SANTA CLARA VALLEY TRANSPORTATION AUTHORITY (VTA)

RECOMMENDED BUDGET

FISCAL YEARS JULY 1, 2003 through JUNE 30, 2004 AND JULY 1, 2004 through JUNE 30, 2005

2003 Board of Directors Jane P. Kennedy Chairperson VTA Board of Directors Council Member City of Campbell Don Gage Vice-Chairperson VTA Board of Directors Supervisor Santa Clara County Board of Supervisors Blanca Alvarado Chairperson Santa Clara County Board of Supervisors Cindy Chavez Council Member City of San Jose David Cortese Council Member City of San Jose Pat Dando Vice Mayor City of San Jose Ron Gonzales Mayor City of San Jose John McLemore Council Member City of Santa Clara Dena Mossar Mayor City of Palo Alto

Thomas Springer Mayor City of Gilroy Manuel Valerio Council Member City of Sunnyvale Forrest Williams Council Member City of San Jose Board Member Alternates Patricia Dixon Vice Mayor City of Milpitas Francis La Poll Council Member City of Los Altos Pete McHugh Supervisor Santa Clara County Board of Supervisors Joe Pirzynski Council Member Town of Los Gatos Ken Yeager Council Member City of San Jose Ex-Officio James Beall, Jr. Chairperson, Metropolitan Transportation Commission (MTC)

General Manager Peter M. Cipolla General Counsel Suzanne Gifford Board Secretary Sandra Weymouth Chief Administrative Officer Kaye L. Evleth Chief Construction Officer Jack Collins Chief Development Officer Michael P. Evanhoe Chief Financial Officer Scott Buhrer Chief Operating Officer Frank T. Martin Controller Jerry Rosenquist Budget Department Victor Chan Liza Chuapoco Christine Huynh Pauline Man Jim McCutchen Linda Schwartz

TABLE OF CONTENTS General Managers Budget Message.......................................................................... I. Introduction Budget Resolution ............................................................................................. Executive Summary .......................................................................................... Vision, Mission, and Strategic Plan ................................................................. Current Operations............................................................................................ Page i

1 4 5 7

II.

Operating Budget Operating Budget............................................................................................... 15 Major Budget Assumptions and Explanations............................................... 18 Division Budgets FY 2002-03 Accomplishments & FY 2003-04 Goals ....................................... Office of the General Manager ......................................................................... Office of the General Counsel .......................................................................... Operations: Administration ............................................................................................. Transportation ............................................................................................. Maintenance ................................................................................................. Administrative Services .................................................................................... Construction....................................................................................................... Development & Congestion Management ..................................................... Congestion Management Program and Highway Project Development & Administration .... Planning & Development and Marketing & Customer Services ............ Fiscal Resources ................................................................................................ Other.................................................................................................................... 31 43 47 49 53 56 61 65 71 80 83 85 88

III.

IV.

Capital Budget Introduction........................................................................................................ 89 Capital Budget Schedule................................................................................... 90 Major New and Augmented Capital Projects ................................................ 91 1996 Measure B Transportation Improvement Program .............................. 96 2000 Measure A Transit Improvement Program ........................................... 104 Other Programs ................................................................................................. 106 Other Local Projects.......................................................................................... 107

Appendices: A. Employee Positions by Division and Pay Ranges............................................. 111 B. Budgeted Positions by Division and Classification ......................................... 112 C. Population Data for Santa Clara County by City............................................. 113

D. Ten Year Summary of Santa Clara County Employment Information ...... 114 E. Projects Closed or Scope Reduced by Capital Improvement Program Oversight Committee ............................................................................................... 115 F. FY 2003-04 Capital Budget Summary .................................................................. 116 G. Additional Information on Non-Revenue Vehicle Purchase ......................... 118 H. FY 2003-04 ATU Pension Fund Expenditure Plan ........................................... 119 I. Proposed FY 2003-04 Basic Fare Structure for Bus, Light Rail and Paratransit Services, and ECO Pass Pricing Information ............................ 120 J. Fee Schedules .............................................................................................................. 122 Glossary ............................................................................................................................... 124

VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ GENERAL MANAGERS BUDGET MESSAGE Last years budget message opened with the necessity for a service reduction, a fare increase and most disturbing, a reduction in our workforce. At that time I also stated If we dont effectively address the situation over the next several months, well be faced with an even more critical issue next year at this time. Here we are, one year later. The economy is showing no sign of recovery. Weve just completed seven quarters of negative sales tax performance (unprecedented at any time during the past 25 years). And, in spite of a great deal of good intentions, discussion, discovery and dedication, we still dont have a viable solution. The result will come as no surprise to those who have been working closely with us this past year. And once again, we are facing a service reduction, a fare increase and another reduction in our workforce. This time, however, the required service cut is so deep that it will take us back to l981 levels of service. Can VTA survive? We hope so, as do the thousands of customers we will impact, along with those talented, dedicated employees we will be forced to lay off as well as those who will remain. The fare increase is designed to generate at least $4 million in necessary revenue, (before considering the effects of the proposed service reductions). Raising fares when we are also making significant service cuts is not an ideal approach, but we have little choice. In combination with several expenditure cuts and efficiency measures, this revenue will help us improve our farebox recovery ratio. In truth, thats secondary to the primary need to generate cash. Without this cash, additional services would have to be cut. The loss of ridership with fare increases and service reductions is usually temporary. But these are unusual times and recently historical trends havent exactly reflected what actually happens in the future. We can only hope our customers will understand and remain loyal to VTA during these extremely difficult times. We will continue to do everything we can to earn, and hopefully retain, their loyalty. The loss of any employee through a layoff is difficult, but this one cuts very deep into the heart of this organization. These are highly skilled, well-trained and extremely loyal individuals who have served to energize VTA. This is not just a job to them. They believe in what they do and in the people they serve. It is incumbent upon those of us who can impact this financial crisis to resolve the issue of additional revenue, restore effective and efficient services, and get our people back to work as quickly as we can, serving the public, our customers, as only they can do. Those who have taken the time to look carefully at VTA these past two years of economic turmoil should realize how skillfully this organization has been able to manage its way through this fiscal crisis up to this point. There are fiscal heros everywhere. The multitude of individuals who have found ways to save VTA moneythe two individuals who discovered a $750,000 error in diesel fuel billingthe review, re-review
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ and subsequent deferral of over $120 millions of capital projects so that we can keep more service on the streetthe series of unique (and often one-time) financial transactions that have or will serve to keep us going a bit longerthe effective use of VTAs reserves these past months, enabling us to keep funding as much service as possible. Some may recall that at one point, two years ago, VTA was criticized for having too much in our unrestricted reserves. While we acknowledged their comments, were glad we retained our reserve program. As a result of the above and much, much more from those within our organization and those affiliated with us (such as input and suggestions from our financial advisors) we have been able to protect our customers from major negative impacts until this past April. While to some, this may not seem like an accomplishment, I would say it is. In fact, I believe it is a major accomplishment and directly a result of the commitment of VTA employees. While much of our focus has been on VTAs enterprise fund (that supports transit operations) this past year, the impact of the economy on the 1996 Measure B Program and State supported major capital projects has sent us back to the drawing board several times this past year. Through the judicious use of swap funds, Garvee bonds and other unique approaches, we have been able to keep the bulk of the major capital program moving ahead, most of which is forecast to be completed below budget and ahead of schedule. As you look through this document, you will have the opportunity to review a short synopsis of the myriad of activities and accomplishments VTA has had or undertaken this past year. Please take the time to look them over. It is very easy and understandable for these to be overshadowed by our fiscal situation. They are, nonetheless, a critical piece of this past years history and reflective of VTAs impact on our community. In developing this budget effort, many are aware, we modified our normal approach and focused on developing a two-year financial plan for FY 2003-04 and FY 2004-05. We fully realize it will change, perhaps a great deal over the next two years, but we felt it critical to develop a financial program that would provide an opportunity to identify and implement a long-term financial strategy for VTA in concert with our stakeholders who reside and work within our county. It is, after all, really their transportation organization. This budget scenario will help us buy a little time. Weve deferred many programs and projects, many of which should not be deferred for long. Excess deferral will serve to the detriment of VTA, our customers and our community. Weve consumed or are in the process of using up the last of the unique one-time financial transactions. Again, we can only buy a little time.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________

Peter M. Cipolla General Manager April 15, 2003

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________

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VTA FY 2003-04 & FY 2004-05 RECO MMENDED BUDGETS

______________________________________________________________________________ Resolution No. RESOLUTION OF THE BOARD OF DIRECTORS OF THE SANTA CLARA VALLEY TRANSPORTATION AUTHORITY (VTA) ADOPTING A BIENNIAL BUDGET OF VTA FOR THE PERIOD JULY 1, 2003 THROUGH JUNE 30, 2005 (FY 2003-04 AND FY 2004-05) WHEREAS, on or before April 25, 2003, the General Manager presented the Santa Clara Valley Transportation Authority Fiscal Year 2003-2004 Recommended Budget to the Board of Directors and mailed a copy to each City Manager and Mayor in the County of Santa Clara and to the County Executive; and WHEREAS, additional copies of the Recommended Budget were distributed to VTAs Advisory Committee membership, libraries in Santa Clara County, Santa Clara Countys state and federal legislative delegation, senior and disabled groups, professional community organizations, and the news media, and were available for review on VTAs website www.vta.org and at VTAs Downtown Customer Service Center, as well as libraries and city halls throughout the County; and WHEREAS, the Recommended Budget includes all administrative, operational and capital expenses for the Congestion Management Program together with the apportionment of Congestion Management Program expenses by levy against the Managing Agency and each Member Agency to the extent necessary to fund the Congestion Management Program; and WHEREAS, the Recommended Budget was reviewed by the Administration and Finance Committee on May 15, 2003, and on April 25 and June 5, 2003, by the Board of Directors at public meetings conducted throughout the County; WHEREAS, a list of employee position classifications and pay ranges is included in the recommended budget as Appendix A, and the amount of funds budgeted for wages, salaries and benefits for Fiscal Year 2003-2004 is based upon VTAs position classification and pay plan and is set forth in the Statement of Revenues and Expenses in the Recommended Budget; and WHEREAS, the Board of Directors desires to adopt a biennial budget for the period of July 1, 2003 through June 30, 2005 (FY 2003-04 and FY 2004-05); NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Santa Clara Valley Transportation Authority that the attached recommended budget for the Santa Clara Valley Transportation Authority (marked Exhibit A and incorporated herein as though set forth at length), is hereby adopted as VTAs budget for the Fiscal Year 2003-2004.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ BE IT FURTHER RESOLVED that, effective July 1, 2003, positions may be authorized and filled, as required, by the General Manager and General Counsel, as appropriate, provided that total VTA-wide budgeted wages, salaries and benefits account is not exceeded. BE IT FURTHER RESOLVED, that, as necessary for efficient administration, position classifications may be added, modified, or deleted and salary ranges adjusted with the approval of the General Manager or General Counsel, as appropriate, provided that the changes are in accordance with applicable VTA personnel policies and procedures and are consistent with pay practices in the transportation industry. Such changes shall include pay and classification adjustments arising from agreements between VTA and its recognized labor organizations. BE IT FURTHER RESOLVED, that operating appropriations for major professional services for one time non-recurring programs or projects, which are not expended during the fiscal year, shall carryover to the successive fiscal years until the programs or projects are completed or terminated. Other operating appropriations shall lapse at year-end. BE IT FURTHER RESOLVED, that capital appropriations, which are not expended during the fiscal year, shall carry over to successive fiscal years until the projects are completed or otherwise terminated. BE IT FURTHER RESOLVED, that the budget shall consist of five Funds: the Transit Enterprise Fund, the Congestion Management Program Fund, the 1996 Measure B Transportation Improvement Program Fund, the 2000 Measure A Transit Program Fund and the Highway Improvement Fund. The General Manager may reallocate appropriations between budget units and cost groups within each Fund up to the limits of each Funds annual appropriation. Any net increase in authorized appropriations to any Fund (including an allocation from reserves) shall require an affirmative vote of at least eight Directors. BE IT FURTHER RESOLVED, that the Recommended Assessments of member agencies for the Congestion Management Program are hereby approved. PASSED AND ADOPTED by the Santa Clara Valley Transportation Authority Board of Directors on ___________, by the following vote: AYES: NOES: ABSENT: DIRECTORS DIRECTORS DIRECTORS

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________

___________________________ JANE P. KENNEDY, Chairperson Board of Directors ATTEST: _________________________________ SANDRA WEYMOUTH, Secretary Board of Directors APPROVED AS TO FORM: __________________________________ SUZANNE GIFFORD, General Counsel

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ SANTA CLARA VALLEY TRANSPORTATION AUTHORITY FISCAL YEAR 2003-04/2004-05 BUDGETS EXECUTIVE SUMMARY
FY 2001-02 In thousands Ridership (In 000's) Bus Light Rail Total Ridership Service Miles (In 000's) Bus Light Rail Total Service Miles Service Hours (In 000's) Bus Light Rail Total Service Hours Total Revenue Major Revenue Components: 1/2 Cent Sales Tax TCRP/Measure A Proceeds TDA Fares Federal Operating Grants Total Expense* * Excluding Contingency Wages & Benefits ADA Debt Service Caltrain Materials & Supplies Security Other Service Fuel Operating Cost Recovery Ratio Farebox Recovery Ratio Number of Projects: New Projects Augmented Projects Carryover Projects Total Number of Projects Gross Project Expenditures (In $000's): New Projects Augmented Projects Carryover Projects Total Number of Projects $ FY 2002-03 Adopted Revised Actual Budget Estimate OPERATIONS 44,900 7,790 52,690 22,044 2,033 24,077 43,600 7,900 51,500 21,174 1,832 23,006 40,000 6,200 46,200 20,402 1,584 21,986 FY 2003-04 Proposed Budget FY 2004-05 Proposed Budget

33,000 5,260 38,260 15,698 1,415 17,113

32,800 5,760 38,560 14,633 1,675 16,308

1,589 137 1,726

1,538 122 1,660

1,493 109 1,602 360,566 133,000 63,383 32,887 40,426 357,028 229,007 30,556 24,168 18,146 14,217 9,383 7,457 6,091 14.0% 11.9%

1,151 96 1,247 377,757 135,000 81,945 63,450 31,495 30,284 407,460 214,471 31,797 105,735 14,105 13,200 7,904 6,584 6,161 13.3% 12.6%

1,067 101 1,168 311,136 139,000 65,330 36,429 31,344 327,095 207,195 32,751 23,579 14,387 13,385 8,499 6,380 5,143 14.8% 14.6%

REVENUES (In $000's) 326,230 336,927 144,218 95,401 31,282 14,023 155,000 63,383 38,011 31,900

EXPENSES (In $000's) 352,405 362,093 220,462 33,122 23,161 20,630 14,715 9,909 8,551 4,809 13.4% 11.6% 227,888 32,452 25,268 16,605 16,048 9,473 7,883 5,964 14.5% 13.3%

CAPITAL PROJECTS 12 4 90 106 4,668 2,848 944,904 $ 952,420 $ 14 23 36 73 4,259 64,104 922,660 $ 991,023 $ 12 2 71 85 4,008 1,000 991,022 $ 996,030

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ VISION, MISSION, AND STRATEGIC PLAN In September 1995, the Board of Directors adopted a vision and mission statement for the Santa Clara Valley Transportation Authority (VTA). This statement provides a framework for making future policy, planning and budgetary decisions. VISION STATEMENT The vision of the Santa Clara Valley Transportation Authority (VTA) is to provide a transportation system that allows anyone to go anywhere in the region easily and efficiently. This statement contains the long-range vision for VTA and portrays the desired future VTA seeks to achieve. The vision is regional, including both the immediate areas of Santa Clara County and the bordering Bay Area to which the County is linked economically, socially, and culturally. MISSION STATEMENT The mission of the Santa Clara Valley Transportation Authority (VTA) is to provide the public with a safe and efficient countywide transportation system. The system increases access and mobility, reduces congestion, improves the environment, and supports economic development, thereby enhancing quality of life. The mission or core purpose of VTA is to provide a safe and efficient countywide transportation system. The emphasis is on an integrated transportation system that comprises the full range of mobility options, from cars, buses, and rail systems to walking and bicycle trips. The system will allow members of the public to travel easily and comfortably to their destination by the most appropriate means. POLICY DIRECTIONS In adopting the vision and mission in 1995, the Board of Directors specified four key policy directions for VTA. In March 1999, the Board adopted a fifth policy direction related to the 1996 Measure A transportation program of projects. Integrate transportation and land use Use all transportation options Create a safe, convenient, reliable and high-quality bus/rail operation Build a regional perspective In partnership with the County of Santa Clara, implement the 1996 Measure A transportation program of projects

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ STRATEGIC PLAN The Strategic Plan serves as the umbrella policy document for VTA and drives the Recommended Budget and other documents for which VTA has responsibility, such as the Short Range Transit Plan (SRTP), the Congestion Management Program (CMP), and the Countywide Transportation Plan. The goals set forth in the Strategic Plan are ambitious but attainable, and include mechanisms for measuring performance. The Strategic Plan contains VTAs strategies for implementing the mission and achieving the vision. Five broad goal areas form the basis of the plan: Enhance our customer focus Improve mobility and access Integrate transportation and land use Maintain financial stability Increase employee ownership

The divisional goals contained in this budget are consistent with the broad goals established in the Strategic Plan. The Strategic Plan also includes a 10-year Business Plan for VTA. The Business Plan consists of a 10-year forecast of transit service levels, expenses, revenues, and specific performance measures with annual benchmarks for monitoring progress towards attaining our goals. VTAs actual performance is analyzed each year against the performance measures, and the Business Plan is modified accordingly. VTAs current Business Plan was released in 1998.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ CURRENT OPERATIONS The Santa Clara Valley Transportation Authority (VTA) is an independent public agency responsible for bus and light rail operation, ADA paratransit service, congestion management, specific highway improvement projects, and countywide transportation planning. As such, VTA is both an accessible transit provider and a multi-modal transportation planning and implementation organization involved with transit, roadways, bikeways, and pedestrian facilities. VTA provides transit services to the 326 square mile urbanized portion of Santa Clara County that is comprised of 15 cities and the County of Santa Clara with a total population of more than 1.7 million residents. A historical summary of the county population by city is presented in Appendix C. VTA operates 69 bus routes and two light rail transit (LRT) lines (Guadalupe and Tasman) within this service area. In addition, VTA funds paratransit and privately operated shuttle services in the County and participates in providing inter-regional commuter rail and express bus services. All of the bus and rail vehicles are accessible for individuals with disabilities. In January 1995, VTA was designated as the Congestion Management Agency and changed from being exclusively a transit provider to an organization responsible for countywide transportation planning, funding, and congestion management within the County.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ VTA, in partnership with the County of Santa Clara, assumed the responsibility for implementing the 1996 Measure B Transportation Improvement Program of transit and highway improvement projects. In addition, VTA is responsible for implementing the 2000 Measure A Transportation Improvement Measure an essential element of VTP 2020. The following section provides a summary of VTAs services: BUS OPERATIONS By the beginning of FY 2003-04, VTA will have an active bus fleet of 433 diesel-powered buses, which includes 235 low-floor buses. The average age of the active fleet is about 3.8 years and the buses range from new to over 11 years old. There are approximately 4,700 bus stops and 700 shelters along the bus routes. VTA also maintains 15 park & ride lots -- five owned by VTA and ten provided under a lease, permit, or joint use agreement with other agencies. Buses are operated and maintained from three operating divisions and an Overhaul and Repair (O&R) facility: Cerone Operating Division, Don Pedro Chaboya Operating Division, North Operating Division and Cerone O&R Division. LIGHT RAIL TRANSIT (LRT) VTA operates a 29.5-mile LRT system connecting the Silicon Valley employment areas of Mountain View, Sunnyvale, Santa Clara, North San Jose and Milpitas to residential areas in South San Jose. The LRT system has a total of 50 stations and 16 park & ride lots. It operates on three routes: service between Santa Teresa and the Baypointe Station in North San Jose, service between Mountain View and the I-880/Milpitas Station in Milpitas and shuttle service between Almaden and Ohlone-Chynoweth Stations in South San Jose. A fleet of new Kinkisharyo low floor light rail vehicles operates exclusively on the Tasman light rail line. VTA will deploy a mixed fleet of Kinkisharyo low floor and UTDC high floor light rail vehicles on the Guadalupe line for part of 2003 until adequate numbers of the Kinkisharyo vehicles are commissioned and the interim platform retrofit project is complete. All 79 (32 Kinkisharyo and 47 UTDC) light rail vehicles are stored and maintained at the Guadalupe Operating Division near downtown San Jose. PARATRANSIT SERVICES In 1992, VTA implemented a paratransit system, which operates throughout the County. VTA contracts with Outreach and Escort, Inc., to serve as a broker and provide paratransit service through contracts with vendors. Eligible riders call Outreach to schedule their trips. Outreach then assigns the trips based on the most appropriate mode that can meet the riders needs: taxi, sedan, accessible van, or transfer to or from fixed-route. VTA is in full compliance with the Americans with Disabilities Act (ADA). In 2002, VTA began the development of the Paratransit Business Practices Improvement Plan. This four-phased plan is designed to control increasing costs through a variety of methodologies, which will improve productivity, decrease vendor and broker costs and increase revenue. Phases I and II have been implemented. Phase III is scheduled for implementation in October 2003, and Phase IV may be implemented later in the year.
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______________________________________________________________________________ CONTRACTED AND INTERAGENCY TRANSIT SERVICES VTA is also a partner in various ventures that expand the transportation options for our customers. These relationships include commuter rail, inter-county express bus lines, and rail feeder services. They are operated either by contract or through cooperative agreements. Caltrain/Peninsula Corridor Joint Powers Board (PCJPB) Caltrain is the commuter rail service provided by the PCJPB, which is governed by representatives from San Francisco, San Mateo, and Santa Clara counties. It operates between Gilroy and San Francisco. Seventy-six trains operate between San Jose Diridon Station and San Francisco each weekday, with 67 of these trains extended to the Tamien Station in San Jose where a connection can be made to the VTA LRT system. Connection to the LRT system can also be made at the Mountain View Caltrain Station. Eight peakhour weekday trains (four northbound in the morning and four southbound in the evening) extend Caltrain from Tamien station to Gilroy. There are 34 stations along the line; 16 are located in Santa Clara County. The system uses diesel-powered locomotives. The share of the operating costs apportioned to each member agency is based upon morning peak period boardings in each county. Complete service planning information, budget and financial statements for PCJPB can be obtained from SamTrans at 1250 San Carlos Avenue, San Carlos, California 94070. Altamont Commuter Express Rail Service The Altamont Commuter Express (ACE) rail service provides peak hour, weekday commuter rail service from the Central Valley to Santa Clara County (three morning and three afternoon commuter trains). VTA, the San Joaquin Regional Rail Commission, and the Alameda County Congestion Management Agency administer the service under a Joint Exercise of Powers Agreement. The 85-mile rail line includes ten stations located in Stockton, Lathrop, Tracy, Livermore (2), Pleasanton, Fremont, Great America, Santa Clara and San Jose Diridon Station. VTA provides free shuttles to transport ACE riders between the Great America and San Jose Diridon stations and nearby employment sites. The share of the operating costs apportioned to each participating county is based upon the proportional share of total daily boardings and alightings that occur in each county. Complete service planning information, budget and financial statements for ACE can be obtained from the San Joaquin Regional Rail Commission at 5000 South Airport Way, Room 201, Stockton, California 95213. Capitol Corridor Intercity Rail Service The Capitol Corridor Intercity Rail service began in December 1991 and is a 170-mile train corridor from Auburn and Sacramento to San Jose, through Placer, Sacramento, Yolo, Solano, Contra Costa, Alameda and Santa Clara Counties. Operating on the Union Pacific railroad tracks, Capitol Corridor service consists of four daily round trips from Sacramento to San Jose and seven daily round trips from Sacramento to Oakland with

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______________________________________________________________________________ connecting bus service to and from San Jose. One round trip per day extends beyond Sacramento to Auburn. The train service parallels the Interstate 80 corridor between Sacramento and Oakland, and Interstate 880 between Oakland and San Jose. Service includes stops in Roseville, Sacramento, Davis, Suisun/Fairfield, Martinez, Richmond, Berkeley, Emeryville, Oakland, Hayward, Fremont, Santa Clara at Great America, and San Jose Diridon Station. On July 1, 1998, the Capitol Corridor Joint Powers Authority (CCJPA), which is comprised of representatives from the eight counties served by the corridor, assumed responsibility for the service. Under contract with the CCJPA, the Bay Area Rapid Transit District (BART) manages the service and Amtrak operates the service on tracks owned by Union Pacific Railroad. The funding is provided by the State of California. Complete service planning information, budget and financial statements for the Capitol Corridor Joint Powers Authority can be obtained from 1000 Broadway, Suite 604, Oakland, California 94607. Inter-county Bus Services VTA co-sponsors two inter-county bus services through cooperative arrangements with other transit systems. The Dumbarton Express is a transbay express route operating between the Union City BART Station and the Stanford Research Park in Palo Alto. It provides the only regularly scheduled public transit service over the Dumbarton Bridge. A consortium comprised of representatives from the Alameda-Contra Costa Transit District (AC Transit), the San Francisco Bay Area Rapid Transit District (BART), the City of Union City, the San Mateo County Transit District (SamTrans), and VTA underwrite the net operating costs of the service. This service is contracted out to a private transit provider. SamTrans and VTA are responsible for 50% of the net operating costs and the other East Bay transit operators are responsible for the rest. The remaining 50% of the operating costs is apportioned based upon total daily boardings in Santa Clara and San Mateo Counties. Express service over Highway 17 between Santa Cruz and downtown San Jose is funded and operated through an agreement between the Santa Cruz Metropolitan Transit District and VTA. Santa Cruz Metro operates this service. The two agencies share the net operating costs equally. Rail Shuttle Program Under this program, VTA offers financial assistance to employers that wish to operate shuttle bus service between LRT stations and nearby employment centers. The service is operated through private contractors provided by VTA or the employers. Shuttles operate trips carrying employees from light rail in the morning to work and back again in the afternoon. Funding to operate this program is provided by the employers (minimum of 25%), VTA, and grants from the Transportation Fund for Clean Air Act (AB434).

