Subject: Light Rail Discussion
Date: September 5, 2018 at 9:04:11 PM EDT
To: “ocbocc@orangecountync.gov” <ocbocc@orangecountync.gov>
Cc: Tony Blake <tonyblake@nc.rr.com>, Alex Cabanes <alex_ncus@yahoo.com>, Bonnie Hauser <bahauser@aol.com>, charles Humble <chashumble@gmail.com>, Julie McClintock <mcclintock.julie@gmail.com>, John Morris <johnnmorris@icloud.com>
Dear Chairman Dorosin and County Commissioners:
Thank you for continuing to listen to public comment on light rail. There are many moving parts which is why it’s so important to continually update the facts as they change, and evaluate these changes on the project assumptions and costs. We all want to be sure you are basing your decisions on the most up to date, factual information. Here’s clarification on some of the discussion points from last night.
We heard a commissioner ask a question about the project ranking. Here are the reports. From the FTA’s view, DOLRT clearly ranks lowest and is the most expensive of all the Light Rail projects in New Start’s engineering phase.
Below are links to the Indy article about these rankings followed by the FTA’s original report. The rankings are on page 11; page 7 documents the FTA’s guidance on not funding new projects.
Here’s the FTA’s evaluation of the DOLRT project. You can see that the lowest ratings are due to the project’s finances. https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/funding/grant-programs/capital-investments/69911/nc-durham-orange-lrt-fy19-profile.pdf
Here’s the FTA’s position on counting TIFIA loans toward their grant. The FTA seems to believe that it has discretion to decide whether to issue loans and how to count them. They also seem to be believe that they can set the total Federal funding amounts, including loans, at 51% not 80% of the project. TIFIA loans are critical to the DOLRT project financing. Hopefully the FTA will clarify their view when the analyze the project risks. https://www.enotrans.org/article/fta-formalizes-new-local-funding-evaluation-criteria-for-new-starts/
We have concerns about projected sales tax growth. Bonnie Hauser and Alex Cabanes are responsible for this work for our team. They have been working with local economists and financial analysts. Bonnie has reached out to Assistant County Manager Travis Myren on the sales tax estimates. For your information, below are Moody’s estimates for Orange County’s sales tax growth for the first 10 years of the project. You can see that the growth rates for the first three years are quite aggressive. After that, the growth slows but remains high for Orange County. In their State of the Community, the Chamber reported 2.4% sales tax growth in 2017-18; 10% in 2016-17. The Chamber report follows the table. We have not looked at growth rates for vehicle registration or car rental fees even though that is also of concern to the FTA.
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https://www.slideshare.net/carolinachamber/2018-state-of-the-community-report-presentation (sales tax growth is on pages 106-7)
Slower growth for Orange County revenues combined with increasing DOLRT debt (of which Orange County is obligated to fund 18%) could challenge our financial future and limit our ability to expand public transportation services. Based on the latest reported estimate of $890 million debt, Orange County will be obligated to fund $160 million in addition to base project costs of $149.5 million. If interest rates and construction costs increase, the costs and risks to Orange County taxpayers could be higher.
These are just some of our concerns about the project’s economics. Because of issues with transparency and their conflict of interest, GoTriangle is not in a position to provide a reliable assessment of the changing financials or risks for our county. That’s why it is so important to invite Davenport, an independent financial consultant, to review the project and report results before GoTriangle submits the county’s final application to the FTA.
Thank you for hearing these concerns.
Sincerely,
Tony Blake
Alex Cabanes
Bonnie Hauser
Charles Humble
Julie McClintock
John Morris