Triangle Transit Financial Plan. Durham Orange Light Rail Transit Project

Transcription

1 Durham Orange Light Rail Transit Project September 2012

2 TABLE OF CONTENTS LIST OF TABLES... ii LIST OF FIGURES... iii 1. Introduction DESCRIPTION OF PROJECT SPONSOR Durham Transit Management DESCRIPTION OF TRIANGLE TRANSIT FUNDING PARTNERS North Carolina Department of Transportation (DOT) Capital Area Transit (CAT) Cary Transit (C Tran) Chapel Hill Transit (CHT) REGIONAL ECONOMIC CONDITIONS Population Employment Inflation Raleigh Durham International Airport Passengers TRIANGLE TRANSIT HISTORICAL DATA Capital Expenses Capital Funding Operating Expenses Operating Revenues Dedicated Taxes Service Levels and Ridership NEW STARTS PROJECTS Durham Orange LRT SUMMARY OF THE FINANCE PLAN Capital Plan PROJECT CAPITAL COST ESTIMATES AND ASSUMPTIONS PROJECT CAPITAL FUNDING SOURCES TRIANGLE TRANSIT CAPITAL PROGRAM TRIANGLE TRANSIT CAPITAL FUNDS Federal State Regional, Local and Agency BORROWING, DEBT LEVELS AND RATINGS CAPITAL PLAN CONTINGENCIES POTENTIAL ACTIONS IN THE EVENT OF FEDERAL FUNDING SHORTFALLS OR PROJECT COST INCREASES YEAR TRIANGLE TRANSIT CAPITAL EXPENDITURES AND FUNDING Operating Plan O&M COST MODEL DESCRIPTION SERVICE LEVEL PROJECTIONS O&M COSTS Systemwide O&M Costs (Excluding New Starts Project) Durham Orange LRT O&M Costs Durham-Orange Light Rail Transit Project September 2012 Section 11 i

3 Systemwide O&M Costs (Including New Starts Project) O&M FUNDING SOURCES Fare Revenues Federal State Local/Regional DESCRIPTION OF CASH RESERVES FOR POTENTIAL O&M COST INCREASES YEAR TRIANGLE TRANSIT O&M COSTS AND EXPENDITURES Triangle Transit s 23 Year Cash Flow TRIANGLE TRANSIT SOURCES AND USES OF FUNDS SENSITIVITY ANALYSIS Sensitivity Test #1 Higher Project Costs Sensitivity Test #2 Higher O&M Cost Annual Growth Rate Sensitivity Test #3 Lower Sales Tax Annual Growth Sensitivity Test #4 Reduced funding from several sources/increased costs Conclusions LIST OF TABLES Table 1.1 Population in the Triangle Transit Region and Triangle Transit Counties Table 1.2 Employment Trends for Triangle Region and Triangle Transit Counties Table 1.3 Unemployment Rates Table 1.4 Triangle Transit Capital Expenditures by Type, Table 1.5 Triangle Transit Capital Funding Sources Table 1.6 Triangle Transit Operating Costs by Mode, Table 1.7 Triangle Transit Operating Revenues Table 1.8 Triangle Transit Revenue Recovery Ratio Table 1.9 Triangle Transit Dedicated Taxes Table 1.10 Triangle Transit Service Levels Table 1.11 Triangle Transit Ridership, Thousands Table 2.1 Durham Orange LRT Project Cost Estimates Millions of Dollars Table 2.2 Durham Orange LRT Cost Schedule Millions of YOE Dollars Table 2.3 Source of Funding for the Durham Orange LRT Project Millions of YOE Dollars Table 2.4 Funding Sources Table 2.5 Vehicle Rental Tax Revenue Forecast (millions) Table 2.6 Vehicle Registration Revenue Forecast (millions) Table 2.7 Sales Tax Revenue Forecast Allocated to Triangle Transit (millions) Table 2.8 Triangle Transit Capital Funding and Expenditures Durham-Orange Light Rail Transit Project September 2012 Section 11 ii

4 Table 3.1 O&M Cost Model Inputs Table 3.2 Triangle Transit Revenue Miles Forecast Table 3.3 Triangle Transit Revenue Hours Forecast Table 3.4 O&M Cost Forecast through 2035 (millions of YOE dollars) Table 3.5 O&M Funding Sources Table 3.6 Fare Revenue Forecast (millions of YOE dollars) Table 3.7 Triangle Transit Operating Plan Summary Table 4.1 Cash Flow Summary (millions YOE) Table 4.2 Sensitivity Test #1 Project Cost 10% (millions of YOE dollars) Table 4.3 Sensitivity Test #2 Higher O&M Costs (millions of YOE dollars) Table 4.4 Sensitivity Test #3 Lower Sales Tax Revenues (millions of YOE dollars) Table 4.5 Sensitivity Test #4 Reduced Funding/Increased Other Capital Costs (millions of YOE dollars) LIST OF FIGURES Figure 1.1 Triangle Transit System Map Figure 1.2 Triangle Transit Senior Management Organization Chart Figure 1.3 Unemployment Rates (2000 through 2011) Figure 1.4 Consumer Price Index Figure 1.5 Year over Year Change (Percent) in Monthly RDU Airport Passengers Figure 1.6 Annual Passengers at RDU Airport Figure 1.7 Triangle Capital Expenditures Bus Related Only, Figure 1.8 Triangle Transit Operating Costs by Expenditure Type, Millions of Year of Expenditure Dollars Figure 1.9 Durham Orange Locally Preferred Alternative Figure 2.1 Taxable Sales Figure 4.1 Sensitivity Test #1 Cumulative Cash Balance Figure 4.2 Sensitivity Test #2 Cumulative Cash Balance Figure 4.3 Sensitivity Test #3 Cumulative Cash Balance Figure 4.4 Sensitivity Test #4 Cumulative Cash Balance Durham-Orange Light Rail Transit Project September 2012 Section 11 iii

