Durham and Orange Transit Plan Funding Needs Orange

Durham and Orange Transit Plan Funding Needs Orange County Board Of Commissioners December 5, 2016

Clarifications Durham and Orange counties are being asked to provide non-binding letters of intent to work with Go. Triangle and other community partners to identify funds to complete the Durham-Orange Light Rail Transit Project. The counties are not being asked to invest any additional funds for the project at this time The funding gap is approximately $250 Million in Year-of-Expenditure (YOE) Dollars In 2016, the North Carolina General Assembly capped available state funding for light rail at 10% of the project’s cost, as opposed to the 25% that was previously awarded to two similar projects in Charlotte The Federal Transit Administration is still expected to invest 50% in federal funds for Durham and Orange Counties’ light rail project (D-O LRT Project), contingent on the remaining 50% coming from the existing dedicated transit revenues, state, local or other funding sources Before Durham and Orange counties are formally asked to commit additional funds to complete their light rail project, Go. Triangle will continue to work with the counties, the Funding and Community Collaborative, and community partners to find ways to reduce the funding gap

Durham-Orange LRT • Funding Gap • Cost of D-O LRT Project • Request for Memorandum of Understanding (MOU) to explore additional funding sources • Schedule of next steps

What is the Funding Gap? Gap = ~ $250 Million in Year-of-Expenditure (YOE) Dollars • Gap is for entire combined Durham and Orange Transit Plan • Includes future funds to operate and maintain full bus and rail system, including vehicle replacements and state of good repair for D-O LRT Project • Bus Operations funded first for Orange Public Transportation, Chapel Hill Transit, Go. Durham, Durham County, and Go. Triangle services in Durham and Orange Counties • Financial plan includes buildout of revised Chapel Hill Bus Rapid Transit (BRT) Project, Hillsborough Train Station, and amended D-O LRT Project including Joint Development and NCCU Station

Why Is There A Gap? Bus Service • State: 7. 5% • Local: 92. 5% Vehicles, Bus Stops, Park and Rides • Federal: 80% 38% • State: 10% 8% • Local/Other: 10% 54% Light Rail, Commuter Rail • Federal: 50% • State: 25% 10% • Local/Other: 25% 40% Bus Rapid Transit • Federal: 50% 70% • State: 25% 0% • Local/Other: 25% 30% Hillsborough Train Station • State: 90% 91% • Local: 10% 9%

How Does the Current Project Estimate Compare to the Original Estimate? Formula y = x(1+r)n Estimate Source Variables y = 2016 dollars x = original year dollars r = escalation rate n = number of years Base Year Millions 2016 Millions*** 2011 Plan* $1, 378 $1, 605 2015 Plan** $1, 598 $1, 648 * Per D-O LRT Cost Share Agreement ** Per Feb 2016 FTA Financial Plan *** r = 3. 1% per Cost Construction Index 20 -year average Two ways of expressing the exact same amount of funds, making the exact same investment.

LRT Construction Cost Updates Cost Estimates Include 30% Contingency in 2016 Millions: Original Project (UNC-Alston Ave) 2011 Plan Feb 2016 Plan Dec 2016 Plan $1, 605 $1, 648 $1, 668

LRT Construction Cost Updates Cost Estimates Include 30% Contingency in 2016 Millions: 2011 Plan Feb 2016 Plan Dec 2016 Plan Original Project (UNC-Alston Ave) $1, 605 $1, 648 $1, 668 Including Joint Development (JD) n/a $1, 769

LRT Construction Cost Updates Cost Estimates Include 30% Contingency in 2016 Millions: 2011 Plan Feb 2016 Plan Dec 2016 Plan Original Project (UNC-Alston Ave) $1, 605 $1, 648 $1, 668 Including Joint Development (JD) n/a $1, 769 Including JD & NCCU n/a $1, 877

LRT Construction Cost Updates Cost Estimates Include 30% Contingency in 2016 Millions: 2011 Plan Feb 2016 Plan Dec 2016 Plan Original Project (UNC-Alston Ave) $1, 605 $1, 648 $1, 668 Including Joint Development (JD) n/a $1, 769 Including JD & NCCU n/a $1, 877 2011 Plan Feb 2016 Plan Dec 2016 Plan 2025 2026 2028 in Year-of-Expenditure Millions: Construction Completion Date

LRT Construction Cost Updates Cost Estimates Include 30% Contingency in 2016 Millions: 2011 Plan Feb 2016 Plan Dec 2016 Plan Original Project (UNC-Alston Ave) $1, 605 $1, 648 $1, 668 Including Joint Development (JD) n/a $1, 769 Including JD & NCCU n/a $1, 877 2011 Plan Feb 2016 Plan Dec 2016 Plan 2025 2026 2028 $1, 823 $2, 013 $2, 126 in Year-of-Expenditure Millions: Construction Completion Date Original Project (UNC-Alston Ave)

