Chair, Christina Fugazi, City of Stockton Commissioner, Nancy Young, City of Tracy Vice Chair, Leo Zuber, City of Ripon Commissioner, Bob Elliott, San Joaquin County Commissioner, Bob Johnson, City of Lodi Commissioner, Scott Haggerty, Alameda County Commissioner, Debby Moorhead, City of Manteca Commissioner, John Marchand, City of Livermore

Executive Director, Stacey Mortensen

SAN JOAQUIN REGIONAL RAIL COMMISSION

This Agenda shall be made available upon request in alternative formats to persons with a disability, as required by the Americans with Disabilities Act of 1990 (42 U.S.C. § 12132) and the Ralph M. Brown Act (California Government Code § 54954.2). Persons requesting a disability related modification or accommodation in order to participate in the meeting should contact San Joaquin Regional Rail Commission (SJRRC) staff, at (209) 944-6220, during regular business hours, at least twenty-four hours prior to the time of the meeting.

All proceedings before the Commission are conducted in English. Anyone wishing to address the SJRRC Board is advised to have an interpreter or to contact SJRRC during regular business hours at least 48 hours prior to the time of the meeting so that SJRRC can provide an interpreter. Any writings or documents provided to a majority of the Commission regarding any item on this agenda will be made available upon request in both English and Spanish for public inspection at the Office of the Executive Director located at 949 East Channel Street, Stockton, California, 95202 during normal business hours or by calling (209) 944-6220. The Agenda is available on the San Joaquin Regional Rail Commission website: www.acerail.com.

May 3, 2019 – 8:00 am Robert J. Cabral Station Conference Call Locations South Hall Meeting Room 1311 Midvale Avenue 6920 NW 155th Terrace 949 East Channel Street Lodi, CA 95240 Edmond, Oklahoma 73013 Stockton, CA 95202

1. Call to Order, Pledge of Allegiance, Roll Call Chair Fugazi

Roll Call: Haggerty, Marchand, Elliott, Johnson, Moorhead, Young, Zuber, Chair Fugazi

Ex- Officios: Chesley, DeMartino, Zoslocki, McElhinney

2. Public Comments Persons wishing to address the Commission on any item of interest to the public regarding rail shall state their names and addresses and make their presentation. Please limit presentations to five minutes. The Commission cannot take action on matters not on the agenda unless the action is authorized by Section 54954.2 of the Government Code. Materials related to an item on the Agenda submitted to the Board of Directors after distribution of the agenda packet are available for the public inspection in the Commission Office at 949 E. Channel Street during normal business hours. These documents are also available on the San Joaquin Regional Rail Commission website at www.acerail.com/about-ace/sjrrc-board.html subject to staff’s ability to post the documents prior to the meeting.

949 East Channel Street Stockton, CA 95202 (800) 411-RAIL (7245) www.acerail.com 3. Consent Calendar 3.1 Minutes of March 1, 2019 ACTION 3.2 Rail Commission/ACE Monthly Expenditure INFORMATION 3.3 ACE Monthly Fare Revenue INFORMATION 3.4 ACE Ridership INFORMATION 3.5 ACE On-Time Performance INFORMATION 3.6 Update on Positive Train Control INFORMATION 3.7 Washington Update INFORMATION 3.8 Agreement with Union Pacific Railroad Company, Inc. (UPRR) for INFORMATION Preliminary Engineering of the Sunol Main Street Quad Gate 3.9 Agreement for a Three-Year and Two-Month Contract with Two INFORMATION One-year Options for Cloud Hosted Voice Over Internet Protocol (VoIP) Phone System to Jive Communications, Inc. for an Amount Not-To-Exceed $60,000 total from May 1, 2019 through June 30, 2022 3.10 Accept Independent Auditors’ Report for Fiscal Year 2017/2018 ACTION 3.11 Approve a Resolution of the Board of Commissioners of the San ACTION Joaquin Regional Rail Commission Approving the Fiscal Year 2018-19 Transportation Development Act (TDA) Claim and Authorizing Submission by the Executive Director to the San Joaquin Council of Governments for Local Transportation Funds (LTF) and State Transit Assistance Funds (STA) for a Total of $6,343,285 3.12 Approve a Resolution of the Board of Commissioners of the San ACTION Joaquin Regional Rail Commission Authorizing the Filing of Applications with the Federal Transit Administration, an Operating Administration of the United States Department of Transportation, for Federal Transportation Assistance Authorized by Chapter 53 of Title 49 of the United States Code and Any Other Federal States Administered by the Federal Transit Administration

3.13 Approve a Resolution of the Board of Commissioners of the San ACTION Joaquin Regional Rail Commission Authorizing the Executive Director to Accept and Sign Waiver of Potential and Actual Conflicts of Interest Letters with SJRRC Counsel, Lewis Brisbois Bisgaard & Smith LLP, Arising from Concurrent Representation of Union Pacific Railroad and San Joaquin Regional Rail Commission

4. Approve a Resolution of the Board of Commissioners of the San ACTION Joaquin Regional Rail Commission Authorizing the Opening of the Public Comment Period Until June 7, 2019, for the Proposed Saturday Service Effective Summer 2019, and Setting a Public Hearing for Adoption of the ACE Saturday Service at the June 7, 2019 Rail Commission Meeting (Brian Schmidt/Chris Kay) (Special and Regular Voting Members)

2 of 122 5. Approve Three (3) Resolutions of the Board of Commissioners of ACTION the San Joaquin Regional Rail Commission Authorizing the Executive Director to Negotiate and Enter into Multiple Consultant Contracts and Establish Pre-Qualified On-Call Consultant Lists for a Period of Five (5) Years for the Capital Projects Program (Kevin Sheridan/Autumn Gowan)

Action 1. Approve Consultant Contracts for Specific Projects for Services and Not-To-Exceed Amounts provided in Table 1 in the Staff Report (Regular Voting Members)

Action 2. Approve Consultant Contracts for Specific Projects for Services Not-To-Exceed Amounts provided in Table 2 in the Staff Report (Regular and Special Voting Members)

Action 3. Adopt and Establish a Pre-Qualified On-Call Consultant List for a Period of Five (5) Years, May 3, 2019 through May 3, 2024 provided in the Staff Report (Regular and Special Voting Members)

6. Presentation on Altamont Corridor Vision INFORMATION (Dan Leavitt)

7. CLOSED SESSION: DISCUSSION/ACTION CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED LITIGATION Significant exposure to litigation pursuant to paragraph (2) or (3) of subdivision (d) of Section 54956.9 (Seven (7) cases).”

CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION (Paragraph (1) of Subdivision (D) of Government Code Section 54956.9) Name of Case: Ann Lester V. San Joaquin Regional Rail Commission, et al. San Joaquin County Superior Court Case No. STK-CV-UMC-2017-3606 8. Commissioner’s Comments

9. Ex-Officio Comments

10. Executive Director’s Report

11. Adjournment The next regular meeting is scheduled for: June 7, 2019 – 8:00 am Robert J. Cabral Station 949 East Channel Street, Stockton

3 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION Meeting of May 3, 2019

Item 3.1 ACTION Minutes of March 1, 2019 The regular meeting of the San Joaquin Regional Rail Commission was held at 8:00 am, March 1, 2019 at the Robert J. Cabral Station, 949 East Channel Street Stockton, CA 95202. 1 Call to Order/Pledge of Allegiance/Roll Call Chair Fugazi called the meeting to order at 8:00 am and led the audience in the pledge of Allegiance. Commissioners Present: Haggerty, Marchand, Elliott, Moorhead, Johnson, Young, Zuber, Chair Fugazi Commissioners Absent: None

Ex-Officio Members Present: Mr. Chesley, Mr. Knodt, Mr. Zoslocki

2 Public Comments No public comments were made.

3 Consent Calendar

3.1 Minutes of February 1, 2019 ACTION 3.2 Rail Commission/ACE Monthly Expenditure INFORMATION 3.3 ACE Monthly Fare Revenue INFORMATION 3.4 ACE Ridership INFORMATION 3.5 ACE On-Time Performance INFORMATION 3.6 Update on Positive Train Control INFORMATION 3.7 Washington Update INFORMATION 3.8 Approve a Resolution of the Board of Commissioners of the San ACTION Joaquin Regional Rail Commission Authorizing and Directing the Executive Director to Sign and Submit the Fiscal Year 2018/2019 State Transit Assistance Application to Claim Alameda County Transportation Commission Apportionment for the ACE Service in the Amount of $809,912 3.9 Approve a Resolution of the Board of Commissioners of the San ACTION Joaquin Regional Rail Commission Authorizing the Executive Director to Submit and Execute Any and All Grant Applications, Agreements, Certifications and Assurances and Any Other

Documents Necessary to Claim $300,818 from the Low Carbon Transit Operations Program (LCTOP) for Lathrop/Manteca ACE Station Transit Access Improvements

4 of 122 3.10 Approve a Resolution of the Board of Commissioners of the San ACTION Joaquin Regional Rail Commission Authorizing the Executive Director to Execute Contract Amendment #1 with the Union Pacific Railroad for the Cabral Phase II Track Extension Design Review and Engineering Services and to Increase the Total Compensation by an Amount of $180,000, and Revised Total Contract Amount Not-To-Exceed $250,000 for Agreement 17-R-34-00

Commissioner Elliott pulled items 3.1 and 3.10.

Commissioner Elliott pointed out an error for item 3.1 regarding the minutes.

Commissioner Elliott inquired about the increased amount for item 3.10.

Mr. Sheridan explained the reasoning for the increased amount.

M/S/C (Zuber/Johnson) Approve the Consent Calendar. Passed and Adopted by the San Joaquin Regional Rail Commission on the 1st day of March, 2019 by the following vote to wit:

AYES: 8 Haggerty, Marchand, Elliott, Moorhead, Johnson, Young, Zuber, Chair Fugazi

NOES: 0 ABSTAIN: 0 ABSENT: 0

4 Approve a Resolution of the Board of Commissioners of the San ACTION Joaquin Regional Rail Commission Authorizing the Executive Director to Execute Contract Amendment #1 with AECOM to Change the CEQA Document to an Environmental Impact Report, Extend the Contract Term Limit Until Work is Completed, and Increase the Total Compensation by an Amount of $620,080, Revised Total Contract Amount Not-To-Exceed $2,400,000 for Agreement 18-R-49-00

Mr. Sheridan did a presentation on this item. Chair Fugazi asked if the project referenced in the presentation encroaches on the community. Mr. Sheridan clarified that it does not. Commissioner Elliott inquired about the need for the environmental document when previous work was already done. Mr. Sheridan explained that additional work is needed for passenger sidings on the Union Pacific (UP) Sacramento subdivision, which was not a factor at the time of the original environmental work. Commissioner Elliott mentioned a section in the staff report for this item that states CEQA exclusively allows the use vehicles miles traveled (VMT)

5 of 122 for traveled related impacts and asked what that meant. Mr. Sheridan explained the old way of measuring travel related impacts and that VMT is another methodology. Ms. Mortensen clarified that the prospective Rail Maintenance Facility (RMF) in Natomas would be for both the San Joaquins service expansion and the ACE service expansion and explained that SJRRC is the lead for both projects to clear them environmentally. Commissioner Elliott asked where the new RMF would be located. Ms. Mortensen explained the RMF for the expansion would be located in Natomas. Ms. Mortensen further explained that the state purchased new equipment for the intercity rail program. Ms. Mortensen added that with the Oakland Maintenance Facility currently at max capacity, the state will be using the Stockton RMF to do some light maintenance work until the Natomas RMF is built where the maintenance will be done full-time.

M/S/C (Zuber/Elliott) to Approve a Resolution of the Board of Commissioners of the San Joaquin Regional Rail Commission Authorizing the Executive Director to Execute Contract Amendment #1 with AECOM to Change the CEQA Document to an Environmental Impact Report, Extend the Contract Term Limit Until Work is Completed, and Increase the Total Compensation by an Amount of $620,080, Revised Total Contract Amount Not-To-Exceed $2,400,000 for Agreement 18-R-49-00. Passed and Adopted by the San Joaquin Regional Rail Commission on the 1st day of March, 2019 by the following vote to wit:

AYES: 6 Elliott, Moorhead, Johnson, Young, Zuber, Chair Fugazi NOES: 0 ABSTAIN: 0 ABSENT: 0

5 Approve a Resolution of the Board of Commissioners of the San ACTION Joaquin Regional Rail Commission Adopting the Transit Asset Management Plan

Mr. Peterson did a presentation on this item.

There was no Board discussion on this item.

M/S/C (Marchand/Moorhead) to Approve a Resolution of the Board of Commissioners of the San Joaquin Regional Rail Commission Adopting the Transit Asset Management Plan. Passed and Adopted by the San Joaquin Regional Rail Commission on the 1st day of March, 2019 by the following vote to wit:

AYES: 8 Haggerty, Marchand, Elliott, Moorhead, Johnson, Young, Zuber, Chair Fugazi NOES: 0 ABSTAIN: 0 6 of 122 ABSENT: 0

6 Approve a Resolution of the Board of Commissioners of the San ACTION Joaquin Regional Rail Commission Authorizing the Executive Director to Sign a Memorandum of Understanding (MOU) and Execute any Necessary Documents with the City of Sacramento for the Design, Construction and Maintenance of Protected Parking Bikeways to Connect with the Midtown Station as Part of the Valley Rail Program Not-To-Exceed $3,061,000

Mr. Leavitt did a presentation on this item.

Commissioner Elliott inquired about the definition of a car protected bikeway. Mr. Leavitt clarified that while it does mean cars are not allowed to park in the bike lane, the cars parked in the designated zone create an additional barrier between the bike lane and the traffic lane.

Commissioner Elliott asked about the degree of SJRRC’s involvement after the agreement is signed. Mr. Leavitt explained that there will be oversight of this project from Rail Commission staff.

Chair Fugazi commended the idea of a protected bike lane.

M/S/C (Moorhead/Zuber) Approve a Resolution of the Board of Commissioners of the San Joaquin Regional Rail Commission Authorizing the Executive Director to Sign a Memorandum of Understanding (MOU) and Execute any Necessary Documents with the City of Sacramento for the Design, Construction and Maintenance of Protected Parking Bikeways to Connect with the Midtown Station as Part of the Valley Rail Program Not-To-Exceed $3,061,000. Passed and Adopted by the San Joaquin Regional Rail Commission on the 1st day of March, 2019 by the following vote to wit:

AYES: 6 Elliott, Moorhead, Johnson, Young, Zuber, Chair Fugazi NOES: 0 ABSTAIN: 0 ABSENT: 0

7 Approve a Resolution of the Board of Commissioners of the San ACTION Joaquin Regional Rail Commission Adopting the ACE Fare Policy

Ms. Rasheed did a presentation on this item.

Commissioner Marchand asked about the farebox recovery ratio. Ms. Rasheed stated that the current farebox ratio is at 39%.

7 of 122 Commissioner Marchand asked how farebox works with the Transit Asset Management Plan. Mr. Peterson clarified that other funding sources are utilized to maintain assets.

Ms. Mortensen explained other factors that play into the farebox recovery ratio.

Commissioner Elliott asked what the fare policy means in regards to complying with federal requirements for providing fare discounts.

Ms. Rasheed explained that the goal of the policy was to keep it broad enough to ensure the policy could be met and explained the current discount structure.

Ms. Mortensen clarified that there are certain requirements mandated by the Federal Transit Administration.

Commissioner Elliott inquired about the last line of the policy regarding incentivizing rider behavior.

Ms. Rasheed stated that the last line in the policy is in regards to the discount programs in order to promote ridership.

Commissioner Elliott moved to approve the item with the condition that the phrase “at a minimum” was removed.

M/S/C (Elliott/Moorhead) to Approve a Resolution of the Board of Commissioners of the San Joaquin Regional Rail Commission Adopting the ACE Fare Policy. Passed and Adopted by the San Joaquin Regional Rail Commission on the 1st day of March, 2019 by the following vote to wit:

AYES: 8 Haggerty, Marchand, Elliott, Moorhead, Johnson, Young, Zuber, Chair Fugazi NOES: 0 ABSTAIN: 0 ABSENT: 0

8 Update on ACE Mobile Ticketing

Ms. Rasheed did a presentation on this item.

There was no Board discussion on this item.

11 Commissioner’s Comments

There were no comments.

8 of 122 12 Ex-Officio Comments

Mr. Knodt announced an event being hosted by RTD and the growth in RTD ridership.

Mr. Zoslocki spoke about the remodel of the Modesto station.

13 Executive Director’s Report

Ms. Mortensen reported the status of California High Speed Rail (HSR) and its federal funding. Ms. Mortensen also stated that the strengthened relationship with HSR has solidified the importance of the Merced connection as well as the Valley Rail program.

14 Adjournment

The meeting was adjourned at 8:59 am. The next regular meeting is scheduled for: May 3, 2019 – 8:00 am Robert J. Cabral Station 949 E. Channel Street Stockton, CA 95202

9 of 122 ItemItem 4.2 3.2 San Joaquin Regional Rail Commission Altamont Corridor Express Operating and Capital Expense Report February 2019 67% of Budget Year Elapsed

SJRRC EXPENSE % ACE EXPENSE % FY 18-19 TO SPENT FY 18-19 TO SPENT OPERATING EXPENSES ALLOCATION DATE TO DATE ALLOCATION DATE TO DATE

Project Management, Services & Supplies Subtotal 784,339 305,056 39% 5,276,185 2,446,816 46% Contracted Services Subtotal 425,375 169,145 40% 18,913,136 10,002,119 53% Shuttle Services 1,269,855 846,570 67% TOTAL OPERATING EXPENSES 1,209,714 474,200 39% 25,459,176 13,295,505 52%

CAPITAL EXPENSE FY 18-19 TO SPENT CAPITAL PROJECTS ALLOCATION DATE TO DATE SAN JOAQUIN RAIL COMMISSION 1 East Channel Street Improvements 2,042,287 73,640 4% 2 Robert J. Cabral Parking Lot Expansion 2,229,413 - 0% 3 SJRRC Maintenance Vehicles 120,000 - 0% TOTAL CAPITAL PROJECT SJRRC $ 4,391,700 $ 73,640 2%

ALTAMONT CORRIDOR EXPRESS 1 SJ COG Loan Repayment 1,118,012 1,118,012 100% 2 A1 & A2 Bond Repayment 3,035,912 643,306 21% 3 UPRR Capital Access Fee 3,242,516 3,242,516 100% 4 UPRR Capitalized Maintenance Projects 4,000,000 829,168 21% 5 ACE Extension Natomas to Stockton 100,000,000 521,884 1% 6 ACE Extension Lathrop to Ceres/Merced 65,865,000 227,427 1% 7 Locomotives (4) 23,396,668 11,758,627 50% 8 Platform Extension Projects 8,959,000 307,292 3% 9 Cabral Track Extension 7,331,989 355,943 5% 10 Fremont Platform Extension 3,400,000 - 0% 11 Lyoth Derail 500,000 - 0% 12 Positive Train Control 3,944,067 2,205,338 56% 13 Rolling Stock 3,500,000 - 0% 14 Facility Upgrades and Capital Improvements 28,522 - 0% 15 Capital Spares 1,125,000 133,820 12% 16 Safety and Security/Video Cameras 1,544,087 295,158 19% 17 E-Ticketing 354,613 33,029 9% 18 Public Information Display System (PIDS) 225,000 - 0% 19 Network Integration 1,000,000 - 0% 20 Coordinated Planning Services 300,000 - 0% 21 Sunol Quiet Zone 400,000 29,898 7% TOTAL CAPITAL PROJECTS ACE $ 233,270,386 $ 21,701,418 9%

TOTAL CAPITAL PROJECTS SJRRC & ACE $ 237,662,086 $ 21,775,059 9%

10 of 122 Status of Capital Projects - As of February 2019

SAN JOAQUIN RAIL COMMISSION

1 East Channel Street Improvements - SJRRC received $2 million from the San Joaquin Council of Governments’ Measure K funds to improve the pedestrian and bicycle access along Channel Street between the Downtown Transit Center and Cabral Station. SJRRC has begun the environmental clearance and final design for the project, which is anticipated to be completed in 2019. Construction is slated to begin after.

2 Robert J. Cabral Parking Lot Expansion - Project will construct a new parking lot at the site of the old Western Pacific depot in Stockton, as well as renovate a portion of the building. Staff is working on completing an environmental determination to move forward with final design.

3 SJRRC Maintenance Vehicles - The purchase of two maintenance trucks.

ALTAMONT CORRIDOR EXPRESS 1 SJ COG Loan Repayment - Annual payment made July 1, 2018 per SJCOG amended loan agreement.

2 Bond Repayments - Bond repayments are made bi-annually, payments FY 18-19 are due in October 2018 and April 2019.

3 UPRR Capital Access Fee - Payment for calendar year 2019 paid in two installments. First payment processed in January and second payment in May 2019

4 UPRR Capitalized Maintenance Projects - Multi-year project is budgeted at $4,000,000 for the year. Invoices are received monthly throughout the year. 5 ACE Extension Natomas to Stockton - Environmental work for the project is currently underway. It is estimated that the Environmental Impact Report (EIR) will be complete in Fall 2019.

6 ACE Extension Lathrop to Ceres/Merced - The Environmental Impact Report (EIR) was certified in August 2018. Final design is anticipated to begin in Q2 2019.

7 Locomotives (4) - Multi-year project to procure up to five Tier 4 locomotives for ACE service. A contract for the procurement was approved in April 2018. Currently ongoing through Fiscal Year 2019/2020, with the first unit scheduled to arrive in December 2019.

8 Platform Extension Projects - Multi-year project to extend the existing Lathrop/Manteca, Tracy, Vasco, Livermore, and Pleasanton platforms. A contract for final design was approved in May 2018 and is currently under review by Union Pacific.

9 Cabral Track Extension - Staff is working on completing an environmental determination to move forward with final design. Union Pacific is currently reviewing documentation. 10 Fremont Platform Extension - Construction of a 400-foot platform extension at the Fremont ACE Station. Final design is anticipated to begin in Q2 2019.

11 Lyoth Derail - Installation of electric-powered derails near the Tracy ACE Station.

12 Positive Train Control - Multi-year project will continue testing with Caltrain in late 2019. On-board equipment installation is complete, the Hosted Back Officer Server is operational. PTC is operating as designed on the UPRR corridor.

13 Rolling Stock - Multi-year project to use a competitive negotiation process to procure five passenger rail cab cars, with an option to purchase up to 29 additional passenger rail cars. A joint procurement is currently underway, with an RFP released in December.

14 Facility Upgrades and Capital Improvements - Currently ongoing 15 Capital Spares - Preventative Maintenance is ongoing.

