$96,580,000 regional transportation district (colorado ... · -1-official statement $96,580,000...
TRANSCRIPT
NEW ISSUE – BOOK-ENTRY ONLY RATINGS: S&P: "AAA" Moody's: "Aa2" Fitch: "AA+" See "RATINGS"
In the opinion of Bond Counsel, interest on the Bonds is included in gross income pursuant to the Internal Revenue Code of 1986, as amended to the date of delivery of the Bonds (the "Tax Code") and is included in gross income pursuant to Colorado law. See "TAX MATTERS."
$96,580,000 REGIONAL TRANSPORTATION DISTRICT
(Colorado) Taxable Sales Tax Revenue Refunding Bonds
Series 2013A Dated: Date of Delivery Due: November 1, as shown below
Principal and the final installment of interest on the Bonds are payable upon presentation and surrender thereof to, and all other interest (due November 1, 2013 and each May 1 and November 1 thereafter) is payable by, The Bank of New York Mellon Trust Company, N.A., as paying agent, by wire, check or draft to the registered owners of the Bonds.
The Bonds are issuable in registered form and are initially to be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York, as securities depository for the Bonds. Purchases by beneficial owners of the Bonds are to be made in book-entry form in the principal amount of $5,000 or any integral multiple thereof. Beneficial owners are not to receive certificates evidencing their interests in the Bonds. See "THE BONDS – Book-Entry Form."
The Bonds mature, bear interest and are priced to yield as follows:
MATURITY SCHEDULE (CUSIP© 6-digit issue number: 759136(2))
Maturity (November 1)
Principal Amount
Interest Rate
Price (1) CUSIP©(2)
Maturity(November 1)
PrincipalAmount
Interest Rate Price (1) CUSIP©(2)
2013 $ 5,855,000 0.250% 100.000% RM8 2018 $12,870,000 1.423% 100.000% RS5 2014 12,780,000 0.438 100.000 RN6 2019 6,315,000 1.757 100.000 RT32015 16,950,000 0.688 100.000 RP1 2020 6,530,000 2.007 100.000 RU0 2016 17,020,000 0.865 100.000 RQ9 2021 1,155,000 2.207 100.000 RV82017 17,105,000 2.000 103.690 RR7 -- -- -- -- --
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(1) This information is not provided by RTD. (2) Neither RTD nor the Underwriters take any responsibility for the accuracy of CUSIP numbers, which are included solely for the convenience of the owners of the Bonds.
The Bonds are not subject to optional redemption prior to maturity.
The Bonds are issued for the purpose of refunding, paying and discharging certain of the District's outstanding sales tax revenue bonds as described herein and funding costs of the premium associated with a surety bond for deposit to the Bond Reserve Account and costs of issuance of the Bonds. See "PLAN OF FINANCE."
The Bonds are special and limited obligations of the District payable solely from and secured by a first (but not necessarily an exclusive first) lien upon the revenues received by the District from its 0.6% sales and use tax and the moneys and investments held in certain accounts under the Bond Resolution. The Bonds do not constitute a general obligation of the District within the meaning of any constitutional or statutory debt limitation or provision and are not payable in whole or in part from the proceeds of ad valorem property taxes. See "SECURITY FOR THE BONDS."
The purchase and ownership of the Bonds involve investment risk. Prospective purchasers should give particular attention to the matters discussed under "RISK FACTORS."
This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors should read this entire Official Statement to obtain information essential to making an informed investment decision.
The Bonds are offered when, as and if executed and delivered and accepted by the Underwriters and subject to the approving legal opinion of Sherman & Howard L.L.C., Denver, Colorado, as Bond Counsel, and to certain other conditions. Hogan Lovells US LLP, Denver, Colorado, and Bookhardt & O'Toole, Denver, Colorado, have acted as Co-Disclosure Counsel to the District in connection with the Official Statement. Certain legal matters will be passed upon for the District by its General Counsel, Marla Lien, Esq., and for the Underwriters by Kutak Rock LLP, Denver, Colorado. First Southwest Company is serving as Financial Advisor to the District in connection with the issuance of the Bonds. It is expected that the Bonds in book-entry form will be available for deposit with The Depository Trust Company and delivery in New York, New York, on or about March 26, 2013.
GOLDMAN, SACHS & CO. PIPER JAFFRAY LOOP CAPITAL MARKETS WELLS FARGO SECURITIES
The date of this Official Statement is March 19, 2013 _________________ Copyright 2013, American Bankers Association. CUSIP data herein is provided by Standard & Poor's, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc.
No dealer, salesman or other person has been authorized to give any information or to make anyrepresentation with respect to the Bonds that is not contained in this Official Statement and, if given ormade, such other information or representation must not be relied upon as having been authorized by theDistrict, First Southwest Company (the "Financial Advisor") or the underwriters listed on the coverhereof (collectively, the "Underwriters"). The information contained in this Official Statement is subjectto change, and neither the delivery of this Official Statement nor any sale made after any such deliverycreates any implication that there has been no change since the date of this Official Statement. ThisOfficial Statement does not constitute an offer to sell or the solicitation of any offer to buy, and there is tobe no sale of any of, the Bonds by any person in any jurisdiction in which it is unlawful for such person tomake such offer, solicitation, or sale.
The information set forth herein has been furnished by the District and includes informationobtained from other sources, all of which are believed to be reliable. The information and expressions ofopinion herein are subject to change without notice and neither the delivery of this Official Statement norany sale made hereunder shall, under any circumstances, create any implication that there has been nochange in the affairs of the District since the date hereof. Such information and expressions of opinionare made for the purpose of providing information to prospective investors and are not to be used for anyother purpose or relied on by any other party.
The order and placement of materials in this Official Statement, including the appendices, are notto be deemed a determination of relevance, materiality or importance, and this Official Statementincluding the appendices, must be considered in its entirety. The captions and headings in this OfficialStatement are for convenience only and in no way define, limit or describe the scope or intent, or affectthe meaning or construction, of any provisions or sections of this Official Statement. The offering of theBonds is made only by means of this entire Official Statement.
The Underwriters have provided the following sentence for inclusion in this Official Statement.The Underwriters have reviewed the information in this Official Statement in accordance with, and as partof, their respective responsibilities to investors under the federal securities laws as applied to the facts andcircumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness ofsuch information.
In connection with the offering of the Bonds, the Underwriters may overallot or effecttransactions which stabilize or maintain the market price of such Bonds at levels above those which mightotherwise prevail in the open market. Such stabilization, if commenced, may be discontinued at any time.
THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATESECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THEFOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINEDTHE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS ACRIMINAL OFFENSE.
THIS OFFICIAL STATEMENT IS BEING PROVIDED TO PROSPECTIVE PURCHASERSEITHER IN BOUND PRINTED FORM ("ORIGINAL BOUND FORMAT") OR IN ELECTRONICFORMAT ON THE FOLLOWING WEBSITE: HTTP://WWW.MERITOS.COM. THIS OFFICIALSTATEMENT MAY BE RELIED UPON ONLY IF IT IS IN ITS ORIGINAL BOUND FORMAT OR IFIT IS PRINTED IN FULL DIRECTLY FROM SUCH WEBSITE.
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REGIONAL TRANSPORTATION DISTRICT1600 Blake Street
Denver, Colorado 80202
BOARD OF DIRECTORS
DirectorsDirectorDistricts
Lorraine Anderson, Chair District LKent Bagley, First Vice Chair District HLarry Hoy, Second Vice Chair District JBruce Daly, Secretary District NJeff Walker, Treasurer District DBarbara Deadwyler District BClaudia Folska District EBill James District AGary Lasater District GJudy Lubow District INatalie Menten District MAngie Rivera-Malpiede District CChuck Sisk District OPaul Daniel Solano District KTom Tobiassen District F
General ManagerPhillip A. Washington
General Counsel to Board of Directors and the DistrictMarla Lien
Bond CounselSherman & Howard L.L.C.
Denver, Colorado
Co-Disclosure CounselHogan Lovells US LLPBookhardt & O'Toole
Denver, Colorado
Financial AdvisorFirst Southwest Company
Dallas, Texas
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_________________________
TABLE OF CONTENTS_________________________
PageINTRODUCTION .................................................. 1THE BONDS.......................................................... 2
Authority ............................................................. 2Description .......................................................... 2No Optional Redemption..................................... 3Debt Service Requirements ................................. 3Payment and Registration.................................... 3Transfer and Exchange........................................ 4Defeasance and Discharge................................... 4Book-Entry Form ................................................ 4
SECURITY FOR THE BONDS............................. 7Flow of Funds...................................................... 7Debt Service Coverage........................................ 8Additional Securities ........................................... 9Events of Default................................................. 9Bondholders' Remedies ..................................... 10
RISK FACTORS .................................................. 10Special and Limited Obligations ....................... 10Economic Conditions ........................................ 11Effect of Internet Sales ...................................... 11Powers Subject to Change by Legislature
or by Initiative................................................ 11Reserve Account Surety Policy ......................... 11No Secondary Market........................................ 11
PLAN OF FINANCE............................................ 12General .............................................................. 12Sources and Uses of Funds................................ 12The Refunding Escrow...................................... 12
THE SALES TAX ................................................ 13Manner of Collection of the Sales Tax.............. 14Remedies for Delinquent Taxes ........................ 14Sales Tax Data................................................... 15
RTD ...................................................................... 18General Information .......................................... 18Organization ...................................................... 18Powers ............................................................... 18Board of Directors ............................................. 19Principal Officials.............................................. 20Employee and Labor Relations ......................... 22Retirement Plans................................................ 22Other Postemployment Benefits........................ 23Insurance ........................................................... 24Intergovernmental Agreements ......................... 24RTD Service Area Map..................................... 25
THE SYSTEM...................................................... 26Fleet Composition ............................................. 26Transit Services ................................................. 26Passenger, Maintenance and
Administrative Facilities ................................ 28Long-Term Financial Planning.......................... 29FasTracks .......................................................... 30
PageDEBT STRUCTURE OF RTD .............................35FINANCIAL INFORMATION
CONCERNING RTD ........................................38Budget Policy.....................................................38Major Revenue Sources .....................................39Sales Tax............................................................40Fare Structure.....................................................40Advertising and Ancillary Revenues .................42Federal Funding .................................................43Investment Income.............................................44Financial Summary ............................................44Management's Discussion and Analysis of
Financial Trends .............................................47ECONOMIC AND DEMOGRAPHIC
OVERVIEW ......................................................47FORWARD LOOKING STATEMENTS.............47CONSTITUTIONAL REVENUE,
SPENDING AND DEBT LIMITATIONS ........47LITIGATION........................................................48GOVERNMENTAL IMMUNITY........................48CONTINUING DISCLOSURE
AGREEMENT...................................................49LEGAL MATTERS ..............................................50TAX MATTERS ...................................................50RATINGS..............................................................51VERIFICATION OF CERTAIN
CALCULATIONS.............................................51UNDERWRITING................................................51FINANCIAL ADVISOR.......................................52FINANCIAL STATEMENTS ..............................53MISCELLANEOUS..............................................54
APPENDICES:
Appendix A – Form of Continuing DisclosureAgreement ...................................A-1
Appendix B – Regional TransportationDistrict Denver, ColoradoComprehensive AnnualFinancial Report for the FiscalYear ended December 31, 2011and 2010 ......................................B-1
Appendix C – An Economic andDemographic Overview of theDenver Metropolitan Area...........C-1
Appendix D – Form of Bond Counsel Opinion ..D-1Appendix E – Summary of Certain Provisions
of the Bond Resolution................ E-1Appendix F – The Refunded Bonds ................... F-1Appendix G – Assured Guaranty Municipal
Corp. . ..........................................G-1
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OFFICIAL STATEMENT
$96,580,000REGIONAL TRANSPORTATION DISTRICT
(Colorado)Taxable Sales Tax Revenue Refunding Bonds
Series 2013A
INTRODUCTION
This Official Statement, which includes the cover page and the appendices, provides certaininformation in connection with the offering of $96,580,000 aggregate principal amount of Taxable SalesTax Revenue Refunding Bonds, Series 2013A (the "Bonds") of the Regional Transportation District("RTD" or the "District"), a public body politic and corporate and political subdivision of the State ofColorado (the "State"), organized and existing under the terms of the Regional Transportation DistrictAct, Section 32-9-101 et seq., Colorado Revised Statutes, as amended (the "Act"). The Bonds are beingissued by the District pursuant to a Sales Tax Revenue Bond Resolution, adopted October 27, 1977, asamended and supplemented (the "Master Bond Resolution"), including the Seventeenth SupplementalSales Tax Revenue Bond Resolution, adopted February 19, 2013 (the "Supplemental Resolution"). Forpurposes of this Official Statement, the Master Bond Resolution and the Supplemental Resolution arecollectively referred to as the "Bond Resolution."
The Bonds are issued for the purpose of refunding, paying and discharging certain of theDistrict's outstanding sales tax revenue bonds (as further described in Appendix F hereto, the "RefundedBonds") and funding costs of the premium associated with a surety bond for deposit to the Bond ReserveAccount and costs of issuance of the Bonds. See "PLAN OF FINANCE."
The Bonds are special and limited obligations of the District payable solely from and secured by afirst (but not necessarily an exclusive first) lien upon the revenues received by the District from its 0.6%Sales Tax (the "Pledged Sales Tax Revenues" or "0.6% Sales Tax Revenues") and the moneys andinvestments in certain accounts created under the Bond Resolution, held by The Bank of New YorkMellon Trust Company, N.A., as trustee (the "Trustee"), and subject only to the provisions of the BondResolution permitting application of such funds for the purposes described in the Bond Resolution. TheDistrict has previously pledged the Pledged Sales Tax Revenues to the payment of obligations of theDistrict outstanding as of March 1, 2013 (not taking into account the refunding of the Refunded Bonds) inthe aggregate principal amount of $110,775,000 (as further described herein, the "Outstanding ParityBonds"). The District is prohibited from issuing securities having a lien upon the Pledged Sales TaxRevenues superior to that of the Bonds and is also prohibited from issuing non-refunding securitieson a parity with that of the Bonds. The District may issue securities having a lien on Pledged SalesTax Revenues on a parity with the Bonds in order to refund Outstanding Parity Bonds, so long asthe refunding does not increase the debt service payable in any bond year. See "SECURITY FORTHE BONDS – Additional Securities."
At an election held within the District on November 2, 2004 (the "2004 Election"), voters in theDistrict approved a ballot referendum allowing for an increase in the RTD Sales Tax rate from 0.6% to1.0% effective January 1, 2005. The revenues generated by this additional 0.4% Sales Tax rate (the
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"Unpledged Sales Tax Revenues" or "0.4% Sales Tax Revenues") do not secure the Bonds. As ofMarch 1, 2013, the District had outstanding obligations in the aggregate principal amount of$1,731,130,0001 (the "Subordinate Bonds") secured by the Pledged Sales Tax Revenues on asubordinate basis to the Bonds and the Outstanding Parity Bonds and secured by a first lien on theUnpledged Sales Tax Revenues, and had outstanding certain other obligations (the "Other Obligations")secured by the Pledged Sales Tax Revenues and the Unpledged Sales Tax Revenues on a subordinatebasis to the Bonds, the Outstanding Parity Bonds and the Subordinate Bonds. See "DEBT STRUCTUREOF RTD." The District expects to deliver refunding Subordinate Bonds immediately subsequent todelivery of the Bonds. The District also expects to issue additional Subordinate Bonds in late 2013.Collectively, the Pledged Sales Tax Revenues and Unpledged Sales Tax Revenues are hereinafter referredto as the "Sales Tax Revenues." The Bonds do not constitute a general obligation of the District withinthe meaning of any constitutional or statutory debt limitation or provision, and are not payable in wholeor in part from the proceeds of ad valorem property taxes. See "SECURITY FOR THE BONDS."
In connection with the issuance of the Bonds, the District will deliver a Continuing DisclosureAgreement in substantially the form attached as Appendix A. See "CONTINUING DISCLOSUREAGREEMENT."
This Official Statement includes financial, demographic and other information about the District.Prospective purchasers are encouraged to read this Official Statement and the appendices hereto in theirentirety. This Official Statement also contains descriptions of the Bonds, the Bond Resolution and otherdocuments and information pertaining to the Bonds. The description of the Bonds, the Bond Resolutionand such other documents do not purport to be definitive or comprehensive, and all references to thosedocuments are qualified by reference to those documents. Copies of the above-mentioned documentsmay be obtained from Brenden Morgan, Manager of Debt and Investments, Regional TransportationDistrict, 1600 Blake Street, Denver, Colorado 80202 (303) 299-2313 or at the offices of the District'sfinancial advisor, First Southwest Company, 325 N. St. Paul Street, Suite 800, Dallas, Texas 75201-3852,Attention: Mike Newman (214) 953-8875.
THE BONDS
Authority
The Bonds are issued pursuant to the Bond Resolution, the Act and Section 11-57-201 et seq.,Colorado Revised Statutes, as amended. Pursuant to Art. X, § 20(4)(b) of the State Constitution, theBonds may be issued without voter approval for the purpose of refunding the Refunded Bonds at a lowerinterest rate. See "CONSTITUTIONAL REVENUE, SPENDING AND DEBT LIMITATIONS."
Description
The Bonds are dated, mature and bear interest and are subject to the other terms and conditions asdescribed on the cover page hereof.
1To date, no draws have been made under the RTD TIFIA Bond (hereinafter defined). Accordingly, the principal balanceoutstanding and payable on the Subordinate Bonds as of March 1, 2013 was $1,451,130,000. See "DEBT STRUCTURE OFRTD."
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No Optional Redemption
The Bonds are not subject to optional redemption prior to maturity.
Debt Service Requirements
The Debt Service Requirements of the Bonds and the Outstanding Parity Bonds (taking intoaccount the anticipated refunding of the Refunded Bonds) are set forth in the following table:
TABLE I
Debt ServiceRequirements ofthe OutstandingParity Bonds(1)
Debt Service Requirements of the Bonds Total DebtService
RequirementsYear Principal Interest Total
2013 $ 17,573,312.50 $ 5,855,000.00 $ 673,186.20 $ 6,528,186.20 $ 24,101,498.702014 14,875,312.50 12,780,000.00 1,112,558.00 13,892,558.00 28,767,870.502015 10,762,562.50 16,950,000.00 1,056,581.60 18,006,581.60 28,769,144.102016 10,806,062.50 17,020,000.00 939,965.60 17,959,965.60 28,766,028.102017 10,727,062.50 17,105,000.00 792,742.60 17,897,742.60 28,624,805.102018 15,055,812.50 12,870,000.00 450,642.60 13,320,642.60 28,376,455.102019 13,397,837.50 6,315,000.00 267,502.50 6,582,502.50 19,980,340.002020 13,295,512.50 6,530,000.00 156,547.96 6,686,547.96 19,982,060.462021 13,315,087.50 1,155,000.00 25,490.86 1,180,490.86 14,495,578.362022 9,583,950.00 -- -- -- 9,583,950.002023 9,582,400.00 -- -- -- 9,582,400.002024 9,588,275.00 -- -- -- 9,588,275.00
Total $148,563,187.50 $96,580,000.00 $5,475,217.92 $102,055,217.92 $250,618,405.42_____________(1) Reflects the anticipated refunding of the Refunded Bonds.Source: The Financial Advisor.
Payment and Registration
The Bonds are issuable in fully registered form and are initially to be registered in the name ofCede & Co., as nominee for The Depository Trust Company ("DTC"), as securities depository for theBonds (the "Securities Depository"). Purchases by beneficial owners ("Beneficial Owners") of theBonds are to be made in book-entry form in the principal amount of $5,000 or any integral multiplethereof. Principal of and final installment of interest on the Bonds are payable upon presentation andsurrender thereof to, and all other interest is payable by, the Trustee, by wire, check or draft mailed to theregistered owners at the addresses appearing on the registration books of the Trustee on the date 20 daysnext preceding such interest payment date. Payments to Beneficial Owners are to be made as describedbelow under "THE BONDS – Book-Entry Form."
Neither the District nor the Trustee has any responsibility or obligation for the payment to theparticipants of the Securities Depository ("Participants"), any Beneficial Owner or any other person ofthe principal of or interest on the Bonds.
Neither the District nor the Trustee has any responsibility or obligation with respect to theaccuracy of the records of the Securities Depository or its Participants regarding any ownership interest inthe Bonds or the delivery to any Participant, Beneficial Owner or any other person of any notice withrespect to the Bonds.
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Transfer and Exchange
The Bonds are transferable only upon the registration books of the District, which are to be keptfor such purposes at the principal corporate trust office of the Trustee, by the registered owner or his, heror its duly authorized attorney. The registered owner of any Bond or Bonds may also exchange suchBond or Bonds for another Bond or Bonds of authorized denominations. The Trustee may require thepayment, by the owner of any Bond requesting exchange or transfer, of any reasonable charges as well asany taxes, transfer fees or other governmental charges required to be paid with respect to such exchangeor transfer. In the case of every transfer or exchange, the Trustee is to authenticate and deliver to the newregistered owner a new Bond or Bonds of the same aggregate principal amount, maturing in the same yearand bearing interest at the same per annum interest rate as the Bond or Bonds surrendered. Transfers byBeneficial Owners are to be made as described below under "THE BONDS – Book-Entry Form."
Neither the District nor the Trustee has any responsibility or obligation with respect to theaccuracy of the records of the Securities Depository or its Participants regarding any ownership interest inthe Bonds or transfers thereof.
Defeasance and Discharge
The Bond Resolution provides the District with the right to discharge the pledge and lien createdby the Bond Resolution with respect to any Bonds by depositing in an escrow fund with the Trustee orother depository sufficient moneys or Investment Securities that are direct obligations of the United Statesof America or securities fully and unconditionally guaranteed as to timely payment of principal andinterest by the United States of America or any interest in any of the foregoing (or any combinationthereof), or both to pay when due the Debt Service Requirements on such Bonds at the maturity orredemption thereof. See Appendix E – "SUMMARY OF CERTAIN PROVISIONS OF THE BONDRESOLUTION – Defeasance."
Book-Entry Form
The following description of the procedures and record keeping with respect to beneficialownership interests in the Bonds, payment of interest and other payments on the Bonds, confirmation andtransfer of beneficial ownership interests in the Bonds and other related transactions is based solely oninformation furnished by DTC.
DTC will act as securities depository for the Bonds. The Bonds are to be issued as fully-registered securities registered in the name of Cede & Co., DTC's partnership nominee or such othername as may be requested by an authorized representative of DTC. One fully registered Bond certificateis to be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity,and is to be deposited with DTC.
DTC, the world's largest depository, is a limited-purpose trust company organized under the NewYork Banking Law, a "banking organization" within the meaning of the New York Banking Law, amember of the Federal Reserve System, a "clearing corporation" within the meaning of the New YorkUniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17Aof the Securities Exchange Act of 1934, as amended. DTC holds and provides asset servicing for over 3.5million issues of U.S. and non U.S. equity, corporate and municipal debt issues, and money marketinstruments (from over 100 countries) that DTC's Participants ("Direct Participants") deposit with DTC.DTC also facilitates the post trade settlement among Direct Participants of sales and other securitiestransactions, in deposited securities, through electronic computerized book-entry transfers and pledgesbetween Participants' accounts. This eliminates the need for physical movement of securities certificates.
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Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies,clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of theDepository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, NationalSecurities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registeredclearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC systemis also available to others, such as both U.S. and non-U.S. securities brokers and dealers, banks, trustcompanies, and clearing corporations that clear through or maintain a custodial relationship with a DirectParticipant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating ofAA+. The DTC Rules applicable to its Participants are on file with the Securities and ExchangeCommission. More information about DTC can be found at www.dtcc.com and www.dtc.org. TheDistrict undertakes no responsibility for and makes no representations as to the accuracy or thecompleteness of the content of such material contained in such websites as described in the precedingsentence, including, but not limited to, updates of such information or links to other internet sites accessedthrough the aforementioned websites.
Purchases of Bonds under the DTC system must be made by or through Direct Participants,which are to receive a credit for the Bonds on DTC's records. The ownership interest of each BeneficialOwner is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners arenot to receive written confirmation from DTC of their purchases. Beneficial Owners are, however,expected to receive written confirmations providing details of the transactions, as well as periodicstatements of their holdings, from the Direct or Indirect Participants through which the Beneficial Ownersentered into the transactions. Transfers of ownership interests in the Bonds are to be accomplished byentries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.Beneficial Owners are not to receive certificates representing their ownership interests in Bonds, except inthe event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC areregistered in the name of DTC's partnership nominee, Cede & Co. or such other name as may berequested by an authorized representative of DTC. The deposit of Bonds with DTC and their registrationin the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTChas no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity ofthe Direct Participants to whose accounts such Bonds are credited, which may or may not be theBeneficial Owners. The Direct and Indirect Participants remain responsible for keeping account of theirholdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by DirectParticipants to Indirect Participants, and by Direct Participants and Indirect Participants to BeneficialOwners are governed by arrangements among them, subject to any statutory or regulatory requirements asmay be in effect from time to time. Beneficial Owners of the Bonds may wish to take certain steps toaugment transmission to them of notices of significant events with respect to the Bonds, such asredemptions, tenders, defaults, and proposed amendments to the underlying documents. For example,Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for theirbenefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, BeneficialOwners may wish to provide their names and addresses to the Trustee and request that copies of noticesbe provided directly to them.
Redemption notices are to be sent to DTC. If less than all of the Bonds within an issue are beingredeemed, DTC's practice is to determine by lot the amount of interest of each Direct Participant to beredeemed.
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Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect toBonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under itsusual procedures, DTC mails an omnibus proxy to the District as soon as possible after the record date.The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whoseaccounts the Bonds are credited on the record date (identified in a listing attached to the omnibus proxy).
Principal, interest and redemption payments on the Bonds are to be made to Cede & Co. or suchother nominee as may be requested by an authorized representative of DTC. DTC's practice is to creditDirect Participants' accounts upon DTC's receipt of funds and corresponding detail information from theDistrict or the Trustee on payment date in accordance with their respective holdings shown on DTC'srecords. Payments by Participants to Beneficial Owners are governed by standing instructions andcustomary practices, as is the case with securities held for the accounts of customers in bearer form orregistered in "street name" and are the responsibility of such Participants and not of DTC, its nominee, theTrustee or the District, subject to any statutory or regulatory requirements as may be in effect from timeto time. Payment of principal, interest and redemption payments to Cede & Co. (or such other nomineeas may be requested by an authorized representative of DTC) is the responsibility of the District or theTrustee, disbursement of such payments to Direct Participants is the responsibility of DTC, anddisbursement of such payments to the Beneficial Owners is the responsibility of Direct and IndirectParticipants.
DTC may discontinue providing its services as securities depository with respect to the Bonds atany time by giving reasonable notice to the District or the Trustee. Under such circumstances, in theevent that a successor securities depository is not obtained, the Bonds are required to be printed anddelivered.
The District may decide to discontinue use of the system of book-entry-only transfers throughDTC (or a successor securities depository). In that event, certificates will be printed and delivered toDTC.
The information in this section concerning DTC and DTC's book-entry system has been obtainedfrom sources that the District believes to be reliable, but neither the District nor the Underwriters take anyresponsibility for the accuracy thereof.
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SECURITY FOR THE BONDS
The Bonds are special and limited obligations of the District payable solely from and secured by afirst (but not necessarily an exclusive first) lien upon the Pledged Sales Tax Revenues, the moneys andinvestments in a reserve fund (the "Bond Reserve Account") and certain other accounts created under theBond Resolution, held by the Trustee, and subject only to provisions of the Bond Resolution permittingapplication of such funds for purposes described in the Bond Resolution. The Bonds are not generalobligations of RTD. The Bonds are not payable in whole or in part from the proceeds of general propertytaxes, nor is the full faith and credit of RTD pledged to pay the Bonds. The Bonds are not secured bythe Unpledged Sales Tax Revenues. See Appendix E – "SUMMARY OF CERTAIN PROVISIONSOF THE BOND RESOLUTION."
Flow of Funds
The Bond Resolution provides for payments, in the sequence described below, into and out of thefollowing accounts held by the Trustee and for the stated purposes. See Appendix E – "SUMMARY OFCERTAIN PROVISIONS OF THE BOND RESOLUTION."
Bond Service Account. Pledged Sales Tax Revenues are to be deposited each month in the BondService Account to the extent necessary to maintain a balance in the Bond Service Account equal to theAccrued Aggregate Debt Service due to the end of such month on the Bonds and the Outstanding ParityBonds and any other parity securities.
Bond Reserve Account. The Bond Resolution requires the District to retain in the Bond ReserveAccount an amount equal to one-half of the maximum amount of principal and interest due on the Bonds,the Outstanding Parity Bonds and any other parity securities in any fiscal year (the "Debt ServiceReserve Requirement"). Subject to the payment required to be made into the Bond Service Account, theBond Resolution provides that there shall be credited to the Bond Reserve Account the amount, if any,required to maintain therein the Debt Service Reserve Requirement. The amounts on deposit in the BondReserve Account are to be maintained as a reserve against deficiencies in the Bond Service Account. Ifmonies on deposit in the Bond Reserve Account are withdrawn to remedy such deficiencies, PledgedSales Tax Revenues are to be deposited in the Bond Reserve Account in an amount sufficient toreaccumulate the Debt Service Reserve Requirement. RTD is permitted to substitute letters of credit,surety bonds, insurance policies or other financial undertakings or guarantees for the deposit required tobe maintained in the Bond Reserve Account, provided that any such substitution does not cause the then-current ratings on the Bonds to be adversely affected.
In connection with the refunding of the Refunded Bonds, amounts on deposit in the Bond ReserveAccount will be deposited to the Escrow Account established under the Escrow Agreement (as definedherein) after the District has deposited to the Bond Reserve Account a surety policy provided by AssuredGuaranty Municipal Corp. ("Assured Guaranty" or "AGM") with a face amount equal to the DebtService Reserve Requirement for the Bonds and the Outstanding Parity Bonds. For information aboutAssured Guaranty, see Appendix G.
Rebate Account. Any amounts that are subject to federal arbitrage rebate requirements onaccount of investment earnings in certain accounts under the Bond Resolution are to be deposited in theRebate Account free and clear of the lien of the Bonds and are to be paid to the federal government whendue.
-8-
Subordinate Securities. To the extent that the required payments have been made into the BondService Account, the Bond Reserve Account and the Rebate Account, any Pledged Sales Tax Revenuesremaining may be used to pay debt service requirements of any subordinate securities, including theSubordinate Bonds and Other Obligations.
Remaining Revenues. To the extent that all of the foregoing requirements have been met in anymonth, any remaining Pledged Sales Tax Revenues are to be returned to the District.
Debt Service Coverage
The following tables set forth historical debt service coverage on obligations secured by thePledged Sales Tax Revenues under the Bond Resolution for the past five years:
TABLE IIHistorical Debt Service Coverage
Year
PledgedSales TaxRevenues
(000's)
Total Debt ServicePledged Sales Tax
Revenue Requirements(000's) Coverage
2008 $247,694 $37,085 6.7x
2009 222,843 35,342 6.3
2010 238,529 34,738 6.9
2011 249,108 35,444 7.0
2012(1) 269,872 35,443 7.6
____________(1)
Based on unaudited financial information of the District.Source: District 2008-2011 Comprehensive Annual Financial Report; The District's unaudited financial records.
The District has budgeted Pledged Sales Tax Revenues of $285.160 million in 2013. See"FORWARD LOOKING STATEMENTS." Based upon the combined Debt Service Requirements of theBonds and the Outstanding Parity Bonds, the District's maximum annual debt service coverage for suchobligations after the issuance of the Bonds is set forth in the following table:
TABLE III
Year
Budgeted PledgedSales Tax Revenues(1)
(000's)
Maximum AnnualBonds and Outstanding
Parity BondsDebt Service Requirements(2)
(000's) Coverage
2013 $285,160 $28,769 9.9x____________(1) See "FORWARD LOOKING STATEMENTS."(2) Reflects the refunding of the Refunded Bonds.Source: The Financial Advisor (with respect to debt service requirements) and the District.
-9-
Additional Securities
The Bond Resolution prohibits the issuance of securities (the "Additional Parity Bonds") havinga lien upon the Pledged Sales Tax Revenues superior to the Bonds or securities having a lien upon thePledged Sales Tax Revenues on a parity with that of the Bonds ("Parity Bonds"), except in the case ofrefunding bonds or in the case of certain financial products or credit facilities related to the Bonds or anysuch Parity Bonds. The Bond Resolution permits the District to issue refunding bonds as AdditionalParity Bonds provided that, after the issuance of such refunding bonds, the debt service payable in eachBond Year on all outstanding Bonds and Parity Bonds after the issuance of such refunding bonds does notexceed the debt service payable in each Bond Year on all outstanding Bonds and Parity Bonds prior to theissuance of such refunding bonds. See Appendix E – "SUMMARY OF CERTAIN PROVISIONS OFTHE BOND RESOLUTION – Additional Parity Bonds."
Events of Default
The following events are declared by the Bond Resolution to constitute Events of Default:
(a) if default shall be made in the due and punctual payment of the principal or redemptionprice of any bond delivered pursuant to the Bond Resolution when and as the same shall become due andpayable, whether at maturity or by call for redemption, or otherwise;
(b) if default shall be made in the due and punctual payment of any installment of interest onany bond delivered pursuant to the Bond Resolution or the unsatisfied balance of any sinking fundinstallment therefor (except when such installment is due on the maturity date of such bond), when and assuch interest installment or sinking fund installment shall become due and payable;
(c) if default shall be made by RTD in the performance or observance of any other of thecovenants, agreements or conditions on its part contained in the Bond Resolution or in the bondsdelivered thereunder, and such default shall continue for a period of 60 days after written notice thereof toRTD by the Trustee or to RTD and to the Trustee by the holders of not less than 10% in principal amountof the outstanding bonds delivered pursuant to the Bond Resolution;
(d) if there shall occur the dissolution or liquidation of RTD or the filing by RTD of avoluntary petition in bankruptcy, or the commission by RTD of any act of bankruptcy, or adjudication ofRTD as a bankrupt, or assignment by RTD for the benefit of its creditors, or the entry by RTD into anagreement of composition with its creditors, or the approval by a court of competent jurisdiction of apetition applicable to RTD in any proceeding for its reorganization instituted under the provisions of theFederal Bankruptcy Act, as amended, or under any similar act in any jurisdiction which may now be ineffect or hereafter enacted; or
(e) if an order or decree shall be entered, with the consent or acquiescence of RTD,appointing a receiver or receivers of the Pledged Sales Tax Revenues, or any part thereof, or of the rents,fees, charges, income or other revenues therefrom, or if such order or decree, having been entered withoutthe consent or acquiescence of RTD, shall not be vacated or discharged or stayed within 90 days after theentry thereof.
See Appendix E – "SUMMARY OF CERTAIN PROVISIONS OF THE BONDRESOLUTION."
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Bondholders' Remedies
The Bond Resolution provides for specific remedies to be exercised by the Trustee or by theholders of not less than 25% of the Bonds outstanding and any other parity securities that might beoutstanding in the event of a default by RTD, including acceleration of all indebtedness represented bythe Bonds, provided that such declaration of acceleration may be rescinded upon payment by RTD of allprincipal then due (except such principal as has become due by acceleration), all interest then due(including interest on overdue interest at the rate of 8% per annum) and all reasonable and proper charges,expenses and liabilities of the Trustee. Neither the Trustee nor the bondholders may foreclose on RTDproperty or sell such property in order to pay the principal of or interest on the Bonds. See Appendix E –"SUMMARY OF CERTAIN PROVISIONS OF THE BOND RESOLUTION."
In addition, the opinion of Bond Counsel is expected to state that the obligations of the Districtpursuant to the Bonds and the Bond Resolution are subject to the application of equitable principles, tothe reasonable exercise in the future by the State of Colorado and its governmental bodies of the policepower inherent in the sovereignty of the State of Colorado, and to the exercise by the United States ofAmerica of the powers delegated to it by the Federal Constitution, including without limitation,bankruptcy powers. See "LEGAL MATTERS" and Appendix D – "FORM OF BOND COUNSELOPINION." Bankruptcy or other legal proceedings, if initiated, could subject the owners of the Bonds tojudicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently mayentail risks of delay, limitation, or modification of their rights.
RISK FACTORS
THE PURCHASE OF THE BONDS IS SUBJECT TO CERTAIN RISKS. EACHPROSPECTIVE INVESTOR IN THE BONDS IS ENCOURAGED TO READ THIS OFFICIALSTATEMENT IN ITS ENTIRETY, INCLUDING ALL APPENDICES HERETO. PARTICULARATTENTION SHOULD BE GIVEN TO THE FACTORS DESCRIBED BELOW, WHICH, AMONGOTHERS, COULD AFFECT THE PAYMENT OF PRINCIPAL OF AND INTEREST ON THE BONDSAND WHICH COULD ALSO AFFECT THE MARKET PRICE OF THE BONDS TO AN EXTENTTHAT CANNOT BE DETERMINED.
Special and Limited Obligations
The Bonds, the Outstanding Parity Bonds and any Additional Parity Bonds are special andlimited obligations of the District payable solely from and secured solely by the Pledged Sales TaxRevenues and the moneys and investments held in certain accounts under the Bond Resolution and are notto be deemed or construed as creating a debt or indebtedness of the District within the meaning of anyconstitutional or statutory limitation. Therefore, the payment of the principal of and interest on the Bondsis dependent on the District's receipt of its Pledged Sales Tax Revenues. Bondholders may not look toany general or other revenues of the District, including without limitation the proceeds of ad valoremtaxes, for the payment of the principal of and interest on the Bonds, and the Bonds do not constitutegeneral obligations of the District. The Bonds are not secured by the Unpledged Sales Tax Revenues.
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Economic Conditions
Collection of Sales Tax Revenues is subject to the elastic nature of consumer spending. Thiscauses Sales Tax Revenues to increase along with the higher prices brought about by inflation, but alsocauses receipts to be vulnerable to adverse economic conditions and reduced consumer confidence, whichmay result in reduced consumer spending. The United States is currently experiencing a sluggishrecovery to a severe recession, with modest improvements in household spending and employment rates.Although Colorado employment rates and personal income levels have generally exceeded thoseexperienced on a national basis, retail sales in Colorado and the Denver metropolitan area haveexperienced only small gains during post-recession recovery. Future drops in Sales Tax Revenuesresulting from a reduction in consumer spending levels, or a reduction in rate of growth, would negativelyaffect the level of debt service coverage. See Appendix C – "AN ECONOMIC AND DEMOGRAPHICOVERVIEW OF THE DENVER METROPOLITAN AREA."
Effect of Internet Sales
The future level of taxable retail sales that occurs within the District may be affected by the levelof internet sales (also known as e-commerce). Such e-commerce vendors may compete with local retailbusinesses and may reduce the taxable retail sales which otherwise would occur within the District.Currently, taxes are often not collected from the vendor in connection with such internet sales and theDistrict is not in a position to enforce and collect the use tax in such situations. The ultimate impact ofinternet sales on the level of taxable retail sales which occurs within the District cannot be determined atthis time, but such impact could be material.
Powers Subject to Change by Legislature or by Initiative
RTD is an entity created by statute. See "RTD – Organization." All of RTD's powers arestatutorily-derived and accordingly may be changed by amendment to the Act approved by the StateGeneral Assembly or initiated by the voters. In particular, the transactions upon which RTD may levy itssales tax are limited by statute, with certain exceptions, to those transactions upon which the Stateimposes its sales tax. The State General Assembly has in the past created new exemptions from the State-imposed sales tax reducing RTD's sales tax base and may do so again in the future. See "RTD – Powers."
Reserve Account Surety Policy
In connection with the refunding of the Refunded Bonds, amounts on deposit in the Bond ReserveAccount will be withdrawn and deposited to the Escrow Account established under the EscrowAgreement (as defined herein) after the District has deposited to the Bond Reserve Account a suretypolicy provided by Assured Guaranty with a face amount equal to the Debt Service Reserve Requirementfor the Bonds and the Outstanding Parity Bonds. For information about Assured Guaranty, see AppendixG. As a result of this substitution, payments from the Bond Reserve Account will be made only to theextent that amounts are made available by Assured Guaranty.
No Secondary Market
There can be no assurance that a secondary market for the Bonds will be established ormaintained. Accordingly, each purchaser should expect to bear the risk of the investment represented bythe Bonds to maturity.
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PLAN OF FINANCE
General
The District is undertaking a refunding and defeasance of the Refunded Bonds in order to realizeeconomic savings, to restructure its debt and to eliminate certain restrictive covenants. In connection withdelivery of the Bonds, certain funds currently on deposit in the Bond Service Account relating to theRefunded Bonds and amounts in the Bond Reserve Account (after the District has deposited to the BondReserve Account a surety policy provided by Assured Guaranty with a face amount equal to the DebtService Reserve Requirement for the Bonds and the Outstanding Parity Bonds) will be released anddeposited to the 2013A Escrow Account (as hereinafter defined).
Sources and Uses of Funds
The following table sets forth the estimated sources and uses of funds in connection with theexecution and delivery of the Bonds:
TABLE IVSources and Uses of Funds
SourcesPrincipal Amount of Bonds .............................................................. $ 96,580,000.00Original Issue Premium .................................................................... 631,174.50Prior Bond Service Account (Refunded Bonds)............................... 4,666,062.50Bond Reserve Account (Parity Bonds)(1) .......................................... 14,492,494.42Contribution by District .................................................................... 3,476,663.78
Total $119,846,395.20
UsesRefunding Escrow Deposit(2) ............................................................ $118,489,873.45Costs of Issuance(3) ........................................................................... 1,356,521.75
Total $119,846,395.20____________(1) Cash in the Bond Reserve Account will be released upon delivery of a surety bond by Assured Guaranty as
described in "SECURITY FOR THE BONDS – Flow of Funds – Bond Reserve Account."(2) See "The Refunding Escrow" under this caption.(3) Includes Underwriters' compensation and surety bond premium. See "UNDERWRITING" and "SECURITY FOR
THE BONDS – Flow of Funds – Bond Reserve Account."
The Refunding Escrow
The Bond Resolution authorizes the execution and delivery of an Escrow Agreement, dated as ofthe date of delivery of the Bonds (the "Escrow Agreement"), between the District and The Bank of NewYork Mellon Trust Company, N.A., as escrow agent (the "Escrow Agent"). The Escrow Agreementdirects that net proceeds of the Bonds, as well as legally available funds released from the Bond ServiceAccount and the Bond Reserve Account under the Bond Resolution and other amounts contributed by theDistrict as described in "Sources and Uses of Funds" under this caption, be deposited in an EscrowAccount established under the Escrow Agreement (the "2013A Escrow Account") in an amountsufficient, together with any earnings on such deposit, to pay the principal of, interest on and redemptionpremiums, if any, due in connection with the prior redemption or payment at maturity of the RefundedBonds. The Refunded Bonds consist of (1) an aggregate principal amount of $5,750,000 of the District'sSales Tax Revenue Bonds, Series 2004A maturing November 1, 2013 (the "2004A Bonds") and (2) anaggregate principal amount of $98,865,000 of the District's Sales Tax Revenue Refunding Bonds, Series
-13-
2005A maturing in the years shown in Appendix F (the "2005A Bonds"). The outstanding 2004A Bondsare not subject to optional redemption prior to their maturity and will be paid on their maturity date ofNovember 1, 2013. The outstanding 2005A Bonds maturing on or before November 1, 2015 are notsubject to redemption prior to their respective maturity dates and 2005A Bonds maturing on and afterNovember 1, 2016 are subject to optional redemption on November 1, 2015. An independent certifiedpublic accountant has verified that the deposit made to the Escrow Account, together with the earningsthereon, will be sufficient to pay all principal, interest and redemption premiums on such Refunded Bondsas the same become due upon maturity or prior redemption. See "VERIFICATION OF CERTAINCALCULATIONS." In connection with the refunding, the District will obtain a surety bond to fund all ora portion of the Bond Reserve Account as described in "SECURITY FOR THE BONDS – Flow of Funds– Bond Reserve Account."
Amounts on deposit in the 2013A Escrow Account may not be used to pay debt servicerequirements on the Bonds.
THE SALES TAX
Pursuant to the Act, in September 1973, District voters authorized RTD to issue bonds for thepurpose of developing a public multi-modal mass transportation system for RTD, such bonds to bepayable from District-wide sales taxes imposed at the rate of 0.5% upon every taxable transaction.Effective May 1, 1983, after the State General Assembly eliminated food and utilities from the sales taxbase of RTD, the Act was amended to empower RTD to impose the sales tax at the rate of 0.6%throughout the District. At the 2004 Election, District voters approved a ballot measure authorizing RTDto increase the rate of the Sales Tax by 0.4%, up to a total of 1.0% in connection with financing a transitexpansion plan known as FasTracks. The revenues generated by this additional 0.4% Sales Tax ratedo not secure the Bonds.
The sales tax, which has been imposed and collected in the District since January 1, 1974, isimposed upon every transaction or other incident with respect to which the State imposes a sales tax,except sales tax levied on certain transactions, including vending machine sale of food, purchase ofmachinery or machine tools and sales of low-emitting motor vehicles, power sources for such motorvehicles, or parts used for converting such power sources. Reference is made to Article 26 of Title 39,Colorado Revised Statutes, as amended (the "Sales Tax Act") for a complete description of thetransactions subject to or exempt from the State sales tax. The sales tax must be collected at the time ofthe transaction. One exception to the sales tax being collected at the time of sale applies to the purchaseof used automobiles from private parties. If the buyer and seller both live within the District, the sales taxis collected by the county motor vehicle registrar in the county in which the buyer resides at the time thatthe vehicle is registered and remitted to RTD. If one or more parties live outside the District, no sales taxis collected, but a use tax will be collected by the County motor vehicle registrar in the County in whichthe buyer resides at the time the vehicle is registered and remitted to RTD. For discussion about theboundaries of the District in which the Sales Tax is levied, see "RTD – Organization."
In 1989, the Colorado Supreme Court held that the Act implicitly authorized RTD to impose ause tax. Under Colorado law, a use tax is considered supplementary to, and not separate from, a sales tax.Reference is made to the Sales Tax Act for a complete description of the transactions subject to or exemptfrom the State use tax. The components of use tax liability to RTD are (1) tangible personal property(2) purchased at retail (3) without prior payment of sales or use tax and (4) use or consumption in theDistrict. Beginning in April 1989, the State Department of Revenue began collecting a use tax for RTD.The sales tax and use tax imposed by RTD are collectively referred to herein as the "Sales Tax."
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Manner of Collection of the Sales Tax
The Sales Tax. The collection, administration and enforcement of the District's Sales Tax areperformed by the Executive Director of the Department of Revenue (the "Executive Director") in thesame manner as the collection, administration and enforcement of the State sales tax. Legislation enactedin 1987 requires the Executive Director to charge RTD for the cost of collection, administration andenforcement after crediting RTD with interest earnings on amounts collected. For the 12-month periodended December 31, 2012, RTD's net cost of collections was approximately $484,863.
Any person engaged in the business of selling at retail must obtain a license therefor from theState. The State license is in force and effect until December 31 of the year following the year in which itis issued. Each individual vendor in the District is liable for the amount of tax due on all taxable salesmade by him. Before the twentieth day of each month, the vendor, if reporting monthly, must make areturn and remit the amount due for the preceding calendar month to the Executive Director. Some smallbusinesses are permitted to remit sales tax collections quarterly. The Executive Director may extend thetime for making a return and paying the taxes due. The vendor is entitled to withhold an amount equal to2.2% (increasing to 3.3% in 2014) of the total amount to be remitted to the Executive Director eachmonth in order to cover the vendor's expenses. If any vendor is delinquent in remitting the tax, other thanin unusual circumstances shown to the satisfaction of the Executive Director, the vendor will not beallowed to retain any amounts to cover the vendor's expenses.
The Executive Director is required to furnish the District a monthly listing of all returns filed byretailers in the District. The District must notify the Executive Director within 90 days of any retailersomitted from the listing or thereafter will be precluded from making any further claims based upon suchomission. The District receives sales taxes so collected in the form of monthly distributions made to theDistrict by the Executive Director. Historically, RTD has received sales tax proceeds about the fifthbusiness day of the second month following receipt thereof by the State Department of Revenue. TheDistrict has assigned its rights to receive the 0.6% Sales Tax Revenues and 0.4% Sales Tax Revenues tothe Trustee for the Senior Debt and the Trustee for the Subordinate Bonds, respectively. Pursuant to suchassignment, the 0.6% Sales Tax Revenues and the 0.4% Sales Tax Revenues are paid directly to TheBank of New York Mellon, N.A., in its capacities of Trustee for the Senior Debt and Trustee for theSubordinate Bonds.
The Use Tax. All vehicles must be licensed in each county. Consequently, the motor vehicle usetax is collected by each county during its licensing process and is then remitted to the District periodicallypursuant to agreements entered into between such counties, the District and the Executive Director. Otheruse taxes are collected by the State Department of Revenue and distributed to the District on a monthlybasis.
Remedies for Delinquent Taxes
Failure by a retailer to pay the appropriate Sales Taxes collected is punishable pursuant to Statelaw. A statutorily prescribed rate of interest is due on deficiencies from the first date prescribed forpayment. Further, if any part of the deficiency is due to negligence or intentional disregard of theregulations with knowledge thereof, but without intent to defraud, 10% of the total amount of thedeficiency, plus interest, is to be added to the amount due. If the deficiency is due to fraud with intent toevade the tax, 100% of the total amount of the deficiency is to be added to the amount due, with anadditional 3% per month added from the date the return was due until paid. In both instances, theadditional amount and interest become due and payable 10 days after written notice and demand by theExecutive Director.
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The sales tax imposed constitutes a first lien upon the goods and business fixtures of or used byany retailer under lease, title retaining contract or other contract arrangement, except for the stock ofgoods sold or for sale in the ordinary course of business. Such lien takes precedence over other liens orclaims of whatsoever kind or nature. Exempted from the lien are identifiable real or personal propertyleased to a retailer if the lessee has no right to become the owner and properly registered motor vehiclesto the extent an interest is not credited to the lessee.
If any tax, penalty or interest imposed and shown due by returns filed by the taxpayer, or shownas assessments duly made, are not paid within five days after the same are due, the Executive Directorissues a notice of the amount due, including a statement as to the lien claimed by the District on theproperty. If such amount remains unpaid, the Executive Director then issues a warrant to any authorizedrevenue collector or to the County sheriff commanding him to levy upon, seize and sell sufficientproperty of the tax debtor to satisfy the amount due, subject to valid preexisting claims or liens. Astatutory limitation provides that except in the case of the filing of a false or fraudulent return with theintent to evade tax, no action to collect Sales Taxes due may be commenced more than three years afterthe date on which the tax is payable.
Any vendor receiving a deficiency notice regarding the payment of Sales Taxes to the District hasthe right to request the Executive Director to conduct a hearing on the deficiency, and may thereafterappeal the decision to the district court. Conviction of a violation of any of the State's sales tax statutoryprovisions is punishable by a fine of no more than $300, or imprisonment for no more than 90 days, orboth. Violations also are subject to prosecution and punishment by the State for the violation of Statelaw.
Sales Tax Data
The following table sets forth the District's Pledged Sales Tax Revenue collections for the pastfive years:
TABLE VHistorical Pledged Sales Tax Revenues
(In Thousands of Dollars)
Year CollectionsPercentChange
2008 $247,694 --%2009 222,843 (10.0)2010 238,529 7.02011 249,108 4.42012(1) 269,872 8.3
___________(1) Based on unaudited financial information of the District.Sources: District 2008-2011 Comprehensive Annual Financial Reports;
The District's unaudited financial records.
The District has budgeted that it will collect $285.160 million of Pledged Sales Tax Revenues in2013, representing a 5.7% increase from 2012. However, there is no certainty that such collections willbe realized in the amount the District currently budgets. See "FORWARD LOOKING STATEMENTS."
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The following table of the District's principal Sales Tax generators by category is based onPledged Sales Tax Revenues remittances to the District for 2012. Because of the confidential nature ofthe gross sales of the individual entities, the identity of vendors may not be divulged under State law.
TABLE VIFifteen Largest Categories of Generators of Sales Tax 2012
Type of BusinessPercent of Total Sales
Tax Collections
Food Services and Drinking Places 12.2%
Motor Vehicle and Parts Dealers 10.1
General Merchandise Stores 8.4
Food and Beverage Stores 5.2
Telecommunications 5.1
Building Material and Garden Equipment and Supplies Dealers 5.0
Miscellaneous Store Retailers 4.9
Clothing and Clothing Accessories Stores 4.8
Merchant Wholesalers, Durable Goods 4.2
Utilities 4.0
Rental and Leasing Services 3.0
Professional, Scientific, and Technical Services 3.0
Accommodation 2.9
Sporting Goods, Hobby, Book, and Music Stores 2.7
Furniture and Home Furnishings Stores 2.7
Other 21.7
Total 100.0%
____________Source: State of Colorado, Department of Revenue; The District.
Certain counties, municipalities and special districts located within the District also impose salestaxes. A statutorily created special district, the Scientific and Cultural Facilities District, covers generallythe same geographical area as RTD and is empowered to levy a 0.1% sales tax. The total sales tax levy inthe District, including the State sales tax, RTD Sales Tax and any locally imposed sales tax, ranges from4.00% in Weld County to 8.75% in the City of Northglenn.
The following table shows taxable retail sales within RTD's service area for the years 2002through 2011:
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TA
BL
EV
II
RT
DN
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axab
leR
etai
lS
ales
(In
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sof
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Yea
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Cit
yan
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of
Den
ver
Bo
uld
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Jeff
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Ad
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Co
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Ara
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Co
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Do
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)
Cit
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(2)
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Tax
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Tra
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Per
cent
Ann
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Incr
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Dec
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20
02
$8
,827
$3
,002
$5
,436
$3
,915
$6
,649
$1
,275
$8
28
$6
64
$3
0,5
96
(4.1
)%2
00
38
,36
42
,96
55
,54
83
,89
16
,69
41
,27
08
58
65
93
0,2
50(1
.1)
20
04
8,8
41
3,0
79
5,6
59
4,1
51
6,7
20
2,1
43
90
25
58
32
,053
6.0
20
05
9,4
29
3,2
48
5,8
23
4,4
71
6,8
51
2,4
63
89
16
09
33
,785
5.4
20
06
9,7
93
3,3
36
5,9
52
4,5
77
6,8
89
2,5
62
90
25
72
34
,583
2.4
20
07
10
,751
3,5
38
6,1
85
4,8
04
7,2
94
2,6
16
93
45
92
36
,714
6.2
20
08
11
,057
3,4
91
6,0
43
4,7
85
7,0
98
2,5
24
90
16
66
36
,565
(0.4
)2
00
99
,26
93
,21
65
,53
64
,24
06
,45
92
,31
97
90
47
43
2,3
03(1
1.7
)2
01
09
,76
63
,39
15
,65
64
,43
36
,81
72
,39
09
35
71
83
4,1
065
.62
01
11
1,2
393
,72
16
,00
14
,74
97
,48
62
,77
89
44
1,0
41
37
,959
11
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-18-
RTD
General Information
RTD is empowered to develop, maintain and operate a mass transportation system within itsboundaries. The RTD service area encompasses portions of an eight-county region comprising theDenver metropolitan area. Over one-half of the population of the State currently resides in the Denvermetropolitan area.
Organization
RTD was created in 1969 by the State General Assembly as a mass transportation planningagency for the Denver metropolitan area. RTD is a public body politic and corporate and a politicalsubdivision of the State, organized and existing under the terms of the Act. In 1974, the Act wasamended, and RTD became an operating entity charged with the responsibility for developing,maintaining and operating a mass transportation system (the "System") for the benefit of the inhabitantsin its service area.
Pursuant to the Act, in September 1973, the voters of RTD authorized RTD to issue bonds for thepurpose of developing a public multi-modal mass transportation system for RTD, such bonds to bepayable from the proceeds of a District-wide sales tax. Thereafter, RTD began negotiations for theacquisition of the existing public and private transit operations throughout the District. By the end of1976, RTD had consolidated seven public and private transit systems into a single system. The largest ofthese systems, Denver Metro Transit, owned by the City and County of Denver, was acquired in 1974.RTD's area consists of the City and County of Denver, most of the City and County of Broomfield, theCounties of Boulder and Jefferson, the western portions of Adams and Arapahoe Counties, thesouthwestern portions of Weld County, and the northeastern and Highlands Ranch areas of DouglasCounty. RTD currently services 2,348 square miles and 40 cities and towns. Over 2.8 million people, orapproximately 57% of the population of the State, reside within the District. The legislature can providefor elections within RTD's boundaries that, if successful, add territory to RTD. Territory may also beadded to the District in certain circumstances by petition of the owners of the land sought to be includedin the District or by a petition followed by an election held in the area sought to be included in theDistrict. See "RTD SERVICE AREA MAP."
Powers
As described under "THE SALES TAX," the District has the power to impose the Sales Tax.Under the Act, RTD's use of Sales Tax Revenues is restricted to paying the costs of operations of RTD, todefraying the cost of capital projects and to paying the principal and interest on securities of RTD.
Because RTD is an entity created by statute, its powers are susceptible to changes in statute. Inparticular, because the State General Assembly requires the Sales Tax imposed by RTD to be imposedupon the same transactions or incidents with respect to which the State imposes a sales tax, with certainexceptions, RTD is unable to prevent the State from enacting exemptions that would diminish its tax base.However, when the State enacted significant new sales tax exemptions in 1983, it also increased RTD'ssales tax rate. Historically, legislation that has broadened State sales tax exemptions has allowed RTD tocontinue to collect Sales Tax on such transactions.
