HRTAC Regional Financial Plan Recap and Work Order Scenarios January - - PowerPoint PPT Presentation

HRTAC Regional Financial Plan Recap and Work Order Scenarios

January 19, 2016

Post ¡Presenta*on ¡Version ¡with ¡correc*on ¡to ¡Slide ¡8. ¡

Recap: Initial Project Financing Scenario Description

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• In November 2015, PFM prepared and presented six HRTAC project financing scenarios

1. Toll Patriots Crossing Only assumed $2.00 fixed toll rate 2. HOT Network HOT on existing I-64 HOV lanes, High Rise Bridge, HRBT, MMBT, and Rt. 460/58 Connector; $2 fixed toll rate all lanes on Patriots Crossing 3. Toll All Lanes – Option A $1 on High Rise Bridge, Patriots Crossing, HRBT and MMBT; HOT on Rt. 460/58 Connector 4. Toll All Lanes – Option B $2 on High Rise Bridge, Patriots Crossing, HRBT and MMBT; HOT on Rt. 460/58 Connector 5. Toll All Lanes – Option C Same as Scenario 3 except peak & off-peak congestion pricing at $1.5 & $1 on HRBT 6. Toll All Lanes – Option D Same as Scenario 4 except peak & off-peak congestion pricing at $3 & $2 on HRBT

* All stated toll rates are in 2015 dollars; toll rates are inflated by 2.5% annually

Recap: Initial Project Financing Scenario Results

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• Scenario 1-6 are not financially feasible with the key assumptions below:

– Total toll revenues through 2070 range from $0.5 billion to $5.9 billion among the six scenarios in 2016 dollars (discounted @ 5.0%) – HRTF revenues through 2070 are $10.7 billion in 2016 dollars (discounted @ 2.5%) – $2 billion HRTPO/VDOT funds in 2016 dollars (discounted @ 2.5%) – Toll projects completed by FY 2037 – Capital costs are $14.5 billion (HOT tolling option) and $13.0 billion (Toll all lane option) in 2014/2015 dollars

• PFM also prepared Scenario 6B that assumed delaying Patriots Crossing construction

after MMBT could be completed. Scenario 6B is feasible.

Scenario 1 Scenario 2 Scenario 3 Scenarnio 4 Scenario 5 Scenario 6

$ millions

Toll Patriots Crossing Only HOT Network Toll All Lanes Option A Toll All Lanes Option B Toll All Lanes Option C Toll All Lanes Option D Future Value of Additional Grants Needed* 7,799 9,005 4,528 2,045 3,551 642 Additional Tax Revenue Needed** 229 265 133 60 104 19

Note: *FV of grants net of residual revenues through 2040 **Additional HRTF revenue in 2016 needed; annual revenues thereafter are based on the new assumed 2016 revenue and grow at the growth rates as the current estimates.

Review of Assumptions: Project Schedule Updates

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• VDOT indicated that the I-64 Widening Segment 3 and Ft. Eustis Blvd Interchange

projects would start construction in 2018 and 2021, respectively, regardless funding availability

• In addition, I-64 Widening Segment 2 and I-64/I-264 Interchange projects completion

dates are slightly delayed

• Updated assumed fiscally unconstrained schedules are as follows:

PE Construction Construction PE Construction Start Date Start Finish Duration Duration I-64 Widening - Segment 1 7/1/2014 1/1/2015 1/1/2018 6 mns 36 mns I-64 Widening - Segment 2 2/1/2015 7/1/2016 6/1/2019 18 mns 36 mns I-64 Widening - Segment 3 7/1/2016 7/1/2018 12/1/2021 24 mns 41 mns

• Ft. Eustis Blvd Interchange

1/1/2019 3/1/2021 12/1/2023 26 mns 33 mns I-64/I-264 Interchange - Phase 1 4/1/2015 11/1/2016 7/1/2019 19 mns 32 mns I-64/I-264 Interchange - Phase 2 1/1/2016 1/1/2017 12/1/2021 12 mns 59 mns High Rise Bridge 1/1/2015 1/1/2017 1/1/2022 24 mns 60 mns Patriots Crossing 11/1/2017 1/1/2020 1/1/2025 26 mns 60 mns HRBT 5/1/2023 1/1/2025 1/1/2030 20 mns 60 mns MMBT 11/1/2027 1/1/2030 1/1/2035 26 mns 60 mns Route 460/58/13 Connector 1/1/2033 1/1/2035 1/1/2038 24 mns 36 mns

Review of Assumptions: Studied Scope vs. SEIS Scope

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• VDOT and FHWA have initiated work on a Supplemental Environmental Impact

Statement (SEIS) to reevaluate the Hampton Roads Crossing Study.

• In November 2015, VDOT and FHWA presented four alternatives to HRTPO

‒ The regional system scope assumed in PFM’s November analysis is mostly aligned with the HRCS SEIS Alternative D

• Alt. ¡A ¡
• Alt. ¡B ¡
• Alt. ¡C ¡
• Alt. ¡D ¡
• I-64 improvements b/w

I-664 & I-564

• HRBT
• I-64/HRBT
• I-564
• I-564 Connector
• Route 164 Connector
• Route 164
• I-664
• I-664/I-564 Connectors
• I-564
• Route 164 Connector
• Alt. B and C

Review of Assumptions: HOT Network

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• VDOT retained qualified engineering and traffic consultants the study Hampton Roads

projects who in 2014 produced reports regarding a High Occupancy Toll network.

