FINANCIAL PLAN for FRA Grant Applications 2010 · CCJPA Financial Plan (2010) Page 2 1 BACKGROUND...

FINANCIAL PLAN for FRA Grant Applications

Jim Allison

[Type

2010

Capitol Corridor Joint Powers Authority

August 5, 2010

FINANCIAL PLAN FOR THE CAPITOL CORRIDOR

FY 2010 HSIPR Application

CCJPA Financial Plan (2010)

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CCJPA Financial Plan (2010) Page 1

CONTENTS 1 Background and Organization ............................................................................................................................. 2

2 Legal Authority .................................................................................................................................................... 2

3 Operational and Capital Funding: Documentation of Financial Health .............................................................. 3

3.1 Project Sponsor ........................................................................................................................................... 3

3.1.1 Operating Funds ................................................................................................................................. 3

3.1.2 Capital Funding ................................................................................................................................... 4

3.2 Key Partners ................................................................................................................................................ 7

4 Capital Financial Planning Components .............................................................................................................. 8

4.1 Providing Matching Funds........................................................................................................................... 8

4.1.1 UPRR Funding ..................................................................................................................................... 8

4.1.2 State Funding ..................................................................................................................................... 9

4.2 Overruns ..................................................................................................................................................... 9

4.3 Cost Estimates ............................................................................................................................................. 9

4.4 Implementation Plan................................................................................................................................. 10

4.5 Financing and Revenues ............................................................................................................................ 10

4.6 Cash Flow .................................................................................................................................................. 10

4.7 Risk Identification and Mitigation Factors ................................................................................................ 10

5 Operating Financial Planning Requirements ..................................................................................................... 10

6 Operational Planning at the State Level ........................................................................................................... 12

7 Capital Asset Renewal Charges ......................................................................................................................... 14

7.1 Rolling Stock .............................................................................................................................................. 14

7.2 Stations - Capital Asset Charges ................................................................................................................ 16

7.3 Rail Infrastructure - Capital Asset Charges ................................................................................................ 16

Appendix A ................................................................................................................................................................... ii

Appendix B .................................................................................................................................................................... v

Table 3-1: Projections of PTA funding to support California IPR Operations .............................................................. 4Table 4-1: Summary of UPRR Financials from 2009 Fact Book .................................................................................... 9Table 5-1: Capitol Corridor Operating and Financial Performance for SDP1+SDP2 Projected through 2021 ............. 12Table 6-1: Intercity Rail Ridership and Service levels from California State rail Plan ................................................ 13Table 6-2: State Rail Plan – Operating Financial Plan ................................................................................................ 14Table 7-1: Intercity Rail Rolling Stock Overhaul Program ........................................................................................... 16


1 BACKGROUND AND ORGANIZATION This Financial Plan is a formal integrated document that describes the Capitol Corridor Joint Powers Authority’s (CCJPA) approach toward managing the financial resources to implement the first two phases of the Capitol Corridor’s Auburn to Sacramento and Oakland to San Jose Improvement Program. Greater details of the overall program and the implementation of the first two phases are included in the Service Development Plan (SDP) submitted concurrently with this document along with the application(s) for those phases. Those first two phases have been termed “SDP1” and “SDP2”. Per the direction in the NOFA (Section 4.2) for the FY 2010 HSIPR program, the CCJPA is submitting two applications: SDP1 and SDP1+SDP2.

The SDP1 application involves several projects designed to increase track capacity between Rocklin and Reno, which will allow an increase of one additional round trip Capitol Corridor train (for a total of two round trips) between Auburn and Sacramento. An added train to Auburn will allow the CCJPA to optimize the service plan for the entire service. As part of this service optimization, the CCJPA will eliminate one weekday round trip (an early morning eastbound train and late evening eastbound train) in the core Sacramento to Oakland territory. The CCJPA expects these changes will benefit the service by increasing system wide ridership by 3 percent and decreasing the total operating cost/subsidy by 2percent. SDP2 involves implementing two key projects from a larger list of improvements between Oakland and San Jose, which will prepare the Capitol Corridor for future expansion. The complete expansion project will allow up to eleven (from the present seven daily round trips) round trips between Oakland and San Jose..

Current funding constraints, the position of the State of California with respect to sending in a package of reasonable funding requests, as well as the NOFA guidance (Section 4.2) advise a more measured approach to achieving corridor objectives. Taking these factors into consideration, the CCJPA, working with its partners Union Pacific Railroad (UPRR) and Amtrak, has identified two initial projects as the first phase of improvements between Oakland and San Jose. These projects, include infrastructure work in the Newark-Albrae area and at the Fremont Station platform, and are aimed to reduce delay minutes in the interim. In the long term, as other applications are made in future years (e.g., SDP3, SDP4, etc.), the incremental addition of projects will result in a phased increase to nine round trips and eventually eleven round trips.

The extent of the overall Oakland to San Jose program and the Auburn to Sacramento program has been described in the SDP with a focus on SDP1 and SDP2. The CCJPA will update the SDP as various phases are applied for in future Fiscal Years.

As outlined in the NOFA, this Financial Plan for CCJPA’s SDP addresses two major areas of the projects financing:

• The financing of the development and implementation of the capital projects identified as necessary to support the Service Development (”capital financing”); and

• The ongoing financing of the operations of the service itself, including provisions for financing any ongoing operating deficits (”operating financing”).

NOFA guidance for the Financial Plan goes on to indicate that two elements common to both capital and operating financing are required: legal and necessary authority to accept and spend federal and non-federal funds for the project and documentation of the recent and forecasted financial condition and health of the project sponsor and other key partners that are anticipated to provide funding for the project.

2 LEGAL AUTHORITY


Pursuant to the Passenger Rail Investment and Improvement Act of 2008 (PRIIA), various entities may apply for HSIPR funds. Under PRIIA, applicants may be states or group of states or “a public agency established by one or more states having responsibility for providing intercity passenger rail service” (such as the CCJPA. To confirm its eligibility, the CCJPA made formal inquiry to the FRA and the FRA formally responded that the CCJPA “qualifies as an eligible applicant according to the definition in PRIIA and is therefore eligible to apply for HSIPR funding.” This letter is attached to this Financial Plan as Appendix A. For purposes of the FY 2010 HSIPR applications, either the CCJPA directly can apply for these HSIPR funds or Caltrans Rail Division will apply as the primary applicant on behalf of CCJPA as either entity is considered by the PRIIA to be a legal applicant having the legal authority to apply for and administer HSIPR grant awards.

3 OPERATIONAL AND CAPITAL FUNDING: DOCUMENTATION OF FINANCIAL

HEALTH CCJPA receives capital and operations funding from the same source of funds that Caltrans Rail Division receives. Should the CCJPA be the lead applicant, the CCJPA would then become the project sponsor for this application...

With the exception of capital asset renewal charges for vehicles, which are Caltrans Rail Division’s responsibility, CCJPA prepared the operational and sustainability portions of the spreadsheets associated with the FY 2010 HSIPR application for all aspects of the Capitol Corridor IPR service. Caltrans Rail Division is the responsible agency as owner of the current IPR fleet in Northern California. Caltrans owns, renovates, and upgrades the rolling stock, whereas CCJPA does not have that responsibility.

3.1 PROJECT SPONSOR The Caltrans Rail Division is responsible to update the California State Rail Plan (Plan) every two years. The CCJPA provides the details and data for the Capitol Corridor service as part of Caltrans’ development of the Plan. Within the March 2008 - California State Rail Plan 2007-08 to 2017-18 is an extensive discussion of funding for the State Intercity Rail program (IPR) however with recently signed legislation in March 2010, portions of that document must be updated for current relevance, especially with respect to the Public Transportation Account (PTA). Regardless, State Rail Plan serves as a basis for much of the available capital and operating financial resources discussion that follows. Funding for IPR operations is solely financed through state PTA funds, while capital financing is provided primarily through state sources (PTAS or general obligation bond funds), but also includes local, federal, Amtrak and railroad funding sources.

3.1.1 OPERATING FUNDS The PTA account had been created by the Transportation Development Act of 1971. The purpose of the PTA is to promote the development of a public transportation infrastructure by providing a source of funds to local and state transportation agencies primarily for transit (including bus and rail) purposes. The PTA is the exclusive California source of IPR operating funds and a potential source of IPR capital funds. Proposition 116 designated the PTA as a trust fund to be used “only for transportation planning and mass transportation purposes” (California Public Utilities Code Section 99310.5).

