5.3
Source: Bureau of Labor Statistics.
1.7.3 Inflation Figure 1-6 shows annual inflation rates for the United States and the southern states, measured by the Consumer Price Index (CPI). The average inflation rate over the last 15 years was estimated at 2.2 percent both for the United States and for the southern states. Forecasts from the CBO for FY 2016 through FY
24 Congressional Budget Office Economic Projections, August 2015.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-19 GoTriangle Financial Plan 2026 estimate inflation at 1.4 percent in 2016. The inflation rate is estimated to increase to 2.4 percent in 2017 and remain stable through 2026.25 These CBO forecasts were applied to the Financial Plan as appropriate. For instance, inflation was used to grow general administrative O&M expenses. Annual growth rates for revenue sources were not specifically tied to inflation. Annual growth rates for revenue sources were based on historical trends and/or regional forecasts developed for the Durham and Orange Transit Plans. Figure 1-6: Consumer Price Index (CPI), United States and Southern States, 2000-2015
5.0%
4.0%
3.0%
2.0%
1.0%
0.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
-1.0%
South US
Source: Bureau of Labor Statistics.
1.7.4 Raleigh-Durham International Airport Passengers The volume of passengers at Raleigh-Durham International Airport (RDU) is one of the main factors that influences vehicle rental tax revenues. RDU is located in Wake County, 11 miles northwest of Raleigh and 10.5 miles southeast of Durham, and provides nonstop air travel to 47 destinations. Nine major airlines and seven regional carriers fly from RDU, serving nearly 400 daily arrivals and departures. The airport underwent major construction in the last decade. In 2011, Phase 2 of the Terminal 2 construction was completed, and work to modernize Terminal 1 was completed in 2014. In 2015, RDU served over 9.9 million passengers, an increase of 4.2 percent compared to 2014. Monthly data show continuing growth
25 Congressional Budget Office Economic Projections, August 2016.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-20 GoTriangle Financial Plan with positive year-over-year changes in passengers since April 2014, with an upward trend continuing through November 2016 (see Figure 1-7), with year-to-date growth already at close to 10 percent. Figure 1-8 shows historical data on passengers served by RDU since 1990. In 2000, passengers at RDU reached 10.4 million, declining to 7.9 million by 2003 due to several factors affecting passenger travel, including 9/11 and the closing of Midwest Airlines (based out of RDU) in 2003. In 2007, passenger volumes reached over 10 million, but economic conditions again led to a decline in passengers through 2009. Since 2010, various airlines (including Delta, JetBlue, and Southwest) have expanded services out of RDU, and passenger volumes have steadily increased each year as the economy continues to recover. Figure 1-7: Year-over-Year Percent Change in Monthly RDU Airport Passengers, 2011-2016
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
Source: RDU Airport Authority.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-21 GoTriangle Financial Plan Figure 1-8: Annual Passengers at RDU Airport, 1990-2015
12
10
8
6 Millions 4 AnnualPassengers 2
0 1990 1995 2000 2005 2010 2015
Source: RDU Airport Authority.
1.8 Updates to Financial Plan from Previous Submittal
1.8.1 Modifications to D-O LRT Project Since the previous submittal of the Financial Plan on February 24, 2016, there have been three main modifications to the D-O LRT Project that impact the capital cost. First, the North Carolina Central University (NCCU) Station Refinement has added approximately one-half mile of alignment and a station at NCCU at an additional cost of approximately $100 million (2016 dollars). Second, a Joint Development program has been added to the project scope at an additional cost of approximately $90 million (2016 dollars). See Section 2.2.3 for more detail on the financial assumptions for the Joint Development program. Third, the construction schedule has been extended by two years, so that the first full year of revenue service is to start in 2029 rather than in 2027. This adjusted schedule better aligns with the anticipated timing of FTA Section 5309 New Starts funding disbursements: a maximum of $100 million YOE per year from 2020 through 2032. This change adds administrative expenses to the base year cost and inflationary expenses to the YOE cost.
1.8.2 Durham and Orange Transit Plans in Financial Model As described in Section 1.3, the financial model includes the allocations that GoTriangle makes to each transit provider per the Durham and Orange Transit Plans. These disbursements fund a portion of the total costs incurred by each transit provider from the dedicated local revenues (sales tax, $3 and $7 registration fees, and vehicle rental tax) that are administered by GoTriangle. The previous version of the Financial Plan had included the full costs of other transit providers’ investments associated with the Durham and Orange Transit Plans, rather than just the share reflected in GoTriangle’s finances.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-22 GoTriangle Financial Plan 1.8.3 N-S BRT Project As in the previous submittal, the Financial Plan includes allocations from GoTriangle to Chapel Hill Transit for the local funding share of its N-S BRT Project. However, the YOE cost of the project has increased from $24.5 million YOE to a projected $125.8 million YOE. Additionally, while the Orange Transit Plan assumed a 25 percent local funding share, Chapel Hill Transit is now assuming a 30 percent local funding share. This proposed increase is included in the Financial Plan. Since GoTriangle is not managing the N-S BRT Project and would not be a recipient of any federal funds for the project, those anticipated project funds are not included in the Financial Plan.
1.8.4 State Funding for D-O LRT Project Since the initial Financial Plan submittal, the potential state funding share for the D-O LRT Project has been reduced from 25 percent to 10 percent. See Section 2.2.2 for more detail on changes to state funding.
1.8.5 Article 43 Sales Tax Forecast The previous forecast for the Article 43 half-cent sales and use tax in Durham and Orange Counties was developed for GoTriangle in 2014 by Dr. Michael Walden, William Neal Reynolds Distinguished Professor of economics at North Carolina State University (NCSU), an expert on the Triangle regional economy. In November 2016, GoTriangle contracted with Moody’s Analytics to provide a second forecast of the sales tax, since it is the largest local revenue source funding the Durham and Orange Transit Plans. Section 3.4.4 compares the methodologies, results, and impacts of the two forecasts.
1.8.6 New Local Funding Sources The Financial Plan base case includes two new local funding sources for the D-O LRT Project. First, the local funding share of the Joint Development program will be funded by a combination of local government grants and private sector investment. About 30 percent of the local share is anticipated to be funded by local governments, and 70 percent is anticipated to be funded by the private sector. The second new local funding source for the D-O LRT Project is the in-kind contribution of D-O LRT Project right-of- way. Section 2.2.3 provides more details for each of these sources. The Financial Plan sensitivity analyses include two more new local funding sources: a private philanthropic campaign and local government funds. Section 4.2.3 provides more information on these additional local funding sources. These two local funding sources are not included in the baseline cash flow.
1.8.7 Source of Historical Data in Financial Model The prior Financial Plan submittal relied on NTD data to analyze trends and develop projections for GoTriangle’s operating and capital expenditures. This source has been changed from NTD to GoTriangle’s financial system, which is more detailed and aligns with GoTriangle’s CAFRs. Historical data from NTD has still been referenced to provide additional context as well as to enable comparison of GoTriangle with other transit providers. There are some immaterial variances between NTD data and the data in GoTriangle’s financial system. Some of the factors in these variances include the reporting of contracted services and timing differences between GoTriangle’s NTD submittals and annual audits.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 1-23 GoTriangle Financial Plan
2. Capital Plan
2.1 D-O LRT Project Capital Cost Assumptions, Estimates, Reviews, and Contingencies The project cost estimates for the D-O LRT Project were developed using unit costs that were based on recent bid prices, historical prices from other transit systems, actual unit prices as published by NCDOT, and RS Means. The development of the unit costs is explained in detail in the project description sheet of the Standard Cost Categories (SCC) worksheet containing the breakdown by cost category.26 The costing elements were defined in a manner that conforms to the FTA SCCs. Multiple independent reviews of the project cost, including by the Project Management Oversight Contractor (PMOC) contracted by FTA, have concluded that the estimates are reasonable.27 The project cost estimates were developed in base-year (2016) dollars and inflated to YOE dollars after including contingency. Base-year dollars were converted to YOE dollars assuming an inflation rate of 3.1 percent based on the 20-year average of the Construction Cost Index (CCI) at the national level published by Engineering News-Record.28 The implementation period for the D-O LRT Project is planned from 2014 through 2028, including Project Development, Engineering, Construction, Testing, and Start-up. Construction is anticipated to begin in 2020. The PMOC review of the methodology used to develop the schedule is included in the supporting documentation.29 The design of the D-O LRT Project is currently at 30 percent, consistent with FTA requirements for the level of design completion at entry into Engineering. The cost estimate includes appropriate levels of allocated contingency across SCC 10 through 80 that are consistent with this stage of design, and unallocated contingency (SCC 90) to account for project risks. The allocated contingency is approximately 19.6 percent of the SCC 10 through 80 cost. The unallocated contingency (SCC 90) is estimated at 9.4 percent of the SCC 10 through 80 cost subtotal before contingency. Combined allocated and unallocated contingencies are estimated at almost 29 percent of the SCC 10 through 80 cost before contingency, or $421.4 million in 2016 dollars. As project costs are further developed in engineering, contingency assumptions will be further refined and reduced. The construction costs, including financing costs, for the D-O LRT Project are estimated at $1,937.7 million in 2016 dollars and $2,476.3 million in YOE dollars. Project development and engineering are estimated at 4.0 and 8.8 percent, respectively, of the construction costs (SCC 10-50) before contingency. Project management and administration also are estimated at about 10.3 percent of the construction costs before contingency. Table 2-1 summarizes the project cost by SCC line item in 2016 and YOE dollars; additional detail is provided in the SCC worksheet in the supporting documentation. Table 2-2 shows the schedule of expenditures in YOE dollars. Section 4.2.5 includes a sensitivity analysis in which the D-O LRT Project capital cost is increased by 10 percent.
26 0407L_EX_SCC-Workbook-161216; 1704B_RPT_Cost-Est-Tech-Report-161114 27 1704E_RPT_Ind-Cost-Review-Lenax-151208; 1704E_RPT_Ind-Cost-Review-AECOM-Oakland-151221; 1704E_LTR_Cabage-Charters-Ind-Cost-Revisions-Complete-160113; 0706_RPT_FTA-PMOC-DOLRT-Cost- Review_160613 28 0704_FMODA-CALC_20-Year-CCI-Average_161117 29 0706_RPT_FTA-PMOC-DOLRT-Schedule-Review_160606
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-1 GoTriangle Financial Plan Table 2-1: D-O LRT Project Cost Estimates
Project Cost Item from SCC Total (2016 Millions) Total (YOE Millions) 10 Guideway and track elements $363.6 469.6 20 Station, stops, terminals, intermodal 209.8 282.7 30 Support facilities: yards, shops, administration buildings 79.5 105.1 40 Site work and special conditions 276.9 346.6 50 Systems 214.4 295.1 60 ROW, land, existing improvements 189.8 224.8 70 Vehicles 104.6 138.9 80 Professional services 301.9 357.9 90 Unallocated contingency 136.4 167.7 Subtotal before finance charges 1,877.0 2,388.6 100 Finance charges 60.7 87.7 Total 1,937.7 2,476.3 Note: Totals may not sum exactly due to rounding. Table 2-2: D-O LRT Project Cost Schedule (YOE Millions)
2014 2015 2016 2017 2018 2019 2020 2021 2022 4.0 14.1 9.1 35.7 37.3 45.3 60.6 155.3 192.9 2023 2024 2025 2026 2027 2028 2029 2030 2031 255.3 481.7 429.5 318.2 245.8 154.3 13.4 11.6 8.0 2032 TOTAL 4.2 2,476.3 Note: Totals may not sum exactly due to rounding.
2.2 Project Capital Funding Sources
2.2.1 Federal Section 5309 New Starts. GoTriangle will request from FTA a New Starts project funding share of 50.0 percent ($1,238.2 million YOE). The Financial Plan anticipates that a Full Funding Grant Agreement (FFGA) will be awarded in 2020, at which time GoTriangle will begin receiving New Starts funds and constructing the project. Any New Starts funding share associated with project costs before 2020 will be paid with local funds over the 2014-2019 period and be reimbursed by FTA in later years. For planning purposes, it is assumed that FTA will allocate no more than $100 million in New Starts funding for the D-O LRT Project in any given year. The Financial Plan also assumes that finance charges (interest plus issuance costs) will be eligible for FTA New Starts funding through 2032, the final year of anticipated New Starts funding based on the reimbursement schedule.
2.2.2 State The Financial Plan includes a planned state funding share of 10 percent of the D-O LRT Project cost, which is $247.6 million YOE. This is the maximum percentage of state funding allowed under current law. By statute, the Secretary of the North Carolina Department of Transportation (NCDOT) is authorized to enter into Full Funding Grant Agreements (FFGAs) to provide matching funds for New Starts projects upon
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-2 GoTriangle Financial Plan completion and FTA approval of Preliminary Engineering and Environmental Impact Studies.30 These state FFGAs have been signed on two occasions: in 2003 for the Lynx Blue Line and in 2012 for the Lynx Blue Line Extension. In both cases, the state committed to fund 25 percent of the project’s capital costs. In 2013, the North Carolina General Assembly passed, and Governor Pat McCrory signed into law, the Strategic Transportation Investments (STI) law to establish a competitive, data-driven process for selecting and funding transportation infrastructure projects throughout the state. Under the STI law, projects are categorized by funding tiers. Overall, the Regional tier gets 30 percent of the STI funding, which is then allocated to each of the state’s seven regions based on population. Transit projects such as the D-O LRT Project, which span two or more counties and serve more than one municipality, are eligible to be funded in the Regional tier. However, the STI law limits funds for transit projects in the Regional tier to a maximum of 10 percent of the regional allocation. In the first biannual STI competitive funding cycle, termed “SPOT 3.0,” the D-O LRT Project achieved a competitive score. Due to the Regional tier allocation cap for transit, the D-O LRT Project was awarded approximately $138 million in the 2016-2025 Statewide Transportation Improvement Program (STIP),31 which was approved by the North Carolina Board of Transportation in June 2015. The D-O LRT Project would have then been eligible for additional funding in future biannual funding cycles, but in August 2015, the final budget adopted by the North Carolina General Assembly (NCGA) and signed by Governor McCrory amended STI to establish a state funding cap of $500,000 for light rail projects. NCDOT subsequently amended the STIP to reflect the statutory change and limited the D-O LRT Project’s state funding in the STIP to $500,000.32 In June 2016, the NCGA adopted a new state budget which repealed the $500,000 cap and replaced it with a new state funding cap of 10 percent of the project’s estimated cost. 33 This change was made in the middle of NCDOT’s current biannual STI competitive funding cycle, termed “SPOT 4.0.” The adopted budget provision also made the D-O LRT Project ineligible for re-entry into the competitive system until “SPOT 5.0,” which will begin in early 2018 and end with an adopted STIP in June 2019. GoTriangle plans to enter the D-O LRT Project into the SPOT 5.0 process to compete for the full 10 percent state share for which the project is eligible.
