HomeMy WebLinkAbout06/06/2006, PH1-D - TRANSIT FUND REVIEW FOR 2006-07 council June 6 006
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CITY OF SAN LUIS O B I S P O
FROM: Jay D.Walter,Director of Public Works
Prepared By: Timothy Scott Bochum,Deputy Director of Public Works "
Austin O'Dell,Transit Manager
SUBJECT: TRANSIT FUND REVIEW FOR 2006-07
CAO RECOMMENDATION
1. Review the 2006-07 Transit Fund Review and discuss related issues.
2. Direct staff to write a letter to the San Luis Obispo Council of Governments (SLOCOG) and
San Luis Obispo Regional Transit Authority's Boards regarding the City's concerns,in an effort
to avoid some of the negative consequences to our Transit Fund identified in the review.
DISCUSSION
On June 2, 2005, the Council considered the 2005-06 Transit Fund review that projected revenues
and expenditures for the current fiscal year. As part of that report, staff identified that in the "out
years;' the Transit Fund would need added revenues due to projections for significant capital
expenditures, such as for Fleet Replacement and Fleet Expansion to serve expansion to the
Margarita and Airport areas and to serve Cal Poly Student Housing North.
The current fare rates and revenues are adequate to support current operations for FY 2006-07 if the
amount of Transportation Development Act (TDA) monies available to the City remains at current
levels and funding for additional services on the Regional Transit Authority (RTA) system does not
increase dramatically. At the time of writing of this report, the RTA had not yet taken final action
on its FY 2006-07 budget (scheduled to be discussed on June 7). Staff has used the best available
information at this point to conduct our analysis of the Transit Fund review. If RTA's budget
changes dramatically staff will return to Council with an update of the Transit Fund.
As discussed at the Council meeting of April 4, 2006, RTA is experiencing significant cost
increases similar to those the City is encountering in operating and capital costs. These increased
costs include fuel, labor, insurance, and new service requirements(Sunday service). Staff has met
with other RTA Joint Powers Authority(JPA) members, RTA and SLOCOG staff in the last month
to try and resolve some of the funding issues associated with the RTA cost increases. It is unknown
at this time what the full impacts will be to SLO Transit funding beyond the 2006-07 fiscal year.
For this reason, two scenarios for changes in Transit Fund working capital have been prepared for
Council consideration. Both attempt to forecast how RTA cost increases may negatively affect the
Transit Fund, if the SLOCOG Board does reconsider and alter recent regional service decisions.
200647 Transit Fund Review Page 2
1. Scenario A ("delivery of current service") forecasts the Transit Fund with revised expenditures
and revenue assumptions based upon SLO Transit and RTA draft budget needs known at this
time. The estimates include increases in state and federal transit funding, projected service and
capital requirements, and additional costs to the City to fund RTA including paying for
countywide Sunday service (beginning in FY 2007-08). This scenario also assumes the contract
terms of the new transportation contract (also to be considered by Council on June 0h), and
projected increases from the Cal Poly Subsidy contract that is under renegotiation. The RTA
budget assumes a one year extension of their curtent contract for FY 2007-08 (3% increase) and
then an 8% increase to our TDA demand in FY 2008-09 when they re-bid their operating
contract.
2. Scenario B includes the same assumptions as Scenario A, but assumes RTA re-bidding its
contract one year earlier(in FY 2007-08) and increases costs by 3% annually thereafter.
Scenario A Findings. Under Scenario A, the year-end working capital remains positive for the
short-term. There are deficits beginning in FY 2008-09 which are caused by bus replacements,
expanded service to the Margarita area and the anticipated decrease in TDA available to the City
due to the need to fund countywide RTA Sunday service:
Table I Status Quo Scenario
2005-06 2006-07 2007-08 2008-09 2009-10
Projected Projected Projected Projected Projected
Total Revenues 2,747,400 3,216,600 3,950,700 3,476,100 3,570,600
Total Expenditures 3,010,200 3,608,000 3,864,300 3,810,300 3,491,800
Total Other Sources(Uses) 19,100 9,700 (6,500) (6,700) (6,900)
Revenues and Other Sources Over(Under)
Expenditures and Other Uses (243,700) (381,700) 79,900 (340,900) 71,900
Working Capital,Beginning of Year 625,800 382,100 400 80,300 (260,600)
Working Capital,End of Year 382,100 400 80,300 (260,600) (188,700)
Note:Boldface indicates negative annual cash flow
This deficit will need to be addressed by finding new revenue for both RTA and SLO Transit
services which could include fare increases, additional capital funding at the regional or state level,
or slowing capital replacement needs.
Scenario B Findings. Even though Scenario B assumes that RTA's need for additional TDA to
fund its services will occur one year earlier than in Scenario A, we do not see a significant change
in potential Transit Fund impact. Working capital at the end of FY 2007-08 is slightly lower and the
deficit in FY 2008-09 is then slightly larger. Thus, we will need to address the exact same issues
regardless of when RTA re-bids its service contract. In essence, the numbers are just slightly worse.