3.1.1.1 PUBLIC TRANSPORTATION ACCOUNT FUNDING SOURCES Previously, there were five main statutory sources of funds for the PTA: state sales tax on diesel fuel, retail sales tax on gasoline from the Transportation Investment Fund (TIF), gasoline spillover (when available), sales tax on nine cents of the gas (excise) tax, and State Highway Account (SHA) transfer of non-Article XIX revenues. These revenues provided funding for California’s IPR Program. Due to recent State budget woes and actions taken in the


past where transportation funds had been used in lieu of general funds, in March 2010, as a part of a special budget session called by the Governor, the Legislature passed ABx8 6 and ABx8 9. These bills contained provisions for a swap of state sales taxes on gasoline for a gasoline excise tax. The bills were signed into law by the Governor. Effective July 1, 2010, this new law:

1. Repealed the state sales tax on gasoline 2. Increased the excise tax on gasoline by 17.3 cents and added an annual index that is intended to ensure

the new excise tax keeps pace with the revenues expected from the sales tax on gas; 3. Increased the rate of sales tax on diesel (previously 4.75 percent) by 1.75 percent and allocates 75

percent to local transit agencies and 25 percent to state transit programs. The excise tax on diesel was reduced from 18 cents to 13.6 cents. Sales tax revenues from diesel must go to transit funding.

Therefore, based on this legislation effective July 1, 2010, the PTA derives its revenues solely from sales tax of 6.50 percent on diesel fuel (prior 4.75 percent + supplement of 1.75 percent). These are now the operating funds for California’s IPR Program. A pending bond measure will be put before voters in November 2010, which will further protect and even enhance the dedicated funding available to support the State’s IPR program.

The PTA account provides all the operating and administrative support to the Caltrans Rail Division and CCJPA. Provided in Table 3-1 are the projected annual PTA revenues and corresponding program expenditures over a ten year time frame. The highlighted row illustrates that PTA revenue streams are sufficient to fund California IPR operations

TABLE 3-1: PROJECTIONS OF PTA FUNDING TO SUPPORT CALIFORNIA IPR OPERATIONS

3.1.2 CAPITAL FUNDING Capital funding sources (federal, state, and local) are varied as discussed below.

3.1.2.1 PROPOSITION 1A Proposition 1A (or the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century) is a law that was approved by California voters in the November 2008 state elections. This ballot proposition and bond measure allocated $9.95 billion in general obligation (GO) bond funds for the development of a high-speed train system


between San Francisco and Anaheim with extensions to San Diego and Sacramento. $9 billion of these GO bonds are identified for allocation to the California High-Speed Rail Authority as part of the state’s annual appropriation process.

The remaining $950 million is dedicated to connecting rail transit services in the state. $190 million is to be programmed and allocated annually by the California Transportation Commission (CTC) to the state’s IPR program, with $47.5 million available to each of the three IPR corridors (Capitol Corridor, Pacific Surfliner, and San Joaquin) with the remaining $47.5 million programmed on a competitive allocation between the three State’s IPR corridors. The CCJPA as well as the Caltrans Rail Division was required to present to the California Transportation Commission (CTC) the projects they would develop with both the non-competitive and competitive funding. The CCJPA proposed to utilize the non-competitive $47.5 million funding for projects in the Oakland to San Jose Track Improvement Program Phase 2 (SDP2, SDP3, etc.). This funding from the State is an important matching fund for the FY 2010 HSIPR (and beyond) grants programs. The CCJPA and Caltrans worked together on the competitive funding program and $15.8 million was allocated to the CCJPA for the future Sacramento to Roseville Third Main Track project. On May 10, 2010, CCJPA succeeded getting CTC approval for both of these requests (see Appendix 2). This approval also authorized the $47.5 million in recommended funding be allocated along with $2.328 million in FY 2011, $11.76 million in FY 2012, and $32.463 million in FY 2013. A 2 percent Caltrans administrative fee for billing and payments permits a total of $46.55 million for project delivery.

3.1.2.2 STATE HIGHWAY ACCOUNT The bulk of State Highway Account (SHA) funding supports the state’s highway system, but a portion of the account also supports rail projects in the STIP. The SHA receives its funds from state gasoline and diesel fuel taxes, state vehicle weight fees and reimbursements from the Federal Trust Fund for Federal-aid projects. Use of the state-generated portion of the SHA is governed by Article XIX of the State Constitution that allows the funds to be used for research, planning, construction, improvement, maintenance, and operation of public streets and highways. Additionally, the SHA can be used for the research, planning, construction, and improvement of public mass transit guide ways (which includes intercity, commuter and urban rail, and electric trolley bus services) and their fixed facilities. Pursuant to the California Constitution, the SHA cannot be used for mass transit vehicle acquisition or maintenance, or mass transit operating costs.

The 1989 Blueprint Legislation allowed intercity rail projects to compete for SHA funds in the STIP. Chapter 622, Statutes of 1997 (SB 45 - Kopp), reserved a minimum of nine percent of the Interregional portion of the STIP known as the Interregional Transportation Improvement Program (ITIP) for IPR and grade separation projects. SB 45 also allowed IPR projects to be programmed in the Regional Transportation Improvement Program (RTIP).

At present based on the legislation enacted in March 2010, the capacity for new programming (i.e., new projects) in the STIP is decreasing at a rate that may slow down delivery of prior programmed projects. This funding slow down in the STIP will in turn affect capital programming funds accumulating in the PTA as operating obligations for the state’s IPR program and other needs are top priority. This leaves limited funds in the PTA for capital funding. The timing of the development and institution of the FRA’s HSIPR capital grant program could not be more appropriate whereby the limited STIP PTA capital funds can be leveraged to gain federal funds through FRA HSIPR capital grants.

3.1.2.3 TRAFFIC CONGESTION RELIEF FUND Chapter 91, Statutes of 2000 (AB 2928 - Torlakson), established the Traffic Congestion Relief Program (TCRP), which is funded from the Traffic Congestion Relief Fund (TCRF). The TCRP specified a list of projects to be funded, including over $200 million for specific intercity rail capital projects. To date about $150 million in projects have been allocated; thus the constrained program includes $50 million in unallocated TCRP funds.


3.1.2.4 PROPOSITION 1B – HIGHWAY SAFETY, TRAFFIC REDUCTION, AIR QUALITY AND PORT SECURITY

BOND ACT OF 2006 Proposition 1B, or the Highway Safety, Traffic Reduction, Air Quality and Port Security Bond Act, was approved by the voters in November 2006 and authorized the issuance of $19.925 billion in the state general obligation bonds for specified transportation purposes, including transit and passenger rail improvements, highway-railroad grade separation and crossing improvement projects. Several sections of Proposition 1B directly impact the Intercity Rail Program. They include:

• The Public Transportation Modernization, Improvement and Service Enhancement Account – This is the only portion of the bonds which are specifically reserved for intercity rail projects providing $400 million for intercity rail improvements of which $125 is reserved for intercity rail equipment. The CCJPA received allocations of up to $13 million which has been used to complete track infrastructure projects in Benicia and Emeryville.

• Highway-Railroad Crossing Safety Account – Proposition 1B includes $250 million for high priority grade separation and railroad crossing safety improvements, to be funded pursuant to the process established in the Streets and Highways Code (S&HC) Section 2450. Whenever these projects are on intercity rail routes they benefit the intercity rail system. However, a dollar for dollar match of non-state funds is required for each project, and the limitation on maximum project cost in S&HC Section 2454(g) is not applicable to projects funded with these funds.

• Trade Corridor Improvement Program – Proposition 1B includes $2 billion for infrastructure improvements along federally designated “Trade Corridors of National Significance.” These projects have not been programmed; however, improvements made on intercity rail routes benefit the intercity rail program.

• In addition, Proposition 1B makes available about $2 billion in additional STIP funding. Under current law, intercity rail and grade separation projects are required to receive 2.25 percent of the entire STIP (or nine percent of the ITIP). Intercity rail and grade separations received an additional $74 million in the STIP Augmentation approved by the Commission in June 2007.

3.1.2.5 THE PASSENGER RAIL AND CLEAN AIR BOND ACT OF 1990 (PROPOSITION 108) The 1989 Blueprint Legislation authorized three $1 billion rail bond measures to be placed on the ballot in 1990, 1992, and 1994. In 1990, voters approved the first $1 billion rail bond measure, The Passenger Rail and Clean Air Bond Act of 1990, but did not approve the subsequent two bond measures in 1992 and 1994. To date, almost all bond proceeds have been used to fund new rail projects and improvements to existing systems including $225 million for intercity rail capital projects. This funding was instrumental in launching the State’s IPR program.

3.1.2.6 CLEAN AIR AND TRANSPORTATION IMPROVEMENT ACT OF 1990 (PROPOSITION 116) Proposition 116 provided a $1.99 billion one-time source of funding for rail and transit projects: $382 million for intercity rail capital projects, $1.37 billion for urban and commuter rail projects, and $235 million for other transit and transit-related projects. Most of these bond funds have been allocated.

