AGENDA ITEM 10-A
ACTION ITEM
TO:
CHAIRMAN MILDE AND THE VRE OPERATIONS BOARD
FROM:
DALE ZEHNER
DATE:
JUNE 18, 2010
RE:
FY 2012 BUDGET GUIDELINES AND CONSIDERATIONS
_____________________________________________________________________
RECOMMENDATION:
The VRE Operations Board is being asked to provide direction in the development of
the FY 2012 budget options for train operations and capital projects.
BACKGROUND:
VRE has adopted a financial planning process that provides for early consideration of
budget issues and assumptions. Each year, VRE staff meets numerous times with the
member jurisdiction’s Chief Administrative Officers (CAO) Budget Taskforce to develop
the annual proposed budget. An independent CAO recommendation is provided to the
Operations Board and Commissions in conjunction with the final budget submission at
the December Operations Board meeting.
As part of the budget process, the jurisdictional CAO Budget Task Force met on June
15, 2010 to review various budget issues, including the cost of fuel, insurance, the new
operating contract, fleet management plan, ridership projections, fuel tax projections,
and subsidy. The goal is to permit the Budget Task Force to focus on material issues
early in the budget process.
REVISIONS TO FY 2011 BUDGET
Each year, revisions to the current year budget are presented to the Operations Board
in December, along with the recommendations for the next budget year. The following
items are expected to be reflected in the revised FY 2011 Budget:

Fare revenue: Fare revenue is budgeted at $28.1M, based on average daily
ridership of 16,200. Current ridership is in excess of this amount and fare
revenue will be reviewed and revised upward as appropriate.

Changes to state revenue: In December 2009, VRE staff estimated the State
would fund their portion of the match to the federal capital program at 35%, with
the exception of the 100% match provided for CMAQ grants. In May, the State
published their draft Six-Year Improvement Program, with FY 2011 average
funding of 56%. VRE received state match for federal grants as follows:
o 100% of match for $5.8M of CMAQ projects, as budgeted
o 80% of match for $14.7M of costs for the purchase of locomotives,
including federal earmarks
o 53% for $15.3M of other projects, primarily debt service
o no funding for $2.1M of costs, including $1M programmed for capital cost
of contracts/preventive maintenance
At the state’s request, VRE reviewed our FY 2011 funding needs and
considerably decreased the amount requested for overlap (the amount funded
from prior year funds to reduce the impact of current year funding delays) for
track lease payments and state-only debt service payments. This is a one year
decrease of state funds for VRE programs that will not impact the available funds
for FY 2011.
The state provided $7.5M for operating assistance, a decrease of $224,000 from
the budgeted amount and 14% less than the original award for FY 2010. The net
impact at present is a total increase of available funds for FY 2011 of $1.5M;
however, this will decrease to $1.3M if the state does not provide match funds for
the revisions described below.
Revisions to Capital Program: VRE staff proposes several adjustments to the
FY 2011 capital program to allow VRE to order as many of the remaining five
locomotives as possible before a mandated locomotive model change occurs for
units ordered after December 31, 2010. This will also permit VRE to take
advantage of a significant price break for all units added during the current
production run.
One of the reasons VRE has historically “banked” grant money over multiple
years for long-term projects is to ensure flexibility in the use of federal grant
funds. However, we believe that in this case, transferring funds from other
projects to the purchase of locomotives is the best course of action as it will
result in long-lasting financial savings for operations, particularly as the useful life
of a locomotive is forty years. Owning two separate models of locomotive has
significant inventory and maintenance costs over the lifecycle of the units which
VRE is trying to avoid. Projects that will be reduced or for which funding will be
shifted to future years are:
o Mid-day storage – first year of funding of $1.7M for $40M project; will be
restored in FY 2012
o Fare collection upgrade - $400K of multi-year funding; will be restored in
FY 2012
o Rail car purchase – first year of funding of $250K; will be restored in future
years
o Construction oversight and facilities and rolling stock improvements –
$450K of funding has been identified from prior year surpluses or future
grants. Contingency of $158K reduced because not needed for locomotive
project.
The net result of these changes is a $2.9M increase to the amount available for
the locomotive purchase.
