1. Virginia Department of Rail and Public Transportation Transit Capital Funding Issues Jennifer Mitchell NVTC Commission Meeting July 10, 2014

2. Virginia Department of Rail and Public Transportation Transit Funding CTB Transit Formulas New capital and operating formulas adopted in December 2013 Performance metrics based on: Net cost per rider (50%) Customers per revenue hour (25%) Customers per revenue mile (25%) Systems are sized equally based on ridership and operating costs – sized relative to all transit operators eligible for state assistance Capital allocations based on set percentages for asset categories

3. Virginia Department of Rail and Public Transportation Transit Capital Needs Ten-Year Trend Analysis Increased capacity has been made and sustained through an increase in funding Future growth and sustainability dependent upon corresponding funding commitment

4. Virginia Department of Rail and Public Transportation Transportation Capital Projects Revenue (CPR) Bonds Va. Code § 33.1-23.4:01 In 2007, the Commonwealth Transportation Board authorized to issue CPR bonds for transportation projects $3 billion total bond authority A minimum of 20% dedicated to transit capital ($60 million annually) Transit elected to receive funding over a ten-year period versus the accelerated bond allocations adopted by highways Above the minimum, $50 M per year over ten years allocated to WMATA PRIIA match

5. Virginia Department of Rail and Public Transportation Transit Capital Funding Other Considerations In 2013, HB2313 provided approximately $15 million of revenue to transit capital on an annual basis For FY 2015, a total of $158 million of revenue was available to be allocated for transit capital projects $48 million came from sustained sources $110 million came from CPR bond revenues The state match with the HB2313 revenues included will drop to approximately 10% by FY 2020

6. Virginia Department of Rail and Public Transportation Marketplace Fairness Act FY 14 $21.3 M FY 15 $22.1 M FY 16 $20.2 M FY 17 $21.1 M FY 18 $21.9 M FY 19 $22.8 M Failure of federal government to pass MFA results in net loss to transit Funds deposited to the Mass Transit Trust Fund split: 72% for operating 25% for capital 3% for special programs Total loss of $129.5 million by FY 19

7. Virginia Department of Rail and Public Transportation Transit Capital Projected Revenues

8. Virginia Department of Rail and Public Transportation Transit Capital Projected State Matching Percentage

9. Virginia Department of Rail and Public Transportation Transit Capital Projected Local Matching Percentage

10. Virginia Department of Rail and Public Transportation Impacts on Local Operators Reduced state match will cause local shares to increase significantly Tradeoffs: fill gap with other revenue sources or make extensive service cuts Potential difficulty in matching Federal funds Deferral or cancellation of many capital projects Increase in need for debt financing for major projects Deferred capital needs can lead to higher O&M costs, shorter asset lifecycles, and lower reliability

11. Virginia Department of Rail and Public Transportation State Matching Share Levels Approximately 25% state match Sporadic general fund allocations Prior to 2009 CPR bond allocations 50% - 70% state match for capital 2009 New TSDAC distribution formula State match remains at 50% - 70% 2014 $110 M decline in transit funding State match approximately 10% 2019 and beyond

12. Virginia Department of Rail and Public Transportation Transit Capital Funding Possible Mitigation Strategies Authorize the bonding authority to be revolving based on the level of underlying insurance premiums tax revenues available for new debt service Allow transit projects to receive equitable consideration under HB 2 prioritization process, including state of good repair capital Increase transit’s percentage share of the transportation trust fund Established in 1986 at 8.4% Amended in 1999 to 14.7% based on increased needs