Board of Directors Meeting   1/10/2022

Okay, anyone opposed?

Thank you.

Great, thank you, Madam Chair, and good morning, everybody.

It's good to see folks here and good to hear folks on the phone.

I am going to do something that Mr. Moorman instructed me one time to never do, so I do it at my own peril.

The executive director's report, the hard copy was put out.

You all have seen it on the website.

Because of the timing of this meeting, the data is November data, so it's good data and it's accurate data, but it's a little bit stale.

I'll just point out at a high level

We're on track with everything we're doing.

Ridership continues to look good.

Our projects continue to look good.

At the last meeting we talked about a target of 20 VPRA staff members by the end of the calendar year.

We did not hit that

with people on board, but we did hit that with accepted offers.

So as of the end of last year, we had 20 and now 21 accepted offers.

So we're on track with hiring, which has been very challenging.

With that said, I would like to, with the permission of the board,

bypass the Executive Director's report, assuming there are no questions, and instead talk about the winter storm that was, that hit Virginia, the Commonwealth earlier this week, and talk about what happened, what we did, and what we're gonna do after action.

So, any objections to that?

My apologies, Mr. Moorman.

Okay, then we have a PowerPoint that was not sent out that we will put on the screen with some information about the winter storm itself.

Winter storm Frida came, if we get that PowerPoint up, winter storm Frida came last weekend.

We knew the storm was coming, and thankfully, if you go to the next slide, when storms come, the railroad, specifically Amtrak, or two host railroads, Norfolk Southern, CSX, VRE,

get together, they know the storm is on its way, and they make plans ahead of time for how to respond to the storm.

Even before the first piece of precipitation fell, Amtrak dealt with the phrase, dealt with VRE.

Unfortunately, this was a storm that was atypical in many, many ways.

First and foremost, it came on a day where the temperatures were literally 70 degrees, and the ground was warm, so there were questions about whether the snow would stick.

We knew it would be a lot of snow.

There was a lot of rain that came first in the warm weather, so the ground was very, very soft.

Winter weather came, heavy snow brought down a lot of trees.

CSX actually made the decision to close portions of the railroad.

Norfolk Southern made the decision to continue to run.

We made plans accordingly.

We had canceled some trains and we kept some running.

As you can see on this first slide, and I can promise you that that picture of the locomotive with that one tree in front of it, there were literally hundreds of trees further on down the track.

Lots of trees fell.

Amtrak work with CSX with Norfolk Southern to clean the trees.

As you can see on the slide, there were over a thousand trees cleared within the first 24 hours after the storm hit.

If you go to the next slide you get a summary of the Virginia State supported trains that were affected.

We had train 176 that left Roanoke headed to DC.

It actually made it through Lynchburg and on the way to Charlottesville got stopped between Lynchburg and Charlottesville because of trees that fell ahead of it.

Side note, behind that train was the Crescent, which is an Amtrak long distance train that comes up from New Orleans.

That train made it to Lynchburg.

At Lynchburg, they made the decision to go forward because they didn't think there were many trees blocking and they thought they could clear the path, NS being the railroad.

Unfortunately, that train left Lynchburg and was also stuck.

So we had two trains stuck between Charlottesville and Lynchburg.

At that point, the safest place for the passengers is on the train because they had power, they were warm, they had food.

So the decision was made to try to clear the path going forward.

When it was determined that there were many, many trees ahead and that the trains would be going into weather, the decision was made to back those trains back up into Lynchburg.

Unfortunately, in the time between when the trains left Lynchburg and when they got stuck, trees had fallen behind, so they had to clear the path to shove the trains back.

So that was train 176.

We also had train 84 that was going from Norfolk to DC.

That was blocked just north of Quantico and then eventually moved back to Quantico.

Train 174 went Newport News to DC.

That actually arrived in DC just doing a slight delay.

That beat the storm.

And then as you can see there, there were three trains that were canceled.

Again, if you look at the picture, you can see the sheer amount of debris that was on these railroad tracks.

Next slide, please.

As I referenced earlier, there were other trains that were affected.

We had multiple freight trains that were also blocking the path on both sides.

CSX and Norfolk Southern both shut down their tracks in Virginia.

Rich, I'm gonna put you on the spot, but we had VRE service.

The northbound trains worked fine.

VRE canceled the southbound trains that were on the Fredericksburg line, so they too were affected by the storm.

and then as you can see Amtrak had a number of long distance trains that were also blocked to include some that terminated in Richmond or terminated in Petersburg.

Going to the next slide, we had trees falling throughout the storm.

The crews were struggling to reach the trains.

I think everybody heard about problems on the roads.

The travel conditions were treacherous.

VDOT was stressing stay off the roads if it's not essential travel.

Even with all of those warnings, it was very difficult for the railroad crews to get out to the right of way and clear the path.

So it was really just a very difficult event.

Bruno, are you on the line, Bruno Maestri from Amtrak?

Yes.

Sure.

And you've really laid out sort of the initial communication that goes on really with respect to every weather event.

And as you said, this one, the meteorologists got a little bit wrong.

And, you know, it was a sort of a domino effect down the road.

You know, speaking to, and you've sort of covered the number of trains that were a problem.

We had two shelters in place in Richmond.

and for those passengers, they were delayed a good part of the day and we did provide, we went out and got fed McDonald's and all sorts of other food and beverages to keep people fed and also meet other needs that they had while they were on the train.

The big problem was train 20, the Crescent in Lynchburg and as you said,

We left the station, and to show the intensity of this storm, at 7 a.m. on that Monday, we communicated with Norfolk Southern, and they said the infrastructure was open and clear.

And by 9 a.m., two hours later, they reported that the infrastructure was closed.

And that was largely due, as you said, not only to trees, but a number of power lines that were down across that infrastructure.

A good part of that infrastructure is not accessible by road, even though the roads were not very accessible.

But a lot of that has to be, the maintenance folks have to get there on a high rate vehicle because of where the infrastructure is.

And because of all the blocked tracks with the trees, they couldn't get to where they needed to get.

So that was a pretty large problem.

Again, there were over 500 trees on that Norfolk Southern line.

So we eventually did back the train into Lynchburg, train 20, and there we were sheltering in place again because that was the safest place for our customers and we were communicating with them as we were communicated to by the host railroads and it was uncertain as to when the railroad would be open.

So obviously people were getting frustrated because we couldn't with certainty tell them when we would be starting the service again.

Meanwhile, we did send some folks down from Washington to help manage the situation.

We fed breakfast, lunch, we got food, people were running out of diapers, we had a train master go out and buy diapers and formula for some of our passengers.

But the fact that they had to stay overnight was not something that we anticipated.

And it was unfortunate because had the situation been different, we might have tried to house them in a hotel overnight.

And in retrospect, that's one of the things we're looking at in our after-action situation.

The train was eventually 30 hours late and everyone eventually got where they needed to get safely, but certainly it was a terrible inconvenience.

We apologize to our customers.

And we're looking at this situation, particularly the communication aspect of it, because certainly everyone deserves to know what's going on.

And it's not clear that we gave them all the information that was available to us, such as the fact that there were trees and power lines down in front of them.

That would have been good to spell out probably in greater detail.

and that's a lesson learned and you know we'll provide the board with our go-forward plan here as we as we finalize sort of our review of what happened in this situation and as we come up with you know what will we be doing next time as you know the two senators were quite upset about this and they've written our bosses here

Thank you Bruno.

So that really ends the conversation about what happened.

The next slide talks about what we're going to do for after action.

We are going to be working with CSX and with Norfolk Southern and with Viri and Amtrak, our operators, to ensure that we learn what went well and what didn't go well during this process.

As you can see from the slide, continued communication with customers is important.

Making sure people have the right information.

Even if it's bad news, we need to make sure that the bad news is out there so folks know exactly what's going on.

A lot of the challenge here, as Bruno pointed out, was just the unknown.

It was not clear how much was blocking the railway both forward and backward and we just we need to do a better job of getting that information to customers.

But over the course of the next couple weeks we'll be working with the railroads to get a detailed after-action report and a here's what we need to do next time.

The other issue that Bruno talked about a little bit was the conditions on board during prolonged delays.

I mean, the trains are only set up for a certain amount of food in a certain amount of time.

The toilets became a big issue.

I think with communication, some of those concerns could have been alleviated, but more to come here.

I'll open it up.

Thanks, DJ.

I think you pretty much covered it.

I do want to say, though, and I think those pictures tell a lot of tales there.

It was a Herculean effort, if you will, to the Maintenance Away folks, the onboard train crews, and even give some credit to our passengers and stuff.

I mean, this was a tough time, and particularly those Maintenance Away crews out there trying to clear trees, clear power lines and stuff.

In a very adverse situation, I think they should be commended for their effort.

Granted, yes, in any incident like this, there's always lessons learned, there's always opportunity for improvement, but I don't want to, you know,

Step away from this topic without acknowledging those folks that spent, you know, just an enormous amount of time, and particularly on the CSX RFMP line, with I-95 shutdown, there was a, the lack of ability to be able to get those crews relieved and bring in fresh forces and stuff like that to help them dig out.

So, just wanted to add to that, and again, as you mentioned, DJ, we are, as VRE, we are part of that,

Thank you Rich and let me add to that the onboard crews I mean the onboard crews expect to work their eight hour or 12 hour shift and then go home and the folks running the train the onboard conductors they stayed on the train the onboard services folks they were all there while many people across the commonwealth were

We're really hunkered down at home dealing with power loss at their own house, taking care of their families.

These folks are out there trying to make sure that our passengers got where they wanted to get safely.

So you're absolutely correct, we can't lose sight of that.

Let me open it up to questions.

I have a question.

Have we had a situation like this within the near past where people have actually been trapped on trains for as long as

Yes, Senator Cain, yes.

This time I think it was the same right on the road.

He can testify, but have we had this situation before with Amtrak, with our passenger rail or VRE?

where people have been trapped.

I can just go back to about 13 years ago if you remember in the 2009-2010 timeframe.

We had a series of storms, 2009 in December and then in 2010 after.

The difference there was even though those events had eventually a large accumulation of snow, they didn't.

The snow did not come down at a rate per hour like this storm did Monday morning.

So in other words, it came down, albeit over several hours or even a couple of day period, and the total accumulation was high.

So that gave us an opportunity to essentially keep up with it, if you will.

And then eventually trains were canceled for a couple of days to get things recovered from that.

But that's the only one I can recall in

I agree with that.

Virginia, as far as the state's Board of Trainers of Virginia, have never had folks stuck on a train for this long.

I mean, there was the 2009-2010 event, but there was not the warmth ahead of time and the soft ground that really brought down as many trees and power lines.

I guess I was wondering if there was a need to store some critical items like diapers and things like that that people were in need of and were not available.

Are there items that we should store on passenger trains in the event of a lengthy delay?

That's a good point, and we'll include that in our after-action discussions.

I mean, we're all advised that in your car, especially in the winter, you should have a blanket, you should have some food.

I think also looking at the stations as well.

We had a number of people that spent the night in Staples Mill Station.

They were actually on, I believe, the long-distance trains, but I think that's just another area that when we do look at the after-action review is how

Agreed.

We'll put that in the report.

One quick question for you, DJ.

So you referenced the after-action report.

Will that report be then

encompassing a broader sort of government-wide after action report or will this be solely focused within the passenger rail wheelhouse, if you will, because obviously we're in an interconnected transportation system, obviously, until what happens with respect to surface impacts rail and vice versa.

We've spoken to VDOT on many occasions over the course of the last week about how we all as transportation could have done a better job.

At this point I'm not aware if there's going to be one Commonwealth DOT after action report.

I would imagine there will be but I just don't know that that's happening and rail would be a part of that.

I do know Commissioner Burch and his team also did an incredible job of just getting out and addressing this storm.

This is Mariia Zimmerman and I just wanted to thank you for making the time and space to share this report with us and certainly applaud all the work of the

The crews at the various railroads who were helping to respond and be responsive.

While this was hopefully a somewhat unusual storm, any time you're on Amtrak and there's a significant delay for many hours, I know I've been on some of those that have been five or six hour delays.

I think the communication issue isn't just about this one event.

And I think looking at it and learning from it is great, but how do we, in expanding rail throughout Virginia and really thinking about the communications piece, I know when I've been in that situation, you're looking at your app, you're looking at Twitter, you're trying to figure out where there's information you can get.

And I think just, you know,

The opportunity looking forward to make sure there's a consistent, reliable, up-to-date way to get information as you were talking about, Bruno, I think is just really important to give passengers and their family peace of mind whenever these kinds of things strike.