Approval for the purchase of four additional
locomotives is presented in a separate Board item. The state has indicated that
they may not provide matching funds for this shift of $2.9M as it is too late in their
process.
In addition, VRE’s share of federal formula funding has been reduced by $769K,
which will be accommodated in the revised program.

Insurance trust fund: VRE’s plan was to restore the balance in the Insurance
Trust Fund to the $10 million level by early 2012. However, in September, VRE
staff plans to make a recommendation to complete that process in FY 2011.

Subsidy Credit Analysis: As indicated during the FY 2011 budget presentation
in September, VRE staff will propose a recommended use for any surplus for FY
2010, including the possibility of a reduction to the subsidy payment due in
January 2011.

Operating expenses: Operating expenses, including fuel costs, equipment
maintenance and the costs of the new Keolis and Amtrak contracts will be
reviewed during the early months of FY 2011 for inclusion in the revised budget,
as needed.
FY 2012 BUDGET GUIDELINES
GUIDELINE #1: VRE staff will take all reasonable measures to continue to grow the
ridership and improve the overall service to the riders. Measures to be reviewed include
service levels, fares, train schedules, service amenities, and contracted services which
bear on the ridership experience.
GUIDELINE #2: VRE staff will strive to ensure that the total jurisdictional subsidy for FY
2012 will be the same or less than the FY 2011 total subsidy, with consideration given
to changes to individual member contributions. The total jurisdictional subsidy has
decreased for the last two years, from $17,275,499 in FY 2009 to $16,070,309 in FY
2011.
GUIDELINE #3: VRE staff will work to maintain fares at the FY 2011 level or, if
unavoidable, limit the fare increase to one per fiscal year. VRE had three fare increases
between July 2008 and July 2009 and kept fares level in FY 2011.
GUIDELINE #4: The replacement of aging locomotives will be a priority for the use of
capital grant funds and additional funding sources will be actively pursued. Fifteen new
locomotives have been ordered and will begin arriving in July 2010. The new
locomotives will be cost and energy efficient and more reliable than the current fleet. As
noted above, VRE staff is pursuing the funding and purchase of as many of the
remaining five locomotives as possible during FY 2011. VRE’s options under the
purchase contract expire in 2013. Any remaining needed locomotives will be purchased
in FY 2012 or FY 2013, as funding permits.
GUIDELINE #5: The mechanisms for funding the Capital Improvement Program to
insure the efficient use of all funding sources and the most expeditious progress on high
priority projects will be reviewed with the assistance of the CAO Task Force and any
recommended changes will be incorporated in the FY 2012 through FY 2017 CIP.
GUIDELINE #6: Fuel hedging strategies will continue in order to provide greater
predictably in budgeting for diesel fuel costs.
GUIDELINE #7: Funding will be provided to maintain the insurance trust fund balance
at $10 million, the level required by the Virginia Division of Risk Management.
GUIDELINE #8: Funding will be provided over a multi-year period to eventually
establish VRE’s level of working capital at an amount equal to three months of operating
costs. This level, which has been discussed with the Operations Board and is
consistent with the reserve goals of other transit agencies, will allow VRE to efficiently
meet its obligations during the course of the year as well as make orderly
accommodation for significant shortfalls. In addition, a capital reserve will be
maintained to provide local match for earmarks, and to fund smaller capital projects and
projects for which grant funds are unavailable. Funding for the reserves will be provided
by surplus funds at year-end and, for the capital reserve, proceeds of the sale of capital
assets.
OTHER FY 2012 BUDGET ISSUES AND ASSUMPTIONS
 State Funding: State funding varies considerably from year to year. As in the
past, VRE staff will continue to work closely with DRPT to develop estimates. Our
experience with the FY 2011 budget process indicates that, in the future, DRPT
will award match funds at differential rates depending on the nature of the
project; will not provide match to all of the projects in VRE’s capital program; and
may not approve grant amendments required to sync state and federal grants. As
a result, our percentage estimate for funding should take these new procedures
into consideration.
DRPT is also considering changes to the operating
assistance formula that could substantially decrease the annual amount available
for VRE. VRE staff will follow this process closely over the next six months.

