streetcar operations -independent review

cityof

CINCINNATIinterdepartmental Correspondence Sheet

Date: December 14, 2015

FOR YOUR INFORMATION

To: Mayor and Members of City Council

From: Harry Black, City Manager~ f~Subject: Independent Review of Streetcar Operations Financial Projections

In September 2016, the new infrastructure project, the Cincinnati Streetcar, will begin revenueservice. It is imperative that this project is fiscally sustainable for the long-term, an importantcomponent of overall success for the City’s financial health.

One of my roles is to make sure that this project is fiscally sustainable for the long-term, whichwill be an important component of its overall success. Since becoming City Manager, it hasbecome increasingly apparent to me that the cost projections for Streetcar operations have notbeen fully tested. As a result, uncertainty remains about the adequacy of funding sources tocover streetcar operating levels of service being discussed for next year and in the years to come.That is a risk to the success of the project that I want to act to mitigate.

In an effort to resolve this issue well ahead of the planned opening of the streetcar service inSeptember 2016, I asked the City’s financial advisors, Davenport & Company, to take a hard lookat the financial projections for the first five years of streetcar operation using the bestinformation available on projected streetcar revenues, costs, and the full range of fundingsources.

Attached is the Davenport analysis, the purpose of which is to clarify the extent of any fundinggap and assist the City’s elected officials in addressing the challenges of paying for streetcaroperations over the long haul. The report is deliberately conservative in order to understand theworst-case scenario in light of the uncertainties and variables associated with currentprojections. I believe this cautious approach is part of sound financial management of the City.

I am cautiously optimistic that the tax incentive policy promoting contributions to streetcaroperations in connection with tax abatements in Downtown and Over-the-Rhine will, in time,alleviate the funding shortfall. As described in the attached, this money will not be more than atrickle until year three, or more likely, year four of the project. This means our immediateconcern is achieving the necessary operations funding in years 2, 3 and 4.

I look forward to reviewing this report in the coming days with each of you, and workingcollaboratively proactively to develop options to ensure the long term success of the project andthe City’s financial future.

Attachment:Review of Streetcar Financial Projections and Pro-forma Sensitivity Analysis by Davenport &Company

{00189395-1}

Review of Streetcar Financial Projections andPro-forma Sensitivity Analysis

City of Cincinnati, Ohio

December 14, 2015

DAVENPORT & COMPANYMember NYSE I FINRAISIPC

Background

• Davenport & Company LLC, as Financial Advisor to the City of Cincinnati (the “City”), has been tasked to:

Review the City’s Streetcar Revenue and Expense Assumptions as provided by HDR ~

Develop a Pro-forma Sensitivity Analysis (based on variances to certain Revenue and Expense Assumptions) thatdemonstrates the potential range of estimated financial support needed from the City over the next five years to operatethe Streetcar system.

For purposes of this financial review and Pro-forma Sensitivity Analysis, it is assumed that the $1.5 million in PledgedGeneral Fund Revenue planned to be allocated annually to the Streetcar will continue to be appropriated for Streetcaroperations.

Review certain of the City’s Streetcar assumptions/metrics in context of other streetcar systems nationwide.

As the basis for this comparative review, we used information from the National Transit Database for the peersystems cited in the “Cincinnati Streetcar Transportation and Maintenance Operations Plan (TMOP)”. In addition, wealso included Hampton Roads Transit (The Tide System in Norfolk) as this system is new and began service in 2011.

• NOTE: Davenport is not a transportation feasibility consultant and therefore we have not assessed the feasibility/validity ofthe Revenue and Expense Assumptions that have been provided to us.

Rather, in our capacity as Financial Advisor we have provided a range of potential variances that may affect the proforma financial results of the Streetcar operations and the resulting financial support needed from the City.