3.1.2.7 TRIBAL COMPACT BONDS Chapter 91, Statutes of 2004 (AB 687- Nunez) ratified amendments to the Tribal-State Gaming compacts negotiated by the Governor with five tribes having gaming income. The bill authorized the issuance of bonds, secured by up to $1.5 billion in Indian gaming revenue, to be dedicated for transportation improvement purposes. Based on the statute, the PTA would receive $275 million, the SHA would receive $477 million, the TCRP would receive $453 million, and $192 million would go to local streets and roads. However, the 2005-06 Budget authorized $1 billion in tribal bond income to be used to pay most of a 2005-06 $1.2 billion General Fund loan


commitment to the TCRF. The remaining $200 million, plus interest, would be repaid from revenues resulting from future tribal gaming compacts if more compacts were negotiated. If tribal gaming revenues were not sufficient to cover any part of the $1.2 billion owed, the remainder would be repaid from the General Fund by July 1, 2021; however, pending litigation makes the timing of the bond sales and resulting revenue uncertain.

3.1.2.8 GENERAL FUND The General Fund can be used for rail projects if there is a specific appropriation in the budget. Since 1975-76, only the 1999-00 and 2000-01 Budgets provided General Fund money for intercity rail capital projects. The 1999-00 Budget included $17.5 million for new intercity rail rolling stock and the 2000-01 Budget also provided $30 million for this purpose as well as $20 million to the CCJPA for the construction of the Yolo Causeway Second Main Track Project, which was completed in 2003.

3.1.2.9 LOCAL FUNDS Although intercity rail passenger services are funded primarily by the state, local entities have invested a substantial amount of local funds in Capitol Corridor service, including funds to match state Proposition 1B funds to install a crossover on the Capitol Corridor route in the Benicia area of Solano County (between the Martinez and Suisun-Fairfield stations). These funds serve to enhance commuter rail service and to improve tracks, signals and stations used by intercity trains. Intercity rail stations are often owned by cities and funded with local revenue in addition to federal and state funds. Caltrans Rail Division and CCJPA will continue to work with local and regional entities that may wish to fund higher levels of service than state resources are able to provide.

3.1.2.10 FEDERAL FUNDS Federal transportation funds from various programs are used for intercity rail projects. The Federal Transit Administration (FTA) Section 5307 and 5309 capital programs have provided funding for station projects; however, federal flexible transportation funds, such as are provided through the Surface Transportation Program, are generally not available for IPR projects. The passage of PRIIA and subsequent American Reinvestment and Recovery Act (ARRA) funding of $8 billion for the HSIPR program has fundamentally changed the opportunities for federal funding support to be paired with the other funding sources presented here.

3.1.2.11 AMTRAK FUNDS On the capital side, Amtrak develops and funds some California intercity rail capital projects. The largest investment has been in maintenance facilities and rolling stock. The Taxpayer Relief Act of 1997 provided Amtrak over $2 billion in capital funds for its nationwide system.

3.1.2.12 RAILROAD FUNDS Railroads own the rights-of-way (ROW) on tracks used for intercity passenger routes. In some instances, the cost of track and signal improvement projects on these tracks is shared by the railroads and the state. For example, both the BNSF and UPRR recently completed several major track rehabilitation projects on the San Joaquin and Capitol Corridor routes.

3.2 KEY PARTNERS Either the CCJPA or the Caltrans Rail Division will apply for FRA FY 2010 HSIPR funding for the Capitol Corridor. Irrespective of the applicant, the CCJPA is the key agency responsible for project delivery and in turn has prepared the Financial Plan that will benefit the Capitol Corridor IPR service.

Documentation regarding CCJPA’s ability to account for financial records for capital funding can be found in the Project Management Plan (PMP) document submitted with this application. For operations, the CCJPA is staffed,


as outlined in the SDP, by San Francisco Bay Area Rapid Transit (BART) employees. Dedicated BART employees staff the CCJPA and ancillary supporting services are provided by BART staff who work part-time on CCJPA matters. CCJPA’s operations budget is overseen by full-time staff: the Transportation Officer and a Senior Administrative Analyst. The CCJPA staff are in turn supported by BART’s accounting and finance department. BART’s accounting staff maintain the operating accounts according to the FTA’s requirements. Their books also are maintained pursuant to the audit requirements of both the State of California and the Federal Department of Transportation.

The CCJPA will contract with UPRR to complete the track work with the exception of the SDP2 portion of the work where CCJPA will contract with Amtrak who is best positioned to complete the Fremont Platform extension. UPRR and CCJPA have established a solid working relationship for several years which have resulted in numerous ontime, within budget construction deployments. Nearly all the $100 million in capital improvements the CCJPA has completed using state (and some local funds) have been completed with UPRR as the construction lead.

4 CAPITAL FINANCIAL PLANNING COMPONENTS The NOFA guidelines ask that applicants certify they can provide matching funds, absorb overruns, and present the cost estimates, implementation plan, financing, revenues cash flow and how they will address risks or propose mitigations to those risks for their projects.

4.1 PROVIDING MATCHING FUNDS For the implementation of SDP1 or SDP1+SDP2, the CCJPA has identified two matching sources of funding. For the SDP1 application alone, the sources are as follows:

• Railroad funding: UPRR providing $10.3 million (with $22 million already spent but not considered by FRA to be valid matching funding)

For SDP1+SDP2, the sources are as follows:

• Railroad funding: UPRR providing $10.3 million (with $22 million already spent but not considered by FRA to be valid matching funding)

• State funding: Proposition 1A funds of $4.26 million of the $47.5 million as outlined in Appendix 2 by the CTC.

4.1.1 UPRR FUNDING in 2009 the UPRR spent $22 million of its funds to build phase one of the improvements along one of the two main tracks between Reno and Rocklin. The second phase of these improvements are focused on the remaining main track and are outlined in the SDP under SDP1 The completed project can provide the capacity for one additional round trip Capitol Corridor train to serve Auburn. Without the UPRR investments made already in 2009, the CCJPA would not be permitted to add the additional round trip to/from Auburn. However, policy direction from FRA has disallowed the $22 million to be considered matching funding. By breaking this linkage, the non-federal matching 20 percentage (minimum) for SDP1 or SDP1+SDP2 requires that CCJPA utilize state funds, which are more advantageously utilized with future HSIPR application submissions.

The UPRR is committed to spend $10.3 million as a match to the $51.3 million total cost for the SDP1 capital program as described in their funding support letter. The final agreements, which UPRR will have to sign if SDP1 or SDP1+SDP2 are awarded, will confirm its commitment. Union Pacific Corporation (NYSE:UNP) is one of America's leading transportation companies with the UPRR being its principal operating company. The UPRR, headquartered


in Omaha, Nebraska, is the largest railroad network in the United States. James R. Young is President, CEO and Chairman. UPRR’s route map covers most of the central and western United States west of Chicago and New Orleans to the Pacific Coast. As of December 31, 2008 UP operates on 32,012 miles of track, of which it owns outright 26,171 miles. Both numbers represent the highest amount of any railroad currently operating in the United States. It has achieved this size as a result of purchasing a large number of other railroads, notably the Missouri Pacific, Chicago and North Western, Western Pacific, Missouri-Kansas-Texas, and the Southern Pacific (including the Rio Grande). Currently, Union Pacific owns 26% of Ferromex while Grupo Mexico owns the remaining 74%. Table 4-1 demonstrates that UPRR has the resources to commit as outlined in the support letter as a match for SDP1 or SDP1+SDP2.

TABLE 4-1: SUMMARY OF UPRR FINANCIALS FROM 2009 FACT BOOK

4.1.2 STATE FUNDING The CCJPA will utilize $4.26 million (out of its state allocated $47.5 million) in Proposition 1A funds as a match of 20 percent for the SDP1+SDP2 application. These funds have been programmed by the CTC and are available in each year subject to enactment of the State Budget Act, which includes all general obligation funds for state-supported activities and programs.

4.2 OVERRUNS The CCJPA and UPRR have nearly a $100 million history of capital improvements that have been successful installed on time and within budget. The construction involved in the projects included in SDP1 and SDP2 are not complicated or involve work that UPRR engineering and labor forces are not already familiar with. As a result the CCJPA does not expect any overruns. In fact, with two recent state funded crossover projects, once funding was secured, project design was able to actually reduce costs and the cost savings is slated to be utilized for two other capital projects. If there were to be a cost overrun, the CCJPA has state available resources in Proposition 1A funding or has the ability to utilize CCJPA’s own Revenue Credits (ticketing revenues over and above the contracted Amtrak ticketing revenues are provided to CCJPA for reinvestment in the service).

