Okay, I'd like to call to order this meeting of the Sacramento Transportation Authority for Thursday, August 14th, 2025.

Madam Clerk, will you please call the roll and establish a quorum?

Good afternoon.

Directors Desmond.

Hume Kennedy.

Kent.

Maple.

Kelsey Nelson.

Here.

Rafel.

Here.

Rodriguez.

Here.

Sing Allen.

Speace.

Here.

Dalamantes.

Here.

And then I'll give Guerra and Dickinson a moment to come in.

Here.

And Chair Cerna.

Here.

And we do have a quorum.

Great.

If you could please recite our statement.

This meeting of the Sacramento Transportation Authority is live and recorded with closed captioning.

It is cable cast on Metro Cable 14, the local government affairs channel on the Comcast and Direct TV Uverse Cable Systems.

It is also live streamed at Metro14Live.sackCounty.gov.

Today's meeting replays Sunday, August 17th at 2 p.m.

on Metro Cable Channel 14.

Once posted, the recording of this meeting can be viewed on demand at YouTube.com slash Metro Cable 14.

To make an in-person public comment, please complete a speaker request form and hand it to the clerk.

The chairperson will call your name when it's your turn to make a comment.

You may also send written comments by email to board clerk at SATCounty.gov.

Your comment will be routed to the board and filed in the record.

Thank you, madam clerk.

Will you please rise and join me in the Pledge of Allegiance?

I pledge allegiance to the flag of the United States of America and to the Republic for which it stands.

Okay, again, I'd like to welcome everyone to uh this afternoon's uh STA uh Board of Directors meeting.

Uh we have a full agenda, and again, as a friendly reminder, we certainly welcome members of the public to address uh the STA board on any matter on our published agenda.

Uh you're also welcome to address the authority board on any matter uh not on the agenda.

We ask that you please keep your uh comments to no more than uh two minutes.

That way, everyone who wishes to address the board has that opportunity.

And with that, Madam Clerk, our first item.

First item is comments from the public regarding matters not on the agenda, and I have not received any public comment cards for that.

All right, very good.

Thank you.

Next item.

Next item on the agenda is our consent calendar items number two through eight.

Okay, does uh any member of the SDA board wish to pull an item for separate voter consideration or comment?

If not, um, and if madam clerk, if we have uh no members of the public's time to speak on consent.

We do not go ahead and move consent.

Then I would look for a motion.

We have a motion.

Do we have a second?

Okay, it's been moved and seconded.

Roll call vote, or do we have electronic voting?

Let me, I think.

Member Guetta's not in, so if do you mind taking a voice vote for that?

So member um Desmond, Dickinson?

Guetta Giera, Hume, Kennedy, Kent, Maple, Kelsey Nelson, aye.

Vice Vice Chair Rafel, Rodriguez, Sing Allen, Speace, Dalamantes, aye, Vang, and Chair Cerna.

I and that item does pass unanimously with those members present.

All right, very good.

Next item, please.

Next item is number 11.

It's to provide direction on financing the ice street bridge replacement project.

Okay, good morning.

Chair and members of the board.

So thank you for the opportunity to speak to you today about a transformational infrastructure project, the ice tree bridge replacement project.

This is in the approved expenditure plan as part of the first decennial review, and it was budgeted in the fiscal year 2026 capital improvement program in our formal approved budget.

This is not just another bridge, it's a once in a generation opportunity to reshape how the region connects, moves, and grows, spanning the Sacramento River between the rail yards district and the Washington district.

This $300 million dollar lift bridge will unlock multimodal access in the heart of the urban core.

I'm gonna interrupt your presentation.

Uh Councilmember Guerra.

Are you in the queue to speak or not?

Oh, yes, afterwards, Mr.

Chair.

Okay, all right.

Thank you.

So but what makes this moment so crucial with this project?

It's it's not just the scale of it, but it's the timing with over 250 million in committed federal and state funding already secured.

The city of Sacramento is poised to begin construction on this project in 2026.

But yet, due to the nature of grant reimbursements, there's a significant cash flow gap between when construction takes place and when grant funding comes in to pay for that construction.

So that's where the Sacramento Transportation Authority comes in with this project.

So by leveraging the financial strength of the measure sales tax, we have an opportunity to provide financing that preserves the credit integrity of SCA as a whole and ensures that the other jurisdictions under Measure A remain unaffected by securing this uh this financing through the city of Sacramento's county roads and city streets ongoing measure A funding.

So with this financing strategy centered on a revolving line of credit, this also offers us flexibility, efficiency, and risk mitigation, allowing us to advance the construction while awaiting grant reimbursements over the next 10 10 to 12 years, and this ensures repayment responsibilities that are clearly defined with the city of Sacramento and West Sacramento.

So moving on to my slide deck here.

So just a brief overview of what the project is 300 million dollar lift bridge, elevating lift bridge, spanning the city, the Sacramento River.

Some of the opportunities that STA has in connection with this is to leverage Measure A's financial strength to ensure the timely delivery of this project.

Unlock 250 million in committed federal and state funding that would otherwise be delayed or lapsed because of the reimbursement timelines.

This also protects other jurisdictions in the Measure A, and it secures current pricing for a project that has seen costs go up every year.

And this also enables the other regional projects like the Ice Street Bridge Deck deck conversion that the city of West Sacramento is heading up and improvements to the Sacramento Intermodal Station.

So to explain a little bit of STA's involvement in this financing, we began talking to banks in 2023 about the I Street Bridge Gap funding.

Um, could bounce ideas off the banks and get some ideas in early 2024, STA and PFM developed uh strategies for developing their for the city's cash flow strategies related to these grant reimbursements in later in 2024, the city and STA began staff level discussions about this project and how it would take shape.

And then today in 2025, STA and PFM have formalized a financing strategy, and Peter is going to present that to you today.

Um I look forward to hearing your feedback after the presentation, and this point I'm gonna hand it off to Peter.

Great.

Good afternoon.

I'm Peter Schellenberger from PFM Financial Advisors, the financial advisor to uh the authority.

And as as Dustin has noted, we've been working with he and Kevin to walk through various scenarios to look at how a line of credit could help support this project.

And so I'm gonna walk you through a few a few slides and some detailed numbers here to recap a little bit of what Dustin has already touched on.

Um the i Street Bridge project, which we will see is about a 300 million dollar project.

It is from our perspective of financing perspective, it's a fully funded project.

There's not a long-term funding need here.

But the construction occurs through 2031, which we will see grant funds come in through 2038.

And so those grant funds come in well after expenditures occur.

So we don't have a long-term funding gap, we have a short-term cash flow challenge.

And so a line of credit is often used to bridge those cash those cash flows.

Um those future grant receipts, uh, both federal and state, would be used to repay any draws on the line of credit.

And so that would be the repayment source.

When you go out, eventually, if this was decided upon and moved forward with, there'd be a procurement.

The procurement would reach out to commercial banks like Wells Fargo and Bank of America, U.S.

bank, and request bids and pricing terms and conditions on line of credit to help support this project.

Those commercial banks are not terribly familiar with federal and state grant funds, and it's hard for them to price efficiently a loan, which could be up in $165 million range, a fairly large loan secured only by federal and state grant funds.

And so that's where the authority comes in.

They do understand the credit strength of sales tax revenues and the Sacramento Transportation Authority is a triple A rated sales tax or borrower, sales tax issuer, borrower, and that triple A is as high as you get.

And so that is the concept here to loan this to lend the strength of the major A sales tax revenues to support the project, even though grant funds would be the source of repayment, the commercial bank would look ultimately to the strength of the sales tax for pricing purposes.

So that would be the play to reduce the interest cost here.

That said, you know, just based on what I've walked you through, the bank would be entering into a loan agreement with the Sacramento Transportation Authority.

And so that third bullet, which we will get into with some detail, is there's some risk, there's a risk analysis here, right?

What if the grant funds don't come in, who's on the hook for repaying those?

And the answer is the Transportation Authority.

And so we've we've worked with staff who we've looked to what available funding sources does the city of Sacramento itself has through 2038 to internalize all of that risk.

So other jurisdictions are not in jeopardy with this.

So that's an overview of what we're going to walk through here.

All right.

There's a cumulative shortfall right there in 27 fiscal year of 73 million.

That would grow to about 162.6 million of accumulative shortfall.

The idea would be to establish a line of credit of about 165 million for a little bit of cushion for this project.

