MEMBERS PRESENT: Michael Burns, Jose´ Cisneros, Don Gage, Jim Hartnett, Arthur Lloyd, John McLemore, Michael Nevin, Ken Yeager

MEMBERS ABSENT: Sophie Maxwell

STAFF PRESENT: Michelle Bouchard, George Cameron, Joan Cassman, Cheryl Cavitt, Robert Doty, Rita Haskin, Gigi Harrington, Chuck Harvey, Jennifer Hardie, Ian McAvoy, David Miller, Michael Scanlon, Mark Simon

Chair Nevin called the meeting to order at 9:03 a.m. and led the Pledge of Allegiance.

AWARD OF CENTRALIZED EQUIPMENT, MAINTENANCE AND OPERATIONS FACILITY (CEMOF)

Cheryl Cavitt, Director of Contracts and Procurement, said Staff Coordinating Council (SCC) recommends the Board award the subject contract to the lowest, responsive and responsible bidder, Shimmick Construction/Obayashi Corporation Joint Venture of Hayward, for $56,445,519; authorize the Executive Director to execute a contract in full conformity with the terms and conditions of the solicitation documents; and authorize the Executive Director to exercise contract bid option items for a total amount of $1,944,816, contingent upon available funding.

The recommended award calls for Shimmick Construction/Obayashi Corporation Joint Venture to furnish all materials, labor, tools, plants, supplies, equipment, transportation and project management to construct a new maintenance building and related infrastructure.

Construction is anticipated to begin in April 2005, with completion planned by August 2006. The majority of the construction will be performed during the day (between the hours of 7 a.m. and 7 p.m.), five days a week in accordance with the CEMOF Shared Objectives Agreement. Weekend or swing shift work will be authorized on a limited basis as project requirements dictate.

Funding for this construction contract is included in previously approved capital budgets and no additional member contributions are required.

The Invitation for Bids (IFB) was advertised and distributed throughout the construction industry and 184 potential bidders downloaded plans and specifications from the JPB's website. The basis for determining the low bidder was a combination of the base bid and the option for removal of excavated material.

The District's Disadvantaged Business Enterprise (DBE) Program Office reviewed the bid documents submitted by Shimmick Construction/Obayashi Corporation Joint Venture and determined that the firm complied with the DBE requirements of the bid. The amount of work committed to DBEs is $1.7M or approximately 3 percent of the bid total.

Detailed and careful consideration was given by the Executive Director, staff and legal counsel whether to reject both bids and return to the marketplace with a newly configured package of projects because of concerns that both bids, while very close, were substantially higher (15 percent) than the engineer's estimate, and the fact that there were only two bidders for such a substantial contract. Contact was made with representatives of firms that attended the pre-bid conference but chose not to submit bids. Staff also reviewed more than 100 bidder questions in an attempt to identify if something was inherently wrong with the documents, which could have discouraged additional bidders. From this analysis it was concluded that the requirement for 30 percent of the work to be performed by the general contractor was a significant factor contributing to a lack of bidders, even though it is a common practice in the industry to set such standards. Further, several firms indicated they chose not to bid on this proposal because of prior commitments in staff and resources to other projects. After all such considerations, Staff still recommends that the Board proceed with these bids because award is affordable within the proposed budget and assures that at least the minimum requirements of a maintenance facility could be built.

Director Burns asked about the relationship between Shimmick Construction and Obayashi Corporation.

Ian McAvoy, Chief Development Officer, said the relationship between the two organizations is like a partnership. His understanding is that Shimmick is the lead and Obayashi deals with the financial aspects of the project.

Director Burns asked what the DBE participation was for Stacy & Witbeck, the second bidder.

Mr. McAvoy said the DBE in the second bid was lower than Shimmick Construction/Obayashi Corporation Joint Venture.

Director Burns said although he supports the award, he cautioned that he has had some problems with a joint venture that involves Obayashi Corporation in San Francisco.

Director Yeager asked if there would be any areas where more than $11.2 million in local funds would be spent.

Mr. McAvoy said there is a contingency in the budget for the project in case change order issues arise. As with most construction contracts, it is staff's responsibility to manage the scope schedule and budget schedule.

Director Yeager asked if the any remaining local funds would go back into the general fund.

Mr. McAvoy replied that the funds would go towards the award of Package C of this project, which includes other high-priority elements such as the control center.