Number of Trains. The FY 2011 Six Year Financial Forecast called for no change
to service levels in FY 2011 and a gradual increase from 30 daily trains to 34
daily trains over the period ending in FY 2015. A combination of funding and
storage issues will prohibit any additional trains in the early years of the current
six-year planning cycle.

Cost Recovery Ratio. The budget forecast must ensure the cost recovery ratio
remains in the 50% to 60% range.

2% Motor Fuels Tax: VRE staff is aware of jurisdictional concerns related to fuels
tax revenue projections and the ability to continue to support current VRE and
PRTC expenses. Prince William County, in particular, has indicated that in the
future all VRE and PRTC contributions must come from their 2% motor fuels tax
receipts.

Spotsylvania County: Spotsylvania County will be providing one-half of their FY
2012 subsidy payment during FY 2012.
NEXT STEPS:

Continue discussing FY 2012 budgeting scenarios with the CAO Budget Task
Force.

Present preliminary budget forecasts to the Operations Board in August 2010.

Begin review of all FY 2012 revenue and cost assumptions in September 2010
with CAO Budget Task Force.
FISCAL IMPACT:
There is no fiscal impact related to the development of the FY 2012 budget.
TO:
FROM:
DATE:
RE:
CHAIRMAN MILDE AND THE VRE OPERATIONS BOARD
DALE ZEHNER
JUNE 18, 2010
FY 2012 BUDGET GUIDELINES AND CONSIDERATIONS
RESOLUTION
10A-06-2010
OF THE
VIRGINIA RAILWAY EXPRESS
OPERATIONS BOARD
WHEREAS, effective financial planning for the Virginia Railway Express is based on
budget development with guidelines approved by the VRE Operations Board; and,
WHEREAS, the VRE Operations Board has directed that the development of each
annual budget involve consultation and cooperation with the Chief Administrative
Officers of VRE’s participating and contributing jurisdictions; and,
NOW, THEREFORE, BE IT RESOLVED THAT, the VRE Operations Board directs staff
to develop budget options for the FY 2012 operating and capital budget in accordance
with the following guidelines:
GUIDELINE #1: VRE staff will take all reasonable measures to continue to grow the
ridership and improve the overall service to the riders. Measures to be reviewed include
service levels, fares, train schedules, service amenities, and contracted services which
bear on the ridership experience.
GUIDELINE #2: VRE staff will strive to ensure that the total jurisdictional subsidy for FY
2012 will be the same or less than the FY 2011 total subsidy, with consideration given
to changes to individual member contributions. The total jurisdictional subsidy has
decreased for the last two years, from $17,275,499 in FY 2009 to $16,070,309 in FY
2011.
GUIDELINE #3: VRE staff will work to maintain fares at the FY 2011 level or, if
unavoidable, limit the fare increase to one per fiscal year. VRE had three fare increases
between July 2008 and July 2009 and kept fares level in FY 2011.
GUIDELINE #4: The replacement of aging locomotives will be a priority for the use of
capital grant funds and additional funding sources will be actively pursued. Fifteen new
locomotives have been ordered and will begin arriving in July 2010. The new
locomotives will be cost and energy efficient and more reliable than the current fleet. As
noted above, VRE staff is pursuing the funding and purchase of as many of the
remaining five locomotives as possible during FY 2011. VRE’s options under the
purchase contract expire in 2013. Any remaining needed locomotives will be purchased
in FY 2012 or FY 2013, as funding permits.
GUIDELINE #5: The mechanisms for funding the Capital Improvement Program to
insure the efficient use of all funding sources and the most expeditious progress on high
priority projects will be reviewed with the assistance of the CAO Task Force and any
recommended changes will be incorporated in the FY 2012 through FY 2017 CIP.
GUIDELINE #6: Fuel hedging strategies will continue in order to provide greater
predictably in budgeting for diesel fuel costs.
GUIDELINE #7: Funding will be provided to maintain the insurance trust fund balance
at $10 million, the level required by the Virginia Division of Risk Management.
