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Board of Directors Meeting

April 18, 2002

Board of Directors Special Workshop Meeting
City Council Chambers
City of San Jose
801 North First Street
San Jose, California

Summary Minutes

1. CALLED TO ORDER at 11:05 a.m.

ROLL CALL: Members Present: Alvarado, Chavez, Cortese, Gage, Gonzales, Lawson, McLemore (Ex-Officio), Mossar, Pirzynski, Springer, Valerio, Williams, Yeager

Members Absent: Beall (Ex-Officio), Dando, Kennedy, La Poll, McHugh, Nadler

2. ORDERS OF THE DAY

Added Agenda Item #6.X., Authorize Santa Clara Valley Transportation Authority (VTA) staff to work with the Santa Clara County Cities Association, the Santa Clara County Board of Supervisors and the Silicon Valley Manufacturing Group to seek the introduction of an appropriate legislative vehicle specifying that any revenues borrowed from any transportation fund or account to help balance the state budget be repaid according to a specific timeline.

Accepted Orders of the Day.

3. Received and filed updates concerning information requested at the
March 1, 2002 Board of Directors’ Workshop Meeting.

A. Sales Tax Performance Bands
B. VTA’s Outstanding Debt Obligations
C. FAQ’s relating to Fare Increases
D. Ridership Trends

4. Discussed the Proposed FY 2003 Operating and Capital Budgets.

Staff provided a brief overview of the Proposed FY 2003 Operating and Capital Budgets. Staff noted some disturbing signs in the economy last July 2001 regarding the Capital Budget, which resulted in the identification of 158 Capital Projects to be reduced, cut or deferred resulting in savings of $70 million. Staff noted a general hiring freeze and a plan to reduce departmental operating budgets by 15 percent, service reductions and fare increase proposals that would help VTA be able to get through the current fiscal year. Staff noted a series of strategies to keep the fare increase and service reductions to a minimum for the time being. Staff noted that with all of the one-time strategies and virtually exhausting all of VTA’s budgetary reserves and running deficits of $5 million per month VTA will “hit the wall” by year-end or shortly after. Staff proposed holding back a grant to purchase buses the $9.7 million in funds will be reprogrammed to preventative maintenance to convert capital grants into operating assistance. Staff reviewed committed capital grants and proposed applying the $20 million in funds from the Cerone reconstruction project into preventative funds. Staff noted that the deficit, through the one-time activities, has been projected to be reduced to $31.7 million when it would have been in excess of $87 million. Staff noted that the service reduction package will be implemented in July 2002 and noted other cost reductions need to be identified to compensate further impacts. Staff recommended that the American Disabilities Act (ADA) Paratransit Service budget be frozen at the $32.5 million funding level in the fiscal year. Staff commented on the ADA Paratransit Service Program’s cost drivers, current delivery and where reductions can be achieved and noted that the recommended changes will be forwarded to the Board of Directors for consideration in the Fall. Staff recommended a percent reduction in VTA’s member agency contribution to Caltrain or assumed VTA’s member agency contribution would remain flat. Staff noted that Caltrain originally asked for $7.5 million for the advancement of Caltrain’s electrification; however, staff recommended a 1/3 match of $2.5 million. Staff proposed the current line of funding of $5.1 million for the Altamont Commuter Express, which includes the cost of three trains and, shuttle service. Staff noted that with the operating budget VTA can get through this year and probably next year; however, VTA has to find strategies to bring expenditures down or revenues up. Staff noted that the structural deficit is roughly $85 million a year and noted that VTA was able to reduce it to $50 million through preventative maintenance by converting capital grants to operating assistance. Staff noted that VTA will need to replace its assets. Staff noted that the Downtown East Valley Project will continue forward and noted that the money is being funded through the 1996 Measure B Swap Fund.

Inquired on the actions necessary for converting the capital grant into operating assistance. Staff responded that two options are available: 1) VTA can conduct all of the hearings and amend the Regional Transportation Improvement Program (RTIP) or 2) allow the grant to go through and when the Metropolitan Transportation Commission (MTC) amends the RTIP in 2003 then VTA will convert the grant and other grant funds in a timely fashion.

Inquired if there was a way to go back and replenish the funds. Staff responded that there was no ongoing obligation to replenish the funds.

Staff noted that the $9.7 million pulled back was intended funding for
58 buses, which included 33 replacement buses and 25 expansion buses; therefore, ending up with a bus fleet of 542. VTA will need to get back to its plan to get to a 600-bus expansion.

Gladwyn d’Souza, VTA Riders Union, addressed the Board of Directors and expressed concern regarding the operating revenue and noted other alternate proposals for VTA. Mr. d’Souza noted that VTA should consider the users of the system and added that the proposals discriminate against the low income.

Michael Wilhelmi, Interested Citizen, expressed concern regarding the BART Extension Project and requested that the Board of Directors cancel the BART Extension Project.

