News

Sales tax would be 'game changer' for pandemic-hit Caltrain, board chair says

If passed by voters, measure would generate about $108M per year for up to 30 years

A woman sits by herself in a train car as Caltrain pulls into the Menlo Park train station around 5 p.m. on March 13. Photo by Magali Gauthier.

The COVID-19 pandemic has challenged many local transit agencies used to relying on large numbers of ticket-buying riders.

For Caltrain, the pandemic has hit especially hard. That's because it's one of the local transit agencies that has traditionally relied most heavily upon rider fares to cover its costs.

Since the pandemic started, ridership has dipped by 95%, according to a statement from Caltrain. The agency initially cut the number of daily trains to 42, then in June increased operations to 70 trains per day, but even so, ridership remains far lower than the 65,000 passengers who rode Caltrain daily before the pandemic.

In early August, an eighth-cent sales tax barely eked its way onto the November ballot, requiring the OK from seven local agencies to do so.

If the measure passes — it will need the approval of two-thirds of voters to move forward — it will generate about $108 million per year for up to 30 years.

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Proceeds from the measure wouldn't start to come in until the fall of 2021, but the transit agency would be able to borrow against future proceeds from the measure, according to Caltrain board chair and San Mateo County Supervisor Dave Pine.

Before the pandemic, the idea was to use those funds to help the rail agency's electrification process, aimed at enabling the number of daily riders to triple to about 180,000 up from 65,000, Pine said.

Ticket sales constituted about 70% of the transit agency's revenue, which in good times, was a positive element: A majority of its revenues were self-sustaining and it offered one of the "best fare box returns in the nation," Pine said.

But without many riders and without the ballot measure, Caltrain will probably only be able to run through the end of the year, Pine said. The rail agency's budget is highly dependent on how many people return to using the rail services in the next six months, he said.

To save money, Caltrain has cut the number of trains it runs per day to 70 from 92 and eliminated the Baby Bullet service. And it has received tens of millions of dollars in CARES Act funds. However, some provisions of the funds, which require that staff members be retained, only go so far to help reduce the agency's costs, Pine said.

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As of mid-August, Caltrain's operational budget for the 2020-21 fiscal year still had about a $17.6 million deficit, according to recent agency documents, even factoring in $41.5 million in federal CARES Act funds, a hiring freeze, no universal wage increases and other measures to reduce costs.

If Caltrain had to shut down, it would stop its passenger service but continue to operate the rail corridors the agency is in charge of, including moving projects that have already been funded forward, the documents stated.

The text of the 1/8 cent sales tax measure that was approved to be on the November ballot. Courtesy Peninsula Corridor Joint Powers Board.

One of the reasons that the ballot measure almost didn't get approved was because of ongoing tensions about the structure of Caltrain and how it is governed.

In an Aug. 6 board meeting, board members negotiated for several changes that they wanted the agency to make, enumerated in a resolution approved that day. The resolution states that the members of the Caltrain board want to change the governance structure so that they have more say over who is appointed executive director of the agency, and that the joint powers board will work to reimburse SamTrans for past investments in Caltrain.

The joint powers board — made up of members from all three of the counties along the Caltrain line — said it planned to hire an auditor and legal representatives who don't work with SamTrans by mid to late January. It also planned to develop recommendations for a new governance structure by the end of 2021.

A complex history

Over the years, Caltrain has been owned by a number of agencies. It started in 1863 with the San Francisco and San Jose Railroad Company before being bought by Southern Pacific Railway in 1870. A century later, the rail commuter business became unprofitable. By 1980, the state helped subsidize the rail service, but by 1988, the state ended its subsidies.

In 1991, the three counties that Caltrain passes through — San Francisco, San Mateo and Santa Clara — created the Peninsula Corridor Joint Powers Authority to buy the rail right of way. The $212 million cost was covered by $120 million in funds from Prop. 116, a nearly $2 billion California bond measure from 1990 to invest in rail and other transportation programs, and $82 million advanced from SamTrans, the San Mateo County Transportation Authority.

In negotiations over the years, steps were laid out for how the other agencies could repay SamTrans' additional contribution to buy the rail right of way. A 1991 agreement said that San Francisco and Santa Clara County's Valley Transportation Authority (VTA) could do so either by fully reimbursing the transportation agency or by paying their share of the additional contribution based on the rail mileage in each county.

