Valley Metro Rail Preliminary Annual Operating & Capital Budget Fiscal Year 2018

Valley Metro Rail Preliminary Annual Operating & Capital Budget Fiscal Year 2018 FY 2008-09 0 May 2008 Operating and Capital Budget METRO

Valley Metro Rail, Inc. Phoenix, Arizona Preliminary Operating and Capital Budget Fiscal Year 2018 (July 1, 2017 through June 30, 2018) Five-Year Operating Forecast and Capital Program Fiscal Year 2018 through Fiscal Year 2022 (July 1, 2017 through June 30, 2022) Board of Directors Chair - Mayor Mark Mitchell, Tempe Vice Chair - Councilmember Chris Glover, Mesa Vice Mayor Kevin Hartke, Chandler Mayor Jerry Weiers, Glendale Councilmember Thelda Williams, Phoenix Executive Management Team Scott Smith, Chief Executive Officer Robert Antoniak, Chief Operating Officer Raymond Abraham, Chief Operations Officer Hillary Foose, Director, Marketing and Communication Wulf Grote, Director, Capital and Service Development Paul Hodgins, Chief Financial Officer Penny Lynch, Director, Human Resources Director Michael Minnaugh, General Counsel Adrian Ruiz, Director, Safety, Security and Quality Assurance

Annual Budget Table of Contents Valley Metro Rail Organization... 1 Valley Metro Rail Vision... 2 Fiscal Year 2017 Highlights... 2 Rail Operations Service Plan... 5 Total Financial Program... 6 Budget Analysis... 8 Agency Staff Overview... 10 Fiscal Year 2018 Budgets: Operating Budget Revenue Operations... 13 Future Project Development... 14 Agency Operating... 15 Agency Overhead Allocation... 16 Capital Budget Northwest Extension Phase I... 17 Central Mesa Extension... 18 Gilbert Road Extension... 19 Tempe Streetcar Extension... 20 50th Street LRT Station... 21 South Central Extension... 22 Operations & Maintenance Center Expansion... 23 Non-Prior Rights Utilities Relocation... 23 Systemwide Improvements... 24 Schedule Capital Debt Service... 24 Funds Flow Fiscal Year 2018... 25

Five-Year Plan Table of Contents Executive Summary Valley Metro Rail Services... 27 Operations & Maintenance... 28 Planning & Development... 28 Design & Construction... 28 Five-Year Plan Summary... 29 Five-Year Operating Forecast Uses & Sources of Funds... 30 Operations & Maintenance Cost Estimate FY18-22... 32 Five Year Fares, Costs and Member City Funding... 33 Project Development Planning... 34 Five-Year Capital Program All Projects... 35 High Capacity Transit Projects... 37 Central Mesa Extension... 38 Gilbert Road Extension... 39 Tempe Streetcar Extension... 41 South Central Extension... 43 50 th Street LRT Station... 45 Operations & Maintenance Center Expansion... 46 Northwest Extension Phase II... 47 Capitol I-10 West Extension Phase I... 49 West Phoenix/Central Glendale Extension... 51 Systemwide Improvements... 52 Staffing Plan... 53 Appendix A-The Budget Process... 59 B-Glossary of Terms and Acronyms... 60

VALLEY METRO RAIL ORGANIZATION Valley Metro Rail, Inc. (VMR) is a public non-profit corporation whose members are the cities of Chandler, Glendale, Mesa, Phoenix, and Tempe. VMR was created to manage the design, construction, and operation of the Light Rail Transit (LRT) System within the Metropolitan Area. The Board of Directors includes the mayors of the member cities or their designated representatives. The Board of Directors establishes overall policies and provides general oversight of the VMR agency and its responsibilities. The Chief Executive Officer (CEO) is responsible for implementing the agency vision and the day-to-day management of the organization. The CEO plans, coordinates, and directs the activities of the Management staff in carrying out the organization s responsibilities. The VMR Staff includes employees managing operations, performing maintenance, directing planning, design and construction of new rail lines. VMR staff are supported by contracted personnel with specialized experience in light rail planning, design, construction, and operations. The following chart depicts the policy organization for VMR and the relationships to key stakeholders. 1

VALLEY METRO VISION: Valley Metro is a leader in connecting communities and building a vibrant, sustainable region. MISSION: Valley Metro provides our customers with a safe, efficient and reliable total transit network. FISCAL YEAR 2017 HIGHLIGHTS VMR ridership increased, serving 15.6 million riders in Fiscal Year 2016, 9.1% percent more than in Fiscal Year 2015. 2

Delivered passenger service achieving the following results: Benchmark FY16 Target FY16 Actual On Time Perfomance 95% 93.4% Cost per Boarding $2.42 $2.25 Average Fare $0.94 $0.86 Valley Metro Rail ridership in FY16 is 15.6 million riders, which is an increase of 9.1% over FY15 and is the highest annual ridership since operations began in Dec. 27, 2008. In July 2016, the establishment of the Valley Metro Accessibility Advisory Group (VMAAG) comes as Valley Metro, in partnership with 15 cities and Maricopa County, implements local Dial-a-Ride improvements including the elimination of transfers. More than 200 regional trips were successfully completed on July 1, 2016, the first day of regional Dial-a-Ride service In August 2016, Valley Metro strengthened its commitment to education outreach and sustainability efforts with the delivery of 124 refurbished computers to the Cartwright School District. The partnership between Valley Metro, Cartwright School District and Cox Communications stems from Cox s Connect2Compete program. In September 2016, officials from the city of Phoenix and Valley Metro, alongside community representatives, announced the first light rail project slated under Phoenix Transportation 2050 (T2050). The new 50th Street Station will serve local businesses and provide added convenience for riders who are traveling from across the Valley to access independent lifestyle resources for people with disabilities at Ability360. In October 2016, a colorful balloon release kicked off the official start of construction on the Gilbert Road Extension. Valley Metro and city of Mesa hosted a groundbreaking event and community fall festival at Stapley Drive and Main Street to mark the milestone. In October 2016, Valley Metro received a $1 million Mobility on Demand (MOD) project grant from the Federal Transit Administration to develop a mobile app that will integrate mobile ticketing and multi-modal trip planning information. The agency is partnering with RouteMatch Software, transit industry technology provider, as well as Arizona State University (ASU) and the City of Phoenix Public Transit Department to create the passenger-based app. 3

In November 2016, the Valley Metro RPTA and Valley Metro Rail Boards of Directors took action to finalize an employment agreement with Scott Smith that will transition his service from interim CEO to CEO. In December 2016, at the monthly Valley Metro Boards meeting, new Chief Financial Officer, Paul Hodgins was announced and Tempe Streetcar designer and artists were approved. In December 2016, Coors Light Free Rides on buses, trains and Dial-a-Ride began at 7 p.m. New this year is a partnership with Uber to allow two rides discounted by 10 percent to or from a Valley Metro Rail station. In March 2016, Valley Metro Rail played a key role in providing transportation for the NCAA Final Four events in downtown Phoenix. 4

RAIL OPERATIONS SERVICE PLAN Service Frequency Fiscal Year 2018 Plan: Weekday trains will run with two cars at 12 minute intervals during peak hours and 15 to 20 minute intervals off peak. Weekends do not require peak service trains and will operate with two cars at 15 to 20 minute headways. Service headways and train lengths will be adjusted over time to accommodate growth and service patterns. No major changes are expected from FY17. Time of Day Monday - Friday 4:29 am to 7:00 am Monday - Friday 7:00 am to 6:00 pm Monday - Thursday 6:00 pm to 11:00 pm Friday - 6:00 pm to 2:00 am Saturday - 4:49 am to 6:00 pm Saturday - 6:00 pm to 2:00 am Sunday - 4:49 am to 11:09 pm Service Frequency 20 minutes 12 minutes 20 minutes 20 minutes 15 minutes 20 minutes 20 minutes Ten weekdays are currently scheduled for holiday schedule frequency (Sunday schedule). Ridership and Fare Revenue: Total Ridership is forecasted at 16.8 million passengers for the year with fare revenues generating $14.3 million. Average fare per ride is forecasted at $0.85 cents per ride. 5

TOTAL FINANCIAL PROGRAM The Fiscal Year 2018 Operating and Capital Budget has been prepared with the goal of delivering a fiscally prudent, balanced budget. Last year, the Board approved a total of $156.8 million (*) for the amended Fiscal Year 2017 Budget. Total uses of funds including debt service for FY18 are estimated to be $298.8 million. Uses of Funds - The Fiscal Year 2018 Budget includes anticipated operating and capital expenditures in the amount of approximately $270.6 million to support program elements during the period of July 1, 2017 through June 30, 2018, as follows: USES OF FUNDS ($,000) FY17 FY18 Budget Amended Prelim Analysis Budget Budget Change Note # Operating Activities: Revenue Operations $ 44,890 $ 47,943 $ 3,053 1 Future Project Development 11,867 17,592 5,725 2 Agency Operating Budget 1,081 1,585 504 3 Subtotal Operating $ 57,838 $ 67,120 $ 9,282 Capital Projects: Northwest Extension $ 3,203 $ - $ (3,203) 4 Central Mesa Extension 4,673 1,961 (2,712) 5 Gilbert Road Extension 43,650 75,245 31,595 6 Tempe Streetcar Extension 15,330 50,955 35,625 7 50th Street LRT Station 6,065 9,998 3,933 8 South Central Extension 3,082 33,557 30,475 9 Operations & Maintenance Center Expansion - 3,197 3,197 10 Non-Prior Rights Utilities Relocations 4,374 - (4,374) 11 CNPAs - Mesa Extension 158 - (158) CNPAs - Gilbert Road 1,484 - (1,484) 12 CNPAs - Tempe Streetcar - 279 279 Systemwide Improvements 16,905 28,304 11,399 13 Subtotal Capital $ 98,924 $ 203,496 $ 104,572 Total Uses $ 156,762 $ 270,616 $ 113,854 Capital Project Debt Service: Debt Service - Interest $ 8,366 $ 8,961 $ 595 Debt Service - Principal 12,193 19,250 7,057 Subtotal Debt Service $ 20,559 $ 28,211 $ 7,652 Total Uses with Debt Service $ 177,321 $ 298,827 $ 121,506 Note: See pages 8 and 9 for budget analysis notes. (*) In FY15, the agency changed its budgetary reporting of Debt Service. Any Debt Service related to PTF bonds are reported on the VM RPTA CAFR and budget documents. Obligations of VM RPTA and VMR related to debt service are reported on a memorandum basis in this and future rail budgets. 6

