Board Agenda Item

Agenda Item # 8

BOARD MEMORANDUM

RECOMMENDATION:

Adopt the VTA 2000 Measure A Transit Program with a Revenue and Expenditure Plan that establishes a new 30-year, quarter-cent, local sales tax supporting the construction and operation of the 2000 Measure A projects.

BACKGROUND:

The VTA Board of Directors reviewed quarter-cent sales tax scenarios at its September 16, 2005, workshop meeting, as follows:

Run 5:            Current Plan – BART to Silicon Valley by 2015.

Run 6:  Silicon Valley Leadership Group (SVLG) Poll – 30-year tax with Pavement Management Program and several other new projects.

Run 7:             BART to Silicon Valley by 2018.

We have carefully weighed feedback received from the Policy Advisory Committee, Technical Advisory Committee, the Board of Directors, and community stakeholders to develop a VTA Scenario for Board consideration and adoption.

DISCUSSION:

When we merged Run 5 with Run 6, the resulting scenario could not complete all of the 2000 Measure A projects, as well as the new projects proposed by SVLG, and maintain a positive ending balance.   It should also be noted that recent ridership estimates submitted to the Federal Transit Administration (FTA) as part of the New Starts process for the BART to Silicon Valley Project show a significant increase in the number of daily trips associated with this project.   While that certainly is good news, the corresponding increase of $450 million (2005 dollars) in project costs for the additional BART vehicles and parking capacity needed to accommodate the higher amount of ridership had to be factored into the VTA Scenario.  This also impacted the ending balance.

This cost increase, as well as the inclusion of additional funding for service restoration and a specific line item for expanded elderly and disabled programs, yields a program of projects that exceeds the projected funding.   To address this problem staff is recommending an initial program of projects and a completion plan.   The “Initial Program” of projects yields an ending balance of $387 million.   While this ending balance is acceptable, it is extremely tight for a program of this magnitude.  The “Completion Program” projects amount to $1.9 billion (YOE dollars) in estimated project costs.  These projects would continue to be developed and refined, so that they would be in a position to receive Measure A funding as the Board dictates. Additionally, if local sales tax revenues improve, project cost savings are realized, and/or other funding opportunities present themselves in the future, or Transit Oriented Development funds are received, the capacity of the overall program will increase.

This concept is very similar to the way the 1996 Measure B Transportation Improvement Program responded to a $200 million shortfall in local sales tax revenues dedicated to the program.   In that case, a number of baseline projects were cleared environmentally and placed in a Completion Plan until changes in revenues and expenditures allowed them to move into an Initial Plan and proceed into construction.   As a result of the local economy showing signs of improvement, other Measure B projects being completed with savings, and other outside funding sources, such as GARVEE bonds materializing, the County of Santa Clara and VTA were successful in moving most Measure B Completion Plan projects into construction.

Given that the 2000 Measure A Transit Program has a 30-year lifespan, the development of an Initial Program and a Completion Program seems to be a reasonable approach.   Circumstances will change over the next 30 years in ways that could allow all 2000 Measure A projects to be delivered, including those originally included as part of the Completion Program.   With that in mind, we are proposing that the VTA Board of Directors review and approve the 2000 Measure A Revenues and Expenditure Plan on an annual basis.

A summary of the recommended VTA Scenario is as follows:

Initial Program Elements:

• A new 30-year, quarter-cent, local sales tax.

• Completes BART to Silicon Valley no later than 2018.  While 2018 would be the latest that this project would be built under this scenario, future changes in revenues, such as transit-oriented development, and reductions in expenditures may allow this project to be completed sooner than 2018.

• Phases in BART to Silicon Valley revenue service and the purchase of BART vehicles in order to improve cash flow and funding requirements.   This phased service would start with 15-minute peak headways from 2018 to 2030 at a 16% savings to the net operating subsidy.  This operating plan is preliminary and will require a review by the BART Board of Directors, as well as adjustments for new ridership forecasts.

• Provides for an initial car order of 119 BART vehicles, with a second procurement of 47 vehicles by 2030 when six-minute peak headways would begin.

• Includes $913 million ($YOE or $450 million in $2005) in additional costs for BART to Silicon Valley for vehicles and station parking impacts associated with the new ridership forecasts for year 2030 that were recently submitted to FTA, as well as for inflation.

• Provides $2.5 billion in BART to Silicon Valley operating subsidy through 2037.

• Completes Capitol Expressway Light Rail to Eastridge by 2019.

• Adds $717 million for a new program of local streets and roads, county expressways, and bicycle and pedestrian improvements over 30 years.

• Completes Dumbarton Rail by 2011.

• Completes an initial phase of Caltrain Improvements/Electrification from Tamien to San Francisco by 2018.   It should be noted that if Caltrain Electrification is determined not to be feasible and cannot move forward for any reason, then these funds would be used for other service improvements within the Caltrain Corridor.

