Fiscal Year 2008 - Ride METRO · Salaries and hourly non-union Wages increase by 4.11% primarily due to salary performance incentives earned. Fringe benefits increase by 4.88% reflecting

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Fiscal Year 2008

Concise statement of approved and adopted budgets issued September 28, 2007.

METRO

BUSINESS PLAN & BUDGETS Fiscal Year 2008

METRO Business Plan & Budgets FY2008

Index

Transmittal Letter from President & CEO Section I: FY2008 Business Plan Initiatives

Listing .................................................................................................................1 Section II: Authority Level Operating Budgets

Summary of Budgets ..............................................................................................3 Operating Budget By Cost Category ...........................................................................................4 Variance Summary ...........................................................................................5 Authority Wide

Service Plan .......................................................................................................7 Fare Policy........................................................................................................11 Projected Ridership ..........................................................................................12 Organizational Chart.........................................................................................13 Manpower Summary ........................................................................................14

Major Cost Drivers Fuel ............................................................................................................15 Power ............................................................................................................17 Labor Agreement ............................................................................................18 Purchased Transportation ................................................................................19

Special Events .................................................................................................20 Health Care ....................................................................................................21

Section III: Financial Proforma Projected Cash Flow .........................................................................................22 Sales Tax Projections ............................................................................................24 Sources and Uses of Funds (GAAP) .....................................................................25 Balance Sheet (GAAP) ..........................................................................................26

Section IV: General Mobility and Capital Budgets

Capital Budget FY2008..........................................................................................27 Proposed General Mobility Budget FY2008...........................................................38 Proposed Capitalized Operating Expenses FY2008..............................................41

Section V: Resolution Resolution Adopted by the Board of Directors .......................................................42

Section I: FY2008 Business Plan Initiatives


Business Plan Initiatives

This section lists 44 new initiatives that have been reviewed and selected as part of the FY2008 Business Plan. The Operating Budget includes $6 million to fund these initiatives, including new service. Some of the initiatives require capital funds and funding for these is included in the capital budget.


Business Plan Initiatives Listing

RIDERSHIP DEVELOPMENT

Bellaire Signature Airport Express – Bush IAH Grand Parkway Pearland / TMC Park & Ride I-45 North Freeway Diamond / HOT Lane 290 Diamond Lane Eliminate Poor Performing Routes

OPERATIONS Transportation Management Intern Program New Mechanic Incentive Program Biennial Operator Refresher Program Bus Operator Recruitment Program Rail Restructuring Bus Shelters InfoPanels Program Alternate Part Sourcing Operations Department Technology Projects Additional Passenger Shelters Reorganize Central Shops PUBLIC SAFETY Alternative Self-Defense Program for Operators Part-Time Police Officer Police Plainclothes – Bus Marshall Program Cameras on Buses Security / Terrorism Awareness Training Program Police Situation Room Houston TranStar Reconfiguration Congestion Management Safety Enforcement & Investigation INFORMATION TECHNOLOGY Upgrade / Replace Budget System Enhance Use of IVOMS as a Service Management Tool Facility Security Improvements Infrastructure Enhancements Core Application Upgrades / Replacement

1


Business Plan Initiatives Listing (Con’t)

HUMAN RESOURCES & DIVERSITY Comprehensive Salary & Compensation Analysis 2008 Labor Agreement Negotiations COMMUNICATIONS & MARKETING Marketing for Ridership Development Image Campaign – Going Places EXECUTIVE Commuter Rail Project ADMINISTRATION Outsource Electronic Documents PLANNING, ENGINEERING & CONSTRUCTION Signal Preemption & Corridor Optimization

FINANCE Establish New Revenue Division Enhance Risk Management Function Implement a Checkless Payroll System Refocus General Mobility Program Upgrade Office of Management & Budget Capability, Role and Impact PROCUREMENT & MATERIALS Establish a Supplier Depot (Inventory Consignment)

2

Section II: Authority Level Operating Budgets


Authority Level

Summary of Budgets

OPERATING EXPENSES Actuals FY2004 - FY2005 & Forcast FY2006

$264.4 $262.7 $264.5$275.0

$150

$250

$350

2004 2005 2006 2007 Forecast

Dol

lars

(mill

ions

)

Budget held constant at $273 million in FY04, FY05 & FY06

FY2007 FY2008 $ Change

Operating Budget 288,117,000$ 300,000,000$ 11,883,000$ General Mobility Budget 112,507,000$ 185,328,000$ 72,821,000$ Capital Budget 363,330,000$ 336,386,000$ (26,944,000)$

Total 763,954,000$ 821,714,000$ 57,760,000$

3


Authority Level

Operating Budget by Cost Category

$ %Wages 90,019,816 94,432,162 4,412,346 4.90%Salaries 66,929,201 69,680,141 2,750,940 4.11%Fringe Benefits 73,781,975 77,381,277 3,599,302 4.88%

Total Labor and Fringe Benefits 230,730,992 241,493,580 10,762,588 4.66%

Purchased Transportation 69,169,027 71,701,401 2,532,374 3.66%Fuel & Utilities 49,617,680 41,840,227 (7,777,453) -15.67%Materials and Supplies 17,122,019 18,497,975 1,375,956 8.04%Services 15,301,497 15,839,344 537,847 3.51%Casualty and Liability 3,568,487 3,963,956 395,469 11.08%Leases, Rentals and Miscellaneous 2,447,090 3,010,828 563,738 23.04%

Total Non-Labor 157,225,800 154,853,731 (2,372,069) -1.51%

Total Labor and Non-Labor 387,956,792 396,347,311 8,390,519 2.16%

New Service 0 2,000,000 2,000,000New Initiatives 0 4,000,000 4,000,000Cost Recovery (10,419,732) (10,738,661) (318,929) 3.06%Total Operating Expenses 377,537,060 391,608,650 14,071,590 3.73%Allocation to Capital (89,420,060) (91,608,650) (2,188,590) 2.45%OPERATING BUDGET 288,117,000 300,000,000 11,883,000 4.12%

Expense Category

FY2007 Current

Year Budget

FY2008 Proposed

BudgetVariance

4


Authority Level

Operating Budget Variance Summary

●

●

●

●

●

●

●

●

●

●

Wages increase by 4.90% reflecting increases in service related bus operatorwages, and increases in the union labor agreement becoming effective August 1,2007.

Salaries and hourly non-union Wages increase by 4.11% primarily due to salaryperformance incentives earned.