More comment than a question, unless, Bruno, there are things that Amtrak is doing with that, but I just know

I've been in that situation thankfully not for as long and I would much rather be in an Amtrak station than on my car for 27 hours in a snowstorm.

Yeah, that's a good point.

And I think that the right word that you said is consistent.

Because, you know, our onboard people do make announcements, for example, if there's freight train delay that, you know, we can't get by a freight train and we, you know, we know that we're going to be late.

Or, you know, frequently, there's some sort of issue with a vehicle strike on the railroad or,

or other situation that causes us to stop the train for some period of time.

Great, thank you.

Anybody else on the phone that may have some questions?

No, I was just gonna, I really like the focus on communication and I appreciate the presentation too.

It was really informative seeing those trees on the track, I mean, really help anyone understand how difficult an issue it is to respond to, especially when those are such isolated locations.

It was impossible to get around by car, let alone how you get to those locations.

So along with the emphasis on communication,

I agree that the last place you want to be is in a car.

Next would be in the train and the optimal place is to be off the train in a town you weren't planning to be in in a hotel, right?

So the question, what I might add to the after action to be really as clear as possible about is how you find out about the track disruption.

In other words, in real time.

Is there a way, and I don't know the answer to that, when do you know that the track is blocked?

and you mentioned earlier in the report that you relied on Norfolk Southern to say that it was open.

So at what point and how do they know that in fact there's a blockage?

That would be one of the first things.

The second is how you get to the location to remove it.

and if you could comment on that, is there something that goes on the track to get there?

So the second question is a little harder because the diversity of the locations is really significant.

There are some places that are readily accessible by roads, there are some places that along the right-of-way there are access roads that heavy trucks can go along, and there are other places that you can only get to if you high rail there, which is you have a high rail vehicle that actually goes on the track.

We have a couple of questions that I wanted to ask.

As we talked about earlier, Sunday night CSX in some parts was already saying, we're not going to run trains here because it's too much of a risk.

As we found out from Norfolk Southern, Amtrak found out first and then we found out so we knew where the trains were and where things were accessible.

So that's kind of my question.

It's not that there are cameras monitoring this, or sensing that something fell on the track.

How do they actually know?

For the most part, that's the way it is.

I mean, there are some parts of the railway that have cameras.

Amtrak, for example, between Washington and Boston, has cameras in places, and obviously it's more populated, people can see it.

But some of the places in Southwest Virginia, and really between Lynchburg and here,

Well that's why I might just add that to the after action is if you had real time information, because we don't know when the train was let out of Lynchburg if there in fact already was a tree over the track.

That's a great point.

Okay, thank you.

Great.

Any other questions?

Anybody else on the phone?

Great.

Nope.

Thank you.

Great.

Thank you, DJ.

So next I'm very pleased to introduce

Devon Barnhart with Capital Transportation Consulting.

She is going to be speaking with us about the federal bill, the Infrastructure Investment and Jobs Act, which I know you all are very aware of.

But we wanted to give you an opportunity to hear some more about the specifics that are in the bill, particularly as it relates to passenger rail funding.

Is this on?

There we go.

Hi, everyone.

I'm Devon Barnhart, and this is me without a mask.

I am smiling at all of you.

I am an infrastructure consultant.

Basically, I just help states, MPOs, trans agencies deal with Congress.

Just a little bit about my background.

I was on the Hill for more than 10 years, focused on rail policy specifically, but also all of surface transportation.

Worked on a bunch of the past authorization bills.

Also the appropriations bills, which is where normally the real money comes from.

And really just excited to talk to you all about what was in this bill.

One other quick thing, in addition to being a consultant, I'm also the executive director of the One Rail Coalition.

This is a coalition of all the associations that work at the federal level on rail, so it's AAR and Amtrak, hello Bruno, the labor groups, engineering, suppliers, it's the whole world of the freight and passenger system.

And so at the end of my presentation, I have a couple of slides focused on some polling that we did

just this past year but we also did polling the year before just to show you some of the sentiment around transit and rail during these times.

So next slide please.

Okay so

Everyone talks about infrastructure as if it's a lot of things, and it's very confusing in the press, and for those of us who do infrastructure as a job, it's mind-boggling.

I'm a civil engineer and a lawyer.

I like words to match their meaning, and in this context, they really don't, so I'm just gonna focus us on what specifically we're talking about when we talk about the infrastructure bill.

The smaller sort of greenish circle, that's the infrastructure bill we're gonna focus on today.

That bill, they have decided to call it the bipartisan infrastructure law.

IIJA is a mouthful.

We'll just call it bill for short.

It is the things that we know and love on infrastructure, right?

It's all the surface transportation modes, broadband, resilience.

It's the hard infrastructure you think of when you picture the word.

There is also another bill they sometimes call infrastructure that is called Build Back Better.

It has 15 other titles, reconciliation, family infrastructure, soft infrastructure, social infrastructure.

It's a whole host of things, but it's a separate but also important bill that sometimes gets lumped together.

So I just flag that bill is out there.

It has not passed.

It does have infrastructure money that we all might care about in there.

There's $10 billion for transit with really broad eligibility and another $10 billion for high-speed rail.

Unclear where that bill ends up, but it exists and people will continue to talk about it and sometimes call it infrastructure.

But back to the main bill, which is the smaller, albeit not small, infrastructure bill.

Can you go to the next slide, please?

This bill is actually two bills combined in one.

Some may say it's multiple bills combined in one, but for our purposes, it's the policy bill.

So every five years, we pass a big surface transportation policy bill that sets all the requirements for highway and transit and rail projects as well as how our MPOs do planning.

and a host of other things.

But that policy bill is important to us because it sets the structure for how we implement all of the new money that's coming.

The other side is the shiny side.

That is plus up funding.

This is sort of once in a lifetime plus up big infrastructure funding.

But both of these bills are important for our purpose, or both sides of this bill are important for our purposes.

Next slide.

This is just a picture of what the plus up money looks like.

This is not all of the money in the bill, but this is the new plus up appropriations money that will be available shortly.

And I use that shortly sort of in quotations.

It will be coming sometime soon.

Just to give you a sense, it's a whole host of things, right?

It's resilience money, which can be important for some of the conversation we were just having.

grid money, broadband, water, sewer, pipes, all that kind of good stuff, ports.

And then the bulk of the money is really at the Department of Transportation for our world of programs.

Next slide.

This is really just to give you a relative sense of how much more money are we talking about in our space.

It's sometimes hard to do apples to apples, but this is a pretty close comparison.

The current FAST Act, that's our highway and transit bill that last year was in place.

You can see there's a pretty big jump in highways, pretty big jump in transit, huge jump in rail.

Some people will see this slide and think, why isn't the rail piece bigger?

Why isn't the transit piece bigger?

And I hear you.

Half of my job is just saying, please make that piece bigger.

But it is shocking to me, and in the most exciting way, that this piece is as big as it is.

was in this exactly three years ago and never would have imagined that we would have this much money for rail and or transit.

The fact that they were able to get this passed in a bipartisan way in a very tight Congress, the Senate is 50-50, is unbelievable.

So it is in no small part due to Senator Warner who sat on the bipartisan group.

This was a big priority for him to have this rail money in here.

and all of the work of sort of the rail advocates and everyone that's been pushing for this for years, Amtrak included.

And so this is exciting for anybody that says otherwise, like I'll fight you all day.

This is a big deal.

And so on the next slide, you'll be able to see sort of why it's such a big deal.

Can you hit the next slide?

Okay, this is a DOT slide.

So what you can see here is the money that they have been spending on rail since, sorry, small font, 2009.

That 2009 money is ARRA.

That was when we did the stimulus bill.

But the blue section in the middle that's pretty low, that's our normal world of rail funding that goes out the door.

It's relatively small.

It's mostly for Amtrak.

There's some grant money in there that you can sort of barely see starting in 2016-2017.

And then now you look at the far end from the red box on.

That's the rail money that's new in this bill.

A big chunk of that is for Amtrak and a huge chunk of it is for discretionary grants.

Discretionary grants we're going to spend a little bit of time talking about today because I think it's one of the biggest opportunities for you all who have done so much work to be

at this exact moment in time, ready to move on to apply to some of these grants.

And then also about how important some of this Amtrak money is.

But in addition, there's still work that can be done and there's still sort of more money we can access in the future.

So I'll talk about all of those pieces.

So next slide.

Okay, one big thing to know about this bill is that there is an intense amount of new grant programs.

They're across all modes, so highways, transit, there's multimodal programs, there's rail programs.

But normally the way that DOT money, I have a slide I'll show you in a little bit.

DOT money normally just flows out through formulas and it's set by metrics.

Now they have a bunch of new grants.

And so if you just look at this screen, everyone that's in blue is a new grant.

The two that are in black,

build slash raise program, and the infra program.

Those are the existing programs that we had prior to this bill passing.

Now there's a whole host of new programs.

I flagged most of these highways and multimodal grants don't apply to you, but it is worth flagging on the next slide that there are two key sort of categories that do apply.

The mega projects, the build raise continues, and the infra grant money.

Those are all have really strong rail eligibility.

They have attempted to fund significant rail projects out of those pots in the past.

Mega Projects is a new one, so we're sort of gonna have to see how that program comes along, but rail's eligible there as well.

And then Smart Grants, that's, if anyone was ever involved in Smart City Challenge, that happened a number of years ago, this is a grant program to continue that, but to make sort of cities come along, but it could have some good overlap with the work that you all are doing.

Okay, next slide.

These are the fun ones.

Okay, so there is, again, just to point out the difference between the new grants and the old grants.

In black are the old grants, the ones we know, Amtrak, NEC, and National Network Grants, CRISI, which is rail infrastructure and safety grants that are eligible for both passenger and freight rail systems.

And then there's a host of new programs.

Oh, I missed CIG, the transit program is also continued.

But there's a host of new programs, and what I should have just put in gigantic letters is under the Federal-State Partnership, that second one, it says $36 billion.

That is so much money for rail.

That is an astronomical increase in rail funding going out the door, and you can almost add up the other programs and still be less than what's going into the Fed State Partnership Program.

So just going to talk a little bit about the specifics of each of these grants and then talk about the process for them.

So next slide please.

Okay, for CIG, I'm not gonna read these all.

I hope that you all have access to these slides, but important things to note for, because you guys have a dual project that has both transit and rail, there's a significant amount of core capacity money that folks will be able to access through this program, so great that CIG is continued.

One of the things I talked about earlier is there's a lot of money in this bill, but there's also access to more money through the appropriations process.

The appropriations process is the annual funding bill

that funds portions of surface transportation.

This is one of those programs that could see additional increases as we go through the approach process each year.

And so while it's a significant increase, it is likely to be more depending on how many projects go into that pipeline.

And so getting into that pipeline is critically important just because folks, there's a lot of broad support around getting those projects out the door.

Okay, next slide.

State Partnership.

This is the big one.

This is $7.2 billion a year.

ARRA money for rail, if we look back to that big pot, was somewhere around eight.

So this is basically that a year.

This is another program.

So the Fed State Partnership Program is a program that has existed through the FAST Act.

It's not exactly new, but they rewrote it significantly enough that

It feels like a new program, so I marked it in blue.

But of note, this is where you get new service, improved service, expanded service.

This is the growth program for passenger rail.

It also doesn't say explicitly high speed rail, but high speed rail would be eligible under this program.

It is going to take

A big effort by the department to be able to implement the program and to get all this money out the door and to make sure that folks are in a position to be able to spend the money.

And so they're spending an immense amount of time right now sort of thinking through these steps about how this program will work, what will it cover, and how to quickly get people moving on these projects.

Next slide.

Chrissy, I'll go pretty quickly on Chrissy.

Chrissy is an existing program, does a host, it's a big tent program.

If you're in the rail space, you're probably eligible under Chrissy.

One thing to note in this space, there's new eligibility for innovative rail projects.

So thinking through some of your challenges on the resilience front with technology, this is a great space to think about, could Chrissy money cover some of this?

Next slide.

Crossing Elimination Program.

This is a big new program.

This is a lot of complaints on the highway side come from being stuck sitting waiting for trains, a lot of complaints on the passenger side when folks are crossing.

And so this is an exciting new program that can allow us to remove some of those crossing challenges.

It has a sort of broader scope.

It's called Crossing Elimination, but there are some other eligibility when the scope of the program

but this is brand new so this is another one that will take a little while to get out the door as they work through the specifics.

Next slide.

