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CALL TO ORDER

The Regular Meeting of the Policy Advisory Committee (PAC) was called to order at 4:10 p.m. by Chairperson Sandoval in Conference Room B-104, Valley Transportation Authority (VTA), 3331 North First Street, San Jose, California. ROLL CALL

Members Present
Mark Brodsky
Dominic Caserta
Dean Chu
Dan Furtado
Steve Glickman
Dennis Kennedy
Breene Kerr
Kathleen King
Victor Ojakian
Greg Perry
Althea Polanski
Dolores Sandoval, Chairperson

Members Absent
Paul Correa
King Lear
Linda J. LeZotte

A quorum was present.

Public Presentation

There were no Public Presentations.

Minutes of April 8, 2004

M/S/C (Perry/Glickman) to approve the Minutes of April 8, 2004.

Minutes of May 13, 2004

M/S/C (Perry/Kishimoto) to approve the Minutes of May 13, 2004.

Committee Staff Report

There was no Committee Staff Report.

Chairperson´s Report

Chairperson Sandoval introduced Mathew O. Tucker, Chief Operating Officer, who distributed a memorandum entitled Small-Capacity Vehicle Demonstration, and reported that VTA´s Short Range Transit Plan includes a plan to implement small-capacity vehicle operations. In preparation for this program VTA will host two manufacturers of small-capacity vehicles on June 17, 2004 at the River Oaks complex. El Dorado and Orion are scheduled to display two small-capacity vehicles from Noon to 2:00 p.m. Mr. Tucker reported that this will be the first of several demonstrations.

Member Kennedy arrived at 4:11 p.m.
Member Kerr arrived at 4:13 p.m.

Member LeZotte asked if a review of small-capacity vehicles similar to the Palo Alto shuttle program indicates that VTA will move to shuttle size buses as opposed to large buses. Mr. Tucker responded that the reason for looking into small-capacity buses relates to market segmentation within public transportation. He noted there are many different transit markets, some that will run more efficiently with small vehicles and some with larger vehicles, the type of markets will determine the type of service best suited. Member LeZotte asked Mr. Tucker if he would pass the information on to the West Valley Mayors and Managers Group. Mr. Tucker responded that he will be attending the West Valley Mayors and Managers Meeting on June 23, 2004. Chairperson Sandoval distributed a list of PAC Policy Priorities 2004 with a description of the status of each item. And noted that it was be discussed under Agenda Item #9 - Committee Work Plan.

Vice Chairperson Kishimoto reported that she presented the PAC Committee Report at the June 3, 2004, Board of Directors Meeting in Chairperson Sandoval´s absence. She advised the Committee that her report included PAC´s discussion regarding the possibility of operating smaller buses in some communities, the formation of a BART Sub Committee, PAC´s motion to reduce the Congestion Management Program budget. Vice Chairperson Kishimoto reported that the VTA Board of Directors deferred the FY 04-05 Congestion Management Program Work Program and Amended Budget Item. She noted that regarding the fare adjustment, a motion was made and passed which reduced the monthly youth fare proposal from $52 a month to $49 a month.

City Groups Report

Vice Chairperson Kishimoto reported that at the North County City Group Meeting on Friday, May 28, 2004 the Committee discussed their priorities for the VTP 2030 expenditure plan, the potential for Community Shuttle service, and Proposition 42 funds.

Member Furtado reported that the West Valley Mayors and Managers Group meeting on Wednesday, May 26, 2004 the Group discussed the potential for Community Shuttle service and decided to meet on Wednesday, June 23, 2004 to discuss the subject further. He reported that the Group discussed Highway 9 bicycle safety issues and will meet again on June 17, 2004 to discuss the subject further, and noted that VTA has made some funding available. Member Furtado reported that the Group discussed the possible suspension of Proposition 42 Funds. He reported that Council Member Don Burnett of Cupertino has been appointed to the West Valley Seat on the VTA Citizens Advisory Committee. Member Kennedy reported that the Milpitas, Gilroy, and Morgan Hill (MGM) Group met and discussed small bus shuttle service. He noted that the City of Morgan Hill has been working on setting up some privately/publicly funded shuttles and perhaps some of the funding could be used to partner with VTA for a pilot small bus or shuttle program.

Member Kennedy reported that Mr. Tucker will attend the July 23, 2004 MGM Group Meeting. He reported that the City of Gilroy requested a traffic planning study for the Highway 101 corridor to look at widening Highway 101 at Cochran Road to Leavesley Road in Gilroy. He reported that the Committee also discussed their transportation priorities, possible alternative to a full funded BART, and project priorities for the VTP 2030 expenditure plan. On order of Chairperson Sandoval, there being no objection, the City Group Reports were received.

