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CITY OF SAN LUIS OBISPO ` 1
FROM: Jay D. Walter, Director of Public Work
Prepared By: Timothy Scott Bochum, r puty Director of Public Works
John Webster, Sr., Transit Manager
SUBJECT: TRANSIT ENTERPRISE FUND REVIEW 2011
RECOMMENDATIONS
1. Review and accept the 2010-11 Transit Fund analysis.
2. Conceptually approve the Transit Enterprise Fund budget of 2011-12, with final action on June 21,
2011 with the adoption of the 2011-13 Financial Plan. --
3. Approve$20,000 annually in revenues for the Downtown Access Pass(formerly the Gold Pass)
DISCUSSION
This report summarizes the status of the Transit Enterprise Fund and key issues that may affect the
health of the fund during the two year Financial Plan. Funding for transit services continues to be tight,
with no funding available for new initiatives or major capital expenditures. Overall, it is forecast that the
fund will end each of the two years with a small year-end working capital amount to assist with
operations and small capital expenditure needs that are needed. However, until a final State budget is
complete,there remains considerable uncertainty of final transit funding levels.
Projected 2010-11 Year-End
On May 13, 2011, following the printing of the 2011-13 Preliminary Financial Plan, the City received
word that the Federal government had finally adopted appropriations for the current fiscal year. The new
appropriation is both good and bad for SLO Transit. On one hand, the City was successful in soliciting a
waiver from the FTA for reporting requirements that has allowed the SLO Urbanized Area to receive all
six categories of the Small Transit Intensive Cities (STIC) funding for this fiscal year. The bad news was
the overall Federal level of STIC funding was less than expected for the year and the SLO Transit
budget needs to be adjusted to the new funding amounts. Part of a Federal grant for bus replacement will
be deferred until next fiscal year to accommodate the lower Federal apportion amount and allow
maximum use of Federal funds for operating assistance. Attachment 1 (The Transit Enterprise Fund
Analysis)contains the revised final 2010-11 capital projections.
After adjusting for the revised Federal appropriation amounts, as well as other miscellaneous line item
changes, it is anticipated that expenditures will still exceed revenues in 2010-11, leaving an end-of-year
deficit of$88,800 to be covered by reserves. This amount is less than the $177,500 deficit shown in the
2011-13 Preliminary Financial Plan, which assumed that the City would not receive funding in all of the
STIC categories.
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Transit Enterprise Fund Review 2011 Page 2
The deficit for the year is partially due to the significant increase in fuel costs, as well as State funding
that remains less than historic levels. Transit reserve funding will need to be utilized to support the
deficit for the immediate shortfall. Depending upon year-end savings, this amount may be reduced
further.
Accomplishments during 2010-11
Ridership
The transit system carried a total of 875,717 passengers from July 1, 2010 through April 30, 2011 (10
months). These ridership totals are up slightly (2.3%) from the previous year which totaled 856,224
passengers during the same period. It is anticipated that SLO Transit total ridership for 2010-11 will
again exceed one million riders, a record previously set in 2008-09..
Continuation of Trolley Service
Staff worked with the Promotional Coordination Committee (PCC)and Tourism Business Improvement
District (TBID) to secure additional funding to continue trolley services for 2010-11. The additional
revenue from the PCC allowed the trolley to continue through 2010-11, with a review of the service
success anticipated for September 2011.
Federal Stimulus Program
The American Recovery and Reinvestment Act (ARRA) of 2009 provided one-time funding for public
transportation capital projects. The City's allocation of ARRA funding was $1,023,660. All projects
have been completed and this grant was formally closed out in January 2011 with 100% of the ARRA
grant funds having been expended.
Mobility Training-New Freedoms Grant
The Ridership Development Consultant has held 14 outreach sessions for senior and disabled rider
education at locations such as Judson Terrace, The Village at the Palms (55 Broad St.)and Laguna Lake
Mobile Home Park. SLO Transit has experienced a year-to-date increase of 18% in ridership as
compared to the same period before the start of the RDC grant funded program which included this
targeted outreach.
