Agenda - 05-02-2017 - 8-a - Minutes

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3 1 counties; some non-financial changes to the transit plan; and a memo and analysis of the 2 possible expansion bus service that could be afforded, if funds remain. 3 4 5 BACKGROUND: 6 The Orange County Transit Plan governs the allocation of transit taxes and fees to various 7 transit services. This Plan updates the original Bus and Rail Investment Plan was adopted in 8 2012. The Plan allocates funding to bus services, the Durham-Orange Light Rail project, bus 9 capital projects, an intercity Amtrak train station in Hillsborough, and a bus rapid transit project 10 in Chapel Hill. The Plan is funded using four dedicated revenue sources: the Article 43 half cent 11 sales tax, the Article 50 five percent (5%) vehicle rental tax, the Article 51 three dollar ($3) 12 increase to the GoTriangle regional vehicle registration fee, and the Article 52 seven dollar ($7) 13 Orange County vehicle registration fee. 14 15 The 2017 update to the Orange County Transit Plan integrates changes to funding assumptions 16 based on limitations placed on transit projects by the State and Federal governments. These 17 changes reduced federal funding for bus capital projects, reduced State funding for the North- 18 South Bus Rapid Transit (BRT) project, and reduced State funding for the Durham-Orange 19 Light Rail Project (DO-LRT). 20 21 The most notable reduction in the Plan is the amount of State funds dedicated to the Durham- 22 Orange Light Rail Project. The 2012 Plan assumed a 25% State share. Based on legislative 23 changes, the 2017 Plan includes a 10% State share. 24 25 External funding limitations placed on the light rail project resulted in a series of reports to the 26 Board of Orange County Commissioners. In November 2016, GoTriangle reported that the 27 limitations resulted in a revenue shortfall in the light rail project. Based on this report, the Board 28 approved a memorandum of understanding in December to work with GoTriangle to identify 29 alternative funding sources. The Board also directed the County Manager to engage a 30 consultant to conduct an independent review of the financial model for the light rail project. 31 Later in December, GoTriangle reported project financing would be restructured to prevent the 32 need for any additional local funds to support the project in a base case scenario. 33 34 In February 2017, GoTriangle received direction from the Federal Transit Administration that 35 prescribed an April 30 deadline for updating the Orange County Transit Plan and the Cost 36 Sharing Agreement between Orange and Durham counties. During this time, GoTriangle also 37 created a new financial model that delineates revenue, expenditure, debt service coverage and 38 cash flow by county. The model also allows the counties to evaluate different cost share 39 scenarios between Durham and Orange County for the D-O LRT project. The new financial 40 model revealed that the dedicated Orange County transit revenues could not support the light 41 rail cost share percentages contained in the 2012 Bus and Rail Investment Plan. As a result of 42 the new financial information and changes to the project scope, Durham and Orange counties 43 are in the process of renegotiating the cost share agreement that defines the financial 44 responsibilities of each County. 45 46 On April 4, 2017 the Board of Orange County Commissioners received a report on the 47 independent financial analysis conducted by Davenport & Company. The presentation clarified 48 the total cost of the project, financing mechanisms, and potential financial risks including credit, 49 cash flow, and any potential budget implications. The presentation also highlighted significant