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 GoTriangle 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, GoTriangle 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 BRT and LRT now include extensions beyond what was in the original plan.

Gap = ~ $250 Million in Year-of-Expenditure (YOE) Dollars 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, GoDurham, Durham County, and GoTriangle 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 10% = ~$230M YOE New growth rates anticipated in about 1 week

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%  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% Impacts: Service still fully funded LRT, BRT, and Hillsborough projects still in financial plan, CRT is out BRT memo included Hillsborough Station original cost: $8.9M with 10% local share ($890K) Updated cost: $8.1M with 8.4% local share ($686K)

How Does the Current Project Estimate Compare to the Original Estimate? Formula y = x(1+r)n Variables y = 2016 dollars x = original year dollars r = escalation rate n = number of years Estimate Source 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: 2011 Plan Feb 2016 Plan Dec 2016 Plan Original Project (UNC-Alston Ave) $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 $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 $1,877 in Year-of-Expenditure Millions: 2011 Plan Feb 2016 Plan Dec 2016 Plan Construction Completion Date 2025 2026 2028

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 $1,877 in Year-of-Expenditure Millions: 2011 Plan Feb 2016 Plan Dec 2016 Plan Construction Completion Date 2025 2026 2028 Original Project (UNC-Alston Ave) $1,823 $2,013 $2,126

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 $1,877 in Year-of-Expenditure Millions: 2011 Plan Feb 2016 Plan Dec 2016 Plan Construction Completion Date 2025 2026 2028 Original Project (UNC-Alston Ave) $1,823 $2,013 $2,126 Including Joint Development (JD) n/a $2,256

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 $1,877 in Year-of-Expenditure Millions: 2011 Plan Feb 2016 Plan Dec 2016 Plan Construction Completion Date 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 $2,389

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 Forecast Estimated Revenue** 2011 Plan Staff $217 Orange $744 Durham Feb. 2016 Plan*** Walden, 2014 $266 Orange $946 Durham Dec. 2016 Plan**** Moody’s Analytics, 2016 $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 Reduce ticket vending machine count and replace with purchase by phone technology Evaluate need for future three-car platforms Evaluate potential single track locations

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 Jan. - Apr. 2017 Mar. 2017 Apr. 2017 Deadline for GoTriangle to request entry into FTA Engineering phase for D-O LRT Project Non-binding MOU to work with GoTriangle 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 Revise and finalize financial plan Monthly Transit Plan financial updates to County, MPO, and GoTriangle Boards Present for information the full GEC and PMC contracts County, MPO, and GoTriangle 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 BRT and LRT now include extensions beyond what was in the original plan.

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