Board of Directors Meeting   5/24/2021

Great.

Well, good morning, everybody.

Thank you for being here and welcome to our May board meeting for the Virginia Passenger Rail Authority.

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On November 19th, Governor Ralph Northam signed House Bill 5005.

Virginia's revised biennial budget, which includes new language for meeting electronically.

In light of the continuing state of emergency declared by Governor Northam, we are conducting this meeting in a remote setting, keeping safety top of mind, and mitigating the impacts and spread of COVID-19.

Now, we do not need to vote on that motion, but I would like to ask Joy Harris to go ahead and do a roll call for attendance today.

Will the board members present please respond aye when your name is called.

Ms. Buller.

Aye.

Mr. Fisette.

Aye.

Mr. Hall.

Ms. Moses-Ned.

Ms. Zimmerman?

Aye.

Madam Chair, that concludes the roll.

Great.

And I do see Ms. Moses-Ned is logged in, so maybe she just had to step away for a moment.

but we are going to go ahead and go into public comment.

Yes, I have a short monologue to read here.

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The public comment will now begin.

All right, well, we will go ahead and close the public comment period then.

Thank you, Andy.

So, very good to see everybody today.

As you can expect from the change in some of the governor's orders, we do hope to have our board meeting in June in person.

That is going to be on the 28th in Richmond.

We will be back to you with some more information about travel arrangements and the agenda for the meeting.

But please do expect to meet with us in person on the 28th.

I'm looking forward to seeing everybody.

It's very odd for all of us to be on a board that has just been appointed and none of us having had the opportunity to meet in person yet.

So really looking forward to being able to do that with you all soon.

Few announcements.

On May 5th, we did announce with Governor Northam and Norfolk Southern CEO Jim Squires, the Western Rail Initiative.

This is our binding term sheet that we have agreed to with Norfolk Southern for $257 million.

And this is going to be to extend a second train to Roanoke and also extend service from Roanoke to the New River Valley.

That includes $38.5 million for acquisition of the Virginia line between Salem and Christiansburg.

$36 million for the Roanoke Yard improvements and additional improvements between Manassas and Roanoke.

And that includes $50 million for a seven-mile siding between Knoxville and Calverton, which will create a continuous 22-mile double-track corridor between Manassas and Remington, Virginia.

So, our next steps are to go into negotiations for definitive agreements with Norfolk Southern

We will certainly keep you appraised on our progress as we're moving forward with that as well.

We're very excited about it.

This is something we've been working on for a number of years and very important to the residents of that part of the state from an economic development standpoint, the ability to connect the new River Valley to Central Virginia and points north and into the Northeast corridor.

is very exciting.

It will also provide additional service for people in the northern part of the corridor, including Lynchburg, Culpeper, Charlottesville, Manassas, and Burke Center, and Alexandria as well.

So certainly a big development for that part of the state.

A few announcements from our Commonwealth Transportation Board meeting.

We've actually had quite a bit going on.

You'll hear a little bit more from Steve Pittard later related to the budget.

But we did get a conditional approval of the budget from the Commonwealth Transportation Board with some recommended amendments.

And these were amendments that we ran by the Finance Committee on, I believe, the week before the CTB meeting.

And the Finance Committee did recommend that those amendments be adopted.

But Steve will give you some more information about that as well.

In addition to that, the CTB approved the recommended smart scale scenario.

What that means is every year, or I should say every two years, there is a staff recommended scenario for the utilization of smart scale funding across the state.

And that includes both highway improvements, transit, rail, and other multimodal improvements.

I believe we had about $680 million to allocate this year over this biennial.

statewide.

The CTB in December did submit a recommendation or I should say submit an application for $50 million in SmartScale funding for this Western Rail Initiative.

And that was approved by the CTB and recommended to go forward into the six-year plan, which would then be approved by the CTB in June.

So that's good news as far as the funding goes for that.

and we'll have that included in recommendations that we bring forward to the full board in June.

In addition to that, we did have a meeting with the I-81 Advisory Committee related to the Western Rail Initiative, or I should say 81 funding in general.

Our staff has recommended funding from the 81 Multimodal Transportation Fund,

for the Western Rail Initiative in the amount of $100 million.

And these are funds that are collected from special fuel taxes and fees in the I-81 corridor.

It's a $2.2 billion plan.

$2 billion of that is going to be for roadway improvements, including operational improvements and highway capacity improvements as well.

In addition to that $2 billion,

there's another $200 million that's been recommended for multimodal improvements.

And of that bucket, we recommended that $100 million of that be utilized for the Western Rail Initiative.

That as well would go forward to our full Commonwealth Transportation Board in June for approval.

In addition, at the CTB meeting this month, the board approved some technical revisions to

a memorandum of agreement that VDOT, DRPT has with the Northern Virginia Transportation Commission related to toll revenues for the I-66 inside the Beltway project.

That's an MOU that we have with NVTC that relates to the use of toll revenues for various multimodal improvements.

That MOU allows us to utilize some of those toll revenues on debt service for the Long Bridge project.

It also includes an allocation of $10 million a year in funding for NVTC to use for other multimodal improvements.

We discovered in working with some of our financial advisors over the past several months that there was some confusing language in there related to the waterfall of funds that could be utilized for debt service.

So we brought that to, we made some changes, brought it back to the Northern Virginia Transportation Commission,

on I believe it was May 6, and they approved it.

And then we brought that to the CTB, which they approved this past month as well.

So again, important development for us.

We felt that the language was possibly adequate, but it was a little bit confusing.

And so we recommended that that be revised.

But now that's in place so that when we do move forward in the future for issuing bonds backed by that I-66 toll revenue for the Long Bridge,

the MOU will be clear and fully in place.

So we have a big agenda today, and we're first going to start with an update from our executive director, DJ Stadler.

He'll be giving us an update on Amtrak transit ridership, where we are staffing and some mobilization activities, including a finance update for the rail authority as well.

Mike McLaughlin is going to be giving us an update on

where we are with the Transforming Rail in Virginia initiative milestones, including an application to what's called the Core Capacity Program from the Federal Transit Administration.

And this is a source of federal funds that we intend to apply for for the Long Bridge project.

So he'll give you an update on where we are with that and what that process looks like from an application standpoint.

Steve Pittard will be giving us an update on the budget and the action by the Commonwealth Transportation Board as well.

And we will be asking for a motion to approve the budget for fiscal year 22.

And then probably one of the biggest items on the agenda today is to assign the CSX agreements from DRPT over to the Virginia Passenger Rail Authority.

and that also includes both our comprehensive rail agreement, our joint operations and maintenance agreement with CSX, and a number of other ancillary agreements and attachments as well.

In addition to that, the deeds for property that were transferred from CSX to DRPT upon what's called Sale Date 1, and that was our financial close.

We went to financial close with CSX on April 14th.

Michael Westermann and Joe Jagman from the Attorney General's Office are here.

They'll be giving us an update.

I believe we distributed a link to the agreements to you all last week, but I know there's a lot of material there.

They'll be giving us a pretty detailed briefing on the major business terms.

We'll be talking a lot about the overall transfer of property that will be occurring from CSX to the Commonwealth as a result of this transaction as well.

So with that, any questions on anything that I've just reported on?

Nope.

Okay.

Great.

Great.

Thank you, Madam Chair, and good morning, everybody.

As you heard, we're going to talk a little bit today in the Executive Director report about the actual train operations.

What I'm looking to do in this report is show every month consistent data on how we're doing so we can get a trend as a board on how ridership and revenue and what we thought we were going to get and how that compares to what we're actually getting.

This report is going to start off with me and then I'll turn it over to Mike McLaughlin and then to Steve to just give a full sense of what's going on in the organization since the last meeting.

I'd also point out that we expect this report to evolve over the course of the next six months or so.

What we're looking for is feedback from you all to make sure that this gives you really the information that you need to make decisions and to understand how things are going.

So with that in mind, we will start with the ridership.

The first slide that you see is the Amtrak FY21 ridership.

So the next slide after this one will show

If we can move to that.

The ridership starting in October of 2020, moving to April of 2021.

You see it's broken out by the different routes, the Richmond route, Norfolk Newport News and Roanoke.

The Richmond numbers you'll see are zero because we stopped that service due to COVID.

We have worked with Amtrak.

They've agreed to bring that back in September because we've had increased ridership and we were confident the demand is there.

As you can see in February, March and April, there's an uptick in ridership, which is positive.

It's pretty typical for January and February to have lower ridership.

And as the weather gets better and we get into the spring holidays, spring break and otherwise the ridership goes up.

So we feel good about this trend.

The question I think that folks will ask is, how does this compare to pre-COVID?

Are we back to where we were?

And if you go to the next slide, please, you'll see that we're not.

We're at about 50 percent, which is a little bit ahead of the Amtrak ridership overall.

The Amtrak ridership is different depending on location.

DJ, this is Ashwani.

I'm sorry to interrupt.

It looks like the COV network has gone down.

And I'm going to change presenters.

And my thought is going to take over.

I can barely hear you at all.

Okay, no worries.

Can everybody else hear me okay?

Okay.

So again, this is the trend of the ridership and it's heading in the right direction.

The question that we ask ourselves is, are we back to pre-COVID levels?

And we're not.

We're at about 50%, which is consistent with where Amtrak is.

We do want to make sure, though, that we have the demand there for when riders want to come back.

One of the challenges, and I don't want to put words in Rich Dalton's mouth, but one of the challenges with VRE is when they brought the number of frequencies down, people didn't have the same options that they used to have.

So I think what VRE is doing, bringing it back now in June, is really important because it gives riders that normalcy back and it'll bring them back to the train.

So that's what we're attempting to do by getting the service back up in September to Richmond.

And we feel good about the trend where we're going.

If you go to the next slide, if we can, that'll show the 19, 20, and 21, just the month to date for April.

And you can see that 2019 was quote unquote normal ridership, which is we've spoken about before, was at record levels.

The last

A few months of 2019 were the best months we ever had, so we were really on a great trajectory pre-COVID.

You see 2020, the ridership was barely there.

We had about 1,000 folks a month on each line.

And then back in 2021, it's starting to recover, but we're still at 50% of where we were pre-COVID.

The next slide will just show you the year to date.

It's a similar story.

We're coming back and we feel good about it.

On-time performance.

On-time performance is a good news story.

This is one of the slides that we're going to tweak over the next few months.

It shows the route on-time performance.

This is in March.

The data lags a little bit.

