DENVER | Transportation Thread

[glowrock]

I tend to agree. Pretty soon, the sales tax numbers will go down to a total of $1 billion, something like that!

Something is WRONG with this picture. A couple of years of downturn doesn't make for such a MASSIVE reduction in revenue projections, even accounting for compounding interest!

Aaron (Glowrock)

[Octavian]

Play around with a compound interest calculator.

A $100 investment earning 6.2% would be worth $375 in 2030 (what Fastracks assumed).
A $100 investment earning 4.7% would be worth $280 in 2030.
A $100 investment earning 3.7% iwould be worth $222 in 2030 (only 59% as much).

Sound familiar? Truth be told, the Independence Institute was right in 2004 when they said RTD's revenue estimates were too optimistic. This isn't about the current downturn, their revenue numbers were too optimistic before the downturn started. They assumed that revenue would grow like it did in the late 1990's.

[glowrock]

Originally Posted by Octavian

Play around with a compound interest calculator.

A $100 investment earning 6.2% would be worth $375 in 2030 (what Fastracks assumed).
A $100 investment earning 4.7% would be worth $280 in 2030.
A $100 investment earning 3.7% iwould be worth $222 in 2030 (only 59% as much).

Sound familiar? Truth be told, the Independence Institute was right in 2004 when they said RTD's revenue estimates were too optimistic. This isn't about the current downturn, their revenue numbers were too optimistic before the downturn started. They assumed that revenue would grow like it did in the late 1990's.

But I see no reason why the estimate for only 3.7% sales tax growth will be accurate, especially given population growth. Between population growth and inflation, you're looking at a minimum of 4%, not including any REAL increases in people's spending habits.

I see no reason to be SO pessimistic here. I'm not assuming that 6.2% was the right way to go, but nearly halving it seems too extreme.

And yes, this IS about the current downturn. Give this another year or two to rebound, and I'll be the overall numbers are at least at the mid-range RTD projection... Shit, I guess RTD could have assumed a 2% growth, hell, why not a zero growth? I mean, I'm not sure how the hell RTD could have expected such a shift in sales tax revenues...

Aaron (Glowrock)

[The Dirt]

Maybe, by being overly pessimistic they (1) avoid any backlash from overestimating, (2) and get praise for hitting their targets early. It's like when you're shopping and get sticker shocked, but then see that it's been cleverly marked down 50% and all of a sudden feel like you got a bargain. It's just all psychological games. And guess what? RTD gets to keep their federal money, and the surplus money from the tax unless it's voted that they give it back.

[Pizzuti]

^I think that in 2004 it was hard to tell just how anti-tax the electorate would be, so RTD figured the "conservative" thing to do was to be highly optimistic about the financing of the project. Better to get it running and deal with a potential financial shortfall later than lose the vote and come back later asking for a 6B project when voters would almost surely say no.

I agree it wasn't a wise strategy, but it seems pretty natural to me that when RTD caves to the heat of the moment that's the way it would go. They would have said no to a new tax in 2008 for sure. In 2006 the measure probably would have passed, but how do you predict something like that?

[CONative]

From the Atlanta thread showing how Atlanta (once a leader) is now lagging behind other cities (including Denver) with mass transit...

http://youtube.com/watch?v=nfi08aQIxH4

[EngiNerd]

2010 Fastracks Budget is posted

http://www.rtd-fastracks.com/media/uploads/main/1_5_10_APE_Presv_Final.pdf

So costs have come down another $400 million to $6.5 billion, but sales tax receipt forecasts are down even more. The shortfall has now risen to $2.4 billion, from $2.2 billion last year.

The full FasTracks program can be completed by:

• 2017: Assuming a successful election in 2010 that increases sales and use tax by 0.4% (under the high, medium and low sales tax growth scenarios)
• 2019: Assuming an election in 2012 that increases sales and use tax by 0.4%, resulting in at least $200 million additional costs to the FasTracks program
• 2025: Assuming a successful election in 2010 that increases sales and use tax by 0.4%, but no federal funding for the East and Gold Line corridors
• After 2035: Assuming no additional revenues

Apparently another new problem has surfaced....basically based on current sales tax revenue forecasts, if they complete the project by 2035, revenue generated will be low enough that there will be an operation and maintenance funding gap as well.