4.3 COST ESTIMATES The cost estimates have been provided in the official spreadsheet required with the FY 2010 HSIPR submittals. The estimates came from UPRR sources and from CCJPA/Amtrak for the Fremont Platform Extension component of SDP2. In preparation for the official spreadsheet required, the CCJPA is also providing project by project cost estimates as a separate submittal. On these spreadsheets the timing, construction element and funding has been prepared by the CCJPA’s Engineering Officer and Manager of Planning who also consulted with the UPRR design engineers. Please see the file uploaded to Grant.Solutions under ‘other documents’ entitled SDP1 CCJPA


Working budget.cost.schedule.xlsbfor SDP1 and SDP1.2 CCJPA working Budget.Cost.Schedule.xlsb for SDP1+SDP2 as a reference to these projects.

4.4 IMPLEMENTATION PLAN The required and supplemental spreadsheet discussed above was utilized in demonstrating the implementation plan. To summarize, all construction is to be completed for SDP1 and SDP2 by no later than October 2012 presuming all funding agreements can be established in time for materials orders and crew scheduling to maintain the anticipated schedule. If SDP1+SDP2 are approved as a full application, the UPRR will have crews who can work on both aspects of the projects concurrently. The costs to complete in annual increments are included in both the required and supplemental spreadsheets.

4.5 FINANCING AND REVENUES The CCJPA is not requiring financing or capital revenue sources which would be required to implement the SDP1 or SDP2 set of projects. UPRR has set aside the capital within their budget ($10.3 million) to support the SDP1 project and outright capital fund sources from both the FRA and state are required for the remaining capital. The resulting Capitol Corridor train schedule with SDP1 will result in a 2 percent reduction in operating costs and a 3percent increase in ridership.

4.6 CASH FLOW The required and supplemental spreadsheet demonstrates that the cash flow requirements can be met. Please refer to those documents which present sufficient evidence that cash flow to implement SDP1 and SDP2 are sufficient so as to ensure project delivery within schedule and budget.

4.7 RISK IDENTIFICATION AND MITIGATION FACTORS CCJPA, working with UPRR on nearly $100 million in improvements over the last ten years, has never run into in a situation where cost overruns have jeopardized the project or funding has been unavailable. Risks to the project will be minimized or limited based on the CCJPA’s PMP. If any project were to incur significant cost overruns, the CCJPA has access to Proposition 1A, Proposition 1B and STIP funds which, when combined with the PMP, would be used to address the cost overruns.

5 OPERATING FINANCIAL PLANNING REQUIREMENTS While it may be true with new Intercity or High Speed Passenger Rail services, in the case of Capitol Corridor, there are not significant risks associated with the ongoing operating of the service after the construction of capital projects has been completed and the Service Development Program has been fully implemented. In fact, with either SDP1 or SDP1+SDP2, the operating financial picture will look better than it does at present. This is primarily due to a higher overall ridership and revenue profile with the implementation of SDP1/SDP1+SDP2, and a lower operating cost, which results in better “financials” than exist today.

The effect on operating budgets, expenses, etc., is not complicated with implementation of SDP1 or SDP1+SDP2. As outlined in the SDP, SDP2 only involves construction of capital projects which do not on their own result in operational service changes yet do result in reduction in delay minutes. Thus, the operational financial requirements are, in effect, the same for SDP1 and SDP1+SDP2. The benefits of implementing SDP2 have been discussed at length in the SDP and those benefits would only result in some change in the operating budget with a


combination of projects in a next phase (SDP3, SDP4, etc.) that allow for a change in service frequency. For all practical purposes, SDP1 sets the benchmark for the operational financial analysis herein.

The SDP contains great detail regarding the documentation of the methods, assumptions and outputs of the following: travel demand forecasts, projected revenue and operating expenses, including maintenance of way, maintenance of equipment, transportation (train movement), passenger traffic and services (marketing, ticketing, station, and onboard services), and general/administrative expenses. Amtrak was integral in developing these values and the ridership/revenue projections. There are essentially minimal changes to the maintenance of way, maintenance of equipment, passenger traffic and services, and general/administrative expenses from today to after implementation of SDP1. The projected changes to ridership, revenue, etc., are shown in Table 5-1 below.

Rather than repeat the lengthy presentation of all the assumptions used to develop cost and revenue estimates, including the sources of information and methodologies used, we are asking that the SDP submitted with this application be utilized to fulfill the requirement to present those assumptions. CCJPA believes that there has been sufficient supporting documentation of the ridership/revenue model as asked in for the SDP criteria in the NOFA that it would be repetitive to copy and paste the same information into this financial plan.


TABLE 5-1: CAPITOL CORRIDOR OPERATING AND FINANCIAL PERFORMANCE FOR SDP1+SDP2 PROJECTED THROUGH 2021

6 OPERATIONAL PLANNING AT THE STATE LEVEL As outlined in the SDP, the CCJPA is presenting the applications for FY 2010 HSIPR funding within a context of both the CCJPA’s Vision Plan and the 10-Year California State Rail Plan. Together these documents outline the future service objectives which are primarily oriented to increasing service frequency in a fiscally responsible manner. These applications submitted as SDP1 and SDP1+SDP2 are done so within the context of these overreaching planning documents. For the three state Intercity Passenger Rail services, the State Rail Plan is built upon the same models used for evaluating the SDP for Capitol Corridor service. The current State Rail Plan states:

OPERATING AND FINANCIAL PERFORMANCE

Existing Service

(SDP0)Performance/Financials 2011 2011 - incremental 2011 2016 2021

Riders 1,644,700 43,100 1,687,800 1,868,300 2,068,103 % Change 3% 11% 11%Pass-miles 103,030,000 2,699,941 105,729,941 117,037,119 129,553,530 Train-miles 1,201,305 (58,864) 1,142,441 1,142,441 1,142,441 % Change -5% 0% 0%

in millions Revenue Ticket Revenue $24.80 $0.60 $25.40 $31.80 $39.81Food and Beverage Revenue $1.70 $0.00 $1.70 $1.80 $1.91Total Revenue (2) $26.50 $0.60 $27.10 $33.60 $41.72% Change 2% 24% 24%

in millions

Expenses Host Railroad / MoW $2.50 ($0.10) $2.40 $2.90 $3.50

Sub - Transp $25.86 $0.10 $25.90 $31.30 $37.83 Operations Mgmt./Crew base/Transportation $7.33 ($0.10) $7.20 $8.70 $10.51 Yard Ops. Trans. Mgmt & Training $0.00 Fuel $4.20 ($0.10) $4.10 $4.90 $5.86 T&E Labor $10.99 $0.10 $11.10 $13.40 $16.18 OBS Labor $2.05 $0.20 $2.20 $2.70 $3.31 Commissary / Supplies $1.29 $0.00 $1.30 $1.60 $1.97

Station Costs $4.09 $0.10 $4.20 $5.10 $6.19

Mechanical $13.36 ($0.10) $13.30 $16.00 $19.25

Amtrak Maintenance of Way $0.00 $0.00 $0.00 $0.00 $0.00

Sub-Sales/marketing $1.29 $0.10 $1.40 $1.60 $1.83 Sales and Marketing $0.75 $0.10 $0.90 $1.00 $1.11 Commissions $0.54 $0.00 $0.50 $0.60 $0.72

Police, Environmental, and Safety $0.50 $0.00 $0.50 $0.60 $0.72

Sub - G&A $4.12 $0.00 $4.20 $5.00 $5.95 Passenger Inconvenience $0.00 Insurance $0.97 $0.00 $1.00 $1.20 $1.44 General Support $3.15 $0.00 $3.20 $3.80 $4.51

Sub-total Direct Operating Costs $51.72 $0.10 $51.90 $62.50 $75.27

Net (Rev. – Dir. Op. Costs) ($25.22) $0.50 ($24.80) ($28.90) ($33.56)% Change -2% 17% 16%

Cost Recovery (Rev./Dir. Costs) 51% n/a 52% 54% 55%

SDP1 (also SDP1+SDP2)


“The ridership and revenue estimates for the three existing routes were developed in conjunction with Amtrak and with the use of the Rail Ridership/Revenue Forecasting Model. The ridership levels are conservative, with growth primarily projected to be the result of general population increases and new frequencies.”

The growth in service frequencies, service extensions, and new services are considered against the following:

• Ridership demand based on actual train ridership, or in the case of extensions or new routes, based on bus ridership and overall travel demand in the corridor.

• Potential to improve cost-effectiveness of existing services, and positive cost-effectiveness of new routes. • Feasibility of increased service based on route capacity, equipment availability, and infrastructure quality. • Local support for the service.

The most significant growth for the three State IPR services does take place when service frequency is expanded (see Table 6-1). Although these growth projections may be askew because of insufficient capital funding for both track infrastructure projects and additional rolling stock to proceed at the original projected in the current State Rail Plan, the Plan does provide the basis for the capital investment.

