Review of 2016–2021 Strategic Budget Plan Development Process and 2016 Budget Assumptions Financial Administration and Audit Committee April 14,

Agenda Purpose of Strategic Budget Plan (SBP) Overview Development Process Operating Elements Capital Elements Assumptions Issues and Challenges Next Steps 2

Purpose of the SBP Provides overall guidance for RTD Base System service delivery, debt, and capital expenditures –Six year capital and operating plan –Identifies anticipated revenues and expenditures –Must be financially constrained (balanced budget) Provides input for other planning efforts –DRCOG six year Transportation Improvement Program (TIP) –RTD Annual Budget –FasTracks Financial Plan Will align with Board top strategic goals for 2016 –Fiscal sustainability –Openings of Rail and BRT –Technology Incorporates approved performance measures Sets target for development of fund balances 3

Overview of the SBP SBP includes only service and projects funded from the Base System 0.6% sales and use tax FasTracks expenses and projects are included in the FasTracks Annual Program Evaluation (APE) financial plan –Cost allocation to FasTracks operations for West Line, DUS Bus Concourse, Free MetroRide, I-225 Rail Line 4

2016 – 2021 SBP Development Process SBP capital program used as baseline for current SBP –Start with projects approved in 2015–2020 SBP –Existing projects with costs in future years are rolled into the current cycle SBP –Requests for new projects are brought into current cycle SBP –Projects are prioritized and evaluated using mission statement criteria and 2016 strategic goals Revenue forecasts updated to incorporate most recent available information Ongoing operating cost forecasts updated to 2015 Budget, using current information and current cost trends 5

2016 – 2021 SBP Operating Elements Bus Services Fixed route bus service levels –Service hours in 2016 being developed, to be higher than 2015 Budget of approximately 3.0 million hours due to US36 BRT –Future bus service improvements dependent on service efficiencies and financial capability ADA service to meet demand – per federal regulations –Pursue taxi service, efficiencies and training LRT Service Service hours in 2016 being developed –To be higher than 2015 Budget of approximately 225,000 hours due to I-225 Rail Line –Future train service capacity improvements dependent on ridership and financial capability Operating and Passenger Facilities Projects to maintain facilities in State of Good Repair 6

2016 – 2021 SBP Capital Elements Capital projects have a cost greater than $5,000 and useful life greater than one year Fleet Plan Bus replacements to meet service needs –Replacements with clean diesel or other clean fuel buses when cost- effective –Base system fleet plan to include replacement of 40-ft. transit, 30-ft. transit, intercity, call-n-Ride and ADA cut-away buses and expansion of 40-ft. transit, intercity, call-n-Ride and ADA cut-away buses Rail fleet expansion to meet service needs –I-225 Rail Line requirements, meet minimum maintenance requirements and spare ratio Operating and Passenger Facilities and Equipment Projects to replace and improve assets and facilities Maintain SOGR 7

2016 – 2021 SBP Revenue Assumptions Sales and use tax growth rates –2016: CU-Leeds School of Business currently forecasts 4.8% increase over 2015 – : based on quarterly forecasts from CU-Leeds School –January 2015 actual sales/use tax is 10.8% over January 2014 Annual sales and use tax growth* –2014: 9.8% (actual) –2015: 7.1% –2016: 4.8% –2017: 6.8% –2018: 5.5% –2019: 3.8% –2020: 3.2% –2021: 3.5% *from CU-Leeds School March 2015 baseline forecast Federal grants –Based on actual 2015 appropriations –Assumed to increase at rate of inflation or as identified Fare revenue –Assume 10% fare increase in 2016 over 2015 budget –Per policy, Board will consider a fare increase every 3 years, scheduled increase for 2014 was deferred to 2015 and

2016 – 2021 SBP Sales/Use Tax Forecast (Base) Source: CU-Leeds School 9

2016 – 2021 SBP Cost Assumptions Operating and maintenance costs –Based on 2015 proposed Amended Budget –Costs escalated at rate of inflation –CBA (Feb-13) incorporated, fixed through 2017 Diesel fuel costs –Locked at $2.95 per gallon in 2015 –Current futures estimate is $2.12 for 2016 volatile commodity exercise contract option for third year prior to lock –Conservative cost assumptions and escalated at rate of inflation –Provide monthly updates Debt service –Interest payments on existing debt and assumed financing Inflation rates –Based on Moody’s forecasts of December 2014 –Denver-Boulder inflation rate: 3.1% in 2016 –National inflation rate: 2.6% in

2016 – 2021 SBP Issues and Challenges Fuel prices/fuel volatility Fiscal sustainability issues in 2016 –Top priorities Sales/use tax compliance reviews Partnerships/privatization –Pursue other revenue sources Naming rights, charge for parking, tolling lanes –Continue development of fund balances Board-appropriated fund and capital replacement fund –Maintain adequate unrestricted fund balance Targeted balance on combined basis Optimize/improve service levels System growth and increased O&M costs Competing projects/prioritization State of Good Repair Continue cost allocation methodology for FasTracks Operations 10

2016 – 2021 SBP Next Steps Continue to review sales tax projections Further review fuel options Review and prioritize SBP departmental requests for capital and expense projects –Mission statement criteria and 2016 strategic goals Develop funding strategies Key dates (tentative): April 14 – SBP overview at FAAC meeting April 28 – First draft SBP at Budget Study Session May 19 – Second draft SBP at FAAC meeting June 9 – SBP update July 14 – Final SBP to FAAC for recommendation to Board August 25 – Presentation of 2016 Requested Budget November 17 – Adoption of 2016 Budget 11