AATA Gets Advice on Countywide Transit

Ann Arbor Transportation Authority special board meeting (Dec. 8, 2009): Late Tuesday afternoon at a special meeting, the AATA board heard from two consulting attorneys, as well as heads of three other Michigan transit authorities, on the subject of expanding the geographic scope of AATA service.

The meeting of the full board, with their five guests, came on the heels of a planning and development committee meeting. At that committee meeting Chris White, AATA’s manager of service development, gave highlights from a recently completed survey of Washtenaw County voters on their attitudes towards a possible countywide transportation tax.

Those who said they would “definitely” or “probably” vote yes on a 1 mill countywide millage eked out a 51% majority countywide.

However, Bob Foy, general manager of Flint’s Mass Transit Authority, repeatedly reminded the full board at their meeting: To get a millage passed, you need a product you can sell. In Flint, which is a countywide authority, Foy reported that the last millage was approved with 68% of the vote.

What the expanded transportation product might look like for Washtenaw County is not yet clear. At the planning and development meeting, AATA CEO Michael Ford indicated that AATA would be bringing in a consultant to address that issue.

The message sent at the board meeting by the two consulting attorneys – Jerry Lax and Jeff Ammon – was that there’s a difference between (i) deciding on the legal authority to be formed, and (ii) deciding on the desired service that AATA wanted to offer. When the board knew what countywide service it wanted to provide and how it wanted to fund that service, they said, at that point it would make sense to decide on the legal mechanism for establishing an expanded authority.

That authority could be established legally under either of the state’s enabling acts: Act 55 or Act 196.

Conversation about possible expansion to countywide service has been a part of AATA board discussions for at least a year. [Chronicle coverage: "AATA Plans for Countywide System" and "AATA Adopts Vision: Countywide Service"]

Act 55 versus Act 196

Jerry Lax, a former Ann Arbor city attorney and the current Ann Arbor Downtown Development Authority legal counsel, and Jeff Ammon, an attorney out of Grand Rapids, laid out some of the technical differences between Michigan’s Act 55 (1963) and Act 196 (1986).

Length of Millage

One of those differences relates to the allowed duration of the millages. For an authority that provides regular bus service, both acts allow for a levy of a maximum of 5 mills, for a maximum of 5 years. Where Act 196 is more flexible is for transit service that includes a “fixed guideway.”

Vehicles that run on rails – street cars and commuter trains – are obvious examples, but bus rapid transit (BRT) is also a “fixed guideway” system. With a BRT operation, special reserved lanes and queue-jumping infrastructure at intersections allow buses to take priority over other traffic on the roadway, so that they have a “fixed guideway” within the roadway.

Act 196 allows a millage to be approved by voters for up to 25 years if it includes a fixed guideway project:

Taxes may be levied at a rate and for a period of not more than 25 years as determined by the public authority in the resolution calling the election and as set forth in the proposition submitted to the electors if the public authority seeking the levy is seeking the levy for public transit services that include a fixed guideway project authorized under 49 USC 5309.

[What is not entirely clear is how the current transportation millage levied by the city of Ann Arbor is consistent with the AATA Act 55 organization. Ann Arbor's millage has no end date, but Act 55 imposes a limit of 5 years.]

Political Subdivisions, Service Outside Area

Other differences relate to the political entities mentioned in the acts. Act 55, passed in 1963, was conceived as a way for cities to form transportation authorities:

From Act 55: Sec. 2. (1) The legislative body of any city having a population of not more than 300,000 may incorporate a public authority for the purpose of acquiring, owning, operating, or causing to be operated, a mass transportation system.

Act 196, passed in 1986, recognized that it’s not just cities that might want to form a transportation authority [emphasis added]:

From Act 196: Political subdivision means a county, city, village, or township.

Further, Act 196 provides the explicit provision for political subdivisions to band together to form an authority, and provides the added flexibility that parts of those political subdivisions, except for counties, may be designated as belonging to the area of the transportation authority:

A city, village, or township forming a public authority by itself or in combination with 1 or more other political subdivisions may provide that only a portion of the city, village, or township shall become part of the public authority. The portion of the city, village, or township to become part of the public authority shall be bounded by precinct lines drawn for election purposes.

Act 196 also lays out explicitly how transportation service to areas outside the boundaries of the authority can be provided – there’s no geographic limit to where service can be provided. Under Act 55, it’s not impossible to achieve service outside the area of the authority – the AATA does this through purchase of service agreements (POSAs).

Opting Out of the Authority

In describing how Flint’s MTA had achieved a countywide authority, Bob Foy said they went to the county board and asked them to join the existing Act 55 authority. There was a champion for the cause on the board who enjoyed the respect of other board members, and was able to achieve a unanimous vote to join the authority, making it a countywide entity.

