ADMINISTRATION & FINANCE COMMITTEE Thursday, February 21, 2019 12:00 PM VTA Conference Room B-106 3331 North First Street San Jose, CA AGENDA CALL TO ORDER 1. ROLL CALL 2. PUBLIC PRESENTATIONS: This portion of the agenda is reserved for persons desiring to address the Committee on any matter not on the agenda. Speakers are limited to 2 minutes. The law does not permit Committee action or extended discussion on any item not on the agenda except under special circumstances. If Committee action is requested, the matter can be placed on a subsequent agenda. All statements that require a response will be referred to staff for reply in writing. 3. ORDERS OF THE DAY 4. ACTION ITEM - Conduct voting to determine the Committee's vice chairperson for calendar year 2019. CONSENT AGENDA 5. ACTION ITEM -Approve the Regular Meeting Minutes of December 20, 2018. 6. ACTION ITEM -Approve the 2019 Administration and Finance (A&F) Committee Meeting Schedule. 7. ACTION ITEM - Recommend that the VTA Board of Directors authorize the General Manager to execute a contract with Itech Solution, the lowest responsive and responsible bidder, in the amount of $810,810 for the Bus Stop Enhancement at Various Locations (C18171F) contract.
71
Embed
Amazon Web Services - ADMINISTRATION & …vtaorgcontent.s3-us-west-1.amazonaws.com/Site_Content/af...General Manager to negotiate and execute a contract with Ray Morgan Company (RMC)
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
ADMINISTRATION & FINANCE COMMITTEE
Thursday, February 21, 2019
12:00 PM
VTA Conference Room B-106
3331 North First Street
San Jose, CA
AGENDA
CALL TO ORDER
1. ROLL CALL
2. PUBLIC PRESENTATIONS:
This portion of the agenda is reserved for persons desiring to address the Committee on
any matter not on the agenda. Speakers are limited to 2 minutes. The law does not
permit Committee action or extended discussion on any item not on the agenda except
under special circumstances. If Committee action is requested, the matter can be placed
on a subsequent agenda. All statements that require a response will be referred to staff
for reply in writing.
3. ORDERS OF THE DAY
4. ACTION ITEM - Conduct voting to determine the Committee's vice chairperson for
calendar year 2019.
CONSENT AGENDA
5. ACTION ITEM -Approve the Regular Meeting Minutes of December 20, 2018.
6. ACTION ITEM -Approve the 2019 Administration and Finance (A&F) Committee
Meeting Schedule.
7. ACTION ITEM - Recommend that the VTA Board of Directors authorize the General
Manager to execute a contract with Itech Solution, the lowest responsive and responsible
bidder, in the amount of $810,810 for the Bus Stop Enhancement at Various Locations
(C18171F) contract.
Santa Clara Valley Transportation Authority
Administration & Finance Committee February 21, 2019
Page 2
8. ACTION ITEM - Recommend that the VTA Board of Directors authorize the General
Manager to negotiate and execute a Firm Fixed Price contract with Fehr & Peers to
complete the Strategic Plan for Advancing High Capacity Transit Corridors. The contract
shall be for a period of 18 months and not to exceed $800,000.
9. INFORMATION ITEM -Receive Monthly Investment Report for December 2018.
REGULAR AGENDA
10. ACTION ITEM - Recommend that the VTA Board of Directors authorize the General
Manager to enter into an Exclusive Negotiations Agreement (ENA) with Green Republic
Blossom Hill LLC (a Joint Venture of Republic Urban Properties, Swenson, and EAH
Housing) for negotiation of the proposed terms and conditions of a Joint Development
Agreement for a Joint Development project at the Blossom Hill Station.
11. ACTION ITEM -Recommend that the VTA Board of Directors approve draft framework
of the proposed 2016 Measure B Innovative Transit Service Models Competitive Grant
Program.
12. INFORMATION ITEM -Receive an update on the development of the 2019 New Transit
Service Plan.
OTHER ITEMS
13. Items of Concern and Referral to Administration.
14. Review Committee Work Plan. (Srinath)
15. Committee Staff Report. (Srinath)
2016 Measure B Update
16. Chairperson's Report. (Carr)
17. Determine Consent Agenda for the March 7, 2019, Board of Directors Meeting.
18. ANNOUNCEMENTS
19. ADJOURN
In accordance with the Americans with Disabilities Act (ADA) and Title VI of the Civil Rights
Act of 1964, VTA will make reasonable arrangements to ensure meaningful access to its
meetings for persons who have disabilities and for persons with limited English proficiency who
need translation and interpretation services. Individuals requiring ADA accommodations should
notify the Board Secretary’s Office at least 48-hours prior to the meeting. Individuals requiring
language assistance should notify the Board Secretary’s Office at least 72-hours prior to the
meeting. The Board Secretary may be contacted at (408) 321-5680 or
Policy Benchmark Returns -4.06% -7.14% -5.33% -5.33% 5.43% 4.50% 7.90% 5.66% 5 Funded April 1, 2009. Prior manager was Brandywine with the same benchmark. 6 Funded December 14, 2007. Prior managers were Putnam and Fidelity with MSCI EAFE as their benchmark. 7 Initially funded June 30, 2016 8 Initially funded July 1, 2010. UBS Realty Investors LLC with NCREIF NFI-ODCE as their benchmark. Report 45 days after quarter ended. 9 Funded January 28, 2016
10 Investment performances by prior managers are included in composite returns and historical policy benchmark returns.
BOSTON PARTNERS - The Domestic Large Cap Value Equity manager underperformed its
policy benchmark in December 2018 by 0.74%. Stock selection in the finance and technology
sectors both detracted from relative performance.
WEDGE - The Domestic Small Cap Value Equity manager outperformed its policy benchmark
in December 2018 by 0.05%. Stock selection in the consumer staples, transportation and the
telecom sectors all contributed to the relative performance for the month.
MFS - The International Equity manager outperformed its policy benchmark in December 2018
by 0.38%. Stock selection in the communication services sector was the primary detractor to
relative performance for the month.
PRINCIPAL GROUP - The Diversified Real Asset Manager underperformed its policy
benchmark in December 2018 by 1.07%. Allocations to the natural resource and the
infrastructure sectors both contributed to relative underperformance for the month.
DODGE & COX - The Fixed Income portfolio manager underperformed its benchmark in
December 2018 by 0.68%. The primary contributor to relative performance was the portfolios’
shorter relative duration and an overweight position to corporate bonds.
LIGHTHOUSE - The Absolute Return manager outperformed its policy benchmark in December
2018 by 0.66%. Long / Short international equity managers were the primary contributors to
relative performance for the month.
SKYBRIDGE - The Absolute Return manager underperformed its policy benchmark in
December 2018 by 0.67%. Relative value, structured credit and credit sensitive MBS strategies
all contributed to relative performance for the month.