(1) Except for VTICA assumption which is based on revenues from actual V11CA Agreements for FY 2017 and FY 2018. Estimated VTICA revenues in FY 2019 andthereafter are based on 3CDC’s estimate of $100 million in annual development and assuming 7.5 o of the value of a 100% property tax abatement in a typicalVTICA.

DAVENPORT & Co PANY

Decembei 14. 2015

Approach

• In undertaking this assignment, Davenport relied on the following information:

Revenue and Expense Assumptions provided by HDR (1);

Supporting documentation, including the “Cincinnati Streetcar Transportation and Maintenance Operations Plan(TMOP)” with respect to the new Streetcar operation that is anticipated to begin in FY 2017;

2013 Transit Agency Profiles from the National Transit Database for the Other Streetcar Systems referenced on page 34of the “TMOP” as source data for the calculation of key metrics to provide comparative perspective for the City’sStreetcar system; and

Discussions with Southwest Ohio Regional Transit Authority (SORTA) and City staff.

• Based on the above information, Davenport created a pro-forma cash flow projection for the first five years of operations inorder to assess the potential impact of variances in:

Certain Revenue Assumptions, which include VTICA, Advertising, Naming and Station Rights; and

City Overhead and Other Expense Assumptions for which the City is responsible under the TMOP.

• In addition, we compared certain key assumptions used in HDR’s projected Fare Revenues for Cincinnati Streetcar tothose of Other Streetcar Systems.

(1) Except for VTICA assumption which is based on revenues from actual VTICA Agreements for FY 2017 and FY 2018. Estimated VTICA revenues in FY 2019 andthereafter are based on 3CDCs estimate of $100 million in annual development and assuming 7.5 of the value of a 100% property tax abatement in a typicalVTICA.

DAVENPORT & COMPANY

December 14. 2015

Scenarios Analyzed C• Davenport’s analysis incorporates the following Scenarios:

Scenario Description of Assumptions — Source: HDR (except VTICA (1)).

Scenario 1A • Fare Revenues based on HDR analysis and assuming no Fare or Ridership growth.• Most current VTICA Revenue estimates (1~

• Annual Advertising/Naming/Station Rights Revenues 2~

• Transdev (and SORTA Overhead) expenses escalate per contract.• city Overhead/Other Costs (3•

Scenario 2A • Fare Revenues based on HDR analysis and assuming no Fare or Ridership growth.• 50% Reduction in VTICA Revenue estimates (i).

• 50% Reduction in Annual Advertising/Naming/Station Rights Revenues (2)•

• Transdev (and SORTA Overhead) expenses escalate per contract.• City Overhead/Other Costs ~.

Scenario 3A • Fare Revenues based on HDR analysis and assuming no Fare or Ridership growth.• 75% Reduction in VTICA Revenue estimates (‘).

• 75% Reduction in Annual Advertising/Naming/Station Rights Revenues (2)~

• Transdev (and SORTA Overhead) expenses escalate per contract.• City Overhead/Other Costs (3)~

Scenario 4A . Fare Revenues based on HDR analysis and assuming no Fare or Ridership growth.• 100% Reduction in VTICA Revenue estimates (1)•

• 100% Reduction in Annual Advertising/Naming/Station Rights Revenues 2•

• Transdev (and SORTA Overhead) expenses escalate per contract.• City Overhead/Other Costs (~.

• In addition, we have provided additional pro-forma sensitivity sub-scenarios that show the impact of a 50% (Scenarios B)and 100% (Scenarios C) increase in City Overhead/Other Costs.

(1) Except for VTICA assumption which is based on revenues from actual VTICA Agreements for FY 2017 and FY 2018. Estimated VTICA revenues in FY 2019 and thereafter are basedon 3CDC’s estimate of $100 million in annual development and assuming 7.5% of the value of a 100% property tax abatement in a typical VTICA.

(2) Based on discussions with SORTA. these annualized assumptions may he aggressive and as a result Davenport has assumed a phase-in over 5 years.(3) Except for Transdev (and SORTA Overhead), no growth rates have been provided by HDR for Revenue or Expense Assumptions. For pro-forma purposes Davenport has assumed a

general annual inflationary rate of 2%.

