DENVER | Transportation Thread

[bunt_q]

As for airport employees, I seriously doubt many will come from elsewhere in the metro, transfer at Union Station, or otherwise take long haul trips to work. What will happen is hordes of airport employees will park at the 40th & Pena park-n-ride, as they do today, and take the train into work. I think the East Corridor will do just fine. But on that line especially we have to be careful to look at new riders, not just total riders. RTD built that park-n-ride specifically for airport employees (or others who are willing to take a half hour longer to not pay full price airport parking), and there's a reason the airport train had to go by that parking lot. A good number of bus riders today will be shifted over to the train for the one stop ride (one stop, until developers add another two or so).

[bunt_q]

edit: wrong thread, oops!

[bunt_q]

Was reading an article this morning about how San Diego is talking about a 50/10 plan to match (beat, actually) Los Angeles' 30/10 Initiative. I thought that might be an interesting contrast to our approach with Fastracks.

Here's a link to LA's 30/10. http://www.metro.net/projects/30-10/

Basically, the gist of it is to use long-term revenue as collateral for more bonds and federal loans to accelerate 30 years of projects into 10 years. Makes it faster, makes it cheaper.

Seems so common sense. And I suppose that's what RTD is doing with the new 0.2%, we're just so far behind on dollars that we're chasing our tails. But I wonder, how long would we have to extend out the current 0.4% increase to be able to bond/borrow the full amount now? Is it even possible? It has to be, right? I'll have to dig into the numbers, but let's say we ask voters to continue that 0.4% for 80 years. Would that be enough present value to get'er'done? We'd still need the election because of TABOR, but what if the language just said - with no increase in current rates, RTD shall be permitted to bond up to $17 bazillion (or whatever the right number is), and maintain 0.4% increase as long as needed to repay those bonds. I know somebody mentioned this in passing... but why wouldn't it work?

[Cirrus]

the gist of it is to use long-term revenue as collateral for more bonds and federal loans to accelerate 30 years of projects into 10 years.

States do this with highways all the time. There's even a federal process called GARVEE bonding to describe it. Basically, you can get several years worth of federal gas tax revenue up front in order to build a project.

Wouldn't surprise me one bit if CDOT has done it.

[Octavian]

Originally Posted by bunt_q

Was reading an article this morning about how San Diego is talking about a 50/10 plan to match (beat, actually) Los Angeles' 30/10 Initiative. I thought that might be an interesting contrast to our approach with Fastracks.

Here's a link to LA's 30/10. http://www.metro.net/projects/30-10/

Basically, the gist of it is to use long-term revenue as collateral for more bonds and federal loans to accelerate 30 years of projects into 10 years. Makes it faster, makes it cheaper.

Seems so common sense. And I suppose that's what RTD is doing with the new 0.2%, we're just so far behind on dollars that we're chasing our tails. But I wonder, how long would we have to extend out the current 0.4% increase to be able to bond/borrow the full amount now? Is it even possible? It has to be, right? I'll have to dig into the numbers, but let's say we ask voters to continue that 0.4% for 80 years. Would that be enough present value to get'er'done? We'd still need the election because of TABOR, but what if the language just said - with no increase in current rates, RTD shall be permitted to bond up to $17 bazillion (or whatever the right number is), and maintain 0.4% increase as long as needed to repay those bonds. I know somebody mentioned this in passing... but why wouldn't it work?

The fastracks tax will continue indefinitely because operating mass transit is a money loser and capital depreciates. In 30 years, the existing lines will require another capital infusion (repair, replace track, electrical, new vehicles etc). So I think you would need extra revenue beyond the 0.8% fastracks tax.

I don't support a tax increase beyond 0.2%, since i think the NW rail line is a waste of resources and would rather not see it built as currently concieved. What you're buying with an increase beyond 0.2% is the NW rail line.

[bunt_q]

Originally Posted by Octavian

The fastracks tax will continue indefinitely because operating mass transit is a money loser and capital depreciates.

It can't without another election (or a third election, as the case may be). The original ballot language stipulated that the tax would roll back once the authorized bonding for the capital construction was repaid. RTD's on its own for operating costs.