16 Safety and Security/Video Cameras - The camera security project was awarded in June 2018 and is in construction.

17 E-Ticketing - Multi-year pilot project is currently ongoing. A contract for the implementation of the Altamont Corridor Express Mobile Ticketing System was approved in May 2018. Full roll out release as of April 2019.

18 Public Information Display System (PIDS) - Currently ongoing project, PIDS system gives the ability to send train status and general information to ACE stations and SJJPA in real time.

19 Network Integration - Planning consulting services of integrating the ACE and SJJPA services with high-speed rail and other rail transit services.

20 Coordinated Planning Services - Anticipated planning services to start summer 2019.

21 Sunol Quiet Zone - Construction has been completed but to address public concerns, revisions need to be made. Design for the revised project, Four Quadrant Gates on Main Street Sunol, was released in a RFQ in January 2019. Contract award is scheduled for the May 3rd Board Meeting.

11 of 122 Item 3.3 Fare Revenue Item 4.3 1,100,000

1,000,000

900,000

800,000

700,000

600,000

500,000 FY Jul‐18 Aug‐18 Sep‐18 Oct‐18 Nov‐18 Dec‐18 Jan‐19 Feb‐19 Mar‐19 Apr‐19 May‐19 Jun‐19 TOTAL FY 18‐19 Fare Revenue 934,823 1,017,601 901,396 1,049,117 856,601 705,227 1,021,424 837,812 932,637 ‐‐‐8,256,636 FY 17‐18 Fare Revenue 761,437 855,600 787,527 914,200 776,861 682,650 912,481 774,475 823,332 876,113 910,443 752,943 9,828,062

% of Budget Year Elapsed: 75% FY 18‐19 % of Budgeted Fare Revenue Received to Date 82.6% Projected Annual Fare Revenue: $10,000,000

12 of 122 Ridership ItemItem 3.4 4.4

170,000

160,000

150,000

140,000

130,000

120,000

110,000

100,000

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

‐ Jul‐18 Aug‐18 Sep‐18 Oct‐18 Nov‐18 Dec‐18 Jan‐19 Feb‐19 Mar‐19 Apr‐19 May‐19 Jun‐19 FY TOTAL FY 18/19 Ridership 120,779 137,442 122,227 151,604 122,880 98,973 127,130 114,725 125,199 ‐‐‐1,120,959 FY 17/18 Ridership 99,462 128,439 116,712 127,787 111,379 89,910 118,269 112,344 118,506 117,336 136,346 122,464 1,398,954

13 of 122 ACE ON TIME PERFORMANCE

100

90

80

70

60

50

OTP% 40

30

20

10

0 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Monthly OTP % 85.14 82.47 91.48 89.88 86.31 86.81 93.42 88.59 95.51 78.52 45.35 66.23 76.19 YTD OTP % 82.47 82.93 84.4 85.31 85.45 85.63 86.41 86.65 87.39 86.79 45.35 55.21 62.35

14 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION Meeting of May 3, 2019

STAFF REPORT

Item 3.6 INFORMATION Update on Positive Train Control

ACE train delays associated with PTC continue to decrease. Average delays have been reduced from 6 to 10 minutes down to 2 to 4 minutes per train. The reduction in delays and the length of time of the delays is attributed to upgrades to the UPRR signal software and ACE radio software which were made in early February.

Communications to Passengers: Staff continues to provide passengers with updated information regarding the delays using the following channels: • ACE Website • Social Media (Facebook and Twitter) • Onboard announcements

Coordination with UPRR, Caltrain and the Federal Railroad Administration (FRA): Staff continues regular conference calls with UPRR, Caltrain and FRA on PTC as PTC continues to evolve.

PTC operations on the Caltrain is scheduled to begin sometime during the 4th quartet 2019. It is anticipated ACE will be fully operational over the entire 86 mile corridor in the 2nd quarter 2020.

FRA PCT Summits:

Staff will be attending the second of six (6) PTC Summits being held by the FRA on June 5th, 2019 in Washington D.C. No meeting agenda has been provided at this time.

15 of 122 Item 3.7

TO: SJRRC Board FROM: Buchanan and TG&A Team RE: Monthly Legislative Report for April 2019

ISSUE ACTIONS APRIL UPDATE CONGRESS ONGOING:

April 2019. TG&A and Buchanan team continue to liaise with UP and BNSF DC staff to schedule calls to discuss next steps for the Stockton Diamond project.

SELECTED CONGRESSIONAL HEARINGS April 10, 2019. The House Committee on Appropriations, Subcommittee on Transportation, and Housing and Urban Development, and Related Agencies met to receive testimony from US DOT Secretary Elaine Chao related to the “Department of Transportation Budget Request for Fiscal Year 2020.” Covered by TG&A ‐ summary available upon request. Link and Testimony

April 2, 2019. The House Committee on Appropriations, Subcommittee on Homeland Security met to receive testimony related to the “FY 2020 Budget Hearing – Transportation Security Administration.” Link and Testimony

SELECTED CONGRESSIONAL BILLS (APRIL) HOUSE SENATE

HR 2164 Julia Brownley (D‐CA) Requires any TBA G. Peters (D‐MI) Vehicle Innovation Act bus purchased for use in public transportation with funds provided by the FTA to be a zero emission bus

HR 2157 N. Lowey (D‐NY) Supplemental S 1098 B. Cardin (D‐MD) To improve the Appropriations Act, 2019 transportation alternatives program

HR 2130 D. Kilmer (D‐WA) To provide grants to assist States in developing and

implementing plans to address

cybersecurity threats or vulnerabilities

16 of 122 APRIL UPDATE ‐ CONTINUED APPROPRIATION / BUDGET RESOLUTION PROCESS April 3, 2019. The House Budget Committee passed a two‐year budget (FY 2020 and FY 2021) (19 YEAs to 17 NAYs) known as

the “Investing for the People Act of 2019.” HR 2021 The bill proposes to raise the defense and non‐defense caps for FY 2020

and 2021. In FY 2020, the defense ($664 billion) and non‐defense ($631 billion) caps were each raised $87.8 billion over the Office of Management and Budget estimates per the OMB Sequestration Report. The Full House is not expected to address the bill until after the two‐week recess that begins on April 13, 2019. The budget resolution is a “concurrent” congressional resolution, not an ordinary bill, and therefore does not go to the President for his signature or veto. Both the House and Senate use the overall spending numbers to craft their appropriations bills.

House Proposed Budget Caps Table:

17 of 122 APRIL UPDATE ‐ CONTINUED HOUSE BUDGET COMMITTEE ‐ PROPOSED BUDGET CAPS FY 2020/2021

($ Millions)

FY 2020 FY 2021

Original Caps Established in the BCA of 2011 Security (Defense) 630,000 644,000

NonSecurity (NonDefense) 578,000 590,000

OMB Reductions to Meet Joint Committee Deficit Reduction Requirement (Mandatory) Security (Defense) (53,825) (53,814)

NonSecurity (NonDefense) (34,807) (33,867)

OMB EST. REVISED BUDGET CONTROL CAPS Security (Defense) 576,175 590,186 NonSecurity (NonDefense) 543,193 556,133

OMB Total FY 2020 Discretionary Spending: 1,119,368 1,146,319

HR 2021 ‐ INVESTING FOR THE PEOPLE ACT 2019

Security (Defense) 664,000 680,119

NonSecurity (NonDefense) 631,018 646,056

Security (Defense) ‐ INCREASE in CAPS 87,825 89,933 Nonsecurity (NonDefense) ‐ INCREASE in CAPS 87,825 89,923

INCREASED CAPS

House (HR 2021) Total FY 2020 Discretionary Spending: 1,295,018 1,326,175

EXECUTIVE BRANCH April 10, 2019. The Government Accountability Office (GAO) released a report titled The Nation's Fiscal Health that provides an update on the nation's fiscal health as of the end of FY 2018, and describes its likely fiscal future if policies do not change. The GAO’s findings include: 1) the federal government’s current fiscal path is unsustainable, 2) the federal deficit increased to $779 billion—and will reach $1 trillion in the next few years for the first time since 2012, 3) publicly held debt ($15.8 trillion) was 78 percent of Gross Domestic Product (GDP) at the end of FY 2018 and will surpass its historical high of 106 percent within 13 to 20

years—sooner than projected last year. Other agencies join GAO in saying that the longer action is delayed, the greater and

more drastic the changes will have to be to attain a sustainable fiscal future.

18 of 122 APRIL UPDATE ‐ CONTINUED April 10, 2019. The Department of the Treasury released their first quarter bulletin Treasury March 2019 Bulletin which provides a profile of the U.S. economy and also provides end‐of‐year balance projections for several transportation trust funds. Provided below is a table summarizing the status and projections of several transportation trust funds.

Department of Treasury Bulletin ‐ Profile of the Economy Transportation Trust Fund Balances and Projections March‐19 ($ Billions) Beginning End‐of‐Year (Est.) (Est.) (Est.) (Est.) (Est.) Balance Balance End‐of‐Year End‐of‐Year End‐of‐Year End‐of‐Year End‐of‐Year FY 2018 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Airport and Airway Trust Fund 15.086 17.325 17.739 17.920 18.535 19.789 21.559

Highway Trust Fund 56.293 44.507 31.000 16.000 1.000 (14.000) (28.000) Highway Account Not Broken Out Not Broken Out 23.000 12.000 2.000 (8.000) (17.000) Mass Transit Account Not Broken Out Not Broken Out 8.000 4.000 (1.000) (6.000) (11.000)

Harbor Maintenance Trust Fund 9.100 9.322 9.416 10.199 11.036 11.929 12.881

($ Millions) Inland Waterways Trust Fund 63.396 130.934 42.000 44.000 45.000 46.000 48.000

PENDING US DOT NOMINATIONS/RESIGNATIONS

April 3, 2019. The Senate Committee on Commerce, Science and Transportation approved several transportation nominees (subject to approval by the full Senate) Senate Comm Approve Nominees

NAME US DOT ADMINISTRATOR / OTHER STATUS

Ms. Diana Furchtgott‐ Assistant Sec. of Senate Commerce Committee approved 4/3/19, YEAs 14‐NAYs 12. Roth Transportation Roth

Ms. Nicole Nason FHWA Administrator Nomination Confirmed 3/28/19 YEAs 95 NAYs 1

Nason

Ms. Thelma Drake FTA Administrator Reported by Senate Banking 3/12/19, on Exec. Calendar Drake

Mr. Stephen Dickson FAA Administrator Nominated 3/19/19

Ms. Heidi King NHTSA Administrator Senate Commerce Committee approved 4/3/2019, YEAs 14‐NAYs 12. King

19 of 122 APRIL UPDATE ‐ CONTINUED Joseph Ryan Gruters Director Amtrak Board (5 Yr. Senate Commerce Committee approved 4/3/2019, YEAs 14‐NAYs (FL) Term) 12. Gruters

Leon A. Westmoreland Director Amtrak Board (5 Yr. Senate Commerce Committee approved 4/3/2019, YEAs 14‐NAYs (GA) Term) 12.Westmoreland

Rick A. Dearborn (OK) Director Amtrak Board (5 Yr. Senate Commerce Committee approved 4/3/2019, YEAs 14‐NAYs Term) 12. Dearborn

Ms. Deb Miller Surface Transportation Board Nomination withdrawn 1./

Ms. Kirstjen Nielsen Dept. of Homeland Security Resigned on 4/7/2019. 2./

1./ Ms. Millar served on the STB from 2014-2018. The Board is chaired by Ann D. Begeman, along with Vice Chairman Patrick J. Fuchs and Martin J. Oberman. The Board has two vacancies (one Republican and one Democrat). 2./ On April 10, 2019, Kevin K. McAleenan assumed the role as Acting Secretary of the Department of Homeland Security. On April 11, 2019, Acting Secretary McAleenan designated David P. Pekoske, the Transportation Security Administration (TSA) Administrator to perform the duties of the Department of Homeland Security (DHS) Deputy Security. Patricia Cogswell, TSA’s Acting Deputy Administrator, was designated to oversee the day-to-day operations at TSA.

REGULATORY UPDATE, EVENT, OR KEY REPORT OPEN NOFOs

April 16, 2019. The US DOT has issued a Notice of Funding Opportunity (NOFO) for the National Infrastructure Investments

(BUILD) program for FY 2019. Funding for surface transportation projects ($900 million) is to be awarded on a competitive

basis. Applications must be submitted by 8:00 PM E.D.T. on July 15, 2019. Following is a link Grants.Gov BUILD NOFO FY 2019

to the NOFO. This is the 11th iteration of the TIGER/BUILD program since its inception under the American Recovery and

Reinvestment Act of 2009. To date, $7.1 billion in grants have been awarded under the previous 10 rounds of the program.

April 12, 2019. The Department of Homeland Security announced the release of FY 2019 Notices of Funding Opportunity for

eight DHS preparedness grant programs, including but not limited to: Intercity Passenger Rail ‐ Amtrak (IPR) Program at $10

million; the Port Security Grant Program (PSGP) at $100 million; the Transit Security Grant Program (TSGP) at $88 million, and

the Intercity Bus Security Grant Program (IBSGP) at $2 million. DHS FY 2019 Preparedness Grants Press Release

April 5, 2019. The Environmental Protection Agency (EPA) published a Notice of Funding Availability (NOFA) in the Federal

Register EPA NOFA Credit Assistance Under WIFIA soliciting Letters of Interest (LOIs) from prospective borrowers seeking credit

assistance from the Water Infrastructure Finance and Innovation Act (WIFIA). The Consolidated Appropriations Act, 2019

provided $60 million in budget authority under the WIFIA program to cover the subsidy cost of providing WIFIA credit

assistance. The WIFIA authorizes the EPA to provide federal credit assistance in the form of secured (direct) loans or loan

guarantees for eligible water infrastructure projects. All LOIs documents should be uploaded no later than 5:00 p.m. EDT on July

1, 2019, to EPA's SharePoint site. See the FR for submittal and selection criteria details.

20 of 122 APRIL UPDATE ‐ CONTINUED April 3, 2019. The Environmental Protection Agency (EPA) published a Notice of Funding Opportunity (NOFO) in the Federal Register (FR) EPA FR NOFO Brownfields Revolving Loan Fund for supplemental funds ($8 million) to the Revolving Loans Fund (RLF) and RLF grantees. The funding is to assist for brownfields revitalization, including grants for assessment, cleanup

(hazardous substances and/or petroleum) and job training. In order to be considered for supplemental funding, grantees must

demonstrate that they have significantly depleted funds (both EPA grant funding and any available program income) and that they have a clear plan for utilizing requested additional funds in a timely manner. Applicants for supplemental funding must contact the appropriate Regional Brownfields Coordinator as noted in the FR. Requests for funding must be submitted to the appropriate EPA coordinator by May 6, 2019.

REPORTS / NOTICES / ARTICLES

April 22, 2019. The Federal Transit Administration notified grant recipients that Fiscal Year 2019 Apportionments are now available for award and obligation in the Transit Award Management System (TrAMS). The Federal Register notice detailing the FY 2019 Apportionments in narrative form will be published soon.

April 19, 2019. The American Public Transportation Association (APTA) issued a report APTA Ridership Report which notes that public transit ridership dropped 2.0 percent in 2018 when compared to transit ridership in 2017. However, from 1995‐2018, public transit ridership grew by 27 percent. APTA also has released a report APTA Understanding Recent Ridership Changes detailing the factors influencing and causing those declines, and the steps public transit agencies should take to change the ridership trend.

April 18, 2019. Two US DOT Administration’s (National Highway Traffic Safety Administration / Federal Railroad Administration) relaunched a $5.6 million public safety awareness campaign NHTSA FRA Stop Trains Can't urging everyone to take greater care at highway‐rail grade crossings. The campaign, “Stop. Trains Can’t.” reminds drivers about the potential risks of an approaching train when crossing railroad tracks. The campaign is national in scope but does target high‐incident communities in 16 selected states. In 2018, 270 people were killed at railroad crossings.

April 12, 2019. President Trump and Federal Communications Commission Ajit Pai discussed 5G cellular communications. 5G is expected to be as much as 100 times faster than the current 4G cellular networks. By the end of 2019 the nation will have 92 deployments in the market. Chairman Pai noted that, “America is well positioned to win the race to fast, secure, and reliable 5G. Here is a link to the FCC 5G Fast Plan and the FCC Fed Register Order 2 5 2019 that establishes an incentive auction that promotes the flexible‐use wireless service rules that the Commission has adopted.

April 9, 2019. The Federal Transit Administration (FTA) allocated $1.36 billion in federal funding FTA CIG Press Release to 16 new and existing transit projects in the Capital Investment Grants (CIG) Program. With this announcement, FTA has advanced

funding for 22 new CIG projects throughout the nation under this administration since January 20, 2017, totaling approximately

$5.06 billion in funding commitments.

21 of 122 APRIL AND UPCOMING DEADLINES April 1 Senate Budget Committee to report a Budget Resolution; April 15 Statutory deadline for House/Senate to adopt Budget Resolution (often missed);

April 15 The Federal Transit Administration (FTA) announced FTA SSO Deadline on March18, 2019,

that it had partnered with 30 states with rail transit systems to strengthen and certify 31 State Safety Oversight (SSO) Programs prior to the April 15, 2019, safety deadline. May 20‐23 AASHTO Spring Meeting at Canyons Village, Park City, Utah 84098 AASHTO Spring Meeting June 23‐26 American Public transportation Association (APTA), “2019 Rail Conference.” ______MARCH UPDATE CONGRESS: Ongoing:

‐ We are working to secure letters of support for SJRRC’s bid to acquire and develop land at Sharpe Army Depot.

3/27/19: The House Committee on Transportation and Infrastructure held a Full Committee markup on several bills. T&I Full Committee Markup

3/27‐28/19: Senate Budget Committee, “Full Committee Hearing ‐ Fiscal Year 2020 Budget Resolution” Link and Testimony

3/27/19: Senate Appropriations Subcommittee on Transportation, “Review of the FY2020 budget request for the U.S. Department of Transportation” Link and Testimony

3/26/19: House Appropriations, “Stakeholder Perspectives: Passenger Rail Development” Link and Testimony

3/22/19: Senate Budget Committee Chairman Mike Enzi (R‐WY) released the FFY 2020 Budget Resolution (BR) on March 22, 2019. The BR sets forth the congressional budget for FFY 2020 and budgetary levels for FFYs 2021‐2024. The proposal cuts discretionary spending at non‐defense agencies by 9 percent in FFY 2020. The $55 billion reduction would bring spending in line with the statutory caps established by the 2011 Budget Control Act. The purported BR assumes new transportation user fees to preserve the solvency of the Highway Trust Fund. The House Budget Committee will soon release their own proposed BR. Subsequently, the House/Senate will need to reconcile their differences and agree on a conferenced BR. The BR does not become law; rather, the BR provides spending limits for each committee. Each appropriations committee will then be responsible for subdividing its allocation among the 12 subcommittees. Senate Budget Resolution ‐ Bill Text, Tables, Summary

3/19/19: “Chair DeFazio Announces Whistleblower Webpage” Whistleblower Rights

3/13/19: House Budget Committee, “Full Committee Hearing ‐ President’s Fiscal Year 2020 Budget Proposal Link and Testimony

22 of 122 3/13/19: Senate Budget Committee, “Full Committee Hearing ‐ President’s Fiscal Year 2020 Budget Proposal” Link and Testimony

3/14/19: The Senate Banking, Housing, and Urban Affairs Committee approved Thelma Drake's nomination to lead the Federal Transit Administration (FTA) by a vote of 24‐1. Thelma Drake was nominated for the same position in the 115th Congress but never received final U.S. Senate Action. She was renominated by President Trump on February 15th of this year.

3/13/19: The House Transportation and Infrastructure Committee's Subcommittee on Highways and Transit held a hearing titled, "Aligning Federal Surface Transportation Policy to Meet 21st. Century Needs." The hearing was the first in preparation of a surface transportation reauthorization bill and concentrated on funding avenues for infrastructure projects and the importance of multimodal transportation system planning.

3/6/19: The Senate Environment and Public Works Committee held a hearing titled, "The Economic Benefits of Highway Infrastructure Investment and Accelerated Project Delivery." The hearing centered on expediting project delivery times and solutions for the Highway Trust Fund (HTF).

3/6/19: The House Ways and Means Committee held a hearing titled, "US. Infrastructure and the Need for Action." The hearing covered solutions for the HTF and the potential benefits of private‐public partnerships (P3).

3/5/19: Rep. Blumenauer (D‐OR) introduced H.R. 1508, the Move America Act. This bill aims to fund new transportation, water, and information infrastructure through federal tax‐exempt bonds that provide at least 95 percent of its net proceeds to a qualified facility, such as a railroad or any associated rail infrastructure to integrate transportation modes.

Executive Branch: 3/11/19: President Trump released his annual Budget Request for fiscal year (FY) 2020, requesting $21.4 billion in discretionary budget authority and $84.1 billion total in gross budgetary resources for DOT. It also calls for $200 billion towards an infrastructure initiative to encourage at least $1 trillion on new infrastructure, which should be aided by surface transportation reauthorization legislation. The Budget calls for increased levels for several major infrastructure grant programs. It calls for $2 billion for the Infrastructure for Rebuilding America (INFRA) grant program, $1 billion for the Better Utilizing Investment to Leverage Development (BUILD) grant program, and $300 million for a competitive highway bridge program. The Budget also leaves in place the $7.6 billion highway funding rescission that will happen on July 1, 2020.

PENDING US DOT NOMINATIONS US DOT ADMINISTRATOR / OTHER NAME STATUS Ms. Diana Furchtgott‐Roth Assistant Sec. of Transportation Referred to Senate Commerce Committee 1/16/19. Roth Ms. Nicole Nason FHWA Administrator Reported E&PW 2/5/19, on Executive Calendar Nason

23 of 122 Ms. Thelma Drake FTA Administrator Reported by Senate Banking 3/12/19, on Exec. Calendar Drake Mr. Stephen Dickson FAA Administrator Nominated 3/19/19 Ms. Heidi King NHTSA Administrator Referred to Senate Commerce Committee 1/16/19 King Ms. Deb Miller Surface Transportation Board Nomination withdrawn 1./ 1./ Ms. Millar served on the STB from 2014-2018. The Board is chaired by Ann D. Begeman, along with Vice Chairman Patrick J. Fuchs and Martin J. Oberman. The Board has two vacancies (one Republican and one Democrat).

Regulatory Update, Event, or Key Report: 3/20/10: Amtrak released their FFY 2020 grant request on March 20, 2019 requesting a total of $1.8 billion with splits of $1.2 billion for the National Network and $600 million for the Northeast Corridor. The FFY 2020 request is a reduction of $141,600,000 from the enacted level of $1,941,600,000 in FFY 2019. Amtrak FFY 2020 Request

3/15/19: The Federal Transit Administration issued its Annual Report on Funding Recommendations for the Capital Investment Grants (CIG) Program and Expedited Project Delivery Pilot Program for FFY 2020, (Capital Investment Grants Program FFY 2020 Annual Report) recommending a total appropriation of $1.505 billion with the following splits: $995.29 million for 10 existing Full Funding Grant Agreements (including eight New Starts and two Core Capacity projects); $494.85 million in funding for other projects that may become ready for funding during FFY 2020, and $15.05 million for management oversight. [Within the CIG program there are three categories of eligible projects: New Starts, Small Starts and Core Capacity projects.]