GUIDELINE #8: Funding will be provided over a multi-year period to eventually
establish VRE’s level of working capital at an amount equal to three months of operating
costs. This level, which has been discussed with the Operations Board and is
consistent with the reserve goals of other transit agencies, will allow VRE to efficiently
meet its obligations during the course of the year as well as make orderly
accommodation for significant shortfalls. In addition, a capital reserve will be
maintained to provide local match for earmarks, and to fund smaller capital projects and
projects for which grant funds are unavailable. Funding for the reserves will be provided
by surplus funds at year-end and, for the capital reserve, proceeds of the sale of capital
assets.
AGENDA ITEM 10-B
ACTION ITEM
TO:
CHAIRMAN MILDE AND THE VRE OPERATIONS BOARD
FROM:
DALE ZEHNER
DATE:
JUNE 18, 2010
RE:
AUTHORIZATION TO AWARD A CONSTRUCTION CONTRACT
FOR THE FREDERICKSBURG STATION INFRASTRUCTURE
REPAIRS PROJECT
RECOMMENDATION:
The VRE Operations Board is being asked to authorize the Chief Executive
Officer to award a construction contract for the Fredericksburg Station
Infrastructure Repairs project to Trinity Construction Group, Inc. from Culpeper,
Virginia in the amount of $1,702,993, plus a 15% contingency of $255,449, for a
total amount not to exceed $1,958,442.
BACKGROUND:
In 2007, VRE received a federal earmark for repairs to the Fredericksburg VRE
station. The earmark totaled $2.6 million, but was allocated over four years
requiring VRE to take a phased approach toward completing the work. To initiate
the process, VRE performed a bridge and station condition assessment and
documented the findings in a report. Then, in 2009, the detailed design plans
identifying the needed repairs were completed.
The repairs will address the structure supporting the VRE platform which has
become a hazard for pedestrians walking below it due to falling debris. This
project will eliminate or substantially reduce the risk of deteriorating concrete that
may dislodge and fall on the station platform and tracks. In addition, the project
will perform architectural rehabilitation to address cosmetic and functional
deficiencies.
At the March 19, 2010 Operations Board meeting, authorization was provided to
solicit construction bids. Following the competitive procurement process, three
bids were received on May 6, 2010. These bids ranged in the amount of $1.703
million to $2.436 million.
After reviewing the bids, VRE staff is recommending award to the lowest
responsive and responsible bidder – Trinity Construction Group, Inc. of Culpeper,
Virginia. Authorization is being sought with a 15% contingency in order to
address unforeseen conditions that may arise due to the age and condition of the
facility. Construction is scheduled to begin in July 2010 and be completed in early
Fall 2011.
FISCAL IMPACT:
Funding for this project is included in VRE’s Capital Improvement Program as part
of the Fredericksburg rail station project. Funding is via a federal earmark with
state and local funding provided as match.
2
TO:
FROM:
DATE:
RE:
CHAIRMAN MILDE AND THE VRE OPERATIONS BOARD
DALE ZEHNER
JUNE 18, 2010
AUTHORIZATION TO AWARD A CONSTRUCTION CONTRACT
FOR THE FREDERICKSBURG STATION INFRASTRUCTURE
REPAIRS PROJECT
RESOLUTION
10B-06-2010
OF THE
VIRGINIA RAILWAY EXPRESS
OPERATIONS BOARD
WHEREAS, the structure supporting the VRE platform at the Fredericksburg
station has become a hazard for pedestrians walking below it due to falling debris;
and,
WHEREAS, over a four year period, VRE has received federal funding totaling
approximately $2.6 million for repairs and rehabilitation of the station and track
infrastructure; and,
WHEREAS, bids were solicited in a competitive procurement process based on
detailed design plans.
NOW, THEREFORE, BE IT RESOLVED THAT, the VRE Operations Board
authorizes the Chief Executive Officer to award a construction contract for the
Fredericksburg Station Infrastructure Repairs project to Trinity Construction
Group, Inc. in the amount of $1,702,993, plus a 15% contingency of $255,449, for
a total amount not to exceed $1,958,442.
BE IT FURTHER RESOLVED THAT, the VRE Operations Board authorizes the
Chief Executive Officer to execute any related documents necessary to implement
the project.
