Dallas Area Rapid Transit. FY 2006 Business Plan (Including FY 2006 Annual Budget and Twenty-Year Financial Plan)

Transcription

1 FY 2006 Business Plan (Including FY 2006 Annual Budget and Twenty-Year Financial Plan)

2 Dallas Area Rapid Transit FY 2006 Business Plan (Including FY 2006 Annual Budget and Twenty-Year Financial Plan)

3 Dallas Area Rapid Transit Board of Directors Officers Mark Enoch, Chairman Cities of Farmers Branch, Garland & Rowlett Joyce Foreman, Vice Chairman City of Dallas Angie Chen Button, Secretary City of Garland Lynn Flint Shaw, Assistant Secretary City of Dallas City of Dallas Terri Adkisson Jerry Allen Scott Carlson Huelon Harrison Beatrice Alba Martinez William M. Velasco City of Irving John Danish City of Plano Robert Pope Cities of Addison, Highland Park, Richardson & University Park Raymond Noah Cities of Carrollton & Irving Randall Chrisman Cities of Dallas, Plano, Glenn Heights & Cockrell Hill Faye Wilkins

4 Table of Contents TABLE OF CONTENTS FY 2006 BUSINESS PLAN Section 1 Introduction/Strategic Alignment Purpose of Business Plan... INT-1 Board and Policy Direction... INT-1 Overview of DART s Leadership System. INT-5 Management Action Plans and Performance Measurements INT-6 Employee Performance.. INT-10 Business Planning Process. INT-10 Budget and Financial Plan Approval and Amendments INT-12 Budget Basis and Presentation of Amounts and Years. INT-12 Related Reports.. INT-13 Acronyms... INT-13 Section 2 Executive Summary Background... EX-1 Business Plan Format EX-1 DART-Key Performance Indicators.. EX-1 Focus on the Customer DART s First Priority... EX-3 Section 3 Customer Bus Overview... BUS-1 Bus Scorecard-Key Performance Indicators..... BUS-1 Bus Ridership Trends.... BUS-2 Ridership Development Action Plan. BUS-4 Subsidy Per Passenger... BUS-7 Restructure Bus Service Delivery.. BUS-8 DART On-Call Service.... BUS-8 Activity Center Shuttles.... BUS-9 Bus Cost Model..... BUS-9 Section 4 Customer LRT Overview... LRT-1 Light Rail Scorecard-Key Performance Indicators... LRT-1 LRT Ridership... LRT-2 LRT Expansion.. LRT-3 LRT Costs and Subsidy Per Passenger.. LRT-7 Section 5 Customer Commuter Rail & Railroad Management Overview... CR-1 Commuter Rail-TRE Scorecard-Key Performance Indicators.. CR-2 TRE Ridership CR-3 Commuter Rail-TRE Costs and Subsidy Per Passenger... CR-5 Commuter Rail and Railroad Management Cost Model.. CR-6 Section 6 Customer Paratransit Services Overview... PAR-1 Paratransit Services Scorecard-Key Performance Indicators PAR-1 Scheduling/Control Center Service Levels... PAR-2 Paratransit Ridership.. PAR-2 Paratransit s Productivity.. PAR-3 Purchased Transportation Contract... PAR-4 Paratransit Costs and Subsidy Per Passenger PAR-5 Paratransit Cost Model.. PAR-5 i

5 Table of Contents TABLE OF CONTENTS FY 2006 BUSINESS PLAN Section 7 Customer HOV/General Mobility HOV Overview.... HOV-1 HOV Scorecard-Key Performance Indicators HOV-2 HOV Projects HOV-2 Ensure I-30 HOV Lane Opens on Time. HOV-7 Stemmons HOV Gates to Improve Safety. HOV-7 HOV Service Subsidy Per Passenger. HOV-7 General Mobility Overview and Vanpool Scorecard..... HOV-8 General Mobility-Road Improvement Programs HOV-9 Section 8 Agency-Wide Overview... AW-1 Utilize Market Research to Increase Ridership. AW-1 Provide a Safe/Secure Service... AW-3 DART Safe Work Practices Policy... AW-5 Provide Customer-Driven Service AW-5 Improving Business Processes and Information AW-7 Major Technology Projects to Improve Quality and Efficiency... AW-9 Satisfied Employees Contribute to Satisfied Customers... AW-11 Promote Employee Development and Alignment. AW-12 Promote Excellence Through Workforce Diversity.. AW-13 Stakeholders Perceptions are Critical... AW-14 Improving Customer Satisfaction/Building Relationships with Stakeholders.... AW-15 Section 9 FY 2006 Budget Overview... BUD-1 Sources and Uses of Funds... BUD-1 Revenues... BUD-2 Operating Budget.. BUD-3 FY 2006 Capital Budget BUD-10 FY 2006 Net Debt Service Budget BUD-11 Position Summary.. BUD-12 Section 10 FY 2006 Twenty-Year Financial Plan Overview... FP-1 Sources of Funds... FP-3 Uses of Funds FP-11 Capital and Non-Operating... FP-14 Debt Program. FP-20 Supplemental Financial Information. FP-24 Major Financial Plan Assumptions FP-27 Potential Risks and Opportunities. FP-29 Section 11 Appendix ii

6 Section 1 Introduction/Strategic Plan Index of Exhibits Exhibit 1.1 DART System Plan Map (Current & Future Services)... INT-3 Exhibit 1.2 Interrelationship of System Plan with Other Documents.... INT-4 Exhibit 1.3 Exhibit 1.4 Exhibit 1.5 Exhibit 1.6 Exhibit 1.7 Relationship of Financial Standards to Sources and Uses of Cash. INT-5 DART s Leadership System and Strategic Alignment... INT-6 DART s Strategic Plan... INT-8 Strategic Performance Measurements. INT-9 Standard Business Plan Development Schedule. INT-10

7 Introduction/Strategic Alignment Purpose of Business Plan Introduction/Strategic Alignment The FY 2006 Business Plan provides the Board of Directors, taxpayers, and elected officials of our region with a comprehensive summary of the Agency's plans and commitments to improve regional mobility, enhance the quality of life, and stimulate economic development. This document consolidates the key elements of the FY 2006 Annual Budget, the FY 2006 Twenty- Year Financial Plan, the Transit System Plan, the Five-Year Action Plan, and the Agency's Strategic Plan. The resolutions adopting the FY 2006 Business Plan (see Exhibit APX.1) approve the funding levels for the FY 2006 Annual Budget and the FY 2006 Twenty-Year Financial Plan as required by DART's enabling legislation. Board and Policy Direction DART History Dallas Area Rapid Transit (DART) is a regional transportation authority of the State of Texas. DART was created by a voting majority of the citizens on August 13, 1983, to organize and provide regional public transportation to its member jurisdictions pursuant to Article 1118y of Vernon's Annotated Texas Civil Statutes, as amended, and recodified into Chapter 452 of the Texas Transportation Code effective September 1, The enabling legislation allows DART to collect a one-percent sales and use tax on certain transactions. DART currently consists of the following member jurisdictions: Addison, Carrollton, Cockrell Hill, Dallas, Farmers Branch, Garland, Glenn Heights, Highland Park, Irving, Plano, Richardson, Rowlett, and University Park. The DART Service Area is approximately 700 square miles and includes approximately 2.1 million people. Mission Statement DART s mission statement defines the purpose for which the Agency was created: To build, establish, and operate a safe, efficient, and effective transportation system that, within the DART Service Area, provides mobility, improves the quality of life, and stimulates economic development. Board Goals To achieve this mission, the Board has developed five goals which have been consolidated into three focus areas or target groups for purposes of strategic planning. Customer Focus Provide DART's customers with services that are ever-increasing in quality, effectiveness, and efficiency. Establish a common vision for transportation that is regionally accepted, progressively implemented through a comprehensive system plan, and periodically revisited. INT-1

8 Introduction/Strategic Alignment Internal Focus (Employee) Foster an internal environment that promotes teamwork, empowerment, accountability, and positive self-image. External Focus (Stakeholder) Sustain a multi-faceted outreach effort to promote dialogue with the public on DART's goals, services, and accomplishments; and Develop and enhance coalitions with all organizations that have a vested interest in regional transportation issues. Service Plan/Transit System Plan DART has a Service Plan and a Transit System Plan. The Service Plan is required by DART s legislation. It describes, in legal terms, where DART's facilities and rail alignments are physically located. DART s Transit System Plan is a longrange planning tool that identifies and prioritizes major capital projects needed to improve regional mobility. The Transit System Plan is closely coordinated with development of the North Central Texas Council of Government s Regional Mobility Plan and is revised every five to six years. The next revision is scheduled for completion in FY 2006 and focuses on transit needs and opportunities within the context of a 2030 horizon. The current Transit System Plan map is located at Exhibit 1.1. The affordability of the Transit System Plan and the timing of service and capital expansion projects are determined by the Twenty-Year Financial Plan, which is approved annually by the Board. Exhibit 1.2 highlights the interrelationships of the Transit System Plan with other key Agency documents. Financial Standards DART s Financial Standards (Exhibit APX.2) are divided into three sections: General (FS-G), Business Planning Parameters (FS-B), and Debt Service (FS-D). The purpose of the general standards is to ensure that DART prudently manages its financial affairs and establishes appropriate cash reserves. The Business Planning Parameters (BPPs) provide management with a framework for developing the following year's budget and Twenty-Year Financial Plan and establish future business targets for management to achieve. The purpose of the Debt Service standards is to limit the level of debt that may be incurred and to ensure that debt assumptions are based on financial parameters similar to (or more conservative than) those that would be placed on DART by the financial marketplace. The combination of these policy documents provides a framework within which management can formulate strategy and action plans to maximize return on investment (i.e., increase ridership and improve subsidy per passenger). Exhibit 1.3 highlights which Financial Standards correlate with the major sources and uses of cash included in the Annual Budget and Twenty-Year Financial Plan. INT-2

9 Introduction/Strategic Alignment Exhibit 1.1 Current & Future Services INT-3

10 Introduction/Strategic Alignment Exhibit 1.2 Interrelationship of System Plan with Other Documents TRANSIT ELEMENT Transit System Plan Revis ed June 30, 1995 June 1995 REGIONAL MOBILITY PLAN PROJECT DEFINITIO N TRANSIT SYSTEM PLAN FINANCIAL CONSTRAINTS LOC ATIO N SPECIFIC OT HER STUDIES SERVICE PLAN LONG-RANGE FINANCIAL PLAN INTERRELATIONSHIP IMPLEMENT COMMITMENT FUNDING LO NG-RANGE ELEMEN T DART DART DART/City of Dallas LINE SECTION NW-1A LINE SECTION NW-1A 30% DESIGN SUBMITTAL 30% DESIGN SUBMITTAL Inter-Local Agreement Including: Supplement # 1 Planning & Zoning Supplement # 2 Design & Construction Council Resolution # CBD Stations FINAL DESIGN INTERLOCAL AGREEMENT BUSINESS PLAN INT-4

11 Introduction/Strategic Alignment Exhibit 1.3 Relationship of Financial Standards to Sources and Uses of Cash Table Description Where Covered Sources of Cash Sales Taxes FS-B1 Operating Revenue FS-B2 Federal Funding FS-B10 Debt FS-D1 to D7 Uses of Cash Operating Budget Fixed Route Service FS-B3 & B4 Administrative Costs FS-B6 Total Expenses FS-B5 Capital Budget Gen. Mobility-Road Improvements FS-B7 Start-up/Capital Planning Costs FS-B8 Capital Projects FS-B8, FS-B9 Net Debt Service Budget FS-D1 to D7 Cash Reserves FS-G5 & G7 Ending Cash FS-G6 Board Policies The Board has a number of policies that provide direction to management for implementation. For example, the Board has policies for real estate purchases, advertising on buses, and fare structure. DART's enabling legislation requires the Board to adopt an annual budget prior to the commencement of a fiscal year. It also requires the Board to have a Financial Plan. The Financial Plan details the projected sources and uses of cash for twenty years and reviews the affordability of DART's currently approved Transit System Plan. The Board's Bylaws require a two-thirds vote of the appointed and qualified Board Members to approve or amend the Financial Plan. Budget and Financial Plan amendments are required for new operating programs or an increase to an existing operating program in excess of $500,000 per year and for new capital programs in excess of $1 million. Overview of DART's Leadership System DART's leadership system is based on the concept of strategic alignment. This is the process used to ensure that DART employees understand how their jobs and performance are linked to the Board's mission, direction, and goals. The leadership process is shown in Exhibit 1.4. Performance measurements are critical and are incorporated into "scorecards" at different levels of the Agency. The major components of the leadership system are described in more detail in the remainder of this section. INT-5

12 Introduction/Strategic Alignment Management Action Plans and Performance Measurements Vision Statement To help achieve the Board's mission and goals, a vision statement was developed in FY 1997 to address the Agency's three focus groups (customers, employees, and stakeholders). The vision describes what the Agency is trying to achieve. The key statements are incorporated into the Agency's Strategic Plan (see Exhibit 1.5). DART's vision follows: DART is a welcomed, integral part of our region. We provide quality service. Our innovative accomplishments benchmark DART as a transportation leader which is supported by a thriving internal environment. DART Organizational Values As an adjunct to the vision statement, six core values were developed in FY 1998 for DART's management and employees. These values demonstrate where focus and emphasis need to be placed on a daily basis. At DART, employees value being: Focused on Our Customers We are dedicated to meeting our customers needs We strive for continuous improvement We deliver quality Committed to Safety We expect safety to be the responsibility of every employee We are committed to ensuring the safety of our passengers INT-6

13 Introduction/Strategic Alignment Professional We demonstrate a high regard for each other We take pride in our accomplishments We congratulate each other for our successes We honor integrity and honesty Dedicated to Quality Performance We strive for excellence We have high expectations We hold ourselves accountable for results We coach, reinforce, and recognize our employees Team Players We are committed and dedicated to DART We support each other We value our diversity Good Stewards of the Public Funds We responsibly use public funds and property Other Strategic Input The Business Plan is reviewed annually, and the Strategic Plan is reviewed every three years. They are modified based on an analysis of business results; the results of employee, customer, and climate surveys; external events (such as issues being considered by the Texas State Legislature); and benchmark comparisons with other transit agencies and private sector companies. Strategic Plan The Board's mission, goals, and policy direction are integrated with the other feedback discussed above to develop and update the Strategic Plan and Business Plan. The Strategic Plan is shown in Exhibit 1.5. The Strategic Plan identifies the key initiatives that must be completed to achieve the Board's goals and the Agency's vision of success. Management developed a leadership system whereby strategy and performance measurement drive the achievement of results and are the basis for the creation of the Business Plan. The Strategic Plan identifies what needs to be accomplished; the Business Plan defines how management intends to achieve it. The key to success is the development of performance indicators or "scorecards" that inform management how well the initiatives are working. Exhibit 1.6 highlights DART's major strategic performance measurements that are used in the Agency-wide, modal, and departmental scorecards. The leading indicators are the key financial, operational, and employee performance drivers that, if achieved, will yield improved Agencywide performance. Measurement definitions are included in Exhibit APX.6. Management's goal is to develop business and information systems that provide critical information regarding the leading indicators to key personnel so corrective or preventive action can be taken as soon as possible. The lagging indicators are more traditional in nature and typically are not available until after month-end. They measure results but do not drive performance. INT-7

14 Introduction/Strategic Alignment INT-8

15 Introduction/Strategic Alignment Exhibit 1.6 Strategic Performance Measurements Management Objectives Key Leading Indicators Key Lagging Indicators Customer Focus C1 - Customer Satisfaction * On-time performance * Ridership * Accidents per 100k miles * Passengers per mile/hour * Complaints per 100k passengers * Customer satisfaction surveys * Call abandonment rates/service levels * Response time * Miles between road calls * Missed trips C2 - Manage System Growth * Revenue miles/hours * Ridership * Actual schedule vs. plan for * Passengers per mile/hour system expansion * Customer satisfaction surveys C3 - Improve Efficiency * Operator lost time claims * Subsidy per passenger * Unscheduled absences * Administrative ratio * Pay-to-platform ratio * Sales taxes for operations * Average system speed * Unused financing capacity * Deadhead ratio * Timely replacement of assets C4 - Improve Business Processes * Cycle time/process measurements * Sales taxes for operations and Information * Project implementation vs. plan * Administrative ratio * Benchmark comparisons Internal Focus - Employee E1 - Promote Employee * Employee verbal feedback * Employee satisfaction survey Development and Alignment * Number of grievances * Corrective disciplinary actions * Retention/absenteeism External Focus - Stakeholder S1 - Build Relationships with * Complaint/commendations * Climate satisfaction survey Stakeholders * Press clippings * Completion of TSP commitments * Joint development created Business Plan The Business Plan is the Agency's written document that outlines DART's performance projections and commitments for each mode of service and the Agency as a whole. The Plan includes five-year "scorecards" showing two past years, the current budget year, and forecasts for the next two years. The scorecards address key operating, financial, and quality measures and identify the work program (i.e., initiatives) necessary to improve performance and scorecards of projected passenger and subsidy per passenger targets. The Strategic Plan and Business Plan are the basis for the FY 2006 Annual Budget and the FY 2006 Twenty-Year Financial Plan and for measuring management and employee performance. Executive management monitors key scorecard elements and work program initiatives on a monthly and quarterly basis. Exception reporting for key scorecard elements is provided to the Board on a quarterly basis in a green, yellow, and red format. For more information on performance reporting, readers should obtain a copy of DART's Quarterly Operating and Financial Performance Report. INT-9

16 Introduction/Strategic Alignment Employee Performance A critical part of DART's leadership system is the link between the Business Plan and employee performance. DART's Senior Management Team (assistant vice-presidents and above) is held accountable for achieving or exceeding the operating, financial, and quality targets established in the Business Plan at the Agency-wide and modal levels. Scorecards and work programs are developed and cascaded down from the Agency-wide and modal levels to the department and division levels. Scorecards at the department and division levels tend to focus more on internal process measurement since continuous process improvement is one of the Agency's core values and therefore a major theme for management. The work program elements necessary to improve performance at all levels are then incorporated into individual employee Performance Management Plans (PMPs). Some PMPs may be homogeneous for an entire group and will focus on achieving the expected business results for that section (such as claims processing). Other PMPs will be project specific (or work program specific) and linked directly back to the specific initiatives in the Strategic Plan. Salaried employees review their performance with their supervisors at least two times per year to ensure that schedules are being maintained and targets are being achieved. Exceptions are noted and adjustments are made to schedules. Management places a significant amount of weight on achieving the performance expectations shown in the scorecard. The Agency uses pay-forperformance merit increases, a lump-sum bonus plan, and other incentive programs to reward employees (or groups of employees) who achieve their objectives. See the Agency-Wide section for more detail on these processes. Business Planning Process Exhibit 1.7 highlights the standard business planning compilation and approval process used at DART. Date Dec Feb Feb Mar May Jul Jul Aug Sep Sep Exhibit 1.7 Standard Business Plan Development Schedule Description Management reviews Strategic Plan every three years Management reviews and makes recommendations for changes to Financial Standards Board reviews and approves Financial Standards Staff develops Business Plan (which includes the Annual Budget and Twenty-Year Financial Plan) for following year Staff presents proposed Budget and Twenty-Year Financial Plan to Board Board approves issuance of Budget and Twenty-Year Financial Plan to Member Cities Member Cities provide input Board approves Budget and Twenty-Year Financial Plan INT-10

17 Introduction/Strategic Alignment DART takes a top-down approach to business planning. It begins with the Board's Financial Standards which establish parameters within which management must operate. The Business Planning Parameters were initiated as part of the Financial Standards in Targets are established, maintained, and highlighted throughout the document. In January, management reviews the Strategic Plan, performs an environmental scan, determines projected funding levels, and establishes expected performance levels for the next several years. Next, the Board reviews the Financial Standards to determine that the business objectives are appropriate based on input from management. Typically, the Board reviews projected business and financial results, including proposed new operating and capital programs beginning in May and June. Departmental targets are set based on projections from the Twenty-Year Financial Plan and other known factors or programs (e.g., increase in health care costs or fuel). Based on the direction of senior management, departments prepare detailed budgets for each of their cost centers within those targets. Budget reviews are held with the Finance Department, the Departments leadership team, and President/Executive Director. The hearing provides an opportunity for the department head, the Executive Vice President, the President/Executive Director, and the Budget Office to discuss the respective budgets as well as any changes. All new proposed programs are evaluated for effectiveness and efficiency. The Finance Department then compiles the numbers, coordinates work programs to achieve strategies, and publishes the Business Plan, including the Annual Budget and Twenty-Year Financial Plan, for the legislatively-required 30-day comment period by DART's member cities. The Board performs additional reviews in August and September, as necessary, before it approves the Budget and Twenty-Year Financial Plan in late September. DART's legislation does not require public hearings. Capital Budgeting A new process was developed in 2005 which is focused on ensuring that DART spends its available capital dollars on projects that provide the most benefit to the region and are done in the most cost-effective manner possible. Capital projects are prioritized based on the following criteria: Compliance with government regulations; Safety-related; Interlocal Agreement (ILA) or other prior commitment; Required to maintain existing infrastructure; Cost effectiveness. INT-11

18 Introduction/Strategic Alignment Many dimensions of each project must be submitted with the project request, including: Consequences of not doing the project; Effect of the project on Customers, Stakeholders, and Employees; Compliance with long-range plans of the Agency, such as the Strategic Plan, Transit System Plan, Twenty-Year Financial Plan, Information Technology Plan, etc. Time criticality; Life-cycle cost including capital expenditures, operating and maintenance expenses, and revenue generation in comparison with current operations; Other potential alternatives to the proposed project and associated life-cycle costs of each alternative; and Concurrence from all affected departments. For certain classes of expenditures (primarily infrastructure maintenance), discreet projects cannot be specifically identified or the timing of equipment replacement cannot be accurately determined (run-to-failure equipment). In these cases, reserves are established in the Twenty- Year Financial Plan for each major capital category based on historic spending patterns and projected levels of new work (see Financial Plan section). Once a specific project is identified that relates to a particular reserve, that project is given its own unique code and the reserve is reduced accordingly. Budget and Financial Plan Approval and Amendments The Board generally approves two resolutions prior to the start of each new fiscal year (see APX.1). The Board approves Operating Expense, Capital, and Debt Service budgets in one resolution. The Board approves a Twenty-Year Financial Plan in the second resolution. Any major change to the Financial Plan that occurs outside of the normal approval schedule requires a Financial Plan Amendment. A major change is defined as an increase of $1 million for capital programs and $500,000 per year for operating programs (see APX.2, FS-G9) and requires the affirmative vote of two-thirds of the number of appointed and qualified members of the Board. Budget Basis and Presentation of Amounts and Years DART's Annual Budget and Twenty-Year Financial Plan are presented in the same format as our audited financial statements, but do not include depreciation, amortization of Federal grants, or the interest income and interest expense from leveraged lease transactions. Each of these noncash transactions, however, is incorporated into the projected balance sheet included in APX.5. INT-12

19 Introduction/Strategic Alignment Schedules are presented and rounded to millions and/or thousands (as indicated), but are based on actual raw numbers. Consequently, certain schedules may not tie exactly or add due to rounding. In some cases, prior years' numbers have been restated to conform to the current year's format. All schedules are in fiscal years unless otherwise stated. Related Reports Several related reports are referenced in this document. Readers may wish to refer to these for a more comprehensive understanding of DART's plans and operations. These documents may be obtained from DART's Finance or Planning Departments. Transit System Plan provides detailed discussions of light rail, commuter rail, and HOV construction and service schedules, Intelligent Transportation Systems, and General Mobility commitments and time phasing. Five-Year Action Plan provides detailed discussions of DART's plan to increase bus and rail ridership through service improvements for a five-year period. Quarterly Operating and Financial Performance Reports provide updates on management's progress against financial and operating projections for the current year and provide status reports on ridership, planning, and capital projects in progress. Acronyms Exhibit APX.7 is a description of acronyms used in this report. INT-13

20 Introduction/Strategic Alignment BLANK PAGE INT-14

21 Section 2 Executive Summary Index of Exhibits Exhibit 2.1 Exhibit 2.2 Exhibit 2.3 Exhibit 2.4 Exhibit 2.5 Exhibit 2.6 Exhibit 2.7 Exhibit 2.8 DART Scorecard of Key Performance Indicators... EX-2 Fixed-Route Ridership.... EX-3 Total System Ridership All Modes. EX-4 Strategic Initiatives to Increase Ridership... EX-4 Subsidy Per Passenger Fixed-Route. EX-5 Subsidy Per Passenger All Modes... EX-6 Strategies to Improve Subsidy Per Passenger.. EX-6 Subsidy Per Passenger Comparison EX-7

22 Executive Summary Executive Summary Background Over the last few years, DART has dealt with a variety of challenges: A recession between 2000 and 2003 which resulted in: Sales tax receipts declining 17%; Declines in service area employment resulting in fixed route ridership declines of 6.1%; Rapidly increasing health care costs; Skyrocketing energy prices in the wake of instability in the Middle East and Hurricanes Katrina and Rita that wracked the Gulf Coast this summer. Through these difficult times, DART has continued to provide high quality transportation services while still moving forward with the next phase of Light Rail expansion. Business Plan Format The Agency's goals and Strategic Plan are based on satisfying the needs of three key groups: DART's customers, employees, and stakeholders (i.e., taxpayers and elected officials). The FY 2006 Business Plan ("FY 2006 Plan") has been organized in a similar format. Sections 3-7 cover DART's strategic business units or modes (bus, light rail transit, commuter rail, paratransit services, and HOV/general mobility). These sections address DART's plans to become more effective and efficient and to provide higher quality services. Section 8 addresses improvements in meeting our customers needs, internal business processes and technology, and the Agency's plans to meet its employees' and stakeholders' needs. Section 9 includes variance explanations between the FY 2006 Budget and the prior year, while Section 10 covers the FY 2006 Twenty- Year Financial Plan and affordability of long-range System Plan commitments. DART Key Performance Indicators Exhibit 2.1 is the DART Scorecard of Key Performance Indicators (KPIs). Fiscal Years 2003 and 2004 are the actual values while Fiscal Years 2005 through 2007 are the budget and projected values. FY05 Q3 is a four-quarter rolling average ending June 30, Each of these indicators is discussed in more detail in this report. EX-1

23 Executive Summary Exhibit DART Scorecard of Key Performance Indicators Strategic Priority - Agency KPI Measure FY03A FY04A FY05 Q3 FY05B FY06B FY07P Ridership Total System Fixed Route Efficiency Subsidy Per Passenger - Total System $2.69 $2.61 $2.65 $2.70 $2.84 $2.90 Fixed Route Subsidy Per Passenger $3.77 $3.72 $3.85 $3.79 $4.00 $4.02 Administrative Ratio 10.5% 10.0% 8.2% 11.0% 8.2% 8.2% Service Quality On-Time Performance - Bus 91.7% 91.8% 92.5% 92.0% 92.0% 92.0% On-Time Performance - LRT 97.4% 97.1% 97.0% 97.0% 97.0% 97.0% On-Time Performance - TRE 96.7% 98.1% 98.0% 96.0% 97.0% 97.0% Customer Satisfaction Complaints Per 100k Passengers - Fixed Route Complaints Per 100k Passengers - Bus Complaints Per 100k Passengers - Light Rail Complaints Per 100k Passengers - TRE Managed Growth Sales Tax for Operations 80.1% 69.2% 68.7% 73.1% 73.1% 69.7% EX-2

24 Executive Summary Focus on the Customer DART s First Priority The Board's first goal is to improve the quality, effectiveness, and efficiency of the system. Effectiveness is achieved by increasing ridership and the number of passengers carried for each mile operated. Efficiency is achieved by minimizing the net cost to move those passengers (i.e., subsidy per passenger). Effectiveness: Total System Ridership Projected to be 96.3 Million in FY 2006 Exhibit 2.2 illustrates the ridership projections for fixed-route service.. Fixed-route service includes bus, light rail, and commuter rail. Ridership information is based on unlinked passenger trips (i.e., each time a person boards a vehicle). Exhibit 2.2 Fixed-Route Ridership FY03A FY04A FY05B FY06P FY07P FY06 Plan FY05 Plan FY05 Q3 Bus system ridership had been trending downward since mid-year Following the September 11, 2001 terrorist attacks, ridership declined more sharply, mirroring the national and regional economies. The opening of Light Rail in the North Central and Northeast corridors between September 2001 and December 2002 also contributed to the decline as productive Express bus service was replaced with Light Rail service. As the economy continued to improve in the last year, bus ridership began to rebound. Late in the year, the sharp increase in the price of gasoline led to even more ridership gains. Bolstered by an improving economy and the opening of Victory Station in November 2004, Light Rail ridership has rebounded even faster in 2005, reaching annualized rates of 17 million passenger trips and is expected to grow higher in FY EX-3