RTD definitely still have a lot of hurdles ahead of them. I just don't think under this economic climate that the people would vote for an increase in sales taxes, especially since I think a lot of people are wary of trusting RTD right now.

EDIT: Actually, I dont think the O&M funding gap is new, wasn't it pretty much always a fact that fastracks would not make money, or even enough to cover O&M?

[EngiNerd]

And just in case anyone is interested in seeing RTD's revenue and where it comes from, you can find it here:

http://www.rtd-denver.com/PDF_Files/Financial_Reports/Adoptedbudget_08_Part_VI_Revenues.pdf

Basically, they pulled in about $250million in sales tax revenues in 2008.

[Giovoni]

Originally Posted by EngiNerd

2010 Fastracks Budget is posted

http://www.rtd-fastracks.com/media/uploads/main/1_5_10_APE_Presv_Final.pdf

So costs have come down another $400 million to $6.5 billion, but sales tax receipt forecasts are down even more. The shortfall has now risen to $2.4 billion, from $2.2 billion last year.

The full FasTracks program can be completed by:

• 2017: Assuming a successful election in 2010 that increases sales and use tax by 0.4% (under the high, medium and low sales tax growth scenarios)
• 2019: Assuming an election in 2012 that increases sales and use tax by 0.4%, resulting in at least $200 million additional costs to the FasTracks program
• 2025: Assuming a successful election in 2010 that increases sales and use tax by 0.4%, but no federal funding for the East and Gold Line corridors
• After 2035: Assuming no additional revenues

Apparently another new problem has surfaced....basically based on current sales tax revenue forecasts, if they complete the project by 2035, revenue generated will be low enough that there will be an operation and maintenance funding gap as well.

RTD definitely still have a lot of hurdles ahead of them. I just don't think under this economic climate that the people would vote for an increase in sales taxes, especially since I think a lot of people are wary of trusting RTD right now.

EDIT: Actually, I dont think the O&M funding gap is new, wasn't it pretty much always a fact that fastracks would not make money, or even enough to cover O&M?

So assuming either the worst, middle AND best case sales tax revenues +0.4% more in tax the year is the same. So 2035 assuming no additional revenues, grants, taxes and assuming what? the low sales tax estimates? the middle? the high? What happens if the economy someday magically, and for the first time in recorded human history, recovers?

[EngiNerd]

They are taking a middle of the road approach and saying sales tax revenues will increase at an annual pace of 3.7%/year between now and 2035...which is probably a pretty good estimate. Their original estimates in 2004 were like 6%, which were made during the height of things....so with all the lows and highs during that time, 3.7% is a good middle of the road number.

At the same time they are estimating that material costs will rise 5% annually between 2010 and 2017.

I assume that if the numbers do better than 3.7%, then they will hold onto it and use it to add capacity, stations, etc. Or they revise their timeline down from 2035...which is really more of a worst case timeline anyway.

Read through that presentation, its really explains most of your questions.

[glowrock]

I seriously believe that sales tax revenues will climb back to reasonable levels once this recession finally ends. A few decent years of sales tax growth will help RTD's forecasts out tremendously!

I still say that 3.7% barely, just barely, accounts for natural growth plus inflation. I have a hard time believing that per-capita sales taxes will drop between now and 2035, accounting for inflation.

Aaron (Glowrock)

[Giovoni]

Originally Posted by EngiNerd

They are taking a middle of the road approach and saying sales tax revenues will increase at an annual pace of 3.7%/year between now and 2035...which is probably a pretty good estimate. Their original estimates in 2004 were like 6%, which were made during the height of things....so with all the lows and highs during that time, 3.7% is a good middle of the road number.

At the same time they are estimating that material costs will rise 5% annually between 2010 and 2017.

I assume that if the numbers do better than 3.7%, then they will hold onto it and use it to add capacity, stations, etc. Or they revise their timeline down from 2035...which is really more of a worst case timeline anyway.

Read through that presentation, its really explains most of your questions.

I am reading it.. but I'm not a typical voter.. those summaries make it look like there is no difference in what RTD will do if sales tax revenues change from worst to best, and that just seems weird

Also does anyone else think that it might be in RTD's best interest to NOT grow anymore - geographically? I was thinking/talking about this last week and it seems like IF we do have a vote for an additional .4% for fastracks having Castle Rock/Douglas county (which are basically turning into Northern COS) out will be a HUGE blessing to the cause.

