[Durham INC] Financing Light Rail

[Richard Ford]

All, 

Light Rail financing was discussed at the delegates' meeting this Tuesday.  At the suggestion of DeDreanna, I am posting material about how the financing plans are being drafted. The plans  are to be released tomorrow (Friday).

Our discussion included an INC Forum on this subject.  The Federal Transit Administration deadline is 4/30.

The below emails were sent to elected officials and community stakeholders.

1. From Orange County Deputy County Manager Travis Myren

From: Travis Myren <tmyren at orangecountync.gov <mailto:tmyren at orangecountync.gov> <mailto:tmyren at orangecountync.gov <mailto:tmyren at orangecountync.gov>>>
> Date: Wednesday, March 22, 2017 at 5:42 PM
> 
> As Commissioner Jacobs requested, I am distributing “Scenario E” for your information along with a higher level presentation of all of the scenarios that have been evaluated by Go Triangle to date. Davenport is independently analyzing this financial model and will have results next week. 
>  
> Scenario E uses the more conservative sales tax projections provided by Moody’s (3% growth in Orange County through 2046 and 3.5% growth from 2047 through 2062). These lower projections create a cash shortage in the early years of construction. The elected officials directed Go Triangle to show how this shortfall could be resolved by providing specific cost cutting strategies. This scenario uses a capital cost share of 82% Durham and 18% Orange and an operating cost share of 80% Durham and 20% Orange. This scenario also includes the original Chapel Hill BRT scope with a total project cost of approximately $25 million. The model cannot support both the light rail project and the expanded BRT project through tax district funds alone.
>  
> We will have a detailed discussion with each of you during our meetings with Davenport, but please let me know if you have any preliminary questions prior to that meeting.  
>  
> Thanks,
> Travis

2. From GoTriangle John Tallmadge Director of Regional Services Development


Subject: Update on Draft Release of Durham and Orange Transit Plans
> This morning, the county elected representatives to the cost share negotiation for the light rail project gave us direction on the “starting point” financial plan scenario to include in the draft plans. It is different than the scenarios that had previously been developed and will take another day to complete. This is going to push back our release date of the draft plans from Thursday to Friday of this week.
> 
> Here is the direction that we were given, and our response to how we would handle it for the draft plans:
> 
> We were directed to use cost-share Scenario C:
> 
> • Capital: 82% Durham/18% Orange
> • Shared borrowing: 82% Durham/18% Orange
> • Operations: 80% Durham/20% Orange
> • State of Good Repair: 80% Durham/20% Orange
> 
> We were also given the following modifications and requirements to the previous Scenario C:
> 
> 1) We were directed to use sales tax growth rates of 4.33% for Durham and 3.71% for Orange carried through 2062. We will do this by using the Moody’s Baseline year by year growth forecast through 2046 ((CAGR = 4.33% and 3.71%) and then applying the 4.33 and 3.71% as annual rates through 2062).
> 2) We were directed to use value engineering and substantial cuts from the project to enable the following conditions that will work with the Scenario C cost share and sales tax growth forecast in #1. We are in the process of documenting cost cutting options and will have that information for you by Friday.
> 2a) We were directed to maintain the balance Orange has for bus investments in C. We will do this continuing to include the bus investments and maintaining the minimum cash balances for Orange County at or above Scenario C. Please remember that these cash balances in C are minimal.
> 2b) We were directed to have some balance shown for the Durham Wake Commuter Rail Plan. We agree that this is important. Because of the need to model the other changes, we will at a minimum show the growing cash balances in Durham County and the Debt Service Coverage Ratios as indicators of when Durham County could make financial commitments to a CRT project. We will work on a preliminary estimate of when CRT could be afforded using the assumptions from the Wake Plan (cost, schedule of spending once started, 1/3 of costs borne by Durham, 50% federal funding, 0% state funding), but cannot commit to include this information in the draft plans or by Friday noon. We will certainly have this for everyone to review as soon as possible so that it can be part of final deliberations on the plans and cost-share agreements.
> 2c) We were directed to have sufficient balance for Orange and Durham through 2062. We interpret “sufficient” to mean positive, and we will continue to show the annual cash balances for each county.
> 
> We expect to have the financial information about this scenario and its impact on the projects and services to share with you by the end of the day tomorrow.
> 
> We must release the draft Plan no later than Friday so that the 21 day public comment can close in time for the Staff Working Group to make a final recommendation on April 21, in advance of the meetings to consider the final plans during the week of April 24.
> 
> Thanks for your continued participation in the development of this draft.
> 
> John
> 
> John Tallmadge
> Director of Regional Services Development
> GoTriangle
> P.O. Box 13787
> Research Triangle Park, NC 27709
> 919.485.7430
> 

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