Staff Report with AttachmentsReviewed by: Assistant Town Manager, Town Attorney, and Parks and Public Works Director
110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 09/03/2019
ITEM NO: 3
DATE: August 20, 2019
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Approve the Town’s Response to the Santa Clara County Civil Grand Jury
Report on “Inquiry into the Governance of the Valley Transportation
Authority” Dated June 18, 2019.
RECOMMENDATION:
Approve the Town’s response to the Santa Clara County Civil Grand Jury Report on “Inqu iry into
the Governance of the Valley Transportation Authority” dated June 18, 2019.
BACKGROUND:
On June 18, 2019, the Santa Clara County Civil Grand Jury issued a report pursuant to its
investigation into the governance structure of the Valley Transportation Authority (VTA). This is
the third Grand Jury investigation in the last twenty years on this topic. In summary, the Grand
Jury found that the VTA Board is “in need of structural change to enable it to better protect the
interests of the County’s taxpayers and address the many complex challenges presented by
emerging trends in transportation, rapidly evolving technology and the changing needs of
Silicon Valley residents” (see Attachment 1).
The Civil Grand Jury Report directed jurisdictions in Santa Clara County to respond to specific
findings and recommendations. Attachment 2 contains the draft Town responses to the Civil
Grand Jury Report.
DISCUSSION:
The Town of Los Gatos is included in the Santa Clara County Civil Grand Jury Report on VTA
governance because it is a jurisdiction within the County of Santa Clara that has representation
on the VTA Board. The West Valley cities of Campbell, Cupertino, Los Gatos, Monte Sereno,
and Saratoga have a single representative, appointed by the Mayors of these cities every two
years. Currently, Los Gatos Council Member Rob Rennie represents the five West Valley cities.
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SUBJECT: Santa Clara County Civil Grand Jury Report on “VTA Governance”
DATE: August 20, 2019
DISCUSSION (Continued):
As a result of its inclusion in the report, the Town is required to respond by letter or electronic
transmission to the Civil Grand Jury’s Findings and Recommendations within 90 days, pursuant
to California Penal Code. The Town may respond to the Report’s Findings in one of the
following ways:
•Agree
•Partially Agree
•Partially Disagree
•Disagree
The Town may respond to the Report’s Recommendations in one of the following ways:
•Has been implemented
•Has not been implemented, but will be implemented in the future
•Requires further analysis
•Will not be implemented
The Civil Grand Jury Report included one Finding and three Recommendations that require a
response from the Town (see Attachment 2). In summary, the response states that the Town
partially agrees with Finding 1 and that the Recommendations require further analysis.
CONCLUSION:
Staff recommends approval of the letter with the detailed response as contained in Attachment
2. Once approved by the Town Council, the letter will be transmitted to the Santa Clara County
Civil Grand Jury, the Presiding Judge, and to the Clerk of the VTA Board pursuant to its request.
COORDINATION:
The City Managers of the West Valley cities of Campbell, Cupertino, Los Gatos, Monte Sereno,
and Saratoga coordinated on the draft response. Internal coordination included the Town
Manager’s Office, Parks and Public Works Department, and Town Attorney’s Office.
FISCAL IMPACT:
There is no fiscal impact for approving the response to the Civil Grand Jury on the matter of VTA
governance.
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SUBJECT: Santa Clara County Civil Grand Jury Report on “VTA Governance”
DATE: August 20, 2019
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachments:
1.Santa Clara County Civil Grand Jury Report dated June 18, 2019
2.Proposed response to the Santa Clara County Civil Grand Jury
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2018-2019 Civil Grand Jury
of Santa Clara County
June 18, 2019
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ATTACHMENT 1
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Table of Contents
GLOSSARY AND ABBREVIATIONS......................................................................................... 2
SUMMARY .................................................................................................................................... 4
METHODOLOGY ......................................................................................................................... 6
DISCUSSION ................................................................................................................................. 8
A Brief History of the VTA ...................................................................................................... 8
Structure of the VTA Board .................................................................................................... 9
The VTA Board in Action ...................................................................................................... 11
VTA’s Operating Performance ............................................................................................. 18
VTA’s Financial Management ............................................................................................... 22
The Extension of Light Rail Service to Eastridge ................................................................ 26
Designing a More Effective Structure for the VTA ............................................................. 35
CONCLUSIONS........................................................................................................................... 40
FINDINGS AND RECOMMENDATIONS................................................................................. 43
Finding 1 .................................................................................................................................. 43
Finding 2 .................................................................................................................................. 44
Finding 3 .................................................................................................................................. 45
Finding 4 .................................................................................................................................. 46
Finding 5 .................................................................................................................................. 46
REQUIRED RESPONSES ........................................................................................................... 47
APPENDIX A – The Guidelines for Member Agency Appointments to the VTA Board of
Directors ........................................................................................................................................ 48
APPENDIX B – VTA Operating Statistics and 2017 National Trends ........................................ 50
APPENDIX C – Peer Agency Comparisons ................................................................................ 53
REFERENCES ............................................................................................................................. 58
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GLOSSARY AND ABBREVIATIONS
AC Transit Alameda County Transit. A peer transit agency to VTA.
APTA American Public Transit Association. A national association of which VTA is
a member.
BART Bay Area Rapid Transit. A peer transit agency.
County County of Santa Clara
CPC Capital Program Committee. A standing committee of the VTA Board of
Directors.
DOT US Department of Transportation. A national transportation agency.
EBRC Eastridge-BART Regional Connector. Current nomenclature for the Eastridge
light rail extension (Phase 2).
Farebox
recovery ratio
Fares collected from passengers divided by operating expenses.
FTA Federal Transit Administration. A federal agency providing transit data (see
NTD) and services.
HMTA Houston Metro Transit Agency
HOV High Occupancy Vehicle
LRT Light rail transit [system]
MTC Metropolitan Transportation Commission. A Bay Area regional transportation
coordination and planning agency.
Next Network VTA's Next Network is a redesign of the transit network and is one
component of an agency-wide effort to make public transit faster, more
frequent and more useful for Santa Clara County travelers.
NTD National Transportation Database. Database of statistics and metrics
maintained by FTA.
PUC California Public Utilities Code
SCCTD Santa Clara County Transit District
SCVWD Santa Clara Valley Water District
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VTA Santa Clara Valley Transportation Authority
VRH Vehicle Revenue Hours
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SUMMARY
The Santa Clara Valley Transportation Authority (VTA) is an independent special district created
by the California legislature in 1972. Initially, the Santa Clara County (County) Board of
Supervisors provided direct oversight of VTA and acted as its Board of Directors. Effective
January 1, 1995, pursuant to further legislation, VTA began operating under a separate Board of
Directors (VTA Board) composed of elected officials from throughout the County appointed to
serve by the County Board of Supervisors and the governing authorities of VTA’s constituent
municipalities, with the allocation of VTA Board representation generally based on population.
For many years, VTA has been plagued by declining operating performance and recurring budget
gaps between projected revenues and expenses (referred to as structural financial deficits) –
notwithstanding significant population growth and, in recent years, increased employment levels
throughout much of Silicon Valley.
The 2003-2004 Santa Clara County Civil Grand Jury conducted an “Inquiry into the Board
Structure and Financial Management of the Valley Transportation Authority”1 which found,
among other things, that:
The operating performance of VTA compared unfavorably to its peer organizations;
The VTA Board had not effectively managed the finances of VTA, resulting in a substantial
structural financial deficit that was projected to increase in the following year; and
A root cause of VTA’s poor performance was the governance structure of the VTA Board,
which was “too large, too political, too dependent on staff, too inexperienced in some cases,
and too removed from the financial and operational performance of VTA.”
To address these issues and attempt to make the VTA Board more responsive, the 2003-2004
Grand Jury proposed various changes to the Board’s structure. Although responses filed by seven
of VTA’s constituent municipalities were supportive of some or all the recommended changes,
VTA’s response defended the status quo, and most of the other municipalities adopted VTA’s
position. Accordingly, the recommended changes were not made.
The 2008-2009 Grand Jury again examined the governance of VTA and reiterated some of the
same concerns noted in the earlier report, although the focus of the 2008-2009 report was primarily
on the role and functioning of the VTA Board’s appointed advisory committees.
1 http://www.scscourt.org/court_divisions/civil/cgj/2004/BoardStructureFinancialMgmtVTA.pdf
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The 2018-2019 Civil Grand Jury (Grand Jury) revisited the subject of VTA’s governance and the
work of the earlier grand juries and found that:
VTA’s operating performance has continued to deteriorate over the last 10 years, relative
to both its own historical performance and the performance of its peers, across a wide
variety of metrics;
The VTA Board has consistently failed to adequately monitor VTA’s financial
performance and has taken action, albeit less than fully effective action, only in the face of
imminent financial crises; and
Despite the serious ongoing structural financial deficit, the VTA Board has been unwilling
to review and reconsider decisions made years or even decades ago regarding large capital
projects (and their attendant operating costs) that are no longer technologically sound or
financially viable, based on their costs and projected ridership.
The Grand Jury concluded that today, more so than in 2004 or 2009, the VTA Board is in need of
structural change to enable it to better protect the interests of the County’s taxpayers and address
the many complex challenges presented by emerging trends in transportation, rapidly evolving
technology and the changing needs of Silicon Valley residents. The Grand Jury recommends
several changes to the governance structure and operations of the VTA Board which will improve
the Board’s ability to effectively perform its important oversight and strategic decision-making
functions. The Grand Jury further recommends that the VTA Board consider deferral of Phase 2
of the Eastridge light rail extension project pending a full review of the future role of light rail in
VTA’s transit system. Such a review should study alternative ways to meet the needs of the
residents of East San Jose for modern, efficient public transportation without extending a costly
and outdated light rail system and worsening VTA’s already precarious financial condition.
In January 2019, the incoming Chairperson of the VTA Board issued a summary of her “2019
Perspectives and Priorities”2 for VTA (see Board of Director’s Meeting, January 7, 2019, section
8.2). Among the goals articulated by the Chairperson was improved board governance. The
Chairperson announced that she would “convene a board working group to look at a range of board
governance practices,” with a view to improving “board engagement and effectiveness.” The
Grand Jury commends the Chairperson for focusing on the important subject of governance. This
report may aid the Chairperson and the rest of the Board in that endeavor.
2 http://santaclaravta.iqm2.com/Citizens/FileOpen.aspx?Type=12&ID=2133&Inline=True
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METHODOLOGY
The 2018-2019 Civil Grand Jury began this investigation of VTA on August 15, 2018 and
concluded its work on May 29, 2019. The investigation primarily followed from issues highlighted
in the report of the 2003-2004 Grand Jury and focused on the structure of the VTA Board of
Directors, the effectiveness of its oversight of VTA’s operating and financial performance, its
handling of the agency’s persistent structural financial deficit and its ability to address the many
complex challenges facing VTA as it confronts the future of transportation in Silicon Valley. The
Grand Jury employed a broad range of data gathering and investigative methods, including:
Site visits were made to VTA headquarters, one of the VTA bus yards, VTA’s downtown
customer service center, and bus and light rail stops and stations.
The transit system was used, including the purchase of Clipper Cards, riding buses and
light rail trains during peak and off-peak hours, stops at and transit through Diridon Station,
Eastridge, downtown and North County rail and bus facilities, and assessing access to
transit stops by walking to stations and stops and using VTA parking sites.
Interviews were conducted with 37 individuals (some more than once) over more than 50
hours. Interviewees included a substantial number of individuals who served as members
of the VTA Board and its committees during 2018 and 2019, senior and mid-level VTA
staff personnel, city and county government officials, and representatives of various
community stakeholder groups.
Governing documents were reviewed, including: (i) provisions of the California Public
Utilities Code (PUC), which established VTA, particularly PUC Sections 100060 through
100063, which set forth the governance structure of the VTA Board; (ii) provisions of the
VTA Administrative Code, adopted by the VTA Board to supplement the provisions of the
PUC; and (iii) agreements among members of city groups who share representation on the
VTA Board regarding the process for rotating their representation on the Board and
collectively choosing their appointees. In addition, data regarding attendance records for
VTA Board and committee meetings, directors’ terms in office and voting records were
examined.
Reports specific to VTA were reviewed, including: (i) the 2003-2004 and 2008-2009 Civil
Grand Jury reports and the responses thereto; (ii) a 2007 report entitled “Santa Clara Valley
Transportation Authority Organizational and Financial Assessment,” by the Hay Group
(Hay Report); (iii) a 2008 report on VTA by the California State Auditor; (iv) a 2010 thesis
entitled “Assessing Transit Performance: Recommended Performance Standards for the
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Santa Clara Valley Transit Authority,” authored by a San Jose State University master
degree candidate; (v) a 2016 report entitled “Transit Choices Report,” prepared for VTA
by the consulting firm Jarrett Walker +Associates; and (vi) numerous public documents
published by VTA and/or available on its website. These and other documents referred to
in this report are listed in the Reference Section.