RTD, with voter approval, also has the power to levy and cause to be collected general advalorem taxes not to exceed one-half of one mill on all taxable property within RTD whenever RTDanticipates a deficit in operating or maintenance expenses. See "FINANCIAL INFORMATION
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CONCERNING RTD – Major Revenue Sources" and "CONSTITUTIONAL REVENUE, SPENDINGAND DEBT LIMITATIONS." Although the Act allows RTD to levy this tax, RTD has not exercised itspower to levy a general ad valorem property tax since 1976, and has no present intention of doing so inthe reasonably foreseeable future.
RTD also has the power to increase or decrease the fares for services and facilities provided byRTD; sue and be sued; purchase, trade, maintain and dispose of its real property and personal property;condemn property for public use; accept grants and loans from the Federal Government; and establish,maintain and operate a mass transportation system and all the necessary facilities relating to such system.
Board of Directors
RTD is governed by a fifteen-member elected Board with each member elected from one of thefifteen districts (the "Director Districts") comprising RTD's geographical area. Each Director Districtcurrently has approximately 180,000 residents and most Director Districts cross county boundaries. Aftereach federal census the fifteen Director Districts are apportioned so that each Director District represents,to the extent practicable, one-fifteenth of the total population of RTD.
The regular term of office for each Director is four years, with approximately one-half of theDirectors being elected every two years. If a vacancy arises on the Board, which vacancy can occur if aDirector from one Director District changes his or her residence to a place outside the Director District, orif a Director resigns, or if a Director is recalled from office by the electors of the Director District, thevacancy is to be filled by appointment for the balance of the term by the board of county commissionersof the county where the Director District is located or, in the case of a Director elected in Denver, by theMayor of the City and County of Denver with the approval of the City Council of the City and County ofDenver. If the vacancy occurs in a Director District that crosses county boundaries, the vacancy is to befilled by an appointee of the board of county commissioners of the county wherein the largest number ofregistered electors of the Director District reside; however, if the largest number of registered electorsreside in the City and County of Denver, the Mayor of the City and County of Denver, with the approvalof the City Council of the City and County of Denver, is to appoint someone to fill the vacancy.
The Board has the authority to exercise all the powers, duties, functions, rights and privilegesvested in RTD, including the power to delegate executive and administrative powers to officers andemployees of RTD. Most actions of the Board require the affirmative vote of a majority of the Board.Legislation enacted in the 1990 session of the State General Assembly requires an affirmative vote oftwo-thirds of the Board to approve any action relating to the authorization of the construction of a fixed-guideway mass-transit system and prohibits the Board from taking any such action until such systemshave been approved by the metropolitan planning organization, currently the Denver Regional Council ofGovernments.
The members of the Board of Directors are as follows:
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Current Board of Directors
Name District
Expiration ofPresent Term
(December 31) Occupation
Lorraine Anderson, Chair District L 2014 Retired Commercial Sales ExecutiveKent Bagley, First Vice Chair District H 2016 Urban Planner and Real Estate ConsultantLarry Hoy, Second Vice Chair District J 2014 Real Estate AppraiserBruce Daly, Secretary District N 2014 Retired Bus OperatorJeff Walker, Treasurer District D 2016 Utilities ManagerBarbara Deadwyler District B 2014 Retired, Project ConsultantClaudia Folska District E 2016 Architectural Planning and Design ConsultantBill James District A 2016 President, James Real Estate Services, Inc.Gary Lasater District G 2016 Business ExecutiveJudy Lubow District I 2016 Retired Government AttorneyNatalie Menten District M 2016 Family Business OwnerAngie Rivera-Malpiede District C 2014 Director of Stapleton Area Transportation
Management AssociationChuck Sisk District O 2014 AttorneyPaul Daniel Solano District K 2016 Recording Artist/Musician/SongwriterTom Tobiassen District F 2016 Senior Systems Engineer
Principal Officials
The following is a list of the current administrative and management personnel most involved inthe management of RTD, their background and experience, and a description of their jobs:
Mr. Phillip A. Washington – General Manager/Chief Executive Officer. Mr. Washington wasappointed to the position of General Manager in December 2009 after serving as Interim GeneralManager since June 2009. He holds a Bachelor of Arts degree in Business Administration and a Master'sDegree in Management from Webster University. Mr. Washington was a highly decorated 24-yearmilitary professional, having attained the highest military noncommissioned officer rank, that ofCommand Sergeant Major, E-9, before retiring from service in June 2000. He began his military career inAir Defense Artillery units and served in virtually every noncommissioned officer leadership role. He hasalso been a project manager, strategic planner, contract representative, human resource director, trainerand budget technician. Prior to being appointed Interim General Manager, Mr. Washington wasappointed Assistant General Manager, Administration in 2000, in which capacity he directed the activitiesof the following divisions: Finance, Materials Management, Human Resources, Information Technology,Treasury, and the Small Business Opportunity Office.
Ms. Marla Lien – General Counsel. Ms. Lien was appointed General Counsel for the District inMay 2005 after having served as Acting General Counsel since November 2004. Ms. Lien has a Bachelorof Arts degree in History and a Juris Doctor degree from the University of Colorado. Prior to taking onthe responsibilities of Acting General Counsel, Ms. Lien's concentration at RTD had been in real estate,federal regulatory compliance, local government law and issues related to Colorado's Taxpayers' Bill ofRights (TABOR). Ms. Lien has been with the District since 1990.
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Mr. Terry L. Howerter – Chief Financial Officer. Mr. Howerter was appointed to the positionof Chief Financial Officer on June 30, 2008. He holds a Bachelor of Arts degree in Accountancy fromthe University of Illinois at Springfield and is member in good standing of the American Institute ofCertified Public Accountants. Mr. Howerter has over twenty-five years of progressive accounting andfinancial experience in both the public and private sector. He has held senior level finance andaccounting positions with the C&NW Transportation Company, Union Pacific Railroad, and The DentonCounty Transportation Authority. As the RTD Chief Financial Officer, he directs the activities of thefollowing divisions: Finance, Treasury, Human Resources and Information Technology.
Mr. Bill Van Meter – Assistant General Manager, Planning. Mr. Van Meter was appointed tothe position of Assistant General Manager, Planning for the District in April 2010 after being appointedas Acting Assistant General Manager, Planning in September 2008. Mr. Van Meter has over 20 years'experience in the transportation planning field, with extensive experience in public transit and roadwayplanning, managing multi-modal transportation studies, and Federal Transit Administration New Startsfunding processes. Mr. Van Meter has been with RTD since 1991, and prior to his appointment to hiscurrent position, he held progressively responsible positions at RTD, most recently in the position ofSenior Manager of Systems Planning. Prior to his employment with RTD, Mr. Van Meter was employedas a transportation planner with the South Central Regional Council of Governments in Connecticut. Heholds Bachelor's and Master's degrees in Economic Geography from the University of Illinois at Urbana-Champaign.
Mr. Bruce Abel – Assistant General Manager, Bus Operations. Mr. Abel joined RTD in 2001as Manager of Special Services and was appointed Assistant General Manager, Bus Operations in May2010. Prior to that appointment, Mr. Abel served as Assistant General Manager, Contracted Services. Mr.Abel holds a Bachelor of Arts degree in Economics from Wake Forest University and a Master's ofBusiness Administration degree with a concentration in marketing from the University of North Carolina-Greensboro. Mr. Abel has more than 30 years of public transportation management and consultingexperience in both the public and private sector, including positions in North Carolina, Texas, SouthDakota and Colorado. Mr. Abel is responsible for overseeing the provision of all of RTD's bus operationsincluding contracted services comprised of ADA paratransit service, traditional fixed-route services andnon-traditional services including general public paratransit, vanpooling and special event services.
Mr. Richard Clarke – Assistant General Manager, Capital Programs. Mr. Clarke wasappointed Assistant General Manager, Capital Programs in May 2010. Prior to that time, Mr. Clarke heldthe position of Assistant General Manager, FasTracks/Engineering. Mr. Clarke is responsible for corridorimplementation. He previously served as RTD's Project Director for the Transportation Expansion (T-REX) project. T-REX was a $1.7 billion, multi-modal (highway/light rail) project that included 19 milesof new light rail and 13 stations. It was completed ahead of schedule and under budget. He has previoustransit project experience in Dallas, New York, Boston, Cleveland and Philadelphia. Mr. Clarke hasBachelor's and Master's degrees in transportation engineering from the University of Pennsylvania.
Mr. Austin Jenkins – Assistant General Manager, Rail Operations. Mr. Jenkins began servingas Assistant General Manager, Rail Operations on August 2, 2010. Mr. Jenkins has over 30 years'experience in the management and operation of North American rail transit systems including the start-upof three rail systems and experience dealing with all elements of rail transit from construction throughoperations. Mr. Jenkins is the former Chair of the APTA Rail Operating Practices Subcommittee of theRail Standards Committee, past Chair of APTA's International Rail Rodeo Committee and APTA'sOperating Practices Standards Committee. He co-authored several APTA operating standards manuals.
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Mr. David A. Genova – Assistant General Manager, Safety, Security and Facilities. Mr.Genova was appointed Assistant General Manager, Safety, Security and Facilities in May 2007. Mr.Genova has a Bachelor of Arts degree in Geology from the University of Colorado and a Master's degreein Business Administration from Regis University. Mr. Genova has over 23 years of safety andenvironmental experience, and 16 years of transit experience including the start-up of four RTD light railprojects and participation in a number of transit industry peer reviews. He is a certified hazardousmaterials manager and certified safety and security director for bus and rail transit. Mr. Genova is activein APTA safety and security committees, served as the Vice Chair of the APTA Bus Safety Committee,served as Vice President and Board Director of the FBI InfraGard Denver Members Alliance, and is onthe Board of Directors of Colorado Operation Lifesaver. He is also a Senior Associate Staff Instructor forthe Transportation Safety Institute. Mr. Genova directs the Safety and Environmental ComplianceDivision, the Security and Emergency Management Division, and the Facilities Division. He has beenwith RTD since 1994.
Mr. Scott Reed – Assistant General Manager, Communications. Mr. Reed was promoted toAssistant General Manager in 2006, having previously served as Director of Public Affairs. The officialspokesperson for the agency, he is responsible for managing all media relations efforts, the GovernmentRelations unit, the Customer Information division including the Telephone Information Center and PassSales outlets, RTD marketing and the public outreach and public information programs for the FasTracksproject. He also administers the Internal Audit unit. Mr. Reed has been with RTD since 1991 and hisnearly 30-year professional career in communications includes work as a newspaper reporter and assistanteditor, Conference and Events Coordinator at the University of Colorado, and Director of Special Eventsfor the Cystic Fibrosis Foundation in Colorado Springs. He holds a Bachelor's degree in Journalism and aMaster's of Public Administration degree, both from the University of Colorado.
Employee and Labor Relations
RTD employs approximately 2,555 persons of whom about 1,895 are represented by Local 1001of the Amalgamated Transit Union (the "Union"), which bargains collectively on behalf of theseemployees. In November 2009, RTD and the Union arbitrated and entered into a collective bargainingagreement which expires on February 28, 2013. The Union members operate the bus and rail servicesand provide other administrative services. On February 27, 2013, the RTD negotiating team and theUnion reached a tentative agreement on all collective bargaining items. This agreement, which has beenratified by the Union membership and RTD, represents an unprecedented five year agreement and is thefirst time that the District and the Union have reached agreement prior to expiration of a Union contract.RTD does not expect the terms of this agreement to have a material impact on operations or the financialposition of the organization. In addition to District employees, approximately 1,700 non-Districtemployees provide contracted services including fixed-route and paratransit services.
Retirement Plans
Pension/retirement plans have been established covering substantially all of RTD's employees.Union-represented employees participate in a pension trust, established through a collective bargainingagreement, and administered by a Board of Trustees representing both the Union and RTD. Both RTDand the employees contribute to this plan (the "Union Plan"). As of January 1, 2011, the Union Plan hadunfunded actuarial liabilities of $101.954 million as described in Note F to the 2011 ComprehensiveAnnual Financial Report attached as Appendix B hereto. The actuarial valuations have been performedby Gabriel Roeder Smith & Company for the Union Plan. The previous collective bargaining agreementrequired RTD to contribute 8% (and the employees to contribute 3%) of eligible employees' qualifyingwages to the Union Plan each year through expiration of the collective bargaining agreement onFebruary 28, 2013. The cost to RTD for the Union Plan for the year ended December 31, 2011 was
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$6.2 million. Under the new collective bargaining agreement, RTD is required to contribute 12%, 12%and 13% (and the employees to contribute 4%, 4% and 5%) of eligible employees' qualifying wages tothe Union Plan respectively for the years 2013, 2014 and 2015 through 2017. RTD's obligations underthe Union Plan based on the new collective bargaining agreement are limited to its defined contributions,and RTD is current with respect to its obligation to pay such defined contributions. See "Employee andLabor Relations" under this caption for a discussion of the status of the existing collective bargainingagreement.
Non-represented salaried personnel hired prior to January 1, 2008 are covered under a non-contributory defined benefit plan to which RTD has in the past contributed 9% of payroll costs annuallycomputed on an actuarial basis (the "Salaried Pension Plan"). Through 2008, the amounts contributedby RTD fully funded the Salaried Pension Plan. Due to the loss in investments in the Salaried PensionPlan starting in 2009 caused by the recession, the actuary recommended contributions of percentageshigher than 9% in years 2010, 2011 and 2012. Accordingly, the 9% contributions made by RTD to theSalaried Pension Plan during those years were less than the actuarially recommended amounts.Beginning in 2013, RTD contributes a fixed dollar amount of $3.1 million to the Salaried Pension Plan,rather than a percentage of payroll costs. This annual fixed contribution to the Salaried Pension Planrepresents the amount actuarially recommended as the periodic contribution designed to ensure there aresufficient assets to pay benefits when due. The Salaried Pension Plan is qualified with the InternalRevenue Service, with the cost to RTD for the Salaried Pension Plan for the year ended December 31,2012 of $2.8 million. As of January 1, 2012, the funded ratio of the actuarial value of assets to theactuarial accrued liability for the Salaried Pension Plan was 93.72%. The most recent actuarial valuationfor the Salaried Pension Plan dated January 1, 2012 was performed by Rael & Letson. For furtherinformation regarding the District's Salaried Pension Plan, see Note F to the 2011 Comprehensive AnnualFinancial Report attached as Appendix B hereto.
Non-represented salaried personnel hired on or after January 1, 2008 are covered under a non-contributory defined contribution plan providing for a 7% to 9% contribution by RTD based on theearnings of the employee. The Board adopts a percentage amount for contributions each year. RTDclosed the Salaried Pension Plan and initiated this defined contribution plan to ensure the long-term fiscalsoundness of both plans while controlling the cost of pension benefits.
RTD also has a deferred compensation plan, created in accordance with §457 of the InternalRevenue Code of 1986, as amended, which is available to substantially all employees and permitsemployees to defer a portion of their compensation to future years.
Other Postemployment Benefits
Employees of state and local governments may be compensated in a variety of forms in exchangefor their services. In addition to a salary, many employees earn benefits over their years of service thatwill not be received until after their employment with the government ends. As the name suggests, OtherPostemployment Benefits ("OPEBs") are postemployment benefits other than pensions.
Although OPEBs may not have the same legal standing as pensions in some jurisdictions, theGovernmental Accounting Standards Board ("GASB") believes that OPEBs are a part of thecompensation that employees earn each year, even though these benefits are not received until afteremployment has ended. Therefore, the cost of these future benefits is part of the cost of providing publicservices today.
In 2004, the GASB issued two new standards – GASB Statement No. 43, Financial Reporting forPostemployment Benefit Plans Other Than Pension Plans, and GASB Statement No. 45, Accounting andFinancial Reporting for Employers for Postemployment Benefits Other Than Pensions. The purpose of
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these new standards is to ensure that governments recognize and report information about the size of theirlong-term financial obligations and commitments related to OPEBs. The District adopted GASBStatement No. 45 for its audited financial statements for the fiscal year beginning January 1, 2007.
The District is not presently obligated to contribute funds towards OPEBs for any of itsemployees and therefore does not have an unfunded liability relating to OPEBs.
Insurance
Under the provisions of the State Governmental Immunity Act, the maximum liability to RTD fora personal injury claim is $150,000 per individual, or $600,000 per incident beginning July 1, 1992.However, RTD may be unable to rely upon the defense of governmental immunity and might be subjectto liability in excess of the maximum limits established by the State Governmental Immunity Act in theevent of suits alleging causes of action founded upon various federal laws, such as suits filed pursuant to42 U.S.C. Section 1983 alleging the deprivation of federal constitutional or statutory rights of anindividual and suits alleging anti-competitive practices and violation of the anti-trust laws by RTD in theexercise of its delegated powers. See "GOVERNMENTAL IMMUNITY."
RTD also holds excess liability insurance for bodily injury, personal and advertising injury,public officials' liability, and property damage. The limit for District operations and personnel is $25million less RTD's self-insured retention of $500,000 per claim (up to $50 million for certain railroadproperty). Additionally, RTD carries property insurance on buildings and other physical assets at anaggregate coverage level of up to $600 million based on the replacement value of such property.
RTD's policy is to recognize claims as they arise, not when they are resolved. RTD anticipatesclaims by budgeting the expected losses in the current year, including an actuarially determined amountfor "Incurred But Not Reported" ("IBNR") claims; such amounts are reflected as liabilities in RTD'scomprehensive annual financial reports. No fund or pool of money is segregated or restricted by RTD forthe payment of such IBNR claims. For 2012, RTD recognized insurance costs of $4.8 million. RTDmaintains reserve funds for existing liabilities (as of December 31, 2012) in the amount of $2.15 millionand workers' compensation claims (as of December 31, 2012) in the amount of $3.57 million.
Under State law, the insurer of a private motor vehicle has a cause of action for benefits actuallypaid by the insurer against the owner or operator of a nonprivate motor vehicle responsible for theaccident. There is an exception, however, for accidents involving motor vehicles of RTD.
Intergovernmental Agreements
Under State law, intergovernmental relationships and agreements are permitted among politicalsubdivisions, agencies, departments of the United States, the State and any political subdivision of anadjoining state. Governments may cooperate or contract with one another for the provision of anyfunction, service or facility that each of them is authorized to provide separately. At any given time, RTDhas numerous intergovernmental agreements ("IGAs") for various purposes with municipalities, the Stateor its agencies such as the Department of Transportation, and the federal government, particularly theFederal Transit Administration ("FTA"). The various agreements cover areas including, but not limitedto, RTD support for the provision of additional bus service in the City of Boulder through the HOPAgreement with Boulder, construction and/or maintenance of joint facilities such as roads, bridges or bikepaths, and various funding and operational agreements with the City of Denver and the ColoradoDepartment of Transportation with respect to the Denver Union Station project. Agreements with FTAusually involve grant funding and application of grant funds. Other than full funding grant agreementswith FTA and annual grant agreements with FTA for Section 5307 funds, no other financially oroperationally significant IGAs exist at this time.
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RTD Service Area Map
The following map shows the service area of the District.
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THE SYSTEM
Fleet Composition
As of December 2012, the District owned 969 fixed-route transit buses (457 of which are leasedto private carriers), 172 light rail vehicles, 327 Access-a-Ride paratransit vehicles and 42 Call-n-Ridevehicles. The RTD fleet includes 22-, 30- and 40-foot transit coaches, 60-foot articulated coaches, over-the-road coaches, specially designed low-floor coaches for use on the 16th Street Mall, 85-foot articulatedlight rail vehicles and vans and buses used for Access-a-Ride paratransit service mandated by theAmericans with Disabilities Act of 1990. As of December 2012, the System had a peak fleet requirementof 797 fixed-route buses and 99 light rail vehicles.
The following table shows the composition of RTD's active vehicle fleet as of December 2012:
TABLE VIIIRTD Active Fleet as of December 2012
Fixed Route Bus Fleet Number
RTD Owned – Fixed Route Buses40' Transit Coaches 541Articulated Buses 118Intercity Coaches 157Mall Shuttles 3830' Transit Buses 10122' Cutaway Buses 14
Total RTD-Owned Fixed Route Buses 969
Access-a-Ride Fleet(1) 327
Call-n-Ride Fleet(2) 42
Light Rail Vehicle Fleet 172
TOTAL ACTIVE FLEET 1,510_____________(1) All paratransit vehicles are owned by RTD and operated by private operators under
contract with RTD.(2) Call-n-Ride vehicles are owned by RTD and operated by private operators under
contract with RTD.Source: The District.
Transit Services
In order to meet the needs of the residents of RTD, RTD provides ten types of service on 155routes, including those operated by private contractors:
1. Local – routes operating along major streets within the Denver metropolitan area and thecities of Boulder and Longmont, making frequent stops for passengers.
2. Limited – routes serving high-density corridors with less frequent stops than local routes.
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3. Express – routes providing non-stop service from suburban areas to downtown Denverand other employment centers.
4. Regional – routes connecting outlying areas of RTD to downtown Denver, Boulder, andother employment centers.
5. SkyRide – routes serving Denver International Airport.
6. Light Rail – rail service for approximately 35 miles of light rail track in the SoutheastCorridor and between Mineral Avenue in Littleton to either 30th and Downing Streets in Denver orDenver Union Station. This does not include the service on the West Corridor scheduled to open in April2013. See "FasTracks – FasTracks Corridors – West Corridor" under this caption.
7. Mall Shuttle – a free shuttle service operating along the 16th Street Mall in downtownDenver.
8. Access-a-Ride – door-to-door paratransit service for people with disabilities providedunder the requirements of the Americans with Disabilities Act of 1990.
9. Call-n-Ride – curb-to-curb service that responds to passenger requests. Typicallyoperated in lieu of fixed route service with small vehicles in areas and/or times of low demand.
10. Special – for example, SeniorRide – pre-scheduled trips in off-peak hours to recreationalevents for elderly persons in the Denver metropolitan area, Boulder and Longmont, seven days a week;BroncoRide – shuttle service from the Auraria campus, Federal Boulevard and selected Park-n-Rides toDenver Broncos home games; RockiesRide – shuttle service from selected Park-n-Rides to ColoradoRockies home games.
State law permits RTD to contract with private operators for the provision of up to 58% of itsvehicular services. RTD is in compliance with this requirement with 58% of its services currentlyoperated by private operators.
RTD may, but currently does not, provide charter service to the extent that such service cannot beprovided by private operators. Pursuant to federal regulations, charter service operated by RTD cannotinterfere with its regularly scheduled services, and the rate charged by RTD must recover the fullyallocated cost of operating the service.
RTD, upon action of its Board, has the authorization to reduce services with no other approvalrequired. In response to declining sales tax revenues, RTD instituted service reductions in 2009-2011 aswell as an 8% reduction in January 2012.
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The following table shows additional operating data concerning the System as of December 31,2012:
TABLE IXOperating Data
(As of December 31, 2012)
Total Miles(1) 38,999,300Active bus stops 9,698Number of routes 155
Local 79Limited 11Express 16Regional 16SkyRide 5Light Rail 6Mall Shuttle 1Call-n-Ride 21
Ridership average weekday, revenue service 283,164Ridership average weekday, all services 328,029Total annual boardings, revenue service 85,442,280Weekday regular fixed-route scheduled miles, including
16th Street Mall and Light Rail(2)126,849
Annual diesel fuel consumption, gallons 5,385,000Total active buses 969Wheelchair lift equipped buses 969Number of employees (actual staff)(3)
Salaried 660Represented (includes part-time drivers) 1,895
Fleet requirements (during peak hours) 797Operating facilities(3) 6
____________(1)
January 2012 service levels annualized (including Light Rail)(2)
District-operated buses only.(3)
Excludes purchased transportation services.Source: The District's unaudited financial records.
Passenger, Maintenance and Administrative Facilities
Patrons who are residents of the District using RTD service may park at no charge in Park-n-Ridelots for up to 24 hours. Patrons residing outside of the District boundaries or District residents parking formore than 24 hours must pay a nominal parking fee. By providing the Park-n-Ride lots, RTD can provideexpress and regional services in low-density areas and more frequent long-haul services for patrons. Asof December 31, 2012, RTD had 74 Park-n-Ride lots, providing a total of 26,530 parking spaces.
RTD currently owns four bus maintenance facilities. RTD also owns two light rail maintenancefacilities, two administrative buildings and three passenger terminals located throughout the District.
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Long-Term Financial Planning
Regional Transportation Plan
The long-term goals and policies of RTD are incorporated in a plan known as the Metro VisionRegional Transportation Plan (the "Regional Plan"). The Regional Plan is mandated by the United StatesDepartment of Transportation which has recognized the Denver Regional Council of Governments("DRCOG"), a voluntary association of Denver metropolitan area county and municipal governments, asthe entity charged with preparing the Regional Plan. DRCOG, in coordination with the ColoradoDepartment of Transportation ("CDOT"), RTD and local governments, has developed the Regional Planto provide a coordinated system of transit and roadway improvements to meet the transportation needs ofthe Denver metropolitan area through the year 2035 within projected available revenues. By inclusion inthe Regional Plan, RTD's capital projects may become eligible for federal assistance.
The Regional Plan includes those regional transportation facilities that can be provided throughthe year 2035, based on reasonably expected revenues. The Regional Plan focus is on improving facilitiesfor a variety of transportation modes; improving the intermodal connections between the varioustransportation modes; and providing programs and services to support the transportation system. TheRegional Plan consists of a network of highways of various roadway classifications, high occupancyvehicle and rail rapid transit facilities, bus service, specialized services for the elderly and disabled,airports of various classifications, provisions for freight travel, a regional bicycle network, sidewalks forpedestrians, and intermodal facilities to provide connections among and between transportation modes.In August 2012, RTD made the decision that it would not pursue a Sales Tax election in November 2012.As a result of this determination, RTD was required under federal law to submit an amendment to theRegional Plan to set forth a "fiscally constrained" Plan which reflected this change in anticipated funding.Accordingly, RTD submitted to DRCOG a 2035 Regional Transportation Plan Amendment request datedAugust 30, 2012 (the "RTP Amendment request") with a financial plan update relating to the FasTrackssystem. See "FasTracks Plan" under this caption.
Strategic Budget Plan
The Strategic Budget Plan ("SBP") is RTD's six-year capital and operating plan adopted annuallyby the Board in connection with the District's estimated capital and operational expenditures for allprograms other than FasTracks. Planning and coordination of FasTracks expenditures are describedabove under "THE SYSTEM – FasTracks."
The SBP includes projections of annual service levels, the capital requirements to maintain theseservice levels, and the funding mechanisms through which the operating and capital programs are to beachieved. In addition, the SBP is a component of the comprehensive six-year TransportationImprovement Program (the "TIP") adopted biennially by DRCOG for the Denver metropolitan area, asrequired by federal regulations. An RTD capital project must be included in the TIP in order to beeligible for federal funds. The six-year SBP is revised annually by the Board in response to factors suchas changes in RTD's goals and objectives, changes in demographics and development in RTD's servicearea, or unforeseen circumstances affecting forecast revenues. As a result, the six-year SBP may includesubstantial changes from year to year, with projects being added, deleted and modified on a regular basis.
An SBP was adopted on July 17, 2012, and covers the period from 2013 through 2018. The2013-2018 SBP contemplates that over such six year period, RTD intends to replace a total of 303 transitbuses, 113 articulated buses, 75 intercity buses, 26 mall shuttle vehicles, 14 cut-away buses and 46 Call-n-Ride vehicles as they reach the end of their useful lives.
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FasTracks Plan
In addition to the SBP, the District is planning and constructing the build-out of the FasTrackstransit expansion plan described in "FasTracks" under this caption. Each year, RTD conducts acomprehensive evaluation of the entire FasTracks program called an Annual Program Evaluation. InAugust 2012, RTD was required to submit the RTP Amendment request described in "RegionalTransportation Plan" under this caption. The RTP Amendment request called for changes to the timing ofthe build out of the Northwest Rail Corridor, the North Metro Corridor and the Central and SouthwestCorridor Extensions due to financial constraints which would prohibit all of the FasTracks projects frombeing completed by 2035. The RTP Amendment request assumed that no additional sales tax vote wouldbe pursued and that there would be no additional tax revenues for FasTracks projects beyond the existing1.0% Sales Tax. Future funding sources identified in the RTP Amendment request include proceeds ofadditional revenue bonds and certificates of participation, certain federal grants and local match funding.The Regional Plan as so amended represents RTD's current plans and expectations but can be furtheramended over time as new funding alternatives become available. See "FasTracks – FasTracksCorridors" under this caption.
Unsolicited Proposals
A third party may, from time to time, provide an unsolicited proposal ("Unsolicited Proposal")to the District on its own initiative for the purpose of obtaining a contract with RTD. An UnsolicitedProposal is distinguishable from a project that is already part of the District's long-term budget planningprocess if it uses innovative and unique solutions to offer added value such as enhanced financing optionsor materially advanced delivery dates. The District's policy regarding Unsolicited Proposals provides thatonce an Unsolicited Proposal is received by the District, it is analyzed to determine whether it meetscertain threshold requirements. If such requirements are met, the Unsolicited Proposal is evaluated todetermine whether, among other things, the proposal: (a) offers benefits to the District, its passengers, andthe community; (b) can be accommodated in the District's long-term budget without displacing otherplanned expenditures; (c) is consistent with the District's and the Board's objectives and goals; and (d)offers unique goods and services that the District did not intend to purchase through the normal contractprocess. If it is determined that the Unsolicited Proposal satisfies these evaluation requirements, theDistrict will (unless the Unsolicited Proposal offers a proprietary concept that is essential to contractdelivery) publicize its interest in acquiring the property or services described in the Unsolicited Proposaland seek competing proposals from other interested parties. No Unsolicited Proposal is selected forcontract award unless and until the process described above has been undertaken by the District. TheDistrict has received and expects in the future to receive Unsolicited Proposals. Most recently, theDistrict has received an Unsolicited Proposal in connection with the North Metro Corridor of theFasTracks Plan. See "FasTracks" under this caption. All such proposals have been and will be handledas outlined herein.
FasTracks
General
Prior to January 1, 2005, the District received the 0.6% Sales Tax. At the 2004 Election, voters inthe District approved a ballot question allowing for the 0.4% Sales Tax Increase effective January 1,2005. The revenues generated by this additional 0.4% Sales Tax rate do not secure the Bonds. Inconnection therewith, the ballot question also authorized RTD to issue up to $3.477 billion of additionaldebt obligations to finance the District's multi-year comprehensive transit expansion plan known as"FasTracks."
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The FasTracks Plan consists of nine rail corridors (new or extended); one bus rapid transit("BRT") corridor; redevelopment of Denver Union Station; a new Commuter Rail Maintenance Facility("CRMF") and an expanded light rail maintenance facility. At completion, the Plan will addapproximately 93 miles of commuter rail (East, Gold Line, North Metro, and Northwest Rail Corridors);approximately 28 miles of light rail (Southeast and Southwest Corridor Extensions, Central CorridorExtension, I-225 Corridor, and West Corridor); Park-n-Ride improvements at and/or relocations ofexisting Park-n-Ride lots along U.S. 36 (US 36 BRT – Phase 1), and 18 miles of BRT (U.S. 36 BRT –Phase 2). The nine corridors further described in "FasTracks Corridors" under this caption are currentlymoving forward in various stages of design and construction. Since 2004, however, projected capital andoperating expenses have increased while projections for available revenues have decreased. The Districthas represented that it is committed to building as many corridors in the shortest timeframe possible,while ensuring that it can meet all current and future projected obligations. In November 2012, theDistrict Board approved the establishment of the FasTracks Internal Savings Account into which certainfunds made available by the reduction of existing budgeted items will be deposited to be used to fund thefuture FasTracks capital program.
In April 2004, CDOT and RTD executed an intergovernmental agreement that is intended toestablish a coordinated process to facilitate the implementation of the FasTracks plan and preserve theability to pursue planned highway and transit improvements in corridors where both highway and transitimprovements are likely to occur. The Board has formally resolved to analyze the FasTracks planannually to determine both local and federal sources and adjust the corridor improvements accordingly.The Board has further resolved that construction of FasTracks improvements within a corridor are not tostart until there is a firm commitment of all required funding sources and intergovernmental agreementsare in place with local governments concerning permits, design and plan review.
FasTracks Corridors
I-225 Corridor. Improvements, facilities, vehicles and equipment for the I-225 Corridor, aproposed 10.5-mile light rail transit extension which will connect the existing Southeast Corridor with theplanned East Corridor and will include eight stations, were approved by the Board in October 2009.Construction of the Corridor from Nine Mile Station to Iliff began in early 2012 as a joint project withCDOT. In August 2012, the District completed negotiations with Kiewit Infrastructure Co. ("Kiewit") ona design build contract to complete the I-225 Corridor from Iliff to Peoria Station. Kiewit has been givena notice to proceed and construction is expected to begin in spring 2013. Completion is scheduled byNovember 2015, with the I-225 rail line to open in 2016.
West Corridor. The West Corridor line is to be a 12.1-mile light rail transit corridor betweenDenver Union Station and the Jefferson County Government Center in Golden, serving Denver,Lakewood, the Denver Federal Center, Golden and Jefferson County. In June 2001, the District beganpreliminary engineering and an EIS for the West Corridor. The final environmental impact statement wasissued in October 2003 with a Record of Decision from the FTA received in April 2004. In 2005, theDistrict began final design for the West Corridor. In January 2009, the District was awarded a fullfunding grant agreement through the FTA's New Starts program for the West Corridor. Under the award,the District is expected to receive approximately $308.68 million over several years. The funds are to beexpended on the light rail line approved as part of the District's FasTracks program. Major constructioncommenced in the West Corridor in 2009 and is now approximately 99% complete, with integratedtesting approximately 65% complete. The West Corridor is scheduled to be opened for revenue serviceon April 26, 2013.
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East Corridor. The East Corridor is designed to be a 22.8-mile commuter rail transit corridorextending from Denver Union Station to Denver International Airport with six proposed intermediatestations in locations throughout the City and County of Denver and the City of Aurora. The District hascompleted an EIS for the East Corridor, covering rapid transit improvement and a Record of Decision wassigned with FTA in November 2009. In August 2010, the District purchased certain property and rights-of-way from the Union Pacific Corporation that are required for construction of the East Corridor. TheEast Corridor is being delivered as part of the first phase of the Eagle P3 Project described in "Eagle P3Project" under this caption. Final design of the East Corridor began in 2010, and construction began in2011, with completion scheduled for January 2016. On August 31, 2011, the FTA granted a combined$1.03 billion Full Funding Grant Agreement for the East Corridor and the Gold Line Rail Corridor(described below).
U.S. 36 Bus Rapid Transit Corridor. The U.S. 36 Bus Rapid Transit Corridor is designed todeliver 18 miles of bus rapid transit service between downtown Denver and Boulder along U.S. Highway36. The District and CDOT jointly conducted an EIS for the U.S. 36 Bus Rapid Transit Corridor in thegeneral area between downtown Denver and Boulder. A final EIS was released in 2009. RTD is workingwith CDOT and the Colorado High-Performance Transportation Enterprise ("HPTE"), which areconstructing managed lanes from Federal Boulevard to Table Mesa Drive along U.S. 36. RTD has agreedto provide $120 million of funding for Phase 1, from Federal Boulevard to 88th Street, and an additional$15 million for Phase 2 from 88th Street to Table Mesa Drive. CDOT has contracted with Ames/GraniteJoint Venture to design, build, finance, operate and maintain ("DBFOM") Phase 1. Design andconstruction on that segment began in May 2012, with the segment scheduled to open in January 2015.HPTE and CDOT are working on a Request for Proposals ("RFP") for a DBFOM contract on Phase 2.Three teams have been shortlisted, and the selection of the preferred proposer and financial close areexpected by the end of 2013. Phase 2 is currently projected to open by the end of 2015, and RTD expectsto operate Bus Rapid Transit service on the full managed lane to Boulder starting in January 2016.
Northwest Rail Corridor. The Northwest Rail Corridor is a proposed 41-mile rail transit corridorbetween Denver Union Station and Longmont. An environmental evaluation for this corridor wascompleted in May 2010. The District currently plans to build the Northwest Rail Corridor in phases. Theconstruction of the first phase of the Northwest Rail Corridor, running from Denver Union Station toWestminster referred to as the Northwest Rail Electrified Segment began in August 2011, withcompletion of such first phase scheduled for March 2016. The Northwest Rail Corridor is part of theEagle P3 Project described in "Eagle P3 Project" under this caption. RTD also will construct the end-of-line station in Longmont to be used as an interim bus Park-n-Ride until the full rail line is constructed.Design on the Longmont station is expected to begin in 2013, with construction completed in 2015.
North Metro Corridor. The North Metro Corridor is a proposed 18-mile transit corridor betweenDenver Union Station and 162nd Avenue passing through Denver, Commerce City, Thornton, Northglennand unincorporated Adams County. The District has completed an EIS for the North Metro Corridor anda Record of Decision was signed with FTA in April 2011. Final design on the initial segments, fromDenver Union Station to the National Western Stock Show ("NWSS") and from the NWSS to 72ndAvenue, began in August 2012 and is expected to be completed in late 2013. Construction of the twoinitial segments is expected to be completed in 2017. The District anticipates funding the construction ofthe segment from NWSS to 72nd Avenue with cash on hand and proceeds of Subordinate Bonds expectedto be issued in the fourth quarter 2013 (subject to change), taking into account savings achieved from therefunding of certain outstanding bonds and certificates of participation of the District. Timing ofconstruction and implementation of revenue service on the North Metro Corridor is being evaluated.
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Gold Line Rail Corridor. The Gold Line is a proposed 11.2-mile commuter rail corridor fromDenver Union Station passing through northern Denver, unincorporated Adams County, Arvada andWheat Ridge. The District has completed a final EIS for the Gold Line and a Record of Decision wasissued by the FTA in November 2009. The Gold Line will be delivered as part of the second phase of theEagle P3 Project described in "Eagle P3 Project" under this caption. On August 31, 2011 the FTAgranted a combined $1.03 billion Full Funding Grant Agreement to the Gold Line Rail Corridor and theEast Corridor (described above). Construction on the Gold Line Rail Corridor began in 2011, withcompletion of construction scheduled for July 2016.
Corridor Extensions. The Southwest Corridor extension is designed to add 2.5 miles of light railto an existing 8.7-mile light rail line. The Southeast Corridor extension is designed to add 2.3 miles oflight rail to an existing 19.1-mile line. Environmental evaluation studies of the Southwest and SoutheastCorridor Extensions were completed in February 2010. These studies include basic engineering design aswell as planning and environmental evaluations. The Central Corridor extension is designed to add 0.8miles of light rail to connect the existing 5.3-mile downtown light rail service to a station on the plannedEast Corridor. Environmental evaluation studies of the Southwest, Central and Southeast Corridorextensions were approved by the Board in February 2010. These studies include base engineering designas well as planning and environmental evaluations. RTD is currently performing additional planningstudies on the Southeast and Central Corridor Extensions. Construction of the Southeast CorridorExtension is programmed for the early 2030s, with revenue service projected in January 2035.
Eagle P3 Project
The District has served as the "conduit issuer" of its Tax-Exempt Private Activity Bonds (DenverTransit Partners Eagle P3 Project), Series 2010 (the "P3 Conduit Bonds") in the aggregate principalamount of $397,835,000. The proceeds of the P3 Conduit Bonds have been loaned to Denver TransitPartners LLC, a Delaware limited liability company ("Denver Transit Partners") pursuant to a LoanAgreement (the "P3 Loan Agreement") between the District and Denver Transit Partners to pay aportion of the costs of a FasTracks project (the "Eagle P3 Project"). The P3 Conduit Bonds are securedsolely by loan payments required under the P3 Loan Agreement to be made by Denver Transit Partners inamounts and on the dates required to pay the principal and interest on the P3 Conduit Bonds. The P3Conduit Bonds do not constitute indebtedness of RTD or a multiple-fiscal year obligation of RTDwithin the meaning of the provisions of the State Constitution or the laws of the State.
The District and Denver Transit Partners entered into a Concession and Lease Agreement (the"P3 Concession Agreement") in July 2010 in order to generate the revenues necessary to meet DenverTransit Partners' obligations under the P3 Loan Agreement. Under the P3 Concession Agreement,Denver Transit Partners has agreed to design, construct, finance, operate and maintain the Eagle P3Project in return for payments by the District in the form of construction payments (the "ConstructionPayments") and service payments (the "Service Payments"). The District has agreed to make monthlyConstruction Payments to Denver Transit Partners during the design and construction phase of the EagleP3 Project and, commencing with the beginning of revenue service of the Eagle P3 Project, to makemonthly Service Payments to Denver Transit Partners. Construction payments are expected to be fundedfrom federal grants and from local funds available to the District and are subject to annual appropriationby the District. Service Payments have two components. One portion (the "TABOR Portion of ServicePayments"), structured to exceed scheduled debt service on the P3 Conduit Bonds, is secured by asubordinate pledge of Sales Tax Revenues available after payment of the Bonds, the Outstanding ParityBonds and the Subordinate Bonds. See "DEBT STRUCTURE OF RTD." Payment of the TABORPortion of Service Payments by the District utilizes $589,913,540 of the principal electoral authorizationreceived at the 2004 Election. The TABOR Portion of Service Payments is payable on a subordinatelien basis to the Bonds. The second portion (the "Appropriation Portion") is structured to cover
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operations and maintenance costs of the Eagle P3 Project and will be subject to annual appropriation bythe District. The P3 Concession Agreement provides that any TABOR Portion not paid due toinsufficiency of Sales Tax Revenues is to be paid from available funds of the District, if appropriated.The District's obligation to make Construction Payments and Service Payments depends upon DenverTransit Partners' performance of its obligations under the P3 Concession Agreement, includingcompletion of the design, construction and start up of the portions of the Eagle P3 Project when requiredand the operation of the Eagle P3 Project in accordance with the standards set forth in the P3 ConcessionAgreement. As required by the P3 Concession Agreement, RTD has reserved a certain amount of itselectoral authority received pursuant to the 2004 Election to secure RTD's obligation to pay a terminationamount to Denver Transit Partners upon the occurrence of certain events under, and in the amountscalculated in accordance with, the P3 Concession Agreement. In the event of a termination of the P3Concession Agreement, any payment obligation by RTD for such termination amount under the P3Concession Agreement will be subordinate to the Bonds.
In order to assist in the financing of a portion of the costs of the Eagle P3 Project, the Districtentered into a loan agreement with the United States Department of Transportation (the "USDOT") inDecember 2011 (the "TIFIA Loan Agreement") pursuant to which the USDOT agreed to loan amountsto the District to be evidenced by a bond (the "RTD TIFIA Bond") as further described in "DEBTSTRUCTURE OF RTD."
Denver Union Station
Under the FasTracks program, the existing Denver Union Station will be developed into amultimodal transportation hub, integrating light rail, commuter rail and intercity rail (Amtrak) as well asregional, express and local bus service, the 16th Street Mall shuttle, and intercity buses, taxis, shuttles,vans, limousines, bicycles and pedestrians (the "DUS Project"). In August 2001, the District completedthe acquisition of Denver Union Station and certain adjacent land. The District, in cooperation with theCity and County of Denver, DRCOG, and CDOT, worked together to prepare a Master Plan and anenvironmental impact statement ("EIS") for the DUS Project. The Master Plan and EIS work began inMay 2002 and the Master Plan components were approved by all four agency partners in the fall of 2004.The Record of Decision was issued by the FTA on October 17, 2008. The DUS Project also includesrezoning of the 19.85-acre site to Denver's new transit mixed use district and designation of the historicstructure as a Denver historic landmark.
In 2006, the agency partners solicited proposals for, and selected, a master developer to enter intoa public-private partnership to develop the public transportation infrastructure and the vertical, private,transit-supported development on the site. Construction at Denver Union Station started in 2009 under alimited Notice to Proceed. Certain improvements to Denver Union Station and related facilities are beingdelivered as part of the Eagle P3 Project described in "Eagle P3 Project" under this caption.
In July 2010, RTD entered into a DUSPA/RTD Funding Agreement (the "DUSPA Agreement")with the Denver Union Station Project Authority ("DUSPA") in order to support DUSPA's financing ofthe Denver Union Station mixed-use and multi-modal project, including transit elements which are to beconstructed on RTD owned property and will be owned and operated by RTD. Such transit elementsinclude a new light rail terminal, a new commuter rail station, a regional and commercial bus facility andnew tracks. See "DEBT STRUCTURE OF RTD" for additional information regarding the DUSPAtransaction which involved issuance of the DUSPA Bond with a lien on Sales Tax Revenues subordinateto the Bonds, the Outstanding Parity Bonds, the Subordinate Bonds and the TABOR Portion of ServicePayments. The light rail station was opened to passengers on August 15, 2011. Approximately 80% ofthe bus facility has been constructed to date, and the bus facility is expected to open in April 2014.
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Excavation of the commuter rail platforms is underway and the District expects commuter rail operationsto begin in 2016.
Commuter Rail Maintenance Facility
A commuter rail maintenance facility is being designed to service the four planned commuter railcorridors (East Corridor, Gold Line, North Metro and Northwest Corridor) included in the FasTracksprogram. Such facility will cover approximately 31 acres, will be located northwest of downtown Denverand is expected to include facilities to allow for command and control of the commuter rail operations andsecurity with communication links to the District's light rail transit operation control center and securitycommand center. The commuter rail maintenance facility is being delivered as part of the Eagle P3Project described in "Eagle P3 Project" under this caption. Completion of the Commuter RailMaintenance Facility is scheduled for August 2014.
DEBT STRUCTURE OF RTD
Subject to certain exceptions, including refinancing at a lower interest rate, the State Constitutionprovides that local governmental entities such as RTD may not issue bonds or other multiple-fiscal yearfinancial obligations without the approval of the voters at an election called to approve the debt. See"CONSTITUTIONAL REVENUE, SPENDING AND DEBT LIMITATIONS." The Act does notprovide any limitation as to the amount of debt which may be issued by RTD. Lease purchaseagreements subject to annual appropriation are not debt or other multiple-fiscal year financial obligationsfor purposes of State law and therefore do not require voter approval. The following table summarizesthe District's authorized and outstanding Sales Tax Revenue Bonds and Lease Purchase Agreements as ofMarch 1, 2013:
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TABLE XStatement of Obligations
As of March 1, 2013
Sales Tax Revenue Bonds (0.6% Sales Tax)(1) – Parity Bonds Outstanding(2)
RTD Sales Tax Revenue Bonds, Series 2004A(3) $ 5,750,000RTD Sales Tax Revenue Refunding Bonds, Series 2005A(3) 98,865,000RTD Sales Tax Revenue Refunding Bonds, Series 2007A 69,825,000RTD Sales Tax Revenue Refunding Bonds, Series 2010A 40,950,000
TOTAL $215,390,000
Sales Tax Revenue Bonds (FasTracks – 0.4% Sales Tax Increase)(4) – Subordinate BondsRTD Sales Tax Revenue Bonds (FasTracks Project), Series 2006A(5) $ 235,735,000RTD Sales Tax Revenue Refunding Bonds (FasTracks Project), Series 2007A 361,320,000RTD Tax-Exempt Sales Tax Revenue Bonds (FasTracks Project), Series 2010A 79,140,000RTD Taxable Sales Tax Revenue Bonds (FasTracks Project) (Direct Pay Build
America Bonds), Series 2010B 300,000,000RTD Sales Tax Revenue Bonds (FasTracks Project), Series 2012A 474,935,000RTD TIFIA Bond(6) 280,000,000
TOTAL $1,731,130,000
Eagle P3 ProjectTABOR Portion of Service Payments(7) $589,913,540
DUSPADUSPA Bond(8) $162,242,251
Lease Purchase Agreements(9)(11)
Adjustable Rate Certificates of Participation (2002A Transit Vehicle Project), Series 2002A(10) $108,775,000Lease Purchase Agreement II (Fixed Rate Certificates of Participation 2004A Refunding
Project), Series 2004A 16,525,000Certificates of Participation, Series 2005A 52,920,000Lease Purchase Agreement II (Taxable Refunding Certificates of Participation),
Series 2007A 12,340,000Tax-Exempt Certificates of Participation, Series 2010A 204,330,000Taxable Certificates of Participation, Series 2010B 100,000,000
TOTAL $494,890,000 (11)
____________(1)
Secured by a first lien on the Pledged Sales Tax Revenues and any additional revenues legally available to RTD that the Board inits discretion pledges by supplemental resolution to the payment of such bonds. The Board has not pledged any additionalrevenues to secure these Outstanding Parity Bonds. Does not reflect the Bonds or the refunding of the Refunded Bonds.
(2)RTD is current on payment of its outstanding obligations.
(3)These are the Refunded Bonds.
(4)Secured by a first lien on the Unpledged Sales Tax Revenues and a subordinate lien on the Pledged Sales Tax Revenues. See thediscussion following this Table X regarding the District's plans to issue additional Subordinate Bonds depending on financial andmarket conditions.
(5)Subject to market conditions, the District expects to issue Subordinate Bonds during 2013 to refund all or a portion of thesebonds for savings in interest expense.
(6)This amount is not actually outstanding, but instead represents the maximum amount that can be drawn under the TIFIA LoanAgreement. The District has not made any draws under the TIFIA Loan Agreement to date, but expects to draw down the loan infull between 2013 and 2016.
(7)See "THE SYSTEM – FasTracks – Eagle P3 Project." Secured by a lien on the Sales Tax Revenues that is subordinate to the lienthereon of the Bonds, the Outstanding Parity Bonds and the Subordinate Bonds.
(8)Secured by Sales Tax Revenues after payment of the Bonds, the Outstanding Parity Bonds, the Subordinate Bonds and theTABOR Portion of Service Payments.
(9)Paid with annually appropriated lease payments by the District. Not secured by Sales Tax Revenues.
(10)The interest on these certificates has been converted to a fixed rate.
(11)See the discussion following this Table X regarding the District's expectations as to interim financing arrangements, certificatesof participation and Subordinate Bonds to be incurred and issued in 2013 and thereafter.
Source: The District.
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On November 2, 1999, the electors of the District authorized the District to incur $457,000,000 ofindebtedness, with no new taxes, exclusively to finance the Southeast Corridor light rail project. The fullamount of this authorized indebtedness has been issued or incurred.
At the 2004 Election, the electors of the District authorized the District to incur $3.477 billion ofindebtedness to finance FasTracks. See "THE SYSTEM – FasTracks." The District has issuedobligations in the aggregate principal amount of $2.492 billion pursuant to such authorization. Afterissuance of the Subordinate Bonds expected to be issued by the District during 2013 subject to marketconditions, the District will have issued approximately $2.492 billion of obligations pursuant to suchauthorization (subject to change). The District has also committed under outstanding agreements toreserve certain amounts of its electoral authority.
Taking into account savings achieved from the anticipated refunding of the Refunded Bonds,certain outstanding Subordinate Bonds and certificates of participation, in the fourth quarter of 2013 theDistrict anticipates the issuance of additional Subordinate Bonds in a principal amount of approximately$120 million (subject to change), together with other funds made available by the District from cash onhand, to finance construction of the North Metro Corridor from Denver Union Station to the NWSS andfrom the NWSS to 72nd Avenue. See "THE SYSTEM – FasTracks – FasTracks Corridors – North MetroCorridor."
RTD also has pledged both the 0.4% Sales Tax Revenues and 0.6% Sales Tax Revenues (to theextent needed) in connection with the Eagle P3 Project. See "THE SYSTEM – FasTracks – Eagle P3Project." In connection with the Eagle P3 Project, the District has issued $397,835,000 aggregateprincipal amount of the P3 Conduit Bonds. The P3 Conduit Bonds do not constitute indebtedness ofRTD as a multiple-fiscal year obligation of RTD within the meaning of any provisions of the StateConstitution or the laws of the State.
As described under "THE SYSTEM – FasTracks – Denver Union Station," RTD entered into theDUSPA Agreement with DUSPA in July 2010 in order to support DUSPA's financing of the DenverUnion Station mixed-use and multi-modal project, including transit elements which are to be constructedon RTD owned property and will be owned and operated by RTD. Such transit elements include a newlight rail terminal, a new commuter rail station, a regional and commercial bus facility and new tracks.Under the DUSPA Agreement, RTD issued the DUSPA Bond to DUSPA payable from Pledged SalesTax Revenues on a lien basis subordinate to the Bonds, the Parity Bonds, the Subordinate Bonds and theTABOR Portion of Service Payments. The DUSPA Bond is outstanding in the aggregate principalamount of $162,242,251 as of January 1, 2013, bears interest at an annual rate of 5.85%, and is amortizedover a 30-year term resulting in level annual debt service not exceeding $12,006,489. In the event thatthere are not sufficient revenues to pay the debt service requirements on the DUSPA Bond, no event ofdefault shall be deemed to occur under the DUSPA Agreement or the DUSPA Bond, but the DUSPABond shall continue to bear interest at 5.85% per annum, without interest on accrued but unpaid interest.
Under the authority conferred at the 2004 Election and in order to assist in the financing of aportion of the costs related to Eagle P3 Project, the District entered into the TIFIA Loan Agreementpursuant to which the USDOT will loan a maximum amount of $280,000,000 to the District, which loanis evidenced by the RTD TIFIA Bond. To date, the District has not made any draws under the TIFIALoan Agreement, but expects to draw down the loan in full between 2013 and 2016. See "THE BONDS– Debt Service Requirements."
As part of the Eagle P3 Project, the District received a Federal New Starts Grant in the amount of$1.03 billion. Future appropriations are expected to be received by the District through 2018. TheDistrict intends to accelerate the receipt of $240 million (which amount may be more or less depending
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on market conditions and other factors) anticipated to be received from 2016 to 2018 through the use ofan interim financing arrangement with a commercial bank. The interim financing is currently expected tobe structured as a non-revolving credit facility (the "GARVEE Credit Facility") with drawings bearing atax-exempt fixed rate of interest. Security will be comprised of (a) a first and exclusive lien on theFederal New Starts Grant expected between 2016 and 2018, (b) a non-exclusive third lien on revenuesgenerated by the 0.4% Sales Tax (after payment of the Subordinate Bonds and the TABOR portion ofService Payments and on parity with the DUSPA Bond) and (c) a non-exclusive fourth lien on therevenues generated by the 0.6% Sales Tax (after payment of the Bonds, the Parity Bonds, the SubordinateBonds and the TABOR Portion of Service Payments and on parity with the DUSPA Bond). Closing ofthe GARVEE Credit Facility is currently anticipated to occur by the third quarter of 2013, with ananticipated maturity date of November 1, 2019. The District may also enter into a second similar facilityto finance up to $200 million in anticipation of the receipt of future appropriations, or increase theGARVEE Credit Facility in such amount, with such financing only to be executed in the event of need.
The District expects that additional certificates of participation in an approximate aggregateprincipal amount of $220 million will be executed and delivered in the second quarter of 2013 to financethe purchase of buses and fare collection equipment from 2013 through 2016, and, subject to marketconditions, refunding certificates of participation will also be executed and delivered at that time. RTDcurrently contemplates the issuance of additional certificates of participation in the amount of $305.230million between 2015 and 2021 to finance the delivery of additional buses and fare collection equipmentas it completes the replacement of its bus fleet used to serve its base system. However, the District mayissue certificates of participation in an aggregate principal amount greater or less than such principalamount depending on market conditions and other related factors.
The District has entered into a number of transactions in which certain of its light rail vehicleshave been leased to and subleased back from certain U.S. and foreign companies and has entered into atransaction in which its maintenance facilities have been sold to and leased back from one of thesecompanies. As part of each of these transactions, the District irrevocably set aside certain moneys (whichwere received from each counterparty as payment for its leasing of the buses, light rail vehicles and thereal property) with a third-party trustee. The moneys held by such trustee will be utilized to make thelease payments owed by the District with respect to its leasing of these assets and the lease paymentsowed by the District under the transactions are therefore considered fully funded and economicallydefeased. See Appendix B – "REGIONAL TRANSPORTATION DISTRICT DENVER, COLORADOCOMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDEDDECEMBER 31, 2011 AND 2010."
FINANCIAL INFORMATION CONCERNING RTD
Budget Policy
RTD annually prepares and adopts an official budget in accordance with the State LocalGovernment Budget Law. RTD's Fiscal Year begins on January 1 and ends on December 31 (the "FiscalYear"). Prior to October 15 of each Fiscal Year, the General Manager submits an operating and capitalbudget for the ensuing Fiscal Year to the Board for its approval. The Board may accept the budget with amajority vote or may vote to override all or any part of the proposed budget. After the budget is approved(on or before December 31), in conjunction with an appropriation resolution by the Board, which mustalso approve subsequent amendments thereto, the General Manager is empowered to administer theoperating and capital budget. If the Board fails to adopt a budget by the required date, RTD has authorityto begin making expenditures limited to 90% of the prior year's approved appropriation for operations andmaintenance.
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RTD also maintains budgetary controls. These controls ensure compliance with legal provisionsembodied in the annual appropriated budget approved by the Board. The budget sets forth proposedoutlays for operation, planning, administration, development, debt service, and capital outlays. The levelof budgetary control (that is, the level at which expenditures may not legally exceed the appropriatedamount) is established at the fund level.
Unused appropriations lapse at year-end, except that the Board has the authority, as stated in theadopted appropriation resolution, to carry-over the unused portions of the funds for capital projects notcompleted for a period, not to exceed three years. RTD's policy also authorizes the General Manager toapprove certain line-item transfers within the budget.
