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HomeMy WebLinkAbout04/20/2012 OFFICE OF THE CITY MANAGER April 20, 2012 TO: Honorable Mayor and City Council FROM: Alan Tandy, City Manager AT SUBJECT: General Information ! We found out late Thursday afternoon (as did the media) that the County will have an item on the Board of Supervisor’s Agenda next Tuesday (4/24/12) to consider an action to terminate the Animal Shelter Land Lease Agreement with the City. They can facilitate this action by exercising a 6 month notice provision contained in the land lease. The City has been providing the County with a cost free land lease since 1978. This free lease was a result of an act of good government between the City and the County and this relationship has worked for both agencies for the past 34 years. In return for rent free use of the land, the agreement contains a provision which requires the County to accept and provide shelter for unwanted animals from the City. The City has a second animal control service agreement with the County under which we pay roughly $340,000 annually to supplement shelter services (this agreement expires in June of this year). The County has recently requested the City pay three times the amount we currently pay for these services ($1.125 million). We have been unable to verify the appropriateness and accuracy of their requested increase. In addition, the County Auditor has raised serious concerns about the County Animal Control Department’s financial controls and related issues and service levels at the Kern County Animal Shelter have been heavily scrutinized over the recent past. We can assume from the County Administrative Report related to the Land Lease termination that they are considering terminating the Land Lease Agreement based on the conditions requiring the County to shelter City animals. Interestingly, that condition has existed since 1978. Under the terms of the Land Lease, the County may leave fixed assets; however, it is unknown at this time what the County will do with the facilities currently on the premises. Please also recall that the building currently used for the Adoption Center is fully owned by the City. While the City has been in continued discussions with the County related to the animal control service agreement, this information, as indicated above, was just conveyed to the City yesterday and comes as a surprise. Honorable Mayor and City Council General Information April 20, 2012 Page 2 We will immediately begin the process of analyzing what needs to be done to expand the City’s current animal control services to include sheltering and to separate our shared processes, such as licensing, equipment and other operational issues. This process will include exploring potential partnerships with third parties who may have an interest in collaborating with the City to provide shelter services or a component thereof. A recent news article that appeared in today’s paper characterized the issue as a monetary dispute between the City and the County. Proper scrutiny of the County’s desired payment is appropriate and justified. As you have been previously informed, the County’s requested payment includes $416,000 of overhead costs that are not directly related to providing animal care. This represents 37% of the total costs they are requesting. When you add this fact to the concerns raised by the County Auditor regarding proper fiscal controls and the questionable service levels provided at the Shelter, the City has no choice but to thoroughly review its alternate options. While this was unexpected, it may ultimately be a positive action as the City always strives to provide cost effective and efficient services! Miscellaneous News • Councilmember Weir requested staff provide a report on the funding sources which may be available in order to continue bonding for matching funds for TRIP projects due to decreases in revenue from Transportation Impact Fees and how it will affect the General Fund. A memo from Finance Director Nelson Smith in enclosed. • Based on inflation and a study of comparable facilities, SMG is increasing the facility fee at the Arena and Convention Center from $1.50 to $2 per ticket. The fee was established in 2008 and has not increased since that time. State Budget News  Governor Jerry Brown said this week the state budget deficit could be $1 billion or more greater than the $9.2 billion previously predicted. His revised budget is due to be released in May. At this point we have not seen any indication that funds will be taken or withheld from local jurisdictions to make up the deficit, but the State is very early in the process. We will keep you updated! High Speed Rail News  A report from the nonpartisan Legislative Analyst's Office this week advised State lawmakers to reject the Governor’s request for $2.7 billion in state bonds, to match $3.3 billion in federal grants, to start building high speed rail tracks in the Central Valley this year. The main concern of the LAO is the Authority’s lack of funding for the full build out of the system – an estimated $55 billion. The report also recommends the Legislature transferring control of the project from the California High-Speed Rail Honorable Mayor and City Council General Information April 20, 2012 Page 3 Authority to Caltrans and project leaders figure out potential new funding sources and provide details of its other plans. An article and the LAO report are enclosed. Event List There is one event scheduled for the upcoming week at City facilities:  Wellness & Healthy Activity Fair Central Park Saturday, April 21 9 a.m. – 2 p.m. Reports For your information, we enclose the following information:  The Streets Division work schedule for the week of April 23rd; and  Recreation and Parks March 2012 Update; and  An update on activities at the SMG-managed facilities for January – March 2012.  A letter from AT&T regarding changes to its U-verse service. AT:ch cc: Department Heads Roberta Gafford, City Clerk The latest on California politics and government April 17, 2012 Gov. Jerry Brown said this afternoon that the state budget deficit could be $1 billion or more greater than the $9.2 billion he previously thought. "I think it will be bigger than it was before," the Democratic governor told reporters after speaking to the California Medical Association in Sacramento. "Whether it's $1 billion or a couple billion, we'll let you know in a couple weeks." Brown will release revised budget projections in May. Legislative Democrats so far this year have resisted spending cuts Brown proposed and his request that they be enacted by March. Lawmakers have said they will wait until later in the budget calendar to make cuts. Brown said today that he isn't frustrated by that resistance. "The way the minuet is played," he said, "first you go through the next couple of months, and then, after June, then you really get down to business." Brown said he is "doing my best" to push reluctant Democrats for pension changes and spending cuts. "I keep pushing it, and I keep pushing the cuts," he said. "But it's a little early yet ... The moment of truth will be here in June." Categories: Gov. Jerry Brown Posted by David Siders 2:14 PM | 37 Comments | Share © Copyright The Sacramento Bee. All rights reserved. About Comments Reader comments on Sacbee.com are the opinions of the writer, not The Sacramento Bee. If you see an objectionable comment, click the "report abuse" button below it. We will delete comments containing Recommend 6 recommendations. Sign Up to see what your friends recommend. Capitol Alert: Jerry Brown says budget gap could grow by $1 billion or morehttp://blogs.sacbee.com/capitolalertlatest/2012/04/jerry-brown-says-budg... 4/17/2012 4:31 PM http://www.mercurynews.com/california-high-speed-rail/ci_20418167/stop-california-bullet-train-states-top-analyst-urges Page 1 of 2 18/04/2012 09:44 AM Stop California bullet train, state's top analyst urges By Mike Rosenberg mrosenberg@mercurynews.com San Jose Mercury News / San Jose Mercury News Posted:MercuryNews.com The state's top analyst on Tuesday urged lawmakers to slam the brakes on California's $68 billion bullet train, cautioning that the newly overhauled plan simply isn't "strong enough" and relies on "highly speculative" funding sources. The report from the nonpartisan Legislative Analyst's Office is especially significant as the state Senate and Assembly on Wednesday begin a debate on whether to start building the high-speed rail line, a decision officials revealed Tuesday will likely be delayed into the summer. The report could give a divided Legislature the political cover it needs to halt the biggest public works project in California history; otherwise, lawmakers would have to go against the advice of their own experts. It is the latest in a series of stinging critiques of the project by independent watchdog groups. But it's the first analysis since the Brown administration early this month unveiled a scaled-back version of the rail line that was intended to appease critics by trimming the cost by $30 billion, speeding up the start of service by five years and electrifying the Caltrain line by the end of the decade. "Our concerns are really legitimate and serious," said Brian Weatherford, the LAO analyst who wrote the report. Without a new outpouring of federal funding, "we don't really see how you could get (the money) to build this thing. That's our primary concern." Hole seen in plan The 10-page analysis advises lawmakers to shoot down Gov. Jerry Brown's request for $2.7 billion in state bonds, to match $3.3 billion in federal grants, to start building tracks in the Central Valley this year. Any delay would risk the loss of the federal grants, which project officials say would be akin to axing the rail line for the foreseeable future. "This project is important for California and it would be a mistake to delay this project and lose billions of dollars in critical federal funds," Dan Richard, who Brown appointed to lead the project, said in a statement. As it has in previous reports over the past few years, the LAO is chiefly concerned that the state will not find the remaining $55 billion needed to complete the full project connecting San Francisco and Los Angeles by 2029. In addition to the federal grants, the state has $10 billion in voter-approved bond funds. The report notes the plan to secure most of the remaining funding through the federal government appears "unlikely" in light of the cost-cutting climate in Washington, where all bullet train funding has been zeroed-out for the past two years. Further, it criticizes the Brown administration's new backup plan to use potentially tens of billions of dollars from the state's new "cap-and-trade" program in which big polluters buy credits in electronic auctions to offset greenhouse gas emissions, with the revenue going to environmentally friendly programs. The LAO argues there are more cost-effective environmental programs that could use the money, that it's unclear whether high-speed rail would actually reduce greenhouse gases quickly enough, and that it may be illegal to use the funds to build the bullet train. But Mary Nichols, who heads the California Air Resources Board, countered in a statement Tuesday that she thinks the bullet train would, indeed, be eligible for cap-and-trade funds. In response to the LAO's point that the rail authority's management has been "lacking," Richard agreed that it needs to "strengthen executive leadership." "But other LAO recommendations overlook the significant environmental and economic benefits of reducing freeway pollution, improving transportation and creating jobs," Richard said. http://www.mercurynews.com/california-high-speed-rail/ci_20418167/stop-california-bullet-train-states-top-analyst-urges Page 2 of 2 18/04/2012 09:44 AM If lawmakers vote to start building high-speed rail, as Weatherford predicts, the LAO advises them only to approve the first $2 billion section of the initial leg of construction near Fresno, because the remaining $4 billion for the rest of the section won't be needed until future years. It also asks lawmakers to approve a bill transferring control of the project from the California High-Speed Rail Authority to Caltrans. Finally, it recommends that project leaders figure out potential new funding sources and provide details of its other plans. Because the rail authority approved the new business plan last week, the LAO, watchdog groups and some legislators have warned that the changes are coming too quickly for them to approve the massive project by the June deadline to pass a budget. Already, sources in the Capitol say the rail authority plans to delay the funding request, likely until lawmakers return from their summer break in August. A fallback The report advises lawmakers to approve a small amount of funding to keep the rail agency in business so it can finish planning documents and "help the Legislature maintain its future options for the project." On Wednesday, two Silicon Valley swing-vote lawmakers on the project -- Sen. Joe Simitian, D-Palo Alto, and Assemblyman Rich Gordon, D-Menlo Park -- will lead the first legislative hearings on Brown's funding request. "I think (the LAO report) reinforces the need to take a little time and get it right," Simitian said. "It's a new plan and I think both the public and the Legislature are going to need some time to understand the implications of the plan, and frankly get the answers to some questions that have been hanging out there for the last three years." Gordon agreed. "We're a ways away from making any kind of funding decisions," Gordon said. The LAO report "will point a way for the conversation that needs to occur" on questions over the plan. Contact Mike Rosenberg at 408-920-5705. The 2012-13 Budget: Funding Requests for High-Speed Rail MAC TAylor • legislATive AnAlysT • April 17, 2012 Summary The California High-Speed Rail Authority (HSRA) is responsible for planning and constructing an intercity high-speed train that would link the state’s major population centers. In April 2012, the HSRA released its most recent business plan that estimates the cost of constructing the first phase of the high-speed train project at $68 billion. However, the HSRA only has secured about $9 billion in voter approved bond funds and $3.5 billion in federal funds. Thus, the availability of future funding to construct the system is highly uncertain. The revised