Caltrain board approves electrification cost hike

Caltrain’s electrification project faces $462 million in additional costs following its settlement agreement with contractor Balfour Beatty Infrastructure, higher than its initial June estimate of $333 million. The cost overruns were previously estimated by the Federal Transit Administration, but it was before the settlement agreement. The settlement resolved disputes around additional costs from the project extension to 2024 announced in June. COVID-19 related delays, utility issues and real estate have also played a role in increasing costs, Caltrain staff said. The Caltrain Modernization Program will electrify 51 miles from San Francisco’s Fourth and King Caltrain Station to San Jose, converting diesel-hauled trains to electric. The project would improve train performance, capacity, regional air quality and reduce greenhouse gas emissions.

At its Dec. 6 meeting, the Caltrain board voted to settle with Balfour Beatty and approved increasing the project budget from $1.98 billion to $2.44 billion. The agreement establishes a shared risk pool to manage future potential issues jointly.

Board Member Steve Heminger supported the additional funding for the project. However, he cautioned the board to prepare for the worst when it comes to a funding strategy. Heminger noted only slightly more than half of the extra costs are known and covered through federal grants and Measure RR funds, with the rest still to be found. He said there could come the point when Caltrain reaches a dicey financial situation if it cannot find funding.

“I think there is a reason for some optimism given the fact that this agency has been quite successful in attracting federal and state grants. The project itself is a pretty attractive project for those sources of funds, especially since it is under construction,” Heminger said.

While Caltrain staff have found funding sources for half of the increase, it is looking for around $200 million from various sources. Caltrain is targeting funding from its financial partners and federal and state options. It has received around $52.4 million from the federal government, with the Federal Infrastructure and Investment Jobs Act and the state transportation budget as additional funding options. Credit financing will cover another $150 million, with Measure RR capital reserve funding accounting for $60 million. Measure RR is an eighth-cent sales tax passed by voters from San Mateo, San Francisco and Santa Clara counties in 2020 for funding for long-term Caltrain projects. If federal or state grants are not sufficient, Caltrain could commit to using its own funds through member agencies’ funding. The three agencies are the San Mateo County Transportation Authority, Santa Clara Valley Transportation Authority and the San Francisco County Transportation Authority. However, Caltrain staff said it was hopeful it could use other funding sources before it would come to that. Other options include Measure RR revenue, proceeds from bonds secured by Measure RR, or low carbon fuel standards credit revenue. Caltrain is reluctant to use Measure RR funding because it is using it to replace both lost ridership revenue and member agency funding due to the pandemic.

Board Member Shamann Walton, also the president of the San Francisco Board of Supervisors, was concerned that the funding proposal did not have known sources for all needed funding. He wanted to do everything possible to protect Measure RR funding. However, he noted the entire region and state needed the project.

“I think we should do everything we can in our power to make sure that is not a source we have to touch moving forward with the project, but also understanding we need to do everything we can as a rail system to make electrification possible. Meaning, all sources or resources that are available may have to possibly be utilized,” Walton said.

Board Member Cindy Chavez, a member of the Santa Clara County Board of Supervisors, preferred using Measure RR funds instead of relying on member agency funding. She noted the pandemic has resulted in fewer passengers and less funding available.

“The strain on our local resources is significant. [Measure RR] would be, in my mind, preferable to our member agencies’ contributions,” Chavez said.

However, others were wary of using Measure RR funds. Board Member Glenn Hendricks, also the vice mayor of Sunnyvale, supported the lowest risk and cost approach but was frustrated by the process and did not want to use Measure RR funds.

“I am not a big fan that we are going to potentially have to go into [Measure] RR. We will see how that plays out down the road, but that’s not where I would like to see us end up in,” Hendricks said.

curtis@smdailyjournal.com

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