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______________________________________________________________________________ DASH and HP Pavilion Shuttle Programs VTA operates a free shuttle (DASH) on weekdays between the downtown San Jose Transit Mall, San Jose State University, and the San Jose Diridon Train Station. VTA, the Transportation Fund for Clean Air Act, the City of San Jose, and the San Jose Downtown Association fund this service. In addition, VTA operates a free shuttle service from the downtown San Jose Transit Mall to public events held in the HP Pavilion. Recently, VTA staff met with the City of San Jose, San Jose Arena Authority, San Jose Arena Management and San Jose Downtown Association to develop a new funding scheme for this shuttle. All parties agree that the Sharks game service is worth continuing and funding is being pursued. VTA has requested that the other parties fund 50% of the costs. If funding partners at this 50% level cannot be secured, this service will be discontinued. Service for other events will be discontinued due to low ridership and existing parallel bus service, effective May 9. San Jose Airport Flyer Service VTA, in partnership with the City of San Jose, provides free Airport Flyer bus service connecting San Jose International Airport terminals and airport employee parking lots with VTAs Metro/Airport Light Rail Station and the Santa Clara Caltrain Station. The City of San Jose and VTA equally share the operating costs for this service. CONGESTION MANAGEMENT VTA, as the Congestion Management Agency for Santa Clara County, is responsible for coordinating and prioritizing projects for state and federal transportation funds, administering the Transportation Fund for Clean Air Program, and coordinating land use and other transportation planning. 1996 MEASURE B TRANSPORTATION IMPROVEMENT PROGRAM (MBTIP) In November 1996, the voters in Santa Clara County overwhelmingly approved Measure A, an advisory measure listing an ambitious program of transportation improvements for Santa Clara County. Also approved on the same ballot, Measure B authorized the County Board of Supervisors to collect a nine-year half-cent sales tax for general county purposes. Subsequently, the County Board of Supervisors adopted a resolution dedicating the tax for Measure A projects. Collection of the tax began in April 1997; however, use of the revenue was delayed pending the outcome of litigation challenging the legality of the sales tax. In August 1998, the California courts upheld the tax allowing the implementation of the Measure A transportation projects to move forward. In February 2000, the VTA Board of Directors approved a Master Agreement formalizing the partnership with the County of Santa Clara to implement the 1996 Measure B Transportation Improvement Program. With this partnership in place, the County and VTA are in a position to complete a transportation program valued at over $1.4 billion. VTA is responsible for project implementation and management of the transit and highway projects and assists in the administration of the pavement management and

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______________________________________________________________________________ bicycle elements of the program. A more detailed description of the program elements can be found in Section IV of this document. To monitor the progress of the program, VTA and County staff update the Measure B Program Revenue and Expenditure Plan for each upcoming fiscal year in June. Any scope, schedule or budget changes are formally requested through this document, upon which the VTA Board of Directors and the County Board of Supervisors take action during a joint workshop. In December, VTA and County staff prepare the Measure B Program Status Report, which describes the status of each project within the program. The report is also presented to the VTA Board of Directors and the County Board of Supervisors for review and acceptance. 2000 MEASURE A TRANSIT IMPROVEMENT PROGRAM In August 2000, the VTA Board of Directors approved placing a measure on the November 7, 2000, General Election ballot allowing Santa Clara County voters the opportunity to vote on transportation improvements funded by a 30 year half-cent sales tax to take effect after the 1996 Measure B sales tax expires (March 31, 2006) in the county. More than 70% of the voters approved the 2000 Measure A. It was estimated that $6.8 billion (FY 2000-01 constant dollars) would be collected. This amount will be revised to reflect the protracted decline in sales taxes. The revenue from this Measure may be used to finance the transit projects and operations specified in 2000 Measure A and listed in VTAs VTP 2020 Transportation Plan and Expenditure Program. VTP 2020 provides for a balanced transportation system consisting of transit, roadway, bicycle and pedestrian improvements. A more detailed description of the program elements can be found in Section IV.

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______________________________________________________________________________

Board of Directors

General Counsel Suzanne Gifford

General Manager Peter M. Cipolla

Operations Frank T. Martin Chief Operating Officer

Administrative Services Kaye L. Evleth Chief Administrative Officer

Construction Jack Collins Chief Construction Officer

Development/ Congestion Management Mike Evanhoe Chief Development Officer

Fiscal Resources Scott Buhrer Chief Financial Officer

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______________________________________________________________________________

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________
SANTA CLARA VALLEY TRANSPORTATION AUTHORITY FISCAL YEAR 2003-04 AND 2004-05 PROPOSED BUDGETS STATEMENT OF REVENUES AND EXPENSES FY 2001-02 In thousands Fares 1/2 Cent Sales Tax TDA STA State Operating Grants Investment Earnings Advertising Income Measure A Refinancing Proceeds Other Income Ongoing Revenues Local Operating Assistance Federal Operating Grants Financing Transactions Sale of Property Measure B Fund Swap TCRP/Measure A Debt Proceeds One-Time Revenues Total Revenue Wages & Salaries Benefits Materials & Supplies Security Professional & Special Services Other Services Fuel Traction Power Tires Utilities Insurance Data Processing Office Expense Communications Employee Related Expense Leases & Rents Miscellaneous Reimbursements Operating Expense ADA Caltrain Caltrain Capital Contribution Light Rail Shuttles Altamont Commuter Express * Highway 17 Express Dumbarton Express Contribution to Other Agencies Debt Service Other Expense Other Expense Total Expense Contingency Surplus/(Deficit) to Reserves Actual $ 31,282 144,218 95,401 7,003 1,066 24,381 4,425 0 4,319 312,095 112 14,023 0 0 0 0 14,135 326,230 136,729 83,733 14,715 9,909 8,326 8,551 4,809 3,612 1,034 2,161 3,199 3,691 745 1,439 1,505 674 944 (17,219) 268,557 33,122 14,897 5,733 1,237 3,160 520 246 436 23,161 1,336 83,848 352,405 0 (26,175) $ FY 2002-03 Adopted Budget $ 38,011 155,000 63,383 7,322 1,766 12,000 4,589 0 1,636 283,707 0 31,900 16,320 5,000 0 0 53,220 336,927 144,768 83,120 16,048 9,473 7,808 7,883 5,964 4,000 1,049 2,353 4,262 3,124 787 1,750 1,671 739 1,916 (16,750) 279,965 32,452 14,105 2,500 1,340 5,100 587 250 440 25,268 86 82,128 362,093 5,000 (30,166) $ Revised Estimate $ 32,194 133,000 63,383 6,778 1,159 14,420 3,402 29,263 1,632 285,231 4,042 40,426 16,320 14,547 0 0 75,335 360,566 136,343 92,664 14,217 9,383 7,766 7,457 6,091 3,589 977 2,279 4,111 3,125 703 1,644 1,523 651 1,930 (17,400) 277,053 30,556 14,105 4,041 1,223 3,960 425 329 435 24,168 733 79,975 357,028 1,927 1,611 FY 2003-04 Proposed Budget $ 31,495 135,000 63,450 4,274 1,177 2,000 1,818 14,595 1,375 255,184 0 30,284 8,300 0 2,044 81,945 122,573 377,757 125,628 88,843 13,200 7,904 4,645 6,584 6,161 2,500 916 2,470 3,461 2,675 662 1,625 1,099 630 1,692 (21,140) 249,555 31,797 14,105 0 1,000 3,960 440 355 466 105,735 47 157,905 407,460 2,000 (31,703) $ FY 2004-05 Proposed Budget $ 36,429 139,000 65,330 5,000 1,177 1,500 1,818 14,566 1,375 266,195 0 31,344 8,400 0 5,197 0 44,941 311,136 118,081 89,114 13,385 8,499 5,475 6,380 5,143 3,100 938 2,518 4,438 2,726 671 1,642 1,115 639 1,474 (15,631) 249,707 32,751 14,387 0 1,000 4,034 440 355 470 23,579 372 77,388 327,095 2,000 (17,959)

* ACE Expenses include $703,000 for shuttles operated by VTA. VTA is reimbursed and the amount is included in fare revenue.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ OPERATING BUDGET The core of VTAs financial crisis is the fact that VTA has experienced significant reductions in local sales tax revenue for seven consecutive quarters. Instead of growing at a rate that maintains pace with the growth of operating expenses, the local sales tax receipts are trending below the levels VTA received in 1997/98. The magnitude and duration of the decline in sales tax is the most extreme ever experienced by VTA. The chart below shows sales tax results for the last decade.
VTA Half-Cent Sales Tax Quarterly Performance Data Through 2Q03
35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% -25.0% -30.0% F F F F F F F Y Y Y Y Y Y Y 9 9 9 9 9 9 9 2 2 2 2 3 3 3 F Y 9 3 F F F F F F F F F F Y Y Y Y Y Y Y Y Y Y 9 9 9 9 9 9 9 9 9 9 4 4 4 4 5 5 5 5 6 6 F Y 9 6 F F F F F F Y Y Y Y Y Y 9 9 9 9 9 9 6 7 7 7 7 8 F Y 9 8 F Y 9 8 F F F F F F F Y Y Y Y Y Y Y 9 9 9 9 9 0 0 8 9 9 9 9 0 0 F Y 0 0 F F F F Y Y Y Y 0 0 0 0 0 1 1 1 F Y 0 1
-21.5% -21.9% -24.5% 5.5% 2.1% 5.3% 2.2% 10.4% 6.4% 1.6% 2.0% 5.7% 2.8% 28.5% 21.4% 20.0% 15.6% 16.8% 9.1% 11.2% 9.9% 7.8% 6.4% 4.5% 1.8% 1.0% 10.0% 7.1% 2.9% 1.9%

27.1% 23.9% 23.2% 18.8% 18.7%

$ 60,000 $ 50,000 $ 40,000 $ 30,000

7.4%

-2.2% -2.0%

-3.0%

-1.1%

-1.0% -8.1% -8.4% -8.6% -10.2% -17.2%

$ 20,000 $ 10,000 -

F Y 0 2

F F F F Y Y Y Y 0 0 0 0 2 2 2 3

F Y 0 3

Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Quarterly Sales 4 1 1 2 3 4 1 2 3 4 1 2 3 Tax 2 3 4 1 2Actual2 % Change4 from same quarter of 1 2 3 4 1 2 year 3 4 1 3 4 1 2 3 1 2 3 4 1 2 3 4 1 2 3 4 previous

Quarterly Sales Tax

Actual % Change from same quarter of previous year

The anticipated slow recovery of the economy has not materialized. Actually, the anemic recovery has stalled and the economy continues to deteriorate. Santa Clara County experienced its lowest unemployment rate ever, 1.3%, in December 2000. It was 7.7% in January 2002 when our last budget was prepared. It climbed to 8.9% by October 2002 and remains at 8.6% in February 2003. In excess of 190,000 jobs have been lost in our community. Organizations in the public sector at all levels, including the Federal, State and local, are now awakening to the financial crisis facing them. Announcements of huge deficits and implementation of painful cost saving and service reduction plans, including layoffs of personnel, by governmental agencies are ever increasingly common events. Last year we proposed a budget that included a 5% service reduction, incorporated a number of one time revenue enhancement strategies and projected that VTA would virtually exhaust the budget reserves by June 30, 2003. Since that time we have taken

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ several steps leading up to this budget. We have implemented another 9% reduction in VTA bus and light rail service hours. We have continued to review the capital budget and have over the last one and one-half years reduced or deferred over $120 million of capital projects. We have continued to aggressively seek out financial strategies that have enabled us to defer the depletion of our reserves for another two years. Further, our proposed budget includes an additional 21% reduction in VTA bus and light rail services and another fare increase. Yet still, as shown below, our on-going annual structural deficit is projected to be $62.9 million for FY 2004-05.
FY 2002-03 FY 2002-03 Revised FY 2003-04 FY 2004-05 Adopted Estimate Proposed Proposed $ 283,707 $ 285,231 $ 255,184 $ 266,195 367,093 358,955 327,315 329,095 (83,386) (73,724) (72,131) (62,900) 53,220 (30,166) (4,759) 42,121 7,196 75,335 1,611 31,654 42,465 75,730 40,428 (31,703) (4,717) 75,730 39,310 44,941 (17,959) (5,000) 39,310 16,351

On-Going Revenues On-Going Expenses On-Going Structural Deficit Total Net One-Time Revenues Suprlus/(Deficit) from Operations Reserves Committed for Local Share of Capital Projects* Reserves Beginning of Fiscal Year Reserves Ending of Fiscal Year

* FY 2002-03 Revised Estimate consists of $4,759 in new projects and $36,413 in capital project scope reductions and deferrals.

The Recommended Budget for the next two years merely buys us time. The two years will get us to the November 2004 election. The November 2004 election is the last opportunity to gain voter approval for new revenues that could stave off further drastic reductions in VTA services. The two years will be necessary for all the stakeholders to decide what kind of organization they want VTA to be, what kind of system they want, the kind of services the public wants VTA to provide, directly and indirectly, and what they are willing to pay for. It is clear that VTA cannot do everything that everyone wants. The VTA Board of Directors will need to take an ever-increasing role in influencing the goals, objectives and mission(s) of the various other organizations that VTA provides funding for, including Caltrain, ACE and our ADA service. Similarly, as we reflected on the recommendations of the Business Review Team (which was convened by 2002 VTA Chair Gonzales, see page 36) and the consultants to the 2003 Ad Hoc Financial Stability Committee of the VTA Board, it is evident that fares are expected to cover a larger percentage of VTAs operating expenses. Over the course of the summer we will be drafting a Fare Policy that will make recommendations as to the overall farebox recovery goals recognizing that a comprehensive farebox recovery strategy encompasses fare revenue, expenditure efficiencies and ridership. This is our first biennial (two -year) budget, which is authorized by subsection (d) of Section 11-2 of the Administrative Code. The Administrative Code permits adoption of
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ the biennial budget at this time, and provides for one general mid-term review by the Board and amendment at that time upon the affirmative vote of at least eight directors. We will also submit periodic budget reviews and updates over the next two years. These reviews provide the Board and the public with an opportunity to evaluate VTAs actual performance after several months of operations. In addition, it presents a forum for VTA management to report to the Board any major differences between budgetary assumptions and actual results that have been occurred since the budget adoption and to request resource reallocations that are warranted due to changes caused by both internal and external factors. MAJOR BUDGET ASSUMPTIONS AND EXPLANATIONS ONGOING REVENUES Ridership and Fares Monthly Ridership & Employment (July 2000 thru January 2003) There is a clear and direct correlation 15% between ridership and employment 10% ridership drops when employment declines. If Santa Clara County 5% continues to lose jobs, our ridership 0% will likely continue to decline. Conversely, a rebound in ridership -5% should occur when the Countys economy rebounds. In order to -10% compensate for the falling sales tax Ridership Employment -15% receipts and alleviate our operating 01 02 00 03 20 20 20 20 deficits, the Administration and Finance Jul Jul Jul Jan Committee at the November 2002 meeting recommended that staff provide a proposal for a fare increase as soon as feasible. The Business Review Team (BRT) also recommended that VTA reduce fare discounts and increase multiples on monthly passes to levels more in line with peer transit agencies in the United States. As a result, we have proposed fare increases for implementation in August 2003 with the goal of increasing the percentage of operating costs paid by patrons and the average fare revenue per boarding. The proposed fare increase is estimated to cause an initial ridership decline of 5.8% with a gradual return over the next year. We anticipate the need of another fare increase in July 2004, which is estimated to result in an initial ridership loss of 4.8% with a gradual return over the following year. Although every situation is unique, it is generally observed that lost patronage after a fare increase typically returns over a year to fifteen months with many riders returning in the first six months after the increase. In addition to the fare increase, the budget proposes a 21% reduction in overall service levels in October 2003. The reduction in service reduces projected reduced ridership to 40,000,000 for FY 2003-04 and FY 2004-05 before considering the impact of a concomitant
Year to Year % Change

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ fare increase. Ridership for light rail is estimated to increase in FY 2004-05 when the Tasman East/Capitol light rail extension to Alum Rock becomes operational in July 2004. The combination of the fare increase and the service reduction reduces our total ridership projection to 38,260,000 in FY 2003-04 and 38,560,000 in FY 2004-05. This will generate fares of $29.2 million in FY 2004 and $34.1 million in FY 2004-05 assuming an additional fare increase in July 2004. Without the currently proposed fare increase, FY 2003-04 revenue would drop to an estimated $25.2 million due to reductions in ridership associated with the reduction in service. We need to increase fares and reduce service levels at the same time because doing only one of them will impose greater and disproportionate hardship for those riders who depend on having VTA services available. We believe that our current proposal represents a balanced compromise. Eco Pass, Residential Eco Pass and San Jose State Universitys Transit Access Program continue to be popular with employers, residential communities and students. Currently the VTA Eco pass program includes almost 150,000 employees, residents and students in the area. The projected revenues for FY 2003-04 are estimated at $2.5 million. These revenues are included in the calculation of the revenues per boarding.
FY 2000-01 In thousands Ridership: Bus % Change Light Rail % Change Total Ridership % Change Total Revenue % Change Average Fare Per Boarding % Change $ Actual 47,238 9,237 56,475 FY 2001-02 Actual 44,900 -4.9% 7,790 -15.7% 52,690 -6.7% $ 28,826 $ -9.1% 0.55 $ -2.6% FY 2002-03 Adopted Revised Budget Budget 43,600 -2.9% 7,900 1.4% 51,500 -2.3% 34,500 $ 19.7% 0.67 $ 22.4% 40,000 -8.3% 6,200 -21.5% 46,200 -10.3% 29,470 $ -14.6% 0.64 $ -4.8% FY 2003-04 Proposed Budget 33,000 -17.5% 5,260 -15.2% 38,260 -17.2% 29,231 $ -0.8% 0.76 $ 19.8% FY 2004-05 Proposed Budget 32,800 -0.6% 5,760 9.5% 38,560 0.8% 34,164 16.9% 0.89 16.0%

31,724

0.56

CENT SALES TAX Regional Economic Growth Half-Cent Sales Tax and TDA The half-cent local sales tax and a quarter-cent state sales tax (also known as the Transportation Development Act or TDA) are the two most important income sources to VTA. About 68% (more than 80% in FY 2000-01) of VTAs proposed operating revenues are generated from them. They are driven by the local economy. The quarter-cent sales tax is derived from the same tax base as the half-cent sales tax but it is collected by the State. The proceeds are administered and allocated by the Metropolitan Transportation Commission (MTC). The cash flow fluctuates differently from the half-cent tax because the annual receipts are based on forecasts, which are adjusted in subsequent years for over-funding or under-funding in prior years.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________
REVENUE SOURCES Our latest quarterly receipts in March 2003 experienced the seventh consecutive quarterly decline and were Fares 10.2% less than the same quarter last 11.2% Half-Cent Sales Tax 45.0% Other year and 32.2% less than the quarterly 2.2% Financial Transactions amounts received for the quarter ended 2.8% Mea-A/Refi Proceeds December 31, 2001. The total of the 4.9% latest four quarters is 14.7% less than that of previous four quarters. We are no Fed Preventative Maint 10.1% longer optimistic that the economy will STA 1.4% turn around soon. As a result, we TDA 22.5% reduced our FY 2002-03 estimate down to $133 million and are hoping for a slight 1.5% increase to $135 million in half-cent sales tax receipts in FY 2003-04 from the revised FY 2002-03 estimate and 3.0% in FY 2004-05 to $139 million.

Actual & Estimated Sales Tax Revenue Performance (Dollars in thousands) Revenue FY 2001 Change from Previous Year FY 2002 Revenue Change from Previous Year Revenue Change from Previous Year Revenue Change from Previous Year Revenue Change from Previous Year Q1 Q2 Q3 Q4 Total $ 48,170 $ 51,132 $ 41,913 $ 42,326 $ 183,540 27.1% 23.2% 1.9% -8.4% 10.1% $ 37,818 $ 38,597 $ 32,752 -21.5% -24.5% -21.9% Estimated $ 34,552 $ 34,656 $ 31,487 -8.6% -10.2% -3.9% Estimated Estimated Estimated $ 33,203 $ 35,445 $ 31,960 -3.9% 2.3% 1.5% Estimated Estimated Estimated $ 34,187 $ 36,495 $ 32,907 3.0% 3.0% 3.0% $ 35,051 -17.2% Estimated $ 32,306 -7.8% Estimated $ 34,392 6.5% Estimated $ 35,411 3.0% $ 144,218 -21.4% Estimated $ 133,000 -7.8% Estimated $ 135,000 1.5% Estimated $ 139,000 3.0%

FY 2003

FY 2004

FY 2005

TDA Transportation Development Act funds (TDA) are derived from a quarter cent sales tax levied by the State on taxable transactions occurring in Santa Clara County. A portion of these funds is retained by the Metropolitan Transportation Commission and approximately 94% is returned to source (i.e., Santa Clara County). We have estimated the TDA funding on the same basis as our half-cent sales tax. For FY 2003-04, we estimated $63.4 million ($135 million times 0.5 times 0.94) and for FY 2004-05, we have estimated $65.3 million. According to the most recent MTC fund estimate, VTAs TDA funds are estimated to increase to $67.4 million in FY 2003-04. We expect the MTC estimate of TDA funding available to be revised downward.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ STA State Transit Assistance (STA) apportionments to regional planning agencies (MTC in the Bay Area Region) are determined by two formulas: 1) 50% of funds are distributed according to population and, 2) 50% are distributed on a basis proportional to operator revenues in the region for the prior year. The Bay Area Region usually receives about 38% of State STA funds. According to MTCs most recent fund estimate, STA is estimated at $4.3 million in FY 2003-04, a decrease of $2.5 million or 36.9% from the current year. STATE OPERATING GRANTS The state operating grants we have budgeted for FY 2003-04 and FY 2004-05 are from the AB 434 Program (Transportation Fund for Clean Air Program), which increased vehicle registration fees in the Bay Area by $4 to fund projects and programs that help reduce vehicle emissions. We request the grants to fund our LR shuttle operation. We only expect a small increase to $1.2 million in FY 2003-04 and 2004-05 from FY 2002-03 Revised Estimate. INVESTMENT EARNINGS The investment earnings are derived from three primary sources. First, are the funds which have been earmarked to underwrite operating deficits. These funds are invested by a money manager whose performance is evaluated by comparing actual results against the Institutional Money Market benchmark. The estimated earnings rate for FY 2003-04 is 1.5% and for FY 2004-05 is 2.5%. The second source of earnings for the Enterprise Fund are from funds which relate to long-term liabilities for which VTA has set aside and restricted assets, (e.g., accrued vacation and sick leaves.) These funds are invested by a money manager whose performance is evaluated by comparing actual results against the Lehman Brothers U.S. Government Intermediate Bond Benchmark. The estimated earnings rate for FY 2003-04 is 3.5% and for FY 2004-05 is 4.0%. The third source of earnings for the Enterprise Fund are from the funds which have been set aside to pay for the 70 new low floor light rail vehicles. The money manager has structured a series of investments that are scheduled to mature at intervals that coincide with the dates payments are due to the LRV manufacturer. Average rates of return for FY 2003-04 are estimated at 1.5% and 2.5% for FY 2004-05. The composite average investable funds and rates of return are estimate at $108.9 million and 1.84% for FY 2003-04 and $54.6 million and 2.75% for FY 2004-05 resulting in estimated earnings of $2 million for FY 2003-04 and $1.5 million for FY 2004-05.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ ADVERTISING INCOME Advertising income is comprised of two components: advertising on buses and light rail vehicles, and bus shelter advertising. Advertising revenue for bus and light rail vehicles is projected at the minimum guaranteed amount of $1.5 million. We budget $318,000 for bus shelter advertising income. MEASURE A REFINANCING PROCEEDS We propose issuing debt to reimburse VTA operating funds for interest and principal that has been disbursed for the 2001 Series A Senior Lien Sales Tax Revenue Bonds. The source of funds to repay this new debt is proposed to be the 2000 Measure A one half cent sales tax approved in November 2000. The tax will start being collected on April 1, 2006. The proceeds of the 2001 Series A Bonds were used to finance portions of Tasman East, Vasona, and Capitol 1996 Measure B Light Rail Projects. Financing these projects for Measure B enabled the Measure B program to provide VTA with Measure B funds for the purchase of 70 low-floor light rail vehicles. The acquisition of the low floor light rail vehicles was included in the 2000 Measure A Transit Improvement Program and approved by the Board of Directors in 2001. The new debt will provide proceeds to reimburse VTA approximately $29.3 million in FY 2002-03, and fund the payment of $14.6 million in FY 2003-04 and $14.6 million in FY 2004-05. In the absence of the new debt, the VTA operating budget would have been repaid in FY 2005-06 and FY 2006-07 when Measure A sales tax receipts become available. OTHER INCOME Other income includes fines and forfeiture, use permit fees, property rentals, proceeds from the disposition of equipment (e.g., buses) and, from time to time, small grants for special operating projects (e.g., Job Access/Reverse Commute Program). We expect a decrease of $257,000 to $1.4 million in both FY 2003-04 and FY 2004-05, mainly due to a lower expected receipts from the Job Access Program and other miscellaneous incomes. ONE-TIME REVENUES LOCAL OPERATING ASSISTANCE In consideration of the financial constraints VTA is facing, the County Board of Supervisors and the VTA Board of Directors approved the use of approximately $10.8 million of the 1996 MBTIP Caltrain Plan by VTA to fund VTA's share of local contribution to the Caltrain Capital Program for three years beginning in FY 2002-03, at the June 7, 2002 Joint Board Meeting. As a result, VTA received $4 million of 1996 MBTIP funds in FY 2002-03. In the December Semi-Annual Update to Revenue and Expenditure Plan, the County and VTA deferred the remaining 1996 MBTIP funds earmarked for Caltrain matching purpose.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ FEDERAL OPERATING GRANTS The federal operating grants we have budgeted for FY 2003-04 and FY 2004-05 are from the Preventative Maintenance Program, which is an eligible activity for FTA Section 5307 formula grant assistance. Although the Section 5307 grant program is designed primarily to fund capital acquisitions, funds awarded for preventive maintenance essentially function to support the maintenance portion of the operating budget. In order words, grants which should be used to replace and refurbish our assets (e.g., buses) are converted into operating assistance. Currently, we treat all maintenance costs for revenue and non-revenue vehicles as eligible expenditure. It is important to note that we are now maximizing the use of preventive maintenance to reduce our operating deficits, with virtually no funds available for capital. This is a necessary strategy at this time, but one that cannot be sustained for a long period of time. Ultimately, we will need to replace and furbish our assets. $9.8 million of Federal Preventative Maintenance (i.e., federal operating assistance) was recognized in VTAs audited financial statements in FY 2001-02. These funds were not included in VTAs budget process until FY 2002-03. This is because we used FY 2001-02 maintenance costs to justify the grant reimbursement, but did not expect to receive the reimbursement until FY 2003-04. We actually received the funds in FY 2002-03. FY 2002-03 Preventative Maintenance Program For FY 2002-03, VTA will receive a total of $40.4 million for preventive maintenance. This consists of two grants. The first one is a grant for $9.8 million of FY 2001-02 formula funds that had been programmed for replacement buses. The replacement bus project was cancelled and during FY 2002-03, FTA approved the application of these funds against FY 2001-02 maintenance operating expenses. The second grant for $30.7 million is the amount of 5307 formula grants available to be applied against the FY 2002-03 maintenance operating expenses. FY 2003-04 & FY 2004-05 Preventative Maintenance Program VTA is continuing to use the available Section 5307 to support the maintenance operating budget. We anticipate receiving $30.2 million in FY 2003-04 and $31.3 in FY 2004-05. FINANCING TRANSACTIONS The financing transaction is associated with the new low-floor light rail vehicles. The Board of Directors approved the transaction, (contingent upon a successful validation action) on April 13, 2003. The transaction consists of a Head Lease where VTA leases the vehicles to a trust and a Sublease where the trust leases the vehicles back to VTA. The net benefit is highly dependent on equipment valuations (determined by appraisal) and remaining useful life of the assets, as well as prevailing interest rates at the time the transaction closes. We anticipate that the first tranche 1 of the transaction will close before the end of FY 2002-03 with a net benefit to VTA of approximately $11-$13 million.
1

