The Department of Transportation (DOT) Office of the Inspector General (OIG) was directed by the U.S. House of Representative Appropriations Committee to “conduct an audit into the financial solvency of the Metropolitan Transit Authority of Harris County, Texas (METRO) [which would include] a stress test to determine if Houston METRO has adequate finances to pay for the construction of new rail lines, as well as the operation and maintenance of existing rail lines and the operation and maintenance of buses.” OIG contracted Steer to assist in this analysis.
How we helped
Steer conducted a Financial Capacity Assessment (FCA) in accordance with the guidance provided by the Federal Transit Administration (FTA). The scope of work included conducting interviews with METRO staff to understand the composition of their existing sources and uses of funds, analyzing the current finances of METRO, and considering key risks regarding the future evolution of METRO’s revenues and costs, including the development of a detailed financial analysis tool. The analysis then considered the sustainability of operations in the longer-term, without recourse to drawing down reserves. This analysis identified the means and extent to which additional operating expenditure could be covered, before committing to new capital expenditure, over and above asset renewal.
Successes and outcomes
Stress tests were undertaken to test the impact of changes on key input costs, reductions in funding available from sales tax receipts, and the impact of higher debt service payments on refinancing. The results of the work demonstrate the extent to which further network expansion is likely to be financially sustainable over the long term.
Yes, you are in the right place. After 40 years, we have changed our name from Steer Davies Gleave to mark our growing international footprint and our expanding portfolio into markets beyond transportation.
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