Comparisons were made of VTA’s performance in various operating and financial
categories to the performance of other transit organizations utilizing data compiled by the
American Public Transportation Association (APTA), the United States Department of
Transportation (DOT), The Business Insider, the Federal Transit Administration (FTA)
published in the National Transit Database (NTD), the Public Transit Factbook and other
federal and industry indices and metrics. Industry and “think tank” reports and articles
discussing and comparing transit agency performance, including, among others, the Cato
Institute, the Heritage Foundation and the Hudson Institute, were also reviewed. For
purposes of comparison, operating data from peer agencies serving the metropolitan areas
of Portland, Minneapolis, Houston, Dallas, Salt Lake City, Denver, San Francisco,
Sacramento and San Diego were reviewed. In connection with a comparison of governance
structures, other agencies, including those serving Los Angeles, Seattle, Vancouver B.C.,
Austin, Chicago, New York, the District of Columbia and Phoenix, were considered.
Attendance at regularly scheduled meetings of the VTA Board and its committees,
including the Administration and Finance Committee, Capital Program Committee (CPC),
Governance and Audit Committee, and Ad Hoc Financial Stability Committee between
October 2018 and May 2019, as well as Board workshops on the Future of Transportation
in Silicon Valley and the proposed biennial budget for fiscal years 2020 and 2021. Audio
and video recordings of some of the meetings noted above, as well as other meetings of the
VTA Board and certain committees conducted from January 2018 forward were reviewed.
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DISCUSSION
A Brief History of the VTA
Santa Clara County Transit District (SCCTD) was created by the County’s voters in June 1972
and took over operations of three financially strapped private bus companies. SCCTD was initially
managed by the County’s Department of Public Works, but in 1974 became a separate agency
governed directly by the County Board of Supervisors.
SCCTD initially focused on upgrading and replacing its inherited fleet of buses. Assisted by
federal funding and a voter approved half-cent sales tax in 1976, SCCTD began to acquire diesel
buses and build repair facilities.
In the 1980s, SCCTD embarked upon the construction of its light rail transit system, utilizing
funding received from the federal government and the proceeds of additional voter-approved sales
taxes. The first segment of the light rail system opened for service in late 1987, and the entire
initial 21-mile system was completed in 1991. Four extensions of the system were completed by
2005, and additional extensions are currently in the planning stages.
SCCTD completed a two-part reorganization, in early 1995. SCCTD was designated the
Congestion Management Agency for the County under a joint powers agreement among the
County and its 15 cities. At the same time, legislation reconstituting the Board of Directors from
five directors, all of whom were County Supervisors, to 12 consisting of two County Supervisors,
five San José City Council members and five city council members representing the remaining 14
cities, selected on a rotating basis by the governing authorities of those cities. The name of the
agency was changed to the Santa Clara Valley Transportation Authority in 1996, from which the
acronym VTA was adopted.
Today, VTA is a complex, multi-billion-dollar enterprise that provides bus, light rail and
paratransit services within Santa Clara County. In addition, VTA participates in funding other
agencies that provide regional rail service, including Caltrain, the commuter rail line serving the
San Francisco Peninsula, the Capitol Corridor operating between Silicon Valley and the
Sacramento area, and the Altamont Corridor Express, connecting Stockton and San José. VTA
also is responsible for county-wide transportation planning, including congestion management, the
design and construction of highway, pedestrian and bicycle improvement projects, and the
promotion of transit-oriented development.
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Structure of the VTA Board
The present structure of the VTA Board was authorized by legislation effective January 1, 1995.
In the legislation proposed by the County Board of Supervisors, the VTA Board was to have been
composed of five directly elected members (corresponding to the five county supervisorial
districts) and 11 appointed members of various elected bodies in the county. As ultimately
adopted, the enabling legislation eliminated the directly elected directors. Instead, PUC Section
100060 provided for a Board consisting of 12 voting members and alternates, all of whom are
elected public officials, with the allocation of Board representation generally based on population.
Under the formula outlined in PUC Section 100060, and further spelled out in Section 2-13 of the
VTA Administrative Code, the VTA Board is composed of:
Two voting members and one alternate who are members of the Santa Clara County Board
of Supervisors;
Five voting members and one alternate representing the City of San José;
One voting member and one alternate representing the cities of Los Altos, Los Altos Hills,
Mountain View and Palo Alto;
One voting member and one alternate representing the cities of Campbell, Cupertino, Los
Gatos, Monte Sereno and Saratoga;
One voting member and one alternate representing the cities of Gilroy and Morgan Hill;
and
Two voting members and one alternate representing the cities of Milpitas, Santa Clara and
Sunnyvale.
All the voting members and alternates, other than the County supervisors, must be currently
serving as mayors or city council members of the city they represent. Each of the four groups of
smaller cities may collectively determine their representative, and each group has adopted an
agreement specifying, in varying degrees of detail, the manner in which the group’s appointed
representatives will rotate among the member cities and how individual representatives are to be
selected.
PUC Section 100060(c) provides, importantly, that “[t]o the extent possible, the appointing powers
shall appoint individuals to the VTA Board who have expertise, experience, or knowledge relative
to transportation issues.” The VTA Administrative Code and the inter-city agreements contain
similar directives.
In 2015, the Governance and Audit Committee of the VTA Board adopted a set of Guidelines for
Member Agency Appointments to the VTA Board of Directors (Guidelines). The Guidelines
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contain several recommendations emphasizing, among other things, the value of a candidate’s
expertise and prior experience on the VTA Board or its Policy Advisory Committee. The
Guidelines also express the expectation that VTA Board members “[h]ave a fiduciary
responsibility to vote for the best interests of the region, not those of their city/county group or
appointing jurisdiction,” and “should be able to attend Board and standing committee meetings
regularly.” A full copy of the Guidelines is attached as Appendix A.
In addition to the voting members and alternates, the VTA Administrative Code provides that
members of the Metropolitan Transportation Commission (MTC) who reside in Santa Clara
County, and who are not voting members or alternates, shall be invited to serve as ex-officio, non-
voting members of the Board3. The VTA Board currently has one such ex-officio member.
VTA Board members serve for a term of two years 4. The VTA Administrative Code “strongly
encourages” appointing authorities to reappoint representatives to successive terms, and some
members do serve multiple terms5. One director who recently left the VTA Board had served as
a director or alternate representing San José and the County for a total of 13 years, but missed eight
Board meetings in his last two years of service. The two voting directors currently representing
the County have served as directors or alternates for a total of 14.5 and 12.5 years. The current
Mayor of San José has served as a director for 11.5 years. However, many directors who serve on
a rotating basis as representatives of the smaller city groups do not serve successive terms, and
directors’ two-year terms are frequently cut short when they are not re-elected, term out or
otherwise cease to serve in their elected position.
PUC Section 100061 requires the VTA Board to elect its Chairperson and Vice Chairperson
annually. Both officers serve for terms of one calendar year, straddling two fiscal years of the
VTA (July 1 to June 30). By informal convention, the Vice Chairperson one year becomes
Chairperson the following year.
3 VTA Administrative Code Section 2-15
4 PUC Section 100060.2
5 VTA Administrative Code Section 2-14
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The VTA Board in Action
As noted above, the VTA Board consists of a rotating group of elected public officials appointed
by the County Board of Supervisors, the City of San José and the four groups of smaller cities.
Although the PUC, the VTA Administrative Code and the Guidelines all admonish the appointing
authorities to appoint VTA Board members who have appropriate expertise, experience and
knowledge, as a practical matter, appointments are often made based more on political
considerations than on the candidate’s qualifications. From the candidate’s point of view,
appointment to the VTA Board, one of the largest agencies in the County, is generally considered
a plus for his or her political advancement. Candidates often express an interest in serving on the
VTA Board largely because they see service on the Board as a “resume builder.” As a result,
appointees to the VTA Board often have no previous experience with transportation, finance or
leadership of a commercial enterprise, let alone one with annual revenues of over a half billion
dollars and assets of $5 billion. New directors often know little about VTA’s operations or
finances, or the organization and functioning of the Board. In our interviews, the Grand Jury
learned that one director was unclear about how directors were chosen or even how many directors
there are. Another, representing one of the smaller city groups, was unfamiliar with the provisions
of the inter-city agreement governing appointments to the Board and considers appointments as
simply the political prerogative of the mayor of the city whose turn it is to make the appointment.
Because new directors often have little or no experience with transportation agency operations or
transit policy, they face a steep learning curve to even begin to become effective Board members.
There is no “boot camp” for new directors. The orientation program provided by the VTA staff is
brief and presents only a high-level overview of VTA and basic information regarding Board
procedures. When speaking with the Grand Jury, some directors couldn’t recall going through any
orientation at all.
Workshops are conducted by the VTA staff, generally about twice a year, to provide background
information to the directors, often focusing on a specific issue. These workshops are relatively
short, sometimes poorly attended and often cancelled. For example, both director workshops
scheduled to be held in 2018 were cancelled. A workshop held on February 22, 2019, ambitiously
addressed the important and complex topic of “The Future of Transportation in Silicon Valley.”
The workshop was attended by eight of the 12 voting members of the VTA Board, three of the six
alternates and the ex officio member and lasted a little over three hours. Needless to say, the
workshop merely scratched the surface of the topic. A few Board members have attended
transportation-related, third party-sponsored programs and seminars on their own initiative to
enhance their knowledge on issues of transportation management and policy. There is no formal
policy requiring or encouraging attendance at external training programs or conferences or other
forms of continuing education.
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Influence on the VTA Board
The City of San José dominates the VTA Board with the ability to appoint five of the 12 directors,
which should not be unexpected given San José’s share of the County’s population. Although the
San José directors technically are appointed by the San José City Council, the Mayor recommends
those appointments. Thus, the Mayor effectively controls the initial selection of the San José
directors as well as their tenure on the Board and, therefore, has the ability to exercise considerable
influence over a substantial portion of the VTA Board. Since some members of the County Board
of Supervisors who have served on the VTA Board previously served on the San José City Council
or represented supervisorial districts within San José, these relationships may further enhance San
José’s dominance on the VTA Board.
Given that representatives of the City of San José and the County Board of Supervisors are often
able to serve multiple terms on the VTA Board, they gain experience and the ability to add value.
However, representatives of the smaller city groups are subject to the rotational provisions of their
inter-city agreements, limiting their ability to serve consecutive terms. Accordingly, the San José
and County representatives often dominate the Board in terms of experience and influence as well
as numbers. Current voting members of the VTA Board representing San José and the County
have served an average of 4.3 years and 10.5 years, respectively, including non-concurrent terms
but excluding service by some of them as alternates. However, the current voting members
representing the smaller cities have served an average of only 1.9 years.
Board Member Preparation
All of the members of the VTA Board are primarily focused on their other duties as local elected
officials; their position on the VTA Board is clearly of secondary importance to most, if not all,
directors and, as noted above, viewed by some principally as a “resume builder” and a one day a
month job. Directors confront their other duties as elected officials and, in the case of smaller city
directors, private employment or business interests, which themselves may be demanding and
time-consuming.
Directors often find it difficult to digest the massive amounts of information provided to them by
the VTA staff to help them fulfill their responsibilities and prepare for meaningful participation in
Board meetings. For example, meeting materials for VTA Board meetings typically run more than
300 pages, and committee meeting packages can be as voluminous. Here too the representatives
of the smaller city groups are at a disadvantage. While members of the County Board of
Supervisors and the San José City Council have dedicated staffs that can help them review and
distill VTA-supplied materials and analyze issues, the representatives of the smaller city groups
have little or no staff support. Although members of the VTA staff make themselves available to
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meet with directors to discuss VTA business, particularly in advance of monthly meetings, the
Grand Jury learned that some directors take little or no advantage of these opportunities.
VTA Committees
Like many complex organizations — both governmental and private — the VTA Board maintains
a system of standing committees. These include the Administration and Finance Committee, the
CPC, and the Governance and Audit Committee, among others. The Board also has a number of
advisory committees and occasionally appoints ad hoc committees to deal with specific matters.
For example, the Ad Hoc Financial Stability Committee (which will be discussed further in this
report) was formed in January 2018 and was active throughout 2018.
The Board’s committee structure is both a benefit and a detriment. Because Board members have
other public and private commitments, it is challenging to deal with all the complex issues affecting
VTA; thus, delegation of certain responsibilities is necessary.
On the other hand, the committee structure tends to create a certain level of disengagement. Board
members are assigned by the Chairperson to serve on standing committees. Several interviewees
expressed the opinion that committee assignments are often made with little or no input from the
affected Board members, and some committee members only learn of their appointment when they
see their name on a list. Because of their various time commitments, Board members often are
unfamiliar with or just defer to and trust the staff and their fellow directors regarding issues passed
upon initially by committees of which they are not members. When those issues come before the
full Board, often by way of its consent calendar, there is little or no discussion or debate. In some
cases, matters of some significance are also placed on the consent calendar at the committee level,
with the result that only the staff conducts any significant review of the matter. This system works
well for some topics, like the approval of construction contracts, but can leave many directors
uninformed about important topics to which the full Board should be attentive. Topics like
monitoring VTA’s financial affairs and structural financial deficit (which is principally left to the
Administration and Finance Committee) and major ongoing capital programs, which are
monitored by the CPC demand full engagement by all directors. At the October 2018 Board
meeting, in reference to a report on the consent calendar, one of the directors stated, “Instead of
going to committee, this type of report should go to the full Board…We should have [Board]
workshops on several of these reports.”
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Alternate VTA Board Members
Like the use of committees, the system of alternate Board members has both advantages and
disadvantages. Alternate members cannot vote at meetings except when they are attending in place
of a voting member. Accordingly, alternate members often do not attend Board or committee
meetings. If they attend meetings at all, they typically sit in the audience and do not participate.
