**Silicon Valley Rapid Transit Corridor**

**Santa Clara County, California**

(November 2004)

The Santa Clara Valley Transportation Authority (SCVTA) is proposing to
implement a 16.3-mile heavy rail extension from a *proposed* Bay Area
Rapid Transit (BART) station at Warm Springs (currently under NEPA
review) to downtown San Jose and the Norman Y. Mineta International
Airport. The current project scope includes the construction of at-,
below-, and above-grade heavy rail track; seven passenger stations, five
of which include substantial park-and-ride facilities; and a new
maintenance yard. The project would also add 106 vehicles to the BART
systemwide fleet. The Silicon Valley Rapid Transit Corridor project
would operate as an extension to BART's Orange (to Richmond) and Green
(to Daly City) lines, providing a combined six-minute headway between
downtown San Jose and Oakland.

Because of rapid job growth in Silicon Valley in the 1990's and
residential growth in Alameda and Contra Costa Counties, travel
conditions on regional highway facilities have worsened. The proposed
BART extension is intended to help address the imbalance between jobs
and affordable housing in Silicon Valley by providing commuters
alternatives to travel on I-680 and I-880, the two major north-south
highway facilities connecting Santa Clara County with East San Francisco
Bay communities. The proposed project is further intended to improve
regional transit connections between BART, SCVTA's light rail and bus
systems, and Caltrain and ACE commuter rail services, thereby expanding
transit access to Santa Clara, Contra Costa, and Alameda counties, as
well as to the city of San Francisco.

+-----------------------------------+----------------------------------+
| **Summary Description**           |                                  |
+-----------------------------------+----------------------------------+
| **Proposed Project:**             | Heavy Rail                       |
+-----------------------------------+----------------------------------+
| ** **                             | 16.3 Miles                       |
|                                   |                                  |
|                                   | 7 Stations                       |
+-----------------------------------+----------------------------------+
| **Total Capital Cost (\$YOE):**   | \$6,151.3 Million (including     |
|                                   | \$832 million in finance         |
|                                   | charges)                         |
+-----------------------------------+----------------------------------+
| **Section 5309 New Starts Share   | \$973.0 Million (15.8%)          |
| (\$YOE):**                        |                                  |
+-----------------------------------+----------------------------------+
| **Annual Forecast Year Operating  | Not Available                    |
| Cost:**                           |                                  |
+-----------------------------------+----------------------------------+
| **Ridership Forecast (2025):**    | Not Available                    |
+-----------------------------------+----------------------------------+
| **Opening Year Ridership          | Not Available                    |
| Forecast:**                       |                                  |
+-----------------------------------+----------------------------------+
| **FY 2006 Finance Rating:**       | # Medium-Low                     |
+-----------------------------------+----------------------------------+
| **FY 2006 Project Justification   | **Not Rated**                    |
| Rating:**                         |                                  |
+-----------------------------------+----------------------------------+
| **FY 2006 Overall Project         | **Not Recommended**              |
| Rating:**                         |                                  |
+-----------------------------------+----------------------------------+

The project is rated *Not Recommended* based on the poor operating
financial condition of SCVTA and the lack of funding available to
operate the proposed major transit capital investment. In addition, the
project is *Not Rated* for project justification for the third
consecutive year because SCVTA has not provided reliable estimates of
project ridership and travel-time benefits. FTA is continuing to work
with SCVTA to improve its travel forecasting procedures, and requires
that an acceptable estimate of project ridership and travel-time
benefits be produced by June 30, 2005 in order for the project to
maintain preliminary engineering (PE) status and be reported in next
year's *Annual Report on New Starts*. Furthermore, SCVTA must provide
evidence of an adequate financial plan for the project (as demonstrated
by passage of a proposed ballot measure to generate new sales tax
revenues for the agency) by November 2006 in order to continue to
maintain PE status and be reported in the FY 08 *Annual Report on New
Starts*. In the meantime, FTA will work with SCVTA to explore
opportunities for phased implementation of the project.

SCVTA is requesting \$973 million in New Starts funding for the project.
Historically, more than \$500 million in New Starts funding has only
rarely been provided to any single major capital investment project.

