A Reston 2020 Committee Alternative Forecast

Reston 2020 Committee Reston Citizens Association

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3/8/2012

It characterized the results as preliminary. The full T&R report is due by the end of March.

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3/8/2012

The dramatic increases over the forecasts cast doubt on each ones credibility. Still, the most recent forecast is a substantial improvement over its predecessors.
D R A F T--FOR REVIEW
3/8/2012

Reduces trip growth rate by 25%. Reduces the Value of Time (VOT).
An implicit increase in the price elasticity of demand.

Increases gasoline prices to $5/gallon.

Means people are more likely to divert to other roadsreduces DTR transactions.

More realistic, but dont know pricing assumptions now or in 2009. Escalates at inflation rate. Tied to 4% reduction in traffic, but dont know how.

D R A F T--FOR REVIEW

3/8/2012

Strengths:

CDMS forecast is a major directional improvement over its predecessors. Supporting Renaissance Planning Group (RPG) socio-economic study is comprehensive, systematic, and transparent.

Growth forecasts change over time.

Understand what, how, and why the study says what it says. Dont agree with all the steps or results, but know why and can discuss rationally.

Issues:
Is this a forecast or a scenario?
More realistic than predecessors, but is it now a baseline (P50) T&R forecast or merely a scenario dictated by MWAA?

Overstates population and employment growth in light of recession & planned cuts in federal spending growth.
RPG generally increases growth from its baseline studyMWCOG 8.0which is outdated & overstates growth. (See chart on right.)

Forecast is probabilistic, but does not provide sensitivity and risk assessments.

This point estimate has less value than a probabilistic forecast. WSA has done risk analyses for other clients.

Sourcing: The 2010 GMU data is from the forecast prepared for the Reston planning task force. The 2011 and 2012 GMU data are the base (low) data from CRAs housing the workforce analyses reflecting current workforce housing policies, adjusted in a presentation to the Reston Task Force in January 2012.

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3/8/2012

CDMS does not pinpoint when gasoline reaches $5.00/gal.

Use R2020 forecast until gas price reaches $5.00 (2024). Escalate at 3% inflation rate from 2024.

R2020 uses & extends NY LT real gasoline price forecast.

Real price growth of 1.58%/yr plus 3% inflation (4.58%) R2020 extends forecast to 2050.

D R A F T--FOR REVIEW

3/8/2012

The RPG forecast is built around the MWCOG Round 8.0 forecast. RPGs overarching approach:
For both population and employment, we concluded that the corrective

In short, RPG believes MWCOGs underlying growth forecast is sound, subject to the recovery from the recent recession to trend by 2030. It made a variety adjustments in MWCOGs forecast, some based on its screening of several corporate macroeconomic forecasts, some based on its own understanding of the regional situation.

trends reflect recessionary trends that will return to the prior MWCOG trend line over time, with the expectation that economic slowdown exists through 2017 and another 10-13 years of recovery will be required to regain forecast trends. More households and lower population than estimated in DC and inner suburbs. More population, fewer households in out suburbs; and A slightly higher proportion of office jobs and lower proportion of retail jobs.

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3/8/2012

We focused on Fairfax & Loudoun counties. RPG baselined its population forecast on the US Census 2010 data.

With minor adjustment, RPG used MWCOG 8.0 2010 employment data.

MWCOGs forecasts were close for Fairfax & Loudoun Counties, so adjustments were minor.

MWCOG overstates employment in Fairfax County for 2010 by about 46,500 jobs (7.1%)a major error. A 10,000 jobs overstatement in Loudoun County.

Fairfax County 2010 Population & Employment Estimates (1000s) Population Employment MWCOG 8.0 1,091.6 680.0 RPG 1,116.6 678.7 GMU/CRA 2011 1,116.6 633.5 RPG-GMU 0.0 45.2 % Difference 0.0% 7.1%

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3/8/2012

Population

Employment

We used county forecasts and pro rated out years by ratio of average MWCOG & Fairfax CAGRs. RPG generally made slight upward adjustments in MWCOG CAGRs.

We anchor our projection on what we believe is a more accurate count of 2010 employment in Fairfax and Loudoun provided by GMU CRA in its housing the workforce analysis. We capture the impact of the Great Recession and likely future federal spending cuts: MWCOGs forecast does not capture the impact of likely reduced federal spending on the areas economy to date. GMU CRAs 2011 base forecast captures the effects of the recession and the planned cuts in federal spending growth.
Its January 2012 update anticipates a further one-third reduction in employment growth over the 2010-2030 spanwith indirect consequences for populationthat may be too extreme.

We believe GMUs 2011 forecast more accurately reflects the more limited jobs growth potential of Fairfax and Loudoun counties.