2.2.3 Local Dedicated Local Revenues. The current local funding commitment for the D-O LRT Project is based on three documents: 1) The Durham County Bus and Rail Investment Plan (Durham Transit Plan), 2) The Bus and Rail Investment Plan in Orange County (Orange Transit Plan), and 3) The Orange County, Durham County, and Research Triangle Regional Public Transportation Authority Interlocal Agreement for Cost Sharing for LRT Rail Project (Cost Sharing Agreement). Each of the first two documents was adopted by
30 0706_NCGS_State-Funding-Grant-Agreements-§136-44.20 31 0706_REF_NCDOT-2016-2025-STIP-DOLRT-Programmed-Funding_150600 32 0407L-ATT-DCHC-STIP2016-25-DOLRT-excerpt_161200 33 0706_NCGS_Change-to-Strategic-Prioritization-Funding-Law-Session-Law-2016-94-Sections-35.12a-d_160414
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-3 GoTriangle Financial Plan the relevant County Board of Commissioners, the GoTriangle Board of Trustees, and the DCHC-MPO.34 The third document was adopted by the counties and GoTriangle.35 The Cost Sharing Agreement commits a portion of each of the four dedicated local revenues (see Table 2-3) to the D-O LRT Project based on a 25 percent share of the estimated construction cost at the time, 36 in 2011 dollars. The Cost Sharing Agreement states that this amount is to fund planning and 37 construction. The adopted Durham and Orange Transit Plans specify the equivalent YOE value of this estimated construction cost as $455.7 million YOE (25 percent of $1,823 million). 38 Of the $455.7 million, $207.5 million will fund pay-as-you-go construction costs, and $248.2 million will fund debt service for limited obligation bonds (see Sections 2.2.4 and 2.2.5). Additionally, the Durham and Orange Transit Plans commit another $161 million YOE in borrowing proceeds to be repaid by the dedicated local revenues.39 Table 2-3: Local Revenues Dedicated in the Durham and Orange Transit Plans
Total Projected During Cash Flow Period Revenue Source (YOE Millions)
Article 43 Half-Cent (0.5%) Sales and Use Tax $1,048.3
Article 50 Five-Percent (5%) Vehicle Rental Tax $54.3
Article 51 Three-Dollar ($3) increase to GoTriangle $27.2 Regional Vehicle Registration Fee Article 52 Seven-Dollar ($7) County Vehicle $63.5 Registration Fee
Total Projected Revenues over 20-Year Period $1,193.4
Portion of Above Revenues Currently Committed to $616.7 (51.7%) the D-O LRT Project
Sales Tax. The largest of the four dedicated local revenue sources is Article 43, a one-half percent sales and use tax collected in Durham and Orange Counties. GoTriangle has statutory authority to levy this tax in Durham, Orange, and Wake Counties.40 Doing so in each county is contingent on the addition of the county to a tax district, a successful referendum, and approval from the Board of County Commissioners. GoTriangle created the Western Triangle Tax District (now known as the Triangle Tax District) in June 2011 41 prior to the Durham referendum. Durham County voters passed their referendum in November 2011, and the Durham County Board of Commissioners passed a resolution authorizing GoTriangle to levy the
34 0706_APRV_Orange-Plan-County-Minutes_121002 (p. 14); 0706_APRV_Orange-Plan-GoTriangle- Minutes_120627 (p.5); 0706_APRV_Orange-Plan-DCHCMPO-Minutes_121022 (p.3); 0706_APRV_Durham-Plan- County-Minutes_110627 (p. 26); 0706_APRV_Durham-Plan-GoTriangle-Minutes_110622 (p. 5); 0706_APRV_Durham-Plan-DCHCMPO-Minutes_110622 (p. 4) 35 0706_AGMT_LRT-Cost-Share_120515 (p. 5) 36 0706_AGMT_LRT-Cost-Share_120515 (pp. 1-2) 37 0706_AGMT_LRT-Cost-Share_120515 (p. 2) 38 0706_TPLAN_Orange_121002 (p. 11) 39 0706_TPLAN_Orange_121002 (p. 25); 0706_TPLAN_Durham_110600 (p.15) 40 0706_NCGS_Article-43-Sales-Tax--§105-506-through-511.4 41 0706_APRV_GoTriangle-Tax-District-Durham_110622
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-4 GoTriangle Financial Plan
42 43 tax. GoTriangle added Orange County to the Tax District in June 2012. Additionally, Orange County and GoTriangle signed an agreement that GoTriangle would not levy the tax until the Board of Commissioners 44 gave further approval. Following the successful Orange referendum in November 2012, the Orange 45 County Board of Commissioners gave its approval. GoTriangle formally levied the tax in both counties in 46 December 2012. The North Carolina Department of Revenue (NCDOR) collects the tax in each county; collections in both counties began April 2013. NCDOR distributes these revenues directly to GoTriangle. More information about historical data and forecasting for the sales tax can be found in Section 3.4.4.47 Vehicle Rental Tax. The second dedicated revenue source is a vehicle rental tax, which is imposed at the rate of five percent on the gross receipts derived by a retailer from the short-term rental of “U-drive-it” vehicles and motorcycles. GoTriangle has statutory authority to levy this tax in Durham, Orange, and Wake 48 49 Counties and did so in November 1997. GoTriangle collects this tax directly from rental vehicle vendors in each of the three counties, including at Raleigh-Durham International Airport.50 Since April 2013, GoTriangle has committed 16 percent of its total vehicle rental tax revenues to fund the Durham and Orange Transit Plans.51 More information about historical data and forecasting for the rental tax can be found in Section 3.4.4. Three Dollar Vehicle Registration Fee. The third dedicated revenue source is a three dollar ($3) vehicle registration fee. Since 1991, prior to the adoption of the Durham and Orange Transit Plans, GoTriangle had already been collecting a five dollar ($5) vehicle registration fee in Durham, Orange, and Wake 52 53 Counties. To fund the Durham and Orange Transit Plans, GoTriangle exercised its statutory authority to increase its fee by three dollars in Durham and Orange Counties and dedicate those new revenues to the county transit plans. To do so, GoTriangle needed to create the Durham-Orange Tax District (distinct from the Western Triangle Tax District) and receive approvals from GoTriangle’s Special Tax Board and both Boards of County Commissioners. GoTriangle created the Durham-Orange Tax District,54 its Special 55 56 Tax Board approved the fee in February 2014, and the Counties approved the fee in March 2014. 57 GoTriangle levied the fee shortly thereafter. The North Carolina Department of Motor Vehicles (NCDMV)
42 0706_APRV_Durham-Authorizing-GoTriangle-Sales-Tax_121126 43 0706_APRV_GoTriangle-Tax-District-Orange_120627 44 0706_AGMT_Orange-GoTriangle-Sales-Tax_120600 45 0706_APRV_Orange-Authorizing-GoTriangle-Sales-Tax_121211 46 0706_APRV_GoTriangle-Sales-Tax_121214 47 The Triangle Tax District was also expanded to include Wake County in June 2016, but this does not impact the financial plan; 0706_APRV_GoTriangle-Tax-District-Wake_160525 48 0706_NCGS_Article-50-Vehicle-Rental-Tax-§105-550-through-555 49 0706_APRV_GoTriangle-Vehicle-Rental-Tax-Levy_971119 50 More information about the collection process for this tax can be found at https://gotransitnc.org/vehicle- rental-taxes 51 0706_TPLAN_Orange_121002 (pp. 22-23); 0706_TPLAN_Durham_ 110600 (p. 13) 52 0706_APRV_GoTriangle-$5-Vehicle-Registration-Fee_910000; 0706_APRV_GoTriangle-$5-Vehicle-Registration- Fee-Ratified_910828 53 0706_NCGS_Article-51-$5-and$3-Vehicle-Registration-Fee-§105-560-through-564 54 0706_APRV_GoTriangle-$3-Tax-District_140226 55 0706_APRV_GoTriangle-Special-Tax-Board-$3-Vehicle-Registration-Fee_140227 56 0706_APRV_Durham-Authorizing-GoTriangle-$3-Vehicle-Registration-Fee_140310; 0706_APRV_Orange- Authorizing-GoTriangle-$3-Vehicle-Registration-Fee_140306. 57 0706_APRV_GoTriangle-$3-Vehicle-Registration-Fee_140326
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-5 GoTriangle Financial Plan collects the fees and distributes them to GoTriangle quarterly. More information about historical data and forecasting for the $3 vehicle registration fee can be found in Section 3.4.4. Seven Dollar Vehicle Registration Fee. The fourth dedicated revenue source is a seven dollar ($7) vehicle registration fee levied by Durham and Orange Counties. The counties have the statutory authority to levy 58 the fee, and since levying the fee they have authorized NCDMV to distribute the revenues directly to 59,60 GoTriangle for the purpose of funding the county transit plans. NCDMV collects the fees and distributes them to GoTriangle quarterly. More information about historical data and forecasting for the $7 vehicle registration fee can be found in Section 3.4.4. Additional Capacity of Dedicated Local Revenues. The Durham and Orange Transit Plans currently commit $455.7 million YOE in dedicated local revenues to the D-O LRT Project. This amount is sufficient to meet the 30 percent commitment requirement for the non- Section 5309 New Starts share of funding for entry into Engineering. However, these taxes and fees have additional capacity that is planned to be committed to the project while continuing to fund the other aspects of the Durham and Orange Transit Plans. The signatories to the original Durham and Orange Transit Plans (Durham County, Orange County, GoTriangle, and DCHC-MPO) are in the process of updating and approving the increased committed amount in the plans. The proposed schedule for this is shown in Table 2-4; the signatory boards are expected to consider the updated plans for approval in April 2017. To develop the updates to the Durham and Orange Transit Plans, GoTriangle has convened a joint Staff Working Group representing Durham County, Orange County, the City of Durham, the Town of Chapel Hill, the Town of Carrboro, the Town of Hillsborough, Triangle J Council of Governments, and DCHC-MPO. The Staff Working Group has met biweekly; in between these meetings smaller groups called Update Teams have met to focus on specific tasks. Additional information about the Update Teams’ objectives and deliverables can be found in the supporting documentation.61
58 0706_NCGS_Article-52-$7-Vehicle-Registration-Fee--§105-570 59 Durham County and Orange County used different methods to authorize the seven dollar fee, but the Orange County resolution has the same effect as the Durham County interlocal agreement. 60 0706_APRV_Durham-Authorizing-GoTriangle-Receipt-$7-Vehicle-Registration-Fee_150520; 0706_APRV_Orange- Authorizing-GoTriangle-Receipt-$7-Vehicle-Registration-Fee_131202 61 0706_MEMO_Staff-Working-Group-Update-Team-Objectives
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-6 GoTriangle Financial Plan Table 2-4: Proposed Schedule for 2017 Approval of the Updated Durham and Orange Transit Plans
Target Date Action
February 12 Release of draft plans for public comment
Presentation of draft plans to Orange County Board of County Commissioners Early March (BOCC), Durham County BOCC, and DCHC-MPO Policy Board
March 12 Close of public comment on draft plans
March 20 Release of proposed final plans
Orange County BOCC and Durham County BOCC consider proposed final plans for Early April approval
April 12 DCHC-MPO Policy Board considers proposed final plans for approval
April 28 GoTriangle Board of Trustees considers proposed final plans for approval
Local Share of Eligible Joint Development Activities. The D-O LRT Project budget includes $90 million in 2016 dollars ($130.2 million YOE) for SCC 20.05, Joint Development, for eligible Joint Development activities to be completed at station sites as part of the project.62 The proposed budget for the Joint Development line item was developed by specifying a level of effort from local government funding and making informed assumptions about private sector financial participation in an overall portfolio of projects. The portfolio of projects is not specific to particular sites at this time, although local government staff already have identified several parcels close to D‐O LRT stations that are strong Joint Development candidates. During Engineering, GoTriangle will work with its local government and private sector partners to advance the evaluation of potential Joint Development opportunities to define the scope, schedule, and budget for the specific Joint Development activities proposed to be included in the FFGA for the D-O LRT Project. The local share of eligible Joint Development activities and associated eligible professional services costs (SCC 80.03) is planned to be funded through local government and private sector contributions.63 The Town of Chapel Hill, Orange County, City of Durham and Durham County have all recently expressed interest in pledging local dollars for Joint Development as part of the D-O LRT Project for opportunities that include an affordable housing component. Planned local government contributions will be committed through inter-local grant agreements, with local governments contributing funds from sources such as the recently approved $5 million bond for low and moderate income housing in Orange County and the City of Durham’s Dedicated Housing Fund which generates approximately $2.5 million (2016 dollars) per year. Planned private sector contributions include cash contributions, tax credit equity, and financing proceeds from credit unions or other financial institutions. As the scope and specific funding source(s) for each Joint Development site are confirmed during Engineering, GoTriangle will execute binding funding agreements with the Joint Development partner entities prior to applying for the FFGA for the D-O LRT Project. In-Kind Right-of-Way Donations. GoTriangle and its local government, institutional, and private sector partners are working together to secure donations of significant portions of the right-of-way required for
62 0513B_MEMO_Joint-Development-and-DOLRT-Proposal_FINAL 63 0513B_MEMO_Planned-Joint-Development-Funding-Sources
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-7 GoTriangle Financial Plan the D-O LRT Project. For the most part, the properties targeted for donation are owned by local governments, public and private universities, banks, and other private entities who will benefit from implementation of the D-O LRT Project due to the proximity of their property to proposed stations. 10 entities have expressed their intent, via written Memoranda of Understanding (MOU) or Letters of Intent (LOI), to dedicate right-of-way needed for the D-O LRT Project, subject to execution of a formal contract.64 The total value of these properties is approximately $18 million in 2016 dollars.65 In addition to these commitments, GoTriangle plans to seek additional donations from other property owners, totaling an additional $5 to $10 million in value. Maps of the documented commitments and additional potential donations are included in the supporting documentation.66 The parcel numbers in the maps link to the parcel numbers listed in the table of estimated property values included in the supporting documentation.67 GoTriangle intends to execute a binding contract with each donor prior to applying for the FFGA for the D-O LRT Project. For the purposes of this Financial Plan, it is assumed that the transfer of property from each donor will occur in 2020.
2.2.4 Financing GoTriangle has statutory authority to issue debt in its enabling legislation.68 State law generally establishes a maximum 40-year final maturity for local government debt, but there is no statutory upper limit on the amount of debt that can be issued. GoTriangle has no outstanding debt; it issued certificates of participation in 2005 but repaid them by 2007. Financing Proceeds for the Local Share of the D-O LRT Project. The local funding share of the D-O LRT Project includes $698.6 million YOE in borrowing proceeds (see summary in Section 2.2.5). Of this total, $409.2 million has already been committed and is to be repaid by committed local revenues as described in Section 2.2.3. The remainder of borrowing proceeds for the local share ($289.4 million) is considered planned. The same local revenue sources are also anticipated to repay this debt and are dedicated to the Durham and Orange Transit Plans, but they have not yet been committed specifically to the D-O LRT Project. The planned borrowing would need to be included in the adopted Durham and Orange Transit Plans before it could be considered committed. Just prior to issuing the debt, GoTriangle will obtain approvals of the financing terms from the GoTriangle Special Tax Board and the Local Government Commission (LGC). As with every unit of local government in North Carolina, the LGC will evaluate the feasibility of the debt prior to issuance. GoTriangle initiated discussions with the LGC regarding the D-O LRT Project Financial Plan in summer 2016. Financing Proceeds to Address Timing of State and Federal Funds. Since the disbursements of state and federal D- O LRT Project funding shares are not anticipated to align perfectly with annual funding needs, $236.4 million in financing proceeds will be used to smooth out the cash flow. This is in addition to the financing that is part of the local funding share. Debt Features. The total borrowing proceeds described above are achieved through two types of financing, summarized in Table 2-5 and described below. All project-related debt is anticipated to be secured by project-related real property and equipment valued at a minimum of 50 percent of the par
64 1808_EX_ROW-MOUs-and-LOIs 65 0706_RPT_FTA-PMOC-DOLRT-Cost-Review_160613 (item 4) 66 1808_DOLRT_Map-Donation-160712-FTA 67 1808_MEMO-Summary-of-Planned-Donations-161228 68 0706_NCGS_GoTriangle-Enabling-Legislation-§160A-600-through-629
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-8 GoTriangle Financial Plan amount of the outstanding debt. For example, this could include the project’s rails and tracks, or the Rail Operations and Maintenance Facility. The Charlotte Area Transit System (CATS) used this same mechanism to secure a Transportation Infrastructure Finance and Innovation Act (TIFIA) loan in 2015 to support construction of the Lynx Blue Line Extension. The intended repayment sources for the debt are the local transit revenues dedicated to the Durham and Orange Transit Plans: the 0.5 percent sales tax, the $7 and $3 vehicle registration fees, and 16 percent of GoTriangle’s vehicle rental tax. Additionally, state and federal grants for the D-O LRT Project would be used to repay some of the debt. Revenues collected per the Wake Transit Plan would not be eligible debt repayment sources. The net debt service coverage ratio for all financing (i.e. intended repayment sources after operating expenses and transfers to reserve accounts over annual debt service) will remain above 1.15. Table 2-5 summarizes the financing plan: Table 2-5: Financing Plan (YOE Millions)
Finance Charges Eligible for Total Finance Charges Sources Par Amount New Starts Funding 2016- 2035 Limited Obligation $535 $86.9 $89.1 Bonds TIFIA Loan $400 $0.8 $116.2
Note: Intended repayment sources for all borrowing are the dedicated local transit revenues and state and federal capital grants.