business plan also makes significant changes from prior plans—such as proposing to integrate high-speed rail with other passenger rail systems, constructing the southern portion of the system first, assuming lower construction costs, and using “cap-and-trade” auction revenues if additional federal funds fail to materialize. The Governor’s budget plan for 2012-13 requests $5.9 billion—$2.6 billion in state bond funds matched with $3.3 billion in federal funds to begin construction of the high-speed rail line in the Central Valley. In addition, about $800 million is requested to make improvements to existing passenger rail services and about $250 million to complete preliminary design work and environmental reviews for various sections of the project. We find that HSRA has not provided sufficient detail and justification to the Legislature regarding its plan to build a high-speed train system. Specifically, funding for the project remains highly speculative and important details have not been sorted out. We recommend the Legislature not approve the Governor’s various budget proposals to provide additional funding for the project. However, we recommend that some minimal funding be provided to continue planning efforts that are currently underway. Alternatively, we recognize that the Legislature may choose to go forward with the project at this time. If so, we recommend the Legislature take a series of steps to increase the chance of the project being successfully completed. Background The HSRA is responsible for planning and constructing an intercity high-speed train that is fully integrated with the state’s existing mass transportation network. The 800-mile long high- speed train system would link the state’s major population centers. The California High-Speed Rail Act of 1996 (Chapter 796, Statutes of 1996 [SB 1420, Kopp]), established HSRA as an independent authority consisting of a nine-member board appointed by the Legislature and Governor. In addition, the HSRA has a staff of approximately 30 state employees who oversee contracts for environmental review, preliminary engineering design, preliminary right-of-way acquisition tasks, and other activities such as legal counsel, commu- nications, and contractor oversight. In November 2008, voters approved Proposition 1A, which allows the state to sell up to $9.95 billion in general obligation bonds to partially fund the development and construction of the high-speed rail system. Of that amount, $9 billion is for the high-speed rail system while the remaining $950 million is for existing passenger rail systems to improve their connectivity with the high-speed system. Proposition 1A further enacted certain statutory requirements to guide the design of the system and to help assure the voters that there would be accountability and oversight of the HSRA’s use of bond funds. In addition to the funds authorized in Proposition 1A, HSRA has been awarded approxi- mately $3.5 billion in federal funds for planning, engineering, and constructing up to 130 miles of dedicated and fully grade-separated high-speed rail line in the Central Valley. Specifically, these funds were provided through the federal High-Speed Intercity Passenger Rail Program, which is admin- istered by the Federal Railroad Administration (FRA). This program was established by the 2008 Passenger Rail Investment and Improvement Act to award grants for eligible intercity high-speed rail passenger rail projects that contribute to building new or substantially improving existing passenger rail corridors. Initial funding for this program was made available in the 2009 federal American Recovery and Reinvestment Act. The federal budget for federal fiscal year 2009-10 appropriated additional funding to FRA for high-speed rail grantees. However, as we discuss in more detail below, permanent and ongoing federal funding for this program has not been identified at this time. reviSed BuSineSS Plan makeS Significant changeS Chapter 618, Statutes of 2009 (SB 783, Ashburn), requires HSRA to submit a business plan containing specified elements to the Legislature by January 2012 and every two years thereafter. On April 2, 2012, the HSRA released a revised draft business plan. This is the fourth draft plan that the authority has released for review and comment. As shown in Figure 1, the HSRA proposes to construct the entire 800-mile long statewide high-speed train system in two phases—Phase 1 “Blended” and Phase 2. Phase 1 Blended, which consists of different stages, attempts to integrate or blend high-speed rail operations with other passenger rail systems. (Please see the nearby box for a more detailed description of this blended approach being proposed by the HSRA.) The total cost for Phase 1 Blended (connecting the San Francisco Bay Area to the Los Angeles Basin) is estimated to be $68.4 billion, which is significantly less than the $98.5 billion cost estimated by the HSRA in its November 2011 draft business plan. Currently, the total cost for Phase 2, which would further expand the system to other regions, is unknown. Train Would Go South First. The HSRA’s previous business plan indicated that construction for the high-speed rail system would begin in 2 Legislative Analyst’s Office www.lao.ca.gov 2 012-13 Budget the Central Valley. However, that plan did not indicate whether the train would subsequently be constructed towards Northern or Southern California. The latest business plan proposes to construct the southern portion of the system first. As shown in Figure 1, the first two stages of construction would be an Initial Operating Segment (IOS) that would run between Merced and the San Fernando Valley over the Tehachapi Mountains. The HSRA asserts that this corridor could support the operation of an unsubsidized passenger train service consistent with the design characteristics required by Proposition 1A. The authority estimates that the IOS would cost a total of about $31.3 billion to construct and be completed by 2021. The next construction stage of Phase 1 Blended (referred to as the “Bay to Basin”) would extend the IOS to San Jose. The final stage of Phase 1 Blended would extend the system to the Transbay Terminal in San Francisco and to Union Station in Los Angeles (or to Anaheim). Figure 2 (see next page) illustrates the location of the various phases and stages of construction. Investments in “Bookends” of System. The 2012 revised business plan proposes to direct $1.1 billion in Proposition 1A funds to Figure 1 High-Speed Rail Construction Phase/Stage Description Length in Milesa Completion Year Cost in Billionsb Phase 1 Blended Initial Operating Segment (IOS), first construction Madera to Bakersfield 130 2017 $6.0 Remainder of IOS Merced to San Fernando Valley170 2021 25.3 Bay to Basin San Jose to San Fernando Valley110 2026 19.9 Blended San Francisco to Los Angeles110 2028 17.2 Subtotals 520 $68.4 Phase 2 Extend to other regionsc 280 UnknownUnknown To tal 800 a Length of construction segments are approximate. b Estimated dollar amounts are in the year of expenditure. c Other regions include East Bay, Sacramento, San Diego, Inland Empire, and Orange County. Proposed Blended Approach for High-Speed Rail In general, the blended approach