Financial Adequacy Chapter - Virginia Department of ... · • Virginia-specific descriptions relate to policy-makers and ... MEETING GOALS VTRANS2035 Financial Adequacy Chapter

Financial Adequacy ChapterProject Status Report

July 8, 2009

Presentation by: Jack Faucett Associates and VHB

TRANSPORTATION IN THE NEWS

VTRANS2035 Financial Adequacy Chapter Status ReportPage 2

“Report: 98 Percent Of U.S. Commuters Favor Public Transportation For Others”

An article title in The Onion, a satirical newspaper, on November 29,2000.

REPORT OUTLINE

• Meeting goals

• Finance chapter objectives

• Section outline

• Individual section outlines

• Scenario analysis description

• Final Comments


The JFA team would like to present our plan to complete this important project and gather feedback.

• Demonstrate how the chapter meets the VTRANS2035 financial adequacy chapter requirements– Layered approach to communicate with different audiences

• Basic explanations communicate with general audience

• Virginia-specific descriptions relate to policy-makers and industry professionals

• Present the chapter and section outlines– Confirm that each chapter meets the committee’s expectations

– Confirm that the important aspects of transportation finance are being recognized

– Generate new ideas for graphical displays and content

• Present alternative financing scenarios for comparison– Relevance of each scenario

– How each scenario is generated

• Present methodological approach to assessing scenario impacts– Highway and transit models

– Systematically employing expert judgment

• Confirm timetable for completion

MEETING GOALS


The finance chapter will inform the reader of contemporary issues in transportation finance and how they affect the future of the Virginia system.

• Illustrate the current state of transportation finance in a single-year “snapshot”• Present a forward looking perspective on Virginia transportation funding• Give each reader something that relates to their knowledge base: system users, transportation

providers, policy makers• Outline available funding sources• Chronicle the challenges Virginia transportation agencies face• Discuss new issues that will affect transportation finance• Discuss PPPs in Virginia and elsewhere• Present alternative funding scenarios• Predict system performance under alternative funding scenarios• Illustrate the impacts of alternative revenue and expenditure patterns• Present current and evolving transportation funding options

FINANCE CHAPTER OBJECTIVES


1. Introduction and Summary

2. The Transportation Challenge

3. Contemporary Issues Affecting Transportation Finance

4. Financing Mechanisms

5. Current Financial Situation and Forecast

6. Funding Scenarios and Impacts on Performance Measures

7. Conclusion: The Future of Transportation Finance in Virginia

PROPOSED CHAPTER OUTLINE


SECTION 1. INTRODUCTION AND SUMMARY

The introduction will summarize the chapter and serve as an executive summary.

A.Description of transportation finance and challenges

B.Presentation of revenues forecast by revenue source (graphical only)

C.Description alternative scenarios

D.Presentation overall evaluations for each scenario


Scenario Name Overall Grade

Business As Usual X

Sustain 2007 Performance X

Shift Funding from Highway to Transit X

Allocation Additional $1 Billion X

This section will summarize the complexities of meeting the transportation requirements of a growing population under financial constraints.

A.Increasing transportation demand– Population growth = congestion

– Population growth measured against transportation capacity

– Purchasing power of gas tax revenues since the last tax increase

B.Increased complexity of solutions– Mega-projects necessary to adequately meet increased capacity

• Springfield Mixing Bowl

• Wilson Bridge

– Comparison of project costs then and now

C.The importance of matching Federal dollars– Graph of the “crossover”

– Implications

SECTION 2. THE TRANSPORTATION CHALLENGE

PPP Call-out Box:“Engaging the Private Sector to Improve Transportation”

● What is the PPTA? ● Why PPPs? ● VDOT’s Response


SECTION 3. CONTEMPORARY ISSUES AFFECTING TRANSPORTATION FINANCE


This section will describe the most prevalent national issues affecting transportation finance and how they affect the Commonwealth.A.Recent Federal commissions reports and the upcoming legislation that will replace SAFETEA-LU

– Recent Federal legislation and transportation finance

– Possible Federal changes with the next bill

B.Recent research on the impact of transportation infrastructure investments on economic vitality– Uncertainty as to how transportation investment impacts the economy

– Policy implications

C.Replacing the gas tax with alternative revenue generation mechanisms– Summary of alternatives

– Activity in other states

– Impact of alternatives on revenues

D.The Commonwealth’s GHG reduction goals– Description of goals

– How might climate change plans affect funding

E.Financial planning impact of transportation fund illiquidity

PPP Call-out Box: “What makes a PPP”

● PPTA Projects ● PPP Appropriateness ● Types of PPPs

This section will explain the role of finance in funding transportation projects and how Virginia has used innovative financing techniques.

