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 • In November 2015, PFM prepared and presented six HRTAC project financing scenarios Toll Patriots Crossing Only assumed $2.00 fixed toll rate 1. HOT Network 2. 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 Toll All Lanes – Option A 3. $1 on High Rise Bridge, Patriots Crossing, HRBT and MMBT; HOT on Rt. 460/58 Connector Toll All Lanes – Option B 4. $2 on High Rise Bridge, Patriots Crossing, HRBT and MMBT; HOT on Rt. 460/58 Connector Toll All Lanes – Option C 5. Same as Scenario 3 except peak & off-peak congestion pricing at $1.5 & $1 on HRBT Toll All Lanes – Option D 6. 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 2

Recap: Initial Project Financing Scenario Results • 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 Scenario 1 Scenario 2 Scenario 3 Scenarnio 4 Scenario 5 Scenario 6 Toll Patriots Toll All Lanes Toll All Lanes Toll All Lanes Toll All Lanes HOT Network $ millions Crossing Only Option A Option B Option C 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. • PFM also prepared Scenario 6B that assumed delaying Patriots Crossing construction after MMBT could be completed. Scenario 6B is feasible. 3

Review of Assumptions: Project Schedule Updates • 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 4

Review of Assumptions: Studied Scope vs. SEIS Scope • 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 ¡ � Alt. B and C � I-664 � I-64/HRBT � I-64 improvements b/w � I-664/I-564 Connectors � I-564 I-664 & I-564 � I-564 � I-564 Connector � HRBT � Route 164 Connector � Route 164 Connector � Route 164 5

Review of Assumptions: HOT Network • 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 operationally 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 6

Review of Assumptions: HRTF Revenue Forecast Update • Virginia Department of Taxation prepared HRTF revenue estimates from FY 2016 to FY 2022 in December 2015 ‒ Fuel tax revenues are revised down and sales tax revenues are revised up. ‒ Combined HRTF revenues are close to the previous estimates. • 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% 7

Work Order 2 Additional Funding Scenarios • The previous Scenario 1&2 are not feasible. The additional scenarios are to explore two options to close the funding gap: – Increase HRTF revenues o Set a fuel tax floor price of $3.22* (FY 2016 projected price is $1.98) o 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. 8

Work Order 2 Financing Variations 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 9

Scenarios 1A – 1D Results: Tax Revenue Comparison • 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 ¡ $1,350M $1,150M $950M Current Estimate Scenario 1A_I $750M Scenario 1B_1 Scenario 1C_1 $550M Scenario 1D_1 $350M $150M 10