ad hoc financial stability committee please note...
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AD HOC FINANCIAL STABILITY COMMITTEE
Friday, November 16, 2018
3:00 PM
PLEASE NOTE MEETING DATE AND TIME
VTA Auditorium
3331 North First Street
San Jose, CA
AGENDA
1. ROLL CALL
2. Introductions
3. Orders of the Day
4. PUBLIC PRESENTATIONS
This portion of the agenda is reserved for persons desiring to address the Committee on
any matter not on the agenda. Speakers are limited to 2 minutes. The law does
not permit Committee action or extended discussion on any item not on the agenda
except under special circumstances. If Committee action is requested, the matter can
be placed on a subsequent agenda. All statements that require a response will be
referred to staff for reply in writing. 5. ACTION ITEM - Approve the Ad Hoc Financial Stability Committee Regular Meeting
Minutes of August 17, 2018.
6. INFORMATION ITEM - Receive an update on November 2018 Election Results.
(Verbal Report)
7. INFORMATION ITEM - Receive presentation from Harvey M. Rose Associates,
LLC. (Verbal Report)
8. ACTION ITEM - Recommend that the Santa Clara Valley Transportation
Authority (VTA) Board of Directors approve mitigation measures to address VTA’s
structural deficit and promote long-term financial stability. (Verbal Report)
Santa Clara Valley Transportation Authority
Ad Hoc Financial Stability Committee November 16, 2018
Page 2
9. ANNOUNCEMENTS
10. ADJOURN
In accordance with the Americans with Disabilities Act (ADA) and Title VI of the Civil Rights
Act of 1964, VTA will make reasonable arrangements to ensure meaningful access to its
meetings for persons who have disabilities and for persons with limited English proficiency who
need translation and interpretation services. Individuals requiring ADA accommodations should
notify the Board Secretary’s Office at least 48-hours prior to the meeting. Individuals requiring
language assistance should notify the Board Secretary’s Office at least 72-hours prior to the
meeting. The Board Secretary may be contacted at (408) 321-5680 or email:
board.secretary@vta.org or (408) 321-2330 (TTY only). VTA’s home page is on the web
at: www.vta.org or visit us on Facebook at: www.facebook.com/scvta. (408) 321-2300: 中文
/ Español / 日本語 / 한국어 / tiếng Việt / Tagalog.
All reports for items on the open meeting agenda are available for review in the Board
Secretary’s Office, 3331 North First Street, San Jose, California, (408) 321-5680, at least 72
hours prior to the meeting. This information is available on VTA’s website at http://www.vta.org
and also at the meeting.
5
Ad Hoc Financial Stability Committee
Friday, August 17, 2018
MINUTES
CALL TO ORDER
The Santa Clara Valley Transportation Authority’s (VTA’s) Ad Hoc Financial Stability
Committee (“Committee”) meeting was called to order by Chairperson Bruins at 1:34 p.m., in
the VTA Conference Room B-106, 3331 North First Street, San José, California.
1. ROLL CALL
Attendee Name Title Status
Jeannie Bruins Chairperson Present
Cindy Chavez Board Member Present
Johnny Khamis Vice Chairperson Present
A quorum was present.
2. Introductions
Chairperson Bruins provided welcome remarks and a brief overview of the meeting.
3. Orders of the Day
There were no Orders of the Day.
4. PUBLIC PRESENTATIONS
Jim Stallman, Interested Citizen, made the following comments: 1) suggested to not
reduce bus service and re-examine 2000 Measure A funds for bus service; 2) urged
Metropolitan Transportation Commissioners representing Santa Clara County to advocate
for funding for VTA; and 3) suggested Express Lanes toll revenue be used for express
bus service.
Roland Lebrun, Interested Citizen, made the following comments: 1) urged to keep
Express Bus Route 181 and suggested exploring public-private partnerships as a way to
maintain express bus service; 2) advocated for buses over light rail due to cost; and
3) offered suggestions to facilitate employee retirement.