One advantage to that approach, Foy said, was that once the county is on board, “you have everybody.” That is, a township within the county could not, under Act 55, opt out of membership in the transportation authority once the county was a member.

Foy stressed that this was not the same as getting a millage passed countywide or providing service countywide. It just meant that you had the opportunity to go to all the voters of the county and ask them to pass a millage to support the service you wanted to provide.

In contrast to Act 55, a recent amendment to Act 196 gives any political subdivisions that get included in an Act 196 transportation authority the opportunity to opt out:

(7) An authority that forms under this act on or after May 1, 2006 shall notify all political subdivisions or portions of any city, village, or township that are included in the authority that the political subdivision or portion of the political subdivision is included in the authority. The authority shall include in this notification notice of the right to withdraw from the authority under this section. The political subdivision or portion of the political subdivision that is notified has 30 days after receiving the notification to withdraw from the authority pursuant to subsection (5).

Taking the AATA and the city of Ypsilanti as an example, if the Washtenaw County board of commissioners were to vote to join the AATA under its existing Act 55 authority, the city of Ypsilanti (among others) would be included in that Act 55 authority. Any millage levied – in the city of Ypsilanti and across the county – would need to be approved by county voters. So Ypsilanti would have no choice about being in the authority, but voters would have a choice at the polls about whether to approve the associated millage. It’s possible to wind up with a countywide authority, but no funding source.

On the other hand, if the AATA first formed an Act 196 authority, and then the Washtenaw County board of commissioners voted to join the AATA under that new Act 196 authority, then the city of Ypsilanti (among others) would have to be property notified that it had been included, and would have 30 days to withdraw if it so chose. Withdrawing would mean that Ypsilanti voters would not be included in any ballot question on a millage related to that authority – because they wouldn’t be living within the area of the authority.

Technical Paths to Countywide Service

Attorneys Jerry Lax and Jeff Ammon laid out at least three different funding options for expanding AATA service.

Piecemeal Service Contracts

On this scenario, the geographic area of the legal authority would not change – it would remain the city of Ann Arbor. To add service to more areas of the county, the AATA would add contracts with individual municipalities, much as it does now. Into the mix was also thrown the possibility of contracting with Washtenaw County for service coverage in areas that did not otherwise have a contract with the AATA.

This approach illustrates that the service coverage area need not necessarily be the same as the geographic area defining a transit authority.

A contract-by-contract model could be pursued under Act 55, without changing the AATA to an Act 196 authority. However, the recommendation from the two attorneys was to convert AATA to an Act 196 authority. Conversion to an Act 196 authority provides the advantage that transit topics are laid out in more detail to provide explicit guidance, there’s not a geographic limit on service, and there’s a possibility of a millage lasting up to 25 years if it’s used to pay for some kind of rail or bus rapid transit system.

Those advantages would put the AATA in a better position to lead future countywide transit efforts.

The County Forms an Act 196 Authority  (Layer Cake Millage)

A second option presented to the board for funding expanded transit service was for two transit authorities to exist simultaneously. The second authority would be established by the county under Act 196. The resulting geographic area from which this Act 196 authority would potentially draw a millage would be the entire county – minus any municipalities that chose to withdraw within 30 days of being notified that they’d been included in an Act 196 transit authority.

Voters in the geographic area of the new Act 196 authority – the county minus possibly some subset of the county – would then have to approve any millage that might be levied.

Assuming the city of Ann Arbor did not exercise its right to withdraw from the Act 196 authority formed by the county, and assuming that voters in the county’s Act 196 area approved a millage, then Ann Arbor voters would pay two millages – one mandated in the city charter, and the other to the new Act 196 authority.

This is what Jeff Ammon called a “layer cake” approach – a countywide millage would be layered on top of the Ann Arbor city millage.

With two transit authorities, a natural question is: Which transit authority actually owns the buses and operates the service? On the scenario sketched out at the board meeting, the county’s new Act 196 authority would exist primarily as a funding mechanism. In exchange for agreed-upon levels of service, the county’s Act 196 authority would turn over its millage money to the AATA, which would continue to operate the service.

Bill Schomisch, who’s head of Kalamazoo Metro Transit and who attended the special AATA board meeting to share the Kalamazoo experience, described how Kalamazoo is a “layer cake” model, with the other transit authority existing as a funding mechanism for the KMT. Schomisch also told a cautionary tale about what happens if the millage fails to be renewed – they’d finally succeeded in getting a millage passed in May of 2009, but they had to operate for one year on reserves.

The County Forms an Act 196 Authority (Donut Millage)

This scenario begins the same way as the “layer cake” approach – the county would form an Act 196 authority. But on this path, the city of Ann Arbor would exercise its statutory option to withdraw from the authority within 30 days. With respect to a potential millage source, that would leave the area around Ann Arbor as the “donut” to the “hole” left by Ann Arbor.

