North County Transit District answers

| Sunday, February 24, 2008 3:31 PM PST ∞

Editor's Note: On Feb. 18, the North County Times editorial board sat down with officials from the North County Transit District to discuss problems with the Sprinter and other regional transportation and development issues. Below is an edited transcript of that meeting.
Listen to the meeting

Present at the meeting were Karen King, executive director of NCTD; Pete Aadland, director of communications and business development for NCTD; Don Bullock, Sprinter project manager; and Ed Gallo, chairman of the NCTD board and Escondido councilman.

North County Times staff included Peter York, publisher; Rusty Harris and Dan McSwain, managing editors; Joe Sheffo, assistant opinion editor; and Paul Sisson, reporter.

Joe Sheffo: The first and most obvious question is the status of the Sprinter. Can we still expect a March 9 start date?

Karen King: That is our expectation. We don't have full control over all of the circumstances that will determine that. But that is the date that we have set and that we are working diligently to meet, and we believe we are on track to meet that. But it will take the cooperation of the California Public Utilities Commission to ultimately make that work.

JS: Can you explain to us what some of the things [are that are] causing the delays?

KK: ... The primary difficulty that has caused the delay since the first of the year has been getting the safety certification and OK to operate from the California Public Utilities Commission. Because this is a new technology to the U.S., ... these diesel-multiple units have not been operated in the U.S., and because we got some exemptions from the Federal Railroad Administration and the CPUC agreed to take on the safety oversight, but the technology does not fit into any of their regulations neatly. They don't quite know how to judge the safety of the system because typically you look at what has been built and you look at a regulation and you see if it complies with the regulation. Because the regulations are built for electric light rail, and that operates exclusively in its own right of way, and this service is not electric and it operates in a freight right of way, they don't match. So the CPUC is having to exercise some independent judgment about whether or not the design construction and operations of this system meet their test for safety. And, of course, as most of us are in this litigious society, they're very risk-adverse and want to make sure, as do we, that the system is safe before they give their blessing for us to stop and start operations.

JS: I don't want to live too much in the past, but could you provide a little context: Why did NCTD choose those particular types of train cars, as opposed to something more conventional and widely used?

KK: NCTD didn't actually make that decision. That decision was made by the San Diego Association of Governments in about 1990, I believe. Early on, as they did the advanced planning for this project and they evaluated the different technologies that were available and evaluated the context in which this project was to be built, because it isn't street-running, like the trolley and which many, or most, light-rail systems are; it's on a dedicated right of way, it's on an existing right of way, it was a different type of analysis and led to different conclusions. And this particular technology ... requires a smaller capital investment. It's less costly to build and, at the time, was less costly to operate. Now with the rise in the cost of diesel fuel, ... I think it's still less costly to operate, but people ask that question, how is that going to impact the cost of operations? And clearly the price of the fuel is a concern for the future.

JS: What were the delays, ... the problems with the Vista station?

KK: ... When you are building a railroad, the straighter the track, the better. Curves, whether it's just during running or at a station, are a problem. That particular station location was selected because it's in a fairly dense neighborhood with a population around it that would be likely to use the service, so it's a good location from that perspective. It's not such an ideal location because it is on a curve. ... And at the time we initiated design of the project, we were also selecting the vehicle, and once we knew what the vehicle was, we had to tweak the design to match the vehicle. And it's only a problem on one side, when you're going westbound because it's a curve, the train hugs the platform nicely, but going the other direction, as it swings out and the tail swings out, you have a larger gap between the edge of the platform and the train, ... and that ... has been a concern for the CPUC, that there is a gap there large enough for someone, perhaps, to fall or get their foot caught between the edge of the platform and the train. So we've had to try and engineer, tweak the design, and also engineer a solution to bridge that gap between the side of the train and the edge of the platform.

JS: Are we past the worst [of the signal problems] ... ? What was the cause and what are you guys doing [about them]?

Don Bullock: ... It's a very complex system from end to end. It's a completely rebuilt signal and train control system. From the 22-mile corridor, we had to integrate with all the intersections, the traffic signal systems. There's 37 that were totally rebuilt. And we have upwards of 80 different signal control houses and various control points where it goes from single to double track. There's been a few issues, but we've been working them out. Software issues. ... And we're working through some of those, but it's safe to say that the failures we've had have been timing or mechanical, but they always are designed to fail-safe so that in the event of a problem, the gates will comes down. It'll tie up traffic and cause inconveniences, but it'll keep the public safe. So, to answer the question, yeah, we're through the worst of them, but I would expect a few more bugs to be worked out. And it's (a) highly complex, very exasperating task to get everything ironed out right in the beginning, but we're getting there.

JS: Can you give us a breakdown on the financing as you move into ... daily operations? It's been built and paid for, for the most part. But from here on out, how do we pay for this? How much are the feds, as a percentage, responsible for? How much do we get from the state, as a percentage, of the total Sprinter budget? How much from rider fees? ... How do you anticipate that working?