Limited Obligation Bonds. The Financial Plan assumes three bond issues during the construction period: $120 million (2024), $215 million (2025), and $200 million (2026). The repayment terms vary, with a repayment period between four to six years, including periods of interest-only payments. The cost of issuance is one percent of the par amount, and debt service reserves of 10 percent the par amount were included in the model. All limited obligation bonds will be repaid in full before debt service for the TIFIA loan begins. The assumed interest rate for the limited obligation bonds is four percent. The bonds will be tax-exempt, and therefore the Municipal Market Data (MMD) index was utilized in the analysis of historical rate movements. It is expected the first series of limited obligation bonds (LOB) will be sold in 2024. Over the last 5-year, 10-year, 15-year and 20-year periods, average rates for the 7-year MMD have been 1.52 percent, 2.12 percent, 2.46 percent, and 2.99 percent, respectively. The interest rate history is shown in Figure 2-1. The budgeted rate of four percent is higher than the average rates over each of those time periods, which supports the reasonableness of the assumption.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-9 GoTriangle Financial Plan Figure 2-1: Municipal Market Data (MMD) Index Rates, 1996-2015
Transportation Infrastructure Finance and Innovation Act Loan. In 2020, GoTriangle plans to close on a TIFIA loan for $400 million. TIFIA drawdowns will occur over five years, with the first drawdown of 50 percent in 2024, three drawdowns of 15 percent in 2025-2027, and a final drawdown of 5 percent in 2028 as project construction comes to an end. The cost of issuance is assumed at $800,000, and the debt service reserves are estimated as the lowest of: a) 10 percent of initial par amount; b) the maximum annual debt service; or c) 125 percent of the average annual payments. The TIFIA Loan is projected to utilize the terms of the TIFIA program and to have a maturity 35 years after project completion, assuming a debt service payment deferral period of five years after project completion and interest-only payments for three years (2033-2035). All limited obligation bonds will be repaid in full before debt service for the TIFIA loan begins. The assumed interest rate for the TIFIA loan is five percent. Under the TIFIA credit program, the TIFIA Loan would have an interest rate approximately equal to the 30-year Treasury rate at the time of the loan closing. The TIFIA loan is expected to be entered into in 2020. Over the last 5-year, 10-year, 15-year and 20-year periods, average rates for the 30-year Treasury have been 3.03 percent, 3.66 percent, 4.00 percent, and 4.54 percent, respectively. The assumed five percent rate in this Financial Plan is higher than the average rates over each of those time periods. The TIFIA interest rate assumption is further based on analysis of the interest rate movements for the 30- year Treasury. The change in rates was measured in rolling three year periods from 1993 to the present. The three-year period was chosen as it is equivalent to the approximate time between now and when the TIFIA loan is expected to be executed. Figure 2-2 shows the 30-year Treasury rate history; the vertical lines highlight the periods in which the rates either increased or decreased by 200 basis points from three years prior for the period of 1993 to present. The chart demonstrates that there has been enough interest rate volatility to result in a 200 basis point movement on occasion (0.37 percent of the time measured). Since 1993, there have been three- year periods in which interest rates have decreased by 200 basis points, but there were no three-year periods in which interest rates increased by 200 basis points. The assumed five percent rate in this Financial Plan represents approximately a 200 basis point cushion from the current market. The history supports the reasonableness of the 200 basis points of interest rate cushion.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-10 GoTriangle Financial Plan Figure 2-2: Historical Rate Changes: 30-Year Treasury Bond Rates, 1996-2015
Debt Service Reserves. The Financial Plan includes debt service reserves equal to 10 percent of the par amount for LOBs and the maximum annual debt service for the TIFIA loan.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-11 GoTriangle Financial Plan 2.2.5 Summary Table 2-6 below summarizes the funding sources and levels of commitment for the D-O LRT Project. Nearly 50 percent (49.8 percent) of the non-federal share of the project costs is committed. Table 2-6: D-O LRT Project Capital Funding Sources, Base Case (YOE Millions) Level of Non-Federal Funding Source Amount Funding Share Commitment Funding Share
FTA Section 5309 New Starts $1,238.2 Planned 50.0% n/a
State Funding $247.6 Planned 10.0% 20.0%
Pay-As-You-Go Local Revenues Committed in D-O Transit $207.5 Committed 8.4% 16.8% Plans Limited Obligation Bonds (Repaid by Local Revenues $248.2 Committed 10.0% 20.0% Committed in D-O Transit Plans) Limited Obligation Bonds (Par Amount Committed in D-O $161.0 Committed 6.5% 13.0% Transit Plans) Limited Obligation Bonds (Additional Par beyond D-O $289.4 Planned 11.7% 23.4% Transit Plans) Local Government Grant for Eligible Joint Development $19.5 Planned 0.8% 1.6% Activities In-Kind Right-of-Way $19.4 Planned 0.8% 1.6% Donations Joint Development Local $45.6 Planned 1.8% 3.7% Match
Total Project Cost $2,476.3 N/A 100% 100%
Note: Totals may not sum due to rounding.
2.3 State of Good Repair Reserves The Financial Plan includes reserves for the purpose of maintaining the D-O LRT Project in a state of good repair. Annual transfers into the fund are set at the lowest of either 50 percent of the cash balance or 30 percent of the inflation-adjusted annualized costs of D-O LRT Project assets. Assets with a useful life exceeding 80 years (e.g. right-of-way) are excluded from the annual funding calculation.
2.4 System Capital Cost Estimates and Assumptions The Financial Plan includes GoTriangle’s capital program as well as the local share of other transit providers’ capital investments disbursed by GoTriangle per the Durham and Orange Transit Plans. The assumed local share of these investments has increased since the original county transit plans were adopted; this reflects the transit providers’ more conservative assumptions about anticipated state and
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-12 GoTriangle Financial Plan federal grant revenues. More detail about the Staff Working Group’s updates to these funding assumptions can be found in the annual letters that GoTriangle sends to the transit providers.69 Vehicle Purchases. The Financial Plan includes new and replacement vehicles for GoTriangle as well as the allocations of local revenues dedicated in the Durham and Orange Transit Plans to the transit providers for vehicle purchases. GoTriangle plans to invest $95.7 million YOE in new vehicles (buses, vans and paratransit vehicles) over the 20-year cash flow period. Of this total, $89.3 million will be funded by General Services revenues and $6.4 million will be funded by Durham-Orange allocations to GoTriangle. The average age of GoTriangle’s bus fleet in 2016 was 5.9 years. Based on the level of investment and the bus purchasing/replacement schedule in the Financial Plan, the average age of GoTriangle’s bus fleet will be less than six years over the analysis period. The Financial Plan assumes that the agency will purchase a total of 132 buses, 81 paratransit vehicles, and 135 vans over the 20-year cash flow period to replace existing fleet vehicles.70 For buses, the Financial Plan assumes a replacement schedule of every 12 years as vehicles reach their useful life. The 2015 Bus Fleet Management Plan71 applied an aggressive replacement schedule assuming a vehicle useful life of eight years, based on mileage. For the purpose of the D-O LRT Project Financial Plan, the 2015 bus fleet replacement schedule is applied through 2021, and the next replacement cycle is pushed forward by four years (starting in 2028), assuming vehicle replacements to occur at the end of the bus useful life (i.e. 12 years). This adjustment represents a more realistic and financially feasible scenario. The current costs for buses, vanpool and paratransit vehicles are $461,900, $30,000 and $80,000 in 2016 dollars, respectively. The Financial Plan adjusts these annually for inflation using the average CBO inflation forecast of 2.3 percent. Additionally, GoTriangle will disburse a total of $14.6 million YOE over the cash flow period to the other transit providers for their own vehicle purchases. The number of vehicles that these allocations will provide will depend on the amount of matching state and federal grants received by each transit provider. Other Capital Investments. As with vehicle purchases, the Financial Plan includes other capital investments for GoTriangle as well as the allocations of local revenues dedicated in the Durham and Orange Transit Plans to the transit providers for their own capital investments. For GoTriangle, a total of $69 million YOE in capital investments such as park-and-ride facilities, a smart card fare system, and bus stop improvements will be funded over the 20-year cash flow period (this excludes the Durham-Orange Light Rail Transit Project). Of this total, $66.6 million will be funded by General Services revenues and $2.4 million will be funded by GoTriangle’s Durham-Orange allocations. Capital investments for General Services are estimated at $3.2 million in FY 2017. For FY 2018, $2.5 million are estimated based on the 5-year and 10-year historical averages. Rather than assuming a flat level of spending over the analysis period, the Financial Plan assumes that capital investments will increase at an annual rate of 3.1 percent based on the 20-year average CCI. Additionally, GoTriangle will disburse a total of $55.4 million YOE over the cash flow period to the other transit providers for their own capital investments. The number of projects that these allocations will
69 0706_LTR_Partner-Agencies-Funding-FY17-Durham_160408; 0706_LTR_Partner-Agencies-Funding-FY17- Orange_160408; 0706_LTR_Partner-Agencies-Funding-FY16-Durham_150313; 0706_LTR_Partner-Agencies- Funding-FY16-Orange_150313 70 The Rail Fleet Management Plan, 0108K_SUB_RFMP_v2, is incorporated into the State of Good Repair Reserve 71 0108B_BFMP_v0
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-13 GoTriangle Financial Plan provide will depend on the amount of matching state and federal grants received by each transit provider and the priorities established in the updates to the county transit plans. Hillsborough Amtrak Station. The Orange Transit Plan includes construction of the proposed Hillsborough Amtrak Station. The project, which is scheduled to be completed in 2020, is funded jointly by NCDOT, the Town of Hillsborough, and the dedicated local revenues managed by GoTriangle per the Orange Transit Plan. This Financial Plan includes GoTriangle’s share of the project. 72 North-South Corridor Bus Rapid Transit Project (N-S BRT). The Orange Transit Plan also includes the proposed N-S BRT Project, which consists of bus lanes and corridor improvements along the Martin Luther King Jr. Boulevard – South Columbia Street – US 15-501 South Corridor. Chapel Hill Transit (CHT), the project sponsor, selected a Locally Preferred Alternative (LPA) for the project in April 2016. DCHC-MPO adopted the project into the fiscally constrained long range plan in October 2016. The project was admitted to Small Starts Project Development in November 2016.73 CHT is assuming a 70 percent federal funding share and a 30 percent local funding share. To date, $6.125 million YOE in local funds have been committed in the Orange Transit Plan.74 The remaining local share is proposed to be funded by Orange Transit Plan revenues as well, so it is included in this Financial Plan as a planning assumption. Transit Oriented Development Study. In 2015 GoTriangle, in partnership with the Town of Chapel Hill, City of Durham, and Triangle J Council of Governments (TJCOG) was awarded a competitive grant in the FTA’s first-ever Transit-Oriented Development Planning Pilot Program in the amount of $1,691,615. GoTriangle and its partners have selected a consultant and are executing a work plan to perform a comprehensive set of transit-oriented planning tasks around each of the D-O LRT Project stations. Tasks include market analysis, development of comprehensive station-area plans, regulations and policies, defining and estimating station-area infrastructure needs (streets, water, sewer, etc.), evaluating affordable housing policies, and working on joint development and value capture projects. Work under the grant is expected to be completed in 2018.
72 0706_MEMO_Hillsborough-Station 73 0706_ATT_NS-BRT-Request-PD-Purpose-and-Need-Statement_140600; 0706_ATT_NS-BRT-Request-PD- Executive-Summary_160700; 0706_LTR_NS-BRT-Request-PD_160902 74 0706_LTR_NS-BRT-GoTriangle-Local-Funding-Commitment-to-FTA_160929
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-14 GoTriangle Financial Plan 2.5 System Capital Funding Sources To fund capital investments, this Financial Plan includes GoTriangle’s General Services revenues as well as the balance of operations from General Services and the Durham and Orange Transit Plans. Table 2-7 summarizes these capital funding sources. More information about the local revenues can be found in Section 3.4.4. Table 2-7: System Capital Funding Sources
Growth Funding Source Other Assumptions Historical Trend Assumptions Applied first to capital, and then to FTA Section 5307 2.12% per year CAGR (2006-2016): 4.5% support operations (preventive Formula (FAST Act) CAGR (2011-2016): 2.4% maintenance) Max (2008-2016): $4,804,254 FTA 5307 Surface Applied first to capital, and then to 2.12% per year Min (2008-2016): $68,800 Transportation support operations (preventive (FAST Act) Average (2008-2016): Program (STP) maintenance) $1,120,761 FY 2016: $237,099 FTA Section 5339 FY 2015: $309,680 2.12% per year Bus and Bus N/A FY 2016: $282,434 (FAST Act) Facilities Program CAGR (2013-2016): -1.6% Historically, GoTriangle has received Other Federal N/A other types of federal funds, but these N/A Funds are not included in the Financial Plan. State share of total Capital State Match N/A 10% of non-New Starts capital needs Funding, (2006-2015): 17.6% 2016 cash balance as reported in the FY 2016 Comprehensive Annual Financial Report (CAFR). Balance of Annual cash balances from operations N/A N/A Operations are transferred to capital after all General Services operating expenses and operating cash reserve needs are covered.
FTA Section 5307 Urbanized Area (UZA) Formula and Surface Transportation Program (STP). Historically, GoTriangle has received about 16 percent of the total FTA Section 5307 funds (bus tier) allocated to two UZAs: Raleigh and Durham. This Financial Plan assumes that GoTriangle’s receipt of these revenues will increase at 2.12 percent annually through 2036. This is in line with the projected growth of federal funding per the FAST Act, which maintains current program structures and funding shares between highways and transit and increases funding by 11 percent over the next five years. This is a conservative assumption, since the annual apportionments to GoTriangle grew at an average annual rate of 4.5 percent from FY 2006 to FY 2016. The Financial Plan also assumes additional bus tier allocations associated with GoTriangle’s expansion of bus service, and fixed guideway allocations associated with GoTriangle’s operation of the D-O LRT Project. After two years of operating the D-O LRT Project, the Durham region
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-15 GoTriangle Financial Plan will be eligible for FTA Section 5307 formula funding under the fixed guideway tier. The financial model assumes an allocation of approximately $1.1 million by 2031, increasing at 2.12 percent annually through 2035, in line with the projected growth of federal funding per the FAST Act. In the financial model, revenue forecast of existing FTA 5307 formula allocations and increases under the bus and fixed guideway tiers due to expansion services are developed separately, but the allocations are combined when applied to the capital needs. The Financial Plan assumes that if FTA 5307 funds exceed 80 percent of capital needs in any given year, those additional revenues are transferred to operations for preventive maintenance. FTA Section 5339 Bus and Bus Facilities Program. In 2015 and 2016, GoTriangle received $309,680 and $282,434, respectively, from FTA Section 5339 formula funds. The assumption for the Financial Plan is that funding will increase at 2.12 percent annually through 2036, in line with FAST Act growth rates. Although the FAST Act re-established a Bus Discretionary Program, potential funding from this program is not included in the Financial Plan. Other Federal Capital Grants. Over the last decade, GoTriangle has received approximately $1.7 million from other federal funding programs such as Sections 5310 and 5316. For the purpose of the D-O LRT Project Financial Plan, no funding from these and other federal programs is included. State Match. State funding for capital investments, excluding funding for the D-O LRT Project, is estimated at $10.4 million over the 20-year cash flow period. The state provides matching funds to federal funding programs, generally about half of the non-federal share. Over the last 11 years, GoTriangle has received $23 million in state funding for capital expenses, accounting for about 19 percent of the total capital spending from 2005 through 2015. The Financial Plan assumes that the state will continue to provide half of the matching requirements for federal grants. For example, for federal UZA formula funds, the state is assumed to provide matching funds at 10 percent. The state may also fund capital projects through the competitive Strategic Transportation Investments (STI) process. Balance of Operations. After accounting for the above federal and state revenues, remaining capital needs will be funded by the balance of operations. The cumulative balance of operations over the 20-year cash flow period is estimated at $820.2 million, after transfers to the O&M reserves. These funds will be used to fund Durham-Orange capital investments, including the D-O LRT Project, and General Services capital investments.
