“Smart Growth” to Fuel Countywide Transit

Ann Arbor Transportation Authority board meeting (March 17, 2011): At its regular monthly meeting, the AATA board voted unanimously to adopt a “Smart Growth” scenario as the basis for a countywide transit master plan (TMP). The transit authority has been developing the TMP over the course of a planning and public engagement process that began in the summer of 2010.

The final phase of that process included 20 public meetings in February, where three different scenarios were presented: Lifeline Plus, Accessible County, and Smart Growth. The three scenarios were nested subsets, starting with Lifeline Plus as a base, which would simply have expanded on existing services and focused on expanding services for seniors and disabled people throughout the county. Accessible County would have added fixed-route bus service to connect all the county’s urban centers. Smart Growth included all the features of Accessible County, as well as high-capacity transit along local corridors, plus regional commuter rail.

At Thursday’s meeting, board chair Jesse Bernstein characterized the TMP as a reflection of where the community wants to be 30 years from now. The entity that would be implementing the TMP, he stressed, would likely be organized under a different legal framework than the current AATA, which is an Act 55 transit authority, with a tax levied just in the city of Ann Arbor. The AATA board has actively discussed for at least the last two and a half years the idea of transforming the transit authority to a countywide funding source, possibly using Act 196.

The meeting included three other pieces of business: (1) approval of a contract for the AATA’s paratransit services; (2) acceptance of an auditor’s report on the AATA’s books from the previous fiscal year; and (3) approval of a contract for media services.

Also discussed, but not acted on, was a memorandum of understanding with the city of Ann Arbor for construction of a bus pull‐out on eastbound Washtenaw Avenue east of Pittsfield Boulevard. The bus pull-out is part of a larger project – a transfer center on the south side of Washtenaw Avenue at Pittsfield Boulevard, opposite Arborland mall – which will include a “super shelter.” The project is being funded with federal stimulus money granted to the AATA. The board was in favor of the agreement with the city, but was reluctant to vote on the memorandum absent a copy of the text of the memorandum itself.

Smart Growth TMP

Before the board was a resolution to adopt a “Smart Growth” scenario as the basis of continued development of its transit master plan (TMP).

Smart Growth: Background

The Smart Growth scenario is the most ambitious of three scenarios the AATA developed for presentation at a series of 20 public meetings in February. Those February meetings were the final phase of a planning  and public engagement process that began in the summer of 2010. [Previous Chronicle coverage includes: "AATA on County Transit: READY, Aim, Fire" and "AATA Moves Engagement Process into Gear"]

Transit options in the three scenarios – which the AATA has labeled Lifeline Plus, Accessible County, and Smart Growth – are nested subsets, starting with Lifeline Plus as a base, which expands on existing services and focuses on services for seniors and disabled people. Accessible County extends services by adding fixed-route bus service to connect all the county’s urban centers. The Smart Growth scenario includes north-south and east-west commuter rail regional components, as well as high-capacity local transit options for corridors like Washtenaw Avenue and State-Plymouth. [Previous Chronicle coverage includes: "AATA: Transit Study, Planning Updates" and "Transit Planning Forum: Saline Edition"]

Development of the TMP for countywide service has been identified by the AATA board as a necessary step to take before reorganizing the AATA as a transit authority for the entire county. In December 2009, the board held a special meeting to seek advice on various options for reorganization under Act 196 or Act 55. [Chronicle coverage of that special meeting: "AATA Gets Advice on Countywide Transit." The special meeting had been preceded by extensive discussions at board meetings: "AATA Plans for Countywide System" and "AATA Adopts Vision: Countywide Service"]

As a part of his regular CEO report to the board, which he made at Thursday’s meeting, Michael Ford said he’d met on Feb. 28 with a group of elected officials about board governance in connection with the new TMP and a possibly new legal framework. Board members Roger Kerson and Jesse Bernstein had attended the meeting, Ford reported. Rich Robben, in his report to the board from the planning and development committee, also mentioned the Act 196 discussions with elected official officials, and said those conversations would continue.

