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CITY COUNCIL AGENDA REPORT MEETING DATE: November 18, 2020 ITEM #12

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CITY COUNCIL AGENDA REPORT MEETING DATE: November 18, 2020 ITEM #12 CITY COUNCIL AGENDA REPORT MEETING DATE: November 18, 2020 ITEM #12 SUBJECT: CONSIDERATION OF A STREETCAR SERVICE MEMORANDUM OF UNDERSTANDING FOR DEVELOPMENT OF AN OPERATING AND MAINTENANCE AGREEMENT WITH THE SACRAMENTO REGIONAL TRANSIT DISTRICT INITIATED OR REQUESTED BY: REPORT COORDINATED OR PREPARED BY: [ ] Commission [ X ] Staff Jason McCoy, Supervising Transportation Planner Capital Projects and Transportation Department [ ] Other ATTACHMENT [ X ] Yes [ ] No [ ] Information [ ] Direction [ X ] Action OBJECTIVE This report provides the City Council with a thorough background and update on the status of the revised Downtown Riverfront Streetcar (Streetcar Project) and provides an opportunity for Staff to receive direction from the City Council pertaining to the Streetcar Service Memorandum of Understanding. RECOMMENDED ACTION Staff respectfully requests that the City Council: 1) Approve the attached Memorandum of Understanding (MOU) with the Sacramento Regional Transit District (SacRT) as a framework for developing an Operating and Maintenance (O&M) Agreement for the Streetcar Project, and delegate authority to the City Manager to execute the MOU; and 2) Recommend that the Sacramento Regional Transit District (SacRT) Board of Directors execute the MOU at their December 14, 2020 meeting as a framework for developing an Operating and Maintenance (O&M) Agreement for the Streetcar Project. BACKGROUND The Streetcar Project received approval from the Federal Transit Administration (FTA) to enter Project Development as a Small Starts Project in 2014. This FTA discretionary grant program funds transit capital investments such as light rail and bus rapid transit and requires completion of the Project Development phase in advance of receipt of a construction grant agreement. The original scope of the Streetcar Project was an approximately four-mile looped system extending between the West Sacramento Civic Center and Riverfront Street, across Tower Bridge over the Sacramento River and into Downtown and Midtown Sacramento. The project was environmentally cleared, designed, and issued for bids in November 2018 by SacRT. The Engineer’s Estimate and projected budget for this work was $108,000,000. On January 11, 2019, SacRT received three bids, with the lowest bid at $183,943,279. Due to the bids being significantly over the Engineer’s Estimate, SacRT, under direction from the two cities and the Sacramento Area Council of Governments (SACOG), rejected all three bids on February 27, 2019. In March 2019, the mayors of both cities subsequently directed the formation of a Mobility Technical Working Group (MTWG). The goal of the MTWG was to present technical alternatives to the currently proposed Streetcar Project (independent of funding and regulatory obstacles) that achieve the best mobility for and between both cities. The alternatives were to be “forward looking,” allow for future innovation, be achievable in phases, and implemented within five years. The project team was expanded to include representatives from Sacramento Municipal Utility District (SMUD), the Sacramento Metropolitan Air Quality Management District (SMAQMD), the Sacramento Mayor’s Office and Congresswoman Matsui’s Office. Over the next several months, over a half- dozen MTWG meetings were held to establish clear objectives and explore various project alternatives to reduce costs and to deliver a project consistent with the original intent, purpose, and need. Two of the principal objectives driving the analysis included: 1) Preservation of the congressionally appropriated $50 million to complete the Streetcar Project; and 2) Connect the two cities and the region with frequent, high-quality mass-transit service over the Sacramento River. The decision was made by the MTWG to move forward with a reduced-scope rail project that preserved the portion of the original Downtown Riverfront Streetcar connecting West Sacramento from Sutter Health Park (formerly Raley Field) with Sacramento’s intermodal transportation facility - Sacramento Valley Station (SVS). This alternative offered many of the benefits of the original Streetcar Project, in that the West Sacramento to SVS connection: Streetcar Service MOU November 18, 2020 Page 2 of 5 • is within the original environmentally cleared alignment, requiring minimal environmental document updates; • was substantially designed by the consulting engineering team, requiring minimal design revisions; • maintained three of the planned Streetcar stations along the existing route; • provided an opportunity to preserve the $50 million federal appropriation to the project; and • would establish the much-needed regional mass-transit