5 1. Introduction 1.1. Description of Project Sponsor Triangle Transit operates 14 regional, five express, and four Research Triangle Park shuttle bus routes over a 1,525 square mile service area spanning Wake, Durham, and Orange counties. In addition to fixed route services, Triangle Transit provides paratransit service and leases 15 passenger vans to commuters who have one end of their trip in the region. A map of the fixed route and express services is presented in Figure 1.1. According to the National Transit Database (NTD), Triangle Transit operated over 2 million vehicle revenue hours on its fixed route service, accommodating over 1.1 million passenger trips. The 1989 Session of the North Carolina General Assembly enabled the creation of Triangle Transit Authority (TTA) as a regional public transportation authority serving Durham, Orange and Wake counties. The new unit of local government was chartered by the North Carolina Secretary of State on December 1, In March 2008, the agency s name was changed from TTA to Triangle Transit. Triangle Transit is governed by a 13 member Board of Trustees. Ten members are appointed by the region s principal municipalities and counties and three members are appointed by the North Carolina Secretary of Transportation. Triangle Transit s organization chart is shown in Figure 1.2. In addition to the Board of Trustees, Triangle Transit also has a Special Tax Board made up of two members of each of the three county s Board of Commissioners. Dedicated funding for the agency is provided through a vehicle registration fee and a rental vehicle tax. Enabling legislation in 1991 authorized Triangle Transit to levy a vehicle registration fee of up to $5 per registration to fund the regional bus operations, vanpooling program and planning program. Collection of the $5 registration fee began in January In 1997, Triangle Transit was authorized to collect a rental vehicle tax of up to five percent of gross receipts to finance future capital projects and provide matching funds for Federal and state grants. This tax became effective in January In 2009, the state legislature passed legislation under House Bill 148 that allows Wake, Durham and Orange counties to enact a ½ percent local sales tax to fund transit investments, upon voters approval. It also allows the three counties to levy an additional $10 vehicle registration fee, of which $3 are dedicated to Triangle Transit, and $7 go to the counties to support local transit investments. Durham County passed a referendum in November 2011 approving the ½ percent sales tax. Revenue collection is contingent upon passage of a ½ percent local sales tax in Orange County. On June 5, 2012, the Orange County Board of County Commissioners voted to put the sales tax measure on the November 2012 ballot. Durham-Orange Light Rail Transit Project September 2012 Section

6 Figure 1.1 Triangle Transit System Map Durham-Orange Light Rail Transit Project September 2012 Section

7 Figure 1.2 Triangle Transit Senior Management Organization Chart Durham-Orange Light Rail Transit Project September 2012 Section

8 Durham Transit Management Triangle Transit is responsible for overseeing operations, daily management, service planning and marketing of the Durham Area Transit Authority (DATA) bus service for the City of Durham. The cost of providing these services is about 3 percent of the Triangle Transit s expenditures. The fiscal year 2012 and 2013 budget estimated the oversight costs at $624,000 and $617,000, respectively. These costs are fully reimbursed to Triangle Transit by Durham County. By contract, Triangle Transit provides oversight of DATA s bus and paratransit services for an initial term of three years, through October 1, For the purpose of the financial plan, it is assumed that Triangle Transit will continue to provide oversight of DATA services beyond In addition, the incremental cost of DATA bus services associated with Triangle Transit expansion of regional services, prior and after the implementation of the Durham Orange (D O) LRT was considered in the development of the financial plan. The financial plan also includes the local share of capital and operating costs of the Durham County Rail and Bus Implementation Plan that will be paid for with new local funding (sales tax and new county vehicle registration fee). The final approval of all routes, DATA s operating budget and major policy decisions rests with the Durham City Council as part of its annual budget process. DATA s fixed route system includes 52 buses providing over 15,000 passenger trips daily on 18 different bus routes. The Access paratransit system includes 46 vans and transports clients to various places within the City of Durham Description of Triangle Transit Funding Partners North Carolina Department of Transportation (DOT) The North Carolina DOT provides matching funds for Federal capital and planning grants (e.g., FTA Section 5307 Formula; FTA Section 5303 Metropolitan Planning). In addition, the State provides operating funds through the State Maintenance Assistance Program (SMAP). Allocations of SMAP funds are based on a formula approved by the state Board of Transportation. Recipients must provide funds equal to or greater than the SMAP allocation. NTD data show almost $2.7 million in state funds for operations and approximately $101,600 for capital expenses in Capital Area Transit (CAT) CAT provides local, express, and circulator fixed route and demand response bus service throughout the City of Raleigh, covering a service area of 125 square miles. Service is managed and funded by the City of Raleigh, and fixed route bus operations are conducted under an external contract with a private contractor. According to the NTD, CAT operated over 200,000 vehicle revenue hours, accommodating 5.2 million passenger trips in CAT also provides demand response service, serving almost 407,000 passenger trips in The CAT network is generally a hub and spoke system, with the majority of routes converging at Moore Square Station in downtown Raleigh. In addition, CAT provides some connector and cross town routes, as well as a fare free downtown circulator connecting employees, residents, and visitors to retail, restaurants, entertainment venues, and parking in the Raleigh CBD. For the purpose of this D O LRT financial plan, the incremental cost of CAT bus services associated with Triangle Transit expansion of regional services is not included, because the D O LRT corridor is outside CAT s service area (Wake County). Durham-Orange Light Rail Transit Project September 2012 Section