But for each of the routes, it shows endpoint on-time performance in all stations.

And just an explanation of that, the endpoint on-time performance is how often the train at the last station is on time.

That doesn't always tell the whole story because, for example, if you're going from Washington to Richmond and you're on time all the way to Ashland and then something happens between Ashland and Richmond that causes you to be late, you would get zero on time performance for that train for an endpoint.

But most of the stations were on time.

So we also include something called all stations on time performance, which does that same math that says here station by station are the percentage of stations where the train showed up on time.

A more meaningful stat even than that is customer on time performance.

We don't have that here on this slide, but what that does is that shows the percentage of customers that got to the station that they had purchased a ticket for on time.

And that's really the meaningful one that we're looking to measure.

All of these numbers are good.

You see that we're in the high 80s, low 90s for the most part.

The reason for delays overall has been track work and slow orders.

That's a good thing because as we take over more and more of the maintenance, we have control over that.

So it really, as we've talked about, positions as well for the future.

If you go to the next slide, we'll talk just a little bit about the, so if we go to the next slide after this one, please.

The load factor.

So another important stat that we want to look at is load factor.

What this measures is the percentage of time a seat on the train is full.

Obviously, I don't want to say you'll never get 100% load factor, but 100% load factor is difficult to get because if you have people that are taking shorter trips, let's say someone goes from Washington, DC to Alexandria,

If they get off and that seat's empty, we would have to have a passenger that gets on right at Alexandria and continues that trip to be at 100%.

But what this measures is the percentage of time that a seat is actually full.

So it's the number of passenger miles divided by the total number of seat miles.

The higher this is, the better.

As you see, we're right about 50% of where we were in 2019, so that's pretty consistent.

We do look at this, though, as we decide where we're going to add new service.

As we look at service, we have to see how many of the passengers are on north of Richmond, how many get on in Richmond and go south to Norfolk, Newport News.

So these are the types of metrics that we analyze as we decide working with Amtrak and our marketing folks where we're going to add new service.

So in summary, from a train operations point of view,

We're comfortable with the rate of recovery after COVID.

We're working with Amtrak to add service back.

As I said earlier, the Richmond service is going to come back in September.

And then later in the year, we're going to add additional trains.

And then in spring of next year, we'll put another Norfolk DC run on.

So we feel like we'll have the trains there for the folks when they want to ride.

Any questions about this train performance information until I go on to administrative issues?

Okay, and again, we'll continue to tweak this over the next few months to make sure that you get the same information every month and you can see trends going forward.

This will help us identify where things are going well and where we have to tweak.

Administratively, we've done a lot of work since the last board meeting.

We have

a lease for our new space, so we actually have VPR space now.

We'll have the network installed by the middle of June, which is good.

From a hiring point of view, we are close to making an offer on an HR manager, and we're in the final interview process for a procurement manager.

We also have a job posting out for a Chief Administrative Officer, which will be the fourth member of the key executive team.

We're confident that we'll get good applications for that one.

We're looking inside and outside for that, and that hopefully we'll have that person at least selected by the time we meet next.

And then we're also, Mike, Steve and I are finalizing the org chart.

We're going to meet with Jennifer over the next week or two to finalize that.

We'll have that for you at the next meeting.

And then the best news is we did sign a contract with our bank.

So we now have an official VPRA banking relationship and we'll be able to continue our progress.

And Steve will talk about that a little bit more later of moving our finances from the Virginia ledger over to our own.

So that's the administrative update.

Any questions on that?

Mike, are you there?

Can you hear me now?

Okay, so as you heard, our network went down.

I'm in the office, and our network went down, so I'm doing my best here.

So I don't know if you can see me, but I'm glad you can hear me.

Hope you can follow along.

Every month we plan to give a capital projects update, and as DJ said, this will evolve.

and any feedback you have is welcome.

And I'm not going to read the details of, as you can see on the capital project slide and on the deck, I'm not going to read all the details.

I'm just going to hit some of the highlights.

But if you have any questions during the board meeting or after the board meeting, please don't hesitate to give me a call.

And if I can't answer the question, I'll work with my staff to get that question answered.

A few things I want to point out.

First of all, the Lawn Fount Fort track project, that 22 million is the amount that

Virginia is putting in, is actually an $80 million project, as Rich Dalton knows.

That is actually being led by VRE.

And the list of projects you see here are projects that are in the agreements with CSX.

And I'll get to the Norfolk Southern Agreements shortly here.

So these are a list of qualified projects in the CSX agreement.

There are other VRE projects out there, but L'Enfant-Fortrac was important because that includes that fourth track all the way up into the Gateway into Union Station.

So there are other VRE projects, but this is the one

that was part of the agreements with CSX, again, because of that four-track and that dedicated two-track passenger corridor from Alexandria all the way through L'Enfant to a place we called CP Control Point, Virginia, which is just south of Union Station.

Long Bridge, I'll talk a little bit more about that later on, but we are moving that along as well.

And as you see in the notes, we've had some meetings with some stakeholders nearby, which is National Park Service and Manor & Oriental Hotel.

We do have a 30% design contractor on board.

That is VHB.

We brought them on board in March and we've been working with them.

They've actually worked on this project for a few years.

They were DDOT's contractor and they won our award as well.

With regard to the Alexandria 4 track, one update I want to let you know about is that we have been working with Amtrak and VRE and FRA to incorporate a Amtrak Crystal City station.

So for those who aren't familiar, there are Amtrak stops at Alexandria and L'Enfant, but there are no Amtrak stops in Crystal City.

And as many of you know, there is a lot of activity going on in Crystal City, including a pedestrian overpass that is going in from Crystal City to National Airport.

For those of us who have lived in the Washington, DC area, including me, it was always frustrating.

You would be in Crystal City or at the airport and you had to drive a car

sometimes would take 10, 15 minutes depending on traffic just to get to National Airport.

In fact, I used to live in the area and I wish I could have walked to National Airport.

So in the future, we'll be able to.

So it makes sense to also add an Amtrak stop there.

That'll be co-joined with the VRE station.

It'll actually be a longer platform.

VRE's moving their station about a quarter miles down the track, and it'll be an Amtrak platform that'll likely be added on to the end of it.

We're still at the very early stages.

I don't even want to know if I want to call it design yet.

Very early stages of working with Amtrak.

but that's a significant development and it makes sense for a lot of people who might want to take the train up to Crystal City and then take a one-seat ride out of National Airport.

So that's, we're working with, like I said, others in the area to move that forward.

So that's one update I wanted to mention.

Another update I wanted to mention is that a procurement that'll be going out this summer will be for the Franconia Springfield Bypass.

And the bypass, again, is one of those projects that'll take trains

from going north to south from the east side of the tracks to the west side.

If you recall, when we briefed you in the past, Virginia will be owning the east side of the corridor south of Franconia and the west side north of Franconia.

For those of you who are familiar with the stations I just mentioned, the VRE stations are generally on the east side south of Franconia and generally on the west side north of Franconia.

If you think about L'Enfant, think about Crystal City, those are on the west side.

whereas on the east side of Brook, Legal, and so on and so forth, they're on the east side.

So we're building that bypass.

That bypass is a relatively newer idea in the whole scheme of things that came about with regard to our CSX negotiations the last couple of years.

So that is a little bit behind the Franconia third track, which is already a 30% design.

So we want to catch up the Franconia Springfield bypass by putting out a design for RFP for 30% design this summer.

You'll also notice that with regard to the project leads,

Those have been assigned.

Those have actually been assigned as part of the CSX agreements.

As we learned, you too, and as Michael Wesper knows, we'll talk about later, those agreements are being signed over to VPRA, but they have project leads in them.

And CSX is leading many of the projects, especially when it's on their side of the corridor.

They're definitely leading it.

Whereas you'll notice on this list, CSX is leading the majority of the projects.

Please also notice that VPRA will be leading

the projects with the biggest cost dollar amounts.

That includes the Franconia-Springfield Bypass and the Long Bridge.

So that's about $2.3 billion that VPR will be leading, even though it's only two projects.

So we coordinated this with CSX and others, and these are, as you see, the leads on the projects.

With regard, if we can go on to the next page, there's some things I want to mention.

We're moving forward with various other projects.

I'm not trying to skip over them.

especially the sidings projects.

Those are moving along, but no new updates on those.

I do want to go all the way down to the Western Rail Initiative.

As Jennifer and others have mentioned, we had an event on May 5th with Norfolk Southern, and there are three projects of importance in the Western Rail Initiative.

And again, that is for the second train to Roanoke and then extending both the current Amtrak train and the second train to New River Valley.

and there are three discrete projects that are in the preliminary term sheet with Norfolk Southern that we need to fund and or complete.

The first one, and this is going north to south, is Nokesville to Calverton.

That is a seven miles of double truck project, just a little bit southwest of Manassas.

It's about $50 million.

Norfolk Southern will be leading that, and we're already working with them.

Their engineers are already starting to work on some items, and we're in conceptual design for that.

and we soon will be having some MOUs or documents of that sort to allow them to move forward on that.

Even though we're still in preliminary agreement stage, we still have to get to definitive agreements, we want them to be able to use the rest of this year to continue designing that because we feel as though we will get to agreements on definitive agreements.

The Roanoke Yard is also a project that they'll lead.

What that is, that is some track improvements

to get the Amtrak trains through the Roanoke Yard.

For those who are familiar with the Roanoke Yard, that is a busy yard for Norfolk Southern, and we don't want to have, we don't want to bring these new trains online and then have them get stuck in Roanoke Yard.

So we're working with Norfolk Southern to create a bypass track in Roanoke Yard, so we'll be able to meet the schedules, not have any conflict with freight trains.

And that's a theme you'll hear throughout, not only with Norfolk Southern, but with CSX.

We want to deconflict freight and passenger movements.

and the last project, Salem to Christiansburg, is a project that will take place on the track that VPRA will arm, that Virginia will arm.

That is about 28.5 miles from Salem to Christiansburg.

That includes signal upgrades such as per PTC, also includes some track upgrades, and also station construction, also a maintenance facility and other maintenance type, layup track type facilities and track work will happen there.

So then, again, that is a project that will, that VPRA will lead, and we're not going to be able to extend the second train, the first and second train to New River Valley until the Roanoke Yard and Salem de Christendre projects are complete.

But I do want to note that we will be able to start the second train within the next year or so.

We do not have to wait on Oaksville to Calvertton project, but that is a project that will be ongoing for the next few years.

