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Final Report - Honolulu Rail Transit Financial Plan Assessment

Final Report - Honolulu Rail Transit Financial Plan Assessment

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Published by Craig Gima
Complete final report of the Honolulu Rail Transit Financial Assessment ordered by Gov. Linda LIngle.
Complete final report of the Honolulu Rail Transit Financial Assessment ordered by Gov. Linda LIngle.

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Published by: Craig Gima on Dec 03, 2010
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11/08/2011

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Table of Contents
Letter of TransmittalExecutive Summary
1.0INTRODUCTION...............................................................................................................................3
2.0PLANNEDVERSUSACTUALCOSTSFORRAILTRANSITPROJECTS.................................7
2.1
C
ASE
S
TUDIES
.....................................................................................................................................................7
2.2
L
ESSONSFOR
H
ONOLULU
..............................................................................................................................10
 2.2.1CapitalExpenditureForecasts..........................................................................................................10
 2.2.2RidershipLevelProjections.................................................................................................................11
 2.2.3InitialProjectBias..................................................................................................................................11
 2.2.4OperatingandMaintenanceExpenditurePredictions...........................................................11
 2.2.5ServiceLevels............................................................................................................................................12
 2.2.6RidershipandFareboxRevenue.......................................................................................................13
 2.2.7TimeBetweenPredictionandMeasurement..............................................................................13
2.3
CASESTUDY
C
ONCLUSIONS
............................................................................................................................15
3.0FEDERALFUNDING......................................................................................................................16
3.1
5307
U
RBANIZED
A
REA
F
ORMULA
F
UNDING
...........................................................................................16
3.2
5309
F
IXED
G
UIDEWAY
M
ODERNIZATION
F
UNDS
...................................................................................17
3.3
5309
B
US
D
ISCRETIONARY
F
UNDS
.............................................................................................................18
3.4
F
EDERAL
F
UNDINGCONCLUSION
.................................................................................................................20
4.0GENERALEXCISETAX(GET)FORECAST...............................................................................22
4.1
P
ARSONS
B
RINCKERHOFF
F
INANCIAL
P
LAN
GET
F
ORECAST
................................................................22
4.2
S
TATE
GET
F
ORECASTS
.................................................................................................................................23
4.3
CBRE

E
CONOMIC
A
NALYSIS
........................................................................................................................23
4.4
CBRE
GET
F
ORECAST
...................................................................................................................................27
4.5
GET
F
ORECAST
A
NALYSIS
C
ONCLUSIONS
..................................................................................................29
5.0THEFINANCIALMODEL.............................................................................................................30
5.1
O
VERVIEW
........................................................................................................................................................30
5.2
S
TRUCTUREAND
K
EY
E
LEMENTS
.................................................................................................................31
5.3
M
ODEL
O
UTPUTS
............................................................................................................................................31
5.4
C
RITICAL
A
SSUMPTIONS
,
D
IFFERENCESWITH
F
INANCIAL
P
LAN
M
ODEL
,
AND
R
ATIONALE
............34
5.5
F
EDERAL
F
UNDSAND
GET
I
NTEGRATIONINTOTHE
M
ODEL
.................................................................36
5.6
C
APITAL
C
OSTS
,
O&M,
AND
M
AJOR
R
ENEWALAND
R
EPLACEMENT
....................................................37
5.7S
CENARIOS
........................................................................................................................................................38
5.8
O
UTPUTSAND
I
NTERMEDIATE
F
INDINGS
...................................................................................................40
5.9
F
INANCIAL
M
ODEL
C
ONCLUSIONS
...............................................................................................................47
6.0OPERATINGPLANREVIEW.......................................................................................................49
6.1
I
NTRODUCTION
................................................................................................................................................49
6.2
B
USAND
R
AIL
O
PERATING
C
OSTS
...............................................................................................................49
6.3
D
ECREASEIN
B
US
O
PERATING
S
PEED
.........................................................................................................51
6.4
F
ARE
I
NCREASE
P
LAN
.....................................................................................................................................52
 