proposed by the California High-Speed Rail Authority involves the integration of high-speed rail operations with other passenger rail systems, in order to control costs, accelerate benefits, and address environmental concerns. Such an approach could include coordinated scheduling and ticketing. For example, on the San Jose to San Francisco corridor, the Phase 1 Blended system would share upgraded and electrified track with Caltrain. The Phase 1 Blended system may also rely on “enhanced” Metrolink (Southern California’s passenger rail system) service in the Los Angeles to Anaheim corridor. In addition, the “Northern Unified Operating Service” would integrate the services (such as ticketing, trackage rights, and marketing) of a consortia of existing Northern California passenger rail operators. These include the state-supported Amtrak routes and the Altamont Commuter Express. www.lao.ca.gov Legislative Analyst’s Office 3 2012-13 Budget Sacramento Stockton Modesto Merced Fresno Kings/Tulare Bakersfield Palmdale San Fernando Valley Riverside San Diego Anaheim Los Angeles San Luis Obispo Pacific Ocean San Francisco Gilroy San Jose Oakland Northern California Unified Service (San Joaquin/Capitol/ACE) Caltrain Corridor Unified Service California Map of Proposed California High-Speed Rail System Figure 2 IOS, First Construction IOS Bay to Basin Blended Phase 2 Existing Passenger Rail Systems IOS = Initial Operating Segment and ACE = Altamont Commuter Express. 4 Legislative Analyst’s Office www.lao.ca.gov 2 012-13 Budget make investments in regional rail projects in the San Francisco Bay and the Los Angeles metropolitan areas—referred to as the bookends of the high-speed rail system. The HSRA has signed memoranda of understanding (MOUs) with regional transit agencies in these areas to coordinate efforts to obtain additional funding for projects that can immediately improve passenger rail service in those regions. Although the specific projects to be constructed under the terms of these agreements have not been fully identified, plans include electrifying the Caltrain corridor. Projects in Southern California will be smaller improve- ments around the region that improve safety or increase capacity and could include, for example, grade separations or double-tracking along the high-speed rail corridor. Lower Estimated Construction Costs. The 2012 revised business plan includes detailed “low” and “high” cost estimates for Phase 1 Blended that range from $68.4 billion to $79.8 billion. These estimates are lower than those provided by the HSRA in the November 2011 business plan, which ranged from $98.5 billion to $117.6 billion, particularly in the latter stages of construction. Specifically, reductions in the out-year costs result from the use of blended operations, abandoning plans to build out to Anaheim (which is now under reconsideration), and revised assumptions on future interest rates. The estimated costs to construct the first stage of the project are relatively unchanged from the estimate identified in the November 2011 business plan. Less Capacity and Reduced Ridership. According to HSRA, in addition to reducing costs, the changes identified in the revised 2012 business plan would result in a system with less capacity and reduced ridership. Specifically, the HSRA estimates that the projected ridership would be about 30 percent lower than estimated in the November 2011 draft business plan. For example, while the November 2011 business plan projected between 29.6 million and 43.9 million one-way trips per year on Phase 1 in 2040, the latest plan assumes between 20.1 million and 32.6 million one-way trips per year. Assumes Operating Subsidy Would Not Be Needed. The business plan continues to assume, as required by Proposition 1A, that the high-speed rail system will not need an operating subsidy. This is because most of the operations and maintenance costs are variable based on the number of trains and miles of track. Given the estimated lower ridership, the business plan assumes that fewer trains will be needed. Specifically, the HSRA estimates that revenues will exceed the cost to operate the train if there are more than 6 million fare-paying passengers per year. We note that to better ensure the soundness of its operating cost estimates, the HSRA is in the process of joining the Union Internationale des Chemins de fer (UIC) or the International Union of Railways. For example, the HSRA has requested UIC to conduct a study of high-speed train operating and maintenance costs, in order to improve its own planning efforts. Use of Cap-and-Trade Revenues as Backstop. The revised business plan is similar to the last business plan in that it heavily relies on federal funding to complete construction of the system. As shown in Figure 3 (see next page), nearly $42 billion, or over 61 percent of the funds needed to construct Phase 1 Blended, is anticipated to come in the form of grants from the federal government. The most significant change from prior business plans is that if the federal funds fail to materialize, revenue from the state’s quarterly cap-and-trade auctions would be used as a “backstop.” As we discuss in the nearby box (see next page), the cap-and-trade auctions are part of the state’s overall plan to reduce greenhouse gas (GHG) emissions. The remaining funds to complete the project consist of $8.2 billion in Proposition 1A funds, $13.1 billion in private www.lao.ca.gov Legislative Analyst’s Office 5 2012-13 Budget capital, and $5.2 billion from other funds (such as local funds and operating surpluses). governor’S Budget requeStS funding to continue Project Consistent with the HSRA’s revised business plan, the Governor’s budget plan for 2012-13 requests additional funding to continue the high-speed rail project. Specifically, the Governor requests in an April Finance Letter: • $5.9 billion ($2.6 billion in Proposition 1A funds matched with $3.3 billion in federal funds) to acquire right-of-way ($937 million) and for construction (about $5 billion) of the 130-mile Central Valley segment from Madera to just north of Bakersfield. As shown in Figure 4, of the $5 billion for construction, $4.2 billion would be for five separate contracts. The remaining $800 million would be for design, contingencies, and other construction-related expenditures. • $812 million in Proposition 1A funds for rail connectivity projects, including $106 million for Caltrans intercity rail (Amtrak) and $706 million for local rail systems. (This amount reflects the remainder of the $950 million that was set aside in Proposition 1A for rail connectivity.) • $252.5 million ($204.2 million in Proposition 1A funds and $48.3 million in federal funds) to complete prelim- inary engineering design work and Figure 3 Sources of Funding for Phase 1 Blended (Dollars in Billions) Source of Funds Amount Percent of Total Proposition 1A bonds $8.2 12.0% Secured federal grants 3.3 4.8 Unsecured federal grants and/or cap-and-trade auction revenue 38.6 56.4 Private capital 13.1 19.2 Other funds (local funds, operations, development)5.2 7.6 To tals $68.4100.0% Cap-and-Trade Auctions The Global Warming Solutions Act of 2006 (Chapter 488, Statutes of 2006 [AB 32, Núñez/ Pavley]), commonly referred to as AB 32, established the goal of reducing greenhouse gas (GHG) emissions statewide to 1990 levels by 2020. In order to help achieve this goal, the California Air Resources Board (ARB) recently adopted regulations to establish a new cap-and-trade program that places a “cap” on aggregate GHG emissions from entities responsible for roughly 80 percent of the state’s GHG emissions. The ARB will issue carbon allowances that these entities will, in turn, be able to “trade” (buy and sell) in the open market. As part of its plan to issue allowances, ARB will hold quarterly auctions at which time a portion of these allowances will be made available for purchase. For 2012-13, ARB’s auctions are estimated to generate roughly $660 million to upwards of $3 billion. These revenues are expected to be in the tens of billions of dollars in the aggregate over subsequent years. 