CEO Report

January 19, 2022

Overview | 2022/23 FY Budget | ARRA Status | Change Order Report | Draft 2020 Business Plan | Relevant Materials

OVERVIEW

• Governor’s Budget
• ARRA Grant Status
• Change Order Report, per new policy
• Preview/Summary of the 2022 Draft Business Plan

GOVERNOR’S 2022/2023 FISCAL YEAR BUDGET

• $15 Billion for Transportation Programs and Projects
• $9.1 Billion for Transportation Infrastructure Package, more detail below.
• $4.5 Billion increase in federal Bipartisan Infrastructure Law formula funding. These are not competitive funds.
• $1.2 Billion for ports, freight, goods movement infrastructure, addressing supply chain challenges.
• $100 Million for the Clean California local grant program, to clean up highways and freeways.

Transportation Infrastructure Package

• $4.2 Billion Proposition 1A bonds for High-Speed Rail.
• $2 Billion General Fund for statewide rail and transit projects.
• $1.25 Billion General Fund for Southern California transit projects.
• $750 Million General Fund for Active Transportation, like pedestrian and bicycle safety projects.
• $500 Million General Fund for high priority grade separation projects.
• $400 Million General Fund for climate adaptation projects. Clean, green elements. Transportation accounts for 40% of GHG emissions in California.
• High level review. We now will collaborate to put together a broad infrastructure package. The Governor’s budget has higher contribution of general fund dollars than last year. There is more tied to rail and transit projects than last year. These are good to pair with federal funds, and an opportunity to discuss joint benefit projects and advance regional and local projects that connect with our system.
• Great opportunity, great start. We look forward to contributing to the dialogue between the legislature and the administration.

ARRA STATUS

• Federal Railroad Administration Notified HSR That ARRA Grant Funding Has Been Met
• Milestone met one year ahead of schedule.
• Authority expended $2.5 Billion in federal ARRA funding by September 2017 deadline.
• Match dollars fully approved by FRA in January 2022.
• Funding used on Central Valley construction and environmental clearance.
• It matters a great deal who your federal partner is. If we hadn’t met that match, could have caused difficulties. But all of that is avoided. Compliments to the team.

CHANGE ORDER REPORT

Belmont Avenue Construction (CP1) Change Order

• Background: Authority directed changes to original contract plans for several City of Fresno streets and facilities, UPRR issues and utility workarounds, lane configuration changes and changes to the Caltrans / SR 99 interchange plans. Authority directed changes issued under multiple Authority Directive letters post contract award after final cooperative agreements were reached with the City of Fresno and UPRR. One of six big ones discussed earlier.
• Cost: $38,700,911 negotiated with contractor.  Amount within Baseline Rev 1 contingency.
• Justification: Belmont Avenue overcrossing structure, street and traffic signal improvements, roadway realignments, utility relocations and protections all agreed to by City of Fresno and UPRR.  Executed through our governance process.

DRAFT 2022 BUSINESS PLAN

• Required by PUC Section 185033
  • Foundational document for implementing the program.
  • Required every two years (even years).
• 2020 Business Plan finalized just 10 months ago
  • COVID-19 impacted timing and cadence of our business plans.
  • A Project Update Report will be prepared for Legislature by March 1, 2023.
  • Business Plan “Draft” is management’s recommendation to Board.
• Because of that, the 2022 Business Plan is a “bridge” document
  • Needs to be out in February to meet our requirements;
  • It provides update on milestones and progress since April 2021;
  • Includes limited updates to records of decisions and forecasts; and
  • Previews what will be covered in the 2023 Project Update Report.
• Most Significant Development: New Federal Funding
  • Bipartisan Infrastructure Law creates new funding opportunities. We can answer previous Plan questions thanks to those opportunities.
  • About $57 billion in funds for which we can compete.
  • We remain hopeful about additional funds in pending Build Back Better Act.
  • We are evaluating federal programs to develop a grants strategy.
• With opportunity for new, more stable funding we will work in the following 5 areas
  1. Deliver electrified, double-track operating segment connecting Merced, Fresno, and Bakersfield as soon as possible.
  2. Environmentally clear full 500-mile system.
  3. Advance design statewide as each project section is cleared, preparing them for future construction funding.
  4. Leverage new federal and state funds for targeted statewide investments, particularly in shared corridors. Series of investments that could be made in regions and localities that would benefit the project in the long term. But they would also be beneficial in the near term. An example is the Caltrain corridor electrification. In the Central Valley, a single station in downtown Merced, helps with connectivity. In Southern California, in fact just in the Burbank to Los Angeles project section before you today, key grade separations that would be great for more immediate traffic and pedestrian safety and circulation, and good for long term blended service. These might also be useful to fund in connection with grade separation funding.
  5. Re-evaluate, especially depending on what happens in the Bild Back Better Act, funding scenarios to extend high-speed rail beyond the Central Valley to the Bay Area.
• Key Updates
  • New and pending funding – including pending requested appropriation of remaining $4.2B Proposition 1A funds by Legislature.
  • Central Valley – construction progress, managing risks and defining scope, negotiating contract changes, more realistic right-of-way schedule.
  • Organizational changes – reformed Right-of-Way Division, revamped change control process.
  • Advancing design – Merced and Bakersfield extensions.
  • Environmental clearance – 291 miles to date, 422 miles by mid-2022, full 500-mile system in 2023.
  • Northern and Southern California updates – more focus on regional benefits and project sections.
  • December Board approval – additional expenditure authorization ($2.3B).
  • Updated estimates for two project sections with recent Records of Decision – Bakersfield to Palmdale and Burbank to Los Angeles (action pending tomorrow).
• Preview – 2023 Project Update Report
  • Funding strategy – informed by Legislative budget decisions and potentially federal action on Build Back Better. After that, we would update more broadly.
  • Updated Program Baseline Budget/Schedule – informed by funding, finalizing commercial agreements and Track and Systems bids.
  • Design procurements – where we’re getting environmental clearance, Merced, Bakersfield, and Central Valley stations.
  • New ridership/revenue forecasts – based on new model developed by Authority’s Early Train Operator in coordination with CalSTA.
  • Updated capital cost estimates – informed by Records of Decision and other factors.
• Schedule / Board Meetings
  • February 4
    • Draft Business Plan out for 60-day public review. Recommendation from management to the Board.
  • February 17
    • Board Meeting.
  • March 17
    • Board Meeting.
  • April 5
    • End of 60-day public comment. Legislative hearings in this period too.
  • April 21
    • Board Meeting – Action/direction on preparing final plan.
  • May 1
    • Final 2022 Business Plan due to Legislature.

RELATED MATERIALS

• View the January 2022 CEO Report PowerPoint Presentation.
• View video of the January 2022 CEO Report.