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98 <br /> DURHAM-ORANGE LIGHT RAIL TRANSIT PROJECT—FINANCIAL RISKS AND MITIGATION STRATEGIES <br /> APRIL 2017 <br /> There are several financial risks to the 2017 County Transit Plans (Plans)that could arise at different <br /> times during the period of the Plans.There are also risks and strategies to mitigate those risks that are <br /> specific to projects in the plan. This document describes the primary downside risks to the Durham- <br /> Orange LRT Project that may emerge, their potential impacts on the D-O LRT Project,the schedule on <br /> which the parties would need to respond, and the options and timeline for mitigating the risks. <br /> Financial Risks: Mitigation Strategies: <br /> 1. Federal funding A. Contingency in the project budget <br /> 2. State funding B. Design changes to reduce project cost <br /> 3. Local sales tax forecast C. Savings from property donations <br /> 4. Cost overruns D. Cost transfer to project partners <br /> 5. Schedule delays E. New revenue <br /> Financial Risks <br /> This section focuses on the potential impact of financial risks to the delivery of the Durham-Orange Light <br /> Rail Transit(D-O LRT) Project.The federal funding risks and local economic growth factors are faced by <br /> all transit agencies seeking to construct major capital projects; the state factors vary according to the <br /> policy environment and funding mechanisms for transit in each state. <br /> 1) Federal Funding—The Plans assume 50%federal funding for the D-O LRT Project through the <br /> Capital Investment Grant (CIG) program. <br /> The President's federal fiscal year(FY) 2018 budget proposal calls for limiting the CIG program to <br /> only those projects that have already received Full Funding Grant Agreements(FFGAs).While <br /> the President issues budget priorities each year,the budget is set by Congress.The elimination <br /> of the CIG program was previously proposed in the House of Representatives budget in 2011, <br /> while the Senate version of the budget retained the program.The final budget retained the CIG <br /> program and funded it at a level of$2 billion per year. Although current federal transportation <br /> law authorizes the New Starts program through 2020, if the FY 2018 federal budget adopted by <br /> Congress funds no new FFGAs, then pursuant to the Cost Sharing Agreement, Durham and <br /> Orange Counties and GoTriangle would convene within fifteen business days and decide <br /> whether to continue advancing the D-O LRT Project at risk. <br /> Without federal funding, Durham and Orange Counties, GoTriangle, and the DCHC-MPO would <br /> not be able to pursue the D-O LRT Project. Although a one-year reduction in CIG program <br /> funding in FY 2018 would not directly affect the D-O LRT Project, it would call into question <br /> whether CIG program funding would be available in future years when the D-O LRT Project is <br /> scheduled to request federal funds. <br /> Federal funding risks could re-emerge (and be addressed) each federal budget year between <br /> 1 <br />