Presentation on the Stanford/Palo Alto Shuttle Program

On order of Chairperson Sandoval, there being no objection, the Presentation on the Stanford/Palo Alto Shuttle Program was deferred to the August 12, 2004 PAC Meeting.

Committee Work Plan

The Committee reviewed the policy priorities list and made recommendations for revision and reprioritization.

Member Kennedy left his seat at 4:34 p.m.
Member Kennedy took his seat at 4:36 p.m.

Alternate Member Kline expressed concern that the City of Saratoga did not have a voice on the VTA Board of Directors.

Member LeZotte explained that each city belongs to a city grouping. The City of Saratoga for example, belongs to the West Valley Mayors and Managers Group. There are two other groups, the North County Cities Group, and the MGM Group. Each month the Groups meet to discuss transportation issues that can be and are forwarded to either the PAC or the VTA Board of Directors.

Alternate Member Kline requested clarification regarding PAC's role, he asked if PAC is an independent advisory board bringing recommendations forward or does PAC act more like a city commission where there are delegated tasks to discuss and to develop recommendations. He noted that the policy priorities list was an interesting list but maybe what should be asked is what does the VTA Board of Directors want PAC to do.

Member Kerr stated that he believed PAC was an independent advisory committee.

Chairperson Sandoval requested review and discussion of the revised policy and priorities list, and review and discussion of the expenditure plan be added to the August 12, 2004 PAC Agenda.

On order of Chairperson Sandoval, there being no objection, the Committee Work Plan was reviewed.

Recommendations to forward to the VTA Board of Directors from BART Working Group

Member Kerr distributed a handout entitled Report of the BART Working Group of the VTA Policy Advisory Committee. (Included as an addendum to the Minutes, Attachment-A.) As way of background Member Kerr reminded the Committee that the recently completed MTC 2030 capital expenditure planning process revealed a number of areas remaining to be resolved by various VTA stakeholders. He reported that each city grouping made clear the importance of funding a minimum list of projects in addition to BART to San Jose. Those "local" projects included Caltrain electrification and system enhancements, double tracking Caltrain to Gilroy, Downtown East Valley Light Rail, light rail extensions in the West Valley Cities, local loop shuttle services, and Dumbarton Rail among others. A compromise process allowed all these projects and BART to San Jose to go "above the line" but funding for these projects remains inadequate, especially in the absence of assumed State and Federal funding and without a proposed sales tax increase.

Member Kerr reported that despite apparent funding shortfalls, the BART extension to San Jose has now progressed to a $150 million preliminary engineering phase. Other "above the line" capital projects continue to be the subject of negative comments from staff and other stakeholders and face an uncertain future. He reported the likelihood of Board action to actually fund these projects remains unclear.

Member Kerr noted that financial assumptions underlying staff analysis contain a number of questionable assumptions, many of which have been brought to the attention of the Board previously. Issues remaining to be resolved are the failure to allow for binding costs (and bonding limits), the implied assumption that State and Federal money is a done deal, optimistic assumptions in the sales tax receipt numbers, failure to allow for inevitable cost overrun, funding shortfalls on the BART to Warm Springs extension project and the possibly unrealistic ridership and fare box recovery numbers for the BART to San Jose extension.

Member Kerr reported that an overview analysis of the current and proposed VTA income streams and cost for the numerous capitol projects makes it clear that a sales tax increase will be required to build and operate the currently listed "above the line" projects. Even the most optimistic supporters of the BART expansion generally accept this position. Further, it is not completely clear that all the "above the line" projects can be built and operated with a ½ cent sales tax increase, even if revenues fall at the high end of projections. However, due to the difficulty of predicting future levels of economic activity in the region, much less interest rate inflation levels, the financial outlook must be simplified for strategic decision-making.

Member Kerr summarized the bottom line on finances as follows: Without a tax increase, the agreed upon "above the line" capitol projects cannot all be built and in fact, it may not even be possible to build the BART extension alone. With a ½ cent tax increase, it is at least conceivable that many of the "above the line" projects can be built, baring major, unforeseen cost overruns and assuming a return to positive economic conditions, significant contributions from Stare and Federal funding agencies, improvements in VTA´s operating efficiencies, and improved fare box recovery ratios.

