Light Rail/High Capacity Transit Life Cycle Program …...Scottsdale Tempe Glendale Mesa Chandler Gilbert Peoria Phoenix Thomas Rd Phoenix Tolleson 10 17 101 202 51 143 101 60 202

May 2009

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Peoria Phoenix

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Bethany Home Rd

Indian School Rd

McDowell Rd

Buckeye Rd

Broadway Rd

Baseline Rd

METRO Light Rail Line

Northwest Extension(Scheduled to open 2012)

Future High Capacity / Light Rail Corridors for Further Study

LEGEND

Note: Dates indicate calendar year openings

Light Rail/High Capacity Transit Life Cycle Program Update 2009

2009 Transit Lifecycle Report Page 1 Valley METRO Rail, Inc. February 2009

Background The Regional Transportation Plan was adopted by the Maricopa Association of Governments (MAG) in 2003. With the successful passing of Proposition 400 in November 2004, the development of a Life Cycle program began for each of the three major transportation elements identified within the RTP over the 20-years of the program. The Regional Public Transportation Authority (RPTA) is responsible for preparation of the transit component of the Life Cycle program, and METRO has been further delegated the responsibility to prepare the LRT/HCT element. The LRT/HCT Life Cycle Program will be updated annually for submittal to the RPTA and identifies project locations, project durations, project capital costs by phase, and project operating costs. Specifically, the program identifies project expenditures and revenues by project and funding categories in year-of-expenditure dollars. This results in an annualized cash flow estimate for the program. Guiding Principles Along with the LRT/HCT Life Cycle Program, guiding principles are necessary to continue to guide the program policies and procedures. The policies and procedures for the LRT/HCT Life Cycle Program were approved by the METRO Board in October 2005 and continue to be the framework for development of the LRT/HCT Life Cycle Program. The following are the guiding principles:

1. A defined and consistent process will be established to implement the voter approved Plan (Proposition 400 maps and capital improvements).

2. A defined and consistent process for Plan amendments and changes will be established.

3. Funding allocations will be regularly monitored and managed. 4. A defined and consistent process will be established to ensure that legislated

compliance audit, reporting and performance requirements are met. 5. Budgeting and accounting systems will be established to manage Public

Transportation Funds and monitor and report results. 6. Jurisdictional equity will be monitored annually over 20 years.

TLCP Update METRO’s last update to the LRT/HCT Life Cycle Program was approved by the Board in January 2008. Since that time there have been several proposed changes and revisions to the program as shown in Table 1, as well as summarized below:

2009 Transit Life Cycle Program Update Page 2 Valley METRO Rail, Inc. May 2009

• Cost Per Mile: The 2003 RTP base capital cost estimate assumption used last year was $60 million per mile, inflated to $75.9 million per mile in 2009 dollars. For the 2009 TLCP Update, new cost estimate information was used based upon the recently completed Central Phoenix / East Valley starter line, as well as the Northwest Phase I project that is in design. The new cost per mile assumption used was $77.4 million per mile in 2009 dollars.

• Inflation Rates: The ADOT inflation rates were adjusted to reflect current market conditions. The 2008 TLCP Update utilized a 3% annual inflation rate from FY 2008-2026. The 2009 TLCP Update uses the adjusted inflation rate of 2% in FY 2009 and 2010 and 3% annually in FY2011-2026.

• Public Transportation Fund (PTF) Revenue Forecast: Reduced regional Public Transportation Fund (PTF) revenue forecast from $2.1 billion (2008) to $1.662 billion (2009). This equates to a reduction of approximately $438 million through the life of the tax.

Table 1: 2009 Life Cycle Program Changes

Proposed Change 2008 TLCP Update 2009 TLCP Update Cost Per Mile $75.9M (2009$) $77.4M (2009$) Inflation Rates FY 2008-2026 = 3% FY 2009 = 2.0%

FY 2010 = 2.0% FY 2011-2026 = 3.0%

PTF Revenue Forecast $2,100M $1,662M Project Schedules The development of the previous TLCP Update was based upon the corridors and project schedules included in the MAG RTP. Current market conditions as reflected in the PTF revenue forecast have created substantial funding shortfalls and have pushed out construction start dates to be commensurate with available funding. The completion of the LRT/HCT corridors has been delayed according to the following schedule:

• Central Mesa, 2015 to 2016; • Tempe South, 2015 to 2016; • Northwest Phase 2, 2017 to 2018; • Glendale, 2017 to 2019; • I-10 West, 2019 to 2021; • Northeast Phoenix, 2025 to 2030.

It should be noted that the Northeast Phoenix project remains in the RTP, but the project duration extends beyond the timeframe of the TLCP and the Proposition 400 sales tax, which end in FY2026. An extension of the sales tax is assumed to allow completion of the Northeast Phoenix project. An early phase of planning for this project


will be initiated in FY2013 to define the alignment and transit mode to preserve and protect the right-of-way from future public and private development. A map showing the LRT/HCT corridors and updated completion dates is shown in Figure 1.