Staff noted that a comprehensive document outlining the budget will be distributed at the next Board of Directors’ Workshop Meeting scheduled for Thursday, May 16, 2002.

Inquired about VTA’s Policy regarding the distribution of free passes to community groups. Inquired about VTA’s Advertising Policy. Requested pie chart that has been previously used by staff that shows income streams. Inquired on how VTA diversifies its funding base.

Inquired on the ECO Pass Program. Staff responded that VTA continues to sign additional customers to ECO Pass Program and have expanded to a residential ECO Pass Program. Staff noted that VTA has more than 100,000 employee customers signed up in the ECO Pass Program. Staff noted that the ECO Pass Program is part of the proposed fare increase plan to increase the cost of ECO Pass Program along with all the other fare structures. Staff noted ridership is down but that VTA is continuing with efforts to get new ridership and to increase ridership on the system. Staff noted that ridership is down 25 percent from last February.

Inquired on alternate solutions to preserve employee positions, such as, reduction in work hours or unpaid time off. Staff responded that staff would explore the issues and bring back the information to the Board Members. Staff noted that it is a negotiable item and the bulk of any proposal does effect all the labor unions. Asked for further review and discussion regarding the alternate solutions. Staff noted further discussion with labor leadership regarding trying to get the people who are laid off back to work.

Noted that a number of speakers, at the last Board of Directors’ Regular Meeting, had expressed an interest in the labor unions working with staff to address lay-off solutions. Queried if VTA is planning to conduct workshop sessions with labor leadership to discuss labor issues. Staff noted meeting with labor leadership on a regular basis regarding lay-off solutions. Requested that the questions and responses brought up in the labor leadership meetings with VTA staff be forwarded to Board Members as reference to assist in their decision-making.

5. Received a report regarding Fiscal Year 2003 Transit Service Reduction Plan.

Staff provided a brief overview of the Fiscal Year 2003 Transit Service Reduction Plan. Staff noted that the Transit Service Reduction Plan is being brought this year along with the development of the budget plan. Staff noted that the level of ridership was not at the expected levels; therefore, froze the service that was projected to increase this year. Staff noted a 3.5 percent service modification last year that was based upon staffing shortage, but planned to restore that service depending on the overall impact of the economy. Staff recommended a 5 percent reduction in the overall service, 4.4 percent reduction in bus service and 11.7 percent reduction in rail service. Staff noted a series of public hearings regarding the proposed service reduction plan and noted the input and comments from the community. Staff noted the original proposed service reduction plan was modified and additional comments from the Policy Advisory Committee (PAC) were included in the proposal. Staff introduced staff to provide a brief overview on the Transit Service Reduction Plan for the Fiscal Year 2003.

Inquired on the process of how the routes are examined. Inquired if the routes are examined on an annual basis and queried if the routes could be examined on a quarterly basis to directly relate to the job loses.

Staff noted that a broad review of the overall service plan is conducted once a year and noted that as the service plan is being developed service improvements are staged throughout the year.

Staff responded that VTA conducts an annual cycle and develops an in-depth study of every route. Staff noted that 2-3 percent of the service is eliminated but VTA is looking at 5 percent reduction and holding service at this level because of the budget situation. Staff noted nine public meetings and two California Environmental Quality Act (CEQA) public hearings were held to obtain input and comment on the proposed service reduction plan. Staff noted the types of changes proposed: 1) Discontinued Service – lines that are recommended for total elimination due to very low, substandard ridership, and would have been changed through VTA’s normal service review process; 2) Service Frequency Changes – where the headway or interval between buses and light rail vehicles is increased; 3) Reduced Service – the elimination of a selected portion of service on a line, such as weekday peak, midday or weekend service; 4) Span of Service Changes – where the start and/or end times of service are modified; 5) Individual Trip Changes – primarily single trips that are eliminated due to low ridership, and would have been eliminated through VTA’s normal service review process and 6) Route Changes – route modifications to eliminate deviations in lines or shorten lines. Staff noted the concerns brought up at PAC by the City of Santa Clara representative regarding the proposed changes on Line 22. Staff noted that VTA is proposing to modify and streamline Line 22 to operate entirely on El Camino rather than making a deviation to Franklin Square. Staff noted that VTA feels that the modification can be made without a causing a substantial impact on the senior community in the area. Staff noted other VTA buses will still service Franklin Square. Staff noted the concerns expressed by the City of Santa Clara regarding the proposed discontinuation of Lines 41, 43 and 345; however, these lines have low ridership.

Addressed the issue of Line 22 in Santa Clara and noted that Santa Clara City Council voted unanimously to not drop Line 22 service to Franklin Mall. Noted that VTA staff indicated a savings of $250,000 with this service cut, but city staff has determined that the service cut would save only $20,000 to $25,000.

