A new review of the FasTracks financial plan says RTD is too optimistic in estimating the revenue it will collect over several decades to pay for the $7 billion transit expansion.
“There is still substantial uncertainty in all the key elements of the FasTracks revenue stream,” the Denver Regional Council of Governments said in its latest analysis of the massive Regional Transportation District project.
By state law, the council must review RTD’s plans for the project each year.
FasTracks includes the addition of six new rail lines in metro Denver and the extension of three existing light-rail lines.
It is one of the largest transit ventures underway in the country, but its finances have been pummeled by the faltering economy in recent years.
When Denver-area voters approved a 0.4 percent sales tax in 2004 to build FasTracks, the project’s price tag was $4.7 billion. The rising cost of construction materials and the land needed for the rail lines, coupled with design changes on some of the projects, boosted the construction cost estimate to $6.1 billion in 2007 and $7 billion earlier this year.
In a 45-page technical assessment of RTD’s 2009 FasTracks financial plan, two consulting firms retained by the council of governments endorsed the latest cost estimate while questioning RTD’s revenue estimate.
“From a capital cost standpoint, the current FasTracks estimated cost of approximately $7 billion appears reasonable,” Urban Engineers Inc. and First Southwest Co. said in their report. RTD paid about $100,000 for the companies’ analysis.
The consultants are less confident about RTD’s estimate of the revenue it will receive over time to pay for the project.
RTD will ask to raise sales tax
RTD has identified about $4.7 billion it will get from a variety of sources for FasTracks. One key source is the dedicated 0.4 percent sales and use tax that voters approved five years ago.
To finish the project by its planned 2017 completion date and close the anticipated $2.3 billion gap, RTD is counting on area voters to approve a doubling of the FasTracks tax — to 0.8 percent — possibly in an election next year.
RTD expects to issue more than $2 billion in sales-tax-backed revenue bonds. The council’s consultants said RTD’s ability to meet payments on the debt “will depend on the performance of sales-tax revenue collections.”
“The 5 percent average annual (sales-tax) growth assumption for the forecast period 2011-2024 appears optimistic given tax-collection performance over the last 10 years, which has averaged only 2.3 percent since 1999,” Urban Engineers and First Southwest said in their report.
RTD spokesman Scott Reed on Thursday said officials at the transit agency still were digesting the new reports on FasTracks. But he said RTD, in settling on its recent $4.7 billion revenue estimate for FasTracks, had lowered its earlier sales-tax growth forecast.
“We did drop our forecasts for this year,” Reed said, “and will be dropping them even further for 2010 as part of our annual program evaluation, based on the continuing economic downturn we are all faced with.”
The council’s consultants raised concerns about other revenue streams RTD is counting on for FasTracks, including the $1 billion the agency expects to get from the federal government for the East Corridor train to Denver International Airport and the Gold Line train to Arvada/Wheat Ridge, and the $900 million in private investment RTD expects from companies that will form a public-private partnership to build the DIA and Gold Line trains and other FasTracks elements.
“The concept remains somewhat risky, and certainly the projections for resultant funds is even less reliable,” consultants said of the public-private partnership scenario.
Jeffrey Leib: 303-954-1645 or jleib@denverpost.com