9 Cary Transit (C-Tran) C Tran provides fixed route bus and paratransit service within the Town of Cary, covering a service area of 50 square miles. C Tran currently operates six bus routes. In 2010, these routes operated over 30,500 vehicle revenue hours, accommodating almost 142,000 passenger trips. For the purpose of this D O LRT financial plan, the incremental cost of C Tran bus services associated with Triangle Transit expansion of regional services is not included, because the D O LRT corridor is outside C Tran s service area (Wake County) Chapel Hill Transit (CHT) CHT serves the Town of Chapel Hill and has cooperative agreements to provide transit service to the Town of Carrboro and the University of North Carolina. In total, CHT operates 33 local and express bus routes and demand response shared ride service within Orange and Chatham counties. The CHT service area covers 25 square miles, operating over 167,000 vehicle revenue hours and carrying 7.5 million passengers in For the purpose of this D O LRT financial plan, the incremental cost of CHT bus services associated with Triangle Transit expansion of regional services, prior and after the implementation of the D O LRT was considered in the development of the financial plan. In addition, the financial plan also includes the local share of capital and operating costs of the Orange County Rail and Bus Implementation Plan that will be paid for with new local funding (sales tax and new county vehicle registration fee) Regional Economic Conditions 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 decades, and this trend is expected to continue through Similarly, the counties served by Triangle Transit (Durham, Orange, and Wake) have experienced significant growth in population. From 2000 through 2010, population increased at an average annual growth rate of 2.9 percent in both the Triangle Region and the Triangle Transit service area. Growth was particularly high in Wake County, with a 3.7 percent average annual growth rate for the period. This level of growth is higher than the annual growth experienced in the state of North Carolina (1.7 percent) and the U.S. (0.9 percent) over the same period. Population forecasts from the Region s travel demand model anticipate strong population growth through 2035, although at a lower growth rate than experienced in previous decades. The average annual growth rate for population in the Triangle Region is forecasted at 2.4 percent, while population in the counties within the Triangle Transit service area will increase by 2.1 percent annually. Again, Wake County is expected to have the fastest growth in population in the area, with an estimated annual growth rate of 2.5 percent; population in Orange and Durham counties is expected to increase by approximately 1.0 percent annually. Table 1.1 summarizes the population forecast for Triangle Transit counties and the region. The anticipated high growth in the region is due to a strong economic base driven by major employment centers such as Research Triangle Park, the Raleigh Durham International Airport, educational institutions (i.e., Duke University, University of North Carolina at Chapel Hill, North Carolina Central University), and a diversity of residential settings (a mix of urban, rural, and suburban) that offer a high quality of life. Durham-Orange Light Rail Transit Project September 2012 Section

10 Table 1.1 Population in the Triangle Transit Region and Triangle Transit Counties 2005 and 2035 CAGR c Durham 248, , % 1.3% Orange 132, , % 1.1% Wake 746,781 1,577, % 2.5% Triangle Transit Counties a 1,127,342 2,120, % 2.1% Triangle Region b 1,311,565 2,647, % 2.4% a Triangle Transit Counties: Durham, Orange, and Wake. b Triangle Region Counties: Chatham, Durham, Franklin, Granville, Harnett, Johnston, Orange, and Wake. c CAGR: Compounded Annual Growth Rate. Sources: U.S. Census; 2005 and 2035 data from Triangle Region travel demand model Employment The major employers in the Triangle Region include institutions of higher education and their associated medical centers, technology firms, and state and local government. Over 90 percent of the region s employment is located in the three county Triangle Transit service area. According to data from the Bureau of Economic Analysis (BEA), employment in Durham, Orange, and Wake Counties increased at an annual average growth rate of almost 2 percent from 2001 through 2010, with most of the growth occurring in 2004 through Table 1.2 summarizes employment forecast from the Triangle Region travel demand model. Average annual employment growth is forecasted at about 2.2 percent within the Triangle Transit counties, with Durham expected to grow annually at a slower pace (1.6 percent) than employment in Orange and Wake Counties (2.3 and 2.4 percent, respectively). Table 1.2 Employment Trends for Triangle Region and Triangle Transit Counties 2005 and 2035 Employment Durham 175, , % Orange 50, , % Wake 411, , % Triangle Transit Counties 637,667 1,237, % Triangle Region 683,139 1,331, % Unemployment in the three county Triangle Transit service area reached its highest rate in 2009, at 8.2 percent. The rate of unemployment in the Triangle Transit service area has generally tracked lower than the State and the nation, as shown in Figure 1.3, over the last decade. In 2011, the unemployment rates for Durham, Orange and Wake counties were estimated at 7.8, 6.5, and 7.9 percent, respectively; the North Carolina unemployment rate was almost 10 percent in the same period. Table 1.3 summarizes the unemployment rates for the Triangle Transit 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 remain above 8 percent this year and through A slow recovery is expected Durham-Orange Light Rail Transit Project September 2012 Section

11 in 2015, where the unemployment rate is projected to gradually decline to around 7 percent, before dropping to near 5.5 percent by the end of Table 1.3 Unemployment Rates Year Durham Orange Wake Three County North Carolina United States Source: Bureau of Labor Statistics. Figure 1.3 Unemployment Rates (2000 through 2011) Source: Bureau of Labor Statistics. 1 Congressional Budget Office Economic Projections, January Durham-Orange Light Rail Transit Project September 2012 Section

