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Recommended VTA Quarter Cent Sales Tax Scenario
Jack J. Collins, Chief Construction Officer, referenced a document provided to the BPAC entitled VTA Scenario 2006, which depicts changes made to the Scenario since it was first presented to the Board of Directors. Mr. Collins outlined the document as follows:
2000 Measure A
Mr. Collins reported that the 2000 Measure A is an all transit measure passed by more than two-thirds voter approval. The Measure is a half-cent sales tax that runs for 30-years and collection of the tax will commence in April 2006. Mr. Collins advised that the existing half-cent sales tax for the 1996 Measure B Program sunsets in March 2006.
Measure A – Major Projects
The 2000 Measure A targets specific transportation projects such as BART Extension in Downtown San Jose and Santa Clara, Airport People Mover connector from the station at Santa Clara to the San Jose Airport, purchase of low floor vehicles, zero emissions buses, hydrogen fuel cell buses, and other paratransit vehicles, light rail throughout the County of Santa Clara, expansion and electrification of Caltrain, and increase of bus and rail service.
Economic Downturn
Mr. Collins stated there was an economic downturn that occurred since the passage of Measure A in 2000, which had a serious negative impact. In 2001, VTA collected $183.5 million on a half-cent sales tax and for the audited end of Fiscal Year 2005 VTA collected $145 million, a drop of 21 percent.
The immediate affect on VTA was the huge drop in ridership, loss of jobs in the areas, layoffs, and cutback in service by 18 percent from the Fiscal Year 2001.
Financial Stability Committee
Mr. Collins referenced the Financial Stability Committee, established by the Board of Directors for the sole purpose of looking for more stable funding sources to stabilize VTA and the service VTA delivers.
Mr. Collins stated that VTA is primarily funded by sales taxes that are volatile in terms of the ups and downs of the economy.
Expenditure Plan Development
Mr. Collins reported there have been a number of Board Workshops over the last two years to discuss delivery all of Measure A projects.
The VTA Board of Directors reviewed four scenarios that focused on a quarter-cent sales tax at their meeting of June 2, 2005.
In Summer 2005 the North County Cities Group, Silicon Valley Leadership Group, and the City of San Jose recommended three additional scenarios.
In September 2005 the Board of Directors reviewed three scenarios and reached the following consensus: a 30-year limited tax, support a quarter-cent maximum, inclusion of new projects such as a pavement management program, consider delaying BART to 2018, build Dumbarton Rail by 2011, and flexibility on the balance amount of the Program.
An Expenditure Plan was developed and on November 3, 2006 the Plan was brought before the Board of Directors for consideration. The item was deferred due to concerns raised by the City of Jose with regard to the timing and placement of the Airport People Mover (APM) and recommendations that the Pavement Management Program be reduced. The Board of Directors was presented with the Expenditure Plan at their December 1, 2005 Board Meeting. At that time, the Pavement Management Program amount was restored to its original value and a recommendation was made to include the People Mover in the Initial Program.
The City of San Jose, City of Morgan Hill and the City of Gilroy still had concerns and the item was deferred to the February 2, 2006 Board Meeting.
Annual Sales Tax Projection
Mr. Collins noted that annual updates have been provided from the Center for Continuing Study of the California Economy (CCSCE) who have been providing annual updates to VTA since 2001.
Mr. Collins explained that the CCSCE looks at a ten-year rolling forecast forward and provides conservative models on sales tax growth year over year and a moderate view of the economy for the next ten years.
Member Carpenter took his seat at 6:37 p.m.
Mr. Collins stated there have been incremental increases in the sales tax revenue VTA is currently collecting that show there is an expansion in the economy.
VTA’s decision to use the new forecast, which will impact three existing sales tax sources, 2000 Measure A, existing half-cent, and quarter-cent VTA has in place to run the rail and transit system. It will also impact the proposed quarter-cent sales tax. The result of the new forecast is that over 30-years there is an additional $2 billion in revenue for the program.