Sources of Funds - The Fiscal Year 2018 Operating and Capital Budget will be funded with a combination of Fare Revenues, Member City contributions, Public Transportation Funds, Congestion Mitigation and Air Quality funds (CMAQ), and other local funding. The Fiscal Year 2018 Budget includes anticipated capital and operating sources of funds in the amount of approximately $270.6 million (*), as follows: SOURCES OF FUNDS ($,000) FY17 FY18 Budget Amended Prelim Analysis Budget Budget Change Note # Operating Activities: Fare Revenue $ 15,909 $ 14,300 $ (1,609) 14 Advertising Revenue 1,100 1,100 - Federal 5307 PM 1,197 1,366 169 Federal 5339-1,600 1,600 15 Federal CMAQ - 1,426 1,426 16 TIGER 175 - (175) Member Cities 31,139 35,092 3,953 17 MAG / RPTA (RARF) 1,000 1,000 - PTF Sales Tax Revenue 7,319 11,236 3,917 18 Subtotal Operating $ 57,838 $ 67,120 $ 9,282 Capital Projects: FTA - Section 5309 $ - $ 29,193 $ 29,193 19 Federal CMAQ 65,349 104,296 38,947 20 Federal 5337 SOGR 341 1,311 970 21 Federal 5312 MOD 500 501 1 Member Cities 14,013 47,969 33,956 22 Less Repayment NW Advance (60,000) - 60,000 23 PTF Bond Revenue 43,099 - (43,099) 24 PTF Sales Tax Revenue 35,622 20,226 (15,396) 25 Subtotal Capital $ 98,924 $ 203,496 $ 104,572 Total Sources $ 156,762 $ 270,616 $ 113,854 Capital Project Debt Service: PTF Sales Tax Revenue $ 20,559 $ 28,211 $ 7,652 Subtotal Debt Service $ 20,559 $ 28,211 $ 7,652 Total Sources with Debt Service $ 177,321 $ 298,827 $ 121,506 Note: See pages 8 and 9 for budget analysis notes. (*) In FY15, the agency changed budgetary reporting of Debt Service. Any Debt Service related to PTF bonds are reported on the VM RPTA CAFR and budget documents. Obligations of VM RPTA and VMR related to debt service are reported on a memorandum basis in this and future rail budgets. 7

Budget Analysis The following is an analysis of the major changes in the Fiscal Year 2018 Preliminary Budget versus the Fiscal Year 2017 Amended Budget. The number in the "Note" column corresponds to the "Note" column in the "Uses of Funds" and "Sources of Funds" located in the Total Financial Program. See Pages 6 and 7. Note Budget Analysis - Uses of Funds 1 FY18 rail operating costs increase by 7% over FY17 levels. Maintenance costs rise with scheduled preventive maintenance activities to maintain the system in a state of good repair. Initiatives for FY18 include increased fare inspection and security resources and the deployment of Wi-Fi to all 50 light rail vehicles. 2 Future Project Development costs are up by $5.7M due to increase in planning activities related to future corridors and system planning; primarily due to the I-10/I-17 ramp design. 3 Agency operating costs are increased $0.5M due to restructuring of the Executive Office to include administration and project management duties. 4 Northwest Extension Phase I capital project is complete. 5 Central Mesa Extension base project costs are down by $2.7M. Remaining activity in FY18 is related to the train signal control system upgrade. 6 Gilbert Road LRT Extension base project cost are up $31.6M due to increased construction activity and progress payments on 3 vehicles. Annual expenditures forecasted at $75.2M. 7 Tempe Streetcar project costs are up $35.6M. Annual expenditures forecasted at $51.0M, which includes NPR costs of $12.5M. 8 50th Street LRT Station costs are up by $3.9M for design and pre-construction activities. 9 South Central Capital Project pre-construction activities to ramp up in FY18. Non-prior rights utilities relocations ($4.2M) are included. Annual design and project management expenditures forecasted at $33.6M. 10 Operations & Maintenance Center Expansion pre-construction activities begin in FY18. Annual design and project management expenditures forecasted at $3.2M. 11 Non-Prior Rights (NPR) costs are now included within the capital projects. 12 No CNPA work planned to occur for Gilbert Road LRT Extension in FY18. 13 Systemwide Improvements include the purchase of 8 light rail vehicles for future extensions ($16.0M), LRV overhauls ($3.7M), LRV Wi-Fi ($2.5M), Mobile ticketing ($0.7), improvements for station lighting and railing, security camera component upgrades, ticket vending machine upgrades and other activities ($5.3M). 8

Budget Analysis (continued) Note Budget Analysis - Sources of Funds 14 Fare revenue forecasted at $14.3M, based on current trends in average fare and ridership; assumes 16.8 million rides with an average fare forecasted to be $0.85 per ride in FY18. 15 Federal 5339 funds are at $1.6M due to the I-10/I-17 Bus Ramp Design project within the Future Project Development budget. 16 Federal CMAQ funds are programmed at $1.4M due to the Capitol/I-10 West project for preconstruction activities. 17 Member City contributions for Operations are up from $31.1M to $35.1M in FY18 due to base service increase of $2.9M, reduced fare revenue -$1.6M, $1.0M decrease for future projects, and $0.5M increase for agency operations. 18 PTF Sales Tax revenue funding requirements for project development are up by $3.9M, primarily related to Northwest Phase II, Phoenix I-10 Capitol projects, I-10/I-17 bus ramp, and Operations and Maintenance Center expansion. 19 FTA - Section 5309 funds are programmed at $29.2M to support Tempe Streetcar project construction activities. 20 Federal CMAQ increasing by $38.9M due to increasing funding requirements for construction activity. FY18 programmed activity includes Central Mesa Extension SCADA ($1.6M), Gilbert Road ($70.9M), Tempe Streetcar ($16.0M), Systemwide Improvements ($13.2M), and Operations and Maintenance Center expansion ($2.6M). 21 Federal 5337 SOGR programmed at $1.3M to assist in funding O&M activities required to maintain a state of good repair. 22 Member City contributions for Capital Projects total $48.0M for FY18. Project amounts for FY18 include South Central funding by Phoenix ($33.6M), 50th Street Station funding by Phoenix ($10.0M), Gilbert Road Extension funding by Mesa ($4.3M), and Concurrent Non-Project Activities (CNPA) work for Tempe Streetcar ($0.1M). 23 In FY17, the City of Phoenix was repaid $60.0M in advances the City made in FY13 and FY14 to accelerate completion of the NW Extension. Funding is from Public Transportation Funds. 24 It is anticipated that RPTA will not issue bonds to support rail capital projects in the FY18. 25 PTF Sales Tax funding will be reduced from $35.6M to $20.2M primarily due to construction completion for Northwest Extension, offset by increased funding requirements for Tempe Streetcar, Systemwide Improvements and Non Prior Rights Utilities. 9

AGENCY STAFF OVERVIEW Valley Metro RPTA and Valley Metro Rail budgets are developed with a unified staff plan, with department managers planning the level of effort required to meet the bus and rail activities. For FY18, there are 360 employees budgeted; 151 FTE s are budgeted to RPTA activities; 209 to VMR activities. Staffing levels are reviewed on an annual basis to fulfill work requirements in the five-year period commencing with the beginning of the new fiscal year. Salary and fringe benefit compensation levels are measured against comparable regional agencies, member cities and peer transit agencies located in the western U.S. FY18 Compensation and Fringe Benefit Assumptions Total compensation budget is based on a 3.0% increase. For staff salary changes, merit increases are based on employee performance. Agency health care costs will increase. Program design adjustments are in place to hold total agency fringe benefit cost increases to within 3% of FY17 levels. FY18-FY20 Staffing Needs The Valley Metro Regional Public Transportation Authority (RPTA) and Valley Metro Rail, Inc. (VMR) are in a period of significant expansion of the system and services. In order to meet the needs of our members and deliver projects, Valley Metro is in need of additional resources. In looking at the expansion plans over the next decade, it is clear that a number of positions are in demand for an extended period of time. The additional staff resources are categorized in three ways: positions that would otherwise be filled with consultants, positions added as a result of strategic initiatives, and support positions added to address agency growth in general. Consultant versus Staff 22 of the 35 positions are conversions from consultants Costs of consultants typically include larger overhead plus profit Approximately $1.3M in costs will be avoided by hiring these positions Project positions will be hired for project term or specific term (3-5 years) Positions to Fulfill Strategic Initiatives 14 positions related to strategic initiatives o Increase Customer Focus 3 Operations Communications Specialists o Evaluate and enhance passenger safety and security Senior Project Certification Coordinator Transit Bus Safety Security Coordinator Project Assistant o Board Adopted Information Technology Strategic Plan 8 positions over the next 3 fiscal years 10

General Growth Need for additional support positions with agency growth (HR and Finance) Below is a table summarizing the changes in staff positions recommended for FY18 and preliminary positions for FY19 and FY20. Adopted Mid Year Proposed Preliminary Preliminary Division 2017 Additions 2018 2019 2020 Capital and Service Development 38 4 11 4 Communication & Marketing 29 8 3 Executive Office 10 1 2 Finance 20 2 3 Human Resources 8 2 Information Technology 9 2 3 3 Internal Audit 2 Legal 12 2 Operations and Maintenance RPTA 58 7 1 Operations and Maintenance VMR 118 4 2 Safety and Security 6 1 3 Total Positions 310 15 35 15 3 RPTA 129.3 8.6 12.8 8.2 3.0 VMR 180.7 6.4 22.2 6.8 0.0 Below is a table that summarizes the impacts of funding the FY18 positions, comparing fully burdened costs for the additional positions relative to the base positions at the end of FY17. Costs shown are in millions. FY18 RPTA Base Additions % Change Planning and Capital Projects (PTF/RARF) $1.24 $0.09 7.0% Administrative and Regional Projects (PTF/RARF) $8.90 $0.62 7.0% Operations Regionally Funded $1.30 $0.05 3.8% Operations Member City Contributions $0.93 $0.03 3.5% Sub total RPTA $12.37 $0.79 6.4% VMR Base FY18 Additions % Change Planning (PTF/RARF) $4.14 $0.74 17.8% Capital (Project funded) $4.37 $1.76 40.3% Member City Contributions $12.61 $0.65 5.2% Sub total VMR $21.11 $3.15 14.9% 11

DETAIL VALLEY METRO RAIL OPERATING AND CAPITAL PROJECTS VMR s operating and capital activities are broken down into projects. The following pages identify the Sources and Uses of Funds for each project. 12