5. Workshop Meeting Summary Minutes of June 8, 2018
M/S/C (Khamis/Chavez) to approve the Workshop Meeting Summary Minutes of
June 8, 2018.
Ad Hoc Financial Stability Committee Minutes Page 2 of 3 August 17, 2018
6. Committee Workshop Results
Stakeholders asked about the process for developing the Committee recommendations.
On order of Chairperson Bruins, and there being no objection, the Committee received
the Committee Workshop Results.
7. Structural Deficit Mitigation Measures
Chairperson Bruins provided a brief overview of the structural budget deficit and
highlighted the Committee’s role.
Raj Srinath, Chief Financial Officer, introduced Carol Lawson, Fiscal Resources
Manager, who provided an overview of the proposed structural deficit mitigation
measures, noting: 1) goals; 2) deficit reduction targets; 3) short-term common themes
from the Committee Workshop meeting discussions; 4) overview of staff proposed
short-term mitigations; 5) overview of staff proposed additional mitigations; 6) selection
criteria for staff proposed mitigation; and 7) overview of long-term mitigation/policy
items for future discussion.
Stakeholders noted their concerns and questions related to the Committee
recommendation process and proposed mitigations. They requested additional review and
discussion and suggested strategies on messaging pertaining to service level adjustments
and ways to increase revenue.
Stakeholders further referenced letters provided to the Committee from Working
Partnerships USA; Amalgamated Transit Union Local 265 (ATU); American Federation
of State, County, and Municipal Employees Local 101 (AFSCME); Service Employees
International Union Local 521 (SEIU); Transportation Authority Engineers & Architects
Association Local 21 (TAEA); and SPUR, outlining additional questions, comments, and
proposals.
Members of the Committee discussed Committee objectives, decision process, and
timeline. They provided the following comments: 1) noted importance of keeping
proposed mitigations in line with VTA’s mission and in the spirit of 2016 Measure B;
2) asked about VTA’s business model and the need for a more balanced “product”; and
3) prioritize topics to be forwarded to the Board for further discussion such as Next
Network service rollout adjustment, capital expansion plans and its financial impacts,
labor efficiencies and other collective bargaining matters, and contributions to regional
partners.
Jim Lawson, Director of Government Affairs & Executive Policy Advisor and Staff
Liaison, noted collective bargaining matters should be discussed in the appropriate
setting.
Ad Hoc Financial Stability Committee Minutes Page 3 of 3 August 17, 2018
Chairperson Bruins briefly discussed next steps, noting no action will be taken on the
proposed mitigation measures.
On order of Chairperson Bruins and there being no objection, the Committee tabled
the recommendation to the Santa Clara Valley Transportation Authority (VTA) Board of
Directors to approve the proposed mitigation measures to address VTA’s structural
deficit and promote long-term financial stability. In addition, direct staff to begin
implementation and negotiation, where applicable, of these measures as soon as feasible.
8. Roundtable Discussion
There was no Roundtable Discussion.
9. ANNOUNCEMENTS
Mr. Lawson expressed appreciation of Stakeholders for their work and contribution to the
committee.
Stakeholders provided comments on capital project impacts and encouraged staff to
examine successful planning strategies by other transit agencies.
Upon query, Chairperson Bruins noted the Committee is anticipated to take action at their
next meeting, and encouraged Committee Members to reach out to staff should they need
additional information.
10. ADJOURN
On order of Chairperson Bruins, and there being no objection, the Committee
adjourned the meeting at 4:25 p.m.
Respectfully submitted,
Michelle Oblena, Board Assistant
VTA Office of the Board Secretary
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Page 1 of 2
From: Adina Levin Sent: Friday, November 16, 2018 2:03 PM To: VTA Board Secretary Subject: Ad Hoc Sustainability Committee
Honorable board members,
Thank you for engaging with the challenges of VTA's financial situation. We are very glad to
see that with the retention of SB1 funds through the failure of Prop 6, and the likely retention of
Measure B funds via the result of the lawsuit, that the financial crisis is less severe.