A tranche is a specified part of a larger transaction.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ VTA anticipates two additional tranches closing in FY 2003-04 to generate a net benefit of approximately $22-$25 million. SALE OF PROPERTY The FY 2002-03 Adopted Budget included the assumption that the Transit Program would sell a portion of the North Operating Division real estate to the Highway Program for $5 million. The Highway Program acquired the property for the 1996 MBTIP Route 85/101 (North) Interchange Project. The actual price paid, (based upon appraisal), was $4.9 million. We also sold the Winfield parcel for $1.1 million and the Evans Lane property for $8.6 million. These are no additional property sales assumed in the Recommended Budget for FY 2003-04 and FY 2004-05. MEASURE B FUND SWAP Due to VTAs existing financial condition, Staff completed a very detailed review of existing capital projects. One of the projects that have been deferred is the downtown segment of the Guadalupe Corridor Platform Retrofit project. This project was financed in part by a $7.2 million FTA 5309 Rail Modernization grant. VTA was able to reprogram this revenue to the Vasona 1996 Measure B Light Rail Project. In exchange for bringing the grant funding into the projects, the County agreed to provide an equivalent amount of 1996 Measure B sales tax funds to VTA. The 1996 MBTIP funds will be release to VTA as the grant funds are received. The swap proceeds are prepared to be used for operations. It is anticipated that $2 million of the revenue will be received in FY 2003-04 and $5.2 million in FY 2004-05. TCRP/MEASURE A DEBT PROCEEDS On October 10, 2002, the Board of Directors approved the issuance of Bond and Grant Application Notes (Notes) to fund the acquisition of a rail corridor from Union Pacific Railroad. The Notes were issued for the principal amount of $81.5 million at a stated interest rate of 3%, and mature in December 2003. Although we used our 1976 cent sales tax to enhance the credit ratings of the Notes (thus reducing borrowing costs), it was, and is not, the intention to repay those notes with any funds other than the State Transportation Congestion Relief Program (TCRP) funds and 2000 Measure A Sales Tax. After the 2002 Notes were issued, the TCRP Program was suspended due to the current State budget crisis. We do not anticipate that TCRP funds will be made available until and if the State Legislature and the Governor agree to continue the TCRP Program. Additionally, VTA covenanted that prior to issuing any future debt, the repayment for these Notes would be provided for, or the Notes would be retired. Therefore, VTA must include in any transaction that advances 2000 Measure A Sales Tax, the refunding of these Notes. We anticipate receiving $81.9 million for repayment in FY 2003-04.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ EXPENSES Service Levels The budget anticipates additional service reductions in October 2003. Details for the October reduction have not been finalized at this time, thus all FY 2004-05 data should be viewed as approximate and preliminary. The service miles and hours in the table on the next page reflect only the partial impacts of the 9% reduction in April 2003 (FY 2002-03) the estimated 21% reduction in October 2003 (FY 2003-04). FY 2004-05 reflects the annualized miles and hours of bus service after the two reductions. The Tasman East and Capitol light rail extensions (to Alum Rock) will become operational in July 2004 (an additional 6.3 miles and 8 new stations). Light rail service is anticipated to increase in July 2004 (adding 300,000 service miles and 8,000 service hours). However, overall miles and hours in FY 2004-05 will still be reduced as a result of the full year effect of the October 2003 service reduction.
FY 2000-01 In thousands Service Miles: Bus % Change Light Rail Train % Change Total Service Miles % Change Light Rail Car Miles % Change Service Hours: Bus % Change Light Rail Train % Change Total Service Hours % Change Light Rail Car Hours % Change Actual 22,640 1,927 24,567 FY 2001-02 Actual 22,044 -2.6% 2,033 5.5% 24,077 -2.0% 2,555 -11.4% FY 2002-03 Adopted Revised Budget Estimate 21,174 -3.9% 1,832 -9.9% 23,006 -4.4% 2,655 3.9% 20,402 -3.6% 1,584 -13.5% 21,986 -4.4% 2,187 -17.6% FY 2003-04 Proposed Budget 15,698 -23.1% 1,415 -10.7% 17,113 -22.2% 1,931 -11.7% FY 2004-05 Proposed Budget 14,633 -6.8% 1,675 18.4% 16,308 -4.7% 2,473 28.1%

2,885

1,617 137 1,754

1,589 -1.7% 137 0.0% 1,726 -1.6% 172 -13.1%

1,538 -3.2% 122 -10.9% 1,660 -3.8% 177 2.9%

1,493 -2.9% 109 -10.7% 1,602 -3.5% 147 -16.9%

1,151 -22.9% 96 -11.9% 1,247 -22.2% 127 -13.6%

1,067 -7.3% 101 5.2% 1,168 -6.3% 152 19.7%

198

The annualized savings resulting from the 9% service reductions implemented April 2003 are: (In thousands) Support Services Transportation & Maintenance Total FY 2003-04 $5,624 16,794 $22,418 FY 2004-05 $5,914 18,048 $23,962

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ The 21% service reduction proposed to be implemented in October 2003 will result in estimated savings for nine months of FY 2003-04 and the annualized savings for FY 2004-05 of: (In thousands) Support Services Transportation & Maintenance Total FY 2003-04 $8,308 32,200 $40,508 FY 2004-05 $8,837 46,147 $54,984 the The Our and and

We are continuing to work on developing the best service plan possible, given resources available. We are also developing plans for reduction in support services. total number of positions that will be eliminated will likely be between 300-400. ability to provide service of all types (e.g., bus, light rail, public information, responsiveness to requests from the Board and the public) will be significantly adversely affected. Wages & Benefits Budgets for Salaries & Benefits and Benefit Rates FY 2002-03 FY 2002-03 FY 2003-04 In $000s Adopted Revised Proposed Salaries & Wages $144,768 $136,343 $125,628 Benefits 83,120 92,664 88,843 Benefit Rates: ATU Non-ATU 49.0% 39.0% 58.3% 50.1% 63.4% 53.5%

FY 2004-05 Proposed $118,081 89,114 66.8% 59.4%

The Recommended Budget assumes that the ATU top of scale wage rates will increase 5% on February 2, 2004. There is no provision in the budget for wage rate adjustments for SEIU, CEMA, TAEA and non-represented employees. The Recommended Budget does include provisions for step increases for all employees who are in pay progression. The benefit cost increases are driven by: health care cost; pension costs due to nonperformance of plan assets; and, workers compensation costs. Budgeted Position Changes By Classification FY 2002-03 FY 2002-03 FY 2003-04 Adopted Revised Proposed Details will be provided at a later time. FY 2004-05 Proposed

Classification

Inflation Rate The Consumer Price Index (CPI) is the gauge of inflation at the retail or consumer level. CPI reached an annual rate of 1.63% for the San Francisco-Oakland-San Jose region in 2002. It was the year that the rate for the Bay Area plunged from the height in 2001 -5.38%. This low rate is expected to continue as the Bay Area remains in a recessionary environment.
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ We used 1.5% as the inflation factor to develop our FY 2003-04 budget and 2.0% for FY 2004-05. Generally, we escalate the budget for non-labor cost items by the appropriate inflation factor to derive the budget number for the next year. However, most divisions chose not to do so.
Monthly Consumer Price Index (Jan 1990 thru Feb 2002) 190 180
Base Year: 1982-84=100
SF-Oakland-San Jose

170 160 150 140 130

Contingency 120 2% In order to maintain a more efficient 110 1% budgeting process, an individual division does not budget for 100 0% 1 92 993 994 995 996 997 998 999 000 001 002 003 90 contingency within its own budget. An 19 199 19 1 1 1 1 1 1 1 2 2 2 2 organization-wide contingency fund is established within the Office of the General Manager to fund urgent and unexpected programs or projects. During development of the FY 1997-98 Budget, the Administration and Finance Committee recommended that VTAs budget policy should include the establishment of a contingency fund (i.e., the General Managers unallocated fund) at 3.0% of the operating budget. Most of the fund has been used to fund new capital projects. However, due to the current financial situation, we do not believe that we will launch any non-critical new capital projects and new programs in FY 2003-04. Consequently, we should need only $2.0 million for contingency purposes. We will re-institute the 3% policy once our financial conditions improve. Reimbursements This item is used primarily for two completely different purposes. The Maintenance Division mostly uses it to record internal repair cost transfers; the Development/Congestion Management, Construction and other support Divisions and Operations departments use it to accumulate capitalized labor costs for project cost monitoring and grant billing purposes. Total reimbursements budget in FY 2003-04 is $20.3 million, an increase of $2.9 million from the FY 2002-03 Revised Budget. The Maintenance reimbursement budget was based upon an estimate of the amount of labor that is going to be capitalized into rebuilt parts in FY 2003-04. It is estimated that the net reimbursement for maintenance labor will be $4 million. This is about 30% below the current year trend and is line with the projected service reduction. For the Development/Congestion Management, Construction and other support Divisions and Operations departments, their reimbursement budgets were developed based upon estimated capital project activities and reimbursements history. We expect reimbursements for the Development/Congestion Management and Construction divisions to increase by $1.6 million. The Operations Transportation Department will charge about $887,000 for rail activation work. Other divisions also increased their reimbursements estimate by $402,000.
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' '''' ''''' ' ' '' '' ' ' '' '' ' '' ' '' '' ''' ''' '' '' '''' ''' ' ''''' '''''' ''''' '''''' ''''' ''' ''' ''' ''' '' '''' '''' ''' ''' ''' ''' ''' ''''' '''' ''' ''' ''' '''' ''' ' '' ''' '''' ''' '' ''' '' '
SF-Oakland-San Jose Year-Over-Year % Change U.S.-All Items Year-Over-Year % Change January

' U.S.-All Items

9% 8% 7% 6% 5% 4% 3%
Year-To-Year % Change

VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ For labor costs incurred for the 1996 MBTIP, we will not recover 100% of our fully allocated expenditures. As stated in the Master Agreement with the County of Santa Clara, we agreed to seek only reimbursement for the direct costs but not indirect costs. As a result, we kept $3.7 million in the Non-Departmental cost center to reflect the indirect costs VTA will absorb. We are in the process of developing a new overhead allocation plan and indirect cost rate proposal, which we will be submitting to the Federal Transit Administration for approval by June 30, 2003. The new allocation will more appropriately distribute support costs between capital and operating programs. The operating programs have been receiving a disproportionate share of the support costs. Thus overstating the cost of operations and understating the costs of capital projects. When the new methodology is in place, it will be necessary to increase individual capital project budgets and decrease the operating budget to reflect the additional amount that will be reimbursed. ADA Paratransit Paratransit ridership continues to increase, but the rate of growth in program costs has slowed significantly. Ridership grew by 7.4% in FY 2002-03, while the total cost of service dropped by 7.0% compared to FY 2001-02. For FY 2003-04, ridership is projected to increase by 5% over FY 2002-03. Correspondingly, program costs for FY 2003-04 will increase but at a rate of only 4.1% due to operational improvements and efficiencies, which have reduced the cost per trip. Ridership in FY 2004-05 is expected to remain level with only a 3% increase in cost due to contractually obligated paratransit vendor rate increases.
FY 2000-01 In thousands ADA Trips % Change ADA Operating Expense % Change Net Cost Per Trip % Change $ Actual 860 FY 2001-02 Actual 1,019 18.5% $ FY 2002-03 FY 2003-04 FY 2004-05 Adopted Revised Proposed Proposed Budget Budget Budget Budget 1,099 1,094 1,148 1,148 7.9% -0.5% 4.9% 0.0% 32,452 $ -2.0% 29.53 $ -9.2% 30,556 $ -5.8% 27.93 $ -5.4% 31,797 $ 4.1% 27.70 $ -0.8% 32,751 3.0% 28.53 3.0%

21,558

33,122 $ 53.6% 32.50 $ 29.7%

25.07

The leveling off of ridership growth and the substantial reduction in expenditures are due to the implementation of various cost-containment strategies, which were developed as part of the four-phased Paratransit Service Business Practices Improvement Plan. During FY 2002-03, Phase I and part of Phase I of the plan were implemented and included strategies to reduce program costs by improving operational efficiencies, consolidating vendor operations and renegotiating vendor contracts, reducing broker costs and raising revenues. The remaining components of Phase II will be implemented at the beginning of FY 2003-04 and are designed to control demand through an improved

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ eligibility certification process. Phase III of the plan will be implemented by October 2003 and will further contain costs through a better alignment of paratransit services with ADA requirements. Phase IV is currently being developed and may be implemented later in FY 2003-04. To date, the Paratransit Service Business Practices Improvement Plan has proven to be effective at controlling paratransit costs. Caltrain Caltrain has yet to develop and approve a FY 2003-04 operating and capital budget. Caltrain projects coming online in the next fiscal year, that could affect service levels, include the initiation of Caltrain Express service and the opening of the Millbrae Station to connect with the BART SFO Extension. Additionally, Caltrain is planning changes to its fare structure and implementing a proof-of-payment system that will modify fare collection and enforcement methods. The changes are scheduled for implementation in September 2003. While this is projected to have a minimal immediate fiscal impact, Caltrain expects savings will be realized over time. The changes will also assist in easier implementation of future fare increases. VTAs current contribution for Caltrain is 42% of the net operating expenses, based on a ridership formula included in the Joint Powers Agreement. VTAs FY 2003-04 budget for Caltrain is based on capping VTAs contribution at FY 2002-03 levels or $14.105 million. This budget is escalated by 2% to $14.387 million for FY 2004-05. Also in response to our current financial conditions, VTA has included no local funds in FY 2003-04 or FY 2004-05 to support Caltrain capital projects but continues to program VTAs share of federal transit formula grants for Caltrain capital improvements. In developing the VTA budget, we have not fully programmed all of the estimated amount of FTA formula grants. VTA and Caltrain staff are assessing the possibility swapping some amount of FTA funds for San Mateo County Transportation Authority sales tax funds. The sales tax funds could then be used to provide the local funds Caltrain needs to match federal and state grants. Currently, Caltrain is requesting $2.2 million in local matching funds from VTA. Altamont Commuter Express (ACE) ACE has yet to develop and approve a FY 2003-04 operating and capital budget. Additionally, the ACE Joint Powers Agreement will expire at the end of June 2003 if it is not extended by the three member agencies. Staff from the three member agencies have been meeting to negotiate a new agreement. A main VTA goal for the new agreement is to cap VTAs financial commitment at affordable levels, while providing the San Joaquin Regional Rail Commission the ability to increase service and the institutional control that they desire. VTAs proposed FY 2003-04 budget for ACE includes $2.45 million for the train operating subsidy. For FY 2004-05 this budget is escalated by 2% to $2,535,500. These are based on
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ the current three round trip operation. Member agency contributions are determined by a formula based on the total boarding riders in each county. VTAs current contribution is 43% of the net expenses. This amount also funds ACEs use of the San Jose Diridon and Santa Clara Stations. $1.51 Million is also budgeted for the complete costs of providing ACE shuttles in Santa Clara County. This amount is reimbursable from outside sources including ACE, Transportation Fund for Clean Air grants and employer match for certain shuttles. VTA staff manages this program and contracts with a private carrier to provide the service on ACEs behalf. As with Caltrain, VTA has included no local funds in FY 2003-04 or FY 2004-05 to support ACE capital projects.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________

MAJOR FY 2002-03 ACCOMPLISHMENTS

The following major accomplishments serve to provide a representative sample of the myriad of activities, projects, programs and efforts VTA has been involved in these past several months. It is by no means a complete or comprehensive list. Because of our fiscal crisis, its all too easy to forget about or not recognize these activities. In truth, while many of us have devoted the majority of our time and effort to VTAs finances, others have continued to do their work effectively, efficiently and in spite of this fiscal cloud hanging over them. It is appropriate we recognize their efforts. OPERATIONS DIVISION OPERATIONS ADMINISTRATION: Administration Negotiated and implemented a revised Attendance Program for ATU represented employees. Automated significant portions of the program. The program continues to provide incentives for employees who report to work on time, daily and a progressive disciplinary process for employees who incur absences. Protective Services Completed safety and security training for all bus operators. Service Planning Developed a Service Reduction Plan needed to help bring FY 2003/2004 operating budgets into balance. Conducted 13 community meetings designed to present the potential service reductions to the public and gather community input. Participated in CEQA process for service reduction plan. Operations Planning Completed installation of Advanced Communications System including new Operations Control Center, new fleet wide radio system with GPS tracking capability, automated next stop annunciation and automatic passenger counters. Accessible Services Developed and implemented Phases I and II of the Paratransit Business Practices Improvement Plan. Held a total of 29 public meetings as part of the Phase II development process. Increased overall paratransit productivity (passengers per hour) by 28.5% and reduced the net cost per passenger trip by 10.2%. (This compares year to date figures from July through January 2002 to year to date figures from July through January 2003.)

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ TRANSPORTATION: Transportation Administration Completed training of 829 operators and 126 administrative personnel in support of the implementation of Advance Communications Systems (ACS). Transportation Technical Training and Rail Activation Developed and delivered the new Articulated Coach operations training class; certified more than 250 operators, maintainers and supervisors. Developed and delivered the new Kinkisharyo light rail vehicle training and certification class; certified more than 200 rail operators, maintainers and supervisors. MAINTENANCE: Accepted and placed 136 low floor Gillig buses into revenue service, received and commissioned 40 new 60-foot low floor articulated buses from New Flyer of America, Inc. Awarded a contract for the procurement of three Zero Emissions Buses (hydrogen fuel cells). Installed 24 new engines for the 9200 Bus Series Repower Program to reduce particulate matter emissions. Completed installation and commissioning of the Advanced Communication System (ACS) on all vehicles and began reliability testing of the system. Also managed the maintenance and decommissioning of existing Motorola Metrocom radio system along with disposal of surplus equipment. Completed installation of Loronix CCTV (closed circuit television) on 326 buses and assumed maintenance responsibilities for all systems. Received and commissioned 32 new low floor light rail vehicles and began reliability demonstration testing. In addition , accepted the Spare Parts Package for these vehicles entering the material data into the SAP Materials Master Data Base. Completed rail replacement of curved tracks immediately North of Childrens Discovery Museum at San Carlos and Woz Way. Also, completed rail replacement of tracks immediately South of Childrens Discovery Museum at the Woz Way/Auzerais crossing. ADMINISTRATIVE SERVICES DIVISION Achieved a cumulative savings of over $1 million through the Rail Construction Owner-Controlled Insurance Program. Completed the Administrative Services Reorganization resulting in a net saving of $284,295. Hosted a career event in April 2003 to assist laid-off employees in finding other employment. Eleven employers and 49 employees attended the April event. Twenty interviews and twelve hires resulted from the event.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ CONSTRUCTION DIVISION CAPITAL IMPROVEMENTS Transit Operations Completed construction of essential elements of the North Division Reconstruction Project and advertised the balance of the completion contract. Resolved issues with City of San Jose and the San Jose Downtown Association and completed construction of Guadalupe LRV Facility Shop Expansion, Parts Storage Building and Maintenance Building Improvements Completed design for raising the Guadalupe platforms and began construction on stations north of Ayr/Japantown. Started construction of Cerone Division Improvements, Cerone ZEB Demonstration Project, and Guadalupe LRV Facility Expansion. Improved 34 sites as part of the ADA Access Program. , 1996 MEASURE B TRANSPORTATION IMPROVEMENT PROGRAM Transit Program: Advertised and awarded all contracts for the Tasman East and Capitol Light Rail Projects. Advertised, award and started construction of the Stations and Park and Ride contracts for the Vasona Light Rail Project. Resolved outstanding environmental and CPUC issues at the Hamilton Avenue light rail crossing, allowing for the award of the structures contract for the Vasona Light Rail Project. Completed construction on the pedestrian tunnel and light rail tunnel within the Caltrain Yard at Diridon train station for the Vasona Light Rail Project. Construction started on the double track from Tamien Station to Lick and the Santa Clara Station as part of the Caltrain Service Improvements Program. Began design of the Palo Alto Transit Center improvements as part of the Caltrain Service Improvements Program. Highway Program: Completed construction of widening of Route 101 in south San Jose and Morgan Hill. Continued construction of improvements as part of the I-880 Widening, the Route 85/101 (South) Interchange, and the Consolidated Biological Mitigation projects. Completed two early delivery projects on Route 17 in Campbell: 17D and 17I. Completed construction of Phase 1A of Route 152 Improvements in Gilroy. Began construction of the Route 85/101 (North) Interchange project in Mountain View. Began construction of the Route 237/I-880 Interchange Stage C, Phase 2 Project in Milpitas.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ 2000 MEASURE A TRANSIT IMPROVEMENT PROGRAM Issued Draft EIS/EIR for the Silicon Valley Rapid Transit Corridor Study of BART to the Federal Transit Administration for review before approval to release to public. Continued the conceptual studies for the Silicon Valley Rapid Transit Corridor Study of BART. Prepared design consultant RFPs for Preliminary Engineering for the Silicon Valley Rapid Transit Corridor Project. Continued the conceptual studies for the Downtown East Valley Project. Substantially completed the Downtown East Valley (Capitol Expressway segment) Conceptual Engineering phase and released the Draft EIR/EIS. Selected the Preferred Alternatives for Inclusion in the EIS/EIR for Downtown East Valley (Santa Clara/Alum Rock segment). HIGHWAY PROJECT DEVELOPMENT & ADMINISTRATION Awarded construction contracts for 85/101S, 152-A, Combined Biological Mitigation Site Phase II, Route 17-D, Route 237/880, Route 85/101N, and the Route 101/Bailey Avenue Interchange. Completed the environmental approval process for the Route 152A, 85/101N, Route 17D, and 85/101 South. Initiated a test program of microgrinding on a one-mile segment of Route 85 to evaluate noise decibel reduction. Executed cooperative agreements with Caltrans for 87N, 87S, 85/101N, 237/880, 152, 880/Coleman Interchange projects and the Route 101/Bailey Avenue Interchange. OTHER PROJECTS Began construction of the U.S. 101/Bailey Avenue Interchange project for the City of San Jose. Commenced utility relocation work for the I-880/Coleman Avenue Interchange project for the City of San Jose. DEVELOPMENT & CONGESTION MANAGEMENT DIVISION CONGESTION MANAGEMENT PROGRAM Completed the Community Design and Transportation: Best Practices for Integrating Transportation and Land Use manual, a comprehensive design manual for communities in Santa Clara County, and distributed to Member Agencies, developers, governmental entities and other interested parties. Completed development of the Santa Clara Valley Bikeways Maps. Completed project selection criteria and process for local streets and county roads program and issued call-for-projects. Developed the $1.3 million 2003 Transportation Development Act Article 3 Bicycle and Pedestrian Expenditure Plan for Santa Clara County.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Through the Pavement Management Program, administered and distributed to local jurisdictions approximately $16 million in 1996 MBTIP and Federal funds for street repair and other transportation projects.

TRANSIT PLANNING & DEVELOPMENT Secured Federal Grants of approximately $50 million (including Preventive Maintenance funds) and State TDA/STA funds of $70 million. Completed, in cooperation with the San Jose Redevelopment Agency, the Diridon/Arena Strategic Development Plan. Maintained development income stream in excess of $700,000. MARKETING & CUSTOMER SERVICE Responded to more than 510,000 telephone-based Customer Service requests regarding trip planning, complaint resolution, schedule information and VTA project information. Redesigned and produced new bus and light rail customer timeguides. Submitted the final report to the California Highway Patrol for the Yield to Bus demonstration project. Coordinated design and fabrication for 18 CODE projects for 1996 Measure B rail projects. Improved and expanded public information liaison with area emergency response organizations. FISCAL RESOURCES DIVISION Completed a Benchmark analysis to evaluate VTAs performance in comparison with other transit agencies. The results of this lead to the development of recommendations of the Business Review Team and subsequent consideration by the Ad-Hoc Committee. Completed negotiation and closed escrows for the purchase of the railroad corridor extending 15 miles from San Jose to Fremont. Completed an analysis evaluating the additional resources required for VTA to develop, operate and maintain the VTP 2020 Transit Projects.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________

FY 2003-04 GOALS, PROJECTS AND MAJOR EFFORTS

Implement the VTA Board of Directors adopted recommendations as received from the Business Review Team and from the Ad Hoc Financial Stability Committee. Business Review Team Recommendations: 1. VTA should establish a multi-year strategy to increase its farebox recovery ratio and average fare per boarding. This will require a program of regular fare increases and reductions in fare discounts. Assuming a $300 million budget for directly-operated service, each 5% improvement in farebox recovery ratio would generate $15 million in additional revenue. 2. To address the increasing costs in health benefits, VTA should consider cost containment opportunities, including employee cost sharing which is a standard practice in the private sector. These changes could result in estimated savings of as much as $2.5 million to $3.5 million annually. 3. To address the rising costs of its ADA Paratransit Program, VTA should consider modifying its existing service to reduce premium services, modify the eligibility verification process, and provides, as close as possible, only the level of service that is actually required by the ADA. Further, the Team concurred with the cost containment strategies VTA has set forth in their Paratransit Business Practice Improvement Plan. These changes could result in estimated savings of between $2.3 million and $3.5 million, depending on which options the Board approves. 4. VTA must continue to increase its marketing efforts to increase its market share and constantly evaluate services, making necessary modifications to assure efficiency and effectiveness. Each 1% increase in VTA ridership would generate approximately 465,000 more boardings and approximately $280,000 in additional revenue. 5. For Joint Power Authorities, VTAs Board of Directors should be involved in the approval of the operating AND the annual incremental capital budget, and further should approve in concept the next five years of operating, maintenance, and capital funding requirements. 6. The VTA Board adopt and adhere to a structured Fare Policy and Program that establishes fair fares, encourages and sustains ridership growth and incorporates ongoing assessments of business efficiencies as part of VTA business practices.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Ad Hoc Financial Stability Committee Recommendations: CONCLUSIONS In response to a dramatic and unprecedented decline in sales tax revenue to VTA, the Board and staff have made substantial in -roads toward the reduction of the near-term operating deficit by reducing expenses and improving productivity and efficiency. However, in spite of these efforts, VTA is still facing annual operating deficits averaging between $40-50 million beyond FY 2004-05. As a consequence, VTA must urgently address the need to enhance revenues and reduce expenses in the very near term. Additional delay in addressing this structural problem simply exacerbates the problem.