3
AGENDA ITEM 10-C
ACTION ITEM
TO:
CHAIRMAN MILDE AND THE VRE OPERATIONS BOARD
FROM:
DALE ZEHNER
DATE:
JUNE 18, 2010
RE:
AUTHORIZATION TO AWARD A CONTRACT FOR ADVERTISING
SALES REVENUE
_____________________________________________________________________
RECOMMENDATION:
The VRE Operations Board is being asked to authorize the VRE Chief Executive Officer
to award a three year base contract with four, one-year renewable options to CBS
Outdoor Advertising of New York for the sale of advertising space on VRE trains and
platforms.
BACKGROUND:
VRE currently has a contract with CBS Outdoor for the sale of advertising space on
VRE trains and platforms. This contract includes a period of performance from January
1, 2001 through December 31, 2005, with a five year renewable option which was
exercised and expires on December 31, 2010.
The original advertising procurement was issued by WMATA in 2000 and included
options for VRE and PRTC so that larger advertising clients could be attracted than
each agency would attract individually. As this contract was nearing the expiration date,
WMATA issued an RFP that again included options for PRTC and VRE. Three
proposals were received and evaluated by the WMATA selection committee. CBS
Outdoor was ranked first and awarded the contract by WMATA on May 28, 2010.
VRE has found this contract to be successful in generating nonfare revenue. VRE
currently receives 65% of revenue generated from the sale of advertising on platforms
and trains. The new contract offers 50% total revenue, a lower percentage attributable
to the present market conditions. While VRE currently earns about $48,000 per year
from this contract, we are optimistic that this amount would improve as the advertising
market improves. VRE’s base contract will begin January 1, 2011 and run through
December 31, 2014 with four one-year renewable options. The contract is being
recommended for the full seven years (three base years plus four one-year options),
with the CEO exercising the option years at his discretion.
FISCAL IMPACT:
VRE estimates the annual revenue from this contract to be approximately $40,000 $50,000.
TO:
FROM:
DATE:
RE:
CHAIRMAN MILDE AND THE VRE OPERATIONS BOARD
DALE ZEHNER
JUNE 18, 2010
AUTHORIZATION TO EXTEND CONTRACT FOR ADVERTISING
SALES REVENUE
RESOLUTION
10C-06-2010
OF THE
VIRGINIA RAILWAY EXPRESS
OPERATIONS BOARD
WHEREAS, VRE currently has a contract with CBS Outdoor Advertising of New York
for the sale of advertising space on VRE trains and platforms; and,
WHEREAS, the term of this contract is December 31, 2010; and,
WHEREAS, WMATA issued an RFP that included options for PRTC and VRE so that
larger advertising clients could be attracted than each agency would attract individually;
and,
WHEREAS, WMATA completed a competitive procurement and awarded a contract to
CBS Outdoor on May 21, 2010; and,
WHEREAS, VRE estimates the revenue from this contract to be approximately $40,000
and $50,000 per year.
NOW, THEREFORE BE IT RESOLVED THAT, the VRE Operations Board authorizes
the VRE Chief Executive Officer to award a three year base contract with four, one-year
renewable options to CBS Outdoor Advertising of New York for the sale of advertising
space on VRE trains and platforms.
AGENDA ITEM 10-D
ACTION ITEM
TO:
CHAIRMAN MILDE AND THE VRE OPERATIONS BOARD
FROM:
DALE ZEHNER
DATE:
JUNE 18, 2010
SUBJECT: AUTHORIZATION TO EXTEND AMENDED OPERATING/ACCESS
AGREEMENT WITH CSXT
RECOMMENDATION:
The VRE Operations Board is being asked to recommend that the Commissions
authorize the Chief Executive Officer to execute an extension of the existing Amended
Operating/Access Agreement with CSXT to January 31, 2011.
BACKGROUND:
The VRE has an Operating/Access Agreement with CSXT related to VRE operations in
the Fredericksburg to Washington corridor. That agreement, entered into in 1994, has
been amended and extended several times, most recently this past December, with an
agreed upon extension to July 31, 2010. A further extension is being requested at this
time to provide sufficient time to complete negotiation of a new agreement.
