Columbia River Crossing Project, Financial Analysis

[Chief]

This thread is going to be based upon 2 documents that were released as part of the DEIS. There are a number of charts that I will be referencing, so I am providing links to those 2 documents here.

Cost Risk Assessment (http://www.clarkblog.org/DEIS2/CRC_Cost_Risk_Assessment.pdf?s=&showtopic=4351&view=findpost&p=28980)

Chapter 4: Financial Analysis (http://www.clarkblog.org/DEIS/CRC_DEIS_Chapter_4_v.7.pdf?s=&showtopic=4351&view=findpost&p=28980)

The Cost-Risk Analysis was used to prepare parts of the Financial Analysis, so I present both. I recommend that readers take time to print out copies of both documents as a printed copy is easier to read along with.

I want to try and keep the idle chatter to a minimum on this thread, and stay on point please. The financial arrangements of this deal are one of it's biggest Achilles Heels, so I want to do this right.

[Chief]

Use of Toll Revenues and Bond Proceeds

In Oregon, toll revenues and bond proceeds are restricted by the state
constitution to highway purposes. The Washington state constitution
does not have a similar prohibition. However, under recent Washington
law the use of toll revenues must be specifically authorized by the
legislature, which to date has not authorized toll revenues to be used for
transit purposes. Thus, the financial plan scenarios discussed in Section
4.4 assume that toll revenues would only be used for the capital and
operations costs related to the highway component of the CRC
alternatives.


This is directly contradictory to what Thayer Rohrbaugh, the City of Vancouver's Transportation Geroo has been out telling the various Neighborhood Associations for months. Thayer has been assuring people that they were "looking into" using toll money to pay for the Transit portion of the CRC as well.

Thayer, what kind of Geroo, are you, anyway?? What has Jim Moeller promised you??

Developing

8)

[Chief]

page 4-25

Additional Transit Revenue Options available to C-TRAN

As stated above, C-TRAN could seek approval of up to an additional
4/10th of 1 percent sales and use tax under its basic PTBA authority.
However, C-TRAN is considering a 20-year plan that would expand
paratransit and fixed-route services unrelated to the CRC project. Thus
unused PBTA sales and use tax authority may be used for C-TRAN’s
long-term plans and may not available for the CRC alternatives. In this
case, C-TRAN may use the additional funding authorities provided by
the State of Washington’s HCT Act18 to pay its share of CRC costs.

These taxing sources include:

• Employer Tax: an excise tax of up to two dollars per month per
employee on all employers located within the agency's jurisdiction.
The employer tax may only generate $2.8 million year within the
C-TRAN district,19 which would be insufficient by itself to support
most of the CRC alternatives.

• Sales and Use Tax on Car Rentals: a maximum of a 2.172 percent
sales and use tax upon retail car rentals within the agency’s
jurisdiction. This revenue option will also would be insufficient by
itself to support most CRC alternatives.

• Sales and Use Tax: not to exceed 9/10th of 1 percent. This is
separate from and in addition to the 9/10th of 1 percent sales and use
tax allowed, with voter approval, under C-TRAN’s PBTA authority.

Currently each 1/10th of 1 percent sales and use tax generates $5.2
million within the full C-TRAN district.

Under the HCT Act, a transit agency must receive voter approval of a
“high capacity transportation system plan and financing plan” as a prerequisite
to levying the funding sources listed above.

To seek voter
approval, the C-TRAN Board of Directors must enact a resolution
placing the system plan on the ballot.

It is anticipated that, if needed, the
measure would be placed on the ballot prior to the issuance of the record
of decision (ROD) by FTA and FHWA.

Voter approval of a systems plan
that includes the taxing authorities outlined above constitutes approval of
the tax.

A single ballot proposition may seek approval for one or more of
the authorized taxing sources.


Two dollars per employee on the exise tax?? Employers in the Tri-County area in Oregon pay $6.618 per employee to support TriMet. How can Clark County pay less than that and still expect to run anything??

Increase the tax on car rentals?? No problem, go rent a car at the Portland Airport to avoid that one, just like people wil avoid that extra 9/10th of a sales tax increase, if it were to be approved by the voters.

This plan leaves C-Tran holding the bag folks, and they would be idiots to agree to this kind of a fantasy to run Loot Rail.

