MEMORANDUM TO: FROM: Santa Clara Valley Transportation Authority Board of Directors Michael T. Burns General Manager DATE: August 4, 2008 SUBJECT: BART Operating Subsidy This memorandum summarizes and presents the analysis that calculates the operating subsidy amount and demonstrates that a 1/8-cent sales tax covers this expense. The purpose of the potential sales tax is to cover VTA s obligation to BART for the cost of operating the Silicon Valley Rapid Transit (SVRT) Project, also known as the BART Extension, in Santa Clara County. At my request our consultants, AECOM Consult, Inc., have provided us a detailed calculation updating the assumptions to give the most reliable estimate of the projected cost to operate and maintain the extension together with offsetting revenue. Their detailed response indicates that the proposed ⅛-cent sales tax will cover our payment to BART for operations, maintenance, fixed overhead and future capital reserve contributions. The calculation shows a reserve at the end of 2036. It is critical that VTA be able to meet this obligation without reducing our existing service or raising fares solely to support this effort. The attached executive summary and technical memo from AECOM Consult describes the methodology for estimating these costs and offsetting revenue. This methodology complies with the 2001 Comprehensive Agreement between the VTA and BART in connection with the proposed Santa Clara County BART Extension. Also attached are brief bios of the AECOM employees who have done this analysis and a list of representative projects on which they have worked. Please feel free to contact me or Carolyn Gonot, Chief SVRT Program Officer, at (408) 321-5623 if you have any questions or need further information. Attachments (3)
Executive Summary VTA SVRT Extension BART Subsidy Funding VTA consultants and staff have examined the projected VTA subsidy for the Silicon Valley Rapid Transit Extension (SVRT) project and determined that the proposed ⅛-cent sales tax will be sufficient to fund the subsidy. This includes consideration of VTA responsibilities for direct Operating & Maintenance (O&M) costs, fixed overhead O&M costs, and VTA capital reserve contributions to BART and offsetting incremental passenger fare revenue. The attached memo and appendix from AECOM Consult describes the methodology for estimating the projected operating costs, capital reserve contribution and revenue. This methodology is consistent with the 2001 Comprehensive Agreement between the VTA and BART in connection with the proposed Santa Clara County BART Extension. In summary, the annual SVRT Extension O&M cost subsidy equals: Net direct O&M cost of the SVRT Extension - calculated as the BART systemwide direct O&M cost for the SVRT Project alternative minus the BART systemwide direct O&M cost for the Core System (the No Build alternative) without the SVRT Extension; PLUS Allocation of BART fixed overhead O&M costs - calculated on the basis of additional SVRT Project direct O&M costs relative to Core System direct O&M costs; MINUS Net incremental BART systemwide passenger revenue - for the SVRT Project alternative relative to the BART systemwide passenger revenue for the Core System. In addition, VTA makes a capital reserve contribution, an annual deposit set aside to cover the capital expenses, equal to a percentage of SVRT Extension O&M costs which grows over time. This is specified in the VTA and BART Comprehensive Agreement. The table below demonstrates that the projected amount of ⅛-cent sales tax revenue is sufficient to cover projected SVRT Extension O&M costs and the capital reserve contribution for the SVRT Extension through 2036. SVRT Extension O&M costs net of fare revenue are projected to total 1,224.2 Million. The capital reserve contribution is projected to total 560.1 Million. Therefore, total VTA SVRT Extension subsidy payments to BART are projected to total 1,784.3.0 Million. The ⅛-cent sales tax is projected to bring in 1,938.5 Million, a difference of 154.2Million. July 31, 2008
