MEMBERS PRESENT: John McLemore (Chair), Michael Burns, Don Gage, Jim Hartnett, Arthur Lloyd, Michael Nevin, Ken Yeager

MEMBERS ABSENT: Sophie Maxwell, Audrey Rice-Oliver

MTC LIASON: Sue Lempert

STAFF PRESENT: Michael Scanlon, David Miller, Roger Contreras, Howard Goode, Chuck Harvey, Rita Haskin, George Cameron, Ian McAvoy, Martha Martinez, Jennifer Buhr

Chair McLemore called the meeting at 10:06 a.m. and led the Pledge of Allegiance to the flag.

PUBLIC COMMENT

Doug DeLong, Mountain View, commented that he was pleased to observe that the signal contractor finished about two and three quarters of its eight remaining cutovers in February. Therefore, Mr. DeLong estimated that the work should be finished around May 1. Mr. DeLong questioned if the old barrels of old scrap tie plates and stacks of fishplates sitting in Menlo Park could be removed. Similarly, perhaps the barrels near Bay Meadows and Redwood City could also be removed.

Peter Khoury, San Francisco, stated that there is an issue in Santa Clara in regard to safety for pedestrians. Mr. Khoury questioned if he could have a Caltrain contact to help him should he seek out funding and stated that until something is built for the pedestrians, Caltrain should not cite people crossing the tracks.

Chair McLemore responded that Mr. Khoury can work with Frank Sharpless from VTA.

Cameron Palmer, San Francisco, stated, in conjunction with Mr. Khoury's comments, that in Santa Clara there are a large number of people that use the tracks to cross rather than the bridge that is immediately adjacent because there is not a pedestrian walkway or ability to ride a bicycle.

Jim Bigelow, representing Redwood City/San Mateo County and Menlo Park chambers, commented that Regional Measure 2 passed this past Tuesday, which signaled the end of a 17-year effort for Dumbarton Rail. Mr. Bigelow reported that a bond was formed to do the Dumbarton Rail as an alternative to endless Dumbarton widening of Dumbarton approach roads. The Alameda County Transportation Authority, the VTA and the San Mateo County Transportation Authority all came up with commitments of $129 million in ballot measures for a basic Dumbarton Rail program. With the passage of Regional Measure 2, $135 million will go toward capital and seismic retrofit and $5.5 million for operating subsidies per year. Mr. Bigelow commended the JPB and others for their work.

Peter Warner, Hanford, commented that in San Jose half of the access ramp going down into the tunnel is blocked off, which could be an ADA violation if there is a wheelchair that is wider than 50 inches. Mr. Warner also stated that a second restroom is needed at the San Mateo station because when riders come off the northbound train there isn't always enough time to get to the southbound side, where the facilities are, and back before the train departs. Mr. Warner requested having one facility on both the northbound and southbound sides.

CONSENT CALENDAR

The Board unanimously approved, by roll call, the following items under the Consent Calendar:

1. Adoption of Minutes of February 5, 2004
2. Statement of Revenue & Expenses, January 2004
3. Request to Approve Lease with Subway Real Estate Corporation for Retail Space at San Francisco Terminal
4. Award of Contract to McGuire & Hester for San Francisco Yard Improvements
5. Award of Contract to William P. Young Construction, Inc. for the Lenzen Yard: Community Wall and Fiber Optic Duct Bank

Howard Goode, Chief Development Officer, responded that with the award of the contract, the wall can be built before a bulk of the construction begins. As discussed with representatives of the community, there will be some things going on in the meantime having to do to with refinement of design. However, the project is staged so that the wall will be built before the major construction.

Director Yeager also questioned the pile driving and what is being done to minimize the effects.

Mr. Goode responded that staff will be working with the contractor to limit the time window. Mr. Goode commented that all work will be done during the day on weekdays.

Director Yeager commented that the community is very appreciative.