3/12/19: Non‐Traditional and Emerging Transportation Technology (NETT) Council – US DOT Secretary Elaine Chao announced the creation of the NETT Council on March 12, 2019. The Council is tasked with identifying and resolving jurisdictional and regulatory gaps that may impede the deployment of new technology, such as tunneling, hyperloop, autonomous vehicles, and other innovations. NETT Council

3/11/19: The U.S. Government Accountability Office (GAO) issued a report on DOT's progress establishing the Build America Bureau, as required under the FAST Act. The report found that the Bureau has created a process to consolidate three financing programs; the Transportation Infrastructure Finance and Innovation Act (TIFIA), Railroad Rehabilitation and Improvement Financing (RRIF), and Private Activity Bonds (PAB), and has taken steps to streamline their application and evaluation process. However, the report also found that the Bureau's efforts lacked implementation goals and performance indicators to assess the progress of the new procedures.

2/28/19: Debrief with USDOT staff for the SJRRC “San Joaquin Valley Rail Enhancement Project” BUILD grant.

24 of 122 Legislative Report Log

FY2019 Appropriations/FY2018 2/15/19: President Trump signed H.J. Res. 31, the Consolidated Appropriations Act of 2019. This joint resolution funded all Federal Appropriations/Budget government agencies that had yet to be funded for Fiscal Year (FY) 2019, including DOT and the Department of Homeland Security (DHS). The bill provides $86.5 billion in funding for DOT, including $900 million for the Better Utilizing Investments to Leverage Development (BUILD) grant program, which is $600 million below FY 2018 levels. It also blocks DOT from using nonfederal funding as a criterion for selection, allowing only the selection criteria from the FY 2017 notice of funding opportunity (NOFO). The bill also provides $17.5 billion, $549 million below FY 2018, for the Federal Aviation Administration (FAA), including $500 million for Airport Improvement Program (AIP) grants; $49.3 billion, an increase of $1.8 billion from FY 2018, for the Federal Highway Administration (FHWA); $667 million, $178 million below FY 2018, for the Federal Motor Carrier Safety Administration (FMCSA); $966 million, an increase of $19 million from FY 2018 levels, for the National Highway Traffic Safety Administration (NHTSA); $2.9 billion, $218 million below FY 2018, for the Federal Railroad Administration (FRA); and $13.4 billion, $67 million below FY 2018 levels, for the Federal Transit Administration (FTA). The joint resolution also provided $49.4 billion in discretionary funding for DHS, funding Customs and Border Protection (CBP) at $14.9 billion with $59 million for hiring new CBP officers. It also provides $16.6 billion, $4.2 billion above FY 2018 levels, for the Federal Emergency Management Agency (FEMA), including $100 million for public transportation security assistance, railroad security assistance, and over‐the‐road bus security assistance.

9/28/18: President Trump signed H.R. 6157, the Department of Defense (DOD) and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019. This bill contains an extension of funding, until December 7, 2018, for all FY 2019 appropriations bills that have not been passed in Congress, including the Transportation‐HUD (THUD) language which is in conference committee with three other bills.

Executive Branch 1/16/19: President Trump renominated a number of individuals that did not receive final U.S. Senate action during the 115th Congress. Included in the list are Thelma Drake as Administrator of NHTSA, Diana Furchtgott‐Rott as an Assistant Secretary of Transportation, and Michelle Schultz as a member of the Surface Transportation Board (STB).

1/9/19: Geoff Burr, who was Secretary Chao's chief of staff for almost two years, vacated his position and will be replaced by Todd Inman. Matt Sturges, who was serving as FRA Deputy Administrator, and Sean McMaster, who was serving as Deputy Assistant Secretary for Congressional Affairs, will both become Deputy Chiefs of Staff. Alan Hanson, current Deputy Chief of Staff, will move to the Federal Motor Carrier Safety Administration (FMCSA) as Deputy Administrator and Cathy Gautreaux, who was acting administrator for FMCSA, will take a new position as Senior Advisor at NHTSA.

1/2/19: The U.S. Senate confirmed several Transportation related Nominees before the end of the 115th Congress. Among the approved nominees were Martin Oberman and Patrick Fuchs, to be members of the Surface Transportation Board.

12/20/18: DOT issued a NOFO for its Nationally Significant Freight and Highway Projects (INFRA) program. The program provides $950 million in available discretionary funding for freight, highway, or bridge projects of national or regional significance. Applications are due no later than 8:00 PM EST on March 6, 2019.

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10/1/18: Ben Kochman, former Legislative Director for Rep. Granger (R‐TX), moved to DOT as Senior Congressional Affairs Officer.

8/10/18: Mike Long, former senior safety and operations manager for the Short Line Safety Institute, took his new position as regional director of operations at FRA. Rail Safety / Positive Train 2/19/19: FRA issued a report to Congress on its first National Strategy to Prevent Trespassing on Railroad Property. The report Control (PTC) identified Los Angeles, CA; Cook, IL; San Bernardino CA; Harris TX; Broward, FL; Palm Beach, FL; Fresno, CA; Riverside, CA; Contra Costa CA; and San Diego, CA counties as the top ten counties where trespasser casualties occur. The strategy calls for greater data gathering, site visits, funding, and coordination with all stakeholders to identify hot spots for trespassing.

2/15/19: FRA published its 2018 4th Quarter report for Positive Train Control (PTC) implementation. According to the report, all railroads required to install PTC systems had met the December 31, 2018 deadline or submitted requests for a final two‐year extension.

11/21/18: The Federal Railroad Administration (FRA) released Positive Train Control (PTC) data for the 2018 3rd Quarter. The data listed five railroads at risk of not meeting PTC requirements or qualifying for alternative schedules, a list later updated to four after Amtrak reached the 95 percent hardware installation requirement that FRA used to classify at‐risk railroads.

10/3/18: The Senate Commerce Committee held a hearing on the current status of PTC. With the 2018 deadline approaching, U.S. Senators sought answers from FRA regarding the next steps and possible scenarios for those rails that may not qualify for an extension.

9/17/18: House Transportation and Infrastructure Committee (T&I) Ranking Member, Rep. DeFazio (D‐OR), and House Railroads Subcommittee Ranking Member, Rep. Capuano (D‐MA) wrote their opposition to allowing rail workers from Mexico to operate trains in the U.S. in a letter to Transportation Secretary Chao, which was joined by 25 other Members. The letter comes after Kansas City Southern Railway (KCSR) requested a waiver excluding them from certain federal safety requirements.

9/13/18: GAO released a report on the status of PTC implementation. It found that as of June 30, 2019, many of the 40 railroads were still installing PTC equipment. It also found that outside of the large freight railroads, many were lacking progress in the later stages of their implementation plans, especially with regard to revenue service demonstration (RSD), which only eight railroads had reportedly initiated. The report found that 32 railroads, or the operator of their track, intended to apply for an extension, which would have a max deadline of December 31, 2020. GAO reported that FRA had taken some steps that were recommended by the GAO in March and had begun to inform on the requirements necessary to receive an extension past December 31, 2018. Rulemaking, Adjudication, 2/14/18: The Pipeline and Hazardous Materials Safety Administration (PHMSA), coordinating with the FRA, issued a final rule. The Policymaking, Decision, Event or rule requires railroads with segments used by High Hazard Flammable Trains (HHFTs) to develop and submit a Comprehensive Oil Key Report Spill Response Plan (COSRP). Specifically, the rule will expand and modernize requirements for COSRP and require railroads to provide HHFT operation information with State and tribal emergency response teams. The rule will go into effect on August 13, 2019. 26 of 122

2/6/19: H.R. 543, which was introduced by Rep. Sires (D‐NJ), passed the U.S. House. This bill requires the FRA, when initiating a comprehensive safety assessment on an intercity or commuter railroad, to notify the House T&I Committee, Senate Commerce Committee, and the Members of Congress representing that state in which the railroad operates within ten days of initiating the assessment. It also requires that the report, once completed, be presented to the House T&I Committee, Senate Commerce Committee, and all Members of Congress representing the state of which the railroad operates within 90 days.

1/11/19: Rep. Blumenauer (D‐OR) introduced H.R. 510. This bill would make the railroad track maintenance credit for short line railroads permanent. The bill was introduced in the House Committee on Ways and Means, where it awaits further action.

12/7/18: The Federal Railroad Administration (FRA) issued a final rule extending a stay on system safety program (SSP) plan requirements for commuter and intercity passenger railroads until September 4, 2019.

11/21/18: FRA published a final rule titled, "Passenger Equipment Safety Standards; Standards for Alternative Compliance and High‐Speed Trainsets." This new rule amends the Passenger Equipment Safety Standards by adding a new tier (tier III), allowed to reach a max speed of 220 miles per hour (mph) and share a right‐of‐way with freight and other passenger equipment when traveling under 125 mph, to its speed‐and‐safety rating system. The rule also updates crashworthiness and occupant protection performance requirements and mph limits for the previous two tiers and sets specific tier III minimum safety standards. The rule will go into effect on January 22, 2019.

11/20/18: FRA issued a Safety Advisory recommending, on top of regulatory requirements, industry best practices to allow for safe operation during temporary signal suspensions. Recommendations can be found here.

8/29/18: FRA issued a final rule on hours of service laws. The rule aims to ease the burden on railroads with fewer than 400,000 employee‐hours annually by providing a method, lower than current electronic recordkeeping requirements, that utilizes electronic signature‐based tracking on automatically created records.

27 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION Meeting of May 3, 2019

STAFF REPORT

Item 3.8 INFORMATION Agreement with Union Pacific Railroad Company, Inc. (UPRR) for Preliminary Engineering of the Sunol Main Street Quad Gate

Background: This project is for a Preliminary Engineering Agreement with UPRR for installation of four quadrant gates at the public crossing near 11882 Main Street in Sunol, California. The proposed work includes civil infrastructure improvements, installation of new gates and crossing arms, and connection via underground conduit to UPRR Signal Cabinet. In connection with the project, San Joaquin Regional Rail Commission (SJRRC) considers it necessary for the successful advancement of the project for UPRR to collaborate in the development of the project by performing the following:

• Preliminary Engineering and other related services • Development of Cost Estimates • Review of the project’s preliminary layouts • Submit current train and switching moves

SJRRC agrees to reimburse UPRR for its expenses and actual costs that are incurred for collaborating in the development of the project’s preliminary engineering and other preliminary activities. UPRR has estimated that these preliminary engineering and other preliminary costs will be Fifty Thousand Dollars ($50,000.00).

Fiscal Impact: Costs associated with the Contract are identified in the San Joaquin Regional Rail Commission/ACE/SJJPA Fiscal Year 2018/2019 Capital Budget.

Recommendation: This an informational item. There is no action requested.

28 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION Meeting of May 3, 2019

STAFF REPORT

Item 3.9 INFORMATION Agreement for a Three-Year and Two-Month Contract with Two One-year Options for Cloud Hosted Voice Over Internet Protocol (VoIP) Phone System to Jive Communications, Inc. for an Amount Not-To-Exceed $60,000 total from May 1, 2019 through June 30, 2022

Background: SJRRC acquired the current phone system hardware and software, Cisco VoIP solutions, back in 2013. The hardware and software are outdated by current standards as more current phone systems utilize cloud-based VoIP phone service solutions which do not require an extensive technical background to implement. The system will reach the end of its useful life and will no longer be supported after June 2019. With a growing agency and program, a more advanced phone system using cloud technology that is capable of a “plug and play” setup will create a more efficient and productive work environment for the agency.

Request for Proposal (RFP) and Selection Process: On January 8, 2019, San Joaquin Regional Rail Commission (SJRRC) released a Request for Proposals for the solicitation of a Cloud Hosted Voice Over Internet Protocol (VoIP) Phone System, with proposals due on February 12, 2019. As a result of the solicitation, SJRRC received proposals from the following firms:

• Jive Communications, Inc. • Maverick Networks, Inc. • Maclaren Partners, LLC • CMS • Synectic Technologies • TPX Communications • Vertical Communications, Inc.

Of the proposals received, two (2) were deemed non-responsive. The remaining five (5) proposals were evaluated. Proposals were evaluated by a panel consisting of four (4) SJRRC representatives; the Legislative & Executive Coordinator, Operations Superintendent, Customer Service Department Lead and Information Technology Consultant.

Of the five (5) scored proposals, four (4) were invited for interviews with the panel. Proposers were evaluated on presentation, and responses to the selection panel’s questions. After the interview, staff deemed RSG the most responsive and responsible proposer.

29 of 122 The contract to be awarded is for an amount not-to-exceed $60,000 for the initial term of the agreement. The breakdown is below:

Fiscal Year Contract Amount 18/19 (May-June) $15,868.56 19/20 $12,376.80 20/21 $12,376.80 20/22 $12,376.80 Contingency $7,000.00

The two one-year options are at the sole discretion of SJRRC and any cost for the option- years will be negotiated in advance.

Fiscal Impact: Costs associated with the first two months of this Agreement are identified in the SJRRC/ACE Fiscal Year in the Professional Services – Communications line. Future year’s costs will be brought before the Board for consideration as part of the annual Budget approval process.

Recommendation: This is an information only item. Contracts within the Executive Director’s Expenditure Authority be reported to the Board. There is no action.

30 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION Meeting of May 3, 2019

STAFF REPORT

Item 3.10 ACTION Accept Independent Auditors’ Report for Fiscal Year 2017/2018

Background

A Summary of Auditors’ Results for FY 2017/2018 can be found on page 57 of the Independent Auditors’ Report.

31 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION

ANNUAL FINANCIAL REPORT

FOR THE FISCAL YEAR ENDED

June 30, 2018

Prepared by:

Fiscal Department

32 of 122 This page is intentionally blank.

33 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION TABLE OF CONTENTS JUNE 30, 2018

INTRODUCTORY SECTION

Organizational Chart…………………………………………………………………………………...... 3 List of Elected and Appointed Officials………………………………………………………………….. 4

FINANCIAL SECTION

Independent Auditors' Report……………………………………………………………………….…….. 5

Management's Discussion and Analysis…………………………………………………………………... 7

Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position ...... 15 Statement of Activities...... 16

Fund Financial Statements: Balance Sheet...... 17 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ...... 18 Statement of Revenues, Expenditures, and Changes in Fund Balance ...... 19 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance to the Statement of Activities...... 20 Proprietary Fund: Statement of Net Position ...... 21 Statement of Revenues, Expenses, and Changes in Fund Net Position ...... 22 Statement of Cash Flows...... 23 Notes to the Basic Financial Statements ...... 25

Required Supplementary Information: Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual (GAAP Basis) ...... 48 Note to the Required Supplementary Information...... 50

Other Reports: Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards ...... 51

Single Audit Reports and Schedules: Independent Auditors' Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by Uniform Guidance ...... 53

Schedule of Expenditures of Federal Awards ...... …55

34 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION TABLE OF CONTENTS JUNE 30, 2018

Notes to the Schedule of Expenditures of Federal Awards ...... 56

Schedule of Findings and Questioned Costs

I. Summary of Auditors' Results...... 57 II. Financial Statement Findings ...... 58 III. Federal Award Findings and Questioned Costs ...... 58

Summary Schedule of Prior Audit Findings...... 59

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San Joaquin Regional Rail Commission

Executive Director

Director of Operations Director of Capitol Projects Director of Fiscal Services & Administration

Executive Legislative Coordinator

Maintenance Facility Manager of Regulatory & Compliance Superintendent Officer Manager of Community Manager of Regional Human Resources/ Administrative Operations Controller Engagement & Marketing Initiatives Payroll Coordinator Coordinator

Assistant Maintenance Assistant Manager of Customer Service, Safety & Marketing Relations And Senior Grants Senior Accountant Fiscal Assistant Office Manager Facility Superintendent Security Coordinator Senior Planner Senior Accountant Reporting & Ticketing Rail Maintenance Operations Outreach Planner Coordinator Coordinator Compliance Program Lead (2) Facility

Planning Maintenance Mechanical Officer Onboard Passenger Facility Watchman Contracts & Office Manager Analyst Compliance Staff Accountant Supervisor Service Agents (7) (Fred) Community Agency Fiscal & Lead Grants Headquarters Outreach Planning Coordinator Maintenance Transportation Customer Service/Station Liaison Ticket Sales Representative Technician Specialists (2) Contracts & Lead Staff Marketing Compliance Accountant Assistant Specialist Maintenance Customer Service/Station Assistant (3) Ticket Sales Fiscal Assistant (3)

Special Groups Coordinator

Color Denotes Percentage 91-100% 81-90% 71-80% 61-70% 51-60% 41-50% 31-40% 21-30% 11-20% 6-10% 1-5% 0% Dedicated to the SJJPA:

36 of 122 San Joaquin Regional Rail Commission List of Elected and Appointed Officials June 30, 2018

Elected Officials

Chair Bob Steve Dresser City of Lathrop

Vice Chair Christina Fugazi City of Stockton

Commissioner Bob Johnson City of Lodi

Commissioner Debby Moorhead City of Manteca

Commissioner Bob Elliot San Joaquin County

Commissioner Leo Zuber City of Ripon

Commissioner Scott Haggerty Alameda County

Commissioner John Marchand City of Livermore

Appointed Officials

Ex-Officio Dennis T. Ajar California Department of Transportation Ex-Officio Andrew Chesley San Joaquin Council of Governments Ex-Officio Donna DeMartino San Joaquin Regional Transit District Ex-Officio Bill Zoslocki Stanislaus Council of Governments Executive Director Stacey Mortensen San Joaquin Regional Rail Commission

37 of 122 INDEPENDENT AUDITOR’S REPORT

Board of Commissioners San Joaquin Regional Rail Commission Stockton, Ca Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, and each major fund of San Joaquin Regional Rail Commission (Commission) as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the Commission’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, and each major fund of the Commission, as of June 30, 2018, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

3031 W. March Lane ▪ Suite 133 S ▪ Stockton CA 95219 Phone: (209) 473-2001 Fax: (209) 473-1761 www.kempercpa.com 38 of 122 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 7–14 and 48–50 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Commission’s basic financial statements. The introductory section is presented for purposes of additional analysis and is not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. The schedule of expenditures of federal awards is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory section has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 26, 2019, on our consideration of the Commission’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Commission’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Commission’s internal control over financial reporting and compliance.

Kemper CPA Group Certified Public Accountants and Consultants

Stockton, CA March 26, 2019

39 of 122 6 MANAGEMENT'S DISCUSSION AND ANALYSIS

40 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2018

As management of the San Joaquin Regional Rail Commission (Commission), we offer readers of the Commission's financial statements this narrative overview and analysis of the financial activities of the Commission for the fiscal year ended June 30, 2018. The Commission is a joint powers authority (JPA) established by the County of San Joaquin (County), and the cities of Lodi, Stockton, Escalon, Ripon, Manteca, Lathrop, and Tracy. The primary mission of the Commission is to address the preservation and improvement of the rail infrastructure for passenger rail service, which will provide regional economic and environmental benefits, as well as operating the ACE Service.

The Commission was formally established on May 1, 1995. Effective July 1, 2003, The Commission became the designated owner, operator and policy-making body for the ACE Service in accordance with the Cooperative Services Agreement, which superseded and rescinded the prior Joint Powers Agreement of May 15, 1997, which created the Altamont Commuter Express Authority. As the designated owner of the ACE Service the Commission took title to all of the assets and assumption of the liabilities that were previously under ownership of the Altamont Commuter Express Joint Powers Authority, which has been dissolved. On October 23, 2003, a Special Voting Memorandum to the SJRRC JPA was approved which provides specifically for two special voting commissioners to be appointed by the Alameda County Transportation Commission (ACTC), who may participate and vote as a part of SJRRC.

This section of the Commission's basic financial statements presents a discussion and analysis of the Commission's financial performance during the fiscal year ended June 30, 2018.

FINANCIAL HIGHLIGHTS

 The assets of the Commission exceeded liabilities at the close of fiscal year 2017-18 by $154,380,342 (net position). Of the net position amount, $22,257,864 in unrestricted net position is available to meet ongoing obligations; and $4,346,269 in restricted net position must be used only for debt service, capital acquisitions, and transportation. The remaining amount of $127,776,209 is the net investment in capital assets.

 The Commission’s charges for services increased by $928,842, due to fare and ridership increases. Operating grant revenues decreased by $2,310,453. Capital grants and contributions increased by $12,674,946 due increased capital additions compared to previous year. Expenses increased in fiscal year 2017-18 by $2,049,248 primarily resulting from increases in, depreciation, fuel, contract services, salaries, professional services, and other expenses, which were partially offset by reductions in costs for insurance, advertising, facilities maintenance and office expenses. The combined factors noted above resulted in an increase in the Commission's total net position of $11,388,941.

OVERVIEW OF THE FINANCIAL STATEMENTS

The discussion and analysis in this section is intended to serve as an introduction to the Commission's basic financial statements. The Commission's basic financial statements comprise three components: 1) government- wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. This report also contains other supplementary information in addition to the basic financial statements.

Government-wide financial statements are designed to provide readers with a broad overview of the Commission's finances, using accounting methods similar to those of a private-sector business. These statements provide both long-term and short-term information about the Commission's overall financial status.

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The Statement of Net Position presents information on all the Commission's assets and liabilities as of the end of the fiscal year, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Commission is improving or deteriorating.

The Statement of Activities presents information on how net position changed during the fiscal year, with revenues and expenses by major type or function. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods.

Both of the government-wide financial statements distinguish functions of the Commission that are primarily financed with intergovernmental revenues (governmental activities) from other functions that are intended to recover a significant portion of the costs through user fees and charges (business-type activities). The governmental activities of the Commission include administration and project management. The ACE Service represents the only business-type activity of the Commission.

The government-wide financial statements can be found on pages 15 and 16 of this report.

Fund financial statements – A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Commission, like other State and local governments, uses fund accounting to ensure and demonstrate compliance with financial related legal requirements. The Commission has governmental funds (special revenue funds) and an enterprise fund.

Governmental fund – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, the governmental funds focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the Commission's near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the governmental near-term financing decisions. Both the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balance, provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The Commission utilizes the General Fund (governmental fund) to account for the general and administrative functions of the Commission (e.g., administration and project management). The ACE Service is an enterprise fund and accounts for the activities associated with operating the ACE train.

The Commission adopts an annual appropriated budget for the governmental funds. A budgetary comparison statement has been provided for the General and Measure K Funds to demonstrate compliance with this budget.

