August 30th, 2018
Dear Orange County Commissioners:
The growth in Durham’s economy is impressive as their leaders are willing to fill the $57 million gap that the NCGA created for DOLRT. Of course, Durham will receive substantial property tax benefits from the project. At the same time, the project continues to grow riskier for Orange County taxpayers.
Please update Orange County’s citizens on major changes to project functionality, risk and cash flow. Our questions include:
- How will GoTriangle cover the added $90 million expense to elevate the tracks on Erwin Road. What other functional changes are planned, including functions lost via “value engineering”. How will this collectively impact cost, ridership, frequency, travel times, and schedules?
- What progress has GoTriangle made in securing $100 million in private funds to fill funding gaps identified last spring? Firm commitments for the $100 million in its entirety will be needed in April in order to secure state funding.
- How will shortfalls in Orange County’s sales taxes and other transit taxes impact project cash flows and Orange County’s ability to meet funding commitments? If sales/transit taxes are insufficient, how will Orange County fill the gap? Orange County’s sales taxes are growing at 2-2.5%, considerably slower than GoTriangle predicted. In the DOLRT plan, county sales taxes were projected to grow by 3.7% annually, and closer to 5% per year from 2018-2020.
- What is the financing risk to Orange County? In other words, how much, beyond the $149 million, will Orange County spend on debt and interest payments? Orange County capped its funding to the base project ($2.47 billion) at $149 million, but is also liable for about 20% of the financing costs which is now estimated at $850 million or more.
- What is the impact of increasing construction costs on the project? Construction costs and trade tariffs are impacting transit projects across the nation. How does that impact the DOLRT project plan and cost estimates?
- What is the likelihood of receiving any federal funding toward this project? The FTA continues to assert that it is not planning to fund new light rail projects at all. This guidance was issued in their 2018 funding plan, and reiterated after Congress increased the funding available for New Starts projects. Since Trump took office, no new LRT projects have received New Starts grants.
- How will the FTA’s policy on TIFIA loans impact the project cost and cash flow? GoTriangle intends to use TIFIA loans to borrow $400 million from the federal government. The FTA has indicated that TIFIA loans will be deducted from federal grants that are issued. That means GoTriangle could lose hundreds of millions of dollars in federal funding or have to find alternative funding at a higher interest rate.
In order to properly evaluate these changes, we ask that Orange County retain its long-time independent advisors Davenport & Co. to examine these changes, and evaluate their impact on the project costs, schedules and cash flows. An independent review is now essential for Orange County’s citizens to understand the risks and challenges that the DOLRT project will place on our local economy.
Thank you.
| David Adams | Thomas Holmes |
| Gail Alberti | Charles Humble |
| Kathy Arab | Dolly Hunter |
| Tony Blake | Ann Moss Joyner |
| Lisa Brach | Rudy L. Juliano |
| Alex Cabanes | Fred Lampe |
| Alex Castro, Jr | Ken Larsen |
| Richard Chady | Brenda McCall |
| Katherine Cheek | Julie McClintock |
| Silvia Clements | Molly McConnell |
| Betsy and Bill Crittenden | Amey Miller |
| Matt Czajkowski | John Morris |
| Tom Englund & Chuck Roser | Jeff Prather |
| Arthur & Deborah Finn | Paul and Graciela Rockwell |
| Vivian Foushee | David Schwartz |
| Joan Guilkey | Del Snow |
| Cheri Hardman | Yuri Trembath & Dina Trobbiani |
| Bonnie Hauser | Terry & Robert Vance |
| Rachel Hawkins | Susan Walser |
| Thomas Henkel | Neva Whybark |
| Diane Willis |