Financial Plan

Albuquerque, NM

July 31, 2015

Contents 1 Introduction .......................................................................................................................................... 1

2 Project Description .............................................................................................................................. 2

3 Plan to Secure Local Financial Commitment ...................................................................................... 6 3.1 Capital Costs ............................................................................................................................. 6 3.2 Capital Revenues ...................................................................................................................... 9

4 Operating Costs and Revenues ........................................................................................................ 11 4.1 ART Operating Plan ................................................................................................................ 11 4.2 Proposed Changes to Existing Local Bus Service .................................................................. 12 4.3 Operating and Maintenance Costs .......................................................................................... 13

4.3.1 ART O&M Cost Estimate Methodology ...................................................................... 13 4.3.2 Net Impact of Implementing the ART Project Operating Plan ................................... 17

4.4 System-wide Operating Costs and Revenues ........................................................................ 19

5 Financial Health Analysis .................................................................................................................. 21 5.1 Cash Flow Analysis ................................................................................................................. 21 5.2 Financial Risk Sensitivity Tests ............................................................................................... 22 5.3 Audited Financial Statements ................................................................................................. 23

6 Conclusions ....................................................................................................................................... 23

Tables Table 1: Annual Inflation Rates ..................................................................................................................... 7 Table 2: Estimated Annual Capital Costs (2015 $, in millions) .................................................................... 8 Table 3: Estimated Annual Capital Costs (YOE $, in millions) .................................................................... 8 Table 4: Proposed Capital Funding, By Year (YOE $, in millions)................................................................ 9 Table 5: Proposed ART Operating Plan ..................................................................................................... 12 Table 6: Existing Rapid Ride Services Operating Characteristic ................................................................ 12 Table 7: Impact of Implementing the ART Project’s Operating Plan .......................................................... 13 Table 8: O&M Cost Estimate Annual Inflation Factors ............................................................................... 13 Table 9: O&M Expense Allocation .............................................................................................................. 14 Table 10: ABQ RIDE Motor Bus Operating Expenses Allocation .............................................................. 15 Table 11: ART O&M Fully Allocated Cost Model ....................................................................................... 15 Table 12: Estimated Additional ART Station Unit Costs (2015 dollars) ...................................................... 16 Table 13: ART Project O&M Cost Estimate (FY 2016$) ............................................................................. 17 Table 14: Impact of Eliminating Duplicate Service (Rapid Ride Services) (FY 2016$) ............................. 18 Table 15: Impact of Implementing the ART Project Operating Plan (2016$) ............................................. 18 Table 16: FY 2016 to FY 2019 System-wide Operating Costs and Service Levels ................................... 19 Table 17: FY 2016 to FY 2019 System-wide Operating Revenues (YOE $, in millions) ........................... 20 Table 18: The ART Project Capital Cost and Revenue Summary (YOE $, in millions) .............................. 21 Table 19: System-wide O&M Uses and Sources Summary FY 2016 to FY 2019 ..................................... 22

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Figures

Figure 1: The ART System ............................................................................................................................ 5

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1 Introduction This financial analysis supports the City of Albuquerque’s (ABQ RIDE) request for award of a Small Starts Construction Grant Agreement for the Albuquerque Rapid Transit Project (ART Project). Specifically, ABQ RIDE is requesting that the ART Project be recommended for funding by the Federal Transit Administration (FTA) in the federal fiscal year (FFY) 2017 budget. The analysis focuses on the funding sources identified to construct and operate the 8.75 mile, $126.2 million (Year of Expenditure (YOE) dollars) ART Project and to operate and maintain ABQ RIDE’s existing and planned transit services through the first full year of operation (fiscal year (FY) 2019) as required under the Small Starts category of the FTA Section 5309 Capital Investment Grant Program. Of the total capital cost of the project, ABQ RIDE is seeking $69.0 million (54.7 percent) in Small Starts funds.

In addition, the financial analysis provides the documentation required for a project pursuing Small Starts funds to receive a streamlined evaluation of the local financial commitment criteria as described in the FTA’s August 2014 New and Small Starts Evaluation and Rating Process Final Policy Guidance. As defined in the Guidance, the ART Project is eligible for the streamlined local financial commitment evaluation as ABQ RIDE can demonstrate the following:

• A reasonable plan to secure funding for the local share of capital costs or sufficient available funds for the local share;

• The additional operating and maintenance (O&M) costs associated with implementing the ART Project’s Operating Plan is less than five percent of ABQ RIDE’s operating budget when compared to the agency’s approved FY 2016 operating budget; and

• ABQ RIDE is in excellent financial condition, as demonstrated by the past three years’ audited financial statements included in Appendix B, which indicate a positive cash flow over the period, a reasonable current ratio, and no material findings.

Following a brief description of the ART Project, the remainder of the analysis includes the following:

• A detailed plan to secure funding from non-Section 5309 Capital Investment Grant (Small Starts) sources which includes a description of the other federal programs and local funding sources, planned amounts, commitment status and a summary of the remaining legislative and/or administrative steps needed to commit funds prior to executing the Small Starts Construction Grant Agreement;

• An operating and maintenance (O&M) cost estimate for the Project;

• A comparison of ABQ RIDE’s FY 2016 approved operating budget compared to the ART Project’s Operating Plan O&M costs demonstrating that implementing the Project will constitute less than 5 percent of the ABQ RIDE’s existing system-wide O&M costs;

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• A completed Small Starts Finance Template, which is included in Appendix A; and

• Three years of audited financial statements documenting the financial health of the agency, including positive ending balances and the following current ratios: 2.7 (FY 2012), 2.7 (FY 2013), and 2.5 (FY 2014). The financial statements are included in Appendix B.

2 Project Description The proposed project includes the construction of a bus rapid transit system on an arterial street within the Albuquerque metropolitan area. The ART includes the construction of an 8.75-mile rapid vehicle guideway primarily within the street median and stations spaced at approximate ½ to 1 mile intervals. All proposed construction is within the operational right-of-way of Central Avenue. Station platforms will include level/elevated boarding platforms (approximate dimensions of 10 feet to 14 feet wide by 65 feet long), an overhead canopy, seating, ticketing equipment, security lighting and equipment, and other similar equipment consistent with BRT service. To avoid a potential adverse effect to historic districts, overhead canopies will not be installed at the Walter Street station, 15th Street station, and Rio Grande Boulevard station. The traffic signal system for Central Avenue within the ART Project limits will be modified to provide traffic signal priority for ART vehicles.

As discussed in more detail in Section 4.1, the ART service will operate from 5:45 am until 9:30 pm at approximately 7.5 to 10 minute headways on weekdays depending on time of day. Weekend service will operate on 10 to 15 minute headways.

The design concepts for the specific improvements within each major segment are summarized below:

• From Unser Boulevard to Coors Boulevard: ART vehicles will operate in mixed flow traffic; no construction will occur in this segment.

