Testimony of the Honorable Janice Hahn

Member, Los Angeles City Council

Chairwoman, Alameda Corridor Transportation Authority

Joint Hearing

of the

U.S. Senate

Environment & Public Works Committee

and

Finance Committee

September 25, 2002

Mr. Chairmen, and members of the joint Committees, good morning, and thank you for inviting me here today. My name is Janice Hahn. I am a Los Angeles City Councilwoman and serve as Chairwoman of the Governing Board of the Alameda Corridor Transportation Authority. The Alameda Corridor Transportation Authority is a joint-powers authority created by the Cities of Long Beach and Los Angeles in 1989 to oversee the financing, design and construction of the Alameda Corridor. The Governing Board of the Alameda Corridor Transportation Authority is a seven-member board representing the cities of Los Angeles and Long Beach, the ports of Los Angeles and Long Beach and the Los Angeles County Metropolitan Transportation Authority (MTA).

On behalf of City of Los Angeles Mayor James Hahn, City of Long Beach Mayor Beverly O’Neill, the Corridor Authority’s Governing Board, and our CEO Jim Hankla, I am honored to be here.

The efficient movement of cargo through our nation's ports and on our rail lines and highways is a critical issue not only in Southern California -- which has the nation's two busiest ports -- but the nation as a whole. I am honored to be here.

INTRODUCTION

We are commonly called ACTA. ACTA is the public agency that built the Alameda Corridor, a 20-mile-long freight rail expressway linking the Ports of Los Angeles and Long Beach to the rail yards near downtown Los Angeles. The project was monumentally complex, running through eight different government jurisdictions in urban Los Angeles County, requiring multiple detailed partnerships between public and private entities, and presenting extensive engineering challenges.

One of the key partnerships that has been vital over the years has been with the United States Congress. We greatly appreciate the strong support you and your colleagues provided to ACTA in developing the innovative loan from the Department of Transportation. We are particularly thankful for the strong leadership demonstrated by many of you in Congress including our two distinguished Senators, Dianne Feinstein and Barbara Boxer along with California Congressman Stephen Horn and Congresswoman Juanita Millender-McDonald. Without their vision and support it is unlikely the Alameda Corridor would be in operation today, strengthening the nation’s global economic competitiveness.

Over the years there wereas many who doubted the Corridor project could be built, let alone on time and on budget. But after more than 15 years of planning and five years of constructing the $2.4 billion Alameda Corridor, one of the nation's largest public works projects opened on time and on budget on April 15. Today, more than 35 freight trains per day use the Alameda Corridor, handling containers loaded with shoes, clothing, furniture and other products bound for store shelves throughout the United States. They also deliver to the ports U.S. goods such as petroleum products, machine parts, and agricultural products for shipment to worldwide markets. A trip from the Ports of Los Angeles and Long Beach to the transcontinental rail yards near downtown Los Angeles used to take more than two hours. It now takes about 45 minutes. As cargo volumes increase, this enhanced speed and efficiency will be critical; more than 100 trains per day are expected on the Alameda Corridor by the year 2020. It is important to note that ACTA is collecting revenue from these rail shipments in amounts sufficient to meet its current and future financial obligations.

MODEL FOR SUCCESS

Because of our success, the Alameda Corridor is considered a model for how major public works projects should be constructed. The Corridor illustrates the significance of intermodalism to the future of our economic and transportation systems. Among those praising the Alameda Corridor have been Transportation Secretary Norman Mineta – a long time supporter and friend of the Corridor project – and three of his predecessors, one from the first Bush administration and two from the Clinton administration.

At our grand opening ceremony last April, Secretary Mineta said this about the Alameda Corridor: "Its successful completion demonstrates what we can accomplish with innovative financing and public-private cooperation, and it provides a powerful paradigm for the kinds of intermodal infrastructure investment we want to encourage as we begin working with the Congress to develop legislation reauthorizing America's surface transportation programs." We were also pleased to see that just this month in testimony before a joint hearing of the Environment and Public Works and Commerce Committees, Associate Deputy Secretary of Transportation Jeff Shane praised the Corridor project as a national model. The project, he said, "will have far-reaching economic benefits that extend well beyond Southern California."