So with that, I hopefully, you can hear me okay.

Sorry for the technical difficulties.

And again, if you have questions or if you think about questions, especially with regard to Alexandria-Fort Rock or Long Bridge, I'll be giving a presentation in a little bit.

So if you think of any, feel free to jump in and ask them that.

Great.

Thanks, Mike.

So with that, I'm going to hand it over to Steve.

No.

Well, thank you all.

Sorry for the technical difficulties and I'm going to reiterate what both Mike and DJ said earlier that this report is a work in progress and we welcome your feedback as we go along.

Hopefully, in six months or so, we have a nice standard report that gives us a lot of trend lines and information to help us go forward and make decisions.

With that, I'm on page eight of the director's report, and I can't see the video, so hopefully y'all can follow along.

So overall, I guess the first item here is just an overall snapshot of where we are 10 months into the year as far as the budget goes.

And the main point I would make overall is we do have a slight lag behind the budget.

with that primarily being as a result of the extended negotiations with the CSX agreement and with Amtrak.

And then also VRE went very smoothly in the agreement, but also those agreements, all three of them went a little longer than we had anticipated.

We had hoped sometime in the summer to conclude those, and we were obviously a little too optimistic there.

So that's the

When you look at the overall budget, that's the reason that we are lagging expenditures at a macro level.

And the next few sections actually go into a little more detail.

So in the operations budget, we actually, I'll call it a positive variance here, because we actually have spent less than we had anticipated to operate the trains and to also adding in our administrative costs into this section.

And the reason for that is, I don't know if y'all recall, but when we went through the budget back in January, we had strong suspicion there was going to be further stimulus funding, but we didn't know the exact amounts at that time.

And so in the budget, we did not have any allowance for stimulus funds.

And so that credit, or the positive variance you're seeing here is due to those stimulus funds being applied to our Amtrak bills.

and moving on now to page 9.

In our administrative budget, the main thing I'll point out here is you see a large number for payroll and I just want to remind you that there was a memorandum of agreement signed between Department of Rail and Public Transportation and the Virginia Passenger Rail Authority to cover all the work that was done beginning really even before July, but

We actually started tracking it in July and they're quarterly.

We basically have a quarterly billing sheet from every employee as far as their time and that's what makes up that as well as a little bit of overhead cost.

We will be, as DJ, I think I heard him mention, we've got our bank accounts set up and we're getting close to separating out our financial

system and operating on our own.

And when we do that, that's when DRPT and passenger rail authority have agreed that we would submit that bill to catch it up.

So that's why you see it as an accrual on this spreadsheet.

Under the capital projects section, as I mentioned, the agreements took a little longer than we'd hoped.

And then the other item to note here is the

The TRV other infrastructure line, if you're looking at the table on page 10, it shows a variance year to date of $29.7 million.

And that a lot of that cost was for new train equipment and

The new service and working with Amtrak as far as the availability of train equipment, that timeline has been re-forecast to happen in FY23, so that's why you see that variance there.

On the capital grants section, looking over at, moving to page 11 to the table at the top there, I think the main point here is it looks like there's a variance, but

The VRE track lease payments, the way those were funded by the Passenger Rail Authority in the current year was using some federal funds that the Passenger Rail Authority had the ability to allocate to a project.

And the decision was made to allocate those funds to VRE to cover the 84% of the track lease payment.

and then VRE has contracted directly with the federal government to receive those funds.

So long and short of it, it's in our budget, but you won't see it in our financial system as an expenditure because VRE is expending those funds and receiving those funds directly from the federal government.

So you factor that in, I think it's $13 million total for the three-track lease payments.

We're essentially on track for the capital projects budget for the year.

Some other data, and this is where I think going forward, if y'all have comments today, that would be great.

Or if you have thoughts over the next few weeks or in the next coming months, please share those as we can refine this report.

But the first item here is, and other financial information, is our revenue, the VPRA core revenues.

The forecast for the year is $91.6 million, and that's represented as a straight blue line because we didn't really have, this is the first year of those dedicated funds, and we don't have a historical trend to know the, because I'll be very surprised if it's a year or two down the road if we see a flat line as far as revenues.

I'm sure there's going to be some seasonality.

we will eventually get to that for our trending.

But overall, you see some variants, but if you add the ups and the downs together, we're right on forecast.

I think we were within like $30,000 over the overall $91 million budget.

Next, we have just a schedule that shows our cash balance.

If you recall,

We had about $302 million of funding from the old rail programs that existed prior to the Passenger Rail Authority.

That's where you see that beginning balance throughout the year.

You're seeing the revenues that we've been collecting and then offset somewhat by some expenditures that we've had.

And then you see the large drop occurring there in the middle of April when we made the first payment to CSX.

and finally the last item I have here in this report today is just it's an investment earnings and really for the year our funds have been invested in the general account of the Commonwealth and I know last last month I spoke to you all about I mean one we need to get an investment policy but then two in the interim I'm going to use the the state's local government investment pool and the local government investment pool as far as return as of

I don't know, two weeks ago, the return on the local government investment pool was essentially equal to the general accounts return.

So there's not, the deviation in those returns is so minimal at this point.

I think that the main thing I would say here when you look at the table, I think it flips over to page 13, but if you look at the table, you see that we had larger amount of earnings in the beginning of the year and that

What that really does is it mirrors what's been going on with interest rates as far from July through the end of March.

They've been declining and it's evident in our returns.

Obviously, when we look at this next quarter or next month, we should start to see some decrease also due to the $200 million going

So with that, I know DJ commented about several things we've progressed as far as getting a banking relationship established.

We're working hard to get payroll up and processing.

It's been a little more challenging than I had ever imagined.

As I think I said last meeting, I appreciate the state government central service agencies a lot more than I ever did before, but we're

steadily making progress, and I'm confident we will be in good shape.

And the other thing I'll add, I know last month the auditor came on and introduced himself, Mr. Churchman with Cherry Beckert, and we are working with them and getting them there.

They have a large list of schedules they would like from us, and we're working with them to make sure they have the information they need, and we're coordinating well with the audit as we move forward.

Great.

Thank you, Steve.

Any comments or questions?

Oh, sorry.

No, I was just going to say the same thing.

Any comments or questions?

And absent any, I will just thank everybody.

Great.

Thank you.

And as you all can tell, we are having some technical difficulties for those of our staff that are in the office today.

Unfortunately, we have a backup plan and somebody else is running the slides from home.

So I'm going to ask the future for the upcoming presenters to just, as you're going along, please mention which number slide you're moving to so that the person running the slides knows to make sure that we're keeping up with the right slides.

And so with that, I think we've got Mike McLaughlin coming up next with an update on the TRV milestones and we'll be talking about the core capacity application as well.

Thanks.

And by the way, while Mike is getting on, I just got a note that actually, apparently the entire

Network is down statewide due to something that occurred in Roanoke.

Hello.

Can you hear me?

Thanks, Mike.

Thank you.

I appreciate it.

I'll do my best here as well.

And so you can see the cover slide, I believe.

Yep.

OK.

So I'm going to give an update.

and we'll probably be doing this every month, if not every month, and quite frequently, whereas during the Executive Director Report, we'll give you a brief update on an overall list of projects, and then quite frequently we'll give you an in-depth update.

And we're doing that here today because there's a milestone coming up, and that is we plan to enter an FTA process program called Capital Investment Grant for core capacity this summer.

So next slide, please.

So a little bit of background of our $3.7 billion agreement with CSX, Amtrak, and VRE.

We had an event, as you know, with Secretary Buttigieg and Secretary of Transportation Valentine, Governor Northam, and many others back on March 30th.

And the importance of that was to show that even during the pandemic, we committed to moving forward.

come with prioritized projects, such as the projects from DC to Richmond to continue to move forward.

And also the Secretary of Transportation was there to show their support as well.

And also the Amtrak CEO was there to show their support as well.

They did not waver in their support of the $944 million contribution.

And then May 5th, as we already mentioned a few times, we expanded to River Valley.

So when we talk about Transforming Rail in Virginia, it's actually more than just

DC to Richmond, it also will now include the Western Rail Initiative all the way down to New River Valley.

But next slide, please.

I'm going to focus in on, and this is slide three, I'm going to focus in on the DC to Richmond projects.

And you can see the map here.

I know it might be hard to see, but these are the list of projects from DC to Richmond, includes phase one and phase two.

I've already mentioned some of them earlier.

And I won't spend too long on this.

You've seen this before.

We showed this to you a few times.

But again, the focus in the first phase is one or two are concentrated between Washington and Richmond.

And we're going to concentrate in this PowerPoint on the most furthest north point near Long Bridge.

Next slide, please.

So I'm going to dive in here a little bit just so you can see a little more clearly.

and I mentioned earlier the L'Enfant four-track implementation improvements are also nicely tethered to Long Bridge, as is the four-track improvements.

So next slide, please.

I'm going to start going through these a little quicker.

So something I want to talk about, I already mentioned it.

The FTA has something called Capital Investment Grant Program that has multiple facets to it.

They have something called New Starts.

from the people are familiar with the Dulles Extension, that was a New Start project.

What a New Start is, is it's a project that you're extending beyond the core.

You're extending a transit line beyond where the footprint already is.

Whereas core capacity, you're adding that capacity to the core.

So you're adding a new bridge over Long Bridge, for instance.

You're adding a four track where there already is three tracks.

You're not extending the map, you're just adding within the map.

So if you hear us talk about core capacity, it's very similar to new starts, except that it's different in that you're expanding the core.

But you're doing both of them for a reason, to expand the capacity so that more passengers can ride a transit system.

And again, this is an FTA program.

And we're eligible to apply because VRE service

is a transit service, as we all know.

As many of you know, have served on VRE for a long time.

They receive FTA funds.

And VPRA will be owning the track, both in the Fortrack area and the Long Bridge area.

So we're going to be an eligible applicant.

We still need to work through some things with FTA, especially as we ramp up our ability to deliver this project from a technical and financial standpoint.

Kate and I, and I think she may be on, I'm not sure, have already been working with FTA on that.

all indications are we are an eligible applicant because we own the track and we'll have the financial and technical capacity to deliver the projects.

And also because we're a subdivision of the state.

That's also important in the FTA's eyes.

So a few things on this slide I want to point out with new starts and core capacity.

They go through similar processes.

The first one is project development, which actually technically isn't the first because you need to get in and out of project development in a second.

So I know it might sound confusing, but let me explain this.