Fringe benefits increase by 4.88% reflecting the union labor agreement increasesin healthcare cost from $640 to $670 per participant per month (4.7%), anticipatedincreases in union healthcare participation, increase in the number of retirees andbenefit increases associated with salary and wage changes.

Purchased transportation increases by 3.66%, reflecting the annualization of thecontract awarded in FY2007 for the management of all METRO vanpool services,inflation and increases associated with annualization of service implemented inFY2007.

Fuel and utilities decrease by 15.67% reflecting the savings achieved throughMETRO's program of hedging diesel fuel and the annualization of savings inMETRO's contract for electric power (including propulsion power) that began inFY2007.

Materials and supplies increase by 8.04% reflecting increased budget for bus partsoffset by lower rail parts cost.

Services increase by 3.51% reflecting a mix of increases and decreases in variouscontract services (such as advertising, repair and maintenance and landscapingcontracts) throughout the Authority.

Casualty and liability increase by 11.08% reflecting an anticipated increase inproperty insurance rates based on current market information.

Leases, rentals and miscellaneous increase by 23.04% reflecting a rearrangementof the way Special Events costs are recognized in the budget (this is not a real costincrease). Adjusting for this change, Leases, Rentals and Miscellaneous decreaseby 1.07%.

The FY2008 budget allows $2.0 million for new service to be implemented in thenext year. A list of new services contemplated are shown under "RidershipDevelopment" in Section I - New Initiatives. The FY2008 Budget also allows $4.0million for new initiatives. A list of new initiatives and details is shown in Section I -New Initiatives.

5


Authority Level

Operating Budget Variance Summary (Con’t)

●

●

Cost recovery increases by 3.06% reflecting increased cost recovery from vanpoolservices.

Allocation to capital increases by 2.45% reflecting increased levels of capitalrelated activity.

6


Authority Level

Service Plan

METRO’s FY2008 Operating Ratio Goal is 20.0%. The FY2008 Business Plan has as its underlying premise the goal of improving the operating ratio, improving service and increasing ridership. In FY2008, METRO proposes a service plan that will increase ridership through:

• simplification of route structures • expansion of service to new markets • implementation of new routes • introduction of new Signature services • discontinuation/redeployment and adjustment of unproductive services • adding service to existing services • provision of clear and useful customer information • continuing efforts for cost effective schedules • efficient integration with light rail/guided rapid transit (GRT)

The Transit Plan provides an overview of proposed strategies to achieve these goals and objectives for fixed-route bus and rail, METROLift, Special Events and METROVan services. The results are reflected in the revenue hours of service summarized as follows:

Annual Revenue Hours of Service (000 omitted)

FY07

Budget FY07 Estimate

FY08 Budget

Difference

FY07 Estimate vs. FY08

Budget

FY2008*New Service

Annualized

Fixed Route: Bus 2,728 2,711 2,786 75 2,795Fixed Route: Rail 58 58 58 0 58Fixed Route: Total 2,786 2,769 2,844 75 2,853 METROLift 777 785 785 0 785Special Events 42 31 33 +2 33 Total 3,605 3,585 3,662 77 3,671*FY2008 includes new service The FY2008 Service Plan features the following enhancements resulting from the identification of market expansion opportunities to/new fixed route bus service: “PROJECT GRID” Project Grid seeks to re-design the existing fixed-route system starting for the ground up in an effort to re-create a fixed route bus system for Houston that will serve current and 7


Authority Level

Service Plan (Con’t)

future needs rather than continuing to operate to meet past needs. By reviewing the current public transportation planning and programming practices within metropolitan,suburban and rural areas, the project aims to enhance service delivery, customersatisfaction, efficiency and effectiveness. These will be achieved by conducting and implementing market research techniques designed to target information sources. Such techniques will include:

• Examining latent demand by seeking an overview of aging-population issues i.e.density and employment locations to identify its implications to transportation system planning.

• Focus on regional transportation by taking a complete inventory of available data

and resources to uncover different attitudes/preferences in concert with travelpatterns and making improvements from a regional approach through the coordination of services.

A final report will be generated to summarize the research and to providerecommendations to METRO in future planning and other assessments. New Park & Ride Facilities

1. Pearland / TMC (Brazoria County / South Freeway / SH288) – Peak hour service is projected to operate from a facility on SH288 near Pearland and provideservice the Texas Medical Center (TMC). The service is anticipated to operate under an interlocal agreement with Pearland or the Texas Medical Center. The service is to operate in express mode along SH288 to the TMC making limitedstops within the TMC. Service implementation is targeted for January 2008. The service is expected to attract 725 boardings per day and will require seven buses.

2. Katy / Grand Parkway (West Harris County /Katy Freeway /IH10) – METRO

proposes to expand its peak hour operation in western Harris County due to increased demand in this area. METRO is anticipated to operate from an ownedor joint use facility on IH10 near the Grand Parkway. The service is expected tobegin operation in October 2007. It is estimated that the service will attract 545boardings per day and will require nine buses.

8


Authority Level

Service Plan (Con’t )

Limited Stop Services New Limited Stop Service to George H. W. Bush Intercontinental Airport – METRO proposes to operate weekday service between George H. W. Bush Airport and several downtown hotels using the Eastex Freeway Corridor (US59). Currently, METRO offersexpress/local service between the airport and downtown. This limited stop service istargeted at existing customers as well as a new potential market – the business traveler.It is estimated that the new service will attract 100 boardings per day and will require seven buses. Signature Express Bus Service – METRO SOLUTIONS Bellaire Signature Service - METRO proposes to implement a 9.6 mile long demonstration route on Bellaire Boulevard. Operating every 15 minutes during the morning and afternoon peak hour periods, the service will provide additional capacity within this highly utilized corridor. The travel time reduction over the existing scheduledservice will be 10 minutes in each direction. The service is expected to begin operation in January 2008. It is estimated that the service will attract 1,475 boardings per day and will require seven buses. Improved Services The FY2008 Transit Plan proposes to address five additional bus routes with runningtime issues. Running time issues were identified on multiple bus routes during FY2006by Transport Workers Union of America Local 260 and bus operating facility personnel.The reconciliation of schedules to traffic and travel time reality began in May 2007 and identified the top five routes with running time issues as:

• 33 Post Oak • 46 Gessner • 65 Bissonnet • 163 Fondren Express • 8 S.Main / Yale (NOTE: This route has since been “unhooked” – separated for

better utilization of resources) Service improvements are expected to begin in January 2008, and are projected to attract estimated 1,226 boardings per day which will require an additional three buses. Effective Technology Utilization – Signal Pre-Emption in Congested Corridors The FY2008 Transit Plan addresses two congested corridors (Bellaire Boulevard andBissonnet) served by 13 bus routes, with future projects involving Post Oak, Richmond and Westheimer. Utilization of the signal pre-emption feature will allow buses to adjust the traffic signals to minimize wait time at traffic signals and maximize the use ofrevenue time. Implementation of traffic signalization is expected to occur in January2008 for Bellaire Boulevard and August 2008 for Bissonnet. This is expected to result in645 boardings and will require no additional buses.