A 7.00% rate of return assumption is used in the annual actuarial analysis for the ATU Pension
Plan. The results of the actuarial analysis determine VTA’s annual contribution rates. The
annual returns for the ATU Pension Plan portfolio have been equivalent to or exceeded the
7.00% assumed rate of return 10 out of 15 years.
Historic Portfolio Performance (calendar year) for the last fifteen calendar years:
Year Performance Year Performance Year Performance
2004 12.2% 2009 25.7% 2014 7.2%
9
Page 7 of 8
2005 7.2% 2010 14.0% 2015 0.5%
2006 14.5% 2011 1.7% 2016 9.2%
2007 5.8% 2012 14.5% 2017 14.65%
2008 -19.7% 2013 16.5% 2018 -4.56%
ATU Spousal Medical Trust Fund, Dental, and Vision Plan
Asset allocation for the ATU Spousal Medical Trust Fund (including funds for dental and vision
plans) is provided for in the SCVTA-ATU Pension Plan Investment Policy.
Asset Allocation Range Target Actual
Domestic Fixed Income 30-50% 38% 37%
Domestic Large Cap Index 50-70% 60% 62%
Cash 0-5% 2% 1%
The ATU Spousal Medical Trust Fund composite portfolio underperformed its policy benchmark
in the current month by 0.57%. The current yield for the fixed income portfolio is 4.39% and the
current effective duration is 4.40 years.
Market performance for each money manager is summarized in the following table:
Investment Performance
Asset Class Fund Manager Dec. 3 Mo Y-T-D 1 Yr 3 Yr 5 Yr 10 Yr I-T-D
Large-Cap Index State Street -9.00% -13.48% -4.40% -4.40% 9.22% 8.47% 13.09% 8.11%
DODGE & COX - The Fixed Income portfolio manager underperformed its benchmark in
December 2018 by 0.79%. The primary contributor to relative performance was the portfolios’
shorter relative duration and an overweight position to corporate bonds.
Other Data
The valuation of VTA’s securities is provided by Interactive Data Corporation (IDC) and
Bloomberg Generic Pricing Service. These firms are the leading providers of global securities
data. They offer the largest information databases with current and historical prices on securities
traded in all major markets.
This report complies with VTA’s adopted investment policies. Based on budgeted revenues and
expenditures as well as actual transfers to/from reserves, there are sufficient funds available to
meet expenditure requirements for the six months ending June 30, 2019.
9
Page 8 of 8
Prepared By: Sean Bill
Memo No. 6856
9
Date: February 15, 2019
Current Meeting: February 21, 2019
Board Meeting: March 7, 2019
BOARD MEMORANDUM
TO: Santa Clara Valley Transportation Authority
Administration & Finance Committee
THROUGH: General Manager, Nuria I. Fernandez
FROM: Chief Financial Officer, Raj Srinath
SUBJECT: Blossom Hill Station Joint Development - Exclusive Negotiations Agreement
Policy-Related Action: Yes Government Code Section 84308 Applies: Yes
ACTION ITEM
RECOMMENDATION:
Recommend that the VTA Board of Directors authorize the General Manager to enter into an
Exclusive Negotiations Agreement (ENA) with Green Republic Blossom Hill LLC (a Joint
Venture of Republic Urban Properties, Swenson, and EAH Housing) for negotiation of the
proposed terms and conditions of a Joint Development Agreement for a Joint Development
project at the Blossom Hill Station.
BACKGROUND:
The Board of Directors adopted VTA’s current Joint Development Policy in 2009, and it
subsequently approved 25 locations as sites in the Joint Development portfolio, including the
Blossom Hill Station Park and Ride lot. Joint Development is mixed-use, mixed-income Transit
Oriented Development pursuant to Federal Transit Administration Joint Development Circular
requirements.
The three Joint Development program goals listed by priority in the Policy can be summarized
as: (1) generate a long-term stable source of revenues for VTA; (2) create high-quality transit-
oriented development with significant affordable housing that spurs creation of transit-oriented
communities; and (3) create development that generates ridership growth and/or enhances VTA
assets. Amendments by the Board of Directors to the Joint Development Policy established a
comprehensive affordable housing policy, with a goal for 35% of all residential units to be
affordable when the portfolio is built out, and a minimum requirement for each project to provide
at least 20% affordable units. The VTA Board also identified aspirations for community
workforce opportunities in Joint Development projects.
10
Page 2 of 6
Blossom Hill Station is located within the Blossom Hill Road/Cahalan Avenue Urban Village.
The City of San Jose has not yet adopted an Urban Village Plan for this location, therefore
development within the area may proceed subject to the City’s “Signature Project” criteria. Some
of the most important elements the City of San Jose requires for a Signature Project include:
specific amount of jobs-producing square footage that is constructed before or concurrent
with residential units;
substantial and publicly accessible open space; and
high-quality architectural, landscape, and site design that is pedestrian-friendly.
In July 2018, VTA’s Real Estate & Joint Development Department issued a Request for
Proposals (RFP) for Blossom Hill Station. The RFP document required interested developers to
submit a detailed development proposal that describes how they would design, finance, build,
and manage the Joint Development project pursuant to a long-term ground lease from VTA. The
RFP was distributed to an extensive list of national, regional, and local developers experienced in
mixed-use development. VTA staff conducted a pre-proposal meeting for interested developers
to discuss the project with VTA staff and each other. VTA staff responded publicly to a number
of written questions from interested parties.
Prior to issuance of the RFP, VTA and the City of San Jose conducted a community meeting
near the site at Del Roble Elementary School to provide neighbors and community members with
an update on the Joint Development project, the upcoming RFP, and future plans for working
with the community once a developer is selected for an ENA. Feedback from this community
engagement was shared with the development community.
DISCUSSION:
Proposal Received
VTA received one qualified proposal by the November 2018 deadline. The qualified response
was submitted by a joint venture comprised of three distinct development entities - Republic
Urban Properties, Swenson, and EAH Housing - forming Green Republic Blossom Hill, LLC
(“GRBH”). The GRBH proposal calls for 300 new rental residential units and 12,580 square feet
of retail space, plus 382 spaces of new shared project parking. Sixty-eight (68) of the apartments
would be affordable rentals, and 232 would be market-rate units. GRBH also proposes to restripe
the existing park-n-ride lot to provide up to 254 transit station parking spaces which would be
owned and maintained by VTA. GRBH proposes a ground lease with a term of 65 years.
The 232 market-rate units and approximately 10,000 square feet of commercial space are
proposed for a single building owned and developed by a 50-50 partnership comprising Republic
Urban and Swenson. The proposed 68 affordable units would be in a connecting building with
approximately 2,850 square feet of commercial space owned and developed by EAH Housing.
Proposed Uses and Developer Entities in GRBH Proposal
10
Page 3 of 6
VTA Blossom Hill Station Parking: 254 Parking Spaces
Within the affordable apartment building, 10% of the units would be for families earning up to
30% of Area Median Income (Extremely Low Income); the remaining apartments would be for
families earning up to 50% of Area Median Income (Very Low Income).