The existence of alternate Board members is useful in securing a quorum at Board and committee
meetings when a voting member is absent. However, the availability of an alternate can serve as
justification for voting members to make meetings a lower priority. Additionally, because
alternate members frequently are called upon at the last minute, they may be even less prepared
than voting members with the agenda and meeting materials. The alternate faces the decision to
vote on matters in accordance with his or her own beliefs and opinions, or to vote the way he or
she believes the voting member being replaced would have voted. This type of voting “by proxy”
is inconsistent with good governance practices and would not be permitted by members of a
corporate board of directors.
VTA Board Meetings
The VTA Board meets once a month in the evening. Board committees meet between three and
11 times a year. Attendance at Board and committee meetings varies greatly. Data compiled by
the Grand Jury show that during 2017, 2018 and the first four months of 2019, attendance by voting
members at Board meetings and workshops averaged approximately 87%. Individual attendance
ranged from 61 to 92%. During the same period, attendance by voting members at committee
meetings averaged approximately 86%. Often, directors arrive at meetings late, step away from
the meeting, or leave early, but their partial participation is not always reflected in the attendance
records. The conduct of Board meetings observed by the Grand Jury is characterized by limited
debate and discussion, typically with active participation by only a few directors and some
directors not participating at all.
The Board does very little on an ongoing basis to monitor and assess directors’ performance. The
Grand Jury learned from our interviews that guidelines were developed to aid the Board in
measuring its effectiveness, but no action has been taken to implement these guidelines. Board
members receive a self-assessment questionnaire at the end of the year, but, according to several
interviewees, many are not completed or returned, and no action is taken to follow up or seek
feedback.
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VTA Board Effectiveness
In short, the VTA Board suffers from:
a lack of experience and continuity by many directors;
dominance, in terms of numbers, seniority and influence, by representatives of San José
and the County;
inadequate time for the directors to devote to the Board’s oversight and policy-making
functions;
a lack of engagement by some of the directors, fostered in part by the committee system,
resulting in VTA functioning largely as a staff-driven organization; and
conflicts of interest, which are often irresolvable, between the directors’ fiduciary duty to
VTA and its regional role, on the one hand, and the political demands of their local elected
positions, on the other.
In assessing the effectiveness of VTA, several preliminary observations are in order.
First, nothing in this report is meant to suggest that the members of the VTA Board are not
honorable and hard-working public servants who are doing their best to perform the duties of a
very difficult position under extremely difficult circumstances.
Similarly, the Grand Jury has found that the VTA senior management staff is a competent team of
professionals doing their best to run a very complex organization within the policy guidance
provided by the VTA Board. As one member of the Board stated at the February directors’
workshop, “the staff is like a racehorse that we are keeping in the starting gate.” For their part,
members of the senior staff are sometimes reluctant to draw the Board’s attention to matters of
concern where they realize there is political resistance on the part of some directors and feel that
raising an issue would be a waste of time. Some senior staff members are frustrated by what they
perceive as an unwillingness of the Board to support needed action or make important changes at
the policy level. Several staff members pointed to other transit districts, such as those in Portland,
Austin and San Diego, as agencies whose policymakers are prepared to make tough decisions and
take risks to improve public transit. According to some staff members and directors, this
frustration, in part, has resulted in a general decline in morale at the senior staff level. The process
used in the recent reorganization of senior staff responsibilities has contributed to additional
morale problems. Some key members of senior management have recently announced that they
will be leaving VTA.
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The Grand Jury also recognizes that many of the problems facing VTA are not unique to it as a
transit organization or to the specific geographic or demographic characteristics of the Silicon
Valley. Like many other transit organizations, VTA must deal with nationwide transportation
trends, including increasing congestion and competition from ride-hailing companies and
corporate-run employee bus services, as well as looming challenges posed by autonomous,
driverless vehicles. Moreover, operating a transit system in a largely suburban region presents
greater challenges than are typically faced in more densely populated urban areas, having
concentrated downtown business centers. It is because of the complex and evolving nature of the
problems facing VTA that active and enlightened Board oversight and strategic vision are more
essential than ever to the organization’s future success.
Having those observations in mind, the Grand Jury has noted that VTA and the VTA Board have
been subject to criticism over the years from various quarters. As described above, the 2003-2004
and 2008-2009 Grand Juries were critical of the Board and its governance structure. However,
criticism of the management and Board of VTA has not been limited to the Civil Grand Jury. A
number of investigations, studies and articles, including the Hay Report which was commissioned
by VTA itself, have criticized VTA’s operational and financial performance and the effectiveness
of VTA governance. In 2007, one writer referred to VTA as possibly “the nation’s worst managed
transit agency, at least among those serving big cities.”6 Even members of the VTA Board have
questioned the Board’s effectiveness. For example, at a meeting of the VTA Board in October
2018, one director made the comment, “we have to break the mold of ‘same ole, same ole’…Board,
we have to step up and change things.” Upon assuming her position in January 2019, the current
Chairperson of the VTA Board announced that she would “convene a board working group [later
designated the Ad Hoc Board Enhancement Committee] to look at a range of board governance
practices” with a view to improving “board engagement and effectiveness.”7 At the Board
workshop in February 2019, the participating directors, by a unanimous show of hands, agreed
that VTA needs to make “radical changes” to address its many challenges. As one director put it,
“We just had a workshop where we had a long conversation and we pretty much had a consensus
where we have to do things differently and think outside the box.” The Ad Hoc Board
Enhancement Committee held its first meeting on May 29, 2019.
A complete review and assessment of the operations and management of VTA is far beyond the
means of the Grand Jury or the scope of this report. Accordingly, the Grand Jury has chosen to
focus its attention on the consideration of the effectiveness of the VTA Board’s oversight and
policymaking, as exemplified by three areas of concern:
VTA’s poor and continually deteriorating operating performance;
6 “The Nation's Worst Transit Agency", The Antiplanner, March 26, 2007
7 http://santaclaravta.iqm2.com/Citizens/FileOpen.aspx?Type=12&ID=2133&Inline=True . See section 8.2 of
Minutes for the January 9, 2019 Board of Directors meeting.
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the VTA Board’s inadequate oversight of the agency’s financial performance and its
structural financial deficit; and
the VTA Board’s unwillingness, to date, to reconsider the merits of significant pending
capital projects that may be indicative of its general ability to guide the organization
strategically.
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VTA’s Operating Performance
VTA Operating Trends
The 2003-2004 Grand Jury reviewed VTA’s operations and found that its operating performance
compared unfavorably to its own benchmarks as well as the performance of peer agencies. Among
other things, its report noted that:
VTA’s operating costs had risen substantially faster than the rate of inflation; and
Fares collected from VTA’s passengers divided by VTA’s operating expenses (referred to
as the farebox recovery ratio) for the previous two years had been 11.6% and 12%,
compared to the national average of more than 20%, meaning that the taxpayers of Santa
Clara County were providing a much greater than average subsidy of transit operations.
The 2018-2019 Grand Jury again examined VTA’s operating statistics and found that VTA’s
performance has continued to deteriorate over the past 10 years, relative to both its historical
performance and the performance of its peers, across a wide variety of metrics, including
continuing increases in operating costs and further reductions in farebox recovery.
Since the 2008-2009 recession, the population of Santa Clara County has increased by
approximately 10.6%. During that 10-year period, bus and light rail vehicle revenue hours (VRH)
,which measures the amount of service VTA offers, increased by 6.4% while operations employee
headcount (i.e., operators and maintenance personnel) grew by 8.9%. Total operations expense
rose by 63.2% between 2009 and 2018, including a one-year increase of 17.1% between 2017 and
2018 alone. As operations expense increased, overall farebox recovery declined from 13.5% in
2009 to 9.3% in 2017 – substantially worse than the ratios that the 2003-2004 Grand Jury cited as
unacceptably low back in 2004.
Meanwhile, despite increases in employment and income levels in Silicon Valley, the public’s
actual use of VTA’s services (as measured by passenger trips on buses and light rail) dropped by
19.2% between 2009 and 2018 and by 14.8% in the last two years alone. According to U.S. Census
Bureau data, in 2017 (the last year for which such data is available), public transit was used as a
means of transportation to work by only 4.8% of Santa Clara County’s commuters, little more than
the combined percentage of those who walked or biked to work and fewer than the 5.3% who
worked at home. Despite the declining use of transit during the last ten years, VTA continued to
increase its employee headcount (both operations employees and administrative staff) and add to
its fleet of buses and train cars, further increasing operating expense.
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As a result of the dramatic increases in operations expense and the concurrent decline in ridership,
VTA’s cost per passenger trip for buses and light rail combined increased from $5.61 in 2009 to
$9.30 in 2017, 90.5% of which was covered by taxpayer subsidies.
Detailed data regarding VTA’s operations are shown in Appendix B, and the trends discussed
above are depicted in Figure 1 below.
Figure 1 - VTA Operations Trends since 2009
Peer Agency Comparison
The FTA issues an annual NTD report summarizing nationwide data and trends for transit agencies
throughout the United States. In its most recent survey, for 2017, the FTA reported that for transit
agencies serving populations of more than one million people:
Operating cost per passenger trip for buses and light rail ranged from a low of $3.27 to a
high of $9.31 with VTA’s cost per trip of $9.28 nearly the highest in the nation;
Operating expense per revenue hour ranged from a low of $84.82 to a median of $123.20
and a high of $249.83 with VTA’s operating expense per revenue hour of $199.79 at about
the top 10th percentile in the nation; and
-25
0
25
50
75
1 2 3 4 5 6 7 8 9 10
Ch
a
n
g
e
s
i
n
c
e
2
0
0
9
(
%
)
Year
Chart Title
County Population Full-time Ops Employees Vehicle Revenue Hours (VRH)
Passenger (Bus+LR) Trips Ops Expense
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
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Farebox recovery for light rail systems (combined bus and light rail data was not available)
ranged from 7.6% to 47.2% with VTA’s light rail system farebox recovery of 7.6%, the
lowest in the nation, requiring taxpayers to subsidize 92.4% of the cost of light rail service.
Since the FTA surveys contain data for more than 800 transit agencies, including many with
operating environments that differ significantly from VTA’s, the Grand Jury selected a cohort of
ten peer agencies for further review using the following guidelines:
Only agencies operating both buses and light rail systems were included;
Only agencies serving urbanized communities with population and service areas generally
comparable to VTA’s were included; and
Agencies identified as VTA’s peers by interviewees or transit experts were also considered
for inclusion.
Based on these guidelines, public transit agencies serving the metropolitan areas of Portland,
Minneapolis, Houston, Dallas, Salt Lake City, Denver, San Francisco (SF), Sacramento and San
Diego were chosen for comparison.
Comparisons of FTA operating data for the 10 peer agencies from 2009 through 2017 are shown
in Appendix C. In summary, comparative data for three key metrics show the following:
Operating Cost per Trip: VTA’s operating cost per trip was the highest of all 10 peer
agencies in each of the nine years. In addition, VTA’s cost per trip increased by 65% over
the period, second only to Sacramento’s increase of 86%.
Passenger Trips per Revenue Hour: The effectiveness of VTA’s service, as measured
by the number of passenger trips per revenue hour, was consistently among the lowest of
the peer group, and second lowest in 2017 and 2018. San Diego, with a lower population
density than VTA’s, achieved almost twice the ridership per hour as VTA in the last five
years. Not surprisingly, San Francisco, with its significantly greater population density,
consistently recorded the highest number of trips per hour.
Farebox Recovery: VTA had the lowest farebox recovery in the peer group for its total
operations since 2012. 2012.
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Table 1 below summarizes VTA’s operating performance in 2017 relative to the peer group.
Table 1 - VTA Operating Performance Versus Peer Group in 2017
Performance Measure
10-Peer
Average Best Worst
VTA
Rating
Service
Effectiveness
Passenger Trips
per Revenue
Hour
34.0
63.8
(SF Muni)
23.4
(Dallas)
24.3
(2nd to last)
Service
Efficiency
Operating Cost
per Passenger
Trip
$5.30
$3.00
(San Diego)
$9.30
(VTA)
$9.30
(Last)
Farebox
Recovery Ratio
21.5%
34.7%
(San Diego)
9.3%
(VTA)
9.3%
(Last)
In short, while all VTA’s peer agencies suffered declines in ridership over the last decade, all but
one of the other agencies were more successful than VTA at controlling increases in costs.
It is important to note that, despite the continuing decline in key operating metrics, between 2016
and 2019, VTA’s operations management has successfully improved performance in a number of
significant areas, including: a 20% improvement in miles between major mechanical schedule loss;
a 24% reduction in passenger concerns (complaints); a 3% improvement in light rail miles between
chargeable accidents; and a 7% improvement in light rail on-time performance. In addition, the
Grand Jury had direct experience utilizing VTA transportation services during our investigation
and observed vehicles that were clean, performance that was generally on-time, and operators who
were friendly and resourceful.
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VTA’s Financial Management
VTA is highly dependent on sales tax for its operating revenue. Currently, sales tax receipts
provide approximately 80% of VTA’s revenue, while farebox revenue provides about 7%.
Remarkably, in an environment of robust population and economic growth, VTA’s farebox
receipts have decreased from $36.2 million in 2009 to $34.5 million in 2018, a decline of 5%.