Since December 2005, numerous negotiation sessions have been held with CSXT
representatives on the terms of a new, long-term agreement. Preliminary agreement
was achieved in a number of areas to include:





Term of the agreement
Change in method of calculating the annual escalation
Incentive agreement for improved on time performance
Additional CSXT supervision in the VRE operating territory
Approval of infrastructure improvements at VRE facilities
Progress has slowed, however, due to a failure to reach an agreement on the level of
liability coverage. CSXT continues to insist on including a higher level of liability and
terrorism coverage in the new agreement. Although we were able to cap commuter rail
liability at the state level, the legislation does not provide protection from gross
negligence claims or claims of third parties, i.e. nonpassengers. Therefore, CSXT and
Norfolk Southern continue to press for higher liability insurance coverage. Currently,
VRE has $250 million in coverage. An extension of the current agreement is needed
while this issue is resolved.
FISCAL IMPACT:
Funding for the CSX track access fee has been included in the FY 2011 budget,
including an escalation of 4%.
2
TO:
FROM:
DATE:
RE:
CHAIRMAN MILDE AND THE VRE OPERATIONS BOARD
DALE ZEHNER
JUNE 18, 2010
AUTHORIZATION TO EXTEND AMENDED OPERATING/ACCESS
AGREEMENT WITH CSXT
RESOLUTION
10D-06-2010
OF THE
VIRGINIA RAILWAY EXPRESS
OPERATIONS BOARD
WHEREAS, the Commissions currently have an amended Operating/Access
Agreement with CSXT relating to VRE operations in the Fredericksburg to Washington
corridor, with said agreement extension ending on July 31, 2010; and,
WHEREAS, staff is currently engaged in ongoing discussions with CSXT concerning a
new agreement and does not anticipate conclusion of these discussions prior to the
expiration of the Amended Operating/Access Agreement; and,
WHEREAS, a proposal to extend the existing agreement to January 31, 2011, without
any changes to the current agreement is expected from CSXT; and,
WHEREAS, the purpose of this extension is to allow time to negotiate and resolve the
outstanding liability issues relating to a new agreement; and,
WHEREAS, necessary funding has been incorporated into the FY 2011 budget to allow
VRE to continue its operations over CSXT tracks via this contract extension.
NOW, THEREFORE, BE IT RESOLVED THAT, the VRE Operations Board
recommends that the Commissions authorize the Chief Executive Officer to execute an
extension of the existing Amended Operating/Access Agreement with CSXT to January
31, 2011.
3
AGENDA ITEM 10-E
ACTION ITEM
TO:
CHAIRMAN MILDE AND THE VRE OPERATIONS BOARD
FROM:
DALE ZEHNER
DATE:
JUNE 18, 2010
SUBJECT: AUTHORIZATION TO EXTEND AMENDED OPERATING/ACCESS
AGREEMENT WITH NORFOLK SOUTHERN
RECOMMENDATION:
The VRE Operations Board is being asked to recommend that the Commissions
authorize the Chief Executive Officer to execute an extension of the existing Amended
Operating/Access Agreement with Norfolk Southern to January 31, 2011.
BACKGROUND:
VRE has an Operating/Access Agreement with Norfolk Southern (NS) relating to VRE
operations in the Manassas to Washington corridor. That agreement, entered into in
1999, has been amended and extended several times, most recently this past
December, with an agreed upon extension to July 31, 2010. A further extension is
being requested at this time to provide sufficient time to complete negotiations of a new
agreement.
Following detailed negotiation sessions with Norfolk Southern representatives, an
agreement in principle was reached on all contract items with the exception of liability
coverage. The Operations Board and Commissions approved these terms at their June
and July, 2005 meetings respectively, and authorized execution of a new agreement
that conformed to each of those items.
Subsequent to the Commissions’ action, however, it became clear that an agreement
on the level of liability coverage could not be reached and the contract could not be
executed. Norfolk Southern insists on including $500 million in liability and terrorism
coverage in the new agreement. Currently, VRE has $250 million in coverage. An
extension of the current agreement is needed while staff continues to attempt to resolve
the insurance issue.
FISCAL IMPACT:
Funding for the Norfolk Southern track access fee has been budgeted in the FY 2011
budget, including an escalation of 4%.