FY18 Preliminary Budget - Revenue Operations FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) SOURCES OF FUNDS Fare Revenue $ 15,909,000 $ 14,300,000 $ (1,609,000) Federal 5307PM 1,197,000 1,366,000 169,000 Advertising Revenue 1,100,000 1,100,000 - Phoenix Contributions 17,285,000 19,364,000 2,079,000 Tempe Contributions 5,418,000 6,883,000 1,465,000 Mesa Contributions 3,981,000 4,930,000 949,000 TOTAL SOURCES $ 44,890,000 $ 47,943,000 $ 3,053,000 USES OF FUNDS Salaries and Fringe Benefits $ 9,475,000 $ 10,017,000 $ 542,000 RPTA Overhead 870,000 816,000 (54,000) Transportation Contractors Labor & Materials 11,296,000 10,580,000 (716,000) Fare Inspection & Security 4,755,000 5,654,000 899,000 Propulsion Power 3,106,000 2,873,000 (233,000) Vehicle Maintenance Contractor Labor & Materials 2,766,000 3,119,000 353,000 Systems & Facilities Maintenance Contractors 2,729,000 3,845,000 1,116,000 SFM Material / Supplies / Other Direct Costs 891,000 1,047,000 156,000 Utilities 1,905,000 2,009,000 104,000 Data/Telecommunications - 550,000 550,000 General & Administrative Costs 3,086,000 3,111,000 25,000 Consultants 428,000 563,000 135,000 Liability Insurance 1,721,000 1,545,000 (176,000) Contingency Reserve 1,270,000 647,000 (623,000) LRT project capital outlay 592,000 1,567,000 975,000 TOTAL USES $ 44,890,000 $ 47,943,000 $ 3,053,000 Allocation of Operating Costs Phoenix Base Costs $ 25,605,000 $ 27,027,000 $ 1,422,000 Regional Security 3,039,000 3,336,000 297,000 Local Security - - - 63.33% 28,644,000 30,363,000 1,719,000 Less Fares,Advertising & Fed PM Distributed (11,359,000) (10,999,000) 360,000 Phoenix Net Contribution $ 17,285,000 $ 19,364,000 $ 2,079,000 Tempe Base Costs $ 8,538,000 $ 9,011,000 $ 473,000 Regional Security 1,013,000 1,112,000 99,000 Local Security 70,000 285,000 215,000 21.71% 9,621,000 10,408,000 787,000 Less Fares,Advertising & Fed PM Distributed (4,203,000) (3,525,000) 678,000 Tempe Net Contribution $ 5,418,000 $ 6,883,000 $ 1,465,000 Mesa Base Costs $ 5,922,000 $ 6,250,000 $ 328,000 Regional Security 703,000 772,000 69,000 Local Security - 150,000 150,000 14.96% 6,625,000 7,172,000 547,000 Less Fares,Advertising & Fed PM Distributed (2,644,000) (2,242,000) 402,000 Mesa Net Contribution $ 3,981,000 $ 4,930,000 $ 949,000 Total Operating Costs $ 44,890,000 $ 47,943,000 $ 3,053,000 13

FY18 Preliminary Budget - Future Project Development FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) SOURCES OF FUNDS FTA - Section 5339 $ - $ 1,600,000 $ 1,600,000 Chandler 239,000 612,000 373,000 Phoenix 2,492,000 969,000 (1,523,000) Mesa - 749,000 749,000 Glendale 644,000 - (644,000) MAG 500,000 500,000 - RPTA (RARF/Other) 500,000 500,000 - PTF Revenue Sales Tax 7,317,000 11,236,000 3,919,000 TIGER 175,000 - (175,000) CMAQ - 1,426,000 1,426,000 TOTAL SOURCES $ 11,867,000 $ 17,592,000 $ 5,725,000 USES OF FUNDS Salaries and Fringe Benefits $ 2,668,000 $ 3,173,000 $ 505,000 RPTA Overhead 232,000 271,000 39,000 Consultants - PM/CM - 1,750,000 1,750,000 Consultants - Planning Support 6,299,000 7,380,000 1,081,000 Consultants - Other 386,000 3,362,000 2,976,000 Consultants - Planning/Environmental 680,000 - (680,000) Advertising 6,000 12,000 6,000 Printing 46,000 59,000 13,000 Postage 51,000 45,000 (6,000) Public meetings & information 28,000 18,000 (10,000) Other direct expenditures 12,000 162,000 150,000 Local meetings & mileage 3,000 4,000 1,000 Business Travel 4,000 8,000 4,000 LRT project capital outlay 5,000 10,000 5,000 Agency Overhead Allocation 1,448,000 1,338,000 (110,000) TOTAL USES $ 11,867,000 $ 17,592,000 $ 5,725,000 * South Central to be funded by Phoenix ($681,000) * Northwest Phase II EA/ACE to be funded with PTF ($2.6M) * West Phoenix/Glendale Corridor Alternatives Analysis is anticipated to be funded with PTF ($0.9M) * Capitol/I-10 West Phase I is anticipated to be funded with CMAQ ($1.4M) and PTF ($0.4M) * Fiesta/Downtown Chandler Transit Corridor Study ($1.4M) to be funded by Chandler ($0.6M) and Mesa ($0.8M) * Northeast Corridor feasibility study to be funded by Phoenix ($228,000) * 16th Street Advanced Feasibility Study ($60,000) to be funded by Phoenix * OMC Master Plan and Phasing Study funded with PTF ($747,000) * I-10/I-17 Bus ramp design funded with FTA 5339 ($1.6M) and PTF ($0.4M) Note: Future Project Development includes expenditures funded by the Public Transportation Fund for the development of capital projects as listed in the Regional Transportation Plan. These expenditures include environmental and alternatives analysis studies necessary to qualify the capital projects for federal funding. 14

FY18 Preliminary Budget - Agency Operating FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) SOURCES OF FUNDS Chandler $ 32,000 $ 48,000 $ 16,000 Glendale 32,000 48,000 16,000 Mesa 195,000 285,000 90,000 Phoenix 541,000 792,000 251,000 Tempe 281,000 412,000 131,000 TOTAL SOURCES $ 1,081,000 $ 1,585,000 $ 504,000 USES OF FUNDS Salaries and Fringe Benefits $ 543,000 $ 854,000 $ 311,000 RPTA Overhead 47,000 73,000 26,000 Memberships & Subscriptions - 44,000 44,000 Consultants - Other 37,000 39,000 2,000 Conferences 11,000 17,000 6,000 Business Travel 20,000 70,000 50,000 Advertising 1,000 - (1,000) Printing 2,000 4,000 2,000 Public meetings & information 41,000 - (41,000) Other direct expenditures 23,000 46,000 23,000 LRT audit and accounting costs 50,000 52,000 2,000 Bank Charges 5,000 - (5,000) Agency Overhead Allocation 301,000 386,000 85,000 TOTAL USES $ 1,081,000 $ 1,585,000 $ 504,000 Note: The Cities of Chandler and Glendale contribute $50,000 each annually to VMR. $48,000 is applied to Agency Operating funds and the balance of the funds are held by VMR for future project studies to be used when requested by the Member City. Agency operating costs are general and administrative costs of Valley Metro Rail, Inc. which are not directly allocable to passenger operations or to capital projects. Typical expenses include agency memberships, public meetings, legislative representation, annual financial audit, and leadership management activities which address interactions with member cities and strategic policy making. 15

FY18 Preliminary Budget - Agency Overhead Allocation FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) ALLOCATION OF COSTS Revenue Operations $ 693,000 $ 629,000 $ (64,000) Future Projects 1,498,000 1,339,000 (159,000) Agency Operating 252,000 386,000 134,000 Northwest Extension 25,000 - (25,000) Central Mesa 59,000 36,000 (23,000) Gilbert Road 378,000 447,000 69,000 Tempe South 296,000 487,000 191,000 50th Street LRT Station 140,000 282,000 142,000 South Central Capital Project 19,000 353,000 334,000 NPR Utilities 22,000 - (22,000) Systemwide Improvements - 4,000 4,000 TOTAL ALLOCATION $ 3,382,000 $ 3,963,000 $ 581,000 USES OF FUNDS Salaries & Fringes $ 1,124,000 $ 1,077,000 $ (47,000) RPTA Overhead 98,000 92,000 (6,000) Building Rent 826,000 1,096,000 270,000 IT Services and Consultants 177,000 287,000 110,000 Office Supplies 138,000 119,000 (19,000) Telecommunication Services 166,000 192,000 26,000 Employee Development 142,000 106,000 (36,000) Memberships & Subscriptions - 15,000 15,000 Business Travel - 71,000 71,000 Vehicle Related 31,000 36,000 5,000 Other Office Expense 73,000 96,000 23,000 Computer/Software/Equipment 569,000 480,000 (89,000) LRT project capital outlay 38,000 296,000 258,000 TOTAL USES $ 3,382,000 $ 3,963,000 $ 581,000 Agency overhead costs include general and administrative costs of Valley Metro Rail, Inc. which are directly allocable to passenger operations, future project development and to capital projects. Expenditures include human resource costs for information technology, accounting and procurement, office building, supplies and equipment, computer software maintenance and offsite hosting. Overhead costs are allocated based on ratios of actual wage expended for VMR operating and capital projects. 16

FY18 Preliminary Budget - Northwest Extension Phase I FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) SOURCES OF FUNDS PTF Revenue Bonds $ 43,098,000 $ - $ (43,098,000) PTF Revenue Sales Tax 20,105,000 - (20,105,000) Less Repayment Phoenix NW Advance (60,000,000) - 60,000,000 TOTAL SOURCES $ 3,203,000 $ - $ (3,203,000) - USES OF FUNDS Salaries and Fringe Benefits $ 45,000 $ - $ (45,000) RPTA Overhead 4,000 - (4,000) Consultants - PM/CM 95,000 - (95,000) Consultants - Other 24,000 - (24,000) LRT project office expense 10,000 - (10,000) NWX Advance - Interest 3,000,000 - (3,000,000) Agency Overhead Allocation 25,000 - (25,000) TOTAL USES $ 3,203,000 $ - $ (3,203,000) 17

FY18 Preliminary Budget - Central Mesa Extension FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) SOURCES OF FUNDS PTF Revenue Sales Tax $ 934,000 $ 392,000 $ (542,000) CMAQ 3,739,000 1,569,000 (2,170,000) TOTAL SOURCES $ 4,673,000 $ 1,961,000 $ (2,712,000) USES OF FUNDS Salaries and Fringe Benefits $ 117,000 $ 154,000 $ 37,000 RPTA Overhead 10,000 14,000 4,000 Contractor - Design Build 4,479,000 1,757,000 (2,722,000) Consultants - Other 7,000 - (7,000) Agency Overhead Allocation 60,000 36,000 (24,000) TOTAL USES $ 4,673,000 $ 1,961,000 $ (2,712,000) FY18 Preliminary Budget - Central Mesa: Concurrent Non-Project Activities (CNPA) FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) SOURCES OF FUNDS Mesa $ 158,000 $ - $ (158,000) TOTAL SOURCES $ 158,000 $ - $ (158,000) USES OF FUNDS Contractor - Design Build $ 158,000 $ - $ (158,000) TOTAL USES $ 158,000 $ - $ (158,000) 18