The process for any project, whether it be a Long Bridge project or a Dulles Rail project, you begin well before you get into project development.

You begin those feasibility studies.

You kick off the environmental.

Because the way the Congress changed things in 2012 with MAP-21, they determined that they started something called project development.

We have two years after you enter to get out of it.

And by the time you get out of it, you have to finish 30% of the design and also finish the environmental work.

but as many of you know, the environmental work takes a lot longer than two years and so does 30% design in many cases.

So with regard to our project, with regard to Long Bridge and Fortrack, as we've already talked about, we're well into, we're about 15% designed for Long Bridge and we're 30% designed for Fortrack and the environmental is actually complete for both of them.

We had the environmental cleared Fortrack through DCRVA and in September of last year we had

Environmental Clearance for Long Bridge.

But there are a lot of other steps you need to take to get out of project development.

But we have to get through 30% design on Long Bridge, and that will take two years.

I mentioned earlier when I discussed during DJ's Executive Director Report that we brought out a contractor to finish 30% design to get a cost estimate.

That'll take about two more years.

So we're planning on entering project development later this summer.

Entering project development isn't that hard.

I actually went through this

Process in Chicago.

There's something called Chicago's Red Purple Modernization Project, and I actually helped to get, worked with various committees and Illinois delegation in Congress to get project, get core capacity authorized in 2012.

So I've been through this process before.

Entering project development isn't that hard.

You write a letter, you have to be a qualified applicant.

Getting out of it is hard.

So if you get out of project development, if you finish that 30% design and you

and you have the cost estimates, and FTA blesses it, you're in good shape.

So entering project development, that's the way Congress set it up.

They did it on purpose.

They want the projects to winnow themselves out.

But we believe we're at a stage where we can enter project development soon.

And when you're done with project development, you enter engineering, and then you move on to full funding grant agreement.

I should mention that if projects are design-build, and projects that are design-build, after 30% of design is done, you combine the contract, the RFP,

for design and construction.

If it is design-build, then FTA will work with project applicants to really, in some ways, that engineering step is shrunk or shortened, and you can enter full funding grant agreement negotiations with FTA not long after exiting project development.

There are a lot of documents involved, a lot of work done with FTA and their project managers, but we still have not yet determined our procurement for Long Bridge,

but if we do decide to design-build, you are able to speed through the process and get you a full funding grant agreement earlier.

Now in case you're wondering what a full funding grant agreement is, some of you may be familiar, but that is a long-term commitment from the Federal Transit Administration, USDOT, to fund their share of a project.

And that could be hundreds of millions if not billions of dollars.

This is one of the larger DOT grant

programs.

It is eligible only for FTA projects, but again, this is an FTA project because VRE carries 90 plus percent of the service during peak hours.

So, next slide, please.

As you can see, we plan to apply for an FFGA that'll be $800 million or more, whereas the projects will be well over $2 billion.

You can receive up to 50% of the funds per the Appropriations Act.

For the authorization, it's 80%, but the appropriators generally keep it to 50% every year.

So we'll be eligible to apply for $800 to $900 million worth of funding from the FTA, and you receive that funding over a period of time, over five or six years.

And that money is good no matter who the administration is.

Once the full funding grant agreements are signed,

you pretty much can take that money to the bank because throughout the 30, 20, 30 plus year history of new starts and core capacity and small starts.

So that is a big deal.

You don't have to apply for money every year.

If we apply for money every year for 10 million, 20 million here, we'll take the money from the federal government, don't get me wrong, but to know you have that certainty of 800 to $900 million is a big deal.

So in case you're wondering what we're applying for,

We're applying for combining two projects as our inner application.

We've talked about them a few times.

It adds up to about eight miles of dedicated track.

We're adding a four track in Alexandria area and adding two miles of a mile and a half of new two track bridge or the Long Bridge.

And it's eligible because that is our pinch point in the area.

We have

a lot of traffic coming through here, and this is where we have our pinch point of 98% at capacity during rush hour.

It's hard for us to put many more trains over the Long Bridge during rush hour, and we want to do that, and we know we've been working with Rich Dalton to be able to do that on VRE service, but you can't do that unless we have more track.

And so these, we're really combining two projects for one application.

We're also eligible to apply for rolling stock, for VRE rolling stock, so any

capacity upgrade you make that enables more trains to be put out there.

Those new trains that you're putting out there, we're eligible to add those funds for those trains to the pot and to receive those funds.

So we'll be working.

I've already talked with Rich Stelton, CFO, about some train sets.

We're determining the amount of train sets we'll need to run the new service.

And if you recall, we're going to get six new VRE trains by 2030 alone.

and there's eight now in the Fredericksburg line.

We're getting six more on the Fredericksburg line by 2030.

So that's quite an increase.

You only have to increase capacity by 10%, and we're doing it by much more than that, as you can see.

OK. Mike, this is Maria with one question.

So you mentioned before the potential

station improvement with Crystal City to add Amtrak.

Is there anything as part of the fourth track to do any improvements at the existing Alexandria station?

I'm asking specifically because I find if you're a

Person with mobility impairments getting between the Metro there at King Street and the Alexandria Station is very, like, very challenging.

So their VRE is undergoing work at Alexandria Station.

They're actually almost at construction stage.

They're adding some elevators at the Alexandria Station and they're making some other improvements.

For those who aren't familiar with Alexandria Station, there's the main west platform, many of you might be familiar with that, where the nice station house is.

There's also an east platform, but to get over there, you either have to cross the tracks and there's a rope line, much like you see a rope at a, if you go to a play or a theater or something, that Amtrak employee has to move the rope and walk you across the grade.

VRE's working to add an elevator, because there's only, there are steps to get to the other side, but obviously those aren't ADA accessible.

So VRE is adding an elevator.

So it's ADA accessible on the east platform as well.

So the east platform and west platform will both be ADA accessible.

Director Zimmerman, you're asking about some work between the WMATA station and the VRE station.

Hey, Mike.

I was actually going to also ask Rich Dalton to jump in real quick because they are leading that project.

Sure.

Thank you, Madam Chair.

Just as a highlight, we've got about a $31 million project at the Alexandria Station, of course, funded by several sources.

We are nearing final design.

We're actually going out with an alternative delivery method, going out, meaning we're going out for a procurement to obtain through what we call a construction manager, general contractor alternative method.

Nonetheless, we'll be doing that primarily over the summer and we hope, you know, as early as next spring to be in construction.

It's a couple of year timeframe.

Thank you.

Anybody else have any questions?

Oh, sorry.

Okay.

Did anyone else have any questions for Mike?

By the way, I wasn't done yet.

I just have more slides.

Oh, yeah, no.

And I was just going to take a bit.

Since I can see everybody and you can't, I was going to offer to sort of field those questions.

Yeah, I did.

And a lot of these projects are years out into the future.

So all the projects have healthy contingency.

I would like to add that I can't see everyone.

I didn't know Rich was on.

I can only see the five, six faces.

So, Jennifer, thank you for letting me know Rich was on.

Yeah, I'd always like to have the project sponsor speak to things, so it's good to know he's on.

Okay, any other questions?

Great.

Okay, next slide, slide seven.

I mentioned earlier the load factor.

As you can see, when you get up to Alexandria, both on the Manassas Line,

and on the Fredericksburg line, we're over capacity on VRE service at Alexandria.

Now, this is pre-COVID.

These are 2019.

We worked with VRE in this.

But so you can see there's a definite pinch point.

You might have heard me say before that we have three Fredericksburg line tracks and two Manassas line tracks coming in at Alexandria into three tracks.

And then we'll have two tracks going over the Long Bridge.

So you can see there's definitely a pinch point there, five tracks of three to two.

and hence the reason why this is such a good core capacity projects to be able to add four track corridor and dedicated two passenger tracks all the way through to Union Station when you add in the VRE on font line as well.

So this is showing you that ridership and the load factor.

The loading is at 95% or more.

A lot of red on that screen.

So obviously the Long Bridge and four track would enable additional peak our VRE trains.

Next slide, please.

This is slide 8.

This is a diagram you've seen before.

This is just a little update on Long Bridge.

Again, it's not just about the bridge over the Potomac.

It's also about a series of other bridges, the GW Parkway, over 395, Ohio Drive, Washington Channel, and Main Avenue.

I'm not going to go over all the talking points here.

You've seen these before.

Again, it bridges at 98% capacity during peak hours, and VPRA is a lead on design and construction.

Next slide, please.

Again, a little insight, more insight into Alexandria Fortrack.

This is always a good diagram for me to remember that we're not doing this in isolation of the VRE projects, as Maria's already mentioned, both the Alexandria Station and the Crystal City Station.

are two projects that we are working very closely with VREON to coordinate those and do them in tandem.

And this project cost is in the $180 million range, and we hope to have construction deplete by 2025, 2026.

And I already mentioned earlier the Crystal City Station.

That'll also be hopefully a joint Amtrak station as well.

Next slide, slide 10.

So this is the project development approval that I already mentioned earlier for FTA.

I should mention that full funding grant agreement funding is subject to congressional appropriations.

However, the congressional appropriators usually do fund projects that are recommended in the FTA's new starts, core capacity, and small starts.

recommendations.

So if a project is ready to receive funding, it usually is recommended in the President's budget.

It comes out usually in February.

And then Congress usually funds to that.

So sometimes you might not get the exact dollar amount that you might have that FTA might have recommended for that year.

But generally speaking, Congress, the appropriators have funded over the past decade or so that I've been working with this program to the level recommended by FTA.

I've already talked about some of the other bullet points on here.

And again, projects that successfully complete the project development process, generally recommended for funding.

So again, that's to get this next two years, two plus years is very important.

If we can go to the next slide, this shows the schedule, slide 11.

and I will show that the orange stars, major milestone, we're going to request that FTA acceptance in the project development in the June, July timeframe.

We want to make sure we're building and that we can finish within two years.

You don't want to have to ask for a waiver from FTA.

We believe we can get this done within two years, and here's the schedule at the current time for Long Bridge and for Ford truck.

I do want to note that FRA

was the entity that blessed the environmental processes for Long Bridge and Fortrack.

And we're already working with the FTA.

They need to bless it as well.

But we'll be able to get that done in about a year's time or so.

FTA has slightly different processes for their environmental clearance.

But like I said, Kate Gungbooth and my staff and others are working with FTA to get that clearance from FTA.

So next slide.

Slide 12, next steps.

The Amtrak, we're working with Amtrak and others to finalize the Ford Track 30% design plans.