Executive Summary SVRT Extension Subsidy Calculation SVRT Project - Millions of YOE 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 ANNUAL SUBSIDY SVRT Direct O&M Costs (102.0) (106.7) (113.0) (117.8) (123.4) (130.1) (135.0) (140.3) SVRT Allocation of Fixed Overhead O&M Costs (11.9) (12.3) (12.9) (13.2) (13.7) (14.3) (14.7) (15.1) Subtotal - SVRT O&M Costs (113.8) (119.0) (125.9) (131.1) (137.2) (144.3) (149.7) (155.5) SVRT Incrmental Fare Revenue 65.0 69.2 74.2 78.5 83.4 88.8 93.7 98.6 Total SVRT O&M Cost Net of Fare Revenue (48.8) (49.8) (51.6) (52.6) (53.8) (55.5) (56.0) (56.9) SVRT Capital Reserve Contribution (6.8) (8.3) (10.1) (11.8) (13.7) (15.9) (18.0) (20.2) Total SVRT Subsidy (55.7) (58.1) (61.7) (64.4) (67.5) (71.4) (74.0) (77.1) ANNUAL TAX REVENUE 1/8 cent Sales Tax Revenue 50.6 53.4 56.5 59.6 61.1 63.3 66.6 68.8 71.5 74.7 76.5 78.4 CASH BALANCE Annual Surplus (Deficit) Prior Year Balance 50.6-53.4 50.6 56.5 104.0 59.6 160.5 5.4 220.1 5.2 225.6 4.9 230.7 4.5 235.7 4.0 240.1 3.3 244.1 2.5 247.4 1.3 250.0 Cumulative Surplus/Deficit Without Interest 50.6 104.0 160.5 220.1 225.6 230.7 235.7 240.1 244.1 247.4 250.0 251.3 Interest on Prior Year Balance 2.0 4.2 6.7 9.3 9.9 10.5 11.1 11.8 12.4 13.0 13.6 Cumulative Surplus/Deficit With Interest (at 4%) 50.6 106.0 166.8 233.1 247.8 262.9 278.3 293.9 309.7 325.4 340.9 355.9 SVRT Project - Millions of YOE ANNUAL SUBSIDY 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 SUM SVRT Direct O&M Costs (147.6) (153.1) (160.3) (167.8) (174.9) (181.4) (190.1) (197.0) (205.1) (214.1) (218.6) (226.0) (3,204.4) SVRT Allocation of Fixed Overhead O&M Costs (15.8) (16.2) (16.7) (17.3) (17.9) (18.4) (19.0) (19.5) (20.1) (20.8) (21.0) (21.5) (332.3) Subtotal - SVRT O&M Costs (163.3) (169.2) (177.0) (185.2) (192.8) (199.8) (209.1) (216.6) (225.3) (234.9) (239.6) (247.5) (3,536.7) SVRT Incrmental Fare Revenue 104.7 109.7 115.7 122.1 128.5 134.4 141.6 147.7 154.7 162.0 166.7 173.4 2,312.5 Total SVRT O&M Cost Net of Fare Revenue (58.6) (59.5) (61.3) (63.1) (64.4) (65.4) (67.6) (68.8) (70.6) (72.9) (72.9) (74.1) (1,224.2) SVRT Capital Reserve Contribution (22.9) (25.4) (28.3) (31.5) (34.7) (38.0) (41.8) (43.3) (45.1) (47.0) (47.9) (49.5) (560.1) Total SVRT Subsidy (81.5) (84.9) (89.6) (94.6) (99.1) (103.4) (109.4) (112.1) (115.6) (119.8) (120.8) (123.6) (1,784.3) ANNUAL TAX REVENUE 1/8 cent Sales Tax Revenue 81.6 83.6 86.4 89.5 92.1 94.2 97.7 100.4 103.8 107.7 108.7 111.8-1,938.5 CASH BALANCE Annual Surplus (Deficit) Prior Year Balance 0.1 (1.4) (3.2) (5.1) (7.0) (9.2) (11.7) (11.7) (11.8) (12.2) (12.2) (11.8) 251.3 251.4 250.0 246.8 241.7 234.7 225.5 213.8 202.1 190.3 178.1 166.0 Cumulative Surplus/Deficit Without Interest 251.4 250.0 246.8 241.7 234.7 225.5 213.8 202.1 190.3 178.1 166.0 154.2 Interest on Prior Year Balance 14.2 14.8 15.3 15.8 16.3 16.6 16.9 17.1 17.4 17.6 17.8 18.0 302.6 Cumulative Surplus/Deficit With Interest (at 4%) 370.2 383.7 395.8 406.5 415.8 423.2 428.5 433.9 439.5 444.9 450.5 456.7 456.7 Note: Values are presented in year-of-expenditure (YOE) dollars. Inflation is based on projections for VTA by Moody s Economy.com, with special consideration of expenses for components of costs that inflation faster than the Consumer Price Index (e.g., wages & salaries, healthcare benefits, and electricity). This projection assumes that the ⅛-percent tax is implemented following award of a Full-Funding Grant Agreement with the Federal Transit Administration for the SVRT project in 2013 with revenues going into a dedicated SVRT O&M fund. - 154.2 July 31, 2008