All options for dealing with the financial crisis are going to be challenging. Given this, we are
puzzled to observe that the potential options being considered at today's meeting focus on
reductions to bus and light rail service. The presentation does not suggest options that affect
capital projects. Any change to expectations will provide disappointment to some voters. In
addition, new capital projects will incur additional operating costs. Building out new capital
projects will deliver less than hoped for results if there is even less budget to pay to operate the
system.
Therefore, we recommend that the solutions evaluated to address the financial issues should
consider re-thinking the capital projects that are on the books, including some capital projects
that have been on the books for many years, and the current and future conditions, and in some
cases the policy goals, are different than anticipated when the projects were initially conceived.
Thank you for your consideration,
- Adina
Adina Levin
Friends of Caltrain
http://greencaltrain.com
From: Jim Stallman Sent: Friday, November 16, 2018 2:23 PM To: Peter Hertan; VTA Board Secretary Subject: FSTF VTA mtg. - regrets
The mtg. looks to be a sham. I had to take my wife to a same day scheduled doctor appt in
Redwood City and won’t be at the mtg.
1. The mtg was scheduled late in a Friday ahead of Thanksgiving break week so as to make it
difficult to attend.
2. The action to be taken is not provided - no proposal list.
3. Yet another financial spreadsheet leaving lots of questions - still haven’t shown the dedicated
voter passed taxes for running buses (& LRT).
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Page 2 of 2
It’s not just sad - it’s diabolically criminal.
I have 3 recommendations:
1. Use bus money to run bus service
2. Keep to the adopted budget so we restore bus service to at least what we had 25 years ago
3. Quit misappropriating taxpayer provided transit money on consultants and instead rely on
staff to do the work as they are quite able to do
OverviewofVTAFinancialCondition
Preparedfor:VTABoardofDirectors
Ad-HocFinancialStabilityCommittee
November,16,2018
Agenda Item #7
HarveyM.RoseAssociates
Foundedin1979,weareaconsultingfirmthatworksprimarilyforstate
andlocaljurisdictionsprovidinganalyticalservicessuchas:
Ø LegislativeAnalysis
Ø PerformanceAudits
Ø BudgetAnalysis
Ø PolicyAnalysis
WewerehiredbyATULocal265toindependentlyassessVTA’sfinancial
condition.
HarveyM.RoseAssociates,LLC 2
VTA’sProjectionsasofJune2017
HarveyM.RoseAssociates,LLC 3
FY18 FY19 FY20 FY21 FY22Revenues $455.02 $466.78 $480.64 $492.85 $505.76Expenses ($475.48) ($493.20) ($509.43) ($514.24) ($531.22)OperatingBalance ($20.45) ($26.42) ($28.79) ($21.40) ($25.46)OperatingReserve $62.60 $42.15 $15.73 $0.00 $0.00SalesTaxStabilizationFund $35.00 $35.00 $35.00 $21.94 $0.54TotalAvailableReserves* $97.60 $77.15 $50.73 $21.94 $0.54OperatingBalance ($20.45) ($26.42) ($28.79) ($21.40) ($25.46)EndingReserves* $77.15 $50.73 $21.94 $0.54 ($24.92)*ReservesrefertotheOperatingReserveandtheSalesTaxStabilizationFund
VTA’sHistoricalBudgetvs.Actuals
HarveyM.RoseAssociates,LLC 4
FY BudgetedRevenues
BudgetedExpenditures
BudgetedBalance
ActualRevenues
ActualExpenditures
ActualBalance
2008 $365,720 $364,191 $1,529 $378,087 $337,713 $40,3742009 $379,686 $371,734 $7,952 $337,584 $342,963 ($5,379)2010 $349,600 $353,395 ($3,795) $346,960 $330,680 $16,2802011 $336,255 $351,898 ($15,643) $371,821 $338,833 $32,9882012 $366,110 $363,967 $2,143 $392,158 $347,443 $44,7152013 $376,825 $375,118 $1,707 $394,289 $356,438 $37,8512014 $392,642 $380,162 $12,480 $404,377 $371,124 $33,2532015 $402,161 $398,846 $3,315 $428,091 $386,129 $41,9622016 $420,189 $419,579 $610 $408,680 $398,361 $10,3192017 $419,836 $435,447 ($15,611) $424,519 $426,066 ($1,547)2018 $455,024 $475,478 ($20,454) $441,731 $447,500 ($5,769)2019 $466,777 $493,195 ($26,418)
ProjectionsAdjustedforActuals
HarveyM.RoseAssociates,LLC 5
FY18 FY19 FY20 FY21 FY22Revenues $441.73 $452.77 $464.09 $475.70 $487.59
Expenses ($447.50) ($463.16) ($479.37) ($496.15) ($513.52)
OperatingBalance ($5.77) ($10.39) ($15.28) ($20.46) ($25.93)
TotalAvailableReserves $97.60 $91.83 $81.44 $66.16 $45.71OperatingBalance ($5.77) ($10.39) ($15.28) ($20.46) ($25.93)
EndingReserves $91.83 $81.44 $66.16 $45.71 $19.78
Assumptionsforourprojections
HarveyM.RoseAssociates,LLC 6
BasebudgetofFY18actualrevenuesandexpenditures.
