Fairy Tale Contracting at Capital Metro in Austin

To resolve conflicts between federal law that protected bargaining rights, and Texas law that forbids public entities from engaging in collective bargaining Capital Metro created a legally separate entity called Star Tran Inc. This is essentially a sham organization that does not have its own money, or offices, or any property whatsoever.

What Star Tran does have is some extremely well paid Directors that alternate between being their own kings in pretend Star Tran board meetings, and then acting like puppets at the whim and fancies of the GM and executives of Capital Metro. As any common sense person can see there are lots of problems with this, like no one is sure who is in charge of what or why, and there is replication of very high paid positions etc. It also happens to violate Texas Code about competitive bidding for contracts with public entities, and yes, Capital Metro is surely a public entity, actually a political subdivision of the State of Texas. (Although Capital Metro likes to pretend that not only are they above State Law but Federal Laws as well when it comes to the Occupational Health and Safety Administration. But we will get to that later.)

More to come about how CMTA has failed to follow regulations for competitive bidding and performance based contracting since 1990, and we will track just how pathetically this arrangement has worked out for the past two decades.

Expect Huge Expenditures in Public Transit - Are you Watching?

Transit authorities are about drooling at the idea of a huge tide of federal dollars coming from the Stimulus Package. We can expect these public entities to be expanding the existing projects they have, and to start new ones to get the money. What is important is that these agencies are not really being watched. Yes they are required to have regular audits and they have reviews by the FTA. But you would be shocked at what audits miss, in many cases, unless the fraud is totally blatant auditors will never see it. Additionally, auditors are not looking examining these entities for good management or efficient management, if they were they would have to look really hard in some cases. As for the FTA, we are talking about the Federal Transit Administration, and if you remember the overpriced toilet seats and overpriced bolts scandals, well, pretty much the same people are in charge of being "watch-dogs" over public transit. Yes, make your own conclusions, but the notion that the federal government has been capable or trustworthy in watching itself is ridiculous to most common sense people. This stated, the responsibility of watching the use of our dollars in transportation and city expenses falls to us. If you are trusting your public servants and managers in these institutions you are mistaken.

Senator Kirk Watson Proposes a Good Idea for Overhaul of CMTA

Read below from the Austin Statesman how ally and best friend Kirk Watson in the legislature is doing his best to change regulations and possibly the entire structure of Capital Metro in Austin. Well, this is the time to do it, but let's not engage in half measures here. Capital Metro has been it's own weird, overpriced and most privileged part of the city for a very long time. The executives have spent money hand over fist, brought in consultants to tell them what to do and how to manage, and always pretty much had green stamps from the Board of Directors, who often seem like they are not really sure how much money they have approved to be spent on what. Kirk Watson has the right idea, but it does not go far enough. Read below

Watson proposes Cap Metro changes. Board would be overhauled, rail vote requirements eased.

The Capital Metro board would be overhauled and the requirement for public rail votes eased slightly under a proposal released Sunday by state Sen. Kirk Watson.

The Austin Democrat, after giving the Capital Metro board and various other local officials a week or so to review and comment on what he has in mind, probably will file legislation to make the changes. Capital Metro, like all transit authorities in the state, was created through state law and is governed by requirements set by legislators in the transportation code.

The current board's makeup was set by state law in 1997, when, as Watson puts it in his Feb. 18 letter to the board and other key officials, the agency "was a disgrace to our community." Watson became Austin's mayor just as the Legislature was making that change. The all-volunteer board of the time was replaced by one with two Austin City Council members, one Travis County commissioner, one suburban mayor, a Williamson County elected official and two citizen members appointed by the Capital Area Metropolitan Planning Organization board.

Watson proposes to have three members appointed by CAMPO, including one elected official, one person with at least 10 years of "financial/accounting experience," and one person with at least a decade of "professional staff executive experience" in the public or private sector.

Two of the three CAMPO appointees would have to be Austin residents. The other four members would be joint appointees of: The City of Austin and Williamson County. The City of Austin and Travis County. The City of Austin and Hays County. The small cities within Capital Metro's jurisdiction. The four joint appointees, under Watson's proposal, don't have to include elected officials. That means the board might have only one elected official.