AECOM Consult, An affiliate of DMJM Harris 3101 Wilson Boulevard, Suite 400, Arlington, Virginia 22201, USA T 703.682.5074 F 703.682.5001 www.dmjmharris.com Technical Memorandum Date: To: From: Subject: August 4, 2008 Carolyn Gonot, VTA Nathan Macek, AECOM Consult VTA SVRT Extension Subsidy Calculation Methodology This technical memorandum summarizes the calculation of the operations and maintenance (O&M) cost subsidy and capital reserve contribution payable to the San Francisco Bay Area Rapid Transit District (BART) by the Santa Clara Valley Transportation Authority (VTA) for the operating, maintenance, and capital expenses resulting from the Silicon Valley Rapid Transit (SVRT) BART Extension project. This methodology is consistent with the 2001 Comprehensive Agreement between the VTA and BART in connection with the proposed Santa Clara County BART Extension, hereafter referred to as the Comprehensive Agreement. In summary, the annual SVRT Extension O&M cost subsidy equals: The net direct cost of the SVRT Extension, calculated as the BART systemwide direct O&M cost for the SVRT Project alternative minus the BART systemwide direct O&M cost for the Core System (the No Build alternative) without the SVRT Extension; PLUS An allocation of BART fixed overhead O&M costs calculated on the basis of additional SVRT Project direct O&M costs relative to Core System direct O&M costs; MINUS The net additional BART systemwide passenger revenue for the SVRT Project alternative relative to the BART systemwide passenger revenue for the Core System. In addition, VTA makes a capital reserve contribution equal to a fixed percentage of SVRT Extension O&M costs as specified in the Comprehensive Agreement. Total payments by VTA to BART may be offset by several revenue sources, including: Incremental revenue from ancillary sources, including concession, fiber optic and advertising revenue; parking revenues; and parking fines; and Federal transit formula grants that VTA receives because of the operation of the SVRT Extension in Santa Clara County, which may be allocated to, and used to meet VTA s financial responsibilities for ongoing capital costs This memorandum is divided into the following sections that describe the annual subsidy calculation in greater detail: Operating and Maintenance Cost Subsidy o O&M Cost Drivers o O&M Unit Costs o Inflation Assumptions o Calculation of Direct O&M Costs o Calculation of Fixed Overhead O&M Costs o Calculation of Fare Revenue o Summation of Annual O&M Cost Subsidy Calculation of Capital Reserve Contribution Other Operating Revenue 1
In addition, a companion spreadsheet BART Subsidy Calculation 8-4-08.xls serves as an appendix to this memorandum. This spreadsheet was used to create the tables presented in this memo, and provides additional tables not included in the memo as referenced throughout this text. Operating and Maintenance Cost Subsidy According to Section IV.C.2 of the Comprehensive Agreement, VTA will bear responsibility for the operating and maintenance costs directly attributable to the operation of the SVRT Extension. There are two components of the SVRT Extension O&M cost, direct and fixed overhead costs. Direct O&M costs are calculated by multiplying cost drivers level-of-service variables defined in the planning process by unit costs calculated from the current BART O&M cost model which was calibrated based on the BART FY05 budget. BART s fixed overhead costs are allocated to the SVRT Extension on the basis of SVRT Extension systemwide direct O&M costs relative to BART Core System direct O&M costs. O&M costs are escalated to year-of-expenditure (inflated or YOE ) dollars by applying actual inflation rates since 2005 and a projection of future inflation rates for each object class, or cost category. The O&M cost drivers, unit costs, and inflation assumptions, as well as the calculation of direct and fixed overhead O&M costs, are described below. O&M Cost Drivers The systemwide BART level-of-service (LOS) in the benchmark years