HRTAC Regional Financial Planning. October 29, 2015

Transcription

1 HRTAC Regional Financial Planning October 29, 2015

2 PFM s Transportation Experience For 29 years PFM has been ranked the leading financial advisor, including investment and commercial banks, to transportation clients, according to Securities Data Corporation. During this period, PFM advised its transportation clients and assisted in the execution of financings totaling over $133 billion in par value. These financings produced capital to fund major infrastructure investments in toll roads, highways, bridges, mass transit facilities and other transportation needs Full Year Transportation Long Term Municipal New Issues National Municipal Financial Advisory Ranking - Equal to Each Financial Advisor Source: Thomson Reuters PFM 67 Estrada Hinojosa & Company Inc 16 FirstSouthwest 46 Public Resources Advisory Group Lamont Financial Services Corp 15 A C Advisory Inc 4 G-Entry Principle PC 8 Acacia Financial Group Inc 9 RBC Capital Markets 18 Piper Jaffray & Co 9 6 # transactions 1, , , ,561.3 dollars in millions 11, Transportation Long Term Municipal New Issues National Municipal Financial Advisory Ranking - Equal to Each Financial Advisor Source: Thomson Reuters PFM Public Resources Advisory Group FirstSouthwest RBC Capital Markets Goldman Sachs & Co Lamont Financial Services Corp Lazard Freres & Co Estrada Hinojosa & Company Inc NW Financial # transactions 15, , , , , , , ,932.7 dollars in millions 133,788.2 Cargill Financial Services 10,

3 PFM s Toll Facilities Experience PFM Toll Facilities Experience Long-Term Financing Plan Privatization Alternative Funding Sources Project Revenue Bonds Operating/Development Agreement FHWA Grants / TIFIA Loans Refunding Bonds State DOT O&M Agreement State DOT Loans/Grants Variable Rate Bonds Letter of Credit SWAPS Structured Products Commercial Paper Arkansas Highway and Transportation Department Bay Area Toll Authority (CA) Buffalo & Ft. Erie Public Bridge Authority Chesapeake Bay Bridge & Tunnel District Chesapeake Transportation System (Virginia) Colorado High Performance Transportation Enterprise Delaware River Port Authority (DRPA) Delaware Transportation Authority E-470 Public Highway Authority Florida s Turnpike Enterprise Foothill/Eastern TCA Georgia 400 Golden Gate Bridge Highway and Transportation District Hampton Roads Planning District Commission Illinois Toll Highway Authority Kentucky Public Transportation Infrastructure Authority Lee County, Florida Transportation Facilities Mackinac Bridge Authority Maryland Transportation Authority (MTA) Massachusetts Turnpike Authority New Jersey Turnpike Authority New York State Thruway Authority North Carolina Turnpike Authority & DOT Ohio Turnpike Orange County Transportation Authority 91 Express Lanes Orlando-Orange County Expressway Authority Osceola Parkway - Poinciana Parkway (Florida) Pennsylvania Turnpike Commission San Diego Association of Governments (SR 11 / SR 125) San Joaquin Council of Governments (I-5 Hotlanes) (CA) San Joaquin Hills TCA Texas Department of Transportation 3

4 Evaluating HRTAC s Project Funding Capacity Desired Timing for Project Delivery Performance of HRTAC s Revenue Streams Policy for Debt Service Coverage Project Priorities Debt Structure HRTAC s Project Funding Capacity Policy for Reserves Mix of PAYGO & Debt Interest Rates Additional Bonds Test Credit Rating Types of Debt used 4