**Project Development History and Current Status**

SCVTA completed a major investment study of potential transportation
options in the project corridor in November 2001, resulting in the
selection of an extension of BART to downtown San Jose as the locally
preferred alternative. FTA approved SCVTA's request to initiate
preliminary engineering (concurrent with initiation of a Draft
Environmental Impact Statement (EIS)) on the Silicon Valley Rapid
Transit Corridor project in September 2002. Since then, concerns about
SCVTA's financial condition and the cost effectiveness of the project
prompted FTA to suggest that SCVTA consider advancing a minimum operable
segment (MOS) of the proposed extension as the New Starts project. SCVTA
responded by suggesting the elimination of stations from the project
scope while maintaining the full 16.3-mile alignment, which resulted in
only modest cost reductions. The full seven-station project scope is the
subject of this evaluation.

In May 2004, the US Environmental Protection Agency recommended that FTA
cease action on the Silicon Valley Rapid Transit Corridor EIS until a
NEPA Record of Decision (ROD) is issued on the BART extension to Warm
Springs. A ROD on the Warm Springs extension is anticipated in Spring
2005. SCVTA is continuing to advance the current Silicon Valley Rapid
Transit Corridor project scope through the State environmental review
process and is contemplating re-initiating Federal NEPA review in late
2005, reflecting the results of value engineering and any further scope
modifications including a potential MOS in the corridor.

**Significant Changes Since Last Evaluation (November 2003)**

There have been no significant changes to the project scope or SCVTA's
submission of information since last year. SCVTA has corrected the cost
estimate reported last year to include finance charges.

**[Project Justification Rating: Not Rated]{.underline}**

The project is *Not Rated* based on the absence of reliable information
on the cost effectiveness of the project, despite a *Medium-High* rating
for transit-supportive land use.

####### *Cost Effectiveness Rating: Not Rated* 

As noted, SCVTA has not submitted to FTA acceptable estimates of the
travel-time benefits of the Silicon Valley Rapid Transit Corridor
project; therefore FTA cannot rate its cost effectiveness. FTA is
continuing to work with SCVTA to develop an acceptable and reliable
travel forecast for the project.

####### . 

####### *Transit-Supportive Land Use Rating: Medium-High*

The *Medium-High* rating reflects the *Medium-High* ratings assigned to
transit-supportive land use policies and performance and the *Medium*
rating assigned to existing land use.

**Existing Land Use: Medium**

-   In 2000, the station area employment was approximately 51,500 jobs.
    The San Jose central business district (CBD) area employment is
    approximately 31,600 jobs. Population density within the corridor is
    estimated at 7,100 residents per square mile.

-   Existing pedestrian facilities in the station areas are quite good
    and include sidewalks, crosswalks, curb cuts and bike lanes.

-   Downtown San Jose is compact and pedestrian-friendly. A variety of
    uses, but mostly a range of residential development and industrial
    uses, surround stations outside of downtown San Jose.

-   A significant number of parking spaces exist at the Great Mall of
    the Bay Area, near the Montague Crystal Station, the Flea Market
    south of the proposed Berryessa Station and an area northwest of
    that station. The San Jose city council has accepted the
    redevelopment agency's recommendation to construct five parking
    garages with more than 4,100 spaces in the downtown area over the
    next several years.

**Transit-Supportive Plans and Policies: Medium-High**

-   There is a concerted effort by all jurisdictions, through the
    establishment of goals and policies, to concentrate development,
    conserve open space, and contain sprawl.

-   Local jurisdictions have created several specific planning areas
    associated with the proposed station sites with high density
    requirements and enhanced design characteristics in order to foster
    increases in development and improvements in the character of the
    station areas.

-   The California legislature amended the *Transit Village Plan* in
    February 2003. The term "transit facilities" now includes rail,
    ferry, bus or bus transfer stations, not just rail stations. The
    amendment also significantly streamlines the process for cities to
    create and implement transit villages and expand opportunities for
    joint development projects with other agencies. Furthermore,
    numerous recently approved general amendments and adopted master
    plans will enhance the transit-friendly character of the corridor
    and station area development and improve pedestrian facilities.

-   Zoning provisions promote mixed-use higher-density development,
    transit-friendly character, and improvement of pedestrian
    facilities. Provisions also include allowances for reduced parking
    within the corridor and station areas.

-   SCVTA, as well as other stakeholder entities, has made public
    involvement, promotion, and cooperation instrumental in their
    planning efforts. SCVTA has demonstrated efforts to involve the
    development community in transit-oriented development plans.

**Performance and Impacts of Policies:** **Medium-High**

-   The city of San Jose has multiple projects under construction that
    will transform under-utilized space into high-density uses.