Over that same period, operating expenses have increased by a staggering 51%. Adding further
pressure to VTA’s revenue stream is the steadily decreasing contribution of federal operating
grants, which peaked at $59 million in 2010 and fell to $3.8 million in 2018.
To address its revenue shortfall, VTA has begun to tap Measure A and Measure B sales tax
receipts, originally earmarked for capital improvements, to help fund transit operations. For 2018
and 2019, the VTA Board approved the transfer of $44 million and $14 million, respectively, of
these funds to supplement VTA’s operating revenue. To further address the shortfall, VTA has
drawn down its reserves to help fund operating deficits.
Given its history of low fare collections, declining ridership and uncertain governmental
assistance, the answer would seem to be increased attention to cost management, with an emphasis
on labor costs, by far the largest component of VTA’s operating expense. However, VTA’s
combined operations and administrative headcount continues to rise each year despite the decline
in ridership. The Grand Jury found the VTA Board has not vigorously addressed these issues
through its budget process by embracing the type of comprehensive cost management strategy that
is called for by the environment of limited resources in which VTA is currently operating.
The 2018-2019 Budget Process
VTA operates on a biennial budget cycle with a budget for the following two fiscal years adopted
in June of each odd-numbered year. The proposed budget is reviewed by the Administration and
Finance Committee and forwarded to the full VTA Board with the Committee’s recommendation.
The proposed 2018-2019 budget, as recommended by a three-to-one vote of the Administration
and Finance Committee in May 2017, showed projected operating deficits of $20 million and $26
million for fiscal years 2018 and 2019, respectively, and similar deficits for subsequent years.
Taking into account the annual need for local funds on the order of $30 million to support VTA’s
capital programs, the total gap between projected revenues and expenses (referred to as a structural
financial deficit) contemplated by the budget was between $50 and $60 million. Compounding the
widening budget gap was the fact that, over the preceding six years, operating expenses had grown
twice as fast as revenues, and VTA had consistently failed to meet its ridership and farebox
recovery projections. For example, in fiscal years 2016 and 2017, VTA’s farebox recovery had
fallen short of budget projections by 7.3% and 18.9%, respectively.
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Nevertheless, rather than undertaking a thorough review of the proposed budget and making hard
decisions regarding meaningful reductions in operating and capital expenses, or even sending the
budget back to the Committee for further study, the VTA Board adopted the budget on June 1,
2017, by a vote of eleven to one, thereby assuring operating deficits for the following two years.
To no one’s surprise, the projected operating deficits materialized and were largely funded by
drawing down VTA’s reserves. Capital reserves, which had stood at $49.5 million at June 30,
2017, had been depleted to $5 million by the middle of the following year.
Ad Hoc Financial Stability Committee
In January 2018, the incoming Chairperson of the VTA Board recognized that some action had to
be taken to address the structural deficit problem, which had become critical. Rather than engaging
the full Board, for example by convening an all-day workshop, to address the problem that the
Board and the Administration and Finance Committee should have been actively monitoring all
along, the Chairperson chose to create an Ad Hoc Financial Stability Committee. The Committee
was chaired by an ex officio member of the Board and included only two actual voting directors.
The Committee then invited a group of approximately 12 “stakeholders” to participate.
Stakeholders included employees, representatives of organized labor and several individuals from
community organizations – each with their own agenda, but none with the fiduciary duty to make
tough policy decisions solely in the best interests of VTA and County taxpayers. As the 2003-2004
Grand Jury report noted, “[i]t is the fiduciary responsibility of the Board, not a committee, a
business lobbying group, or business community leaders, to provide oversight and direction”
regarding VTA’s operations and financial management.
The use of an ad hoc committee was hardly a new concept for the VTA Board. The Board had
historically followed a pattern of waiting for a financial crisis to arise and then appointing an ad
hoc committee. That committee would attempt to deal with the crisis and come up with a fix. In
most cases, the fix would last a few years, relying primarily on new sources of revenue that would
hopefully emerge. However, in any event, the composition of the Board — and responsibility for
dealing with the problem — would have changed. The Board would then realize that another
financial crisis was taking place, and the process would be repeated. Most recently, Ad Hoc
Financial Stability Committees had been formed to deal with financial crises in 2001 and 2010.
The Ad Hoc Financial Stability Committee met sporadically between March and December 2018
to discuss the structural deficit, its implications and potential cost-saving measures. Three of the
nine scheduled meetings were cancelled. At a meeting of the Committee in August 2018, in
response to a question, VTA’s Chief Financial Officer underscored the urgency of VTA’s financial
situation by stating that VTA could continue its operations for no more than 18 to 24 months before
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going “off a cliff.” On June 20, 2018, the Committee held a three-hour workshop to discuss
strategies and solutions to address the budget and structural deficit. During the workshop, the
stakeholders broke out into working groups to consider possible solutions. Although no consensus
was reached, a wide variety of suggestions were made, which were reviewed by the VTA staff and
discussed at subsequent meetings. These recommendations included, among other things,
substantial fare increases, implementation of wage cuts, a hiring freeze, a reduction of fleet size,
and a delay of further capital expenditures on light rail expansion.
At its final meeting in December 2018, the Ad Hoc Financial Stability Committee concluded that
the defeat in November of a ballot measure to repeal fuel taxes and vehicle fees (California
Proposition 6) and the collection of sales tax on out-of-state sales beginning at some unspecified
point in the future (later determined to be April 2019) would infuse additional revenues into the
budget. The fuel and vehicle monies would result in an additional $23 to $27 million per year in
annual revenues. The sales tax would, when implemented, increase revenues by $5.5 million per
year. After these painless fixes, the Committee then addressed the annual structural deficit of
approximately $25 million that still remained by proposing three initiatives:
reducing the proposed increase in bus and rail service hours – not from their actual fiscal
2018 levels, but from the even higher levels originally budgeted for fiscal year 2019 as a
part of VTA’s Next Network program – saving approximately $15 million annually;
a fare increase indexed to inflation, saving approximately $2 million annually (which was
subsequently deferred until 2021); and
a voluntary early-retirement program projected to save another $1 million annually.
After six meetings over a nine-month period (including the three-hour workshop) involving three
directors and a dozen stakeholders, as well as untold hours of VTA staff support time, the Ad Hoc
Financial Stability Committee recommended a total of only $18 million in projected cost savings
to address the remaining $25 million deficit target, leaving a $7 million gap unaddressed. Several
serious cost-cutting measures brought forward at the workshop were not actively considered. At
its meeting, on December 6, 2018, the VTA Board unanimously accepted the recommendations of
the Committee, and the Committee stood down.
By any measure, the VTA Board’s oversight of the agency’s financial affairs, as exemplified by
its adoption of the 2018-2019 budget and the handling of the built-in structural financial deficit,
has been weak and ineffective. The inability of the VTA Board to meaningfully address the deficit
can be attributed, in part, to the lack of financial expertise on the Board, a lack of preparation and
engagement on the part of some directors — exacerbated by the delegation of the problem to the
Ad Hoc Financial Stability Committee — and the VTA Board’s inability or unwillingness to deal
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with controversial and politically-charged topics such as labor costs and expensive capital
programs.
The 2020-2021 Budget Process
The VTA Board will consider VTA’s proposed biennial budget for fiscal years 2020 and 2021 at
its meeting on June 6, 2019. The proposed budget shows net surpluses of approximately $2 million
in 2020 and $4 million in 2021. However, the proposed budget does not take into account the
outcome of pending labor negotiations with the Amalgamated Transit Union (ATU) that have been
ongoing since August 2018. VTA has reported that its current proposal to the ATU, if accepted,
would result in a total additional cost of $30.9 million over the next three years. Since the VTA's
proposal is the best possible outcome of the negotiations, the budget understates expenses and
virtually assures continuing deficits. Other risks acknowledged in the budget could further increase
these deficits.
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The Extension of Light Rail Service to Eastridge
Light Rail in the United States
Light rail transports people using electric motive power and light-weight rails (hence the name).
Light rail transit (LRT) systems, originally called trams or trolleys, evolved in the early 1900s to
move employees to businesses and industries located in downtown or central business districts.
They were less expensive to build than traditional heavy railway systems, and the cars were
likewise less expensive to build and operate.
In the late 1960s, private transportation companies, including those that operated LRT systems,
began to struggle financially and subsequently were transitioned to public ownership with the
expectation that better public transport could be achieved using a mix of city, state and federal
funding.
LRT systems in the United States have not met the original expectations of transit planners or the
public. Coupled with the downward trend of public transit ridership and expanding infrastructure
regulations, LRT systems have experienced ever-increasing installation and operations costs. Due
in part to its high costs and fixed routes, light rail is now viewed by many industry experts as a
technology whose time has passed. In October 2017, Randal O’Toole, a senior fellow with the
Cato Institute and a recognized expert in light rail policy analysis, recommended the following: 8
“First, transit agencies should stop building rail transit. Buses made most rail transit
obsolete nearly 90 years ago. Buses can move more people faster, more safely, and for far
less money than light rail, meaning light rail was obsolete even before San Diego built the
nation’s first modern light-rail line in 1981.” …
“Second, as existing rail lines wear out, transit agencies should replace them with buses.
The costs of rehabilitating lines that have suffered from years of deferred maintenance is
nearly as great as (if not greater than) the cost of building them in the first place.”
Cities whose densities and post-automobile development sprawl aren’t particularly suitable for
efficient light rail service have begun to reexamine the viability of constructing, operating and
maintaining expensive light rail systems. For example, in March of this year, the Phoenix City
Council voted to delay and likely kill an ambitious expansion of its existing light rail system.
Calling it a “train to nowhere,” city leaders determined that the reallocation of capital funds from
light rail to an expansion of a flexible bus system and the repair of a deteriorating road system
would be a better use of the taxpayers’ money and have a more positive impact on transit
8 “The Coming Transit Apocalypse”, Randal O’Toole, Cato Institute, October 2017
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effectiveness.9 A Phoenix Arizona initiative measure that will be on the ballot in August 2019
proposes to halt six additional light rail extension projects that were previously approved by the
Phoenix voters in 2015 and forbid the city from funding any other future light rail extensions.10
VTA’s Light Rail System
Santa Clara County’s LRT system, first proposed in the early 1980s, was conceived as a loop
connecting to a future integration of Bay Area Rapid Transit (BART) and the San José Airport
with transfer points throughout the County with feeder lines to support access to and from the loop
to business and residential areas. The intent was to transport large numbers of residents quickly
— at upwards of 55 mph — and cost-efficiently to and from jobs, entertainment and shopping,
and to link San José and Santa Clara County with the entire BART system. As funding issues
arose and interest group views emerged, the loop concept was abandoned in favor of direct spoke-
like connections between downtown centers (e.g., San José) and various residential and business
areas.
VTA’s LRT began service in December 1987 with a 6.8-mile corridor between Santa Clara and
downtown San José. An additional 14.3 miles were added by 1991 in 5 separate extensions (under
the auspices of the SCCTD). VTA then followed with 4 more extensions: into Mountain View
(1999), Milpitas (2001), East San José (2004) and the last corridor, Diridon to Winchester,
completed in October 2005. The ultimate construction cost of this system was almost $2 billion.
Today, VTA operates a 3-line LRT system consisting of 42 route miles, 61 stations and 21 park-
n-ride lots. Due to unprecedented declines in revenues beginning in 2008, the implementation
plan for further light rail expansion was modified to provide for construction of additional
extensions in phases. Two significant extensions, to Eastridge and Vasona Junction, remain under
consideration by VTA.
Overly optimistic ridership projections justified the construction of the $2 billion light rail system
in an environment that did not have the trip densities necessary to support this mode of transit. The
federal government had its own doubts and initially did not approve funding, thereby creating the
necessity of funding the project, in part, with local tax measures.
As suggested above, the design and layout of the VTA LRT system deviated from the initial
concepts, largely driven by political and financial considerations rather than strategic decisions.
Despite the high capital costs of the system, the airport remains inaccessible directly via light rail,
there is uneven access to jobs, entertainment and shopping, and operating speeds are far below
9 “Phoenix Votes to Delay, Likely Kill, West Phoenix Light-Rail Line", Jessica Boehm, Arizona Republic, March 21,
2019
10 “Phoenix Voters Could Kill Light Rail to These 6 Neighborhoods”, Jessica Boehm, Arizona Republic, April 15,
2019
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those expected or technically feasible. VTA LRT has been in operation for over 30 years but
continues to underperform in effectiveness and ridership.
VTA LRT Operational and Financial Challenges
Since its inception, VTA’s light rail system has struggled with operational and financial
inefficiencies caused by low ridership and high operating costs. Despite a vibrant local economy
with burgeoning job growth and population expansion, the public’s interest in and utilization of
light rail has deteriorated. Over the past ten years, light rail ridership has declined by 21% and,
currently, fewer than 1% of Santa Clara County residents regularly utilize light rail. During the
same period, the farebox recovery ratio for light rail has declined 36%. In just the past five years,
light rail ridership has declined 15% while operating expenses have increased 54%. Meanwhile,
VTA has continued to increase capacity without a corresponding demand for its product, resulting
in higher operating costs of which less than 8% is covered by fare revenue. Put more bluntly, the
taxpayers pay for more than 92% of the LRT system’s operating costs. VTA has failed to
accurately estimate the ongoing operating and capital costs of maintaining the light rail system, a
fact that has led, in part, to its recurring financial deficits.