Director Yeager asked if the money could be used as operating funds.

Mr. McAvoy replied that state funds could not be used for non-capital issues.

Richard Mlynarik, San Francisco, said the Lenzen Yard is inadequate for this project because it is not sufficient for Caltrain's current or future needs. However, Caltrain will be marginally better-off with the yard facility.

The motion to award the contract to Shimmick Construction/Obayashi Corporation Joint Venture was unanimously approved, by roll call, and Resolution 2005-13 was adopted.

FY 2006 BUDGET WORKSHOP

Michael Scanlon, Executive Director, said many alternatives would be presented relative to the significant financial deficit that Caltrain will have in Fiscal Year 2006. The alternatives will be presented with the flavor of a private business versus public sector. Mr. Scanlon said this is a difficult time for Caltrain but also a historic time. Following the board workshop, staff members would be available to speak to the members of the press in the TA conference room.

Virginia Harrington, Chief Financial Officer, presented an overview of the history of the recent revenues and expenditures of Caltrain. She also presented FY2006 budget assumptions and a base budget. FY2006 revenues are projected at $64.9 million and expenditures at $78.5 million, leaving a $13.6 million shortfall.

Robert Doty, Acting Chief Operating Officer, presented productivity and on-time performance of Caltrain, revenue generations (including fare increase proposals), operational expenses and operating efficiencies. He also discussed the cost of train stops and the cost of hold-out station improvements. Mr. Doty outlined that net costs for weekend service are $2.3 million, net costs for Gilroy service are $315,000, net revenues for 30-minute weekday mid-day service are $770,000 and net revenues for hourly weekday mid-day service are $1,075,000. New service must optimize revenue, retain local service but remove slowest trains, optimize crew and equipment utility, maximize station access and be expandable without additional infrastructure, he said. A rush-hour pattern that pulls in passengers by providing preferred service with higher average fares, improves revenue in excess of the marginal expense of the service. Two additional Baby Bullets can immediately be placed in service for no additional cost and would net $415,000 in revenue.

Mr. Doty said station agents account for 25.7 percent of ticket sales with San Francisco and San Jose agents selling 20 percent of tickets alone. Removing all ticket agents except San Francisco and San Jose, a total of 7 agents, would produce a savings a $600,000. Removing all ticket agents, a total of 13, would produce a savings of $1.3 million. Mr. Doty cautioned that the potential revenue is unknown and there would be 13-c labor protection expenses.

Mr. Doty said staff looked at "life-line" service. This schedule incorporates 60 trains a day with half-hour peak service, hourly mid-day, hourly weekend and only operates from San Francisco to San Jose. Basically, this service kept the bullets in place but stripped all the other service down to an absolute minimum. Analysis showed this service did not close the budget gap because the most revenue producing trains were cut and the earned revenue per employee decreased. There was also a decrease in ridership and revenue, which would contribute to making the gap wider because the cost per trip would be higher.

Mr. Doty presented alternative "Super-88", which would remove system constraints, optimize preferred service, institute an expandable service to five or six trains per hour, maximize potential capacity, maximize revenue potential and increase productivity. This service scenario would provide half-hour bullet trains, eliminate local trains but provide local service by blending traffic, and would save 15 minutes end-to-end on every train. To achieve this efficiency, the service must have fewer stops. The new Baby Bullet stops will be at stations with ample parking. The new efficient pattern would yield $2.5 million in revenue and cost savings. The 17.5 percent fare increase with this schedule would yield $3.4 million, producing a total benefit of $5.9 million.

Mr. Doty said any benefits from the system will have to be grown into and will not be seen immediately. He said any changes need to be looked at on a systemwide basis and can not be seen individually. There are also external risks that can not be measured, such as fuel cost. Mr. Doty cautioned that even with proposed changes, there will still be a budget deficit.

Mr. Doty said public meetings will be held on March 23 in San Francisco, San Mateo and Santa Clara counties. A public hearing will be on April 7 at the JPB board meeting, a special board meeting will be held April 22 and a draft budget will be presented to the board on May 5.

Ms. Harrington presented five possible shortfall reduction scenarios with two different fare structure increases. Each scenario assumed weekend service would be eliminated, a fare increase would go into effect, station agents would be reduced, there would be a willingness to use the remaining reserves and that operating efficiencies would be identified.