The basic governmental fund financial statements can be found on pages 17 through 20 of this report.

Proprietary fund – The Commission maintains the ACE Service enterprise fund to account for the activities associated with operating the ACE train. Enterprise funds are used to report the same functions presented as business type activities in the government-wide financial statements. The enterprise fund provides the same type of information as the government-wide financial statements, only in more detail.

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The proprietary fund financial statements can be found on pages 21 through 24 of this report.

Notes to the basic financial statements – The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the basic financial statements can be found on pages 25 through 47 of this report.

GOVERNMENT –WIDE FINANCIAL ANALYSIS

As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the Commission, total net position of governmental and business-type activities (assets in excess of liabilities) were $154,380,342 at June 30, 2018.

A summary of changes in net position from the prior year to the current year are as follows:

San Joaquin Regional Rail Commission Net Position June 30, 2018

Governmental Activities Business-Type Activities Total

2018 2017 2018 2017 2018 2017 Current & other assets $ 4,059,209 $ 4,211,205 $ 34,522,215 $ 22,066,115 $ 38,581,424 $ 26,277,320 Capital assets, net 12,089,221 12,173,644 166,903,642 160,709,493 178,992,863 172,883,137 Total assets 16,148,430 16,384,849 201,425,857 182,775,608 217,574,287 199,160,457

Long-term liabilities 100,046 110,078 46,655,593 48,614,198 46,755,639 48,724,276 Current and other liabilities 658,227 625,788 15,780,079 6,818,992 16,438,306 7,444,780 Total liabilities 758,273 735,866 62,435,672 55,433,190 63,193,945 56,169,056

Net position: Investment in capital assets 12,089,221 12,173,644 115,686,988 107,586,175 127,776,209 119,759,819 Restricted - - 4,346,269 5,115,966 4,346,269 5,115,966 Unrestricted 3,300,936 3,475,339 18,956,928 14,640,277 22,257,864 18,115,616 Total net position $ 15,390,157 $ 15,648,983 $ 138,990,185 $ 127,342,418 $ 154,380,342 $ 142,991,401

Governmental Activities

Capital acquisitions or capital asset related adjustments of $286,071 were recorded for buildings in the Governmental Activities during fiscal year 2017-18. The recording of depreciation expense was the only other item affecting capital assets of Governmental Activities in fiscal year 2017-18.

In fiscal year 2015-16 SJRRC was contracted to serve as the managing agency for the San Joaquin Joint Powers Authority (SJJPA). The Authority is responsible for the administration and managing the operation of the existing rail service in the 365-mile San Joaquin Rail service route from Bakersfield to Oakland (San Joaquin Rail Service).

Financial transactions related to management of SJJPA were recorded in the Governmental Activities in fiscal year 2017-18. These SJJPA related activities consisted of funds advanced for payroll and Cabral Station expenses totaling $248,706, of which a total of $83,624 was retired during 2017-18 fiscal year, and the balance of $165,082 in 2018-19 fiscal year.

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Business-Type Activities

Capital assets (net of accumulated depreciation) increased $8,100,813 from the prior year primarily due to the locomotive purchases (construction in progress) and the PTC installation, and Natomas – Stockton and Lathrop– Ceres extensions. Restricted net position decreased by $769,697 over the prior year due to increased disbursements from funds received in previous years for PTC installation. Unrestricted net position increased by $4,316,651 from the previous year due to increased fare revenues, increased intergovernmental revenues due to increased capital expenditures mentioned above.

San Joaquin Regional Rail Commission Changes in Net Position For the Year Ended June 30, 2018

Governmental Activities Business-Type Activities Total

Revenues: 2018 2017 2018 2017 2018 2017 Program revenues: Charges for services $ - $ - $ 9,828,061 $ 8,899,219 $ 9,828,061 $ 8,899,219 Operating Grants and Contributions 670,706 853,842 13,813,994 15,941,311 14,484,700 16,795,153 Capital Grants and Contributions 54,069 - 20,535,818 7,914,941 20,589,887 7,914,941 General revenues: Unrestricted investments 17,964 8,506 155,703 33,179 173,667 41,685 Other 1,787 69,102 1,963,972 929,141 1,965,759 998,243 Total revenues 744,526 931,450 46,297,548 33,717,791 47,042,074 34,649,241

Expenses: Administration and project management 1,003,352 1,043,778 - - 1,003,352 1,043,778 ACE Service - - 34,019,398 31,929,724 34,019,398 31,929,724 Total liabilities 1,003,352 1,043,778 34,019,398 31,929,724 35,022,750 32,973,502

Changes in net position before extraordinary items (258,826) (112,328) 12,278,150 1,788,067 12,019,324 1,675,739

Extraordinary items - - (630,383) (237,800) (630,383) (237,800) Changes in net position (258,826) (112,328) 11,647,767 1,550,267 11,388,941 1,437,939 Net position - beginning 15,648,983 15,761,311 127,342,418 125,792,151 142,991,401 141,553,462 Net position - ending $ 15,390,157 $ 15,648,983 $ 138,990,185 $ 127,342,418 $ 154,380,342 $ 142,991,401

Governmental Activities

A decrease in net position of $258,826 is mainly due to charges for depreciation expense in the amount of $370,494. The reduction in net position was mainly due to capital outlay of $286,071 from which $201,818 were paid from fund balance.

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Business-Type Activities

Net position in the business-type activities of the Commission for fiscal year 2017-18 increased by $11,647,767. The following are significant factors that affected net position: Charges for services increased by $928,842 due to ridership increases. Operating grant revenues decreased by $2,127,317 and other revenues increased by $1,034,831 which includes $900,000 insurance payout for the March 2016 derailment. Capital grants and contributions increased by $12,620,877 due to the payments made towards the locomotive purchases. Expenses increased in fiscal year 2017-18 by $2,089,674. The following are the most significant expense increases: depreciation expense by $1,003,335 due to track extension capitalization, fuel $272,969, contract services by $637,238 other expenses increased by $176,132 which includes non-capitalizable capital expenses.

FINANCIAL ANALYSIS OF THE COMMISSION'S FUNDS

As noted earlier, the Commission uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements.

Governmental Funds

General Fund - The General Fund is the primary administrative fund of the Commission. At June 30, 2018, the unassigned fund balance was $3,404,435, while total fund balance was $3,460,074. The Commission's fund balance decreased by $183,850 for the fiscal year ended June 30, 2018. Administration and project management expenditures increased by $226,205, primarily because of a slight increase in salaries and benefits, services and supplies, a larger increase in capital outlay for the WP building paid with fund balance; offset by a decrease in maintenance and security.

Proprietary Fund

ACE Enterprise Fund - The Commission's proprietary fund, the ACE Enterprise Fund, provides the same type of information found in the government-wide financial statements, except in more detail. In fiscal year 2017-18, non- operating grants, contributions and other revenues increased by $11,529,846. This net increase came primarily from increased intergovernmental revenues of $10,752,128, local operating assistance of $124,319 and other revenue of $943,992 which were offset by decreased in sales and use tax of $ $290,593. The increase in intergovernmental revenues came primarily from the state TIRCP and SB132 awards for the locomotive purchase and wayside power projects. There was a modest increase in local revenues from Santa Clara VTA of $118,324 followed by a decrease from BAAQMD of $15,717. In addition, other revenues increased by the $900,000 due to insurance reimbursement for the March 2016 derailment. The overall increase in operating grants, contributions and other revenues was offset by the decrease in sales tax; primarily from LTF and STA increase of $1,520,414 offset by a reduction in Measure B and BB (operations and capital) of $73,217 and a reduction in Measure K of $1,737,790.

In fiscal year 2017-18 ACE Enterprise Fund operating expenses increased by $2,197,075. This amount mainly represents the increase in depreciation expense cost due to putting in service the track extension, increase in fuel and other expenses. These increases were partially offset by decreases in insurance, facility maintenance, advertising and office expense. Non-operating expenses, specifically bonds interest expense, slightly decreased by $107,402 due to lower interest charges for fiscal year 2017-18.

Charges related to the extraordinary items caused by the ACE 10 derailment totaled $630,383 in fiscal year 2017-18. When increased fare revenues of $928,842 are combined with other financial activity as highlighted above, the increased change in net position of the Proprietary Fund for fiscal year 2017-18 was $11,647,767.

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GENERAL FUND BUDGETARY HIGHLIGHTS

For the fiscal year ending June 30, 2018 there were no amendments made to the General Fund operating budget. Budgeted Measure K revenues exceeded actual revenues by $458,124 primarily due to budgeted expenditures being allocated directly to SJJPA management expenses, resulting in lower costs. When actual Measure K related expenditures are less than budgeted revenues and expenditures, the SJRRC General Fund returns excess Measure K operating funds to the San Joaquin Council of Governments (SJCOG). Total actual Measure K related expenditures did not exceed total Measure K revenues in fiscal year 2017-18 and $458,124 were returned to SJCOG.

CAPITAL ASSETS

The Commission’s investment in capital assets for its governmental and business-type activities as of June 30, 2018, amounted to $176,324,440 (net of accumulated depreciation). The investment in capital assets consists primarily of, Rolling Stock-locomotive purchase and overhaul, and PTC, Equipment- Wayside Power, ACE Extension to Sacramento and Ceres, Cabral Station Neighborhood Revitalization Project, added a modular building at the Rail Maintenance Facility, Track Extension and e-ticketing.

The total increase in the Commission's investment in capital assets, before depreciation, for the year ended June 30, 2018, was $12,379,227, or 4.16%.

San Joaquin Regional Rail Commission Capital Assets June 30, 2018

Governmental Activities Business-Type Activities Total

Non-depreciable: 2018 2017 2018 2017 2018 2017 Land $ 2,820,449 $ 2,820,449 $ 9,199,194 $ 9,199,194 $ 12,019,643 $ 12,019,643 Capital spares - - 1,412,738 1,471,368 1,412,738 1,471,368 Construction in progress - - 20,845,813 25,641,372 20,845,813 25,641,372 Buildings not in service 274,967 63,283 - - 274,967 63,283 Future service enhancements - - 131,123 97,581 131,123 97,581 Depreciable: - - Equipment, furnishings and - - vehicles 68,967 68,077 8,261,065 7,901,255 8,330,032 7,969,332 Rolling stock - - 76,598,937 75,860,434 76,598,937 75,860,434 Trackage rights & - - improvements - - 87,042,143 71,474,482 87,042,143 71,474,482 Software 40,000 40,000 37,656 37,656 77,656 77,656 Building & layover facility 13,183,242 13,109,744 82,220,982 81,973,154 95,404,224 95,082,898 Multimodal & ACE Stations - - 8,125,025 8,125,025 8,125,025 8,125,025 Less: Accumulated - - depreciation (4,298,404) (3,927,909) (129,639,457) (123,730,349) (133,937,861) (127,658,258) Total $ 12,089,221 $ 12,173,644 $ 164,235,219 $ 158,051,172 $ 176,324,440 $ 170,224,816

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Major capital asset activity during the current year included the following:

 Increases in capital assets for the modular building, wayside power and locomotive overhaul.  New construction projects including the Natomas to Stockton and Lathrop to Ceres Extension  Initial payments for rolling stock locomotives  Additional repairs for car 3304 from the Niles Canyon derailment

LONG-TERM DEBT

Certificates of Participation - At the end of the current fiscal year, the Commission had total Certificate of Participation Debt outstanding of $29,266,869. The 2010 Series A-1 Certificates of Participation and 2010 Taxable Series A-2 Recovery Zone Economic Development Bonds are secured by a pledge of Measure K and farebox revenues.

Consolidated Note Payable – At the end of the current fiscal year, the Commission had an outstanding balance of $19,172,607 due to the San Joaquin Council of Governments (SJCOG). This note, which constitutes an advance of Measure K funds for capital projects, is secured by the Commission’s apportionment of future Measure K revenues.

San Joaquin Regional Rail Commission’s Outstanding Debt:

Business-Type Activities July 1, 2017 Additions Deletions June 30, 2018 Certificates of Participation 2010 A-1 $ 2,450,000 $ - $ 820,000 $ 1,630,000 Certificates of Participation 2010 A-2 27,990,000 - - 27,990,000 Deferred Issuance (Discounts)/Premiums (364,560) - (11,429) (353,131) Consolidated Note Payable 20,290,619 - 1,118,012 19,172,607 $50,366,059 $ - $1,926,583 $ 48,439,476

The Commission’s total debt decreased by $1,926,583, or 3.4% during the current fiscal year. The reasons for the decrease were principal payments for the consolidated Note payable of $1,118,012 and $820,000 for the Certificates of Participation 2010 A-1 offset by net amortization of premiums and discounts of $11,429.

The Commission issued no new debt in the current fiscal year, and all payments were made timely.

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ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND ACTIVITIES

The Commission is experiencing economic and political factors consistent with all of California. Valley Agencies have been working diligently over the last decade to create a vision for passenger’s rail expansion. The consolidation of efforts and resources has resulted in unprecedented state funding to expand the commuter and intercity rail programs in the region. Through a combination of over $400M from SB1 and SB132 and S500M from the Transit and Intercity Rail Capital Program (TIRCP) the San Joaquin rail services will be transformed. ACE will be extended in phases southward to Ceres and Merced and north to Sacramento and Natomas. Additionally, grants from the Bay Area Air Quality and Management District, San Joaquin Valley Air Pollution District, TIRCP and the Low Carbon Transit Operators program made possible to procure 4 new Tier IV locomotives. Sales tax revenues generated by Measure K and LTF are gradually improving as the general economy begins showing signs of recovery. Federal and other state grants continue to provide significant fiscal support for the Commission and ACE train operations, as well as expansion efforts. Other future economic factors expected to affect the Commission and the ACE operations include increased costs for track improvements and maintenance, insurance and debt service.

Economic and political factors will likely continue to present challenges; however, the Commission will continue to perform its responsibilities and leverage the enthusiastic local support of other agencies to provide improved, safe and reliable transportation for its passengers.

The work effort in 2018-2019 will focus on the continuation of major, multi-year capital projects and planning work for near-term improvements on the Altamont and Merced to Sacramento Corridors as well as Saturday service.

On July 1, 2015, the Commission was selected as the managing agency for the San Joaquin Joint Powers Authority (SJJPA) to support the SJJPA and the day-to-day oversight of the Amtrak San Joaquin passenger train and related bus services. The fiscal year 2018-19 budget for marketing and administration services of the SJJPA totals $3.8 million.

The total Capital Program for 2018-2019, approved by the Commission Board on June 1, 2018 is $241,328,476. Approximately $100 million was budgeted for Natomas-Stockton Extension and $65.8 million for Lathrop-Ceres Extension, $23.3 million for the purchase of 4 locomotives, $8.9 million for Platform extensions, $7.3 million for Track Extension, $4.6 million for Positive Train Control, $3.5 million for Rolling Stock, $1.8 million for the Cabral parking lot, $7.2 million for trackage right and maintenance, $4.1 million for debt payments, $2 million for Channel Street improvements, and $2.9 million for capital spares, safety and security projects vehicles and planning services. The fiscal year 2018-19 budget for capital and related transportation projects of the SJJPA totals $9.3 million.

The operating budget approved by the Commission Board on June 2, 2017 is $23,545,218. This operating budget reflects a net anticipated cost increase of approximately 4.8%, with an estimated 33% farebox recovery.

REQUESTS FOR INFORMATION

This financial report is designed to provide a general overview of the Commission's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Fiscal Department, San Joaquin Regional Rail Commission, 949 East Channel Street, Stockton, California.

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49 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION STATEMENT OF NET POSITION JUNE 30, 2018

Primary Go vernment Go vernmental Business-Type Activities Activities Total ASSETS Current Assets: Cash and cash equivalents $ 3,912,862 $ 13,285,543 $ 17,198,405 Receivables Accounts receivable, net of allowance - 35,056 35,056 Interest 12,366 63,612 75,978 Intergovernmental 78,342 16,561,134 16,639,476 Due from general fund - 5,743 5,743 Prepaid expenses 53,788 2,853,991 2,907,779 Inventory - 1,708,701 1,708,701 Deposits 1,851 8,435 10,286 Total Current Assets 4,059,209 34,522,215 38,581,424 Noncurrent Assets: Restricted cash and investments - 2,661,953 2,661,953 Restricted interest receivable - 6,470 6,470 Capital assets, non-depreciable 3,095,416 31,588,868 34,684,284 Depreciable capital assets, net of accumu lated depreciation 8,993,805 132,646,351 141,640,156 Total Noncurrent Assets 12,089,221 166,903,642 178,992,863 Total Assets 16,148,430 201,425,857 217,574,287 LIABILITIES Current Liabilities: Accounts payable 39,241 7,996,418 8,035,659 Accrued payroll 5,048 44,547 49,595 Deposits payable 4,560 750 5,310 Insurance premium payable 43,991 1,055,796 1,099,787 Intergovernmental payable 458,124 469,564 927,688 Due to proprietary funds 5,743 - 5,743 Accrued interest payable - 467,850 467,850 Unearned revenue 42,428 3,668,386 3,710,814 Current portion of long-term obligations 59,092 2,076,768 2,135,860 Total Current Liabilities 658,227 15,780,079 16,438,306 Noncurrent Liabilities: Certificates of participation - 28,416,868 28,416,868 Note payable - 18,054,595 18,054,595 Comp ensated absences 100,046 184,130 284,176 Total Noncurrent Liabilities 100,046 46,655,593 46,755,639 Total Liabilities 758,273 62,435,672 63,193,945 NET POSITION Net investment in capital assets 12,089,221 115,686,988 127,776,209 Restricted for: Debt service - 2,668,423 2,668,423 Capital projects - 519,386 519,386 Transportation - 1,158,460 1,158,460 Unrestricted 3,300,936 18,956,928 22,257,864 Total Net Position $ 15,390,157 $ 138,990,185 $ 154,380,342 15 The accompanying notes are an integral part of these financial statements. 50 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2018

Net (Exp ense) Revenue and Program Revenues Changes in Net Assets Operating Capital Primary Go vernment Charges for Grants and Grants and Go vernmental Business-Type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Primary Government: Go vernmental activities: Adminis tration and project management $ 1,003,352 $ - $ 670,706 $ 54,069 $ (278,577) $ - $ (278,577) Total Governmental Activities 1,003,352 - 670,706 54,069 (278,577) - (278,577)

Business-Type Activities: ACE Service 34,019,398 9,828,061 13,813,994 20,535,818 - 10,158,475 10,158,475 Total Business-Type Activities 34,019,398 9,828,061 13,813,994 20,535,818 - 10,158,475 10,158,475 Total Primary Go vernment $ 35,022,750 $ 9,828,061 $ 14,484,700 $ 20,589,887 (278,577) 10,158,475 9,879,898

General Revenues: Investment earnings 17,964 155,703 173,667 Other 1,787 1,963,972 1,965,759 Extraordinary items - (630,383) (630,383) Total General Revenues and Extraordinary Items 19,751 1,489,292 1,509,043 Change in Net Position (258,826) 11,647,767 11,388,941 Net position - beginning 15,648,983 127,342,418 142,991,401

Net position - ending $ 15,390,157 $ 138,990,185 $ 154,380,342

16 The accompanying notes are an integral part of these financial statements. 51 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2018

Total General Measure K Governmental Fund Fund Funds ASSETS

Cash and cash equivalents $ 3,454,738 $ 458,124 $ 3,912,862 Receivables Interest 12,366 - 12,366 Intergovernmental 78,342 - 78,342 Prepaid expenses 53,788 - 53,788 Deposit 1,851 - 1,851 Total Assets $ 3,601,085 $ 458,124 $ 4,059,209

LIABILITIES AND FUND BALANCE

Liabilities: Accounts payable $ 39,241 $ - $ 39,241 Accrued payroll 5,048 - 5,048 Insurance loan payable 43,991 - 43,991 Intergovernmental payable - 458,124 458,124 Due to proprietary fund 5,743 - 5,743 Deposits 4,560 - 4,560 Unearned Revenue 42,428 - 42,428 Total Liabilities 141,011 458,124 599,135

Fund Balance: Nonspendable: Prepaid items 53,788 - 53,788 Deposit 1,851 - 1,851 Unassigned 3,404,435 - 3,404,435 Total Fund Balance 3,460,074 - 3,460,074

Total Liabilities and Fund Balance $ 3,601,085 $ 458,124 $ 4,059,209

17 The accompanying notes are an integral part of these financial statements. 52 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2018

Fund balance of governmental funds $ 3,460,074

Amounts reported for governmental activities in the Statement of Net Assets are different because:

Capital assets, net of depreciation, used in governmental activities are not financial resources and, therefore, are not reported in the funds. 12,089,221

Compensated absences are not due and payable in the current period and, therefore, are not reported in the funds. (159,138)

Net position of governmental activities $ 15,390,157

18 The accompanying notes are an integral part of these financial statements. 53 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2018

Total General Measure K Governmental Fund Fund Funds REVENUES Sales and use taxes $ - $ 724,775 $ 724,775 Investment earnings 17,964 - 17,964 Other 1,787 - 1,787 Total Revenues 19,751 724,775 744,526

EXPENDITURES Current: Administration and project management: Salaries and benefits 314,083 - 314,083 Services and supplies 111,671 - 111,671 Maintenance and security 216,551 - 216,551 Capital Outlay 286,071 - 286,071 Total Expenditures 928,376 - 928,376

Excess of revenues over expenditures (908,625) 724,775 (183,850)

OTHER FINANCING SOURCES (USES) Transfer in 724,775 - 724,775 Transfers out - (724,775) (724,775) Total Other Financing Sources (Uses) 724,775 (724,775) -

Net change in fund balance (183,850) - (183,850)

Fund balance - beginning 3,643,924 - 3,643,924 Fund balance - ending $ 3,460,074 $ - $ 3,460,074

19 The accompanying notes are an integral part of these financial statements. 54 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2018

Net change in fund balance - total governmental funds $ (183,850)

Amounts reported for governmental activities in the Statement of Activities are different because:

Capital outlays are reported as expenditures in governmental funds. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount of current year depreciation and other capital asset activities in the current period.

Purchase of capital assets $ 286,071 Less current year depreciation (370,494) (84,423)

Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the funds.

