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HomeMy WebLinkAboutStaff Report 242-09TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DEPARTMENT: City Manager's Office DATE: MAY 11,2009 CMR: 242:09 REPORT TYPE: INFORMAITON SUBJECT: Status on High Speed Rail Legislative Activities This is an informational report and no Council action is required. BACKGROUNDIDISCUSSION Implementation of High Speed Rail continues to be an evolving set of issues which Staff and the Ad Hoc Committee members (Barton, Burt and Kishimoto) are actively engaged. This report is intended to give a brief status of several of the major activities at the state and local level. Staff will be bringing the discussion of Ad Hoc Committee direction to the full Council on May 18, 2009. While this discussion was tentatively scheduled for May 11, Staff required the additional time to develop guiding principles and resolve possible Brown Act issues. Senate Budget Subcommittee On April 30, 2009 the Senate Budget and Fiscal Review Subcommittee on Transportation chaired by Senator Joe Simitian, discussed oversight and funding of the High Speed Rail Authority (HSRA). Vice Mayor Jack Morton and a broad cross section of community members attended to testify on numerous issues and concerns regarding the outreach and accountability of the HSRA related to the San Jose to San Francisco segment. High Speed Rail Authority Executive Director Medhi Morshed was also present representing the Authority The discussion centered on three areas: 1) Accountability and oversight; 2) Concerns regarding HSRA's business plan; 3) Outreach and community involvement. Staff has attached (A IT ACHMENT A) the Legislative Analyst Office (LAO) Subcommittee report which raises questions regarding the ability of HSRA to manage the largest infrastructure project in the state. Since November and the passage of Prop 1 A, HSRA has been very quickly transformed from a small planning and advocacy organization to an organization trusted with managing a challenging project with few peers in scope and complexity. The attached LAO report discussed the possibility of merging HSRA and Caltrans' Rail Division into a consolidated department effectively doing away with HSRA altogether. CMR:242:09 Page 1 of3 Due to concerns raised by the LAO regarding the business plan, the Subcommittee ultimately held open HSRA's budget request until staff returns to the Subcommittee with clear and satisfactory responses to the HSRA Business Plan questions. The attached LA 0 report provides the detailed list of samples of missing information. Of primary concern to the Subcommittee were ridership projections on which future financing is heavily dependent. Lastly, the Subcommittee expressed serious concern regarding the quality of the outreach HSRA had conducted in the San Jose to San Francisco segment. Director Morshed explained that HSRA Board had directed staff to reduce community outreach because the expense was not justified as the project was viewed by the HSRA Board as largely non-controversial. Clearly this is not the case as evidenced by the extensive community involvement in Palo Alto and the other peninsula cities since HSRA began work on the scoping report in January this year. Legislative Activities Attached is a comprehensive summary of the numerous HSRA related bills currently pending in the State Legislature. The summary was prepared by Rita Wespi, Palo Alto resident who has been very involved in community activities related to high speed rail. The research conducted by Ms. Wespi represents the most thorough and accurate summary of pending legislature currently available from any source. 'One bill in particular, AB 289 (Galgiani) has serious implications for the peninsula communities. Essentially, AB 289 attempts to extend the existing CEQA Exemption to high speed rail grade separations. While there is an existing CEQA Exemption which allows re-building of grade separations, high speed rail separations will involve a much larger footprint and consequently much greater impact. The bill, if passed, would greatly reduce the public's ability to influence the design of HSRA grade separation since there will be no formal review period nor opportunity to comment on potential impacts. The bill is still in the Assembly and has not gone to the Senate. Staff is working closely with Senator Simitian's office to oppose passage of AB 289. Peninsula Cities Coalition The Ad Hoc Committee members continue to attend the weekly meeting of the Peninsula Cities Coalition (PCC). Currently the draft Memorandum of Understanding has been adopted by City Councils for the Cities of Burlingame, Atherton and Palo Alto; however two additional