DAVENPORT & COMPANY

December 14. 2015

Summary of Results

• The City’s Streetcar system has the potential to require the following ranges of additional support from the City (over andabove the $1.5 million of Pledged General Fund Revenues):

Beginning in FY 2017, the potential support needed from the city ranges from $830,000 to $1.4 million.

By FY 2021 (year 5 of operations), the potential support from the City could range from as low as $495,000 (if all Revenue and ExpenseAssumptions perform as planned) to as high as $2.4 million depending on the variances assumed herein for Revenues/Expenses.

The above results incorporate $900,000 per year from the Haile Foundation, actual VTICA revenues for FY 2017 & FY2018 and the mostcurrent VTICA estimates for FY 2019 and thereafter.

It is important to note that the pro-forma analysis and results herein are preliminary and based on a variety of assumptions that may differfrom actual experience. Actual results may differ significantly due to variances in Revenue and Expense Assumptions and/or any timing orinflationary factors assumed herein.

• A comparison of certain key metrics (derived from HDR’s assumptions of 3,000 average daily boardings at $0.62 perboarding) reveals that:

Cincinnati’s Projected Streetcar Fare Revenues assume a relatively high ridership rate by the public in terms of Passenger trips per revenuemile (and per revenue hour) versus other existing systems.

If HDR’s projected ridership does not materialize as planned then the following Additional Annual Support may result due to Reduced FareRevenue: Additional Annual

Support Needed DueIf Ridership to Reduced Fare

Projection is: RevenueReduced by 25% $168,750Reduced by 50% 337,500Reduced by 75% 506,250

• Based on year to date estimates, the Pledged General Fund Revenues are on track to meet the $1.5 million projection.These revenues have been pledged to Streetcar and will be used to fund Transdev’s $1.1 million start up cost.

If there are no other anticipated uses prior to the commencement of Streetcar operations on/about Sept 2016, then the City may haveupwards of $1.4 million of “startup” Pledged General Fund Revenues that could be applied to initial operating deficits.

DAVENPORT & COMPANY

Decembei 14. 2015

Scenarios iA/B/C

Scenario Description of Assumptions - Source: HDR (except VTICA (1)).

Scenario 1A • Fare Revenues based on HDR analysis and assuming no Fare or Ridership growth.• Most current VTICA Revenue estimates (1

• Annual Advertising/Naming/Station Rights Revenues (2•

• Transdev (and SORTA Overhead) expenses escalate per contract.• City Overhead/Other Costs (3~

FYSurplus (Deficit) 2017 2018 2019 2020 2021Scenario 1A (829,558) (905,243) (818,096) (687,788) (495,088)

Scenario lB (1,099,752) (1,251,945) (1,171,732) (1,048,496) (863,010)

Scenario 1C (1,369,946) (1,598,646) (1,525,367) (1,409,204) (1,230,932)

Pro-forma Deficit(2,500,000)

(2,250,000)

(2,000,000)Impact of 50% increase in

City Overhead/ Other ~,750,000) (1) Except for VTICA assumption which is based on

Costs (1,500,000) revenues from actual VTICA Agreements for FY2017 and FY 2018. Estimated VflCA revenues

_______________________ _______ (1,250,000) in FY 2019 and thereafter are based on 3CDC’s

Impact of 100% increase (1,000,000) estimate of $100 million in annual development

in City Overhead/ Other and assuming 7.5% of the value ofa 100%

Costs (750,000) property tax abatement in a typical VTICA.(500,000) (2) Based on discussions with SORTA. these

annualized assumptions may he aggressive and(250,000) as a result Davenport has assumed a phase-in

0 over5years.2017 2018 2019 2020 2021 (3) Except for Transdev (and SORTA Overhead), no

Fiscal Year growth rates have been provided by HDR forRevenue or Expense Assumptions. For pro-forma

Scenario 1A Scenario 18 Scenario 1C purposes Davenport has assumed a generalannual inflationary rate of 2%.

