Case Study

Name: Miami Citizens' Independent Transportation Trust Date: 2005 - Present Project: Transit and Surface Transportation Financial Analysis and Program Auditing

Summary: Since 2005, IMG has served as financial advisor to the Miami Citizens' Independent Transportation Trust (CITT) for the implementation of the multi-billion dollar People’s Transportation Plan (PTP), funded primarily by a half-cent sales tax in Miami-Dade County. The CITT is tasked with oversight of all expenditures from the sales tax, which primarily support Miami-Dade Transit (MDT) projects as well as public works projects.

Issue: IMG reviewed MDT’s long-term financial plan and FTA New Starts applications, as well as the actual use of the sales tax dollars. We found that critical assumptions were optimistic and that the sales tax would be unlikely to support all of the projects promised in the PTP. Furthermore, IMG found that the surtax funds were mostly supporting MDT operating expenses rather than the capital programs that the public expected.

Solution:

1. IMG developed a comprehensive Risk Assessment Financial Model, capable of analyzing MDT’s long-term financial outlook. Starting with a “replication case” to demonstrate the validity of the model, IMG analyzed a wide variety of scenarios using more realistic assumptions and Monte Carlo analysis to test sensitivities.
2. IMG worked directly with MDT to understand the basis for the assumptions in MDT’s pro forma. IMG’s suggested changes to assumptions were brought to the County Commission and were largely accepted. This caused a re-thinking of MDT’s New Starts financial plan for the proposed Orange Line and the County is now considering innovative financing ideas to fill gaps in the financing plan.
3. IMG analyzed the funding allocation formula by which surtax funds are allocated to support MDT operating expenses created by new PTP capital projects. IMG was directly involved in the development of a new allocation model, led by an independent consultant, that permits much greater oversight by the CITT of surtax funds.
4. In conjunction with MDT and the County budget office, IMG reviewed and proposed changes to MDT’s New Starts financial plan to provide a realistic development scenario for the Orange Line and MDT.
5. IMG currently continues to periodically review the MDT 30-year pro forma, provide risk assessment modeling analysis and oversee a MDT/PTP cost allocation study, among other tasks.

Value Created: IMG is helping the CITT volunteer members fulfill their obligation to the taxpayers to oversee the surtax. By providing comprehensive, yet concise analysis, IMG is enabling the CITT members to understand how sales tax revenues have been spent to date and whether the PTP will be achieved in the budget and timeframe originally projected. Furthermore, IMG is making clear all of the major risks that this ambitious plan may face, such as: construction delays, construction cost increases, delays in obtaining grant funding, changes in design programs, and helping the CITT to ensure that MDT has properly accounted for all these risks in its financial forecasts.