5 Considerations for HRTAC Develop a long term financial plan to provide funding for prioritized projects Determine a comprehensive and reasonable fiscally unconstrained project development schedule Consider HRTAC s credit profile including parameters for debt burden & debt affordability Optimize the use of HRTF tax revenue within desired credit profile Establish a firm foundation for financial sustainability Flexible planning model to analyze multiple alternatives For Toll Projects, if any, determine project financing inputs and attributes Develop detailed traffic & revenue forecasts Develop refined project costs including toll collection capital and operating costs Determine parameters for debt burden & debt affordability (different than special taxes) Role of TIFIA and VTIB, if any Analyze structural alternatives for HRTAC s toll backed debt Strategic Financial Plan Comprehensive plan incorporating all projects, all HRTF revenue, and tolling Forms part of the basis for any rating agency discussions Guides the agency and other stakeholders with respect to project planning and implementation 5

6 HRTAC Planning Approach Outline Review all project schedules and cost estimates in year of expenditure dollars to support financial modelling. Decide on HRTF revenue growth projections, or range of growth projections, to analyze. Decide on bond covenants and structure, or appropriate range of bond parameters, to analyze Develop a long term financial plan to determine HRTF funding capacity with a reasonable and fiscally unconstrained schedule for all projects. If all projects cant can t be afforded on a fiscally unconstrained basis, then look at: 1) Pushing projects further into the future, i.e fiscally constrained schedule 2) Additional state/federal funding needed to build on an unconstrained schedule 3) Additional tax revenue needed to build on an unconstrained schedule 4) Tolling needed to build on an unconstrained schedule 5) Some reasonable combination of

7 Attributes of the HRTAC Financial Plan Objectivity PFM does not have a dog in this hunt! We will study the projects, revenue parameters, and schedule all as determined by HRTAC Financial plan goal is to deliver the projects as quickly and effectively as possible within reasonable financial market constraints Transparency All key assumptions will be discussed and thoroughly documented We will ask tough and probing questions designed to get the decisions and feedback needed for a consensus strategic financial plan Flexibility Our financial model will be able to test different assumptions throughout development of the financial plan Looking to the future, the financial plan can be modified as circumstances dictate 7

8 Initial Project Financing Scenarios Six project financing scenarios are identified including HRBT, which is part of a consolidated SEIS study with Patriots Crossing and I-664/MMBT. CDM Smith and CH2MHILL have provided T&R and capital cost estimates for all scenarios. 1) Toll Patriots Crossing Only except $2.83 on Patriots Crossing 2) HOT Network HOT on existing I-64 HOV lanes, High Rise Bridge, HRBT, MMBT, and Rt. 460/58 Connector; $2.83 on Patriots Crossing 3) Toll All Lanes Option A $1 on High Rise Bridge, Patriots Crossing, HRBT and MMBT; HOT on Rt. 460/58 Connector 4) Toll All Lanes Option B $2 on High Rise Bridge, Patriots Crossing, HRBT and MMBT; HOT on Rt. 460/58 Connector 5) Toll All Lanes Option C Same as Scenario 3 except peak & off-peak congestion pricing at $1.5 & $1 on HRBT 6) Toll All Lanes Option D Same as Scenario 4 except peak & off-peak congestion pricing at $3 & $2 on HRBT * All stated toll rates are in 2015 dollars; toll rates are inflated by 2.5% annually 8

9 Regional Toll System Concept Common approach to project planning and phasing for toll roads and other revenue generating infrastructure Common approach to setting toll rates considering both financial feasibility and traffic management Consolidated toll collection system and back office Ability to implement a regional toll system financing/ bonding approach, as opposed to individual stand-alone project financing Integrated plan for toll projects and leveraging HRTF revenues Over time, significantly improved credit ratings and expended bonding capacity 9

10 Regional System Financing Example Central Florida Expressway Authority The CFX system is comprised of 109 centerline miles of expressways within Orange County in Florida 741 Lane Miles 14 Mainline Toll Plazas 64 Ramp Plazas 301 Toll Collection Lanes All CFX facilities are integrated into one system. Toll revenues are combined to support its overall capital plan. Toll revenues and other revenues form the pledge for CFX s revenue bonds. CFX has one Master Bond Resolution and one system debt policy. Currently about to finance completion of the western loop around Orlando a project that would not be financially feasible outside of the system concept. 10