Ford said the funding analysis would continue for the TMP and that it would be addressed at the April board meeting. To explore additional funding options, Ford reported that he’d traveled to Washington D.C. and met with office staff for senators Carl Levin and Debbie Stabenow. He also reported that he’d met with U.S. representatives John Dingell, Candice Miller and Tim Walhberg, and he plans to meet with a representative of Gov. Rick Snyder’s office. They are all generally supportive of the transit master plan, he said.

In his report from the planning and development committee on the TMP, Robben said the Smart Growth plan was preferred by the majority of people polled – using feedback from public meetings, a poll on AnnArbor.com, as well as one on the AATA’s project website [www.movingyouforward.org]. The committee recommended that the board approve the resolution.

Smart Growth TMP: Public Comment

Larry Krieg led off the public commentary at the start of the meeting by congratulating the staff on all the hard work they’d done on the TMP. Krieg is a planner with Ypsilanti Township. He said that the TMP was put together well and that the public input had been meaningful. He called attention to the fact that the American Public Transit Association has calculated that a family using public transit would save $9,904 per year compared to owning a car.

Krieg continued by saying that there’d been some some wise comments made at the AATA’s planning and development committee meeting about the AATA not getting out too far ahead of the community. From the minutes:

David [Nacht] indicated that it will be important for that dialogue to continue and for the community to feel comfortable with the plan. He stated that AATA did not intend to “get ahead” of the community on this issue until support is there for moving forward.

Krieg cautioned that it’s also good not to lag behind the county residents, and to continue to push forward. He pointed to the city of Ypsilanti’s overwhelming approval of a transit millage in November 2010. [That millage will fund most of purchase of service (POS) agreement that Ypsilanti has with AATA.]

Carolyn Grawi, of the Ann Arbor Center for Independent Living, also thanked the board and the AATA staff for all the work they’d put into holding the various forums. She noted that people keep saying it’s a 30-year plan, but she said there’s a need to start right away to increase transit options in the community. The transit system is needed, and it’s being used, she said. She also told the board that many people she’s heard from about the TMP have indicated great excitement about the increased geographic area where paratransit service might be extended.

As the board contemplates a different legal framework for the AATA to allow countywide funding for transit, Grawi cautioned against dissolution of the existing Ann Arbor millage. She said that money needs to stay in place and needs to continue to be used to fund the transit options that we’ve become accustomed to using in Ann Arbor.

Smart Growth TMP: CEO Comment, Board Deliberations

In summarizing his written CEO report for the board, Michael Ford said that during the February meetings, when the three scenarios were introduced to the community, the overwhelming response was support of the Smart Growth option. He thanked Jesse Bernstein and Roger Kerson for their help in preparing for those meetings.

At several other points in the meeting, board members complimented the AATA staff for their hard work on the issue.

The TMP item was voted on by the board after minimal discussion on three other items. So Charles Griffith noted that “there seems like there should be a little discussion on this one.” He said he was very supportive of the effort. In the performance monitoring and external relations committee discussions, he said committee members had talked about how to acknowledge the fact that this is an important stage in the development of the plan. It would set the stage for a lot of additional work that would need to be done on the local, state and federal level, he said.

Griffith said it was important not to give the impression that a final decision had been made, but noted that the AATA had held “many, many meetings” with many different groups. So he said he felt like the AATA had the strength of the broad community behind the effort. In that sense, he said, he felt comfortable saying that the AATA board concurred with the community in supporting the most robust scenario of transit options.

For his part, board chair Jesse Bernstein said the TMP described where the community wants to be in 30 years. That, he said, is the easy part. Now we have to figure out how to get there. That would be achieved through 3-5 year strategic plans, he said, which the current board and likely a new board – established under Act 196 – would implement.

Roger Kerson echoed the appreciation of the staff’s hard work that had been expressed during the meeting. He also picked up on Larry Krieg’s comments about not wanting to get too far ahead of the community, but also not falling behind the community, either. He said that as stewards of public assets, the board had a responsibility to lead, and the TMP reflects real leadership, he said.

Kerson said he was concerned, based on his attendance of a meeting with leaders from other governmental units, about the word “plan.” He said that to an outside observer, the word “plan” sounds like it’s set in concrete. It’s not the same as  a “vision” or a “proposal” or a “scenario.” So endorsing Smart Growth is the way to go, he said, but he still wanted to be sensitive to language and the process as the AATA moves forward. As new partners are invited in, it’s responsible to invite them to work on the TMP to turn the vision into reality.