2.6 Mitigations for Potential Capital Funding Shortfalls or Cost Increases Should funding be received at a rate slower than anticipated in the Financial Plan, GoTriangle could adjust the schedule of the D-O LRT Project’s multiple construction contracts as needed. GoTriangle could also implement measures from its value engineering analyses. The value engineering study completed for the 30 percent design of the project identified potential cost savings totaling $40 million in addition to the contingency included in the cost estimate.75 Early in Engineering, as part of the FTA-led risk assessment, GoTriangle will identify “secondary mitigation” measures based on the value engineering study and other investigations of potential cost savings. Secondary mitigation refers to cost- saving measures identified in the project definition (but not implemented) that could be implemented if necessary to lower the project cost in response to a funding shortfall or cost increase. As an example, GoTriangle’s secondary mitigation may include the option to reduce certain bridges to single track instead
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Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-16 GoTriangle Financial Plan of double track—a measure that ordinarily would not be implemented, but could be implemented to reduce the project cost if needed.76 If additional funding is needed, GoTriangle could issue additional bonds as long as the debt service coverage ratios required by lending institutions are maintained. The Financial Plan currently assumes that the minimum net debt service coverage ratio is above 1.15. Finally, GoTriangle and its partners are also exploring additional revenue sources (see Section 4.2.2).
2.7 20-Year GoTriangle System Capital Plan The system capital plan includes projects to support GoTriangle’s existing and expansion bus services, expansions to GoTriangle’s vehicle fleet while maintaining an average bus age below six years, implementation of the D-O LRT Project, and the necessary resources to maintain GoTriangle’s system in a state of good repair. The plan also includes funds for the local share of capital investments associated with the Durham and Orange Transit Plans. Table 2-8 shows the funding sources and uses for GoTriangle’s system capital plan for 2017 through 2036. Total General Services and Durham-Orange capital revenues are projected to be $2,686.5 million YOE from state, federal, and local sources before including the $820.2 million from the balance of operations. Total General Services and Durham-Orange capital expenditures (including debt service and partner agency expenses) are estimated at $3,466.7 million YOE over the 20-year cash flow period. The system capital plan is balanced; surplus revenues are represented in the system cash balance. The cash flow also includes state of good repair reserves for future investments on the D-O LRT Project. The first set aside of $18.4 million YOE occurs in 2029, the first full year that the D-O LRT Project starts revenue service. The balance of the state of good repair reserve by the end of 2036 is $170.2 million YOE.
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Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-17 GoTriangle Financial Plan
Table 2-8: System Capital Plan (YOE Millions) 2017- Capital Expenditures 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2036 GoTriangle, Capital Expenditures, General Services Capital Investments $3.2 $2.5 $2.6 $2.7 $2.7 $2.8 $2.9 $3.0 $3.1 $3.2 $3.3 $3.4 $3.5 $3.6 $3.7 $3.8 $4.0 $4.1 $4.2 $4.3 $66.6 Bus Fleet Replacement $5.2 $9.2 $3.5 $7.1 $5.2 $.0 $.0 $.0 $.0 $.0 $.0 $1.8 $10.6 $12.7 $4.5 $9.3 $6.8 $.0 $.0 $.0 $75.8 Paratransit Fleet Replacement $.4 $.3 $.3 $.4 $.4 $.4 $.4 $.4 $.4 $.4 $.4 $.4 $.4 $.4 $.5 $.5 $.5 $.5 $.5 $.5 $8.3 Vanpool Fleet Replacement $.2 $.3 $.2 $.1 $.2 $.2 $.2 $.1 $.3 $.6 $.5 $.3 $.3 $.1 $.3 $.3 $.3 $.2 $.3 $.1 $5.1 Total $9.0 $12.3 $6.6 $10.2 $8.5 $3.4 $3.5 $3.5 $3.7 $4.2 $4.2 $5.9 $14.8 $16.9 $9.0 $13.9 $11.5 $4.7 $5.0 $5.0 $155.8 GoTriangle, Capital Expenditures, D-O Service Expansion Capital Investments $2.4 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $2.4 Bus Acquisition $.0 $.3 $1.5 $.3 $.7 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $2.8 Bus Replacement $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.4 $2.0 $.4 $.8 $.0 $.0 $.0 $3.6 D-O LRT Project $63.0 $37.3 $45.3 $60.6 $155.3 $192.9 $255.3 $479.7 $422.6 $305.9 $232.7 $138.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $2388.6 Total $65.4 $37.6 $46.8 $61.0 $155.9 $192.9 $255.3 $479.7 $422.6 $305.9 $232.7 $138.0 $.0 $.4 $2.0 $.4 $.8 $.0 $.0 $.0 $2397.4 GoTriangle, Debt Service, TIFIA Loan Principal $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $10.5 $10.5 Interest $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $28.9 $28.9 $28.9 $28.8 $115.4 Cost of Issuance $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.8 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.8 Debt Reserve Deposits - Transfer to Debt Reserve Account $.0 $.0 $.0 $.0 $.0 $.0 $.0 $19.6 $5.9 $5.9 $5.9 $2.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $39.2 Total $.0 $.0 $.0 $.0 $.0 $.0 $.0 $20.4 $5.9 $5.9 $5.9 $2.0 $.0 $.0 $.0 $.0 $28.9 $28.9 $28.9 $39.2 $165.9 GoTriangle, Debt Service, Limited Obligation Bonds Principal $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $28.3 $29.4 $70.3 $73.1 $90.0 $93.6 $97.4 $53.0 $.0 $.0 $.0 $.0 $535.0 Interest $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $4.8 $12.3 $19.1 $16.3 $13.4 $9.8 $6.0 $2.1 $.0 $.0 $.0 $.0 $83.7 Cost of Issuance $.0 $.0 $.0 $.0 $.0 $.0 $.0 $1.2 $2.2 $2.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $5.4 Debt Reserve Deposits - Transfer to Debt Reserve Account $.0 $.0 $.0 $.0 $.0 $.0 $.0 $12.0 $21.5 $20.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $53.5 Total $.0 $.0 $.0 $.0 $.0 $.0 $.0 $13.2 $56.7 $63.7 $89.4 $89.4 $103.4 $103.4 $103.4 $55.1 $.0 $.0 $.0 $.0 $677.6 Disbursements to Partner Agencies, D-O Service Expansion Chapel Hill Transit Bus Acquisition $.0 $.0 $.9 $1.0 $.7 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $2.5 GoDurham Bus Acquisition $.0 $3.0 $.0 $.0 $.7 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $3.6 Orange Public Transportation Bus Acquisition $.0 $.1 $.0 $.0 $.1 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.2 Durham County Bus Acquisition $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 Chapel Hill Transit Bus Replacement $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $1.2 $1.2 $.8 $.0 $.0 $.0 $3.3 GoDurham Bus Replacement $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $3.9 $.0 $.0 $.8 $.0 $.0 $.0 $4.7 Orange Public Transportation Bus Replacement $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.1 $.0 $.0 $.1 $.0 $.0 $.0 $.3 Durham County Bus Replacement $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 N-S BRT Project $2.0 $1.9 $3.3 $8.5 $11.8 $10.2 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $37.7 Orange County Transit Plan Capital Projects $2.7 $.4 $.4 $.4 $.1 $.1 $.1 $.1 $.1 $.1 $.1 $.1 $.1 $.1 $.1 $.1 $.1 $.1 $.1 $.1 $5.9 Durham County Transit Plan Capital projects $4.5 $1.1 $1.1 $1.1 $.2 $.2 $.2 $.2 $.2 $.2 $.2 $.2 $.2 $.2 $.3 $.3 $.3 $.3 $.3 $.3 $11.7 Total $9.1 $6.6 $5.8 $11.0 $13.5 $10.5 $.3 $.3 $.3 $.3 $.3 $.3 $.4 $4.4 $1.6 $1.6 $2.2 $.4 $.4 $.4 $70.0 Total System Capital Expenditures (Excl. Debt Service) $83.5 $56.5 $59.2 $82.2 $177.9 $206.9 $259.1 $483.6 $426.6 $310.5 $237.2 $144.3 $15.1 $21.6 $12.5 $15.9 $14.6 $5.2 $5.5 $5.4 $2623.2 Total System Capital Expenditures (Incl. Debt Service) $83.5 $56.5 $59.2 $82.2 $177.9 $206.9 $259.1 $517.2 $489.2 $380.0 $332.4 $235.6 $118.5 $125.0 $115.9 $71.0 $43.5 $34.0 $34.3 $44.6 $3466.7 Note: Totals may not sum exactly due to rounding.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-18 GoTriangle Financial Plan 2017- Capital Revenues 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2036 GoTriangle, Capital Revenues, General Services FTA funding for Capital (All programs) $3.5 $3.7 $3.8 $4.0 $4.0 $2.7 $2.8 $2.8 $3.0 $3.4 $3.3 $4.7 $4.8 $4.9 $6.1 $6.2 $6.3 $4.2 $4.3 $4.4 $82.9 State Match to Federal Funds $.4 $.5 $.5 $.5 $.5 $.3 $.3 $.4 $.4 $.4 $.4 $.6 $.6 $.6 $.8 $.8 $.8 $.5 $.5 $.5 $10.4 Vehicle Rental Tax Apportionment $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 Total $3.9 $4.1 $4.3 $4.5 $4.5 $3.1 $3.1 $3.2 $3.4 $3.8 $3.7 $5.3 $5.4 $5.5 $6.8 $7.0 $7.1 $4.7 $4.8 $4.9 $93.3 GoTriangle, Capital Revenues, D-O Service Expansion FTA New Starts (50%) $.0 $.0 $.0 $100.0 $100.0 $100.0 $100.0 $100.0 $100.0 $100.0 $100.0 $100.0 $100.0 $100.0 $100.0 $38.2 $.0 $.0 $.0 $.0 $1238.2 Additional Federal Funds $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 State Funding $.0 $.0 $23.9 $23.9 $23.9 $23.9 $23.9 $24.1 $24.6 $25.1 $25.2 $25.5 $1.3 $1.2 $.8 $.4 $.0 $.0 $.0 $.0 $247.6 Local, Pre-2017 $27.2 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $27.2 Local, Joint Development Activities (Local Share) $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.6 $.6 $31.5 $32.5 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $65.1 Local, In-kind contribution $.0 $.0 $.0 $19.4 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $19.4 Local, Private Capital Campaign $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 Local, Orange County $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 Local, Durham County $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 Total $27.2 $.0 $23.9 $143.3 $123.9 $123.9 $123.9 $124.1 $125.2 $125.7 $156.7 $158.0 $101.3 $101.2 $100.8 $38.6 $.0 $.0 $.0 $.0 $1597.5 Debt Proceeds Debt Proceeds, Limited Obligation Bonds $.0 $.0 $.0 $.0 $.0 $.0 $.0 $120.0 $215.0 $200.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $535.0 Debt Proceeds, TIFIA Loan $.0 $.0 $.0 $.0 $.0 $.0 $.0 $200.0 $60.0 $60.0 $60.0 $20.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $400.0 Total $.0 $.0 $.0 $.0 $.0 $.0 $.0 $320.0 $275.0 $260.0 $60.0 $20.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $935.0 GoTriangle Reserve and Interest Releases Debt Reserve Account Balance Releases $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $12.0 $.0 $.0 $21.5 $20.0 $.0 $.0 $.0 $.0 $53.5 Interest Rate Earnings Released $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.3 $.6 $.8 $.9 $.8 $.8 $.8 $.6 $.4 $.4 $.4 $.4 $7.2 Total $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.3 $.6 $.8 $12.9 $.8 $.8 $22.3 $20.6 $.4 $.4 $.4 $.4 $60.7 Total System Capital Revenues (Excl. Debt Proceeds) $31.1 $4.1 $28.2 $147.7 $128.4 $127.0 $127.0 $127.3 $128.8 $130.1 $161.3 $176.1 $107.5 $107.5 $129.9 $66.1 $7.5 $5.1 $5.2 $5.3 $1751.5 Total System Capital Revenues (Incl. Debt Proceeds) $31.1 $4.1 $28.2 $147.7 $128.4 $127.0 $127.0 $447.3 $403.8 $390.1 $221.3 $196.1 $107.5 $107.5 $129.9 $66.1 $7.5 $5.1 $5.2 $5.3 $2686.5 2017- Summary of Capital Plan 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2036 Total System Capital Revenues (Incl. Debt Proceeds) $31.1 $4.1 $28.2 $147.7 $128.4 $127.0 $127.0 $447.3 $403.8 $390.1 $221.3 $196.1 $107.5 $107.5 $129.9 $66.1 $7.5 $5.1 $5.2 $5.3 $2686.5 Total System Capital Expenditures (Incl. Debt Service) -$83.5 -$56.5 -$59.2 -$82.2 -$177.9 -$206.9 -$259.1 -$517.2 -$489.2 -$380.0 -$332.4 -$235.6 -$118.5 -$125.0 -$115.9 -$71.0 -$43.5 -$34.0 -$34.3 -$44.6 -$3466.7 GoTriangle, Balance/Deficit from Capital Investments -$52.4 -$52.4 -$31.0 $65.5 -$49.5 -$79.9 -$132.1 -$69.9 -$85.4 $10.1 -$111.1 -$39.5 -$11.0 -$17.5 $14.0 -$4.9 -$36.0 -$28.9 -$29.1 -$39.3 -$780.2 GoTriangle, Balance from Operations $24.3 $33.5 $36.1 $38.0 $39.3 $42.0 $44.1 $46.0 $47.8 $49.0 $51.0 $51.6 $25.9 $34.5 $36.6 $38.5 $40.5 $44.7 $47.1 $49.6 $820.2 GoTriangle, Net Balance after O&M transfers -$28.1 -$18.9 $5.1 $103.5 -$10.2 -$37.9 -$88.0 -$23.9 -$37.6 $59.1 -$60.1 $12.1 $14.9 $17.0 $50.6 $33.6 $4.5 $15.8 $18.0 $10.3 $40.0 Note: Totals may not sum exactly due to rounding.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 2-19 GoTriangle Financial Plan
3. Operating Plan
3.1 Service Level Projections Between light rail, bus, paratransit, and vanpool services, GoTriangle will add almost 1.6 million annual vehicle revenue-miles and about 70,400 annual vehicle revenue-hours by the end of the 20-year cash flow period. Additionally, after the D-O LRT Project begins revenue service, duplicative bus services along the corridor will be redeployed. Error! Reference source not found. Tables 3-1 and 3-2 show service levels projected from 2017 through the end of the Financial Plan in 2036. Table 3-1: GoTriangle Revenue-Miles Forecast
2014 NTD 2036 GoTriangle Existing and Expansion (excluding LRT) 3,891,826 4,501,892 D-O LRT 984,400 Total 3,891,826 5,486,292 Table 3-2: GoTriangle Revenue-Hours Forecast
2014 NTD 2036 GoTriangle Existing and Expansion (excluding LRT) 164,087 184,392 D-O LRT 50,100 Total 164,087 234,492
3.2 D-O LRT Project O&M Costs A detailed report describing the resource build-up cost model developed for estimating O&M costs is included in the supporting documentation. The report has three components: Methodology,77 Results,78 and an Addendum with updated costs from the addition of the NCCU Station to the D-O LRT Project.79 The O&M cost model includes the D-O LRT Project, GoTriangle bus services, GoDurham bus services, and Chapel Hill Transit bus services. Only the D-O LRT Project projections are used in this Financial Plan; bus services are projected using a separate method. The model for D-O LRT Project O&M costs used actual 2012 expenditures from peer light rail systems and applied CPI southern region adjustments to generate O&M cost estimates in 2015 dollars. The O&M cost estimates generated by the model were then adjusted from 2015 dollars to year-of-expenditure dollars and added to the cash flow. The input variables for the D-O LRT Project O&M cost model are listed below in Table 3-3. Table 3-3: D-O LRT Project O&M Cost Model Inputs
GoTriangle D-O LRT Project Cost Model Inputs Annual revenue train-hours Number of rail yards Number of passenger stations Annual revenue car-miles Directional route miles Number of peak cars
77 0706_RPT_DOLRT-Operations-and Maintenance-Cost-Methodology-Report_150724 78 0706_RPT_DOLRT-Operations-and-Maintenance-Cost-Results_150724 79 1703_RPT_Operating-Plan-and-Cost-Addendum-NCCU
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 3-1 GoTriangle Financial Plan The D-O LRT Project is projected to begin full operations by FY 2029. O&M costs in YOE dollars are projected at $28.7 million for the first year, increasing to $35.6 million by 2036. The annual growth rate of additional O&M costs is projected at 3.1 percent annually in line with the annual growth rate assumption for existing bus services. The O&M costs for the D-O LRT Project will be funded from Durham- Orange revenues rather than General Services revenues.
