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Posted on: February 14, 2017

Board of Supervisors to Receive Briefings on Projected Metrorail Costs

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Loudoun County staff will brief members of the Loudoun County Board of Supervisors’ Finance/Government Operations and Economic Development Committee about projected costs for Metrorail during its regular meeting Tuesday, February 14, 2017 at 6:00 p.m. Members of the Transportation and Land Use Committee will receive the same briefing Friday, February 17 at 9:00 a.m. Both meetings are held at the Loudoun County Government Center, 1 Harrison Street, SE, in Leesburg.

Cost Projections
The agenda item being presented to committee members was developed primarily from reports of a Metropolitan Washington Council of Governments (MWCOG) Technical Panel that were created to illustrate the costs of returning the transit system that is operated by the Washington Metropolitan Area Transit Authority (WMATA) to a “safe and reliable” status. The forecast model run by the MWCOG Technical Panel aims to quantify the level of capital improvements needed to accomplish a safe and reliable system in the next ten years. Included in these reports are projected costs for Loudoun’s financial obligations to Metrorail. These projections suggest significantly higher costs than last reported to the Board in September 2016. 

Questions about Loudoun’s future costs were raised following the release of the WMATA fiscal year (FY) 2018 proposed budget that includes increased funding requests from all Metro Compact jurisdictions. These increases are substantially higher than those received from WMATA in previous years. No specific payments from Loudoun County have been requested by WMATA in its FY 2018 proposed budget because the county will not begin its full share of operating and capital improvement payments to WMATA until 2020, although operating payments are expected to begin as early as FY 2019. Due to the increased funding requests received by other Metro jurisdictions for FY 2018, members of the Board of Supervisors asked staff for a briefing on how the potential WMATA FY 2018 budget increases may impact Loudoun County.

WMATA cost projections for Loudoun County were developed as part of the MWCOG Technical Panel Interim Report on Metro, which was published in October 2016. As noted above, the purpose of this exercise was to illustrate the funding levels needed to return WMATA to a safe and reliable system. Under this scenario, Loudoun County’s estimated payments to WMATA show the county’s obligation as $50.8 million in FY 2020, which is $27.9 million higher than the most recent estimate that was reported to the Board in September 2016. It is important to note that these projections were developed for the purpose of identifying the resources that will be required to return WMATA to a safe and reliable system, which assumes that a significantly larger capital improvement program (CIP) is necessary.

Putting the Projections in Perspective
While calculations based on the goals of MWCOG’s Technical Panel Interim Report on Metro and actual requests included in WMATA’s FY 2018 proposed budget both indicate that Loudoun’s future operating and capital improvements payments to WMATA are likely to be higher than previously reported, they are not actual costs. 

Loudoun County has analyzed the data and concluded that actual costs—while still higher than previously estimated—are not likely to be as high as the MWCOG projections. Factors not considered in the MWCOG report that influence Loudoun’s actual costs include:
  • Loudoun has opted out of Metro bus service, which reduces Loudoun’s financial obligation;
  • Loudoun has the ability to debt finance its portion of capital improvement payments, which lowers actual annual costs; 
  • The WMATA jurisdictional partners, which includes Loudoun County, will likely negotiate WMATA’s CIP request to a lower amount as has been the practice of the Metro Compact jurisdictions;
  • The calculations assume that WMATA must continue its current practice of paying in full for capital costs each year (as opposed to debt financing its CIP), which results in higher annual costs. If a dedicated funding source is identified that would allow WMATA to debt finance its capital program, then the annual capital costs owed by Loudoun County will be significantly lower than the MWCOG projections suggest.
Silver Line Construction and Parking Garage Costs
While future operating and capital improvement costs are projected to be higher than previous estimates, Loudoun County’s costs associated with construction of the Silver Line have not changed. As reported to the Board in September 2016, Loudoun County’s construction funding commitment was established at 4.8%, currently $274 million of the total Silver Line Construction project. The county secured a $195 million federal loan, available via the Transportation Infrastructure Finance and Innovation Act (TIFIA), to pay for the bulk of its share of construction. To date, the county has expended approximately $83 million of the loan toward the ongoing construction of the Silver Line. In accordance with the TIFIA loan agreement, however, the county is not obligated to repay the TIFIA loan until Metrorail revenue service in Loudoun County begins (interest payments begin in FY 2019 and principal payments begin in FY 2023).

In addition, Loudoun County committed to constructing three commuter parking garages next to the future Metro stations; two at the Ashburn Metrorail Station and a third at the Loudoun Gateway Metrorail Station. The county budgeted approximately $130 million to construct the three garages. To date, the county has expended approximately $1.5 million toward garage construction. The county’s total cost for garage construction is expected to be well below the budgeted amount because construction of the north garage at the Ashburn Station is now being paid for privately. 

Loudoun’s Funding Sources 
Loudoun County has planned for a number of funding sources to meets its obligations to Metro. These funding sources include:
  • The TIFIA loan to pay for Silver Line construction;
  • Revenue from the Metrorail Service Tax Districts, which were established near Loudoun’s two Metro stations in 2012;
  • Gasoline tax, which will be diverted to WMATA starting in FY 2019; 
  • Transportation funds from the Northern Virginia Transportation Authority;
  • Future debt issuance, which Loudoun may leverage to pay for the county’s ongoing capital obligation to WMATA; and 
  • Parking garage revenue that will be used to pay for construction and operating costs associated with the three garages at the Ashburn and Loudoun Gateway Stations.
Based on the MWCOG projections for Loudoun’s future financial obligations to WMATA for operating and capital improvements, the county anticipates that supplemental funding could be required. The amount of supplemental funding, if any, that could be required by Loudoun County remains unknown at this point because projected costs are likely to change.

Next Steps
The final report prepared by the MWCOG Technical Panel is expected to be published by the end of April 2017. Loudoun County will continue to work with its Metro Compact partners to identify solutions for addressing the costs of maintaining a safe and reliable transit system and paying for ongoing operating and capital improvement costs. Possible future funding solutions include identifying a dedicated funding source for WMATA, which would also position WMATA to debt finance capital improvement projects, thereby lowering annual costs; working to secure increases in federal funding; and increases in passenger revenue.

Loudoun County remains committed to completing its Silver Line construction obligations, identifying Loudoun’s actual future operating and capital improvement costs and planning for future costs in a manner that is fiscally responsible and fair.

More Information
Members of the public who are interested in learning more about the new projected costs may review the detailed information provided to committee members, which is posted at www.loudoun.gov/bosdocuments. In addition, the public may learn more from the presentations to the committees and from the Board members’ discussion. The public may attend the Board’s committee meetings or watch the meetings on television on Comcast Government Channel 23, Open Band Channel 40 or Verizon FiOS Channel 40. The meetings also will be streamed live on the Loudoun County webcast system, www.loudoun.gov/webcast

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