Anya Dale added her thanks to the community that had participated in the process of developing the plan. She said she was impressed not just that Smart Growth – which is the most daunting task of the three – had been the choice of the majority, but that it had been chosen “by a landslide.” The Smart Growth plan is something that we need to do for the community, she said, and we need to invest in transit, in large part, to help turn the economy around.

Sue McCormick complimented the AATA as a whole for really taking public engagement forward. Rather than just sharing information, the AATA had looked to the community for help in making what is likely the biggest decision an agency could make – namely, how to plan the future of the region for transit. A clear signal from the public makes it easy to lead, she concluded, saying that there is a good public consensus.

Outcome: The board voted unanimously to adopt the Smart Growth scenario as the basis for a countywide transit master plan.

Paratransit Contract

The board considered a resolution to award a contract for A-Ride and paratransit services to Select Ride Inc. Select Ride is the current provider of these services. The contract value is $2,793,481 for a one-year term from July 1, 2011 to June 30, 2012, with two one‐year additional renewal options.

A-Ride is a transportation service for people who are prevented from using AATA fixed-route bus service due to a disability. It’s provided with taxis, small buses or lift-vans. Performance data on A-Ride through February 2011 shows that AATA serves around 500 passengers daily.

The new contract differs from the old one by reducing the advance reservation booking window from two weeks to one week. The amount of time drivers are expected to wait (vehicle dwell time) was increased from two minutes to five minutes. Pricing of trips changed from an hourly rate to a flat per‐trip rate.

AATA has experienced reduced use of its A-Ride and paratransit services since implementing fare increases for that service in May 2009 (from $2 to $2.50) and May 2010 (from $2.50 to $3). AATA also attributes part of the decrease in use to the fact that the fare increases for A-Ride were coupled with elimination of fares to A‐Ride‐eligible passengers who chose to use the fixed‐route regular bus service.

Paratransit: Public Commentary

Addressing the board on the topic of paratransit services was Thomas Partridge, who introduced himself as a resident of Washtenaw County and the city of Ann Arbor, and a recent candidate in the Democratic primary for the District 18 state Senate seat. He noted that the AATA was showing a decrease in expenditures for its paratransit service, which is used by seniors and disabled people, exactly at a time when there’s increasing need for that service. He called on the board to reverse the contraction of services in that area. He also criticized the performance of Select Ride, with respect to the quality of their service and their ability to be non-discriminatory.

During her public comments, Carolyn Grawi, of the Ann Arbor Center for Independent Living, said she’d received feedback indicating an increase in the number of people using the regular bus service, instead of A-Ride, for their work transportation trips.

Paratransit: Board Deliberations

The board did not deliberate on the paratransit contract.

Outcome: The board unanimously approved the paratransit contract with Select Ride.

FY 2010 Audit

Before the board was a resolution to accept the auditor’s report for fiscal year 2010, which ended Sept. 30, 2010. The AATA’s auditor is Rehmann Robson.

FY 2010 Audit – Presentation

Dave Fisher delivered Rehmann Robson’s presentation to the board on the AATA audit. He noted that it had been presented in more detail to the performance monitoring and external relations committee a few weeks before, so he was highlighting just the main points.

Overall, he said he’d given a “clean opinion” on the AATA’s books, based on generally accepted accounting principles, including the guidelines of the Michigan Dept. of Transportation.

Economic factors discussed in the report included the fact that up until 2009, there had been relatively constant increases in property tax revenues. [Ann Arbor property owners pay a roughly 2 mill tax that helps fund the AATA, which appears as MASS TRANSIT on tax bills.] But the July 1, 2010 levy was down by 5% and next year was expected to be down a bit more, Fisher said.

In FY 2010, the $9,589,000 collected under the Ann Arbor tax levy represented 38% of total revenues, Fisher said. The rest of the revenues are state and federal operating or capital grants, plus fare box revenues.

Fisher summarized AATA’s assets this way: Total assets are $51,831,000, against which there are $11,212,000 in liabilities, leaving $40,619,000 in net assets.