RTD administration utilizes multi-year planning and forecasting methods for budgeting and forcapital projects planning. They are believed to be effective in more accurately forecasting RTD'sfinancial needs and in programming the capital improvements program to meet its infrastructurerequirements. The use of six-year operating and capital improvement forecasts in financial planning hasenabled RTD to plan necessary revenue measures to meet future operational needs. See "THE SYSTEM– Long-Term Financial Planning – Strategic Budget Plan."
Major Revenue Sources
According to its unaudited financial statements for the year ended December 31, 2012, RTDderived 69% of its combined operating and non-operating income from Sales Tax Revenues, 18% fromtransit operating revenues, 11% from federal operating assistance, 1% from investment income and 1%from other sources. RTD has not levied any ad valorem taxes since 1976, although it has the power to doso, subject to certain State constitutional restrictions. See "CONSTITUTIONAL REVENUE,SPENDING AND DEBT LIMITATIONS."
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The following table summarizes certain information relating to RTD's primary sources of revenueand capital receipts, including Sales Tax Revenues, for the years 2002 to 2012:
TABLE XIRevenue and Capital Receipts by Source(1)
(In Thousands of Dollars)
YearOperatingRevenues(2)
SalesTax
Revenues
FederalOperatingAssistance
InvestmentIncome Other
TotalRevenue
FederalCapitalGrants
Local CapitalContributions
TotalRevenue
and CapitalReceipts
2002 $52,613 $213,668 $35,096 $18,815 $3,493 $323,685 $46,984 $3,587 $ 374,2562003 54,547 210,447 37,803 10,095 3,550 316,442 135,917 4,019 456,3782004 61,023 221,276 39,649 9,439 3,621 335,008 54,446 17,309 406,7632005 62,741 386,427(3) 41,322 15,624 3,484 509,598 86,523 10,861 606,9822006 69,521 399,557 42,805 29,936 4,032 545,851 57,413 4,123 607,3872007 81,510 418,407 47,041 57,471 4,706 609,135 107,577 7,556 724,2682008 92,329 412,824 50,814 52,456 3,106 611,529 39,220 169 650,9182009 101,247 371,405 68,146 29,379 3,283 573,460 129,211 2,500 705,1712010 102,356 397,549 92,655 8,065 3,653 604,278 102,213 5,265 711,7562011 113,379 415,180 89,592 6,484 11,356 635,991 186,073 52,219 874,2832012(4) 117,265 449,787 69,314 2,612 10,934 649,912 213,001 86,831 949,7442012% 12.3% 47.4% 7.3% 0.3% 1.2% 68.5% 22.4% 9.1% 100%
____________(1) Data is taken from the financial records of RTD and is presented on the accrual basis.(2) Comprised almost entirely of passenger fare revenues and advertising revenues.(3) The District began collecting the 0.4% Sales Tax Revenues in 2005.(4) Based on unaudited financial information of the District.Source: District Comprehensive Annual Financial Reports for the years ended December 31, 2002-2011; The District's unaudited
financial records.
Sales Tax
Both the Sales Tax and property tax are subject to legislative control in that both the tax base andthe tax rates are prescribed by statute and may only be changed by amendments to the Act approved bythe State General Assembly or initiated by the voters. See "THE SALES TAX" for a detailed discussionof the sales tax.
Fare Structure
Passenger fare revenues are derived from fares charged to the users of the RTD system. Faresmay be paid in exact change, by tokens that were purchased prior to December 31, 2011, by prepaidtickets, by using a monthly pass valid for unlimited rides during the month for the level of servicepurchased, or by using annual passes sold to specific groups. These include passes sold to employers foruse by all employees ("EcoPass"), passes sold to organized neighborhood groups ("NeighborhoodEcoPass"), and passes sold to all students at participating colleges or universities ("CollegePass"). TheRTD fare structure includes free transfers between routes in the same or lower fare classes. Discountedfares also are available for youth, students, seniors, and the disabled; RTD also sells ten-ride ticket booksand monthly passes to social service agencies at a discounted rate. RTD does not refund or replace lost orstolen ticket books or passes. Most RTD prepaid fare media are available through various outletsthroughout the District at no charge to RTD. EcoPass, Neighborhood EcoPass, and CollegePass programannual passes are sold directly to participating organizations, and each individual participant is given aphoto ID pass.
-41-
RTD may adjust fares on the system without the approval or consent of any other body or entity.As a recipient of federal grants, RTD is obligated to consider comments arising from a publicinvolvement process prior to implementing any fare increases. The current SBP assumes future fareincreases every three years corresponding to the projected increase in the Denver-Boulder ConsumerPrice Index. The District implemented a fare increase on March 3, 2002, which was the first majorchange in the fare structure since 1997. Fares were adjusted further on January 1st of 2003, 2004, 2006,2008, 2009 and 2011. On July 1, 2006, RTD initiated a new fare system for light rail based upon thenumber of zones a passenger travels in for each one-way trip.
The following table shows the current RTD fares that became effective on January 1, 2011:
TABLE XIISingle Trip Fares
FareSenior/Disabled/
Student(1)
Mall Shuttle Free FreeDenver, Boulder, Longmont and $2.25 $1.10
Light RailLight Rail and Bus Express(2) 4.00 2.00Light Rail and Bus Regional(3) 5.00 2.50SkyRide
Zone 1 13.00 6.50Zone 2 11.00 5.50Zone 3 9.00 4.50
____________(1) Seniors include age 65 and older.(2) Trips consisting of three fare zones.(3) Trips consisting of four fare zones.Source: The District's unaudited financial records.
TABLE XIIIMultiple Trip Fares
Regular10-Ride
Other10-Ride
RegularMonthly
OtherMonthly(1)
Local - Denver, Boulder andLongmont and Light Rail $20.00 $10.00 $79.00 $39.50
Light Rail and Bus Express 36.00 18.00 140.00 70.00Light Rail and Bus Regional 45.00 22.50 176.00 88.00____________(1) Includes monthly fares for youth, student, disabled and senior patrons. Youth patrons include children ages 6-19. Student
includes any student with a school identification card. Seniors include age 65 and older.Source: The District's unaudited financial records.
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The following table summarizes RTD's ridership and fare revenue for the years 2002 to 2012:
TABLE XIVRTD Annual Ridership and Fare Revenue
(In Thousands of Dollars)
YearRevenue
Boardings(1) Fare Revenue
PercentChange in
Fare Revenue
2002 64,167 $49,967 6.8%2003 61,235 50,459 1.02004 64,720 55,442 9.92005 67,994 57,638 4.02006 69,867 66,211 14.92007 81,714 77,128 16.52008 89,254 88,205 14.42009 83,337 96,890 9.82010 83,732 97,942 1.12011 83,442 108,497 10.82012(2) 85,442 112,927 4.1
____________(1) Includes Access-a-Ride boardings and vanpool boardings. Totals for 2007-2012 include Southeast
Corridor light rail.(2) Based on unaudited financial information of the District.Source: The District's Comprehensive Annual Financial Reports for the fiscal years ended December 31,
2002-2011; The District's unaudited financial records.
Advertising and Ancillary Revenues
RTD receives additional operating revenue from advertising on its buses. RTD sells signs on theexterior and interior of its vehicles, and allows advertisers to wrap buses with advertising themes. RTDalso receives ancillary non-operating revenue from parking fees and charges, rent received pursuant to anair rights lease at its Civic Center facility (under contract for sale by RTD expected to be completedduring 2013), leases of retail space at facilities, cross border leases, and other sources.
[Remainder of page left blank intentionally]
-43-
The following table shows RTD's advertising income and ancillary revenues for the years 2002 to2012:
TABLE XVRTD Advertising and Ancillary Revenues
(In Thousands of Dollars)
YearAdvertising
RevenueAncillaryRevenues
2002 $2,419 $3,4932003 2,886 3,5502004 3,047 3,6212005 3,196 3,4842006 2,800 4,0322007 3,194 4,7062008 2,854 3,1062009 2,866 3,2432010 3,301 2,8922011 3,992 2,5282012(1) 3,524 2,247____________(1) Based on unaudited financial information of the District.Source: District Comprehensive Annual Financial Reports for the years ended
December 31, 2002-2011; The District's unaudited financial records.
Federal Funding
RTD is a designated recipient of federal funds from the FTA. These grants are reserved forcapital, planning, technical assistance or operating assistance projects. The following table shows RTD'sgrant receipts from FTA for the years 2002 to 2012:
TABLE XVIRTD Federal Grant Receipts
(In Thousands of Dollars)
YearFederalCapital
Other LocalContributions
Operations,Planning
and Other
2002 $ 46,983 $ 3,587 $35,0962003 135,917 4,020 37,8032004 54,446 17,309 39,6492005 86,523 10,861 41,3222006 57,413 4,124 42,8052007 107,577 7,556 47,0412008 39,220 169 50,8142009 129,211 2,500 68,1462010 102,213 5,265 92,6552011 186,073 52,219 89,5922012(1) 202,499 86,831 69,314
____________(1) Based on unaudited financial information of the District.Source: District Comprehensive Annual Financial Reports for the years ended December 31,
2002-2011; The District's unaudited financial records.
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As a condition of receipt of FTA grants, RTD is typically required to augment these grants withcertain amounts of its own locally generated funds. As of December 31, 2012, RTD had an estimatedcommitment to provide $31,347,911 in local funds in order to receive $85,194,344 in federal grant funds.RTD will be required to provide approximately $16,659,000 in local funds to match 2013 federalappropriations of $66,634,558. FTA operating assistance is allocated nationally on a formula basis, andcannot exceed 50% of an agency's total operating budget.
As a designated recipient, RTD must comply with prevailing statutes, regulations, administrativerequirements, executive orders, and FTA guidance. These include, but are not limited to, requirements inthe areas of labor, seniors and disabled, civil rights, charter bus service, financial reporting, privatization,public participation, and environmental regulations. The grant agreements contain substantial conditionsand limitations concerning the payment of federal funds, and such payments also may be subject tocontinuing appropriations by the United States Congress.
RTD expects the Budget Control Act of 2011 to have a minor impact on the cash flow fromfederal funds. With the sequestration reductions which have gone into effect as of March 1, 2013, RTDcould lose 8.7 percent of the Build America Bond subsidy relating to certain outstanding Bonds andcertificates of participation, resulting in a reduction of approximately $767,462 per year. The RTDannual operating assistance grants of approximately $62 million in 2013 are exempt from sequestration.While the RTD Full Funding Grant Agreements ("FFGAs"), such as the Eagle Project FFGA, are subjectto sequestration, it has not yet been determined how a potential spending reduction from sequestrationwould be allocated among New Starts and FFGA projects. That determination will either be made by theCongress or the FTA after appropriations for the remainder of Fiscal Year 2013 are provided. FTA'sstated policy is to honor existing FFGA commitments before new funding recommendations, whichwould mitigate impacts for projects with existing FFGAs. RTD expects any reduction in cash flow froman award to be temporary, and receipts would most likely be made whole over the remainder of theannual FFGA allocations. Overall RTD does not anticipate that sequestration will have a material impacton cash flows over time and will not impact its ability to complete the projects on time.
Investment Income
For the year ended December 31, 2011, RTD earned investment income in the amount of$6,484,000, representing approximately 1.0% of 2011 revenues. For the year ended December 31, 2012,RTD earned investment income in the amount of $2,612,000, representing approximately 0.4% of 2012revenues. See TABLE XI herein.
Financial Summary
The following tables summarize certain financial information regarding RTD. The data for thefour years ended December 31, 2011 has been prepared by RTD from its audited financial statements forthe years ended December 31, 2008-2011. The data for the year ended December 31, 2012 has beenprepared from RTD's unaudited financial records. For detailed financial information, see Appendix B –"REGIONAL TRANSPORTATION DISTRICT DENVER, COLORADO COMPREHENSIVEANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011 AND2010."
-45-
TABLE XVIISummary of Statements of Revenues and Expenses and Changes in Net Position
For the Years Ended December 31, 2008-2012(In Thousands of Dollars)
Years ended December 31
2008 2009 2010 20112012
UnauditedOperating Revenues:
Passenger Fares $88,205 $96,890 $97,942 $108,497 $112,927Other 4,124 4,357 4,414 4,882 4,338Total Operating Revenues 92,329 101,247 102,356 113,379 117,265
Operating Expenses:Salaries, wages, fringe benefits 155,799 161,747 160,498 166,332 174,084Materials and supplies 61,056 56,835 48,310 52,015 57,092Services 36,835 42,783 60,553 48,357 112,748Utilities 10,575 9,512 10,977 11,627 11,432Insurance 5,333 3,767 5,429 6,089 4,850Purchased transportation 102,743 103,975 104,514 108,865 111,100Leases and rentals 2,464 2,680 2,515 1,964 2,374Miscellaneous 2,619 6,866 3,315 2,082 15,679Total Operating Expenses 377,424 388,165 396,111 397,331 489,359
Operating loss beforedepreciation (285,095) (286,918) (293,755) (283,952) (372,094)
Depreciation 102,252 106,025 104,176 104,280 112,582
Operating Loss (387,347) (392,943) (397,931) (388,232) (484,677)
Nonoperating income (expense):Sales and use tax revenues 412,824 371,405 397,549 415,180 449,787Grant operating assistance 50,814 68,146 92,655 89,592 69,314Investment income 52,456 29,379 8,065 6,484 2,612Other income 3,106 3,243 3,653 11,356 10,934Gain/loss capital assets 1 40 (3,474) (6,101) (6)Investment expense (56,273) (34,179) (48,735) (51,274) (64,641)Other expense/Unrealized loss (977) (23,037) (1,671) (3,895) (667)Total Nonoperating Income 461,951 414,997 448,042 461,342 467,333
Net income before capital grantsand local contributions 74,604 22,054 50,111 73,110 (17,343)
Federal capital grants and localcontributions 39,389 131,711 107,478 238,292 299,830
Increase in Net Position 113,993 153,765 157,589 311,402 282,487
Net Position at Beginning of Year 1,778,417 1,892,410 2,046,175 2,203,764 2,515,166Prior Period Adjustment -- -- -- -- --Net Position at End of Year $1,892,410 $2,046,175 $2,203,764 $2,515,166 $2,797,653
____________
(1) The financial data for the fiscal years ended December 31, 2008–2011 is from the Comprehensive Annual Financial Reports of theDistrict for the fiscal years ended December 31, 2008-2011. The financial data for the fiscal year ended December 31, 2012 is fromthe District's unaudited financial records.
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___
___
___
___
(1)
The
Dis
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Bas
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dite
dfi
nanc
ial
info
rmat
ion
of
the
Dis
tric
t.S
ourc
e:T
heD
istr
ict's
Co
mpr
ehen
sive
An
nual
Fin
anci
alR
epor
tsfo
rth
efi
scal
year
sen
ded
Dec
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r31
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011;
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ncia
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r20
12an
dth
eD
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2013
Bud
get
adop
ted
No
vem
ber
27,
2012
.
-46-
-47-
Management's Discussion and Analysis of Financial Trends
An overview and analysis of the District's financial activities is provided under "FINANCIALSECTION – Management's Discussion and Analysis" in Appendix B.
ECONOMIC AND DEMOGRAPHIC OVERVIEW
Appendix C contains an economic and demographic overview of the Denver Metropolitan Areaas of February 2013 (the "Overview"). The Overview has been prepared at the request of RTD byDevelopment Research Partners which has consented to the inclusion of the Overview in this OfficialStatement. Neither RTD nor the Underwriters assumes responsibility for the accuracy, completeness orfairness of the information contained in the Overview. The information in Appendix C – "ANECONOMIC AND DEMOGRAPHIC OVERVIEW OF THE DENVER-METROPOLITAN AREA" hasbeen included in this Official Statement in reliance upon the authority of Development Research Partnersas experts in the preparation of economic and demographic analyses. Potential investors should read theOverview in its entirety for information with respect to the economic and demographic status of theDenver Metropolitan Area.
FORWARD LOOKING STATEMENTS
This Official Statement, and particularly the information contained under the captions "THESYSTEM – FasTracks" and "– Long-Term Financial Planning – Strategic Budget Plan," containsstatements relating to future results that are "forward-looking statements" as defined in the PrivateSecurities Litigation Reform Act of 1995. When used in this Official Statement, the words "estimate,""forecast," "intend," "expect" and similar expressions identify forward-looking statements. Suchstatements are subject to risks and uncertainties that could cause actual results to differ materially fromthose contemplated in such forward-looking statements. Inevitably, some assumptions used to developthe forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, thereare likely to be differences between forecasts and actual results, and those differences may be material.
CONSTITUTIONAL REVENUE, SPENDING AND DEBT LIMITATIONS
On November 3, 1992, the voters of the State approved an amendment to the State Constitution(the "Amendment") that limits the powers of public entities to borrow, tax and spend.
The Amendment requires voter approval prior to the imposition by RTD of a new tax, tax rateincrease, mill levy increase, valuation for assessment ratio increase, tax extension or other change in taxpolicy that results in a net gain of tax revenues or the creation by RTD of any multiple-fiscal year director indirect debt or other financial obligation, subject to certain exceptions, including refinancing at alower interest rate. Elections for such voter approval may be held only at a State general election or onthe first Tuesday of November of odd-numbered years.
In the absence of voter approval, the Amendment also limits, with certain adjustments, annualpercentage increases in RTD property tax revenues and total revenues, subject to certain exceptions, tothe total of inflation plus changes in the actual value of real property within its boundaries. Revenuescollected by RTD in excess of the limit are required to be refunded during the next calendar year. Inaddition, in the absence of voter approval, the Amendment limits, with certain adjustments, annual
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percentage increases in RTD spending, subject to certain exceptions, to the total of inflation plus thechanges in the actual value of real property within its boundaries. If revenues fall in any calendar year,the lower total becomes the new RTD base for computing the next year's limits. On November 2, 1999,the voters of the District voted to exempt RTD from the revenue and spending limitations of theAmendment for the purpose of repaying any debt incurred to finance the Southeast Corridor light railproject or operating such project, for as long as any such debt remains outstanding, but in no eventbeyond December 31, 2026. On November 2, 2004, the voters of the District also exempted the Districtfrom any revenue and spending limitations on the 0.4% Sales Tax Revenues and related investmentincome.
LITIGATION
There is no litigation pending or threatened in writing relating in any manner to the authorization,execution or delivery or the legality of the Bonds or the power of RTD to apply Pledged Sales TaxRevenues under the Bond Resolution.
RTD and the City and County of Denver ("CCD") have an intergovernmental agreement for thedesign and construction of RTD's East Corridor commuter rail line at CCD's Denver International Airport("DIA"). The parties have a dispute under the agreement related to responsibilities regarding earthwork,walls, roads and other elements of the DIA project. The dispute has been submitted to an arbitrator. Thearbitrator has issued an interim decision which is subject to appeal only based on showing an abuse ofdiscretion, and CCD has indicated that it may appeal the ruling. RTD's responsibility under the interimdecision, and negotiations/resolution consistent with that decision, will not result in exposure in excess ofRTD's budgeted reserve for the project, which is itself a sub-project of the Eagle P3 Project. See "THESYSTEM – FasTracks – Eagle P3 Project." If the interim decision is overturned on appeal, there is apossibility that RTD could be responsible for approximately $10 million in additional costs; however,such amount is still within the overall contingency for the Eagle P3 Project.
The District is involved in various other claims and lawsuits arising in the ordinary course of theDistrict's business. The District believes that its insurance coverage is adequate and that any liabilityassessed against the District as a result of claims or lawsuits that are not covered by insurance would notmaterially adversely affect the financial condition of the District or its ability to perform its obligationsunder the Indenture.
GOVERNMENTAL IMMUNITY
The Colorado Governmental Immunity Act, Title 24, Article 10, Part 1, Colorado RevisedStatutes, as amended (the "Governmental Immunity Act"), provides in part, that public entities areimmune from liability in all claims for injury which lie in tort or could lie in tort (regardless of the type ofaction of the form of relief chosen by the claimant), except to the extent specifically excluded by theGovernmental Immunity Act. These exclusions include claims resulting from: (a) the operation, by apublic employee during the course of his or her employment, of a motor vehicle that is owned or leasedby a public entity; (b) the operation by a public entity of a public hospital, correctional facility or jail; (c)a dangerous condition of a public building or public facility operated by a public entity, including apublic water, gas, sanitation, electrical, power or swimming facility; (d) a dangerous condition of a publichighway, road or street which physically interferes with the movement of traffic, a dangerous conditioncaused by a failure to realign traffic signs turned without authorization in a manner which reassigns theright-of-way on intersecting public highways, roads or streets or by a failure to repair traffic control
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signals on which conflicting directions are displayed or a dangerous condition caused by an accumulationof snow and ice which interferes with access to public buildings when a public entity has actual notice ofsuch condition, has a reasonable time to act and fails to use existing means available to it for removal ormitigation; or (e) the operation and maintenance by a public entity of any public water, gas, sanitation,electrical, power or swimming facility. The Governmental Immunity Act defines "dangerous condition"as a physical condition or use which constitutes an unreasonable risk to the health or safety of the publicwhich is or should have been known to exist and which is proximately caused by the negligent act oromission of the public entity. The maximum amount that may be recovered in any single occurrence on aclaim based on one of the exclusions of the Governmental Immunity Act is limited to $150,000 for injuryto one person in a single occurrence and $600,000 for an injury to two or more persons in a singleoccurrence, except that no person may recover in excess of $150,000. The Governmental Immunity Actalso specifies the sources from which judgments against public entities may be collected and provides thatpublic entities are not liable either directly or by indemnification for punitive or exemplary damages orfor damages for outrageous conduct, except as may be otherwise determined by a public entity pursuantto the Governmental Immunity Act.
RTD may be subject to civil liability and may not be able to claim sovereign immunity for actionsfounded upon various federal laws. Examples of such civil liability include, but are not limited to, suitsfiled pursuant to 42 U.S.C. Section 1983 alleging the deprivation of federal constitutional or statutoryrights of an individual. In addition, RTD may be enjoined from engaging in anti-competitive practiceswhich violate the antitrust laws. However, the Governmental Immunity Act provides that it applies to anyaction brought against a public entity or a public employee in any Colorado state court having jurisdictionover any claim brought pursuant to any federal law, if such action lies in tort or could lie in tort.
Pursuant to the Governmental Immunity Act, a public entity may prospectively waive itsimmunity. RTD has waived sovereign immunity for certain types of claims. Specifically, RTD haswaived immunity for claims arising from its negligent operation of light rail vehicles and for claimsarising from the construction of the Southwest Corridor light rail line, up to the limits of its insurancepolicy covering such claims. See "RTD – Insurance."
CONTINUING DISCLOSURE AGREEMENT
Pursuant to the requirements of the Securities and Exchange Commission Rule 15c2-12 (17C.F.R. Part 240, § 240.15c2-12) ("Rule 15c2-12"), RTD has agreed in a Continuing DisclosureAgreement, dated March 26, 2013 (the "Continuing Disclosure Agreement"), between RTD and DigitalAssurance Certification, L.L.C., as dissemination agent (the "Dissemination Agent"), to provide certainfinancial information, other operating data and notices of material events for the benefit of the owners ofthe Bonds. A form of the Continuing Disclosure Agreement is attached hereto as Appendix A. A failureby RTD or the Dissemination Agent to comply with the Continuing Disclosure Agreement does notconstitute an Event of Default under the Bond Resolution. Nevertheless, such a failure must be reportedin accordance with Rule 15c2-12 and must be considered by any broker, dealer or municipal securitiesdealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently,such a failure may adversely affect the transferability and liquidity of the Bonds and their market price.
RTD has filed its annual reports, audited financial statements and event notices on a timely basisas required by its existing continuing disclosure agreements under Rule 15c2-12. However, in 2011,RTD became aware that certain information required by its continuing disclosure agreements to beupdated in the annual report was not included in the annual report in certain prior years in the formatrequired or was included in the audited financial statements rather than the annual report. RTD undertookin 2011 to consolidate its annual updated information (including information for the noncompliant years)
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in the annual report filed that year and anticipates following such a consolidated disclosure process in thefuture. RTD has not otherwise failed to comply with any continuing disclosure agreement underRule 15c2-12.
LEGAL MATTERS
Legal matters relating to the execution and delivery of the Bonds are subject to the approvingopinion of Sherman & Howard L.L.C., Denver, Colorado, as Bond Counsel, which is to be delivered withthe Bonds.
Hogan Lovells US LLP and Bookhardt & O'Toole, Denver, Colorado, as Co-Disclosure Counsel,have been retained to assist the District in the preparation of this Official Statement.
Certain legal matters will be passed upon for RTD by Marla Lien, Esquire, General Counsel forthe District, and for the Underwriters by Kutak Rock LLP, Denver, Colorado.
The legal fees to be paid to Sherman & Howard L.L.C. in connection with the execution anddelivery of the Bonds are contingent upon the sale and delivery of the Bonds. The legal fees to be paid toHogan Lovells US LLP and Bookhardt & O'Toole in connection with the preparation of this OfficialStatement are also contingent upon the sale and delivery of the Bonds.
TAX MATTERS
In the opinion of Bond Counsel, interest on the Bonds is included in gross income pursuant to theTax Code and is included in gross income pursuant to Colorado law.
The Tax Code contains numerous provisions, including provisions related to the imposition ofadditional taxes, which may affect an investor's decision to purchase the Bonds. Further, under Section3406 of the Tax Code, backup withholding may be imposed on payments on the Bonds in certainsituations including: (i) an owner who fails to provide certain required information to certain personsrequired to collect such information; (ii) the owner underreports "reportable payments" (including interestand dividends) as defined in Section 3406; or (iii) an owner fails to provide a certificate that the owner isnot subject to backup withholding when such a certificate is required by the Tax Code.
The opinions expressed by Bond Counsel are based on existing law as of the delivery date of theBonds. No opinion is expressed as of any subsequent date nor is any opinion expressed with respect topending or proposed legislation. Amendments to the federal or state tax laws may be pending now orcould be proposed in the future that, if enacted into law, could adversely affect the value of the Bonds. Inaddition, future court actions or regulatory decisions could affect the market value of the Bonds. Ownersof the Bonds are advised to consult with their own tax advisors with respect to such matters.
Any tax advice concerning the Bonds, interest on the Bonds or any other federal income taxissues associated with the Bonds, express or implicit in the provisions of this Official Statement, is notintended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penaltiesthat may be imposed on any taxpayer by the Internal Revenue Service. This document supports thepromotion or marketing of the transactions or matters addressed herein. Each taxpayer should seekadvice based on the taxpayer's particular circumstances from an independent tax advisor.
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RATINGS
Standard & Poor's Rating Service, Inc. ("S&P"), Moody's Investor Service, Inc. ("Moody's") andFitch Inc. ("Fitch") have assigned the ratings shown on the cover page hereof to the Bonds.
Such ratings reflect only the views of the rating agencies and are not a recommendation to buy,sell or hold the Bonds. Any explanation of the procedures and methods used by each rating agency andthe significance of their respective ratings may be obtained from Moody's at 7 World Trade Center,250 Greenwich Street, New York, New York 10007, from Fitch at 111 Congress Avenue, Suite 2010,Austin, Texas 78701 and from S&P at 55 Water Street, New York, New York 10041. Generally, a ratingagency bases its rating on the information and materials furnished to it and on investigations, studies andassumptions of its own. There is no assurance that the ratings will continue for any given period of timeor that the ratings will not be revised downward or withdrawn entirely by such rating agencies, if, in thejudgment of such rating agencies, circumstances so warrant. Any such downward revision or withdrawalof the ratings may have an adverse effect on the market price of the Bonds.
VERIFICATION OF CERTAIN CALCULATIONS
Causey Demgen & Moore P.C., independent certified public accountants, will verify from theinformation provided to them the mathematical accuracy of the computations contained in the providedschedules as of the delivery date of the Bonds to determine that the anticipated receipts from the securitiesand cash deposits to be held in escrow will be sufficient to pay, when due, the principal, interest andredemption premium, if any, with respect to the Refunded Bonds. The independent certified publicaccountants will express no opinion on the assumptions provided to them, nor as to the exemption fromtaxation of the interest on the Bonds.
UNDERWRITING
The Bonds were purchased by the Underwriters at a price equal to $96,874,392.06 (consisting of$96,580,000 aggregate principal amount of the Bonds, plus original issue premium of $631,174.50 lessunderwriting compensation of $336,782.44).
The Underwriters and their respective affiliates are full service financial institutions engaged invarious activities, which may include sales and trading, commercial and investment banking, advisory,investment management, investment research, principal investment, hedging, market making, brokerageand other financial and non-financial activities and services. Certain of the Underwriters and theirrespective affiliates have provided, and may in the future provide, a variety of these services to theDistrict and to persons and entities with relationships with the District, for which they received or willreceive customary fees and expenses. The District intends to use a portion of the proceeds from thisoffering to refund the Refunded Bonds. Goldman, Sachs & Co., an underwriter for this offering, or anaffiliate thereof holds certain of the Refunded Bonds that are being refunded and, as a result, will receivea portion of the proceeds from this offering in connection with such Refunded Bonds being redeemed bythe District.
In the ordinary course of their various business activities, the Underwriters and their respectiveaffiliates, officers, directors and employees may purchase, sell or hold a broad array of investments andactively trade securities, derivatives, loans, commodities, currencies, credit default swaps and otherfinancial instruments for their own account and for the accounts of their customers, and such investmentand trading activities may involve or relate to assets, securities and/or instruments of the District (directly,
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as collateral securing other obligations or otherwise) and/or persons and entities with relationships withthe District. The Underwriters and their respective affiliates may also communicate independentinvestment recommendations, market color or trading ideas and/or publish or express independentresearch views in respect of such assets, securities or instruments and may at any time hold, orrecommend to clients that they should acquire, long and/or short positions in such assets, securities andinstruments.
Goldman, Sachs & Co. ("Goldman Sachs"), one of the Underwriters of the Bonds, has enteredinto a master dealer agreement (the "Master Dealer Agreement") with Incapital LLC ("Incapital") forthe distribution of certain municipal securities offerings, including the Bonds, to Incapital's retaildistribution network at the initial public offering prices. Pursuant to the Master Dealer Agreement,Incapital will purchase Bonds from Goldman Sachs at the initial public offering price less a negotiatedportion of the selling concession applicable to any Bonds that Incapital sells.
Piper Jaffray & Co. and Pershing LLC, a subsidiary of The Bank of New York MellonCorporation, entered into an agreement (the "Agreement") which enables Pershing LLC to distributecertain new issue municipal securities underwritten by or allocated to Piper Jaffray & Co., including theBonds. Under the Agreement, Piper Jaffray & Co. will share with Pershing LLC a portion of the fee orcommission paid to Piper.
Loop Capital Markets LLC ("Loop Capital Markets"), one of the Underwriters of the Bonds,has entered into an agreement (the "Loop Distribution Agreement") with UBS Financial Services Inc.for the retail distribution of certain municipal securities offerings at the original issue prices. Pursuant tothe Loop Distribution Agreement, Loop Capital Markets will share a portion of its underwritingcompensation with respect to the Bonds with UBS Financial Services Inc.
Wells Fargo Bank, National Association ("WFBNA"), one of the underwriters of the Bonds, hasentered into an agreement (the "Distribution Agreement") with its affiliate, Wells Fargo Advisors, LLC("WFA"), for the distribution of certain municipal securities offerings, including the Bonds. Pursuant tothe Distribution Agreement, WFBNA will share a portion of its underwriting or remarketing agentcompensation, as applicable, with respect to the Bonds with WFA. WFBNA also utilizes the distributioncapabilities of its affiliates, Wells Fargo Securities, LLC ("WFSLLC") and Wells Fargo InstitutionalSecurities, LLC ("WFIS"), for the distribution of municipal securities offerings, including the Bonds. Inconnection with utilizing the distribution capabilities of WFSLLC, WFBNA pays a portion of WFSLLC'sexpenses based on its municipal securities transactions. WFBNA, WFSLLC, WFIS, and WFA are eachwholly-owned subsidiaries of Wells Fargo & Company. Wells Fargo Securities is the trade name forcertain securities-related capital markets and investment banking services of Wells Fargo & Company andits subsidiaries, including WFBNA.
FINANCIAL ADVISOR
RTD has retained First Southwest Company, Dallas, Texas as Financial Advisor in connectionwith the sale of the Bonds. The Financial Advisor is not obligated to undertake, and has not undertakento make an independent verification of or to assume any responsibility for the accuracy, completeness orfairness of the information contained in this Official Statement.
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FINANCIAL STATEMENTS
The financial statements of RTD for the years ended December 31, 2011 and 2010, included inAppendix B have been audited by RubinBrown LLP, independent certified public accountants, as statedin their report appearing herein. Such financial statements represent the most current audited financialinformation for the District. RubinBrown LLP has agreed to the use of their name and the auditedfinancial report for the District in this Official Statement. RubinBrown LLP has not performed anyprocedures with respect to the unaudited financial information of the District included in this OfficialStatement.
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MISCELLANEOUS
The financial data and other information contained herein have been obtained from RTD'srecords, audited financial statements and other sources that are believed to be reliable. There is noguarantee that any of the assumptions or estimates contained herein will be realized. All of thesummaries of the statutes, documents, and resolution provisions contained in this Official Statement aremade subject to all of the provisions of such statutes, documents and resolution provisions. Thesesummaries do not purport to be complete statements of such provisions and reference is made to suchdocuments for further information. The authorization, agreements and covenants of RTD are set forth inthe Indenture, and neither this Official Statement nor any advertisement of the Bonds is to be construed asa contract with the owners of the Bonds.
So far as any statements made in this Official Statement involve matters of opinion, forecasts orestimates, whether or not expressly stated, they are set forth as such and not as representations of fact.
The Appendices are integral parts of this Official Statement and must be read together with allother parts of the Official Statement.
REGIONAL TRANSPORTATION DISTRICT
By: /s/ Lorraine AndersonChair, Board of Directors
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Appendix A
FORM OF CONTINUING DISCLOSURE AGREEMENT
CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the "Disclosure Agreement"), dated as of March 26,2013, is executed and delivered by the Regional Transportation District (the "Issuer") and DigitalAssurance Certification, L.L.C., as exclusive Disclosure Dissemination Agent (the "DisclosureDissemination Agent" or "DAC") for the benefit of the Owners (hereinafter defined) of the Bonds(hereinafter defined) and in order to provide certain continuing disclosure with respect to the Bonds inaccordance with the Rule (hereinafter defined).
The services provided under this Disclosure Agreement solely relate to the execution ofinstructions received from the Issuer through use of the DAC system and do not constitute "advice"within the meaning of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act").DAC will not provide any advice or recommendation to the Issuer or anyone on the Issuer's behalfregarding the "issuance of municipal securities" or any "municipal financial product" as defined in the Actand nothing in this Disclosure Agreement shall be interpreted to the contrary.
SECTION 1. Definitions. Capitalized terms not otherwise defined in this DisclosureAgreement shall have the meaning assigned in the Rule or, to the extent not in conflict with the Rule, inthe Indenture (hereinafter defined). The capitalized terms shall have the following meanings:
"Annual Filing Date" means the date, set in Sections 2(a) and 2(f), by which the Annual Report isto be filed with the MSRB.
"Annual Financial Information" means annual financial information as such term is used inparagraph (b)(5)(i) of the Rule and specified in Section 3(a) of this Disclosure Agreement.
"Annual Report" means an Annual Report described in and consistent with Section 3 of thisDisclosure Agreement.
"Audited Financial Statements" means the financial statements (if any) of the Issuer for the priorfiscal year, certified by an independent auditor as prepared in accordance with generally acceptedaccounting principles or otherwise, as such term is used in paragraph (b)(5)(i) of the Rule and specified inSection 3(b) of this Disclosure Agreement.
"Board" means the Board of Directors of the Issuer.
"Bond Resolution" means the Master Sales Tax Revenue Bond Resolution adopted by the Boardon October 29, 1977, and all amendments and supplements thereto as of the date hereof, including but notlimited to the Supplemental Sales Tax Revenue Bond Resolution, adopted by the Board on February 19,2013.
"Bonds" means the Issuer's Taxable Sales Tax Revenue Refunding Bonds, Series 2013A, in theaggregate principal amount of $96,580,000, issued pursuant to the Bond Resolution, as listed on theattached Exhibit A, with the 9-digit CUSIP numbers relating thereto.
"Certification" means a written certification of compliance signed by the DisclosureRepresentative stating that the Annual Report, Audited Financial Statements, Notice Event notice, Failure
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to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure delivered to theDisclosure Dissemination Agent is the Annual Report, Audited Financial Statements, Notice Eventnotice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosurerequired to be submitted to the MSRB under this Disclosure Agreement. A Certification shall accompanyeach such document submitted to the Disclosure Dissemination Agent by the Issuer and include the fullname of the Bonds and the 9-digit CUSIP numbers for all Bonds to which the document applies.
"Disclosure Dissemination Agent" means Digital Assurance Certification, L.L.C, acting in itscapacity as Disclosure Dissemination Agent hereunder, or any successor Disclosure Dissemination Agentdesignated in writing by the Issuer pursuant to Section 9 hereof.
"Disclosure Representative" means the General Manager or Chief Financial Officer of the Issuer,or his or her designee, or such other person as the Issuer shall designate in writing to the DisclosureDissemination Agent from time to time as the person responsible for providing Information to theDisclosure Dissemination Agent.
"Failure to File Event" means the Issuer's failure to file an Annual Report on or before theAnnual Filing Date.
"Force Majeure Event" means: (i) acts of God, war, or terrorist action; (ii) failure or shut-down ofthe Electronic Municipal Market Access system maintained by the MSRB; or (iii) to the extent beyondthe Disclosure Dissemination Agent's reasonable control, interruptions in telecommunications or utilitiesservices, failure, malfunction or error of any telecommunications, computer or other electrical,mechanical or technological application, service or system, computer virus, interruptions in internetservice or telephone service (including due to a virus, electrical delivery problem or similar occurrence)that affect internet users generally, or in the local area in which the Disclosure Dissemination Agent or theMSRB is located, or acts of any government, regulatory or any other competent authority the effect ofwhich is to prohibit the Disclosure Dissemination Agent from performance of its obligations under thisDisclosure Agreement.
"Information" means, collectively, the Annual Reports, the Audited Financial Statements (if any),the Notice Event notices, the Failure to File Event notices, the Voluntary Event Disclosures and theVoluntary Financial Disclosures.
"MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section15B(b)(1) of the Securities Exchange Act of 1934. As of the date hereof, the MSRB's required method offiling is electronically via its Electronic Municipal Market Access (EMMA) system available on theInternet at http://emma.msrb.org.
"Notice Event" means any of the events enumerated in paragraph (b)(5)(i)(C) of the Rule andlisted in Section 4(a) of this Disclosure Agreement.
"Obligated Person" means any person, including the Issuer, who is either generally or through anenterprise, fund, or account of such person committed by contract or other arrangement to supportpayment of all, or part of the obligations on the Bonds (other than providers of municipal bond insurance,letters of credit, or other liquidity facilities).
"Official Statement" means the final Official Statement dated March 19, 2013, together with anysupplements thereto, delivered in connection with the original issuance and sale of the Bonds.
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"Owner" means any person (a) having the power, directly or indirectly, to vote or consent withrespect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees,depositories or other intermediaries) or (b) treated as the owner of any Bonds for federal income taxpurposes.
"Participating Underwriter" means the original underwriter of the Bonds required to comply withthe Rule in connection with an offering of the Bonds.
"Rule" means Rule 15c2-12(b)(5) adopted by the SEC under the Securities Exchange Act of1934, as the same may be amended from time to time (17 C.F.R. Part 240 § 240.15c2-12).
"SEC" means the Securities and Exchange Commission.
"Trustee" means The Bank of New York Mellon Trust Company, N.A., and its successors andassigns, as trustee under the Indenture.
"Voluntary Event Disclosure" means information of the category specified in any of subsections(e)(vi)(1) through (e)(vi)(11) of Section 2 of this Disclosure Agreement that is accompanied by aCertification of the Disclosure Representative containing the information prescribed by Section 7(a) ofthis Disclosure Agreement.
"Voluntary Financial Disclosure" means information of the category specified in any ofsubsections (e)(vii)(1) through (e)(vii)(9) of Section 2 of this Disclosure Agreement that is accompaniedby a Certification of the Disclosure Representative containing the information prescribed by Section 7(b)of this Disclosure Agreement.
SECTION 2. Provision of Annual Reports.
(a) The Issuer shall provide, annually, an electronic copy of the Annual Report andCertification to the Disclosure Dissemination Agent, together with a copy for the Trustee, not later thanthe Annual Filing Date. Promptly upon receipt of an electronic copy of the Annual Report and theCertification, the Disclosure Dissemination Agent shall provide an Annual Report to the MSRB not laterthan nine months after the end of each fiscal year of the Issuer, commencing with the fiscal year endingDecember 31, 2012. Such date and each anniversary thereof is the Annual Filing Date. The AnnualReport may be submitted as a single document or as separate documents comprising a package, and maycross-reference other information as provided in Section 3 of this Disclosure Agreement.
(b) If on the fifteenth (15th) day prior to the Annual Filing Date, the DisclosureDissemination Agent has not received a copy of the Annual Report and Certification, the DisclosureDissemination Agent shall contact the Disclosure Representative by telephone and in writing (which maybe by e-mail) to remind the Issuer of its undertaking to provide the Annual Report pursuant to Section2(a). Upon such reminder, the Disclosure Representative shall either (i) provide the DisclosureDissemination Agent with an electronic copy of the Annual Report and the Certification no later than two(2) business days prior to the Annual Filing Date, or (ii) instruct the Disclosure Dissemination Agent inwriting that the Issuer will not be able to file the Annual Report within the time required under thisDisclosure Agreement, state the date by which the Annual Report for such year will be provided andinstruct the Disclosure Dissemination Agent that a Failure to File Event has occurred and to immediatelysend a notice to the MSRB in substantially the form attached as Exhibit B, accompanied by a cover sheetcompleted by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1.
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(c) If the Disclosure Dissemination Agent has not received an Annual Report andCertification by 6:00 p.m. Eastern time on the Annual Filing Date (or, if such Annual Filing Date falls ona Saturday, Sunday or holiday, then the first business day thereafter) for the Annual Report, a Failure toFile Event shall have occurred and the Issuer irrevocably directs the Disclosure Dissemination Agent toimmediately send a notice to the MSRB in substantially the form attached as Exhibit B without referenceto the anticipated filing date for the Annual Report, accompanied by a cover sheet completed by theDisclosure Dissemination Agent in the form set forth in Exhibit C-1.
(d) If Audited Financial Statements of the Issuer are prepared but not available prior to theAnnual Filing Date, the Issuer shall, when the Audited Financial Statements are available, provide in atimely manner an electronic copy to the Disclosure Dissemination Agent, accompanied by a Certification,together with a copy for the Trustee, for filing with the MSRB.
(e) The Disclosure Dissemination Agent shall:
(i) verify the filing specifications of the MSRB each year prior to the Annual FilingDate;
(ii) upon receipt, promptly file each Annual Report received under Sections 2(a) and2(b) with the MSRB;
(iii) upon receipt, promptly file each Audited Financial Statement received underSection 2(d) with the MSRB;
(iv) upon receipt, promptly file the text of each Notice Event received under Sections4(a) and 4(b)(ii) with the MSRB, identifying the Notice Event as instructed bythe Issuer pursuant to Section 4(a) or 4(b)(ii) (being any of the categories setforth below) when filing pursuant to Section 4(c) of this Disclosure Agreement:
1. "Principal and interest payment delinquencies;"
2. "Non-Payment related defaults, if material;"
3. "Unscheduled draws on debt service reserves reflecting financialdifficulties;"
4. "Unscheduled draws on credit enhancements reflecting financialdifficulties;"
5. "Substitution of credit or liquidity providers, or their failure to perform;"
6. "Adverse tax opinions, IRS notices or events affecting the tax status ofthe security;"
7. "Modifications to rights of securities holders, if material;"
8. "Bond calls, if material;"
9. "Defeasances;"
10. "Release, substitution, or sale of property securing repayment of thesecurities, if material;"
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11. "Rating changes;"
12. "Tender offers;"
13. "Bankruptcy, insolvency, receivership or similar event of the obligatedperson;"
14. "Merger, consolidation, or acquisition of the obligated person, ifmaterial;" and
15. "Appointment of a successor or additional trustee, or the change of nameof a trustee, if material;"
(v) upon receipt (or irrevocable direction pursuant to Section 2(c) of this DisclosureAgreement, as applicable), promptly file a completed copy of Exhibit B to thisDisclosure Agreement with the MSRB, identifying the filing as "Failure toprovide annual financial information as required" when filing pursuant to Section2(b)(ii) or Section 2(c) of this Disclosure Agreement;
(vi) upon receipt, promptly file the text of each Voluntary Event Disclosure receivedunder Section 7(a) with the MSRB, identifying the Voluntary Event Disclosureas instructed by the Issuer pursuant to Section 7(a) (being any of the categoriesset forth below) when filing pursuant to Section 7(a) of this DisclosureAgreement:
1. "amendment to continuing disclosure undertaking;"
2. "change in obligated person;"
3. "notice to investors pursuant to bond documents;"
4. "certain communications from the Internal Revenue Service;"
5. "secondary market purchases;"
6. "bid for auction rate or other securities;"
7. "capital or other financing plan;"
8. "litigation/enforcement action;"
9. "change of tender agent, remarketing agent, or other on-going party;"
10. "derivative or other similar transaction;" and
11. "other event-based disclosures;"
(vii) upon receipt, promptly file the text of each Voluntary Financial Disclosurereceived under Section 7(b) with the MSRB, identifying the Voluntary FinancialDisclosure as instructed by the Issuer pursuant to Section 7(b) (being any of thecategories set forth below) when filing pursuant to Section 7(b) of this DisclosureAgreement:
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1. "quarterly/monthly financial information;"
2. "change in fiscal year/timing of annual disclosure;"
3. "change in accounting standard;"
4. "interim/additional financial information/operating data;"
5. "budget;"
6. "investment/debt/financial policy;"
7. "information provided to rating agency, credit/liquidity provider or otherthird party;"
8. "consultant reports;" and
9. "other financial/operating data."
(viii) provide the Issuer evidence of the filings of each of the above when made, whichshall be by means of the DAC system, for so long as DAC is the DisclosureDissemination Agent under this Disclosure Agreement.
(f) The Issuer may adjust the Annual Filing Date upon change of its fiscal year by providingwritten notice of such change and the new Annual Filing Date to the Disclosure Dissemination Agent,Trustee (if any) and the MSRB, provided that the period between the existing Annual Filing Date and newAnnual Filing Date shall not exceed one year.
(g) Any Information received by the Disclosure Dissemination Agent before 6:00 p.m.Eastern time on any business day that it is required to file with the MSRB pursuant to the terms of thisDisclosure Agreement and that is accompanied by a Certification and all other information required bythe terms of this Disclosure Agreement will be filed by the Disclosure Dissemination Agent with theMSRB no later than 11:59 p.m. Eastern time on the same business day; provided, however, the DisclosureDissemination Agent shall have no liability for any delay in filing with the MSRB if such delay is causedby a Force Majeure Event provided that the Disclosure Dissemination Agent uses reasonable efforts tomake any such filing as soon as possible.
SECTION 3. Content of Annual Reports.
(a) Each Annual Report shall contain Annual Financial Information with respect to theIssuer, including updates of the type of information identified in Exhibit D hereto, which is contained inthe indicated tables in the Official Statement.
(b) Audited Financial Statements prepared in accordance with generally accepted accountingprinciples ("GAAP") as described in the Official Statement will be included in the Annual Report. Ifaudited financial statements are not available, then, unaudited financial statements, prepared inaccordance with GAAP as described in the Official Statement will be included in the Annual Report.Audited Financial Statements (if any) will be provided pursuant to Section 2(d).
Any or all of the items listed above may be included by specific reference from other documents,including official statements of debt issues with respect to which the Issuer is an "obligated person" (as
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defined by the Rule), which have been previously filed with the Securities and Exchange Commission oravailable on the MSRB Internet Website. If the document incorporated by reference is a final officialstatement, it must be available from the MSRB. The Issuer will clearly identify each such document soincorporated by reference.
Any Annual Financial Information containing modified operating data or financial information isrequired to explain, in narrative form, the reasons for the modification and the impact of the change in thetype of operating data or financial information being provided.
SECTION 4. Reporting of Notice Events.
(a) The occurrence of any of the following events with respect to the Bonds constitutes aNotice Event:
1. Principal and interest payment delinquencies;
2. Non-payment related defaults, if material;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposedor final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status ofthe Bonds, or other material events affecting the tax status of the Bonds;
7. Modifications to rights of Bond holders, if material;
8. Bond calls, if material, and tender offers;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Bonds, ifmaterial;
11. Rating changes;
12. Bankruptcy, insolvency, receivership or similar event of the Obligated Person;
Note to subsection (a)(12) of this Section 4: For the purposes of theevent described in subsection (a)(12) of this Section 4, the event is considered tooccur when any of the following occur: the appointment of a receiver, fiscalagent or similar officer for an Obligated Person in a proceeding under the U.S.Bankruptcy Code or in any other proceeding under state or federal law in which acourt or governmental authority has assumed jurisdiction over substantially all ofthe assets or business of the Obligated Person, or if such jurisdiction has beenassumed by leaving the existing governing body and officials or officers inpossession but subject to the supervision and orders of a court or governmentalauthority, or the entry of an order confirming a plan of reorganization,
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arrangement or liquidation by a court or governmental authority havingsupervision or jurisdiction over substantially all of the assets or business of theObligated Person.
13. The consummation of a merger, consolidation, or acquisition involving anObligated Person or the sale of all or substantially all of the assets of theObligated Person, other than in the ordinary course of business, the entry into adefinitive agreement to undertake such an action or the termination of a definitiveagreement relating to any such actions, other than pursuant to its terms, ifmaterial; and
14. Appointment of a successor or additional trustee or the change of name of atrustee, if material.
The Issuer shall, in a timely manner not in excess of seven business days after its occurrence,notify the Disclosure Dissemination Agent in writing of the occurrence of a Notice Event. Such noticeshall instruct the Disclosure Dissemination Agent to report the occurrence pursuant to subsection (c) andshall be accompanied by a Certification. Such notice or Certification shall identify the Notice Event thathas occurred (which shall be any of the categories set forth in Section 2(e)(iv) of this DisclosureAgreement), include the text of the disclosure that the Issuer desires to make, contain the writtenauthorization of the Issuer for the Disclosure Dissemination Agent to disseminate such information, andidentify the date the Issuer desires for the Disclosure Dissemination Agent to disseminate the information(provided that such date is not later than the tenth business day after the occurrence of the Notice Event).
(b) The Disclosure Dissemination Agent is under no obligation to notify the Issuer or theDisclosure Representative of an event that may constitute a Notice Event. In the event the DisclosureDissemination Agent so notifies the Disclosure Representative, the Disclosure Representative will withintwo business days of receipt of such notice (but in any event not later than the tenth business day after theoccurrence of the Notice Event, if the Issuer determines that a Notice Event has occurred), instruct theDisclosure Dissemination Agent that (i) a Notice Event has not occurred and no filing is to be made or (ii)a Notice Event has occurred and the Disclosure Dissemination Agent is to report the occurrence pursuantto subsection (c) of this Section 4, together with a Certification. Such Certification shall identify theNotice Event that has occurred (which shall be any of the categories set forth in Section 2(e)(iv) of thisDisclosure Agreement), include the text of the disclosure that the Issuer desires to make, contain thewritten authorization of the Issuer for the Disclosure Dissemination Agent to disseminate suchinformation, and identify the date the Issuer desires for the Disclosure Dissemination Agent todisseminate the information (provided that such date is not later than the tenth business day after theoccurrence of the Notice Event).
(c) If the Disclosure Dissemination Agent has been instructed by the Issuer as prescribed insubsection (a) or (b)(ii) of this Section 4 to report the occurrence of a Notice Event, the DisclosureDissemination Agent shall file a notice of such occurrence with MSRB in accordance with Section 2(e)(iv) hereof within three business days of receiving such instruction from the Issuer. This notice will befiled with a cover sheet completed by the Disclosure Dissemination Agent in the form set forth inExhibit C-1.
SECTION 5. CUSIP Numbers. Whenever providing information to the DisclosureDissemination Agent, including but not limited to Annual Reports, documents incorporated by referenceto the Annual Reports, Audited Financial Statements, Notice Event notices, Failure to File Event notices,Voluntary Event Disclosures and Voluntary Financial Disclosures, the Issuer shall indicate the full nameof the Bonds and the 9-digit CUSIP numbers for the Bonds as to which the provided information relates.
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SECTION 6. Additional Disclosure Obligations. The Issuer acknowledges and understandsthat other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 10b-5promulgated under the Securities Exchange Act of 1934, may apply to the Issuer, and that the duties andresponsibilities of the Disclosure Dissemination Agent under this Disclosure Agreement do not extend toproviding legal advice regarding such laws. The Issuer acknowledges and understands that the duties ofthe Disclosure Dissemination Agent relate exclusively to execution of the mechanical tasks ofdisseminating information as described in this Disclosure Agreement.
SECTION 7. Voluntary Filing.
(a) The Issuer may instruct the Disclosure Dissemination Agent to file a Voluntary EventDisclosure with the MSRB from time to time pursuant to a Certification of the Disclosure Representative.Such Certification shall identify the Voluntary Event Disclosure (which shall be any of the categories setforth in Section 2(e)(vi) of this Disclosure Agreement), include the text of the disclosure that the Issuerdesires to make, contain the written authorization of the Issuer for the Disclosure Dissemination Agent todisseminate such information, and identify the date the Issuer desires for the Disclosure DisseminationAgent to disseminate the information. If the Disclosure Dissemination Agent has been instructed by theIssuer as prescribed in this Section 7(a) to file a Voluntary Event Disclosure, the DisclosureDissemination Agent shall promptly file such Voluntary Event Disclosure with the MSRB in accordancewith Section 2(e)(vi) hereof. This notice will be filed with a cover sheet completed by the DisclosureDissemination Agent in the form set forth in Exhibit C-2.
(b) The Issuer may instruct the Disclosure Dissemination Agent to file a Voluntary FinancialDisclosure with the MSRB from time to time pursuant to a Certification of the Disclosure Representative.Such Certification shall identify the Voluntary Financial Disclosure (which shall be any of the categoriesset forth in Section 2(e)(vii) of this Disclosure Agreement), include the text of the disclosure that theIssuer desires to make, contain the written authorization of the Issuer for the Disclosure DisseminationAgent to disseminate such information, and identify the date the Issuer desires for the DisclosureDissemination Agent to disseminate the information. If the Disclosure Dissemination Agent has beeninstructed by the Issuer as prescribed in this Section 7(b) to file a Voluntary Financial Disclosure, theDisclosure Dissemination Agent shall promptly file such Voluntary Financial Disclosure with the MSRBin accordance with Section 2(e)(vii) hereof. This notice will be filed with a cover sheet completed by theDisclosure Dissemination Agent in the form set forth in Exhibit C-3.
(c) The parties hereto acknowledge that the Issuer is not obligated pursuant to the terms ofthis Disclosure Agreement to file any Voluntary Event Disclosure pursuant to Section 7(a) hereof or anyVoluntary Financial Disclosure pursuant to Section 7(b) hereof.
(d) Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer fromdisseminating any other information through the Disclosure Dissemination Agent using the means ofdissemination set forth in this Disclosure Agreement or including any other information in any AnnualReport, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary EventDisclosure or Voluntary Financial Disclosure, in addition to that required by this Disclosure Agreement.If the Issuer chooses to include any information in any Annual Report, Audited Financial Statements,Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary FinancialDisclosure in addition to that which is specifically required by this Disclosure Agreement, the Issuer shallhave no obligation under this Disclosure Agreement to update such information or include it in any futureAnnual Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice,Voluntary Event Disclosure or Voluntary Financial Disclosure.
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SECTION 8. Termination of Reporting Obligation. The obligations of the Issuer and theDisclosure Dissemination Agent under this Disclosure Agreement shall terminate with respect to theBonds upon the earliest of: (i) the legal defeasance, prior redemption or payment in full of all of theBonds, (ii) the date when the Issuer is no longer an "obligated person" within the meaning of the Rulewith respect to the Bonds, or (iii) upon delivery by the Disclosure Representative to the DisclosureDissemination Agent of an opinion of counsel expert in federal securities laws to the effect thatcontinuing disclosure is no longer required.
SECTION 9. Disclosure Dissemination Agent. The Issuer has appointed Digital AssuranceCertification, L.L.C. as exclusive Disclosure Dissemination Agent under this Disclosure Agreement. TheIssuer may, upon thirty days written notice to the Disclosure Dissemination Agent and the Trustee,replace or appoint a successor Disclosure Dissemination Agent. Upon termination of DAC's services asDisclosure Dissemination Agent, whether by notice of the Issuer or DAC, the Issuer agrees to appoint asuccessor Disclosure Dissemination Agent or, alternately, agrees to assume all responsibilities ofDisclosure Dissemination Agent under this Disclosure Agreement for the benefit of the Owners of theBonds. Notwithstanding any replacement or appointment of a successor, the Issuer shall remain liableuntil payment in full for any and all sums owed and payable to the Disclosure Dissemination Agent. TheDisclosure Dissemination Agent may resign at any time by providing thirty days' prior written notice tothe Issuer. The new Disclosure Dissemination Agent or the Issuer, as the case may be, shall forthwith givenotice thereof to the MSRB.