Amtrak, all right, everyone's favorite.

Amtrak, the two things to note, they broke up the money between the NEC and the National Network, which is typically how we do it.

It's about $101.2 billion on the NEC, and it has some pretty focused language around what they should spend the money on, including dealing with the backlog on the NEC, as well as dealing with some of their service challenges.

Next slide.

National Network, very similar in terms of what the eligibilities are, focused on long distance rolling stock and state supported rolling stock importantly.

I know everyone's been doing an immense amount of work trying to get new rolling stock procurements finished and funded and so this is an exciting eligibility.

ADA has been

I don't have to tell anyone here how long ADA has been going along and the need to finish that work at stations, maintenance, and then again new technology, so opportunities there to think about how can we spend some of that technology money.

Amtrak Shared Services.

Sometimes states have flagged challenges with Amtrak on a host of their sort of shared services that everyone accesses, security and other types of funding.

Those are all available under this pot of money.

So I think it's going to be a really exciting time to talk about how this money goes out the door and really exciting to see the changes that come from its implementation.

But one thing to flag, this funding isn't Amtrak's base funding that allows for all the operations.

That still goes through the normal appropriations process.

And so Amtrak will need to have significant continued funding every year.

And so for those of you that spend any time talking to anyone in Congress, that's a great opportunity to continue to fund those programs because it is very necessary despite these big increases that we see.

Next slide.

So I want to talk a little bit about how the money works.

Discretionary grants are amazing because it gives lots of people an opportunity to push projects that haven't traditionally had access to transportation funding at the federal level before.

It also comes with sort of a world of hurt, which is that everyone is going to be applying for everything, and there are so many new programs, and each of these programs takes an immense amount of effort to put out the NOFO and the regulations around the program,

get applications, write applications, receive and review applications, and then the whole process of actually implementing a project.

So while this is amazing, it is like sort of jarring for those of us who see how much grant money is about to be flowing.

It's gonna be a hard process for everyone.

And so one of the really important things to do is really to start now to identify the key grants

where you may be eligible.

Virginia is a shining star in the rail space.

And it's that the hard work that you all have done to get here is incredible.

And so there's a big opportunity to benefit from some of these grant programs.

But you might be asking like, which ones should we target?

And which ones are best for us?

And so the best thing that everyone can do is to start thinking about which parts do you fit into?

Where do you look most competitively attractive?

and then start having conversations with FRA right away.

No one should wait to have those conversations because they're thinking through these same challenges.

They wanna pick projects that are moving forward and are able to move forward.

The fact that you guys work so closely with the freight railroads sets you apart from any other projects that don't have that sort of hand-in-hand state, local agency, freights, Amtrak, sort of a unique situation that you all are in.

So I think it's a real opportunity.

I'll just flag real quickly on the next slide

This is how the bulk of the money goes out the door for the states.

It's very easy.

It flows pretty seamlessly.

The money goes out without a lot of hassle.

There are some challenges that might delay some of the funding around the appropriations bill.

But just generally speaking, the formula funding for this bill, states are going to have access to that pretty quickly.

So whenever you're working with the state on the project, their state funding should be available more quickly.

On the next slide.

You will see.

This is a Devon Barnhart potential estimated timeline.

This is not.

No one else signed off on this.

But just to give you a sense of how we've looked at grants in the past, formula money, as I was just talking about, the kind that flows right to the states, that can go up pretty quickly.

That can start flowing.

The existing grants, any grant that has already existed because they had a regulation, because like Build Tiger, we know how to do those.

The NOFOs are essentially written.

Those can move pretty quickly.

New priority grants take a little bit longer.

They are prepping them.

They're moving really quickly on them, so we expect to see those relatively soon, but there is a holdup with the probes that does impact some of those programs, so they probably won't be out, like,

in the next couple of months, but hopefully shortly.

The last part of programs, there will be programs that just don't come out right away.

They're trying to figure out can they combine programs to get more of them out quickly, but there will be a slog of projects that just don't happen as quickly.

As you're thinking about applying for these grants and thinking through what you're eligible for, it's really important to keep in the department objectives.

They will say these sort of at every opportunity.

The Biden administration has been extremely focused on these objectives.

Safety is obviously the number one, it always is for the department, but these other four are ones to keep hitting home.

I should say transformation of our nation's infrastructure is also a pretty typical one, but the equitable economic strength, racial equity and economic inclusion, climate and resilience, these are big picture items this department is very focused on, particularly around equity.

The President has an executive order called Justice 40 that the Department is implementing their piece of, which is when they're looking at programs, they're trying to make sure that 40% of the benefits go to areas that are economically distressed.

And so these can have big impacts on

how well you compete and so thinking through when you're thinking about which grants might we apply for, you really want to focus on sort of where are we hitting on these key department objectives and how are we going to be more competitive within the scope of them.

Now I'm just going to jump into a quick couple slides on our polling.

When we all did polling, we planned our polling at the beginning of

January, right before COVID hit and so our polling went out I think in April that first year which is

made for a real challenge writing and asking people what they thought about transit and rail at that point.

And then we did a follow-up this last year and really saw a whole host of positive feelings.

Folks were very, very interested in rail and passenger as it relates to reducing GHG emissions.

This is sort of across the board and across generations.

So you can see 83%, it's one of our highest pulled numbers.

Next slide.

This is the one that really surprised us last year.

This was 6 out of 10.

Really wanted to come back to rail and transit after the pandemic.

This rose to 7 out of 10 this year.

There is some disparity amongst ages about who's most excited to come back.

We were sort of surprised to see some of the

The younger folks were less inclined.

They were more focused on Uber and Lyft and those kinds of services.

But still a really strong number of folks who are very interested.

So as we're thinking about planning our rail and transit into the future, we know that it's going to be important to a variety of Americans.

Next slide.

And then just the last one, this is one out of two believe that we should be investing more in public transit and passenger rail.

This number can go either way.

It's great that 50% of Americans think that we should be doing that.

It's also great that we're about to.

But it means that we really have a task in front of us of showing what that investment can do.

So we'll sort of be watching this number over the years to sort of see how people are feeling about these big investments that we're making and what those projects mean on the ground.

All right, I talked for a very long time.

Thank you.

Any questions for Devon?

I will start because I have one actually.

Can you talk a little bit about just from your awareness of some of the other work that's happening in other states about the type of competition that, as you mentioned before, everybody's going to be applying for everything, but we think we're very well situated at least to be able to compete well.

I mean, sort of depends on which program you're going through, but as we all know, California has spent an immense amount of time, very similar, trying to get everyone on the same page, has extensive ridership, and this, I'm not speaking specifically about their high-speed rail project, but their passenger service, so I think California is very much eyeing this funding, but really, this is the most excitement we've seen from across the country, so there's a lot of,

I think a lot of folks

It is somewhat limited in that sense, the competition.

I will say there are projects in Illinois and other places that have been trying to access funding.

We've also just seen a really big push from some states that we don't normally, Montana.

and other folks talking about having new service, and I think folks are really excited about what it might mean to have a new map of where expanded service could go.

Thank you.

Any other questions?

I'm sure I had one quick question.

I am good, I am good.

I want you to know

I know, I know, good to see you, good to see you.

Authorizing staff still matter.

The four broad, not broad, but the four stated objectives in your slide I thought were particularly noteworthy.

Particularly the piece about safety, obviously, but also about equity.

The equity piece seems to be a very big focal point for this administration.

In dealing with another mode, with one of your former Senate Commerce colleagues who's now over at the FAA, they seem to be leaning very forward into the equity inclusion piece.

They're writing it into every application already.

So in the NOFOs that have gone out, Lono, maybe Chrissy, I'd have to go back and look.

They've started writing equity analysis and encouraging an equity analysis as part of all the projects.

Do I think it's going to be determinative of every project?

No, but it is a priority focus.

They have a team that's been working on how do we

assess this at the department.

What does it mean to have those benefits?

So they are spending an immense amount of time and they want to see results in that space.

So I think it's gonna be a huge priority.

Rail, we haven't had, transit is pretty, like an extensive history of talking about equity.

We don't talk about that as much in the passenger rail space.

And so thinking through what that means in the passenger space, I think is an important component and ensuring that people have access to intercity travel.

It's limited.

It's limited everywhere with aviation losing lines, bus services closing down in some spots.

Yeah, sure.

It was a good presentation.

I appreciate it.

The one slide I found a little difficult was 18, the potential timeline.

There are no dates in there.

It's a little hard to figure out what you mean, and maybe it's because it's so amorphous.

But my big issue is, you know, what are we doing?

I mean, what's most important about all this is the opportunity for VPRA.

And so is there, what is your plan?

So we are already in the, I know Sparnhart referred to the CIG grants, the capital investment grants that are actually transit grants.

We are already in that pipeline.

We submitted that back in August and have been accepted by FTA into the pipeline.

It's a very competitive grant program with transit projects competing from all over the country, and it's a multi-year process, so at least a two-year process to get through, sometimes longer than that.

We've had some projects in Virginia that may have taken seven years to get through that process, but we are in that pipeline now, so that's one area where you do expect to compete, and I think compete very well.

We've been talking quite a bit about having a really holistic sort of grant strategy rather than just trying to apply for everything that's out there all the time, but really trying to put together a federal funding strategy that we could then bring to DOT and talk with them about here's the type of

We have a great level of participation that we hope to see from federal grants in this.

These are the types of programs that we would expect to go after, but also to get some feedback from them on that too.

They've really encouraged us and welcomed that.

I know I've spoken with the FRA administrator about it and they're ready for us to come in.

with that kind of

things that sort of how we see things going on our end but we are I think pretty far ahead of a lot of other states because we have I can't emphasize enough the importance of the arrangements that we've already negotiated with Norfolk Southern and with CSX.

Many of the Amtrak I know has some pretty big plans as well with lines all over the map

I will say when I give this presentation to anyone that isn't you all the fourth and fifth slides are

your project, and then the partners in your project, because it's so rare to have that lineup of partners holding hands and having already secured a deal.

It is pretty unique.

And when I say pretty, it is just unique.

One thing on the timelines, like you and me both, I wish there were dates.

One thing to think about for grants is in the past, the way the department has done it is they've put up NOFOs,

sort of when they wanted to.

And they made decisions when they wanted to.

And it didn't really have a rhyme or reason.

It wasn't like it was happening every March a certain grant was coming out.

So that's been a real challenge with the existing grants.

Now that they have dozens of grants that they have to put out the door, encouraging the department to have a transparent process for folks is really important.

It costs a lot of money to apply to these grants and a lot of work to get them to good shape, so yes, it would be great to have some dates around those.

The only good news is, not the only good news, part of the good news is there's multiple years of this grant.

All of these grants happen over the course of the next five years.

There'll be multiple cycles.

And so just thinking through, maybe this isn't a project that happens in the next

Maybe we're not ready to apply in the next six months.

Maybe we're gonna work with the department and apply next year.

The one caveat to think through, which I did not put in these slides, but is always ever present, and as many of you worked in DC know, politics is a thing.

The House is likely to flip to Republicans.

The Senate is up in the air, but leaning Republican, potentially.

The administration has a few years left, but that will be in cycle there, too, and so,

Well, Madam Chair, I would just say based on what you said, and we've certainly teed it up so well with the branding, the VDOT, all of our partners, VDOT, top of the list, and DRPT and the vision.

So I would think a strategic plan for federal funding

would be a good thing.

And I say that partly because we have a new administration here and a new VDOT leadership coming in so that packaging it and making sure we continue moving forward and being as clear as possible about that strategy I think can only help.

We're going to be very aggressive.

We see this as a fantastic opportunity.

As I think the whole board knows, we're acquiring railroads, and some of them are in better shape than others.

But to the extent that we can use this federal money as an opportunity to increase our safety, whether they're old bridges or tunnels, we are going to be very proactive in doing that.

Everything from ADA stations to again bridge safety.

One other question I had, was there anything related to the federal match rate associated with CIG grants?

We are partnering

that extends to Raleigh right now.

We have had some conversations, I see Emily Stock in the room here, with our counterparts in Tennessee as well about potentially looking at rail service through Bristol.

There's a lot of interest in the state potentially to expand passenger rail to Bristol.

Emily will be talking in a little bit about the General Assembly study that we did.

However, it really would make sense to have it be part of a

and more long distance line that connects into other destinations south rather than just going from Bristol North.

So we are in conversations with them too.

It traditionally has been a selling point for grants that have been selected in ARRA.

You'll remember some of the biggest grants were sort of multi-state freight capacity that was added.

