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P a g e I 1 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana Appendix A: Executive Summary of the Benefit-Cost Analysis for Glacier Rail Park/Kalispell Core Area Development and Trail Project Table of Contents Summary and Findings 3 Introduction 5 Methodology 6 Project Overview 6 Base Case- “no build scenario” 7 Build Alternative 7 Assumptions 7 Current Situation 8 Future Situation 8 Project Cost and Schedule 9 Project Costs 9 Project Funding 9 Project Schedule 10 Long Term Outcomes 11 Summary of the Benefit Cost Analysis 11 Affected Populations and Types of Impacts 13 Quantified Costs and Benefits Measurement of Long-Term Outcomes 13 Quality of Life 14 Environmental Sustainability Benefits 14 Economic Competitiveness Benefits 15 ---PAGE BREAK--- P a g e I 2 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana State of Good Repair of the local Highways 16 Safety benefits 17 Job Creation 19 Short-Term Impacts on Employment: 19 Long-Term Job Creation 20 Sources 20 List of Tables Table 1: Project Matrix 3 Table 2: Summary of Pertinent Data, Quantified Benefits and Costs 4 Table 3: Summary of Benefit Cost Analysis Selection Criteria 5 Table 4: Total Project Phase II Budget 9 Table 5: Phase II Funding Sources 9 Table 6: Phase II Project Schedule 10 Table 7: Project Benefit to Cost Ratio Analysis Summary 12 Table 8: Gallons of Fuel and CO2 Saved 14 Table 9: Decrease Operational transportation costs 15 Table 10: Decrease in Road Maintenance 16 Table 11: Conversion of Collision Statistics 17 Table 12: Predictive accidents on Rail crossings 17 Table 13: Construction Jobs Created by the Total Project 19 ---PAGE BREAK--- P a g e I 3 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana Summary and Findings This TIGER FY2015 grant application is for Phase II construction of the rural Glacier Rail Park/Kalispell Core Area Development and Trail project (hereafter referred to as the Project). The funds will be used toward the construction of the Glacier Rail Park and the redevelopment of the core area of downtown Kalispell and a trail that will be built upon the resulting abandoned rail corridor that will connect east and west Kalispell. The project will improve both transportation choices for freight and people. The new rail yard will concentrate freight into an industrial park where it can be loaded / unloaded onto rail and moved in and out of the region on rail. This rail yard will provide shippers with cost effective transportation options that are not currently available in NW Montana. Table 1 below summarized the improvements and associated economic benefits. Table 1: Project Matrix Current Status/ Base line (No Build) & Problem to be Addressed Change to Baseline/ Alternatives Type of Impacts Population Affected by Impacts Economic Benefit Summary of Results ( Mill $ 2015) Reference in BCA write up Tab in Spreadsheet Reduced VMT on highways and roadways Vehicle drivers Monetized value of reduced truck miles generating fuel savings Estimated $7 million of fuel savings Pages 14 Table 8 Detailed Savings Gallons & MT CO2 Reduced pollutant emissio Local, state, region and national populations Monetized value of emission reductions Estimated $1.4 million in reduced emissions Page 14 Table 8 Detailed Savings Gallons & MT CO2 Improved efficiency in freight modal choice by switching freigh to rail vs. truck Freight Shippers utilizing the Rail Park Monetized value of reduced operational costs to shippers Estimated $7 million operational costs savings to shippers Page 15 Table 9 Operational Savings Reduced road maintenace cost due to the reduction of VMT on highways Government Monetized value of reduced road maintenance costs to due to reduced VMT Estimated $6 million of Road maintenance savings to states and regions Page 16 Table 10 Road Maintenance Reduced potential fatalities on highways General public Monetized value of the reduction of potential fatalities on roadways to due to reduced VMT Estimated $11 million of reduced fatalities from reduction of Vehicle Miles Traveled Page 17 Table 11 Collision Costs Build a trail to transform Kalispell into a walkable community by connecting the isolated populations to work and daily activity centers. This will be accomplished by removing and relocating the current core area rail users to the new rail park. Post opening of the new rail park, the rail line running through the Core Area will be abandoned and replaced with a trail that connects east and west Kalispell. It will also include the closure of six at-grade rail crossings that limit safe transportation options to daily activities in Kalispell's core area. Reduction in potential fatalities at six Downtown at-grade crossings General public Monetized value of the reduction of potential fatalities at six at-grade rail crossings Estimated $10 million of reduced falaties from the closure of six at- grade crossings Page 17 Table 12 Collision Costs Project Matrix for Glacier Rail Park/Kalispell Core Area Development and Trail Project Build a Rail Park to consolidate rail loading and unloading into one location (rail hub). Thus will allow the conversion of currentl long-haul truck trips to be converted to short truck trips supporting the local area and long distant rail hauls of the associated cargo. Lack of Transportation options for freight and people in Kalispell,MT. This includes the lack of a centralized cost-effective/ efficient Rail loading/ unloading hub in Flathead Co. The use inefficient long haul trucking as the primarily modal option causes inefficient and costly routing of freight into and out of the region. The current rail facilities do not have the capacity to meet current and future cargo demands In addtion, a current rail line passing through the Core Area of Kalispell, bifurcates downtown. This increases the safety risk of the residents and visitors as they attempt to cross this active line on a daily basis. The period of analysis used in the estimation of benefits and costs corresponds to 24 years, consisting of the current year (2015), 3 years of construction and 20 years of operation after the completion of the