Houston Light-Rail Finances

[daveklepper]

A federal review conducted by an outside auditor has placed Metro transit of Harris County at HOUSTON in souteast Texas on a sound financial footing, The Houseon Chronicle reports:

<https://tinyurl.com/ydz8y8la>

Federal review gives Metro mostly clean marks

By Dan Begley

 

Published 7:30 am, Tuesday, October 3, 2017

 

Federal inspectors, using an outside auditor, have given Houston’s transit agency a mostly-clean bill of health, while warning that rough times ahead could mean lean times.

 

In a financial assessment released last month, the Federal Transit Administration’s Office of Inspector General said the Metropolitan Transit Authority was on firm financial footing, for now.

 

“Metro’s financial condition — its ability to operate and maintain its transit system at present levels of service — was satisfactory but vulnerable to adverse revenue or cost changes,” auditors said.

 

The risk largely is confined to Metro’s own board policies, which call for an additional 10 percent in reserves over what is required.

 

Should Houston experience a noticeable drop in sales tax revenues – which fund nearly 71 percent of the agency’s $729.2 million operating budget – Metro officials could be left with hard financial choices.

 

“Metro may encounter difficulties maintaining its added cash reserves in the event of revenue declines or cost increases,” auditors wrote. “Furthermore, if Metro were to experience 10 percent sales tax revenue declines in fiscal year 2017 — and did not take actions such as reducing service or borrowing — it could exhaust its cash reserves and be insolvent at points from fiscal years 2017 through 2021.”

 

Despite the ominous tone, the majority of the audit – spurred by a request from Congressman John Culberson, R-Houston – showed Metro capable of affording its current service.

 

Transit officials expressed little surprise.

 

"I think this audit was very positive,” Metro CEO Tom Lambert said.

 

The report also confirmed something Metro, its supporters and vocal critics have all said: Current finances will make any major expansion of service impossible for at least four years. Uncertainty about sales taxes again leave the agency vulnerable, auditors said.

 

“Metro is unable to finance almost any capital projects while meeting its added cash reserve levels, which impact the amount of cash Metro has available for investment,” auditors said.

 

Using a host a scenarios, auditors found Metro would have about $100 million per year through fiscal 2023, capable of some minor system improvements, such as park and ride lots. Major projects, such as bus rapid transit that can cost hundreds of millions and light rail which can easily top $1 billion would be unaffordable, according to the report. In some of the worst-case scenarios, Metro would not have the money for a $1.16 billion light rail project until 2036.

 

Again, officials said the finding was expected, noting Metro’s ongoing planning envisions projects with funding coming from new sources, potentially ranging from private investment to voter-approved increases in Metro’s tax revenues.

 

“We will not move forward with any major expansion without first identifying potential funding sources,” Lambert said. 

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Edward B. Havens

Tucson, Ariz.