Seattle Economics Council February 1, 2017

Transcription

1 Seattle Economics Council February 1, 2017

2 Sound Transit District

3 Sound Transit Ballot Measures Sound Move Key Projects 16 Miles of Central Link Light Rail 75 Miles of Sounder Commuter Rail 18 Express Bus Routes Operations & Maintenance Facility ST2 Key Projects 35 Miles of New Link Light Rail Sounder Expansion Express Bus Expansion System Access Improvements Operations & Maintenance Satellite Facility Plans for ST3 ST3 Key Projects Ballard West Seattle Tacoma Everett Kirkland-Issaquah BRT 405 Sounder improvements

4 M More riders every year In Millions 42M University Link & Angle Lake Station open 47M 50M Northgate Link opens 75M East Link, Lynnwood Link and Kent/ Des Moines open 30.3M 34.9M 18.8M Source: Sound Transit ridership reports, service implementation plan and financial plan.

5 Regional Link light rail expansion By 2041: 116+ miles 80+ stations 16 cities connected

6 2016 Light rail Downtown Seattle to SeaTac University of Washington Capitol Hill Angle Lake

7 2021 Light rail U District Roosevelt Northgate

8 2023 Light rail Shoreline Mountlake Terrace Lynnwood Mercer Island Bellevue Redmond (Overlake) Tacoma Hilltop

9 2024 Light rail SE Redmond Downtown Redmond Kent/Des Moines S. 272nd Federal Way TC BRT I-405/SR 518 (Lynnwood to Burien) SR 522/NE 145 th (N Lake Washington) Other bus investments in Seattle and Pierce County

10 2030 Light rail Alaska Junction Avalon Delridge S. Federal Way Fife East Tacoma Tacoma Dome

11 2035 Light rail and new downtown tunnel Ballard Interbay Smith Cove Seattle Center S. Lake Union Denny Midtown

12 2036 Light rail West Alderwood Mall Ash Way Mariner SW Everett Industrial Center SR 526/Evergreen & Everett Station Sounder Sounder south capacity & access improvements completed

13 2039 Light rail Tacoma Link Hilltop to Tacoma Community College

14 2041 Light rail South Kirkland Richards Road Eastgate/Bellevue College Issaquah

15 ST2 vs ST3 Total Capital Spending

16 ST Spending vs Regional Transportation Spending WSDOT Municipalities ST2 ST3 ST Percent of Total $4,500 50% $4,000 45% Total Spending (all phases) in Millions (2014$) $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 40% 35% 30% 25% 20% 15% 10% ST Percent of Total Transportation Spending $500 5% $ % WSDOT and Municipality Spending: Annual average of planned spending from , extended to Source: PSCR 2015, The Project List

17 ST3 Construction Jobs vs Regional Construction Jobs Remaining Jobs (after private sector development and ST3) Total Private Sector Construction Jobs Jobs Generated by ST3 Construction Spending Regional Construction Jobs (King, Kitsap, Pierce, and Snohomish Counties) 140,000 ST3 2029: 9% of regional construction jobs 120,000 Construction Jobs 100,000 80,000 60,000 40,000 **86% of regional construction jobs are assumed to be from private sector development. Source: Community Attributes, , Regional Construction Jobs: Forecast from PSRC. Construction jobs refers to NAICS Code 23: Construction. Jobs generated by ST3 Construction Spending: Assumes each million in spending results in 8.34 direct jobs. Source: IMPLAN methodology, TriMet. Private Sector Construction Jobs: City of Seattle Construction Industry Labor Market Assessment, prepared by Community Attributes, 2014.

18 ST FINANCES

19 FINANCIAL STRUCTURE Special purpose entity Single proprietary fund structure $8.8 billion asset 2015 AAA/AAA S&P/Moody s Key # 813 FTEs $400 m operating budget $1.4b capital 2018 Forecasted Revenues Sales Tax: $1,200 m MVET $320 m Property Tax $135 m Total $1.6 b

20 Financial Plan DR AFT Independent Revenue Forecasts Independent Inflation Forecasts Board-Adopted Financial Policies Financial Model Program Costs From Budget & Cost Estimates Key Planning Assumptions Results 21

21 Key Lessons Learned Importance of long term financial plan Necessity with long duration projects/assets Value of establishing baseline Financial plan vs. budget hierarchy & alignment Value of constitutional financial policies Clear ownership/management of adequate contingencies

22 BUILDING THE ST3 PLAN 4 year effort Board direction Nov 2012 Legislative taxing authority Working with board/public on content/finances Developing final plan & documents Voter approval

23 ST3: Sound Transit receives revenue authority 0.5% Sales and Use Tax 0.8% MVET $.25* Property Tax 50 cents per $100 purchase $80 on a $10K vehicle $75 annually for a $300K home

