[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
THE ALAMEDA CORRIDOR PROJECT: ITS SUCCESSES AND CHALLENGES
=======================================================================
HEARING
before the
SUBCOMMITTEE ON GOVERNMENT EFFICIENCY,
FINANCIAL MANAGEMENT AND
INTERGOVERNMENTAL RELATIONS
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
APRIL 16, 2001
__________
Serial No. 107-50
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpo.gov/congress/house
http://www.house.gov/reform
77-859 U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2002
____________________________________________________________________________
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COMMITTEE ON GOVERNMENT REFORM
DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida EDOLPHUS TOWNS, New York
JOHN M. McHUGH, New York PAUL E. KANJORSKI, Pennsylvania
STEPHEN HORN, California PATSY T. MINK, Hawaii
JOHN L. MICA, Florida CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia ELEANOR HOLMES NORTON, Washington,
MARK E. SOUDER, Indiana DC
JOE SCARBOROUGH, Florida ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio DENNIS J. KUCINICH, Ohio
BOB BARR, Georgia ROD R. BLAGOJEVICH, Illinois
DAN MILLER, Florida DANNY K. DAVIS, Illinois
DOUG OSE, California JOHN F. TIERNEY, Massachusetts
RON LEWIS, Kentucky JIM TURNER, Texas
JO ANN DAVIS, Virginia THOMAS H. ALLEN, Maine
TODD RUSSELL PLATTS, Pennsylvania JANICE D. SCHAKOWSKY, Illinois
DAVE WELDON, Florida WM. LACY CLAY, Missouri
CHRIS CANNON, Utah ------ ------
ADAM H. PUTNAM, Florida ------ ------
C.L. ``BUTCH'' OTTER, Idaho ------
EDWARD L. SCHROCK, Virginia BERNARD SANDERS, Vermont
------ ------ (Independent)
Kevin Binger, Staff Director
Daniel R. Moll, Deputy Staff Director
James C. Wilson, Chief Counsel
Robert A. Briggs, Chief Clerk
Phil Schiliro, Minority Staff Director
Subcommittee on Government Efficiency, Financial Management and
Intergovernmental Relations
STEPHEN HORN, California, Chairman
RON LEWIS, Kentucky JANICE D. SCHAKOWSKY, Illinois
DAN MILLER, Florida MAJOR R. OWENS, New York
DOUG OSE, California PAUL E. KANJORSKI, Pennsylvania
ADAM H. PUTNAM, Florida CAROLYN B. MALONEY, New York
Ex Officio
DAN BURTON, Indiana HENRY A. WAXMAN, California
J. Russell George, Staff Director and Chief Counsel
Earl Pierce, Professional Staff Member
Grant Newman, Clerk
C O N T E N T S
----------
Page
Hearing held on April 16, 2001................................... 1
Statement of:
Hankla, James, chief ecexutive officer, Alameda Corridor
Transportation Authority; Tim Buresh, director of
engineering and construction, Alameda Corridor
Transportation Authority; Jeffrey Brown, California State
Office of Research, representing State Senator Betty
Karnette; and Larry Wiggs, job training officer, Tutor-
Saliba..................................................... 46
Kellogg, Jeffrey, former Long Beach City councilman and
former vice chairman, Alameda Corridor Transportation
Authority Board; Gill Hicks, former general manager,
Alameda Corridor Transportation Authority; James Preusch,
vice president, managing director, A.G. Edwards & Sons,
former treasurer, Alameda Corridor Transportation
Authority; and Jeffrey D. Holt, vice president, Goldman
Sachs & Co., senior managing underwriter, Alameda Corridor
Project.................................................... 3
Steinke, Richard, executive director, Port of Long Beach
representing the Alameda Corridor Transportation Authority
Board; Larry Keller, executive director, Port of Los
Angeles; and Rollin Bredenberg, vice president, service
design and performance, Burnington Northern Santa Fe
Railroad................................................... 30
Letters, statements, etc., submitted for the record by:
Buresh, Tim, director of engineering and construction,
Alameda Corridor Transportation Authority, prepared
statement of............................................... 55
Hankla, James, chief ecexutive officer, Alameda Corridor
Transportation Authority, prepared statement of............ 49
Hicks, Gill, former general manager, Alameda Corridor
Transportation Authority, prepared statement of............ 7
Holt, Jeffrey D., vice president, Goldman Sachs & Co., senior
managing underwriter, Alameda Corridor Project, prepared
statement of............................................... 43
Keller, Larry, executive director, Port of Los Angeles,
prepared statement of...................................... 37
Preusch, James, vice president, managing director, A.G.
Edwards & Sons, former treasurer, Alameda Corridor
Transportation Authority, prepared statement of............ 13
Steinke, Richard, executive director, Port of Long Beach
representing the Alameda Corridor Transportation Authority
Board, prepared statement of............................... 32
Wiggs, Larry, job training officer, Tutor-Saliba, prepared
statement of............................................... 63
THE ALAMEDA CORRIDOR PROJECT: ITS SUCCESSES AND CHALLENGES
----------
MONDAY, APRIL 16, 2001
House of Representatives,
Subcommittee on Government Efficiency, Financial
Management and Intergovernmental Relations,
Committee on Government Reform,
Long Beach, CA.
The subcommittee met, pursuant to notice, at 8:58 a.m., in
the Harbor Department Administration Building Board Room, Port
of Long Beach, 925 Harbor Plaza, Long Beach, CA, Hon. Stephen
Horn (chairman of the subcommittee) presiding.
Present: Representatives Horn and Millender-McDonald.
Staff present: J. Russell George, staff director and chief
counsel; Bonnie Heald, director of communications; and Grant
Newman, assistant to the committee.
Mr. Horn. This meeting of the Subcommittee on Government
Efficiency, Financial Management and Intergovernmental
Relations will come to order.
More often than not congressional hearings are called to
examine a problem. Sometimes it involves an outrageous waste of
Federal taxpayer money, other times it may involve an abusive
use of power. Today's hearing is different and refreshing. We
are here today to examine the multi-billion dollar
transportation project that, unlike most publicly funded
programs of this magnitude, is nearing completion on schedule
and within budget. By this time next year trains will be
speeding their Pacific Rim cargo along the Alameda Corridor
between the Ports of Long Beach and Los Angeles and
transcontinental rail networks 20 miles away.
The intermodal project, which includes a 10-mile, 33-foot
deep trench and 29 new bridges will ease traffic congestion and
cut noise and air pollution in each of the seven cities along
its path. The project will also allow cargo from the combined
port complex, the busiest in the Nation and the third busiest
in the world, to move two to three times faster toward
destinations throughout the United States. Nearly one quarter
of all waterborne imports currently enter this country through
these ports and that volume is expected to double within the
next 20 years. The need for such a project was clear, the
challenges however were enormous.
When the Alameda Corridor Transportation Authority was
created in 1989, board members had the daunting task of
building a consensus among seven distinct city governments,
huge railroad companies that were in the process of merging,
and Federal, State, and regional government agencies. The
support of all of these entities was vital to the completion of
the $2.4 billion project. Today we would like to learn how that
consensus was achieved. We would like to hear about the
specific challenges, how they were met and finally how the
project is progressing.
There are a number of proposals for similar projects in
other cities, such as Seattle and New Orleans, perhaps Houston
and others. In addition, projects are being discussed for other
congested California areas north and east of Los Angeles. We
hope that today's testimony will provide guidance for those who
are considering these proposals. I congratulate all of our
witnesses who are here with us today for their contributions to
this highly successful public/private enterprise.
I would like to welcome our first panel of witnesses who
helped put this project together. Jeffrey Kellogg of the Newark
Co., former Long Beach City councilman and former vice chairman
of the Alameda Corridor Transportation Authority Board of
Directors; Gill Hicks, president of Gill Hicks and Associates,
Inc., and former general manager of the Alameda Corridor
Transportation Authorty; James Preusch, vice president and
managing director of A.G. Edwards and Son and former treasurer
of the Alameda Corridor Transportation Authority; and Jeffrey
D. Holt, vice president of Goldman Sachs & Co., and senior
managing underwriter of the Alameda Corridor Project.
On panel two we will hear the stakeholders of this project,
the ports and the railroads. Richard Steinke, the executive
director of the Port of Long Beach, who will also represent the
Alameda Corridor Transportation Authority Board of Directors;
followed by Larry Keller, his counterpart, executive director
of the Port of Los Angeles and Rollin Bredenberg, vice
president of service, design and performance for Burlington
Northern Santa Fe Railroad.
Our third and final panel will provide an update on the
progress and successes of the project and the challenges that
remain. James Hankla, chief executive officer of the Alameda
Corridor Transportation Authority, former city manager of the
city of Long Beach, former chief administrative officer for the
county of Los Angeles; Tim Buresh, director of engineering and
construction for the Alameda Corridor Transportation Authority;
Jeffrey Brown of the California State Office of Research, who
is also representing State Senator Betty Karnette.
I welcome all of you and look forward to your testimony.
Let me explain how we conduct this hearing. Technically we are
an investigating committee, and as I said earlier, this is the
good luck day with this committee. We have had about 100
different hearings in the last 2 years and we will do the same
process here. The minute--if you have a written statement--that
we introduce you, that automatically goes in the hearing record
with the gentleman from my left, and your right, and that will
all be put in there with exhibits and everything else. What we
would like you to do is summarize your testimony within 5
minutes. We would like to have a lot of time for questions and
answers, because that is the way we learn a lot. Your
statements are very fine. They have been gone over by staff and
I have had a chance to look at some. So if we can get panel one
up here. You cannot see it apparently, but I can see it. Mr.
Kellogg is on the right side. Mr. Hicks next to him. That is
Mr. Hicks. Then we have Mr. Preusch and we have Mr. Holt.
I might add for the second panel and the third one, you
might want to just get around here and then it will be more
intimate than having you just sitting and seeing their backs.
So why doesn't the second panel just come up? We will put you
in the right place when that time comes. Those chairs might
even be more comfortable. The commissioners are very good at
being comfortable. This is a beautiful building and we thank
all of the people in the Port for helping us with this Corridor
hearing, and you have been so good in the past when we have had
hearings on the Customs Service and trying to help them, a very
fine service.
So we have Mr. Kellogg, Mr. Hicks, Mr. Preusch and Mr.
Holt.
Ms. Heald. Mr. Holt is here and we are trying to find him.
Mr. Horn. Oh, OK. Well he will be the fourth one anyhow, so
it does not matter.
Let me just say that we also swear in all witnesses. So if
you will stand and raise your right hands.
[Witnesses sworn.]
Mr. Horn. The clerk will note the three witnesses have
assumed the oath.
We will now begin with Mr. Jeffrey Kellogg, former Long
Beach city councilman and I think mayor pro tem and former vice
chairman of the Alameda Corridor Transportation Authority
Board. So, Jeff, we are delighted to have you here.
STATEMENTS OF JEFFREY KELLOGG, FORMER LONG BEACH CITY
COUNCILMAN AND FORMER VICE CHAIRMAN, ALAMEDA CORRIDOR
TRANSPORTATION AUTHORITY BOARD; GILL HICKS, FORMER GENERAL
MANAGER, ALAMEDA CORRIDOR TRANSPORTATION AUTHORITY; JAMES
PREUSCH, VICE PRESIDENT, MANAGING DIRECTOR, A.G. EDWARDS &
SONS, FORMER TREASURER, ALAMEDA CORRIDOR TRANSPORTATION
AUTHORITY; AND JEFFREY D. HOLT, VICE PRESIDENT, GOLDMAN SACHS &
CO., SENIOR MANAGING UNDERWRITER, ALAMEDA CORRIDOR PROJECT
Mr. Kellogg. Actually by starting with me you are jumping a
little bit ahead because Mr. Hicks was involved with the
Southern California Association----
Mr. Horn. Have we got those microphones OK? The clerk will
check. Can you hear it out in the audience?
Mr. Kellogg. The problem with these tables is you do not
know where the microphones are unless you look over at them.
That is fine.
Mr. Horn. Fine, but you have got to speak up.
Mr. Kellogg. It is on.
Mr. Chairman, my involvement is from the beginning of the
Alameda Corridor in 1988 as a newly elected member of the Long
Beach City Council. I am one of the original members of that
governing board. The beginning process though really began with
Mr. Hicks and the Southern California Association of
Governments as they went through a process of determining the
planning for the growth of the Ports of Long Beach and Los
Angeles. I wish I could sit here today and tell you that I had
this great vision, and if I was still in elected office I
probably would make that claim, but the fact remains that I was
simply trying to find a way of removing train traffic and
eliminating a lot of the problems that trains were causing in
my neighborhoods as a Council member.
Someone showed me a document about this proposed Alameda
Corridor. I got involved more out of luck than anything else. I
became one of the original members and I was a chairman, I
believe, four different times of that governing board during my
12 years. It is probably one of the projects I am most proud of
during my tenure as a member of the city council, and also
representing the city of Long Beach on that governing board.
There are too many stories that I have talked to your staff
about on the project that are beneficial to it, some of the
challenges along the way. I could probably--as you mentioned,
you many times have to talk to different public works projects
that have not had a success rate, as this one has been. Every
time I did go back to Washington, DC, or Sacramento to lobby,
it usually began with the following: Good morning, my name is
Jeff Kellogg and I am not with the Metropolitan Transportation
Agency. We are not part of the MTA, because the MTA, or the big
dig project in Boston were at that time at the forefront of how
to spend a lot of money and not necessarily get a lot of
results.
If I had to tell you what I felt was the strongest point on
the Alameda Corridor that made it successful, it is because of
one strong factor. You had people that were vested in it
financially. The Ports of Long Beach and Los Angeles stepped
up. When we went back to Washington, DC, or Sacramento to ask
for additional funding, we did not say we have no funding, we
said we have funding, we need more funding to make this project
work. The strongest point is to have a partner in this who is
willing to step up financially, whether it be corridor or
cities. In other parts of this country who are trying to do
similar projects, if they are not willing to put financial
dollars up to make the project initially begin, I believe they
will have a difficult time getting any more support back in
Washington, DC, for example.
The other issue that we felt very strongly about, we had a
sole purpose. We are building one corridor to connect the Ports
of Long Beach and Los Angeles to downtown Los Angeles and move
the cargo. We are not trying to do 10 or 15 different items. We
did not have 10 or 15 different political agendas taking place.
We had one agenda, to build this corridor, to help improve
moving cargo out of the Ports of Long Beach and Los Angeles.
That impact is positive for the Federal Government, as well as
the local area. For a local official, it meant less trains
running through my neighborhood. So we had from the very
smallest part, as an elected official, all the way to the top
end of government realizing the benefits of it all.
Those two points were critical as I looked at this. Having
the people who were willing to financially invest in the
project from the very beginning and then the community
continuing to focus on the mission statement of what this was
to do, and that was to build this project, not to become social
engineers, but to just advance an engineering project of this
magnitude.
Mr. Chairman, that is the best advice I can give to anyone.
It was a wonderful experience for me. I had a tremendous time
working with different people and the Ports of both Long Beach
and Los Angeles. I truly believe it is a model for everyone
else to follow. Thank you, Mr. Chairman.
Mr. Horn. Well, I thank you very much because that was a
good summary, and here we are even before the end of the 5-
minute situation.
Mr. Hicks, who was one of the early pioneers in guiding the
Alameda Corridor project.
Mr. Hicks. Good morning, Mr. Chairman, ladies, and
gentlemen. Thank you very much for the invitation to speak to
you today.
You have asked me to discuss some of the challenges faced
by this project. I am going to speak primarily to the issues
prior to construction. There are other speakers here today who
will touch base on that.