FY18 Preliminary Budget - Gilbert Road Extension FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) SOURCES OF FUNDS Mesa $ 2,488,000 $ 4,289,000 $ 1,801,000 CMAQ 41,162,000 70,956,000 29,794,000 TOTAL SOURCES $ 43,650,000 $ 75,245,000 $ 31,595,000 USES OF FUNDS Salaries and Fringe Benefits $ 783,000 $ 1,103,000 $ 320,000 RPTA Overhead 68,000 95,000 27,000 Consultants - PM/CM 2,275,000 2,200,000 (75,000) Consultants - Planning Support 122,000 402,000 280,000 Consultants - Design & Construction Support 2,618,000 1,703,000 (915,000) Contractor - CM@R 21,278,000 50,568,000 29,290,000 City Construction Management 1,178,000 1,846,000 668,000 Consultants-Facilities Construction 100,000 607,000 507,000 Consultants - Art Design 317,000 469,000 152,000 Consultants - Other 476,000 510,000 34,000 Real estate acquisition 9,375,000 5,091,000 (4,284,000) Business Assistance 150,000 150,000 - Light Rail Vehicles 4,025,000 7,647,000 3,622,000 Community Advisory Board 120,000 80,000 (40,000) Data/Telecommunications 10,000 - (10,000) Advertising 6,000 1,000 (5,000) Printing 23,000 25,000 2,000 Postage 15,000 15,000 - Public meetings & information 6,000 4,000 (2,000) Other direct expenditures 23,000 33,000 10,000 Computer unit cost under 5K 25,000 - (25,000) Copier 8,000 - (8,000) LRT project office expense 82,000 - (82,000) Software Licenses/Maintenance 89,000 94,000 5,000 Local meetings & mileage 6,000 2,000 (4,000) Business Travel 4,000 10,000 6,000 LRT project capital outlay 90,000 - (90,000) Gilbert Rd Extension NPR Utilities 2,143,000 2,143,000 Agency Overhead Allocation 378,000 447,000 69,000 TOTAL USES $ 43,650,000 $ 75,245,000 $ 31,595,000 FY18 Preliminary Budget - Gilbert Road - Concurrent Non-Project Activities (CNPA) SOURCES OF FUNDS FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) Mesa $ 1,484,000 $ - $ (1,484,000) TOTAL SOURCES $ 1,484,000 $ - $ (1,484,000) USES OF FUNDS Contractor - Design Build $ 1,484,000 $ - $ (1,484,000) TOTAL USES $ 1,484,000 $ - $ (1,484,000) 19

FY18 Preliminary Budget - Tempe Streetcar Extension FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) SOURCES OF FUNDS PTF Revenue Sales Tax $ 3,066,000 $ 5,749,000 $ 2,683,000 FTA Section 5309-29,193,000 29,193,000 CMAQ 12,264,000 16,013,000 3,749,000 TOTAL SOURCES $ 15,330,000 $ 50,955,000 $ 35,625,000 USES OF FUNDS Salaries and Fringe Benefits $ 609,000 $ 1,216,000 $ 607,000 RPTA Overhead 53,000 104,000 51,000 Consultants - PM/CM 1,632,000 1,855,000 223,000 Consultant-Planning Support 238,000 360,000 122,000 Consultants - Design & Construction Support 3,420,000 4,227,000 807,000 Contractor - CM At Risk 1,000,000 16,485,000 15,485,000 City Construction Management 200,000 600,000 400,000 Consultants - Art Design 175,000 - (175,000) Consultants - Other 249,000 523,000 274,000 Consultants - Utility Relocation 100,000 1,309,000 1,209,000 Consultants - Vehicle Design/Procurement 7,000,000 10,500,000 3,500,000 Real estate acquisition - 400,000 400,000 Business Assistance 150,000 150,000 - Community Advisory Board - 60,000 60,000 LRT project capital outlay 100,000 - (100,000) Business Travel 4,000 10,000 6,000 Other direct expenditures 104,000 153,000 49,000 Tempe Streetcar NPR Utilities 12,516,000 12,516,000 Agency Overhead Allocation 296,000 487,000 191,000 TOTAL USES $ 15,330,000 $ 50,955,000 $ 35,625,000 FY18 Preliminary Budget - Tempe Streetcar: Concurrent Non-Project Activities (CNPA) SOURCES OF FUNDS FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) Tempe $ - $ 125,000 $ 125,000 PTF Revenue Sales Tax 154,000 154,000 TOTAL SOURCES $ - $ 279,000 $ 279,000 USES OF FUNDS Consultant-D&C Support $ - $ 125,000 $ 125,000 Consultants-Art Design - 154,000 154,000 TOTAL USES $ - $ 279,000 $ 279,000 20

FY18 Preliminary Budget - 50th Street LRT Station FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) SOURCES OF FUNDS Phoenix $ 6,065,000 $ 9,998,000 $ 3,933,000 TOTAL SOURCES $ 6,065,000 $ 9,998,000 $ 3,933,000 USES OF FUNDS Salaries and Fringe Benefits $ 253,000 $ 665,000 $ 412,000 RPTA Overhead 22,000 57,000 35,000 Business Assistance 60,000 60,000 - Consultants - PM/CM 1,017,000 405,000 (612,000) Consultants - Planning Support - 39,000 39,000 Consultants - Design & Construction Support 1,186,000 156,000 (1,030,000) Contractor-CM@R 1,662,000 6,036,000 4,374,000 City Construction Management 954,000 439,000 (515,000) Consultants - Art Design 76,000 141,000 65,000 Consultants - Other 58,000 225,000 167,000 Real Estate/ROW Acquisition 542,000 131,000 (411,000) Advertising 3,000 - (3,000) Printing 10,000 12,000 2,000 Postage 3,000 3,000 - Public meetings & information 4,000 4,000 - Other direct expenditures 22,000 23,000 1,000 Software Licenses/Maintenance agreements - 30,000 30,000 Local meetings & mileage 3,000 4,000 1,000 50th St LRT Station NPR Utilities - 1,266,000 1,266,000 LRT project capital outlay 50,000 20,000 (30,000) Agency Overhead Allocation 140,000 282,000 142,000 TOTAL USES $ 6,065,000 $ 9,998,000 $ 3,933,000 21

FY18 Preliminary Budget - South Central Extension FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) SOURCES OF FUNDS Phoenix $ 3,082,000 $ 33,557,000 $ 30,475,000 TOTAL SOURCES $ 3,082,000 $ 33,557,000 $ 30,475,000 USES OF FUNDS Salaries and Fringe Benefits $ 58,000 $ 785,000 $ 727,000 RPTA Overhead 5,000 69,000 64,000 OMC Expansion - 3,279,000 3,279,000 Business Assistance - 150,000 150,000 Consultants - PM/CM 771,000 2,000,000 1,229,000 Consultants - Planning Support 229,000 446,000 217,000 Consultants - Design & Construction Support 1,000,000 10,484,000 9,484,000 Contractor-CM@R - 3,593,000 3,593,000 Consultants - Art Design - 300,000 300,000 Consultants - Other - 530,000 530,000 Real estate acquisition - 7,196,000 7,196,000 Advertising - 3,000 3,000 Printing - 18,000 18,000 Postage - 15,000 15,000 Public meetings & information - 9,000 9,000 Other direct expenditures - 21,000 21,000 Software unit cost under $5k - 54,000 54,000 Local meetings & mileage - 3,000 3,000 South Central -NPR 1,000,000 4,248,000 3,248,000 Agency Overhead Allocation 19,000 354,000 335,000 TOTAL USES $ 3,082,000 $ 33,557,000 $ 30,475,000 22

FY18 Preliminary Budget - Operations & Maintenance Center (OMC) Expansion FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) SOURCES OF FUNDS CMAQ $ - $ 2,558,000 $ 2,558,000 PTF Revenue Sales Tax - 639,000 639,000 South Central Capital Project - 3,279,000 3,279,000 TOTAL SOURCES $ - $ 6,476,000 $ 6,476,000 USES OF FUNDS Consultants (direct) $ - $ 5,400,000 $ 5,400,000 Consultant-PM/CM - 1,076,000 1,076,000 TOTAL USES $ - $ 6,476,000 $ 6,476,000 Note: Expansion of the Operations and Maintenance Center is required in order to support future extensions. FY18 South Central Capital Project budget includes $3.3M of OMC Expansion costs. FY18 Preliminary Budget - Non-Prior Rights Utilities Relocation (NPR) FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) SOURCES OF FUNDS City of Mesa $ 114,000 $ - $ (114,000) Phoenix 621,000 - (621,000) CMAQ 3,237,000 - (3,237,000) PTF Revenue Sales Tax 402,000 - (402,000) TOTAL SOURCES $ 4,374,000 $ - $ (4,374,000) USES OF FUNDS Salaries and Fringe Benefits $ 39,000 $ - $ (39,000) RPTA Overhead 3,000 - (3,000) Tempe Streetcar NPR Utilities 1,689,000 - (1,689,000) 50th St LRT Station NPR Utilities 621,000 - (621,000) Gilbert Rd Extension NPR Utilities 2,000,000 - (2,000,000) Agency Overhead Allocation 22,000 - (22,000) TOTAL USES $ 4,374,000 $ - $ (4,374,000) Note: Non-Prior Rights (NPR) costs have been included within the capital projects beginning in FY18. 23

FY18 Preliminary Budget - Systemwide Improvements FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) SOURCES OF FUNDS Federal 5337 SOGR $ 341,000 $ 1,311,000 $ 970,000 Federal 5312 MOD 500,000 501,000 1,000 PTF Revenue Sales Tax 11,114,000 13,292,000 2,178,000 CMAQ 4,950,000 13,200,000 8,250,000 TOTAL SOURCES $ 16,905,000 $ 28,304,000 $ 11,399,000 USES OF FUNDS Salaries and Fringe Benefits $ - $ 10,000 $ 10,000 RPTA Overhead - 1,000 1,000 Consultants - General/Prelim Engineering - 125,000 125,000 Computer unit cost under 5K - 128,000 128,000 Software Licenses/Maintenance agreements - 35,000 35,000 Light Rail Vehicles 6,000,000 16,000,000 10,000,000 Systemwide Capital 10,905,000 12,001,000 1,096,000 Agency Overhead Allocation - 4,000 4,000 TOTAL USES $ 16,905,000 $ 28,304,000 $ 11,399,000 FY18 Preliminary Budget - Scheduled Capital Debt Service FY17 FY18 Amount Amended Preliminary Increase/ Budget Budget (Decrease) SOURCES OF FUNDS PTF Revenue Sales Tax $ 20,559,000 $ 28,211,000 $ 7,652,000 TOTAL SOURCES $ 20,559,000 $ 28,211,000 $ 7,652,000 USES OF FUNDS Debt Service - Interest $ 8,366,000 $ 8,961,000 $ 595,000 Debt Service -Principal 12,193,000 19,250,000 7,057,000 TOTAL USES $ 20,559,000 $ 28,211,000 $ 7,652,000 *Debt Service is shown in the VMR budget for information only. The Debt Service budget is developed and included within the RPTA budget. The figures above represents the combined interest and principal amounts due for PTF Bond issuance to support Capital Rail projects. 24

FY18 Preliminary Budget - Funds Flow Funding Sources ($,000) Central Mesa Gilbert Road Tempe Streetcar 50th Street Station South Central OMC Expansion Other Capital Operating Total Funding Fare Revenue $ - $ - $ - $ - $ - $ - $ - $ 14,300 $ 14,300 Advertising Revenue - - - - - - - 1,100 1,100 Phoenix - - - 9,998 33,557 - - 21,125 64,680 Tempe - - - - - - 125 7,295 7,420 Mesa - 4,289 - - - - - 5,964 10,253 Glendale - - - - - - - 48 48 Chandler - - - - - - - 660 660 Federal 5309 - - 29,193 - - - - - 29,193 Federal 5337 SOGR - - - - - - 1,311-1,311 Federal 5339 - - - - - - - 1,600 1,600 Federal CMAQ 1,569 70,956 16,013 - - 2,558 13,200 1,426 105,722 Federal 5307 PM - - - - - - - 1,366 1,366 Federal 5312 MOD - - - - - - 501-501 Regional PTF Sales Tax 392-5,749 - - 639 13,446 11,236 31,462 RPTA - - - - - - - 500 500 MAG Arranged Funding - - - - - - - 500 500 Total Funding $ 1,961 $ 75,245 $ 50,955 $ 9,998 $ 33,557 $ 3,197 $ 28,583 $ 67,120 $ 270,616 25