-   A considerable amount of light industrial/warehouse usage is present
    in station areas, offering significant possibilities for new
    high-density development. The station areas are not constrained by
    well-established low-density residential development.

-   The Silicon Valley Rapid Transit Corridor is located in the heart of
    the Silicon Valley and is projected to experience significant
    growth. This area is projected to have the greatest numerical
    population and employment growth within the region.

####  

####### Other Project Justification Criteria 

+------------------------------------------+--------------+------------+
| **Mobility Improvements Rating: Not      |              |            |
| Rated**                                  |              |            |
+------------------------------------------+--------------+------------+
| **[Within ½-mile radius of boarding      | 51,500       |            |
| areas]{.underline}:**                    |              |            |
|                                          | 77,900       |            |
| Existing Employment                      |              |            |
|                                          | 4,200 (36)%  |            |
| Projected Employment (2025)              |              |            |
|                                          | 7,357\*      |            |
| Low Income Households (% of total HH)    |              |            |
|                                          | 600\*        |            |
| **[Average Per Station]{.underline}:**   |              |            |
|                                          | **[New Start |            |
| Employment                               | vs.          |            |
|                                          | Baseline]{.  |            |
| Low Income Households                    | underline}** |            |
|                                          |              |            |
| **Transportation System User Benefit Per | N/A\*        |            |
| Project Passenger Mile (Minutes)**       |              |            |
+------------------------------------------+--------------+------------+
| **Environmental Benefits Rating: Not     |              |            |
| Rated**                                  |              |            |
+------------------------------------------+--------------+------------+
| **[Criteria Pollutant (Reduction in      | **[New Start |            |
| tons)]{.underline}**                     | vs.          |            |
|                                          | Baseline]{.  |            |
| > Carbon Monoxide (CO)                   | underline}** |            |
| >                                        |              |            |
| > Nitrogen Oxide (NO~x~)                 | N/A          |            |
| >                                        |              |            |
| > Volatile Organic Compounds (VOC)       | N/A          |            |
| >                                        |              |            |
| > Particulate Matter (PM~10~)            | N/A          |            |
| >                                        |              |            |
| > Carbon Dioxide (CO~2~)                 | N/A          |            |
|                                          |              |            |
| **[Criteria Pollutant                    | N/A          |            |
| Status]{.underline}**                    |              |            |
|                                          | **[EPA       |            |
| > Carbon Monoxide                        | De           |            |
| >                                        | signation]{. |            |
| > 8-Hour Ozone (O~3~)                    | underline}** |            |
|                                          |              |            |
| **Annual Energy Savings (million British | Maintenance  |            |
| Thermal Units)**                         | Area\*       |            |
|                                          |              |            |
|                                          | Marginal     |            |
|                                          | No           |            |
|                                          | n-Attainment |            |
|                                          | Area\*       |            |
|                                          |              |            |
|                                          | N/A          |            |
+------------------------------------------+--------------+------------+
| **Operating Efficiencies Rating: Not     |              |            |
| Rated**                                  |              |            |
+------------------------------------------+--------------+------------+
| **System Operating Cost per**            | > **         | **[New     |
|                                          | [Baseline]{. | Start]{.un |
| **Passenger Mile (current year           | underline}** | derline}** |
| dollars)**                               | >            |            |
|                                          | > N/A\*      | N/A\*      |
+------------------------------------------+--------------+------------+

\* Indicates that measure is a component of rating for each criterion.

N/A indicates information was not available for this measure.

# [Local Financial Commitment Rating: Medium-Low]{.underline} 

The *Medium-Low* rating for local financial commitment is based on
*Medium-Low* and *Low* ratings for the capital and operating finance
plans, respectively.

####### *Section 5309 New Starts Share of Total Project Costs: 16%* 

####### *Rating: High*

SCVTA is requesting approximately 16 percent as the New Starts share of
total project costs, which results in a *High* rating for this measure.