As you know, the Alameda Corridor began modestly as a low-
budget planning study in the early 1980's and has now developed
into a $2.4 billion program, one of the largest public works
projects in the United States. I believe that the success of
the Alameda Corridor is due in part to the successful execution
of what I call the seven C's of project development, and they
are communication, coordination, credibility, compromise,
consensus, coalition and champions. These C words reflect the
necessary components of implementing a complex project
involving many stakeholders with competing agendas.
Successfully navigating these seven C's is normally a
prerequisite to obtaining another C word, namely capital.
Conversly, missteps in any of these areas, if serious enough,
could easily sink or derail a major project.
In the early days of the program, one of the key challenges
was what is the project. What is the project definition? And in
the early 1980's, the Southern California Association of
Governments created a Ports Advisory Committee which looked at
the options. And after only 5 months, in March 1982, the Ports
Advisory Committee did reach consensus on a comprehensive list
of highway improvements that included the widening of Alameda
Street from the ports to Route 91.
From 1982 to 1984, the Ports Advisory Committee focused on
railroad access for the ports, and in December 1984 the SCAG
Executive Committee adopted a plan for the consolidation of all
port-related railroad traffic onto the former Southern Pacific
San Pedro Branch. This corridor is largely industrial and thus
more compatible with the heavy freight trains than three other
harbor-access lines that cut through residential neighborhoods.
When the plan for the consolidated corridor was originally
proposed in 1984 the railroads looked at it and were generally
opposed because, of course, they had their own privately owned
rights-of-way. It was like asking three neighbors on a
residential street to share the same driveway. Ultimately
however, through simulations of the railroad traffic and other
studies, we were able to convince the railroad that, yes
indeed, the project would speed up the trains and reduce the
significant amount of delay to their own trains; thus,
improving the efficiency of the rail line and facilitating the
movement of international cargo were important objectives,
along with the goals of reducing vehicular delays at grade
crossings, improving emergency access, and reducing noise and
air pollution. The SCAG study demonstrated that the
consolidated corridor would be a win-win solution for all
concerned.
Another major challenge, of course, was obtaining
additional funding beyond the seed funding that the ports
provided in the early days of ACTA. We first approached the
L.A. County Transportation Commission, which was the earlier
agency before the MTA. Initially there was not even a category
in which to compete. We were not a freeway, we were not buses,
we were not commuter rail. For 2 years we lobbied the agency
for a category for goods movement so that the Alameda Corridor
could compete in this arena. Eventually over time we were
successful in getting commitments from the MTA for $347 million
in State, Federal and county grants. These efforts were also
supported by the California Transportation Commission, another
major champion of that project.
One of the highlights of the program, of course, was
obtaining the Federal loan in 1996 and 1997. Through a variety
of legislation, the ISTEA, the National Highway System
Desigination Act which desiginated the Alameda Corridor as a
high-priority corridor, we became eligible for the innovative
financing. In 1996, the Omnibus Budget legislation allowed for
a $58.68 million appropriation to support a $400 million loan.
In 1997, in January, President Clinton held a signing ceremony
for the loan at the White House.
This process, culminating in the landmark loan, was the
result of extensive communications, coordination, credible
analyses of national economic impact of port activity,
consensus and coalition building, compromise and the support of
key champions within the legislative and executive branches of
the State and Federal Governments. Members of ACTA's coalition
and advocacy team successfully communicated the key message
that the project was vital to the health of the Nation's
economy because it would dramatically improve a critical
international trade corridor linking every other State in the
Nation to the largest port complex in the United States.
Congressman Horn and several of his colleagues were true
champions in this endeavor and deserve enormous credit for the
successful effort.
Mr. Chairman, there are other challenges that I have listed
in my written testimony that you can read at your leisure, but
in the interest of time, I would like to stop here.
Mr. Horn. Well thank you very much, Gill. You have been a
real pioneer and I am sure you will have plenty of people
saying how did you do it and how can we do it. So that will be
helpful.
Our next presenter is James Preusch, the vice president and
managing director of A.G. Edwards & Sons, former treasurer of
the Alameda Corridor Transportation Authority. He also was the
chief financial officer to the Port of Los Angeles. So he
really knew the territory.
Mr. Preusch.
[The prepared statement of Mr. Hicks follows:]
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Mr. Preusch. Thank you, Mr. Chairman, and good morning. It
is a pleasure to be here. I want to thank you for your support
and encouragement of the ACTA project. It was one of the things
that helped us move the financing along.
Let me talk about several factors that led to the success
in financing the ACTA project.
First, I think was the recognition that ACTA represented a
solution to a bona fide need. As Mr. Hicks pointed out, in the
early 1970's and the 1980's, the three rails were using
different routes; asking them to consolidate, was vital to
eliminating 200 separate points of conflict where surface
streets crossed--met rail lines, creating traffic conflicts,
safety, noise and environmental impacts at each one of those
points. The fact that there was a very clear and substantive
need, I think brought people together to resolve that need. The
ACTA project was the outgrowth and the solution.
Second, the project developed a great deal of regional
support and involvement. As people began to understand what the
project represented and really grasp the nature of the
challenge, they recognized this as a vital solution to
resolving that conflict. I think an important aspect was the
recognition that cargo would come to our country through the
San Pedro Bay ports regardless of whether or not there was a
plan to deal with that eventuality or not. The fact that the
cargo was coming motivated people to do something about it.
There was little that could be done to stop the cargo movement
and the recognition that it would be here motivated people
throughout the community to get on board to find a workable
solution.
In the early 1990's, as the concept was beginning to take
shape, there were some preliminary estimates of costs that led
to several funding strategies. The initial thinking included
right-of-way funding by the ports, funding from State and local
sources, bond financing supported by a truck or rail user-fee
and a Federal grant of $700 million. It soon became clear that
in spite of the need and support for ACTA, a Federal grant of
that magnitude was simply out of the question. Many Members of
Congress and the administration encouraged flexibility and some
cooperation in resolving that problem, and we saw creative,
experienced staff members within the U.S. DOT and with the new
latitude in the ISTEA legislation find ways to craft a loan for
ACTA's benefit. The cargo use fee which grew out of the
negotiations with the railroads was essential to supporting the
debt structure that was necessary to provide the financing.
In 1994, the ports made a major financial commitment by
purchasing miles of railroad right-of-way potentially needed
for the project for some $394 million. That was a very bold
move, but that extraordinary commitment of cash when ACTA's
costs were unknown and its financial viability unproven was
vital. The use-fee, which was negotiated as part of the funding
package, was essential in assemblying and leveraging those
funding sources.
I want to talk for just a minute more about the outgrowth
of the Federal loan in the TIFIA legislation that came about in
TEA-21. TIFIA, as you know, provides $10.6 billion in loanable
money between 1999 and 2003. When ACTA received its loan, the
loan was negotiated, and the first $140 million draw was
received before the ACTA costs were clearly known or the
details of the bond structure were in hand. Today the TIFIA
process has become more conservative to the frustration of many
of the applicants. The result has been some stagnation. I would
like to encourage that in going forward these projects find
ways to become more flexible with TIFIA funding that can go to
the ports or to ACTA, and to more flexibility in using TIFIA
that might be possible with charges during reauthorization.
Thank you.
[The prepared statement of Mr. Preusch follows:]
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Mr. Horn. Well, that is very helpful and I am sure in the
question period, maybe you will reveal some of the other
options that you must mentioned would be needed if someone is
going to try to replicate this.
Is Mr. Holt--somebody said he is in the building----
Ms. Heald. No, he is not in the building.
Mr. Horn. Well, we will go to the next panel then, Let me
go through two panels I think and then we will have questions.
Panel two: Richard Steinke, executive director, Port of
Long Beach. Just stay where you are, folks, we will have a
grand convention here before the end. Welcome, Richard. And
then Larry Keller, executive director of the Port of Los
Angeles; and Rollin Bredenberg, vice president, service design
and performance, Burlington Northern Santa Fe Railroad.
So we will start with Mr. Steinke.
STATEMENTS OF RICHARD STEINKE, EXECUTIVE DIRECTOR, PORT OF LONG
BEACH REPRESENTING THE ALAMEDA CORRIDOR TRANSPORTATION
AUTHORITY BOARD; LARRY KELLER, EXECUTIVE DIRECTOR, PORT OF LOS
ANGELES; AND ROLLIN BREDENBERG, VICE PRESIDENT, SERVICE DESIGN
AND PERFORMANCE, BURNINGTON NORTHERN SANTA FE RAILROAD
Mr. Steinke. Good morning, Mr. Chairman.
I would like to tell you a little bit about what I consider
the challenges and successes of the Alameda Corridor
transportation project. As executive director of one of the
Nation's busiest ports and as a member of the governing board
of ACTA, I can tell you that the word that best describes ACTA
to me is perseverance. Most people think that ACTA is only a
few years old, but as Mr. Kellogg, Mr. Preusch, and Mr. Hicks
indicated, it really has its origins going back to the early
1980's. This intermodal project was first conceptualized during
this time and it has taken over 15 years to transition from
concept to design and now to construction. With any large-scale
project, there will always be challenges, and during this
period of time, this project has certainly seen its share of
these obstacles that it has had to overcome.
I stand before you today happily being able to tell you
that we have overcome these obstacles and are scheduled for an
on-time and under-budget completion of ACTA in April 2002.
There has been a tremendous amount of inter-governmental
cooperation by a whole host of entities. First of all, there
had to be cooperation between the Port of Long Beach and the
Port of Los Angeles. Also we share one bay, we are two separate
and distinct harbor departments within two different cities.
And while we compete vigorously for customers and market share,
we also have recognized that we must cooperate on regional
infrastructure projects. The Alameda Corridor is a good case in
point. The project traverses important corridor cities and
cooperation and consensus had to be attained from the cities of
Long Beach, Los Angeles, Carson, Compton, South Gate,
Huntington Park and Vernon. A number of major regional
governmental organizations have also had to be involved in this
project including the Metropolitan Transportation Authority,
Southern California Association of Governments, Metrolink,
Southern California Regional Rail Authority and others. A
significant role has been played by the State of California and
our Federal Government has served an essential role through the
various agencies involved in reviewing and approving the
project and funding for the same. You can mix or you can
combine any or all of these entities because all of us have had
to work cooperatively through a myriad of issues to make this
project work successfully. Years have been spent in
negotiations on issues ranging from permits and environmental
documentation to funding issues and construction, to name a
few. I will not go into detail about the funding of the
project, but suffice to say that besides the Ports of Long
Beach and Los Angeles, various other sources of governmental
funding have been used to finance the $2.4 billion project,
including the $400 million loan from the Department of
Transportation.
This is truly a public-private partnership, and while I
previously mentioned the governmental stakeholders that have
been involved in this project, it also required cooperation
with the railroads. When this project started, we were dealing
with three major railroad companies--Southern Pacific, Union
Pacific, and Santa Fe, all who had separate lines that ran to
the ports. By the time all of the operating agreements and
final documents were completed, there were mergers and
acquisitions that resulted in our railroad partners being Union
Pacific and Burlington Northern Santa Fe.
Probably the key aspect of this project has been the
recognition by all of the parties that this is a critical and
beneficial infrastructure project that will positively impact
not only southern California, but also the State's and the
Nation's surface transportation system. Without that
recognition and without the various parties working toward the
greater good, the project would still be in a planning mode. We
all look forward to this time next year when all the various
entities will rightfully be able to say they contributed to the
success of a critical linchpin in our Nation's transport system
of goods movement. This has been a great example of
intergovernmental interdependence that will assure the
continuing movement of goods from our Pacific gateway ports to
consumers across the country.
Thank you.
Mr. Horn. Thank you.
[The prepared statement of Mr. Steinke follows:]
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Mr. Horn. Let me introduce Ms. Millender--Juanita
Millender-McDonald. She has been very helpful on the Alameda
Corridor and we are glad to have her here this morning.
Mr. Holt has arrived now and what I would like to do is
swear in Mr. Holt and the three witnesses.
[Witnesses sworn.]
Mr. Horn. The clerk will note that the fourth witness of
panel one and all of panel two have taken the oath.
So we now go to the executive director of the Port of Los
Angeles, Larry Keller. Glad to have you here.
Mr. Keller. Good morning, Mr. Chairman and Congress Member
Millender-McDonald.
We are proud to be one of the founding partners of the
Alameda Corridor and thank you for this opportunity to appear
before your subcommittee to discuss this vital infrastructure
project. I would also personally like to thank both of you for
your support of this project over the years that it has been in
existence. It is much appreciated and it has made it possible.
At the core of our success to date has been the significant
intergovernmental cooperation and bipartisan support received
from all levels of government. It has been unprecedented and
certainly signifies the value placed on the need for seamless
transcontinental cargo delivery. In reality, the beneficiary of
the Alameda Corridor's successful completion and operation is
the American public, to whom our domestic and global
transportation efficiency is critical.
In the early 1980's, it was apparent an improved
infrastructure would be required if the cargo transportation
system serving the Ports of Los Angeles and Long Beach was to
handle the predicted growth in cargo through the west coast
ports. In the ensuing two decades, cargo through southern
California has increased more than 700 percent. Globally,
containerization has become the undeniable mode for efficient,
cost-effective cargo handling and intermodalism has become the
delivery mode of choice.
Our growth projections proved to be conservative. Container
growth at Los Angeles in the last 5 years has been an explosive
76 percent. Business has been brisk despite economic
uncertainties with some of our trading partners around the
world starting in 1997. In fact, the Port of Los Angeles saw a
27 percent overall increase in container cargo last year alone.
With our neighbor, the Port of Long Beach, our total cargo
places us third in the world behind the Ports of Singapore and
Hong Kong.
Needless to say, we must be prepared for continuing growth
surges in the near and long term. Our planning has been likened
to a chess game where you must contemplate at least 12 moves
ahead and there is no single all-encompassing solution for our
future. The puzzle of our highway and rail efficiency has
numerous pieces which must fit precisely together in order to
achieve a functioning whole. No longer can we afford to have
cross traffic at intersections which slows cargo transit and
delays our people.
And as environmentally responsible public agencies, we are
also charged with addressing air emissions and other quality of
life issues caused by idling vehicle traffic and costly delays
to people and commerce. One answer was to design a better
corridor for the short but critical 20-mile stretch between the
ports and downtown railheads. That piece of the puzzle was the
construction of the Alameda Corridor.
At the extreme south end of the Corridor are port grade
separations, street improvements and similar infrastructure
projects serving major terminal developments designed to meet
current and future transportation needs. Efficient
infrastructure is the centerpiece of our future potential in
planning for road and rail improvements and is a normal but
important part of our terminal design work.
At the Port of Los Angeles alone, we have spent more than
$200 million in recent years for infrastructure improvements to
link the Corridor with our Pier 300 and 400 projects. These
Pier 300 and Pier 400 landfill and terminal projects are
dependent upon the Corridor and highway access to carry almost
5 million containers of cargo today alone. For our two ports,
that number can be expected to swell to about 24 million
containers in just 20 years.
No longer are container terminals built on 100 acres, which
was common just 10 years ago. When completed in less than 4
years, our newest terminal on Pier 400 will cover almost 500
acres, built on a manmade landfill of some 600 acres. This is
responsible planning and careful readiness.
Our projections are matched by those of our customers to
develop the best technology, design and logistics to set the
standard for our industry. We are committed to continued
improvements in coordination with the Alameda Corridor project
completion early next year.