2006-07 Transit Fund Review Page 3
Table 2—Status Quo Plus
2005-06 2006-07 2007.08 2008-09 2009-10
Projected Projected Projected Projected Projected
Total Revenues 2;747.400 3,216,600 3,928,500 3,477,800 3,572,300
Total Expenditures 3,010,200 3,608,000 3,864,290 3,810,600 3,491,800
Total Other Sources(Uses) 19,100 9,700 (6,500) (6,700) (6.900)
Revenues and Other Sources Over(Under)
Expenditures and Other Uses (243,700) (381,700) 57,710 (339,500) 73,600
Working Capital,Beginning of Year 625.800 382,100 400 58.110 (281,390)
Working Capital,End of Year 382,100 400 58,110 (281,390) (207,790)
Note:Boldface indicates negative annual cash flow
Similar to Scenario A, this deficit will need to be addressed by finding new revenue for both RTA
and SLO Transit services which could.include fare increases, additional capital funding at the
regional or state level, or slowing capital replacement needs.
As a result of this fund analysis, staff has identified possible recommendations for Council to
consider that will establish budget policies designed to minimize the impact on local transit
operators and better coordinate funding between the Regional and local providers.
SLORTA Budget Policies
As reported to the Council at its meeting of May 2, 2006, RTA budget increases for FY 2006-07,
along with the direction to implement region-wide RTA Sunday service, requires a significant
increase in TDA revenues needed to be funded by the City to support RTA. The Sunday service
was found reasonable to meet by the SLOCOG Board at its meeting of April 5`s, 2006,even though
the City representative voted against the finding due to it not meeting all of the provisions in current
TDA Unmet Needs policies. Based upon testimony at the May 3, 2006 RTA Board meeting, the
Board delayed a decision on the proposed FY 2006-07 budget and directed staff to meet with
affected JPA members to determine if alternative funding measures could be identified or budget
impacts to local operators be reduced.
Since that time RTA and SLOCOG staff have met with JPA members and discussed the various
issues associated with the proposed RTA budget, the current JPA funding formula and the regional
and local issues. Unfortunately, thus far there has been no significant change to the funding need of
the RTA for FY 2006-07 and SLOCOG has not reconsidered its April determination that Sunday
service is an unmet need reasonable to meet. SLOCOG will meet again on June 7, 2006, but to our
knowledge, reconsiderations of the unmet needs is not on the agenda.
11b - 3
2006-07 Transit Fund Review Page 4
While it appears that RTA must move forward with its budget at this time, many JPA members
identified potential improvements to the current system in determining unmet needs funding and
how RTA processes its budget.
Therefore, staff recommends that Council take a formal position in support of the below
suggestions for both the RTA and SLOCOG Boards:
1. Request that the SLOCOG Board either reconsider its April 2006 finding of Sunday
Service as reasonable to meet, or delay implementation for six to twelve months to
resolve funding formula inconsistencies.
Rationale: The determination of Sunday service as reasonable to meet did not satisfy
all of the findings necessary under current policies of the Unmet Needs process. In
essence, STA funding is being used to fund the first 12 month period for the City and
Morro Bay,but year two costs will negatively affect our local transit service.
2. Request RTA include the following when preparing future budgets:
a) Develop a multi-year budget (similar to what we do) to assist JPA members in
determining impacts to local systems and have that information reported to the RTA
Board as part of the Budget approval process;
b) Send budget information earlier to affected jurisdictions to be better able so the latter
will be able to evaluate budget impacts and have adequate time to address concerns
or questions;
c) Work with member jurisdictions to develop performance criteria to evaluate service
by route and run/trip basis for a more thorough analysis of where inefficiencies may
occur and to focus on changes that may improve service and reduce costs;
d) Identify funding sources for each transit service to better determine how the funding
flows and what limits there are to funding formula modifications;
e) Examine revenue enhancement alternatives, capital replacement delays or service
changes for consideration by the end of the FY 2006-07, with particular emphasis
on an analysis of increasing fares to address rising operating and fuel costs.
Rationale: RTA and the JPA member jurisdictions support transit service at all levels.
Currently, the funding process and formula is geared towards establishing regional
service first and then what money is left goes to the local jurisdictions. Having RTA
revise its budget process and timing will assist SLO Transit and the City in
anticipating future impacts to the Transit Fund and local service levels.
A draft letter for signature by the Mayor will be "red-filed" for Council prior to our June 6`i'
meeting.
FISCAL IMPACTS
There are no direct fiscal impacts to the General Fund due to the recommendations in this report.
