Caltrain board discusses new governance options

Director Dev Davis, also on the San Jose council, said option three was the most ideal in theory but not currently due to the complexity and cost.

“I have really grave concerns about option three and part of that is because governance costs just this year, when we haven’t even tried to do any type of transition or change but just study them, have already gone over budget and stressed the organization, and that is a huge concern for me,” Davis said.

Caltrain governance discussion began after the board in August 2020 approved a resolution placing Measure RR on the ballot, a sales tax increase in San Mateo, San Francisco and Santa Clara counties for Caltrain funding. The resolution also included a commitment to create and approve a governance recommendation by December.

The Aug. 20 Caltrain meeting discussed three options, a refined shared services model, a new shared services model, or a potential independent Caltrain agency. Option one would keep the San Mateo County Transit District, known as SamTrans, as the managing agency of Caltrain, which is the current arrangement. It would offer increased oversight from the rest of the Caltrain board of the executive director and services but offer the least amount of governance change.

Option two would be a new shared service model, giving the Caltrain board greater expanded oversight and authority. It includes direct employment of the executive director and senior leadership and increased oversight for services currently provided by SamTrans. The third option would dissolve the managing agency model and replace it with a separate, independent Caltrain. The agency would directly manage and administer the railroad, either through reorganizing a Joint Powers Authority or forming a special district.

Davis noted Caltrain needs its own staff for some tasks and areas, with potential discussion for option two.

“Option two has a lot of room for us to maneuver and to get to an agreement amongst our board, and that will hopefully be palatable to all the boards of the member agencies,” Davis said.

Director Steve Heminger agreed with Davis, noting option three would be expensive and complicated. He rejected option one and felt it didn’t create enough change. He suggested option two include additional sub-options to consider.

“Something in the neighborhood of option two deserves further consideration,” Heminger said.

Several board members representing SamTrans recommended looking at option one further. Director Jeff Gee, also on the Redwood City Council, thought option three was not sustainable or achievable financially and favored discussing options one and two.

“I would like to see an equitable conversation and evaluation of bucket one and bucket two at the next meeting because I don’t think we’ve spent enough time on option one as we have on option three,” Gee said.

Director Dave Pine, serving as a San Mateo County supervisor, declared option three prohibitively expensive, leaving options two and one.

“There’s a certain natural tendency to take the middle ground and say let’s look at option two, which I understand. But I think we have to understand option two’s cost and disruptions are still very significant,” Pine said.

Director Charles Stone, currently Belmont mayor, observed option three was unrealistic and would destroy the intent of Measure RR. He had financial concerns about some of the options, given Caltrain’s financial state.

“If we can’t afford what we are doing right now, how would an independent agency possibly afford taking on tens of millions of dollars of one time in annual costs, plus some sort of pension obligation?” Stone said.

Caltrain must resolve several issues if it picks an option. There would be liability costs, pension obligations and employee transfers. Some SamTrans employees would have to switch employment to Caltrain, likely leading to Caltrain taking on financial obligations related to pensions, including unfunded accrued liability, medical benefits and paid time off. The cost of these liabilities has not been determined, with wide-ranging estimates.

A legal process would occur, with all three options legally feasible. Option one would require fewer legal resources to implement and would take six to 18 months and cost for legal resources $750,000 to $1.5 million. Option two would be more expensive and take more time due to Caltrain and SamTrans negotiations, ranging from 12 to 18 months and require legal resources of $1.5 to 2.5 million. Option three would take one to three years and cost $2.5 to $4.5 million.

The governance talk touched on reimbursing SamTrans for its purchase of the original right of way, which has caused tension on the board. The previous Caltrain governance June meeting ended early over concerns about potential litigation due to right-of-way repayment concerns involving the three partner agencies that make up the Peninsula Corridor Joint Powers Board, which runs Caltrain. The city and county of San Francisco, SamTrans and the Santa Clara Valley Transportation Authority are the three agencies represented.

Director Monique Zmuda noted repaying SamTrans was of great importance as the discussions continued.

“Certainly I think paying SamTrans what is owed to them is a very high priority and should be continued to be one of the first functions that we want to complete and also to take a look at shared services to see how much we want to stay with SamTrans if this is the direction that we ought to go to,” Zmuda said.

Letters between the partner agencies have been exchanged. Michelle Bouchard, acting executive director of Caltrain, has convened meetings with general managers from all partner agencies on right-of-way repayment discussions, with meetings ongoing. Caltrain has also alerted the Metropolitan Transportation Commission of its potential need for talks.

Bouchard noted a resolution was crucial to help with organizational stability and to continue Caltrain recovery.

“It’s critical that the governance discussion as we’re having it that it comes to a resolution expediently, but it’s important the manner in which it gets resolved,” she said.

A governance meeting will take place in September and another Oct. 22.

curtis@smdailyjournal.com

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