The Ad Hoc Committee has adopted the following recommendations. Adoption, in whole or in part, by VTAs Board of Directors is pending. RECOMMENDATIONS 1. VTA should consider actively pursuing new local revenue sources that effectively diversify the revenue stream dedicated to VTA. (Committee has yet to recommend particular revenue sources.) 2. VTA should support statewide legislative efforts to broaden the sales tax base, as well as to reduce the threshold for passing broad-based local transportation measures. 3. VTA should seek to partner with other entities when seeking new revenue sources. 4. VTA should implement managements recommended fare changes for FY 2003-04. 5. VTA should adopt and annually examine a formal policy guiding fares for the future, which includes setting a farebox recovery target of 20% to 25%, to be pursued over the coming two to three years. 6. VTA should streamline the procedure for considering a fare change. 7. VTA should work with labor representatives and health care providers to develop a strategy to contain health insurance costs. 8. VTA should develop a strategy for negotiating with all four labor organizations in order of agreement expiration (Local 715, CEMA and TAEA in 2003 and ATU in 2005) and address non-represented staff benefits in a timely manner. 9. Implement staffing changes consistent with productivity improvements and service reductions. 10. Re-examine and revise inventory levels required for reduced fleet levels.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ 11. Address excess fleet issue by halting rehabilitation of 92 Series buses, mothballing excess fleet and evaluating partial sale of excess fleet. 12. VTA should examine work rules and resulting productive work hours per employee as part of both the current service restructuring and labor negotiations. 13. VTA should carefully examine reductions in administrative costs both as part of potential productivity improvements and as part of the service restructuring effort. 14. VTA should implement service reductions (restructuring) totalling 30% by October 2003. Such reductions should be made in line with the Board of Directors adopted service standards. The net effect of this reduction is to save between 22 and 27 percent of total operating expense. 15. The VTA Board should receive an annual presentation on the nature and magnitude of VTA services and periodic reports on route productivity, comparisons to service standards and efforts to restore services previously reduced. 16. VTA should review and revise its service standards in light of its financial condition. These standards should address target and minimum acceptable measures of route productivity by route, service type, and overall system. 17. VTA should revise and enforce staff time keeping policies and procedures to ensure maximum allocation of appropriate direct and indirect costs to capital projects. 18. The Board of Directors should not adopt capital programs unless operations and maintenance costs have been identified and revenue sources are determined. Capital programs and service changes should be considered by the Board in the context of the budget process and revenue and cost projections. 19. VTA should re-assess overhead cost composition to ensure all appropriate projects are defined as capital. OPERATIONS DIVISION OPERTIONS ADMINISTRATION: Protective Services Continue the expansion of the On Board Closed Circuit Television (CCTV) including the completion of the Remote Viewing Demonstration Project by establishing CCTV data viewing at the Eastridge Transit Center and the Chynoweth Light Rail Station. Service Planning Transition from current manual passenger data collection system to an automated system using Automatic Passenger Counters (APCs). This new technology works in

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ concert with the Advanced Communications System (ACS) on both bus and light rail vehicles. Operations Planning Work with VTAs service partners, such as Caltrain, ACE, Highway 17 Express and Dumbarton Express to develop service and operating plans that meet passenger needs, while reflecting VTAs financial condition. Accessible Services Contain paratransit program costs and overall utilization through a 20% reduction in enrollment rate. Further contain paratransit program costs through the development and implementation of Phase III of the Paratransit Business Practices Improvement Plan. 1. September 1, 2003modify minimum account balance policy 2. October 13, 2003implement ADA service area 3. October 13, 2003implement curb-to-curb service TRANSPORTATION: Meet or exceed the goal of providing 99.25 percent of scheduled service for bus and 99.90 for rail. Desired outcome is 99.25% or greater for bus and 99.90 for light rail. Plan and coordinate all Operations Division programs to effect the activation of the Tasman East/Capitol light rail extension. Desired outcome is to successfully complete timeline goals in preparation for planned revenue service in Summer 2004. MAINTENANCE: Continue the implementation of VTAs Clean Fuel Strategy. This includes working with the California Air Resources Board on emissions reductions by developing and implementing a program for bus engine overhaul to ensure compliance with emission regulations, demonstrating and testing technology that has the potential to reduce NOx emissions by 70% or more on three buses operating in revenue service over a three-year period, the Zero Emission Bus Demonstration Project and continued participation in the California Fuel Cell Partnership. As a part of VTAs Clean Fuel Strategy, manage the contract for the purchase of three Zero Emission Buses (hydrogen fuel cell) and complete the installation of the hydrogen fueling station at the Cerone Division. In addition, coordinate maintenance procedures and training development to support the Zero Emission Bus Demonstration Project and coordinate the delivery of Zero Emission Bus vendor training. Continue to manage the contract for the construction and commissioning of 100 low floor light rail vehicles from Kinkisharyo and place into revenue service 48 of these low floor light rail vehicles. In addition, complete the decommissioning of the 39 UTDC light rail vehicles, which includes scheduled preventive maintenance, exterior body rust removal and body repair if needed. Provide support and conduct system integration testing in preparation for the opening of the Tasman East and Capitol Light Rail Corridors in early June 2004. At
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ this time, the Way, Power & Signal section of the Maintenance Department will assume maintenance responsibility for this light rail extension. Additional responsibilities will include the maintenance of eight light rail stations, five substations, five Park & Ride Lots and 12.6 miles of track and overhead cantenary. ADMINISTRATIVE SERVICES DIVISION Continue to reduce overall IT costs through: o Complete knowledge transfer from consultants to VTA employees. o Development of IT Strategic Plan. Successfully negotiate equitable labor agreements with: o Transportation Authority Engineers and Architects Association. o Service Workers Local 715 Service Employees International Union, AFL-CIO. Santa Clara Valley Transportation Authority Chapter o County Employees Management Association, Santa Clara Valley Transportation Authority Chapter. CONSTRUCTION DIVISION CAPITAL IMPROVEMENTS Transit Operations Complete construction of projects in the Facilities Improvement Program including: North and the Cerone O&R Division Improvements Project, and the Cerone ZEB Demonstration Project. Complete construction of north line Guadalupe platform modifications to accommodate low floor light rail vehicles. 1996 MEASURE B TRANSPORTATION IMPROVEMENT PROGRAM Transit Program: Continue construction of the Vasona Light Rail Project as scheduled and budgeted. Complete the Tasman East and Capitol Light Rail Projects for revenue service by July 2004. Construction completed on the double track from Tamien Station to Lick for the Caltrain Service Improvements Project. Complete construction on Caltrain Improvement Program projects to include: Lawrence Bus/Shuttle & Parking Expansion; Palo Alto Transit Center Improvements and Santa Clara Parking & Bus Expansion. Highway Program: Complete construction on the following contracts: (a) I-880 Widening in San Jose; (b) Route 152 Improvements Phase A2 in Gilroy. Continued construction on the following contracts: (a) Route 85/101 (North) Interchange in Mountain View; (b) Route 85/101 (South) Interchange in San Jose; (c)

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Route 237/880 Interchange Stage C Phase 2; (d) Consolidated Biological Mitigation in San Jose. Begin construction on the following contracts: (a) Route 87 (S) HOV lanes in San Jose; (b) Route 87 (N) HOV lanes in San Jose; (c) Replacement planting/landscaping for Route 85/87 Interchange; (d) Replacement planting/landscaping for I-880 Widening.

HIGHWAY PROJECT DEVELOPMENT & ADMINISTRATION Award construction contracts for 152-B, I-880/Coleman Avenue Interchange, Route 87 S, Route 87 N, and the River Oaks Bicycle/Pedestrian Bridge. Complete design of 87 N, 87 S, 880/Coleman Avenue Interchange, and the River Oaks Bicycle Bridge. Complete environmental clearance for 880/Coleman Avenue Interchange, Route 87 N, and Route 87 S. Begin design of Route 85 Noise Mitigation Project. Commence preliminary engineering/environmental approval activities for highway projects selected by the VTA Board in implementation of VTP 2020. Develop the 10-year project list for local streets and roads program OTHER PROJECTS Continue construction of the U.S. 101/Bailey Avenue Interchange project for the City of San Jose. Begin interchange construction work for the I-880/Coleman Avenue Interchange project for the City of San Jose. Begin construction of the River Oaks Bicycle/Pedestrian Bridge in San Jose and Santa Clara. DEVELOPMENT & CONGESTION MANAGEMENT DIVISION CONGESTION MANAGEMENT PROGRAM Develop the 2003 Congestion Management Program. Update Valley Transportation Plan 2020 (VTP 2020), the comprehensive multimodal transportation plan for Santa Clara County. Continue and expand the outreach and education for the Community Design and Transportation program, to ensure that all cities adopt the guidelines Develop the Capital Improvement Program (CIP) element of the 2003 Congestion Management Program (CMP). TRANSIT PLANNING & DEVELOPMENT Complete Conceptual Engineering and Final EIR/EIS for the SVRTC (BART Extension) Project. Complete Conceptual Engineering and Final EIR/EIS for the Downtown East Valley (Capitol Expressway segment) Project.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Complete and release Draft EIR/EIS for the Downtown East Valley (Santa Clara/Alum Rock segment) Project.

MARKETING & CUSTOMER SERVICE Coordinate design, fabrication, and installation of more than 40 CODE projects within 1996 Measure B light rail and highway projects Implement and evaluate comprehensive strategic marketing plan in accordance with VTAs financial condition and service levels. FISCAL RESOURCES DIVISION Complete a subleasing transaction involving VTAs Light Rail vehicles to Salt Lake City and Sacramento Regional Transit District. Complete a series of two lease to service contracts financial transaction for Low Floor Light Rail vehicles. Complete lease to service contract financial transaction on buses. Complete refinancing of Measure A repayment obligation.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ OFFICE OF THE GENERAL MANAGER RESPONSIBILITIES The General Managers Office is responsible for the management of the Santa Clara Valley Transportation Authority (VTA) according to the policies adopted by the Board of Directors. General duties include the development of program and policy alternatives for consideration by the Board and management of the authoritys staff activities. Specific functions within the General Managers Office include support of the Board through the Board Secretary, policy development, strategic planning, and intergovernmental and business relations. MAJOR PROGRAMS The Office of the Board Secretary is responsible for all Board-related activities. These include the preparation and publication of agendas, notices, minutes of meetings, hearings, and other matters within the jurisdiction of the Board. Additionally, the Record Management and Document Control department maintains documents and prepares as-built plans for most of the large capital projects and is responsible for VTAs document reproduction center. The Chief of Staff assists and participates in the planning, organizing, and facilitating the activities of the General Manager. In this capacity, the Chief of Staff facilitates and coordinates with Executive Management on items critical to VTA including strategic planning and analysis, program development, and internal and external policy development. Government Affairs is primarily responsible for developing and coordinating VTAs legislative and intergovernmental relations programs. Specifically, it analyzes the impact of state and federal legislative issues, and develops and coordinates VTAs strategy for responding to these issues. It manages VTAs legislative advocacy efforts in Washington, D.C. and in Sacramento. Government Affairs also coordinates VTAs outreach efforts to the local community, the cities, and respective state and federal legislative delegations. Policy and Programs serves as VTAs principal liaison with Joint Powers Boards (Caltrain, ACE, and Capitol Corridor) and Santa Clara Countys representatives to MTC. Policy and Programs supports VTAs liaison activities with business organizations, other community groups within the county, and to some extent, specific governmental institutions. Various special projects and programs (both internal and external) are also coordinated out of the General Managers Office.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________

Board of Directors

Peter M. Cipolla General Manager

Board Secretary Sandra Weymouth

Chief of Staff Denise Daly

Board Office

Administration

Record Management & Document Control Tim Ellenberger Manager

Policy & Program Frank Sharpless Manager

Positions: Will be provided later.

Government Affairs Kurt Evans Manager

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________
OFFICE OF GENERAL MANAGER FY 2001-02 FY 2002-03 FY 2003-04 FY 2004-05 Adopted Revised Proposed Proposed Actual Budget Estimate Budget Budget $ 1,919 $ 2,152 $ 2,063 $ 2,142 $ 2,113 770 836 980 1,142 1,251 3 17 17 9 9 333 373 373 337 339 251 351 443 414 422 43 30 30 23 24 143 163 163 154 156 157 148 280 289 295 0 5,000 1,927 2,000 2,000 306 462 422 392 397 1 0 0 0 0 0 34 685 18 343 3,926 9,566 7,383 6,920 7,349 (473) (131) (313) (403) (315) $ 3,453 $ 9,435 $ 7,070 $ 6,517 $ 7,034

In thousands Wages & Salaries Benefits Materials & Supplies Professional & Special Services Other Services Office Expense Employee Related Expense Leases & Rents Contingency Miscellaneous Contribution to Other Agencies Other Expense Total Expense Reimbursements Net Total

MAJOR BUDGETARY CHANGES Cost Reduction and Efficiency Measures Details regarding cost reductions will be provided at a later date. Contingency During development of the FY 1997-98 Budget, the Administration and Finance Committee recommended that VTAs budget policy should include the establishment of a contingency fund (i.e., the General Managers unallocated fund) at 3.0% of the operating budget. This fund is used to fund urgent and unexpected programs or projects not specifically identified and budgeted. Recognizing that VTA has reduced programs and is refraining from launching new non-critical capital projects, we believe that a contingency fund of $2 million for FY 2003-04 and FY 2004-05 will be sufficed to meet essential unanticipated expenses. This represents a 60% reduction from the FY 2002-03 Adopted Budget when we budgeted $5 million for the entire year. We will re-institute the 3% policy once our financial conditions improve. Miscellaneous Expense VTA was responsible for paying the County Registrar of Voters for costs associated with the November 2002 Transit Advisory Ballot Measure, at a cost of $402,000 in FY 2002-03. We have also included the estimated cost of $325,000 for a November 2004 ballot measure in FY 2004-05.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ OFFICE OF THE GENERAL COUNSEL RESPONSIBILITIES The General Counsels Office provides legal advice and counsel to all of the divisions and departments, as well as to the General Manager and the Board of Directors, with respect to all facets of VTAs operations, including the Congestion Management Program. MAJOR ACTIVITIES Assist divisions and departments to achieve their goals by providing legal advice and support: o In connection with labor/employment issues, including representing VTA in litigation and in arbitration hearings; o Concerning contract, real estate, construction and public agency law issues; o By reviewing, analyzing and drafting administrative policies and procedures and legislation; o By representing VTA in other litigation. Provide legal support to the VTA-ATU Pension Board and to the VTA Deferred Compensation Committee. Retain and supervise outside counsel who provide specialized legal services.

Board of Directors

Suzanne Gifford General Counsel

Assistant General Counsel Richard Katzman Kevin Allmand

Attorneys

Support Positions

Positions: Will be provided later.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________
OFFICE OF GENERAL COUNSEL FY 2001-02 FY 2002-03 FY 2003-04 FY 2004-05 Adopted Revised Proposed Proposed Actual Budget Estimate Budget Budget $ 796 $ 920 $ 829 $ 956 $ 980 311 359 371 512 582 112 207 207 207 211 1 0 0 0 0 2 2 2 2 2 14 10 10 7 8 21 24 24 19 20 1,257 1,522 1,443 1,703 1,803 (493) (282) (282) (282) (287) $ 764 $ 1,240 $ 1,161 $ 1,421 $ 1,516

In thousands Wages & Salaries Benefits Professional & Special Services Other Services Office Expense Employee Related Expense Miscellaneous Total Expense Reimbursements Net Total

MAJOR BUDGETARY CHANGES Salaries and Benefits Counsel will realize $91,000 in salary savings in FY 2002-03 due to vacancies. However, the increase in benefits trims the savings to $79,000. Counsel anticipates filling all vacancies in FY 2003-04, so this budget reflects a fully staffed department. Additionally, the budget assumptions for benefits have increased over the past year. The major causes of this increase are increased health care costs for employees and retirees, as well as increased pension plan contribution costs. These increases result in a cost increase of $268,000.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ OPERATIONS DIVISION ADMINISTRATION RESPONSIBILITIES The Operations Division is responsible for delivering safe, courteous and reliable service to the residents of Santa Clara County. This Division consists of three functional units: Administration, Transportation, and Maintenance. Administration consists of the Chief Operating Officers administrative unit, Service and Operations Planning and Protective Services departments. MAJOR PROGRAMS Service and Operations Planning consists of Service Planning, Accessible Services and Operations Planning. Service Planning is responsible for planning, scheduling and monitoring VTAs 69 bus routes and light rail service. Accessible Services ensures compliance with the Americans with Disabilities Act (ADA) and manages the paratransit program. Operations Planning has responsibility for the operation of light rail and Altamont Commuter Express (ACE) shuttles, and coordination of ACE, Caltrain, Dumbarton Bridge and Highway 17 Express services. In addition, Operations Planning has responsibility for passenger facility planning, coordination of the shelter and bus stop programs, monitoring Tamien Child Care Center operations, analysis and reporting of transit system performance, and management of the Advanced Communication System (ACS) project. Protective Services provides security for VTA bus and light rail service and facilities. This department coordinates law enforcement activities with the contracted Santa Clara County Sheriff unit and Pinkerton Security, a private security contractor. Protective Services is also responsible for revenue collection and protection, management of VTAs Lost & Found program, the Vandalism Abatement program, employee security systems and fare inspection on light rail.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________

Frank T. Martin Chief Operating Officer

Administration

Service & Operations Planning Mike Aro Deputy Director

Protective Services Ray Frank Chief of Security

Accessible Services George Tacke', Manager

Administration

Sheriff's Contract

Operations Planning Jim Unites, Manager

Fare Inspection

Security Contract

Service Planning Bill Capps, Manager

Positions: Will be provided later.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________
OPERATIONS - ADMINISTRATION FY 2001-02 FY 2002-03 Adopted Revised Actual Budget Estimate $ 3,316 $ 3,473 $ 3,479 1,381 1,487 1,795 176 235 193 9,909 9,473 9,383 80 132 124 542 56 36 57 66 61 26 145 145 69 73 64 40 66 66 71 153 132 4 506 506 33,122 32,452 30,556 14,897 14,105 14,105 0 2,500 4,041 1,237 1,340 1,223 3,160 5,100 3,960 520 587 425 246 250 329 256 278 273 1,208 6 6 70,317 72,483 70,902 (2) 0 0 $ 70,315 $ 72,483 $ 70,902 FY 2003-04 Proposed Budget $ 3,231 1,879 172 7,904 853 36 61 145 73 52 131 506 31,797 14,105 0 1,000 3,960 440 355 265 6 66,971 0 $ 66,971 FY 2004-05 Proposed Budget $ 3,077 1,979 172 8,499 1,353 36 61 145 70 52 131 506 32,751 14,387 0 1,000 4,034 440 355 265 6 69,319 0 $ 69,319

In thousands Wages & Salaries Benefits Materials & Supplies Security Professional & Special Services Other Services Utilities Data Processing Office Expense Employee Related Expense Leases & Rents Miscellaneous ADA Caltrain Caltrain Capital Contribution Light Rail Shuttles Altamont Commuter Express Highway 17 Express Dumbarton Express Contribution to Other Agencies Other Expense Total Expense Reimbursements Net Total

MAJOR BUDGETARY CHANGES Accessible Services VTA, Outreach and a consultant team have developed various options for improving paratransit operations and controlling costs. Staff has developed a four-phased Paratransit Service Business Practices Improvement Plan. The plan includes strategies to improve productivity, increase revenue, decrease costs and control demand. As a result of the implementation of the plan, the Revised FY 2002-03 paratransit budget has been reduced by approximately $ 1.9 million from the FY 2002-03 Adopted Budget. The Recommended FY 2003-04 budget for our accessible services is estimated at $31.8 million. The FY 2004-05 budget is expected to be $32.7 million. The plan requires two additional staff: a Senior Management Analyst and an Accessible Service Representative. The annual wages and benefits for these two positions are estimated at $199,000. Service Planning As part of the Advanced Communication System, VTA is implementing Automated Passenger Counters (APCs) on its buses and light rail vehicles. APCs will count customer boardings and monitor on-time performance. This information i used to s determine bus and light rail ridership and to plan routes and modify schedules so they are realistic and reliable. With the APCs, VTA will be able to check the service much more frequently than in the past. The net savings for six months in FY 2 003-04 is $238,000.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Protective Services VTAs system-wide security is provided through a combination of County Sheriffs peace officers and Pinkerton Security (Pinkerton) unarmed and armed transit security officers. The FY 2003-04 budget proposes to eliminate some Deputies from our Sheriffs Transit Patrol and reduce Pinkerton services by approximately 19,000 hours. Despite the reduction, we believe that we can provide a reasonable level of law enforcement response. The net savings in FY 2003-04 is $1.5 million. Caltrain We propose to cap our contribution to Caltrain at the FY 2002-03 Adopted Budget level of $14.1 million for FY 2003-04 and escalate the amount by 2% to $14.4 million for FY 2004-05. Other Cost Reduction and Efficiency Measures Details regarding cost reductions will be provided at a later date.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ OPERATIONS DIVISION TRANSPORTATION RESPONSIBILITIES Transportation is responsible for the operation of VTAs 69 bus routes, the 18-mile Guadalupe light rail line, which runs from South San Jose to North San Jose terminating at the Baypointe Station on Tasman Drive, and the 11.5-mile Tasman light rail line, which runs from Mountain View to I-880 in Milpitas. Over 1,000 operators provide more than 24,000,000 miles of bus and light rail service on an annual basis. Three bus operating facilities, one light rail facility, the Operations Control Center and the field supervision unit support transit operations. MAJOR PROGRAMS Transportation Administration provides management direction and oversight of Transportation Department policies, programs and projects by establishing goals, performance measures and standards. Bus Transportation consists of Cerone Transportation, Chaboya Transportation, and North Transportation. The section is responsible for the daily operations of VTAs 69 bus routes. Rail Transportation consists of Guadalupe Transportation. The section is responsible for the daily operations of the Guadalupe and Tasman light rail lines. Service Management consists of the Field Supervision, Operations Control Center, and Dispatch units. The section is responsible for facilitating improved communication and efficiency among all units in the Operations Division. Rail Activation develops and implements programs and functions for all planned light rail and commuter rail lines operated by VTA. Successful implementation of the rail projects requires that all tasks necessary for the initiation of revenue service be comprehensively identified and accomplished in a systematic, integrated and timely fashion. Transportation Training is responsible for the initial and refresher training of Bus and Light Rail operators as well as the development of all rules and procedures governing bus and rail operations. Training programs include Verification of Transit Training (VTT) safety and renewal classes, customer service training, DMV certification, post-accident retraining, contractor restricted access training and fire/life safety training for department personnel. MAJOR ACTIVITIES The Bid, Dispatch and Timekeeping (BDT) System is an online real time software system, which enables efficient and accurate data entry and tracking of operating activities, operator utilization, bidding, daily dispatching, timekeeping and payroll processing.
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ The Transportation Department is a major stakeholder in the design and implementation of TransLink, a universal fare card system using smart card technology. Passengers will be able to pay fares on multiple Bay Area transit systems with a single TransLink card, about the size of a credit card. Transportation serves as VTAs representative and liaison with the California Public Utilities Commission on new General Orders, rules and procedures, attending hearings and authoring VTA position papers.

Frank T. Martin Chief Operating Officer

Matthew O. Tucker Deputy Director Transportation

Operators on Long-Term Leave

Administration

Chaboya Bus Transportation Curt Raitz Superintendent

Light Rail Transportation & Service Management Austin Jenkins General Superintendent

North Bus Transportation Paul Googe Superintendent

Guadalupe Light Rail Transportation

Field Supervision Mark Bugna Asst. Superintendents

Cerone Bus Transportation Rich Golda Superintendent

Transportation Training

Operations Control Center John Carlson Asst. Superintendent

Positions: Will be provided later.

Rail Activation

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________
OPERATIONS - TRANSPORTATION FY 2001-02 FY 2002-03 Adopted Revised Actual Budget Estimate $ 60,296 $ 62,670 $ 59,176 42,547 41,581 45,811 87 202 202 50 206 194 13 33 54 31 0 0 162 141 136 13 0 0 127 257 214 84 73 24 7 54 53 1 35 32 103,418 105,252 105,896 0 0 0 $ 103,418 $ 105,252 $ 105,896 FY 2003-04 FY 2004-05 Proposed Proposed Budget Budget $ 52,039 $ 50,270 41,285 41,655 180 181 170 170 28 28 0 0 125 130 0 0 153 158 24 24 43 43 20 20 94,067 92,679 (887) 0 $ 93,180 $ 92,679

In thousands Wages & Salaries Benefits Materials & Supplies Professional & Special Services Other Services Data Processing Office Expense Communications Employee Related Expense Leases & Rents Miscellaneous Other Expense Total Expense Reimbursements Net Total

MAJOR BUDGETARY CHANGES Proposed October 2003 Service Reduction VTA proposes to implement a 21% service reduction in October 2003. This service reduction will save approximately $15.5 million for eight and half months in FY 2003-04. Cost Reduction and Efficiency Measures The Transportation department has analyzed and modified programs and process to realize operational and fiscal efficiencies. In March 2003, Transportation eliminated two cost centers: Service Management and Transit Technical Training & Rail Activation Administration. As a result, effective July 1, 2003, nine positions will be eliminated. The annualized savings for the nine positions for FY 2003-04 is approximately $869,000. FY 2004-05 Opening of the Tasman East and Capitol Light Rail Extensions The Light Rail service to Capitol at Alum Rock Avenue in San Jose is scheduled to open in the summer of 2004. Ten new Light Rail Operator positions will be required for this service.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ OPERATIONS DIVISION MAINTENANCE RESPONSIBILITIES Maintenance is responsible for maintaining VTAs fleet of buses and light rail vehicles and the light rail system consisting of track, operating signals, power distribution system, and the adjoining rights-of-way. It maintains all facilities, communications systems and most passenger facilities. Additional responsibilities include materials management, management of all non-revenue vehicles (support vehicles) and maintenance information systems. Maintenance also provides quality assurance and warranty services for all of VTA as well as maintenance related training and maintenance engineering. MAJOR PROGRAMS Bus Maintenance consists of North Maintenance, Chaboya Maintenance, Cerone Maintenance and Overhaul and Repair. The section is responsible for the timely and reliable maintenance, preventive maintenance, heavy repair, engine rebuilding, other maintenance services, inspections and servicing of VTAs active fleet of 431 buses which includes 40 60-foot New Flyer articulated buses. Rail Maintenance consists of Light Rail Vehicle Maintenance and Way, Power and Signal Maintenance. Under the direction of Maintenance Engineering, the Light Rail Vehicle Maintenance section is responsible for the continued delivery and acceptance testing of the new low floor Kinkisharyo light rail vehicles. Light Rail Vehicle Maintenance is also responsible for the timely and reliable maintenance, preventive maintenance, inspections, repair and servicing of VTAs entire light rail fleet. At this time, VTA has 43 Kinkisharyo low floor light rail vehicles and is in the process of decommissioning 39 UTDC light rail vehicles. Way, Power and Signal Maintenance is responsible for timely and reliable maintenance, preventive maintenance of right of way, rail system power, tracks, signals, Supervisory Control and Data Acquisition (SCADA), wayside communications, station facilities and related equipment, park and ride lot maintenance, and evaluation of rail maintenance efficiency. Facilities Maintenance consists of Facilities Maintenance and Passenger Facilities Maintenance. In addition to maintaining VTAs Transit Centers and bus stops, this section is responsible for the planned and unscheduled (on-call) facility maintenance including preventive maintenance painting and roofing, inspections, repair of VTAs buildings, shelters, grounds (except right-of-way), related equipment, hazardous waste disposal and overall environmental regulatory record keeping and oversight. The Facilities Maintenance Section evaluates the efficiency and safety of all facilities and related equipment. This section also assists in the evaluation and planning of facility modifications, upgrades, expansions, and equipment replacements. Maintenance Support Services consists of Warranty and Quality Assurance, Nonrevenue Vehicle Maintenance, Maintenance Training and Maintenance Information Systems. The section is responsible for the management of warranty and quality assurance programs, administration and maintenance of the non-revenue vehicle fleet,
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ management and administration of non-revenue vehicle procurement contracts, development and implementation of maintenance training programs, administration of maintenance information systems and the development, administration and distribution of maintenance standard operating procedures. Materials Management consists of Bus Parts and Light Rail Parts. The section is responsible for the timely ordering, replenishment, receipt, issue and management of bus and light rail parts inventory at all of VTAs facilities (Cerone, Chaboya, North and Guadalupe). This section operates one main warehouse and three operating storerooms for bus parts and one main warehouse and one operating storeroom for rail parts. Maintenance Engineering consists of Bus Engineering, Rail Engineering and Communications Systems Maintenance. Bus and Rail Engineering units are responsible for the management and administration of all revenue vehicle procurement contracts as well as the technical specifications for the procurement of components and for the development of scheduled maintenance service inspection programs for revenue vehicles. These units are also responsible for all engineering activities relating to the bus fleet and the light rail system. The Communication Systems Maintenance unit is responsible for the maintenance of the voice telephone systems, all radio communication systems, closed circuit TV, card access systems and miscellaneous communication systems.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________

Frank T. Martin Chief Operating Officer

George Barlow Deputy Director of Operations for Maintenance

Long-Term Absence

Administration

Bus Maintenance Manuel Martinez General Superintendent

Rail Maintenance Ray Borge General Superintendent

Facilities Maintenance Administration Art Taylor Manager

Maintenance Support Services Jerry Oxsen Manager

Maintenance Engineering Chris Eichin Manager

Materials Management Glen Bolon Manager

Cerone Maintenance Mark Coffield Superintendent

LR Vehicle Maintenance Tom Kennedy Superintendent

Facilities Maintenance Art Taylor Manager

Warranty & Quality Assurance Chris Crisologo Manager

Rail Maintenance Engineering Hussein Fouad Senior Systems Engineer Bus Maintenance Engineering Art Douwes Senior Mechanical Engineer

Bus Parts Glen Bolon Manager

Chaboya Maintenance Jeff Flagg Superintendent

Way, Power & Signal Maintenance Curt Nicks Superintendent

Passenger Facilities Maintenance Tony Kelly Supervisor

Non Revenue Vehicle Maintenance Carol Peterson Coordinator

Light Rail Parts Glen Bolon Manager

North Maintenance Heidi Samuels Superintendent

Maintenance Training Dwight Barnes Supervisor

Communications Maintenance Bob Gave Manager

Bus Overhaul & Repair Ciro Aguirre Superintendent

Positions: Will be provided later.