Similarly, in an article written for TrafficWorld, former U.S. Department of Transportation Secretaries Federico Pena and Samuel Skinner said: "The Alameda Corridor is of national significance not only because of its direct economic impact on jobs, taxes and commodity prices but because the corridor serves as a model of how our country can and must expand and modernize our freight transportation system if we are to remain a world-class trading partner." In addition, former U.S. Department of Transportation Secretary Rodney Slater has also been a supporter of the Alameda Corridor project.

We are flattered by the accolades and pleased and proud to share our experience with those who hope to benefit from it. In fact, one of the goals of the ACTA Governing Board is to support other projects that promote international trade and the efficient movement of cargo.

The key to our success can be attributed to two major themes that guided us throughout the planning, financing and construction of the project: First is multi-jurisdictional cooperation. The Alameda Corridor is built on the partnerships forged between competitive public agencies and between those agencies and the private sector. We have demonstrated that governments can work together, and they can work with the private sector, putting aside competition for the benefit of greater economic and societal good. Second is direct and tangible community benefits. The Alameda Corridor provided direct community benefits in the form of significant traffic congestion relief, job training and other programs. We have proven that communities don't have to sacrifice quality of life to benefit from international trade and port and economic activity.

PROJECT NEED AND PLANNING

The roots of our multi-jurisdictional cooperation began to take hold in the early 1980s, when a committee was formed by the Southern California Association of Governments to study ways to accommodate burgeoning trade at the Ports of Los Angeles and Long Beach. The panel included representatives of the ports, the railroad and trucking industries, the Army Corps of Engineers as well as local elected officials and others. The ports had projected – accurately, it turns out – massive cargo increases driven by the growing use of intermodal containers transferred directly from ships to rail cars and trucks. The volume of containers crossing the wharves doubled in the 1990s and last year reached more than 10 million 20-foot containers per year. That figure is expected to exceed 36 million by the year 2020. Last year, the ports handled more than $200 billion in cargo, or about one-quarter to one-third of the nation's waterborne commerce. This has had huge ripple effects in Southern California and across the country in the form of jobs, tax revenues and general economic activity.

In the early 1980s, there was growing concern about the ability of the ground transportation system to accommodate increasing levels of trade-related rail and truck traffic in the port area. By 1989, the cities and ports of Los Angeles and Long Beach had joined forces to form a joint powers authority that later became the Alameda Corridor Transportation Authority. The agency then selected a preferred project: consolidating four branch lines serving the ports into a 20-mile freight rail expressway that is completely grade-separated, including a 10-mile-long 30-foot-deep trench that runs through older, economically disadvantaged industrial neighborhoods south of downtown Los Angeles. The project would eliminate traffic conflicts at more than 200 street-level railroad crossings.

PROJECT FINANCING AND FUNDING

Our broad base of cooperation is also evident in the project's unique finance plan, which draws revenue from a range of both public and private sources.

The linchpin of this funding plan was designation of the Alameda Corridor as a "high-priority corridor" in the 1995 National Highway System Designation Act. That designation cleared the way for Congress to appropriate $59 million needed to back a $400 million loan to the project from the U.S. Department of Transportation. As mentioned previously, Senators Boxer and Feinstein, along with California Congressman Stephen Horn and Congresswoman Juanita Millender-McDonald and other members of our Congressional delegation, were instrumental in helping to form a bipartisan Congressional coalition to support this effort. It is important to point out that this financing arrangement preceded the passage of TEA-21, and the associated provisions known as TIFIA. ACTA was pleased to work cooperatively with Department of Transportation officials and Congressional staff, to be a “trailblazer” with the Office of Management and Budget and forge an innovative arrangement to finance an intermodal project of national significance.

