What about the Financial Risk?

I’m Bonnie Hauser and I’m a retired partner from PricewaterhouseCoopers.  I’ve never worked on the Academy Awards – but I know a lot about large projects and financial risk. I’ve read GoTriangle’s plan – twice and I’m pretty confused.  With a public hearing, we hope that your staff and consultants can answer questions that are not clear from the plans.

GoTriangle’s latest plan projects light rail to cost $2.5 billion. $1 billion in local funds and over $900 million in debt. That assumes all goes well.

What if things don’t go as planned?  Cost overruns are funded in full by Durham and Orange.  For this project a 1% overrun costs $25 million. 

Others are asking about alternative technologies and how funds are allocated between bus and light rail.  My questions are about cost.  

·         What if there’s a cost overrun – above the 30% contingency in the budget. Where will those funds come from? 

·         What if the state funds less than 10%?  Last time, DOT scored the project at 8.6%. That’s $35 million short.

·         What about revenue?  What if sales tax doesn’t grow by 4% compounded, over the next 45 years? 

·         Is the $40 million that you discussed last December in or out? The risk scenarios in latest plan assume it’s in.

·         How will you pay back $935 million?  The plan stops at 2035 – but the debt payments continue until 2062. We heard estimates of $20 million a year to pay back the debt starting in 2036.  It’s not plan – so that means no federal or state match.  That’s on top of $30 million to run the train.  So if all goes well, on top of $2.5 billion we’ll be paying $50 million per year for 30 years.

·         Finally – are Orange County taxpayers liable for the $935 million debt? Mrs Snow has more to say about that.

We know that a lot of work went into GoTriangle’s plan – but the risks will fall on Orange and Durham taxpayers for generations.   That’s why we hope your staff and financial consultant can answer these questions in a public hearing.

Thank you