As the grant funds come in, those would be used to immediately repay and reduce the outstanding balance on a line of credit.

Here we see the blue line is the line of credit itself, and the orange, the orange lines is the cumulative balance of that.

And so the reimbursement, the grant reimbursements would come in, we would slowly or the authority would slowly repay those as soon as they come in.

As the project drew on that line of credit, there's really two costs associated with that.

There's the interest rate upon drawn amounts.

For our estimation purposes, we're using current rates, that's about 3.9%, 3.93% for whatever's drawn and outstanding.

There are times in which there would be unutilized capacity on this line of credit.

And so that's usually at the beginning of the project.

You set up the line of credit 165 million.

You haven't fully drawn the 165.

Whatever's sitting there waiting to be drawn, there's a charge there that's the unutilized amount, that's 0.35%.

So with those assumptions, through the life of this project through 2038, total interest costs would be about 40.6 million.

Okay, that would be the cost that the city of Sacramento would have to pay.

And we know they have a funding partner in the city of West Sacramento, so that would be the cost that those two entities would have to pay total interest costs.

That's under current rates.

Current rates are a little high right now, short-term rates are high.

If we revert back to the five-year average, that 40 million could be more like 27 and a half.

So that's the range of costs.

Assuming that grant funds come in and repay all the principal drawers, there's still a cost of 40 million on interest and fees or 27.6 or 27.5, depending on where interest rates are.

We look at, again, while grant receipts would repay STA's measure a sales tax revenues with secure, and so they the authority is on the hook to repay any draws, as well as interest and fees.

And so under this risk analysis, the question comes, what happens if the facility is fully drawn and there are no grant funds that come in?

Okay.

And typically it's going to be right.

What if grant funds are delayed, or what if grant funds don't come in the amounts expected?

For this, we'll admit for this, and from as I present to the board here, from the board's perspective, we're going to take an extreme sort of risk analysis.

We're going to assume no grant funds come in in any amount.

Can the city of Sacramento still cover that amount?

That'd be sort of an extreme case, worst case scenario.

Yeah.

So only because you're talking right now specifically about risk analysis, but it sounds like you're just looking at risk analysis on the on the revenue side, the what ifs on the revenue side.

What are you looking at, or will you be sharing in this presentation or more elsewhere risks on the cost increase uh side?

I have yet to see a single public project almost anywhere that comes in at cost at what you think it's gonna cost.

So are you going to speak to any kind of scenarios or assumptions on expected cost increases?

Short answer is no.

Okay.

Right.

We're accepting the costs as presented to us.

Very good point.

There's the potential for cost increases.

And the more time that goes by with between the time that a project is conceived versus the time you think you find funding for it.

I think we all understand that risk escalates with each passing year.

So absolutely.

Right.

Mr.

Busey?

Yeah, if we could take that question at the end of the end of the presentation, I can uh elaborate a little more.

All right.

Very good.

So again, this accepts the cost of 300 million, the expected grant reimbursement schedule through 2038, which is a conservative repayment schedule.

There is a possibility those grant funds come in uh much quicker.

So we're then asking the question: what if no grant funds come in whatsoever?

The city of Sacramento really has two sources of measure A funds to look to to repay that obligation.

That's the measure A CIP allocation, as well as our ongoing street and road uh maintenance allocation.

The question is, are those sufficient to repay any outstanding obligations and therefore insulate insulate the authority, if you will, or other jurisdictions within this within this concept, so here is the column A, we've worked with staff.

Staff's provided really all of the numbers here.

And column A is the forecast of future CIP allocations from 26 through the end of the measure, 2038.

Uh column B is future street and road allocations again through 2038.

Column C is just adds them up in their in their total amounts at points in time.

And so in 2026, it's 263 million.

That's the cumulative outstanding amounts that are expected to flow to the city of Sacramento under those two programs, and so on down down the time.

As you get towards the end of the program, there's only one year remaining, so there's 20.6 million remaining.

On the next side of the ledger, if you will, there is column D is the interest and fees that we went through.

Assuming a draw schedule that we walked through, there would be accruing interest and fees forecasted in the amount under column D.

There would be draws under the line of credit, and as you draw more and more, it would get up to an outstanding peak draw of 162.5 million in 2029.

Grant funds would come in and you would repay that.

And so you have this cumulative obligation in column F.

And the question is at every point in time for that cumulative obligation outstanding and expected expected to be required through 2038.

Does the city of Sacramento have necessary or expected funds to repay that?

And that first bullet kind of captures that based on these forecasted allocations, the answer is yes.

The city would have sufficient dollars under those two programs to repay all outstanding obligations under this schedule.

So obviously there's some variables, right?

What if costs go up?

That's not contemplated here.

Um I would also point under this second bullet, it's an extreme risk assessment, right?

It assumes it doesn't get a single dollar of the $300 million of grant funds that it's scheduled to get.

So that's pretty extreme as well.

Uh but uh those are the assumptions.

And then it would be important to update this annually uh as the spend occurs as grant funds come in, etc.

So that is the risk assessment.

Um it it is based on these cash flows and forecast the dollars.

The city of Sacramento can internalize the cost of the interest and fees and the principal repayment without even assuming any dollars from the from the grant funds coming in.

I got one more slide and then open it to questions.

If the board decided to pursue this and provide the credit support for this project for this line of credit, there's a broader context to think about.

You do have two series of bonds outstanding, series 2022 and 2023, and I'm guesstimating I should have the number in front of me, but it's outstanding in excess of 300 million dollars as your long-term bonds.

Those you've worked very hard to achieve the highest possible rating of triple A.

So those are your triple A rated entity on your senior lien bonds.

Senior lien simply being those those investors that are paid first.

Um, and so you want to keep those triple A ratings intact.

Um, and so if you were again to offer up credit support for this line of credit, uh you would you would likely want to do it on a subordinate lien, uh, just to protect your senior lien and make sure those triple A ratings stay intact, put that on a subordinate lien.

That's commonly done, especially with transportation authorities throughout the state.

If you do a commercial paper or a line of credit program, it's usually on a subordinate lien, which is fine.

Uh, rather than it being a triple A obligation, that would be a double A obligation, which is still very high.

And uh that last bullet is just there for uh to be fully aware.

It's not a publicly sold security, you're entering into a loan agreement with a bank under this concept, and you would simply have to be sure to uh disclose that to the markets and disclose that in your in your ACFR, which is very straightforward.

And so with that, I will uh I I believe yep, I turn it back over to Dustin at this point.

Thank you, Peter.

Well, just really quickly before we turn it over for questions and comments.

Said we have the opportunities here to advance this major regional project.

We have uh favorable favorable financing terms because of measure A's sales tax.

Um, and this helps to highlight the strength of a local transportation sales tax, because we have the the ability to do this type of financing with the sales tax.

So the recommendation that staff have for the board is to provide direction on financing and moving forward with the financing plan for the I Street Bridge replacement project and authorizing staff to develop financing agreements and related documents, and just to put it put it in a little more context, some of the next step in this process would be returning with a summarizing MOU with the City of Sacramento and the authority uh discussing more of the financing terms and the structure and a resolution providing us financing authority within given boundaries.

So those would be the next steps and turn it over for questions.

Okay.

Thank you.

Uh Mr.

Busey, did you want to uh start by um elaborating on the concern question I sure pose?

Yeah, so I mean I just want to a couple of things, right?

So the construction cost estimate that we had developed has already has a 10% contingency in that, so we do have some some flow in there.

Um the other thing I want to point out is that our line of credit that we've been talking about is is uh is like a hundred and sixty-five million.

That's kind of that's actually a little bit right at the cap of what we think is feasible within staying within the measure A uh funding that's available in the city of Sacramento.

So if there is a you know we open bids and the bids are higher, then um those the additional funding would have to come from some other other source.

Um the plan is to uh not actually do the line of credit until after the bid openings when we have actual bids in hand.

We're not gonna do it in advance of that.

Some of that is just to make sure that we're sizing it appropriately because if bids come in lower, we don't need the full 165.

There's no reason to actually charge that much.

Um, and then if if bids come in higher, um, you know, we're we'll be happy to work with the city of Sacramento.

Um they have what's called a highway bridge program funding.

There's 250 million available for that.

There's potentially um a way to get more highway bridge program funding, so that could be an avenue that is is looked at.

