APPENDIX A. ANTICIPATED PAYOUT Capital outlays—Financed by $141.7 million in Government equity and $310 million in private loans (41⁄2 percent non-tax-exempt federally underwritten) estimated principal and interest payments assuming that excess net revenues are used to retire bonds prior to maturity-Continued Use of interest from depreciation account deferred until 1st year of debt retirement. ? No interest on cash balance account assumed during the period in which private loans are issued. SUPPLEMENTAL STATEMENTS AND LETTERS FILED WITH COMMITTEE NATIONAL CAPITAL TRANSPORTATION AGENCY Hon. JOHN L. MCMILLAN, NOVEMBER 5, 1963. Chairman, Committee on the District of Columbia, DEAR MR. CHAIRMAN: This is in response to your letter of October 23 inviting our comments on H.R. 8929, a bill to authorize a rapid transit system for the National Capital region. The system which would be authorized represents an abbreviated version of the transit development program proposed by this Agency. The Agency wholeheartedly supports the bill. We believe that the system it would authorize will make a substantial contribution to the easing of the traffic congestion problems of the National Capital region and will be financially sound. The system has three primary advantages. First, the Agency estimates that the system will attract in the morning peak hour over 50,000 downtown-destined persons who would otherwise overcrowd the city's highways and streets. Second, the Agency estimates that all operating costs and 65 percent of the capital cost of the system can be met through revenues in the course of 36 years. In other words, all operating costs and the major part of the capital costs of the system will be borne by its users. The remaining 35 per cent of capital costs would be provided through grants which could be repaid after retirement of the bonded debt. Third, each of the rapid transit lines which would be authorized by H.R. 8929 is a part of the transit development program proposed by this Agency and each is at the mouth of a heavy traffic corridor. Thus, if Congress later finds it necessary to extend the system-as the Agency believes will be necessary such extensions can be accomplished readily. For the present, the key consideration is the need for an early start of construction of a subway system. Such a system is critically needed today and that need is steadily increasing. We therefore urge the passage of H.R. 8929. Transmitted herewith is a statement explaining the proposed financing of the rapid transit system. Should there be need for any further information, we will gladly supply it. The Bureau of the Budget advises that there is no objection to the submission of this report to your committee and that enactment of this legislation would be consistent with the objectives of the administration. Sincerely yours, C. DARWIN STOLZENRACH, Administrator. EXPLANATION OF THE FINANCING OF THE RAPID TRANSIT SYSTEM WHICH WOULD BE AUTHORIZED BY H.R. 8929 BACKGROUND During the course of the hearings in July of this year before Subcommittee No. 6 on H.R. 6633 and 7249 representatives of the Agency were asked by members of the committee whether the proposed rapid transit system would be financially feasible in the event the radial lines were to terminate at or near the borders of the District of Columbia rather than penetrating deep into the suburbs as proposed in the transit development program. The Agency representatives testified that such a system would be financially feasible. Thereafter, the Agency was asked by Mr. Whitener, the chairman of Subcommittee No. 6, to submit a financing plan for the abbreviated version of the transit development program which would be authorized by H.R. 8929. A table setting forth such a financing plan was transmitted to Mr. Whitener and was thereafter appended to Chairman McMillan's letter of October 23 requesting comments on H.R. 8929. The following is an explanation of that financing plan and of the cost and revenue estimates upon which that plan is based. THE FINANCING PLAN The estimated capital outlay required to construct and place in operation the facilities which would be authorized by H.R. 8929 is $400.6 million. Of this amount, $258.9 million, or approximately 65 percent, would be financed through the sale of bonds in the public market underwritten as to principal and interest by the Federal Government. Revenues of the system would retire these bonds within an estimated 36 years of the date on which borrowing begins. An additional $141.7 million, or 35 percent of the required capital outlay, would be provided by the Federal Government and the District of Columbia in the form of grants. Of the $141.7 million of grants, $120 million would be provided by the Federal Government and $21.7 million by the District of Columbia. These grants could be repaid after retirement of the bonded debt. As noted in the statement accompanying Chairman McMillan's letter of October 23, the major difference between the financing plan proposed for the $793 million system (hereinafter the "larger" system) and the plan for the $400.6 million system (hereinafter the "abbreviated" or "smaller" system) is that the same amount of Federal equity that was required for the larger system-$120 million-will be required for the abbreviated system. As the Agency pointed out in its testimony during the July hearings, the capacity of the larger system to meet its capital requirements out of revenues is in major part attributable to the relatively low-cost, high-fare suburban lines. These suburban extensions are largely eliminated by H.R. 8929. As a consequence, a higher ratio of equity to total capital cost is required for the abbreviated system than for the larger system. Whereas under the original financing plan Federal and local grants represented only 22.7 percent of the capital costs of the larger system, for the smaller system the grants represent 35.4 percent of the required capital outlay. An additional $51.1 million would be borrowed to cover interest during construction. This amount also would be paid out of revenues. At the same time, this financing plan does not entail an increase in the amount of Federal equity inasmuch as any further extensions of the system would be financed by the further sale of bonds and by grants from the local governments other than the District of Columbia as provided in the financing program originally recommended by the Agency. THE ESTIMATES Capital costs.