[Chief]

pages 4-20 thru 4-21

Toll Credits

Under Federal law, a project is permitted to use certain toll revenue
expenditures as a credit toward the local matching share of federallyeligible
highway and transit projects. This concept is frequently referred
to as toll credits.

Toll credits are earned when a state or toll authority funds an eligible
capital investment with toll revenues from an existing facility. Project
sponsors may use toll credits as local match on a Federal project. By
using a sufficient amount of toll credits, the federal funding for a project
can be increased to 100 percent.

Fares paid by ferry riders, in places where ferry routes are considered
part of the highway systems (such as the Washington State Ferry
System), can earn toll credits in the same manner as a tolled highway.
WSDOT has earned toll credits through this mechanism, and may
provide an allocation of toll credits to the CRC project.

In this assessment, up to $750 million in New Starts funds are assumed
to be available to the high-capacity transit project.

With toll credits,
alternatives costing $750 million or less can be funded with New Starts
funds, provided a sufficient amount of toll credits are applied to meet the
local match requirement.

Project alternatives costing more than $750
million must incorporate sufficient local cash match to cover the
difference between the project cost and the assumed $750 million New
Starts grant.

There can be alternatives in which a portion of the local
match requirement is met by toll credits and a portion met with local
funds or in-kind match.

Some issues arise with the use of toll credits.

First, the project staff must
work with FTA to ensure that the use of toll credits does not negatively
affect FTA’s New Starts rating of the project.

Second, as part of any Full
Funding Grant Agreement, FTA will establish a maximum amount of
New Starts funds available to the project, and will obligate the project
sponsors to cover any cost overruns with non-New Starts funds.

During
the rating of the financial plan, FTA will complete a financial capacity
review to determine the ability of the project sponsors to meet this
obligation.

Thus, even when they can be used, toll credits do not entirely
eliminate the need for local capital funding capacity.

Lastly, in order to
use toll credits, WSDOT must provide a letter committing the necessary
amount of toll credits to the CRC project.


Isn't this some king of house of cards that they have constructed here?? Notice all of the carefully parsed language that doesn't hide the fact that the local taxpayers will be left holding the bag when all of these fine fantasies come crashing down in flames.

They cannot even guarantee that the FTA will even buy this construct...

8)

[Chief]

Let me lay out my nightmare scenario for you, and please poke holes in it anywhere you like.

I believe that our local politicians know in their heart of hearts that this project in it's present form is simply not doable. There are a lot of people in Public Office here in Vancouver who take this very seriously, are not happy with the process to date, and are scared stiff that the whole thing is about to come crashing down. I've talked to several elected people here in town who privately admit that the financing for the Columbia Crossing simply isn't there.

The scenarios that Chapter Four has put together for ways to pay for this are non-starters under current law. Significant legislation has to be passed in Olympia in order for portions of their plan to work at all. In addition they have to go to the voters in several ways in order to set this whole thing up.

** C-Tran has to be given permission by the voters in order to expand their Charter to manage and operate light rail in Clark County.

** Current plans call for up to 9/10ths of a cent Sales Tax increase, payable to C-Tran in order to pay for the light rail operations.

But the Federal Smart Starts Program is going to be the biggest initial hurdle that the Project has to clear, before they do anything. You see, most of Portland's Light Rail decisions have not been made because they serve so many people, they have been made to drive redevelopment. The Yellow Line up Interstate Avenue is a perfect example. Do some research on that and see how much the Feds actually kicked in to that project and why...

Problem One: What if the calculus that the Federal Transit Authorities are currently conducting turns up to prove that America's Vancouver's Loot Rail System only qualifies for $500 Million of that "up to $750 Million" worth of Smart Starts money?? That means that the locals would immediately have to find a way to cough up the other $250 Million in cash before the TSA will release a penny.

Problem two: The only thing the City thinks they can afford to operate at this point are the so-called (MOS) or "Minimal Operating Segments". I will get the diagrams up for those two options soon...the point to remember is that the only thing that the City of Vancouver can afford to build is one that does not involve contribution of a "local share". If the project does not qualify for the whole $750 Million it is dead in the water right there. No need to go any further, but they would need another $3.5 Million a year just to operate and maintain whichever alignment they build. In any case, a solid source for that money will have to be identified before the TSA will cough anything up, and a sales tax isn't going to cut it.