cities will be required to join before the coalition becomes a recognized entity. The Cities of Mountain View and Menlo Park are currently considering joining the coalition. ATTACHMENTS Attachment A: Legislative Analyst Report to the Senate Budget Subcommittee Attachment B: CARRD High Speed Rail Legislative CMR:242:09 Page 2 of3 PREPARED BY: CITY MANAGER APPROVAL: CMR:242:09 JAMES KEENE City Manager Page 3 of3 Subcommittee No.2 Attachment A April 30, 2009 2665 High-Speed Rail Authority The California High-Speed Rail Authority (HSRA or Authority) was created by Chapter 796. Statutes of 1996. to direct development and implementation of inter-city high- speed rail service that is fully coordinated with other public transportation services. The cost to build the initial phase (from San Francisco to Anaheim) is currently estimated by the HSRA to cost $34 billion (in 2008 dollars) -this includes a contingency. calculated at 30 percent of construction costs •. as well as an allowance for environmental impact mitigation. calculated at three percent of construction costs. January Budget: The January Governor's Budget included funding of $125.2 million for the HSRA (all High-Speed Passenger Train Bond Fund). The 2009 Budget Act (SB 1XXX) reduced the HSRA budget down to base staff funding of $1.8 million, without prejudice to the merit of the request, to allow for a thoroygh subcommittee review of the budget. Since the Safe, Reliable High-Speed Train Bond Act for the 21 st Century (Proposition 1A) was approved by voters in November 2008. the HSRA has $9 billion in bonding authority to begin implementation of the system. This transition from a small- budget study organization to a multi-billion dollar engineering and construction entity requires additional discussion with regard to the structure of the Authority and management and implementation of the high-speed rail project. April Finance Letters: The Administration additionally submitted April 1 Finance Letters to augment the HSRA budget by $14 million for additional contract costs, bringing the total request for 2009-10 to $139.2 million. March 17, 2009 Senate Transportation and Housing Committee Hearing: On March 17. 2009,the Senate Transportation and Housing Committee held an informational hearing with a focus on the Legislative Analyst's Office's analysis of the HSRA's proposed $125.4 million budget for 2009-2010, and state government's response to the $8 billion provided for high-speed rail by the federal stimulus program, the American Recovery and Reinvestment Act of 2009. Some of the information in this agenda is derived from this prior hearing. Pooled Money Investment Account (PMIA) loans: Since the March 17 policy committee hearing, the State Treasurer has been successful in selling general obligation bonds and the HSRA has received a PMIA loan to pay contract expenses in 2008-09. Senate Committee on Budget and Fiscal Review Page 23 Subcommittee No.2 April 30, 2009 Issue Proposed for Discussion: 1. Implementation of a Transportation Mega-Project. As was alluded· to in the introduction, the HSRA is tasked with quickly transforming itself from a small-budget study organization into a mUlti-billion dollar engineering and construction entity. This challenge is compounded by the fact that the high-speed rail project is a mega- project like the San-Francisco Oakland Bay Bridge or the "Big Dig" in Boston -these projects have few peers in scope and complexity. Mega projects often experience large cost escalations and schedule delays. With this great challenge in mind, the Legislature has explored different structural models to increase the chances of successful implementation. Last year's SB 53 (Chapter 612, Statutes of 2008, Ducheny) requires the California Research Bureau to analyze the state's rail management structure and report recommendations by May 1, 2009. Other bills in the current legislative session look at consolidation of rail functions at Caltrans and the HSRA, and other project implemention and oversight issues. Administration's Implementation Plan: The Administration is not proposing any government reorganization in the area of rail. In terms of implementation of the high-speed system, the Administration proposes to contract for engineering and design, and then contract with other consultants for oversight of those original contracts. The rational for this model is that the Authority should avoid developing a large permanent organizational staff because the project is a one-time endeavor, requires highly specialized skills, and will require limited ongoing support. On the basis of this approach to project management, the HSRA is relying upon outside consultants to provide