Agenda - 04-27-2017 - 1 - Consideration of the Final Draft Durham – Orange Light Rail Cost Sharing Agreement and Final Draft Orange County Transit Plan

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75 Orange County Transit Plan April 25, 2017 to pay annual debt service, given projected revenue and recurring operating expenses. GoTriangle's total borrowing to The assumed interest rate for the limited obligation bonds is implement both the Durham and Orange transit plans four percent. The bonds will be tax-exempt, and therefore the maintains a minimum net debt service coverage (ratio of Municipal Market Data (MMD) index was utilized in the analysis revenues less operating expenses over annual debt service) of of historical rate movements. It is expected the first series of 1.19x for LOBS intended to be repaid by Tax District Revenues, limited obligation bonds(LOB)will be sold in 2024.Over the last 1.26x for LOBS intended to be repaid by federal grants, and 5-year, 10-year, 15-year and 20-year periods, average rates for 1.07x for the TIFIA loan. The average net coverage ratios for the 7-year MMD have been 1.52 percent, 2.12 percent, 2.46 those same categories of borrowing are 2.28x,3.03x, and 2.04x, percent, and 2.99 percent, respectively. The budgeted rate of respectively. four percent is higher than the average rates over each of those time periods, which supports the reasonableness of the Figure 5.4-2 and Figure 5.4-1 show the net debt service assumption. coverage ratios (DCSR), distinguished by the intended repayment source. Figure 5.4-2 shows DSCR for the LOBS The assumed interest rate for the TIFIA loan is 5 percent. Under intended to be repaid by federal grants. Figure 5.4-3 shows the TIFIA credit program,the TIFIA Loan would have an interest DSCR for the TIFIA loan and LOBS that are intended to be rate approximately equal to the 30-year Treasury rate at the funded by local transit tax revenues. time of the loan closing.To receive that favorable interest rate, minimum credit qualifications are that the loan must be rated Figure 5.4-3 shows the total local transit tax revenue associated investment grade or be subordinate to an investment grade with Durham and Orange counties as well as GoTriangle's total credit. The TIFIA loan is expected to be entered into in 2020. projected debt service for the D-O LRT Project. Even as Over the last 5-year, 10-year, 15-year and 20-year periods, GoTriangle's debt service remains fairly level into the future, average rates for the 30-year Treasury have been 3.03 percent, revenues available to pay debt service are projected to 3.66 percent, 4.00 percent, and 4.54 percent, respectively.The continue growing. assumed 5 percent rate in this plan is higher than the average rates over each of those time periods. Given the Plan's focus on significantly increasing transit service, a key measure of financial health is GoTriangle's ongoing ability Final Page 51 of 65