GRBH Housing Type Detail
Market-
Rate
Affordable 7 units
@ ELI 61 units @
VLI
Studio Apartments 88 12
1-Bedroom Apartments 108 16
2-Bedroom Apartments 36 20
3-Bedroom Apartments 20
Sub-Total 232 68
TOTAL 300
The open space occurs throughout the proposal in new plazas near the transit station and the two
residential buildings; in a new publicly accessible picnic and play area adjacent to the Affordable
apartment building; and in a new bike/pedestrian trail which would be constructed along the
bank of Canoas Creek, under Highway 85, and connecting to Martial Cottle Park.
The new parking spaces occur in a combination of surface parking and structured parking
garages, including one level of below-grade parking. GRBH proposes 382 parking spaces to
serve the combined residential and commercial project, with some shared parking between the
buildings, subject to City’s approval and application of Transit Demand Management program.
GRBH also proposes to restripe the VTA park-n-ride lot to provide up to 254 onsite spaces,
which meets the requirement to provide at least 212 onsite spaces for transit station parking.
10
Page 4 of 6
Attachment A to this memorandum provides details on the proposal and program.
Consideration of a Single Proposal
Joint Development solicitations for sites with a federal interest, including Blossom Hill, are
subject to the guidance contained in the Federal Transit Administration’s Third-Party
Procurement Circular C 4220.1F (rev. 4, 03/18/2013). The receipt of a single proposal raises the
question of whether there was “adequate competition” pursuant to the Circular. Staff arranged
for a third-party consultant to interview developers who had interest in the RFP by registering to
receive information via VTA’s online procurement system. These interviews reinforced that few
developers were interested in submitting proposals, even when we queried whether a Request for
Qualification process would be simpler. Other factors contributing to the low response rate
identified in the interviews include increasing concerns about the financial feasibility of new
multifamily rental development, uncertainty about economic trends, and a resulting tendency by
development firms to focus on projects already in their “development pipeline.”
The RFP release was accompanied by press coverage in the San Jose Mercury News, Silicon
Valley Business Journal, Railway Track & Structures, Progressive Rail Roading, and other local
and national media outlets. Staff and third-party vendors publicized the opportunity through
professional networks and trade organizations. Numerous publicly advertised opportunities for
additional information followed, including a pre-proposal conference on July 26, 2018; a
published date for questions to be submitted in writing to VTA staff; and a publicly circulated
“Question & Answer” document to all entities and individuals who registered for the RFP on
VTA’s “Procurement and Solicitations” web portal.
Due to the feedback received during the exit interviews and the wide-ranging publicity given the
RFP during the solicitation period, staff believes that we have met the adequate competition test,
and is awaiting FTA’s review and concurrence with our conclusion.
Proposal Evaluation
The proposal was evaluated by VTA-retained experts in architecture and development
economics. A review panel consisting of two VTA Real Estate Project Managers; one VTA
Principal Planner; one community member appointed by Councilmember Khamis (the project
site is in District 10); the Deputy Director for Real Estate and Joint Development; and an
economist from BAE Urban Economics under contract to VTA, was convened to review the
technical evaluation, conduct an interview, and assess the proposal based on the criteria set forth
in the RFP, which include:
the quality of the development proposal, including the affordable housing commitment;
the proposed financial offer and other proposed terms and conditions, including benefits
such as community workforce opportunities;
the proposed development team’s experience (including a reference check); and
the financial capacity and financial strength of the proposed development team
10
Page 5 of 6
In a consensus decision, the panel concluded that the GRBH proposal meets VTA’s stated Joint
Development Policy goals, and recommends to the Board of Directors that the developer be
invited to an Exclusive Negotiation Agreement (“ENA”) period, during which all parties can aim
to produce detailed project documentation including a Joint Development Agreement and
Ground Lease for consideration by the Board. A copy of the review panel’s report is contained in
Attachment B.
Recommendations for Exclusive Negotiations
The review panel recommends the following as a starting point for VTA’s negotiation objectives
during the ENA period:
(a) increase the financial offer to VTA starting with a higher ground rent in Year 4 and annual
escalation higher than 1.5% each year thereafter; or
(b) identify a “value capture” threshold - such as standard percentage rent agreement that has
a gross revenue threshold and would include future revenue from project parking;
(c) ensure the open space is located to serve the neighborhood and any new commercial
businesses. Aligning the open space in the required setback along the creek is efficient for
the site plan, but may not be optimal for usability and desirability of the open space; and
(d) specify that 300 is the minimum number of units, even if the city requirement for jobs-
producing space is higher than the proposal. If commercial space requirements are greater
than proposed, then the residential count should stay the same or increase.
Following the Board’s authorization of an ENA, the Joint Development staff, assisted by its
consultant team, will commence negotiations with this developer on the terms and conditions of
a Joint Development Agreement (“JDA”) and a long-term ground lease, which is expected to
take approximately one year through Spring 2020. At the conclusion of the ENA period, if
negotiations are successful, staff will present to the Board of Directors for approval the proposed
terms and conditions for a JDA, including contingencies for design and entitlement approvals,
permit requirements, financing commitments, and other conditions that would need to be
satisfied before VTA executes a ground lease agreement.
ALTERNATIVES:
The Board of Directors direct staff to commence a new solicitation offering, or direct staff to re-
evaluate plans for Joint Development at Blossom Hill station.
FISCAL IMPACT:
Exclusive negotiations will require use of VTA consultants to assist with review of ongoing
developer submittals and negotiations. To the extent possible, VTA staff will seek to have the
selected developer reimburse these expenses (the proposal included a $25,000 check as initial
payment towards these expenses).
10
Page 6 of 6
Successful completion of a Joint Development project would result in VTA receiving ongoing
ground lease payments during the ground lease term as well as any direct financial contributions
from GRBH for station area enhancements.
Prepared by: Ron Golem
Memo No. 6513
ATTACHMENTS:
ATTACHMENT A_GRBH Proposal Summary (PDF)
ATTACHMENT B_Blossom Hill Station Review Panel Report (PDF)
ATTACHMENT C_Key Participants (PDF)
10
Attachment A Proposal Summary
Attachment A: Proposal Summary Green Republic Blossom Hill, LLC, a joint-venture company between
Republic Urban Properties, EAH Housing, and Swenson (“GRBH”)
Item GRBH Proposal
Residential Units 300 Residential Units
68 Affordable (23% of total)
232 Market-rate Units
Lease Term 65 years proposed.
GRBH has expressed a desire for a longer lease term.
Lease Payments Year 1 (Construction): $ 110,000 Year 2 (Construction): $ 110,000 Year 3: $ 0 Year 4: $200,00 Base Rent Annual Increases: Base Rent increases 1.5% each year thereafter Base Rent Adjusted: Year 20, 40, & 60 according to project’s Adjusted
Gross Income (AGI), estimated at 3% annually
Commercial Square Feet 12,580 sq. ft.
Concerns • Signature Project approval in an Urban Village is discretionary and
uncertain.