Trail plus a residual value after the final year. Total project costs for Phase II are $21.2 million are expected to ---PAGE BREAK--- P a g e I 4 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana be financed through local and federal sources. The Tiger FY2015 application requests $10 million and the local participates of this project are committed to funding $12.2 million, 59 percent of the project cost. The BCA includes all project costs from Phases I and II for a total of $23.3 million which includes initial project costs starting in 2012 such as planning, engineering and property purchase costs. A summary of relevant data as well as the Total Benefits and Total Costs used to derive the benefit costs analysis for the project are shown in Table 2. Table 2: Summary of Pertinent Data, Quantified Benefits and Costs Calendar Year Total Direct Beneficiaries (Reduction in Truck VMT) Total Benefits (2015$) Total Initial Costs & Residual Maintenance Costs (2015$) Undiscounted Net Benfits (2015$) Discounted Net Benefits 2015 $0 ($2,042,081) $0 ($2,042,081) ($2,042,081) 2016 $0 ($15,469,464) $0 ($15,469,464) ($14,457,443) 2017 1,560,000 $1,970,715 ($2,407,355) $0 ($436,640) ($349,561) 2018 1,560,000 $1,970,715 ($3,407,355) $0 ($1,436,640) ($1,141,164) 2019 1,606,800 $1,999,919 ($54,400) $1,945,519 $1,517,133 2020 1,655,004 $2,030,000 ($54,400) $1,975,600 $1,442,824 2021 1,704,654 $2,060,983 ($54,400) $2,006,583 $1,371,991 2022 1,755,794 $2,092,896 ($54,400) $2,038,496 $1,304,392 2023 1,808,468 $2,125,766 ($54,400) $2,071,366 $1,241,817 2024 1,862,722 $2,159,622 ($54,400) $2,105,222 $1,182,036 2025 1,918,603 $2,194,493 ($54,400) $2,140,093 $1,125,521 2026 1,976,161 $2,230,411 ($54,400) $2,176,011 $1,072,085 2027 2,035,446 $2,267,407 ($54,400) $2,213,007 $1,021,551 2028 2,096,510 $2,305,512 ($54,400) $2,251,112 $974,424 2029 2,159,405 $2,344,761 ($54,400) $2,290,361 $929,205 2030 2,224,187 $2,385,186 ($54,400) $2,330,786 $886,420 2031 2,290,913 $2,426,825 ($54,400) $2,372,425 $845,929 2032 2,359,640 $2,469,713 ($54,400) $2,415,313 $806,933 2033 2,430,429 $2,513,888 ($54,400) $2,459,488 $771,324 2034 2,503,342 $2,559,387 ($54,400) $2,504,987 $736,971 2035 2,578,442 $2,606,252 ($54,400) $2,551,852 $705,112 2036 2,655,796 $2,654,523 ($54,400) $2,600,123 $674,300 2037 2,735,469 $2,704,242 ($54,400) $2,649,842 $645,783 2038 2,817,534 $2,755,452 ($54,400) $2,701,052 $618,129 2039 2,902,060 $2,808,199 $17,406,535 ($54,400) $20,160,333 $4,023,564 Total 49,197,377 $50,828,666 ($5,919,720) ($1,088,000) $26,414,411 $5,907,192 Based upon the Benefit Cost Analysis present in the remainder of this document, the project is expected to generate $24 million in discounted benefits and $18 million in discounted costs using a 7 percent real discount rate. Therefore the project generates a Net Present Value (NPV) of $5.9 million and a Benefit/ Cost Ratio of 2.5:1 at 7 percent. Table 3 below summaries the Selection Criteria calculated in this Benefit Cost Analysis. ---PAGE BREAK--- P a g e I 5 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana Table 3: Summary of Benefit Cost Analysis Selection Criteria Discount Rate 7% Discount Rate 3% Quality of Life Converting current rail line going through Downtown to trail Property Values/ Noise Mitigation not calculated Quality of Life Fuel savings due to reduced miles traveled by cargo using Rail Park vs. Truck Gallons of fuel saved 2.6 million gallons of fuel saved by reducing miles traveled with modal shift to Rail 2,977,469 $ 4,730,461 $ Economic Competiveness Operational cost savings Savings of rail transport vs. truck transport 249 million ton miles @$0.071 savings per mile (truck/ barge vs. rail) 7,453,055 $ 11,841,059 $ State of Good Repair Reduction of maintenance on US Roads & Hwys, Consistent with State and Regional Plans Maintenance, preservation and upgrade savings of 49 million VTM reduced off the highways 2,483,315 $ 3,945,373 $ Environmental Sustainability Environmental Benefits from Reduced Emissions CO2 cost savings 22,408 metric tons of CO2 saved 920,932 $ 920,932 $ Safety Closing of 6 rail crossings in Downtown Kalispell Fatality cost savings of 1.1 fatalities $10.7 million saved 5,365,761 $ 8,131,428 $ Safety Reduced fatalities from reduction of VMT Fatality cost savings of 1.1 fatalities $10.2 million saved 5,139,806 $ 7,789,008 $ ($18,433,147) ($14,652,909) $24,340,339 37,358,262 $ 5,907,192 $ 22,705,353 $ Benefit to Cost Ratio 1.3:1 2.5:1 Total Benefits Net Present Value Selection Criteria Description Inputs Value Monetized Value Total Cost Benefit to Cost Ratio Analysis Introduction This document provides detailed technical information on the economic analyses conducted in support of the Grant Application for the Glacier Rail Park/Kalispell Core Area Development and Trail project. The Methodology section, introduces the conceptual framework used in the Benefit-Cost Analysis (BCA). The Project Overview provides an overview of the project, including a brief description of existing conditions and the proposed alternative; Assumptions describes the current and future situations used in the analysis. Project Cost and Schedule provides a summary of cost estimates and schedule. Long Term Outcomes discusses the general assumptions used in the estimation of project costs and benefits, Specific data elements and assumptions pertaining to the long term outcome selection criteria are summarized in this section, Estimates of the project’s Net Present Value (NPV), its Benefit/Cost ratio (BCR) and other project evaluation metrics are also discussed. Short and long term job estimates are found in the Job Creation section. ---PAGE BREAK--- P a g e I 6 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana Methodology Benefit-Cost Analysis (BCA) is a conceptual framework that quantifies in monetary terms as many of the costs and benefits of a project as possible. Benefits are broadly defined. They represent the extent to which people impacted by the project are made better-off, as measured by their own willingness-to-pay. In other words, central to BCA is the idea that people are best able to judge what is “good” for them, what improves their