CEO Report – August 2019

The purpose of this monthly CEO Report is to keep the Board and the public apprised of important events and milestones related to the high-speed rail program. Although there is no Board meeting in August, I want to inform Board members of recent progress on a number of important fronts.

Specifically, there have been several significant developments over the last month that I believe will have a positive impact on our progress going forward:

NEPA Assignment

• In July, the State and the Federal Railroad Administration (FRA) entered into a Memorandum of Understanding assigning to the State the FRA’s environmental review responsibilities under the National Environmental Protection Act (NEPA) under a program known as NEPA Assignment.
• With NEPA Assignment, we can now move forward with the completion of environmental approvals for all Phase 1 projects between San Francisco and Anaheim, which will allow us to continue construction progress in the Central Valley and meet our federal grant commitments.
• NEPA Assignment allows the Authority to complete the environmental review process in a manner that is more efficient and cost-effective while still maintaining the same level of rigorous review and opportunities for public input.
• California is now the only state to have NEPA Assignment for both highway and rail projects. Under NEPA Assignment, the California State Transportation Agency (CalSTA) and the Authority will “step into FRA’s shoes” to provide the same level of oversight and independent review the FRA has provided in the past.
• It is important to note that the FRA still retains certain responsibilities and we will be working closely with them to coordinate our efforts going forward.
• We have established a dedicated “NEPA Assignment Team” to work directly with project teams and federal partners to inform project decision-making and provide ongoing oversight.
• We will be further briefing the Board on this development at the September Board meeting.

Settlement with Kings County

• On August 15th, the Authority and Kings County announced that we had signed three major agreements that will clear the way for substantial progress in Kings County in the Central Valley.
• The first agreement was a settlement that will result in the dismissal of the final pending California Environmental Quality Act (CEQA) lawsuit against the Authority for the Fresno to Bakersfield Project Section Environmental Impact
• Report/Environmental Impact Statement (EIR/EIS).
• The Authority and the Kings County Board also signed cooperative agreements related to coordinating ongoing construction efforts in Kings County, and the maintenance of several grade-separation projects crossing Kings County roadways.

Opening two grade separations in Madera County – Avenue 8 and Avenue 11

• I am pleased to report that on July 31st, the Authority and our CP 1 contractor, Tutor-Perini/Zachry/Parsons opened two newly-constructed overpasses to allow traffic to flow over the high-speed rail system.
• Opening these crossings will minimize impacts to the citizens of Madera during construction and will provide safe crossings over our tracks when our trains are running at high speeds through the Valley.
• Avenue 8 is 110 feet long and 44 feet at its highest point; Avenue 11 is over 100 feet long and 43 feet at its highest point.
• These are two significant project milestones.

Industry Forum for Track and Systems procurement

• On August 5th, over 90 businesses attended our Industry Forum in Sacramento which was designed to provide more information on our Track and Systems procurement. The forum also included a Small Business Informational Workshop.
• As you know, we initiated the procurement process to seek a design-build contractor by issuing a Request for Qualifications on July 17th. Statements of Qualifications are due to the Authority on October 3rd.
• We anticipate coming to the Board in November to move forward with the next step of issuing the Request for Proposals to potential bidders.

Public Outreach on Preferred Alternatives in Northern California

• Our Northern California team has been conducting extensive outreach on Staff Recommended Preferred Alternatives for the San Francisco to San Jose and the San Jose to Merced project sections.
• Since releasing the Staff Recommendations for the Preferred Alternatives in July, we have held technical working group meetings with agency staff, community working group meetings (made up of community and organization leaders in different geographies in the corridor), and presented at city councils, boards of supervisors, the Local Policy Maker Group (made up of elected officials from each city along the Caltrain corridor from San Francisco to Gilroy), and other stakeholder and policy bodies.
• Outreach efforts are still underway and will culminate at the September 17 Board meeting in San Jose at which the Board is scheduled to consider the Staff Recommended Preferred Alternatives for action. This will be a key step in advancing our federal commitment to complete environmental reviews by or before December 2022.

Senate appointments to the Board of Directors

• I am pleased to share with you that the Senate President pro Tem, Toni Atkins, has made two appointments to the Board.
• The first is the appointment of Henry R. Perea, Sr. Mr. Perea has long been a supporter of the high-speed rail program in Fresno, where he has served as a supervisor on the Fresno County Board of Supervisors.
  The second action was the re-appointment of Director Ernest Camacho to the Board of Directors. During his tenure on the Board, Director Camacho has played a key role in overseeing the project’s move from delivery to construction and beyond.

