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Agenda Item # 9

BOARD MEMORANDUM

RECOMMENDATION:

Review and recommend that the VTA Board of Directors approve $14,819,000 for Fiscal Year (FY) 2005-06 and $15,263,000 for FY 2006-07 to provide VTA’s share of Caltrain operating support; and $2.66 million for FY 2005-2006 and $2.18 million for FY 2006-07 as VTA’s share of the local matching funds required for Caltrain’s Capital Budgets for these two years.

BACKGROUND:

Caltrain is the commuter rail service provided by the Peninsula Corridor Joint Powers Board (JPB), which is governed by representatives of San Francisco, San Mateo and Santa Clara counties.   It operates 86 weekday trains between San Francisco and San Jose Diridon Station, with 50 of the trains continuing south to Tamien Station.   Ten of the weekday trains are express (“Baby Bullet”) trains that provide service only to San Jose Diridon, Mountain View, Palo Alto, Hillsdale, Millbrae, 22^nd Street and San Francisco 4^th and King Stations.  Eight weekday trains, four northbound morning trips and four southbound afternoon trips, serve five stations in South San Jose, Morgan Hill, San Martin and Gilroy.  On weekends, 32 Saturday trains and 30 Sunday trains provide service between San Francisco and San Jose Diridon Stations.  Caltrain connections to the VTA light rail system are available at the Mountain View and Tamien Stations.

The shares of the Caltrain operating cost subsidy are apportioned to each member agency based upon morning peak period boardings in each county.   Currently, the shares are apportioned: 

• San Mateo County:   43.98 percent
• Santa Clara County:   40.62 percent
• San Francisco:   15.40 percent

The sharing of the necessary local matching funds for Caltrain’s capital budget for replacement and enhancement projects on the JPB-owned railroad between San Francisco and San Jose is done on an equal one-third basis by each member agency.

DISCUSSION:

As of this date, the JPB has not completed and distributed a final draft of the FY 2005-2006 Caltrain Operating and Capital Budgets to the JPB Board.   The following information is taken from the latest working drafts of the operating and capital budgets and will be updated as needed during the Committee’s discussion of this item.

Operating Budget:

In the current Draft, JPB staff is recommending a FY 2005-06 Caltrain Operating Budget of $77,953,521, which represents a $3.23 million, or 4.3 percent increase over the FY 2004-05 Operating Budget of $74,727,480.    The Draft 2005-06 budget reflects the following service proposal and fare increases that were approved by the JPB on April 22, 2005, with the service changes effective August 1, 2005 and the fare increase effective July 1, 2005:

• 96 weekday trains between San Francisco and Santa Clara County (including two new Baby Bullet trains implemented on May 2, 2005)
• A reduction from 8 to 6 weekday trains to and from Gilroy/South County.
• An additional 14 Baby Bullet trains, with service to Baby Bullet stops at Tamien, San Jose Diridon, Sunnyvale, Palo Alto, Redwood City, San Mateo, Millbrae and San Francisco for a total of 24 Baby Bullet trains operating in the peak hours.   The existing 10 Baby Bullet trains would continue to serve the current Baby Bullet stops.
• Maintain mid-day service at 30-minute intervals.
• Eliminate all but early morning, mid-day and late evening local trains, but provide local service through timed transfers on new local/express trains.
• A reduction from 12 to 4 weekday trains serving the College Park Station.
• Suspension of train service at Atherton, Broadway (in the City of Burlingame) and Paul Avenue (in San Francisco) stations.
• Elimination of 227 station stops (a 12.8 percent reduction).
• 32 Saturday trains and 28 Sunday trains between San Francisco and San Jose Diridon Station.
• A 17.5 percent fare increase effective July 1, 2005 with an additional 5.6 percent fare increase effective January 1, 2006.
• Eliminate ticket sales offices at Millbrae, Hillsdale, Palo Alto, California Avenue and Sunnyvale, retaining ticket sales at San Jose Diridon and San Francisco.   Station positions would be eliminated through attrition, rather than layoffs.

The Draft Budget includes the following revenue and expense projections:

• A $7.5 million increase in farebox revenue resulting from the approved fare increases and a projected annual ridership increase from 9.3 million to 10.4 million.
• A $1.5 million (22.9 percent) increase in parking revenue due to increased ridership.
• A $1.2 million (5.5 percent) increase in shuttle revenue due to increased employer contributions.
• The use of $3.1 million of grant funds for capitalized maintenance.
• A $2 million (30.1 percent) increase in fuel costs due to rising fuel prices and additional number of trains in operation.
• A $0.5 million (13.2 percent) increase in insurance costs due to increased premiums and anticipated claims.
• A $0.2 million (11.7 percent) decrease in facilities and equipment maintenance costs.
• A $0.4 million (5 percent) decrease in professional services due to a reduction in contracted staff.