The existing AATA would then provide transit service in areas outside of the “hole” by contracting with the Act 196 authority.

Peter Varga, CEO of The Rapid, the Grand Rapids’ transit system, which includes six cities as part of an Act 196 authority, described the funding for their system in this way: the “hole” has contracts with the “donut.” [Varga joined the meeting by phone.]

Comparing the “layer cake” to the “donut,” one difference is that for a given amount of revenue needed from the new Act 196 authority, the millage rate would need to be higher on the “donut” approach, because Ann Arbor’s property tax base would be left out of the equation.

Public Comment, Politics and a Morsel of Analysis

During time for audience comment, Nick Sapkiewicz of the Washtenaw Area Transportation Study (WATS) asked a question of the guests that spoke to some of the diplomatic and political efforts that would be necessary for countywide expansion: How do you determine representation on new transit authority boards?

Foy reported that for Flint’s MTA, the county’s board of commissioners appointed five positions, the city appointed five positions and one was appointed by the “education community.” Varga described how the city of Grand Rapids appointed five board members, with the other six cities in the authority appointing two each. Varga said that at one point, three of the six mayors served on the board.

From the audience also came a question about balancing the service needs of different communities when it came to funding through contracts: How do you determine what level of service to offer, compared to a community’s ability to pay? The implicit background to the question was the ongoing challenge the city of Ypsilanti has faced in paying the full amount of the service contract it has with the AATA.  Ypsilanti mayor Paul Schreiber and councilmember Peter Murdock attended the special meeting on Tuesday, with Schreiber offering his encouragement to the board to go down a path to countywide funding and service. [Previous Chronicle coverage: "Buses for Ypsi and a Budget for AATA"]

From Grand Rapids’ Varga came the reply that even low density areas should get good service. And from Foy came the explanation that what they looked at in evaluating service levels was not miles driven or number of routes, but rather the question of whether they were meeting the needs of their riders.

Carolyn Grawi, of the Center for Independent Living, elicited from Schomisch the fact that advocates for disability (Friends of Transit) had helped pass the millage in Kalamazoo.

Jim Mogensen cautioned that while some of the advice was along the lines of there being several different legal mechanisms for doing things, the lesson from the guests and the AATA’s own experience was: “History matters. When it happens and why it happens matters.” He remarked that every system seemed to be cobbled together.  The cobbling together in the AATA’s case, he said, involved purchase-of-service contracts that seemed like a mechanism to lay claim to a local match for federal funding.

Mogensen often comments at AATA board meetings on the theme of contrasting interests: commuters versus residents. Transit service designed primarily to serve basic transportation needs of residents who use the system to get around could look much different from a system designed primarily to get people to their jobs.

Whether an expanded system looks more like a commuter system or more like a basic transportation system could factor into whether there’s support for membership by municipalities in a countywide Act 196 authority. And it could factor into the level of support for a millage in different areas of the county.

A system that featured connections between urban areas in the county would likely appeal to commuters, while a service that included door-to-door service for outlying county areas might look attractive to out-county dwellers.

As described by Flint MTA’s Foy, the two approaches are not mutually exclusive. The MTA provides something Foy called “through-the-door” service – a driver of a van will come into a rider’s dwelling to provide assistance with putting on coats and galoshes for those who would like it. The MTA also provides commuter service to the Delphi plant in Troy.

Like the Flint MTA, the AATA currently offers paratransit services through its A-Ride program, and is currently piloting commuter express buses between Chelsea and Ann Arbor, and Clinton and Ann Arbor. Ridership on those commuter bus pilots has not met expectations.

At the planning and development committee meeting that immediately preceded the full board meeting, board member Sue McCormick focused on the geographic distribution of millage support measured by the survey that Chris White had reported out.

Groups of 235 respondents had been selected in four different mutually exclusive areas: Ann Arbor, non-Ann Arbor urbanized areas, western townships, and eastern townships.  The support for a possible countywide millage was strongest in Ann Arbor, followed by other urbanized areas, then western townships and eastern townships.

If western and eastern townships opted out of an Act 196 organization formed by the county, then the survey results indicate that chances of passing a transportation millage would increase. That would need to be balanced against the diminished millage revenue that their inclusion would otherwise bring.

What the survey revealed most clearly, said White, was that the state of the overall economy would be the major factor affecting possible millage support. When people feel like the future is uncertain, they’re less likely to support an additional millage, no matter what it’s for.

Present: Charles Griffith, David Nacht, Ted Annis, Jesse Bernstein, Paul Ajegba, Sue McCormick, Rich Robben

Next regular meeting: Wednesday, Dec. 16, 2009 at 6:30 p.m. at AATA headquarters, 2700 S. Industrial Ave., Ann Arbor [confirm date]