A.Description of the reasoning behind financing transportation projects– Graphical depiction of the reasoning for financing

– Graphic of Virginia’s use of financing

B.Discussion of financing mechanisms in Virginia– Grant Anticipation Revenue Vehicles (GARVEE) Bonds

– Federal Highway Reimbursement Anticipation Notes (FRANs)

– Transportation Infrastructure Finance and Innovation Act (TIFIA) Loans

– State Infrastructure Bank (SIB)

– Capital Project Revenue (CPR) Bonds

SECTION 4. FINANCING MECHANISMS

PPP Call-out Box: “Problematic PPPs and Lessons Learned”

● South Bay Expressway (CA) ● London Underground


This section will orient the reader to transportation related revenues and expenditures in 2008, as well as the expected revenues and allocations to 2035.

A.Description of transportation funding sources in 2008– Revenues by source (Federal, state, local & private)

– Revenues by type (motor fuels tax, state sales tax, etc.)

– Revenues by mode

– State allocations

B.Forecasted revenues to 2035– Revenues by type (motor fuels tax, state sales tax, etc.)

– State allocations

SECTION 5. CURRENT FINANCIAL SITUATION AND FORECAST


This section will show how policy changes that affect funding levels in the future will likely influence the quality of the transportation system.

A. Description of the different funding scenarios– Business as Usual (Baseline Scenario)—the projection of current spending from the forecast provided by

VDOT

– Sustain 2007 Performance—funding determined by estimates of needed funds to maintain system performance

– Change in Mix—shift funding from highways to transit

– Increased Funding—allocate an additional $1 billion across all modes

B. Relate funding to Transportation Accountability Commission performance measures and evaluate the effect of each scenario on performance

– Briefly describe the evaluation method

– List 2007 performance characteristics as in the 2007 Transportation Performance Report

– Identify results under each using the same tools at in the performance report (↑,→,↓)

– Assign letter grades to performance measure categories

SECTION 6. FUNDING SCENARIOS AND IMPACTS ON PERFORMANCE MEASURES


The concluding section will relate each of the sections to each other and discuss how transportation finance may change between now and 2035.

A.Reiterate challenges Virginia transportation finance may face in the future– Shrinking ability to meet demand

– Inability to meet matching funds

– Poor system performance

– Environmental considerations

B.Comment on the applicability of solutions likely to be proposed– Alternative revenue generation vehicles

– Financing methods

– The role of the Federal government

SECTION 7. CONCLUSION: THE FUTURE OF TRANSPORTATION FINANCE IN VIRGINIA

PPP Call-out Box: “The Future of Private Investment in Virginia’s Transportation System”


SCENARIO ANALYSIS DESCRIPTION


Four alternative financing scenarios will be evaluated against a consistent forecasted increase in demand, which is proportional to projected population.

Business as Usual (Baseline Scenario)•VDOT revenue forecasts will be the “do nothing” financial forecast

•Models and opinion from agency experts will dictate the effect on Transportation Accountability Commission performance measures

Sustain 2007 Performance•Funding determined by estimates of needed funds to maintain system performance

•Models provide option to optimize system performance while maintaining specified benefits

•Agency experts will address key performance characteristics that will require investment to satisfy demand

Change in Mix•A portion of TTF from the BAU reallocated to transit (amount to be determined)

•Changes in highway and transit performance determined using models and expert opinion

•Implications of those changes to aviation and ports determined using expert option

Increased Funding•$1 billion (2007 $) will be allocated across all modes proportionally to TTF allotments

•Results for highways and transit will be modeled against the baseline using the FHWA and FTA models

•Agency experts will determine what priority projects will receive additional funding and the predicted impact

SCENARIO ANALYSIS DESCRIPTION (cont’d)


Alternative funding scenarios will be evaluated against the performance measures stated in the 2007 Transportation Performance Report.

Outcomes from each performance measure will be averaged with a weighting for each to get an overall grade for each of the seven goals, as shown in the following example:

Scenario analysis results will be obtained in fours ways:1.HERS-ST, a highway planning model specific to Virginia that measures the costs and benefits of highway investment

2.TERM, a transit investment model with 2006 data for 18 of Virginia’s largest transit agencies

3.Expert opinion, obtained through interviews with transportation agency staff

4.Economic interpretation, identifying the linkages between performance measures with help from agency experts

Goal BAU Sustain ‘07 Change Mix Add Funds

Safety D C B B

Preservation C C C B

Mobility D B C B

etc. . .