Further, the Ports of Los Angeles and Long Beach are
jointly pursuing an MTA grant for $7.2 million for an
intelligent transportation system to put the whole thing
together. We have each committed over $1 million in matching
funds because we feel so strongly about efficient
transportation. The goal is to provide real time traffic
information to truckers using the ports, using tools like
interactive transit signage and programmable signs driven by TV
cameras mounted on freeway bridges. These measures in sync with
express rail access provided by the Corridor will ensure that
all cargo, both local and intermodal loads, will move swiftly
from our docks to their ultimate destinations.
Growth will continue here. That is a given. The reason for
our continued growth is quite simple. Today, half our cargo
stays in our five-county area to serve this consumer pool of 16
million people. We are a distribution and manufacturing hub for
import and export cargo. In about 10 years, it is estimated
that the Los Angeles regional population could swell to 20
million people. The addition of a population the current size
of the city of Los Angeles. The other 50 percent of our cargo
goes to points east of the Rockies because of our excellent
access to America's rail system.
America depends on us, we depend on you, we thank you for
your efforts. Projects like the Alameda Corridor ensure that we
can in fact deliver as promised.
Thank you very much.
Mr. Horn. Thank you for that very succinct presentation.
And now Rollin Bredenberg is vice president, service design
and performance for the Burlington Northern Santa Fe Railroad.
Welcome.
[The prepared statement of Mr. Keller follows:]
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Mr. Bredenberg. Good morning, Mr. Chairman, ladies and
gentlemen, thank you for the opportunity to speak to you today.
I am Rollin Bredenberg, vice president, service design and
performance with Burlington Northern Santa Fe.
When the Corridor first started being negotiated, I was at
that time general manager on the Southern Pacific Railroad and
so have seen this from a couple of angles. I can tell you from
either angle it was not the railroad's great vision that got
the project started.
As a matter of fact, the different railroads had different
slants on whether the project should even go or not. Southern
Pacific had arguably the best existing infrastructure with the
San Pedro and Wilmington branches serving as a paired track
feeder to the ports. Southern Pacific also had the ICTF
facility, the near dock facility, that facility started
producing so many trains that even their paired track operation
started to get slow, and because of other problems that the
Southern Pacific had, even Southern Pacific went along with
this. Union Pacific had their harbor subdivision, a single
track, unsignaled mainline. The Santa Fe was in probably the
worst position with its harbor subdivision, a 23-mile branch
line that goes down through the L.A. Airport and Inglewood
area.
The infrastructure that existed in the mid-1980's, and
remains today substantially, could not and has not sustained
growth. When the Corridor opens up in April 2002, we will be
past the time when we needed to have that corridor open.
The use-fee that the railroads will be paying for the use
of the Corridor can be absorbed by traffic on the Corridor
because much of that traffic would have to be drayed at a
higher cost to facilities in Vernon or Los Angeles. Not only
that, but today there is no place to expand intermodal
production lift facilities anywhere in the Los Angeles basin
short of San Bernadino, on our railroad.
The project model for the Alameda Corridor is not a model
that can be replicated other places that do not have the
fundamental franchise need or infrastructure need by the
railroads to sustain growth. That is the reason why the
railroads over time will retire a $1.1 billion bond and I
believe $400 million loan. At the rate of $30 per 40-foot
container, we will be paying and passing the costs on to our
customers or absorbing in margin ourselves what we would not
have been able to do without this project.
As we move toward substantial completion of the project,
Union Pacific and BNSF and ACTA have been able to reach
consensus on all of the important decisions necessary for a
successful implementation and operation.
Thank you.
Mr. Horn. Thank you very much. That will be helpful in the
question period there.
Let us go back now to Mr. Jeffrey D. Holt, vice president,
Goldman Sachs & Co., senior managing underwriter for the
Alameda Corridor Project. Thank you, Mr. Holt, for coming.
Mr. Holt. Thank you, Mr. Chairman and distinguished
members.
My name is Jeff Holt. I am a vice president of Goldman,
Sachs & Co., and I am the manager of the municipal finance
division of the Fixed Income Currency and Commodities Group,
and my offices are in San Francisco. I served as the senior
managing underwriter for the Alameda Corridor project. It is my
pleasure to address the committee concerning the financing
aspects of the Alameda Corridor project. The views I present
today are my own and do not necessarily represent those of
Goldman, Sachs & Co.
In my business, I see many great proposals for new
infrastructure ideas. Engineers bring in beautiful conceptual
drawings, planners project tremendous statistical benefits and
policymakers stress the need for such projects. In the end,
each and every one of these projects comes down to financial
feasibility. The big question is always, how do we pay for the
large public works projects that everyone needs but that no one
agency, on its own, can afford. The Alameda Corridor is
possibly the best example of how multiple parties in a public/
private partnership can come together to fund such large
projects.
The effort started with the ports of Los Angeles and Long
Beach. Of all the stakeholders, one group, the ports, finally
stepped up to take the leadership position, and they brought
their checkbook. The all-important $400 million in development
money used to secure the right-of-way was only surpassed in
importance by the many dedicated and skilled personnel they
lent to the effort on a full-time basis. The ports provided the
organization, the vision, and the enthusiasm to make the
project happen.
Next the railroads agreed to combine three separate lines
into one. They proved ultimately reasonable through the
negotiations and the entire debt burden of $1.6 billion will be
paid from the $30-per-box corridor user-fee.
The Federal Government added several critical financing
components. Through the local MPO, the LACMTA, the Federal
Government is passing through $347 million in grant funding for
the project. The LACMTA is graciously accelerating that funding
through its own financing efforts in order to turn those future
grants into construction dollars now. In addition, the U.S. DOT
closed the last portion of the funding gap with a very
innovative loan. The U.S. DOT staff came to the finance team
early in the process and asked us how they could be helpful. We
said give us more grants. They said the grant well is dry, so
how about a loan. We said we can borrow in the tax exempt
market, why do we need taxable Federal loans. They said, we can
give a loan with very favorable terms. So we got busy and
designed a loan whose terms one could only describe as being
very close to straight equity, and they agreed. That $400
million loan finished the funding package and completely closed
the gap. That loan stands as a prototype for the U.S. DOT's now
popular TIFIA program. The key piece to that loan was a $59
million congressional appropriation in a key budget vote in a
key budget year. That $59 million appropriation for a loan-loss
reserve made a $400 million loan available which, in turn, made
it possible to borrow an additional $1.2 billion from the
capital markets to complete the $2.4 billion total project
cost.
I also want to compliment the ACTA Board. During the final
stages of the process, the negotiations with the railroads made
the project costs increase by several hundred million dollars.
Rather than succumb to whispers of potential cost overruns, the
ACTA board held fast in their courage that the project was
feasible in its proposed form and size, and they moved ahead
with the final approvals.
Last, bondholders stepped forward and provided $1.2 billion
in bond proceeds to complete the funding package. Interest
rates were very favorable at the time. Swarms of lawyers wrote
stacks of documents, including a 650-page official statement,
the primary disclosure document for the municipal market. In
the end, the projected revenue stream was converted to
construction dollars with the maximum leverage that the capital
markets would allow and with the least risk to the principals
possible. The bond financing was non-recourse to the ports and
non-recourse to the railroads. Bondholders accepted a basketful
of risks, including construction risks, interruption risks and
long-term business, revenue and economic risks. The ports
provided a limited backup pledge, which under current
projections will never be drawn. This was groundbreaking
financing in many ways, but most importantly, it was the first
time that any financing for intermodal cargo facilities had
been secured almost solely from the container cargo stream
coming through a single gateway port. The strong market forces
that make containers come through the Los Angeles/Long Beach
area provided the credit and security to bondholders. So in the
end, the problem became the solution.
The blended cost of capital for the combined financings was
near 6.5 percent. On the date of financial closing, it was
expected that the debt service for the $1.6 billion in debt
would have been paid off on the last possible day that
container use charges could be collected. As you all are well
aware, the San Pedro Ports have been growing at double digit
numbers for several years running. Given the tremendous growth
through the last 3 years and the fact that the management team
has brought the project in on time and on budget, it is now
expected that the Federal loan will be paid off many, many
years early. By all financial standards, this project is a
raging success.
In closing, I must say that it was the governmental
partners that brought the critical elements together for a
successful project. They saw the original need for the Corridor
using regional long-term planning. They brought all of the
parties together across many jurisdictions to solve the
organizational, logistical and financial problems. They staffed
the Carson office with dedicated and brilliant men and women,
and most importantly, they have, and still have, the will to
succeed.
Thank you.
[The prepared statement of Mr. Holt follows:]
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Mr. Horn. Thank you. I think we will now--if panel three is
here, we will merge you in and then we can put questions to all
of you and not have to replicate it. I see Mr. Hankla, Mr.
Buresh, Mr. Brown and Mr. Wiggs are here.
Gentlemen, we do have an oath to be administered, so Mr.
Holt and the new panelists please rise.
[Witnesses sworn.]
Mr. Horn. The clerk will note that all five of the
witnesses have affirmed the oath. That duty done, we will start
with Mr. Hankla, chief executive officer, Alameda Corridor
Transportation Authority, and as I noted, former city manager
of Long Beach, former chief administrative officer of the
largest county in the Nation, which is Los Angeles County. So
thank you for coming.
STATEMENTS OF JAMES HANKLA, CHIEF ECEXUTIVE OFFICER, ALAMEDA
CORRIDOR TRANSPORTATION AUTHORITY; TIM BURESH, DIRECTOR OF
ENGINEERING AND CONSTRUCTION, ALAMEDA CORRIDOR TRANSPORTATION
AUTHORITY; JEFFREY BROWN, CALIFORNIA STATE OFFICE OF RESEARCH,
REPRESENTING STATE SENATOR BETTY KARNETTE; AND LARRY WIGGS, JOB
TRAINING OFFICER, TUTOR-SALIBA
Mr. Hankla. Thank you, Mr. Chairman and Congresswoman
Millender-McDonald. It is always nice to see both of you. My
name is Jim Hankla. I am the chief executive officer of the
Alameda Corridor Transportation Authority, known by the acronym
ACTA. We are the public agency building the Alameda Corridor
rail cargo expressway, otherwise known as a toll road for
trains.
Thank you for inviting us here today to discuss how our
project came together and how we have benefited from
intergovernmental cooperation. At ACTA, we believe very
strongly in government efficiency and think there are good
lessons to be learned from our experience in this area, so we
are very grateful for the opportunity to appear before you
today.
I especially want to thank you, Mr. Chairman, and also
Congresswoman Millender-McDonald for your longstanding and
active support of the Alameda Corridor project. I doubt that
this project would be in existence today were it not for your
efforts. As you know, intergovernmental cooperation has been at
the heart of the success of the Alameda Corridor project.
In 1981, a Ports Advisory Committee was created in response
to growing concerns about the ability of ground transportation
systems to accommodate increasing levels of traffic in the port
area. The committee was formed by the Southern California
Association of Governments. Its members included
representatives of the ports, the U.S. Navy, the Army Corps of
Engineers, the railroads, the trucking industry, and the Los
Angles County Transportation Commission, the predecessor agency
to the Los Angeles County MTA.
Perhaps the most basic example of intergovernmental
cooperation can be found in the very structure of the Alameda
Corridor Transportation Authority itself. ACTA is a Joint
Powers Authority created by the cities of Los Angeles and Long
Beach in 1989. The seven-member governing board includes
representatives from each city council, two representatives
from each port and a representative from the Los Angeles County
Metropolitan Transportation Authority.
By putting aside their friendly but unmistakable rivalry to
cooperate on the Alameda Corridor project, the two ports are
benefiting not just the region but the entire Nation, and they
should be praised for their leadership.
In the early 1990's, ACTA began reaching out to Members of
Congress to line up bipartisan support for the project. Members
of Congress and elected officials at all levels were invited to
the port area to see for themselves the critical need for the
Alameda Corridor. In 1995, Congress approved legislation that
identified the Alameda Corridor as a project of national
significance. I should note, Mr. Chairman, that as a Member of
Congress, you and the Congresswoman were both instrumental in
the success of this effort.
The congressional identification of the Alameda Corridor as
a project of national significance was the trigger needed to
secure Federal funding for the project. In 1997, Congress
appropriated $57 million needed to back a Federal loan for the
project, and in 1998, the U.S. Department of Transportation
authorized a $400 million loan for the Alameda Corridor
project. Neither of these actions would have been possible
without a broad coalition of support from elected officials and
our strategic partners in the Federal Government.
The process that resulted in the Department of
Transportation loan became the model for the Transportation
Infrastructure Finance and Innovation Act of 1998 [TIFIA].
Through TIFIA, the Department of Transportation and the Federal
Highway Administration now provide financial assistance to
projects across the country identified as being nationally
significant. I understand that the Federal Government is
considering an expansion of this program. I can tell you
unequivocally that this innovative program worked well for
ACTA. In effect, it allowed us to leverage Federal financial
support to complete our funding package with money from the
public and private sectors, which I will get into in a moment.
At the State level, ACTA worked closely with members of the
legislature, Caltrans' staff and the California Transportation
Commission to include the Alameda Corridor in short and long-
range plans, and to expedite its funding. Through Caltrans,
ACTA also received a grant as partial funding for a major rail/
rail grade separation, known as the Redondo Junction, to grade
separate freight train movements from commuter and intercity
passenger rail services, thus providing benefit to both freight
and passenger rail services.
At the local level, we worked closely with the Los Angeles
County MTA to set aside State and Federal grant funds, as well
as local transportation sales tax revenue that MTA allocates at
its discretion for use on the Alameda Corridor project.
The ports, of course, provided the most essential risk
capital, $394 million for rights-of-way purchases and startup
financing.
Innovative financing was provided. The collective
assistance offered by the Federal, State and local agencies and
elected officials provided the base funding--the leverage if
you will--for the biggest piece of our innovative financing
package, more than $1.1 billion in proceeds from revenue bonds
sold by ACTA. Approximately 55 percent are taxable bonds and
the remaining 45 percent are tax exempt.
The bonds and the Federal loan are to be retired with
revenues from the fees paid by the railroads for use of the
corridor. These fees are based on the number of full and empty
cargo containers hauled by the railroads on the corridor. The
fee program is the product of the successful partnership
developed between ACTA and the railroads that transport freight
from the ports. I sometimes refer to this, as I said earlier,
as a toll road for trains.
In total, ACTA's innovative $2.4 billion financing package
breaks down as follows: 51 percent from revenue bonds; 18
percent from Federal loans; 18 percent from the ports; 8
percent from California State grants and 5 percent from other
sources, much of it administered through the Los Angeles
Metropolitan Transportation Authority.
The Alameda Corridor project truly is a public/private
partnership that has benefited from the cooperation of our
strategic partners, the multiple Federal, State and local
agencies, elected officials and, of course, the railroads.
Because of our success in multi-agency cooperation, ACTA
has been approached numerous times by organizations planning
large transportation related infrastructure projects. We are
happy to share our experiences with them because we believe the
public benefits from efficiencies achieved when government
agencies put aside competition to cooperate for the greater
good.
We would also be pleased to provide any guidance that will
assist the subcommittee in applying our experiences to other
programs and projects.
Thank you again for having us here today, Mr. Chairman. We
would be happy to address any questions you may have.
Mr. Horn. Thank you.
Mr. Tim Buresh is director of engineering and construction,
Alameda Corridor Transportation Authority. Mr. Buresh.
[The prepared statement of Mr. Hankla follows:]
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Mr. Buresh. Good morning, Mr. Chairman and Congresswoman.
If you will please refer to the slide show I will use to
accompany my remarks, I will provide a brief description of the
project and a status report of construction.