• Amount of commercial square feet is ~50% lower than previous city
requirements for projects of this size.
• Site uses and circulation optimized for vehicles - not for
pedestrians/residents/transit riders/neighbors.
Benefits • Public Trail connecting Blossom Hill Road with Martial Cottle Park &
Public open space with children’s play area.
• 68 Deeply affordable family-sized units, more than the city
requirement.
• Improvements to station area, such as bike share, coffee kiosk, and
privately maintained bathrooms for use by VTA staff & customers;
maintains 212 stalls (minimum) of transit station parking.
• 300 total new residential units (potentially more with City Signature
Project approval) on underutilized parking lots.
Total Revenue proposed (65 Years)
$ 50,911,086
Assuming 3% annual growth in adjusted growth income
Net Present Value (65 years) $ 7,400,622
Net Present Value is the present value of future cash inflows. Calculation assumes a 5% discount rate.
10.a
Attachment A Proposal Summary
GRBH Proposal Data
GRBH Proposed Unit Types and Sizes
Market-Rate Affordable Approximate Sq. Ft.
Studio Apartments 88 12 550
1-Bedroom Apartments 108 16 725
2-Bedroom Apartments 36 20 1000
3-Bedroom Apartments 20 1250
Sub-Total 232 68
TOTAL 300
GRBH Proposed Affordability Level
Affordability Range Proposed Units
Percentage
Extremely Low Income (<30% AMI) 7 10%
Very Low Income (30-50% AMI) 61 90%
Low Income (50-80% AMI) 0 0%
Moderate Income (80-120% AMI) 0 0%
TOTAL 68 100%
*AMI = Area Median Income
Proposed Schedule for Negotiations and Project Development
Task Commence Conclude
Exclusive Negotiations (VTA) Spring 2019 Fall 2020
Signature Project Approval & Environmental Review (City) Fall 2019 Fall 2020
Joint Development Agreement & Ground Lease (VTA Board) Fall 2020
Building Permit Fall 2020 Spring 2021
Construction Spring 2021 Spring 2023
Lease-Up and Occupancy Summer 2023
Projected Potential Annual Revenue to VTA
Ground Lease Payments Stabilized Year $ 200,000
Fare Revenue from 210 new riders 2019 fares $ 125,791
Parking revenue from daily parking fees If approved $ 72,478
Total $ 400,000
Additional One-time payment for Station Area Enhancements
Year 1/2
$ 220,000
10.a
Attachment A Proposal Summary
GRBH Site Plan
Archway over Main Entrance
VTA Transit Parking
Market-rate Building
Affordable Apartment Bldg.
To Martial Cottle Park
10.a
Attachment A Proposal Summary
GRBH Site Program and Uses
10.a
Attachment B – Review Panel Summary
Attachment B: Review Panel Summary Report Green Republic Blossom Hill, LLC, a joint-venture company between
Republic Urban Properties, EAH Housing, and Swenson (“GRBH”)
A Review Panel was convened to evaluate proposals submitted by Developers responding to
VTA’s Request For Proposals (“RFP”) for a mixed-use development at Blossom Hill Station.
The Review Panel is comprised of two VTA Real Estate Project Managers; one VTA Principal
Planner; one community member appointed by Councilmember Khamis (the project site is in
District 10); the Deputy Director for Real Estate and Joint Development; and an economist from
BAE Urban Economics under contract to VTA. The panel also received expert advice from the
Dahlin Group, an Architecture and Urban Design firm under contract to VTA on issues of site
and building design.
Since there was only one proposal to evaluate, and therefore no need to compare and rank
competing proposals, the evaluation focused on either reaching a recommendation to advance to
the Exclusive Negotiation Agreement (“ENA”) stage, or to identify any disqualifying
deficiencies and recommend a different course of action. During the analysis, the panel sought to
identify the following specific items:
1. Any deficiencies or disqualifying aspects in the proposal;
2. Elements of the proposal that were exemplary; and
3. Items recommended to be a focus of negotiation during the subsequent ENA period.
The Review Panel met several times in person and via telephone conferences; requested
additional information from GRBH; and conducted an in-person interview with 9 members of
the GRBH team in early December. Based on the quality of GRBH’s proposal, follow-up
information, and the interview, the panel is unanimous in its recommendation that VTA should
proceed into negotiations with GRBH for a Joint Development Agreement and Ground Lease for
Board approval.
Review Panel Findings on Evaluation Criteria
The proposal was evaluated against 4 Evaluation Criteria included in the RFP, which are
summarized below, followed by the panel’s findings for each category.
A. QUALITY OF DEVELOPMENT PROPOSAL - VTA seeks development proposals for
high‐quality mixed‐use Transit‐Oriented Development (“TOD”) that represents best
practices, supports TOD on other adjacent and nearby sites, and maximizes benefits for
both VTA and the community.
The panel finds that the GRBH proposal is a high-quality mixed-use project that incorporates
best practices for site design and program. Examples of the best practices in the proposal that
were noted include:
• massing the buildings along Blossom Hill Road, to create an active street frontage
and improved pedestrian experience, with the benefit of placing the new homes
furthest away from the highway off-ramp
10.b
Attachment B – Review Panel Summary
• Grouping the affordable housing units into a single building in order to position them
for competitive financing from state and local matching sources
• Ensuring that most the new project parking is concealed and hidden from the
pedestrian areas – but including a small amount of surface parking along the highly
visible entry street to support the ground-floor retail tenants
In terms of the proposed housing mix,
GRBH’s proposal exceeds the
requirements of the RFP and provides
an even greater number of affordable
units at very deep affordability levels.
The RFP calls for a minimum of 20%
affordable units with a requirement
for half of them to be “Low Income”
or below. GRBH is proposing 23% of the units to be
affordable; and all of the proposed units will be
reserved for Extremely Low and Very Low incomes.
Furthermore, over half of the affordable units are
proposed to be 2-BR and 3-BR apartment homes, which
are scarce in the area and will serve families who are
likely to develop long-term ties and involvement in
local insitutions, all of which maximize benefits for
VTA and the community.
Though only a conceptual site plan was submitted in the GRBH proposal, and no detailed
architectural drawings, the Panel noted the creativity and uniqueness of the proposed “Archway”
which spans the main entrance drive, and is topped by 3 levels of homes. This open span serves
to further define the street wall along Blossom Hill Rd; optimizes efficiency on a site constrained
by necessary setbacks from the freeway offramp and Canoas Creek; and adds a unique
architectural element - all of which supports the excellent design features that are required for
the City’s Urban Village “Signature Project” process.