The goals, performance measures, recent results and anticipated evaluation methods are listed in the following table:

Highway Transit Rail Aviation Port DMVSafety & Security

Highway Fatalities ↓ ↑ HERS‐VAHighway Crashes ↓ ↓ HERS‐VATransit Crashes ↓ ↑ TERM+Aviation Crashes ↓ ↑ InterviewCompliance with Maritime Transportation Security Act → → Interview InterviewAirport Voluntary Certification Program ↑ → InterviewSafety and Security Plan → → Interview Interview Interview Interview Interview Interview

Preservation & Management% Interstate & Primary Roads in Fair or Better Condition ↑ ↓ HERS‐VA% Bridges in Fair or Better Condition ↑ → HERS‐VA% Transit Vehicles in Need of Replacement ↓ ↓ TERM

Mobility, Accessibility, & ConnectivityPublic Transportation Trips per Capita ↑ ↑ TERMTransit Revenue Miles ↑ ↑ TERMHOV Use ↑ → InterviewHours of Delay ↓ → HERS‐VAPark and Ride Spaces ↑ ↑ Interview InterviewBicycle Travel ↑ ↑ InterviewPedestrian Travel ↑ ↑ InterviewIntercity Rail Service ↑ ↑ Interview

Goals & Performance MeasuresDesired Trend

2007 Result

Mode/Agency



Highway Transit Rail Aviation Port DMVEnvironmental Stewardship

Tons of Mobile Source Emissions ↓ ↓ Linked to Measures AboveTons of Greenhouse Gas Emissions ↓ ↑ Linked to Measures AboveFuel Usage per Capita ↓ ↑ Linked to Several Measures AboveAcres of Wetlands Replaced → → Interview with VDOT Environmental Division

Economic VitalityTransportation Sector Employment ↑ ↓ Tracks Forecasted RevenuesFreight Through the Port of Virginia ↑ ↑ InterviewNumber of Enplanements ↑ ↑ Interview% Transportation Expenditures on SWAM Business ↑ ↑ Tracks Forecasted Revenues Interview Interview

Program DeliveryAdministrative Expenditures/Total Expenditures (VDOT) ↓ ↓ InterviewTotal Operating Costs per Transit Trip ↓ ↑ TERM InterviewProjects Completed On‐Time and On‐Budget ↑ ↑ Interview Interview Interview Interview Interview InterviewDMV Customer Service Center Wait Times ↓ ↓ InterviewVDOT Customer Satisfaction ↑ ↑ Linked Above

Coordination of Transportation & Land UseJobs/Housing Balance ↓ ↓ Interview Linked AbovePopulation Density in Metro Areas ↑ ↑ Interview Linked AboveVMT per Capita ↓ → Interview Linked Above

Goals & Performance MeasuresDesired Trend

2007 Result

Mode/Agency



2007 will be the baseline year for performance measures– Measures will be relative when possible (fatalities per capita or % change compared to national forecasts)

– Change against the baseline will only be considered as improvement, no/small change, or worsening and assigned a value of 1, 0.5 and 0 respectively.

HERS-ST and TERM provide quantitative outputs for numerous performance measures that will be compared against the baseline– For the sustain performance scenario, performance targets can be set and optimal funding calculated

Interviews will focus on identifying how changes in funding will affect sub-measures– Sub-measures will consist of performance measure attainment strategies identified in the 2007 Transportation

Performance Report and programs listed in agency plans

– Hypothetical budgeting will be used to identify trade-offs

– Minimal and maximum thresholds will be identified

Interpretation will consider the effects determined on performance measures that are directly linked to other performance measures (i.e., fuel use per capita is linked to public transit, HOV use, and others)– This is especially necessary when there is not a direct link between agency actions and performance (i.e., land

use)

• Total chapter length to be no more than 30 pages, including pictures, graphics, charts, and tables.

• Reader should gain from this chapter an understand the nature of transportation finance in the Commonwealth, including:

– An understanding of where their funds go and the complexities involved in funding the system

– An appreciation for what the transportation community has done in the past and the path toward the future

– A realization that decisions made today will affect the State now and for years to come.

FINAL COMMENTS


Documents

Financial Adequacy Chapter - Virginia Department of ... · • Virginia-specific descriptions relate to policy-makers and ... MEETING GOALS VTRANS2035 Financial Adequacy Chapter