6 Legislative Analyst’s Office www.lao.ca.gov 2 012-13 Budget environmental review for various sections of the project. In addition, the Governor’s January budget proposal includes $17.9 million for state operations to fund the authority for 73 positions (including 19 new positions), contracts with other state departments, and external contracts for commu- nications, program management, and financial consulting services. BuSineSS Plan and Budget ProPoSalS raiSe concernS Based on our review of the 2012 business plan and the Governor’s related budget proposals, we find that the HSRA has not provided suffi- cient detail and justification to the Legislature regarding its plan to build a high-speed rail system. Specifically, we find that (1) most of the funding for the project remains highly speculative, including the possible use of cap-and-trade revenues; and (2) important details regarding the very recent, significant changes in the scope and delivery of the project have not been sorted out. Most of the Future Funding Remains Speculative Future Funds Not Identified. The future sources of funding to complete Phase 1 Blended are highly speculative. Specifically, the funding approach outlined in the 2012 revised business plan is no more certain than what was proposed in previous plans. For example, the recent plan assumes nearly $42 billion, or 62 percent of the total expected cost, will be funded by the federal government. However, about $39 billion of this amount has not been secured from the federal government. Given the federal government’s current financial situation and the current focus in Washington on reducing federal spending, it is uncertain if any further funding for the high-speed rail program will become available. In other words, it remains uncertain at this time whether or not the state will receive the necessary funds to complete the project. The absence of an identified funding source at the federal level makes the state’s receipt of additional funding unlikely, particularly in the near term. In addition, it is unclear how much, if any, other non-state funds (such as local funds, and funds from operations and development, or private capital) have been secured. In total, only $11.5 billion (or about 17 percent) of the estimated funds needed to complete the project have been committed. Use of Cap-and-Trade Auction Revenues Very Speculative. As discussed earlier, the plan proposes to use revenue from the state’s quarterly cap-and- trade auctions, which are scheduled to begin in November of this year, to backstop any shortfall in anticipated funding from the federal government. These auctions involve the selling of carbon allow- ances as a way to regulate and limit the state’s GHG Figure 4 Central Valley Segment Divided Into Five Design-Build Contracts Contract Description Length in Milesa Cost Estimate (In Billions) Estimated Date of Contract Award 1 North of Fresno through Fresno 26 to 37 $1.5 December 2012 2 South Fresno to Hanford Aroma Road 28 0.8 September 2013 3 Hanford Aroma Road to Dresser Avenue 55 1.0 September 2013 4 Dresser Avenue to Allen Road 14 0.4 October 2013 5 Trackwork for the entire 130 mile segment N/A 0.5 March 2017 a Length of construction segments are approximate. www.lao.ca.gov Legislative Analyst’s Office 7 2012-13 Budget emissions in accordance with Chapter 488, Statutes of 2006 (AB 32, Núñez/Pavley). As we discussed in our recent brief, The 2012-13 Budget: Cap-and- Trade Auction Revenues, the use of cap-and-trade revenues are subject to legal constraints. Based on an opinion we received from Legislative Counsel, the revenues generated from the cap-and-trade auctions would constitute “mitigation fee” revenues. Therefore, in order for their use to be valid as mitigation fees, these revenues must be used to mitigate GHG emissions. Given these considerations, the administration’s proposal to possibly use cap-and-trade auction revenues for the construction of high-speed rail raises three primary concerns. • Would Not Help Achieve AB 32’s Primary Goal. The primary goal of AB 32 is to reduce California’s GHG emissions statewide to 1990 levels by 2020. Under the revised draft business plan, the IOS would not be completed until 2021 and Phase 1 Blended would not be completed until 2028. Thus, while the high-speed rail project could eventually help reduce GHG emissions somewhat in the very long run, given the project’s timeline, it would not help achieve AB 32’s primary goal of reducing GHG emissions by 2020. As a result, there could be serious legal concerns regarding this potential use of cap-and- trade revenues. It would be important for the Legislature to seek the advice of Legislative Counsel and consider any potential legal risks. • High-Speed Rail Would Initially Increase GHG Emissions for Many Years. As mentioned above, in order to be a valid use of cap-and-trade revenues, programs will need to reduce GHG emissions. While the HSRA has not conducted an analysis to determine the impact that the high-speed rail system will have on GHG emissions in the state, an independent study found that—if the high-speed rail system met its ridership targets and renewable electricity commitments—construction and operation of the system would emit more GHG emissions than it would reduce for approximately the first 30 years. While high-speed rail could reduce GHG emissions in the very long run, given the previously mentioned legal constraints, the fact that it would initially be a net emitter of GHG emissions could raise legal risks. • Other GHG Reduction Strategies Likely to Be More Cost Effective. As we discussed in our recent brief on cap-and- trade, in allocating auction revenues we recommend that the Legislature prioritize GHG mitigation programs that have the greatest potential return on investment in terms of emission reductions per dollar invested. Considering the cost of a high- speed rail system relative to other GHG reduction strategies (such as green building codes and energy efficiency standards), a thorough cost-benefit analysis of all possible strategies is likely to reveal that the state has a number of other more cost-effective options. In other words, rather than allocate billions of dollars in cap-and-trade auctions revenues for the construction of a new transportation system that would not reduce GHG emissions for many years, the