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3/8/2012

Fairfax County
Population RPG CAGR MWCOG CAGR RPG-COG CAGR Diff FC Govt CAGR COG-FC CAGR Diff 2010 1116.6 1091.6 25.0 1116.6 2020 1221.3 0.900% 1188.0 0.850% 33.3 0.050% 1143.8 0.241% 44.2 0.609% 2030 1318.8 0.771% 1274.8 0.708% 44.0 0.063% 1226.9 0.703% 47.9 0.068% 2040 1377.2 0.434% 1326.1 0.395% 51.1 0.039% 1275.9 0.393% 50.2 0.041% Employment 2050 2010 1431.8 RPG 678.7 0.390% 1,379.4 MWCOG 680.0 0.395% -1.3 1,326.9 GMU 2011 0.393% CAGR 52.5 COG-GMU -0.003% CAGR Diff 633.5 46.5 2020 810.9 1.796% 788.5 1.491% 22.4 0.304% 733.9 1.481% 54.6 0.010% 2030 899.0 1.037% 863.8 0.916% 35.2 0.120% 802.3 0.896% 61.5 0.021% 2040 961.6 0.675% 917.5 0.605% 44.1 0.070% 851.6 0.598% 65.9 0.007% 2050 1024.2 0.633% 923.1 0.605%

903.9 0.598% 19.1 0.007%

Loudoun County
Employment 2020 2030 2040 2050 2010 2020 2030 2040 RPG 387.5 449.1 473.3 495.4 RPG 150.9 233.5 285.2 321.4 CAGR 2.181% 1.486% 0.526% 0.457% 4.462% 2.020% 1.202% MWCOG 290.0 357.7 418.9 439.7 461.5 MWCOG 143.7 206.5 257.2 285.4 CAGR 2.121% 1.592% 0.486% 0.486% 3.692% 2.220% 1.046% RPG-COG 22.3 29.8 30.2 33.6 RPG-COG 7.2 27.0 28.0 36.0 CAGR Diff 0.060% -0.106% 0.040% CAGR Diff 0.770% -0.200% 0.156% LOU Govt 312.3 395.3 458.7 481.8 502.7 GMU 2011 140.4 213.4 287.3 318.6 CAGR 2.385% 1.499% 0.493% 0.426% 4.276% 3.018% 1.038% COG-LOU -37.6 -39.8 -42.1 -41.2 COG-GMU 3.3 -6.9 -30.1 -33.2 CAGR Diff -0.264% -0.012% 0.034% 0.031% CAGR Diff -0.583% -0.798% 0.007% Highlighted cells are data R2020 used in formulating its forecast. The 2030-2040 MWCOG population CAGR was used to forecast growth from 2040 to 2050. Yellow colored cells are calculated forecasts. 2010 312.3 Population 2050 358.8 1.107% 316.7 1.046%

353.2 1.038% -36.6 0.007%

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A WSA presentation at a TRB conference last year provided insight into the sensitivity of traffic to changes in key parameters. Assumptions for the toll road looked applicable to DTR case, except the following:
DTR is not a new toll road.
Forecasts more reliable in early years.

DTR transponder participation is moderate, not high.

Higher usage generates more transactions.

Specifics of road network differ, but are of similar complexity.

Believe the sensitivity factors are accurate enough to adjust CDMS forecast, if adjusted for new vs. existing toll road.

With a few exceptionsmost notably DTR is not a new toll roadthe assumptions presented are similar to the DTR.

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Impact of 10% Change in Toll Road Transactions

1-Year Impact 20-Year Impact Factor Increase Decrease Increase Decrease Population 2% -1% 2% -2% Employment 3% -2% 5% -2% Gasoline -2% 1% -1% 2%
A broader Smith assessment puts short-term gas price sensitivity a -.1 (1 yr.) and long-term at -.3 (5 yrs).

We used -.2 for our forecast.

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RPGs growth rates for both counties are consistently higher in every decade than MWCOG and GMU CRA.

Nearly triple GMUs Fairfax forecast CAGR this decade. Doubles GMUs forecast CAGR in the next decade. Slightly higher after 2030. Only lower CAGR is for

Loudoun in 2020-2030 timeframe (-1%).

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Reston 2020s forecast indicates toll revenue will grow more slowly that CDMS forecasts.
$137MM annual difference in 2050. 25% shortfall in forecast revenues in 2050.

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We expect population and employment growth will be slower and gasoline price escalation higher over the next 40 years than CDMS & RPG forecast.

Our results suggest the likelihood of revenue shortfalls in every year and growing to 25% by the end of the 40-year forecast period. The odds are two-to-one that the annual forecast revenues are not achieved (67%) at the end of the forecast period.
Projected annual revenue shortfalls grow to more than $130MM late in the forecast period. The cumulative revenue shortfall is likely to be about $1.7 billion over 40 yearsabout one-tenth of total forecast revenues. All of this assumes project and financing costs do not increase after the preparation of the CDMS T&R forecast.

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