both technical and managerial services. The counter to this argument is that this model is the historic information-technology (IT) model that has often been unsuccessful. In fact, the Administration is currently proposing an IT reorganization that would in-source oversight of state IT projects to the Office of the Chief Information Office (OCIO). The Business Plan suggests the HSRA will be completing the preliminary engineering and environmental review over the next three years, after which right-of- way acquisition and co'nstruction will commence. However, the federal stirriulus funds may accelerate the start of right-of-way acquisition. Administration's Funding and Timeline: The following two tables show the Authority's anticipated funding sources and timeline for implementation: * HSRA graphic Senate Committee on Budget and Fiscal Review Page 24 Subcommittee No.2 April 30, 2009 Issue raised by the LAO: The Legislative Analyst raised several concerns with the HSRA Business Plan,· which was required by statute and released in November ~ ,2008. The LAO indicates that the report includes, to some degree, each of the statutorily required elements, the information provided is very general and does not provide specifics that are· included in the typical business plans. The LAO lists details absent from the Business Plan in' the table on the next page and recommends that the Authority expand on its Business Plan to include the missing detail (see table on next page). The LAO recommends: (1) that the Legislature withhold budget funding for 2009-10, until the additional information is provided; (2) that the Legislature require the authority to adopt project selection and evaluation criteria to ensure that bond funds are used efficiently and that they deliver projects with immediate mobility benefits; and (3) that the Legislature enacts legislation directing the authority to provide an annual report to the Legislature at the time the Authority submits its annual budget. Senate Committee on Budget and Fiscal Review Page 25 Subcommittee No.2 April 30, 2009 LAO Report: Business Plan Fails to Provide Many Details Forecast of patronage, operation & capital costs Estimate of necessary federal, state, and local funds Proposed construction timeline for each segment Source: Legislative Analyst's Office How are ridership estimates projected? What is the operating break-even pOint? How will costs be distributed by segment route? How would funds be secured? What is the proposed schedule, by segment, for completing design/environmental clearance? For nni construction would each type project? What specific mitigation strategies are planned to be deployed? Staff Comment: The HSRA should address the issues in this agenda item. The issues include: • What department structure and project oversight model maximize the chances for successful implementation? What advantages and disadvantages does the Authority see if the HSRA and the Caltrans Division of Rail were to be consolidated into a new department? Why has the Administration foregone the option of using state staff, such as rail engineers at Caltrans, to in-source design and engineering contract oversight and to provide project management? • What missing details cited by the LAO have since been provided by the HSRA? What is the HSRA response to each of the individual concerns raised by the LAO in the above table? • What functions should the HSRA add internally as the project ramps up? For example, HSRA does not currently have an accounting section -that function is performed by the California Highway Patrol under an inter-agency agreement. Staff Recommendation: Hold open for additional review. Senate Committee on Budget and Fiscal Review Page 26 Subcommittee No.2 April 30, 2009 2. Federal Stimulus Funds. The federal American Recovery and Reinvestment Act (ARRA) includes over $8 billion for high-speed rail and other rail investments. California is· ahead of other states in terms of having a completed Program Level Environmental Impact Report I EnVironmental Impact StatementC(EIRlEIS), and in having $9 billion in state funds already approved for the project. Hopefully California can use these advantages to obtain a significant share of federal funds. In addition to the $8 billion in stimulus funds dedicated to high-speed rail, President Obama has proposed in his budget plans $1 billion annually for the next five years. Last year's federal Passenger Rail Investment and Improvement Act of 2008: The federal stimulus program aUocates $8 billion for high-speed rail projects under the terms and conditions of existing federal law. In the case of the high-speed rail funds, the money will be allocated through program