Ad Hoc Financial Stability Committee Friday, March 9, 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 3:01 p.m., in the VTA Auditorium, 3331 North First Street, San José, California. 1. ROLL CALL Attendee Name Title Status Jeannie Bruins Chairperson Present Cindy Chavez Member Present Johnny Khamis Member Present 2. Introductions Committee Members: Jeannie Bruins, City of Los Altos Councilmember and VTA Ex-Officio Board Member Cindy Chavez, County of Santa Clara Supervisor and VTA Board Member Committee Stakeholders: Glenn Hendricks, City of Sunnyvale Mayor, VTA Alternate Board Member, and VTA Policy Advisory Committee (PAC) Member Tammy Dhanota, Service Employees International Union (SEIU) Local 521 and VTA Employee Christine Fitzgerald, VTA Committee for Transportation Mobility and Accessibility (CTMA) Chairperson and Silicon Valley Independent Living Center Employee Kyle Timmins, Santa Clara Coalition of Chambers of Commerce (Alternate) and Vice President of Comerica Bank Ratna Amin, SPUR Transportation Policy Director Ray Hashimoto, VTA Citizens Advisory Committee (CAC) Member and Principal at HMH Gabe Gonzalez, Santa Clara County City Managers Association and City of Gilroy City Administrator Raj Sehdev, Transportation Authority Engineers & Architects Association (TAEA) President and VTA Employee Asn Ndiaye, South Bay AFL-CIO Labor Council and VTA CAC Member
Committee Stakeholders: (continued) VTA Staff: Steve Jovel, American Federation of State, County, and Municipal Employees (AFSCME) Local 101 Chapter President and VTA Employee Ronnie Smith, Amalgamated Transit Union (ATU) Local 265 (Alternate) and VTA Employee Jim Lawson, Director of Government Affairs & Executive Policy Advisor Nuria I. Fernandez, General Manager and CEO Evelynn Tran, Deputy General Counsel Raj Srinath, Chief Financial Officer Member Khamis arrived at the meeting and took his seat at 3:07 p.m. Member Khamis introduced himself as City of San Jose Councilmember, District 10, and VTA Board Member. Chairperson Bruins provided introductory remarks, noting formation of the Committee through VTA Board Chairperson Sam Liccardo s leadership, and the Committee s role of offering recommendations and approaches to the VTA Board of Directors to address VTA s structural deficit. She expressed appreciation of stakeholders for their participation and dedication to this endeavor. Upon query of Chairperson Bruins, Mr. Lawson provided clarification on the committee structure and stakeholder role. Alternate Stakeholder Matt Quevedo arrived at the meeting and took his seat at 3:10 p.m. Alternate Stakeholder Quevedo introduced himself as representing the Silicon Valley Leadership Group (SVLG). Chairperson Bruins noted public comments pertaining to any item on the agenda will be taken under Agenda Item #3 Public Presentations. She proposed the following changes to the agenda: 1) defer Agenda Item #6 Receive an overview of emerging trends in transportation, to the next meeting; and 2) hear the agenda items in the following order: Agenda Item #9 VTA s Budget/Structural Deficit Review, followed by Agenda Item # 11 Roundtable Discussion, then Agenda Item #12 Committee Work Plan, and lastly, Agenda Item #10 Independent Consultant Work Scope. 3. PUBLIC PRESENTATIONS Roland Lebrun, Interested Citizen, made the following comments: 1) suggested discontinuing the light rail Commute Express Service due to cost; 2) asked what factors contributed to the increase in farebox recovery for January 2018; and 3) expressed concern on fare collection discrepancies via Clipper cards and card reader functionality on buses. Ad Hoc Financial Stability Committee Minutes Page 2 of 6 March 9, 2018
Jim Stallman, Interested Citizen, commented on funding opportunities through the State of California and the Metropolitan Transportation Commission (MTC). He noted the Alameda-Contra Costa Transit District (AC Transit) marketing campaign on increasing bus service and suggest VTA embark on a similar strategy. Aaron Morrow, VTA CTMA Vice Chairperson, commented on local economic conditions and impact of ridesharing services and transportation network companies (TNCs) to transit ridership. He noted paratransit service should be examined cautiously and urged the Committee not to change the program. 4. Voting to Determine the Ad Hoc Financial Stability Committee Vice Chairperson Member Chavez nominated Member Khamis as Committee vice chairperson. M/S/C (Chavez/Bruins) to close nominations and elect Member Khamis as the Ad Hoc Financial Stability Committee Vice Chairperson. RESULT: APPROVED [UNANIMOUS] Agenda Item #4 MOVER: Cindy Chavez, Member SECONDER: Jeannie Bruins, Chairperson AYES: Bruins, Chavez, Khamis NOES: None ABSENT: None 5. 2018 Ad Hoc Financial Stability Committee Meeting Schedule M/S/C (Chavez/Khamis) to approve the 2018 Ad Hoc Financial Stability Committee Meeting schedule. RESULT: APPROVED [UNANIMOUS] Agenda Item #5 MOVER: Cindy Chavez, Member SECONDER: Johnny Khamis, Vice Chairperson AYES: Bruins, Chavez, Khamis NOES: None ABSENT: None 6. (Deferred to a future Committee meeting.) Receive an overview of emerging trends in transportation. (Verbal Report) 7. Financial Recovery History Mr. Lawson provided an overview of the staff report, highlighting the previous Ad Hoc Financial Recovery Committee s recommendations and key principles. reviewed the financial recovery history. Ad Hoc Financial Stability Committee Minutes Page 3 of 6 March 9, 2018
