Tram Cost-benefit Data

Date:

October 02, 2007

To:

James Parsons, Parametrix

From:

Mike Deiparine, Parametrix

Subject:

RIOC Tramway Cost Benefit Analysis Data

cc:

Jim Fletcher, Parametrix Steve Shane, RIOC Fernando Martinez, RIOC Rene Testa, Columbia University

Project Number: 354-5162-002 Project Name:

RIOC Tramway

Data required for your Cost-Benefit Analysis, per our Sep. 19 meeting, is as follows: Capital Costs Based on the current understanding of the construction market and material fluctuations, as well as the degradation of the US dollar against other currencies and as validated by manufacturer feedback, I have added 15% to the estimated cost for each of the four Alternatives, as quoted in our March 2007 Tramway Modernization Preliminary Engineering report. Given the uncertainties associated with these estimates, we recommend getting the project to the market place as soon as possible. Alternative 1 - $5.6 million Alternative 2 - $14.25 million Alternative 3 - $17.25 million Alternative 4 - $20.4 million Life Expectancy In the event that Alternative 1 is chosen, the interim repair is likely to make the tramway functional without further significant capital investment for 7 years or less. In the event that any other Alternative is chosen, it is expected that the useful life of the system will be 30 years or greater. Alternative 1 – 7 years Alternative 2 – 30 years Alternative 3 – 30 years Alternative 4 – 30 years O&M Fee The O&M fee is based on the current contract for operations and maintenance as performed by Doppelmayr. From an operations perspective, Alternatives 2 and 3 are fundamentally the same system as today, and while the new systems will likely require less corrective maintenance in the near term, no reduction was made for the maintenance fee (union labor, preference to keep “ahead” of maintenance rather than “behind,” and the redundancy creates some minor additional maintenance). The fee for Alternative 4 was estimated by using the current contract as a baseline and adding to that the cost of two

(Rev. 04/04)

RIOC Tramway Cost Benefit Data October 2, 2007 Page 2 of 2 additional maintenance staff for the more complex system (confirmed with Armando Cordova, RIOC maintenance lead). This fee was then decreased to reflect a reduction in the number of Cabin Attendants resulting from the ability to use only one system and therefore only one cabin during off-peak hours. Alternative 1 - $2.3 million Alternative 2 - $2.3 million Alternative 3 - $2.3 million Alternative 4 - $2.4 million Maintenance Parts and Supplies Costs The recent historical parts and supplies expenditures were used as a baseline and expanded slightly to where they “should be” according to Armando Cordova (Operations Lead). To adjust this for Alternatives 2-4, a relative estimate of near- to mid-term parts and supplies costs was made (in today’s dollars). Alternative 4 is higher than Alternatives 2 and 3 simply because it has more moving parts. Alternative 1 - $75,000 Alternative 2 - $25,000 Alternative 3 - $25,000 Alternative 4 - $35,000 Power Costs The recent historical average was used for Alternative 1 and as a baseline. Alternatives, 2 and 3 were assumed to be nominally the same. Alternative 4 was obtained by estimating the cabin hours now and cabin hours under the Dual System and applying that ratio to the current power usage. An additional 20% was added to that result to account for additional friction, some inefficiency and a general contingency. In reality, the Alternative 4 savings may be greater because of the effect of peak demand which should be smaller for Alternative 4. All four Alternatives were given a 15% increase to reflect the notification to RIOC by ConEdison that power costs would increase. Alternative 1 - $140,000 Alternative 2 - $140,000 Alternative 3 - $140,000 Alternative 4 - $105,000 Ridership and Revenue Ridership and revenue data are based on the financial data provided by RIOC which included data covering several years. The data for the operating period September 2006 through August 2007 formed the baseline for our analysis. An additional 20% was added to those figures to account for the near term occupation of the Southtown development which will increase the Island residency by roughly 20%. Because of the lack of time specific ridership data and rider behavior information, these numbers make no revenue adjustment for lost rides during downtime. Alternative 1 - 1.9 million riders, $3.6 million revenue Alternative 2 - 1.9 million riders, $3.6 million revenue Alternative 3 - 1.9 million riders, $3.6 million revenue Alternative 4 - 1.9 million riders, $3.6 million revenue Annual and Replacement Down Time Estimates are provided for the amount of time for which the system will be out of service, on an annual basis, over the life of each Alternative. These are estimates only and are based, in part, on historical data from the existing system. The replacement downtimes are as indicated in our March 2007 Tramway Modernization Preliminary Engineering report. With proper production, staging and financial incentives it should be possible to reduce the replacement downtimes stated here. The duration of and requirements for those reductions are under separate investigation. Alternative 1 – 850 hours per year, 8 weeks replacement Alternative 2 – 580 hours per year, 6 months replacement Alternative 3 – 440 hours per year, 7 months replacement Alternative 4 – 25 hours per year, 7 months replacement