LRT Construction Cost Updates Cost Estimates Include 30% Contingency in 2016 Millions: 2011 Plan Feb 2016 Plan Dec 2016 Plan Original Project (UNC-Alston Ave) $1, 605 $1, 648 $1, 668 Including Joint Development (JD) n/a $1, 769 Including JD & NCCU n/a $1, 877 2011 Plan Feb 2016 Plan Dec 2016 Plan 2025 2026 2028 Original Project (UNC-Alston Ave) $1, 823 $2, 013 $2, 126 Including Joint Development (JD) n/a $2, 256 in Year-of-Expenditure Millions: Construction Completion Date

LRT Construction Cost Updates Cost Estimates Include 30% Contingency in 2016 Millions: 2011 Plan Feb 2016 Plan Dec 2016 Plan Original Project (UNC-Alston Ave) $1, 605 $1, 648 $1, 668 Including Joint Development (JD) n/a $1, 769 Including JD & NCCU n/a $1, 877 2011 Plan Feb 2016 Plan Dec 2016 Plan 2025 2026 2028 Original Project (UNC-Alston Ave) $1, 823 $2, 013 $2, 126 Including Joint Development (JD) n/a $2, 256 Including JD & NCCU n/a $2, 389 in Year-of-Expenditure Millions: Construction Completion Date

D-O LRT Funding Updates Anticipated State and Federal Shares of D-O LRT Construction Cost, in Year-of-Expenditure Millions: Estimate Source YOE Cost State Share Federal Share 2011 Plan $1, 823 25% = $456 50% = $912 Feb. 2016 Plan $2, 013 25% = $503 50% = $1, 006 Dec. 2016 Plan $2, 389 10% = $239 50% = $1, 195

Dedicated Transit Revenue Updates Projected Total Dedicated Transit Revenues* through 2035, in Year-of-Expenditure Millions: Estimate Source 2011 Plan Forecast Staff Feb. 2016 Plan*** Walden, 2014 Dec. 2016 Plan**** Moody’s Analytics, 2016 Estimated Revenue** $217 Orange $744 Durham $266 Orange $946 Durham $251 Orange $960 Durham * Includes sales tax, $3 and $7 vehicle registration fees, vehicle rental tax ** Actuals are included plan updates *** All four revenues based on Walden, 2014 **** Sales tax based on Moody’s Analytics, 2016; remaining revenues based on Walden, 2014

Ways to Resolve the Funding Gap Includes 10% State Funding Note: No Additional funds needed prior to 2020.

Other Steps To Fill Gap • Steps already taken – Adjusted D-O LRT Project construction schedule to better match FTA reimbursement rate (delayed completion of construction from 2026 to 2028) – Hired new financial advisor, experienced in structuring financing plans for major federally funded projects, to begin refining financing assumptions • Steps that will be evaluated between December and April – Value engineering / cost cutting opportunities – Financing optimization – Joint Financial Staff Working Group • Coordinated evaluation of financial plans • Refinement of funding shortfall need • Evaluation of additional revenue sources

Key Dates Jan. 2020 Full Funding Grant Agreement (FFGA) with FTA Oct. 2019 Submit request for FFGA with FTA – requires 100% of funding to be committed Jun. 2019 Inclusion in State Transportation Improvement Program (STIP) – State participation committed Dec. 2018 Inclusion in Draft STIP - State share defined, but not committed Jun. 2018 Request to be in President’s budget – requires 50% of non. New Starts funds to be committed Apr. 2017 Update of Transit Plans and execution of full General Engineering Consultant (GEC) and Program Management Consultant (PMC) contracts

Getting to April 2017 Dec. 2016 • Deadline for Go. Triangle to request entry into FTA Engineering phase for D-O LRT Project • Non-binding MOU to work with Go. Triangle and other community partners to identify funds to complete the D-O LRT Project • The counties are not being asked to invest any additional funds for the project at this time Jan. - Apr. • 2017 • Revise and finalize financial plan Monthly Transit Plan financial updates to County, MPO, and Go. Triangle Boards Mar. 2017 • Present for information the full GEC and PMC contracts Apr. 2017 • County, MPO, and Go. Triangle Boards review updated Transit Plans with potential additional revenue assumptions • Execution of GEC and PMC contracts required to maintain proposed construction schedule

Next Steps • Obtain approval from Orange (Dec. 5) and Durham (Dec. 12) Boards of County Commissioners to submit financial plan to FTA that includes potential additional local funding: – “Subject to and contingent upon any authorizations required by Orange County, including the Orange County Board of Commissioners, Orange County agrees to cooperate with the local municipalities and work together to identify, develop, and implement additional funding mechanisms to directly support the D-O LRT Project. ” • Obtain similar approvals from MPO (Dec. 14, 2016) • Continue to work with local partners to identify potential additional local revenue sources prior to approving full GEC and PMC contracts in April 2017 • Note: No additional local funds will be spent on the D-O LRT Project prior to receiving a Full Funding Grant Agreement (FFGA) from FTA in 2020

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