Capital Metro's service area includes Austin (which provides more than 90 percent of the agency's sales tax revenue and the bulk of its customers), Manor, Leander, a handful of other small suburban cities and parts of unincorporated Travis and Williamson counties. The board could be enlarged, Watson proposes, if there comes a time when at least 35 percent of the Capital Metro service area population comes from outside Austin.

Watson also wants to do away with a requirement that all fare increases go before a "local government advisory committee" of elected officials. Instead, he would have fare increases approved by the Capital Metro board but subject to what would amount to a veto by the CAMPO board. If CAMPO were to leave a fare increase unaddressed for 60 days, it would go into effect.

Finally, Watson, whose proposal arose mainly from a CAMPO "peer review" of Capital Metro completed last fall, would amend the requirement in state law that Capital Metro get voter approval for all expansions of its rail system.

Watson would allow Capital Metro to expand a line by up to one mile without a referendum. Similarly, if another entity (such as the City of Austin) paid to build a line and then hired Capital Metro to operate it, no public vote would be necessary. However, if Capital Metro — which opens its first passenger line, between downtown Austin and Leander, next month — were to build another line with its own funds, a referendum would be necessary under the Watson proposal.

We Need More Trains -- And Money

In the article below Ben Wear of Austin American Statesman newspaper talks about the likelihood that almost immediately Capital Metro in Austin Texas will be taking out loans to buy more trains. Oh yeah, where do you think they will get the money to pay back those loans, well from sales tax revenues. Well, those sales tax revenues are significantly down in the first quarter of this fiscal year. This is a terrific example of the 'we got our foot in the door and we can keep on spending'. So as stated below, CMTA plans to go into either 35 or 70 million dollars of debt, while the success of Metro Rail is questionable, and while the economy is in recession. Expect CMTA to come to the public in coming years complaining about being "in the red" and having to cut core services and possibly lay off workers. I do not know about you, but this sounds like a really dumb plan. Then again, it is also possible that many transit agencies like CMTA are salivating at the idea of that cash infusion from the Obama Stimulus Plan. I think we can expect for large amount of federal cash tagged for transit to vanish into the suction of projects that are various kinds of runaway trains.

From Ben Wear:

"I wrote a column in July about a problem Capital Metro's passenger rail service might have when it opens March 30: popularity.

Or, more to the point, capacity. To keep costs down when it put the rail project before voters in 2004, Capital Metro decided to buy just six self-propelled rail cars for initial service on the 32-mile commuter rail line between Leander and downtown Austin. With a ration of spare parts, that purchase from Swiss railcar manufacturer Stadler set Capital Metro back about $38 million. Capital Metro had to borrow the money from Bank of America.

The problem is that the cars have just 108 seats, with room for another 92 people to stand. And it will take close to two hours for a car to leave from Leander during rush hour, get to downtown near the Hilton Austin hotel and return to Leander. In practice, that means that the five cars (one will be held in reserve) might be able to make only seven runs between 6 a.m. and 9 a.m., with 30-minute intervals between departures. That would be 1,400 passengers max, with the last car not getting downtown until close to 10 a.m.

Last summer, when gas was $4 a gallon and new people were flocking to Capital Metro's express commuter buses, it seemed reasonable to assume that some Red Line trains might fill up in the first two or three stops, leaving steamed customers behind at stations closer to downtown. Maybe that will still be the case, even with the current dirt-cheap gas prices. We'll know in April or May.

With that in mind, Capital Metro staff members say they probably will go before the transit agency board in February for approval to buy six more cars, or perhaps 12. But Capital Metro doesn't have $35 million sitting around (its contract lowers the price for further orders), much less $70 million. So it will have to borrow again.

The credit markets, of course, have been less than robust lately. And Bank of America in particular has had troubles, asking Uncle Sam for an additional $20 billion in bailout funds after $25 billion didn't right the ship.

