November 24, 1975 Request Local Jurisdictions Question 1: Please provide any studies done by the Authority on regional taxes. See attached. 3:30 p.m. January 30, 1976 Revised February 4, 1976 AIRLIE WORKSHOP XII Summary of Financial Impact On Problems Bearing On A Supplemental Financial Plan The proceedings of the last two days provides us with the facts to understand the causes and the magnitude of the changes which have occurred in the financial posture of the Metro project since the initial plan for financing was adopted in 1969. That plan was designed to finance only rail construction and operations since it was the contemplated that the bus service would continue to be provided by the private carriers. The capital costs for acquisition of the private bus companies, the upgrading and expansion of the bus fleet and related facilities and the Metrobus operation have been superimposed on the original financial plan. Moreover, the expected inflation which has been compounded by delays from a variety of causes. It was recognized from the outset of the transit project that as the development of the system progressed, supplemental financing arrangements would be required. This is an inevitable consequence of the fact that the project is to be constructed over a decade, that initial cost estimates necessarily are based on preliminary engineering data and that estimates of operating costs necessarily had to anticipate future conditions some years ahead. The Capital Contributions and Guaranty Agreement, which implements the Financial Plan and Program adopted November 1969, recognized "that definitive net project costs for the transit system will not be determined until the transit system is completed and that, accordingly, Capital Contributions provided for herein are based on estimates." In order to assure the availability of necessary funds the Capital Contributions Agreement provides for recomputation and re-allocation of costs among Political Subdivisions five years after the start of construction and from time to time thereafter at least at two-year intervals. The prescience which foresaw the need for rolling adjustments could not fore tell the magnitude of those changes brought on by the unanticipated and dramatic changes in the general eco nomic conditions. Costs To Be Financed Formulation of a supplemental financing plan must be undertaken in the context of the costs which are to be financed. These include capital costs for completion of the rail system, including facilities for the handicapped, expenditures to pay for operations and debt service on $997 million of WMATA's revenue funds. For purposes of this discussion it is assumed that both capital and operating costs are to be shared on an 80-20 federallocal basis. Based on the data presented at this meeting, the local obligations for Capital Contributions during the five-year period 1976-1980, inclusive, aggregates $317.4 million, reflecting estimated net project costs of Metrorail at approximately $4.6 billion. The breakdown by jurisdiction of each element of the capital costs for the five-year period is shown as follows: |