Agenda - 04-04-2017 - 6-b - Davenport & Company Independent Financial Review of Go Triangle Durham-Orange Light Rail Transit Financial Plan

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1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: April 4, 2017 Action Agenda Item No. 6-b SUBJECT: Davenport & Company Independent Financial Review of GoTriangle Durham- Orange Light Rail Transit Financial Plan DEPARTMENT: County Manager's Office ATTACHMENT(S): INFORMATION CONTACT: Davenport Financial Model Review Travis Myren, 919-245-2300 Gary Donaldson, 919-245-2453 Ted Cole, Davenport, Senior VP Mitch Brigulio, Davenport, VP Chazzo Habliston, Davenport, Associate VP PURPOSE: To receive a presentation by Davenport & Company regarding the GoTriangle Durham-Orange Light Rail Transit (D-O LRT) Financial Plan. The presentation will clarify the total costs of the project, the financing mechanisms used to fund the project, and the financial risks associated with the project including credit, cash flow, and any potential budget implications. The cost share and transit tax assumptions used in the presentation are presented for modeling purposes only. They have not been adopted for use in the final Transit Plan. This information is intended to inform the Board's deliberations on the Orange County Transit Plan (formerly the Bus and Rail Investment Plan) scheduled for consideration on April 27, 2017. BACKGROUND: On December 5, 2016, the Board of County Commissioners directed the County Manager to engage a consultant to conduct an independent financial review of the D-O LRT Project and the financial plan used to demonstrate project's financial viability in the context of the Orange County Transit Plan. The County executed an agreement with its financial advisor, Davenport & Company, to review the financial model. Since the initial request to independently review the financial plan, GoTriangle created a new financial model that delineates revenue, expenditure, debt service coverage and cash flow by county. The model also allows the counties to evaluate different cost share scenarios between Durham and Orange County for the D-O LRT project. The cost share that was adopted as part of the 2012 Bus and Rail Investment Plan allocated 77.05% of the capital cost of the project to Durham County and 22.95% of the capital cost to Orange County. Operating costs were allocated on a 76.05% share for Durham County and a 23.95% share for Orange County. The Davenport analysis (attached) uses different cost share assumptions for capital and operating costs in an effort to model the financial implications of using different cost allocations. Cost share discussions between the two counties are ongoing and could produce a different scenario than the one modeled in this analysis.