Agenda - 12-08-2011 - Attachment 2

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Attachment 3 Triangle Transit Responses to Orange County Staff Questions on Bus and Rail Plans in Orange County November 7, 2011 1. How is the model fiscally conservative on both the revenue and expense side? As a point of reference, this question was briefly discussed in Triangle Transit's June 7, 2011 presentation to the Orange BoCC. We shared the following information. On the expense side: • Construction costs and right-of-way acquisition costs for rail have a 30% contingency added on top of base costs. • Capital plans add a general unspecified contingency of 4.6% above and beyond the 30% in the previous item • Inflation is estimated using long-term growth rates from the Federal Congressional Budget Office (CBO) and Office of Management and Budget (OMB), but we have added an additional 0.5% inflation per year to be more conservative on cost growth. On the revenue side: • Plan maintains a minimum of $3 million cash balance throughout life of the plan (about 60% of initial year sales tax revenue) while running buses, planning for and building rail The plan uses along-term annual growth rate of 3.6%, which is below the historical trend for Orange County, which has grown at 4.0%. Economist Karl Smith from UNC School of Government has projected long-term economic growth for Orange County to be as much as 4.5% per year. • The plan assumes no interest on cash balances; there would be interest during implementation • The plan is tested against debt service coverage ratios (DSCRs) that have been accepted by bond markets to loan money for transit projects in other metro areas 2. Which bus routes are assumed to be fare free and which ones are not? This item was maintained by former Orange County Transportation Planner Mila Vega in the spring and summer of 2011. It is attached to the end of this document as Exhibit A. All the routes. assumed to be operated by Chapel Hill Transit were assumed to be fare free, and all routes assumed to be operated by Triangle Transit were assumed to have a cost recovery of 15% from the farebox. Since the majority of services were assumed to be operated by Chapel Hill Transit, the average fare recovery for all Orange County bus services in the financial model is 3.5%. In Durham and Wake counties, the fare recovery is assumed to average 15% since there are no fare free routes.