As has already been mentioned, the Corridor is a 20-mile
rail-link between the ports and the transcontinental railroads
which are located just east of downtown Los Angeles. The
Corridor is being built primarily to smoothly accommodate an
exponential increase in cargo shipped through the ports. Port
cargo volume doubled in the 1990's. By 2020 those volumes are
expected to triple to approximately 24 million containers per
year. Unfortunately the existing rail system now serving the
ports, two railroads with four low-speed branch lines, are
insufficient to handle such volumes.
Trains on the existing lines, which are often more than a
mile long, typically travel at less than 15 miles an hour and
the system can only accommodate about 20 unit trains per day.
This threatens the region's competitiveness in international
trade and causes major delays of vehicle traffic at street-
level railroad crossings throughout the Los Angeles Basin. On
the Alameda Corridor, these trains will now travel at over
twice their current speed and the Corridor will be able to
accommodate over 100 unit trains per day, a five fold increase.
How do we accomplish that kind of increase? By
consolidating the rail lines into a single two-track expressway
that is completely grade-separated and eliminates the conflicts
at more than 200 street-level rail crossings.
Besides safeguarding the region's competitiveness in the
global marketplace and easing traffic congestion, the Alameda
Corridor has the added benefits of reducing air pollution from
idling cars and trucks and slower-moving trains and cutting
noise pollution from trains. The Alameda Corridor is one of the
largest air abatement projects in California. We are also
providing job training and placement services to 1,000
residents of Corridor communities, a societal benefit that will
last well beyond the construction of the Alameda Corridor. Mr.
Wiggs will expand upon this point later.
The Corridor is a large, complex project. It is one of the
largest transportation projects in the Nation and currently the
largest single public works project in California. The
centerpiece of the project is the Mid-Corridor Trench, a 10-
mile long, 30-foot deep trench that will carry trains below
ground level between State Route 91 to the border separating
the cities of Vernon and Los Angeles. At this date over 6 miles
of the trench has been excavated, track work is under way with
over 3 miles of permanent track already in place, as you can
see on this slide.
There are over 30 bridges as part of the Mid-Corridor
project. At this time only four bridges remain to be completed.
Twenty-six are already opened up to traffic, as is this one at
Zoie Street in Huntington Park. By this fall the trench
structure will be complete and all bridges will be in place.
Track work and street reconstruction will continue through the
spring of 2002.
There are many construction elements that make up the
Alameda Corridor. Besides the Mid-Corridor Trench, the two
biggest pieces are the Henry Ford Avenue grade separation on
the south end and the Redondo Junction grade separation at the
north end.
This photograph is a picture of the Henry Ford Avenue grade
separation, which replaces a single track rail with a mile long
two-track rail bridge over the Dominguez Channel and State
Route 47 with transition ramps at Henry Ford Avenue.
The Redondo Junction grade structure is a bridge structure
stretching the length of eight football fields in the vicinity
of Washington Boulevard and Santa Fe Avenue in Los Angeles.
This project separates passenger rail lines from cargo rail
lines by elevating Amtrak and Metrolink commuter tracks above
the Alameda Corridor mainline. This project will be completed
and opened up in July of this year with an immediate benefit to
all of the passenger rail which uses it daily.
Right now, we are in the middle of full-scale construction
up and down the 20-mile route, with up to 1,500 people working
on various construction projects on any given day. These
projects are rapidly working toward completion. Major project
segments will be completed and opened to traffic this year.
I am pleased to report that the Alameda Corridor project is
on schedule to open on April 15, 2002. This was the original
project completion date and there has been no schedule delay to
this project. I would also like to report that ACTA remains
well within our original budget of $2.4 billion.
Any project of this scope inevitably encounters significant
hurdles in the construction process that can lead to delays.
There are many reasons why our project remains on schedule, but
at the top of the list are our agreements with the corridor
communities and our decision to use a design-build contract for
the Mid-Corridor Trench.
ACTA has Memoranda of Understanding [MOUs], with each of
the cities along the route detailing expedited permitting
processes, haul routes for construction traffic and the
processes for lane closures and temporary detours. By agreeing
in advance on these and other issues, we have streamlined a
complex construction process. For instance, the Santa Fe Avenue
bridge that you see here required the cooperation of the city
of Los Angeles, the city of Vernon and Los Angeles County, in
addition to ACTA, to become a reality.
On the Mid-Corridor design/build project, we have saved an
estimated 18 months in project delivery by using the design/
build approach. The design/build approach allows for the
overlapping of some design and construction work. ACTA has
obtained design/build authority through a city of Los Angeles
ordnance. This enabled ACTA to award the Mid-Corridor contract
based on the lowest ultimate cost as opposed to the traditional
bid process. This contract ensures that the contractor's work
will be completed by a fixed date and a fixed cost or be
subject to significant financial penalties.
These are just two of the many examples of how ACTA has
cleared some hurdles and saved time by making the construction
process more efficient.
ACTA continues to face strategic challenges in completion
of the project. For example, ACTA will be obtaining final
environmental permits for stormwater discharge. ACTA has
installed state-of-the-art stormwater treatment and collection
systems. However, some of the proposed discharge standards are
extremely stringent. For example, falling rain may be too
contaminated to be discharged into the Los Angeles River and
San Pedro Bay estuaries. We continue to strive for a common-
sense solution to this situation.
The ports in the Los Angeles region have continued their
rapid growth. Mr. Keller outlined many of those statistics in
his remarks. ACTA is taking all reasonable steps to ensure that
there is adequate capacity to meet this demand. The trench and
north end of the project definitely have adequate capacity for
the foreseeable future. At the south end, ACTA is strengthening
connections between the ports and to the Corridor. For example,
this photograph shows that the existing connections to Terminal
Island must be expanded within a few short years. This will
require a new bridge. ACTA is working cooperatively with the
ports and the Coast Guard to deliver a less expensive bridge
which will save time as well as cost. ACTA will continue to
explore other opportunities to enhance its capacity and
efficiency.
That concludes my remarks, Mr. Chairman.
Mr. Horn. Thank you very much for that presentation. It
gives us a better view. OK, we will now go to Mr. Jeffrey
Brown, the California State Office of Research representing
State Senator Berry Karnette.
[The prepared statement of Mr. Buresh follows:]
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Mr. Brown. Good morning, Chairman Horn, Congresswoman
Millender-McDonald, I am Jeff Brown with the California Senate
Office of Research. I am here today to speak on behalf of State
Senator Betty Karnette. Unfortunately the Senate floor session
has prevented Senator Karnette from attending today's hearing.
But she would like to thank you for the opportunity to comment
today on the Alameda Corridor, which the Senator truly believes
to be America's Corridor of National Significance.
In addition, Senator Karnette would like to thank all of
the men and women of the Alameda Corridor Transportation
Authority [ACTA]. It is their world-class professionalism and
dedication that have delivered one of America's largest
transportation projects on time and on budget. Moreover, ACTA
not only implemented the Nation's major transportation corridor
with efficiency and innovation, but incorporated a jobs
development and training program to assist in developing a
sustainable economic development effort for the Alameda
Corridor region.
Given the significant growth in international trade, and
the increasing share of rail and freight cargo moving east and
west, there is a critical need to effectively implement a
comprehensive regional transportation plan. The Alameda
Corridor is now the efficiency and innovation standard on how
to do transportation planning and implementation.
Years of supporting and working on the Alameda Corridor
have helped Senator Karnette, as former chair of the
Transportation Committee and as current chair of the
Subcommittee on the Alameda Corridor to recognize that
California's trade-based economy requires California to expand
the State's policy in facilitating goods movement and to
increase State support for projects that promote international
trade.
Last year, Senator Karnette authored Senate Concurrent
Resolution 96, the Global Gateways Development Program which
will help contribute to the regional transportation
infrastructure and be the State's goods movement blueprint. In
addition, SCR-96 will help lay the groundwork for the State to
develop an effective and strategic plan to influence the next
Federal transportation reauthorization bill. The goal of SCR-
96, as inspired by the Alameda Corridor, is to improve major
freight gateways in California, to enhance overall mobility,
including increased access at and to international ports of
entry, international airports, seaports and other major
intermodal transfer facilities, goods movement distribution
centers and trade corridors in California.
The measure requires the Department of Transportation in
cooperation with business transportation and housing, the trade
and commerce agency, the California Transportation Commission
and other appropriate parties to submit a final report to the
legislature by July 1, 2001.
This $2.4 billion public-private partnership is not simply
a transportation project, but a project dedicated to helping
the Alameda Corridor region to produce a sustainable economic
development strategy that will effectively meet the challenges
of a 21st century global economy.
International trade is a key element to local, regional,
State and national economies. The Corridor is enabling southern
California businesses to prosper as well as to create a
substantial number of new jobs. ACTA chose not only to be a
major transportation project but to partner in the economic
development of the Corridor region. In order to realize the
potential for the quality of life and the attraction of new
industries and jobs, a strong collaborative effort among all
interested parties involved in the Alameda Corridor project
needed to be developed. to achieve this goal, a comprehensive
regional strategic plan has been created and is being
effectively implemented. The job development and training
program required by the Alameda Corridor Transportation
Authority for the Corridor community residents is an important
component in helping to develop a sustainable economic
development effort for the Alameda Corridor region. This
opportunity for sustained community development is enormous.
ACTA, local organizations, communities along the corridor
have demonstrated a collaborative spirit and visionary
leadership to develop the opportunities which are helping to
realize the full potential of the Alameda Corridor region.
In the past, we have often viewed transportation, economic,
environmental and social goals as competing. Over the past
decade, however, a new vision of the future has emerged. One
arguing that progress in all areas is not only possible, but
required for communities and regions to be sustained over the
long-term. Consensus is emerging among business, government,
environmental, regional and community leaders about
sustainability and the importance of creating sustainable
regions and community. This project is addressing that goal.
The core essence of sustainability is the focus on the future
and a collaborative commitment to ensure prosperity and
opportunity for the next generation. Economic regions
increasingly compete with one another to attract private
investment and talented workers to assure a rising standard of
living. However, few regions are able to implement policies
region-wide and support and effectively implement a sustainable
economic development strategy. The Alameda Corridor has been an
important agent in helping the region meet these challenges of
a new economy. The effort motivated Senator Karnette to author
SB-653, the Alameda Corridor Industrial Reclamation Act of
1999, which the legislature passed and the Governor signed. The
bill is doing the following: It is directing several local
entities to provide assistance, both short and long-term, to
coordinate, plan and implement strategies to assist cities and
unincorporated communities impacted by the Alameda Corridor, to
expand their commercial and industrial base. In addition, it is
improving workforce preparedness to meet the needs of a
changing manufacturing and technological environment.
Chairman Horn, Congresswoman Millender-McDonald, I would
like to thank you again for the opportunity to praise this
remarkable transportation project and to salute the men and
women who are making it a reality.
Mr. Horn. Thank you very much for coming down here to
testify.
Mr. Wiggs. Mr. Wiggs is the job training officer for Tutor-
Saliba.
Mr. Wiggs. Thank you very much. Chairman Horn and
Congresswoman Millender-McDonald, it is a pleasure to be here
representing the Tutor-Saliba Corp., the Tutor-Saliba Team and
its president, Ron Tutor, who is the president and the prime
contractor for the mid-corridor component of the Alameda
Corridor project.
I am here today to speak briefly on the job training
program that has been alluded to and the development component
and the performance statistics and accomplishments of the
program at the end of the second year of operation. I want to
point out that while the first quarter 2001 performance
statistics are not yet compiled, rest assured that the goals
established by the Alameda Corridor Transportation Authority
are growing closer to achievement.
As a condition of contract approval, the recommended
contractor for the mid-corridor segment of the Alameda Corridor
project, the Tutor-Saliba Team, was required to develop and
fund a program designed to provide pre-apprenticeship training,
construction training for 650 residents and non-trade
construction training to 350 residents.
The Century Housing Corp., the Carpenter's Educational
Training Institute [CETI], the Alameda Corridor Jobs Coalition
Training and Employment Corp. were contracted by Tutor-Saliba
to administer and implement the job training program.
At the end of the first program year, organization changes
took place within the job training program resulting in the
Carpenter's Training and Education Employment Institute
relinquishing all of its training programs in the State of
California, thus backing out of our program, as well as a non-
trade training entity backing out, thus being substituted by
Century Housing Community Training Program and the project-by-
project consulting program.
The main criteria for eligibility in a training project is
residency within a specific geographic area adjacent to the
Alameda Corridor project and the graduation of the 1,000
Corridor community residents represents the satisfaction of the
training goals established by ACTA.
Following the pre-apprenticeship training, the placement
goal is triggered. Here, the goal is to place the 650 graduates
in State-approved union apprenticeship programs. I want to
point out that while the additional 350 non-trade construction
trainees are not--there is no requirement for placement, we are
happy to note that 10 percent of the current trainees have been
placed in support positions within the construction industry.
The employment goals set forth two performance criteria.
The first is that 30 percent of all the work hours on the mid-
corridor segment of the Alameda Corridor project be performed
by Corridor community residents or local workers. Again, those
individuals who are within an established geographic boundary
of the Alameda Corridor location.
The second requirement is that 30 percent of all the local
work be performed by graduates of the training program.
I would like to take the next few moments to give you a
comparison as to where we were at the end of year one, December
1999 and at the end of year two, December 2000, with respect to
our various goals. At the end of December 1999, we had
established program graduate rate of 167. At the end of 2000,
we had 674 Corridor residents graduating from our combined
programs.
The graduates in the construction pre-apprenticeship
training; i.e., the goal is 650. At the end of the first
program year, 97; the second year was 486. The graduates in the
non-trade training, the goal was 350; the first year resulted
in 70 graduates; second year, 188.
The placement accomplishments, again, the goal is to place
those 650 in union apprenticeships. Graduates at the end of the
first year was 70; second year, 295 in union apprenticeship
programs.
In the non-construction jobs, these are jobs that
individuals opted out rather than going into union
apprenticeships, they were still related to the construction
industry, there were 13 in the first year, 49 in the second
year.
Total placements, 83 the first year; 344 end of year two.
Now the breakdown I wanted to share with you on the three
segments of our contract, mid-corridor project, that is a 10-
mile trench; the first year, we had 14 graduates; second year,
116.
The north and south Alameda projects, the first year, 4;
second year 14. And then other construction projects within the
L.A. County region, 65 first year and 214 second year for a
total of 344.
Our local worker goal, the number of local workers in the
first year we had 223 representing the various surrounding
community corridor cities. At the end of the second year, we
had 559 who had been placed and were gainfully employed.
Local worker hours, 21 percent, the goal was 30 percent. At
the end of the second year, 29 percent.
Percentage of graduate hours, 6 percent and 12 percent. We
are struggling in that area, I should note, but we are making
substantial improvement with our subcontractors hiring more of
our trainees and maximizing their hours. And I want to point
out that several subcontracts on the Alameda mid-corridor
project have yet to come on-line, so we feel very certain that
those numbers will be increasing in the next three quarters.
One area that ACTA has asked us to really focus on is to
ensure the equitable distribution of our resources; i.e., jobs
and training. I'll provide this pie chart to just indicate to
you where we are with our training graduates, and this
replicates itself around the work force as well.
Black population of our training graduates, 57 percent;
Hispanic, 23; and other, 20 percent. The gender is split 66
percent male, 25 percent female.
This is important to note, because as our graduates enter
in the program, with a few exceptions, they are without wage or
at minimum wage. But upon completion of the program and
entering into the union apprenticeship, the average of our
apprenticeship is $11.95, so at the end of their 8 week
training, they are virtually--they are making $12 a hour with
benefits, with vacation time and health benefits. At the end of
their 4 to 5 year apprenticeship program, they can command a
$25.62 hourly wage, as of this date. And this is nationwide
within the construction industry.
