www.pbworld.com Funding and Financing Options
Overview What is Transit? Federal Transit Funding P3s and their Financing Arizona s Funding Limitations The Virginia Model Key Takeaways 1
What Is Transit? Transit in 2013 is not the Transit of 20 years ago Public transit funding must provide support for a variety of public transportation is service to the public provided by: A Van Pool A Bus Tramways Bus Rapid Transit Commuter Rail Passenger Ferry Boats Streetcars Light Rail Heavy Rail 2
Fixed Guideway Public Transportation Guideway Capital Cost Per Mile Example Bus Rapid Transit (BRT) Bus in exclusive right-of-way; dedicated travel lane; mixed-traffic Commuter Rail (CRT) Rail in separate right-of-way Streetcar (SCR) Rail in mixed traffic; dedicated right-of-way Light Rail (LRT) Rail in separate right-ofway or dedicated travel lane $16M-$40M* $25M-$80M* $12M- 80M* $19M- $146M** Heavy Rail (HRT) Rail in fully grade separated right-of-way $76M- $2B** * Jackson County Commuter Corridors Alternative Analysis, January 2012 **FTA Capital Cost Database, 2010 Version 3
Federal Transit Funding Of the 18.4 in federal gas tax the mass transit account receives 2.86 from the Trust Fund From FY05 to FY10, states flexed $6.8 billion in highway funding to transit projects (principally STP and CMAQ funds) - roughly 3.5 percent of the total funding eligible to be flexed to transit States, MPOs, regional and local transit operators rely on federal transit funding FHWA and FTA are spending more for prior obligations than the amount of revenues that are being taken in 4
April 2013 CBO Congressional Statement Regarding Funding Levels The current trajectory of the Highway Trust Fund/Mass Transit Account is unsustainable. Starting in fiscal year 2015, the trust fund will have insufficient amounts to meet all of its obligations, resulting in steadily accumulating shortfalls Since 2008, the Congress has avoided such shortfalls by transferring $41 billion from the general fund of the Treasury to the Highway Trust Fund. An additional transfer of $12.6 billion is authorized for 2014 5 Projections are that gas tax would have to be increased 10 or program spending reduced by 92% to balance revenues and spending
Highway Cash Balance is down 61% from last year Mass Transit cash balance is down 52% from last year 6
Federal Transit Funding Special Programs Transit projects also may qualify for funding from special programs, including TIGER High Speed Intercity Passenger Rail Program Passenger Rail Investment & Improvement Act Railroad Rehabilitation & Improvement Financing Must qualify and compete, sometimes against other transportation modes 7
Federal Transit Funding MAP-21 2-year bill retained overall program size but reduced the number of discretionary programs and made some programs formula based Policy goals of streamlining and performance measurement; requirement to develop Transit Asset Management Plan Established a new State of Good Repair Program Established a new category for Core Capacity Improvement in New Starts 8
Current New Starts Pipeline 22 projects have New Starts FFGAs 26 projects in New Starts pipeline seeking funding Current New Starts Supply & Demand 9
Arizona Federal Transportation Funding 2011-2015 STIP A 2012 Report of State STIPs thru FY 2015 found that 16% of Arizona s federal funds are programmed to transit 10
Arizona s Federal Transit Funding In 2001, the state ranked 25 th in federal transit funding In 2006, the state ranked 17 th - $174.6 million with $88.2 million New Starts for Central Phoenix/East Valley LRT (in millions) 2007 2008 2009 2010 2011 Federal Transit Funding State Transit Funding $168.3 $186.1 $199.3 $169.3 $115.4 $10.1 $11.8 $0 $0 $0 AASHTO Survey of State Funding for Public Transportation Final Report 2013 11
Arizona s Federal Transit Funding Since 2010, the state has ranked 22 nd in federal transit funding receiving $94.5 million in FY 2012 Central Mesa LRT Extension received $18.9 million in FY 2013 (Small Starts) Tempe Streetcar is in Small Starts Project Development, requesting $56 million in federal funds with no local sources identified in the Annual FTA report New Starts and Small Starts are constrained in funding levels and capacity 12
Federal Public Private Partnership (P3) Programs and their Financing 13