25 Executive Summary Total system ridership (Exhibit 2.3) also includes paratransit services, vanpool, and HOV ridership. Exhibit 2.3 Total System Ridership All Modes FY03A FY04A FY05B FY06P FY07P FY06 Plan FY05 Plan FY05 Q3 Exhibit 2.4 is the section of DART's Strategic Plan that highlights the two management objectives and ten strategic initiatives related to increasing ridership. Exhibit 2.4 Strategic Initiatives to Increase Ridership Increase Effectiveness Optimize Ridership Improve Customer Satisfaction (C1.) Manage System Growth (C2.) 1. Improve service reliability 1. Market services to optimize ridership 2. Provide a customer friendly environment 2. Develop a convenient, seamless, fully 3. Provide a safe/secure service accessible multimodal system 4. Provide effective customer communication 3. Integrate new transit services 4. Optimize fare structure 5. Improve passenger amenities and facilities 6. Optimize service opportunities EX-4

26 Executive Summary Base fixed-route ridership (which excludes ridership from the openings of additional LRT line segments) is projected to increase approximately 1.3% per year over the next 10 years due to regional population growth, higher employment densities around stations, and management's focus on strategies C2.1, C2.4, and C2.5. These strategies provide for a seamless, fully accessible multimodal system, concentrated marketing efforts, and improved passenger amenities and facilities. Additionally, management will focus on strategic initiatives C1.1 through C1.4, which stress service quality that is instrumental in keeping new riders once they try the system. DART's quality improvement initiatives are discussed in the modal sections. The next phase of rail openings is expected to add another 25 million fixed-route passenger trips per year by Efficiency: Subsidy per Passenger Subsidy per passenger is defined as operating expenses less operating revenues divided by passenger trips. Exhibits 2.5 and 2.6 compare the projections for fixed-route and system-wide subsidy per passenger. Increasing health care and fuel costs were partially offset through reductions of less productive bus routes and reductions to DART s overall administrative costs, but fixed-route and overall subsidy per passenger increased modestly in The increase is more fully discussed in the modal sections. Exhibit 2.5 Subsidy per Passenger Fixed-Route $4.05 $4.00 $3.95 $3.90 $3.85 $3.80 $3.75 $3.70 $3.65 $3.60 $3.55 $4.00 $4.02 $3.85 $3.77 $3.79 $3.72 FY03A FY04A FY05 Q3 FY05B FY06P FY07P EX-5

27 Executive Summary Exhibit 2.6 Subsidy per Passenger All Modes $2.95 $2.90 $2.85 $2.80 $2.75 $2.70 $2.65 $2.60 $2.55 $2.50 $2.45 $2.90 $2.84 $2.69 $2.70 $2.65 $2.61 FY03A FY04A FY05 Q3 FY05B FY06P FY07P Exhibit 2.7 highlights the two management objectives and eleven strategic initiatives designed to improve subsidy per passenger. Management's focus over the next year will be to increase ridership, contain costs, and maximize DART s revenue sources. These strategies are discussed in more detail in the modal sections. Exhibit 2.7 Strategies to Improve Subsidy per Passenger Increase Efficiency Improve Subsidy per Passenger Manage System Growth (C2.) 1. Market services to optimize ridership 2. Develop a seamless, fully accessible multimodal system 3. Integrate new transit services 3. Manage costs Improve Efficiency (C3.) 1. Reduce unproductive service/ improve productivity 2. Improve employee productivity 4. Optimize fare structure 4. Maintain assets and improve asset management 5. Improve passenger amenities and facilities 5. Maximize resources 6. Optimize service opportunities EX-6

28 Executive Summary Exhibit 2.8 compares subsidy per passenger by mode. Related discussions may be found in the modal sections. Exhibit 2.8 Subsidy Per Passenger Comparison Mode FY03A FY04A FY05 Q3 FY05B FY06B FY07P Bus $4.01 $3.92 $4.06 $3.99 $4.22 $4.26 LRT $2.95 $2.98 $3.10 $3.29 $3.11 $3.15 TRE $5.53 $5.49 $6.09 $6.60 $7.31 $7.51 Total Fixed Route $3.77 $3.72 $3.85 $3.79 $4.00 $4.02 HOV $0.16 $0.16 $0.13 $0.15 $0.16 $0.20 Paratransit $40.76 $42.14 $41.44 $45.65 $47.49 $48.92 Vanpool $1.07 $0.78 $0.74 $0.59 $0.20 $0.26 Total System $2.69 $2.61 $2.65 $2.70 $2.84 $2.90 EX-7

29 Executive Summary BLANK PAGE EX-8

30 Section 3 Customer Focus Bus Index of Exhibits Exhibit 3.1 Exhibit 3.2 Exhibit 3.3 Exhibit 3.4 Exhibit 3.5 Exhibit 3.6 Bus Scorecard-Key Performance Indicators... BUS-1 DART Service Area Employment BUS-2 Bus Ridership.. BUS-3 DART Bus Ridership and Texas Gasoline Prices... BUS-3 Eight-Year Bus Replacement Schedule BUS-7 Bus Subsidy Per Passenger..... BUS-7 Exhibit 3.7 FY 2006 Bus Cost Model.... BUS-9 Exhibit 3.8 FY 2006 DART Bus Transportation Cost Model-Bus Operations Only. BUS-10

31 Customer Focus Bus Customer Focus - Bus Overview This section examines DART's strategic initiatives to improve the quality, efficiency, and effectiveness of the bus system. Each initiative is linked to the Strategic Plan (Exhibit 1.5). A more detailed description of long-term strategies for improving bus service is contained in DART s Five Year Action Plan (Action Plan). DART continues to operate all fixed-route service out of four DART-owned facilities: East Dallas, Northwest, Oak Cliff, and South Oak Cliff. DART operates a total of 687 buses and maintains a contingency fleet of 57 buses. In addition to buses, DART maintains an extensive bus and rail passenger amenity and facility infrastructure including: 11,961 bus stops, 450 bus shelters, 1,042 benches, 15 transit centers, 2 passenger transfer locations, 19 enhanced shelters, 35 rail platforms, 5 commuter rail stations, 97 information pylons, and all operating divisions, for a total of approximately 29 million square feet. Bus Scorecard Key Performance Indicators Exhibit 3.1 highlights the Bus Key Performance Indicators (KPIs) presented in scorecard format. Fiscal years 2003 through 2004 indicate actual values, while figures for fiscal years 2005 through 2007 represent the budget and projected values. Fiscal Year 2005 quarter 3 is a fourquarter rolling average ending June 30, Exhibit 3.1 Bus Scorecard - Key Performance Indicators Indicators FY03A FY04A QTR 3 FY05 FY05B FY06B FY07P Customer/Quality Indicators Fixed Route Bus Ridership (M) Charter Ridership (M) Revenue Miles (M) Passengers per Mile Complaints per 100k passengers On Time Performance 91.7% 91.8% 92.5% 92.0% 92.0% 92.0% Mean Distance Between Service Calls 4,221 4,566 4,460 4,400 4,400 4,400 Veh. Accidents Per 100k Miles (All Service) Financial/Efficiency Indicators Revenues (M) $28.3 $26.6 $24.5 $28.6 $28.6 $29.1 Expenses - Fully Allocated (M) $189.8 $177.2 $183.6 $185.9 $196.0 $200.5 Net Subsidy (M) $161.6 $150.6 $159.1 $157.3 $167.4 $171.4 Subsidy Per Passenger $4.01 $3.92 $4.06 $3.99 $4.22 $4.26 Cost per Revenue Mile $6.22 $6.29 $6.56 $6.64 $7.17 $7.33 Pay-to-Platform Ratio - Dollars $1.38 $1.38 BUS-1

32 Customer Focus Bus Bus Ridership Trends Bus system ridership trended downward between mid-year 2001 and January Much of this trend was attributable to the economic downturn that began in 2001 and continued through Other contributing factors included changing customer travel patterns, ridership response to service and fare changes as well as customer perceptions of service quality. Consistent increases in bus ridership began in January 2005 and have continued throughout the balance of FY 2005, with strong growth in the final months of the fiscal year. This upward trend was attributed to highly volatile gas prices, coupled with DART s five-year, cross-departmental ridership development program. Economic Climate: Employment trends also significantly impact transit ridership because an average of 73% of all trips are taken for work commute purposes. Employment levels decreased most significantly after September 2001 and remained at lower levels into early 2003, as seen on Exhibit 3.2. Area employment levels have been slowly improving since early Employment at the end of the third quarter of FY 2005 was slightly above the FY 2001 level. Employment levels in the City of Dallas are above the FY 2001 level while suburban employment continues to lag behind FY 2001 levels. Exhibit 3.2 provides a look at Dallas area employment trends since January Exhibit 3.2 DART Service Area Employment January July % 96.0% 95.0% 94.0% 93.0% 92.0% 91.0% FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 BUS-2

33 Customer Focus Bus Exhibit 3.3 shows the trend in bus ridership (including special events) over a similar period to the employment levels in our service area shown in Exhibit Exhibit 3.3 Bus Ridership Millions FY03A FY04A FY05B FY06P FY07P FY06 Plan FY05 Plan FY05 Q3 Gasoline price levels began to significantly impact DART ridership in late FY As prices at the pump approached $3.00 per gallon, significant ridership increases were observed. Exhibit 3.4 provides an overview of the relationship of DART average weekday bus ridership to the average price of regular gasoline in Texas since the beginning of FY There are normally seasonal variations in ridership that account for some of the peaks and valleys in the trend line, however the correlation with the surge in gasoline prices is readily apparent. Exhibit 3.4 DART Bus Ridership and Texas Gasoline Prices - FY 2005 $3.600 $3.200 $2.800 $2.400 $2.000 $1.600 $1.200 $0.800 $0.400 $0.000 Oct 04, 2004 Oct 11, 2004 Oct 18, 2004 Oct 25, 2004 Nov 01, 2004 Nov 08, 2004 Nov 15, 2004 Nov 22, 2004 Nov 29, 2004 Dec 06, 2004 Dec 13, 2004 Dec 20, 2004 Dec 27, 2004 Jan 03, 2005 Jan 10, 2005 Jan 17, 2005 Jan 24, 2005 Jan 31, 2005 Feb 07, 2005 Feb 14, 2005 Feb 21, 2005 Feb 28, 2005 Mar 07, 2005 Mar 14, 2005 Mar 21, 2005 Mar 28, 2005 Apr 04, 2005 Apr 11, 2005 Apr 18, 2005 Apr 25, 2005 May 02, 2005 May 09, 2005 May 16, 2005 May 23, 2005 May 30, 2005 Jun 06, 2005 Jun 13, 2005 Jun 20, 2005 Jun 27, 2005 Jul 04, 2005 Jul 11, 2005 Jul 18, 2005 Jul 25, 2005 Aug 01, 2005 Aug 08, 2005 Aug 15, 2005 Aug 22, 2005 Aug 29, 2005 Sep 05, 2005 Sep 12, 2005 Sep 19, 2005 Sep 26, , , , , ,000 80,000 60,000 40,000 20,000 0 Texas Average Price Average Weekday Bus Ridership BUS-3

34 Customer Focus Bus Ridership Development Action Plan In response to the continuing downward trends in ridership that were experienced between FY 2001 and 2004, a comprehensive set of strategies was developed to focus on retaining current riders and developing new ridership. The Five-Year Action Plan includes: Service Quality/Customer Satisfaction Initiatives New Marketing and Promotion Initiatives New Equipment and Facilities Service Quality/Customer Satisfaction Initiatives There are two related efforts underway. Two customer input sources (customer satisfaction surveys and customer complaints) have been used to identify the most critical customer service issues. Cross-departmental teams have developed service quality improvement strategies and implemented an ongoing tracking process. In FY 2005 the focus was on five key areas: on-time performance, operator courtesy, security, pass-bys, and vehicle operation. Over 90% of the improvement strategies associated with these five areas were completed in FY For FY 2006 this program will focus on the two areas of customer satisfaction that research shows to be most highly correlated to the rider s decision to use transit: customer and/or potential customer perception of both on-time performance of the service and security of the system. A detailed set of strategies for improving performance in each of these areas will be developed by cross-departmental teams and then tracked through implementation. Specific and measurable objectives will be detailed at the strategy level to assure clear evaluation of the effectiveness of individual strategies as well as of the overall program. An operating division-level measurement, reporting, and improvement system has been developed and implemented throughout all four bus operating divisions, as well as the Materials Management Division, since January This initiative has provided feedback to all team members about how their division is performing on key indicators which they have some ability to impact and has increased employee ownership of organizational goals (Key Performance Indicators [KPIs]). Through the Division Level Measurement Program, scorecards tailored to each operating division are posted monthly to provide feedback on performance to front-line staff. Targeted performance levels have been established at the division level and a formal recognition program is in place. Problem-solving teams that include front-line employees, division management, and support personnel from other DART departments focus on developing and implementing strategies to improve division performance while managing incremental costs. In FY 2006, this program will be rolled out to the Maintenance Central Support Division and to the Station Monitors within the Transit Center Operations Section. BUS-4

35 Customer Focus Bus Marketing and Promotion Initiatives C1.2; C2.4) A new Route Promotion Program was initiated in FY 2005 and will be expanded and refined in FY The Route Promotion Program utilizes route performance metrics to target those routes with the most opportunities for ridership growth. Targeted routes are grouped geographically so that promotional efforts can focus on the benefits of a service network rather than a single route and provide an improved return on investment. Detailed research is conducted on each route in the route group, including riding on the route and talking with bus operators, in order to identify specific marketing opportunities. Promotional strategies are then customized based on the detail route level information. Four route groups of 5-10 routes each (20-40 routes total) will be included in the FY 2006 timeframe. The goal for route promotions is a 10% ridership increase on the targeted routes. Route promotion group 1 (including routes 8, 39, 51, and 409), Exploring Oak Lawn, Uptown, and Beyond group 2 (including routes 2, 12, 35, 50, and 409), Exploring South Dallas, Fair Park, and Beyond launched in July 2005 and concluded in September Route promotion group 3 (including routes 26, 29, 44, 63, and 409) Exploring Stemmons Corridor, Medical City, and Beyond and group 4 (including routes 37, 50, and 475) Exploring Pleasant Grove, Buckner, and Beyond, will launch in March 2006 through May After all four route groups are completed, they will be revisited and evaluated. Based on the feedback and the results of the evaluations, future route promotion groups will be identified. The branding campaign that was launched in FY05 will continue into FY06. The first quarter media buy will include television, radio, billboards, newspaper, and internet advertising. For the second, third, and fourth quarters, media for the campaign will include radio and billboard advertising. Other marketing and promotion initiatives include special event marketing. DART will copromote more than 1,000 events in FY06 including the Texas State Fair, Big 12 Basketball Tournament, and the White Rock Marathon, to name a few. A major initiative will be undertaken in FY06 to increase ridership through diversity/segment marketing to the African American, Hispanic, Asian, and Seniors markets. Elements include targeted monthly advertising to specific segments, partnering with key media on promotional opportunities, round table discussion, educational outreach, and targeted collateral/webpages in various languages. Another key marketing initiative will focus on fuel price-based marketing. Riding DART will be promoted as an alternative to paying high fuel prices, through sponsorship of traffic patrol spots on various radio stations as well as newspaper, television and billboard advertising. BUS-5

36 Customer Focus Bus New Equipment and Facilities (Strategy C2.5) Automated Vehicle Locators (AVL) System Upgrade DART is upgrading its AVL system to provide more frequent and reliable reporting of vehicle location to Central Dispatch, allowing DART to provide improved on-time service to bus riders. This upgrade will also provide location information to the newly-deployed fare collection system for more precise reporting of customer boarding locations. Park-and-Ride Enhancement A comprehensive evaluation of parking demand has been completed at all of DART s bus and rail park-and-ride facilities. Near-term and longterm strategies for addressing areas where parking demand exceeds current capacity are being developed and implemented. Strategies include improved communication to customers on locations with available parking, implementation of carpool parking spaces at park-and-ride facilities, negotiation of interim parking agreements with retail or other private property owners and identification of capital projects to purchase property and construct additional parking spaces. Completion of the Elm/Lamar Patron Plaza -. Land has been purchased, design is underway, and a $374,000 federal grant has been secured. On-Street Bus Facilities Program The on-street bus facilities program, formerly called the amenities program, includes installation of the following improvements: 187 new bench installations each year for the next five years, the majority of which will be new style metal benches with back, arm rests, and lumbar support Replacement of 250, 20-year old brown shelters with new blue standard shelters the first year and the addition of 70 new standard blue shelters each year thereafter Addition of 26 new double/modular shelters over the next five years Three additional enhanced and special design/cbd bus shelters annually at locations like Parkland Hospital and other on-street locations with over 1,000 daily boardings (an example of a special design CBD shelter is 912 Commerce, a cooperative project of Belo, DART, and McDonald s). Completion of the Elm/Lamar Patron Plaza in FY Land has been purchased, design is underway, and a $374,000 federal grant has been secured, as well as capital contributions from the City of Dallas ($50,000) and the Downtown Improvement District (DID) ($10,000), with maintenance to be shared by DART and the DID. Capital improvements associated with Bus Corridor and Bus Rapid Transit (BRT) programs BUS-6

37 Customer Focus Bus Bus Replacement Schedule (Strategy C3.4) Mechanical failures during operating hours can significantly impact on-time performance. This is measured by "Mean Distance Between Service Calls" (see Exhibit 3.1). To minimize mechanical failures, DART continually strives to maintain an average fleet age of no greater than six to seven years while attempting to balance the remaining capital program commitments. The average age of the bus fleet is six years in FY Management Strategy C3.4 (Replace assets on a timely basis) is important from both a cost and quality standpoint. Exhibit 3.5 is the current bus replacement schedule for the next eight years. Exhibit 3.5 Eight-Year Bus Replacement Schedule FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY The total active bus fleet is projected to grow slightly to approximately 707 buses to coincide with the increase in the peak pull-out requirement of 591 buses throughout the term of this Plan. In an effort to remain ready to respond to a recovering economic climate and the need for additional service prior to the delivery of new buses in FY08, DART will maintain a fleet of approximately 57 buses in a reserve fleet. This fleet, which will be maintained in a ready state, is available for deployment as additional services are warranted. Subsidy Per Passenger Exhibit 3.6 is a comparison of projected bus subsidy per passenger between the FY 2005 and FY 2006 Financial Plans. The increase in subsidy per passenger between the two plans is related to the projected increases in fuel costs, increased benefits costs, and the lower-than-projected number of bus passengers. Exhibit 3.6 Bus Subsidy Per Passenger $4.40 Dollars $4.30 $4.20 $4.10 $4.00 $3.90 $3.80 $4.01 $3.92 $4.06 $3.99 $4.22 $4.14 $4.26 $4.18 $3.70 $3.60 $3.50 FY03A FY04A FY05B FY06B FY07P FY06 FY05 FY05 Q3 BUS-7

38 Customer Focus Bus Fuel/Energy Costs Energy costs are a major cost driver in the delivery of DART services. DART continues to focus on stabilizing the cost for the different types of fuels used in delivering our services. DART has recently secured continued favorable pricing of both its liquefied natural gas and electricity through multi-year fixed-price contracts. Although the cost increase for LNG during the contract renewal was approximately 65%, DART was able to cap the potential cost increases for the next three years at a rate far lower than assumed in the Financial Plan. This concept will result in more favorable pricing and cost savings over that assumed in the Financial Plan in FY07 and FY08. DART recently executed hedging options for diesel fuel which caps our exposure to future market volatility through FY06, and will continue to monitor available options for longer term price stabilization. Service Efficiencies The FY 2006 Budget includes a $3 million reduction in bus and light rail service levels, reflecting the implementation of Board-adopted service standards. As part of the October 2005 and February 2006 service modifications, approximately 20 under-performing bus routes are being modified to either reduce resource expenditures or increase ridership levels. In addition, service efficiency is being improved through adjustments to DART s service delivery approach, including: Reductions to pull-out and pull-in deadhead times, based on GPS data Reassignment of routes by garage to reduce deadhead Increased efficiency of operator assignments through the use of Trapeze Blockbuster Restructure Bus Service Delivery A restructuring of bus service delivery to operate from three operating divisions instead of the current four divisions is being evaluated. Preliminary analysis indicates that significant savings could result from this restructuring due to reduced deadhead, improved efficiency of operator assignments, and a reduction in duplication. If the restructuring plan proceeds forward, the change would be implemented near the end of FY The fiscal impact of this restructuring would therefore principally fall into FY 2007 and beyond. DART On-Call Service (Strategy C3.1) DART On-Call service is provided in areas that do not meet service-planning, ridership, and efficiency standards for traditional fixed-route service. Use of demand response vans instead of larger buses operating on a defined schedule saves more than $2 million annually for the Agency. DART currently has nine On-Call zones in operation throughout the Service Area. The six zones currently operated by ATC under the oversight of the Paratransit Services staff are: Lakewood, North Dallas, East Plano, Farmers Branch, Richardson, Rowlett, and Glenn Heights (effective in October 2005). A Lake Highlands On-Call zone will be added in February Two additional zones are operated through agreements with rural transit providers for Collin County and Hunt County. BUS-8

39 Customer Focus Bus Activity Center Shuttles (Strategy C3.1) Shuttle services developed in partnership with employers and major activity centers are another cost-reducing way for DART to provide access to the transit network. Under the Board s Site Specific Shuttle Policy, DART provides up to 50% funding for these shuttle services with employers or major activity centers funding the majority of the service cost. DART has existing shuttle agreements with Southern Methodist University, UT Southwestern Medical Center, DFW International Airport, McKinney Avenue Trolley Authority, Texas Instruments, Medical City of Dallas, Campbell Center, and Crescent Real Estate (Galatyn Shuttle). Additional shuttle service opportunities will be pursued in FY Bus Cost Model Exhibit 3.7 is the cost model for the bus system. Transportation cost is the most significant element of the bus mode. The majority of this cost element is directly related to bus operator pay and benefits. Consequently, many of the strategies to reduce costs revolve around efficient use of bus operators. Exhibit 3.7 FY 2006 Bus Cost Model Bus $196.0 million* Transportation Vehicle Maintenance Facility Maintenance Allocated Costs Cost Drivers - Number of hours - Average hourly rate - Number of operators - Number of supervisors - Work rules - Scheduled/Unscheduled Work - Workers' compensation/benefits Cost Drivers - Number of miles - Number of vehicles - Fuel Costs - Quality Standards - Age of fleet - Timely asset replacement $87.1 million $73.9 million $7.1 million 44.4% of total cost 37.7% of total cost 3.6% of total cost *Total FY06 Bus costs, which include $16.7 million for administrative overhead allocation. Cost Drivers Cost Drivers - Facility type/age - Customer Service - Number of facilities - Marketing Services - Customers served - Retail Sales - Quality standards - Materials Management - Timely asset replacement - DART Police - Revenue Systems - Scheduling - Real Estate - Safety/Risk $27.9 million 14.2% of total cost BUS-9

40 Customer Focus Bus Exhibit 3.8 is a further refinement of the bus model for transportation only. Management closely monitors the key indicators shown in the blue boxes (shaded). The deadhead ratio (Strategy C3.1) measures the percentage of revenue miles to non-revenue miles scheduled. Scheduled miles per hour measures the average speed of the vehicle. By nature, these measures require long periods of time to adjust. Service Planning attempts to optimize these ratios with each change in service. Pay-to-platform compares the total pay hours to the hours actually operating the vehicle (i.e., "time behind the wheel" or platform time). Total pay hours include platform time, scheduled and unscheduled overtime, absences, and administrative and training time. Average pay rate is total operator pay (including overtime pay) divided by total pay hours. The benefits ratio includes all paid benefits, including workers' compensation, health, and retirement plans, but excludes paid absences (since these are already included in the pay-to-platform ratio). The overall goal is to improve efficiency. Exhibit 3.8 FY 2006 Transportation Department Cost Model Bus Operations Only Revenue Total Platform Total Pay Total Pay Total Pay Miles Miles Hours Hours Dollars w/benefits Deadhead Ratio Scheduled Miles per Hour Pay-to-Platform Ratio Average Pay Rate Benefits Ratio - Peak to base ratio - Route planning - Absences - No. of employees - Workers' comp - Facility location - Recovery time - No. of employees - Turnover - Light Duty - Route planning - Layover time - Work rules - Incentive Pay - Health Benefits - Bus type/location - HOV lanes - Avg run time - Training - Retirement Plans - Training/admin Deadhead ratio 18.5% Mph System Avg. Speed $1.38 PTP Dollars (Bus Only) 1,330 FT Operators & 30 PT Operators Avg weekday run time: 9 hours 09 mins Avg Saturday run time: 9 hours 24 mins Avg Sunday run Time: 9 hours 41 mins $17.00 Avg Pay Rate 5.4% Turnover Rate 47.2% Benefits Ratio BUS-10

41 Section 4 Customer Focus LRT Index of Exhibits Exhibit 4.1 Exhibit 4.2 Exhibit 4.3 Exhibit 4.4 Exhibit 4.5 Exhibit 4.6 Exhibit 4.7 Exhibit 4.8 LRT Scorecard-Key Performance Indicators.. LRT-1 LRT Service Map.... LRT-2 LRT Ridership LRT-3 NW and SE Corridors Map. LRT-3 LRT Revenue Service Date Comparison LRT-4 LRT Construction Schedule LRT-5 LRT Subsidy Per Passenger.... LRT-7 FY 2006 Light Rail Cost Model..... LRT-8

42 Customer Focus Light Rail Transit Customer Focus Light Rail Transit Overview The purpose of this section is to provide information on DART's strategic initiatives to improve the quality, efficiency, and effectiveness of the Light Rail Transit (LRT) system. References to DART's Strategic Plan are included throughout this section. A 1.5-mile extension from the West End Historic District to Victory Station (NW-1A) opened in November 2004, bringing the LRT system to 45 miles. DART is in various stages of planning or preliminary design for the Phase II Build-out which includes 48 additional miles of LRT, extending southeast from the Dallas Central Business District (CBD) through Deep Ellum and Fair Park to the Buckner Station; and northwest from Victory Station to Farmers Branch, Carrollton, and Irving; as well as extensions from Downtown Garland Station to Rowlett and from Ledbetter Station to I-20 in South Oak Cliff. The Agency currently is operating and maintaining 35 rail stations and a fleet of 95 vehicles. An additional 20 cars will be received and integrated into the LRV fleet in FY A map of the current LRT system is included at Exhibit 4.2. DART s Service & Inspection Facility is currently undergoing expansion to support and operate the additional fleet required for the new line sections. Construction is expected to be completed in December A new rail operating facility, located along the Northwest alignment, currently is under design to support future vehicle requirements for the Phase II build-out. LRT Scorecard Key Performance Indicators Exhibit 4.1 highlights LRT's Key Performance Indicators (KPIs) presented in scorecard format. Fiscal years 2003 through 2004 indicate actual values, while figures for fiscal years 2005 through 2007 represent the budget and projected values. Fiscal Year 2005 quarter 3 is a fourquarter rolling average ending June 30, 2005 Exhibit 4.1 Light Rail Scorecard - Key Performance Indicators Indicators FY03A FY04A QTR 3 FY05 FY05B FY06B FY07P Customer/Quality Indicators Ridership (M) Revenue Car Miles (M) Passengers per Car Mile On Time Performance 97.4% 97.1% 97.0% 97.0% 97.0% 97.0% Complaints per 100k passengers Mean Distance Between Service Calls (000s) Accidents per 100k Miles Financial/Efficiency Indicators Revenues (M) $12.4 $12.5 $10.9 $13.0 $12.9 $12.9 Expenses - Fully Allocated (M) $62.4 $61.6 $64.7 $69.6 $69.3 $70.8 Net Subsidy (M) $50.1 $49.2 $53.8 $56.6 $56.4 $57.9 Subsidy Per Passenger $2.95 $2.98 $3.10 $3.29 $3.11 $3.15 Subsidy Per Passenger Mile $0.48 $0.37 $0.41 $0.40 $0.47 $0.48 Cost per Revenue Car Mile $11.02 $12.17 $12.65 $13.26 $13.92 $14.20 Pay- to- Platform Ratio - Hours $1.43 $1.43 LRT-1

43 Customer Focus Light Rail Transit Exhibit 4.2 LRT Service Map LRT Ridership Exhibit 4.3 reflects actual and projected LRT ridership from FY 2003 through FY The significant increase in ridership in FY 2003 was related to service expansion to the north and northeast through Dallas to Garland, Richardson, and Plano. Key factors impacting LRT ridership for FY 2005 and FY 2006 include the impact of the October 2003 reduction of midday service frequency from every 15 minutes to every 20 minutes and the opening of the NW-1A line section that extended LRT service to Victory Station in November Overall, LRT ridership in FY 2005 increased by more than six percent over FY 2004 reflecting ridership increases associated with the improving economy as well as increased special event ridership. LRT ridership is expected to grow by more than 3.5 percent in FY As with bus ridership, LRT ridership has increased in late FY 2005 as a result of increased fuel prices, although the increase on the LRT system has been moderated by constraints on parking capacity and peak period seating capacity. LRT-2

