Dulles Metrorail Silver Line: Status Report & Transportation Infrastructure Finance and Innovation Act (TIFIA) Funding Update

Transportation Committee Fairfax County Board of Supervisors May 7, 2013

Presentation Outline • Phase 1 Status Report • Phase 2 Status Report • Transportation Infrastructure Finance and

Innovation Act (TIFIA) Funding Update • Recommendation of Preliminary TIFIA

Allocation • Requirements from Funding Partners

• Phase 1 Plan of Finance – Closeout • Staff Recommendations • Timeline 2

Phase 1 – Status Report (as of April 24, 2013)

Status • Construction: 90% Complete • Final Design: 100% Complete • Utility Relocation: 100% Complete • Property Acquisition: All rights of entry obtained • Track Work: 100% Complete • Stations:

• McLean – 80% • Tysons Corner – 75% • Greensboro – 65% • Spring Hill – 65% • Wiehle – 84%

• First Delivery of Rail Cars – February 2014 • Wiehle Garage: 88% Complete

• Garage Substantial Completions: July 19, 2013 • Roadway Improvements (ROD): 67% complete

• August/September 2013 completion

Budget • Revised Budget Authorized: $2.905B • Expended to Date: $2.2B • County Phase 1 share: $467.8M

• Tax District Funds: $400M (Funding Gap = $67.8M)

• Fairfax County share of Project expenditures through fourth quarter 2012 = $369.1M

• $150M received from Commonwealth

Schedule • Substantial Completion: September 7, 2013 • WMATA Testing and Acceptance: August – December

2013 • West Falls Church Yard Completion: December 2013

• Sound Box and Tail Track: November 2013 • Estimated Passenger Revenue Service: December 31,

2013 Current Milestones – Past 30 Days • Entire 3rd Rail energized for Metrorail train testing. • Tunnel Clearance – No issues per WMATA • All five stations under construction with efforts on

mechanical, electrical, plumbing, and station finishes • Phase 1 Maintenance and Land Conveyance process

ongoing: • Fairfax County will retain ownership of Kiss

and Ride at McLean • Fairfax County will operate through an

easement Kiss and Ride at Spring Hill Station • Regional planning effort underway for Phase 1 bus

service (Fairfax Connector, WMATA, Washington Flyer, PRTC, Loudoun Transit)

• Fairfax County 2nd round of Public Meetings ongoing

• Ask Fairfax online chat completed

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Phase 2 – Status Report (as of April 24, 2013)

Status • Packet A Price Proposals Opened – April 19, 2013 • Project estimate Packet A = $1.4B - $1.6B vs. $1.177B

low bid • Positive impact on toll rates = $300M (est.)

• Packet A Contract Award: May 2013 • Packet A Notice to Proceed: June 2013 • 5 Bid Packages:

• Packet A - Rail Line, Station, and Systems (includes Innovation Center Station)

• Packet B – Yard and Shop • Packet C (may not be issued) – Parking

Garages • Packet D – ROW • Packet E – Utilities

• Fairfax County working to fund & construct Herndon and Innovation Center garages outside of project

• Financial Plan status: • Transportation Sub Committee May 7, 2013 • BOS May 14, 2013

Innovation Center (RT 28) Station • Station included in Packet A bid.

• County using its best efforts to mitigate some station costs on south side. (ROW, alternative site work funding, and improved site layout for: garage, bus bay, and kiss/ride design. )

• Station cost will have to be funding either in part or whole per the funding agreement (County funding agreement share 16.1%).

• County also pursuing funding from TIGER Grants and NVTA

Budget • Cost Estimate: $3.093B • Cost Estimate with value engineering and

alternative funding for garages & Innovation Center Station: $2.7B

• Cost to build garages in Fairfax County: $105M est.