CHAIRPERSON'S REPORT

Chair McLemore reported:

• There were various critical issues on the ballot this past Tuesday. Chair McLemore referenced a handout, which illustrated the percentage of support, by county, for Regional Measure 2. Out of the seven counties voting, there was only one county that did not support the Measure.
• VTA Chair, Don Gage, sent a letter to the JPB to show support of the moderate growth section of the Strategic Plan.

MTC LIAISON REPORT (SUE LEMPERT)

Ms. Lempert reported that MTC is delighted with the passage of Regional Measure 2. Ms. Lempert highlighted that some of the money will be going into the Transbay Terminal, which will be a big boost for commuters going into San Francisco. Ms. Lempert also noted that it bodes well for the reauthorization of Measure A.

REPORT OF CITIZENS ADVISORY COMMITTEE (CAC)

Bruce Balshone reported on the last CAC meeting:

• Discussed the marketing plan for the rail service and Baby Bullet.
• Discussed the CAC by-laws and attendance policy.
• Reviewed the Strategic Plan.
• In regard to agenda item #10, the CAC has not had an opportunity to review the item and requested that the item be sent to them for review because there are some concerns with the aesthetics, appearance, identity and the revenue that this project may generate for Caltrain.

REPORT OF THE EXECUTIVE DIRECTOR

Michael J. Scanlon reported:

• The passage of Regional Measure 2 speaks well for regional transportation and will help the JPB and other agencies in the area.
• Due to the public input from last month's public hearing and because staff is still in the final stages of negotiations with contract operator Amtrak, the recommendation for the new Caltrain service level is anticipated to be brought to the board for adoption in April.
• Key Caltrain Performance Statistics:
1. January ridership went from 689,916 to 628,079 riders, a 9 percent decrease.
2. January average weekday ridership was down 9 percent, from 27,372 weekday riders to 24,890.
3. January total revenue was off 14 percent from $1.72 million to $1.48 million.
4. On-time Performance decreased 3 percent with 92.5 percent for January.
5. January shuttle ridership had a decrease of 9 percent with 3,694 riders, down from 4,046.
While staff is investigating the cause of the average weekday ridership and revenue decline, it is suspected that there are several causes including timing of the New Year's holiday, the economy and the introduction of new fare media that accompanied the transition to Proof-of-Payment. The decline in On-time Performance may be attributed to cutover work, signal problems and construction work. Additionally, Caltrain had a practice of holding the first southbound train at the BART station in the morning, which staff has now been directed to discontinue.
• In response to the rising gas prices, the marketing department has run an ad in local newspapers to market the fact that there are alternatives and there is an opportunity to rediscover Caltrain. As a preview, staff is inventing a couple of investors that are going to save their money from Caltrain and SamTrans and invest in an IRA and the savings will be tracked over a period of time. The strategy is that you can use transit and become a millionaire in the process.
• The rising gas prices over the past few weeks have been substantially over the budgeted amounts for diesel fuel. However, Caltrain is still on budget for the year.
• Last month as a part of the Quarterly Capital Project Status Report, it was noted that most of the construction for the CTX project is going well. However, there was slippage in the signal work. Staff has completed its analysis of the impact of the delay and has determined that the final cutover, originally scheduled for the first week of March, will not be able to be completed until the end of April. Therefore, it will be late spring before the service will be operated. Mr. Scanlon introduced Steve Hill who is the new director of construction and who is managing this project.
• The Federal Transit Administration (FTA) has granted the JPB approval to proceed with distributing the electrification Environmental and Impact Report (EIR) for public comment. Accordingly, staff will be distributing to the member agencies, elected officials, public libraries, etc. Four public meetings will be held (San Francisco, San Carlos, Santa Clara and Morgan Hill) beginning in late April.
• The Monthly Safety and Security Report was distributed. The Safety Audit Program is continuing with good results. There is an outreach being done with the city of Palo Alto and Palo Alto High School to explore possibilities to provide rail safety education. On February 18 Train 56 struck a female adult just north of Castro Street in Mountain View. New circuits are being installed in the locomotives that will cut the power to the motors when passenger car doors are open. Caltrain contracted for extensive rail grinding throughout the month of February, which is critical for maintaining a working railroad.
• Rita Haskin, Chief Communications Officer, reported that Caltrain partners with a number of different agencies to promote Caltrain. As a partner, the Sharks have advertised on the busses and trains and have also sent out the Caltrain brochure to all the season ticket holders. Additionally, at the Shark Tank a 15-second promotion video is run reminding people what time the train leaves after a game.
• The celebration for completion of Lawrence station will be tomorrow, March 5, at 10:00 a.m.