Table 2 below outlines metrics comparing operations of VTA’s light rail system versus its peers
(using 2017 NTD data) that reveal its poor performance, including:
Cost per Passenger: Highest among peers ($11.61)
Subsidy per Passenger Trip: Highest among peers ($10.73)
Operating Cost per Hour: Highest among peers ($487.58)
Farebox Recovery Ratio: Lowest among peers (7.6%)
Passenger Trips: Lowest among peers (9.1 million miles)
Passengers Boarded per Hour: Second lowest among peers (42)
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Table 2 - VTA Light Rail Peer Statistics (2017)
Legend: Ms = value in millions
Worst in peer group
2nd worst in peer group
In light of the VTA LRT system’s intrinsic design issues, unacceptably slow speeds in portions of
its routes, extremely high operating costs and the lack of ridership and revenue to support those
costs, a case can be made for dismantling or phasing out the light rail system altogether. At a
meeting of the CPC on March 28, 2019, a member of the VTA staff responded to a question from
a Board member by confirming that operating costs could be cut in half and farebox recovery
doubled if a bus-only system were deployed. In fact, light rail operating expenses are closer to
three times the cost of bus operations, but the point remains that a large reduction in the taxpayer
subsidy of VTA operations could be achieved by focusing future investment in transit solutions
other than light rail, as Phoenix has decided to do. One director noted at the March 28, 2019 CPC
Peer Agency
Name
Service
Area
Population
Route
Miles
Fare
Revenue
Earned
($Ms)
Total
Operating
Costs
($Ms)
Farebox
Recovery
Ratio
Operating
Cost per
Hour
Boardings
per Hour
Passenger
Trips
(Ms)
Cost per
Passenger
Revenue
per
Passenger
Subsidy
per
Passenger
Santa Clara
VTA 1,664,496 42.2 $8.06 $106.0
7.6%
$487.58
42
9.1
$11.61 $0.88
$10.73
Sacramento
Regional
Transit
District 1,723,634 42.9 $14.80 $67.8 21.8% $272.55 46 11.4 $5.93 $1.29 $3.64
Dallas Area
Rapid Transit 5,121,892 93 $27.71 $175.2 15.8% $356.20 61 29.9 $5.84 $0.92
$4.92
Denver
Regional
Transportation
District 2,374,203 58.5 $38.16 $115.2 33.1% $145.09 31 24.6 $4.67 $1.55
$3.12
San Francisco
Municipal
Railway 3,281,212 36.8 $39.22 $213.8 18.4% $368.95 88 50.9 $4.19 $0.77
$3.42
Houston
Metropolitan
Transit
Authority 4,944,332 22.7 $5.97 $65.2 9.2% $227.04 63 18.3 $3.56 $0.33
$3.23
Portland Tri-
County
Metropolitan
Transportation
District 1,849,898 60 $49.38 $138.8 35.6% $222.51 63 39.7 $3.49 $1.24
$2.25
Salt Lake City
Utah Transit
Authority 1,021,243 44.8 $17.97 $64.7 27.8% $180.35 52 18.8 $3.44 $0.95
$2.49
Minneapolis
Metro Transit 2,650,890 23 $24.14 $70.9 34.0% $166.23 55 23.8 $2.98 $1.01
$1.97
San Diego
Metropolitan
Transit
System 2,956,746 53.5 $38.97 $82.5 47.3% $168.24 76 37.6 $2.19 $1.04
$1.15
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meeting, “We have to really broaden our thought process with regard to light rail. The worst
position that VTA can get into is being the last transit agency to be deploying an old technology.”
The Eastridge LRT Extension
Although operating statistics demonstrate the high cost and inefficiency of light rail as a mode of
transportation, the VTA Board has continued to consider construction of two additional light rail
extensions that would require additional capital outlays in the hundreds of millions of dollars.
These two extension projects, to Vasona Junction and the Eastridge Transit Center, have been in
the planning stage for years, have been the subject of countless VTA staff studies and reports and
have been considered by the Board and its committees, particularly the CPC, at numerous
meetings. Finally, at its meeting on March 28, 2019, the CPC approved placing the Vasona project
on an indefinite hold, based on its capital costs, high operating costs and projected ridership that
failed to meet VTA’s minimum criteria for a new project. However, the Eastridge project remains
alive.
The proposed Eastridge light rail extension is part of a two-phase project. Phase 1 of the project,
which included conceptual design, pedestrian and bus improvements, and improvements of the
Eastridge Transit Center, has been completed. Phase 2, which is now referred to as the Eastridge-
BART Regional Connection, or EBRC, would add a 2.4-mile rail line and related infrastructure
connecting the Alum Rock Station and the Eastridge Transit Center. In the original design, most
of the rail extension was to have been constructed at street level on Capitol Expressway. The
design was subsequently changed to an elevated track above the roadway for the entire 2.4 miles
at an estimated additional cost of $75 million, which would enable the trains to run at higher
speeds. The total cost of the project, which was originally estimated at $377 million, is now
projected to be $599 million, of which $146 million has been spent on Phase 1, and $453 million
would be spent on Phase 2 ($13 million has been spent to date on design and other preparatory
work). If Phase 2 is continued, work is currently estimated to be completed in 2025.
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Table 3 below outlines the cost and status of the Eastridge project*:
Table 3 - Eastridge (EBRC) Phases, Costs and Status
Project Cost Sub-total
Cost
Status Notes
Concept $11M Completed
Original Construction $56M Completed
Phase 1 – pedestrian improvements $19M Completed
Phase 1 – bus improvements $60M Completed Eastridge Transit Center
Phase 1 sub-total - $146M
Phase 2 – EBRC various
studies/design
$13M Initial design
work
completed
Phase 2 – EBRC completion
(2023-25)
$440M Under
review
Does not meet minimum
operations criteria until well after
2025
Phase 2 sub-total - $453M Plus $2-3M per year in new
operational costs
Project total - $599M Costs almost $250 million/mile
*Data from VTA CPC Agenda Packet item #7, pages 36 and 37, dated March 28, 2019 and updates presented in the
Board of Directors meeting on April 4, 2019.
The VTA Board has considered various aspects of the Eastridge project more than 20 times since
2000. Each time, the Board has made a decision that allowed work on the project to continue,
often kicking the ultimate decision on the fate of the project down the road by noting that its current
decision was not the final word on the project and that there would be opportunity for further
consideration of the project and final approval at a future date.
For example, at its meeting on May 3, 2018, the Board considered the viability of the light rail
extension to Eastridge. After a lengthy discussion, the Board approved a funding strategy for
proceeding with the project, but the Chairperson noted that there would be still more decision
points at which the project could again be considered by both the CPC and the full Board. At the
same time, the Board approved a resolution authorizing a staff study of alternatives to light rail for
the Eastridge extension. VTA staff has confirmed that, a year later, this study still has not been
completed.
At the March 28, 2019 meeting of the CPC (at which the Committee agreed that the Vasona
Junction extension should be put on hold), Phase 2 of the Eastridge project was again considered.
At the meeting, the Mayor of San José, serving as Chairperson of the Committee, asked the
following question, “Is the current light rail system one we want to continue to invest in? Our
ridership is challenged. Our cost-effectiveness system-wide is 10% on farebox return [it is actually
less than 10%]. That 10% is already among the very lowest in the nation in terms of farebox
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return, and light rail actually hurts us. The question is: what does the process look like for us to
be re-evaluating the entire system to see if we want to start thinking differently about the entire
light rail system? I hate to think we are doubling down on a failed system.” Another committee
member echoed that sentiment, noting, “We have to choose our transportation modes in a cost-
effective and efficient manner. I support to do additional evaluation of what is needed for that
corridor. The train has not left the station on Eastridge.” Yet, after a lengthy discussion about
an overall re-evaluation of light rail before proceeding with the Eastridge extension, no concrete
action was taken in that direction, and both of these directors joined with a third to support a motion
to move forward with the project and kick the ultimate decision down the road yet again. The vote
was three to two in favor of the motion, but it failed for lack of the required four aye votes needed
to pass.
The fate of the Eastridge extension project is now once again in the hands of the VTA Board, and
its final resolution will be a test of the Board’s leadership. The issue will be considered by the
Board again at its meeting on June 6, 2019. Although the subject of the extension was not on the
agenda at the Board’s May meeting, the Mayor of San José signaled his intentions. Despite the
comments he made at the March CPC meeting, the Mayor stated, “I will vote to proceed
immediately with the construction of the Eastridge transit project when it comes before the VTA
Board in June. I expect we will move forward without delay.” The investigation of the Grand Jury
report was completed on May 29, 2019, and this report does not reflect any actions taken at the
June 6, 2019 meeting.
As pointed out above, the remaining capital cost to complete the 2.4-mile extension is currently
estimated at $453 million, or almost $189 million per mile. According to most recent staff
projections included in the May 2019 EBRC Supplemental Environmental Impact Report (SEIR),
the new light rail extension would attract approximately 611 11 new riders (net of a reduction in bus
ridership on the existing bus lines that run parallel to the proposed rail extension) by 2025.
Therefore, the additional capital cost would be equal to approximately $720,000 for each new rider
in the first year of service. Once completed, the Eastridge extension would become part of an
outmoded light rail system that is one of the most expensive and heavily subsidized LRT systems
in the country, with declining ridership and operating costs more than double the cost of bus
operations. The extension, upon completion, is projected to have a miniscule impact on transit
usage in the East San José/Milpitas corridor over the next 24 years (i.e., an increase of only 0.07%
by 2043 and just over half that when service begins).12 Moreover, the current design permanently
removes two existing high occupancy vehicle (HOV) lanes from the Capitol Expressway, without
any foreseeable commensurate reduction in automobile traffic, a fact that may not be widely
11 EBRC SEIR, May 2019, page 71, Table 5.1-11. http://vtaorgcontent.s3-us-west-
1.amazonaws.com/Site_Content/EBRC_Vol1_FSEIR-2%20(1).pdf
12 EBRC SEIR, May 2019, page 72
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understood in the East San José community. As noted in the SEIR, “[t]he proposed removal of the
HOV lanes would result in higher average automobile delays and higher automobile travel times
on Capitol Expressway.”13 Further, despite claims that the Eastridge Transit Center is among the
busiest in the VTA system, there is an average of only seven riders per bus trip into and out of that
center.
Based on our interviews, the Grand Jury has found virtually no support for the project among the
VTA staff, although they continue to move the project forward in compliance with incremental
policy decisions made by the VTA Board.
The argument supporting the Eastridge extension is essentially political. The extension was one
of 13 transportation improvement projects envisioned by Measure A and passed by the voters in
2000. For various reasons, most related to budget challenges brought about by the dot com
“bubble” in the early 2000s and the later economic recession, the implementation of the Eastridge
project has been delayed, along with some of the other Measure A projects. In the interim, the
once-promising LRT system has become technically outmoded and increasingly expensive.
Yet, proponents of the extension, including powerful political forces, contend that the periodic,
incremental approvals of the project by the VTA Board that have kept the project alive over the
years have reinforced a “promise” to complete it, even though the VTA Board has both the right
and the duty to re-evaluate capital projects when they are no longer viable. Proponents also
contend that completion of the project is a matter of “economic equity,” balancing the needs of a
relatively low-income, transit-dependent area of Santa Clara County with the type of transit
services provided elsewhere in the County (although, as noted above, the Vasona Junction project
that was to have served the Los Gatos area was recently put on hold).
The challenge to the VTA Board, in the exercise of its fiduciary duties to the taxpayers and transit
users of the County, is to address such questions as:
Can any further investment in VTA’s present LRT system be justified, much less one that
will cost $720,000 for each prospective new rider?
Does the proposed Eastridge extension meet VTA’s standards for new transit projects,
including minimum projected ridership criteria?
Before proceeding with the project, should the Board undertake a thorough review of the
light rail system and its future as a mode of transportation in Silicon Valley, as suggested
by members of the CPC?
13 Ibid, page 72
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Can the recognized needs of the residents of East San José for modern, efficient public
transportation be better served by an alternative to the proposed Eastridge light rail
extension?
VTA should aspire to take an industry-leading role in the future of public transportation,
commensurate with the role of Silicon Valley as a worldwide leader in technology and innovation.
Whether the VTA Board is able to put aside local political considerations and answer these
questions based on the interests of all the taxpayers and residents of Silicon Valley will say much
about its effectiveness as a policy-making body and whether VTA will be able to achieve such
leadership aspirations.
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Designing a More Effective Structure for the VTA
There are countless variations in models for governing a regional transit agency, and there is no
perfect structure that fits all situations. Even when transit agencies set out to reorganize their own
governance structure in response to acknowledged defects, they realize they must choose among
alternative structures having both advantages and disadvantages.
Virtually all the individuals interviewed by the Grand Jury, including directors and senior staff,
agreed that VTA could benefit from a more knowledgeable and engaged Board of Directors that
is more sharply focused on VTA’s role as a regional transit agency and less on local political
interests. However, there is less consensus on how best to achieve that goal. Nevertheless, it is
useful to examine some of the variable features of alternative governance structures, how they
have been implemented by other transit agencies and how changes to the structure of VTA’s
governance might result in a more effective Board.