Double Deck Bus
The City received delivery of the Double Deck bus in fall of 2010 and the vehicle was immediately put
to use on the high-demand routes that are Cal Poly oriented. Since it was placed into service some trips
have averaged over. 100 passengers per hour and would have resulted in leave behinds with a 40' bus
and resulted in standing room only on the DD. Over 20% of the trips have exceeded 72 riders per hour
and over 70% of the trips have exceeded 36 riders per hour. The average trip carries over 50 passengers
per hour and averages over 60 per hour between 7 am and 11 am.
The 2011-12 Budget and beyond
As shown in the Transit Enterprise Fund Analysis 2010-11 (Attachment 1), staff is projecting 2011-12
to be free of service-level reductions, but forecasts very little capacity for funding variations. Due to
one-time-only funding increases, as well as other cost savings and a minimal capital improvement
program, staff is projecting to finish 2011-12 with a small amount of positive cash flow ($105,500).
However,until the State budget is approved, staff will not have final amounts to rely upon.
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Transit Enterprise Fund Review 2011 Page 3
Table 1 —revised Transit Enterprise Fund Budget Forecast
2008-09 2009-10 2010-11 2011-12 2012-13
ACI UAL AC I UAL KEV ISEU Budget Budget
Total Revenues 4,482,400 3,859,500 5,620,900 3,226,600 3,076,800
Total Expenditures 5,199,700 3,782,900 5,709,700 3,134,100 3,243,900
Total Other Sources(Uses) - 33,300 13,000 13,000
Revenues and Other Sources over(Under)
Expenditures and Other Uses (717,300) 109,900 (88,800) 105,500 (154,100)
Working Capital,Beginning of Year L 1,446,300 729,000 8385600 749,800 855,300
lWorking Capital,End of Year Fund Reserves 1 729,000 838,600___ _ 749,800_ 855,300 1 701.200
State Budget Impacts
Overall, the Governor's May Revision to the State budget does not make any significant changes to
funding for transportation or public transit. Any further reduction of funding to the City, Cal Poly or
SLORTA could have a significant impact on service level funding for 2011-12 and beyond.
Cal Poly Subsidy Agreement
SLO Transit is in the final year of the Subsidy Agreement with Cal Poly, and staff has proposed another
three-year term agreement which is currently under consideration. The SLO Transit budget projection
for 2011-12 includes a small increase in Cal Poly funding with slight increases in the following two
years. If the State budget significantly affects Cal Poly's ability to fund the Subsidy Agreement,the City
and the University will need to undertake discussions on potential program modifications or service-
level reductions.
First Transit Contract
On June 6, 2006 the City Council approved a three-year contract with First Transit, Inc. to provide
Purchased Transportation for operations and maintenance services for SLO Transit. In June 2010,
Council approved option-year contract extensions through June 30, 2012, which includes a conservative
3% increase in 2011-12. An additional extension agreement will need to be negotiated next fiscal year
or a new RFP circulated for transit operations and maintenance in 2012-13 and beyond. Not knowing
which direction we are going yet, staff assumed a 7% increase in Purchased Transportation contract
costs for 2012-13.
Continued Volatility in Fuel Costs
Fuel costs are once again very volatile. Prices over the last part of 2010-11 have increased significantly
and are expected to continue to rise over the next year. Fuel costs have been budgeted at $4.00 per
gallon for 2011-12. Staff is also exploring the possibility of utilizing red-dye diesel fuel in the transit
fleet as currently used in other Public Works vehicles. Red-dye diesel is fuel specifically exempted from
state road tax mostly used for off road and construction equipment. A quick cost comparison, using May
31, 2011 prices, indicated a possible $0.44 per gallon savings ($4,400 monthly), based upon typical
transit usage,because the City would not be paying the taxes on the fuel.
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Transit Enterprise Fund Review 2011 Page 4
SLORTA
SLO Transit shares State and Federal funding for transit services with SLORTA. The Agreement funds
SLORTA "off the top" each year from the City's share of State TDA funding. The recently adopted
2011-12 SLORTA budget increased the City's contribution, thereby decreasing SLO Transit's allotment
of State revenue available in 2011-12. This increase is partially offset by a one time only increase in
State funding due to larger than expected carryover amounts and higher tax revenues than expected.
Representatives from SLORTA, SLOCOG and SLO Transit continue to work on options for funding
that maximize transit service provision for each agency.