• Coors Boulevard to Atrisco Drive: Two exclusive rapid vehicle lanes will be constructed within the existing roadway median. Left-turn/U-turn and pedestrian access will be provided at nine signalized intersections. In addition to the rapid vehicle lanes, the street section will include two westbound and two eastbound traffic lanes and on-street bicycle lanes. Median stations will be located at Coors Boulevard, Yucca Avenue, and Atrisco Drive.

• Atrisco Drive to San Pasquale Avenue: Two exclusive rapid vehicle lanes will be constructed within the existing roadway. Left-turn/U-turn and pedestrian access will be provided at five signalized intersections. In addition to the rapid vehicle lanes, the street section will include two westbound and two eastbound traffic lanes and on-street bicycle lanes (limited to the segment between Atrisco Drive and New York Avenue). Median stations will be located west of New York Avenue and east of Rio Grande Boulevard. A reduction of one westbound and one eastbound traffic lane is proposed.

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• San Pasquale Avenue to 10th Street: A single reversible rapid vehicle lane will be

constructed within the existing roadway median. Rapid vehicles will operate in the rapid vehicle lane in the peak traffic direction (eastbound in the a.m. and westbound in the p.m.). The off-peak service will operate within the mixed flow traffic lane. Left-turn/U-turn and pedestrian access will be provided at four signalized intersections. In addition to the busway, the street section will include one westbound and one eastbound traffic lane and on-street bicycle lanes. A median station will be located near 15th Street.

• Downtown area from 10th Street to 1st Street: Construction will be limited to five curbside stations. Rapid vehicles will operate in mixed flow traffic lanes. The ART route will follow Copper Avenue (one block north of Central Avenue) for westbound service and Gold Avenue (one block south of Central Avenue) from 8th Street to 1st Street for eastbound service. Curbside stations will be located on 1st Street just north of Central Avenue, 2nd Street and 6th Street on Copper Avenue, 6th Street on Gold Avenue, and on 1st Street just south of Central Avenue.

• 1st Street to Interstate 25: One bi-directional rapid vehicle lane will be constructed within the existing roadway median. Left-turn/U-turn and pedestrian access will be allowed at three signalized intersections. In addition to the rapid vehicle lane, the street section will include a single westbound and a single eastbound traffic lane. A median station will be located at Walter Street. A reduction of one westbound and one eastbound traffic lane is proposed.

• Interstate 25 to University Boulevard: Two rapid vehicle lanes will be constructed within the two center travel lanes. Left-turn/U-turn and pedestrian access will be provided at two signalized intersections. In addition to the rapid vehicle lanes, the street section will include a single westbound and a single eastbound traffic lane. A median station will be located at Cedar Street. A reduction of one westbound and one eastbound traffic lane is proposed.

• University Boulevard to Girard Boulevard: One bi-directional rapid vehicle lane will be constructed within the existing westbound lanes. Left-turn/U-turn and pedestrian access will be provided at five signalized intersections. In addition to the rapid vehicle lane, the street section will include two westbound and two eastbound traffic lanes. Median stations will be located at University Boulevard and Cornell St.

• Girard Boulevard to San Mateo Boulevard: Two rapid vehicle lanes will be constructed within the existing roadway median. Left-turn/U-turn and pedestrian access will be provided at six signalized intersections. In addition to the rapid vehicle lane, the street section will include one westbound and one eastbound traffic lane. Median stations will be located at Bryn Mawr Drive, Solano Drive, and Washington Street. A reduction of one westbound and one eastbound traffic lane is proposed.

• San Mateo Boulevard to Louisiana Boulevard: Two rapid vehicle lanes will be constructed within the two center travel lanes. Left-turn/U-turn and pedestrian access will be provided at five signalized intersections. In addition to the rapid vehicle lanes, the street section will include two westbound and two eastbound traffic lanes. Median

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stations will be located at San Mateo Boulevard and west of Louisiana Boulevard. A reduction of one westbound and one eastbound traffic lane is proposed in this segment.

• Louisiana Boulevard to Tramway Boulevard: Rapid vehicles will operate in mixed flow traffic lanes and will use existing Rapid Ride stations. No construction will occur in this segment.

• Louisiana Boulevard between Central Avenue and Indian School Road: This segment connects the rapid vehicle service on Central Avenue with the Uptown Transit Center. Rapid vehicles will operate in mixed flow traffic lanes and will use existing Rapid Ride stations. No construction will occur in this segment.

In addition to the design elements described above, the ART Project will include the following changes to the existing roadway:

• Existing pavement on Central Avenue will be milled, overlaid, and restriped throughout the project construction limits. Depth of mill and overlay will be approximately 2 inches.

• Some existing medians will be removed to accommodate rapid vehicle lanes. Depth of reconstruction will be up to 36 inches and will affect the following segments of Central Avenue: Coors Boulevard to Sunset Avenue; Broadway Boulevard to Interstate 25; and, Girard Boulevard to San Mateo Boulevard.

• Sidewalks will be widened and curbside landscaping will be added where right of way is available in the following segments: Coors Boulevard to Atrisco Drive; Broadway Boulevard to I-25; and Girard Boulevard to San Mateo Boulevard. Sidewalk widening/landscaping will vary from 2 feet to 6 feet, depending on right-of-way availability.

• Sidewalk ramps at street and drive pad intersections will be reconstructed to meet ADA standards from Coors Boulevard to 10th Street and from Broadway Boulevard to Louisiana Boulevard.

• Landscaped medians will be reconstructed and reconfigured at several locations including: Tingley Drive to Rio Grande Boulevard; University Boulevard to Girard Boulevard; and, San Mateo Boulevard to Louisiana Boulevard.

• Existing street lights will be relocated from medians to curb side from Coors Boulevard to Atrisco Drive and from San Mateo Boulevard to Louisiana Boulevard.

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Figure 1: The ART System

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3 Plan to Secure Local Financial Commitment 3.1 Capital Costs

As described in more detail in the Capital Cost Estimate Report (submitted under separate cover), the capital cost estimate reflects approximately 60 percent design and was developed using FTA’s Standard Cost Categories (SCC). A brief description of each cost category is provided below:

• Guideway (SCC 10): 8.5 miles of exclusive BRT lanes will be constructed using colored concrete. The lanes will be separated from vehicular traffic with an 8 inch rumble stripe and will include "BUS ONLY" lane signage.

• Stations, Stops, Terminals, Intermodal (SCC 20): The ART Project includes twenty (20) stations. Fifteen (15) will be median stations with ten (10) stations located at signalized intersections and five (5) mid-block stations. The median stations will be raised platforms to provide for level boarding at all door entrances. Additionally twelve (12) of the platforms will be covered by a tensile fabric structure canopy composed of steel bolted members and a durable fabric membrane, with the sides of the canopy open air. The remaining five (5) stations are located in downtown and will be curbside stations with raised platforms. Four (4) of the five (5) stations will have a similar tensile fabric structure canopies.