If it DOES turn out that way I'd think if I were RTD I'd freeze my borders and if Douglas County/CR ever wanted to link up to RTD they could be responsible for raising the funds and building the lines to the southern extensions in fastracks.

[EngiNerd]

Ah, I see what you mean.

Its because the difference, based on the current sales tax intake of 250million, of 3.7% vs. 4.3% is very small (~1.5 million), which is really nothing in terms of the overall FasTracks budget. So over 7 years, assuming they actually hit the 2017 deadline, the difference would only be what, $15 million? Where with 6% it would be more like $50 million over those years.

Still, $50 million does not explain it. Even with 6% sales tax increase, it still does not excuse the fact that they originally estimated that FasTracks would cost $4.7b, and now its $6.5b, that is where the big shortfall is...and no amount of year over year sales tax increase will help that.

The fact is RTD simply budgeted too low, and should have either asked for more money from the voters the first time, or not been quite so ambitious with their FasTracks plan (BRT + Rail in same corridor?).

[SandSailor]

OK. Is FASTracks in trouble here? I mean, are we probably not gonna get what we voted on? Everything I read in the Post is bad news. And if you read all the comments people leave in the Post, it does not look like a vote for a tax raise will pass. I totally want this to pass (the expansion) but am fed up with the retards at RTD! So we get like 2 new lines and the rest is scrapped for the time being? On that note, how can a city vote on a tax raise and be promised x amount of light rail and lines (132 miles or whatever) and not end up getting what we were promised? I guess I do not understand these contracts! If I say I will build a road for $50,000 a mile or whatever, and it ends up costing me $75,000, can I just bail? Or do I pay out of pocket because I won the contract? Not sure how we get screwed on this!

[SnyderBock]

SandSailor, the main problem is the economy. Project all across the country have the exact same issue as FasTracks right now. There are always solutions to these problems and RTD is working hard to find the best solution.

-Current cost is projected at $6.5 billion and they said they can trim that down to $5.81 billion and still build the entire system.
-Sales tax revenue projection has dropped, lowering total anticipated funds to a budget of $4.1 billion.
-The sales tax projections are now using a conservative 3.7% as the medium annual growth. It may not end up being so bad, I hope the economy will rebound more than this, don't you?

-If voters don't pass the sales tax increase in 2010, FasTracks can still all be built, but some lines will have to be postponed and built out over an additional 20 year period (over this period between now and 2035, additional funding could come into play which we don't yet know about and speed that up).

[DenverInfill]

and SandSailor, whatever you do, do NOT read the comments to articles at the Denver Post. The people who comment there are the biggest bunch of negative, cynical, whiny, hateful people (often of the Teabagger variety) that you will ever see. There is rarely anything helpful, insightful, interesting, or educational in the comments, but instead it usually ends up as a shit throwing contest. There could be an article about how a fireman rescued a kitty from a tree and there would be an avalanche of hate-spewing comments about the liberals this and socialist Obama that and corrupt government this and illegal immigrants that.

[Cirrus]

Seriously. It's not just the Denver Post, either. Most mainstream newspapers are like that.

I don't know what it is about the comments section of news sites, but they really bring out the crazies.

[Giovoni]

It's pretty hard to avoid becoming scared and cynical if you have enough spare time to read every newspaper and watch news all day.

[Fritzdude]

Originally Posted by DenverInfill

and SandSailor, whatever you do, do NOT read the comments to articles at the Denver Post. The people who comment there are the biggest bunch of negative, cynical, whiny, hateful people (often of the Teabagger variety) that you will ever see. There is rarely anything helpful, insightful, interesting, or educational in the comments, but instead it usually ends up as a shit throwing contest. There could be an article about how a fireman rescued a kitty from a tree and there would be an avalanche of hate-spewing comments about the liberals this and socialist Obama that and corrupt government this and illegal immigrants that.

Ain't that the truth! I avoid reading comment sections for exactly that. The internet allows people to rant on just about anything, but unfortunately, it mucks up any civil discourse if left unchecked.

[SandSailor]

OK, but if the average person reads the comments, they may get an overwhelming feeling that the majority of people are against a new tax increase! I wish their were more of the "yes" crowd who favor a more rapid buildout of the system. I for one would vote yes again, even though I feel that most of the RTD folk are inept!