12 Inflation Figure 1.4 shows annual inflation rates for U.S. and the southern states, measured by the Consumer Price Index (CPI). The average inflation over the last 11 years is estimated at 2.5 percent both in the United States and at the Southern States. Forecasts from the CBO for fiscal years 2012 through 2022 estimate inflation at 2.2 percent in 2012, declining to 1.6 percent in 2015, and increasing to 2.3 percent by 2018, where it will remain through These CBO forecasts were applied to the financial plan as appropriate. Specifically, on the cost side, the CBO forecast was applied to the unit costs of O&M factors for bus and light rail operations and to fleet vehicle unit costs. Upward adjusted CBO inflation forecasts (+0.8 percentage points) were applied to escalate the D O LRT project costs to year of expenditure dollars. Annual growth rates for revenue sources were not specifically tied to inflation, but rather were based on historical trends and/or regional forecasts developed for the bus and rail implementation plans. Figure 1.4 Consumer Price Index U.S. and Southern States Source: Bureau of Labor Statistics. 2 Congressional Budget Office Economic Projections, January Durham-Orange Light Rail Transit Project September 2012 Section

13 Raleigh-Durham International Airport Passengers The Raleigh Durham International Airport (RDU) is located in Wake County, 11 miles northwest of Raleigh and 10.5 miles southeast of Durham, providing nonstop air travel to 40 destinations. Nine major airlines and seven regional carriers fly from RDU, serving nearly 400 daily arrivals and departures. In 2011, RDU served almost 9.2 million passengers, a modest increase of 0.7 percent compared to Monthly data show signs of recovery with positive year over year changes in passengers during the first quarter of 2012 (see Figure 1.5) In 2011, Phase 2 of the Terminal 2 construction was completed, and work to modernize Terminal 1 was initiated. Figure 1.5 Year over Year Change (Percent) in Monthly RDU Airport Passengers Source: RDU Airport Authority. The volume of passengers at RDU is one of the main factors that influence vehicle rental tax revenues. Figure 1.6 shows historical data on passengers served by RDU since In 2000, passengers at RDU reached 10.4 million, declining afterwards to 7.9 million by 2003 due to several factors affecting passenger travel, including 9/11 and Midwest Airlines (based out of RDU) closing operations in In 2007, passenger volumes reached over 10 million, but economic conditions again led to a decline in passengers through Since 2010, various airlines (including Delta, JetBlue and Southwest) have expanded services out of RDU, and by the end of 2011, passenger volumes have been steadily increasing, as the economy continues to show signs of recovery. Durham-Orange Light Rail Transit Project September 2012 Section

14 Figure 1.6 Annual Passengers at RDU Airport Source: RDU Airport Authority Triangle Transit Historical Data Capital Expenses Table 1.4 summarizes Triangle Transit capital expenses by type for fiscal years (FY) 2000 through 2010, as reported by NTD. Over this 11 year period, Triangle Transit has invested almost $160 million, most of which was spent on other capital expenditures, primarily associated with the earlier Regional Rail project. In 2009 and 2010, Triangle Transit spent most of its capital budget in replacing and adding vehicles to its bus and vanpool fleet. Between 2004 and 2007, a significant share of expenditures was associated with previous efforts to implement high capacity regional service (commuter rail) within the Triangle Transit service area. Durham-Orange Light Rail Transit Project September 2012 Section

15 Table 1.4 Triangle Transit Capital Expenditures by Type, Millions of Dollars Total Guideway $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $4.5 $0.0 $0.0 $0.0 $4.5 Stations $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $2.0 $0.2 $1.3 $0.1 $3.7 Administrative Buildings $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.9 $0.0 $0.1 $0.0 $1.1 Facilities $1.7 $1.7 $0.1 $0.0 $0.0 $0.0 $0.0 $0.9 $1.3 $0.1 $0.1 $6.0 Rolling Stock $0.03 $4.2 $3.1 $0.0 $0.0 $0.0 $0.0 $0.0 $7.7 $5.6 $3.1 $23.7 Fare Revenue Collection Equipment $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.05 $0.0 $0.0 Systems $0.0 $0.0 $0.1 $0.4 $0.7 $2.6 $0.7 $0.4 $0.2 $1.0 $0.6 $6.7 Other $0.1 $0.2 $7.2 $28.2 $29.3 $23.2 $24.5 $0.0 $0.0 $0.0 $0.0 $112.5 Total $1.8 $6.1 $10.4 $28.6 $30.0 $25.8 $25.3 $8.8 $9.4 $8.1 $4.0 $158.2 Source: National Transit Database. Figure 1.7 shows bus related capital expenditures for FYs 2000 through Triangle Transit spent almost $69 million over that period, most of which is related to other capital and vehicle replacement/purchases. In 2010, the average fleet age was 3.0 years, based on NTD data. Figure 1.7 Triangle Capital Expenditures Bus Related Only, Millions of Dollars Source: National Transit Database. Durham-Orange Light Rail Transit Project September 2012 Section