• Support Facilities: Yards, Shops, Administrative Buildings (SCC 30): The ART Project will not require building or expanding support facilities. As a result there are no costs included for this category.

• Sitework and Special Conditions (SCC 40): This category includes estimated costs for utility modifications, maintenance of traffic, crosswalk treatments, ADA ramps, roadway work adjacent to stations, sidewalk connections, and installation of mill and fill asphalt paving adjacent to the BRT lane.

• Systems (SCC 50): The systems category includes costs associated with the ART Project’s intelligent transportation system (ITS) / traffic signal prioritization (TSP), signal controls, traffic signalization, and communications. Additionally, this category includes costs for forty (40) off-board fare collection units.

• Right of Way (ROW), Land, Existing Improvements (SCC 60): This category includes allowances for acquisition of right-of-way needed for roadway widening associated with the guideway and stations. As the definition of the Project evolves and additional engineering is completed, there may be changes to the right-of-way acquisition needs included in future capital cost estimates.

• Vehicles (SCC 70): This estimate reflects the preliminary operating plan results which identified the need for eighteen (18) buses with dual-side doors and spare parts for the ART Project. Based on the Art Project’s operating plan, fifteen (15) peak vehicles would be needed. The capital cost estimate includes the purchase of three (3) spare vehicles.

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• Professional Services (SCC 80): This includes estimated costs for the following

professional services “soft costs” that are associated with implementing major fixed guideway projects. The current capital cost estimate includes allowances for professional services that are equivalent to 30 percent of the base year construction costs (SCC codes 10 through 50).

o Project Development

o Project Management for Design and Construction

o Construction Administration & Management which includes

Professional Liability and other Non-Construction Insurance

Surveys, Testing, Investigation, Inspection

• Unallocated Contingency (SCC 90): This element provides a risk allowance for the entire project (SCC 10 through 80) for potential fluctuations in materials and labor during future construction. The current capital cost estimate includes a 4.1 percent unallocated contingency.

In addition to the unallocated contingency, the capital cost estimate includes an allocated contingency within each SCC (SCC 10 through SCC 60). For the construction elements (SCC 10 through 50), the allocated contingency is 25 percent and the allocated contingency for right-of-way (SCC 60) is 43 percent.

• Finance Charges (SCC 100): While proceeds from a larger city-wide bond package will support implementation of the ART Project, the City of Albuquerque does not attribute financing costs to individual projects. As such, the cost estimate does not include finance costs and the City of Albuquerque will pay 100 percent of bond finance costs.

The capital cost estimate for the ART Project was developed in current year (2015) dollars and escalated to Year of Expenditure dollars based on the ABQ RIDE’s proposed project implementation schedule and annual inflation factors. Table 1 summarizes the annual inflation factor assumptions, which reflects a 2.4 percent annual growth rate between 2015 and 2018.

Tables 2 and 3 summarize the Project’s capital costs by year in FTA SCC format in FY 2015 constant dollars and in YOE dollars respectively. As shown in the tables, based on the planned implementation schedule and annual inflation factors, the capital cost of the ART Project is $119.3 million in FY 2015 dollars and $126.2 million in YOE dollars.

Table 1: Annual Inflation Rates

Fiscal Year Inflation Factor

Compound Growth Rate

2015 - 1.000 2016 0.024 1.024 2017 0.024 1.048 2018 0.024 1.073

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Table 2: Estimated Annual Capital Costs (2015 $, in millions)

SCC Number Description 2014 2015 2016 2017 Total

10 Guideway & Track Elements $0.0 $0.0 $4.9 $7.4 $12.3 20 Stations, Stops, Terminals, Intermodal $0.0 $0.0 $3.2 $4.8 $8.0 30 Support Facilities: Yards, Shops, Admin. Bldgs $0.0 $0.0 $0.0 $0.0 $0.0 40 Sitework & Special Conditions $0.0 $0.0 $22.2 $14.8 $36.9 50 Systems $0.0 $0.0 $7.8 $7.8 $15.6 60 Row, Land, Existing Improvements $0.0 $0.0 $1.4 $0.6 $2.0 70 Vehicles $0.0 $0.0 $0.0 $18.0 $18.0 80 Professional Services $1.9 $11.0 $6.2 $2.8 $21.8 90 Unallocated Contingency $0.0 $0.0 $2.3 $2.3 $4.6 100 Finance Costs $0.0 $0.0 $0.0 $0.0 $0.0

Project Total $1.9 $11.0 $48.0 $58.4 $119.3 Note: totals may not match due to rounding

Table 3: Estimated Annual Capital Costs (YOE $, in millions)

SCC Number Description 2014 2015 2016 2017 Total

10 Guideway & Track Elements $0.0 $0.0 $5.1 $7.9 $13.0 20 Stations, Stops, Terminals, Intermodal $0.0 $0.0 $3.4 $5.1 $8.5 30 Support Facilities: Yards, Shops, Admin. Bldgs $0.0 $0.0 $0.0 $0.0 $0.0 40 Sitework & Special Conditions $0.0 $0.0 $23.2 $15.9 $39.1 50 Systems $0.0 $0.0 $8.2 $8.4 $16.6 60 Row, Land, Existing Improvements $0.0 $0.0 $1.5 $0.6 $2.1 70 Vehicles $0.0 $0.0 $0.0 $19.3 $19.3 80 Professional Services $1.9 $11.3 $6.5 $3.0 $22.6 90 Unallocated Contingency $0.0 $0.0 $2.4 $2.5 $4.9 100 Finance Costs $0.0 $0.0 $0.0 $0.0 $0.0

Project Total $1.9 $11.3 $50.3 $62.7 $126.2 Note: totals may not match due to rounding

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3.2 Capital Revenues Table 4 summarizes the annual and total funding levels from the revenue sources planned for the ART Project. These sources include: FTA Small Starts, other federal programs, and City of Albuquerque funds, including funding support from the Department of Municipal Development’s Transportation Infrastructure Tax and the Department of Technology and Innovation. A detailed description of each source is provided after the table.