3.3 System O&M Costs The Financial Plan includes GoTriangle’s operating program as well as the local share of other transit providers’ operations disbursed by GoTriangle per the Durham and Orange Transit Plans. The assumed local share of these investments has increased since the original county transit plans were adopted; this reflects the transit providers’ more conservative assumptions about anticipated state and federal grant revenues. To analyze and forecast the O&M costs of GoTriangle’s bus services, paratransit services, vanpool services, Durham-Orange allocations, and other administrative expenditures, the Financial Plan uses historical trend data from GoTriangle’s financial system, 2017 budget estimates, and future growth plans. The average annual growth rate of GoTriangle’s O&M costs between 2007 and 2016 was 6.2 percent. This includes the ramp-up of paratransit services, the introduction of GoTriangle’s new bus services associated with the Durham and Orange Transit Plans, the local allocations to transit providers for their own investments related to the Durham and Orange Transit Plans, and the temporary costs associated with the Fortify project. Total system O&M costs for GoTriangle were close to $32 million in FY 2016 and are projected to be $98 million YOE by 2036, a projected average annual growth rate of 5.8 percent. Within the total system O&M costs, growth rate assumptions vary by category. O&M costs for paratransit are projected to grow at an average annual rate of 5 percent, as compared to 17 percent between 2007 and 2016. This is due to the maturity of the service following a ramp-up period. O&M costs for directly operated bus services, contracted bus services, light rail service, and the local allocations to partner agencies are projected to increase at an average annual rate of 3.1 percent. O&M costs for vanpool services and other administrative expenditures are projected to increase at 2.3 percent per year, consistent with the CBO inflation forecast. Over the cash flow period, GoTriangle will disburse a total of $128.8 million YOE to the other transit providers for their own expansion operations. The level of service that these allocations will provide will depend on the amount of matching state and federal grants received by each transit provider. The assumed local share of these investments has increased since the original county transit plans were adopted; this reflects the transit providers’ more conservative assumptions about anticipated state and federal grant revenues. More detail about the Staff Working Group’s updates to these funding assumptions can be found in the annual letters that GoTriangle sends to the transit providers.80 This Financial Plan includes no O&M costs for the proposed Hillsborough Amtrak Station project or the N- S BRT Project. These projects are not to be managed or maintained by GoTriangle, and allocations to NCDOT and Chapel Hill Transit (CHT) for O&M for these projects were not included in the Orange Transit Plan. Table 3-4 summarizes the forecasted system O&M expenditures included in the Financial Plan.
80 0706_LTR_Partner-Agencies-Funding-FY17-Durham_160408; 0706_LTR_Partner-Agencies-Funding-FY17- Orange_160408; 0706_LTR_Partner-Agencies-Funding-FY16-Durham_150313; 0706_LTR_Partner-Agencies- Funding-FY16-Orange_150313
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 3-2 GoTriangle Financial Plan Table 3-4: System O&M Cost Forecast, 2017-2036 (YOE Millions)
2017- 2017 2020 2025 2030 2036 2036 GoTriangle, General Services $28.8 $31.5 $36.4 $42.1 $50.3 $771.5 Bus $12.6 $13.8 $16.1 $18.7 $22.5 $341.9 Paratransit $2.2 $2.6 $3.3 $4.2 $5.6 $73.1 Bus contracted services $1.5 $1.6 $1.9 $2.2 $2.7 $40.5 Vanpool $1.6 $1.7 $2.0 $2.2 $2.5 $40.9 General Administration $10.0 $10.7 $12.0 $13.5 $15.5 $251.2 GoDurham Oversight $.9 $1.0 $1.1 $1.3 $1.6 $23.8 GoTriangle, D-O Services $4.2 $2.2 $2.6 $32.6 $39.2 $313.3 Bus $1.8 $2.0 $2.3 $2.7 $3.2 $48.5 Paratransit $.2 $.2 $.3 $.4 $.5 $6.2 Transit-Oriented $2.2 $.0 $.0 $.0 $.0 $2.2 Development Study D-O LRT $.0 $.0 $.0 $29.6 $35.6 $256.4 GoTriangle, Transfer to $4.9 $5.2 $6.0 $7.0 $8.5 $128.8 Partner Agencies Total O&M Costs (Excl. $37.9 $38.8 $45.0 $81.8 $98.2 $442.1 Transfer to O&M Reserve)
Note: Totals may not sum exactly due to rounding.
3.4 O&M Funding Sources To fund operations and maintenance, this Financial Plan includes GoTriangle’s General Services revenues as well as the dedicated local revenues in the Durham and Orange Transit Plans. Table 3-5 summarizes these O&M funding sources.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 3-3 GoTriangle Financial Plan Table 3-5: System O&M Funding Sources
Growth Funding Source Other Assumptions Historical Trend Assumptions Farebox revenues: bus and Fare increases First fare increase in 2019; Average farebox recovery paratransit every 4 years farebox recovery ratio 15% ratio (2010-2016): 14% Average farebox recovery Farebox revenues: vanpool N/A 25% farebox recovery ratio ratio (2010-2016): 29% Farebox revenues: N/A 20% farebox recovery ratio N/A D-O LRT Used first to support 2.12% per capital expenses, then CAGR (2006-2016): 4.5% FTA Section 5307 UZA Formula year transferred to operations CAGR (2011-2016): 2.4% (FAST Act) for preventive maintenance NCDOT State Maintenance CAGR (2007-2016): 1.2% Assistance Program (Existing 1% per year N/A CAGR (2010-2016): 0.6% Service) NCDOT State Maintenance 7.5% of D-O LRT and Assistance Program (Expansion N/A Durham-Orange bus N/A Service) service O&M costs Average (2011-2016): NCDOT Apprentice Internships 1% N/A $29,188 in nominal dollars Increase by Assumed every other year; Average (2007-2016): NCDOT Advanced Technology $3,000 every baseline revenue: $99,000 $0.3M in nominal dollars other year in 2017 Baseline Orange Based on economic Half-Cent (0.5%) Sales and Use Tax County: 4.0% forecasts from Moody’s CAGR (2014-2016): 5.2% Durham Analytics County: 4.5% Based on economic $5 Vehicle Registration: Vehicle registration fees ($5, $7, $3) 2.9% per year forecasts from Dr. Walden, CAGR (2004-2016): 2.1% NCSU Based on economic 5% vehicle rental tax 4.8% per year forecasts from Dr. Walden, CAGR (2004-2016): 3.5% NCSU Under contract, Reimbursement for GoDurham GoDurham reimburses N/A 100% of oversight costs Management 100% of oversight costs to GoTriangle Reimbursement for GoTransit 2.8% of GoTriangle’s O&M Average (2010-2016): N/A Regional Call Center expenses 2.7% of O&M expenses 3.5% of GoTriangle’s O&M Average (2010-2016): Reimbursement for TDM N/A expenses 3.5% of O&M expenses Other Reimbursements (Regional 3.5% of GoTriangle’s O&M Average (2010-2016): N/A Bus Service Fund) expenses 4.0% of O&M expenses
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 3-4 GoTriangle Financial Plan 3.4.1 Fare Revenues In 2015, GoTriangle generated $2.8 million in farebox revenues, covering 11.5 percent of the agency’s O&M costs. The actual system-wide average fare (i.e. total farebox revenues divided by total ridership) was $1.34 per trip in 2015, with actual bus average fare estimated at $1.19 per trip. The higher average fare of vanpool skews the systemwide average to be higher than the bus average fare. GoTriangle’s fare policy allows the Board of Trustees to increase transit fares every two years, and there is no maximum fare increase limit. The cost recovery policy establishes a 25 percent cost recovery target for bus services. 81 Since the adoption of this policy, fares have been increased twice, in 2005 and 2014. In 2014, fares increased 12.5 percent for regional services and 20 percent for express services. An analysis of NTD data shows that the average fare system-wide went from $1.07 in 2013 to $1.27 in 2014, an increase of almost 19 percent. Regular fares for buses are now $2.25 and $3.00 for regular and express routes, respectively. Table 3-6: GoTriangle Fares
Mode 2013 2014 % Increase Regional 1-way $2.00 $2.25 12.5% Regional day pass $4.00 $4.50 12.5% Express 1-way $2.50 $3.00 20.0% Express day pass $5.00 $6.00 20.0% GoTriangle has been able to minimize frequent, direct fare increases through the growing and successful use of GoPasses and other pre-paid fares. GoTriangle’s GoPass program allows employers and universities to purchase passes that are then provided to their employees or students. Today, subscribers include University of North Carolina at Chapel Hill (UNC); Duke University; North Carolina State University (NCSU); North Carolina Central University (NCCU); Durham Technical Community College; state, county, and municipal governments; commercial office complexes such as the American Tobacco Campus in downtown Durham; and individual private businesses. Since FY 2009, GoPass ridership has accounted for approximately 40 percent of GoTriangle’s boardings and over one-quarter of its operating revenue. In FY 2015, GoPass usage accounted for 42 percent of boardings and 44.5 percent of fare revenue. Bus and Paratransit Cost Recovery. The Financial Plan assumes a baseline farebox recovery ratio of 15 percent for bus and paratransit services, in line with the historical average. Periodic fare revenue increases of five percent are considered under the assumption that fares will be adjusted every four years starting in 2019. Adjusting fares every four years is more conservative than the agency’s policy (every two years) but allows the agency to maintain fare increases at a reasonable rate. Vanpool Cost Recovery. For vanpool services, a farebox recovery ratio of 25 percent was applied to estimate farebox revenues, which is conservative compared to the historical vanpool farebox recovery ratio of 29 percent. D-O LRT Project Cost Recovery. The farebox recovery ratio for the D-O LRT Project is assumed at 20 percent of the D-O LRT Project O&M expenses, which is conservative compared to national trends of peer
81 0706_POL_GoTriangle-Cost-Recovery_030423
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 3-5 GoTriangle Financial Plan LRT systems.82 An analysis of NTD data for peer agencies found that farebox recovery ratios for LRT systems were on average about 30 percent for 2013 and 2014, ranging between 16 and 40 percent. 83
3.4.2 Federal FTA Section 5307 UZA Formula. Forecast assumptions of FTA Section 5307 formula funds are described in Section 2.5. FTA Section 5307 Formula funds are assumed to be used first for capital expenses, including the acquisition of revenue vehicles; any remaining funds will be transferred to cover preventive maintenance needs. About $15 million will be transferred to support O&M expenses through 2036.
3.4.3 State State Maintenance Assistance Program. The State Maintenance Assistance Program (SMAP) provides funding for transit operations to local governments and transit agencies. Recipients must provide matching funds for operations equal to or greater than the SMAP allocation. On average, GoTriangle has received about $2 million per year over the last decade, accounting for about 9.2 percent of annual operating costs (Table 3-7). Table 3-7: SMAP Funding to GoTriangle, 2007-2016
FY SMAP Funding Average Share of O&M 2007 $1,817,950 9.8% 2008 $2,080,580 11.8% 2009 $2,034,934 11.3% 2010 $1,951,615 10.0% 2011 $2,243,433 8.8% 2012 $2,017,855 8.5% 2013 $2,213,820 9.3% 2014 $2,008,718 8.1% 2015 $1,948,907 7.3% 2016 $2,028,578 7.4% Average Share of N/A 9.2% Annual O&M Costs Historically, annual allocations have been based on a formula approved by the North Carolina Board of Transportation. Sixty (60) percent of the total funding allocation is based on service levels and performance (e.g. unlinked passenger trips per vehicle revenue-hours, net cost per unlinked passenger trips), 30 percent is based on the share of local revenues, and the other 10 percent is an equal share to all recipients.84 Starting in FY 2017, NCDOT will disburse funds quarterly. Additionally, NCDOT is evaluating revisions to the allocation methodology; as a result, NCDOT disbursed an amount equal to 25 percent of each recipient’s FY 2016 amount in the first quarter of FY 2017.85
82 Peer LRT systems considered in the development of the O&M cost model for the LRT alternative include: Baltimore, Charlotte, Houston, Minneapolis, and Salt Lake City. 83 0706_RPT_DOLRT-Operations-and Maintenance-Cost-Methodology-Report_150724; 0706_RPT_DOLRT- Operations-and-Maintenance-Cost-Results_150724; 1703_RPT_Operating-Plan-and-Cost-Addendum-NCCU 84 0706_REF_SMAP-FY-16-Allocations; 0706_REF-SMAP-FY-16-Application 85 0706_TL-REF_SMAP-FY17-Q1-Allocation_160920
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 3-6 GoTriangle Financial Plan The Financial Plan assumes that SMAP allocations for existing GoTriangle O&M expenses will increase at an annual rate of one percent, resulting in an annual average of $2.1 million over the analysis period. For GoTriangle expenses associated with the bus service expansion and D-O LRT service, SMAP funds are conservatively assumed at a 7.5 percent share. NCDOT Apprentice Internships. The Apprentice Internships program is a long-standing program of NCDOT that provides grant funding to transit agencies for the purpose of hiring college students and new graduates for internships or apprenticeships. Both NCDOT and GoTriangle have seen the value of investing time and resources in this program to introduce talented young people to the transit industry, and to build skills in individuals who may become staff members. The application process is annual, and positions are funded at a predetermined amount of 90 percent state and 10 percent local. Funding through this program has remained stable for the past several years. The Financial Plan assumes that state funding for this program will increase at one percent per year. NCDOT Advanced Technology. The Advanced Technology program is a competitive grant program intended to provide funding for urban transit agencies to implement technology projects that improve the operational efficiency of the transit system or customer experience. For many years, the grants were made on a two-year cycle, but the State Public Transportation Division moved to an annual cycle in FY 2016. The application process is a competitive process. Projects must be included in the Regional Intelligent Transportation System (ITS) Strategic Deployment Plans. Grants are awarded to fund 90 percent of total project costs, including one year of maintenance, support, or licensing fees. In FY 2015, GoTriangle was awarded approximately $401,000 in grants for four projects; no funding was awarded to GoTriangle in FY 2016 from this program. On average, GoTriangle has received about $200,000 per year over the last five years. The Financial Plan assumes that GoTriangle will receive funding through this competitive program every two years, starting in FY 2017 at $99,000, increasing to $103,000 in FY 2019, and then increasing by $3,000 every two years.