Federal Funding Issues/2012 Program of Projects
The Transit Fund analysis anticipates a small FTA funding apportionment reduction (1%) for
operating assistance and preventive maintenance funding for 2011-12. No additional capital projects
are assumed for next year however, capital projects may be brought forward if Federal funding
amounts come in higher than expected.
Downtown Access Pass (formally Gold Pass)
For the past two years the Parking Fund has allocated $10,500 annually for the Downtown Access Pass
program for downtown employees. The program has seen a recent measured increase primarily due to
rebranding efforts that started in 2009-10, additional Regional Rideshare advertising, and higher
gasoline costs. Projected SLO Transit ridership for 2010-11 was for 8,000 riders annually. Based upon
current ridership, staffs initial forecast has almost doubled with a projected 14,000 riders by year's end.
With ridership nearly doubling earlier forecasts, staff recommends the annual allocation of$10,500 be
augmented by an additional $9,500; making a total annual Parking Fund allocation of$20,000 annually.
Staff is recommending Council approve $20,000 of revenues from the Parking Fund, for both 2011-12
and 2012-13 to fully fund the SLO Transit Downtown Access Pass program.
FISCAL IMPACT
The SLO Transit budget Changes in Financial Position is included as part of the 2010-11 Fund Analysis
(Exhibit A1). Overall, revenues are projected to not meet expenditures in 2010-11; leaving an end-of-
year deficit of$88,800. Transit reserve funding will need to be utilized to support the deficit for the
immediate shortfall. There is adequate reserve to support this for the current year.
The revised 2010-11 budget and projected funding for the 2011-13 Financial Plan includes assumptions
of revenues in key funding sources that have seen significant reductions by State budget takeaways in
the past three years. One-time only increases in State funding for next year helps to balance 2011-12
with a small year end savings of$105,500. Rather than program all funding at this time, staff proposes a
conservative budget which minimizes capital projects, defers bus replacements (unless substantially
funded via grant funds) and maintains reserves to address minor shortfalls in revenue if they should
occur.
Transit Fund - Projected Year End FY 2011-12 FY 2012-12
Working Capital
$855,300 $701,200
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Transit Enterprise Fund Review 2011 Page 5
Maintaining end-of-year reserve funding is prudent for two reasons; first, as identified above, fuel prices
are anticipated to continue to rise and may exceed budget assumptions. Second, the proposed outside
funding sources for bus replacement capital may not be fully realized or funding sources could again be
reduced dramatically because of State budget issues. Retaining the modest working capital amount as
reserve funding will allow for some flexibility and adjustments in critical components of the SLO
Transit system if funding levels are below expectation.
ALTERNATIVES
Modem the Fund Analysis. The City Council could reject the 2010-11 Transit Fund analysis as
presented and direct staff to seek additional funding sources, defer capital projects or provide transit
operating cost reductions. Staff does not recommend this option as staff believes this fiscal forecasting
to be the best "snapshot" of funding at this time based upon the current information provided by the
State and Federal government. Staff will continue to update the fiscal forecast and information.on
funding sources as received with an intention to defer capital projects if grant funds are not realized.
Deny additional funding for the Downtown Access Pass. The City Council could deny additional
funding from the Parking enterprise Fund in support of the DAP program. Staff does not recommend
this option as DAP ridership is estimated to double original forecasts. Additional funding is needed to
fully support the DAP program.
ATTACHMENT
Transit Enterprise Fund Analysis 2010-11
T:\Council Agenda Reports\Public Works CAR\201 I\TRANSInTransit FUND REVIEW 201 I-l2\CAR 2010-11 Transit Fund Review FINAL.DOC
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ATTACHMENT
Transit Enterprise Fund
Sall Luis o8ispo transit
2011 -13 Financial Plan
2011-12 Budget
Transit Enterprise Fund
Fund Analysis
June 14, 2011
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Attachment
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City of San Luis Obispo
2011-13 Transit Fund
TABLE OF CONTENTS
I. OVERVIEW
11. 2011-13 FINANCIAL PLAN
A. Summary of Operating Programs
B. Summary of Operating Cost Reductions
C. Capital Improvement Projects
III. ASSUMPTIONS
A. General Assumptions
B. Transportation Revenues and General Government Expenses
C. Grants
D. Ridership and Evening Service
E. Transit Vehicle Replacements
F. Short Range Transit Plan
IV. LOOKING TO THE FUTURE
A. Fuel Costs
B. State and Regional Budget Impacts
C. Operations and Maintenance Contract
D. Transit Vehicle Replacements
E. Downtown Access Pass
V. EXHIBIT A—CHANGES IN FINANCIAL POSITION
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Attachmerrt
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city of
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san WIS OBlspo
2011-13 Transit Fund Report
I. OVERVIEW
This report presents the financial condition of the Transit Fund, based on the 2009-11 Financial
Plan operating program budgets, projected 2010-11 year end amounts, and recommends program
and capital requests to address the identified needs in the Transit Program.