Table 4: Proposed Capital Funding, By Year (YOE $, in millions)

2014 2015 2016 2017 Total Small Starts $69.0 $69.0 Other Federal Funds

FTA Section 5309 (committed) $1.5 $1.5 Flex (CMAQ/STPU) (committed) $5.1 $5.1 FTA Section 5307 (committed) $8.1 $8.1 Flex (CMAQ/STPU) (budgeted) $7.7 $7.7 FTA Section 5307 (budgeted) $6.0 $6.0 FTA Section 5339 (budgeted) $3.2 $3.2

Local Local Match FTA Section 5309 (committed) $0.4 $0.4 GRT Revenue Bonds (committed) $6.1 $6.9 $13.0 GO Bonds (committed) $4.1 $4.1 Transportation Infrastructure Tax (committed) $6.0 $6.0

Bernalillo County (planned) $1.0 $1.0 GO Bonds: Broadband (committed)) $1.0 $1.0

Total Revenues $1.9 $11.3 $69.0 $44.0 $126.2 Note: totals may not match due to rounding

• Federal Funding Sources: As mentioned above, the current funding approach includes the FTA Small Starts program and Other Federal funding programs. The total level of federal funding currently assumed is $100.9 million or approximately 79.9 percent of total revenues.

o FTA Small Starts Program: The ART is a corridor-based BRT project that represents a substantial investment in a critical corridor within the City of Albuquerque. As such ABQ RIDE is requesting Small Starts (Section 5309 Capital Investment Grant) funds of $69.1 million or approximately 55 percent of total project costs. Table 4 reflects a preliminary assumption of the timing and level of Small Starts funds ABQ RIDE will receive. The actual level and timing will be negotiated with FTA as part of the Small Starts Construction Grant Agreement.

o Other Federal Funds: ABQ RIDE is working with the Mid-Region Council of Governments (MRCOG), the Metropolitan Planning Organization for the Albuquerque urban area, to program Other Federal Funds within the Transportation Improvement Program (TIP) to support the ART’s engineering

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(final design) and construction. In total, the financial plan includes $31.8 million in Other Federal Funds. As shown in Table 4, $14.8 million is considered “Committed” and the remaining $17.0 million is considered “Budgeted”.

Other FTA Funds: As stated above ABQ RIDE has worked with the MRCOG to program federal formula funds for the ART Project into the current TIP. Additionally staff is currently working with MRCOG to amend the TIP to program additional funds to support construction of the Project.

Specifically, ABQ RIDE is programming available FTA Section 5307 Urbanized Annual Formula Program and FTA Section 5339 Bus and Bus Facilities Program to support the implementation of the Project without negatively impacting the current condition of the existing bus network. The current schedule calls for the amendments to the STIP to be approved by the end of 2015. Following this action, ABQ RIDE will complete the FTA application by the end of 2015 to use these funds for the ART Project.

In addition to the Section 5307 and Section 5339 formula funds, ABQ RIDE and MRCOG had previously adopted into a prior TIP funds from the program formerly known as FTA Section 5309 Discretionary Bus and Bus Facilities (pre-MAP 21) to support the ART Project’s Small Starts Project Development activities. The existing grant number for the Section 5309 Discretionary Bus and Bus Facilities funds is NM 03 0025.

Federal Highway Administration (FHWA) Flex Funds: This reflects FHWA funding sources programmed through MRCOG that are eligible to be “flexed” (transferred) to the FTA to support implementation of transit projects. For the ART Project, the current TIP includes $5.1 million in FHWA Surface Transportation Program (STP) and Congestion Mitigation and Air Quality Improvement Program (CMAQ) committed funds to support construction of the ART Project. An additional $7.7 million in STP/CMAQ funds are included in the TIP to support construction of the Project. The final step to commit the $7.7 million to the Project will occur by the end of 2015 when ABQ RIDE requests transfer of the funds to FTA and then submits a grant application to the FTA.

• City of Albuquerque Funds: Five local funding sources totaling $25.4 million are planned to provide funding for the ART Project. Of this amount, $24.4 million in funding is considered committed to the ART Project in that no additional City Council or administrative actions are required.

o Local Match for Other Federal Funds: The current TIP includes $1.3 million in local matching funds programmed through the City of Albuquerque’s capital program as match for the FTA Section 5309 ($0.4 millions – Committed).

o Gross Receipts Tax (GRT) Revenue Bond Proceeds: In May 2015, the City of Albuquerque approved the issuance of $49.1 million in GRT Revenue Bonds which includes $13.0 million to support implementation of the ART. (City Council Resolution R-15-185).

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o Existing General Obligation (GO) Bond Proceeds: The City of Albuquerque has

$4.1 million in unexpended proceeds from a prior GO Bond that will support the implementation of the ART Project. Existing GO Bond legislation allows the City to re-appropriate 10 percent of proceeds for other uses. As such, $4.1 million have been appropriated from the prior GO Bond to the ART Project, with no additional City Council or administrative actions required.

o Department of Municipal Development (DMD) Transportation Infrastructure Tax: This source is funded through the City’s Gross Receipts Tax. Specifically a quarter cent is set aside as the Transportation Infrastructure Tax fund. The $6.0 million programmed for the ART project will support streetscape elements and elements that support the City of Albuquerque’s Complete Streets initiative.

o Existing GO Bond Proceeds: Broadband: A portion of the City’s existing GO bond proceeds are currently obligated to the Department of Technology and Innovation. Allowable expenses for these proceeds include the following activities: “Assess, plan, design, and implement an open broadband fiber network (to include wifi capabilities) along the Central Avenue corridor. This project will take into consideration existing dark fiber resources to build an open, community broadband for use by the City of Albuquerque.” ABQ RIDE is currently working with the Department of Technology and Innovation to allocate $1.0 million in Broadband related GO Bond proceeds to broadband infrastructure along with systems elements of the ART Project. These funds are committed to the Project. .

o Bernalillo County: ABQ RIDE is currently working with the County to secure $1.0 million to support construction of the ART Project. ABQ RIDE anticipates the County will approve the appropriation of funds for the Project by the end of 2015.

4 Operating Costs and Revenues 4.1 ART Operating Plan

This financial analysis reflects initiation of revenue service in fall 2017 (FY 2018), consistent with the ART Project’s operating plan. As shown in Table 5 within the Unser Boulevard to Louisiana Boulevard high frequency portion of the alignment, the effective service frequency is planned to be 7.5 minutes during weekday peak periods, 10 minutes during weekday off-peak periods, primarily 10 minutes on Saturdays and 15 minutes on Sundays.

At Louisiana Boulevard, the ART has two operating branches. One branch continues east to Tramway Boulevard and the second branch turns north on Louisiana Boulevard and terminates at the Uptown Transit Center. The operating plan reflects that every other trip will serve each branch. Based on the operating plan, route service frequency along the two branches is planned to be 15 minutes during weekday peak periods, 20 minutes during weekday off-peak periods, primarily 20 minutes on Saturdays and 30 minutes on Sundays.

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As shown in Table 5, this operating plan would result in 1,069,479 annual revenue miles, 71,469 annual revenue hours, and will require fifteen (15) peak vehicles for the ART. The previously described capital cost estimate includes a total of eighteen (18) vehicles which reflect the acquisition of three (3) spare vehicles.