They can be really compelling because you get so many political supporters can add a real sort of heavy weight to the application process.

That being said, it doesn't always make sense for your individual projects, so it's really aligning your immediate goals, your long-term goals with the metrics and what makes you most competitive, but it is one of those things that can make you competitive.

Great.

Thanks.

Okay, so our next item on the agenda is actually our FY22 budget amendment as well as presentation on the FY23 budget.

I want to thank the other members of the Finance Committee that were present this morning.

We actually had the opportunity to get this presentation as well.

As we noted, we were originally planning to do our Finance Committee meeting in December,

but then we knew the Governor's budget would be coming out in mid-December with new revenue information.

Then we were planning to have our Finance Committee meeting last week but with the snow we had to cancel it and so we were able to meet this morning and Steve and Shannon are going to go through both the components of the amended budget as well as the FY23 budget.

Thank you, Madam Chair.

So before I jump in, I just do want to say that there was a lot of work that went into these two budgets.

Shannon did a lot of work.

It was very helpful to me, but then also the whole department.

This wasn't just Shannon and I doing this work.

It involved the whole department.

The point of the amendment and, obviously, a budget is, one, to provide y'all good feedback on the progress that we're making within the agency on the efforts that you've told us to go forth with.

So I just wanted to say that before I jump into the slides.

Next slide, please.

For this slide, I'm not gonna read all that.

It's really just here for y'all's information.

It basically says, if you're wondering why we're here,

in early January looking at our budget and not later, a couple of months from now, but essentially we have to prepare a budget and present that budget to the Commonwealth Transportation Board, who is a big funding partner towards a lot of the projects that we are carrying out.

So by February 1 of each year, we have to recommend a budget forward to them and that's why we're here today.

Next slide.

This slide is really just an overview of the purpose of the budget.

I'm not going to read that again, but the classifications, I do want to talk for a moment about those because as you're looking through the budget document, you'll see that it's compartmentalized into three separate areas.

One is our operations budget, which is, you know, our general administrative cost, but more importantly, the cost to actually run the passenger service, which is the core

of the purpose of our authority.

The second classification is capital projects, and on capital projects, the key differentiator here is, it's sort of a financial accounting perspective, is projects that are our projects, and at the end of the day, we will own the underlying asset related to the project, and going forward, we'll have to maintain those assets.

Then finally, the third sort of section of the budget is our capital and operating grants.

And this is where we have an outside partner that's gonna carry out the work, and they're gonna do that work on assets that they will own at the end of the project.

Next slide, please.

I didn't say this, but at any point, please feel free if you have questions as we're talking.

We're both comfortable with the questions as we're moving forward.

So before I let Shannon take over and take you through capital projects and the capital and operating grants sections of these budgets, I just want to give a real high level of

We are looking to amend the FY22 budget, which is the year we're in currently.

It's not something that will be a commonplace event.

It's a one-time event for us for three real reasons in my mind.

Western Rail Initiative, we had briefjaw on that back last spring, but because we did not know for certain that the deal with NS was gonna push through, was not incorporated into the budget at that time.

So the approved FY22 budget does not have that large initiative, which in the next two to three months, we will need to make significant expenditure for.

Next item is we did, in working through our financial statement audit, we reported our operations, our revenues, and our expenditures on a gross methodology, meaning we showed both of them, whereas before, when we did the budget last December, we kind of mirrored what DRPT had been doing for years, which was just utilizing the net expenditure amount.

I do think it's very important for this new classification at a gross level because it does show a lot better information with respect to those core operations.

And then the third thing I wanted to point out here is you're looking through these slides and Sharon's talking you through the budget capital projects and the capital grants.

I think we tried to make these slides point out to y'all where we had new projects, so anything new where you're authorizing new funding, you're adding funding to an existing project, but then also the third thing was wherever there was a project and for whatever reason we may have removed the project or the project budget has decreased, and those

As opposed to focusing on one year of expenditure on these capital items, I'm trying to tee up to focus on the total capital budget and the total capital grant budget.

And I think those three items would be important.

So in looking at that, when

Compare the FY22 budget amendment and then we move to the FY23 proposed budget that will be hopefully recommended forward to the CTB when we meet again at the beginning of February.

I think the only thing you gotta focus on is the

the total capital projects, the total capital grants budget are the same in both documents.

All we're doing, and it's why there's this red box, all we're doing for 23 is we're showing another year of expenditure.

So we're showing the FY28 year of timing of expense is the only change between the two.

All righty, let's go ahead and jump in.

We're going to be starting with capital projects here.

As Steve mentioned, we're trying to create the budget so it really mirrors a financial statement.

So capital projects are going to eventually end up on the balance sheet as fixed assets.

So these are going to be assets that we own at the end of the completion, and we're going to be tasked with doing the maintenance on them for their useful lives.

So that's really what's defining a capital project in this section.

There's two key programs within the capital project section and we're going to kick ourselves off with the I-95 corridor program on the next slide here.

So here you'll see the total changes that we're going to have between the approved and the amended budget.

This total budget, as Steve has mentioned, is going to be the same for both the FY22 amendment and the 23 budget.

It's going to include all project expenditures for all years.

and we're gonna talk through these a little bit more in detail down below, but we really just wanted to drive home that it's gonna be the same total budget for each of these when we're talking about both the approved, I mean the amended and the FY23 budget.

So let's go ahead and press on.

We're going to dive into each of the changes here.

So the first call out here is in green.

So all of these projects, these four projects, the costs here have been updated to align with the executed CRA that was signed with CSX.

We'll dive into them a little bit.

So Long Bridge, the planned construction for this was really designed to ramp up in 25 and 26 in the approved budget, but now that's shifted out to 28 and 29.

The increase you'll see here is related to the time value of money with that shifting out of that project.

Next is the Alexandria Fortrack and this year this increase relates to additional right-of-way that will need to be acquired for this project.

Franconia to Lorton, and then the Franconia to Springfield Bypass.

The shift here is just a delineation of each of the projects, so there's actually been some costs shifted over to the Franconia to Lorton project.

However, between the two, there's a net great decrease of $54 million, so a net positive there.

So all of these have just been updated to align with what's in the CRA, because that's the budget we'll be managing to on a going-forward basis.

Next in the red call-out here, we've got the TRV right-of-way transaction costs.

So as you know, we've been incurring these since the transaction's really been going on.

We're going to put them in the budget now so we can manage towards them.

So there's a lot of costs that we were not really aware of in the onset when the budget was presented last year.

So we have titling, legal assistance, and survey work that's been going on.

So at this point, we'd like to put it in the budget so we can continue to track it.

The last item on this page relates to the gross-up of the Newington and Route 1 bridges.

So in the initial budget, we just included the VPRA portion of this, so there's actually an additional amount that was coming from funding partners.

As we're going to be capitalizing the whole total project costs, we'd like to put the total project costs in the budget.

We've also included the revenue sources for this as well, so really these increase are just a gross-up of the budget with a minor increase in the Route 1 bridge budget.

On the next page, we'll continue on to talk about the remaining changes that we're going to be putting through in the amendment.

So the first item here goes back to that reclassification that we were talking about, trying to put the budget items in the right bucket.

So here we have the Amtrak new equipment, which has been moved over to a capital and operating grant.

These train sets are going to be purchased when new service comes online, but we aren't going to be retaining these assets.

They're just going to be going to Amtrak.

They will own it.

So it's not really a capital project.

It really equates to a grant.

So it's been reclassified out of this section.

Next we have the Richmond Layover Facility, which is a required project in order to meet the schedule defined in the executed CRA, so it's been included in the budget as well.

Lorton to Route 1.

So this would really be a Phase 3 or Phase 4 project.

But when thinking about the corridor, so when you go from Franconia to Lorton, it's three tracks.

And then this Lorton to Route 1 is this 1.2 miles that drops down to two tracks.

And then at the Route 1 bridge, it goes back up to four.

So you have this bottleneck that's existing.

So what we've decided is, since we have the funding available, we are going to push this project into Phase 1 and Phase 2 in order to have corridor development efficiencies and long-term cost savings, because we'll be able to do the whole stretch in one pass.

And then the last section here, the other I-95 corridor projects, this is what Jennifer was talking about.

So this is the FTA Core Capacity Grant that we have an application in for.

There's some additional costs related to both Long Bridge and Alexandria-Fortrack that we're gonna need to incur to further that eligibility, so we've included that in the budget as well.

It's a separate cost, so we are able to track that a little bit differently.

Before I move off of the total I-95 corridor budget, can I answer any questions on these changes?

Any questions from anybody on the phone?

Okay.

We'll move on to the other big corridor.

So we've got the Western Rail Corridor that we'll be adding in to the FY22 amendment on the next slide here.

There you go.

Awesome.

So these are the capital project section of the Western Rail Corridor.

There's also capital grants.

If you go to page 7 of your FY23 budget, you'll see an inclusive list of what the total Western Rail Corridor looks like.

This is just going to be the capital project section of it.

So, again, the amended 22 is the same as 23, including

all project expenditures for all years.

So we've got the right-of-way acquisition, the new platform and track that will need to be put in place, and then some condition items that are capital improvements that we've determined that we need to do on the line.

And then we've learned that we need to include transaction costs, so that's been included as well.

Question.

Right, so the V-Line tunnels, capital improvement bridges, and capital improvements other, it's all capital improvements that are going to be required on the Virginia line that we're purchasing.

So due to various survey work that we've done, we've realized that there's going to be some initial infrastructure needs that are going to be required once we purchase the asset.

And if you have more specifics, Mike is behind me ready to jump in as well.

So with regard to New River Valley, I do want to state that we're undergoing a NEPA evaluation.

We have four sites currently under evaluation.

Some of those, I think I heard you mention parking.

One of the locations at the New River Valley Mall would have parking pretty much already there because there's the mall parking.

It's an idea of one way to reinvent the mall.

We'd have to work with the mall to make sure there's still adequate parking for

the customers at the mall.

So there would be less parking and road needs at that location.

However, some of the other locations would need more parking and road needs.

So there's four alternatives.

We'll send out to the board a survey we have going on for the new River Valley.

We've already received 2,500 comments as of this morning from the public and other stakeholders.

So that number is a placeholder for now until we determine the exact site.

That is based on one of the options, though, and we'll be further refining that as we move forward.

I'd rather have that option be whittled down, if you will, budgetary-wise than otherwise, but that is a number that we've gotten preliminarily from our consultants.

Thank you for the avoidance of doubt.

We're in the middle of a feasibility study that's looking at the four different locations that Mike talked about.

We're also doing a public survey where we're getting comments from the public.

Sometime in the February calendar, we'll be having a public meeting to go over what we found and to get additional comment.

We probably will not have a final recommendation on station location.

Well, we definitely won't until after February.

At that point, when we decide which station, when we have all of those,

Fax in line, when we make the recommendation on which station location we'll go with, we'll know whether money goes to parking or to roads or to environmental work.

Thank you.

Sorry to belabor this point but the one thing that we also expect that there will be a local contribution towards the funding station or towards the funding for the station in the New River Valley.

There is a New River Valley passenger station authority that was created in the last General Assembly session.

They are made up of all of the local governments in that area but they are expecting and they know that we will be

Thank you for raising that.

It's an important point.

At three of the four locations, there's a trail that runs alongside all the locations.

It's a very popular trail that connects Blacksburg and Christiansburg.

And we're not harming the trail.

We might have to work with it to fit the station and some of the track in.

That's a very important point.

It's also a pedestrian overpass to other, it's a neighborhood that is growing to the west of the New River Valley Mall that we want to make sure that people don't have to drive a mile to

where the crow flies 400 yards.

So that's very important.

Station access to us, not just by car, but by bike, walking, is very important to us.

So that is part of the survey and feasibility component to make sure that that is included.

But also New River Valley has asked that if we build a station, would the station be built in coordination with them because they want to put some offices there.

We think it's a great opportunity to have some placemaking, if you will, to allow for, when you're building something new, allow for the New River Valley or the area to have some place to have public meetings and or New River Valley Station Authority would like to have their offices there at the New River Valley Station, which would make a lot of sense.

Excuse me.

The choice comes to the board.

We'll be working with the board.

All of us work with the Federal Railroad Administration as part of the federal NEPA action.

We'll continue to keep you informed.

That's my question.

I don't know the answer to it.

I think that's something we'll have to look into.

Michael, correct me if I'm wrong, I don't think the CTB tends to approve locally preferred alternatives for the NEPA process.

So that's a really good question.