As a result of the ever-turbulent State budget situation, the Transit Fund program moves
cautiously into the 2011-12 fiscal year. SLO Transit is in the final year of the Cal Poly subsidy
agreement, and another three-year term has been proposed, which Cal Poly is currently
considering. However, the impact of the State budget decisions could change the level of funding
from Cal Poly. As such, Cal Poly has indicated that it may not be able to provide the City with a
final number until a State budget is passed. State transit funding is expected to increase for this
fiscal year as a result of the better than expected sales/gas tax/excise tax revenues and one-time
carryover funding, which results in an increase in State revenues of approximately 27% over
current year. However, this good news is offset by an increase in the budget needs of the San
Luis Obispo Regional Transit Authority (SLORTA) which is proposed to be up 12% from this
year, and the recent increase in fuel prices. Federal revenues are expected to be about 1% less
than last year's amounts. Staff has included projections of expenditures in the budget that are
realistic,but if exceeded, will cause funding hardship.
With these factors under consideration, staff is projecting a year free of service reductions.
However, there is very little room for funding variations. Until the State budget is approved,
SLO Transit will not have final dollar amounts to rely upon. Additionally, 2012-13 is anticipated
to be a very challenging year based on projected revenue amounts. Staff will be monitoring the
budget situation closely, and return later in the year with any changes or reductions that require
Council consideration. Capital expenditures will be limited to projects that can be funded from
grant revenues, keeping the local match required to a minimum, and preserving as much for
operating expenses as possible. If needed, the capital purchases can be deferred, in the short-term
freeing up funds intended to be used as a local match.
Due to the need to program almost all available funding resources for support of operations,
there will not be significant capital funding available in the 2011-13 Financial Plan from the
conventional funding sources, such as TDA and Federal Transit Assistance (FTA) funding.
Instead, it is likely that the City will need to continue to rely heavily on one-time only grant
sources (such as Proposition 113) to deliver needed vehicle replacements and other major capital
expenses. These funds are discretionary under the purview of the San Luis Obispo Council of
Governments (SLOCOG) and as such, have not been anticipated nor included as part of the
budget forecasts. However, staff will continue to seek these grants when available to assist in
meeting capital replacement needs.
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With the fare increase approved in 2009, SLO Transit's farebox ratio is projected to stabilize in
2010-11 and beyond. The Cal Poly subsidy agreement (currently under negotiation) will be a
key component in meeting the required 20% farebox ratio. The performance of the farebox ratio
is the subject of audits that the Transit Program undergoes on a regular basis. If the farebox ratio
is consistently below the 20% level, then the City will be subject to losing State funding.
The 2011-12 budget is currently forecast to be balanced, but there are significant issues such as
State and Federal transit funding levels,higher fuel costs, additional transit contract extension(or
rebidding) cost increases and the needs of SLORTA that could effectively unbalance the future
forecast. In addition, the Cal Poly subsidy contract is due to terminate on June 30, 2011. The
City is currently in contract negotiations with Cal Poly, however, future reimbursement levels
from Cal Poly for transit services remain unknown at this time. Additionally, 2013 will be a very
challenging year based on projected revenue amounts. Staff will be monitoring the budget
situation closely, and return later in the year with any changes or reductions that need to be
considered.
II. 2011-13 FINANCIAL PLAN
A. Summary of Operating Programs
2010-11 Revised Budget and 2011-13 Financial Plan projections of Revenues and
Expenditures.