Mr. Scanlon responded that all adjustments have been made in order to continue the bus service.

Director Yeager questioned if there has been any special outreach to all the new owners of the housing around Diridon Station.

Ms. Haskin responded that within the next month or so there will be a direct mail piece to high density housing within a quarter mile of all stations.

Director Yeager commented that there is a new weekly in San Jose that serves the whole area on Diridon.

Ms. Haskin replied that staff will look into it.

Chair McLemore questioned how the public will be informed that the weekend bus service will continue until Baby Bullet is operating.

Mr. Scanlon responded that there will be a news release with the anticipated date of restoration of service and other details. The information will also be posted on the Website.

AUTHORIZATION TO EXECUTE USE, OPERATING, AND MAINTENANCE (UOM) AGREEMENT FOR THE MILLBRAE INTERMODAL STATION

Chuck Harvey, Chief Operating Officer, reported that the Staff Coordinating Council (SCC) recommends that the Board authorize the Executive Director to execute a Use, Operating and Maintenance Agreement (UOM Agreement) for the Millbrae Intermodal Station. This converts the original Construction and Maintenance Agreement (C&M Agreement) into a UOM Agreement, which covers all of the aspects of area around the station and the joint facilities that are shared between the BART operation and Caltrain. Ms. Harvey stated that it is a complex agreement that covers many things besides maintenance platforms, elevators, etc. including Caltrain's rights to make alterations and use of property.

Director Burns questioned how the maintenance costs are apportioned among the members.

Mr. Harvey responded that it is an operating cost, which is in the operating budget.

Richard Mlynarik, San Francisco, stated that the maintenance is $.7 million a year, which is 15 percent of Caltrain's annual fuel budget. $700,000 a year is $2,000 a day and equates to about 75 cents for every passenger that goes through the Millbrae facility. Mr. Mlynarik commented that Caltrain platforms are about 700 feet long therefore, it turns out to be about $33 square foot rental for platforms in Millbrae.

Michael Kiesling, Millbrae, commented that in the history of California there was a stagecoach robber named Black Bart and Mr. Kiesling thinks that Black Bart has been reincarnated. Mr. Kiesling stated that it is painful to watch a transit agency trying to balance its budget on the back of its partners.

Mr. Scanlon responded that negotiations over the price to be paid and the many details over this comprehensive agreement took many hours and many meetings. Mr. Scanlon commented that the focus has to be taken off just the platforms. The whole concept from BART's point of view is that the Millbrae Station is almost double the size of what their typical stations are and would have been had it not been for a Caltrain connection. Mr. Scanlon clarified that the agreement also includes the garage that is available for the riders of Caltrain, police protection and elevator and escalator maintenance. Mr. Scanlon feels confident that these figures are the best deal for this agreement.

The motion for authorization to execute Use, Operating and Maintenance Agreement for the Millbrae Intermodal Station was approved unanimously, by roll call, and resolution 2004-07 was adopted.

AWARD OF CONTRACT TO VIACOM OUTDOOR, INC. FOR AN EXTERIOR TRAIN ADVERTISING DEMONSTRATION PROGRAM

Rita Haskin, Chief Communications Officer, reported that Staff Coordinating Council (SCC) recommends that the Board approve the one-year exterior train advertising contract with Viacom. Advertising displays will be limited to the exterior of three train sets during the year and bring in a potential of $30,000 a month.

Director Burns questioned if that would be for three train sets or for a full rollout of advertising on the system.

Ms. Haskin clarified that with three train sets for the entire year, the maximum that would come in would be $30,000 per month. There is a maximum potential of $360,000 for the Caltrain budget.

