Meeting: " Independent Transit Authority - Financial Boom or Bust?"

Montgomery County Taxpayers League Meeting
www.mctaxpayersleague.org

Wednesday, October 21, 2015 - 7:00 - 9:00 pm
6th Floor Conference Room, Council Office Building
100 Maryland Avenue, Rockville, MD 20850


Topic: " Independent Transit Authority - Financial Boom or Bust?"


Speakers:

Mark Winston, Chair, Montgomery County Transit Task Force
Rich Parsons, Member, Montgomery County Transit Task Force

Questions sent to both speakers in advance of the meeting:


1. Affordability - Given the huge construction and operating costs associated with the Purple Line, its not entirely risk-free public-private partnership, and the generally rosy cost projections at the beginning of such mega projects, can County taxpayers afford another mega project - the BRT and CCT - which will cost $2.2 billion in capital and $3.5 billion in interest in Phase 1 alone? Do you agree?


2. Borrowing Costs- contrary to the draft report's logic, debt incurred by the proposed Independent Transit Authority (ITA)would have a higher interest rate than that of the county, and would be several percentage points above the state's borrowing rate. ITA debt would incur over $1 billion in extra interest costs, ironically reducing funds available for transit projects, and resulting in a frozen capital market if rates jump. A state infrastructure bank would reduce interest rate risks and costs. Do you agree?


3. Operating Costs- The proposed ITA will receive nominal revenue sources from operations (unlike the WSSC) and will depend heavily on undefined and likely unsustainable Federal and state tax revenues ($40M). This could result in "going concern" issues during economic downturns. Also, shifting current DOT costs to the proposed ITA would have to be offset by property tax credits to avoid using the ITA as an ATM to re-purpose current county revenues. A state infrastructure bank could help smooth revenue issues during a downturn and avoid the need for a separate ITA bureaucracy altogether. Do you agree?


4. Economic Development- planned tax increases on top of the already high and growing county tax burden will undermine economic development. Why increase local taxes when calculated state benefits are many times greater than those of the county? Establishing a state infrastructure bank to finance the projects shifts taxes and risks to the state which has more control over taxes. Do you agree?


5. Ridership projections - The underpinnings of arguments for the BRT have been glowing ridership projections. However, the Institute for Transportation and Development Policy in its 2012 Market and Demand Study for the County concluded that the potential peak hour BRT usage on Route 29 is only 66% of the Federal Transit Administration's minimum standard for BRT ridership. Viers Mill Road and Rockville Pike peak hour demands are estimated at about 25% of the minimum. Do you agree with these figures? Is there a credible study of an urban area similar to Montgomery County that shows a sufficient number/percentage of motorists switching to a BRT system that would justify the enormous costs and accompanying tax increases associated with it?


6. Paying the Piper - Who should cover the costs of this large and ambitious venture? The business community that will gain from it? The residents along the route? The riders who will use the BRT? All the taxpayers of Montgomery County? Also, who should be held accountable when costs exceed projections?