GRBH proposes a new creekside trail from Blossom Hill Road northward to connect with
Martial Cottle Park, a community benefit that was requested by attendees at the VTA community
outreach meetings held in 2018. This pedestrian and bike connection to Blossom Hill Road is
also identified as a goal in the “State Park General Plan and County Park Master Plan” approved
by the County of Santa Clara in 2011 (p. 35). During the interview, the developer spoke about
the GRBH team’s experience working with both the County and SCVWD on other similar public
trail improvements in recent years. GRBH said they intend to seek funding from public sources
(e.g. SCVWD), which could be applied not only for easement and access rights for construction
of the trail but potentially toward ongoing maintenance funding. Though this proposed feature
takes advantage of a required Creek setback and could deliver a desirable community
enhancement – GRBH’s site plan currently overlaps the trail with other usable open space
(picnic areas, children’s play area) furthest away from the retail/restaurant spaces. Ideally the
active plazas and picnic areas would be adjacent to the retail stores, as customers would be more
Unit Type Total Average Rent
Studio 12 $ 1,012
1-Bedroom 16 $ 1,019
2-Bedroom 20 $ 1,167
3-Bedroom 20 $ 1,408
Total 68
Source: GRBH Proposal p. 95
Rent Level Total
30% AMI 7
40% AMI 14
50% AMI 46
Manager 1
Total 68
Source: GRBH Proposal p. 95
10.b
Attachment B – Review Panel Summary
able to access them and also to prevent them from appearing to be “isolated” and potentially
attractive nuisances. The panel would like to see both the trail connection with other retail-
adjacent plaza amenities, and hopes both items can be incorporated into the final project.
Although high-quality aspects of the proposal were noted by the panel, other items the panel
recommends be further developed during an ENA period include:
• The amount of commercial square feet proposed does not meet the minimum stated by
officials in the City’s Planning Department and required by the RFP. Developer’s
reasoning for proposing 12,500 sq. ft. when 19,000 sq. ft. was requested is that anything
more than what they propose is not commercially viable according to their retail broker
experts. This adds to the entitlement risk, and also may not be enough “critical mass”
commercial space to appeal to a variety of tenants that will support the Urban Village
goals. If additional commercial space is required or proposed, it should not come at the
expense of any residential units. “Live-work” units may be one way to keep the
residential unit count and add commercial space.
• The Blossom Hill Archway, though architecturally interesting, may not be compatible
with the transit operations and auto access to the site, since there is only one auto
entrance. If the Archway is determined incompatible or infeasible during site design,
then the architecture and massing may need substantial revisions.
• The largest amount of open space is adjacent to the creek and in one of the least
accessible and least visible parts of the project. Further evaluation of whether additional
open space and plazas can be provided nearer to the retail/commercial stores should be
undertaken.
• Even though VTA’s Joint Development goals are to minimize automobile trips and
encourage transit ridership, the provision of new project parking plus the preservation of
transit parking may still be insufficient at this location. Further research into the parking
provision for both new residents and day-use transit parking, plus consideration of
parking management measures, will be necessary to minimize effects on nearby
neighborhoods and encourage transit ridership.
10.b
Attachment B – Review Panel Summary
B. OFFER/TERMS TO VTA - VTA seeks financial proposals that maximize VTA’s long‐term financial return. VTA also seeks to maximize public benefits, including, but not
limited to, affordable housing, a quantifiable increase in community workforce
opportunities, and station access and area enhancements.
Over 65 years, GRBH has proposed to return $ 50,911,086 in total consideration to VTA, with a
net present value of $7.4 million. That number includes a one-time contribution of funds during
the construction phase of $220,000 that would be earmarked for station area enhancements such
as new lighting, planting, signage, etc. The next payments to VTA would not occur until Year 4
after the project commences construction, i.e. the year the developer expects the project to
stabilize, and would escalate at 1.5% annually with periodic adjustments based on Adjusted
Gross Income in Year 20, 40, and 60.
The development economics expert on the panel states this type of valuation process is widely
used in ground lease transactions of this type, as it allows for VTA to capture increased value in
the future, a key feature ground lease transactions for the real property owner. Based on the value
of the land used in the developer’s submitted pro forma, however, the proposed initial base rent
may not reflect today’s land value – so the escalated rent payments compute to lower annual
ground rent payments than they otherwise would. Typical ground leases for similarly sized and
located projects also have re-assessment dates more often than proposed by GRBH (which
proposes adjustment in Year 20, 40, and 60 only). The panel recommends that these terms,
including the starting base rent, should be discussed in more detail during the ENA period, and
examples of other market-rate ground leases should be used to identify the best practices for
these types of transactions.
The Blossom Hill Station would benefit from $220,000 worth of improvements to the Station
Area, but the increased ridership and use the station will get as a result of this development may
warrant a larger funding allocation from the transaction. The provision of affordable housing,
particularly the family-sized units, and the proposal to provide 68 of them when only 60 are
required by the City - is an excellent benefit. The development partnership of Swenson and RUP
have each demonstrated experience working with local apprentice labor and maintaining labor
peace on other major mixed-use projects in San Jose, which was confirmed by our reference
checks, and will be a community benefit during the construction period.
The panel concludes that GRBH’s proposal is on its way to maximizing VTA’s long-term
financial return. Ensuring the best possible value for VTA as the property owner (for instance by
establishing Year 1 rent at a higher base land value which reflects of the market value of the
property; and ensuring the AGI re-sets can occur more often than every 20 years); then the
overall financial return to VTA could be maximized.
10.b
Attachment B – Review Panel Summary
C. RESPONDENT TEAM EXPERIENCE - VTA seeks demonstrated experience within the
Respondent team with: (i) the successful development and operation of one or more
mixed‐use housing projects similar to what is envisioned for the Blossom Hill Station
Park and Ride Lot, including the ability to successfully work with public agencies and
diverse communities; and (ii) the successful completion of multiple affordable housing
development projects that utilize Low Income Housing Tax Credits (LIHTC) and/or other
public and private sources of funds.
GRBH is a joint venture of three development companies that each have extensive
experience with VTA, City of San Jose, and mixed-use developments. We performed
reference checks on each of the 3 entities, with development partners, financial lenders, and
agency partners (VTA would be an agency partner), and received very good references for
all three.
Republic Urban is in development on two projects with municipal or agency oversight (one
in Millbrae and one in Morgan Hill), on which they are performing on time, on budget.
They are also in negotiation with VTA on separate site in San Jose which and members of
the Review Panel who work directly with them have found them responsive and performing
to expectations, and their experience in working on a VTA transit site is advantageous.
EAH Housing, the affordable housing developer, owns numerous affordable housing
projects in San Jose although they haven’t constructed a new one in this jurisdiction in over
a decade. Our reference checks of EAH indicate they are an outstanding developer, with
several projects built ground-up in nearby jurisdictions that include transit adjacency and
TOD features such as transit passes for residents, car-sharing, etc. They have an excellent
track record in securing funding and tax credit financing for these projects, as well. Their
proposal to utilize state 4% tax credits along with City of San Jose housing funds is
bolstered by the large family-sized units and deep affordability proposed, meaning they are
likely to receive the funding as proposed.
