AC TRANSIT DISTRICT Board of Directors Executive Summary
Meeting Date: November 18, 2009
Committees: Planning Committee External Affairs Committee Rider Complaint Committee Board of Directors
Finance and Audit Committee Operations Committee Paratransit Committee Financing Corporation
SUBJECT: Appointment
GM Memo No. 09-276
Affirm Scope and Duration of Funding Task Force and Membership
RECOMMENDED ACTION: Information Only
Briefing Item
Recommended Motion
Consider Approving Recommendations for Scope and Duration of Funding Task Force; Approve Process to Appoint Members to Serve on Task Force
Fiscal Impact: Unknown at this time; no negative budget impact anticipated Background/Discussion: At a special Board meeting on Friday, September 25, the Board authorized the formation of a task force to discuss “other funding sources and Regional Measure 2 (RM2).” This action was predicated upon an agreement from the Metropolitan Transportation Commission (MTC) to divert $35 million in Congestion Mitigation and Air Quality (CMAQ) funds from the Bus Rapid Transit (BRT) project into the District’s operating budget. Subsequently, District and MTC staff met, and it appears there is support to pursue the above diversion of CMAQ funds. Accordingly, while the next steps in the diversion process are underway, Board and staff are concurrently moving forward with the next steps to establish the Funding Task Force (Task Force). Board President Fernandez led discussion of the Task Force concept at the October 28 Board meeting. During that meeting, he proposed a clarification that the objective of the Task Force would be to seek and identify capital funding to backfill the funds being diverted from the BRT project. Further, President Fernandez suggested a four month duration for the Task Force, and that the first meeting for the group would be assembled by December 2009. It had been previously suggested that three AC Transit Board members serve on the Task Force. Finally, President Fernandez requested that the Board work on recommendations for other Task Force members, for consideration and approval at the next Board meeting on November 18, 2009. An alternative perspective on the Task Force concept was provided in a letter from John Knox White, Program Director of Transform (Attachment A). The letter was provided to the
Rev. 6/09
GM Memo No. 09-276 Meeting Date: November 18, 2009 Page 2 of 5 Board in the Red Folders at the October 28, 2009 meeting. Briefly, Transform supports the creation of the task force, and suggests the following recommendations: • Define the task force focus as the long term sustainability of AC Transit • Include non-staff/board members with public finance knowledge on the task force • Establish a task force duration of 12-18 months, in order to facilitate working with MTC auditors to focus on long-term recommendations In conversation with the AC Transit Board President and Vice President, the BRT Technical Advisory Committee (BRT TAC), and staff at Transform, some considerations have emerged. Accordingly, the information presented in this memo for Board consideration represents an amalgam of suggestions and recommendations from various quarters. Scope and Timeframe for Task Force As noted above, it is the Board’s intention that the scope of the Task Force is to seek capital funding to backfill the funds being diverted from the BRT project. This is in keeping with the Board’s interest in establishing a short term Task Force, rather than the longer term effort proposed by Transform. However, it is likely that the proposed four month term is simply not enough time for the group to effectively address the funding issue. Accordingly, staff recommends that the Task Force duration be tied to approval of the Final Environmental Impact Statement/Report (FEIS/R). When the final BRT project has been identified, staff will have a clearer notion of the required funding. As the Board is aware, District and staff from the cities of Berkeley, Oakland and San Leandro are currently in the process of developing a Locally Preferred Alternative (LPA) for the BRT project. The current timeline assumes that each of the City Councils will have selected an LPA by April 2010. Subsequently, an administrative draft of the FEIS/R will be submitted to the Federal Transit Administration (FTA) by the end of May 2010. Certification of the FEIS/R document by the AC Transit Board is scheduled for September 2010. Associating the Task Force with completion of the FEIS/R would allow more opportunity for meaningful contributions from the group. Tiered Approach Possibly the most significant staff recommendations relate to the notion of a two-tiered approach to the Task Force. Because the scope of the group is to seek capital funding, an area in which advocacy groups such as Transform have limited expertise, staff recommends that a Funding Working Group (Working Group) be convened. Staff recommends that this group be convened after the MTC-AC Transit financial review (a condition imposed by MTC with respect to the diversion of SMAQ funds) is complete. This core group would include AC Transit staff, and staff from the various funding agencies that play a role in the BRT project: MTC, FTA, the Alameda Congestion Management Agency (ACCMA), and the Alameda County Transportation Improvement Authority (ACTIA).