Another thing I find interesting. From RTD Board Resolution 4 (2010) - the one that decided not to go for the tax increase in 2010:

"WHEREAS An unparalleled national recession has severely reduced anticipated revenue from the original FasTracks sales and use tax projections and is the primary cause of an insurmountable funding deficit for full build-out of the FasTracks transit network..."

Hang on - there are two sides to this equation - costs and revenues.

If the only problem was revenue, then the Board's statement would be true. But how does an "unparalleled national recession" explain an increase on the costs side from $4.7b to $6.2b to and up and up? Haven't we been told time and again (including in the State of the Union this week, right?) that this is the time to invest, to build infrastructure, because we get a better deal on the cost side during an "unparalleled national recession?" Sure, revenues are down, but that is not what we're being told here, unless the entire cost increase is attributable to having to stretch out repayment due to lower revenues.

Sorry, I get very frustrated every time something new pops up in the news. This is where I'm torn, though. Does it really make sense to "punish" a public agency for screwing up by not voting for FasTracks Deux?

[wong21fr]

Originally Posted by bunt_q

It can't without another election (or a third election, as the case may be). The original ballot language stipulated that the tax would roll back once the authorized bonding for the capital construction was repaid. RTD's on its own for operating costs.

This still seems ambiguous to me. The ballot language IMO sounds as if RTD can maintain the tax increase as long as it never actually hits the maximum bonding ceiling. So, if it takes a pay-as-you-go approach it could run up $4.69 billion in debt and maintain the tax increase indefinitely.

But, you're the lawyer so you likely have a better understanding of the ballot language.

[wong21fr]

Originally Posted by Octavian

The fastracks tax will continue indefinitely because operating mass transit is a money loser and capital depreciates. In 30 years, the existing lines will require another capital infusion (repair, replace track, electrical, new vehicles etc). So I think you would need extra revenue beyond the 0.8% fastracks tax.

I don't support a tax increase beyond 0.2%, since i think the NW rail line is a waste of resources and would rather not see it built as currently concieved. What you're buying with an increase beyond 0.2% is the NW rail line.

Unless you view it as this proposed tax increase also being the down-payment for NexTracks. If the ballot language is written correctly RTD wouldn't have to ask the taxpayers for another sales tax hike ever.

[ski82]

Originally Posted by bunt_q

It can't without another election (or a third election, as the case may be). The original ballot language stipulated that the tax would roll back once the authorized bonding for the capital construction was repaid. RTD's on its own for operating costs.

Another thing I find interesting. From RTD Board Resolution 4 (2010) - the one that decided not to go for the tax increase in 2010:

"WHEREAS An unparalleled national recession has severely reduced anticipated revenue from the original FasTracks sales and use tax projections and is the primary cause of an insurmountable funding deficit for full build-out of the FasTracks transit network..."

Hang on - there are two sides to this equation - costs and revenues.

If the only problem was revenue, then the Board's statement would be true. But how does an "unparalleled national recession" explain an increase on the costs side from $4.7b to $6.2b to and up and up? Haven't we been told time and again (including in the State of the Union this week, right?) that this is the time to invest, to build infrastructure, because we get a better deal on the cost side during an "unparalleled national recession?" Sure, revenues are down, but that is not what we're being told here, unless the entire cost increase is attributable to having to stretch out repayment due to lower revenues.

Sorry, I get very frustrated every time something new pops up in the news. This is where I'm torn, though. Does it really make sense to "punish" a public agency for screwing up by not voting for FasTracks Deux?

It looks like the window to take advantage of those recession cost savings has closed too. Raw material prices are once again way up thanks to developing countries. I’m not sure when the next cost review is, but I think it is going to have a lot of red. Compounding the problem is our economy is still down and it appears there will be no roaring recovery, meaning the growth rate of revenues is going to really take a hit and put a damper on future revenues. While a lot of this is out of RTD’s control, you do need to wonder about the growth rate they used to cast revenue projections. To have a long term project like this and assume constant economic growth is unrealistic at best. And the thing about these forecasting models is small changes in assumptions make big differences in the results. A few tenths of a percent can turn make a world of difference and the trouble is, you can make something sound reasonable when in reality, the margin of error is extremely slim. While people who make these decisions with their own money or with their own job on the line are perhaps most concerned with the tolerance of variations in their model and the associated risks, I just don’t know that the due diligence was done here. They found a number that was reasonable at the time and sold it to the public.