Swenson, who is proposed as a 50% JV partner with Republic Urban on the market-rate
portion of the project, also has good relevant experience. They have built numerous multi-
family apartment buildings in areas adjacent to VTA rail routes, for instance along the North
First Street light rail corridor and at Tamien Station. They are experienced within San Jose,
and can build on their 20+ years of experience with city of San Jose planning and approval
processes. Swenson, who is proposed to be the General Contractor on the project as well as
one of the project developers, has developed specific cost-containing processes for
construction and development that could benefit the Blossom Hill project.
Overall, the Review Panel concluded that this team has excellent experience and a very good
track record in their individual capacities, and believes they will work well together as a joint
venture.
10.b
Attachment B – Review Panel Summary
D. FINANCIAL CAPACITY AND STRENGTH OF THE RESPONDENT TEAM - VTA seeks
a Respondent who has the capability to obtain financing for the proposed Project, as
demonstrated by its previous history of completed projects, as well as current financing
activities for pending projects.
All three development entities comprising the Joint Venture presented strong company-level
financials. Each of the 3 firms that are part of the joint venture identified sources of financing
and provided letters of interest from lenders and potential equity sources, and reference checks to
lenders and financial partners were performed on each one.
In speaking with one national lender who has worked with EAH on new construction over the
past 5 years (2012-2017), they have successfully closed loans ranging up to $13 million dollars
with no problem, and in each case leveraged those funds with various public sources as well.
Another financing partner with EAH rated them as “exceeding expectations” and “among the
best” with regards to obtaining financing, meeting financial obligations, and completing new
construction projects without incident.
According to two different financial partners (lenders) for Swenson, they have never defaulted
on a loan or been late in payments. Similarly, Republic Urban submitted documentation for
financing packages up to $70 million dollars, and they have recently completed construction and
opened up a transit-adjacent multi-family project with every retail space leased up and occupied,
in a market where many other developers often leave ground-floor retail space vacant. Republic
Urban’s success in leasing and opening ground-floor retail in its mixed-use projects is an
indicator that their proposed retail at Blossom Hill is likely to be occupied and may catalyze
neighborhood activity for future growth in that Urban Village.
Summary of Review Panel Findings
In conclusion, the Review Panel finds that the proposal meets minimum standards in all of the
Evaluation Criteria – and exceeds the criteria in several (i.e experience with ground leases;
experience with agencies and VTA; experience obtaining financing with uncertain entitlements;
familiarity with this area and neighborhood). The panel recommends that VTA enter into
negotiations with Green Republic Blossom Hill.
If negotiations are authorized by the VTA Board of Directors, then the panel recommends trying
to improve the proposal in the following areas:
• Design and Architecture. Ensure the ultimate architectural design along Blossom Hill
Road encourages further development in the Urban Village. If the architectural archway is
infeasible, replace that design feature with other interesting elements. Ensure the open
space is distributed throughout the site – the trail connection on Canoas Creek is good but
other areas may be better positioned closer to retail and residential buildings where they
are more likely to be used.
• Financial Terms. Negotiate a fair and equitable base rent based on current market value
of the land. Consider escalation and AGI re-set more frequently than every 20 years.
Ensure enough money is dedicated for station area improvements to benefit transit riders
and encourage more transit ridership in the future.
• Parking and Other Uses. Ensure the provision of parking is adequate for both the short-
term and the long-term, as parking needs are likely to evolve as the region transitions to
10.b
Attachment B – Review Panel Summary
more transit- and micro-mobility users. Ensure transit patron parking is sufficient to
encourage ridership. Make sure the buildings are situated so that access to parking and
station operations are not impeded, and also that adequate parking is identified for patrons
of the retail spaces and guests of the future residents.
10.b
Attachment C Key Participants
Attachment C: Key Participants Green Republic Blossom Hill, LLC, a joint-venture company between
Republic Urban Properties, EAH Housing, and Swenson (“GRBH”)
Firm Name Key Person Role Location:
Swenson Case Swenson President San Jose
Republic Urban
Properties
Michael Van
Every
President & CEO San Jose
EAH Housing Welton Jordan Vice President San Rafael
HMH Engineers Ray Hashimoto Principal San Jose
WRT Landscape &
Urban Design Planning
James Stickley Principal San Francisco
10.c
Date: February 15, 2019
Current Meeting: February 21, 2019
Board Meeting: March 7, 2019
BOARD MEMORANDUM
TO: Santa Clara Valley Transportation Authority
Administration & Finance Committee
THROUGH: General Manager, Nuria I. Fernandez
FROM: Director - Planning & Programming, Chris Augenstein
SUBJECT: Draft 2016 Measure B Innovative Transit Service Models Competitive Grant
Program Framework
Policy-Related Action: Yes Government Code Section 84308 Applies: No
ACTION ITEM
RECOMMENDATION:
Recommend that the VTA Board of Directors approve draft framework of the proposed 2016
Measure B Innovative Transit Service Models Competitive Grant Program.
BACKGROUND:
On November 8, 2016, the voters of Santa Clara County approved by over a two-thirds vote
Measure B, a 30-year, ½ cent sales tax measure supporting transportation projects and services.
2016 Measure B includes $500 million (in 2017 dollars) for Transit Operations. The Transit
Operations Program Category is divided into the following four subcategories:
Enhance Core Frequent Network
Support new/innovative transit service models to address first/last mile connections.
Expand mobility services and affordable fare programs for seniors, disabled, students and
low income riders.
Improve amenities at bus stops to increase safety, security and access, as well as on-going
maintenance.
At their October 2017 meeting, the VTA Board of Directors approved the Transit Operations
Program Category Guidelines, which directed the Innovative Transit Service Models Program to
support goals to address first/last mile connections. Strategies to support this subcategory may
include competitive grant programs to help fund services operated by local jurisdictions, utilize
excess paratransit capacity, and other programs that encourage investments in local service. The
11
Page 2 of 5
Transit Operations Program Category Guidelines are included as Attachment A.
The VTA Board adopted allocation for the Innovative Transit Service Models subcategory is $3
million for FY18 & FY19. VTA staff are proposing to continue this level of funding in the FY20
& FY21 budget. If approved by the VTA Board in June as part of VTA's FY20 & FY21
budgets, this would provide a four-year total allocation of $6 million.
DISCUSSION:
In order to address the charge of the Board of Directors, VTA will develop a competitive
Innovative Transit Service Models Grant program - to support the goals of the Innovative Transit
Service subcategory. A draft framework for the proposed Innovative Transit Service Models
Grant Program was developed using the language of the voter-approved 2016 Measure B Transit
Operations subcategory and proposes competitive grant funds, available to Member Agencies,
for the operation of innovative services that address first/last mile connections, as well as for
capital costs directly associated with those operations.
The draft framework was initially presented to the VTA Technical Advisory Capital
Improvement Program Working Group (CIPWG) in fall 2017 for discussion. The presentation
included a robust discussion on the elements of the framework and concluded with Member
Agencies discussing the types of projects or programs the grant could potentially fund.