Director Gage said the proposals lack regional effects. For example, if more member contribution is needed for Caltrain, Valley Transportation Authority (VTA) would need to cut its service to cover the extra funds.

Mr. Scanlon said Caltrain is one of the most unappreciated services in the Bay Area, in his opinion. Caltrain provides the longest trips in the region and are almost exclusively choice rides. Caltrain is regional commuter railroad.

Director McLemore said VTA is showing a three percent increase of member contribution over the next two years, which is not reflected in the scenarios presented today and he would like that to be incorporated. Director McLemore said working through MTC, Federal monies may be used to offset regular maintenance structured in the yearly budget, which he would also like to see included in the proposals because it would make the deficit less. He said he thinks there should be a 25-cent fare increase and the Super-88 schedule should be implemented. He also suggested implementing the new Baby Bullets as soon as possible so the impact could be seen this fiscal year.

Mr. Scanlon said staff provided a base-case budget that showed no increase to account for a cost-of-living increase or an increase from Santa Clara County. Mr. Scanlon said capital maintenance has never been used in Caltrain's history and added there are certain restrictions. He did say that some money may be available through the Surface Transportation Program (STP) and Congestion Mitigation Air Quality Program (CMAQ).

Director Hartnett said his impression is that the Super-88 schedule and the 25-cent fare increase makes sense. He said he would not be comfortable depleting the remains of the reserves, as $1.4 million is already too low.

Director Yeager asked if staff had looked at administrative personnel to see if there were any potential savings.

Mr. Scanlon said all the scenarios are assuming $1 million can be saved in Caltrain's virtual organization. He said there are only 40 full-time equivalents.

Director Yeager asked if capital projects could be scaled back as a way to get revenues back into operating.

Mr. Scanlon said if service was suspended at some of the hold-out stations, construction would not need to be done and some capital money would be saved. However, capital monies can't be transferred to operating.

Director Yeager asked if that were true even if there was a local match.

Mr. Scanlon said if there is a true local match, there could be a transfer. But this year Caltrain did not have a match from VTA because monies were swapped. San Francisco and San Mateo could possibly get a small amount of cash to convert to operating.

Director Yeager asked if the money was transferred to operating, would federal money be lost.

Mr. Scanlon said yes, leveraging would be lost.

Mr. McAvoy said with the capital program, everything works three to five years in advance. For the last two years, Caltrain has been creative with local match requirements. With the VTA, regional federal funds were included in a project in San Mateo County that was otherwise being funded by San Mateo County Transportation Authority (TA). In essence, there is no true capital dollars coming from Santa Clara. In San Francisco, Measure K funds are being used and have the restriction for capital programs only. The existing Measure A for San Mateo County is also restricted in providing capital funds only. Mr. McAvoy said staff is looking at delaying some capital projects with the exception of the Centralized Maintenance Equipment and Operating Facility (CEMOF) and other system integrity projects.

Director Cisneros asked what the difference is between weekend and partial weekend service. Mr. Scanlon said the partial weekend service would operate trains every one-and-a-half hour as opposed to every hour.

Director Cisneros asked if staff analyzed two-hour headways.

Mr. Doty said due to the sheer number of combinations, staff did not identify every option.

Mr. Scanlon said that in his opinion, if the train doesn't run every hour, it may as well not run at all. At that point, the service would be more life-line and for the transit dependent. A reliable ridership base would not be developed.

Director Burns asked if the public hearings would address the service issues and fares.

Mr. Scanlon said at the next regular JPB meeting, there will be two public hearings. One to ascertain if there is a fiscal emergency and the second for service changes and fares. There will also be public meetings in each of the three counties; San Francisco, San Mateo, Santa Clara.

Director Burns asked if the fiscal emergency would apply to station eliminations.

David Miller, Legal Counsel, said the fiscal emergency determination is an arithmetic calculation. Mr. Miller is convinced that the JPB has that base and many options are legitimately under consideration.

Director Lloyd said he supports an hourly headway for weekend service. He believes elimination of some of the stations is in order because the capital expenditures would also be eliminated. Director Lloyd asked if staff could analyze labor savings by having train crews reduced from four- persons to two-persons, which could de done through attrition.

Mr. Scanlon said Caltrain could run safely with two-person crews but the requirements are set under the national labor contract. If there were to be reductions, they would have to be done through attrition because of the 13-c labor conditions.

