DALLAS — The funding gap for the Denver area’s FasTracks transit plan has grown to $2.5 billion — a $300 million increase since 2009 — even though the construction cost estimate has fallen by nearly the same amount, according to the Regional Transportation District.
To complete the now $6.7 billion project by the original deadline of 2017, voters will need to approve a doubling of sales tax revenue in a referendum expected to be called this spring, according to officials.
RTD board members learned the new figures from an annual cost estimate presented Tuesday night by district general manager Phil Washington and financial adviser Tim Romer, managing director of Goldman, Sachs & Co.
Next month, the board will adopt a financial plan for the future build-out of FasTracks and next steps regarding potential timing for a sales-tax hike initiative.
Originally designed as a $4.7 billion program, the cost estimates grew to $6.1 billion in 2007.
However, a strong economy indicated that revenue would sustain those higher costs. In 2008, cost estimates soared to $7.9 billion, while anticipated revenue fell by $200 million to $5.8 billion.
Last year, the funding gap grew to $2.2 billion as estimated revenue fell by another $1 billion to $4.8 billion while costs dropped nearly that much to $7 billion. That pattern continued in this year’s estimates. While the projected cost fell by $300 million, revenue estimates fell by $600 million.
The RTD faces other uncertainties, such as whether federal grants will materialize as expected.
As a showpiece public-private partnership, FasTracks blends private investment with local, state, and federal revenue. The project includes six new train lines, extensions to three light-rail lines, high-speed bus corridors, and other features.
From a bond perspective, the diminished revenue stream creates restraints on financing and potential risks to the district’s triple-A credit.
“Based on the recommendation of a panel of regional economic and financial experts, RTD has lowered its long-term (30-year) revenue projections more than 1% lower than what was assumed for the 2009 program evaluation — from 4.8% to 3.7% — the mid-range estimate that resulted from the regional economic panel,” the RTD staff report noted.
Voters authorized $3.47 billion of bonds in 2004. Issuance of those bonds will offset the district’s strengths, including a broad tax base and continued growth, according to analysts at Standard & Poor’s.
The rating agency last month updated its rating on RTD in advance of a $42 million refunding deal coming this month.
“The district’s financial operations remain sound, and the district has some ability to curtail transit operations (offset by practical and political considerations for providing service to the metro area) to meet potential future financial shortfalls, should any occur,” analysts noted.