New Projections by VTA
Mr. Collins reported that current Fiscal Years 2006/2007 were not tweaked as the Board of Directors had already adopted a sales tax growth at 4.8 percent. Mr. Collins noted it does appear VTA is trending beyond the 4.8 percent. In 2008 instead of applying the 2004 projection of 4.9 percent VTA applying 2005 projection of 5.7 percent, an increase of .8 percent for the next eight years to 2015. For the remaining 20 years, VTA will revert back to 4.8 percent. This represents historical data VTA has garnered over the past 20 years of the peaks and valleys.
Projections by Other Cities
Forecasting on sales taxes is not a major component of most city budgets because they rely on property taxes.
VTA Scenario with New Projections
With the consideration of New Projections, the first and most important item is that all Measure A Projects can be completed with the new forecast. There is a positive ending balance of $537 million versus the previous forecast of an ending balance of $94 million.
Mr. Collins stated the previous projects had an Initial Program and $1.3 billion of deferred projects. The New Projections does not have a Completion Program and all projects are in the Initial Plan.
The New Projections will maintain VTA’s Reserves at 15 percent, which will be held the 30 years of the Program, will advance BART to December 2016, advance light rail to Eastridge by 2012, advance light rail to Nieman by 2017, advance light rail to the City of Los Gatos by 2012, and will accommodate single car light rail on Santa Clara/Alum Rock by 2021, if it is the selected mode.
Mr. Collins explained that the Light Rail on Santa Clara/Alum Rock Project is currently in environmental study phase and considering two alternatives, enhanced bus or single car light rail to the Capital Light Rail Line.
The New Projections will restore prior 10 percent funding cut to Caltrain previously contemplated, complete Caltrain Electrification by 2018, provide for Caltrain Service Improvements, provide for 8.4 miles of Caltrain double tracking in South County by 2010, complete Dumbarton Rail by 2011, complete Airport People Mover by 2018, and initiate Bus Rapid Transit (BRT) projects on Line 22, Monterey Road, and Stevens Creek Boulevard by 2011.
VTA Scenario Includes New Projects
Mr. Collins stated that there are $718 million Local Streets and Roads, County Roads, and Bicycle/Pedestrian Path Improvement Program of new projects included in the New VTA Scenario. In today’s dollars $14.7 million per year will be set aside for the three projects. The Roads portion, which is a Pothole Pavement Management Program is will be $10 million, County Roads Improvement portion will be $3.3 million per year and the Bicycle/Pedestrian Path Improvement Program will be funded at level of about $1.3 million to $1.4 million per year.
The BRT in the cities of Sunnyvale/Cupertino is a new project at approximately $130 million, which would contribute to increase VTA’s service from its current level to 24 percent by 2020.
A Senior/Disabled Program will be funded at $2 million per year. VTA is looking at a special program and will welcome recommendations from the Advisory Committees as to what that program might be.
Mr. Collins stated there is a $2.7 billion BART Operating Subsidy that commences in late 2016 and goes to 2038.
Next Steps
Mr. Collins advised the Santa Clara Board of Supervisors reviewed the Expenditure Plan and action was tabled on the item for two weeks per the Board of Supervisors’ direction.
The Expenditure Plan will be presented for review to the VTA Advisory Committees on January 11, 2006 and January 12, 2006, to the Board Standing Committees on January 19, 2006, and to the Board of Directors at a Workshop on January 27, 2006.
Upcoming Actions
Mr. Collins stated that the Board of Directors will take action at their February 2, 2006 Board Meeting.
Subject to the Board of Directors’ action at their February 2, 2006 Board Meeting, a meeting later in March, April, May 2006 timeframe may be added to consider ballot language and when to add the quarter-cent sales tax on a County of Santa Clara ballot.
Mr. Thiegles queried as to the definition of a single car light rail. Mr. Collins responded that it is a one-car train running at street level along Santa Clara/Alum Rock Corridor.
Member Carpenter recommended running Bus Rapid Transit (BRT) using a lane that is separate from automobiles. Mr. Collins stated the proposal currently being in the environmental document to run Enhanced Bus Service because it is more conducive to the environment along Santa Clara/Alum Rock.