Director Lloyd questioned if the wrap around would be restricted to 15 cars, which is three consists.

Ms. Haskin responded if a five-car consist is maintained that is correct but noted that if the consist changes over the next year, the advertising would extend with the consist. Ms. Haskin also noted that the advertising would not be done on the Baby Bullet equipment.

Chair McLemore acknowledged that the advertising is up to three train sets and questioned if there was a guarantee.

Ms. Haskin clarified that there is not a guarantee and commented that it all depends on the market.

Chair McLemore questioned if it would be $10,000 per train.

Ms. Haskin responded that that is correct.

Mr. Scanlon emphasized that $360,000 is the absolute maximum that could be received for one full year.

Director Nevin commented that this argument was before SamTrans a long time ago. It started out as a $500,000 income a year for SamTrans. Director Nevin commented that it has been successful in good times and in bad.

Mr. Scanlon commented that staff has been creative in trying to find sources of revenue and reiterated that this is a one-year demonstration program, which will cost Caltrain no money. After the one-year demonstration, staff will be able to see if it would be worth it to continue. Mr. Scanlon also commented that staff would like to work closely with the CAC to evaluate the impacts.

Chair McLemore noted that VTA has wrapped its busses before and has had success.

Norman Rolfe, San Francisco, expressed concern with a wrap and questioned if a wrap would cover the windows. Mr. Rolfe noted that Muni has a complete wrap on some of their buses and it makes it hard for the riders to see out the window. Mr. Rolfe suggested having the wrap fall below the window line so it does not obstruct the riders view.

Vaughn Wolffe recommended using the revenues from this project to target the Highway 101 users, which is also a part of the Strategic Plan. Mr. Wolffe noted that Caltrain needs to advertise its service.

Director Gage reported that in Santa Clara County, 80,000 jobs have been lost, which can attribute to the reduction in ridership.

Jeff Carter, Burlingame, recommended approval of this project and emphasized that the wrap should not cover the windows and it would be good if the revenue can help with more advertising. Mr. Carter reported that SamTrans has an exterior advertising program, which has been working quite well.

The motion to approve the award of contract to Viacom Outdoor Group, Inc. for an Exterior Train Advertising Demonstration Program for a One-Year Term was approved unanimously, by roll call, and resolution 2004-04 was adopted.

APPROVAL OF A SERVICE CONTRACT TRANSACTION (FORMERLY KNOWN AS U.S. LEVERAGED LEASE/LEASEBACK TRANSACTION) OR ROLLING STOCK

Roger Contreras, Chief Financial Officer, reported that the item for approval is a Lease to Service Contract Transaction of the Baby Bullet equipment. During budget deliberations last year, the board agreed to pursue a Lease to Service Contract Transaction to fund requirements in excess of its member agency contributions. Following the delivery of the locomotives, the leveraged lease market became significantly curtailed in the latter part of 2003 due to legislation reported out of the Senate Finance Committee and the Federal Transportation Administration's (FTA) moratorium on issuing consents. In 2004 the Administration's/Treasury Department's tax proposals, which were slated to be retroactive to January 2004, caused the market to shut down completely. It is now expected that the effective date of current tax proposals will be amended to a date that a bill is actually reported out of the House Ways and Means Committee, which is estimated to be April 2004. Consequently, a very small number of equity investors are willing to close transactions during this period. In the domestic market, those transactions will be limited to those few transit agencies whose equipment was not Federally funded, and thus, do not require FTA consent, which is this case with the JPB equipment. As a result, one such equity investor, Fifth Third Leasing Company, is willing to proceed with a transaction with the JPB. Staff is confident that the JPB, with board approval, will be able to finalize this transaction quickly within the necessary time frame. With respect to the transaction itself, the essence of the transaction is the transfer of Federal tax ownership of the equipment to an investor(s), who is able to take depreciation and certain other tax benefits on the equipment. The JPB would retain ownership for State law purposes and retain beneficial operation use of the equipment. VTA and Muni have closed similar transaction some months past and the JPB did the same several years ago. In regards to the benefit, successful completion of the proposed transaction would produce a substantial immediate net cash benefit for the JPB in the range of $4.5 million to $5 million, depending on the final appraisal of the rolling stock and prevalent interest rates at the time of closing. This net benefit includes all transaction costs, including the JPB's lessee counsel and financial advisor. All legal and advisory fees for transaction team members are contingent on successful closing of the transaction.