Attachment 1: 2006 Transit Fund Analysis
Attachment 2: Capital Improvement Program Requests
C\_CAR Reports\2006\Tiansit\12007 Transit Fund Review(NEW FORMAT)\Transit CAR 2005-07 Transit Fund Review v2-DRAFr.DOC
ATTACHMENT 1
2006 Transit Fund Analysis
® TRANSU
June 6, 2006
Prepared by the
Public Works Department
erg OF SAN LUN ORNPO
Attachment 1
Page 2
City of San Luis Obispo
2006 Transit Fund
TABLE OF CONTENTS
I. OVERVIEW
111. 2006-07 NUD-YEAR REVIEW
A. Summary of Operating Programs
B. Significant Operating Program Change Requests
C. Capital Improvement Projects
III. ASSUMPTIONS
A. Status Quo Scenario
B. Status Quo+RTA Re-Bid in FY 2006-07.
IV. LOOKING TO THE FUTURE
A. Fleet Replacement and Expansion
B. Short Range Transit Plan
C. TDA Funding Issues
V. EDIT A—FINANCIAL SCHEDULES
1. Status Quo Scenario
2. Status Quo+RTA Re-Bid in FY 2006-07.
Attachment 1
Page 3
2006 Transit Fund Report
I. OVERVIEW
This report presents the financial condition of the Transit Fund, based on the 2005-07 Financial
Plan operating program budgets, existing situation, and recommended program and capital
requests to address the identified needs in the Transit Program.
H. 2005-07 MID-YEAR REVIEW
A. Summary of Operating Program
2005-06 2006-07
BUDGET BUDGET
Staffing $ 181,400 $ 184,900
Contract Services $ 1,738,800 $ 1,880,600
Other Operating Expenditures $ 12,600 $ 10,500
Minor Capital
Total Transit Services $ 1,932,800 $ 2,076,000
B. Significant Operating Program Change Requests
2005-06 2006-07
BUDGET BUDGET
No Requests $ - $
Total $ - $
�- Attachment t
Page 4
C.Capital Improvement Projects
2005-06 2006-07 2007-08 2008-09 2009-1Q
BUDGET BUDGET BUDGET BUDGET BUDGET
Capital Cost of Contracting 175,000 150,000 150,000 165,000 181,500
Bus Stop Improvements 148,000 25,000 25,000 25,000
Fleet Replacement-Transit 468,000 1,060,200 593,000 900,000 600,000
Fleet Expansion-Transit 420,000
Short Range Transit Plan 50,000
Diesel Aftertreatment Devices 200,790 0
Information Technology Projects Share 28,900 0 8,000 700
$ 819,900 $ 1,260,200 $ 1,396,790 $ 1,090,700 $ 806,500
III. ASSUMPTIONS
The-following provides more detail for the key assumptions in Exhibits Al and A2 to this report,
the financial schedules showing the Transit Fund's changes in financial position and the listing
of assumptions. Because many issues that affect the Transit Fund are beyond the control of the
City (i.e. RTA budget increases, unmet transit needs, etc.) an analysis to determine the health of
the fund can be tricky. Due to the various issues currently being resolved at the RTA budget
hearings,two scenarios have been developed:
1. Scenario A ("delivery of current service") forecasts the Transit Fund with revised
expenditures and revenue assumptions based upon SLO Transit and RTA draft budget needs
known at this time. The estimates include increases for state and federal transit funding,
projected service and capital requirements, and additional costs to the City to fund RTA
including paying for countywide Sunday service (beginning in FY 2007-08. This scenario
also assumes the contract terms of the new purchased transportation contract (to be
considered by Council later tonight), and projected increases from the Cal Poly Subsidy
contract that is under renegotiation. The RTA budget assumes a one year extension of their
current contract for FY 2007-08 (3% increase) and then an 8% increase to our TDA demand
in FY 2008-09 when they re-bid their operating contract.
2. Scenario B includes the same assumptions as Scenario A, but analyzes RTA re-bidding their
contract one year earlier (in FY 2007-08) and then increases in costs by 3% annually
thereafter.
A The Status Quo Scenario Assumptions:
1. Continuation of Cal Poly Subsidy Program @ $322,452 in FY 2006-07. Subsidy will
increase by three percent thereafter.
2. Operating costs assumes negotiated rates.
3. Assumes one expansion bus in FY 2007-08 and again in FY 2012, and begin service
expansion to Margarita, Airport, or Cal Poly Student Housing North in FY 2008-09 and FY
20012-13.
4. Federal Transit Administration (FTA) grant apportionments have increased from levels stated ,
in the Short Range Transit Plan.
Attachment 1
Page 5
5. Ridership will increase by five percent in 2006-07 and by three percent annually thereafter.
6. Bus pass and cash fare revenue will increase commensurate with ridership.
7. Assumes RTA increase of 3% in FY 2007 and contract increase of 8% in FY 2008 due to
rebid, and 3% annually thereafter. City pays for full cost of Sunday service in FY 2008 @
$35,000.