well-being or welfare. BCA also adopts the view that a net increase in welfare (as measured by the summation of individual welfare changes) is a good thing, even if some groups within society are made worse off. A project or proposal would be rated positively if the benefits to some are large enough to compensate the losses of others. Finally, a BCA is typically a forward-looking exercise, seeking to anticipate the welfare impacts of a project or proposal over its entire life cycle. Future welfare changes are weighted against today’s changes through discounting, which is meant to reflect society’s general preference for the present, as well as broader inter-generational concerns. The specific methodology developed for this application was developed using the above BCA principles and is consistent with the TIGER guidelines. In particular, the methodology involves: Establishing existing and future conditions under the build and no-build scenarios; Assessing benefits with respect to each of the five long-term outcomes identified in the Notice of Funding Availability (NOFA); Measuring benefits in dollar terms, whenever possible, and expressing benefits and costs in a common unit of measurement; Using DOT guidance for the valuation of travel time savings, safety benefits and reductions in air emissions, while relying on industry best practice for the valuation of other effects; Discounting future benefits and costs with the real discount rates recommended by the DOT (7 percent, and 3 percent). Project Overview Requested funds will complete a new industrial rail park serving northwest Montana and all ports served by BNSF Railway on the West Coast, Great Lakes Region, and Canada. Primary port connections include the Ports of Seattle, Tacoma, and Vancouver in Washington; Portland, Oregon; Minneapolis, Minnesota; North Dakota and Lethbridge/Raymond in Alberta, Canada. Following the opening of the new industrial park, the current rail line through downtown Kalispell will be remove, allowing the development of the Core Area , the removal of six at-grade rail crossings and completion of the east- west trail. ---PAGE BREAK--- P a g e I 7 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana Project comparison is with most likely alternative, a "no build" scenario Base Case- “no build scenario” The base case in the BCA represents the current state of an example freight movement from the Flathead region to an export terminal in Portland, OR. Due to the complexity of the potential commodity movements and volumes that will be generate in the future from businesses locating in the new rail park, a representative supply chain has been selected for the project comparison of the BCA. This example cargo movement is based upon CHS grain facility that is currently located on a site in downtown Kalispell that does not have adequate rail service. Thus, all export grain movements must be trucked to Lewiston, where the grain is barged to the Port of Portland for export. The base case is developed upon the actual 2014 grain export volume from the CHS facility in Kalispell to the Port of Portland. Build Alternative This alternative measures the grain movement when this same grain exporter, CHS, re-locates from their current downtown Kalispell site and becomes the anchor tenant at the rail park upon its opening in 2017. To be conservative in the analysis, it is assumed that the relocation of this grain facility will induce shipper to convert the current grain volume from a truck/ barge model movement between Kalispell and Portland, OR. to a train only movement between these two end points. Last year, CHS transported 77,500 tons of grain to the Port of Portland export terminal. To be conservative, this analysis starts with 2015 as the basis of 77,500 tons and holds the volume constant until the opening of the new larger facility in 2017 which will provide CHS with the ability to increase their grain export tonnage capacity. Assumptions For the purposes of this analysis, the proposed project is compared with a no build alternative. The analysis included the total project costs to date and upcoming construction (Phases I and II) for a total project cost of $23.3 million. These costs are included in the cost basis for the BCA but the federal funds to be used to fund the assessment and mitigation is not shown in the project funding for Phase II as these funds cannot be count in the match calculations so have been separated. The BCA was run for the period of 24 years beginning with the base year of 2015 including a residual calculated in 2039 of combined $17.4 million for remaining estimated life of the Rail Park and Trail at that time. Phase I costs of $2 million are shown in year -2 (2012/2013), year -1 (2014) and year 0 (2015) This funding request is for Phase II construction. A project cost analysis recently completed by project engineers indicates the cost to complete this phase of the project is $21.2 million in 2015 dollars. ---PAGE BREAK--- P a g e I 8 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana Estimation of costs and benefits are limited to the 2015 to 2039 period. The analysis incorporates assumptions based upon one grain shipper that is committed to move into the Rail Park and use the rail service once it opens in 2017. This shipper is CHS, who has committed to relocate from its current facility downtown Kalispell to the new Rail Park in December 2016. To assure that the BCA presents a conservative estimate of the benefits, the BCA assume the first shipments from the Rail Park will occur in January 2017. The movements related to this example are based upon conversion their grain that currently is routed in a truck /barge movement to primarily a rail only movement. To be conservative the volumes were held constant at 2014 levels until after the Rail Park opens in 2017, then the tonnage is projected to grow at a conservative 3% per year. These assumptions are detailed below. Estimated loads were developed based upon the conversion of the current 77,600 tons annual grain movement. There were 3,000 total truck loads in 2014 from the current production at CHS facility in Kalispell to