TABLE 6-1: INTERCITY RAIL RIDERSHIP AND SERVICE LEVELS FROM CALIFORNIA STATE RAIL PLAN

As the State Rail Plan notes, it is important to note that implementation is subject to demonstrated ridership demand, approval from Amtrak and the relevant railroad(s), availability of operating and capital funding and equipment and completion of necessary capital projects.


TABLE 6-2: STATE RAIL PLAN – OPERATING FINANCIAL PLAN

Table 6-2 is also gleaned from the State Rail Plan and summarizes the ten-year operations financial plan. It presents: revenue, expense and farebox ratio for existing routes, and projected State costs for existing and new routes for the ten-year period from 2008-09 through 2017-18. These data were developed by the Department in conjunction with Amtrak based on the Department’s service levels shown in Table 6-1 and the ridership and revenue projection developed by the Rail Ridership/Revenue Forecasting Model. The figure also shows actual and projected costs for the Caltrans Division of Rail’s heavy equipment overhaul program (see Capital Asset Renewal Charges below), as well as actual data for 2004-05 – 2006-07 and budget data for 2007-08.

The ongoing operating support for the State IPR services is described above as relates to the PTA account, which supplies the operating funds. There are legally binding requirements to direct the PTA funds toward the support of the State’s Intercity Passenger Rail program and if a California bond measure passes in November 2010, it is estimated that the dedicated amount of funding for IPR will increase over time.

7 CAPITAL ASSET RENEWAL CHARGES In the three capital asset categories, CCJPA has no direct role in setting aside financial capacity for renewal charges. As discussed above, the CCJPA and Caltrans relationship and responsibilities have required that this Financial Plan answer some of the details which the dedicated FRA spreadsheet required for submittal could not conform. CCJPA does not have fiduciary responsibility for capital asset renewal charges rolling stock, stations and the rail infrastructure itself.

7.1 ROLLING STOCK Caltrans owns the rolling stock, which is leased to the CCJPA. CCJPA does not pay Caltrans Rail Division a fee for the rolling stock – these are costs the State of California pays. Caltrans Rail Division is responsible for ensuring the rolling stock overhaul program is addressed. Funding for the overhaul program varies by budget year based on the


specific overhauls planned for that particular budget year. The overhaul program has been funded through PTA funds appropriated each year by the Budget Act (see Table 7-1).

In addition to equipment procurement, the equipment program also includes warranty, rework, and modification of procured equipment; scheduled maintenance; heavy equipment overhaul; equipment modernization; inspection and safety monitoring; and repair of damaged equipment. In 2001-02, the Caltrans Rail Division started its heavy equipment overhaul program for its fleet of California Cars and locomotives. Different components of the equipment need to be overhauled on a cyclical basis. The overhaul cycle varies from two to eight years depending on the component being serviced. The principal overhaul is at eight years and is called the midlife overhaul. Thus, the overhaul program is ongoing, and in each year different cars and components receive this service.

In 2003-04, the Caltrans Rail Division contracted for the midlife (eight-year) overhaul of the original 66 California Cars. Design, engineering and the completion of the overhaul and testing of the four pilot (prototype) cars (cab, coach, foodservice and baggage) was completed in 2004-05, and overhauls of the remainder of the fleet will be completed in 2008. This overhaul cycle includes many mechanical components; heavy cleaning of vehicle interior including upholstery and carpets; rebuilding and new flooring in toilet rooms; new side door and end door operating systems; 110 volt convenience outlets at every seat; as well as other additions and improvements to the cars. The Caltrans Rail Division oversees and inspects the contractor’s overhaul work. In future years, the newer 22 cars (12 in the Northern California fleet and ten in the Southern California fleet) will need their midlife overhaul as will the remaining eight locomotives.

The Caltrans Rail Division also has an overhaul program for its 17 locomotives (15 GM F59 and two GE Dash-8) which includes improving locomotive fuel efficiency and emission reduction. The Environmental Protection Agency instituted emission requirements for diesel locomotives in 2001. Eleven locomotives purchased after January 1, 2001, must meet Tier 0 emission requirements. The next set of standards, called Tier 1, took effect on January 1, 2004. It requires passenger locomotives purchased after that date emit 25 percent less nitrogen oxides (NOx) and 33 percent less particulates than previously allowed. Tier 2 standards, which took effect January 1, 2005, required that passenger locomotives purchased after that date emit 35 percent less NOx and less than half the particulates than previously allowed.

In early 2004, the Caltrans Rail Division completed the midlife overhaul of the nine original F59PHI locomotives acquired in 1994-95, which met Tier 1 standards when purchased. This project improved both the reliability and appearance of the locomotives, with graphics that match the new F59PHIs. Also, the remote locomotive health monitoring system currently in place on the six new F59PHI locomotives was installed on the nine locomotives in 2003-04. The two GE locomotives will be overhauled in early 2008 at which time they will be brought up to Tier 0 standards. All 15 F59 locomotives will receive Tier 2 engine kits for the main engines at their next overhaul. Overhauls are scheduled began during the summer of 2008.


Intercity Rail Rolling Stock Overhaul Program State Fiscal Year Projected Overhaul Funding

Needs (in millions) 2005-06 $ 13.8 2006-07 $ 14.4 2007-08 $ 13.8 2008-09 $ 9.3 2009-10 $ 23.2 2010-11 $ 20.9 2011-12 $ 16.1 2012-13 $ 18.4 2013-14 $ 14.4 2014-15 $ 11.9 2015-16 $ 11.9 2016-17 $ 21.0 2017-18 $ 25.5

1. Financing and Revenues, showing each funding source as annual amounts available to support any operating deficit or capital replacement requirements;

2. Cash Flow, presenting on an annual basis cash inflows and outflows; and 3. Risk Identification and Mitigation Factors, showing how the project sponsor intends

to address major financial risks, such as cost overruns, revenue shortfalls, and unavailability of anticipated funding.

TABLE 7-1: INTERCITY RAIL ROLLING STOCK OVERHAUL PROGRAM

7.2 STATIONS - CAPITAL ASSET CHARGES The CCJPA does not own or have any direct responsibility for stations along the route. Platforms at the stations are maintained by Amtrak and the station facilities are owned and maintained/repaired by the local jurisdiction. There are no aspects of implementing SDP1/SDP2 which alter any existing arrangements with respect to stations and their capital asset charges. The operating agreement between CCJPA and Amtrak identifies within the fixed fee portion of the budget an expense that Amtrak requires for station platform maintenance. This Amtrak annual budget fee does not include major station infrastructure. The CCJPA will, on occasion, partner with a local jurisdiction that owns a station to secure capital funding to implement larger scale station improvements. In addition, the CCJPA and does retain a small budget each year within the operating budget provided from the state to assist in minor repairs.

7.3 RAIL INFRASTRUCTURE - CAPITAL ASSET CHARGES The rail infrastructure is maintained by the host railroads. Through its operating budget, the CCJPA reimburses Amtrak for the access fees that Amtrak pays the host railroads, which are intended to offset the incremental maintenance costs associated with the Capitol Corridor IPR trains. UPRR has also instituted a regular tie replacement maintenance program on the Capitol Corridor route. The most recent of these multi-year programs were completed in early 2010 and will not require a revisit for similar maintenance for an estimated five to eight years. Separately from the Amtrak incremental maintenance payments, the CCJPA pays for a regular tie tamping and surfacing gang through a capitalized maintenance program. This is not a regular capital asset charge but one CCJPA pays to ensure that slow orders are eliminated by maintaining the Class IV railroad to Class V standards.

CCJPA Financial Plan (2010) Page i

APPENDIX

U.S. Department Administrator 1200 New Jersey Avenue, SE

of Transportation Washington, DC 20590

Federal Railroad Administration

JUL I %VI)

David B. Kutrosky Managing Director Capitol Corridor Joint Powers Authority 300 Lakeside Drive, 14th Floor East Oakland, CA 94612

RECEIVED JUL 2 12010

CAPITOL CORRIDOR

Dear Mr. Kutrosky:

This letter is in response to a request by the Capital Corridor Joint Powers Authority ((CJPA), through its attorneys at the San Francisco Bay Area Rapid Transit (BART), for a Federal Railroad Administration (FRA) determination whether the CCJPA is an applicant eligible to apply for funding under the High-Speed Intercity Passenger Rail (HSIPR) Program. The Passenger Rail Investment and Improvement Act of 2008 (PRIIA) defines an applicant as a "State (including the District of Columbia), a group of States, an Interstate Compact, or a public agency established by one or more States and having responsibility for providing intercity passenger rail service." 49 U.S.C. § 24401(1). Because the CCJPA does not qualify as a "state," "group of states," or "interstate compact," CCJPA's eligibility turns on whether it is (1) a public agency established by one or more states, (2) with responsibility for providing, (3) a service that constitutes intercity passenger rail.