The agreement was renegotiated in 2008 because by 2007, neither of the agencies had started to pay back SamTrans. Compound interest increased the amount owed by the two other agencies to $91.5 million, but the amount was reset to $53.3 million. SamTrans forgave the agencies $38.2 million in exchange for being able to remain the managing agency for Caltrain as long as it chose to do so.

In the 2008 agreement, the plan was for the VTA to pay $8 million, San Francisco to pay $2 million and to have the bulk, $43.3 million, paid by the MTC or Metropolitan Transportation Commission, the Bay Area's transportation financing, planning and coordinating agency. VTA has paid SamTrans $8 million; San Francisco has paid back all but $200,000 of its $2 million commitment; and the MTC has paid back $23.7 million, leaving SamTrans still about $19.7 million short of the $53.3 million committed back in 2008.

The Joint Powers Authority designates SamTrans as the managing agency for Caltrain.

The measure faced complications when leaders in two of the three counties, San Francisco and Santa Clara counties, pushed back.

It was initially discussed because the agency doesn't have a dedicated source of funding and it is in the process of completing a $2 billion project to electrify the Caltrain line.

Governance challenges

The awkward thing, Pine said, is that the Caltrain board itself can't change the governance of Caltrain. The governance debate, he added, has been ongoing for years and needs to be resolved.

While SamTrans currently manages Caltrain, the Caltrain board has equal membership among all three counties.

Caltrain was created as a joint powers authority between the city and county of San Francisco, SamTrans and the Santa Clara Valley Transportation Authority.

But SamTrans also manages other operations besides Caltrain, like the paratransit and bus systems in San Mateo County.

The big issue, Pine said, is that the other two counties don't get a say in staffing matters, such as whether to hire or fire the CEO.

The governance tension goes back decades to 1991, when San Mateo County invested $82 million to purchase the trackage rights. Neither San Francisco nor Santa Clara County put money toward that purchase. When the agreement was restructured in 2008, SamTrans essentially gave up $38 million in interest in exchange for the right to be the managing agency "as long as it desired," Pine said.

In other words, SamTrans invested tens of millions of dollars in the Caltrain system for which it was never paid by the other two counties, Pine summarized.

"Passing a sales tax for Caltrain would be a game changer during this time of the COVID pandemic and would allow Caltrain to substantially expand its service in the future," Pine said.

Rider information

To improve safety conditions during the COVID-19 pandemic, Caltrain cleans and sanitizes its fleet and stations with hospital-grade disinfectants. Surfaces that are regularly touched at stations are wiped down multiple times daily, and crews use spray foggers to clean surfaces midday and overnight. Riders must wear face masks and are asked to maintain at least 6 feet of space from others.

Access the latest weekday schedules here. Weekend schedules are unchanged.

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Kate Bradshaw writes for The Almanac, a sister publication of PaloAltoOnline.com.

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Sales tax would be 'game changer' for pandemic-hit Caltrain, board chair says

If passed by voters, measure would generate about $108M per year for up to 30 years

by / Almanac

Uploaded: Sat, Sep 5, 2020, 8:29 am
Updated: Thu, Sep 10, 2020, 8:55 am

The COVID-19 pandemic has challenged many local transit agencies used to relying on large numbers of ticket-buying riders.

For Caltrain, the pandemic has hit especially hard. That's because it's one of the local transit agencies that has traditionally relied most heavily upon rider fares to cover its costs.

Since the pandemic started, ridership has dipped by 95%, according to a statement from Caltrain. The agency initially cut the number of daily trains to 42, then in June increased operations to 70 trains per day, but even so, ridership remains far lower than the 65,000 passengers who rode Caltrain daily before the pandemic.

In early August, an eighth-cent sales tax barely eked its way onto the November ballot, requiring the OK from seven local agencies to do so.

If the measure passes — it will need the approval of two-thirds of voters to move forward — it will generate about $108 million per year for up to 30 years.

Proceeds from the measure wouldn't start to come in until the fall of 2021, but the transit agency would be able to borrow against future proceeds from the measure, according to Caltrain board chair and San Mateo County Supervisor Dave Pine.