Note: Actual results may differ significantly due to variances in Revenue and Expense Assumptions and/or any timing or inflationary factors assumed herein.

DAVENPORT & COMPANY

December :L4. 2015

Scenarios 2A/B/C


Scenario 2A • Fare Revenues based on HDR analysis and assuming no Fare or Ridership growth.• 50% Reduction in VTICA Revenue estimates (1)•

• 50% Reduction in Annual Advertising/Naming/Station Rights Revenues (2•

• Transdev (and SORTA Overhead) expenses escalate per contract.• City Overhead/Other Costs (3•

FYSurplus (Deficit) 2017 2018 2019 2020 2021Scenario 2A (865,677) (1,043,930) (1,084,510) (1,104,530) (1,067,402)

Scenario 28 (1,135,870) (1,390,631) (1,438,146) (1,465,239) (1,435,324)

Scenario 2C (1,406,064) (1,737,333) (1,791,781) (1,825,947) (1,803,246)


(2,250,000)

(2,000,000)Impact of 50% increase inCity Overhead/ Other (1,750,000) (1) Except for VTICA assumption which is based on

Costs (1,500,000) revenues from actual VTICA Agreements for FY2017 and FY 2018. Estimated VTICA revenues

(1,250,000) in FY 2019 and thereafter are based on 3CDC’sImpact of 100% increase (1,000,000) estimate of $100 million in annual development

in City Overhead/ Other and assuming 7.5% of the value of a 100%





Scenario 2A Scenario 2B Scenario 2C purposes Davenport has assumed a generalannual inflationary rate of 2%.


DAVENPORT & COMPANY

Decembet 14. 2015

Scenarios 3A/B/C


Scenario 3A • Fare Revenues based on HDR analysis and assuming no Fare or Ridership growth.• 75% Reduction in VTICA Revenue estimates ~).

• 75% Reduction in Annual Advertising/Naming/Station Rights Revenues 2~

• Transdev (and SORTA Overhead) expenses escalate per contract.• City Overhead/Other Costs (3~


Scenario 3B (1,153,930) (1,459,974) (1,571,353) (1,673,610) (1,721,481)

Scenario 3C (1,424,124) (1,806,676) (1,924,988) (2,034,318) (2,089,403)


(2,250,000)


City Overhead/ Other (1,750,000) (1) Except for VTICA assumption which is based on

Costs (1,500,000) revenues from actual VTICA Agreements for FY2017 and FY 2018. Estimated VTICA revenues(1,250,000) in FY 2019 and thereafter are based on 3CDCs

Impact of 100% increase (1,000,000) estimate of $100 million in annual development

in City Overhead/ Other and assuming 7.5%of the value of a 100%


annualized assumptions may be aggressive and(250,000) as a result Davenport has assumed a phase-in





DAVENPORT & COMPANYDecember L4. 2015

Scenarios 4A/B/C CScenario Description of Assumptions — Source: HDR (except VTICA (1)).

Scenario 4A • Fare Revenues based on HDR analysis and assuming no Fare or Ridership growth.• 100% Reduction in VTICA Revenue estimates ~• 100% Reduction in Annual Advertising/Naming/Station Rights Revenues (2)•

• Transdev (and SORTA Overhead) expenses escalate per contract.• City Overhead/Other Costs (3•


Scenario 4B (1,171,989) (1,529,317) (1,704,560) (1,881,981) (2,007,638)

Scenario 4C (1,442,183) (1,876,019) (2,058,195) (2,242,689) (2,375,560)

Pro-forma Deficit(2,500,000) —

(2,250,000)


City Overhead/ Other (1,750,000) (1) Except for VTICA assumption which is based on

Costs (1,500,000) revenues from actual VTICA Agreements for FY2017 and FY 2018. Estimated VTICA revenues