SECTION 10. Remedies in Event of Default. In the event of a failure of the Issuer or theDisclosure Dissemination Agent to comply with any provision of this Disclosure Agreement, the Owners'rights to enforce the provisions of this Agreement shall be limited solely to a right, by action inmandamus or for specific performance, to compel performance of the parties' obligation under thisDisclosure Agreement. Any failure by a party to perform in accordance with this Disclosure Agreementshall not constitute a default on the Bonds or under the Indenture or any other document relating to theBonds, and all rights and remedies shall be limited to those expressly stated herein.
SECTION 11. Duties, Immunities and Liabilities of Disclosure Dissemination Agent.
(a) The Disclosure Dissemination Agent shall have only such duties as are specifically setforth in this Disclosure Agreement. The Disclosure Dissemination Agent's obligation to deliver theinformation at the times and with the contents described herein shall be limited to the extent the Issuer hasprovided such information to the Disclosure Dissemination Agent as required by this DisclosureAgreement. The Disclosure Dissemination Agent shall have no duty with respect to the content of anydisclosures or notice made pursuant to the terms hereof. The Disclosure Dissemination Agent shall haveno duty or obligation to review or verify any Information or any other information, disclosures or noticesprovided to it by the Issuer and shall not be deemed to be acting in any fiduciary capacity for the Issuer,the Owners of the Bonds or any other party. The Disclosure Dissemination Agent shall have noresponsibility for the Issuer's failure to report to the Disclosure Dissemination Agent a Notice Event or aduty to determine the materiality thereof. The Disclosure Dissemination Agent shall have no duty todetermine, or liability for failing to determine, whether the Issuer has complied with this DisclosureAgreement. The Disclosure Dissemination Agent may conclusively rely upon Certifications of the Issuerat all times.
The obligations of the Issuer under this Section shall survive resignation or removal of the DisclosureDissemination Agent and defeasance, redemption or payment of the Bonds.
(b) The Disclosure Dissemination Agent may, from time to time, consult with legal counsel(either in-house or external) of its own choosing in the event of any disagreement or controversy, or
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question or doubt as to the construction of any of the provisions hereof or its respective duties hereunder,and shall not incur any liability and shall be fully protected in acting in good faith upon the advice of suchlegal counsel. The reasonable fees and expenses of such counsel shall be payable by the Issuer, subject toannual appropriation by the Board of the Issuer.
(c) All documents, reports, notices, statements, information and other materials provided tothe MSRB under this Agreement shall be provided in an electronic format and accompanied byidentifying information as prescribed by the MSRB. As of the date of this Disclosure Agreement, alldocuments submitted to the MSRB must be in portable document format (PDF) files configured to permitdocuments to be saved, viewed, printed and retransmitted by electronic means. In addition, such PDFfiles must be word-searchable, provided that diagrams, images and other non-textual elements are notrequired to be word-searchable.
SECTION 12. Amendment; Waiver. Notwithstanding any other provision of this DisclosureAgreement, the Issuer and the Disclosure Dissemination Agent may amend this Disclosure Agreementand any provision of this Disclosure Agreement may be waived, if such amendment or waiver issupported by an opinion of counsel expert in federal securities laws acceptable to both the Issuer and theDisclosure Dissemination Agent to the effect that such amendment or waiver does not materially impairthe interests of Owners of the Bonds and would not, in and of itself, cause the undertakings herein (oraction of any Participating Underwriter in reliance on the undertakings herein) to violate the Rule if suchamendment or waiver had been effective on the date hereof but taking into account any subsequentchange in or official interpretation of the Rule; provided neither the Issuer or the DisclosureDissemination Agent shall be obligated to agree to any amendment modifying their respective duties orobligations without their consent thereto. The Disclosure Dissemination Agent shall provide notice ofsuch amendment or waiver to the MSRB and the Participating Underwriter.
Notwithstanding the preceding paragraph, the Disclosure Dissemination Agent shall have theright to adopt amendments to this Disclosure Agreement necessary to comply with modifications to andinterpretations of the provisions of the Rule as announced by the Securities and Exchange Commissionfrom time to time by giving not less than 20 days written notice of the intent to do so together with a copyof the proposed amendment to the Issuer. No such amendment shall become effective if the Issuer shall,within 10 days following the giving of such notice, send a notice to the Disclosure Dissemination Agentin writing that it objects to such amendment.
SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of theIssuer, the Trustee of the Bonds, the Disclosure Dissemination Agent, the Participating Underwriter, andthe Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
SECTION 14. Governing Law. This Disclosure Agreement shall be governed by the laws of theState of Colorado.
SECTION 15. Counterparts. This Disclosure Agreement may be executed in severalcounterparts, each of which shall be an original and all of which shall constitute but one and the sameinstrument.
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The Disclosure Dissemination Agent and the Issuer have caused this Continuing DisclosureAgreement to be executed, on the date first written above, by their respective officers duly authorized.
DIGITAL ASSURANCE CERTIFICATION, L.L.C., asDisclosure Dissemination Agent
By:_______________________________________Name:____________________________________Title:_____________________________________
REGIONAL TRANSPORTATION DISTRICT
By:_______________________________________Name:____________________________________Title: Chair, Board of Directors
[SEAL]
Attest:
Secretary, Board of Directors
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EXHIBIT A
NAME AND CUSIP NUMBERS OF BONDS
Name of Issuer Regional Transportation District (the "Issuer")
Name of Bond Issue: Regional Transportation District (Colorado), Taxable Sales Tax RevenueRefunding Bonds, Series 2013A, dated as of their date of delivery, in theaggregate principal amount of $96,580,000 (the "Bonds").
Date of Issuance: March 26, 2013.
Date of Official Statement: March 19, 2013.
MATURITY CUSIP COUPON
11/01/2013 759136RM8 0.250%11/01/2014 759136RN6 0.43811/01/2015 759136RP1 0.68811/01/2016 759136RQ9 0.86511/01/2017 759136RR7 2.00011/01/2018 759136RS5 1.42311/01/2019 759136RT3 1.75711/01/2020 759136RU0 2.00711/01/2021 759136RV8 2.207
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EXHIBIT B
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Issuer: Regional Transportation District (the "Issuer")
Obligated Person: ________________________
Name of Bond Issue: Regional Transportation District (Colorado), Taxable Sales Tax RevenueRefunding Bonds, Series 2013A, dated as of their date of delivery, in theaggregate principal amount of $96,580,000 (the "Bonds").
Date of Issuance: March 26, 2013.
Date of Disclosure March 26, 2013.Agreement:
CUSIP Number: 759136 ___.
NOTICE IS HEREBY GIVEN that the Issuer has not provided an Annual Report with respect tothe above-named Bonds as required by the Disclosure Agreement between the Issuer and DigitalAssurance Certification, L.L.C., as Disclosure Dissemination Agent. The Issuer has notified theDisclosure Dissemination Agent that it anticipates that the Annual Report will be filed by______________.
Dated: _____________________________
Digital Assurance Certification, L.L.C., as DisclosureDissemination Agent, on behalf of the Issuer
__________________________________________
cc:
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EXHIBIT C-1EVENT NOTICE COVER SHEET
This cover sheet and accompanying "event notice" will be sent to the MSRB, pursuant to Securities andExchange Commission Rule 15c2-12(b)(5)(i)(C) and (D).
Issuer and/or Other Obligated Person's Name: Regional Transportation District (Colorado) (the "Issuer")
Issuer's Six-Digit CUSIP Number: 759136
or Nine-Digit CUSIP Number(s) of the bonds to which this event notice relates: 759136 ___
Number of pages attached: _____
____ Description of Notice Events (Check One):
1. "Principal and interest payment delinquencies;"2. "Non-Payment related defaults, if material;"3. "Unscheduled draws on debt service reserves reflecting financial difficulties;"4. "Unscheduled draws on credit enhancements reflecting financial difficulties;"5. "Substitution of credit or liquidity providers, or their failure to perform;"6. "Adverse tax opinions, IRS notices or events affecting the tax status of the security;"7. "Modifications to rights of securities holders, if material;"8. "Bond calls, if material;"9. "Defeasances;"10. "Release, substitution, or sale of property securing repayment of the securities, ifmaterial;"11. "Rating changes;"12. "Tender offers;"13. "Bankruptcy, insolvency, receivership or similar event of the obligated person;"14. "Merger, consolidation, or acquisition of the obligated person, if material;" and15. "Appointment of a successor or additional trustee, or the change of name of a trustee, ifmaterial."
____ Failure to provide annual financial information as required.
I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly:
Signature:
___________________________________________________________________________________
Name: _________________________________Title: ________________________________________
Digital Assurance Certification, L.L.C.390 N. Orange Avenue
Suite 1750Orlando, FL 32801
407-515-1100
Date:
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EXHIBIT C-2VOLUNTARY EVENT DISCLOSURE COVER SHEET
This cover sheet and accompanying "voluntary event disclosure" will be sent to the MSRB, pursuant tothe Continuing Disclosure Agreement dated as of March 26, 2013 between the Issuer and DAC.
Issuer's and/or Other Obligated Person's Name: Regional Transportation District (Colorado) (the "Issuer")
Issuer's Six-Digit CUSIP Number: 759136
or Nine-Digit CUSIP Number(s) of the bonds to which this event notice relates: 759136 ___
Number of pages attached: _____
____ Description of Voluntary Event Disclosure (Check One):
1. "amendment to continuing disclosure undertaking;"2. "change in obligated person;"3. "notice to investors pursuant to bond documents;"4. "certain communications from the Internal Revenue Service;"5. "secondary market purchases;"6. "bid for auction rate or other securities;"7. "capital or other financing plan;"8. "litigation/enforcement action;"9. "change of tender agent, remarketing agent, or other on-going party;"10. "derivative or other similar transaction;" and11. "other event-based disclosures."
I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly:
Signature:
___________________________________________________________________________________
Name: _________________________________Title: ________________________________________
Digital Assurance Certification, L.L.C.390 N. Orange Avenue
Suite 1750Orlando, FL 32801
407-515-1100
Date:
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EXHIBIT C-3VOLUNTARY FINANCIAL DISCLOSURE COVER SHEET
This cover sheet and accompanying "voluntary financial disclosure" will be sent to the MSRB, pursuantto the Continuing Disclosure Agreement dated as of March 26, 2013 between the Issuer and DAC.
Issuer and/or Other Obligated Person's Name: Regional Transportation District (Colorado) (the "Issuer")
Issuer's Six-Digit CUSIP Number: 759136
or Nine-Digit CUSIP Number(s) of the bonds to which this event notice relates: 759136 ___
Number of pages attached: _____
____ Description of Voluntary Financial Disclosure (Check One):
1. "quarterly/monthly financial information;"2. "change in fiscal year/timing of annual disclosure;"3. "change in accounting standard;"4. "interim/additional financial information/operating data;"5. "budget;"6. "investment/debt/financial policy;"7. "information provided to rating agency, credit/liquidity provider or other third
party;"8. "consultant reports;" and9. "other financial/operating data."
I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly:
Signature:
___________________________________________________________________________________
Name: _________________________________Title: ________________________________________
Digital Assurance Certification, L.L.C.390 N. Orange Avenue
Suite 1750Orlando, FL 32801
407-515-1100
Date:
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EXHIBIT D
INDEX OF OFFICIAL STATEMENT TABLES TO BE UPDATED
Table Number Table TitleTable II – Historical Debt Service Coverage
Table V – Historical Pledged Sales Tax Revenues
Table IX – Operating Data
Table X – Statement of Obligations
Table XI – Revenue and Capital Receipts by Source
Table XIV – RTD Annual Ridership and Fare Revenue
Table XV – RTD Advertising and Ancillary Revenues
Table XVI – RTD Federal Grant Receipts
Table XVII – Summary of Statements of Revenues and Expensesand Changes in Net Position
Table XVIII – Comparison of Budgeted and Actual Revenues andExpenses
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Appendix B
REGIONAL TRANSPORTATION DISTRICT DENVER, COLORADOCOMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011 AND 2010
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Comprehensive AnnuAlFinAnCiAl report
regional transportation District1600 Blake Street, Denver, Colorado303.299.6000 rtd-denver.com
Fiscal year endedDecember 31, 2011
REGIONAL TRANSPORTATION DISTRICT DENVER, COLORADO
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Fiscal Year Ended December 31, 2011 and 2010
Prepared by Finance Division
Chief Financial Officer
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TABLE OF CONTENTS
INTRODUCTORY SECTION Page Letter from Chair of Financial, Administration and Audit Committee .............................................7 Letter of Transmittal .................................................................................................................................9 Board of Directors .................................................................................................................................. 15 District Service Area Map...................................................................................................................... 16 Organization Chart ................................................................................................................................. 17 Department Officials ............................................................................................................................. 17 GFOA Certificate of Achievement ...................................................................................................... 18 FINANCIAL SECTION Report of Independent Certified Public Accountants ...................................................................... 21 Management’s Discussion and Analysis .............................................................................................. 25 Basic Financial Statements Statement of Net Position ..................................................................................................................... 40 Statement of Revenues, Expenses and Changes in Net Position .................................................... 42 Statement of Cash Flow ......................................................................................................................... 43 Notes to Financial Statements .............................................................................................................. 46
Required Supplementary Information
Pension Plan Summary……………………………………………………………..….…….78
Supplemental Information Schedule of Expense and Revenue – Budget and Actual - Budgetary Basis ................................................................................................... 80
Fund Financial Statements (Unaudited).……………………………………………….……81
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TABLE OF CONTENTS
(CONTINUED)
STATISTICAL SECTION Page Net Position by Component ................................................................................................................. 84 Summary of Statement of Revenues, Expenses and Changes in Net Position .............................. 85 Operating and Other Expenses and Capital Outlays ........................................................................ 86 Revenue by Source ................................................................................................................................. 87 Debt Coverage Ratios ............................................................................................................................ 88 Demographic and Operating Data ....................................................................................................... 90 Largest Private Employers – Denver Metro Area ............................................................................. 91 DEBT DISCLOSURE TABLES Strategic Budget Plan - Operations ...................................................................................................... 93 Strategic Budget Plan - Capital Program ............................................................................................. 94 Additional Operating Data .................................................................................................................... 95 Statement of Debt .................................................................................................................................. 96 Annual Ridership and Fare Revenue ................................................................................................... 97 Advertising and Ancillary Revenues .................................................................................................... 97 Grant Receipts ......................................................................................................................................... 97 Five-Year Summary of Statement of Revenues, Expenses
and Changes in Net Position ................................................................................................ 98 Five-Year Schedule of Expenses and Revenues –
Budget and Actual - Budgetary Basis .................................................................................. 99 2011 and 2012 Budget .......................................................................................................................... 100
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INTRODUCTORY SECTION
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Regional Transportation District May 4, 2012 Board of Directors Regional Transportation District Denver, Colorado In accordance with Colorado statutes and Regional Transportation District (RTD) bylaws, the enclosed Comprehensive Annual Financial Report of the Regional Transportation District as of December 31, 2011, has been compiled. Responsibility for the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with RTD. Management believes the data, as presented, fairly sets forth the financial position and operating results of RTD. Disclosures necessary to enable the reader to gain the maximum understanding of the financial affairs of RTD have been included. In developing and evaluating RTD’s accounting system, consideration has been given to the adequacy of internal accounting controls. These controls are discussed by the Chief Financial Officer in the Letter of Transmittal. Within that framework, we believe RTD’s internal accounting controls adequately safeguard assets and provide reasonable assurance of the proper recording of financial transactions. This report has been prepared according to the guidelines recommended by the Government Finance Officers Association of the United States and Canada. In accordance with these guidelines, the accompanying report is presented in three parts: 1. Introductory Section, including the Chief Financial Officer’s Letter of Transmittal. 2. Financial Section containing the independent auditor’s report, Management’s Discussion and
Analysis, the financial statements, notes thereto and supplemental information. In addition, the supplementary information contains unaudited financial information by fund.
3. Statistical Section, including selected tables of unaudited data depicting the financial history of
RTD, demographics, and other miscellaneous information. Colorado law requires the governing bodies of local governments to have an independent audit of RTD’s financial statements performed. RTD has complied with this requirement and has included the report of the independent auditors in the Financial Section of this report. Preparation of this Comprehensive Annual Financial Report could not have been accomplished without the dedicated efforts of the entire financial staff. Should you have any questions or comments, please contact me or Terry Howerter, Chief Financial Officer. Respectfully submitted, Bill James Chair, Financial, Administration and Audit Committee
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Regional Transportation District May 4, 2012 Mr. Bill James Chair, Financial, Administration and Audit Committee Regional Transportation District State law requires that all general-purpose local governments publish within seven months of the close of each fiscal year a complete set of financial statements presented in conformance with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the Comprehensive Annual Financial Report of the Regional Transportation District for the fiscal year ended December 31, 2011. This report consists of management’s representations concerning the finances of RTD. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of RTD has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of RTD’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, RTD’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. RTD’s financial statements have been audited by RubinBrown, LLP, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of RTD for the fiscal year ended December 31, 2011, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that RTD’s financial statements for the fiscal year ended December 31, 2011, are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the Financial Section of this report. The independent audit of the financial statements of RTD was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are in RTD’s separately issued Single Audit Report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis
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(MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. RTD’s MD&A can be found immediately following the report of the independent auditors. REGIONAL TRANSPORTATION DISTRICT (RTD) RTD provides public mass transit service to the Denver metropolitan area. In 1969, the Colorado General Assembly (Assembly) found that public transit was a necessary part of the growing Denver Metropolitan Region. The Assembly found that public sector involvement was the best method to ensure the continuation of this vital component. Thus, the Regional Transportation District was created as a political subdivision of the State effective July 1969 “to develop, maintain, and operate a public mass transportation system for the benefit of the inhabitants of the District.” RTD boundaries now include Jefferson, Boulder, and Denver counties, most of the City and County of Broomfield, and portions of Adams, Douglas, Weld, and Arapahoe counties. Over 2.8 million people, or approximately 57% of the population of Colorado, reside within RTD’s 2,348 square mile area. Since 1983, a fifteen-member Board of Directors, they are elected by their constituents to serve four-year terms, has governed RTD. There are approximately 180,000 voters per director district. The RTD Board of Directors is responsible for setting policy, overseeing the agency’s annual budget, and establishing short and long-range transit goals and plans in concert with local, state, and federal agencies. The agency employs over 2,400 men and women, making it one of the largest employers in the eight county areas. Besides its administrative headquarters in Denver, RTD has six operating facilities, including three in Denver, one in Aurora, one in Englewood, and one in Boulder. The financial reporting entity includes all of the financial activities of RTD, as well as those activities of its component unit, the RTD Equipment Acquisition Authority, Inc. (the Authority), a nonprofit corporation established to facilitate RTD’s use of lease/purchase financing. RTD also maintains budgetary controls. These controls ensure compliance with legal provisions embodied in the annual appropriated budget approved by RTD’s Board of Directors. The budget sets forth proposed outlays for operations, planning, administration, development, debt service, and capital assets. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the project level. The annual budget serves as the foundation for RTD’s financial planning and control. All departments of RTD are required to submit requests for appropriation to the General Manager on or before August 1st of each year. The General Manager uses these requests as the starting point for developing a proposed budget. The General Manager then presents this proposed budget to the Board of Directors for review prior to October 15th. The Board of Directors is required to hold a public hearing on the proposed budget and to adopt a final budget no later than December 31st. Unused appropriations lapse at year end, except that the Board of Directors has the authority, as stated in the adopted appropriation resolution, to carry-over the unused portion of the funds for capital projects not completed, for a period not to exceed three years.
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RTD’s policy also authorizes the General Manager to approve certain line-item transfers within the budget. Budget-to-actual comparisons are provided in the Supplementary Information Section of this report. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered in the broader perspective of the specific environment within which RTD operates. RTD serves the eight-county region considered the Denver metropolitan area. It is the most populated area of the state and the economic barometer of Colorado. Employment in the Denver Metro area is dominated by small businesses. These companies represent a diverse mix of industries and are located throughout the Denver metropolitan area, providing a geographic balance in employment centers. The 10 largest private employers are listed in the Statistical Section of this report. The Colorado Legislative Council (CLC) in its December 2011 report forecasts that the economic recession has subsided and a modest recovery has begun. Economists for CLC reported the following key economic indicators. Key Economic Indicators 2010 Actual 2011 Forecast 2012 ForecastJob Growth -1.1% 1.4% 1.0%Unemployment 8.9% 8.6% 8.3%Personal Income Growth 3.8% 5.4% 2.9%Population Growth 1.5% 1.5% 1.6%Inflation 1.9% 4.1% 3.7% On November 3, 1992, the voters of Colorado approved a Constitutional Amendment (the “Amendment”) that limits taxes, revenue, and spending for state and local governments effective December 31, 1992. On November 7, 1995, the voters of the District exempted RTD from the revenue and spending limitations concerning the Amendment through December 31, 2005. On November 2, 1999, the voters of the District further exempted RTD from the revenue and spending limitations outlined in the Amendment for the purpose of paying any debt incurred to finance the construction of the Southeast and Southwest light rail lines or to operate such for as long as any debt remains outstanding, but in no event beyond December 31, 2026. On November 2, 2004, the voters of the District authorized an increase in the District’s sales and use tax rate from 0.6% to 1.0%, effective January 1, 2005, to finance the FasTracks transit improvement program. This authorization also exempted the District from any revenue and spending limitations on the additional tax and on any investment income generated by the increased tax revenue, and allowed RTD to incur debt to finance the capital improvements included in the FasTracks program. At the time that all FasTracks debt is repaid, the District’s sales and use tax rate will be reduced to a rate sufficient to operate the transit system financed through FasTracks. Long-term Financial Planning
Each year the Board of Directors adopts a financially constrained Strategic Budget Plan (SBP) which is the six-year operating and capital improvement plan of RTD. It reflects RTD’s plans for service and capital improvements excluding FasTracks. In November 2010, the Board of Directors convened a Fiscal Sustainability Task Force for the purpose of developing a formal written report,
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to be submitted to the Board of Directors in June 2011, detailing opportunities for operating efficiencies and revenue enhancements to ensure RTD’s fiscal sustainability in the long term. The Task Force consisted of 21 members from RTD management, the Board of Directors and the public and private sector. The Board of Directors gave approval to management to pursue implementation of the Task Force’s recommendations. The SBP includes those recommendations that have been implemented in the SBP timeframe, most notably an operational service adjustment, enhanced sales and use tax forecasts and implementation of a revised fund balance policy beginning in 2012. On August 16, 2011, the Board adopted the 2012-2017 SBP. In addition to the SBP, RTD is planning and constructing the build-out of the FasTracks transit expansion plan. FasTracks entails the addition of six new light-rail lines and diesel-powered commuter rail lines, 21,000 new parking spaces, the redevelopment of Denver Union Station, and expanded bus service throughout the eight county District. Each year, RTD conducts a comprehensive evaluation of the entire FasTracks program, called an Annual Program Evaluation. RTD has worked closely with elected officials, local governments, corridor stakeholders and the public to identify how to move the FasTracks program forward. FINANCIAL INFORMATION RTD management is responsible for establishing and maintaining an internal control structure designed to ensure that assets are protected from loss, theft, or misuse and that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. RTD has designed its internal control structure to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the costs of a control should not exceed the benefits likely to be derived and (2) the valuation of costs and benefits requires estimates and judgment by management. Single Audit: As a recipient of federal assistance, RTD is responsible for ensuring that an adequate internal control structure is instituted to ensure compliance with applicable laws and regulations related to those programs. This internal control structure is subject to periodic evaluation by management and the RTD internal audit staff. As part of RTD’s single audit, tests are made to determine the adequacy of the internal control structure, including that portion related to federal financial assistance programs, as well as to evaluate RTD’s compliance. RTD’s single audit for the fiscal year ended December 31, 2011 found no instances of material weakness in the internal control structures or significant violations of applicable laws and regulations. A separate report was prepared for this purpose. Debt Administration: RTD formulates its debt policy to protect its credit ratings and soundly manage its assets and liabilities. Included in this policy is a requirement that debt will not be used to finance current operations. Another requirement precludes financing capital projects beyond the useful life of the project. Additional policies go beyond these essential guidelines and result in further protection. RTD has a dual rating for its 1.0% sales tax credit. Moody’s Investors Service rates the sales tax credit as “Aa2”, Standard and Poor’s Corporation rates the sales tax credit “AAA” and Fitch Ratings rates the sales tax credit “AA+” that are secured by the 0.6% sales tax. Moody’s Investors Service rates the sales tax credit as “Aa2”, Standard and Poor’s Corporation rates the sales tax credit “AA+” and Fitch Ratings rates the sales tax credit “AA” that are secured by the 0.4% sales tax.
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Cash Management: The main objective of RTD’s cash management program is the protection of investment principal while providing optimal levels of cash throughout the year. The RTD investment policy is modified periodically to adapt to changes in eligible investments, benchmarks, and specific objectives. During the year, RTD invested its cash in various investment vehicles including money market funds, U.S. Treasury securities, agency securities, discount notes, commercial paper, repurchase agreements, and variable and fixed rate mortgage-backed securities. The total average return on investments for the year was 1.7%. Risk Management: RTD employs a combination of self-insurance and purchased insurance in its efforts to protect assets and control and prevent losses. The areas of self-insurance are worker’s compensation and general liability. RTD is self-insured for liability, the limits of which are $150,000 per person and $600,000 per occurrence as specified under the Colorado Governmental Immunity statute. The self-insured retention for worker’s compensation claims is $2,000,000 per claim, with any amounts above this covered by purchased insurance up to the legal limits of liability under the Colorado worker’s compensation statute. Commercial insurance policies provide property coverage up to $300,000,000 for buildings, their contents, and rolling stock (other than collision); a Commercial Crime Policy and Faithful Performance Bond; a $3,500,000 Workers’ Compensation Bond; Felonious Assault Policy; travel insurance for employees on RTD business; fidelity coverage on the Trustees of the Union Pension Trust, Salaried Pension Trust, Represented Health and Welfare Union Trust, Legal Trust, and the employees administering the health benefits program for salaried employees. With the addition of Light Rail Transit (LRT), RTD has added Railroad Protective and Railroad Liability commercial insurance policies that provide coverage when required under operational needs. The Risk Management division coordinates these programs internally for RTD. OTHER INFORMATION Independent Audit: State statutes require an annual audit by independent certified public accountants. The accounting firm of RubinBrown LLP was selected to perform the 2011 audit. This audit also was designated to meet the requirements of the Federal Single Audit Act amendments of 1996 and related OMB Circular A-133. The auditor’s report on the financial statements and schedules are included in the Financial Section of this report. The auditor’s report related specifically to the single audit is included in a separate report. Awards: The Government Finance Officers Associations (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to RTD for its Comprehensive Annual Financial Report for the fiscal year ended December 31, 2010. This is the nineteenth consecutive year, after a two-year absence from the program, that RTD has been awarded this prestigious award. In order to receive the Certificate of Achievement for Excellence in Financial Reporting, RTD must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, the contents of which must conform to program standards. This report must also satisfy both generally accepted accounting principles and applicable legal requirements.
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The Certificate of Achievement is valid for one year only. We believe our current Comprehensive Annual Financial Report meets the program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Acknowledgements: Preparation of the Comprehensive Annual Financial Report on a timely basis was made possible by the dedicated services of the entire staff of the Finance Division. Each member of the division has our sincere appreciation for the contributions made in the preparation of this report. Finally, without the leadership and support of the members of the RTD’s Board of Directors, preparation of this report would not have been possible. Sincerely, Terry L. Howerter Chief Financial Officer
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Board of Directors RTD’s governing body is a 15-member elected Board of Directors, with each member elected from one of the fifteen districts comprising RTD’s service area. Each district is apportioned equally by population and most districts cross county boundaries. The districts are assigned letter designations from “A” to “O”. The following are the members of the Board of Directors as of January 2012: District A Bill James Denver/Arapahoe Counties
District I Lee Kemp, Chairman Boulder/Broomfield/Adams/Weld Counties
District B Barbara Deadwyler Denver/Adams Counties
District J Larry Hoy Adams/Jefferson/Broomfield Counties
District C Angelina Malpiede, Secretary Denver/Adams/Jefferson Counties
District K Kathi Williams Adams County
District D Jeff Walker Denver/Jefferson/Arapahoe Counties
District L Lorraine Anderson Jefferson/Boulder/Broomfield Counties
District E William G. McMullen Denver/Arapahoe Counties
District M Matt Cohen, Second Vice Chairman Jefferson County
District F Tom Tobiassen Arapahoe County
District N Bruce Daly Jefferson/Denver Counties
District G Jack O’Boyle Arapahoe/ Douglas Counties
District O John Tayer, First Vice Chairman Boulder County
District H Kent Bagley, Treasurer Arapahoe/ Douglas Counties
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Taxpayers and Customers
Board of Directors
General Manager
Administration
Finance
Planning
Communications
Capital Programs
General Counsel
Rail Operations
Bus Operations
Safety, Security & Facilities
Organization Chart
Department Officials General Manager/Chief Executive Officer Phillip A. Washington
AGM, Planning William C. Van Meter
AGM, Bus Operations Bruce Abel
AGM, Capital Programs Richard Clarke
Chief Financial Officer Terry Howerter
General Counsel Marla L. Lien
AGM, Rail Operations Dale Jenkins (Austin)
AGM, Administration Carla Perez
AGM, Safety, Security & Facilities Dave Genova
AGM, Communications Scott Reed
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Certificate of Achievement for
Excellence in Financial Reporting
Presented to
Regional Transportation District
Colorado
For its Comprehensive Annual
Financial Report
For the Fiscal Year Ended
December 31, 2010
A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the
United States and Canada to Government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs)
achieve the highest standards in government accounting and
financial reporting.
President
Executive Director
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FINANCIAL SECTION
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REGIONAL TRANSPORTATION DISTRICT Management’s Discussion and Analysis (Unaudited) December 31, 2011 and 2010 (Dollars in Thousands)
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The management of the Regional Transportation District (RTD) offers users of our financial statements this narrative overview and analysis of the financial activities for the years ended December 31, 2011 and 2010. This discussion and analysis is designed to assist the reader to focus on significant financial activities and identify any significant changes in the financial position of RTD. It should be read in conjunction with the financial statements that follow this section. All amounts, unless otherwise indicated, are expressed in thousands of dollars. Financial Highlights As of December 31, 2011 and 2010, total assets of RTD exceeded total liabilities $2,515,166 and $2,203,764, respectively. The amount of unrestricted net position as of December 31, 2011 was $134,671 compared to $166,299 in 2010. The net position of RTD increased by $311,402 during the current year compared to an increase of $157,589 in the previous year. The increases in both years are due to higher operating revenues, and grant revenue, net of increases in operating expenses and non-operating expenses. RTD’s total debt decreased $53,882 (2.7%) and increased $763,795 (62.3%) in 2011 and 2010, respectively. The decrease in 2011 is due to payments made on principal and no additional debt incurred. The increase in 2010 is due to new funding for Fastrack projects and Base System paratransit vehicles, farebox and CAD/AVL projects. RTD’s sales and use tax revenue increased $17,631 (4.4%) in 2011 and increased $26,144 (7.0%) in the previous year. Capital grants and local contributions increased $130,814 (121.7%) in 2011 and decreased $24,233 (18.4%) in the previous year. The increase for 2011 is attributed to the Eagle P3 Full Funding Grant Agreement executed in 2011, the West Corridor Full Funding Grant Agreement additional year appropriation and the Denver Union Station project capital contributions. The decrease in 2010 was primarily due to a decrease in receipts of grant funds and local contributions for the West Corridor project and other capital projects. For 2011, total operating expenses exceeded total revenues resulting in a loss before non-operating revenue and expenses of $388,232 compared to a loss of $397,931 for 2010. The loss in 2011 is lower than 2010 due to the West Corridor project reaching 90% completion in 2011 with more expense being incurred in prior periods in addition to increased operating revenue. RTD anticipates operating losses, as these losses are subsidized by non-operating sales and use tax, grant revenues and other miscellaneous income. Basic Financial Statements Management’s Discussion and Analysis serves as an introduction to RTD’s basic financial statements. RTD’s financial statements are prepared using proprietary fund (enterprise fund) accounting that uses the same basis of accounting as private-sector business enterprises. Under this method of accounting, an economic resources measurement focus and an accrual basis of accounting is used. Revenue is recorded when earned and expenses are recorded when incurred.
REGIONAL TRANSPORTATION DISTRICT Management’s Discussion and Analysis (Unaudited) December 31, 2011 and 2010 (Dollars in Thousands)
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The basic financial statements are comprised of four components: statement of net position; statement of revenues, expenses and changes in net position; statement of cash flows; and notes to the financial statements. The statement of net position presents information on assets and liabilities, with the difference between the two reported as the net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of RTD is improving or deteriorating. The statement of revenues, expenses, and changes in net position presents information on operating revenues and expenses and non-operating revenues and expenses of RTD for the fiscal year with the difference, the net income or loss, combined with any capital grants to determine the change in net position for the year. That change combined with the previous year-end total net position reconciles to the net position total at the end of the current fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the changes occurs, regardless of the timing of the related cash flows. The statement of cash flows reports cash and cash equivalent activities for the fiscal year resulting from operating activities, capital, and related financing activities, noncapital and related financing activities and investing activities. The result of these activities added to the beginning of the year cash balance reconciles to the cash and cash equivalents balance at the end of the current fiscal year. The statement of cash flows, along with the related notes and information in other financial statements, can be used to assess the following: RTD’s ability to generate positive future cash flows and pay its debt as the debt matures; the reasons for differences between RTD’s operating cash flows and operating income (loss); and the effect of investing, capital, and financing activities on RTD’s financial position. The notes to the financial statements provide additional information that is essential to fully understand the data provided in the statement of net position, statement of revenues, expenses, and changes in net position, and statement of cash flows. RTD provides bus, paratransit, and light rail service in a 2,348 square mile area in and around Denver, Colorado. The activities of RTD are supported by a 0.6% and 0.4% sales and use tax collected within the District. The 0.6% sales and use tax is used to fund the Base System operations of RTD. The Base System operations provide the bus and current light rail services in the Denver area. The 0.4% sales and use tax funds the FasTracks build out program and provides for enhanced transit services in the District. Additional revenue sources include fare collections, federal, state, and local financial assistance, interest income, and other income such as advertising and rental income. Financial Analysis Condensed Financial Information - Condensed financial information from the statement of net position and statement of revenues, expenses, and changes in net position is presented below. Statement of Net Position - As of December 31, 2011 and 2010, total assets of RTD exceeded total liabilities by $2,515,166 and $2,203,764, respectively. The largest portion of this excess, 74.5% in 2011 and 72.5% in 2010, was invested in capital assets, net of related debt. RTD uses these capital assets to provide public transportation services to customers; consequently, these assets are not available for future spending. Although the RTD investment in capital assets is reported net of
REGIONAL TRANSPORTATION DISTRICT Management’s Discussion and Analysis (Unaudited) December 31, 2011 and 2010 (Dollars in Thousands)
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related debt, it should be noted that funding required to repay this debt will be obtained from other sources such as sales and use tax, since the capital assets themselves cannot be used to pay the related debt. The amount of unrestricted net position as of December 31, 2011 was $134,671 compared to $166,299 in 2010. Substantially all of the unrestricted net position, although not legally restricted, has been appropriated or reserved by the RTD Board for future capital acquisition, operating reserve policy, and debt liquidation during the budget process.
2011 2010 2009Assets:
Current assets 738,374$ 595,848$ 457,402$ Current assets - restricted 454,671 694,018 393,339 Capital assets (net of accumulated depreciation) 3,472,133 2,969,149 2,361,845 Other noncurrent assets 202,157 249,577 213,873
Total assets 4,867,335 4,508,592 3,426,459
Liabilities:Current liabilities 433,980 228,909 199,107 Noncurrent liabilities 1,918,189 2,075,919 1,181,177
Total liabilities 2,352,169 2,304,828 1,380,284
Net position:Invested in capital assets, net of related debt 1,872,790 1,597,631 1,456,493 Restricted 507,705 439,834 457,647 Unrestricted 134,671 166,299 132,035 Total net position 2,515,166$ 2,203,764$ 2,046,175$
Condensed Summary of Assets, Liabilities, and Net Position
Current assets, unrestricted, increased $142,526 (23.9%) in 2011 which was primarily attributed to the Eagle P3 Full Funding Grant Agreement executed in 2011, the West Corridor Full Funding Grant Agreement additional year appropriation and the DUS project capital contributions. Current assets, restricted and other noncurrent assets decreased $286,767 (30.4%) in 2011 due to the use of funds for the FasTracks build-out and increased $336,383 (55.4%) in 2010 from proceeds due to the issuance of debt. In 2011, capital assets net of accumulated depreciation increased $502,984 (16.9%) primarily due to the acquisition of revenue equipment, land, and construction in progress for the FasTracks program. Current liabilities increased $205,071 (89.6%) in 2011 primarily due to a scheduled construction payment for the FasTracks Eagle P3 to the project concessionaire in early 2012. Noncurrent liabilities decreased $157,730 (7.6%) due to payment of debt principal and a scheduled construction payment to the Eagle P3 concessionaire made in 2011. RTD’s net position increased $311,402 (14.1%) in 2011. The increase was primarily due to increased investments in capital assets, net of related debt from the acquisition of equipment, land, design, and construction cost related to the FasTracks programs.
REGIONAL TRANSPORTATION DISTRICT Management’s Discussion and Analysis (Unaudited) December 31, 2011 and 2010 (Dollars in Thousands)
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Statement of Revenues, Expenses, and Changes in Net Position – The following summary of revenues, expenses, and changes in net position shows the activities of RTD resulted in an increase in net position. The net position of RTD increased by $311,402 during the current year compared to an increase of $157,589 in the previous year. The increases in both years were due to higher operating revenues and grant revenue income, net of increases in operating expenses and non-operating expenses. The key elements of the changes in net position for the fiscal years ended December 31, 2011 and 2010 with comparative information for 2009 are shown in the following table:
Summary of Revenues, Expenses, and Changes in Net Position2011 2010 2009
Operating revenue:Passenger fares 108,497$ 97,942$ 96,890$ Advertising and other 4,882 4,414 4,357
Total operating revenue 113,379 102,356 101,247Operating expenses:
Salaries and wages 123,704 119,422 117,355Fringe benefits 42,628 41,076 44,392Materials and supplies 52,015 48,310 56,835Services 48,357 60,553 42,783Utilities 11,627 10,977 9,512Insurance 6,089 5,429 3,767Purchased transportation 108,865 104,514 103,975Leases and rentals 1,964 2,515 2,680Miscellaneous 2,082 3,315 6,866Depreciation 104,280 104,176 106,025
Total operating expenses 501,611 500,287 494,190Operating loss (388,232) (397,931) (392,943)
Nonoperating revenues (expenses):Sales and use tax 415,180 397,549 371,405Grant operating assistance 89,592 92,655 68,146Investment income 6,484 8,065 29,379Other income/Gain on Sale of Assets 5,255 179 3,283Interest expense (51,274) (48,735) (34,179)Other expense/ Unrealized Loss on Assets (3,895) (1,671) (23,037)
Net nonoperating revenue (expenses) 461,342 448,042 414,997Income before capital contribution 73,110 50,111 22,054Capital grants and local contributions 238,292 107,478 131,711Increase in net position 311,402$ 157,589$ 153,765$
The information contained in the condensed information table is used as the basis for the revenue and expense discussion presented below, surrounding RTD’s activities for the fiscal years ended December 31, 2011, 2010 and 2009.
REGIONAL TRANSPORTATION DISTRICT Management’s Discussion and Analysis (Unaudited) December 31, 2011 and 2010 (Dollars in Thousands)
29
Revenues Passenger fares – Passenger fares provided 12% and 14% of RTD’s total revenues in 2011 and 2010, respectively. Farebox receipts, monthly and annual pass revenue, and special event fares for bus and rail services are included in passenger fares. Passenger fares increased by $10,555 (10.8%) in 2011 compared to an increase of $1,052 (1.1%) in 2010. The increase in 2011 was due to a 12.5% fare increase effective January 1, 2011 which was partially offset by a decrease in revenue service passengers of -0.4%. The increase in 2010 was due to higher participation in fare media programs due to economic hardships. Advertising and other – Advertising income includes revenues from advertisements primarily on RTD’s buses and external wraps on light rail vehicles. Advertising and other income increased $468 (10.6%) in 2011 compared to a $57 (1.3%) increase in 2010. The increase in 2011 and 2010 was primarily due to RTD establishing light rail vehicle wrap advertisements. Sales and Use Tax – Sales and use tax provided 48% and 56% of RTD’s total revenues in 2011 and 2010 respectively. Sales and use tax is a dedicated 1.0% tax imposed on certain sales within the service area. Sales and use tax increased $17,631 (4.4%) in 2011 compared to an increase of $26,144 (7.0%) in 2010. RTD experienced an economic downturn in 2009 resulting in a decrease in sales and use tax revenue. In 2011 and 2010, the District experienced some growth in tax revenues due to increased consumer and business spending activity in addition to the suspension of a 3.3% vendor allowance for timely payment of taxes which was restored in July 2011 allowing the vendors to retain 2.2% of the sales and use tax collections.. Grant operating assistance – Grant operating assistance decreased $3,063 (3.3%) in 2011 compared to an increase of $24,509 (36.0%) in 2010. The operating assistance primarily is a federal grant revenue program used to perform capital maintenance and maintain RTD’s revenue fleet of bus, paratransit, and rail vehicles. The U. S Congress adoption of the American Recovery and Reinvestment Act of 2009 (ARRA) increased funds available for 2010 and decreased funds available when the program ended creating significant fluctuations between grant years 2009 - 2011. Investment Income – Investment income decreased $1,581 (19.6%) in 2011 compared to a $21,314 (72.5%) decrease in 2010. The decrease in 2011 and 2010 was due to lower interest rates and a smaller investment balance with invested funds being utilized in 2011 and 2010 primarily for the build-out of the FasTracks project. Other Income/ Loss on sale of Assets – Other income increased $5,076 (2835.8%) in 2011 compared to a decrease of $3,104 (94.5%) increase in 2010. Other income includes subsidy income, rental income from retail space, parking, air-rights, and miscellaneous other items. Capital grants and local contributions - Capital grants and local contributions increased $130,814 (121.7%) in 2011 and decreased $24,233 (18.4%) in the previous year. The increase for 2011 is attributed to the Eagle P3 Full Funding Grant Agreement executed in 2011, the West Corridor Full Funding Grant Agreement additional year appropriation and the DUS project capital contributions. The decrease in 2010 was primarily due to a decrease in receipts of grant funds and local contributions for the West Corridor project and other capital projects.
REGIONAL TRANSPORTATION DISTRICT Management’s Discussion and Analysis (Unaudited) December 31, 2011 and 2010 (Dollars in Thousands)
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The following schedule and charts show the major sources of revenue for the years ended December 31, 2011, 2010 and 2009.
Revenue Analysis
2011 2010 2009Revenues
Passenger fares 108,497$ 97,942$ 96,890$ Advertising and other 4,882 4,414 4,357Sales and use tax 415,180 397,549 371,405Grant operating assistance 89,592 92,655 68,146Investment income 6,484 8,065 29,379Other income/Gain Sale of Assets 5,255 179 3,283Capital grants and local contributions 238,292 107,478 131,711
Total Revenues 868,182$ 708,282$ 705,171$
$- $50,000
$100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000
Revenue Analysis
2011
2010
2009
REGIONAL TRANSPORTATION DISTRICT Management’s Discussion and Analysis (Unaudited) December 31, 2011 and 2010 (Dollars in Thousands)
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Expenses The following schedule and charts shows the major sources of operating expenses for the years ended December 31, 2011, 2010 and 2009.
Expense Analysis
2011 2010 2009Expenses
Salaries and wages 123,704$ 119,422$ 117,355$ Fringe benefits 42,628 41,076 44,392Materials and supplies 52,015 48,310 56,835Services 48,357 60,553 42,783Utilities 11,627 10,977 9,512Insurance 6,089 5,429 3,767Purchased transportation 108,865 104,514 103,975Leases and rentals 1,964 2,515 2,680Miscellaneous 2,082 3,315 6,866Depreciation 104,280 104,176 106,025Interest expense 51,274 48,735 34,179Other expense / Unrealized loss 3,895 1,671 23,037
Total Expenses 556,780$ 550,693$ 551,406$
Passenger fares12%
Advertising and other
0.6%
Sales and use tax
48%
Grant operating assistance
10%
Investment income
1%
Other income/Sale
of Assets1%
Capital grants and local
contributions27%
2011 Revenue Passenger fares14%
Advertising and other
0.6%
Sales and use tax
56%
Grant operating assistance
13%
Investment income
1%
Other income/Sale
of Assets0.7%
Capital grants and
local contribution
s14%
2010 Revenue
REGIONAL TRANSPORTATION DISTRICT Management’s Discussion and Analysis (Unaudited) December 31, 2011 and 2010 (Dollars in Thousands)
32
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
Expense Analysis
2011 2010 2009
Salaries and wage expense accounted for 22.2% and 21.7 % of RTD’s total expenses in 2011 and 2010, respectively, and were the largest expense category in operating expenses. This is common in the public transportation industry as the provision of service is extremely labor intensive. Unlike many other transit districts, RTD has a substantial portion of its transit vehicle service contracted to private providers. In 2011, approximately 57.0% of RTD’s transit services, fixed route, and demand response ADA service were operated by private contractors and categorized as purchased transportation expenses. Due to the large investments RTD has in capital assets, depreciation continues to be a large operating expense.
Salaries and wages22%
Fringe benefits8%
Materials and supplies
9%Services9%Utilities
2%Insurance
1%
Purchased transportation
20%Leases and rentals0.4%
Miscellaneous0%
Depreciation19%
Interest expense
9%
Other expense / Unrealized
loss on assets0.7%
2011 Expenses
Salaries and wages22%
Fringe benefits7%
Materials and supplies
9%
Services11%Utilities
2%Insurance
1%
Purchased transportation
19%Leases and
rentals0.5%
Miscellaneous1%
Depreciation19%
Interest expense
9%
Other expense / Unrealized
loss on assets0%
2010 Expenses
REGIONAL TRANSPORTATION DISTRICT Management’s Discussion and Analysis (Unaudited) December 31, 2011 and 2010 (Dollars in Thousands)
33
Salary and wages – Salary and wage expense is the largest expense category accounting for 22.2% and 21.7% of the total RTD expenses in 2011 and 2010, respectively. Salary and wage expenses increased by $4,282 (3.6%) in 2011 compared to an increase of $2,067 (1.8%) in 2010. The increase in both years for salary and wages is due to an increase of salaried headcount for Fastrack projects and support departments. Benefits – Fringe benefits increased by $1,552 (3.8%) compared to a decrease of $3,316 (7.5%) in 2010. The increase in 2011 fringe benefit costs is related to an increase in the Net Pension Obligation (NPO) which was partially offset by favorable health benefit claims. The decrease in 2010 fringe benefits is related to increased usage of part-time operators and fewer full time operators resulting in fringe benefit savings. Materials and supplies – The materials and supplies expense category accounted for 9.3% and 8.8% of the total RTD expenses in 2011 and 2010 respectively. Materials and supplies expenses increased $3,705 (7.7%) in 2011 compared to a decrease of $8,525 (15.0%) in 2010. The increase in 2011 is due to the average price of diesel fuel increasing from $2.25 per gallon to $2.36 per gallon and average gas prices increasing from $2.70 per gallon to $3.43 per gallon in addition to a light rail maintenance campaign. The decrease in 2010 was due to a lower price for diesel fuel and gasoline. Services – Services expense includes contracted services such as security services; vehicle, equipment and right of way maintenance services; advertising and marketing services, and legal services. Services expense decreased $12,196 (20.1%) in 2011 compared to an increase of $17,770 (41.5%) in 2010. The decrease in 2011 services expense was primarily due to decreased West Corridor activity, with construction reaching 90% completion in 2011. Utilities – Utilities expense includes electric, telecommunications, water and sewer, and natural gas for facilities and rail service. Utilities expense increased $650 (5.9%) in 2011 compared to an increase of $1,465 (15.4%) in 2010. The increase in both 2011 and 2010 are due to the increase in electricity rates driving traction power cost for light rail services higher. Insurance – Insurance expense includes RTD’s self-insured cost for general liability and worker’s compensation claims. In addition, RTD purchased insurance in its efforts to protect assets and control and prevent losses. Insurance expense increased $660 (12.2%) in 2011 compared to an increase of $1,662 (44.1%) in 2010. The change was primarily due a reserve established in 2011 for incurred but not reported (IBNR) claims for worker’s compensation. Purchased transportation – The purchased transportation expense category accounted for 19.6% and 18.9% of the total RTD expenses in 2011 and 2010. Purchased transportation represents the costs of contracted transportation services for bus, access-a-Ride, and call-n-Ride services. Purchased transportation costs increased $4,351 (4.2%) in 2011 compared to $539 (0.5%) in 2010. The increase in both years was primarily due to negotiated contract increases and an increase in the hours of service provided. Leases and rentals – Leases and rentals include lease expense for office space, office equipment, park-n-Ride facilities, and use of communication towers. Leases and rentals expense decreased $551 (21.9%) in 2011 compared to a decrease of $165 (6.2%) in 2010.
REGIONAL TRANSPORTATION DISTRICT Management’s Discussion and Analysis (Unaudited) December 31, 2011 and 2010 (Dollars in Thousands)
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Miscellaneous – Miscellaneous expense includes other incidental operating expenses not included in other defined categories. Miscellaneous expenses decreased $1,233 (37.2%) in 2011 compared to a decrease of $3,551 (51.7%) in 2010. This category includes additional one-time project expenses creating fluctuations between years. Depreciation – The depreciation expense category accounted for 18.7% and 18.9% of the total RTD expenses in 2011 and 2010, respectively. Depreciation expense is a non-cash systematic allocation of the cost of capital assets over the estimated useful life of the assets. Depreciation expense increased $104 (0.1%) in 2011 compared to a decrease of $1,849 (1.77%) in 2010. The increase in 2011 is primarily due to placing the light rail mode into service for the Denver Union Station project. The decrease in 2010 is due to asset retirements and reduced allocation for assets that had reached the end of life based on the accounting depreciation period. Interest expense – The interest expense category accounted for 9.2% and 8.8% of the total RTD expenses in 2011 and 2010 respectively. Interest expense increased $2,539 (5.2%) in 2011 compared to an increase of $14,556 (42.6%) in 2010 due to the issuance of additional debt in late 2010. Other expense /Unrealized loss on assets – Other expense includes miscellaneous non-operating expenses not classified in other expense categories. Other expense increased $2,224 (133.1%) in 2011 compared to a decrease of $21,366 (92.7%) in 2010. The increase in 2011 was the result of additional debt amortization costs. Capital Assets – Investments in capital assets include: land and rights-of-way; buildings and improvements; leasehold improvements; revenue and non-revenue vehicles; shop and service equipment; security and surveillance equipment; computer equipment; and furniture. RTD’s investment in capital assets, net of accumulated depreciation, in 2011 was $3,472,133 compared to $2,969,149 in 2010. The increase in capital assets during the current year is $502,984 (16.9%) compared to an increase of $607,304 (25.7%) in 2010. RTD acquires its assets with sales and use tax revenues, farebox revenue, federal capital grants, and proceeds from the sale of revenue bonds, certificates of participation and commercial paper. The increases during 2011 and 2010 were primarily due to the cost of planning, design and construction of FasTracks projects. The following table summarizes capital assets, net of accumulated depreciation, as of December 31, 2011 and 2010 with comparative information for 2009.
Capital Assets (Net of Depreciation)2011 2010 2009
Land 187,985$ 173,884$ 172,537$ Land improvements 922,118 908,104 939,202 Buildings 91,274 96,736 102,789 Revenue earning equipment 395,125 423,664 362,186 Shops, maintenance and other equipment 23,464 15,563 19,933 Construction in progress 1,852,167 1,351,198 765,198
Total 3,472,133$ 2,969,149$ 2,361,845$
REGIONAL TRANSPORTATION DISTRICT Management’s Discussion and Analysis (Unaudited) December 31, 2011 and 2010 (Dollars in Thousands)
35
Major capital asset events during the 2011 fiscal year included the following:
FasTracks Denver Union Station (DUS) – RTD, with assistance from the City and County of Denver (CCD), the Denver Regional Council of Governments (DRCOG), and the Colorado Department of Transportation (CDOT) acquired historic Denver Union Station (DUS) in August 2001. DUS and the surrounding property are being developed as a mixed-use, multi-modal transportation center located at and in the vicinity of the original Denver Union Station. The master plan was adopted by all the participating agencies in September and October 2004. In addition, RTD acquired approximately two acres of property to relocate light rail tracks adjacent to the Consolidated Mainline. Expenditures for 2011 were $125,177 for the construction of assets.
FasTracks West Corridor - The West Corridor is a 12.1 mile light rail transit corridor between the Auraria Campus in downtown Denver and the Jefferson County Government Center in Golden, serving Denver, Lakewood, the Denver Federal Center, Golden and Jefferson County. It will be the first corridor completed in the FasTracks program. In 2007, RTD submitted an initial Full Funding Grant Agreement (FFGA) application to FTA. In 2011, expenditures related to the West Corridor were approximately $144,152.
FasTracks North Metro Corridor - The North Metro Corridor is an 18 mile rail transit corridor between Denver Union Station and 162nd Avenue, passing through Denver, Commerce City, Thornton, Northglenn and unincorporated Adams County. In 2011, expenditures related to the North Metro Corridor were approximately $2,353.
FasTracks Northwest Rail Corridor - The Northwest Rail Corridor is a 41 mile rail transit corridor between Denver Union Station and Longmont, passing through Denver, Westminster, Broomfield, Louisville, Boulder, Longmont, unincorporated Adams County, and unincorporated Boulder County and was constituted as a project separate from the ongoing environmental work in the US 36 Bus Rapid Transit (BRT) corridor. In 2011, expenditures related to the Northwest Rail Corridor were $12,838.
East and Gold Line Public-Private Partnership (Eagle P3) –
RTD was selected for inclusion in the FTA Public-Private Partnership Pilot Program (Penta-P). In 2010, RTD entered into a public-private partnership to design, build, finance, operate and maintain several of the transit improvements contemplated under the FasTracks program. The Eagle P3 project is a $2,185,000 project that includes a Commuter Rail Maintenance Facility, the East and Gold Line Corridors as well as the Northwest Rail Electrified Segment. The Eagle P3 partnership was awarded to a concessionaire, Denver Transit Partners (DTP), through a competitive bid process culminating in a contract price that was $305,000 below internal estimates. The Eagle P3 project will be completed in two phases. Phase I includes the East Corridor, Commuter Rail Maintenance Facility and design work for Phase II. Phase II includes the Gold Line Corridor and the Northwest Electrified Rail Segment. In 2011, construction expenditures related to the Eagle P3 project were $191,405. The Eagle P3 Project elements are described below:
FasTracks East Corridor - The East Corridor is a 23.6-mile commuter rail transit corridor between Denver Union Station and Denver International Airport. In 2010, RTD issued notice to proceed with construction on this portion of Phase I of the Eagle P3 construction.
FasTracks Commuter Rail Maintenance Facility – The Commuter Rail Maintenance Facility is being designed to service the four planned commuter rail corridors (East Corridor, Gold Line,
REGIONAL TRANSPORTATION DISTRICT Management’s Discussion and Analysis (Unaudited) December 31, 2011 and 2010 (Dollars in Thousands)
36
North Metro, and Northwest Rail) included in the FasTracks plan. In 2010, RTD issued notice to proceed with construction on this portion of Phase I of the Eagle P3 construction.
FasTracks Gold Line Corridor - The Gold Line Corridor is an 11.2 mile rail transit corridor between Denver Union Station to the vicinity of Ward Road, passing through northwest Denver, unincorporated Adams County, Arvada, and Wheat Ridge. A notice to proceed with construction of this portion of Phase II was issued in 2011.
FasTracks Northwest Electrified Rail Segment – The Northwest Rail Corridor, described previously, includes a project segment, referred to as the Northwest Electrified Rail Segment, extending from Denver Union Station to Westminster which will be completed under the Eagle P3 Project Phase II which was issued a notice to proceed in 2011.
Additional information on RTD’s capital assets can be found in footnote C of this report. Debt Administration Outstanding debt – Outstanding debt includes sales tax revenue bonds, certificates of participation, and commercial paper. The 2011 outstanding principal was $1,903,563 compared to $1,954,528 in 2010. Outstanding debt decreased by $50,965 (6.6%) in 2011 and increased by $759,548 (63.6%) in 2010. The decrease in 2011 is due to scheduled principal payments. The increase in 2010 is due to new funding for FasTrack projects and Base System paratransit, farebox and CAD/AVL. Sales tax revenue bonds – RTD issues sales tax revenue bonds to fund the acquisition and construction of assets. The sales tax revenue bonds were $1,380,038 and $1,405,048 as of December 31, 2011 and 2010, respectively. The sales tax revenue bonds decreased $25,010 (1.8%) in 2011 compared to an increase of $523,203 (59.3%) in 2010. The decrease in 2011 is due to scheduled principal payments for the year and no new debt acquired. The sales tax revenue bonds are payable from RTD’s sales and use tax revenue. RTD is required to maintain certain minimum deposits, as defined in bond resolutions, to meet debt service requirements. The bonds may be redeemed prior to maturity, at a price equal to the principal amount plus accrued interest thereon to the date of redemption and a premium. Certifications of participation - Certifications of participation relate to financial obligations issued by the Regional Transportation District Asset Acquisition Authority, Inc. (Authority), a nonprofit corporation. The Authority issued Certificates of Participation (Certificates) with the proceeds being used to acquire certain equipment and facilities to be used by RTD. RTD leases the equipment acquired with the proceeds from the Certificates under two separate Master Lease Purchase Agreements. For financial reporting purposes, RTD accounts for the Certificates as its own debt. Certificates outstanding were $523,525 and $549,480 as of December 31, 2011 and 2010, respectively. The certificates outstanding decreased $25,955 (4.7%) in 2011 compared to an increase of $258,345 (88.7%) in 2010. The decrease in 2011 is due to scheduled principal payments for the year and no new debt acquired.