Before the pandemic, the idea was to use those funds to help the rail agency's electrification process, aimed at enabling the number of daily riders to triple to about 180,000 up from 65,000, Pine said.

Ticket sales constituted about 70% of the transit agency's revenue, which in good times, was a positive element: A majority of its revenues were self-sustaining and it offered one of the "best fare box returns in the nation," Pine said.

But without many riders and without the ballot measure, Caltrain will probably only be able to run through the end of the year, Pine said. The rail agency's budget is highly dependent on how many people return to using the rail services in the next six months, he said.

To save money, Caltrain has cut the number of trains it runs per day to 70 from 92 and eliminated the Baby Bullet service. And it has received tens of millions of dollars in CARES Act funds. However, some provisions of the funds, which require that staff members be retained, only go so far to help reduce the agency's costs, Pine said.

As of mid-August, Caltrain's operational budget for the 2020-21 fiscal year still had about a $17.6 million deficit, according to recent agency documents, even factoring in $41.5 million in federal CARES Act funds, a hiring freeze, no universal wage increases and other measures to reduce costs.

If Caltrain had to shut down, it would stop its passenger service but continue to operate the rail corridors the agency is in charge of, including moving projects that have already been funded forward, the documents stated.

One of the reasons that the ballot measure almost didn't get approved was because of ongoing tensions about the structure of Caltrain and how it is governed.

In an Aug. 6 board meeting, board members negotiated for several changes that they wanted the agency to make, enumerated in a resolution approved that day. The resolution states that the members of the Caltrain board want to change the governance structure so that they have more say over who is appointed executive director of the agency, and that the joint powers board will work to reimburse SamTrans for past investments in Caltrain.

The joint powers board — made up of members from all three of the counties along the Caltrain line — said it planned to hire an auditor and legal representatives who don't work with SamTrans by mid to late January. It also planned to develop recommendations for a new governance structure by the end of 2021.

A complex history

Over the years, Caltrain has been owned by a number of agencies. It started in 1863 with the San Francisco and San Jose Railroad Company before being bought by Southern Pacific Railway in 1870. A century later, the rail commuter business became unprofitable. By 1980, the state helped subsidize the rail service, but by 1988, the state ended its subsidies.

In 1991, the three counties that Caltrain passes through — San Francisco, San Mateo and Santa Clara — created the Peninsula Corridor Joint Powers Authority to buy the rail right of way. The $212 million cost was covered by $120 million in funds from Prop. 116, a nearly $2 billion California bond measure from 1990 to invest in rail and other transportation programs, and $82 million advanced from SamTrans, the San Mateo County Transportation Authority.

In negotiations over the years, steps were laid out for how the other agencies could repay SamTrans' additional contribution to buy the rail right of way. A 1991 agreement said that San Francisco and Santa Clara County's Valley Transportation Authority (VTA) could do so either by fully reimbursing the transportation agency or by paying their share of the additional contribution based on the rail mileage in each county.

The agreement was renegotiated in 2008 because by 2007, neither of the agencies had started to pay back SamTrans. Compound interest increased the amount owed by the two other agencies to $91.5 million, but the amount was reset to $53.3 million. SamTrans forgave the agencies $38.2 million in exchange for being able to remain the managing agency for Caltrain as long as it chose to do so.

In the 2008 agreement, the plan was for the VTA to pay $8 million, San Francisco to pay $2 million and to have the bulk, $43.3 million, paid by the MTC or Metropolitan Transportation Commission, the Bay Area's transportation financing, planning and coordinating agency. VTA has paid SamTrans $8 million; San Francisco has paid back all but $200,000 of its $2 million commitment; and the MTC has paid back $23.7 million, leaving SamTrans still about $19.7 million short of the $53.3 million committed back in 2008.

The Joint Powers Authority designates SamTrans as the managing agency for Caltrain.

The measure faced complications when leaders in two of the three counties, San Francisco and Santa Clara counties, pushed back.

It was initially discussed because the agency doesn't have a dedicated source of funding and it is in the process of completing a $2 billion project to electrify the Caltrain line.