_________________________ ________ (1,250,000)

in FY 2019 and thereafter are based on 3CDC sImpact of 100% increase (1,000,000) —————--———-—.--——~--—-----—.--——-.——.-——— estimate of $100 million in annual development

in City Overhead/ Other 0000 and assuming 7.5% of the value ofa 100%

Costs (75 ) property tax abatement in a typical VTICA.(500,000) — — — (2) Based on discussions with SORTA. these


0 oversyears.2017 2018 2019 2020 2021 (3) Except for Transdev (and SORTA Overhead), no




DAVENPORT & COMPANYDecember 14. 2015

Key Observations — Revenues

• The following table below summarizes the Revenue Assumptions that have been provided to Davenport:

Revenue Category Annual Assumption Commentary

Fares $675,000 Based on HDR’s forecasting using the Regional Travel Demand Model andassumes 3,000 average daily boardings and an average revenue of $0.62per boarding~’~.(1) Base Fare Assumption of $1.00 per 2 hours.

VTICA Varies (See Page 10 for VTICA revenues)

Advertising $106,000 Based on a forecast from the same vendor used for SORTA bus advertisingand assumes complete covering of the streetcar vehicles with ads bothinside and out. According to discussions with Paul Grether, this level ofrevenue may be aggressive.

Pledged General $1,500,000 Pledged General Fund Revenue starting from January 2015.Fund Revenue (1)

Naming/Station $295,500 Derived from a report generated by the Haile Foundation. According toRights discussions with Paul Grether, this level of revenue is larger than any other

level received by comparable streetcar systems nationwide and may beaggressive.

Haile Foundation (1) $900,000 Commitment from the Haile Foundation.

Total $3,476,500 (shown without VTICA)

(1) Note: Pledged General Fund and Haile Foundation Revenues are not derived from Streetcar operations, but have been identified by City Council as sourcesof funding for Streetcar operations. Source: HDR

DAVENPORT & COMPANYDecembe 14. 2015

Tax Incentive Policy — VTICA Revenues

• Effective January 1, 2015, City Council adopted a Tax Incentive Policy that incentivizes an applicant for a real property taxabatement in Downtown and Over-the-Rhine to commit to enter into a Voluntary Tax Incentive Contribution Agreement(“VTICA”) as a means of reinvesting a portion of the tax savings into streetcar operations that benefit Downtown and Over-the-Rhine. Typically, a property owner agrees to commit 7.5% of their abatement savings to a third party that supportsstreetcar operations. Once a property owner commits to City Council to a VTICA commitment, the City may revoke the taxexemption for failure to perform.

• The City anticipates that VTICA funding for streetcar operations will accumulate gradually over time, but VTICA isdependent on factors such as:

Continued application by Council of its tax incentive policy -- including use of abatements for development in Downtownand Over-the-Rhine; and

A continued pace of investment in real estate development at current rates.

VTICA payments will accrue in the second calendar year after completion of construction, which means thatcommitments will not result in streetcar funds until FY2017 at the earliest.

• Current estimates assume annual commitments ramping up as shown below:

FY2017 2018 2019 2020 2021

Annual Estimate (1) 10,947 165,753 346,264 577,106 807,949

(1) FY 2017 and FY 2018 is based on revenues from actual V11CA Agreements. Estimated VTICA revenues in FY 2019 and thereafter are based on 3CDC’s estimate of$100 million in annual development and assuming 7.5% of the value of a 100% property tax abatement in a typical VTICA. Figures for FY 2019 and thereafterhave been delayed by one year from the original estimate.

DAVENPORT & COMPANY

December 14. 2015

Key Observations — Expenses C

• The following table below summarizes the Expense Assumptions that have been provided to Davenport:

Expense Category Initial Year Commentary

Transdev $3,269,921 Initial year per Transdev Contract with agreed upon fixed price arrangementand escalation factors over first five years. Average growth rate over firstfive years is approximately 3.2%.