Table 5: Proposed ART Operating Plan

Day Service Span Headways Unser to Louisiana

Northern / Eastern Branches

Peak Vehicles

Annual Hours

Annual Miles

Weekday 5:45 am to 9:30 pm 5:45 am to 7:15 pm 7.5 minutes 15 minutes

15 57,879 870,303 7:15 pm to 9:30 pm 10 minutes 20 minutes

Saturday 6:00 am to 9:00 pm 6:00 am to 8:00 am 15 minutes 30 minutes

11 8,700 127,789 8:00 am to 9:00 pm 10 minutes 20 minutes

Sunday 6:30 am to 6:30 pm All Day 15 minutes 30 minutes 8 4,890 71,387 Total 71,469 1,069,479

4.2 Proposed Changes to Existing Local Bus Service In addition to implementing the ART service, the operating plan calls for modifying existing local service within the project corridor. The modifications are proposed for the Route 766: Rapid Ride Red Line and Route 777: Rapid Ride Green Line. Specifically, since these two routes duplicate the proposed ART service, both would be eliminated with the implementation of the ART.

Table 6 summarizes the current operating characteristics for the Rapid Ride services and Table 7 summarizes the impact of implementing the ART’s operating plan to ABQ RIDE’s existing annual revenue hours and peak vehicle requirements.

As shown in Table 7, the implementation of the ART and corresponding reduction of Rapid Ride service will result in a net increase of 16,902 annual revenue hours, 248,649 annual revenue miles and require three (3) additional peak vehicles.

Table 6: Existing Rapid Ride Services Operating Characteristic

Day Service Span Headways Unser to Louisiana

Northern / Eastern

Branches

Peak Vehicles

Annual Hours

Annual Miles

Weekday 5:45 am to 9:30 pm 5:45 am to 7:15 pm 8 minutes 16 minutes

12 44,698 669,800 7:15 pm to 9:30 pm 11 minutes 22 minutes

Saturday 6:00 am to 9:00 pm 6:00 am to 8:00 am 15 minutes 30 minutes

9 6,703 97,503 8:00 am to 9:00 pm 10-12 minutes 20-24 minutes

Sunday 6:30 am to 6:30 pm All Day 16.5 minutes 33 minutes 5 3,167 53,526 Total 54,567 820,829

Note: totals may not match due to rounding

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Table 7: Impact of Implementing the ART Project’s Operating Plan

Peak Vehicles Annual Bus Hours Annual Bus Miles ART Project ART Service 15 71,469 1,069,479 Proposed Local Bus Changes Duplicate Corridor Services -12 -54,567 -820,829 Net Impact 3 16,902 248,649

Note: totals may not match due to rounding

4.3 Operating and Maintenance Costs

4.3.1 ART O&M Cost Estimate Methodology This section presents the methodology for estimating O&M costs for the ART Project. An O&M model was developed using cost estimation methods that are consistent with FTA guidelines for developing a fully allocated cost model utilizing multiple supply variables. The O&M model and associated unit costs were used to estimate the fully allocated costs associated with implementing the ART Project. Fully allocated costs include all costs related to the provision of transit service including direct costs(e.g., bus operator and mechanic wages and fringe benefits, fuel, spare parts, transportation and vehicle maintenance supervision) and administrative and support costs.

The ART O&M unit costs and cost estimates were prepared utilizing ABQ RIDE’s FY 2013 data, the most current available information, from the National Transit Database (NTD) to estimate bus operations and maintenance costs. Additionally, to estimate ART Project O&M costs new to ABQ RIDE related to fare collections, stations and guideway expenses, the analysis incorporated actual City of Albuquerque costs for similar categories of existing expenditures.

Finally, for comparability to the FY 2016 ABQ RIDE budget, the fully allocated cost model results and additional fare collection, station and guideway expenses were inflated to FY 2016 dollars using the annual inflation rates summarized in Table 8.

Table 8: O&M Cost Estimate Annual Inflation Factors

Fiscal Year CPI %

Change 2013 2.31370 1.7% 2014 2.34968 1.6% 2015 2.36166 0.5% 2016 2.37952 0.8%

Source: IHS Global Insight CPI-U

Fully Allocated Cost Model

ABQ RIDE’s NTD report categorizes expenses by function (vehicle operation, vehicle maintenance, non-vehicle maintenance and general administration) and the following expense categories:

• Labor (Salaries and Wages) • Fringe benefits

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• Services • Materials & Supplies Consumed • Fuel • Casualty and Liability Costs

Miscellaneous (includes Taxes, Freight, Leases and Rentals)ABQ RIDE’s motor bus operating and maintenance expenses reported in the FY 2013 NTD were allocated to the following driving supply variables:

• Annual Vehicle-Hours: Total hours operated by all vehicles in one year. Costs related to this variable include most vehicle operations costs.

• Annual Vehicle-Miles: Total miles operated by all vehicles in one year. Costs related to this variable include most vehicle maintenance and fuel costs.

• Peak Vehicles: The maximum number of vehicles required for scheduled peak service. Costs related to this variable mainly reflect administrative and support costs.

• Garages: The number of ABQ RIDE facilities used to store and maintain its motor bus fleet. Costs related to this variable include costs to maintain garage and other facilities including bus stops, transit centers and park and ride lots. Costs related to the garages variable were not included in the fully allocated cost model since the existing ABQ RIDE’s garages have sufficient capacity for the BRT fleet, will not require any modifications that will affect O&M costs, and ART station costs have been developed separately.

The key driving supply variables were allocated to each expense line item below.

Table 9: O&M Expense Allocation

Expense Object Vehicle-Hours

Vehicle-Miles

Peak Vehicles

Operator Salaries & Wages Other Salaries & Wages Fringe Benefits

Services Fuel & Lubricants Tires & Tubes Other Materials & Supplies Casualty/Liability Miscellaneous Expenses

Table 10 details the reported operating expenses for FY 2013 ABQ RIDE motor bus for vehicle operations, vehicle maintenance, non-vehicle maintenance and general administration with associated driving supply variables. Table 11 provides a summary of expenses by line item and driving supply variable and then calculates fully allocated unit costs. Unit costs were calculated based on total expenses and units of service supplied for each variable reported. Expenses assigned to each variable were summed and

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divided by units of service to derive unit costs. The following equation summarizes the fully allocated cost model used to estimate O&M costs for ART operations:

Fully Allocated Annual

O&M Cost

=

Vehicle-Hour Unit Cost

x Projected

Vehicle-Hours

+

Vehicle-Mile Unit Cost

x Projected

Vehicle -Miles

+

Peak Vehicles Unit Cost

x Projected Peak

Vehicles

+

ART Fare Collection,

Station, and Guideway

Maintenance Costs

Table 10: ABQ RIDE Motor Bus Operating Expenses Allocation (Source: 2013 National Transit Database)

Table 11: ART O&M Fully Allocated Cost Model (Source: 2013 National Transit Database)

As noted above, costs related to maintaining the garage facility are not included in the fully allocated model since these are generally considered fixed costs (i.e., they vary based on the number and size of garages which is not expected to change).