44 Customer Focus Light Rail Transit Exhibit 4.3 LRT Ridership Millions FY03A FY04A FY05B FY06B FY07P FY06 Plan FY05 Plan FY05 Q3 LRT Expansion (Strategy C2.3) The next major expansion of LRT to the Northwest (NW) is planned for Dallas, Carrollton, Farmers Branch, Irving, and Southeast (SE) to Deep Ellum, Fair Park, and Pleasant Grove (see Exhibit 4.4). Exhibit 4.4 NW and SE Corridors LRT-3

45 Customer Focus Light Rail Transit Exhibit 4.5 provides a comparison of the revenue service dates for these two extensions as well as the extension of the NE line from downtown Garland to Rowlett. Ridership forecasts project approximately 60,000 combined daily riders in Year DART Rail Corridor Exhibit 4.5 LRT Revenue Service Date Comparison Corridor Length (in miles) FY05 Financial Plan Revenue Service FY06 Financial Plan Revenue Service Phase II Southeast Corridor Downtown to Pleasant Grove 10.1 Downtown to Fair Park (SE-1A) 2.7 Jun 2009 Sep 2009 Fair Park to Hatcher (SE-1B) 1.4 Jun 2009 May 2010 Hatcher to Buckner Blvd. (Pleasant Grove Transit Center) (SE-2) 6.0 Dec 2010 Dec 2010 Northwest Corridor Downtown to Carrollton 17.6 Downtown to American Airlines Center/Victory Station (NW-1A) 1.2 Nov 2004 Victory Station to Inwood Station (NW-1B) 2.8 Dec 2009 Oct 2010 Inwood Station to Northwest Highway (NW-2) 3.2 Dec 2010 Dec 2010 Northwest Highway to Valley View (Farmers Branch) (NW-3) 4.9 Dec 2010 Dec 2010 Valley View to Frankford Rd. (North Carrollton) (NW-4) 5.5 Dec 2010 Dec 2010 Northwest Corridor Northwest Hwy to DFW Airport 13.2 Northwest Hwy. To Las Colinas Urban Center (I-1) 4.7 Dec 2011 Dec 2011 Las Colinas Urban Center to State Hwy. 161 (I-2) 3.4 Dec 2012 Dec 2012 State Hwy. 161 to DFW Airport (I-3) 5.1 Dec 2013 Dec 2013 Northwest Rail Operating Facility --- Jun 2010 Jun 2010 Northeast Downtown Garland to Rowlett Park & Ride (R-1) 5.3 Dec 2012 Dec 2012 Phase III Central Business District New line through Downtown Dallas --- June 2013 Aug 2014 South Oak Cliff Loop 12 to LBJ Freeway (I-20) (SOC-3) 3.0 Oct 2018 Oct 2018 The opening dates above are predicated on assumptions that are detailed in the Financial Plan section and approval of an FFGA in early, 2006 (see Exhibit 4.6). Line sections SE-1 and NW1- B revenue service dates were impacted approximately 10 months due to delay in receiving FTA approval to enter final design. (The FY05 Business Plan assumed FTA approval to enter Final Design would be received in August Actual FTA approval was received in June 2005.) The 2nd CBD alignment was impacted by a delay in the start of planning. LRT-4

46 Customer Focus Light Rail Transit Exhibit 4.6 LRT Construction Schedule Design/ROW/Utilities Construction Revenue Service FFGA Approval FFGA Preparation SE-1 SE-2 NW-1B NW-2 NW-3 NW-4 NWROF I-1 I-2 I-3 R-1 FFGA Interim Service to Fair Park by September 2009 September 1, 2005 A number of interim improvements are being made in FY 2006 relative to LRT vehicles, facilities, and operations. Level Boarding Initiative The process of converting existing A/B light rail vehicles to super light rail vehicles (SLRV) through the addition of a low-floor middle section will be initiated in FY Design and engineering activity related to implementation of level boarding at existing and new stations will also be ongoing throughout FY Level boarding will eliminate the use of high-blocks for boarding and alighting of passengers using wheelchairs or strollers and will facilitate the operation of closer headway service along the CBD Transitway Mall that will be required for the Phase II LRT Expansion. Transit Signal Priority Study for LRT in Dallas CBD DART is working with the City of Dallas to improve LRT operations in the CBD area without significantly degrading vehicular traffic flow. DART s desire is to prevent accumulation of trains at downtown Dallas stations and have LRT travel between stations without stops. Project recommendations to improve performance of DART LRT operations are underway. Implementation of Transit Signal Priority is expected to be completed in FY LRT-5

47 Customer Focus Light Rail Transit Light Rail Vehicle Business Systems (VBS) This initiative includes outfitting the light rail vehicles with GPS, automatic passenger counters, automatic voice announcements, mobile data terminals, wireless LAN, and real-time wireless communications. The VBS will be the infrastructure for providing real-time information to customers and rail operations. Other proposed features of the system include interfaces to the Supervisory Control and Data Acquisition (SCADA) system. The first VBS implementation was in Paratransit Services vehicles in Light rail VBS is the next deployment of on-board intelligent information systems and will be accomplished as a part of the conversion of the fleet to Super Light Rail Vehicles (SLRVs). Light Rail Vehicle (LRV) Door Timing LRV door timing will be accelerated to reduce dwell times at stations and improve the overall speed and efficiency of the LRT service. This improved operational efficiency will be critical to the implementation of Phase II operations along the transitway mall. Park-and-Ride Enhancements A comprehensive evaluation of parking demand has been completed at all of DART s bus and rail park-and-ride facilities. Near-term and long-term strategies for addressing areas where parking demand exceeds current capacity are being developed and implemented. Strategies include improved communication to customers on locations with available parking, implementation of carpool parking spaces at park-and-ride facilities, negotiation of interim parking agreements with retail or other private property owners, and identification of capital projects to purchase property and construct additional parking spaces. Expansion projects have been identified at both the Bush Turnpike Station and the Parker Road Station in response to overcrowding of parking at those locations. Division Level Measurement Program A division-level measurement, reporting, and improvement system has been developed and implemented in Rail Transportation, Rail Fleet Maintenance, and Ways, Structures, and Amenities operating groups. This initiative provides feedback to all team members about how their group is performing on Key Performance Indicators (KPIs) which they have some ability to impact and has increased employee ownership of organizational goals. Transit System Plan DART s Transit System Plan is a long-range planning tool that identifies and prioritizes major capital projects needed to improve regional mobility. The Transit System Plan is closely coordinated with development of the North Central Texas Council of Government s Regional Mobility Plan. The Board of Directors adopted the current Transit System Plan in November The 1995 Plan was an update of the 1989 Plan, both of which were oriented toward a horizon year of The Plan was updated in 1997 to allow for the acceleration of the DART North Central and Northeast rail extensions and again in August 2000 following a public vote authorizing long-term financing to accelerate the Northwest and Southeast Corridor extensions. The current update effort focuses on transit needs and opportunities within the context of a 2030 horizon, and is scheduled for completion in FY The 2030 plan will include recommendations for DART's core services (bus, rail, HOV) as well as discuss issues such as land use and economic development, system accessibility, bicycle and pedestrian integration, and policies relative to DART's role in regional transit initiatives. LRT-6

48 Customer Focus Light Rail Transit LRT Costs and Subsidy Per Passenger Adjust LRT Service Schedules to Match Ridership Demand (Strategy C3.1) LRT service schedules will be modified in October 2005 to better reflect observed passenger loads. Boarding counts by time of day and day of week are utilized, together with Board-adopted passenger loading standards, to determine appropriate schedule headways and vehicle car consists to match variations in ridership demand. The October adjustments will include a reduction in the frequency of service on weekday and weekend evenings, as well as on weekend mornings. Train consists will be adjusted during midday periods, based on observed passenger loads. Develop and Refine LRT Preventive Maintenance Programs (Strategy C3.4) DART has extensive vehicle and facility preventive maintenance campaigns in place. Preventive maintenance is an essential component of a strategy which has allowed the Agency to achieve an average of 38,000 or more car miles without a failure through FY The FY 2006 Budget includes work programs for light rail vehicle (LRV) brakes, suspension systems, and pantographs. In addition, consistent with the Maintenance Department s five-year business plan, the Capital Budget includes a five-year schedule for Original Equipment Manufacturer (OEM) required rebuild and overhaul work programs for the entire LRV fleet of 115 vehicles. Develop Strategic Partnerships with Suppliers (fuel, parts, services) (Strategy C4.3) Consistent with the philosophy of stabilizing operating costs, DART continues to enjoy favorable rates for a majority of our traction power and facility electrical costs as a result of the deregulation of electrical service providers in Texas. DART was able to secure a fixed-rate cost, saving in excess of $12 million in the first three years of the program, over the comparable price-to-beat rate. DART continued this trend by entering into an Interlocal Contract during FY 2005 with the Texas General Land Office (GLO) to be the provider of our future electricity needs. The agreement with the GLO secured the best balance of price and risk for our electrical energy needs through FY Exhibit 4.7 compares subsidy per passenger for LRT for FY 2003 through FY The decreases shown from the FY 2005 Twenty-Year Financial Plan and the FY 2006 Plan were due to service resource reductions during midday, late night, and weekend time periods together with anticipated overall growth in LRT ridership Exhibit 4.7 LRT Subsidy Per Passenger $3.50 $3.25 $3.29 $3.29 $3.33 $3.00 $2.95 $2.98 $3.10 $3.11 $3.15 $2.75 FY03A FY04A FY05B FY06B FY07P FY06 Plan FY05 Plan FY05 Q3 LRT-7

49 Customer Focus Light Rail Transit Exhibit 4.8 highlights the cost structure for LRT. Although LRT and Bus have very different cost structures, the cost drivers for each cost category (transportation, vehicle maintenance, and facility maintenance) are similar. LRT is more expensive per mile due to higher fixed costs for facilities, but less expensive per passenger due to the higher capacity of LRT vehicles versus buses. On a relative basis, facility maintenance costs are more significant, while transportation costs are less significant. For example, rail facility maintenance costs represent 36.8% of the total LRT cost structure versus only 3.6% for bus. Transportation costs, on the other hand, represent only 17.6% of the total LRT cost structure versus 44.4% for bus. For a full comparison, contrast the bus cost model from Exhibit 3.6 with the LRT cost model (Exhibit 4.8). Exhibit 4.8 FY 2006 Light Rail Cost Model Light Rail $69.3 million * Transportation Vehicle Maintenance ROW & Facility Maintenance Cost Drivers Cost Drivers Cost Drivers - Number of hours - Number of miles - Facility type/age - Average hourly rate - Number of vehicles - Number of facilities - Number of operators/supv - Quality standards - Customers served - Work rules - Timely asset replacement - Quality standards - Pay-to-platform - Traction power - Miles/type of track - Unscheduled absences - Timely asset replacement - Paratransit Services $12.2 million $12.8 million $25.5 million 17.6% of total cost 18.4% of total cost 36.8% of total cost Allocated Costs Major Allocations - Customer Service - Information Technology Svcs - Retail Sales - Revenue Systems - Marketing Services - Safety/Risk Management - Materials Management - Scheduling - Operations Technology - Real Estate - DART Police and Fare Inspection $18.8 million 27.2% of total cost * Total FY 2006 LRT costs, which include $5.9 million for administrative overhead allocation. LRT-8

50 Section 5 Customer Focus Commuter Rail Index of Exhibits Exhibit 5.1 Exhibit 5.2 Exhibit 5.3 Exhibit 5.4 Exhibit 5.5 Map-TRE Corridor.. CR-1 Commuter Rail-TRE Scorecard-Key Performance Indicators... CR-2 TRE Ridership CR-3 Commuter Rail-TRE Subsidy Per Passenger.. CR-5 FY 2006 Commuter Rail-TRE Cost Model.... CR-6

51 FY 2006 Business Plan (09/28/05) Customer Focus Commuter Rail Overview Customer Focus Commuter Rail & Railroad Management The purpose of this section is to highlight the Commuter Rail & Railroad Management business plan for the next five years, including the key indicators and strategic initiatives. References to DART's Strategic Plan are included throughout this section. Passenger service is provided jointly with the Fort Worth Transportation Authority ("the T") pursuant to an Interlocal Agreement (ILA) which was restated by the two transit authorities in September The Trinity Railway Express (TRE) is operated on a rail line that was formerly owned by the Cities of Dallas and Fort Worth (the Cities) and transferred to DART and the T in December Exhibit 5.1 is a map of the TRE corridor. Pursuant to Trackage Rights Agreements, the Burlington Northern Santa Fe (BNSF) railroad, the Union Pacific (UP) railroad, and the Dallas, Garland, and Northeastern Railroad (DGNO) pay a fee for operating freight services on the corridor. DART and the T, acting as the TRE, have jointly contracted with Herzog Transit Services, Inc. (Herzog) to maintain the commuter rail rolling stock and right-of-way, provide dispatching services for the corridor, and operate the commuter rail service on the corridor. The Department s Railroad Management Division has responsibility for management of all DART-owned active freight rail lines, as well as the property management responsibilities for the TRE corridor, which includes the collection of land and signboard rental income, license fees, and trackage rights fees. The Division is also responsible for administering trackage rights agreements with freight railroads, and coordination with, and oversight of, those freight railroads that are fulfilling DART s common carrier obligations in DART-owned corridors. The Regional Rail Right-of-Way Company, a wholly-owned subsidiary of DART, holds the common carrier authority, and manages the trackage rights agreements for the DART-owned active freight rail corridors. The Division undertakes management of the trackage rights agreements, and collects the associated fees for these corridors on behalf of the Regional Rail Right-of-Way Company. Exhibit 5.1 Trinity Railway Express Corridor CR-1

52 FY 2006 Business Plan (09/28/05) Customer Focus Commuter Rail Commuter Rail Infrastructure The TRE operates between downtown Dallas and downtown Fort Worth, a distance of 34 miles, with a total of 10 stations, 5 of which are maintained by DART. The vehicle fleet consists of 13 rail diesel cars, 6 locomotives, 10 coaches, and 7 bilevel cab cars. Commuter Rail TRE Scorecard Key Performance Indicators Exhibit 5.2 highlights Commuter Rail TRE s Key Performance Indicators (KPIs) presented in scorecard format. Fiscal years 2003 and 2004 indicate the actual values, while figures for fiscal years 2005 through 2007 represent the budget and projected values. Fiscal Year 2005 quarter 3 is a four-quarter rolling average ending June 30, To more accurately depict the true operating costs of TRE, the FY 2005 column includes all budgeted revenue and expenses for DART and the T. The TRE Revenues line includes the T s passenger revenues allocated to the TRE; and the TRE Expenses line includes all direct and indirect costs allocated to TRE including the T s allocated costs of $1.1 million. By including all revenues and expenses, the information presented will provide the reader with data comparable to all other modes. Currently, ridership is collected and reported for the TRE system; therefore, KPIs associated with ridership will be calculated as TRE totals and not only DART s totals. The decrease in revenues projected in FY 2006 from FY 2005 is due to the elimination of capital payments from BNSF in FY 2005 as per the trackage rights agreement, and the identification of TRE Corridor rental income only, as opposed to prior years when all rental income generated by the department was shown. Exhibit 5.2 Commuter Rail - TRE Scorecard Systemwide - Key Performance Indicators Indicators FY03A FY04A QTR 3 FY05 FY05B FY06B FY07P Customer/Quality Indicators Ridership (M) Revenue Car Miles (M) Passengers per Car Mile Scheduled Train Hours (000's) On Time Performance 96.7% 98.1% 98.0% 96.0% 97.0% 97.0% Complaints per 100k passengers Veh. Accidents Per 100k Miles Financial/Efficiency Indicators TRE Revenues (M)* $4.9 $5.7 $5.1 $6.0 $4.9 $5.0 TRE Expenses Fully Allocated (M)** $17.8 $17.9 $18.0 $20.1 $ $22.4 TRE Net Subsidy (M) $13.0 $12.2 $12.9 $14.1 $16.7 $17.5 TRE Subsidy Per Passenger $5.53 $5.49 $6.09 $6.60 $7.31 $7.51 TRE Subsidy Per Passenger Mile $0.34 $0.36 $0.41 $0.42 $0.43 TRE Cost per Revenue Car Mile $11.45 $13.77 $13.24 $14.38 $12.70 $13.19 *includes the T's passenger revenues starting in FY05 ** includes the T's expenses starting in FY05 CR-2

53 FY 2006 Business Plan (09/28/05) Customer Focus Commuter Rail TRE Ridership Exhibit 5.3 reflects actual and projected TRE ridership from FY 2003 through FY Exhibit 5.3 TRE Ridership Millions FY03A FY04A FY05B FY06B FY07P FY06 Plan FY05 Plan FY05 Q3 TRE ridership has continued to grow due to excellent service quality with a special focus on the customer. Ridership has grown steadily since the opening of TRE service in 1996, reaching peaks of more than 8,000 passengers per weekday and 5,000 passengers on Saturdays in FY Service cuts for cost containment and special event reductions over the last two years resulted in declines to approximately 7,500 passengers per weekday and 3,000 passengers on Saturday in the third quarter of FY The FY 2005 and FY 2006 budgets have incrementally added service, particularly on the Tarrant County side of the corridor. The ridership indicator in Exhibit 5.3 reflects these service changes and the impact on ridership in FY 2005 due to the cancellation of the National Hockey League (NHL) season in late 2004 and early Average weekday ridership (excluding special events) has been trending upward in 2005, and ridership is expected to be bolstered by the return of the NHL. TRE currently operates Monday through Saturday from Fort Worth s Texas & Pacific (T&P) Station to Dallas' Union Station with seven intermediate stops. TRE also serves an additional special-events station (Victory Station) jointly with DART s Light Rail at the American Airlines Center in Dallas. Service at this location is on event-days only, and results in ridership increases of approximately 1,000 passengers per event-day. Operating efficiencies and acceptable longterm performance will come with the development of a true bi-directional commuter rail service (both Dallas and Fort Worth as destinations), which includes access to the mid-cities market and adequate service to DFW International Airport, commensurate with service requirements of airport users and employees. CR-3

54 FY 2006 Business Plan (09/28/05) Customer Focus Commuter Rail Weekend Service (Strategy C1.1) A limited-schedule Saturday service operates between Dallas and Fort Worth. Sunday service cannot be implemented until more double tracking is added. The majority of these double-tracking projects are not in the Financial Plan as the costs will be incurred by the T. Sundays are currently utilized for required maintenance activities within the right-of-way. Ensure Service Quality with Fort Worth Service Expansion (Strategies 1.3; C3.4) With the expansion to Fort Worth, the number of railroad on-line "meets" has increased dramatically and presents a much greater challenge to maintain on-time service. TRE attained on-time performance of 98.1% in FY 2004 and has attained an on-time performance of 96.0% as of the third quarter of FY 2005, in spite of heavy construction on the corridor. TRE has generated an enthusiastic and loyal ridership base. This has been accomplished with the current 49-train weekday and 22-train Saturday schedule and despite the 15 to 20 freight train movements per day. Careful coordination with the freight railroads and the dispatching skills of our contractor have made this possible despite a predominantly single-track railroad. In FY 2005 through FY 2007, on-time performance is targeted at 97% due to heavy construction activities on the corridor. Constant monitoring of the track and signal systems is the first step to ensure safe and continued operation of a railroad; but eventually, more sidings and double tracking will be required to maintain service reliability and support any service expansion. The major capital projects proposed over the next few years for track upgrades, and other items necessary to maintain and improve service quality on the east side of the TRE are listed in the Financial Plan section. Continued service reliability and expansion capability will require similar or greater investments in Tarrant County. Reserves have been established to provide for projects that have not been specifically identified at this time. These reserves will ensure the timely replacement of TRE assets as well as allow for a certain amount of unexpected future capital requirements. In early FY 2006, a TRE Strategic Plan will be completed with significant policy input from the DART and T Boards as well as appropriate DART, T, and TRE staff members. Once completed and approved, this plan will provide the base-line plan for the current service as well as how to address growth of that service. CR-4

55 FY 2006 Business Plan (09/28/05) Customer Focus Commuter Rail Commuter Rail TRE Costs and Subsidy Per Passenger Exhibit 5.4 provides subsidy per passenger projections. The increases shown from FY 2005 and FY 2006 are due to the increase in fuel prices and a 19% decrease in revenues due to contract agreements along the corridor. Exhibit 5.4 TRE Subsidy Per Passenger Dollars $9.00 $8.50 $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 $7.31 $7.51 $6.60 $6.32 $6.48 $5.49 $6.09 $5.53 FY03A FY04A FY05B FY06B FY07P FY06 Plan FY05 Plan FY05 Q3 TRE Fare Structure The DART and T Boards have adopted a zone fare system for TRE with base fares of $1.25 and $2.25 for one and two zones, respectively. A one-zone fare exists for rides between Downtown Dallas and West Irving or between Fort Worth and CentrePort; a twozone fare is charged for customers traveling across the zone boundary, located at the Dallas/ Tarrant County line (between CentrePort and West Irving stations). Cost-Sharing Arrangement with the T Based on Revenue Seat Miles DART s ILA with the T specifies that revenues arising from operation of the TRE commuter rail service are joint revenues and shall be applied against TRE operating costs. Net costs are allocated to DART and the T based on revenue seat miles operated in each county. For example, if the shared cost to operate TRE is $100 and TRE collects $25 in fares and $10 from other sources, the remaining $65 would be split based on the number of revenue seat miles operated in DART County and in Tarrant County. Except for employees dedicated 100% to TRE, DART and the T separately absorb their own staff, administrative, and station maintenance costs. DART s share of the subsidy in FY 2005 is approximately 48.9%. In FY 2002, the cities of Arlington, Bedford, Colleyville, Euless, Grand Prairie, Grapevine, Haltom City, Hurst, and North Richland Hills (the Mid-Cities) agreed through an ILA with the North Central Texas Council of Governments (NCTCOG) to contribute $775,000 per year for three years, which began in FY 2002, for services that their citizens utilize. None of the Mid-Cities currently belong to either DART or the T. The Mid-Cities ILA has been negotiated by the NCTCOG and approved by the boards of DART and the T, and will remain in effect until September Under this ILA, TRE realized $4.5M in additional federal capital funding. CR-5

56 FY 2006 Business Plan (09/28/05) Customer Focus Commuter Rail Increase TRE Ridership (Strategy C2.1) During FY 2003, the Boards of Directors for DART and the T approved a fare increase and TRE service reductions, as cost containment measures. Incremental, strategic increases in the service began in FY 2005, and more increases are planned for FY These improvements are aimed at recapturing the lost ridership that was experienced as a result of earlier service reductions. DART must now focus on communicating the improved levels of service. DART and the T staff, working together through the TRE Coordinating Committee, will continue to place priority on implementing cost effective joint marketing and public information campaigns to not only retain existing ridership but also to attract new riders to TRE service, as well as the connecting DART and T transit services. A key element of this effort will be marketing products that focus on re-branding TRE, and reducing or eliminating any customer confusion related to the jointly-funded/operated nature of the service. Commuter Rail and Railroad Management Department Cost Model Exhibit 5.5 is the Commuter Rail and Railroad Management Cost Model. Costs are divided between TRE, railroad management, and railroad corridor management divisions of the Department. Total revenues associated with TRE corridor management for FY 2006 are budgeted at $2.66 million and $1.1 million for the DART-owned active freight rail lines. The portion of the total corridor management revenues and property management costs associated with the TRE corridor management are factored into the Commuter Rail-TRE subsidy per passenger calculations. Total expenses below include $1.1 million of indirect costs from the T. Exhibit 5.5 FY 2006 Commuter Rail and Railroad Management Cost Model Commuter Rail $22.5 million * Trinity Railway Railroad Railroad Corridor Express (TRE) Management Management $21.6 million $0.64 million $0.22 million Contract Service & Insurance Allocated Costs DART Management Revenue Generated $1.1m Cost Drivers ** Allocations Cost Drivers Cost Drivers - Contract rates - Number of employees - Number of employees - Quality standards - DART/T rev seat miles/train hours - DART Police - ROW owned - Number of work shifts - Revenue Collection - Number of employees - Insurance requirements - Marketing and Customer service - Level of freight operations - Quality standards - Passenger Amenities $18.4 million $3.2 million $0.64 million $0.22 million 85.05% of TRE costs 14.95% of TRE costs 81.78% of total costs 14.38% of total costs 2.86% of total costs 0.98% of total costs * Total FY 2006 Commuter Rail costs, which include $1.7 million for administrative overhead allocation. ** Inherent in some of these cost drivers is compliance with FRA requirements. CR-6

57 Section 6 Customer Focus Paratransit Index of Exhibits Exhibit 6.1 Exhibit 6.2 Exhibit 6.3 Exhibit 6.4 Exhibit 6.5 Paratransit Scorecard-Key Performance Indicators PAR-1 Paratransit Ridership... PAR-2 Paratransit Passengers Per Hour-Actual. PAR-3 Paratransit Cost and Subsidy per Passenger... PAR-5 FY 2006 Paratransit Cost Model.... PAR-5

58 Customer Focus Paratransit Services Customer Focus Paratransit Services Overview Paratransit Services is responsible for providing accessible, curb-to-curb public transportation in accordance with the Board-approved Accessible Services Policy No. III.14, which complies with the Americans with Disabilities Act of 1990 (ADA). The department is responsible for planning/ scheduling, dispatching, field supervision, contract compliance, rider eligibility, outreach, travel training, and other administrative functions. Additionally, the department oversees the fixedroute Reduced Fare Program for people with disabilities and operates DART On-Call services. Service is currently contracted with ATC/Connex, which operates and maintains a total of 99 vans, 76 sedans, and 7 On-Call vans. Approximately 8,700 certified eligible riders are registered for Paratransit Services as of September 30, The purpose of this section is to explain Paratransit Services Business Plan, including strategic initiatives. References to DART's Strategic Plan are included throughout this section. Paratransit Services Scorecard Key Performance Indicators Exhibit 6.1 highlights Paratransit Services Key Performance Indicators (KPIs). Fiscal years 2003 and 2004 indicate actual values, while figures for fiscal years 2005 through 2007 represent the budget and projected values. Fiscal Year 2005 quarter 3 is a four-quarter rolling average ending June 30, Exhibit 6.1 Paratransit Scorecard - Key Performance Indicators Indicators FY03A FY04A QTR 3 FY05 FY05B FY06B FY07P Customer/Quality Indicators Actual Ridership (000s) Scheduled Ridership (000s) Revenue Hours (000s) Paratransit Passengers per Hour - Scheduled Paratransit Passengers per Hour - Actual On-Time Performance 88.1% 87.5% 89.0% 86.0% 86.0% 86.0% Accidents per 100K n/a Percentage of Trips Completed 100.0% 100.0% 100.0% 98.0% 98.0% 98.0% Passenger Canceled Trips Ratio 12.7% 10.5% 9.5% 13.0% 12.0% 12.0% Passenger No Shows Ratio 3.7% 3.3% 3.2% 4.0% 4.0% 4.0% Service Level - Scheduling (3 minutes) 95% 95% 95.8% 92.0% 93% 93.0% Service Level - Where's My Ride (2 minutes) 93% 92% 95.8% 91.0% 92% 92.0% Complaints per 1k Passengers Certified Riders 7,170 7,680 8,405 7,600 8,700 8,700 Financial/Efficiency Indicators Revenues (M) $1.1 $1.4 $1.5 $1.4 $1.6 $1.6 Expenses - Fully Allocated (M) $24.6 $26.3 $26.9 $28.1 $31.0 $32.3 Net Subsidy (M) $23.5 $24.8 $25.4 $26.7 $29.5 $30.7 Subsidy Per Passenger $40.76 $42.14 $41.44 $45.65 $47.49 $48.92 PAR-1

59 Customer Focus Paratransit Services Scheduling/Control Center Service Levels (Strategy C1.1) The KPIs for the Scheduling and Control Center functions are referred to as call service levels the percentage of calls handled (answered or abandoned) within an established time period. The FY 2006 targets for call service levels are projected to be higher than FY 2005 targets. The Paratransit Access Advisory Group, the Board-appointed paratransit customer focus group, helped DART establish these targets. Setting standards helps management to meet service level requirements. X-Press Booking (XPB), an automated scheduling feature, is regularly marketed to eligible customers. The Scheduling Center is not open on holidays and weekends. Riders wishing to schedule trips when the Scheduling Center is closed may still do so by using either XPB or an automated voic system, which is available from 8:00 a.m. to 5:00 p.m. on Saturdays and Sundays. Our clients have responded positively to the system, find it quick and easy to use, and appreciate the absence of hold times. Paratransit Ridership In accordance with the spirit and intent of the ADA, and due to the high cost of demand responsive service, DART continues to work with patrons to transfer as many riders as possible who can use bus and/or rail service from Paratransit to fixed-route service. More details on transitioning riders can be found under Paratransit Eligibility and Travel Training Program on Page PAR-3. FY 2005 ridership exceeded budget by approximately 8.6%. Additional vehicle capacity to handle this increase was unavailable, and service denials began to occur on May 31, Exhibit 6.2 compares actual and projected ridership from FY 2003 through FY Exhibit 6.2 Paratransit Ridership Thousands FY03A FY04A FY05B FY06B FY07P FY06 Plan FY05 Plan FY05 Q3 PAR-2