Five Year Operating Forecast and Capital Program Fiscal Year 2018 Fiscal Year 2022 26

VALLEY METRO RAIL SERVICES VMR was formed to plan, design, construct, and operate the VALLEY METRO Light Rail Transit System. The Approved Light Rail Alignment (the initial 20-mile segment) was completed on time and commenced serving passengers in Phoenix, Tempe, and Mesa in December 2008. An additional 40 miles of High Capacity Transit, to be funded by local taxes, Proposition 400 revenues, and Federal Funds, are planned for future years. See Future Projects for further information. In 2015 the City of Phoenix voters approved Prop 104 providing transportation funding. Based on City of Phoenix projections, the map below shows projects moving forward in advance of the current Transit Life Cycle Plan. 27

VALLEY METRO RAIL SERVICES (continued) Operations & Maintenance: VMR is responsible for overseeing the day-to-day operations of the VMR system with the ultimate goal of providing a safe, reliable and customer focused transit system. In December of 2008, revenue operations began and VMR commenced comprehensive management of rail passenger services including safety, security, public information and marketing, risk management, fare collection, finance, transportation service delivery and LRT systems maintenance. VMR is selfperforming core systems maintenance including track, power, signals and communication systems. Future Project Planning and Development: The proposed high capacity/light rail transit system will include over 66 miles of service in four cities within the next 17 years. Before any specific transit corridor is initiated, VMR will study and configure the system to better understand how corridors connect, determine facility requirements, and define operating parameters. System planning is the first step in developing the high capacity transit network. It is followed by the corridor planning for individual corridors. Once technologies and alignments are determined in each corridor, proposed engineering is engaged. A key objective during project development is to define all aspects of each high capacity transit corridor project, identify the appropriate transit technology, the alignment, stations, park-and-rides, maintenance facilities, traction power substations, and bus interface. VMR staff is committed to working closely with policy makers, public agencies, businesses, community stakeholders, utility companies to assure an early and complete understanding of their needs and issues, before design begins. VMR is responsible to assure that adequate funding is in place to implement, maintain and operate the light rail program. VMR staff works closely with federal, state, regional and local agencies that provide present and future funding for the light rail system. VMR, in coordination with all affected agencies, annually updates the HCT element of the Transit Life Cycle Program, which defines light rail projects, funding, and schedule. Finally, VMR assists with light rail station area planning by actively engaging to support member cities efforts to facilitate Transit Oriented Development (TOD). Design and Construction: VMR is responsible for the design and construction of the regional rail transit system. Efforts include design for guideway, passenger stations, LRV traction power, signals and communications systems and maintenance facilities. VMR coordinates right-of-way acquisitions and public and private utility relocations to make way for construction. Construction contract specifications are developed and competitive procurements executed. Construction is managed to meet planned budget and schedule requirements. Emphasis is placed on delivering a high quality product focused on meeting the long-term needs to operate and maintain systems for rail passenger services. 28

FIVE-YEAR OPERATING AND CAPITAL PROGRAM The By-Laws of the Corporation call for the Board of Directors to approve a Five-Year Operating and Capital Program annually, which identifies anticipated operating costs, capital projects and costs, and the associated funding sources. The Fiscal Year 2018 Fiscal Year 2022 Five-Year Operating and Capital Program will be completed and submitted to the Board of Directors for approval along with the Fiscal Year 2018 Operating and Capital Budget. Five-Year Operating and Capital Program Forecast Summary FY18 FY19 FY20 FY21 FY22 TOTAL USES OF FUNDS ($,000) Operations & Maintenance $ 47,943 $ 49,944 $ 53,374 $ 58,520 $ 61,846 $ 271,627 Project Development Planning 17,592 11,272 9,178 8,176 8,412 54,629 Agency Operating Budget 1,585 1,633 1,681 1,730 1,781 8,410 Subtotal - Operating 67,120 62,849 64,233 68,426 72,039 334,666 Central Mesa 1,961 - - - - 1,961 Gilbert Rd 75,245 39,742 12,044 - - 127,031 Tempe Streetcar 50,955 56,418 40,045 9,726 2,386 159,530 50th Street Station 9,998 2,969 349 64-13,380 South Central 33,557 96,726 120,955 87,757 175,891 514,886 OMC Expansion 3,197 8,076 5,612 2,895-19,780 Northwest Phase II - 70,740 50,191 54,725 51,312 226,968 Capitol I-10 West Phase I - 14,521 29,698 37,000 46,374 127,593 West Phoenix Central Glendale - - 22,703 129,204 147,500 299,407 CNPA Projects 279 - - - - 279 Systemwide Improvements 28,304 24,598 4,375 3,521 2,567 63,365 Subtotal - Capital 203,496 313,790 285,972 324,892 426,030 1,554,180 Total Uses $ 270,616 $ 376,639 $ 350,205 $ 393,318 $ 498,069 $ 1,888,846 SOURCES OF FUNDS ($,000) Phoenix $ 64,684 $ 116,286 $ 55,472 $ 89,520 $ 121,184 $ 447,146 Tempe 7,420 14,075 14,116 12,126 13,675 61,412 Mesa 10,253 7,096 8,942 8,974 9,366 44,631 Glendale 48 1,439 4,703 37,205 44,006 87,400 Chandler 661 45 46 43 45 839 MAG / RPTA 1,000 1,000 1,000 1,000 1,000 5,000 Subtotal 84,065 139,941 84,278 148,868 189,275 646,428 PTF Sales Tax Revenue (Allocation 43.24%) 43,487 47,060 50,924 54,607 58,102 254,179 PTF (Reserve) / Bond Borrowing (12,032) 29,290 32,234 12,359 13,008 74,860 PTF Regional Revenue - Demand 31,455 76,350 83,158 66,966 71,110 329,039 TPAN Funds - 21,815 12,044 - - 33,859 LRT Fares 14,300 14,842 15,180 15,600 15,894 75,816 Advertising 1,100 1,100 1,100 1,100 1,100 5,500 FTA Section 5309 29,193 72,213 136,913 122,372 167,878 528,568 FTA Section 5339 1,600 - - - - 1,600 CMAQ 105,724 46,048 14,346 35,503 49,396 251,017 Federal 5307 PM 1,366 1,429 1,495 1,564 1,635 7,489 Federal 5337 SOGR 1,812 2,900 1,691 1,345 1,781 9,531 Subtotal Federal 139,696 122,590 154,445 160,784 220,690 798,204 Total Sources $ 270,616 $ 376,639 $ 350,205 $ 393,318 $ 498,069 $ 1,888,846 29

Five-Year Operating Forecast The Operations & Maintenance (O&M) costs are projected based on current cost history with a general inflation escalation factor of 3.0%. Anticipated structural changes to staffing, contract and materials expenses are forecasted to meet customer demand and maintain the system in a state of good repair. System-wide and specific corridor LRT Project Development Planning activities are included in the operating budget. Once a project has been approved for proposed engineering, the costs are thereafter capital in nature. Agency Operating costs include those costs not directly allocable to capital projects or to passenger operations. Included are costs of annual audit, federal and state legislative representation, and memberships to transportation related organizations. Operating costs and funding planned for the Fiscal Year 2018 through Fiscal Year 2022 planning horizon are as follows: FY18 FY19 FY20 FY21 FY22 TOTAL USES OF FUNDS ($,000) Operations & Maintenance $ 47,943 $ 49,944 $ 53,374 $ 58,520 $ 61,846 $ 271,627 Project Development Planning 17,592 11,272 9,178 8,176 8,412 54,629 Agency Operating Budget 1,585 1,633 1,681 1,730 1,781 8,410 Total Uses $ 67,120 $ 62,849 $ 64,233 $ 68,426 $ 72,039 $ 334,666 SOURCES OF FUNDS ($,000) LRT Fares: Phoenix $ 9,361 $ 9,717 $ 9,905 $ 10,012 $ 10,206 $ 49,201 Tempe 3,036 3,143 3,200 3,493 3,555 16,427 Mesa 1,903 1,982 2,075 2,095 2,133 10,188 Subtotal Fares 14,300 14,842 15,180 15,600 15,894 75,816 Other Revenues: Phoenix 21,129 20,673 20,737 20,800 21,869 105,206 Tempe 7,295 7,469 7,509 12,126 13,675 48,074 Mesa 5,964 6,074 8,942 8,974 9,366 39,320 Glendale 48 1,439 46 43 45 1,620 Chandler 661 45 46 43 45 839 Advertising 1,100 1,100 1,100 1,100 1,100 5,500 Subtotal Local Revenues 36,196 36,800 38,380 43,086 46,098 200,560 Capital Planning Funds - PTF 11,229 8,778 8,178 7,176 7,412 42,773 Federal 5307 PM 1,366 1,429 1,495 1,564 1,635 7,489 FTA 5339 1,600 - - - - 1,600 RPTA 500 500 500 500 500 2,500 MAG 500 500 500 500 500 2,500 CMAQ 1,429 - - - - 1,429 Total Sources $ 67,120 $ 62,849 $ 64,233 $ 68,426 $ 72,039 $ 334,666 5-Year Operating Assumptions: Gilbert Rd opens revenue service in May 2019 Tempe Streetcar opens revenue service in September 2020 30

Passenger Operations & Maintenance Rail Transportation Service Delivery: Rail Transportation is responsible for ensuring the overall safety and reliability of the VMR system. This includes the Rail Control Center, Field Supervision and Train Operators. Rail Transportation will be responsible for monitoring the VMR system on a 24/7 basis. LRV Maintenance: LRV Maintenance is responsible for the preventive and corrective maintenance required to ensure a high level of LRV availability and reliability. In addition, each LRV will be cleaned on a daily basis. System Maintenance: Systems Maintenance is responsible for maintaining all VMR systems and facilities, including: track, communications, signals, stations, traction power distribution and overhead centenary systems. Administration: Rail transportation and maintenance operations are supported by administrative activities including public safety and security, marketing and customer service, legal and procurement, finance and accounting, risk management, and information systems. Fares: Effective March 2013, the current Regional Fare Policy is as follows: ***Reduced Fare ADA Certified, Youth (6-18) and Seniors (age 65 and over) 31