categories established by the Passenger Rai/lnvestment and Improvement Act of 2008 (PRIIA). There are three categories of funding in PRIIA: • High-speed rail corridor development grants • Intercity passenger rail service corridor capital assistance • Congestion grants for corridors in which Amtrak service operates. US Department of Transportation (US DOT) Strategic Plan for ARRA funds: To ensure there is a consistency between the policies of PRIIA and the stimulus act, Congress directed the Secretary of Transportation to prepare a strategic plan. On April 16, 2009, the US DOT released this plan. This plan does not provide any specifics to suggest how much of the funds California might receive. US DOT Interim Guidelines for ARRA funds: By June 17, 2009, the FRA will issue interim guidelines that will outline the specific selection criteria and other conditions governing the submittal of applications for stimulus funds for high-speed rail. Projects that are awarded grants must be under contract by 2012. Possible Projects for federal ARRA funds: The HSRA has sent a letter to Senator Dianne Feinstein identifying projects that may be ready for funding, although the projects have not been developed by the HSRA. A revised list of projects, with a total value of $3.6 billion was circulated at the HSRA's March meeting. Attachment I is the revised list of projects prepared by its staff. This list totals $3.6 billion and includes $1.5 billion for statewide high-speed rail projects and $2.1 billion for regional projects complementing high-speed rail. Substitution of federal funds for state bond funds. The HSRA letter indicates some of the federal funds may be available for design and engineering work that would otherwise be funded from Proposition 1A. . Accordingly, the Subcommittee may want to consider the addition of budget bill language to allow a substitution of federal funds for Prop 1 A funds. Such a substitution would only occur to the extent it was allowable under the federal program. The state bond funds would still be available for the project in future years, but the state General Fund would see Senate Committee on Budget and Fiscal Review Page 27 Subcommittee No.2 April 30, 2009 reduced interest costs. The language, based on existing Caltrans language, could read as follows: Notwithstanding any other provision of law, funds appropriated in this item from the High-Speed Train Passenger Train Bond Fund, to the extent permissible under federal law, may be reduced and replaced by an equivalent amount of federal funds determined by the High-Speed Rail Authority to be available and necessary to comply with Section 8.50 and the most effective management of state high-speed rail transportation resources. Not more than 30 days after replacing the state funds with federal funds, the Director of Finance shall notify in writing the chairpersons of the committees in each house of the Legislature that consider appropriations and the Chairperson of the Joint Legislative Budget Committee of this action. Staff Comment: The HSRA should update the Subcommittee development that have occurred with federal stimulus funding since the March 17, 2009, Senate Transportation and Housing Committee hearing. The Administration should also comment on the desirability of adding the budget bill language to allow substitution of federal funds for state bond funds. Staff Recommendation: Adopt new budget bill language to allow the substitution of federal funds for State bond funds. Vote: Senate Committee on Budget and Fiscal Review Page 28 Subcommittee No.2 April 30, 2009 3. Budget Change Proposals and April Finance Letters. The updated Administration budget request (including April Finance Letters) requests a total of $139.2 miJlion from Proposition 1 A bond funds. Of this request, $1.9 milli.Qn is for state staff and operations and $138.0 million is for contract work. All 'Of these requests were excluded from the 2009 Budget Act (SB 1 XXX) to allow for a thorough review by budget subcommittees. Detail on the HSRA's budget requests: The eight requests are as follows: • BCP #1 and April FL #10 -Program Management Services: $26.6 million is requested for the project management team of contractors. The team is charged with directing, managing, and providing oversight for the regional engineering/environmental teams, as well as the developing of the basic design of the statewide high-speed train system. In addition to the overall management of the regional teams, the Program Management Team is responsible, through their project engineering group, to review and oversee the site specific designs for the entire system. • BCP #2 and April FL #11 -Preliminary Engineering