Governance challenges

The awkward thing, Pine said, is that the Caltrain board itself can't change the governance of Caltrain. The governance debate, he added, has been ongoing for years and needs to be resolved.

While SamTrans currently manages Caltrain, the Caltrain board has equal membership among all three counties.

Caltrain was created as a joint powers authority between the city and county of San Francisco, SamTrans and the Santa Clara Valley Transportation Authority.

But SamTrans also manages other operations besides Caltrain, like the paratransit and bus systems in San Mateo County.

The big issue, Pine said, is that the other two counties don't get a say in staffing matters, such as whether to hire or fire the CEO.

The governance tension goes back decades to 1991, when San Mateo County invested $82 million to purchase the trackage rights. Neither San Francisco nor Santa Clara County put money toward that purchase. When the agreement was restructured in 2008, SamTrans essentially gave up $38 million in interest in exchange for the right to be the managing agency "as long as it desired," Pine said.

In other words, SamTrans invested tens of millions of dollars in the Caltrain system for which it was never paid by the other two counties, Pine summarized.

"Passing a sales tax for Caltrain would be a game changer during this time of the COVID pandemic and would allow Caltrain to substantially expand its service in the future," Pine said.

Rider information

To improve safety conditions during the COVID-19 pandemic, Caltrain cleans and sanitizes its fleet and stations with hospital-grade disinfectants. Surfaces that are regularly touched at stations are wiped down multiple times daily, and crews use spray foggers to clean surfaces midday and overnight. Riders must wear face masks and are asked to maintain at least 6 feet of space from others.

Access the latest weekday schedules here. Weekend schedules are unchanged.

Kate Bradshaw writes for The Almanac, a sister publication of PaloAltoOnline.com.

Comments

Nayeli
Registered user
Midtown
on Sep 5, 2020 at 5:25 pm
Nayeli, Midtown
Registered user
on Sep 5, 2020 at 5:25 pm
51 people like this

My simple, one-word answer:

No.


Nayeli
Registered user
Midtown
on Sep 5, 2020 at 5:39 pm
Nayeli, Midtown
Registered user
on Sep 5, 2020 at 5:39 pm
49 people like this

Here's my longer answer:

You know what I find offensive? The careful wording of this ballot measure is deeply deceptive. It pretends that this sales tax increase (to be paid by rich and poor alike) is NECESSARY to:

- "Preserve Caltrain service" (it doesn't need a tax to accomplish this)
- "Support regional economic recovery" (by taxing people?)
- "Prevent traffic congestion" (very little...even by the most liberal estimates)
- "Make Caltrain 'more affordable'" (laughable due to scheduled FARE HIKES coming YET AGAIN)
- "Make Caltrain 'more accessible'" (...with higher fares?)
- "Reduce air pollution" (...like our massive gas tax hikes over the last 18 months? Caltrain is already going electric.)
- "Quieter electric trains" (...which are already paid for.)
- "Travel times faster" (...even though they will be the SAME speed no matter what.)
- "Increase Caltrain frequency" (...just take their word for it?)
- "Increase capacity" (...on already-existent trains and schedules by doing what?)

Of course, the ballot measure throws in the "state cannot take away" wording at the end -- as if that would make it better for the local government to tax everyone for a service enjoyed by a tiny fraction of residents.

If you want to truly HELP local residents rather than further expand the Caltrain bureaucracy, then why not LOWER FARES so that it is more appealing to residents? There is no estimate of lower fares in the future (tax or no tax). Rather, this tax is effectively charging everyone a fare whether you use the service or not (and most people do not).

I would be more inclined to consider this tax increase if it came with a promissory that fares will either remain stable for X amount of years -or- the fares would actually go down so that the service is truly more accessible (and appealing) to potential patrons.

So....no.

"No" to yet another tax increase in our already overtaxed area of an overtaxed state.


Resident 1-Adobe Meadows
Registered user
Adobe-Meadow
on Sep 5, 2020 at 6:09 pm
Resident 1-Adobe Meadows, Adobe-Meadow
Registered user
on Sep 5, 2020 at 6:09 pm
5 people like this

I love Caltrain. I love hearing the whistle at night. I went up to a game at SF and the whole train was filled with fans in their shirts. You have something that works. What we know now is if it works then do something to ruin it. Have you all noticed that there appears to be a bunch of people who need to meddle in workable solutions and we end up with what?