Revenuegrowthof2.5%annually.
Expendituresgrowthof3.5%annually.
Doesnotinclude:
• MeasureBrevenuesandexpenditures
• $12.7ofunbudgetedstateassistanceinFY2018-19
CapitalProjects
HarveyM.RoseAssociates,LLC 7
VTATransitFundappropriationsforcapitalprojects
AppropriationsthroughFY17
SpendingthroughFY17
Carryover AppropriationinFY18-19
TotalVTATransitFundforCapitalProjects
FY18-19
$195,535,000 $66,373,000 $129,162,000 $62,686,000 $191,848,000
Exampleofprojectcarryover
HarveyM.RoseAssociates,LLC 8
Project AdoptedFundingthroughFY17
SpendingthroughFY17
Carryover AppropriationinFY18-19
Totalfornon-revenue
vehiclesinFY18-19
Non-revenuevehicleprocurement $3,866,000 $2,702,000 $1,164,000 $1,300,000 $2,464,000
ContractAuthority
HarveyM.RoseAssociates,LLC 9
ServiceCategory TotalContractAuthority EstimatedAnnualAuthority
EngineeringConsulting $120,706,863 $32,262,866ContractTransitOperations $117,381,045 $48,756,575ConstructionProjectManagement $99,329,863 $24,544,309ContractStaff $46,889,096 $11,749,773Planning/Strategy $36,863,495 $14,386,155TechnologyServices $27,652,325 $12,826,327FinancialServices $16,016,462 $3,578,067OnCallServices $12,381,049 $2,768,439TechnologyConsulting $7,666,697 $2,726,522EquipmentProcurement $5,182,470 $2,890,871Marketing $4,469,169 $1,632,344Other $4,012,842 $1,653,378LegalServices $2,146,000 $802,612LegislativeAffairs $1,140,000 $227,452Training $976,568 $1,010,610GrandTotal $502,813,942 $161,816,300
Structural Deficit Mitigations
Ad Hoc Financial Stability Committee
November 16, 2018
Agenda Item #8
Deficit Reduction Target
2
• $50-$60 million per year at full
impact:
- Budgeted Operating deficit- FY19 $26M(assumes 1.6M bus hours and 192K light rail hours of
service)
plus
- VTA local share of Capital-
$30M-$35M annual need
Mitigation Measure Options
3
Identified based on:
• Ad Hoc Committee discussions and suggestions
• Board direction at time of FY18 & FY19 Budget Adoption
• Implementation schedule—relatively short
• Financial impact—immediate and ongoing
• Excludes items which require collective bargaining
Mitigation Measure Categories
4
• Incremental Revenues with no VTA
Board action required
• Service Delivery Levels
• Fare & Other
Incremental Revenues-No VTA Board
Action Required
5
MitigationProjected Annual
RevenuesImplementation
Timeframe
Full Revenue Impact
Timeframe
STA/SB1 Revenues $23.0M-$27M* Immediate Immediate
Full Sales Tax collection for online purchases
$5.5M Up to 2 years Ongoing
Total $28.5M-$32.5M
* Represents incremental STA revenue above pre-SB1 receipts. Earlier estimates from MTC totaled $16M, current projection based on latest information available from MTC. Actual revenues received will vary based on diesel prices.