and Design/Proiect-Level Environmental Review: $105.3 million is requested for the anticipated 2009-10 phase of preliminary engineering and design/project-level environmental work. In addition, two state-worker positions are requested to review the design of bridges and structures for compliance with State and federal requirements. • BCP #3 -Visualization Simulation Plan Development: $255,000 is requested for visualization simulations (computer animation) to educate the public on potential impacts high-speed trains may have to their communities. • BCP #4 -Ridership/Revenue Forecast: $2.0 million is requested for a ridership and revenue forecast model. Two prior forecasts have been completed, most recently a study funded by the Metropolitan Transportation Commission (MTC) , but this request would bring a model in-house to update the numbers for the project-level environmental work as well as the development of public private partnership packages. • BCP #5 -Financial Plan and Public Private Partnership Program (P3): The Authority requests $2.0 million to continue the work of the Financial Plan consultants as well as develop and commence the Public Private Partnership program. • BCP #6 -Right-of-way Plan Development: $750,000 is requested to fund inter- departmental contracts for other state agencies for the development of a right-of- way plan. • BCP #7 -Program Management Oversight: $350,000 is requested for the Program Management Oversight consultants, which the Authority indicates are an extension of state staff. The conSUltants' work includes monitoring of the project to determine if the project is on schedule, within budget, proceeding in conformance with approved work plans, staffing plans, and other agreements, and is being implemented efficiently and effectively. • BCP #8 -Department of Justice Services: $136,000 is requested to cover legal and litigation services provided via inter-agency contract with the Department of Justice. Senate Committee on Budget and Fiscal Review Page 29 Subcommittee No.2 April 30, 2009 Staff Comment: The HSRA should briefly walk the Subcommittee through each of the individual budget requests. Staff Recommendation: Hold open for additional review. Senate Committee on Budget and Fiscal Review Page 30 Subcommittee No.2 April 30, 2009 Attachment I High-Speed RaU Authority's List of Projects for Federal Stimulus Funds Proposed Federal Stimulus List Avenue and Sylvan of the system from Jose to San Subtotal Senate Committee on Budget and Fiscal Review Page 31 II II II II I I I I I I I I I I I I Attachment B CARRD's High-Speed Rail Legislative Update This legislative update is provided by Rita Wespi ofCARRD -Californians Advocating Reasonable Rail Design. To receive an electronic version with active hyperlinks send email torwesp;@mathmatinee.com. Next update: 5/11/09. Bill numbers are hyperlinked to their doc set; links in the Description column are of particular interest; votes are linked; times are linked to video. Changes: dropped SB 165; SB 527 was given to Kehoe (will be dropped in our next report); SB 391 amended; SB 476 added Senate Analysis. Senate Bills Bill Author Hearing Description Status/Update Committee SB 53 Ducheny Studies creation of Dept. of Railroads. Chaptered In Sept 2008. !;;P!.!C Analysis Against SB 537/2008. SB409 Ducheny Creates Dept. of Railroads, transferring all rail 4/14 Trans Com: placed on hold, Sen Trans Com functions from Caltrans to new dept; also moves rail waiting for CA Research Bureau's safety from CPUC to rail dept. (see CPUC Report) study due 5/1. Projected 5/15. SB 455 Lowenthal Ma¥-4 Gov appointed members of CHSRA are subject to 4/21 Sen Trans: do pass (10-1) & Sen. advice/consent of Senate. Also affects acquiring & re-referto Appr. Appropriations insuring property, adds CHSRA to exemptions 4/28 May 4 hearing canceled at Cal trans benefits from, including property request of author. acquisition. Like Caltrans, they'd be exempt from OGS, SPWB and OOF body of law. Author amendments on 4/16. Trans Com Analvsis added on 4/16. 58734 Lowenthal May 11 Allocates funds for various projects including grade 4/28 Sen Trans: pass /10-0) to Senate 11:00 separation, freight, etc. Appr recommend Consent Cal. Appropriations Trans Com Analvsis added 4/23. S8526 Ashburn May 11 Requires the operation of at least 1 Amtrak train on 4/28 Sen Trans: pass /10-0) & to Sen ApprCom 11:00 San Joaquin (Altamont) route that terminates in SF. Appr Trans Com Analvsis added 4/23. SB 527 v"!,,,, 'yt? . U:1'1 i/' ,-;;,,','" '" "'" """;:, "1' k ,'; z', ;:'c' .; T, .:cn· -,,~ 5/6 Amend change author, is now a bicycle bill. SB 783 Ashburn Establishes additional requirements for CHSRA 3/19 to RLS Com Senate Appr. business plan. 4/16 referred to Trans. Com. Trans Com Analysis added 4/23. 