Rail Operations and Maintenance Cost Forecast Fiscal Year 2018 through 2022 Annual Cost Projection ($,000) FY18 FY19 FY20 FY21 FY22 TOTAL Transportation $19,664 $20,493 $22,412 $25,457 $26,956 $114,982 Vehicle Maintenance 8,425 8,859 9,019 9,430 10,336 46,069 Systems and Facilities Maintenance 13,233 13,721 14,603 15,620 16,208 73,385 Administration 6,621 6,871 7,340 8,013 8,346 37,191 Total Annual Cost Projection $47,943 $49,944 $53,374 $58,520 $61,846 $271,627 The total $47.9 million operating cost forecast in FY18 is composed of the following components: Base 26 mile system $ 47.9 M The total $49.9 million operating cost forecast in FY19 is composed of the following components: Base 26 mile system $ 49.5 M Gilbert Rd Extension $ 0.4 M The total $53.4 million operating cost forecast in FY20 is composed of the following components: Base 26 mile system $ 50.5 M Gilbert Rd Extension $ 2.9 M The total $58.5 million operating cost forecast in FY21 is composed of the following components: Base 26 mile system $ 51.8 M Gilbert Rd Extension $ 3.0 M Tempe Streetcar $ 3.7 M The total $61.8 million operating cost forecast in FY22 is composed of the following components: Base 20 mile system $ 54.0 M Gilbert Rd Extension $ 3.1 M Tempe Streetcar $ 4.7 M Forecasted Rail Ridership and Average Fare Fiscal Year 2018 to Fiscal Year 2022 FY18 FY19 FY20 FY21 FY22 TOTAL Ridership (,000) Phoenix 11,013 11,432 11,653 11,878 12,108 58,084 Tempe 3,572 3,698 3,765 4,144 4,218 19,397 Mesa 2,239 2,331 2,442 2,486 2,530 12,028 Total Ridership 16,824 17,461 17,860 18,508 18,856 89,509 Avg Fare - Rail $0.85 $0.85 $0.85 $0.85 $0.85 Avg Fare - Streetcar $0.43 $0.43 32

Rail Operations Uses and Sources of Funds Fiscal Year 2018 to Fiscal Year 2022 FY18 FY19 FY20 FY21 FY22 TOTAL USES OF FUNDS ($,000) Phoenix $30,363 $31,241 $31,414 $31,479 $32,729 $157,226 Tempe $10,408 $10,711 $10,777 $15,828 $17,461 $65,185 Mesa $7,172 $7,992 $11,183 $11,213 $11,656 $49,216 Total Uses $47,943 $49,944 $53,374 $58,520 $61,846 $271,627 SOURCES OF FUNDS ($,000) FY18 FY19 FY20 FY21 FY22 TOTAL Fares Phoenix $9,361 $9,717 $9,905 $10,012 $10,206 $49,201 Tempe $3,036 $3,143 $3,200 $3,493 $3,555 $16,427 Mesa $1,903 $1,982 $2,075 $2,095 $2,133 $10,188 Subtotal Fares $14,300 $14,842 $15,180 $15,600 $15,894 $75,816 Advertising Phoenix $765 $765 $724 $679 $669 $3,602 Tempe $198 $198 $184 $245 $258 $1,083 Mesa $137 $137 $192 $176 $173 $815 Subtotal Advertising $1,100 $1,100 $1,100 $1,100 $1,100 $5,500 Federal 5307 PM Phoenix $873 $903 $889 $853 $876 $4,394 Tempe $291 $301 $296 $414 $454 $1,756 Mesa $202 $225 $310 $297 $305 $1,340 Subtotal Federal $1,366 $1,429 $1,495 $1,564 $1,635 $7,489 Member City Funding Phoenix $19,364 $19,856 $19,896 $19,935 $20,978 $100,029 Tempe $6,883 $7,069 $7,097 $11,676 $13,194 $45,919 Mesa $4,930 $5,648 $8,606 $8,645 $9,045 $36,873 Subtotal Member City Funding $31,177 $32,573 $35,599 $40,256 $43,217 $182,822 Total Sources $47,943 $49,944 $53,374 $58,520 $61,846 $271,627 Fare revenue is forecasted to grow from FY18 through FY22 with increased ridership. Baseline ridership is forecasted to grow by 2% per year. Additional passenger rides are developed in FY18 through FY22 with the addition of the Gilbert Road and Tempe Streetcar Extensions. 33

Project Development Planning Project development planning consists of the following subcategories of System Planning and Corridor Planning activities: Light rail/high capacity transit system planning. Alternatives analysis, environmental analysis, and conceptual engineering for future light rail/high capacity transit corridors. Developing and updating LRT design criteria, standards and specification Working with the Maricopa Association of Governments and the Regional Public Transportation Authority to participate in their regional transit planning studies and to update regional project programming documents. Support of Transit Oriented Development initiatives by Member Cities. Development of a comprehensive Geographic Information System (GIS) for the agency. The projected uses and sources of funds in connection with Capital Project Development over the next five years are summarized as follows: Capital Project Development Fiscal Year 2018 to Fiscal Year 2022 FY18 FY19 FY20 FY21 FY22 TOTAL USES OF FUNDS ($,000) Capitol/I-10 West $ 1,786 $ - $ - $ - $ - $ 1,786 Capitol/I-10 West Phase II - 85 157 301 301 844 South Central 683 - - - - 683 West Phoenix/Central Glendale 940 2,270 1,375 - - 4,585 Northeast Phoenix 228 - - - - 228 I-10/I-17 Bus Ramp Design (FTA) 2,000 - - - - 2,000 Fiesta/Downtown Chandler 1,362 100 - - - 1,462 Northwest Phase II 2,577 - - - - 2,577 16th Street Advanced Feasibility Study 60 - - - - 60 West Glendale Feasibility Study - 1,394 - - - 1,394 OMC Master Plan and Phasing Study (PTF) 748 - - - - 748 Systems Planning & Project Development 5,962 6,141 6,325 6,515 6,710 31,651 Capital Project Development Administration 1,245 1,282 1,321 1,360 1,401 6,610 Total Uses $ 17,592 $ 11,272 $ 9,178 $ 8,176 $ 8,412 $ 54,629 SOURCES OF FUNDS ($,000) Phoenix $ 972 $ - $ - $ - $ - $ 972 Mesa 749 100 - - - 849 Glendale - 1,394 - - - 1,394 Chandler 613 - - - - 613 CMAQ 1,429 - - - - 1,429 FTA 5339 1,600 - - - - 1,600 PTF 11,229 8,778 8,178 7,176 7,412 42,773 RARF RPTA 500 500 500 500 500 2,500 MAG 500 500 500 500 500 2,500 Total Sources $ 17,592 $ 11,272 $ 9,178 $ 8,176 $ 8,412 $ 54,629 34

Five-Year Capital Program Fiscal Year 2018 through Fiscal Year 2022 Capital projects included in the five year program include: Central Mesa: continuation of the train signal control system upgrade known as SCADA project. Gilbert Road Extension: 1.9 mile alignment extending from terminus of Central Mesa extension eastbound to Gilbert Road. Tempe Streetcar: 3.0 mile alignment extending southward along Mill Avenue in downtown Tempe from Rio Salado to Southern. Capitol / I-10 West: 11.0 mile alignment from downtown Phoenix westward to the vicinity of 79th Avenue. South Central: 5.0 mile southern extension of the existing Valley Metro light rail line along Central and 1st Avenues in central Phoenix. 50 th Street LRT Station: station will enhance mobility options by serving a regional facility for persons with disabilities and other developments in the area. Northwest Extension Phase 2: a 1.5 mile extension which will extend west on Dunlap Ave., north on 25th Ave. and across I-17 near Mountain View Rd. with a terminus on the west side of the freeway near Metrocenter Mall. West Phoenix Central Glendale: a 5.0 mile extension connecting the light rail system at 19 th Avenue and Camelback Road in Phoenix with downtown Glendale at 58 th Avenue and Glenn Drive Systemwide Improvements: Includes 8 additional light rail vehicles, fare technology improvements, system component overhauls to maintain a state of good repair, and small capital improvement elements which benefit the entire LRT system. The Capital Program report is a multiple year (five fiscal years) forecast of the capital projects managed by VMR. Costs and revenues are reported on an accrual basis. Actual cash flow impacts may lag pending receipt of contractor billings and receipt of federal funding. 35

Five-Year Capital Forecast All Capital Projects -- Uses of Funds: VMR currently has a number of transit projects in various stages of planning, design or construction. The overall uses of funds associated with these projects and activities are projected to be $1,544.2 million through the five-year planning horizon. These uses of funds are summarized as follows: FY18 FY19 FY20 FY21 FY22 TOTAL USES OF FUNDS ($,000) Central Mesa $ 1,961 $ - $ - $ - $ - $ 1,961 Gilbert Rd 75,245 39,742 12,044 - - 127,031 Tempe Streetcar 50,955 56,418 40,045 9,726 2,386 159,530 50th Street Station 9,998 2,969 349 64-13,380 South Central 33,557 96,726 120,955 87,757 175,891 514,886 OMC Expansion 3,197 8,076 5,612 2,895-19,780 Northwest Extension Phase II - 70,740 50,191 54,725 51,312 226,968 Capitol I-10 West Phase I - 14,521 29,698 37,000 46,374 127,593 West Phoenix Central Glendale - - 22,703 129,204 147,500 299,407 Subtotal HCT Corridors 174,913 289,192 281,597 321,371 423,463 1,490,536 CNPA Projects 279 - - - - 279 Systemwide Improvements 28,304 24,598 4,375 3,521 2,567 63,365 Total Uses $ 203,496 $ 313,790 $ 285,972 $ 324,892 $ 426,030 $ 1,554,180 All Capital Projects -- Sources of Funds: Funding is derived from three primary sources: Regional Sales Taxes (Public Transportation Fund), Federal Grants, and member city contributions. These sources of funds are summarized as follows: FY18 FY19 FY20 FY21 FY22 Total SOURCES OF FUNDS ($,000) Phoenix $ 43,555 $ 95,614 $ 34,735 $ 68,721 $ 99,316 $ 341,940 Tempe 125 6,606 6,607 - - 13,338 Mesa 4,289 1,022 - - - 5,311 Glendale - - 4,656 37,162 43,961 85,779 Subtotal 47,969 103,242 45,998 105,882 143,277 446,368 PTF Sales Tax Revenue (Allocation 43.24%) 32,258 38,282 42,746 47,431 50,690 211,407 PTF (Reserve) / Bond Borrowing (12,032) 29,290 32,234 12,359 13,008 74,860 PTF Regional Revenue - Demand 20,226 67,572 74,980 59,790 63,698 286,266 TPAN - 21,815 12,044 - - 33,859 Federal Revenues: FTA 31,005 75,113 138,604 123,717 169,659 538,098 CMAQ 104,296 46,048 14,346 35,503 49,396 249,588 Subtotal Federal 135,301 121,161 152,950 159,220 219,055 787,686 Total Sources $ 203,496 $ 313,790 $ 285,972 $ 324,892 $ 426,030 $ 1,554,180 36