Try no power!!!!!.

But the train is running on fuel so it can keep going and take people where they need to go. If the train was electric then there would be all kinds of problems associated with that. Yes - the tax is okay.


Resident 1-Adobe Meadows
Registered user
Adobe-Meadow
on Sep 5, 2020 at 7:09 pm
Resident 1-Adobe Meadows, Adobe-Meadow
Registered user
on Sep 5, 2020 at 7:09 pm
3 people like this

This train functions in three counties - and it does that very well. The problems we have are how we set up the cross paths. In San Mateo county they have build shallow underpasses for autos, SUV's and small Service trucks. That is all we need at those vulnerable cross paths. Yet people think up all kinds of convoluted ideas about tunnels -that is BIG BUCKS. We do not have BIG BUCKS.

And since I am on a rant Candlestick Park was good - just needed some upgrade - a cover. The current stadium in Santa Clara is continually under arguments about time, parking, etc. It was not worth it.

Oakland - the stadium is in a good place - next to the freeway and BART. And what do they think up? Put it in the harbor with a lot of housing. The harbor is a main profit center for the city. If any think invest in a more high end port with upgraded facilities. We have major ship traffic going through there every day. If you figure out what your profit center is then build on it 0 do not mess with it.

And that applies to the housing issue - quit messing with it. The peninsula is limited in housing space - quit trying to ruin it.

Note to Atkins in San Diego - new housing down there is well done and well planned. Quit messing with it.


Anonymous
Registered user
Duveneck/St. Francis
on Sep 5, 2020 at 8:39 pm
Anonymous, Duveneck/St. Francis
Registered user
on Sep 5, 2020 at 8:39 pm
39 people like this

Too expensive for a public transit system.


Nayeli
Registered user
Midtown
on Sep 5, 2020 at 8:59 pm
Nayeli, Midtown
Registered user
on Sep 5, 2020 at 8:59 pm
34 people like this

This proposed permanent tax increase (1/8%) works out to about $25 per year for every person in the counties -- a conservative estimate of ~$108 Million.

In return, Caltrain will continue to automatically raise fares every two years (even post electrification). In addition, they reserve the right to propose additional rate hikes as they see fit.

The economic turmoil and uncertainty brought on by this pandemic is the WORST possible time to raise permanent sales taxes.


Resident 1-Adobe Meadows
Registered user
Adobe-Meadow
on Sep 6, 2020 at 6:06 am
Resident 1-Adobe Meadows, Adobe-Meadow
Registered user
on Sep 6, 2020 at 6:06 am
4 people like this

This pandemic has shown us all of the major issues of what is going wrong. Electrification! Turn that one on it's head please. All decisions concerning power and electrification shows knee jerk decisions which have dug us into a hole. We now have to re-think electrification for the whole state. Another is infrastructure - dams. That in part is one of the producers of electricity. Water quality - now they are saying in some areas the water is contaminated because of the smoke.

Trying to electrify Caltrain now is the least of our worries. And should not be high on the list of things to do. The people who get high on some of these topics are the ones that have companies that will stand to benefit from all of the construction of the upgrade. All things electric need to resolve the higher set of problems which will come home to roost in the rest of the week - so they tell us.

And now I am going to get earthquake insurance. And what you need is the ability to move people and products and a train is the way to go. That is part of the safety net that we have now. Don't mess with it.


Resident 1-Adobe Meadows
Registered user
Adobe-Meadow
on Sep 6, 2020 at 4:58 pm
Resident 1-Adobe Meadows, Adobe-Meadow
Registered user
on Sep 6, 2020 at 4:58 pm
2 people like this

Like to add here that the state legislators are term limited. So they are trying to work their way up the chain to federal legislators which are not term limited, or some other government appointment which will keep them employed in the government. Replace an aging incumbent?

In order to get support and funding from the "party" they need to walk the walk and talk the talk. And the talk for their party is the "new green deal". Come hell or high water - or both. So people are signing on to a scheme which in reality cannot be accomplished under the current circumstances. And the current circumstances will not go away. The circumstances are bigger than any scheme out there in the new green deal.