In order to determine eligibility, FRA asked the CCJPA to provide documentation demonstrating its legal authority to qualify as an eligible applicant. In response to this request, FRA received two letters, dated April 22, 2010 and May 7, 2010 as well as supplementary materials containing relevant statutes, interagency transfer agreements and

- -other documents supporting the CCJPA's eligibility,' For the following reasons, after reviewing the letters and supporting documents, FRA finds that the CCJPA qualifies as neligible applicant according to the definition provided in PRIIA and is therefore ligible to apply for HSIPR funding.

To address the first eligibility factor—whether the CCJPA is a public agency established by one or more states—CCJPA provided FRA with the California's Intercity Passenger Rail Act of 1996 (SB 457) which authorizes the Secretary of Business, Transportation and Housing (Secretary) to transfer the "administrative functions" to a joint powers board through an interagency agreement in order for the board to "assume all responsibility for

1 This request is fully consistent with FRA's HSIPR Interim Guidance which provides that an applicant affirmatively demonstrate that it "has or will have the legal, financial, and technical capacity to carry out its proposed project." (74 p.R. 29900 (June 23, 2009)) (Section 2.2).

CCJPA Financial Plan (2010) APPENDIX A Page ii

2

administering passenger rail service in the corridor." Cal. Gov't Code § 14070 et seq. After authorizing the Secretary to transfer responsibility for intercity passenger rail, SB 45 expressly creates the Capital Corridor Joint Powers Board subject to an agreement be een the public agencies comprising the CCJPA. As a result, because the CCJPA was ex ressly created by California statute, it complies with the first eligibility factor as a public agency established by one or more states.

In order to address the second factor —the CCJPA's responsibility for providing intercity passenger rail service—in addition to SB 457, the CCJPA provided the Joint Exercise of Powers Agreement (JP Agreement) which formally creates the CCJPA and the Interagency Transfer Agreement between CCJPA and the California Department of Transportation (Caltrans). These documents support FRA's finding that the CCJPA is responsible for providing intercity passenger rail service.

While SB 457 establishes the CCJPA, the JP Agreement formally creates the organizational structure and describes the responsibilities of the CCJPA and its constituent member agencies. The JP Agreement states the CCJPA's purpose is to "administer and manage the operation of the Capital Corridor Rail Service as part of the Ca_ifonna Passenger Rail System." Further, the JP Agreement also discusses the authority of the CCJPA which includes, "the ability to apply for and accept grants for financial aid pursuant to any applicable State or Federal statutes," "construct, manage, and maintain facilities and services," and to "contract for the services deemed necessary to meet the purposes of the Authority." Furthermore, the Interagency Transfer Agreement between Caltrans and the CCJPA, effective July 1, 1998, supports the CCJPA's authority to provide intercity passenger rail service. The purpose of the agreement was to "transfer the responsibility for administering the Service from the State to the [CCJPA]." Appendix K enumerates the CCJPA's responsibilities under the transfer agreement including, "manag[ing] and directing] the Capital Corridor Service, lead[ing] or provid[ing] support in all negotiations related to service, manag[ing] equipment assignments, develop[ing] operational plans, overseeing] and coordinat[ing] fare collection and develop[ing] policies, plans and programs for service." Therefore, the JEP Agreement describes the responsibilities of the CCJPA for providing intercity passenger rail service and the Interagency Transfer Agreement transfers those responsibilities from Caltrans to the CCJPA. 2

The last factor ig whether the CCJPA service qualifies as "intercity passenger rail service." PRIIA defines intercity rail passenger transportation as "rail passenger transportation, except commuter rail passenger transportation." 49 U.S.C. § 24102(4).

2 In addition, in order to implement the service transferred in the Interagency Transfer Agreement, the CCJPA has

contracted with Amtrak to operate the intercity passenger rail service along the corridor. The ability of CCJPA to contract with Amtrak for the provision of service is important because of a statutory provision stating that "any entity that succeeds the department as a sponsor of state-supported passenger rail services through an interagency transfer agreement is deemed an agency of the state for all purposes related to passenger rail services." Cal. Gov't Code § 14070.6. This further supports the FRA finding that the CCJPA is established by the state and responsible for providing intercity passenger rail service.

CCJPA Financial Plan (2010) APPENDIX A Page iii

3

Commuter rail is defined as "short-haul rail passenger transportation in metropolitan and suburban areas usually having reduced fare, multiple ride, and commuter tickets and morning and evening peak period operations." 49 U.S.C. § 2102(3). 3 After review, FRA believes that the CCJPA's service is "intercity" within the definition of PRIIA.

The CCJPA service is focused on small to mid-sized metro areas along the 170 mile corridor and does not cater to multiple stops within metro areas (Oakland is the exception) or service stops just between the suburbs and metro areas. In addition, after reviewing the CCJPA schedule it appears that the service does not specifically target morning and evening peak periods and is not designed to target commuter riders. Furthermore, while CCJPA has some multiple ride passes, it does not appear to be designed to attract commuters specifically but rather rail passengers in general consistent with Amtrak's general policy of incentivizing ridership. In sum, it appears that the CCJPA does not meet the definition of commuter rail passenger transportation and is therefore properly classified as an intercity passenger rail provider.

For the foregoing reasons, the CCJPA is eligible to apply for funding under the HSIPR Program. It was created under California state statute and through the Interagency Transfer Agreement and the JP Agreement CCJPA is charged with managing and directing the provision of intercity passenger rail service along the Capital Corridor. In addition, under PRIIA, the CCJPA provides intercity passenger and not commuter rail service. If you have any questions, please feel free to contact Chris Van Nostrand, Office of Chief Counsel, at (202) 493-6058. The FRA appreciates your interest in the HSIPR Program and looks forward to working with you toward our common goal to revitalize an4 improve intercity passenger rail in this country.

Si cerely,

(

Joseph C. Szabo Administrator

3 The FRA also considered the six features the Interstate Commerce Commission (ICC) established to aid in classifying a service as "commuter" rather than "intercity" rail passenger transportation. Those factors are:

• The passenger service is primarily being used by patrons traveling on a regular basis either within a metropolitan area or between a metropolitan area and its suburbs;

• The service is usually characterized by operation performed at morning and peak periods of travel; • The service usually honors commutation or multiple-ride tickets at a fare reduced below the ordinary coach

fare and carries the majority of its patrons on such a reduced fare basis; • The service makes several stops at short intervals either within a zone or along the entire route; • The equipment used may consist of little more than ordinary coaches; and • The service should not extend more than 100 miles at the most, except in rare instances; although service

over shorter distances may not be commuter or short haul within the meaning of this exclusion.

CCJPA Financial Plan (2010) APPENDIX A Page iv

Memorandum To: CHAIR AND COMMISSIONERS Date: May 10, 2010 From: BIMLA G. RHINEHART Reference No. 4.16 Executive Director Action Ref: Adoption of the Proposition 1A High Speed Passenger Train Program of Projects

Resolution HST1A-P-0910-01 _________________________________________________________________________________ Issue: Should the Commission adopt the Proposition 1A program of projects for FY 2011/12 – 2012/13? Recommendation: Staff recommends that the Commission adopt the proposed program of projects. Commission staff has reviewed the proposed projects and find that the projects are eligible under the Commission’s Proposition 1A guidelines and the underlying statute approved by the voters as Proposition 1A. The commuter and urban rail agencies have met the dollar-for-dollar match requirements called for in the guidelines. (The amounts listed under Agency Recommendations represent the Proposition 1A programming requested.) Finally, staff also recommends that the agencies report on a periodic basis to the Commission on the progress in implementing their projects. Agency Recommendations: INTERCITY RAIL Caltrans Division of Rail is proposing to use most of its formula ($130.8 million) and competitive share ($40.534 million) in FY 2010/11 through 2011/13 to program:

• Positive Train Control, Moorpark to San Onofre. (Pacific Surfliner, $46.55 million, formula). • Positive Train Control, San Onofre to San Diego. (Pacific Surfliner, $24.01 million, competitive). • Positive Train Control, LA to Fullerton. (Pacific Surfliner, $2.94 million, competitive). • Positive Train Control for Central Valley. (San Joaquin, $9.8 million, formula). • Double track from Merced to Le Grand. (San Joaquins, $36.75 million, formula). • Double track from Merced to Le Grand. (San Joaquins, $4.116 million, competitive). • Double Track and Track Improvements, Oakland to San Jose, Phase 2. (Capitol, $46.55 million,

formula). • Roseville Third Main Track/ Sacramento Layover Facility in Placer. (Capitol, $15.484 million,

competitive). In reviewing Caltrans’ proposals, Commission staff notes that Caltrans is proposing on the:

STATE OF CALIFORNIA CALIFORNIA TRANSPORTATION COMMISSION

CCJPA Financial Plan (2010) APPENDIX B Page v

Chair and Commissioners May 10, 2010 Page 2 of 6

• Pacific Surfliner in coordination with Metrolink and the Coaster to program positive train control (PTC) projects from Moorpark to San Diego. Caltrans’ proposal will improve safety along the line and permits speeds up to 90 mph. PTC is required by the federal government with an implementation deadline of 2015. PTC will improve safety, passenger train headways, provide the potential for increased frequencies, and on-time performance on the interconnected intercity and commuter regional rail system in the southern California basin. PTC will help the regional and intercity rail system become more robust. Patrons of the proposed high-speed rail system would be more likely to use high-speed rail system if they know they can take a regional/intercity rail system or transit on to their final destination.

