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Board Box Template JANUARY 15, 2021 TO: BOARD OF DIRECTORS THROUGH: PHILLIP A. WASHINGTON, CHIEF EXECUTIVE OFFICER FROM: JIM DE LA LOZA, CHIEF PLANNING OFFICER SUBJECT: SENATE BILL 1 (SB 1) PROGRAM AWARDS ISSUE On December 2, 2020, the California Transportation Commission (CTC) awarded $628.9 million in funding to Metro from Cycle 2 of three SB 1 grant programs -- the Local Partnership Program (LPP), the Solutions for Congested Corridors Program (SCCP) and the Trade Corridor Enhancement Program (TCEP). The award comprised $112.5 million in formulaic and $516.4 million in discretionary grant funding for six projects that support implementation of the Measure R and M Expenditure Plans, the 2020 Long Range Transportation Plan, and other Board- approved priorities. DISCUSSION Metro staff reported through a September 4, 2020 Board Box on the submission of ten applications for Cycle 2 of SB 1, five of which were submitted jointly with Caltrans. Metro applied for a total of $752.8 million for projects valued at $2.4 billion in construction costs and realized 84% ($628.9 million) of the overall request. Attachment A provides information about the project applications that Metro submitted for funding. Across the three discretionary SB 1 programs, Metro received 25% of all funding available statewide. The following projects were awarded SB 1 funding: • I-105 ExpressLanes Project – ($150 million) • I-210 Soundwall Improvements, Phase IV – ($5.5 million) • Metro Red & Purple Line Core Capacity Improvements – ($112.5 million) • NextGen Bus Speed and Reliability Improvements – ($25 million) • SR-57/60 Confluence Chokepoint Relief Program – ($217.9 million) • SR-91 Goods Movement Corridor Projects – ($118 million) Projects submitted by our county partners – the Port of Long Beach, the Port of Los Angeles and the City of Long Beach – realized an additional $43.4 million in discretionary grant awards. SB 1 Cycle 2 Strategy for Success In preparation for the SB 1 Cycle 2 competition, Metro staff worked with CTC staff to shape SB 1 program guidelines through public workshops and coordinated with Caltrans staff at Headquarters and District 7 to identify opportunities to partner with the state on grant applications. This partnership including submitting joint nominations for all of Metro’s SB 1 Cycle 2 SCCP and TCEP projects with all four TCEP applications including recommendations by Caltrans for 40% of the total TCEP funding request for each project coming from the Caltrans statewide TCEP target. Staff also worked across Metro departments over many months to develop project elements (costs, schedules, cashflow, etc.), identify important qualitative and quantitative aspects of these projects, create compelling project narratives and conduct outreach with key stakeholders to support the applications. Staff once again deployed the Evaluative Criteria Framework (ECF) to establish a strategic, regional, multimodal and competitive program of projects for SB 1 Cycle 2, as first reported in a June 2020 Board Box (Attachment B). To maximize Metro’s ability to secure federal and state discretionary funding, staff developed the ECF in 2017 as the set of guiding principles to support decisions on project evaluation and selection for various competitive and formulaic funding programs (File # 2017- 0546). The ECF guides staff to identify timely projects that meet local and regional goals and priorities, satisfy program eligibility criteria and demonstrate close alignment with respective funding program priorities. Applying this approach consistently across funding opportunities has allowed Metro to pursue funding strategically across multiple cycles to achieve geographically-balanced investment and leverage local transportation dollars to support the overall delivery of our program of transportation projects throughout the region (Attachment C). Altogether, the ECF has helped Metro secure $3.1 billion in federal and state funding over the past three fiscal years (Attachment D). It is important to note that a key ECF consideration is whether or not a project can safely meet the project milestone requirements set by each funding program. Failure to do so after an award is made will lead to the award being rescinded. Therefore, maintaining project schedules promised in the applications to maintain eligibility is of critical importance for Metro to ensure compliance with accountability and timely use of funds requirements, as described in the next section. Title 2 Funding Risks Associated with Timely Project Development and Delivery Full implementation of the Measure R and Measure M Expenditure Plans, the 2020 Long Range Transportation Plan and other Board-approved projects and programs requires a combination of federal, state and other funding sources to leverage and complement local sales tax funding. SB-1 funding has proven essential to delivering Metro’s full program of projects. Securing $516.4 million in SB 1 Cycle 2 state awards is only the first step; ensuring that these funds are drawn down in full and these projects are delivered in a timely manner will require diligent work by staff