Of those net assets, a substantial amount are capital assets, Fisher said, which is consistent with the typical case for a transit authority. Buildings, buses minus the depreciation totals $31,798,000 of capital assets for the AATA. Subtracting the capital assets from the total net assets gives $8,820,000 as the effective “working capital” of the AATA – money that is available to spend. That compares with $8,511,000 at the end of FY 2009.

Fisher also told the board that in addition to the basic financial audit, his firm was also responsible for auditing compliance with federal regulations – any time an organization receives more than $500,000 of federal grant money, such an audit is required because the Single Audit Act applies. The sum of federal assistance for the fiscal year was $8,729,000, Fisher reported, which is an increase compared to the last few years. That’s because of federal stimulus money, he said.

As an example of the federal compliance auditing, for the construction of the Plymouth Road park-and-ride lot, the AATA was required to comply with the Davis-Bacon Act, which requires that prevailing wages be paid for any public project. Fisher cautioned that the AATA needs to make sure that Davis-Bacon Act compliance on construction contracts is systematically verified by AATA, even when that responsibility is “farmed out” to a third party.

Among the other suggestions made that resulted from the audit were: (1) to have the board sign off on a list of vendors/contracts greater than $25,000 – indicating that the AATA’s conflict of interest policy has been met – before the contract is executed; (2) that only the accounts payable accountant, or the controller – but not the payroll accountant – be able to distribute management and hourly paychecks; and (3) when a journal entry is made, it should be documented and reviewed by someone other than the person who prepared the journal entry.

During the CEO’s question time, Charles Griffith asked CEO Michael Ford if he had anything to report on how the recommendations of the auditor would be implemented. Ford indicated that he’d have some remedies that would provide clear solutions, and would provide more details at the next performance monitoring committee meeting.

After entertaining questions from the board, Fisher expressed appreciation for AATA awarding a one-year audit contract to Rehmann. He noted that he’d heard rumblings that the AATA was contemplating changing audit firms. He reported that effective Jan. 1, 2011, Rehmnann had merged with a firm in Ann Arbor – Wright Griffin Davis and Co. If the AATA wanted to allow Rehmann to continue to bid on the auditing contract, they could continue to receive service with the same expertise, plus have a local presence. They could include a partner from Wright Griffin Davis for the AATA work, if what was desired is a another set of eyes, Fisher said.

By way of background, at its Sept. 16, 2010 meeting, the board awarded just a one-year contract to Rehmann Robson, amid a discussion about the possibility of changing its policy on awarding its auditing contract, so that a certain amount of rotation among firms would be enforced. From The Chronicle’s coverage of that meeting:

It gave her a reason to review the general policy on the awarding of auditing contracts, [Sue] McCormick said, which was to award them for no more than five years. Rehmann Robson has been under contract for auditing services for the AATA for the last 10 years. There’s no policy in place, she said, to ensure a variety of perspectives from different auditors – no term limit on auditors, she said. But because the current firm is very familiar with the AATA, they are able to offer their services more cost effectively, McCormick said – they’re familiar with the AATA chart of accounts, for example. She said that for the time being the recommendation is to move ahead with a one-year contract and use the time to review the auditing policy.

FY 2010 Audit – Board Questions, Deliberations

Board chair Jesse Bernstein wanted to know if the AATA had any “unfunded programs” – like pensions and health care for retirees. Fisher told Bernstein that the liability due to OPEB (Other Post-Employment Benefits) had been pre-funded with the “lion’s share” of its employees. It had been a one-time “pay-off,” Fisher said, and for those employees who did not take advantage of it, the liability is being recorded in the financial statements – it’s currently $179,685, he said, which is very small. For other organizations, that number would be in the millions of dollars, Fisher said.

Bernstein drew out the fact that when that obligation is eventually paid, it would need to be paid out of the working capital, just as if it were an account payable to a vendor. The defined contribution plan, Fisher said, is a percentage of the payroll, so there’s no hidden cost there. With a defined benefit plan, sometimes organizations will find that the trust fund will lag behind the required payment to meet the requirements of the benefit to be paid out. It’s not a problem for the AATA, Fisher said, because it has mostly switched over to a defined contribution plan.