state could make targeted investments in programs that are actually designed to reduce GHG emissions and would do so at a much faster rate and at a significantly lower cost. 8 Legislative Analyst’s Office www.lao.ca.gov 2 012-13 Budget Significant Changes Made Recently Without Necessary Details As described earlier, the most recent business plan makes significant changes to how the construction of the high-speed rail project would proceed, by making early investments in the bookends and constructing the southern portion of the high-speed rail line first. In the past, we have recommended that the Legislature work to ensure that any funding provided be spent on segments that have the greatest potential of actually being constructed and operated and can provide benefit to the state’s overall transportation system, even if the rest of the system were not completed. Based on our review of the 2012 revised business plan, the approach of improving passenger rail infrastructure in the San Francisco Bay and the Los Angeles Metropolitan areas has the potential to deliver some such tangible benefits. In addition, the intent to integrate the high-speed train with the overall transportation network sooner than later also has merit. For example, the “Northern Unified Operating Service” could increase ridership on the existing rail system, which could in turn increase the likelihood that the high-speed train would achieve the ridership targets estimated by the HSRA. Collaboration among passenger rail operators throughout the state is also likely to reduce risk and improve the chance of successfully completing the high-speed rail system. However, despite the potential benefits, we are concerned that the decisions to make the above changes have been rushed with many important details not having been sorted out. While the HSRA has been planning for the project over the past 15 years, the proposed modifications, which substantially change how the project would proceed, were developed within the last couple of months (and in only the last few days with regards to the inclusion of Anaheim). As a result, it is unclear how some of the changes would be implemented, further adding to the risk of the project. For example, some of the necessary agree- ments with all parties involved, such as the MOU for the Northern Unified Operating Service, have not yet been reached. In addition, implemen- tation of the project as proposed in the revised 2012 business plan places a greater emphasis on coordination with entities such as the California Department of Transportation (Caltrans), the California Transportation Commission, Amtrak, Union Pacific Railroad, and regional rail systems (such as Caltrain and Metrolink). This would require coordination and leadership from HSRA, which has been lacking in the past in part due to the high number of persistent vacancies in key positions (such as the chief executive operator [CEO] and the risk manager). lao recommendationS In view of the above concerns regarding the certainty of future funding and the recent significant changes proposed for the project, we find that the HSRA has not made a strong enough case for going forward with the project at this time. Accordingly, we recommend that the Legislature not approve the Governor’s various budget proposals to provide additional funding for the high-speed rail project. However, we recommend that some minimal funding be provided to continue some of the planning efforts that are currently underway, in order to help the Legislature maintain its future options for the project. Specifically, some of the environmental review and preliminary engineering efforts are nearing completion and it would be costly and time-consuming to start this process over again as opposed to revising and updating environmental documents in the future. In addition, once the necessary environmental documents have been completed, the Legislature may want to consider preserving critical right of way (such as land www.lao.ca.gov Legislative Analyst’s Office 9 2012-13 Budget in densely populated urban areas) through the purchase of easements or acquisitions. In this way, the Legislature could retain some of the investment already made in the project and maintain its options to proceed in the future. Alternatively, we recognize that the Legislature may choose to move forward with the high-speed rail project at this time. Given the numerous threats to the project’s successful completion, we would recommend that the Legislature take a series of steps to increase the chance that the project is successfully completed. First, we would suggest providing funding at this time for only those contracts that will be awarded in 2012-13. As discussed earlier, the $5.9 billion for the first construction project will be procured under five separate contracts. The first contract is estimated to be between $1.5 billion and $2 billion and is expected to be awarded in December 2012. However, the remaining four contracts would be awarded after 2012-13 and, thus, funding for these particular contracts is unnecessary at this time. We also believe it would be important to improve the governance of the project. In our May 2011 report, High-Speed Rail Is at a Critical Juncture, we discussed options to better integrate the high-speed rail project into the state’s current transportation planning structure. Over the past year, HSRA has been increasingly relying on Caltrans staff and the new business plan indicates an increasing overlap with the roles and respon- sibility of Caltrans. At the present time, HSRA is advertising for numerous two-year assignments for current Caltrans staff to come over and fill its vacancies. Therefore, should the Legislature decide to move forward with the project at this time, we would recommend adopting legislation that would shift the responsibility for the development of the project from HSRA to Caltrans. Current staffing levels remain far below authorized positions (about 30 of 54 already authorized positions are filled), with many key positions unfilled. In addition, there continue to be serious concerns about interagency coordination, contractor management, and project funding. Thus, we would further recommend that the Legislature adopt budget bill language requiring the new CEO to present a plan that specifies (1) a strategy and timeline for filling vacancies; (2) how HSRA will ensure coordination with other state, regional, and private transportation entities; (3) steps that will be taken to ensure adequate contactor management and oversight; and (4) how new sources of project funding will be developed. Finally, it will be important for the HSRA to provide certain critical information and key documents. While it is not unreasonable that certain details of the business plan would be periodically revised with changes in circumstances and new information, there are critical parts of the recent plan that lack sufficient detail or have not yet been fully developed. Thus, in order to allow for greater legislative oversight of the project, we would also recommend that the Legislature require HSRA to provide the following to the appropriate fiscal and policy committees: (1) a copy of the UIC study examining how HSRA’s estimated operating costs compare to international systems, (2) the MOU with the Northern Unified Operating Service, and (3) an analysis of the net impact that high-speed rail would have on the state’s GHG emissions. 