Transit Enterprise 2010=11 �'2011-12 2012-13
rprise Fund REVISED BUDGET BUDGET
Staffing $ 230,300 $ 237,400 $ 242,300
Contract Services $ 1,857,500 $ 2,008,800 $ 2,144,000
Other Operating Expenses $ 536,600 $ 476,700 $ 500,400
Minor Capital $ $ - $ -
TOTAL TRANSIT OPERATING $ 2,624,400 $ 2,722,900 $ 2 886,700
Operating cost information is provided on page D-86 of the Preliminary 2011-13
Financial Plan.
B. Summary of Operating Cost Reductions
201243
Transit Enterprise-Fund 2010-11 2011-1_
—_BUDGET _BUDGE , BUDGET
Advertising $ (14,300) $ - $ -
Printing&Reproduction $ (6,500) $ $ -
Training&Education $ - $ 1,200 $ 1,200
TOTAL OPERATING REDUCTIONS $ (20,800), $ (1,200) $ (1,200)
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C. Capital Improvement Projects
The table below shows the 2010-11 Revised Capital Improvement Program and 2011-13
Financial Plan assumptions for capital projects. Both years of the Financial Plan are light
in capital expenditures due to the need to program almost all transit funding for
operations and maintenance. Fortunately, the City has been very successful in acquiring
outside grant funding to assist in capital projects, including vehicle replacements, during
the last two fiscal years (shown in table below). The City will need to rely heavily on
these types of grants in the next two fiscal years to augment the proposed Transit CIP.
201011 2010:11 201142 2012-13
BUDGET REVISED BUDGET BUDGET
ACCOUNT __ __. . CIP PROJECTS '
90414 FOXPRO DATABASE $ 500 $ . $ - S
90999 NETWORK SWITCH UPGRADE S . $ - $ - $ -
91006 FOXPRO REPLACE $ - $ 23,000 S - S
90589 BUSES&TROLLEYS $ - $ - $ - S
91022 LASERFICHE S 2,400 S 2;400 S - S
90748 PARTICULATE MATTER(PM)TRAPS $ 3,100 S - $ - S
90918 DOUBLE-DECK REPLACEMENT $ 764,700 $ 850,000 S - S
90921 ELECTRONIC FAREBOX UPGRADE S 3,400 $ 3,400 $ - S
90920 AVL PASSENGER ACCESS SYSTEM S 33,700 $ 33,700 S - $
90922 TRANSIT FACILITY IMPR S 1,000 $ 1,000 $ - S
99601 BUS MAINT FACILITY EXP $ 58,300 $ 58,300 S - S
90996 FORKLIFT S 30,000 $ 30,000 S - S
90997 STAFF VEHICLE $ 50,000 S 50,000 $ - S
90919 BUS STOP IMPROVEMENTS S 25,700 $ 25,900 $ - S -
99001 BUS STOPS $ 400 $ 400 $ - S -
91090 FACILITY SECURITY IMPR PROJ $ S 48,100 S - S -
91077 RADIO REPLACEMENT PROJECT $ - S 209,600 S - $ -
90998 DWNTWN TRANSIT COORD STUDY $ 112,500 $ 125;000 $ - S -
91089 BUS CAPITAL ENGINE-REHAB $ - $ 47,000 $ - S
91086 BUS REPLACEMENT(Asset#9710) $ - $ 386,000 $ - S
91087 BUS REPLACEMENT(Asset#9823) S - $ 419,500 $ S
91088 BUS REPLACEMENT(Asset#9824) S - $ 415,000 $ S
9XXXX SERVICE TRUCK RPLCMNT(Asset#0028) S - $ $ 45,500 S
9XXXX CITY WEBSITE UPGRADE $ - $ $ 3,500 $
9XXXX MICROSOFT OFFICE REPLACEMENT S S__ _ $ 5,000 S
TOTALS is 1,085,700 1;S 2,728;100-15 54,00015
III. ASSUMPTIONS
The following assumptions have been used to forecast the Transit Fund. The discussions provide
details for the key assumptions used to generate the changes in financial position worksheet
shown as Attachment A. It is important to note the proposed budget is a "snapshot" of current
funding and expenditure projections. The following discussions focus on major issues that may
affect the Transit Fund next fiscal year, assumptions that have gone into the proposed budget,
and additional issues that will effect the"out" years of the transit budget.
A. General Assumptions
The Transit Fund commits all available transit funding to transit and will carry over any
unused funding for use in subsequent years and to maintain as high a fund balance
(reserve) as possible.