SORTA Overhead $261,594 Agreed upon 8% of Transdev Contract amount.

City Overhead $357,234 Place holder estimate of new incremental expenses that the City isresponsible for under the Operating Agreement (i.e. police, street cleaning,snow removal, etc.)

Other Costs $325,361 Place holder estimate of utility costs and miscellaneous other costs notincluded in City Overhead.

Total $4,214,110

Source: HDRIAVENPORT & COMPANY

December 14. 2015

Utilization (Passenger Trip/Rev. Mile) — Comparable Systems

• Unlinked Passenger Trips per Revenue Mile is a key metric that measures the extent of which the City’sStreetcar service is used by the public.

C

DAVENPORT & COMPANYSource: Comparative data - National Transit Database 2013 profiles: Cincinnati Projections — HDR.

Utilization - Passenger Trips perRevenue Mile

Central Puget (WA) _____________

King County (WA) ___________________________New Orleans (LA)

Memphis (TN)Hampton Roads (VA)

Hillsborough (FL)Kenosha (WI)

Arkansas

Proj. Cincinnati (OH)

Average

0.0 5.0 10.0 15.0

Annuai Annual UnlinkedVehicle Unlinked assenger Trips

Revenue Passenger (Boardings) Fare Fare RevenueMiles Trips (Boardings /Rev Mile Revenues per Boarding

• Based on HDR’s projections,Cincinnati’s Streetcar utilization asmeasured by this metric is abovethe average and amongst thehighest in the comparable group ofpeer systems.

Central Puget Sound (WA) systemhas the highest utilization rate,which may be explained by thefree service of the system.

However, The Tide System inNorfolk (Hampton Roads) has alow utilization rate despite havingthe lowest Fare Revenue perboarding.

Central Puget Sound Regionai Transit Auth (WA) 75,996 962,306 12.7King County Metro (WA) 63,268 760,933 12.0New Orleans Regional Transit Auth (LA) 865,299 8,650,376 10.0Memphis Area Transit Auth (TN) 309,748 1,468,030 4.7Hampton Roads Transit (VA) 373,045 1,762,284 4.7Hiiisborough Area Regional Transit Auth (FL) 66,757 295.916 4.4Kenosha Transit (WI) 16,711 38,825 2.3Central Arkansas Transit Auth (AK) 51,874 92,543 1.8

Cincinnati Streetcar (OH) - Projection 97,697 1,095,000 11.2

Average 213,377 1,680,690 7.9

0761,610

6,859,287846,992687,892487,588

18,42176,057

675,000

1,301,606

NA$1.00$0.79$0.58$0.39$1.65$0.47$0.82

$0.62

$0.74

December 14. 2015

Utilization (Passenger Trip/Rev. Hour) — Comparable Systems C

• Unlinked Passenger Trips per Revenue Hour is another key metric that measures the extent of which theCity’s Streetcar service is used by the public.

Utilization - Passenger Trips perRevenue Hour • Based on HDR’s projections, Cincinnati’s

Central Puget(WA) Streetcar utilization as measured by thisKing County (WA) ____________

New Orleans (LA) metric is above the average and second onlyHampton Roads (VA) to that of Central Puget Sound Regional

MemphisON) Transit Authority which has free service.Hilisborough (FL)

Kenosha (WI)Arkansas


Average

0.0 50.0 100.0 150.0

Annual Annual UnlinkedVehicle Unlinked assenger Trips

Revenue Passenger (Boardings) Fare Fare RevenueHours Trips (Boardings /Rev Hour Revenues per Boarding