10 Legislative Analyst’s Office www.lao.ca.gov 2 012-13 Budget www.lao.ca.gov Legislative Analyst’s Office 11 2012-13 Budget An l A o B r i e F 12 Legislative Analyst’s Office www.lao.ca.gov LAO Publications this brief was prepared by Brian Weatherford, with contributions from tiffany Roberts, and reviewed by Farra Bracht. the Legislative Analyst’s Office (LAO) is a nonpartisan office that provides fiscal and policy information and advice to the Legislature. to request publications call (916) 445-4656. this brief and others, as well as an e-mail subscription service, are available on the LAO’s website at www.lao.ca.gov. the LAO is located at 925 L Street, Suite 1000, Sacramento, CA 95814. Week of April 23_2012_Work Schedule Page 1 of 2 STREETS DIVISION – WORK SCHEDULE Week of April 23, 2012 – April 27, 2012 Resurfacing/Reconstructing streets in the following areas: Reconstructing streets in the area south of Planz Rd and west of Wible Rd (weather permitting) Grind & Resurface “L” St between 23th & Truxtun Ave (weather permitting) Grind & Resurface MLK Blv from Brundage Ln north to Railroad Tracks (weather permitting) Grind & Resurface MLK Blv from Brundage Ln south to Fwy 58 (weather permitting) Grind & Resurface New Stine Rd between Stockdale Hwy & Ming Ave (weather permitting) (CDBG funded area) Resurface streets in the area south of Flower and east of Robinson prior to street resurfacing Finishing reconstruction of Saint Clair Ct east of Chester W. Nimitz (weather permitting) Miscellaneous Streets Division projects: Video inspection of City owned Sewer & Storm lines to evaluate condition of pipes (CDBG funded area) Installing & Repairing curb, gutter & sidewalks in the area east of Oleander & south of Palm St. Installing sewer & storm lines and grading for curb & gutter on Trailer Mart access road Concrete work prior to finishing reconstructing of Freemont south of Wilson (weather permitting) NOTE: If raining, there will be no street sweeping service and all street cleaning personnel will be assigned to cleaning plugged drains and part circle culverts. THIS SPACE INTENTIONALLY LEFT BLANK Week of April 23_2012_Work Schedule Page 2 of 2 STREETS SWEEPING SCHEDULE Monday, April 23, 2012 Between Coffee Rd. & Verdugo Ln. – Brimhall Rd., south to the Kern River boundary. Cul-De-Sacs, west of Windsong St., between Brimhall Rd. & Thistlewood Ct. City areas between Rosedale Hwy. & Stockdale Hwy. – Verdugo Ln. to the west City Limit. Between Jenkins Rd. & Allen Rd. – Stockdale Hwy. & Birkenfeld Ave. Between Hosking Rd. & Astro Ave. – So. “H” St. & Union Ave. Tuesday, April 24, 2012 City areas between Olive Dr. & Downing Ave. – Coffee Rd. & Knudsen Dr./Mohawk St., including Patton Wy. From Weldon Ave. to Meany Ave. Between W. Columbus St. & 34th St. – Chester Ave. & San Dimas St. Beween Union Ave. & Madison St. – Casa Loma Dr. & White Ln. Between Westwold Dr. & So. Laurelglen Blvd. – Gosford Rd. & Woodglen Dr. Wednesday, April 25, 2012 City areas between Snow Rd. & Rosedale Hwy. – Jewetta Ave., west to the City limit. Between Ming Ave. & So. Laurelglen Blvd. – Coffee Rd. & El Portal / Laurelglen Blvd. Thursday, April 26, 2012 Between Snow Rd. & Olive Dr. – Jewetta Ave., east to the canal boundary. Between Olive Dr. & Hageman Rd. – Jewetta Ave. & Calloway Dr. Between Niles St. & Sumner St. – Union Avenue & Beale Ave. Between Sumner St. & E. Truxtun Ave. – Beale Ave. & Brown St. Between Brundage Ln. & E. Belle Terrace St. – Union Ave. & Kincaid St. Between Camino Media & Kroll Wy. – Coffee Rd., west to the PG&E easement. Friday, April 27, 2012 Between Etchart Rd. & Pavilion Dr. -- Calloway Dr., west to the canal boundary. Between Norris Rd. & Olive Dr. – Calloway Dr. & Coffee Rd. Between Olive Dr. & Noriega Rd. – Calloway Dr. & Verdugo Ln. City areas between Coffee Rd./Riverlakes ext. & Allen Rd. – Hageman Rd. & Rosedale Hwy. City areas between Pacheco Rd. & Harris Rd. – Stine Rd. & Wible Rd. The Department of Recreation and Parks enhances the quality of life through a variety of programs, parks, and partnerships. Department of Recreation and Parks Date: April 17, 2012 To: Alan Tandy, City Manager From: Dianne Hoover, Director of Recreation & Parks Subject: March 2012 Monthly Report ADMINISTRATION:  March Monthly Total Attendance: 52,233 (Includes all programs, reservations and volunteers combined for the month.) • Unimproved Median Island Study - A tentative bid opening date has been established as of April 24, 2012. • Bright House Networks Amphitheatre: o March 31st – 2012 River Walk Concert Series SMG presented the first of six concerts featuring “Atlanta Rhythm Section”, a nationally known American southern rock band. Attendance was approximately 240. o Special Event Reservations: o March 3rd – The Park at River Walk, Stockdale High School Posse Run/Walk, 250 Guests o March 17th – Beach Park, Club de Pervianos Soccer Tournament, 200 Guests o March 24th – The Park at River Walk Cystic Fibrosis Walk, 250 Guests o March 31st – Yokuts Park, CJ Foundation SIDS Run/Walk, 500 Guests • Total Attendance: 9,279 – Reservations/Special Events AQUATICS: o Total attendance at City pools increased by 7.1% as compared to the same time last year. Attendance for the month of March was 11,229; last March’s attendance was 10,484. The primary reasons for the increase in attendance is as follows:  The number of children who received water safety presentations through the Make-a-Splash program increased. The number of children served for the month of March was 723; last March the program served 83 children.  Attendance at McMurtrey Aquatic Center increased by 3.5% or 242 additional participants. The Department of Recreation and Parks enhances the quality of life through a variety of programs, parks, and partnerships. DEPARTMENT OF RECREATION AND PARKS MARCH 2012 MONTHLY REPORT PAGE TWO o McMurtrey Aquatic Center o Attendance at the McMurtrey Aquatic Center was 7,082 for the month of March. o Underwater EGGStravaganza – The Sixth Annual Underwater EGGStravaganza was held at the McMurtrey Aquatic Center on Saturday, March 31st. The total attendance for the event was 349, with 155 children participating in the underwater egg hunt. o 100 Mile Club – The 100 mile lap swim club is currently made up of 284 active members. The club has swum a combined total of 95,117 miles. One year ago the club had swum a total of 74,289 miles! o Jefferson Pool o High school swim team attendance at Jefferson Pool totaled 1,142. o Silver Creek Pool o High school swim team attendance at Silver Creek Pool totaled 2,282. o Make-a-Splash Program o The Make-A -Splash drowning prevention program provided 723 preschool-aged children with age-appropriate water safety education and provided them with valuable resources to share with their families. The program hopes to reach over 3,000 children ages 0 to 5 between now and June. Other Aquatics News: Some of the activities currently taking place at the McMurtrey Aquatic Center include: Lap Swimming 100 Mile Club Water Walking Lifeguarding