11 Potential HRTAC Bonds Structure Flow of Funds Capital Funding Non-Toll Revenues Toll Revenues* Beginning Balance HRTF Revenue Senior Lien Debt Service Fund Toll Collection Expenses Net Debt Proceeds (Deposit) HRTF Revenue Senior Lien Debt Service Reserve Fund Non-Recourse Toll Revenue First Tier Debt Service Fund Residual Non-Toll & Toll Revenue (Deposit) Project Cost (Draw) State & Federal Funds (Deposit) HRTF Revenue Junior Lien Debt Service Fund Non-Recourse Toll Revenue First Tier Debt Service Reserve Fund Ending Balance HRTF Revenue Junior Lien Debt Service Reserve Fund Non-Recourse Toll Revenue Second Tier Debt Service Fund Surplus Non-Toll Revenues Non-Recourse Toll Revenue Second Tier Debt Service Reserve Fund Double-Barrel Toll Revenue Third Tier Debt Service Fund Note: *Assumes toll collection costs paid by HRTAC and roadway O&M / R&R costs paid by VDOT HRTAC Administrative Expenses 11

12 Non Toll Funding Assumptions The projects will be financed with a combination of pay-go cash and debt proceeds supported by non-toll funds and toll revenues. Non-toll funds include HRTF, HRTPO, and VDOT funds. HRTF Based on VDOT s forecast prepared in September HRTPO Controlled Funds (CMAQ, RSTP) Assume annual funds of $50M in 2016 and increase by 2.5% annually from 2017 to 2035 (Subject to change) VDOT Funds Potential Grants through HB2 District and Statewide Programs Assume annual funds of $50M in 2016 and increase by 2.5% annually from 2017 to 2035 (Subject to change) 12

13 HRTF Preliminary Funding Analysis Current Estimates HRTF Revenues: $160,031,725 in 2014; $165,088,591 in 2015; $171,312,431 in 2016; $177,531,072 in 2017 Increase 3.23% annually thereafter HRTF Bond Issuance Issuance every 2 years; first series in 2016, last series in 2038 when final construction ends 30-year level debt service A rated credit; 10-year historical average interest rates 1.25x minimum coverage ratio Total bond proceeds - $4.6 billion Plus unspent HRTF revenues from 2014 to $0.325 billion Residual revenues over 20 years (from 2017 to 2038) Present value (discounted at 2.5% to 2015) - $1.6 billion Total present value funding of $6.5 billion from HRTF from 2014 to

14 Preliminary Indicative T&R Estimates Nominal value / Present value Billions $ $31,312 / $5,927 $23,502 / $4,539 $18,874 / $3,545 $13,805 / $2,649 $8,587 / $1,707 $6,196 / $1,257 14

15 Preliminary Indicative Inflated Project Costs ALL non-toll and potentially tolled projects fiscally unconstrained costs assuming the schedules shown earlier and a 2.5% annual inflation rate: Cumulative Costs Millions $ 22,500 20,000 17,500 15,000 12,500 I 64 HOV/HOT & High Rise Bridge Patriots Crossing HRBT MMBT Rt. 460/58/13 Connector $20.3B in total $17.1B in total 10,000 7,500 5,000 2, Costs Assuming HOT Tolling Costs Assuming No Tolls or Toll All Lanes * Lines point to the time when each project s construction starts ** I-64 HOV/HOT project is only included in the HOT Tolling scenario 15