KK: In terms of cost of operations?

JS: Yes.

KK: ... About 70 percent of our operating budget comes from federal, state and local subsidies. And we don't really allocate that by mode unless the source requires us to do so. And some of our federal funds, for example, are designated for rail only or bus only, but in general we put it all in a pot and then allocate those to the different modes. So it will just get folded into our budget. We do have some federal Congestion, Mitigation and Air Quality funds that are available for the first couple of years of operations. They're a limited source that can be applied to new starts such as this project, until you can develop the ridership. ... The fare will be the same as the bus, which is $2 for a single ride or $4 for a day pass. And right now our fare box recovery ratio systemwide is running about 27 percent, which is pretty average for a transit system.

Dan McSwain: What does that mean?

KK: ... You take your fares, divide it by your operating costs, the percentage of your costs that's covered by your fares, and the balance of it is covered by subsidies or income that the district generates, which we generate through leases, advertising, various other sources.

JS: About the operating budget, about three-quarters you'll have to get somewhere else, other than paying riders?

KK: That's correct.

JS: Since we're discussing financial matters, the $4 million, I guess it is, at least for this fiscal year, budget deficit. Is that correct? I'm just kind of wondering what the causes are.

KK: You know, it depends on any given day that somebody does an estimate, and we'll know what that is at the end of the year. Last Friday at the SANDAG Transportation Committee meeting, SANDAG presented some revised revenue projections which are a little bit more favorable than the projections they had given us in November. So, we are being conservative and trying to control spending, and we'll budget to the lower number, but as of this week, we're feeling a little bit more optimistic that it may not be quite as bad.

JS: And what's behind it? Do you know?

KK: Sales tax revenue. ... All of our subsidies are either based on gas tax or sales tax. And so as the economy goes, (so) goes our subsidies, and that's very typical. It ebbs and flows. Although I will say in my 30-year career in public transit, this is probably the worst economic situation I've observed.

JS: I know that you're looking for other sources of revenue, one of those sources being development along the ... Coaster [and Sprinter lines]. ... Can you explain how those arrangements would work, how much NCTD is responsible for, as far as financing and running once they're built? And how much private sector and how much you're asking from the cities? How does that all work?

KK: It's interesting because it works differently in different communities, and in some places across the country, they've had some measured success with that, and in many they've had high hopes and not generated a lot in terms of cash revenues. But there's other benefits that accrue to public transit by having more dense population around the stations, in particular, ridership, because it ... becomes a destination and an origin for trips. Our contribution primarily to those developments is the land. And we have an interest in particular in trying to enhance the transit attractiveness of those areas around the station. That's our primary focus. And then secondarily to provide parking because parking is always a constraint to ridership for rail, not just in our system, but everywhere. It should be, at least I'm hopeful, it will be less of a constraint on the Sprinter than it is on the Coaster. And then thirdly, if after the public-private partnership of that development pays for the parking, if there is long-term lease revenue that would then be generated from that development, that's good for us because it helps to temper that peaks and valley ...

Rusty Harris: So, in short, the transit district is into being a landlord.

KK: No, I wouldn't say that. We're into providing public transit.

RH: Right, but what you just described sounded very much like somebody making plans to allow somebody else to develop their property ...

KK: Correct.

RH: ... so they can collect revenue.

KK: But that is not our primary ...

RH: I realize that.

KK: ... purpose.

RH: That's why I'm wondering why you're in the landlord business.

KK: Because we own property that we view as an asset for generating revenue, and it's a way of diversifying our revenues to try and strengthen our financial picture.

RH: Parking lots I understand. It's the government owning land and letting somebody build an office building on it and then the government, I'm talking about San Marcos, is a great example, pulls revenue for decades off leases. Is that what the Transit District is proposing?

KK: Yes.

JS: Why not just sell it?

Ed Gallo: Los Angeles Transit District did that back in the '20s. Look at the condition they're in. If they could've retained the land that they owned, L.A. wouldn't have the transit problem that they have. That's one of the biggest reasons. Once you own something, don't get rid of it.

DM: Putting an office building on it's getting rid of it. ... Putting an office building on it's getting rid of it. You can't use it for transit.

EG: No, we still own it.

DM: You mean because they sold easements? I don't understand the L.A. Transit District metaphor.

KK: We would retain the ownership. We would lease the property to the developer. So we would be retaining the ownership and collecting lease revenue.

RH: I think we understand all that. I think the basic idea is if you don't need the land for easement or possible expansion or possible construction of something directly tied to the operation of the Sprinter, why not sell off excess land to the private sector?

JS: It sounds like you'd be setting yourselves up as kind of a Center City Development Corporation, you know a development corporation for ... the rail corridor.