60 Customer Focus Paratransit Services Paratransit Eligibility and Travel Training Program (Strategy C2.2) The current eligibility program, initiated in July 1999, requires paratransit applicants to be certified in person rather than by mail. As a result, the number of registered Paratransit riders dropped from more than 18,000 to currently 8,700 a 48.3% decrease. The eligibility process is critical in that it determines whether a person is eligible, in whole or in part, to take trips on the more costly Paratransit mode in lieu of less costly fixed-route services. Assessments are conducted on actual buses and trains instead of in a controlled environment. Funding for contract services for a Certified Orientation & Mobility Specialist has been included in FY 2006 to assess and travel-train persons who are blind or have visual impairments. Currently, these individuals are being deemed unconditionally eligible to use Paratransit services because existing staff does not have the expertise to make these determinations. The eligibility assessment and travel training functions were combined two years ago due to budget constraints. The primary focus of this staff of four is to conduct eligibility assessments. Travel training enables DART to train and transition individuals from Paratransit to less costly fixed-route service; however, time available for travel training is limited. For a client to transition to fixed-route services, staff must perform route checks to ensure there are no environmental barriers that would impede the client s travel. As of September 30, 2005, approximately 1,352 trips normally provided by Paratransit Services were transitioned to fixedroute service. This equates to approximately $50,100 in cost avoidance. Paratransit's Productivity Productivity (Strategy C3.1) Passengers per hour is one method of measuring Paratransit s efficiency. Exhibit 6.3 provides the actual and projected paratransit passengers per hour for FY 2003 through FY Compliance with the ADA s zero denial mandate impacts Paratransit s efficiency and lowers its productivity. The improvement shown in productivity is due to a more efficient service; however, we are encountering vehicle capacity issues, and clients are riding for longer periods of time. An additional 20,000 hours has been included in the FY 2006 Budget to shorten rides for passengers. Paratransit s Trapeze scheduling system is designed to schedule trips as efficiently as possible. The automated system is currently being manipulated to accommodate the increase in ridership. Exhibit 6.3 Paratransit Passengers Per Hour - Actual FY03A FY04A FY05B FY06B FY07P FY06 Plan FY05 Plan Qtr 3 PAR-3

61 Customer Focus Paratransit Services Manage No-Shows and Cancellations (Strategy C3.1) DART s second challenge for improving efficiency concerns cancellations and no-shows. As of September 30, 2005, DART scheduled 1.8 passengers per hour; after cancellations and no-shows were factored in, productivity levels dropped to DART has strictly enforced the No-Show Policy since 2005, resulting in the no-show rate dropping from 5.2% to 3.2% as of September After the most recent cancellation policy went into effect in September 2003, the cancellation rate has continued to drop from 12.6% to 9.2% as of September Management estimates the KPI ratio for No- Shows will remain in the 4% range, and the KPI ratio for cancellations will remain in the 10% range, which is consistent throughout the transit industry. Vehicle Business System (Strategy C4.1) A Vehicle Business System (VBS) is installed in all Paratransit vehicles. The wireless communication system allows better utilization of revenue vehicles. An approved capital project allows for an automatic call-out feature enhancement to the system. If the rider is not waiting at the pick-up location, an automated call will be made to alert the rider that their vehicle has arrived. The vehicle will then wait no more than five minutes. This feature will help reduce no-shows and dwell time of the vehicles, further improving productivity and on-time performance. Purchased Transportation Contract A purchased transportation contract with ATC/Connex was implemented in January Thanks to a close partnership between DART and the contractor, the quality of service improved for paratransit riders. Having learned lessons from previous contracts, management addressed prior deficiencies by placing the proper controls into this contract. Improvements included a minimum hourly wage rate for operators and higher disincentives for non-performance. Additionally, DART staff has daily oversight at the contractor s facility, which ensures that all contractual obligations are being met. The base term of the current contract ends on December 31, 2005, with the provision for two, one-year options. The first one-year option was approved by the Board of Directors and will be exercised in Additionally, management will seek a five-month extension through May 31, 2007, to allow ample time for the successful bidder on a new contract solicitation to purchase vehicles and prepare to assume Paratransit Services contract operations. It is anticipated that fixed-route operations will be moved from the Oak Cliff Facility in late FY 2006 to achieve cost savings by operating out of three garages. DART On-Call is provided through the ATC/Connex contract. There are currently eight DART On-Call zones in operation throughout the Service Area and a ninth will be added to the Lake Highlands area as part of the February 2006 Service Change. Seven zones are operated by ATC/Connex. Two additional zones are operated through agreements with rural transit providers for Collin County and Hunt County. See the Bus Section for more detail on this service. PAR-4

62 Customer Focus Paratransit Services Paratransit Costs and Subsidy Per Passenger Exhibit 6.4 compares paratransit cost and net subsidy actual results for FY 2003 and FY 2004 with budget and projections through FY Due to rising contract rates and fuel costs, the subsidy per passenger is projected to continue to increase during FY 2006 and FY Exhibit 6.4 Paratransit Cost & Subsidy per Passenger Millions $35.0 $30.0 $25.0 $20.0 $15.0 $10.0 $5.0 $0.0 FY03A FY04A FY05B FY06B FY07P $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 Dollars Total Costs Net Subsidy Subsidy per Passenger Paratransit Cost Model Exhibit 6.5 is the Paratransit Cost Model. Exhibit 6.5 FY 2006 Paratransit Cost Model Paratransit $31.0 million* Contract In House Allocated Service Costs Costs Cost Drivers Cost Drivers Allocations - Passenger demand - Oversight and Administration - Customer Service - Service effectiveness of contract - Retail Sales (passengers per hour) - Number of employees - Operations Technology Support - Contract rate per hour - Certification program - Information Technology Support - Quality standards - Dispatching - DART Police Support - Fleet age - Scheduling - Technical Services - Vehicle requirements - Non-revenue vehicle Services $25.0 million $3.6 million $2.4 million 80.6% of total cost 11.7% of total cost 7.7% of total cost * Total FY06 Paratransit costs, which include $2.7 million for administrative overhead allocation. PAR-5

63 Customer Focus Paratransit Services BLANK PAGE PAR-6

64 Section 7 HOV and General Mobility Index of Exhibits Exhibit 7.1 Exhibit 7.2 Exhibit 7.3 Exhibit 7.4 Exhibit 7.5 Exhibit 7.6 Exhibit 7.7 HOV-Scorecard-Key Performance Indicators HOV-2 Interim/Immediate Action HOV Projects HOV-2 Map-Interim/Immediate HOV Lanes HOV-3 Map-Permanent HOV Lanes... HOV-5 General Mobility Scorecard-Key Performance Indicators. HOV-8 General Mobility-Road Improvement Programs.... HOV-9 Projected LAP/CMS Program. HOV-9

65 Customer Focus HOV and General Mobility Customer Focus - HOV Overview The purpose of this section is to discuss business performance expectations and major initiatives for DART's High Occupancy Vehicle (HOV) Transitway services. References to DART's Strategic Plan are included throughout this section. DART s Transit System Plan calls for an HOV Transitway program that includes five Interim or Immediate Action Transitways, as well as more than 110 miles of Permanent HOV Transitways. The Board-approved HOV Transitway Policy guides the program s development by establishing funding commitment and the necessary framework to advance the projects with regards to development, construction, operations, enforcement, and maintenance. Currently, DART operates, enforces, and maintains four Interim/Immediate facilities totaling 31.1 miles of HOV lanes. The East R.L. Thornton (I-30) contraflow HOV lane utilizes movable barriers and operates during weekday peak periods from 6 a.m. to 9 a.m. and 3:30 p.m. to 7 p.m. The Stemmons (I-35E), LBJ (I-635), and Marvin D. Love (US 67) concurrent flow HOV lanes are buffer-separated facilities that are open 24-hours a day in both directions. DART also operates reversible HOV lanes along South R.L. Thornton (I-35E)/Marvin D. Love (US 67) from 6 a.m. to 10 a.m. and 2:30 p.m. to 7 p.m., and at the Stemmons/LBJ interchange (the S-Ramp) with operating hours similar to the I-30 facility. Changes to operating hours of the HOV lanes to match travel and ridership patterns are implemented as needed. A map of DART's Interim/Immediate HOV network is included at Exhibit 7.3. Interim HOV projects are funded by the Texas Department of Transportation (TxDOT), DART, the Federal Transit Administration (FTA), and the Federal Highway Administration (FHWA) Congestion Mitigation/Air Quality (CMAQ) Program, which is administered by the Regional Transportation Council (RTC) of the North Central Texas Council of Governments (NCTCOG). All facilities are jointly planned and designed by DART and TxDOT, and each agency contributes 16.7% of the construction cost. Federal funds provide the remaining 66.6%. Once the facilities are built, DART is responsible for 100% of the operation, enforcement, and management of the HOV lanes, while maintenance is the joint responsibility of DART and TxDOT. DART is responsible for sweeping and striping the lanes, and TxDOT is responsible for roadway maintenance (repairing potholes, etc.). In response to increasing air-quality concerns in the region, plans to extend the operating limits of the existing I-635 and I-30 HOV lanes are in various stages of development. Also, design activities for the region s first managed lane facility along I-30 (west of Downtown Dallas) are underway. All of these projects are scheduled to be implemented by November 15, HOV-1

66 Customer Focus HOV and General Mobility HOV Scorecard Key Performance Indicators Exhibit 7.1 highlights HOV Key Performance Indicators (KPIs) presented in scorecard format. Fiscal Years 2003 and 2004 indicate the actual values, while figures for Fiscal Years 2005 through 2007 represent the budget and projected values. Fiscal year 2005 quarter 3 is a fourquarter rolling average ending June 30, Exhibit 7.1 HOV Scorecard - Key Performance Indicators Indicators FY03A FY04A QTR 3 FY05 FY05B FY06B FY07P Customer/Quality Indicators Ridership (M) Avg. Weekday Ridership (000s) Lane Availability 100.0% 98.0% 98.0% 98.0% Operating Speed Ratio Financial/Efficiency Indicators Expenses - Fully Allocated (M) $5.4 $5.7 $4.9 $5.4 $5.8 $7.1 Subsidy Per Passenger $0.16 $0.16 $0.13 $0.15 $0.16 $0.20 HOV Projects Exhibit 7.2 highlights major capital project budgets for the Interim/Immediate HOV Projects. A more detailed description of these projects follows the exhibit. Exhibit 7.3 is a map of the Interim/Immediate HOV lanes. Exhibit 7.2 Interim/Immediate Action HOV Projects (In Millions) HOV FY05 FY06 FY07 FY08 FY09 5-Yr Total East RL Thornton Extension $0.4 $0.0 $0.0 $0.0 $0.0 $0.4 Stemmons Central (Immediate) SH I-635 HOV West I-635 HOV East I-30 HOV Extension East to I IH 635 (LBJ) IH30 (Turnpike) HOV Maintenance Reserve Police Motorcycle Replacements HOV Stemmons Reversible Gates TOTAL HOV $13.3 $18.2 $17.3 $7.1 $7.3 $63.2 NOTE: These costs include DART s portion of the funding for these projects. HOV-2

67 Customer Focus HOV and General Mobility Exhibit 7.3 North Central (Interim/Immediate) HOV lane A concurrent-flow HOV lane facility is being advanced along this corridor from I-635 to Exchange Parkway in Allen. The facility will have delineator posts in the buffer zone between the two white lines to separate HOV lane traffic from the main lane users. Project schematics and Environmental Assessment (EA) documents have been approved and design activities are underway. Access and egress locations will be at both ends of the facility as well as around Park Boulevard and Campbell Road. During the operations phase, NCTCOG will reimburse DART for monies spent outside the DART Service Area. Transit Partnership Program (Strategies S1.6; S1.8) As part of the Transit Partnership Program offered by the NCTCOG, studies were conducted to identify potential locations for additional and/or expanded interim/immediate action HOV lanes. This program was initiated to help the region meet federal air-quality standards by November 15, Several potential candidate projects have been identified, and their feasibility is being evaluated. HOV-3

68 Customer Focus HOV and General Mobility I-635 Western Extension: The existing eastbound entrance to the HOV lane will be moved closer to Belt Line Road providing approximately two additional miles of HOV lane for commuters. I-635 Eastern Extension: The eastern end of the I-635 facility will be extended for another nine miles to I-30. The extended section will be a reversible lane facility. I-30 Eastern Extension: The limits of the I-30 facility will be extended another five miles to I-635. Like the current facility, the extension will be a contraflow facility. Regional Value Pricing (Strategy 1.6) A regional value or Congestion Pricing study was completed to evaluate the feasibility of charging single-occupant vehicles to use the existing and future HOV lanes throughout the region. This federally-funded project was led by the NCTCOG, and DART and TxDOT are among the project partners. Federal rules mandate that a study of this type be conducted prior to testing and/or implementation. The study was completed during FY 2005 and an application to implement the concept in the selected corridor was advanced to the FHWA for funding. The application was approved and the I-30 (turnpike) corridor will be the region s first Managed Lane project. Permanent HOV Transitways DART's Transit System Plan calls for 110 miles of permanent HOV transitways. DART's share of the construction costs of these facilities is 10%. A map of the permanent HOV projects is included at Exhibit 7.4. Per the Board-approved HOV Transitway Policy and consistent with the Metropolitan Transportation Plan by NCTCOG, all Permanent HOV Transitways will be evaluated for Congestion Pricing. HOV-4

69 Customer Focus HOV and General Mobility Exhibit 7.4 Notice of Board Commitment The Board s current HOV Policy commits DART to fund up to 100% of the construction cost of the permanent LBJ, Stemmons, and North Central Expressway HOV transitways, if Federal funding is not available. This funding is not included in the FY 2006 Twenty-Year Financial Plan. If DART is required to provide additional funding for these HOV projects, it will have a significant impact on the capital expansion and financing assumptions included in this Plan. Major Investment Studies In 2001, DART initiated a Major Investment Study (MIS) for the I- 30 Freeway Corridor east of Downtown Dallas. All mode alternatives and alignments within the corridor are being studied and evaluated to determine a Locally Preferred Investment Strategy (LPIS) for the corridor. Upon completion of the MIS, DART will begin advanced planning for elements of the LPIS. HOV-5

70 Customer Focus HOV and General Mobility The East Corridor Major Investment Study was completed in January This transportation corridor is roughly bounded by Garland Road/Santa Fe Railroad/Ferguson Road in the north, Dallas County Line in the east, Scyene Road/Military Parkway in the south, and Downtown Dallas in the west. The study s recommendations included: 1) managed and general purpose lanes for IH-30 and US 80; b) commuter rail and light rail investigation; and c) Bus Rapid Transit (BRT) on Ferguson Road. Each of these objectives is being advanced by the respective implementing agencies. Specifically, TxDOT has begun schematic design and the environmental process for managed lanes on I-30 and US 80. Project completion is expected in DART, through its 2030 Transit System Plan (TSP) effort, has conducted an initial evaluation of two potential rail corridors in the East Corridor study area: Scyene Road, as a potential light rail service, and the Union Pacific (UP) Railroad, as a potential commuter rail service. Based on the initial evaluation, the UP alternative has been screened from further evaluation during the 2030 TSP effort due to marginal ridership and poor cost-effectiveness. The Scyene Road alternative continues to be examined in the 2030 TSP effort as a potential project. DART will be advancing BRT on Ferguson Road in FY The City of Dallas, in support of that effort, has designated Ferguson Road as a BRT Corridor in its Transportation Plan and in its Vision Plan. SH 114 Permanent HOV Transitways With the completion of the Northwest Corridor Major Investment Study, DART is advancing the permanent, barrier-separated HOV lanes along SH 114 from SH 183 to the Dallas County line as identified by the Locally Preferred Alternative. Advanced planning activities including schematic designs and environmental studies will be in progress through FY The western end of the project terminus was redrawn to conform to recently identified demand volumes. Preliminary Engineering/Plan Specifications & Estimates for the remainder of SH 114 Corridor will be done during FY 2006 through FY 2009 and utilities relocation/coordination and right-of-way acquisition will follow from FY 2009 through FY The construction phase, pending funding availability, is expected to occur between FY 2012 and FY As a result of changes to Loop 12 schematics, final schematics have been developed and submitted to TxDOT in Austin. These define the limits of the Loop 12 and SH 114 interchange for early project implementation to accommodate construction of the LRT underpass. I-30 (Old Turnpike) Managed HOV Lane Development of the first Managed HOV Lanes project in Dallas is underway. The Managed HOV Lanes facility will be implemented in the median of I-30 starting from the Dallas/Tarrant County line to Downtown Dallas. This project will operate 20 hours a day, and will comprise a two-lane Managed HOV facility from the Dallas/Tarrant County line to the Westmoreland wishbone ramp. From Westmoreland to Downtown Dallas, the facility will have one reversible lane. During special events, a second Management HOV Lane will be added in the westbound direction using movable barriers. HOV-6

71 Customer Focus HOV and General Mobility High-Five Reconstruction of the I-635/US 75 Interchange (High-Five) is almost complete and all freeway elements of the interchange will open this year. The fifth level of the interchange will be a reversible HOV lane connecting the I-635 and US 75 HOV lanes and will be operational when the US 75 HOV lanes are implemented. The project includes an HOV T-ramp at TI Boulevard along with main lanes and frontage road construction. LBJ Corridor This project is a joint effort between TxDOT, DART, and other partners in the region. The LBJ Corridor project is comprised of two sections: the east section, which includes the Mesquite section (US 75 to US 80), and the west section (from US 75 to Luna Road west of I-35E). The west section includes a tunnel from west of Midway to east of Preston. This project will be designed and constructed in various phases. Target completion is FY DART will not participate in funding the Mesquite section which is outside the DART Service Area. Ensure I-30 HOV Lane Opens on Time (Strategy C1.1) In April 1997, DART privatized the operation and maintenance of the Barrier Transfer Vehicles (BTVs) that are used on the I-30 HOV Lane to ensure that the facility opens on time every day. Since privatization, the HOV lane has been open an average of at least 99% of the time. The purpose of this indicator is to determine if the facility is open as scheduled for the morning and evening operating hours. To date, we have been able to meet the set target. Operating Speed Ratio (OSR) This efficiency ratio measures the average operating speed of vehicles using the HOV lane versus the speed of vehicles on the main freeway lanes. The target has been set at 50%; that is, HOV traffic traveling an average of 1.5 times the speed of main lane traffic. To date, we have been able to exceed this target. Barrier Moving Machines Improving Quality and Efficiency DART procured two new barrier transfer vehicles in 2003 which have had a positive impact (approximately $100,000 in savings) on the operating and maintenance costs over the past two years. Stemmons HOV Gates to Improve Safety (Strategy C1.3) This $2.4 million project will fund the installation of an automatic gate system for opening and closing each of the three ramps on the Stemmons Reversible HOV Lane. Engineering schematics and EA documents for the project have been completed and approved by the Federal Highways Administration (FHWA) and TxDOT. Installation of these gates will eliminate the current procedure of manually placing pylons next to high-speed freeway traffic. This project will be 60% funded by the Federal Transit Administration (FTA) through the Fixed Guideway Modernization program. HOV Service Subsidy Per Passenger HOV is very cost-effective to DART, with a projected subsidy per passenger of $0.16 for FY 2006 and $0.20 in FY HOV-7

72 Customer Focus HOV and General Mobility Overview and Vanpool Scorecard Customer Focus - General Mobility DART's General Mobility programs include carpool matching, vanpool operations, and support for local Transportation Management Associations (TMAs). General Mobility also includes road improvement programs such as the Local Assistance Program/Congestion Management System (LAP/CMS), the Transit Principal Arterial Street System program (Transit PASS), the Transportation System Management (TSM) program, and the Intelligent Transportation Systems (ITS) program. Exhibit 7.5 highlights Vanpool Key Performance Indicators (KPIs) presented in scorecard format. Exhibit 7.5 General Mobility (Vanpool) - Key Performance Indicators Indicators FY03A FY04A QTR 3 FY05 FY05B FY06B FY07P Customer/Quality Indicators Ridership (000s) Number Of Vanpools Financial/Efficiency Indicators Revenues (M) $0.9 $0.8 $0.7 $0.9 $1.1 $1.1 Expenses - Fully Allocated (M) $1.3 $1.1 $1.0 $1.1 $1.2 $1.2 Subsidy Per Passenger $1.07 $0.78 $0.74 $0.59 $0.20 $0.26 DART currently offers 7- to 15-person vans through a third-party contractor (Enterprise Rent-a- Car DFW). This program is partially funded by the NCTCOG through a Congestion Mitigation/Air Quality grant. NCTCOG provides funding to DART that covers 40% of the total cost of operations. The vanpool customers pay an additional 50% of the total cost of operations through a flat $ per month per vanpool fare paid to DART. DART recovers approximately 90% of the total cost of operations, with the bulk of DART s expense being inkind expenditures and staffing. Management s goal is to meet or exceed 83 vans in operation by the end of FY Employers in the Metroplex have also discovered vanpools as a viable transportation alternative for their employees and are subsidizing passenger fares to help with escalating fuel costs. Management s objective is to increase the number of vanpools and the number of employers participating in the program. HOV-8

73 Customer Focus HOV and General Mobility General Mobility Road Improvement Programs The Road Improvement Programs shown in Exhibit 7.6 represent all of the Board-approved road programs with member cities and state agencies. Road improvement programs are recorded as non-operating expenses in the Budget and Twenty-Year Financial Plan because DART does not take an ownership interest in most of these mobility improvements. Exhibit 7.6 General Mobility / Road Improvement Program (In Millions) FY03A FY04A FY05B FY05 Q3 FY06B FY07P LAP/CMS $8.1 $8.7 $5.2 $5.1 $0.0 $0.0 Transit PASS TSM (includes street repair) ITS Total $9.1 $10.7 $5.8 $6.1 $2.1 $2.1 Note: For FY06 and beyond the budgeted column reflects new allocations. Actual expenditures may also include unspent program allocations from prior years. Local Assistance Program/Congestion Management System (LAP/CMS) This agreement returned 15% of DART sales taxes collected in a member city to that city until a contract was awarded for rail construction in that city. Irving was included at a 7.5% funding level because it is served by commuter rail. The program ended for all member cities in FY DART accrued the appropriate LAP/CMS amount at the beginning of each fiscal year. Cities then request LAP/CMS funds, as necessary, for projects that enhance transit. Exhibit 7.7 reflects the current LAP/CMS payable to each member city. Exhibit 7.7 Projected LAP/CMS Program (000s) Member City 09/30/05 LAP/CMS Unspent Balance Addison $1,680 Carrollton 5,517 Cockrell Hill 122 Dallas County* 52 Farmers Branch 2,452 Garland 2,792 Glenn Heights 85 Irving 13,193 Plano 645 Richardson 300 Rowlett 23 University Park* 5 TOTAL $26,866 * Balance remaining from original LAP program. HOV-9

74 Customer Focus HOV and General Mobility Transit Principal Arterial Street System (PASS) The Transit PASS program is a $115 million program originally funded by DART ($30 million), TxDOT/FHWA ($55 million), and member cities and counties ($30 million). No new money is being allocated to this program; however, approximately $1.6 million of DART's portion of this program remains unspent from prior years and will be rolled forward. Transportation System Management (TSM) Total TSM funding has been established at approximately $5.6 million over the next five years. TSM funding is available to repair streets damaged by buses and for minor enhancements such as intersection modifications, bus pads, and traffic studies/signal modifications. The Board authorized funding for the street repair component in FY Intelligent Transportation Systems (ITS) is an element of DART's Transit System Plan. It includes Smart Vehicle, Smart Traveler, and Smart Intermodal Systems. DART is working with other regional transportation providers, cities, counties, airports, and national organizations to develop a Regional Comprehensive ITS Program for the Dallas/Fort Worth Region. The program s purpose is to review and, if necessary, update the completed and in-progress ITS Plans for compliance with the ITS national architecture for interoperability and funding purposes. The program is aimed at prioritized implementation of projects to improve transportation throughout the region. It focuses on providing metropolitan areas ITS elements including: Advanced Traveler Information Systems (ATIS), Advanced Public Transportation Systems (APTS), and Advanced Traffic Management Systems (ATMS). The goal of this project is to facilitate information exchange between the various ITS systems and to create a seamless intermodal transportation infrastructure across jurisdictional boundaries. As part of the ITS program, DART continues to develop of the Vehicle Business System (i.e., Smart Vehicle). This effort will be rolled into the overall DART ITS program, but will be funded by DART and the FTA. Please refer to the Agency-Wide section for more information on this program. Regional Comprehensive ITS Program This program will include the planning, design, construction, implementation, and operation of real-time traveler and transportation system information. This will allow partners in the region to share and provide transit users with traffic information. This much needed exchange will also aid the region in dealing with major incidents. High-level design is underway for both video and data exchange between multiple agencies in the region. HOV-10

75 Customer Focus HOV and General Mobility DART ITS Plan DART s ITS Program will include Smart Vehicles, Smart Travelers, and Smart Intermodal Systems. Ongoing work for Smart Vehicles was incorporated in the DART ITS Plan, while the entire ITS effort will be coordinated with the 2030 Transit System Plan. The ITS Plan focuses on the existing transportation facilities, infrastructures, and operations of DART. It identifies the current status of ITS deployment within and outside the Agency; defines near-term ITS initiatives to meet current Agency needs; identifies system deployment costs; presents an internal ITS Architecture consistent with the National ITS Architecture; and incorporates an implementation phasing plan to guide the deployment of recommended nearterm initiatives. These initiatives also position DART as the dominant public transportation services provider to support regional ITS initiatives that involve multiple transportation providers and inter-modal initiatives. HOV-11

76 Customer Focus HOV and General Mobility BLANK PAGE HOV-12

77 Section 8 Agency-Wide Index of Exhibits Exhibit 8.1 Exhibit 8.2 Exhibit 8.3 Exhibit 8.4 Exhibit 8.5 Exhibit 8.6 Exhibit 8.7 Exhibit 8.8 Exhibit 8.9 Bus Rider Survey... AW-2 LRT Rider Survey... AW-2 TRE Rider Survey... AW-3 Strategic Initiatives to Improve Business Processes... AW-7 Scorecard-Improve Business Processes and Information... AW-7 Sales Taxes for Operations. AW-8 Administrative Ratio... AW-8 Strategic Initiatives to Increase Employee Satisfaction.. AW-11 Strategic Initiatives to Increase Stakeholder Satisfaction... AW-14

78 Agency-Wide Agency-Wide Customer, Employee, and Stakeholder Strategies Overview DART's "balanced scorecard" approach to strategic planning focuses on the three groups that the DART Board of Directors identified as key to DART s success: the customer, the employee, and the stakeholder. The strategic initiatives identified within each core group center on continuously improving processes, technology, and communication to achieve DART s goals of increasing ridership, increasing customer satisfaction, and reducing subsidy per passenger. The purpose of this section is to address Agency-wide issues and outline DART's strategies, key performance measurements, and major initiatives for the management objectives: (C4) Improve Business Processes and Information; (E1) Promote Employee Development and Alignment; and (S1) Build Relationships with Stakeholders. In 2004, the President/Executive Director made Customer and Employee Satisfaction the top two priorities for the Agency. The following addresses some of the projects and initiatives completed in FY 2005 and those planned for FY Customer Focus It is DART s goal to provide safe, secure, efficient, and effective services to our customers. DART works toward continuous improvement in these areas through the use of customer surveys, division-level scorecards, Key Performance Indicators (KPIs), station monitors, systematic review of police deployment, fare inspectors, and agency committees such as Service Planning and Customer Satisfaction. Customer surveys are conducted every six months to monitor the effectiveness of DART s programs and services. Utilize Market Research to Increase Ridership (Strategies C2.1; C4.5) A benchmark was established in April 2002 to evaluate and monitor customer satisfaction in five areas: service, operations, maintenance, communications, and safety. The latest Rider Survey was conducted in June Exhibits 8.1 (Bus), 8.2 (LRT), and 8.3 (TRE) show the results of service evaluation on a scale of 1 to 5 with 1 being least favorable and 5 being most favorable. AW-1