Financial Plan AssessmentFeasibility and Fiscal Implications of theHonolulu Rail Transit Project
December 1, 2010
Page 2
6.5
R
AIL
L
INE
“L
ENGTH
”......................................................................................................................................53
6.6
O
PERATING
P
LAN
C
ONCLUSIONS
.................................................................................................................55
7.0FISCALCAPACITY.........................................................................................................................57
7.1O
VERVIEWOF
A
NALYSISAND
M
ETHODOLOGY
.........................................................................................57
7.2B
ASELINE
S
PENDINGAND
P
LANNED
C
APITAL
I
NVESTMENTS
...............................................................57
7.3
P
UBLIC
P
ENSIONS
/O
THER
P
OST
R
ETIREMENT
B
ENEFITS
.....................................................................58
7.3.1Pensions.......................................................................................................................................................59
7.3.2OtherPost-EmploymentBenefitsandtheCityandCountyGeneralFund.....................60
7.4
T
HE
EPA
W
ASTEWATER
C
ONSENT
D
ECREE
.............................................................................................61
7.5
D
EBT
C
APACITYAND
R
EVENUE
S
TREAMS
..................................................................................................62
7.6
F
ISCAL
C
APACITY
C
ONCLUSIONS
..................................................................................................................63
8.0SUMMARYOFFINDINGS............................................................................................................64
 APPENDIX1–IMGFINANCIALMODELASSUMPTIONS...........................................................66
 APPENDIX2–BASECASE.................................................................................................................67
 APPENDIX3–BESTCASE.................................................................................................................71
 APPENDIX4–DOWNSIDECASE.....................................................................................................76
 APPENDIX5–RAILPROJECTCASESTUDIES.............................................................................82
R
AIL
T
RANSIT
P
ROJECTS
W
ITH
M
AJOR
N
EGATIVE
V
ARIANCES
F
ROM
P
LAN
.............................................82
O
THER
C
ASE
S
TUDIES
............................................................................................................................................86
 AtlantaMARTANorthLineExtension......................................................................................................86
CTABrownLineCapacityExpansionProject........................................................................................87 
DenverRegionalTransportationDistrict:FasTracks.......................................................................88
Hudson-BergenLightRailProject..............................................................................................................89
LosAngelesCountyMetropolitanTransportationAuthority.........................................................90
Minneapolis/SaintPaulHiawathaCorridorLightRailTransitProject....................................93
NewJerseyTransitCorporationRiverLine............................................................................................95 
SanFranciscoBARTColmaStationandSFO/MillbraeExtensions..............................................95 
PuertoRicoTrenUrbanoHeavyRailProject........................................................................................98
SoundTransitCentralLink(Seattle).........................................................................................................99
SonomaMarinAreaRailTransitProject.............................................................................................100
 APPENDIX6—FISCALCAPACITYGRAPHASSUMPTIONS.....................................................102
 APPENDIX7–ENDNOTES...............................................................................................................103
 
 
Financial Plan AssessmentFeasibility and Fiscal Implications of theHonolulu Rail Transit Project
December 1, 2010
Page 3
1.0 Introduction
Infrastructure Management Group, Inc. (“IMG”), in conjunction with the Land Use and EconomicConsulting Group of CB Richard Ellis (“CBRE”) and Thomas A. Rubin, was tasked by the HawaiiDepartment of Transportation to evaluate the proposed Honolulu High-Capacity Transit Corridor project’s (the “Rail Project”) financial plan, including sources and uses of funds, criticalassumptions regarding revenues and costs, the transit system’s post-rail operating plan, and futurefiscal implications for the City and County of Honolulu (“C&C”). In addition, IMG examined thefinancial performance history of other relevant transit rail projects that might provide useful insightsfor Honolulu.The IMG Team’s assessment goes beyond the relatively limited scope of the Federal Transit Administration’s (“FTA’s”) new starts grant approval process, which is directed toward protection of the federal interest and which relies mostly upon the strictures of the Full Funding Grant Agreement (“FFGA”) to limit future federal liabilities and force local governments to bear costoverruns or revenue shortfalls to complete the project as proposed and then to operate it asagreed. Accordingly, the IMG Team used standard infrastructure investor due diligence processessimilar to what bond rating agencies and infrastructure fund managers use to evaluate financialfeasibility. The diagram below summarizes the analytic process.This independent assessment process is also distinguishable from the conceptual financialplanning conducted by the project’s engineer and program manager, which is conducted in support

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