Valley Metro RPTA FY17 Budget Overview · 2020. 1. 15. · FY17 Budget Overview April 2016 FY17...

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Valley Metro RPTAFY17

Budget Overview

April 2016

FY17 Baseline Operations

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Passengers Revenue miles Operating Costs Fare RevenuesFixed Route BusFY16 17,263,000 11,403,000 $72,604,000 $13,265,000FY17 17,902,000 12,002,000 $75,561,000 $13,580,000Change 4% 5% 4% 2%

Baseline Trips Trips - Contingency Operating Costs Fare RevenuesParatransitFY16 487,000 $14,103,000 $1,727,000FY17 522,000 10,440 $15,580,000 $1,784,000Change 7% 2% 10% 3%

Passengers Revenue miles Operating Costs Fare RevenuesVanPoolFY16 1,136,000 6,108,000 $1,045,000 $1,148,000FY17 1,192,000 6,414,000 $967,000 $1,069,000Change 5% 5% -7% -7%

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FY17 Strategic Plan Initiatives

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Improve Customer Satisfaction• Development of Fare Smart Card and Smart Phone mobile ticketing $0.4M• Renovation of Website and mobile phone travel aid applications $0.2M

Enhance services & facilities for seniors & people with disabilities• Implement seamless Regional Dial-a-Ride Service $2.5M

Maintain strong fiscal controls • Establishment of Internal Audit Department with direct reporting to Board Audit and

Finance Subcommittee $0.1M

Communicate availability, attractiveness and safety of transit service• Discretionary ridership advertising campaigns to continue to attract riders $0.1M

Valley Metro RPTA FY17 Sources of Revenues: $344.2M

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Valley Metro RPTA Revenues

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Sources of Funds $millions

Funding Sources FY17 FY16 Change $ Change %

Public Transportation Funds $141.2 $133.9 $7.3 5%

Transit Service Agreements $30.8 $30.2 $0.7 2%

Federal Grants $39.8 $33.6 $6.1 18%

METRO Rail Reimbursement $17.1 $16.9 $0.2 1%

Fixed Route Fare Revenues $15.7 $16.3 -$0.6 -4%

AZ Lottery Proceeds $11.3 $11.3 $0.0 0%

Regional Area Road Funds $4.9 $4.8 $0.1 2%

Other Revenues $3.3 $2.0 $1.3 64%

Bond Proceeds $61.3 $0.0 $61.3

Carry forwards and Reserves $18.9 $38.0 -$19.1 -50%

Total $344.2 $286.9 $57.4 20%

Valley Metro RPTA FY17 Expenses: $344.2M

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Carry Forward & Reserves

5%

Lead Agency Disbursements

21%

Transit Service Contracts & Fuel

28%

Personnel8%

Capital Expenditures11%

Bond Disbursements

13%

Bond P & I7%

AZ Lottery3% Other

3%Contracts

1%

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Valley Metro RPTA Expenses

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Uses of Funds $millions

Uses of Funds FY17 FY16 Change $ Change %

PTF Pass-thru Disbursements $72.3 $69.5 $2.8 4%

Transit service contracts & fuel 94.6 89.1 5.5 6%

Capital 36.9 25.9 11.0 42%

RPTA & METRO Personnel Costs 27.2 26.3 0.8 3%

Bond Principal & Interest 25.4 24.2 1.2 5%

Contractual Agreements 3.8 4.0 -0.2 -6%

AZ Lottery Disbursements 11.2 11.2 0.0 0%

PTF Bond Pass-thru Disbursements 43.1 25.0 18.1 72%

Other Costs 11.0 11.2 -0.2 -2%

Carry forwards to Reserves 18.7 0.4 18.5

Total $344.2 $286.9 $57.4 20%

Integrated Agency Budget Assumptions: Staffing Costs

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Staffing cost analysis

FY 17 FY 16 change pct change$ million

Salaries 19.6 18.8 0.8 4%

Fringe Benefits 7.6 7.5 0.1 2%

Total Salary and Fringe Benefits 27.2 26.3 0.9 3%

Analysis of changes Salary Fringe Total

Base Compensation FY16 18.8 7.5 26.3 Base increase 0.5 - 0.5 Position Changes 0.3 0.1 0.4

New Base Compensation FY17 19.6 7.6 27.2

Change FY17 Preliminary Budget vs. FY16 Adopted Budget 0.9 $ million

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Integrated Agency – FY17 Position Changes

Title Division Scope of Work

Manager, Internal Audit Chief Executive Office Agency Internal Controls with primary reporting to Board

Internal Audit Specialist Chief Executive Office Internal Control testing and compliance

Program Representative Planning & Accessible Transit Support East Valley, West Valley, and regional paratransit

Scheduler Operations and Maintenance ‐ RPTA Fixed Route Bus schedule analysis and managementProgram Coordinator Operations and Maintenance ‐ RPTA Fixed Route Bus contractor performance management

FIVE YEAR PLAN OVERVIEWFY 2017 THROUGH FY 2021

Valley Metro RPTA

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5-Year Operating Assumptions• Public Transportation Fund (PTF) - up approximately 5.4% annually

• Federal PM Revenues down from $8.9M to $7.6M in FY18, $7.0M FY21

• TLCP planned route service miles funded by PTF increase 588,000

• Transit service costs up 3% annually plus contingencies

• Fixed route fares up 5% in FY18

• VM operated paratransit ridershipFY17 up 7%FY18 – FY 20 + 5.3% per year overall Regional trips up 9.6%

• Administrative costs up 2% annually

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Five Year Operating Forecast -Revenues

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(thousands)

5-Year

Total

Revenues

Public Transportation Fund (ADOT) 793,606$

Less: AZDOR Assessment (4,973)

PTF Bond Proceeds 61,257

Less: Debt Service Bus & Rail (157,971)

Less: Rail Capital Funding (current) (268,669)

Net PTF for Operations 423,250$

Other Regional Funds 24,725$

Federal Funds 41,973

Transit service reimbursements 182,658

Fare Revenues 92,018

Alternative Fuel Tax Credit 1,228

Interest and other revenue 160

Total revenues 766,012$

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Five Year Operating Forecast -Expenditures

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(thousands)

5-Year

Expenditures Total

Operations

Fixed Route 458,136$

Paratransit - EVDAR 47,350

Paratransit - NWDAR 10,515

Paratransit - Regional Trips 14,549

Paratransit - RideChoice 4,703

Vanpool Service 5,138

ADA 108,312

Total operations expenditures 648,704$

Transportation Demand Management 5,912$

Planning & Administration 24,668

Regional Services 42,018

Safety & Security 1,974

Operations Contingency 18,993

Total expenditures 742,269$

5-Year Capital Program Assumptions• Bus Fleet - $211 Million

– 475 replacement units; 93 expansion units

– 85% Federal /15% PTF

• Vanpool Fleet - $18 Million

– 301 replacement units; 100 expansion units 100% Federal STP

• Facilities and Equipment - $31.6 Million

– Peoria PNR and Transit Center - 80% Federal / 20% PTF

– North Glendale and Laveen Park and Rides - Local match PTF

– Regional Communications System - 80% Federal / 20% PTF

– Fare Collection/Paratransit Software Improvements - 100% PTF

– Mid-Life Bus Rebuilds (194 units) - 80% Federal / 20% PTF

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Five Year Capital Program- Revenues

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(thousands)

5-YearTotal

RevenuesPublic transportation funds 46,696$ FTA - Section 5307 161,448 FTA - Section 5311 456 FTA - Section 5337 1,046 FTA - Section 5339 8,245 FHWA - STP 17,159 Member local match 100 Vehicle/parts proceeds 1,929 Capital assets reserve applied 1,740 Vanpool reserve applied 741 Undesig. Fund Balance Applied (PTF) 20,891

Total Revenues 260,451$

Five Year Capital Program- Expenditures

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(thousands)

5-YearTotal

Expenditures by ProjectIT Infrastructure 2,747$ Standard Bus - Replacement 154,339 Standard Bus - Expansion 50,308 Express/BRT - Expansion 3,168 Rural Fleet - Replacement 1,173 Paratransit Fleet - Replacement 1,915 Vanpool Fleet - Replacement 13,462 Vanpool Fleet - Expansion 4,438 Fleet - Other 1,957 Transit Centers (4-Bay) 2,376 Bus Stop Passenger Amenities 535 Park & Rides 9,233 Vehicle Management/Communications Systems 6,546 Fare Collection Systems 505 State of Good Repair - Fleet Rebuild 7,749

Total Expenditures 260,451$

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Forecasted Reserve RequirementsProposed FY17-21 Five-Year Operating and Capital Forecast $ in Millions

RESERVE FUND FY17 FY18 FY19 FY20 FY21General Fund Operating Reserve $23.4 $23.7 $24.4 $25.2 $26.0Capital Reserve Fund $3.6 $3.0 $1.6 $2.5 $1.5Working Capital Reserve Fund $14.2 $5.9 $7.8 $5.8 $10.5Vanpool Reserve Fund $3.4 $3.5 $3.7 $3.9 $4.1Emergency Reserve Fund $1.0 $1.0 $1.0 $1.0 $1.0Total Reserves (July 1) $45.5 $37.1 $38.5 $38.4 $43.1