Member Kerr reported that it is the considered opinion of the BART Working Group that the VTA Board and the VTA Policy Advisory Committee have a responsibility to the public to continue to work towards a positive vision for the future of public transportation in Santa Clara Valley. It is also clear that the public deserves an open, transparent discussion of the cost/benefits, priorities and objectives of future capitol projects. The public will then presumably have the final say in a County-wide vote on the advisability of levying additional taxes for the purpose of funding public transportation projects above and beyond that which can be built and operated from the current VTA income stream.

He reported that therefore the Policy Advisory Committee recommend the following to the VTA Board: 1) Direct staff to simplify the strategic VTA Board financial discussion by preparing an executive summary of capitol project costs and funding sources, all expressed in present value, 2004 dollars. This will have the desirable effect of removing any distortions caused by bonding costs, inflation, and discounted value of future income streams. Further, income streams should be clearly identified as either committed or subject to political action by third party agencies or governments. 2) Initiate a process designed to result in a consensus driven "Plan B", or "no new taxes" scenario of group of scenarios. This project would presumably involve careful consideration by all the various VTA stakeholders and then could be presented to the public as part of their consideration of any future election regarding a sales tax increase. 3) Direct staff to work cooperatively with the Policy Advisory Committee BART Working Group to remove existing uncertainties as the level of capitol projects that can reasonably be funded under the Plan A, or increased (1/2 cent) tax scenario. Specifically, to make staff resources available for the possible revision of the financial spreadsheet prepared by the BART Working Group.

Member Brodsky distributed a spreadsheet entitled "REAL BART" Compiled by Member Brodsky and Member Perry on June 6, 2004.(Included as an addendum to the Minutes, Attachment-B.)

The BART Working Group requested that staff be directed to assist with a preliminary revision of the spread sheet prior to the Board meeting at which this motion is introduced.

Member Chu left his seat at 5:15 p.m.
Member Chu returned to his seat at 5:19 p.m.

Chairperson Sandoval asked if under the Measure A with proposed BART column, those dollars reflected were from the state and federal government and asked why it was not carried through the last two columns. Member Brodsky responded that is because it looks at dollars that we know are real at the present time.

Member Kerr noted that the spreadsheet was created without staff support and one of the recommendations the BART Working Group would like PAC to consider is to provide staff support to clean up the spreadsheet prior to presenting it to the Board of Directors.

Member Glickman suggested that staff be asked to provide an analysis of the spreadsheet rather than requesting staff to assist with a preliminary revision of the spreadsheet prepared by the BART Working Group.

Member Kennedy suggested that the spreadsheet be used as a reference as it does highlight what the problems are and what we are not seeing in the numbers that staff a provided so far.

The Committee expressed concern about a request that staff resources be made available for possible revision of the spreadsheet prepared by the BART Working Group and suggested that a revised spreadsheet be forwarded to the Board to use as an example.

Chairperson Sandoval suggested the spreadsheet be forwarded to the Finance Department for analysis. She hoped that staff would meet with one or two Committee Member to review the spreadsheet. Chairperson Sandoval suggested delay of discussion of a Plan B as there may not be a need for a Plan B.

M/S/C (Kennedy/Kline) with 13 ayes, 3 noes and 0 abstentions, to recommend the Board to: 1) direct staff to simplify the strategic VTA Board financial discussion by preparing an executive summary of capitol project costs and funding sources, all expressed in present value, 2004 dollars. This will have the desirable effect of removing any distortions caused by bonding costs, inflation, and discounted value of future income streams, 2) clearly identify income streams as either committed or subject to political action by third party agencies or governments, and further, initiate a process designed to result in a consensus driven "Plan B", or "no new taxes" scenario or group of scenarios. This project would presumably involve careful consideration by all the various VTA stakeholders and then could be presented to the public as part of their consideration of any future election regarding a sales tax increase, and 3) forward a (revised version) of the spreadsheet entitled "REAL BART" Compiled by Members Brodsky and Perry on June 9, 2004 as an example. Members Glickman, Furtado, and Ojakian voted no.

BUSINESS REFERRED TO COMMITTEE BY THE BOARD OF DIRECTORS/ GENERAL MANAGER

OTHER

Announcements

Chairperson Sandoval announced there will be no PAC meeting in July, 2004.

Adjournment

On order of Chairperson Sandoval, there being no objection, the meeting was adjourned at 5:35 p.m.

Respectfully submitted,
Barbara R. Cappa,Board Assistant
VTA Board of Directors

NOTE: M/S/C MEANS MOTION SECONDED AND CARRIED AND, UNLESS OTHERWISE INDICATED, THE MOTION PASSED UNANIMOUSLY