David Nacht objected somewhat to the characterization Fisher had provided, saying that in connection with the last collective bargaining agreement, the AATA had maintained the defined benefit plan for its employees – but simply limited its obligations to that program to a defined contribution. That is, AATA agreed to make a certain contribution towards employee’s pensions every year and not to waver from it, or to borrow from it. Employees, for their part, agreed to increase their own contribution, if the AATA’s contribution were ever actuarially insufficient to achieve the benefit that is supposed to be achieved. It’s a way of sharing the risk with employees – it’s something the AATA is rather proud of, Nacht concluded.

Roger Kerson wanted to put the financial picture in the context of the countywide service expansion that the AATA is considering, which will require additional resources. As a summary, Kerson said, the AATA is managing around $28 million in expenses and had commensurate revenue to cover those expenses. He noted there are roughly $30 million in net assets. He asked for confirmation from Fisher that AATA is, on the whole, using financially sound practices compared to other agencies his firm has reviewed. Fisher confirmed for Kerson what he wanted to hear, citing specifically the working capital of around $9 million – that’s adequate, Fisher said. In contrast, he said, some other organizations have deficits in their working capital.

Kerson also asked for confirmation that all the local, state and federal taxes used by the AATA were being used for the purposes for which they were intended – Fisher gave that confirmation.

Sue McCormick wanted to know what the impact of GASB (Governmental Accounting Standards Board Statements) 54 is on the AATA – GASB 54 defines the standard practice for how fund balances are reported. Fisher answered by saying that GASB 54 would not apply to the AATA’s enterprise funds, because AATA uses a “full accrual” basis of accounting. That is, revenue is recognized on the ledger as soon as it is earned and expenses are recognized when the related benefit is received. [In contrast, a "cash basis" of accounting would recognize revenue only when it's actually received, and expenses only when they are actually paid.]

Fisher noted that the city of Ann Arbor, like many governmental entities, has a “modified accrual” basis of accounting. That is, revenue is recognized when it becomes both available and measurable, rather than when it is earned; expenditures are recognized when the related liability is incurred. GASB 54 applies to governmental funds that are on a modified accrual basis, explained Fisher, so it had an impact on the city’s books, but not the AATA’s.

When the board reached the point on their agenda when it actually voted on the resolution, Sue McCormick took the opportunity to compliment the AATA staff on their excellent work and said she looked forward to Ford’s planned remedies for the minor process issues that had been identified.

Outcome: The board voted unanimously to accept the auditor’s report.

Media Contract

The board considered a resolution to award a one-year contract for media placement services to be provided by Orange Egg, an Ann Arbor company. Orange Egg will identify the appropriate media for advertising, place the buys and handle the billing.

The contract provides for four additional one-year renewals. AATA expects to spend more than $100,000 under the contract, so it required board approval. In describing the contract during his report from the planning and development committee, Rich Robben noted that Orange Egg would essentially be acting as a pass-through agency, and the AATA costs would be billed against Orange Egg. So he wanted to make sure that it’s documented properly for auditors to review.

The board did not deliberate on the motion, having heard a description of the contract from Rich Robben during his report from the planning and development committee.

Outcome: The board unanimously approved the contract with Orange Egg for media services.

MOU: Washtenaw Avenue Bus Pull-Out

Not originally on the agenda was a resolution to authorize the CEO to sign a memorandum of understanding (MOU) with the city of Ann Arbor regarding construction a bus pull‐out on eastbound Washtenaw Avenue, east of Pittsfield Boulevard. The bus pull-out is part of a larger project – a transfer center on the south side of Washtenaw Avenue at Pittsfield Boulevard, opposite Arborland mall – which will include a “super shelter.” The project is being paid for with federal stimulus money granted to the AATA.

During question time, Sue McCormick asked if a copy of the MOU was available – it was not. Chris White, manager of service development for the AATA, explained that the draft was being reviewed by the city attorney’s office and that the AATA had just received it the previous day – it hadn’t been reviewed by the AATA yet.

When the board came to the actual agenda item, board chair Jesse Bernstein asked if there was time pressure – could they wait until the board had the actual MOU before voting?