79 Agency-Wide Exhibit 8.1 Bus Rider Survey Response Category Scale Response Closeness of bus stop to final destination 4.08 Transit agents knowledge about the service 3.98 Closeness of bus stop to home 3.88 Cost of riding DART 3.87 Station staff s knowledge of the service 3.82 Walking time/distance to stop/stations 3.81 Drivers knowledge about the service 3.79 Number of transfers 3.73 Length of trip 3.73 Bus driver courtesy 3.65 On-time performance 3.56 Reliability of transfer connections 3.52 Availability of bicycle amenities 3.35 Frequency of buses 3.34 Cleanliness of interior of the bus 3.30 Security at Transit Centers 3.20 Availability of evening service (after 6 p.m.) 3.20 Security on the bus 3.05 Availability of benches/shelters 2.95 Security at bus stops 2.91 Exhibit 8.2 LRT Rider Survey Response Category Scale Response On-time performance 4.31 Cost of riding DART 4.27 Number of transfers 4.08 Transit agents knowledge about the service 4.00 Frequency of the train 3.98 Length of trip 3.97 Reliability of transfer connections 3.90 Walking time/distance to stop/station 3.83 Availability of bicycle amenities 3.64 Announcement of stations 3.63 Availability of seating 3.57 Cleanliness of train interior 3.44 Security on platforms 3.02 Security at Park & Rides 2.91 Security on the train 2.88 Transit police visibility on train 2.79 AW-2

80 Agency-Wide Exhibit 8.3 TRE Rider Survey Response Category Scale Response Cost of riding DART 4.42 On-time performance 4.37 Transit agents knowledge about the service 4.37 Number of transfers 4.32 Announcement of stations 4.16 Walking time/distance to stop/station 4.15 Length of trip 4.10 Cleanliness of train interior 4.09 Reliability of transfer connections 4.08 Availability of bicycle amenities 4.02 Availability of seating 3.82 Security on the train 3.54 Frequency of the train 3.32 Transit police visibility on train 3.27 Security on platforms 3.18 Security at bus stops 3.01 Security at Park & Rides 2.96 As is evident by the survey results, DART has generally done well in different areas of service. Safety and security is the area needing improvement. To further evaluate customers feedback regarding DART services, a Customer Satisfaction Survey will be conducted in FY This will allow Management to monitor these indicators and address these and other performance issues over time. Additional studies will be conducted during FY 2006 and FY 2007 to address concerns of our non-riders (Stakeholders). Provide a Safe/Secure Service (Strategy C1.3) DART Police Overview The DART Police Department, consisting of 224 positions including sworn peace officers, telecommunications personnel, support staff, and fare inspectors, provides police services for the 700-square mile service area, which traverses 13 cities and 6 counties. The police department is made up of three major divisions: Field Operations, Special Services, and Administrative Services. Police officers in Field Operations provide patrol services to DART bus stops and shelters, bus routes, transit centers, transfer centers, LRT and commuter rail stations in Dallas County, transitway mall, tunnel, bridges, HOV lanes, bus/rail operations, and maintenance and administrative facilities. This section also includes police telecommunications, fare inspection, and security guard services. Special and Administrative Services personnel provide support for records management, citation processes, internal affairs investigations, intelligence information, case filings, evidence management, facilities and equipment, hiring processes, planning and research, procurements, and special projects. AW-3

81 Agency-Wide Strategic Plan The DART Police department operates under a set of initiatives, which is updated annually to reflect new objectives and projects. These initiatives are consistent and in alignment with the Agency s vision, mission, goals, and Strategic Plan Mission Statement The mission of the DART Police is to maintain a safe and peaceful environment for DART customers and employees and to ensure the security of property. Statement of Commitment To provide safety and security for the transit community and to reduce the perception of crime, the DART Police Department will use best practices, technology, and collaborative enforcement strategies to encourage ridership on the DART system. Goals To accomplish its mission and vision, the DART Police Department has established the following goals, which are identical to DART's agency-wide goals: Increase effectiveness for the customer Increase efficiency for the customer Increase stakeholder satisfaction Increase employee satisfaction Objectives To accomplish each of the goals, the DART Police Department defined six objectives for FY 2006: 1. Enhance emergency preparedness initiatives 2. Allocate and deploy resources 3. Enhance DART Police performance 4. Improve DART Police employee morale 5. Research and develop best practices 6. Support effective external communications Key Performance Indicators DART Police will use the following metrics to measure deployment effectiveness and efficiency: Response Time to Crimes Against Persons No more than 7 minutes average response time to calls for service. Measuring officer response time assists management in monitoring responsiveness to major incidents that affect patrons perception of safety on the transit system. These statistics are gathered by measuring the elapsed time between an initial call for service and the officer s arrival time at the scene of an alleged incident. Crimes Against Persons per 100,000 Passengers by Mode Monitoring Crimes Against Persons per capita provides an overview of patron safety by detailing the frequency of crimes that occur on the DART System over each of the modes. Crimes Against Property per 100,000 Passengers by Mode Examining Crimes Against Property per capita provides an overview of the safety of our customer s property over each of the modes. AW-4

82 Agency-Wide DART Safe Work Practices Policy (Strategy E1.6) Thirteen standard operating procedures (SOP) were implemented on an Agency-wide basis as part of the DART Safe Work Practices Policy in FY Four more SOPs are being written to expand this program and should be completed in FY The DART Safe Work Practices Policy voluntarily adopts the OSHA standard as DART s minimum standard for safe work practice. A comprehensive audit of those SOPs was conducted in FY The Safety Section of the Risk Management Division (Safety) focused on the audit findings during FY 2004 and revised the SOPs in response to the audit findings. Follow-up audits covering at least 2 of the 13 original SOPs are conducted each year to measure and record improvement with respect to the findings and mitigation implementations. To further support the Safe Work Practices Policy, Safety is initiating a program to improve the investigation and enforcement process for injury accidents. The Maintenance Department will pilot the program, which will begin implementation in FY An employee safety and health program will be incorporated into the FY 2006 revision of the System Safety Program Plan. Transportation Department supervisors are an important resource for accident scene investigation and safety monitoring in the field. DART s Safety staff provides accident investigation courses to enhance field supervisory skills. Training was limited over the last two years due to budgetary constraints, but the course will be offered to all Transportation Field Supervisors during FY Safety will continue to advocate increased safety training activities for the Field Supervisory positions. Provide Customer-Driven Service Enhance Customer Satisfaction and Rider Retention (Strategies C1.4; E1.3) This Customer Service strategic initiative is a two-pronged approach to increase customer satisfaction and ridership. The two prongs are: 1) employee motivation/satisfaction; and, 2) positive customer experiences. DART s customer surveys indicate that one-quarter to one-third of customers describe themselves as new riders on the system. This proportion of new riders has seen even greater increases as a result of recent high fuel prices. Retaining these new riders is a key element of DART s strategy to build transit ridership. A customer s experience with DART service is a significant factor in successfully retaining these new riders and employee motivation/satisfaction impacts the degree to which employees can focus on creating a positive customer experience. The Division Level Measurement Program is described in the Bus and LRT sections of the Business Plan. It is targeted at increasing front-line employee ownership in the goals of the Agency, with the ultimate objective of increasing employee motivation and satisfaction. The Division Level Measurement Program also targets improvements in service quality through enhanced data analysis, communications, and problem-solving. This initiative together with the Customer Satisfaction Priorities Initiative are cornerstones of the current strategy to enhance customer satisfaction and rider retention. AW-5

83 Agency-Wide Employer Market Key to Increasing Ridership (Strategies C1.4; C2.1; C2.4) The Route Promotion Program utilizes route performance metrics to target those routes with the most opportunities for ridership growth. Targeted routes are grouped geographically so that promotional efforts can focus on the benefits of a service network rather than a single route. This provides an improved return on investment. Detailed research is conducted on each route in the route group, including riding on the route and talking with bus operators, in order to identify specific marketing opportunities. Promotional strategies are then customized based on the detail route level information. Four route groups of 5 to 10 routes each (20 to 40 routes total) will be included in the FY 2006 timeframe. The goal for route promotions is a 10% ridership increase on the targeted routes. Using Baldrige criteria to create a customer-focused culture (Strategies C4.1; E1.1) In 1996, DART embarked on a quality journey, DART s Quality in Motion, utilizing the Malcolm Baldrige criteria. The criteria are designed to help organizations enhance their performances through focus on dual, results-oriented goals: delivery of ever-improving value to customers, resulting in marketplace success; and improvement of overall organizational effectiveness and capabilities. Using these criteria, DART began to establish systematic processes for operating the Agency. In 2000, DART participated in the Texas Award for Performance Excellence process which is equivalent to the national Malcolm Baldrige Award and filed a Level III application. DART received a site visit, a privilege given only to those organizations that are strong contenders to receive the award. After receiving the feedback report from the Quality Texas Foundation, DART management prioritized some of the areas identified for improvement, established teams to address those areas, and developed and implemented processes that are consistent with the criteria. Today, DART has a customer-focused culture and uses the team-based continuous improvement philosophy and process to increase efficiencies within the organization. AW-6

84 Agency-Wide Business Processes and Technology Improving Business Processes and Information (Strategy C4.1) The Agency's vision states, "Our innovative accomplishments benchmark DART as a transportation leader." DART has worked diligently to accomplish this vision and has been recognized in the industry as a transportation leader. The commitment to performance excellence and continuous process improvement is ongoing and keeps us on track to make this vision a reality by developing efficient processes that are comparable to best practices used in the private sector. Exhibit 8.4 from DART's Strategic Plan highlights the key strategies for this management objective: Exhibit 8.4 Strategic Initiatives to Improve Business Processes Improve Business Processes and Information (C4) 1. Continuously improve business processes and supporting technology 2. Provide critical business information to employees on a timely basis 3. Assess and manage key business risks 4. Develop strategic partnerships with suppliers (fuel, parts, services) 5. Use surveys to understand customers, employees, and stakeholders needs 6. Benchmark performance inside and outside of transit Exhibit 8.5 is a scorecard of the Key Performance Indicators (KPIs) for key business processes in scorecard format. Exhibit 8.5 Scorecard - Improve Business Processes and Information Key Performance Measurements - Lagging Indicators Measurement FY03A FY04A FY05 Q3 FY05B FY06B FY07P Sales Taxes for Operations 80.1% 69.2% 68.7% 73.1% 73.1% 69.7% Administrative Ratio 10.5% 10.0% 8.2% 11.0% 8.2% 8.2% Manage the Percentage of Sales Taxes Used for Operating Expenses Sales taxes are DART s primary source of funding. The sales-tax-for-operations calculation measures the percentage of sales tax that is required to cover those operating costs not covered by other sources (i.e., operating revenues and interest income). Management strives to keep this measure as low as possible. This measure tends to fluctuate depending on the opening of new services. As new service comes online, the percentage increases, and then begins to trend downward as the growth of sales tax revenue outpaces the growth of operating expenses. The measurement was at an alltime high in FY 2003 due to the recession. As sales tax revenues began to increase in FY 2004, however, the percentage of sales taxes needed for operations began to decrease. AW-7

85 Agency-Wide Exhibit 8.6 compares the percentage of sales tax used for Fiscal Years 2003 and 2004, while figures for Fiscal Years 2005 through 2007 represent the budget and projected values. Fiscal Year 2005 quarter 3 is a four-quarter rolling average ending June 30, Exhibit 8.6 Sales Taxes for Operations 82.0% 80.0% 78.0% 76.0% 74.0% 72.0% 70.0% 68.0% 66.0% 64.0% 62.0% 80.1% 73.1% 73.1% 69.2% 69.7% 68.7% FY03A FY04A FY05 Q3 FY05B FY06B FY07P Minimize Administrative Costs Exhibit 8.7 compares the administrative ratio for the period FY 2003 to FY The administrative ratio measures administrative costs less administrative revenues (primarily advertising income) as a percentage of direct costs. As DART becomes more efficient with its administrative processes, this ratio will improve (i.e., decrease). The objective is for the percentage change in administrative costs to be smaller than the percentage change in direct costs. Due to the significant cuts to administrative costs in FY 2004, the Administrative Ratio shows dramatic improvement. The increase budgeted in FY 2005 was due to the increase in administrative positions due to control positions that were added to better serve the Agency. Exhibit 8.7 Administrative Ratio 12.0% 10.5% 10.5% 10.0% 11.0% 9.0% 8.2% 8.2% 8.2% 7.5% FY03A FY04A FY05 Q3 FY05B FY06B FY07P AW-8

86 Agency-Wide Major Technology Projects to Improve Quality and Efficiency (Strategy C4.1) Operator Swipe Card The operator swipe card initiative will change the bus and rail operators signing-in process each morning and afternoon. In the future, they will sign-in using a magnetic card which is interfaced with Trapeze. Trapeze is the Agency s integrated software application used to create routes, assign operators and vehicles to routes, calculate operator pay hours, and maintain operators vacation and sick accruals as well as other personal information. The swipe read will automatically provide the operator with his assignment including the bus number and parking location. This will significantly reduce the manual processes currently in place for both the station office supervisors and the spotter s booth personnel. It will allow the station office and spotter s booth personnel more time to focus on managing the pull-out instead of signing-in operators and issuing them their vehicle and vehicle location. It will also update Trapeze with the actual sign-in time and eliminate questions regarding late to work. This initiative is being coordinated with the employee photo ID, employee bus pass and facility access card program. Surveillance Cameras There are three surveillance camera pilot projects that are to be combined into one study. The surveillance pilot project will be implemented on 20 buses and 5 light rail vehicles and at 1 bus transit center and 1 rail station. The purpose of the pilot is to evaluate the benefits, determine the operational impact of using and maintaining surveillance equipment, and to determine which technology solution best meets DART s needs. Ticket Vending Machine (TVM) Networking Currently, over 50 TVMs, originally installed as part of DART's Light Rail Starter System are not networked and require Finance s Revenue personnel and guards to visit each machine periodically to obtain transactional data, replenish ticket stock, and remove cash. Networking will provide daily transactional data as well as service status that will be used to schedule Revenue personnel on an as needed basis. Maintenance personnel will also be provided with information regarding the type of service a machine requires and arrive prepared with the proper tools. This project is scheduled to be completed by the end of the calendar year. Transportation Uniformity Committee The purpose of this committee is to standardize and reengineer (if necessary) transit operations internal data processes within the bus and rail divisions (East Dallas, South Oak Cliff, Northwest, Oak Cliff, and S&I). The processes to be addressed in FY 2006 are: Operator Assignment, Revenue Controllers, Timekeeping, Phase 2 of Employee Administration, and Trapeze for Bus Dispatch. During FY 2005, Trapeze Operations was upgraded to version 6.0. The Uniformity Committee has addressed Phase 1 of the Employee Administration process. The yard management process as well as the Maintenance Department s Trapeze processes were reviewed. Trapeze was also evaluated for use in Transportation s Training Department. AW-9

87 Agency-Wide Computer-aided Dispatch and Records Management System (CAD/RMS) DART Police will implement a CAD/RMS which will: 1) improve dispatching resource assignment efficiency; 2) improve call data capturing and data availability; 3) increase ability to monitor and assess the entire DART Service Area; 4) provide instantaneous access to State of Texas information; 5) increase report accuracy detail including providing the ability to do criminal trend analyses; 6) decrease officer report preparation time; and 7) be the infrastructure for the next ITS deployment of on-board applications. Field Supervisor Mobile Data Terminals (MDT) Two laptop computers were installed on two bus field supervisor vehicles and two rail field supervisor vehicles in May The pilot application provides the field supervisors with real-time wireless communications as well as wireless local area network access at the East Dallas Transportation facility. It includes templates of all commonly used forms, access to DART , Trapeze, electronic Mapsco, route and schedule information, pull-in and pull-out reports, and operator information. It also includes a printer and digital camera for recording and archiving digital images of accidents. The application will continue to be enhanced and the effectiveness monitored to determine if it should be deployed throughout the system. Computing and Telecommunications Infrastructure FY 2006 will begin a period of major planning for significant changes in the computer infrastructure. Changes in computing platforms from HP Alpha servers to HP IA64 Integrity servers will be required along with changing the operating system for HP-TRU64 Unix to HP-UX to accommodate the newer Lawson Software version 8.1. This technology change is planned to take effect in late FY 2007 or early FY However, the equipment acquisition, planning for the hardware and operating system changes, plus staff training to support the newer technology, will begin during FY In February 2005, a consultant study and recommendations for disaster recovery options for DART s core network, computer, and telecommunications center was completed. Based upon the findings and recommendations, DART s Information Technology Division will plan for the implementation of the approved disaster recovery plan that will support the development of a redundant network operation center somewhere in the Service Area. Major Oracle database upgrades from version 8i to 9i will also take place to support all systems databases across all applications. Other various system upgrades and changes will take place for the Windows-based architecture servers and Novell operating systems. Web Application Development DART s Intranet, DARTnet, has proven itself to be a trusted tool for business and a valuable resource for employees. The Web Development and Business Quality employees, along with their clients, have developed several processes in FY 2005 that have assisted in reducing administrative personnel and streamlining agency-wide processes. AW-10

88 Agency-Wide Those processes include: Budget services for tracking budget changes Non-revenue vehicle requests Key processes that are to be deployed over DARTnet within the next 12 months include: Automated travel requests, advance, and reimbursement Applicant selection and hiring Automated Lost-Time Programs workflow Prepaid discounted pass sales Automated Accrual Process Recurring journal entries Performance management plan Safety efficiency testing workflow Ticket Vending Machine (TVM) 5000 file parser Conversion to FTA Standard Cost Code reporting EMPLOYEE FOCUS Satisfied Employees Contribute to Satisfied Customers Exhibit 8.8 from DART s Strategic Plan highlights the major strategic initiatives for this management objective. Exhibit 8.8 Strategic Initiatives to Increase Employee Satisfaction Increase Employee Satisfaction DART has a thriving internal environment Promote Employee Development and Alignment (E1) 1. Align Board goals, strategic plan, and employee performance 2. Support personal and professional growth & leadership through training and development 3. Compensate, reward, and recognize excellent performance 4. Demonstrate a high regard and respect for each other 5. Communicate continuously with employees 6. Promote a healthy and safe work environment and practices for all employees 7. Promote excellence through workforce diversity AW-11

89 Agency-Wide Promote Employee Development and Alignment (Strategies C4.2; E1.2) In FY 2006, DART s employee programs will focus on enhancing individual and team performance, stabilizing the total compensation process and package, improving employee communication, and prioritizing wellness as a key component of employee satisfaction. Enhancing Performance The Employee Satisfaction Committee, chartered in late 2004, will continue its focus on performance management: designing tools and systems to effectively communicate and measure individual employee performance. The division level measures will continue to be the standards for team performance in the operating units where emphasis is placed on meeting on-time performance goals and decreases in absenteeism, vehicle accidents, and customer complaints. Employees are motivated and rewarded both through the merit pay system and various awards, including, but not limited to, The President s STAR Award, Operator Efficiency Awards, and Maintenance Employee of the Quarter Awards. DART enters its third year under a formal mentoring program for employees at grade level G and below. The program provides an opportunity for employees to gain knowledge, skills and experience through informal relationships with leaders of the organization who have demonstrated abilities in the areas of interest for the protégé. Employees completing the program in 2005 rated the program high in terms of meeting protégé expectations. There are 15 participants in the program for Stabilizing Total Compensation A key element of the employee satisfaction initiative is the ability to assess the effectiveness of the Agency s total compensation package. In FY 2006, teams were established to address the three major areas of total compensation: direct compensation, health and welfare benefits, and ancillary benefits. These cross-functional teams, led by senior leaders in the organization and supported by Human Resource professionals, are responsible for recommending short-term and long-term strategies that will stabilize the total compensation process and package while balancing DART s need to accomplish its Mission. Employees will have the opportunity to influence these recommendations through feedback at town-hall style meetings and through the completion of employee surveys. Improving Employee Communication A continuous effort for the Agency is enhancing communication with employees. The Executive Leadership Team periodically hosts employee meetings to share information about the organization and to gain feedback from employees on their concerns. DART will also continue to publish its quarterly newsletter to employees and utilize all of the electronic media available to disseminate information. Executive roundtable discussions with randomly selected employees and monthly departmental employee meetings will ensure ongoing face-to-face time that allows for greater interaction and employee engagement. AW-12

90 Agency-Wide Prioritizing Wellness DART recognizes that employees bring their total selves to the work environment. Unhealthy employees decrease productivity and morale while increasing absenteeism and DART s health care costs. The Agency emphasis this year is encouraging employees to take care of their health as a priority. Healthy employees are more productive, motivated, and committed to outstanding performance. Through various wellness strategies, DART is providing information, assessments, and incentives that motivate employees to healthier lifestyles. These strategies comprehensively address the well-being of employees: o Physically: through preventive care programs, weight management, nutritional education, disease management programs, health care resources, and physical events; o Emotionally: through stress management workshops, educational literature and counseling with DART s Employee Assistance Program (EAP); and o Financially: through money management seminars, retirement and investment planning tools, and personalized benefits statements. Additionally, many of these opportunities are available to family members as well. DART will continue to strengthen its wellness program through the introduction of two pilot programs designed for specific populations of DART targeting the primary medical conditions for those employees. Increasing Employee Satisfaction (Recognizing excellent performance, supporting personal/professional growth & leadership through training/development, promoting excellence through workforce diversity Strategies E1.2; E1.3, E1.5, E1.7) In FY 2005, DART's multidiscipline Internal Communications program will focus support on key objectives in division level measurement, customer satisfaction, employee recognition, and benefits communications. On an ongoing basis, this program will utilize targeted and integrated print, electronic and face-to-face communications. This includes DART's Connections/ Reconnect newsletters, DARTnet intranet, periodic ELT briefings to all divisions, roundtable meetings of randomly selected employees and the President/Executive Director, the President/ Executive Director's Star awards, employee activities and special events. Promote Excellence Through Workforce Diversity (Strategy E1.7) DART maintains a strategic advantage by encouraging a culture of inclusiveness and respect for all people. Management's strong belief that diversity is a catalyst for future organizational success has resulted in a more positive climate and a heightened commitment to foster an environment that acknowledges and values the uniqueness of each individual. DART's workforce is multi-cultural and consists of over 30 different ethnic groups. AW-13

91 Agency-Wide The Department of Diversity and Economic Opportunity (DEO) serves as the "change agent" and promoter of diversity throughout the Agency. DEO is charged with the responsibility of developing, implementing, and monitoring aggressive Equal Employment Opportunity, Affirmative Action, and Diversity programs for the Agency which recognize, respect, and advocate utilization of the full spectrum of diverse knowledge, skills, and abilities of people and businesses in the community and service area. DART will continue to implement, monitor, and carry out the legislative, executive, and operational mandates for equal employment opportunity. DART s Diversity Council, appointed in 2004, continues to achieve its mission to encourage a positive work environment free from discrimination based on race, color, religion, national origin, sex, age, disability, veteran's status, or sexual orientation. The primary objectives of the Council are to: Increase employee awareness of the value of diversity in general and individual strengths, abilities and personalities in particular. Help DART adhere to a "zero tolerance" policy for unlawful discrimination. Continuously develop and adopt processes that leverage individual employees' unique characteristics as a way to increase productivity, morale, efficiency and service quality. STAKEHOLDER FOCUS This section addresses DART s Stakeholders and how management is addressing their needs. Stakeholders' Perceptions are Critical Exhibit 8.9 from DART's Strategic Plan highlights the key strategies for this management objective. Exhibit 8.9 Strategic Initiatives to Increase Stakeholder Satisfaction Increase Stakeholder Satisfaction DART is a welcomed integral part of the community Build Relationships with Stakeholders (S1) 1. Obtain timely public input on DART s current and proposed service projects 2. Effectively communicate with stakeholders 3. Maximize Federal and other governmental funding 4. Address requirements of Bond Holders 5. Leverage Federal and State legislative resources 6. Identify and develop strategic partnerships 7. Pursue transit-oriented development opportunities 8. Maintain legal and regulatory compliance 9. Create and maintain D/M/WBE economic development opportunity 10. Expand Service Area AW-14

92 Agency-Wide Improving Customer Satisfaction/Building Relationships with Stakeholders (Providing effective customer communication, effectively communicating with stakeholders Strategies C1.4 & S1.2) New customer tools for the Agency s Internet website, gave customers greater access to the latest Agency information and trip-planning tools. Customers responded with an 18% increase in total visitors and a 35.8% increase in page views. Enhancement to the webbased trip planning tool and the relocation of the tool on the front page of website helped produce a 149% increase in Trip Planner page views during FY This partial site redesign was implemented as a result of the FY 2004 audit of DART.org. The redesign will continue through FY The creation of special event pages to support Agency marketing initiatives will continue to be a valuable customer resource generating strong web traffic. Furthermore, regular additions to the Travel Agent tool of DART.org generated more traffic. Page views to all Travel Agent pages grew 50% during FY The five most popular sections are DART to Jury Duty, Visitor Information and Connections, Living on the Rail Line, Shopping Centers, and Entertainment Districts. To strengthen the Agency s position in the general Hispanic market, and in particular among primary Spanish speakers, DART launched a new Spanish-language web page, TransporteDART.org, in late FY The site contains essential Agency news and information and how-to-ride tips and destinations. Additional marketing efforts will be made to promote it through FY Federal, State, and Local Government Relations (Strategies S1.2; S1.3; S1.5, and S1.10) Government relations encompasses all interactions between DART and its external political environment. DART s Government Relations staff plans and implements the Agency s advocacy efforts and ensures that the exchange of information between DART and its 13 member cities, the U.S. Congress, the U.S. Department of Transportation, and Texas Legislature is accurate, consistent, and timely. In addition to providing tours and briefings to elected officials and their staffs, Government Relations also actively participates in transportationrelated organizations such as the Texas Transit Association, Partners in Mobility, Dallas Regional Mobility Coalition, and TEX-21. Government Relations staff also oversees the day-today administration of DART s contracted legislative consultants in Washington, D.C., and Austin, Texas; working with these consultants to develop appropriate advocacy strategies for securing Agency objectives both operationally and for capital projects. In FY 2006 DART will work with the Dallas area congressional delegation to finalize a $700 million Full-Funding Grant Agreement and to submit an $80 million request for the FY 2007 appropriation cycle. Staff also is actively monitoring the interim committees of the 79 th Texas Legislature and the issues under review that could impact DART s mission and operations. Among the important issues tracked by staff is regional transportation and efforts to find solutions to expanding rail transit in the region through the collaborative efforts of State legislatures and local officials serving on the Regional Transit Review Committee. Government Relations also continues to maintain a strong presence in local government activities through regular attendance at council meetings and work sessions, and continues strong communication with member cities staff, ensuring timely resolution of DART issues. AW-15

93 Agency-Wide Community Affairs (Strategy S1.1, S1.2, and S1.8) The Community Affairs Section of the Marketing and Communications Department serves as the liaison between DART and the community during the planning, construction, design, and operational phases of a project. By facilitating community meetings and public hearings, Community Affairs ensures that DART meets legal and/or government regulations, while developing and maintaining long-standing relationships with diverse communities throughout the DART Service Area. Staff works to promote public participation in DART Capital Planning & Development and DART Project Management projects as well as major and minor bus service modifications. Community Affairs also works to implement corridor safety initiatives as part of the Agency s system expansion. Continue to Build Strong Relationships with Chambers and Business (Strategy S1.2, S1.6, and S1.8) External Outreach develops, implements, and markets community outreach programs. Designed to educate and inform customers and stakeholders throughout DART s diverse Service Area, staff interfaces with both public and private educational entities, senior citizens, membercity organizations, and special and civic interest groups. Staff conducts tours, briefings, presentations, and utilizes various methods to promote the DART message including corridor safety. Strengthening relationships with chambers of commerce throughout the DART Service Area is included in this effort. The chambers of commerce have proven to be great business partners and have been very supportive of DART. DART will continue its strong communications with area businesses and chambers, contractor associations, and community organizations and will continue to promote DART s employer programs, especially in transit or major investment study corridors. These efforts will accelerate as DART continues its current plan of expansion on the Northwest/Southeast corridors, Irving, Rowlett, and Central Business District. Communication to a broad and diverse stakeholder community is the major focus of both endeavors. Enhance Economic Development (Strategy S1.7) Two of the objectives of the Agency, as stated in the DART mission statement, are to improve the quality of life and to stimulate economic development through the implementation of the Transit System Plan. While these impacts follow rail development as a rule, it has been both surprising and gratifying to see how quickly rail development has sparked transit-oriented developments along the rail lines. Even before rail opened in Richardson, station-area residential, retail, and office development exceeded DART s cost by $23 to $1. With the opening of rail service to Plano and Garland in late 2002, the impact of our joint development efforts now exceeds $1.3 billion. Management continues to actively support all transit-oriented development around DART stations for the purpose of increasing transit ridership, reducing car trips on major thoroughfares, and receiving new sources of funds. AW-16

94 Agency-Wide Create D/M/WBE Economic Development Opportunity (Strategy S1.9) DART s D/M/WBE program is designed to involve disadvantaged, minority, small and emerging, and women-owned businesses to the maximum extent possible in all facets of DART's contracting and purchasing activities. The Department of Diversity and Economic Opportunity (DEO) positions itself as a bridge between DART and disadvantaged, minority, small and emerging, and women-owned businesses. To increase access to DART procurement opportunities, the DEO Department offers and conducts various modes of technical assistance, outreach, seminars, educational training, and counseling in the understanding of federal and Agency procurement regulations. The DEO Department aggressively seeks integration of D/M/WBEs in all DART procurement and contracting opportunities, and ensures that DART is in compliance with all appropriate federal and state laws, regulations, and executive orders. AW-17