For sure, any contract that would be let would have to come to the board, but you're asking specifically about site location?

Yeah, I mean, it might be good to know if the decision, if it's a recommendation of staff to the board or if it's not, we're just being informed, you know, to ask questions about it.

I will point out that the decision will not be made without the full understanding of the board.

I mean, we'll bring all of the data on all four locations to the board.

It may be an outcome where there's one that is clearly the right path, but a lot of it depends on the locality and what funding comes.

We're not inviting that.

Okay, well that's going to round us out on the total capital project budget, but now we're going to kind of zoom in and look at the actual annual expenditures here.

So we're going to look at this from two different lenses.

The first one is we're going to compare the amended 22 budget to the 23 budget for annual spend.

So you'll notice here that there's actually going to be a $27 million decrease here every year.

Don't worry, the projects are still ramping up.

The main driver of this decrease is that we're acquiring more right-of-way acquisitions in FY22, which are not occurring in FY23, causing that decrease.

We do expect a large ramp-up of about $73 million in the I-95 corridor projects and $29 million in the Western Rail corridor projects.

The lower half of the slide, you're going to see a comparison between the amended FY22 budget annual expenditures versus the approved FY22 budget annual expenditures.

What we'd like to call out here is you can really see that shift out of Long Bridge.

So that initial construction occurring in 25 and 26, you can see in that blue, has now shifted out to about 27.

If you continued it on, you'd see that ramp up there.

So that's just the annual expenditure comparison.

Last slide in this section, we are going to talk about how all these capital projects are going to be funded.

So if we go to the next slide here, so how are we going to fund this $4.1 billion budget?

So the big funding sources here, we've got the I-66 Inside the Beltway Toll Funding, VPRA revenues, Amtrak capital contribution, and the CTB allocated.

So CTV allocated, this is gonna be sources such as PTF, SmartScale, CMAQ, and then I-81 revenues.

This number has increased by about 155 million dollars based on allocated funds specifically for the Western Rail Corridor, which have been incorporated into the budget.

The other item here that we'd like to talk about is the I-66 Inside the Beltway Toll Funding.

So this revenue source in total has decreased about $270 million.

The reason for that is that the last study that really kind of forecasted the revenues was done in 2019 pre-pandemic.

So now we're working with actuals at this current time.

And obviously, while some of the traffic patterns have returned, the timeframe of the traffic patterns is not creating the revenues it once did for that corridor.

So we have taken a haircut on this based on our best available data, knowing that there's a lot of uncertainty that goes with this.

So is it that we're going to have another variant that comes out and continues to push everybody home?

Will the federal workers be required to go back to work?

Are they going to work from home?

So we just don't really know what's going to happen with this funding source.

So we wanted to take a conservative approach.

Put this line up with the estimates and go ahead and see where we stood as a total funding picture.

Luckily with this, the VPRA revenues have had an uptick, so we've been able to fill that shortfall with those revenues there.

The last thing I want to point out before we move off this slide is there's going to be three different financing that are going to happen in order to fund these projects.

So like I just mentioned, the I-66 inside the Beltway Toll Funding, that's going to be led by VDOT and the CTB.

and then we have the VRE C-ROC funding which is going to happen in the next quarter or so and that's going to be led by VRE and then we have our financing on the passenger tickets, ticket revenues and that's going to happen with us, VPRA led in about 2025.

That's going to round us out for the capital projects budgets.

I'm happy to pause and answer any questions before we move on.

Okay, capital and operating grants.

So going back to our financial statement comparison, so capital and operating grants are going to hit the income statement.

However, they're not part of our core operation, so it would just be an other expense.

The key differentiator here is that we're going to be giving money to a third party to either improve their capital assets or operate some sort of railroad function, but we aren't going to be doing—we're not the ones that are actually performing those projects.

So we're kind of just the pass-through for these funds.

We're administering the funds.

So if we go to the next slide here, you'll see we've got a total of 29 grants that we are going to be administering.

Twenty-four of them are done by the VPRA staff and five of them will be done by DRPT.

And we'll talk about the differentiator there in a second, but some of the key drivers for the changes in the funding for grants is going to be changes in grantee project scope, CTB grant awards, budget reclassifications like we talked about before, new or removed VPRA grants, or updated project costs related to VPRA grants.

The big change you're going to see here is that we've got VPRA grant funding, so not total project funding.

So if you were to go look at Crystal City platform and VRE's budget, it's obviously going to be more than $700,000.

We are contributing a portion of that, so that's what we're demonstrating here is the change in our portion.

What are we administering?

And that's what we're going to be looking at as far as the change between the approved and then the amended budgets.

Last thing to note before we move off the slide is 33% of our grants are going to be CTB allocated, meaning the grantee is going to CTB, putting in their application for what they're going to do, and then the CTB awards it.

VPRA was tasked with administering it after the fact, after it's been awarded.

So 30% of these are actually being passed on to us from the CTB.

You can go to the next slide.

With our new classification of VPRA managed and DRPT managed, you'll kind of see that breakout on this slide here.

DRPT managed were not in the budget in the prior year.

DRPT has retained five grants in accordance with the board approved MOA.

We would like to include them in the current year because the cash flow for these is going to be coming out of VPRA funds.

In order for us to better cash manage our investments, we need to know what's going on with the annual expenditures for these.

Also, if these projects don't proceed with the grantee, the funding will come back to the VPRA for us to be able to reallocate to our projects.

So keeping these in our budget will help us manage these more actively going forward.

Before we leave the slide, I want to draw everyone's eye to the total change here of $129 million.

We've created a slide that really summarizes this.

For 29 grants, it's hard to talk about each one individually, but we're going to put it in a bigger picture so you can see really what's moving here and what the important changes are.

So if we go to the next slide, I'll talk us through that.

Starting out here, the top of this table is going to show the new grants or funding changes to the grants.

So the first section is VRE scope changes or new CTB grants.

So this entire bucket shows that VRE had a decrease of $31 million related to the grants.

A lot of this was due to changes in scope.

We did the I-95 corridor.

They didn't need to do a platform on one side because now they have a railroad there.

So a lot of it was just them kind of changing their scope and adjusting to the new corridor that we have going on and then they have also been awarded a couple new grants as well.

That covers off on that first one though and that's all the VRE changes.

The next four we would really consider to be VPRA grants.

These are our grants being funded with our funds.

So we've got the Ettrick Station State of Good Repair, Station Program and Planning, Positive Train Control, and then the S Line Planning and Development.

So, Ettrick Station and the Positive Train Control, these have been updated just because we now have a better idea what the costs are going to be.

Positive Train Control has been completed, we know where that's going to land.

Ettrick Station, I will note, we do have a CRISI grant out there, an application to receive funds in order to help us with this cost increase.

We don't know if we have it at this point, so it's not been included as a source, but we are seeking funding to assist us with those repairs on that station.

Station Program and Planning, the increase there just relates to our continued commitment to work on state of good repair on our stations.

The next section that we've called out is the Western Rail Corridor.

So these are the two new grants that will be going into our budget related to the Western Rail Corridor.

So we've got the Western Rail Initiative Grant and the Roanoke Yard Improvements, both going to Norfolk Southern here.

Last, DRPT Manage is added as a new grant.

Even though they were existing last year, we're gonna put them in the budget this year.

Next section, we've got the removed or reclassified.

You'll see that Amtrak Terrain Equipment probably looks familiar from Capital Projects, though the number has changed.

It was $55 million up in Capital Projects.

It's now coming here.

It's $34 million.

Again, we have a much better understanding of how much this is going to cost, and we've moved it to the correct section of the budget.

The two next grants to Norfolk Southern have been removed as the Western Rail Corridor is going to be taking place and that transaction is going to occur.

These capital grants are going to fall off the budget and will no longer be going out the door.

And the last item here, we've got our VRE track lease payment related to CSX.

So in accordance with the JOMA that was signed with CSX, this payment is actually going to be for maintenance on our corridor.

meaning it's more of an operations expense because it's going to be paying for all of the maintenance that we need to do so it's been reclassified as well to operations.

This is going to drop us down to a $129 million change here.

Can I answer any questions on the changes?

I know this is kind of a lot to bite off.

Okay.

Wonderful.

We can proceed on to the funding for this then.

That's great.

So on the next slide, you'll see that we have our pie chart of the 30% of VPRA, I mean, CTB allocated grants, and then we have the CTB allocated VPRA.

So I want to note that these, again, are funds that the CTB has allocated to VPRA for Western Rail.

So we've carved that out as well.

You'll see in the table some of the sources for this.

Similar to the other CTB allocations, so the grants get CMAQ, there's I-66 outside the beltway concessions and SmartScale for CTB allocated grants, and then the CTB allocated monies coming to us relate to the 2020 Appropriations Act, SmartScale, I-81 corridor improvement program, and then everything else is being funded with VPRA funds.

And then to our last slide so that we are mirroring capital projects as well.

So here's the comparison between the amended and the approved annual expenditures.

You're really going to see, I mean, pretty much everything is going to be very consistent.

Twenty-three had a really big uptick.

A big driver of this is the $26 million payment that's going out the door related to the Western Rail Initiative grant.

And then also, when we sourced all of the cash flow expenditure forecasts from our grantees, they expect a big year in 23.

So a lot of this is coming from the grantees and their expected expenditures in FY23.

So that is gonna round us out for capital and operating grants.

Can I answer any questions on this section before we?

Yeah, I have a question.

I noticed in several of the slides there is money in here from the inside the Beltway tolling, which I was involved with at the time.

I see money from the outside the Beltway 66.

This is all about 66 tolling.

We, so as you know, there's, on the Hot Lanes project, there is funding that's going to NVTC for transit improvements.

We are not, at this point in time, planning to tap into any of those funds.

They're being allocated by NVTC today.

We do have funding in here from the Fredericksburg extension of the hot lanes.

There was a concession payment that was made by Transurban to the state and for transportation purposes in the corridor.

So we are planning to use, I forget how much, is it 200 million from that, Steve?

What's that?

255.

Well, there's different components of the 95, but it is an ongoing payment.

95-395, inside the Beltway portion, is a recurring transit payment.

from the concessionaire.

The money that is related to the Fredericksburg extension is a one-time payment.

Michael knows these.

So next slide, please.

Take a few minutes and take you all through the operations format.

Like as far as a break, Jennifer, I didn't know if... What I was going to propose is that we continue and go ahead and get through these budget slides and then break for lunch.

So, on this slide, it's really, I wanted to talk a little bit about budget, the two different budgets you're gonna be looking at, and the main thing, and I mentioned this earlier, one of the big drivers for doing an amendment was, we wanted to show our operational budget, instead of showing it just the net cost that we paid to Amtrak or the net subsidy amount, we wanted to show

the actual revenues coming in and then all the different expenditures.

And I think as I go through this, you'll see the big reason for that is one, it gives us a lot better data when we're looking at each of our different trains and our different routes to analyze how each of those are doing.

And then two, as Shannon mentioned in fiscal year 25 or thereabouts, we're looking to take this revenue stream of passenger ticket revenues

and actually go out and bond against that to provide funding to do some of our capital projects at that point in time.

So obviously we need to show those revenues in our financial records to be able to go out to the open market and issue debt against it.

Second thing here is, and Shannon's mentioned this several times, there are several re-classes amongst the three different categories of budgets.

I apologize for that.

I think we've come up with a good standard this year.

I think we talked about this back in September to the board, to the finance committee.

I think we now have a good standard and going forward we won't have those re-classes.

I know it makes this presentation a little confusing.

The third item here that as a board member for y'all to be thinking about as we move forward, we have at the very bottom an overall cost recovery metric.

and what this actually is for all of our operational costs, including our general administrative expenses.

And I think for now, we want to propose this as a metric as we move forward, but for now, we obviously don't know is, you know, the 51% that the FY 23 budget is showing, is that a good number or a bad number?

And as DJ pointed out earlier in the Finance Committee meeting,

We're gonna always strive to do better.

I don't think anyone here can reasonably expect that we're gonna get close to 100%.

And I said this earlier, all of our transportation, roads, airports, transit, et cetera, they're all subsidized.

So we're gonna have some subsidy level, but to me, I think we've determined internally that

A good metric for y'all to look at our performance on how we're managing our operations is this cost recovery metric.

Next slide please.

First I want to try to walk y'all through the amended FY22 budget and I think what I'm trying to do with these two slides is bridge that gap

of the old net presentation to the new gross presentation because I just can't take the FY22 approved budget and put it up against the FY23 or the FY22 amended budget because FY22 approved was just as net expenditures.