• San Joaquin to install positive train control and double tracking from Merced to Le Grand. PTC

will improve safety, passenger train headways, potentially increased frequencies, and on-time performance on the intercity system that will connect at several stations with the proposed high-speed rail system. Double tracking will permit increased average speed, trip time reductions, and increased on-time performance.

• Capitol, with operating agency the Capitol Corridor Joint Powers Agency, double tracking and

improvements between Oakland and San Jose, as well as a third main track on the north end of the line in Roseville and a layover facility. Double tracking will permit increased average speed, trip time reductions, and increased on-time performance. Double tracking will eliminate most of the single-tracking between Oakland and San Jose. The proposed high-speed rail system is proposed to stop at the San Jose Diridon station, which is also the terminus for the Capitol.

Commission staff recommends that the eight projects be programmed. COMMUTER RAIL North County Transit District (Coaster) is proposing to program:

• Positive train control from San Onofre to San Diego for $15.5 million. North County Transit District, Caltrans and Metrolink are coordinating their proposals to program positive train control projects from Moorpark to San Diego. As described earlier, PTC will improve safety, passenger train headways, potentially increased frequencies, and on-time performance on the interconnected intercity and commuter regional rail system. Commission staff recommends that the project be programmed. Southern California Regional Rail Authority (Metrolink) is proposing to program two projects:

• Positive train control on the 215-mile Metrolink system, $45 million; and • Renovation and rehabilitation of the existing system, $52.7 million.

Positive train control is the highest priority for Metrolink. Metrolink is looking at PTC technology that will permit train speeds up to 110 miles per hour. Even with the increased speed, PTC will allow safer track usage and connections at higher speeds between joint stations for the Metrolink and the proposed

CCJPA Financial Plan (2010) APPENDIX B Page vi


high-speed rail system. PTC is mandated by the federal 2008 Rail Safety Improvement Act and passenger railroads will not be permitted to operate after 2015, if PTC is not implemented. Renovation and rehabilitation of the existing Metrolink system is the agency’s second highest priority. Metrolink must keep its system in a state of good repair. Similar to the highway system, a rail system will deteriorate over time with use. Metrolink is proposing to use the Proposition 1A programming in conjunction with matching revenues controlled by its member agencies to renovate/rehabilitate the 215-mile system with regard to its signals, control points, voice and data network, crossings, dispatch center and its rail fleet. Commission staff recommends that the projects be programmed. Commission staff further recommends that prior to allocation that Metrolink submit a detailed list of proposed projects by fiscal year that make up the renovation and rehabilitation program. Altamont Commuter Express (ACE) is proposing two projects for programming:

• A gap closure (Stockton Passenger Track Project) that will provide a dedicated passenger rail track north of the track interlock between UP and BNSF ($4.9 million).

• Joint environmental studies of the corridor with High-Speed Rail Authority in order to select an alignment suitable for ACE train service and the proposed high-speed rail service. ($0.75 million).

The proposed Stockton Passenger Track project would permit ACE passengers at the Stockton station to board and deboard safely without being exposed other rail traffic. ACE is working with the California High-Speed Rail Authority (HSRA) to upgrade the regional rail services between Stockton and San Jose. The goal is to provide a connector to the future high-speed rail line in the Central Valley, while improving the connectivity of the ACE train service with the Bay Area Rapid Transit (BART) and the Santa Clara Valley Transportation Authority (VTA) light rail system. The HSRA is proposing to program $2 million from its share of Proposition 1A. Commission staff recommends that both projects be programmed. Peninsula Corridor Joint Powers Board (PCJPB) is proposing to program:

• Pre-construction phase of a corridor electrification project ($4.1 million) The PCJPB is proposing to electrify the 52-mile corridor from San Jose to San Francisco. Electrifying the corridor will permit trains to operate with reduced travel times, thereby encouraging more ridership, as well as reducing pollutant emissions and noise by replacing the existing diesel locomotive fleet. The PCJPB is coordinating with the California HSRA on a federal American Recovery and Reinvestment Act (ARRA) grant to jointly design electrification of the Peninsula Corridor. How the ARRA revenues are distributed is yet unclear. Accordingly, the PCJPB is only requesting funding for the pre-construction activities. The PCJPB may request capital funding from Proposition 1A once the ARRA grant distribution becomes clear, by either requesting an amendment to the FY 2011/12 three-year program or in later programming cycles.

CCJPA Financial Plan (2010) APPENDIX B Page vii


The PCJPB is also requesting that the Commission permit it to program 9.9 percent of its share for pre-construction ($4.1 million) rather than the 5 percent ($2 million) set forth in the Commission’s guidelines. The Commission can program up to 10 percent of an agency’s share for pre-construction activities under its guidelines. Programming $4.1 million towards pre-construction is not unreasonable; since the proposed project’s total cost is estimated to be $785 million. Commission staff recommends that the project be programmed and that the Commission permit the PCJPB to program up to 10 percent of its share for preconstruction. URBAN RAIL San Diego Trolley (SANDAG) is proposing to program:

• The rehabilitation of its light rail Blue Line from Old Town State Park to the California/Mexico border for $57.8 million.

The Blue line was originally built in the late 1970s and began service in 1981. The proposed project is to rehabilitate the line by replacing worn rail and track, replace or rehabilitate switches and signaling and re-construct the existing station platforms to accommodate low-floor vehicles. The proposed rehabilitation will improve the speed, reduce headways and improve service flexibility and reliability. Further, the proposed high-speed rail system will extend from Los Angeles to San Diego via the Inland Empire and is considering the Santa Fe Depot in downtown San Diego for its terminus. The Blue Line will provide future high-speed rail patrons with a connection to the border, as well as to other major destinations in south and east San Diego County. Commission staff recommends that the project be programmed. Los Angeles Metropolitan Transportation Authority (MTA) is proposing to program:

• A two-mile light rail project (Regional Connector Transit project) that will link the Metro light rail Blue, Gold and Green lines in downtown Los Angeles so that the lines are seamless ($114.9 million). By linking the lines, the number of transfers will be reduced and congestion at various stations can be reduced. The Regional Connector Transit project will have direct connectivity with the proposed high-speed rail system at Union Station.

Although the Regional Connector Transit project is in the draft environmental review phase, MTA is requesting that the Commission program both the pre-construction ($5.7 million) and construction components ($109.1 million) of the project. MTA is requesting the programming of the $109.1 million so that it can demonstrate to the Federal Transit Administration (FTA) that it has the financial capacity with local (and state) funds to fully fund the proposed Connector Transit project. Without the programming, MTA will not be able to pursue the federal New Starts transit funds it is seeking.

The Commission is in a similar position and asks that the local agency demonstrate that a project, phase or component is fully funded. Commission policy is to maximize federal funds being sought for California’s transit projects. As a funding partner, the Commission has over the years showed the State’s commitment to funding large transit projects. Under Proposition 1A, each eligible agency has a defined share. Accordingly, those funds could be programmed in a manner to show FTA that MTA has the funding capacity needed.

CCJPA Financial Plan (2010) APPENDIX B Page viii


Commission staff recommends that the Regional Connector Transit project be programmed as follows:

• The pre-construction phase for environmental work is programmed as requested. • The construction phase is programmed in FY 2012/13 with the following condition. Prior to

receiving an allocation for construction, MTA must demonstrate to the Commission’s satisfaction that the project is fully funded and that MTA has successfully secured from FTA an agreement to provide federal funds or permission to begin expending funds with later federal reimbursement. If MTA does not have the federal funding secured, then the state programming in FY 2012/13 will be re-programmed.

San Francisco Municipal Transportation Agency (Muni) is proposing to program:

• The tunnel component ($27 million) of its Central Subway light rail line (Phase 1) that starts at the Caltrain (PCJPB) depot and goes north to Chinatown. The Central Subway will be the first major north-south rail connection to the east-west BART/Muni subway at Market.