95 Agency-Wide BLANK PAGE AW-18

96 Section 9 FY 2006 Budget Index of Exhibits Exhibit 9.1 Exhibit 9.2 Exhibit 9.3 Exhibit 9.4 Exhibit 9.5 Exhibit 9.6 Exhibit 9.7 Exhibit 9.10 FY 2006 Budget.. BUD-1 FY 2006 Sources and Uses of Funds.. BUD-1 FY 2006 Revenues.. BUD-2 Sales Tax History BUD-2 Operating Expense Budget by Category..... BUD-4 Capital and Non-Operating..... BUD-10 Net Debt Service Budget BUD-11 Full-Time Salaried Position Summary-By Department.. BUD-12

97 FY 2006 Budget FY 2006 Budget Overview The FY 2006 Budget of $753.7 million as shown in Exhibit 9.1, is divided into three categories, which are approved individually by the Board: Operating Expense Budget, $323.9 million (excludes $19.8 million for capital planning and development costs and start-up costs); Capital Budget, $396.3 million (includes capital planning and development and start-up costs); and Net Debt Service Budget, $33.5 million. Sources and Uses of Funds Exhibit 9.1 FY 2006 Budget (In Millions) Description FY06 Budget Operating Expense $323.9 Capital Budget Net Debt Service 33.5 $753.7 The purpose of this section is to provide a detailed review of Sources and Uses of funds and variances between the FY 2005 Budget and the FY 2006 Budget. As shown in Exhibit 9.2, total funding for FY 2006 is projected at $842.1 million, $173.2 million (25.9%) higher than the FY 2005 Budget, primarily due to an increase in Debt Issuances and Federal Funds. More information can be found in the Financial Plan section, subsection Sources of Funds. Also included in Exhibit 9.2 is a review of the Uses of Funds. The operating budget increased by $14.7 million (4.7%) above FY Details can be found on pages BUD-6 through BUD-9. The Capital Budget for FY 2006 has increased $126.4 million (46.8%) primarily due to the increase in activity related to the LRT Phase II Build-out. More details are located in the Financial Plan section. The Debt Service Budget increase of $3.9 million (13.1%) is attributed to the increase in Principal repayments and Commercial Paper Program Interest and Fees. See Exhibit 9.7 for more detail. Exhibit 9.2 FY 2006 Sources and Uses of Funds (In Millions) Description FY05 Budget FY06 Budget $ Variance Sales Tax Revenues $339.3 $352.9 $13.6 Debt Issuances (all CP)* Federal Funds Operating Revenues Interest Income Other Sources (3.4) Total Sources of Funds $668.8 $842.1 $173.2 Operating Expense Budget $309.2 $323.9 $14.7 Capital Budget Net Debt Service Budget Total Uses of Funds $608.7 $753.7 $145.0 * Commercial Paper BUD-1

98 FY 2006 Budget Revenues The combined revenue budget ($438.6 million) is shown in Exhibit 9.3 and excludes Federal Funds and Debt Issuances. The changes to each category are discussed in more detail following the chart. Other Non-Operating 2.1% Interest Income 3.8% FY 2006 Revenues Exhibit 9.3 Passenger 9.3% Advertising /Rental Income/Other 2.0% Grant 0.2% Sales Tax Revenue 82.5% Sales Tax Revenues ($352.9 million) are the largest source of revenue for the Agency (see Exhibit 9.4). Of the seven years shown, receipts were lowest in FY Receipts increased 7.8% in FY 2004 and are projected to increase 3% in FY 2005 over the FY 2004 Budget. Through August 2005, actual sales tax receipts were $308.6 million, 2.84% better than the same period in FY 2004 and 0.81% better than budget. Management has modified sales tax growth projections, reducing them to a 4% increase for FY 2006 and 5% thereafter in the Twenty-Year Financial Plan (see the Financial Plan section for more detail). Exhibit 9.4 Sales Tax History ($ in millions) $357.9 $325.5 $309.1 $333.3 $339.3 $352.9 $ FY 2001A FY 2002A FY 2003A FY 2004A FY 2005B FY 2006B FY 2007P BUD-2

99 FY 2006 Budget Operating Revenues ($49.4 million) consist of passenger revenue ($39.7 million), advertising/rental income/other income ($8.6 million), and grant revenue ($1.1 million). Within this category passenger revenues are 80.4% of total operating revenues. Passenger revenues are based on ridership and average fare (projected as $0.61) for fixed route. Revenues are projected to increase due to the projected increase in ridership. Other Non-Operating Revenues ($8.9 million) reflects the FY 2006 contribution made by the Fort Worth T towards Trinity Railway Express (TRE) operations and capital projects. Operating Budget The following assumptions were used to develop the operating budget: $3 million reduction in bus and light rail service levels Increase in contract rates for Paratransit (5%) and 25,300 additional Paratransit service hours Employee Compensation Increase 3% Health Care Cost Increases of 20% A $250 health care deductible per employee, $500 deductible per family $250 Flexible Spending Accounts for all employees under current Medical Plan Reductions to Service Incentive Pay and Performance Incentive Pay programs Diesel fuel costs at $2.395 per gallon delivered, including $0.215 per gallon option premium to control DART s exposure to further price increases Additional utilities costs for transition and power factor charges Increase in TRE service in Tarrant County BUD-3

100 FY 2006 Budget Exhibit 9.5 breaks down the Operating Expense Budget by category and compares the FY 2005 Budget to the FY 2006 Budget. A brief commentary follows the chart providing details about the various categories and the changes. Exhibit 9.5 Operating Expense Budget by Category (in Thousands) FY04 Actuals Category FY05 Budget FY06 Budget $ Inc/{Dec} % Variance $47,324.4 Operator Wages $47,668.7 $47,385.8 ($282.9) -0.6% 8,506.7 Operator Leave Wages 7, , , % $55,831.2 S&W - Operators Payroll $54,790.0 $55,956.0 $1, % $27,882.1 Non Operator Hourly Wages $29,710.4 $30,906.3 $1, % 2,754.2 Overtime - Hourly 1, , % $30,636.2 S&W - Non-Operator Payroll $31,015.0 $32,478.2 $1, % $58,407.5 Salaries $62,431.8 $59,435.0 ($2,996.8) -4.8% 1,876.3 Overtime - Salaried 1, ,622.0 (127.0) -7.3% Part-Time/Temporary % $60,799.7 S & W - Salaried $64,610.2 $61,561.8 ($3,048.4) -4.7% $147,267.1 Total Salaries & Wages $150,415.2 $149,996.0 ($419.8) -0.3% $18,778.2 Health & Life & Disability Insurance $19,901.7 $23,966.5 $4, % 15,059.6 Pension & 401K Plans 15, , % 11,064.9 FICA 11, , % 5,104.1 Workers Compensation 7, , , % 1,881.7 Service Incentive Pay 2, ,455.2 (588.2) -28.8% 1,702.6 Paid Absences Liability 1, , % 1,137.1 Retiree Benefits 1, ,018.8 (270.6) -21.0% Unemployment & Other Benefits (138.0) -23.5% $55,344.7 Total Benefits $59,384.6 $64,933.9 $5, % $9,473.4 Contract Services $10,224.1 $9,637.4 ($586.7) -5.7% 3,306.0 Advertising, Marketing & Public Information 4, ,596.5 (467.6) -11.5% 2,388.2 Administration, Human Resources & MBE 2, , % 1,970.5 Financial, Legal & Governmental 2, , % 2,106.8 Computer & Communications 2, , % 1,060.1 Vehicle & Equip Maintenance 1, ,704.1 (49.0) -2.8% Engineering & Real Estate Acquisition (97.1) -16.0% $20,658.1 Total Services $25,149.6 $25,192.2 $ % BUD-4

101 FY 2006 Budget Exhibit 9.5 (cont'd) Operating Expense Budget by Category (in Thousands) FY04 Actuals Category FY05 Budget FY06 Budget $ Inc/{Dec} % Variance $11,461.6 Diesel, NRV and LNG Fuel & Lube $14,870.9 $15,417.4 $ % 13,016.6 Motor Vehicle Parts & Supplies - Bus 13, ,446.3 (22.4) -0.2% 3,561.6 Light Rail Parts 4, ,405.8 (755.8) -18.2% 1,712.9 Facilities Operations - Material & Supplies 1, ,584.1 (263.2) -14.2% 1,215.0 Uniforms, Tools & Shoes 1, , % 1,654.2 Office Equipment & Supplies 1, ,292.2 (569.3) -30.6% $32,621.7 Total Materials & Supplies $37,416.3 $36,464.6 ($951.7) -2.5% $4,285.2 Power & Light LRT - Vehicle $4,375.1 $5,082.9 $ % 3,174.7 Utilities - Facilities 3, , % 1,094.4 Communications 1, ,075.7 (55.6) -4.9% $8,554.2 Total Utilities and Communications $9,215.3 $10,321.3 $1, % $2,613.1 Liability & Property Insurance $2,288.4 $2,301.3 $ % 1,189.1 Liability Claims 1, , % $3,802.2 Total Claims & Insurance $3,605.2 $3,661.6 $ % $18,157.3 Paratransit Services $19,415.0 $21,238.4 $1, % 14,016.5 Trinity Railway Express 14, , % 1,405.3 DART Shuttle Services 1, , % DART-on-Call Services 1, , % TDM - Van Pool % HOV Services (28.5) -3.5% $35,908.2 Total Purchased Transportation $38,172.1 $40,501.5 $2, % $1,500.7 Fuel & Lube/ Other Taxes $1,513.0 $1,425.3 ($87.7) -5.8% 1,432.7 Facilities & Equip - Leases 1, , % 1,046.0 Training/Travel 1, ,029.1 (436.9) -29.8% Employee Programs, Dues & Subscriptions (21.2) -2.8% Public Information (324.5) -48.9% $4,989.4 Total Taxes, Leases & Other $5,488.3 $4,655.3 ($833.0) -15.2% $309,145.6 Sub-total $328,846.6 $335,726.3 $6, % ($18,951.7) Capitalized P&D ($20,717.7) ($19,770.5) $ % (491.8) Start-Up Costs (526.0) % 0.0 Fuel Reserves 0.0 6, , % 0.0 Other Expense Budget Changes 1, (492.9) -44.5% 0.0 Management Reserve (22.0) -4.4% ($19,443.5) Total Other ($19,636.5) ($11,863.2) $7, % $289,702.1 Total Expenses $309,210.0 $323,863.1 $14, % BUD-5

102 FY 2006 Budget Variance Analysis FY 2006 Operating Expense Budget Salaries & Wages This category decreased $0.4 million from the FY 2005 Budget. Variances in this category include: $2.7 million increase for a 3% increase to employee base compensation $2.2 million increase for Hourly and operator wage progressions and labor and work rule changes $1.9 million decrease from eliminated positions $1.8 million decrease from delaying the hiring of open positions $1.6 million decrease due to the elimination of the Performance Bonus Program For details by department on position additions and eliminations, see the position summary at Exhibit 9.8. Benefits are 20% of the Agency s total operating budget; 31% of which are benefits required by law. Health Insurance remains the major cost driver of all DART benefits and increased $4.0 million to $23.1 million (20.7%) in FY DART is self-insured and pays all administrative fees and all claims costs. The FY 2006 Budget includes a 3% growth in participation of approximately 3,200 employees who will elect DART as their health benefit provider. The budget includes an increase in employee co-pays for specialized tests such as MRIs and an introduction of deductibles. Deductibles will be $250 per employee and a maximum of $500 per family. Funding for a flexible spending account and administration fees ($849,000) will be provided in FY 2006 for each employee after the 90-day waiting period under the DART Medical Plan to help offset the deductible. New hires are not eligible for health benefits until after 90 days of employment. This category previously included administrative fees ($1.35 million) that have now been reclassified to the services line item. Management will continue to evaluate options to mitigate increasing health care costs (including dependent verification). Workers compensation increased $1.2 million (17.3%) based on actuarial projections provided by an outside consultant. The number of workers compensation claims has decreased over the past few years. However, the rise in health care costs is also affecting the cost of workers compensation claims. The increase in Pension and 401k plans is due to changes to the Defined Benefits Plan ($650,000). A study was completed recently, and, using an updated mortality table, showed individuals are living longer and recommended that additional funding be made to the Plan. This Plan is closed to any new participants. BUD-6

103 FY 2006 Budget Salaried employees hired before May 1, 1996 and hourly employees hired before December 31, 1996 may be eligible to participate in DARTs Service Incentive Pay (SIP) program. This program pays qualified employees for longevity. The program has undergone changes over the past several years. In FY 2004 the amount was frozen at then-vested percentages, and the amount paid did not grow after FY 2004 regardless of salary changes. The program was reviewed again during preparation for the FY 2006 Budget, and Management has chosen to change the program to pay a flat rate of $6 per month up to 25 years of service for a maximum payout of $1,800 for each eligible employee. This change will have the largest impact on highercompensated, longer-term employees and will save approximately $588,000 in FY The Paid Absences Liability line item is to fund the liability associated with accrued sick, vacation, and Paid Time Off (PTO) balances. Salaried employees are allowed to accrue up to 320 hours (40 days) of PTO; any amount over 320 hours will be transferred to a Short-Term Disability/Family Medical Leave Administration (STD/FMLA) bank. However, the maximum that can be transferred into the STD/FMLA bank is 50% of the amount posted to the PTO bank at the beginning of the year. As employee salaries and banked hours grow, the amount needed to fund the liability is greater. PTO is paid out upon termination or retirement according to an approved vesting schedule. Hourly employees are eligible to accrue up to 1,392 hours (174 days) of sick time, although the Agency is only liable for 720 hours (90 days) if an employee retires or is terminated with at least 20 years of service. An employee who terminates with less than 20 years of service is not entitled to payment for unused sick leave. The liability continues to grow with merit increases and longevity. Vacation benefits are provided to hourly employees only. Vacation leave accrual is based on years of service; a minimum of 80 hours (10 days) to a maximum of 224 hours (28 days) is eligible for accrual per calendar year. Unused vacation leave in excess of 448 hours that is in an employee s bank as of December 31 of each year is forfeited. Any vacation time in an employee s bank is paid upon leaving the Agency up to a maximum of 448 hours plus any accrued hours for the current year. Services The FY 2006 Budget decreased $43,000 (0.2%) from FY However there were significant changes made in several categories; a brief explanation follows: Contract services reduction reflects reallocation of planned work from Operating Expense to Capital. The Advertising, Marketing, and Public Information ($468,000) reduction is based upon planned adjustments to advertising programs, and increased savings achieved through joint promotions and advertising sponsorships. BUD-7

104 FY 2006 Budget The Administration, Human Resources, and MBE ($613,000) increase is attributed to the combined effect of several items: Reclassification of $1.3 million in administrative fees paid on the medical insurance plans (previously classified under benefits). A reduction of $360,000 due to the conversion of contract labor positions to full-time status to comply with IRS regulations. A decrease in budgeted workers compensation consulting services resulted in a $220,000 reduction from FY Elimination of a copier study and Owner-Controlled Insurance Program (OCIP) feasibility study that were completed in FY 2005 reduced this category by $130,000. The increase of $339,000 in Computer and Communications is attributed to maintenance fees for software that was purchased during FY The increase in Financial, Legal & Governmental ($292,000) is due to an increased usage of administrative law judges in the procurement dispute process and a projected increase in the governmental affairs area for new contracts for representation services in Washington D.C. and Austin, Texas. Materials & Supplies decreased $952,000 (2.5%), as detailed below: Diesel, NRV, and LNG fuels are up 3.7% ($546,000) due to an increase in fuel prices. Management set up a fuel reserve due to the volatility of the market (see Fuel Reserves below). Reductions in the category Office Equipment and Supplies ($569,000) are due to the completion of the replacement of the Agency s desktop computers (a two-year project completed in FY 2005), and an Agency-wide reduction to allowable budgets for office supplies. Rail warranty credits, a new line item for FY 2006 ($710,000), is for work completed by DART staff for parts that are covered by warranty. DART staff monitors this item and bills the manufacturer. DART is then reimbursed under the Light Rail Parts line item. Utilities and Communications increase of $1.1 million (12.0%) is attributed to the change in the consumption rate and the power factor and transition charges now charged by the utilities company. Purchased Transportation The Paratransit Services increase of $1.8 million for FY 2006 is due to contract rate increases and additional revenue hours required to prevent trip denials and alleviate existing capacity constraints. ATC/Connex operates this service. BUD-8

105 FY 2006 Budget A new contract for Trinity Railway Express (TRE) services was negotiated in FY Contract rate savings gave the Agency the ability to add more service hours. Estimated revenues of $8.8 million from the Fort Worth Transportation Authority s (the T ) contribution to TRE Operating Expenses are budgeted in the revenue section under Other Sources of Cash. Herzog Transit Services, Inc. operates this service. Management continues to explore the use of DART On-Call and Shuttle services, which are more cost effective in areas where low ridership does not warrant the use of regular fixed-route bus service. The increase of $238,000 is due to an increase in rates and additional services to be implemented with the October 2005 and February 2006 service changes. This service is operated by ATC/Connex, under the same contract as Paratransit Services. Taxes, Leases & Other is budgeted at $4.7 million, $833,000 (15.2%) lower than FY This category includes major reductions to training and travel line items ($437,000) to meet the Agency s targets. The other major reduction in this category is a reduction to Public Information from a one-time cost of $100,000 programmed for the 2005 APTA Conference and Expo which was held in September Fuel Reserves A new item for FY 2006, this item includes fuel for Paratransit services, Bus services, and TRE services. The category Materials & Supplies on the previous page is for the current service at a rate of $1.62 per gallon per the Financial Plan. The current paid rate of $2.65 per gallon was used to calculate the reserve amount. All expenditures for fuel above $2.02 per gallon will be funded on a quarterly basis from the Sales Tax Reserve. These reserved funds will not be used for any other purpose. Other Expense Budget Changes This line item is for savings such as: contractual savings, delay in programs, and delay in hiring positions. This line item is monitored by the President/Executive Director and could be used for other programs or projects as needed or deemed necessary to the Agency. Management Reserve is for unforeseen expenses such as contractual increases, additional service, etc. which may arise during the year. The President/Executive Director manages this reserve. BUD-9

106 FY 2006 Budget FY 2006 Capital Budget Shown in Exhibit 9.6 is a summary of the FY 2006 Capital and Non-Operating Budget which includes such things as: LRT expansion, HOV lanes, TRE track work, vehicle and facility capital maintenance programs, scheduled vehicle replacements (including fixed-route buses, paratransit vehicles, and non-revenue vehicles), etc. A current funding level for FY 2006 has been established at $396.3 million for capital and non-operating activities. A list of major capital projects recommended for inclusion in the FY 2006 Budget is located in the Financial Plan section. FY 2005 Budget Category Exhibit 9.6 Capital & Non-Operating (In thousands) FY 2006 Budget $242,807 Total Capital Projects $370,812 $128,005 20,718 Capital Planning & Development 19,771 (947) 526 Startup Costs 0 (526) 3,104 Non-Operating 3, Road Improvements/ITS 0 LAP/CMS Program* PASS Program* 0 0 2,100 TSM (General & Street Repair Program) 2, Regional ITS 0 (600) 0 DART/TxDOT ITS* 0 0 $2,700 Total Road Improvements/ITS $2,100 ($600) $269,855 Total Capital & Non-Operating $396,306 $126,451 * No new money is currently being allocated to these programs, however unspent balances as of September 30 each year, will be expended in future years. $ Variance BUD-10

107 FY 2006 Budget FY 2006 Net Debt Service Budget The FY 2006 Budget shown in Exhibit 9.7 includes the assumption that DART will issue $260 million of Commercial Paper in FY 2006 and an additional $43 million in FY 2007 to partially fund its capital program. It is projected that DART will have $557 million in outstanding Commercial Paper at the end of FY The FY 2006 Plan assumes that no Long-Term Bonds will be issued in FY It is projected that DART will have $478.7 million in outstanding Long-Term Bonds at the end of FY This is the remaining principal balance of the nearly $498.7 million in bonds that were issued in 2001 and More details can be found in the Financial Plan Section under Debt Program. Exhibit 9.7 Net Debt Service Budget (In Thousands) FY 2005 Budget Category FY 2006 Budget $ Variance $6,146 Commerical Paper Program Interest & Fees $14,649 $8,503 24,438 Long-Term Debt Program Interest 24,172 (266) 271 Amortization of Issuance Costs Financial Advisor and Other Fees 385 (101) 25,541 Defeased Lease Expense 24,645 (896) $56,882 Total Expenses $64,122 $7,240 $6,819 Principal Repayments $10,470 $3,651 $63,701 Total Debt Service Budget $74,592 $10,891 ($25,541) Less: Defeased Lease Income ($24,645) $896 (8,500) Less: Interest Income* (16,406) (7,906) $29,660 Total Net Debt Service Budget $33,541 $3,881 * Interest income is shown here because of the interest rate link between interest income and interest expense BUD-11

108 FY 2006 Budget Position Summary Exhibit 9.8 summarizes position changes by department. The FY 2006 Operating Expense Budget includes 8 new salaried positions replacing current personnel working as contract labor, 18 new hourly positions, and an elimination of 29 salaried positions. Exhibit 9.8 FY 2006 Budget Full-Time Salaried Position Summary - By Department FY05 Total FY05 Mods FY05 Total FY06 New / (Eliminated) FY06 Total Commuter Rail DART Police (19) 227 DEO 18 (2) EVP Administration EVP Operations EVP Program Development Finance (1) 84 Human Resources Internal Audit Legal Maintenance Marketing & Communications Office of Board Support Office of the President Paratransit Planning & Development Procurement Project Management (1) 47 Transportation 237 (53) 184 (8) 176 Total Salaried Positions 1,216 (53) 1,163 (21) 1,142 Full-Time Hourly Position Summary - By Department EVP Operations - Hourly Maintenance - Hourly 610 (2) Marketing - Hourly Paratransit - Hourly Planning - Hourly Transportation - Hourly 1, , ,398 Total Hourly Positions 2, , ,144 Grand Total 3,293 (4) 3,289 (3) 3,286 BUD-12

109 Section 10 FY 200 Twenty-Year Financial Plan Index of Exhibits Exhibit 10.1 Exhibit 10.2 Exhibit 10.3 Exhibit 10.4 Exhibit 10.5 Exhibit 10.6 Exhibit 10.7 Exhibit 10.8 Exhibit 10.9 Exhibit Exhibit10.11 Exhibit Exhibit10.13 Exhibit10.14 Exhibit FY06-10 Sources and Uses of Funds Comparison..... FP-2 FY06-10 Sources of Funds Comparison.... FP-3 Projected Annual Sales Tax Receipts..... FP-5 Cumulative 20-year Sales Tax Receipts. FP-5 Financial Plan Cash Availability Profile. FP-6 Estimated Sales Tax Receipts by Financial Plan Comparison... FP-7 Projected Fixed Route Average Fare FP-8 Anticipated Capital Grant Funding..... FP-9 Operating Expenses FY06-FY10... FP-11 Historic Growth vs. Projected Growth-Operating Expenses.. FP-12 5-Year Capital Expenditure Categories.. FP-14 Capital & Non-Operating Project Listing... FP-16 Projected Net Debt Issuances by Fiscal Year. FP-22 Debt Assumptions FP-23 Cash Availability Profile. FP-26

110 FY 2006 Twenty-Year Financial Plan FY 2006 Twenty-Year Financial Plan Overview The purpose of this section is to provide an overview of the FY 2006 Twenty-Year Financial Plan (the "FY06 Plan"). The first year of the FY06 Plan corresponds with the FY 2006 Budget, and the first five years of the Financial Plan comprise the FY 2006 Business Plan. The purpose of the final 15 years of the Twenty-Year Financial Plan is to validate the affordability of DART's long-range Transit System Plan, which includes the Agency's commitments for future system expansion and the issuance and repayment of debt. The FY06 Plan demonstrates that DART has the financial capacity to meet the Agency's Transit System Plan commitments and to continue current levels of bus and expanded rail service. Each section of the FY 2006 Twenty-Year Financial Plan is described in detail: 1. Sources of Funds a. Sales Taxes b. Operating Revenues c. Interest Income d. Federal Funding e. Debt Issuance f. Other Sources 2. Uses of Funds a. Operating Expenses (by mode) b. Capital and Non-Operating Expenditures c. Debt Program 3. Supplemental Financial Information This section also provides definitions of terms, outlines the major assumptions used to develop the FY06 Plan, discusses changes from prior plans, and illustrates some potential risks and some areas for potential financial improvement. References are made throughout this section to DART s Financial Standards. See the Introduction section for more discussion of Financial Standards and see Exhibit APX.2 for DART s approved Financial Standards. On September 28, 2004, the DART Board adopted the FY05 Financial Plan. On February 22, 2005, the DART Board approved a Budget and Financial Plan Amendment encompassing several operations-related changes. This revised plan is hereafter referred to as the FY05 Plan. On September 20, 2005, the DART Board adopted the FY06 Budget and voted to incorporate those budget numbers into the FY05 Plan and adopt that as the FY06 Twenty-Year Financial Plan. On October 25, 2005, the Board voted to amend that Plan to incorporate all other assumption changes that were made during the year. This amended Plan is hereafter referred to as the FY06 Plan. FP-1

111 FY 2006 Twenty-Year Financial Plan Exhibit 10.1 is a summary of the five-year changes in the sources and uses of cash between the FY05 Plan and the FY06 Plan for the period FY 2006 through FY Line Exhibit 10.1 DART FY 2006 FY 2010 Sources and Uses of Funds Comparison (In Millions) Description FY05 As Amended FY06 As Amended Variance Percentage SOURCES OF FUNDS 1 Sales Tax Revenues $1,973.2 $1,954.2 ($19.0) (1.0%) 2 Operating Revenues % 3 Interest Income (4.6) (3.3%) 4 Formula Federal Funding % 5 Discretionary Federal Funding (2.3) (0.5%) 6 Debt Issuances 2, ,903.0 (153.0) (7.4%) 7 Other Sources % 8 Total Sources of Funds $5,287.7 $5,154.5 ($133.3) (2.5%) USES OF FUNDS Operating Expenses: 9 Bus $1, ,032.5 ($12.0) (1.1%) 10 Light Rail Transit (5.4) (1.4%) 11 Commuter Rail/RR Management % 12 Paratransit % 13 HOV Transitways % 14 General Mobility - TDM (1.1) (15.0%) 15 Total Operating Expenses $1,740.0 $1,743.0 $ % Capital Projects and Non-Operating: 16 Agency-wide $48.8 $52.0 $ % 17 Bus (5.3) (2.6%) 18 Light Rail Transit 2, ,279.6 (188.8) (7.6%) 19 Commuter Rail/RR Management % 20 Paratransit % 21 HOV Transitways % 22 Capital P & D, Start-Up, Non-Operating (10.5) (7.5%) 23 General Mobility - Road Impr./ITS (1.7) (23.2%) 24 Total Capital and Non-Operating $3,005.8 $2,850.6 ($155.3) (5.2%) Debt Service 25 Principal - LT/ST Debt $84.6 $80.9 ($3.7) (4.3%) 26 Interest and Fees - LT/ST Debt (21.6) (5.3%) 27 Total Debt Service $495.0 $469.8 ($25.3) (5.1%) 28 Total Uses of Funds $5,240.8 $5,063.4 ($177.5) (3.4%) * Numbers may not foot properly due to rounding. FP-2

112 FY 2006 Twenty-Year Financial Plan The Twenty-Year Financial Plan is included as an attachment to the Board resolution, which is located at Exhibit APX.1. A copy of the FY05 Plan is included at Exhibit APX.3. SOURCES OF FUNDS Total sources of cash for the period FY 2006 through FY 2010 have decreased by $133 million (2.5%) from the FY05 Plan, due primarily to reduced debt issuance and reduced sales tax projections. Because of delays in receiving permission to enter final design from the Federal Transit Administration (FTA), the cash flows on the LRT Phase II Build-out slid somewhat from that contained in the FY05 Plan, and therefore debt issuances were delayed as well. A reduction in the estimated sales tax growth rate in FY06 (discussed in more detail on the following pages) also contributed to the decline in sources. An increase in federal formula funding (through the Congestion Mitigation and Air Quality Improvement Program, or CMAQ) and the Fort Worth Transportation Authority s (the T) contribution to Trinity Railway Express (TRE) operations helped partially offset those declines. Exhibit 10.2 details the sources of funds in the FY06 Plan for the period FY 2006 through FY Exhibit 10.2 FY06-10 Sources of Funds Comparison Other Sources 2% Debt Issuances 37% Sales Tax Revenues 38% Federal Funding 15% Operating Revenues 5% Interest Income 3% FP-3