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B. Transportation Revenues and General Government Expenses
Fare Revenue
Fare increases adopted by the City Council in April 2009 continue to help bring in
revenue to meet expenses and the fare box recovery ratio required by the State. We are
initially projecting a year where no service reductions or fare modifications need to be
proposed now, but there is very little room for variation. Based upon past experience,
potential increase in ridership due to fuel cost increases and the effect of the Cal Poly
Subsidy agreement, a 3%increase in fare revenues has been programmed for each year of
the Financial Plan.
Cal Poly Subsidy Contract
SLO Transit is in the final year of the Cal Poly subsidy agreement and another agreement
is under negotiation with Cal Poly. The outcome of the State budget negotiations could
change the level of funding from Cal Poly and they have indicated that they may not be
able to give us a final number until a State budget is passed. The transit budget includes a
small increase in Cal Poly funding for next year with larger increases the following two
years.
Transit Purchased Transportation Contract
The current Purchased Transportation contract for transit operations and maintenance
provided by First Transit will enter the last year of a two-year extension in 2011-12. An
additional contract extension agreement or circulation of a Request for Proposals (RFP)
will be required for future years and costs are expected to be a significant factor. The
budget forecasts a 3% increase in 2011-12 contract costs and a very conservative 7%
increase in 2012-13.
Staffing
The Transit Fund staffing will remain the same over the next two year period at a 2.32
FTE staffing level. The Transit Fund provides funding to support a shared temporary
worker position with the Transportation Planning and Engineering Division for bicycle
support services. The Bicycle Programs Coordinator will cost the Transit Fund $20,400
in 2011-12.
C. Grants
Local Transportation Funds (LTF)
This funding is from the % cent retail sales tax. This assumption includes a 22% increase
in 2011-12 for LTF grant funds, as estimated by SLOCOG. This funding increase is
mainly due to increased sales tax revenue and one-time carryover funds that may only be
available in 2011-12. The final State budget amounts for next fiscal year have not been
released and will likely affect the final funding levels.
State Transit Assistance Program (STA)
Although initially eliminated in 2009-10, STA was renewed under the State budget gas
tax swap agreement and is expected to provide SLO Transit with annual funding. The
Transit Fund Analysis includes an assumption of $176,100 estimated STA funding for
2011-12 and a slightly higher amount in 2012-13.
Federal Transit Administration (FTA)Section 5307
FTA funding is formula-based, and is anticipated at a minimum of$1,231,000 in 2011-12
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and $1,255,000 in 2012-13 which will primarily be used for operating assistance. Actual
amounts may vary and will be determined by Council as part of the annual approval process.
The overall Federal level of Small Transit Intensive Cities STIC funding was less than
expected during 2010-11, and the SLO Transit budget has been adjusted to the new
funding amounts. Looking ahead, due to changes in reporting statistics, it is likely that
the City will share a larger portion of STIC funding with SLORTA. The end result may
be reduced STIC funding for SLO Transit for 2011-12 and beyond.
American Recovery and Reinvestment Act(ARRA)
The American Recovery and Reinvestment Act (ARRA) of 2009 provided one-time
funding for public transportation capital projects. The City's allocation of ARRA funding
was $1,023,660. All projects have been completed and this grant was formally closed out
in January 2011 with 100%of the ARRA grant funds having been expended.
Proposition 1B
During 2010-11, the City applied for and received approval for $476,600 in new
Proposition 1B capital projects funding. This assistance will help to replace one bus
($419,500) and complete security improvements at the Transit facility ($48,100). These
projects are anticipated to be completed in 2011-12.
D. Ridership and Evening Service
Ridership is estimated to increase at a modest 3% in 2011-12 if existing service levels are
maintained. Evening Service is estimated at approximately 31,500 miles at an annual net
cost (minus revenue) of $118,000 annually. The Evening Service program does not
deliver significant additional revenue to assist with farebox recovery ratios. The Transit
fund analysis does not include any assumptions to reduce evening service levels at this
time. Overall fare rates and revenues are adequate to support current operations for
2011-12. Should revenue sources continue to decline, staff will return to Council with
recommendations for service level reductions or fare modifications as necessary.