In addition to the fully allocated cost estimates, the financial analysis evaluated direct cost impact of implementing the ART Project. As stated previously, direct costs (also referred to as marginal costs) include those O&M costs that are directly related to the

TotalExpense Object Expense Variable Expense Variable Expense Variable Expense Variable ExpensesOperators salaries and wages $8,426,462 Vehicle-Hours $8,426,462Other salaries and wages $464,959 Vehicle-Hours $2,957,560 Vehicle-Miles $313,845 Garages $1,275,814 Peak Vehicles $5,012,178Fringe Benefits $5,620,256 Vehicle-Hours $1,990,417 Vehicle-Miles $218,674 Garages $824,763 Peak Vehicles $8,654,110Services $0Fuel and lubricants $4,870,098 Vehicle-Miles $4,870,098Tires and tubes $451,490 Vehicle-Miles $451,490Other materials and supplies $268,430 Peak Vehicles $3,619,780 Vehicle-Miles $432,400 Garages $703,167 Peak Vehicles $5,023,777Utilities $931,334 Peak Vehicles $931,334Casualty and Liability Costs $436,803 Vehicle-Miles $4,894 Garages $1,571,471 Vehicle-Miles $2,013,168Taxes $0Miscellaneous Expenses $283,439 Peak Vehicles $283,439Total Operating Expenses $20,101,695 $9,004,560 $969,813 $5,589,988 $35,666,056

Non-Vehicle Maintenance General AdministrationVehicle MaintenanceVehicle Operations

Expense Object Vehicle-Hours Vehicle-Miles Peak VehiclesOperators salaries and wages $8,426,462 $0 $0Other salaries and wages $464,959 $2,957,560 $1,275,814Fringe Benefits $5,620,256 $1,990,417 $824,763Fuel and lubricants $0 $4,870,098 $0Tires and tubes $0 $451,490 $0Other materials and supplies $0 $3,619,780 $971,597Utilities $0 $0 $931,334Casualty and Liability Costs $0 $2,008,274 $0Miscellaneous Expenses $0 $0 $283,439

Total Operating Expenses $14,511,677 $15,897,619 $4,286,947

FY2013 Units of Service 428,338 6,415,599 131

Unit Cost (operating expenses only) $33.88 $2.48 $32,725

FULL ALLOCATION

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provision of service (e.g., bus operator and mechanic wages and fringe benefits, fuel, spare parts, transportation and vehicle maintenance supervision). Direct costs are typically used to assess the near-term cost impact of implementing new services.

Based on the fully allocated cost model, direct unit costs were developed by summing the costs attributed to vehicle-hours and vehicle-miles only ($14,511,677 and $15,897,619, respectively), then dividing by ABQ RIDE’s FY 2013 annual vehicle-hours and vehicle-miles (394,904 hours and 6,415,599 miles) to produce an average direct cost of $33.88 per vehicle-hour and $2.48 per vehicle-mile.

ART Fare Collection, Station and Guideway Expenses

The final component of the ART Project’s O&M costs are expenses associated with fare collection and enforcement, security, and station maintenance that ABQ RIDE does not currently directly incur. ART station-related costs include annual costs for ticket vending machine (TVM) cash fare collection requirements and TVM equipment maintenance, security, fare monitoring, shelter maintenance, including cleaning and trash removal 350 days per year (every service day), and electrical components maintenance and supplies. Guideway expenses are included for median maintenance and traffic signal maintenance. When applicable, costs from other agency departments for like-kind services were used to estimate the annual impact of the ART stations. Labor associated with security monitoring, TVM cash collection and servicing, on-board fare enforcement, median maintenance, and shelter repair was also estimated and included in the cost estimates based on the assumptions below. These additional ART annual O&M costs (2015 dollars) are presented in Table 12.

• Salaries and Wages: includes Security Officers for on-board fare enforcement and station security and four Signs and Marking Workers (to clean stations); this also includes the indirect overhead ABQ RIDE pays the City on all wages.

• Fringe Benefits: includes FY15 rates for retirement, employee benefits, and FICA.

• Utilities: Includes cellular wireless access and electricity at each station.

• Other Materials and Supplies: includes cash collection for TVMs, TVM maintenance costs and repairs, arrival signage supply/repair costs, smart phone payment capability annual fees, and maintenance of medians.

Table 12: Estimated Additional ART Station Unit Costs (2015 dollars) Expense Object Annual Costs Salaries and Wages $515,306 Fringe Benefits $202,789 Utilities $18,237 Other materials and supplies $215,014

Total $951,346

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Fully Allocated Cost and Direct Cost Results For the purposes of the ART Project planning and design, fully allocated costs were estimated to reflect the long-term costs (Horizon Planning Year, 2040) associated with operating and maintaining a BRT system. The fully allocated O&M cost estimate reflects an assumption that as ABQ RIDE’s BRT system matures and evolves over the long term, additional administrative staff and expenses would be incurred.

Direct costs were also estimated to reflect the near-term costs (Opening Year, FY 2018) necessary to operate and maintain the ART system. In the near-term, ABQ RIDE will not need any additional administrative staff to support the ART operations (i.e., no additional staff for marketing, service planning, legal, IT, payroll, finance, management, etc.). Existing agency resources will be sufficient to provide all administrative and support functions for the ART Project. Through the remainder of this analysis, annual O&M estimates are presented as Direct Costs (2018) and Fully Allocated Costs (2040).

Table 13 presents the annual O&M cost estimates for the ART service. All costs have been escalated to 2016 dollars based on the annual inflation rates shown previously in Table 8.

Table 13: ART Project O&M Cost Estimate (FY 2016$)

Total Annual O&M Cost (2016 $)

FY 2013 ABQ RIDE Unit Costs (2016$)

Vehicle-Hrs Vehicle-Miles Peak Vehicles Direct Cost Fully Allocated

$34.87 $2.55 $33,682 -2018 -2040

ART Service 71,469 1,069,478 15 Cost by Variable (2016$) $2,492,191 $2,729,882 $505,232 $5,222,073 $5,727,306

Fare Collection, Station, Guideway O&M Cost (2016$) $979,172 $979,172 Total $6,201,245 $6,706,477

Note: Direct Cost (2018) estimate represents an assumption that administrative activities and costs for the ART Project will be absorbed within ABQ RIDE’s existing staff and budget. Fully Allocated Cost (2040) estimate reflects an assumption that as the ABQ RIDE’s BRT System evolves and expands over the long term, additional administrative staff and expenses will be incurred by the agency.

4.3.2 Net Impact of Implementing the ART Project Operating Plan This section summarizes the net impact of implementing the ART Project’s Operating Plan. Per FTA Guidance, the net impact analysis for Small Starts Streamlined Local Financial Assessment compares the cost to implement the Operating Plan in 2016 dollars to ABQ RIDE’s adopted FY 2016 system-wide operating budget (included in Appendix B).