Uh in addition to that, there are some local funding sources available through both the city of Sacramento and West Sacramento that can be tapped into.

And then there's potentially if we are into a situation where we are pushing out uh the award uh to address this funding issue, where there's potential for new competitive dollars to come in.

Um so I think the key decision point is really where that bid the bid opening comes in, and then we may mean may need to make adjustments after that.

Kevin, when was the um when was the the date of the last cost estimate?

I'd have to ask my partner that question from the city of Sacramento.

Lucinda, can you ask answer that for us?

Good afternoon.

I'm Lysinda Wilcox, assistant public works director for the city of Sacramento.

Uh, we have been working on our cost estimate, the most updated one we got two days ago, uh, which had that 300, it's like 300 and million and 700,000.

I will say, um, you know, we have been very mindful of concerns about cost escalations.

Um, so we did a lot of value engineering before to get down to something that we thought we could bear.

The costs are based on a 2007 level of escalation.

We put a lot of contingency in the steel costs concerned about what the packs of tariffs might be.

And again, as Kevin mentioned, we have a 10% contingency, which we put on all our construction contracts to cover any unexpected change orders.

So we are hopeful that we have a good estimate, but really, until we open the bids in January, we won't really know what the true construction costs that we're looking at are.

So between the thank you for that.

Uh uh, what's the difference between the the first cost estimate and the one that was done completed two days ago?

What what change occurred if any?

Well, we've been doing cost estimates for the life of the project.

So the 300 and we had a higher one.

We did some value engineering to get we're actually trying to keep it at around 300 million because we feel that is probably um that's about as much as we would like to, you know, we can figure out how to balance with the funding that we have secured.

So that's where we we are really focusing on keeping it.

So another words you're telling me that you started with the number, and you said this is the number we can bear, we can we can accept this number, and then you move backwards from that over time to keep that to maintain that number more or less based on cutting here and there or making different assumptions, whether it's value engineering or otherwise, um, to keep the number from growing.

Yeah.

We had we were keeping we had our estimates and we were doing actual estimates of the costs.

Earlier this year, we finally got a number from Caltrance that they would give us the 250 million.

Once we knew what their um actual number that they were willing to provide, um and then we knew that we had 25 million in additional funding from a state grant.

Uh we tried to look at how much each agency could bear, um, given we know we had the financing costs, and that's when we started doing some value engineering just to reduce some of the costs or defer items that could be done afterwards.

I I understand the concept, but uh I guess what where I'm heading with this is um that's one way to do it, is to start from your budget and say, okay, we can't go over the budget, so let's figure out how we stay within the budget.

That's uh that's understandable.

Uh at some point though, you get to a place where there's no more headroom left, right?

And then you say, shoot, we we're we can't value engineer this any longer.

Um, then you're up against redesign or you know substantial modification.

How close are is the city to that threshold?

How much headroom do you have?

I think at this point we're very comfortable with that we're not going to cut any more.

We just submit we have a hundred percent plans.

We have just submitted our request um authorization to the federal government to get um to move forward with the plans that we have and the estimates that we have.

Um we have we may have a couple ad alternates for things that we uh deferred so that if there are the bids come in low, we can do additional work.

There are some items that are kind of on the shores of each um of each agency that we could um complete later with with additional funding if we get it.

So right now we are pretty clear that we are not going to cut any additional costs if the bids come in at higher than we are expecting.

We will then evaluate whether we can allocate additional funding or whether we have to go back to the drawing board.

Okay.

All right.

We'll start with uh Director Guerra.

Uh thank you, Mr.

Chair.

Uh first I I do want to thank the uh the staff of the STA and also our City of Sacramento and the West uh Sacramento City staff for uh thinking through how uh we can make, as was mentioned, a once in a generation project.

Uh and and also one that is uh fully funded.

I mean that's very rare in uh in these situations where we get to this point.

And I think what's important to recognize here is that uh the approach here that I believe the staff have looked at is by looking at getting this project uh funded sooner, we can avoid the cost escalations.

Uh and of my understanding, construction could happen as early as next year, uh 2026.

So we would be moving quickly with cost estimates that are true to what's on on uh on paper.

Um, you know, I've uh been able to watch this process at least for the last 10 years.

Uh and uh, and of course, when you do a project like this, the public has many uh uh imaginations of what they would like to see.

Uh and I believe that uh you know uh some of the the concepts that came about were obviously well outside of our our means, and I think that the project where we are today uh is an exciting one.

Obviously, I have I wish there was more um uh money spent on the the type of uh design on the bike lane infrastructure, but again, it's uh I think the project uh it's one that is a great partnership between West Sacramento and Sacramento that focuses on on safety, that focuses on connecting our two economies and growing the economy between uh these two counties, uh, and one that uh you know that looks at okay, can we also use our or older bridge as well, similar to if you ever been to New York the skyline, how they've actually created that as an economic amenity where people go for for tourism as well.

So uh the fact is is that bridge is uh that we have is in terrible condition.

Uh it's an infrastructure project that's needed, and so uh I'm excited here that uh the staff has come forward with something that actually gets a project moving and uh with shovels in the ground within a year.

So uh with that, Mr.

Chair, my recommendation is to move to give staff direction to develop a financing agreement to bring back to this board and to make sure that all those safeguards uh for both um uh this or this uh authority and the two other entities are ready to move forward.

So thank you.

All right, there's a motion and a second.

All right, Director Kent.

Thank you.

I'm normally very supportive of short-term financing for long-term projects.

The buffering for cash flow can translate to no unnecessary reprioritizations, no unnecessary delays.

That makes for a more efficient project overall, it's just fiscally responsible.

My concern is that uh although you've done a great job indicating that the terms are appropriate and uh commensurate with the management of public funds, it's clear what the attachments and remedies are in case of default.

If the worst happens, primarily concerning uh state and federal commitments possibly failing or to being delayed, and the obligations to the city of West Sacramento, City of Sacramento, and to the STA themselves, actually become distressed by having to abide by these terms of remediation and default.

Then my question's twofold.

First is are you still eligible for the grant awards?

Because ultimately they have to be earmarked for project scheduling and completion and proper disbursement, and yet this attachment is in the way.

So I'm not sure what the ratio of the proposed attachment would be to the actual award in general.

And then what would be the actual effect on the ground to projects?

Does that cripple projects that were somehow uh being funded by these awards, or how much are would they likely be compromised should the worst happen?

Let me let me try to hit that one.

So what we we've done with this is um in that risk scenario that um Peter presented was essentially if for some reason the federal government decided to not provide the funding or not provide the funding in a timely manner, but we still had to make these payments, right?

Um, they would end up coming from the city of Sacramento's share of Measure A funds, both capital and their ongoing streets and roads funding, right?

Um we don't think that's gonna happen.

It's never happened in this program.

This highway bridge program we're talking about, it's been around for you know 25, 30 years.

Um probably longer than that, actually.

Uh, we don't think that's gonna happen, but we've we've set it up that way to sort of isolate that out so that if there are impacts, it's the city of Sacramento's impacts, right?

That their uh their projects and their let's say their streets and roads program will probably be the ones that suffer and it won't be the other agencies that suffer.

Um and then to your second question about about um, so typically the way it works is the we if we went uh move forward with the project and for some reason the grant funds were not materializing.

Um, the way that they're proceeding with that, they're getting something called um advanced construction authorization.

Um that means that um we don't lose the funds, but they still owe us the funds, and we just are waiting longer, potentially waiting longer for those grant funds to come forward.

Um you don't actually there isn't a we've done our part, we've delivered the project that we said we're gonna deliver, and if the grant funds are taking longer for some odd reason, then that's just a um was just a waiting game at that point.

Um what we I just also want to clarify what was provided in the presentation is a worst case scenario as far as how we think those funds will come in.

The most more likely scenario is those funds will come in much quicker than what is shown, and that we will have less interest cost.

Um, but we want to show you kind of the work, you know.

We kind of showing you the worst case, right?

This is full disclosure on this thing.

So hopefully that helps.

All right, director Hume.

Thank you, Chair.

Um, my first question is uh, you know, the issue behind delivering this project in an accelerated fashion is one that's not new to this board.

And it's the difference between pay-go or bond financing.

And uh the essential difference between those two is with paygo, which means I have the money in my pocket and I give it to you, and you give me what we've contracted for, I get three dollars worth of product for three dollars.