Similarly, at the state level, ACTA worked closely with both Republican and Democrat members of the Legislature, Governor Pete Wilson along with the California Business, Transportation and Housing Agency, the California Transportation Commission and the Department of Transportation to include the project in short- and long-range plans and to expedite state funding. At the local level, ACTA coordinated closely with Mayor Beverly O'Neill of Long Beach and then-Mayor Richard Riordan of Los Angeles for support of the project, and ACTA worked closely with the Los Angeles County Metropolitan Transportation Authority to set aside State and Federal grant funds and local transportation sales tax revenues for use on the Alameda Corridor. And, of course, the ports provided almost $500 million in start-up funding and for the purchase of rights-of-way.

The collective assistance offered by federal, state and local agencies and elected officials provided the base funding -- the leverage, if you will -- for the biggest piece of our financing package -- more than $1.1 billion in proceeds from revenue bonds sold by ACTA. The bonds and the federal loan are being retired by use fees paid by the railroads.

The Use and Operating Agreement between ACTA and Burlington Northern and Santa Fe Railway and Union Pacific Railroad, approved in October 1998, is truly unprecedented. Never before had the competitive railroads cooperated on a project to the extent that they did on the Alameda Corridor. Like the ports, the BNSF and the UP put aside their rivalry to cooperate on a project with positive economic implications at the national, regional and local levels.

In the end, funding for the Alameda Corridor came from multiple public and private sources and resulted from bipartisan support. The funding breaks down roughly like this: 46% from ACTA revenue bonds; 16% from the U.S. Department of Transportation loan; 16% from the ports; 16% from California state and local grants, much of it administered by the Los Angeles County Metropolitan Transportation Authority, and 6% from other sources.

PROJECT CONSTRUCTION

As with project planning and funding, construction also required extensive cooperation and coordination among multiple entities.

The Alameda Corridor included, among other elements, construction of 51 separate bridge structures, relocation of 1,700 utilities, pouring of 27,000 concrete pilings and removal of 4 million cubic yards of dirt excavated to make way for the Mid-Corridor Trench. More than 1,000 professionals from 124 engineering and construction management firms, as well as more than 8,000 construction workers, contributed to the project. Moreover, construction occurred in eight different government jurisdictions. Any project of the Alameda Corridor's size and scope inevitably encounters hurdles in the construction process that can lead to delays.

There are many reasons why our project stayed on schedule, but at the top of the list are our permit facilitating agreements with corridor communities and utility providers, and our decision to use a design-build contract for the Mid-Corridor Trench.

ACTA saved an estimated 18 months on project delivery by utilizing the design-build approach for our largest contract, the Mid-Corridor Trench. The design-build approach allows for the overlapping of some design and construction work and provides greater control over cost and scheduling. Design-build authority was obtained through an ordinance approved by the Los Angeles City Council. This enabled ACTA to subject the contractor to significant liquadative damages if the contract was not completed by a fixed date at a fixed price.

Before construction began, ACTA negotiated separate Memoranda of Understanding with each city along the route, detailing expedited permitting processes, haul routes for construction traffic and the protocol for lane closures and temporary detours. By agreeing in advance on these and other issues, we streamlined a complex construction process and saved time and money.

DIRECT COMMUNITY BENEFITS

One key to securing the MOUs and additional community cooperation and support was to deliver on our promises of direct community benefits.

By eliminating more than 200 at-grade railroad crossings, the Alameda Corridor is projected to reduce emissions from idling trucks and automobiles by 54 percent, slash delays at railroad crossings by 90 percent and cut noise pollution by 90 percent. The project also reduces traffic congestion through improvements to Alameda Street. But from the start, the ACTA Governing Board wanted to leave a lasting legacy beyond construction of a public works project. This was accomplished by creating several community-based programs.

Through its contractors and various community partnerships, ACTA administered several programs designed to provide local residents and businesses with direct benefits that would long outlive construction. For example:

The Alameda Corridor Business Outreach Program offered technical assistance, networking workshops and aggressive outreach to provide disadvantaged business enterprises with the tools they need to compete for work on the project. Disadvantaged firms – known as DBEs – have earned contracts worth more than $285 million, meeting our goal for 22 percent DBE participation.