REGIONAL TRANSPORTATION DISTRICT Management’s Discussion and Analysis (Unaudited) December 31, 2011 and 2010 (Dollars in Thousands)
37
Commercial Paper - RTD has issued commercial paper (CP) in order to provide bridge financing for the federal share of the Southeast Corridor light rail project. In August 2001, RTD was authorized to issue up to $118.5 million of commercial paper for this purpose. The final principal reduction took place in 2010. In 2011, RTD had no commercial paper outstanding. The following table summarizes outstanding debt obligations as of December 31, 2011 and 2010 with comparative information for 2009.
Outstanding Debt
2011 2010 2009Bonds payable:
Sales Tax Revenue Bonds 1,380,038$ 1,405,048$ 881,845$ Certificates of Participation 523,525 549,480 291,135 Commercial Paper - - 22,000
Total Principal 1,903,563 1,954,528 1,194,980 Less unearned amounts:
Issuance premiums and discounts 42,599 47,381 40,357 Unearned loss on refunding (10,557) (12,422) (9,645)
Debt net of issuance and refunding $ 1,935,605 $ 1,989,487 $ 1,225,692
RTD maintains credit ratings from Standard & Poor Corporation, Moody’s Investor Services, and Fitch Ratings. Credit ratings vary based on the type of debt and the source of funds used for repayment. RTD’s ratings are presented in the following table:
Rating Agency Base System Bonds
0.6% Sales & UseTax
FasTracks Bonds 0.4% Sales & Use
Tax Certificates of Participation
Standard & Poor’s AAA AA+ A- Moody’s Aa2 Aa2 AA3 Fitch AA+ AA AA-
Additional information on RTD’s debt can be found in footnote E of this report. Economic Factors and Subsequent Events after the adoption of the 2011 Budget Sales and use taxes are the largest source of revenue for RTD, representing 47.5% and 56.1% of the total revenues in 2011 and 2010 respectively. Sales and use tax revenues are affected by changes in the local economy. RTD’s sales and use tax revenue grew an average of 4.3% each year from 2004 through 2007 as the Colorado economy expanded. Beginning in the fourth quarter of 2008 sales and use tax revenues fell below 2007 levels, resulting in an annual decrease of $5,583 (1.3%) in 2008 followed by an annual decrease of $41,419 (10.0%) in 2009. RTD experienced an economic downturn in 2009 as consumer and business optimism reached record low levels and unemployment continued to move upward further depressing consumer spending. Economic conditions began to
REGIONAL TRANSPORTATION DISTRICT Management’s Discussion and Analysis (Unaudited) December 31, 2011 and 2010 (Dollars in Thousands)
38
stabilize during 2010 with some signs of optimism during the latter half of the year. Actual sales and use tax revenue for 2010 was $397,549 and increase of $26,144 (7.0%) from 2009. Of this amount, $11,985 was attributable to a temporary discontinuance of a 3.3% vendor allowance with the remaining increase attributable to increased consumer and business spending. The vendor allowance was partially restored to 2.2% in July 2011. Sales and use tax levels continued to recover in 2011 with an increase of $17,631 (4.4%) over 2010 with $8,351 attributable to the reduced vendor allowance. Increases in expenditures are expected in future years due to expansion of RTD’s FasTracks program. The FasTracks program is a 12-year plan to build a comprehensive, integrated region-wide transit network that will provide a reliable and safe system, enhance mobility and respond to the growing transportation needs within the eight-county Regional Transportation District. The FasTracks program includes 122 miles of new light rail and commuter rail, 18 miles of bus rapid transit infrastructure, 57 new stations, 31 new park-n-Rides, and redevelopment of Denver Union Station. Funding for the FasTracks program will be secured through Federal Transit Administration (FTA) grants, sales and use taxes and other revenues, issuance of long term debt, and public-private partnerships. Due to the continuing recession, sales tax revenues have also declined significantly and are projected over the long-term to leave a gap in funding necessary to complete the program. Requests for Information This financial report is intended to provide an overview of RTD’s finances for those with an interest in this organization. Questions concerning any information contained in this report may be directed to the Chief Financial Officer.
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BASIC FINANCIAL STATEMENTS
40
REGIONAL TRANSPORTATION DISTRICTSTATEMENT OF NET POSITIONYear Ended December 31,(In Thousands)
2011 2010ASSETS
Current Assets:Cash and cash equivalents (note B) 151,923$ 116,226$ Marketable interest bearing investments (note B) 213,174 132,513Receivables:
Sales tax 74,361 75,360Other, less allowance for doubtful accounts of $861 and
$687 at December, 31 2011 and 2010, respectively 16,849 78,059Grants 151,463 52,087
Inventories 28,049 30,151Other current assets (note C) 102,555 111,452Cash and cash equivalents - restricted (note B) 256,763 656,340Marketable interest bearing investments - restricted (note B) 197,908 37,678
Total current assets 1,193,045 1,289,866
Noncurrent Assets:Capital assets (note D):
Land 187,985 173,884Land improvements 1,345,825 1,296,854Buildings 250,255 259,553Revenue earning equipment 744,732 730,295Shop, maintenance and other equipment 101,429 88,495Construction in progress 1,852,167 1,351,198
Total capital assets 4,482,393 3,900,279Less accumulated depreciation (1,010,260) (931,130)
Net capital assets 3,472,133 2,969,149
Other Noncurrent Assets:Long-term marketable interest bearing investments (note B) 113,502 157,339
Long-term receivable (note H) - 110 Other long-term assets (note C) 88,655 92,128
Total other noncurrent assets 202,157 249,577
Total noncurrent assets 3,674,290 3,218,726
Total assets 4,867,335$ 4,508,592$
The accompanying notes are an integral part of these statements.
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REGIONAL TRANSPORTATION DISTRICTSTATEMENT OF NET POSITION (CONTINUED)Year Ended December 31,(In Thousands)
2011 2010 LIABILITIES
Current LiabilitiesAccounts and contracts payable 313,368$ 116,367$ Current portion of long-term debt payable from restricted assets (note E) 54,786 50,965Accrued compensation (note F) 18,279 17,194Accrued interest payable from restricted assets 16,636 14,887Other accrued expenses 30,801 29,394Unearned revenue (note H) 110 102
Total current liabilities 433,980 228,909
Noncurrent Liabilities Long-term debt, net (note E) 1,880,819 1,938,522Other liabilities (note E and F) 37,370 137,287Unearned revenue (note H) - 110 Total noncurrent liabilities 1,918,189 2,075,919
Total liabilities 2,352,169 2,304,828
NET POSITION
Invested in capital assets, net of related debt (note J) 1,872,790 1,597,631Restricted debt service and project related (note J) 101,656 60,419Resticted tabor reserve (note J) 16,392 15,486Restricted FasTracks (note J) 389,657 363,929Unrestricted (note J) 134,671 166,299
Total net position 2,515,166$ 2,203,764$
The accompanying notes are an integral part of these statements.
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(In Thousands)
2011 2010OPERATING REVENUE
Passenger fares 108,497$ 97,942$ Advertising, rent, and other 4,882 4,414
Total operating revenue 113,379 102,356
OPERATING EXPENSESSalaries and wages 123,704 119,422Fringe benefits 42,628 41,076Materials and supplies 52,015 48,310Services 48,357 60,553Utilities 11,627 10,977Insurance 6,089 5,429Purchased transportation 108,865 104,514Leases and rentals 1,964 2,515Miscellaneous 2,082 3,315Depreciation 104,280 104,176
Total operating expenses 501,611 500,287
OPERATING LOSS (388,232) (397,931)
NONOPERATING REVENUE (EXPENSES)Sales and use tax 415,180 397,549Grant operating assistance 89,592 92,655Investment income 6,484 8,065Other income 11,356 3,653Loss on capital assets (6,101) (3,474)Interest expense (51,274) (48,735)Other expense (3,895) (1,671)
Net nonoperating revenue (expenses) 461,342 448,042
INCOME BEFORE CAPITAL GRANTSAND LOCAL CONTRIBUTIONS 73,110 50,111
Capital grants and local contributions (note A) 238,292 107,478
INCREASE IN NET POSITION 311,402 157,589
NET POSITION, beginning of year 2,203,764 2,046,175
NET POSITION, end of year 2,515,166$ 2,203,764$
REGIONAL TRANSPORTATION DISTRICTSTATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITIONYear ended December 31,
The accompanying notes are an integral part of these statements.
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(In Thousands)
2011 2010Cash flows from operating activities
Receipts from customers 175,745$ 117,075$ Payments to suppliers (123,189) (255,297)Payments to employees (165,247) (159,377)Other receipts 11,356 8,535
Net cash used in operating activities (101,335) (289,064)
Cash provided from noncapital financing activitiesGrant operating assistance 89,592 92,655Sales and use tax collections 416,179 392,452
Net cash provided by noncapital financing activities 505,771 485,107
Cash flows from capital and related financing activitiesPrincipal paid on long-term debt (53,882) (74,101)Proceeds from issuance of debt - 748,521Capital grant funds and other contributions received 139,026 119,094Proceeds from sale of assets 3,588 (2,402)Acquisition and construction of capital assets (570,212) (554,238)Payment to defease debt - (78,579)Interest paid on long-term debt (96,266) (78,500)
Net cash provided/(used) in capital andrelated financing activities (577,746) 79,795
Cash flows from investing activitiesPurchases of investments (767,167) (395,308)Proceeds from sales and maturities of investments 570,113 526,964Interest and dividends on investments 6,484 8,065
Net cash provided/(used) by investing activities (190,570) 139,721
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (363,880) 415,559
Cash and cash equivalents - January 1 772,566 357,007
Cash and cash equivalents - December 31 408,686$ 772,566$
REGIONAL TRANSPORTATION DISTRICTSTATEMENT OF CASH FLOWYear ended December 31,
The accompanying notes are an integral part of these statements.
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(In Thousands)
RECONCILIATION OF OPERATING LOSS TO NET CASH 2011 2010 USED IN OPERATING ACTIVITIES:
Operating loss (388,232)$ (397,931)$ Adjustment to reconcile operating loss to
net cash used in operating activitiesDepreciation expense 104,280 104,176Amortization expense (3,746) (1,359)Other revenue 11,356 8,535Bad debt expense (149) (312)Changes in operating assets and liabilities:
(Increase)/decrease in other accounts receivable 61,210 (36,913)(Increase)/decrease in inventories 2,102 (11,504)(Increase)/decrease in other current assets 8,897 (71,913)Increase in accounts payable 97,084 193,196Increase in accrued compensation and expenses 1,085 1,121Increase/(decrease) in long-term other assets 3,473 (81,997)Decrease in deferred revenue (212) (94)Increase in other accrued expenses 1,517 5,931
Net cash used in operating activities (101,335)$ (289,064)$
RECONCILIATION OF CASH and CASH EQUIVALENTS Cash and cash equivalents 151,923$ 116,226$ Cash and cash equivalents - restricted 256,763 656,340 Total cash and cash equivalents 408,686$ 772,566$
Noncash investing, capital and financing activities:RTD had unrealized losses on investments of $445and $651 for 2011 and 2010, respectively.
RTD issued a DUSPA bond to fund the constuction of capitalassets in 2010 for $167,954. Assets received were $46,107 and $121,847 for 2011 and 2010, respectively.
The accompanying notes are an integral part of these statements.
STATEMENT OF CASH FLOWS (CONTINUED)Year ended December 31,
REGIONAL TRANSPORTATION DISTRICT
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NOTES TO FINANCIAL STATEMENTS
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NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Organization
The Regional Transportation District (RTD) was created as a transportation planning agency, a political subdivision of the State of Colorado, by an Act of the Colorado General Assembly (the Act), effective July 1969 (Title 32, Article 9, C.R.S., 1973, as amended). In 1974, the Act was amended and RTD became an operating entity charged with the responsibility for development, operation and maintenance of a public mass transportation system for the benefit of the citizens of the District. The District is comprised of 15 separate districts located in Denver, Boulder, Broomfield and Jefferson counties, and certain portions of Adams, Arapahoe, Douglas, and Weld counties.
RTD is governed by a publicly elected board of directors consisting of 15 members. Each board member is elected to serve a term of four years by the constituents of the district in which the board member resides. As required by generally accepted accounting principles, these financial statements present RTD and its component unit. The component unit discussed in note A.2 is included in the RTD’s reporting entity because of the significance of its operational or financial relationship with the District. In 1988, a Senate Bill was enacted (privatization legislation) requiring RTD to implement by March 31, 1989, a plan to competitively bid contracts for the provision of at least 20% of RTD’s bus service by private contractors. In 1999, the Bill was amended requiring RTD to increase this provision to at least 35% of fixed route bus service. In 2003, the Bill was amended to require that at least 50% of RTD’s vehicular service be operated by private transit companies.
2. Financial Reporting Entity – Blended Component Unit The Regional Transportation District Asset Acquisition Authority, Inc. (the Authority) was
formed in 1987 as a nonprofit corporation on behalf of RTD for the purpose of issuing certificates of participation in a public offering collateralized by an installment purchase agreement with RTD. RTD’s General Manager appoints the Board of Directors of the Authority. The Authority serves as a financing mechanism for various financing arrangements for RTD. The activity related to the underlying financial obligations has been included in RTD’s financial statements for the years ended December 31, 2011 and 2010. No separately audited financial statements are prepared for the Authority.
3. Basis of Accounting
The accounts of RTD are reported as a Proprietary Fund. Proprietary funds are accounted for on the flow of economic resources measurement focus and use the accrual basis of accounting. Revenue is recognized when earned and expenses are recorded at the time liabilities are incurred. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of RTD are charges to customers for services. Operating expenses include the cost of services, administrative expenses and
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
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NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
depreciation on capital assets. All revenues and expenses not meeting the definition are reported as non-operating revenues and expenses. It is RTD’s policy to apply all applicable Governmental Accounting Standards Board (GASB) pronouncements and Financial Accounting Standard Board (FASB) Accounting Standards Codification (ASC) issued on or before, but not after, November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. When both restricted and unrestricted resources are available for use, it is RTD’s policy to use restricted resources first, then unrestricted resources as they are needed.
4. Cash Equivalents RTD considers all highly liquid investments, both restricted and unrestricted, with an
original maturity of three months or less when purchased to be cash equivalents. 5. Interest Bearing Investments Investments with a maturity date, when purchased, of less than one year are recorded at cost
or amortized cost. Investments with a maturity date of more than one year from the date of purchase are recorded at fair value.
6. Inventories Inventories consist primarily of materials and supplies used in the ordinary course of
operations. Materials and supplies are stated at cost using the FIFO (first-in, first-out) method.
7. Other Assets
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. Escrows are deposits held in escrow during the period of construction. At the time projects are completed, escrows are generally applied toward the cost of the project or may be forfeited by the District upon breach of contract.
8. Receivables
Accounts receivable are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollected amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. Changes in the valuation allowance have not been material to the consolidated financial statements.
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
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NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
9. Restricted Assets
Restricted assets are assets restricted by the covenants of long-term financial arrangements. 10. Capital Assets Property and equipment are stated at historical cost. Capital assets are defined by RTD as
assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Maintenance and repairs are charged to current period operating expenses and improvements are capitalized. Upon retirement or other disposition of property and equipment, the cost and related accumulated depreciation are removed from the respective accounts and any gains or losses are included in non-operating revenue and expenses. A pro rata share of the proceeds from the sale of property and equipment, which were acquired with federal funds, is required to be invested in a similar asset.
Interest is capitalized on assets financed with debt from the date of the borrowing until
completion of the project. The amount of tax-exempt debt (externally restricted) interest to be capitalized is the difference between the interest expense on debt and interest earnings on debt proceeds. The amount of other debt interest to be capitalized is calculated by weighted average construction expenditures multiplied by the weighted average interest rate of outstanding debt.
Total interest cost of RTD consisted of the following as of December 31:
2011 2010
Interest expense $ 51,274 $ 48,735 Capitalized interest 46,741 36,467
Total interest cost $ 98,015 $ 85,202
11. Depreciation Depreciation of property and equipment is computed using the straight-line method over
the estimated useful lives of the assets, which are as follows:
Land improvements 5–30 years Buildings 30 years Revenue earning equipment 8–25 years Shop, maintenance and other equipment 3–10 years
Fully depreciated assets, which are still in use, are included in the asset balances in the
accompanying financial statements. The cost of fully depreciated assets was approximately $208,207 and $201,084 at December 31, 2011 and 2010, respectively.
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
49
NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
12. Compensated Absences
Substantially all employees receive compensation for vacations, holidays, illness, and certain
other qualifying absences. The number of days compensated in the various categories of absence is based generally on length of service. Compensated absences, which have been earned but not paid, have been accrued in the accompanying financial statements.
13. Self-Insurance
Liabilities for property damage and personal injury are recognized as incurred on the basis of
the estimated cost to RTD. In addition, RTD offers a self-insured health benefit option as part of its employee benefits program in which costs are recognized as they are incurred.
14. Revenue Recognition Passenger Fares Passenger fares are recorded as revenue at the time services are performed and revenue
passes through the farebox. Sales of monthly passes are recorded initially as unearned revenue and recognized as income at the end of the month for which the pass is used. Sale of tokens and ten ride tickets are recorded as income at the time of sale.
Sales of University based passes, which are valid for a specific academic semester, are
recorded initially as unearned revenue. Sales are recognized as income at the end of each month, with the amount recognized in each month determined by prorating the total contract amount over the number of academic calendar days in each month of the contract. Sales of Eco Pass and Neighborhood Pass, which are valid through December 31 of a given year, are recorded initially as unearned revenue. Sales are recognized as income at the end of each month, with the total contract amount prorated evenly over the number of months of the contract.
Sales and Use Taxes Under the provisions of the Act, as amended, RTD levies a sales tax of 1.0% on net taxable
sales made within the District and a use tax of 1.0% on items purchased for use inside the District. As described in Note E, under the terms of the Sales Tax Revenue Bonds, Series 2002B, Series 2004A, Series 2005A, Series 2006A, Series 2007A, Series 2008A, Series 2010A and Series 2010B bond resolutions, sales and use tax revenue is pledged for payment of debt service. Sales and use taxes are collected by the State of Colorado, Department of Revenue and are remitted to a trustee who satisfies debt service from the collections, as required under RTD’s bond and commercial paper resolutions, and remits balance to RTD.
Sales and use taxes are recorded as revenue by RTD in the month collected by the merchant. Sales and Use Tax Bonds debt service will be paid from the collateralized sales and use revenues in the amount of approximately $2,611,745 through 2050. Principal and interest paid for the current year and pledged revenues received were $83,650 in 2011.
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
50
NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Grants and Other Contributions The federal government, through the Federal Transit Administration (the FTA), provides
financial assistance and makes grants directly to RTD for operations and acquisition of property and equipment. The amount recorded as federal capital grant was $186,073 and $102,213 in 2011 and 2010, respectively. Other contribution revenue was $141,811 and $93,038 in 2011 and 2010, respectively.
15. Use of Estimates
The financial statements contained herein have been prepared in accordance with US Generally Accepted Accounting Principles (GAAP). GAAP are uniform minimum standards of and guidelines to financial accounting and reporting. GAAP establishes appropriate measurement and classification criteria for financial reporting. Adherence to GAAP provides a reasonable degree of comparability among the financial reports of state and local governmental units. The preparation of financial statements in accordance with GAAP involves the use of management’s estimates. These estimates are based upon management’s best judgments, after considering past and current events and assumptions about future events. Actual results may differ from estimates.
16. Reclassification of Prior Year Amounts Other income - contributions have been regrouped and prior year financial statements have
been reclassified to conform to current year presentation. NOTE B – DEPOSITS AND INVESTMENTS Deposits
RTD’s deposits are subject to the State of Colorado’s Public Deposit Protection Act (PDPA). Under this act, all uninsured public deposits at qualified institutions are fully collateralized with pledged collateral which is held in custody by any Federal Reserve Bank or branch thereof, or held in escrow by some other bank in a manner as the banking Commissioner shall prescribe by rule and regulation, or may be segregated from the other assets of the eligible public depository and held in its own trust department. Colorado’s PDP Act requires that pledged collateral so held is clearly identified as being security maintained or pledged for the aggregate amount of public deposits accepted and held on deposit by the eligible public depository. The depository has the right at any time to make substitutions of eligible collateral maintained or pledged and is at all times entitled to collect and retain all income derived from those investments without restrictions.
On October 3, 2008, as part of the Economic Stabilization Act, Congress temporarily increased FDIC insurance from $100 to $250 per depositor. As of December 31, 2011 and 2010, respectively, RTD had bank deposits of $979 and $0 collateralized with securities held by the pledging financial institutions’ trust department or agent but not in RTDs name.
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
51
NOTE B – DEPOSITS AND INVESTMENTS (CONTINUED) Investments At December 31, 2011, the Regional Transportation District’s investments consisted of the following:
Investment Type
Fair Value Less Than 6 Months
6-12 Months
1-5 Years
U.S. Agency Securities $ 246,435 $ 90,829 $ 65,659 $ 89,947
U.S Treasury Securities 60,545 35,299 10,047 15,199
Municipal Bonds 6,819 6,819 Commercial Paper 148,463 148,463 Corporate bonds 56,210 5,022 8,249 42,939 Repurchase
agreements 6,112 6,112 - -
Total 524,584 285,725 83,955 154,904 Money market
funds-(not categorized)
151,923 151,923 - -
Total: $ 676,507 $ 437,648 $ 83,955 $ 154,904 At December 31, 2010, the Regional Transportation District’s investments consisted of the following:
Investment Type Fair Value
Less Than 6 Months
6-12 Months
1-5 Years
U.S. Agency Securities $ 237,566 $ 67,900 $ 55,745 $ 113,921
U.S Treasury Securities 10,252 - - 10,252
Corporate bonds 52,571 - 9,153 43,418 Repurchase
agreements 27,141 27,141 - -
Total 327,530 95,041 64,898 167,591 Money market
funds-(not categorized)
116,226 116,226 - -
Total: $ 443,756 $ 211,267 $ 64,898 $ 167,591
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
52
NOTE B – DEPOSITS AND INVESTMENTS (CONTINUED) Investments (Continued) Interest Rate Risk. As a means of limiting its exposure to fair value losses arising from rising
interest rates, RTD’s investment policy limits maturities of individual investment securities to 5 years, unless otherwise authorized by RTD’s Board of Directors.
Credit Risk. Investment transactions are made in accordance with the Colorado Revised
Statutes (CRS) 24-75-601, et seq. The types of investments, which are authorized by RTD’s internal investment policy, include the
following: 1. Obligations of the United States government.
2. Obligations of the United States government agencies and United States government sponsored corporations.
3. Municipal notes or bonds that are an obligation of any state of the United States. 4. Corporate Bonds that are an obligation of corporations or financial institutions organized
and operating in the United States. 5. Commercial paper. 6. Time Deposits/Time Certificates of Deposits. 7. Bankers’ Acceptances. 8. Repurchase agreements. 9. Money market funds. 10. Local government Investment Pools. 11. Any other Investment permitted under CRS 24-75-601 et seq.
Credit ratings of RTD’s portfolio, as of December 31, 2011 and 2010, are exhibited in the table below. While all portfolio holdings adhere to RTD’s investment policy and applicable statute, not all investment holdings are rated by the nationally recognized statistical rating organizations. Investments rated AAA, AA and A are from the Fitch rating service. Investments rated A-1+/P-1 are from the Standard & Poor’s and Moody’s rating services, respectively. The securities falling within the non-rated categories below are either money market funds, which seek their returns through investments in high-quality short-term debt obligations, securities issued by U.S. government agencies, or repurchase agreements collateralized with securities issued by the U.S. government and government sponsored enterprises (U.S. Agencies).
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
53
NOTE B – DEPOSITS AND INVESTMENTS (CONTINUED) At December 31, 2011, the Regional Transportation District’s credit ratings consisted of the following:
Investment Ratings Market Value Summary AAA (Fitch Ratings)
$263,787
AA (Fitch Ratings) 44,760 A-1+/P-1 148,463 Non-rated Money Market Funds
151,923 Money market funds investing in
high-quality short-term debt obligations.
Non-rated Agency Securities: Although these securities are Non-rated, they are obligations issued
by federal agencies and/or the US government sponsored enterprises.
61,462
Securities issued by FHLB (rated Aaa Moody’s), FMLMC (rated Aaa Moody’s and AAA Fitch) and FNMA (rated Aaa Moody’s and AAA Fitch).
Non-rated Repurchase Agreements
6,112
Repurchase agreement collateralized with securities issued by U.S. government agencies.
Total: $676,507 At December 31, 2010, the Regional Transportation District’s credit ratings consisted of the following:
Investment Ratings Market Value Summary AAA (Fitch Ratings)
$206,040
AA (Fitch Ratings) 33,054 A-1+/P-1 (S&P, Moody’s) 6,132 Non-rated Money Market Funds
116,226 Money market funds investing in
high-quality short-term debt obligations.
Non-rated Agency Securities: Although these securities are Non-rated, they are obligations issued
by federal agencies and/or the US government sponsored enterprises.
55,163
Securities issued by FHLB (rated Aaa Moody’s), FMLMC (rated Aaa Moody’s and AAA Fitch) and FNMA (rated Aaa Moody’s and AAA Fitch).
Non-rated Repurchase Agreements
27,141
Repurchase agreement collateralized with securities issued by U.S. government agencies.
Total: $443,756
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
54
NOTE B – DEPOSITS AND INVESTMENTS (CONTINUED) Concentration of Credit Risk. It is the policy of RTD to diversify its investment portfolio. Assets held in the investment funds shall be diversified to eliminate the risk of loss resulting from over-concentration of assets in a specific maturity, a specific issue or a specific class of securities. The asset allocation in the portfolio should, however, be flexible, depending upon the outlook for the economy and the securities markets.
RTD’s investment policy outlines the following maximum exposure limits for unrestricted investments. As of December 31, 2011, RTD was in compliance with these limits. RTD had investments in U.S. Agency securities greater than 5% of its total portfolio as follows: Federal Home Loan Mortgage (11%), Federal National Mortgage Association (10%), Federal Home Loan Bank (10%) and Federal Farm Credit Bank (7%). As of December 31, 2010, RTD was in compliance with limitations set out in RTD’s previous investment policy limitations. RTD had investments in U.S. Agency securities greater than 5% of its total portfolio as follows: Federal Home Loan Mortgage (17%), Federal National Mortgage Association (11%), Federal Home Loan Bank (18%) and Federal Credit Bank (11%).
Investment Type
Maximum Portfolio %
Maximum Issue %
Maturity
Restrictions
Rating
Restrictions
U.S. Treasury Securities 100% 100% 5 years N/A
U.S Agencies 1 75% 25% 5 years AAA Municipal Bonds 20% 3% 3 years AA- Pre-Refunded Muni
Bonds 40% 5% 3 years AA-
Corporate bonds 20% 3% 3 years AA- Commercial Paper 40% 3% 270 days A-1/P1 Time Deposits/CD 10% 3% 1 year AA- Bankers Acceptances 20% 3% 1 year AA- Repurchase agreements 50% 10% 90 days AA-
Money market funds 100% 20% N/A
AAA or assets under management of
$1 billion or more
Local Government investment 100% 20% N/A AAA
1 In the event that one or more nationally recognized statistical rating agency rates such Agency obligations below the highest rating category, but no lower than one of the two highest rating categories, RTD’s funds may continue to be invested in Agencies if such investments satisfy the requirements of CRS 24.75.601.1 (m) which limits the maturity from the date of settlement to three years, provided that the book value limits of CRS 24.75.601.1 (m) (II) shall not apply. Rather, the diversification limit shall be set as follows: no more than 75% of the portfolio may be invested in Agencies, with any more than 25% being invested in any one Agency.
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
55
NOTE B – DEPOSITS AND INVESTMENTS (CONTINUED) The Portfolio will be limited to an aggregate exposure of 50% for the following investment types: Municipal Bonds, Corporate Bonds, Commercial Paper, Time Deposits/Time Certificates of Deposit and Bankers Acceptances. Maturity restrictions shall be calculated from settlement date to maturity date. Portfolio percent restrictions by security type and issuer are applicable only on the date of purchase of the investment. Proceeds from the issuance of RTD’s obligations are invested in accordance with legal documentation governing the transaction, notwithstanding any provisions of RTD’s investment policy to the contrary, and do not fall within the maximum exposure limits listed above.
At December 31, 2011 and 2010, RTD had $454,671 and $694,018 of cash and investments that were restricted under the provisions of bond agreements.
NOTE C - OTHER ASSETS
Other Assets consist of:(In Thousands)
2011 2012Prepaid expenses 2,686$ 2,590$ Prepaid repair parts 1,405 - Eagle P3 construction escrow 86,011 99,539 Other constuction escrow 4,148 - Assets held for sale 8,305 9,323 Debt issue costs (net of amortization of $7,892 and $4,147 at December 31, 2011 and 2010, respectively) 88,655 92,128
191,210 203,580 Less current portion (102,555) (111,452)
88,655$ 92,128$
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
56
NOTE D – CAPITAL ASSETS Capital asset activity as of December 31, 2011 was as follows:(In Thousands)
Balances 2011 2011 Balances12/31/2010 Additions Deletions 12/31/2011
Capital assets not being depreciated:Land 173,884$ 14,164$ 63$ 187,985$ Construction in progress 1,351,198 616,953 115,984 1,852,167 Total capital assets not being depreciated 1,525,082 631,117 116,047 2,040,152
Capital assets being depreciated:Land improvements 1,296,854 68,294 19,323 1,345,825 Buildings 259,553 3,894 13,192 250,255 Revenue earning equipment 730,295 14,437 - 744,732 Shop, maintenance and other equipment 88,495 15,195 2,261 101,429 Total capital assets being depreciated 2,375,197 101,820 34,776 2,442,241
Less accumulated depreciation:Land improvements 388,750 46,124 11,167 423,707 Buildings 162,817 7,941 11,777 158,981 Revenue earning equipment 306,631 42,994 18 349,607 Shop, maintenance and other equipment 72,932 7,221 2,188 77,965 Total accumulated depreciation 931,130 104,280 25,150 1,010,260 Total capital assets being depreciated, net 1,444,067 (2,460) 9,626 1,431,981 Capital assets, net 2,969,149$ 628,657$ 125,673$ 3,472,133$ The depreciation expense was $104,280 and $104,176 for years 2011 and 2010, respectively.
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
57
NOTE D – CAPITAL ASSETS (CONTINUED) Capital asset activity as of December 31, 2010 was as follows:(In Thousands)
Balances 2010 2010 Balances12/31/2009 Additions Deletions 12/31/2010
Capital assets not being depreciated:Land 172,537$ 2,087$ 740$ 173,884$ Construction in progress 765,198 712,553 126,553 1,351,198 Total capital assets not being depreciated 937,735 714,640 127,293 1,525,082
Capital assets being depreciated:Land improvements 1,281,751 15,178 75 1,296,854 Buildings 257,817 1,736 - 259,553 Revenue earning equipment 634,665 104,292 8,662 730,295 Shop, maintenance and other equipment 89,387 3,260 4,152 88,495 Total capital assets being depreciated 2,263,620 124,466 12,889 2,375,197
Less accumulated depreciation:Land improvements 342,549 46,201 - 388,750 Buildings 155,028 7,789 - 162,817 Revenue earning equipment 272,479 42,580 8,428 306,631 Shop, maintenance and other equipment 69,454 7,606 4,128 72,932 Total accumulated depreciation 839,510 104,176 12,556 931,130 Total capital assets being depreciated, net 1,424,110 20,290 333 1,444,067 Capital assets, net 2,361,845$ 734,930$ 127,626$ 2,969,149$
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
58
NOTE E – LONG-TERM DEBT Long-term debt is comprised of the following as of December 31:
2011 2010 Sales Tax Revenue Bonds, Series 2002B, due serially on
November 1 of each year from 2004 to 2012, issued with a coupon of 4.2%, payable semiannually on May 1 and November 1 of each year; including premium of $355 and $780 for 2011 and 2010, respectively. $ 8,285 $ 16,255
Sales Tax Revenue Bonds, Series 2004A, due serially on November 1 of each year through 2013, issued with a 5.00% coupon, payable semiannually on May 1 and November 1 of each year; including premium of $461 and $713 for 2011 and 2010, respectively. 11,691 17,158
Sales Tax Revenue Bonds, Series 2005A, due serially on November 1 of each year through 2021, issued with 4.00% and 5.00% coupons, payable semiannually on May 1 and November 1 of each year; including net unearned loss from refunding of ($4,582) and ($5,048) for 2011 and 2010, and premium of $5,640 and $6,214 for 2011 and 2010 respectively. 100,133 100,446
Sales Tax FasTracks Revenue Bonds, Series 2006A, due serially on November 1 of each year through 2036, issued with coupons between 4.375% to 5.0%, payable semiannually on May 1 and November 1 of each year; including premium of $9,183 and $9,553 for 2011 and 2010, respectively. 244,918 245,288
Sales Tax FasTracks Revenue Refunding Bonds, Series 2007A, due serially on November 1 of each year through 2036, issued with coupons between from 4.00% to 4.50% payable semiannually on May 1 and November 1 of each year; including net unearned gain from refunding of $713 and $742 for 2011 and 2010, and discount of ($1,274) and ($1,326) for 2011 and 2010, respectively. 361,234 361,671
Sales Tax Revenue Refunding Bonds, Series 2007A, due serially on November 1 of each year through 2024, issued with a 5.25% coupon, payable semiannually on May 1 and November 1 of each year; including net unearned loss of ($1,725) and ($1,859) for 2011 and 2010, and premium of $7,172 and $7,731 for 2011 and 2010, respectively. 75,272 75,697
Sales Tax Revenue Refunding Bonds, Series 2008A, due serially on November 1 of each year through 2012, issued with coupons between 4.50% and 5.00%, payable semiannually on May 1 and November 1 of each year, including net unearned loss of ($135) and ($298) for 2011 and 2010, and premium of $202 and $445 for 2011 and 2010, respectively. 6,422
12,552
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
59
NOTE E – LONG-TERM DEBT (CONTINUED) 2011 2010 Sales Tax Revenue Refunding Bonds, Series 2010A, due serially on
November 1 of each year through 2017, issued with coupons between 3.00% and 5.00%, payable semiannually on May 1 and November 1 of each year, including net unearned loss of ($2,709) and ($3,173) for 2011 and 2010, and premium of $4,845 and $5,675 for 2011 and 2010, respectively. $ 46,471
$ 50,127 Subordinate Sales Tax FasTracks Revenue Bonds, Series 2010,
Denver Union Station Project Authority (DUSPA) with principal and interest due on February 1 and August 1 of every year thru February 2040, with a coupon of 5.85%. 164,619 166,864
Sales Tax FasTracks Revenue Bonds, Series 2010A, due serially on November 1 of 2037 and 2038, issued with coupon of 5.0%, payable semiannually on May 1 and November 1 of each year, including premium of $2,396 and $2,485 for 2011 and 2010, respectively. 81,536 81,625
Sales Tax FasTracks Revenue Bonds Taxable (Direct Pay Build America Bonds), Series 2010B, due serially on November 1 of 2046 through 2050, issued with coupon of 5.844%, payable semiannually on May 1 and November 1 of each year. 300,000 300,000
Certificates of Participation Refunding Obligations, Series 2004A, under a lease agreement for acquisition of transit buses and vehicles, payments are due semiannually on June 1 and December 1 to 2014, issued with coupons between 4.50% and 5.00%, including net unearned loss from refunding of ($1,048) and ($1,408) for 2011 and 2010 and premium of $946 and $1,270 for 2011 and 2010, respectively.
26,813
35,292
Certificates of Participation Obligations, Series 2005A, under a lease agreement for acquisition of light rail vehicles, payments are due semiannually on June 1 and December 1 to 2025, issued with coupons between 4.50% and 5.00%, including premium of $2,979 and $3,201 for 2011 and 2010, respectively.
60,439
65,011
Certificates of Participation Taxable Refunding Obligations, Series 2007A, under a lease agreement for acquisition of transit buses and vehicles, payments are due semiannually on June 1 and December 1 to 2021, issued with a 5.535% coupon, including net unearned loss from refunding of ($495) and ($545) for 2011 and 2010, respectively. 12,950 13,890
Certificates of Participation Obligations, Amended and Restated Series 2002A, under a lease agreement for acquisition of transit vehicles and facilities, payments are due semiannually on June 1 and December 1 to 2022, issued with coupons between 4.00% and 5.00%, including premium of $5,800 and $6,331 for 2011 and 2010, respectively. 122,835 131,236
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
60
NOTE E – LONG-TERM DEBT (CONTINUED) 2011 2010 Certificates of Participation Obligations, Series 2010A, under a
lease purchase agreement for acquisition of light rail vehicles, construct, install and improve certain equipment and other capital projects. Payments are due semiannually on June 1 and December 1 to 2031, issued with coupons between 3.00% and 5.50%, including net unearned loss from refunding of ($576) and ($832) and premium of $3,893 and $4,307 for 2011 and 2010, respectively.
$ 211,987
$ 216,375
Certificates of Participation Taxable (Direct Pay Build America Bonds), Obligations, Series 2010B, under a lease purchase agreement for acquisition of light rail vehicles, construct, install and improve certain equipment and other capital projects. Payments are due semiannually on June 1 and December 1 thru 2040, issued with a coupon of 7.672%.
100,000
100,000
1,935,605 1,989,487
Less current portion ( 54,786) (50,965)
$ 1,880,819 $ 1,938,522 The Sales Tax Revenue Bonds are payable from and secured by RTD’s sales and use tax revenue. RTD is required to maintain certain minimum deposits, as defined in the bond resolution, to meet debt service requirements. The bonds may be redeemed in inverse order of maturity, at a price equal to the principal amount plus accrued interest thereon to the date of redemption and a premium. Sales Tax Revenue Bonds debt service requirements to maturity are as follows:
Year ending December 31, Principal Interest Total 2012 $ 26,211 $ 70,752 $ 96,963 2013 20,839 69,453 90,292 2014 21,898 68,396 90,294 2015 23,013 67,284 90,297 2016 24,178 66,113 90,291 2017-2021 133,497 310,794 444,291 2022-2026 53,496 282,873 336,369 2027-2031 300,169 246,521 546,690 2032-2036 360,632 168,432 529,064 2037-2041 116,105 98,508 214,613 2042-2046 53,220 87,660 140,880 2047-2050 246,780 37,105 283,885 $ 1,380,038 $ 1,573,891 $ 2,953,929
Certificates of participation relate to debt issued by Regional Transportation District Asset
Acquisition Authority, Inc., a nonprofit corporation. The Authority issued Certificates of
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
61
NOTE E – LONG-TERM DEBT (CONTINUED)
Participation (Certificates) with the proceeds being used to acquire certain equipment and
facilities to be used by RTD. RTD leases the equipment acquired with the proceeds from the Certificates under two separate Master Lease Purchase Agreements. For financial reporting purposes, RTD accounts for the Certificates as its own debt. Annual debt service requirements on the Certificates to maturity are as follows:
Year ending December 31, Principal Interest Total 2012 $ 28,575 $ 28,451 $ 57,026 2013 25,735 27,197 52,932 2014 28,580 25,918 54,498 2015 20,510 24,739 45,249 2016 21,525 23,720 45,245 2017-2021 132,075 102,137 234,212 2022-2026 107,135 66,099 173,234 2027-2031 59,390 46,683 106,073
2032-2036 69,575 24,014 93,589 2037-2040 30,425 4,894 35,319
$ 523,525 $ 373,852 $ 897,377
Changes in Long-Term Liabilities Long-term liability activity for the year ended December 31, 2011, was as follows:
Balance
12/31/2010 2011
Additions 2011
Reductions Balance
12/31/2011 Due Within One Year
Bonds payable: Sales Tax Revenue Bonds $1,405,048 $ - $25,010 $1,380,038 $26,211
Certificates of Participation
549,480
-
25,955
523,525
28,575 Less deferred amounts: Issuance premiums and discounts
47,381
-
4,782
42,599 -
Deferred loss on refunding (12,422) - (1,865) (10,557) - Total Bonds Payable 1,989,487 - 53,882 1,935,605 54,786 Other liabilities* 137,287 5,695 105,612 37,370 - Deferred revenue 212 - 102 110 110
Total long-term liabilities $2,126,986 $5,695 $159,596 $1,973,085 $ 54,896 *Other liabilities consist of Net Pension Obligation liability reflecting the cumulative differences between pension cost and employer’s contributions to the plan.
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
62
NOTE E – LONG-TERM DEBT (CONTINUED)
Long-term liability activity for the year ended December 31, 2010, was as follows:
Balance
12/31/2009 2010
Additions 2010
Reductions Balance
12/31/2010 Due Within One Year
Bonds payable: Sales Tax Revenue Bonds $881,845 $ 594,719 $71,516 $1,405,048 $25,010
Certificates of Participation
291,135
312,900
54,555
549,480
25,955 Commercial Paper
22,000
-
22,000
-
- Less deferred amounts: Issuance premiums and discounts
40,357
13,347
6,323
47,381 -
Deferred loss on refunding (9,645) (4,491) (1,714) (12,422) - Total Bonds Payable 1,225,692 916,475 152,680 1,989,487 50,965
Other liabilities* 25,418 111,869 - 137,287 -
Deferred revenue 306 - 94 212 102 Total long-term liabilities $1,251,416 $1,028,344 $152,774 $2,126,986 $ 51,067
*Other liabilities consist of Net Pension Obligation liability reflecting the cumulative differences between pension cost and employer’s contributions to the plan and the Eagle P3 Project concession agreement. On December 1, 2011, RTD closed on a Transportation Infrastructure Finance and Innovation Act (TIFIA) loan of up to $280 million. The proceeds from the TIFIA loan will be used to pay for “Eligible Project Costs” on RTD’s Eagle Project. The interest rate on the TIFIA loan is 3.14% with principal and interest payments anticipated to begin in 2025 and final maturity expected in 2045. The TIFIA loan will be used to complement the other sources of debt, resulting in a lower cost of funding than would have otherwise been available in the capital markets. The first TIFIA draw is anticipated to be approximately $125 million in 2012. The TIFIA loan is secured by a pledge of RTD’s 0.4% FasTracks sales and use tax. In January 2010, RTD issued its Sales Tax Revenue Refunding Bonds, Series 2010A, in the par amount of $47,625 for the purpose of refunding a portion of its Sales Tax Revenue Bonds, Series 2000A, 2002B and 2004A. The final maturity for the Refunding Bonds is November 1, 2017. This refunding was undertaken to reduce total debt service by $2,152 and resulted in a net present value savings of $1,831. In November 2010, RTD issued its Tax-Exempt Sales Tax Revenue Bonds (FasTracks Project) Series 2010A and Taxable Sales Tax Revenue Bonds (FasTracks Project) (Direct Pay Build America Bonds), Series 2010B in the combined par amount of $379,140 for the purpose of financing additional costs of transit improvements, facilities, vehicles and equipment for its FasTracks transit expansion program, funding a reserve fund, costs of issuance and termination payments required in connection with managing certain forward starting swaps previously entered into by RTD. The final maturity on the Bonds is November 1, 2038 and November 1, 2050 for Series 2010A and Series 2010B, respectively. Under Section 6431 of the Tax Code, an issuer of a Qualified Build America Bond (BAB) may apply to receive BAB Credit directly from the Secretary of the U.S. Treasury at
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
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NOTE E – LONG-TERM DEBT (CONTINUED) 35% of the corresponding interest payable on the related BABs. The 2010B Bonds are Qualified Build America Bonds. In December 2010, RTD issued its Tax-Exempt Certificates of Participation, Series 2010A and Taxable Certificates of Participation (Direct Pay Build America Bonds) Series 2010B in the combined par amount of $312,900 for the purpose of refunding certain RTD certificates and to acquire, construct, install and improve certain equipment, vehicles, buildings and other capital projects. The final maturity on the Certificates is June 1, 2040. Under Section 6431 of the Tax Code, an issuer of a Qualified Build America Bond (BAB) may apply to receive BAB Credit directly from the Secretary of the U.S. Treasury at 35% of the corresponding interest payable on the related BABs. The 2010B Certificates are Qualified Build America Bonds. The refunding portion of the 2010A certificate resulted in a net present value savings of $18. In July 2010 RTD entered into a DUSPA/RTD Funding Agreement (the DUSPA Agreement) with the Denver Union Station Project Authority (DUSPA) in order to support DUSPA’s financing of the Denver Union Station mixed-use and multi-modal project, including transit elements which are to be constructed on RTD-owned property and will be owned and operated by RTD. Such transit elements include a new light rail terminal, a new commuter rail station, a regional and commercial bus facility and new tracks. Under the DUSPA Agreement, RTD has agreed to issue a Subordinate Lien Sales Tax Revenue Bond, Series 2010 (the DUSPA Bond) to DUSPA. The DUSPA Bond was issued in the principal amount of $167,954, bears interest at an annual interest rate of 5.85% and is amortized over a 30-year term.
NOTE F – EMPLOYEE RETIREMENT AND UNEARNED COMPENSATION PLANS Plan Description RTD maintains two single-employer defined benefit pension plans for substantially all full-time employees. The Regional Transportation District Salaried Employees’ Pension Plan (the RTD Plan) covers all non-union, full-time salaried employees who have reached the age of 21. The Regional Transportation District and Amalgamated Transit Union Division 1001 Pension Plan (the Union Plan) was established pursuant to collective bargaining agreements between RTD and the Union. This plan covers substantially all full-time union-represented employees in accordance with the union agreement. The Board of Directors of each plan has the authority for establishing and amending benefits and funding policy. Each plan is administered by a pension board and issues audited financial statements, which include financial information for that plan. Those financial statements may be obtained from the plan: Regional Transportation District RTD ATU 1001 Pension Plan Salaried Employees Pension Trust 2821 S. Parker Road 7000 North Broadway, Building 106 Aurora, Colorado 80014-2602 Denver, Colorado 80221 The RTD Plan provides retirement benefits to RTD salaried employees who retire at or after age 55 with at least five years of service. These employees are entitled to a single lump sum distribution or an annual retirement benefit, payable monthly for life. The normal retirement benefit is equal to
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
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NOTE F – EMPLOYEE RETIREMENT AND UNEARNED COMPENSATION PLANS (CONTINUED) 2½% of average final compensation to which a participant is entitled on the day the participant retires, multiplied by the number of years of credited service. The RTD Board adopted amendment No. 8, effective January 1, 2008, in which salaried employee new hires shall not be eligible to participate in the RTD Plan. New salaried employees will be eligible to participate in the new RTD defined contribution plan (the RTD DC Plan). The Board of Directors for the RTD DC Plan has the authority for establishing and amending benefits and funding policy. RTD contributes 9% of the employee’s qualifying wage. Contributions totaled $1,157 and $792 in 2011 and 2010, respectively. RTD employees cannot contribute to the RTD DC Plan. Membership was 237 and 163 active employees in 2011 and 2010, respectively. In addition, RTD has one employee in 2011 and 2010 participating in both the RTD plan and the RTD DC Plan due to a compensation level in excess of the 2011-2010 compensation limits imposed under IRC Section 401(a) (17). The Union Plan provides retirement benefits to employees who retire at or after a certain age with at least a specified number of years of service. These employees are entitled to a percentage of their final average earnings based on age and credited service at retirement. The following schedule (derived from the most recent actuarial valuation reports) reflects membership for the plans as of January 1, 2011:
RTD Plan Union Plan
Active employees 456 1,676 Pensioners 186 1,198 Inactive vests 111 983
753 3,857 Funding Policy Contributions to the RTD Plan are actuarially determined. RTD employees are not required to contribute to the RTD Plan. Contributions to the Union Plan are made in accordance with the Union agreement. This agreement requires RTD to contribute 8% and the employee to contribute 3% of the employee’s qualifying wages. RTD has no liability to the Union Plan beyond its contributions. Funding Status Based on actuarial valuations performed as of January 1, 2011, the RTD Plan had unfunded actuarial accrued liabilities of $990 and the Union Plan had unfunded actuarial accrued liabilities of $101,954. The actuarial value of assets for both plans is determined by spreading gains and losses over a five-year period.
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
65
NOTE F – EMPLOYEE RETIREMENT AND UNEARNED COMPENSATION PLANS (CONTINUED) Schedule of Funding Progress – RTD Plan
Actuarial Valuation
Date
Actuarial Value of Assets
Actuarial Accrued Liability
Funding Excess
(Deficiency) Funding
Ratio
Annual Covered Payroll
Unfunded Actuarial
Liability as % of Covered
Payroll 1/1/11 $ 104,283 $ 105,273 $ (990) 99.06% $ 32,906 (3.0%)
Schedule of Funding Progress – Union
Actuarial Valuation
Date
Actuarial Value of Assets
Actuarial Accrued Liability
Funding Excess
(Deficiency) Funding
Ratio
Annual Covered Payroll
Unfunded Actuarial
Liability as % of Covered
Payroll 1/1/11 $ 223,457 $ 325,411 $ (101,954) 68.67% $ 80,286 (127.0%)
The schedule of funding progress presented as Required Supplementary Information following the notes to the financial statements provides multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actual accrued liability. Three-year Trend Information – RTD Plan
Annual pension
cost (APC)
Annual pension cost
(APC) Net Pension Obligation
RTD Pension Plan Year-end December 31, 2009 $ 4,932 64% $ 1,780 2010 5,228 57% 4,011 2011 2,246 128% 3,385 Annual Pension Cost and Net Pension Obligation RTD Pension Plan NPO Liability Disclosure 2011 2010 2009 Actuarially Determined Contribution (ARC) $ 2,268 $ 5,255 $4,943 Interest on NPO 202 245 105 Adjustment (224) (272) (116) Annual Pension Cost (APC) 2,246 5,228 4,932 Contribution Made 2,872 2,997 3,152
Increase/Decrease NPO (626) 2,231 1,780 NPO Beginning of year 4,011 1,780 - NPO Ending of year $ 3,385 $ 4,011 $1,780
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
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NOTE F – EMPLOYEE RETIREMENT AND UNEARNED COMPENSATION PLANS (CONTINUED)
Three-Year Trend Information – Union Plan
Annual pension
cost (APC)
Annual pension cost
(APC) Net Pension Obligation
ATU 1001 Pension Plan Year-end December 31, 2009 $ 13,371 45% $ 23,638 2010 10,045 60% 27,663 2011 12,504 50% 33,985 Annual Pension Cost and Net Pension Obligation ATU 1001 Pension Plan NPO Liability Disclosure 2011 2010 2009 Actuarially Determined Contribution (ARC) $ 12,084 $ 9,668 $ 13,451 Interest on NPO 2,210 1,813 1,305 Adjustment (1,790)) (1,436)) (1,385) Annual Pension Cost (APC) 12,504 10,045 13,371 Contribution Made 6,182 6,020 6,045 Increase/Decrease NPO 6,322 4,025 7,326 NPO Beginning of year 27,663 23,638 16,312 NPO Ending of year $ 33,985 $ 27,663 $ 23,638
Actuarial Methods and Assumptions RTD annual pension cost for the current year, based on actuarial valuation plans performed as of January 1, 2011, and related information for each plan, is as follows:
RTD Pension Plan ATU 1001 Pension Plan Contribution rates RTD 9% 8% Contribution rates Employees - 3% Annual pension cost $ 2,246 $ 12,504 Contributions made $ 2,872 $ 6,182 Actuarial valuation date January 1, 2011 January 1, 2011 Actuarial cost method Entry age normal Individual Entry Age Amortization method Level-dollar; closed Level percentage of payroll;
open Remaining amortization period 20 Years 30 years
Asset valuation method 5-Year Smoothed Market
Value (20% Corridor) 5-Year Smoothed Market Value
(20% Corridor) Actuarial assumptions: Inflation Rate/Payroll Growth 3.5% to 8.5% 3% Investment rate of return 7.5% 8% Projected salary increases Age based table 3-7% Cost-of-living adjustments - -
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
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NOTE F – EMPLOYEE RETIREMENT AND UNEARNED COMPENSATION PLANS (CONTINUED) Amalgamated Transit Union Division 1001 Health and Welfare Trust The Amalgamated Transit Union Division 1001 Health and Welfare Trust was formed pursuant to a Trust Agreement effective July 1, 1971, between Amalgamated Transit Union Division 1001 (ATU 1001) and an agent of a transit enterprise owned by the City and County of Denver, through July 3, 1974, and the Regional Transportation District (RTD) thereafter. In addition to the original Denver Metro Division, employees of other RTD divisions have been approved for participation in the Trust benefits. The Trust agreement shall continue in full force and effect in all its terms and provisions so long as there continues to be a collective bargaining agreement between the Union and the District. The Trust provides health benefits (hospital, medical, dental, vision, life and short-term disability) for represented employees of RTD and certain officers of ATU 1001 and health care benefits for retired employees. RTD’s contribution was $11,323 and $11,051 for the years ended December 31, 2011 and 2010, respectively. The Trust also provides insurance coverage for felonious assault for each employee and funds the Amalgamated Transit Union Division 1001 Legal Services Trust. The Trust self-insures part of its health benefits, life insurance coverage and short-term disability. The plan issues audited financial statements, which include financial information for the plan. The financial statements may be obtained from the plan.
RTD ATU 1001 Health and Welfare Trust 2821 S. Parker Road, Suite 1005 Aurora, Colorado 80014-2602
Unearned Compensation Plan RTD offers its employees an unearned compensation plan (the Plan), created in accordance with Internal Revenue Code Section 457, which is available to substantially all employees and permits them to defer a portion of their compensation to future years. Under the terms of the Plan, the unearned compensation is available to participants upon termination, retirement, death or in the event of an unforeseeable emergency or other financial hardship. Compensated Absences RTD considers all accrued compensated absences as due within one year. Compensated absences activity for the year ended December 31, 2011, was as follows:
12/31/2010
Balance 2011
Accruals 2011
Payments 12/31/2011
Balance Represented employees $ 1,750 $ 1,021 $ 782 $ 1,989 Salaried employees 7,464 3,759 3,601 7,622 Total compensated absences due $ 9,214 $ 4,780 $ 4,383 $ 9,611
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
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NOTE F – EMPLOYEE RETIREMENT AND UNEARNED COMPENSATION PLANS (CONTINUED) Compensated absences activity for the year ended December 31, 2010, was as follows:
12/31/2009
Balance 2010
Accruals 2010
Payments 12/31/2010
Balance Represented employees $ 1,734 $ 782 $ 766 $ 1,750 Salaried employees 7,148 3,601 3,285 7,464 Total compensated absences
due $ 8,882 $ 4,383 $ 4,051 $ 9,214 The accrued compensation liabilities of $18,279 and $17,194 as of December 31, 2011 and December 31, 2010, include $8,668 and $7,980 of accrued wages, salaries, and fringe benefits in addition to accrued compensated absences. NOTE G – OPERATING LEASES – LESSOR Air Rights Lease In 1982, RTD entered into an agreement with a real estate partnership to lease the air space above RTD’s Civic Center transfer facility located in downtown Denver for the purpose of constructing, leasing and operating a 21-story office building for a period of 65 years. Under the terms of the lease agreement, RTD began receiving minimum annual rental income of approximately $400 beginning in 1987. In addition, RTD is entitled to receive 38% of the annual net cash flow proceeds, as defined in the lease agreement, from the rental of space in the office building. This amount totaled approximately $400 in 2011 and 2010. At the end of the lease term, RTD acquires title to the office building. Future minimum rentals are approximately $400 annually until the lease expires in 2049. The air space is carried at a zero basis by RTD. NOTE H – UNEARNED REVENUE During 1987, RTD entered into an out-of-court settlement with an architect, a contractor and a supplier of materials for the design, construction and materials supplied on the Sixteenth Street Mall. The settlement provided for RTD to receive a cash payment each year for 25 years. The actual payments will come from an annuities contract (rated AAA by Moody’s Investment Services), which is maintained by a local insurance company. RTD’s revenue is an amount equal to the net present value of the future cash flows ($2,156) at the time of the settlement based on an interest rate of 8.6%. RTD received an initial payment of $350. The next four payments were for $300 per year. The remaining payments are for $120 per year. As of December 31, 2011 and 2010, $110 and $212, respectively, of the initial deferral of $2,156 remains, which is recognized as repairs to the Mall are incurred.
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
69
NOTE I – COMMITMENTS AND CONTINGENCIES Commitments Operating Lease In 1976, RTD entered into an operating lease for a portion of the land on which the Civic Center transfer facility is located in downtown Denver. As collateral for the lease, RTD must maintain an account balance with a minimum market value of $1,500 in an escrow account, the interest on which accrues to RTD until the lease expires. This amount in escrow is included in restricted assets in the accompanying financial statements. Operating Leases Fixed rental commitments under the lease in years subsequent to December 31, 2011, are as follows:
Year ending December 31, 2012 $249 2013 252
2014 254 2015 257 2016 259 2017-2021 1,337 2022-2026 1,405 2027-2031 1,477 2032-2036 1,552 2037-2041 1,631 2042-2046 1,714 2047-2051 1,801 2052-2056 1,894 2057-2061 1,990 2062-2066 2,092 2067-2071 2,198 2072-2075 1,839 $ 22,201
Rental expense relating to this lease amounted to $247 and $245 for the years ended December 31, 2011 and 2010, respectively.