High Capacity Transit Projects: The Regional Transportation Plan (RTP), adopted by the Maricopa Association of Governments (MAG) and financed under the one-half cent sales tax extension, identifies 66 miles of major high capacity/ light rail transit corridors to be implemented by 2034. Currently the 1.9-mile Gilbert Road extension to serve east Mesa is under construction. The 3.0-mile Tempe Streetcar project is in final design. City of Phoenix voters approved Proposition 104, a 35-year transportation plan that would expedite several miles of light rail/high capacity transit and add additional corridors to the regional high capacity transit system. Under the plan additional service areas are identified; 5.0-miles into south Phoenix, 5.0-miles west into West Phoenix and Central Glendale, 1.5-mile Northwest extension (phase II), 1.5-mile Capitol/I-10 West extension (phase I), an additional 9.5-miles Capitol/I-10 West extension (phase II) and 12.0-miles into northeast Phoenix. Valley Metro is the agency charged with planning, designing, building and operating the light rail transit (LRT)/high capacity transit (HCT) system in the area. The timing of the projects in the program is depicted on the following schedule shown below: Funding for future projects has two phases: 1) Planning Budget Phase: Alternative Analysis and the draft environmental document are funded from Member City contributions, and PTF. 2) Capital Budget Phase: After environmental clearance and completion of 30% design, costs are included in the capital budget and funded by Federal, regional, and local sources. 37

Central Mesa Extension: The Central Mesa Extension remaining activity in FY18 is related to the train signal control system upgrade known as SCADA. Central Mesa Extension Alignment Central Mesa Extension Sources and Uses of Funds: The total capital cost of the Central Mesa Extension project through Fiscal Year 2018 is budgeted to be approximately $183.8 million, excluding financing costs. - - - - - - - ($,000) - - - - - Central Mesa Extension Pre-FY18 FY18 FY19 FY20 FY21 FY22 TOTAL CAPITAL COSTS NPR Utilities Relocation $ 605 $ - $ - $ - $ - $ - $ 605 Project Costs 181,278 1,961 - - - - 183,239 Financing Costs 5,905 - - - - - 5,905 Total Capital Costs $ 187,788 $ 1,961 $ - $ - $ - $ - $ 189,749 CAPITAL REVENUES FTA Section 5309 $ 75,000 $ - $ - $ - $ - $ - $ 75,000 CMAQ 43,847 1,569 - - - - 45,416 Subtotal Federal 118,847 1,569 - - - - 120,416 PTF Revenue 68,941 392 - - - - 69,333 Subtotal Local 68,941 392 - - - - 69,333 Total Capital Revenue $ 187,788 $ 1,961 $ - $ - $ - $ - $ 189,749 Concurrent Non-Project Activities Related to Central Mesa: - - - - - - - ($,000) - - - - - - CNPA Pre-FY18 FY18 FY19 FY20 FY21 FY22 TOTAL Total CNPA Costs $ 7,568 $ - $ - $ - $ - $ - $ 7,568 REVENUES Mesa $ 7,568 $ - $ - $ - $ - $ - $ 7,568 Total Local Revenue $ 7,568 $ - $ - $ - $ - $ - $ 7,568 38

Gilbert Road Extension -- The Gilbert Road Extension will improve mobility and provide additional capacity in the Main Street corridor in Mesa. In addition, the project will connect the corridor with major activity and employment centers located east and west of the project corridor, such as Downtown Phoenix, Downtown Tempe, Sky Harbor International Airport and Arizona State University. The project will also enhance connectivity to the Mesa Link BRT (with in-street mixed traffic operations) that currently operates as a feeder to the end-of-line Sycamore LRT station in Mesa and serves East Mesa including Superstition Springs Mall. In 2009, Valley Metro, the Mesa City Council and the Maricopa Association of Governments (MAG) approved extending light rail for 3.1 miles along Main Street from the current end-of-line station at Sycamore to Mesa Drive. This extension, known as the Central Mesa Extension, completed construction ahead of schedule and commenced passenger operations in August 2015. As part of the 2009 recommendations, a 1.9-mile extension on Main Street east to Gilbert Road was included as a future project. This segment, the Gilbert Road Extension, was recommended because of strong transit ridership, opportunities to optimize regional transportation connections, and an optimal location for an end-of-line park-and-ride. Valley Metro and the City of Mesa began a study of the potential Gilbert Road Extension in 2011 and completed it in summer 2012. This planning study identified and evaluated various alternatives, on where and how light rail could be placed in this 1.9-mile segment of Main Street. Valley Metro and the City of Mesa have entered the next phase of the planning process, the Environmental Assessment (EA), which was introduced to the public in September. In this phase, alternatives were analyzed in more detail and defined potential station locations and a park-and-ride facility. Design for the Gilbert Road Extension began in FY14, with construction commencing in 2016. Passenger operations is scheduled to begin in May 2019. 39

Gilbert Road Extension Alignment Gilbert Road Extension Sources and Uses of Funds: The total capital cost of the Gilbert Road Extension project is budgeted to be approximately $181.5 million. - - - - - - ($,000) - - - - Gilbert Rd Extension Pre-FY18 FY18 FY19 FY20 FY21 FY22 TOTAL CAPITAL COSTS NPR Utilities Relocation $ 3,031 $ 2,143 $ - $ - $ - $ - $ 5,174 Project Costs 47,442 65,455 39,742 6,857 - - 159,496 Vehicle Procurement 4,025 7,647-5,187 - - 16,859 Total Capital Costs $ 54,498 $ 75,245 $ 39,742 $ 12,044 $ - $ - $ 181,529 CAPITAL REVENUES City of Mesa $ 3,106 $ 4,289 $ 1,022 $ - $ - $ - $ 8,417 TPAN - - 21,815 12,044 - - 33,859 CMAQ Flex 51,392 70,956 16,905 - - - 139,253 Total Capital Revenue $ 54,498 $ 75,245 $ 39,742 $ 12,044 $ - $ - $ 181,529 40

Tempe Streetcar Extension -- The Tempe Streetcar extension project is located on Rio Salado Parkway from the Marina Heights development west to Mill Avenue, downtown loop on Mill and Ash avenues and south to Apache Boulevard, then east to Dorsey lane. The Tempe Streetcar will run in a one-way loop between Rio Salado Parkway and University Drive, going north on Mill Avenue and south on Ash Avenue. The Tempe Streetcar will operate weekday trains at approximately 10 minute intervals during peak hours and 15 to 20-minute intervals off-peak. Weekends do not require peak service trains and will operate at 15 to 30-minute headways. Service headways will be adjusted over time to accommodate growth and service patterns. This project is part of the Regional Transportation Plan and funded by Proposition 400 regional sales tax, local funding, and federal grants. Project Development activities including final design, pre-construction activities and ROW acquisition for the Tempe Streetcar project is anticipated to be completed by the end of FY18. Pending FTA Small Starts Grant Agreement execution in FY18, construction could be complete in FY20. Tempe Streetcar Extension Alignment 41

Tempe Streetcar Extension Sources and Uses of Funds: The total capital cost of the Tempe Streetcar project over the Fiscal Year 2018 to Fiscal Year 2022 period is budgeted to be approximately $176.6 million, excluding financing costs. - - - - - - ($,000) - - - - Tempe Streetcar Extension Pre-FY18 FY18 FY19 FY20 FY21 FY22 TOTAL CAPITAL COSTS NPR Utilities Relocation $ 1,689 $ 12,516 $ 1,140 $ 213 $ - $ - $ 15,558 Project Costs 8,403 27,939 55,278 29,740 6,226 2,386 129,972 Vehicle Procurement 7,000 10,500-10,092 3,500-31,092 Financing Costs 176 4,172 3,508 1,616 - - 9,472 Total Capital Costs $ 17,268 $ 55,127 $ 59,926 $ 41,661 $ 9,726 $ 2,386 $ 186,094 CAPITAL REVENUES FTA Section 5309 $ - $ 29,193 $ 23,850 $ 16,711 $ 3,901 $ 957 $ 74,612 CMAQ 3,341 16,013 - - - - 19,354 Subtotal Federal 3,341 45,206 23,850 16,711 3,901 957 93,966 Tempe - - 6,606 6,607 - - 13,213 PTF Revenue 13,927 9,921 29,470 18,343 5,825 1,429 78,915 Subtotal Local 13,927 9,921 36,076 24,950 5,825 1,429 92,128 Total Capital Revenue $ 17,268 $ 55,127 $ 59,926 $ 41,661 $ 9,726 $ 2,386 $ 186,094 Concurrent Non-Project Activities Related to Tempe Streetcar: CNPA Pre-FY18 FY18 FY19 FY20 FY21 FY22 TOTAL Total CNPA Costs $ - $ 279 $ - $ - $ - $ - $ 279 REVENUES Tempe $ - $ 125 $ - $ - $ - $ - $ 125 PTF Revenue - 154 154 Total Local Revenue $ - $ 279 $ - $ - $ - $ - $ 279 42

South Central Extension The South Central Light Rail Extension will consist of an approximately 5.0-mile-long southern extension of the existing Valley Metro light rail line along Central and 1st Avenues in central Phoenix. The extension tracks would connect to the existing light rail system at Central Avenue and Washington Street in the northbound direction and at 1st Avenue and Jefferson Street in the southbound direction. The track would continue south along 1st and Central Avenues to Hadley Street, where the southbound track would follow the 1st Avenue one-way couplet curve to the east to rejoin Central Avenue. From Hadley Street to the extension s southern terminus at Baseline Road, the tracks would operate bi-directionally along Central Avenue. The South Central Light Rail Extension Project is scheduled to begin operations in 2023. The South Central Light Rail Extension will operate weekday trains at approximately 12 minute intervals during peak hours and 15 to 20-minute intervals off-peak. Weekends do not require peak service trains and will operate at 15 to 30-minute headways. Service headways will be adjusted over time to accommodate growth and service patterns. Preliminary engineering for the South Central LRT Extension began in FY17, with design commencing in FY18. FTA issued a Finding of No Significant Impact (FONSI) on January 6, 2017. Valley Metro will request entry to FTA New Starts engineering phase in FY18. Passenger operations are scheduled to begin in 2023. South Central Extension Alignment 43

South Central Extension Sources and Uses of Funds: The total capital cost of the South Central project is estimated to be approximately $690.0 million. This extension is part of the Regional Transportation Plan and is planned to be funded by City of Phoenix Transit 2050 local sales tax and federal grants. - - - - - - ($,000) - - - - South Central Extension Pre-FY18 FY18 FY19 FY20 FY21 FY22 Post-FY22 TOTAL CAPITAL COSTS NPR Utilities Relocation $ 1,000 $ 4,248 $ 14,343 $ 14,343 $ 1,434 $ - $ - $ 35,368 Project Costs 2,082 26,030 34,064 74,166 83,353 122,514 172,032 514,241 Vehicle Procurement - - 40,033 26,688-53,377-120,098 OMC Expansion - 3,279 8,286 5,758 2,970 - - 20,293 Total Capital Costs $ 3,082 $ 33,557 $ 96,726 $ 120,955 $ 87,757 $ 175,891 $ 172,032 $ 690,000 CAPITAL REVENUES Future Federal $ - $ - $ 48,363 $ 60,478 $ 43,879 $ 87,946 $ 86,016 $ 326,681 Subtotal Federal - - 48,363 60,478 43,879 87,946 86,016 326,681 Phoenix 3,082 33,557 29,018 36,287 26,327 52,767 51,610 232,647 PTF Revenue - - 19,345 24,191 17,551 35,178 34,406 130,672 Subtotal Local 3,082 33,557 48,363 60,478 43,879 87,946 86,016 363,320 Total Capital Revenue $ 3,082 $ 33,557 $ 96,726 $ 120,955 $ 87,757 $ 175,891 $ 172,032 $ 690,000 44