Recent appointments to key executive positions

On August 20th, the Governor’s Office announced appointments for several key Executive positions. I am pleased to welcome these great professionals to the Authority. The Authority will benefit immensely from their collective work ethic, professionalism and talent. They include:

• Alicia Fowler, has been appointed chief counsel She has served as deputy secretary and general counsel at the California State Transportation Agency since 2015. She was senior assistant attorney general at the California Department of Justice, Office of the Attorney General from 2008 to 2015, where she was a supervising deputy attorney general from 2001 to 2008 and a deputy attorney general from 1994 to 1996. Alicia was staff counsel III at the California Trade and Commerce Agency from 1998 to 2001 and an associate at Orrick, Herrington & Sutcliffe from 1990 to 1994. She earned a Juris Doctor degree from the University of San Francisco School of Law.
• Melissa Figueroa, has been appointed chief of strategic communications. She has been deputy secretary of communications and strategic planning at the California State Transportation Agency since 2015. She was deputy secretary of communications and external affairs at the Business, Consumer Services and Housing Agency from 2013 to 2015, deputy secretary of communications at the State and Consumer Services Agency from 2011 to 2013 and press secretary for California State Senator Joe Simitian from 2009 to 2011. Melissa was consumer and special projects producer for KCRA-TV from 2006 to 2009 and newscast producer for KSBY 6 from 2002 to 2006.
• Margaret (Meg) Cederoth, has been appointed director of planning and sustainability. She has been a sustainability director and practice leader at WSP since 2011, where she has been a sustainability manager and transportation planner since 2002. She was a transit planner at URS Corporation from 2001 to 2002 and an associate at PADCO Inc. from 2000 to 2001. Meg earned a Master of Urban and Planning degree from the University of Illinois, Urbana-Champaign.
• Christine Inouye, has been appointed director of engineering. She has served as undersecretary at the California State Transportation Agency since 2017. She has served as capital contracts procurement manager at the California High-Speed Rail Authority since 2016. She was a project manager at the California State Transportation Agency from 2014 to 2016. Christine served in several positions at the California Department of Transportation from 1989 to 2014, including high-speed rail coordinator, management liaison to the chief engineer, project manager and supervising transportation engineer.

Thank you and best of luck to Barbara Rooney

I wanted to let you know that our deputy director of legislation, Barbara Rooney, has been appointed director of the California Office of Traffic Safety. I very much appreciate Barbara’s professionalism and her many contributions to the Authority in the four years she has served here. We wish her well in her new position.

Settlement with design-build contractor for Construction Package 1

• On August 6th, we signed a settlement agreement with Tutor-Perini/Zachry/-Parsons (TPZP) addressing a series of delay costs associated with securing right-of-way, utility relocations and third party agreements for CP 1. Per the delegation of authority policy, I reported to the Board Chair that this settlement had been reached.
• Through this agreement we have cleared the costs associated with these delays through a modification to the contract budget of $126 million and a time extension to November 2, 2021. A comprehensive analysis by the Authority’s independent auditor helped inform this agreement and I believe that a potentially higher potential risk exposure has successfully been avoided.
• These costs were identified and accounted for in our Rev 1 Program Baseline, adopted by the Board in May 2019; with the agreement, the funds were moved from the contract contingency to the contract budget.
• As a result of working through the issues with the TPZP, a more collaborative relationship has been established which sets the foundation for greater progress going forward. Importantly, the contractor now has schedule certainty which allows him to plan the work more efficiently and productively.
• In addition, this settlement has helped improve trust and collaboration between the Contractor, the Authority and third parties. Examples of this can be seen with the City of Fresno agreeing to allow the contractor to proceed with work on the Belmont Avenue Bridge and with UPRR allowing the contractor to re-submit a re-design of the Kinder Morgan liquid gas line.
• When the settlement was finalized, Ron Tutor, CEO of Tutor Perini commented that, “This process definitely established a mutual trust and a collaboration that will enable us to proceed going forward in a much more productive way than we collectively have in the past.”

Settlement with design-build contractor for Construction Package 4

• We recently reached a similar settlement with California Rail Builders to address delay issues on CP 4. This is being reported in the August Finance and Audit Committee Contingency Report.
• This agreement also cleared the costs associated with past delays through a settlement of $40.46 million and an extension of the schedule to June 30, 2021.
• The potential costs of this settlement were known and accounted for in the Authority’s Rev 1 Baseline (although it preceded the Board’s adoption of the Baseline in May) and funds were moved from contract contingency to the contract budget.
• This settlement allowed the Authority and the contractor to successfully avoid the risk of potentially higher costs and longer delays. As above, the Authority’s independent auditor conducted a thorough review to support the development of this agreement.
• With this settlement, the relationship between the Authority and the contractor has been transformed and we are working collaboratively on re-sequencing the remaining work to reflect the new schedule.
• At the conclusion of this agreement, California Rail Builders commented that “This agreement has helped the teams to go through and resolve challenges of the project in a true partnering fashion, which is key to ensure a successful delivery of the CP 4 package. It also allowed us to establish a new revised baseline schedule to track progress and production.”
• I am very pleased to report that because of this agreement, production on CP 4 is increasing as are construction expenditures.