So the point of these two charts is to, one, show you the amended budget with all the gross level detail, the revenues, all the detailed expenses.

As you see, the new budget comes down in the red box to an $18.1 million planned subsidy amount.

And then when we shift back to the chart on the left, you'll see

The approved FY22 budget had a $51.2 million net cost.

And we're comparing that to our 18.1 in our amended, proposed amended budget.

And you see it's a $33 million decrease

that we're coming back in our amended budget for FY22.

The reasons for that decrease are listed below.

We had some new service that we thought was gonna start in FY22.

We now know it won't.

So that's about $8.2 million of the decrease.

$10.3 million of the decrease was federal credits that have been applied by Amtrak before the bill ever comes to us

that therefore have reduced the cost.

We knew there was federal stimulus funds out there, I mean not stimulus, but relief funds out there.

When we did the budget last year, we did not know how they were gonna be allocated, so we did not include them.

So that's 10.3 million of costs that are being covered by outside funds.

In addition, the Richmond service that we had in the budget for the full year, it did not return back to service until late in September.

So there's three months of costs there.

And then finally, the other factor that's playing into the decrease is we were very conservative in our estimate of revenues due to the uncertainty of the pandemic.

Questions from anybody on the phone?

Next slide, please.

So the FY22 administrative budget, the approved compared to the amended, you see a $1.47 million increase.

and a lot of this increase, not quite half, but maybe a little over a third is payroll and that is when we develop the budget December of 2020, we thought 28 employees.

Right now we believe we'll have 34 employees by the end of the year.

So that's part of the cost.

Additionally, the other large driver here is professional services, which professional services,

As I said earlier in the Finance Committee, when we started, we literally had no infrastructure in this entity at all.

We had no general ledger, no process, no procedures.

So, and we literally, first day there was three employees.

So we've needed to rely, while we're ramping up our employment level, we've needed to rely on a little more on some consultant support.

and as you heard earlier, there's a lot of federal money out there and we're using some of that support to help us with applications for that federal financial assistance.

And the third item that's noted here is the ERP system implementation.

And there's just a slight increase related to that.

And it's also, we've had to ramp up a little quicker because we do have more employees.

And so some additional needs for IT because of those employees.

Next slide, please.

FY 23 budget.

shown here, and here I'm gonna compare it to that amended budget, so we're no longer dealing with that gross versus net comparison.

So on the right here, you see what we're proposing for the amendment with the $18.1 million additional funding required, and then the 23 budget, we're looking at 60 million, which is a $41.9 million increase.

What the key factors in that increase are those two trains that we thought were gonna start in FY22, now they're gonna start this summer, so it's FY23.

And if you take our FY22 budget for the six trains that currently exist, the expenditures, you divide it by six, you come out to about $12.4 million per train, two new trains, that's the $25 million.

In addition, we have some costs related to the Western Rail Initiative, some access fees and some maintenance costs that are new.

Our administrative expenses, 22 to 23, are gonna increase, and I'll go into that later.

Those federal credits that helped keep costs down in 22, instead of 10.3 million in 22, we only have 4.4 million

in 23, so that's, it basically in turn increases our cost that we have to cover.

Those are the main drivers in the increase from 22 to 23 that we're proposing.

And once again, I will ask if there's questions before I move on.

All right, next slide.

This is to take you through the detail of the administrative budget and for the most part, it's year over year, there's not a lot of change.

I mean, there's two items that have some change to take you all through.

One is our payroll and benefits and FY22, we started the year with, it's four employees or maybe five, I just don't remember the start date of one employee.

The budget, we were starting with four for 22.

When you look at 23, we're planning to start FY22-23 with 34 employees.

So a very significant change in the number of employees that are gonna be on payroll for the full year.

There's still a ramp up going from 34 to 45, hopefully by the end of FY23.

So that's what that large change in payroll relates to as we

Finally moved towards getting fully staffed.

The other item here I wanted to bring your attention to is the other employee cost.

That's really travel expenses, training costs, recruitment costs, which in this environment could be significant, and other administrative costs.

And with new employees, these costs tend to increase along with the increase in the number of employees.

Next slide, please.

This slide, I'm not going to go into real detail, but this is as I alluded to earlier.

We are going to report this to you every month.

Once the FY22 amended budget is approved, we will report at this level.

And I think the biggest thing here is over time, we're working with Amtrak.

Rather than reporting by route, we want to report each individual train because obviously they start at different times where you see two trains here, or three trains even.

There are different times associated with those.

And so we actually want to break this report down to showing all eight trains individually.

And that cost recovery factor I talked about from an overall operational perspective, we also want to

get to where we're applying that here.

And not that that's an absolute, I think each train has different parameters around them, different purposes, but it's to help us assess how well we're doing with the train service.

Next slide, please.

This slide is as in the other sections to show you how we pay for our operations budget.

And essentially, it's passenger ticket revenues.

And I'll just focus on FY 23, we're at about 51% cost recovery just from the ticket revenues.

And in the remainder of that difference is the Virginia Passenger Rail Authority, the dedicated funding coming out of the Commonwealth Rail Fund.

One more point, I think, too, is after FY23, there will be no further federal credits, at least as of right now.

Before I move to the next slide, that really takes us through the three sections of the budget, the amendment that we're proposing for FY22, as well as the proposed FY23 budget,

We need to present to the CTB in February.

This is Mariia Zimmerman with a quick question.

Mariia, that number, the 62.7 million, is based off of Amtrak's projections for FY22, and they don't provide projections into the future.

And what I would say to your question is I feel that we've been, once again, conservative.

I said we were conservative last December because of the pandemic.

Because of the two variants that have come about, it also made us concerned.

So we have been conservative in our revenue estimates throughout.

Yeah, but it's definitely post-COVID.

Okay.

And I'm gonna add too that

We didn't realize, we didn't, back last December, we didn't know, when we got to this past summer, we had no idea we'd be back at 70% of ridership.

So then the variants hit, September, and now here in December.

The ridership has held pretty well, even though the two variants have hit.

And I'll say 70% return,

From a transportation mode perspective, I think we have fared really well.

But even then, we have been conservative in those revenue estimates.

All right, well, moving on then to the next slide.

This is part of the budget we do wanna propose.

I really should have put board management reserve on this title, because we want to propose a reserve for you as the board to manage, and if we have a proposal, we would obviously have to come to you for your approval.

But all the capital projects that Shannon spoke to you about, they all have contingency built in at certain levels.

which are for known risk and even to some degree there's unknown risk.

This reserve is really for unforeseen items within those capital projects but just as much in my mind this reserve is to allow a funding reserve so if other opportunities present themselves you would have the ability to move forward versus

having to look at your whole budget and potentially eliminate other projects.

So that's what we're proposing here to y'all is what we call a board management reserve.

We did a lot of financial modeling since September, a lot of new revenue estimates, both up and down with our different revenue sources.

And added some cost, as you've seen.

That being said, in the modeling we've done, we do have about $50, $55 million available over the next three to four years.

Then the financial model and

What we are going to recommend as part of the budget action when we get to the FY23 recommendation on February 1 is that $15 million be set aside into this board management reserve.

And the last column here, when it says metric, it's not really a performance metric.

It's really ideas to think about

What is the appropriate level or dollar amount that should be put into the reserve?

Is it 10% of the total capital projects budget for the 10 years we're working on?

Is it 10% of the annual capital expenditures in a year?

And I'm just using 10%.

That's really the idea here is for y'all to be thinking about as we move forward, if there are other funds available,

What is an amount that's reasonable to have sitting in a reserve?

Just a comment on the management reserve.

And so as you said, capital projects all have their contingency reserves that they're required to have.

So this is something different from that.

And so it's

An opportunity fund or enhancement fund to be used for transportation related items.

I want to say that this is a really good thing to put into the budget.

We should also look at some guidance for how we might allocate it or what sorts of projects we want to have considered.

I think we feel a lot better.

I know Mike, DJ would say this, with the estimates we're bringing to y'all with the current budget, we feel a lot better about them.

We did include level of where we are in that planning process in the budget.

If you look at the document, you'll see we kind of rated it one through seven of how far along we are

but we feel a lot better about our estimates at this point.

That being said, there are every big $4.1 billion of capital projects.

There's gonna be some things that come up, but I like the spirit of the opportunities this fund could also present, as opposed to a great idea comes along and we don't have any money to even pursue it.

Moving along, this slide really just wanted to show y'all the core VPRA revenues.

And main point, Jennifer had mentioned this earlier, Finance Committee, did compare to December of last year to this December, there was a significant uptick in the revenue estimates.

I think there was a little bit

I'm not the economist for the state, but I think there was a little bit of what we did.

There was a little bit of conservatism in estimating revenues because there was so much uncertainty.

That being said, the second bullet is really a comparison to the revenues at a different point in time back from, I think it was in

May, when we got a revenue estimate.

If you go back to the December that we did in last year's budget, it's actually $179 million increase in our core revenues.

Next slide.

These next two slides are really just a summary of everything we've talked about.

So capital projects, we've got, we adjusted the I-95 corridor program to the

Comprehensive Rail Agreement, adding in Western Rail Initiative, which is getting ready to kick off here in the next month or two.

Then added a slight amount for other capital projects.

On the grant side, we added in that DRPT managed grants of $22 million.

And on top of that, as far as VPRA managed grants, there's about $168 million

related to the Western Rail Initiative.

And the last thing I'll say here is there was about $24.6 million, if you added the numbers up that Shannon pointed out earlier, that are new grants in this budget compared to the approved FY22 budget related to ETC and related to station state of good repair.

Next slide, please.

FY22 approved FY22 amendment, $33 million decrease.

Trains didn't start, federal credits were applied, more revenue than we thought and a slight adjustment to admin.

FY22 amended, the FY23 proposed.

The federal credits aren't as significant.

Two new trains we hope to start this summer, so it'll be a full year of their operations.

Then there are additional maintenance costs related to the right-of-way that we now will own.

And finally, our administrative budget has got to see a fairly large increase during FY23 as we actually get closer to fully staffed up.

Next slide, please.

This last slide really is

It really is supposed to tell the story for the FY23 budget.

And once again, we need to recommend a budget forward and forward that budget document to CTV by code on February 1st.

So I think the plan right now is that we're gonna have another board meeting on February 1st.

Hopefully recommend the budget forward to the Commonwealth Transportation Board.

So we're certainly open to any feedback you have on the budget between now and then to work through any of that.

Once that's presented to the CTV middle of February, we'll do a presentation for them about the detail.

I hope to get CTV to approve the budget earlier this year in April instead of May, then come to you in May for final approval of that FY23 budget.

That being said,

It's not on this page, but the FY22 budget amendment, we are hopeful to bring a resolution to you today to approve those changes so that we can begin reporting, giving you a lot better information in the current year.

Any questions?

Anybody on the phone?

Okay, thank you.

We do need to take an action on the amended FY22 budget.

However, I'd like to do that after lunch.

We actually need a physical quorum.

We're one person short.

I know Ms. Doersch had to run to take a phone call, but she'll be back after lunch.

So what I'd like to do is take that action after lunch.

Why don't we plan to reconvene at, for those of you on the phone, at 1 o'clock?

We will have our auditor who was actually supposed to meet with the finance committee this morning but was unable to come.

He'll be joining us by phone, I think just to give a very quick update.

We'll have one agenda item after that and then we will need to go into closed session as well after that.

But we should still be out of here by 3 o'clock today as planned.

Okay, so why don't we do this when we go ahead and break for lunch.

I believe lunch is down the hallway on the right and then we will reconvene at one o'clock.

For those of you on the phone, we will be back in a little while and we'll look forward to rejoining you then.

I know we still have one or two people out of the room, but Steve is going to lead us off.

We actually have our auditor who was planning to be at our finance committee meeting this morning, was not able to be here in person, but he is on the phone and he's going to give us a recap of our

inaugural VPRA audit.

Steve, you want to get started?

I just want to introduce Rob Churchman with Cherry Becker.

We had a very good and productive audit working with them this year.

I'm pleased to say there weren't any issues, unqualified opinion.

So set a high bar, I guess, going forward.

And with that, Rob, I think he has certain required communications as part of the audit process that he wants to relay to y'all.

I think he is.

Yes, ma'am.

Okay.

Can you speak up a little bit?

It's a little hard to hear you.

Sure.

That's better.

Oh, there you are.

Okay.

Great.

Thank you for allowing me to be here at the earlier session.

I have en route to CU this morning.

I had a positive family household test, so I brought myself back home.