Number of Directors
The VTA Board has 12 voting members. As pointed out in the 2003-2004 Grand Jury’s report,
the VTA Board is larger than the boards of many regional transit agencies. Alameda County
Transit (AC Transit) and BART, for example, have boards of seven and nine members,
respectively, while two other transit agencies in California have five-person boards. However,
transit agency boards across the country range widely in size, from as few as five to more than 20.
The agency serving Dallas/Fort Worth, for example, has a 15-person board, while the Phoenix and
Salt Lake City transit agencies each has a 16-member board. The 2003-2004 Grand Jury Report
concluded that a smaller Board, of five to seven members, “would be more involved in and
accountable for the financial and operational management of VTA.” Some current members of the
VTA Board agree that a smaller Board would be preferable, although others disagree. While the
current Grand Jury agrees that reducing the size of the Board might result in more focused
decision-making, a reduction in Board size, in and of itself, would not address fundamental issues
of lack of experience, inadequate continuity, competing time commitments and conflicts of interest
between VTA and local priorities. Accordingly, a reduction in the size of the VTA Board should
only be considered in conjunction with other structural changes that directly address these key
issues.
Term of Service
VTA directors serve for terms of two years. Although some directors serve more than one term
(often consecutive), directors whose positions rotate among groups of smaller cities generally do
not serve consecutive terms. Furthermore, a director’s term can be cut short if the director ceases
to serve in his or her elected position.
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The term of service for directors of regional transit agencies in California and other larger
metropolitan areas generally ranges between two and four years, with three and four-year terms
being common. In California, for example, directors of BART, AC Transit and transit agencies
serving Santa Barbara, Stockton and Bakersfield serve four-year terms. Directors of agencies
serving Austin and Vancouver, B.C. serve for three years. In an independent review of the agency
serving Vancouver, a Governance Review Panel concluded that “longer-term decision-making
requires a minimum of three-year terms,” although the panel also recommended that members not
be allowed to serve more than six consecutive years in order to vary the “mix of management,
finance, legal and other skills to match [the agency’s] changing needs over time.”14
Among the individuals interviewed, there was substantial support for longer terms to provide
additional time for directors to become knowledgeable about VTA’s operations and transit issues,
to participate in more than one budget cycle and to participate more effectively in the Board’s
long-term planning function. In addition, lengthening the term of service would mitigate the
advantage currently enjoyed by representatives of San José and Santa Clara County, who typically
serve substantially longer terms than the representatives of the smaller city groups and dominate
the Board, in part, as a result of their greater experience. Not all interviewees agreed, however.
One made the point that, if a director is unqualified in the first place, a four-year term would just
mean that the Board would be burdened with an unqualified member for twice as long.
Additionally, since under the current structure a director’s term ends when he or she leaves elected
office, a four-year term is more likely than a two-year term to be cut short, lessening to some
degree the impact of a change to a longer term. Nevertheless, extending the term of VTA directors
to four years would increase the average term of Board service and, accordingly, would provide
some valuable experience and continuity to the Board and enhance the influence of the smaller
cities. Likewise, establishing term limits or limits on total years of service would mitigate the
dominance of San José and the County and allow the Board to evolve over time to meet its
changing needs.
As described above, the PUC specifies the annual election of the Board’s Chairperson and Vice
Chairperson. The VTA Administrative Code provides that the election of the two officers shall be
conducted at the last meeting of the calendar year, when practical, and that they shall serve for the
ensuing calendar year.15 The Administrative Code also specifies that the two positions shall be
rotated annually, according to a fixed schedule, among representatives of San José, Santa Clara
County and the smaller city groups16.
There was considerable support among the persons interviewed for extending the Chairperson’s
term from one to two years. As pointed out above, because VTA operates on a June 30 fiscal year,
14 “TransLink Governance Review", TransLinK Governance Review Panel, January 26, 2007, page 22
15 VTA Administrative Code Section 2-26
16 Ibid
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the Chairperson’s calendar year term of service straddles two fiscal years, disconnecting the
Chairperson from the budget process and accountability for operating and financial results. He or
she inherits one annual budget in mid-stream and serves only halfway through another.
Lengthening the Chairperson’s term would help address this problem by allowing the Chairperson
to oversee VTA’s financial performance for at least one full fiscal year. Coordinating the term of
the Chairperson with the agency’s June 30 fiscal year would further connect the Chairperson with
VTA’s budget process and the oversight of its financial performance. Similarly, reviewing the
VTA General Manager’s performance on a fiscal year rather than a calendar year basis would also
improve direct accountability for the organization’s performance to budget.
Direct Election of Directors
Under the current governance structure, members of the VTA Board are appointed to serve by the
jurisdictions they represent, either through direct appointment by a mayor or city council or, in the
case of the groups of smaller cities, by arrangement among the cities. As pointed out above, as
originally proposed by the County Board of Supervisors, the VTA Board would have been
composed of a combination of five directly elected members and 11 appointed members.
Although the direct election of directors of transit agencies is not common in California, there are
exceptions, including BART and AC Transit, both of which have directly elected directors serving
four-year terms. Other regional public bodies use a direct election model for some or all their
directors. The Santa Clara Valley Water District (SCVWD), for example, has a board of seven
directors, directly elected by supervisorial district.
Benefits of an elected board include direct accountability to the public and the directors’ increased
focus on the affairs of the agency as their primary, rather than secondary, public service
responsibility. Direct election would also eliminate the possibility of directors’ terms being
shortened when they cease to serve in their elected position. In theory at least, candidates who
serve on an elected board also would be more likely to have an interest in and commitment to
public transportation issues than would appointed directors. On the other hand, directly elected
VTA Board members, like other elected officials, may tend to have a parochial view if they are
elected to represent specific districts or municipalities, so the goal of encouraging a regional view
of strategic planning responsibilities might not be fully realized.
Some interviewees supported changing to a direct election model for the VTA Board, based on the
potential benefits noted above. Others, however, did not favor such a change. Several pointed out
what they perceived to be a lack of effectiveness of the BART Board of Directors as evidence that
the change would not be worthwhile. Others noted that moving to a direct election model would
be complicated, politically difficult and costly – again, not justifying the change. One interviewee
observed that, at the end of the day, voters pay very little attention to the direct election of directors
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of governmental agencies, noting that many voters do not even know that an agency like SCVWD,
for example, even exists, much less who its directors are.
Appointed Directors Who Are Not Elected Officials
Like VTA, many regional transit districts have boards consisting exclusively of elected officials
representing the constituent communities making up the district. In at least three California transit
agencies (those serving Santa Barbara, San Francisco and Stockton), the appointed boards of
directors include interested citizens who are not currently serving as elected officials, and the
enabling legislation of another transit district, serving the Bakersfield area, specifically provides
that elected officials are not eligible for appointment as members of the Board. Transit agencies
whose directors are not current elected officials are not uncommon in other parts of the country.
Examples of transit agencies with appointed boards that do not include elected public officials are
those serving Houston, Austin, Vancouver, B.C. and Toronto.
The flexibility to appoint non-politicians to serve on the board of a transit agency allows the
appointing authority to select directors having a wide range of business, financial and
transportation-related experience with a mandate to serve non-politically and make evidence-
driven policy decisions based on demonstrated need and financial feasibility. The Houston
Metropolitan Transit Authority (HMTA), for example, has a board of nine members, five of whom
are appointed by the Mayor of Houston, two by the Harris County Commissioners Court and two
by the mayors of other cities in its service area. The Board of the HMTA currently includes a
retired lawyer, a certified public accountant, a banker, executives of large companies and experts
on infrastructure, construction and budget management.
Partially offsetting the benefits of removing elected public officials from a transit agency’s
governance structure are concerns of accountability. The level of commitment of non-elected
directors to their local communities’ views on transit policy and priorities, including land use and
development, is uncertain. However, some senior VTA staff and directors feel that the staff gets
little support from VTA Board members in connection with VTA’s dealings with city governments
on these issues.
Some transit districts have chosen to balance the benefits of a predominantly non-political
governing board with some participation by elected officials. For example, the board structure of
the transit agency serving the Austin area was revised in 2011 from 100% elected officials to a
mix of two elected officials and five non-politicians, with the City of Austin, the largest participant
and underwriter of the system, having a predominant say in the appointments. The enabling
legislation went a step further and specified that one appointed member of the board must have at
least 10 years of experience as a financial or accounting professional and another must have at
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least 10 years of experience in an executive-level position in a public or private organization.17 As
one commentator noted at the time the legislation was proposed, “What the board would lose in
elected officials, it would presumably gain in knowledge.”18
In 2011, the Legislative Auditor of the State of Minnesota issued an evaluation report that analyzed
various governance structures for the agency principally responsible for the Twin Cities’ transit
system, as potential alternatives to the existing structure under which all members of the governing
council are appointed by the governor. After analyzing and comparing various structures,
including the existing appointment system and the direct election of council members, the Auditor
concluded that the optimal model would be a combination of appointed and elected officials that
“would provide the Council with an effective mix of regional and local perspectives.”19
Silicon Valley offers an unparalleled pool of talented individuals, including entrepreneurs who
have introduced cutting-edge technologies, products and services, as well as countless experts with
leadership experience in finance and executive management of large organizations. Current and
retired leaders of Silicon Valley companies and organizations have made numerous contributions
in support of a wide range of community activities, including the arts, healthcare, education and
other civic and charitable endeavors. Surely, appointing authorities could identify qualified public
sector leaders who would be willing to serve on the VTA Board, and VTA would benefit from
their knowledge and experience.
17 Texas Transportation Code Section 451.5021(b)
18 "What's Wrong With Cap Metro...and What's Right", Lee Nichols, Austin Chronicle, April 24, 2009
19 "Governance of Transit in the Twin Cities Region", Office of the Legislative Auditor, January 2011, page 44
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CONCLUSIONS
VTA is a complex, multi-billion-dollar enterprise. In addition to operating a large transit system,
VTA has responsibility for county-wide transportation planning, including congestion
management, the design and development of highway, pedestrian and bicycle improvement
projects and the promotion of transit-oriented development.
VTA is governed by a part-time Board of Directors composed solely of elected public officials,
each of whom is burdened by the obligations of his or her office and subject to local political
interests. A few of the directors have served for many years, but others have served for less than
two. Appointees to the VTA Board often have little or no previous experience with transportation,
finance or leadership of a large organization, let alone one the size of VTA.
Today, VTA faces a series of challenges which, taken together, can be fairly characterized as a
crisis. The following challenges, among others, must be addressed by the VTA Board:
Year after year, VTA operates one of the most expensive and least efficient transit systems
in the country. Empty or near-empty buses and light rail trains clog the County’s streets
but are used regularly by fewer than 5% of the County’s commuters. Operating costs
increase continuously, and taxpayers subsidize 90% of these costs, to the tune of about
$5.50 per rider for each bus trip and $10.75 per rider for each light rail trip.
VTA veers from one financial crisis to another. In June 2017, the VTA Board adopted the
2018-2019 biennial budget and consciously approved a built-in structural financial deficit
of $50 to $60 million per year. In January 2018, an ad hoc committee of the VTA Board
was formed to deal with the crisis caused by the budget deficit. In August 2018, VTA’s
Chief Financial Officer advised the committee that the agency was 18 to 24 months away
from going “off a cliff.” At the end of 2018, the ad hoc committee made weak and only
partially effective recommendations to address VTA’s structural financial deficit and
didn’t seriously consider such important but politically sensitive topics as reductions in
employee headcount or the scrapping or deferral of large capital projects.
Light rail ridership is declining steadily throughout the country. Experts have pronounced
the early twentieth century concept of light rail transit obsolete, and other regional transit
agencies are contemplating abandoning light rail system extensions. VTA, however,
continues to move forward with an extension of its light rail system — one that currently
has among the highest operating costs and lowest ridership in the country. The remaining
capital cost of the proposed 2.4-mile Eastridge extension project is currently estimated at
$440 million, representing approximately $720,000 for each new rider that the staff
estimates will actually use the extension during the first year of its operation. The project
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makes no financial sense and survives only because powerful political forces continue to
support it. VTA needs to carefully consider whether the recognized needs of the residents
of East San José for modern, efficient public transportation can be met without “doubling
down on a failed system,” as one director put it, and worsening VTA’s precarious financial
condition.
Although a detailed review of the long-pending BART to Silicon Valley project was
beyond the scope of the Grand Jury’s inquiry, a number of our interviewees, including
senior VTA staff and members of the VTA Board, noted its importance to the future of
VTA. VTA’s proposed fiscal years 2020-2021 capital budget calls for a staggering $713.5
million in Measure A and Measure B tax funds for the BART Phase 2 project. The
operating agreement between VTA and BART remains in negotiation, and several of our
interviewees expressed concern that important issues regarding the sharing of system-wide
capital and operating costs remain unresolved and that such costs could fall
disproportionately on VTA. One director expressed the opinion that BART-related cost
control issues are more significant for VTA than those related to the Eastridge light rail
extension. A senior staff member stated unequivocally that “BART is going to bankrupt
VTA.” An interested stakeholder similarly predicted that BART “will be the demise of
VTA.” Whether or not these assessments are accurate, it is clear that the financial health
of VTA is dependent on the success of BART in the South Bay Area. That success is
dependent, in turn, on VTA effectively implementing BART Phase 2 and meeting its
ridership and revenue goals.