of 2015 and 2030 are specified in the project planning process for the alternatives No Build, Baseline/TSM, and SVRT Project. The No Build service plan represents the BART Core System, or the service that BART would operate in years 2015 and 2030 without the SVRT Extension. The SVRT Project service plan represents the extension to Santa Clara (six stations). There are 18 cost drivers, which include: Linked Passenger Trips Early/Late Trains At-Grade Stations Lines Total Car Hours Subway Stations Peak Vehicles Total Train Hours Parking Spaces Fleet Vehicles Revenue Route Miles Yard with Back Shops Peak Trains Total Stations Service & Inspection Base Trains Elevated Stations Yards In addition, there are fixed overhead O&M costs, which are the same for all alternatives. The cost drivers in the 2015 and 2030 benchmark years are summarized by alternative in Table 1 below, and in the worksheet Benchmark Year LOS in the companion spreadsheet. August 4, 2008 2
Table 1. BART Systemwide Cost Drivers by Alternative, 2015 and 2030 2015 2030 Cost Drivers 2005 No Build Baseline SVRT Project No Build Baseline SVRT Project Boardings 96,523,006 169,779,600 173,240,400 186,404,400 199,615,468 202,460,282 225,783,266 Linked Passenger Trips 93,711,656 164,686,212 168,043,188 180,812,268 193,627,004 196,386,473 219,009,768 Lines 5 5 5 5 5 5 5 Peak Vehicles 522 752 752 807 860 860 950 Fleet Vehicles 669 886 886 949 1,013 1,013 1,119 Peak Trains 66 77 77 83 78 78 85 Base Trains 52 51 51 57 64 64 71 Early/Late Trains 25 31 31 33 38 38 42 Total Car Miles N/A 95,634,536 95,634,536 102,456,420 97,151,420 97,151,420 107,423,490 Total Car Hours 2,099,371 3,059,783 3,059,783 3,231,431 3,108,315 3,108,315 3,388,091 Total Train Hours 293,607 384,131 384,131 418,645 408,387 408,387 450,558 Revenue Route Miles 104.0 108.2 108.2 124.9 108.2 108.2 124.9 Total Stations 43 46 46 52 46 46 52 Elevated Stations 15 17 17 19 17 17 19 At-Grade Stations 13 13 13 14 13 13 14 Subway Stations 15 16 16 19 16 16 19 Parking Spaces 46,479 52,007 51,681 66,963 53,278 53,278 70,555 Yard w/ backshops 1 1 1 2 1 1 2 Service & Inspection Yards 4 5 5 6 5 5 6 Annual cost drivers in the interim years between 2015 and 2030 and beyond 2030 are interpolated based on the level-of-service in the 2015 and 2030 benchmark years. The annual cost drivers are first computed without rounding, and are then rounded to whole units to ensure that a cost driver such as number of peak vehicles does not represent a fraction of a railcar. Annual BART systemwide cost drivers by alternative are summarized in the worksheet Annual LOS in the companion spreadsheet. O&M Unit Costs Unit costs are derived by cost driver from the O&M cost model developed for BART by Connetics Transportation Group. As specified in Section IV.C.3 of the Comprehensive Agreement, an O&M cost model is required as the basis for estimating VTA s subsidy to BART for operating the SVRT Extension. The precise method by which the O&M cost model is developed and applied is specified in Exhibit B of the Comprehensive Agreement. The O&M cost model is calibrated to BART O&M costs, employee headcounts, and service levels specified in BART s Fiscal Year 2005 budget. The model has been periodically updated to reflect changes in service plans for the SVRT Extension alternatives as well as the steep growth in BART electricity costs since 2005. The same unit costs are applied to each alternative service plan. Costs are specified by cost driver by object class, each of has its own inflation rate. Object classes include: Labor Net of Healthcare ADA Service Healthcare Fringe Electric & Natural Gas Shuttle Service Other Non-Labor Express Bus Service Certain of these object classes are excluded from the calculation of incremental O&M costs, per Exhibit B of the Comprehensive Agreement. These object classes include Shuttle Service, Express Bus Service, and ADA Service. ADA paratransit service costs are excluded based on the assumption that VTA will separately and apart from the Comprehensive Agreement assume financial responsibility for any additional ADA Paratransit services in Santa Clara County required due to the operation of the SVRT Extension. Unit costs by cost driver by object class are summarized in 2005 dollars in Table 2 and the worksheet Unit Cost 2005 in the companion spreadsheet. August 4, 2008 3