They're done, we're just waiting on some signatures.

And that actually revolved around some of the discussion that I talked about earlier with regard to Amtrak from Crystal City.

We just wanted to make sure that the Ford Track design plans allow for that Amtrak station because we're looking to get a high platform

Island, high level platform island for the Amtrak station.

So we're making sure, and we believe we've done so, that the four track design plans will incorporate that.

CSX is then going to commence the four track final design.

And we're doing some design agreements with CSX now.

We're going to continue the preliminary engineering for Long Bridge.

And again, as I mentioned, we'll apply to enter at FDA's core capacity development phase this summer.

And again, the requirement to exit project developments are you have to have an environmental clearance, which we pretty much have, except the FTA needs to bless the FRA findings.

The 30% in design, which we have for 4-track, but not for Long Bridge.

And also cost estimates.

Cost estimates are very important, because if the FTA is going to give you $800, $900 million, they want to make sure that the cost estimates providing are ones that will be able to fund and build the project.

And we refine cost estimates as we refine engineering.

So that goes hand in hand.

And of course, we're also doing a risk assessment to understand the risk that we'll have moving forward, both in the four track and long bridge projects.

And that's all I have.

Thank you, Mike.

Great.

The only thing I had is in listening to the last presentation and looking at the four-year process at FTA, I for one certainly hope that the approach to these issues doesn't change over the next eight years.

But if there is a new administration, it strikes me that

that things could change.

And people have done some drastic things that maybe hadn't ever been done before, even though the civil service sort of used to keep on going and hold true for a good while in its work.

My question is,

I'm glad you asked that question.

And that's one of the reasons why we've been driving our teams to try to get into project development and get out of it.

And I would love to receive the sign off from FTA before the end of this administration for the

the funding, $800, $900 million.

Because again, even before the turn of the last administration, not this last year, but four years ago, those full funding grant agreements were honored by the administration.

So once you have the full funding grant agreement, they're honored.

But as you may know, and you may be alluding to, some projects that did not yet have a full funding grant agreement early on in the last administration, there was some delays.

They eventually did move projects forward because Congress stayed on top

and Congress is one of those that want, there's bipartisan support for new starts, core capacity and small starts projects.

And with their help, that got kind of unclogged a little bit.

But Director Fisette, you're exactly right.

We're aiming to definitely get out of project development.

And if we could, as I mentioned, I don't want to predetermine the procurement, whether it's design-build or design-bid-build.

One thing we'll be doing during preliminary engineering is determining that.

We'll have some some workshops and so on and so forth and talking to the industry.

But if we decide it's going to be design build, heck yes, I'm going to try to get that funding that the full funding going to be locked down by the end of this administration.

Yeah, well, let me just say, as one board member, I mean, on the chart on the screen,

on my screen here, the two years for project development.

You don't have timelines on the next two.

And I really believe that the agreement needs to be done by the end of the administration.

So, I would change your thinking somewhat, because it's really easy for two years to become two years and eight months and two years and ten months.

And then all of a sudden you're in the end of engineering and all of a sudden you missed out.

So, I actually think a little mindset change about what the end line here is

and the date with backing up to make sure you get there is potentially incredibly significant.

That's good feedback.

I think that's a great point.

And I know even those projects, Michael, that did eventually move through,

It costs them millions and millions of dollars to be stuck in limbo for several years.

Yep, absolutely.

Any other questions?

Great.

Well, thank you.

We're going to move to the next item with Steve Pittard on the budget.

I will go ahead and go through this, and then what I'm going to suggest is that we take a short break after this presentation before we then go into the next presentation on the two representatives from the agency.

Thank you, Director Mitchell.

As the Chair mentioned earlier, there has been some activity with the budget since we recommended, as a board, you recommended a budget to send to CTV.

We got some feedback from them and also we had a very significant event occur when we moved forward with the acquisition from CSX.

This is not a very long presentation, but to update you on the amendments that were recommended through the Finance Committee and then to or through the CTB through their approval of the capital portion of the budget.

So on the slide titled Passenger Rail Authority Budget Timeline, this is really just a history for y'all as far as

the budget this year, and I know we had a tight turnaround to get a budget produced.

We plan to begin work in August this year to allow more input from the board.

So back December 9th, we did present to CTB a proposed format of the budget to get their input as was required in the code section.

Then February 1st, we worked through, finance committee worked through,

you as a board had a recommended budget that we submitted by February 1st to the CTV Commonwealth Transportation Board as required by the code.

And then on February 17th, I did a briefing, a detailed briefing of the budget to the Commonwealth Transportation Board.

And at that meeting, we received a little bit of feedback, but in the coming months, a little more feedback from a few of the members

around some of the stations, the state of stations and the state of good repair within the stations and who was responsible for that.

Anyway, moving forward, May 14th at the Finance Committee meeting, we brought up a recommended amendment to the budget, presented that to the Finance Committee.

They gave their approval of the amendment.

We took that to the CTB last week.

On the 18th, I presented the amendment, and on the 19th, they gave us their approval, and their approval was conditional that you would, at this meeting, approve the final capital budget with those amendments.

So moving on to the next slide, the recommended budget amendment.

So as I alluded to,

We did get some feedback around the stations, but primarily when we took ownership of some of the stations in April, when we sent those funds to CSX, we took on some liability for those stations.

are about $7.5 million at three different stations.

And we needed to add those in at that point in time.

In addition, the Amtrak funding agreement that we worked through with Amtrak over the past nine months, it did have a requirement that if there was any sort of disruption, an accident, or some sort of

a problem with the tracks that they use, they wanted us to have a $5 million reserve balance in order to ensure that we had the financial capability to get those tracks back up and operational so they could continue to operate their service.

So as a result of signing that agreement very late in March, we thought it prudent to adhere to the agreement and get the $5 million reserve

allocated also.

And in addition, overall, based on some of the CTB members' comments, we also wanted to make sure that state of good repair program that we had originally in the budget that we continued it on as an ongoing effort.

So we added funding in FY 27.

And these amendments essentially all

If you happen to be looking at the budget document, they all impact the Amtrak station state of good repair line item.

And then in addition, in the final budget, I've added a line item for the $5 million reserve for the Amtrak capital maintenance.

So the next slide is the actual detail of that line item, the Amtrak station state of good repair.

and it just shows you the $9 million over the six year period that we're recommending adding the seven and a half for the ADA needs and then one and a half million to continue have an underlying state of good repair funding line item.

And I will add, currently, there was a presentation done to the Commonwealth Transportation Board in April

about these stations and their state of good repair and the planning that was going to be undertaken to address those needs.

Station State of Good Repair Policy.

So in the coming months, a long-winded way to say in the coming months, these estimates, we are looking to further refine them.

And there may be continued adjustments.

And in particular, as we go through segment two and segment three of the acquisition with CSX.

So the next slide is

the amended capital budgets in total.

So here it's the same of the prior slide, except I've added the $5 million reserve, which we went ahead and put that in the current fiscal year.

As I said, we signed the agreement in late March and it was a requirement in that agreement to have that reserve.

So it's just showing that.

And I think the main point to this slide is we were at a, over the six year window, we were at a $401 million

Capital Grants budget, and now we're at a $415 million capital grants budget.

And as you can see, it's spread out over most of the years.

And the next slide, it's the available revenues.

This is just sort of to give you once again some comfort that we have the financial wherewithal for this amendment that's being proposed.

And basically what this slide does is it takes

the core VPRA revenues, plus the financing that we would be looking to let on the passenger ticket revenues in FY25, combines those and then says, of those revenues, how much do we need for the I-95 corridor TRB initiative?

And that's 727 million, which leaves $372 million available.

Of that amount, we need about $118 million of those funds to put towards the capital grants, because a lot of those capital grants have other funding, smart scale funding in particular, that aren't the core passenger rail authority revenues.

And then I'm showing adding those amendment needs and then showing the net that's still remaining for operations.

If you recall, the core operational cost of the six trains today, the net subsidy amount, I'll call it, is roughly $13, $14 million.

And during our financial analysis of the TRV initiative, so when we double to 12 trains, that core subsidy, when we get to 2030, is estimated to be about $30 million.

The point of all this is to give you comfort that there is funding available to do the amendment as well as cover all of our ongoing operations.

And the next slide is really just for your information.

I'm not going to read that, but it's just a reference slide of the code language with respect to the Passenger Rail Authority budget.

And you can see the different timelines and

and what has to be approved.

And you see, essentially, the CTB doesn't approve our operating budget, but they do approve our capital budget.

And that's what the CTB has sent forward to us with the condition that y'all accept this amendment to the budget.

And with that, I am, you know, I know Mr. Sadiq was unable to join us today from the Finance Committee.

And Steve, as a member of the Finance Committee, this is Deb Painter.

Great, we have a second.

Any questions or comments from any of the other board members?

Just a quick question.

So the CTB added to the budget the ADA requirements or projects at, you said, several Amtrak stations.

Yes.

I can take that for a second.

The way that it actually worked was we brought a presentation to the CTB with the budget and

One of the questions that they raised during one of their meetings was specifically around stated repair needs for stations.

We did go back and take a look at that.

We also did then get additional information from Amtrak about what they had projected the needs, the cost of the ADA improvements being.

And so that was the basis of our recommended amendment that

the Finance Committee reviewed, recommended that it be moved forward.

And that is what the CTB essentially approved was a budget.

They would approve the budget as amended with those numbers.

So it wasn't necessarily that the CTB put those numbers in there.

We actually put those numbers in there.

But that is what they recommended that the VPRA board move forward with.

Okay, I guess I'm just curious as to, you know, are there others?

You know, will we find

I'd like DJ to take that.

Sure, thank you.

On the issue of ADA, we actually feel very confident that we know where the backlogs are and that these funds will cover at least what's represented there.

Now, when we get into the plans, we may find that things are more expensive or less expensive, so they're high-level estimates.

But as far as other stations, we are comfortable that the ADA

issues will be covered.

More importantly though, or as importantly, what we're going to be doing over the next couple months is doing a comprehensive assessment of all of the Virginia stations, not only looking at ADA, but also looking at other state of good repair issues and coming up with a station plan that shows year by year over the next five, six, seven years, how we're going to address some of the shortfalls in the stations and get them all

up to the level that we want them.

So that's something that you'll be seeing over the next couple months.

Answering the question directly, these funds cover the ADA needs that are out there.

Yeah, thanks.