Maintenance Information Systems Sharon McElligott Senior Management Analyst

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________
OPERATIONS - MAINTENANCE FY 2001-02 FY 2002-03 FY 2003-04 FY 2004-05 Adopted Revised Proposed Proposed Actual Budget Estimate Budget Budget $ 38,856 $ 40,365 $ 38,392 $ 34,098 $ 32,247 23,619 24,702 28,046 25,772 25,655 14,174 15,347 13,558 12,741 12,923 103 545 840 387 739 4,547 5,081 4,863 4,515 4,718 4,809 5,964 6,091 6,161 5,143 3,612 4,000 3,589 2,500 3,100 1,026 1,049 977 916 938 2,103 2,286 2,217 2,408 2,456 1 0 0 0 0 107 119 113 106 108 1,391 1,746 1,640 1,621 1,637 179 308 281 180 180 117 156 102 82 85 57 57 57 53 54 749 0 0 0 0 95,450 101,725 100,766 91,540 89,983 (4,124) (4,012) (4,012) (4,012) (4,192) $ 91,326 $ 97,713 $ 96,754 $ 87,528 $ 85,791

In thousands Wages & Salaries Benefits Materials & Supplies Professional & Special Services Other Services Fuel Traction Power Tires Utilities Data Processing Office Expense Communications Employee Related Expense Leases & Rents Miscellaneous Other Expense Total Expense Reimbursements Net Total

MAJOR BUDGETARY CHANGES Proposed October 2003 Service Reduction Details regarding cost reductions will be provided at a later date. Advanced Communication Systems (ACS) Support One Communications Systems Analyst position was added to support the overall system management and maintenance of the ACS equipment. The ACS includes a new simulcast radio communication system, Computer Aided Dispatch and Automatic Vehicle Location software, automated next-stop announcements on buses, driver security features, and automatic passenger counting equipment. The annual cost of the position is estimated at approximately $133,000 for FY 2003-04 and $138,000 for FY 2004-05. Tasman East and Capitol Light Rail Extensions Tasman East and Capitol Light Rail Extensions consist of 6.3 additional right of way miles (12 double track miles and overhead wiring). The extensions are scheduled to open in Summer 2004. Maintenance staff needs to be hired at the start of the second quarter of FY 2003-04, prior to the opening of the light rail extension, for system training. Nine additional positions (three Signal Maintainers in the Light Rail Signal Maintenance Unit, one Overhead Line Worker and one Substation Maintainer in the Light Rail Power System Maintenance Unit, one Track Worker in the Light Rail Track Maintenance Unit, and three Maintenance Workers in the Light Rail Station Maintenance Unit) are required to support the extension. The approximate cost of the nine positions for nine months is $594,000 for FY 2003-04 and the annual cost for FY 2004-05 is $845,000.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Fuel The FY 2002-03 budget assumption for low sulfur diesel fuel was $1.00 per gallon. In the third quarter of FY 2002-03, the price of low sulfur diesel fuel increased to $1.26 per gallon. The proposed budget assumption for the reminder of FY 2002-03 is $1.20 per gallon and for FY 2003-04 is $1.40 per gallon due to the current volatility of diesel fuel prices and the current situation in the Middle East. The total fuel budget for FY 2003-04 is $6.2 million based on 15.7 million bus service miles. The low sulfur diesel fuel budget assumption for FY 2004-05 is projected to be $1.25 per gallon. Based on the projected 14.6 million bus service miles, the estimated fuel cost for bus service will be approximately $5.1 million, a decrease of $1.1 million from the FY 2003-04 fuel budget.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ ADMINISTRATIVE SERVICES DIVISION RESPONSIBILITIES The Administrative Services Division includes Information Technology, Employee Relations, Employee Services, and Risk Management. The Division is responsible for the business and employee support functions, including information technology, employee/labor relations, organization development and training, personnel selection, employee compensation, employee benefits, employee wellness, substance abuse testing, equal employee opportunity, workers compensation, claims management and safety, and risk management. MAJOR PROGRAMS Information Technology Department: The Information Technology Department manages centralized data processing and maintains VTAs information systems. This includes both application development and support and infrastructure management. Employee Relations Department: There are three major sections of responsibility in the Employee Relations Department, Equal Opportunity , Labor Relations, and Employee Development. The Equal Opportunity Section is responsible for preparing and administering VTAs Equal Employment Opportunity/Affirmative Action Program; ensuring compliance with state and federal non-discrimination laws and regulations; and conducting discrimination complaint investigations. The Employee Relations Section activities are focused on conflict resolution and include negotiating and administering collective bargaining agreements for the four bargaining units (ATU, Local 265; SEIU, Local 715; CEMA; and Engineers and Architects); representing VTA management in arbitrations; providing training and consultation on employee relations issues, including grievance handling and discipline actions; and researching labor trends and issues. The Employee Development Section is responsible for VTA-wide development and coordination of training. Programs include customer service, computer skills, tuition assistance, and new employee orientation. The Section also focuses on working with managers and employees to increase employee participation in achieving VTA goals and objectives. Employee Services Department: This department is composed of Personnel Services, Recruitment and Selection, Compensation and Classification, Health and Welfare, and Retirement Services. The Personnel Services Sections activities include position control and records, reviewing and processing all personnel transactions, maintaining official personnel files, and processing employment verification for employees.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ The Recruitment Sections activities include targeted outreach and examination of candidates to fill vacancies throughout VTA with qualified employees; its also responsible for the development of Personnel Policies and Procedures to promote sound personnel practices. The integral part of effective recruitment is that VTAs compensation is competitive. This is the responsibility of the Classification and Compensation Section. This Section conducts studies to appropriately define the work for classes within VTA and to ensure that compensation is competitive. The Health and Welfare Section is responsible for administering employee benefits programs, including medical, dental, vision, employee assistance, dependent care, life insurance, AD&D, disability insurance and COBRA. The Retirement Services section is responsible for administering Pension and Deferred Compensation, ATU, and PERS retirement programs; and serving as staff to the ATU Pension Board and the VTA Deferred Compensation Committee. Risk Management Department: The Risk Management Department is responsible for identifying, assessing, preventing, controlling and financing accidental losses that result from operations, and rail, facilities, and highway construction activities. Specific functions include fund management of retained losses, management of claims administration programs for both Workers Compensation and Liability losses, including transit liability, construction liability, first party damage, property and employee property losses. The Department manages risk transfer through the purchase of insurance and establishment of insurance standards for contract transactions. The Department is responsible for VTAs Environmental Health and Safety Programs, which include employee safety, and health, safety awards programs, environmental compliance and the Emergency Response Plan. Risk Management also administers the employee ADA, FMLA, return to work/modified work and earned benefit payroll integration programs. The Substance Abuse Control Program is responsible for administering the Drug-Free Workplace Act and the FTA required substance abuse testing program for safetysensitive employees, including detection, case management, and employee training.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________

Kaye L. Evleth Chief Adminstrative Officer

Administration

Information Technology Richard Kurk Chief Information Officer

Employee Relations Robert Escobar Manager

Employee Services Shellie Albright Manager

Risk Management Nanci Eksterowicz Manager

Positions: Will be provided later.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________
ADMINISTRATIVE SERVICES DIVISION FY 2001-02 FY 2002-03 FY 2003-04 FY 2004-05 Adopted Revised Proposed Proposed Actual Budget Estimate Budget Budget $ 9,040 $ 9,743 $ 9,186 $ 9,037 $ 9,185 3,613 3,780 4,396 4,835 5,456 107 105 105 25 26 5,719 3,831 3,550 974 993 972 309 232 74 75 5,199 5,262 5,111 4,461 4,438 3,585 2,965 2,965 2,524 2,575 116 123 94 138 140 30 0 0 0 0 735 497 510 446 454 51 36 0 0 0 111 91 82 53 54 216 0 0 0 0 29,494 26,742 26,231 22,567 23,396 (263) (61) (474) (607) (607) $ 29,231 $ 26,681 $ 25,757 $ 21,960 $ 22,789

In thousands Wages & Salaries Benefits Materials & Supplies Professional & Special Services Other Services Insurance Data Processing Office Expense Communications Employee Related Expense Leases & Rents Miscellaneous Other Expense Total Expense Reimbursements Net Total

MAJOR BUDGETARY CHANGES Cost Reduction and Efficiency Measures In FY 2002-03, as an effort to reduce costs and improve efficiency, the Administrative Services Division has undergone a reorganization to streamline its support functions. This reorganization included combining the Personnel and Benefits Departments to create the new Employee Services Department; streamlining the Civil Rights, Employee Relations, and Organizational Development and Training departments to form the new Employee Relations Department; moving the Substance Abuse Control Program to Risk Management; and continuing realization of savings from ongoing consolidation in the IT cost center. Details regarding cost reductions will be provided at a later date.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ CONSTRUCTION DIVISON RESPONSIBILITIES The Construction Division completes engineering designs and implements construction projects that are part of VTAs rail, facilities, and highway transportation improvement program. The division accomplishes this task by managing the preparation of construction plans and specifications, administration of construction contracts and coordination of project hand-over and acceptance with VTA Operations or city and state agencies. Additionally, the division has ongoing responsibilities in project utility coordination, field-surveying activities including as-built drawings, and capital projects management support for other VTA divisions. MAJOR PROGRAMS The construction division is currently organized into three project delivery groups: Rail and Facilities, Highways and the Capital Projects group. The Rail and Facilities group manages the implementation of a $1.25 billion rail expansion program with $1 billion funded as part of the 1996 Measure B Transportation Improvement Program. This group is beginning to transition into preliminary engineering (subject to State Funding) for the $3.7 billion BART extension to Silicon Valley. The group also designs and constructs VTA facility modification and expansion projects, including transit centers, Caltrain stations, bus stops, and operating, maintenance and administrative facilities. The Highway group is responsible for managing project delivery of $600 million in highway improvement projects funded as part of the 1996 Measure B Transportation Improvement Program. The Highway group is also taking on additional project and construction management of local highway projects being requested by the City of San Jose. These projects include the I-880/Coleman Interchange and Route 101/Bailey Interchange. Funding for these projects is from other local and state agencies and VTA costs are fully reimbursed. The Highway group is also responsible for all VTA Survey and Hazardous Material Remediation for rail, facilities and highway projects. The Capital Projects Group is responsible for managing cost and schedule reporting on VTAs major Capital projects. The group is instrumental in tracking capital expenditures and forecasting costs to complete and works closely with VTAs Fiscal Resources Division in transferring capital assets once projects are completed. The group also maintains state of the art project controls software tools for reporting costs and tracking changes that are integrated into VTAs SAP enterprise software. Major projects underway by VTAs Construction Division next two fiscal years that were used as a basis for determining staffing levels are as follow. 1996 Measure B Rail Projects: The Tasman East Light Rail Project consists of a five-mile extension of VTAs existing light rail system from North First Street in the city of San Jose, through the city of

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Milpitas, to Hostetter Avenue in northeast San Jose. The entire project to Hostetter will be completed by July 2004. The Capitol Light Rail Project consists of 3.3-mile extension from Hostetter Avenue in San Jose, along Capitol Avenue, to just east of Alum Rock Avenue. Current plans are to open Capitol and Tasman East at the same time in July 2004. The Vasona Light Rail Project consists of building a 5.2 mile Vasona Light Rail Line from downtown San Jose to the San Jose Arena/Caltrain Station and on to Winchester Blvd. in Campbell. Current plans are to open the Vasona Project in January 2006. The Caltrain Service Improvement Program involves a number of service improvements for Caltrain in Santa Clara County. A program of projects is funded by 1996 Measure B Transportation Improvement Program and TCRP grants. Construction of a $22 million TCRP funded Tamien to Lick double tracking project began in late 2002 and is scheduled for completion in late 2003. Other projects include the improvement to Caltrain Stations and Park and Ride lots. 1996 Measure B Highway Projects: Most of these highway projects are under construction and will open from late 2003 through 2005. Route I-880 Widening from 4 to 6 lanes in San Jose Route 85/87 Interchange Completion in south San Jose Route 101 Widening from 4 to 6 lanes plus 2 HOV lanes -Morgan Hill/south San Jose Route 85/101 (S) Interchange in south San Jose Routes 237/880 Interchange Completion-Stage C in Milpitas Routes 85/101 (N) Interchange and HOV Direct Connector in Mountain View Route 17 improvements Route 152 safety projects 2000 Measure A Transit Improvement Projects: The Silicon Valley Rapid Transit Project is a 10 to 12 year design and construction effort estimated at $3.7 billion in 2001 dollars. The project is currently in the conceptual engineering, FEIS/FEIR phase. The Construction Division is assisting the Development and Congestion Management Division in reviewing design alternatives, project schedules, and cash flows. Also, the division will develop consultant requests for proposals and a project implementation plan to allow for a seamless transition to final design and construction in mid to late 2003 subject to TCRP funding availability. Other Rail and Facilities Projects: Retrofit project to raise the existing north Guadalupe Corridor Light Rail station platforms Reconstruction of North Operating Division

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Reconstruction and expansion of Cerone Operating Division, Overhaul and Repair Facility and Distribution Center Master Plan Study for Chaboya Operating Division, Palo Alto, Gilroy and West Valley College Transit Centers Bus Stop Improvement Program VTA Signage Improvement Program Hazardous Materials Remediation and Monitoring Various Bus Operation and Maintenance Facility Modification Projects LRT Bridge Seismic Retrofit Projects

Other Highway Projects: I-880 Coleman Interchange for City of San Jose Route 101/Bailey Interchange for City of San Jose 87 (S) HOV Lanes 87 (N) HOV Lanes

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________

Jack Collins Chief Construction Officer

Administration

Rail & Facilities Design & Construction Les Miller Deputy Director

Highway Construction Jeff Funk Deputy Director

Capital Projects Group Derek Carrier Manager

Systems Ramesh Dhingra Manager

Platform Modifications

Survey Stan Heffner Manager

Vasona Project Design & Construction Mark Robinson Manager

Facilities Design & Construction Ken Brencic Manager

Permits, USA Locating Business Relations Bill Kindricks Manager Utilities Coordination John Beebe Manager

Haz Mat Environmental Wes Toy Engineer

BART Group John Donahue Manager

Tasman East/ Capitol Project Design & Construction Arch Walters Manager

Positions: Will be provided later.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________
CONSTRUCTION DIVISION FY 2001-02 FY 2002-03 FY 2003-04 FY 2004-05 Adopted Revised Proposed Proposed Actual Budget Estimate Budget Budget $ 8,107 $ 9,967 $ 8,825 $ 9,382 $ 5,294 2,881 3,837 4,025 4,957 3,113 72 98 98 41 41 1 240 240 200 200 1 6 6 0 0 7 0 0 0 0 50 59 49 37 37 42 82 77 46 46 21 33 20 2 2 7 8 8 10 10 11,189 14,330 13,348 14,675 8,743 (12,341) (11,898) (11,926) (12,675) (7,365) $ (1,152) $ 2,432 $ 1,422 $ 2,000 $ 1,378

In thousands Wages & Salaries Benefits Materials & Supplies Professional & Special Services Other Services Data Processing Office Expense Employee Related Expense Leases & Rents Miscellaneous Total Expense Reimbursements Net Total

MAJOR BUDGETARY CHANGES Cost Reduction and Efficiency Measures During FY 2002-03, the Construction Division revised its staffing to reflect the reductions made to VTAs Capital Program. These revisions resulted in the elimination of 12 positions. These reductions, along with reductions to overtime and savings realized from vacancies and six positions being converted from consultants to VTA positions, result in salary cost savings of approximately $1.1 million. As a result of the significant increase in benefits, benefits actually increase to $188,000 despite fewer positions. The full year impact of the added positions is partially reflected in an increase of $1.4 million of salaries and benefits in FY 2003-04. Since these positions are mostly project reimbursable, we also increase estimated reimbursements by $0.7 million. The FY 2004-05 Recommended Budget represents the winding down and completion of much of the MBTIP and VTA Capital Programs, and is reflected in dramatic reductions in both the divisions labor expenditure and reimbursement budgets.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________
CONSTRUCTION DIVISION - HIGHWAY CONSTRUCTION FY 2001-02 FY 2002-03 FY 2003-04 FY 2004-05 Adopted Revised Proposed Proposed Actual Budget Estimate Budget Budget $ 247 $ 280 $ 280 $ 284 $ 284 97 109 109 152 169 344 389 389 436 453 (428) (389) (389) (436) (453) $ (84) $ $ $ $ -

In thousands Wages & Salaries Benefits Total Expense Reimbursements Net Total

For accounting purposes, three positions in the Highway Construction cost center are budgeted and accounted for under the Congestion Management Program Fund, not VTA Transit Enterprise Fund. Their costs are fully project reimbursable.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ DEVELOPMENT & CONGESTION MANAGEMENT DIVISION RESPONSIBILITIES The Development & Congestion Management Division (D&CM) is responsible for the planning, marketing, development, programming and congestion management functions for VTA. This division consists of four major functional units: Congestion Management Program (CMP); Transit Planning & Development; Marketing & Customer Service; and Highway Project Development & Administration. The CMP, which is fiscally separate from VTA Transit, is funded through assessments to local jurisdictions (Member Agencies), federal and state planning grants, grant program manager administration fees, SB 45 Monitoring Funds, and reimbursements for services provided. In addition, Highway Project Development & Administration and Transit Planning & Development are funded from the budget of each specific capital project. MAJOR PROGRAMS 1. CONGESTION MANAGEMENT PROGRAM: Congestion Management Program (CMP) and Capital Improvement Program (CIP): The Congestion Management Program is responsible for preparing and implementing the countys statutorily mandated Congestion Management Program. Adoption of a CMP is necessary to qualify for certain transportation funds made available through the state gas tax increase authorized in 1990. The CMP sets performance standards for roadways, public transit, and other modes of transportation, and shows how local jurisdictions will meet those standards through a ten-year Capital Improvement Program, land use strategies and other actions designed to reduce congestion and improve air quality. Under development is a policy to link local land use decision-making to transportation funding through the CMP Capital Improvement Program. The CMP is updated every two years and previously, on an annual basis the elements of the CMP were monitored and CMP staff prepared a monitoring and conformance report. However, for FY 2003-04 the annual traffic monitoring and preparation of the monitoring and conformance report will not occur due to financial constraints. Traffic monitoring will resume in Fall 2004. Valley Transportation Plan 2020 (VTP 2020): This is the long-range transportation plan for the county, which drives overall planning and programming efforts of the Valley Transportation Authority. The policies and procedures for the various programs are now under development as part of the VTP 2020 Implementation Plan and will, when adopted, be incorporated into the 2003 update of VTP 2020. Grant Programming: The Congestion Management Program is responsible for fund programming and/or oversight of the following Federal, State, regional and local grant programs:

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Federal Federal Surface Transportation Program/Congestion Mitigation - Air Quality Improvement Program (STP/CMAQ): STP funds are used to address problems caused by urban and suburban congestion by funding improvement projects across all transportation modes. CMAQ funds are to be used to implement the transportation provisions of the 1990 Federal Clean Air Act. The STP and CMAQ funding programs were wrapped into the Federal Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) and continued when Congress enacted the Transportation Equity Act for the 21st Century (TEA-21) in mid -1997. Under both ISTEA and the current TEA-21 legislation, VTA determines the countywide priorities for these funds, subject to final approval of the Metropolitan Transportation Commission (MTC). Transportation Enhancement (TE): TEA-21 provides for a 10% set-aside of each states STP allocation to be used for Transportation Enhancement (TE) above and beyond normal capital improvements that fit within the 12 categories described in the TEA-21 legislation. Within the MTC region, the responsibility for TE program development has been divided between MTC and the congestion management agencies (CMAs). MTC programs 50% of the available TE funding and the CMAs develop programs for the remaining 50% subject to MTC approval. VTA, acting in its capacity as the CMA for Santa Clara County, programs the local share.

State Regional Improvement Program (RIP): Senate Bill 45 (SB-45), which was signed into law at the end of the 1997 legislative session, consolidated several state transportation funding programs and directed 75% of the funds from the State Highway Account (SHA) into the Regional Improvement Program (RIP). Each county receives a County Share. VTA determines the countywide priorities for these funds subject to final approval by MTC and the California Transportation Commission (CTC) via the State Transportation Improvement Program (STIP) process. Local Transportation Fund for Clean Air Program Manager Fund (TFCA 40%): In 1991, state statute authorized the Bay Area Air Quality Management District (BAAQMD) to increase vehicle registration fees by up to $4.00 per vehicle to implement certain transportation control measures contained in the Districts adopted Clean Air Plan. Forty percent (40%) of these funds are distributed to each county based on a proportional share of paid vehicle registrations. These funds are allocated and administered by a program manager selected within each county. VTAs Congestion Management Program is the program manager for the TFCA 40% Funds for Santa Clara County.

Transportation Development Act Article 3: The California State Legislature enacted

the Transportation Development Act (TDA) in 1972. Article 3 of this act provides for

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ the return of a portion of the sales tax receipts in each county to fund bicycle and pedestrian improvements. MTC administers the program Bay Area-wide, while VTA develops annual countywide program priorities. Programmed Project Monitoring and Assistance: The State Transportation Improvement Program (STIP) contains a timely use of funds provision that requires project sponsors to deliver the project on time or risk loss of the grant funding. This legislation also increased the responsibility of local agencies, such as VTA, to not only program transportation funds but to also monitor project progress and potentially provide assistance to ensure timely completion. Because of the substantial fiscal impact on the countywide Capital Improvement Program due to delayed project construction, CMP staff is providing active oversight of the delivery of CIP projects. This oversight includes a significant level of direct involvement by division staff, utilizing consultant engineering assistance, in several large, high profile state highway projects managed by Caltrans, including the Route 880/Dixon Landing Road interchange, the Route 101 Auxiliary Lanes from the Route 87/101 interchange to Trimble Road, and Route 87 near Mineta San Jose International Airport. CMP staff also provides to the Board of Directors and Advisory Committees the Programmed Projects Quarterly Monitoring Report, which tracks the progress of projects funded through programming actions of the VTA Board of Directors. Bicycle and Pedestrian Planning Program: The 20-year Countywide Bicycle Plan was adopted by the Board of Directors in October 2000. It includes three prioritized tiers of capital bicycle projects. The ten-year Bicycle Expenditure Program, which is included in the Countywide Bicycle Plan, is the funding mechanism for the Tier 1 projects. Over $31 million has been approved for the Bicycle Expenditure Program. The Bicycle Planning Program administers and distributes funds to Member Agencies to implement and construct the projects. In 2001, the VTA Board of Directors requested that the VTA Advisory Committee structure be modified to focus more directly on pedestrian issues. In response, staff suggested that the existing Bicycle Advisory Committee be re-established as the Bicycle and Pedestrian Advisory Committee (BPAC), and that its duties be augmented to include attention to pedestrian-related issues. The Board also requested that staff develop a VTA Pedestrian Program that delineates the agencys pedestrian-related activities. Board adoption of the Pedestrian Technical Guidelines is anticipated for Summer 2003. Pavement Management Program: The 1996 Measure B Transportation Improvement Program and other sources provide funds to local jurisdictions for street repair and other transportation projects. Administration and distribution of these funds is managed by the Pavement Management Program and is primarily based on a formula derived from the 1990 Proposition 111, which increased the tax on gasoline and subvened the receipts to local jurisdictions. Over the life of the 1996 Measure B, local jurisdictions will receive a combined total of approximately $90 million countywide. Additionally, $37 million in

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Federal funds previously secured for similar functions will also be administered and distributed through the Pavement Management Program. 2. TRANSIT PLANNING & DEVELOPMENT: Transit Planning & Programming is responsible for the planning and conceptual design of all major transit projects including new rapid transit corridors, for the administration of federal, state and regional transit grants, and for VTAs transit oriented development program. Objectives include: Conducting system and corridor planning, supporting environmental clearance, completing Conceptual Engineering and supporting Preliminary Engineering for programmed 2000 Measure A projects; Completing transit planning projects including Short Range Transit Plan (SRTP); Coordinating VTA planning with external agencies; Supporting planning activities for Caltrain, ACE and Bus Rapid Transit (BRT) projects; Conducting planning, research, advocacy and development review activities in support of Transit-Oriented Development, with particular emphasis on TOD projects on VTA property; Ensuring required compliance activities for Transportation for Livable Communities (TLC) projects; Aggressively advocating for, and successfully programming, securing and managing Federal, State and Regional transit grant revenues to support VTAs on-going capital and operations programs; Providing funding, budgetary and regulatory support to VTA project managers and management to maximize the use of external revenues on capital projects and preventative maintenance; Ensuring agency compliance with current Federal and State grant management rules and audit requirements to maintain VTAs grant eligibility status. Current tasks include: Conceptual Design for Silicon Valley Rapid Transit Corridor (BART) Downtown East Valley LRT Conceptual Design Caltrain and Altamont Commuter Express Capital Improvement Planning Line 22 Bus Rapid Transit Project TOD Planning for Development of VTA Property Federal and State Grant Funding for the BART Project Other Grants Supporting VTA Operations and Capital Projects

Environmental Analysis prepares all of VTAs environmental documents including those required for the 1996 Measure B Transportation Improvement Program transit and highway projects and ensures that VTA implements the required mitigation measures/conditions during construction activities for 2000 Measure A funded projects as well as other projects. It effectively integrates land use and transportation through coordinated VTA review of City and County development projects and plans. Current tasks include: EIS/EIR for Silicon Valley Rapid Transit Corridor (BART) and Downtown East Valley LRT projects 1996 Measure B Transit Project Environmental Documents Measure B and other Highway Project Environmental Documents

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Real Estate appraises and acquires property for all VTA capital projects and manages VTAs existing real estate assets. Objectives include: Management, administration and coordination of the Real Estate process to insure the purchase of various property rights necessary for the 1996 Measure B and 2000 Measure A projects as well as other projects; Participating in and supporting the planning and development and early acquisition activities for BART and Downtown East Valley Rail Projects; Managing real property assets including maximizing income, both tangible and intangible, for internal and external customers; In concert with Planning & Programming, managing, administering and coordinating VTA Real Estate assets with focus on maximizing revenue and/or transit ridership, improving station environment and complementing existing or planned zoning for the area. Current tasks include: Planning for Right of Way Acquisitions for Silicon Valley Rapid Transit Corridor (BART) and Downtown East Valley Light Rail Transit projects 1996 Measure B Real Estate Acquisitions Caltrain Stations, Tasman East, Capitol and Vasona Light Rail Projects Management, Sale or Development of Excess Property Management of Additional Leases, Permits, Easements and Issues arising from the Purchase of Union Pacific Rail Road Right of Way Corridor Management of Guadalupe Corridor Right of Way Title/Issues Closeout and Title Clearance process Management of the Transfer of Parcels to Utility Companies and Respective Cities (Tasman East, Capitol and Vasona Light Rail Projects)

