Regional Alliance For Transit
Box 20375
Oakland 94620

To: Supervisor Winter

Date: 21 February 1999

Subject: Memo from Executive Director on BART extension to Millbrae

We have read the memorandum dated February 17th and have the following comments for your consideration.

Why is it that the big policy question facing the Commission remains unaddressed—Should the Commission invest more of the region’s money in the project? Note that this is a different question from whether BART or samTrans should put in more funds of “their own.”

The memorandum contains no forward looking financial information for use by Commissioners to make a thoughtful policy decision about whether to direct more money to the extension. Rather, the same failed “close your eyes and pray” approach of recent years is to be relied upon again:

Given a flow of federal funds reflective of the FFGA and a favorable decision by FTA in response to BART’s request to consider a scope revision, BART should not need to return for additional funds.

In other words, if the federal appropriation is what BART requests, then the project and BART will be fine. There is nothing new here.

The FFGA the past three years has overestimated what the United States would contribute. The table attached to the memorandum could not be more clear. BART has received considerably less than requested to date—$61 million less (71%).

The trend is suggestive. Here is what BART sought each fiscal year and what it has received:

Year Sought Appropriated % of “Sought”
1993 $22.5 m $22.5 m 100%
1994 0.0 m 0.0 m 100%
1995 $33.0 m $34.2 m 107%
1996 $0.0 m $9.8 m -----------
1997 $28.4 m $17.3 m 61%
1998 $56.3 m $29.8 m 53%
1999 $74.0 m $39.3 m 53%

For the next fiscal year, BART seeks $84 million. If the 53% figure holds for a third consecutive year, then the Congress will appropriate $44.6 million, or about $40 million less than the amount sought. The memorandum is silent on how this next $40 million gap may be closed.

There is no information in the memorandum on which to judge if $84 million is an achievable allocation. Information about what has been allocated on other FFGAs in other metropolitan areas of California over the past three years may prove useful to Commissioners.

The issue of whether the Congress will “honor” the Administration’s FFGA on the project is raised in several places in the memorandum. This is not the vital appropriations issue. As RAFT has pointed out on several occasions, the primary issue is the time it will take to complete payments on its commitment.

Again, there is insufficient information on which to reach a sound policy decision in the materials furnished to Commissioners.

A related issue about the level of appropriations is an underlying theme in the memorandum: if everyone contributes more money now, then the Congress will look favorably on the FFGA and appropriate more than expected.

The best strategy is built on a regional accord in support of the project. The recent State expression of support and the combined actions of BART, SamTrans and MTC to solve the budget and cash flow problems represent the most telling things we con do in support of a successful appropriations strategy.

How likely is this to matter to the Congress? There are dozens of other FFGAs outstanding across the country. TEA-21 authorizes the commitment of federal funds for new starts projects that will take until the year 2050 to fund via the appropriations process. Why should other projects having realistic budgets and controls on costs be hurt by having funds taken from their FFGAs and diverted to BART?

The issue raised in Question #15 about who suffers if the project is abandoned is a good one. The answer set forth in the memorandum to Question #15 indicates there are three groups will be hurt if the project is abandoned now: 1) prospective users of a system that has not been built; 2) drivers on the freeways in San Mateo County; and 3) MTC’s credibility.

It is true that prospective passengers of the extension will be disadvantaged if the project is abandoned. But there is no information on which to assign a value to the state of disadvantaged. Is the potential discomfort to transit users greater than the amount of funds remaining to be committed to the project from today forward? Is the discomfort worth more than $1 billion?

As for the second class of who would suffer, parallel highway users, the EIR/EIS for the project predicts that the extension will increase congestion, not reduce it. If this is true, then abandoning the project could actually help highway users, not disadvantage them. There may be other classes of people, and users of other transit systems, who would benefit from abandonment, but the memorandum is silent.

The third class of “who” would suffer is interesting—the credibility of MTC. How much money is a potential, minuscule decrease in credibility worth? How many regional transportation projects and programs will be sacrificed to retain credibility? If the project is abandoned, will MTC actually lose any credibility at all? If more money is demanded next year, how will that affect MTC’s credibility?
The issue has arisen about how BART will repay its loans.

In summary, the full faith and credit of the BART District back up repayment of the $60 million east bay cash flow advance. Repayment of the $16.5 million west bay allocation is dependent upon contingency savings and the extent to which the SFO extension generates a net operating surplus.

Does the change of heart of the bank issuing the guarantee on the Financing Authority’s letter of credit say anything about the “full faith and credit of the BART District?” If BART is called upon to honor financial guarantees, will service be cut? What will that mean for BART’s revenue from fares?

The idea of calling the $16.5 million from MTC a loan is questionable, since repayment seems unlikely, given that the line must operate with a surplus, something nearly unheard of in North America. Even if the loan is repaid, though, the memorandum states that it will be “at least 10 years after service commences on the extension.” This means that the value of the repayment will be pennies on the dollar, given the time value of money and the lapse of more than fifteen years.

The memorandum states that the MTC allocation will not divert funds from other MTC commitments. That may be true. But it ignores the uncommitted projects and programs that have been and will be foregone, perhaps for a decade, because the funds for them will have been consumed by the Millbrae extension. Please make no mistake about it: each additional dollar that goes to the extension could have gone elsewhere, either locally or nationally, perhaps to more efficient and effective projects.

What about other prospective projects and programs that would otherwise have been eligible for federal funding? Is there a possibility these would be eliminated by the Congress from consideration, because the region is asking for one mega-project to be fully funded, as soon as possible? The Congress may decide that the region is entitled to funding for just the one project, and the region may be shortchanged with other projects as a result.

In summation, the decision you face on Wednesday is a difficult one. RAFT urges Commissioners to take a hard look at the proposal to increase MTC’s regional commitment to the extension project. Is the staff recommendation the best course to follow? We also ask that MTC not place in jeopardy the finances of other transportation agencies and transit systems, such as the San Francisco Municipal Railway, Caltrain, AC Transit and Santa Clara VTA.