• Fairfax County share for Phase 2 ranges from $433M – $498M, Tax District capped at $330M

Schedule • Substantial Completion: Summer 2018 • Revenue Operations: Late 2018

Current Milestones Past 30 Days • FTA oversight of Phase 2 under discussion:

Ongoing • TIFIA Letter of Interest submitted: Ongoing • WMATA Art in Transit: Selection: Ongoing • Reston Town Center Tunnel Design under review

by WMATA and MWAA

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Request Board Approval of Staff Recommendations • Approve the Preliminary TIFIA Allocation of $1.9b

amongst the Funding Partners, with County to receive $475m

• Approve the County Credit Pledge of the C & I Fund and the Phase 2 Tax District to TIFIA; Potential use of Moral Obligation from General Fund to meet AA Category Rating mandated from USDOT

• Request Credit Ratings from the bond rating agencies to comply with TIFIA Credit Review ($90,000)

• Approve the $100,000 down payment required from the County to move forward in the TIFIA Letter of Interest (LOI) review process

• Review short term financing options to cover the $67m for balance of County contributions for Phase 1. This will be paid off with receipt of TIFIA funds

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Transportation Infrastructure Finance and Innovation Act (TIFIA) Status Update - Recommendation of Preliminary TIFIA Allocation

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TIFIA Financing Overview • Federal credit assistance in the form of direct loans

(not grants) to finance surface transportation projects of national and regional significance

• USDOT Secretary LaHood departing & accelerated turnaround time for documents

• Improved access to capital markets, flexible repayment terms, and potentially more favorable interest rates than can be found in private capital markets for similar instruments

• Loan Repayment Deferral Option - 5 years after project completion (2023) • Alternatively – conduct open market bond sale & debt

service payments immediately

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Silver Line Cost Allocation – Funding Partners

Funding Partner

% Share TPE - Baseline

$ Share TPE - Baseline

Other – Garages

Funding Partner Total

(TPE Baseline + Garages)

Dulles Toll Road* 75%

$4,262,763,750

-

$4,262,763,750

Fairfax 16.1%

915,073,285

146,721,000

1,061,794,285

Loudoun 4.8%

272,816,880

168,413,000

441,229,880 MWAA – Aviation Funds 4.1%

233,031,085

-

233,031,085

Total 100.00%

$5,683,685,000

$315,134,000

$5,998,819,000

* Includes $900m from FTA New Starts (16.1%), $275m from Commonwealth (4.9%). Net to Dulles Toll Road is 54%. Allocation assumes the add’l $150m + $300m for Phase 2 will be used to pay interest on Dulles Toll Road Revenue Bonds, not direct project costs.

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Silver Line Total Project Estimate - Fairfax County Costs 16.1%

Phase 1 Phase 2 Total Total Baseline $2,905,685,000 $2,778,000,000 $5,683,685,000 County Share @ 16.1% 467,815,285 447,258,000 915,073,285 Less Tax Districts (400,000,000) (330,000,000) (730,000,000)

Net County due $67,815,285 $117,258,000 $185,073,285

Garages Herndon-Monroe $80,959,000* $80,959,000 Route 28 65,762,000* 65,762,000 Total Garages $146,721,000 $146,721,000

TOTAL (Baseline + Garages) $467,815,285 $593,979,000

$1,061,794,285

*Per 100% P/E and consistent with MWAA documents; County believes costs will be lower and in the process of a feasibility study

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TIFIA Allocation: Funding Partner Consensus

Funding Partner Funding Partner Total Project Cost

TIFIA Allocation

Fairfax $1,061,794,285 $475,000,000

Loudoun 441,229,880 200,000,000

MWAA – Aviation Funds 233,031,085 -

Dulles Toll Road 4,262,763,750 1,304,610,270 Total $5,998,819,000 $1,979,610,270

• Meets MWAA goal of $1.2-$1.4b for the Toll Road • Counties maintain equity of TIFIA allocation equal to

45% Total Project Cost

• December 2012 – Per USDOT Project Will Remain Eligible for 33% TIFIA Loan or $1.9b ($5.9b * 33%)

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TIFIA Premium Projections A B C D E (C * D)