3. MARKETING & CUSTOMER SERVICE: Customer Service provides VTA customers and potential customers with accurate, timely assistance through a variety of programs and formats. The department serves the public through a telephone contact center, the Downtown Customer Service Center, community events, site visits, and over the Internet. Utilizing the on-line CARE (Customers Are Resources to Excellence) system, the department facilitates the resolution of customer concerns by working with the operating divisions on customer issues. In addition, Customer Service distributes printed transit information materials throughout Santa Clara County, coordinates the Youth Outreach Program (YOP) and Class Pass program, and is a liaison with Operations in the Youth Partnership Program (YPP) with area schools. Staff promotes and makes presentations to local schools, including information about transit services and safety lessons. Customer Service also acts as VTAs website content lead. Public Information is responsible for internal and external communications, particularly news media contacts. It initiates and responds to news media contacts; maintains updated information about VTA and its projects; and publishes biweekly communications from the General Manager (Monday Exchange). Public Information responds to VTA Bus, Light Rail and highway construction emergencies 24 hours a day and establishes and maintains liaison with public information officers from emergency response organizations throughout the region.
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Sales Program positively influences ridership and revenue through the sale of fare media programs, communicating vital service and fare information to VTAs customers, and managing the revenue-generating transit advertising contract. Creative Services acts as the primary resource for creative design and production services for all VTA departments to ensure that VTA materials and formats are well designed, uniform, attractive, and easy to understand. Creative Services also ensures VTA materials meet VTA corporate standards. Market Development develops and delivers positive advertising messages to reinforce community top-of-mind awareness that VTA is a safe, reliable and viable transportation choice, and to encourage people to ride and support VTA services. Community Outreach encourages public involvement from initial planning through the environmental process and construction phase of every project to completion. All Community Outreach efforts address community needs, issues and concerns; provide timely and accurate project information regarding VTA projects; enhance two-way communication with other agencies, advisory groups and communities; build understanding and support for transportation and congestion management projects; and, revise outreach efforts to meet project and community needs. Community OutreachPre-Construction provides community outreach efforts for: 1996 Measure B projects (Caltrain Improvements and Highway); 2000 Measure A projects (Downtown East Valley and BART); VTP 2020 projects (I-680/I-880 Cross Connector, U.S. 101/Blossom Hill, U.S. 101/Hellyer, U.S. 101/Stevens Creek, U.S. 101/Mabury, U.S. 101/Trimble, River Oaks Bridge, Palo Alto Transit Center); VTA Enterprise (Facilities Improvement Projects); and other projects as authorized by the VTA Board of Directors. Community OutreachConstruction provides community outreach efforts for: 1996 Measure B rail and highway projects (Tasman East, Capitol, Vasona and Caltrain Improvements; I-880 Widening, Route 85/U.S. 101 (S) Interchange, Route 237/I-880 Interchange, Route 85/U.S. 101 (N) Interchange, Route 152 Improvements, Biological/Wetlands Mitigation, Route 85 Noise Mitigation); VTP 2020 capital projects (I-880/Coleman, U.S. 101/Bailey Avenue); Service Operations, Planning and Modifications; VTA Enterprise (Facilities Improvement Projects, Platform Retrofit Project, Low Floor Light Rail Vehicles, etc.); and other projects as authorized by the VTA Board of Directors. Community Oriented Design Enhancements (CODE) and VTP 2020 Projects Design Enhancements (DE) Programs work in partnership with local jurisdictions to integrate the highest quality design enhancements in transportation projects. CODE/DE enhances the character of transportation projects to increase transit ridership by creating a positive aesthetic experience for riders, fosters community support for transportation projects by including citizens in the selection and design process for projects, and ensures that projects reflect the identity of the neighborhoods and
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ communities in which they are located, building community pride and project ownership. Marketing Administration and Research directs and evaluates all VTA marketing and related programs (including Customer Service, Public Information, Sales, Market Development, Creative Services and Community Outreach); and, contributes to the achievement of VTAs Vision, Mission and Strategic Goals through exemplary, comprehensive marketing support. Marketing Administration and Research also provides assessments of changes in ridership and market share; enhances appropriate response to current and prospective customer base and key stakeholders; promotes compliance with VTP 2020 and public involvement requirements; enables compliance with VTA Board of Directors, Business Review Team and public recommendations for increased marketing efforts; and, maintains a positive relationship with the news media as well as public and private sector stakeholders. 4. HIGHWAY PROJECT DEVELOPMENT & ADMINISTRATION: Highway Project Development and Administration (HPD&A) is responsible for developing the highway improvement projects and studies listed below and for their administrative functions. Project development activities include planning, conceptual and preliminary engineering, and final design. The construction phase is managed by VTA Construction Division staff in partnership with Caltrans. HPD&A duties are accomplished using a combination of full-time VTA staff and consultants that provide direct project implementation support. The major phases to implement each highway project are: Conceptual Alternative Analysis Preliminary Engineering (Project Study Report) Project Approval (Project Report/Environmental Clearance) Environmental documentation and approval Final Design (Preparation of Plans, Specifications and Estimates) Right-of-way certification and utility relocation coordination Advertise, bid and award construction contracts Construction of the project

The twelve current Highway Program projects funded by the 1996 Measure B Transportation Improvement Program are: I-880 widening from 4 to 6 lanes from Montague Expressway to 101 and an auxiliary lane on southbound I-880 from 101 to the North First Street exit ramp. Route 85/87 direct connector ramps for southbound 85 to northbound 87 and southbound 87 to northbound 85 movements. Route 101 widening from a 4 lane to a 6 lane plus two HOV (carpool) lanes within the existing median of the freeway between Bernal Road and Cochrane Avenue.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Routes 85/101 interchange in Mountain View. Routes 237/880 interchange to Milpitas (Stage C) HOV lane direct connector ramps from southbound 880 to westbound 237 and eastbound 237 to northbound 880; southbound 880 braided exit ramp to Tasman Drive and eastbound 237 braided ramp to southbound 880. Route 87 HOV lane from I-280 to Route 85. Route 87 HOV lane from Julian Street to Route 280. Routes 85/101 interchange in south San Jose. Route 17 improvements from I-280 to Lark Avenue in the Town of Los Gatos. Route 152 safety projects. Route 85 noise mitigation. Consolidated Biological Mitigation Project.

The other current Highway Program projects that are contained in VTP 2020 but are funded by sources other than the 1996 Measure B Transportation Improvement Program are: I-880/Coleman Avenue Interchange Improvement. Route 152/156 Interchange Improvements. I-680/880 Cross Connector Corridor Study. Route 101 North Corridor Study. Route 101 Central Corridor Study. Route 237/101 Corridor Study. Route 280/85 Corridor Study. Route 101/Bailey Avenue Interchange. Route 101/Hellyer Avenue Interchange. Route 101/Blossom Hill Road Interchange. River Oaks Bicycle/Pedestrian Bridge. I-280/I-880/Stevens Creek Boulevard Interchange.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________

Michael P. Evanhoe Chief Development Officer

Administration

Planning & Development Department James E. Pierson Director

Marketing & Customer Service Department Anne-Catherine Vinickas Director

Congestion Management Program Carolyn Gonot Deputy Director

Transit Planning & Development Jim Lightbody Deputy Director

Programming & Highway Administration John Ristow Deputy Director

Positions: Will be provided later.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________
DEVELOPMENT AND CONGESTION MANAGEMENT DIVISION CONGESTION MANAGEMENT PROGRAM AND HIGHWAY DEVELOPMENT & ADMINISTRATION FY 2001-02 FY 2002-03 FY 2003-04 FY 2004-05 Adopted Revised Proposed Proposed In thousands Actual Budget Estimate Budget Budget Federal Operating Grants $ 453 $ 500 $ 452 $ 452 $ 500 State Operating Grants 203 411 450 175 675 Local Operating Assistance 1,849 1,450 1,450 3,161 400 Investment Earnings (36) Other Income 1,595 2,057 2,047 1,798 2,189 Total Revenue 4,064 4,418 4,399 5,586 3,764 Wages & Salaries Benefits Materials & Supplies Professional & Special Services Other Services Data Processing Office Expense Communications Employee Related Expense Leases & Rents Miscellaneous Other Expense Reimbursements Operating Expense Surplus/(Deficit) to Reserves Beginning Reserves Ending Reserves $ $ $ 1,367 611 1 556 392 31 20 1 36 76 125 9 (590) 2,635 1,429 347 1,776 $ $ $ 2,161 842 3 2,521 299 77 22 13 65 104 125 15 (1,094) 5,153 (735) $ 1,776 1,041 $ $ 2,158 842 2 2,115 407 75 20 6 52 89 222 12 (869) 5,131 (732) $ 1,776 1,044 $ $ 2,394 1,281 3 3,446 153 78 22 7 61 89 123 15 (1,085) 6,587 (1,001) $ 1,044 43 $ $ 2,330 1,384 3 540 313 80 23 7 62 91 127 15 (1,128) 3,847 (83) 43 (40)

MAJOR BUDGETARY CHANGES The Congestion Management Program (CMP), which is kept fiscally separate from VTA Transit, is funded through assessments to local jurisdictions (Member Agencies), federal and state planning grants, program manager fees and payment for services provided. Highway Project Development & Administration is funded from the budget of each specific capital project. Due to the sharing of staff and certain services, the budgets for these programs are shown combined. As requested by Member Agencies, the CMP proposes that FY 2003-04 Member Agency fees be reduced by 18% from the projected amount (to $1.78 million). In addition, due to the states budget crisis, the CMP has assumed the elimination of $561,000 of SB-45 State Transportation Improvement Program (STIP) Project Monitoring funds due to their likely deferral or elimination. To accommodate these revenue reductions, the CMP Work Program has been aggressively modified to eliminate some non-mandated tasks, defer others, and replace consultant and contracted services with CMP staff wherever feasible. The most significant tasks proposed for FY 2003-04 are:

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Updating Valley Transportation Plan (VTP) 2020, the long-range multimodal transportation plan for the county integrating transportation and land use, and completing the VTP 2020 Implementation Plan, which will establish the capital improvement program project selection process and define a ten-year implementation schedule for the first phase of the Capital Improvement Program. Preparing the mandated 2003 Congestion Management Plan. Continued development of five highway corridor studies: U.S. 101 North (Great America Parkway to Old Oakland Road) U.S. 101 Central (Alum Rock Avenue to north of Hellyer Avenue) SR 85/I-280 Corridor Improvements (SR 237 to south of Stevens Creek Boulevard) SR 237 Corridor (El Camino Real to I-880) SR 152/SR 156 Interchange Study. Continued development of three gateway studies: I-680/I-880 Cross Connector Study (Automall Parkway in Fremont to Montague Expressway in Milpitas) Southern Gateway Land Use and Transportation Study (SR 25, SR 152, SR 156, US 101, and SR 129 corridors in San Benito, Monterey, Santa Cruz, Merced and Santa Clara counties) Peninsula Gateway Corridor Study (SR 85 from Redwood City to Mountain View).

Since there are no significant changes for Highway Project Development & Administration, the combined effect of the CMPs reduced revenue and modified tasks result in a projected end of fiscal year 2003-04 Fund Balance of $43,000.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________
Santa Clara Valley Transportation Authority Congestion Management Program Recommended FY 2003-04 Member Assessments Includes 18% Reduction [A] Member Agency County of Santa Clara Campbell Cupertino Gilroy Los Altos Los Altos Hills Los Gatos Milpitas Monte Sereno Morgan Hill Mountain View Palo Alto San Jose Santa Clara Saratoga Sunnyvale Subtotal VTA - Managing Agency Contribution TOTAL Total 201,216 37,412 57,480 27,964 18,456 4,920 25,470 57,006 1,478 18,588 92,574 104,758 580,510 153,334 16,058 184,094 1,581,318 201,216 1,782,534

[A] Represents an 18% reduction from the fees specified for this year in the Strategic Six-Year Financial Plan element of the FY 0203 CMP budget adopted by the Board of Directors on April 4, 2002.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________
DEVELOPMENT AND CONGESTION MANAGEMENT DIVISION PLANNING & DEVELOPMENT AND MARKETING & CUSTOMER SERVICE FY 2001-02 FY 2002-03 FY 2003-04 FY 2004-05 Adopted Revised Proposed Proposed In thousands Actual Budget Estimate Budget Budget Wages & Salaries $ 6,558 $ 6,689 $ 6,151 $ 6,347 $ 6,454 Benefits 2,971 3,039 3,310 3,895 4,323 Materials & Supplies 5 30 30 23 23 Professional & Special Services 686 933 547 546 481 Other Services 1,709 1,743 1,518 1,217 795 Utilities 1 1 1 1 1 Data Processing 52 9 9 3 3 Office Expense 83 82 55 48 48 Employee Related Expense 168 145 60 54 54 Leases & Rents 136 94 85 93 93 Miscellaneous 175 74 57 45 45 Contribution to Other Agencies 179 162 162 201 205 Other Expense 2 0 0 0 0 Total Expense 12,725 13,001 11,985 12,473 12,525 Reimbursements (2,786) (2,605) (2,606) (4,308) (3,082) Net Total $ 9,939 $ 10,396 $ 9,379 $ 8,165 $ 9,443

MAJOR BUDGETARY CHANGES Transit Planning & Development Cost Reduction and Efficiency Measures Details regarding cost reductions will be provided at a later date. Reimbursements In FY 2003-04 Recommended Budget, the reimbursements budget is increased by $1.7 million to reflect expected changes in overhead allocation methodology and increased work on capital projects. Marketing and Customer Service Cost Reduction and Efficiency Measures In FY 2002-03, as part of the effort to reduce costs and improve efficiency, Marketing and Customer Service has undergone a reorganization to streamline its functions. This reorganization consolidates seven cost centers into three Ridership and Revenue, Community Outreach, and Marketing Administration. By continuing to reduce professional services and media advertising in FY 2003-04, an additional $383,000 is saved. Details regarding other cost reductions will be provided at a later date.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ FISCAL RESOURCES DIVISION RESPONSIBILITIES The Fiscal Resources Division fulfills the Controller/Treasurer function for VTA, including financial reporting, accounting, budgeting, internal audit, investment, cash management, payroll, accounts receivable, accounts payable, and farebox revenue services. In addition, purchasing, messenger/mail services, contracts administration, and disadvantaged business enterprise program are the responsibility of the Fiscal Resources Division. MAJOR PROGRAMS Contracts and Materials Management is responsible for commodity and nonprofessional service procurements; all construction and professional services contracting; the administration of the Pre-Qualification Pilot Program; all aspects of Disadvantaged Business Enterprise (DBE) program compliance; messenger and mail service, central receiving, and surplus property disposal. Budget and Analysis assists the Chief Financial Officer and the divisions with the development of annual budget requests and prepares VTAs annual budget for the Board of Directors consideration; monitors and modifies the budget throughout the fiscal year; and performs financial and operational analyses, and updates forecasts on a regular basis. Internal Audit is an independent appraisal activity established within VTA to examine and evaluate its activities as a service to management. The objective of internal audit is to assist members of the organization in the effective discharge of their responsibility by furnishing them with analyses, appraisals, counsel, and information concerning the activities reviewed. This objective includes effective control at a reasonable cost. Investment Services is responsible for establishing effective investment strategy, reviewing and recommending changes to VTAs investment policies, analyzing investment portfolio performance, reporting investment performance to the Board of Directors, designing and managing cash management and cash forecasting systems, and monitoring and coordinating the timely receipt of federal and state grant funds. The dayto-day investment functions include managing and monitoring cash flows as well as banking related activities. Debt Administration & Business Analysis is responsible for identifying the need for, and implementing debt related transactions as well as dealing with programmatic issues that may have fiscal implications to the organization. This department also oversees the investment of VTAs debt service reserve funds from the trustee and is responsible for monitoring the transfer of sales tax monies from the State Board of Equalization to the bond trustees and to VTAs bank account. Additionally, this unit provides analytical support services in the areas of collective bargaining, debt administration, financial capacity analysis and sales tax audits.
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Disbursements manages Payroll for VTA employees and ATU retirees, and payments to vendors through Accounts Payable. This unit reports payroll and remits withheld taxes for VTA employees. Disbursements is also responsible for preparing financial reports for the VTA/ATU Pension and related trust funds. Financial Accounting is responsible for maintaining the financial accounting system and records for all of VTAs business and administrative financial activities. The Financial Accounting Department is also responsible for external and internal financial reporting, revenue billings for projects, program contracts, and other program services. The cash deposit function is performed here. Revenue Services is responsible for managing the activities of fare media sales, Bus and Light Rail fare, counting, depositing, and reconciling and any other fare related activities.

Scott Buhrer Chief Financial Officer

Administration Jerry Rosenquist Controller

Business Analysis & Debt Administration Kimberly Koenig Manager

Disbursements Ali Hudda Manager

Investment Services Manny Bagnas Manager

Financial Accounting Linda Willis Manager

Internal Audit Grace Salandanan Manager

Revenue Services David Sausjord, Manager

Contracts & Materials Management Tom Smith Manager Positions: Will be provided later.

Budget & Analysis Victor Chan Manager

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________
FISCAL RESOURCES DIVISION FY 2001-02 FY 2002-03 FY 2003-04 FY 2004-05 Adopted Revised Proposed Proposed Actual Budget Estimate Budget Budget $ 7,841 $ 8,789 $ 8,242 $ 8,396 $ 8,461 3,105 3,425 3,883 4,492 5,026 91 14 14 9 10 1,242 1,341 1,691 971 989 515 304 305 300 306 (11) 5 6 3 3 113 158 160 110 112 5 4 4 4 5 57 143 142 7 7 37 45 8 9 9 342 640 488 338 345 3 11 10 3 3 13,340 14,879 14,953 14,642 15,276 (1,647) (1,511) (1,537) (1,716) (1,783) $ 11,693 $ 13,368 $ 13,416 $ 12,926 $ 13,493

In thousands Wages & Salaries Benefits Materials & Supplies Professional & Special Services Other Services Data Processing Office Expense Communications Employee Related Expense Leases & Rents Miscellaneous Other Expense Total Expense Reimbursements Net Total

MAJOR BUDGETARY CHANGES Cost Reduction Measures Details regarding cost reductions will be provided at a later date.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ OTHER RESPONSIBILITIES VTA groups all the expenses that are beyond the control of an individual division, difficult to be allocated meaningfully to any division or unrelated to actual operations into a non-departmental division. The rationale is that since the divisions have no control over these expenses, they should not be held responsible or accountable for them. The typical expenses are general liability adjustments, and prior year adjustments.
NON-DEPARTMENTAL FY 2001-02 FY 2002-03 FY 2003-04 FY 2004-05 Adopted Revised Proposed Proposed Actual Budget Estimate Budget Budget $ 2,535 $ 74 $ 47 $ 74 $ 74 8 0 0 0 0 (2,000) (1,000) (1,000) (1,000) 0 (86) 0 233 233 0 5,733 0 0 0 0 23,161 25,268 24,168 105,735 23,579 (843) 0 0 0 0 28,508 24,342 23,448 105,042 23,653 4,910 3,750 3,750 3,750 2,000 $ 33,418 $ 28,092 $ 27,198 $ 108,792 $ 25,653

In thousands Benefits Tires Insurance Miscellaneous Caltrain Capital Contribution Debt Service Other Expense Total Expense Reimbursements Net Total

MAJOR BUDGETARY CHANGES Interest Expense The FY 2003-04 Budget for VTAs long term debt obligations is estimated to be $23.6 million and includes expenses from three categories: interest expense, principal payments, and other bond charges. Interest expense is estimated to be $14.7 million, using a rate of 2.5% for variable rate debt obligations (1998 & 2000 Series A Sales Tax Revenue Bonds). Principal payments equal $8.5 million and other bond charges are estimated to be $0.4 million. Other bond charges include trustee fees, remarketing fees, letter of credit fees, rating fees, and administrative fees. Refinancing VTA anticipates refinancing the principal and interest related to the 2002 Bond and Grant Anticipation Note, which mature December 4, 2003. The note was issued to finance the purchase of BART to San Jose right-of-way from Union Pacific Railroad. The source of funds for the new debt will be the 2000 Measure A sales tax. This refinancing is expected to increase debt service expenditure in FY 2003-04 by $82.1 million. Liability Self Insurance An actuarial review of the liability self-insurance program is prepared annually. This program has excess reserves. VTA proposes to reduce the reserve by $1.0 million in FY 2003-04. As a result, the same amount of expense for liability insurance will be reduced. It is not anticipated that there will any excess reserves in FY 2004-05.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ CAPITAL BUDGET The current financial situation has forced VTA to severely curtail capital spending. As in the previous year, the Capital Improvement Program Oversight Committee (CIPOC), which is composed of senior management and supporting staff from all five divisions within VTA, has continued to conduct a thorough review of the entire capital program. This process examined every capital project as to its criticality to our operations, strategic plan, and goals. Consequently, 46 projects were closed, cancelled, scaled back, or budgets reduced, returning over $36 million to reserves to help offset operating deficits. The following is a list of these projects by category.
Original Budget In $000's Bus Facility Expansion Info Sys., Comm & Tech Non-Revenue Vehicles & Facilities Operating Equipment Operating Facilities Other Passenger Facilities Rail Facility Expansion Revenue Vehicles & Equipment Total No. of Projects VTA 2 $ 18,513 11 9,196 4 4,254 12 2,568 7 2,959 4 423 3 45,642 1 20,571 2 5,445 46 $ 109,571 Non VTA $ 9,710 209 443 15,556 $ 25,917 Total 28,222 9,196 4,462 2,568 2,959 423 46,085 36,126 5,445 $ 135,488 Total CIPOC Savings VTA Non VTA Total (1,738) $ $ (1,738) (553) (553) (555) (555) (1,232) (1,232) (1,581) (1,581) (99) (99) (25,876) (25,876) (4,322) (4,322) (456) (4,989) (5,445) $ (36,413) $ (4,989) $ (41,402)

Some of the major projects that realized savings from this review included: Guadalupe Corridor Platform Retrofit (retrofits of platforms in the Downtown and Southline segments have been deferred); Cerone Division Expansion & Rehabilitation (savings have been realized as a result of low bids); De Anza College Transit Center (project was cancelled); and Guadalupe LRV Facility Improvements and Expansion (project scope has been reduced and refocused on minimum improvements). A complete list of these projects can be found in Appendix E. Against this backdrop, a high level of scrutiny was paid to requests for new projects and augmentations to existing projects in FY 2003-04. As a result, this budget proposes the smallest locally funded VTA Capital Program in eight years. This budget initiates twelve new projects and augments two previously approved projects, for a total new local fund commitment of $4,717,000. There are also 71 unfinished projects (excluding the Measure B Program) being carried forward from prior capital budgets. A summary listing of these carry-forward projects, along with the proposed new and augmented projects, can be found in Appendix F.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________
Summary of Changes in New Capital In $000's In Number New Augmented Total New Augmented $ 4,008 $ 1,000 $ 5,008 12 2 4,259 64,104 68,363 14 23 $ (251) $ (63,104) $ (63,355) (2) (21) -6% -98% -93% -14% -91%

Year FY 2003-2004 FY 2002-2003 As April 03 Increase/(Decrease) % Increase/(Decrease)

Total 14 37 (23) -62%

SANTA CLARA VALLEY TRANSPORTATION AUTHORITY CAPITAL BUDGET - FY 2003-2004 (In $000's)
CAPITAL PROJECT PROGRAMMING (EXCLUDING 1996 MEASURE B TRANSPORTATION IMPROVEMENT PROGRAM) Estimated Projected Approved Recommended Recommended Total Total Net Project Projects & Project ReimburseVTA Project Program Group Budgets Modifications Budgets ments Costs New Projects ADA $ $ 200 $ 200 $ $ 200 Info Sys., Comm & Tech 494 494 494 Non-Revenue vehicles & Facilities 851 851 (40) 811 Operating Equipment 1,493 1,493 1,493 Operating Facilities 971 971 971 Total New Projects $ $ 4,008 $ 4,008 $ (40) $ 3,968 Augmented Projects Passenger Facilities Operating Equipment Total Augmented Carryover Projects ADA Paratransit Bus Facility Expansion Info Sys., Comm & Tech Non-Revenue Vehicles Operating Equipment Operating Facilities Passenger Facilities Rail Facility Expansion Revenue Vehicles & Equipment Other Total Carryover Total Capital Projects

$ $

1,598 250 1,848

$ $

250 750 1,000

$ $

1,848 1,000 2,848

$ $

(1,461) $ (1,461) $

387 1,000 1,387

$ $

1,918 79,254 29,865 1,267 8,984 10,323 30,057 507,075 314,823 5,610 989,174 991,022

5,008

$ $

$ $

1,918 79,254 29,865 1,267 8,984 10,323 30,057 507,075 314,823 5,610 989,174 996,030

(1,230) $ (29,937) (12,688) (6,328) (8,196) (473,484) (269,222) $ (801,084) $ $ (802,585) $

688 49,317 17,177 1,267 2,656 10,323 21,861 33,591 45,601 5,610 188,090 193,445

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ NEW CAPITAL PROJECTS Information Systems, Communications, and Technology Information Technology Infrastructure Replacement This project will replace and/or upgrade Information Technology (IT) infrastructure components. The major areas of infrastructure are Win 2000/NT-based servers, UNIXbased servers, Storage Area Network, Network Area Storage, Network components (including switches and routers), tape library, and peripherals. Project Budget: $202,000 Grant Funding: $0 Local Funds required: $202,000 Information Technology Disaster Recovery Site Infrastructure This project will complete and make fully operational the disaster recovery data center located at the Guadalupe facility. It will acquire necessary equipment and professional services to populate the site in the event of a disaster that may render the River Oaks data center unavailable. The basic elements include additional equipment to host systems defined as A priority (examples are SAP Payroll, BDT, and email), equipment to allow minimal or no onsite staffing from IT, and professional services to re-configure specific systems, network and hardware to bring the site on line. Project Budget: $223,000 Grant Funding: $0 Local Funds required: $223,000 Network Monitoring This project would allow VTA to perform network monitoring in -house, replacing ongoing outside professional services. The costs of this capital investment would realize a payback in reduced consultant services within one year. The project would include the purchase of server hardware and software. Project Budget: $68,585 Grant Funding: $0 Local Funds required: $68,585

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Non-Revenue Vehicles (NRV) NRV procurement is a planned, on-going activity. There are 11 vehicles, including one Unimog/car mover ($314,000), one 17500 GVW Truck with bucket ($104,420), six vans ($189,750) and three trucks ($165,000), scheduled for replacement due to their age or mileage. In addition, this budget will extend the leases on twenty electric vehicles for $77,580. Vehicles used in support of the Capital Program will result in project reimbursement for their usage. Vehicle assignment at VTA utilizes a cascade approach with older, used vehicles assigned to adverse operating conditions such as construction site inspection. (More information is provided in Appendix G.) Project Budget: $850,750 Grant Funding: $40,000 Local Funds required: $810,750 Operating Equipment Facilities and Equipment Emergency Repair Allowance This ongoing account allows VTA to expedite unplanned repairs that may be required at facilities or to equipment that is essential to normal or safe operations. These funds are administered by the Deputy Director of Operations for Maintenance, and are not used for regular anticipated maintenance activities. Project Budget: $400,000 Grant Funding: $0 Local Funds required: $400,000 Maintenance Equipment Replacement Program This capital item allows for the scheduled replacement of equipment that has reached the end of its useful life. It allows VTA to proactively keep its equipment in a state of good repair, while reducing repair expenses and downtime. Equipment scheduled for replacement includes 20 Aqueous Solution Parts Tanks, 3 Electric Burden Carriers, 1 Steel Hot Tank, 1 Aluminum Hot Tank, and 1 Personnel Lift. Project Budget: $165,000 Grant Funding: $0 Local Funds required: $165,000