Yeah, I was, and you and I spoke briefly about this.

I know that you have your matrix for state of good repair.

But there are also broader improvements, expansions, things like that.

And I know as stations are expanded or improved, people are going to be coming to us looking for money or looking for help or looking for incentives.

Do we have a policy?

And if we don't, can't over the next months develop a policy and then does it make sense to bring it back here to get input from the board?

Thank you, Jay.

That is something we discussed, something that was brought up by members of the CTB, and we will be working with you all as we are developing these estimates of state of good repair.

We do also want to bring forward a policy, though,

that would address in a broader sense how the VPRA Board wants to improve or prioritize funding for station improvements in the future.

I should note that DRPT is also doing an update to the State Rail Plan, which will also be looking at statewide, but really it will be the VPRA Board that will be determining how best to prioritize things like ADA accessibility,

versus State of Good Repair versus expansion needs, and just in a general, what the prioritization framework should be.

I think that covers it.

That covers it.

We have the background noise from someone.

That'd be great.

Okay, so we have a motion and a second on the floor.

All those opposed say nay.

Ms. Bulova?

Aye.

Ms. Dorsch.

Aye.

Mr. Fisette.

Ms. Moses-Nan.

Aye.

Ms. Zimmerman.

Aye.

The majority ayes.

The ayes have it.

Great.

Thank you.

So our next item is going to be on the assignment of the agreements.

Why don't we do this, though?

Why don't we take a quick 10-minute break?

And I'll be back here at, let's say, about, let's make it a 12-minute break, 11.45, before we go, because I do think that this is going to be a lengthy presentation and discussion.

All right, thank you.

Just talk to Mike Todd.

I think we are, they're moving everybody back into panelist mode who may have logged off.

Good, okay.

So I think we may be waiting on one or two people to come back.

I think, yep, looks like we've got almost everybody here.

So I'm going to give Mike, who's running the slides here, a moment to pull everything back up.

and while he is doing that, I would like to introduce two people that I think you may have met before, but they always could use a reintroduction is Michael Westerman from our Office of Attorney General and Joe Jagman as well.

Michael and Joe are two of the attorneys that have been supporting VPRA and DRPT for quite a long time on our

CSX transaction and have been just truly integral members to the team.

They're going to give us all an overview of the business terms in the agreements as well as talking about the deeds and the property transfer process.

This is a very, very big step today for VPRA to accept the assignment of these agreements.

We did send these out.

I would like to note as well that we have made these agreements public.

They are posted now.

on the DRPT website.

I believe with a link to the VPRA website, we can send you all that link as well.

I know we sent you a private link, but they are now all available to the public as well, should there be any questions about that.

I know we've received some questions and some other board members may have received questions too about when these agreements are going to be available.

So with that, I would like to I think Michael is going first.

OK, I will do that.

Thank you for the introduction, Jennifer.

And it's nice to be speaking to the Virginia Passenger Rail Authority Board again.

So as Jennifer said, two pretty important things are happening today.

The assignment of the Conference of Rail Agreement and a batch of ancillary agreements and also the transfer of property rights.

We wanted to take another opportunity.

A lot of this is going to be reeducation, but an opportunity to walk through the key terms of the commercial agreements, the process for the transfer and for the assignment and what the effect of all of that is.

Can we go to the next slide, please?

Okay, this is definitely a background slash reminder that for the purposes of the assignment and for the purpose of the property transfer, we are only talking about the deal with CSX.

For example, we're not talking about the Western Rail Initiative that's been mentioned a few times during this meeting already, having to do with Southern.

So when we think about the CSX deal,

We executed commercial agreements in late March.

And the CSX deal includes the acquisition of three discrete rail segments, the first of which has already been essentially acquired.

Real property rights have been acquired in segment one.

So if you look at the map, segment one under the agreement with CSX constitutes the blue line between Richmond and Washington, D.C. on the map.

and it also includes a gray segment between Richmond and Petersburg.

So those two collectively are segment one within the agreement with CSX.

And there are two other segments that will be acquired in the future.

Segment two begins where segment one ends around Petersburg and goes south to Ridgeway, North Carolina.

And so that is the orangish yellow corridor shown in the map.

and then the final corridor, segment three, is between Doswell and Clifton Forge.

It's an east-west corridor.

We often refer to that as the Buckingham Branch.

You can see segment one is in bold.

That's because, again, as of April 14th of this year, DRPT has already acquired real property rights with respect to segment one, and those will be transferred to the rail authority imminently.

I also want to remind everybody there are three purchase installments that correspond to each closing date for a particular segment.

The first $200 million, as Mr. Pitt had already noted, was paid on April 14, 2021, when we closed on segment one.

The other key thing to remember is when we talk about segment one, segment one is distinct because we are splitting that corridor in half, right?

It's a north-south corridor.

It's about 100 feet wide.

generally.

And so we, the Commonwealth, are going to own or have property rights in the eastern half of the corridor from the southern terminus all the way up to the Franconia area.

But then we have to fly over and then our portion of the rail corridor switches to the west half of the corridor.

But in all cases when we talk about segment one we're talking about a longitudinally split rail corridor where

half the corridor, and we acquire half the corridor.

The same is not true for segments two and three.

When we acquire segments two and three in the future, we'll acquire everything.

They're not split corridors.

We'll acquire the entire rail corridors.

And finally, it's important to remember that when we talk about segment two, so the orangish yellow line between Petersburg and Ridgeway, that is actually an abandoned corridor.

There are no tracks and no service there today.

so the tracks and service wouldn't have to be added into the future.

And I guess one more final note before we get off of this very, very basic slide.

When we talk about our $3.2 billion program of infrastructure improvements, those all happen between Richmond and Washington, DC, between today and around 2030.

And so those improvements all happen on the blue portion of the corridor shown in the map

Next slide, please.

Okay, so what's happening with this resolution today?

There are two things that are very related but independent of one another.

One is the assignment of the Comprehensive Rail Agreement.

That is an agreement today between CSX and DRPT.

Once the assignment happens, there will be an agreement between CSX and the Rail Authority.

So it truly is the rail authority stepping into the shoes of DRPT to be able to fulfill its mission to increase passenger capacity and improve passenger service in Virginia.

Now under the umbrella of that Comprehensive Rail Agreement, the Comprehensive Rail Agreement is what it sounds like.

It is an umbrella slash master agreement between the Commonwealth and CSX.

It contains every aspect of the deal that DRPT negotiated with CSX.

and there are six discrete agreements that are attached as exhibits to that comprehensive rail agreement.

Those have also been executed and delivered between DRPT and CSX, and those also would be assigned at the same time.

So that's one thing that's happening is the assignment of commercial agreements from DRPT to the Rail Authority.

The second independent thing that would happen is

As I mentioned before, DRPT has actually acquired real property rights in segment one.

So of the three closes, we've hit one of the closes.

And so the second thing that will happen is all the rights that DRPT has acquired will then be transferred to the Rail Authority.

Okay, next slide, please.

Okay, so of the two things I just mentioned, let's focus in on the assignment of the agreement and quickly make sure we all understand what's the process, what's the schedule, what's actually the legal effect of an assignment, like how does it happen and what does it mean.

The process is very simple.

Anyone looked at the resolution, there's an agreement attached to it.

It's a very simple one-page agreement.

It lists out the seven agreements that would be assigned.

and it says essentially the rail authority is now in the place of DRPT.

That was the plan all along.

So in all of the agreements we negotiated with all the stakeholders, we, DRPT, negotiated for a unilateral right to be able to make this assignment.

So it doesn't require the consent of any counterparty.

We can just do it between DRPT and the rail authority.

Moving to the scope of the assignment, as I mentioned, there are seven agreements, the comprehensive rail agreement being the master agreement.

There's also the joint operations and maintenance agreement.

That is a key long-term agreement that really governs our side-by-side operations and maintenance on the segment one corridor where it's split rail corridor principally.

So it's a key, very important agreement that will be assigned.

In addition, there are two construction agreements and two engineering agreements, and I'll get into the explanation of why there are two of each of those a little later.

And then there's a pretty simple inspection right of entry agreement.

Again, I'll get more into the detailed substance of each agreement a little later in the presentation.

So once the assignment agreement is entered into, what's the effect?

It's pretty simple.

VPRA will fully replace DRPT.

So whereas today you have an agreement between DRPT and CSX,

After the assignment, the agreement between the Rail Authority and CSX, DRPT will no longer be a party to the agreement, and the Rail Authority will be availed of all the rights and bound by all the duties that DRPT negotiated within the agreements.

I also want to take a quick moment to note that we have other stakeholder agreements that will eventually be assigned to the Rail Authority.

Those agreements are with Amtrak and the VRE.

The rail authority has been briefed on those agreements as well, but those are not the subject of today's assignment.

Today's assignment, again, is isolated to the agreements between CSX and DRPT that have already been executed and delivered.

Next slide, please.

Okay, so of the two things we talked about that are happening, we just honed in on assignments, so let's focus in now on the transfer of property rights.

What's the process for that?

How does that happen?

and the Rail Authority will execute a new set of deeds.

The deeds will be very simple.

They will simply say that the property rights of DRPT acquired on April 14th will be transferred to the Rail Authority.

So a new set of real property instruments that are recorded in courthouses and show the Rail Authority as the beneficiary owner of the real property interest.

So our second middle column here, I want to slow down and talk about the scope of what's being transferred.

And I really want to make sure everybody understands the nature of the real property interest that DRPT acquired and what's actually being transferred to the Rail Authority.

Again, it's limited to segment one.

The other two segments will close in the future, and those will happen directly between CSX and the Rail Authority.

There are two key easements that we need to talk about.

Easement is a real property interest.

It is a non-possessory interest, meaning it's not thought of as ownership, but you have essentially the right to use someone else's property.

So the first easement that's really important to understand is we have an easement over the passenger corridor.

The passenger corridor is the part of segment one that we ultimately will own, but we do not yet have an ownership interest in it.

We have an easement interest in it.

So why do we have an easement interest in it instead of ownership?

Well, we will have ownership interest eventually, but in order to get that ownership interest, we have to meet some boundary surveys of the entire corridor to delineate the portion of that corridor that is retained by CSX versus the portion of the corridor that we are actually acquiring ownership of.

Once we do those surveys, as we do them incrementally over the next two and a half years, we can record those surveys with what are called deeds of confirmation.

And once we complete the surveys and record deeds of confirmation, the easement interest that we have today will automatically convert to fee title ownership.