-The capital cost estimate of $400.6 million is derived from the estimates previously submitted to the committee in appendix volume I (printed hearings, pp. 25-26). The cost for each segment of the abbreviated system is the same as the previously estimated cost of that segment except that $24.9 million has been added to reflect land acquisition for and construction of additional parking spaces, bus transfer facilities and vehicle storage facilities. The required capital outlay by segment is set forth in the following table: Segment Silver Spring-Rockville: Judiciary Square to Woodside- Columbia Heights-Petworth: Connecticut and Florida to Columbia Rd. Alexandria-Springfield: Lafayette Square to Pentagon City. Subtotal construction_ Rapid transit vehicles.... Total.... Traffic and revenues.-The Agency estimates that operating revenues will amount to $29.5 million in 1980 or 61.4 percent less than the estimate of $76.5 million for the larger system. A 1980 profit and loss estimate is attached hereto as appendix A. The revenue reduction reflects the Agency's estimate that there will be 53.7 percent less traffic on the abbreviated system than on the larger system. These estimates are based on the traffic forecasts previously submitted to the committee in appendix volumes III and V (printed hearings, p. 26). The major changes in these forecasts are as follow: (a) Approximately 16.5 percent of the passengers destined to downtown in the morning peak hour were eliminated because of the deletion of the Independence Avenue line. That line would have served some 20 percent of the estimated 1980 downtown employment. Analysis indicated that some 3.5 of these 20 percentage points represented passengers who would use rapid transit even without the Independence Avenue line.2 (b) Traffic boarding at suburban stations not included in the abbreviated system was largely eliminated from the estimate. It was assumed that a small percentage of these persons would use feeder bus service and transfer to the rapid transit system, or would use the additional parking facilities provided for, as previously noted, in the capital cost estimates. 2 In other words, it was found that some passengers destined to the Federal Triangle area would use G St. line and then walk to the triangle. (c) Much of the through-downtown traffic was eliminated from the estimate to reflect the shortening of the system. The factors used to expand morning peak-hour inbound traffic to an annual total and the method for calculating revenues are the same as those set forth in appendix volume V, pages 29-36, 45-46 (printed hearings, p. 26). Intradowntown traffic is estimated at 80 percent of the amount for the larger system. It was assumed, in other words, that the single G Street line, traversing the principal business and commercial areas of the city and serving the Capitol, the Pentagon complex, and the Navy Weapons Plant would attract 80 percent as much intradowntown traffic as would have been attracted by that line and the Independence Avenue line together. The factors used to estimate nonfare box revenue are the same as those set forth in appendix volume V, pages 48-49 (hearings, p. 26). Operating costs.-Estimated operating costs are based on a complete schehuling of the abbreviated system. As was true of the estimates previously submitted, these estimates were developed by the Agency with the assistance of cousultants who are transit operations experts. Based upon the schedules, a daily total of 30,765 rapid transit and 4,712 commuter railroad car-miles will be required in order to accommodate forecast 1980 traffic. The Agency estimates that car-mile operating costs would amount to 80.50 cents per mile. This estimate is about 19 percent higher than the 67.61 cents estimated for the larger system. Some of the reasons for this increase are the facts that: (a) A much higher proportion of the total system would be in subway and this would result in proportionately higher maintenance costs. (b) With a smaller system and closer station spacings, average speeds would be reduced resulting in lower vehicle utilization, somewhat higher vehicle maintenance expenses and higher wage costs per car-mile. (c) Power costs would be higher principally because, due to closer station spacing, a greater proportion of each vehicle operating hour would be consumed in acceleration, and a smaller proportion of time would be spent at cruising speed. (d) General and administrative expenses would be higher since many of these items are relatively fixed in nature and will be incurred even though the system is smaller. The table below compares the car-mile costs estimated by the Agency with those experienced by other major rail rapid transit systems. Abbreviated system. Chicago (1961). New York (1961–62). Cents 80. 50 63. 71 48. 07 74. 59 Operating expenses for the rail commuter operations were estimated to be at the same level as previously estimated. Vehicle and other depreciation expense was calculated on the same basis as was used for the larger system. The basis for these estimates is set forth in appendix volume V, page 61 (hearings, p. 26). |