8. Capital project appropriations will include:
a. Capital Cost of Contracting @ $175,000 in 2005-06, $150,000 in 2006-07, $150,000 in
2007-08, $165,000 in 2008-09, $181,500 in 2009-10.
b. Bus Stop Improvement @ $25,000 each from 2007-08 to 2009-10.
c. Fleet Replacement— Buses @ $468,000 in 2005-06, $1,060,200 in 2006-07, $593,000 in
2007-08, $900,000 in.2008-09, and $600,000 in 2009-10. Includes one trolley in 2005-
06 and 2011-12.
d. Fleet Expansion— Buses @ $420,000 in 2007-08.
e. Short Range Transit Plan Update @ $50,000 in 2006-07.
f. Diesel After Treatment Devices @ $200,000 in 2007-08
g. Technology Enhancements @ $28,900 in FY 2005-06.
h. Maintenance Facility Expansion project complete. Project balance of $17,100 in FY
2004-05 transferred to Fund Balance.
B Status Quo + RTA Re-Bids Service Contract in FY 2006-07 (assumes all of Scenario A
except.)
1. Assumes RTA increase of 8% in FY 2007 due to rebid, and 3% annually thereafter. City
pays for full cost of Sunday service in FY 2008 @ $35;000.
VI. LOOKING TO THE FUTURE
Fleet Replacement and Expansion
The City will is embarking on an aggressive fleet replacement program to comply with the
emission mandates of the California Air Resources Board. The City will also be expanding
service to the Margarita Area and Cal Poly Student Housing North in the next five years; thus,
adding a vehicle to its fleet to accommodate this new area will be necessary.
Short Range Transit Plan
The City will be expediting its update to the current Short Range Transit Plan (2003)in FY
2006-07 to coincide with RTA's update to their Short Range Transit Plan. Hopefully, this will
allow for mutual analysis on service coordination, efficiencies and funding possibilities.
Transit Funding Issues
TDA is the primary funding source for the City's bus service. Generally speaking, the regional
transit authority receives their TDA funding first based on their budget then TDA is distributed
to the cities for use on local transit services. The problem with this process is that the regional
transit authority has priority over local service. The amount of TDA available to the local transit
operators is subject to the budget of the regional transit authority and can be unstable depending
upon their needs.
The City will be working with RTA, SLOCOG and other JPA members to determine if there is a `.
i 1
U Attachment)
Page 6
better process to coordinate funding and services of the regional and local providers.
Attachment 1
Page 7
EXHIBIT A
2006 TRANSIT FUND
FINANCIAL SCHEDULES
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TRANSPORTATION -TRANSIT—CARB FLEET COMPLIANCE
CIP Project Summary
Replacing three vehicles in 2006-07:
1982 Orion bus(#131)with one 30' new bus will cost$293,000(in Financial Plan @ $275,000)
1994 Orion buses(#142,#143)with two 40' buses with two 40' new rebuilt hybrid buses will $767,200
Background
The California Air Resources Board (CARB) passed legislation in 2000 that will significantly reduce emissions
from public transit vehicles. CARB's legislation regulated on particulate matter (PM) and oxides of nitrates
(NOx) emissions. Engine manufactures were able to produce a diesel engine to comply with the particulate
matter emissions (PM) in 2003; however, were not able to produce an engine that complied to the NOx
requirement. CARB provided an opportunity for small transit operators, with less than twenty buses, to file a
financial burden waiver. This financial burden waiver allowed small transit operators to delay their compliance
with the PM emission requirement until 2007. Based on staff recommendation, City Council opted the financial
burden waiver. The rationale for this approach was that the City would ultimately save scarce transit dollars by
making significant investment in CARB compliance once, instead of twice; and because it was uncertain if engine
manufacturers would be able to produce an engine that would meet the .20 gram NOx requirement. CARB
responded by refusing to certify new transit buses that are manufactured or delivered in the state of California.
Engine manufacturers are not able to produce a diesel engine that can meet the 2007 NOx. There were several
reasons that diesel engine manufacturers could not meet CARB NOx standard. The first two reasons are
technology and time. The engine manufacturers could not develop the technology in time for the January 1, 2007
deadline. The remaining reason is economics. California represents a small market as compared to the rest of the
nation. Diesel engine manufacturers are focusing their efforts on the federal deadline in 2010, which represents a
large market to defray the development costs on a national scale. During the fall of 2005, CARB considered the
possibility of eliminating the clean diesel path, modifying the emission standard, or maintaining the status quo.
On October 27, 2005, CARB made a compromise by relaxing their standard NOx to the federal standard of 1.2
grams. In 2010, the federal standards will effectively catch-up to the CARB NOx standard of 0.20 grams. The
net result is that transit operators can now buy transit vehicles, and must comply with the January 1, 2007
deadline.
Project Objectives
1. Comply with new state emission standards
2. Reduce emissions
3. Maintain fleet reliability and appearance
4. Reduce maintenance&fuel costs
Existing Situation
Project proposes to replace five of the older buses in the City's bus fleet, which will cost$858,000 in FY 2006-07.
The industry standard interval for bus replacement on urban transit systems is 12 years or 500,000 miles. Because
of excellent maintenance, and somewhat less strenuous operating conditions, SLO Transit has been able to extend_ _.
