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Legislative Priorities: Impact/Value Capture and Local Hiring

April 6, 2015

Dear Reader:
First and foremost, thanks to a few readers bringing it to my attention, I have corrected my e-news system settings so that you can now update your subscriptions to include area preferences by clicking the appropriate link at the header or footer of this message.  Pardon this oversight!  In case you missed it, I did send an e-newsletter to my West Contra Costa County subscribers just more than a week ago.

Now to this e-newsletter...  At a recent BART Board of Directors meeting, the Board voted on its state and federal legislative priorities for the 2015 calendar year.  With unanimous support from my colleagues on the Board, I successfully incorporated into our legislative priorities one state and one federal priority.  My state priority involves advocacy for BART and other special district transit agencies to assess impact and/or value capture fees on properties.  My federal priority focuses on increasing local hire and contracting opportunities for federally funded projects.

In addition, this e-newsletter provides some brief information (with a link for more information) about BART's current and future track rehabilitations that may impact your travels.

State Legislative Priority: Impact and Value Capture Fees

Unlike counties and municipalities, special districts of the state like BART do not have the flexibility to impose fees on properties that may impact the services we deliver or benefit from the services we deliver.  City and county governments, for example, can impose development impact fees on local developments.  Because we do not have these instruments available to us, we’re generally limited to either raising fares or seeking a bond or sales tax measure from the public as a means to obtain needed funding.

Many argue – with merit – that solely charging working people when their employers at least equally benefit from and impact our services disproportionately places costs on riders.  In-deed, two-thirds of BART ridership goes to or from Downtown San Francisco and it is this ridership that drives BART’s capacity constraints and service planning.  Furthermore, as the graph above shows, not only does BART’s ridership tend to track with San Francisco employment, but an increasing share of commuters to/from Downtown San Francisco rely on BART as the volume of jobs increases (that’s represented in the growth by the gap between the two curves increasing as the curves increase).  Based on this and the fact that, during the commute period, BART carries as many people across the bay as the Bay Bridge carries cars, it goes without saying that Downtown San Francisco would not have the transportation infrastructure to support its economy without BART.  There simply is not enough road infrastructure to support the volume of vehicles that would drive to the city if BART did not exist.

But what is "Downtown San Francisco" in that sense?  Professional industry businesses tend to cluster around like businesses in order to have equal access to prospective clients, benefit from information spillover, compete for the same market of employees, and much more.  These sorts of economies that densely cluster together are referred to as economies of agglomoration (learn more).  In many metropolitan settings, including Downtown San Francisco, these economic centers rely on the added capacity provided by transit that roads cannot handle.  This is all to say that the reality that Downtown San Francisco could not exist without the transportation afforded by BART is not simply a city-created dilemma, but a business-created dilemma.  And those businesses, nor the properties they operate within, are paying proportionally for the impacts they place upon, and benefits (including property value) they gain from, BART service.

For this calendar year, we will be exploring if there is any legislative support for providing special district agencies a means to assess fees on property owners so that property value benefits and service impacts can somehow be charged.  I’ll be the first to admit that the concept is an uphill climb.  But at the same time, with transit funding being in as much of a dilemma as it now is (as shown in my March 13 e-newsletter), the time to pursue this effort is optimal.

Federal Legislative Priority: Spend Local Dollars Locally

Unlike my state legislative priority, my federal priority impacts cities, counties, and special districts alike.  Several federal agencies that provide federal monies for local projects, including the Federal Transit Administration (FTA) that BART receives various funds from, require that any project which receives federal funds base its minority- and woman-owned firm contracting goals on nationally-oriented targets.  That in many cases results in a minority- and women-owned business subcontracting goal that is much lower than the local targets we have developed (never mind that the local targets are generally developed based on federal guidelines).  In addition, if any federal funding is associated with a project, no local firm subcontracting commitments can be required.  Let me underscore that if one penny of a $20M project is funded by the FTA, BART must base all $20M of the project funds on these nationally-based contracting targets and standards.  At the very least, should not the money that is generated locally (i.e., the $19.9999M in the previous example) be able to be regulated locally??  I certainly feel so, and that's what my federal legislative priority focuses on.

Similarly, federal regulations also prohibit BART from setting local hiring requirements as part of a project.  While we can and have "pressured" firms that win a BART bid that has federal money tied to it to try to hire locally, we have no authority to require it.

The Good News
Shortly after this federal legislative priority was agreed to by the BART Board of Directors, the Federal Transit Administration announced that they will be allowing a one-year pilot program to take place that will lift the local hiring prohibitions when there is federal money tied to a project.  In addition to local transit agencies being provided the flexibility to test out geographic-based preferences in worker hiring, they will also be allowed to establish income- (also known as workforce-) based and veteran status-based worker hiring preferences.  What will come after this one-year pilot remains to be seen.  But what I hope is that it becomes the beginning of a bigger movement to provide greater local control over hiring priorities for local projects.

The Not-so-Good News
While I am no constitutional law attorney, some such attorneys have explained to me that the dilemma with being able to establish local firm subcontracting preferences or higher minority- or women-owned subcontracting goals is driven by constitutional constraints.  While projects that are fully funded by local and state monies can have these sorts of requirements tied to them, that option is only available due to the privilege and immunity clause of the constitution that affords states greater rights on how they use their money.  When a project is federally funded, however, the interstate commerce clause of the constitution takes precedent and courts have upheld that open and competitive bidding of federal dollars requires that no geographic boundaries be set and, by extension, any women- or minority-business participation goals must be based on national targets.  And although I would like to argue that we should be able to set goals proportional to the amount of money that is locally based, I have too been told that this amounts to “dividing money,” which is not allowed and can set an undue precedent when it comes to other regulations.

So, again, hopefully this one-year trial of local worker hire can be the beginning of a longer-term evolution towards greater local control of local project hiring priorities.

Several Weekends of Closure on BART's A-Line

You have likley already heard that during the next several weekends, service between BART's Coliseum and Fruitvale Stations will be suspended to perform critical maintenance of our track in this section.  The rails and ties (the wooden [sometimes concrete] blocks that the rails rest on) must be replaced to maintain safety and reliability of BART service.

A bus bridge will connect passengers between the two stations.  Although the bus bridge has been scheduled so that your trip should only increase by ten to fifteen minutes, we suggest that you add between thirty and sixty minutes of wiggle-room in your schedule.  The March 18 BART news release regarding this work details the dates of the closure for your planning.

Over the next several months, BART will need to do similar repairs at the locations listed below.  Whether and how these repairs will impact service will be released as they are planned moving forward...

  • Between South Hayward and Union City Stations
  • Between West Oakland and the Transbay Tube
  • Between San Leandro and Bayfair Stations
  • Between Balboa Park and Daly City Station

To stay up-to-date about service interruptions and other BART news, sign up for BART alerts.

Sincerely,


Zakhary Mallett, MCP
Director, District 7
San Francisco Bay Area Rapid Transit District (BART)
300 Lakeside Drive, 23rd Floor
Oakland, California 94612
510-815-9320

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