24 $54 b ST3 Plan Year of Expenditure Dollars In Millions

25 Financial Plan - Sources & Uses Summary 2017 through 2041 (YOE Dollars in Millions) Sources of Funds Snohomish North King South King East King Pierce System-wide Total 1 ST3 Tax Revenues 3,689 7,912 3,933 6,973 5,203-27,710 2 ST3 Grants - Federal 800 1, ,669 3 Sound Move + ST2 Surplus 1,824 1, ,493 2, ,621 4 Bond Proceeds 2,894 4,965 2, ,999 5 Fares & Other Revenues ,514 6 Interest Earnings Total Sources 9,334 16,264 8,385 9,786 8,953 1,122 53,845 Uses of Funds Capital Expenditures 7 Sounder Commuter Rail ,453-2,230 8 Link Light Rail 6,249 8,791 3,252 5,999 3,221 4,171 31,683 9 Regional Express Bus Bus Rapid Transit , , System-wide Activities Total Capital 6,414 9,194 4,315 7,290 4,926 4,545 36,683 O & M Expenditures 12 Sounder Commuter Rail Link Light Rail , Regional Express Bus Bus Rapid Transit ,203 System-wide Activities ,246 2,246 Total O&M , ,956 7, Debt Service 1,397 3,313 1, , State of Good Repair Contribution to Reserves Contribution to System-wide 834 2, ,842 (6,431) 1,031 Total Uses 9,334 16,264 8,385 9,786 8,953 1,122 53,845

26 Sales Tax Forecast 10.00% Sales Tax Growth Rates 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 4.2% Average Growth % Average Growth Conway 2016 Current Forecast ST/ Conway Adjusted Forecast Prior Year Conway Forecast Prior Year 2.00%

27 MVET Forecast

28 Debt Coverages Above Policy Targets Bond Coverages x min gross 1.5x min net Net Gross

29 Risk Assessment q Initial Static Stress Tests Capital Costs: 10% increase in all capital ($3.6 billion) Sales Tax: 6% reduction in revenue Recession: -4% 2017, 0% 2018, return to forecast thereafter Interest rate increase of 25% (130 basis points, 6.6%) Inflation: increase of 60 basis points q Dynamic Risk Assessment

30 Distribution Fitting Risk Register # Uncertain Variable Variable Type Historical Data Series Distribution Curve Min 5 th %ile 95 th %ile Max Mode (Most Likely) Mean Std Dev 1 General Inflation (CPI) Growth Rate Annual LogLogistic -0.30% 0.99% 10.52% 10.52% 2.53% 4.37% 4.43% 2 Construction Cost Inflation (CCI) Growth Rate Annual Normal -1.13% 1.48% 6.3% 7.58% 3.23% 3.23% 1.86% 3 Right of Way Cost Inflation (ROWI) Growth Rate Annual Logistic % -4.96% 16.87% 22.99% 5.96% 5.96% 6.72% 4 Sales Tax Base Real Growth Rate 1 Annual Logistic % -6.51% 10.78% 15.62% 2.13% 2.13% 5.33% 5 Motor Vehicle Excise Tax (MVET) Base Real Growth Rate Annual ExtValue -7.17% -7.17% 17.67% 17.67% -0.47% 3.05% 7.83% 6 Property Assessed Valuation (AV) Nominal Growth Rate Annual ExtValueMin % -7.22% 15.16% 17.53% 9.12% 5.95% 7.06% 7 New Property Tax Revenue Growth Rate Annual - Triangular 0% % 0.50% Federal New Starts Grant Revenues 2 Annual - Triangular Borrowing Interest Rate 3 Annual LogNormal 2.63% 3.79% 9.68% 12.78% 4.80% 5.98% 1.96% 10 Construction Cost Adjustment Factor Uniform - Pert -10% % 0% 0.83% - 11 Right of Way Cost Adjustment Factor Uniform - Pert -10% % 0% 0.83% - 12 Other Capital Cost Adjustment Factor Uniform - Pert -10% % 0% 0.83% - 13 Ridership Forecast Adjustment Factor Uniform - Uniform -10% % 0% 0% - 1 To reflect the positively-skewed shape of the historic data histogram, the Logistic distribution (which is by definition symmetrical) is truncated at the 95 th percentile value, equal to 10.81%. The maximum value observed in the data series considered is 10.43% in the year Annual probability distributions for Federal New Starts Grant Receipts are defined by minimum, maximum, and most likely forecast values provided by Sound Transit for forecast years between 2019 and The fitted distribution was re-adjusted to achieve a mode equal to the forecasted interest rate of 5.3%. This was to account for the fact that the historical data is not a perfect proxy for Sound Transit s AAA-credit rating based interest rate.

31 Dynamic Risk Assessment (Monte Carlo) CPI Growth Rate Base Ridership Forecast Ridership Adjustment Factor Tax Base Real Growth Rate Tax Base Weighted Average Fare Ridership Gross Proceeds 2014 Tax Base Tax Rate Tax Revenue Fare Revenue Gross DSCR Debt Service Interest Rate Debt Service Period

32 Net Coverage Threshold Probabilities Probability Net DSCR below 1.1x Probability Net DSCR below 1.5x 20% Probability 15% 10% 5% 0% Year

33 Legal Debt Capacity Threshold Probabilities Probability % of Debt Capacity above 95% Probability % of Debt Capacity above 80% 25% 20% Probability 15% 10% 5% 0% Year

34 Risk Threshold Probabilities Key risks below 20% probability in all cases Probability in the Least Favorable Year Probability Across Forecast 14.5% 18.4% 16.1% 20.0% 6.7% 7.5% Net DSCR < 1.5x Gross DSCR < 2.0x Share of Debt Capacity > 80% Minimum Net DSCR < 1.5x Minimum Gross DSCR < 2.0x Maximum Share of Debt Capacity > 80%

35 Monte Carlo Lessons Learned Allows identification of key variables, key time periods Fosters internal/external conversation about risks and risk management Need to recognize limits of approach

36 Other ST2/ST3 items of interest Green bonds TIFIA/Master Credit Agreement P3

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