However we got to the point we are at now (and I do fear the gap is going to continue to expand). I hope to see FasTracks built out and soon, but certainly can’t blame for wanting to readdress the entire thing since it is pretty clear we will not be delivered close to what was promised, this is especially the case for people whose lines are at risk.

[bunt_q]

Originally Posted by wong21fr

Unless you view it as this proposed tax increase also being the down-payment for NexTracks. If the ballot language is written correctly RTD wouldn't have to ask the taxpayers for another sales tax hike ever.

That sounds like a constitutional softball for RTD's opponents. But who knows, RTD does have a friendly state supreme court at the moment. The only way to get away with that would be to explicitly request a permanent increase. I think they'd need a separate measure then to authorize the additional bonding. Which isn't the end of the world. Colorado voters are used to "Vote Yes on 12, 17, 43, and 122B; No on 44, 3A, and B4" campaigns, with our single-issue ballot requirements being what they are.

[EngiNerd]

Originally Posted by bunt_q

It can't without another election (or a third election, as the case may be). The original ballot language stipulated that the tax would roll back once the authorized bonding for the capital construction was repaid. RTD's on its own for operating costs.

Another thing I find interesting. From RTD Board Resolution 4 (2010) - the one that decided not to go for the tax increase in 2010:

"WHEREAS An unparalleled national recession has severely reduced anticipated revenue from the original FasTracks sales and use tax projections and is the primary cause of an insurmountable funding deficit for full build-out of the FasTracks transit network..."

Hang on - there are two sides to this equation - costs and revenues.

If the only problem was revenue, then the Board's statement would be true. But how does an "unparalleled national recession" explain an increase on the costs side from $4.7b to $6.2b to and up and up? Haven't we been told time and again (including in the State of the Union this week, right?) that this is the time to invest, to build infrastructure, because we get a better deal on the cost side during an "unparalleled national recession?" Sure, revenues are down, but that is not what we're being told here, unless the entire cost increase is attributable to having to stretch out repayment due to lower revenues.

Sorry, I get very frustrated every time something new pops up in the news. This is where I'm torn, though. Does it really make sense to "punish" a public agency for screwing up by not voting for FasTracks Deux?

Completely agree...when you look at the tax revenues (both historical and RTD's anticipated), and the amount they are in the RED right now, there is just no way they would have made up this deficit even if the economy were roaring along and revenues remained more on track with historical numbers. Someone screwed up the projected costs, plain and simple. But why do they have to keep lying to us about "the economy" blah blah when it clearly was a mistake.

Hell, the $6.2b is down from their their high cost projection several years ago of over $7b when material prices were skyrocketing. So this $6.2b already takes into account the reduced cost of materials and labor that is going on right now.

But like you said, do we use this opportunity on a tax vote to punish RTD for their shortcomings to prove a point, or do we give them what they want so that we can move forward?

[SnyderBock]

You just don't project sales tax revenue declines, into long term projections. Decades pass without there ever being declines in sales tax revenues. It's very rare. Projecting such an anomaly, early on in the tax collection process, has exponentially greater impacts on long term collections, than such an anomaly in later years would create. So how do you know to project a recession early on or later on in the future? Once there is a period of sales tax decline, there will be shortages in collections for every year after that, indefinitely. There was no way to accurately project this recession and it's impacts on sales tax collections.

The fact that they screwed up by averaging to optimistic annual sales tax revenue collections growth, only compounded the issue slightly. But after the recession is factored out, they would likely only had been ~$500 million off on projected sales tax revenue and then another ~$500 million off on projected material costs.

