I-70 Financial Projections and Considerations
Private Sector venture capital routinely has taken calculated risks such as investing in new transit technology. But the cost of this money is more expensive than government funding. In order to attract the capital, a "higher than market" rate of return is necessary. The financial projections, shown here, demonstrate the magnitude of tourism and local business necessary to pay at least 10% return for investor capital on the mountain resort segment from Union Station in downtown Denver. These numbers are based on fare box collections only and do not include any of the sales tax revenues that are proposed to the local communities and the State of Colorado to purchase the system over a period of 20 years. The sales taxes are proposed to come from incremental sales to out of state tourists who book their travel reservations on a computerized system.
Interstate Highway Model CONCLUSIONS: I-70 Cash Flow Summary This is a projection based on 20,000 travelers per day (Ave) and starting price (for an average ticket ) of $25 round trip in order to grow over 25 years into a 9% Return on Investment after taxes. Breakeven to amortize $1.5 Bil. is 10,000 travelers per day. The ridership depends mainly on tourism which is good because we can increase their ridership by cross marketing our seats with other travel reservations on the route such as hotels, meals, resorts, cars, retail and recreation. The main reason this project makes money is the basic hardware is in-place and paid for while revenues and ridership soar over 25 years as shown in this spreadsheet.
Construction Costs Ticket Pricing Operations & Maintenance
I-70 Feasibility Model & Assumptions
These figures illustrate the level of ridership required to generate a 15.9% Return on Invested (ROI.) capital of $1.5 billion. This figure is comprised of $712 million Guideway 126 miles long from Denver to Beaver Creek, 235 cars at an average cost of $150,000 apiece, propulsion and automation systems. For simplicity at this stage, the Airport leg, all local stations in route and local people movers ($1.5 billion collectively) aren't included in the calculations and assumed to produce their own financing.
| Assumptions |
| Riders 20,000 per average day |
| Ticket prices start at $25 average RT |
| Vehicle Capacity from 6 to 15 |
| Riders Growth Rate 4.5% per year |
| Pricing Inflation Rate 4% per year |
| Capital Costs $1.5 billion |
| Operations & Maintenance30% |
| O & M per passenger mile 5 cents |
| Replacement Reserves 3% gross revenues |
Ridership-10,000 riders per day is 1/6 of the existing traffic on I-70 + 10,000 more induced to ride because of convenience to resorts and attractions. This is the magnitude of ridership required to produce a 15.9 % ROI The projected mix is 50% tourists and 50% local population. The tourism market pays best and this part of the ridership can be increased by additional marketing via the Internet to the 300 million on-line by year 2002. In this model tourists are charged the same as locals. Reservations could add a premium. Over the next 25 years the I-70 car and truck traffic should more than double causing serious congestion. Our ridership could triple as a result of more people wanting to avoid traffic congestion on the ground.
Additional Revenues Possible- Other sources of revenue not included in this model: freight, mail, trash, medical station leases, naming rights, sales taxes rebates, travel reservations, and revenue from the local circulators. Local circulators in the $10 to $30 million range each are not included in the stations budget, which is estimated at $1.5billion. Naming rights may generate significant additional revenue. Naming rights are based on high visibility, and the 235 cars would be seen by hundreds of thousands of people daily.Financial Considerations Private Sector venture capital routinely has taken calculated risks such as investing in new technology. But the cost of this money is more expensive than government funding. In order to attract private capital, a "higher than market" rate of return is necessary. The financial projections, shown here, demonstrate the magnitude of tourism and local business necessary to pay a 15.9% return for investor capital on the mountain resort segment from Union Station in downtown Denver. These numbers are based on fare box collections only .