RTD has entered into a number of transactions in which certain of its light rail vehicles have been leased to and subleased back from certain U.S. and foreign companies and has entered into a transaction in which its maintenance facilities have been leased to and subleased back. As part of these transactions, RTD irrevocably set aside certain monies (which were received from each counter party as payment for its leasing of light rail vehicles and real property) with a third party trustee. The monies held by such trustees will be utilized to make the lease payments owed by the RTD under the transactions and are therefore considered fully funded and economically defeased.
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
70
NOTE I – COMMITMENTS AND CONTINGENCIES (CONTINUED) Cross Border Leases In December 1996, RTD entered into an 18-year cross border lease agreement and other related agreements with DB Export-Leasing GmbH for the sale and leaseback of six light rail vehicles. RTD has made investment arrangements to meet all of its payment obligations throughout the term of the lease. In December 1994, RTD entered into an 18-year cross border lease agreement and other related agreements with DB Export-Leasing GmbH for the sale and leaseback of eleven light rail vehicles. RTD has made investment arrangements to meet all of its payment obligations throughout the term of the lease. U.S. Leveraged Lease In July and December 1997, RTD entered into two U.S. leveraged lease agreements with Pitney Bowes Credit Corporation for the lease and leaseback of 17 light rail vehicles and four transportation and maintenance facilities. RTD has made investment arrangements to meet all its payment obligations throughout the terms of the leases. Capital Projects As of December 31, 2011, RTD has contracts for the construction of various capital projects and the purchase of buses and light rail vehicles. The costs to complete these projects and the purchase of buses/light rail vehicles total $488,318 and $287,187 in 2011 and 2010, respectively. Federal Grant Match Requirements Under the provisions of current FTA grants, RTD is obligated to satisfy certain matching requirements of these grants. At December 31, 2011, RTD had a commitment to provide $85,326 in matching funds in order to receive $131,314 in future federal grant funds. Privatization Contracts In response to the privatization legislation (Note A), RTD has awarded contracts for specific groups of routes, not to exceed 58% as required by law for vehicular services. ADA Paratransit Service With the passage of the Americans with Disabilities Act of 1990 (ADA), RTD was mandated to provide paratransit service to the disabled individuals unable to use RTD’s fixed route buses, operating the same days and hours of service as the fixed route service. This service, called access-a-Ride, is a curb-to-curb (with door-to-door assistance upon special request) transportation system offered to disabled individuals who cannot functionally use RTD’s regular fixed route system. Passengers eligible for access-a-Ride service must originate their trip within 3/4 of a mile of an RTD non-commuter fixed route. Since September 1996, RTD has been in full compliance with the Americans with Disabilities Act of 1990 requirement to provide paratransit service to the disabled individuals unable to use fixed route buses.
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
71
NOTE I – COMMITMENTS AND CONTINGENCIES (CONTINUED) Future Commitments under Construction Contracts In 2010, RTD entered into a public-private partnership to design, build, finance and operate several of the transit improvements contemplated under the FasTracks program, including the Commuter Rail Maintenance Facility, the East Corridor, the Gold Line Rail Corridor and the electrified segment of the Northwest Rail Corridor (together, the “Eagle P3 Project). The Eagle P3 Project is being delivered and operated under a concession agreement that RTD has entered into with a concessionaire that has been selected through a competitive proposal process. The selected concessionaire is known as Denver Transit Partners (DTP), a special purpose company owned by Fluor Enterprises, Uberior Investments and Laing Investments.
The Eagle P3 Project construction will be completed in two phases with Phase I completed in 2016 and Phase II completed in 2017. Under the terms of the Eagle P3 Project agreement, RTD will make scheduled construction payments to DTP each year from 2011 through 2017 for completed project elements totaling $1,064,592. RTD will assume ownership of the Eagle P3 Project elements as they are constructed. In addition, RTD will make scheduled secured principal and interest payments to DTP from 2017 through 2044 for the remaining Eagle P3 Project obligation totaling $1,438,234 resulting in a total project cost through 2044 of $2,502,826. The Eagle P3 Project agreement also includes a provision whereby, upon project completion and placement in service, DTP will operate and maintain the Eagle P3 Project during the period 2016 through 2044 for which RTD will make service payments. Future Commitments under Service Contracts The fixed commitments under the Privatization and ADA Paratransit Service contracts in the years subsequent to 2011 are as follows:
Commitments under ADA Paratransit Service contracts expire at the end of 2012. Due to ADA Paratransit Services being federally mandated, renewal of these contracts is projected to increase the contracted amounts above by approximately $39,500 in 2013, $40,600 in 2014, $41,900 in 2015 and $43,100 in 2016.
Year ending December 31,
2012 $127,774 2013 89,837 2014 82,279 2015 38,746 2016 24,789
Total $363,425
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
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NOTE I – COMMITMENTS AND CONTINGENCIES (CONTINUED) Diesel Fuel Contract RTD contracts with Suncor Energy (U.S.A.) Inc. for diesel fuel. The contract is structured as a base year with fifth year options to renew. RTD is on the fifth option for 2012. The fixed commitment under the Suncor contract in 2012 is $13,000. RTD estimates usage of 9.1 million gallons at unit cost of $2.55 per gallon: 5.1 million RTD usage and 4.0 million RTD private carriers usage. Contingencies Federal Grants RTD receives federal grants for capital projects and operating assistance, which are subject to audit by FTA. Although the outcome of any such audit cannot be predicted, it is management’s opinion these audits will not result in liabilities to such an extent that they would materially affect RTD’s financial position. Self-Insurance RTD is self-insured for general liability and Workers’ Compensation claims. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. In addition, RTD offers a self-insured health benefit option as part of its employee benefits program in which costs are recognized as they are incurred. RTD does not carry excess liability insurance for personal injury and property damage. Under the provisions of the Colorado Government Immunity Act, the maximum liability, with certain exceptions as defined in the Act, to RTD for claims involving personal injury and property damage is $150 per individual and $600 per incident. For Workers’ Compensation, an excess coverage insurance policy covers individual claims in excess of $2,000. The amount of settlements has not exceeded insurance coverage in any of the past three years. RTD’s liability for unpaid claims includes an amount for claims that have been incurred but not reported (IBNR). RTD’s Risk Management determines incurred claims by investigating the accident and establishing a reserve. Reserves are established on the day of assignment, reviewed at 330 days and again at 90 days. Reserves are reviewed every 90 days thereafter and based on ultimate exposure. This amount is included in other accrued expenses in the statement of net assets. Changes in the balances of claims liabilities for both general liability and Worker’s Compensation
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
73
NOTE I – COMMITMENTS AND CONTINGENCIES (CONTINUED) during the past year are as follows:
General Liability
Workers’ Compensation Total
Unpaid claims, January 1, 2010 $ 2,066 $ 1,782 $ 3,848 Incurred claims (including IBNR) 2,145 2,047 4,192 Claims payments (1,854) (2,096) (3,950)
Unpaid claims, December 31, 2010 $2,357 $1,733 $4,090 Incurred claims (including IBNR) 2,006 3,146 5,152 Claims payments (1,950) (2,233) (4,183)
Unpaid claims, December 31, 2011* $ 2,413 $ 2,646 $ 5,059 *All claim liabilities are considered current liabilities payable within one year. Contract Disputes and Legal Proceedings RTD is party to a number of pending or threatened lawsuits under which it may be required to pay certain amounts upon final disposition of these matters. RTD’s legal counsel estimates that the ultimate outcome of these matters is either sufficiently covered by RTD’s general liability and Workers’ Compensation reserves or would not materially affect the financial statements of RTD. As of December 31, 2011, RTD has no outstanding judgments payable within one year. NOTE J – NET POSITION
December 31, 2011 2010
Invested in capital assets, net of related debt $ 1,872,790 $ 1,597,631
Restricted net assets Restricted debt service and project related 101,656 60,419 Tabor emergency 16,392 15,486 FasTracks related 389,657 363,929
Total restricted net position 507,705
439,834
Unrestricted assets net assets1 134,671 166,299
Total net position $ 2,515,166 $ 2,203,764 1 Substantially all of the unrestricted net assets, although not legally restricted, have been appropriated or reserved by the RTD’s Board for future capital acquisition, operating reserve policy, and debt liquidation during the budget process.
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
74
NOTE K – BUDGETARY DATA RTD’s annual budget is prepared on the same basis as that used for accounting except that the budget also includes proceeds of long-term debt and capital grants as revenue and expenditures includes capital outlays and bond principal payments, and excludes TABOR rebates under Amendment One, extraordinary loss and depreciation on, as well as gains and losses on disposition of, property and equipment. The budget sets forth all proposed outlays for operations, planning, administration, development, debt service, and capital outlays for the calendar year. Prior to October 15, the General Manager submits to the Board of Directors a proposed operating and capital budget for the fiscal year commencing the following January 1, which is made available for public inspection and comment. On or before December 31, the budget is adopted in conjunction with an appropriation resolution by the Board of Directors, who must also approve subsequent amendments thereto. In the absence of such adoption, RTD has authority to begin making expenditures limited to 90% of the prior year’s approved appropriation. RTD’s policy on budget transfers authorizes the General Manager to approve certain transfers within the budget. A reconciliation for the years ended December 31 of the annual budget, as amended, to actual revenue and expenses is as follows:
2011 2010
Revenue, actual $635,991 $609,160 Proceeds from debt / arbitrage relief - 748,521 Federal capital grants and local contributions 238,292 102,596 Revenue, actual (budgetary basis) 874,283 1,460,277 Revenue, budget 1,387,634 1,401,214
Expenses, actual 562,881 554,167 Capital outlays 616,953 712,552 Depreciation, amortization, other (104,280) (104,176) Long-term debt principal payment 53,882 74,101 Expenses, actual (budgetary basis) 1,129,436 1,236,644 Appropriations 1,914,394 1,866,235 Unused appropriations $784,958 $629,591
Unused appropriations lapse at year-end, except the Board of Directors has the authority, as stated in the adopted appropriation resolution, to carry over the unused portion of funds for capital projects not completed, for a period not to exceed three years. As of December 31, 2011, there were approximately $784,958 million of unused 2011 appropriations for capital outlays available for carryover to 2012.
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
75
NOTE L – TAX, SPENDING AND DEBT LIMITATIONS In November 1992, Colorado voters passed an amendment (Amendment One) to the State Constitution (Article X, Section 20) that limits the revenue raising and spending abilities of state and local governments. The limits on property taxes, revenue, and “fiscal year spending” include allowable annual increases tied to inflation and local growth in construction valuation. Fiscal year spending as defined by the amendment excludes spending from certain revenue and financing sources such as federal funds, gifts, property sales, fund transfers, damage awards, and fund reserves (balances). The amendment requires voter approval for any increase in mill levy tax rates, new taxes, or creation of multi-year debt. Revenue earned in excess of the “spending limit” must be refunded to the taxpayers unless voters approve retention of these revenues. In addition, the amendment mandates that reserves equal to 3% of fiscal year spending be established for declared emergencies. On November 7, 1995, the voters of the District exempted the Regional Transportation District from the revenue and spending limitations concerning the Amendment through December 31, 2005. On November 2, 1999, the voters of the District further exempted RTD from the revenue and spending limitations outlined in the Amendment for the purpose of paying any debt incurred to finance the Southeast Corridor light rail project or to operate such project for as long as any debt remains outstanding, but in no event beyond December 31, 2026. On November 2, 2004, the voters of the District authorized an increase in RTD’s sales and use tax rate from 0.6% to 1.0%, effective January 1, 2005, to finance the FasTracks transit improvement program. This authorization also exempted RTD from any revenue and spending limitations on the additional tax and on any investment income generated by the increased tax revenue, and allowed RTD to incur debt to finance the capital improvements included in the FasTracks program. At the time that all FasTracks debt is repaid, RTD’s sales and use tax rate will be reduced to a rate sufficient to operate the rapid transit system financed through FasTracks. As of December 31, 2007, RTD has $3.477 billion in authorized debt, of which $600 million has been issued, subject to the Amendments’ limitations. This debt was authorized by the voters of the District in 2004 to pay for the FasTracks rapid transit improvement program, and is scheduled to be issued between 2006 and 2014. Based on estimated fiscal year spending for 2011, $16,392 of year-end net assets has been reserved for emergencies. The Amendment is complex and subject to judicial interpretation. RTD believes it is in compliance with the requirements of the Amendment based on the interpretations of the Amendment’s language available at year-end.
REGIONAL TRANSPORTATION DISTRICT Notes to Financial Statements December 31, 2011 and 2010 (Dollars in Thousands)
76
NOTE M – SUBSEQUENT EVENTS By March 15 of the second year following the year in which the federal census is taken, RTD is required by Colorado Revised Statute 32-9-111 (1) (a) to apportion the composition of the Board of Directors into compact contiguous director districts so that the 15 directors will represent, to the extent practical, the people of the District on the basis of population. On January 24, 2012, the RTD Board of Directors approved a revised map of the director district boundaries in which each district is within five percent of the average individual District population of approximately 180,000. The above change affected the composition of the boundaries within the District without changing the outer boundaries and is not expected to have any financial impact.
During January 2012, RTD implemented fixed route service changes that were approved by the Board of Directors in October 2011. The service changes were approved by the Board of Directors as a result of recommendations made by a Fiscal Sustainability Task Force which was convened in late 2010 to examine measures to be taken to address the long-term fiscal sustainability of RTD’s operations. These changes are expected to reduce the amount of fixed route services by 7-8% or approximately $10,700 in 2012.
77
REQUIRED SUPPLEMENTARY INFORMATION
78
Required Supplementary Information REGIONAL TRANSPORTATION DISTRICT Pension Plan Summary Schedule of Funding Progress – RTD Plan
Actuarial Valuation
Date
Actuarial Value of Assets
Actuarial Accrued Liability
Funding Excess
(Deficiency) Funding
Ratio
Annual Covered Payroll
Unfunded Actuarial
Liability as % of Covered
Payroll 1/1/09 $ 95,398 $ 100,157 $ (4,759) 95.25% $ 36,499 (13.0%) 1/1/10 103,917 106,374 (2,457) 97.69% 34,606 (7.1%) 1/1/11 104,283 105,273 (990) 99.06% 32,906 (3.0%)
Schedule of Funding Progress – Union
Actuarial Valuation
Date
Actuarial Value of Assets
Actuarial Accrued Liability
Funding Excess
(Deficiency) Funding
Ratio
Annual Covered Payroll
Unfunded Actuarial
Liability as % of Covered
Payroll 1/1/09 $ 213,273 $ 293,899 $ (80,626) 72.57% $ 76,978 (104.7%) 1/1/10 228,617 312,839 (84,222) 73.08% 77,254 (109.0%) 1/1/11 223,457 325,411 (101,954) 68.67% 80,286 (127.0%)
79
SUPPLEMENTAL INFORMATION
80
SCHEDULE OF EXPENSE AND REVENUE
(In Thousands) Variance -Adopted Final positiveBudget Budget Actual (negative)
Operating revenuePassenger fares 103,236$ 103,236$ 108,497$ 5,261$ Other 5,374 5,374 4,882 (492)
Total operating revenue 108,610 108,610 113,379 4,769Operating expenses
Salaries, wages and fringe benefits 154,739 155,286 166,332 (11,046)Materials and supplies 50,989 54,981 52,015 2,966Services 87,063 89,609 48,357 41,252Utilities 10,510 11,180 11,627 (447)Insurance 6,950 6,943 6,089 854Purchased transportation 110,372 110,487 108,865 1,622Leases and rentals 2,482 2,482 1,964 518Miscellaneous 3,476 3,575 2,082 1,493
Total operating expenses 426,581 434,543 397,331 37,212
Operating loss (317,971) (325,933) (283,952) 41,981Nonoperating revenue (expenses)
Sales and use tax 385,923 419,136 415,180 (3,956)Grant operating assistance 91,563 84,789 89,592 4,803Investment income 15,363 10,765 6,484 (4,281)Other income 1,679 1,479 11,356 9,877Gain/loss on capital assets - - (6,101) (6,101)Interest expense (90,705) (41,747) (51,274) (9,527)Other expense/unrealized loss capital assets - - (3,895) (3,895)
Total nonoperating revenue (expenses) 403,823 474,422 461,342 (13,080)Proceeds from debt - - - - Capital outlay
Capital expenses 1,318,094 1,327,839 616,953 710,886Less capital grants (244,883) (261,849) (238,292) (167,892)
1,073,211 1,065,990 378,661 687,329Long-term debt principal payment (51,535) (50,965) (53,882) (2,917)
Excess (deficiency) of revenue and nonoperatingincome over (under) expenses, capitaloutlays and debt principal payments (1,038,894)$ (968,466)$ (255,153) 713,313$
Increases (decreases) to reconcilebudget basis to GAAP basis
Capital expenses 616,953 Long-term debt principal payment 53,882 Depreciation (104,280)
INCREASE IN NET POSITION 311,402$
REGIONAL TRANSPORTATION DISTRICT
BUDGET AND ACTUAL - BUDGETARY BASISYear ended December 31, 2011
81
REGIONAL TRANSPORTATION DISTRICTCONDENSED SUMMARY OF ASSETS, LIABILITIES, AND NET POSITION BY SEGMENT (Unaudited)Year Ended December 31,(In Thousands)
2011 2010 2011 2010 2011 2010ASSETS
Current Assets 166,920$ 179,514$ 571,454$ 416,334$ 738,374$ 595,848$ Current assets - restricted 111,342 116,029 343,329 577,989 454,671 694,018Capital assets (net of accumulated depreciation) 1,447,927 1,510,414 2,024,206 1,458,735 3,472,133 2,969,149Other noncurrent assets 24,157 13,995 178,000 235,582 202,157 249,577
Total assets 1,750,346 1,819,952 3,116,989 2,688,640 4,867,335 4,508,592
LIABILITIES Current Liabilities 155,183 131,593 278,797 97,316 433,980 228,909 Noncurrent Liabilities 492,599 536,663 1,425,590 1,539,256 1,918,189 2,075,919
Total liabilities 647,782 668,256 1,704,387 1,636,572 2,352,169 2,304,828
NET POSITION
Invested in capital assets, net of related debt 1,009,645 1,034,778 863,145 562,853 1,872,790 1,597,631Restricted 47,314 42,877 460,391 396,957 507,705 439,834Unrestricted 45,605 74,041 89,066 92,258 134,671 166,299
Total net position 1,102,564$ 1,151,696$ 1,412,602$ 1,052,068$ 2,515,166$ 2,203,764$
Base System FasTracks Combined
82
COMBINED
(In Thousands)
2011 2010 2011 2010 2011 2010OPERATING REVENUE
Passenger fares 108,497$ 97,942$ - $ - $ 108,497$ 97,942$ Advertising, rent, and other 4,882 4,414 - - 4,882 4,414
Total operating revenue 113,379 102,356 - - 113,379 102,356
OPERATING EXPENSESSalaries and wages 119,006 115,840 4,698 3,582 123,704 119,422Fringe benefits 41,308 39,978 1,320 1,098 42,628 41,076Materials and supplies 51,934 48,098 81 212 52,015 48,310Services 39,521 40,990 8,836 19,563 48,357 60,553Utilities 11,583 10,942 44 35 11,627 10,977Insurance 6,029 4,941 60 488 6,089 5,429Purchased transportation 108,865 104,514 - - 108,865 104,514Leases and rentals 1,431 1,686 533 829 1,964 2,515Miscellaneous (10,324) (8,101) 12,406 11,416 2,082 3,315Depreciation 94,373 96,971 9,907 7,205 104,280 104,176
Total operating expenses 463,726 455,859 37,885 44,428 501,611 500,287
OPERATING LOSS (350,347) (353,503) (37,885) (44,428) (388,232) (397,931)
NONOPERATING REVENUE (EXPENSES)Sales and use tax 249,108 238,529 166,072 159,020 415,180 397,549Grant operating assistance 71,471 85,485 18,121 7,170 89,592 92,655Investment income 869 1,350 5,615 6,715 6,484 8,065Other income 2,523 2,859 8,833 5,676 11,356 8,535Gain/(Loss) capital assets (9,816) (3,474) 3,715 - (6,101) (3,474)Interest expense (20,828) (22,264) (30,446) (26,471) (51,274) (48,735)Other expense (691) (950) (3,204) (721) (3,895) (1,671)
Net nonoperating revenue (expenses) 292,636 301,535 168,706 151,389 461,342 452,924
INCOME BEFORE CAPITAL GRANTSAND LOCAL CONTRIBUTIONS (57,711) (51,968) 130,821 106,961 73,110 54,993
Capital grants and local contributions (note A) 8,579 20,452 229,713 82,144 238,292 102,596
CHANGE IN NET POSITION (49,132) (31,516) 360,534 189,105 311,402 157,589
NET POSITION, beginning of year 1,151,696 1,183,212 1,052,068 862,963 2,203,764 2,046,175
NET POSITION, end of year 1,102,564$ 1,151,696$ 1,412,602$ 1,052,068$ 2,515,166$ 2,203,764$
Combined
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION BY SEGMENT (Unaudited)
REGIONAL TRANSPORTATION DISTRICT
Year ended December 31,
Base System FasTracks
83
STATISTICAL SECTION
This part of the Regional Transportation District’s comprehensive annual financial report presents detailed information
as a context for understanding what the information in the financial statements, note disclosure, and required supplementary information says about the government’s overall financial health.
Contents Page Financial Trends 84-85
These tables contain trend information to help the reader understand how the government’s financial performance and well-being have changed over time.
Revenue Capacity 86-87
These tables contain information to help the reader assess the government’s most significant revenue source. Debt Capacity 88-89
These tables present information to help the reader asses the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future.
Demographic and Operating Information 90-91
These tables contain service and infrastructure data to help the reader understand how the information in the financial report relates to service the government provides and the activities it performs. The demographic and economic indicators help the reader understand the environment within which the government’s financial activities take place.
84
Table 1
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002Invested in capital assets, net of related debt (Note J) 1,872,790$ 1,597,631$ 1,456,493$ 1,338,453$ 1,162,486$ 1,167,667$ 1,027,361$ 835,035$ 803,738$ 758,399$ Restricted (Note J)
Emergencies 16,392 15,486 15,158 16,821 16,829 15,078 14,048 8,860 8,359 8,657Reserves 491,313 424,348 442,489 393,223 412,822 232,702 120,653 - - -
Unrestricted (Note J) 134,671 166,299 132,035 143,913 186,280 140,626 204,176 296,945 269,944 200,839
Total net position 2,515,166$ 2,203,764$ 2,046,175$ 1,892,410$ 1,778,417$ 1,556,073$ 1,366,238$ 1,140,840$ 1,082,041$ 967,895$
1 Data is taken from the financial records of RTD and is presented on the accrual basis.
REGIONAL TRANSPORTATION DISTRICTNET POSITION BY COMPONENT1 (In Thousands)
85
REGIONAL TRANSPORTATION DISTRICT Table 2SUMMARY OF STATEMENT OF REVENUES, EXPENSESAND CHANGES IN NET POSITION(In Thousands)
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002Operating Revenues:
Passenger Fares 108,497$ 97,942$ 96,890$ 88,205$ 77,128$ 66,211$ 57,638$ 55,442$ 50,459$ 49,967$ Other 4,882 4,414 4,357 4,124 4,382 3,310 5,103 5,581 4,088 2,646 Total Operating Revenues 113,379 102,356 101,247 92,329 81,510 69,521 62,741 61,023 54,547 52,613
Operating Expenses:Salaries, wages, fringe benefits 166,332 160,498 161,747 155,799 150,560 136,733 130,371 127,334 130,435 129,251Materials and supplies 52,015 48,310 56,835 61,056 49,157 43,709 39,869 27,835 25,422 22,953Services 48,357 60,553 42,783 36,835 30,654 29,864 22,344 20,127 21,499 17,926Utilities 11,627 10,977 9,512 10,575 8,678 7,530 7,170 5,548 5,330 4,603Insurance 6,089 5,429 3,767 5,333 5,090 5,722 6,569 7,451 8,217 9,531Purchased transportation 108,865 104,514 103,975 102,743 97,819 93,003 86,330 76,759 66,970 64,974Leases and rentals 1,964 2,515 2,680 2,464 2,195 1,758 1,568 1,460 1,655 1,587Miscellaneous 2,082 3,315 6,866 2,619 2,390 3,144 2,347 2,815 2,247 2,338 Total Operating Expenses 397,331 396,111 388,165 377,424 346,543 321,463 296,568 269,329 261,775 253,163
Operating loss before depreciation (283,952) (293,755) (286,918) (285,095) (265,033) (251,942) (233,827) (208,306) (207,228) (200,550)Depreciation 104,280 104,176 106,025 102,252 103,302 67,526 58,924 58,833 58,567 59,750Operating Loss (388,232) (397,931) (392,943) (387,347) (368,335) (319,468) (292,751) (267,139) (265,795) (260,300)Nonoperating income (expense):
Sales and use tax revenues 415,180 397,549 371,405 412,824 418,407 399,557 386,427 221,276 210,447 213,668Grant operating assistance 89,592 92,655 68,146 50,814 47,040 42,805 41,322 39,649 37,803 35,096Interest income 6,484 8,065 29,379 52,456 57,471 29,936 15,624 9,439 10,095 18,815Other income 11,356 3,653 3,243 3,106 4,706 4,031 3,484 3,621 3,550 3,493Gain/Loss on Capital Assets (6,101) (3,474) 40 1 1,055 1,929 1,450 (50) (1,311) (780)Interest expense (51,274) (48,735) (34,179) (56,273) (52,272) (29,689) (21,163) (18,385) (19,786) (20,208)Other expense/Unrealized Loss Assets (3,895) (1,671) (23,037) (977) (861) (805) (790) (1,367) (794) (592) Total Nonoperating Income 461,342 448,042 414,997 461,951 475,546 447,764 426,354 254,183 240,004 249,492
Net income before capital grants and local contributions 73,110 50,111 22,054 74,604 107,211 128,296 133,603 (12,956) (25,791) (10,808)Capital grants and local contributions 238,292 107,478 131,711 39,389 115,133 61,537 97,384 71,755 139,936 50,570Increase in Net Position 311,402 157,589 153,765 113,993 222,344 189,833 230,987 58,799 114,145 39,762Net Position at Beginning of Year 2,203,764 1,892,410 1,892,410 1,778,417 1,556,073 1,366,240 1,140,841 1,082,042 967,897 928,135Prior Period Adjustment (5,588)Net Position at End of Year 2,515,166$ 2,203,764$ 2,046,175$ 1,892,410$ 1,778,417$ 1,556,073$ 1,366,240$ 1,140,841$ 1,082,042$ 967,897$
86
Table 3
Transit Planning, OtherOperating Administrative Interest Nonoperating Capital
Year Expenses2 and Development Depreciation Expense2 Expenses Outlays2 Total 2002 224,231$ 28,932$ 59,750$ 20,208$ 1,372$ 164,954$ 499,447$ 2003 235,011 26,765 58,567 19,786 2,104 277,944 620,1772004 242,176 27,153 58,833 18,385 1,418 217,201 565,1662005 264,840 31,728 58,924 21,163 790 273,843 651,2882006 284,360 37,104 67,526 29,689 805 208,361 627,8452007 302,626 43,916 103,302 52,272 861 156,785 659,7622008 324,931 52,492 102,252 56,273 977 282,758 819,6832009 326,324 61,841 106,025 34,179 23,037 410,354 961,7602010 318,751 77,360 104,176 48,735 5,145 712,552 1,266,7192011 333,301 64,030 104,280 51,274 9,996 616,953 1,179,834
1 Data is taken from the financial records of RTD and is presented on the accrual basis.2 RTD capitalizes certain interest costs, which are included in capital outlays.
REGIONAL TRANSPORTATION DISTRICT
Last Ten Years (Unaudited)
(In Thousands)
OPERATING AND OTHER EXPENSES AND CAPITAL OUTLAYS1
87
REGIONAL TRANSPORTATION DISTRICTREVENUE BY SOURCE1 Table 4
Grant Local Total RevenueOperating Sales/Use Operating Interest Total Capital Capital and Capital Grant
Year Revenues Tax2 Assistance Income Other Revenue Grants Contributions & Contributions2002 52,613$ 213,668$ 35,096$ 18,815$ 3,493$ 323,685$ 46,984$ 3,587$ 374,256$ 2003 54,547 210,447 37,803 10,095 3,550 316,442 135,917 4,019 456,378 2004 61,023 221,276 39,649 9,439 3,621 335,008 54,446 17,309 406,763 2005 62,741 386,427 41,322 15,624 3,484 509,598 86,523 10,861 606,982 2006 69,521 399,557 42,805 29,936 4,032 545,851 57,413 4,123 607,387 2007 81,510 418,407 47,041 57,471 4,706 609,135 107,577 7,556 724,268 2008 92,329 412,824 50,814 52,456 3,106 611,529 39,220 169 650,918 2009 101,247 371,405 68,146 29,379 3,283 573,460 129,211 2,500 705,171 2010 102,356 397,549 92,655 8,065 3,653 604,278 102,213 5,265 711,756 2011 113,379 415,180 89,592 6,484 11,356 635,991 186,073 52,219 874,283
1 Data is taken from the financial records of RTD and is presented on the accrual basis.2 RTDs Sales/Use Tax increased from 0.6% to 1.0% effective January 1, 2005.
(In Thousands)Last Ten Years (Unaudited)
88
REGIONAL TRANSPORTATION DISTRICTDEBT COVERAGE RATIOS1 Table 5(In Thousands)
LAST TEN YEARS (UNADUITED)
Debt Sales Tax Service Requirements2 Sales Tax CoverageInterest Principal Total Collections Ratio
2002 12,076$ 10,050$ 22,126$ 213,668$ 9.662003 15,650 9,205 24,855 210,447 8.472004 17,748 15,125 32,873 221,276 6.732005 18,683 12,415 31,098 386,427 12.432006 21,048 15,015 36,063 399,557 11.082007 48,445 38,590 87,035 418,407 4.812008 44,944 45,505 90,449 412,824 4.562009 43,210 44,430 87,640 371,405 4.242010 46,324 44,511 90,835 397,549 4.382011 70,646 25,010 95,656 415,180 4.34
Debt Certificate of Participation Service RequirementsInterest Principal Total
2002 9,545$ 10,265$ 19,810$ 2003 9,484 10,830 20,3142004 10,472 11,345 21,8172005 12,651 11,470 24,1212006 14,393 16,155 30,5482007 14,428 17,105 31,5332008 14,502 17,515 32,0172009 13,714 18,340 32,0542010 13,711 26,725 40,4362011 28,973 25,955 54,928
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REGIONAL TRANSPORTATION DISTRICT Table 5DEBT COVERAGE RATIOS2 (Continued)
(In Thousands)
Total Debt Service Requirements Total CoverageInterest Principal Total Revenue Ratio
2002 21,621$ 20,315$ 41,936$ 323,685$ 7.722003 25,134 20,035 45,169 316,442 7.012004 28,220 26,470 54,690 335,008 6.132005 31,334 23,885 55,219 509,598 9.232006 35,441 31,170 66,611 545,851 8.192007 62,873 55,695 118,568 609,135 5.142008 59,446 63,020 122,466 611,528 4.992009 56,924 62,770 119,694 573,460 4.792010 60,035 71,236 131,271 635,991 4.842011 99,619 51,735 151,354 874,283 5.78
1 Source: The financial records of RTD and the Offical Statements of the respective debt issues.2 Sales Tax Bonds include the 2001A Commercial Paper.
90
REGIONAL TRANSPORTATION DISTRICT Table 6DEMOGRAPHIC AND OPERATING DATA
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002January 1 population within RTD service area 2,800,000 2,800,000 2,800,000 2,760,000 2,700,000 2,619,000 2,598,000 2,545,000 2,525,900 2,510,000Cities and towns served 40 40 40 40 40 39 40 40 40 40Square miles in service area 2,348 2,348 2,348 2,337 2,331 2,329 2,327 2,327 2,326 2,410Total miles 42,996,614 41,449,988 48,862,622 49,947,763 50,706,993 49,167,392 49,167,392 49,053,000 48,399,000 47,000,000Passenger stops 9,698 10,140 10,199 10,199 10,329 10,596 10,366 10,237 10,352 10,348
Number of routes1 138 148 150 165 170 166 174 177 175 181 Local 64 66 67 72 73 73 67 67 66 66 Express 16 20 20 24 25 24 37 38 37 41 Regional 17 16 16 18 18 16 20 20 20 20 Skyride 5 5 5 5 5 5 5 5 5 5 Circulator - - - - - - 1 1 1 3 Boulder City 12 14 15 15 15 15 15 16 16 16 Longmont City 4 7 7 7 8 8 8 8 8 8 Limited 11 11 11 13 15 15 15 16 16 15 Miscellaneous 9 9 9 11 11 10 6 6 6 7Ridership average weekday, without Mall Shuttle and Light Rail 205,504 209,172 212,758 224,918 207,734 198,629 194,077 180,467 168,712 178,012Ridership average weekday, including Mall Shuttle 254,197 255,068 259,873 273,737 255,987 246,992 254,928 243,395 229,776 237,067Ridership average weekday, including Mall Shuttle, Light Rail, ADA, and Van Pool 325,900 323,311 328,291 344,954 320,311 294,791 292,407 279,101 267,389 273,924Total annual boardings without Mall Shuttle, Light Rail and ADA 61,634,723 62,902,963 63,578,004 67,910,015 62,007,583 57,662,038 56,736,687 53,963,199 50,079,765 53,199,492Total annual boardings, including Mall Shuttle 76,577,627 76,825,609 77,928,088 82,727,534 76,620,488 74,637,863 75,100,270 72,221,606 67,652,418 70,354,789Total annual boardings, including Mall Shuttle and Light Rail 97,272,342 96,657,335 97,687,476 103,362,667 95,275,984 85,915,718 85,557,899 82,250,065 78,302,600 80,784,361Total annual boardings, including Mall Shuttle, Light Rail, ADA service, and Van Pool 98,384,882 97,724,928 98,746,429 104,071,339 96,326,580 86,842,675 86,371,859 82,978,959 78,911,922 81,322,400Daily miles operated (average weekday), including Mall Shuttle 117,261 124,248 149,750 152,848 155,153 154,078 158,464 158,188 155,795 156,561Daily miles operated (average weekday), including Mall Shuttle and Light Rail 126,849 134,294 159,824 163,987 166,571 165,666 163,398 163,057 160,634 161,488
Diesel fuel consumption, gallons2 5,400,000 5,200,000 5,400,000 6,000,000 6,000,000 6,100,000 6,100,000 6,000,000 6,400,000 7,100,000Total active buses 969 1,025 1,050 1,039 1,071 1,071 1,071 1,074 1,064 1,127Wheelchair lift equipped buses 969 1,025 1,050 1,039 1,071 1,071 1,071 1,074 1,064 1,127Number of employees Salaried 697 696 664 623 611 613 591 553 544 561 Represented (includes part-time) 1,785 1,744 1,802 1,903 1,923 1,907 1,919 1,893 1,885 2,000Fleet requirements (during peak hours) 797 806 830 862 862 851 880 863 855 856
Operating facilities2 6 6 6 6 6 6 6 6 6 6
* Source: Population is based on estimates provided by the Denver Regional Council of Governments. All other data comes from the financial records of RTD.1 Reflects fixed route service realignment as of November 2006 for the opening of the Southeast Light Rail Line service.2 Excludes purchased transportation services.
Last Ten Years (Unaudited)
91
REGIONAL TRANSPORTATION DISTRICTLARGEST PRIVATE EMPLOYERS-DENVER METRO AREA Table 7Current Year and Nine Years Ago
2011 2002Percentage of Percentage ofTotal District Total District
Employees Rank Employment Employees Rank Employment
King Soopers, Inc. 12,280 1 0.9% 13,800 2 1.1%
Wal-Mart 10,770 2 0.8%
HealthOne 9,640 3 0.7% 9,000 3 0.7%
Safeway Inc. 9,440 4 0.7% 6,200 9 0.5%
Century Link 7,380 5 0.5% 15,000 1 1.1%
Exempla Healthcare 7,320 6 0.5% 7,300 5 0.6%
Lockheed Martin Corp. 7,220 7 0.5% 5,500 10 0.4%
Centura Health 6,370 8 0.5% 6,400 7 0.5%
Kaiser Permanente 5,870 9 0.4%
Target Corporation 5,350 10 0.4% 7,100 8 0.5%
Coors Brewing Corporation 5,500 10 0.4%
IBM 6,500 6 0.5%
United Airlines 7,600 4 0.6%
81,640 5.9% 89,900 6.9%
Total Employment 1,389,343 1,306,195
Source: Development Research Partners, Februry 2011
92
CAFR 1998A OSTable Table Table Title
8 I SBP Operations Program9 II SBP Capital Program
10 IV Additional Operating Data11 V RTD Statement of Debt12 XI RTD Annual Ridership and Fare Revenue13 XII RTD Advertising and Ancillary Revenues14 XIII RTD Federal Grant Receipts15 XIV Five-Year Summary of Revenue/Expense
Statements16 XV Five-Year Summary of Budget/Actuals 17 XVI RTD 2010 and 2011 Budget
1998A OSTable Table Title Location in CAFR
VI RTD Revenues by Source Statistical Section – Table 4XVI Summary Balance Sheet Statement of
Net Position – pp. 40–41
Debt Disclosure Tables for 2011 CAFR
Debt Disclosure Tables Updated in Body of 2010 CAFR
93
Table 8
2012 2013 2014 2015 2016 2017 Total Cost
Interest payments1,2 25,809$ 28,280$ 30,770$ 32,849$ 32,917$ 30,136$ 180,761$ Bus operations – Current RTD 115,194 118,420 121,735 125,144 128,648 132,250 741,391 Bus operations – Private carrier startup1 1,000 - 1,057 - 1,117 - 3,174 Bus operations – Private carrier after contract1 89,032 92,553 94,088 97,808 99,430 103,362 576,273 Bus operations - call-n-Ride1 4,247 4,366 4,488 4,614 4,743 4,876 27,334 Private contract administration costs 182 187 192 198 203 209 1,171 FasTracks service allocation - Bus (7,589) (7,801) (8,020) (8,244) (8,475) (8,713) (48,842) Cost sharing agreements - Bus service1 1,993 2,049 2,106 2,165 2,226 2,288 12,827 Van pool program 1,080 1,110 1,142 1,173 1,206 1,240 6,951 Section 5011 local match 559 574 591 607 624 641 3,596 Light rail operations 34,706 35,646 36,242 37,256 38,300 39,372 221,522 ADA operating costs1 41,183 42,336 43,521 44,740 45,993 47,281 265,054 FasTracks service allocation - ADA (4,747) (4,880) (5,017) (5,157) (5,301) (5,450) (30,552) Facilities maintenance - Base 37,836 38,895 39,984 41,104 42,255 43,438 243,512 Facilities maintenance - Additional costs 1,156 3,173 18,025 6,993 5,974 4,152 39,473 Capital programs - Base 3,521 3,619 3,721 3,825 3,932 4,042 22,660 Capital programs - additional costs 2,192 2,278 1,745 1,008 1,234 1,249 9,706 Direct costs - Other departments 154 159 163 168 172 177 993 Indirect costs - Other departments 65,739 67,944 69,849 71,597 73,815 74,797 423,741 Denver Union Station costs 958 986 1,013 1,041 1,070 1,101 6,169
Grand total 414,205$ 429,894$ 457,395$ 458,889$ 470,083$ 476,448$ 2,706,914$
1Interest payments, private carrier operations costs, call-n-ride, ADA operations costs, and passthrough grants are presented in year of expenditure dollars.2 Interest payments on bonds and certificates of participation issued for purposes other than Southeast Line or FasTracks.
REGIONAL TRANSPORTATION DISTRICT2012-2017 STRATEGIC BUDGET PLAN - OPERATIONS (In Thousands)
94
Table 9
2012 2013 2014 2015 2016 2017 Total Cost
Long term debt1 29,736$ 27,373$ 33,498$ 32,172$ 37,047$ 36,900$ 196,726$ Southeast corridor debt service2 17,005 17,830 18,720 19,655 20,635 21,525 115,370 Fleet modernization and expansion
Transit buses 25,388 70,693 76,144 68,048 40,513 1,991 282,777 Light rail vehicles - - - - - - - ADA vehicles - 8,424 3,426 8,087 5,335 - 25,272 Van pool program - - - - - - - Major spares 250 700 400 400 400 - 2,150
Passenger infrastructureBus infrastructure 775 775 775 775 775 775 4,650 Transfer stations 130 - - - - - 130
Park-n-Rides 2,400 5,000 5,000 1,700 1,875 - 15,975 Capital support equipment
Vehicles and bus maintenance equipment 1,040 1,304 1,575 1,272 1,304 1,324 7,819 Treasury 175 - - - - - 175 Information systems, computer equipment for operations 7,378 7,392 488 2,200 - 1,360 18,818 Security equipment - - - - - - -
Bus maintenance facilitiesBoulder - - - - - - - District Shops 50 - 300 - - - 350 East Metro - - - - 175 - 175 Platte - - - - - - - Light rail maintenance facilities - Mariposa - 1,000 - - - - 1,000 Facilities District-wide - - - - - -
Discretionary capital 150 150 150 150 150 150 900
Grand total 84,477$ 140,641$ 140,476$ 134,459$ 108,209$ 64,025$ 672,287$
1Principal payments are set at the time the bonds are issued and do not change with inflation.2Southeast Corridor debt service costs include principal and interest payments on bonds and certificates of participation, and are presented in year of expenditure dollars.
2012-2017 STRATEGIC BUDGET PLAN - CAPITAL PROGRAM (In Thousands)
95
ADDITIONAL OPERATING DATA - 2010 Table 10
Total miles1 42,996,614Active bus stops 9,698Number of routes2 138
Local 64Express 16Regional 17SkyRide 5City of Boulder Local 12City of Longmont Local 4Limited 11Miscellaneous 9
Ridership average weekday, revenue service 277,207Ridership average weekday, all services 325,900Total annual boardings, revenue service 83,441,978Total annual boardings, all services 98,384,882Daily miles operated (average weekday),
including Mall Shuttle3 117,261Daily miles operated (average weekday),
including Mall Shuttle and Light Rail3 126,849Diesel fuel consumption, gallons4 5,400,000Total active buses 969Wheelchair lift equipped buses 969Number of employees4
Salaried 697Represented (includes part-time) 1,785
Fleet requirements (during peak hours) 797Operating facilities4 6
1 Reflects total miles (including Light Rail).2 Reflects fixed route service realignment as of November 2006 for the opening of the Southeast Light Rail Line service.3 Excludes special services. 4 Excludes purchased transportation services.
96
STATEMENT OF DEBT Table 11
Sales Tax Bonds Outstanding2
RTD Sales Tax Revenue Bonds, Series 2002B1 7,930$
RTD Sales Tax Revenue Bonds, Series 20041 11,230
RTD Sales Tax Revenue Bonds, Series 20051 99,075
RTD Sales Tax Revenue Bonds, Series 20061 - FasTracks 235,735
RTD Sales Tax Revenue Refunding Bonds, Series 20071 - FasTracks 361,795
RTD Sales Tax Revenue Refunding Bonds, Series 20071 69,825
RTD Sales Tax Revenue Refunding Bonds, Series 20081 6,355
RTD Sales Tax Revenue Refunding Bonds, Series 20101 44,335
RTD Subordinate Sales Tax Revenue (DUSPA) Fastracks, Series 2010 164,618
RTD Sales FasTracks Tax Revenue Bonds, Series 2010AB1 379,140
Total Sales Tax Revenue Debt 1,380,038$
Lease Purchase Agreements Outstanding2
Master Lease Purchase Agreement II Fixed Rate Certificates of Participation, Series 2004A 26,915$ Master Lease Purchase Agreement II Fixed Rate Certificates of Participation, Series 2005A 57,460Master Lease Purchase Agreement II Fixed Rate Taxable Certificates of Participation, Series 2007A 13,445
Amended and Restated Certificates of Participation, Series 2002A 117,035Master Lease Purchase Agreement II Fixed Rate Certificates of Participation, FasTracks Series 2010AB 308,670
Total Certificates of Participation Debt 523,525$
Total Debt 1,903,563$
RTD Seven County Populaiton 2010 3 2,784,228Per Capita Debt Requirement 684
2 RTD is current on its obligations under all such debt.3 Metro Denver Economic Profile 2011-2012
REGIONAL TRANSPORTATION DISTRICT
as of December 31, 2011
1 The Bond Resolution pursuant to which the RTD Sales Tax Revenue Bonds are issued provides that pledged for the payment of such Bonds are the Sales Tax Revenues and "any additional revenues legally available to RTD which the Board in its discretion may hereafter by Supplemental Resolution pledge to the payment of the Bonds".
97
Table 12(In Thousands)
PercentChange
Revenue Fare in FareYear Boardings1 Revenue Revenue
2002 64,167 49,967$ 6.8%2003 61,235 50,459 1.0%2004 64,720 55,442 9.9%2005 67,994 57,638 4.0%2006 69,867 66,211 14.9%2007 81,714 77,128 16.5%2008 89,254 88,205 14.4%2009 83,337 96,890 9.8%2010 83,732 97,942 1.1%2011 98,384 108,497 10.8%
Table 13(In Thousands)
Advertising AncillaryYear Revenue Revenues
2002 2,419$ 3,493$ 2003 2,886 3,550 2004 3,047 3,621 2005 3,196 3,484 2006 2,800 4,032 2007 3,194 4,706 2008 2,854 3,106 2009 2,866 3,243 2010 3,301 2,892 2011 3,992 2,528
Table 14(In Thousands)
Operations,Grant Other Local Planning,
Year Capital Contributions and Other
2002 46,983$ 3,587$ 35,096$ 2003 135,917 4,020 37,803 2004 54,446 17,309 39,649 2005 86,523 10,861 41,322 2006 57,413 4,124 42,805 2007 107,577 7,556 47,041 2008 39,220 169 50,814 2009 129,211 2,500 68,146 2010 102,213 5,265 92,655 2011 186,073 52,219 89,592
RTD ANNUAL RIDERSHIP AND FARE REVENUE - 2002-2011
RTD ADVERTISING AND ANCILLARY REVENUES - 2002-2011
RTD GRANT RECEIPTS - 2002-2011
1 Totals for 2002-2011 include access-a-Ride boardings. Totals for 2002-2011 include vanpool boardings.
98
Table 15
(In Thousands)
2011 2010 2009 2008 2007Operating Revenues:
Passenger Fares 108,497$ 97,942$ 96,890$ 88,205$ 77,128$ Other 4,882 4,414 4,357 4,124 4,382 Total Operating Revenues 113,379 102,356 101,247 92,329 81,510
Operating Expenses:Salaries, wages, fringe benefits 166,332 160,498 161,747 155,799 150,560Materials and supplies 52,015 48,310 56,835 61,056 49,157Services 48,357 60,553 42,783 36,835 30,654Utilities 11,627 10,977 9,512 10,575 8,678Insurance 6,089 5,429 3,767 5,333 5,090Purchased transportation 108,865 104,514 103,975 102,743 97,819Leases and rentals 1,964 2,515 2,680 2,464 2,195Miscellaneous 2,082 3,315 6,866 2,619 2,390 Total Operating Expenses 397,331 396,111 388,165 377,424 346,543
Operating loss before depreciation (283,952) (293,755) (286,918) (285,095) (265,033)Depreciation 104,280 104,176 106,025 102,252 103,302
Operating Loss (388,232) (397,931) (392,943) (387,347) (368,335)Nonoperating income (expense):
Sales and use tax revenues 415,180 397,549 371,405 412,824 418,407Grant operating assistance 89,592 92,655 68,146 50,814 47,040Interest income 6,484 8,065 29,379 52,456 57,471Other income 11,356 3,653 3,243 3,106 4,706Gain/Loss on Capital Assets (6,101) (3,474) 40 1 1,056Interest expense (51,274) (48,735) (34,179) (56,273) (52,273)Other expense/Unrealized Loss (3,895) (1,671) (23,037) (977) (861) Total Nonoperating Income 461,342 448,042 414,997 461,951 475,546
Net income before capital grants and local contributions 73,110 50,111 22,054 74,604 107,211Federal capital grants and local contributions 238,292 107,478 131,711 39,389 115,133
Increase in Net Position 311,402 157,589 153,765 113,993 222,344
Net Position at Beginning of Year 2,203,764 2,046,175 1,892,410 1,778,417 1,556,073Prior Period AdjustmentNet Position at End of Year 2,515,166$ 2,203,764$ 2,046,175$ 1,892,410$ 1,778,417$
Years ended December 31
REGIONAL TRANSPORTATION DISCTRICT
AND CHANGES IN NET POSITIONFIVE-YEAR SUMMARY OF STATEMENT OF REVENUES, EXPENSES
99
Budget Actual Budget Actual Budget Actual Budget Actual Budget ActualOperating revenues:
Passenger fares 103,236$ 108,497$ 93,449$ 97,942$ 93,449$ 96,890$ 85,786$ 88,205$ 68,633$ 77,128$ Other 5,374 4,882 4,117 4,414 4,102 4,357 4,041 4,124 3,791 4,382 Total operating revenues 108,610 113,379 97,566 102,356 97,551 101,247 89,827 92,329 72,424 81,510
Operating expenses:Salaries, wages, fringe benefits 155,286 166,332 149,840 160,498 149,969 161,747 151,991 155,799 145,579 150,560 Materials and supplies 54,981 52,015 50,333 48,310 59,870 56,835 65,665 61,056 52,511 49,157 Services 89,609 48,357 86,355 60,553 57,331 42,783 46,828 36,835 45,460 30,654 Utilities 11,180 11,627 9,920 10,977 9,805 9,512 10,160 10,575 10,024 8,678 Insurance 6,943 6,089 7,505 5,429 5,863 3,767 7,393 5,333 7,244 5,090 Purchased transportation 110,487 108,865 109,032 104,514 105,727 103,975 103,354 102,743 98,842 97,819 Leases and rentals 2,482 1,964 2,463 2,515 2,982 2,680 4,001 2,464 4,234 2,195 Miscellaneous 3,575 2,082 11,640 3,315 2,262 6,866 844 2,619 523 2,390 Total Operating Expenses 434,543 397,331 427,088 396,111 393,809 388,165 390,236 377,424 364,417 346,543
Operating loss (325,933) (283,952) (329,522) (293,755) (296,258) (286,918) (300,409) (285,095) (291,993) (265,033)
Nonoperating revenue (expense):Sales and use tax 419,136 415,180 386,390 397,549 373,193 371,405 427,690 412,824 425,796 418,407 Grant operating assistance 84,789 89,592 94,042 92,655 89,275 68,146 53,865 50,814 53,439 47,040 Interest income 10,765 6,484 16,039 8,065 23,078 29,379 37,706 52,456 26,457 57,471 Other income 1,479 11,356 1,644 3,653 2,590 3,243 3,272 3,106 3,650 4,706 Gain/Loss on capital assets - (6,101) - (3,474) - 40 - 1 - 1,056 Interest expense (41,747) (51,274) (73,057) (48,735) (42,561) (34,179) (65,467) (56,273) (68,379) (52,273) Other expense/Unlrealized loss - (3,895) - (1,671) - (23,037) - (977) - (861) Total nonoperating revenue 474,422 461,342 425,058 452,924 445,575 414,997 457,066 461,951 440,963 475,546
Proceeds from issuance of long-term debt - - 279,865 916,475 62,698 9,478 200,843 17,695 - 471,151
Capital outlayCapital expenses 1,327,839 616,953 1,227,124 712,552 987,199 410,354 646,087 282,758 480,536 156,785 Less capital grants (261,849) (238,292) (270,488) (107,478) (267,572) (131,711) (81,590) (39,389) (138,218) (115,133)
1,065,990 378,661 956,636 609,956 719,627 278,643 564,497 243,369 342,318 41,652
Long-term debt principal payment 50,965 53,882 71,660 74,101 63,861 65,109 63,040 63,020 55,695 55,695
Excess (deficit) of revenue and nonoperating income over (under) expenses, capital outlay and debt principal payments (968,466)$ (255,153) (652,895)$ 391,587 (571,473)$ (206,195) (270,037)$ (111,838) (249,043)$ 584,317
Increases (decreases) to reconcile budget basis to GAAP basis
Capital expenditures 616,953 712,552 410,354 282,758 156,785Long-term debt proceeds - (916,475) (9,478) (17,695) (471,151)Long-term debt principal 53,882 74,101 65,109 63,020 55,695Depreciation (104,280) (104,176) (106,025) (102,252) (103,302)
Net Income 311,402$ 157,589$ 153,765$ 113,993$ 222,344$
* RTD's annual budget is prepared on the same basis as that used for accounting except that the budget also includes proceeds of long-term debt and capital grants as revenues, and expenditures include capital outlays and bond principal
REGIONAL TRANSPORTATION DISTRICT Table 16FIVE-YEAR SCHEDULE OF EXPENSES AND REVENUES - BUDGET AND ACTUAL - BUDGETARY BASIS (In Thousands)*
2008 2007200920102011
100
REGIONAL TRANSPORTATION DISTRICT
Table 17
2011 August 2011 2012
Adopted Budget Amended Budget Adopted Budget
Beginning net position 2,203,764$ 2,203,764$ 2,285,219$
Revenues:
Operating 108,610 108,610 111,655
Sales & use taxes 385,923 419,136 430,799
Federal and local grants 336,446 346,638 319,499 Interest and other income 17,042 12,244 14,478 FasTracks - change in construction reserve 551,006 501,006 7,487 Financing proceeds - - 25,388 Contributed capital 352,868 179,520 110,179
Total Revenues 1,751,895 1,567,154 1,019,485
Expenditures:
Operating 426,581 439,543 508,890
Interest expense 90,705 41,747 52,999
Debt payments 51,535 50,965 56,563 Current capital 535,860 785,573 901,571
Capital carryforward 782,234 542,266 807,279
Total expenditures 1,886,915 1,860,094 2,327,302
Adjustments1 (103,485) (17,322) 706,782
Ending net position 1,965,259$ 1,893,502$ 1,684,184$
Net position summary:Invested in captital assets, net of related debt 955,206 1,245,155 1,152,575 Restricted debt service, project related and other2 412,797 183,201 172,220
Restricted TABOR fund 15,347 16,200 16,708 Restricted FasTracks3 559,182 402,919 284,084 Restricted Board appropriated and capital replacement fund4 - - 19,200
Unrestricted fund 22,727 46,027 39,397
Ending net position 1,965,259$ 1,893,502$ 1,684,184$
FISCAL YEAR 2011 AND 2012 BUDGET SUMMARY (in thousands)
1 Adjustments reflect cash activity from the Statement of Net Position.2 Funds restricted by bond covenants, other contracts and policy guidelines.3 Appropriated funds which are available to fund future year expenditures for the FasTracks program.4 Board appropriated funds per policy guidelines and funds designated for capital replacement.
C-1
Appendix C
AN ECONOMIC AND DEMOGRAPHIC OVERVIEWOF THE DENVER METROPOLITAN AREA
(THIS PAGE INTENTIONALLY LEFT BLANK)
AN ECONOMIC & DEMOGRAPHIC OVERVIEW OF THE DENVER METROPOLITAN AREA
Page 1 Regional Transportation District February 2013
INTRODUCTION Employment data for 2012 show Colorado outperforming the nation and boasting a lower than national average unemployment rate. The state’s attractive business climate and high quality of life continued to be a magnet for young, talented adults. In fact, Colorado was the fifth fastest-growing state between July 2010 and July 2011. A major revision of 2012 employment data is expected to take place in March 2013, but if basic trends in the data remain, Colorado’s economic recovery remained steady during the year, and employment grew at a healthy pace.
Growth advantages aside, Colorado’s economy is not independent of national trends: political conflict, slow growth in nationwide economic output, and unstable foreign economies have had an impact on business in the state. Although progress was made during 2012, several important political situations have the potential to affect the state, particularly fiscal tightening measures. While the economy nationally and statewide improved during the year, national budget cuts may pose a threat to future growth.
As Colorado’s economy thrives, so will the economy in the Denver metropolitan area. Like Colorado, employment data for the Denver metropolitan area will go through a significant revision process, but current data show stronger-than-average employment growth for the area. Only three supersectors show declining employment during 2012: government, information, and transportation, warehousing, and utilities. Four large industry sectors – professional and business services, education and health services, leisure and hospitality, and wholesale and retail trade – accounted for the majority of Denver metropolitan area jobs added between 2011 and 2012.
The Denver metropolitan area is comprised of seven counties – Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, and Jefferson – and continues to be an important driver in Colorado’s economy, accounting for 56 percent of the state’s population and 61 percent of its jobs. The Regional Transportation District (RTD) operates as a public transportation system whose 2,348-square-mile service area includes all or parts of eight counties, consisting of parts of the seven Denver metropolitan area counties plus a small part of Weld County. Specifically, RTD serves 40 municipalities within six counties and two city/county jurisdictions: the City and County of Denver, the City and County of Broomfield, the counties of Boulder and Jefferson, the western portions of Adams and Arapahoe Counties, the northeastern portion of Douglas County, and portions of Weld County annexed by Longmont and Erie. RTD operates almost 1,000 buses on 134 fixed routes and 172 light rail vehicles on 35 miles of track. As the area of Weld County served by RTD is relatively small, this report describes economic activity in the seven-county Denver metropolitan region using mostly annual statistics.
POPULATION
Colorado
The Colorado State Demographer’s office recently announced that data show Colorado as the fifth fastest-growing state between July 2010 and July 2011 with a growth rate of 1.4 percent. The 2012 population in the state totaled 5.2 million, and the state increased at about twice the rate of the nation, chiefly due to a high birth rate, low death rate, and positive net migration.