Table 2. BART Unit Costs by Cost Driver by Object Class, in 2005 Dollars Applied Object Classes Cost Drivers Gross Labo r Labor Net of Healthcare Healthcare Fringe Electric & N atur al Gas Other N on-labor Total Fixed 37,878,708.63 34,090,837.77 3,787,870.86-11,589,100.73 49,467,809.36 Linked Passenger Trips 0.41 0.37 0.04-0.07 0.48 Lines 1,248,426.00 1,123,583.40 124,842.60-273,718.29 1,522,144.29 Peak Vehicles 15,206.41 13,685.77 1,520.64-1,016.51 16,222.92 Fleet Vehicles 13,657.64 12,291.87 1,365.76-7,893.06 21,550.70 Peak Trains 113,067.74 101,760.96 11,306.77-12,633.34 125,701.08 Base Trains - - - - 5,356.46 5,356.46 Early/Late Trains - - - - - - Total Car Hours 9.66 8.70 0.97 11.80 1.98 23.44 Total Train Hours 151.28 136.15 15.13-11.07 162.34 Revenue Route Miles 443,741.67 399,367.51 44,374.17-85,404.43 529,146.10 Total Stations - - - Elevated Stations 372,095.30 334,885.77 37,209.53 42,237.18 100,551.15 514,883.62 At-Grade Stations 1,299,399.91 1,169,459.92 129,939.99 136,790.87 328,792.52 1,764,983.30 Subway Stations 2,414,653.73 2,173,188.36 241,465.37 251,983.18 612,972.13 3,279,609.04 Parking Spaces 68.61 61.75 6.86-18.11 86.72 Yard w/ backshops 6,698,498.74 6,028,648.86 669,849.87-4,932,606.36 11,631,105.10 Service & Inspection Yards 5,807,750.04 5,226,975.03 580,775.00-1,057,007.51 6,864,757.55 Note: BART Healthcare Fringe costs are assumed to equal 10 percent of BART Gross Labor costs, consistent with recent budgets. Inflation Assumptions Unit costs are inflated to year-of-expenditure dollars by applying a specific inflation projection for each object class to each unit cost by cost driver. The following basis is used to project inflation for each object class, consistent with inflation assumptions in the VTA financial analysis developed by AECOM Consult: Labor Net of Healthcare: Economy.com forecast of the Bay Area Consumer Price Index for All Urban Consumers (CPI) prepared for VTA + 0.5 percentage points annually Healthcare Fringe: 10 percent annually through FY11, then twice the Economy.com forecast of Bay Area CPI in FY12 and beyond, to reflect the historically high rate of growth in healthcare benefits expenses Electric and Natural Gas: Economy.com forecast of California electric prices. (Note that the predominant share of this object class is traction power for rail service, as well as electricity for stations and other BART facilities. Also note that electricity unit costs reflect BART s current practice of purchasing electric power on the open market with no power purchased from the Bonneville Power Administration.) Other Non-Labor: Economy.com forecast of Bay Area CPI The index of inflation rates applied in the analysis are summarized in Table 3 below; inflation rates and resulting unit costs in year-of-expenditure dollars are summarized in the worksheet Unit Costs YOE in the companion spreadsheet. Table 3. Compound Inflation Factors by Object Class, 2015-2036, 2007 = 1.0 Object Class 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Labor Net Healthcare 1.44 1.50 1.54 1.59 1.66 1.70 1.76 1.83 1.88 1.93 2.01 2.05 2.12 2.19 2.26 2.32 2.39 2.45 2.52 2.60 2.63 2.69 Healthcare Fringe 2.38 2.54 2.65 2.79 3.00 3.14 3.32 3.55 3.71 3.88 4.13 4.29 4.52 4.78 5.03 5.24 5.54 5.75 6.02 6.31 6.39 6.63 Electric & Natural Gas 1.99 2.11 2.13 2.22 2.35 2.45 2.57 2.71 2.76 2.82 2.96 3.06 3.20 3.34 3.39 3.47 3.64 3.77 3.92 4.08 4.14 4.23 Other