So in other words, the plans being laid down now are not sustainable from a realistic point of view, because by Washington Law, the voters will have to be consulted two and possibly three separate times in order to authorize any of this, and the voters locally haven't been in the mood to raise taxes lately for much of anything.

The scariest notion about this whole thing is the need to prop it up with a sales tax. I guarantee that as soon as a sales tax increase goes into effect, there will be a massive exodus both ways on the bridges, of Washingtonians crossing over to Oregon to shop more than they do now. There won't be a real need to organize a sales tax boycott, because the boycott will organize itself.

The point is that sales taxes in this market will not support anything to do with light rail for long. C-Tran will be left high and dry, and by Federal Law they may not degrade the bus service in order to pay for light rail, so the money has to come from somewhere else; both Clark County and all of the localities that pay into C-Tran would have to cough up the needed cash immediately to make up for any shortfall in the Transit Maintenance and Operations budget.

These are all issues that are in black and white before our very eyes, and every Politician I know has long ago headed for the tall grass to hide on this one. They will whisper that there is no money, but in Public they all put on a brave face, and talk hopefully about Federal and State Grant money, and their eagerness to do something for their Grand-children on the Columbia Crossing. In private they acknowledge that the project is likely doomed in several different ways.

Once this thing finally falls apart, (and I am convinced that it eventually will go the way of Proposition 1 up in Pugetopolis last Fall), the blame game will start, and we will begin to find out exactly who did what to short-circuit whom, and why. I think Royce Pollard is going to receive most of the blame when this is all said and done, and that would be fair, since he sits on almost every Washington Committee that advises him in his position on the Columbia Crossing Task Force.

Royce Pollard has a lot to answer for, and when this crashes and burns, it will not only mark the end of Pollard's political career, but an end to the mad dash for Downtown redevelopment too. I don't look for him to run for office again in 2009, because he will be so bloodied by the failure of the Columbia Crossing Project as to be a completely non-viable candidate for anything.,

So the nightmare scenario culminates with an emergency tax levy on my house in order to raise the millions that will be needed to bail out loot rail once it's built into Vancouver. If it comes, those silver trains that they Mayor loves so well will cost this County dearly, and in ways that you haven't even imagined yet.

More to come...

Stout hearts...

[Chief]

The other item that disturbs me immediately, is that there is no discussion in this document that I have found yet, that discusses the substantial financial contributions that Clark County residents are making not only to the State of Oregon, but to Trimet as well.

Quite the contrary, I see Clark County Commuters being treated very much like the enemy, and many ways being found to squeeze them for every cent they have for tolls.

Automatic tolling is very bothersome to me, especially in the ways it is being described, but I will save that for a different thread...

8)

[Chief]

Oh by the way...anyone care to do the calculus of the effect that killing the gasoline tax for three months this summer will have on the CRCP?

Just sayin'...

8)

[Waterbuffalo]

This is probably the first time I have said some thing on what you have posted on this subject related to the CRC Task Force and the local politicians who basically are taking the the Right of Glib of Silence on this one.

Have heard bits and pieces from Betty Sue this week at the Board of commissioners meeting on Tuesday about taking the time to read the report, send in comments and talk to them about how you feel about the CRC project.

Other than that I have heard very little in the past month on the subject and would not be surprised by the same fact Chief. That the local politicians are not willing to stick their necks out politically for this project.

Chef, my question I put to you before is: Has this stopped the mayor of America's Vancouver before and has he pulled off the impossible magic before?

[Chief]

There is no way the Mayor can make this happen alone WB.. Right now, it is legislatively impossible to finance the CRCP the way they want, because Washington law will not allow it. It will be others like Jim Moeller and Craig Pridemore who will be working to make this all happen.

If this project fails, Royce Pollard is finished in Vancouver politics.

[Waterbuffalo]

Some thing I might add here and not in a new or different thread, its that I personally do get offended by a lot of what the Multnomah county and other state government officials from Oregon treat us like where their second step child with hands outstretched.

Its offended me more than once. I do get some of the same feeling from others over there as well. No, I am not brush stroking all of Portland, because there are a lot of good, honest, hard working people.

Have you gotten this feeling Chief?

[Waterbuffalo]

I am going to move this over to another thread.. This is for the DEIS questions, not my personal comments on this subject.