Based on the information provided in prior sections, implementation of the ART Project will result in a gross annual operating cost increase of $6.2 million (2016 dollars) in Direct Costs or a gross increase of $6.7 million (2016 dollars) in Fully Allocated Costs.

The O&M Cost Model was used to estimate the financial impact of eliminating duplicate services in the corridor (Rapid Ride services). As shown in Table 14, elimination of the duplicate service will result in an O&M cost savings of $4.0 million (2016 dollars) in Direct Costs or by $4.4 million (2016 dollars) in Fully Allocated Costs.

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Table 14: Impact of Eliminating Duplicate Service (Rapid Ride Services) (FY 2016$)

Total Annual O&M Cost (2016 $)

FY 2013 ABQ RIDE Unit Costs (2016$)

Vehicle-Hrs Vehicle-Miles Peak Vehicles Direct Cost Fully Allocated

$34.87 $2.55 $33,6826 -2018 -2040

Duplicate Services -54,567 -820,829 -12 Cost by Variable (2016$) ($1,902,803) ($2,095,196) ($404,186) ($3,997,999) ($4,402,185)

Total ($3,997,999) ($4,402,185)

As shown in Table 15, the net impact of implementing the ART Project’s Operating Plan is estimated to be $2.2 million (2016 dollars) in Direct Costs or $2.3 million (2016 dollars) in Fully Allocated Costs. According to ABQ RIDE’s adopted FY 2016 budget, system-wide annual operating costs are $47.6 million (2016 dollars). Implementing the ART Project would result in a 4.6 percent increase (direct costs) or 4.8 percent increase (fully allocated costs) compared to ABQ RIDE’s FY 2016 Budget.

Table 15: Impact of Implementing the ART Project Operating Plan (2016$)

Total Annual O&M Cost (2016 $)

Peak Vehicles

Annual Bus Hours

Annual Bus Miles

Direct Cost - 2018

Fully Allocated -

2040 ART Project ART Service 15 71,469 1,069,479 $6.20 $6.71 Proposed Local Bus Changes Eliminate Duplicate Corridor Service -12 -54,567 -820,829 ($4.00) ($4.40) Net Impact 3 16,902 248,649 $2.20 $2.30

FY 2016 System-wide O&M Costs $47.62 $47.62 Percent Increase 4.63% 4.84%

Note: Direct Cost (2018) estimate represents an assumption that administrative activities and costs for the ART Project will be absorbed within ABQ RIDE’s existing staff and budget. Fully Allocated Cost (2040) estimate reflects an assumption that as the ABQ RIDE’s BRT System evolves and expands over the long term, additional administrative staff and expenses will be incurred by the agency.

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4.4 System-wide Operating Costs and Revenues Table 16 summarizes ABQ RIDE’s adopted FY 2016 budget and projected operating costs and service levels over the FY 2017 to FY 2019 period, including an assumption that the ART Project will begin revenue service in fall 2017 (FY 2018). System-wide cost increases over the FY 2017 to FY 2019 period reflect annual cost growth rate assumptions used by the City of Albuquerque’s Department of Finance and Administrative Department (DFAS), Budget Office, as part of its annual five-year budget look-ahead planning process. Additionally, as indicated in the table, the projected net cost impact of implementing the ART Project’s Operating Plan in fall 2017 will be approximately $2.3 million (2018 dollars) and the cost of first full year of operations will be approximately $2.4 million (2019 dollars).

Table 16: FY 2016 to FY 2019 System-wide Operating Costs and Service Levels (YOE $, in millions)

Operating Expenses 2016 2017 2018 2019 Labor and Fringes $33.10 $34.00 $34.98 $36.03 Services $0.64 $0.64 $0.64 $0.64 Fuel $5.56 $5.56 $5.68 $5.87 Parts, Materials and Supplies $2.94 $2.94 $2.94 $2.94 Utilities $1.19 $1.19 $1.19 $1.19 Casualty and Liability $3.35 $3.44 $3.55 $3.61 Other (Travel) $0.85 $0.85 $0.85 $0.85

Existing System-wide Operating Expenses $47.62 $48.61 $49.83 $51.13 Net Impact of ART Operating Plan

ART Operating Plan $2.30 $2.37 Total Annual Expenses $47.62 $48.61 $52.14 $53.50

Annual Change 2.1% 7.3% 2.6% Annual Service Levels Bus

Revenue Miles 5,427,924 5,427,924 4,812,301 4,607,094 Revenue Hours 400,419 400,419 359,494 345,582

ART Revenue Miles 802,109 1,069,479 Revenue Hours 53,602 71,469

Paratransit Revenue Miles 1,849,228 1,849,228 1,849,228 1,849,228 Revenue Hours 112,228 112,228 112,228 112,228

System-wide Revenue Miles 7,277,152 7,277,152 7,463,638 7,525,801 Revenue Hours 512,647 512,647 525,324 529,549

Note: totals may not match due to rounding

Table 17 summarizes ABQ RIDE’s adopted FY 2016 budget and projected system-wide operating revenues over the FY 2017 to FY 2019 period. As shown in the table, the two primary sources of operating revenue are the City of Albuquerque’s General Fund Subsidy, which is allocated annually as part of the overall City budget process, and operating assistance provided through the Transportation Infrastructure Tax. The financial analysis reflects the following assumptions:

• Operating Revenues: to be conservative, the financial plan assumes no growth in annual revenue from operations (passenger fares, special events, contract revenues, and advertising).

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• Transportation Infrastructure Tax Operating Assistance: The financial plan assumes Infrastructure Tax funding will increase 2 percent per year, which is less than the 6 percent average annual increase which occurred over the FY 2005 to FY 2015 period.

• General Fund Subsidy: The financial plan reflects an assumption that the remaining funding required to cover annual operating costs will be covered through the City’s annual budget process for allocating funds to ABQ RIDE. Historically, the level of general fund subsidy varies from year to year based on funding available from other sources and changes in annual operating costs. Over the FY 2005 to FY 2014 period, the General Fund Subsidy increased an average of 4 percent per year. Finally, the City’s five year budget look-ahead planning process includes an increase in ABQ RIDE operating funding associated with the ART Project.

Table 17: FY 2016 to FY 2019 System-wide Operating Revenues (YOE $, in millions)

Fiscal Year 2016 2017 2018 2019 Operating Revenue

Passenger Fares $4.27 $4.27 $4.27 $4.27 Special Events $0.01 $0.01 $0.01 $0.01 Contract Revenues $7.33 $7.33 $7.33 $7.33 Advertising $0.33 $0.38 $0.38 $0.38

Subtotal Operating Revenue $11.92 $11.97 $11.97 $11.97 Non-Operating Revenue

Local Assistance - General Fund Subsidy $22.28 $22.95 $26.21 $27.29 Local Assistance - Transportation Infrastructure Tax $13.42 $13.69 $13.96 $14.24

Subtotal Non-Operating Revenue $35.70 $36.63 $40.16 $41.53 Total Revenues $47.62 $48.61 $52.14 $53.50 Annual Change 2.1% 7.3% 2.6%

Note: totals may not match due to rounding

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5 Financial Health Analysis This section provides a summary of the Project’s capital cash flow and ABQ RIDE’s system-wide operating and maintenance cash flow to document the financial capacity to implement the ART Project and operate and maintain the existing transit system. This section also describes how ABQ RIDE would address FTA’s two financial risk sensitivity tests: a 15 percent increase in the ART Project’s capital costs and a 12.5 percent increase in system-wide operating costs. Finally the City of Albuquerque’s current ratio (current assets divided by current liability) for the last three fiscal years is summarized.

