Taking MARTA private

[M II A II R II K]

Taking MARTA private


October 8, 2012



Read More: http://blogs.ajc.com/atlanta-forward...tlanta_forward

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Rep. Mike Jacobs, R-Brookhaven

- We now know that inefficient management is to blame for the fare increases and other financial woes of the beleaguered agency. We know this from the new 114-page audit performed by the national firm KPMG, which finds, “MARTA’s current economic model is structurally unsustainable with costs projected to be greater than revenue for each year through 2021.” It’s time for MARTA’s board of directors to get serious about fixing its dire balance sheet by implementing the recommendations of KPMG.

- Primary among the firm’s suggestions is the outsourcing of seven business functions at MARTA including payroll, employee records and accounts payable which could result in savings of $17 to $27 million over five years. This is a no-brainer for an agency that needs to transform its operations and culture. KPMG’s audit also offered the idea of hiring private contractors to run five other operations including cleaning services, customer care and the highly expensive paratransit services. That savings could total $43 to $115 million over five years.

- Thanks to its union, MARTA’s employees have liberal benefits including healthcare plans with lower employee contributions than the national average and a defined benefit pension instead of a 401k plan. MARTA could save $59 million with modest changes to healthcare and save $34 million assuming it gradually moved to a 401k plan, one common in the private sector. Of course, these sorts of changes will require MARTA management to demonstrate some real backbone in upcoming collective bargaining negotiations. With so much red ink on the books, the MARTA board should not stop their cost-saving efforts at implementing the KPMG recommendations. They should look to other nearby transit systems for tips on how to operate without such massive debt.

- If we turn to Cobb and Gwinnett counties, for example, we may find answers. In each county, a private operator is utilized to run the entire bus system. MARTA is a state-authorized authority. Its enabling law is a state law. The General Assembly’s approach with respect to the KPMG audit findings is likely to follow the advice of Ronald Reagan, “Trust but verify.” The MARTA board states publicly that they plan to implement the KPMG recommendations, so they should not mind if privatization measures are added to MARTA’s enabling law. In our current economic environment, we must consider all creative ideas to keep MARTA afloat.

Paul McLennan - Atlanta Public Service Alliance

- Privatization has a proven track record of failure. The privatization of the Atlanta water and sewer system in 1999 led to the city cancelling its contract with United Water after four years of terrible service. MARTA brought back in-house its paratransit service in 1997 because of all the problems with the private contractor, Dave Transportation. In 2004, the British multinational, First Transit, began operating the C-TRAN buses in Clayton County. Three years later, MARTA took over the service. The bottom line is that the profit motive has no place in public transit. There are some necessary services that a society provides that are not designed to make a profit – fire, police, libraries, schools and mass transit.

- Other funding mechanisms, including state funding, must be found to restore MARTA to its rightful place at the core of any regional system that will be developed in the future. In order to correct the racist history that has had such influence on the lack of development and maintenance of MARTA, it will take a social movement led by those most affected – transit dependent riders and transit workers – to demand that MARTA remain in the hands of the people not the profiteers. The Atlanta Public Sector Alliance urges all residents of metro Atlanta to stop this takeover of public assets for the enrichment of a private few.

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[Rail Claimore]

Privatized transit (especially rail) won't work anywhere outside East Asia without major cuts to service. There just isn't enough high-intensity land use over a large area outside a few cities like Tokyo, Osaka, and Hong Kong.

[McBane]

Why is it that certain people think transit agencies need to turn a profit. Do highways make a profit? No. Why are transit agencies different? Because they cost money? Toll roads cost money and even they are not profitable either.

[Busy Bee]

"The liberty of a democracy is not safe if the people tolerate the growth of private power to the point where it becomes stronger than their democratic State itself. That, in its essence, is Fascism -- ownership of government by an individual, by a group, or by any controlling private power."

-Franklin D. Roosevelt

[electricron]

Originally Posted by Busy Bee

"The liberty of a democracy is not safe if the people tolerate the growth of private power to the point where it becomes stronger than their democratic State itself. That, in its essence, is Fascism -- ownership of government by an individual, by a group, or by any controlling private power."