B-i
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TRANSPORTATION - TRANSIT—CARB FLEET COMPLIANCE
this interval to 15.years and 625,000 miles. The new buses will increase service reliability, will increase the
capacity of the City's transit fleet to accommodate extreme loads during peak periods, and reduce maintenance
and fuel costs.
The California Air Resource Board is mandating the replacement of City transit vehicles between 1982 and 1992,
and retrofit vehicles between 1992 and 2000.
Goal and Policy Links
1. California Air Resource Board
2. 1996 Short-Range Transit Plan
3. 2005-07 Financial Plan,Appendix B,pages 225-227
4. 1999-00 Financial Plan,pages E-11 and E-34
5. 2002 Short Range Transit Plan
Project Work Completed
Staff is securing funds from Federal Transit Administration and Transportation Development Act.
Environmental Review
1. CEQA regulations allow a categorical exemption for replacement of existing equipment under 14 CAC
15302.
2. NEPA regulations allow a categorical exclusion for purchase of vehicles under 23 CFR 771 (c) (14)(17)
Other Special Review Considerations
Funding. The San Luis Obispo Council of Governments(SLOCOG)has included the project within the Regional
Transportation Improvement Program(RTIP)and in the Federal Transportation Improvement Program(F1'IP).
The Federal Transit Administration (FTA) requires the submission and approval of a grant application. Due to
the change in the eligible recipients (e.g. City and SLORTA) of FTA funds, funding amounts are subject to the
SLO UZA Technical Committee's preparation of the Program of Projects.
Fuel and Technology. The CARB emission standards are fuel and technology neutral. Regardless of the fuel
path (clean diesel or alternative), the both fuels are required to meet the same standard. Since CARB has
modified their standards on October 27, 2005, technology is rapidly improving. Compressed Natural Gas (CNG)
was the only alternative to the diesel transit engine. In 1997, the first gasoline hybrid transit bus was introduced
in the United States. Hybrid technology is not new; but rather, has been receiving more attention because of its
reliability,operating efficiencies, and emissions. There are over 600 hybrid buses in the United States.
The City has chosen to follow the clean diesel path. The clean diesel path offers the most flexibility, because it
allows transit operators to purchase alternative fueled buses as well as clean diesel fueled buses. In terms of
alternative fuels, the City has the choice between hybrid and CNG. This project description is fuel and
technology neutral,however,it does allow the City flexibility of purchasing hybrid technology.
In terms of deciding which technology to use and is best for the City depends on several factors. The first factor
is bus size and the available technology. Clean diesel technology exists for thirty foot buses that meet the CARB
emission requirements, and at the least cost to the City. Available technology for larger buses; at this time.. -
B-2
ACxMENr
TRANSPORTATION -TRANSIT—CARB FLEET COMPLIANCE
require either CNG or hybrid technology (Note: Since CARB has relaxed their standard, diesel engines that meet
CARB's revised requirements will be available in the near term.). Thirty foot buses with clean diesel is a viable
strategy for the City.
Another factor is cost. There are several costs to consider: purchase, operating, and labor. A typical clean diesel
transit coach will cost about $300,000; whereas, a hybrid bus cost about $400,000, and a CNG costs about
$350,000. In terms of fuel economy, maintenance, operating, initial investment, and experience,clean diesel fuel
will be less expensive than other alternatives for this sub-fleet while achieving the same emission requirements.
The initial cost for any clean diesel bus is less than hybrid or CNG; however, clean diesel is not available for
buses larger at this time. The only options are hybrid or CNG. CNG is clearly less expensive in terms of
purchase price. However, operating, maintenance, and labor costs need to be considered. Hybrid technology is
achieving 3.5 miles per gallon, which is comparable to clean diesel. In contrast, CNG technology achieves
achieve 1.6 miles per gallon. The impact to the City will have to spend twice as much on CNG than hybrid
engines. In addition, maintenance costs on CNG are ten dollars ($10.00) per service mile, in contrast with the
City's current fleet is twenty cents per service mile ($0.20). Overall, the CNG is a more expensive and less
reliable technology based on the City's experience. Transit operators with hybrid technology have experience
comparable maintenance costs to their diesel fleet. Another maintenance cost to CNG technology is the
replacement of the fuel tanks at a cost of$100,000 per bus every twelve years. Labor is another cost. The buses
are fueled daily. Fueling a hybrid and diesel bus fleet takes about thirty to forty-five minutes,compared to a CNG
fleet which requires three hours. Fueling alone would represent a significant increase in labor costs.
Another factor is safety. The physical characteristics of CNG are different than traditional fuels (i.e. lighter than
oxygen, collects in ceiling spaces, high pressure, burns on contact, etc.). CNG requires special training and
protective clothing during handling and refueling.
After thorough review and monitoring the technology over the years, clean diesel is the best option for the City.