Remaining Deficit Reduction Target
6
$50-$60 million Starting Target
less:
$23-$27 million STA/SB1
$5.5 million Sales Tax-online purchases
~$25 million Remaining Target
Service Delivery Level Options
7
MitigationProjected Annual
Savings/Revenues at Full Implementation
Implementation Timeframe
Full Savings Timeframe
Option 1 Implement Next Network concepts to greatest extent possible with less service than currently provided (~1.4M bus hours, ~150K light rail hours)
$30.0M 1 year FY 2020
Option 2 Implement Next Network concepts to greatest extent possible within currently provided service levels (~1.52M bus hours, ~156K light rail hours)
$14.7M 1 year FY 2020
Service Hours Comparison/Context
8
Service TypeFY18
Actual
FY19
Adopted
Budget
Mitigation
Option 1
Mitigation
Option 2
Bus Service 1,483 1,601 1,400 1,520
Light Rail Service* 153 192 150 156
Total 1,636 1,793 1,550 1,676
* Train Hours
In Thousands
Fare & Other Options
9
MitigationProjected Annual
Savings/Revenues at Full Implementation
Implementation Timeframe
Full Savings Timeframe
Index Fares to inflation $2.0M* 2-3 yearsOngoing/
Cumulative
Voluntary Early Retirement Incentive
$1.0M 3-6 months FY 2020
* Annual revenue impact would grow as fares are re-indexed
VTA Ad-Hoc Stability Plan
Financial Actions
Action Budget Impact Timeline
SB1/STA $23-27 million Immediate
Joint development and value capture (development fees) $2 million 2 years
Full Sales Tax share $5 million Immediate
Congestion/Express Lanes Pricing $5-10 million 2 years
Maintain current service levels (approx. 1.5m hours of bus service) combined with refocus on frequency
$15 million 18 months
Early retirement and staff reorganization through attrition and changes in productivity/leave
$8 million 2 years
Contracting cost reductions $5-10 million 2 years
Total $60-$70 million 2 years
Policy Changes
Policy Impact
Shift $30 million in capital funding from under-budget projects, delayed or canceled projects, and other capital funds to save $30 million bus and light rail operating costs.
Staff has identified that a primary cost driver is low efficiency within the system, estimating that a broad increase in service speeds for bus and light rail could save up to $30 million per year. We propose spending $30 million in capital funds to help make the changes that are necessary to achieve the efficiency improvements.
Set transit funding allocation targets in revenue measures
End the cannibalization of transit funding and the bias toward higher income serving projects like high-capacity rail and highway projects. Standard should be a minimum of 25% allotted to operations in all future measures.
Legal and legislative feasibility of new sources of revenue
Study feasibility (polling, political support) of new sources of revenue including property and rideshare based fees and levies to diversify VTA’s funding base.
Use role as congestion management agency and funder to move cities to make land use changes to help improve transit viability.
While pushing for legislation like AB 2923, which gave BART land use authority on property it owns, VTA can immediately play a more forceful role to make cities change land use to speed up and improve service.
NEXT Network to focus on more on frequency and efficiency.
NEXT Network should be revisited to increase balance to 90% frequency/10% coverage. VTA should incorporate disparate programs (Light rail speed improvement, FAST network, Fare payment technology) into a single broad “Transit Forward” plan.
Address productivity issues by adjusting leave policy
Allow for more flexible use of leave time to allow employees and management to better plan for potential overtime needs.
Begin outreach and consulting process to formulate a business plan
VTA must begin process to prepare itself for a sustainable future business model that includes a more integral role in climate mitigation, real estate, and land use policy.
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