CITY COUNCIL: Policy Direction Regarding Transforming MST from a JPA to MST District

Meeting Date: 3 March 2009
Prepared by: Rich Guillen

City Council
Agenda Item Summary

Name: Receive report and provide policy direction on the proposal to transform MST from a JPA to the Monterey-Salinas Transit District.

Description: Monterey–Salinas Transit (MST) is a Joint Powers Agency (JPA) created by the State of California to provide public transit services to citizens of and visitors to communities which comprise its member jurisdictions. MST also operates transit services under contract to other communities in Monterey County and connecting services to other transit providers at Watsonville, Gilroy, Morgan Hill and San Jose. While MST is a JPA, many other transit agencies are organized by the California Public Utilities code as transit districts.

At the January 12, 2009 meeting of the MST Board of Directors, its 2009 Legislative Program was adopted. Staff was directed to explore the possibility of transforming MST from a JPA to a transit district. Since then, MST has been working with its legislative representative in Sacramento to craft a legal framework to accomplish this effort.
Overall Cost:

City Funds: None
Grant Funds: N/A

Staff Recommendation:

Important Considerations: Council may offer its support of the proposal by authorizing the Mayor to draft a letter of support to be forwarded to Assembly Member Anna Caballero.

Decision Record: None

Reviewed by:

__________________________ _____________________
Rich Guillen, City Administrator Date

February 24, 2009
Carmel City Council
Attn: Heidi Burch
Carmel City Hall
PO Box CC
Carmel CA 93921

Dear Ms. Burch:

The City of Carmel is one of the members of the Monterey-Salinas Transit Joint Powers Agency (JPA). As you may have heard, the state deficit reduction budget deal currently under consideration in Sacramento would result in the complete elimination of the State Transit Assistance program. MST uses State Transit Assistance to fund the majority of its RIDES paratransit services for specially qualified persons with severe disabilities. Without the State Transit Assistance program, MST will need to find alternative sources of revenue to fund the RIDES program to avoid devastating cuts to our fixed-route transit services and further increases to passenger fares, which were just raised in January.

As a JPA, MST does not have the ability to raise revenues itself. Assemblymember Anna Caballero has offered to introduce a bill in the legislature that would transform MST from a JPA to a transit district, thereby granting this agency the ability to ask the voters of Monterey County directly for a local sales tax and to raise revenues through the issuance of bonds. At the February 9th meeting of the MST Board of Directors, staff was given direction to pursue this action (see attached MST Board memo).

Please note that there would be no additional expense required from the City of Carmel to affect this change in MST’s governance. Before introducing the bill, Assemblymember Caballero has asked for a resolution from each of the existing JPA members supporting MST’s efforts to develop stable long-term sources of revenue, which is one of MST’s five strategic goals that were adopted by our Board of Directors in 2007. In that regard, please find the attached draft language that can be used as a model for a resolution that would be considered by the city council at its March 3nd meeting. Thank you for expediting this matter, as Assemblymember Caballero has asked for all resolutions of support by March 20th.

Sincerely,
Carl G. Sedoryk
General Manager/CEO
Attachment

Agenda # 9-1
February 9, 2009 Meeting
_____________________________________________________________________
To: Board of Directors
From: H. Harvath, Assistant General Manager – Finance & Administration
Subject: Proposal to Create the Monterey-Salinas Transit District

RECOMMENDATION:
Authorize staff to proceed in pursuing a legislative change to the Public Utilities Code to create the Monterey-Salinas Transit District.

FISCAL IMPACT:
None.

POLICY IMPLICATIONS:
Your Board approves changes to the governance structure of the MST Joint Powers Agency; this action would be consistent with and support “Strategic Goal #2 – Develop stable long-term revenue sources” from MST’s three-year strategic plan, adopted by your Board in 2007.

DISCUSSION:
Monterey-Salinas Transit is a Joint Powers Agency (JPA) created by the state of California to provide public transit services to citizens of and visitors to communities which comprise its member jurisdictions. In addition, MST operates transit services under contract to other communities in Monterey County as well as connecting services to other transit providers at Watsonville, Gilroy, Morgan Hill and San Jose. While MST is a JPA, many other transit agencies are organized by the California Public Utilities code as transit districts. One of the advantages of the transit district form of governance is the authority to levy taxes with the approval of the voters residing in that district. For instance, Santa Cruz Metropolitan Transit District receives revenues from a local sales tax that was approved by the county’s voters and that is dedicated solely to funding transit services.

Given the billions of dollars in cuts to State Transit Assistance in recent years, plus the governor’s proposed complete elimination of the State Transit Assistance program in future years, MST must seek alternative ways of funding its transit services locally. In November 2008, a ½-cent sales tax for transportation proposed by the Transportation Agency for Monterey County failed to garner the 2/3rds majority required to be implemented. Had the TAMC tax passed, MST would have received 20% of the revenues that would have been generated by that tax. While MST would continue to support TAMC’s future efforts to secure local funding for a broad range of transportation projects, it is possible that MST would need to find local sources of revenue before another TAMC sales tax would be able to garner the supermajority required to pass.
Transforming the Monterey-Salinas Transit JPA into a transit district would give MST the flexibility to ask the voters of Monterey County directly for a local sales tax to support public transit services. While there is no guarantee that a transit only sales tax would pass, MST as a transit district would, with direction by your Board, at least have the option of pursuing that funding mechanism. As a JPA, MST does not have that legal authority. In addition, an MST transit district would have bonding capabilities. As a JPA, MST has secured financing in the private markets to fund its bus replacement program. While MST has received competitive rates from the private markets, it is possible that interest rates would be even lower through bond financing, which would free up more of the agency’s money to fund transit services for its customers rather than interest
payments to banks.

At the January 12th meeting of your Board, MST’s 2009 Legislative Program was adopted. Item 2sc of the legislative program directed staff to explore the possibility of transforming MST from a JPA to transit district. In that regard, MST has been working with its legislative representative in Sacramento, JEA & Associates, to craft a legal framework accomplish this effort. The attached draft
legislation for the creation of the Monterey-Salinas Transit District has been compiled by borrowing, in part, from existing Public Utilities Code statutes for other transit districts around the state, including that for Yolo and Santa Cruz counties. In addition, the draft legislation, which has been reviewed by general counsel, has been developed with MST’s existing JPA member jurisdictions, bylaws, composition, policies and procedures in mind to facilitate a quick and easy transition to a transit district if it were enacted. Pending approval by your Board, staff would request the assistance of Assemblymember Anna Caballero with carrying this bill through the legislative process.

Subsequently, MST staff would then request letters from each member jurisdiction in support of its efforts to become a transit district to assist in moving the bill successfully through the legislature.

Attachment: Draft Public Utilities Code language creating the Monterey-Salinas Transit District