Monday, November 18, 2019

Stop Proposed $45 Million Central Avenue BRT As Dishonest Transit Agency Is Going Broke

Pinellas Suncoast Transit Agency (PSTA) is headed towards insolvency. PSTA's operating expenses keep increasing, their ridership and farebox recovery continue declining and PSTA is using their Reserves to keep operating.
Chart presented at May 29, 2019 PSTA Board meeting
Instead of addressing their declining financial position, PSTA is pursuing a proposed $45 million Central Avenue Bus Rapid Transit (CA BRT) service. PSTA submitted a grant to the Federal Transit Administration (FTA) requesting tens of millions of taxpayer dollars from the FTA and from the Florida Department of Transportation (FDOT) for the CA BRT.

PSTA's financial health is deteriorating. The FTA or FDOT should not be handing transit grant dollars for a costly and unneeded new service to a dishonest transit agency going bankrupt.

PSTA continues to run deficits and are depleting their Reserves to keep operating. PSTA will accelerate their insolvency if they use millions of their Reserve dollars to fund the CA BRT. And PSTA's funding portion of the CA BRT keeps increasing.

PSTA's proposed CA BRT is an unneeded transit service that uses road diets to remove valuable lanes of vehicle traffic for a bus only lane. The CA BRT is opposed by 2 of the 3 municipalities along its route - St. Pete Beach and S. Pasadena.

PSTA is barreling towards bankruptcy. PSTA and their proposed CA BRT project are a fiscal mess and the FTA must reject PSTA's grant request.

PSTA's FY2020 Budget reflects that over the last 10 years, annual Farebox Revenues decreased by over $1.5 million while Operating Expenses increased by $20 million.

As ridership keeps declining, PSTA has not taken due diligent actions to address their unsustainable fiscal issues.
Expenses increasing as Farebox declines
In FY2020, PSTA expects farebox revenues to be 4.84% LESS than FY2019. With the city of St. Pete Beach eliminating and reducing their contracted beach Trolley services, PSTA expects their beach Trolley revenues to be 6.04% LESS than FY2019.

Even with PSTA's property tax revenues expected to be almost 8% higher in FY2020, PSTA will run a deficit of over $1.7 million. PSTA's FY2020 budget states:
PSTA will be using reserves for operations to maintain service to Pinellas County. The PSTA Board is supportive of seeking new revenue sources to bridge operating deficits while long term solutions are developed and workshops to achieve this are on-going.
As PSTA admits they are going broke and seeking new revenue sources, we can also assume behind the scene discussions being held with deep pocketed special interests to fund another transit tax hike campaign.

PSTA's operating expenses have increased almost 16.5% since 2018. PSTA has 23 more employees than they had in 2009 when their ridership was higher. 

PSTA financial information is found in numerous places from their Budget documents to their Comprehensive Annual Financial Report (CAFR) to their Transportation Development Plan to presentations made to the PSTA Board. 

PSTA's 2018 CAFR reflects their bus ridership declined 4.24% and their overall ridership declined 3.55% from 2017. While property tax revenues increased 9% in 2017 and 2018, the 2018 CAFR states "In FY 2019, total operating budget expenses of $80,838,053 and operating and non-operating revenues of $79,047,587 will result in an operating deficit of $1,790,466 that will be funded by a transfer from reserves."

As the chart above represents, PSTA is using their Reserves for operating expenses to cover their annual deficits instead of addressing their unsustainable declining financial position. PSTA currently plans to use about $8 million of their capital reserves for their proposed $45 million (CA BRT) service, an increase of $3 million since PSTA initially submitted their grant request.

PSTA must provide information regarding their financial position in their grant application submitted to the FTA for their proposed $45 million Central Avenue Bus Rapid Transit (CA BRT) service. 

In the financial information PSTA submitted in their initial grant request to the FTA in September 2017, PSTA claimed: 
  • CA BRT capital costs estimated at $41.36  million
  • PSTA will use $5 million of Capital Reserves for the CA BRT
  • St. Pete Beach is a funding partner who would contribute $1.5 million when St. Pete Beach never agreed to fund or support the CA BRT.
  • PSTA (optimistically) anticipates a route farebox recovery of 29%-39% for the CA BRT
  • Capital Reserve balance projected to be reduced from $25.3 million in 2017 to $2.5 million in 2021 
  • In 2021 PSTA will run a deficit of over $6.85 million

In PSTA's grant update submitted to the FTA in September 2018, PSTA claimed:
  • CA BRT capital costs estimated at $41.38 million
  • St. Pete Beach is a funding partner who would contribute $1.5 million when St. Pete Beach never agreed to fund or support the CA BRT.
  • PSTA will use $5 million of Capital Reserves for the CA BRT 
  • PSTA (optimistically) anticipates a route farebox recovery of 30% for the CA BRT
  • Capital Reserve balanced projected to go negative in 2022 - reduced from $25.5 million in 2018 to $-8.6 million in 2022 
  • In 2022 PSTA will run a deficit of over $8.6 million