Noted concern regarding the private shuttles that service some of the companies in the area and queried what assurance does VTA have to ensure that the service does not go away. Staff responded that the shuttles belong to Caltrain and are sponsored by the Joint Powers Board (JPB) since VTA is a member of the JPB, VTA has a say in the operation. Requested staff contact the JPB to ensure that the shuttles will not be discontinued and bring assurance back to the Board of Directors.

Expressed concern regarding the long-term implications of service reductions. Noted that the issue of connectivity and service is important in the long run. Requested additional information regarding the service reduction decisions.

Queried on the criteria used to determine service modification or reduction in a line or route. Requested that the criteria used to identify service modifications or reductions be explained to the public.

Expressed appreciation to staff regarding outreach efforts to the community. Noted that VTA has to look at what is in the best interest of the system. Requested information on the revenues of bus and light rail service. Queried if VTA has considered using bus service where light rail service is low. Queried on the feedback from the Congestion Management Program member agency cities regarding the increase in member agency fees. Staff responded that light rail is down by 15 percent overall and bus service is down by 8 percent and 11 percent reduction in light rail service. Staff noted that VTA has to modify the service based on the demand for that particular service.

Agreed that VTA must do what is best for the overall system. Queried if smaller vehicles should be utilized or contract out areas with lower ridership. Noted the opportunity to work with staff regarding maximizing ridership on the bus lines.

Noted concern regarding what the Board of Directors approve and queried if VTA has considered shuttles in areas where there is low ridership. Queried if VTA will begin to explore alternatives in their rolling stock.

Staff responded that the assessment fee for the Congestion Management Program did not receive any adverse comments from the member agencies.

6. Received a report regarding Proposed Fare Increases.

Staff noted that nine public meetings were held regarding the Proposed Service Reductions and Proposed Fare Increases to gather input and comment from the community. Staff noted a total of 208 comments and questions obtained from the public meetings. Staff noted 82 responses against the fare increase, 32 in favor of the fare increase, 18 inquires relating to the day pass token, 14 inquires relating to the ECO Pass Program, 5 responses offered alternatives regarding cost reductions and 31 general inquires relating to VTA not related to service reduction or fare increase. Staff noted that the fare increase and service reduction is a balancing strategy that is necessary at this time. Staff recommended that the fare increase go into effect on July 1, 2002, and continue to examine the overall fare structure. Staff noted that VTA has begun a study on the cost of collections to see if VTA can modify the fare collection process to result in a higher net income and lower cost of collection. Staff noted that this study is part of the Chairperson Gonzales’ Business Review Team Analysis. Staff noted the impact will increase fares by 15 percent and VTA will lose about 2.1 million riders.

Queried on the history with previous fare increases and the impacts on ridership and noted concern to address the issues.

Noted concern of the community regarding fare increases. Requested staff to develop a plan to get VTA where they have to be to operate this business successfully.

Queried what can the cities and county do to help promote ridership. Noted the emphasis on public transportation and shift to active role.

Noted concern regarding the low-income riders who will have trouble with the fare increase and queried if VTA is maximizing potential revenues. Noted the bargain and suggested that groups join together to offer ECO Passes to their membership. Expressed concern on the fare box recovery and noted that VTA cannot depend on sales tax. Noted that VTA cannot continue to subsidize off the sales tax and noted that it is time to organize and get the state system structure fixed.

6.X. Authorized Santa Clara Valley Transportation Authority (VTA) staff to work with the Santa Clara County Cities Association, the Santa Clara County Board of Supervisors and the Silicon Valley Manufacturing Group to seek the introduction of an appropriate legislative vehicle specifying that any revenues borrowed from any transportation fund or account to help balance the state budget be repaid according to a specific timeline.

7. PUBLIC PRESENTATIONS

There were no public presentations.

8. CLOSED SESSION at 12:35 p.m.

Conference with Labor Negotiators
[Government Code Section 54957.6]

Employee Organizations:
Amalgamated Transit Union (ATU)
County Employees Management Association (CEMA)
Service Employees International Union (SEIU) Local 715
Transportation Authority Engineers and Architects (TAEA)

VTA Designated Representatives:
Scott D. Buhrer, Chief Financial Officer
Kaye L. Evleth, Chief Administrative Officer
Frank T. Martin, Chief Operating Officer

RECONVENED TO OPEN SESSION at 12:59 p.m.

9. CLOSED SESSION REPORT

Conference with Labor Negotiators
[Government Code Section 54957.6]

Employee Organizations:
Amalgamated Transit Union (ATU)
County Employees Management Association (CEMA)
Service Employees International Union (SEIU) Local 715
Transportation Authority Engineers and Architects (TAEA)

VTA Designated Representatives:
Scott D. Buhrer, Chief Financial Officer
Kaye L. Evleth, Chief Administrative Officer
Frank T. Martin, Chief Operating Officer

There was no reportable action taken during Closed Session.

10. ANNOUNCEMENTS

There were no announcements.

11. ADJOURNED at 12:59 p.m.