Meeting
FINANCE, BUDGET, AND AUDIT COMMITTEE
MARCH 14, 2018
Subject
SUBJECT: FY19 BUDGET DEVELOPMENT UPDATE
Action
ACTION: RECEIVE AND FILE
Heading
RECOMMENDATION
Title
RECEIVE AND FILE FY19 Budget Development Update.
Issue
ISSUE
This report is the second in a series of FY19 Budget development updates leading to the FY19 Budget adoption for Board consideration in May 2018. In this report, staff will present the Transit Project Construction/Planning, Highway, and Regional Rail programs for FY19. This report will describe the agency’s implementation plans to meet the Measure M / Measure R (MM/MR) priorities as well as the current status of the expanded public outreach efforts to obtain public and stakeholder input.
...Discussion
DISCUSSION
Transit Infrastructure, Highway and Regional Rail
The preliminary FY19 budget is balanced at approximately $6.5 billion estimated expenditures. This report focuses primarily on Transportation Infrastructure Development Programs. As shown in Figure 1, this category represents almost one third, 32% or $2.2 billion, of the preliminary FY19 Proposed Budget. It includes Transit Construction and Planning Activities ($1,674.8 million), Highway Expansion ($304.5 million), and Regional Rail / Metrolink Projects ($178.3 million).
Figure 1: FY19 Preliminary Budget Percentage by Program
Transit Project Construction/Planning
Westside Purple Line Extension (WSE PLE), including the Division 20 expansion required for enabling revenue operations at the completion of subway extensions, Regional Connector and Crenshaw LAX projects combined account for 87%, or $1,461.3 million, of the $1,674.8 million Transit Project Construction/Planning program budget proposed for FY19. The table in Figure 2 below shows the program breakdown by major projects. It identifies year over year budget changes at the project level and the respective project Life of Project (LOP) expenditure rate anticipated by the end of FY19.
Figure 2:
Westside Purple Line Extension (WSE PLE)
Section 1 of Westside Purple Line Extension will expend 49% of the project with major advancement in construction phase. For WSE PLE Sections 2 and 3, the final designs are yet to be completed at this time. However, Section 2 plans for $344.2 million in FY19 or 36% in total LOP expenditure rate. This indicates a substantial completion of the final design, acquisition of all critical subsurface easements and the start of construction phases. WSE PLE Section 3 will leverage $227.2 million annual budget allocation to seek Federal funding approval of the Full Funding Grant Agreement (FFGA) to start critical final design and early construction activities. Division 20 Improvements are included in WSE PLE Section 3 scope to meet the operation headway requirements with the last extension of subways to the west side.
Crenshaw/LAX
Most notable in the FY19 transit construction budget is the Crenshaw LAX Project which reflects substantial expenditures at 97%. In FY19, the project will move on to Systems Integration and Pre-Revenue testing phases; leading to a target opening date in October 2019.
Regional Connector
Regional Connector requests for $212.9 million annual cash flow allocation; targeting for a 69% expenditure rate of the LOP budget by the end of FY19. The project will pass the halfway mark of construction to complete major excavation activities. Excavations will be done to allow for connections to Little Tokyo of the Gold Line Eastside Extension and the crossover section heading toward the 7th / Metro Station. In addition, significant concrete installations at most stations will be complete as well.
Other Significant Transit Projects
The Gold Line Foothill Extension 2B from Azusa to Claremont and the Orange Line Improvements Project are expected to be groundbreaking in FY19. These projects are budgeted for $39.8 million and $15.0 million respectively to support the transition from planning phases to design, engineering and construction phases. In addition, the Airport Metro Connector Project is budgeted for $27.8 million in FY19 to meet the groundbreaking timing in Measure M Ordinance.
Planning Studies for Measure M / Measure R Transit Projects
This Planning Study budget line at $31.6 million is the bundle of many first decade Measure M / Measure R Projects per Ordinance in the early conceptual planning stage to meet the future project groundbreaking dates, see Attachment A for Measure M Projects with First Decade Groundbreaking Dates. It provides for advance conceptual design support to a state of readiness. In doing so, Metro also maximizes its potential for other funding opportunities while leveraging the Measure M / Measure R funds. Some projects bundled in this line include projects such as the BRT Connector Orange / Red Line to Gold Line, Green Line Ext to Redondo Beach, Vermont Transit Corridor, Crenshaw LAX Track Enhancement, LA River Waterway & System Bikepaths and the Sepulveda Pass Transit Corridor Phase II.
Overall, there is a net decrease of $44 million budget from FY18 to FY19 in the Transit Projects category. This represents the cash flow needs for the program progress to date. As projects near completion, cash flow demands slow down and the resource requirements migrate from construction activities to Systems Integration and Pre Revenue Testing phase to prepare for revenue operations.
Highway Development and Maintenance
The Highway Program continues to grow year over year as a variety of projects are entering construction phases. Work efforts from Plans, Specifications & Estimates (PSE) and Project Approval / Environmental Document (PAED) phases are in completion and will be released for bid development in FY19. In total, the Highway Program has grown from $162.2 million in FY18 to $304.5 million in FY19 as shown in Figure 3.