KK: I think NCTD would be open to higher subsidies if the taxpayers or property owners or someone else wanted to help underwrite the cost of public transit in San Diego.

JS: Don't we already do that?

KK: We do, but it's one of the lowest subsidies in the country. And so the question is, what level of public transit will serve the community well, and how do you pay for it?

JS: Are you worried about, I guess the most obvious example is Solana Beach, where this was all going along just fine until they actually got to the point where they had to say "yes"? Is that something you guys think about? I mean, because you face the same problem in downtown Oceanside. It all sounds great until somebody has to make a decision and then ...

KK: Those are the difficulties in any development, whether you're a private developer on private property or trying to develop on public property. We aren't exempt from those requirements.

DM: Forgive my skepticism. Governments are usually bad landlords. The Marina Towers debacle in Oceanside is a wonderful example. They signed a bunch of leases that required the city to renovate the place. The elevators quit working, for example, but it was really expensive to fix the elevator, and the city was in a budget crunch, so the tenants said, wait a minute, where's my elevator? And ... it became a problem. And it looked like a great idea 20 years ago when they built that thing and signed a bunch of 20-year leases. And, from a different side of the coin, it's outside the core competency argument. We've got some of the greatest industrial/commercial/residential developers on the planet right here in San Diego County. That's what they do for a living, they've got people straight out of the top business schools in the country, and ... a government agency is at a disadvantage competing against those folks, all things being equal. So, what makes the district think that over time, you can be an effective landlord and that this is a source of revenue that makes sense? For example, you could sell the land and go buy Chinese bonds or whatever they make you buy these days. There are a lot of investments ...

JS: Yeah, live off dividends.

KK: I think there's a couple of answers to that. ... It's a policy issue at the district and I think we look to where it has been done successfully elsewhere, in Oakland, in other parts of the country. And, yes, maybe there's been failures. There's also been successes. And is there a reason why we could not be successful, I would ask you?

DM: Because it's not what you do for a living. We could probably open ... we're a newspaper, and we've got space for a taco shop right across the street. We could probably generate revenue with a taco shop.

KK: And you couldn't, you couldn't develop that competency?

DM: We probably could. It's probably not the best deployment of our intellectual assets.

Peter Aadland: There seems to be a couple models, I know, transit has sold property. They've also said, here's our property, here's what it's worth, who's the highest bidder for 100 years? Back on the East Coast, Washington develops a huge percentage of their budget through real estate, to the point where they have, I think, a building, for sure a huge team, that does nothing but manage real estate. So you're right, you reach a point where, where do you make that decision, where do you draw that line, and I think those are the policy issues that our board is going to have to look at and struggle with. But there's different scenarios on setting that up.

Peter York: Let me ask you something, kind of in the same vein. What are the cities along the route doing ... to benefit the ridership or to make it more attractive? I know that Vista's talking about buses from, or trolleys, or some sort of a thing, from the stations around town. I don't know what Escondido's doing. ... I live in Carlsbad and I might take the train to work, but, I mean, that's a hike for me from the end of the line to here, unless the line's going to end right here, which it isn't.

KK: See, I always find that interesting because people will pay hundreds of dollars a year to go to the gym and walk on the treadmill, but they won't walk a half a mile from their business to the train. ... Well, I will tell you that the last mile of the trip is a problem for transit everywhere. I mean, when you go to New York City, I don't know if you use the subway, but I take the subway. But it means I have to walk three or four blocks to my hotel or to the theater or wherever I'm going. That is a fact of taking public transit anywhere.

JS: And, [that] leads me to another question. I've read of some evidence, I think in L.A. there was a case where a community group actually sued the transit district up there, because once they put the subways in ...

KK: 20 years ago.

JS: ... and the cost went up, they had to cut bus services.

KK: That was in the 1980s. That's correct.

JS: Well, that's a good model. How was that worked out up there and are you anticipating ...

KK: I'll tell you how: One way ...

JS: ... how to deal with those kind of pressures here?

KK: One thing that came out of that bus riders union lawsuit back in the '80s was that the federal government, as part of their full-funding grant agreement, requires that you do a before and after study and they require that you present a financial plan before they give you the grant that demonstrates that you will not do that. They're very sensitive to that specific plight, and I happened to be working in Long Beach when that occurred, and that was a big problem. The Los Angeles Metropolitan Transportation Authority wanted Long Beach transit to provide connector service to the Blue Line, that goes from Long Beach to L.A., but had absolutely no revenue to help pay for that, so they were looking to us to underwrite that cost and we had no additional revenues to add service, so that is a legitimate concern. But since that lawsuit was filed and the Blue Line was one of the first new light-rail lines built under this program of the federal government, that has been a concern. It is addressed. My signature and our former board's signature, chair's signature, is on that document, saying that we will not allow that to occur.