Central Puget Sound Regional Transit Auth (WA) 9,835 962,306 97.8 0 NAKing County Metro (WA) 11,905 760,933 63.9 761,610 $1.00New Orleans Regional Transit Auth (LA) 145,325 8,650,376 59.5 6,859,287 $0.79Hampton Roads Transit (VA) 29,978 1,762,284 58.8 687,892 $0.39Memphis Area Transit Auth (TN) 42,119 1,468,030 34.9 846,992 $0.58Hilisborough Area Regional Transit Auth (FL) 12,404 295,916 23.9 487,588 $1.65Kenosha Transit WI) 2,322 38,825 16.7 18,421 $0.47Central Arkansas Transit Auth (AK) 11,667 92,543 7.9 76,057 $0.82

Cincinnati Streetcar (OH) - Projection 15,174 1,095,000 72.2 675,000 $0.62

Average 31,192 1,680,690 53.9 1,301,606 $0.74

Source: Comparative data - National Transit Database 2013 profiies; Cincinnati Projections - HDR.

DAVENPORT & COMPADecember 14. 2015

Fare Revenues vs. Operating Expenses — Comparable Systems

• This ratio known as Farebox Recovery is an indicator of the total operating cost that is covered from thepassenger fares.

Fare Revenue vs. Operating Expense

C

Hillsborough (FL)New Orleans (LA)King County (WA)

Memphis (TN)Arkansas

Kenosha (WI)Hampton Roads (VA)

Central Puget (WA)


• Based on HDR’s projections, Cincinnati’sStreetcar Fa rebox Recovery approximates16% or about ¾ of the peer group average.

• Cincinnati’s projected Streetcar FareRevenue is based on an average dailyboarding of 3,000 and an average revenueper boarding of $0.62.

Average (1)

0.0% 10.0% 20.0%(1) Excludes Central Puget Sound (WA) due to free service.

OperatingExpenses1.418.468

23966,2323,089,9364,440,7801,062.877

289,80712,374,4244,243,373

30.0% 40.0%

FareRevenues

34.4%28.6%24.6%19.1%

7.2%6.4%5.6%0.0%

16.0%

20.9%

$1.65$0.79$1.00$0.58$0.82$0.47$0.39

NA

$0.62

$0.74

If actual ridership or revenue per boardingis lower Fare Revenue may be negativelyimpacted.

DAVENPORT & COMPANYSource: Comparative data - NatIonal Transit Database 2013 profiles; Cincinnati Projections - HDR.

~are Revenues Fare Revenue% of ExDenses per Boarding

HiNsborough Area Regional Transit Auth (FL)New Orleans Regional Transit Auth (LA)King County Metro (WA)Memphis Area Transit Auth (TN)Central Arkansas Transit Auth (AK)Kenosha Transit (WI)Hampton Roads Transit (VA)Central Puget Sound Regional Transit Auth (WA)

Cincinnati Streetcar (OH) - Projection

Average (Excluding Central Puget Sound

487,5886,859,287

761,610846,992

76.05718,421

687,8920

$4,214,109 $675,000

$6,663,218 $1,391,121

• It is important to note that The Tide Systemin Norfolk (Hampton Roads) is a new systemthat recently began in 2011.

The lower Farebox Recovery rate of TheTide System may be explained by a lowerfare structure (with an average revenueper boarding of $0.39) than those of theother Systems.

Decembei 14. 2015

Ap .endix

DAVENPORT & COMPANY

Decernhei 14. 2015

C

Scenario 1 Detail C

Based on Revenue and Expense Assumptions as described on pages 9-11.

Full Year ending 9/142017 2018 2019 2020 2021

Fares 675,000 675,000 675,000 675,000 675,000Advertising (1) 21,200 42,400 63,600 84,800 106,000VTICA (2) 10,947 165,753 346,264 577,106 807,949Pledged General Fund Revenue 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000Naming Rights (1) 34,100 68,200 102,300 136,400 170,500Station Rights (1) 25,000 50,000 75,000 100,000 125,000Haile Foundation 900,000 900,000 900,000 900,000 900,000Total Revenues 3,166,247 3,401,353 3,662,164 3,973,306 4,284,449