9


Authority Level

Service Plan (Con’t)

Expansion of Bus Shelters The FY2008 Transit Service Plan proposes to add 100 bus shelters over the course FY2008. As of April 24, 2007 only 19% of the Authority’s bus stops have shelters. Arecent analysis indicates that in certain locations, the average daily passengerboardings are significantly higher in bus stops that have shelters when compared to those without. The addition of bus shelters is expected to cause an increase inridership and could also minimize ridership losses during poor weather conditions. Thisinitiative is expected to attract 625 boardings per day. Improved Passenger Information METRO has identified three primary campaigns to be conducted over the course of FY2008 to improve passenger information in an effort to increase ridership. By creatinga positive public image that METRO is a safe, friendly and clean mode of transportation, and by increasing awareness of METRO services by providing accurate,comprehensive and easily accessible route / schedule and service information, METROhopes to attract at least 1,307 boardings per day. The three campaigns include:

• The installation of InfoPanels at bus shelters on select routes • Updating and printing multiple Transit System Maps • Promoting METRORail ridership for special events

Service Discontinuation / Redeployment Opportunities - Poorly Performing Routes METRO uses a comparative ranking model to identify fixed-route services with poor performance (e.g. high subsidy per passenger boarding, low operating ratio, lowpassenger boardings per revenue hour or low passenger boarding per revenue mile). Currently there are 3 services that have poor performance and have also failed to reachthe ridership goal stated upon implementation. These include the weekday routes ofthe 39 Parker Road Circulator, 59 Aldine Mail and the 326 TMC Campus Circulator. In addition, there are 21 other services with subsidies per passenger boarding in excess of100% above the average subsidy per boarding for their respective service category(Local, Express and Park & Ride). Currently, four services – Routes 18 Kirby –Saturday, 48 Navigation – Sunday, 131 Memorial – Saturday and 326 TMC Campus Circulator – have been identified for discontinuation in January 2008 and are projected to cause a decrease in ridership of 404 boardings per day. Other routes may beproposed for discontinuation over the course of the fiscal year.

10


Authority Level

Fare Policy

METRO Board policy provides “ - - that the fare structure and fare rates will be reviewedannually and that fares will be increased as necessary to account for the effects ofinflation on operating costs and to maintain or improve the revenue/operating expenseratio”. (Resolution 85-18) In METRO’s Regional Bus Plan (1992) METRO proposed to increase its fares on thefixed-route bus system annually, alternating between $0.05 and $0.10 increases until completion (original scheduled completion date: December 31, 2003). These proposedincreases would have resulted in customers who rode the fixed-route system covering an increasing amount of the costs associated with operating the fixed-route system. On September 27, 2006 METRO’s Board of Directors adopted Resolution 2006-68 Approving And Adopting A Fare Restructure; And Making Findings And ProvisionsRelative to the Subject. The resolution proposed retention of the existing base fares butwith the discontinuation of a variety of fare media and discounts. The new structure is:

• More equitable for the average rider (ride more, save more through new loyaltyprogram)

• Simpler (easier to understand, pay cash or use Smart Card); reduced number ofinstruments

• Quicker (less wait time, speed boarding, improve service reliability; touch SmartCard to validator and computers handle the rest.)

• Financially sound (help to insure the future health of the Authority) METRO will implement the fare restructure during FY2008 simultaneous with the distribution of the Q Card, METRO’s new Smart Card technology. The Q Card will provide free transfers for a 2-hour window, an additional benefit of 5 free rides for every 50 rides taken, and eliminate more than 50 fare media types. It is expected that farerevenue will increase by $8.8 million after adjusting for a decline in ridership. Ridership forecasts included in the FY2008 Transit Plan assume an 11.0% decrease in fixed routeridership associated with full implementation of Q Card.

11


Authority Level

Projected Ridership (000’s omitted)

FY2007 FY2008Estimate Target

Fixed Route BusLocal 70,977 64,200 -6,777 -9.55%Express 5,994 5,393 -600 -10.02%Park & Ride 8,468 6,381 -2,087 -24.65%

Total Fixed Route Bus 85,439 75,974 -9,465 -11.08%

METRORail 11,664 10,550 -1,115 -9.56%

Total Fixed Route Bus and Rail 97,104 86,524 -10,580 -10.90%

Special Bus ServicesMETROLift 1,413 1,405 -7 -0.52%Special Events 596 713 117 19.57%METROVan 2,245 2,361 116 5.18%

Total Special Bus Services 4,254 4,479 226 5.30%

Total All Bus and Rail Services 101,357 91,003 -10,355 -10.22%

HOV Carpools, Vanpools, andNon-METRO Buses 24,882 26,948 2,065 8.30%

TOTAL SYSTEM RIDERSHIP 126,240 117,951 -8,290 -6.57%

Service Category Change

FY2007 vs. FY2008

12

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Business Plan & Budgets FY2008

Authority Level Organizational Chart

13


Authority Level

Manpower Summary

FY2007 FY2008Divisions Auth. FTE Auth. FTEOperations

Operations Full-time 2,493 2,355.6 2,492 2,485.6Operations Part-time 307 138.9 307 168.8

Police & Traffic Management 271 259.0 275 266.0Planning, Engineering & Construction 99 88.5 99 94.5Real Estate 6 5.4 6 6.0Procurement & Materials 114 112.2 114 114.0Administration 25 23 25 25Government Affairs 4 3.2 4 4.0Communications & Marketing 104 83.6 96 87.0Information Technology 53 49.0 53 53.0Human Resources 36 34.5 38 37.0Finance 103 100.5 107 107.0Legal 11 11.0 13 13.0Audit 13 12.0 12 12.0Executive Office 9 8.8 9 9.0Total Full-Time 3,341 3,146.2 3,343 3,313.1

Total Part-Time 307 138.9 307 168.8

Auth. = Number of authorized full-time and part-time positions at the end of the year.FTE = Full-time equivalent employees in person years for the total fiscal year.*Part-time personnel work varied hours up to 32 hours per week.