White indicated that there was, in fact, some time pressure. The city of Ann Arbor has already gone out to bid, had received bids and was ready to award a contract, he said. The city council would be acting at its first meeting in April to award the contract, he continued. He wasn’t sure if the city was requiring that an MOU be signed before awarding the contract. He turned to McCormick for insight – she’s the public services area administrator for the city of Ann Arbor.

McCormick said it depends on the terms of the MOU. White noted that the city is handling the contract, but AATA is paying the bills from a grant. McCormick said depending on the exact language in the MOU, it might be the case that the city would have to award the contract contingent on the AATA board’s action and an agreement to pay.

The board was in favor of the agreement with the city, but was reluctant to vote on the memorandum absent a copy of the text of the memorandum itself.

Board chair Jesse Bernstein suggested that a draft be circulated by board members and that board members “vote electronically.” There seemed to be a consensus that this would be the board’s intended course of action. There was no discussion about whether this strategy would comply with Michigan’s Open Meetings Act.

Outcome: The board did not act on the memorandum of understanding with the city of Ann Arbor.

Board: Communications, Committees, CEO, Commentary

At its March meeting, the board entertained various communications, including its usual reports from the performance monitoring and external relations committee, the planning and development committee, as well as from CEO Michael Ford. The board also heard commentary from the public. Here are some highlights.

Comm/Comm: Ridership Numbers

Reporting out for the performance monitoring and external relations committee, Charles Griffith said there were no big surprises in the monthly financials and performance statistics. [.pdf of tables and graphs for performance data extracted from the board packet] He noted that regular bus ridership was now just about even with last year’s ridership, after showing decreases for several months, and it was a good sign that the AATA was on its way back to its historic high ridership levels. [By way of comparison January ridership for 2011 showed an average of 22,834 weekday passengers compared to 22,618  in 2010. In February, there was a slight slip from 22,422 last year to 22,210 this year.]

Comm/Comm: Night Ride Expansion

Also during his report from the performance monitoring and external relations committee, Griffith said that the committee had been briefed on the expansion of the Night Ride shared taxi service to the area up to Golfside Road. It would be an experiment to see how much the service is used in the expanded area, he said. The AATA would be taking it slow to make sure that the level of service for existing users is not degraded.

Comm/Comm: Website Development

Part of Griffith’s performance monitoring and external relations committee report touched on the redevelopment of the AATA’s website. Griffith said the board would be getting a more complete update as that process unfolds.

Comm/Comm: Report from CEO Ford

In addition to the remarks that Michael Ford made about the work on the transit master plan (TMP) and future funding (see above), he also reported that he and deputy CEO Dawn Gabay had attended a Michigan Public Transit Association (MPTA) conference and met with Michigan state House representatives Jeff Irwin and Rick Olson.

Ford also made a point of thanking the staff for their hard work during the planning of the TMP, which was accomplished in the course of all the other regular day-to-day operations that had to be done to keep the buses running.

Comm/Comm: Annual Retreat Planning

Reporting out from the planning and development committee, Rich Robben said that committee members had discussed the planning of the board’s annual retreat, scheduled for Friday, June 3, 2011. Work was continuing on the agenda for that retreat, Robben said.

Comm/Comm: Local Advisory Council – Saying Thank You

Karen Wanza reported out from the AATA’s local advisory committee (LAC), the entity through which the AATA receives input and advice from people with disabilities and senior citizens interested in AATA services. She said that several people had attended their meetings who had expressed an interest in finding a way of showing appreciation to AATA employees who went above and beyond the call of duty. So LAC is looking for a some way of implementing such some kind of Driver of the Month program.

Comm/Comm: More Transparency

Addressing the board at the end of the meeting during the second slot that’s available for public commentary, Thomas Partridge called on the AATA to televise its committee meetings in addition to its board meeting. There needs to be more detailed discussion of issues at the board meetings, he said. He called for linking the transit system in Washtenaw County with other transit systems in southeast Michigan to form one united transportation system.

Present: Charles Griffith, David Nacht, Jesse Bernstein, Sue McCormick, Rich Robben, Roger Kerson, Anya Dale

Next regular meeting: Thursday, April 21, 2011 at 6:30 p.m. at the Ann Arbor District Library, 343 S. Fifth Ave., Ann Arbor [confirm date]