Transdev 3,269,921 3,308,165 3,478,733 3,616,540 3,701,929SORTA Overhead (3) 261,594 264,653 278,299 289,323 296,154City Overhead (4) 357,234 364,379 371,666 379,100 386,682Other Costs (4) 325,361 331,868 338,506 345,276 352,181Total Expenses 4,214,110 4,269,065 4,467,203 4,630,238 4,736,946

Annual Surplus (Deficit) (1,047,863) (867,712) (805,039) (656,932) (452,497)

Scenario 1A FY Basis (6/30) (829,558) (905,243) (818,096) (687,788) (495,088)

~Scenario lB (1,099,752) (1,251,945) (1,171,732) (1,048,496) (863,010)

~Scenario 1C (1,369,946) (1,598,646) (1,525,367) (1,409,204) (1,230,932)Impact of 50% increase in /

City Overhead/ Other / (1) Assumed to be phased in over 5 years for pro-forma purposes.

Costs / (2) No discount on VTICA Revenues.(3) 8% of Transdev payment.

Impact of 100% increase (4) Place holder number for new incremental expenses related to City responsibilities in the Operating

in City Overhead/ Other Agreement; 2% general inflation assumption used for pro-forma purposes.

Costs


DAVENPORT & COMPANY

Decembei 14. 2015

Scenario 2 Detail C


Full Year ending 9/142017 2018 2019 2020 2021



Annual Surplus (Deficit) (1,093,486) (1,030,889) (1,098,621) (1,106,085) (1,057,222)

Scenario 2A FY Basis (6/30) (865,677) (1,043,930) (1,084,510) (1,104,530) (1,067,402)

_~..._-Scenario 2B (1,135,870) (1,390,631) (1,438,146) (1,465,239) (1,435,324)


City Overhead/ Other / (1)50% discount and assumed to be phased in over 5 years for pro-forma purposes.

Costs / (2) 50% discount on VTICA Revenues.(3) 8% of Transdev payment.


in City Overhead! Other Agreement; 2% general inflation assumption used for pro-forma purposes.

Costs


DAVENPORT & COMPANY

Decembei 14. 2015

Scenario 3 Detail C


Full Year ending 9/142017 2018 2019 2020 2021





cenario 3B (1,153,930) (1,459,974) (1,571,353) (1,673,610) (1,721,481)


City Overhead! Other / (1) 75% discount and assumed to be phased in over 5 years for pro-forma purposes.

Costs / (2) 75% discount on VTICA Revenues.(3) 8% of Transdev payment.


in City Overhead/ Other Agreement; 2% general inflation assumption used for pro-forma purposes.Costs


DAVENPORT & COMPADecernbei 14. 2015

Scenario 4 Detail


Full Year ending 9/142017 2018 2019 2020 2021

Fares 675,000 675,000 675,000 675,000 675,000Advertising (1) 0 0 0 0 0V11CA(2) 0 0 0 0 0Pledged General Fund Revenue 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000Naming Rights (1) 0 0 0 0 0StationRights(1) 0 0 0 0 0Haile Foundation 900,000 900,000 900,000 900,000 900,000Total Revenues 3,075,000 3,075,000 3,075,000 3,075,000 3,075,000




(1,171,989) (1,529,317) (1,704,560) (1,881,981) (2,007,638)

~Scenario 4C (1,442,183) (1,876,019) (2,058,195) (2,242,689) (2,375,560)

(1) 100% discount.(2) 100% discount on VTICA Revenues.(3) 8% of Transdev payment.(4) Place holder number for new incremental expenses related to City responsibilities in the OperatingAgreement; 2% general inflation assumption used for pro-forma purposes.


DAVENPORT & COMPANY

~Scenario 4B

Impact of 50% increase inCity Overhead/ Other

Costs

Impact of 100% increasein City Overhead/ Other

Costs

Decernbei 14. 2015

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DAVENPORT & COMPANYDecember 14. 2015

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