The funding is an important step for VTA to qualify for roughly US$4.6bn (£3.75bn) in a federal contribution, approximately 50% of the estimated project cost.

In May last year, Kiewit Shea Traylor joint venture (KSTJV) was awarded the design-build contract for the tunnel and trackwork. KSTJV plans to use an approximate 16.5m diameter TBM to bore an 8km (5-mile) tunnel under Downtown San Jose. It is the first rail project in the US to be constructed by a single bore, allowing both tracks and station platforms to be constructed within the tunnel.

In November, an independent peer review, led by the American Public Transportation Association, concluded that a single-bore tunnel was the best option for the project. It said it would save construction time, reduce the station footprint and property needs, increase the potential for transit-oriented development, and reduce disruption to communities.

The Phase II extension includes 9.6km of track and four stations to be added to the Phase I 16km alignment from the Warm Springs/South Fremont Station, through Milpitas and Berryessa/North San Jose.

The federal government has authorised VTA to advance design on the project and begin certain activities. Early pre-construction activities are planned to start this spring, with major construction beginning next year.