Funding Partner

USDOT Requested Minimum

Credit Rating

Anticipated TIFIA Premium

TIFIA Allocation*

USDOT Premium Subsidy

Allocation

Fairfax AA Category 2%

$475,000,000

$9,500,000

Loudoun AA Category 2%

200,000,000

4,000,000

Dulles Toll Road Investment Grade

(BBB Category) 12%

1,304,610,270

156,553,232

Total

$1,979,610,270

$170,053,232

Premium allocation evaluated/ reviewed heavily by TIFIA office when awarding project funding * Assumes MWAA Aviation Funds receive no TIFIA Loan

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TIFIA Status Update – Requirements from Funding Partners

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TIFIA Financing • Competitive Interest Rates that correlate to 30-Year

Treasury Note • Flexible call options - prepay outstanding principal • Potential future refunding opportunities • USDOT Expected Ratings from Funding Partners

• AA Category Rating from Counties • Investment Grade from Dulles Toll Road (MWAA)

• Pledge two County sources for Plan of Finance • Commercial and Industrial Tax Fund • Dulles Rail Phase 2 Tax District ($330 million)

• May be required to include Moral Obligation of the County General Fund if AA Category Rating is not achieved

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USDOT Information Request – April 2013

• Complete County Plan of Finance for TIFIA • Commercial and Industrial Tax Fund • Dulles Rail Phase 2 Tax District ($330 million)

• Indicative Rating Letter on the TIFIA Loan • USDOT EXPECTS Counties to achieve rating in the AA Category • Initial review from the Credit Rating Agencies ($90,000)

• Feasibility Study for Each Source of Credit Pledged • MWAA Toll Road Study • Counties expected to submit standard information: tax

assessment, economic, and demographic information

• Credit Processing Down Payment of $100,000 from each funding partner

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County Plan of Finance for TIFIA - Commercial & Industrial Tax Fund • Tax Rate of 12.5 cents per $100 of AV & generates

approximately $51m revenue annually • Previously recommended to finance County project costs

outside of the two tax districts: Phase 1 ($67.8m) & Phase 2 ($117.3m)

• Planning Guideline for Long Term Forecasting: • 50% of expenses for Tysons / Silver Line • 50% of expenses for Remainder Countywide Projects

• Loan Repayment Deferral Option - 5 years after project completion (2023) • Redirect previously forecasted monies required for debt

service to fund other Countywide projects (equates to approximately $70m total from 2014-2023)

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County Plan of Finance for TIFIA - Phase 2 Tax District $330 million

• Estimated stand alone current rating of this district likely “A” Category, thus enhancement necessary • Comparative Assessed Value 1/1/13: Phase 1 $11.4b vs. Phase 2 $7.5b

• Allow for growth district tax base / assessed value, similar to Phase 1 Tax District

• Phase 2 Tax Rate – 20 cents for FY 2014 • Initially began at 5 Cents in FY 2011, with 5 cent laddered increases • Remain at this rate until rail service begins 2018, then ability to increase to

25 cents per Petition • Accumulation of tax collections to provide for early repayment of

outstanding principal at regular intervals • Staff recommendation that C & I Fund be used back this Tax District

for credit enhancement • General Fund Moral Obligation may be needed to reach AA

Category if C & I Fund insufficient

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Financing Dulles Rail - Alternate Options Public Sector Sources Private Sector Sources

State/Federal Funding

General Fund (Pay

Go) G.O. Bonds C&I Funds Meals Tax (Pay Go) 100% TIF Capped TIF

Service District /CDA

Developer Contributions

Cost of Financing / Carrying Cost (Lowest to High)

■ ■ ■ ♦ ■ • • ♦ ■ Length of Time to Accrue Funds (Sooner to Later) • ♦ ■ ♦ ♦ ♦ ♦ • • General Fund Impact (Low to High)

■ ♦ ■ ■ ■ • ♦ ■ ■ Impact on Redevelopment (Low to High)