However, clean diesel is not available for all the City buses during this critical compliance period. Based on the
City's experience with CNG, hybrid technology is a viable and proven option. In fact, a hybrid bus from Long
Beach Transit recently toured the City. The vehicle had no difficulty. City Council chose the clean diesel path
because it was the most cost-effective avenue to meet the emission requirements. Technology is rapidly
improving, allowing diesel and hybrid to become viable and clean options. Based on the City's experience and if
a supplier were to guarantee/lock their fuel prices for five years, the City would spend 74 % more on CNG than
other fuel,CNG is not the fuel choice for the City bus service. It is important to realize that choosing the next bus
is nota simple decision.. Considerations to its application,terrain, size; and passenger loads are essential to decide
whether to purchase a diesel or a hybrid bus.
Project Phasing and Funding Sources
Project Budget by Phase
Phase To-Date 2006-07 2007-08 2008-09 Total
Equipment Acquisition 275,000 785,200 1,060,200
Total 275,000 785,200 L 1,060,200
B-3
ACHMENT
TRANSPORTATION -TRANSIT CARB FLEET COMPLIANCE
Project Budget by Funding Source
Funding Source To-Date 2006-07 2007-08 2008-09 Total
Federal FTA Grant* 220,000 628,160 848,160
State TDA Grant** 55,000 157,040 212,040
Total 275,000 785,200 1,060,200
* Federal Transit Administration
** Transportation Development Act
Department Coordinator and Project Review%Support
Department Coordinator Austin O'Dell,Transit Manager
Project Review and Support Dave Smith and Pam King,PW Admin. Services .
Alternatives
1. Council can authorize staff to review the most current available technologies, and return to Council
with a recommendation when requesting authorization for solicitation.
2. Council can direct staff to purchase a combination of clean diesel and hybrid technology that best
suits the City's bus fleet.
3. Council can direct staff to purchase buses with only clean diesel technology. There are several
consequences to this alternative. One consequence is that clean diesel is not available on buses larger
than 30 feet. The City relies on larger buses to accommodate peak demand, which can reach 101
passengers per hour. Another consequence to this alternative would be the City would have to wait
CARB certified clean diesel engines for buses larger than 30 feet. Though technology is improving,
the City is required to have CARB compliant engines by January 1, 2007, and does not have the
luxury of time to wait.
4. Council can direct staff to purchase only CNG technology. The consequence to this alternative is that
City will incur additional fuel, maintenance, and labor costs associated with CNG. This alternative
could ultimately result in the reduction of service in effort to control costs. Another consequence to
this alternative is the decrease in service reliable, based on the City's experience. Lastly, another
consequence to this alternative is the increase in the risk of handling associated with CNG.
5. Council can direct staff to purchase only to purchase hybrid technology. The consequence to this
alternative is the increase in capital cost, because it would exclude other technologies at lower costs
and that meet CARB's emission standards.
Operating Program
Transit(50700)
B-4
TTACHMENT
TRANSPORTATION - TRANSIT—CARB FLEET COMPLIANCE
Project Effect on the Operating Budget
This project will move the City's transit fleet into compliance with California Air Resources Board,and avoid
penalties. Bus replacement helps keep the fleet in reliable condition. Maintenance of the bus fleet is through the
SLO Transit operations contract, with the exception of major repairs. Newer buses and retiring old buses will
reduce the City's cost of major repairs and fuel costs.
B-5
l ,
RECEIVED
JUN 01 2006
�liilllllll!IIIIIII�����jp1°lu������ SLO CITY CLERK
t :�3���- memonanaum
Ci of San Luis Obispo
DATE: June 1, 2006
TO: Mayor and Members of the City Council
FROM: Jay Walter, Public Works Director
VIA: Shelly Stanwyck, Assistant City Administrative Officer
SUBJECT: DRAFT LETTER TO THE SAN LUIS OBISPO REGIONAL TRANSIT
AUTHORITY (SLORTA)
Attached is a draft letter to the San Luis Obispo Regional Transit Authority regarding concerns about a
proposed cost increase in the FY 2006-07 budget.
COUNCIL L CDD DIR
EZ CAO S FIN DIR
RED FILE 9 ACAC !T6-FIRECHIEF
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MEETING AGENDA 14 GLERK/ORIG 1�PCLICE CHF
11
DATE G U ITEM # —� DEPT MEADS arc DIR
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GA301-03 AGENDAS\Red File Correspondence\Red File 060606 Draft Letter to SLOCOG and SLORTA.DOC
- DRA
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. ��►►�III illlllllllllllll����� �IIIIU�llllll _s- An Cl O - loBispo
955 Morro Street • San Luis Obispo, CA 93401
June 6,2006
Mr.Tony Ferrara, President
San Luis Obispo Regional Transit Authority
1150 Osos Street, Suite 206
San Luis Obispo, CA 93401
Dear Mr. Ferrara:
On May 2, 2006, the San Luis Obispo City Council expressed their concerns about a
proposed increase in the FY 2006-07 budget that San Luis Obispo Regional Transit
Authority (SLORTA) had presented for approval. The cost increases were due to higher
prices for fuel, insurance, and labor, in addition to the direction to implement region-wide
RTA Sunday service. The addition of service on Sunday is an expansion of service that all
of the San Luis Obispo Regional Transit Joint Powers Authority's members (JPA members)
will be supporting with their Transportation Development Act funds. The Sunday service
was found reasonable to meet by the SLOCOG Board at its meeting of April 5`h,2006, even
though the City of San Luis Obispo representative voted against the finding, due'to it not
meeting all of the provisions of TDA Unmet Needs policies.
