AATA Financial Group: Let’s Continue

Funding recommendations for countywide transit reviewed

A Feb. 29 meeting of a financial advisory group – an entity that’s helping the Ann Arbor Transportation Authority as it seeks to expand its governance and funding structure – resulted in broad agreement on many recommendations made by a subcommittee of that group.

But the group as a whole is declining at this time to make a final funding recommendation. Instead, the financial advisory group is recommending that it continue to convene periodically, but for the time being that their efforts be put “on hold.”

Regarding initial recommendations and findings, the subcommittee calculated that there’s a roughly $32.9 million gap between existing funding and what would be needed to fund the first five years of expanded services. To cover that gap, the subcommittee calculated that a countywide millage of 0.5 mill would be needed – if the mechanism of funding were to be a countywide transit tax. But the subcommittee declined to identify a millage as the solution to that funding gap, in light of pending legislation at the state level that might make other mechanisms available. [.pdf of Feb. 29 report draft approved by whole group]

Also, the categories of service recommended for inclusion in the first five years of the program include ongoing bus replacements, urban bus network enhancements (including enhancements to the WAVE, a western Washtenaw express), countywide door-to-door and flex services, express bus services, local community circulators, park-and-ride lots, vanpool services, and “superstops” in the Washtenaw Avenue corridor.

The subcommittee is recommending an average increase for fixed-route fares of $0.50, with the possibility of fare increases for paratransit services as well. Higher fares should be charged for express bus services, with the possibility of distance-based zone fares.

Also, projects like the north-south high-capacity connector, the Washtenaw Avenue high-capacity service, as well as the east-west and north-south commuter rail service, are recommended by the financial group to be considered separately. Those projects are not recommended for inclusion for local expenditures in the first five years. It’s also recommended that the Ann Arbor downtown circulator service (previously called The LINK) should be discretionary and should rely on private investment.

Among the concerns in the group’s report are the many assumptions on which the recommendations of the subcommittee were built – assumptions about the level, type and timing of funding available from the state of Michigan, in the context of pending legislation to establish a regional transit authority in southeast Michigan. Another uncertainty identified by the group relates to federal transit funding programs. An additional concern is that the subcommittee’s analysis assumed that all governmental units would be a part of the tax base for expanded countywide governance and service. A handful of townships in Washtenaw County have already indicated they’d prefer not to participate – any local unit could opt out of a countywide transportation authority once it is formally incorporated under Act 196 of 1986.

The whole group also identified the recommended fare changes as “fairly general” and concluded that they need further refinement and linkage to specific services. Another possible uncertainty identified by the group is the exact mix of services to be included in the first five years of the transit plan.

The meeting of the financial group comes in the context of a possible four-party agreement that would establish the framework for the AATA’s transition. The agreement would be between the city of Ann Arbor, the city of Ypsilanti, Washtenaw County and the Ann Arbor Transportation Authority. It would provide a framework for decision-making on a governance and funding structure for the AATA (under Act 196 of 1986) that would be geographically broader than the city of Ann Arbor.

Most recently, at its Feb. 6, 2012 meeting, the Ann Arbor city council had postponed consideration of the agreement to its March 5 meeting. But the council gave the city administrator and mayor the discretion to omit the item from the March 5 agenda, depending on the kind of information that the AATA’s financial advisory group provided at its Feb. 29 meeting. Based on the uncertainty of the financial group’s recommendation, it’s a possibility that the four-party agreement will not appear on the council’s March 5 agenda. [Added after initial publication: Although it was not initially included in the online agenda made available on the morning of Feb. 29, by afternoon the item had been added.]

The financial advisory group is co-chaired by McKinley Inc. CEO Albert Berriz and retired Washtenaw County administrator Bob Guenzel, and includes more than 20 other members.

In the interest of providing more information and answering questions from the public, on March 2, the AATA is hosting an open drop-in session in the Ann Arbor city council chambers from 4 p.m.-7 p.m. The city council chambers are located on the second floor of city hall, at 301 E. Huron.

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  1. By Ken
    February 29, 2012 at 11:25 am | permalink

    Well now it sounds as though the finance committee is asking more questions than answering. So if my math is correct the base fare just to climb on board an AATA bus would then be $2.00? Any Express route from the burbs into A2 or the reverse would cost extra beyond the $2.00 fare?

  2. February 29, 2012 at 12:51 pm | permalink

    Re: [1] possible basic fare of $2 with additional from outside city limits into Ann Arbor

    Ken, I think what you’re describing is certainly consistent with what the financial advisory group has in mind. But so would a lot of other different fare structures. The group would like the word “average” in the description of a $2 average fare to carry a lot of the meaning, which I think the board is content to leave vague at this point. In fact, the lack of specificity on fare structure is one of several points identified by the group as leading to the conclusion that it cannot at this time make a final funding recommendation. From the report:

    The sub-group’s recommendations regarding passenger fares are fairly general. The recommendations should be more fully developed to identify the specific services and markets whose fares would be affected, the phase-in period for any fare changes, and the resulting financial impacts on the Program.

    Related to fares, it’s worth noting that the AATA board approved an increase in the budget for its consultant at its Feb. 16, 2012 meeting, and one of the specific tasks identified for the increased contract is to work on fare structures and methods of payment.

  3. February 29, 2012 at 1:13 pm | permalink

    What the discussion on fares did not reflect is that AATA has a complex fare structure with many discounts and special fares, each of which has been crafted to achieve a distinct policy objective. The “base fare” is hardly paid by everyone. So when they say “average fare”, do they in fact mean an average yield over all fare classes? That might change with the season and for other reasons. For example, the GoPass system is subsidized both by the DDA and by AATA’s decision to accept less compensation for the program even as participation increases. The more people who utilize this (valuable) program, the lower the nominal fare.

    And of course, there is the question of elasticity of demand, so as fares go up, ridership may decline, which lowers the revenue from fares. Etc. As you say, leave it to the consultants.