7.2. SR 07-19-2004 - Laserfiche WebLink

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DATE: May 18, 2004 TO: Bob McFarlin, Assistant to the Commissioner Tim Yantos, NCDA Project Director FROM: Mike Schadauer, Fixed Guideway Transit Manager Mary Richardson, NCDA Legal Counsel RE: Implications to Northstar Commuter Rail Project If Bonding for Northstar Not Approved You asked us to summarize the likely impact on the Northstar Commuter Rail Project that would result from the Legislature's failure to approve bonding in the amount of $37,500,000 for the project. This memorandum describes the implications of delay in project implementation. Financial Implications 1. Loss of Funds Appropriated by Congress a. Congressional appropriations for the Northstar project include the following: i. FY 2002 Public Law 107-87 - $9,900,131 (Expires on September 30, 2004) ii. FY 2003 Public Law 108-7 - $4,917,912 (Expires on September 30, 2005) iii.FY 2004 Public Law 108-199 - $5,659,028 (Expires on September 30, 2006) b. Failure of the 2004 Legislature to provide its share of the local match for these federal funds will result in the loss of $9,900,131. If the Legislature does not act until the 2006 bonding year, an additional $4,917,912 in federal funds will expire on September 30, 2005. 2. New Starts Process a. The Northstar Commuter Rail Project completed the preliminary engineering phase of the Federal Transit Administration's New Starts process in 2001. b. FTA guidelines prohibit projects from advancing into the final design phase if project sponsors have not secured 50% of the non-federal (local) match of the project's capital costs. c. Failure of the 2004 Legislature to provide its share of the non-federal matching funds ($37,500,000) will result in an FTA rating of "not recommended" for federal funding, and the project may not progress into the final design phase. The F-FA has indicated that the project will not receive a "recommended" rating until the local match is secured. d. The competition for FTA New Starts funding intensifies every year as more projects are proposed across the country. The introduction of Bus Rapid Transit has greatly increased the number of projects eligible for New Starts funding. 3. Inflation For each year of delay in the construction of the Northstar project, capital costs increase at the rate of inflation. According to the Engineering News Record, the construction cost index increased 3.75% so far in 2004. Assuming an inflation rate of 4% per year, a one- year delay of Northstar would increase the capital cost by approximately $10.6 million to a total of $275.6 million. If the project were delayed a second year with approval in 2006, the capital cost will increase by an additional $11.0 million to a total of approximately $286.6 million.