Difference between revisions of "Bridge Projections"

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==Uncertainties==
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This is my guesstimate of the basic numbers for the Bridge project during the [[Sublease Term|lease period]], based on my [[Bridge Calculations]] spreadsheet.  All figures are in millions of dollars, and have been adjusted to 2010 constant dollars.
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===Repayment schedule===
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This is the biggest unknown - there appears to be no public information on the repayment of the $165 million in [[2008 Bonds|bonds]] comprising the [[Base Debt]].  [[Schedule 1]] of the [[Concession Agreement]] says that ''commencing December 1, 2011 amortization payments will be made semi-annually with the final payment on June 1, 2046''.  But they don't indicate how the payment amounts are to be calculated.
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I've tried a couple of guesstimating options.  One is to reduce a fixed proportion of the principal each payment.  However, this seems to build up deficits the first few years, which would require interest-bearing advances.  It seems unlikely the financing would be set up this way.  My other option is to cap the maximum payment each year so that no deficit is produced.  This basically pays off the debt as fast as possible, and limits the return to the guaranteed 4.5% until the last few years of the project, which see large returns.  Another option might be to reduce the payments to somewhat less than what the revenues would support each year, in effect taking out some of that later-year money in earlier years.  This would seem more desirable from the DCBC point of view, but I don't know how much (if any) flexibility they have in determining the amount of principal they repay in a given year.  It could be there is a semi-fixed repayment schedule that is skewed to build up to larger payments in later years to avoid the early shortfalls.
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The "NOW" column for the "low" traffic forecast would be the likely current scenario.
  
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===Partial Year===
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===Lease Period Summary===
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The [[Partial Concession Year]] after construction is completed causes a bit of uncertainty. Since it will likely begin late in the year, there will only be a small amount of toll revenue available that year, and the operating costs and [[Base Contribution|GNWT contribution]] are pro-rated as well. But with an interest payment due December 1, this likely leaves a hole in the first year where the GNWT would have to advance [[Additional Funds]].  The [[Concession Agreement]] doesn't seem to allow for funds to be used for an interest payment after the [[Traffic Availability Date|construction is completed]], but I'm not sure if there is something I'm missing would cover some of this shortfall.
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{{User:NorthernRaven/returns}}
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===Comments===
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The "Net Cost" is somewhat misleading, because the tolls are to some extent offset by the benefits of the bridge, which aren't reflected here.  Whatever the argument over their exact nature, the value isn't zero.  The [[Cost Benefit Analysis]] attempts to quantify these.  The
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===Assumptions===
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*[[Traffic Availability Date]] - I've assumed October 31, 2011, a suitably spooky date.
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*Amortization - I've used a straight amortization for the [[Base Debt|$165 million debt]], indexed to 2008 when it was issued, with semi-annual principal repayments beginning December 1, 2011.  Different amortization could produce different results.
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*[[Partial Concession Year|Partial Year]] - I've assumed the December 1, 2011 principal and interest payment are handled by this process, which tends to put a $2.5 million dollar hole in the [[Partial Concession Year|partial first year]], since there are only a couple of months of toll revenue.  If the Construction budget includes an allocation for this payment, there will be a corresponding improvement in the numbers.
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*[[Invested Equity|Equity]] - For "Original", $4.3 million, and for "Now", $1.4 million.  I've run it as if the GNWT doesn't "buy" equity in its own project, but instead puts all extra money in as [[Additional Funds]].  If they take the equity stake the numbers might change slightly.  If the [[DCBC]] equity is bought out, those monies would be added to the GNWT as well.
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*[[Traffic Forecasts]] - "Low" is the "Conservative" forecast from the PROLOG 2006 report, and "High" is the "Probable".
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*[[Annual Operating Costs]] - $600,000 for the "Original" forecasts.  For "Now" I've used $350,000 as that was a number thrown out by the [[Michael McLeod||Minister of Transport]] during the debate.
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*Inflation - I've assumed an arbitrary 2% inflation, although it isn't a big factor since everything except the equity return is indexed to inflation.
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*Interest - [[Additional Funds Outstanding]] are charged interest at the current GNWT short-term rate.  I've assumed this at 3%.
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*Sanity - assumes my calculations bear some resemblance to reality and the old  [[User:NorthernRaven|NorthernRaven]] isn't as crazy as a loon.  Debatable.
  
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==Possible returns==
 
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(table)
 
  
 
{{Incomplete}}
 
{{Incomplete}}

Revision as of 06:20, 28 March 2010

This is my guesstimate of the basic numbers for the Bridge project during the lease period, based on my Bridge Calculations spreadsheet. All figures are in millions of dollars, and have been adjusted to 2010 constant dollars.

The "NOW" column for the "low" traffic forecast would be the likely current scenario.

Lease Period Summary

Traffic Forecast 2006 PROLOG low range 2006 PROLOG high range
Original NOW Original Now
Additional Debt 15.0 15.0
Equity 4.3 1.4 4.3 1.4
         
Total Tolls 188.8 188.8 250.7 250.7
Subsidy Contributions 140.0 140.0 140.0 140.0
Total Revenues 328.8 328.8 390.7 390.7
Principal -171.0 -171.0 -171.0 -171.0
Interest -113.3 -113.3 -113.3 -113.3
Total Debt Service -284.2 -284.2 -284.2 -284.2
         
Operating Costs -21.0 -12.3 -21.0 -12.3
         
DCBC Equity Return -14.7 -5.6 -49.3 -38.7
         
Gross Cost -319.9 -302.0 -354.5 -335.1
GNWT Returns 4.4 3.6 32.1 34.5
Net Cost -315.5 -298.4 -322.4 -300.7

Comments

The "Net Cost" is somewhat misleading, because the tolls are to some extent offset by the benefits of the bridge, which aren't reflected here. Whatever the argument over their exact nature, the value isn't zero. The Cost Benefit Analysis attempts to quantify these. The

Assumptions

  • Traffic Availability Date - I've assumed October 31, 2011, a suitably spooky date.
  • Amortization - I've used a straight amortization for the $165 million debt, indexed to 2008 when it was issued, with semi-annual principal repayments beginning December 1, 2011. Different amortization could produce different results.
  • Partial Year - I've assumed the December 1, 2011 principal and interest payment are handled by this process, which tends to put a $2.5 million dollar hole in the partial first year, since there are only a couple of months of toll revenue. If the Construction budget includes an allocation for this payment, there will be a corresponding improvement in the numbers.
  • Equity - For "Original", $4.3 million, and for "Now", $1.4 million. I've run it as if the GNWT doesn't "buy" equity in its own project, but instead puts all extra money in as Additional Funds. If they take the equity stake the numbers might change slightly. If the DCBC equity is bought out, those monies would be added to the GNWT as well.
  • Traffic Forecasts - "Low" is the "Conservative" forecast from the PROLOG 2006 report, and "High" is the "Probable".
  • Annual Operating Costs - $600,000 for the "Original" forecasts. For "Now" I've used $350,000 as that was a number thrown out by the |Minister of Transport during the debate.
  • Inflation - I've assumed an arbitrary 2% inflation, although it isn't a big factor since everything except the equity return is indexed to inflation.
  • Interest - Additional Funds Outstanding are charged interest at the current GNWT short-term rate. I've assumed this at 3%.
  • Sanity - assumes my calculations bear some resemblance to reality and the old NorthernRaven isn't as crazy as a loon. Debatable.


Under Construction This article is currently incomplete. BridgeWiki will eventually improve by expanding it.
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