With the JPB approval of the service and fare changes shown above and the incorporation of the listed revenue and expenditure revisions, the Draft 2006 Caltrain Operating Budget identifies a $2 million deficit.   The JPB staff has identified three alternatives for the JPB to consider to eliminate the deficit:

A.  Do not increase member agency contributions above the FY 2004-05 amounts and implement additional service reductions or take other actions to eliminate the shortfall.

B.  Acquire a 3 percent increase in member agency contributions, resulting in a remaining $1 million shortfall, and implement other actions to eliminate the remaining shortfall.

C.  Acquire sufficient member agency contributions to offset the entire $2 million deficit.

The Recommended VTA FY 2005-06 Budget includes $14,819,000 as VTA’s share of Caltrain’s FY 2005-06 Operating Budget, which represents a 3 percent increase over the FY 2004-05 VTA contribution.   This amount would address the 3 percent increase in Option B above.   Option C above would require a VTA FY 2005-06 Caltrain Operating Budget contribution of an estimated $15,211,900, which is an increase of $392,900 over the amount included in the VTA FY 2005-06 Recommended Budget.

Capital Budget

In the current Draft, JPB staff is recommending a FY 2005-06 Caltrain Capital Budget of $77.2 million, which represents a $3.55 million, or 4.6 percent increase over the FY 2004-05 Capital Budget of $73.65 million.   The Draft Budget includes local funds of $2,228,242 from each of the three member agencies to match federal and state funds.   The Draft Capital Budget includes the following major projects:

• $50.1 million in right of way improvement projects, including bridge rehabilitation, track and signal improvements and radio/communication system upgrades.
• $9.5 million for rolling stock, including $8.2 million to purchase additional passenger cars.
• $10.6 million for operational facilities and equipment, including $4.8 million for projects related to the new Caltrain Maintenance Facility.

The Recommended VTA FY 2005-06 Budget includes $2.66 million as VTA’s share of Caltrain’s FY 2005-06 Capital Budget.

ALTERNATIVES:

Alternatives identified in the discussion of the Draft Caltrain FY 2005-06 Operating Budget on the previous are currently being evaluated by JPB, VTA and San Francisco staff and will be presented to and discussed by the JPB at their May 5, 2005 meeting. 

FISCAL IMPACT:

The VTA Recommended FY 2005-06 Budget includes the following contributions to Caltrain:

          Fiscal Year 2005-06 VTA Recommended Budget                                         

Operating             $14,819,000                                                                                                  
Capital                  $2,660,000                                                                                                                            
Total                      $17,479,000                                                                            

Based on the latest Draft Caltrain FY 2005-06 Operating and Capital Budgets, the following estimates of VTA contributions to Caltrain would be required:

                         Fiscal Year 2005-06 Caltrain Draft Budgets                 

Operating         $15,211,900          (From Option C on previous page, assumes member agencies completely fund $2 million budget deficit- maximum member agency funding)
Capital              $2,228,242     
Total                 $17,440,142

As shown above, the combined VTA funding of the Caltrain contained in the VTA FY 2005-06 Recommended Budget is sufficient to provide the combined VTA contributions identified in the current draft of the Caltrain 2005-06 Operating and Capital Budgets.

The VTA Recommended FY 2006-07 Budget includes the following contribution to Caltrain:

                         Fiscal Year 2006-07 VTA Recommended Budget
Operating                  $15,263,000
Capital                       $2,180,000
Total                         $17,443,000

Caltrain has not yet developed an estimate of their FY 2006-07 Operating Budget or the local contribution required from VTA.   An estimate of the VTA FY 2006-07 Caltrain Operating Budget local match of $15,668,245 has been developed based on an assumed 3 percent increase in VTA’s FY 2005-06 maximum contribution to the Caltrain FY 2006-07 Operating Budget as shown above.   An estimate of the FY 2006-07 the VTA FY 2006-07 Caltrain Capital Budget local match is based on the Caltrain 2004-2013 Short Range Transit Plan (SRTP), adopted by the JPB on October 7, 2004.  The SRTP estimates member agency local match required for the FY 2006-07 Caltrain Capital budget at $1,280,000.  These estimates are shown in the table below.

                         Fiscal Year 2006-07 Estimates

Operating                     $15,668,245
Capital                          $1,280,000     
Total                             $16,948,245

As shown above, the combined VTA funding of the Caltrain Operating and Capital Budgets as contained in the VTA FY 2006-07 Recommended Budget is expected to be sufficient to provide the combined VTA contributions for the Caltrain 2006-07 Operating and Capital Budgets.

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