On May 3, 2006, the Council requested the SLORTA Board of Directors to take the
following action:
1. No final action on the proposed RTA 2006-07 Budget at its May 3, 2006
meeting,
2. Direct RTA staff the determine the possibility of minimizing the affect of their
budget on JPA member by reducing costs, find new revenue sources and/or
alternative funding strategies; and
3. Request RTA Board and SLOCOG Board establish funding and service
recommendation policies that foster basic service levels for both regional and
local transit systems,instead of regional verses local transit systems.
As a result, the Board delayed a decision on the proposed 2006-07 SLORTA budget and
directed staff to meet with affected JPA members to determine if alternative funding
measures could be identified or that budget impacts to local operators be reduced.
Since that time, RTA and SLOCOG staff have met with JPA members and discussed the
various issues associated with the proposed RTA budget, the current JPA funding formula
/O The City of San Luis Obispo is committed to include the disabled in all of its services, programs and activities.
V� Telecommunications Device for the Deaf(805) 781-7410. 19
RAF
2006-07 RTA Budget
June 6, 2006 Page 2 of 3
and regional vs. local service issues. So far,.there has been no significant change to the
increased funding needs of the RTA for 2006-07, SLOCOG has not reconsidered its April
determination that Sunday service is an unmet need reasonable to meet, and the City's
concerns about impacts to the future of SLO Transit operations have not been addressed.
SLOCOG will meet again on June 7, 2006, but to our knowledge is not reconsidering the
decision to implement Sunday service.
While it appears that RTA must move forward with its budget at this time, JPA members
have identified potential improvements to their budget process.
The San Luis Obispo City Council is therefore recommending the following budgeting and
programmatic changes:
1. Request that the SLOCOG Board either reconsider its April 2006 finding of
Sunday Service as reasonable to meet; or delay implementation for six to 12
months to resolve funding formula inconsistencies.
2. Request RTA to conditionally approve it's 2006-07 budget, maintaining current
service levels for a period of six to 12 months.
3. Develop a multi-year budget (similar to SLO Transit) to assist JPA members in
determining impacts to local systems and have that information reported to the
RTA Board as part of the Budget approval process.
4. Provide budget information earlier to affected jurisdictions so they will be able
to evaluate budget impacts and have adequate time to address concerns or
questions.
5. Work with member jurisdictions to develop performance criteria to evaluate
service by route and run/trip basis for a. more thorough analysis of where
inefficiencies may occur and to focus on changes that may improve service and
reduce costs.
6. Identify funding sources for each transit service to better determine how the
funding flows and what.limits there are to funding formula modifications.
7. Examine revenue enhancement alternatives, capital replacement delays or
service changes for consideration by the end of the 2006-07, with particular
emphasis on an analysis of increasing fares to address rising operating and fuel
costs.
The City of San Luis Obispo appreciates your consideration regarding our concern for
service impacts to our nearly.one million passengers. The City acknowledges the
importance of the partnership with RTA for both intercity and local transit service and looks
forward to continuing a good working relationship.
®RAF
2006-07 RTA Budget
June 6,2006 Page 3 of 3
Respectfully submitted,
Dave Romero
Mayor
cc: San Luis Obispo City Council
Ken Hampian
Jonathan Lowell
Jay Walter
Tim Bochum
Austin O'Dell
David Lilly
San Luis Obispo Council of Go : :rnments
Regional Transportation Planning Agency ArrncasGrande
caa o
Metropolitan Planning Organization GrMorro Bay
over Beach
Census Data Affiliate Paso Robles
Service Authority for Expressways and Freeways Pismo Beach
i/� /� - ! San Luis Obispo
Ronald De Carli.Executive Director !y C�P MQ-w San Luis Obispo County
55 COOUNCIL i�DD DFIRE IR RECEIVED
� FIN DIR
June 5, 2006 GATT RNEY ACAO epw D RHIEF JUIN 0 6 1006
e5 CLERK/ORIG CiOPOLICE CHF
Mayor Dave Romero and Council Members ❑ DEPT HEADS Ci'flEC DIR SLO CITY CLERK
City of San Luis Obispo '+� �i-�� L'UTIL DIR
990 Palm Street C HR gln
San Luis Obispo, CA 93401
Re: Sunday Transit Services and the Unmet Needs Process RED FILE
:MEETING AGENDA
Dear Mayor Romero and Council members: DATEY,,�,
,ku ITEM # �,b
The rationale used on page 1 D-4 to request that SLOCOG reconsider its'findings under the unmet
needs criteria is incorrect. SLOCOG staff and its legal counsel believe Sunday transit service meets
the unmet needs criteria with respect to State Transit Assistance funding. For the following reasons,
we believe Sunday transit services should move forward-in-the Regional Transit Authority FY 06-07
budget:
• It meets the local criteria and unmet needs requirements under the Transportation Development
Act (TDA)
• It is supported by precedent stretching over the last 10 years
• State Transit Assistance (STA) policies will "hold harmless" other transit services (Morro Bay &
San Luis Obispo)
• .The cost to SLO City for Sunday service is $0
• "Backlog" of bus replacement needs drives SLO Transit funding shortfall
1. Meets TDA Requirements: Page 1 of the Transportation Development Act (TDA) Statutes and
Regulations states; `The TDA provides two funding sources:
1. Local Transportation Funds (LTF), which is derived from '/4 cent of the general sales tax
collected statewide..