Forecasted Fund Balance Bus Fund Balance $86.0 $66.3 $51.8 $48.3 $41.4Rail Fund Balance $39.4 $57.8 $59.3 $53.4 $63.0Total Forecasted Fund Balance (July 1) $125.4 $124.1 $111.1 $101.7 $104.4

Budget Schedule FY17

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Nov 19 FY17 Agency Budget Initiatives presented to Boards for information

Feb 18 Board approves service changes effective April 2016

Feb 26 Preliminary FY17 Budget presented to Fin. Working Group

Mar 1 Executive Summary & 5 year Plan posted to website

Apr 6 Draft Budget delivered to TMC/RMC/AFS

Apr 14 Member City Comments due

Apr 14 Budget presented for information to AFS

Apr 21 Budget presented to Board of Directors for information

May 19 Board Meeting for Budget Adoption

RPTA FY17 Preliminary Budget Executive Summary Valley Metro | 1

FY17 PRELIMINARY ANNUAL OPERATING AND CAPITAL BUDGET Valley Metro Regional Public Transportation Authority (RPTA) provides public transportation services for Maricopa County located in the metro Phoenix, Arizona. The FY17 Preliminary Budget covers the 12-month period between July 1, 2016 and June 30, 2017. Services include fixed route bus, paratransit, Dial-a-Ride, vanpool, regional planning, marketing, customer service, alternative transportation, trip reduction and fiscal management of regional Public Transportation Funds (PTF). FY17 Sources of Funds Total sources of funds for FY17 are $344.2M, an increase of $57.3M or 20% from FY16. For FY17, PTF sales tax revenues are increasing by $7.3M or 5% above last year. Federal grant revenues are increasing by $6.1M (18%) primarily due an increase in 5307 funding used to purchase bus fleet. It is anticipated that RPTA will issue $61.3M in new series 2017 bonds to support rail capital projects in the spring of 2017.

$0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0

Public Transportation Funds

Transit Service Agreements

Federal Grants

METRO Rail Reimbursement

Fixed Route Fare Revenues

AZ Lottery Proceeds

Regional Area Road Funds

Other Revenues

Bond Proceeds

Carry forwards and Reserves

FY17 FY16 Valley Metro RPTA Sources of Funds FY17 vs FY16

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FY17 Uses of Funds Total uses of funds for FY17 are $344.2M, an increase of $57.3M or 20% from FY16. PTF Pass-thru Disbursements are increasing by $2.8M due to increased light rail construction and purchases of regional bus fleet. Transit service contracts and fuel are increasing by $5.5M or 6% primarily due to increases in contract rates and paratransit ridership. Capital expenditures are up $11.0M primarily due to bus fleet additions and land acquisition and regional fleet purchases. PTF Bond Pass-thru Disbursements are increasing by $18.1M due to increased light rail construction. In FY17, carry forwards to reserves include $18.4M in capital reserve increases.

$0.0 $20.0 $40.0 $60.0 $80.0 $100.0

PTF Pass‐thru Disbursements

Transit service contracts & fuel

Capital

RPTA & METRO Personnel Costs

Bond Principal & Interest

Contractual Agreements

AZ Lottery Disbursements

PTF Bond Pass‐thru Disbursements

Other Costs

Carry forwards to Reserves

FY17 FY16 Valley Metro RPTA Uses of Funds FY17 vs FY16


FY17 Uses of Funds – Comparisons of Services Provided Valley Metro RPTA’s primary activities include passenger services, regional services and capital funding. The table below depicts changes in the FY17 plan versus FY16.

FY17 Budget Baseline Service Assumptions Fixed Route Bus Services

East and West Valley routes operated by Valley Metro will increase revenue miles vs. FY16 service levels; fleet of 279 units to deliver 12.0 million vehicle revenue miles serving 17.9 million passenger trips in the coming year.

Bus service includes a combination of local, express, circulator, and rural route service.

Dial-a-Ride and Paratransit Services

East and West Valley demand response ADA and non-ADA services operated by Valley Metro will continue to serve portions of Maricopa County and the cities of El Mirage, Peoria, Sun City, Surprise and Youngtown in the West Valley and Chandler, Gilbert, Mesa, Scottsdale and Tempe in the East Valley.

$0.0 $20.0 $40.0 $60.0 $80.0 $100.0

+ Passenger Services

Fixed Route Bus Operations

Paratransit Operations

ADA Lead Agency Disbursements

Regional Vanpool Service

+ Regional Transit Services

Marketing and Outreach

Call Center

ADA Compliance

Rideshare and Trip Reduction

Service and Capital Planning

+ Capital Activities

Bus Equipment

Paratransit Lead Agency Capital

Vanpool Fleet

Light Rail Lead Agency Capital

Facilities and equipment

+ Fiscal & Administrative Services

Valley Metro Rail Staffing

Arizona Lottery Fund Disbursements

Debt Service

Cash Reserves Carried Forward

Valley Metro Administration

FY 17 FY 16Valley Metro RPTA Uses of Funds FY17 vs FY16


New for FY17 is seamless Regional ADA Dial-a-Ride service enabling qualified passengers to cross municipal boundaries without transfers, estimated at 47,000 trips.

For eligible ADA passengers, level of service is based on passenger reservation demand within service areas and hours of operation covered by fixed route bus routes.

For non-ADA passengers, service levels are set by member cities. Services are provided on a shared-ride basis by a mixed fleet comprised of taxi cabs,

vans and accessible vehicles; estimated at 522,000 annual passenger trips. Vanpool Services

Service levels are anticipated to increase over FY16 with 440 vehicles delivering 1.2 million passenger trips.

Regional Call Center and ADA Compliance Center

Customer Service levels anticipated to remain similar to FY16 for fixed route bus and light rail.

ADA paratransit eligibility certification levels are anticipated to rise to 5,550 as a result of increasing numbers of seniors, persons with disabilities applying for service and as current customers go through eligibility recertification. Travel training will continue to be provided for individuals with disabilities who wish to take advantage of Valley Metro’s expanding light rail and bus network.

Capital Procurement

101 standard bus replacements (81 units Phoenix, 8 units Scottsdale, 12 units RPTA) and 6 circulator replacements for RPTA

21 expansion buses (8 RPTA for Scottsdale Rd Service, 13 for RPTA) and 7 expansion circulators for RPTA

25 lead agency paratransit fleet vehicles for Phoenix 67 vanpool replacement units $6.7M in park-and-rides, bus stop amenities and facilities $3.7M in vehicle communication systems, camera bus upgrade and fare collection

system upgrades 48 mid-life rebuilds of engines and transmissions

FY17 Goals and Initiatives In January 2015, the Valley Metro RPTA and Valley Metro Rail Boards adopted the Valley Metro Strategic Plan for FY16 through FY20. The Strategic Plan provides clear definition of the purpose of the organization and establishes realistic goals and objectives for a five-year period. This plan ensures the most effective use of the organization’s resources by focusing those resources on key priorities. Below are the five, overarching goals identified in the Strategic Plan:

1. Increase customer focus 2. Advance performance based operation 3. Grow transit ridership 4. Focus on economic development, regional competitiveness and financial resources 5. Advance the value of transit


With the initiation of the FY17 budget process, staff has developed a number of initiatives that align with the Strategic Plan and will be incorporated into the FY17 budget, as summarized below.

RPTA Investment

Total Investment

Develop smart card fare program/mobile ticketing 430.0$ 860.0$

Renovate website & mobile site 200.0$ 300.0$

Enhance services & facilities for seniors & people with disabilities.

Develop a more seamless, cost-effective ADA Dial-a-Ride network with cities as partners

2,500.0$ 2,500.0$

Improve Customer SatisfactionIntegration of greater, more effective technology, improving passenger information systems with real time data, such as the website, facility signage and a Ridekick mobile application, and implementation of an enhanced fare media solution, including smart cards and mobile ticketing.

Valley Metro FY17 Investment$ Thousands

FY17 Initiatives1. Increase Customer Focus:


Total Investment

Operate an effective, reliable, high performing transit system.

Develop an asset management plan for Valley Metro in conjunction with member agencies

25.0$ 100.0$

Maintain a culture to recruit and retain a qualified and diverse workforce.

Develop a program to recruit and retain a qualified and diverse workforce. Consultant engagement to for comprehensive training assessment and new employee orientation programs

20.0$ 40.0$

Maintain strong fiscal controls to support Valley Metro’s long-term sustainability.

