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100 <br /> Baseline forecast for the half-cent sales tax equates to an average annual rate of 4.2 percent in <br /> the two counties—more than a full percentage point below the 10-year average for the one- <br /> cent sales and use tax for the two counties noted above.The Moody's Baseline forecast equates <br /> to an average annual rate of 4.33 percent in Durham County and 3.71 percent in Orange County. <br /> In accordance with Federal Transit Administration (FTA) requirements, GoTriangle and our <br /> financial advisor have also evaluated scenarios using the Downside forecast, to understand the <br /> effects and potential mitigations that may be required to plan for less than expected sales tax <br /> growth.The Moody's Downside forecast equates to an average annual rate of 3.14 percent in <br /> Durham County and 3.00 percent in Orange County. <br /> The sales tax forecast affects GoTriangle's ability to borrow money to fund construction of the <br /> D-O LRT Project. In addition to sensitivity analyses on the sales tax growth rate that GoTriangle <br /> must complete for the FTA, a sensitivity analysis on the local sales tax growth rate to evaluate <br /> GoTriangle's ability to make debt repayments for the life of each loan will be needed in order to <br /> secure financing at favorable terms. <br /> With other financial planning assumptions held constant, planning for the Moody's Downside <br /> forecast creates a cash shortfall of approximately$100 million (year of expenditure, or YOE) <br /> toward the end of the construction period for the D-O LRT Project, because the lower sales tax <br /> growth rates would limit GoTriangle's ability to borrow funds needed for construction. <br /> To address the potential funding shortfall and strengthen GoTriangle's ability to borrow funds, <br /> GoTriangle is pursuing new sources of revenue, including in-kind contributions of right-of-way <br /> from property owners along the alignment, private grants, a private philanthropic campaign, <br /> and other federal funds. (These activities are described in more detail in the Mitigation <br /> Strategies section below.) In addition, GoTriangle is preparing a set of cost mitigation strategies <br /> that could be used to reduce the cost of the project, reducing the amount of additional funds <br /> required. (This is also described in more detail in the Mitigation Strategies section below.) In <br /> addition to the mitigation strategies identified in this document, another potential course could <br /> be that one or more local governments could choose to pledge other future revenues to <br /> increase the D-O LRT Project's borrowing capacity. <br /> 4) Cost Overruns—This risk remains for all capital projects in the Plans; however, it varies based on <br /> where each project is in its development stage.The D-O LRT Project has completed the Project <br /> Development phase and is at a 30% level of engineering design. At this level of design, the <br /> project budget includes a commensurate level of contingency to guard against cost overruns as <br /> described in part A of the Mitigation Strategies section below. Strategies to mitigate cost <br /> overruns beyond the project budget are described in parts B through F of the Mitigation <br /> Strategies section below. <br /> 5) Schedule Delays—Schedule risk is particularly important for large multiyear programs due to <br /> the cost of inflation.The cost associated with a one-year construction schedule delay for the <br /> D-O LRT Project is approximately$60 million YOE, which would not be offset by an increase in <br /> 3 <br />