With bond financing, I take that same three dollars and I pay you two dollars, and so now I'm getting $2 worth of product, and I pay the other dollar to the bank who's lending me the money to to make this happen on a more accelerated time frame.

That's in very broad terms, obviously, but it's it's something that we have wrestled with on this board, primarily because going back to I want to say it was four executive directors ago, maybe even five, if you count Will Kempton's uh stemp, uh uh Will Kempton's uh stint with this board, we had a very nice uh spreadsheet that the board would review on how this program was funded and expended, and it all looked great, until you saw the last page that was not included in the board documents that showed a 300 million dollar hole in the program because we were using bond financing, and we had to retool the delivery of just about every project in the capital improvement program.

Lesson learned.

And so I guess my issue here is it's a wonderful looking bridge, it is an iconic project, it absolutely uh I think elevates the region.

But when you have that shiny thing and the eagerness to deliver that shiny thing, it costs a lot more to do so.

And so a couple of things that I want to point out is you you just mentioned that it would be if if these funds don't materialize, if these grants don't come in, that it just becomes a waiting game.

Well, it's more than a waiting game, because now you can't pay down that principal, and so your interest clock, the meter just keeps running, and you're gonna be paying more to interest uh because you didn't get the money to to bring in to pay it down.

And so on one of the charts, it showed, you know, essentially 40 million dollars uh of the hundred and sixty sum on borrowed or the line of credit uh would be going to interest.

That was a worst case scenario given current rates, given construction costs, whatever else, blah, blah, blah.

One of the other things that you said though was that why that we uh there's uh potential to pull down more money from the highway and bridge funding program, or to maybe go to West Sacramento and see what their um grant capacity is.

Yes.

Yes, okay, why wouldn't we start there?

Like, let's see if we can accelerate and get because here's the thing is as soon as you pull the the lever on the meter and it starts running, you're paying interest on that money to your point about or to someone's point about not actually putting out the line of credit until we know the the project award and the actual costs and what's being delivered.

Some of the benefits of this revolving line of credit, uh financial element, um basically we we don't pay interest until we pull the funding down.

So we will get a cap of 165 million.

We do hope a holding um fee, so it's about a half a percent, that's what we're estimating.

But until you pull that funding down, we don't pay any interest.

So we're we're gonna try to delay setting up the line of credit until the last possible moment to try to reduce fees as much as possible.

But to your point about pulling some of the other financial levers, the city of Sacramento is looking into that and trying to basically ring ring all the trees to try to you know get more funding and use less financing.

And and so if I'm hearing you correctly, even if the line of credit were set up today, there would be fees associated with having that money available, but we wouldn't necessarily be paying interest until we start drawing down on that line of credit, and then we would only be paying interest on the amount that we had borrowed so thus far.

Yes.

Until we hit that peak, and then we start paying down the principal and the interest and okay.

Yes, yes, this is maximum flexibility with the way that we're we're structuring this.

So then uh back to my original premise, which is I'll gladly pay you Tuesday for a hamburger today.

Uh the issue is is that if I'm saving up for something, I'm much more motivated to contribute money to saving up for that, because boy, I don't get it until it's until I have that cash and I pay for it.

If I'm paying someone back for something, well, geez, I couldn't make it happen this week, you know, because I had these other things come up.

And so what kind of guardrails or safeguards do we have in place or would be put into this MOU that would say um number one, you we still have to remain aggressive in pursuing those outside funds to the maximum extent.

Don't just take the 20 million because that's what we've factored into our pro forma.

I mean, if we can bring down more, bring it down because that obviously reduces our overall uh liability.

Um so that's question A.

Question B: if political will changes, if uh external forces come to be and this money does not materialize, what teeth is there to say that it's not a choice that we redirect these funds from your CIP or from your roadway program, that this is the obligation to keep the the in other words, taking the individuals on this dais out of the equation completely.

Yes, and that will be worked into a forthcoming agreements that the city of Sacramento has up to a certain point before we start drawing on those funds that STA holds.

Um, because we do want to make sure that this gets paid off and the other jurisdictions have no liabilities here.

Okay, so that will be worked into final agreements and could even more contingency planning if that were to come that grant funding didn't come in we would likely refinance this to try to get a cheaper rate over a longer period of time to secure it because this is a floating line of credit so it's going to go up and down with the market.

Okay.

All right I think that concludes my questions for now chair thank you.

May I just it sounds like we'll just take these comments and make sure we try to incorporate those into the subsequent action that we come back with our proposed action.

Well that and try and as best you can to address them on the spot.

All right.

Vice Chair Raisel thank you chair uh I appreciate the conservative risk analysis and assessment.

I really do I think um it's absolutely a worst case scenario that you guys have presented I've got a couple questions though first off do we have an idea of how much money this would save the city of Sacramento by taking this approach.

Do we Lucinda do you want to speak to how much it's gone up over the last 10 years?

I just I do want to flag like you know the comment about paygo right we we did an analysis essentially showing that the city of Sacramento will have enough funding to build this project um by 2038 but it'll be in 2038 prices right and so uh it's almost it's hard to see you know it's gonna be challenging to figure out how much escalation you're gonna build into the construction price but I think it's a great exercise for us to go through and and I was thinking more along the lines of I don't I don't know what the city of Sacramento's credit rating is.

I was thinking more along the lines of why are why are we putting ourselves in the position versus the city of Sacramento putting themselves in the position.

Good afternoon again um I part of the issue is uh the city of Sacramento does um our treasurer's office is very reluctant to um put more general fund capacity at risk um and so we are not sure that we would be able to enter that level of debt and I would say in terms of the the pay as you go this was because Caltrans um as a condition of getting the 250 million which we've been negotiating with them for over five years to try to get them to give us a firm number about how much they would give us in the Highway Bridge program their condition of approval is you have to agree to this financing structure we will not give it all to you in one year.

So any delay our concern is increasing construction costs are only going to make the bridge more expensive and possibly put it out of reach.

So that is really why we want to move ahead we explored all kinds of financing options and when we had discussions with STA staff that seemed like the most practical approach.

And again we were structuring it so that all the risk is on the city side and not on the STA side.

Thank you.

And then my next question is really about other between now and 2039 um do we expect to issue other bonds where this credit rating or having this subordinate lien there would impact uh our rate on other projects no there's no plan right now there is a plan to refinance the 2023 debt in another nine years um and to speak the another point about STA doing this financing as opposed to the city we're able to get better rates because of our structure and it is a fine uh transportation type project so this fits right into the niche of what the authority should be doing do we know what that rate difference would be that's that was really my question are we paying 3.93 percent and they're paying 3.97% or are we paying 3.93 and they'd have a 7% rate because it I think that's the real value that that we're providing.

If that number is not substantial, then you know it's like why are we why are we shifting the risk?

Mm-hmm yes well and tenths of percent mean a lot with this amount of money so we we're even looking at how fast can we move money around to save days worth of interest so that that's the way that we're looking at this.

How much can we save?

But we don't know what that delta is.

Because I'm not sure where the city of Sacramento's credit rating would come in for this specific type of debt.

I do not have that number.

No, I don't know.

I don't know the delta because I think to um to the prior statement, though, it's much more of a capacity issue.

I think they may be able to structure something that looks pretty good and go to the capital markets and get a line of credit.

I don't know if they can get it to 165 million, and what type of stress that would play across the or their or their program.

So that's an important consideration.

Thank you.

Director Sing Allen.

Well, gosh, um a lot of my questions actually have been answered.

Um excellent questions, Vice Chair Brethal and Director Hume.

Um I guess just a little give me some historical perspective in terms of did was this something that the city of Sacramento came to STA for consideration?

Um, you know, what's the background on that?

Yep.

Yeah, the city of Sacramento was uh came to us in a couple uh almost a couple years ago.

We're just trying to figure out how can we move this project forward at a staff level.

And so we we started having conversations with them, talk trying to figure out you know what their need was.

There's a sort of uh the project was still developing, the costs were weren't exactly clear yet.

There was you know it was unclear how much they would get out of the highway bridge program.

Um and so, you know, we we kept having conversations with them until we got to a point where we really need to bring the board in on this and start discussing, hey, does this make sense?

Okay, and then um I I'm sorry, I forget your name, so forgive me.

From sac this our representative from Sacramento Public Works.

Um you mentioned just briefly without qualifying it, in terms of you discussed several financing options.

Could you elaborate on that a little bit?