Figure 1: Regional Transportation Plan LRT/HCT System Map

The development of a LRT/HCT project involves adherence to a rigorous federal process. Federal review occurs at various milestones. This federal approval process includes the review of alternative transit technologies (e.g. light rail transit, bus rapid transit, etc) and alignments, the development of draft and final environmental impact statements, preliminary engineering, and final design. These steps are followed by the purchase of right-of-way, utility relocations, construction, and testing of the system. Taken together, the entire development process takes about ten to twelve years to complete, depending upon the length and complexity of the project. The project’s duration and development steps are integral factors considered in the development of the LRT/HCT Life Cycle program. Figure 2 and Table 2 below identify these steps and their duration in the project development process.


Figure 2: Federal Transit Administration Project Development Process

Table 2: Project Development Process LRT/HCT Project Phases & Duration Project Phase Duration (months) Alternative Analysis / DEIS 18-24 Preliminary Engineering / FEIS 18-24 Final Design 12-18 Right-of-Way Acquisition 24-30 Utility Relocation 24-30 Construction / Testing / Start-Up 30-48

The schedule for development of each of the seven LRT/HCT extensions is shown in Figure 3.

Figure 3: Regional Transportation Plan LRT/HCT System Schedule


Revenue Assumptions The LRT/HCT Life Cycle Program revenues (FY 2009-2026) are estimated at $3,558 million in year-of-expenditure dollars. Program funding sources include tax revenues from the 20-year one-half cent sales tax Public Transit Fund (PTF), FTA 5309/5339 New Starts, CMAQ, local funds from HURF, as well as from the cities of Glendale and Phoenix. Table 3 below reviews these funding sources.

Table 3: Capital Funding Sources (YOE$) Source Amount Percent of Total PTF $1,662 46.7% Federal $1,417 39.8% Local $479 13.5% Total $3,558 100.0%

Within each of the program revenue sources, there are also a variety of assumptions that have been used including:

• The Glendale extension will be funded jointly between the cities of Glendale and Phoenix as follows. Glendale will fund 100% of the capital projects costs for the miles within the city of Glendale and 50% of the project capital project costs for the miles in Phoenix. Phoenix will fund the remainder in Phoenix. Glendale will fund 100% of the operating costs for the miles within the city of Glendale and Phoenix will fund 100% of the operating costs for the miles in Phoenix.

• FTA Section 5309 funds will only become available after the funding of CP/EV FFGA is completed in FY 2011. Section 5309 funds will not be available for future extensions until the estimated FFGA year.

• FTA Section 5309 funds utilized for all projects, except Northwest Phase I. The maximum allotment of Section 5309 funds per project are capped at 50% for each project, and $90 million per year systemwide in 2009$.

• The PTF revenue forecasts are consistent with the ADOT projections and cover the local share of all projects, except the Northwest and Glendale extensions. PTF funds are limited to $30M (2002$) each for the Northwest and Glendale extensions, or limited to the amount of the regional facilities.

• CMAQ funds are not precluded from any extension and are based on MAG’s forecast.

• Revenues considered are as identified in the RTP. Revenues from the FTA Section 5309, CMAQ, PTF and local tax sources are shown in 2009$ except for CP/EV where FTA Section 5309 is based upon the FFGA.


Cost Assumptions Costs for the program are estimated at $3,531 million in year-of-expenditure dollars. This estimate includes all expenses for each of the seven corridor extensions, reimbursements for all private utility relocations, repayment to Phoenix, Tempe and Mesa for regional infrastructure developed in the initial project, system-wide support infrastructure in future years and necessary systems planning and design standards. The original RTP cost estimate for LRT/HCT did not include non-prior rights utility relocations, because, at the time the plan was developed, these costs were a responsibility of the utility companies. As a result of state legislation passed after the original RTP was completed, utility companies with non-prior rights must be reimbursed. This change was added to the LRT/HCT Life Cycle Program in the 2008 Update. Table 4 reviews the updated expenditures by project and highlights the added cost for non-prior right utility relocations. Table 5 identifies the percentage of funding from key sources for each of the projects.

Table 4: Project Capital Expenditures (YOE$) Project RTP Base

(YOE$) + Non-Prior Rights Utilities (YOE $)

Total (YOE $)

Northwest Phase 1 $285 $20 $305 Central Mesa $236 $11 $248 Tempe South $175 $8 $183 Glendale $473 $22 $496 Northwest Phase 2 $133 $6 $140 I-10 West $1,071 $28 $1,099 NE Phoenix (thru 2026) $413 $47 $460 CP/EV Regional Reimbursements / Utilities $199 $78 $277 Systemwide Support (constrained) $168 N/A $168 Design Standards $7 N/A $7 Total $3,161 $222 $3,382

(Cost of Financing estimated at $149 million, Total Program cost $3,531 million)

Table 5: Percentage of Capital Project Funding By Source (%) Project PTF Federal Local Northwest Phase 1 18% 0% 82% Central Mesa 49% 51% 0% Tempe South 49% 51% 0% Glendale 14% 51% 35% Northwest Phase 2 13% 51% 35% I-10 West 48% 52% 0% NE Phoenix 49% 51% 0% Total 38% 46% 16%


Within each of the project capital cost estimates, there are also a variety of assumptions that have been used including:

• The total capital cost estimate of each project is based upon the weighted average costs of the CP/EV and the Northwest Phase I amount of $77.4 million per mile.