Federal P3 Programs There is no single P3 program at the federal level no single method for developing and executing a project Since the mid-1990s, different pilot programs and financing strategies have taken shape P3s have grown in number and sophistication Many do not consider design-build a P3 anymore For transit, the programs are limited and are not widespread in use Even without federal clarity, transit P3s are gaining ground among states 14
Range of public and private infrastructure delivery methods Private Finance DBFOM User Fees DBFOM Availability Segmented Procurement Package DBF Integrated Procurement Package Increased Public Responsibility O&M Performance DB DBOM Increased Private Responsibility DBB 15 Public Finance Adapted from John B. Miller, Principles of Public and Private Infrastructure Delivery, Kluwer Academic Publishers, 2000
Federal P3 Programs PENTA-P Established in 2007, FTA s Public-Private Partnership Pilot Program goals: Reduce risk by sharing responsibility among partners Save time by using a non-traditional design-build approach and through a streamlined New Starts process Save money through tighter integration of design, engineering, construction and operations Deliver high quality project by involving contractor early in project development and identifying opportunities for innovation early Denver Eagle only Transit Project implemented; FTA has not released P3 guidance 16
Project Management Oversight P3 Procurement Process P3 and New Starts Process Planning Specific application requirements and local decision points to move through phases Does not recognize concurrent activities Private P3 Partners consider federal processes a risk, particularly when no identified path or schedule Project Description FTA Acceptance into Project Development Project Development Complete NEPA Process Confirm Locally Preferred Alternative Address New Starts Criteria FTA Approval into Engineering 2-year limit NEPA Federal Approvals Financing Engineering Finalize Project Scope & Cost Commit Non-Federal Funds Develop Construction Plans Acquire ROW Address New Starts Criteria for FFGA Evaluation Full Funding Grant Agreement (FFGA) Construction 17
P3 Programs - TIFIA Transportation Infrastructure Finance & Innovation Act s strategic goal is to leverage limited Federal resources and stimulate private capital investment in transportation infrastructure by providing credit assistance in the form of direct loans, loan guarantees, and standby lines of credit TIFIA loans can provide financing (not funding) for up to 49% of eligible costs MAP-21 updated the TIFIA program by increasing its funding 8-fold to $750 million in FY 2013 and technical changes to make it more accessible for transit projects supported by sales, property, or income taxes 18
P3 Programs TIFIA, continued Through FY 2011, 9.6% of TIFIA assistance was provided to transit projects, including: Denver Eagle Commuter Rail Crenshaw/LAX Light Rail Transit Dallas Orange Line Extension Light Rail Transit Staten Island Ferries Tren Urbano Heavy Rail US 36 BRT WMATA Capital Improvement Program Other financing programs include GARVEEs, Private Activity Bonds, toll revenue bonds http://www.fhwa.dot.gov/ipd/project_delivery/ 19
P3 Programs Availability Payment Denver Eagle is the only transit P3 under agreement (and in construction) in the US Denver Eagle is a Design-Build-Finance-Operate-Maintain (DBFOM) with availability payment (AP) Availability Payment means that the public partner pays the private partner for the project s availability based on agreed upon performance measures such as on-time performance and cleanliness An AP provides the public partner with budget certainty and the private partner with no revenue risk (i.e. farebox) can be structured to address state/local debt capacity issues 20
P3 Programs Availability Payment Canadian P3 Light Rail Transit Projects use the AP model Ottawa and Waterloo are the two most recent examples Maryland s 16.2 mile Purple Line Light Rail Transit Project is being developed as an Availability Payment P3 $2.2 billion greenfield construction project Request to Enter Engineering stage of New Starts Funding TIFIA Loan (pending, held by private partner) Expected 30-year Operating Term Budget Certainty for Maryland Transit Administration Requires high-quality performance by private partner 21
22 Arizona s P3 Process a Solid Process
23 Arizona s Transit Funding Limitations
ADOT s FY 2013-2017 Strategic Plan Total Revenues of $3.85 billion in FY 2012 Flat revenues forecasted through FY 2017 State Constitution limits use of revenues derived from taxes and fees related to the registration, operation, or use of motor vehicles to highway-related purposes Debt for highway projects $1.8 billion in outstanding state highway fund-back bonds as of July 1, 2013 No limit on outstanding debt Arizona also uses GARVEEs debt repaid with FHWA reimbursements about $370 million outstanding 24
