Agenda - 04-20-2017 - 1 - Discussion Regarding the Draft Durham – Orange Light Rail Cost Sharing Agreement and Draft Orange County Transit Plan

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2 Financial Scenarios Davenport & Company has conducted a comparative analysis of four scenarios produced by GoTriangle (Attachment B). The first is Scenario C which Davenport & Company evaluated and presented during the April 4 meeting of the Board of County Commissioners. The second scenario is Scenario M. This represents the financial model currently included in the Draft Orange County Transit Plan. It distributes eighty-two percent (82%) of the capital cost of the light rail project to Durham County and eighteen percent (18%) of the capital cost to Orange County. For operating costs, it distributes eighty percent (80%) of the operating cost to Durham County and twenty percent (20%) of the operating cost to Orange County. However, this scenario produced low cash balances for Orange County with a minimum cash balance of approximately $1 million in 2030. To increase available cash balances in Orange County, additional scenarios were developed. The primary difference between these scenarios and Scenario M is the application of approximately $18 million in outside revenue or approximately two percent (2%) of the total local share. This outside revenue is used to offset Orange County's contribution to the project. The outside revenue is expected to be generated through the Funding and Community Collaborative group that is working with corporate and institutional partners to secure private monetary and in- kind donations. GoTriangle reports that most of the $18 million that is applied in the financial model would be generated by right of way donations. The project budget included funding to purchase right of way, so if those funds are no longer needed because they are donated, the local share of the project cost can be reduced. The third scenario, Scenario Z, attributes eighty-two percent (82%) of the capital cost of the light rail project to Durham County, sixteen percent (16%) to Orange County, and two percent (2%) to outside funding. For operating costs, it distributes eighty-one percent (81%) to Durham County and nineteen percent (19%) of the operating cost to Orange County. This scenario also models Durham County's cash balances if it contributed twenty percent (20%) of the capital cost to the commuter rail project. Due to the infusion of outside resources, this scenario increases Orange County's cash balances to a minimum cash balance of $4.9 million in 2019 and produces higher cash balances in subsequent years of over $22 million. Scenario EE distributes eighty-one and one half percent (81.5%) of the capital cost of the light rail project to Durham County, sixteen and one half percent (16.5%) to Orange County, and two percent (2%) to outside funding. For operating costs, it distributes eighty percent (80%) to Durham County and twenty percent (20%) of the operating cost to Orange County through 2036 and eighty-one percent (81%) to Durham County and nineteen percent (19%) of the operating cost to Orange County through the end of the debt repayment. This model increases Orange County's cash balances to a minimum of $4.4 million in 2019 and higher cash balances in subsequent years of over $16 million. Risk Management The Cost Share Agreement specifies that Orange County's share of the capital cost of the project is $149.5 million which represents an $18 million reduction from Scenario M. The Cost Share Agreement also includes provisions to manage risks associated with a long term project. The uncertainty related to State and Federal funding is addressed in Paragraph 13 which states that if Federal or State funds are not available or are reduced in an amount that would require additional local funds, the parties to the agreement will meet to discuss responses. Those