8. Ad Hoc Financial Stability Committee Purpose Mr. Lawson provided a brief overview of the staff report. Member Chavez noted an assessment of VTA s financial challenges could help better understand short-term and long-term implications of any recommendations. reviewed the Ad Hoc Financial Stability Committee purpose. 9. VTA's Budget/Structural Deficit Review Raj Srinath, Chief Financial Officer, highlighted VTA s structural imbalance, noting revenues are not keeping up with expenses. He introduced Celia Pedroza, Budget Administration Manager, and provided a presentation on VTA's budget/structural deficit, noting: 1) past sales tax measures and their purposes; 2) competing uses for revenue dollars; 3) overview of Fiscal Year (FY) 2018 and FY 2019 adopted operating budget revenues, noting volatility of sales tax-based revenues; 4) FY 2018 and FY 2019 adopted operating budget expenses; 5) adopted service level budget impact for bus and light rail service hours; 6) structural imbalance concerning operating and capital expenditures; 7) overview of actual and projected expenses; 8) summary of FY 2018 and FY 2019 expense mitigations and additional funding; 9) funding opportunities for future VTA local share of capital; 10) overview of total deficit; and 11) options to address structural imbalance and deficit management options. Discussion ensued on the following: 1) sales tax revenue volatility, growth assumptions, and availability of funds; 2) major capital projects not addressed under 2000 Measure A; 3) other funding sources; 4) staffing vacancies and labor-related expenditures; and 5) breakdown of service delivery costs by major categories. Members of the Committee and Stakeholders made the following comments: 1) noted the importance of identifying the long term impact of capital projects to operating expenditures and requested information on capital expenditures be presented as separate categories, highlighting: a) actual project investment; and b) expenses pertaining to operations or state of good repair (SGR) of that investment; 2) asked what structural deficit would look like if VTA was achieving its farebox recovery goal; 3) asked what is VTA s yearly capital expenditure across all projects; 4) requested for written clarification on factors behind projected expense increase between FY 2017 and FY 2018 and mitigation measures applied; 5) asked about funding source for TAEA staff wages; 6) requested information on compensation for VTA s contracted paratransit service provider; 7) suggested staff examine best practices from peer transit agencies concerning funding strategies and revenue sources; 8) requested for a list of current staffing vacancies; 9) noted the importance of strategic marketing efforts; 10) suggested further examination of expenses, such as labor-related costs and re-evaluating Next Network; 11) requested for information comparing operating expense of various bus sizes in VTA s fleet; and 12) asked for a comparison of bus service and light rail service operating costs. Stakeholder Dhanota left the meeting at 4:36 p.m. Ad Hoc Financial Stability Committee Minutes Page 4 of 6 March 9, 2018
Alternate Stakeholder Tim Markham, representing SEIU Local 521, took his seat at 4:37 p.m. received an overview on VTA s Budget/Structural Deficit Review. 11. Roundtable Discussion 12. Committee Work Plan The Agenda was taken out of order. Agenda Items #11 and #12 were heard together. Members of the Committee and Stakeholders provided input on the Committee Work Plan and requested the following for the April 2018 meeting: 1) presentation on emerging trends in transportation; 2) presentation on Next Network to better understand system efficiencies and fiscal impact of service changes; 3) assessment of similar transit agencies and how they address fiscal challenges; and 4) additional information on VTA contributions to partner agencies. There were requests for additional information at a future meeting on operational expenditures related to planned capital projects and exploring consolidation of equipment to minimize maintenance efforts. Stakeholders highlighted the importance of ensuring paratransit coverage and service to low income and transit dependent communities are not negatively impacted in this process. reviewed the Committee Work Plan. 10. Independent Consultant Work Scope Members of the Committee made the following comments: 1) noted identifying key drivers of the structural deficit, understanding VTA s business model, and prioritization are important; 2) noted consideration of funding for activities related to VTA s role as the region s Congestion Management Agency; and 3) requested additional information on past ballot measures. Stakeholders made the following comments: 1) suggested longer forecasting periods and requested information on best practices from other transit agencies on maximizing revenue; and 2) requested a copy of the specific recommendations from the 2008 study. reviewed the Independent Consultant Work Scope. 13. ANNOUNCEMENTS Chairperson Bruins announced the next meeting of the Ad Hoc Financial Stability Committee is scheduled for April 13, 2018, in the VTA Auditorium. Ad Hoc Financial Stability Committee Minutes Page 5 of 6 March 9, 2018
14. ADJOURNMENT adjourned the meeting at 5:03 p.m. Respectfully submitted, Michelle Oblena, Board Assistant VTA Office of the Board Secretary Ad Hoc Financial Stability Committee Minutes Page 6 of 6 March 9, 2018