Compensated absences 9,447

Change in net assets of governmental activities $ (258,826)

20 The accompanying notes are an integral part of these financial statements. 55 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION STATEMENT OF NET POSITION PROPRIETARY FUND JUNE 30, 2018 ACE Enterprise ASSETS Fund Current Assets: Cash and cash equivalents $ 13,285,543 Receivables Accounts receivable, net of allowance 35,056 Interest 63,612 Intergovernmental 16,561,134 Due from general fund 5,743 Prepaid expenses 2,853,991 Inventory 1,708,701 Deposits 8,435 Total Current Assets 34,522,215 Noncurrent Assets: Restricted cash and investments 2,661,953 Restricted interest receivable 6,470 Capital assets, non-depreciable 31,588,868 Depreciable capital assets, net of accumulated depreciation 132,646,351 Total Noncurrent Assets 166,903,642 Total Assets 201,425,857 LIABILITIES Current Liabilities: Accounts payable 7,996,418 Accrued payroll 44,547 Deposits payable 750 Insurance premium payable 1,055,796 Intergovernmental payable 469,564 Accrued interest payable 467,850 Unearned revenue 3,668,386 Current portion of long-term obligations 2,076,768 Total Current Liabilities 15,780,079 Noncurrent Liabilities: Certificates of participation 28,416,868 Note payable 18,054,595 Compensated absences 184,130 Total Noncurrent Liabilities 46,655,593 Total Liabilities 62,435,672 NET POSITION Net investment in capital assets 115,686,988 Restricted for: Debt service 2,668,423 Capital projects 519,386 Transportation 1,158,460 Unrestricted 18,956,928 Total Net Position $ 138,990,185

21 The accompanying notes are an integral part of these financial statements. 56 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUND FOR THE YEAR ENDED JUNE 30, 2018

ACE Enterprise Fund Operating revenues: Charges for services: Passenger fares $ 9,828,061

Operating expenses: Contract services 7,529,625 Salaries and benefits 3,073,603 Insurance 2,003,873 Depreciation 5,909,111 Shuttle service 1,100,714 Professional services 460,142 Fuel 1,177,594 Facility maintenance 792,124 Ticket programs 411,129 Safety programs 141,064 Lease and rentals 86,310 Capital access fee 3,242,516 Capital track maintenance 4,000,000 Equipment and parts 951,698 Advertising, printing, and programs 143,929 Office expenses, communications and travel 486,020 Other expense 283,065 Total Operating Expenses 31,792,517 Operating loss (21,964,456)

Nonoperating Revenues (Expenses): Nonoperating grants and contributions: Local operating assistance 3,456,001 Sales and use taxes 12,076,742 Intergovernmental revenue 18,817,069 Investment earnings 155,703 Ticket sales for others 90,838 Other revenue 1,873,133 Interest expense (2,226,880) Total Nonoperating Revenues (Expenses) 34,242,606

Income before extraordinary item 12,278,150

Extraordinary item - Derailment (630,383)

Change in Net Position 11,647,767

Net Position - Beginning 127,342,418

Net Position - Ending $ 138,990,185

22 The accompanying notes are an integral part of these financial statements. 57 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION STATEMENT OF CASH FLOWS PROPRIETARY FUND FOR THE YEAR ENDED JUNE 30, 2018

ACE Enterprise Fund CASH FLOWS FROM OPERATING ACTIVITIES Cash receipts from customers $ 9,837,270 Cash paid for employee services (3,080,484) Cash paid to suppliers for goods and services (16,758,211) Net Cash Used by Operating Activities (10,001,425)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Local operating assistance received 3,456,001 Sale and use taxes received 10,053,304 Intergovernmental receipts (6,051,563) Other nonoperating revenues 82,292 Ticket sales for others 90,838 Extraordinary items (630,383) Net Cash Provided by Noncapital Financing Activities 7,000,489

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital contributions 11,126,398 Intergovernmental receipts 6,836,194 Bond principal paid (1,916,766) Interest paid on debt (2,226,299) Other nonoperating revenues 1,790,841 Purchase of capital assets (12,034,528) Net Cash Provided by Capital and Related Financing Activities 3,575,840

CASH FLOWS FROM INVESTING ACTIVITES Investment earnings 120,798 Net Cash Provided by Investing Activities 120,798

Net Increase in Cash and Cash Equivalents 695,702

Cash and cash equivalents - beginning of year 12,589,841

Cash and cash equivalents - end of year $ 13,285,543

23 The accompanying notes are an integral part of these financial statements. 58 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION STATEMENT OF CASH FLOWS PROPRIETARY FUND FOR THE YEAR ENDED JUNE 30, 2018

Reconciliation of operating income (loss) to net cash provided (used) by operating activities:

Operating income (loss) $ (21,964,456) Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation and amortization 5,909,111 Changes in assets and liabilities (increase) decrease in Receivables 12,489 Inventory 5,485 Prepaid expenses 29,770 Increase (decrease) in Accounts payable and accrued expenses 6,129,455 Accrued payroll and benefits (4,857) Compensated absences (2,024) Deposit payable (3,280) Intergovernmental payable (113,118) Net cash used by operating activities $ (10,001,425)

24 The accompanying notes are an integral part of these financial statements. 59 of 122 NOTES TO THE BASIC FINANCIAL STATEMENTS

60 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. The Reporting Entity

The San Joaquin Regional Rail Commission (Commission) is a joint powers authority established by San Joaquin County (County), and the cities of Lodi, Stockton, Escalon, Ripon, Manteca, Lathrop, and Tracy. The primary purpose of the Commission is to address the preservation and improvement of the rail infrastructure for passenger rail service, which will provide regional economic and environmental benefits, as well as, operating the Altamont Corridor Express (ACE) Service. On November 2, 2012, the Board of Commissioners of the San Joaquin Regional Rail Commission approved a resolution adopting a new ACE acronym - Altamont Corridor Express and new ACE logo. The ACE Service had previously been called the Altamont Commuter Express.

The Commission was formally established on May 1, 1995. The Commission receives its funding from Measure K, Transportation Development Act (TDA) and federal and state grants. The ACE Service receives its funding from Measure K, contributions from the Alameda County Transportation Commission (ACTC) and the Santa Clara Transportation Authority (SCVTA) and passenger fares from the ACE Service. Measure K is the half-cent sales tax approved by San Joaquin County voters in 1990 and assessed in San Joaquin County to be used for the transportation improvement projects administered by the San Joaquin Council of Governments (SJCOG). TDA and STA funds are both Local Transportation Funds, one-quarter cent of the State sales tax, allocated by the SJCOG for public transportation and local streets and roads, and State Transit Assistance, funds budgeted by the State for public transit purposes. The Commission also receives funding for various projects from Federal and State grants.

The Commission does not exercise control over any other governmental agency or authority. The Commission is considered a primary government since it has a separate governing body, is legally separate, and is fiscally independent of other State or local governments.

Effective July 1, 2003, the Commission became the designated owner, operator, and policy making body for the ACE Service in accordance with the Cooperative Services Agreement, which superseded and rescinded the prior Joint Exercise of Powers Agreement of May 15, 1997, which created the Altamont Commuter Express Authority. As a designated owner of the ACE Service the Commission took title to all of the assets and assumption of the liabilities that were previously under ownership of the Altamont Commuter Express Joint Powers Authority, which has been dissolved. The ACE Service is reported as an enterprise fund in the Commission's basic financial statements.

B. Government-Wide Financial Statements

The government-wide financial statements report information on all of the non-fiduciary activities of the Commission. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from the business-type activities, which rely to a significant extent on fees and charges for support. The Commission's governmental activities include administration and project management. The Commission's business-type activities include the ACE rail service.

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are proprietary funds. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Grants and similar items are recognized as revenue in the period that all eligibility requirements imposed by the provider have been met.

25 61 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the Commissions' governmental and business-type activities. Direct expenses are those that are specifically associated with a program or function and, therefore are clearly identifiable to a specific function. Program revenues include 1) charges to customers who purchase or use the services provided by the ACE Service, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular segment or function. Investment earnings and other items not properly included among program revenues are reported instead as general revenues.

C. Measurement Focus, Basis of Accounting and Fund Financial Statement Presentation

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Commission considers revenues to be available if they are collected within 90 days of the end of the current fiscal period. Revenues considered susceptible to accrual primarily include sales tax revenues, State funds, Federal revenues, and interest. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, expenditures related to compensated absences and long-term debt are recorded only when payment is due.

The Commission reports the following major governmental funds:

The General Fund is used to account for all financial resources necessary to carry out basic governmental activities of the Commission that are not accounted for in the ACE Enterprise Fund.

The Measure K Special Revenue Fund is used to report funds from the San Joaquin County Measure K Sales Tax proceeds for the Commissions general operating expenses. Amounts that are unexpended at fiscal year end are repaid to the San Joaquin Council of Governments.

The Commission reports the following major enterprise fund:

The ACE Service Enterprise Fund accounts for the activities of the ACE commuter rail service. The commuter rail service was established between the cities of Stockton and San Jose to serve the residents and businesses of the surrounding area, contribute to improved air quality and reduce congestion within the Interstate 205, 580, 680, and 880 corridors.

Proprietary funds distinguish between operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services in connection with its principal ongoing operations. The principal operating revenue of the ACE Service is passenger fares. Operating expenses include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

When both restricted and unrestricted resources are available for use, it is the Commission's policy to use restricted resources first, then unrestricted resources as they are needed.

26 62 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

D. Cash and Cash Equivalents and Investments

For purposes of the accompanying Statement of Cash Flows, the enterprise fund considers all highly liquid investments with a maturity of three months or less when purchased, and their equity in the San Joaquin County Treasurer's investment pool, to be cash equivalents. The Commission participates in the common investment pool of San Joaquin County. Investments are recorded at fair value.

E. Interfund Transactions

In the fund financial statements, transactions that constitute reimbursements to a fund for expenditures/ expenses initially made from it that are properly applicable to another fund are recorded as transfers out in the reimbursing fund and as transfers in the fund that is reimbursed. Nonrecurring or non-routine permanent transfers of equity are also reported as transfers.

For internal accounting purposes, the Commission utilizes numerous funds, of which some are consolidated into a single reporting fund in the financial statements. Internal transfers and balances between such funds within the same reporting fund are eliminated for financial reporting purposes. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide presentation. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances".

F. Inventory

Inventory consists principally of tools and spare parts consumed in the normal transit operations of the ACE Enterprise Fund and are recorded at the lower of cost or market. Inventory is valued using the average cost method which approximates market and is recorded as an expense at the time the inventory item is consumed.

G. Deferred Outflows/Inflows of Resources and Unearned Revenues

In addition to assets, the Statement of Net Position and/or the balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of resources that applies to a future period (s) and therefore will not be recognized as an outflow of resources (expense/expenditure) until then. The Commission did not have any items that qualified for reporting in this category for the year ended June 30, 2018.

In addition to liabilities, the Statement of Net Position and/or the balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of resources that applies to a future period (s) and therefore will not be recognized as an inflow of resources (revenue) until that time.

H. Unearned Revenues

Unearned revenues in the Governmental Fund and Proprietary Fund financial statements represent receipts collected by the Commission for which sufficient services have not been provided to meet revenue recognition criteria. These items are also presented as unearned revenue on the Statement of Net Position. Unearned revenue totaled $3,710,814 for the fiscal year end June 30, 2018.

27 63 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

I. Intergovernmental Receivables

These amounts represent receivables with other Federal, State, and local governments.

J. Capital Assets

The Commission defines capital assets, as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. All capital assets are valued at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are valued at their estimated acquisition value on the date of donation. Assets contributed or transferred from other funds are valued at cost. On May 1, 2015, the SJRRC Board of Commissioners approved an expanded schedule of useful lives and depreciation terms in order to include the new Rail Maintenance Facility assets. Capital assets are depreciated over the following estimated useful lives on the straight-line basis:

 Office equipment – 3 to 5 years  Vehicles – 5 years  Shop equipment – 5 to 15 years  Rolling stock – 26 to 29 years  Track improvements – 10 years  Software – 5 years  ACE stations – 10 years  Maintenance and layover facilities – 40 to 50 years  Buildings – 40 to 50 years

K. Compensated Absences

It is the Commission's policy to permit employees to accumulate earned, but unused vacation and sick leave benefits. Upon separation from service with the Commission, it is the Commission's policy to pay employees for all unused accumulated vacation, floating holidays and compensatory time off. All vacation, floating holidays and compensatory time off is accrued and incurred in the government-wide financial statements. Compensated absences does not include accrued sick leave for employees who have not met the ten (10) years continuous service with SJRRC requirement, as referenced in Note 7.

L. Prepaid Expenses

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government–wide and fund financial statements.

28 64 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

M. Claims and Judgments

The Commission records a liability for litigation, judgments, and claims when it is probable that an asset has been impaired or a liability (including incurred but not reported) has been incurred prior to year-end and the probable amount of loss (net of any insurance coverage) can be reasonably estimated. In the fund financial statements, these liabilities, if any, are recorded in the ACE Service Enterprise Fund.

N. Net Position/Fund Balance

The government-wide financial statements utilize a net position presentation. Net Position is categorized as follows:

 Net Investment in capital assets – This category groups all capital assets, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of these assets reduce the net position balance.

 Restricted – This category represents external restrictions imposed by creditors, grantors, contributors, or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation.

 Unrestricted – This category represents net position of the Commission, not restricted for any project or other purpose.

The Commission has implemented Government Accounting Standards Board Statement No. 54 "Fund Balance Reporting and Governmental Fund Type Definition". This Statement provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government's fund balances more transparent. The following classifications describe the relative strength of the spending constraints:

 Nonspendable Fund Balance consists of funds that cannot be spent due to their form (e.g., inventories and prepaids) or funds that legally or contractually must be maintained intact.

 Restricted Fund Balance consists of funds that are mandated for a specific purpose as required by external parties, constitutional provisions, or enabling legislation.

 Committed Fund Balance consists of funds that are set aside for a specific purpose by the Commission's highest level of decision making authority (governing board). Formal action must be taken prior to the end of the fiscal year. The same formal action must be taken to remove or change the limitations placed on the funds.

 Assigned Fund Balance consists of funds that are set aside with the intent to be used for a specific purpose by the Commission's highest level of decision making authority (governing board) or a body or official that has been given the authority to assign funds. Assigned funds cannot cause a deficit in unassigned fund balance.

29 65 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

N. Net Position/Fund Balance (Continued)

 Unassigned Fund Balance consists of excess funds that have not been classified in the previous four categories. All funds in this category are considered spendable resources. This category also provides the resources necessary to meet unexpected expenditures and revenue shortfalls.

Authority to Commit Funds

The Commission's governing board serves as the Commission's highest level of decision making authority and will have sole authority for establishing constraints on the use of governmental fund balances classified as committed. Formal board action to establish, modify, or rescind fund balance commitments will require either board approved policy designations or a majority approved resolution acted on before June 30 of each fiscal year. Committed funds cannot be used for any other purpose unless likewise modified by formal action of the board. The committed amount subject to the constraint may be determined after June 30.

Authority to Assign Funds

The Commission's governing board has authority to set aside or designate authority to set aside funds as assigned for an intended purpose. The Board authorized the Executive Director as designee of the Board in identifying intended uses of funds and assigning residual balances. Any such assignments will be presented at regular financial and budget reporting periods. Board action to approve such financial and budget reports will represent ratification of any such assignments.

Order of Expenditure of Funds

When expenditures are incurred for purposes for which both restricted and unrestricted fund balances are available, restricted fund balance will be considered to have been spent first.

When expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications can be used, committed amounts should be reduced first, followed by assigned amounts and then unassigned amounts.

O. Local Operating Assistance

Amounts received from ACTC and SCVTA to fund the operations of the ACE Service.

30 66 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

P. Grants and Contributions

From time to time, the Commission receives Federal grants as well as contributions from individuals and private organizations. Revenues from grants and contributions (including contributions of capital assets) are recognized when all eligibility requirements, including time requirements are met. Grants and contributions may be restricted for either specific operating purposes or for capital purposes. Amounts that are unrestricted or that are restricted to a specific operating purpose are reported as nonoperating revenues. Amounts restricted to capital acquisitions are reported after nonoperating revenues and expenses.

Grant revenue on cost-reimbursement grants or contracts is recognized when the Commission requests reimbursement from granting agencies after the program expenditures have been incurred. As such, the Commission recognizes revenue and records a receivable for the reimbursement amount from the granting agency. Such grant programs are subject to independent audit under the Office of Management and Budget Circular A-133, Uniform Guidance, and review by grantor agencies. Such review could result in the disallowance of expenditures under the terms of the grant or reductions of future grant funds.

Q. Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

NOTE 2 – CASH, CASH EQUIVALENTS, AND INVESTMENTS

The Commission follows the practice of pooling cash and investments of all funds except for those required to be held by outside fiscal agents under the provisions of bond indentures. Interest income earned on the pooled cash and investments is allocated monthly to the various funds based on monthly cash balances.

Cash and investments as of June 30, 2018, are reported in the accompanying financial statements as follows:

Statement of Net Position: Cash and investments $17,198,405 Restricted cash and investments 2,661,953 Total cash and investments $19,860,358

Cash and investments as of June 30, 2018 consist of the following: Cash Cash in banks and on hand $ 126,678 Investments Cash and investments held in San Joaquin County Pool 17,071,727 Restricted cash and investments with fiscal agent 2,661,953 Total cash and investments $19,860,358

31 67 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 2 – CASH, CASH EQUIVALENTS, AND INVESTMENTS (CONTINUED)

Investments Authorized by the California Government Code

The table below identifies the investment types that are authorized for the Commission by the California Government Code.

This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the Commission, rather than the general provisions of the California Government Code.

Maximum Maximum Investment Types Authorized by State Law Maximum Percentage Investment Maturity of Portfolio* in One Issuer

Local Agency Bonds 5 years None None U.S. Treasury Obligations 5 years None None U.S. Agency Securities 5 years None None Bankers' Acceptances 180 days 40% 30% Commercial Paper 270 days 25% 10% Negotiable Certificates of Deposit 5 years 30% None Repurchase Agreements N/A None None Reverse Repurchase Agreements N/A None None Medium-Term Notes 5 years 30% None Mutual Funds N/A 20% 10% Money Market Mutual Funds N/A 20% 10% Mortgage Pass-Through Securities 5 years None None County Pooled Investment Funds N/A None None Local Agency Investment Fund (LAIF) N/A None None Supranationals 5 years 30% 5% *Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.

Investments Authorized by Debt Agreements

Investment of debt proceeds held by bond trustees is governed by provisions of the debt agreements, rather than the general provisions of the California Government Code. The table below identifies the investment types that are authorized for investments held by bond trustees. The table also identifies certain provisions of these debt agreement that address interest rate risk, credit risk, and concentration of credit risk.

Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value will be to changes in market interest rates. One of the ways the Commission manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. The Commission's investment policy, which conforms to the San Joaquin County investment policy, states that investment decisions are made with the intention of retaining the investment until maturity, thereby negating the ill effects of market interest rate fluctuations. 32 68 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 2 – CASH, CASH EQUIVALENTS, AND INVESTMENTS (CONTINUED)

Information about the sensitivity of the fair values of the Commission's investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the Commission's investments by maturity:

12 months 13 - 24 25 - 60 Investment Type Total or less months months

Held by fiscal agent: Bank of Stockton $ 126,678 $ 126,678 $ - $ - San Joaquin County Investment Pool 17,071,727 17,071,727 - - Held by bond trustee: US Government Securities 2,174,588 955,930 568,128 650,530 CAMP Investment Pool 487,365 487,365 - - Total $ 19,860,358 $ 18,641,700 $ 568,128 $ 650,530

Disclosure Related to Credit Risk

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by the California Government Code, the Commission's investment policy, or debt agreements, and the actual rating as of June 30, 2018, for each investment type:

Standard & Poor's Rating Investment Type Total AA+ AAAm Not Rated

Held by fiscal agent: Bank of Stockton $ 126,678 $ - $ - $ 126,678 San Joaquin County Investment Pool 17,071,727 - - 17,071,727 Held by bond trustee: US Government Securities 2,174,588 2,174,588 - - CAMP Investment Pool 487,365 - 487,365 - Total $ 19,860,358 $ 2,174,588 $ 487,365 $ 17,198,405

Custodial Credit Risk

Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the Commission's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits.

33 69 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 2 – CASH, CASH EQUIVALENTS, AND INVESTMENTS (CONTINUED)

Custodial Credit Risk (Continued)

The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure Commission deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

All deposits in financial institutions are fully collateralized in accordance with Section 53652 of the California Government Code. The California Government Code requires California banks and savings and loan associations to secure the Commission's deposits by pledging government securities as collateral. The Commission had a total of $124,703 deposited in financial institutions at year end.

As of June 30, 2018, the Commission held no deposits with financial institutions with a balance that exceeded Federal depository insurance limits. Deposits are fully collateralized in accordance with Section 53625 of the California Government Code.

Investment in San Joaquin County Pool

The Commission maintains cash balances in the San Joaquin County Treasury Investment Pool. The pool is non- SEC registered and is invested in accordance with California State Government Code and the San Joaquin County Treasurer's Investment Policy. California State Government Code requires the formation of an Investment Oversight Committee, which is charged with overseeing activity in the pool for compliance to policy and code requirements. To this end, the Oversight Committee reviews the monthly investment report prior to presentation to the County Board of Supervisors and causes an audit of investments to occur annually. The fair value of the Commission's shares in the San Joaquin County Pool is the same as the value of the pool shares. The Commission had a total of $17,071,727 invested in the San Joaquin County Investment Pool at June 30, 2018.

Investments in California Asset Management Program (CAMP)

The California Asset Management Program (CAMP) manages a significant portion of the Commission's investments. CAMP investment includes Federal agency bonds/notes and the CAMP Pool money market fund.

CAMP is a Joint Powers Authority formed to provide professional investment management services and allows the participants to combine the use of a money market portfolio with an individually managed portfolio. The money market portfolio offers daily liquidity and is rated AAAm by Standard and Poor's. To maintain the AAAm rating, the portfolio weighted average maturity may not exceed 60 days.

The CAMP Pool money market fund invests in short-term debt obligations issued or guaranteed by the U. S. government, its agencies, or instrumentalities, some of which may be subject to repurchase agreements. The Pool may also invest in commercial bank bills of exchange or time drafts, certificates of deposit and commercial paper. Funds in the Pool are invested in accordance with the prudent investor standard set forth in Section 53600.3 of the California Government Code.

34 70 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 2 – CASH, CASH EQUIVALENTS, AND INVESTMENTS (CONTINUED)

Investments in California Asset Management Program (CAMP) - (Continued)

Investments for the Commission are reported at fair value as determined by quoted market prices. Changes in the fair value of investments are included with all other investment income. Cash on deposit with the San Joaquin County Treasurer is invested as authorized by statutes.

Fair Value Measurements

The Commission categorizes the fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows:

Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Commission has the ability to access.

Level 2 — Inputs to the valuation methodology include:

 Quoted prices for similar assets or liabilities in active markets;  Quoted prices for identical or similar assets or liabilities in inactive markets;  Inputs other than quoted prices that are observable for the asset or liability;  Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 — Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Unobservable inputs reflect the Commission’s own assumptions about the inputs market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the Commission's own data.

Deposits and withdrawals in governmental investment pools are made on the basis of $1 and not fair value. Accordingly, the Commission’s proportionate share in these types of investments is an uncategorized input not defined as a Level 1, Level 2, or level 3 input.