Okay, so we don't have ownership today.

We have a process to get it and it requires survey work.

And rather than waiting two and a half years to close a transaction, we got an easement today, which will convert as survey work is done over the next two and a half years.

So that's the first easement.

The second easement that's really important to understand is we have an easement that will not convert to ownership interest, but just an easement over the portion of the corridor that is retained by CSX.

And this is true in the VRE territory between Spotsylvania and Washington DC.

And the reason that's very important is because I'm sure folks probably already know that in order to get passenger trains between Richmond and DC for the next several decades, at the very least,

passenger trains will have to operate over freight tracks, either to reach passenger stations or because our tracks are not fully built out yet.

So in order to have a very reliable, essentially permanent right to operate passenger trains over the portion that's being retained by CSX, DRPT actually obtained a 100 year easement that will end either at the end of 100 years

or I believe when we have two dedicated passenger tracks between Spotsylvania and Washington, DC.

And then finally, there's a small batch of property that DRPT did acquire futile ownership of on day one when closed last month.

There are 13 VRE passenger station facilities, DRPT-acquired platforms

and Canopies, and I believe perhaps even One Station Building, but assets that aren't subject to survey but were easily conveyed by other descriptions.

So then what's the effect?

Once DRPT and VPRA execute these new deeds, what does that mean?

It means that the rail authority and not DRPT will be the beneficiary of these ownership interests I just described.

Once the rail authority after doing the survey where it converts easement into fee ownership, does that mean it can do anything it wants?

It does not.

I want to point out a few key rights that CSX has retained.

So the first one being, again, this is not new information, but CSX is remaining the freight common carrier for the entire corridor.

The Commonwealth was never interested in becoming a freight common carrier and subject to STV jurisdiction, etc.

So CSX

on the entire corridor remains freight carrier.

And also CSX remains the counterparty to occupants under either licenses or easements.

And the way that works, we think of a fiber optic utility or perhaps an outdoor advertiser that has billboards in the corridor.

CSX has permitted these occupants onto the corridor for certain use rights and receives payments for granting those use rights.

And so that relationship will continue into the future.

Virginia is not going to be

in the business of collecting revenue from occupants, CSX will do that.

And CSX can even grant new licenses and easements in the future, but they're restricted from unreasonably interfering with passenger service when they do so in the future.

I simply make that note to note that, yes, we have this path to the rail authority owning half the corridor, but there are some practical limitations to what actually is being acquired.

CSX is retaining some meaningful rights.

all of which were beneficial for us to allow them to retain.

Next slide, please.

Okay, so now I will transition into talking about each of the agreements I'll be assigned and highlighting the key terms of the agreements.

I won't read the slide for you, but so we'll talk first about the big Comprehensive Rail Agreement.

Next slide, please.

Okay, so again, the comprehensive rail agreement at its core is an agreement whereby the rail authority will acquire the three corridors, one already being acquired.

So the comprehensive rail agreement establishes the process for closing on segments three and two.

And segment three happens first in time, segment two happens last.

It includes things like our right to go on the corridor and do inspections, to do title examinations,

There are rules about what happens if there's an unexpected damage to the tracks before closing day, right?

So we have a lot of the kind of normal off-ramps that you would have.

If there's an environmental release or a bridge collapses, then the rail authority would not have the duty to close on a segment.

Next is freight operations.

So freight operations, each segment is a little different.

As I just mentioned, CSX is the common carrier on segment one.

It's going to be the principal or is the freight operator on segment one.

When we talk about the east-west corridor, segment three, there's actually a short-line freight railroad called Buckingham Branch Road Company.

And that is the freight common carrier on segment three.

and it will remain as the freight common carrier on segment three.

CSX's duty will simply be to backstop Buckingham Branch if it for some reason can't or won't fulfill its common carrier obligations.

But CSX is not the primary freight operator on segment three.

And then finally, when we talk about segment two, the abandoned corridor where there are no tracks today, if segment two is restored and there are freight customers on there, CSX bargained for the first right of refusal to be the freight operator on segment two.

if freight operations are ever restored on that line.

Next slide, please.

All right, segment one.

Again, I mentioned that all of the planned infrastructure improvements happen on segment one, and they happen principally between, or they happen all between Richmond and DC, many of which are in Northern Virginia.

We unlock additional passenger service

as we complete the infrastructure program.

So there were some additional passenger service that was unlocked on sale date one, which happened last month.

But then as we complete the phase one improvements targeted for 2026, we unlock another tranche of passenger rail service.

And likewise, when we complete the Long Bridge and the balance of the phase two improvements in 2030, the Rail Authority will unlock even more passenger rail service

I should know all the details.

I don't.

So if we need to get into the details of what's unlocked at what stage, I need to rely on my expert folks at the Rail Authority.

But nonetheless, the concept of unlocking these new service incrementally as we build more capacity should be in the way of a reminder.

Moving on to liability.

We talk about liability.

So we, the rail authority, are going to be the new owner of all these rail corridors.

And so what is what liability are we buying when we buy these rail corridors?

We spent a lot of time and energy negotiating these principles within our stakeholder contracts.

But I do want to remind everybody the rail authority is statutorily prohibited from directly operating trains.

The role of the rail authority is as a

an owner of corridors, a facilitator of passenger service, right?

You're going to fund a lot of infrastructure improvements, but you're not an operator of trains.

You're not out there doing the dangerous stuff on the rail corridors day to day.

So that informed a lot of the liability regimes were able to negotiate with counter parties.

Next slide, please.

So we talk about our liability regime.

We talk about the three I's immunity, indemnity, and insurance.

Immunity is very straightforward.

The rail authority is an arm of the commonwealth, just like DRPT.

It's cloaked in sovereign immunity.

Sovereign immunity is a legal principle that says sovereign is actually the legal maxim is the sovereign can do no wrong, that it shields government entities from port liability, especially.

That immunity has actually been waived by the General Assembly for a maximum of $100,000 to any injured party.

But you kind of start there when you think about the rail authority's liability as a new owner.

You have sovereign immunity.

You have limited exposure for tort.

By statute, you have limited exposure for any tort injuries that happen on the property you will own.

Then we need to talk about indemnity.

Indemnity is when our contractual counterparties agree to hold us harmless for certain classes of injuries.

What we learned in negotiating these deals with our counterparties is that in the rail world, indemnity is provided on a no-fault basis, meaning you essentially divide up injuries based on category, potential injuries or damage based on categories, and then you assign those categories to one party or the other, and it's done on a no-fault basis.

So in the Comprehensive Rail Agreement, CSX indemnifies or will indemnify the rail authority

for injuries to its employees, its property, its cargo, and to third parties that are struck by CSX trains, which trains is a definition that includes any kind of CSX equipment on the rail lines, and also damage to the rail authority property.

I will point out there is one category that is carved out from the indemnity that CSX provides us, and that is any injuries to passengers on passenger trains, and that's for a very good reason.

because the passenger operators, Amtrak and VRE will provide the rail authority very strong, robust indemnities with respect to passenger injuries.

And that's also done on a no fault basis.

So kind of look at the whole puzzle together and collectively the contracts provide the rail authority with very strong indemnity with respect to any injuries that happen out on the rail corridor to the loan.

Now Third Eye Insurance, so we agreed and we have purchased on behalf of DRPT and the Rail Authority, liability policies with coverage of $15 million per incident up to $30 million aggregate.

And so you say, well, if we have immunity and we have indemnity, why do we need insurance?

Well, we've named our other stakeholders as additional insurers on our insurance policy.

they have the benefit to make claims, they have the benefit of the proceeds, and all that was done in order to get the benefit of the indemnities through negotiations that otherwise we would not have been able to get if we didn't agree to purchase insurance and make the proceeds available to our other additional insurance, such as CSX.

Next slide, please.

All right.

Finally, environmental conditions.

So just to be pretty succinct here, DRPT conducted two types of environmental inspections before closing on segment one, and also kept CSX in the game somewhat.

For the first decade of our infrastructure program, there are any pre-existing hazardous materials, hazardous environmental conditions that are discovered as we're constructing our program.

CSX has to reimburse us for half the remediation costs up to a $7 million cap.

And then if there are new environmental conditions that are introduced due to freight operations, CSX has an absolute duty to remediate those under the Comprehensive Agreement.

So we both inspected before we bought, negotiated a regime that kept CSX and cost sharing

and CSX has an absolute duty to remediate any conditions that are caused by its freight operations once we are the owner going into the future.

Dispute Resolution.

So just quickly, so dispute resolution becomes important.

We have this very intricate commercial agreement.

It can always wind up in dispute.

So how are those resolved?

We have a sort of progression of dispute where staff level can't solve it.

It goes to senior representatives.

and ultimately you can wind up in court, but there's a step between senior representatives in court, which is the parties must mediate, and mediation is when both parties go before a neutral, plead their case, and attempt to mutually agree on the settlement.

We've used that to great success in our office before, and so we thought it was important to point out that we do have this mandatory step of,

Pause, go to a neutral, plead the case, get the parties in the same room, try to negotiate a settlement before we wind up in court suing each other.

We have a very long-term side-by-side relationship.

There are going to be some disagreements, and we don't want any sort of hair-trigger paths to court.

Hey, Michael.

I am going to suggest, before we go on to the next agreement,

that we stop and ask if any of the members have any questions on the Comprehensive Rail Agreement.

I know we went through a lot of information there.

Question?

Sharon, yes.

Am I muted or remote?

Yes, ma'am.

So CSX must reimburse us for half the remediation costs for pre-existing conditions.

And then there's a cap.

So people who are a lot smarter than me went through the analysis to size that cap.

I will say that it was based on coordination among our state agencies.

I know we worked with VDOT to get that sizing.

So the idea was if we went through the phase one and phase two environmental inspections, we figured out what's there, especially with respect to where we know we're going to be doing construction work.

We're going to be turning dirt.

We look more carefully at those locations than other locations.

So we had a good feel for those things before we agreed to the sizing of the cost sharing cap.

I cannot explain to you because I'm not expert enough.

I don't know how they arrived at the seven million dollars, but the sizing absolutely was based on an assessment of the risk based on our inspections and outcomes of those.

We did some work with VDOT to sort of understand and look back at some of their prior experience with environmental remediation with similar types of industrial type of properties.

It just seems to me that

You just don't know what kind of pre-existing conditions, environmental problems could be in existence that we would then become responsible for remediating or paying for.