Lewiston, ID where the grain was loaded on to a barge to be delivered down river to an export grain terminal in Portland, OR. Current Situation The current movement of the grain requires a 280 mile dray to Lewiston, ID. There it is loaded on to a barge for transport 465 miles downriver to an export grain terminal at the Port of Portland. This is a 560 mile round trip for the trucks. It must be noted that the trucks return empty back to their origin in the Flathead region. It also includes a round trip grain barge movement of 930 miles. Future Situation The proposed improvements will open a Rail Park in Kalispell, MT enabling the local shippers to move their cargo by rail versus truck. This will save the example company millions of dollars per year in transportation costs due to the ability to more efficiently route the cargo using on-site rail as well as the cost per ton differential of rail versus truck along the supply chain. Upon completion of Phase II, the new routing would be by truck from the local farm to a grain silo at the Rail Park in Kalispell. This trip is estimated to be an average of 26 miles each way, followed by a 646 mile rail move to the Port of Portland’s export grain terminal. This conversion is estimated to eliminate over 1.5 million truck miles in the first year of operation. ---PAGE BREAK--- P a g e I 9 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana Project Cost and Schedule Project Costs Table 4: Total Project Phase II Budget in Millions $19.5 92% $1.1 5% $0.6 3% $21.2 100% Project Budget Phase II CN FE/ CN Engineering Management and Inspection Total Cost Glacier Rail Park/Kalispell Core Area Development and Trail Project Table 5, shows the break out of the project funding. The TIGER 2015 project application requests $10 million in Federal support and a local investment of $12.5 million. The local investment of $12.5 million (59%) is comprised of committed funds primarily from the FCEDA and the City of Kalispell. Project Funding Table 5: Phase II Funding Sources Amount in Millions Status $ 0.5 Committed 7.5 $ Committed 4.5 $ Committed 10.0 $ Requested 21.2 $ $10.0 47% $12.5 59% $21.2 100% TIGER VII Request Construction Total Project Funding for Phase II Total Project Cost Total Federal Total Local Total Project Funding for Phase II City of Kalispell FCEDA Construction Funding Sources Purpose BNSF Construction Construction The City and FCEDA are requesting a TIGER FY2015 federal investment of $10 million to complete the project’s Phase II construction. ---PAGE BREAK--- P a g e I 10 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana Project Schedule Table 6: Phase II Project Schedule Glacier Rail Park/Kalispell Core Area Development and Trail Phase II Project Schedule Rail Park- Trail Project Schedule and Task Details Approved/Complete REVIEW-Rail Park Categorical Exclusion Worksheet (FRA) April 2015 APPROVAL-Preliminary Rail Design & Operation Plan (BNSF) April 2015 APPROVAL-Traffic Design Concept and Location (Montana DOT) April 2015 COMPLETED-Construction Documents for Rail Park June 2015 SUBMITTED-Trail Categorical Exclusion Worksheet (USDOT) September 2015 Approval-Water Design (City of Kalispell and Montana DEQ) June 2015 Approval-Sewer and Storm Water Design (City of Kalispell and Montana DEQ) September 2015 APPROVAL-Traffic Design Construction Documents (Montana DOT) September 2015 BID-Construction of Rail Park September 2015 RECEIVE- Notice of Award from the US DOT September 2015 SIGN- Lease with CHS September 2015 BEGIN- Rail Abandonment and Rail Banking Process September 2015 RECEIVE- TIGER VII funds from US DOT January 2016 SIGNED-Rail Park Construction Contract February 2016 BEGIN-Rail Park Construction March 2016 BEGIN-CHS Facility Construction March 2016 COMPLETE- Environmental Site Assessments for Trail July 2016 COMPLETE-Construction of Rail Park December 2016 COMPLETE-CHS Facility Construction and Relocation December 2016 COMPLETE- Rail Abandonment and Rail Banking Process January 2017 COMPLETE-Trail Property Acquisition February 2017 COMPLETE-Final Design and Construction Documents for Trail February 2017 BID-Construction Costs of Trail March 2017 AWARD- Contract for Trail Construction May 2017 OBLIGATED- All TIGER Funds June 2017 REMOVE Track June 2017 TRAIL Construction (180 days over a 12 month period due to weather) July 2017 – June 2018 COMPLETE- Complete Street Extensions and Upgrade Pedestrian Crossings June 2018 Phase II Project Completion Federal grant funds received from the TIGER FY2015 request will enable the applicants to complete the new industrial rail park. Due to limited funding options, the project will otherwise be delayed if these funds are not awarded under TIGER FY2015 until the final funding becomes available in another federal ---PAGE BREAK--- P a g e I 11 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana funding source. With the successful award of this TIGER FY2015 grant, construction for Phase II can begin spring 2016 and the rail park could be completed and opened by January 2018. This project will be 100 percent ready to start construction in spring 2016. This project is ready to go. The NEPA environmental process categorical exclusion checklist has been completed; thirty relevant agency responses indicate no negative impacts as a result of the project. We have been informed by the Federal Railroad Administration that upon award of TIGER FY2015 funding the agency would at that time finalize their NEPA review. Preliminary design was prepared by professional design engineers working closely with BNSF Railway, Watco/Mission Mountain Rail, and our first expected tenant, Cenex Harvest States (CHS) and has received approval of all three entities. We are currently completing our final design and engineer in preparation for final project funding in early 2016. The design team foresees no complicating or project ending factors. Although to mitigate any unforeseen risk, a $1 million contingency fund has been budgeted and established for the project. The project site is owned by one of the co-applicants. It is flat, locally owned, with no significant environmental features or complicating