• The future costs are inflated at a rate of 2% in FY 2009 and 2010, and 3% from FY 2011 to 2026.

• Alternatives Analysis / DEIS = $4 - $6 million depending on project length and study area size.

• Preliminary Engineering / FEIS = PE @ 9% of [R-O-W+Construction] + FEIS @ 25% of [AA/DEIS]

• Final Design = 6% of [R-O-W+Construction] • R-O-W = $5.564 per mile (average of CP/EV & NWE estimates) for all extensions

except for I-10 West which uses $500,000 per mile for 7 out of 11 miles. • Prior Rights Utilities = $2.256 million per mile (average of CP/EV & NWE

estimates) • Non-Prior Rights Utilities = $3.6 million per mile (average of CP/EV costs) • Construction Costs = approximately 2/3’s of total base costs

- Includes: public utilities including water services, contingency, project reserve, construction management costs, insurance, public art, vehicles, regional maintenance and storage facilities)

Summary A summary of revenues and project expenses is depicted in the graph in Figure 4 and shown in detail in Table 6. This table also identifies estimated financing needs to allow the projects to move forward on schedule. A funding balance of $27 million is shown at the completion of all LRT/HCT projects in the RTP.

Figure 4: Total Capital Revenues & Expenses (YOE$)


Table 6: Total Capital Revenues & Expenses (YOE$) Items Impacting Funding Requirements $ (in millions) Funding

Surplus / Shortfall

Total Program Revenues $3,558.1 Total Base Program Cost -$3,160.8 Funding surplus before added utility expenses and financing $397.3Non Prior Right Utility Relocations -$221.5 -$221.5Financing needs anticipated: Cost Estimate

Principal Finance

FY 2009 $80.0 $38.8 FY 2011 $10.0 $4.5 FY 2013 $130.0 $50.1 FY 2017 $160.0 $44.7 FY 2021 $70.0 $10.6 Subtotal $450.0 $148.7 -$148.7 -$148.7Total Program Cost -$3,531.1

Net funding balance>>>> $27.0

Operations Another component of the LRT/HCT Life Cycle Program is the operating expense and revenue evaluation. The annual operating costs for LRT extensions are estimated in 2010 dollars at a rate of $1.45 million per mile and are based on the initial 20-mile project’s current cost forecast. Costs are escalated for annual inflation at 3.5%. Operating costs are paid by fare revenues and METRO Member City contributions. Fares are anticipated to cover 28% of the cost of operations. Table 7 outlines the operating expenditures and Table 8 outlines the operating revenues through the end of the RTP in 2026.

Table 7: Operating Costs by Project Project Operating Costs (Opening Year) to 2026

Total (YOE $)

CP/EV (2008) $834 Northwest Phase I (2012) $81 Central Mesa (2016) $60 Tempe South (2016) $45 Northwest Phase II (2018) $26 Glendale (2019) $80 I-10 West (2021) $127 NE Phoenix (2030) $0 Total $1,253


Table 8: Operating Revenues (YOE$) Project Operating Revenues (Opening Year) to 2026

Total (YOE $)

Phoenix T-2000 $608 Tempe Transit Sales Tax $199 Mesa General Fund $74 Glendale GO $24 Fare Revenues (28%) $348 Total $1,253

Conclusion Staffs from METRO member cities, RPTA and MAG have been included in the review process and their comments have been incorporated. The capital and operating expenses and costs of the LRT/HCT Life Cycle Program are currently in balance however, future funding considerations and refinements include:

• An extension of PTF or other funding beyond FY2026 will be needed to fully fund the Northeast Corridor Project.

• Federal transportation reauthorization, and the level of funding provided for major transit capital projects will affect the LRT/HCT corridors in the region. The current federal transportation act expires in 2009.

• METRO staff will continue to explore the potential to enter into a program agreement with the Federal Transit Administration. This agreement could include several of the LRT/HCT corridors and may include redistribution of federal, regional, and local funding between the various projects.

• During the next year, three of METRO’s corridor planning studies (Central Mesa, Tempe South and I-10 West) will reach a locally preferred alternative and will include updated cost estimates that will be reflected in next year’s TLCP Update.

• METRO will continue to annually update regional and local sales tax revenue forecasts and inflation rates.

• Annual updates will be made to refine future system-wide support infrastructure (facility modernization, upgrades and expansion) needs. An additional $70 million will be needed for support infrastructure through FY2026.

• METRO is working to define regional operations and maintenance facility needs as part of each project and will work to fund this activity through allocations from each individual corridor project.

Documents

Light Rail/High Capacity Transit Life Cycle Program …...Scottsdale Tempe Glendale Mesa Chandler Gilbert Peoria Phoenix Thomas Rd Phoenix Tolleson 10 17 101 202 51 143 101 60 202