4.4. SR 03-17-2003 - Laserfiche WebLink

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The operating and maintenance cost component is the present value of those costs over the first 15 years of operation. Beginning in 2007, the operation of the line is expected to cost roughly $15 million per year in 20075. Thus, the net present value of the project is estimated to be a positive $77.5 million and the benefit/cost ratio is 1.15 (578.9/501.4). This means that the project will produce $1.15 cents for every dollar of cost, in present value terms. Return to the State of Minnesota This benefit/cost ratio of 1.15 is based on the total costs of the proposed rail line. From the point of view of the State of Minnesota, a more interesting calculation might be to compare the benefits generated by the project with the monies that the state will have to provide for the construction and operation of the line. Current funding proposals involve the sharing of capital costs among three entities: the State of Minnesota, the Federal Transit Administration, and the NCDA, an organization of thirty cities, townships, and counties located along the proposed rail line. The state is being asked to provide roughly 40 per cent of the $302 million in capital costs, the Federal government 50%, and the local governments 10%. Thus Minnesota's portion of the capital bill will be $123 million. The current operating plan involves splitting the expected annual operating cost of $15 roughly into thirds. One-third would be paid by Federal funds, one-third by the State of Minnesota, and the last third would be covered by fare-box receipts. The present value of Minnesota's share over 15 years would be 72 million. Table 2 Northstar Commuter Rail Benefits Compared to State Costs (Present values in million of 20075) Total Benefits State Costs Capital Costs Operating and Maintenance Costs Total State Costs Benefit/cost ratio= Source: Anton, Lubov & Associates $123.1 $ 72.5 $578.9 $195.6 2.97