Manpower Added/Deleted FY2008Operations

Salaried Full-time -1Police & Traffic Management 4Communications & Marketing -8Human Resources 2Finance 4Legal 2Audit -1Total Net Change 2

14


Authority Level

Major Cost Drivers - Fuel

The market prices of diesel and gasoline have been extremely erratic over the past few years with a strong upward trend. This has put enormous pressure on METRO’s fuel bill as illustrated in the following tables:

Gallons Used (METRO & Contractors)

FY02 FY03 FY04 FY05 FY06 FY07

Budget FY08

Budget Diesel 15,903,948 15,607,482 16,746,698 14,964,649 14,431,528 14,502,611 14,147,391 Gasoline 750,203 725,966 723,128 700,488 727,601 788,893 761,028 Total 16,654,151 16,333,448 17,469,827 15,665,136 15,159,129 15,291,504 14,908,419

Expenditures (METRO & Contractors)

FY02 FY03 FY04 FY05 FY06 FY07

Budget FY08

Budget Diesel $10,367,394 $13,722,561 $19,001,484 $22,834,852 $27,552,712 $37,021,780 $29,956,268 Gasoline $ 505,745 $ 663,324 $ 769,533 $ 1,093,547 $ 1,459,587 $ 2,083,807 $ 1,603,438 Total $10,873,139 $14,385,885 $19,771,017 $23,928,400 $29,012,299 $39,105,587 $31,559,706

*Does not include taxes

In FY2005 and FY2006 METRO contracted for a bulk purchase with Valero, Citgo for fixed price future contracts, Motiva (Shell) for fixed price future contracts and Love’s for storage fuel. This resulted in a $6.6 million total savings against buying at the current rack price. In February 2006, the METRO Board approved a Fuel Hedge Policy (Fuel Price Risk Management Policy). It called for FY2007’s diesel fuel to be hedged by July 2006. However, the price of a FY2007 hedge was not favorable and the budget was funded for increasing fuel costs. At the start of the fiscal year NYMEX based fixed price future delivery contracts were executed for October-June deliveries and storage fuel is to be utilized for July-September. The FY2007 total fuel cost is expected to be $6.0M less than budgeted. In January 2007, two financial hedges for diesel fuel were executed for FY2008. A total of 13.5M gallons or 95.6% of the required diesel for FY2008 has been hedged at an average market price (excluding $0.0893 additional for additives and transportation) per gallon of $1.83. The details of the hedges are listed in the following chart:

15


Authority Level

Major Cost Drivers – Fuel (Con’t)

Vendor Gallons Date of

PurchaseAvg. Price per gallon Cost

BP Products N. America, Inc. 7,014,000 1/10/07 $1.88 $13,179,466Koch Supply & Trading, LP 6,510,000 1/17/07 $1.77 $11,516,148Total 13,524,000 $1.83 $24,695,614

The FY2008 budget for fuel has been determined as follows: METRO & Contractors FY2007 FY2008 Difference Gallons of Diesel (millions) 14.503 14.147 -0.355Gallons of Gasoline (millions) 0.789 0.761 -0.028Total Gallons (millions) 15.292 14.908 -0.383 Price per Gallon* $ 2.56 $ 2.12 $ (0.44)Subtotal ($ millions) $ 39.106 $ 31.560 $ (7.546) Taxes ($ millions)** $ 3.081 $ 3.003 $ (0.077)Total Budget ($ millions) $ 42.187 $ 34.563 $ (7.624) * Purchase plus transport plus TxLED ** State of Texas Tax, Fees = 20.12 cents/gallon for Diesel State of Texas Tax, Fees = 20.62 cents/gallon for Gasoline

METRO Staff proposes a $7.546 million decrease in the fuel budget from FY2007 to FY2008. This savings reflects the FY2008 financial hedges executed during FY2007.

16


Authority Level

Major Cost Drivers – Power

METRO has two major uses of electrical power: electricity for METRO facilities and electricity for rail propulsion power. In January 2004, METRO put in place a three year fixed price electricity contract with Reliant Energy which expired during FY2007. A new contract was negotiated during FY2007 with Suez Energy Resources which fixed the base contract rate at $0.0784 per kilowatt hour for the term of the contract while the Transmission and Distribution Service Provider (TDSP) portion floats. The contract hedges METRO’s electricity requirements for 3 years, providing budget certainty on price in accord with the Board’s Fuel Price Management Policy adopted February 2006. METRO has projected its FY2008 power requirements as follows:

Quantities in millions of kwh FY2007 Budget FY2008 Budget Difference

Facilities 46.769 45.751 (1.0180) Propulsion 7.236 7.555 0.3190 Total 54.005 53.306 (0.699) (1.294%) The increase in power requirements for propulsion is due to increased service in FY2008 associated with leap year and very heavy rider loads being carried on METRORail. The decrease for facilities reflects current usage and anticipated requirements for a full year of operation at the Cypress Park & Ride lot. The FY2008 Operating Budget has assumed the price will be $0.100302 as compared to $0.113026 budgeted in FY2007 for the new contract.

($ millions) F2007 Budget FY2008 Budget Difference

Electricity 5.881 5.348 (.533) (9.06%)

17


Authority Level

Major Cost Drivers – Labor Agreement

METRO’s current labor agreement approved in August 2005 covers three years August 1, 2005 – July 31, 2008. The key terms of the agreement impacting FY2008 are as follows:

• Wages August 5, 2007 4% increase to all classifications FY2008 Budget Increase = $3,036,521

• Health Benefits METRO’s contribution to Health & Welfare Trust

August 1, 2007 increased to $670 per month per participant FY2008 Budget Increase = $839,756

• Pension August 1, 2006, Benefit = $53 per month per year of service August 1, 2007, Benefit = $54 per month per year of service FY2008 Budget Increase = $145,753

During FY2008, METRO will negotiate a new labor agreement with Local 260 of the Transport Workers Union of America. Any additional costs associated with the new Agreement will be covered with existing resources in the FY2008 budget request and savings achieved during the fiscal year.

18


Authority Level

Major Cost Drivers – Purchased Transportation

METRO has two service components run by private contractors: First Transit, Inc. operates the fixed route service based at Northwest BOF (one of the six BOFs) and the METROLift van service. Greater Houston Transportation Company operates the METROLift sedan service. During FY2006, METRO began providing diesel fuel to these contractors for the fixed route bus service and van paratransit service to better control volatile fuel costs. As this has been beneficial in reducing fuel cost and consumption during FY2007, METRO will continue this practice in FY2008. In FY2007, a new five-year contract for fixed route bus service operated out of the Northwest BOF was successfully negotiated. During the procurement process for this contract, METRO was able to have the current contract’s service rate for ½ of FY2007 extended to the entire fiscal year which generated real savings, and also negotiated a favorable service rate for FY2008. In addition, METRO will be bidding a new METROLift sedan service multi-year contract. Based on FY2008 service levels and negotiated contract increases, an additional $1,799,363 has been incorporated into the FY2008 budget request to cover expected increased costs in these contracts.