113 FY 2006 Twenty-Year Financial Plan Sales Tax Revenues (line 1 of the Financial Plan) Sales tax revenues comprise 38% of DART s total projected sources of funds through FY 2010 and 79% of DART s sources excluding debt issuances and federal funding. DART currently uses the forecast of an independent economist for its sales tax projections M. Ray Perryman, PhD. DART has used Dr. Perryman s models (Perryman Model) for many years, and he was reasonably accurate over the long term prior to the economic downturn between 2000 and However, the Perryman Model, the primary drivers of which are personal income in Dallas and Collin counties, the consumer price index for the Dallas Metropolitan Statistical Area, and retail sales for the State of Texas, can be slow to respond to significant short-term changes. The method for estimating sales tax revenue for financial planning purposes is discussed in Financial Standard B1 (FS-B1), which states: Sales tax revenue forecasts shall be based on a sales tax model developed specifically for the DART Service Area by an independent economist, except for the most current year, which may be based on management s best estimate. To ensure a conservative sales tax estimate, the model s projections may be reduced by 1% for years 6-10 and by 2% thereafter, dependent on current economic trends. However, DART management has chosen to take a different approach in projecting sales taxes in the FY06 Financial Plan for two reasons: 1) Small changes in the near-term can have much larger long-term ramifications than more substantial changes in later years of the Plan; and 2) The use of the Business Planning Parameter as stated, would result in an additional $150 million in available cash during years of minimum financial capacity ( ), and management feels this is overly optimistic. Therefore, in an effort to be conservative, DART used a 3% growth rate for FY05 (fitting current growth through August), despite Perryman's projection of 5.72% (made this past spring). Going forward, DART management has chosen to reduce Perryman s projected growth for FY05 from 5.7% to 4% in FY06 and, in the future, from variable rates that decline slightly each year (from 5.61% in FY07 to 4.76% in 2025) to a flat 5% for the life of the Plan. Exhibits 10.3 and 10.4 provide projected annual sales tax receipts and 20-year cumulative sales tax using different assumptions. Exhibit 10.5 shows the effect of working each of the different sales tax scenarios into DART s affordability analysis. FP-4

114 FY 2006 Twenty-Year Financial Plan Exhibit 10.3 Projected Annual Sales Tax Receipts (In Millions) $1,000 $800 $600 $400 $200 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 Perryman Perryman + FS-B1 FY06 Plan Exhibit 10.4 Cumulative 20-year Sales Tax Receipts (In Billions) $12.5 $12.0 $11.5 $11.0 $10.5 $10.0 Perryman Perryman + FS-B1 FY06 Plan FP-5

115 FY 2006 Twenty-Year Financial Plan Exhibit 10.5 FY06 Financial Plan Cash Availability Profile (In Millions) $3,500 $3,000 $2,500 Minimum Financial Capacity In the Critical Year of 2018 FY06 Plan: $232 million Perryman: $600 million BPP-B1: $333 million $2,000 $1,500 $1,000 $500 $0 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 Operating Exp. Capital P&D,SU,Non-Op Phase II Non-Phase II Capital Debt Service Total Available - FY06 Plan Total Available - Perryman Total Available - Perryman + BPP-B1 As Exhibits show, this is a conservative sales tax forecast, pulling more than $1 billion in revenues out of the 20-year plan as compared to using the growth rates supplied by the Perryman Model. The projected growth rate assumptions also provide the most conservative value for financial capacity during the years of minimum financial capacity in the late 2010s. Affordability is discussed in more detail under the Net Available Cash Line on Page FP-23. As a point of historical reference, Exhibit 10.6 compares the total sales tax receipts from past financial plans, beginning with the FY02 Plan, just prior to the decline in sales tax revenues. The economic decline during the past five years and slower growth rates for the future has cost DART over one-third of its primary source of revenue, or $5.8 billion, over the 20-year window of the FY06 Plan. FP-6

116 FY 2006 Twenty-Year Financial Plan Exhibit 10.6 Comparison of 20-Year Estimated Sales Tax Receipts by Financial Plan (In Billions) $25 $20 $17.5 $15 $12.2 $11.1 $11.8 $11.7 $10 $5 $0 FY02 Approved Plan FY03 Draft Plan Original FY04 Plan FY05 Plan FY06 Plan One other point relevant to sales taxes is that these revenues include both an inflationary component and a real growth component. Because both expenses and revenues are affected in similar fashion by inflation, the key portion of the sales tax growth rate is the real growth component. Based on the Perryman Model, this component averages approximately 2.5% for the life of the Plan. This component includes regional population growth and employment growth as well as productivity growth from current businesses in the region. Operating Revenues (line 2) Operating revenues include passenger revenue, advertising revenue, rental income, CMAQ vanpool contribution, and DART police positions (Community Oriented Policing Services [COPS] grant). Operating revenues are projected to contribute $280.4 million (5.4%) of DART's sources of funds through FY This is a 0.7% increase from the FY05 Plan. Passenger revenues are the primary component of operating revenues (78%) between FY 2006 and FY Business Planning Parameter FS-B2 states, "the Board will consider fare modifications from time to time to achieve Service Plan, ridership, and subsidy per passenger targets and to maintain DART's financial viability." In accordance with that change, the FY01 and FY02 Financial Plans contained assumptions that the average fare would grow by the rate of inflation each year. Because fare revenue does not behave in this manner, the FY05 Plan was adjusted to accommodate a fare increase every five years of approximately the same magnitude as the change that went into effect in FY 2003 (17%). The next programmed fare increase is in 2008; however, the recent escalation in fuel prices has raised the possibility of accelerating that fare increase. Exhibit 10.7 details the effect of the programmed fare changes. FP-7

117 FY 2006 Twenty-Year Financial Plan Exhibit 10.7 Projected Fixed Route Average Fare DART is in the process of assessing the current fare structure for potential to improve the average fare over and above the programmed base fare increases. These improvements might come in the form of enhanced fare enforcement, reviewing the employer pass programs, etc. Interest Income (line 3) Interest income is projected to contribute $135.1 million, or 2.6% of total sources of funds for the next five years. This represents a decrease of $4.6 million (3.3%) from the FY05 Plan. This is due to slightly lower cash balances during the period than were anticipated in preparation of the F05 Plan. Interest income is calculated by multiplying the average cash balance for each year, including reserves, by the projected interest rates. These rates are estimated at 100 basis points (1%) above the rate that DART pays when it issues short-term debt (Commercial Paper [CP]) between FY06 and FY08. This differential increases to 150 basis points (1.5%) as CP interest rates rise above 4.5% in FY Federal Funding (lines 4 and 5) Year Avg. Fare $ $ $ $ $1.14 Federal funds are included in the following line items of the Plan: Formula Federal Funding (line 4) and Discretionary Federal Funding (line 5). Formula funds include dollars received under 49 U.S.C. 5307, Fixed Guideway Modernization funds, and Congestion Mitigation/Air Quality (CMAQ) projects approved by the North Central Texas Council of Governments (NCTCOG). Discretionary funds are authorized under 49 U.S.C and appropriated by Congress annually. Discretionary funding is provided primarily for New Start bus and rail projects. The FY06 Plan assumes the receipt of discretionary funding for LRT expansion plus funding for 30% of future bus purchases, which is substantially lower than what DART has historically received (80-83%). FP-8

118 FY 2006 Twenty-Year Financial Plan Formula Federal Funding (line 4) Formula funds are $344.9 million, or 6.7% of total sources of funds through FY This represents a $26.8 million (8%) increase from the FY05 Plan due primarily to increasing levels of Formula Funding allocations. Under the proposed Safe, Accountable, Flexible and Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), it is anticipated that DART will receive Federal appropriations of $46.3 million in FY 2006 for 5307 and fixed guideway funding. Projected formula funds have been programmed at the same amount each year thereafter and not adjusted for inflation, in accordance with FS-B10. Projected formula funds through FY 2010 also include $115.6 million of other formula funding, predominantly composed of CMAQ funds. Discretionary Federal Funding (line 5) Discretionary funding comprises $429.8 million, or 8.3% of total sources through FY 2010, which is essentially the same as the FY05 Plan. This line item is predicated on DART receiving a $700 million Full Funding Grant Agreement (FFGA) for the entirety of the Phase II Build-out. Phase II includes the Northwest and Southeast corridors, along with the Irving line to DFW airport, the Rowlett extension, a CBD rail solution (either a second surface line or subway), and the SOC-3 line segment. This plan assumes up to 50% federal participation of portions of the build-out that will be federally funded and just over 20% participation on the entire Phase II Build-out. By comparison, DART received an 18% Federal share for the Starter System (20 miles) and a 33% Federal share for the Phase I NC LRT Build-out (48 miles). FFGA funds have been programmed based on the expected Phase II cash flows and ability to draw down those funds. The Plan also assumes some discretionary funds will be available for bus replacements (30%) and includes more than $11 million toward new passenger facilities. Exhibit 10.8 details the anticipated receipt of Formula and Discretionary Funds over the life of the Plan. Exhibit 10.8 Anticipated Capital Grant Funding (In Millions) $200 $175 $150 $125 $100 $75 $50 $25 $0 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 Formula Funding Discretionary Funding FP-9

119 FY 2006 Twenty-Year Financial Plan Debt Issuance (line 6) DART plans to issue $303 million of Commercial Paper (CP) in the next two years. This will increase our total outstanding CP to $600 million. Additionally, $1.6 billion in long-term debt will be issued through FY This represents a $153 million decrease from the FY05 Plan. As discussed above, delays in receiving permission to enter final design by the FTA have deferred some of the cash flows on the LRT Phase II Build-out, also deferring the related debt issuance. For financial planning purposes, DART will issue all of its authorized Commercial Paper prior to issuing any long-term debt. In reality, when debt is required to fund DART's capital programs, management will pursue a policy of initially funding these expenditures with Commercial Paper and then issuing long-term debt to replace CP when it is financially advantageous to do so. Additional details regarding DART s Debt Program are shown under Uses of Funds. Other Sources (line 7) Other sources of funds total $107 million between FY 2006 and FY 2010 and represent 2.1% of total sources of funds for that same period. This line item is predominantly composed of nongrant contributions from other public entities, such as the Fort Worth T's contribution toward its share of the operating and capital costs for the Trinity Railway Express ($48 million and $8 million, respectively), $31 million from the City of Irving s contribution toward the Phase II LRT Build-out, and $20 million in other miscellaneous contributions. FP-10

120 FY 2006 Twenty-Year Financial Plan USES OF FUNDS Operating Expenses (lines 9 through 15) Total operating expenses for the period FY 2006 through FY 2010 are projected to be $1.74 billion, which is essentially the same as FY05 Plan over the same period of time. Exhibit 10.9 shows the modal distribution of total operating expenses for the period FY06 through FY10. Exhibit 10.9 Operating Expenses FY06-FY10 (In Millions) $170.2 $40.7 $6.5 $111.0 $382.2 $1,032.5 Bus Commuter Rail/RR Management HOV Transitways Light Rail Transit Paratransit General Mobility - TDM Changes in operating expenses that are built into the Financial Plan for future years are controlled from a policy perspective, by Financial Standards B3, B4, and B5 (see Exhibit APX.2). FS-B3 and FS-B4 relate to fixed route service, which accounts for nearly 88% of projected operating costs over the next five years. The primary cost drivers for the variable expenses of fixed route service are the number of miles, hours, and vehicles in service, contract rates for purchased transportation, and fuel prices. The key efficiency measurement for DART is subsidy per passenger. Service levels and subsidy per passenger are discussed in detail in the Executive Summary and modal sections of this report. FS-B5 places a limit on the total increase in operating expenses to 90% of inflation plus service changes and new programs. Exhibit compares the historical and projected future operating budget as well as annual operating expense growth. FP-11

121 FY 2006 Twenty-Year Financial Plan Exhibit Historic Growth vs. Projected Growth Operating Expenses $500 20% $ % $ % Operating Expenses (Millions) $300 $ % $264.2 $ % $304.5 $305.9 $294.2 $ % $ % $ % $359.2 $ % 5.0% 10% 5% Annual Growth Rate 2.8% $ % 0% $0-3.8% FY00A FY01A FY02A FY03A FY04A FY05B FY06B FY07P FY08P FY09P FY10P -5% Operating Expenses Growth Rates This perspective shows the budget growth for the past five years and the next five years both in absolute dollars and as a growth percentage. The increases in the first three years (FY00 FY02) show the growth related to opening of the Phase I Build-out. The next two years (FY03 FY04) show DART s cost-cutting measures adjusting to the reduced sales tax receipts. The future growth rates include normal inflationary growth and allowance for system expansion such as: the Phase II LRT Build-out, additional passenger facilities maintenance, new HOV lanes, etc. In future years of the plan, operating expenses for each modal line item are based on the prior year s budget, plus 90% of the inflation rates projected by the Perryman Model, plus the incremental cost of operating new services new facilities and other approved programs. Bus Expenses (line 9) Bus operating expenses for the five-year period ending in FY 2010 are $1.03 billion, $12 million (1.1%) lower than in the FY05 Plan for the same period. While fuel and benefits costs have put pressure on cost growth, DART has mitigated those increases by modifying inefficient service, replacing some bus service with Innovative Services (DART On-call van service), and continuing attempts to improve service delivery. Additional details are included in the Bus modal section. FP-12

122 FY 2006 Twenty-Year Financial Plan Light Rail Transit Expenses (line 10) This line includes the projected annual cost to operate and maintain DART's 46-mile light rail system. Light rail operating expenses are $69.3 million in FY06 and $382 million between FY 2006 and FY 2010, $5.4 million (1.4%) lower than the FY05 Plan. More details are included in the LRT modal section. Commuter Rail and Railroad Management Expenses (line 11) This line includes the consolidated cost to operate the TRE and railroad corridor management costs for DART-owned active freight rail lines. DART and the T contract with an outside provider for the TRE service. Projected TRE operating expenses for the next five years are $111 million, $6.8 million (6.5%) higher than for the same period in the FY05 Plan. The primary reason for the increase is additional services that will be provided in Tarrant County and paid for by the T. Please refer to the more detailed discussion in the Commuter Rail modal section. Paratransit Expenses (line 12) Paratransit expenses are budgeted at $31 million for FY06 and $170.2 million over the next five years. This is an increase of $5.9 million (3.6%) over the FY05 Plan. The rise is due to increasing service hours related to the FTA-mandated policy of zero trip denials. This mandate increases ridership and decreases productivity. DART management is working actively to mitigate the effects of this policy. Additional details are included in the Paratransit Services modal section. High Occupancy Vehicle (HOV) Transitway Expenses (line 13) HOV costs are projected to be $40.7 million between FY 2006 and FY 2010, $8.9 million (28%) higher than the FY05 Plan. The increases are predominantly due to the insertion of two new HOV lanes into DART s Capital Program, which are scheduled to be completed in A more detailed discussion of HOV programs is included in the HOV/General Mobility section. General Mobility (GM) Transportation Demand Management (TDM) Expenses (line 14) General Mobility programs consist mainly of vanpool services and, at $1.2 million for FY06, represent less than half of 1% of the total operating budget. Projected costs are $6.5 million over the next five years, which is a $1.1 million decrease from the FY05 Plan. This decrease is a result of capping the growth of some of these programs. Additional details on General Mobility programs are contained in the HOV/General Mobility section. FP-13

123 FY 2006 Twenty-Year Financial Plan Capital and Non-Operating Expenditures (lines 16 through 24) FS-B9 requires that "Timely replacement of assets shall be the highest priority to ensure a safe system, and that reserve levels shall be based on an independent assessment of asset condition (to be completed at least once every five years)." Such a study was completed in FY 2002 and is the basis for much of the capital program. Capital and Non-Operating expenditures total $2.85 billion through FY This is a decrease of $155 million (5.2%) below the same period from the FY05 Plan due primarily to revised cash flows for the Phase II LRT Build-out. Capital projects are organized into four categories: Expansion, Replacement, Maintenance, and Other. Expansion projects include the addition of new facilities and/or passenger amenities (e.g., transit centers), infrastructure for new services (e.g., light rail/hov/commuter rail) and the addition of new operating facilities. Replacement projects include like-kind asset replacements for vehicles, equipment, and infrastructure. Maintenance projects include major maintenance programs and vehicle and facility rehabilitations that are scheduled at regular intervals. Other projects are for those items that do not fit into any other category, such as planning studies, emission reduction programs, safety equipment, enhanced signage, etc. Exhibit details the modal and categorical distribution of capital projects. Exhibit Capital Expenditure Categories FY06-FY10 (In Millions) Mode Expansion Maintenance Replacement Other Total Agency-wide $0.0 $1.5 $47.2 $3.3 $52.0 Bus LRT 2, ,279.6 Commuter Rail Paratransit HOV GM, SU, Non-Ops and P&D Total $2,512.7 $63.3 $250.6 $24.0 $2,850.6 Please Note: This table does not include any dollars that are unspent as of September 30, 2005 that were allocated to approved FY05 projects, which will be rolled into the FY06 Budget. Capital Planning, Start-up Costs, and Non-Operating (line 22) Capital planning and start-up costs are predominantly internal staff costs associated with planning, designing, managing, constructing, and opening new capital projects such as the light rail system. FS-B8 limits capital planning costs to no more than 7% of the total operating budget and start-up costs to no more than 60% of the first year's operating cost. This category of costs has dropped $12.2 million (8.3%) from the FY05 Plan, to $119.4 million for the five-year period ending in FY A more detailed allocation process resulted in much of this reduction. FP-14

124 FY 2006 Twenty-Year Financial Plan Non-operating costs relate to projects/programs that are not accounted for as operating costs or capitalized as an asset. These costs are charged through the income statement as a non-operating expense. Examples of non-operating costs are: consulting costs for the Transit System Plan revision, the Love Field Alternatives study, and various other capital planning studies. Total non-operating costs through FY 2010 have increased by $2 million (to $10.6 million), including support of the next update for the Transit System Plan Update and other capital studies. General Mobility Road Improvement Programs (line 23) FS-B7 limits General Mobility Road Improvement Programs to funding allowed under the terms of the approved Interlocal Agreements (ILA). Road improvement programs include the Local Assistance Program/Congestion Management System (LAP/CMS), Principal Arterial Street System (PASS), Transportation System Management (TSM), and Intelligent Transportation System (ITS) projects. These programs have essentially remained the same and are discussed in the HOV/General Mobility section. Capital Reserves Reserves represent funds that are set aside to fund projects of a specific type, the exact nature, timing, and amount of which is unknown at the present time. When a project is requested and approved which applies to a specific reserve, the new project is put into the capital program and the balance of the reserve is reduced by the budgeted cost of the new project. Reserve balances are reviewed on an annual basis to ensure that they are adequate to cover future needs for each respective expenditure type. Capital Projects Listing Exhibit lists all approved capital projects for the 20-year life of the Financial Plan, including projected expenditures in FY06, five-year totals ( ), 20-year totals ( ), and external funding related to each project. Projects highlighted in green are either reserves or new projects for FY06 that are funded from those reserves. Projects highlighted in blue are new additions to this year s Plan, and projects highlighted in yellow are projects that were included in the FY05 Plan, but have had approved increases in funding. FP-15

125 FY 2006 Twenty-Year Financial Plan Exhibit Capital & Non-Operating Project Listing (In Thousands) AGENCY - WIDE FY06 5-Yr Total 20-Yr Total DART Administrative Facility Maintenance $115 $1,049 $5,554 $5,554 IT Reserves 198 4,974 4,974 Five-Year Information Technology Initiatives & Strategic Plan Enterprise Archive and Retrieval Software Repair Slab Cracks, Curtain Walls Replace Federal St. Elevators (3) CAD Automation 75 1,119 1,119 Replace Portable Radios Radio Systems Replacement 2,200 44, , ,535 Police Mobile Data Computers (MDCs) 1,311 6,324 6,324 Enterprise Server Upgrade Agency WAN/LAN Upgrade 700 1,400 1,400 1,400 Replacement of Copiers with Multifunction Printers Disaster Recovery Implementation 1,500 1,500 1,500 1,500 Scheduled Replacement - Color Plotter for Planning Scheduled Replacement - Police Skywatch Towers Scheduled Replacement - Motorcycle Trailer Six Currency Counters with Printers Commuter Alert System Bus Fare Collection Equipment Surveillance System Three Encoding Machines for Piloting Pass Program TOTAL AGENCY-WIDE $6,153 $51,970 $131,453 $131,453 External Funds HOV FY06 5-Yr Total 20-Yr Total DART External Funds SH 114 $479 $5,905 $13,445 $13,445 I-635 HOV West 1,000 1,000 1, $800 I-635 HOV East 7,000 15,000 15,000 3,000 12,000 I-30 HOV Extension East to I-635 5,000 10,000 10,000 2,000 8,000 IH 635 (LBJ) 2,441 21,551 54,987 54,987 IH30 (Turnpike) 1,723 3,515 3,515 3,515 HOV Maintenance Reserve Police Motorcycle Replacements 584 1,228 3,576 3,576 TOTAL HOV $18,226 $58,249 $101,573 $80,773 $20,800 PARATRANSIT FY06 5-Yr Total 20-Yr Total DART External Funds Paratransit VBS Equipment Replacement $110 $611 $1,074 $1,074 Van Replacements 12,239 61,941 61,941 Paratransit Facility Purchase 2,300 2,300 2,300 2,300 Digital Recorder Upgrade Trapeze PASS (4.471)/Ontira (IVR) Upgrade TOTAL PARATRANSIT $2,452 $15,192 $65,604 $65,604 FP-16

126 FY 2006 Twenty-Year Financial Plan Exhibit (cont.) Capital & Non-Operating Project Listing (In Thousands) BUS FY06 5-Yr Total 20-Yr Total DART External Funds Maintenance Equipment Reserve $28 $877 $3,908 $3,908 Vehicle Main. Prog.(w/out body program) Reserve 3,578 10,801 35,773 35,773 Bus Operating Facility Maintenance Reserve 73 5,339 29,396 29,396 Fall Restrain Body Support LNG fuel tank service equipment Install New Drive On Inground Bus Lift (steambay) Rehab Bus Washer Portable ramps for NABI buses Install caps on storefront awning support columns Repair collapsed sanitary sewer piping in steambay Replace bus lot light standards and fixtures Concrete Repair Seal Bus Lot Replace Front Inground Lift C Channels Bus Purchase Program 118, , ,750 $237,322 NRV-Sedans/Vans/Lt. Trucks 966 3,792 21,575 21,575 NRV-Sedans/Lt. Trucks-equipped 243 1,098 7,421 7,421 NRV-Heavy Trucks 1,407 5,654 5,654 NRV-Equipment registered NRV-Equipment/non-registered ,406 2,406 NRV-Police Sedan/Vans 54 1,231 6,074 6,074 GPS/AVL System Upgrade Bus Surveillance System Pilot Bus Seat Replacement ELM/Lamar Patron Plaza TERP Emission Reduction Retrofit For 2002 Diesel Engines $900 $900 $900 $ BRT Elm and Commerce Bus Lanes Reconstruction 7,000 7,000 1,400 5,600 On-Street Passenger Facilities 2,906 11,250 11, ,271 Farebox Replacement 14,537 14,537 Low Emission Bus 1,465 2,484 2,484 2,484 On-Call Van Replacement 803 1,691 4,922 4,922 Bus Purchase (70) 75 25,919 25,919 18,143 7,776 Portable Lift Sets High Temp. Oven/kiln filter cleaning Used Oil Submergible Pump Replacement Dust Control and electrical service for new brake lathe NRV for the Communication Section Upgrade Rear Lift Post Structural Integrity Replace Roof - Study Shore Power - Electric A/C Bus Upgrade OC Restrooms Facilities NOVA Bus Floor Replacement Bus Station and Parking Lot Upgrade / Overhaul ,227 2,227 TOTAL BUS $14,834 $196,515 $977,072 $714,602 $262,845 FP-17

127 FY 2006 Twenty-Year Financial Plan Exhibit (cont.) Capital & Non-Operating Project Listing (In Thousands) LRT FY06 5-Yr Total 20-Yr Total DART External Funds High Rail Equipment (Vehicles) $2,019 $6,987 $6,987 WSA Maintenance Equipment Reserve $32 1,030 4,265 4,265 Coachscrew Track Machine Portable Air Compressor Prism DS Infrared Camera (SS) Dual Channel Power Meter Microwave Spectrum Analyzer RF Communications Test Set RF Spectrum Analyzer Spectrum Analyzer Mig-Welder S&I Track S-6 Car/Body Hoist Motor Brake Replacement Emergency Lighting Battery Replacements S&I - Liebert & LORETEC UPS Battery Replacement LRV Maintenance Prog (w/o Body) Reserve 2,516 10,436 50,554 50,554 Starter System Communications House Repair Replace Shop Air Compressors and Dryers Large Bead Blast Cabinet with Turntable for LRV Maintenance S&I Body Shop Replacement of ACCU-C1, C Repair of Tower 18 Comm./Signal House LRT Expansion Systems 860 3,560 3,560 3,560 LRV/ROW Systems Reserve 2,319 9,208 9,208 LRT Passenger Amenities Reserve 721 2,354 2,354 Communications Reserve 19 1,993 6,296 6,296 LRT Operating Facility Maintenance Reserve ,952 7,952 Love Field 1,107 21,782 25,778 25,778 LRT Phase II Build-out 233,041 2,154,984 2,925,152 2,138,470 $786,681 MARTA Track - Distressing and crossing panels 1,682 1,682 1,682 1,682 Bryan Street Bridge Ramp Replacement at US 75 2,100 5,300 5,300 5,300 LRT Build-Out Program-Wide $1,059 $1,614 $1,614 $1,614 S&I Expansion - Phase II 12,200 12,678 12,678 9,100 3,578 S&I Ventilation System Hwy/Rail Grade Crossing LED Flashing Lights Power-Operated Switch Machine Refurbish Tunnel Delamination Study/Project 1,500 2,382 2, ,000 TPSS Battery Charger Replacement Hawkins St. Rail Junction 6,100 14,785 14,785 14,785 Rail Surveillance System Pilot Portable Generator (Passenger Amenities) Messenger Saddle Insulator Portable Generator (TES) Insulation Tester LRT Vehicle Business Systems (VBS) 824 8,004 22,645 22,645 Passenger Emergency Call (PEC) FP-18

128 FY 2006 Twenty-Year Financial Plan Exhibit (cont.) Capital & Non-Operating Project Listing (In Thousands) LRT (Continued) FY06 5-Yr Total 20-Yr Total DART External Funds Replacement of Current LRV Fleet (95) 223, ,235 Vehicles (20) 25,872 25,872 25,872 12,162 13,710 Light Rail Vehicle Door Timing Tunnel Software Upgrade Signal Generator (Life Cycle Replacement) Interlocking Event Recorders Replacement Downtown Dallas LRT/ Traffic Signal Priority (TSP) Improvement 553 3,500 8,204 8,204 Hydraulic Hanger Equipment Insulation Tester Portable Generator (TES) Protective Relay Tester LRT Starter System Battery Replacement Kinkisharyo Parts Manuals Computer System Upgrades at Santa Fe Junction Interlockings TPSS Sectionalizing Switches (SS) ,092 1,092 LRT Station and Parking Lot Upgrade / Overhaul (Starter System) ,817 1,817 TOTAL LRT $293,883 $2,279,597 $3,368,518 $2,556,249 $812,269 COMMUTER RAIL FY06 5-Yr Total 20-Yr Total DART External Funds TRE Vehicle Maintenance Programs $39 $3,757 $24,056 $14,098 $9,958 Couplers for Bi-Level Coaches Purchase F59PH Turbocharger Purchase HEP Engine for Locomotive RDC Auxiliary Power Unit (APU) RDC Transmission Rebuild Bi-Level Coach Side Bearings Bi-Level Wheels Locomotive Wheel/Axle Assembly TRE ROW Maintenance Programs 225 1,219 6,699 2,796 3,903 Locomotive Overhaul 2,000 4,688 1,544 3,144 Bi-Level Fleet Overhaul 3,000 6,250 14,649 4,825 9,825 Lisa to Perkins Double Track 4,342 4,342 4,342 3,231 1,110 Beltline Grade Separation 11,788 26,788 26,788 2,186 24,602 CentrePort/DFW Station Double Tracking (Dorothy Sink) 1,467 22,000 22,000 2,200 19,800 Valley View to W.Irving Double Tracking 400 4,400 4, ,520 Train Dispatching Control System Grade Crossing Improvements 2,138 2,138 2, ,091 TRE Track Upgrade Medical & Market Ctr Area $ $4,000 $4,000 $800 3,200 TRE Station Enhancements 4,500 4, ,050 TRE Train Set Phase I TRE Train Set Phase II 10,000 10,000 1,000 9,000 CentrePort / DFW Station Double Tracking 2,000 4,000 4, ,600 Beltline/TRE Grade Separation 6,000 11,212 11,212 3,712 7,500 FP-19