50 TH Street LRT Station: The 50 th Street Light Rail station will enhance mobility options by serving a regional facility for persons with disabilities and other developments in the area. The project is completely funded by City of Phoenix as part of the voter approved Proposition 104. The project is currently in design phase and is expected to begin construction in spring 2017. 50 TH Street Station 50 th Street LRT Station Sources and Uses of Funds: The total capital cost of the 50 th Street LRT station project over the FY18 to FY22 period is budgeted to be approximately $20.1 million. - - - - - - ($,000) - - - - 50th Street LRT Station Pre-FY18 FY18 FY19 FY20 FY21 FY22 TOTAL CAPITAL COSTS NPR Utilities Relocation $ 621 $ 1,266 $ 445 $ - $ - $ - $ 2,332 Project Costs 6,065 8,732 2,524 349 64-17,734 Total Capital Costs $ 6,686 $ 9,998 $ 2,969 $ 349 $ 64 $ - $ 20,066 CAPITAL REVENUES Phoenix $ 6,686 $ 9,998 $ 2,969 $ 349 $ 64 $ - $ 20,066 Total Capital Revenue $ 6,686 $ 9,998 $ 2,969 $ 349 $ 64 $ - $ 20,066 45

Operations and Maintenance Center Facility Expansion Valley Metro plans to expand the existing Operations and Maintenance Center (OMC), located east of Phoenix Sky Harbor International Airport and southwest of the intersection of the Grand Canal and Loop 202. The OMC expansion would include modifications to the Maintenance of Equipment (MOE) building, storage tracks and cleaning platform. The MOE building modifications would consist of an approximately 23,000-square-foot expansion to the east with improvements/modifications to the existing mezzanine, office space, inspection pits and cranes. Expansion of vehicle storage would include construction of seven new storage tracks (north and south of the existing storage tracks) to increase total storage capacity to 100 vehicles. Finally, two new tracks and a second cleaning platform would be constructed south of the existing cleaning platform. The OMC expansion would occur within the existing facility boundaries; thus, no additional property would be required. OMC Facility Expansion 46

OMC Expansion Sources and Uses of Funds: This extension is part of the Regional Transportation Plan and is planned to be funded by PTF funds and federal grants. The total capital cost of the project over the FY18 to FY22 period excluding finance costs is budgeted to be approximately $40.1 million. Note: South Central Capital Project budget includes $20.3M of OMC Expansion costs. OMC Expansion Pre-FY18 FY18 FY19 FY20 FY21 FY22 TOTAL CAPITAL COSTS Project Costs $ - $ 6,476 $ 16,362 $ 11,370 $ 5,865 $ - $ 40,073 Total Capital Costs $ - $ 6,476 $ 16,362 $ 11,370 $ 5,865 $ - $ 40,073 CAPITAL REVENUES CMAQ $ - $ 2,558 $ 6,461 $ 4,490 $ 2,316 $ - $ 15,824 Subtotal Federal - 2,558 6,461 4,490 2,316-15,824 South Central Extension - 3,279 8,286 5,758 2,970-20,293 PTF Revenue - 639 1,615 1,122 579-3,956 Subtotal Local - 3,918 9,901 6,880 3,549-24,249 Total Capital Revenue $ - $ 6,476 $ 16,362 $ 11,370 $ 5,865 $ - $ 40,073 Northwest Extension Phase II - The Northwest extension will enhance mobility options for a largely transit-dependent community and provide connectivity with employment centers near the I-17 freeway. It will support nearly 10,000 family housing units and help up to 20,000 employees get to work. It will also bolster community revitalization. In 2004, the Phoenix City Council approved the Northwest Light Rail Extension, which included 4.7 miles of additional light rail service, extending from the current end-of-line at 19th Ave. and Montebello Ave. to Mountain View Rd. and 25th Ave. In 2007, the route was divided into two phases. The 3.2-mile Phase I on 19th Ave. from Montebello Ave. to Dunlap Ave. began revenue operations in March 2016. Phase II of the project will extend west on Dunlap Ave., north on 25th Ave. and across I- 17 near Mountain View Rd. with a terminus on the west side of the freeway near Metrocenter Mall. The Phoenix City Council approved the I-17 crossing in 2014. Preliminary engineering and environmental assessment on the project is currently underway. Phase II is scheduled to open in 2023. 47

Northwest Extension Phase II Alignment Northwest Extension Phase II Sources and Uses of Funds: The total capital cost of the Northwest Phase II Extension project is budgeted to be approximately $280.9 million. - - - - - - ($,000) - - - - Northwest Extension Phase II Pre-FY18 FY18 FY19 FY20 FY21 FY22 Post-FY22 TOTAL CAPITAL COSTS NPR Utilities Relocation $ - $ - $ 3,626 $ 3,721 $ 3,356 $ - $ - $ 10,703 Project Costs - - 58,114 33,228 51,263 51,312 53,923 247,840 Vehicle Procurement - - 9,000 13,242 106 - - 22,348 Total Capital Costs $ - $ - $ 70,740 $ 50,191 $ 54,725 $ 51,312 $ 53,923 $ 280,891 CAPITAL REVENUES FTA Section 5309 $ - $ - $ - $ 48,372 $ 21,890 $ 20,525 $ 21,569 $ 112,356 Subtotal Federal - - - 48,372 21,890 20,525 21,569 112,356 Phoenix - - 63,627 (3,896) 26,403 27,708 29,119 142,961 PTF Revenue - - 7,113 5,715 6,432 3,079 3,235 25,574 Subtotal Local - - 70,740 1,819 32,835 30,787 32,354 168,535 Total Capital Revenue $ - $ - $ 70,740 $ 50,191 $ 54,725 $ 51,312 $ 53,923 $ 280,891 48

Capitol / I-10 West Extension Phase I -- The Capitol / I-10 West Extension Phase I will improve mobility and provide additional capacity in the I-10 corridor in West Phoenix. In addition, the project will connect the West valley with major activity and employment centers located near Downtown Phoenix, such as State Capitol, Maricopa County and City of Phoenix Governmental Mall. The project will also enhance regional connectivity by connecting with the existing Valley Metro light rail. In May 2012, the City of Phoenix Council adopted a locally preferred alternative (LPA), consisting of an 11.0-mile light rail transit project from the 79th Avenue Park-and-Ride (P&R) on I-10 to the existing light rail transit system in downtown Phoenix to be carried forward for environmental analysis. In July 2012, MAG Regional Council approved the recommendation for light rail as the preferred mode on the route shown on the map below. This extension is part of the Regional Transportation Plan and funded by Proposition 400 regional sales tax and federal grants that are included in the TLCP and the Transportation Improvement Program (TIP). In addition, the City of Phoenix passed an extension of their transportation tax (Proposition 104) that included this extension. In June 2016, Valley Metro Rail Board recommended this project be built in two phases. Phase 1 would be from Downtown Phoenix to the State Capitol and be completed in 2023 and Phase 2 would extend out to 79 th Avenue and be completed in 2030. The Environmental Assessment phase in compliance with the National Environmental Policy Act is anticipated to be complete in late 2017. Concurrent with the environmental analysis, Valley Metro Rail will generate detailed engineering designs of the selected alignment and station layouts. Capitol / I-10 West Extension Phase I & Phase II Alignment 49

Capitol / I-10 West Extension Phase I Sources and Uses of Funds: The total capital cost of the Capitol/I-10 West Extension Phase I project is budgeted to be approximately $174.8 million. - - - - - - ($,000) - - - - Capitol/I-10 West Ext. Phase I Pre-FY18 FY18 FY19 FY20 FY21 FY22 Post-FY22 TOTAL CAPITAL COSTS NPR Utilities Relocation $ - $ - $ - $ 13,465 $ 6,911 $ - $ - $ 20,376 Project Costs - - 9,790 8,348 23,037 41,288 47,204 129,667 Vehicle Procurement - - 4,731 7,885 7,052 5,086-24,754 Total Capital Costs $ - $ - $ 14,521 $ 29,698 $ 37,000 $ 46,374 $ 47,204 $ 174,797 CAPITAL REVENUES CMAQ $ - $ - $ 7,832 $ 6,678 $ 18,430 $ 33,030 $ 37,763 $ 103,733 Subtotal Federal - - 7,832 6,678 18,430 33,030 37,763 103,733 PTF Revenue - - 6,689 23,020 18,570 13,344 9,441 71,064 Subtotal Local - - 6,689 23,020 18,570 13,344 9,441 71,064 Total Capital Revenue $ - $ - $ 14,521 $ 29,698 $ 37,000 $ 46,374 $ 47,204 $ 174,797 50

West Phoenix / Central Glendale - West Phoenix/Central Glendale high capacity transit corridor is currently programmed as a 5.0-mile corridor connecting the existing 19th Ave LRT extension serving West Phoenix and Downtown Glendale. Valley Metro initiated a transit corridor study in 2013 to identify high capacity transit options in partnership with the cities of Phoenix and Glendale. After completing three levels of technical analysis and extensive public outreach, staff is considering up to a 7.0-mile leading alternative connecting 19th Avenue and Camelback LRT station through Camelback Road, north along 43rd Avenue and west along Glendale Ave and Glenn Drive. Additional technical analysis and community outreach will be conducted in FY17 and FY18 with a proposed recommendation taken for city council actions and Valley Metro Rail Board action in late 2017/early 2018. The 2018 TLCP will be updated to reflect the revised alignment following Board action. West Phoenix / Central Glendale Alignment West Phoenix/Central Glendale Source and Uses of Funds: The estimated capital cost of the project is budgeted to be approximately $837.3 million. - - - - - ($,000) - - - - West Phoenix/Central Glendale Pre-FY18 FY18 FY19 FY20 FY21 FY22 Post-FY22 TOTAL CAPITAL COSTS NPR Utilities Relocation $ - $ - $ - $ - $ 23,800 $ 30,600 $ 6,289 $ 60,689 Project Costs - - - 22,703 105,404 116,900 531,605 776,612 Total Capital Costs $ - $ - $ - $ 22,703 $ 129,204 $ 147,500 $ 537,894 $ 837,301 CAPITAL REVENUES FTA Section 5309 $ - $ - $ - $ 11,352 $ 52,702 $ 58,450 $ 265,803 $ 388,307 CMAQ - - - 3,178 14,757 16,366 74,425 108,726 Subtotal Federal - - - 14,530 67,459 74,816 340,228 497,033 Phoenix - - - 1,996 15,926 18,840 48,488 85,251 Glendale - - - 4,656 37,162 43,961 113,139 198,918 PTF Revenue - - - 1,521 8,657 9,883 36,039 56,099 Subtotal Local - - - 8,173 61,745 72,684 197,666 340,268 Total Capital Revenue $ - $ - $ - $ 22,703 $ 129,204 $ 147,500 $ 537,894 $ 837,301 51