16 Capital Funding Table 1.5 summarizes Federal, state, and local funding sources used for capital expenses by Triangle Transit over the last 11 years ( ), as reported to NTD. Close to two thirds of the capital expenses have been funded with Federal formula and capital grants. Details on each funding source are provided in Section 2.0 of the financial plan. Federal Table 1.5 Triangle Transit Capital Funding Sources Total FTA Capital Program $0.7 $4.9 $7.4 $26.2 $17.9 $15.0 $8.6 $5.9 $3.4 $0.5 $0.0 $90.6 FTA Formula $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $2.6 $0.7 $3.2 $6.5 Other FTA $0.0 $0.0 $1.8 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $1.9 U.S. DOT $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $3.0 $0.0 $3.0 Total Federal $0.7 $4.9 $9.2 $26.2 $17.9 $15.0 $8.6 $5.9 $6.0 $4.1 $3.2 $102.0 State General Funds $0.4 $0.7 $0.8 $2.3 $10.5 $10.8 $5.0 $2.4 $1.0 $1.7 $0.5 $36.0 Local General Funds $0.1 $0.5 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $1.7 $0.2 $0.0 $2.5 Dedicated Revenues $0.6 $0.0 $0.0 $0.0 $2.4 $4.0 $4.2 $0.4 $0.0 $0.0 $0.3 $11.9 Other $0.0 $0.0 $0.4 $0.0 $0.0 $0.0 $7.5 $0.0 $0.7 $2.1 $0.0 $0.4 Total Local $0.7 $0.5 $0.4 $0.0 $2.4 $4.0 $11.7 $0.4 $2.4 $2.2 $0.3 $10.2 Total Operating Funds $1.8 $6.1 $10.4 $28.6 $30.8 $29.8 $25.3 $8.8 $9.4 $8.1 $4.0 $163.0 Source: National Transit Database Operating Expenses Triangle Transit operates bus, vanpool and demand response services. Table 1.6 summarizes operating expenses, as reported to NTD, for FY 2000 through During this period, bus operating costs have increased at an average annual growth rate of 8.3 percent, which includes an increase in service level of approximately 5.3 percent over that period (see Table 1.10). On a per revenue mile basis, bus service expenditures increased significantly in 2004 through However, in 2009 and 2010, operating cost on a per mile basis declined despite service level increases. This decline was due to the procurement of 22 new buses which, in a single year, replaced inefficient and unreliable vehicles previously in operation. The new buses, all under warranty, are operated at lower cost than previous vehicles, primarily due to reduced maintenance and inventory costs. Additionally, a drop in fuel prices after fairly significant increases in 2008 contributed to the lower operating cost per mile. Durham-Orange Light Rail Transit Project September 2012 Section

17 Table 1.6 Triangle Transit Operating Costs by Mode, Millions of Year of Expenditure Dollars Operating Expenses CAGR Bus $4.5 $4.8 $5.3 $6.1 $6.9 $7.0 $8.2 $8.9 $9.6 $9.7 $ % a Vanpool $0.7 $0.7 $1.0 $1.2 $1.2 $1.5 $1.6 $1.9 $2.1 $2.3 $ % b Demand Response $0.0 $0.0 $0.0 $0.3 $0.3 $0.4 $0.5 $0.9 $0.9 $1.2 $ % b Total $5.2 $5.4 $6.2 $7.6 $8.5 $9.0 $10.3 $11.6 $12.6 $13.3 $ % b O&M Cost per Revenue Mile CAGR Bus $ 3.29 $2.90 $2.95 $2.57 $3.30 $3.88 $4.14 $4.51 $4.79 $4.58 $ % a Vanpool $0.88 $0.80 $1.22 $1.44 $1.42 $1.59 $1.52 $1.97 $1.95 $1.80 $ % b Demand Response $8.20 $2.63 $2.72 $2.83 $4.68 $4.74 $5.00 $ % b Total $2.41 $2.21 $2.41 $2.34 $2.74 $3.07 $3.21 $3.74 $3.86 $3.65 $ % b Source: National Transit Database. a 10 year CAGR ( ) b 5 year CAGR ( ) Figure 1.8 shows O&M costs by expenditure type. Salaries, wages and benefits account for about 60 percent of the total O&M costs, with materials/supplies and other operating costs each accounting for approximately 20 percent. Durham-Orange Light Rail Transit Project September 2012 Section

18 Figure 1.8 Triangle Transit Operating Costs by Expenditure Type, Millions of Year of Expenditure Dollars Source: National Transit Database Operating Revenues Table 1.7 summarizes the sources of funding for operating expenditures at the Federal, state, and local levels for FY 2000 through Descriptions and details on these revenue sources are provided in Section 3.0 Operating Plan. Federal funding (including FTA formula funds for preventive maintenance) and state operating assistance account for approximately 21 percent each, of the operating funds over the last decade. Farebox revenues cover about 14 percent of the O&M costs (see Table 1.7). Dedicated revenues from vehicle registration fees and vehicle rental taxes account for 35 percent of the operating funding over this period. Table 1.8 shows Triangle Transit s farebox recovery ratio by mode. Farebox recovery ratio of bus services has improved slightly over time, reaching 13 percent in The overall farebox recovery ratio including all modes is 15 percent on average over the last decade. Durham-Orange Light Rail Transit Project September 2012 Section

