The city of San Mateo received $23.8 million from the San Mateo County Transportation Authority in early January to fund the completion of a grade separation project that had extra costs in its final stages.

The Transportation Authority approved the funding at a Jan. 7 meeting. Grade separation entails raising train tracks and lowering the roadway with the benefits of increased safety and less traffic congestion at railroad crossings.

San Mateo’s project involves grade separation at East 25th Avenue, completing east-west street connections at 28th and 31st avenues and building an elevated Hillsdale station with updated amenities.

Planning for the project began two decades ago. Construction began in the fall of 2017 and is slated for completion this fall. However, due to delays, the project cost had risen from $180 million to $205.9 million.

The city learned of the $25.9 million shortfall last month. Without additional funding from the Transportation Authority, the project would have been stalled or downsized.

The city of San Mateo plans contributed an additional $2.1 million to cover extra costs and requested the other $23.8 from the Transportation Authority.

During the meeting with the Transportation Authority, San Mateo City Councilwoman Diane Papan said the project’s strategic location near Hillsdale Boulevard will give it regional benefits.

“Hillsdale Boulevard is one of the major roads into Foster City which has very limited access as it is,” Papan said. “Because we’re going to be putting in three grade separations between those major routes, you’re really going to be having an impact on the region and transportation in the region.”

An undated photo shows construction progress at the new Hillsdale Caltrain station.

Pressure to secure permits

So far, the project is 85 percent complete; the track is already separated from vehicular traffic while work on the Hillsdale station and other road work is ongoing.

Because grade separation would be more expensive after Caltrain electrification — slated for 2022 or later depending on delays — project organizers faced pressure to secure funding and permits quickly. Caltrain manages the project while the city of San Mateo secured funding sources.

To meet its original $180 million cost, the project was funded through the city, the Transportation Authority and two state agencies, with the largest contribution ($84 million) from the California High-Speed Rail Authority.

Since funding from the High Speed Rail Authority would only be enough to cover construction costs before electrification, the project risked losing that $84 million if it did not move forward.

“We did not have the benefit of time given the looming electrification program but also the potential loss of the $84 million.”

Michelle Bouchard, Caltrain

“We did not have the benefit of time given the looming electrification program but also the potential loss of the $84 million,” Caltrain’s Chief Officer of Rail Michelle Bouchard said. “In consultation with the city we decided to take a calculated risk.”

As a result, when funding was secured in 2017, construction and utilities permits were pursued simultaneously that year. When construction began, negotiations to remove a fiber optic cable — which ideally would have been completed before construction — delayed the project for 500 days. Moreover, funding was not originally budgeted to remove a PG&E gas line.

Despite the costly delays, if the project had waited post-electrification, it would have been even more expensive.

“It financially doesn’t make sense to stop it (the project) and hope to get money from somebody else in the future,” said Jim Hartnett, CEO and general manager of the San Mateo County Transit District, which oversees Caltrain, SamTrans and the Transportation Authority. “We would have an incomplete project and uncertain as to when we would ever be able to complete it and uncertain as to what the funding source would be. But a certainty that it would cost more than what we’re asking now.”

Other projects in the works

Moving forward, the Transportation Authority requested more accountability from Caltrain and the city of San Mateo regarding the project’s funding, such as quarterly reports.

Despite its support for the 25th Avenue project, the Transportation Authority worried about funding for other grade separation projects in the county, located at South San Francisco and San Bruno, Menlo Park and Burlingame.

The Burlingame project at Broadway is furthest along. It is in the final design phase — and is likely next in line for construction funding — while the other projects are in early stages.

Funding from the Transportation Authority is on a first-come, first-serve basis. With or without the additional funding given to the city of San Mateo, the Transportation Authority would not have been able to fund every grade separation project to completion without external funding.

The board agreed that one of the best things they could do moving forward was ensure that other projects become as “shovel-ready” as possible in order to apply for state or federal funding, which tends to be limited for grade separation projects.

“The very best money is somebody else’s,” said Derek Hansel, CFO of the San Mateo County Transit District. “The degree to which we’re able to get projects shovel ready and ready to effectively compete for federal and/or state funding puts us in a much better position in challenging times.”

Additional information and project resources can be found on the Caltrain website.

The Jan. 7 Transportation Authority meeting video and agenda are available on the agency’s website.