35 71 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 2 – CASH, CASH EQUIVALENTS, AND INVESTMENTS (CONTINUED)

Fair Value Measurements (Continued)

As of June 30, 2018, the commission has the following recurring fair value measurements: Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Fair Value Measurements Identical Assets Inputs Inputs Investments by fair value level Fair Value (Level 1) (Level 2) (Level 3) Debt securities US Treasure Notes $ 2,174,588 $ - $ 2,174,588 $ - Total investments measure at fair value $ 2,174,588 $ - $ 2,174,588 $ -

Investments measured at fair value not subject to fair value hierarchy Bank of Stockton $ 126,678 San Joaquin County Investment Pool 17,071,727 CAMP Investment Pool 487,365 $19,860,358

NOTE 3 – CAPITAL ASSETS

Capital asset activity for the governmental activities for the year ended June 30, 2018, was as follows: Balance Balance June 30, 2017 Additions Retirements June 30, 2018 Go vernmental Activities Capital assets not being depreciated Land $ 2,820,449 $ - $ - $ 2,820,449 Buildings not in service 63,283 211,683 - 274,967 Total, capital assets not being depreciated 2,883,732 211,683 - 3,095,416

Capital assets being depreciated Equipment and vehicles 68,077 890 - 68,967 Buildings 13,109,745 73,498 - 13,183,242 Software 40,000 - - 40,000 Total, capital assets being depreciated 13,217,822 74,388 - 13,292,209

Accumulated depreciation Equipment and vehicles (54,758) (2,343) - (57,102) Buildings (3,833,151) (368,151) - (4,201,302) Software (40,000) - - (40,000) Total accumulated depreciation (3,927,909) (370,494) - (4,298,404) Total capital assets being depreciated, net 9,289,913 (296,106) - 8,993,805 Go vernmental Activities Capital Assets, net $ 12,173,645 $ (84,423) $ - $ 12,089,221

Depreciation expense totaling $370,494 was charged to administration and project management in the governmental activities. 36 72 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 3 – CAPITAL ASSETS (CONTINUED)

Capital asset activity for the business-type activities for the year ended June 30, 2018, was as follows: Balance Balance June 30, 2017 Additions Retirements Transfer June 30, 2018 Business-type activities Capital assets not being depreciated Land $ 9,199,194 $ - $ - $ - $ 9,199,194 Capital spares 1,471,368 - (58,630) - 1,412,738 Construction in progress 25,641,372 11,141,292 - (15,936,851) 20,845,813 Future service enhancements 97,581 33,542 - - 131,123 Total, capital assets not being depreciated 36,409,515 11,174,834 (58,630) (15,936,851) 31,588,868

Capital assets being depreciated Equipment, furnishings, vehicles 7,901,255 358,640 - 1,170 8,261,065 Rolling stock 75,860,434 476,750 - 261,753 76,598,937 Trackage rights and improvements 71,474,482 - - 15,567,661 87,042,143 Software 37,656 - - - 37,656 Maintenance and layover facilities 81,973,154 141,561 - 106,267 82,220,982 Demonstration platforms 3,514,682 - - - 3,514,682 Multi-modal and ACE stations 4,610,343 - - - 4,610,343 Total, capital assets being depreciated 245,372,006 976,951 - 15,936,851 262,285,808

Accumulated depreciation Equipment, furnishings, vehicles (2,499,731) (1,113,356) - - (3,613,087) Rolling stock (38,116,080) (2,697,808) - - (40,813,888) Trackage rights and improvements (70,788,381) (416,907) - - (71,205,288) Software (35,156) (1,500) - - (36,656) Maintenance and layover facilities (4,246,768) (1,643,257) - - (5,890,025) Demonstration platforms (3,514,682) (36,283) - - (3,550,965) Multi-modal and ACE stations (4,529,548) - - - (4,529,548) Total accumulated depreciation (123,730,346) (5,909,111) - - (129,639,457) Total capital assets being depreciated, net 121,641,660 (4,932,160) - 15,936,851 132,646,351 Business-type Activities, Capital Assets, net $ 158,051,175 $ 6,242,674 $ (58,630) $ - $ 164,235,219

Depreciation expense totaling $5,909,111was charged to ACE services in the business-type activities.

All assets summarized above are the property of the Commission, except track improvements that are owned by the Union Pacific Railroad (Railroad). However, in the event that the Commission and the Railroad mutually agree in the future to a purchase by the Commission of the tracks and/or operating land, the Commission is entitled to a credit against the purchase price for the property. The amount credited to the Commission is equal to the amortized cost of the track improvements paid for by the Commission as described in the trackage rights agreement. Trackage improvements are amortized over the trackage rights agreement period.

37 73 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 4 – LONG-TERM LIABILITIES

Summary of Long-Term Liabilities:

A summary of changes in long-term liabilities for the fiscal year ended June 30, 2018, is as follows: Balance Balance Due within Governmental Activities June 30, 2017 Additions Deletions June 30, 2018 one year

Compensated absences $ 168,585 $24,932 $ (34,379) $ 159,138 $ 59,092 Total Governmental Activities 168,585 24,932 (34,379) 159,138 59,092

Business-type Activities Certificates of Partic ipation 2010 A-1 2,450,000 - (820,000) 1,630,000 850,000 Certificates of Partic ipation 2010 A-2 27,990,000 - - 27,990,000 - Deferred Issuance (Discount)/Premium (364,560) - 11,428 (353,132) - Consolidated Note Payable 20,290,619 - (1,118,012) 19,172,607 1,118,012 Compensated Absences 285,095 54,573 (46,782) 292,886 108,756 Total Business-type Ac tivities 50,651,154 54,573 (1,973,366) 48,732,361 2,076,768 Total $ 50,819,739 $79,505 $ (2,007,745) $ 48,891,499 $ 2,135,860

Compensated Absences

As of June 30, 2018, the total compensated absences liability for the Commission's governmental activities and business-type activities is $159,138 and $292,886, respectively. Obligations for compensated absences of the governmental activities will be fulfilled by the General Fund whereas compensated absences of the business-type activities will be fulfilled by the ACE Enterprise Fund. All compensated absences are accrued when earned in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, as a result of employee separation and retirements.

Consolidated Note Payable

On June 6, 2014, the SJRRC Board approved an agreement with the San Joaquin Council of Governments (SJCOG) to consolidate two existing loans. In June 2017, SJCOG amended the loan terms to create a 20-year non-interest- bearing note with a balance including accrued interest of $20,290,619. Principle only payments are made each year on July 1. For the year ended June 30, 2018, the consolidated note payable balance was $19,172,607.

Certificates of Participation

On November 4, 2010, the Commission issued 2010 Certificates of Participation (COPS) Series A-1 in the amount of $7,535,000 for the ACE Maintenance Facility Project. The Commission also issued 2010 Taxable Series A-2 in the amount of $27,990,000 for the Recovery Zone Economic Development. The series A-2 certificates provide for a federal subsidy of 45% of the interest paid on the Bond to the issuer. To obtain the subsidy, the Commission must file a claim to the Internal Revenue Service (IRS) when an interest payment on the Bond is made. The total certificate issued was $35,525,000. The interest rates range from 2.50% to 4.00% for the Series A-1 and 7.54% to 7.64% for Series A-2. The Series A-1 certificate matures on May 1, 2020, and the Series A-2 will mature on May 1, 2040. The certificates were issued by the Commission to fund a portion of the construction of a new equipment maintenance and layover facility in Stockton, California. As of June 30, 2018, the Commission owed $29,620,000 and has a deferred issuance (discount)/premium of ($353,131) on the COPS.

38 74 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 4 – LONG-TERM LIABILITIES (CONTINUED)

The 2010 Series A-1 Certificates of Participation and 2010 Taxable Series A-2 Recovery Zone Economic Development Bonds are secured by a pledge of Measure K and farebox revenues. Farebox revenues are collected by the Commission in connection with the operation of commuter rail services of the ACE Enterprise Fund. The Commission has granted to the bond trustee a lien on and security interest in all right, title, and interest of the Commission in and to the farebox revenues and Measure K revenues allocated to and received by the Commission and provides that such lien and security interest will be prior in right to any other pledge, lien or security interest created by the Commission in the farebox revenues and Measure K revenues allocated to and received by the Commission. Debt service payments (principal and interest) made in the 2017-18 fiscal year totaled $3,034,419. Total Measure K and farebox revenues for fiscal year 2017-18 were $1,964,757 and $9,828,061, respectively.

Below is a schedule of the debt service for the Consolidated Loan and Certificates of Participation:

Year Ending Consolidated Note Payable 2010 A-1 Series COP 2010 A-2 Series COP June 30: Principal Interest Principal Interest Principal Interest

2019 $ 1,118,012 $ - $ 850,000 $ 65,200 $ - $ 2,122,013 2020 1,118,012 - 780,000 31,200 105,000 2,122,013 2021 1,118,012 - - - 920,000 2,113,988 2022 1,118,012 - - - 955,000 2,043,672 2023 1,118,012 - - - 995,000 1,970,682 2024 - 2028 5,590,060 - - - 5,650,000 8,645,048 2029 - 2033 5,590,060 - - - 6,940,000 6,301,462 2034 - 2038 2,402,427 - - - 8,505,000 3,453,698 2039 - 2040 - - - - 3,920,000 446,368 Total $ 19,172,607 $ - $ 1,630,000 $ 96,400 $27,990,000 $ 29,218,944

NOTE 5 – OPERATING LEASES

Parking Lot Lease The Commission leases industrial property in Stockton, California for the purpose and use as a parking lot. The annual lease payment for the Anita Merlo property was originally $10,500 and adjusts annually by the consumer price index, until the lease expiration date of June 30, 2033. Rental expenditures for the fiscal year ended June 30, 2018, were $16,233.

CalTrain Lease The Commission has entered into an operating lease with CalTrain to use a yard maintenance facility in San Jose, California. The eighth amendment of the lease became effective July 1, 2013. The annual lease payment for use of the yard maintenance facility (Peninsula Corridor) for year 2017 – 18 was $136,171, and recalculates annually to reflect actual costs until such time CalTrain cancels the lease on a 30 days' notice to the Commission, or the Commission successfully finds an alternative storage site. The current amended agreement expired June 30, 2018. The ninth amendment for CalTrain lease was signed September 20, 2018 and expires June 30, 2023. The facility is strictly for layover purposes and paid by the ACE Service.

39 75 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 5 – OPERATING LEASES (CONTINUED)

Altamont Pass Trackage Rights On June 6, 2014, the Commission Board adopted the fourth amendment to the Altamont Pass Trackage Rights Agreement. The term of the agreement was extended from January 1, 2014 until December 31, 2023. Annual payments in the amount of $3,242,516 are be due by January 31. The Commission paid $3,242,516 for trackage rights to Union Pacific Railroad (UPRR) in the fiscal year ended June 30, 2018. Altamont Pass Capitalized Maintenance Fund On June 6, 2014, the Commission Board adopted the fourth amendment to the Altamont Pass Trackage Rights Agreement. The term of the agreement was extended from January 1, 2014 until December 31, 2023. Annual payments in the amount of $1,000,000 per train per annum are due by January 31. The Commission paid $4,000,000 into the maintenance fund to Union Pacific Railroad (UPRR) in the fiscal year ended June 30, 2018. Office Equipment In addition, the Commission leases office copiers and other equipment. The costs for such leases were $42,014 for the year ended June 30, 2018. Future Minimum Lease Payment Future minimum lease payments required for these operating leases are as follows: Anita Altamont Merlo Caltrain Pass Altamont Ye ar Ending Parking Storage & Trackage Pass Capital Office June 30: Lot Trackage Rights Fund Equipment Total

2019 $ 16,233 $ 136,171 $ 3,242,516 $ 4,000,000 $ 39,320 $ 7,434,240 2020 16,233 136,171 3,242,516 4,000,000 39,320 7,434,240 2021 16,233 136,171 3,242,516 4,000,000 39,320 7,434,240 2022 16,233 136,171 3,242,516 4,000,000 - 7,394,920 2023-2027 81,165 136,171 3,242,516 4,000,000 - 7,459,852 2028-2032 81,165 - - - - 81,165 2033 16,233 - - - - 16,233 Total $ 243,495 $ 680,855 $ 16,212,580 $ 20,000,000 $ 117,960 $37,254,890

40 76 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 6 – RISK MANAGEMENT

The Commission is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets, errors and omissions, and natural disasters. The Commission purchases commercial insurance through an insurance agent, who obtains the appropriate insurance coverage needed by the Commission from insurance companies. Coverage provided by commercial insurance and excess coverage at June 30, 2018, is as follows:

Excess or Additional Commercial Insurance Coverage Type of Coverage (in aggregate) (in aggregate) Deductible

Railroad Liability Up to $200,000,000 per $1,000,000 per occurrence; occurrence $3,500,000 aggregate

Property Damage Up to $50,000,000 per Also includes earthquake $200,000 per occurrence (real and personal occurrence and flood with aggregate except $250,000 Flood and property including limit of $5,000,000 Earthquake, 5% of total railroad rolling stock insured value, min. of $250,000 each IOC-EQ

Automobile Up to $1,000,000 per Also includes uninsured $500 per occurrence occurrence motorists

Worker's Up to $1,000,000 per None Compensation occurrence

Employment Up to $2,000,000 for all $100,000 per occurrence Practice loss combined (including defense)

Crime Coverage Up to $500,000 for all $5,000 per occurrence loss combined

Fiduciary Coverage Up to $1,000,000 None Maximum aggregate limit of liability

All property is insured at full replacement value. To date, there have been no significant reductions in any of the Commission's insurance coverage, and no settlement amounts have exceeded commercial insurance coverage for the last three years.

41 77 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 7 – EMPLOYEE BENEFITS

Other Employee Benefits

Commission employees are granted vacation, holiday, merit, compensation time, and sick leave in varying amounts. In the event of termination, an employee is reimbursed for accumulated vacation at various rates. Upon retirement, an employee, having at least ten (10) years continuous service with the Commission, having unused accumulated sick leave, shall have the option to be paid a lump sum in an amount equivalent to 25% of his or her then current daily wage rate for each day of unused sick leave. As of June 30, 2018, accrued vacation, holiday, merit, comp time, and sick leave pay totaled $452,024.

Employee Retirement Plans

The Commission participates in a defined contribution pension plan through the Commission Retirement Plan, which is available to all employees who have attained 21 years of age. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. Employees are eligible to participate from the date of employment. Contributions to the plan are entrusted to the ICMA Retirement Corporation, which provides investment consultation and administration.

Contributions to the plan by the Commission are limited to 15% of compensation as determined by the Commission's Board of Directors. The Commission's contributions are fully vested after five years of continuous service. The Plan does not provide for employee contributions.

Plan provisions and contribution requirements for the retirement plan are established and may be amended by the Commission's Board of Directors. The Commission's total contributions to the retirement plan on behalf of employees were $322,286 for the year ended June 30, 2018. There was $16,589 paid for 2017-18 contributions from the ICMA Retirement Trust 401A Plan forfeiture reserves during the fiscal year ended June 30, 2018. Forfeiture reserves represent amounts paid into the 401A plan on behalf of employees that are forfeited by employees who leave service before they are fully vested in plan assets. These funds become available to the Commission for 401A retirement plan payments after various plan requirements are met. The balance of retirement payments was paid from current fiscal year revenues.

Additionally, the Commission provides a deferred compensation plan under Section 457 of the Internal Revenue Code. Under the Commission's deferred compensation plan, a participant can contribute a portion of his or her salary on a tax-deferred basis, pursuant to limitations set by statute. For all Senior Management Group employees, the Commission shall make a contribution to the deferred compensation plan equal to 2% of the employee's annual base salary. For all Management Group employees, the Commission shall make a contribution to the deferred compensation plan equal to 1% of the employee's annual base salary. The Commission's deferred compensation plan employee and employer contributions are entrusted to the ICMA Retirement Corporation, which provides investment consultation and administration. The Commission's total contributions to the deferred compensation plan on behalf of employees were $11,089 for the year ended June 30, 2018.

42 78 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 7 – EMPLOYEE BENEFITS (CONTINUED)

Employees Covered – At June 30, 2018, the following employees were covered by the benefit terms for each Plan:

Employee Benefit Plan 401 A 457 457 457

Active Employees 51 34 5 4 Class 1 Class Eligible Benefit vesting in service years 5 Years N/A N/A N/A Required employee contribution rate 0% 0% 0% 0% Required employer contribution rate 15% 0% 1% 2%

NOTE 8 – PUBLIC TRANSPORTATION MODERNIZATION, IMPROVEMENT, AND SERVICE ENHANCEMENT ACCOUNT (PTMISEA)

In November 2006, California voters passed a bond measure enacting the Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006. Of the $19.925 billion of State general obligation bonds authorized, $3.6 billion was set aside by the State as instructed by statute into the PTMISEA account. These funds are available to the California Department of Transportation for intercity rail projects and to transit operators in California for rehabilitation, safety or modernization improvements, capital service enhancements or expansions, new capital projects, bus rapid transit improvements or for rolling stock procurement, rehabilitation, or replacement. PTMISEA activity for the Commission as of and for the year ended June 30, 2018, is reported within the ACE Enterprise Fund as follows:

Cash Balance - July 1, 2017 $ 1,156,154 Revenues: Interest 22,418 PTMISEA funding 386,378 Expenses: Positive Train Control (911,965) Electronic Ticketing (1,171) Accounts receivable (396,327) Accounts payable 133,503 Fair market value adjustment 1,139 Cash Balance - June 30, 2018 $ 390,129

43 79 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 9 – INSURANCE PREMIUM PAYABLE

On March 1, 2018, the Commission entered into an insurance premium finance agreement with AFCO Premium Acceptance, Inc., to finance the insurance premiums due under the Commission's insurance policies as described in Note 6. The terms of the agreement required a down payment of $157,112, and 11 monthly payments of $157,112. Final payment is due on January 20, 2019. Total payments are $1,728,237 including interest. The annual interest rate is 4.21%. At June 30, 2018, the remaining balance outstanding was $1,099,787 and is reflected as a short term liability in the General Fund and ACE Services Enterprise Fund in the amounts of $43,991 and $1,055,796 respectively.

NOTE 10 – COMMITMENTS

Union Pacific

The Commission entered into a trackage agreement on August 11, 1997, with Union Pacific Railroad (Railroad) to secure the trackage rights from Stockton to San Jose for the initial commitment period of the ACE Service at a cost not to exceed $15,143,000 for capital improvements. The trackage rights agreement with the Railroad granted the Commission trackage rights for a period of five years beginning on the service commencement date. On December 5, 2003, the original trackage rights agreement was amended and extended for a period of ten years. The amended agreement expired on December 31, 2013. For consideration, the Commission agreed to pay the Railroad a capital access usage charge consisting of a lump sum payment of $5,000,000, and $1,810,049 for each additional year, thereafter. The payments are due to the Railroad no later than January 31 of each fiscal year. The payments are funded through Measure K revenues received from the SJCOG, and Federal Transit Administration Sec. 5307. The Commission and the Railroad each have the right to terminate the agreement upon sixty (60) days advance written notice. On June 6, 2014, the SJRRC Board adopted the fourth amendment to the Altamont Pass Trackage Rights Agreement.

The term of the agreement is extended from January 1, 2014 until December 31, 2023. Annual payments in the amount of $3,242,516 will be due by January 31. In addition, the Commission agreed to commit one million dollars per year per train per year ($4 mil) to a capitalized maintenance fund for track improvements. Track improvement projects require executed contracts between UPRR and the Commission and are anticipated to be funded with a combination of Federal, State and local grants.

CalTrain

The Commission secured an option to lease trackage rights from Peninsula Corridor Joint Powers Board (Caltrain) to operate the ACE Service in Santa Clara County. In July 2007, ACE entered into an amended agreement with CalTrain extending the trackage rights through June 2010. An extension of this agreement was executed on July 1, 2013, extending the trackage rights through June 2018. Another extension of this agreement was executed on September 20, 2018 extending the trackage rights through June 2023. Either party has the power to terminate the restated agreement without cause upon sixty (60) days advance written notice.

44 80 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 10 – COMMITMENTS (CONTINUED)

Agreements and Grants

Contracts with Herzog Transit Services

The Commission has extended its current agreement with Herzog Transit Services for the operation and maintenance of equipment for the ACE Service through June 2019. Total expenses billed to the Commission by Herzog for operating the rail service for the period ended June 30, 2018, was $7,996,476. Herzog contracts are adjusted annually in accordance with the change in the regional Consumer Price Index (CPI). Contract expenses with Herzog for the operation and maintenance of ACE service and other agreed upon services and capital projects are estimated at $9,640,657.

Contracts for Capital Projects

The Commission has entered into multi-year agreements with vendors for capital projects, which had not be completed or had been committed beyond fiscal year end June 30, 2018. The open commitment for these agreements for the period ended June 30, 2018, was approximately $35.8 million, of which $24.8 million was committed for locomotive and rail car procurement.

Contract with San Joaquin Joint Powers Authority (SJJPA)

In September 2012, Assembly Bill 1779 was passed, which provided for the creation of the San Joaquin Joint Powers Authority (Authority). On June 29, 2015, the Authority entered into a Joint Exercise of Powers Agreement with ten public transportation agencies (Agencies) to establish the San Joaquin Joint Powers Authority (Authority), a public instrumentality of the State of California. SJJPA was formed for the purpose of administering and managing the operation of the existing rail service in the 365 mile San Joaquin Rail service route from Bakersfield to Oakland (San Joaquin Rail Service).

On June 29, 2015, the Authority entered into an Interagency Transfer Agreement (ITA) with the State of California, Department of Transportation (State). The ITA provided for transfer of the responsibility for administration, managing and control of the operation of the San Joaquin Rail Service from the state to the Authority for an initial three-year term terminating June 30, 2019. In August 2018 the Authority and the State of California renewed the ITA for three years commencing August 1, 2018 and ceasing the third anniversary date, June 30, 2021, with two four-year options for renewal.

Effective October 4, 2013, the Authority entered into an Agreement with the Commission for Managing Agency Services in the Oversight of the San Joaquin Intercity Rail Service ("Agreement"). Per this Agreement, SJRRC, as Managing Agency, is engaged to provide marketing and administrative support to the Board for the benefit of the Authority. The Managing Agency is reimbursed by the Authority for actual expenses incurred in excess of those amounts paid directly by the Authority. The Agreement has been extended to June 30, 2019. The Board may then select the current Managing Agency or another rail transit agency to provide marketing and administrative support to the Board.

Marketing and administrative services and other operating expenses incurred by the Commission, the Managing Agency, on behalf of the Authority amounted to $282,706 for the year ended June 30, 2018. These advanced funds were partially repaid to the Managing Agency during the 2017-18 fiscal year and the remainder will be repaid in fiscal year 2018-19.

