Good news: FasTracks costs headed down
Ever hear of a public works project that dropped in cost? You soon may.
A worldwide drop in commodities and construction costs could lower RTD's $7.9 billion price tag for FasTracks.
But what one hand giveth ...
The worldwide recession is cutting even more deeply into RTD's sales tax revenues.
What it means is that even with its costs lowering, RTD's budget gap could be widening.
The dilemma was outlined this morning for a task force of the Metro Mayors Caucus, which is working with RTD to come up with a strategy for FasTracks.
In the last assessment of its budget and financing for FasTracks in August, RTD estimated it was $2.1 billion short of completing the program by the original 2017 date – it estimated it would generate $5.8 billion in resources by that time to pay for a $7.9 billion program.
That's why RTD has been working with community leaders to determine whether it should delay completion as revenues allow, build what can be afforded by 2017 or seek another sales tax hike and other revenue to get back on the original schedule.
With the release last week of sales tax collections for November, RTD found it had taken in nearly 10 percent less than in November 2007, a precipitous drop that caused the agency to freeze salaries, investigate bus and light rail service cuts and demand budget trims through all departments.
It also has an impact on FasTracks planning.
"It changes the assumptions we're using in the financing plan for FasTracks much more radically than we expected," Bill Van Meter, RTD's senior manager for systems planning, told the mayors' meeting. "We don't have confidence in what our old financial projections will look like in light of the bombshell from November's figures."
RTD is tightening up its timetable to give updated information to the mayor's group and the community, and may delay a board vote on how to proceed with FasTracks until the end of March instead of mid-March. That will give RTD more time to develop more realistic numbers in light of recent economic news, and mayors may not have new data until March 3 instead of mid-February as originally planned.
Some mayors told RTD they don't like waiting because they will need time to react with their city councils. In addition, with the fast pace of worldwide economic news, even well thought out figures could be obsolete in a week.
"We have to make a decision," said Broomfield Mayor Pat Quinn. "What we do know is that whatever projection you guys come up with is going to be wrong anyway."
Van Meter said declining project costs as steel and concrete drop in price won't solve FasTracks problems.
"There's still going to be a sizable gap and something that merely tweaks
that isn't going to fix it," he said.
Aurora Mayor Ed Tauer said RTD should work toward a plan that acknowledges change is inevitable and build in flexibility to adjust to those changes, but that a decision on whether and how to build the whole program should be made.
"You just build that adaptability into the solution," he said. "Your 9.6-percent drop in sales tax in November is too small a data point to drive five to 10 years of planning your program."
"Your financial situation is probably going to change on a monthly basis," agreed Thornton Mayor Erik Hansen.
[email protected] or 303-954-5247.
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