-Franklin D. Roosevelt

Excellent quote from FDR.

Now, please explain why Amtrak, MARTA, or any other local transit agency, should be considered a self governing state? Does Amtrak provide any function required by a self governing state?

[bobdreamz]

or maybe the state of Georgia can provide MARTA with about 20% of it's yearly budget instead of complaining about the agency that it doesn't give a penny to.

[atlantaguy]

Sigh. This is more business as usual around here, sadly. Sen. Jacobs is the head of MARTOC, a State agency that "oversees" MARTA. Although the state provides absolutely zero funding to MARTA, by law they can dictate how the agency spends its funds. The way MARTA was set up by the state they have been hamstrung since their inception in the 60's.

The recently defeated metro-wide T-Splost vote here in July would have expanded MARTA to Emory and provided over $600 million to assist with infrastructure improvements to the system (in addition to jumpstarting the transit portion of the Beltline). Of course the state legislature insisted the vote be in July during the Republican primary, ensuring defeat. And it was defeated, overwhelmingly (with the exception of the core voting districts in Fulton & DeKalb Counties).

To add insult to injury, MARTA is used as the backbone of our transit network (obviously) yet the state run GRTA suburban luxury coach network and the Cobb and Gwinnett County suburban bus networks plug into the system and rely on it - again, with zero monetary support.

There is a huge Teathuglican element in state government here that would simply like to destroy the system, from our corrupt Governor on down. The upcoming legislature this winter is sure to be amazing to watch.

Despite all this, MARTA transports approximately 240,000 daily on the rails alone. They do a damn good job in my opinion, in spite of the beyond hostile environment they are forced to operate in. We just lost our excellent CEO to Boston to run the MBTA, and she's taking a huge pay cut to leave. Can't really say that I blame her.

[M II A II R II K]

There are necessary services to be provided but in some industries providing them aren't profitable, and those industries shouldn't have the private sector as the main player in it.

Expansion of the system combined with TOD is where some kind of partnership could be carved out but only to do with construction, not running the system after it's built.

There is also the possibility of not having to depend on partnering with the public sector, but the agency itself get into the public sector as it pertains to developing real estate. And government funding could also translate into giving the agency an important piece of land and whoever builds on it would have to pay them every year in lease payments as an additional source of revenue.

Currently the MTR in Hong Kong does that and raise even more money on their local stock exchange. And 100 years ago some American running a London line provided his own power and made money by selling off electricity with his plant that was producing it.

Although in his time creating new subdivisions translated into more riders before cars were prevalent, but to a point that sort of success could be re-created.

[Jonboy1983]

Originally Posted by atlantaguy

Sigh. This is more business as usual around here, sadly. Sen. Jacobs is the head of MARTOC, a State agency that "oversees" MARTA. Although the state provides absolutely zero funding to MARTA, by law they can dictate how the agency spends its funds. The way MARTA was set up by the state they have been hamstrung since their inception in the 60's.

The recently defeated metro-wide T-Splost vote here in July would have expanded MARTA to Emory and provided over $600 million to assist with infrastructure improvements to the system (in addition to jumpstarting the transit portion of the Beltline). Of course the state legislature insisted the vote be in July during the Republican primary, ensuring defeat. And it was defeated, overwhelmingly (with the exception of the core voting districts in Fulton & DeKalb Counties).

To add insult to injury, MARTA is used as the backbone of our transit network (obviously) yet the state run GRTA suburban luxury coach network and the Cobb and Gwinnett County suburban bus networks plug into the system and rely on it - again, with zero monetary support.

There is a huge Teathuglican element in state government here that would simply like to destroy the system, from our corrupt Governor on down. The upcoming legislature this winter is sure to be amazing to watch.

Despite all this, MARTA transports approximately 240,000 daily on the rails alone. They do a damn good job in my opinion, in spite of the beyond hostile environment they are forced to operate in. We just lost our excellent CEO to Boston to run the MBTA, and she's taking a huge pay cut to leave. Can't really say that I blame her.