Director Burns questioned how long until the actual closing assuming that it is approved today.

Mr. Contreras replied that staff is targeting the middle of March to close.

Director Burns requested clarification on what, if any, Federal tax liability there could be on the JPB if the deal is closed and then the law changes.

Mr. Contreras responded that the investor would assume all risks in regards to the potential change, even if it were retroactive.

The motion to approve a Lease to Service Contract Transaction of Rolling Stock was approved unanimously, by roll call, and resolution 2004-05 was adopted.

PRESENTATION OF PUBLIC COMMENTS AND PROPOSED REVISIONS TO THE DRAFT CALTRAIN STRATEGIC PLAN

Ian McAvoy, Deputy Chief of Development, reported that this item is for information and the purpose of the presentation is to review the progress of the Strategic Plan and of the general comments that have been received as a result of the outreach process. Highlights of the presentation included the outreach schedule, policy questions, the scenario approach, the financial approach, service levels, system rehabilitation, electrification, capacity improvements, next steps and what happens after the Strategic Plan.

Richard Mlynarik stated that the structural elements need to be addressed. There are three counties involved and Mr. Mlynarik feels that only two of them want Caltrain to run. Mr. Mlynarik stated that the recommendations are very unambitious and are not what the people on the peninsula want or what they are being promised.

Jeff Carter commended staff for their work but he feels that the plan could be more ambitious. Mr. Carter is particularly interested in getting a dedicated funding source for Caltrain. Level boarding and electrification are also very important to him because he thinks that will greatly increase the speed of the service. Mr. Carter stated that it is necessary to be careful with regard to the ridership projection models because in the early 1990s there was a ridership projection for the Millbrae Station, which indicated that in the first year of opening there would be 78,000 people using Colma through Millbrae. Mr. Carter stated that currently there are only about 25,000 to 30,000 in reality. Therefore, Mr. Carter feels that the ridership projections are not an accurate reflection of reality. Mr. Carter stated that ridership will increase if the plan produced is ambitious and a plan that people want to use.

Margaret Okuzumi reported that BayRail Alliance submitted a letter to the board summarizing its comments in regard to the Strategic Plan. Ms. Okuzumi stated that perhaps some of the ambiguity surrounding the plan may be because it was not based on performance based goals rather than fixed infrastructure scenarios, which the BayRail Alliance feels would be the most sensible to define. Ms. Okuzumi referenced the Capital Corridor and how they were able to increase its ridership by looking at its market demand. Ms. Okuzumi also noted that electrification is necessary to achieve a vision for fast and appealing transit.

Vaughn Wolffe commended the issue of undertaking market research to understand latent demand and build ridership after the Strategic Plan. With regard to electrification, Mr. Wolffe stated that the definition in the Plan is that of a full build out of electrification for four tracks. Mr. Wolffe suggested electrifying two tracks at first and then when three tracks are needed, electrify the track at that time. Mr. Wolffe also noted that with electrification, longer trains can move faster. Therefore the trains can be expanded rather than having to add more trains, including express trains. Mr. Wolffe commented that with electrification existing diesels will be freed up, which can be used to enhance Dumbarton service, ACE service, etc.

Sue Lempert stated that the ridership will be produced with Transit Oriented Development (TOD) if the Caltrain service meets the demands of what people want. Ms. Lempert commented that there is an education process that needs to be done for Caltrain service. Ms. Lempert stated that there needs to be more emphasis on TOD within the plan. Also, Ms. Lempert questioned how electrification will affect operating costs.