Muni is proposing to extend the connectivity of its system with the existing BART system, the Caltrain system and the proposed high-speed rail system. The connectivity should increase ridership and reduce travel times, similar to the benefits that would occur with Los Angeles’ Regional Connector. The tunnel component will permit Muni to begin the tunneling. Commission staff recommends that the project be programmed. Bay Area Rapid Transit District (BART) is proposing to program:

• A Phase 1 of a car replacement program for $30 million. • A car reconfiguration project for $1 million. • A cover board enhancement project for $ 3 million.

BART is requesting the initial match of $30 million with the intent of replacing 200 of its original 669 vehicle fleet over the next 16 years. BART will be making future programming requests. BART worked with the Metropolitan Transportation Commission to secure the majority of the federal funds needed for replacing its vehicles. The Proposition 1A programming will be used as part of the 20 percent match for the federal funds to purchase the first 200 vehicles. The replacement of the fleet will enable the users of the future high-speed rail system to connect with the BART system at common stations and travel onto their destination on a reliable regional system. BART’s car reconfiguration project is intended to increase the carrying capacity of its fleet. The reconfiguration will remove eight seats and permit more people to stand in the cars, as well as handling more luggage, bicycles, strollers and wheelchairs. The standees will have more stability with more hand straps and rails. BART’s cover board enhancement project is intended to protect the system’s third rail. The existing cover boards are failing and cause system delays throughout the entire 104 mile system. The proposed

CCJPA Financial Plan (2010) APPENDIX B Page ix


project will reinforce 22 miles of the double main and increase the overall system reliability and on-time performance. Commission staff recommends that the three projects be programmed. Background: Proposition 1A, a rail bond for $9.95 billion, was passed by the voters in November 2008. Proposition 1A partially funds a $40+ billion, 800-mile high-speed train under the supervision of the California High-Speed Rail Authority. The initial segment of the high-speed rail system is between San Francisco and Los Angeles, with Anaheim, California as the designated southern terminus of the initial segment. $950 million is available for capital projects on other passenger rail lines to provide connectivity to the high-speed train system and for capacity enhancements and safety improvements to those lines. rc\lhf\2010ctcmtg\CTC Memo Proposition 1A 11-13 Pgm of Projects.doc

CCJPA Financial Plan (2010) APPENDIX B Page x

CALIFORNIA TRANSPORTATION COMMISSION Adoption of the Program of Projects for the

High-Speed Passenger Train Bond

RESOLUTION HST1A-P-0910-01 1.1 WHEREAS, the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st

Century approved by the voters as Proposition 1A on November 4, 2008, authorized the California Transportation Commission (Commission) upon appropriation by the Legislature to allocate funds for capital improvements to intercity rail lines, commuter rail lines, and urban rail systems that provide direct connectivity to the high-speed train system and its facilities, or that are part of the construction of the high-speed train system as set forth in Streets and Highways Code, Division 3, Chapter 20, Section 2704.04, subdivision (b) or that provide capacity enhancements and safety improvements; and

1.2 WHEREAS, in accordance with Streets and Highways Code Section 2704.095 the

Commission, at its February 2010 meeting, adopted the High-Speed Passenger Train Bond Program Guidelines which provide direction to project sponsors for programming the net proceeds of $ 950 million in bonds authorized under Proposition 1A; and

1.3 WHEREAS, the High-Speed Passenger Train Bond Program Guidelines directed

agencies to submit project applications by March 15, 2010; and 1.4 WHEREAS, the guidelines require that projects proposed for funding from either

the Intercity Rail Program or the Commuter and Urban Rail Program will be usable or provide usable segments and be a reasonable expenditure, even if the high-speed train system as identified in the Streets and Highway Code, Division 3, Chapter 20, Section 2704.04, subdivision (b) is delayed, postponed or cancelled; and

1.5 WHEREAS, the guidelines require that the useful life of a project under the High-

Speed Passenger Train Bond Program shall not be less than the required useful life (15 years or more) for capital assets pursuant to the State General Obligation Bond Law, specifically subdivision (a) of Section 16727 of the Government Code; and

1.6 WHEREAS, the Commission staff has reviewed the project applications in

accordance with the guidelines and published their recommendations; and

CCJPA Financial Plan (2010) APPENDIX B Page xi

1.7 WHEREAS, the Commission has considered comments regarding the staff recommendations; and

2.1 NOW THEREFORE BE IT RESOLVED THAT the Commission hereby adopts

the High-Speed Passenger Train Bond Program of projects for funding as presented by Commission staff.

CCJPA Financial Plan (2010) APPENDIX B Page xii

High-Speed Passenger Train Bond Recommended Program

May 19, 2010

AgencyProject Recommended for Programming

Estimated Total

Project Cost

Total Prop 1A Funds

Requested FY 10/11 FY 11/12 FY 12/13Future Year

RequestAgency Share

Share Remaining

Caltrans

Formula Program

Capitol 46,550 Track Improvements from Oakland to San Jose, Phase 2 402,904 46,550 2,328 11,760 32,463

46,550 2,328 11,760 32,463 (46,550) 0

San Joaquin 46,550 Positive Train Control for Central Valley, Bakersfield to Port Chicago/Oakley 24,500 9,800 8,000 1,800

Double Track, Merced to Le Grand 37,600 27,900 3,900 12,000 12,000 8,800

37,700 11,900 13,800 12,000 (37,700) 8,850

Pacific Surfliner 46,550 Positive Train Control, Moorpark to San Onofre 201,600 46,550 46,550

Formula Program Total 46,550 46,550 0 0 (46,550) 0

Caltrans

Competitive Program 46,550

CapitolRoseville Third Main Track/ Sacramento Layover Facility in Placer 250,800 15,484 15,484

San JoaquinDouble Track, Merced to Grand 4,100 4,100 4,100 66

Pacific SurflinerPositive Train Control, LA to Fullerton 5,400 2,940 2,940 Positive Train Control, San Onofre to San Diego 60,000 18,010 5,000 7,000 6,010 6,000

Competitive Program Total 40,534 27,524 7,000 6,010 (40,534) 6,016

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CCJPA Financial Plan (2010) APPENDIX B Page xiii


May 19, 2010


Estimated Total

Project Cost

Total Prop 1A Funds


RequestAgency Share

Share Remaining

North County Transit District (NCTD - San Diego) 17,833

Positive Train Control -- San Onofre to San Diego 60,000 15,500 3,500 7,000 5,000 2,333

NCTD Total 15,500 3,500 7,000 5,000 (15,500) 2,333

Southern California Regional Rail Authority (Metrolink) 123,707

Positive Train Control 201,600 35,000 35,000

Renovation/Rehab 105,417 52,707 17,707 17,500 17,500

SCRRA Total 87,707 52,707 17,500 17,500 (87,707) 36,000

Altamont Commuter Express (ACE) 14,974

Stockton Passenger Track Project (Gap Closure) 16,880 4,900 2,450 2,450 Alamont Corridor Environmental Studies 3,500 750 750

ACE Total 20,380 5,650 3,200 2,450 0 (5,650) 9,324

Peninsula Corridor Joint Powers Board (PCJPB) 41,026

Corridor Electrification 785,026 4,100 2,050 2,050 0 36,926

PCJPB Total 785,026 4,100 2,050 2,050 0 (4,100) 36,926

San Diego Trolley, Inc. (MTS) 57,855

Blue Line Light Rail Project 115,710 57,855 19,285 19,285 19,285

MTS Total 115,710 57,855 19,285 19,285 19,285 0 (57,855) 0

Los Angeles County Metropolitan Transportation Authority (LACMTA) 114,874

Regional Connector Transit Corridor -- 2 mile light rail line to connect Gold, Blue and Expo LRT lines 1,073,020 114,874 5,744 0 109,130

LACMTA Total 1,073,020 114,874 5,744 0 109,130 (114,874) 0

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CCJPA Financial Plan (2010) APPENDIX B Page xiv


May 19, 2010


Estimated Total

Project Cost

Total Prop 1A Funds


RequestAgency Share

Share Remaining

San Francisco Municipal Railway (MUNI) 61,308

Central Subway light rail line extension of the new line, 1.7 miles from the Caltrain depot and potential high-speed rail station at 4th and King Streets to Chinatown.The segment of work sets the stage for all the tunneling work associated with the Central Subway. 1,578,300 27,090 27,090 0 0

MUNI Total 1,578,300 27,090 27,090 0 0 0 (27,090) 34,218

San Francisco Bay Area Rapid Transit District (BART) 256,639

Rail Car Replacement Program for Phase 1 for 200 cars of the 669 original cars in fleet 1,026,000 30,000 30,000 120,000 Re-Configure 200 existing cars to increase capacity by decreasing seats in favor of standees. 4,000 2,000 1,000 1,000 Third Rail Cover Board Enhancement --Phase 2 6,000 3,000 1,550 1,450

BART Total 1,030,000 35,000 32,550 2,450 0 (35,000) 221,639

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CCJPA Financial Plan (2010) APPENDIX B Page xv

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