+-------------------------+-----------------------+--------------------+
| **Locally Proposed      |                       |                    |
| Financial Plan**        |                       |                    |
+-------------------------+-----------------------+--------------------+
| **[Source of            | **[Total Funds        | **[Percent of      |
| Funds]{.underline}**    | (\$mi                 | To                 |
|                         | llion)]{.underline}** | tal]{.underline}** |
+-------------------------+-----------------------+--------------------+
| **Federal:**            | \$973.0               | 15.8%              |
|                         |                       |                    |
| Section 5309 New Starts |                       |                    |
+-------------------------+-----------------------+--------------------+
| **State:**              | \$649.0               | 10.6%              |
|                         |                       |                    |
| Traffic Congestion      |                       |                    |
| Relief Program          |                       |                    |
+-------------------------+-----------------------+--------------------+
| **Local:**              | \$1,722.4             | 28.0%              |
|                         |                       |                    |
| Measure A Sales Tax     | \$1,590.9             | 25.9%              |
| Revenue                 |                       |                    |
|                         | \$1,216.0             | 19.8%              |
| Measure A Bond Proceeds |                       |                    |
|                         |                       |                    |
| Other Local Funds       |                       |                    |
+-------------------------+-----------------------+--------------------+
| **Total:**              | **\$6,151.3**         | 100.0%             |
+-------------------------+-----------------------+--------------------+

**NOTE**: The financial plan reflected in this table has been developed
by the project sponsor and does not reflect a commitment by DOT or FTA.
The sum of the figures may differ from the total as listed due to
rounding.

# *Capital Finance Plan Rating: Medium-Low* 

The capital finance plan is rated *Medium-Low*, based upon the ratings
assigned to each of the subfactors listed below. SCVTA earned a *High*
rating for commitment of capital funds, a *Medium-High* rating for
capital condition, a *Medium-Low* rating on completeness of the plan,
and *Low* ratings on capital funding capacity and capital cost estimates
and planning assumptions. These ratings average to *Medium*, but the
rating was lowered to *Medium-Low* due to the *Low* rating for the
capital cost estimate and planning assumptions subfactor.

#### Agency Capital Condition: Medium-High

-   SCVTA's bus fleet average age is 4.5 years, which is significantly
    younger than the industry average.

-   The agency has a good bond rating from Fitch of A+, which was issued
    in September 2003.

#### Completeness of Capital Plan: Medium-Low

-   The submittal was only partially complete. Although it included a
    20-year cash flow statement, it was missing identification of key
    assumptions, fleet management plans, historical information,
    supporting documentation and a sensitivity analysis.

#### Commitment of Capital Funds: High

-   Approximately 64 percent of non-New Starts funding is committed. The
    committed funds are composed entirely of local "Measure A" sales tax
    revenues, either cash or proceeds from bonds that are secured by
    this tax.

#### Capital Funding Capacity: Low

-   SCVTA cannot cover any cost increases or funding shortfalls -- its
    income stream is fully leveraged, as indicated by only a 1.0 net
    coverage ratio on debt backed by Measure A sales tax revenue.

#### Capital Cost Estimate and Planning Assumptions: Low

### The lack of information submitted did not allow for informed judgments to be made regarding the reasonableness of capital planning assumptions.

#### *Operating Finance Plan Rating: Low*

The operating finance plan is rated *Low,* based upon the ratings
assigned to each of the subfactors listed below. SCVTA was assigned a
*Medium-High* rating for commitment of operating funds, but it received
a *Low* rating for all other subfactors. The average of these ratings is
*Medium-Low*, but the rating has been lowered to *Low* due to the *Low*
rating for the operating cost estimates and planning assumptions
subfactor.

#### Agency Operating Condition: Low

-   SCVTA is in poor condition with recent service cutbacks. The agency
    will need in increase in dedicated tax revenues in order to sustain
    existing operations.

-   SCVTA's current ratio of assets to liabilities could not be
    evaluated because SCVTA did not submit a current comprehensive
    annual financial report.

#### Completeness of Operating Plan: Low

-   The operating plan was incomplete. It included a cash flow statement
    for years 2004-2010, and one-year snapshots for years 2015, 2020,
    and 2025. No historical information was provided. Key assumptions
    and supporting documentation were also not provided.

#### Commitment of Operating Funds: Medium-High

#### Over 75 percent of operating funding is committed, including passenger revenues, revenues from the existing ½-cent sales tax levied by SCVTA, Transportation Development Act sales tax revenues, FTA Section 5307 formula funds (for preventative maintenance), investment and other income, and State grants. The remaining operating funds derive from a new 3/8-cent sales tax that SCVTA hopes to have approved in November 2006. 

#### Operating Funding Capacity: Low

-   SCVTA cannot sustain existing operations or operate this new project
    without a new revenue source.

#### Operating Cost Estimates and Planning Assumptions: Low

-   The lack of information submitted did not allow for informed
    judgments to be made regarding the reasonableness of the operating
    cost estimates and planning assumptions.

Map

####