BayRail Alliance

Memo to the VTA Board

August 7, 2008

After eight years of planning, VTA still does not have the financing lined up to pay for the construction and operation of the Silicon Valley Rapid Transit project. Each proposal for new money, when granted, ends up surprising the VTA board when it learns the new funds are inadequate. At that point the usual course has been for the VTA to go out again for more money. As you will see from our attached analysis, the proposal for a new sales tax (one– eighth of a cent) will not raise enough money, and VTA will have to go out again for yet another tax.

Voters and the VTA Board need to know what BART will really cost, both for capital and operating.

In 2000, VTA asked voters to approve Measure A, a tax that was to raise $6 billion. The Expenditure List assigned $2 billion to the BART project.

In 2001, after Measure A was approved, VTA began negotiations with BART over a “buy–in” fee. BART’s figure was about double what VTA had estimated. It was agreed to begin at $48 million a year, and increase at the rate of Santa Clara County sales tax collections, in perpetuity. The base year is 2002, six years ago. The current buy–in figure is higher now than the initial $48 million.

In 2002, VTA acknowledged that it had a long–term, 25–year operating deficit of $6 billion. VTA continued to cut bus service while continuing to move the BART project forward.

Also in 2002, VTA agreed to have the BART buy–in figure taken directly from its TDA allocation, unless VTA could come up with a sound alternative source of funds. The TDA is used to run VTA’s buses, and VTA has not yet come up with a reliable alternative to providing the TDA funds to BART.

In 2003, the Chief Financial Officer of the VTA released a report to the “Ad Hoc Expenditure Committee” that showed for the first 22 years of the 30 years of Measure A, VTA’s expenditures would exceeded its revenues. The principal driver of this situation was the cost of building BART. The CFO wrote to the VTA Board about financing alternatives: “The end result of this was that the BART project would be completed in FY 2026 and we were still
unable to maintain a positive cash flow.”

In 2006, VTA worked the county to ask voters for one quarter of a cent to solve its financing problems. That was probably not enough money, but the voters said No.

Now in 2008, with costs rising, VTA is prepared to ask voters for one eighth of a cent, to fix its problems and move BART along. But if one quarter of a cent was inadequate, how will a one eighth of a cent tax solve the problem?

We estimate that, WITH a new one eighth of a cent tax, when the BART line opens in 2017, that VTA will be underwater by at least $15 million a year with the buy-in. And the red ink continues through the life of Measure A. That is because the tax is inadequate to the task.

Before more money is assigned to the BART project, shouldn't everyone agree on what it will cost and on what funds are available to pay for it?

Attachments:
VTA memo: BART Operating Subsidy
VTA cost estimate by BayRail Alliance
Relevant pages from the Comprehensive Agreement between BART and VTA

Time/date: August 15 - 27, 2007

Source: MTC

After 18 months of analysis and stakeholder involvement, a draft regional rail plan for expanding the region’s network of rail lines has been completed.

The Draft Regional Rail Plan was made to identify potential rail passenger and rail freight improvements for the near-, intermediate-, and long-term and the economics of different scenarios.

Come to one of a series public meetings (listed below) where you can:

* See and comment on what’s proposed to move people and freight throughout the region in the coming 50 years

* Learn how the regional rail network would be enhanced with proposed California high-speed rail investments (and view alternatives for bringing high-speed rail into the Bay Area)