Non-Labor 1.36 1.41 1.44 1.48 1.53 1.57 1.61 1.67 1.71 1.75 1.80 1.84 1.89 1.94 1.99 2.03 2.09 2.13 2.18 2.23 2.25 2.29 Calculation of Direct O&M Costs Due to step functions in the BART O&M cost model (which make some cost functions non-continuous), there is a slight difference between the O&M cost in 2005 dollars for each alternative calculated using the unit costs derived from the O&M cost model and the O&M cost in 2005 dollars calculated using the O&M cost model directly. This difference is labeled the convergence factor. The convergence factor is calculated in 2005 dollars for the benchmark years of 2015 and 2030, calculated for interim years by interpolating based on the 2015 and 2030 amounts, and inflated to YOE dollars by applying the Economy.com forecast of Bay Area CPI. These calculations are summarized in the worksheet Convergence Factors in the companion spreadsheet. August 4, 2008 4
Next, the annual cost drivers are multiplied by the inflated unit costs and added to the inflated convergence factor to calculate the systemwide annual direct O&M cost by alternative in YOE dollars. These calculations are summarized in worksheet O&M Cost YOE in the companion spreadsheet. The difference between the systemwide O&M cost for the SVRT Project and the No Build Alternative is the direct O&M cost for the SVRT Project alternative. The direct O&M cost of each alternative is a component of the BART subsidy calculation. The calculation of the annual direct O&M cost in YOE is summarized for the SVRT Project alternative in the worksheet Total O&M Cost. Two checks of direct O&M cost calculations are conducted as follows: The cost drivers in the benchmark years (2015 and 2030) may be multiplied by the unit costs in base year (2005) dollars and added to the convergence factor in base year (2005) dollars to calculate the total annual O&M cost by alternative in the benchmark years in base year (2005) dollars. These calculations may be checked against the O&M cost calculated directly in O&M cost model for each alternative, and should match to the dollar. These calculations, summarized in the worksheet O&M Cost 2005 are presented in the companion spreadsheet for information purposes only. The O&M costs by cost driver in YOE dollars may be deflated by projected CPI to estimate the cost by cost driver by year in real 2007 dollars. This illustrates the effects of real inflation over time by cost driver. These calculations are presented in the worksheet O&M Cost Real 2007 in the companion spreadsheet for information purposes only. Calculation of Fixed O&M Costs According to Section IV.C.2 of the Comprehensive Agreement, VTA will bear responsibility for a fullyallocated share of BART s fixed overhead costs, net of costs for Shuttle Service, Express Bus Service, and ADA Service. This fully-allocated share of fixed overhead O&M costs is calculated proportionate to the level of service attributable to the SVRT Extension. Attachment 2 of the Comprehensive Agreement specifies that a factor 15.0139 percent be applied to fixed costs in the BART O&M cost model. Fixed costs total 49.5 million in the version of the BART O&M cost model applied in this analysis. The fixed costs for each object class are multiplied by the factor and inflated by their respective inflation indices. These calculations are summarized in the worksheet Fixed Costs in the companion spreadsheet. Note that the 15.0139 percent allocation is based on a simple average of several cost drivers and number of BART employees derived in the O&M cost model. This allocation may be revised, subject to mutual agreement by VTA and BART. Calculation of Fare Revenue According to Section IV.E.2 of the Comprehensive Agreement, the projected incremental systemwide fare revenue is calculated by multiplying the incremental linked passenger trips forecast for the SVRT Project alternative (the systemwide