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Discussions on Caltrain’s future governance structures progressed on Thursday, with Caltrain’s board moving closer to understanding several topics, including increased oversight of the executive director’s board and support for reimbursement of a right of way to SamTrans.
“I think the repayment of the right of way and a way forward should be included in this [agreement], and what I’ve heard from a majority of members is a dedicated executive director and the ability for the board to hire and fire and have an evaluation check, ”said Caltrain President Dev Davis.
The governance of Caltrain and the role of SamTrans has been a long standing issue at the board level. SamTrans, known as the San Mateo County Transit District, is currently the management agency for Caltrain, with the Peninsula Corridor Joint Powers Board, or JPB, owner and operator of Caltrain. The JPB is made up of representatives from the counties of San Francisco, San Mateo and Santa Clara. Some members of the San Francisco and Santa Clara County Caltrain Board of Directors have called for changes to Caltrain’s governance structure due to the interconnected nature of SamTrans and Caltrain as a management agency. The two transit agencies have overlapping staff and until recently they were headed by the same CEO.
The September 30 discussion was the fifth special meeting on financial and legal options and analysis for the development of a governance recommendation. Timing remains an issue, as Caltrain’s board has committed to adopting a governance recommendation by December. Staff have yet to determine the process for a draft recommendation, a recommendation for a basic governance structure and how best to deal with governance issues like repayment of the right of way to SamTrans.
The meeting discussed three governance options for the future of Caltrain. The first option called for a refined shared service model and an executive director relationship. SamTrans would remain Caltrain’s managing agency with increased JPB oversight over Caltrain’s executive director and increased oversight through a shared services agreement. Option two calls for a new model of shared services and an executive director relationship. This would lead to greater management and authority of JPB, including the JPB hiring the executive director and senior management and establishing purchased service agreements for the remaining services provided to the railway by SamTrans. Option three would dissolve the current SamTrans management agency model and replace it with a separate and independent Caltrain agency to directly manage and administer the railway, either by reorganizing the JPA or forming a special district. At its August 20 meeting, the board recognized that the third option of dissolving the current model and replacing it with a separate Caltrain agency was financially impractical or inappropriate.
The first option would cost $ 63.8 million, with $ 1.5 million in one-time costs that will take six to 18 months to implement. Option two has $ 69.7 million in annual costs, with $ 4.6 million in one-time costs taking 12 to 18 months to implement. The third option would have annual costs of $ 73 million, including $ 48.9 million in one-time costs, and its implementation would take one to three years. Expenses relate to reimbursement from SamTrans, new contracts and worker costs.
Director Charles Stone, also president of SamTrans and mayor of Belmont, wanted SamTrans to remain the management agency under its contractual law in a 1991 railway right-of-way transaction. There was a result where SamTrans was no longer the managing agency, he thought that the SamTrans board would want the reimbursement of his right of way transaction. Under the 1991 Land Ownership Agreement, he estimated the repayment at $ 38.5 million, plus interest. He estimated that the 2008 amendment to the real estate property agreement would add $ 19.8 million, plus interest. Stone also wanted assurance that if SamTrans was no longer the managing agency, the money would be refunded within a specified short period.
“I think any outcome that does not include the repayment of that $ 19.8 million, plus interest, would not be acceptable to me or to the board of SamTrans, even if I don’t speak for them. “Stone said.
Stone, however, wanted to conclude the issue of governance.
“I kind of hope these are our CEOs, but maybe someone can walk into a room and find something that captures everyone’s perspectives and can find common ground,” he said. Stone said.
Director Steve Heminger, who represents San Francisco on the board, wanted to turn the executive director into a Caltrain employee with more board oversight and reimburse SamTrans for the right of way agreements.
“We have something that we need here, and maybe the next step is not that far a step after all,” Heminger said.
Timing of approving governance reform was an issue for Heminger, and he was open to minimal changes if they had a significant impact. At the very least, he believed SamTrans owed management agency right-of-way repayments of at least $ 20 million. He suggested working in the coming weeks to come to an arrangement on the role of the executive director and the payments owed to SamTrans.
“To buy a little more independence, we may have to go over that $ 20 million figure,” Heminger said.
Director Jeff Gee, also a SamTrans board member and Redwood city council member, suggested that Caltrain’s interim general manager Michelle Bouchard could return in October with a straw proposal containing solutions and guidelines. details on some of the issues discussed.
“I don’t think we’re that far away. I think there might be an opportunity to find a way to achieve many of the values that were articulated by the director [Jeff] Hendricks and President [Dev] Davis, that would be acceptable to the other board that I report to, ”Gee said.
Manager Dave Pine, a San Mateo County supervisor and a member of the SamTrans board, supported asking Bouchard to reconcile the dissenting views.
“I support giving him this opportunity. I think it would be useful to have a feedback on this work in October and for it to take precedence over any regional discussion as time is running out to see if we can come up with a governance recommendation by the end of the year ” , said Pine.
Bouchard will be developing a straw proposal over the next few weeks to try and thread a needle to meet all of the requests from individual board members. The next special meeting on governance will take place on Friday 22 October. She will take stock of potential proposals during this meeting.
Caltrain staff noted that using the RR measure to reimburse SamTrans for its investment would be vulnerable to legal challenge as it was not presented to voters. The RR measure is a special tax approved by voters in 2020 as a dedicated funding source for Caltrain. Staff said the RR measure could likely be used to implement governance options, as this is one type of operating cost that the RR measure is considering.
While the Caltrain Board of Directors may recommend a change in governance, it must rely on the approval of the three JPA organizations that are represented on the Caltrain Board of Directors. The three members of the JPA are the City and County of San Francisco, SamTrans, and the Santa Clara Valley Transportation Authority. If all three members approve the amended agreements, the chosen governance option takes effect.
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