Member Chan asked if staff has other scenarios to present if the quarter-cent sales tax does not go forward or pass. Mr. Collins responded that staff did run a no tax scenario but did not run which project would move forward. If the quarter-cent sales tax does not go forward then the Board of Directors will have to redouble their efforts and make decisions as to what projects will move forward.
Mr. Wightman queried how many low floor vehicles VTA will have in 2021. Mr. Collins responded VTA has a fleet of 100 low floor vehicles, which is adequate for the requirements up through 2025.
Chairperson Jensen queried as to the projection of pavement costs. Mr. Collins responded that costs have increased 20 percent from last year’s costs. Chairperson Jensen queried what percentage increase VTA is budgeting. Mr. Collins responded that the approach on the Pavement Program is a $10 million per year program that escalates up at 3.5 percent per year and gets divided up amongst the various cities using a formula that will distribute the funding by population.
Chairperson Jensen requested staff provide costs on pavement for overlays, regrind and repavement to the BPAC.
Member Walton queried as to the durability of the rubberized asphalt and if VTA has used it on its projects. Mr. Collins responded that County Roads Department used rubberized asphalt on Page Mill Road and has been used on Interstate 880. Mr. Collins stated the longevity of rubberized asphalt is still being studied although it is holding up well on I-880. Member Walton inquired if rubberized asphalt will be used in Pavement Program Projects. Mr. Collins responded VTA does not dictate the Pavement Management Program and will be up to the individual cities to decide what type of specification they want to use. Mr. Collins stated that rubberized asphalt is the most expensive because of the rubber tire base and chrome rubber.
Member Hauge inquired if VTA has any say as to how the cities determine to use the funding. Mr. Collins responded the Technical Advisory Committee (TAC) would most likely oversee the spending of the funds.
Member Muniz queried if the Scenario is not approved what are the alternatives for the BART project.
Member Muniz stated the Airport People Mover is a transportation element in the Program and expressed concern that public funding will be used on a system that is very specific to the travel needs of people who are traveling in and out of the area but not necessarily for the people who are residing with this area.
Member Muniz expressed concern regarding the lack of funding for the center part of South County stating that funding from a need point of view is not being addressed accordingly.
Member Muniz queried if the positive ending balance of $537 million will be reprogrammed and what it is the BPAC can do to lobby to have additional funding allocated for bicycle and pedestrian projects. Member Muniz expressed concern that the $1.4 million annual allocation for bicycle and pedestrian projects is minimal when considering the cost of projects.
Mr. Collins stated the problem is that people forget the purpose of the tax is to try to provide more stability to VTA so it can operate the service that is out there at this present time.
With regard to the South County, Mr. Collins stated that are some very interesting things in the Governor’s proposal to make improvements such as widening Highway 101 to four lanes through the City of Gilroy and to three south of the City of Gilroy to the county line. Mr. Collins noted there are other funds that address the transportation needs in South County that are beyond this Pavement Management Program available.
Mr. Collins stated the Bicycle/Pedestrian Program has other sources of funding and the intent of the ending balance is for VTA to have some sort of a cushion.
Member Stallman asked if the San Jose Airport will contribute funding to the People Mover. Mr. Collins responded the connection from the future BART/the Caltrain Station in the City of Santa Clara over to the San Jose Airport is funded from Measure A. The additional internal circulator inside the Airport is funded by the City of San Jose.
Member Stallman queried what proportion of non-transit projects would be represented by the supplemental tax measure if approved and what the pie chart looks like. Mr. Collins responded there are pie charts depicting the new tax in the Board Memo entitled Attachment 3, Revenue Sources. Mr. Collins advised the total amount of revenue anticipated in the Program is $22 billion over 30 years. The quarter-cent sales tax would yield approximately $5.5 billion.
Member Stallman expressed concern that parking structures will be built instead of grade separated crossings that would help to avoid mishap.