GM Memo No. 09-276 Meeting Date: November 18, 2009 Page 3 of 5 The charge of the Working Group would be to develop a full funding plan for the BRT project. The AC Transit staff serving on the Working Group would report back at the Executive Staff level, and the findings would also be vetted at the Task Force, and ultimately, with the full AC Transit Board. In conversations with Transform staff, it is clear that the sense of urgency that precipitated the recommendation to form a Task Force has been assuaged for two key reasons: 1. MTC’s willingness to move forward with diverting the CMAQ funds as a stand-alone piece 2. MTC’s conditioning the funds diversion upon the District agreeing to a comprehensive financial review It is likely that other advocacy groups would similarly have a lessened sense of urgency around the formation of the Task Force. The two-tiered approach recognizes the specific skills associated with staff work at the various funding agencies, yet allows time for significant input from the Task Force. Staff would recommend that the Task Force make a determination as to the group’s duration when the first meeting is convened. Again, if the Board approves this two-tiered approach, staff would recommend convening the Working Group upon completion of the financial review mentioned above. Task Force Size and Membership The AC Transit Board President and Vice President are in agreement that the Task Force should be large enough to include input from external agencies, yet small enough to be effective. Accordingly, staff recommends a group no larger than 11 members, perhaps as some combination of the following: 3 Board members 4 – 6 outside representatives 2 staff (Service Development and Grants) Selection of Task Force members could be handled as follows: AC Transit Board President solicits interest from Board members, and makes appointments Each Board member selects 1 outside representative to serve on the Task Force Board narrows down the candidates to 4 or 6 who will serve on the Task Force Alternatively, selection could be handled in this manner: AC Transit Board President appoints 3 Board members to serve on Task Force Remaining 4 Board members select outside representatives Staff would recommend that the Board consider Transform’s recommendation to appoint “relevant stakeholders” to the Task Force. Such stakeholders should include members of advocacy groups (Transform; Urban Habitat), and perhaps a representative from a legislator’s office (e.g., a representative from Senator Hancock’s office). It should be clear to any prospective Task Force members that their contributions, though valuable, will not be
GM Memo No. 09-276 Meeting Date: November 18, 2009 Page 4 of 5 compensated by AC Transit; that is, the Task Force is conceived as a body that makes recommendations to the AC Transit Board, but the members would not be paid by the District for their participation. Assuming the Board approves the formation of the Task Force, it would serve as a Committee of the Board, subject to all applicable Brown Act regulations. An alternative would be to form the Task Force as a sub-committee of the Policy Steering Committee (PSC). However, that notion would need to be vetted by the PSC; to date, there has been no discussion at the PSC level concerning that group’s involvement in the formation of the Task Force. Frequency of Task Force Meetings Initially, staff recommends that the Task Force meet monthly. If the two-tiered concept is approved, the questions of start-up, frequency and duration of the Task Force meetings would require further discussion. In any case, the group would determine the frequency of their meetings. The recommended business of the first meeting is twofold: 1. Establish the group’s mission 2. Agree on the timeframe to execute the mission As noted above, staff recommends tying the Task Force to the approval of the final EIR. Therefore, the group would essentially work backwards from fall 2010 to establish a schedule that dovetails with the dates in the LPA and FEIS/R schedule. Process to Report Back to AC Transit Board Regular updates on Task Force progress will be provided to both the AC Transit Board and the BRT Policy Steering Committee (PSC). Again, if the two-tiered approach is approved, these updates would include staff reports on the progress and recommendations of the Working Group as well as the Task Force. It is recommended that any such reports be presented to the full Board, just as they would be presented to the full PSC. Whatever form the Task Force ultimately takes, AC Transit staff will be available to assist as needed. Assuming that the AC Transit Board representatives are identified on November 18, the next steps will include: • Identifying and agreeing upon the external task force members • Convening an initial task force meeting • Finalizing discussion of the task force objective to identify capital funding resources, and other scope of work details • Identifying a regular meeting schedule for the task force
GM Memo No. 09-276 Meeting Date: November 18, 2009 Page 5 of 5 Prior Relevant Board Actions/Policies: GM Memo 09-228: Consider Authorizing the General Manager or His Designee to Pursue Shifting Funds from the East 14th Street/International Boulevard/Telegraph Avenue Bus Rapid Transit (BRT) Project to the Operating Budget September 25, 2009:
Board action to direct the General Manager to discuss a proposal to divert CMAQ funds with MTC; if acceptable, to form a shortterm task force to discuss other funding sources and RM2
Attachments: Attachment A:
October 28, 2009 Letter from Transform
Approved by:
Mary V. King, Interim General Manager
Prepared by:
Nancy M. Skowbo, Deputy GM, Service Development
Date Prepared:
November 8, 2009
GM Memo 09-276 Attachment A
October 28, 2009
Board of Directors AC Transit 1600 Franklin Street Oakland, CA 94612 Honorable Board President and Directors, As advocates for world-class public transportation in the Bay Area, TransForm greatly appreciates the support of AC Transit’s staff and Board in forming a Long-Term Budget Sustainability Task Force. We believe that the creation of this Task Force is a key step in achieving the agency’s goal of creating a sustainable 10-year financial plan without jeopardizing core system improvement projects. With respect to your discussion on a funding Task Force at tonight’s meeting, TransForm would like to recommend the following: 1. Define the scope of the Task Force as investigating and reporting on the needed steps to create long-term sustainability in AC Transit’s budget beyond those that rely on one-time infusions from capital funding swaps. 2. Require that the Task Force contain non-staff/board members who bring finance knowledge, especially public finance, and stakeholder groups including riders. 3. Establish a 12-18 months process in order to enable the task force to work with MTC’s proposed auditors and explore significant recommendations rather than a cursory look at immediate funding infusions. Ongoing financial sustainability is at the heart of the issue being addressed by both AC Transit and MTC. As we have stated in the past, we feel that proposals to shift RM2 funding from capital funding to operations represent short-term, unsustainable shifts that won’t even manifest for years. However we recognize that shifting CMAQ funds can immediately help to cover the current. The scope of the Task Force should be to take a broad look at AC Transit’s sources of revenue and operational expenses and work with AC Transit’s financial staff to create a 10-year financial plan based on anticipated sources of revenue and reduced operations costs. It is our hope that the Task Force will ultimately help AC Transit move beyond this cycle of “creative financing” and into a new era of growth and stability. In the end, we anticipate the Task Force to be able to help build public awareness and increased transparency for well vetted, but difficult decisions that may need to be made by the Board in the near future in order to adopt a truly sustainable 10-year financial plan. TransForm respectfully requests that those who are appointed by the Board President to serve on the Task Force bring knowledge on finance matters; and especially experience working on finance within the public sector, even if their expertise is not directly related to public transit agency budgets. Many of the issues facing AC Transit are not specific to transit agencies.
436 14TH STREET, SUITE 600, OAKLAND, CA 94612 | T: 510.740.3150 | WWW.TRANSFORMCA.ORG
The Board should also make sure that the Task Force members represent relevant stakeholders, including transit riders, unions, advocacy organizations, local businesses and institutions. We understand, and respect, Director Peeples suggestion to have the Task Force meet for only four months. However, we are concerned that such a short lifetime would severely limit the ability of the Task Force to achieve meaningful long-term recommendations. MTC has indicated willingness to discuss the CMAQ issue with an agreement from AC Transit to move towards financial sustainability. Putting in place a meaningful process that can lead to recommendations beyond “use RM2” or “use other funds than RM2” which do not represent a long term solution will help AC Transit achieve the actual result that MTC is requesting it embark on. In summary, our recommendations are as follows:
RECOMMENDED MOTION 1. Define the scope of the Task Force as examining AC Transit’s long-term financial plans, including sources of revenue and operating expenses. The Task Force should be charged with developing recommendations on how to create a truly sustainable 10-year financial plan based on anticipated sources of revenue and reduced operations costs. 2. The Task Force Members should be appointed by the Board President and most should have a demonstrated knowledge of finance matters. The Board should advise the President on who should be appointed. The overall qualifications of the task force should include:
Experience in public finance, or; Strategic financial planning experience, or; Represent of AC Transit stakeholders, including at least one of the following; Transit riders Local Businesses and Institutions Transit Advocates Labor
3. Provide the Task Force with 12-18 months in order to create a truly sustainable 10-year financial plan. Sincerely,
John Knox White Program Director
405 14TH STREET, SUITE 605, OAKLAND, CA 94612 | T: 510.740.3150 | WWW.TRANSFORMCA.ORG