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Rail Digitizer The Rail Digitizer is a computerized measurement and recording device to obtain precision rail profile measurements. Taking measurements on a regular basis will allow VTA to optimize the rail grinding process by determining areas that need more or less frequent attention. These measurements will also allow determination of the appropriateness of a chosen profile after grinding. This function is currently provided through contracted service. Acquisition of this equipment would allow the service to be provided in-house and on a more frequent basis. Project Budget: $50,000 Grant Funding: $0 Local Funds required: $50,000 Operating Facilities Cerone Complex Safety, Communication & Security Equipment The Cerone expansion project has been re-phased and the budget revised over the past year in response to VTAs financial situation. Many components that were in Cerone Complex Improvement Project Phases 2 and 3 are no longer budgeted. As a result of final design work in Phase 1, it is recommended to add items deemed critical to safe and efficient operations. These items include: a new master fire alarm system to replace the existing system that is 25 years old; all underground conduit with pull strings for VTA standard closed circuit television equipment for facility wide surveillance and security in response to the FTA Homeland Security Team Audit; communication and data cables to connect all buildings and tie the communication and data systems together into one single system; a facility-wide public address system to maintain a secure workplace in accordance with FTA Homeland Security Audit; Card Reader security at 6 public access points only; an HVAC master control system for all buildings to monitor and control the levels of cooling, heating and ventilation, and; in-fill pavement in the new bus yard in order to maintain efficient operations and safe movement of buses within the facility. Project Budget: $877,500 Grant Funding: $0 Local Funds required: $877,500 Pavement Management Program This is an ongoing program to keep VTA-owned parking lots and driveways in a state of good repair. Typically, activities in this program include scheduled slurry sealing and restriping as well as performing minor repairs and repaving, if needed. Facilities scheduled for this year includes repair and slurry sealing at the Guadalupe Division, Branham and Tamien LRT Park and Ride lots, and Park and Ride lots at Camden/Highway 85, Eastridge, Lawrence Expressway/Moorpark, Main/Calaveras, Page Mill/El Camino, and Santa Clara Caltrain. This request also includes an annual allowance for minor repairs, inspections, spot sealing, and other preventative maintenance. Due to budget constraints, major pavement rehabilitation at Chaboya and River Oaks is being deferred, along with slurry sealing at the Capital, Curtner, Cottle, Snell, and Santa Teresa LRT Park and Ride lots.
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Project Budget: $404,250 Grant Funding: $0 Local Funds required: $404,250 Roofing Management Program This is an on-going, comprehensive long-term program to maximize the useful life and integrity of VTA facilities. This program includes the pro-active scheduling of roofing rehabilitation prior to major failure, as well as unscheduled repairs, seasonal cleaning, annual roof inspections, and emergency leak response. Due to financial constraints, the scheduled re-roofing of the River Oaks Facility in FY04 is being deferred. Project Budget: $216,250 Grant Funding: $0 Local Funds required: $216,250 Painting Management Program This is an on-going, comprehensive long-term program to maintain the appearance and integrity of VTA facilities. This years request is comprised solely of an annual allowance for unscheduled painting and touch-ups. Due to financial constraints, VTA will be deferring painting of the Guadalupe Division, all stations and transit centers along the Tasman West line, and fuel island epoxy floor coverings at the Chaboya and Cerone Divisions. Project Budget: $350,000 Grant Funding: $0 Local Funds required: $350,000 Passenger Facilities Bus Stop Improvement Program VTA has been committed to maintaining and improving safe bus stops, bus stop accessibility and sound operating conditions for transit vehicles, operators and our customers. In the past, these activities were programmed in three discrete projects: the Bus Stop Duck-out and Pavement Restoration Program, ADA Passenger Access Program, and the Line 22 Articulated Bus Stop Improvements Program. Combining these programs will improve efficiency of design and repair for these stops, resulting in savings to VTA. This Capital Project Request will improve a total of 5 bus stops that are in the most need of repair. Project Budget: $200,000 Grant Funding: $0 Local Funds required: $200,000

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ AUGMENTED CAPITAL PROJECTS Operating Equipment Light Rail T-Signal Retrofit This project will retrofit light rail T-Signals with the new Manual of Uniform Traffic Control Devices (MUTCD) Standard T-Signal indications for the Tasman West & Tasman East (Zanker-I880) Light Rail Corridors. The MUTCD is a nationally recognized standard and is being implemented as part of the Tasman East (I880-Hostetter), Vasona, and Capitol Light Rail Corridors. The project is being budgeted in two phases with design already budgeted for $250,000 in FY 2002-03. This request for $750,000 will fund construction of Tasman only, with upgrade to Guadalupe line being deferred. Existing Budget: $250,000 Augmentation: $750,000 Total Grant Funding: $0 Total Local Funds required: $1,000,000 Passenger Facilities Palo Alto Depot Station Renovation This project will restore and rehabilitate the Downtown Palo Alto Train Depot. On the California Historic Register of Structures, the project will extend the useful life of the building and allow the continued use of the building as a Caltrain ticket sales area, VTA operator restroom facility, and potentially may be used for passenger amenities such as food and beverage sales. This augmentation, which is 100% funded by a contribution from the Caltrain JPB, will upgrade restrooms at the facility to make them compliant with ADA requirements. The City of Palo Alto and Stanford University have contributed approximately $200,000 to date toward the local funding of this project by waiving VTAs lease payments for the Station area over the last two years. VTA is currently working with Palo Alto and Stanford to also waive the current $100,000 lease payment. Existing Budget: $1,597,675 Augmentation: $250,000 Total Grant Funding: $1,461,118 Total Local Funds required: $386,557

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ 1996 MEASURE B TRANSPORTATION IMPROVEMENT PROGRAM The voters of Santa Clara County approved Measures A and B on November 6, 1996. The advisory Measure A delineated a list of priority transportation projects to be undertaken should funding become available. The validity of 1996 Measure B, which called for a nine-year half-cent general sales tax, was challenged in the courts. The California State Supreme Court refused to hear an appeal, upholding 1996 Measure B and allowing the sales tax to stand. In February 2000, the VTA Board of Directors approved the execution of the Master Agreement with Santa Clara County Board of Supervisors. The agreement identifies the roles, responsibilities and obligations of County and VTA in the implementation of the 1996 Measure B Transportation Improvement Program (MBTIP). In the agreement, the County Board of Supervisors has committed actual 1996 Measure B sales tax receipts for use in the completion of the 1996 Measure A Projects. The Base Case Implementation Plan, approved by the County Board of Supervisors in June 1999, and updated every June thereafter, identifies the 1996 Measure B Projects, along with preliminary budget estimates. Budget estimates found in this document for 1996 Measure B Projects reflects those recommended for adoption at the June 6, 2003 Joint VTA and County Board Of Supervisors workshop. The ultimate project scopes and estimated costs for completion will be revised based on Baseline Scope, Schedule & Costs submitted to both VTA and County Boards at the completion of preliminary design or project study reports. The 1996 MBTIP projects are grouped into seven programs: Transit Program, Highway Program, Bicycle Program, Pavement Management Program, Fund Transfer Projects, Expressway Signal Synchronization Program, and Level of Service Intersection Improvement Program. VTA is not involved in the administration of the last two programs. The following is a description of the Transit, Highway, Bicycle, Pavement Management Programs and Fund transfer Programs.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ TRANSIT PROGRAM The Transit Program includes six major rail projects. The total projected cost is approximately $928 million.

Tasman East Light Rail Project The Tasman East Project extends the current double track light rail system 4.8 miles east of North First Street. It is being built in three phases and will add seven light rail stations and three park & ride lots. Two of the stations are elevated on 1.7 miles of elevated structure in the City of Milpitas. Revenue Service from Baypointe Station to North First Street began in December 1999. Project Budget: $282,401,105 Funding: $81,793,365 in 1996 MBTIP funds, $100,648,335 in Federal/State/ Local funds, and $99,959,405 from 2001 Series A Sales Tax Revenue Bonds Estimated Completion: Spring 2001 (Zanker to I-880) and July 2004 (I-880 to Hostetter) Vasona Light Rail Project The Vasona Project extends light rail 5.2 miles from downtown San Jose to downtown Campbell, utilizing Union Pacific freight rail alignment primarily on single track from

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Diridon Station to Campbell. In downtown San Jose, it transitions from Diridon Station in a short tunnel to San Fernando Street and Delmas Avenue, and then runs at grade along Delmas to Woz Way where it connects to the existing Guadalupe line. Eight stations will be constructed in the first phase. VTA has committed to provide $16.5 million towards the completion of the project. In January 2001, the VTA Board approved an augmentation to this project in the amount of $20.5 million to include the Winchester Extension. Project Budget: $320,362,713 Funding: $178,895,316 in 1996 MBTIP funds, $85,050,512 in Federal/State/ Local funds, and $56,416,885 from 2001 Series A Sales Tax Revenue Bonds Estimated Completion: January 2006 Capitol Light Rail Project The Capitol Project extends light rail in the median of Capitol Avenue another 3.3 miles beyond Tasman East to just south of Alum Rock Avenue. The project includes double track with four stations, two of which have park-and-ride facilities. Project Budget: $166,542,000 Fund: $122,349,345 in 1996 MBTIP funds, $2,222,251 in Local funds, and $41,970,404 from 2001 Series A Sales Tax Revenue Bonds Estimated Completion: July 2004 New Rail Vehicles The expansion of Tasman East, Capitol, and Vasona Corridors will require approximately 30 new low floor light rail vehicles in order to meet the resultant service levels. VTA has committed to provide funds in excess of the $90 million identified in the MBTIP. Project Budget: $94,162,953 Funding: $90,000,000 in 1996 MBTIP funds and $4,162,953 in VTA funds Estimated Completion: Spring 2003 Caltrain Service Improvements This project w provide a series of station and track improvements for the Caltrain ill Commuter Rail service within Santa Clara County. a b C=b-a 1996 Measure Other Total Project(in $ millions) B Funds Funds Funds Palo Alto Transit Center $2.50 $4.50 $7.0 Sunnyvale Parking & Transit 8.89 0.00 8.89 Center Lawrence Bus & Parking 1.85 0.00 1.85 Improvements Santa Clara - Bus & Parking 3.66 1.54 5.20 Improvements San Martin Parking 1.25 0.00 1.25 Other Funds Description Funding

VTA Funds (Swap)

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ South County Extension Projects Matching Funds Caltrain Capital Program Total 4.00 4.04 $26.19 22.00 0.00 $28.04 26.00 State TCRP 4.04 $54.23

Project Budget: $54,230,055 Funding: $26,189,050 in 1996 MBTIP funds and $28,040,005 in Federal/State TCRP/Local funds Estimated Completion: January 2005 Community Orientated Design Enhancement (CODE) Program - Rail The Board of Supervisors pledged as a goal to incorporate up to 2% of the construction costs of 1996 MBTIP rail projects for aesthetic enhancements of the projects. This is a placeholder for such costs. The appropriate cost will be allocated back to the respective rail projects. Project Budget: $7,187,000 in 1996 MBTIP funds

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ HIGHWAY PROGRAM The Highway Program includes eleven major projects, of which construction is being deferred on all or part of five of these projects. The total projected cost of current projects is $470.4 million.

Route 880 Widening This project will widen route 880 between Route 101/North First Street and Montague Expressway from a four to a six-lane freeway. Widening would occur within the existing 40-foot median and include a 12-foot lane in each direction with a center barrier. A new eight-lane Coyote Creek/Brokaw Road Interchange Bridge will be constructed. Also included is a southbound auxiliary lane from Route 101 to North First Street and ramp improvements at the southbound Brokaw Road exit ramp. Project Budget: $73,871,000 Funding: $60,121,000 in 1996 MBTIP funds and $13,750,000 in SHOPP funds Completion Date: Fall 2003 Route 85/87 Connector Ramps This project will complete the existing interchange by adding two connector ramps, including southbound Route 85 to northbound Route 87 and southbound Route 87 to

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ northbound Route 85. In addition, the project will construct a high occupancy vehicle (HOV) lane in each direction of Route 87 in the median between Route 85 and Branham Lane. Project Budget: $44,297,000 Funding: $40,797,000 in 1996 MBTIP funds and $3,500,000 in State TCRP funds Completion Date: Summer 2003 Route 101 Widening The widening from four to six lanes plus two HOV lanes will occur in the existing median between Burnett Road in Morgan Hill and Metcalf Road in San Jose, providing an additional two lanes in each direction and a 10-foot inside shoulder. Project Budget: $54,169,000 Funding: $49,769,000 in 1996 MBTIP funds and $4,400,000 in State funds Completion Date: Spring 2003 Route 85/101 (N) Interchange Mountain View This project will improve mainline weaving operations and increase Route 85 and Route 101 interchange capacity while maintaining the existing local interchange access at Old Middlefield Way, North Shoreline Boulevard, and Moffett Boulevard. The project will replace: the Route 85/Route 101 connector; modify interchange ramps at Moffett Boulevard, North Shoreline Boulevard and Old Middlefield Way; construct additional lanes; and, construct high occupancy vehicle (HOV) direct-connector ramps between northbound Route 85 to northbound Route 101 and southbound Route 101 to southbound Route 85. Project Budget: $124,234,000 Funding: $99,234,000 in 1996 MBTIP funds and $25,000,000 in local program reserve funds Completion Date: January 2006 Route 237/880 Interchange This interchange completion project is comprised of two stages including: (1) direct high occupancy vehicle connectors for southbound I-880 to westbound Route 237 and eastbound Route 237 to northbound I-880; (2) a southbound braided exit ramp from I-880 to Tasman Drive interchange. Project Budget: $47,843,000 Funding: $25,343,000 in 1996 MBTIP funds and $22,500,000 in STIP funds Completion Date: Fall 2004 Route 87 HOV Lanes (Between Branham Lane and I-280) This project will construct a high occupancy vehicle (HOV) lane in each direction in the existing median between Branham Lane and I-280, a distance of approximately 4.5 miles. In addition, the project will include installation of ramp meters, HOV on-ramp bypasses and retaining walls. A separate project may include the repair of pavement, median barrier, sound wall, and drainage systems damaged by settlement in this segment of the freeway. Construction of this project is currently deferred due to projected Measure B
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ revenue shortfalls. VTA is pursuing state GARVEE bond funding in order for the construction to proceed. Project Budget: $10,548,000 Funding: $10,548,000 in 1996 MBTIP Completion Date: Summer 2003 (Project Development only) Route 87 HOV Lanes (Between I-280 and Julian Street) This project widens Route 87, from I-280 to 0.2 miles north of Julian Street, from a four to a six-lane freeway. The project includes adding a high occupancy (HOV) lane in each direction and installing ramp meters at the entrance ramps. Construction of this project is currently deferred due to projected Measure B revenue shortfalls. VTA is pursuing state GARVEE bond funding in order for the construction to proceed. Project Budget: $14,530,000 Funding: : $14,530,000in 1996 MBTIP Completion Date: Spring 2003 (Project Development only) Route 85/101 (S) Interchange South San Jose This project will construct high occupancy vehicle (HOV) direct connectors from northbound Route 101 to northbound Route 85 and southbound Route 85 to southbound Route 101, and construct the southbound Route 101 to northbound Route 85 branch connector. In addition, the project will include the widening of Route 101 to eight lanes between Bernal Road and Metcalf Road. Project Budget: $65,832,000 Funding: $40,832,000 in 1996 MBTIP funds and $25,000,000 in State funds (TCRP) Completion Date: Summer 2004 Route 17 Improvements The scope of this project includes the following recommended projects: (C) modify San Tomas Expressway between Winchester Boulevard and White Oaks Road; (D) auxiliary lane on northbound 17 between Route 85 and Camden Avenue; (E) auxiliary lane on northbound 17 between Camden Avenue and Hamilton Avenue; (H) improve merge of I280 with southbound Route 17; (I) Improve Hamilton Ave. off-ramp with added paving and overhead sign; and (J) direct connector from northbound 17 to northbound 85. Construction of projects E and J are currently deferred due to projected Measure B revenue shortfalls. Project Budget: $12,017,000 Funding: $12,017,000 in 1996 MBTIP funds Completion Date: Spring 2003

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Route 152 Safety Improvements Project A (Phase I) Project A (Phase II) Project B Widen Route 152 from Route 101 to Millers Slough Route 101/152 Interchange improvements Widen Route 152 from Millers Slough through the Llagas Creek Bridge and provide traffic signal at Gilroy Foods/WTI Intersection Intersection improvement at Ferguson Road

Project E

Construction of projects B and E are currently deferred due to projected Measure B revenue shortfalls. Project Budget: $15,014,000 Funding: $11,086,000 in 1996 MBTIP funds and $3,928,000 in City of Gilroy funds Completion Date: 2002-2004 Route 85 Noise Mitigation The scope of this project is to reduce freeway noise along a segment of Route 85 between I-280 and Route 87. The intent is to mitigate noise along this section of the Route 85 corridor. A noise attenuation study was conducted on a one-mile segment of Route 85 in March 2003. Construction of this project is currently deferred due to projected Measure B revenue shortfalls. Project Budget: $1,159,000 Funding: $1,159,000 in 1996 MBTIP funds Completion Date: TBD Community Orientated Design Enhancement (CODE) Program - Highway The Board of Supervisors pledged as a goal to incorporate up to 2.0% of the construction costs of 1996 MBTIP highway projects for aesthetic enhancements of the projects. Due to program shortfalls, this project has been eliminated. Project Budget: $0 Consolidated Biological Mitigation Site This project was created to construct a consolidated biological mitigation site to alleviate environmental impacts from eight Measure B projects: 101 Widening, Capitol Light Rail, Vasona Light Rail, I-880 Widening, Route 85/101 (Mountain View), Route 85/101 (San Jose), Route 85/87 Interchange, and Route 17 Improvements. Project Budget: $6,921,000 Funding: $6,921,000 in 1996 MBTIP funds Completion Date: January 2007

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ 2000 MEASURE A TRANSIT IMPROVEMENT PROGRAM In accordance with the 2000 Measure A ballot language, 100% of the sales tax funds generated by the measure are dedicated to transit. This section describes some key capital projects for which 2000 Measure A funding is committed, including those that will require additional funding from other sources and, in some cases for which full project funding is not yet identified. Zero-Emission Vehicles and Facilities In February 2000, the California Air Resources Board (CARB) adopted regulations to reduce nitrogen oxide (NOx) and particulate matter (PM) emitted by transit buses. These regulations include the requirement for transit agencies to begin purchasing zero emissions buses (ZEBs) by the end of this decade. These regulations also require that transit agencies that operate over 200 transit buses and selected the low emissions diesel path to demonstrate zero emissions buses in transit service and report on the demonstration by the end of 2005. In December 2000, VTAs Board of Directors selected the low emissions diesel fuel path in compliance with CARBs Fleet Rule for Urban Transit Operators. Further, the Board acted to implement a bus procurement program that shifts from a lowemission diesel bus fleet to a zero emission bus fleet (fuel cell technology) beginning with the purchase of zero emission buses in 2008. In accordance with the above, VTA is proceeding with a demonstration of fuel cell technology to evaluate the impacts on operations, maintenance and the public. The Zero Emissions Bus Demonstration Project will be done in conjunction with SamTrans. In June 2002, The Board of Directors authorized the General Manager to execute a contact with the Gillig Corporation for the purchase of three 40-foot low floor fuel cell powered buses. In addition to the procurement of the fuel cell buses, the program includes the installation of a hydrogen fueling facility and modification of the Cerone Division maintenance facility to accommodate the fuel cell buses, the training of staff, the public and emergency departments and an evaluation of the overall program. Downtown East Valley Transit Improvement Plan In August 2000, VTA Board of Directors approved a Preferred Investment Strategy for the Downtown East Valley area of San Jose. It includes the following projects: o Light rail along Santa Clara Street and Alum Rock Avenue from the Capitol LRT line to Downtown San Jose; o Light rail along the Capitol Expressway from the Alum Rock Station on the Capitol LRT line to the Eastridge Mall area; and o Light rail along the Capitol Expressway from the Eastridge Mall area to the Guadalupe LRT line; and o Bus Rapid Transit Improvements on Monterey Highway from Downtown San Jose to the Santa Teresa Station on the Guadalupe LRT line.
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Low-floor Light Rail Vehicles VTA has committed to improving accessibility by converting the Light Rail Vehicle (LRV) fleet to low-floor vehicles, with the VTA Board having approved a contract for acquiring 70 low-floor LRVs. Silicon Valley Rapid Transit Corridor Project VTA is conducting an EIS/EIR for the Silicon Valley Rapid Transit Corridor. The project area stretches over 20 miles from Alameda County to the cities of Milpitas, San Jose, and Santa Clara in Santa Clara County. The EIS/EIR is evaluating a BART Extension as well as No-Action and Baseline alternatives. Bus Rapid Transit Corridors VTA has embraced the concept of Bus Rapid Transit (BRT) and identified three BRT corridors in VTP 2020. VTA currently has two BRT corridors under active development the Line 22 BRT corridor and the Monterey Highway BRT Corridor. VTP 2020 also identifies the Stevens Creek Boulevard as a potential BRT corridor; however, no study of the corridor has been undertaken to date. Caltrain Service Improvements VTA, in cooperation with the Peninsula Corridor Joint Powers Board (PCJPB), is directly improving or financially supporting many aspects of the Caltrain service. Key elements include system rehabilitation, upgraded station facilities, new express service, expanded service to Gilroy and electrification. Additional 2000 Measure A Projects: o New Light Rail Corridors At least two future light rail corridors are to be identified for construction out of seven potential candidate corridors listed. o Transit Access for San Jose International Airport VTA has participated with Airport Department staff in an ongoing effort to develop a transit plan in conjunction with the Airport expansion project. This project would provide a link from San Jose International Airport to VTAs Guadalupe Light Rail Transit Line on North First Street in San Jose, and to Caltrain and, potentially, future BART in Santa Clara. o Altamont Commuter Express (ACE) Rail Service Upgrade There are two phases of service frequency improvements to ACE service. They are: An initial increase to six trains per day, which was implemented in mid2001; and An additional expansion to twelve trains. There are also track and station improvements o Dumbarton Rail Corridor The project provides VTAs share of matching funds for a partnership with Alameda and San Mateo counties for the rebuilding of the Dumbarton Rail Corridor. The service would run over the Dumbarton Rail Bridge between the Union City BART station in Alameda County and Caltrain in San Mateo and Santa Clara counties. The project definition and conceptual design work is being initiated with VTAs partners in San Mateo and Alameda Counties. o Highway 17 Bus Service Improvements funding for additional buses and service upgrades for the Highway 17 Express Bus service.
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ FUND TRANSFER PROGRAM In order to maximize funding opportunities and operational efficiencies, VTA has agreed to secure Federal or State grant funds and sales tax revenue bond proceeds for certain 1996 MBTIP projects and to release 1996 MBTIP funds to fund other projects. Currently, fund transfers have been performed on the Tasman East, Capitol, and Vasona Light Rail Projects. Tasman East Light Rail Project Transfer $72.8 million of Federal and State grants funds and $100.0 million of bond proceeds were transferred into this project and a net of $167.9 million was transferred out for other projects or purposes. Vasona Light Rail Project Transfer $51.6 million of Federal and State grants funds and $56.4 million of bond proceeds were transferred into this project and the same amount was transferred out for other projects or purposes. Capitol Light Rail Project Transfer $41.9 million of bond proceeds were transferred into this project and the same amount of Measure B funds were transferred out for other projects or purposes. BICYCLE PROGRAM The 1996 MBTIP has allocated $12.0 million towards the Bicycle Program, a series of bicycle projects that were developed as part of the Countywide Bicycle Plan. VTAs Board of Directors adopted the Bicycle Plan in October 2000 after approval of a ten-year expenditure plan by VTA and the County Board of Supervisors. PAVEMENT MANAGEMENT PROGRAM This program administers and distributes 1996 MBTIP funds, along with other sources, to local jurisdictions for street repair and other transportation projects. VTA is responsible for the administration and distribution of program funds. The total MBTIP allocation to this the program is projected at $90.0 million.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ OTHER LOCAL PROJECTS VTA has entered into construction agreements with various cities in the County. The major agreements are: City of Campbell Participation in the Vasona Light Rail Project The City of Campbell is contributing $500,000 towards the construction of the Winchester Station. The City is also contributing an additional $54,324 towards the design cost of Winchester Station so that VTA will incorporate requested design changes related to parking in the Winchester Station Area. Project Budget: $554,324 Funding: $554,324 from the City of Campbell Completion Date: November 2004 City of San Jose Construction Associated with the Capitol Light Rail Project The City of San Jose is funding work by VTAs civil construction contractor for the Capitol Light Rail Project through a cooperative agreement with VTA. The scope of work includes widening McKee Road, replacing a storm drain box culvert within the intersection of Capitol Avenue and McKee Road, applying a pavement overlay along Capitol Avenue, and installing emergency vehicle preemption equipment at certain intersections. Project Budget: $744,991 Funding: $744,911 from the City of San Jose Completion Date: December 2003 Montague Expressway Widening The City of Milpitas Montague Expressway Widening Project was scheduled for construction concurrent with the construction of the Tasman East elevated guideway contract. Since both of these projects involved work at the Montague and Capitol Avenue intersection, the City requested VTA to combine the two projects into a single construction contract. The only work remaining in the agreement is a pavement overlay project that is partially funded by City of Milpitas and should be completed by December 2003. Project Budget: $1,113,676 Funding: $1,113,676 from the City of Milpitas Completion Date: December 2003

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ I-880/Coleman Avenue Interchange Reconstruct the Coleman Avenue Interchange at I-880 in San Jose to improve access to the Mineta San Jose International Airport. This project is sponsored by the City of San Jose. Project Budget: $74,600,000 Funding: $9,000,000 in City of San Jose funds, $5,000,000 in State (TCRP) funds and $60,600,000 in State Transportation Improvement program (STIP) funds. Completion Date: 2005 I-680/I-880 Cross Connector Study Prepare a Conceptual Alternative Analysis for a freeway connector from I-680 to I-880 including preliminary engineering and initial environmental evaluation. Project Budget: $3,000,000 Funding: $1,000,000 in VTA Gateway Studies funds, $1,000,000 in State (TCRP) funds and $1,000,000 in Alameda County Transportation Improvement Authority funds. Completion Date: 2004 South County Gateway Study Study multi-modal transportation improvements at the southern gateway to Santa Clara County to identify cost-effective transportation projects. Based on preliminary findings in VTP 2020, the following corridors are considered for study: Route 25 from the San Benito County Line to Gilroy; Highway 101 from Gilroy to the San Benito County Line; Highway 156 from Route 152 to the San Benito County Line; and Highway 152 from Gilroy to the junction with 156. Project Budget: $750,000 Funding: $750,000 in VTA Gateway Studies funds. Completion Date: 2004 Peninsula Gateway Corridor Study Study multi-modal transportation improvements in the US 101 and Dumbarton Bridge approaches as a gateway into Santa Clara and San Mateo Counties. San Mateo is managing this project. Project Budget: $500,000 Funding: $250,000 in VTA Gateway Studies funds, $250,000 from San Mateo CCAG Completion Date: 2004 Corridor Studies Study major freeway corridors as defined in VTP 2020 including US 101 North; US 101 Central; Route 237/101 Corridor; Route 85/I-280 Corridor and Route 152/156 Conceptual Alternatives Study. Project Budget: $2,311,000 Funding: $1,400,000 in Local Program Reserve funds, $600,000 in City of San Jose funds, and $311,000 in City of Sunnyvale funds. Completion Date: 2004
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Route 101/Bailey Avenue Interchange Construct a new interchange at Route 101 and Bailey Avenue in South San Jose, including extension of Bailey Avenue from Monterey Highway to Route 101. Project Budget: $25,800,000 Funding: $14,800,000 in State Transportation Improvement program (STIP) funds, $4,500,000 in local STIP funds, and $6,500,000 in City of San Jose funds Completion Date: 2005 Route 152/156 Interchange Reconstruct the Route 152/156 interchange to improve traffic operations and safety. Project Budget: $19,500,000 Funding: $15,800,000 in State Transportation Improvement program (STIP) funds, and $3,700,000 in Local Program Reserve funds. Completion Date: 2006