And to what extent did that include the city of West Sacramento's uh grant capacity?

It was mentioned, but just sort of like in a bullet.

So if you can give me some more information on that.

Yeah, we we did a lot of investigations, including um looking at kind of kind of city bonds, like city loans, um, we looked at the infrastructure bank, um, state infrastructure banks.

We looked at a lot of options.

Um we have had to schedule City West Sacramento, but um they again they are we are the lead agency on the project and they are participant, um, and so while they are assisting us with the financing and they're assisting us with or with the funding, and they may put be able to put in more money up front to help um reduce the level of borrowing.

They don't um they don't have the capacity to borrow um this level of of funding either from their general fund.

So it was really um again, we looked at we have spent a lot of time trying to figure out how to to get through the requirements of Caltrans requirements to finance the bridge.

And again, we're very grateful um after we had some discussions with with STA staff that that seemed like the a path forward that would be uh the most efficient.

Um, I appreciate that.

And then I my final question is as the city of Sacramento perhaps considers a citywide ballot measure for a sales tax increase.

Would this be a part of that potentially has that been discussed?

I don't know the answer.

I can't answer that question.

As a source of funding, Kevin, do you want to chime in?

Yeah, I'm not aware of a city of Sacramento specific sales tax measure uh that they would lead themselves.

No, I know you haven't done one, but I've been hearing that perhaps you might consider doing one if the county um and all of us don't sign off on doing one that applies to all of the jurisdictions, and should the legislation not come forward.

We at the city of Sacramento right now have not had any conversations about an individual city of Sacramento sales tax measure.

We are still with STA and redoing the sales tax measure that we have here.

Okay, thank you.

Thank you, Chair.

Um I you know, we often I think all of us bemoan the fact that it takes us so interminably long to deliver transportation projects across this county.

And through the uh very, very hard work and diligence of the uh of the city staff, city of Sacramento staff working with uh Caltrans, uh something's been accomplished that uh I think was both unexpected and a surprise, and that was to get the commitment of Caltrans to deliver 250 million dollars to this project.

This project which won't benefit just the city of Sacramento and the county of uh YOLO and the city of West Sacramento, but will benefit all of us demonstrably.

This is a project that that needs to happen, and it doesn't need to happen in 2039, it needs to happen now.

But the fundamental point for I think those of us who are here this afternoon sitting on this board is that this agency is being asked to take zero risk, zero risk.

And I've heard some of we why should STA accept any risk?

STA is not taking any risk.

STA is setting up the financing mechanism, which is the access to capital to cover what cash flow needs there may be over the course of the life of the project, but it is the city of Sacramento that takes the risk.

The city of Sacramento depends on the state and federal agencies to deliver the money, not STA.

If the city of Sacramento doesn't get the money as it projects or needs, the City of Sacramento pays for that shortfall out of its entitlements under Measure A money or from other sources of transportation money that the city of Sacramento will receive.

So all that is being asked here in reality is that STA facilitate the financing of this project by taking no risk to assist one of the member agencies, namely the city of Sacramento and a non-member agency, frankly, the city of West Sacramento, to deliver a project in our lifetimes that all of us will benefit from.

Thanks.

And I and I wanted to also, you know, bring the point that that this is a regional asset, okay.

There is one bridge, one bridge, if you don't count the state highway between two counties and any major metropolitan area has multiple bridges who have who have rivers.

And this this regional asset, by the way, of 250, a 300 million dollar project for the region, is going to be a significant one.

And when you think about where all of the workers and the contractors and the people who uh are going to be building this bridge, they some of them probably aren't even going to be living in the city of Sacramento.

They're gonna be living throughout the county because this is a regional asset.

And I I do want to say uh I appreciate uh uh board member Hume's comment about Pago because I was here during those conversations and cleaning up this uh the way to make this happen.

And this in fact is a is a probably uh uh a quasi-pago because the commitment from uh the state to come in uh is at 20 million a year.

Now you don't build a bridge by saying, hey, let me lay this section of uh of asphalt and then I'll pay you that sidewalk and then I'll pay you this, you know, uh westbound lane and I'll pay your eastbound lane.

But this is in fact how you build a regional asset.

Uh and the fact that this agency was created, this agency was created to be able to do those types of projects because no one city or one jurisdiction can do it alone.

And that's I think the strength of this.

And so if this agency is ever to go out for a public measure uh to go out and say, hey, we want you to show that we can actually finance the dollars.

This is actually a project where I have to commend the city staff of West Sacramento and uh the STA and the and the city of Sacramento for thinking creatively about how we reduce the cost of a project and actually get construction work happening within a year, and not in 2038.

Because frankly, if it's if it's 2038, I don't think the project ever happens, and that's a $300 million dollar project that never occurs.

So to use uh um idioms, uh we would be penny wise, but pound foolish director Speace.

Thank you, Chair.

I guess I'm having a really difficult time wrapping my mind around an assertion that there is zero risk to STA.

I'm a businessman.

If I loan somebody else, or if I helped loan somebody else money for a project, it affects me at least in my credit rating.

Okay.

I I don't see how that, and I and I don't want to be argumentative.

You can have your position, I understand that, but there absolutely is risk to STA for it.

So the other questions that I had that I wasn't gonna ask is have we done this before?

Has this ever happened?

Have we ever done this type of financing before for a project?

So we I'll just add, I mean, we have done a bond financing for projects.

This is the first time we've done it for an individual project.

Um we did uh we working with Peter, we did work out to see if any other agencies had done this before as well, and there are other agencies that have done, you know, sort of like we're borrowing against their individual slice of a measure for a civic project.

That that has happened before, but we have not done that at STA before.

Um, and so on your question on risk.

I did I mean we our intent is to try to minimize the risk to the other agencies, the maximum extent practical.

I can't say there's zero risk, though.

So absolutely, I mean, one of the favorite themes going around nowadays is something to the effect of you know, you can you can be close to zero, but it's it's never zero, right?

So, what uh what I'm trying to say is there is risk to us, and I just want that to be clear.

So, beyond that, um, I I don't have any other questions, Director Telemontas.

Um, I do want to echo, you know, Councilmember Dickinson's comments, Director uh Gerald, like 250 million dollars from Caltrans is being dedicated to this project.

We're asking for a financing structure, we're asking for staff to look into it today.

We're gonna come back in September.

Please allow us the opportunity to figure out if this pencils out, and I'm hopeful, and it will.

And we will get back to you in terms of some of the the concerns that you may have today, but this is 250 million dollars being dedicated towards this project, towards the rail yards, where we're doing the groundbreaking for our Sacramento Republic FC, where Kaiser is underway, where we're gonna have a future paint shop and concert venue and thousands of people traveling to see artists in the rail yards, largest in fill development project in the in the area in the region, the country, seventy-nine thousand tech and life science employees, three hundred and eighty-four thousand university students within a hundred miles, seventy-five thousand average salary, tech salary, twelve thousand people moving to Sacramento every year, 90 minutes commute time from the Bay Area.

Our hope, and this in inside in the city of Sacramento and County Sacramento, is to make the rail yards a destination place for others to come visit us and to spend their dollars here and TOT to stay in hotels.

So this is just an addition to something that we're you know investing in in downtown, and so I just humbly ask you to support city staff recommendation to sub to move forward with the financing structure and come back for a vote in September.

250 million dollars is on the line.

Please consider that.

Thank you.

And how do I turn this one on?

Thank you.

So there's got to be a microphone that works somewhere here.

Thank you.

I appreciate the discussion, and I know it's an important project, it's a good project.

Um, I will support the action here today.

I know that we have a motion on the table, but I am very interested that I want to make sure these financing agreements do address some of the concerns that were brought up here today.

And and I do appreciate Director Speace's comments because I the risk is defined in different ways.

There is certainly a risk to the credit weight rating, but there's also an impact, an impact in terms of the bandwidth that STA would have to do other loans like this, a range of other arrangements like this.

And there is a I think an impact on this body if for some reason the city of Sacramento is not able to meet its obligations.

How do we deal with that going forward?

So I'll be very interested to see how how maybe some of those issues are addressed in the financing agreements.

Thank you.

Yeah, um I just want to clarify the motion.

So the motion that was um uh Mr.

Garrett put forward.

Uh so does that include in that motion trying to address all the various concerns we've heard today, the extent feasible when we bring back that finance agreement?

And if so, that would be great.