The next chart is one that we prepared because this is the
guide that we are using as a tool for our training officers as
well as to share with all parties involved how your particular
community or city fares with respect to our placement of local
workers and job trainees.
The labor force goal is essentially the labor-force,
percentage of the labor-force per Corridor city and the goal
that we are to achieve. For example, the city of Carson has a
labor-force goal of 6.97 percent. The actual to date is 4.41.
There is some effort that we need to do in that regard to
increase the numbers of trainees and graduates working on that
project within the city of Carson.
So where are we? To date, within the 2-years of our
program, 3,100 Corridor residents have responded to our
outreach effort. That is, 3,100 individuals have received
written communications inviting them to participate in the
Alameda Corridor jobs program; 67 percent of our goal has been
achieved; i.e., 674 program graduates; 45 percent of our
placement goal at the end of 2000, December, has been achieved
with 295 graduates being placed in union apprenticeships; 130
graduates have been placed on the Alameda Corridor project
specifically; 653 non-trainee local workers have been hired on
the mid-corridor segment of the project. There are many others
who were hired by contractors on both the north and south end
projects. Twenty-nine percent of all of our work hours have
been performed, the goal is 30; 12 percent of the local work
hours were performed by graduates, again the goal is 30. And we
completed 70 percent of the mid-corridor segment of the Alameda
Corridor project, 30 percent of our work remains to be
completed by 2002, April.
That concludes my comments, Members.
[The prepared statement of Mr. Wiggs follows:]
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Mr. Horn. Thank you very much. We appreciate your
presentation and the statistics there.
Let me now move to some questions. I am going to spend 5
minutes on them and then I am going to yield to my colleague
and she will spend another 5 minutes and we will go back and
forth, so we can cover some of this ground and get it from
various perspectives. Let me just start with a few simple ones.
Either Mr. Hicks or Mr. Kellogg might be on this. There
were some problems involving some of the smaller cities along
the Corridor. How were those problems resolved?
Mr. Kellogg. Mr. Chairman, I always like to tell people in
the private sector, in government you have a term called
mitigation when you get something resolved. A lot of times it
is called blackmail, but that said, there were issues that were
going on in the cities that needed to be addressed. They were
addressed.
The problems that communities had up and down the corridors
were real. My concern was--
Mr. Horn. Cannot hear up here.
Mr. Kellogg. My problem at the time, Mr. Chairman, was that
as we were negotiating with the cities, unfortunately we
followed another project and that project was an MTA project.
As was mentioned earlier, some of the successes of this project
is because we stayed very focused on what we were trying to
accomplish. This was a project, as Mr. Hankla mentioned, a road
for trains, it was not a program that we were going to build
fire stations, things that were not related to the
transportation issues, because we had to stay very focused on
it.
What finally happened is the cities realized the benefits
of this project, eliminating something that has been
historically having a negative effect, and that is the impact
of train traffic through their communities, cutting their
cities in two, three, four different sections. This project,
just by going below grade, had a tremendous impact on that.
Many of the cities along the Corridor finally realized that.
They accepted the fact that we were putting--we, this project,
was putting a lot of money toward making those improvements and
everyone stayed focused on what this project was. I think that
was critical to working with those cities, working through the
problems and getting beyond them at the very beginning. In the
beginning a lot of people looked at this project as if this was
a wish list of the many things outside the parameters of what
the Alameda Corridor was. The Alameda Corridor, on its own,
would have a tremendous impact positively in each community and
I believe all the community leaders up and down the Corridor
finally realized that and accepted the fact that this was the
answer to a lot of their problems. What we were not going to do
was answer a lot of problems that had nothing to do with the
Corridor.
And so finally, reasonable minds came together and the
project moved forward. I think Mr. Buresh made a comment about,
again, keeping focused on this project, having all the permits
in place. One of, as was mentioned, the criteria for this if
you are moving forward with a construction project and you do
not have agreements with the cities that you are passing
through and you expect when you enter that city to get all your
permitting done in a timely fashion, you are horribly mistaken.
By the time we began the actual construction of the trench, for
example, all the permits were in place, the agreements with the
cities, and we passed through those cities with relative ease.
And that was a critical point.
But this project took a lot of time and I know there was a
lot of comments about that, especially dealing with a lot of
the communities, but reasonable minds did take place finally.
Mr. Horn. Any other members of the panel want to make a
comment on this? Mr. Hankla.
Mr. Hankla. The only point that I would add to what Mr.
Kellogg has said, Mr. Chairman, is that essentially there was
litigation. The litigation was ultimately resolved in the favor
of the Alameda Corridor Transportation Authority, which allowed
the Authority to restructure itself.
Notwithstanding the success on the litigation front, it was
obvious that we were going to need the cooperation, just as Mr.
Kellogg said, to secure the necessary permits in a timely
fashion and the cooperation we would need in carrying out the
construction project through these cities. The scope of the
negotiations then narrowed to a payment to those cities, those
six cities, to secure their cooperation. Alameda Corridor
Transportation Authority did make that payment. My recollection
is it was about $12 million, and as a consequence of that,
those MOUs went in place and we have been administering the
project pursuant to those MOUs.
Mr. Horn. Thank you. On that, we will switch to Ms.
McDonald for 5 minutes and then I will go back.
Ms. Millender-McDonald. Thank you, Mr. Chairman. I do have
other meetings to attend, but I am going to try to see if I can
get all of my questions answered at this point.
Let me first say, in seeing Mr. Hicks in front of me, it
reminds me of the time when in the State legislature, the bill
that I passed on gridlock, those three rail tracks that you
were talking about--Mr. Steinke, I think is your name--reminds
me of the fact that Mr. Hicks was in front of us at that time
on the transportation committee in Sacramento and it was indeed
the bill that I authored to ungridlock those three railroads to
get them to the table to start the Alameda Corridor running and
also the bonding bill that I authored as well as the bill to
make this Corridor a Corridor of National Significance. I never
thought that I would get to Congress in time to ungridlock the
$400 million that Mr. Holt spoke about in terms of ensuring
that we did get this funding. And so it seems like a baby that
is about to be born, way over time, as one of you said, but
then right on time, so that is a dichotomy in and of itself.
But as I sit here and really am sitting here 1 year out
from the opening of this Corridor and really taking the traffic
as it should be, not only downtown Los Angeles but across this
great Nation, in listening to Mr. Keller, he kind of brought
back the whole notion that I speak so often to the Members of
Congress that 50 percent of this Corridor does come across the
Nation and indeed we are a significant partner not only in this
State but in this Nation in terms of economics.
Mr. Kellogg, getting back to you though on the cities, I am
going to have to disagree with my friend, those cities still
have not been really given the due diligence that they should
have in terms of this Corridor. We are talking about jobs that
Mr. Wiggs has outlined, and yet I have a bone to pick with him
as well, as well as the economic significance of this whole
Corridor. This is why I introduced that bill, not only for the
national significance of it, but also the economic viability of
those cities along the Corridor, the 37th Congressional
District's cities really are impacted by this Corridor and yet,
they have not seen the jobs that should have come, they have
not seen the economic vitality that we had wanted to have here.
So I need to have someone on this panel speak to me about the
jobs.
When Mr. Wiggs talks about the jobs, they are extremely low
in numbers and unemployment is still tremendously high in
Wilmington, Carson, Compton, Watts, Lynwood, all of those
cities that are severely impacted by this.
I recall that I had to go to DOT and get at $1.5 million
for mitigation of those cities because of the tremendous impact
of this Corridor. So please tell me now why is it that the jobs
have not come in as they should have and the economic vitality
has not been reached by those cities--someone please talk to
me.
Mr. Hankla. Congresswoman, I think it would be certainly on
point to tell you that of this entire program, we have probably
spent almost as much time and energy in trying to get the jobs
program up and running as we have on problems of the Corridor.
I think we had a false start in the efforts to accomplish
the training of the skilled workers program through the
auspices of the Carpenter's Educational and Training Institute.
It was only after we shifted to Century Housing Corp. that we
began to record substantial success in those numbers. To the
extent that we have also implemented the Alameda Corridor
Conservation Corps, which is another 200-plus members that is
separate and apart from the Job Training Program, which is
training young adults between the ages of 18 and 23, and is
also assisting them with their high school diplomas and also
placing them in the union apprentice programs. When you add
that 200-plus members--and I think they are at over 200 now--I
think then our numbers come up to exactly what was promised.
Now the project is not over. And let me say that the
economic benefits--
Ms. Millender-McDonald. What is that number that was
promised, Mr. Hankla?
Mr. Hankla. The number that was promised was basically 650
trainees in the trades and 350 in non-trade training. Now with
roughly one-third of the project yet remaining, we think we
will meet those numbers. When you overlay that with the numbers
on the Alameda Corridor Conservation Corps, which were never
promised, but were essentially undertaken by our Board of
Directors as more or less an insurance policy to make sure we
hit those number--
Ms. Millender-McDonald. I just wanted someone to get back
to the numbers that the Inspector General was told we would get
for the jobs on the Alameda Corridor at my next round of
questions.
Mr. Hankla. And basically that was 650 in trades, 350 in
non-trades.
Now in terms of the economic benefits that these
communities are going to derive, I think it is fair to say that
most of these communities are tremendously negatively impacted
today by a monumental construction project.
If I were to sit here today and tell you we have been able
to mitigate all of the inconveniences caused those cities by
this project, that would be totally, utterly false. It cannot
be done. But as we open those new bridges, and we have opened
over 20 bridges today, and there is transportation taking place
where it never took place before, connecting cities from east
to west where they have been disjointed for over 100 years.
We see the L.A. Economic Development Corp. beginning to
market large parcels of real estate along the Corridor for
major employers. That is where the economic benefit is going to
come for these communities. It will come after our project,
aside from the labor training project, which I think is
beginning to show the numbers.
Mr. Horn. Let me move a little bit to the railroad
situation. The Alameda Corridor is a win-win situation for
cities and railroads, as you have just mentioned. Other
California proposals for similar projects appear to lack that
balance. What do these projects need to do in order to get the
railroad support?
Mr. Hankla. Is that question directed to me, Mr. Chairman.
Mr. Horn. Yeah, beyond the State. There are about 30 ports
in California.
Mr. Hankla. Well, I believe it perhaps goes without saying
that these projects need to find the hot button that will
interest the railroads in participating in these projects. That
may be something akin to what was done in the Alameda Corridor,
such as purchasing right-of-way, I frankly do not think the
Alameda Corridor would have happened had that particular step
not taken place. That may well be the linchpin in terms of
these other rail projects that are important to cargo movement
in southern California. If I had to pick one single linchpin,
that would be it.
Mr. Horn. Any other comments on that anybody wants to make?
Yes, Mr. Bredenberg.
Mr. Bredenberg. Congressman, I would like to clarify that,
however. In the case of the Alameda Corridor, a very inadequate
infrastructure was purchased from the railroads, an
infrastructure that did not have the capacity to absorb growth.
It would be very difficult to interest the railroads in
purchasing right-of-way if they have the infrastructure at the
time and have already provisioned for the funding of the
amplification of that infrastructure to handle the growth it is
going to be seeing in the next 30 to 40 years.
Mr. Horn. Thank you. Yes, Mr. Buresh.
Mr. Buresh. Mr. Congressman, I think one of the big keys to
the Corridor's success is the fact that it is a systemic
solution. That is, that it provides a comprehensive solution to
moving containers from the ports to the transcontinental
railroads. The classic trap facing many transportation agencies
is that they focus on congestion issues. Basically they develop
a grade separation here, improve an intersection there and so
forth. The problem is that is basically a reactive rather than
a proactive solution and it does nothing to change your
fundamental flow and movement patterns of goods, either their
efficiency or their cost.
When the Corridor comes into play, it changes a lot of
those economics. You have got a consolidation of that flow of
traffic, there is a big increase in speed for the rail trains
happening through there, there is a big increase in the safety
and efficiency, an increase in capacity for the future. And
fundamentally, the transportation economics for the railroads
have changed and therefore justifies their investment in those
toll charges.
So I think it is inherent that other mega projects of that
scale must combine that systemic overview on there. And while a
particular community may need a grade separation as its major
mitigation, it has to look elsewhere to find an enhancement to
the railroads to offset that and combine that in there in a
systemic improvement. That is the real challenge.
Mr. Horn. Let me move to another field on this last
question on this 5 minutes. Regarding the stormwater discharge
standards, Mr. Buresh, you say that falling rain may be too
contaminated to flow into the Los Angeles River. Can you
explain this or elaborate on it?
Mr. Buresh. We ran into a great problem in the process of
dewatering on this project where we had basically a temporary
situation of having to discharge water and we could not meet
the discharge standards for trace metals. These are very, very
low. We were able to discharge under the agreement that we
proceed with a series of studies to validate that we did no
harm to the environment. Based on those studies, which
demonstrated no harm, I would have a serious series of
challenges to raise those limits. I think they are extremely
low. Essentially, the trace metal limits are so low that
rainfall coming through the atmosphere in L.A. picks up enough
trace metals out of the atmosphere, that we may not be able to
be in compliance. That essentially puts us in the business of
polishing rain.
I think it has come to the point that it is almost absurd
and it requires an overall solution and I think it is going to
have to come out of the Congress. We are just one of many
projects being impacted. Some of the environmental cleanup work
that is reflected in these standards is very necessary and
should be going forward; however, the standards do need to be
real world standards that communities and agencies can meet.
Fundamentally, we are part of the solution, not a problem here.
We have cleaned up a 20-mile corridor, we have better
stormwater control and cleanup standards than has probably been
seen in most sections of railroad anywhere in the country and
yet, we found ourselves extremely vulnerable to those
standards.
Mr. Horn. Were those State or Federal standards or both?
Mr. Buresh. Both are in here, but it comes out of the
Federal Clean Water Control Program.
Mr. Horn. But you think it will be solved?
Mr. Buresh. I believe that we will be able to solve it. But
I think it poses a grave risk for any other large-scale
transportation project.
Mr. Hankla. Mr. Chairman, by way of scale, the potential
fines that could have been levied against the Alameda Corridor,
for the privilege of cleaning up 20 miles of the most polluted
environment in the United States, was $794 million.
Mr. Horn. $794 million. And how did we come to that?
Mr. Hankla. That was basically based upon the requirement
by the Regional Water Quality Control Board that we meet the
standards of the national toxic rule which establishes limits
of trace metals which can be discharged into I guess threatened
bodies of water?
Mr. Buresh. That is correct.
Mr. Chairman, the way the fines are set up, if I put out of
a gallon of water and it has say 10 different trace metals in
there, I can collect a fine for each one of those metals per
gallon as a violation. It has a huge compounding effect.
These rules basically exist to punish agencies that are
attempting to do the right thing. We are very easy targets to
get. Meanwhile, we have spent $40 million cleaning up messes
left from other people out there that are true lawbreakers.
They are hard to catch, the regulatory agencies do not go after
them. We are very easy to find.
Mr. Horn. We are hoping with a new administrator there, she
will have common sense and that is basically--the former
administrator just simply had lawsuits all over the place and
hardly ever cleaned-up any major dumps, and you are absolutely
right about that. So hopefully we will get some action this
time.
Now I will yield to my colleague from--
Ms. Millender-McDonald. Following up on the questions that
you have raised, Mr. Hankla, the 790, did you say $3 million?
Mr. Hankla. $94.