45 81 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 11 – CONTINGENCIES

Litigation

On March 7, 2016, an ACE Train derailment occurred that resulted in a number of legal claims. At this time, the probable outcome and potential liability from these claims has not yet been determined.

The Commission is the defendant in various other lawsuits and other claims arising in the ordinary course of its operations. It is the opinion of management and the Commission's legal counsel that the likelihood of the resolution of these matters resulting in a material adverse loss in the financial statements for the year ended June 30, 2018 is remote.

NOTE 12 – EXTRAORDINARY ITEMS

When a significant transaction or event occurs that is both unusual and infrequent it is considered an Extraordinary Item. On March 7, 2016, an ACE Train derailed in Niles Canyon, between Fremont and Sunol, which sent a train car into the creek near Palomares Road. This event resulted in the following Extraordinary Items: Claims for damages - A number of claims were settled and paid by the Commission and ACE for medical costs and property damages. Costs incurred for settlement of claims for the fiscal year end June 30, 2018 totaled $630,383. Cumulative claims for property and medical damages for the last three fiscal years total $1,074,149 and $395,457 for the vehicle restoration costs.

NOTE 13 – RECENT ACCOUNTING PRONOUNCEMENTS

GASB issued Statement No. 83 - Certain Asset Retirement Obligations: This statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that had legal obligations to perform future asset retirement activities, related to its tangible capital assets should recognize a liability based on the guidance in this Statement. The requirements of this Statement are effective for reporting periods beginning after June 15, 2018.

GASB issued Statement No. 84 - Fiduciary Activities: The Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. The requirements of this Statement are effective for reporting periods beginning after December 15, 2018.

GASB Statement No. 87 – Leases: This Statement requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provision of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financing of the right to use an underling asset. The requirements of this Statement are effective for reporting periods beginning after December 15, 2019.

GASB Statement No. 88 – Certain Disclosures Related to Debt: The primary objective of this Statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. The requirements of this Statement are effective for reporting periods beginning after June 15, 2018.

46 82 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE BASIC FINANCIAL STATEMENTS JUNE 30, 2018

NOTE 13 – RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

GASB Statement No.89 – Accounting for interest Cost Incurred before the End of Construction Period: This Statement establishes accounting requirements for interest cost incurred before the end of a construction period. The requirements for this Statement are effective for reporting periods beginning after December 15, 2019.

GASB Statement No. 90 – Majority equity interests: The primary objectives of the Statement are to improve the consistency and comparability of reporting a government’s majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. The requirements of this Statement are effective for reporting periods beginning after December 15, 2018.

47 83 of 122 REQUIRED SUPPLEMENTARY INFORMATION

84 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2018

Budgeted Amounts Va riance with Actual Final Budget Original Final Amounts Positive (Negative) REVENUES Sales and use taxes $ - $ - $ - $ - Intergovernmental revenues - - - - Investment earnings - - 17,964 17,964 Other revenues - - 1,787 1,787 Total Revenues - - 19,751 19,751

EXPENDITURES Current: Administration and project management: Salaries and benefits 450,142 450,142 314,083 136,059 Services and supplies 236,877 236,877 111,671 125,206 Maintenance, security and capital outlay 441,811 441,811 216,551 225,260 Other expense - - 286,071 (286,071) Total Exp enditures 1,128,830 1,128,830 928,376 200,454 Excess (deficiency) of revenues over (under) exp enditures (1,128,830) (1,128,830) (908,625) (2,037,455)

OTHER FINAINCING SOURCES (USES) Transfer in 1,128,830 1,128,830 724,775 (404,055) Transfers out - - - - Total Other Financing Sources (Uses) 1,128,830 1,128,830 724,775 (404,055)

Net change in fund balances $ - $ - (183,850) $ -

Fund balance - beginning 3,643,924

Fund balance - ending $3,460,074

See note to required supplementary information 48 85 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION MEASURE K SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2018

Budgeted Amounts Variance with Actual Final Budget Original Final Amounts Positive (Negative) REVENUES Sales and use taxes $1,128,830 $1,128,830 $724,775 $ (404,055) Intergovernmental revenues - - - - Investment earnings - - - - Other revenues - - - - Total Revenues 1,128,830 1,128,830 724,775 (404,055) EXPENDITURES Current: Administration and project management: Salaries and benefits - - - - Services and supplies - - - - Maintenance, security and capital outlay - - - - Other exp ense - - - - Total Exp enditures - - - - Excess (deficiency) of revenues over (under) exp enditures 1,128,830 1,128,830 724,775 (404,055) OTHER FINAINCING SOURCES (USES) Transfer in - - - - Transfers out (1,128,830) (1,128,830) (724,775) 404,055 Total Other Financing Sources (Uses) (1,128,830) (1,128,830) (724,775) 404,055

Net change in fund balances $ - $ - - $ -

Fund balance - beginning -

Fund balance - ending $ -

See note to required supplementary information 49 86 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 2018

NOTE 1 - BUDGET AND BUDGETARY ACCOUNTING

The Commission prepares and legally adopts a final budget on or before June 30, of each fiscal year for the General Fund. The Commission’s operations, commencing July 1st is governed by the proposed budget, adopted by the Commission’s Board in June of the prior fiscal year. Final budget revenues and expenditures represent the original adopted budget. There were no budget amendments during FY 2017-18. All budget increase, amendments, or transfers between major budget categories are submitted to the Board for approval, and the Executive Director has the authority to transfer funds within a major budget category. The legal level of budgetary control for the Commission is total expenditures. The budgetary data is on a basis of accounting consistent with accounting principles generally accepted in the United States of America.

50 87 of 122 OTHER REPORTS

88 of 122 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Board of Commissioners San Joaquin Regional Rail Commission Stockton, California

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, and each major fund of San Joaquin Regional Rail Commission (Commission), as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the Commission’s basic financial statements, and have issued our report thereon dated March 26, 2019. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered San Joaquin Regional Rail Commission’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Commission’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Commission’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

3031 W. March Lane ▪ Suite 133 S ▪ Stockton CA 95219 Phone: (209) 473-2001 Fax: (209) 473-1761 www.kempercpa.com 89 of 122 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Commission’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Kemper CPA Group LLP Certified Public Accountants and Consultants

Stockton, CA March 26, 2019

52

90 of 122 SINGLE AUDIT REPORTS AND SCHEDULES

91 of 122 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE

Board of Commissioners San Joaquin Regional Rail Commission Stockton, California

Report on Compliance for Each Major Federal Program We have audited San Joaquin Regional Rail Commission’s (Commission) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the Commission’s major federal programs for the year ended June 30, 2018. The Commission’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of the Commission’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Commission’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the Commission’s compliance. Opinion on Each Major Federal Program In our opinion, the Commission complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2018.

3031 W. March Lane ▪ Suite 133 S ▪ Stockton CA 95219 Phone: (209) 473-2001 Fax: (209) 473-1761 www.kempercpa.com 92 of 122 Report on Internal Control over Compliance Management of the Commission is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Commission’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Commission’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose.

Kemper CPA Group LLP Certified Public Accountants and Consultants

Stockton, CA March 26, 2019

54 93 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION SCHEDULE OF EXPENDITURE OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2018

Grantor/Oversight Federal CFDA Entity Identifying Federal Federal Grantor/Program Title Number Numb er Expenditures

U.S. DEPARTMENT OF TRANSPORTATION Direct Programs: Federal Transit Cluster: Federal Transit - Formula Grants: Section 5307 20.507 CA-2019-014-00 $ 3,052,923 Section 5307 20.507 CA-90-Z198-00 39,559 Section 5307 20.507 CA-2016-095-00 238,786 Section 5307 20.507 CA-2016-118-00 476,750 Subtotal Federal Transit --Formula Grants [1] 3,808,018 Pass through programs: Passed Through California Department of Transportation: Z400 Federal Funds 20.507 CML-6262-017 1,779 Passed Through Metropolitan Transportation Commission: MTC-5303 FTA Funds for Short Range Transit Plan (SRTP) 20.507 MTC 17-R-29-00 20,000 Total pass through programs: 21,779

Direct Programs: Subtotal 3,829,797 Federal Transit - Capital Investment Grants: Section 5337 20.525 CA-2019-019-00 2,664,327 Section 5337 20.525 CA-2016-094-00 1,777,014 Subtotal Federal Transit --Capital Investment Grants [1] 4,441,341 Total Department of Transportation - Federal Transit Cluster 8,271,138

TOTAL U.S. DEPARTMENT OF TRANSPORTATION 8,271,138

Total Exp enditures of Federal Awards $ 8,271,138

[1] Denotes a major program

See accompanying notes to schedule of expenditures of federal awards. 55 94 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2018

NOTE 1-BASIS OF PRESENTATION

The accompanying schedule of expenditures of federal awards (Schedule) includes the federal award activity of the Commission under programs of the federal government for the year ended June 30, 2018. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the Commission, it is not intended to and does not present the financial position, changes in net position, or cash flows of the Commission.

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years.

NOTE 3-INDIRECT COST RATE

The Commission has elected not to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.

NOTE 4-CATALOG OF FEDERAL DOMESTIC ASSISTANCE (CFDA)

The CFDA numbers included in the accompanying Schedule were determined based on program name, review of grant contract information and Office of Management and Budget's Catalog of Federal Domestic Assistance.

56

95 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2018

I. Summary of Audit Results

Financial Statements

Type of auditor's report: Unmodified Internal control over financial reporting: Material weakness(es) identified? No Significant deficiency identified that are not considered to be material weakness(es)? No Noncompliance material to financial statements noted? No

Federal Awards Internal control over major programs: Material weakness(es) identified? No Significant deficiency identified that are not considered to be material weakness(es)? No Type of auditor's report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR section 200.516(a)? No Identification of major programs: CFDA #20.507 and 20.525 - Federal Transit Cluster Dollar threshold used to distinguish between Type A and Type B programs was $750,000 Auditee qualified as low-risk auditee? Yes

FINDINGS - FINANCIAL STATEMENTS AUDIT None

FINDINGS AND QUESTIONED COSTS None

57

96 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2018

II. FINANCIAL STATEMENT FINDINGS

None reported

III. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

None reported

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97 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2017

II. FINANCIAL STATEMENT FINDINGS

None reported

III. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

None reported

59

98 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION Meeting of May 3, 2019

STAFF REPORT

Item 3.11 ACTION Approve a Resolution of the Board of Commissioners of the San Joaquin Regional Rail Commission Approving the Fiscal Year 2018-19 Transportation Development Act (TDA) Claim and Authorizing Submission by the Executive Director to the San Joaquin Council of Governments for Local Transportation Funds (LTF) and State Transit Assistance Funds (STA) for a Total of $6,343,285

Background: The Transportation Development Act (TDA) provides two sources of major funding for transportation in California: The Local Transportation Fund (LTF) and the State Transit Assistance (STA) fund. As a direct claimant for both LTF and STA funding from the San Joaquin Council of Governments (SJCOG), SJRRC has prepared a TDA claim for Fiscal Year 2018-19 funding and unclaimed funds from previous years for the following amounts:

Local Transportation Funds $3,857,762 State Transit Assistance Funds $2,485,523 Total Gross TDA Claim Amount $6,343,285 Less SJCOG Admin Fees $130,275 Less Previous Year Unexpended Carryover $788,467 Net 2018-19 SJRRC TDA Funds $5,424,543

The total amount for Operations is $6,338,350 and $4,935 for Capital.

Fiscal Impact: This TDA claim is consistent with the Fiscal Year 2018-19 SJRRC/ACE Operating and Capital Budget.

Recommendation: Approve a Resolution of the Board of Commissioners of the San Joaquin Regional Rail Commission Approving the Fiscal Year 2018-19 Transportation Development Act (TDA) Claim and Authorizing Submission by the Executive Director to the San Joaquin Council of Governments for Local Transportation Funds (LTF) and State Transit Assistance Funds (STA) for a Total of $6,343,285.

99 of 122 RESOLUTION SJRRC-R-18/19-30

RESOLUTION OF THE BOARD OF COMMISSIONERS OF THE SAN JOAQUIN REGIONAL RAIL COMMISSION APPROVING THE FISCAL YEAR 2018-19 TRANSPORTATION DEVELOPMENT ACT (TDA) CLAIM AND AUTHORIZING SUBMISSION BY THE EXECUTIVE DIRECTOR TO THE SAN JOAQUIN COUNCIL OF GOVERNMENTS FOR LOCAL TRANSPORTATION FUNDS (LTF) AND STATE TRANSIT ASSISTANCE FUNDS (STA) FOR A TOTAL OF $6,343,285

WHEREAS, the San Joaquin Regional Rail Commission is the owner operator of the Altamont Corridor Express (ACE) Service; and

WHEREAS, the State of California enacted the Transportation Development Act (TDA) in 1972 to provide funds for transportation needs each fiscal year; and

WHEREAS, the San Joaquin Regional Rail Commission is an eligible claimant of Transportation Development Act funds administered by the San Joaquin Council of Governments; and

WHEREAS, the San Joaquin Regional Rail Commission incorporates the Transportation Development Act funds into the approved FY2018-19 operating and capital budgets;

NOW, THEREFORE, BE IT RESOLVED that the Board of Commissioners of the San Joaquin Regional Rail Commission hereby approve the Fiscal Year 2018-19 Transportation Development Act claim and authorize submission by the Executive Director to the San Joaquin Council of Governments for Local Transportation Funds and State Transit Assistance Funds for a total of $6,343,285.

PASSED AND ADOPTED, by the Board of Commissioners this 3rd day of May 2019, by the following vote:

AYES: NOES: ABSTAIN: ABSENT:

ATTEST: SAN JOAQUIN REGIONAL RAIL COMMISSION

______STACEY MORTENSEN, Secretary CHRISTINA FUGAZI, Chair

100 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION Meeting of May 3, 2019

STAFF REPORT

Item 3.12 ACTION Approve a Resolution of the Board of Commissioners of the San Joaquin Regional Rail Commission Authorizing the Filing of Applications with the Federal Transit Administration, an Operating Administration of the United State Department of Transportation, for Federal Transportation Assistance Authorized by Chapter 53 of Title 49 of the United States Code and Any Other Federal Statutes Administered by the Federal Transit Administration

Background: Funding from the Federal Transit Administration (FTA) plays an important role in the operation of ACE service, ensuring funding is available for necessary projects such as the annual Capital Access Fee payment to Union Pacific Railroad. Chapter 53 of Title 49 of the United States Code (U.S.C.) outlines the various public transportation funding programs administered by the FTA, which includes the Urbanized Area Formula Program grants (“5307”) and State of Good Repair Program grants (“5337’), of which ACE receives an annual apportionment.

As part of the FTA’s efforts to safeguard agencies eligible to receive Federal funds, a resolution from the Board is required identifying the personnel responsible for grant and funding program oversight on behalf of the agency.

The attached resolution authorizes the Executive Director or designee to execute and file grant applications, the annual certifications and assurances, the grant and cooperative agreements, and to draw payments against available grant funding using FTA’s web system. The resolution applies both to funding outlined in 49 U.S.C. Chapter 53 and any other Federal statues authorizing activities administered by the FTA, which can include programs such as the Better Utilizing Investments to Leverage Development (BUILD) and Infrastructure for Rebuilding America (INFRA) discretionary grant programs.

The attached resolution fulfills the FTA requirement for designating personnel to administer FTA grant and funding programs.

Fiscal Impact: There is no fiscal impact; however, an updated authorizing resolution is required for new FTA grants for 5307 and 5337 funds to be executed.

101 of 122 Recommendation: Approve a Resolution of the Board of Commissioners of the San Joaquin Regional Rail Commission Authorizing the Filing of Applications with the Federal Transit Administration, an Operating Administration of the United State Department of Transportation, for Federal Transportation Assistance Authorized by Chapter 53 of Title 49 of the United States Code and Any Other Federal Statutes Administered by the Federal Transit Administration.

102 of 122 RESOLUTION SJRRC-R-18/19-31

RESOLUTION OF THE BOARD OF COMMISSIONERS OF THE SAN JOAQUIN REGIONAL RAIL COMMISSION AUTHORIZING THE FILING OF APPLICATIONS WITH THE FEDERAL TRANSIT ADMINISTRATION, AN OPERATING ADMINISTRATION OF THE UNITED STATE DEPARTMENT OF TRANSPORTATION, FOR FEDERAL TRANSPORTATION ASSISTANCE AUTHORIZED BY CHAPTER 53 OF TITLE 49 OF THE UNITED STATES CODE AND ANY OTHER FEDERAL STATUTES ADMINISTERED BY THE FEDERAL TRANSIT ADMINISTRATION

WHEREAS, the Federal Transit Administration has been authorized to provide funding to support public transportation under 49 U.S.C. Chapter 53;

WHEREAS, grants or cooperative agreements for Federal financial assistance will impose certain obligations upon the San Joaquin Regional Rail Commission and may require the San Joaquin Regional Rail Commission to provide the non-Federal share of transportation-related expenses supported with Federal financial assistance;

WHEREAS, the San Joaquin Regional Rail Commission is legally authorized under Federal, state, or local law to apply for and receive Federal assistance;

WHEREAS, the San Joaquin Regional Rail Commission has received authority from the Designated Recipient as defined at 49 U.S.C. 5302(4) to apply for and receive Urbanized Area Formula Program assistance authorized by 49 U.S.C. 5307.

WHEREAS, the San Joaquin Regional Rail Commission is required to provide certain certifications and assurances to the Federal Transit Administration at least annually;

NOW, THEREFORE, BE IT RESOLVED that the Board of Commissioners of the San Joaquin Regional Rail Commission hereby confirms:

1. That the Executive Director or designee is authorized to execute and file an application for Federal assistance on behalf of the San Joaquin Regional Rail Commission with the Federal Transit Administration for Federal assistance authorized by 49 U.S.C. Chapter 53 or any other Federal statutes authorizing activities administered by the Federal Transit Administration; 2. That the Executive Director or designee is authorized to execute and file with the Federal Transit Administration the annual certifications and assurances and other documents the Federal Transit Administration requires before awarding a Federal assistance grant or cooperative agreement; 3. That the Executive Director or designee is authorized to execute the grant and cooperative agreements with the Federal Transit Administration on behalf of the San Joaquin Regional Rail Commission; and

103 of 122 4. That the Executive Director or designee is authorized to draw payments against available grant funding using the ECHO web system or other Federal Transit Administration automated application used to request payments from grant awards.

PASSED AND ADOPTED, by the Board of Commissioners this 3rd day of May 2019, by the following vote:

AYES: NOES: ABSENT: ABSTAIN:

ATTEST: SAN JOAQUIN REGIONAL RAIL COMMISSION

______STACEY MORTENSEN, Secretary CHRISTINA FUGAZI, Chair

104 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION Meeting of May 3, 2019

STAFF REPORT

Item 3.13 ACTION Approve a Resolution of the Board of Commissioners of the San Joaquin Regional Rail Commission Authorizing the Executive Director to Accept and Sign Waiver of Potential and Actual Conflicts of Interest Letters with SJRRC Counsel, Lewis Brisbois Bisgaard & Smith LLP, Arising from Concurrent Representation of Union Pacific Railroad and San Joaquin Regional Rail Commission

Background: Currently Lewis Brisbois Bisgaard & Smith LLP (LBBS) is representing SJRRC in two (2) civil action cases. Union Pacific Railroad (UPRR) has retained LBBS to represent the railroad in relation to projects proposed by SJRRC to construct track and other facilities on UPRR property near the Robert J. Cabral Station in Stockton, CA. UPRR has also expressed the possibility of retaining LBBS for representation on projects related to ACE Saturday Service.

Under the rules of professional conduct and other laws that govern attorneys in California, LBBS cannot represent two clients at the same time, whether their interests are presently adverse or potentially adverse, unless both clients agree to waive any potential or actual conflicts arising from such concurrent representation in writing after having the opportunity to seek the advice of independent legal counsel.

SJRRC consulted with General Counsel, Neumiller and Beardslee, who concurred with LBBS.

Waiver letters will be provided on a project-by-project basis. UPRR has agreed that upon execution by SJRRC, UPRR will execute similar waivers of any potential and actual conflicts of interest arising from LBBS’ representation of UPRR while representing SJRRC in the SJRRC Actions related to the projects on UPRR property.

Fiscal Impact: There is no fiscal impact.

Recommendation: Approve a Resolution of the Board of Commissioners of the San Joaquin Regional Rail Commission Authorizing the Executive Director Accept and Sign Waiver of Potential and Actual Conflicts of Interest Letters with SJRRC Counsel, Lewis Brisbois Bisgaard & Smith LLP, Arising from Concurrent Representation of Union Pacific Railroad and San Joaquin Regional Rail Commission.

105 of 122 RESOLUTION SJRRC-R-18/19-32

RESOLUTION OF THE BOARD OF COMMISSIONERS OF THE SAN JOAQUIN REGIONAL RAIL COMMISSION AUTHORIZING THE EXECUTIVE DIRECTOR TO ACCEPT AND SIGN WAIVER OF POTENTIAL AND ACTUAL CONFLICTS OF INTEREST LETTERS WITH SJRRC COUNSEL, LEWIS BRISBOIS BISGAARD & SMITH LLP, ARISING FROM CONCURRENT REPRESENTATION OF UNION PACIFIC RAILROAD AND SAN JOAQUIN REGIONAL RAIL COMMISSION

WHEREAS, Lewis Brisbois Bisgaard & Smith LLP (LBBS) are current counsel for San Joaquin Regional Rail Commission (SJRRC) in two (2) civil cases; and

WHEREAS, Union Pacific Railroad (UPRR) has retained LBBS to represent UPRR in relation to a project proposed by SJRRC on UPRR property near the Robert J. Cabral Station in Stockton, CA; and

WHEREAS, Union Pacific Railroad (UPRR) has the potential to retain LBBS to represent UPRR in relation to a project proposed by SJRRC on UPRR property for the ACE Saturday Service; and

WHEREAS, LBBS requires that both parties execute waivers of potential and actual conflicts of interest related to projects proposed, as needed; and

WHEREAS, Union Pacific Railroad has agreed to execute similar waivers upon SJRRC’s execution of their waivers;

NOW, THEREFORE, BE IT RESOLVED that the Board of Commissioners of the San Joaquin Regional Rail Commission hereby Authorize the Executive Director Accept and Sign Waiver of Potential and Actual Conflicts of Interest Letters with SJRRC Counsel, Lewis Brisbois Bisgaard & Smith LLP, Arising from Concurrent Representation of Union Pacific Railroad and San Joaquin Regional Rail Commission

PASSED AND ADOPTED, by the Board of Commissioners this 3rd day of May 2019, by the following vote:

AYES: NOES: ABSTAIN: ABSENT:

ATTEST: SAN JOAQUIN REGIONAL RAIL COMMISSION

______STACEY MORTENSEN, Secretary CHRISTINA FUGAZI, Chair

106 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION Meeting of May 3, 2019

STAFF REPORT

Item 4 ACTION Approve a Resolution of the Board of Commissioners of the San Joaquin Regional Rail Commission Authorizing the Opening of the Public Comment Period Until June 7, 2019, for the Proposed Saturday Service Effective Summer 2019, and Setting a Public Hearing for Adoption of the ACE Saturday Service at the June 7, 2019 Rail Commission Meeting

Background: In December 2017, SJRRC approved the use of State Rail Assistance (SRA) funding to operate an ACE Saturday Service. The original concept of beginning Saturday Service was to coincide with the testing of Positive Train Control (PTC) toward the end of 2018 and beginning of 2019. However, due to initial on-time performance delays due to PTC implementation, the deployment of Saturday Service was put on hold until the later part of 2019.