Yeah, well, I mean, I think that's the what we've been saying is the purpose of this uh motion is to come back with an agreement that addresses those risks and concerns.

Yeah, um, and I think they're valid.

I mean, I don't disagree with uh board member speace that you know you and I I don't see memes, so I try to stay off of that.

So but yes, it's not too much time.

Exactly.

Show me some good ones, maybe it'll help me.

But uh to that point that you know uh um yes, there's never no risk.

If not somebody would have already figured this out a long time ago, but I think providing each jurisdiction the assurances that their projects aren't impacted is important.

And I don't I don't see uh unless uh um you know uh Ms.

Wilcox has any concern with any of these, but I think these are conversations we've already had on how this could affect other agencies.

Is that do you have any concerns?

Uh Ms.

Wilcox?

No, so maybe uh Director BC I'd probably be rec like do an FAQ of the questions that directors had today with answers, along with the financing mechanism that we did the motion for.

Is that clear?

Okay, is that clarification on the motion from Gera as well then?

Yeah, that's so that the have the staff report come back with say the FAQs on answers to the questions that were posed.

Thanks.

And that way they're directly to the questions that members had, Director Kent.

Thank you.

In your answer to me, Director Busey, you use the word suffer.

What I'd like to know in the final analysis is how and how much.

Let the record show Mr.

Busey's writing seriously.

Okay.

All right.

Supervisor Hume.

Thank you, Chair.

I just wanted to clarify, and I heard uh one of my other colleagues here mumble something to that effect as well that whatever financing agreement comes forward needs to address the concerns that have been raised from this diet.

So I don't want an FAQ that just says, hey, we heard this question and here's an answer.

I mean it better be embedded in to whatever paperwork and documentation is.

Yes.

Concur with those comments from board member Hume.

All right.

Um looks like council wants to chime in.

Counsel.

Let me let me ask the question.

Any public comment on this?

There is no public comment.

All right, very good.

Um, okay.

Uh we have a motion and a second.

If there are no further questions, uh I believe we can do electronic voting voting now.

As the second telamantes, would you?

Okay.

I'm glad I asked.

All right.

Please vote.

And that item does pass unanimously with those members present.

All right.

All right, very good.

Good discussion.

Thank you.

Next item, please.

Next item is item number 12.

It's to receive a presentation on countywide vehicle miles travel mitigation program.

Options and opportunities.

And Metro Cable, if you could please bring that presentation up.

Thank you.

Yeah, I thought we were done.

I'm sorry, we have another couple more items.

Um you guys stressed me out there for sure.

Uh so this is this this is uh second in our our workshop regarding a VMT mitigation, right?

Where with this workshop, we're going to talk about one, the VMT bash background, which is a kind of quick overview of what we talked about our last meeting, which is a month ago, and then we're gonna go a little bit further and talk about what are the actual VMT mitigation uh programs that might be applicable at a countywide level.

Quickly a reminder of why we're here.

Um so VMT mitigation is adding a substantial substantial cost to a lot of highway capacity projects, roadway capacity projects throughout the various uh cities and the county.

Um, and it's causing delays in trying to deliver those projects.

It's hard to actually identify, you know, how to mitigate and uh or to how hard to find cost-effective mitigation, which is adding some of the construction costs.

Um, you know, we think that maybe a countywide approach has some um has some ability to potentially address some of these some of these issues.

Um, we have certain agencies that are part of SDA or get SDA funding that just do highway capacity projects, and we have certain agencies that just do VMT mitigation projects, and so is there a role for an agency like SDA to sort of provide that matchmaking to make sure that there's an ability to move, they can move forward their projects, and then um some of that funding comes to some of these VMT mitigations.

So that's what we're gonna talk about in general.

That's why we're here, and then we're gonna get into the detail now.

Uh, and Fair and Piers is here to start that, start it off.

So, Sonia, thank you.

Thank you.

Thank you for that adjustment.

I'll run through this portion pretty fast on VMT mitigation background content here.

Uh again, I'm Sony Anthorne with Fair and Pierce.

Thanks for having me here.

So, saw the slide last time, two months ago.

What is VMT again?

We used it a few times in the last slide.

Uh, stands for vehicle miles traveled at its simplest.

It is a product of the number of vehicle trips and the length of those trips.

So one car going one mile is one VMT, four cars going 10 miles is 40 VMT.

Of course, the devil is in the details here.

Um, and we also discussed uh two months ago how this is not just a proxy measure for greenhouse gas, but also for safety congestion and a variety of other metrics.

So why are we using VMT?

Because of Senate Bill 743 that connected VMT to greenhouse gas statewide goals in that move away from the previous metric level of service, and um it has a shared intent in the legislature of a promotion of public health through active transportation as well as info housing, which Matt will fill us in a little bit more on later with AB 130.

And I'll leave you with this slide on mitigation effectiveness.

So we can see at the base of this pyramid, the most effective mitigations are those that influence the built environment.

So the density of development, the level of diversity within those developments, land use diversity, um, whereas the least least effective are more leaning upon individual behavior and nudging people towards making independent decisions towards lower vehicle travel.

And so we heard support two months ago for exploring some options for programmatic level mitigation for VMT, and so I will pass it over to Matt to cover that.

Thank you, Sonia.

I'm Matt Going with Far and Pears, and uh you heard from one of my colleagues, Ron Mylam last time, but I'll be filling in.

Happy to talk as I go through here answering questions.

It does get a little complicated.

I understand that, and I don't want to kind of move too fast without um answering anything that needs to come up.

So, as Sonia mentioned, really uh VMT mitigation programs provide the opportunity to lower the cost of individual mitigations because you have a consolidated uh program that does all the legwork up front, and that can make it more seamless for project sponsors or whoever needs to reduce VMT.

Um, it can also be more effective because you're affecting broader populations.

So there's really two main types of programs that STA could pursue at a countywide basis.

There's a VMT bank and then there's a VMT exchange.

A VMT bank is just like a typical bank where it collects money and it distributes money.

But in this case, it is collecting um basically credits.

Uh individual project sponsors can purchase credits, it will assign a price to those credits based on the different um VMT reduction projects that are within the county that can reduce the that can be funded by those credits, and so it takes that money and then it gives it to the lead agency or implementing agency to go and build those those projects or implement those programs.

A VMT exchange, on the other hand, has a list of projects or programs that can be funded through the program.

And the project applicant will just go and select individual projects or programs for that based on whatever you know come the them and the lead agency decide is the most appropriate.

So you end up you can end up with the same project list.

You can include capital projects, you can include programs like uh distributing transit passes, for example, um, but ultimately it's just a different structure of whether you have this kind of centralized administrator on the bank, that centralized administrator gives you a little bit more confidence that you can get to uh less than significant fully mitigated impact.

Well, in the VMT exchange, uh if you don't have enough projects that fit the kind of the availability at that time, you might not be able to reduce it fully to uh less and significant.

But however, there is um you know flexibility.

Uh you'll see a lot of the programs that are happening today, uh, mix and match a little of these programs.

Before I dive uh deep into some case studies, though, I do want to bring up AB 130, as was mentioned, which I'm sure at least some of you are aware, was passed recently and includes a clause to create a statewide VMT mitigation program that funds in fill affordable housing.

Um, and this would be an option for project sponsors throughout the state to pay a credit type fee to the state, and that money would be uh collected by HCD, which would then fund just add it to their infill affordable housing program that they already um kind of distribute each year, the transit oriented development uh implementation fund.

So uh the state is going to investigate over the next year, sometime next summer, they're hoping to have guidance on this, and at that point, it could become kind of a competitor to local programs because it would be an option for project sponsors to use.

Um but uh for any local agencies that set up programs, you can kind of use that as a guide as well and understand how how this program would interface with that program, be part of the development.

Before you leave that slide, sure, yeah.

Wrong slide.

Went backwards.

I'm going.

There we go.

It's a different button.

I see.

Thanks.

No, still wrong slide.

There you go.

Okay, so if I understand uh concept here, this is um so uh uh an applicant comes to a municipality, wants to do a PUD, and the uh transportation section of their EIR says you're gonna uh increase VMT by X.

So you take the VMT under this uh proposed um legislation, and you would have the option of paying into uh you're paying a fee that would be collected and then administered by CD, uh, the purpose of which would be to help fund or help subsidize, I suppose, infill housing.

That's correct, infill affordable housing.

So, uh basically the state is building info affordable housing today.