16 Non-Toll HRTAC Projects Uninflated Capital Cost Summary HRTAC has identified several projects that will be toll free and funded in part with HRTF revenues, including: I-64 Widening Project (Segment 1-3 plus Ft. Eustis Blvd Interchange) I-64/I-264 Interchange (Phase 1 and Phase 2) Uninflated cost estimates and fiscally unconstrained schedules are as follows: PE Cost RW/CN Cost Total Estimate Year I-64 Widening - Segment 1 4,135, ,963, ,098, I-64 Widening - Segment 2 6,000, ,592, ,592, I-64 Widening - Segment 3 10,000, ,303, ,303, Ft. Eustis Blvd Interchange 15,000, ,603, ,603, I-64/I-264 Interchange - Phase 1 8,547, ,161, ,709, I-64/I-264 Interchange - Phase 2 11,802, ,228, ,031, Source: correspondence dated July 29, 2015 PE Construction Construction PE Construction Start Date Start Finish Duration Duration I-64 Widening - Segment 1 7/1/2014 1/1/2015 1/1/ mns 36 mns I-64 Widening - Segment 2 7/1/2014 1/1/2016 1/1/ mns 36 mns I-64 Widening - Segment 3 7/1/2014 1/1/2016 7/1/ mns 30 mns Ft. Eustis Blvd Interchange 7/1/2014 4/1/ /1/ mns 30 mns I-64/I-264 Interchange - Phase 1 7/1/2015 4/1/2016 9/1/ mns 41 mns I-64/I-264 Interchange - Phase 2 1/1/2016 1/1/ /1/ mns 59 mns Source: 1. I-64 Widening VDOT Presentation dated July 17, I-64/I-264 Interchange - correspondence dated July 29,

17 Potential HOT Network HRTAC Projects Uninflated Capital Cost Summary Includes the I-64 existing HOV lane to HOT conversion project. The uninflated cost estimates and fiscally unconstrained schedules assuming a I-64 / I-664 HOT network are as follows: PE Cost RW/CN Cost Total Estimate Year I-64 HOV/HOT 100,000, ,600, ,600, High Rise Bridge 75,005,551 1,210,924,449 1,285,930, Patriots Crossing 279,998,225 3,738,671,775 4,018,670, HRBT 560,160,000 3,174,240,000 3,734,400, MMBT 279,998,225 3,763,371,775 4,043,370, Route 460/58/13 Connector 19,304, ,705, ,010, PE Construction Construction PE Construction Start Date Start Finish Duration Duration I-64 HOV/HOT 7/1/2016 7/1/2017 7/1/ mns 12 mns High Rise Bridge 1/1/2015 1/1/2017 1/1/ mns 60 mns Patriots Crossing 11/1/2017 1/1/2020 1/1/ mns 60 mns HRBT 5/1/2023 1/1/2025 1/1/ mns 60 mns MMBT 11/1/2027 1/1/2030 1/1/ mns 60 mns Route 460/58/13 Connector 1/1/2033 1/1/2035 1/1/ mns 36 mns Source: Cost Estimate Report by CH2MHILL prepared in July

18 Potential All-Lane Tolling HRTAC Projects Uninflated Capital Cost Summary The uninflated cost estimates and fiscally unconstrained schedules assuming the interstate bridge / tunnel water crossings are tolled all lanes. All-lane tolling network costs are lower than the HOT alternative because barriers and direct connectors can be eliminated. PE Cost RW/CN Cost Total High Rise Bridge 75,005,551 1,127,851,449 1,202,857,000 Patriots Crossing 279,998,225 3,738,671,775 4,018,670,000 HRBT 547,124,250 3,100,370,750 3,647,495,000 MMBT 279,998,225 2,557,197,775 2,837,196,000 Route 460/58/13 Connector 19,304, ,953, ,258,000 PE Construction Construction PE Construction Start Date Start Finish Duration Duration High Rise Bridge 1/1/2015 1/1/2017 1/1/ mns 60 mns Patriots Crossing 11/1/2017 1/1/2020 1/1/ mns 60 mns HRBT 5/1/2023 1/1/2025 1/1/ mns 60 mns MMBT 11/1/2027 1/1/2030 1/1/ mns 60 mns Route 460/58/13 Connector 1/1/2033 1/1/2035 1/1/ mns 36 mns Source: Cost Estimate by CH2MHILL prepared in October