But as Steve mentioned, there are certain communications that are required to be provided to those charged with governance at an entity, regardless of whether it's a not-for-profit or international conglomerate and so forth.

and I have those ready to be discussed.

I think we have the ability to do them here if you just let them know when, yep there we go.

Sure.

Will do.

Next slide please.

I have four key areas.

I need three that I have to talk to you about.

And the fourth one, the purple one is sort of just an FYI of what's going to happen or is happening in the governmental accounting standards area for the next week.

I'm sorry, for the next year's coming forward.

Next slide, please.

Engagement services, next slide.

Now, you may be saying, Rob, what you're going to be telling us, what we're seeing right now, we know we hired you to do an audit.

We know we hired you to do this and that.

Well, the standards don't presume that those on this call right now or those present in the audience had any discussion or knowledge of what our audit contract conveys and so forth.

So they require us to go through these items each time, regardless of whether or not, again,

I've had clients who've heard me say this five, six years in a row because they've stayed on the audit committee or finance committee and so forth.

But I still have to say it anyway because, again, the standards require it.

We are hired to do an audit of your finance statements as of your first full fiscal year end, 6-30-21.

Because of the nature of some of your funding and revenue streams, we are required to do that not only in accordance with generally accepted auditing standards, but also with government auditing standards.

And then also if you had reached enough revenue amounts, expenditures amounts that were federally related, you would have had to have what we call a uniform guidance audit, which in the old days was just simply called a single audit.

They changed the terminology a little bit several years back to kind of make the terminology more global.

But in essence, it's a single audit of your federal dollars.

And you did not have enough money this year to require that, but it is anticipated you will have enough money from the federal side next year for us to do that audit.

And then also because you're a state authority, the Auditor of Public Counts of the Commonwealth of Virginia has some specifications that are required by us as auditors to do authorities boards and commissions.

Now for those of you who may have some ties to city or county, they have the same thing but they're much more

There's much more of them at a city or county level as opposed to authorities, boards, and commissions.

But we still have to do it.

They're in areas, for example, like cash, some investment steps, conflict of interest steps, and so forth.

And we do those for any authority that we're auditing for in the state of Virginia.

Next slide, please.

Now, the most important slide is the next slide that's going to come up.

Next slide, please.

And that's the overall audit results.

Our opinion, we write an opinion on the financial statements that was unmodified.

That is a, again, getting back to the global area, that is a global term that has been modified in the old days would be called

unqualified, but because of the international auditing standards they wanted to kind of get the entire world using some similar terminology.

We changed it to unmodified.

What it means is that we found that your statements are fairly presented in all material respects and of course generally accepted accounting principles.

It's the audit opinion you want to have from your auditor.

It's the best one you can get.

Then also, as I mentioned earlier, because of the nature of some of your funding and the fact that we had to deal with government auditing standards audit also, that's our second bullet there.

That's the Internal Control for Financial Reporting and Compliance.

That also is unmodified.

Again, the perfect opinion you want to have from your auditor.

And then on Virginia compliance, we had no matters to report there either.

With regards to compliance laws and regulations, we don't do an audit that gives you an absolute opinion on

all compliance across all borders of your operations, but we are required to give you a report that says if we found anything.

And again, as it states here on the screen, we had no matters of noncompliance that we thought need to be reported to you regarding the material effect on the financial statements, and that includes also debt agreements and so forth.

Again, this slide is the perfect slide you want to hear from your auditors.

It's a testament to the finance department's operations and abilities, Mr. Pittard and his crew in getting this level of opinion in the first year of existence.

Next slide, please.

Actually, it'll be two more, so next one also.

Getting into my last required section of discussion, we're gonna be talking about some of the required areas that, again, because these are standards that relate to any size, breadth, or depth of entity, not just commercial or governmental or not-for-profit and so forth, these are required to be discussed each time.

Now, I will admit, as I have in many other sessions, that some of these items aren't really applicable to you.

But because they are required, because they are meant to cover the entire universe of audits, I have to at least let you know that I took them into consideration and or they weren't applicable.

But first, as you see, there are accounting policies.

If this was an entity that had many years of existence, there could be a chance that policies could change over years.

And because you're not there 24-7, and we're not there 24-7,

We are required to let you know if we are made aware of any material changes to the accounting and recording of activity.

And all your policies, in essence, as it states there, were basically put into place this year.

There may be very real possibility that next year I might be reporting to you that there have been some changes in policy because as you grow as an entity in your life, there will be times when you might want to change a policy here or there.

But in this case, being the first year of existence, all your policies were new.

With regards to the financial statements themselves, because no entity can afford to have an audit that audits 100% of every item and is there a 24-7, 365, there are some things in accounting where you can't get a solid, absolute number for it.

You have to make an estimate.

You can't always have a receipt that you can tie something to or an invoice you can tie it to.

And in your case, you have a couple areas where you have, currently you have estimates in place and then the last bullet here is when you're going to have some going forward.

But, you know, it allows for doubtful counts.

If you have receivables and there's a possibility, and this is very heavily related to government arena, cities and counties, for example, for taxes and so forth.

to make an estimate of what you're going to collect.

Because you don't know exactly every dollar you're going to get in.

You hope you're going to get it all, obviously.

But we look at the allowance for doubtful counts calculation.

We look at your depreciable life for capital assets.

You have to make a guess on how long somebody's going to live.

And therefore, you're going to depreciate it each year.

So you look at those lives.

And then going forward, you'll have actuarial liabilities that you're going to have estimates of, pensions and other post-employment benefits.

Roy wasn't the case this year because your existence coming into play this is one year.

But for all estimates and judgments, we have to look at them to make sure they make sense.

to make sure they are, in your case, next year, we'll look at them to make sure they're comparable year over year, to make sure that they are not out of the realm of reason, that you are not recording something, an allowance account at, say, 20% of the receivable, when everybody else, the entire plan is at 10, for example.

So we do look at how you stack up against your peers and so forth when we're looking at the estimates.

We noted nothing in our testing this year that makes us think that any of your estimates are out of the realm of possibility or unreasonable and so forth.

And again, next year, like I said, I'll report back to you on whether or not they stay comparable.

Now, estimates can change year over year, but making sure that they are the reasonable reason for them changing and not just something where, and again, and this is,

This is really relevant to governments but it's also hyper relative to corporations where they may change an estimate year over year because they want to modify where their bottom line is going to come out.

That's why it's important for us to talk to those charging governments about the estimates that are in place.

With regards to the last section here on this slide, we're required, unless you're

Just obviously trivial.

We're required to let you know if we have any changes that we proposed to the general ledger, to the accounting, to the debits and credits, either that we proposed and where it's made or proposed.

It was not made because for various reasons and generally it's because they're immaterial to the overall statements.

In the case of the authority, we had no uncorrected misstatements.

It makes it look ominous, but it's really not ominous.

It's just the words we have to use.

We had no uncorrected misstatements that we asked the finance team to make in order for us to believe that the statements were fairly presented.

Again, another example of the opinion you want to have from your auditor on the operations of the audit and the finance teams themselves.

Next slide, please.

Okay, so this looks very ominous because I have words like disagreements, difficulties on there, so forth.

And it's at some clients I've had this slide be frankly three or four pages long because not every audit is without disagreements, is without difficulties.

But I'm required to let you know if I came across any of those in my audit for your authority.

And we had no disagreements or management over reporting or presentation of the financial statements and disclosures.

And we had no difficulties encountered with working with them in order to get information from them, getting proposed changes to the presentation of the financial statements through them and so forth.

So, again, I sound like a broken record, but it's the opinion you want to have or report you want to have from your auditor.

And then also this last item here on this slide, I'm required to make you aware if there's ever any material communications that you would not have been privy to throughout the audit.

That could be a significant matter in a legal letter, that could be other matters.

The item that's here

to make you aware of what this is.

The standards require, because I give you four pieces of paper that goes into your document, that's your financial statements, the opinion and the GIS report.

This letter is required because it wants to document or the standards require it to happen because to document the responsibilities of management over the financial statements because they are not our financial statements, they are your financial statements.

And so this management representation letter is a standardized letter.

It's likely the same across any accounting firm you're looking at because they are all really just straightforward items.

And what it represents is from management to us as the auditor,

that they recognize that they we have done our audited accords with the engagement letter that they are your financial statements that you provided all records that will be relevant to me in a case where maybe you've had a federal or state regulator come in and look at your operations for some reason that you've given me a copy of that report so these are these are standard representations that would that would have

that would cause me as an auditor to have an issue if a client came back and wanted to change them.

They're literally that straightforward.

And so if I ever had a client come back and say, Rob, I can't represent this to you because X, Y, or Z, then I as the auditor have to think, well, why is that true?

What am I missing to make sure that I have the complete knowledge of the operations so that I can give a full opinion on the financial statements?

In the case of the authority, they did not request any changes to my standard representations.

They signed it and brought it back to me as 99.9% of my clients always have.

And so, but I'm required to make you aware that that letter exists and was provided to us without any pause through that.

The core part of what I have to talk to you about

I mentioned earlier that the standards are for any kind of, and this first item here is something that's more relevant or more, happens more often in the commercial arena of the desert government.

I've never had it, my 30, 35 plus years happened, but if I ever became aware of a client of mine who was asking other audit firms

How, what they would let them report, how to let them report something that maybe is a, I'll use the word controversial, but maybe something that has some gray area.

And we call it in our industry, shopping the opinion.

where an entity may talk to three different firms, and if they get the right answer they want from one of the firms, that's who they go with.

Again, it's never happened in government for me.

It's more of a commercial risk, but I'm required to make you aware of any of that discussion, and I'm not aware of any discussion that the finance team has had with other firms about accounting, reporting, and presentation.

This is probably as important as anything else on the other two previous slides, my middle bullet here, independence.

I'm required to make you aware that we know no transaction, no personnel in my firm, no activities with the firm or other firms that would cause us to be not independent of you.

And why is that important?

Well, if I'm not an independent, I'm an objective and my opinion means nothing to you.

So we have steps we perform yearly at our clients to make sure that our personnel don't have relationships, whether it be with maybe a Friday-esque person at an entity, maybe it's a family member or so forth that works or does business with an entity and so forth.

So we take those steps to make sure that we are independent.

And I would have to tell you right now, well, I would have to tell you much earlier because I wouldn't have been able to give you an opinion, but I'm telling you now that we're not aware of anything that would have impaired our independence.

And then my last matter here is just to make you aware that in your certifications, as you've seen, there's a section up front called the management discussion analysis.

And that is required by GASV, the people that set up journaling, subject accounting principles.

as a

and maybe you've started a new pension plan.

And so for that, that's where we, that's where this gets talked about.

We don't give an opinion on it.

We're not required to, but we do read it.

We do provide guidance, uh, suggestions, uh, criticisms, uh, corrections, uh, Hey, have you thought about saying it this way?

Hey, we thought about presenting this and so forth.

Um, but we don't give an opinion on it, but we do make sure the numbers tie.

Oh, I'm sorry.

To use non-accounting terms, uh, agree from there up to the financial statements and so forth.

Those are my required communications under the standards.

Next two slides, please.

Thank you.

Just to make you aware that in the year we're sitting in now fiscal year 22, there are some changes that are coming in the auditing industry, and that these may or may not relate to you, but I wanted to make you aware of them.

To the extent you have extensive leases, there are some changes in how those will be reported and recorded going forward, as opposed to how they are now.

and then also to the extent that an entity had construction period costs that they were incurring for interest.

This is the year where the GASB, who sets GAAP, says stop recording that and don't record it anymore.

It's capitalized interest.

Our audit opinion actually changed this year.

The AICPA has put out standard changes.

Our hope is to make our opinion as an industry

Easier to understand and provide more insight into what an audit actually does and what can be inferred from a audit opinion as with regards to the comfort you can have on the numbers that have been presented.

Next slide, please.

And then just FYI, as you know, coming down the pike for 23, there are some standards that are being put in place for the GSB

in their research noted that there appeared to be a higher level of public-private partnerships going on throughout the United States.

And so they wanted to put some guides out there so that entities would be comparable consistently presenting their information in the same way.

So again, this is probably not going to relate to

98% of my clients, but I want to make you aware that these new standards are coming out and will be required to be put in place for 6-30-23 if you find yourself in a relationship such as the PPPs.

And then also, finally, because of how so many businesses and operations and so forth are getting up into the cloud, web services and so forth, they put some guidance out for subscription based information technology agreements, basically your cloud services.

