A mere 9% sales tax decline has resulted in a funding gap of at least $154 million for SMART rail project.
But how could that be?
Just over 1 year ago, SMART staff reported numerous built-in safeguards:
In order to ensure that SMART’s revenues are enough to cover its expenses over the next 20 years, SMART and its financial consultants conducted a months-long analysis of finances for the project. Then they subjected their draft findings to a rigorous review by outside experts, including Dr. Eyler and transportation finance professionals from the Transportation Authority of Marin (TAM). Comments from those reviewers, along with suggestions and questions submitted by members of the public, helped SMART finalize its funding plan.
The result is a document that outlines costs, revenues, bonding strategy, financial risk management and a detailed 20-year cash flow analysis for the project. It includes fuel cost, ridership, sales tax collection and inflation assumptions. And, on top of those conservative assumptions, it includes contingencies of nearly 20 percent for each year of operation and all construction costs.
Curiously, SMART staff revealed shortfalls before construction began. Are they not aware that planners only confess to shortfalls in mega-projects until after construction begins. It is so much easier to secure additional funds once a big hole is dug in the ground.