This all being said, I find it interesting that RTD now thinks they can win ~$300 million in New Starts federal funding for the North Corridor EMU line. It also looks like they think they can qualify for $75 million in Small Starts federal funding for the SE Corridor, 3 station extension into Lone Tree. I also wouldn't be surprised if they end up pursuing federal funding for the I-225 LRT line from Aurora to the East Corridor line. Not sure why this one wouldn't qualify.

[bunt_q]

Originally Posted by SnyderBock

Once there is a period of sales tax decline, there will be shortages in collections for every year after that, indefinitely.

How do you figure? If that money was invested, I suppose there'd be less interest accrued over time for bond repayment. But not if money is being expended in year-of-collection.

But why would collections not recover? It's not like consumers cap themselves at a x% increase in year-over-year spending, with a TABOR-style ratchet-down effect. I don't understand what you are saying I guess.

Originally Posted by SnyderBock

This all being said, I find it interesting that RTD now thinks they can win ~$300 million in New Starts federal funding for the North Corridor EMU line. It also looks like they think they can qualify for $75 million in Small Starts federal funding for the SE Corridor, 3 station extension into Lone Tree. I also wouldn't be surprised if they end up pursuing federal funding for the I-225 LRT line from Aurora to the East Corridor line. Not sure why this one wouldn't qualify.

Timing, probably. By waiting on some corridors, I assume we'll be able to get our hands on more federal money over time.

[SnyderBock]

Originally Posted by bunt_q

How do you figure? If that money was invested, I suppose there'd be less interest accrued over time for bond repayment. But not if money is being expended in year-of-collection.

But why would collections not recover? It's not like consumers cap themselves at a x% increase in year-over-year spending, with a TABOR-style ratchet-down effect. I don't understand what you are saying I guess.

Put in on a graph and chart it out. Say sales tax decline early on for 2 years, then returns to the projected growth rate after that. The growth curve will still always be behind the projected curve, because of the 2 years of decline. Sales tax revenue growth would actually have to grow faster than projected, to make up the gap. At some point, the two lines will meet again, but it wouldn't likely be 30, maybe 40 years out.

[EngiNerd]

The point was, it wasn't the economic decline and lack of tax revenues that caused the majority of the shortage, it was underestimating the actual cost of the project.....or just being overly optimistic. I remember looking at the numbers (maybe last year) and seeing that even if the tax revenues would increase at the high pace it was before 2006, there still would have been a massive shortfall.

Some of that probably has to do with RTD assuming they will have ROW with Union Pacific and not having to buy up as much land as they did.

[bunt_q]

RTD assumed a 6.3% year on year sales tax revenue increase, I believe. Snyder's math is still wrong - you have to look at the cumulative revenues (it's a bar graph, not a compounding interest model), so a few really good years could catch them up, if the original projection had been even close. The original revenue projection - the 6.3% - averaged good years and bad, so it isn't as if they thought it would always be positive and growing at a high rate, that's not really true or fair. The projected averaged-out growth just included a lot of really good years and only a few bad years. And nobody realistically thinks we'll have enough good-enough growth years to bring the average up. Makes you miss the 90s, right?

But that still doesn't excuse the costs side, which is mostly independent of the revenues. RTD was wrong on both, but I think we're more understanding on the revenues side because nobody expected the magnitude of this recession. Only a fool would've thought the railroads were going to play nicely all the time, though. Only a terrible negotiator would expect a rosy deal from an opposing party who has something you have to have (right-of-way), who knows you need it, who knows what your budget it, and over whom you have minimal leverage (no eminent domain threat there). Like you said, RTD probably assumed...they were on a roll, after all, following the SW corridor and T-REX passing. But we all know what assuming does...

[Pizzuti]

I thought the cost of FasTracks increased so much because the global cost of steel, copper and other metals more than doubled between 2004 and 2008 (dropped during the recession and are now back), oil prices trippled between 2004 and 2008 (then they came down but have now rebounded to more than double the 2004 prices), and property values spiked at the time that much of the land for FasTracks was being acquired. Now that a lot of land has been acquired, the fact that it lost value during the recession makes no difference. And a cost increase that significant leads to problems and additional work that also costs money, ends up being a bigger cost increase.