In their latest grant update to the FTA submitted in August 2019, PSTA finally removed St. Pete Beach as a funding partner and claimed:
  • CA BRT capital costs estimated at $43.93 million
  • PSTA will use $7.6 million of Capital Reserves for the CA BRT
  • PSTA (optimistically) anticipates a route farebox recovery of 44% for the CA BRT while also stating overall farebox recovery declines to 11%
  • Capital Reserve suddenly projected to increase from $23.8 million in 2019 to $28.2 million in 2023 
  • PSTA suddenly no longer running deficits 

Coincidentally, PSTA added this new section in their 2019 FTA grand request update - that they had never included before - admitting they are seeking a new funding source.
New Revenue Sources Based on community and elected official support of public transportation in Pinellas County, combined with overall needs for improved transportation, the Pinellas County Commission held a workshop in July 2019 to explore new funding sources for transportation. Proposed sources included an increase in local option gas tax and local option sales tax. 
PSTA presented needs for continued county-wide service operations and state of good repair as detailed in the agency’s 2018 Transit Asset Management Plan in addition to service expansions beyond the Central Avenue BRT. The Board of County Commissioners in cooperation with Forward Pinellas (Metropolitan Planning Organization) will continue to explore options for increased funding for transportation across the county including roadway, bicycle and pedestrian safety and public transportation improvements through the Spring and Summer of 2020. 
A 5-cent local option gas tax increase would require only the vote of the Pinellas County Commission and generate approximately $17M annually. 
A local option sales tax would require a referendum and could be scheduled as early as November 2020. A ½-cent sales tax would generate approximately $95M annually (2019$).
PSTA never informed the public this project requires a new funding source. PSTA continues to be dishonest with the public and the FTA about the CA BRT project.

How did PSTA claim in August 2019 they will have $28.2 million in Capital Reserves in 2023 when they previously told the FTA in 2018 their Capital Reserves will be a deficit of $-8.6 million in 2022?

PSTA claims a new funding source created out of thin air….

PSTA suddenly included a new funding source that does not exist in their 5 year budget projections for FY2019 through FY2023. PSTA's new funding source magically shows up in 2021 as if a tax hike referendum got passed in 2020.

PSTA misleadingly claims $45 million of new revenue that does not exist ($15 million a year in FY2021, 2022 and 2023). PSTA then claims a false surplus they transfer to their Capital Reserves to misleadingly show a positive balance. This is nonsense.
PSTA adds $45 million of new Revenue that
does not currently exist to their Operating Budget projections
(click to enlarge)
PSTA made up a new funding source and slotted it in as if it were real - in their federal grant request. This is misleading and dishonest. The FTA cannot accept or condone such dishonesty that is a pattern of behavior with PSTA.

PSTA was already caught misleading the FTA when they falsely claimed the city of St. Pete Beach was a funding partner and supporter of the CA BRT.

It appears PSTA is again providing misleading information to the FTA trying to make the appearance their financial position is much better than the fiscal mess it actually is.

And PSTA has a history of dishonest behavior. PSTA was also caught misusing federal transit security funds for their Greenlight Pinellas rail tax marketing campaign in 2014 and forced to return over $350K to the Feds over that brouhaha.

PSTA's financial information is a mish mash of inconsistency and what appears to be an incomprehensible trail of financial numbers.

Time for some adult supervision of PSTA.

The State needs to do what they just did with the city of Gainesville. The State Joint Legislative Auditing Committee recently voted to send an auditor general for an in-depth inspection of the city of Gainesville's finances. 

The State needs to send in an auditor general to scrutinize a decade of PSTA's operational practices, managerial oversight, its deteriorating financial health and whether the governing Board is providing proper financial oversight.

The financial information in PSTA's latest Transit Development Plan (TDP) from August 2019 does not include any new funding source.

The 10 year operating budget projections in the TDP shows PSTA runs a deficit every single year from 2019 through 2029. The deficit increases each year from $504.8K in 2019 to $22.5 million in 2029.

Over the 10 years 2019-2029,  PSTA estimates they will run a deficit of about $130.5 million. 

The TDP clearly reflects PSTA is going bankrupt. 

PSTA's TDP is also submitted to the FTA. How can the FTA square the distressing financial information in PSTA's TDP with made up financial information PSTA included in their CA BRT grant request to make their insolvent financial position appear solvent?

They can't.

The FTA cannot award competitive federal grants based on financial information that is made up and revenue sources that do not exist. The FTA cannot award federal grants to transit agencies who are in financial distress and on the brink of insolvency.

The FTA must reject PSTA's CA BRT grant….and the sooner the better for us all.

Because the CA BRT expedites PSTA's insolvency.

And taxpayers beware...

As PSTA seeks a short term bailout from the Feds, they are also using the CA BRT project to pursue another tax hike referendum - probably in 2020.

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