• Reflects a 10% reduction in Caltrain funding pursuant to the methodology used in Run 6 (SVLG Poll Scenario).  Specially, referencing Attachment 1, this reduction was calculated using the following four steps:  (1) adding together Line Item #16 (Caltrain Service Upgrades), Line Item #17 (Caltrain South County Improvements) and Line #18a (Caltrain Improvements/Electrification);  (2) imposing the 10% reduction on the resulting total;  (3) restoring the original amount of funding for Line Item #16 (Caltrain Service Upgrades) and Line Item #17 (Caltrain South County Improvements; and  (4) allocating the remaining amount to Line Item #18a (Caltrain Improvements/Electrification).  The funds resulting from the 10% reduction were redistributed to other Initial Program projects.

• For Line Item #16 (Caltrain Service Upgrades) and Line Item #17 (Caltrain South County Improvements), examples of the types of project that could be funded include service level improvements; track work, such as double-tracking; station improvements; and park & ride lot capacity enhancements.  Following Board of Directors adoption of the 2000 Measure A Transit Program, we would initiate a formal process to identify a specific program of projects for these two line items.  This program of projects would then be brought to the Board for adoption.  The intent would be to focus on those improvements that would result in increased ridership on Caltrain.

• Continues project development work on the Santa Clara/Alum Rock Rapid Transit Corridor.

• Completes a Bus Rapid Transit Project in Sunnyvale/Cupertino by 2021.

• Implements Phase I of the Norman Y. Mineta San Jose International Airport People Mover Project, which would consist of a special premium non-stop service from the Santa Clara BART Station to the airport terminals using unique station elements to differentiate from VTA’s regular service.  Estimated operating cost of Phase I is $94 million from 2018 to 2036.

• Includes a 100% federal funding assumption for the Zero Emission Bus Program.

• Provides for a gradual VTA service increase of 12.4% by 2015, followed by an increase to 24% in 2020 for an estimated cost of $731 million.

• Includes funding for senior/disabled transit service programs from 2008 to 2036 at an estimated cost of $98 million.

• Maintains VTA’s operating reserves at 15%.

• Estimates total net bond proceeds required for the Initial Program at $ 4.1 billion.

• Provides for a low, but adequate Initial Program ending balance of   $387 million.

• Estimates an operating deficit of $150 million in 2038 resulting from the original 2000 Measure A sales tax expiring in 2036, and the new 30-year, quarter-cent sales tax expiring in 2037.   This scenario will require a renewal of a local sales tax during the 2036-2038 timeframe.

Completion Program Elements:

• Mineta San Jose International Airport People Mover Phase 2.  If funding for a fixed guideway technology is identified, then it could potentially be brought on line by 2019.

• Capitol Expressway Light Rail Extension to Nieman.

• Santa Clara/Alum Rock Rapid Transit Corridor.  At this time, a preferred transit mode alternative has not been determined for this corridor.  Therefore, the cost of this project currently is unknown, and could range from $140 million to $809 million, depending on the alternative eventually selected.  VTA has embarked on an outreach process with the affected communities, and is moving forward with the environmental process, which will result in the adoption of a preferred alternative.  Once a preferred alternative has been adopted for the corridor, the Board of Directors could direct that the project be moved into the Initial Program.

• Caltrain Improvements/Electrification Phase II: Tamien to Gilroy.  As noted previously, if Caltrain Electrification is determined not to be feasible and cannot move forward for any reason, then these funds would be used for other service improvements within the Caltrain Corridor.  Also, this line item was not used in determining the 10% reduction to Caltrain funding since it is already part of the Completion Program.

The recommended VTA Scenario for the Measure A Transit Program is shown in Table 1.   A more detailed analysis of revenues and expenditures for the 2000 Measure A Transit Program is included in Attachment 1.

Table 1.

Recommended VTA Scenario for 2000 Measure A Transit Program

VTA’s operating budget in FY 2038 is shown in Table 2.

Table 2.

(Year of Expenditure $ x 1,000)

ALTERNATIVES:

The Board of Directors can modify the VTA Scenario or choose to take no action on this recommendation.

FISCAL IMPACT:

The recommended VTA Scenario maintains operating reserves at the Board-adopted policy of 15%.  This scenario has a positive ending balance of $387 million subject to a new, quarter-cent, local sales tax being passed in November 2006.  If a new sales tax is not placed on the November 2006 ballot, or if it were to fail to pass by a supermajority of voters in Santa Clara County, then it would be necessary to prepare a revised 2000 Measure A Revenue and Expenditure Plan.

ATTACHMENT 1:   Summary Recommended VTA Scenario

ATTACHMENT 2:   Revenue Sources For 2000 Measure A Program

ATTACHMENT 3:   Summary Data

ATTACHMENT 4:   Detailed 2000 Measure A and Operating Budget Spreadsheets

CONTACT BOARD SECRETARY'S OFFICE FOR ATTACHMENTS

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