19


Authority Level

Major Cost Drivers – Special Events

METRO will operate transit service, using both METRO buses and contract buses, for approximately 20 special events in FY2008. The largest of these special events will be the Rodeo. These services are intended to reduce traffic congestion and to improve traffic flow for both event attendees and other regional travelers. However, two major factors have required METRO to reevaluate how special events service is provided. These are: • Large increases in costs for fuel and private contractor purchased transportation, • Proposed changes by the FTA regarding the use of federally-funded public transit

agency resources instead of private contractors for providing charter bus service. During FY2007, METRO staff in cooperation with event sponsors restructured special events service delivery and cost recovery in order to ease the financial burden on both parties. This restructuring consisted of the following: • Redesign special events service delivery and associated resource usage to match

service levels and demand in the most efficient and cost-effective means possible. In this way, special events transportation needs could be met with far fewer resources needed.

• METRO operated special events service would be provided primarily through augmentation of existing fixed-route service.

• Utilization of private contractors for providing special events service would be done through the greatest extent possible based on their availability to provide required service. Furthermore, special event sponsors would be responsible for 100% of the expenses associated with the use of the private contractors.

The use of this strategy dramatically reduced special event net expense during FY2007, thus representing real savings to METRO. The FY2008 proposed budget has been prepared using the same philosophy, which has resulted in a year-to-year budget reduction of $588,000.

20


Authority Level

Major Cost Drivers – Health Care

Medical and dental benefits are budgeted in FY2008 at $37.569 million, an increase of $2.31 million over FY2007, or 6.5%. These benefits are provided to the employees in the following two categories:

• Union - METRO’s payment to the Trust is negotiated and changes from $640 per person per month to $670, an increase of $30 per month.

• Non-Union - METRO’s decision to return to self-funding of its medical plans for FY2008 after almost five years of being fully-insured, allowed medical rates for salaried employees to remain the same as FY2007. This is a major accomplishment in a climate of rising healthcare costs. A small increase in staffing levels and allowance for new retirees provide the increase over FY2007.

Overall, the salary employee health care plan provides more choice, features and flexibility. It is designed with wellness incentives that encourage employees to be more proactively engaged in their health management which contributes to the quality of life and to healthcare cost containment. The medical plan options will increase from two to four, a Health Maintenance Organization (HMO) equivalent, and three Preferred Provider Organization (PPO) plans. The PPOs differ primarily in their premiums, deductibles, copays, and out-of-network coverage which allows employees more choice based on their income levels and priorities. In addition, METRO has moved to the forefront as a preferred employer with some alternative medical therapies in the PPO plans such as acupuncture, nutrition counseling, compounded drugs, and herbal supplements (when prescribed by a licensed physician). Other new features include no copays for generic and formulary drugs used to treat common diseases such as hypertension and diabetes, and no deduction for insulin. This should encourage employees to maintain their health and contain health care cost. The dental PPO plan will have some added benefits as well, including no deductibles for diagnostic and preventive services. Employees will be encouraged to ‘buy-in’ to their health through incentives for participating in a Wellness Program. By doing so, they will have the opportunity to maintain their premiums at current levels; the premiums will go up for those who do not participate in the wellness program.

21

Section III: Financial Proforma


Financial Proforma

Projected Cash Flow

$millionsFares 52.884Sales Tax Income (1) 450.000Interest Income 8.912Grants Income(2) 113.428Other Income 0.610Commercial Paper 255.563Total Revenue FY2008 881.397Beginning Fund Balance (3) 222.973Total Sources 1,104.370

ExpendituresOperating Expenses – Transit 287.276Operating Expenses – Traffic Mgmt. 6.201Capitalized Operating Expenses 53.812Special Events Expenses 0.123Allowance for New Service 2.000Allowance for New Initiatives 4.000Expensed Small Capital 0.400Total Operating Expenditures 353.812

General Mobility Budget(4) 185.328Capital Budget 316.386Capital Contingency 20.000Subtotal Capital Expenditures 521.714

Total Expenditures FY2008 875.526

Ending Fund Balance (3) 228.844Total Uses 1,104.370

Revenues

22


Financial Proforma

Projected Cash Flow (Con’t)

*Commercial paper in the amount of $255.563 million is used in the cash flow to balance sources and uses. To the extent that the General Mobility carryover from FY1999 - 2007 ($111.459 million = total $148.612 less $37.153 budgeted in FY2008) is spent by the City of Houston, Harris County and the Multi Cities, additional commercial paper would have to be issued to cover the expenditure. The Capital Budget assumes the use of up to $255.563 million of commercial paper. For fiscal conservatism, this cash flow assumes a minimal holding in METRO’s investment portfolio. Notes (1) For fiscal conservatism, projected cash flow uses sales tax revenue of $450.000

million which represents the FY2006 actual sales tax revenue of $481.656 million less a one time audit collection of $16.839 million. Barton Smith’s projection for FY2008 is $510.265 million.

(2) Includes capital projects and capitalized operating expenses. (3) METRO Board approved Debt Policy adopted June 2005 sets minimum target

fiscal year ending fund balance (cash and investment portfolio) at 25% of the forward 12 month operating expenditures which is $88.453 million. To this is added the following: Board approved reserves $115.855 million, which are not proposed to be used in FY2008; worker’s compensation reserve of $12.284 million; and vehicle liability reserve of $12.252 million. Total minimum balance = $228.844 million.

(4) METRO will fund the Multi Cities program of projects at the time they are ready for implementation regardless of projected funding availability within the program.

23


Financial Proforma

Sales Tax Projections

FY07 FY08 FY09 FY10Sales Tax 481,656 510,265 2 546,852 589,451

Rate of Change from Prior Year 6.8% 1 5.9% 7.2% 7.8%

NOTE:1

2

3

($000's omitted)

FY2006 sales tax revenue actual = $467.646 millionFY2006 sales tax revenue adjusted for $16.839 million one-time audit collection receivedJanuary 2006 for prior years = $450.807 million. The adjusted sales tax is used incalculating annual growth.

For fiscal conservatism, METRO's sources and uses of funds and projected cash flow forFY2008 uses FY2006 adjusted sales tax revenue, which was $450.807 million roundedto $450.000 million.