Currently, staff is coordinating with Union Pacific (UP) and Caltrain to ensure a Summer 2019 start for Saturday Service. Saturday Service will include two (2) round trip 7-car trainsets from Stockton to San Jose.

Below is a tentative schedule pending approval from UP and Caltrain:

Westbound (Tentative) Station 1st Train 2nd Train Departure Departure Stockton 7:25 8:40 Lathrop/Manteca 7:44 8:59 Tracy 7:56 9:11 Vasco Road 8:25 9:40 Livermore 8:30 9:45 Pleasanton 8:38 9:53 Fremont 9:00 10:15 Great America 9:18 10:37 Santa Clara 9:25 10:45 San Jose 9:37 10:57

Eastbound (Tentative) Station 1st Train 2nd Train Departure Departure San Jose 15:50 17:06 Santa Clara 15:55 17:11 Great America 16:09 17:25 Fremont 16:25 17:41 Pleasanton 16:48 18:04 Livermore 16:57 18:13

107 of 122 Station 1st Train 2nd Train Departure Departure Vasco Road 17:02 18:18 Tracy 17:31 18:47 Lathrop/Manteca 17:43 18:59 Stockton 18:07 19:23

Saturday Service Adoption Schedule: As part of the Rail Commission’s Title VI program, a public comment period is required as Saturday Service qualifies as a major service change. A proposed schedule is included below:

May 3, 2019 : Open Public Comment Period until June 7, 2019

June 7, 2019 : Public Comment Period Closes : Open Public Hearing : Receive Comments : Close Public Hearing : Consider Adopting a Resolution Implementing Saturday Service

Summer 2019 : Implementation of Saturday Service

Staff will assemble the comments received prior to mail out for the June 7, 2019 Board meeting and provide all comments received after the mail out date to the Board during the staff presentation.

Comments can be sent to [email protected] or through the ACE website and social media channels.

Recommendation: Approve a Resolution of the Board of Commissioners of the San Joaquin Regional Rail Commission Authorizing the Opening of the Public Comment Period Until June 7, 2019, for the Proposed Saturday Service Effective Summer 2019, and Setting a Public Hearing for Adoption of the ACE Saturday Service at the June 7, 2019 Rail Commission Meeting.

108 of 122 RESOLUTION SJRRC-R-18/19-33

RESOLUTION OF THE BOARD OF COMMISSIONERS OF THE SAN JOAQUIN REGIONAL RAIL COMMISSION AUTHORIZING THE OPENING OF THE PUBLIC COMMENT PERIOD UNTIL JUNE 7, 2019, FOR THE PROPOSED SATURDAY SERVICE EFFECTIVE SUMMER 2019, AND SETTING A PUBLIC HEARING FOR ADOPTION OF THE ACE SATURDAY SERVICE AT THE JUNE 7, 2019 RAIL COMMISSION MEETING

WHEREAS, the Altamont Corridor Express (ACE) currently runs 4 daily weekday round trips; and

WHEREAS, the San Joaquin Regional Rail Commission received State Rail Assistance (SRA) funding to begin operating ACE Saturday Service; and

WHEREAS, ACE will operate two round trips on Saturdays contingent upon operating agreements and schedule approvals with Union Pacific Railroad (UP) and Caltrain.

NOW, THEREFORE, BE IT RESOLVED that the Board of Commissioners of the San Joaquin Regional Rail Commission hereby authorizes the opening of the Public Comment Period Until June 7, 2019, For The Proposed Saturday Service Effective Summer 2019, And Setting A Public Hearing For Adoption Of The Ace Saturday Service At The June 7, 2019 Rail Commission Meeting.

PASSED AND ADOPTED, by the Board of Commissioners this 3rd day of May 2019, by the following vote:

AYES: NOES: ABSENT: ABSTAIN:

ATTEST: SAN JOAQUIN REGIONAL RAIL COMMISSION

______STACEY MORTENSEN, Secretary CHRISTINA FUGAZI, Chair

109 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION Meeting of May 3, 2019

STAFF REPORT

Item 5 ACTION Approve Three (3) Resolutions of the Board of Commissioners of the San Joaquin Regional Rail Commission Authorizing the Executive Director to Negotiate and Enter into Multiple Consultant Contracts and Establish Pre-Qualified On-Call Consultant Lists for a Period of Five (5) Years for the Capital Projects Program

Action 1. Approve Consultant Contracts for Specific Projects for Services and Not- To-Exceed Amounts provided in Table 1 in the Staff Report. (Regular Voting Members)

Action 2. Approve Consultant Contracts for Specific Projects for Services Not-To- Exceed Amounts provided in Table 2 in the Staff Report. (Regular and Special Voting Members)

Action 3. Adopt and Establish a Pre-Qualified On-Call Consultant List for a Period of Five (5) Years, May 3, 2019 Through May 3, 2024 provided in Table 3 in the Staff Report. (Regular and Special Voting Members)

Background: With the passage of both Senate Bill (SB) 132 and the Transit and Intercity Rail Capital Program (TIRCP) the “Valley Rail Project Program” was created. The Valley Rail Project is a program within the Capital Projects Program with many separate projects that will expand the ACE and San Joaquin Services. The expansion will create new passenger/commuter rail services from Sacramento to Merced with connections to both the existing ACE Service to San Jose, and San Joaquins service to Bakersfield and Oakland. The Valley Rail Project will also provide a vital link for the California High Speed Rail Project from Bakersfield to Merced, and for an ACE to BART connection for the Tri-Valley (Valley Link Project).

Consultant Selections: On January 15, 2019 SJRRC released a Request for Qualifications (RFQ) to solicit services for On-Call Professional Consulting Services for twenty-nine (29) identified projects needing the following Services: A. Project Development B. Right of Way C. Construction Management D. Rail Engineering Services

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The selected consultants would perform services for the Capital Projects Program and associated projects, including Valley Rail. The RFQ listed projects for immediate contracting services and as such created a “One Step” process as a Consultant’s response in their Statement of Qualifications (SOQ) can follow the requirements for submitting on a specific project and thus satisfies the requirement of an RFP. To establish a shortlist of pre-qualified On-Call Consultants a “Two Step” process will be followed and a cost proposal or RFP will be required for each project when services for specific projects arise. This ensures a competitive bid process and is used in support of the projects listed in the RFQ.

In response to the RFQ, thirty-three (33) SOQ responses were received by the RFQ deadline of February 22, 2019. SJRRC’s Contracts and Procurement Department reviewed the SOQs and deemed thirty (30) out of the thirty-three (33) were responsive in meeting the RFQ requirements. An RFQ consultant selection review panel was formed to review and evaluate the proposals. The review panel consisted of public agency representatives from the Cities of Modesto, Manteca, Lathrop, Caltrans, San Joaquin Council of Governments and SJRRC.

Immediate Contracting Services: The review panel members individually reviewed, scored, and ranked proposals per the RFQ scoring criteria, and submitted to SJRRC’s Contract and Procurement Department. Staff reviewed the scores and proposals and determined the highest scoring most qualified firm for each of the projects. As a result of the extensive review effort, the highest scoring/ranked consulting firms were selected for the project(s) they proposed on. SJRRC staff is seeking to immediately contract with these firms to continue progressing these projects.

Establish Pre-Qualified On-Call Consultant List: To expedite contracting needs for the Capital Projects Program, SJRRC is seeking to establish a list of pre-qualified consultants for a period of five (5) years. The effort to establish a list of pre-qualified firms is to solicit future bids from those consultants on the pre-qualified list.

Following a similar review process as the Immediate Contracting Services portion of the RFQ, review panel members individually reviewed and scored the proposals. As a continuation of the qualification process to establish a list of pre-qualified consultants, the highest scoring firms were invited to make oral presentations. Based on scoring, twenty-three (23) firms were invited to interview with some firms interviewing for more than one service. Overall, twenty-seven (27) interviews were held over a period of five days in the Cabral Station Board Room. During the interview and oral presentation

111 of 122 phase of the RFQ, firms were allowed to earn additional points for the review panel to add to the SOQs written scores. The final score is based on both written and presentation scores for final ranking. Based on the final score and ranking, SJRRC staff is recommending that twenty (20) firms be listed on the SJRRC Pre-Qualified On-Call Consultant List.

Summary: In order to better define the actions being requested in this staff report, the below tables are being used to identify the category, Consultant name, and individual contract not to exceed amounts.

The sum of all contracts from each category for immediate services represents the individual negotiated contract amounts and equals the total not to exceed amount being requested from the Board in this staff report. In the event any of the listed contracts require amendments, they will be brought back to the SJRRC Board as individual contract amendments.

The Pre-Qualified On-Call Consultant List table does not include contract amounts or separate cost proposals. As needed over the next five years, in support of the Valley Rail Project program and associated projects, SJRRC will request separate cost proposals or initiate Request for Proposals (RFP) to solicit services from the On-Call Consultant list. These contracts will be presented to the Board for approval as separate contracts.

Table 1. Immediate Contracting Services (Regular Voting Members) Category A. Project Development Services Not-To-Exceed Project Consultant Amount North Lathrop Transfer Station at Sharpe Army AECOM Technical Services, Inc. $2,414,600 Depot Modesto Station Platform AECOM Technical Services, Inc. $1,148,600 Ceres Layover Facility AECOM Technical Services, Inc. $1,048,860* Madera Station Relocation AECOM Technical Services, Inc. ** Natomas/Sacramento Airport Station & AECOM Technical Services, Inc. $500,000 Layover Facility Lathrop Wye Connection HDR Engineering, Inc. $2,005,000 Kjeldsen, Sinnock & Neudeck, Robert J. Cabral Station Expansion $333,117 Inc. Platform LDA Partners, Inc. $900,000 Ceres Station Mark Thomas & Company, Inc. $1,826,833 North Elk Grove Station Mark Thomas & Company, Inc. $401,600 Platform O’Dell Engineering $1,302,282*

112 of 122 Category A. Project Development Services Rail Surveyors and Engineers, Tracy ACE Station Improvements $285,432 Inc. Total Not-To-Exceed Amount for Project Development Services: $12,166,324 *Approve consultant recommendation but hold until schedule verification. Will report back to the Board on status when schedule confirmation and ready to contract. **The Madera Station Relocation will be approved by the SJJPA Governing Board due to it not being a shared station for both ACE and the San Joaquins.

Category B. Right of Way Services Contracts for Right of Way Services were not awarded at this time. The approved Established On- Call Consultants List will be utilized as needed. Total Not-To-Exceed Amount for Right of Way Services: $0.00

Category C. Construction Management Services Not-To-Exceed Project Consultant Amount Stockton Cabral Track Extension NV5, Inc. $1,884,040 Total Not-To-Exceed Amount for Construction Management Services: $1,884,040

Category D. Rail Engineering Support Services Not-To-Exceed Project Consultant Amount North Lathrop Transfer Station at Sharpe Army Depot Lathrop Wye Connection Manteca Transit Center Platform Modesto Station Platform Ceres Station Pennino Management Ceres Layover Facility Group Ripon Station Platform Robert J. Cabral Station Expansion Tracy ACE Station Improvements North Elk Grove Station Natomas/Sacramento Airport Station and Layover Facility Stockton Cabral Track Extension Lathrop/Manteca Shuttle Pullout Total Not-To-Exceed Amount for Rail Engineering Support Services: $2,813,000

113 of 122 Table 2. Immediate Contracting Services (Regular and Special Voting Members) Category A. Project Development Services Not-To-Exceed Project Consultant Amount Sunol Quiet Zone Quad Gates Rail Surveyors and Engineers, Inc. $80,000 Fremont Platform Extension Rail Surveyors and Engineers, Inc. $281,400 Total Not-To-Exceed Amount for Project Development Services: $361,400

Category B. Right of Way Services Contracts for Right of Way Services were not awarded at this time. The approved Established On- Call Consultants List will be utilized as needed. Total Not-To-Exceed Amount for Right of Way Services: $0.00

Category C. Construction Management Services Contracts for Construction Management Services were not awarded at this time. The approved Established On-Call Consultants List will be utilized as needed. Total Not-To-Exceed Amount for Construction Management Services: $0.00

Category D. Rail Engineering Support Services Not-To-Exceed Project Consultant Amount Sunol Quiet Zone Quad Gates Lockwood, Andrews & Newnam, Inc. $38,361 Fremont Platform Extension Lockwood, Andrews & Newnam, Inc. $45,813 Total Not-To-Exceed Amount for Rail Engineering Support Services: $84,174

Table 3. Established Pre-Qualified On-Call Consultant List (Regular and Special Voting Members) Pre-Qualified On-Call Consultant List will be for a period of five years (5), from May 3, 2019 to May 3, 2024. The pre-qualified consultants are listed in order of rank and by service they will be providing: D. Rail B. Right of C. Construction Rankings A. Project Development Engineering Way Management Services Pennino AECOM Technical Paragon PGH Wong 1. Management Services, Inc. Partners Ltd. Engineering, Inc. Group Property Rail Surveyors and 2. HDR Engineering, Inc. Specialists, Inc. NV5, Inc. Engineers, Inc. (dba CPSI)

114 of 122 D. Rail B. Right of C. Construction Rankings A. Project Development Engineering Way Management Services Overland, Lockwood, Pennino 3. T.Y. Lin International Pacific & Cutler, Andrews & Management Group LLC Newnam, Inc. Kleinfleder 4. EXP Construction Services, Inc. Rail Surveyors and MNS Engineers, 5. Engineers, Inc. Inc. Sener Engineering and 6. WSP, USA, Inc. Systems, Inc. Mott Macdonald, 7. TranSystems LLC Anil Verma Associates, 8. Inc. Biggs Cardosa 9. Associates, Inc.

Fiscal Impact: All funding has been secured for the projects being awarded for immediate contracting services. The funding sources being utilized include State funding from the $500M TIRCP award for the Valley Rail Project, the $400M allocation from SB 132, and the State Rail Assistance (SRA) Program created by SB 1; Federal funding from the Congestion Mitigation and Air Quality (CMAQ) Improvement Program and the Urbanized Area Formula Funding Program; and Local funding through Measure K in San Joaquin County and Measure B in Alameda County.

Expenditures occurring in FY 2018-19 are identified in the San Joaquin Regional Rail Commission/ACE/SJJPA Fiscal Year 2018/2019 Capital Budget. The Fiscal Year 2019/2020 Capital Budget will identify all costs occurring in the upcoming fiscal year.

Recommendation: Approve Three (3) Resolutions of the Board of Commissioners of the San Joaquin Regional Rail Commission Authorizing the Executive Director to Negotiate and Enter into Multiple Consultant Contracts and Establish Pre-Qualified On-Call Consultant Lists for a Period of Five (5) Years for the Capital Projects Program.

Action 1. Approve Consultant Contracts for specific projects for services and Not-To- Exceed Amounts provided in Table 1 in the Staff Report. (Regular Voting Members)

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Action 2. Approve Consultant Contracts for specific projects for services Not-To- Exceed Amounts provided in Table 2 in the Staff Report. (Special Voting Members)

Action 3. Adopt and Establish a Pre-Qualified On-Call Consultant List for a Period of Five (5) Years, May 3, 2019 Through May 3, 2024 provided in Table 3 in the Staff Report. (Regular and Special Voting Members)

116 of 122 RESOLUTION SJRRC-R1-18/19-34

RESOLUTION OF THE BOARD OF COMMISSIONERS OF THE SAN JOAQUIN REGIONAL RAIL COMMISSION AUTHORIZING THE EXECUTIVE DIRECTOR TO NEGOTIATE AND ENTER INTO MULTIPLE CONSULTANT CONTRACTS FOR SPECIFIC PROJECTS FOR SERVICES AND NOT-TO-EXCEED AMOUNTS PROVIDED IN TABLE 1 IN THE STAFF REPORT

WHEREAS, SJRRC secured funding from multiple sources including SB 1, SB 132, TIRCP, Federal, and local funds for the Capital Projects Program; and

WHEREAS, on July 27, 2018 SJRRC was authorized to act on behalf of the SJJPA in the development of the joint train layover and station locations between the Cities of Stockton and Natomas using TIRCP funds; and

WHEREAS, the San Joaquin Regional Rail Commission (SJRRC) desires to entire into multiple consultant contracts for services needed for the Capital Projects Program; and

WHEREAS, a Request for Qualifications (RFQ) was released on January 15, 2019 for On-Call Professional Consulting Services for the Capital Projects Program that included Project Development, Right of Way, Construction Management, and Rail Engineering Support Services for twenty-nine (29) identified projects; and

WHEREAS, on February 22, 2019, thirty-three (33) proposals were received for On-Call Professional Consulting Services; and

WHEREAS, the proposals received were reviewed for completeness and responsiveness and evaluated as part of the procurement process; and

WHEREAS, the Rail Commission came to agreement on the terms and price with multiple consultants for the projects identified in the RFQ;

NOW, THEREFORE, BE IT RESOLVED that the Board of Commissioners of the San Joaquin Regional Rail Commission hereby authorizes the Executive Director to Negotiate and Enter into multiple Consultant Contracts for specific projects for services not-to-exceed amounts provided in Table 1 in the staff report.

PASSED AND ADOPTED, by the Board of Commissioners this 3rd day of May 2019, by the following vote:

AYES: NOES: ABSENT: ABSTAIN:

117 of 122 ATTEST: SAN JOAQUIN REGIONAL RAIL COMMISSION

______STACEY MORTENSEN, Secretary CHRISTINA FUGAZI, Chair

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RESOLUTION SJRRC-R2-18/19-35

RESOLUTION OF THE BOARD OF COMMISSIONERS OF THE SAN JOAQUIN REGIONAL RAIL COMMISSION AUTHORIZING THE EXECUTIVE DIRECTOR TO NEGOTIATE AND ENTER INTO MULTIPLE CONSULTANT CONTRACTS FOR SPECIFIC PROJECTS FOR SERVICES NOT-TO-EXCEED AMOUNTS PROVIDED IN TABLE 2 IN THE STAFF REPORT

WHEREAS, SJRRC secured funding from multiple sources including SB 1, SB 132, TIRCP, Federal, and local funds for the Capital Projects Program; and

WHEREAS, on July 27, 2018 SJRRC was authorized to act on behalf of the SJJPA in the development of the joint train layover and station locations between the Cities of Stockton and Natomas using TIRCP funds; and

WHEREAS, the San Joaquin Regional Rail Commission (SJRRC) desires to entire into multiple consultant contracts for services needed for the Capital Projects Program; and

WHEREAS, a Request for Qualifications (RFQ) was released on January 15, 2019 for On-Call Professional Consulting Services for the Capital Projects Program that included Project Development, Right of Way, Construction Management, and Rail Engineering Support Services for twenty-nine (29) identified projects; and

WHEREAS, on February 22, 2019, thirty-three (33) proposals were received for On-Call Professional Consulting Services; and

WHEREAS, the proposals received were reviewed for completeness and responsiveness and evaluated as part of the procurement process; and

WHEREAS, the Rail Commission came to agreement on the terms and price with multiple consultants for the projects identified in the RFQ;

NOW, THEREFORE, BE IT RESOLVED that the Board of Commissioners of the San Joaquin Regional Rail Commission hereby authorizes the Executive Director to Negotiate and Enter into multiple Consultant Contracts for specific projects for services not-to-exceed amounts provided in Table 2 in the staff report.

PASSED AND ADOPTED, by the Board of Commissioners this 3rd day of May 2019, by the following vote:

AYES: NOES: ABSENT: ABSTAIN:

119 of 122

ATTEST: SAN JOAQUIN REGIONAL RAIL COMMISSION

______STACEY MORTENSEN, Secretary CHRISTINA FUGAZI, Chair

120 of 122 RESOLUTION SJRRC-R3-18/19-36

RESOLUTION OF THE BOARD OF COMMISSIONERS OF THE SAN JOAQUIN REGIONAL RAIL COMMISSION ADOPTING AND ESTABLISHING A PRE- QUALIFIED ON-CALL CONSULTANT LIST FOR A PERIOD OF FIVE (5) YEARS, MAY 3, 2019 THROUGH MAY 3, 2024 PROVIDED IN TABLE 3 IN THE STAFF REPORT

WHEREAS, SJRRC secured funding from multiple sources including SB 1, SB 132, TIRCP, Federal, and local funds for the Capital Projects Program; and

WHEREAS, on July 27, 2018 SJRRC was authorized to act on behalf of the SJJPA in the development of the joint train layover and station locations between the Cities of Stockton and Natomas using TIRCP funds; and

WHEREAS, the San Joaquin Regional Rail Commission (SJRRC) desires to establish a Pre-Qualified On-Call Consultant List for services needed for the Capital Projects Program for a term of five (5) years; and

WHEREAS, a Request for Qualifications (RFQ) was released on January 15, 2019 for On-Call Professional Consulting Services for the Capital Projects Program that included Project Development, Right of Way, Construction Management, and Rail Engineering Support Services; and

WHEREAS, on February 22, 2019, thirty-three (33) proposals were received for On-Call Professional Consulting Services; and

WHEREAS, the proposals received were reviewed for completeness and responsiveness, evaluated and ranked, as part of the procurement process;

NOW, THEREFORE, BE IT RESOLVED that the Board of Commissioners of the San Joaquin Regional Rail Commission hereby adopts and establishes a pre-qualified On-Call consultant list for a period of (5) years, May 3, 2019 through May 3, 2024 provided in Table 3 in the staff report.

PASSED AND ADOPTED, by the Board of Commissioners this 3rd day of May 2019, by the following vote:

AYES: NOES: ABSENT: ABSTAIN:

ATTEST: SAN JOAQUIN REGIONAL RAIL COMMISSION

______STACEY MORTENSEN, Secretary CHRISTINA FUGAZI, Chair

121 of 122 SAN JOAQUIN REGIONAL RAIL COMMISSION Meeting of May 3, 2019

STAFF REPORT

Item 6 INFORMATION Presentation on Altamont Corridor Vision

Background

A presentation will be given on this item.

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