Randy Hume, Capital Metro's vice president for finance, said last week that the agency was talking to Bank of America to try to nail down the additional loan. The current one costs the agency $4.3 million a year for 10 years. Even though the interest rate might be higher this time — up to 5 percent, rather than 3.7 percent as in the initial loan — Hume said the payments could be lower because Capital Metro could choose to get a 15-year term.

Hume said the agency won't order more cars until financing is secure."We're not there yet," he said. And even if Capital Metro makes the order by March 1, Stadler said it would be two years before the first car arrives, with about four weeks more for each car to follow. And the agency has to test each car here for 1,000 hours or more, a process that takes several months.

Bottom line, don't look for extra capacity on the Red Line until late 2011 or early 2012."

Runaway Train

Capital Metro Rail is about to begin operation in 30 some odd days. In the interest of examining how they are really spending the public dollars we are gathering documents to give the accurate information. Everyone needs to remember that this project was approved by the voters at $90 million. I have heard too often lately the rationalizations about how often these public projects run over budget, and it appears that the effort of these statements is to persuade and wear down the public so that we simply shrug our shoulders and say to ourselves; "well, they say that things always cost more than they planned on" or, "they say that they made it better with that extra money" etc etc. Well, that is not good enough.

The public is really supposed to say to these entities, look- we approved the costs at "x" and four years later you have changed the number, knowing that you are so far into this project that we have to let you finish it. This is the shell game of how public infrastructure projects always run over cost, they know from the start that it will cost much more, so all they really want is the voters approval that they can start the project, and once they have that they know that they are locked in to spend more to get it done. Considering the Stimulus Bill that was just signed by President Obama will infuse lots of cash into transit systems across the country these are not small concerns.

In the next few weeks we will be presenting the information in detail about how much the Austin CMTA Commuter Rail Project is really costing, and will cost in the future. You can expect the CMTA marketing and public relations staff (and consultants - they love consultants) to be working overtime spinning the numbers in the media.

According to this article from Ben Wear in the Austin American Statesman CMTA is if financial wows. What a minute, is that what this article says, I am not sure. You read it and decide. In any case at the same time CMTA was seeing the revenues fall they were throwing money out like it was Christmas on rail, consultants, marketing and lots of nonsense that had nothing to do with its core services. Lets just watch the next few months what "watching costs" means for CMTA. I predict that it means they will be spending more millions on rail, and questionable hired advisors.

Capital Metro, like the rest of America, had a bad fall.

Falling sales tax receipts, falling ridership, falling fare revenue. Fortunately, as a business that uses a lot of fuel, the transit agency also saw sharply falling diesel costs. The result, at least for now, is that the agency expects no layoffs or reduced bus service.

Capital Metro, which depends on its 1 percent sales taxes for about 70 percent of its income, has seen tax revenues that were lower than the same time last year for three straight months. The tax revenue for the first quarter of its fiscal year was 4.3 percent below the same period a year earlier.

Meanwhile, ridership on the agency's regular "fixed route" buses — after a spring and summer gasoline price spike had the effect of packing many rush hour buses — was off 6.6 percent in December from the same month a year earlier, as gas prices below $2 a gallon sent folks back to their cars. November ridership, when there was a three-day strike, was 15 percent below November 2007.

Fare revenue, although well above last year's because of a 50 percent price increase in October, will be about 7 percent below budget predictions under the current trend.

The agency had predicted sales taxes would increase 3 percent in the fiscal year that began Oct. 1. Now the agency expects about $16.4 million less in overall revenue than it predicted in September. At the same time, Capital Metro is predicting that diesel fuel costs will be $9.4 million below budget, or about 41 percent. The agency is paying about $1.50 a gallon for diesel rather than the $3.60 a gallon predicted in its budget.

"The fuel is saving us, big-time," Chief Financial Officer Randy Hume said Wednesday.

The net effect is that Capital Metro expects to have about $31.4 million left after operating costs, rather than the $37.5 million predicted in the budget. That would be enough to cover the $28.8 million in capital projects the agency board approved in the budget.

Hume said the agency has put off some capital spending — replacing a parking lot at headquarters, some computer projects, consulting expenses — and is otherwise watching costs. The current budget had projected adding nine full-time positions this year.