§ The goal of our Alameda Corridor Job Training and Development Program was to provide job training and placement services to 1,000 residents of corridor communities. We exceeded that goal - almost 1,300 residents received construction industry-specific job training, and of those 637 were placed in construction-trade union apprenticeships.

The Alameda Corridor Conservation Corps provided life skills training to 447 young adults from corridor communities, exceeding the goal of 385. While studying for high school class credits, these young adults completed dozens of community beautification projects in corridor communities, including graffiti eradication, tree-planting and debris pickup. After completing the three-month program, recruits had the option to join the Los Angeles or Long Beach conservation corps chapters full time, phase into a city college program or enroll in a business, vocational, trade school or apprenticeship program.

§ And finally, in partnership with the World Trade Center Association Los Angeles-Long Beach, the Alameda Corridor Transportation Authority International Trade Development Program has provided technical training and international trade-specific job skills to 30 entry-level job seekers in local communities. In addition, some 600 local companies seeking inroads into the import or export business have been identified for one-on-one technical assistance. That assistance is being provided throughout this year. This unique program is helping local residents and businesses capitalize on international trade.

These community-based programs ensured that local residents and businesses did not get left behind, that they would receive direct and long-lasting benefits from the project.

THE FUTURE

The efficient movement of cargo through our nation's ports and on our rail lines and highways is a critical issue not only in Southern California -- which has the nation's two busiest ports -- but the nation as a whole. The Alameda Corridor is truly the backbone of an emerging trade corridor program in Southern California. Already, others are following our lead, including governmental agencies in Los Angeles, Orange, San Bernardino, and Riverside Counties who are building grade-separation projects.rces to build rail-related improvements.

In addition, ACTA and the California Department of Transportation are working under an innovative cooperative agreement to develop plans for a Truck Expressway that would provide a “life-line” link between Terminal Island at the Ports and the Pacific Coast Highway at Alameda Street. The Alameda Corridor Truck Expressway is intended to speed the flow of containers into the Southern California marketplace. Environmental reports are being prepared, and the project could be ready for approval as early as March 2003. At ACTA, we believe that by restructuring our federal loan we can undertake this critical Truck Expressway project without any additional federal financial support.

IMPLICATIONS AND RECOMMENDATIONS

The Alameda Corridor not only creates a more efficient way to distribute cargo, but it also boosts the regional and national economies by keeping the ports competitive and capable of generating additional economic growth. Moreover, it provides direct, long-lasting benefits to local residents and companies, benefiting the entire region with a legacy well beyond actual construction. In short, the Alameda Corridor has demonstrated the benefit of investment in well-planned and well-executed intermodal transportation infrastructure.

As your committees, the full Congress, and the U.S. Department of Transportation begin the TEA-21 reauthorization process, including the formulation of policies to address growing freight rail and truck traffic congestion and other challenges posed by international trade, we respectfully offer these policy recommendations, based on our experience with the Alameda Corridor:

§ The planning and funding of intermodal projects of national significance, directly benefiting international trade, should be sponsored at the highest levels within the Office of the Secretary of Transportation. There should be a national policy establishing the linkage between the promotion of

free trade and support for the critical intermodal infrastructure moving goods to every corner of the United States. Public-private partnerships do in fact work and should be promoted and encouraged by federal transportation legislation.

§ A specific funding category is needed to support intermodal infrastructure projects, and trade connector projects. Consideration should be given to new and innovative funding strategies for the maritime inter-modal systems, infrastructure improvements enhancing goods movement.

§ The Alameda Corridor project benefited from a Department of Transportation willing to undertake risk and provide loan terms that were not available on a commercial basis. This federal participation gave private investors confidence in the project and made bond financing possible.

Most important, in my mind, is this: The success of the Alameda Corridor has shown that federal investment in trade-related infrastructure can benefit the economy without sacrificing quality-of-life issues.

Mr. Chairmen, once again, thank you for inviting me here today. That concludes my remarks. I would be happy to address any questions.