Ms. Millender-McDonald. $94 million. Were these additional
fines that you had to try to get for this cleanup or was it all
encompassed in the $2.4 billion that this project cost?
Mr. Hankla. Basically it is the potential fine that could
have been levied by the Regional Water Quality Control Board.
We were successful in Sacramento, with the tremendous
assistance of Senator Karnette and Assemblyman Lowenthal, in
securing some relief. There was a bill previously that had been
passed by the legislature and signed by the Governor called the
Migdon Bill that would have removed the discretion on the part
of the Regional Board and would have made the levying of those
fines mandatory. We were able to secure the relief that
returned that discretion to the Regional Water Quality Control
Board. Our subsequent interaction with staff, we believe, will
lead to relatively reasonable fines. Frankly, I do not think we
should be fined at all, but we have already been fined about
$180,000 for our work on the Corridor.
Ms. Millender-McDonald. Well, certainly you should not be
fined when it is something that is out of the realm of your--
you have no cause for this type of--the rainfall, the falling
rain, and the contamination of it. So that is something that
perhaps, Mr. Chairman, we can pursue or follow-up on to make
sure that some relief can be done there.
Mr. Keller, in terms of the dredging of the 300 and 400
pier, I have been following that for years because it certainly
does speak to the quadrupled freight cargo that we are
anticipating and projecting. Will this falling rain affect
anything that we are doing down in the pier--would it not
affect that as well?
Mr. Keller. Congressmember, it really never has. That is a
natural function of the ports and certainly the downstream
portion during major rain events and that type of thing, it is
our duty to clean-up as best we can, particularly floating
materials.
The dredging, however, has had a beneficial effect overall
because materials that have historically been washed into the
harbor from former industrial activities have been cleaned up
and removed. As you know, under our dredging permits, we are
allowed only to take clean material out to sea. Hazardous
material is hauled to upland waste disposal sites and
encapsulated. So the actual dredging is a beneficial effect
that does largely cleanup the effects of former industrial
activity. And these are the same type of activities that Mr.
Hankla and Mr. Buresh are dealing with on shore, where the
materials have percolated down into groundwater.
Ms. Millender-McDonald. Uh-huh.
Mr. Keller. We have inherited the activities from water and
materials that were dumped directly into our waters.
Ms. Millender-McDonald. I have sent a letter to Ms.
Christine Todd-Whitman to come and look at some of the
brownfields in this area, Mr. Chairman, and perhaps you and I
can come together with her to look at some of the things that
you are talking about, because after all, this is the region
that is going to be the engine that drives the economy of this
State, especially given the power problem that we now face. But
this has always been, in my estimation, and will always be the
engine that drives it.
As you said, Mr. Keller, we are a third behind Hong Kong
and Singapore, we have gone to Hong Kong to look at their port
system. I have not gone to Singapore and perhaps we need to go
there and we can talk with our new chairman and see if we can
get that trip out, Mr. Chairman.
But are you saying that right now we are going to have a
700 percent increase in cargo with the dredging of both 400 and
300 pier completed, we will go into 24 million tons of cargo?
Explain that to me. I wrote it down as you were speaking and I
may not have gotten it all correctly.
Mr. Keller. Congresswoman, our cargo has increased 700
percent since the early 1980's and in the next 20 years--the
two ports right now are putting through about 10 million
containers, imports and exports. By the year 2020, we expect
that number to rise to 24 million--from 10 million to 24
million.
We are not, by any means, done with our development between
the two ports. We have additional landfills, consolidations and
dredging projects in order to allow the larger ships to come
in.
Ms. Millender-McDonald. Uh-huh, absolutely.
That is why it is so critically important that we make sure
that the air, the quality of the environment is conducive to
your continuing that, because we are looking forward to that,
as we talk about international trade and other entities that
will help us in our economic vitality.
Mr. Horn. Let me ask you, what is the extent you have
engaged in eminent domain in order to get the project done?
Mr. Buresh. Mr. Chairman, the bulk of the real estate which
was required for the Corridor was obtained either from the
initial rail purchase executed by the ports or has come from
the ports or additional purchases from the railroads or from
the Corridor cities. There are approximately 200 parcels that
we have been required to obtain from third parties other than
the ones I previously mentioned.
Mr. Horn. So what percent of the land was picked by eminent
domain?
Mr. Buresh. Approximately 10 percent.
Mr. Horn. Ten percent. That is rather unusual in a major
program like this, is it not?
Mr. Buresh. That is very unusual, and again, that
underscores the importance of that initial purchase of the
railroad right-of-way by the ports.
Mr. Horn. I think you would agree, Mr. Hankla, on that, if
you look at a nationwide perspective.
Mr. Hankla. Yes, sir.
Mr. Horn. Well, that is very good news because you did not
drive a lot of people out of their houses. But did we have that
problem anywhere along the line?
Mr. Hankla. Actually no, there has been very little
residential relocation, other than we have some people who live
in junkyards and they will get relocated. But basically no
housing was taken out, it is mostly commercial space.
Mr. Horn. What about the Pacific Coast highway, what is the
situation with that in terms of--I can see you saying oh, no,
not this one--but who wants to take that on?
Mr. Buresh. Nobody wants to take that.
Mr. Horn. Looks like you have got the gavel.
Mr. Buresh. OK. There were a series of related
transportation projects funded called the Port Access
Demonstration Projects. These were done by various cities, the
city of Carson and Los Angeles County in particular. One of
those projects was the PCH or Pacific Coast Highway grade
separation. This takes place through the Equilon Oil Refinery.
Mr. Horn. I am sorry, which oil refinery?
Mr. Buresh. The Equilon Oil Refinery, used to be Texaco,
now it is owned by both Texaco and Shell.
Mr. Horn. Oh, OK.
Mr. Buresh. At that particular grade separation--and I
would emphasize, all the other grade separations along the
Corridor are either done or very close to being done. By the
end of the year, they will all be in place, whether they were
done directly by the Corridor or by some of our sister agencies
as part of the PADP projects.
The one exception is the PCH grade separation, which is a
CALTRANS project. That project is not yet underway. The design
is not complete, they have not obtained a final deal with
Equilon to expand access across their refinery. Building a
grade separation at that particular location will require an
extensive relocation of refinery utilities. That work has not
yet begun, there is not even a business or engineering solution
to that work.
Our concern from the Corridor's point of view is very
simple. We already have our main tracks in place at this
location, we do not need additional work there. That allows us
to run 100 trains per day or more with impunity, but the
reality is that when we put that many trains in there, we will
effectively have stopped or completely blocked Pacific Coast
Highway. Highway No. 1 of the State is going to come to a
standstill.
The solution CALTRANS is putting forward will be a detour
of Pacific Coast Highway, beginning at the Terminal Island
Freeway going north to Sepulveda, going west on Sepulveda,
coming down Alameda Street and then resuming its former route.
Essentially, we will deactivate this portion of the Pacific
Coast Highway. It is a cause of great alarm for us. Right now
we see, when train traffic appears down there, a large number
of illegal movements on the part of vehicles, people turning U-
turns in the middle of streets. I think it is just a question
of time before somebody with a tanker does something like that
and we have a tragedy on our hands.
The other thing is that this particular intersection is
close to the port, we get a large number of trucks moving
through here. This is an important part of our grid system, and
having that capacity in place is critical, especially as the
710 becomes more congested, either because of port growth or
because of CALTRANS construction on the 710. If you happened to
drive it this morning, you noticed all the K-rail or temporary
concrete barriers along the median. That is just the first step
in some repaving and correction of drainage problems along the
710. The minute those K-rails went up, we saw a significant
increase in truck traffic in other portions of the grid, in
particular along Alameda Street, on PCH and on Anaheim, as well
as on the 110 freeway. So it is important that we fix this
portion of our grid before other portions experience increased,
more increased capacity problems.
Mr. Horn. Mr. Brown, you have come from Sacramento and you
have spent a lot of time on transportation for Senator
Karnette. Where are we on the PCH side and where are we
particularly on 710? How are we going to handle the truck
traffic that is there now and that we hoped, when the Alameda
Corridor was complete, it might not be doubling, just as the
Corridor is with rail containers. How do you feel about this
and what do they say in Sacramento and at CALTRANS on all that?
Mr. Brown. Well, Mr. Chairman, with regard to the 710, a
study is underway, we should have that hopefully within the
very near future. CALTRANS is prone to be delinquent in
delivering its reports, but given the critical nature of the
710, we hope that we can hold their feet to the fire, get the
study done and produced to the legislature on time so that we
can begin to address and begin to implement a solution to the
710.
With regard to the Pacific Coast Highway, which as Tim has
just outlined, is most critical, Senator Karnette,
Assemblywoman Orapeza and Assemblyman Lowenthal will be--
Senator Karnette is convening a meeting on April 27 with ACTA
and with CALTRANS to discuss at length and hopefully come up
with a solution that provides a win-win strategy. The solution
that currently is on the table by CALTRANS, as I understand it
from members I have just outlined, is unacceptable. It brings
with it a great deal of liability, it does not allow the
freight and goods movement as well as movement by vehicles and
the general public, to move in a safe and conducive capacity.
In the future it will potential bring tremendous liability with
those tanker trucks.
So I hope that we can begin to address solving the Pacific
Coast Highway situation with a plan that ACTA brought up and
was discussed at length 1 year ago. We hope that through
productive and constructive discussions with CALTRANS, with the
members that will meet with them on the 27th, that we will be
moving in the direction, hopefully, that CALTRANS has outlined.
In addition to CALTRANS' gracious and generous offer to
contribute in making this happen with some of their engineering
ability and maybe some of their construction management
contribution, which would be sorely needed in order to divert
us away from this potential problem that we face.
Mr. Horn. Is one option to either get the trucks isolated
that will still be using 710 or the cars that are isolated to
still get some sort of special lanes for cars, because people
that go to work up in that area, it is a terrible situation
where you have got a truck on the side, truck behind you and
truck in front of you. Is there any way CALTRANS has got some
creative methods to get them moving?
Mr. Brown. The short answer to that, Mr. Chairman, is no. I
think that the design that ACTA has provided addresses the
elements that you have just outlined with a long overpass
instead of a short overpass or a roundabout or whatever the
configuration that CALTRANS currently has on the table. That
does not in any way address what you have just suggested and
questioned. In looking at the plans that ACTA has put forth and
discussed at great length with CALTRANS and with the
legislature, the long bridge is what is necessary in order to
meet these needs for the present time as well as to address the
future impact of freight and vehicular movement on the PCH.
Mr. Horn. What does the Alameda Corridor think of doing
something to either help the individual vehicle traffic--and
most of those are just one person in a car--or getting the
isolations of the trucks left over to go to various places
where, but not to where the railroad yard is that the Alameda
Corridor feeds into?
Mr. Hankla. Mr. Chairman, an organization called Gateway
Cities currently has a cooperative study underway relative to
the 710 Freeway. There is no question it is a serious concern
to the cities of the region and the residents of the region and
it has every prospect of getting worse. Now what the ultimate
recommendations will be coming out of that study, we are not
involved with. We have representatives that observe those
deliberations. How ACTA might be involved in any future effort
would be strictly a policy matter for our Board of Directors.
Mr. Steinke. Mr. Chairman, if I might add a little bit more
detail about the 710 as it pertains to truck trips into and out
of the Port of Long Beach and Los Angeles, the two ports have
embarked upon a $600,000 study looking at some interim
solutions, some things that we might be able to do. It is
called the Transportation Master Plan. We are looking at ways
to either look at moving traffic to some of the other arterials
like the underused Terminal Island Freeway or the 110, looking
at empty containers that might be able to be isolated away from
the ports some things like that.
The results of this study are going to be fed into a major
investment study, a $4.2 million study that Mr. Brown was
referring to, that is looking at the overall long-term
solutions to capacity restraints on the 710. And that is what
Mr. Hankla was referring to that the Gateway Cities Council of
Governments is keeping very close tabs on. That study will take
some time to complete but it should come up with some capacity
recommendations which will hopefully be implemented over the
course of the next several years.
The two ports, with the growth that we are experiencing,
cannot afford to wait for 5, 6, 8, or 10 years to have capacity
improvements take place on the 710 and that is why we are
looking at some short-term mitigation measures to try to move
trucks to different locations, reduce truck trips, extend
hours, do some other things that give the ports more elasticity
than they currently have.
Mr. Horn. We have met, and I think you and all your
colleagues, with the Gateway Cities people and their problems
with 5 and the Orange and the interconnection with what goes on
in Los Angeles County.
As you know, one of their basic thrusts is to go east with
the Alameda Corridor, to solve some of the pollution problems
that are going on. I think the group feels there are some of
the things come into the ports, especially coal from Utah that
they either tie down the loads or not, I do not know, but it is
a real problem still. I thought we had done all that and now I
do not think we have.
So who would want to grapple with the extension of the
Alameda Corridor? I am not saying you should do it, but I am
saying that a lot of Members of Congress, starting with Mr.
Dreier, or really starting with the rail yard and then going
east. You have got Mr. Dreier's District, Mr. Jerry Lewis'
District, Ken Calvert's District, all of that, to go to the
Nevada line essentially. But certainly to get into Riverside
and San Bernardino.
Any comments? I do not think I see too many hands on this.
Mr. Hicks.
Mr. Hicks. Mr. Chairman, there are a number of efforts to
look at grade separations and other improvements east of
downtown Los Angeles. The so-called Alameda Corridor East in
the San Gabriel Valley is approximately a $900 million effort.
It has raised about $400 million thus far for their program.
Another program is called OnTrac in Orange County, which is
also called the Orange County Gateway. It's approximately a
$450 million railroad lowering project similar to the ACTA
trench along Alameda Street. They have raised about $32 million
thus far and are looking of course for additional funding.
The county of Riverside and the county of San Bernardino
are also putting together a plan for grade separations and have
teamed up with the San Gabriel Valley and Orange County to
prepare a report per AB 2928 in the State, which requires them
to collaborate and develop a long-range plan for grade
separation improvements in all four areas. Once that report is
done, then some funding will become available through the State
to help supplement those projects. But it will not be enough.
Clearly, significantly more funding will be required, hopefully
through the TEA-21 reauthorization and other sources.
There are needs east of downtown Los Angeles. Clearly all
those trains continue east and go through various communities
on their way to the San Bernardino area.
Mr. Horn. Mr. Kellogg, did you want to comment on that?
Mr. Kellogg. Mr. Chairman, I know in the past I have had
discussions with Supervisor Antonovich on this, some rather
heated ones. I have talked to Congressman Lewis and Dreier on
it. Obviously they do have concerns, but my only caution--and I
have been removed from the Alameda Corridor for 9 months, but
as I mentioned to them, in particular Supervisor Antonovich, we
have many issues in the corridor cities that we need to address
first and foremost. My caution was always not to look at the
Ports of Long Beach and Los Angeles as a funding source. My
comment to him was what you are attempting to do is build the
second coming of the transcontinental railroad by piecemeal and
using the funding from the Ports of Long Beach and Los Angeles.
We have issues we have to address in this general area and,
again, as my opening comments, the communities up there, the
impacts they have, they do have to step up financially because
to look at the ports as the financial vehicle I find
inappropriate, but I think there would be some legal questions
as well. But I know they have looked many times when I was
serving on the Alameda Corridor as--their solution to a lot of
their funding was to come back to the Ports of Long Beach and
Los Angeles, and I think that would be a travesty and it would
be irresponsible to the corridor cities who do have direct
needs that we have to address on this project.