VTA’s operating territory is the Silicon Valley – the world’s leading center of innovation and
cutting-edge technology. Several of VTA’s key staff members have noted that they had joined
VTA in the hope that VTA would take an industry-leading role in the future of transportation,
commensurate with the role that companies and other institutions in the Silicon Valley have taken
in the introduction of all manner of new products, technologies and services. Yet, little such
innovation has been evident at VTA in recent years. In fact, as noted above, VTA seems to be
“doubling down” on old technology. At the Board’s recent workshop on “The Future of
Transportation in Silicon Valley,” the directors present (two-thirds of the voting members and half
of the alternates) seemed to recognize this problem and unanimously agreed that VTA needs to
make “radical changes” in the way it provides its services.
If VTA is going to meet the many challenges it faces, the VTA Board will have to make good on
its commitment to radical change. So, the question becomes, is the Board capable of making the
policy decisions and providing the strategic oversight necessary to accomplish such change? The
Grand Jury has concluded that, as presently structured and operated, that level of capability does
not appear to be present. Accordingly, the Grand Jury recommends a number of changes in the
structure of the VTA Board and in the way directors are selected, trained and evaluated that it
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believes will assist VTA in addressing its many challenges and achieving its aspiration of
becoming a leader in the transportation industry.
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FINDINGS AND RECOMMENDATIONS
Finding 1
The VTA Board, currently made up exclusively of elected officials from the Santa Clara County,
Board of Supervisors, the City of San José and the other smaller cities in the County, suffers from:
A lack of experience, continuity and leadership;
Inadequate time for the directors to devote to their duties to the VTA Board due to their
primary focus on the demands of their elected positions;
A lack of engagement on the part of some directors, fostered in part by the committee
system, resulting in VTA functioning largely as a staff-driven organization;
Domination, in terms of numbers, seniority and influence, by representatives of the Santa
Clara County Board of Supervisors and the City of San José; and
Frequent tension between the director’s fiduciary duties to VTA and its regional role, on
the one hand, and the political demands of their local elected positions, on the other.
Recommendation 1a
VTA should commission a study of the governance structures of successful large city
transportation agencies, focusing on such elements as: board size; term of service; method of
selection (directly elected, appointed or a combination); director qualifications; inclusion of
directors who are not elected officials; and methods of ensuring proportional demographic
representation. This study should be commissioned prior to December 31, 2019.
Recommendation 1b
As the appointing entity with an interest in the transit needs of all County residents, the County
of Santa Clara should commission its own study of transportation agency governance structures,
focusing on the elements listed in Recommendation 1a. This study should be commissioned prior
to December 31, 2019.
Recommendation 1c
As constituent agencies of VTA, each of the cities in the County should prepare and deliver to
VTA and the County Board of Supervisors a written report setting forth its views regarding VTA
governance, with specific reference to the elements listed in Recommendation 1a. These reports
should be completed and delivered prior to December 31, 2019.
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Recommendation 1d
Within six months following the completion of the studies and reports specified in
Recommendations 1a, 1b and 1c, the County of Santa Clara and/or one or more of VTA’s other
constituent agencies, should propose enabling legislation, including appropriate amendments to
Sections 100060 through 100063 of the California Public Utilities Code, to improve the
governance structure of VTA (which potentially could include an increase in the directors’ term
of service, the addition of term limitations and the inclusion of appointed directors who are not
currently serving elected officials).
Recommendation 1e
In order to provide more continuity in the leadership of the VTA Board, within six months
following the completion of the studies and reports specified in Recommendations 1a, 1b and 1c,
the County of Santa Clara and/or one or more of VTA’s other constituent agencies, should propose
enabling legislation amending Section 100061 of the California Public Utilities code to provide
that the Chairperson of the VTA Board shall be elected for a term of two years rather than one.
Recommendation 1f
Prior to December 31, 2019 and pending changes contemplated by Recommendation 1e, VTA
should adopt a policy of routinely reappointing an incumbent Chairperson for a second one-year
term at the end of his or her initial term, absent unusual circumstances.
Recommendation 1g
In order to better connect the Chairperson with the budget process and accountability for operating
and financial results, prior to December 31, 2019, VTA should amend Section 2-26 of the VTA
Administrative Code to provide that the Chairperson and Vice Chairperson shall serve terms
coinciding with VTA’s fiscal year ending June 30, rather than the calendar year.
Finding 2
The California Public Utilities Code, the VTA Administrative Code and the Guidelines for
Member Agency Appointments to the VTA Board of Directors adopted by the Governance and
Audit Committee of the Board (Guidelines) all contain provisions requiring that, to the extent
possible, the appointing agencies shall appoint individuals to the VTA Board who have expertise,
experience or knowledge relative to transportation issues. Nevertheless, appointees to the VTA
Board often lack a basic understanding of VTA’s operations and transportation issues, generally.
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Recommendation 2
In order to help assure that individuals appointed to serve on the VTA Board have the appropriate
qualifications, prior to December 31, 2019, VTA should take vigorous action to enforce
compliance by appointing agencies with the qualification and suitability requirements of: (i)
Section 100060(c) of the California Public Utilities Code; (ii) Section 2-14 of the VTA
Administrative Code; and (iii) the Guidelines.
Finding 3
The VTA Board lacks effective policies designed to assure productive participation by members
of the VTA Board.
Recommendation 3a
In order to help make directors become and remain productive members of the VTA Board, prior
to December 31,2019, VTA should: (i) implement and enforce attendance at an intensive, multi-
session onboarding bootcamp for incoming directors that would provide detailed information
regarding VTA’s operations, financial affairs and currently pending large-scale projects as well as
the organization and operations of the Board and directors’ duties and obligations; (ii) prepare and
provide to each director a detailed handbook of directors’ duties, similar to the “Transit Board
Member Handbook” published by the American Public Transportation Association; (iii) enforce
attendance at Board and committee meetings by providing Board attendance records to appointing
agencies and removing directors from committees for repeated non-attendance; and (iv) implement
a robust director evaluation process, with the participation of an experienced board consultant, that
would include mandatory completion by each director of an annual self- evaluation questionnaire
and Board review of a composite report summarizing the questionnaire responses.
Recommendation 3b
In order to further enhance the effectiveness of the directors, prior to December 31,2019, VTA
should develop a program to encourage continuing education of the Board members by: (i)
scheduling and enforcing attendance at more frequent and intensive Board workshops on important
issues regarding transit policy, developments in transportation technology, major capital projects
and VTA’s financial management; and (ii) requiring directors to attend, at VTA’s expense, third-
party sponsored industry conferences and educational seminars.
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Finding 4
The Grand Jury commends the Chairperson of the VTA Board for recognizing the need to improve
Board engagement and effectiveness by convening the Ad Hoc Board Enhancement Committee to
review the Board’s governance structure and practices.
Recommendation 4
None.
Finding 5
VTA continues to consider an extension of VTA’s light rail system to the Eastridge Transit Center,
at an additional capital cost of over $450 million, although VTA’s light rail system is one of the
most expensive, heavily subsidized and least used light rail systems in the country, many transit
experts consider light rail obsolete, and VTA is suffering from chronic structural deficits that
would be exacerbated by the continuation of the project as currently defined.
Recommendation 5a
VTA should consider following recommendations made by several directors that it undertake a
thorough review of VTA’s light rail system and its future role as a mode of transportation in Silicon
Valley before proceeding with the Eastridge extension project. This review, as it pertains
specifically to the analysis of the viability of the Eastridge extension, should be undertaken with
the participation of an independent consultant and should consider such issues as projected
ridership estimates, project cost estimates including future operating and capital costs, and the
projected impact on traffic congestion on Capitol Expressway with the removal of two HOV lanes.
Recommendation 5b
VTA should consider whether the recognized needs of the residents of East San José for modern,
efficient public transportation can be better served by an alternative to the proposed light rail
extension.
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REQUIRED RESPONSES
Pursuant to Penal Code sections 933 and 933.05, the Grand Gury requests responses as
follows:
From the following governing bodies:
Responding Agency Finding Recommendation
Santa Clara Valley Transportation Authority 1, 2, 3, 4 and 5 1a, 1f, 1g, 2, 3a, 3b, 5a and 5b
County of Santa Clara 1 1b, 1d and 1e
City of Campbell 1 1c, 1d and 1e
City of Cupertino 1 1c, 1d and 1e
City of Gilroy 1 1c, 1d and 1e
City of Los Altos 1 1c, 1d and 1e
City of Milpitas 1 1c, 1d and 1e
City of Monte Sereno 1 1c, 1d and 1e
City of Morgan Hill 1 1c, 1d and 1e
City of Mountain View 1 1c, 1d and 1e
City of Palo Alto 1 1c, 1d and 1e
City of Santa Clara 1 1c, 1d and 1e
City of San José 1 1c, 1d and 1e
City of Saratoga 1 1c, 1d and 1e
City of Sunnyvale 1 1c, 1d and 1e
Town of Los Altos Hills 1 1c, 1d and 1e
Town of Los Gatos 1 1c, 1d and 1e
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APPENDIX A – The Guidelines for Member Agency Appointments to
the VTA Board of Directors
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APPENDIX B – VTA Operating Statistics and 2017 National Trends
This appendix presents operational metrics comparing VTA against national trends using an FTA
annual summary.
Table B1 VTA Operating Statistics 2009 - 2018
Year
County
Popula-
tion1
(millions)
Bus
Ridership1
Light Rail
Ridership1
VTA
Operations
Full-Time
Employees1
Fleet
Size1& 2
VTA
Operations
Expense ($)1
Vehicle
Revenue
Hours3&4
Total
Unlinked
Passenger
Trips3&4
2009 1.77 34,510,273 10,754,161 1649 547 254,285,943 1,487,469 45,264,434
2010 1.79 31,983,494 9,749,882 1588 523 257,953,581 1,406,463 41,733,376
2011 1.814 31,395,126 10,014,504 1576 593 263,322,297 1,357,169 41,409,630
2012 1.841 32,053,755 10,373,042 1599 544 278,532,013 1,383,007 42,426,797
2013 1.87 32,432,354 10,742,292 1614 542 293,447,169 1,411,180 43,174,646
2014 1.894 32,475,527 10,952,965 1687 542 311,287,342 1,464,798 43,428,492
2015 1.92 32,623,599 11,320,497 1724 639 319,978,046 1,524,011 43,944,096
2016 1.934 32,195,504 10,722,932 1758 599 335,140,300 1,555,226 42,918,436
2017 1.946 29,057,047 9,132,084 1761 559 354,494,193 1,569,744 38,189,131
2018 1.957 28,048,405 8,507,095 1795 571 414,975,000 1,582,146 36,555,500
Notes:
1. From VTA report "Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2018" listed in
References, item number 15, and State Department of Finance
http://www.dof.ca.gov/Forecasting/Demographics/Estimates/E-2/documents/PressReleaseJul2018.pdf
2. Fleet size includes the total number of buses and light rail cars
3. Vehicle Revenue Hours (VHR) and Unlinked Passenger Trips (UPT) data from FTA NTD
https://www.transit.dot.gov/ntd/data-product/ts22-service-data-and-operating-expenses-time-series-system-0
4. Operating expense, UPTs and VHRs include only directly operated bus and light rail vehicles
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For the charts below, the Grand Jury used data from the 'National Transit Summaries & Trends
2017”20, “Santa Clara Valley Transit Authority Annual Agency Profile 2017”21, and “Service
Data and Operating Expenses Time-Series by System”22 to examine VTA’s operations and
performance in the national arena.
20 2017 National Transit Summaries and Trends
https://www.transit.dot.gov/sites/fta.dot.gov/files/docs/ntd/130636/2017-national-transit-summaries-and-trends.pdf
21 Santa Clara Valley Transit Authority Annual Agency Profile 2017
https://www.transit.dot.gov/ntd/transit-agency-profiles/santa-clara-valley-transportation-authority
22 Service Data and Operating Expenses Time-Series by System
https://www.transit.dot.gov/ntd/data-product/ts22-service-data-and-operating-expenses-time-series-system-0
0
1
2
3
4
5
6
7
8
9
10
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Op
e
r
a
t
i
n
g
C
o
s
t
(
$
)
Percentile
2017 Operating Cost ($) per Passenger Trip
2017 Operating Cost per Passenger Trip Data National Distribution ($)
2017 Operating Cost per Passenger Trip Data VTA ($)
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0
50
100
150
200
250
300
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Op
e
r
a
t
i
n
g
C
o
s
t
(
$
)
Percentile
2017 Operating Cost ($) per Revenue Hour
2017 Operating Cost per Revenue Hour Data National Distribution ($)
2017 Operating Cost per Revenue Hour Data VTA ($)
0
5
10
15
20
25
30
35
40
45
50
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Fa
r
e
R
e
c
o
v
e
r
y
R
a
t
i
o
%
Percentile
2017 Fare Recovery Ratio
2017 Fare Recovery Ratio National Data (%)2017 Fare Recovery Ratio VTA (%)
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APPENDIX C – Peer Agency Comparisons
This appendix presents various operational metrics for VTA and nine peer agencies. Generally,
VTA under-performs all or most of these agencies as noted.