♦ ■ ■ ♦ ■ ■ ■ ♦ • Impact to G.O. Debt (Low to High) ■ ■ ♦ ■ ■ ■ ■ ■ ■ Ability to Meet Capital Requirements (High to Low) • ♦ ♦ ♦ ■ ■ ♦ ■ ♦ Requires Third Party Concurrence (Degree of Difficulty) • ■ ♦ ♦ • ■ ■ • •

■ Low Impact and/or Most Beneficial ♦ Medium Impact and/or of Concern • High Impact and/or Most Difficult

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Other Potential Funding Options: NVTA & Federal TIGER Grants

Fairfax County Portion Remaining Dulles Rail Financing

Phase 1 Phase 2 Total

Total Project Estimate (TPE) $2,905,685,000 $2,778,000,000 $5,683,685,000

County Share @ 16.1% 467,815,285 447,258,000 915,073,285

Less Tax Districts (400,000,000*) (330,000,000) (730,000,000)

Net County due $67,815,285 $117,258,000 $185,073,285

Total County Remaining Financing Needed

$67,815,285 $447,258,000 $515,073,285

*paid to date to MWAA 18

Fairfax County Cashflow Remaining Dulles Rail Financing Source Funds Amount Source Debt

Service Comment

TIFIA $67.8m C & I Fund Balance Phase 1 costs beyond $400m from Phase 1 Tax District; TIFIA may be used to repay short term financing (2013)

TIFIA $117.3m C & I Fund

Phase 2 costs beyond $330m from Phase 2 Tax District (2013-2018)

TIFIA $289.9m Phase 2 Tax District

88% of Phase 2 Tax District’s $330m (2013-2018)

Total TIFIA $475.0m 45% Total County Project Cost

Phase 2 Tax District Bond Sale or Cash

$40.1m Phase 2 Tax District

Phase 2 Tax District Bond Sale or Cash Contribution (2018)

Total Remaining Financing

$515.1m

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County Phase 1 Cost - $467m • Phase 1 Tax District fulfilled $400 million obligation • Establish a plan of finance to cover remaining $67m

to close out the County’s Phase 1 contributions • TIFIA Funds are not expected until end of the

Calendar Year 2013 at the earliest • County Staff and Financial Advisor review of short

term financing options to address the $67m: • Use portion of County’s current $100m Line of Credit • Bond Anticipation Note (BAN)

• Staff recommendation: Utilize the Line of Credit & then pay off from receipt of TIFIA funds.

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Recommendations – Consistent with May 14th Board Item • Approve the Preliminary TIFIA Allocation of $1.9b amongst

the Funding Partners, with County to receive $475m • Approve the County Credit Pledge of the C & I Fund and

the Phase 2 Tax District to TIFIA • Goal to receive AA Category Rating and assumes no Moral

Obligation • Phase 2 Tax District to utilize $290m of Preliminary TIFIA &

seeking Moral Obligation (e.g. Credit Enhancement) from C & I Fund

• Request Credit Ratings from the bond rating agencies to comply with TIFIA Credit Review ($90,000)

• Approve the $100,000 down payment required from the County to move forward in the TIFIA LOI review process

• Review short term financing options to cover the $67m for balance of County contributions for Phase 1. This will be paid off with receipt of TIFIA funds

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Timeline Date Item

October 2012 MAP-21 Revised TIFIA Loan Notification (33% to 49%)

October 2012 Funding Partners Submits LOI USDOT TIFIA (@ 49%)

December 2012 TIFIA request to Funding Partners for more information

January 2013 Funding Partners discussion on TIFIA Allocation

April / May 2013 MWAA Awards Phase 2 Design-Build Contract

May 2013 Board Discussion on TIFIA Allocation

May 2013 Discussion with Bond Rating Agencies on County Credit for TIFIA

May 2013 Submit County materials to TIFIA

Summer 2013 County Interim Financing to cover balance of Phase 1 costs

December 2013 Targeted Closing on TIFIA Loan for Funding Partners

December 2013 Begin Service for Phase 1

Spring 2014 Refinance Interim Financing for balance Phase 1 costs

December 2018 Begin Service for Phase 2

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Questions?

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