3.4.4 Local The Financial Plan assumes that local O&M revenues are applied to O&M reserves first and then to the operating costs of bus services and rail investments. Any surplus from operations is available for capital expenses (see Section 2.5). The forecasts of the local revenues come from two sources. The first was developed for GoTriangle in 2014 by Dr. Michael Walden, William Neal Reynolds Distinguished Professor of economics at North Carolina State University (NCSU), an expert on the Triangle regional economy.86 Walden’s forecast examines relationships between each county’s key economic activity measures, the national real Gross Domestic Product (GDP), and the Consumer Price Index (CPI). In November 2016, GoTriangle contracted with Moody’s Analytics to provide a second forecast of the sales tax, since it is the largest local revenue source funding the Durham and Orange Transit Plans. Moody’s Analytics used the one-cent Local Government Sales and Use Tax (i.e. Article 39) collections as a proxy to forecast the one‐half cent sales tax for public transportation (i.e. Article 43) in Durham and Orange counties. Separate regressions were performed for each county utilizing county-level personal disposable income and metro area housing completions as explanatory variables.87
86 0706_RPT_Walden-Revenue-Forecast_141000; 0704_FMODA-CALC_Walden-Revenue-Forecast_141004; 0706_PRES_Walden-Revenue-Forecast_141007 87 0704_FMODA-DATA_Moody’s-Sales-Tax-Forecast_161123; 0706_FMODA-FIG_ Moody’s-Sales-Tax- Forecast_161123; 0706_FMODA-RPT_ Moody’s-Sales-Tax-Forecast_161123
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 3-7 GoTriangle Financial Plan Sales Tax. Table 3-8 compares the results of both sales tax forecasts: Table 3-8: Comparison of Article 43 Half-Cent Sales Tax Revenue Forecasts, 2017-2036 (YOE Millions)
County Walden (2014) Moody’s Analytics (2016) Durham $838.7 $851.9 Orange $213.7 $196.5 Total $1,052.4 $1,048.4 Compounded Annual Growth Rate (CAGR) 4.6% 4.2% Additionally, Figure 3-1 shows one-cent local sales and use tax net collections by county from FY 2006 through FY 2016. Net collections declined in FY 2008 and 2010 due to the economic recession. However, over the 10-year period, sales tax collections grew at an average annual rate of 5.5 percent. Sales tax collections in Durham County grew at an average annual rate of 5.7 percent and in Orange County at a rate of 4.8 percent per year. Figure 3-1: Article 39 One-Cent Sales Tax Net Collections, 2006-2015 (YOE Millions)
$80
$70
$60
$50
$40
$30 Millions $20
$10
$0 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016
Durham Orange
Source: North Carolina Department of Revenue Vehicle Registration Fees. As described in Section 2.2.3, GoTriangle is authorized to receive three vehicle registration fees: a $5 fee, a $3 fee, and a $7 fee. The $5 fee is levied in Durham, Orange, and Wake counties; it is used to fund GoTriangle’s agency operations and is reported in GoTriangle’s General Fund. The $7 and $3 fees are currently levied only in Durham and Orange counties; they are dedicated to the Durham and Orange Transit Plans and are reported in the Triangle and Durham-Orange Tax Districts, respectively. Revenues from the $5 vehicle registration fee increased from $4.7 million in FY 2004 to $6.0 million in FY 2016, an average annual rate of 2.1 percent (Figure 3-2). The collection of the $7 fee and $3 fee began in July 2013 and October 2014, respectively.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 3-8 GoTriangle Financial Plan Figure 3-2: Vehicle Registration Fee Revenues, 2004-2016 (YOE Millions)
$10 $9 $8 $7 $6 $5 $4
Millions $3 $2 $1 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Vehicle Registration Fee ($5) Vehicle Registration Fee ($7) Vehicle Registration Fee ($3)
Source: GoTriangle Comprehensive Annual Financial Reports (CAFRs) Figure 3-3 shows historical vehicle registrations for 2000 through 2013 for Wake, Durham, and Orange Counties. Over this period, vehicle registrations in Durham and Orange Counties increased at an average annual rate of 1.4 percent and 1.2 percent, respectively, whereas Wake County vehicle registrations increased at 2.8 percent annually. Wake County vehicle registrations account for 72 percent of the three- county area total registrations. Figure 3-3: Vehicle Registrations in the Triangle Region, 2000-2013
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0 2000 2002 2004 2006 2008 2010 2012 2014
Durham County Orange County Wake County
Source: Log Into North Carolina (LINC), North Carolina Office of State Budget and Management (data available through 2013) To forecast the $3 and $7 vehicle registration fee revenues, the Financial Plan applies Walden’s forecast of vehicle registration average growth rates (as a function of future real gross domestic product growth): 3.2 percent in Orange and 2.6 percent in Durham. The combined growth rates of Durham and Orange, 2.9 percent, is applied to forecast the $5 vehicle registration fee revenues. Based on historical trends, the $5
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 3-9 GoTriangle Financial Plan vehicle registration fee forecast is considered conservative, as it only accounts for the growth in Durham and Orange counties, and does not account for the potential higher growth rate in vehicle registration in Wake County. Error! Reference source not found. Table 3-9 compares total projected revenues between each of the fees: Table 3-9-: Vehicle Registration Fee Revenue Forecast, 2017-2036 (YOE Millions)
Total 2017 2020 2025 2030 2036 (2017- 2036) $5 vehicle registration fee (Wake, Durham, and $6.3 $6.9 $7.7 $8.9 $10.6 $164.7 Orange Counties $7 vehicle registration fee (Durham and Orange $2.4 $2.6 $3.0 $3.4 $4.1 $63.5 Counties only) $3 vehicle registration fee (Durham and Orange $1.0 $1.1 $1.3 $1.5 $1.8 $27.2 Counties only)
Total Vehicle Registration $9.7 $10.6 $12.0 $13.8 $16.5 $255.4 Revenue
Note: Totals may not sum exactly due to rounding. Vehicle Rental Tax. As described in Section 2.2.3, GoTriangle’s vehicle rental tax is allocated to multiple purposes. Sixteen percent of GoTriangle’s vehicle rental tax revenues are dedicated to funding the Durham and Orange Transit Plans; they are reported in the Triangle Tax District. Thirty-four percent of total revenues are to be used for transit investments in Wake County; currently these revenues are reported in the Major Transit Investment Fund. The remainder is available to be used for GoTriangle’s general operations; these funds are transferred annually from the Major Transit Investment Fund to the General Fund. Reimbursement for GoDurham Management. GoDurham (formerly the Durham Area Transit Authority, or DATA) has a fixed route system and a complementary paratransit service called GoDurham ACCESS that transports clients to various places within the City of Durham. By contract with the City of Durham, GoTriangle is responsible for overseeing GoDurham’s fixed route and paratransit operations, service planning, daily management, and marketing.88 The final approval of all GoDurham routes, GoDurham’s operating budget, and major policy decisions rests with the Durham City Council as part of its annual budget process. GoTriangle’s FY 2017 budget estimates annual GoDurham oversight costs at $875,95489; these costs are assumed to increase at 3.1 percent per year in line with forecast growth rate of GoTriangle expenditures. The Financial Plan assumes that GoTriangle will continue to provide oversight of GoDurham services over the analysis period and will continue to be reimbursed for 100 percent of the associated costs.
88 0706_CONTR_GoDurham-Fixed-Route; 0706_CONTR_GoDurham-Demand-Response 89 0706_BUDG_GoTriangle-FY17_170000 (p.34)
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 3-10 GoTriangle Financial Plan Reimbursement for GoTransit Regional Call Center. Since 2010, other transit providers reimburse GoTriangle for their share of the costs associated with the GoTransit Regional Call Center.90 Reimbursements have historically ranged between 2.1 and 3.0 percent of GoTriangle’s annual O&M costs. The average over the past five years was 2.8 percent. The Financial Plan assumes a rate of 2.8 percent. Reimbursement for Transportation Demand Management Program. Since 2005, GoTriangle has received $8.8 million in operating assistance from regional transit operators and Triangle J Council of Governments (TJCOG) to cover the costs associated with the regional transportation demand management program (TDM).91 On average, TDM reimbursements are 3.5 percent of GoTriangle’s annual O&M costs. In FY 2015 and FY 2016, the reimbursements represented 3.1 percent and 3.2 percent of total O&M costs, respectively. For financial planning purposes, it is assumed that these reimbursements will continue at 3.5 percent of annual O&M costs. Other Reimbursements. Revenues from other reimbursements were estimated based on the historical share of total O&M costs. Since FY 2008, reimbursements have accounted for about 3.6 percent of GoTriangle’s O&M costs. The average over the past five years increased to 4.7 percent. The Financial Plan assumes that other reimbursements will account for 3.5 percent of GoTriangle’s O&M expenses. Miscellaneous Funding. Other miscellaneous funding sources include rental income, gains from vehicle disposal, and investment income. The average annual revenue from investment activities since FY 2006 is $873,200, ranging from $300,380 to $1,427,905. GoTriangle estimates a revenue of $845,769 from investment activities in FY 2017. After FY 2017, a conservative estimate of $600,000 is assumed. Revenues from rental income, credits, and gains from vehicle disposal have steadily increased since FY 2008, averaging an annual growth rate of 19 percent. The average over the past five years is close to $3 million. Rather than applying a growth factor, a flat revenue of $2.3 million per year in year-of-expenditure dollars is assumed over the analysis period.
3.5 Cash Reserves for Potential O&M Funding Shortfalls or Cost Increases The Financial Plan assumes that GoTriangle will maintain cash reserves for O&M equivalent to three months of its annual system operating budget, which can be used to meet unexpected increases in operating costs. The initial 3-month O&M reserve is estimated at $8.2 million in 2017, increasing to $22.4 million by 2036. GoTriangle could also supplement O&M funding with its cash balance.
3.6 20-Year GoTriangle System O&M Plan The system operating plan includes GoTriangle’s existing and expansion bus services, the D-O LRT Project, and a three-month O&M reserve. It also includes funds for other transit providers’ operating expenses associated with the Durham and Orange Transit Plans. Table 3-10 shows funding sources and uses for GoTriangle’s system-wide O&M plan for 2017 through 2036. Total General Services and Durham-Orange O&M revenues from 2017 through 2036 are projected to be $2,056.1 million YOE from federal, state, and local sources. Of this total, fare revenues account for almost seven percent. Dedicated local revenues from the sales tax, vehicle registration fees, and Durham-Orange portion of the vehicle rental tax account for 81 percent. Other local sources account for approximately 8.4 percent. State and federal grants account for four percent of the total O&M funding sources.
90 0706_CONTR_Call-Center 91 0706_CONTR_TJCOG-TDM-FY16; 0706_CONTR_TJCOG-TDM-FY17
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 3-11 GoTriangle Financial Plan Over the 20-year period, total General Services and Durham-Orange O&M expenditures are estimated at $1235.9 million YOE. By 2036, O&M for the D-O LRT Project will account for 39 percent of annual system O&M costs. The system operating plan is balanced; after funding the O&M reserve, surplus revenues are transferred to capital. Over the 20-year cash flow period, the balance of operations transferred to capital will be $820.2 million.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 3-12 GoTriangle Financial Plan Table 3-10: System Operating Plan (YOE Millions) 2017- O&M Expenditures 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2036 GoTriangle, O&M Expenditures, General Services Bus O&M $12.6 $13.0 $13.4 $13.8 $14.2 $14.7 $15.1 $15.6 $16.1 $16.6 $17.1 $17.6 $18.2 $18.7 $19.3 $19.9 $20.5 $21.2 $21.8 $22.5 $341.9 Paratransit O&M $2.2 $2.3 $2.4 $2.6 $2.7 $2.8 $3.0 $3.1 $3.3 $3.4 $3.6 $3.8 $4.0 $4.2 $4.4 $4.6 $4.8 $5.1 $5.3 $5.6 $73.1 Contracted services Bus O&M $1.5 $1.5 $1.6 $1.6 $1.7 $1.7 $1.8 $1.8 $1.9 $2.0 $2.0 $2.1 $2.2 $2.2 $2.3 $2.4 $2.4 $2.5 $2.6 $2.7 $40.5 Vanpool O&M $1.6 $1.7 $1.7 $1.7 $1.8 $1.8 $1.9 $1.9 $2.0 $2.0 $2.1 $2.1 $2.1 $2.2 $2.2 $2.3 $2.4 $2.4 $2.5 $2.5 $40.9 Other Administrative Expenditures $10.0 $10.3 $10.5 $10.7 $11.0 $11.2 $11.5 $11.8 $12.0 $12.3 $12.6 $12.9 $13.2 $13.5 $13.8 $14.1 $14.4 $14.8 $15.1 $15.5 $251.2 GoDurham Oversight $.9 $.9 $.9 $1.0 $1.0 $1.0 $1.1 $1.1 $1.1 $1.2 $1.2 $1.2 $1.3 $1.3 $1.3 $1.4 $1.4 $1.5 $1.5 $1.6 $23.8 Total $28.8 $29.7 $30.6 $31.5 $32.4 $33.3 $34.3 $35.3 $36.4 $37.4 $38.6 $39.7 $40.9 $42.1 $43.4 $44.7 $46.0 $47.4 $48.8 $50.3 $771.5 GoTriangle, O&M Expenditures, D-O Service Expansion Bus O&M $1.8 $1.8 $1.9 $2.0 $2.0 $2.1 $2.1 $2.2 $2.3 $2.3 $2.4 $2.5 $2.6 $2.7 $2.7 $2.8 $2.9 $3.0 $3.1 $3.2 $48.5 Paratransit O&M $.2 $.2 $.2 $.2 $.2 $.2 $.3 $.3 $.3 $.3 $.3 $.3 $.3 $.4 $.4 $.4 $.4 $.4 $.5 $.5 $6.2 GoTriangle, Transit-Oriented Development Study $2.2 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $2.2 D-O LRT O&M $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $28.7 $29.6 $30.5 $31.5 $32.5 $33.5 $34.5 $35.6 $256.4 Total $4.2 $2.0 $2.1 $2.2 $2.2 $2.3 $2.4 $2.5 $2.6 $2.6 $2.7 $2.8 $31.6 $32.6 $33.6 $34.7 $35.8 $36.9 $38.0 $39.2 $313.3 GoTriangle, Transfer to O&M Reserve Transfer to O&M Reserve $8.2 $.0 $.0 $.2 $.2 $.3 $.3 $.3 $.3 $.3 $.3 $.3 $7.5 $.6 $.6 $.6 $.6 $.6 $.6 $.7 $22.4 Total $8.2 $.0 $.0 $.2 $.2 $.3 $.3 $.3 $.3 $.3 $.3 $.3 $7.5 $.6 $.6 $.6 $.6 $.6 $.6 $.7 $22.4 Disbursements to Partner Agencies, D-O Service Expansion GoDurham O&M $2.4 $2.4 $2.5 $2.5 $2.5 $2.6 $2.7 $2.8 $2.9 $2.9 $3.0 $3.1 $3.2 $3.3 $3.4 $3.5 $3.6 $3.8 $3.9 $4.0 $61.0 Durham County O&M $.2 $.2 $.2 $.2 $.2 $.2 $.2 $.2 $.2 $.2 $.2 $.3 $.3 $.3 $.3 $.3 $.3 $.3 $.3 $.3 $4.9 Chapel Hill Transit O&M $2.0 $2.0 $2.1 $2.1 $2.2 $2.3 $2.3 $2.4 $2.5 $2.6 $2.6 $2.7 $2.8 $2.9 $3.0 $3.1 $3.2 $3.3 $3.4 $3.5 $52.9 Orange Public Transportation O&M $.4 $.4 $.4 $.4 $.4 $.4 $.4 $.5 $.5 $.5 $.5 $.5 $.5 $.5 $.6 $.6 $.6 $.6 $.6 $.7 $9.9 Total $4.9 $5.0 $5.1 $5.2 $5.3 $5.5 $5.7 $5.9 $6.0 $6.2 $6.4 $6.6 $6.8 $7.0 $7.3 $7.5 $7.7 $8.0 $8.2 $8.5 $128.8 Total System O&M Expenditures $46.1 $36.7 $37.8 $39.0 $40.2 $41.4 $42.7 $44.0 $45.2 $46.6 $48.0 $49.4 $86.8 $82.3 $84.9 $87.5 $90.1 $92.9 $95.7 $98.7 $1235.9 Note: Totals may not sum exactly due to rounding.