FY 2018 PUBLIC HEARINGS PROPOSED FARE INCREASE 1
VRE BUDGET DEVELOPMENT July August December January March April-June July Budget Key Issues and Guidelines Present Draft Budget VRE Board Budget Approval PRTC/NVTC Commission Budget Approval Public Hearings on Fare Increase Jurisdictions Budget Approval Budget takes Effect 2
FINANCIAL ENVIRONMENT: HOW VRE IS DIFFERENT FROM A COUNTY VRE must maintain a 50% fare recovery ratio per our Master Agreement. Fare Revenue must cover >50% of Operating Costs. All other costs are covered by subsidies and grants. Need for additional dedicated sources of funding revenue does not keep up with expense increases in the long run Use of VRE service is market driven. Core cost areas are contractual and escalate year to year, access fees, train operations, equipment maintenance. Decisions on major funding levels made elsewhere, i.e. State and Federal. Capital intensive industry with no access to full faith and credit debt and no ability to levy taxes 3
FY2018 PROPOSED BUDGET* Assumes Average Daily Ridership of 18,200 Maintains service level at 32 revenue trains Recommends a 3% Fare Increase Last fare increase was 4% in FY 2016 Maintains level jurisdictional subsidy of $17.25M Jurisdictional Subsidy increased by 5% in FY 2017 Funds high priority capital investments, such as positive train control and system state of good repair mandates *December 16, 2016 VRE Operations Board Meeting -- Action Item 9F 4
FY2018 PROPOSED BUDGET Fares and ridership Budget Fare Revenue ADR FY 2018 Proposed $39.8M 18,200 FY 2017 Adopted $38.9M 19,100 FY 2016 Actual $37.8M 17,723 Factors Considered Ridership and average fare trends to date in FY 2017 WMATA Safe Track effects Low fuel prices and increases in telecommuting Regional growth and development, traffic congestion Fare level, transit subsidy level New station in Spotsylvania 5
FARE INCREASE 3% fare increase - $1.15M additional revenue Why is increase required? Operating expenses and contractual obligations 3.3% higher than FY 2017 Ridership and avg. fare projection revisions VRE funding structural issue, operating expenses increasing faster than revenues Maintains required >50% fare recover ratio Consistent with Financial Plan, FY 2017 Approved Budget & Board Direction 6
3% FARE INCREASE The 3% fare increase = $1.15M projected increased revenue in FY18 FY2017 FY2018 Description Actual Proposed Increase Monthly Pass (examples to/from L'Enfant/Union Station) Spotsylvania (Zone 9) 318.10 327.60 9.50 Broad Run/Quantico/Manassas/Manassas Park (Zone 6) 260.80 268.60 7.80 Franconia-Springfield/Backlick (Zone 3) 203.50 209.60 6.10 Single Ride (examples to/from L'Enfant/Union Station) Spotsylvania (Zone 9) 11.55 11.90 0.35 Broad Run/Quantico/Manassas/Manassas Park (Zone 6) 9.50 9.80 0.30 Franconia-Springfield/Backlick (Zone 3) 7.40 7.65 0.25 7
VRE FY 2018 APPROVED BUDGET $133.4M TOTAL OPERATING & CAPITAL 8
FY 2017-2018 BUDGET COMPARISON Budget Budget Description FY 2017 FY 2018 Difference Fare Revenue 38,950,000 39,845,400 895,400 Local Subsidy 17,250,240 17,250,240 0 Federal/State 72,709,636 74,553,182 1,843,546 Other 1,602,000 1,755,000 153,000 Revenue Total 130,511,876 133,403,822 2,891,946 Contract Operations & Equipment Maint. (Keolis) 21,071,169 21,776,500 705,331 Insurance & Reserves/Contingency 4,728,794 5,395,008 666,214 Capital Project Development & Implementation 1,589,250 2,014,450 425,200 System Safety & Security (Incld. Yard Security) 1,031,500 1,256,500 225,000 Legal Expenses 80,000 280,000 200,000 Fare Collection Costs 2,960,000 3,125,000 165,000 Station Maintenance (Station Painting) 590,000 700,000 110,000 All Other Operating Expenses 43,667,850 43,668,903 1,053 Operating Total 75,718,564 78,216,361 2,497,798 Capital Program 48,028,443 48,422,591 394,148 Debt Payments 6,764,870 6,764,870 - Capital & Debt Total 54,793,313 55,187,461 394,148 Net Unfunded - 0 0 9
MAJOR EXPENSE CHANGES Operating Expenses - $2.49M net increase (3.3% of $75.7M) Major Expense Increase Examples: Contract operations and maintenance - $705k (3.3% of $21.1M), CPI increases, additional contract elements Operating contingency at 1.9% of operating budget - $666k Yard security - $155 for L Enfant storage and Crossroads expansion Project Development consulting $258k for update of required NTD and TDP information, and analysis of benefits of VRE Fare Collection Costs -- $165k for system maintenance, vendor commissions, ticket stock & card processing fees. Legal Fees - $200k - NY Avenue yard and capital program Non-Routine Station Maintenance - $110k for station painting program 10
Asset Management FY 2018 CAPITAL BUDGET $48M TOTAL Equipment Asset Management Program -$4.9M Positive Train Control (Regulatory Requirement)- $3.6M Facilities Asset Management Program $2.7M Security Cameras -$386K Security Enhancements -$105K Replacement/Rehabilitation Mid Day Train Storage -$17.5M Expansion - Other Brooke & Leeland Platforms - $5.3M REF Broad Run Parking Improvement - $5.2M CMAQ Rippon Station Improvements - $819K CMAQ Washington Union Station Improvements - $5.0M Fourth Track VA to LE -$250K L Enfant Station Improvements - $250K Other Capital Reserve Contribution - $3M 11
VRE SURVEY RIDERSHIP CHANGES October 2015 October 2016 Change Jurisdiction Riders Riders Net +/- % Change Fairfax County 2,163 2,777 614 28.41% Prince William County 3,095 3,061 (34) -1.11% Stafford County 1,603 1,610 7 0.43% Spotsylvania County 990 1,183 194 19.55% Manassas 428 418 (10) -2.39% Manassas Park 280 294 14 4.99% Fredericksburg 359 337 (22) -6.14% Other 777 778 1 0.13% 9,695 10,458 763 7.87% 12
FY2018 SUBSIDY BREAKDOWN FY 2017 FY 2018 Change Jurisdiction Subsidy Subsidy Net +/- % Change Fairfax County 5,160,910 6,099,300 938,391 18.18% Prince William County 5,968,406 5,363,372 (605,034) -10.14% Stafford County 2,647,222 2,344,514 (302,708) -11.43% Spotsylvania County 1,382,749 1,520,191 137,442 9.94% Manassas 749,371 684,586 (64,785) -8.65% Manassas Park 511,777 474,718 (37,059) -7.24% Fredericksburg 483,524 417,278 (66,246) -13.70% Arlington 205,692 205,692 0 0.00% Alexandria 140,589 140,589 0 0.00% 17,250,240 17,250,240 (0) 0.00% 13
QUESTIONS? 14