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The Impacts of Increased Phase 2 Dulles Metrorail Construction Costs--FINAL--04272011

The Impacts of Increased Phase 2 Dulles Metrorail Construction Costs--FINAL--04272011

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Published by: Terry Maynard on May 01, 2011
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The Impacts of Increased Phase 2 DullesMetrorail Construction Costs: Toll Road UsersPay Three-Quarters, Huge Public Subsidy forDulles Airport Metrorail Station
An RCA Reston 2020 Committee Paper
April 27, 2011
The Impacts of Increased Phase 2 Dulles Metrorail Construction Costs:Toll Road Users Pay Three-Quarters, Huge Public Subsidy for Dulles AirportMetrorail Station
Prepared by The RCA Reston 2020 Committee April 27, 2011
The growing projected construction costs of Phase 2 of the Metrorail Silver Line linking eastern LoudounCounty and Dulles Airport along the Dulles corridor to West Falls Church has raised serious questionsabout who pays for the increased cost, how those added costs are financed, their potential impact ontraffic diversion to other roads, and whether there may be less expensive alternatives.Based on the current funding agreement among the parties to the Metrorail project parties, Dulles TollRoad (DTR) users will pay for most full project and more than three-quarters of the extra one billiondollars that has been added to the cost of Phase 2 (P2) in the last year. As currently agreed, while thefederal government and state of Virginia agreed to pay fixed amounts, Fairfax and Loudoun counties andthe MWAA Aviation Fund agreed to pay fixed percentages, and the balance is to be paid by tolls fromthe DTR. The addition of one billion dollars to the cost of P2 means the fixed percentage contributorswill up their costs proportionate to the overall cost of the project
about 19%--
while DTR users’ share
will increase more than 27% to about 56% of total project costs. In the end, DTR users pay $752 millionof the one billion dollar P2 cost increase, more than three-quarters of the added cost in increased tolls.
Figure S-1: Funding Commitments & Shares among the Parties to the Dulles Metrorail Project 
   1   6   %    5   %    5   %    1   7   %    4   %    5   3   %    1   6   %    5   %    4   %    1   4   %    4   %    5   6   %    1   6   %    5   %    0   %    0   %    4   %    7   5   % 
   P   e   r   c   e   n   t
% Share by Participant
Old CostNew CostIncrease05001,0001,5002,0002,5003,0003,5004,000
   8   4   6   2   5   2   2   7   5   9   0   0   2   1   5   2 ,   7   6   7   1 ,   0   0   8   3   0   0   2   7   5   9   0   0   2   5   7   3 ,   5   1   9   1   6   1   4   8   00   4   1   7   5   2
   T    h   s   o   u   s   a   n   d   s   o    f   D   o    l    l   a   r   s
Cost by Participant
Old CostNew CostIncrease
iiUpdating the cost and traffic analysis prepared for the Metropolitan Washington Airports Authority(MWAA) by Wilbur Smith Associates (WSA), our analysis indicates:
Virginia and the federal government are unlikely to increase their current combined funding
commitment of about $1.2 billion, and both have become critics of the project’s rising costs.
Fairfax and Loudoun counties together will have to add about $210 million to their existing
commitments to help pay for the Silver Line’s construction, raising their total contribution to
about $1.0 billion.
Tolls on the Dulles Toll Road (DTR) will likely need to increase from the $11.25 in 2047projected by WSA to $15.40 or more, or more than $6.00 in 2010 dollars
—triple today’s full
toll cost--to cover the additional debt servicing costs.
Traffic on the DTR is likely to decrease about 15% over the next 37 years as a result of thehigher tolls, driving more traffic from a growing jobs and residential population onto nearbyroads as well as on to the Silver Line.The $257 million that MWAA has pledged to pay for overall Dulles line construction costs is about one-quarter of the one billion dollars its own staff expects will be the cost of the Dulles modifiedunderground station alone. Given that the station will almost exclusively serve airport clientele and
employees, MWAA’s pledged share
of the cost is extremely inequitable. While the bulk of thedifference will have to be made up by toll increases under the current agreement, this also means thatFairfax and Loudoun counties will be subsidizing the costs of the Dulles Metrorail station.We believe there are at least two additional options for funding the Metrorail construction available toease the burden on DTR riders and local counties in particular.
Charge tolls on the Dulles access highway once Metrorail is operational to the airport. Besideseasing the burden on toll road users, this would encourage the use of Metrorail for airport-bound travelers and employees.
Use MWAA Aviation Account funds to build all Metrorail facilities at the airport. At the veryminimum, this should include funding the difference between any selected station designoption and the least expensive option as originally estimated.We believe these alternative funding sources should be at the center of an alternative MWAA financingstrategy that seeks to share the project costs more equitably while sustaining near full utilization of theDTR. In particular, we believe the 2047 full DTR toll should be reduced from the full toll projected underthe current arrangements to help sustain about 100 million DTR transactions per year
roughly itscurrent pace and essentially full capacity utilization. By our calculations based on the WSA approach, afull toll of about 13.00-$13.50 in 2047 (with similar 10-15% reductions in earlier years) would accomplishthat 100 million transaction per year objective. This toll schedule would leave a roughly $825 millionshortfall in DTR revenues over the 37-year period to be made up by the alternative revenue sources. If project costs continue to rise, those additional deficits would need to be offset by increases in fundingfrom the alternative sources identified about or other funding sources.The growing costs and delays in building the Silver Line are increasingly putting its full completion indoubt. The added billion dollars in construction costs and three-plus billion dollars in MWAA financingcosts over 37 years are not something Fairfax County, Loudon County, or especially their residents andemployees who use the DTR should have to shoulder.
Based on this project’s cost growth, these cost

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