forecast ridership for each of these alternatives net of forecast systemwide No Build alternative ridership) by the BART average fare per rider with all discounts applied, escalated to YOE by applying the forecast CPI. These calculations are summarized in the worksheet Fare Revenue in the companion spreadsheet. Summation of Annual O&M Cost Subsidy According to Section IV.F.1 of the Comprehensive Agreement, the SVRT O&M cost subsidy is calculated as the direct and fixed overhead O&M cost of the SVRT Extension minus incremental systemwide fare revenue collected for each alternative. The projected annual direct and fixed overhead O&M costs for the SVRT Project alternative are summarized in YOE and real 2007 dollars in Figure 1. The projection of incremental SVRT fare revenue and resulting SVRT subsidy payable to BART are summarized in Figure 2. Note that incremental SVRT fare revenue plus the SVRT O&M cost subsidy equals the SVRT total O&M cost in each year. These calculations are summarized in YOE and real dollars, respectively, in the worksheets O&M Subsidy - YOE and O&M Subsidy - Real in the companion spreadsheet. August 4, 2008 5
Figure 1. Projected Annual SVRT Direct and Fixed Overhead O&M Costs 300 Millions of Year-of-Expenditure (Inflated) Dollars 300 Millions of Real (2007) Dollars 250 250 200 200 150 150 100 100 50 50 0 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 0 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 SVRT Direct O&M Costs SVRT Fixed Overhead O&M Costs Figure 2. Projected Annual SVRT Incremental Revenue and O&M Subsidy Amount 300 Millions of Year-of-Expenditure (Inflated) Dollars 300 Millions of Real (2007) Dollars 250 250 200 200 150 150 100 100 50 50 0 0 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 SVRT Incremental Fare Revenue SVRT O&M Cost Subsidy SVRT Total O&M Costs Calculation of Capital Reserve Contribution According to Section IV.D of the Comprehensive Agreement, VTA bears financial responsibility for the ongoing cost of capital investments for the SVRT Extension and a proportional share of the cost of capital investments for the BART Core System. According to Section IV.F.2 of the Comprehensive Agreement, in each year, VTA is to fund a capital reserve contribution that is calculated based on 5 percent of SVRT Extension operating costs in the opening year, growing by one percent each year to a maximum of 20 percent of SVRT Extension operating costs. The calculation of the capital reserve contribution in YOE is summarized for the SVRT Project alternative in the worksheet Incremental O&M and Cap Costs in the companion spreadsheet. Other Operating Revenue According to Section IV.E.3 of the Comprehensive Agreement, VTA may be credited incremental revenue from ancillary sources, including concession, fiber optic and advertising revenue; parking revenues; and parking fines. In addition, according to Section IV.H.1 of the agreement, federal transit formula grants, including Section 5307 Urbanized Area Formula Funds and Section 5309 Fixed Guideway Modernization funds, that VTA receives because of the operation of the SVRT Extension in Santa Clara County will be allocated to, and used to meet VTA s financial responsibilities for ongoing capital costs. August 4, 2008 6
OVERVIEW OF AECOM CONSULT, INC. AECOM Consult, Inc. is a nationally recognized leader in providing infrastructure project development, planning, and management consulting services to the transportation industry. We provide professional services to transportation authorities and enterprises, transit organizations, departments of transportation, state and local governments, and metropolitan planning organizations. AECOM Consult has proven experience and a record of success in implementing transportation infrastructure projects by advancing them through the project development process. We assist clients in