FY2006 sales tax revenue which excludes $16.839 million one-time audit collectionreceived in January 2006 for prior years was the basis for the FY2007 rate of changefrom FY2006.The sales tax projection for FY2008 is based on Barton Smith's June 2007 report toMETRO. Barton believes the Houston economy will slow in FY2008 due to the slowdown in the US economy from the declining housing market and the energy sector returnto solid but not spectacular growth.FY2004 sales tax revenue actual = $381.993 millionFY2005 sales tax revenue actual = $394.016 million

24


Financial Proforma

Sources and Uses of Funds (Income Statement) Per GAAP Format

FY2007 FY2008 Difference

Budget ProjectionFY07 Budget vs. FY08 Proj.

RevenuesFares 56,038 52,884 -3,154Sales Tax Income (Accrual Basis) 400,000 450,000 50,000Interest Income 9,984 8,912 -1,072Grants Income 138,885 113,428 -25,457Other Income 1,000 610 -390Commercial Paper 0 255,563 255,563

TOTAL REVENUES 605,907 881,397 275,490

ExpensesTransit Operating 333,033 345,088 12,055Traffic Management Operating 6,710 6,201 -509Other Operating 2,186 2,523 337 Subtotal Operating 341,929 353,812 11,883

General Mobility Street Projects 112,507 185,328 72,821Transit Mobility Street Projects* 2,986 3,124 138 Subtotal Street Projects 115,493 188,452 72,959

TOTAL EXPENSES 457,422 542,264 84,842

Net before Depreciation 148,485 339,133 190,648

125,000 125,000 0Net after Depreciation 23,485 214,133 190,648

*Streets & RCTSS

Depreciation and Loss on Disposal of Fixed Assets

($000 omitted)

25


Financial Proforma

Balance Sheet (GAAP)

Estimated ProjectedSeptember 2007 September 2008

AssetsCash 1,862 2,862 Receivables 126,092 130,029 Inventory 23,220 23,779 Investments 221,747 247,747 Other Assets 23,663 15,373 Capital Assets Net of Depreciation 1,597,288 1,897,288

Total Assets 1,993,872 2,317,078

LiabilitiesTrade Payables 43,210 49,885 Accrued Payroll 19,305 21,035 Short-term Debt 143,000 400,000 Other Current Liabilities 25,779 29,259

Total Liabilities 231,294 500,179 Net Assets - Retained 1,762,578 1,816,899

Total Liabilities and Net Assets 1,993,872 2,317,078

Net Assets 1,607,701 1,762,578 Change in Net Assets 154,877 54,321

(in Thousands)

Metropolitan Transit Authorityof Harris County, Texas

Estimated and Projected Statement of Net AssetsFor Years Ended September 30, 2007 and 2008

26

Section IV: Capital & General Mobility Budgets


Capital & General Mobility Budgets

Capital Budget FY2008

Discussion The proposed capital budget for FY2008 is $33 6.386 million. See following document for details of projected expenditures by individual project. In summary, the capital budget breaks down as follows:

The proposed capital budget contains $20 million in program contingency. This is to provide funding for the following possible events:

1. Unbudgeted carryover from FY2007, which is due to projects’ cash flow spilling over from FY2007 to FY2008. METRO’s budget does not allow for automatic carryover of budget funds from year to year. There is always some spillover due to timing issues, so an allowance is needed.

2. Many of METRO’s initiatives have not been fully planned. Therefore, cost estimates are not existent at this time. Some capital funds will be needed to support some of these initiatives. The contingency is a source of funding when plans have been completed, cost estimated, justified and approved.

3. Frequently during a fiscal year, a capital need, not previously identified, appears. The capital contingency provides funds for such unexpected events. The capital contingency, representing 5.9% of the proposed capital budget, is controlled by the President & CEO, who releases funding only when needs have been justified.

Program FY08 Budget Grants Commercial Paper Local

A. METRO Solutions 162.460 33.091 56.563 72.806

B. Capital Improvement Program 173.926 26.525 80.000 67.401

C. General Mobility 185.328 119.000 66.328

D. Capitalized Operating Expenses* 53.812 53.812

Total 575.526 113.428 255.563 206.53519.7% 44.4% 35.9%

* Local matching funds not included.

Funding Sources$millions

27



Capital Budget FY2008 (Con’t) Project Listing

FY2008Budget

METRO Solutions

GRT Corridors & Intermodal Terminal

GRT Corridors

North Corridor 8,661Southeast Corridor 8,133East End Corridor 5,326Uptown Corridor 5,996University Corridor 21,033

Subtotal - 49,149

ROW / Land AcquisitionNorth Corridor 14,828Southeast Corridor 17,922East End Corridor 6,929Uptown Corridor 16,060University Corridor 3,576

Subtotal - 59,315

Subtotal - GRT Corridors 108,464

Intermodal TerminalDesign / Construction 10,000ROW / Land Acquisition 5,000

Subtotal - Intermodal Terminal 15,000

123,464Total - Phase 1 Development & Phase 2 Design/Build

Phase 1 Development & Phase 2 Design/Build

Design, Construction, Systems & Vehicles

DESCRIPTION

28




FY2008Budget

Pre Phase 1 & Program DevelopmentFEIS / Environmental (2005-2008)

North Corridor 752Southeast Corridor 748University Corridor 2,200East End Corridor 335Uptown Corridor 335

Subtotal - 4,370

Pre Phase 1 EngineeringUniversity Corridor 3,127

Subtotal - 3,127

Wheeler Intermodal Terminal (PE&C - Develop. Fund) 1,950Transit Facilities Misc. Engineering Studies 300

Subtotal - 2,250

Program DevelopmentProgram Initiation - Phase 2 2,500Quality Assurance Prog (QAP) 165Operations Development Support 242Small Business / DBE 338

Subtotal - 3,245

12,992Total - Pre Phase 1 & Program Development

Misc. Transit Facilities - Development Projects

DESCRIPTION

29




FY2008Budget

136,456

Other METRO Solutions ProjectsSignature Bus Service

Program Development Future Corridor Development Fund 250

Subtotal - 250

Bellaire CorridorBellaire Quickline: Vehicle Improvements 345Bellaire Quickline: Capital Educ. Campaign 276Bellaire Quickline: Transit Amenities 3,237