The state has you know published a bunch of research showing how info affordable housing reduces state VMT, and so they're making that connection now that that individual project applicants could fund could put money into this program that would then go back into funding these in reducing VMT reducing projects.

You know, one one thing, and I and I'm not trying to open a massive can of worms in the middle of your presentation, so I'll try not to do that.

But I've I've had similar line of questioning and uh I think in the last um discussion that we've had here about this.

But conceptually, and it wasn't on the introductory slide in terms of what is VMT.

Uh what I didn't hear mention is that VMT was originally conceived of to be a surrogate for uh for uh carbon emissions, correct?

That's correct, yeah.

Okay, so here's the problem, and I know you know the problem, right?

Uh we all kind of know the problem, we're winking at each other here.

The problem is is that you've had market shift, significant market shift in some cases to zero emission vehicular choice, right?

So now you still have now you have legislation that piles on, you know, whether it's 375 or other VMT related legislation, these measures that this I mean, under this bill, you could conceivably have a project that either organically or by way of you know, let's just say pretend some let's say you had a some kind of uh uh requirement that said, you know, uh this 100-acre um one you know 500 unit project uh is all the all the folks that live here are gonna have to have zero emission vehicles.

This would still charge the applicant a fee, be a cost to the project, even though there's no carbon emissions coming from that project associated with the transportation sector.

So um we're uh what what is it that we are supposed to do in terms of policy setting or resource allocation, or even considering uh other legislation that affects us as representatives at the municipal and county level, how are we supposed to kind of conceive of the fairness of more and more legislation, more and more application of this metric that more and more is fundamentally uh missing the target because of thankfully our share, our market share uh is increasing in terms of zero emission vehicle choice.

So I would I would start by saying start by saying that this program and both and the legislation does not change how jurisdictions measure the impact uh on the environment.

And so uh SB 743, you know, suggested use something like that.

But what's the what's the impact on the environment?

So VMT being a proxy for exactly that's the problem.

Because yeah, go ahead.

My point being is that that these don't change that.

There could certainly be other legislation that changes like how or the state could issue additional guidance saying, like we recognize you know that greenhouse gas emissions was most important, and we're gonna put aside our concerns about safety or other concerns where this is a proxy for that could happen.

This doesn't change that.

This is just at the very final stage for if a project generates an impact right now.

What we're finding is that um each individual project has to go figure out the mitigation, and each individual project that has to figure out the mitigation, it becomes a very cumbersome, difficult and expensive process.

And so this program creates an option to do that, and you could always go upstream and change how we how we measure impacts.

So and I'll just make this uh comment and then um hold my tongue so you can kind of move on here.

But but given what I've just mentioned about um kind of this disconnect, this growing disconnect between using VMT as the as the measure for uh transportation-related carbon emissions.

Um is it fair to say that uh the more and more we continue to use it as that that measure, and we look at VMT quantities that come out of uh environmental assessment, the transportation sections, chapters of EIRs.

Um, and we know, at least anecdotally, that the market is growing more and more each year for zero emission vehicles, that the VMT finger quotes impacts associated with uh especially large scale master plan uh proposals is actually growing in terms of its conservative estimates because if you're if it's really the measure of carbon emissions we're concerned about, um, I would I would argue that you know uh when you have a project that comes in and says, Well, VMT is X, it's and then there's no accounting for, well, there's a certain percentage of that project that it's expected will be households that travel by zero emission vehicle, then it's an extremely conservative measure of that uh of VMT of the surrogate for carbon emissions, and therefore whatever the EIR is telling you is actually um giving you kind of an artificial elevated estimate of what uh the transportation sector is actually contributing.

Would you agree with that?

Well the greenhouse gas emissions section specifically evaluates and presents that information.

So the VMT is is presenting a different piece of information.

It's not the total amount of driving uh it is the effect of driving on the environment, which can include greenhouse gas emissions safety, other things like that.

So, and that's fine.

I just think it it's more um it's less disingenuous.

If you say, okay, our concern is safety, let's look at an appropriate metric that measures safety.

That's that's that's fair.

And that is that is part of the transportation EIR section.

No, I understand that, but but you know, you can't uh convince me today that um the VMT impact quote unquote impact is the same for uh for a household that drives that's driving you know two Teslas versus a household that's driving two suburbans, you know, ice uh propelled suburbs.

And so that's the problem is you're both you're measuring VMT the same way for those two both of those those households.

That's that's the point.

Um I see others in the queue.

Did you want to respond to this line of questioning, Mr.

Hume?

Yeah, I was actually gonna follow up on this slide.

Okay.

Um Eric, did you want to wait?

Okay.

Well, let's start with Erica then.

Well, well, thank you.

First, I I want to, you know, uh agree with uh the chair on on these concerns on how you know what what is the appropriate measure of VMT and if there's in the future uh a discount factor.

But aside from that, um I think um more so now that the state has approved AB1 uh 130 and the statewide VMT mitigation bank has been created, uh my concern uh is that uh uh a project say within uh the county of Sacramento uh has to pay this fee into the statewide bank, and then that money doesn't necessarily come back to the jurisdiction for the purposes of our VMT mitigation.

Uh and you could say that, okay, well, you know, hey, we might actually fare better because LA uh the Southern California region or the Bay Area is probably gonna have higher amounts of fees and this bank's gonna be larger, um, so there'll be more money.

But the the reality is is we haven't fared well, in my opinion, in getting our fair share on these statewide accounts.

So um, I guess my my ask of uh staff and maybe from the board is that we draft a letter to the appropriate state agencies in the development of guidance and drafting that if in fact we are trying to mitigate the impacts of VMT, and we can argue how the VMT gets calculated, but that if our jurisdictions are paying into that, then our our uh our residents should benefit from those fees specifically to impact our own jurisdiction.

Um so I I think that's at least a fundamental point because why would Sacramento or any city here be paying into a fee that all of a sudden goes into a massive Southern California project?

So uh all to say is I I think there needs to be a position from the from this authority and even to say that as developments go off uh go on, and uh in fact, this is where uh for this reason I think now that AB 130 is has been approved, um uh even encouraged that if there is a local VMT bank uh available that that those funds not go to the state account but that go directly to a locally controlled uh uh mitigation bank.

So uh I'd like to make sure that we figure out some communication on that.

Um, and Mr.

Chair, I'm not sure uh in what method we could do that, but I do think that that one on the calculation of VMT, but then if we are in fact required to pay those fees, how do we make sure that those fees stay here locally?

So, good point.

Uh okay.

Uh Director Hume.

Thank you, Chair.

Um, first of all, that was exactly the point that I was going to make is that there should be a return to source aspect of the if we're gonna have a statewide bank, there should be a return to source aspect because otherwise you're charging a project for VMT mitigation and you're performing that mitigation somewhere completely unrelated.

It doesn't make any sense.

Um but then the other piece of this goes to what the chair's line of questioning was kind of targeting, which is there is a nebulous uh nexus or relationship to this and to what we're actually doing to solve VMT issues.

And I I liken it somewhat to you know carbon offset credits that you can go ahead and fly your private jet as long as some trees are planted somewhere that that makes up for the difference, right?

Like it doesn't curb the behavior, but then more importantly, what VMT fails to recognize is that whether it takes you uh one hour or one minute to go that mile, that's still one VMT.

And so the congestion, um whether that's internal combustion engines or or zEVs or whatever, the congestion does not get alleviated at all that it would have under an LOS standard that we used previously.

So there is a bit of sort of uh nebulous um uh nexus, I think, to the what we're trying to solve for and how what the actual fix is.

Thank you.

Please proceed.

Got it.

I didn't know what I was asking for when I said let's have a conversation a bit.

Thank you.

This is all great conversation.

Um there is this conversation is happening throughout the state too as well, and there's been uh dozens of agencies, uh uh regional countywide agencies that have tackled this this issue.

So luckily you all are not the first one, and none of these kind of issues are brand new.

They are continuing to come up um throughout the state.

Um, and so really when we think about what programs are really in place right now.

There's very few.

A lot of studies have been done.

Uh there are a few agencies that have committed two banks.

Um, and I'll give you a specific example for what San Bernardino County is doing next.

Um, but also understand that as these programs get set up, you know, places like Metro, for example, are creating a bank, but then they also have the option to fund specific projects that developers could fund specific uh projects, and that's kind of more of an exchange option.