Member Wadler expressed concern regarding the overall Plan. Mr. Wadler asked if BART funding was denied by the federal government. Mr. Collins explained that the Project was not denied funding and is currently in the Final Environmental Impact Statement phase and conducting planning studies. Mr. Collins stated VTA took a time out with the Federal Transit Administration (FTA). Mr. Wadler asked if the problem was that the ridership projections were too high and not going to be met. Mr. Collins stated that there is no problem with ridership projections but rather there was an issue with the cost effectiveness index the federal government has in their this one size fits all project number. Mr. Collins also stated the FTA has some exceptions to their criteria and VTA is working within their criteria and to reduce it down to their cost effectiveness number.
Member Wadler stated he is being skeptical and expressed concern that neither the City San Jose or the County of Santa Clara will be able to bring BART on budget and on time.
Mr. Wadler expressed concern that public transportation can be slow and queried if VTA is looking at ways to make public transportation more effective in meeting the needs of the riders. Mr. Collins responded that VTA is currently conducting a Comprehensive Operation Analysis (COA) Study. Mr. Augenstein stated that VTA is conducting a COA and market study to understand where the markets are and what types of factors need to be addressed to attract new riders to the system. Mr. Augenstein stated that bus and light rail are often compared to the automobile and it is a very rare case when there are comparable travel times. Mr. Augenstein advised that the results of the studies will be provided to the BPAC for their review and comment.
Member Swent requested clarification that the 2000 Measure A is a transit only Measure. Mr. Collins stated that at the same time the 2000 Measure A was passed, the VTA Board of Directors adopted a policy where future State Transportation Improvement Program (STIP) allocations would be 100 percent highway program.
Member Swent referenced Item 12, Bond Payments, stating at cost it is the largest item on the list and is not transit. Mr. Collins reiterated that the new quarter-cent sales tax has new non-transit projects.
Member Swent expressed concern regarding the review policy of the Program. Jim Lawson, Governmental Affairs Manager, responded VTA will protect the Program in an annual review which will be done to make sure that the performance is what VTA expects. Mr. Lawson advised that the original Measure A ballot had a Citizens Oversight Committee to review and ensure funding is being disbursed for projects listed in the ballot initiative.
Member Swent stressed the need for flexibility and accountability. Mr. Lawson explained the ballot initiative has not yet been written.
Member Carpenter stated that after reviewing the information it appears that BART is not immediately needed and would be a better idea if BART were built in increments.
Member Carpenter stated with BART using the Advance Automatic Train Control System (AATCS) enough trains will be freed up to enable BART to run to Berryessa and service the area every 15 minutes.
Mr. Lawson restated that if the quarter-cent sales tax is not approved by the Board of Directors or not passed by the voters, the Board of Directors will need to grapple with various approaches as building BART in sections or increments or different programs becoming part of a Completion Plan.
Mr. Lawson referenced Mr. Carpenter’s comment regarding the AATCS stating that while the system will run more efficiently and enable the reduction of headways, it will actually be necessary to purchase more train sets to make the headways happen.
Member Sullivan commented that sitting on the Ad-Hoc Financial Stability Committee representing BPAC as a stakeholder member was a very educational process. He noted one of the main problems that became apparent is that the sales tax, as a revenue source, is very unstable and increasing the sales tax by another quarter percent is not going to do anything to correct that problem. Mr. Sullivan expressed concern that with VTA depending so much on sales tax measures, the stability problem will return again. Mr. Sullivan requested staff remember that increasing the sales tax will bring the current sales tax up to 8.5 percent and the largest burden of the sales tax and local tax will be a burden on low-income families, the very families who support VTA by putting money in the farebox.
Member Stallman stated that one of the principal elements in the 1996 Measure A safety improvements and another element was Caltrain Improvements which was the first thing thrown out of the window.
Member Stallman expressed concern that the West Valley/North County areas may feel cheated out by not receiving a share of the pie.
Member Stallman expressed concern that parking structures will be built instead of grade separated crossings, which would help to avoid mishap. Mr. Stallman recommended adding safety improvements to the Plan for the Caltrain Corridor.
Reviewed and forwarded recommendations to the VTA 2000 Measure A Transit Program with a Revenue and Expenditure Plan that assumes a new 30-year, quarter-cent sales tax supporting the construction and operation of the 2000 Measure A Projects and some new projects and programs.
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