Establishing Internal Audit Department with dual reporting responsibility to the Board of Directors and VM Executive Office

94.5$ 189.0$

3. Grow Transit Ridership: FY17 Initiatives RPTA Investment

Total Investment

Communicate availability, attractiveness and safety of transit service

Conduct discretionary ridership campaigns to continue to attract riders 105.0$ 210.0$

4. Focus on Economic Development, Regional Competitiveness and Financial Resources:

FY17 Initiatives RPTA Investment

Total Investment

Work with local communities to leverage transit oriented development (TOD) to increase investment in transit

Research and monitor and report regional trends regarding TOD implementation and successes- Support to TOD working group and PNR utilization study: $100,000

100.0$ 100.0$

Pursue all available funding opportunities for transit projects and services

Aggressively pursue federal transit funding opportunities at the regional level- Conducting region-wide ITS study for federal funds: $100,000

100.0$ 100.0$

5. Advance the Value of Transit: FY17 Initiatives RPTA Investment

Total Investment

Develop and implement a communications plan to inform and educate the public on the value of transit

Continue media campaign to raise greater awareness of the value of transit 63.0$ 126.0$

RPTA Investment

2. Advance Performance Based Operation: FY17 Initiatives



Agency Staff Overview Valley Metro RPTA and Valley Metro Rail budgets are developed with a unified staff plan, with department managers planning the level of effort required to meet the bus and rail activities. For FY17, there are 310 employees budgeted in the integrated agency; 131 FTE’s are budgeted to RPTA activities; 179 to VMR activities. Staffing levels are reviewed on an annual basis with zero-base analysis of level of effort requirements to fulfill work requirements in the five-year period commencing with the beginning of the new fiscal year. Salary and fringe benefit compensation levels are measured against comparable regional agencies, member cities and peer transit agencies located in the western U.S. FY17 Compensation and Fringe Benefit Assumptions Total compensation budget is based on a 2.5% increase. For staff salary changes, merit increases are based on employee performance. Division level control is in place to contain total salary and fringe costs within budget. Agency health care costs will increase. Program design adjustments are in place to hold total agency fringe benefit cost increases to within 3% of FY16 levels.

Five new agency positions are planned to improve agency internal controls and strengthen fixed route bus and accessible transit contractor performance, as noted below.


FY 17 FY 16 change pct change$ million

FTE 310 312 -2 -1%

Salaries 19.6 18.8 0.8 4%













FY17 Preliminary Budget Financial Summary In the table below, detailed revenues and expenses are shown with comparisons to the prior year’s preliminary and revised budgets. Amounts of increase or (decrease) are shown from the preliminary budget. The “Note” column (on the far right side) indicates reference to explanations which are provided in the following table.

Valley MetroRegional Public Transportation Authority

FY17 Prelim Operating & Capital BudgetComparison to FY16 Adopted Budget

(In thousands)

FY17 FY16 FY16 Amount Percent***Prelim Adopted Revised Increase/ Increase/Budget Budget Budget Decrease (Decrease) Note

Sources of fundsRevenues:

Public transportation funds (PTF) 141,165$ 133,866$ 132,121$ 7,299$ 5% (1)Transit service agreements 30,844 30,181 29,695 663 2%Federal grants 39,773 33,644 18,114 6,129 18% (2)VMR staff & administration reimbursement 17,137 16,889 16,889 248 1% (3)Regional area road funds (RARF) 4,864 4,782 4,782 82 2%Interest & other revenues 2,772 1,377 3,911 1,395 101% (4)Local participation 297 199 199 98 49%State & local grants 261 449 449 (188) -42%Fixed Route Fare Revenues 15,664 16,265 16,347 (601) -4% (5)AZ Lottery Proceeds 11,250 11,250 11,250 - 0%

Total revenues 264,027 248,902 233,758 15,125 6%

Bond proceeds 61,257 - - 61,257 100% (6)Carryforwards & reserves 18,923 37,986 33,768 (19,063) -50% (7)

Total revenues & other sources of funds 344,207 286,888 267,526 57,319 20%

Uses of funds by categoryExpenses:

Lead agency PTF disbursements 72,304$ 69,532$ 91,127$ 2,772$ 4% (8)Transit service contracts and fuel 94,622 89,150 91,751 5,472 6% (9)Capital outlay 36,850 25,882 7,783 10,968 42% (10)Salary & fringe benefits 27,231 26,342 26,363 889 3% (11)Bond principal & interest expense 25,433 24,235 24,235 1,198 5% (12)Consultants & Maintenance contracts 3,771 3,992 3,754 (221) -6%Contingency 1,942 1,668 1,418 274 16% (13)Rent & facility costs 4,988 5,063 5,063 (75) -1%Advertising 528 530 530 (2) 0%Transit book, outreach mat. & online serv. 893 746 746 147 20%Insurance & risk management 205 266 266 (61) -23%Safety & security - - - - 0%Lead agency RARF disbursements 500 500 500 - 0%Other administrative costs 1,938 2,432 2,440 (494) -20%AZ lottery Disbursements 11,200 11,200 11,200 - 0%Lead agency bond disbursement 43,098 25,000 - 18,098 72% (14)

Total expenses 325,503 286,538 267,176 38,965 14%

Carryforwards & contributions to reserves 18,704 350 350 18,354 5244% (15)

Total expenses & other uses of funds 344,207$ 286,888$ 267,526$ 57,319$ 20%

Operating Budget 166,439$ 160,908$ 163,020$ 5,531$ 3.4%Capital Budget 177,768 125,999 104,496 51,769 41.1%

Total Operating & Capital Budget 344,207$ 286,907$ 267,526$ 57,300$

*** Percentage change is compared to the FY16 Adopted Budget


Sources of FundsNote

1

2

3

4

5

6

7

It is anticipated that RPTA will issue $61.3M in new series 2017 bonds to support rail capital projects in the spring of 2017.

Consumption of carryforwards & reserves are down by $19.1M due to decreased amount of sales tax fund balance spending needed in FY17 for LRT capital construction activity

ExplanationPublic Transportation Funds from the Maricopa County Transportation Excise Tax are forecasted to grow by 5%. Forecast is provided by ADOT. In FY17 the AZ Department of Revenue assessment charge is estimated at $900K, which is a reduction to PTF revenue forecasted by ADOT. Adequate reserves are in place should collections fall short of ADOT forecast projections.

Federal Grants overall are up by $6.1M from $33.7M to $39.8M. Primary cause for change is an increase in 5307 funding used to purchase bus fleet. Planned bus fleet purchases for FY16 were rescheduled to arrive in FY17.

Contributions from Valley Metro Rail for staff are $0.2M higher in FY 17 primarily due to VMR staff additions to maintain the 26 mile rail service for the full 12 months. In FY16, VMR operated partial year service for the Central Mesa and Northwest Extensions. Added 2 FTEs internal audit staff.

Interest and other revenues are expected to increase $1.4M over FY16. Revenues programmed include alternative fuel tax credit ($1.2M) and increases in proceeds form disposing revenue vehicles ($0.2M)

Fixed route farebox revenue is forecasted to be approximately 4% less than what was budgeted in FY16. Fare revenue decrease is due to ridership losses attributed to low gas prices and transfers from bus to rail.


Uses of Funds by CategoryNote

8

9

10

11

12

13

14

15

Overall staff cost in FY17 of $27.2M is 8% of total budget. 3% Overall Salary and Fringe increase $0.9M, broken down as follows: 2.5% base salary and fringe increase $0.5M, net cost increase of position changes $0.3M Salary and $0.1 M Fringe.

Bond principal and interest expense is up 5% to $25.4M due to the series 2017 bond issue to support funding for increased LRT capital construction activity.

Contingency is up from $1.7M to $1.9M. Primary contingency relates to fixed route bus contract rates, fuel rates, and paratransit demand.

Lead Agency Bond Disbursements are Public Transportation Funding (PTF) amounts derived from bond proceeds to Member Agencies and VMR for eligible capital transit expenditures. Lead Agency Bond Disbursements are up by $18.1M due to increased LRT capital construction activity.

Carryforwards & contributions to reserves increased by $18.4M primarily due to the issuance of bonds to support funding for increased LRT capital construction activity.

ExplanationLead Agency Disbursements are Public Transportation Funding (PTF) amounts to Member Agencies and VMR for eligible operating and capital transit expenditures. Increase in PTF Lead Agency Disbursements of $2.8M is primarily due to an increase in project development and construction activity for light rail projects and lead agency disbursements for regional bus fleet.

Fixed route bus service levels operated by Valley Metro have increased with approximately 130,000 additional service miles added. Transit service contracts increases primarily reflect contractual rate increases from fixed route service providers. Paratransit demand is forecasted to increase by 7%.

Capital Outlay was increased by $11.0M primarily due to land acquisition $2.2M and regional fleet $7.0M; and $1.1M related to computers/software and site improvements $0.3M.