Subtotal - 3,858

Future Projects 4,725

Total - Signature Bus Service 8,833

HOT Lane ProgramHOT Lane Conversion

Phase 1B - HOT Lane Conversion 10,171

Subtotal - 10,171HOT Lane Expansion

Phase 2A - HOT Lane Expansion 280

Subtotal - 280

Total - HOT Lane Program 10,451

Total - GRT Corridors and Intermodal Terminal

DESCRIPTION

30




FY2008Budget

Commuter Rail Transit (CRT)200

2,0003,000

Total - Commuter Rail Transit (CRT) 5,200

Park & Ride Lots & Transit CentersPark & Ride Lots (Land, Design & Construction)

SH 288 P&R 413Katy Freeway P&R 338

751

Main St. Corridor EnhancementsVehicle Expansion 188

100

In Pavement LightingIn Pavement Lighting - Phase 2 481

Total - Main St. Corridor Enhancements 769

Total - Other METRO Solutions Projects 26,004

Total - METRO Solutions 162,460

Advanced Transit Plan ( ATP )New Starts

Advanced High Capacity TransitKaty Corridor

Addicks Park & Ride Modifications 707TxDOT Coordination Activities 113

Total - New Starts 820

Total - Advanced Transit Plan (ATP) 820

Commuter Rail Transit (CRT) StudiesCRT 90A - Missouri City - Fannin SouthCRT 290 - Fairfield to Intermodal

Total - Park & Ride Lots & Transit Centers

DESCRIPTION

Rail Operating Center (ROC) Expansion

31




FY2008Budget

TransitwaysNorthwest Transitway - US 290 Diamond Lane 500

Subtotal - Transitway 500

Fixed Guideway ModernizationSlip Ramp Closure Devices

Slip Ramp In-Pavement Lighting & Delineators 564Sign Standardization

Sign Standardiization (98/99 Grant) 276Facility Visibility 335New Signage Initiative - Drum Sign Upgrades 147

TranStar IntegrationHOV Lane TranStar Control & Integration 1,425

Other ProjectsHOV Utilization Data Collection 225Fixed Guideway Rehabilitation - Phase 2 655Fixed Guideway Rehabilitation - Phase 3 795

Subtotal - Fixed Guideway Modernization 4,422

Total - Transitways & Related Facilities 4,922

Buses & Support EquipmentPassenger Shelters

Shelters & LightingPassenger Shelters & Lighting 100Shelter Initiative 1,027

Revenue VehiclesBus Acquisitions

Leases Purchase Transit & Suburban Bus Improvements (100/yr 7,474Bus Improvements

Bus Bike Racks 450New Flyer AC Lines 407

DESCRIPTION

32




FY2008Budget

Fire Suppression System Upgrade 758New Flyer Hydraulic Lines 586Operators Seats 247HVAC System 188Axles 3,924Engines 5,579Transmissions 1,815Replace Bus Floors 411Non-Revenue Vehicle Capital Projects 609

Sub-Total Buses Improvements 14,974

Collection & Management SystemsImplement Bus Smart Card System 20,450Cubic Farebox Upgrade 335Cubic Lawsuit - Seek Recovery of Funds 1,500

Sub-Total 22,285

Sub-Total Revenue Vehicles 44,733Support Equipment & Systems

Support Vehicles 4,532Tools & Equipment 1,925Police Support Equipment 100System Support for Yard Supervisor Function&Fleet Mgt 1,500

Sub-total Support Equipment & Systems 8,057

Total Buses & Support Equipment 53,917

Operating Facilities & UpgradesOperating Facilities

Administration Office Building/METRO Lift 100Emergency Preparedness - Phase 2 (PE&C) 1,629Purchase & Install Two Diesel Storage Tanks 2,500

Subtotal - Operating Facilities 4,229

DESCRIPTION

33




FY2008Budget

Facility UpgradesMain St. Corridor Enhancements

Bar Signal Overrun system 2,301IH-610 Frontage Rd High Load Detection 1,327Station Platform PA Announcement Upgrades 375Cable Support System in Traction Power Pull Boxes 1,237ATMS Study, Recommendations and Implementation 439Install SCADA Summary Alarms 810Traction Power Alarms and Indications 912ROC Shop Electrical 129Central Control Systems Upgrade 737Wayside Wireless Network System 1,788Vehicles On-Board Wireless and Diagnostic System 913

Subtotal - 10,968

Park & Ride Lot ModificationsPark & Ride Lots Visibility Improvements 405Kuykendahl P&R Expansion 147Southpoint P&R Expansion 158Fuqua P&R Expansion 242

Subtotal - 952

Facility UpgradesUpgrade Security - 1900 Main 720Upgrade Restroom - Kingsland P&R 100Upgrade Fall Protection - Pits 355Upgrade Tactile Pavers - Rail Line 222Upgrade Lighting - 1900 Main 110Upgrade Projects Engineering/Design 250

Sub-Total 1,757

Rail System UpgradesTire Replacement Overhaul Schedule 390

Major Facility Rehabilitation Initiative 7,000

DESCRIPTION

34




FY2008Budget

Administration Services & Print Shop AOB Improvement 195Furniture and Equipment 550METRO Corporate Store 105

Sub-Total 850

Total Operating Facilities & Upgrades 26,146Intelligent Transportation System

Police Automation ProgramRegional RadiosRegional Cad Dispatching & Records Mgmt 124Police Radio Enhancements 238

Total - Intelligent Transportation Systems 362Information Technology

Safe Bus/Replace ARCS System (Radio) 22,373 End User Workstation 1,958 Fortify Network Communications 4,072 UNIX And Intel Servers 3,053 Core Applications 6,000 ERP Implementation 1,878 IVOMS Enhancements 1,400 Budget System Integration 690 SAP Upgrade & Deployment 2,500 Security Enhancements for Facilities 100 Police Command Center at Buffalo Bayou 379Total - Information Technology 44,403

Homeland SecurityVideo Surveillance of Bus Stops 150Portable Video for P&R Ride Lots 150Transit Security Planning 79Transit Organizational Activities - Train 86Equipment Acquisition 247Training 46

DESCRIPTION

35




FY2008Budget

Transit Organizational Activities - Bus 119Transit Equipment Acquisition - Bus 101Transit 1900 Main Radio Interoperability 133NIMS Training 1,800

Sub-Total 2,911

Other Miscellaneous ProjectsVoice Analysis Software 6OSHA And Environmental Compliance 1,000Wireless Headset For Motorcycles 17Police SORT Support Equipment 155Records Management Office Upgrade 48Surveillance Equipment for Investigations 12Training Room Furniture 8Wellness Program Equipment 55