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 3-13 GoTriangle Financial Plan 2017- O&M Revenues 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2036 GoTriangle, O&M Revenues, General Services Section 5307 Preventive Maintenance $.0 $.0 $.0 $.0 $.0 $1.4 $1.4 $1.5 $1.4 $1.1 $1.3 $.0 $.0 $.0 $.0 $.0 $.0 $2.3 $2.3 $2.4 $15.0 NCDOT SMAP for Operations $2.0 $2.0 $2.0 $2.1 $2.1 $2.1 $2.1 $2.1 $2.2 $2.2 $2.2 $2.2 $2.3 $2.3 $2.3 $2.3 $2.3 $2.4 $2.4 $2.4 $44.0 NCDOT Apprentice Internships $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.7 NCDOT Advanced Technology $.1 $.0 $.1 $.0 $.1 $.0 $.1 $.0 $.1 $.0 $.1 $.0 $.1 $.0 $.1 $.0 $.1 $.0 $.1 $.0 $1.1 Vehicle Rental Tax Apportionment (84%) $9.5 $10.0 $10.4 $10.9 $11.3 $11.8 $12.2 $12.7 $13.3 $13.9 $14.6 $15.3 $16.0 $16.8 $17.6 $18.5 $19.4 $20.3 $21.3 $22.3 $298.1 Vehicle Registration Fee, $5 $6.3 $6.5 $6.7 $6.9 $7.0 $7.2 $7.4 $7.6 $7.7 $8.0 $8.2 $8.4 $8.7 $8.9 $9.2 $9.4 $9.7 $10.0 $10.3 $10.6 $164.7 Investment Income $.8 $.6 $.6 $.6 $.6 $.6 $.6 $.6 $.6 $.6 $.6 $.6 $.6 $.6 $.6 $.6 $.6 $.6 $.6 $.6 $12.2 Local Grant Revenues/TDM Reimbursements (TJCOG) $1.1 $1.1 $1.1 $1.2 $1.2 $1.2 $1.3 $1.3 $1.4 $1.4 $1.4 $1.5 $1.5 $1.6 $1.6 $1.7 $1.7 $1.8 $1.8 $1.9 $28.9 Reimbursement from Call Center $.8 $.9 $.9 $.9 $1.0 $1.0 $1.0 $1.1 $1.1 $1.1 $1.2 $1.2 $1.2 $1.3 $1.3 $1.3 $1.4 $1.4 $1.5 $1.5 $23.1 Other Reimbursements $2.4 $1.4 $1.5 $1.5 $1.6 $1.6 $1.7 $1.7 $1.8 $1.8 $1.9 $1.9 $2.0 $2.0 $2.1 $2.2 $2.2 $2.3 $2.4 $2.4 $38.2 Miscellaneous $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $2.3 $46.0 Reimbursement from GoDurham $.9 $.9 $.9 $1.0 $1.0 $1.0 $1.1 $1.1 $1.1 $1.2 $1.2 $1.2 $1.3 $1.3 $1.3 $1.4 $1.4 $1.5 $1.5 $1.6 $23.8 Fixed Bus and Paratransit Fares $2.8 $2.5 $2.7 $2.7 $2.8 $2.9 $3.1 $3.2 $3.3 $3.4 $3.6 $3.7 $3.8 $3.9 $4.1 $4.3 $4.4 $4.6 $4.8 $5.0 $71.7 Vanpool Fares $.4 $.4 $.4 $.4 $.4 $.5 $.5 $.5 $.5 $.5 $.5 $.5 $.5 $.5 $.6 $.6 $.6 $.6 $.6 $.6 $10.2 Total $29.4 $28.7 $29.7 $30.5 $31.5 $33.7 $34.8 $35.6 $36.8 $37.5 $39.0 $38.9 $40.4 $41.6 $43.2 $44.6 $46.3 $50.0 $51.9 $53.6 $777.8 GoTriangle, O&M Revenues, D-O Service Expansion FTA Transit Oriented Development Study Grant $1.7 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $1.7 NCDOT SMAP for D-O Service Expansion Operations $.2 $.2 $.2 $.2 $.2 $.2 $.2 $.2 $.2 $.2 $.2 $.2 $2.4 $2.4 $2.5 $2.6 $2.7 $2.8 $2.9 $2.9 $23.3 Vehicle Rental Tax Apportionment (16%) $1.7 $1.8 $1.9 $2.0 $2.1 $2.1 $2.2 $2.3 $2.4 $2.5 $2.7 $2.8 $2.9 $3.1 $3.2 $3.4 $3.5 $3.7 $3.9 $4.1 $54.3 Vehicle Registration Fee, $7 $2.4 $2.5 $2.6 $2.6 $2.7 $2.8 $2.8 $2.9 $3.0 $3.1 $3.2 $3.2 $3.3 $3.4 $3.5 $3.6 $3.8 $3.9 $4.0 $4.1 $63.5 Vehicle Registration Fee, $3 $1.0 $1.1 $1.1 $1.1 $1.2 $1.2 $1.2 $1.2 $1.3 $1.3 $1.4 $1.4 $1.4 $1.5 $1.5 $1.6 $1.6 $1.7 $1.7 $1.8 $27.2 Sales Tax $33.6 $35.6 $38.1 $40.3 $41.6 $43.1 $45.2 $47.3 $49.0 $50.6 $52.2 $54.0 $56.1 $58.4 $60.8 $63.3 $65.8 $68.4 $71.0 $74.1 $1048.3 Fixed Bus and Paratransit Fares $.3 $.3 $.3 $.3 $.3 $.4 $.4 $.4 $.4 $.4 $.4 $.4 $.5 $.5 $.5 $.5 $.5 $.5 $.6 $.6 $8.6 D-O LRT Fares $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $5.7 $5.9 $6.1 $6.3 $6.5 $6.7 $6.9 $7.1 $51.3 Total $41.0 $41.5 $44.1 $46.5 $48.1 $49.7 $52.0 $54.3 $56.3 $58.1 $60.0 $62.1 $72.4 $75.2 $78.2 $81.3 $84.4 $87.6 $90.9 $94.6 $1278.3 Total System O&M Revenues $70.4 $70.2 $73.9 $77.0 $79.6 $83.4 $86.8 $90.0 $93.0 $95.6 $99.0 $101.1 $112.8 $116.8 $121.4 $125.9 $130.6 $137.6 $142.8 $148.2 $2056.1 2017- Summary of Operating Plan 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2036 GoTriangle, Balance from Operations Total System O&M Revenues $70.4 $70.2 $73.9 $77.0 $79.6 $83.4 $86.8 $90.0 $93.0 $95.6 $99.0 $101.1 $112.8 $116.8 $121.4 $125.9 $130.6 $137.6 $142.8 $148.2 $2056.1 Total GoTriangle O&M Expenditures -$41.2 -$31.7 -$32.7 -$33.8 -$34.9 -$35.9 -$37.0 -$38.1 -$39.2 -$40.4 -$41.6 -$42.8 -$80.0 -$75.3 -$77.6 -$80.0 -$82.4 -$84.9 -$87.5 -$90.2 -$1107.1 Total Disbursements to Partner Agencies -$4.9 -$5.0 -$5.1 -$5.2 -$5.3 -$5.5 -$5.7 -$5.9 -$6.0 -$6.2 -$6.4 -$6.6 -$6.8 -$7.0 -$7.3 -$7.5 -$7.7 -$8.0 -$8.2 -$8.5 -$128.8 GoTriangle, Balance from Operations $24.3 $33.5 $36.1 $38.0 $39.3 $42.0 $44.1 $46.0 $47.8 $49.0 $51.0 $51.6 $25.9 $34.5 $36.6 $38.5 $40.5 $44.7 $47.1 $49.6 $820.2 Note: Totals may not sum exactly due to rounding.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 3-14 GoTriangle Financial Plan
4. GoTriangle System 20-Year Cash Flow
4.1 GoTriangle System Sources and Uses of Funds This section summarizes the sources and uses of funds from 2017 to 2036 for the entire GoTriangle system, including General Services and Durham-Orange revenues and expenditures. The 20-year cash flow shows that GoTriangle has the financial capacity to implement the D-O LRT Project while meeting the capital and operating demands of existing and expanded service. The cash flow includes appropriate reserves for debt service, state of good repair, and operations and maintenance (O&M). Nearly fifty percent (49.8 percent) of the non-federal share of capital funding for the D-O LRT Project has already been committed with local revenues and borrowing backed by those revenues. One hundred percent of the funds needed to operate the system in the opening year of the project has been committed as well. Assumptions used to forecast revenues and expenditures are consistent with past experience, and they account for current and future economic conditions that may affect the assumptions. System O&M revenues are projected at $2,056.1 million YOE, and O&M expenses are estimated at $1,235.9 million. After allocating appropriate funding to the O&M reserve, an operating surplus of $820.2 million will be available for capital investments over the 20-year period. GoTriangle’s system capital program (including the D-O LRT Project and debt service) is estimated at $3,466.7 million YOE over the 20-year period. Capital funding (including the D-O LRT Project and debt proceeds) totals $2,686.5 million YOE before the $820.2 million transfer from operations. The cash flow also includes a state of good repair reserve of $170.2 million YOE for future investments on the D-O LRT Project. When the balance of operations and GoTriangle’s FY 2016 cash balance are incorporated into the cash flow, a cumulative surplus of $16.4 million YOE is estimated by 2036 in addition to $22.4 million in O&M reserves, $170.2 million in state of good repair reserves, and $39.2 million in debt service reserves. Table 4-1 shows both the cumulative cash balance and the O&M reserve balance from 2017 to 2036 (the O&M reserve increases from $10.6 million in 2028 to $18.1 million in 2029 due to the opening of the LRT system).
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 4-1 GoTriangle Financial Plan
Table 4-1: System Cumulative Cash Flow Balance, 2016-2036 (YOE Millions)
Systemwide Cash Flow 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
Revenues Prior Year Fund Balance (Including Carryover from Prior Year Capital Funds) $146.5 $146.5 $118.5 $99.6 $104.6 $208.2 $198.1 $160.1 $72.2 $48.3 $10.7 $69.8 $9.7 $21.9 $18.4 $17.7 $45.6 $55.7 $36.2 $27.1 $22.5 Total System Capital Revenues (Excl. Debt Proceeds) $31.1 $4.1 $28.2 $147.7 $128.4 $127.0 $127.0 $127.3 $128.8 $130.1 $161.3 $176.1 $107.5 $107.5 $129.9 $66.1 $7.5 $5.1 $5.2 $5.3 Total System O&M Revenues $70.4 $70.2 $73.9 $77.0 $79.6 $83.4 $86.8 $90.0 $93.0 $95.6 $99.0 $101.1 $112.8 $116.8 $121.4 $125.9 $130.6 $137.6 $142.8 $148.2 Debt Proceeds, Limited Obligation Bonds $.0 $.0 $.0 $.0 $.0 $.0 $.0 $120.0 $215.0 $200.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 Debt Proceeds, TIFIA Loan $.0 $.0 $.0 $.0 $.0 $.0 $.0 $200.0 $60.0 $60.0 $60.0 $20.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 $.0 Expenditures Total System Capital Expenditures (Excl. Debt Service) -$83.5 -$56.5 -$59.2 -$82.2 -$177.9 -$206.9 -$259.1 -$483.6 -$426.6 -$310.5 -$237.2 -$144.3 -$15.1 -$21.6 -$12.5 -$15.9 -$14.6 -$5.2 -$5.5 -$5.4 Total System O&M Expenditures -$46.1 -$36.7 -$37.8 -$39.0 -$40.2 -$41.4 -$42.7 -$43.9 -$45.2 -$46.6 -$48.0 -$49.5 -$86.9 -$82.3 -$84.8 -$87.4 -$90.1 -$92.9 -$95.7 -$98.6 Debt Service, Limited Obligation Bonds $.0 $.0 $.0 $.0 $.0 $.0 $.0 -$13.2 -$56.7 -$63.7 -$89.4 -$89.4 -$103.4 -$103.4 -$103.4 -$55.1 $.0 $.0 $.0 $.0 Debt Service, TIFIA Loan $.0 $.0 $.0 $.0 $.0 $.0 $.0 -$20.4 -$5.9 -$5.9 -$5.9 -$2.0 $.0 $.0 $.0 $.0 -$28.9 -$28.9 -$28.9 -$39.2 Year End Fund Balance (Prior to State of Good Repair Reserve Deposits) $146.5 $118.5 $99.6 $104.6 $208.2 $198.1 $160.1 $72.2 $48.3 $10.7 $69.8 $9.7 $21.9 $36.8 $35.4 $68.3 $79.1 $60.3 $52.0 $45.1 $32.8 State of Good Repair Reserve Deposits, TEST with 50% of Cash Balance -$59.2 -$49.8 -$52.3 -$104.1 -$99.0 -$80.1 -$36.1 -$24.2 -$5.4 -$34.9 -$4.9 -$10.9 -$18.4 -$17.7 -$34.1 -$39.6 -$30.1 -$26.0 -$22.5 -$16.4 State of Good Repair Reserve Deposits, TEST -$.0 -$.0 -$.0 -$.0 -$.0 -$.0 -$.0 -$.0 -$.0 -$.0 -$.0 -$.0 -$21.4 -$22.0 -$22.7 -$23.4 -$24.1 -$24.9 -$25.7 -$26.4 Year End Fund Balance-After State of Good Repair Reserve $118.5 $99.6 $104.6 $208.2 $198.1 $160.1 $72.2 $48.3 $10.7 $69.8 $9.7 $21.9 $18.4 $17.7 $45.6 $55.7 $36.2 $27.1 $22.5 $16.4
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 4-2 GoTriangle Financial Plan
4.2 Sensitivity Analysis With a diversity of dedicated local revenue sources that can be used in various combinations to support both operating and capital needs for existing and new transit services, the Financial Plan is significantly more resilient than a plan that is exclusively dependent on a single revenue stream. However, uncertainty is inherent in long-range financial plans; this section explores potential impacts and mitigations of the key risks in this Financial Plan.
4.2.1 Key Risks in Financial Plan D-O LRT Project Capital Cost. The D-O LRT Project is currently at 30 percent design, and its construction costs and schedule are subject to uncertainty due to factors such as unforeseen field conditions and variations in unit costs. To mitigate the impact of potential cost increases as the project advances to the Engineering and Construction phases, the project’s capital cost and schedule estimates includes appropriate contingencies and inflation assumptions (see Section 2.1). This risk is tested in Sensitivity test 1 (Section 4.2.5); specifically, the analysis evaluates a capital cost increase of 10 percent. D-O LRT Project O&M Cost. The D-O LRT Project O&M cost model was developed using input variables such as unit costs, annual growth rates, and project-specific service levels to forecast O&M costs after construction is completed in 2028. Service levels for the D-O LRT Project are derived from the proposed operating plan and from ridership forecasts. Higher O&M costs than projected would increase the annual system O&M funding requirements. Interest Rates. Since interest rates have been historically low, it is likely that they will rise by the time GoTriangle issues the debt in the Financial Plan. To mitigate this risk, the Financial Plan assumes conservative interest rates (see Section 2.2.4). Sales Tax Forecast. The 0.5 percent sales and use tax in Durham and Orange Counties is the largest dedicated revenue source in the Financial Plan. To ensure that the Financial Plan can accommodate fluctuations or decreases in the sales tax, GoTriangle has tested this risk in Sensitivity test 2 (Section 4.2.6). Moody’s Analytics has provided Optimistic, Baseline, and Pessimistic sales tax forecasts in November 2016; this sensitivity analysis tests the Pessimistic forecast. 92 Actual Annual Disbursement of Capital Grants. Annual allocations of federal and state grant funding for project implementation are subject to appropriation processes, which are outside the control of GoTriangle. The funding assumptions in the SCC worksheet are based on annual funding needs and reasonable assumptions of annual Federal and State funding that might be appropriated (e.g. FTA Section 5309 New Starts funding not to exceed $100 million per year). Allocations below current projections could affect the capital plan by: 1) extending the project schedule; 2) requiring more local funding for the project to be provided upfront (see Section 4.2.2); and 3) increasing financing costs if debt is required to address funding shortfalls.
4.2.2 Reserves The Financial Plan assumes that three months of systemwide O&M expenses will be retained in a cash reserve fund along with debt service reserves equal to 10 percent of the par amount for LOBs and the maximum annual debt service for the TIFIA loan. After D-O LRT Project completion, the financial model assumes that an amount equivalent to the lower of 30 percent of annualized costs or 50 percent of the
92 0704_FMODA-DATA_Moody’s-Sales-Tax-Forecast_161123; 0706_FMODA-FIG_ Moody’s-Sales-Tax- Forecast_161123; 0706_FMODA-RPT_ Moody’s-Sales-Tax-Forecast_161123
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 4-3 GoTriangle Financial Plan cash balance is deposited into a state of good repair reserve to support future state-of-good repair needs of the LRT.
4.2.3 Additional Funding Sources included in Sensitivity Analysis As part of addressing the key risks in the Financial Plan, GoTriangle and its partners are exploring ways to supplement the current dedicated local revenues. The sensitivity tests indicate that these additional funds would be required if the tested event(s) were to occur. These potential additional funding sources are included in the sensitivity analyses to demonstrate how they would be utilized. Other Federal Funds. In addition to Section 5309 New Starts funds, GoTriangle is seeking to apply other federal transportation funds to the D-O LRT Project. GoTriangle has discussed with DCHC-MPO how other projects around the country have used such funds and has proposed flexing $2 million in federal grants annually for 10 years to support the D-O LRT Project.93 The grants proposed for flexing include the Congestion Mitigation and Air Quality Improvement Program (CMAQ) and Surface Transportation Block Grant Program (STBGP) (formerly Surface Transportation Program – Direct Attributable [STP-DA]). Funds made available to DCHC-MPO under the STBGP, 23 United States Code (USC) § 133, are eligible to be used for “transit capital projects eligible for assistance under chapter 53 of title 49,” including Capital Investment Program/New Starts projects, 23 USC § 133(b)(1)(C). CMAQ funds may be used for transit capital projects, according to FTA.94 DCHC-MPO has signed a Memorandum of Understanding to further explore this funding source.95 Table 4-2 shows DCHC-MPO’s historical and planned allocations of these funds.