• PFM used these reports as a primary basis for our financing analyses to the extent possible:

– Engineers were asked and provided project costs based upon all general purpose lanes, which eliminated significant costs related to HOT direct connectors – Traffic consultant provided toll revenue estimates for tolling all lanes of the major water crossings

• Based on this data, PFM determined that HOT revenues did not cover HOT incremental costs
• It may be possible to add HOT lanes to some of the projects without direct connectors at

major interchanges, and PFM has been asked to study this:

– Engineers suggest an operational study to evaluate the safety & operation at each access point. – General purpose lanes cost estimates eliminated DCs but did NOT identify any corresponding slip ramps or pavement/bridge widenings that would be required for access/egress if HOT without DCs – The direct connectors provide a ‘cleaner’ system in terms of operational effectiveness and in terms of controlling leakage (toll evasion) – The HOT revenue forecast depends how the areas without direct connectors would function

• perationally with weaving and merging, etc.

– If a HOT network with Patriot’s Crossing tolling is the chosen alternative, then additional detailed traffic & revenue study is needed

Review of Assumptions: HRTF Revenue Forecast Update

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• Virginia Department of Taxation prepared HRTF revenue estimates from FY 2016 to FY 2022

in December 2015

• HRTF estimates from FY 2023 to FY 2045 revenues are extrapolated based on growth rates

assumed previously. Estimates thereafter assume the same growth rate as in FY 2045

• Fuel tax revenues growth rates vary from 0.0% to 1.7%; sale tax revenues growth rate is

approximately 3.3%

‒ Fuel tax revenues are revised down and sales tax revenues are revised up. ‒ Combined HRTF revenues are close to the previous estimates.

Work Order 2 Additional Funding Scenarios

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• The previous Scenario 1&2 are not feasible. The additional scenarios are to explore two
• ptions to close the funding gap:

– Increase HRTF revenues

• Set a fuel tax floor price of $3.22* (FY 2016 projected price is $1.98)
• Raise tax rates: currently 0.7% sales tax and 2.1% fuels tax**

– Delay project schedules until sufficient funds are accumulated

• Scenario 1: Toll Patriots Crossing Only ($2 Fixed Toll)

– 1A - $3.22 Floor Fuels Price – 1B - $3.22 Floor Fuels Price & Increase Fuels Tax Rate As Needed – 1C - $3.22 Floor Fuels Price & Increase Fuels Tax & Sales Rates As Needed – 1D - $3.22 Floor Fuels Price & Increase Sales Tax by 1.0%

• Scenario 2: $3.22 Floor Fuels Price; $2 Fixed Toll on Patriots Crossing and HOT Tolling on

High Rise Bridge, HRBT, MMBT & Rt. 460/58 Connector – 2A - Eliminate Direct Connectors – 2B - Eliminate Direct Connectors and Add I-64 HOV/HOT Project (no direct connectors)

*Weighted average figure established based on market prices on 2/20/2013 (76% gasoline and 24% diesel) ** Transposed numbers noted and corrected in FSAC meeting by PFM. This version denotes that correction.

Work Order 2 Financing Variations

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For each of the previously outlined additional scenarios, the following three financing variations have been evaluated:

• I. HRTF debt issuance allowed and $2 billion PV VDOT/HRTPO funds in total
• II. HRTF debt issuance allowed and $500 million PV VDOT/HRTPO funds in total

‒ VDOT may not pay pre-construction costs

• III. HRTF debt NOT allowed (pay-go funds only) and $2 billion PV VDOT/HRTPO funds

in total For the previous Scenario 4 as well as the above scenarios, as applicable, assume no capacity or other improvements to HRBT during the planning & financing horizon and no tolling of HRBT of any type

• Scope and cost correspond to Hampton Roads Crossing Study SEIS Alternative C

Scenarios 1A – 1D Results: Tax Revenue Comparison

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$150M $350M $550M $750M $950M $1,150M $1,350M Current Estimate Scenario 1A_I Scenario 1B_1 Scenario 1C_1 Scenario 1D_1

• The ¡Sales ¡Tax ¡is ¡projected ¡to ¡grow ¡more ¡rapidly ¡than ¡the ¡fuel ¡tax, ¡so ¡a ¡lower ¡star*ng ¡dollar ¡

amount ¡is ¡needed ¡if ¡increasing ¡the ¡Sales ¡Tax ¡

• Scenarios ¡1B, ¡1C, ¡and ¡1D ¡all ¡fully ¡fund ¡all ¡projects ¡by ¡2040 ¡if ¡bond ¡issuance ¡is ¡allowed, ¡even ¡if ¡

lower ¡HRTPO/VDOT ¡funding ¡is ¡assumed ¡

• However, ¡without ¡bond ¡issuance ¡significantly ¡higher ¡tax ¡rates ¡are ¡needed ¡and/or ¡some ¡

projects ¡will ¡be ¡pushed ¡past ¡2040 ¡