Caltrain Slides Closer To Big Service Cuts

By Sharon Simonson

The Caltrain governing board is expected to declare a fiscal emergency for the beleaguered commuter-rail service at a March 3 board meeting. Such a declaration would allow the agency to make drastic service cuts while escaping environmental analysis usually required by state law.

Caltrain managers assert that the 77-mile system will have negative working capital within a year, a necessary condition for emergency status. That calculation is based on a projected $30 million revenue shortfall in a $103 million operating budget for the fiscal year that starts July 1.

Under the California Environmental Quality Act, Caltrain normally would be required to do an analysis to determine the effects of the cuts. A fiscal emergency eliminates the stipulation.

The proposed reductions come even as train ridership has blossomed since 2004, climbing 44 percent to an average of nearly 40,000 on weekdays. Total ridership in 2010 was more than 6.31 million, up 4 percent from 2009. Fare-box revenue topped $23 million, up more than 9 percent.

But Caltrain riders contribute only about half the revenue to operate the system. The remaining funding comes from the San Mateo County Transit District, the Santa Clara Valley Transportation Authority and the city and county of San Francisco. In the current fiscal year, they have contributed more than $35 million. Next year, they propose to give less than $12 million. Driving the enormous change is real fiscal trouble at debt-laden SamTrans.

San Jose City Councilman Ash Kalra, who serves on the Caltrain board, said he is distressed by the turn of events, but resigned to doing what he must if circumstances command. “At this point it is about survival,” he said. “I don’t like declaring the fiscal emergency, but if the numbers warrant it and we need to give ourselves the flexibility, then we should.”

The changes proposed are obviously profound, he said, and would affect people’s lives in meaningful ways. A declaration of an emergency would also serve the purpose of focusing public attention as well as the nine-member board’s

“It is extremely serious,” he said. “We should be upfront and not try to run away or hide from it. We have to listen to how this will impact people’s lives. It serves us better to understand the gravity of what we are doing and lends a sense of urgency.”

Caltrain’s travails are expected to inconvenience thousands of daily users. But they could also be a bitter pill for commercial real estate landlords. Proximity to Caltrain has emerged as a key leasing driver for tenants in this recovery. In one high-profile example, cell-phone maker Nokia Corp. has said a key component of its decision to lease 156,000 square feet in Sunnyvale was adjacency to a Caltrain station.

Brokers assert substantial rent premiums and occupancy rates for buildings located on Caltrain compared to those that are not. Rents ultimately determine property values. In addition, buildings adjacent to public transit can often function with less parking. That means land can be developed at higher building densities than would otherwise be possible. That higher density makes the underlying ground have greater value.

Caltrain managers propose to reduce weekday service from 86 trains to 48 trains, concentrated during the working commute. They would eliminate weekend and special-event service. Currently the system operates 36 trains on Saturdays and 32 trains on Sundays.

In addition, service to seven stations, mostly on the Peninsula, would be suspended as would service to all six stations south of San Jose’s downtown Diridon. That includes three stations in San Jose and one each in Morgan Hill, San Martin and Gilroy. The system currently has 32 stations in 19 cities beginning in San Francisco and ending in Gilroy.

West Coast Commercial Real Estate News