FY17 – FY21 PRELIMINARY FIVE-YEAR OPERATING FORECAST AND CAPITAL PROGRAM Valley Metro RPTA has the primary responsibility of implementing the operating and capital components of the transit element identified in the 20-year Regional Transportation Plan (RTP). The operating component includes the expansion of regional fixed route services, high-capacity transit alternatives, vanpools and paratransit services throughout the region. The capital component of the transit element of the RTP includes fleet replacement and expansion as well as the development of new park-and-rides, transit centers, passenger facilities and maintenance and operations facilities over the life of the plan. Construction of the light rail RTP components has been designated to Valley Metro Rail by Valley Metro RPTA and expenditures are shown as Rail Capital Funding in the Operating Forecast. For the Five-Year Operating Forecast, the operations revenues and expenditures are based on current costs, as used for the development of the preliminary FY17 operating budget, with an annual inflation escalation of three percent (3%) for the remaining four years. Other assumptions in the Five-Year Operating Forecast are as follows:

The Public Transportation Fund (PTF) grows by approximately 5.4% annually Fixed route fares grow by 5% in FY18 with reduction of discounted fares and base fare

increase in FY20 Paratransit ridership drives an 7% increase in number of trips delivered Planning, Administration, Safety & Security, and Regional Services costs have been

inflated two percent (2%) for the last four (4) years of the forecast The proposed service changes within the five-year time period that have been incorporated into the plan as proposed by the Transit Life Cycle Program are as follows: FY17

No service changes FY18

Begin Route 104 Saturday service in Chandler Begin PTF funding of Route 104 in Mesa

FY19

Begin PTF funding of Route 50 in Scottsdale FY20

Begin PTF funding of Route 30 in Tempe Begin PTF funding of Route 77 in Mesa

FY21:

Begin PTF funding of Route 30 in Mesa


FY17 – FY21 Operating Forecast

(thousands)

5-Year

Total

RevenuesPublic Transportation Fund (ADOT) 793,606$

Less: AZDOR Assessment (4,973)

PTF Bond Proceeds 61,257

Less: Debt Service Bus & Rail (157,971)

Less: Rail Capital Funding (current) (268,669)

Net PTF for Operations 423,250$

Other Regional Funds 24,725$

Federal Funds 41,973

Transit service reimbursements 182,658

Fare Revenues 92,018

Alternative Fuel Tax Credit 1,228

Interest and other revenue 160

Total revenues 766,012$

(thousands)

5-Year

Expenditures Total

Operations

Fixed Route 458,136$

Paratransit - EVDAR 47,350

Paratransit - NWDAR 10,515

Paratransit - Regional Trips 14,549

Paratransit - RideChoice 4,703

Vanpool Service 5,138

ADA 108,312

Total operations expenditures 648,704$

Transportation Demand Management 5,912$

Planning & Administration 24,668

Regional Services 42,018

Safety & Security 1,974

Operations Contingency 18,993

Total expenditures 742,269$

Excess/(deficiency) of revenues

over expenditures - operations 23,744$

Less: Bus Capital Funding (67,585)$

Undesignated fund balance, July 1, 2015 85,950$

Excess/(deficiency) (43,841)

Undesignated fund balance, June 30, 2021 42,109$

The Five Year revenue operating forecast begins with PTF sales tax funds, which are estimated by ADOT team of economists.

One Bond Issue is anticipated in FY17.

Debt Service and Rail Capital Funding requirements are deducted to derive PTF available for operations.

Operations expenditures for the five-year period are impacted by service contract increases and paratransit demand ridership.

Due to aging population, paratransit ridership is forecasted to grow significantly.

Regional Services, Planning, Safety & Security and Admin costs are forecasted to grow about 2% per year.

A $23.7M operating surplus is projected, which will be used to fund bus capital purchases along with existing fund balance. The current $86.0M balance has been built to support the cyclical bus capital drawdown.

Projected Operating Fund Balance is $42.1M in FY21


FY17 – FY21 Capital Program

(thousands)

5-YearTotal

RevenuesPublic transportation funds 46,696$ FTA - Section 5307 161,448 FTA - Section 5311 456 FTA - Section 5337 1,046 FTA - Section 5339 8,245 FHWA - STP 17,159 Member local match 100 Vehicle/parts proceeds 1,929 Capital assets reserve applied 1,740 Vanpool reserve applied 741 Undesig. Fund Balance Applied (PTF) 20,891

Total Revenues 260,451$

(thousands)

5-YearTotal

Expenditures by ProjectIT Infrastructure 2,747$ Standard Bus - Replacement 154,339 Standard Bus - Expansion 50,308 Express/BRT - Expansion 3,168 Rural Fleet - Replacement 1,173 Paratransit Fleet - Replacement 1,915 Vanpool Fleet - Replacement 13,462 Vanpool Fleet - Expansion 4,438 Fleet - Other 1,957 Transit Centers (4-Bay) 2,376 Bus Stop Passenger Amenities 535 Park & Rides 9,233 Vehicle Management/Communications Systems 6,546 Fare Collection Systems 505 State of Good Repair - Fleet Rebuild 7,749

Total Expenditures 260,451$

Capital program funding sources include new PTF sales tax and PTF fund balance that has been accumulated for cyclical bus fleet replacement.

Total PTF funding over the five years is $67.6M or 26% of capital revenue.

Federal funding will provide $188.4M or 72% of capital revenue.

Capital program expenditures for the upcoming five years are primarily for fleet replacement and expansion.

A total of 475 bus units are planned for replacement and 93 for expansion.

Vanpool fleet replacements total 301 units, with 100 expansion units planned.

Paratransit fleet replacements total 164 units.

New transit center and park-and-ride facilities are planned in the West Valley. Vehicle communications and fare collection systems are also planned.

4/5/2016

1

1

Proposed October 2016 Transit Service Changes

April 2016

Overview• Coordinated through:

– Service Planning Working Group (SPWG)

– Individual Member Agencies

– Short Range Transit Program

• Board action anticipated in August 2016– Service contract changes

– IGA amendments2

4/5/2016

2

3

Proposed Changes

Improved Frequency/Service Hours• Phoenix Route Improvements

– 44 routes: service hours

– 4 routes: weekday frequency

– 26 routes: weekend frequency

• Other Cities (match Phoenix)– Scottsdale - Route 50: service hours

– Glendale - Route 51: service hours & weekend frequency

4

4/5/2016

3

LINK Related Service Changes• Eliminate LINK

– Arizona Ave/Country Club (Mesa, Gilbert, Chandler)

– Main Street (Mesa)

• Improve Frequency on Local Routes– Route 40

– Route 112

• Improved customer convenience

• Provides more frequency at similar cost5

0

1,000

2,000

3,000

4,000

5,000

6,000

Light…

61

45

72

30

96

81

112

56

40

LINK ‐…

LINK ‐…

104

156

62

65

108

66

77

136

48

184

120

128

Avg. W

eekday Boardings

Average Weekday Boardings in the Southeast ValleyApril 2015

Ridership – Before Central Mesa LRT

Light Rail Local LINK16,844

4/5/2016

4

0

1,000

2,000

3,000

4,000

5,000

6,000

Light…

61

45

72

30

96

112

81

56

40

104

156

65

62

66

77

108

136

48

LINK ‐…

LINK ‐…

184

120

128

Avg. W

eekday Boardings

Average Weekday Boardings in the Southeast ValleyOctober 2015

Ridership – After Central Mesa LRT

• Majority of boardings occur on local services

Light Rail Local LINK19,726

Other Trip/Frequency Changes

• Add Weekday Peak Trips– Route 72 (Scottsdale/Rural)

• Tempe Transportation Center to Scottsdale P-n-R

• Weekend Frequency - from 60 to 30 minutes – Miller Rd. Trolley (Scottsdale)– Route 81 (Hayden/McClintock)

• Reduce Weekend Frequency– Camelback Trolley (Scottsdale)

8

4/5/2016

5

Minor Route Modifications

• End-of-Line Adjustments– Route 104 (Alma School) - Chandler– Route 170 (Bell) - Scottsdale– Route 50 (Camelback) - Scottsdale

• Modify from Demo to Permanent Change– BUZZ Circulator - Mesa– Requires Title VI analysis

9

Next Steps

• Continued Analysis & Agency Coordination

• Public Comment Period - April through May – Webinar (May 12)– Public hearing (May 18)– Open houses & targeted outreach– Online options: web site, e-mail, & social media

• Board Action – August 2016

10

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 602-262-7433

REVISED April 5, 2016 March 30, 2016

Rail Management Committee Wednesday, April 6, 2016

Lake Powell Conference Room 101 N. 1st Avenue, 10th Floor

11:45 a.m.

Action Recommended

1. Public Comment

A 15-minute opportunity will be provided to members of the public at the beginning of the meeting to address the RMC on all agenda items. The Chair may recognize members of the public during the meeting at his/her discretion. Up to three minutes will be provided per speaker or a total of 15 minutes total for all speakers.

1. For information

2. Minutes

Minutes from the March 2, 2016 RMC meeting are presented for approval.

2. For action

CONSENT AGENDA

3A. Renewal of Safety and Security Agreement with the City of Phoenix, Public Transit Department Staff recommends that the RMC forward to the Board of Directors authorization for the Interim CEO to renew the Safety and Security agreement with the City of Phoenix, Public Transit Department through 2019.

3A. For action

3B. Network Video Recorder Upgrade Staff recommends that the RMC forward to the Board of Directors authorization for the Interim CEO to purchase necessary equipment from World Wide Technology, Inc. for an amount of $229,140 to complete a Network Video Recorder (NVR) upgrade to the light rail closed circuit television (CCTV) security camera system and to establish a 10% contract change contingency of $22,914 that is included in the overall budget established for the project.

3B. For action

2

3C. Amendment for Planning, Conceptual Engineering and Environmental Studies Consultant for the I-10 West and Glendale High Capacity/Light Rail Transit Corridors, Contract No. LRT-07-077A-PCES Staff recommends that the RMC forward to the Board of Directors authorization for the Interim CEO to execute a contract amendment to the Planning, Conceptual Engineering and Environmental Studies Consultant for the I-10 West and Glendale High Capacity/Light Rail Transit Corridors Contract with AECOM to reallocate $400,000 from the Capitol/I-10 West corridor to complete additional Alternatives Analysis tasks for the West Phoenix/Central Glendale corridor.