Ms. Millender-McDonald. Mr. Chairman, if I might just
comment on that. The reason they are looking at the ports is
because after all, you are going to quadruple in your cargo
container movement, which means that they perceive 710 as being
the conduit for the trucks. Of course it is. The Alameda
Corridor is not a corridor for the trucks to go through, and so
they are looking at the 710. Indeed, Congressman Horn and I did
meet with the Gateway Cities folks just last month and they
raised this issue and raised the whole capacity issue,
especially given NAFTA. NAFTA is now opening up new truck
traffic and we are just going to be inundated with trying to
take this cargo from the ports out east. So they have suggested
that the port, as well as the Federal--in other words, they
want to mimic what we have done for the Alameda Corridor, for
the Alameda Corridor East. They want pretty much the same type
of model in order to move the truck traffic out east and
beyond.
And so it is a problem, Mr. Chairman. I have talked with
SCAG about this and again, we need to look at and convene, Mr.
Chairman, a regional--we had tried to put that in place last
year when I suggested to them last year that we need to look at
that, because indeed Congresswoman Napolitano and all of those
who are witnessing the heavy truck traffic on the 710, the
gridlock that the chairman talks about in terms of cars
interwoven with the trucks, we have got to do something about
that. No one wants to travel the 710 now because of the
gridlock. And so indeed we have got to study that, whether it
is ACTA, whether it is whatever, whether it is SCAG, whether it
is CALTRANS, we have got to do that.
Mr. Brown, my question is why is it that we are still in a
dilemma of the PCH in terms of making sure the grade separation
takes place? I mean that is also a critical component to what
we are talking about in terms of moving cargo in and onto the
710 and beyond. So what is going on here that we cannot get
that grade separation going?
Mr. Brown. I think it is CALTRANS' way of doing business,
which you have experienced for many years.
Ms. Millender-McDonald. God knows, yes.
Mr. Horn. That is Mr. Brown--I am going to start--the
reporter cannot quite hear everybody.
Mr. Brown. I am sorry, Jeff Brown.
I think CALTRANS--and Tim knows the history of this a lot
better--because of the long history and lack of action on the
part of I guess the city of L.A. and CALTRANS to address the
Pacific Coast Highway grid sep is the answer to your question,
Congresswoman. I just think that it has been on the back-
burner, it has remained on the back-burner. Because of a decade
of keeping it on the back burner, the project costs have gone
up. I think the parties involved have, to some degree,
alienated Equilon in the negotiating process of right-of-ways,
and as a result of that it escalated their costs--it has almost
doubled from what it was last year.
I think what we need to address the problem in a timely,
cost-efficient, and efficient way with innovative approaches is
to address this in a public/private partnership way, CALTRANS
partnering to a great degree with ACTA, because we are about to
get a black eye if we do not address Pacific Coast Highway
grade sep.
Ms. Millender-McDonald. I do not think anyone wants to come
into a project that is already over-budget--or you are saying
lack of funding, because you have an override, right?
Mr. Brown. It is tremendous, I mean I think the figure now
is $115 million. Last year, it was about $30 million less. I
think that with some type of public/private partnership
collaborative effort, we might be able to bring that cost down
and get the project underway. But I think we, the State, will
have to prevail upon ACTA and their gracious offer to help us
get ourselves out of this knot. Because based on historical
inaction on the part of the city and CALTRANS, we are where we
are today and that is absolutely at step one. We need a partner
to pull us along quickly, efficiently and hopefully in a cost-
effective way.
Ms. Millender-McDonald. Mr. Hankla, where are you on
assisting them in making sure that we open up PCH so that we
can begin to look at this regional intermodal transportation
mode?
Mr. Hankla. Congresswoman Millender-McDonald, let me say
that we have met on a number of occasions with CALTRANS, we
have made suggestions to CALTRANS and offered some technical
assistance to CALTRANS. What seems to be the rub, if I may be
so bold, is that CALTRANS would like ACTA to make up the
financial shortfall. I think that is highly problematic from
the standpoint of management of our funds, as well as the
policies established by our Board of Directors.
Mr. Horn. CALTRANS is funded by the Federal Trust Fund for
most of the interstate highway. This is partly interstate
highway----
Ms. Millender-McDonald. It is.
Mr. Horn [continuing]. And presumably only 10 percent is
put in by the States across the country. So we give them a good
hefty bit when all of us drive in to our friendly gasoline
station and see the Federal tax go in the pocket back east and
we have fought very vigorously to make sure that people do not
use that for other things than primarily interstate highways.
Ms. Millender-McDonald. Mr. Chairman, I suggest, given the
fact that this is Government Reform and Efficiency, that
perhaps a letter goes out asking them to delineate the cost
that has been incurred to date, to see whether or not it has
been efficiently done, so that we can get a handle on this. You
know, we are looking at not only this quadrupled container
traffic coming in, but also the truck traffic that is going to
be increased. And if we do not get some of these corridors
opened up, you are talking about gridlock, it is just going to
be a tremendous detriment to us down here economically. So
perhaps I would like to suggest that you and I together----
Mr. Horn. They are going to have a meeting on this and----
Ms. Millender-McDonald. The 24th, April 24.
Mr. Horn. Yeah.
Mr. Brown. April 27.
Mr. Horn. The State legislative personnel, both Assembly
and State Senate, are the ones that tell CALTRANS what to do.
Ms. Millender-McDonald. Of course, they should dictate to
them.
Mr. Horn. It is not the Federal legislators.
Ms. Millender-McDonald. But our funding, we can ask just
how to date that has been implemented in terms of getting the
corridors taken care of; in my opinion, it certainly would not
be a problem.
Mr. Horn. We talked with them, as I recall, in 1993 and we
had very mixed feelings when we left discussions with our
friends in CALTRANS, but I think they have helped in a number
of ways ever since; is that not so?
Mr. Hankla. Mr. Chairman, by frame of reference, I believe
this project was essentially initially funded in 1987.
Mr. Horn. 1987?
Ms. Millender-McDonald. And we are still pretty much in the
same position where we are, have we crawled, have we snailed,
have we done anything in terms of moving on?
Mr. Hankla. To term the movement glacial would probably be
an overstatement.
Mr. Horn. Is that ahead of a snail or behind a snail?
[Laughter.]
Ms. Millender-McDonald. Or even a snail.
Mr. Horn. Even a snail. It is a melting one, anyhow, it is
a glacial one.
Ms. Millender-McDonald. I really do think that we will wait
to hear what the meeting on the 27th brings about, but
certainly with the funding from the Federal, I think we will be
in a position to ask if we can get some kind of efficiency
report or something to see just where we are and where the
money has come down, because it is important that we get that
corridor up and going, given this truck traffic increase as
well as the cargo container increase.
Mr. Chairman, you spoke about eminent domain, my bill did
not move any residents any place, we did not have that type--I
wanted to make sure, given that they were poor people along
that corridor anyway. So that particular eminent domain bill
that Mr. Hicks and all of us fought for in Sacramento with Mr.
Kellogg did not bring about any undue hardship on anyone.
Mr. Horn. I want you to know that there are low income
people on both sides of the tracks and the L.A. River.
Ms. Millender-McDonald. That is very true, I am not
suggesting----
Mr. Horn. And based on that, that is how I got the money to
solve the L.A. River problem. You know, this is not people
sitting in Carmel on bluffs.
Ms. Millender-McDonald. That is very true, we connect in
Long Beach, so how well I know.
Mr. Horn. And we have gotten everybody on both sides of the
river to help us; on all of these things, we try to have a
bipartisan approach in Los Angeles County, and I must say my
colleagues have signed on the dotted line every time.
Ms. Millender-McDonald. Uh-huh.
Mr. Horn. Whether it be Ms. Waters, whether it be the ones
related like Jerry Lewis and Ken Calvert. We work together, in
brief.
Let me ask you, Mr. Wiggs, I am particularly interested in
what we learned from the experiences you had with the project
and I was very interested to see the data you had on
apprenticeships. There are a number of firms in the area where
women are the CEOs and the workers. To what extent have we had
those firms that are right in the area get jobs along the way
in terms of the Alameda Corridor?
Mr. Wiggs. Let me go back and describe for you just the
process of how our trainees gain entry into the program. We
have established what we call intake sites or points of entry
for any Corridor resident that is located within your
Congressional District; Congresswoman Millender-McDonald's
Congressional District; your colleague, Maxine Waters', Lucille
Roybal-Allard and to an extent Congressman Becerra's District,
so that we can get individuals from the entire breadth and
length of the Alameda Corridor participating in the job
training program, thus representing all of the geographic and
demographic constituencies in the areas.
In my opinion, we have had great success in the last year,
year two has been a turning point in the program. The labor
unions, the trade unions, have stepped up to permit our
graduates' entry into their unions, thus ensuring them a
position in the new apprenticeship program. The private sector
is a sector that we have not reached out to in any great way
because the structure of our program is union apprenticeships.
That is the goal that we are striving, attempting to achieve
within the project.
Any private sector support has come by way of the small
number of placements from our non-trade component. There again,
they are essentially support staff to the construction
industry.
If I were to name the central lesson that has been learned
from this project, it is two-fold; one you and Congresswoman
Millender are probably familiar with. The first is the trade
unions opening up their union roles to be as receptive as
possible for new blood, as it were. Our project has some 350
labor personnel coming out of the trade unions or labor locals.
Our goal in that regard was to have the highest number of
apprentices per journey level. At that particular trade, there
are about 25 percent of apprentices to journey level. That is
the rule of thumb. We have not met that basic goal yet. We are
approximately 50 percent below that threshold mark and in the
last month we in fact may have even--may meet substantial
difficulty in getting that additional 50 percent labor union
support. It is not a formal support, it is an informal
relationship. They have agreed--they being the three labor
unions operative in the Alameda Corridor parameters--to work
with us. Nothing formal. We attempted early on to get a
memorandum of understanding between the labor unions and the
Alameda Corridor Project, at least our mid-corridor segment,
whereby any individual that we would sponsor into the labor
union would be accepted. That was not received by the three
labor unions, they agreed that they would take a percentage of
our graduates proportionate equally amongst the three unions.
It was a very small number at that point. Subsequent to meeting
that number with that labor union, then informally, they have
expanded and permitted us to go beyond that.
I say that because I recall reading several weeks ago,
emanating from the White House, there is a position that there
may be an elimination of PLAs, project labor agreements, with
any new projects of this magnitude. That would, in my opinion,
serve a substantial disincentive for any future project of this
nature to incorporate local workers and apprentices in their
program because the project labor agreement is that binding
document that at the front-end, if established properly, will
then hold the hands of both the contractor and the labor unions
to buy into a concept. Absent a project labor agreement, then
the workforce of course then becomes probably non-union and
absolutely antithetical to what this project and other projects
do, enhance the lives of individuals and transition them into a
union workforce.
Mr. Horn. Any more thoughts on that?
Ms. Millender-McDonald. Mr. Wiggs, you know, you and I have
gone back and forth on these jobs and the inability of the
training; first of all, the unions to accept those who were
trained by Tutor-Saliba and the training program, to go on
board without having to pay a union fee before coming aboard.
Has that been dismissed or where are we on trying to get those
who have been pretrained or into the apprenticeship training
program to at least get on board and start working and then pay
the union fee, because after all, these folks are folks who did
not have jobs and do not have funds for that?
Mr. Wiggs. We have worked that out. I am happy to report to
you that the issue of union sponsorship and payment of dues has
been worked out. That was worked out several months after we
met in your office and you encouraged us to work out that
relationship.
That is not the issue at this point. The issue now, of
course, is for more and more subcontractors and others in the
area to accept our trainees as apprentices, bring them on to
their workforces, their labo-force, and give them the requisite
number of hours to continue their apprenticeship training.
Ms. Millender-McDonald. So there was not an MOU done to
enable that to go forth, if I am understanding you correctly?
Mr. Wiggs. That is correct.
Ms. Millender-McDonald. Then is it ACTA who comes back and
talks about that or what happens here that there is a slight--
--
Mr. Horn. Mr. Hankla.
Ms. Millender-McDonald. Yeah, Mr. Hankla.
Mr. Hankla. ACTA has certainly jawboned this issue, both
with Tutor-Saliba and with the unions. The relationship, the
critical relationship, is between the general contractor and
those unions.
Ms. Millender-McDonald. Right.
Mr. Hankla. We cannot insert ourself in that relationship.
If we do, we create certain imbalances and legal
responsibilities. However, we have been pleased with the
progress that Mr. Tutor has been making with the unions
recently. We have certainly helped him out to the extent that
we have talked, and I personally have talked, to the unions
about securing their support.
It is a problem that is not solved yet, but our ability to
impact the problem at this point is limited to jawboning.
Ms. Millender-McDonald. To what?
Mr. Hankla. Jawboning. We talk a lot and we do and we have.
Mr. Horn. A good labor term.
Mr. Hankla. Yes.
Mr. Horn. J-a-w-i-n-g.
Ms. Millender-McDonald. We do understand that jawboning,
yeah.
All right, well, Mr. Wiggs, I did see that there is a
slight under-percentage of jobs in the work force in the Carson
area; also in the Compton area I saw in your grid, and Lynwood.
Mr. Wiggs. Compton has exceeded its goals substantially by
three-fold.
Ms. Millender-McDonald. Maybe I did not have my glasses on
when I saw that.
Mr. Wiggs. Lynwood is approximately about a percentage
point ahead of its goals.
Ms. Millender-McDonald. And what about the Watts area?
Mr. Wiggs. Watts area is part of the Los Angeles community.
Ms. Millender-McDonald. Which is part of my district.
Mr. Wiggs. It has approximately 45 percent of the entire
labor force of the Alameda Corridor communities. They have the
highest numerical number of workers and trainees on the
project, yet we are still under goal about 9 percent, given the
substantial numbers that the city of L.A. has.
Ms. Millender-McDonald. Yeah, but I am talking about the
city of L.A., Watts, Wilmington, the two W's that I have talked
about for years. They are still under-represented in this job
market.
Mr. Wiggs. If I may take a moment to somewhat take a
different perspective. The Wilmington community, about 12
percent of our trainees and graduates are from the Wilmington
community specifically. Unfortunately, I do not have the
following numbers, I did a report several months ago----
Ms. Millender-McDonald. Can you send that to my office, I
will be in the rest of this week and I would like to get that.
The last question that I have, Mr. Chairman, so that I can
move on and leave for my next meeting, I had wanted to talk
with Mr. Brown, but I suppose he has either left or he is out
for this moment. But I would really like to talk with him. And
again I appreciate Senator Betty Karnette having someone to
come in and speak today--may I put that on the record? But I
would like to talk with them about their SB-653, especially
when you are talking about improving the work force
preparedness to meet the changing manufacturing environment.
With my being the ranking member on Small Business, Work Force
and Empowerment, I am interested in working--is this Mr. Brown?
Yes, Mr. Brown, thank you.
I just wanted to ask you to elaborate on your SB-653,
especially directing certain local entities to provide
assistance and so forth and so on for communities impacted by
the Alameda Corridor. And again, will you extend my
graciousness to the Senator for having someone here to
represent her, and I know why she is not here. She is doing the
people's business in Sacramento. Also improving the work force
preparedness, can you expound on that for me somewhat?
Mr. Brown. The SB-653 was actually a partnership with ACTA
and L.A. County Economic Commission to invest in firstly
identifying brownfield locations of the Corridor----
Ms. Millender-McDonald. I am sorry?
Mr. Brown. Brownfield locations.
Ms. Millender-McDonald. Uh-huh.
