2018 – 2023 Strategic Budget Plan 4/15/2018 2018 – 2023 Strategic Budget Plan Financial Administration & Audit Committee May 16, 2017

SBP Components SBP includes only service and projects funded from the Base System 0.6% sales and use tax, and FasTracks Operations activity Cost allocation to FasTracks Operations for West Line, DUS Bus Concourse, Free MetroRide, I-225 Rail Line FasTracks expense and projects (non- operational) are included separately in the FasTracks Annual Program Evaluation (APE) financial plan

2018-2023 SBP Parameters Fiscal management Requirements to operate per specified performance measures Strategic goals for the General Manager Maintain a balanced budget Continued building of reserves Continued refunding of Board-appropriated fund and capital replacement fund Operating reserve fund development – established in 2017 Sufficient reserves to withstand economic fluctuations Maintain service levels for bus and light rail systems Service hours in 2018 expected to be comparable for Rail and flat for Bus

2018-2023 SBP Parameters (cont’d.) Baseline is 2017 Amended Budget First draft cash flow will change from Adopted to Amended Diesel fuel lock for budget certainty in 2018 Monitor futures for opportunity, use 2017 lock price of $1.69/gallon and escalate by national CPI over SBP term Forecasted price may change based on market conditions SOGR of facilities and equipment Prioritization of capital and expense projects First draft SBP is fully-loaded with all capital and expense project requests To balance first draft SBP, will require elimination, reduction, or deferral to outlying years of over $400 million in project requests if no other funding sources identified CBA negotiated costs through 2017, then escalated at area CPI, to be updated for final agreement Planned fleet expansion/replacement funded by previously issued COPs (associated debt service), grant funds and local funds

SBP Variables Uncontrollable factors Controllable decision areas Sales/use tax revenue Fuel price volatility Inflation rate Continued nature of economic growth Interest rates on debt Ridership Grant revenue/Federal appropriations Controllable decision areas Fare rate increases/decreases Service levels Operating costs/expense projects Capital investment in projects Fund balance development

2018-2023 SBP Revenue Assumptions 4/15/2018 2018-2023 SBP Revenue Assumptions Sales and Use Taxes 2018-2023 SBP uses CU-Leeds Business School March 2017 forecast Actual ytd March collections: 6.3% over March 2016 CU-Leeds School forecasts 4.0% increase over 2016, 5.5% increase over 2017 (baseline forecast) Over 6-year SBP term, negative difference between baseline forecast and low forecast is $188 million for Base System Including 2017, the negative difference is $208 million Year Baseline Low Annual Difference Cumulative Difference 2017 4.0% -2.1% -$20,588 2018 5.5% 4.3% -$25,743 -$46,331 2019 4.1% 3.8% -$27,873 -$74,204 2020 3.3% 3.0% -$30,164 -$104,368 2021 2.6% 2.3% -$31,979 -$136,347 2022 2.4% -$35,140 -$171,487 2023 4.5% -$36,897 -$208,384

Sales and Use Tax – Base System 4/15/2018 Sales and Use Tax – Base System

2018-2023 SBP Revenue Assumptions 4/15/2018 2018-2023 SBP Revenue Assumptions Passenger Fares Per RTD Board policy, a 10% fare rate increase is considered by Board every 3 years Next scheduled for 2019 and 2022 Fare revenue assumed flat in 2017 for Base Ridership assumed flat in 2017 for Base No escalation other than rate increases Federal Grants Based on actual 2017 appropriations Recognized as awarded Assumed to increase at rate of inflation or as identified

2018-2023 SBP Expenditures Assumptions 4/15/2018 2018-2023 SBP Expenditures Assumptions Operating and Maintenance Costs Inflated at Moody’s Denver-Boulder CPI rates (2.8% in 2018) National Moody’s CPI rate applied to fuel costs (2.5% in 2018) Includes one-time expense projects Includes CBA, fixed through 2017 then escalated at CPI, to be updated to actual negotiated contract Fuel Costs Diesel budgeted at $1.69 gallon (2017 lock price) and escalated at national CPI Gasoline budgeted at $2.65/gallon (2017 budget) and escalated at national CPI Debt Service Interest and debt payments on existing debt based on debt amortization schedules Proposed interest payments on possible future debt issues would be based on treasuries rate forward curves Future debt issuance based on rolling stock COPs, both bus and rail, and potential facilities construction Capital Expenditures Over $400 million of project requests (capital and expense) will need to be eliminated, reduced or deferred in SBP first draft absent other funding sources

Diesel Fuel Cost per Gallon 4/15/2018 Diesel Fuel Cost per Gallon

SBP Summary Cash Flow – Base System

2018 Base System Sources of Funds $655.5M 4/15/2018 2018 Base System Sources of Funds $655.5M

2018 Base System Uses of Funds $745.9M 4/15/2018 2018 Base System Uses of Funds $745.9M

SBP Opportunities and Challenges Board strategic priorities and GM tactical plans Fuel lock for favorable outcome Challenges Sales/use tax volatility Fuel price uncertainty State of Good Repair commitments and needs Project prioritization and project deferral Financing capacity, funding constraints Continued refunding of fund balances Increased O&M costs, CBA negotiations

Next Steps June 20 – Presentation of 2017 Amended Budget for Board adoption, SBP Update, and APE update July 18 – Presentation of SBP update and APE update to FAAC August 8 – Presentation of final SBP and APE for recommendation to full Board August 15 – Board adoption of 2018-2023 SBP and APE August 22 – Board Study Session on 2018 Budget Financial Administration and Audit Committee 2011-2016 Transit Development Program April 13, 2010