3C. For action

3D. City of Tempe Streetcar Project Agreements Staff recommends that the RMC forward to the Board of Directors authorization for the Interim CEO to execute the following agreements for the Tempe Streetcar project:

A. The Funding, Design and Construction Agreement B. The Operations and Maintenance Agreement C. The Public Way Use Agreement

3D. For action

3E. 16th Street Light Rail Transit (LRT) Station Advanced Feasibility Study: Phoenix Funding Agreement Staff recommends that the RMC forward to the Board of Directors authorization for the Interim CEO to enter into a Funding Agreement with the City of Phoenix to pay up to $60,000 for Valley Metro to conduct the 16th Street LRT Station Advanced Feasibility Study.

3E. For action

3F. Valley Metro Operations and Maintenance Center Security Fence Staff recommends that the RMC forward to the Board of Directors authorization for the Interim Chief Executive Officer (CEO) to execute a contract award through the state procurement office to install a perimeter fence around the Operations and Maintenance Center (OMC). This contract is for phase one of the project and is to be awarded to Western Fence Co. for the amount of $85,500.

3F. For action

3

REGULAR AGENDA

4. Valley Metro Rail, Inc. Fiscal Year 2017 (FY17) Preliminary Operating and Capital Budget and Five-Year Operating Forecast and Capital Program (FY 2017 thru 2021)

Scott Smith, Interim CEO, will introduce John McCormack, Chief Financial Officer, who will provide information regarding the FY17 Budget and Five-Year Preliminary Operating Forecast and Capital Program (FY17 thru FY21).

4. For information

5. Future Agenda Items Request and Report on Current Chair Zuercher will request future RMC agenda items from members and members may provide a report on current events.

5. For information

6. Next Meeting The next meeting of the RMC is scheduled for Wednesday, May 4 6, 2016 at 11:45 a.m.

6. For Information

Qualified sign language interpreters are available with 72 hours notice. Materials in alternative formats (large print, audiocassette, or computer diskette) are available upon request. For further information, please call Valley Metro at 602-262-7433 or TTY at 602-251-2039. To attend this meeting via teleconference, contact the receptionist at 602-262-7433 for the dial-in-information. The supporting information for this agenda can be found on our web site at www.valleymetro.org

VALLEY METRO • 101 N 1ST AVE • STE 1300 • PHOENIX AZ • 85003 • 602-262-7433

DATE AGENDA ITEM 3F April 5, 2016 SUBJECT Valley Metro Operations and Maintenance Center Security Fence PURPOSE To request authorization for the Interim Chief Executive Officer (CEO) to execute a contract award through the state procurement office to install a perimeter fence around the Operations and Maintenance Center (OMC). This contract is for phase one of the project and is to be awarded to Western Fence Co. for the amount of $85,100. BACKGROUND/DISCUSSION/CONSIDERATION The OMC, located at 605 S. 48th St. Phoenix, AZ 85034, is used to store and maintain public transit light rail vehicles (LRVs). The facility has on site security personnel to provide security services 24 hours a day, 365 days a year. However, there are areas without perimeter fencing, resulting in several trespassing incidents onto the property and buildings. Some of these trespasses have resulted in vandalism to LRVs. The facility currently has fencing along some of the perimeter of the property and a badge access gate at the entrance of the property. However, there is a span over 4,300 feet that is currently not fenced. Staff is requesting a contract award to complete the first phase of this two phase project. Valley Metro will procure the necessary equipment and services needed for the installation of a perimeter fence by utilizing a cooperative agreement through the State of Arizona – State Procurement Office. Valley Metro staff sent a written request for quote and provided a Scope of Work and background information to the 2 vendors listed on the State Contract with an invitation to attend a site visit of the OMC facility in order to provide an accurate quote. Each firm contacted was asked to install perimeter fencing around the facility in two phases. Both vendors attended the site visit with both submitting a quote based on the parameters and pricing of the contract they hold with the State of Arizona. The list of vendors that provided quotes on this project was as follows:

Western Fence Co. State Contract # ADSPO13-046426 American Fence Co. State Contract # ADSPO13-046427

Valley Metro staff met with each of the vendors listed to gain a better understanding of their proposal and approach to upgrading the fencing system. At the conclusion of

2

the evaluation process, Valley Metro staff recommends awarding a contract to Western Fence Co. This vendor’s offer and proposed solution was the “best value” for the fencing system upgrade and the price is deemed fair and reasonable when compared to an independent cost estimate prepared by staff. COST AND BUDGET The proposed contract award for the phase one fencing system for the OMC is $85,100 A contract contingency of $9,980 is included within the overall budget for the project for unanticipated costs. The cost for this system-wide improvement project is included in the VMR adopted FY16 Operating and Capital Budget, with funding provided by PTF. STRATEGIC PLAN ALIGNMENT This item relates to the following goals and strategies in the Five-Year Strategic Plan, FY 2016 – 2020:

Goal 2: Advance performance based operation o Tactic A: Operate an effective, reliable, high performing transit system o Tactic B: Evaluate and enhance passenger safety and security

COMMITTEE ACTION RMC: April 6, 2016 for action Board of Directors: April 21, 2016 for action RECOMMENDATION Staff recommends that the RMC forward to the Board of Directors authorization for the Interim CEO to execute a contract with Western Fence Co. State Contract # ADSPO13-046426 to upgrade the phase one fencing system at the Valley Metro OMC for an amount not to exceed $85,100 and to establish a contract change contingency of $9,980 that is included in the overall budget established for the project. CONTACT Adrian Ruiz Director Safety and Security 602-523-6054 [email protected] ATTACHMENT None

4/5/2016

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1

Valley Metro RailPreliminary FY17Budget Overview

April 2016

Baseline: Light Rail Operations

2

FY17 FY16 Change

Passenger Boardings 17,293,000 15,558,000 11%

Vehicle Revenue miles delivered 3,754,000 2,845,000 32%

Boardings per Revenue Mile 4.61 5.47 ‐16%

Operating cost per passenger $2.60 $2.53 3%

Operating Costs $44,944,000 $39,415,000 14%

Fare Revenues $15,910,000 $14,019,000 13%

Fare Recovery 35% 36%

Avg Fare $0.92 $0.90 2%

4/5/2016

2

Baseline: LRT Capital Project ScheduleCalendar Year View

3

Transition dates to be updated

Valley Metro Rail Expenses - Operating

4


Uses of Funds FY17 FY16 Change $ Revenue Operations $44.9 $39.4 $5.5 Future Project Development 11.0 11.5 (0.5) Agency Operating Budget 1.1 0.9 0.2 Operating Activity Uses $57.0 $51.9 $5.2

4/5/2016

3

Valley Metro Rail Revenues - Operating

5


Funding Sources FY17 FY16 Change $ Fare Revenue $15.9 $14.0 $1.9 Advertising Revenue 1.1 0.9 0.2 Federal 5307 PM 1.2 1.1 0.1 Federal CMAQ 0.0 1.5 (1.5) TIGER 0.2 1.5 (1.3) Member Cities 31.2 26.3 4.9 MAG / RPTA (RARF) 1.0 1.0 0.0 PTF Sales Tax Revenue 6.4 5.6 0.9 Operating Revenue Totals $57.0 $51.9 $5.2

Valley Metro Rail Expenses – Capital

6


Capital Uses of Funds FY17 FY16 Change $Northwest Extension $3.2 $49.2 ($46.0)Central Mesa Extension 4.7 15.5 (10.9)Gilbert Road Extension 58.0 11.5 46.5 Tempe Streetcar Extension 9.5 1.2 8.3 50th Street LRT Station 5.8 0.7 5.0 South Central Extension 39.4 0.0 39.4 Non-Prior Rights Utilities 3.2 1.5 1.7 CNPAs - Mesa Extension 0.0 0.3 (0.3)Systemwide Improvements 16.2 3.5 12.7

Capital Uses Totals $139.9 $83.5 $56.5

4/5/2016

4

Valley Metro Rail Revenues – Capital

7


Funding Sources FY17 FY16 Change $ Federal New Starts $0.0 $7.1 ($7.1) Federal CMAQ 73.2 14.5 58.7 Federal SOGR 0.3 0.3 0.0 Member Cities 49.2 1.7 47.6

Less Payment NW Advance (60.0) 0.0 (60.0) PTF Bond Revenue 43.1 0.0 43.1 PTF Sales Tax Revenue 34.0 59.9 (25.9)Capital Revenue Totals $140.0 $83.5 $56.5

5-Year Operating Assumptions:

• 1.9 mile Gilbert Rd opens revenue service in Nov 2018

• 3.0 mile Tempe Streetcar opens revenue service in Dec 2019– With new rail service ridership up 20%

• Transportation and Security to service new extensions• Maintenance increases per preventive maintenance schedule• Fare Revenue

– FY17 changes to fare discount structure and enforcement – average fare $.92– Base fare increase FY20 - average fare $1.06

• Federal PM revenue level per MAG forecast• Member contributions grow with CME, NWE, GRE and Tempe Streetcar