Population growth depends on two components – natural increase and net migration. Natural increase is the difference between births and deaths, and it tends to change only gradually as the population ages. Net migration reflects the number of in-migrants to the state minus the number leaving, and it tends to be more volatile as economic cycles, housing costs, and other less-predictable factors tend to influence population mobility. Natural increase accounted for 57 percent of Colorado’s total population change between 2002 and 2012, and net migration accounted for 43 percent.
AN ECONOMIC & DEMOGRAPHIC OVERVIEW OF THE DENVER METROPOLITAN AREA
Page 2 Regional Transportation District February 2013
(10,000)
-
10,000
20,000
30,000
40,000
50,000
60,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Net Migration
Colorado
Denver Metropolitan Area
Source: Colorado Division of Local Government, Demography Section.
0.5%
1.0%
1.5%
2.0%
2.5%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Annual Percentage Population GrowthColorado
Denver Metropolitan Area
Source: Colorado Division of Local Government, Demography Section.
As Colorado’s economy expanded and contracted over the past ten years, single-year net migration has represented a positive contribution to population growth, with several years showing more than 50 percent of growth due to migration. As Colorado’s economy continues to recover and the state attracts households seeking a good quality of life, demographers expect net migration as a share of total population will remain strong through 2025, particularly as “Baby Boomers” retire and job opportunities become available. Historically, the largest groups of new Colorado residents have hailed from California, Texas, Arizona, and Florida.
Denver Metropolitan Area
The Denver metropolitan area is a magnet for new Colorado residents, although the two nationwide recessions that occurred over the past ten years made the share of regional population growth due to net migration somewhat smaller than it was during the 1990s and early 2000s. Net migration represented 37 percent of total Denver metropolitan area population growth between 2002 and 2012, and natural increase represented 63 percent of total growth. The prior decade (1992-2002) showed net migration of 71 percent.
Even with slower net migration during recession periods, the Denver metropolitan area’s average annual population growth over the past ten years (1.4 percent) was noticeably faster than the national average (0.9 percent). The region’s population grew 1.3 percent between 2011 and 2012, and the Denver metropolitan area is now home to nearly 2.9 million residents.
As its total population continues to grow at a faster-than-average pace, the Denver metropolitan area’s young adult population is growing quickly as well. According to the Brookings Institution, the Denver metropolitan area had the third largest number of young adult (ages 25-34) net migration between 2009 and
2011 among 51 large metropolitan areas with populations greater than one million. The Denver metropolitan area also had the third highest amount of college graduates, aged 25 and older during the period. The area’s median age (36.2) is lower than the nationwide median (37.3) and the total share of the region’s population age 65 and older (11.2 percent) is somewhat smaller than the comparable share nationwide (13.3 percent).
AN ECONOMIC & DEMOGRAPHIC OVERVIEW OF THE DENVER METROPOLITAN AREA
Page 3 Regional Transportation District February 2013
Denver Metropolitan Area Population by County
2002 2007 2012
Avg. Annual Population Growth (%)
2002-2007 2007-2012 Adams 371,181 415,915 459,730 2.3% 2.0% Arapahoe 510,503 545,882 593,589 1.3% 1.7% Boulder 284,433 288,757 304,066 0.3% 1.0% Broomfield 42,432 53,328 58,930 4.7% 2.0% Denver 559,090 570,437 628,174 0.4% 1.9% Douglas 209,705 268,599 296,889 5.1% 2.0% Jefferson 527,539 527,120 542,958 0.0% 0.6% Denver Metropolitan Area 2,504,883 2,670,038 2,884,336 1.3% 1.6% Colorado 4,504,709 4,821,784 5,189,245 1.4% 1.5%
Source: Colorado Division of Local Government, Demography Section.
Of the seven Denver metropolitan area counties, Douglas County, the City and County of Broomfield, and Adams County have reported the fastest population growth over the past five years. Growth in five of the seven counties exceeded both the statewide and national average growth rates between 2007 and 2012.
EMPLOYMENT The U.S. Bureau of Labor Statistics releases employment data based on two different surveys. The household survey – also called the Current Population Survey (CPS) – reflects employment characteristics by place of residence and is the data source for statistics on labor force, employment and self-employment, and unemployment by county. This data is discussed in the Labor Force & Unemployment section of this report.
The so-called “establishment” survey is the data source for the Current Employment Statistics (CES) series, which includes detailed information on employment, hours, and earnings by industry. Although the survey does not count the self-employed, the CES data are some of the most closely watched and widely used gauges of employment trends. CES data will be revised in March 2013, and data used for this report are unrevised. Annual benchmark revisions to this data series can significantly alter historic trends.
Industry employment data in the CES series are grouped according to North American Industry Classification System (NAICS) codes. This coding structure includes 20 detailed industry groups that form 11 industry “supersectors.”
Colorado
In the past ten years, Colorado employment grew at an annual average rate of 0.5 percent, more than twice the national rate (0.2 percent). Two periods of recession pushed the employment growth down and have clearly shown the state’s tendency to exhibit amplified employment trends compared to the national average. Colorado has typically shown a more negative growth rate during the last two recessions but recovered more quickly and showed higher growth at peak times.
The concentration of certain industries in the state gave it unique advantages in recent times of economic growth. A large presence of high-tech, natural resource, and construction activity positioned Colorado to fare well in the current recovery. However, during periods of contraction, Colorado lacks large numbers of workers in industries that showed strength after the recent recession, such as public-sector healthcare and education and manufacturing. These factors lead to a contraction (-1 percent) during 2010 that was greater than the national average (-0.7
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Page 4 Regional Transportation District February 2013
-5.5%
-4.5%
-3.5%
-2.5%
-1.5%
-0.5%
0.5%
1.5%
2.5%
3.5%
4.5%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Nonfarm Employment Growth Rates
United States
Denver Metropolitan Area
Sources: U.S. Bureau of Labor Statistics, Colorado Department of Labor and Employment.
0.0% 5.0% 10.0% 15.0% 20.0%
Natural Resources & Construction
Manufacturing
Wholesale & Retail Trade
Transportation, Warehousing, Utilities
Information
Financial Activities
Professional & Business Services
Education & Health Services
Leisure & Hospitality
Other Services
Government
Distribution of Nonfarm Employment by Industry (2012)
Denver Metropolitan Area
United States
Sources: U.S. Bureau of Labor Statistics, Colorado Department of Labor and Employment.
percent), but higher growth during 2011 (1.5 percent) and 2012 (1.8 percent) than the nation (1.1 percent in 2011 and 1.4 percent in 2012).
Denver Metropolitan Area
The U.S. Bureau of Labor Statistics also compiles CES data for a number of Metropolitan Statistical Areas (MSAs), including the Denver-Aurora-Broomfield MSA (Denver MSA) and the Boulder MSA. The Denver MSA consists of ten counties: Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park Counties. Because CES data are not available for the counties individually, data in this section of the report reflect the Denver MSA and Boulder MSA (Boulder County) combined.
This 11-county region has a nonfarm employment base of more than 1.4 million workers. Growth for the region has been even
stronger than the state during the recent recovery, with employment rising 2.5 percent between 2011 and 2012. Accounting for over 61 percent of the state’s employment, the Denver metropolitan area added 34,500 jobs of the total 41,500 jobs added in the state during the last year. The ten-year average annual growth rate for the area (0.6 percent) is slightly higher than the state (0.5 percent). The 11-county region weathered the recent recession slightly better as well, with the lowest point of -4.3 percent contraction in 2009 slightly higher than the state’s employment loss of -4.5 percent.
Four industry supersectors – professional and business services, education and health services, leisure and hospitality, and wholesale and retail trade – accounted for 80 percent of Denver metropolitan area jobs added between 2011 and 2012. Part of these industries’ large impact on overall job growth reflects their sheer size, as they are some of the region’s largest sectors in terms of total jobs. Employment in the region’s third-largest industry supersector, government, declined slightly (-0.4 percent) between 2011 and 2012 as local, state, and federal agencies struggled to balance lower revenues and higher demands for public services.
Aside from government employment, only two other supersectors showed declining employment between 2011 and 2012. The information supersector declined 2.2 percent, most likely due to the dissemination of free information on the Internet, the changing landscape of publishing, and the reorganization of the region’s largest telecommunications companies. Employment in the transportation, warehousing, and utilities supersector also decreased by 0.3 percent.
AN ECONOMIC & DEMOGRAPHIC OVERVIEW OF THE DENVER METROPOLITAN AREA
Page 5 Regional Transportation District February 2013
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Annual Average Unemployment Rates
United States
Colorado
Denver Metropolitan Area
Sources: U.S. Bureau of Labor Statistics, Colorado Department of Labor and Employment.
LABOR FORCE & UNEMPLOYMENT Since the recovery began in 2009, the nation has struggled with an elevated unemployment rate. While profits are at record levels, companies are not hiring in the uncertain economic environment. The national unemployment rate remains high, although progress has been made since reaching a peak in 2010 of 9.6 percent. Unrevised data show the unemployment rate declined to 8.1 percent in 2012, a decline of 0.8 percentage points from the 2011 rate (8.9 percent).
Colorado
Colorado’s unemployment rate, while still elevated, was lower than the national average at 7.9 percent for 2012. Indeed, the Colorado unemployment rate consistently stayed below the national average throughout the recent recession. At the highest point in 2010, Colorado’s unemployment rate was 8.9 percent, 0.7 percentage points below the national average peak.
Denver Metropolitan Area
The effects of the 2001 recession kept the region’s unemployment rate above the national average until 2006, at which time the Denver metropolitan area unemployment remained below five percent through 2008. The region’s rate stayed below the national average throughout the recent recession and recovery. The unrevised data for 2012 show a 7.7 percent unemployment rate, and the Denver-Aurora-Broomfield MSA ranked in the middle (25th) based on data for December 2012 for the 49 largest metropolitan areas. The lowest rate was 4.6 percent in the Oklahoma City MSA and the highest in the Riverside-San Bernardino-Ontario, CA MSA (10.9 percent).
The Denver metropolitan area consistently attracts young, talented workers. As mentioned previously, between 2009 and 2011 the region recorded the third largest positive net migration of 25 to 34 year olds and had the third highest number of college graduates 25 years of age or older among the 51 largest metropolitan areas. The attractive pool of workers coupled with the well-performing economy enable employers to fill positions with local talent across a broad spectrum of skill levels.
MAJOR EMPLOYERS Colorado’s small businesses play a major role in the state’s job creation and economic growth. Data from the U.S. Census Bureau show that, as of 2010, more than 98 percent of Colorado businesses employed fewer than 100 workers. Self-employment is another important economic driver in Colorado: according to the U.S. Bureau of Economic Analysis, Colorado had the nation’s fourth-largest share of total jobs linked to sole proprietorship in 2011.
While small businesses and the self-employed are vitally important to the Denver metropolitan area economy, larger firms are also key providers of jobs and income. Census Bureau data show 116 firms with 1,000 or more
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employees were operating in Colorado in 2010 and more than half of these large businesses were located in the Denver metropolitan area.
Nine companies headquartered in Colorado were included on the 2012 Fortune 500 list. Arrow Electronics (130th) was the highest-ranked Colorado company, followed by DISH Network (191st), Liberty Interactive (230th), Newmont Mining (257th), Liberty Global (261st), Ball Corporation (297th), DaVita Inc. (359th), CH2M Hill (440th), and Western Union (445th).
Private sector businesses account for a majority of employment in the Denver metropolitan area, but the public sector also represents a sizeable portion of the area’s job base. As the capital of Colorado, the City and County of Denver has a large concentration of government employees. Specifically, public sector employment in Denver consists of 14,000
federal government employees, 19,200 state government employees, and 33,600 employees in local government entities including Denver Public Schools (13,100 employees) and the City and County of Denver (10,800 employees).
INTERNATIONAL TRADE The Denver metropolitan area is located just west of the nation’s geographic center and at the exact midpoint between Tokyo and Frankfurt. As a result, it serves as an ideal hub for businesses focused on interstate and international commerce. Shipping businesses can access the Denver metropolitan area via all transportation modes except water, and the region’s location midway between Canada and Mexico – U.S. partners under the North American Free Trade Agreement (NAFTA) – is another asset for trade-focused companies. About one-third of the total dollar value of export shipments from Colorado went to Canada and Mexico in 2012; others of the state’s largest trading partners include China, Japan, Germany, and the Netherlands.
The most recent recession took a significant toll on Colorado’s exports, which fell sharply (-23.9 percent) between 2008 and 2009. Over that period, the decline in exports of computers and electronic products – Colorado’s largest export commodity – was significantly sharper in Colorado (-41.3 percent) than it was nationwide (-15.6 percent). The state’s total exports are now rebounding with an 11.3 percent increase from 2011 to 2012 compared with a 4.4 percent national increase.
Key exports for Colorado include computer and electronic products, food and kindred products, machinery, and chemicals. Computer exports increased 38 percent between 2011 and 2012, the largest increase of all export products. Other large increases occurred in oil and gas (32 percent), articles of iron or steel (23 percent), and meat (11 percent).
Metro Denver Largest Private Sector Employers Company Product/Service Employment King Soopers Inc. Grocery 12,540 Wal-Mart General Merchandise 10,550 HealthONE Corporation Healthcare 10,280 Exempla Healthcare Healthcare 7,260 Safeway Inc. Grocery 7,150 Lockheed Martin Corporation Aerospace & Defense Systems 7,030 Centura Health Healthcare 6,920 CenturyLink Telecommunications 6,850 Kaiser Permanente Healthcare 6,170 Target Corporation General Merchandise 5,350 Comcast Corporation Telecommunications 5,000 United Airlines Airline 4,600 DISH Network Satellite & TV Equipment 4,420 Children’s Hospital Colorado Healthcare 4,400 University of Colorado Hospital Healthcare, Research 4,400 Wells Fargo Bank Financial Services 4,400 University of Denver University 4,310 IBM Corporation Computer Systems & Services 4,200 United Parcel Service Parcel Delivery 3,430 Frontier Airlines Airline 3,360
Source: Development Research Partners, April 2012
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-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Annual Inflation RatesUnited States
Denver-Boulder-Greeley
Source: U.S. Bureau of Labor Statistics.
INFLATION The U.S. Bureau of Labor Statistics measures inflation – or deflation – as a change in the Consumer Price Index (CPI). The CPI is a compilation of price measures for items in eight broad categories, the most heavily weighted of which are housing, transportation, and food and beverages. Housing carries the most weight of these three categories.
The weight placed on housing costs is one reason why the U.S. average and Denver-Boulder-Greeley CPIs have varied over the past decade. Slow economic growth following the 2001 recession and a milder-than-average home price boom meant the Denver-Boulder-Greeley CPI rose at a slower-than-average pace between 2003 and 2005. Oil prices – which tend to drive CPI when they are most volatile – rose in 2005 and brought the local and national inflation rates closer together.
Fallout from the 2007 recession caused a rare decline in both the Denver-Boulder-Greeley and U.S. CPIs in 2009, but variation in housing trends – slightly stronger trends in Denver and
weaker trends elsewhere – again drove the CPIs apart in the following years. The Denver-Boulder-Greeley CPI rose 3.7 percent in 2011, 0.5 percentage points higher than the U.S. CPI. The two indexes stabilized in 2012, with the Denver-Boulder-Greeley index rising only 1.9 percent and the U.S. increasing 2.1 percent.
Denver-Boulder-Greeley prices for education and communication, food and beverage, other goods and services, medical care, and recreation rose more quickly than U.S. prices in 2012. Apparel, housing, and transportation rose more slowly.
INCOME
Colorado
Because earnings from work are by far the largest component of personal income, growth trends in Colorado personal income over the past decade have reflected trends in the state’s major industries. Slower-than-average growth in Colorado personal income following the 2001 recession partly reflected deep job losses in the high-tech sector, and faster-than-average growth in 2005 and 2006 reflected a boom in energy and natural gas exploration. Personal income in both Colorado and the nation as a whole declined in 2009 as the most recent recession took a steep toll on jobs and household assets, but the income measures for both geographies grew at a modest pace in 2010. In 2011, Colorado’s faster-than-average job growth meant its annual personal income gain (+6.1 percent) exceeded the national average (+5.1 percent).
Growth in per capita personal income – or total personal income divided by population – is often slower-than-average in Colorado as the state’s population has long grown at a rate faster than the national average. Still, Colorado per capita personal income in 2011 ($44,053) was 106 percent of the U.S. average.
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Denver Metropolitan Area
Personal income in the Denver metropolitan area has roughly followed the statewide trend over the past decade. Income growth slowed after the 2001 recession, accelerated between 2004 and 2006, and slowed – and eventually declined – with the most recent recession. The decline in Denver metropolitan area personal income between 2008 and 2009 (-5.8 percent) was steeper than the decline reported nationwide (-4.8 percent), but the region’s personal income grew faster than the national average in 2011, increasing 6 percent compared with the national increase of 5.1 percent.
Denver metropolitan area per capita personal income in 2011 ($49,398) was 119 percent of the U.S. average. Comparatively high wage rates tend to keep per capita personal income in the Denver metropolitan area above the national average. Denver metropolitan area average annual pay in 2011 ($54,590) was up 2.5 percent over the 2010 annual average.
RETAIL TRADE Retail sales account for a large part of the nation’s total economic output and are a useful indicator of overall consumer health. The recession pushed retail sales down in 2008 and 2009, when sales declined 1 percent and 7 percent, respectively. However, as consumer financial situations recovered and confidence rose, retail sales also grew, increasing 8 percent in 2011 and 5 percent in 2012.
Durable goods sales also recovered, an encouraging sign since these products tend to be more expensive and represent a long-term commitment, such as cars. In fact, motor vehicle sales rose 10.8 percent in 2011 and 7.6 in 2012. The strong increase in consumers purchasing vehicles signaled that households were financially more stable than they were during the recession when motor vehicles sales decreased significantly by 14 percent in 2008 and 13.9 percent in 2009. The impressive rebound may also partially be due to the delay in purchasing big ticket items during difficult times.
Colorado
Economic growth – partly fueled by an energy boom – and a solid housing market contributed to faster-than-average growth in Colorado retail trade sales in 2006 and 2007. Statewide sales rose 7.6 percent in 2006 and seven percent in 2007, while sales nationwide rose 5.4 percent and 3.3 percent, respectively. With the onset of recession, however, Colorado households sharply
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Annual Growth in Per Capita Personal Income
United States
Colorado
Denver Metropolitan Area
Source: U.S. Bureau of Economic Analysis.
-13.5%
-9.0%
-4.5%
0.0%
4.5%
9.0%
13.5%
18.0%
22.5%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Annual Growth in Retail Trade Sales
Colorado
Denver Metropolitan Area
Source: Colorado Department of Revenue.
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curtailed their spending. Statewide retail trade sales decreased an average of 6.1 percent per year between 2007 and 2009, while sales nationwide declined by an average of 4.1 percent.
The state’s retail trade sales recovered throughout 2010, and total sales in 2011 were up 7.6 percent over-the-year, based on the most current annual data available.
Denver Metropolitan Area
Like sales in Colorado, retail sales in the Denver metropolitan area grew rapidly in 2006 and 2007. A strong housing market allowed households more asset-based wealth, and solid job and income growth also supported retail sales. When the most recent recession dramatically lessened household wealth and drove unemployment higher, Denver metropolitan area retail trade sales fell 0.8 percent in 2008 and 11.3 percent in 2009.
While consumer confidence data suggest many households are still worried about jobs and income, consumers have noticeably increased their spending since the recession. Denver metropolitan area retail trade sales rose 5.2 percent in 2010 and 5.9 percent in 2011, and while higher prices for food and gasoline drove some of the gains, household spending on non-essentials also increased. Sales of motor vehicles and auto parts,
for example, rose 14.9 percent between 2010 and 2011, and sales of electronics, appliances, and furniture also rose. Sales for two of the largest contributors to total Denver metropolitan area retail trade sales – grocery stores and general merchandise stores – rose 5.4 percent and 5.2 percent between 2010 and 2011, respectively.
Arapahoe County – which has the largest share of retail trade activity in the Denver metropolitan area – also posted the strongest over-the-year increase in retail activity in 2011 (10.9 percent). Over-the-year retail trade sales gains in the remaining counties ranged from 0.8 percent in Adams County to 8.5 percent in Douglas County and the City and County of Broomfield.
Denver Metropolitan Area Retail Trade Sales ($000s)
Industry 2010 2011Percentage
ChangeRetail Trade:
Motor Vehicle / Auto Parts $6,841 $7,860 14.9Furniture and Furnishings $1,240 $1,308 5.4Electronics and Appliances $1,258 $1,400 11.3Building Materials / Nurseries $2,512 $2,573 2.4Food/Beverage Stores $7,715 $8,130 5.4Health and Personal Care $1,352* $1,410* -------Service Stations $2,235 $2,606 16.6Clothing and Accessories $2,116 $2,262 6.9Sporting/Hobby/Books/ Music $1,376 $1,458 6.0General Merchandise/ Warehouse $5,953 $6,266 5.3Misc. Store Retailers $1,472 $1,772 20.4Non-Store Retailers $1,025* $713* -------
Total Retail Trade $35,907 $37,977 5.8Food / Drinking Services $4,987 $5,340 7.1TOTAL $40,894 $43,317 5.9Note: Data are not adjusted for inflation. Sales by industry may not add to totals due to rounding and data suppression. *total does not include data that have been suppressed. Source: Colorado Department of Revenue.
Arapahoe 23%
Denver 22%
Jefferson 18%
Adams 14%
Douglas 10%
Boulder 10%
Broomfield 3%
Distribution of 2011 Retail Trade Sales by County
Source: Colorado Department of Revenue.
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$40.0
$90.0
$140.0
$190.0
$240.0
$290.0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Median Home Price ($000s)
United States
Denver Metropolitan Area
Source: National Association of Realtors.
RESIDENTIAL REAL ESTATE Combined, all aspects of the housing market – from new home construction to money spent on mortgage and rental payments, furnishings, and home improvements – contribute significantly to the nation’s economy. Housing’s large role in the economy explains why the market collapse helped trigger such a deep recession in 2007.
While housing markets appear to be recovering, the makeup and function of markets has clearly changed. Census data show the U.S. homeownership rate fell from 69.1 percent in the first quarter of 2005 to a fourth quarter 2012 rate of 65.4 percent, the lowest rate reported since 1997. The shift in homeownership for individual states has been even more profound: Colorado’s homeownership rate fell from 72.1 percent in the first quarter of 2005 to 64.9 percent in the first quarter of 2012. In fact, Colorado ranked ninth for largest percentage-point decline in homeownership over the seven-year period.
Despite a large decline in homeownership, Colorado’s housing market appears to be recovering more quickly than markets elsewhere. Foreclosures declined during 2012 and home sales improved. With interest rates at record lows nationally, home ownership is becoming even more attractive, as demand improved for both existing-home sales and residential building permits.
Residential Home Prices
Median home prices in the Denver metropolitan area showed positive signs of recovery during 2012, rising 9.1 percent to an average of $252,400. After a slight dip in 2011 (-0.4 percent), the increase in 2012 brought housing prices above levels prior to the housing bust. The Denver metropolitan median home price is now 1.2 percent higher than the 2006 peak, whereas the 2012 national median home price was 20.3 percent lower than the 2006 peak. Prices in the Denver area did not rise as quickly as national prices during the 2000-2006 period, leading to the relatively milder collapse of housing prices in 2007 and the subsequent faster increase during the recovery.
The S&P/Case-Shiller Home Price Index shows that the Denver home price index is the city closest to reaching its prior peak index value. The most recent month of data (November 2012) shows the Denver index was 4.1 percent below its peak in August 2006. The 20 city composite index was 29.4 percent below its peak in July 2006. Another housing price index, the Federal Housing Finance Agency’s Home Price Index shows Denver as having the 19th highest (+2.9 percent) over-the-year increase of 304 metropolitan areas using third quarter 2012 data. When comparing the Denver area index to its 5-year value change, it ranks 72nd with a slightly negative change (-1.8 percent). Both price indexes, while using different methodologies, indicate that the Denver metropolitan area is doing relatively well, and home prices are recovering.
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0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Annual Growth in Denver Metropolitan Area Housing Units and Households
Housing Units
Households
Source: Colorado Division of Local Government, Demography Section.
0
10,000
20,000
30,000
40,000
50,000
60,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Denver Metropolitan Area Existing Home Sales
Source: Metrolist.
Demographic data suggest Denver metropolitan area home prices might be poised for continuing appreciation in the coming years. Since 2006, the growth in household formation has outpaced the growth in housing units. The growth in households will ultimately lead to stronger demand for housing, supporting higher home prices and prompting increased residential construction.
Foreclosures
The foreclosure crisis, triggered by widespread subprime home loans, high unemployment, and falling home prices, significantly improved by 2011. Foreclosure filings fell 28.4 percent in 2011 to 16,741 in the Denver metropolitan area and dropped another 10.3 percent in 2012. Despite the declines,
2012 filings were still over 2.5 times the number in 2001. The improving economy and tighter restrictions on home loans are helping to keep foreclosures down, but numbers may remain elevated until foreclosures delayed by judicial processes subside.
Residential Home Sales
Denver metropolitan area existing home sales reached a peak (54,012) in 2004. Sales ratcheted down in the following years before dropping more noticeably in 2009 and 2010. With high unemployment, tight housing credit, falling home prices, and the whiplash effect of homebuyers’ stimulus programs – an initial boost in demand followed by a sharp drop in home buying – sales in 2010 fell more than 28 percent below the 2004 peak.
By mid-2011, however, home sales totals were consistently rising above year-ago totals. The sales count for the year (39,387) was still substantially below pre-recession averages, but a gradual upswing in sales activity appeared increasingly entrenched. Sales improved significantly in 2012, rising 17.5 percent to 46,299. The strong increase boosted the sales level to a more sustainable level based on the size of the Denver metropolitan area market. The inventory of unsold houses has also declined, reaching the lowest level at the end of 2012 of data dating back to 1990. The low inventory has created a seller’s market, which should ultimately encourage hesitant home sellers to enter the market.
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0
5,000
10,000
15,000
20,000
25,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Denver Metropolitan Area Residential Building Permits
Multi-Family
Two-Family
Single Family
Source: Home Builders Association of Metro Denver.
Residential Building Permits
Denver metropolitan area new home construction trends met both extremes since 2000: the total count of residential permits pulled in 2000 (28,310) was one of the highest reported since the early 1980s, while the total pulled at the bottom of the market crash in 2009 (3,436) was the lowest reported in at least three decades. Permit issuance notched upwards beginning in 2010, and increased 49.7 percent in 2012 to 9,530 and 121.4 percent since the low in 2009. Despite the significant year-over-year gains, building permits are still far below the 2000 peak.
Demographic data and anecdotal reports suggest housing demand is growing. Colorado and the Denver metropolitan area continue to attract new residents, and stronger-than-average job growth over the past year has added to the areas’ appeal for relocating households. Housing demand will rise as families that lost a home or shared housing during the downturn seek new living arrangements. Low existing housing inventory for sale also signals that households will turn to building new homes.
While these shifts suggest housing demand will continue to strengthen as the economy improves, demand may rise for different property types – specifically, smaller homes and rental housing – than those commonly sought before the downturn. Construction of apartment-style housing more than doubled in 2010 and 2011, signaling that demand for rental housing was rising in a difficult economic environment. However, 2012 data suggest a slight shift in direction, as single-family detached home permits rose 50.5 percent over 2011, and the increase in apartment construction slowed to a 65 percent increase.
Data on apartment vacancy also indicate that demand for apartments in the Denver metropolitan area is increasing, as the vacancy rate dropped 0.5 percentage points between 2011 and 2012 to an average rate of 4.7 percent. The Denver Metro Apartment Vacancy and Rent Survey shows vacancy rates declining for each of the seven counties in the region, ranging from a decrease of 0.1 percentage points in Douglas County to 1.1 percentage points in Boulder/Broomfield Counties.
Rising apartment demand and falling vacancy rates have driven average lease rates higher: the Denver metropolitan area average rent increased 5.5 percent between 2011 and 2012 to about $974 per month. The only county to report a decline in the average rental rate was Adams County, where the average rent for 2012 declined 0.2 percent compared with 2011. The largest increase occurred in the Boulder/Broomfield area, as the average rent for 2012 increased 7.2 percent annually.
COMMERCIAL REAL ESTATE Prior to the 2001 recession, commercial developers were highly active in the Denver metropolitan area: in 2000 and 2001 alone, builders completed almost 20 million square feet of new office and industrial space. Once the nationwide recession took hold, the large inventory of new space weighed on the market and pushed lease rates steadily lower until 2004.
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0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Denver Metropolitan Area Office Market Direct Vacancy Rates
Source: CoStar Realty Information, Inc.
After a few years of recovery, the region’s commercial real estate markets faced another recession. While defaults, a near disappearance of commercial real estate credit, and a drop in property demand put Denver metropolitan area markets under heavy strain, this latest round of recession was arguably more manageable for many submarkets and property types. Without the overbuilding that came before the 2001 recession, vacancy rates in many areas did not rise to the levels reported earlier in the decade.
As 2012 ended, the Denver metropolitan area’s commercial real estate markets appeared to have settled in a pattern of slow – but steady – improvement, and the market remained highly attractive to national tenants and investors. Vacancy rates have not improved enough to push up lease rates, but speculative development is finally on the horizon, an encouraging sign for commercial real estate.
Office Activity
Data from CoStar Realty Information, Inc. show the direct office market vacancy rate in the Denver metropolitan area fell in 2012 to 12.2 percent, the lowest rate since 2007. The vacancy
rate hit a peak of 13.7 percent in 2009 and has been slowly improving since that time. Office lease rates have not struggled as much as vacancy rates, remaining relatively stable during the recession and after. The average lease rate in the fourth quarter of 2012 ($20.76 per square foot) was an improvement over the year-ago rate of $19.88 and the 2010 rate of $19.90.
As job growth continues and office market property demand revives, the region’s rental rates should increase and will eventually prompt new development. In the meantime, most of the office market construction has been build-to-suit. Several large build-to-suit projects were underway at the end of 2012. Notable projects include IMA Financial Group, The TriZetto Group, and Trimble, with each choosing to build headquarters in the Denver metropolitan area.
Industrial and Flex Activity
CoStar Realty Information shows that industrial direct vacancy rates for the Denver metropolitan area improved since the recession. In fact, the 2012 vacancy rate of 5.2 percent was at its lowest point since 2000. The vacancy rate has steadily decreased since the high of 8 percent in 2004. However, higher demand for space has not translated into higher lease rates, as rates have been volatile since 2008, decreasing one year but increasing the next. Until vacancy rates decrease enough to push up lease rates, volatility may continue. The fourth quarter 2012 industrial direct average lease rate was $4.67 per square foot, 2.2 percent higher than the fourth quarter 2011 rate but 0.6 percent lower than the fourth quarter 2010 rate.
Like lease rates in the industrial market, flex market rates have not yet responded to lower vacancy: the Denver metropolitan area direct flex market lease rate in the fourth quarter of 2012 ($8.86 per square foot) was 7.7 percent lower than the fourth quarter 2008 average. Direct flex market vacancy in the fourth quarter (12 percent) was 0.9 percentage points below the year-ago level but was still above the pre-recession low of 11.1 percent. Bargain-priced office, industrial, and retail properties made stiff competition for flex properties during the recession and have likely contributed to a slower flex market recovery.
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Build-to-suit projects dominated the 2012 industrial and flex market construction scene. However, as vacancy rates slowly decline, speculative projects will begin to pick up. After the completion of a mere 50,000 square feet of new industrial and flex space in 2011, about 1 million square feet was completed in 2012. Improvement in overall economic activity is encouraging developers and companies to pursue projects delayed by the recession and slow recovery.
Retail Activity
Because the recession dealt a direct blow to consumers, it also took a large toll on retail real estate. The direct vacancy rate for the retail market in the Denver metropolitan area has steadily declined since the recession, after hitting a peak of 7.9 percent in 2009. The 2012 vacancy rate (6.6 percent) was lower than the 2011 rate (6.9 percent). Average lease rates in the retail market have not responded to improved vacancy rates, trending downward since 2009. Despite the 1.3 percentage point decline in the vacancy rate between the fourth quarter of 2009 and fourth quarter of 2012, the lease rate has declined 1.2 percent. Landlords may be keeping rents low until consumer spending markedly improves. As the economy grows and consumers become more confident, the retail market should see positive results.
The amount of retail projects under construction was at its highest point at the end of 2012 since the end of 2008. Retailers were most likely wary of economic circumstances and less inclined to build new facilities during and after the recession. The pickup in construction activity points to a recovering market and higher consumer confidence in the economy.
Medical Facilities
A rapidly growing – and aging – population demands more healthcare, and the healthcare sector continues to be one of the Denver metropolitan area’s most active in construction activity. Projects underway in 2012 included the $100 million Children’s Hospital Colorado South Campus in Highlands Ranch; three Centura Health expansions in Lakewood, Westminster, and Castle Rock; a $90 million renovation and expansion of Craig Hospital in Englewood; and a $623 million Exempla St. Joseph Hospital redevelopment project in Denver. Other projects are already slated to begin in 2013, signaling that strong activity will continue beyond 2012.
The healthcare field is particularly active in Aurora and includes the Fitzsimons Life Sciences District and the University of Colorado Anschutz Medical Campus. The site, including the Fitzsimons Life Sciences District and the adjacent Anschutz Medical Campus, is the largest medical-related redevelopment in the nation and the world’s only completely new research, education, and patient complex. The attractiveness of this unique area has brought new facilities and companies. Several projects were finished at the campus during 2012 including the Children’s Hospital Colorado which opened a $230 million expansion consisting of a 10-story East Tower and the University of Colorado Hospital which opened a five-story, $20 million addition to the Anschutz Cancer Pavilion. Also in Aurora, the 543,000-square-foot Buckley Clinic on Buckley Air Force base opened in May 2012.
TRANSPORTATION With access by road, rail, and air, the Denver metropolitan area is one of the country’s most important transportation hubs. The region’s national and international connectivity both reflects and supports its dynamic economy.
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Highways
Colorado’s transportation network includes almost 1,000 miles of Interstate highway, more than 300 miles of other freeways and expressways, and almost 87,100 miles of arterials, collectors, and local roads. In 2011, the entire network supported more than 46.6 billion vehicle-miles of travel.
The Denver metropolitan area is at the crossroads of three major Interstate highways. Motorists can access I-25 for north-south travel and both I-70 and I-76 for east-west routes. More than three-quarters of the Denver metropolitan area beltway – E-470, C-470, and the Northwest Parkway – has been completed to date. In 2008, Jefferson County, the City and County of Broomfield, and the city of Arvada formed the Jefferson Parkway Public Highway Authority to complete the remaining portion of the beltway. Despite the recent positive developments in the parkway planning, construction may be more than two years in the future.
Improvement and maintenance of a high quality transportation system contributes to the state’s long-term economic well-being. In 2009, Colorado legislators approved a bill – Funding Advancements for Surface Treatment and Economic Recovery (FASTER) – which added an average of $61 per year to the cost of each Colorado vehicle registration to fund bridge repairs and highway improvements. FASTER encompasses four programs that focus separately on bridge safety and repair, highway safety, highway funding, and transit and rail. FASTER revenues are projected to total $197 million in fiscal year 2013.
As the state’s largest economic hub, the Denver metropolitan area receives a significant portion of the Colorado Department of Transportation (CDOT) annual funding allocation. In fiscal year 2011, the highway regions that encompass the Denver metropolitan area received $233.8 million in CDOT funding that went towards construction (62 percent of funds), maintenance (29 percent), and traffic and safety work (eight percent).
Mass Transit
The Regional Transportation District (RTD), funded by a one percent sales tax, oversees the Denver metropolitan area’s mass transit system. RTD operates almost 1,000 buses on 134 fixed routes and 172 light rail vehicles on five light rail lines (C, D, E. F, and H). The District operates 74 Park-n-Rides, 36 light rail stations, and almost 9,700 bus stops. RTD also operates 36 hybrid-electric buses along the 16th Street Mall in downtown Denver and transports visitors from one end of the mile-long pedestrian mall to the other free of charge. System-wide ridership for 2011 resulted in more than 98 million boardings.
As the Denver metropolitan area continues to grow, RTD is working to expand its capacity and satisfy transit demand through FasTracks, a $7.4 billion plan for the buildout of a comprehensive, multi-modal metro transit system. When completed, FasTracks will add 122 miles of new light rail and commuter rail, 18 miles of bus rapid transit service, and more than 21,000 new parking spaces at rail and bus stations. FasTracks will also redirect bus service to better connect communities throughout the Denver metropolitan area and will add 57 new transit stations.
Perhaps the most prominent of these stations, Union Station, will combine state-of-the-art facilities for buses, light rail, regional rail, and commuter rail with office, residential, and retail development on nearly 20 acres of space in the heart of downtown Denver. Builders are currently working to redevelop the historic Union Station and have made progress on a regional bus facility, a light rail plaza, and support systems for a commuter rail line to Denver International Airport. The completed Union Station project will also include several public plazas and a privately operated boutique hotel.
Rail lines that will connect with Union Station are also underway. The West Corridor – which will run between Union Station and the Jefferson County Government Center – was the first FasTracks corridor to begin full
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construction and is currently on-track for completion in April 2013. In 2010, builders broke ground on Eagle P3, a multi-pronged project that includes the East Corridor commuter rail line between Union Station and the airport, the Gold Line light rail between Union Station and Wheat Ridge, and a portion of the Northwest Rail Corridor. The Eagle P3 corridors will be funded, built, and managed by a first-of-its-kind public-private partnership, and construction should be complete in 2016.
Other FasTracks projects currently underway include an extension of the I-225 Corridor light rail line, which will eventually connect to commuter rail on the East Corridor, and the U.S. 36 Bus Rapid Transit, an 18-mile highway segment providing service between Downtown Denver and Boulder. RTD staff is also planning work on four other corridors or extensions to existing corridors.
Air
Denver International Airport (DIA) provides an invaluable link between the Denver metropolitan area and the global community. Located on a 53-square-mile parcel northeast of downtown Denver, DIA has six runways – one of which is the longest commercial runway in North America – plus three concourses, 93 gates, and 47 regional aircraft positions. Fourteen commercial carriers offer more than 170 nonstop flights from DIA to destinations worldwide. Partly because three of those carriers – United Airlines, Southwest Airlines, and Frontier Airlines – have Denver hubs, the airport has developed a reputation for some of the nation’s most competitive fares. DIA ranked third among the 20 major U.S. airports with the lowest airfares in the third quarter of 2012, and it reported the largest decline in average fares between the third quarters of 2000 and 2012.
DIA is the only major U.S. airport constructed in the past 25 years. As a relatively new facility, DIA was designed around sustainability and has become one of the nation’s models for green operations. The airport’s ISO 14001 certified environmental management system provides a comprehensive framework for reducing waste, protecting natural resources, and conserving energy, and airport officials aim to make DIA a zero-waste, carbon-neutral facility by 2020. Progress towards that goal is already evident: with three large solar arrays, DIA is the largest distributed generation photovoltaic energy producer in the state.
The airport’s location and relative youth also make it one of the few facilities nationwide that still have room for growth, and expansion capacity has become an asset as the airport serves progressively larger numbers of passengers. In 2012, DIA and airline staff managed almost 1,700 flight operations and more than 145,600 passengers every 24 hours. Total airport passenger traffic rose 0.6 percent between 2011 and 2012 and reached a record 53.2 million, while passenger traffic nationwide decreased 6.8 percent. DIA ranks as the nation’s fifth-busiest airport by passenger traffic and is the 11th busiest airport worldwide.
The total amount of cargo shipped through DIA declined slightly between 2011 and 2012. Still, air freight activity remains a dynamic part of the airport’s daily operations. Five cargo airlines and 10 major and national carriers currently provide DIA cargo service, and the carriers handled roughly 522 million pounds of shipments – including 488 million pounds of freight and express and 34 million pounds of air mail – in 2012.
With a dynamic freight business and record passenger growth, DIA is poised to expand. Builders have started work on the $500 million South Terminal redevelopment project, which includes train and baggage system upgrades, a new public plaza, a station for the commuter rail line that will connect DIA with Union Station, and a 519-room Westin Hotel. The train station should be ready for preliminary testing in 2014, and the hotel will open in 2015.
The airport’s growth is also galvanizing development activity on surrounding property. Officials with DIA and the City and County of Denver recently unveiled plans for Airport City Denver, a large, mixed-use development
AN ECONOMIC & DEMOGRAPHIC OVERVIEW OF THE DENVER METROPOLITAN AREA
Page 17 Regional Transportation District February 2013
that could occupy surplus airport land. The plan includes six individual districts: the first district, Airport City Center, would include a cluster of hotels, stores, and office buildings and would locate near DIA. Another district, Airport City Gateway, would include parking structures, an automobile and RV mall, and several transit-oriented developments. Airport City Tech would house companies focused on renewable energy, aerospace, and bioscience, while Airport City Agro would support food and biofuels manufacturing. Airport City Logistics would offer warehousing and distribution space, and Airport City Aero would focus on military and aviation uses.
Three reliever airports complement DIA’s expanding role in the Denver metropolitan area economy. Centennial Airport serves the southeast metro area; Front Range Airport is located six miles southeast of DIA and serves the northeast Denver metropolitan area; and Rocky Mountain Metropolitan Airport serves Jefferson, Broomfield, and Boulder Counties in the northwest area. Three general aviation airports – Boulder Municipal Airport, Erie Municipal Airport, and Vance Brand Municipal Airport in Longmont – also serve the Denver metropolitan area.
Rail
Rail lines are a critical component of the nation’s transportation system and are vital to the Denver metropolitan area’s economic health and global competitiveness. Colorado is home to 14 freight railroads operating on more than 2,680 miles of track, and the Denver metropolitan area serves as a major hub for the Burlington Northern Santa Fe and Union Pacific railroads. According to the Association of American Railroads, coal accounted for 70 percent of rail shipments originating in Colorado and almost 60 percent of shipments ending in the state in 2010.
Passenger rail adds to the variety of travel options available in the Denver metropolitan area. Amtrak’s California Zephyr route offers area residents transportation through the Rocky Mountains west of Denver and connects Chicago to San Francisco. Almost 206,430 travelers passed through Colorado Amtrak stations in fiscal year 2011, and more than half (56 percent) of those travelers either boarded or alighted from trains in the Denver metropolitan area.
TOURISM Denver’s many recreational opportunities, cultural attractions, and entertainment and convention venues make the region a favorite of business and leisure travelers. According to the most recent study by Longwoods International, Denver tourism activity increased to a record 13.2 million overnight visitors spending $3.3 billion in 2011, representing a four percent increase in visitors and a 10 percent increase in spending over 2010. Business travelers were responsible for a large portion of the increase, registering a 17 percent increase in visits and a 15 percent increase in spending. Top Denver attractions for visitors included the 16th Street Mall and the Cherry Creek Shopping District, as well as the LoDo Historic District and numerous other cultural facilities.
In addition to excellent cultural attractions and amenities, the Denver metropolitan area is also home to a variety of professional sports teams and some of the newest sports venues in the nation. Denver sports fans enjoy seven professional sports franchises – the NFL Denver Broncos, the NBA Denver Nuggets, the MLB Colorado Rockies, the NHL Colorado Avalanche, the MLS Colorado Rapids, the NLL Colorado Mammoth, and the MLL Denver Outlaws. Each of these teams plays in a venue constructed within the past 20 years. Coors Field – a 76-acre ballpark – hosted two sold-out games of the 2007 World Series, and the 76,125-seat Sports Authority Field at Mile High hosts Denver Broncos football and Denver Outlaws games as well as large public events. Located nine miles northeast of downtown Denver, Dick’s Sporting Goods Park opened in spring 2007 and hosts the Colorado Rapids soccer team. With an 18,000-seat stadium and a fully-lit, 24-field complex, the park is considered to be one of the largest of its kind in the world. Finally, the Pepsi Center hosts three professional sports teams and numerous special events throughout the year.
AN ECONOMIC & DEMOGRAPHIC OVERVIEW OF THE DENVER METROPOLITAN AREA
Page 18 Regional Transportation District February 2013
40%
45%
50%
55%
60%
65%
70%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Denver Metropolitan Area Average Hotel Occupancy Rates
Source: Colorado Hotel & Lodging Association, Rocky Mountain Loding Report.
Denver metropolitan area residents and visitors enjoy year-round outdoor recreation. The City and County of Denver maintains more than 200 city and mountain parks, and eight state parks are located in or immediately outside of the seven-county Denver metropolitan area. The region is also the gateway to the Rocky Mountains, which attract hikers, bikers, rafters, and climbers during the summer and winter sports enthusiasts during colder months. In fact, Colorado is one of the nation’s most-favored destinations for skiing: 11 of the 20 top resorts in Ski magazine’s “2011-2012 Resort Rankings” are located in the Colorado Rocky Mountains.1
Twelve Colorado ski resorts – including several in the top resorts ranking – are located within two hours of the Denver metropolitan area. Data from Colorado Ski Country USA and Vail Resorts, Inc. indicate that the count of skier visits at Colorado resorts during the 2011/2012 season fell to about 11 million, a 10.3 percent decline. Colorado skier visits – or the count of persons skiing or snowboarding for any part of one day – declined in response to extreme weather impacting Colorado resorts. Although abundant snowfall occurred in the fall, prompting some resorts to open early, the record low levels of snowfall during the remainder of the season halted the momentum.
Already magnets for recreational visitors, Colorado and the Denver metropolitan area are increasingly recognized as ideal locations for business travel. A Metropoll survey released in early 2012, for example, showed meeting planners nationwide rank Denver as the nation’s fifth-best city for hosting a convention.2 Increased convention activity confirms the region’s growing popularity among meeting planners and attendees: the Colorado Convention Center reported a 5.8 percent increase in convention delegates between 2010 and 2011 and an
equivalent increase in delegate spending. As one of the largest public meeting facilities in the west, the Colorado Convention Center is poised to accommodate more and larger gatherings. In fact, 11 conventions between May and October 2012 attracted at least 5,000 delegates each.
Growth in convention activity – and visitor activity more generally – has supported more hotel development throughout the Denver metropolitan area. Development has been particularly brisk in downtown Denver, where multiple new or remodeled hotels – including the Four Seasons Hotel Denver, the Embassy Suites Denver-Downtown Convention Center, and the Ritz-Carlton, Denver – have opened within the
1 SKImag.com. “2011-2012 Resort Rankings.” www.skinet.com 2 Denver Business Journal. “Denver Ranked 5th-Best City for Conventions.” January 30, 2012.
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
12.0
12.5
13.0Colorado Skier Visits (millions)
Source: Colorado Ski Country USA.
AN ECONOMIC & DEMOGRAPHIC OVERVIEW OF THE DENVER METROPOLITAN AREA
Page 19 Regional Transportation District February 2013
past several years. The Metropolitan State University of Denver’s Hotel and Hospitality Learning Center opened in fall 2012 and offers a fully functioning flagged hotel – the 150-room SpringHill Suites® Denver Downtown – and an extensive learning laboratory for growing hospitality student enrollment. Plans for at least three other downtown hotels are also moving forward.
New hotel openings – particularly the launch of luxury establishments – are one reason why average room rates for the Denver metropolitan area have recently increased. Some of the gain, however, also reflects a strengthening economy and increased business and consumer willingness to travel. Data from the Rocky Mountain Lodging Report show the region’s average nightly room rate for 2012 ($111.78) was 1.7 percent higher than the 2011 average, and the average occupancy rate for 2012 (68 percent) was also higher than the 2011 rate (66.8 percent).
SUMMARY Employment growth in the Denver metropolitan area shows a steady path of recovery and an improving unemployment rate. The region’s total population and its young adult population have also grown at a pace faster than the national average. Given accelerating job growth and a growing population of highly educated, working-age residents, the Denver metropolitan area appears poised for solid growth.
While the region’s foreclosure crisis is not yet resolved, the Denver metropolitan area housing market made significant progress during 2012, and experts believe much of the foreclosure crisis has passed. Low unsold inventory, better-than-average price trends, and a favorable balance between housing unit development and new household formation supports a healthy market. As housing demand continues to revive, Denver metropolitan area home construction will accelerate but may result in more apartment units and smaller-format homes than the region has had in the past.
The region’s commercial real estate markets are recovering at a slow but steady pace, and several businesses are building new headquarters. Evolving plans for Airport City Denver will leverage the region’s attractiveness for national tenants and property investors and one of its strongest transportation assets, Denver International Airport. Rising airport passenger traffic reflects the region’s continued appeal for business and leisure travelers, as does increased convention activity.
Prepared By:
10184 West Belleview Avenue, Suite 100 Littleton, Colorado 80127 Phone: 303-991-0073
DATA APPENDIX
Page 20 Regional Transportation District February 2013
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
POPULATION (July 1)
United States (thousands) 287,625 290,108 292,805 295,517 298,380 301,231 304,094 306,772 309,326 311,588 313,914
Colorado 4,504,709 4,555,084 4,608,811 4,662,534 4,745,660 4,821,784 4,901,938 4,976,853 5,049,717 5,118,526 5,189,245
Denver Metropolitan Area 2,504,883 2,528,665 2,558,106 2,582,177 2,626,197 2,670,038 2,716,819 2,762,164 2,797,896 2,847,212 2,884,336
POPULATION GROWTH RATE
United States 0.9% 0.9% 0.9% 0.9% 1.0% 1.0% 1.0% 0.9% 0.8% 0.7% 0.7%
Colorado 1.4% 1.1% 1.2% 1.4% 1.8% 1.6% 1.7% 1.5% 1.5% 1.4% 1.4%
Denver Metropolitan Area 1.1% 0.9% 1.2% 1.3% 1.7% 1.7% 1.8% 1.7% 1.3% 1.8% 1.3%
NET MIGRATION
Colorado 19,411 8,903 13,162 13,024 42,205 34,777 39,719 36,379 36,876 34,716 34,714
Denver Metropolitan Area 3,284 (2,296) 3,986 (1,496) 18,720 18,606 22,148 21,716 13,854 28,634 14,718
NONAGRICULTURAL EMPLOYMENT
United States (millions) 130.3 130.0 131.4 133.7 136.1 137.6 136.8 130.8 129.9 131.4 133.2
Colorado (thousands) 2,184.2 2,152.8 2,179.6 2,226.0 2,279.1 2,331.3 2,350.3 2,245.6 2,222.3 2,255.3 2,296.8
Denver Metropolitan Area 1,332.8 1,314.0 1,324.7 1,349.9 1,377.2 1,406.8 1,420.4 1,359.1 1,352.5 1,374.0 1,408.5
(thousands)
NONAGRICULTURAL EMPLOYMENT GROWTH RATE
United States -1.1% -0.3% 1.1% 1.7% 1.8% 1.1% -0.6% -4.4% -0.7% 1.1% 1.4%
Colorado -1.9% -1.4% 1.2% 2.1% 2.4% 2.3% 0.8% -4.5% -1.0% 1.5% 1.8%
Denver Metropolitan Area -3.1% -1.4% 0.8% 1.9% 2.0% 2.1% 1.0% -4.3% -0.5% 1.6% 2.5%
DATA APPENDIX
Page 21 Regional Transportation District February 2013
2012 EMPLOYMENT DISTRIBUTION BY INDUSTRY
Natural Resources & ConstructionManufacturingWholesale & Retail TradeTransportation, Warehousing, UtilitiesInformationFinancial ActivitiesProfessional & Business ServicesEducation & Health ServicesLeisure & HospitalityOther ServicesGovernment
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
UNEMPLOYMENT RATE
United States 5.8% 6.0% 5.5% 5.1% 4.6% 4.6% 5.8% 9.3% 9.6% 8.9% 8.1%
Colorado 5.7% 6.1% 5.6% 5.1% 4.3% 3.8% 4.8% 8.1% 8.9% 7.9% 8.3%
Denver Metropolitan Area 5.9% 6.4% 5.8% 5.2% 4.3% 3.8% 4.8% 8.2% 8.8% 8.1% 7.7%
CONSUMER PRICE INDEX (CPI-U, 1982-84=100)
United States 179.9 184.0 188.9 195.3 201.6 207.3 215.3 214.5 218.1 224.9 229.6
Denver-Boulder-Greeley 184.8 186.8 187.0 190.9 197.7 202.0 209.9 208.5 212.4 220.3 224.6
INFLATION RATE
United States 1.6% 2.3% 2.7% 3.4% 3.2% 2.8% 3.8% -0.4% 1.6% 3.2% 2.1%
Denver-Boulder-Greeley 1.9% 1.1% 0.1% 2.1% 3.6% 2.2% 3.9% -0.6% 1.9% 3.7% 1.9%
12.4%
10.9%
4.0%
14.8%
Denver Metropolitan AreaUnited States Colorado
4.9%
8.9%
15.4%
3.7%
2.0%
5.8%
13.4%
15.2%
10.3%
4.1%
16.4%
6.4%
5.8%
14.7%
5.5%
5.6%
3.0%
3.0%
6.3%
15.2%
12.2%
12.1%
4.1%
17.2%
15.1%
3.3%
3.7%
7.1%
17.6%
DATA APPENDIX
Page 22 Regional Transportation District February 2013
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
TOTAL PERSONAL INCOME (millions, except as noted)
United States (billions) $9,060 $9,378 $9,937 $10,486 $11,268 $11,912 $12,460 $11,867 $12,322 $12,947 $13,402
Colorado $157,752 $159,918 $168,587 $179,695 $194,390 $205,242 $216,030 $204,625 $212,545 $225,410 N/ADenver Metropolitan Area $99,903 $100,934 $106,176 $113,046 $123,018 $128,512 $134,768 $127,016 $132,535 $140,544 N/A
TOTAL PERSONAL INCOME GROWTH RATE
United States 2.0% 3.5% 6.0% 5.5% 7.5% 5.7% 4.6% -4.8% 3.8% 5.1% 3.5%
Colorado 0.8% 1.4% 5.4% 6.6% 8.2% 5.6% 5.3% -5.3% 3.9% 6.1% N/A
Denver Metropolitan Area 0.3% 1.0% 5.2% 6.5% 8.8% 4.5% 4.9% -5.8% 4.3% 6.0% N/A
PER CAPITA PERSONAL INCOME
United States $31,481 $32,295 $33,909 $35,452 $37,725 $39,506 $40,947 $38,637 $39,791 $41,560 N/A
Colorado $35,131 $35,312 $36,849 $38,795 $41,181 $42,724 $44,180 $41,154 $42,107 $44,053 N/A
Denver Metropolitan Area $40,049 $40,187 $41,925 $44,148 $47,208 $48,436 $49,884 $46,201 $47,406 $49,398 N/A
PER CAPITA PERSONAL INCOME GROWTH RATE
United States 1.0% 2.6% 5.0% 4.5% 6.4% 4.7% 3.6% -5.6% 3.0% 4.4% N/A
Colorado -0.6% 0.5% 4.4% 5.3% 6.1% 3.7% 3.4% -6.8% 2.3% 4.6% N/A
Denver Metropolitan Area -0.8% 0.3% 4.3% 5.3% 6.9% 2.6% 3.0% -7.4% 2.6% 4.2% N/A
RETAIL TRADE SALES
United States (billions) $3,460 $3,612 $3,834 $4,084 $4,304 $4,446 $4,394 $4,080 $4,306 $4,651 $4,885
Colorado (millions) $58,850 $58,689 $62,288 $65,492 $70,437 $75,375 $74,911 $66,454 $70,233 $75,551 N/ADenver Metropolitan Area $35,355 $35,548 $37,197 $38,589 $41,491 $44,177 $43,829 $38,882 $40,894 $43,317 N/A (millions)
DATA APPENDIX
Page 23 Regional Transportation District February 2013
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
RETAIL TRADE SALES GROWTH RATE
United States 2.4% 4.4% 6.1% 6.5% 5.4% 3.3% -1.2% -7.1% 5.5% 8.0% 5.0%
Colorado -0.3% -0.3% 6.1% 5.1% 7.6% 7.0% -0.6% -11.3% 5.7% 7.6% N/ADenver Metropolitan Area -0.8% 0.5% 4.6% 3.7% 7.5% 6.5% -0.8% -11.3% 5.2% 5.9% N/A
MEDIAN HOME PRICE
United States (thousands) $167.6 $180.2 $195.2 $219.0 $221.9 $217.9 $196.6 $172.1 $173.1 $166.2 $176.9
Denver Metropolitan Area $228.1 $238.2 $239.1 $247.1 $249.5 $245.4 $219.3 $219.9 $232.4 $231.4 $252.4
(thousands)
EXISTING HOME SALES
Denver Metropolitan Area 47,919 47,966 54,012 53,106 50,244 49,789 47,837 42,070 38,818 39,387 46,299
NEW RESIDENTIAL UNITSDENVER METROPOLITAN AREA
Single Family 13,793 12,656 14,260 15,778 10,952 7,082 3,686 2,397 3,372 3,525 5,306
Two-Family 4,425 3,755 4,843 4,642 5,311 4,632 1,330 601 798 834 908
Multi-Family 4,085 1,858 2,681 459 1,727 3,015 4,413 438 1,002 2,008 3,316
Total Units 22,303 18,269 21,784 20,879 17,990 14,729 9,429 3,436 5,172 6,367 9,530
OFFICE VACANCY RATE
Denver Metropolitan Area 13.4% 14.1% 14.3% 13.1% 12.7% 11.8% 12.9% 13.7% 13.1% 12.6% 12.2%
HOTEL OCCUPANCY RATE
Denver Metropolitan Area 60.3% 59.5% 61.9% 64.1% 66.4% 67.0% 65.0% 59.0% 64.4% 66.8% 68.0%
SKIER VISITS 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13
Colorado (millions) 11.6 11.3 11.8 12.5 12.6 12.5 11.9 11.9 12.3 11.0 N/A
N/A: Not AvailableSources: U.S. Department of Commerce, Bureau of the Census; Colorado Division of Local Government, Demography Section; U.S. Department of Labor, Bureau of Labor Statistics; Colorado Department of Labor and Employment, Labor Market Information; U.S. Department of Commerce, Bureau of Economic Analysis; Colorado Department of Revenue; National Association of REALTORS; Metrolist, Inc.; Home Builders Association of Metro Denver; CoStar Realty Information, Inc.; Rocky Mountain Lodging Report; and Colorado Ski Country USA.
