Caltrain's stalled effort to electrify its tracks flickered to life Wednesday morning when the Metropolitan Transportation Commission approved an agreement with the California High-Speed Rail Authority that includes as its centerpiece a plan for funding the electrification project.

Calling it a major "milestone" in Caltrain's long quest to modernize its system, the Metropolitan Transportation Commission board voted to approve a "memorandum of understanding" with the rail authority that includes $1.5 billion for electrification and new train signals. Under the agreement, the rail authority would supply about half of the funds for the long-awaited project, with the rest coming from local and regional agencies.

The agreement was spearheaded by the Metropolitan Transportation Commission and the rail authority with participation from a variety of regional agencies, including the Peninsula Corridor Joint Powers Board (which operates Caltrain), San Francisco County Transportation Authority, San Mateo County Transportation Authority (Samtrans), Santa Clara Valley Transportation Authority (VTA) and the Transbay Joint Powers Authority. It is a key component of the rail authority's "new vision" for the controversial system -- a vision that calls for early investments in the northern and southern segments of the line. The rail authority still plans to begin construction in the Central Valley.

The agreement was heralded by various Metropolitan Transportation Commission board members, local officials and Caltrain advocates as a huge step toward electrification, a project that the cash-strapped agency is banking on for long-term financial stability. With electrified tracks and a new signal system, Caltrain would be able to operate more trains and, as a result, generate more revenue.

"This really is the foundation for electrification and, really, for the future of Caltrian," said MTC board Chair Adrienne Tissier, who also chairs Caltrain's board of directors.

For the rail authority, the new agreement provides a way to appease some of its critics on the Peninsula, where opposition to the project has been particularly fierce. Palo Alto in December adopted as its official position a call for termination of the high-speed rail project. It has also joined Menlo Park, Atherton and a coalition of nonprofit groups in a lawsuit that challenge's the rail authority's environmental analyses for the San Francisco-to-Los Angeles project. Electrification also supports the rail authority's long-term plan to stretch the voter-approved rail system along the Caltrain corridor.

Some local officials form the Peninsula raised concerns about the document Wednesday, arguing that it is not explicit enough in committing the rail authority to a "blended" system in which high-speed rail and Caltrain share two tracks. Burlingame City Councilman Michael Brownrigg said the new contract is "weak" when it comes to rejecting the previously considered four-track alternative.

Richard Hackmann, a management specialist with Palo Alto's city manager's office, told the Metropolitan Transportation Commission board the city sees the new agreement as an opportunity "to rebuild a working relationship with the High-Speed Rail Authority while moving forward with electrification of Caltrain on the corridor." Like Brownrigg, Hackmann said his city would like to see a written agreement specifying that the rail system would not use the four-track design.

"We want to make sure it's done in a way that does not adversely affect communities," Hackmann said.

Tissier said that while the two-track design is not specified in the Memorandum of Understanding, it will be detailed in the rail authority's new business plan, which is scheduled to be released in the coming weeks.

Other critics of the high-speed rail project lauded the new document, which they characterized as a critical step toward improving Caltrain. The agency, which has no dedicated source of funding, has a structural deficit and has been relying on one-time funding sources to keep its service levels intact for the past two years. Yoriko Kishimoto, a former Palo Alto mayor who co-founded the group Friends of Caltrain, was among those who praised the agreement.

"There is much work still left to do, but the day seems to be arriving for Caltrain electrification and modernization," Kishimoto told the board. "I truly thank all of you and all the leaders who have worked to align the stars on this day."

Michael Scanlon, CEO of Caltrain, called Wednesday a "historic day" for Caltrain and said the new agreement provides "the framework, and only the framework, for development of high-speed rail to proceed in a reasonable, pragmatic and, I believe, enlightened way."

"Everyone does not quite agree, but Caltrain staff is fully committed to continuing to working with the stakeholders," Scanlon said. "The work only begins when you start constructing a project and you really have to know how to listen to and work with communities."

Even with the new document, which the rail authority plans to consider next month, Caltrain's electrification is far from a done deal. The project is banking on funds from Proposition 1A, a 2008 measure approved by California voters that devotes $9.95 billion for the new rail system. But while voters approved the bond measure, it is still up to the state Legislature to release the rail funds. With the project enjoying mixed support in Sacramento (and overwhelming opposition by Republicans), it's far from clear when the funds for electrification will be released.

Dan Richard, chair of the rail authority's board of directors, indicated at a public hearing in Mountain View earlier this month that the board doesn't plan to ask the legislature for electrification funds this year. Instead, its funding request will focus on the "initial construction segment" in the Central Valley. The rail authority's plan is to start building the line in the middle and to later stretch it north and south.