2. State Transit Assistance (STA), which is derived from the statewide sales tax on gasoline and
diesel fuel."
➢ Clearly; STA funds are TDA funds-, and are an eligible funding source under the unmet
needs criteria.
2. Supported by Precedent: In addition, this policy decision is supported by historical actions.
SLOCOG has used STA funds for regional unmet needs several times in the recent past:
1. April 3, 1993-STA funds for Route 10 Expansion (Rt 14 at the time)
2. April 6, 1994-STA funds used in justification for Saturday service
3. April 2001 -STA funds used for Community Interaction Program unmet need
4. April 2005-STA funds used to meet United Cerebral Palsy unmet need
➢ No jurisdiction has ever questioned the use of STA for unmet needs
3. Proposed STA Policy: It is unfortunate the city has not to recognize a proposed STA policy that
would "hold harmless"jurisdictions that spend 100% of TDA funds on transit on an annual basis (i.e.
every year).
1150 Osos St. Suite 202, San Luis Obispo,CA 93401 ♦ Tel. (805)781-4219 ♦ Fax(805)781-5703
E-mail: slocog@slonet.org ♦ Internet http://www.slonet.org/-ipslocog
I \
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"Any local jurisdiction that.spends 100% of its TDA funds on transit shall be "held harmless"
annually with Discretionary State Transit Assistance funds for the incremental cost associated with
the local jurisdictions share of implementing an "unmet need"found reasonable to meet on the
Regional Transit System.
This policy has been recommended by SLOCOG staff on the following occasions:
1. May 3, 2006 -The RTA Board meeting;
2. May 16, 2006 Finance &Transit mangers meeting in Atascadero;
3. May 23, 2006- Distributed to SLO and Morro Bay staff; and
4. May 24, 2006 - Dismissed for discussion at the request of SLO City staff at the Social Service
Transportation Advisory Committee and the Technical Transportation Advisory Committee;
➢ Notwithstanding the Citys' lack of acknowledgement of this proposed policy, it remains
proposed for adoption at the SLOCOG meeting on June 7"'
4. Sunday Service costs SLO $0 - It is unfortunate that implementing "Sunday Service" is being
raised as a key factor that may harm SLO City's transit funding. Here are the RTA related budget
increases responsible for the$489,000 increase in FY 06/07:
1. Fuel.......................................$203,000 SLO City share: $51,000
2. Contract cost increases ............$130,000 SLO City share: $13,000
3. RTA Administration; ...................$65,000 SLO City share: $16,000
4. Revenue loss/Cuesta N. County;... $45,000 SLO City share: $11,000
5. Cost for Sunday Services ..........$150,000 SLO City share: $0
➢ Sunday Services is not a factor in the regional transit cost increases.
5. SLO City Bus Replacement: The largest driving force behind the funding needs for SLO Transit is
bus replacement. Here is the recent and projects funding dedicated for bus replacement:
Past 5 years Next 5 years
FY 01/02—$0 FY 06/07 - $1,060,000
FY 02/03—$0 FY 07/08 -$ 593,000
FY 03/04—$0 FY 08/09 -$ 900,000
FY 04/05—$0 FY 10/11 -$ 600,000
FY 05/06 - $470,000 FY 11/12 - $ 600,000
TOTAL=$470,000 $3.7 Million
In recognition of SLO City's inability to meet its' demand for transit capital, SLOCOG programmed
$600,000 in the 2006 Regional Transportation Improvement Program for bus replacement for the City.
The new funding need is largely driven by local transit capital needs, not growth regional unmet needs.
Clearly there are several valid issues associated with the development, review and approval of future
budgets for the Regional Transit Authority:
➢ Multi-year budgeting
➢ Sending budget information to jurisdictions earlier
➢ Performance criteria
➢ Possible funding formula changes
➢ Increased fares
These are issues that should be addressed in RTA's FY 07/08 budget cycle. Please consider these
broader issues as you contemplate the message you send to the RTA and SLOCOG Boards.
Sincerely,
Ron De Carli
Executive Director