Source of data: https://www.transit.dot.gov/sites/fta.dot.gov/files/February%202019%20Adjusted%20Database.xlsx
20
30
40
50
60
70
80
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Tr
i
p
p
e
r
H
o
u
r
Year
Passenger Trips per Revenue Hour (Bus & Light Rail )
Portland Minneapolis Houston Dallas
Utah Denver VTA SF Muni
Sacramento San Diego
VTA competes for
lowest
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Source of data https://www.transit.dot.gov/ntd/data-product/ts21-service-data-and-operating-expenses-time-series-
mode-2
100
120
140
160
180
200
220
240
260
2009 2010 2011 2012 2013 2014 2015 2016 2017
Op
e
r
a
t
i
n
g
C
o
s
t
s
$
p
e
r
H
o
u
r
Year
Operating Expense per Revenue Hour (Bus & Light Rail)
Portland ($)Minneapolis ($)Houston ($)
Dallas ($)Utah ($)Denver ($)
VTA ($)SF Muni ($)Sacramento ($)
San Diego ($)
VTA now trending
highest
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Source of data https://www.transit.dot.gov/ntd/data-product/ts21-service-data-and-operating-expenses-time-series-
mode-2
2
3
4
5
6
7
8
9
10
2009 2010 2011 2012 2013 2014 2015 2016 2017
Op
e
r
a
t
i
n
g
C
o
s
t
s
$
p
e
r
T
r
i
p
Year
Operating Expense per Passenger Trip (Bus & Light Rail)
Portland ($)Minneapolis ($)Houston ($)
Dallas ($)Utah ($)Denver ($)
VTA ($)SF Muni ($)Sacramento ($)
San Diego ($)
VTA is highest
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Source of data https://www.transit.dot.gov/ntd/data-product/ts21-service-data-and-operating-expenses-time-series-
mode-2
0
10
20
30
40
50
60
2009 2010 2011 2012 2013 2014 2015 2016 2017
Fa
r
e
b
o
x
R
e
c
o
v
e
r
y
R
a
t
i
o
%
Year
Farebox Recovery Ratio (Bus & Light Rail)
Portland Minneapolis Houston Dallas
Utah Denver VTA SF Muni
Sacramento San Diego
VTA competes for
lowest
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Source of data https://www.transit.dot.gov/ntd/data-product/ts21-service-data-and-operating-expenses-time-series-
mode-2
0
5
10
15
20
25
30
35
40
45
2009 2010 2011 2012 2013 2014 2015 2016 2017
Fa
r
e
b
o
x
R
e
c
o
v
e
r
y
%
Year
Farebox Recovery Ratio (All Operations)
Portland Minneapolis Houston Dallas
Utah Denver VTA SF Muni
Sacramento San Diego
VTA is lowest
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REFERENCES
1.VTA Ad Hoc Financial Stability Committee Archives for 2018, http://www.vta.org/Get-
Involved/Ad-Hoc-Financial-Stability-Committee
2.The Coming Transit Apocalypse, O’Toole, October 24, 2017
https://www.cato.org/publications/policy-analysis/coming-transit-apocalypse
3.Santa Clara Valley Transportation Authority Ad Hoc Financial Recovery Committee
February 10, 2010
http://www.vta.org/sfc/servlet.shepherd/version/download/068A0000001Fbgu
4.California Public Utilities Code (PUC), Sections 100060 through 100063.
https://codes.findlaw.com/ca/public-utilities-code/puc-sect-2870.html
5.Measure A Transit Improvement Program. See VTA.org Live Website.
http://www.vta.org/projects-and-programs/programs/2000-measure-a-transit-improvement-
program
6.Santa Clara Valley Transportation Authority Administration Code, w/ Amendments
through June 7, 2018. http://vtaorgcontent.s3-us-west-
1.amazonaws.com/Site_Content/admin_code.pdf
7.American Public Transportation Association (APTA), Quantifying Reporting Transit
Sustainability Metrics. June 2012
8.Business Insider, These North American cities have the best public transit systems.
November 4, 2017. https://www.businessinsider.com/best-subway-public-transit-north-america-
2017-10#3-vancouver-13
9.The Best Cities for Public Transportation, SmartAsset Publication. September 20, 2018.
https://smartasset.com/mortgage/best-cities-for-public-transportation
10.Assessing Transit Service Improvement, May 3, 2010, San José State University, Urban
Planning, Honors Report, Tyree.
http://www.sjsu.edu/urbanplanning/docs/URBP298Docs/urbp298_HonorsReport_Tyree.pdf
11.Hay Group, VTA Organizational and Financial Assessment, March 2007.
http://www.vta.org/sfc/servlet.shepherd/version/download/068A0000001FbYn
12.Santa Clara Valley Transportation Authority. Transit Choices Report, Jarrett Walker
Associates, February 3, 2016. https://vtaorgcontent.s3-us-west-
1.amazonaws.com/Site_Content/Transit_Choices_Report_Full.pdf
13.Transit Services Guidelines, VTA January 2019. http://www.vta.org/News-and-
Media/Connect-with-VTA/Community-Engagement-to-Begin-on-2019-New-Transit-Service-
Plan#.XMXYsbdKjIU
14.Jarrett Walker, Randal O’Toole, CATO Institute, October 2, 2018, The Future of Public
Transit. https://www.cato.org/events/the-future-of-public-transit
15.VTA Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2018.
http://vtaorgcontent.s3-us-west-1.amazonaws.com/Site_Content/CAFR_FY_2018.pdf
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16. Long Range Transportation Plan for Santa Clara County. VTP2040 undated.
http://vtaorgcontent.s3-us-west-
1.amazonaws.com/Site_Content/VTP2040_final_hi%20res_030315.pdf
17. Why We Need to Stop Subsidizing Public Transit, CATO Institute, Randal O’Toole, May
2018. https://www.cato.org/publications/commentary/why-we-need-stop-subsidizing-public-
transit
18. California State Auditor, Santa Clara County Transportation Authority, July 2008, Report
2007-129 SUMMARY. https://www.bsa.ca.gov/reports/summary/2007-129
19. National Transit Database. October 20, 2018. https://www.transit.dot.gov/ntd
20. The Great Transit Rip-Off: Joel Kotkin and Wendell Cox, August 25, 2017.
https://www.dailynews.com/2017/08/25/the-great-transit-rip-off-joel-kotkin-and-wendell-cox/
21. Silicon Valley Can’t Get Transit Right, Eric Jaffee, January 11, 2013.
https://www.citylab.com/transportation/2013/01/silicon-valley-cant-get-transit-right/4374/
22. Paying for Silicon Valley’s Transit Upgrade. The Hudson Institute, Walter Russell Mead,
April 24, 2017. https://www.hudson.org/research/13566-paying-for-silicon-valley-s-transit-
upgrade
23. Charting Public Transit’s Decline, CATO Institute, Randal O’Toole, November 8, 2018.
https://www.cato.org/publications/policy-analysis/charting-public-transits-decline
24. America Needs a Rational Transit Policy, Wendell Cox, Heritage Foundation, March 24,
2015. https://www.heritage.org/transportation/report/america-needs-rational-transit-policy
25. American Public Transportation Association: Transit Board Member Handbook. July
2014
26. It’s Never Too Late to Stop a Transportation Megafolly, Randal O’Toole, CATO, March
5, 2019. https://www.cato.org/publications/commentary/its-never-too-late-stop-transportation-
megafolly
27. Getting to the Route of It. The Role of Governance in Regional Transit. The Transit
Center. EnoTrans, Washington D.C. October 1, 2014. https://www.enotrans.org/wp-
content/uploads/Transit-Governance.pdf
28. New York City MTA Board Leadership. From Live Website.
https://new.mta.info/transparency/leadership/board-members
29. Governance of Regional Transit Systems. Washington D.C., New York, Toronto. Wilson
Center. Canada Institute, June 2014.
https://www.scribd.com/document/233493152/Governance-of-Regional-Transit-Systems-
Washington-New-York-and-Toronto
30. Houston Metro Board Leadership. From Live Website
https://www.ridemetro.org/pages/boardofdirectors.aspx
31. Austin Texas Metro Board Leadership. From Live Website
https://www.capmetro.org/board/
Note: All links verified June 9, 2019
THIS PAGE
INTENTIONALLY
LEFT BLANK
OFFICE OF THE TOWN MANAGER
(408) 354-6832
Manager@LosGatosCA.gov
August 20, 2019
Mr. John Pedersen, Foreperson
Santa Clara County Civil Grand Jury
Superior Court Building
191 North First Street
San Jose, CA 95113
RE: Response to the Santa Clara Civil Grand Jury Report on “Inquiry into the Governance of the
Valley Transportation Authority” Dated June 18, 2019
Dear Mr. Pedersen,
The Town would like to thank you and the other jurors for your work on this important topic. Attached,
please find the Town’s response to the Santa Clara Civil Grand Jury Report on “Inquiry into the
Governance of the Valley Transportation Authority.”
The response was reviewed and approved by the Los Gatos Town Council on September 3, 2019. The
Town is required to respond to one Finding and three Recommendations. The attached document
contains the Town’s responses to the Finding and Recommendations. In summary, the Town partially
agrees with Finding 1 and the Recommendations require further analysis as noted.
If you have any questions, please contact me at Manager@LosGatosCA.gov or (408) 354-6832.
Sincerely,
LAUREL PREVETTI
Town Manager
Attachment
LP/jj
cc: Robert Schultz, Town Attorney
Presiding Judge, Santa Clara County Superior Court
Clerk of the Santa Clara County Superior Court
Clerk of the Valley Transportation Authority Board
ATTACHMENT 2
Town of Los Gatos Response to Grand Jury Report on VTA Governance
Finding 1
The VTA Board, currently made up exclusively of elected officials from Santa Clara County, Board of
Supervisors, the City of San Jose, and the other smaller cities in the County, suffers from :
•A lack of experience, continuity and leadership;
•Inadequate time for the directors to devote to their duties to the VTA Board due to their primary
focus on the demands of their elected positions;
•A lack of engagement on the part of some directors, fostered in part by the committee system,
resulting in VTA functioning largely as a staff-driven organization;
•Domination, in terms of numbers, seniority and influence, by representatives of the Santa Clara
County Board of Supervisors and the City of San Jose; and
•Frequent tension between the director’s (sic) fiduciary duties to VTA and its regional role, on the
one hand, and the political demands of their local elected positions, on the other.
Response: Partially Agree.
While the finding correctly identifies many of the factors influencing effective leadership of the VTA
Board, some of the broad generalizations are not applicable to every director. Specifically, some
directors do have transportation experience having served on other VTA committees and/or be ing
engaged in local transportation issues. In addition, some directors create the necessary time to prepare
for meetings.
Recommendation 1c
As constituent agencies of VTA, each of the cities in the County should prepare and deliver to the VTA
and the County Board of Supervisors a written report setting forth its views regarding VTA governance,
with specific reference to the elements listed in Recommendation 1a . These reports should be
completed and delivered prior to December 31, 2019.
Response: Requires further analysis.
Recommendation 1a requests that “VTA commission a study of governance structures of successful large
city transportation agencies.” The Town of Los Gatos respectfully requests that such a study explore
successful transportation agencies that serve a major metropolitan area consisting of multiple
municipalities, such as Portland, Oregon. Governance models of individual large cities may not be as
applicable to the unique and diverse communities within Santa Clara County.
The recommendation for individual constituent cities to perform a similar analysis and explain their
views on governance issues requires further analysis and resources to implement thoroughly. The Town
of Los Gatos appreciates the Grand Jury’s interest to engage the constituent cities in these important
governance questions; however, small jurisdictions cannot undertake such an analysis alone. As an
alternative, the analysis might be best performed by a representative body of the cities, such as the
Cities Association of Santa Clara County with financial support from VTA. This approach would enable
the more efficient use of available resources and an existing institutional framework for collaboration.
Once funding is committed, it is estimated that the analysis and compilation of the cities’ input would
require at least 120 days. After completion, a report would be submitted to the VTA Board and County
Board of Supervisors. The Town would participate in such a multi-agency approach.
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Town of Los Gatos Response to Grand Jury Report on VTA Governance
Recommendation 1d
Within six months following the completion of the studies and reports specified in Recommendations
1a, 1b and 1c, the County of Santa Clara and/or one or more of VTA’s other constituent agencies, should
propose enabling legislation, including appropriate amendments to Sections 100060 through 100063 of
the California Public Utilities Code, to improve the governance structure of VTA (which potentially could
include an increase in the directors’ term of service, the addition of term limitations and the inclusion
of appointed directors who are not currently serving elected officials).
Response: Requires further analysis.
Assuming that the analysis and engagement of the constituent agencies occurs pursuant to the response
to Recommendation 1c, the Town of Los Gatos is open to participating in the development of legislation
regarding VTA governance. Any legislation should address the root concerns regarding
underrepresentation of the smaller jurisdictions.
Recommendation 1e
In order to provide more continuity in the leadership of the VTA Board, within six months following the
completion of the studies and reports specified in Recommendations 1a, 1b and 1c, the County of Santa
Clara and/or one or more of VTA’s other constituent agencies, should propose enabling legislation
amending Section 100061 of the California Public Utilities code (sic) to provide that the Chairperson of
the VTA Board shall be elected for a term of two years rather than one.
Response: Requires further analysis.
It is premature to commit to a specific legislative action pending the outcome of the requested studies
and reports. Specifically, while continuity in leadership is typically effective for any governing body, the
continuity is only effective if it is fairly distributed among the constituent agencies. Otherwise, a longer
term of the Chairperson would exacerbate the issues identified in the Grand Jury Report.
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