That was what I heard people attributing the funding shortage to a couple years ago. What has changed since? It's not as though the funding shortage came about in 2008-2009; the fact that the projected costs went up by billions of dollars was already being discussed 2 years ago, when projected revenues from sales tax had not changed. The projected cost was $4.7 billion and now it's about $6.5 billion. That is not a change in funding, that is a change in costs.

Maybe RTD is choosing to make it about "the recession" because that is more on the minds of the public, and they're more likely to accept it without skepticism, whereas more people might scratch their heads and wonder why labor/materials are still an issue.

As for tax revenue forecasts... those are not based only on economic growth which would be impacted by a national/global recession, they're based on economic growth + population growth. If the average person's spending goes up 1.5 percent per year and the number of people in the RTD district who are spending it goes up 4 percent per year, that compounds itself to something that makes 6.5% annual revenue growth projections realistic. Maybe that is what Snyder is talking about where a lull in growth, followed by a return to a stable pace of growth (as in metro area population growth), creates a permanent shortfall. The economy can "rebound" and accelerate after a recession and catch up with the original trend, but population growth usually does not "rebound" and catch up with the original curve of population growth.

[SnyderBock]

Revenue from sales tax collections has dropped from the estimated $4.7 billion, down to about $3.7 billion. This is in addition to the cost increases from $4.7 billion to about $6.5 billion. But they are getting ~$450 million in additional private funds for the eagle P3. They have also gained some flexibility with things, such as, the feds financing Union Station. There is also a chance sales tax collections will partially recover and close that gap from the current projections of $3.7 billion, towards the originally projected $4.7 billion number. But RTD is now using extremely conservative projection, provided by a third party. They are projected about 2.7-3.3% annual sales tax growth for the next several decades. So anything over that, would actually increase their available budget over current projections. And honestly, 2.7-3.3% doesn't really account for much growth at all, after inflation is figured in, so I'm not buying those numbers.

[Pizzuti]

Thanks for answering my question, Snyder. If they're just airing on the conservative side about financing now after being humbled by previous mistakes, I don't think this is as much of a boondoggle as it is being portrayed to be.

Maybe there's some sort of political effort to make the situation seem really, really bad, and then come back later when it turns out to only have been sorta bad, which is more effective at averting public frustration than just jumping to sorta bad. Saying "we thought we were 4 billion short but it turns out we're only 2 billion short" is much less of an OMG moment than "oh shit, it turns out we are 2 billion short. No wait, 2.5 billion. No wait, 2.7 billion."

[Pizzuti]

I think that some of the value of the NW corridor is not so much that Boulder-Longmont are high-population centers but it creates a starting place to expand to Loveland and Fort Collins. If the Front Range Corridor goes forward and there is eventually a rail connection between Fort Collins and Denver, then instead of following I-25 all the way (which is too far east to go through downtown Loveland and Fort Collins), it connects through the NW line in Longmont.

The financing for that project goes to building the Longmont-Fort Collins segment, and also to "upgrading" the NW corridor plans to handle more frequent trains and traffic, which pays off much of the cost of the corridor. That would open up the project to new federal funding, it gets a rural congressional district invested in FasTracks, and makes the NW corridor more cost-effective since a greater number of people would use it.

I'm not sure how the funding would work - whether you'd expand RTD, create a broader regional transit agency (Which may be impossible due to FasTracks), allow RTD to service sites outside its district with contracts with those counties (The way NYC's MTA does through Connecticut) or hope for a state or federal project. In any case, it seems like a good way to get a major portion of FasTracks paid for.

A ballot item combining Boulder and Larimer counties with a sales tax to expand transit through Boulder and Longmont to Fort Collins would pass. If you had to run them separately in each county, Larimer might be iffy; it's more Democratic than you think - party affiliation in Larimer County is similar to Jefferson County. If you came up with a district in Larimer County that only included Loveland-Fort Collins, they'd probably vote for transit since Fort Collins is quite Democratic.