Again, to make sure that people across the board are presenting that, recording it, disclosing it consistently across the states to make sure that the statements will be as relevant and as knowledgeable as possible for the reader to understand the relationships that are falling under this subscription-based information.

Again, this is not going to be relevant to every one of my clients, but I just want to make you aware that that's out there, and I'll be talking with Finance Management over these last two pages to make sure, you know, throughout the entire calendar year that we're in on fiscal year now and well into next fall, to make sure that there's, if there's any, if these are relevant, that we'll make sure we're tackling them properly and presenting them properly in the year that they are due.

And those are my required communications with two slides at the end for, hey, here's what's coming down the pike that may or may not be relevant to you.

GASB, the GASB, does reserve the right to change their mind a lot and put out more guidance.

And so it's a revolving wheel, but these are the ones that are, if they were going to be relevant that we...

Oh, good for you though.

Look at this.

So, I think what you were saying was that concludes your report.

Does anybody have any questions for Rob?

Anybody on the phone with questions related to the audit?

I just wanted to say for Rob, before you go, it was good working with your team, very professional, and we look forward to going forward.

Oh, thank you.

Great.

Thank you very much.

We appreciate that.

Thank you, Steve, as well.

We do have one action item that we need to take related to the amended FY22 budget.

We got a presentation on that earlier.

We would like to get a motion.

Oh, I should note as well that the Finance Committee did review it this morning.

and did also vote to recommend that the amended budget be forwarded to the board for approval.

And so we do need to approve that.

I believe there was, was there a resolution in the package I believe was there?

And this is just for the amended FY22 budget.

We will be

taking action on the FY23 budget at the February meeting, which in that case would be to forward the 23 budget to the CTB.

But for this one, it would be adoption of the FY22 amended budget.

So any questions?

Would anybody like to make a motion or?

I'll move.

OK, great.

Second that motion.

Great.

All right, so all in favor?

Aye

Okay, thank you very much.

And so now we are going to have a presentation.

I want to make sure that we have plenty of time for our closed session to discuss some of the information we sent you related to Norfolk Southern.

Emily, though, is going to give us a quick presentation on a few studies that we have done in response to requests by the General Assembly.

reports, once they are forwarded to the General Assembly, are also public information.

Yes, if I may, sorry.

On the audit, the actual audited financial statements, I cannot remember if I forwarded it to the full board, so we will make sure you get that this afternoon.

Okay, great.

Thank you.

So there are three studies here in particular that we'll be discussing related to passenger rail expansion.

Thank you very much, Director Mitchell.

Thanks for having me.

Again, Emily Stock, DRPT Rail Chief, and I'll be talking about the inner city passenger rail related General Assembly studies that some have gone to the General Assembly already, some are about to go.

Next slide, please.

We had three that we focused on this past year.

We had one for Bedford, one for Bristol, and one for what's known as the Commonwealth Corridor, and I'll show you a map in a minute.

For all three of these studies, we looked at potential costs and potential ridership.

I'll start out for long-term,

Expansions of passenger rail.

So long term plans for expansion of passenger rail.

And as you all are aware, VPRA is focused on on all things passenger rail.

DRPT is still still does work on long range plans like this and like the Virginia statewide rail plan.

Next slide.

So for Bedford, DRPT has actually been working with local groups in the Bedford area for a couple of years now on a feasibility study that we already had underway and just recently completed to look at the potential for expansion of rail to, a rail stop to Bedford.

That Roanoke service that goes up to Lynchburg and eventually to the Northeast corridor goes right by Bedford.

And we estimated the cost of a new rail station there and the potential ridership that we could expect.

for a stop at Bedford.

And then the General Assembly asked us to work with Norfolk Southern to do rail traffic controller modeling to see what type of freight improvements might be needed in order to accommodate that service because, of course, this is on a Norfolk Southern rail line.

So next slide.

So I'll go ahead and report the results of both of those studies, both for the DRPT-led study.

We looked at a potential station location that was just east of downtown, and we expect that the construction cost for the preferred location is about $11 million.

And for this study and for the other studies that I'll be talking about, I'm happy to talk with you all about this in more detail.

I know we're a little pressed for time today, but I'm happy to tell you more about this.

And of course, the full reports will be available for you to

for you to review as well.

And the very good news was that when we worked with Norfolk Southern their results showed that operations modeling showed non-material new delay for Norfolk Southern freight operations with service included in this study.

So that was great news.

That meant that we didn't have to add anything to that $11 million to do

We also did a ridership analysis and we looked at the total ridership that we would expect to come to Bedford.

And then we also looked at what the incremental ridership would be because we know that putting a station between existing Roanoke Station and the existing Lynchburg Station means that we would probably siphon off some riders from those stations as well.

But even with that,

We're looking at ridership of about 10,000 per year at Bedford, which puts it online with Quantico or Ashland, so somewhere between Quantico and Ashland.

So I can move on to the next slide and some of our next steps.

We did apply for a CRISI planning grant.

With the Federal Railroad Administration, we're waiting to hear back from that.

But late in November, we applied for some additional funding to do a NEPA study.

That would lead to further design and ultimately implementation, hopefully.

depending on funding availability moving forward.

But we are going to be starting an Amtrak Thruway bus to serve Bedford in spring of 2022 is what we're estimating.

So that's another great development that will help us to understand what the demand might be for a rail stop at Bedford.

Next slide, please.

So the next study that we looked at, another long range potential expansion for passenger rail is to extend passenger rail to Bristol.

And as you all know, we're looking at passenger rail expansion to Christiansburg right now.

So this would

would build upon that.

And I don't want to undersell the fact for this study and for the Commonwealth Corridor study that I'll talk about that the host railroad has not evaluated or agreed to the proposed future service.

So we've let the host railroads know about these studies that are out there, both for Bristol and Commonwealth Corridor, but they have not agreed to

to the proposed service and that's a work that we would need to do as this moves forward.

So we reviewed a number of previous studies that were developed to look at Bristol service, the potential cost and benefit of Bristol service.

to understand the methodology for ridership and for cost estimates, so we weren't starting at square one.

But the current study is an independent estimate that builds on that earlier work and looks at updated service assumptions, especially now that we have Roanoke service under our belts.

Next slide, please.

Great.

One item that I want to point out, and this has a huge bearing for the potential for capital investment, the potential for capital costs for service between Christiansburg and Bedford is a location that's chosen for a New River Valley site.

So the New River Valley station assessment is being done right now by VPRA.

They're looking at some different options there.

And so there are a few different corridors where that station could go.

We talked about a mall site.

There's also a site called the Merrimack site.

And depending on where that ends up, it's possible that there would need to be a passenger rail tunnel built if one of the station locations on this northern Whitehorn district line is chosen.

So that's something to keep in mind because there's going to be a big range of capital cost estimates in the next slide.

So capital costs, we are looking at somewhere between half a billion dollars and 1.5 billion dollars and so that tunnel that I was talking about along the Whitehorn District route we're thinking would be about a billion dollars to build and so a lot will hinge on that station location.

that's being decided in New River Valley.

We're thinking for operations and maintenance costs.

We're looking at $5 million to $5.6 million per year, and there would be an offset depending on ridership that would come into play.

And then with regard to ridership, again, because this is long range, we are looking at somewhere between 10,000 and 15,500 riders per year to a station in Bristol.

So next slide.

Next steps for Bristol.

We have had a conversation as Jennifer mentioned earlier with the state of Tennessee.

It would be great to be able to partner with Tennessee and look at extending this not just to the northeast corridor but also down toward Atlanta as services are ramping up toward the south too because of the geography.

of this area and the amount of time that it takes to get from Bristol, would take to get from Bristol to the northeast corridor.

And there is a southeast regional rail plan that FRA put out not too long ago and it does show an emerging route between Bristol and Knoxville down to Chattanooga and Atlanta.

So we'd like to continue that conversation with the Southeast Rail Coalition

or Commission, I'm sorry, of which Tennessee is a member and Georgia.

And then continue to work with localities in the region on the number of stops that we may consider between New River Valley and Bristol.

I'll move over to the proposed Commonwealth Corridor study.

This is a corridor that would stretch from Hampton Roads through Richmond, then over to Charlottesville, and then down that Western Rail corridor to Lynchburg, Roanoke, and eventually the New River Valley.

So we looked at statewide travel demand model to identify popular sub-markets that help define this route.

Next slide please.

And we did quite a bit of public outreach.

We did some surveys to figure out how this would work because it was really not, this isn't a corridor that's gone through a lot of study like the way that Bristol and Bedford have.

So we found that most of the people who were answering the survey really preferred a one-seat ride.

It wasn't necessarily small local trips.

This is passengers who would want to go the entire corridor.

We looked at two daily round trips between Newport News and the New River Valley Station in Christiansburg.

That was one of the assumptions that we made early on to make this service worthwhile.

Next slide.

So we found along that corridor, and you may have noticed that there is a portion of that corridor that goes along the Buckingham Branch Railroad between Charlottesville and Doswell, just north of Richmond, and we found that the areas that needed the most improvement

include that Charlottesville to Doswell section that currently has no passenger rail service.

The other corridors along the way do have passenger rail service now, and we do know that we would have to have a storage and servicing facility at either end of the route as well.

We'd have to look at that in the future.

But the good thing is that all segments of the corridor do have existing track now.

Next slide, please.

As I mentioned, we modeled two daily round trips between Newport News and Christiansburg.

We found that this service could draw as many as 169,400 potential annual passengers.

The capital costs would range from $319 million

to $416 million in 2030 dollars.

And the O&M costs would be somewhere around $27 million and there may be some offsets there for the ridership that we get in that area.

But these, of course, are looking far into the future.

We did use $20, $21 for capital costs, but there's a lot of work that would need to be done

to see exactly how this service would work, especially work with the railroads themselves.

Next slide, please.

I think that might be all of my slides, and I went very fast because I wanted to leave you all lots of time to talk about your next agenda item.

Are there any questions now that you all can think of?

If not, I can answer questions offline.

I don't usually like to ask questions, but I'm gonna ask this.

The Bedford effort, I may have missed it.

So we are looking at adding an Amtrak Thruway bus sometime this spring or summer, and that's something that VPRA is working actively with Amtrak to get started.

We wanna give it the best chance of success, given the COVID issues that we've had.

Thank you very much.

We have a very active group of advocates there.

That's right.

Thank you.

Okay.

So with that, we now are going to go into closed session.

I do, Madam Chairman.

I would move that the board convene in a closed session pursuant to section 2.2-3711A6

of the Code of Virginia for the purpose of discussing a project involving the investment of public funds where bargaining is involved and where the financial interest of the Commonwealth would be adversely affected if the discussion were made public at this time.

and pursuant to A11 for consultation with legal counsel and briefings by staff members or consultants pertaining to probable litigation where such consultation or briefing in open meeting would adversely affect the negotiating or litigating posture of the public body.

Additionally, I move that staff and attorneys attend the closed session because their presence is deemed necessary

and we'll aid the board in its consideration of this matter.

Second.

Okay, great.

Joan, could you call the roll please?

Sure, those in favor say aye, those opposed say nay.

Ms. Bulova?

Aye.

Ms. Butler Painter?

Aye.

Mr. Cardwell?

Aye.

Ms. Doersch?

Great, thank you.

So let me just make sure that our IT is

All right, great.

We are now going to take a roll call vote and members should say aye if they agree with the following or abstain.

Well, no, not for this.

Let's see, to the best of our knowledge during the closed meeting, the only matters heard, discussed or considered were those matters lawfully exempted from open meeting requirements

under the Virginia Freedom of Information Act, and only those public business matters as were identified in the motion by which the closed session or closed meeting was convened.

Is there a second?

Okay.

Jen, will you call the roll call?

Ms. Butler Painter?

Aye.

Mr. Cardwell?

Aye.

Ms. Doersch?

All right, thank you.

So now we would like to, and as DJ noted, we did send out a decision brief and resolution as well, which we would like to now put to a vote as well.

Ms. Butler Painter?

Mr. Cardwell?

Ms. Doersch?

Mr. Fisette?

Mr. Hall?

Mr. Sadid?

Mr. Spore?

Aye.

All right, so the motion passes.

Very exciting.

Well, thank you all.

Yeah, that's all we have today unless anybody else has any other business they'd like to bring up.

All right, thank you all for coming.

It's good to see everybody in person.

Our next board meeting will be February 1st.

Alright, thank you all.

Yeah, we can take that one off the calendar.

Actually, what we'll do, we'll make sure we send you new calendar invitations and that you've got everything.

Alright, thank you to everybody on the phone as well.