features. The southern edge of the site is buffered by a hillside. The Glacier Rail Park/Kalispell Core Area Development and Trail project has met all local requirements for approvals and permits. State and federal requirements will be met by fall 2015, so that if funded by TIGER FY2015 it would allow USDOT to obligate funding well in advance of September 30, 2017. Project risks have been identified and mitigation strategies incorporated. The project schedule illustrates that all contract bid documents will be finalized with the project ready for bid by spring 2016. With TIGER FY2015 funding, the full project can be completed by December 2018. Long Term Outcomes Summary of the Benefit Cost Analysis Table 7 displays the summary of the BCA. Quantified benefits include the transportation cost savings of modal conversion to rail, reduced emissions due to reduced truck miles, better fuel efficiency, and improved safety due to the reduction of potential accidents due to the reduction of truck vehicle miles traveled when this project is completed. This benefit-cost analysis (BCA) follows guidance set forth in the Notice of Funding Availability for Department of Transportation’s National Infrastructure Investments under the Consolidated and Further Continuing Appropriations Act, 2015. A discount rate of 3 percent was used, following the TIGER BCA Resource Guide updated 3/27/2015. Bottom line, the present value (PV) of costs in 2015 dollars is $14.7 million and the PV of benefits is $37.4 million. This rate yields conservative estimates of NPV and benefit cost ratio, but per the NOFA ---PAGE BREAK--- P a g e I 12 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana guidance, it is appropriate because funds are public and would be spent on other public projects. This analysis yields a NPV of $22.7 million and a benefit-cost ratio of 2.5:1. The greatest share of benefits is Quality of Life from fuel savings as a result of the modal change from truck/barge to rail the forecasted grain shipments. Table 7: Project Benefit to Cost Ratio Analysis Summary Discount Rate 7% Discount Rate 3% Quality of Life Converting current rail line going through Downtown to trail Property Values/ Noise Mitigation not calculated Quality of Life Fuel savings due to reduced miles traveled by cargo using Rail Park vs. Truck Gallons of fuel saved 2.6 million gallons of fuel saved by reducing miles traveled with modal shift to Rail 2,977,469 $ 4,730,461 $ Economic Competiveness Operational cost savings Savings of rail transport vs. truck transport 249 million ton miles @$0.071 savings per mile (truck/ barge vs. rail) 7,453,055 $ 11,841,059 $ State of Good Repair Reduction of maintenance on US Roads & Hwys, Consistent with State and Regional Plans Maintenance, preservation and upgrade savings of 49 million VTM reduced off the highways 2,483,315 $ 3,945,373 $ Environmental Sustainability Environmental Benefits from Reduced Emissions CO2 cost savings 22,408 metric tons of CO2 saved 920,932 $ 920,932 $ Safety Closing of 6 rail crossings in Downtown Kalispell Fatality cost savings of 1.1 fatalities $10.7 million saved 5,365,761 $ 8,131,428 $ Safety Reduced fatalities from reduction of VMT Fatality cost savings of 1.1 fatalities $10.2 million saved 5,139,806 $ 7,789,008 $ ($18,433,147) ($14,652,909) $24,340,339 37,358,262 $ 5,907,192 $ 22,705,353 $ Benefit to Cost Ratio 1.3:1 2.5:1 Total Benefits Net Present Value Selection Criteria Description Inputs Value Monetized Value Total Cost Benefit to Cost Ratio Analysis When a discount rate of 7 percent was used, the PV of costs in 2015 dollars is $18.4 million and the PV of benefits is $24.3 million. This rate also yields conservative estimates of NPV and benefit cost ratio per the NOFA guidance. This analysis yields a NPV of $5.9 million generating a benefit-cost ratio of 1.3:1 over the analysis. The greatest share of benefits is again from the Economic Competiveness Category from the fuel cost savings by moving the cargo on rail vs. truck/ barge as is currently done. The use of rail service for the grain shipments instead of the current route of trucking the grain to Lewiston, ID where it is put on a barge to Portland, OR will elimination at least 49 million commercial truck miles off of the local roads and highways. This reduction in commercial vehicle miles will reduce the probability of 1.1 fatality accidents from occurring on the related roads and highways. This results in a monetized safety value of $5.3 million at 7 percent discount rate. In addition the removal of the six downtown at-grade crossings monetize to a $5.1 million safety benefit at 7 percent. ---PAGE BREAK--- P a g e I 13 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana Affected Populations and Types of Impacts The benefiting populations include three main groups: personal vehicle users, commercial carriers, and local residents that will now have access to a new employment center as well as improved connectivity by non- motorized means such as bicycle/pedestrian. The following description and tables attempt to present costs and benefits for each type of impact that could be monetized. Quantified benefits include: Improved economic competitiveness based upon the reduction of transportation costs for the Flathead Valley grain producers Reduction of gallons of fuel used to transport the grain. Improved state of repair of the roads and highways, due to the reduction of truck miles Reduced emissions due to lower Vehicle miles traveled by the commercial truck Improved safety, resulting in reduced economic costs of potential fatalities on the highway due to the reduced VMT of the trucks as well as the reduced economic cost of potential fatalities prevented with the closure of the six downtown rail crossings. Costs include construction and lifecycle costs. Construction costs are best available estimates at the 90% design level as of April 2015. This analysis anticipates general operations and maintenance costs. Unquantified benefits include: Downtown benefits from reduced truck congestion Benefits to the local community to increase job opportunities at the Rail Park and the improved availability of