Mr. Brown. Which could be graded according to their
toxicity so that you could begin to address the mitigation
necessary to attract businesses. The L.A. EDC, as Mr. Hankla
pointed out in his presentation, has reached out nationally to
attract manufacturing concerns and advance transportation
technologies to begin, hopefully in the near future, to create
new plants there that would in turn help generate quality of
life jobs.
I think if you have that in place, and one of the long-term
goals of 653, although not part of the legislation, but
certainly the intent and good will of that legislation; if you
are able to attract the manufacturing concerns and the advanced
transportation technology concerns to those sites, you will
generate quality of life jobs for people in the corridor which
will hopefully enhance small and mid-sized business in that
community and hopefully will begin to initiate affordable
housing strategies. You know, they are building blocks to the
process. I think this is one of the key foundational building
blocks, SB-653, in identifying the sites, grading them and then
beginning an extensive marketing strategy that will attract the
businesses to provide precision manufacturing jobs and advanced
transportation jobs for people in this corridor and in the
surrounding vicinities.
Ms. Millender-McDonald. Have you gotten cities to come
together in a joint policy authority or whatever it might be to
engage in the solicitation of companies and manufacturing
companies to come out and look at the area?
Mr. Brown. Well, actually, that has been the responsibility
of the L.A. EDC, Lee Harrington, and Richard Hollingsworth of
Gateway Cities. They have been sort of at the front of that
effort and I believe there have been two or three tours of
industry, CEOs and decisionmakers to the corridor to look at
these sites and to begin that process.
One thing that Senator Karnette would like to do and we
have been trying to schedule that is to get an inter-agency
effort with Health and Human Services, Winston Hickok, and the
treasurer whose report on smart investment and the double-
double bottom line addresses exactly what the potential of the
Alameda Corridor community region has to offer in revitalizing
this manufacturing hub with quality jobs, helping to raise
small and mid-sized businesses to a higher level of earnings
and to generate, as I said, affordable housing.
Ms. Millender-McDonald. Well, I am interested in following
you and following the Senator on her movements, given the
signage of this bill, and making sure that those cities that
are affected really do become cities that have quality of life
jobs and economic vitality.
Mr. Chairman, let me thank you again for your insight in
bringing this committee to Long Beach; and to all of you who
have been here today, I must leave because I have other
commitments and when I got the word, I had to stop and come in,
but thank you so very much.
Mr. Horn. Good to see you.
Ms. Millender-McDonald. Uh-huh.
Mr. Horn. Mr. Wiggs, I was very impressed with the data you
gave to us and you told us some lessons about your experience
on this. I guess let me ask you, if you could change one thing,
what would it be in terms of what you have to go toward goals
and so forth?
Mr. Wiggs. I think the fundamental change would be at the
beginning--the front-end of the program design was the
appointed authority determining that a job training,
development program would be part of its criteria for selection
of contractors--would be to establish a punitive system as
well; and that is to say that if there is no performance, a
monetary punitive statement in any contractual document setting
forth that failing to perform established goals will result
in--my terminology would be impacting contractors' retention.
Because at this point, as I have shared with staff, the impetus
for contract compliance is great, but it is one where there is
the reference of goal, goal versus requirement. Wherever there
is that reference point, there is a feeling that if you do not
achieve the established goal, and you have demonstrated your
best faith, given best faith efforts, the obvious response is
OK, I did it, so what.
That means that there is a harder effort for the
implementers and those who are encouraging goal attainment to
really apply the pressure upon subcontractors and others to
perform. At this point, we are grappling in the final stages of
our contract as to what we should do as a contractor for our
subs who less than achieve their goals. Therefore, the only
thing that is left for us to do is to attack the retention or
at least threaten that retention will be attacked should that
become a necessity. I have gotten some response from our
subcontractors in the last quarter, numbers have begun to
increase, meaning specifically that trainees have been brought
on their work forces and have been maximized--the hours have
been maximized. So I would think at the beginning would be some
reference that attachment of retention or some percentage of
retention should be withheld for job training assurance for
performance purposes.
Mr. Horn. That is helpful. And a lot of them have been
integrated into the various unions?
Mr. Wiggs. Yes.
Mr. Horn. So there has been good cooperation there.
Mr. Wiggs. Oh, we have not had union, trade union problems.
I spoke to you early on about the Laborers Union, but again,
the informal agreements have been working well. We are not
getting those formal agreements unless you have at the front-
end of a project as well that labor agreement specifically
setting forth the terms of the training program; i.e., numbers
of local workers or whatever designation of worker category you
are using, shall be employed on this project from beginning-to-
end and the trade unions are signing off on that agreement at
the front end.
Mr. Hankla. Mr. Chairman, I think it is important to note
that in the mix of workers on the Corridor, approximately 60
percent--correct me if I am wrong--would be laborers. So if we
have a problem with the Laborers Union, that is much larger as
a problem than, for example, if we had a problem with the
Electricians' Union. I think that has been one of our problems
and I think that Mr. Wiggs would agree that best efforts at
this point with the Laborers have as yet to produce the kind of
results we would like. And since they are so over-represented
in terms of the workforce, it has an interesting and negative
impact on the numbers.
Mr. Horn. That is very important.
Anybody have something they want to get on the record
before we close it out? Although if you have a good idea, we
keep it open to put something, a memorandum or letter, in the
mail or whatever. But this has been very enlightening for me of
all the progress that has been made. You will have lots of
visitors.
Mr. Buresh.
Mr. Buresh. There are a couple of comments I would like to
get into, to go back to some of our discussions, if you will,
about the overall transportation system. I think it is the
lessons to be learned from the Corridor and some of the
opportunities in here. This has been a very effective
partnership between the ports and the railroads that impacts
the transportation system dramatically.
When the Corridor comes on-line, one of the benefits will
be the dramatic reduction in travel time for a container
traveling by rail from the ports to say San Bernardino.
Presently that trip I believe takes 10 to 12 hours depending on
rail traffic congestion. Now that trip will go down to an
average of say 3 hours for the Burlington-Northern Railroad.
That suddenly changes possibilities and those things which
would not make economic sense in the past suddenly become more
viable.
We talked about AB-2928, that is a required study by
several counties to address goods movement, but it has turned
into a grade separation study. It is not really addressing
goods movement. More important, it is not addressing how you
change that flow of goods. I think for those of us who have
worked with CALTRANS and been driving through their large long-
term projects, that is a project delivery time line that is
broken and we cannot count on. I think we need to find ways to
shift more containers from trucks to rail and expand that as a
viable alternative, to start either reducing truck trip length
or the number of truck trips. I believe that the current
studies are not addressing that opportunity or taking advantage
of the increased opportunities that the opening of the Corridor
will present in a very short time.
We need to also come up with a different project delivery
method for CALTRANS. Frankly, there has not been a penalty for
their failure to perform. At peak construction volume on the
Corridor, we put in place over $2 million worth of work per
day. CALTRANS on average puts in $3 million per day in the
entire State. Clearly things could be speeded up, expansions
could be made more rapidly, and more responsive, to our
changing needs.
The ports are unusual in that we can see where our growth
is coming, we can see what the demand is going to be. Mr.
Keller referred to the fact that half of those containers go to
Los Angeles, well they come from the ports, but they go
somewhere. We have over 20 million square feet of new warehouse
or big box space opening up in San Bernardino. By definition,
trucks come from somewhere to feed them, they leave them to
feed somewhere else. And the whole time that all those
facilities have been getting installed out there, we have not
addressed whether we should serve them in any way other than
traditional truck road, which consists of once they leave my
loading dock, I do not think about them, I do not care how they
get where they are going. I think as a region, we have got to
get our arms around that and come up with a wiser approach to
having a good mix between rail and truck service and having the
right kinds of truck service into those facilities.
Mr. Horn. That is a very helpful perspective.
Mr. Hankla.
Mr. Hankla. There is one other item, and that is, I think
as these other projects search for the nexus that will allow
them to become reality, the one thing that they should be
looking toward is how they can add value in terms of cargo and
goods movement, and in particular how they would add value for
the railroads, because they are the principal partners. We
added value, or the Alameda Corridor would not exist. How do
they add value, that is the question.
Mr. Horn. Well, give me some examples of the value added.
Mr. Hankla. Well, does this improve in some fashion the
railroad's ability to move cargo; does it move it faster, does
it move it cheaper, does it move it better. Those, I think,
will become the sine qua non that the railroads are going to be
looking for to get involved in a partnership and these other
projects. Without the railroads, you do not have a partnership.
Mr. Horn. So you would see a much faster movement of goods
from port to wholesale and retail, once it is out of Los
Angeles County, and it is apparently quite a bit in Los Angeles
County. But I take it the trucks will handle most of that. Is
there sort of any rule of thumb, Mr. Keller, Mr. Steinke, as to
whether you see the truck traffic changing and doing maybe
within 150 miles or something like that, or San Diego, as
opposed to putting it on a railcar?
Mr. Steinke. Congressman, I think those are some of the
studies that groups like the Transportation Research Board are
looking at and as Mr. Buresh said, the idea of maybe taking a
train, a unit train, to a place like Ontario or San Bernardino,
to eliminate trips on the 710; whether or not those make
economic sense. And I think that those studies are taking place
by the groups that I just mentioned. Traditionally, we think of
intermodal cargo as anything about 300 miles and further, and
so that is where we come up with our basic ratios of about 50
percent serving the local market and then 50 percent moving
what we call intermodally. But I think we need to continue to
look at what makes sense, if there is a train movement that
goes into San Bernardino County, and then serves the areas
closer in. Those are things that other groups are looking at,
whether that makes sense. I think we need to continue to
investigate those kinds of things.
Mr. Horn. Mr. Keller.
Mr. Keller. That is certainly one part of the model.
Another one, Congressman, that we have discussed actively is
strengthening the whole distribution system. We have truckers
who will drive at night, we have terminals in the ports that
will stay open at night. But the containers have nowhere to go.
The same distribution centers we are talking about want to open
at 8 a.m., and close at 6 p.m., leaving the trucker with no
secure spot to drop the container.
We have to strengthen that system, and in so doing, we
would effectively free up the freeways for roughly sometime
between 9 p.m., and 7 a.m., a time when most commuters and most
other citizens are not using those freeways and highways. We
think that has enormous potential as well and we are actively
engaged with several of the groups who can make this happen,
particularly with some of the smaller importers and exporters.
So we think that there are solutions here and they are all
being studied.
Mr. Horn. That is an exciting idea as to certain times
where the bulk of the traffic could go and other times not.
Any other comments? Yeah, Mr. Brown.
Mr. Brown. Congressman, I would just like to go back to the
Alameda Corridor East and I think Mr. Kellogg identified it as
sort of a piecemeal process. AB-2928 invested $273 million for
those four counties to invest in building the Corridor which is
now, as Mr. Buresh indicated, a grade separation project, not
necessarily a goods movement project. What is key, in order for
this project to build it from the Redondo junction to the
desert is that there needs to be a regional approach. We cannot
do it in a piecemeal fashion, we cannot do it through a
parochial lens. All of the districts--congressional districts,
legislative districts east of the Redondo junction need to look
at this as a team effort or else we will build this in a
piecemeal fashion and it will take twice as long and probably
three times the money. And we will have a great deal of
congestion.
So I just want to suggest that in talking with your
colleagues in Congress, that the approach to building the
Alameda Corridor East be one of a regional approach.
Mr. Horn. That makes a lot of sense and that is how we got
this far. Now as I remember, it was $800 million, the Secretary
of Transportation signed on and said you did not have to start
paying it back until what----
Mr. Buresh. $400.
Mr. Horn. $400. What did you do with the other $400?
Mr. Hankla. We got $400 from the Federal Government in a
loan.
Mr. Horn. Good heavens, I thought it was $800.
Mr. Hankla. The ports advanced $400 risk capital up front.
Mr. Horn. That was Secretary Pena.
Mr. Hankla. We got approximately $400 million, give or
take, through California Transportation Commission MTA, the
rest was bond funded.
Mr. Horn. So have you fixed a figure on the container and
how long it will take to pay the Federal Government back?
Mr. Hankla. It will be based--at current projections it
looks like there will be an early retirement of the debt all
around. How early, I could not say. But based upon cargo
growth, it appears that the debt will be retired earlier than
anticipated.
Mr. Horn. Do you have any thoughts on the financing here
that somebody wants to comment on? Yes, Mr. Preusch.
Mr. Preusch. The $800 million was the amount that the $400
million loan grew to before the amortization actually occurred.
With the increasing volumes that we are seeing, it probably
will not get to that point. As Mr. Hankla pointed out, all of
the debt should be retired quite a bit sooner than the loan
agreement anticipated.
One of the things, if I could make one other point, with
regard to regional issues and concerns related to the Alameda
Corridor East or the Placentia project, I think it is important
to recognize not just how, as Mr. Hankla pointed out, the
railroads would benefit, but who the ultimate beneficiaries
are. About half, 55 percent, of the cargo coming through the
San Pedro Bay ports is moving to points well east for consumers
that are back there. There needs to be some mechanism to
connect the benefit that those ultimate consumers receive to
the costs of moving those goods faster and with less
congestion, less impact here.
One of the things that the airline industry has done is to
use a passenger facility fee. Each one of us pays a very, very
small amount to fly through LAX whether we live here or not.
There may be a parallel structure that could be imposed on
goods movements in a way that would cause the ultimate consumer
to help support some of these projects in a more regional or
national sense.
I think it is important that the money not be
redistributed, that it be applied where the needs are, in this
area as an example. But as has been said many, many times, we
cannot expect the ports, we cannot expect ACTA to fund every
grade separation between here and Chicago or New York.
Mr. Horn. Well said. I am interested in what you think--
these would be the sort of duplicate for what was the harbor
maintenance tax that the Supreme Court threw out.
Mr. Preusch. I think the issue with the harbor maintenance
tax was the redistribution of money, it was not necessarily
used where it was collected. I think perhaps an approach that
would bring a fee back to a port or a region where the
congestion is occurring, where the relief is needed might work
a little more effectively.
Mr. Horn. Do you see any other option in terms of replacing
the harbor maintenance tax that would withstand Constitutional
muster?
Mr. Preusch. I do not know that I have explored it that
thoroughly. I think that is likely the case. One of the issues
there, of course, was the redistribution. To the extent that
money is collected for cargo coming through an area, it needs
to be used to support that same area. That is the principle
that has worked with the passenger facility charge in the
airline fee and I think that is a pretty good model to at least
explore.
Mr. Horn. Yeah, and of course the airlines were very upset
about that when Los Angeles International put that on, but I
first remember that in Yugoslavia back in the 1960's and
1970's. They get you going out of town, that is for sure.
Well, thank you for that dialog and thank you all,
gentlemen, for your help in this. A lot of people are going to
want a copy at other ports in America as to what you all said
this morning. So thanks for coming and we appreciate it.
Let me thank the staff that put this together. Right to my
left, your right, staff director and chief counsel, Russell
George; Dianne Guensberg, professional staff has returned to
Washington. On my right is the professional staff member and
director of communications, Bonnie Heald, who came from Long
Beach here. Earl Pierce, professional staff is back in
Washington, as is Matthew Ebert, policy advisor. Grant Newman
is here doing all the work and he is over there. Put your hand
up, Grant. And then Brian Hom, our intern is staying in
Washington.
Now we want to thank the people here that helped us a lot
and they are Steve Sykora and Arturo Garcia. We are delighted
to have this facility. They are both related to public
relations for the Port of Long Beach. And then Bill Warren,
this will be his last hearing in the last 10 days and I am sure
he is glad to get back to Georgia--the court reporter.
We thank you all and with that, we are adjourned.
[Whereupon, at 11:46 a.m., the subcommittee was adjourned.]