2
TO:
FROM:
DATE:
RE:
CHAIRMAN MILDE AND THE VRE OPERATIONS BOARD
DALE ZEHNER
JUNE 18, 2010
AUTHORIZATION TO EXTEND AMENDED OPERATING/ACCESS
AGREEMENT WITH NORFOLK SOUTHERN
RESOLUTION
10E-06-2010
OF THE
VIRGINIA RAILWAY EXPRESS
OPERATIONS BOARD
WHEREAS, the Commissions currently have an Operating/Access Agreement with
Norfolk Southern related to VRE operations in the Manassas to Washington corridor,
with said agreement ending on July 31, 2010; and,
WHEREAS, staff has reached an agreement in principle on many substantive items
relating to a new agreement following detailed negotiation sessions with Norfolk
Southern representatives; and,
WHEREAS, a proposal to extend the existing agreement to January 31, 2011, without
any changes to the existing agreement is expected from NS; and,
WHEREAS, the purpose of this extension is to allow time to negotiate and resolve the
outstanding insurance issues relating to a new agreement; and,
WHEREAS, necessary funding has been incorporated into the FY 2011 budget to allow
VRE to continue its operations over Norfolk Southern tracks via this contract extension.
NOW, THEREFORE, BE IT RESOLVED THAT, the VRE Operations Board
recommends that the Commissions authorize the Chief Executive Officer to execute an
extension of the existing Amended Operating/Access Agreement with Norfolk Southern
to January 31, 2011.
3
AGENDA ITEM 10-F
ACTION ITEM
TO:
CHAIRMAN MILDE AND THE VRE OPERATIONS BOARD
FROM:
DALE ZEHNER
DATE:
JUNE 18, 2010
RE:
AUTHORIZATION TO MODIFY THE CONTRACT FOR NEW
LOCOMOTIVE PURCHASE
RECOMMENDATION:
The VRE Operations Board is being asked to recommend that the Commissions
authorize the Chief Executive Officer to modify the contract with MotivePower,
Inc., for the purchase of locomotives so that the base order is increased from
fifteen to nineteen locomotives, increasing the contract value by $13,218,128, for
a total amount not to exceed $73,798,120.
BACKGROUND:
In January of 2008, the Operations Board authorized VRE staff to enter into a
contract with MotivePower, Inc. of Boise, Idaho for the manufacture of two new
locomotives in an amount not to exceed $9.6 million. Since that time, additional
approvals have been sought and received as follows:




October 2008 - three additional units (five total) for a contract total of
$20.3 million.
March 2009 - four additional units (nine total) for a contract total of $36.4
million.
June 2009 - three additional units (twelve total) for a contract total of $48.4
million.
October 2009 – three additional units (fifteen total) for a contract total of
$60.6 million.
Authorization is now being sought for up to four additional units. The first three
units will be purchased using federal formula funds for FY 2011 and prior years.
The fourth unit will be purchased by transferring federal formula funds from other
projects in FY 2011, reducing the contingency amount needed for the project,
based on costs to date, and using up to $1.5 million of VRE’s capital reserve of
$2.4 million. The capital program reallocation is described in detail in the FY
2012 budget item found earlier on the agenda.
MotivePower has offered a price of $3,604,532 per locomotive for all orders
placed by July 5, 2010. This price reflects the supplier discount they receive for
bulk purchasing, since the supplies for these locomotives will be combined with
some of VRE’s prior orders. Locomotives ordered after that date will cost
approximately $500,000 more per unit, in accordance with the contract
provisions. As such, VRE is making every effort to order as many units as
possible at the lower price, including using a portion of the capital reserve. In
addition, although the option contract extends until 2013, locomotives ordered
after December 31, 2010 will be a different model which requires additional
inventory and training, resulting in significantly higher lifecycle costs.
In January 2008, the Operations Board authorized up to $4,145,920, including
contingency, to STV, Inc. for construction engineering and inspection services for
the purchase of all twenty locomotives. Similar to the locomotive contract, this
contract was structured to allow incremental notices to proceed, such that
authorization will be issued concurrently and proportionately with locomotive
option orders. As such, no additional Board authorization is needed for the
oversight work.