How do you feel about Bland, the current CEO of Pittsburgh's Port Authority? You know he's in the running for that opening, right?

[atlantaguy]

Originally Posted by M II A II R II K

There are necessary services to be provided but in some industries providing them aren't profitable, and those industries shouldn't have the private sector as the main player in it.

Expansion of the system combined with TOD is where some kind of partnership could be carved out but only to do with construction, not running the system after it's built.

There is also the possibility of not having to depend on partnering with the public sector, but the agency itself get into the public sector as it pertains to developing real estate. And government funding could also translate into giving the agency an important piece of land and whoever builds on it would have to pay them every year in lease payments as an additional source of revenue.

Currently the MTR in Hong Kong does that and raise even more money on their local stock exchange. And 100 years ago some American running a London line provided his own power and made money by selling off electricity with his plant that was producing it.

Although in his time creating new subdivisions translated into more riders before cars were prevalent, but to a point that sort of success could be re-created.

MARTA has done some of this. They've leased some air rights for a couple of towers, and they were joint venture partners in a rather large TOD at Lindbergh Center (major transfer point).

They have recently indentified certain stations to focus on with more comprehensive jv plans going forward. The urban real estate market is in recovery mode here, so I'm hopeful we'll see some good projects soon.

[atlantaguy]

Originally Posted by Jonboy1983

How do you feel about Bland, the current CEO of Pittsburgh's Port Authority? You know he's in the running for that opening, right?

Jonboy1983 - I actually posted in the Pittsburgh thread requesting info and opinions of Bland! He was one of two finalists for the job.

Keith Parker of San Antonio's VIA snagged it, however.

Here's a post from an extremely well respected local site if you're interested in the two finalists:

http://saportareport.com/blog/2012/0...two-finalists/

[Shawn]

Public transit isn't supposed to make money. It's a public works. Governments will invest in public works because of the overall benefit to society when there is a lack of private sector benefit (a project that will not generate revenue) or the risk is too great for a private company to accept on its own.

JR East had an operating profit of about USD 200 million in 2011, and I'd say that JR East is in the best position out of any transit authority in the world to make money. 24 million daily weekday trips in Tokyo will do that, but revenue actually doesn't come from riders - it's the media and advertising space that brings in the cash. Rates for a single Yamanote train take-over can top USD 100,000 a day!

[M II A II R II K]

With Hydro it's either there's enough power and water for everyone or there isn't to fund it adequately.

Since transit isn't that much of an essential need it becomes open ended as to how much money to put into it and for potential expansion.

[ardecila]

Nobody's suggesting MARTA needs to make money. They receive farebox revenue and tax subsidies and those should add up to equal their expenses. We understand the need for MARTA to receive subsidies but it's absolutely crucial that they balance their budget without borrowing.

The only reason transit agencies should borrow is for one-time capital investments or to smooth out severely depressed tax revenue (like during a recession).

[emathias]

Originally Posted by McBane

Why is it that certain people think transit agencies need to turn a profit. Do highways make a profit? No. Why are transit agencies different? Because they cost money? Toll roads cost money and even they are not profitable either.

I didn't see where anyone said they need to. Privatizing when it comes to transit means giving a private operator a fixed amount of subsidy and rules about what level of service they can provide and then leaving it up to them to make it happen and allowing them to keep any profit. In theory, if they can provide the same or similar service for the same public subsidy what would change is the trendline of cost increases. Like I said, that's the theory anyway. Sometimes it's sold as an instant cost saver, and sometimes that can be true, but the biggest savings, again, in theory, are in changing the angle of cost trendlines. Or in getting out from under a union contract that was politically motivated instead of motivated by efficient, fair use of labor.

Originally Posted by Rail Claimore

Privatized transit (especially rail) won't work anywhere outside East Asia without major cuts to service. There just isn't enough high-intensity land use over a large area outside a few cities like Tokyo, Osaka, and Hong Kong.