129 FY 2006 Twenty-Year Financial Plan Exhibit (cont.) Capital & Non-Operating Project Listing (In Thousands) COMMUTER RAIL (Continued) FY06 5-Yr Total 20-Yr Total DART External Funds Rebuild Locomotive Traction Motors RDC Wheel/Axle Assemblies Brookhollow "B" Lead 500 3,500 3,500 1,180 2,320 Switch Grinding Joint Elimination (Thermite Welding) Ballast Deck Bridge Tie & Rail Replacement Bridge Repair at DFW and Madill Main Line Grinding Curve Rail Replacement Tie Renewal / Replacement ,058 2,058 Switch Installation (split over 3 years) Commuter Rail Station and Parking Lot Upgrade TOTAL COMMUTER RAIL $35,263 $113,469 $152,346 $44,323 $108,023 CAPITAL P&D, START-UP, AND NON-OPERATING FY06 5-Yr Total 20-Yr Total DART External Funds Capital P&D $19,771 $103,459 $367,731 $367,731 Road Improvements 2,100 5,584 14,216 14,216 Start-Up 15,976 34,454 34,454 Non-Operating 3,624 10,562 18,230 18,230 $1,800 TOTAL CAPITAL P&D, START-UP, AND NON-OPERATING $25,494 $135,581 $434,632 $434,632 $1,800 GRAND TOTAL $396,306 $2,850,572 $5,231,199 $4,027,637 $1,205,737 Existing projects Additional requested funds for existing projects New recommended projects Reserves & new projects to be funded from existing reserves Debt Program (lines 6, 24-26, and 36-39) With the passage of a referendum on August 12, 2000, DART received voter authorization to issue up to $2.9 billion of sales tax-backed long-term debt. DART has established a two-tiered debt structure: 1) commercial paper as the initial financing tool; and 2) long-term bonds. Each of these is discussed below: FP-20

130 FY 2006 Twenty-Year Financial Plan Commercial Paper Program On January 23, 2001, the Board approved a Master Debt Resolution, which authorized DART to pledge its sales tax revenues, on a senior subordinated basis, for the issuance of Senior Subordinate Lien Sales Tax Revenue Commercial Paper Notes. On the same day, the Board authorized the issuance of up to $650 million in Commercial Paper to be issued to: a) fund its capital acquisition program; b) refund $150 million in outstanding North Central Light Rail Project Notes; and c) fund its self-insurance program. Upon the first issuance of Senior Lien Obligations (Long-Term Bonds) the authorized amount of Commercial Paper was decreased to $450 million. The Commercial Paper program is backed by a liquidity facility supplied by Westdeutsche Landesbank, Bayerische Landesbank, Landesbank Baden- Wurttemberg, and State Street Bank and Trust. It is anticipated that the facility will be increased up to an authorized amount of $600 million in FY06 and a fourth bank will be added to the group. The FY06 Plan includes the assumption that DART will issue $260 million of Commercial Paper in FY 2006 and an additional $43 million in FY 2007 to partially fund its capital program. It is projected that DART will have $557 million in outstanding Commercial Paper at the end of FY Long-Term Bonds On January 23, 2001, the Board approved a Master Debt Resolution, which authorized DART to pledge its sales tax revenues, on a senior lien basis, for the issuance of up to $2.9 billion in Long-Term Bonds. The Long-Term Bonds are issued to fund DART s capital program or refund Commercial Paper. The FY06 Plan assumes that no Long-Term Bonds will be issued in FY It is projected that DART will have $478.7 million in outstanding Long- Term Bonds at the end of FY This is the remaining principal balance of the nearly $498.7 million in bonds that were issued in Exhibit shows projected issuances of shortterm and long-term debt, and debt outstanding over the twenty-year life of the plan. FP-21

131 FY 2006 Twenty-Year Financial Plan Exhibit Projected Net Debt Issuances by Fiscal Year Chart (In Millions) Net CP LT Debt Total LT Debt EOY Debt Issuance* Issuance Issued Outstanding FY 2006 $260 $0 $499 $1,036 FY ,266 FY ,191 1,748 FY ,774 2,311 FY ,099 2,608 FY ,276 2,752 FY ,463 2,901 FY ,532 2,927 FY ,572 2,921 FY ,602 2,902 FY ,676 2,924 FY ,704 2,896 FY ,753 2,885 FY ,753 2,822 FY ,753 2,754 FY ,753 2,683 FY ,753 2,609 FY ,753 2,530 FY ,753 2,446 FY ,753 2,358 * Excludes repayments and refundings Coverage Ratios (Lines 38-39) Financial Standard FS-D7 requires that DART maintain a debt coverage ratio (the External Coverage Ratio) such that Gross Sales Tax Revenues must be at least two times the amount of annual Debt Service. This is the standard that DART is held to by the financial marketplace and in its own external debt documents. In those documents, DART agrees that it will not issue additional debt when it does not comply with this standard. DART is easily in compliance with the standard throughout the life of the Plan. The lowest value for this coverage ratio in the FY06 Financial Plan is 2.47, occurring in 2012, which is a slight improvement from the FY05 Plan when the minimum value was FP-22

132 FY 2006 Twenty-Year Financial Plan DART also has a goal to maintain another coverage ratio (the Internal Coverage Ratio). This ratio states that the sum of Sales Taxes, Operating Revenues (and the T s contribution to operating expenses), Interest Income, and Formula Funding exceeds Total Annual Debt Service Requirements by a factor of 1.25 for the first five years of the Plan and by a factor of 1.5 for the remainder of the Plan. DART s FY 2006 Financial Plan does not comply with this standard between 2011 and 2020, dropping to a low value of 1.02 in This is a slight improvement over last year s Plan when the minimum value was Complying with this standard would result in a substantial additional delay to the LRT Phase II build-out. While the Internal Coverage Ratio is a goal, it is self-imposed and not a legal or contractual requirement. The DART Board has chosen an accelerated LRT Build-out schedule over compliance with this standard. Exhibit summarizes the major commercial paper and long-term debt assumptions. For purposes of the Financial Plan, 30-year bonds are assumed; however, shorter-term notes may be sold depending on interest rates and other considerations, as determined at the time of issuance. Exhibit FY06 Financial Plan Debt Assumptions Commercial Paper Long-Term Debt (LTD) Description FY 2006 Future FY 2006 Future Term <5 years <5 years 30 years Up to 30 years Interest rates + fees 3.00% 4.0%-5.0% n/a 5.25%-6% Credit enhancement? No No n/a Yes Principal and interest repayment Refund w/ltd Refund w/ltd Level Debt Level Debt Total debt issued $260M $43M $0 $2.25B Maximum debt outstanding $557M $600M $478.7M $2.3B Year of maximum debt outstanding n/a FY n/a FY 2013 Cash reserves required? No No No No Issuance costs n/a n/a n/a 2% Uninsured Debt Rating assumed A1+/P1 A1+/P1 AA- AA- FP-23

133 FY 2006 Twenty-Year Financial Plan SUPPLEMENTAL FINANCIAL INFORMATION Net Increase (Decrease) in Cash and Change in Balance Sheet Accounts (lines 29-30) Based on each year s projected sources and uses of cash, DART has projected its Balance Sheet for each year of the Plan. These line items reflect the net change in cash and non-cash working capital balance sheet accounts. The Change in Balance Sheet Accounts line item is used as a compensating factor for the lag between the occurrence of an accounting transaction which affects the balance sheet and the actual receipt or disbursement of cash. DART's projected Balance Sheet for each of the first five years of the Financial Plan is included in Exhibit APX.5. Cash Reserves (line 33) DART maintains several cash reserves. FS-G5 requires a Master Insurance Reserve for claims and Board liability exposure ($11.6 million balance as of September 14, 2005). FS-G7 requires that sales tax collections that exceed budget during a year be placed in a "Financial Reserve" account ($29.4 million balance as of September 14, 2005). These funds may be used for any purpose, subject to an affirmative vote of two-thirds of the appointed and qualified Board members. This line item represents the projected end-of-year value. Working Cash Requirements (line 34) This line is included in the Financial Plan because of FS-G6, which states "since sales taxes are received on a monthly basis, the unrestricted cash balance at the end of the year shall not be less than one-twelfth of the difference between the subsequent year's total sources of cash (excluding sales taxes) and total uses of cash as projected in the Financial Plan." DART actually reserves two-twelfths of projected annual sales tax receipts; however, the additional month s reserve is invested in longer-term securities to earn additional interest income. The combination of the Financial Reserve and this working cash balance ensures that DART always has a minimum of approximately three months of net expenditures on-hand. This line item represents the projected end-of-year value. Net Available Cash (line 35) This line item represents the projected end-of-year value and is the bottom-line check regarding the long-term affordability of DART s programs. As long as this value is positive, the Plan is affordable. In the FY 2006 Financial Plan, the minimum amount of Net Available Cash is $59.4 million in This amount is in addition to the reserves in lines 33 and 34 and as such, represents DART s unprogrammed cash balance. FP-24

134 FY 2006 Twenty-Year Financial Plan This year of minimum financial capacity is referred to as the Critical Year. Every decision that is made, every change to a financial plan assumption or estimate is made with an eye toward that Critical Year. In the FY06 Plan, the Critical Year is At this time, it is projected that DART will have $84.3 million in Net Available Cash and $147 million in available long-term debt capacity. Because the current plan includes debt issuance in 2018, the year of lowest ending cash balance (2017) is not the same as the year of minimum financial capacity (2018). Exhibit graphically depicts DART s Financial Plan. Each bar on the chart represents total expenditures by fiscal year with each color representing a different type of expenditure. The red line above the expenditure bars shows DART s total financial capacity including the unrestricted cash balance as of the end of the year and unissued long-term debt ($2.9 billion authorized minus total issued to date). FP-25

135 FY 2006 Twenty-Year Financial Plan FP-26

136 FY 2006 Twenty-Year Financial Plan MAJOR FINANCIAL PLAN ASSUMPTIONS Sources of Funds o Sales taxes up 3% from budget (to $339.3 million) in FY05; up 4.0% (to $352.9 million) in FY06; up 5% thereafter; o Fare increase of 17% (the same magnitude as the FY03 fare increase) programmed every 5 years; the next increase is programmed in FY08; o Ridership increases (primarily due to regional population and employment growth): Bus ridership remains flat for FY06, then increases 1.5% per year through FY10, then begins to taper down to 0.5% growth per year in FY18 and beyond. These are base growth rates. Bus ridership will decline as bus services are replaced by new Light Rail lines at a rate of one bus rider lost per five new LRT riders gained; LRT ridership grows by 5% in FY06 with a full year of Victory Rail Service and increases by 1.5% per year through FY14 (plus new openings), then begins to taper down to 0.5% in FY24 and beyond; Commuter Rail ridership increases 5% in FY06 primarily due to increased service in Tarrant County, then grows by 1.5% for each year of the Plan; HOV ridership grows by 1.5% (plus new openings) for each year of the Plan; Paratransit Ridership increases by 6% in FY06 due to increasing demand fueled by zero denials. Efforts to control this growth as outlined in the Paratransit Action Plan, results in lower future growth rates 1% per year through FY10 and then begins to taper down to 0.1% in FY13 and beyond; o Advertising and other miscellaneous operating revenues grow by inflation each year; o Investment portfolio yields remain 1.0% 1.5% above the commercial paper rates through the life of the Plan; o DART receives $46.3 million in Federal Formula money for Capital Preventive Maintenance and Fixed Guideway Modernization every year for the life of the Plan; o Future Bus revenue vehicle procurements receive 30% Federal Funding; o DART receives $700 million Full Funding Grant Agreement (FFGA) for the NW/SE portion of the LRT Phase II Build-out; o $32.8 million in CMAQ funds to be received in 2006 and $101.9 million over the first five years of the Plan. As additional funds become available and more projects are identified to access these funds, additional CMAQ funds will be programmed into the Plan; o $57.5 million in other external capital contributions including the T's contribution to TRE capital, various member city contributions, Homeland Security Grants, etc. between 2006 and 2010, and $139.2 million over the 20-year life of the Plan. FP-27

137 FY 2006 Twenty-Year Financial Plan Uses of Funds o Operating Expenses Operating budget of $323.9 million in FY06; Annual inflation of 2.7% in 2006, tapering down to 2.3% by the end of the Plan; Operating expense growth by 90% of inflation plus new service and other new programs; Bus service levels remain constant beyond FY06; LRT service levels remain constant beyond FY06, except for Phase II line segment openings; TRE service levels remain constant beyond FY06, and contract costs are programmed to grow at 4%; Paratransit contract costs grow by approximately 5% per year including both growth in service demand and contract rate increases; The number of Vanpools is capped at the current level for the life of the Plan; $10.3 million is included in the Plan beginning in FY08 to fund post-retiree health benefits. o Capital & Non-Operating Annual inflation rate of 4% for LRT build-out costs; Capital Planning & Development budget of $19.8 million in FY06. This grows by 90% of inflation each year and then begins to taper down after major Phase II construction is completed (beginning in FY11); The next bus purchase is in 2008 and is for less than 30-foot buses; All future buses are replaced with zero-emission vehicles (ZEVs) every 12 years (next purchase in FY10). o Debt Service $600 million in Commercial Paper (CP) capacity; $2.9 billion in long-term debt (up to 30-year) capacity ($2.75 billion issued); Long-term debt issued at interest rates of 5.25% in FY07, 5.5% in FY08, 5.75% in FY09, and 6% thereafter; The amount, type, and timing of debt issuance will depend on DART s financial needs and market conditions. FP-28

138 FY 2006 Twenty-Year Financial Plan POTENTIAL RISKS AND OPPORTUNITIES Sales Tax receipts are unquestionably the most important estimate in the Financial Plan, and therefore are the largest single area of risk to DART s ability to meet its goals and objectives. DART is projecting long-term growth rates of 5% per year after FY06. Because DART's Service Area has been almost fully developed and most of the growth in North Central Texas will occur outside the Service Area, a 5% long-term growth rate may be difficult to sustain. DART s economic consultant, Dr. M. Ray Perryman is still forecasting growth rates that exceed this rate for the next 15 years. Use of the Perryman Model projections as given, without Management s adjustments, would yield nearly a billion dollars more in cash than is reflected in the Plan. Projected ridership growth rates of 1%-1.5% for DART's fixed route services over the next years may be difficult to sustain for the same reasons discussed related to sales taxes. However, ridership jumped substantially in the last few months of FY05 due to markedly higher fuel prices. That makes our baseline numbers for FY06 likely to be understated, which should help us achieve our targets in the future. Additionally, the region appears to be in a period of economic recovery which could give rise to an additional risk. If ridership increases as projected and if that increase is highly peak intensive, additional unbudgeted capital for expanding vehicle fleets and additional unbudgeted service might be required. DART has programmed $700 million in Federal Funding for the LRT Phase II build-out. At this point in time, DART appears to have a favorable chance to receive the full $700 million. However, if the request is not approved in its entirety, DART might incur delays to the LRT Phase II build-out. Another potential risk with the FFGA relates to the timing of the receipt of these funds. If DART does not receive these funds in a timely manner, additional debt may need to be issued to fill that funding gap. This will result in a long-term reduction of cash available. However, as a possible offset to the FFGA money and other revenue shortfalls, there are unprogrammed opportunities in the arena of federal funding. Currently the Financial Plan projects that DART will receive $46.3 million each year in Formula and Fixed Guideway Modernization Funds and, in accordance with FS-B10, this value is not inflated. Allowing this value to be increased by inflation would add nearly $400 million to the Plan. Even allowing for inflation is a very conservative estimate, as over the last ten years, these funds have averaged more than a 10% increase per year. If the Plan assumed a 5% annual increase, over $900 million in additional funds would be added to the Plan. Also, it is possible that DART will receive federal funds for Irving, SOC-3, or CBD line segments, as well as CMAQ funding for other projects that are not currently included in the Plan. Another opportunity in the federal funding arena relates to future bus purchases that have only been programmed at a 30% federal funding level. Additional money might be available, particularly for zero-emission vehicles (ZEVs). FP-29

139 FY 2006 Twenty-Year Financial Plan DART is constrained by FS-B5 to grow operating expenses by no more than 90% of the projected inflation rate, plus new programs and service. This limit on operating expenses will be very difficult to attain. Approximately two-thirds of DART's FY05 Budget is composed of salaries, wages, and benefits. In the long term, these costs must at least grow by inflation, or DART s ability to attract and retain quality employees may be adversely impacted. Also considering the highly volatile energy market and the annual double digit increases in health care costs, this presents a major challenge for DART. DART has attempted to identify all foreseeable capital projects, but every year additional new projects are requested. If significant additions to the capital program (and associated operating costs) are required without concurrent increases in revenues or deletions of offsetting capital projects, this could cause affordability issues. Also, in the next 6-12 months, DART will complete its 2030 Transit System Plan Update. This update may identify additional required capital expenditures or service requirements. Based on the Perryman Model (and supported by the last 20 years of experience), inflation is estimated at an average of approximately 2.5% per year for the life of the Plan. Because inflation affects sales tax revenues and both operating and capital expenditures, it has many risks and many potential opportunities associated with it. DART is at risk if either capital inflation is substantially greater than general inflation, if inflation declines, or if the economy enters a period of deflation. Conversely, DART stands to benefit if inflation increases substantially, particularly in the middle years of the Plan after the majority of Phase II dollars have been spent and debt has been issued. This would allow DART to repay its fixed longterm debt obligations with deflated dollars. Current long-term debt interest rates are approximately 5%. They are programmed into the Plan at 5.25% in FY07, rising to 6% in FY10 and beyond. DART is at risk if long-term rates rise more quickly than anticipated or rise above 6%. Conversely, if interest rates remain at or near their current levels, DART stands to benefit. Clarifying a possible point of misconception, the current and projected future increases in the Federal Funds rate has minimal impact on rates that DART expects to pay on its long-term debt. Short-term rates are far more volatile than long-term rates and it would take a major upward move in shortterm interest rates to substantially affect long-term rates. DART may be able to build its sales tax revenue base through the addition of new cities to the Service Area or through the pursuit of other Legislative changes. Preliminary discussions are underway in the Metroplex for a Regional Transit Authority to fulfill the transportation needs of the region for the gaps in between DART, the T, and Denton County Transit Authority (DCTA). This is a highly complex issue that could either have a positive or negative impact on DART. Any such Regional Authority might require a tax restructuring which might benefit DART. It also might provide DART with increased ridership (and therefore revenue) as other areas currently without transit, connect with our services. It also creates a risk that DART will receive less of the Federal money that is allocated to this region because it will now need to be spread among more entities. FP-30

140 Section 11 Appendix Index of Exhibits Exhibit APX.1 Exhibit APX.2 Exhibit APX.3 Exhibit APX.4 Exhibit APX.5 Exhibit APX.6 Exhibit APX.7 Exhibit APX.8 Resolutions Approving FY 2006 Budget and Twenty-Year Financial Plan..... APX-1 FY 2006 Financial Standards..... APX-6 FY 2005 Financial Plan, As Amended APX-12 FY06-FY10 Changes in Sources & Uses of Cash... APX-13 Five-Year Balance Sheet..... APX-14 Glossary of Terms/Definitions APX-15 Acronyms.... APX-19 Organization Chart through Assistant Vice-President.... APX-21

141 Appendix Exhibit APX.1 APX-1

142 Appendix APX-2

143 Appendix APX-3

144 Appendix APX-4

145 Appendix APX-5

146 Appendix Exhibit APX.2 FY 2006 Financial Standards Resolution No The Financial Standards are divided into three sections: General, Debt Service, and Business Planning Parameters. The purpose of the general standards is to ensure that DART prudently manages its financial affairs and establishes appropriate cash reserves. The purpose of the debt service standards is to limit the level of debt that may be incurred and to ensure that debt assumptions are based on financial parameters similar to (or more conservative than) those that would be placed on DART by the financial marketplace. Actual debt covenants may differ from these standards. Where this occurs, the Financial Plan will reflect the actual covenants in the Board-approved debt instrument. The Business Planning Parameters provide management with a framework for developing the following year's budget and the twenty-year Financial Plan and establishing future business targets for management to achieve. Since DART's enabling legislation requires a two-thirds vote on debt and the Financial Plan, approval or amendment of DART's Financial Standards will require an affirmative vote of two-thirds of the appointed and qualified Board members. Financial Standards - General G1. Complete and accurate accounting records shall be maintained in accordance with Generally Accepted Accounting Principles as promulgated by the Government Accounting Standards Board. DART's fiscal year-end for financial reporting purposes shall be September 30. G2. Funds of the Authority shall be invested within the guidelines of the Board's approved Investment Policy and Investment Strategy, and in compliance with applicable State law, including Section of the Texas Transportation Code, Article 717q V.T.C.S., the Texas Public Funds Investment Act, and applicable Federal law. The Board shall approve the signatories for all Agency checking and savings accounts. G3. An independent accounting firm shall perform an examination of DART's consolidated financial statements (including Single Audit requirements) and DART's retirement plan financial statements on an annual basis. The Agency's goal is to receive an unqualified opinion on the financial statements and an opinion that DART is in compliance with Federal Single Audit requirements in all material respects. G4. An annual actuarial analysis shall be performed on the Defined Benefit Plan. This Plan shall be funded in an amount sufficient to meet current actuarial requirements and to reduce the actuarially determined unfunded liability to zero by APX-6

147 Appendix Exhibit APX.2 (cont.) FY 2006 Financial Standards G5. Appropriate insurance coverage shall be maintained to mitigate the risk of material loss. For self-insured retentions, a separately funded Master Insurance Reserve shall be maintained in an amount equal to the estimated liability for incurred losses and a reasonable allowance for claims incurred but not filed. An actuarial review of selfinsured retentions will be made at least once every three years to ensure adequacy of the Master Insurance Reserve. G6. Since sales taxes are received on a monthly basis, the unrestricted cash balance at the end of the year shall not be less than one-twelfth of the difference between the subsequent year's total sources of cash (excluding sales taxes) and total uses of cash as projected in the Financial Plan. This reserve will be invested in accordance with the investment strategy for the Operating Fund. G7. In order to provide a buffer against an unanticipated shortfall in sales tax collections, DART will maintain a Financial Reserve. The goal of this reserve is to maintain a balance of at least 10% of the current year s sales tax budget. During periods in which sales taxes exceed the budget, the excess collections will be deposited into the Reserve by January 1 of the following year, up to a maximum fund balance of $50 million. Authorization to spend Reserve funds requires the affirmative vote of two-thirds of the appointed and qualified members of the Board. G8. The fiscal year of DART shall end on September 30 of each year. Two months before the Business Plan is distributed to the Board, the Board should review and approve a set of Financial Standards that can be used by management as a framework for developing the following year's Budget, Business Plan, and Financial Plan. The Board shall approve the Budget and Financial Plan by September 30 of each fiscal year. The Annual Budget shall be the first year of the Financial Plan. G9. Financial Plan amendments shall require a two-thirds vote of the number of appointed and qualified Board members. An amendment is necessary when the addition of a new capital project or the cumulative modification of an existing capital project is in excess of $1 million or the addition of a new operating program or increase in an existing operating program is in excess of $500,000. APX-7

148 Appendix Exhibit APX.2 (cont.) FY 2006 Financial Standards Financial Standards Business Planning Parameters B1. Sales tax revenue forecasts shall be based on a sales tax model developed specifically for the DART Service Area by an independent economist, except for the most current year which may be based on management's best estimate. In order to ensure a conservative sales tax estimate, the model s projections may be reduced by 1% for years 6-10 and by 2% thereafter, dependent on current economic trends. B2. Passenger revenue forecasts shall be derived from ridership and average fare forecasts based on the Board's approved fare policy and fare structure. The Board will consider, from time to time, fare modifications to achieve Service Plan, ridership, and subsidy per passenger targets (see B4) and to maintain DART's financial viability. B3. The Board shall approve annual fixed route service levels by mode for each of the next five years. Fixed route service levels shall be based on the Five Year Action Plan prepared by the Planning and Development Department. Cost of service will be developed jointly by Finance and Planning. B4. The Board desires to steadily improve service efficiency over time. It is the Agency's long-term strategy to achieve this by reducing the subsidy per passenger ratio (operating expenses minus operating revenues divided by passenger boardings). Subsidy per passenger for fixed route service and for all modes may not be higher in FY 2002 than $2.85 for fixed route and $2.47 for all modes, respectively. B5. For financial planning purposes, total operating expenses may not increase by more than 90% of the projected rate of inflation for the Dallas area, plus the incremental costs associated with the addition of new services, programs, and/or facilities as approved by the Board. The projected incremental cost impact of new services, programs, and/or facilities shall be presented to the Board for approval as part of the Financial Plan assumption process each year. B6. Management shall use a consistent methodology for computing net administrative costs and direct costs. The administrative ratio (administrative costs minus administrative revenues divided by direct costs) may not increase for two consecutive years and shall not be higher than 14.0%. B7. General Mobility programs for road improvement programs such as the Local Assistance Program (LAP), Principal Arterial Street System (PASS), and Transportation System Management (TSM) and Intelligent Transportation System projects shall be funded according to the terms of the approved Interlocal Agreements and recorded as nonoperating expenses in the Financial Plan. APX-8

149 Appendix Exhibit APX.2 (cont.) FY 2006 Financial Standards B8. Capital planning and development costs and start-up costs are the internal staff costs associated with planning, designing, constructing, and opening new capital projects such as the light rail system. Management shall use a consistent methodology for allocating costs between operating and capital planning. Capital planning and development costs shall not exceed 7% of total operating costs. Cumulative start-up costs for a line section shall not exceed 60% of the first year operating costs of that line section or HOV lane. B9. The Financial Plan shall include funding for asset replacement and expansion projects. Capital projects in excess of $1 million shall be approved by the Board. Timely replacement of assets shall be the highest priority to ensure a safe system. Accordingly, the Financial Plan shall include replacement reserves by major asset category to ensure adequate future funding. The reserve levels shall be based on an independent assessment of asset condition (to be completed at least once every five years). Expansion projects shall be prioritized based on the project's cost, impact on ridership, return on investment, available funds, and other relevant factors. An inflation rate of 4% shall be used for capital construction projects. Non-construction capital projects will be increased at the rate of inflation. B10. DART receives formula and discretionary Federal funding. Formula funding shall be programmed primarily for bus replacement, capital maintenance (if available), vehicles, and passenger facility construction. Formula funding for future years shall be forecast at the current year's funding level or at the minimum levels included in Federal authorizations to ensure a conservative forecast. Discretionary funding shall be programmed primarily for major system expansion projects (e.g., LRT or new bus maintenance facilities). Discretionary funding levels shall be estimated by project based on Federal criteria and the likelihood of obtaining congressional appropriations and require Board approval during the Budget/Financial Plan process. APX-9

150 Appendix Exhibit APX.2 (cont.) FY 2006 Financial Standards Financial Standards Debt Service D1. DART may not enter into a debt or financing arrangement unless the transaction is in full compliance with all applicable provisions of the Texas Transportation Code and other applicable state and federal laws. D2. Long-term debt may be included in the Financial Plan; however, no debt secured by a pledge of sales and use tax revenues and that has a maturity longer than five years from the date of issuance shall be incurred without the approval by the voters of the Service Area. D3. Debt shall be issued for approved capital projects and insurance reserves. Any project included in the budget or Financial Plan that requires funding by any debt shall be clearly identified therein. D4. Sinking funds shall be established to ensure that cash is available to make timely debt service payments on fixed-rate debt issuances that have maturities of one year or more and have periodic semi-annual interest payments. DART shall deposit on a monthly basis a prorated amount sufficient to fund the next principal and interest payment. D5. Reserve fund(s) that may be required by the financial markets for each debt issuance shall be maintained. These reserves may be funded by cash and securities, insurance, or surety bonds, but shall not be accessed unless the sinking funds have insufficient money to make the principal and interest payments as due. For financial planning purposes, reserve projections shall be based on the actual requirement on existing debt, plus the lower of maximum annual debt service, 125% of average annual debt service, or 10% of principal outstanding on projected debt. D6. DART shall establish a legal security structure of liens, agreements, pledged revenues, and other covenants which will be sufficient to (1) secure a rating of "A" or better on sales tax securities; (2) a MIG1 or SP1 rating on short-term notes; or (3) secure A1 or P1 rating on other short-term debt, or if necessary, secure a credit enhancement from a financial institution with a rating of "AA" or better. APX-10

151 Appendix Exhibit APX.2 (cont.) FY 2006 Financial Standards D7. Certain debt service coverage ratios are required to access the financial markets. For financial planning purposes, annual sales tax revenues must exceed DART s current year debt service obligations by a factor of at least two (External Coverage Ratio). It is a goal of DART that for financial planning purposes, for long-term debt, sales tax revenues plus operating revenues, plus interest income, less operating expenses (excluding debt service and depreciation), for any twelve consecutive months of the prior eighteen months, must be sufficient to cover maximum annual debt service and financing lease payments by 1.0 to 1.25 times (Internal Coverage Ratio). The same calculation for future years must be sufficient to cover maximum annual debt service and lease payments, including payments on any debt to be issued, by 1.0 to 1.25 times for the first five years and 1.0 to 1.5 times thereafter. However, the DART Board may choose to grant exceptions to this standard in the interest of expediting the completion of the System Plan. APX-11

152 Appendix APX-12