Year of Publication

2006

College

Martin School of Public Policy and Administration

Executive Summary

The Louisville-Jefferson County area encompasses a vast area and large population of citizens. To meet the transportation needs of this growing city, the Transit Authority of River City or TARC undertook a study in 1996 to determine potential transportation solutions to traffic congestion in the area. Based on their analysis, TARC determined that a 15-mile light rail transit system would best service their needs. This light rail system would run from the downtown central business district to a park-and-ride facility at the Gene Snyder Freeway.

Prior to undertaking this project, TARC and all those parties involved should ask the fundamental question: Can we afford the high cost of this project? This capstone sought the answer to that very question. A thorough and exhaustive financial condition analysis was performed on a focus group of US cities that currently have light rail systems in existence. Local municipal governments were examined across this focus group to best ascertain the financial condition of the community at large. This financial condition analysis incorporated various financial factors. These financial factors included measures relating to revenues, expenditures, debt capacity, and operations.

Based on the results of this study, we can conclude that the community of Louisville can justify the construction of a light rail transit system. This means that the project would be financially feasible. This does not mean that a light rail transit system in Louisville would enjoy great success with the community (i.e.- high ridership rates). Currently, funding for this project has been put on indefinite hold due to the allocation of several billion dollars to the Louisville Two Bridges project.

Despite this setback, the light rail project issue may gain traction again in the future as the political winds change. If this happens, the extreme magnitude and scale of light rail transit would impose a large financial toll on TARC. As such, the second phase of this capstone comes up with a list of comparable cities to Louisville. Those seven cities included the communities of Boston, Buffalo, Dallas, Denver, Houston, Portland, and St Louis. The transit authorities from those respective cities were then evaluated one by one to determine likely financial scenarios for TARC. Specifically, the capstone sought to determine viable revenue and expenditure scenarios should this project become a reality. For example, what might TARC expect to pay in terms of operating and capital expenses? From the revenue perspective, where are these sources of funds going to come from?

Each transit authority, acting as an independent body in charge of local transit, provides reasonable comparisons for projecting expenditures and providing possible revenue models. Pertinent information obtained from the Federal Transit Administration’s (FTA) National Transit Database is used in conjunction with financial statements from the various transit authorities. On the expenditure side, it initially appears TARC has underestimated what it expects to pay in annual operating costs. On the revenue side, there are many options for source funding but a sales tax model and a municipal payroll tax model remain the most likely choices for TARC.

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