19 Federal Table 1.7 Triangle Transit Operating Revenues FTA Formula $1.5 $0.0 $0.7 $1.9 $1.0 $2.0 $1.4 $1.7 $1.9 $1.7 $2.2 Other FTA $0.0 $0.0 $0.0 $1.0 $1.6 $1.7 $1.5 $1.0 $0.0 $0.0 $0.0 Total Federal $1.5 $0.0 $0.7 $2.9 $2.5 $3.7 $2.9 $2.7 $1.9 $1.7 $2.2 State Operating Assistance $0.9 $1.0 $1.3 $1.7 $2.3 $3.1 $2.3 $3.7 $2.2 $2.2 Local/Agency Farebox Revenues $0.8 $0.9 $0.6 $0.9 $1.1 $1.2 $1.6 $1.8 $1.9 $2.3 $2.5 Local Operating Assistance $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $1.5 $1.2 $0.9 $0.9 $0.3 Dedicated Taxes $1.9 $3.5 $3.5 $5.0 $2.3 $0.9 $0.9 $5.0 $5.4 $5.4 $4.4 Other Agency/Miscellaneous $0.0 $0.0 $0.2 $0.6 $0.3 $0.1 $1.1 $0.9 $0.6 $1.6 $2.5 Total Local/Agency $2.7 $4.5 $4.2 $6.5 $3.7 $2.3 $5.1 $8.9 $8.8 $9.0 $9.7 TOTAL OPERATING FUNDS $5.2 $5.4 $6.2 $11.1 $8.5 $9.0 $10.3 $15.3 $12.9 $12.9 $14.1 Source: National Transit Database. Table 1.8 Triangle Transit Revenue Recovery Ratio Farebox Recovery Ratio Average Bus N/A N/A Vanpool N/A N/A Demand Response N/A N/A Total Source: Data analysis from National Transit Database Dedicated Taxes Triangle Transit has two dedicated local taxes and fees: vehicle registration fees and vehicle rental taxes. Table 1.9 summarizes the receipts from both revenue sources since Table 1.9 Triangle Transit Dedicated Taxes Vehicle Registration Fee Vehicle Rental Tax Total Source: Triangle Transit Comprehensive Annual Financial Reports Service Levels and Ridership Table 1.10 summarizes Triangle Transit service levels from 2000 through 2010 by mode (vehicle revenue miles and vehicle revenue hours). In spring 2002, Triangle Transit significantly expanded its service in most corridors from two departures per hour to four departures per direction per hour, and ridership increased considerably. Unfortunately, soon after in 2003, the early 2000s recession hit health and tech employers hard, and while 15 minute service to many RTP employers in those industries had looked promising a year earlier, passenger per hour counts were very low because of job losses throughout the $2.2 Durham-Orange Light Rail Transit Project September 2012 Section

20 service area. From 2003 to 2005, the agency saw a rightsizing period in service that retreated 8% from the peak in service hours. During that time new service concepts were tested, including the first runs of the highly successful regional express routes. By 2010, bus service levels had increased to 103,000 vehicle revenue hours. In terms of vehicle revenue miles, systemwide revenue miles reached almost 2.6 million vehicle revenue miles by 2003; by 2010, systemwide vehicle revenue miles were estimated at over 3.8 million. The average annual growth over the 2005 through 2010 period for bus services is estimated at 2.6 percent for vehicle revenue hours and 4.8 percent for vehicle revenue miles. Table 1.10 Triangle Transit Service Levels CAGR (05 10) Vehicle Revenue Miles (Millions) Bus % Vanpool % Demand Response % Total % Vehicle Revenue Hours (Thousands) Bus % Vanpool % Demand Response % Total % Source: National Transit Database. Table 1.11 summarizes Triangle Transit ridership levels by service. In 2010, Triangle Transit served over 1.5 million passenger trips, with nearly 1.1 million (or 71 percent of the trips) using the bus service. Ridership growth is estimated at 5.8 percent annually over this period. When accounting for service level increases (measured based on passengers per vehicle revenue miles), bus ridership growth is estimated at 0.5 percent annually. Table 1.11 Triangle Transit Ridership, Thousands Bus , ,091.6 Vanpool Demand Response Total , , , , , , , ,535.1 Source: National Transit Database New Starts Projects The Triangle Regional Transit Program is the study of regional transit investment opportunities, including rail service. This financial plan was developed to demonstrate Triangle Transit s financial capacity to deliver and operate the D O Light Rail Transit (LRT) New Starts project that has resulted from this regional initiative Durham-Orange LRT The D O LRT project will greatly expand transit service in Durham and Orange Counties, and is a key element of the Triangle Regional Transit Program. The LRT project extends on double track Durham-Orange Light Rail Transit Project September 2012 Section

21 approximately 17.1 miles between Durham (Alston Avenue/NCCU Station) and UNC Chapel Hill (UNC Hospitals Station). The LRT alignment connects to a range of activity centers including North Carolina Central University, downtown Durham, Duke University, Duke University Medical Center, Durham Veterans Administration Medical Center, the Friday Center, UNC Hospitals, and several park and ride lots. Convenient connections also will be made to Amtrak and local, regional, and intercity bus service in downtown Durham. As shown in Figure 1.9, the LRT alignment generally follows the North Carolina Railroad Corridor, US , I 40 and NC 54. A total of 17 stations are planned. Station features include a public address system, variable message signs, CCTV camera coverage, ticket vending and validation machines (state of the art and ADA compliant), weather protection in terms of canopy protection and wind screens, lighting, decorative finishes, signage and wayfinding and informational kiosks. Approximately 6,900 parking spaces at stations along the alignment will be provided to facilitate park and ride trips on the LRT service. LRT service will be provided seven days a week, operating at 10 minute headways in the peak periods (weekdays), and 20 minutes off peak and weekends. Travel time between the Alston Avenue/NCCU Station and UNC Hospitals Station will be approximately 35 minutes. Service is expected to begin in In addition to the D O LRT project, the Durham and Orange county plans include expanded and new bus services that are anticipated to add approximately 25,700 vehicle revenue hours to Triangle Transit, about 82,270 vehicle revenue hours to DATA, and 21,600 vehicle revenue hours to Chapel Hill Transit. The capital (fleet) and O&M cost impact of these new services is included in the D O LRT financial plan. Other capital investments in these county plans that are anticipated to impact Triangle Transit s financial plan include: Commuter Rail (CRT) from West Durham to Greenfield Parkway in Garner. Implementation of this corridor is contingent on the passage of the ½ percent sales tax in Wake County. According to the Durham County Bus and Rail Investment Plan, the capital costs are estimated at $645 million (2011 dollars), and the annual operating costs are estimated at $11 million (2011 dollars). Durham s share of capital and operating costs is 46.5 percent and 23.4 percent, respectively. Wake Light Rail Transit (LRT): the proposed Cary/Raleigh LRT project is a 13.9 mile line, with 16 proposed station, and a capital cost of $1.1 billion (2011 dollars) and annual O&M expenditures of $14 million (2011 dollars), according to the Wake County Transit Plan (draft). It is assumed that the implementation of these two projects will be funded through sales tax and new vehicle registration fees from Durham and Wake counties once a referendum has taken place in Wake County. The impact of these investments will be determined by the implementation schedule, and whether these projects are ready to advance over the 23 year cash flow horizon. The financial plan for the D O LRT project does not include these two projects, nor does it include Wake County revenues that will be dedicated to support these investments. Durham-Orange Light Rail Transit Project September 2012 Section