5.1 Cash Flow Analysis Tables 18 and 19 summarize the ART Project’s capital uses and sources and ABQ RIDE’s system-wide operating and maintenance uses and sources through the ART Project’s first full year of the operations. As shown in the tables, based on the engineering completed to date, and the assumptions described above, ABQ RIDE has a reasonable plan to fund the construction of the ART project and cover projected system-wide O&M costs through the first full year of operations.

Table 18: The ART Project Capital Cost and Revenue Summary (YOE $, in millions)

2014 2015 2016 2017 Total Capital Costs

The ART $1.9 $11.3 $50.3 $62.7 $126.2 Capital Revenues Beginning Balance $18.7 $18.7 Small Starts $69.0 $69.0 Other Federal Funds

FTA Section 5309 (committed) $1.5 $1.5 Flex (CMAQ/STPU) (committed) $5.1 $5.1 FTA Section 5307 (committed) $8.1 $8.1 Flex (CMAQ/STPU) (budgeted) $7.7 $7.7 FTA Section 5307 (budgeted) $6.0 $6.0 FTA Section 5339 (budgeted) $3.2 $3.2

Local Local Match FTA Section 5309 (committed) $0.4 $0.4 GRT Revenue Bonds (committed) $6.1 $6.9 $13.0 GO Bonds (committed) $4.1 $4.1 Transportation Infrastructure Tax (committed) $6.0 $6.0 Bernalillo County (planned) $1.0 $1.0 GO Bonds: Broadband (committed) $1.0 $1.0

Total Revenues $1.9 $11.3 $69.0 $62.7 $126.2 Ending Balance $0.0 $0.0 $18.7 $0.0 $0.0

Note: totals may not match due to rounding

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Table 19: System-wide O&M Uses and Sources Summary FY 2016 to FY 2019 (YOE $, in millions)

Operating Expenses 2016 2017 2018 2019 Labor and Fringes $33.1 $34.0 $35.0 $36.0 Services $0.6 $0.6 $0.6 $0.6 Fuel $5.6 $5.6 $5.7 $5.9 Parts, Materials and Supplies $2.9 $2.9 $2.9 $2.9 Utilities $1.2 $1.2 $1.2 $1.2 Casualty and Liability $3.3 $3.4 $3.6 $3.6 Other (Travel) $0.8 $0.8 $0.8 $0.8

Existing System-wide Operating Expenses $47.6 $48.6 $49.8 $51.1 Net Impact of ART Operating Plan

ART Operating Plan $2.3 $2.4 Total Annual Expenses $47.6 $48.6 $52.1 $53.5

Operating Revenue

Passenger Fares $4.3 $4.3 $4.3 $4.3 Special Events $0.0 $0.0 $0.0 $0.0 Contract Revenues $7.3 $7.3 $7.3 $7.3 Advertising $0.3 $0.4 $0.4 $0.4

Subtotal Operating Revenue $11.9 $12.0 $12.0 $12.0 Non-Operating Revenue

Local Assistance - General Fund Subsidy $22.3 $22.9 $26.2 $27.3 Local Assistance - Transportation Infrastructure Tax $13.4 $13.7 $14.0 $14.2

Subtotal Non-Operating Revenue $35.7 $36.6 $40.2 $41.5 Total Revenues $47.6 $48.6 $52.1 $53.5 Ending Balance $0.0 $0.0 $0.0 $0.0

Note: totals may not match due to rounding

5.2 Financial Risk Sensitivity Tests The following approaches are available to ABQ RIDE to address potential financial risk sensitivity tests:

• Potential 15% capital cost increase: Working with the existing City of Albuquerque financial process, including a capital project clean-up bill, and based on prior major capital infrastructure project experience, the potential 15 percent capital cost increase (approximately $19 million) would be addressed with available fund balance from interest earnings and/or through the use of unallocated proceeds from other capital projects.

• Potential 12.5 percent increase in system-wide O&M costs: If there was a one year spike in O&M costs (equivalent to approximately $6.0 million), ABQ RIDE would work within the existing City budget and finance structure to request a mid-year appropriation from available fund balances and/or existing reserves. For the years following the spike, the City would evaluate options to reduce costs or increase revenues, including analyzing potential fare increases.

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5.3 Audited Financial Statements The City of Albuquerque’s Comprehensive Annual Financial Report (CAFR) for FY 2012, FY 2013, and FY 2014 and additional financial information are included in Appendix B. Based on these CAFRs, the City’s current ratio (current assets to current liabilities) over the last three years was: 2.7 (FY 2012), 2.7 (FY 2013), and 2.5 (FY 2014) and each year shows a positive year end balance for ABQ RIDE.

6 Conclusions ABQ RIDE is applying for FTA Section 5309 Capital Investment Grant funding under the Small Starts Program category for the ART Project. As documented in this report, the accompanying Small Starts Finance Template, Comprehensive Annual Financial Reports, and other components of the Small Starts application, ABQ RIDE has demonstrated that it meets the following conditions required by FTA for eligibility for Small Starts.

• Section 5309 Capital Investment Grant funding request is less than $75 million;

• Total estimated capital cost is less than $250 million; and

• The project includes features that emulate services provided by rail (branded stations, traffic signal priority, short bi-directional headways, level boarding at stations, off-vehicle ticket vending).

Additionally, this report indicates that ABQ RIDE is eligible for the streamlined local financial commitment evaluation based on the following:

• The additional operating and maintenance cost to ABQ RIDE for the proposed Small Starts project is less than 5 percent of the adopted FY 2016 system-wide operating cost budget;

• Through a combination of Other Federal and local funds, ABQ RIDE has approximately 68 percent of the non-Section 5309 Capital Investment Grant funds committed to the Project. Further, an additional 30 percent of funds are currently budgeted for the Project and will be considered committed by the end of 2015 following the remaining administrative steps with the MPO and FTA;

• ABQ RIDE has the financial capacity to fund the Project’s capital costs and to operate and maintain the existing transit services; and

• ABQ RIDE’s financial health is strong as documented in the three years of audited financial statements, and an existing approach with the City’s budget and finance process to address potential project capital and system-wide O&M cost increases.

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