4/28 Sen Trans: pass flO-Oj Auth.Amend on 4/30 removes bond contingency. 4/30 amend & re-refer to Apr. SB 686 OeSaulnier Adds to the CEQA process. 4/20 Env Qual Com: do pass (7-01 Assembly Env. Qual. Com Analysis ,by Simitian} added 4/19. & to Consent Cal; 4/23 from cc. Senatl: Analy~is Consent added 4/22. 4/27 Sen floor: 3'd read pass (36-01 Senate Analvsis Third Read added 4/23. 4/27 in Assembly, first read. S8476 Correa File date Prohibits taking action against an agency for 4/23 re-referred to Env Qual Com Senate 3rd May 7 noncompliance with CEQA unless the complaints 4/27 Env Qual: do pass eEl-O) re-reading were presented prior to the close of public refer to Appropriations comment period. 5/6 to Special Consent Calendar. Author Amended 4/23 -significantly alters intent. Env Qual Com Analysis 4/23 by Simitian. Author Amended 4/30. Senate Analvsis 5/4. SB 555 Kehoe April 28 Revises Eminent Domain law to prohibit person 4/21 Jud Com: do pass ,3-2) as Sen Appr from acquiring conservation easement by eminent amended & re-referred to Sen domain unless specified procedures are followed. Appr. Allows current holder to state objections. 4/28 Second read, amend, to Appr. Jud Com Analysis added on 4/20. Author amendments on 4/28. SB 391 liu, Requires Caltrans to address trans. planning policy 4/21 Trans: do pass 0-41 Sen Appr Lowenthal & process; relates to sustainable communities 4/27 Env Qual: do pass (5-21 strategy. Does not specifically include HSR. 5/4 2nd read, amend, to Appr. Amended 5/4. 5B454 Lowenthal Non-substantive wording change. 3/12 referred to Com on RLS. Sen Rules Com Assembly Bills Bill Author Hearing Description Status/Update Committee AB 153 Ma File date Exempts CHSRA from certain contingencies related 3/23 Trans Com: pass /9-3) & toJud. Assembly May7 to eminent domain, giving them greater autonomy 4/14 Jud Com: pass (7-2) & to Appr. 3rd reading when acquiring rights-of-way. 4/29 Appr: do pass /11-5). Jud Com Analysis 4/13. Trans Com Analysis 3/20. 5/4 Second reading. AggrCom Analysis 4/28. AB338 Ma File date Increases definition of transit village from ~ to Y. 4/2 Com on Local Gov: do pass /4-2) Assembly May7 mile of main entrance of a transit station. Affects & re-referred to Appr Com. 3rd reading affordable housing, denSity, funding bfTODs. 4/22 Appr Com: do pass /11-5) Unclear whether it adds or removes protections to 4/27 Second reading. affected properties. Authorizes city or county to make infrastructure improvements without voter approval. Requires local govs to use at least 20% of tax increment of certain bond funds for affordable housing. Asm Com on Local Gov Analysis 3/31. Asm Appr Analvsis 4/21. Asm Analysis 4/29. AB289 Galgiani File date Exempts high-speed grade separation projects 4/15 re-referred to Trans Com Assembly May7 from having to meet CEQA. 4/27 Trans: do pass to floor /13-0) 3rd reading Author amendments on 4/14, significantly altered 4/29 Second reading content. Trans Com Analysis 4/24. Asm Analysis 4/27. AB 733 Galgiani File date Authorizes CHSRA to create jobs, award contracts, 4/20 Trans: pass /13-0) & to Appr. Assembly May7 purchase trains. 4/29 Appr: pass /16-0). 3rd reading Trans Com Analysis 4/17. Aggr Com Analysis 4/28. 5/4 Second reading. AB 1375 Galgiani f\pril27 Repeal and reenact CHST Act in Public Utilities 4/27 Trans: do pass (9-4) & refer to Asm Code. Creates new Dept. of Rail. Similar to SB 409. Appr. Com. Appropriations Trans Com Analysis 4/24. Select Senate Committee Info: Committee (no. members) Hearings Chair Vice Chair Hearings of interest (non-bill items) Aggrogriations (13) Mon 11:00 Kehoe Cox Budget& Fiscal Review (40) Thurs 8:00 Ducheny Dutton Budget Sub N02 Resources, Thurs 9:30 Simitian April 30: CHSRA Env, Energy, Trans (3) Environmental Quality (7) 1/3 Mon 1:30 Simitian Runner Judicia!:y (5) Tues 1:00 Corbett Harman Rules (5) Wed 1:30 Steinberg Aanestad Transgortation & Housing (11) Thurs 1:30 Lowenthal Huff Select Assembly Committee Info: Committee (no. members) Hearings Chair Vice Chair Hearings of interest (non-bill items) Appropriations (17) Wed 9:00 De Leon Nielsen Budget (27) Wed, on call Evans Niello Budget NoS Tech, Trans (5) Wed 4:00 Blumenfield April 29: CHSRA Judicia!:y (10) Tues 9:00 Feuer Tran Natural Resources Skinner Gilmore Rules (11) Mon, on call Lieu Blakeslee Transl2ortation (14) Mon 1:30 Eng Jeffries Select Committee Trans (7) Davis Fletcher This legislative update is provided by Rita Wespi of CARRD -Californians Advocating Reasonable Rail Design. To receive an electronic version with active hyperlinks send email torwespi@mathmatinee.com. Next update: 5/11/09. J