So there's a little bit of flexibility here of like how you set it up.

On the exchange side, there are um I'll share with you what WR Cog is doing down in Southern California as a great example, but um uh there's several pilot programs such as VTA, which is an exchange right now, and they might, if it becomes successful, they'll roll it into the bank type credit structure, or and there's also the distinction between um jurisdictions that have counties that have centralized you know control with someone that manages you know a lot of different aspects uh for the county.

That's gonna be the WR Cog example.

And then there's a distributed model, which is the C CAG of San Mateo County, where they are not taking any responsibilities from their local lead agencies, they just created the program with the guidance and letting local lead agencies continue to do their sequel analysis as they typically do with this as an option.

Um so on the VMT bank option uh example, we we can go down to San Bernardino County.

They have this uh operating VMT uh pilot today, mitigation pilot program today.

It focuses on one kind of one structure to really try to make this work uh well with just kind of one targeted measure.

It is a smartphone app that allows users to uh basically track their travel behaviors and as they drive less, they uh get to accrue benefits like transit passes, carpool subsidies, other things like that, kind of nudge nudge factors that help people uh just uh commute less.

And so this is a program right now that developers can kind of buy credits through that central kind of bank in that county, and it's currently being funded though by REAP funding, so right now they're still trying to figure out how to make this a long-term uh sustainable program and potentially add other other measures, other actions to that program.

Can I can I ask, is it do you know whether or not that app um gives the user the ability to say I drive a dev or not?

I I don't know.

I'm not in familiar with all those details of that program, but I I know that they're it's by having this kind of centralized bank, they are basically updating and adjusting as they go to make sure that they're getting kind of measurable results on the various metrics that they're trying to achieve through the program.

And then the VMT exchange program example, WR Cog, this really builds on the history that WR COG has in terms of they do a regional traffic impact fee program.

They've done that for decades, and so they have that kind of centralized coordination already where they take money in from local jurisdiction, development and local jurisdictions, and they help distribute it out back to local source.

And so they have set up now a VMT exchange version of that where they have a whole list of projects, they're in charge of managing that list of projects, working with local jurisdictions, um, helping developers select those measured individual projects that are going to get funded through this program that include transit service, include transit, you know, investments, bike and pet investments, the affordable housing within the county uh within the region as well.

Um, it is approved, and they're now looking for their first project.

So it's really they've they've been working on this for years and they they just got it up and running.

So this is probably the farthest along that a centralized program is going right now.

Um other examples are like San Mateo's program is is up and running, but there's no central control and and development market has quieted down in that area.

So there hasn't been any examples yet.

Um and so with that uh those are happy to answer any questions about those examples, and uh I don't know, Sonia, if you want to talk about next steps, but or Devin, you do.

Yeah, I can talk about next steps.

So, you know, we do that.

Sorry, yeah, director Dickinson.

That's okay, Chair.

He can go through next steps, all right.

Yeah, so our next step is, you know, this is a three-part workshop series, right?

Um, this is our second workshop.

Um we're gonna meet with the working group and uh in September um and October, we're gonna develop kind of a some recommendations uh in a report.

We'll also the working group will review that report, and then ideally in November um we'll have some recommendations on how we think what we think it makes sense to proceed in what direction, as uh whether it's a bank or exchange or there's other some other options on the table potentially tied to a measure where we think it might make sense and where uh those issues like return to source or um, you know, I think agencies who have their own VMT mitigation specifically on the land development side, how those would integrate, that kind of thing.

We can uh we'll get into that by at November, hopefully.

Thank you.

Director Dickens.

Thank you.

Um I do think that uh commenting to to the state agencies about how they're going to uh address contributions to a to a bank under AB 130 offset emissions uh in uh the area from which the contribution is made.

I think that is uh uh something that does definitely should be raised uh as they consider their their guidelines putting it together.

Uh I do want to note that uh uh a project can always mitigate its VMT on the basis of the project.

Uh and and so when we talk about banks or exchanges or other things, that's really that's really a response to the concerns that have been raised about the feasibility of project by project mitigation.

But that's still an available option that's completely local.

Uh the the idea of banks and exchanges in AB 130 is to is to create a spectrum of opportunities for those who are developing projects to meet their mitigation requirements.

That makes complete sense to me.

It also makes sense to me to explore every alternative uh locally that that we could possibly feasibly and sensibly uh implement it it's not clear to me whether exchanges and banks are mutually exclusive.

It seems that the jurisdictions you were talking about have approached it that way, that you couldn't have a bank and have an exchange in the same jurisdiction.

Uh and and I'm curious whether that's your conclusion or or whether you could have them both in a particular jurisdiction.

There are examples already of of where individual counties are using both formats.

So CCAG's example is that they have an exchange with a list of projects, but you can also pay money to their countywide housing program.

For example, that is they they have a sales tax measure that funds affordable housing that say gets 10 million dollars a year to build affordable housing, and you could just contribute additional money to that and you get a VMT credit associated with that.

So that kind of uh operates more like a bank.

So yes, there's not not rigid rules, it's just the general do you want to have a centralized administrator who's assigning credits, or do you want to have a more flexible kind of list-based project?

Okay.

Thank you for clarifying that because uh in regard with regard to this, I think exploring all the alternatives and and having as many alternatives as it's feasible to have uh is the superior approach because different different alternatives are gonna fit different circumstances, it seems it seems to me.

Beyond that, uh I'm going to uh I'm gonna refrain from getting into the VMT versus L O LOS or VMT as an appropriate metric for measuring uh uh emissions.

There's a a lot more to be said about that subject than we've heard this afternoon, but but uh that the clock is ticking, so I'll save that for another day.

Thanks.

Mr.

Busey.

Yeah, I just want to clarify one thing.

So what just I'll make this statement.

So whether it's federal or state grant funds, whether it's VMT mitigation funding, whether it's toll funding, uh, I believe you know STA is in is trying to ensure that we get our fair share of those dollars.

And so um this idea of a letter um is consistent very consistent with prior board action, and I have no issue uh getting that letter going to make sure we are uh part of those guideline discussions.

Great, thank you.

All right, thanks again.

Um we do have a member of the public that has signed up to speak, Supervisor Kennedy is not one of them.

He's a director, but he wants to speak.

Still a member of the public.

Uh thank you, Chair.

Um just uh to tie on to that.

If if we're gonna do this letter and um we might want to engage SACOG as well and make it a regional.

Good idea.

Okay, thank you.

Um Dan Allison.

Good afternoon, Dan Allison speaking for myself at the moment.

Um I'm glad that STA is um investigating this and considering it.

Uh I think it's a good idea.

Um, some of you are aware, um, some of you may not be aware.

SACOG is in the very beginning stages of considering a mitigation program in order to fund their green means go program on an ongoing basis, because their funding will run out that they have so far.

Um, so there's there's a context.

There's the state, there's the region, there's the county, um, and they all need to be considered.

Um, if one of them meets all the needs, then why reinvent the wheel and have to fund program and staff to do something?

But perhaps they don't meet needs.

The more localized something is, the better it fits the local needs, and the less likely it is that money will go elsewhere.

Al Caden and introducing the idea, use the term leakage as in money that goes out, and you're all familiar with donor state kind of the concept.

Um so that is a concern, and maybe it's a good argument for having a county program, but seeing the context of region and state is important.

Thank you.

Thank you.

So only speaker slip I have on that matter, uh, Madam Clerk.

Is that all that I had, Chair?

Okay, very good.

Uh no action on this.

That is correct, it's received and file.

All right, very good.

Uh I have a feeling we're gonna lose quorum shortly.

So uh Mr.

Busey, uh, you may wish to um really abbreviate your.

Can I wave my presentation?

Thank you.

Thank you.

Awesome.

All right, and no presentation from Carter, right?

No, it's gonna be $25 if you violate the tolling and fifty dollars the second time, and uh you can if you sign up for the thing, you don't have to pay it.

All right, very good.

Uh Mr.

Alison, there's no director's report.

Do you still want to uh use your two minutes to address us?

Um my second address is was on behalf of uh SAC Moves coalition, and we expect to be back uh before the board at some point, and it can be delayed until then.

Thank you.

All right, very good.

Thank you.

All right.

Okay.

Uh if there's nothing else in terms of our open session uh today, Madam Clerk, I believe we just have a closed session.

That is correct.

Okay, in that event uh we will adjourn to closed session.

Thank you.

Yes.