Courses Water Safety Instructor Courses CPR/AED Recertification Classes Deep Water Aerobics High School Swimming/Diving Kern River Divers SCUBA Kayaking Aqua Conditioning Stroke & Turn Clinics • Total Attendance: 11,229 ATHLETICS: o Adult, Youth, Fitness and Adaptive Programs over-all attendance for the month of March was 25,884. o The 65% increase from last year’s attendance is due to the number of softball teams, adding a new event, and moving T-Ball and Pee Wee T-Ball Leagues from summer to spring. Attendance also increased in all the classes this month. o Spring Adult Softball League: o Spring Softball started their ten week league on March 12th. The Department of Recreation and Parks enhances the quality of life through a variety of programs, parks, and partnerships. DEPARTMENT OF RECREATION AND PARKS MARCH 2012 MONTHLY REPORT PAGE THREE o Three softball tournaments were held at Mesa Marin Sports Complex this month. The Kern High School District All Area Girls’ Softball Tournament was held on March 16th with 10 teams participating, a USSSA All Wooden Bat Men’s Softball Tournament on March 24th with 12 teams, and an ASA Softball Tournament on March 31st and April 1st with 25 teams. o Connor’s Concession reported earning $8,368.54 in sales for the month of March o First Annual “Quality of Life” Presentation & St. Patrick’s Day 5K Run/Walk o This presentation was given by Kathleen Knutzen, Ph.D. Dean of CSUB School of Social Sciences and Education on Thursday, March 8th at the City Council Chambers. It was video tapped so that it can be replayed on KGOV. o In conjunction with these presentations, a St. Patrick’s Day 5K Run/Walk was held on Saturday, March 17th at The Park at River Walk. A total of 240 participants were registered. o Adult Adaptive Spring Softball League o Games started on Thursday, March 15th at Beach Park for this 6 week Spring League for adults with disabilities. o Four teams from local adult day programs play each week in this modified softball league. o Pee Wee T-Ball and T-Ball League o There are 8 Pee Wee T-Ball Teams with 89 participants. T-Ball has 6 teams with 73 participants. This is a total of 162 participants which is a 50% increase from 108 participants in last year’s leagues. Other Sports Programs: Some of the activities staff is currently working on include: Adaptive Youth Tennis Pee Wee sports Celebrate CSUB 5K Fun Run/Walk T-Ball League League of Drams-Adaptive T-Ball Pee Wee T-Ball League “Quality of Life” Presentation on “Benefits of Strength Training” • Total Attendance: 25,884 DR. MARTIN LUTHER KING, JR. COMMUNITY CENTER: • Overall attendance for the Martin Luther King, Jr. Center was 3,035 which is a decrease of 22% from March 2011. The decrease was due to less people in the weight room and in the after-school program. • Children’s Garden – The children have been clearing the garden for summer planting. We have several new participants helping with the garden this month. • Healthy Cooking Class – The cooking participants are learning to enjoy onions, garlic, red and yellow bell peppers. Participants are preparing activity sheets regarding how much exercise they should get and how many servings of fruits and vegetables they should eat a day. The Department of Recreation and Parks enhances the quality of life through a variety of programs, parks, and partnerships. DEPARTMENT OF RECREATION AND PARKS MARCH 2012 MONTHLY REPORT PAGE FOUR • Donations: o Bike Donations (3 bikes & Accessories) $100.00 Total Value Volunteer Hours: $100.00 • Volunteer Donations: o Hours donated (Various Programs) 39 hrs. @ $10/hr. $390.00 Total Value Volunteer Hours: $390.00 • Total Attendance: 3,035 SILVER CREEK COMMUNITY CENTER/SAUNDERS MULTI-USE FACILITY: • Silver Creek Community Center Total attendance for the Silver Creek Community Center was 1556, compared to 1319 in 2011. The increase is due to higher park rental attendance. The Silver Creek Community Center was rented a total of eight (8) times for the month of March. o Participants in the After School Program created fun and exciting games and crafts for the month of March. o Camp Fun – Planning and scheduling is ongoing for the summer camp. o Music Fest – The following groups have been lined up for the Music Fest at Silver Creek Park: Mento Buro, Noah Claunch Band, Banshee in the Kitchen, Bunky Spurling and Kris Tiner Quartet. • Saunders Recreational Facility o Total overall attendance for the Saunders Recreational Facility was 1250 compared to 732 in 2011. The increase is due to hosting the Roller Derby state tournament. o Soccer League o Spring Men’s Adult Soccer League has begun. o Women’s and Coed adult soccer is at the midway point in its season with seven (7) teams and $2,700 in revenue generated. o Drop in Basketball Program o The basketball program held at the Saunders facility has been a huge success! The facility is open on Wednesday’s from 5-8pm for youth and adults to take advantage of this program. The program has averaged about 40 participants to date. • Total Attendance for Silver Creek & Saunders Recreational Facility : 2,806 PARKS: • On March 7th, area 3 staff began trenching the approximately 1,070 feet to install control wire for a Maxi-Com connection to the Wayside Park softball field sport lights. The Maxi-Com controllers and CCU will be acquired via use of existing Maxi-Dollars. • On March 9th, a vehicle ran across a median island on Hoskings Road E. of Monitor Street hitting our irrigation controller cabinet and electric meter pedestal. On March 12th, City staff installed a new irrigation controller and cabinet. The Department of Recreation and Parks enhances the quality of life through a variety of programs, parks, and partnerships. DEPARTMENT OF RECREATION AND PARKS MARCH 2012 MONTHLY REPORT PAGE FIVE • Old River Medians – Mow ramps were completed on the medians between White Lane and Camino Media. Planted ninety (90) fortnight lily on median end caps to screen new mower paths. • Garden Park – Shell made some pipeline repairs to its 10” crude pipeline. The repairs were within Garden Park which required an excavation of approximately 8’x10’. • Campus Park South – Pump realignment project was started at North end of the sump along Carvalho Ct. • Syphon testing started in the first week of March and as of this date there have been 431 of the 635 syphon tests completed. The remainder of the syphon tests should be completed by the middle of April. • On March 8th, Area 3 staff received a copy of an acceptance report to Moreland Corporation indicating Tract 6368 had been accepted into City maintenance effective February 26, 2012. This .9175 acre parcel, located at SE corner of Hosking Road and Sophia includes 76 trees, 379 shrubs and turf within the median. • Trees Trimmed: 84 Clearance: 254 Removals: 77 • Service Tickets received: 315 Completed: 270 UPCOMING EVENTS: • Summer Adult Softball begins on April 16th • On-line Aquatics Registration Begins on April 24th • Camp King Registration at Dr. Martin Luther King Jr. Center Begins on May 1st • Camp Fun Registration at Silver Creek Community Center begins May 3rd. • The Water Spray Parks open on May 5th • The Park at River Walk Concert Series continues with another concert on May 12th - Firefall