transportation choices for area residence for their daily activities such as work, education and other services. The increase in land value as the rail in downtown is converted to a trail. Benefits to the area citizen of the increased connectivity across town for non- motorized modes of transportation that will provide access to work centers, educational sites, and daily services. Quantified Costs and Benefits Measurement of Long-Term Outcomes The largest positive benefits at 7 percent discount rate are from the economic competiveness improvement based upon the reduction of highway miles which generates an annual operating savings of approximately $7 million due to the lower ton/mile transportation costs generated by the energy efficiency of rail versus trucks. This benefit alone accounts for 32 percent of the total benefits. The fuel savings generates an additional 13 percent. Total Safety benefits account for 43 percent of the benefits. Reduced emissions and saving in road maintenance from the improvements account for the remainder. ---PAGE BREAK--- P a g e I 14 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana Total gallons save by reduction in modal shift Fuel savings due to reduced VMT CO2 Reduced (Metric Tons) @$2.731 / gal 2015 - $0 2016 - $0 2017 - $0 2018 82,186 $224,[PHONE REDACTED] 84,652 $231,[PHONE REDACTED] 87,191 $238,[PHONE REDACTED] 89,807 $245,[PHONE REDACTED] 92,501 $252,[PHONE REDACTED] 95,276 $260,[PHONE REDACTED] 98,135 $268,[PHONE REDACTED] 101,079 $276,[PHONE REDACTED] 104,111 $284,[PHONE REDACTED] 107,234 $292,[PHONE REDACTED] 110,452 $301,[PHONE REDACTED] 113,765 $310,692 1,016 2030 117,178 $320,013 1,046 2031 120,693 $329,614 1,078 2032 124,314 $339,502 1,110 2033 128,044 $349,687 1,143 2034 131,885 $360,178 1,178 2035 135,841 $370,983 1,213 2036 139,917 $382,112 1,249 2037 144,114 $393,576 1,287 2038 148,438 $405,383 1,325 2039 152,891 $417,545 1,365 Total 2,509,705 $6,854,005 22,408 Year Gallons and CO2 MT Saved due to shift in mode Quality of Life This project provides wonderful benefits to the local residents through increased access to the new employment center at the Rail Park as well as the benefits they will receive from the reduction of the grain trucks being removed from the downtown corridor. The completion of the project will allow the addition of paths that will connect the east and west sides of Kalispell for non-motorized travel. The project will improve the quality of life in Kalispell and along the I-90 Corridor, as it supports the core livability principles established by the Partnership for Sustainable Communities that are being used by the federal agencies as guidance for project selection. The project’s purpose is to provide a safer transportation of freight from the City of Kalispell to their respective markets. Table 8: Gallons of Fuel and CO2 Saved Quality of life benefits of the trail have not been monetized in the BCA due to the difficulty to fully articulate and model the community benefits. See more detail on this criteria under the section below on Qualitative Benefits not Quantified. The Quality of Life Benefit that can be monetized is the Fuel saving based upon the energy efficiency of rail transportation compared to truck transportation. Fuel savings due to the use of the more energy effective rail mode to transport the cargo to Portland, OR. Fuel savings are anticipated as the cargo is moved directly to Port of Portland by rail versus the current multi-modal method. Table 8 shows the estimated number of gallons of fuel saved by converting the current transportation method to rail. The construction of the Rail Park will reduce fuel usage by over 2.5 million gallons of fuel during the analysis period, which will save shipper over $7 million at today’s average fuel prices of $2.731/ gallon as of April 27, 2015. Environmental Sustainability Benefits The project is also expected to save 22,408 Metric Tons of greenhouse gas emissions over analysis period as shown in Table 8. This is calculated based on the reduced emissions in CO2 due to the reduction of fuel usage of rail transportation vs. trucking. ---PAGE BREAK--- P a g e I 15 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana Year Total ton miles on rail after opening of rail park saving / mile Reduction in operation cost based upon differential rate/ mile rail vs truck Portland, OR $ 0.071 2014 0.071 $ 2015 0.071 $ 2016 0.071 $ 2017 7,913,160 0.071 $ 561,834 $ 2018 7,913,160 0.071 $ 561,834 $ 2019 8,150,555 0.071 $ 578,689 $ 2020 8,395,071 0.071 $ 596,050 $ 2021 8,646,924 0.071 $ 613,932 $ 2022 8,906,331 0.071 $ 632,350 $ 2023 9,173,521 0.071 $ 651,320 $ 2024 9,448,727 0.071 $ 670,860 $ 2025 9,732,189 0.071 $ 690,985 $ 2026 10,024,154 0.071 $ 711,715 $ 2027 10,324,879 0.071 $ 733,066 $ 2028 10,634,625 0.071 $ 755,058 $ 2029 10,953,664 0.071 $ 777,710 $ 2030 11,282,274 0.071 $ 801,041 $ 2031 11,620,742 0.071 $ 825,073 $ 2032 11,969,365 0.071 $ 849,825 $ 2033 12,328,445 0.071 $ 875,320 $ 2034 12,698,299 0.071 $ 901,579 $ 2035 13,079,248 0.071 $ 928,627 $ 2036 13,471,625 0.071 $ 956,485 $ 2037 13,875,774 0.071 $ 985,180 $ 2038 14,292,047 0.071 $ 1,014,735 $ 2039 14,720,809 0.071 $ 1,045,177 $ 249,555,588 17,718,447 $ Decreased Operational Costs due to construction of Phase II and coversion to rail in Kalispell, MT Economic Competitiveness Benefits The Economic Competitiveness Benefits of the project have been monetized through the decreased operational costs to the shipper being achieved based upon rail transportation being more cost effective than trucking. Table 9 below shows the operational savings to the shippers of the new rail routing vs. the base case routing. Table 9: Decrease Operational transportation costs: This chart shows the estimated operational cost saving based upon the differential cost of $0.071 per ton savings which will total almost $18 million over the analysis period. This is anticipated to be achieved by the grain shipper when the grain is moved from the Rail Park by rail to Port of Portland versus the current route by truck and barge to the same destination. ---PAGE BREAK--- P a g e I 16 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana State of Good Repair of the local Highways Table 10: Decrease in Road Maintenance Year Truck Miles saved Maintenance rate/ mile Total savings No Build Total Miles No Build Total Maintenance Cost Decrease in Maintenance Costs with full conversation to rail of the grain shipments $ 0.12 2014 - 0.12 $ - 1,872,000 224,640 $ - $ 2015 - 0.12 $ - 1,872,000 224,640 $ 2016 - 0.12 $ - 1,872,000 224,640 $ 2017 1,560,000 0.12 $ 187,200 1,872,000 224,640 $ 187,200 $ 2018 1,560,000 0.12 $ 187,200 $ 1,872,000 224,640 $ 187,200 $ 2019 1,606,800 0.12 $ 192,816 $ 1,928,160 231,379 $ 192,816 $ 2020 1,655,004 0.12 $ 198,600 $ 1,986,005 238,321 $ 198,600 $ 2021 1,704,654 0.12 $ 204,558 $ 2,045,585 245,470 $ 204,558 $ 2022 1,755,794 0.12 $ 210,695 $ 2,106,952 252,834 $ 210,695 $ 2023 1,808,468 0.12 $ 217,016 $ 2,170,161 260,419 $ 217,016 $ 2024 1,862,722 0.12 $ 223,527 $ 2,235,266 268,232 $ 223,527 $ 2025 1,918,603 0.12 $ 230,232 $ 2,302,324 276,279 $ 230,232 $ 2026 1,976,161 0.12 $ 237,139 $ 2,371,394 284,567 $ 237,139 $ 2027 2,035,446 0.12 $ 244,254 $ 2,442,535 293,104 $ 244,254 $ 2028 2,096,510 0.12 $ 251,581 $ 2,515,811 301,897 $ 251,581 $ 2029 2,159,405 0.12 $ 259,129 $ 2,591,286 310,954 $ 259,129 $ 2030 2,224,187 0.12 $ 266,902 $ 2,669,024 320,283 $ 266,902 $ 2031 2,290,913 0.12 $ 274,910 $ 2,749,095 329,891 $ 274,910 $ 2032 2,359,640 0.12 $ 283,157 $ 2,831,568 339,788 $ 283,157 $ 2033 2,430,429 0.12 $ 291,652 $ 2,916,515 349,982 $ 291,652 $ 2034 2,503,342 0.12 $ 300,401 $ 3,004,010 360,481 $ 300,401 $ 2035 2,578,442 0.12 $ 309,413 $ 3,094,131 371,296 $ 309,413 $ 2036 2,655,796 0.12 $ 318,695 $ 3,186,955 382,435 $ 318,695 $ 2037 2,735,469 0.12 $ 328,256 $ 3,282,563 393,908 $ 328,256 $ 2038 2,817,534 0.12 $ 338,104 $ 3,381,040 405,725 $ 338,104 $ 2039 2,902,060 0.12 $ 348,247 $ 3,482,471 417,897 $ 348,247 $ 49,197,377 5,903,685 $ 5,903,685 $ Decreased road maintenance due to construction of Phase II and conversion to rail It is anticipated that there will be almost 49 million truck miles saved with the opening of the Rail Park just with the current grain converting to rail to Portland, OR. This is a total savings in road maintenance of $6 million over the entire analysis period. ---PAGE BREAK--- P a g e I 17 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana Safety benefits Table 11: Conversion of Collision Statistics Collision Type Current est. accident costs AIS Level Severity Fraction of VSL Unit value ($2013)* Conversation of Montana Traffic Accident Count by KABCO Current Annual social cost of Accidents Estimated reduction in injuries by 70 % per Insurance Estimated Annual accident costs savings AIS 0 no injury $0 $0 AIS 1 Minor 0.003 $28,200 $0 $0 $0 AIS 2 Moderate 0.047 $441,800 $0 $0 $0 AIS 3 Serious 0.105 $987,000 $0 $0 $0 AIS 4 Severe 0.266 $2,500,400 $0 $0 $0 AIS 5 Critical 0.593 $5,574,200 $0 $0 $0 AIS 6 reduction VMT Unsurvivable 1.000 $9,400,000 0.051903 0 $487,890 $341,523 $487,890 AIS 6 due to crossing closure Unsurvivable 1.000 $9,400,000 0.054185 0 $509,339 $356,537 $509,339 Property Damage Only $3,285 $0 $0 $0 $997,229 $698,061 $997,229 *TIGER BENEFIT-COST ANALYSIS (BCA) RESOURCE GUIDE updated 3/27/2015 annual savings Montana Traffic Fatalities Per 100 Million miles traveled on Roads 2.11 Annual Total Truck miles reduced over the 22 years 49,197,377 /22 2,459,869 Total Truck miles divided by 100 million miles 0.491973773 0.024598689 Estimated Fatalities Per 100 miles travel based upon Montana's experience 1.04 0.051903233 2013 Unsurvivable value $9,400,000 Annual life savings based upon reduced truck mileage $487,890.39 1.14 $10,733,589 Conversion of Collision statistics based upon 100 Million miles travel by truck Conversion of Collision statistics based upon 100 Million miles travel by truck Total lives saved over 22 years Dollars saved Annual Average Effect on Accidents with conversion to rail Safety benefits are estimated at $10.4 million in total social benefit of 1.1 lives being saved over 22 years after the completion of the Rail Park based upon the reduction of fatalities due to the reduction of truck miles between Kalispell and Lewiston. Table 12: Predictive accidents on Rail crossings Crossing MP City County Rank within County with 33 crossings Predictive Collision Train Speed # Tracks AADT Lanes 059375E 1226.70 Meridian Rd Kalispell Flathead 22 0.009105 10 mph 1 Main 10482 2 059374X 1226.30 5th Ave NW Kalispell Flathead 21 0.008358 10 mph 1 Main 7611 2 059373R 1226.10 Main St ((US 93) Kalispell Flathead 4 0.021198 5 mph 1 Main 25833 5 099099N 1225.93 1st Ave E (US723) Kalispell Flathead 33 0.000145 10 mph 2 Main 6409 3 059372J 1225.79 3rd Ave NE Kalispell Flathead 23 0.007626 10 mph 1 Main + 1 5422 4 059371C 1225.70 4th Ave NE Kalispell Flathead 24 0.007753 10 mph 1 Main 5761 2 Six crossings have an annual predictive collision rate of 0.054185 Total Predictive Collisions 0.054185 20 yrs 1.0837 20 yrs 10,186,780 $ Source: http://safetydata.fra.dot.gov U.S. DOT-Crossing inventory information as of 4/28/2015 post abandment and trail construction RAILROAD CROSSING SAFETY Road The closing of the six at-grade crossings will save approximately 1.1 lives over the 20 years after the removal of the rail line through the core area of Kalispell. This analysis estimates a saving the public social benefits of $10.2 million in reduced fatalities. ---PAGE BREAK--- P a g e I 18 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana Qualitative Benefits not Quantified. The project does not permit economic quantification of some factors. Unquantified factors include general vitality of downtown Kalispell due to improved accessibility and attractiveness to consumers and investors with the truck and rail traffic moving out of downtown to the Rail Park. The main benefits not quantified are summarized below. These factors are expected to be positive benefits to the community. The project team did not try to monetize the benefits of the closings of the six at-grade crossing accept for an estimate of accidents that will be prevented when the current rail through downtown Kalispell is converted to rail as those closing will be part of Phase II of the project. It is