The following elements of the framework, primarily derived from the language of the law, will
be the basis of the criteria of the competitive grant program:
Innovative service/business model - The project includes an innovative aspect in project
delivery including, but not limited to, unique partnership and funding arrangements;
flexible models of transit service delivery; technical capabilities such as integrated
payment systems, incentives for traveler choices, mobile applications, on-demand
software, and/or real time transit data.
Provides first/last mile connections to existing frequent transit - The project improves
connections between major, frequent transit stations/stops and residential areas,
employment areas, or major activity centers.
Serves vulnerable/transit dependent populations - The project cost effectively ensures
equal access is provided for individuals with disabilities, low incomes, and the elderly.
The project is located in an area benefitting individuals belonging to one or more of these
vulnerable population groups.
Service is affordable - The project provides a level of subsidy to maintain affordability
for customers. The project also considers protections against “surge pricing,” a concept
made popular with ride hailing services that increases costs for customers to ride during
periods of high demand.
Serves underserved market - The project provides new or supplementary transit service
to an area that has little or no frequent transit service. The project may also target new
11
Page 3 of 5
markets currently not served such as specific commute patterns and/or early morning/late
night service.
Project readiness - The project has completed a feasibility study or similar analysis to
provide the basis for project implementation. Project funding has been identified and
local match funding has been secured. The project is supported in existing transportation
documents and/or policies. The project must be implemented within one (1) year of grant
award.
Level of local contribution - Project commits to more than 10% of total project costs
from non-2016 Measure B sources.
Cost effectiveness - The project demonstrates reasonableness in costs per trip in relation
to the subsidy provided. Project must include ridership projections for new transit
services.
While programs can target specific populations (e.g. school children, seniors, people with
disabilities, etc.), all programs must serve the general public.
Next Steps
With the development of the draft framework, staff is looking for the VTA Board of Directors’
approval on the direction of the draft Innovative Transit Service Models Grant Program. After
approval of the proposed grant program framework, staff will develop project scoring criteria,
based on the elements of the framework, and guidelines with consultation and input from the
Capital Improvement Program Working Group (CIPWG), advisory committees and other
stakeholders throughout spring 2019.
The draft Innovative Transit Service Models Grant Program will be brought back to the
appropriate committees in summer 2019 for review and input prior to final approval from the
VTA Board of Directors. A call for projects, anticipated in late summer/early fall 2019, will be
held after Program approval.
FISCAL IMPACT:
There is no fiscal impact to VTA associated with the approval of the draft framework of the
proposed 2016 Measure B Innovative Transit Service Models Competitive Grant Program as the
FY18 & FY19 allocation for this subcategory has already been approved. However, should the
Board of Directors choose not to approve the draft framework, development and distribution of
the competitive grant program will be delayed, pending a favorable outcome of the pending
lawsuit.
ADVISORY COMMITTEE DISCUSSION/RECOMMENDATION:
TAC heard this item at their January 16, 2019, meeting. A Member of the Committee requested
that staff bring future items to the TAC’s Capital Improvement Program Working Group
(CIPWG) so that they would be able to provide input. Staff confirmed to the TAC that the
proposed Innovative Transit Service Models Competitive Grant Program was the only
11
Page 4 of 5
subcategory of the 2016 Measure B Transit Operations Program Category through which local
agencies could access 2016 Measure B Transit Operations funds. A brief discussion was held on
potential projects that may be eligible for the proposed grant funds. Staff clarified that project
eligibility would be determined once the program structure and criteria were developed after the
VTA Board of Directors approves the draft framework for the proposed Innovative Transit
Models Service Models Competitive Grant Program. A Member of the Committee requested that
the definition of the elements and ultimately criteria, specifically the ‘Innovative’ element,
remain broad to allow for flexibility. Staff reiterated that the criteria and grant program structure
would be developed with input from the CIPWG and appropriate committees.
Upon completion of discussion, the TAC unanimously recommended this item for approval.
The Citizens Advisory Committee (CAC) heard this item at their January 16, 2019, meeting.
Brief discussions were held on the distribution of FY18/FY19 Transit Operations allocation to
the four subcategories and the language of the Transit Operations category in the 2016 measure,
specifically the use of the word ‘seniors.’ A Member of the Committee requested that staff
consider weighting of criteria during program criteria and structure development, as well as
consider job quality as a criteria.
The CAC unanimously recommended the item for approval with the following amendments:
Include weighting the elements and include job quality as a criteria.
The Committee for Transportation Mobility and Accessibility (CTMA) heard this item at their
January 17, 2019, meeting. A Member of the Committee pointed out a specific area that they felt
was underserved. Discussions were held regarding partnering with a Member Agency to submit
an application when the time comes, program timeline, and how to keep the CTMA fully
engaged in the process. Staff will coordinate with the CTMA staff liaison on how to engage the
CTMA as the grant program develops. A Member of the Committee stated that they agreed with
the TAC comment about keeping the elements/criteria flexible, as it is important.
The CTMA unanimously recommended this item for approval.
The Policy Advisory Committee (PAC) heard this item at their February 14, 2019, meeting.
Discussions were had on the timeline of approval for the proposed grant program as well as
including an additional element and weighting of an existing element when determining criteria.
These two elements are as follows: 1) Applicability (add) - If a project/program is successful,
can it be scaled up to work in other jurisdictions; 2) Cost Effectiveness/Sustainability (existing) -
A project/program should not be a money-sink, thus this element should be weighted higher as a
criterion.
The PAC unanimously recommended this item for approval with the addition of ‘Applicability’
as an element for consideration as criteria and weighting Cost Effectiveness/Sustainability higher
during criteria development.
Prepared by: Jane Shinn
Memo No. 6128
11
Page 1 of 3
Transit Operations Program Guidelines Definition from Resolution No. 2016.06.17 The revenue from this program category will provide additional funds specifically for bus operations to serve vulnerable, underserved, and transit dependent populations throughout the county. The goals of the program category are to increase ridership, improve efficiency, enhance mobility services for seniors and disabled, and improve affordability for the underserved and vulnerable constituencies in the county. As VTA considers modifications to bus operations and routes to improve ridership and efficiencies, these funds may also be utilized to maintain and expand service to the most underserved and vulnerable populations. The funds may be used to increase core bus route service frequencies, extending hours of operations to early morning, evenings and weekends to improve mobility, safe access and affordability to residents that rely on bus service for critical transportation mobility needs. Attachment D describes the list of Candidate Projects and Programs. Total Funding
$500 million in 2017 dollars. Distribution
VTA anticipates that allocations will be programmed based upon the total allocation for the Transit Operations Program contained in 2016 Measure B divided by the number of years in the measure.
Future allocations will vary depending upon the amount of sales tax revenue collected.
The Transit Operations Program Area funding will be allocated for the following four programs identified in 2016 Measure B Attachment D:
o Enhance Frequent Core Bus Network by increasing core bus route service frequencies, and expanding or adding additional evening, late night and weekend service.
o Expand mobility services and affordable fare programs for seniors, disabled, students and low‐income riders.
o Support new/innovative transit service models to address first/last mile connections and transit services for the transit dependent, vulnerable populations and paratransit users that is safe and accountable.
o Improve amenities at bus stops to increase safety, security and access with lighting and access improvements.