10

4/5/2016

5

LRT Project Development5 Year Project Expenditure Plan – Uses of Funds

11

2017 2018 2019 2020 2021 Total

USES OF FUNDS

Capitol/I-10 West 475$ 2,050$ -$ -$ -$ 2,525$

Capitol/I-10 West Phase II - - 100 750 1,600 2,450

West Phoenix/Central Glendale 711 3,000 1,250 500 - 5,461

Northeast Phoenix 529 - - - - 529

South Central 2,078 - - - - 2,078

Fiesta/Downtown Chandler 239 - - - - 239

Northwest Phase II 840 750 200 - - 1,790

16th Street Advanced Feasibility Study 60 - - - - 60

West Glendale Feasibility Study 644 343 - - - 987

OMC Master Plan and Phasing Study (PTF) 175 - - - - 175 Systems Planning & Project Development 3,811 3,925 4,043 4,164 4,289 20,232

Capital Project Development Administration 1,426 1,469 1,513 1,558 1,605 7,572

Total Uses 10,990$ 11,537$ 7,106$ 6,973$ 7,494$ 44,100$

5-Year Operating Uses and Sources

12

Uses of Funds - Operating Budget ($,000)Operations & Maintenance 251,988$ Project Development Planning Support 44,100 Agency Operating Budget 5,773

Total Uses 301,861$

Sources of Funds - Operating Budget ($,000)Fare Revenues 95,079$ Advertising 5,841 Phoenix 91,002 Tempe 34,959 Mesa 26,381 Glendale 1,143 Chandler 394

Regional 40,207 Federal 6,854 Total Sources 301,861$

4/5/2016

6

5-Year Capital Projects Uses of Funds

13

2017 2018 2019 2020 2021 FY 2017-21

USES OF FUNDS Northwest Extension Phase 1 3,203$ -$ -$ -$ -$ 3,203$ Central Mesa 4,673 3,926 - - - 8,599 Gilbert Rd 57,988 56,653 14,153 1,309 - 130,103 Tempe Streetcar 9,478 48,872 73,296 30,035 - 161,681 South Central 39,417 124,687 98,336 89,080 68,309 419,829 50th Street Station 5,782 8,634 4,022 - - 18,438 Northwest Extension Phase 2 - 3,055 29,032 66,415 69,180 167,682 Capitol I-10 West - 5,089 5,089 11,557 42,580 64,315 West Phoenix Central Glendale - - - - 102,186 102,186 Subtotal HCT Corridors 120,541 250,916 223,928 198,396 282,255 1,076,036

Non-Prior Rights Utilities Relocation 3,185 8,174 6,274 2,744 3,339 23,716 Systemwide Improvements 16,222 22,438 22,000 2,126 1,480 64,266 Total Capital Costs 139,948$ 281,528$ 252,202$ 203,266$ 287,074$ 1,164,018$

5-Year Capital Projects Source of Funds

14

SOURCES OF FUNDS 2017 2018 2019 2020 2021 FY 2017-21 Phoenix 45,820$ 138,456$ 129,648$ 107,327$ 107,201$ 528,452$

Less Repayment Phoenix NW Advance (60,000) - - - - (60,000) Tempe - 6,500 6,500 - - 13,000 Mesa 3,423 164 - - - 3,587 Glendale - - - - 14,722 14,722 Subtotal (10,757) 145,120 136,148 107,327 121,923 499,761

PTF Sales Tax Revenue (Allocation 43.24%) 34,038 27,871 33,879 38,110 41,951 175,849 PTF (Reserve) / Bond Borrowing 43,027 (1,351) 5,998 (9,463) 14,567 52,778

PTF Regional Revenue - Demand 77,065 26,520 39,876 28,648 56,518 228,627

TPAN - 55,430 14,253 1,309 - 70,992

Federal Revenues: FTA 341 20,262 41,906 56,737 64,520 183,763 CMAQ 73,300 34,196 20,019 9,246 44,113 180,874 Subtotal Federal 73,641 54,458 61,925 65,983 108,633 364,637 Total Revenues 139,948$ 281,528$ 252,202$ 203,266$ 287,074$ 1,164,018$

4/5/2016

7

Budget Schedule FY17

15

Nov 19 FY17 Agency Budget Initiatives presented to Boards for information

Feb 18 Board approves service changes effective April 2016

Feb 26 Preliminary FY17 Budget presented to Fin. Working Group

Mar 1 Executive Summary & 5 year Plan posted to website

Apr 6 Draft Budget delivered to TMC/RMC/AFS

Apr 14 Member City Comments due

Apr 14 Budget presented for information to AFS

Apr 21 Budget presented to Board of Directors for information

May 19 Board Meeting for Budget Adoption

VMR FY17 Preliminary Budget Executive Summary Valley Metro | 1

FY17 PRELIMINARY ANNUAL OPERATING AND CAPITAL BUDGET Valley Metro Rail, Inc. (VMR) is a public non-profit corporation whose members are the cities of Chandler, Glendale, Mesa, Phoenix, and Tempe. VMR plans, designs, constructs and operates light rail/high-capacity transit system in metro Phoenix, Arizona. FY17 Operating Activities Total Operating Activities for FY17 are $57.0 million, an increase of $5.2M or 10% from FY16. Primary sources of funds are $57.0M as detailed below:

Public Transportation Fund (PTF) sales tax revenue is $6.4M. PTF funding requirements for project development activities are up by $0.9M.

Member city funding of $31.2M is up from $26.3M due to operating 12 months of the 26-mile line, additional $1.3M future project development activities and $0.2M increase for agency operations.

Fare revenue is $15.9M, which is up due to addition of six miles of service for a full 12 months.

Primary uses of funds are also $57.0M as detailed below:

Future project development is $11.0M, down primarily due to completion of project development for the Tempe Streetcar and South Central capital projects.

Revenue operations is $44.9M, up due to operating 12 months of the 26-mile line, increased maintenance costs to maintain a state of good repair and increased fare inspection and security resources.


$0.0 $10.0 $20.0 $30.0 $40.0

Fare Revenue

Advertising Revenue

Federal 5307 PM

Federal CMAQ

TIGER

Member Cities

MAG / RPTA (RARF)

PTF Sales Tax Revenue

FY17 FY16 VMR Operating Sources of Funds FY17 vs FY16

$0.0 $10.0 $20.0 $30.0 $40.0 $50.0

Revenue Operations

Future ProjectDevelopment

Agency Operating Budget

FY17 FY16 VMR Operating Uses of Funds FY17 vs FY16


FY17 Capital Activities Total Capital Activities for FY17 are $139.9 million, an increase of $56.5M or 68% from FY16. Primary sources of funds are $139.9M as detailed below:

PTF sales tax revenue is $34.0M, down from $59.9M last year due to completion of Central Mesa and Northwest Phoenix light rail extensions.

PTF bond revenue is $43.1M with series 2017 bond issue to fund upcoming rail projects.

Federal CMAQ is $73.2M, up from $14.5M primarily for Gilbert Road Extension, Tempe Streetcar and LRV acquisition.

Primary uses of funds are $139.9M as detailed below:

Systemwide Improvements $16.2M Non- Prior Rights Utilities $3.2M South Central Extension $39.4M 50th Street Station $5.8M Tempe Streetcar $9.5M Gilbert Road Extension $57.9M Central Mesa Extension $4.7M Northwest Extension $3.2M

$0.0 $20.0 $40.0 $60.0 $80.0

Federal New Starts

Federal CMAQ

Federal SOGR

PTF Bond Revenue

PTF Sales Tax Revenue

Member Cities

FY17 FY16 VMR Capital Sources of Funds FY17 vs FY16

Member City revenue includes payment of $60.0M advance to Phoenix.


$0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0

Northwest Extension

Central Mesa Extension

Gilbert Road Capital Project

Tempe Streetcar Extension

50th Street LRT Station

South Central Capital Project

Non‐Prior Rights Utilities…

CNPAs ‐ Mesa Extension

Systemwide Improvements

FY17 FY16 VMR Capital Uses of Funds FY17 vs FY16


FY17 Baseline Service and Capital Plan Assumptions Passenger Services Rail Operations Service Frequency Plan

Weekday trains will run with two to three cars at 12-minute intervals during peak hours and 15 to 20-minute intervals off peak.

Weekends do not require peak service trains and will operate with one or two cars at 15 to 20-minute headways.

Ridership and Fare Revenue

Total ridership is forecasted at 17.3M passengers for FY17 with fare revenues generating $15.9M

The estimate includes an increase of an estimated 2.7M rides due to the Central Mesa and Northwest Extensions, which are commencing revenue service in FY16.

Over the course of the FY17, average weekday boardings are forecasted at 52,000 while Saturday and Sunday average ridership are forecasted at 43,000 and 30,000 per day respectively.

Project Development High-Capacity Transit Projects

The Regional Transportation Plan (RTP), adopted by the Maricopa Association of Governments (MAG) and financed under the one-half cent sales tax extension, identifies 66 miles of light rail/high-capacity transit corridors to be implemented by 2034.