believed that there will be additional savings to the community that cannot easily be monetized. Examples of these non -quantified Benefits that could be monetized under economic competitiveness and Environmental Sustainability categories but have not been in this analysis include: Travel time savings to the school district due to the reduction of school bus crossing of the railroad in the downtown area. It is currently estimated that there are almost 2100 Head Start pre- school bus crossing of the six at-grade downtown crossings. These are in addition to the 42,900 annual bus crossings by the School District 5 and Eagle. Travel time savings to local citizens due to reduction of six at-grade crossing in downtown Kalispell. Decreased emission due the reduction of idling time at these removed crossings Quality of Life: A benefit not quantified in this calculation of the BCA from the trail improvement is the enhanced livability of downtown Kalispell, which is expected to benefit the area and its many users. The project’s primary livability goal is to foster a livable community through the application of existing policies and new investments to increase transportation choices and improve access to transportation services. The livability investments included in this project will deliver transportation benefits and are designed and planned in such a way that they will have a positive impact on the qualitative measures of community life. The project will generally enhance the community’s economic competitiveness by improving accessibility and transportation service for economically disadvantaged populations, non-drivers, senior citizens, active citizen that like to travel by non- motorized modes to work and school, and persons with disabilities that may now be able to use the proposed path to get to services such as stores and doctors. The improved access to downtown and the Rail Park will provide reliable and safe access to this new employment center. The improved connectivity that the path will bring for the community will provide transportation choices to access job opportunities, educational, services to meeting other basic needs of community members. The project will also support the existing community through land renewal and redevelopment to increase community revitalization and improve the efficiency of public works investments. The proposed transportation improvements will support infill, mixed-use development, rehabilitation, and ---PAGE BREAK--- P a g e I 19 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana redevelopment of the downtown area to further reduce the need for automobiles, encourage walking / biking, and save energy. The project may also stimulate new opportunities to rehabilitate or redevelop existing structures to accommodate a higher density or intensity of use. Redevelopment often occurs where a property location can support more intense development, such as areas where street improvements can accommodate increased traffic flow. Increase in Downtown Property Values: Additionally, the project adds value to communities and neighborhoods. It will enhance the unique characteristics of the downtown community and adjacent neighborhoods by investing in healthy, safe, and walkable transportation infrastructure. Studies have shown an eight to twelve percent increase in residential and commercial values where alternative transportation means—such as bike lanes and sidewalks—are located within ½ mile compared to areas without these amenities. And an improved level of service may create new opportunities for businesses to locate, expand or build in this area, adding further value to downtown Kalispell and adjacent neighborhoods. Noise mitigation: The project also includes landscaping and other noise mitigation features allowed by the closure of the at-grade rail crossings in the downtown area. This will positively affect nearby neighborhoods and businesses by reducing potential health costs and improving property values. These external costs and benefits are not quantified in the BCA. Job Creation Table 13: Construction Jobs Created by the Total Project Direct Jobs by Calendar Quarter 2016 2017 2018 Q1 201 0 44 Q2 201 0 44 Q3 201 31 0 Q4 201 31 0 Short-Term Impacts on Employment: Job creation impacts from the total project are estimated in Table 10. The construction of this Phase II of the project will generate 276 short-term family wage jobs at $76,900 per job year in the years spanning 2016-2018. This includes investment that covers the final design, final approvals, and construction period of both the rail park and the trail. Positive economic impacts resulting from these jobs are not included in the benefit-cost ratio. The project team used the administration’s jobs formula to calculate short-term employment impacts of Phase II. It is estimated that the construction of the Rail Park will generate 201 job years in 2016. An estimated additional 75 job years will be generated for the construction of the trail. Other private investment generated by the Rail Park development will include an estimated $18 million in capital improvement in the Rail Park as well as $7 million investment in the downtown area. This construction will generate an additional 325 short term jobs. ---PAGE BREAK--- P a g e I 20 Glacier Rail Park/Kalispell Core Area Development and Trail Project TIGER FY2015 GRANT APPLICATION For City of Kalispell, Montana Long-Term Job Creation: In addition to the short-term construction jobs, it is anticipated that the Rail Park at full build out will generate 11.75 1jobs per acre on the 32.4 acres of transload facilities located on site. This calculates to more than 380 long-term direct, indirect and induced jobs related to the completion of this project. The annual economic impact is estimated to exceed $16.6 million in wages and benefits for the local community. Sources All sources and additional notes have been cited in the Benefit Cost Analysis excel workbook that can be found at the project website: http://www.kalispell.com/community_economic_development/Tiger2015.php 1 http://cdn.laedc.org/wp-content/uploads/2012/04/CalCartage_REVISED_November9.pdf