22 Figure 1.9 Durham Orange Locally Preferred Alternative Durham-Orange Light Rail Transit Project September 2012 Section

23 1.6. Summary of the Finance Plan The current Triangle Transit s Financial Plan shows that the agency has the financial capacity to implement the proposed New Starts, the D O LRT project, while maintaining its financial capacity to operate, maintain, and invest in capital improvements on the existing system, in addition to accounting for the financial impact of other regional transit investments that, while not operated by Triangle Transit, will rely on the revenues from both the Durham and Orange sales tax and vehicle registration fees. It should be noted that the implementation of these services is not Triangle Transit s responsibility. Based on the current financial plan assumptions, Triangle Transit will maintain healthy cash balances throughout the planning horizon, with an estimated cumulative surplus of almost $377 million by Triangle Transit s baseline capital program includes $147.1 million in capital investments to maintain the state of good repair of existing assets, while it also provides for additional enhancements over the 2013 to 2035 planning horizon. The cost to operate and maintain Triangle Transit s services (including the proposed New Start project) is estimated at $914.1 million over the same period. Chapter 2.0 of the Financial Plan describes Triangle Transit s capital plan, including the cost estimates for the D O LRT project. Chapter 3.0 provides details on the agency s operating plan. Chapter 4.0 summarizes Triangle Transit s combined cash flow (Capital and Operating Plans), and includes a sensitivity analysis to test the Financial Plan s capacity to withstand a range of currently unforeseen circumstances (under four selected scenarios) and provides Triangle Transit s potential strategies to address potential financial issues. Durham-Orange Light Rail Transit Project September 2012 Section

24 2. Capital Plan This chapter summarizes the assumptions and methodologies used to develop Triangle Transit s capital plan that incorporates the implementation of the D O LRT project and systemwide capital investments through The purpose of this chapter is to demonstrate that Triangle Transit has the financial capacity to implement the proposed improvements, while continuing to maintain its current infrastructure in a state of good repair, and supporting its planned capital investments over the next 23 years Project Capital Cost Estimates and Assumptions 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, 2011 actual unit prices as published by the North Carolina Department of Transportation (NCDOT), from RS Means and from research performed on the internet. The development of the unit costs is explained in detail in the project description sheet in the SCC worksheet containing the breakdown by cost category. The costing elements were defined in a manner that conforms to the FTA Standard Cost Categories. Additional information on the project cost estimates is provided in Section 5 of the FY 2014 New Starts Submittal. The project cost estimates were developed in base year (2012) dollars and inflated to year ofexpenditure (YOE) dollars after including contingency. The implementation period for the D O LRT project is assumed from 2013 through Project construction is anticipated to begin in Inflation factors were applied to convert the base year estimates to YOE, based on Congressional Budget office inflation forecast, adjusted over the long term by 0.8 percentage points, acknowledging that the cost of construction has generally outpaced inflation. The inflation factor over the short term (i.e., through 2014) was assumed at 1.5 percent, and at 3.1 percent thereafter. The construction costs for the D O LRT project are estimated at $1,335.5 million in 2012 dollars and $1,820.6 million in YOE dollars (including financing costs). Allocated contingency was applied directly to all SCC items. Overall, the allocated contingency is approximately percent of the project costs (in constant dollars, 2012 dollars). The unallocated contingency was estimated at 7.42 percent of the project cost subtotal without contingency (items 10 through 80 of the SCC). Combined allocated and unallocated contingencies are estimated at percent of the project cost (without contingency, in 2012 dollars). Preliminary engineering/eis and final design were estimated at 5.0 and 7.0 percent of the construction costs (items 10 through 50 of the SCC, before contingency); project management and administration also are estimated at about 2.5 percent of the construction costs (before contingency). This level contingency is conservative based on the current level of design and based on the degree of definition of the unit costs. Table 2.1 summarizes the project cost by SCC line item in 2012 and YOE dollars; additional detail is provided in the SCC worksheet included in Section 5 of the FY 2014 New Starts submittal. Table 2.2 shows the schedule of expenditures in YOE dollars. Durham-Orange Light Rail Transit Project September 2012 Section

25 Table 2.1 Durham Orange LRT Project Cost Estimates Millions of Dollars Project Cost Item from SCC Total (2012 Dollars) Total (YOE Dollars) 10 Guideway and track elements $ $ Station, stops, terminals, intermodal 30 Support facilities: yards, shops, administration buildings 40 Sitework and special conditions 50 Systems 60 ROW, land, existing improvements 70 Vehicles 80 Professional services 90 Unallocated contingency $120.2 $28.4 $170.2 $165.9 $95.2 $56.5 $196.2 $70.6 $163.5 $37.9 $235.2 $235.1 $115.4 $78.1 $ Finance charges $87.5 $132.2 Total $1,335.5 $1, Source: Note: SCC worksheet. Totals may not add up due to rounding. Table 2.2 Durham Orange LRT Cost Schedule Millions of YOE Dollars Total 8.4 1, $98.2 Source: SCC worksheet. Note: Totals may not add up due to rounding Project Capital Funding Sources The capital costs for the D O LRT project will be covered using the following funding sources: FTA Section 5309 New Starts. Triangle Transit will request a New Starts funding share of 50 percent for the proposed project ($910.3 million). The project schedule assumes that both the FFGA will be awarded and construction will begin in 2021, at which time Triangle Transit will begin receiving New Start funds for the project. Any New Starts funding share associated with project costs before 2021 will be paid with local funds over the period, and reimbursed by FTA in later years. For planning purposes, it is assumed that FTA will allocate no more than $100 million in New Start funding for the D O LRT in any given year, and that any additional funding needs will be covered with Grant Anticipation Notes (GANs). The financial Durham-Orange Light Rail Transit Project September 2012 Section