The 1.9-mile Gilbert Road Extension, to serve east Mesa, is in final design. The 3-mile Tempe Streetcar project progresses into final design. City of Phoenix voters approved Proposition 104 (Transportation 2050), a 35-year

transportation plan that would expedite several miles of light rail/high-capacity transit and add additional corridors to the regional high-capacity transit system. Under the plan and timing as shown on table below, additional service areas are identified:

o 5-mile South Central Extension o 1.7-mile NW Extension Phase II o 7-mile West Phoenix/Central Glendale transit corridor o 1.5-mile Capitol/I-10 West Extension (Phase I) o 9.5-mile Capitol/I-10 West Extension (Phase II) o 12-mile Northeast Phoenix transit corridor o 5.5-mile ASU West transit corridor (new project, not currently in RTP)


The timing of the projects in the program is depicted on the following schedule shown below:


FY17 Goals and Initiatives In January 2015, the Valley Metro RPTA and Valley Metro Rail Boards adopted the Valley Metro Strategic Plan for FY16 through FY20. The Strategic Plan provides clear definition of the purpose of the organization and establishes realistic goals and objectives for a five-year period. This plan ensures the most effective use of the organization’s resources by focusing those resources on key priorities. Below are the five, overarching goals identified in the Strategic Plan:

1. Increase customer focus 2. Advance performance based operation 3. Grow transit ridership 4. Focus on economic development, regional competitiveness and financial resources 5. Advance the value of transit

With the initiation of the FY17 budget process, staff has developed a number of initiatives that align with the Strategic Plan and will be incorporated into the FY17 budget, as summarized below.

VMR Investment

Total Investment

Develop smart card fare program/mobile ticketing 430.0$ 860.0$

Renovate website & mobile site 100.0$ 300.0$

Evaluate and enhance passenger safety and security.Increasing rail fare inspection and security resources 425.0$ 425.0$

Improve Customer SatisfactionIntegration of greater, more effective technology, improving passenger information systems with real time data, such as the website, facility signage and a Ridekick mobile application, and implementation of an enhanced fare media solution, including smart cards and mobile ticketing.


FY17 Initiatives1. Increase Customer Focus:


VMR Investment

Total Investment

Operate an effective, reliable, high performing transit system.

Develop an asset management plan for Valley Metro in conjunction with member agencies

75.0$ 100.0$

Enhance Valley Metro’s role in sustainability and the environment.

Implement the Sustainability Action Plan with focus of updating of design standards and urban design guidelines.

229.0$ 229.0$

Deliver projects and services on-time/on-budget.

Advance projects and services in the current regional transportation plan and Transit Life Cycle program.

Expediting S Central Corridor: $2,109,000 Expediting Northwest Phase II: $907,000 Advancing Northeast Corridor feasibility study: $291,000

3,307.0$ 3,307.0$

Maintain a culture to recruit and retain a qualified and diverse workforce.

Develop a program to recruit and retain a qualified and diverse workforce. Consultant engagement to for comprehensive training assessment and new employee orientation programs

20.0$ 40.0$

Maintain strong fiscal controls to support Valley Metro’s long-term sustainability.

Establishing Internal Audit Department with dual reporting responsibility to the Board of Directors and VM Executive Office

94.5$ 189.0$

2. Advance Performance Based Operation: FY17 Initiatives


With the recent

passage of

Transportation 2050 in

the City of Phoenix, rail

service to North, South

and West Phoenix

neighborhoods are

being moved forward.

Planned completion

dates are shown.


FY17 Goals and Initiatives

VMR Investment

Total Investment

Improve connectivity of transit services for greater effectiveness.

Analyze the region’s transit system to optimize connectivity between transit services, including new LRT extensions- Fiesta Downtown Chandler Study: $250,000- West Glendale Feasibility Study: $657,000

907.0$ 907.0$

Communicate availability, attractiveness and safety of transit service

Conduct discretionary ridership campaigns to continue to attract riders 105.0$ 210.0$

4. Focus on Economic Development, Regional Competitiveness and Financial Resources:

FY17 InitiativesVMR Investment

Total Investment

Work with local communities to leverage transit oriented development (TOD) to increase investment in transit

Research and monitor and report regional trends regarding TOD implementation and successes- Support to TOD working group and PNR utilization study: $100,000

100.0$ 100.0$

5. Advance the Value of Transit: FY17 InitiativesVMR Investment

Total Investment

Develop and implement a communications plan to inform and educate the public on the value of transit

Continue media campaign to raise greater awareness of the value of transit 63.0$ 126.0$

3. Grow Transit Ridership: FY17 Initiatives



Agency Staff Overview Valley Metro RPTA and Valley Metro Rail budgets are developed with a unified staff plan, with department managers planning the level of effort required to meet the bus and rail activities. For FY17, there are 310 employees budgeted in the integrated agency; 131 FTE’s are budgeted to RPTA activities; 179 to VMR activities. Staffing levels are reviewed on an annual basis with zero-base analysis of level of effort requirements to fulfill work requirements in the five-year period commencing with the beginning of the new fiscal year. Salary and fringe benefit compensation levels are measured against comparable regional agencies, member cities and peer transit agencies located in the western U.S. FY17 Compensation and Fringe Benefit Assumptions Total compensation budget is based on a 2.5% increase. For staff salary changes, merit increases are based on employee performance. Division level control is in place to contain total salary and fringe costs within budget. Agency health care costs will increase. Program design adjustments are in place to hold total agency fringe benefit cost increases to within 3% of FY16 levels.

Five new agency positions are planned to improve agency internal controls and strengthen fixed route bus and Accessible transit contractor performance, as noted below.


FY 17 FY 16 change pct change

$ millionFTE 310 312 -2 -1%

Salaries 19.6 18.8 0.8 4%













FY17 Preliminary Budget Financial Summary In the table below, detailed revenues and expenses are shown with comparisons to the prior year’s amended budget. The “Note” column (on the far right side) indicates reference to explanations which are provided in the following table.

Uses of Funds ($,000)

FY16 Amended

FY17 Prelim Change

Budget Analysis

Note #Operating Activities: Revenue Operations 39,415 44,944 5,529 1 Future Project Development 11,541 10,990 (551) 2 Agency Operating Budget 909 1,088 179

51,864 57,022 5,158

Capital Projects: Northwest Extension 49,178 3,203 (45,975) 3Central Mesa Extension 15,549 4,673 (10,876) 4Gilbert Road Capital Project 11,516 57,988 46,472 5Tempe Streetcar Extension 1,198 9,478 8,280 650th Street LRT Station 747 5,782 5,035 7South Central Capital Project - 39,417 39,417 8Non-Prior Rights Utilities Relocations 1,467 3,185 1,718 9CNPAs - Mesa Extension 321 - (321) 10Systemwide Improvements 3,497 16,222 12,725 11

Subtotal Capital before Debt Service 83,472 139,948 56,476

Total Uses of Funds 135,336 196,970 61,634

Note Budget Analysis - Uses of Funds1 FY17 rail operating costs increase by 14% over FY16 levels. In FY17, 26 miles of service will be

operated for the full year. Maintenance costs rise with scheduled preventive maintenanceactivities to maintain the system in a state of good repair, and increased fare inspection andsecurity resources are being deployed.

2 Future Project Development costs are down by $0.6M due to decrease in planning activitiesrelated to future corridors and system planning; primarily due to completion of project developmentfor the Tempe Streetcar capital project.

3 Northwest Extension Phase I base project costs are down by $46.0M due to completion of theconstruction portion of the project and commencement of passenger operations in March of 2016.

4 Central Mesa Extension base project costs are down by $10.9M. Remaining activity in FY17 isrelated to the train signal control system upgrade. Annual expenditures forecasted at $58.0M.

5 Gilbert Road LRT Extension project construction to commence in FY17, along with the purchaseof Light Rail Vehicles.

6 Tempe Streetcar design and pre-construction activities commence. Annual expendituresforecasted at $9.5M.


Note Budget Analysis - Uses of Funds7 50th Street LRT Station preliminary design and ROW acquisition work continues with

construction to commence in FY17.

8 South Central Capital Project pre-construction activities to begin in FY17. Annual design andproject management expenditures forecasted at $39.4M.

9 Non-prior rights utilities relocations up by $1.7M due to increased activity for construction projects. FY17 amounts include Tempe Streetcar ($0.5M), 50th Street LRT Station ($0.6M), and GilbertRoad Extension ($2.0M).

10 No FY17 City of Mesa funding for Central Mesa Extension Concurrent Non-Project Activities(CNPA).

11 Systemwide Improvements include the purchase of 8 light rail vehicles for future extensions($6.0M), LRV overhauls ($4.7M), improvements for station lighting and railing, security cameracomponent upgrades, ticket vending machine upgrades and other activities ($5.5M).

Sources of Funds ($,000)

FY16 Amended

FY17 Prelim Change

Budget Analysis

Note #Operating Activities: Fare Revenue 14,019 15,910 1,891 12 Advertising Revenue 876 1,100 224 Federal 5307 PM 1,143 1,197 54 Federal CMAQ 1,451 - (1,451) 13 TIGER 1,488 175 (1,313) 14 Member Cities 26,324 31,200 4,876 15 MAG / RPTA (RARF) 1,000 1,000 - PTF Sales Tax Revenue 5,564 6,440 876 16

51,864 57,022 5,158 Capital Projects: FTA - Section 5309 7,084 - (7,084) 17 Federal CMAQ 14,491 73,237 58,746 18 Federal 5337 SOGR 341 341 - Member Cities 1,665 49,239 47,574 19

Less Repayment Phoenix NW Advance - (60,000) (60,000) 20 PTF Bond Revenue - 43,099 43,099 21 PTF Sales Tax Revenue 59,891 34,031 (25,860) 22

83,472 139,948 56,476

Total Sources of Funds 135,336 196,970 61,634


Note Budget Analysis - Sources of Funds12 Fare revenue increases from $14.0M to $15.9M; assumes 17.3 million rides with an average fare

forecasted to be $0.92 per ride in FY17. Ridership grows with addition of 6 miles of service for full12 months. Average fare increase due to fare pricing adjustment anticipated in late 2017, pendingBoard approval.