Arizona Department of Transportation Responsibility for long-range planning and programming for public transportation Programmed funds used to support MPOs public transportation programs Authorized P3 Program can be used to develop transit Sources of Revenue are Constrained 25
26 Virginia s Transit Model
Virginia s Transit Model 1986 Needs analysis of all modes; Trust Fund established; created % allocation to each mode; today 14.7% to transit programs 1992 Department of Rail & Public Transportation separated from DOT; no new funding or staff DRPT advances projects primarily through partnerships with local and regional governments and private entities DRPT funds only a portion of rail and public transportation project costs, with a significant share of expenses borne by localities 1995 Virginia adopted P3 legislation - use revenues/activities for programs and projects that benefit the corridor (not mode specific) 2000 Public Transportation included in GARVEE authorization and every subsequent transportation bond authorization 27
Virginia s Transit Model Legislatively mandated transfer of federal STP and CMAQ funds to transit, including required match FY 2005, the DRPT budget totaled $248.5 million; FY 2014 - $548 million Two statewide tax increases since 2006 for transportation Two regional gas tax increments fund regional transit services with new program coming on line in 2014 Tax revenues dedicated to transit outside of Trust Fund include recordation tax, retained interest earnings, retail sales and use tax including internet equity proposal Agency staff size remains small with language allowing up to 3.5% of budget to be used for staff/consultant support 28
Virginia s Transit Model Dulles Rail Median of Dulles Toll Road reserved for future rail in early 1980s Project Development followed NEPA Process Local/regional support was mixed Dulles Corridor Plan adopted in 1992 Dulles Corridor Task Force established in 1998 Unsolicited P3 proposal received in 1998; P3 agreement signed by DRPT Director in June 2004 Allocation of 85% of excess Dulles Toll Road revenues to transit in the corridor in 2001 Dedication of increased toll revenue (25 ) to development of Dulles Rail in 2005 29
Virginia s Transit Model Dulles Rail Subsequent transfer of the Dulles Toll Road to regional entity to facilitate financing of the extension of Washington region s Metro system to Dulles International Airport Local governments established transportation improvement districts to provide their local share New Starts funding secured after Maryland-DC-Virginia increased funding commitment to State of Good Repair for entire Metro system TIFIA loan GARVEE bonds Toll Revenues Phase One opens in early 2014 30
Virginia s Other Transit Program Efforts Fund additional Amtrak slots in three corridors Ridership growth of 100% on Amtrak in Virginia far exceeding expectations Concurrent funding dedicated to freight rail and shortline railroads Relationships, transparency, performance measures and monitoring critical to public support Local and regional transit allocation formulas being modified to support performance and use not just funding needs 31
Virginia s Amtrak Staples Mill Station Parking Lot Almost 1 million riders on the 3 state funded Amtrak slots in FY 2013 32
33 Key Takeaways
Federal programs are not sustainable Competition for limited federal dollars is intense P3s are an alternative for budget certainty Organizational, policy and funding actions can be taken that do not require new revenue 34
One of the most important benefits of transit is its ability to serve as a focal point for future development, and in the process raising property values and generating additional tax revenues to support local services Transit investments should reinforce local and regional land use and economic development plans Since opening in 2007, Charlotte s Blue Line has attracted millions of dollars in commercial and residential development around the 15 stations along the 9.6-mile length. The line has helped attract 2,600 residential units, 420,000 square feet of retail space, and 320,000 square feet of office space, generating $6.5 million annually for the City of Charlotte and $12.2 million annually for the county 35