across departments in the years to come. These goals will be put at risk if project development processes take more time than originally planned, and if the project schedules come into conflict with the timely use of funds provisions of SB 1 program guidelines. To reduce the likelihood of such delays, the CTC has developed SB 1 Accountability Guidelines, which provide for Metro to enter into baseline agreements to establish the project scope, schedule, cost, expected benefits and agency roles for each project awarded SB 1 funding. Missing key deadlines established through this process will incur penalties for Metro, including the loss of awarded funding. For those projects on the State Highway System, Metro staff will continue to minimize the risk of schedule delays by closely coordinating with Caltrans -- the owner/operator of the State Highway System that benefits from the awarded SB 1 funds -- to ensure expeditious development of project submittals and securing timely approvals to proceed with the implementation of those projects. Staff will also coordinate internally to secure the necessary information and approvals to support these deadlines. With the loss of sales tax revenues due to the COVID-19 pandemic, funding for pre-construction phases for some of these projects has been reduced, leading to some schedule delays on those phases. Staff is currently working to recover this time by accelerating work, with the goal of achieving the start-of-construction deadlines stipulated in the baseline agreements. In the event a time extension is needed, staff will develop requests for reasonable and allowable time extensions to ensure we capture 100% of those grants. Moving forward, staff may consider recommending adjustments to Metro’s budget priorities to include timely funding for the pre-construction work that is required for grant-funded projects. This will ensure a full-draw down of the right of way and construction dollars. Future cycles of SB 1 programs may carry with them more stringent eligibility requirements related to project delivery. At the December 2, 2020 CTC meeting, Commissioners and staff discussed project delivery issues of concern to them, including frequent project delays as well as post-award requests for scope changes that could reduce project benefits or introduce ineligible scope elements. Title 3 One solution discussed to address the latter concern was to require environmental clearance for any projects seeking funding in future SB 1 cycles – an outcome that could reduce the number of eligible projects for Metro to consider submitting in SB 1 Cycle 3. Commissioners encouraged staff to commence discussions with agency leaders, staff and key stakeholders to prepare all parties for these potentially more stringent requirements for SB 1 Cycle 3 project submissions. As staff begins to look ahead for projects to submit for Cycle 3, these potential changes will require staff to analyze which candidate projects will have environmental clearance by the time the next application cycle begins in approximately 18 months and to develop an appropriate position on potential guideline changes for future discussions with CTC staff. NEXT STEPS Staff will report to the Board in early 2021 regarding key delivery and funding risks and opportunities, including: • Complying with Timely Use of Funds requirements • Developing Baseline Agreements and complying with other Accountability Measures • Keeping projects on schedule to draw down the awarded funds on time and in full • Responding to new developing constraints for SB 1 Cycle 3 project identification Staff will also continue to provide quarterly updates to the Board regarding progress on the delivery of our grant-funded projects. ATTACHMENTS Attachment A – SB 1 Cycle 2 Funding Awards Attachment B – SB 1 Cycle 2 Strategy and Candidate Project Priorities (June 2020 Board Box) Attachment C – Evaluative Criteria Framework and Geographic Distribution Attachment D – FY 2018 through 2021 Federal and State Funding Awards Title 4 Attachment A SB 1 Cycle 2 Funding Awards ($ millions, year of expenditure) Project Costs and SB 1 Award Total Program Project Name Project Description SB 1 Award Project Cost This project widens the existing portal and improves Local Metro Red and the turnback facility to allow Metro to double the Partnership Purple Line Core number of subway train trips per day, leading to a $112.5 $801.8 Program - Capacity reduction in wait times and crowding on the Formulaic Improvement system. $112.5 $801.8 Total Program Project Name Project Description SB 1 Award Project Cost Implements speed and reliability improvements from Metro’s NextGen Transit First Service Plan, including all-door boarding, transit signal priority, NextGen Bus and bus priority lanes. This project provides faster Speed & and more frequent bus service to Metro riders. The $25.0 $50.0 Reliability three-phase NextGen plan, approved by Metro’s Improvements Local Board of Directors in October, will ultimately result Partnership in buses running every five to 10 minutes for 83% of Program - Metro’s current riders (compared to 48% today).
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