DALLAS — New economic reality may alter the current financial plan for the Denver area’s $6.2 billion FasTracks transportation project, a consultant’s report suggests.
Facing a $2.3 billion shortfall in revenues to support the current plan, the Regional Transportation District — which serves as the transit authority for greater Denver — expects to ask voters next spring for an additional sales tax increase five years after they approved the 0.4% sales tax to pay for FasTracks project over 12 years.
RTD officials said they are revising their financial plan and expect to release it in January. But they dismissed the report from BBC Research & Consulting as old news.
“We remain focused on delivering the entire FasTracks plan and are working closely with our partners to make that a reality,” an RTD spokesman said. “Our approach is to build out the entire plan as a system.”
Instead of attempting to complete the 122 miles of rail and 18 miles of bus rapid transit as envisioned in 2004, the Regional Transportation District should rethink its available revenues and base its planning on those circumstances, the BBC report advises.
“RTD needs to contemplate and discuss Plan B, and perhaps Plan C and Plan D,” the report suggested.
The consultant’s study was commissioned by an organization of Denver-area governments known as the North Area Transportation Alliance.
BBC also reviewed a study from Urban Engineers and First Southwest Co. issued in August that found the RTD’s method of cost projection satisfactory but cited missing or inadequate contingency and escalation factors.
Revenue growth rates based on pre-recessionary trends are unrealistic, both studies found.
“BBC agrees that repetition of historical growth rates, particularly in this instance when American household spending was demonstrably exceeding sustainable levels, is an unreasonable expectation,” the study said.
“The RTD forecasts assume a return of retail sales growth in 2010 and continually steady growth averaging about 5% thereafter for the next 14 years. This annual compound rate of growth mirrors the region’s past 20-year pattern, which, in our view, should be seen as a highly optimistic expectation of future activity.”
A more realistic rate of growth, incorporating the recession, would be about 2.3%, the report said.
The FasTracks financing is based on a public-private partnership with three contenders for the development contract. A winner is expected to be named next September.
The RTD expects to obtain $893 million in P3 financing, a 63% increase from last year’s projection of $547 million, according to the report.
Funding would also come from a federal grant of up to $1 billion. The project has already received $309 million in federal funds under the New Starts program.
However, the BBC study found that the funding scenarios remain fairly speculative.
“Completion of the system relies on federal funding from a program that isn’t currently in place; from a public-private partnership that has never been accomplished on this scale anywhere in the United States; from an unlikely increase in sales tax rates to unprecedented levels, and from fare box revenue that is dependent on a fully functioning system,” the report said.