11.a
Page 2 of 3
The proposed allocations for the four categories are as follows:
2016 Measure B Transit Operations Program Area
Area Funding Allocation (Proposed)
Frequent Core Bus Network 73%
Innovative Mobility Models & Programs 8%
Fare Programs 15%
Bus Stop Amenities 4%
Implementation For FY18 & FY19 Budget Allocation:
The Enhanced Frequent Core Bus Network will directly fund VTA’s core bus network of services increasing core bus route service frequencies, and expanding or adding evening, late night and weekend service.
The Fare Programs will fund the Transit Assistance Program (TAP) and reduced fares for youth.
The Innovative Transit Models Program will support goals to address first/last mile connections. Strategies may include competitive grant programs to help fund services operated by local jurisdictions, utilize excess paratransit capacity, and other programs that encourage investments in local service.
The Bus Stop Amenities Program will directly fund improvements at VTA’s bus stops. The bus stop improvements will be prioritized based on VTA’s Transit Passenger Environment Plan and ongoing maintenance needs.
Six to 12 months into the implementation of the Next Network, staff will have ridership data available to evaluate potential increases to the ridership hours where we see higher demand for service. To meet our commitment as expressed in 2016 Measure B and in collaboration with the public, VTA will make increased investments in service hours in the system focusing on those areas where we see the greatest demand by transit dependent populations. VTA will consider the potential for further reducing the fares for seniors and youth with a requested goal of free rides.
Criteria
Only projects and programs currently listed on 2016 Measure B Attachment D are eligible.
Requirements
For potential competitive grants for the Innovative Transit Models Program: o Reporting requirements will be detailed in agreements executed with VTA
for project funding.
11.a
Page 3 of 3
o All applications must include a delivery schedule. o Funds will be available on a reimbursement basis.
VTA Complete Streets reporting requirements will be required for all capital improvements projects.
All collateral material will be required to display a 2016 Measure B logo.
11.a
Date: February 15, 2019
Current Meeting: February 21, 2019
Board Meeting: N/A
BOARD MEMORANDUM
TO: Santa Clara Valley Transportation Authority
Administration & Finance Committee
THROUGH: General Manager, Nuria I. Fernandez
FROM: Director - Planning & Programming, Chris Augenstein
SUBJECT: Proposal for 2019 New Transit Service Plan
FOR INFORMATION ONLY
BACKGROUND:
This is a staff proposal for a 2019 New Transit Service Plan that incorporates the direction
provided by the VTA Board of Directors at its December 2018 meeting.
Following an intense two-year planning effort in collaboration with Jarrett Walker + Associates,
the community, and transit stakeholders, the VTA Board of Directors adopted the Next Network
transit service plan in May 2017. The plan was to be implemented with the start of BART service
to Milpitas and Berryessa. As adopted, the Next Network plan comprised 1,601,000 annual bus
hours and 192,000 annual rail hours of service, with an 83% ridership and 17% coverage mix.
Since adoption, VTA's existing service network (in place and largely unchanged since 2008)
remains in effect until the introduction of BART service.
To help address VTA's structural deficit and improve its long-term financial stability, in
December 2018 the Board of Directors adopted the Ad Hoc Financial Stability Committee's
recommendations. Included in these recommendations was direction to develop a 2019 New
Transit Service Plan that would replace the original Next Network plan at approximately the
same service level as FY2018, but with a higher ridership focus, in order to achieve a $14.7M
annual operating cost savings.
Per VTA's Transit Service Guidelines and the Title VI Major Service Change policy, any major
service change must be developed as part of a comprehensive service plan development process,
which must include outreach/engagement with the community, an analysis of ADA paratransit
impacts, a CEQA environmental analysis, and a Title VI service equity analysis. Accordingly,
the necessary first step of this process is for staff to develop and present this network proposal
for Board and community consideration.
12
Page 2 of 10
DISCUSSION:
At its December 2018 meeting, the VTA Board of Directors directed staff to develop a new
transit service plan, based on the original Next Network, but with several changes. The proposed
service plan presented here generally meets all three of the Board’s parameters for the new plan:
1. Maintain transit service at levels approximately the same as what is offered today,
1.52M annual hours of bus service and 156K annual hours of rail service, to achieve
a $14.7M reduction in annual operating costs. The proposed plan would achieve a net
$14.7M reduction in annual operating costs, however the plan divides the cuts between
bus and rail service to preserve BART connections, ridership, and efficiency.
2. Adjust the network’s ridership/coverage balance to 90% ridership and 10%
coverage. The proposed plan would achieve a 90/10 ridership/coverage balance.
3. Protect service in South County. All local bus service as adopted in the original Next
Network plan is maintained in South County with no reductions. Route 68, which is South
County’s “backbone” transit route into San Jose, is improved significantly (resulting
from the shift to a 90/10 network). Express bus service to South County would be
reduced, however, as part of coverage reductions in the entire Express Bus program.
The original Next Network transit service plan was used as the baseline for this proposal,
and as such, the proposed plan is presented by prescribing changes as compared to the
original service plan. While service cuts are always difficult because the loss of transit service
impacts real riders, staff aimed to focus cuts on the least productive services in the network
(routes with the fewest boardings per hour of service) to minimize the impact to riders and
improve the proposal’s systemwide ridership. Accordingly, the proposed plan minimizes cuts to
VTA’s Next Network light rail system plan, as it represents the foundation of VTA’s ridership-
oriented service. To follow the direction to move to a 90/10 network, the proposal focuses most
of the service cuts to coverage services throughout the Local and Express route network. The
most significant major changes are also illustrated on the map in Attachment A. Attachment B
lists the municipalities impacted by each change.
Service Reductions
The proposed service plan includes 61 reductions in service as compared to the original Next
Network plan. All the reductions are to coverage service (to limit ridership impacts). Each
change in service is detailed below; the most significant major changes are highlighted in bold.
Purple Line (Almaden)
1. Discontinue Purple Line rail service (Almaden spur)
2. Replace Purple Line rail service with a new bus route that will stop at all three
stations (Ohlone/Chynoweth, Oakridge, Almaden) at 30-minute frequency, on the
same days and generally the same hours as the Purple Line
Blue Line (Alum Rock – Santa Teresa)
3. Shorten to end at Baypointe Station instead of Alum Rock Station; stations east of
Baypointe would be served by the Orange Line (Mountain View – Alum Rock)
All Light Rail Lines
4. Change weekend frequency to every 20 minutes on all lines (to provide better
12
Page 3 of 10
connections with BART’s 20-minute weekend train frequency)
Rapid 523 (Berryessa – Lockheed Martin)
5. End Saturday service at Sunnyvale Transit Center instead of Lockheed Martin after 8:00
PM
6. End Sunday service at Sunnyvale Transit Center instead of Lockheed Martin after 7:30