connection between the two cities. The Streetcar Project partners, with leadership and direction from Congresswoman Matsui, agreed to proceed with the reduced-scope project. After several discussions with the Federal Transit Administration (FTA), SACOG and SacRT (with support from the Cities) sent a letter to the FTA on February 13, 2020, (Attachment 2) outlining the revised project, expressing the partners’ commitment to the Streetcar Project as revised, and committing to deliver a full Streetcar Project update (including updated environmental documentation, engineering design, revised project management plan, operating plan, and associated studies by January 2021, and notified the FTA of our intent to submit an updated Small Starts Grant application before the August 28, 2020 deadline. On August 18, 2020, the Sacramento City Council received an update on the status of the Streetcar Project. West Sacramento staff was not granted an opportunity to address the Sacramento City Council to correct mischaracterized and inaccurate information presented at that meeting, including: 1) Minimizing knowledge of and level of participation in decision making through the MTWG; 2) Omitting knowledge of planned station area transit oriented development in West Sacramento; 3) Misrepresentation of the scope of the revised Streetcar Project; 4) Denial of existing documentation and plans for extension of future rail service in West Sacramento; and 5) Downplaying the regional benefits and general merits of the Streetcar Project. The recommended actions presented to the Sacramento City Council by their staff included dissolving the Riverfront Joint Powers Authority (JPA), the governing body formed to make decisions and carry the Streetcar Project through approvals and construction, transferring project responsibility to SacRT and limiting funding for Streetcar Project design, engineering, construction and vehicle procurement. Despite creating uncertainty regarding the committed funding required to carry the project through receipt of the federal Small Starts Grant Agreement (SSGA) a majority of Sacramento City Council members still voted in support of continuing with the revised project. However, for the time being the action has left Sacramento short of its funding commitments to the project, including $151,000 in 2020 and $560,000 in 2021 needed to work through the FTA’s Project Development Review process through SSGA execution. On August 19, 2020, the West Sacramento City Council received an update on the project and the actions taken by Sacramento the previous day, and requested authorization for the West Sacramento City Manager to modify and execute Amendment #1 to the Interagency and Cost Reimbursement Agreement and recommend that SacRT and its Board of Directors advance the revised Streetcar Project. The West Sacramento City Council expressed their expectation that the City of Sacramento honor its existing contracts, including funding pledged under the current Interagency and Cost Reimbursement, and reaffirmed West Sacramento’s commitment to the Streetcar Project. SACOG has offered to loan the necessary funding to Sacramento in order to carry the project through to securing the SSGA; at which time $30 million in State funding and $50 million in federal funds will become available to complete the project. To date, the City of Sacramento has not taken up the offer from SACOG, and has not otherwise allocated project development funding as agreed. On August 24, 2020, the SacRT Board of Directors initially rejected advancing the revised Streetcar Project on a split vote (48% to 42%) under SacRT’s weighted voting system. However, the SacRT Board reconsidered and approved the Streetcar Project on September 14, 2020, based on specific feedback from the August 24th Board meeting to reduce risk to Regional Transit and with continued support for the Streetcar Project from Congresswoman Matsui and the City Council of Sacramento and West Sacramento. As a condition of approval, the SacRT Board required that the City of West Sacramento either enter into an agreement for the construction, operation, and maintenance of the project, or agree to join the District through annexation prior to the award of a SSGA. The SacRT Board voted affirmatively to accept external funding to implement the actions required to obtain the award of a SSGA and advance the modified Streetcar Project on the condition that project partners hold SacRT harmless for construction and/or operation cost-overruns. It is noteworthy that under the previous Streetcar JPA arrangement, the cities would have already had primary responsibility for project cost overruns as the owners of the Streetcar Project. The SacRT Board directed staff to immediately begin negotiations with the City of West Sacramento to enter into an agreement to be completed no later than December 31, 2020.
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