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March 24 Draft ST3 Plan for Public Comment Financial Plan Expert Review Panel April 12, 2016
March 24 Draft ST3 Plan for Public Comment Financial Plan Expert Review Panel April 12, 2016
ST3 Financial Plan - Key Changes Since Last Review
Financing:
Interest on 30 Year Bonds now 5.3% versus 5.75% Assume 2 federal loans (TIFIA/RRIF) Minimum Debt Service Coverage – 1.6x down from 1.8x
Inflation:
Removed contingencies from inflation forecasts
CPI – 25 basis points CCI - 10 basis points ROW – 15 basis points
Sources of Funds:
Added $70 million UW-Link, net savings. Added $1m advertising revenue, and parking revenue of $6 million / year post
2030.
2
ST3 Financial Plan - Key Changes Since Last Review
Grants:
Increased Lynnwood Link assumption to $1.173 billion Included 2 or 3 New Starts totaling $4.1 billion Added Formula Funding of $500 million.
State-of-Good Repair:
Added additional SOGR dollars
O&M
Increased O&M real growth from 0.5% to 1.0%
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Key Financial Planning Assumptions for ST3Nominal Dollars
Sound Move 2007 ST2 Plan ST3 Draft Plan
Funding SourcesSales Tax and Use Tax 0.4% 0.9% 0.5%Motor Vehicle Excise Tax ( MVET) 0.3% 0.3% 0.8%Property Tax 0.25$ Parking Revenue ~$6m annually
Annual Average Revenue Growth 15 Year Plan 15 Year Plan 25 Year PlanSales Tax and Use Tax 4.8% 4.8% 4.1%MVET 5.8% 4.5% 3.9%
BondingLevel-Loaded Team 30 years 30 years 30 yearsAmortization Wrap Wrap WrapInterest-Only Team 5yrs/10yrs 5 years 5 yearsInterest-Only Premium - - -Debt Issuance Costs 1.5% 1.5% 1.5%Gross Debt Services Ratio Policy NA NA NANet Debt Services Coverage Ratio Policy 1.3x 1.5x 1.5xFederal Loans $2.0b
Borrowing Range
Interest Rate 6.00% 5.75% 5.30%
Federal Funds% of Capital 21% 7% 11%
Inflation Cost IndexConsumer Price Index 2.90% 3.30% 2.30%Building Cost Index 3.90% 3.60% 3.60%Right of Way Index 3.90% 4.60% 4.00%ST Inflation Contingency No No No
OtherInterest earning rate 3.00% 3.00% 3.00%Capital Replacement Yes Yes Yes
Debt/Equity Ratio 30% 49% 22% 4
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
30-Year UST 30-Year MMD
30-Year MMD vs. 30-Year U.S. Treasuries Since 1986
Average 30-Year MMD Since 1986: 5.21% Average 30-Year UST Since 1986: 5.91%
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ST3 March 24 Draft Plan For Public Comments ($M YOE)
2017-2041 NotesSOURCES
Tax Revenue 27,602,561 Updated forecast in early MayFare Revenue 752,750 Based on ST3 Ridership and AFB assumptionsOther Sources Revenue 8,647,328 Primarily surplus of SM and ST2 TaxesCapital Grant Drawdowns 4,102,053 Assumes 2-3 FFGAsFTA Formula Fund Drawdowns 501,721 Consistent w/ agency historic ratesBond Proceeds (less issuance cost) 8,461,670 Net Coverage at 1.6x, Gross at 3.0xInterest Earned 827,943 - TOTAL SOURCES - 50,896,026 -
USESCommuter Rail Capital Costs 1,857,182 - Light Rail Capital Costs 34,308,764 - Regional Express Capital Costs 299,986 - Bus Rapid Transit Capital Costs 1,766,838 - Rapid Street Car Capital Costs 940,013 - Agency Admin Capital Costs - - System-wide Capital Costs 1,118,763 -
TOTAL CAPITAL PROGRAM - 40,291,545 - Total O&M Costs 7,163,281 - Scheduled Debt Service 1,988,514 - Early Principal Redemption - - Bond Reserve Deposits 612,554 - O&M Reserve Contributions 135,275 - Capital Reserve Contributions - Begin at end of ST3 capital programIncrease (decrease) in cash 704,857 Change in net cash position TOTAL USES - 50,896,026 -
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0.0
1.0
2.0
3.0
4.0
5.0
6.0
2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 2052 2053 2054 2055 2056 2057 2058 2059 2060
Coverage
Net Gross
Min Net: 1.6 (2045) Gross 3.0 (2045)
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Risk Assessment Initial Static Stress Tests
• Capital Costs
• Revenue Loss
• Interest rates
Dynamic Risk Assessment: May
8
ST2 vs ST3 Total Capital Spending
9
ST3 2029: 10% of Construction Spending
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
Mill
ions
of D
olla
rs (2
014
$)
Taxable Construction Retail Sales ST3 Construction Spending ST2 Construction Spending
Taxable Construction Retail Sales 2013-2014: Actuals from WA Dept of Revenue for Sound Transit District municipalities. Taxable Construction Retail Sales 2015-2042: Projected using PSRC growth rate for construction jobs.
ST Construction Spending vs Regional Construction Spending
10 10
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042
ST P
erce
nt o
f Tot
al T
rans
port
atio
n Sp
endi
ng
Tota
l Spe
ndin
g (a
ll ph
ases
) in
Mill
ions
(201
4$)
WSDOT Municipalities ST2 ST3 ST Percent of Total
WSDOT and Municipality Spending: Annual average of planned spending from 2015-2025, extended to 2041. Source: PSCR 2015, The Project List 2015-2025.
ST Spending vs Regional Transportation Spending
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Regional Construction Jobs: Forecast from PSRC. Construction jobs refers to NAICS Code 23: Construction. Jobs generated by ST3 Construction Spending: Assumes each million in spending results in 8.34 direct jobs. Source: IMPLAN methodology, TriMet. Private Sector Construction Jobs: City of Seattle Construction Industry Labor Market Assessment, prepared by Community Attributes, 2014.
ST3 2029: 9% of regional construction
jobs
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041
Cons
truc
tion
Jobs
Total Private Sector Construction Jobs Jobs Generated by ST3 Construction Spending
Remaining Jobs (after private sector development and ST3) Regional Construction Jobs (King, Kitsap, Pierce, and Snohomish Counties)
**86% of regional construction jobs are assumed to be from private sector development. Source: Community Attributes, 2014.
ST3 Construction Jobs vs Regional Construction Jobs
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Next Steps Financial Policy: Review by board May/June
Update Financial Plan: June
Final ERP Review
board adoption of plan
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