Director McLemore would like staff to implement the following issues into the scenarios before the public hearing; not having the reserves depleted, add a three percent increase from VTA, closure of at least two stations, don't entertain the 60 or 66 train schedules, and have a 25-cent fare increase.

Director Gage said the JPB needs to look at worse-case scenarios. The board will need to identify and explore all the options.

Richard Mlynarik, San Francisco, said he agrees that weekend service should run every hour otherwise, don't run at all. He said the midline overtake is the most important capital project that the system needs. He doesn't think enough emphasis was placed on how expensive it is to eliminate the hold-out rule at some of the stations.

Jeff Carter, Burlingame, said he hopes there is a way to run service without significant cutbacks. He suggested having a surcharge for San Francisco and Santa Clara counties since they still owe San Mateo County for the purchase of the right-of-way. Mr. Carter said he believes weekend ridership has a significant effect on the weekday ridership. He asked how much ridership is attributable to weekends, public outreach and the rise in gas prices. With regard to closure of stations, there needs to be an option for reopening the stations in the future, he said. Mr. Carter also believes Caltrain needs a dedicated funding source.

John Carpenter, Mountain View, suggested reducing the number of train sets used in the mornings, which could improve service and reduce the number of train sets in the system. He also suggested having a local train as the last evening train.

Francis Wong, Mountain View, said he supports the fare increase and the retention of Gilroy service. He suggested keeping weekend service but using a bullet type service instead of all locals. He also suggested establishing a pool of gallery cars for additional bullet service.

Doug DeLong, Mountain View, asked if the Super-88 schedule is better, why doesn't Caltrain run even more trains. The modeling may show there would be even more revenue.

Mr. Scanlon said staff did explore other options and Mr. DeLong can speak to staff.

Brian Wilfley, Los Altos, said he supports the Super-88 train schedule. He does not support the elimination of weekend service.

Michael Kiesling, San Francisco, said in addition to stopping the trains where there is ample parking, all Baby Bullet trains should stop at certain stops (i.e. Palo Alto). He agreed that regional effects need to be explored.

Jack Ringham, Atherton, said there should be premium fares for Baby Bullet or perhaps premium fares for peak service. He suggested eliminating senior discounts, charging for bicycles and having overnight and weekend parking at available stations. Frequency is more important than the time of trip for off-peak riders and running shorter trains would facilitate more frequent trips, he said. Mr. Ringham also suggested advertising inside the cars and reducing train wraps. He would like to see internet ticketing.

Chair Nevin asked if staff has explored charging premium fares for the Baby Bullet service.

Mr. Scanlon said the option has been discussed. There are complications with logistics and there is not a staff recommendation at this time.

Director McLemore said people understand that Caltrain is saving money by the Baby Bullet and an increase might be harmful. Director McLemore reiterated that he believes the two additional Baby Bullet trains should be implemented immediately to impact the current fiscal budget, if possible.

Mr. Doty said it would take approximately one month to implement the additional bullet service.

Director Hartnett asked what the staff recommendation was with regard to weekend service.

Mr. Scanlon said he would like to see weekend service continue. He said it is important to have the opportunity for supporters of public transportation to ride on the weekends. Staff will consider the limited stop suggestion for weekend service.

(Director McLemore left the meeting at 11:22 a.m.)

Director Hartnett said in addition to his support of the Super-88 schedule and the fare increase, he would also support reduction of mid-line ticket agents through attrition.

Mr. Scanlon summarized that the board is in support of the Super-88 schedule, the 25-cent base and 25-cent zone increment fare increase, continuation of Gilroy service, no change in weekend service, the possible suspension of service of up to four stations, and any reduction of Amtrak staff or ticket agents would be done through attrition. Staff will also continue looking for other solutions.

Director Hartnett added that the operating reserves should not be depleted.

Director Gage suggested using a service like Ticketron for weekend service so the number of riders would be known and the adequate number of trains could be operated.

Mr. Scanlon said staff can explore the option, particularly for special events.

DATE/TIME OF NEXT MEETING

Thursday, April 7, 2005, 10 a.m. at the San Mateo County Transit District Administrative Building, 1250 San Carlos Avenue, San Carlos, CA 94070

ADJOURNED

Meeting adjourned at 11:30 a.m.