93 0206_PRES_DCHCMPO-Other-Federal-Funding_161116; 0206_AGENDA_DCHCMPO-Other-Federal- Funding_161116; 0206_PRES_DCHCMPO_Other-Federal-Funding-Final_161214; 0206_AGENDA_DCHCMPO_Other- Federal-Funding-Final_161214; 94 https://www.transit.dot.gov/regulations-and-guidance/environmental-programs/livable-sustainable- communities/fhwa-flex-funding 95 0706_MOU_DCHCMPO_161214
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 4-4 GoTriangle Financial Plan Table 4-2: Federal Funding Allocations to DCHC-MPO, 2006-2019 (YOE Millions)
FFY CMAQ STBGP (formerly STP-DA) 2006 $1.33 $3.55 2007 $1.33 $4.08 2008 $1.33 $3.98 2009 $1.33 $4.10 2010 $1.33 n/a 2011 $1.33 $4.47 2012 $1.33 $4.37 2013 $2.53 $4.36 2014 $2.59 n/a 2015 $2.64 n/a 2016 $2.28 $4.54 2017 (planned) $2.28 $4.47 2018 (planned) $2.38 $4.54 2019 (planned) $2.42 TBD Source: DCHC-MPO96 The FAST Act appropriates funds for the first three years of the Act (FY 2015 through FY 2017) and authorizes funds for the final three years (FY 2018 through FY 2020). Over that time, funds allocated to the STBGP nationwide is scheduled to increase from $10.3 billion in FY 2015 to $12.1 billion in FY 2020. In addition, STBGP and its predecessor STP-DA have allocated funds directly to MPOs since the Transportation Equity Act for the 21st Century was enacted in 1998. Therefore, it is reasonable to assume a flat level of flexible STBGP and CMAQ funds will be available for DCHC-MPO during the D-O LRT Project construction period. By allocating a portion of these funds to the D-O LRT Project, the MPO may limit funding for other regional non-highway projects. However, the allocation of funds to the D-O LRT Project is consistent with the MPO’s policy to use the funds to improve non-highway infrastructure and transit service within the MPO’s territory. In addition, the D-O LRT Project includes millions of dollars of bicycle and pedestrian infrastructure in and adjacent to station areas. Therefore, by providing an allocation of STBGP or CMAQ funds which enable the D-O LRT Project to proceed, the MPO will gain as much or more non-highway and transit infrastructure than through its traditional distribution process, maintaining consistency with the MPO’s institutional priorities. To the extent the D-O LRT Project is awarded CMAQ funding in a given year, STBGP funds would remain available for use for other projects in the region. Private Philanthropic Campaign. In cities such as Detroit and Atlanta, private philanthropic funding sources have complemented allocations from traditional public sources to advance the construction of major infrastructure projects for their communities. GoTriangle believes that a similar funding model may prove successful for the D-O LRT Project.
96 Values listed as “n/a” were not available from NCDOT. Per NCDOT staff, in some years STP-DA funding was provided through partial-year Continuing Resolutions and other short-term funding mechanisms, and total amounts were not available. In other years, the STP-DA funding allocation was identical year-to-year, and NCDOT did not track.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 4-5 GoTriangle Financial Plan GoTriangle is in the process of establishing a nonprofit organization that will seek a minimum of $25 million YOE in private philanthropic contributions for the D-O LRT Project. While GoTriangle is not itself a nonprofit — it is a public transportation authority — GoTriangle is authorized under North Carolina law to establish, control, and operate a nonprofit: “A public authority may establish, control, and operate a nonprofit corporation that is created under Chapter 55A of the General Statutes and is a tax- exempt organization under the Internal Revenue Code to further the authorized purposes of the public authority.” 97 GoTriangle qualifies as a “public authority.” 98 On December 14, 2016 and by unanimous vote, GoTriangle’s Board of Trustees authorized GoTriangle staff to proceed with the incorporation process. Early in 2017, articles of incorporation will be filed with North Carolina’s Secretary of State in order to formally establish the entity. Once established, the organization will apply for tax-exempt status at the state and federal levels. GoTriangle envisions several roles for the nonprofit. The nonprofit will work with the Funding and Community Collaborative (Collaborative), a group of 21 private citizens and leaders from universities, health care institutions, the private sector, and local governments who are committed to securing additional funds for the local share of the D-O LRT Project.99 The nonprofit will be able to pursue the philanthropic prospects identified by the Collaborative and be eligible to receive tax-deductible donations of property (real property, money, and other personal property). The tax benefits associated with donations will expand the range of citizens and businesses that are willing to contribute. Also, the nonprofit will be eligible to seek foundation grants not typically available to public agencies. GoTriangle has begun the process of identifying grant-making organizations whose missions resonate with the values of the D-O LRT Project – namely, improving the economic, environmental, cultural, social, and educational opportunities in our region. A listing of such foundations, endowments, and trusts identified to date are included with these application materials3 and include the Golden LEAF Foundation, the Goodnight Educational Foundation, the Sall Family Foundation, the AJ Fletcher Foundation, the Blue Cross Blue Shield Foundation, the Bank of America Foundation, and the North Carolina State Employees Credit Union Foundation.100 GoTriangle is confident about the prospects for building private, corporate, and philanthropic support for the D-O LRT Project. This confidence is rooted in past experience where the people and organizations of the Research Triangle region have consistently demonstrated a willingness to make robust investments in their communities. By way of example, the transit-tax referendum was favorably passed by Durham County voters in 2011 by a margin of 60-40; by Orange County voters in 2012 by a margin of nearly 59-41; and by Wake County voters in 2016 by a margin of nearly 53-47. Similar referenda for public investment were passed overwhelmingly in 2016 in Durham and Orange counties. Durham approved bonds by large majorities for its investment in the community college (83 percent in favor), library (80 percent in favor), museum (78 percent in favor), and school systems (84 percent in favor). Meanwhile, Orange approved bonds for school (75 percent in favor) and affordable housing (65 percent in favor) in this election cycle. This ethos of community support is also reflected in the right-of-way pledges already received
97 0706_NCGS_Public-Authority-Nonprofit-§159-42.1 98 0706_NCGS_GoTriangle-Enabling-Legislation-§160A-600-through-629 99 0706_Funding-and-Community-Collaborative-Membership_161208; 0707_AGENDA_Funding-and-Community- Collaborative_160826; 0707_AGENDA_Funding-and-Community-Collaborative_160923; 0707_AGENDA_Funding- and-Community-Collaborative_161118; 0707_PUB_Funding-and-Community-Collaborative-Press-Release_161117 100 0707_Foundations-Endowments-Grants_161212; 0707_MEM_Benefits-LRT-Economic-Education-Art- Trogden_161013; 0707_MEM_Benefits-LRT-1pager-Environ_161019
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 4-6 GoTriangle Financial Plan by GoTriangle for the D-O LRT Project since establishment of the Collaborative in August 2016. Contingent on the project advancing to construction, these pledges received to date (from both public and private entities) are valued at approximately $18 million (2016 dollars) as described in Section 2.2.3. Efforts to round out the non-federal funding of the D-O LRT Project will be ongoing in the coming months and years. GoTriangle envisions the Collaborative and the nonprofit, described above, to be important components of this effort, as they help to identify and secure private, corporate, and philanthropic contributions to the project. Additional Local Revenues. Should additional funding be needed beyond the federal funds, state funds, dedicated local taxes and fees, joint development local match, in-kind right-of-way donations, and private philanthropic campaign, Durham and Orange Counties have committed to exploring additional local funding mechanisms to support the D-O LRT Project. GoTriangle staff have been engaging with the local jurisdictions about potential funding needs for the D- O LRT Project. They have been meeting with the managers, financial officers, and other staff of Durham County,101 Orange County,102 and the municipalities. Based on feedback from those meetings, GoTriangle staff have presented the idea of additional local revenue to the Orange Board of County Commissioners,103 Orange County Assembly of Governments (a joint meeting of the elected bodies of Orange County and the Towns of Chapel Hill, Carrboro, and Hillsborough),104 Durham City Council,105 and Durham Board of County Commissioners.106 In these presentations, GoTriangle has proposed a combined target amount for additional local funding totaling $175 million YOE. By county, that proposed target would be $4 million per year ($40 million total) from Orange County and $13.5 million per year ($135 million total) from Durham County from 2020 through 2029. This split is based on the current Cost Sharing Agreement between the counties.107 Following presentations from GoTriangle staff, Durham and Orange Counties each signed a Memorandum of Understanding (MOU) that they would “cooperate with the municipalities within the County and work together to identify potential additional funding mechanisms to directly support the D-O LRT Project.”108 The City of Durham has also signed a letter of support for this decision.109 The potential sources of these additional local funds have not yet been identified, but the Revenue/Finance Update Team of the Staff Working Group will be working collaboratively in spring 2017 to develop a range of options. This process will occur in tandem with other updates to the Durham and Orange Transit Plans.
101 0211C_PRES_Durham-Managers-and-Finance-Staff_161104 102 0211D_PRES_Orange-Managers-and-Finance-Staff_161109 103 0211D_PRES_Orange-BOCC_161115; 0211D_AGENDA_Orange-BOCC_161115; 0211D_PRES_Orange- BOCC_161205; 0211D_AGENDA_Orange-BOCC_161205 104 0211D_PRES_Orange-Assembly-Govts-Financial-Update_161117; 0211D_AGENDA_Orange-Assembly-Govts- Financial-Update_161117 105 0211C_PRES-Joint-BOCC-City-Council_161129 106 0211C_AGENDA_Durham-BOCC _161212; 107 0706_AGMT_LRT-Cost-Share_120515 108 0706_MOU_Orange-County-161221; 0706_MOU_Durham-County-161221 109 0211B_MA_Durham-City-Council-161222-Financial-Letter-of-Support; 0211B_LTR_Bell-Jacobs-Financial-MOU
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 4-7 GoTriangle Financial Plan 4.2.4 Cost Reduction Strategies GoTriangle’s value engineering study completed for the 30 percent design of the project identified potential cost savings totaling $40 million, separate from the contingency included in the cost estimate.110 Early in Engineering, as part of the FTA-led risk assessment, GoTriangle will identify “secondary mitigation” measures based on the value engineering study and other investigations of potential cost savings. Secondary mitigation refers to cost-saving measures identified in the project definition (but not implemented) that could be implemented if necessary to lower the project cost in response to a funding shortfall or cost increase. As an example, GoTriangle’s secondary mitigation may include the option to reduce certain bridges to single track instead of double track—a measure that ordinarily would not be implemented, but could be implemented to reduce the project cost if needed.111 GoTriangle will also work with its financial advisors to identify potential efficiencies in the debt structure that is currently in the Financial Plan. Additionally, during the D-O LRT Project construction period, GoTriangle could adjust the schedule of its construction contracts or issue short-term debt to address cash flow challenges. Another strategy for GoTriangle to address any cash flow issues would be to adjust its fleet replacement program, determining whether the vehicle replacement schedule can be adjusted without increasing significantly the average age of the fleet.
4.2.5 Sensitivity Test 1: D-O LRT Project Cost Increase For Sensitivity Test 1,112 the D-O LRT Project construction costs (2020 through 2028) are increased by 10 percent, excluding finance charges. The analysis assumes that neither Section 5309 New Starts nor state funding would increase beyond the funding estimates developed for the base cash flow. Table 4-3 summarizes the results from the sensitivity test. With additional local funding, the sensitivity test results in positive cash balances at the end of each fiscal year over the 20-year period. As shown in Figure 4-1, fiscal years 2027 and 2028 are the most critical years, when the end year cash balances are estimated at almost $5 million, leaving little buffer to withstand unforeseen changes in costs and/or revenues (Figure 4-1). In addition to the end year cash balance, funding in the O&M and debt service reserves in 2027 is estimated at $10.3 million and $91.2 million, respectively. When running this test without additional local funding, the cash flow goes into deficit by 2023 and does not recover by 2036. Note that financing charges associated with the project change as project financing plan changes. For instance, the size of the TIFIA loan increases from $400 million to $465 million and LOBs increase from $535 million to $545 million.
110 0112_VE-Report-160202_v0 111 0012_RPT_Single-Track-Analysis-Results-160915 112 0704_FMOD_GoTriangle-20-Year-Cash-Flow-Model-Sensitivity-1-DOLRT-Capital-Cost_161229
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 4-8 GoTriangle Financial Plan Table 4-3: Sensitivity Test #1, D-O LRT Project Cost Increase of 10% (YOE Millions)
Test #1 (with Additional Difference Base Local Funding) (Test #1 - Base) D-O LRT Project Cost (10% Increase) Without financing $2,388.5 $2,627.4 $238.9 charges With financing charges $2,476.3 $2,794.6 $318.3 GoTriangle Cash Flow (2017-2036)a Operating expenses $1,213.5 $1,213.5 $0.0 Capital expenses $3,466.7 $3,849.0 $382.3 Total Expenses $4,680.2 $5062.5 $382.3
Operating revenues $2,056.1 $2,056.1 $0.0 Capital revenues $2,686.5 $3,027.5 $341.0 Total revenues $4,742.6 $5,083.6 $341.0
Net Balance a $62.4 $21.1 ($41.3) a Excludes FY 2016 end of year fund balance of $146.5 million. Figure 4-1: Sensitivity Test #1, Cumulative Fund Balance (YOE Millions)
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4.2.6 Sensitivity Test 2: Lower Sales Tax Revenues For Sensitivity Test 2,113 the Pessimistic scenario of sales tax revenue projections from Moody’s Analytics is applied. Under this Pessimistic scenario, sales tax revenue projections in Orange County are projected to grow at an average annual rate of 3.2 percent, a decrease of 0.8 percentage points from the Baseline scenario projections. For Durham County, sales tax revenue projections are projected to grow at an average annual rate of 3.2 percent, a decrease of 1.2 percentage points from the Base case.
113 0704_FMOD_GoTriangle-20-Year-Cash-Flow-Model-Sensitivity-2-Sales-Tax_161229
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 4-9 GoTriangle Financial Plan Table 4-4 summarizes the results from the sensitivity test. With additional local funding and corresponding adjustments to financing, the sensitivity test results in a positive cash balance over the 20-year period. As shown in Figure 4-2, FY 2027 is the most critical year, when the end year cash balance is estimated at approximately $29.8 million excluding reserves, leaving little buffer to withstand additional changes in costs and/or revenues (Figure 4-2). In addition to the end year cash balance, funding in the O&M and the Debt service reserves in 2027 are estimated at $10.3 million and $73.2 million, respectively. When running this test without additional local funding, the cash flow goes into deficit by 2025 and recovery begins by 2035. Table 4-4: Sensitivity Test #2, Sales Tax Growth Reduction (YOE Millions)
Test #2 (with Additional Base Difference (Test #2 - Base) Local Funding) D-O LRT Project Cost Without financing $2,388.5 $2,388.5 $0.0 charges With financing charges $2,476.3 $2,522.6 $46.3 GoTriangle Cash Flow (2017-2036)a Operating expenses $1,213.5 $1,213.5 $0.0 Capital expenses $3,466.7 $3,403.2 ($63.5) Total Expenses $4,680.2 $4,616.7 ($63.5)
Operating revenues $2,056.1 $1,931.1 ($125.0) Capital revenues $2,686.5 $2,791.6 $105.1 Total Revenues $4,742.6 $4,722.7 ($19.9)
Net Balance a $62.4 $106.0 $43.6 a Excludes FY 2016 end of year fund balance of $146.5 million. Figure 4-2: Sensitivity Test #2, Cumulative Fund Balance (YOE Millions)
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Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 4-10 GoTriangle Financial Plan 4.3 Sensitivity Analysis Conclusions The sensitivity analyses indicate that adverse changes to expenditure and revenue assumptions would have the most impact at the end of the D-O LRT Project construction period. Major changes to Financial Plan assumptions in earlier years may lead to deficits in years 2027, 2028, and 2029 unless costs are lowered or revenues are raised accordingly. However, after construction is completed, GoTriangle’s cash balance will begin to increase significantly as the financial demands are reduced; the primary expenditures at that time will be operations, debt service, fleet replacement, and maintaining a state of good repair for the D-O LRT Project.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 4-11 GoTriangle Financial Plan 5. Conclusion The Durham-Orange Light Rail Transit Project is a major, vital investment in the transportation future of the rapidly-growing Research Triangle region. Delivering a project of this magnitude requires careful financial planning and a combination of federal and non-federal resources. This Financial Plan sets forth a financially sound path for the D-O LRT Project’s construction and future operations and maintenance, and it establishes sufficient local financial commitment to advance the D-O LRT Project into the Engineering phase in 2017. As the D-O LRT Project progresses, GoTriangle will continue working diligently to secure the full non-federal funding share, with the goal of executing a federal Full Funding Grant Agreement in 2020.
Durham-Orange Light Rail Transit Project | December 2016 | Version 1 | 5-12