13 With Tempe Streetcar project moving into capital phase, no Federal CMAQ project developmentfunds programmed for FY17.

14 Project Development Federal TIGER funds down by $1.3M due to South Central entering into pre-construction activity in FY17, which will be funded by City of Phoenix within the capital projectbudget.

15 Member City contributions for Operations are up from $26.3M to $31.2M in FY17 due to operating12 months of the base service along with the Central Mesa and Northwest Extensions ($3.4M netof revenues), an additional $1.3M of future project development activities, primarily related to SouthCentral Corridor project in Phoenix, and $0.2M increase for agency operations.

16 PTF Sales Tax revenue funding requirements for project development are up by $0.9M, primarilyrelated to Northwest Phase II, West Phoenix-Central Glendale and Phoenix I-10 Capitol projects.

17 No Federal New Starts funds programmed for FY17. Activity in FY16 was to complete the CentralMesa Extension project. New Starts funds for the Tempe Streetcar are anticipated in FY18.

18 Federal CMAQ increasing by $58.8M due to increasing funding requirements for constructionactivity. FY17 programmed activity includes Central Mesa Extension SCADA ($3.7M), GilbertRoad ($54.6M), Tempe Streetcar ($7.6M), Systemwide Improvements ($5.0M), and Non PriorRights Utilities ($2.3M)

19 Member City contributions for Capital Projects total $49.2M for FY17. Project amounts for FY17include South Central funding by Phoenix ($39.4M), 50th Street Station funding by Phoenix($5.8M), Gilbert Road Extension funding by Mesa ($3.3M), and Non Prior Rights Utilities ($0.7M).

20 In June of 2017, the City of Phoenix will be repaid $60.0M in advances the City made in FY 13 andFY 14 to accelerate completion of the NW Extension. Funding is from Public TransportationFunds.

21 It is anticipated that RPTA will issue $60.0M series 2017 bonds to support rail capital projects inthe spring of 2017. Consumption of bond proceeds is estimated at $43.1M in FY17.

22 PTF Sales Tax funding will be reduced from $59.9M to $34.0M primarily due to constructionactivity winding down for Northwest and Central Mesa Extensions, offset by increased fundingrequirements for Tempe Streetcar and Systemwide Improvements.


FY17 – FY21 PRELIMINARY FIVE-YEAR OPERATING FORECAST AND CAPITAL PROGRAM The Valley Metro Rail Five-Year Operating and Capital Program identifies anticipated operating costs, capital projects and costs and the associated funding sources. The FY17 – FY21 Five-Year Operating and Capital Program is submitted to the Board of Directors along with the FY17 Operating and Capital Budget. Five-Year Operating Assumptions

1.9-mile Gilbert Road Extension opens revenue service in November 2018 50th Street Station opens revenue service in May 2019 3-mile Tempe Streetcar opens revenue service in December 2019

The Operations & Maintenance (O&M) costs are projected based on current cost history with a general inflation escalation factor of 3.0%. Anticipated structural changes to staffing, contract and materials expenses are forecasted to meet customer demand and maintain the system in a state of good repair. System-wide and specific light rail corridor project development activities are included in the operating budget. Once a project alignment has been approved by local and regional policy makers and federal environmental approvals are secured the project costs are recorded in the capital program. Agency Operating costs include those costs not directly allocable to capital projects or to passenger operations. Included are costs of annual audit, federal and state legislative representation and memberships to transportation related organizations. Fares Effective March 2013, the current Regional Fare Policy is as follows:

*Reduced Fare – Youth (6 – 18), seniors (age 65 and over) and people with disabilities In accordance with the regional fare policy to achieve a 25% fare recovery ratio, fare discount structure changes are projected for FY17 to increase average fare by 5%. Within the 5 year plan, a base fare increase is anticipated in FY20.


FY17 – FY21 Operating Uses and Sources of Funds Operating costs and funding planned for the FY17 – FY21 planning horizon are summarized as follows (in year of expenditure ($,000):

2017 2018 2019 2020 2021 TOTALUSES OF FUNDS Operations and Maintenance 44,944$ 46,540$ 49,448$ 53,999$ 57,057$ 251,988$ Project Development Planning Support 10,990 11,537 7,106 6,973 7,494 44,100 Agency Operating Budget 1,088 1,120 1,153 1,188 1,224 5,773 Total Uses 57,022 59,197 57,707 62,161 65,775 301,861

SOURCES OF FUNDS

LRT Fares: Phoenix 9,828 11,028 11,264 11,945 11,847 55,911 Tempe 3,751 3,677 3,756 5,214 6,139 22,537 Mesa 2,331 2,551 3,463 4,161 4,126 16,631 Subtotal Fares 15,910 17,257 18,482 21,320 22,112 95,079 Other Revenues: Phoenix 20,355 17,637 17,853 17,336 17,822 91,002 Tempe 5,712 6,029 6,105 7,762 9,351 34,959 Mesa 4,184 4,215 5,575 6,124 6,283 26,381 Glendale 677 374 32 30 31 1,143 Chandler 272 31 32 30 31 394 Advertising 1,100 1,133 1,167 1,202 1,238 5,841 Subtotal Local Revenues 32,300 29,418 30,763 32,483 34,757 159,720

Capital Planning Funds - PTF 6,440 8,554 6,106 5,373 5,294 31,767

MAG 500 500 500 500 500 2,500 RPTA 500 500 500 500 500 2,500 TIGER 175 - - - - 175 Federal 5307 PM 1,197 1,329 1,356 1,383 1,412 6,679

CMAQ - 1,640 - 600 1,200 3,440 Total Sources 57,022$ 59,197$ 57,707$ 62,161$ 65,775$ 301,861$


FY17 – FY21 Capital Program

Valley Metro Rail currently has a number of transit projects in various stages of planning, design or construction. The sources and overall uses of funds associated with these projects and activities are projected to be $1.2B through the five-year planning horizon. These uses and sources of funds are summarized as follows:

Funding is derived from three primary sources: Regional sales taxes (PTF), Transportation Project Advance Notes (TPAN) and federal grants. The TPAN notes are issued by the City of Mesa, with a combination of federal and local revenues. (Note: Negative sources of funds reflect reimbursements to City of Phoenix for the Northwest Extension advance (source of funding is PTF.)

2017 2018 2019 2020 2021 FY 2017-21

USES OF FUNDS Northwest Extension Phase 1 3,203$ -$ -$ -$ -$ 3,203$ Central Mesa 4,673 3,926 - - - 8,599 Gilbert Rd 57,988 56,653 14,153 1,309 - 130,103 Tempe Streetcar 9,478 48,872 73,296 30,035 - 161,681 South Central 39,417 124,687 98,336 89,080 68,309 419,829 50th Street Station 5,782 8,634 4,022 - - 18,438 Northwest Extension Phase 2 - 3,055 29,032 66,415 69,180 167,682 Capitol I-10 West - 5,089 5,089 11,557 42,580 64,315 West Phoenix Central Glendale - - - - 102,186 102,186 Subtotal HCT Corridors 120,541 250,916 223,928 198,396 282,255 1,076,036

Non-Prior Rights Utilities Relocation 3,185 8,174 6,274 2,744 3,339 23,716 Systemwide Improvements 16,222 22,438 22,000 2,126 1,480 64,266 Total Capital Costs 139,948$ 281,528$ 252,202$ 203,266$ 287,074$ 1,164,018$

SOURCES OF FUNDS Phoenix 45,820$ 138,456$ 129,648$ 107,327$ 107,201$ 528,452$

Less Repayment Phoenix NW Advance (60,000) - - - - (60,000) Tempe - 6,500 6,500 - - 13,000 Mesa 3,423 164 - - - 3,587 Glendale - - - - 14,722 14,722 Subtotal (10,757) 145,120 136,148 107,327 121,923 499,761

PTF Sales Tax Revenue (Allocation 43.24%) 34,038 27,871 33,879 38,110 41,951 175,849 PTF (Reserve) / Bond Borrowing 43,027 (1,351) 5,998 (9,463) 14,567 52,778

PTF Regional Revenue - Demand 77,065 26,520 39,876 28,648 56,518 228,627

TPAN - 55,430 14,253 1,309 - 70,992

Federal Revenues: FTA 341 20,262 41,906 56,737 64,520 183,763 CMAQ 73,300 34,196 20,019 9,246 44,113 180,874 Subtotal Federal 73,641 54,458 61,925 65,983 108,633 364,637 Total Revenues 139,948$ 281,528$ 252,202$ 203,266$ 287,074$ 1,164,018$

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