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ APPENDIX A Santa Clara Valley Transportation Authority Employee Positions by Division and Pay Ranges Positions Projected as of 7/1/2003 Details will be provided at a later date.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ APPENDIX B Budgeted Positions by Division and Classification

Details will be provided at a later date.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ APPENDIX C Population Data for Santa Clara County by City

1970 24,731 18,216 12,665 24,872 6,862 23,466 27,149 3,074 6,485 54,206 55,999 445,779 87,717 27,199 95,408 152,181 1,066,009 18,136,045 5.88% 1980 1990 2000 2001 2002 26,843 36,048 38,138 38,200 38,400 34,297 40,263 50,546 50,800 52,200 21,641 31,487 41,464 42,700 43,950 25,769 26,303 27,693 27,800 27,850 7,421 7,514 7,902 7,925 8,000 26,906 27,357 28,592 28,800 28,950 37,820 50,686 62,698 62,900 63,800 3,434 3,287 3,483 3,490 3,520 17,060 23,928 33,556 34,100 34,800 58,655 67,460 70,708 71,200 71,600 55,225 55,900 58,598 60,200 60,500 629,400 782,248 894,943 903,800 918,000 87,700 93,613 102,361 103,200 104,300 29,261 28,061 29,843 29,850 30,450 106,618 117,229 131,760 132,200 132,800 127,021 106,193 100,300 100,800 100,500 1,295,071 1,497,577 1,682,585 1,697,965 1,719,620 21.5% 15.6% 12.4% 0.9% 1.3% 23,668,145 29,760,021 33,871,648 34,385,000 35,037,000 5.47% 5.03% 4.97% 4.94% 4.91%

Campbell Cupertino Gilroy Los Altos Los Altos Hills Los Gatos Milpitas Monte Sereno Morgan Hill Mountain View Palo Alto San Jose Santa Clara Saratoga Sunnyvale Unincorporated County Total % of Increase California % of California

Source: U.S. Census Bureau; California Department of Finance - Demographic Research Unit (http://www.dof.ca.gov/HTML/DEMOGRAP/e-1text.htm) (http://www.dof.ca.gov/HTML/DEMOGRAP/table1.xls) This report provides provisional population estimates for Jan. 1, 2002, and revised estimates for Jan. 1, 2001.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ APPENDIX D Ten Year Summary of Santa Clara County Employment Information (Annual Average)
In 000's Civilian Labor Force* Employment Unemployment Total Unemployment Rate County State of California Employment by Industry** Agriculture Construction and Mining Educational and Health Services Financial Activities Government Information Leisure and Hospitality Manufacturing Other Services Professional and Business Services Trade - Retail Trade - Wholesale Transportation and Public Utilities Total 1993 792.1 58.3 850.4 1994 807.3 53.7 861.0 1995 824.2 42.8 867.0 1996 862.8 32.2 895.0 1997 909.2 28.3 937.5 1998 927.9 30.9 958.8 1999 936.3 29.2 965.5 2000 982.0 19.8 1,001.8 2001 959.8 45.8 1,005.6 2002 879.0 80.6 959.6

6.9% 9.4%

6.2% 8.6%

4.9% 7.8%

3.6% 7.2%

3.0% 6.3%

3.2% 5.9%

3.0% 5.2%

2.0% 4.9%

4.6% 5.4%

8.4% 6.7%

5.4 26.8 74.6 32.7 87.9 23.2 57.4 219.1 23.9 126.2 75.1 35.1 14.5 801.9

5.1 26.6 77.2 31.2 88.3 23.6 58.5 213.7 24.0 133.8 74.2 34.5 14.6 805.3

4.5 28.8 77.6 30.4 87.8 24.6 61.0 223.0 24.6 147.0 75.8 36.4 14.9 836.4

5.1 32.7 78.5 31.4 87.4 26.0 62.2 237.8 25.8 162.8 79.9 39.3 16.2 885.1

5.1 36.5 81.4 32.3 88.5 28.1 64.6 247.2 25.5 181.3 82.4 41.9 16.7 931.5

5.2 41.3 84.2 33.8 88.9 29.0 66.7 246.1 26.4 196.7 83.8 42.4 16.9 961.4

5.3 44.8 85.5 34.2 91.4 32.5 68.6 234.9 26.1 207.1 86.6 42.3 17.3 976.6

5.0 47.6 85.2 34.0 94.5 42.7 71.4 251.7 26.7 225.8 90.6 42.2 17.5 1,034.9

4.6 48.0 89.8 35.2 94.6 41.9 72.0 240.6 26.3 210.0 88.2 40.7 16.3 1,008.2

4.5 43.2 93.2 34.9 97.9 34.1 69.1 203.6 26.3 172.5 82.9 36.3 15.3 913.8

Source: California Department of Employment Development, as of March 24, 2003 * Labor force data are based upon place of residence. Employment includes self-employed, unpaid family workers, domestics, and workers involved in labor-management disputes. ** Wages and salary employment is reported by place of work. Data now based upon the North American Industry Classification System (NAICS).

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ APPENDIX E PROJECTS CLOSED OR SCOPE REDUCED BY THE CAPITAL IMPROVEMENT PROGRAM OVERSIGHT COMMITTEE (CIPOC)
Original Budget In $000's VTA Non VTA Total Line 22 Improvements $ 2,179 $ 1,310 $ 3,489 Cerone Division Rehab & Expansion 16,334 8,400 24,734 Bus Facility Expansion 18,513 9,710 28,222 Enhance Database Integrity 30 30 ISG Help Desk Phone System 14 14 FY01 PCST Project 8,050 8,050 Business Warehouse Data Extraction Tool 350 350 Exchange Mail Server 81 81 Internet Development Suite 50 50 IVR Phone System Replacement 150 150 River Oaks Telephone System Replacement 150 150 Voice Mail System Replacement 90 90 FY01 Equipment Purchases 188 188 IVR System Upgrades /Trapeze Impl/FY02 43 43 Info Systems 9,196 9,196 Non-Rev. Vehicles 1,276 1,276 Non-Revenue Vehicles (42) 915 209 1,123 NRV Procurement 980 980 NonRevenue Vehicle Fleet Procuremnt/FY03 1,083 1,083 Non-Revenue Vehicles & Facilities 4,254 209 4,462 Parts Carousel 650 650 LRT Signal Priority Retofit 137 137 MOW Multi-Purpose Vehicle 225 225 Overhead Safety Restraint at Cerone Minor Maint 70 70 FY01 Color Printer 50 50 Facilities & Equipment Emergency Repair Allowance 180 180 Scheduled Maintenance Equipment Replacement 410 410 Woz Way Portable Crossover 272 272 River Oaks HVAC Replacement 60 60 Parts Carousel at North Division 100 100 Chaboya Transformer Replacement FY02 100 100 Maintenance Shop Equip Replacement-FY03 315 315 Operating Equipment 2,568 2,568 VTA Facilities Master Plan 715 715 ACE Track Improvements 610 610 Eastridge Transit Center Modifications 290 290 Chaboya Maintenance Training Firewall 164 164 Pavement Management Program 1,099 1,099 Emergency Operations Center 36 36 LRV OCC Equipment Room HVAC 45 45 Operating Facilities 2,959 2,959 Office Furniture 234 234 Check Stuffing Machine 18 18 General Manager Office Reconfiguration 71 71 Office Furni Modifications/Reconfig-FY03 100 100 Other 423 423 Monterey Hwy Bus Stop 3,466 443 3,909 Guadalupe Corr. Platform Retrofit - Phase 2 38,409 38,409 De Anza College Transit Center 3,767 3,767 Passenger Facilities 45,642 443 46,085 LR Facility Expansion 20,571 15,556 36,126 Rail Facility Expansion 20,571 15,556 36,126 Bus Farebox Replacement 100 100 MTC Regional Express Bus Procurement 5,345 5,345 Revenue Vehicles & Equipment 5,445 5,445 Total $109,571 $ 25,917 $135,488 Total CIPOC Savings VTA Non VTA Total $ (338) $ $ (338) (1,400) (1,400) (1,738) (1,738) (30) (30) (4) (4) (229) (229) (1) (1) (0) (0) (50) (50) (150) (150) (9) (9) (37) (37) (0) (0) (43) (43) (553) (553) (5) (5) (22) (22) (78) (78) (449) (449) (555) (555) (650) (650) (74) (74) (15) (15) (19) (19) (1) (1) (180) (180) (20) (20) (101) (101) (5) (5) (29) (29) (45) (45) (93) (93) (1,232) (1,232) (39) (39) (610) (610) (41) (41) (134) (134) (730) (730) (18) (18) (9) (9) (1,581) (1,581) (25) (25) (1) (1) (32) (32) (41) (41) (99) (99) (950) (950) (21,500) (21,500) (3,426) (3,426) (25,876) (25,876) (4,322) (4,322) (4,322) (4,322) (100) (100) (356) (4,989) (5,345) (456) (4,989) (5,445) $ (36,413) $ (4,989) $ (41,402)

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ APPENDIX F SANTA CLARA VALLEY TRANSPORTATION AUTHORITY FY 2003-2004 CAPITAL BUDGET SUMMARY
Recommended Approved Projects & Project Budgets Modifications NEW PROJECTS $ $ 200 200 202 223 69 494 851 851 50 878 400 165 1,493 350 404 216 971 $ $ 4,007 Estimated Total Projected Total Reimburse Net VTA Projects ments Costs $ (40) (40) $ (40) $ $ 200 200 202 223 69 494 811 811 50 878 400 165 1,493 350 404 216 971 3,967

In $000's ADA Acess/Bus Stop Paving/Line 22 Improvements ADA IT Infratructure Replacement & Growth IT Disaster Recovery Site Infrastructure Network Monitoring Info Systems NRV Fleet Procurement Program Non-Revenue vehicles & Facilities Rail Digitizer Cerone Safety, Comm & Security Equip Facilities/Equip Emergency Allowance Maintenance Equip Replacement Program Operating Equipment Painting Management Program Pavement Management Program Roofing Management Program Operating Facilities Total New Projects

Recommended Project Budgets $ 200 200 202 223 69 494 851 851 50 878 400 165 1,493 350 404 216 971 4,007

Palo Alto Depot Renovation Passenger Facilities T-Signal Retrofit Project- FY03 Operating Equipment Total Augmented Projects

AUGMENTED PROJECTS 1,598 $ 250 1,598 250 250 750 250 750 1,848 $ 1,000

1,848 1,848 1,000 1,000 2,848

(1,461) $ (1,461) (1,461) $

387 387 1,000 1,000 1,387

ADA Pass Access & Sign Pro ADA North Yard Reconstruction Line 22 Improvements Bus Facilities Expansion Cerone Division Rehab & Expansion Bus Facility Expansion Radio Communications System (2) Records Archival & Retrieval Transit Facilities CCTV Demonstration Project Electronic Scheduling & Runcutting Software Business warehouse Hardware Upgrade- Phase 1 Communications Recording System BDT Operator Card Swipe system FY01 PCST Project Lan Upgrade -FY01 Info Sys, Comm, & Tech Non-Revenue Vehicles (38) NonRevenue Vehicle Fleet Procuremnt/FY03 Non-Revenue Vehicles GUAD CORR TVM REPLACEMENT Rail Rehabilitation Project Generator Replacement R/Oaks HVAC Scheduled Unit Replac-FY03 Facilities & Equip Emergency Repair-FY03 Maintenance Shop Equip Replacement-FY03 FY03 Computer Rm HVAC Operating Equipment Total

CARRYOVER PROJECTS 1,918 $ 1,918 37,318 3,151 15,451 23,334 79,254 20,030 288 300 800 150 152 100 7,821 223 29,865 633 634 1,267 5,268 2,888 60 246 225 222 75 8,984 -

1,918 1,918 37,318 3,151 15,451 23,334 79,254 20,030 288 300 800 150 152 100 7,821 223 29,865 633 634 1,267 5,268 2,888 60 246 225 222 75 8,984

(1,230) $ (1,230) (20,227) (1,310) (8,400) (29,937) (12,688) (12,688) (4,328) (2,000) (6,328)

688 688 17,091 1,841 15,451 14,934 49,317 7,343 288 300 800 150 152 100 7,821 223 17,177 633 634 1,267 940 888 60 246 225 222 75 2,656

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________
Approved Project Budgets 806 3,223 517 1,160 70 744 400 388 369 100 551 313 448 487 299 350 99 10,323 55 5,225 100 104 67 59 5,610 6,250 184 560 2,959 3,083 16,909 111 30,057 333,393 31,805 126,680 350 9,741 652 55 4,399 507,075 17,232 22,110 14,204 4,341 13,592 3,640 19,623 14,051 3,829 202,202 314,823 $ 989,174 $ 991,022 Recommended Projects & Modifications $ $ 5,007 Recommended Project Budgets 806 3,223 517 1,160 70 744 400 388 369 100 551 313 448 487 299 350 99 10,323 55 5,225 100 104 67 59 5,610 6,250 184 560 2,959 3,083 16,909 111 30,057 333,393 31,805 126,680 350 9,741 652 55 4,399 507,075 17,232 22,110 14,204 4,341 13,592 3,640 19,623 14,051 3,829 202,202 314,823 $ 989,174 $ 996,029 Estimated Total Projected Total Reimburse Net VTA Projects ments Costs 806 3,223 517 1,160 70 744 400 388 369 100 551 313 448 487 299 350 99 10,323 55 5,225 100 104 67 59 5,610 (5,400) 850 184 560 (443) 2,516 (2,353) 730 16,909 111 (8,196) 21,861 (316,758) 16,635 (15,556) 16,249 (126,680) (350) (9,741) 652 55 (4,399) (473,484) 33,591 (12,618) 4,614 (15,701) 6,409 (11,449) 2,756 4,341 (4,626) 8,966 (1,820) 1,820 (10,610) 9,013 (14,051) 3,829 (198,347) 3,855 (269,222) 45,601 $ (801,084) $ 188,090 $ (802,585) $ 193,444

In $000's Operator Facilities VTA Signage Program Card Readers at Operating Divisions Bus Stop Duckout & Pavement Restoration Program Guadalupe Automatic Fire Supression Guadalupe Vehicle Wash Modifications LRT Drainage Improvements at Bayshore/Manila Painting Management Program Pavement Management Program Roofing Management Program Chaboya Maintnance BayPit Modificat-FY03 LRV Emerg.Ops. Ctr./IT Disaster RecovRm Chaboya Restrooms Rehabilitation/FY03 Pavement Management Program-FY03 Roofing Management Program-FY03 Painting Management Program-FY03 Chaboya Operations Office Modifications Operating Facilities San Carlos Remediation (New) Construction Claims Support Rail Systems Design Consultant Services Surveying GPS System HazMat Removal / Fac, Design & Con FY02 Office Furni Modifications/Reconfig-FY03 Other Mountain View Transit Center San Jose Transit Mall Elevator Floor Replacement Monterey Hwy Bus Stop I-880 Smart Park Guadalupe Corr. Platform Retrofit - Phase 2 FY02-"VETAG" Passenger Facilities Tasman West LR Facility Expansion Silicon Valley Rapid Transit Corridor Metro LRT Station Reconstruction Downtown/East Valley Conceptual Design FY01 Guadalupe Corridor Right-Of-Way Disposition Proj. FY 02 Newhall/BART Maintenance Facility ZEB Facility Improvements Rail Facility Expansion Replacement Coaches 53 Articulated Coaches 40 Replacement Coaches 40 Cameras on Transit Vans Revenue Vehicles (17 Repl + 15 Expn/ local fd') Clean Diesel Engine Bus Fleet Procurement - 52 buses ZEB Emissions Retrofit of Bus Diesel Engines FY01 70 Low Floor LR Vehicles (replace P0369) Revenue Vehicles & Equipment Total Carryover Projects Total Capital Projects

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______________________________________________________________________________ APPENDIX G Santa Clara Valley Transportation Authority FY 2003-2004 Budget Purchase of Non-Revenue Vehicles (NRVs)
SUMMARY - REPLACEMENT AND ADDITIONAL Type Quantity Passenger Vehicles 6 Heavy-Duty & Specialized 25 Total 31 REPLACEMENTS Passenger Vehicles: Mini-Passenger Vans 3 Activans 3 Total 6 Heavy-Duty & Specialized Vehicles: Yard/Road Call Truck 17500 GVW Truck w/bucket Unimog/Car Mover RAV4 EV Lease Renewal Total Total Replacements ADDITIONS No additions recommended for NRV Fleet Total Additions VEHICLES Cost $ 189,750 661,000 $ 850,750

69,750 120,000 189,750

3 1 1 20 25 31
0

165,000 104,420 314,000 77,580 661,000 $ $ $ 850,750 -

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ APPENDIX H SANTA CLARA VALLEY TRANSPORTATION AUTHORITY VTA/ATU Pension Plan Fiscal Year 2003-04 Expenditure Plan (In $000s)
FY 2002-03 FY 2003-04 Expenditure Expenditure Plan Plan 11,253 16,500 27,753 $ 12,011 14,700 26,711

FY 2001-02 Actual REVENUES VTA Employer Contribution Interest Income Net Appreciation (Depreciation) on Investments Total Revenues EXPENSES Operating Expenses Pension Payments to Retirees Medical/Psychiatric Evaluations Administrative Expenses Total Operating Expenses Net Increase in Plan Asset Beginning Fund Balance Ending Fund Balance $ $ $ $

10,302 $ 4,494 (1,350) 13,446

7,775 1,222 8,997 4,449 207,691 212,140 $ $ $

8,333 54 975 9,362 18,391 212,140 230,531 $ $ $

9,760 64 1,018 10,842 15,869 230,531 246,400

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______________________________________________________________________________ APPENDIX I Proposed FY 2003-04 Basic Fare Structure for Bus, Light Rail and Paratransit Services, and ECO Pass Pricing Information Fare Category Adult: Single Ride Day Pass Day Pass Tokens Monthly Pass Annual Pass Youth: Single Ride Day Pass Day Pass Tokens Monthly Pass Annual Pass Senior/Disabled: Single Ride Day Pass Monthly Pass Annual Pass Express: Single Ride Day Pass Monthly Pass Annual Pass Paratransit: One-Way Trip (2x Adult base fare) Companion - One-Way Trip (equal to one-way trip) Personal Care Attendant Open Return Trip (2x one-way trip) No Show Charge (equal to one-way trip) Second Vehicle Service (5x one-way trip) Same-Day Service (4x one-way trip) $1.50 $4.50 $4.05 $52.50 $577.50 $1.00 $3.00 $2.70 $30.00 $330.00 $0.75 $2.00 $20.00 $220.00 $3.00 $9.00 $90.00 $990.00 $3.00 $3.00 No Charge $6.00 $3.00 $15.00 $12.00 Fare

ECO PASS PRICING These prices are based on the number of employees and the level of VTA service at a given work site. Eco passes are purchased for all full-time, permanent employees at one discounted price per employee. These prices are prorated if

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ an employer joins the program mid-year. The minimum annual contract for Eco Pass is $1,150. Employer Location/ Service Level Downtown San Jose Areas Served by Bus & LRT Areas Served by Bus Only 1 to 99 $120.00 $90.00 $60.00 Number of Employees 100 to 2,999 3,000 to 14,999 $90.00 $60.00 $60.00 $30.00 $30.00 $15.00 15,000+ $30.00 $15.00 $7.50

ECO Pass with Dumbarton and Highway 17 Express Employer and Residential Location/ Service Level Downtown San Jose Areas Served by Bus & LRT Areas Served by Bus Only Number of Employees 100 to 2,999 3,000 to 14,999 $105.00 $72.00 $75.00 $42.00 $45.00 $27.00

1 to 99 $138.00 $108.00 $78.00

15,000+ $37.50 $22.50 $15.00

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______________________________________________________________________________ APPENDIX J Santa Clara Valley Transportation Authority Fee Schedules As of 04-11-03 RATES FOR PLAN SHEETS, BID SHEETS AND SPECIFICATIONS (Consistent with standard practice, this concerns the sale of documents and records to individuals and contractors who have projects that impact VTA) Sale of Plan Sheets Sale of Bid Plans/Specifications $10.00 Per Sheet $2.00 Per Item

PERMIT FEE SCHEDULE (To protect VTA properties and facilities when construction activities are performed on VTA properties and facilities by outside parties) Permit Application Fee (Minimum fee charged for all non-refundable permit applications processed. Additional fees may be assessed.) Light Rail Crossings Plan Check and Inspection: Directional Bore Method Bore and Jack Method Bus and Transit Facility Inspection: New P.C.C. Bus Pad New P.C.C. Shelter Pad Plan Check and per pad per site $515.00 $280.00 $1,200.00 per crossing per crossing $255.00

$545.00 $805.00

Material Lab Fee (If VTA provides service) Standard P.C.C. Bus Pad (10 ft. by 50 ft.) includes: 1) Sub Base Compaction Tests 2) Material Analysis 3) Base Rock Compaction Tests and Material Analysis 4) 3 Concrete Cylinders or 2 Beams Asphalt Testing per Location includes compaction test and material analysis (All retests for failed compaction billed to contractor at $75.00 per hour for lab related labor cost.) Other Construction Project Fees (including sidewalk removal or replacement, curb and gutter removal or replacement, trenching, etc.) All additional costs for labor and materials beyond that required above will be assessed based on site/scope specific requirements. Type rates as follow:
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Engineering Fees Construction Inspector Fees Office Administrative Support $55.00 $49.00 $29.00

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______________________________________________________________________________ GLOSSARY Accrual Accounting A method of accounting where revenues are recognized in the accounting period in which they are earned and become measurable, and expenses are recognized in the period incurred, if measurable. ADA Americans with Disabilities Act. Federal civil rights legislation that, among other things, gives disabled persons the right to equal access to fixed route transit service or to comparable paratransit service if they are unable to use fixed route transit. Adopted Budget The official budget that has been adopted by VTA Board of Directors. Appropriation Legal authorization expressed by budget unit, fund, and cost group granted by the Board to make expenditures and to incur obligations for specific purposes. Operating appropriations are time period limited and must be expended or encumbered within the time limits. Capital appropriations have no expiration. Articulated Bus A bus usually 55 feet or more in length that bends at a connecting point when the bus turns a corner. BAAQMD Bay Area Air Quality Management District. Commonly referred to as the air district, this agency regulates industry and employers to keep air pollution in check, and sponsors programs to clean the air in the San Francisco Bay Area. Bond Long-term debt issued by an agency to help finance new acquisitions of property, facilities, and equipment. Budget Unit An organizational unit is identical to a cost center. Capital Budget A portion of the annual budget that appropriates funds for the purchase of capital equipment items or for capital projects. The capital budget includes funds for capital equipment purchases, such as vehicles, construction of new facilities, office equipment, and machinery. They are distinguished from operating items due to their value (greater than $5,000) and projected useful life (greater than one year).

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Capital Project Expenditure for tangible long-lived assets, such as property and equipment used by VTA in its operations, which is expected to benefit future periods. Commuter Rail Local and regional passenger train service between a central city, its suburbs, or another central city. Caltrain is an example of commuter rail service. Cost Group VTA uses the following expenditure and cost-reduction cost groups such as labor costs, non-labor costs, Caltrain contribution, ADA, ACE, debt service and revenues. They are the lowest units of budget funding control. Cost Recovery Ratio A measure of the proportion of transit operating e xpenses covered by non-subsidy sources. It is calculated by dividing all of the transit operators non-subsidy revenues, such as fare box revenue, parking fees, and advertising fees, by the operators total transit operating expense. Debt Service The amount of money required to pay interest and principal on VTAs borrowed funds. Division An organizational entity consists of cost centers. Enterprise Fund A distinct fiscal entity whose resources are dedicated to a specific purpose, and in which all resources and expenditures must balance. Expenditure appropriations may exceed revenues if an asset balance is available from the prior period. Fare Box Revenue The value of cash, tickets, and pass receipts given by passengers as payment for public transit rides. Fiscal Year Period of any 12 consecutive months used as an accounting period. VTAs fiscal year is July 1 through June 30. FTA Federal Transit Administration, formerly the Urban Mass Transportation Administration (UMTA). FTA provides capital and operating funds to VTA. Fund A fiscal or accounting entity with a self-balancing set of accounts. A fund is established for the purpose of carrying on specific activities in accordance with specific limitations.
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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ Grants A contribution by a government or other organization to support a particular function. Grants may be classified as either operational or capital, depending upon the grantee. MTC Metropolitan Transportation Commission. MTC is recognized by the state as the Regional Transportation Planning Agency (RTPA) and by the federal government as the Metropolitan Planning Organization (MPO) for the nine counties in the San Francisco Bay Area. It has 19 commissioners, of which 14 are voting members appointed by local elected officials. In the five most populous counties, including Santa Clara County, two commissioners are appointed one by the county board of supervisors and one by the cities selection committee in the county. In the four less populous counties, the cities nominate candidates to the board of supervisors, which appoints one. Two other voting members on MTC, to total 16, represent the Association of Bay Area Governments (ABAG) and the San Francisco Bay Conservation and Development Commission (BCDC). In addition, there are three non-voting members on MTC, representing the states Business, Transportation & Housing Agency, the U.S. Department of Housing and Urban Development, and the U.S. Department of Transportation. Operating Budget A plan of expenditures and proposed sources of financing current service. The operating budget does not include capital or reserves. Paratransit Comparable transportation service required by the Americans with Disabilities Act (ADA) of 1990 for individuals with disabilities who are unable to use fixed-route transportation systems. Reserves Amount of funding held back in order to meet probable or possible demands. SRTP Short-Range Transportation Plan. A document that catalogues operating statistics for the transit system and projects future improvements that are scheduled over a ten-year time frame. The document includes capital and operating budgets. STA State Transit Assistance. Half of the revenues annually budgeted through the state budget process for the Transportation Planning & Development Account (TP&D) are appropriated to the STA Program. Funds are used for mass transit operations, transit coordination projects, and transportation planning. These funds are apportioned to the regional transportation planning agencies according to a formula based on population and annual transit operator revenues.

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VTA FY 2003-04 & FY 2004-05 RECOMMENDED BUDGETS

______________________________________________________________________________ TDA Transportation Development Act. An act passed by the state Legislature in 1972 allowing each county to elect to participate in a quarter-cent state sales tax program for public transportation purposes. TDA sales tax revenues are apportioned by the state, through the regional transportation planning organizations, to each participating county based on the amount collected within that county.

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______________________________________________________________________________

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