Dallas Area Rapid Transit Cotton Belt Commuter Rail Line

IMG Rebel utilized its extensive expertise in infrastructure P3s and availability payments to assist with the development of a crucial new rail line in the Dallas-Fort Worth area.

For Dallas Area Rapid Transit (DART) IMG Rebel developed a financial model to analyze the optimal financial structure of the proposed commuter rail line
IMG Rebel was tasked with analyzing the financial feasibility of the Cotton Belt as a public-private partnership (P3). IMG Rebel developed a financial model to identify the most appropriate P3 mechanism. The model was developed from the perspective of the concessionaire and DART’s perspective as an oversight agency. The financial model used discounted cash flow analysis in order to assess the project’s value. The model allowed for sensitivities on a variety of factors, including construction costs, revenues, and financing assumptions.

IMG Rebel proposed an innovative availability payment scheme for compensating a private concessionaire
Our analysis identified that an availability payment model would be an attractive mechanism for financing the Cotton Belt. The structure allowed a private concessionaire to receive milestone and availability payments as compensation for the construction and operation of the facilities.  Milestone payments constituted a portion of the total project costs and availability payments would be paid annually over the life of the concession according to negotiated terms that could raise or lower the payment based on the concessionaire’s ability to meet certain performance standards.

IMG Rebel’s model delved deep to analyze the future finances of the project
The model assumed a complex financial structure that took into account the necessary funding source drawdowns, the cost of equity, various levels of tranched debt, and system and non-system revenues over the course of the multi-decade year model. Further, the senior and subordinated debt were modeled according to assumptions based on federal programs such as the Federal Railroad Administration’s Railroad Rehabilitation Improvement Fund (RRIF) and U.S. Department of Transportation’s Transportation Infrastructure Finance and Innovation Act (TIFIA) program.

Public and private financing options were both given fair consideration for a true comparison
Besides analyzing the P3 option, IMG Rebel also used a public sector comparator (PSC) to understand the P3 as compared to a more traditional public ownership/operations approach. This analysis used relevant cost and revenue assumptions based on historical data/experience.

The team used its expertise to consider various creative funding and financing options
IMG Rebel’s financial model was flexible enough to understand various scenarios including assessing new revenue sources such as transit-oriented development or various dedicated tax revenues. Our work with DART shows IMG Rebel’s ability to produce financial models and analysis that can take into account both traditional and innovating funding sources for complex rail projects.

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