MTC letterhead

June 4, 2004

M Kiesling
Regional Alliance for Transit
1000 Union Street
Suite 207
San Francisco, California 94133

Dear Mr. Kiesling:

Thanks for your thoughtful letter of May 19 addressed to our chair, Steve Kinsey, in which two questions are raised:

1) Should not the recent submittal of VTA projects and programs be returned to VTA for correction because it is not fiscally constrained? The supporting discussion for question 1 raises issues of 30 years of funding for a 25-year plan, interest costs, and the state’s Traffic Congestion Relief Program.

2) Should not the Silicon Valley Rapid Transit Corridor Project be removed from MTC’s Regional Transportation Plan because, among other things, funding to build it is of questionable feasibility?

VTA’s financially constrained list must match MTC’s Phase I funding target. MTC set the county targets based on conservative financial estimates. If 30 years worth of projects would program out at a greater sum than the funding target for Santa Clara County, some of the projects will not make the financially constrained list. In the list that they formally submitted to MTC on May 26, VTA included revenues from a sales tax program that has a specific sunset date and which is associated with a specific set of projects. If other operators were to submit similar programs based on future collections of permanent property taxes or bridge tolls, we would have to consider the specifics of such a program at the time that it was submitted. Interest costs are part of the overall program administration costs, including fees retained by the state or county for collecting the tax, and are not usually specific to individual projects. Since the Governor is attempting to find revenues to fund the Traffic Congestion Relief Program in future years, we consider it a viable program.

As for inclusion of the Silicon Valley Rapid Transit Corridor Project in the Regional Transportation Plan (RTP), we are conducting a comprehensive update of Resolution 3434, the region’s transit expansion program adopted in 2001, with an update of both costs and revenues associated with each project, reflecting new information and changing circumstances over the last three years.

Since now, the scope of the RTP is expanded to include a “Big Tent” element anticipating future new revenue sources and commensurate investment strategies beyond the financially constrained element of the plan, we expect to include all Resolution 3434 projects in the Transportation 2030 Plan. However, we must also indicate a financially constrained subset of projects and programs to meet federal planning and air quality requirements, which can only include those Resolution 3434 projects deemed fully funded.

In order for an extension of service to be included in the RTP, the project sponsor must provide evidence of its ability to fund operation of the service for a minimum of 10 years, or the duration of operations within the 25-year RTP time horizon, whichever is longer. These financial capacity determinations must also include a demonstration of the transit operator’s ability to sustain levels of core bus services to low-income and minority populations. We have requested all Resolution 3434 project sponsors to respond in writing as to how they are going to satisfy these requirements as a basis for determining their status with respect to the financially constrained elements of T-2030. We expect these responses, including VTA’s on or before July 1, 2004.

We expect the Commission to adopt the Resolution 3434 update by January 2005. If you have any questions about the Resolution 3434 update, please feel free to call me at (510) 464-7828, or Alix Bockelman at (510) 464-7850.

Thank you for your interest.


Therese McMillan
Deputy Director, Policy

cc: Chairman Kinsey