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D-1
Appendix D
FORM OF BOND COUNSEL OPINION
March 26, 2013
Regional Transportation District1600 Blake StreetDenver, Colorado 80202
$96,580,000Regional Transportation District (Colorado)Taxable Sales Tax Revenue Refunding Bonds
Series 2013A
Ladies and Gentlemen:
We have acted as bond counsel to the Regional Transportation District (the "District"), inthe State of Colorado, in connection with its issuance of the above-captioned bonds (the "Bonds")pursuant to Resolution No. 002, Series of 2013, adopted by the Board of Directors of the District onFebruary 19, 2013, which amends and supplements Resolution No. 9, Series 1977, adopted onOctober 27, 1977, as previously amended and supplemented (collectively, the "Bond Resolution"). Insuch capacity, we have examined the District's certified proceedings and such other documents and suchlaw of the State of Colorado and of the United States of America as we have deemed necessary to renderthis opinion letter. Capitalized terms not otherwise defined herein shall have the meanings ascribed tothem by the Bond Resolution.
Regarding questions of fact material to our opinions, we have relied upon the District'scertified proceedings and other representations and certifications of public officials and others furnishedto us without undertaking to verify the same by independent investigation.
Based upon such examination, it is our opinion as bond counsel that:
1. The Bonds have been duly and validly authorized and issued in accordance withlaw, including the Act, and in accordance with the Bond Resolution and are entitled to the benefits of theBond Resolution and of the Act.
2. The Bonds are valid and binding, special, limited obligations of the Districtpayable solely from the Pledged Income and from funds and accounts pledged therefor under the BondResolution.
3. The District has the right and power under the Act to adopt the Bond Resolution,and the Bond Resolution has been duly and lawfully adopted by the District, is in full force and effect andconstitutes a valid and binding obligation of the District, enforceable in accordance with its terms, and noother authorization for the Bond Resolution is required.
D-2
4. The Bond Resolution creates the valid pledge and assignment which it purportsto create of the Pledged Income, moneys, securities and funds held or set aside under the Bond Resolutionfor the benefit of the Bonds on a parity with the pledge and assignment thereof for the benefit of theoutstanding 2007A Bonds and 2010A Bonds, subject only to the provisions of the Bond Resolutionpermitting the application thereof for the purposes and on the terms and conditions set forth in the BondResolution. Except as described in this paragraph, we express no opinion regarding the priority of thepledge and assignment of the Pledged Income, moneys, securities and funds held or set aside under theBond Resolution.
5. Interest on the Bonds is included in gross income for federal and Coloradoincome tax purposes.
The opinions expressed in this opinion letter are subject to the following:
The obligations of the District pursuant to the Bonds and the Bond Resolution are subjectto the application of equitable principles, to the reasonable exercise in the future by the State of Coloradoand its governmental bodies of the police power inherent in the sovereignty of the State of Colorado, andto the exercise by the United States of America of the powers delegated to it by the Federal Constitution,including without limitation, bankruptcy powers.
In expressing the opinions above, we are relying, in part, on a report of an independentcertified public accountant verifying the mathematical computations of the adequacy of the maturingprincipal amounts of and interest on the investments and moneys included in the 2013A Escrow Accountto pay when due, at stated maturity or upon prior redemption, all principal of, any prior redemptionpremiums, and interest on the Refunded Bonds.
The provisions of this opinion letter concerning federal tax issues are not intended orwritten to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may beimposed on any taxpayer by the Internal Revenue Service. This writing supports the promotion ormarketing of the transactions or matters addressed herein. Each taxpayer should seek advice based on thetaxpayer's particular circumstances from an independent tax advisor.
In this opinion letter issued in our capacity as bond counsel, we are opining only uponthose matters set forth herein, and we are not passing upon the accuracy, adequacy or completeness of theOfficial Statement or any other statements made in connection with any offer or sale of the Bonds or uponany federal or state tax consequences arising from the receipt or accrual of interest on or the ownership ordisposition of the Bonds, except those specifically addressed herein.
This opinion letter is issued as of the date hereof and we assume no obligation to reviseor supplement this opinion letter to reflect any facts or circumstances that may hereafter come to ourattention or any changes in law that may hereafter occur.
Respectfully submitted,
E-1
Appendix E
SUMMARY OF CERTAIN PROVISIONS OF THE BOND RESOLUTION
The following description is intended as a summary only and is qualified in its entirety byreference to RTD's Sales Tax Revenue Bond Resolution, adopted October 27, 1977 (the "1977 Sales TaxRevenue Bond Resolution"), as amended and supplemented by the First Supplemental Sales Tax RevenueBond Resolution, adopted June 25, 1985, the Second Supplemental Sales Tax Revenue Bond Resolution,adopted April 26, 1988, the Third Supplemental Sales Tax Revenue Bond Resolution, adoptedJuly 10, 1990, the Fourth Supplemental Sales Tax Revenue Bond Resolution adopted June 23, 1992, theFifth Supplemental Sales Tax Revenue Bond Resolution, adopted May 25, 1993, the Sixth SupplementalSales Tax Revenue Bond Resolution, adopted July 22, 1997, the Seventh Supplemental Sales TaxRevenue Bond Resolution, adopted November 14, 2000, the Eighth Supplemental Sales Tax RevenueBond Resolution, adopted July 24, 2001, the Ninth Supplemental Sales Tax Revenue Bond Resolution,adopted December 18, 2001, the Tenth Supplemental Sales Tax Revenue Bond Resolution, adopted onApril 16, 2002, the Eleventh Supplemental Sales Tax Revenue Bond Resolution, adopted onJune 17, 2003, the Twelfth Supplemental Sales Tax Revenue Bond Resolution adopted on April 22, 2004,the Thirteenth Supplemental Resolution, adopted on February 22, 2005 (the "Thirteenth SupplementalResolution"), the Fourteenth Supplemental Resolution, adopted on February 20, 2007 (the "FourteenthSupplemental Resolution"), the Fifteenth Supplemental Resolution, adopted on February 19, 2008 (the"Fifteenth Supplemental Resolution"), the Sixteenth Supplemental Resolution adopted on November17, 2009 (the "Sixteenth Supplemental Resolution") and the Seventeenth Supplemental Resolutionadopted on February 19, 2013 (the “Seventeenth Supplemental Resolution”) all of which, collectively, arereferred to as the "Bond Resolution." Certain provisions of the Bond Resolution are summarized underthe captions, "INTRODUCTION" and "THE BONDS" in the body of this Official Statement and are notsummarized in this APPENDIX E. For purposes of this APPENDIX E the term "Bonds" means: RTD'sSales Tax Revenue Bonds, Series 2004A (the "Series 2004A Bonds"), RTD's Sales Tax RevenueRefunding Bonds, Series 2005A (the "Series 2005A Bonds"), RTD's Sales Tax Revenue RefundingBonds, Series 2007A (the "Series 2007A Bonds"), RTD's Sales Tax Revenue Refunding Bonds, Series2010A (the "Series 2010A Bonds"), and RTD's Taxable Sales Tax Revenue Refunding Bonds, Series2013A (the "Series 2013A Bonds") (together, the "Outstanding Parity Bonds"), and any Additional ParityBonds, as described in this APPENDIX E (the "Additional Parity Bonds").
The Series 2004A and Series 2005A Bonds are insured by Ambac Assurance Corporation and noother Outstanding Parity Bonds are insured. In connection with the issuance of the Series 2013A Bonds,the District expects to refund all of the outstanding Series 2004A Bonds and the Series 2005A Bonds. Ifthe District refunds all of the outstanding Series 2004A Bonds and Series 2005A Bonds, all references tothe Bond Insurer and Bond Insurance shall be of no force and effect.
Certain Definitions
The following are definitions in summary form of certain terms contained in the Bond Resolutionand used herein:
"Accrued Aggregate Debt Service" means, as of any date of calculation, an amount equal to thesum of the amounts of accrued Debt Service with respect to all series of Bonds payable from the PledgedIncome, calculating the accrued Debt Service with respect to each series of such Bonds at an amountequal to the sum of (a) interest on the Bonds of such series accrued and unpaid and to accrue to the end ofthe then current calendar month, and (b) Principal Installments due and unpaid and that portion of the
E-2
Principal Installment for such series next due which would have accrued (if deemed to accrue in themanner set forth in the definition of Debt Service) to the end of such calendar month.
"Act" means part 1 of Article 9 of Title 32, Colorado Revised Statutes, as amended from time totime.
"Aggregate Debt Service" for any period means, as of any date of calculation, the sum of theamounts of Debt Service for such period with respect to all series of Bonds payable from the PledgedIncome.
"Beneficial Owner" means the beneficial owner of Series 2013A Bonds registered in the name ofthe Securities Depository or its nominee.
"Bond Insurer" means, with respect to the Series 2004A Bonds and the Series 2005A Bonds,Ambac Assurance Corporation.
"Debt Service" for any period means, as of any date of calculation and with respect to any series,an amount equal to the sum of (a) interest accruing during such period on Bonds of such series, except tothe extent that such interest is to be paid from deposits in the Bond Service Account (as described belowin "Application of Pledged Income") made from Bond proceeds and (b) that portion of each PrincipalInstallment for such series which would accrue during such period if such Principal Installment weredeemed to accrue daily in equal amounts from the next preceding Principal Installment due date for suchseries (or, if there shall be no such preceding Principal Installment due date, from a date one yearpreceding the due date of such Principal Installment or from the date of issuance of the Bonds of suchseries, whichever date is later). Such interest and Principal Installment for such series shall be calculatedon the assumption that no Bonds of such series outstanding at the date of calculation will cease to beoutstanding except by reason of the payment of each Principal Installment on the due date thereof.
For the purposes of this calculation with respect to the issuance of Additional Parity Bondspursuant to the Bond Resolution, it shall be assumed that (a) any Bonds which bear interest at a variablerate outstanding at the time of such calculation will bear interest during any period (i) if the interest ratethat such variable rate Bonds bear or shall bear during such period has not been determined, at the fixedinterest rate estimated by the remarketing agent for such variable rate Bonds and approved by RTD or, ifthere is no such remarketing agent, by RTD that, having due regard for prevailing financial marketconditions, is necessary, but does not exceed the interest rate necessary, to sell such variable rate Bonds at100% of the principal amount thereof in an open market transaction, assuming the variable rate Bondshad a term equal to the then remaining term of the variable rate Bonds (taking into account any mandatoryredemption for such variable rate Bonds) or (ii) if the interest rate that such variable rate Bonds bear orshall bear during such period has been determined and is not subject to fluctuation, at such interest ratethus determined; and (b) any Bonds which are subject to tender by the registered owners thereofoutstanding at the time of such determination shall mature at the date of maturity or mandatoryredemption date or dates thereof. Variable rate Bonds, if any, hereafter issued shall be subject to amaximum rate as determined by the Board. "Debt Service Reserve Requirement" means, as of any date ofcalculation, an amount equal to one-half of the greatest amount of Aggregate Debt Service for the thencurrent or any future Fiscal Year.
"District Sales Tax Area" means the geographic area comprising RTD as described in the Act asamended to October 27, 1977, plus any other area within which RTD has been thereafter or is hereafterauthorized by law to levy the Sales and Use Tax, and excluding any area which may have been thereafteror may hereafter be deleted by law from the geographic area comprising RTD, provided, however, that so
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long as any Bonds payable from the Pledged Income remain outstanding under the Bond Resolution, theDistrict Sales Tax Area will at least be comprised of the Primary Sales Tax Area.
"Escrow Agreement" means the Escrow Agreement dated as of the date of delivery of the Series2013A Bonds between the District and the Trustee, as Escrow Agent.
"Facilities" means any land or other properties, or any interest therein, pertaining to themulti-modal mass transportation system of RTD.
"Fiscal Year" means the then current annual accounting period adopted by RTD for its generalaccounting purposes which period, at the time of the adoption of the Bond Resolution, is the calendaryear.
"Investment Securities" means any securities or other obligations which at the time of theirpurchase by the Trustee on behalf of RTD are legal for investment of RTD's funds; provided that so longas any Bonds are insured by the Bond Insurer and so long as the Bond Insurer is not in default of itspayment obligations under the Bond Insurance Policy, for the purpose of the investment of funds held tothe credit of the Bond Reserve Account "Investment Securities" shall be those specified below, to theextent permitted by law:
(a) Direct obligations of the United States of America and securities fully andunconditionally guaranteed as to the timely payment of principal and interest by the United Statesof America, provided, that the full faith and credit of the United States of America must bepledged to any such direct obligation or guarantee ("Direct Obligations");
(b) Direct obligations and fully guaranteed certificates of beneficial interest of theExport-Import Bank of the United States; consolidated debt obligations and letter of credit-backed issues of the Federal Home Loan Banks; participation certificates and senior debtobligations of the Federal Home Loan Mortgage Corporation ("FHLMCs"); debentures of theFederal Housing Administration; mortgage-backed securities (except stripped mortgage securitieswhich are valued greater than par on the portion of unpaid principal) and senior debt obligationsof the Federal National Mortgage Association ("FNMAs"); participation certificates of theGeneral Services Administration; guaranteed mortgage-backed securities and guaranteedparticipation certificates of the Government National Mortgage Association ("GNMAs");guaranteed participation certificates and guaranteed pool certificates of the Small BusinessAdministration; debt obligations and letter of credit-backed issues of the Student Loan MarketingAssociation; local authority bonds of the U.S. Department of Housing & Urban Development;guaranteed Title XI financings of the U.S. Maritime Administration; guaranteed transit bonds ofthe Washington Metropolitan Area Transit Authority; Resolution Funding Corporation securities.
(c) Direct obligations of any state of the United States of America or any subdivisionor agency thereof whose unsecured, uninsured and unguaranteed general obligation debt is rated,at the time of purchase, "A" or better by Moody's and "A" or better by S&P, or any obligationfully and unconditionally guaranteed by any state, subdivision or agency whose unsecured,uninsured and unguaranteed general obligation debt is rated, at the time of purchase, "A" or betterby Moody's and "A" or better by S&P;
(d) Commercial paper (having original maturities of not more than 270 days) rated,at the time of purchase, "P-l" by Moody's and "A-1" or better by S&P;
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(e) Federal funds, unsecured certificates of deposit, time deposits or bankersacceptances (in each case having maturities of not more than 365 days) of any domestic bankincluding a branch office of a foreign bank which branch office is located in the United States,provided legal opinions are received to the effect that full and timely payment of such deposit orsimilar obligation is enforceable against the principal office or any branch of such bank, which, atthe time of purchase, has a short-term "Bank Deposit" rating of "P-l" by Moody's and a "Short-Term CD" rating of "A-1" or better by S&P.
(f) Deposits of any bank or savings and loan association which has combinedcapital, surplus and undivided profits of not less than $3 million, provided such deposits arecontinuously and fully insured by the Bank Insurance Fund or the Savings Association InsuranceFund of the Federal Deposit Insurance Corporation;
(g) Investments in money-market funds rated "AAAm" or "AAAm-G" by S&P;
(h) Repurchase agreements collateralized by Direct Obligations, GNMAs, FNMAsor FHLMCs with any registered broker/dealer subject to the Securities Investors' ProtectionCorporation jurisdiction or any commercial bank insured by the FDIC, if such broker/dealer orbank has an uninsured, unsecured and unguaranteed obligation rated "P-1" or "A3" or better byMoody's, and "A-1" or "A-" or better by S&P, provided:
(i) a master repurchase agreement or specific written repurchase agreementgoverns the transaction; and
(ii) the securities are held free and clear of any lien by the Trustee or anindependent third party acting solely as agent ("Agent") for the Trustee, and such third party is(A) a Federal Reserve Bank, (B) a bank which is a member of the Federal Deposit InsuranceCorporation and which has combined capital, surplus and undivided profits of not less than $50million or (C) a bank approved in writing for such purpose by the Bond Insurer, and the Trusteeshall have received written confirmation from such third party that it holds such securities, freeand clear of any lien, as agent for the Trustee; and
(iii) a perfected first security interest under the Uniform Commercial Code,or book entry procedures prescribed at 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq. in suchsecurities is created for the benefit of the Trustee; and
(iv) the repurchase agreement has a term of 180 days or less, and the Trusteeor the Agent will value the collateral securities no less frequently than weekly and will liquidatethe collateral securities if any deficiency in the required collateral percentage is not restoredwithin two business days of such valuation; and
(v) the fair market value of the securities in relation to the amount of therepurchase obligation, including principal and interest, is equal to at least 103%.
(i) Investment Agreements, the issuer, form and substance of which are approved bythe Bond Insurer.
(j) Any other investments approved in writing by the Bond Insurer.
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"Moody's" means Moody's Investors Service, a corporation organized and existing under the lawsof the State of Delaware, its successors and their assigns, if it then maintains a rating on the Bonds, and, ifsuch corporation shall for any reason no longer perform the functions of a securities rating agency,"Moody's" shall be deemed to refer to any other nationally recognized rating agency designated by RTD.
"Participants" means participating underwriters, securities brokers or dealers, banks, trustcompanies, closing corporations, or other persons or entities for which the Securities Depository holdsSeries 2013A Bonds.
"Paying Agent" means, with respect to the Series 2013A Bonds, The Bank of New York MellonTrust Company, N.A., and with respect to any other series of Bonds, any bank or trust companyorganized under the laws of any state of the United States or any national banking association designatedas paying agent for the bonds of such series, and its successor or successors appointed in the mannerprovided in the Bond Resolution.
"Pledged Income" means the Sales and Use Tax Revenues and any additional revenues as may bepledged by supplemental resolution.
"Primary Sales Tax Area" means the area within the District Sales Tax Area described in theBond Resolution, together with such additional area or areas within the District Sales Tax Area whichshall be added thereto pursuant to the Bond Resolution as the Board of RTD shall from time to timedetermine by supplemental resolution to be necessary to provide further security for the Bonds issued orto be issued under the Bond Resolution or to enable RTD to sell and issue Additional Parity Bonds. Thedescription of the Primary Sales Tax Area will be amended by said supplemental resolution so as to addthereto such additional area or areas and such Primary Sales Tax Area as so amended will thereafter bedeemed to be the Primary Sales Tax Area for all purposes of the Bond Resolution.
"Principal Installment" means, as of any date of calculation and with respect to any series ofBonds payable from the Pledged Income, so long as any Bonds thereof are outstanding, (a) the principalamount of Bonds of such series due on a certain future date for which no sinking fund installments havebeen established; or (b) the unsatisfied balance of any sinking fund installments due on a certain futuredate for Bonds of such series, plus the amount of the sinking fund redemption premiums, if any, whichwould if applicable upon redemption of such Bonds on such future date in a principal amount equal tosaid unsatisfied balance of such sinking fund installments; or (c) if such future dates coincide as todifferent Bonds of such series, the sum of such principal amount of Bonds and of such unsatisfied balanceof sinking fund installments due on such future date plus such applicable redemption premiums, if any.
"Refunded Bond Requirements" means the principal of, premium, if any, and interest on theRefunded Bonds as the same become due prior to and at the maturity or prior redemption thereof.
"Refunded Bonds" means all or a portion of the outstanding Series 2004A Bonds andSeries 2005A Bonds to be refunded with the proceeds of the Series 2013A Bonds, as designated in theSale Certificate.
"Reserve Fund Credit Facility" means a surety bond, insurance policy or letter of credit whichmeets certain requirements, described in the Bond Resolution, to the satisfaction of the Bond Insurer.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,Inc., a corporation organized and existing under the laws of the State of New York, its successors andtheir assigns, if it then maintains a rating on the Bonds, and, if such corporation shall for any reason no
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longer perform the functions of a securities rating agency, "S&P" shall be deemed to refer to any othernationally recognized securities rating agency designated by RTD.
"Sale Certificate" means the certificate executed by either the General Manager or the ChiefFinancial Officer dated on or before the date of delivery of the Series 2013A Bonds setting forth certaininformation concerning the Series 2013A Bonds the determination of which is delegated by theSeventeenth Supplemental Resolution.
"Sales and Use Tax" means a sales tax levied uniformly throughout the District Sales Tax Area ata rate of one-half of 1% upon every transaction or other incident with respect to which a sales tax waslevied by the State pursuant to the provisions of Article 26 of Title 39, Colorado Revised Statutes, on thedate the Act first became effective, plus the increase in such tax levied uniformly throughout the DistrictSales Tax Area, which increase is levied at the rate of one-tenth of 1% upon which every transaction orother incident with respect to which a sales tax was levied by the State pursuant to the provisions ofArticle 26 of Title 39, Colorado Revised Statutes, on May 1, 1983.
In 1989 the Colorado Supreme Court interpreted RTD's taxing authority to include both sales anduse taxes. Beginning in 1989, and in all subsequent years, the term "Sales Tax" has included both salestax and use tax.
"Sales and Use Tax Revenues" means the proceeds received by RTD, or by the Trustee asassignee of RTD, from the levy and collection of the Sales and Use Tax and from the levy and collectionof any additional sales tax the proceeds of which have been added to Pledged Income in accordance withthe provisions of the Bond Resolution.
"Securities Depository" means The Depository Trust Company, a limited purpose trust companyorganized under the laws of the State of New York, or its successors and assigns.
"Series 2013A Bonds" means the Regional Transportation District, Taxable Sales Tax RevenueRefunding Bonds, Series 2013A.
"2013A Escrow Account" means the account established pursuant to the Escrow Agreement.
"Underwriters" means, collectively, the purchaser or purchasers of the Series 2013A Bonds.
Pledge Effected by Bond Resolution
The payment of the principal and redemption price of, and interest on all Bonds payable from thePledged Income is secured by (a) the Pledged Income and (b) all funds established by the BondResolution, excluding the 2013A Escrow Account and certain other accounts created with respect to theOutstanding Parity Bonds, including any investment thereof, subject only to the express provisions of theBond Resolution permitting application of such funds for the purposes and on the terms and conditionsdescribed in the Bond Resolution.
Assignment to Trustee
RTD has assigned its rights to receive payment of the Sales and Use Tax Revenues to the Trusteefor the benefit of the bondholders and has directed the Executive Director of the Colorado Department ofRevenue to pay the Sales and Use Tax Revenues collected by such Director directly to the Trustee.
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Trustee
The Bank of New York Mellon Trust Company, N.A., a banking association organized andexisting under the laws of the United States, is Trustee under the Bond Resolution.
Additional Parity Bonds
The Bond Resolution prohibits the issuance of securities having a lien upon the Pledged SalesTax Revenues superior to the Bonds. The Bond Resolution also provides restrictions on the issuance ofsecurities having a lien upon the Pledged Sales Tax Revenues on a parity with that of the Bonds("Additional Parity Bonds").
The Bond Resolution provides that no Additional Parity Bonds may be issued except as permittedby and in accordance with the District's Indenture of Trust, dated as of October 1, 2006, between theDistrict and the Trustee, relating to the District's Sales Tax Revenue Bonds (FasTracks Project), Series2006A, and as permitted by and in accordance with any resolutions, indentures or other documentsauthorizing the issuance of bonds payable on a parity with such 2006A FasTracks Bonds (collectively, the"Subordinate Indentures"). The 2006A FasTracks Bonds and the outstanding bonds issued pursuant tothe Subordinate Indentures have a lien on the Pledged Sales Tax Revenues that is junior and subordinateto the lien thereon of the Series 2013A Bonds. The Subordinate Indentures prohibit the issuance of anyadditional Senior Debt, as defined therein (which would have a lien on the Pledged Sales Tax Revenueson a parity with the Series 2013A Bonds and senior to the FasTracks Bonds) except for securities issuedto refund, in whole or in part, such outstanding Senior Debt, provided that after the issuance of suchrefunding bonds, the debt service payable in each Bond Year on all such Outstanding Senior Debt afterthe issuance of such refunding bonds shall not exceed the debt service payable in each Bond Year on allOutstanding Senior Debt prior to the issuance of such refunding bonds. Notwithstanding the foregoing,the Subordinate Indentures permit the District to enter into Senior Financial Products Agreements andSenior Credit Facility Obligations in connection with the Senior Debt (as such terms are defined in theSubordinate Indentures).
Refunding Bonds
One or more series of Bonds payable from the Pledged Income may be issued to refund all suchoutstanding Bonds of one or more series or one or more maturities within a series ("Refunding Bonds").The issuance of Refunding Bonds to refund such outstanding Bonds is subject to the condition that (a) theAggregate Debt Service for the current and each future Fiscal Year will not be increased, and (b) there isdeposited in the Bond Reserve Account the amount required, if any, so that such fund shall equal the DebtService Reserve Requirement calculated immediately after the authentication and delivery of such seriesof Refunding Bonds. As set forth above, the Bond Resolution permits RTD to issue Refunding Bonds asAdditional Parity Bonds provided that, after the issuance of such refunding bonds, the debt servicepayable in each Bond Year on all Outstanding Parity Bonds after the issuance of such Refunding Bondsshall not exceed the debt service payable in each Bond Year on all Outstanding Parity Bonds prior to theissuance of such Refunding Bonds.
Subordinated Debt
RTD may, at any time, or from time to time, issue subordinated indebtedness ("SubordinatedIndebtedness") payable out of, and which may be secured by a pledge of Pledged Income as may fromtime to time be available to RTD for the purpose of payment thereof pursuant to the Bond Resolution,provided, however, that such pledge shall be, and shall be expressed to be, subordinate in all respects tothe pledge of the Pledged Income, moneys, securities and funds created by the Bond Resolution as
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security for the Bonds. The issuance of Subordinated Indebtedness is subject to the Bond Insurer'sconsent.
Application of Bond Proceeds
The net proceeds of the Series 2013A Bonds will be applied simultaneously with the deliverythereof as follows:
(a) There will be deposited in the 2013A Escrow Account an amount sufficient,together with other available moneys of the District and the known investment yield onInvestment Securities in which such amounts will be invested, to pay the Refunded BondRequirements; and
(b) The balance of the net proceeds of the Series 2013A Bonds will be applied to thepayment of the costs of issuing the Series 2013A Bonds.
Application of Pledged Income
The Bond Resolution establishes the Bond Service Account and the Bond Reserve Account, to beheld by the Trustee. The Trustee shall forthwith upon receiving the Pledged Income each month, depositin the Bond Service Account and the Bond Reserve Account in the following order, the followingamounts:
(a) for credit to the Bond Service Account, the amount, if any, required so that thebalance in said account shall equal the Accrued Aggregate Debt Service; and
(b) for credit to the Bond Reserve Account, the amount, if any, required so that suchaccount shall equal the Debt Service Reserve Requirement.
In each month after making such deposits and fulfilling all obligations with respect toSubordinated Indebtedness, the Trustee shall pay over the remaining Pledged Income to RTD for use byRTD for any lawful purpose.
Bond Service Account
The Trustee will pay out of the Bond Service Account to the respective Paying Agents (a) on orbefore each interest payment date for any of the Bonds payable from the Pledged Income the amountrequired for the interest payable on such date; (b) on or before each Principal Installment payment datefor any of the Bonds the amount required for the Principal Installment payable on such due date; and(c) on or before any redemption date for the Bonds, the amount required for the payment of interest on theBonds then to be redeemed. The Trustee will also pay out of the Bond Service Account the accruedinterest included in the purchase price of Bonds purchased for retirement.
Bond Reserve Account
Amounts in the Bond Reserve Account are to be applied to make up any deficiency in the BondService Account.
Whenever the moneys on deposit in the Bond Reserve Account exceed the aggregate of the DebtService Reserve Requirements, such excess will first be deposited in the Bond Service Account, if and tothe extent necessary to make the amount in such account equal to the amount then required to be in such
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account, and any balance of such excess shall be forthwith paid over to RTD free and clear of the lien ofthe Bond Resolution.
Whenever the amount in the Bond Reserve Account, together with the amount in the BondService Account, is sufficient to pay in full all outstanding Bonds in accordance with their terms, thefunds on deposit in the Bond Reserve Account will be transferred to the Bond Service Account, and nofurther deposits will be required to be made into such accounts.
Nothing in the Bond Resolution will be construed as limiting the right of RTD to augment theBond Reserve Account with any other moneys which are legally available therefor or to substitute for thedeposit required to be maintained under the Bond Resolution a letter of credit, surety bond, insurancepolicy, agreement guaranteeing payment or other undertaking by a financial institution to ensure that theamount otherwise required to be maintained under the Bond Resolution will be available to RTD asneeded, provided that any such substitutions will be submitted to Moody's, if the Bonds are then rated byMoody's, and S&P, if the Bonds are then rated by S&P, and shall not cause the then-current ratings to beadversely affected; and provided further that so long as any Series 2004A Bonds or Series 2005A Bondsare Outstanding and insured by the Bond Insurer and so long as the Bond Insurer is not in default of itspayment obligations under the Bond Insurance Policies relating to the Series 2004A Bonds or theSeries 2005A Bonds, as the case may be, any such letter of credit, surety bond, insurance policy,agreement guaranteeing payment or other undertaking by a financial institution must be a Reserve FundCredit Facility or be approved by the Bond Insurer. Any such determination will be evidenced in suchmanner as the Trustee may require.
Sinking Fund Installment Credits
In the event RTD, or the Trustee on behalf of RTD, purchases or redeems (other than a purchaseor redemption of bonds to satisfy sinking fund installments) Bonds of any series and maturity for whichsinking fund installments shall have been established, there shall be credited toward each such sinkingfund installment thereafter to become due (other than the next due) an amount bearing the same ratio tosuch sinking fund installment as the total principal amount of such Bonds so purchased or redeemed andcanceled bears to the total amount of all such sinking fund installments to be credited. The portion of thesinking fund installment remaining after the deduction of any such amounts credited toward the sameshall constitute the unsatisfied balance of such sinking fund installment.
Investment of Certain Accounts
Moneys held in the Bond Service Account and the other accounts created under the BondResolution may be invested and reinvested by the Trustee in any securities or other obligations which atthe time of their purchase by the Trustee on behalf of the District are legal for the investment of theDistrict funds; provided, however, that so long as any Bonds are insured by the Bond Insurer, moneysheld in the Bond Reserve Account may be invested and reinvested by the Trustee only in thoseInvestment Securities that are described in paragraphs (a) through (j) of the definition of "InvestmentSecurities" set forth above. The Trustee shall make all such investments of moneys held by it inaccordance with instructions received from RTD.
Interest (net of that which represents a return of accrued interest paid in connection with thepurchase of any investment) earned on any moneys or investments in the Bond Service Account or theBond Reserve Account shall be credited to the account from which the investment was made thatgenerated such interest. Interest earned on any moneys or investments in a separate sub-account in theConstruction Account shall be held in such sub-account for the purposes thereof.
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Payment of Bonds
RTD covenants in the Bond Resolution that it will duly and punctually pay or cause to be paid,but solely from the Pledged Income and the proceeds of the Bonds pledged therefor by the BondResolution, the principal of, redemption premium, if any, of every Bond and the interest thereon, at thedates and places and in the manner mentioned in the Bonds.
Extension of Payment of Bonds
RTD covenants in the Bond Resolution that it will not directly or indirectly extend or assent tothe extension of the maturity of any of the Bonds or the time of payment of any claims for interest by thepurchase or funding of such Bonds or claims for interest or by any other arrangement and in case thematurity of any of the Bonds or the time for payment of any such claims for interest shall be extended,such Bonds or claims for interest will not be entitled, in case of any default under the Bond Resolution, tothe benefit of the Bond Resolution or to any payment out of Pledged Income or accounts established bythe Bond Resolution, including the investments, if any, thereof, pledged under the Bond Resolution or themoneys (except moneys held in trust for the payment of particular Bonds or claims for interest pursuant tothe Bond Resolution) held by the Trustee except subject to the prior payment of the principal of all Bondsoutstanding the maturity of which has not been extended and of such portion of the accrued interest on theBonds as shall not be represented by such extended claims for interest. Nothing in the Bond Resolutionshall be deemed to limit the right of the District to issue Refunding Bonds and such issuance shall not bedeemed to constitute an extension of maturity of Bonds.
Power to Issue Bonds and Pledge the Pledged Income and Other Funds
RTD covenants in the Bond Resolution that it is duly authorized under all applicable laws tocreate and issue the Bonds and to adopt the Bond Resolution and to pledge and assign the PledgedIncome and other moneys, securities and funds purported to be subjected to the lien of the BondResolution in the manner and to the extent provided in the Bond Resolution. Except to the extentotherwise provided in the Bond Resolution, the Pledged Income and other moneys, securities and fundsso pledged are and will be free and clear of any pledge, lien, charge or encumbrance thereon or withrespect thereto prior to, or of equal rank with, the pledge and assignment created by the Bond Resolution,and all corporate or other action on the part of RTD to that end has been and will be duly and validlytaken. The Bonds and the provisions of the Bond Resolution are and will be the valid and legallyenforceable obligations of RTD in accordance with their terms and the terms of the Bond Resolution.Subject to the provisions of the Bond Resolution, RTD will at all times, to the extent permitted by law,defend, preserve and protect the pledge and assignment of the Pledged Income and other moneys,securities and funds pledged under the Bond Resolution and all the rights of the bondholders under theBond Resolution against all claims and demands of all persons whomsoever.
Power to Levy and Collect Pledged Income
RTD covenants in the Bond Resolution that it has, and will have so long as any Bonds areoutstanding, good right and lawful power to levy, establish and collect the Pledged Income.
Creation of Liens
RTD covenants in the Bond Resolution that it will not issue any bonds, notes, debentures, orother evidences of indebtedness of similar nature, except those issued under the Bond Resolution, payableout of or secured by a pledge or assignment of the Pledged Income or other moneys, securities or fundsheld or set aside under the Bond Resolution nor will it create or cause to be created any lien or charge on
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the Pledged Income, or such moneys, securities or funds other than (a) evidences of indebtedness payableout of, or secured by a pledge and assignment of, Pledged Income to be derived on and after such date asthe pledge of the Pledged Income provided in the Bond Resolution shall be discharged and satisfied or(b) Subordinated Indebtedness as described under the caption "Subordinated Debt" in this APPENDIX E.
Primary Sales Tax Area
For purposes of the Bond Resolution, the Primary Sales Tax Area is defined to mean thefollowing described area:
The entire geographical area of RTD as described in Section 32-9-106, Colorado RevisedStatutes, as amended prior to October 27, 1977, excepting therefrom the following described areas:
(a) that portion of Adams County lying east of the center line of Range 65 West ofthe 6th Principal Meridian; and
(b) that portion of Boulder County lying west of the East line of the westerly mostsections of Range 71 West of the 6th Principal Meridian; and
(c) those portions of Douglas and Jefferson Counties lying south of the center line ofTownship 7 South.
provided, however, that if the Board of RTD shall from time to time determine in a supplementalresolution that in order to provide further security for the Bonds issued or to be issued under the BondResolution or to enable RTD to sell and issue Additional Parity Bonds it shall be necessary to add to theaforesaid described Primary Sales Tax Area an additional area or areas within District Sales Tax Area,and the description of said Primary Sales Tax Area shall be amended by said supplemental resolution soas to add thereto such additional area or areas, such Primary Sales Tax Area as so amended shallthereafter be deemed to be the Primary Sales Tax Area for all purposes of the Bond Resolution.
RTD determines in the Bond Resolution that the levy of the Sales and Use Tax throughout thePrimary Sales Tax Area as described pursuant to the provisions of the Bond Resolution is necessary andmaterial to the rights and security of the holders of the Bonds issued under the Bond Resolution.
Resolution to Constitute Contract
In consideration of the purchase and acceptance of any and all of the Series 2013A Bondsauthorized to be issued under the Bond Resolution by those who shall hold the same from time to time,the Bond Resolution is to be deemed to be and shall constitute a contract among RTD, the Trustee and theholders from time to time of RTD's Bonds; and the pledge and assignment made in the Bond Resolutionand the covenants and agreements therein set forth to be performed on behalf of RTD shall be for theequal benefit, protection and security of the holders of any and all of RTD's Bonds, all of which,regardless of the time or times of their authentication and delivery or maturity, are of equal rank withoutpreference, priority or distinction of any of RTD's Bonds over any other thereof except as expresslyprovided in or permitted by the Bond Resolution.
Protection of Bondholders' Rights and Security Against Impairment
RTD covenants in the Bond Resolution that it will continue to levy the Sales and Use Tax andany additional sales tax which becomes part of Sales and Use Tax Revenues in accordance with theprovisions of the Bond Resolution within the District Sales Tax Area as such area shall exist from time to
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time and that it promptly will take all steps, including any and all action permitted by law, necessary toenforce the collection of Sales and Use Tax Revenues by the Executive Director of the State Departmentof Revenue and to enforce the assignment of such Sales and Use Tax Revenues to the Trustee.
RTD covenants in the Bond Resolution that it will not take any action, including, withoutlimitation, any action in respect of the Act, its Resolution No. 19, Series of 1973, adopted on October 25,1973, pursuant to which the Sales and Use Tax is levied, the diminution of the Primary Sales Tax Area,the reduction of the rate of the Sales and Use Tax or any other sales tax which becomes part of Sales andUse Tax Revenues in accordance with the Bond Resolution, or the elimination of transactions to whichthe Sales and Use Tax or such other sales tax applies, which would result in a material impairment of therights of the bondholders or the security for the Bonds.
It is recognized that certain areas, other than the Primary Sales Tax Area, may be deleted by lawfrom the District Sales Tax Area, and that such deletion is permitted under the terms of the BondResolution and shall not result in any impairment of bondholders' rights under the Bond Resolution.
Accounts and Reports
RTD covenants in the Bond Resolution to keep or cause to be kept proper records and accounts(separate from all other records and accounts) in which complete and correct entries shall be made of itstransactions relating to the Pledged Income and each account and subaccount established under the BondResolution and which shall at all times be subject to the inspection of the Trustee, and the holders of anaggregate of not less than 5% in principal amount of the Bonds then outstanding or their representativesduly authorized in writing.
The Trustee will advise RTD promptly after the end of each month of the respective transactionsduring such month relating to each account and subaccount held by it under the Bond Resolution and thePledged Income.
RTD will annually, within 150 days after the close of each Fiscal Year, file with the Trustee, andotherwise as provided by law, a copy of an annual report for such Fiscal Year, accompanied by anaccountant's certificate. RTD will also file with said annual financial report, a report with respect to eachaccount and subaccount established under the Bond Resolution of the receipts therein and disbursementstherefrom during such Fiscal Year and the amount held therein at the end of such Fiscal Year and of thereceipts and disbursements of Pledged Income, accompanied by an accountant's certificate. Suchaccountant's certificate accompanying the report of accounts and subaccounts will state whether or not, tothe knowledge of the signer, RTD is in default with respect to the aforesaid information required to becontained in such report, and if so, the nature of such default.
RTD will file with the Trustee (a) forthwith upon becoming aware of any default under anycovenants of the Bond Resolution, a certificate specifying such default, and (b) within 150 days after theend of each Fiscal Year, a certificate stating whether RTD is in default under any covenants or obligationsof the Bond Resolution. Likewise, the Trustee shall provide the Bond Insurer notice of any event ofdefault under the Bond Resolution within five business days of the Trustee's knowledge of such default.
The reports, statements and other documents required to be furnished to the Trustee pursuant toany provisions of the Bond Resolution will be available for the inspection of bondholders at the office ofthe Trustee and will be mailed to each bondholder who shall file a written request therefor with RTD.RTD may charge each bondholder requesting such reports, statements and other documents a reasonablefee to cover reproduction, handling and postage.
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Payment of Taxes and Charges
RTD covenants in the Bond Resolution that it will from time to time duly pay and discharge, orcause to be paid and discharged, all taxes, assessments and other governmental charges, or requiredpayments in lieu thereof, lawfully imposed upon the rights, revenues, income, receipts, and other moneys,property, securities and funds transferred, assigned or pledged under the Bond Resolution when the sameshall become due, except those taxes, assessments, charges or claims which RTD shall in good faithcontest by proper legal proceedings if RTD shall in all such cases have set aside on its books reservesdeemed adequate with respect thereto.
Corporate Existence
RTD covenants in the Bond Resolution that it will preserve its corporate status and its existenceas a multimodal mass transportation district, and will not be dissolved or lose its right to exist as such adistrict or lose any rights necessary to enable the District to levy and receive the benefit from thecollection of Pledged Income to the extent and in the manner provided in the Bond Resolution and in theAct.
Remedies on Default
As described in "SECURITY FOR THE BONDS – Bondholders' Remedies" in the body of thisOfficial Statement, upon the happening and continuance of any such event of default, the Trustee or theholders of not less than 25% in principal amount of the Bonds outstanding under the Bond Resolutionmay declare the principal and accrued interest on such Bonds immediately due and payable (subject to arescission of such declaration upon the curing of such event of default).
Upon occurrence of an event of default, which shall not have been remedied, RTD will, ifdemanded by the Trustee, (a) account as trustee of an express trust, for all Pledged Income, moneys,securities and funds pledged under the Bond Resolution, and (b) pay over to the Trustee all moneys,securities and funds held in any fund or account under the Bond Resolution and, as promptly aspracticable after receipt thereof, all Pledged Income, which the Trustee will apply after payment of certainexpenses to the payment of interest on and principal of and redemption premium, if any, then due andpayable or declared due and payable on all the Bonds then outstanding under the Bond Resolution.
If and whenever all overdue installments of interest on all Bonds, together with the reasonableand proper charges, expenses and liabilities of the Trustee, and all other sums payable by RTD under theBond Resolution, including the principal of, redemption premium, if any, and accrued unpaid interest onall Bonds which shall then be payable by declaration or otherwise, shall either be paid by or for theaccount of RTD, or provision satisfactory to the Trustee shall be made for such payment, and all defaultsunder the Bond Resolution or the Bonds shall be made good or secured to the satisfaction of the Trusteeor provision deemed by the Trustee to be adequate shall be made therefor, the Trustee will pay over toRTD all moneys, securities, and funds then remaining unexpended in the hands of the Trustee (exceptmoneys, securities and funds deposited or pledged, or required by the terms of the Bond Resolution to bedeposited or pledged, with the Trustee), and thereupon RTD and the Trustee will be restored,respectively, to their former positions and rights under the Bond Resolution. No such payment over toRTD by the Trustee or such restoration of RTD and the Trustee to their former positions and rights shallextend to or affect any subsequent default under the Bond Resolution or impair any right consequentthereon.
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If an event of default has occurred and has not been remedied, the Trustee may, or on request ofthe holders of not less than 25% in principal amount of Bonds outstanding, shall take such steps by a suitor suits in equity or at law, whether for the specific performance of any covenants of the Bond Resolutionor in aid of the execution of any powers granted in the Bond Resolution or any remedy granted under theAct, or for an accounting against RTD, or in the enforcement of any other legal or equitable right as theTrustee shall deem most effectual to enforce any of its rights or to perform any of its duties under theBond Resolution.
The holders of not less than a majority in principal amount of the Bonds then outstanding underthe Bond Resolution may direct the time, place and method of conducting any proceeding for any remedyavailable to the Trustee, subject to the right of the Trustee in certain circumstances to decline to conductsuch proceeding as directed.
No bondholder will have any right to institute any suit, action or proceeding for the enforcementof any provisions of the Bond Resolution or the execution of any trust under the Bond Resolution or forany remedy under the Bond Resolution, unless such bondholder shall have previously given the Trusteewritten notice of an event of default, and the holders of at least 25% in principal amount of the Bondsthen outstanding under the Bond Resolution shall have filed a written request with the Trustee and shallhave afforded the Trustee a reasonable opportunity to exercise its powers or institute such action, suit orproceedings, and unless there shall have been offered to the Trustee adequate security and indemnityagainst its costs, expenses and liability to be incurred and the Trustee shall have refused to comply withsuch request within 60 days. Nothing in the Bond Resolution or the Bonds issued thereunder affects orimpairs RTD's obligation to pay the Bonds when due or the right of any bondholder to enforce suchpayment.
Regardless of the happening of an event of default, the Trustee will have power to, but unlessrequested in writing by the holders of a majority in principal amount of the Bonds then Outstanding, andfurnished with reasonable security and indemnity, will be under no obligation to, institute and maintainsuch suits and proceedings as it may be advised shall be necessary or expedient to prevent anyimpairment of the security under the Bond Resolution by any acts which may be unlawful or in violationof the Bond Resolution, and such suits and proceedings as the Trustee may be advised shall be necessaryor expedient to preserve or protect its interests and the interests of the bondholders.
No remedy by the terms of the Bond Resolution conferred upon or reserved to the Trustee or thebondholders is intended to be exclusive of any other remedy, but each and every such remedy iscumulative and is in addition to every other remedy given under the Bond Resolution or existing at law,including under the Act, or in equity or by statute on or after the date of execution and delivery of the1977 Sales Tax Revenue Bond Resolution.
No delay or omission of the Trustee or any bondholder to exercise any right or power arisingupon the happening of an event of default will impair any right or power or will be construed to be awaiver of any such event of default or be an acquiescence therein; and every power and remedy given byArticle VIII of the Bond Resolution to the Trustee or to the bondholders may be exercised from time totime and as often as may be deemed expedient by the Trustee or by the bondholders.
Prior to the declaration of maturity of the Bonds as described in the first paragraph under thiscaption, the holders of not less than 66-2/3% in principal amount of the Bonds at the time outstanding, ortheir attorneys–in–fact duly authorized, may on behalf of the holders of all of the Bonds waive any pastdefault under the Bond Resolution and its consequences, except a default in the payment of interest on orprincipal of or premium, if any, on any of the Bonds. No such waiver will extend to any subsequent orother default or impair any right consequent thereon.
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The Trustee will promptly mail written notice of the occurrence of any event of default (a) toeach registered owner of Bonds then outstanding at his address, if any, appearing upon the registry booksof RTD, (b) to each holder of any Bond payable to bearer who shall have filed with the Trustee withintwo years preceding such mailing an address for notices and (c) to the Bond Insurer as provided in thecaption "Bond Insurer's Rights" in this APPENDIX E.
Financial Qualifications of Trustee; Removal of Trustee
The Trustee and any successor to the Trustee shall be a bank or trust company or nationalbanking association having a capital stock and surplus aggregating at least $10,000,000, if there be such abank or trust company or national banking association willing and able to accept the office on reasonableand customary terms and authorized by law to perform all the duties imposed upon it by the BondResolution.
The Trustee may be removed by (a) written request or consent of the holders of a majority inprincipal amount of Bonds payable from the Pledged Income then outstanding, excluding any Bonds heldby RTD; (b) by written request of RTD, if RTD is not then in default under the Bond Resolution; or (c) atthe request of the Bond Insurer for any breach of the trust set forth in the Bond Resolution. Noresignation or removal of the Trustee shall become effective until a successor acceptable to the BondInsurer, has been appointed and has accepted the duties of the Trustee.
Powers of Amendment; Supplemental Resolutions
Any of the provisions of the Bond Resolution may be amended by RTD, by a supplementalresolution, upon the consent of the holders of at least two-thirds in principal amount in each case of (a) allBonds payable from the Pledged Income then outstanding and (b) if less than all of the outstanding Bondsare affected, the Bonds of each affected series, and (c) if the amendment changes the terms of any sinkingfund installment the Bonds of the series and maturity for which such sinking fund installment wasestablished; excluding in each case, from such consent, and from the outstanding Bonds (i) the Bonds ofany specified series and maturity, if such amendment by its terms will not take effect so long as any ofsuch Bonds remaining outstanding, and (ii) any Bonds owned or held by or for the account of RTD, theState or any political subdivision thereof; provided that any such amendment shall not, with respect to anyoutstanding Bond, permit a change in the terms of redemption or maturity or any installment of interest ormake any reduction in principal, redemption premium or interest without the consent of the affectedholder, or reduce the percentages of consents required for a further amendment, without the consent of theholder of such Bond.
RTD may adopt (without the consent of any holders of the Bonds) supplemental resolutions toauthorize Additional Parity Bonds, to close the Bond Resolution against or limit or restrict the issuance ofAdditional Parity Bonds, to add to the restrictions contained in the Bond Resolution, to add to thecovenants of RTD contained in the Bond Resolution, to confirm any pledge under the Bond Resolution ofPledged Income or other moneys, to add an additional area or areas to the Primary Sales Tax Area, to addto Pledged Income additional revenues of RTD; and otherwise to modify any of the provisions of theBond Resolution (but no such other modification may be effective while any of the Bonds of any seriestheretofore issued are outstanding), or to cure any ambiguity or to correct any defect or clarify any mattersin the Bond Resolution (provided that the Trustee shall consent thereto).
Copies of any amendment to the Bond Resolution are to be sent to the Bond Insurer, S&P andMoody's at least 10 days in advance. Notwithstanding any other provision of the Bond Resolution to thecontrary, no amendment or supplement to the Bond Resolution which adversely affects the Bond Insurershall be effective without the prior written consent of the Bond Insurer.
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Defeasance
The Series 2013A Bonds, or any maturity within the Series 2013A Bonds, shall prior to thematurity or redemption date thereof be deemed to have been paid and shall cease to be entitled to any lien,benefit or security under the Bond Resolution if the following conditions are met: (a) in the case of suchBonds to be redeemed prior to their maturity, RTD shall have given to the Trustee irrevocable instructionsto publish the notice of redemption therefor; (b) there shall have been deposited with the Trustee in trusteither moneys in an amount which shall be sufficient, or, Investment Securities (which shall consist ofdirect obligations of the United States of America or securities fully and unconditionally guaranteed as totimely payment of principal and interest by the United States of America or any interest in any of theforegoing, and which shall not be subject to redemption prior to their maturity) the principal of and theinterest on which, when due, will provide moneys which, together with any moneys also deposited, shallbe sufficient to pay when due the principal of, redemption premium, if applicable, and interest due or tobecome due on such Bonds; (c) RTD delivers to the Trustee and the Bond Insurer a report of anindependent certified public accountant (acceptable to the Bond Insurer) which indicates that the moneysand the Investment Securities, including the known investment yield thereof, deposited with the Trusteeshall be sufficient to pay when due the principal or Redemption Price, if applicable, and interest due andto become due on the applicable Bonds on or prior to the redemption date or maturity date thereof, as thecase may be; and (d) in the event such Bonds are not subject to redemption within the next succeeding 60days, RTD shall have given the Trustee irrevocable instructions to publish, as soon as practicable, a noticeto the holders of such Bonds that the above deposit has been made with the Trustee, that such Bonds aredeemed to be paid, and stating the maturity or redemption date upon which moneys are to be available topay the principal and, redemption premium, if applicable, of such Bonds. RTD shall remain liable for anydeficiencies upon a defeasance of the Series 2013A Bonds.
Continuing Disclosure Covenant
RTD covenants for the benefit of the owners of the Series 2013A Bonds to comply with the termsof the Continuing Disclosure Agreement, dated as of the date of delivery of the Series 2013A Bonds,between RTD and Digital Assurance Certification, L.L.C. which enables the participating Underwriters tocomply with Rule l5c2-12 promulgated by the Securities and Exchange Commission. Failure of theDistrict to comply with the Continuing Disclosure Agreement does not constitute an event of defaultunder the Bond Resolution. See "CONTINUING DISCLOSURE AGREEMENT" in the body of thisOfficial Statement.
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Appendix F
THE REFUNDED BONDS
Series Dated Date Par AmountMaturity Date(November 1)
InterestRate
RedemptionDates
(November 1)Redemption
PriceCUSIPNumber
2004A 5/12/2004 $5,750,000 2013 5.000% -- 100% 759136JY1
2005A 3/23/2005 220,000 2013 4.000 -- 100 759136KW3
2005A 3/23/2005 8,965,000 2014 5.000 -- 100 759136KX1
2005A 3/23/2005 13,525,000 2015 5.000 -- 100 759136KY9
2005A 3/23/2005 14,155,000 2016 5.000 2015 100 759136KZ6
2005A 3/23/2005 14,800,000 2017 5.000 2015 100 759136LA0
2005A 3/23/2005 10,965,000 2018 5.000 2015 100 759136LB8
2005A 3/23/2005 13,175,000 2019 5.000 2015 100 759136LC6
2005A 3/23/2005 13,935,000 2020 5.000 2015 100 759136LD4
2005A 3/23/2005 9,125,000 2021 5.000 2015 100 759136LE2
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Appendix G
ASSURED GUARANTY MUNICIPAL CORP.
General
AGM is a New York domiciled financial guaranty insurance company and a wholly ownedsubsidiary of Assured Guaranty Municipal Holdings Inc. ("Holdings"). Holdings is an indirect subsidiaryof Assured Guaranty Ltd. ("AGL"), a Bermuda-based holding company whose shares are publicly tradedand are listed on the New York Stock Exchange under the symbol "AGO". AGL, through its operatingsubsidiaries, provides credit enhancement products to the U.S. and global public finance, infrastructureand structured finance markets. No shareholder of AGL, Holdings or AGM is liable for the obligations ofAGM.
AGM's financial strength is rated "AA-" (stable outlook) by Standard and Poor's RatingsServices, a Standard & Poor's Financial Services LLC business ("S&P") and "A2" (stable outlook) byMoody's Investors Service, Inc. ("Moody's"). An explanation of the significance of the above ratings maybe obtained from the applicable rating agency. The above ratings are not recommendations to buy, sell orhold any security, and such ratings are subject to revision or withdrawal at any time by the ratingagencies, including withdrawal initiated at the request of AGM in its sole discretion. In addition, therating agencies may at any time change AGM's long-term rating outlooks or place such ratings on a watchlist for possible downgrade in the near term. Any downward revision or withdrawal of any of the aboveratings, the assignment of a negative outlook to such ratings or the placement of such ratings on anegative watch list may have an adverse effect on the market price of any security guaranteed by AGM.
Current Financial Strength Ratings
On January 17, 2013, Moody's issued a press release stating that it had downgraded AGM'sinsurance financial strength rating to "A2" (stable outlook) from "Aa3". AGM can give no assurance asto any further ratings action that Moody's may take. Reference is made to the press release, a copy ofwhich is available at www.moodys.com, for the complete text of Moody's comments.
On November 30, 2011, S&P published a Research Update in which it downgraded AGM'sfinancial strength rating from "AA+" to "AA-". At the same time, S&P removed the financial strengthrating from CreditWatch negative and changed the outlook to stable. AGM can give no assurance as toany further ratings action that S&P may take. Reference is made to the Research Update, a copy of whichis available at www.standardandpoors.com, for the complete text of S&P's comments.
For more information regarding AGM's financial strength ratings and the risks relating thereto,see AGL's Annual Report on Form 10-K for the fiscal year ended December 31, 2012.
Capitalization of AGM
At December 31, 2012, AGM's consolidated policyholders' surplus and contingency reserveswere approximately $3,324,781,247 and its total net unearned premium reserve was approximately$2,090,197,521, in each case, in accordance with statutory accounting principles.
AGM's statutory financial statements for the fiscal year ended December 31, 2012, which havebeen filed with the New York State Department of Financial Services and posted on AGL's website at
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http://www.assuredguaranty.com, are incorporated by reference into this Official Statement and shall bedeemed to be a part hereof.
Incorporation of Certain Documents by Reference
Portions of the following document filed by AGL with the Securities and Exchange Commission(the "SEC") that relate to AGM are incorporated by reference into this Official Statement and shall bedeemed to be a part hereof:
(i) the Annual Report on Form 10-K for the fiscal year ended December 31, 2012 (filed byAGL with the SEC on March 1, 2013).
All information relating to AGM included in, or as exhibits to, documents filed by AGL pursuantto Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, after the filing of the lastdocument referred to above and before the termination of the offering of the Bonds shall be deemedincorporated by reference into this Official Statement and to be a part hereof from the respective dates offiling such documents. Copies of materials incorporated by reference are available over the internet at theSEC's website at http://www.sec.gov, at AGL's website at http://www.assuredguaranty.com, or will beprovided upon request to Assured Guaranty Municipal Corp.: 31 West 52nd Street, New York, New York10019, Attention: Communications Department (telephone (212) 826-0100).
Any information regarding AGM included in this Appendix G or included in a documentincorporated by reference herein (collectively, the "AGM Information") shall be modified or supersededto the extent that any subsequently included AGM Information (either directly or through incorporationby reference) modifies or supersedes such previously included AGM Information. Any AGMInformation so modified or superseded shall not constitute a part of this Official Statement, except as somodified or superseded.
Miscellaneous Matters
AGM or one of its affiliates may purchase a portion of the Bonds offered under this OfficialStatement and such purchases may constitute a significant proportion of the bonds offered. AGM or suchaffiliate may hold such Bonds for investment or may sell or otherwise dispose of such Bonds at any timeor from time to time.
AGM makes no representation regarding the Bonds or the advisability of investing in the Bonds.In addition, AGM has not independently verified, makes no representation regarding, and does not acceptany responsibility for the accuracy or completeness of this Official Statement or any information ordisclosure contained herein, or omitted herefrom, other than with respect to the accuracy of theinformation regarding AGM supplied by AGM and presented in this Appendix G.