FISCAL IMPACT:
Funding is available from the locomotive acquisition line item of the VRE capital
budget. The first three units will be purchased using federal formula funds for FY
2011 and prior years. The fourth unit will be purchased by transferring federal
formula funds from other projects in FY 2011, reducing the contingency amount
needed for the project based on costs to date, and using up to $1.5 million of
VRE’s capital reserve of $2.4 million.
TO:
FROM:
DATE:
RE:
CHAIRMAN MILDE AND THE VRE OPERATIONS BOARD
DALE ZEHNER
JUNE 18, 2010
AUTHORIZATION TO MODIFY THE CONTRACT FOR NEW
LOCOMOTIVE PURCHASE
RESOLUTION
10F-06-2010
OF THE
VIRGINIA RAILWAY EXPRESS
OPERATIONS BOARD
WHEREAS, in January of 2008, the Operations Board approved the award of a
contract to MotivePower, Inc. for the manufacture of two new locomotives; and,
WHEREAS, since that time, additional approvals have been granted allowing the
purchase of fifteen total units for a contract total of $60.6 million; and,
WHEREAS, authorization is now being sought for up to four additional units.
NOW, THEREFORE, BE IT RESOLVED THAT, the VRE Operations Board
recommends that the Commissions authorize the Chief Executive Officer to
modify the contract with MotivePower, Inc., for the purchase of locomotives so
that the base order is increased from fifteen to nineteen locomotives, increasing
the contract value by $13,218,128, for a total amount not to exceed $73,798,120.
AGENDA ITEM 10-G
ACTION ITEM
TO:
CHAIRMAN MILDE AND THE VRE OPERATIONS BOARD
FROM:
DALE ZEHNER
DATE:
JUNE 18, 2010
RE:
AUTHORIZATION TO EXECUTE A FORCE ACCOUNT
AGREEMENT FOR THE FREDERICKSBURG STATION
INFRASTRUCTURE REPAIRS PROJECT
RECOMMENDATION:
The VRE Operations Board is being asked to authorize the Chief Executive
Officer to execute a force account agreement with CSX Transportation for the
Fredericksburg station infrastructure repairs project in an amount not to exceed
$200,000.
BACKGROUND:
Award of a construction contract to perform the Fredericksburg station
rehabilitation work is being recommended in an earlier board item. In addition to
this work performed by the general contractor, CSX also requires that certain
tasks be performed by union forces under a force account agreement, including
work associated with track drainage. In addition, a CSX flagman will be required
to provide worker protection during all work performed near the tracks. The force
account agreement will cover the aforementioned work and is being requested in
an amount not to exceed $200,000.
FISCAL IMPACT:
Funding for this project is included in VRE’s Capital Improvement Program as part
of the Fredericksburg rail station project. Funding is being provided using a
federal earmark with state and local funds being provided as match.
TO:
FROM:
DATE:
RE:
CHAIRMAN MILDE AND THE VRE OPERATIONS BOARD
DALE ZEHNER
JUNE 18, 2010
AUTHORIZATION TO EXECUTE A FORCE ACCOUNT
AGREEMENT FOR THE FREDERICKSBURG STATION
INFRASTRUCTURE REPAIRS PROJECT
RESOLUTION
10G-06-2010
OF THE
VIRGINIA RAILWAY EXPRESS
OPERATIONS BOARD
WHEREAS, the structure supporting the VRE platform at the Fredericksburg
station has become a hazard for pedestrians walking below it due to falling debris;
and,
WHEREAS, over a four year period, VRE has received federal funding totaling
approximately $2.6 million for repairs and rehabilitation of the station and track
infrastructure; and,
WHEREAS, a construction contractor has been selected and a force account
agreement with CSXT is currently required for flagmen services and drainage
work during construction.
NOW, THEREFORE, BE IT RESOLVED THAT, the VRE Operations Board
authorizes the Chief Executive Officer to execute a force account agreement with
CSX Transportation for the Fredericksburg station infrastructure repairs project in
an amount not to exceed $200,000.
BE IT FURTHER RESOLVED THAT, the VRE Operations Board authorizes the
Chief Executive Officer to execute any related documents necessary to implement
the project.
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