developing and advancing successful transportation projects and programs by integrating our core competencies in service planning, financial planning, demand and revenue analysis, and project management with the competencies of our engineering firm partners in environmental clearance, public involvement, conceptual engineering and capital costing. Our work has been instrumental for the development of large urban rapid transit projects, understanding the system-wide dynamics of highway congestion, and managing passenger rail programs. We are recognized for our work in ridership/revenue forecasting, financial capacity analysis, economic impacts, procurement, and organizational management. AECOM Consult has supported the development of fixed guideway transit New Starts with services that include ridership forecasting, O&M costing, financial capacity analysis, economic Impacts analysis, and preparation of FTA Section 5309 New Starts applications. Our work has been instrumental in advancing transportation projects toward implementation: FTA Section 5309 New Starts projects that received Full-Full Grant Agreements) New York/Long Island Rail Road East Side Access: FTA share = 2,632 Million (34%) New York/Second Avenue Subway: FTA share = 1,300 Million (27%) Norfolk/The Tide Light Rail: FTA share = 128 Million (55%) Minneapolis/NorthStar Commuter Rail: FTA share = 157 Million (49%) Other projects under construction or in operation: New York (AirTrain from JFK Airport to Long Island Railroad and NYC Subway) Washington (several Metrorail lines) Houston (busway and light rail line) Dallas (light rail system) Amtrak (Acela and several state corridor services) AECOM CONSULT STAFF SERVING VTA ROBERT L. PESKIN, a Senior Consulting Manager, with AECOM Consult, Inc., consults in the areas of transportation financing, planning, and management. He has over 31 years of experience with the AECOM Consult transportation practice serving public transportation agencies, local governments, planning agencies, state departments of transportation, Amtrak, and the US Department of Transportation. Dr. Peskin pioneered analytical methodologies in the areas of transportation financial planning, analysis of transportation infrastructure capital needs, and operating & maintenance cost modeling. His work focuses on the application of quantitative information to support transportation decision making. He works with public agency staff in integrating financial, capital, and operating data from all functional areas including planning, engineering, transportation, and maintenance. Dr. Peskin supports transportation agency executive staff and governing boards as they commit limited public resources to major capital investments and make difficult budgeting decisions. NATHAN M. MACEK, AICP, a Consulting Manager with AECOM Consult, Inc., is a transportation planner and resource management analyst with experience performing financial analysis, policy analysis, strategic management, economic analysis, and planning studies. His capabilities extend along the infrastructure development life cycle from planning, programming, innovative finance, and development to operation and maintenance of infrastructure facilities, including highways, toll roads, transit systems, and other public works facilities. He has conducted cash flow modeling, financial analyses, and risk analyses of capital and operating funding for over a
dozen transportation agencies, applying innovative non-profit and public sector financing techniques to address the budgetary challenges faced by public agencies. Dr. Peskin and Mr. Macek are specialists in developing FTA Section 5309 New Starts grant applications and have supported projects in Boston (Silver Line Phase III), New York (East Side Access and Second Avenue Subway), Miami (Orange Line Phase II North Corridor), and San Francisco (Central Subway).