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27 <br /> 1 those dollars (tax district revenue dollars) every year. He said when considering percentage <br /> 2 growth over a long period of time, one can determine a growth rate that takes the plan from <br /> 3 year one to year 40. He said there is some vulnerability with this model, because a temporary <br /> 4 period of no growth, or reduced growth, would greatly impact this model. <br /> 5 Mitch Brigulio said what year it happens and to what extent such a change may occur is <br /> 6 very important. He said cumulative dollars needed is what is being considered. He said there <br /> 7 may be years with flat or negative growth, but if there have been years prior with greater than <br /> 8 predicted growth, there may be surplus to cover the lower years. <br /> 9 Commissioner Rich referred to page 10, which talks about capital reserves, and said <br /> 10 she looked at a GoTriangle flow chart, which discussed debt service reserves, and an operating <br /> 11 reserve. She asked if the difference between these two reserves could be explained and their <br /> 12 relationship to the cash flow. <br /> 13 Ted Cole said the debt service reserve is specific to those borrowings that are <br /> 14 anticipated to take place, and as part of those individual borrowings, part of what is funded is a <br /> 15 reserve that is set aside in order to make a year's worth of payments if there is a problem. He <br /> 16 said the amount that is set aside is one year's debt service, and if the money is never needed, it <br /> 17 is used at the end of the loan to make the last payment. He said these dollars cannot be used <br /> 18 for any other purpose. <br /> 19 Ted Cole said in the model there is also an operating reserve. <br /> 20 Mitch Brigulio said there is an operating reserve set up in the model, which is essentially <br /> 21 three months worth of Orange County and GoTriangle operations for the system. He said it <br /> 22 does not include the LRT. <br /> 23 Mindy Taylor said the operating reserve is for the system operations and is modeled in <br /> 24 three separate places; a portion is allocated to Durham, Orange, and GoTriangle's own agency <br /> 25 operations, outside of the county plans. <br /> 26 Commissioner Rich asked if the source of the operating reserve could be identified. <br /> 27 Mindy Taylor said it comes from the sales tax. She said the reserve is 25% of the <br /> 28 annual operating expenses, and if there were a shortfall for three months, there would be funds <br /> 29 to cover it. <br /> 30 Commissioner Marcoplos referred to the graphs on page 8 and 9, and said it appears to <br /> 31 show the disappearing orange bars, which could not be seen because of the size of the graph. <br /> 32 He said this is a problem because there is the 82/18 split, which is a part of this thought <br /> 33 process. He said the cash balance for Durham is in relation to their 82%, and the cash <br /> 34 balance for Orange is in relation to its 18%. <br /> 35 Commissioner Marcoplos said there needs to be a way to make this clear on the <br /> 36 website so that the public does not get the wrong impression. <br /> 37 Commissioner Marcoplos referred to the sales tax assumptions table, column b, on <br /> 38 page 7, and said he does not see business cycles there. <br /> 39 Ted Cole said there may well be, and some expectation of business cycles. He said the <br /> 40 process to derive these growth rates was very involved. <br /> 41 Commissioner Marcoplos referred to the line item that notes 30% contingency funds, <br /> 42 which seems to be based on an FTA requirement; but to him this contingency number should <br /> 43 be based on actual estimates on the actual project. <br /> 44 Commissioner Marcoplos said the answer that he originally got back from GoTriangle <br /> 45 was that 20% of the total base cost is allocated contingency, which seems to be saying to him <br /> 46 that excavation, stations, rail installation, etc. are going to have a certain amount of <br /> 47 contingency. He said there is then 10% that is unallocated. He said he is a builder and builds <br /> 48 contingency into his projects as well, and there seems to be no way of dealing with the fact that <br /> 49 if this is a true contingency it may indicate that 5-10% is not needed. He said a 5% contingency <br /> 50 amount would be $120 million, plus any finance costs. He said he is curious to gain a more in <br />