Complete privatization won't work without enormous densities. Private operations with fixed subsidy could work. The main reason it didn't work in London is that London didn't write a strong enough, detailed enough contract and didn't evaluate bids well enough for plausibility. But financially, there's absolutely no reason why a well-described, well-bid and well-evaluated privatization that includes strong definitions of service and a set subsidy couldn't work. The trouble is really when cities solicit the bidding without involving the people with the expertise to make it viable.

[Jonboy1983]

Originally Posted by atlantaguy

Jonboy1983 - I actually posted in the Pittsburgh thread requesting info and opinions of Bland! He was one of two finalists for the job.

Keith Parker of San Antonio's VIA snagged it, however.

Here's a post from an extremely well respected local site if you're interested in the two finalists:

http://saportareport.com/blog/2012/0...two-finalists/

I think I remember you posting in the Pittsburgh discussion thread, come to think of it. I guess we'll wait and see what Parker can do with MARTA's issues.

Actually, and not to turn this into a thing about Port Authority, but they need to be better run. They have very little self-management and oversight if they even have any at all. They're very narrow-minded and short sighted with their decision-making, which has pretty much rendered the transit agency poorly managed; one of the reasons they can never seem to erase their fiscal deficits year in year out. They look at transit service cuts as the only way of cutting costs to erase debt. Um, how about restructuring your service? How about reroute some of your underperforming bus routes instead of cutting them altogether? You can boost ridership and fare revenues. If you cut service, well there goes whatever fare revenue you were collecting altogether... Not the wisest thing to do...

It seems as tho Marta has similar issues from what I'm reading. Aren't they trying to expand their system tho?

[LtBk]

Originally Posted by Shawn

Public transit isn't supposed to make money. It's a public works. Governments will invest in public works because of the overall benefit to society when there is a lack of private sector benefit (a project that will not generate revenue) or the risk is too great for a private company to accept on its own.

JR East had an operating profit of about USD 200 million in 2011, and I'd say that JR East is in the best position out of any transit authority in the world to make money. 24 million daily weekday trips in Tokyo will do that, but revenue actually doesn't come from riders - it's the media and advertising space that brings in the cash. Rates for a single Yamanote train take-over can top USD 100,000 a day!

Tell that to libertarians or American conservatives.

[atlantaguy]

Originally Posted by Jonboy1983

It seems as tho Marta has similar issues from what I'm reading. Aren't they trying to expand their system tho?

Yes, they were trying to expand - but the metro-wide tax that would have funded the main expansion with LRT to Emory was defeated in July. Now Emory, the CDC and other major stakeholders in that area are regrouping and trying to figure out how to move forward with funding. There is a lot of will to get this line built.

The first phase of our streetcar Downtown is under construction now though, and MARTA will be running that.

Our largest and most transformative project is The Beltline. This is a 26 mile loop around the central city on old railroad right of way that is a combo of transit, parks and trails. The lead designers also did the High Line in NY. Portions are under construction, and a decent segment has recently opened. It's already caused what could honestly be called a boom in new development on the Eastside. If the tax had been voted in, construction on the LRT portion would have been sped up by about 8 years, and that will eventually link up with the streetcar. The Feds have taken note, and have already funded several grants towards the project. MARTA will also run the transit portion of this.

The Beltline has been called the largest urban redevelopment in the country, and people in the urban core here are totally stoked about it.

http://beltline.org/

Sorry for the long-winded response, but it's all a little complicated!

[llamaorama]

It seems like there would have to be frequent contract renewals with a competitive bidding process to ratchet down how much the private operator makes as they allegedly lower costs. Or else they'll just gut everything to hell and pocket a subsidy greater than what they need.

[atlantaguy]

Here's the latest example of the State screwing with MARTA. Sen. Jacobs is the head of the oversight committee (as mentioned above), and is throwing a public hissy fit since his hand picked GM wasn't selected.

http://www.ajc.com/news/news/marta-d...process/nSbLb/