Mr. McAvoy responded that in the Environmental Report there is mention of the effects of electrification. The trade off by not using diesel for the locomotives is that there will be some additional costs associated with the operating and maintenance of the facilities. Mr. McAvoy stated that he will report back with more specific details. In regard to education, Mr. McAvoy stated that it was clear from public outreach that there needs to be an ongoing process of educating the communities of the Caltrain service. In the Vision itself, one of the items is acting as a major catalyst for redevelopment and economic activity in communities, which all three member agencies are dealing with within their own strategic plans.

Director Lloyd stated that with electric motors, only the traction motors will need to be maintained. Therefore, some maintenance cost should be eliminated.

PRESENTATION FROM THE TRANSPORTATION AGENCY FOR MONTEREY COUNTY (TAMC)

William Reichmuth, Executive Director of TAMC, and Christina Watson, Caltrain Extension Project Manager, made a presentation in regard to a Caltrain extension to Monterey County. Highlights of the presentation included who TAMC is, why passenger rail, the Caltrain extension route, the operating plan, new construction, capital funding, the financial plan, the operating funding sources, the timeline of activities already completed and the timeline for future activities.

Ms. Lempert questioned if TAMC is working with MTC on this project.

Mr. Reichmuth responded that TAMC is working with MTC. Additionally, there are a number of other organizations that TAMC is actively working with.

Director Burns questioned if the original operating plan would be one train in the morning and one train in the evening.

Mr. Reichmuth clarified that it would be two trains in both the morning and the evening. However, Mr. Reichmuth stated that the demand is clearly there, so TAMC is already looking into four trains each way.

Director Burns questioned if in other words it would be four one-way trips.

Mr. Reichmuth responded that the plan right now states two trips but Mr. Reichmuth suspects that it will be four.

Director Burns requested clarification on what is meant by stating the service would be revenue neutral.

Mr. Reichmuth responded that in addition to the capital costs, which TAMC will pay, there is a certain amount of administrative overhead, which would be a fair share percentage of the total overhead of what it takes to run the entire operation.

Chair McLemore referenced an article from the San Jose Business Journal and stated that he was misquoted in the interview, which Chair McLemore does not want to be a reference upon his opinion of TAMC's attempt for the service.

Mr. Scanlon stated that as he understands it, TAMC is looking for a purchase of service agreement with fully allocated costs south of Gilroy. Mr. Scanlon questioned if TAMC has envisioned how these trains will operate north of Gilroy.

Ms. Watson responded that the operating plan assumes that the same trains that are currently running to Gilroy would then extend down to Salinas.

Director Lloyd questioned if TAMC is looking at layover facilities in Salinas.

Ms. Watson responded that layover facilities in Salinas are part of the plan.

UPDATE ON CONSTRUCTION OF BICYCLE STATION AT SAN FRANCISCO CALTRAIN DEPOT

Howard Goode, Chief Development Officer, reported that this item is presented for information only and no policy action is requested. As a result of an impetus from bicycle interests in San Francisco, staff has pursued a series of grant applications to build a bicycle facility adjacent to the Caltrain station at 4th & King in San Francisco. Approximately $600,000 has already been lined up for the project. An issue that has been parallel with the capital side of this project has been the operation of the project. It has been decided that this project should not be a JPB operating cost but should be handled by an outside party. Staff is in negotiations with the San Francisco Bicycle Coalition to perform this function within the facility. At the same time, staff is completing an Invitation for Bid (IFB) and staff is hopeful that the bids received will be within the grant money available.

Jeff Carter recommended having the bicycle station be named in memory of Cap Thomas, who was a long-time advocate for Caltrain and very instrumental in getting bicycles on trains.

Director Lloyd agreed with Mr. Carter's recommendation.

REPORT OF LEGAL COUNSEL

None.

CORRESPONDENCE

Previously distributed.

DATE/TIME OF NEXT MEETING

Thursday, April 1, 2004, 10 a.m. at the San Mateo County Transit District Administrative Building, 1250 San Carlos Avenue, San Carlos, CA 94070.

ADJOURNED

Meeting adjourned at 12:40 p.m.