So anyway, I'm assuming that a pretty thorough job was done already to try to identify

What sorts of things might be out there?

I can weigh in a little bit if you don't mind, and I'll just be speaking.

I obviously can't speak for CSX.

I can speak for Norfolk Southern, and I will tell you that between the environmental departments, the compliance groups, the legal groups at the railroads, they have a really

comprehensive understanding of the potential environmental liabilities and they have them booked in various places and there are estimates of potential remediation and some of them are just situations that are known potential risks and others are based on actual settlements that have been reached.

So I would have, I think, probably a fairly high level of confidence that if that is the number that

Both VDOT and CSX agreed to that that's probably pretty close.

In fact, it may be a little bit conservative in terms of the the expense that environmental remediation expense that may be down the road.

No, CSX's cost sharing is capped at 7 million.

Our costs are to, you know, if we run into an environmental problem as we're prosecuting the infrastructure work, our costs will be to complete the work.

The phase one and phase two environmental inspections really did inform our understanding of the conditions that are out there today.

There was some work that was already done for DSA to RBA, but we did do additional phase two inspections.

So we do have a sense, I don't want to state that we know everything that's out there because that would probably be misleading, but I think we do have a sense of what the conditions are in the corridor.

Okay, thanks.

Good question.

I see Joe raising his hand.

Yes, thank you, Michael.

Just as a bit more comfort on that.

First of all, the lead VDOT reviewer of the Phase 1 and Phase 2

reports.

I reviewed every report.

I spoke with him extensively about it.

His view was that he was actually pleasantly surprised with the lack of potential issues that were encountered in the Phase 1 and Phase 2.

Another thing to keep in mind, we focused on

Potential off-site migration, we're talking about phase two, well, about environmental remediation problems that would arise during the improvements.

And we focused a lot on off-site potential sources, particularly those that didn't have a ready party that remains obligated

Thanks, Joe.

Great, and thanks for chiming in there, Joe, very helpful.

Okay, so the next agreement, this is another big agreement between us and CSX, falls under the umbrella of the Comprehensive Rail Agreement.

It is a joint operating and maintenance agreement.

And principally, it's to govern the side-by-side relationship

going into the future with no end on segment one where we have a split corridor.

It also has some application to segment three, but it does not apply to segment two where there's no tracks today.

I won't read you the slide, but we can get right into it.

Next slide, please.

OK, so two of the most critical components of the Joint Operating and Maintenance Agreement are dispatch and maintenance.

So how does train dispatching work?

On segment one, CSX is going to continue to be the train dispatcher until after phase four.

Phase four is when we have a single dedicated track between Spotsylvania and Washington, DC.

And in places we have two dedicated passenger tracks.

The exception to that rule is the rail authority has the option to dispatch north of Alexandria after phase two.

North of Alexandria after phase two will constitute a four-track corridor, two of which are passenger-dedicated tracks.

So the rail authority would then have the option to say to CSX, we intend to undertake dispatching north of Alexandria and to unlock that right.

And when we talk about segment three, the short line railroad Buckingham Branch will continue to dispatch that line at its own cost and just

As a reminder, the segment three has one long distance Amtrak passenger train called the Cardinal.

I think it comes through a few times a week.

But between Charlottesville and Clifton Forest, there's not a lot of passenger rail service on segment three today the way there is on segment one.

And we go to the maintenance side.

Maintenance essentially mirrors dispatch.

CSX is going to continue to maintain segment one until after phase four.

The rail authority can, or actually it has to maintain North of Alexandria if it pulls a lever and opts to dispatch that segment after phase two.

So maintenance and dispatch truly do go together.

And then we talk about segment three, the short line railroad Buckingham branch is also going to continue to maintain that segment at its own cost.

Next slide, please.

Okay, so this agreement also governs future improvements to segment one.

I mean, imagine the future.

We have side-by-side operations within a 100-foot corridor, and one party wants to do an improvement either on their property or on the others, or maybe a little on both.

We have a regime that requires cooperation, design review, consent rights when it comes to future improvements.

The check that each party will have against the other is to make sure that whatever improvements one wants to make within the corridor, they do not materially interfere with the other's operating rights.

So that's a key right that we had to make sure we got from CSX as part of this transaction.

And then the other thing this agreement does is it establishes initial passenger schedules.

The important thing to remember there is passenger schedules are refined often.

In this case, it'll be refined by a performance management committee.

It includes not only CSX and the Commonwealth, but also includes representatives from BRE and Amtrak.

Next slide, please.

Okay.

Hearing none, I'll move on to the other ancillary agreements.

So, construction and engineering agreements, there are two of each.

I told you I'd explain that, and so here's the explanation.

As Mr. McLaughlin spoke to earlier in this meeting, sometimes the Commonwealth will take the lead on engineering.

Sometimes the Commonwealth will take the lead on construction.

Other times CSX will take the lead on one or both of those aspects.

So we have one agreement that governs engineering, for example, when the Commonwealth takes the lead.

We have another agreement that governs engineering when CSX takes the lead.

The simple reason why there's two needed is in all cases, the Commonwealth is funding the improvements.

So we have a whole litany of checks when CSX is undertaking engineering and or construction.

and we are reimbursing for that versus when we are taking the lead, CSX has no money in the project, but simply has bare bones review and approval rights or review and comment rights.

So that's why there are two of each type of agreement.

Next slide, please.

So we talk about the construction and engineering agreements.

CSX is essentially when they take the lead, they're performing at cost.

So they're in the traditional way when you're negotiating a construction or engineering contract with a contractor, that contractor is typically profit motivated, CSX is not.

So it became a little challenging for Virginia to get the typical protections, risk protections that apply

in the standard construction contract because CSX is not exactly motivated to take on a lot of risk, right?

So here, these are a litany of protections that we were able to get into the construction engineer agreements, which are very meaningful for the rail authority.

And so it actually took a lot of negotiating to get in.

So when we talk about schedule risk, we do have CSX has agreed to have liquidated damages for late completion be a feature of any contract that it lets.

We talk about completion risk.

We have performance securities.

Namely, we have performance bonds.

So you have a surety that is a secondary entity that's obligated to complete the contract.

For whatever reason, CSX or its contractor becomes unable or unwilling to do so.

That's sort of our standard practice in public construction contracting anyhow.

We talk about cost control.

So yes, we, the Commonwealth, we, the rail authority, will be paying for the projects.

So what are our cost controls?

For any given scope, we agree up front to a not to exceed amount.

Mr. McLaughlin already talked about the very healthy contingency that's built into the project budgets.

And then if for some reason we blow through the entire budget, including the contingency, we have defined remedies for unbudgeted amounts, some of which include the scoping or simply terminating the contract.

But you do not have

and unbound commitment to pay to fund an infrastructure project no matter what the cost is.

You always have, if the project becomes troubled, you have these defined remedies that are prescribed in the agreement that you can sort of walk through the hierarchy, say, okay, can we de-scope and make it affordable?

Okay, can we identify the funding sources?

And if not, shall we terminate and not complete the project because it's become cost prohibitive?

And then finally we talk about defects.

There's always a chance that there would be an error or omission or construction defect.

And so we've actually, these agreements have very industry standard remedies for defective work and outstanding the fact that I just described CSX is not profit motivated, but in the end, it only made sense for CSX and its contractors to come back and fix work if it wasn't done right the first time, right?

Next slide.

And finally, this is the seventh and final agreement that would be assigned.

The inspection right of entry agreement is a very simple agreement.

What it does is it allows the rail authority onto segments three and two before they're closing to do their requisite due diligence inspections.

It actually also permits the rail authority and its contractors to go on segment one to conduct the

All-important survey work that I mentioned at the beginning of this presentation so that we can convert the easement interest into a feet title ownership interest.

So this is about our access to CSX property before we own it outright.

And again, like I said, it's a fairly simple agreement.

The key here is that with contractors on time to enter into a standard indemnity agreement with

CSX, so that our contractors agree to directly protect CSX for any injuries that they cause when they're on the corridor.

That relationship happens between our contractor and CSX, and it's beyond commitment of the rail authority.

Next slide, please.

Okay, I know that was a lot of information, and it wasn't

Thank you, Michael.

Does anybody have any questions?

Well, Michael, you and Joe just did such a great job of explaining everything, so.

First of all, I do really want to thank

Michael and Joe as our representatives from the AG's office who have done a tremendous amount of work along with our private sector legal counsel as well from Hunt Landers-Kirth, John O'Neill, and a number of others.

A number of people on the technical team led by Mike McLaughlin and Corey Hill had a huge role in putting together these agreements as well from adding all of the technical information.

huge team of people behind us that have been involved in these agreements.

And I really can't underestimate the amount of work that went into these over quite a sustained period of time.

And we believe we came out with a very good result as well.

So again, thank you to everybody on the team.

Faya Constantine, Jeremy Latimer, Kate Youngbluth, all the other people that I haven't mentioned yet.

Nick Donohue and John Lawson as well, two of our deputy secretaries had a very big role to play in the negotiations of these agreements as well.

So this is a very big moment and we're excited at least that we're here today and at this point where we can now assign all of these agreements over to VPRA.

So, and I should note as well, we have other agreements, namely our Amtrak agreements and our agreements with VRE.

that we will be taking steps to assign in future meetings too.

Okay, any further questions?

Nope.

All right.

I would like to ask if anybody would like to make a motion to adopt the assignment of the CRA and the other associated agreements.

I believe we actually did, we did send you a resolution and a decision brief as well that was in your meeting package.

I'd be glad to make that motion, Sharon Boliva.

Great.

Second?

Okay.

Great.

Thank you.

All right.

As I call the roll, those in favor say aye.

All those opposed say nay.

Ms. Bulova?

Aye.

Ms. Dorsch?

Aye.

Mr. Fisette?

Aye.

Ms. Moses-Ned?

Aye.

Mr. Spore?

The ayes have it.

Great.

Thank you very much.

So, that is the end of our agenda.

Before we adjourn, any additional questions or comments from any of the board members?

Great.

As I mentioned before, we will be going forward with other agreements to be assigned in our future meetings.

DJ will be giving us updated information about the hiring plan in our next meeting and additional information about the mobilization of the authority too.

So I do look forward to seeing you all on June 28th in person in Richmond.

We will be back in touch with information about the logistics for that.

Definitely looking forward to being able to get in a room with you all in a safe manner next month.

So we likely will still have a hybrid option too, but I do hope that everybody that can attend in person will do so.

Great.

All right.

Thank you all.