Figure 3:
The $142.3 million, or 88%, increase from FY18 is firstly due to the Measure M and Measure R Sub-Regional Projects identified by the five Regional Council of Governments (COG). Subsidies to these regional projects will double in FY19; representing $68.9 million increases. A semi-annual report is provided by the Highway Department under Program Management to update the board on the status of the individual Sub Regional Highway Project. Subsidy to Caltrans for Highway construction and planning will increase by $45.5 million. Metro will also further the progresses on various Soundwall Projects for a proposed $43.2 million.
The Highway Program is different from the Transit Project Construction as the completed project is a non-Metro owned asset. In most of the Highway projects, Metro is the planning and early engineering support provider. This effort amounts to $20.6 million in FY19. Metro Highways will continue PSE and PAED activities which will refine the project scopes and cost estimates through FY19 and beyond.
Regional Rail / Metrolink Projects
Metro’s Regional Rail program consists of Metro’s Operating and Capital support of the Metrolink commuter rail system as well as Metro managed regional rail capital expansion, development, construction, and corridor studies as shown in Figure 4.
Figure 4:
Metro Regional Rail
Identified by the State of California as the number one grade crossing separation project in the state, the Rosecrans/Marquardt grade crossing project is expected to advance in property acquisition and completion of design. LINK US project at Los Angeles Union Station (LAUS) intends to expand the capacity and operational efficiency of LAUS for rail operations. At the same time, Metro expects to move forward with the design of the Brighton to Roxford double tracking project in the east San Fernando Valley. Several capacity studies will be conducted in FY19, such as Union station to Burbank, North County and San Bernardino Lines.
Metrolink Commuter Rail
Funding for Metrolink commuter rail operations is currently assumed at FY18 levels, while Metrolink finalizes the cash flow requirements for previously approved capital and state of good repair projects. These projects include the procurement of new Ticket Vending Machines (TVMs), track, signal and infrastructure upgrades on the Antelope Valley and San Bernardino Lines, and the rehabilitation of the first generation passenger rail vehicles.
Outreach Update
Online Budget Tool
This month Metro will launch the interactive Online Budgeting Tool, which engages the public in the budgeting process by walking users through a series of questions designed to gather input on transportation priorities. With nearly 5,000 responses last year, the Online Budgeting Tool has a proven ability to yield the greatest level of engagement from the public across all outreach methods. To further enhance the response rate, marketing efforts and social media campaign will be deployed to encourage even more members of the public and key stakeholders to utilize the Online Budgeting Tool. Figure 5 and Figure 6 are the initial screen shots upon entering the Online Budgeting Tool page.
Figure 5:
The new survey for FY19 starts by asking the public to rank their transportation priorities by mode, and the remaining questions solicit input on a wide variety of Metro projects, such as transit service, Active Transportation, First/Last Mile, streets & highways, and the parking program. Based on feedback from last year’s respondents, the tool this year will provide additional background information on the types of programs in the budget, Metro’s role within LA County, and the budgetary restrictions Metro faces on an annual basis.
Figure 6:
Telephone Town Hall
Last year, Metro hosted one Telephone Town Hall meeting to discuss the budget and answer other questions the community had about the agency. There were 3,000 participants in that session, who asked very thoughtful questions about the budget as well as service planning and future plans. This year, two Telephone Town Halls are scheduled next month on Wednesday, April 4 and Thursday, April 5. The additional Town Hall Meeting will allow even more people to participate and provide their feedback on the budget and Metro’s NextGen bus restructuring study. Using innovative telephone technology, Metro staff will speak directly with members of the community, providing information and answering questions related to Transit and Transportation programs in the budget. Each evening, thirty thousand registered voters will be called through an automated system and invited to participate in the telephone forum. The meetings will be simulcast in English and Spanish. Interested residents can dial in directly to participate in English or Spanish or can participate through a specially designated website.
Financial_Impact
FINANCIAL IMPACT
This report is part of an overall agency wide budget which will be presented to the Board for action in May 2018. There is no direct financial impact by this Receive and File report.
Alternatives_Considered
ALTERNATIVES CONSIDERED
The annual budget serves as the legal authority to obligate and spend funds. Failure to adopt the budget would severely impact Metro’s stated goal of improving transportation in Los Angeles County.
Next_Steps
NEXT STEPS
Metro staff will continue to finalize the FY19 Budget Proposal. As more budget details become available, staff will conduct outreach to the stakeholder groups for in-depth and technical discussions of Transit Services and Transportation Programs included in FY19 Proposed Budget. The programs funded in FY19 Proposed Budget, including any updates since the first review with the Board in February, will be consolidated and exhibited in the FY19 Proposed Budget Book 14 days before Budget Public Hearing on May 16, 2018.
Attachments
ATTACHMENTS
Attachment A: Measure M Projects with First Decade Groundbreaking Dates
Prepared_by
Prepared by: Quintin Sumabat, Deputy Executive Officer, Finance, (213) 922-2277
Office of Management and Budget (OMB) Team
Reviewed_By
Reviewed by: Nalini Ahuja, Chief Financial Officer, (213) 922-3088
