LOS ANGELES — The federal government's decision to contribute $647 million to convert a San Francisco-area commuter rail system to electric trains could open the spigot for state bond money as well.

The Federal Transit Administration said Monday it will approve a $647 million full funding agreement for the Caltrain electrification project.

The grant agreement, approved by the Obama Administration, had been withheld after President Trump took office, with the FTA informing Caltrain that it was “deferring a decision.”

“I’m pleased and thankful that Secretary Elaine Chao has agreed to sign the long-awaited grant agreement for Caltrain’s Peninsula Corridor Electrification Project,” U.S. Senator Dianne Feinstein said Monday.

The San Jose-to-San Francisco project is designed to also host high-speed-rail trains on California’s planned Los Angeles area to San Francisco bullet train route.

The federal delay resulted in the state Department of Finance deferring its own decision on the financial viability of the project as part of the state's $64 billion high-speed rail project. Funding for Caltrain was not included in the state's April $1.2 billion bond sale though funding for the Central Valley segment of high speed rail was.

Transportation Secretary Elaine Chao "did the right thing" in approving a full funding agreement for Caltrain, said California Gov. Jerry Brown.
Transportation Secretary Elaine Chao "did the right thing" in approving a full funding agreement for Caltrain, said California Gov. Jerry Brown. Bloomberg News

Almost two decades of planning for the $1.98 billion project hinged upon this grant agreement, Feinstein said.

“For the past three months we’ve waited to hear the status of the grant, while Caltrain was forced to spend roughly $15 million to hold its contractors in place,” Feinstein said. “With this agreement, the project can finally begin.”

The multi-year agreement is a commitment to provide $647 million over the next five years, roughly one-third of the total project cost.

The FTA said it intends to sign the San Carlos Peninsula Corridor Electrification Project agreement in preparation for releasing fiscal year 2017 funds appropriated in the Consolidated Omnibus Appropriations Bill enacted May 5. The bill appropriates $100 million for Caltrain.

“Secretary Chao did the right thing on Caltrain,” Gov. Jerry Brown said in a statement.

Brown met with Chao and Majority Leader Kevin McCarthy in Washington, D.C. in March to push for approval of the grant agreement. The governor also wrote to Chao to encourage her to support the project. Feinstein and Sen. Kamala Harris also penned a letter to Chao after the appropriations bill was passed.

Cohen had deferred a decision on approving the High Speed Rail Authority's request to use part of the voter-approved $9 billion in bonds to fund the project. In a letter to the High-Speed Rail Authority's director, Finance Director Michael Cohen said that the budget for Caltrain had a significant gap without the FTA agreement.

In his March letter, Cohen asked that the rail authority inform him as soon as a federal agreement was in place.

"Given today's development, we expect to move forward quickly," said H.D. Palmer, a DOF spokesman.

The finance department will send the rail authority a revised letter based on the new information "expeditiously," said Palmer, but he would not be more specific about the timing.

Cohen, according to published reports, has taken a leave of absence after an unexpected hospitalization.

California typically conducts GO bond sales offering between $1 billion and $2 billion to help fund a variety of infrastructure projects.

As to whether Caltrain could be included in the fall sale, Palmer said it would depend "on the actual cash needs for that segment for the period covered by the fall bond sale."

He added that DOF would be working with Caltrain and the rail authority to make that determination.

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