Total Other Miscellaneous Projects 1,301

Total Homeland Security 4,212

Transit Mobility ProgramBus Pads / Bus Lanes 225Curb Cuts / Intersection Improvements 265RCTSS - Outside Beltway 102System Accessibility 100Corridor Signal Preemption & Optimization 1,800

Total - Transit Mobility Program 2,492

Development Projects - PE&CAir Quality Transportation Conformity 75Engineering Studies 225Capital & Environmental Studies 200Interagency Coordination 200Travel Model Adapt HGAC (OD Survey) 500

DESCRIPTION

36




FY2008Budget

System Planning/New Initiatives 750GIS System Upgrade 212Technology Program Support 0High Speed Rail - Planning 100Main Street Corridor RCTSS - O&M 1,270

Sub-Total 3,532

Development Projects - Real EstateCypress P&R Joint Development (Construction) 300Intermodal Terminal Joint Development 4,700Wheeler Intermodal 2,500Joint Development Studies 1,000Transit Oriented Development Market Analysis 1,500Fannin South TOD 3,000

Sub-Total 13,000

Other Development ProjectsFederal Small Business Program 120

Sub-Total 120

Total Development Projects 16,652

Allowance for Capital Replacements/Contingency 20,000

Total Development Fund, Land & Contingency 36,652

Total - Capital Improvement Program 173,926

Total - METRO Solutions & Capital Improvement Program 336,386

* INCLUDES FEDERAL GRANTS APPROPRIATED TROUGH FY2007 PLUS PROJECTED FY2008 GRANTS.** USE COMMERCIAL PAPER TO FUND CURRENT EXPENDITURES, REDEEM WITH FORMULA GRANTS IN FY2009-FY2010.

DESCRIPTION

37



General Mobility Budget FY2008

Discussion A. FY2007 Projected Expenditures versus Budget ($000 omitted)

Program Components

Budget FY2007

Estimate FY2007 Difference

City of Houston Designated Projects 19,145 17,209 -1,936 Future Designated 46,096 11,988 -34,108 Carryover FY1999-2006 0 41,854 41,854 Total 65,241 71,051 5,810Harris County Designated Projects 8,191 0 -8,191 Future Designated 13,135 0 -13,135 Carryover FY1999-2006 0 0 0 Total 21,326 0 -21,326Multi-Cities Designated Projects 16,853 14,602 -2,251 Future Designated 3,315 12,943 9,628 Carryover FY1999-2006 0 0 0 Total 20,168 27,545 7,377Areawide Designated Projects 5,772 5,950 178 Total Designated Projects 49,961 37,761 -12,200 Future Designated 62,546 24,931 -37,615 Carryover FY1999-2006 0 41,854 41,854 Total 112,507 104,546 -7,961

During FY2007 it is estimated that the General Mobility Program will underspend the budget by $7.961 million, -7.1%. The category labeled “Carryover FY1999-2006” is previously budgeted funds not expended and carried over into FY2007 per the 1999 Master Agreement. The Board did not include the carryover in the FY2007 General Mobility Budget. METRO does not control the expenditure of General Mobility Funds. This is driven by the implementation of projects by the City of Houston, Harris County, and the Multi-Cities.

38


General Mobility & Capital Budgets

General Mobility Budget FY2008 (Con’t) Projected Revenues & Available Funding – FY2008 – FY2012

FY08 FY09 FY10 FY11 FY12 Total

Sales Tax RevenuesEstimated Sales Tax Revenues Available 127,566 136,713 147,363 158,440 169,318 739,400

(June 2007 Barton Smith)

Pre-Agreement Designated ProjectsEstimated Expenditures

City of Houston 10,986 10,475 10,474 10,449 10,794 53,178Harris County 8,191 0 0 0 0 8,191Multi-Cities (Incl. Congestion Mitigation) 18,314 16,190 17,228 18,308 19,368 89,408Area-Wide Projects 5,861 5,903 5,898 5,944 5,942 29,548

Subtotal 43,352 32,568 33,600 34,701 36,104 180,325

Future Designated ProjectsEstimated Sales Tax Revenues Available 84,213 104,145 113,763 123,739 133,214 559,074

Sales Tax Distributed by Formula

City of Houston (73.7% of Total Available) 62,064 76,755 83,844 91,196 98,179 412,038Harris County (21.0% of Total Available) 17,685 21,870 23,890 25,985 27,975 117,405Multi-Cities (5.3% of Total Available) 4,463 5,520 6,029 6,558 7,060 29,630

Subtotal 84,213 104,145 113,763 123,739 133,214 559,074

Unexpended Carryover from Prior Years

City of Houston 28,320 28,320 28,320 28,320 0 113,280Harris County 10,224 10,224 10,224 10,224 0 40,896Multi-Cities -1,391 -1,391 -1,391 -1,391 0 -5,564

Subtotal 37,153 37,153 37,153 37,153 0 148,612

Total Adjusted Funding Available

City of Houston 90,384 105,075 112,163 119,516 98,179 525,317Harris County 27,909 32,094 34,114 36,209 27,975 158,301Multi-Cities (See Note 1) 23,683 19,331 0 0 0 43,014

Subtotal 141,976 156,500 146,277 155,725 126,154 726,632

Notes: (1) Cash f low assumes that all funding for the current Multi-Cities plan w ill be complete by the end of FY2009.

( $000 )

39


General Mobility & Capital Budgets

General Mobility Budget FY2008 (Con’t) Projected Revenues & Available Funding – FY2008 – FY2012

FY08 FY09 FY10 FY11 FY12 Total

City of Houston 101,370 115,550 122,637 129,965 108,973 578,495Harris County 36,100 32,094 34,114 36,209 27,975 166,492Multi-Cities (Incl. Congestion Mitigation) 41,997 35,521 17,228 18,308 19,368 132,422Area-Wide Projects 5,861 5,903 5,898 5,944 5,942 29,548

Subtotal 185,328 189,068 179,877 190,426 162,258 906,957

( $000 )

40



Capitalized Operating Expenses FY2008

Since 1999, METRO has allocated each year some of its formula grants to fund allowable operating expenses in accord with FTA regulation pertaining to capital grants. It is proposed that the following FY2008 activities be funded with the listed capital grants. FY2008 Budget Description Type of Grant $ In the millions − Bus & Rail Maintenance POP / Fixed Guideway Mod. 47.362 − Buffalo Bayou Facility POP 0.586

Maintenance − METROLift Service POP 5.864

TOTAL 53.812 The 20% local match is provided with ‘in-kind” expenditures so that these cashflows are 100% grant funded. (POP = Program of Projects Section 5307 grants.)

41

Section V: Resolution

42

43