E. Transit Vehicle Replacements
The City will need to rely heavily on grant sources, such as Proposition 113, to secure
funding for vehicle replacements and other major capital items. (See discussion below).
No additional bus replacements are proposed at this time as part of the Financial Plan and
instead will need to be brought forward as individual grants are received.
F. Short Range Transit Plan
On May 5, 2009 the City Council adopted the Short Range Transit Plan (SRTP) update
that was prepared by Urbitran Associated, Inc. Due to significant fund constraints,
service recommendations identified in the SRTP are not expected to be pursued during
the 2011-13 Financial Plan period.
IV. LOOKING TO THE FUTURE
A. Fuel Costs
Fuel costs are once again very volatile. Fuel pricing is similar to that which occurred in
2008-09 when the City saw the price of diesel fuel spike to $4.40 per gallon in July 2009.
Prices over the last part of 2010-I1 have increased significantly and are expected to
continue to rise over the next few years. The proposed transit budget anticipates this
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increase to a certain extent. Fuel costs have been budgeted at $4.00 per gallon in the
2011-12 fiscal year. However, if fuel costs continue to soar, the transit budget will not be
able to absorb all of the cost increase and service reductions or fare modifications will be
required. Staff is also exploring the possibility for utilizing red dye diesel fuel in the
transit fleet as currently used in other Public Works vehicles.
B. State and Regional Budget Impacts
Overall, the Governor's May Revision to the State budget does not make any significant
changes to funding for transportation or public transit. The budget language states that the
reenactment of the gas tax swap (AB 105, Chapter 6, Statutes of 2011), which was
completed in March 2011, will provide the General Fund with $903.5 million in relief for
2010-11. While the legislature has approved the Transportation Trailer Bill (AB 105
which reenacts the gas tax swap proposal to address potential conflicts with Proposition
26), the measure has not been sent to the Governor's desk for a signature and is not
expected until the Governor's entire budget proposal is approved. Ultimately, the final
impact on the SLO Transit budget remains unknown until the State budget is finally
approved. Any further reduction of funding to the City, Cal Poly or SLORTA could have
a significant impact on service level funding for 2011-12 and beyond.
C. Operations and Maintenance Contract
On June 6, 2006 the City Council approved a three-year contract with First Transit, Inc.
to provide Purchased Transportation for operations and maintenance services for SLO
Transit for the period July 1, 2006 through June 30, 2009. This agreement included an
option for seven one-year extensions and authorized the City Manager to execute these
agreements. In June 2010, Council approved the second and third option-years contract
extensions through June 30, 2012, which included a conservative 3% increase in 2011-
12. An additional extension agreement will need to be negotiated next fiscal year or a
new RFP circulated for transit operations and maintenance. Staff has been conservative in
projecting Purchased Transportation contract costs for 2012-13 and has assumed a 7%
increase.
D. Transit Vehicle Replacements
A heavy-duty service truck is expected to be replaced in 2011-12 in the amount of
$45,500. This vehicle is used by the contractor for on road vehicle servicing and other
tasks at the transit facility. The 2011-13 Financial Plan does not assume grant revenues at
this time for additional bus replacements. However, staff will continue to pursue
alternative grant funding sources and will amend the budget accordingly if successful in
being awarded funding. In order to off-set increasing operating costs, SLO Transit will
need to utilize significant amounts of the FTA funding in support of operating assistance,
bus maintenance and transit operations.
E. Downtown Access Pass
For the past two years the Parking Fund has allocated $10,500 annually for the
Downtown Access Pass program for downtown employees. The program has seen a
recent measured increase primarily due to rebranding efforts that started in 2009-10,
additional Regional Rideshare advertising, and higher gasoline costs. Projected SLO
Transit ridership for 2010-11 was for 8,000 riders annually. Based upon current
ridership, staffs initial forecast has almost doubled with a projected 14,000 riders by
year's end. With ridership nearly doubling earlier forecasts, staff recommends the annual
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allocation of $10,500 be augmented by an additional $9,500; making a total annual
Parking Fund allocation of $20,000 annually. Staff is recommending Council approve
$20,000 of revenues from the Parking Fund, for both 2011-12 and 2012-13 to fully fund
the SLO Transit Downtown Access Pass program.
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EXHIBIT A
201113
TRANSIT FUND
FINANCIAL SCHEDULES
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