All of the obvious remedies are there - can they be turned back on? We are talking gas, oil. The train uses diesel but can be partially electrified by batteries.

Forget coal - that is being mined in Utah with potential sale to China. That tells you about the governor of Utah. And many schemes have been put out there - ship from Oakland? A coal train coming down through the state putrefying the air and ground as it travels along? In the Paris Accord China is listed as an "emerging country" which allows it to remain without goals and to buy coal.

So the Paris Accord was created with many holes to allow the pursuit of other than green power.

Right now the electrification of Caltrain falls into that bucket of "ideas" which people have invested in but if implemented will open up more problems than we can imagine.


Jennifer
Registered user
Barron Park
on Sep 10, 2020 at 1:06 pm
Jennifer, Barron Park
Registered user
on Sep 10, 2020 at 1:06 pm
24 people like this

I am voting a big No! If ridership is down 95%, reduce the number of trains per day to save cost. It is not fair for tax payers to foot the cost when there is only a few people on the train. California already has the highest state tax, our money should be wisely spent, not wasted.


Resident 1-Adobe Meadows
Registered user
Adobe-Meadow
on Sep 11, 2020 at 7:27 am
Resident 1-Adobe Meadows, Adobe-Meadow
Registered user
on Sep 11, 2020 at 7:27 am
2 people like this

Any one's interpretation of the issues at hand are based on their personal usage of a service or cause, and if they are employed by a company that stands to benefit financially from the action in a bill. Electrification would employ a large number of people in the construction process but proceeding with electrification assumes a number of issues bigger than Caltrain. Caltrain would be a user of electrification, not a producer of electricity.

Caltrain at this time is constrained by Covid which we assume is a temporary situation. HAHA - temporary? I was planning on using it more to get up to the city to see some games. But that assumes games are happening and there are people in the stands. I was planning on using my car to a lessor degree but now the reverse is happening. Riding bikes and walking are now problematic.

We just need new engines - AMTRAK has great new engines which produce electricity internally with a lessor amount of fuel. Those new engines are a game changer.

It is one of the best back-up systems we have that WORKS. Whether you personally use it or not, whether from your POV it just another tax eater out there - it is a basic mover of people and by the end of the year we should assume that we will have somewhere to go. One hopes. But throwing the cost of electrifying the system a this point in time is just lining the pockets of the companies that were geared up to do that. Not working in the city of SF right now - they are unable to manage their projects with any competence.


Resident 1-Adobe Meadows
Registered user
Adobe-Meadow
on Sep 12, 2020 at 12:01 pm
Resident 1-Adobe Meadows, Adobe-Meadow
Registered user
on Sep 12, 2020 at 12:01 pm
Like this comment

Large opinion piece in the papers today concerning the Caltrain and taxes. It gives all types of good reasons why the train needs to be part of our overall safety net. But it gives a throw away one line concerning electrification. It just assumes it will happen and all of our problems will be solved. It is the biggest and costliest issue for the train.

Sorry - one of the biggest problem we now have in the state is our power grid and the use of electricity. The governor points to "climate change" as the culprit in all going wrong. And of course mismanagement by the federal government - always. This coming from a man who has wine producing fields - all of which are plants that GROW, need continual management and clean-up. Farming is a labor intensives operation. People in agriculture world know that a lot of work is required to manage the overall operation to success. Lots of Manpower.

One thing SU does is have cattle roaming the fields that eat vegetation. And one other thing that San Jose and others do is hire the goat herds that come in and eat vegetation. I don't think that you will see fires in those areas. So one key to the current problems is reducing the excess dry and dead vegetation. We need a lot of goat herds. And we need a lot of planning on how we manage big trees, especially those that are next to power lines. But that still leaves the prospect of how electricity is generated to power cities and the transportation systems that are using the same resources. All types of assumptions which I think at this time are not working. Hydro-power suffers in drought years.

Bottom line is get spiffy new engines that operate on multi-systems and do not require the tearing down of whole systems end to end. We do not have the budget at this time to go through that turmoil. Or the temperament - we are continually in turmoil now. And employ some of those goat herds up and down the peninsula to clear vegetation - especially along roads. Yeah goats.


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