26 plan also assumes that finance charges (interest plus issuance cost) from GANs will be eligible for FTA New Starts funding through 2030, which is the last year of anticipated New Starts funding, based on the reimbursement schedule. The financial plan assumes that the first GANs will be issued in 2022, the first year when expenditures would require more than $100 million in New Starts funding to cover project costs. State Match to FTA New Starts funding. The State can provide up to 25 percent of New Starts project costs, subject to appropriations. Triangle Transit will request $455.2 million for the D O LRT project in state funding to match FTA Section 5309 New Starts funding, up to 25 percent of preliminary engineering, design and construction costs. [ North Carolina state government has maintained a steady record of support for light rail projects over the last 10 years. Legislation was enacted in the last decade which authorized the state Department of Transportation to sign state full funding grant agreements with local communities to provide state funding of 25 percent of the capital costs for rail projects. A few years later NC DOT signed a state FFGA with Charlotte to provide a total of about $115 million dollars over a five year period to supply the state share of Charlotte s initial Blue Line LRT project. Each year for the next five years the State approved a budget which appropriated its share of the project costs to Charlotte. More recently, the State has committed to support Charlotte s Blue Line extension LRT project and to pay for its 25 percent share or $280 million of capital costs. For each of the last two years the General Assembly has appropriated funds as requested by Charlotte to pay for its share of the costs. In its 2012 legislative session, the North Carolina General Assembly adjusted the method by which the Department of Transportation funds rail projects by authorizing funding for rail under three different sections of the state s Highway Trust Fund (Intrastate System, City Streets and Secondary Roads) and discontinuing the new starts program in the Public Transportation Division. Rail projects can also be funded by the state under the recently created Mobility Fund, administered by NC DOT. Triangle Transit Dedicated Taxes. Funding from the ½ percent local sales tax and new vehicle registration fees collected in Durham and Orange counties will be available for capital investments. It is assumed that 25 percent of the project costs will be covered with these dedicated revenues. If annual revenues are not sufficient to cover expenditures, Triangle Transit will issue bonds backed by local funding. Bonds. The Triangle Transit financial plan assumes that bonds will be issued to pay for project implementation, backed by local sales tax and vehicle registration fee receipts. The financial plan assumes that a total of $127.5 million in long term bonds will be issued to support the construction of the D O LRT project. In addition, Triangle Transit will issue $266.9 million in GANs to accelerate New Starts funding over the annual cap of $100 million assumed in the financial model. Table 2.3 summarizes the funding sources and levels of commitment for the D O LRT project. Durham-Orange Light Rail Transit Project September 2012 Section

27 Table 2.3 Source of Funding for the Durham Orange LRT Project Millions of YOE Dollars Sources of Funds Funding Level Funding Share Level of Commitment Evidence of Commitment Federal Sources: Section 5309 New Starts (including GANs) $ % N/A N/A Other Federal Sources (CMAQ, STP, Section 5307) Total Federal Funds $ % Non Federal Sources: State Funding $ % Local Funding Local Sales Tax and Vehicle Registration Fees Bonds $327.6 $ % Total Non Federal Funds $ % Total Project Budget $1, % 7% Planned Committed Planned NCDOT Durham and Orange County Bus and Rail Investment Plans 2.3. Triangle Transit Capital Program Triangle Transit s capital program includes the following investments: Bus capital, including existing fleet replacement and new bus purchases to support new and expanded bus services as part of the adopted Durham and Orange counties transit plans. That includes vehicles for fixed route, vanpool and demand response services. Other annual capital investments including systems, facilities, and other capital expenses through 2035, associated with existing assets and transit services. The Bus Fleet Management Plan is included as part of the supporting documentation (see Appendix D of the Project Management Plan). A total of 155 buses, 301 vanpools and 75 demand response vehicles will be purchased over the 23 year cash flow period, for a total investment of $101.3 million, of which 19 percent ($19.7 million) will be invested in vehicles to support new bus, demand response and vanpool services. According to NTD statistics, the average age of the bus fleet in 2010 was 3.0 years. Based on this level of investment and bus purchasing/replacement schedule, the average age of Triangle Transit s bus fleet will be 4.5 years over the analysis period. Other capital costs through 2014 include Triangle Transit s planned short term capital investments, such as park and ride facilities, a smart card fare system, and bus stop improvements Thereafter, the financial plan assumes an annual capital spending of $2.0 million to meet the agency s capital needs (e.g., bus stops, signage, fare system, etc.), excluding major capital investments. In addition to Triangle Transit s capital expenses associated with the existing system and future growth in bus, vanpool and demand response services, the capital plan includes the local share of new buses and other capital expenditures for DATA and Chapel Hill Transit associated with the Durham and Orange Bus and Rail Investment Plans. The total capital cost associated with these regional transit investments is $21.5 million, of which the local share is estimated at $10.4 million. The local share for these capital Durham-Orange Light Rail Transit Project September 2012 Section