Thursday, May 28, 2020

Fiscally Distressed PSTA: No Bailouts, Shut Down the Central Ave BRT Boondoggle and Hire a New CEO

Pinellas County's transit agency PSTA is a fiscal mess. PSTA's financial position has been declining for years and their fiscal distress began long before the coronavirus pandemic.

Whether thru incompetence or willful neglect, PSTA has refused to address their fiscal mess. The pandemic has devastated PSTA's ridership even more causing their financial position to worsen. The State or the Feds should not be handing out bailouts to PSTA that will mask or cover up PSTA's own incompetence and/or neglect.

PSTA's CFO presented their 2019 Comprehensive Financial Annual Report (CAFR) at yesterday's (May 27) PSTA Board meeting. PSTA's financial picture is not good but the PSTA Board rubber stamped their approval of the CAFR with no discussion about it or any questions asked.

PSTA's CAFR for the FY ending September 30, 2019 reflects fare box revenue continues to decline due to tanking ridership while operating expenses continues to rise. In FY2019, PSTA's fare box recovery was 12.58% and taxpayers subsidized 87.42% of PSTA's operating costs.
From PSTA 2019 CAFR
(click to enlarge)
PSTA's Administrative and Finance costs continue going up. Those costs increased from $10.98 million in 2010 to $16.68 million - an increase of 52% in a 10 year period of low inflation.

The number of PSTA employees increased from 576 in 2010 to 621 in 2019, an increase of 45 employees while PSTA's ridership and financial position continued declining.

PSTA had an unsustainable operating model before the pandemic devastated PSTA's ridership even more. The PSTA Board, who is supposed to provide proper oversight, refuses to publicly discuss, ask questions or publicly acknowledges PSTA's fiscal mess as if they do not exist.

PSTA promised the public and taxpayers they would address their financial issues after the Greenlight Pinellas rail tax was defeated in 2014. But they refused. Instead, as we posted here, PSTA uses taxpayer dollars to hire well connected State and Federal lobbyists to pursue more taxpayer dollars.

Harry Glenn, PSTA's Federal lobbyist is pursuing the FTA (Federal Transit Administration) grant for PSTA's notoriously deceptive $45 million Central Avenue Bus Rapid Transit (CA BRT). The project is so bad that two of the three municipalities along the CA BRT route (St. Pete Beach and S Pasadena) have voted unanimously to oppose the project.

Glenn told PSTA that he has spoken to the FTA and the FTA says they have everything they need for the project and are reviewing all the paperwork. Glenn also stated he expects a final decision by the Feds by mid-year - which is now just a few days away.

But Glenn has made erroneous statements before. As this February Tampa Bay Guardian article reported, Glenn erroneously stated the FTA grant program was "not a competitively awarded program" but "you work through the process and as you check off the boxes, funding will become available to you.”

The FTA's Capital Investment Grant (CIG) Program is discretionary and highly competitive. The CIG process evaluates and rates proposed transit projects that enter into their grant request process. There are always more projects in the pipeline than available funding. Politics will also play into the CIG program. It is not a process where you check off boxes and the funding magically appears. 

The FTA CIG process requires PSTA to prepare a financial plan and a 20-year cash flow statement in accordance with FTA’s Guidance for Transit Financial Plans. This financial plan measures the financial position of PSTA for both capital and operating to ensure PSTA has the committed funds to build, operate and maintain the new service.

PSTA has no committed long term funding source for the CA BRT. As we reported here, PSTA admitted that in their last update to the FTA in August 2019. PSTA clearly states they require a new funding source, that does not exist, for the CA BRT project.

The FTA does not have everything they need for the CA BRT project - they are missing a critical required component from PSTA - a committed long term funding source.

In addition, this recent Tampa Bay Guardian article reports they obtained documents from the FTA showing "PSTA has failed to implement key FTA recommendations three years in a row." The Guardian article also references a January 15 letter from the FTA to PSTA. This letter warns that PSTA may incur $432K of more costs for work on the CA BRT "at its own risk and that the project must still complete further steps in the CIG program to be eligible for consideration to receive CIG funding."

PSTA has not been honest about the CA BRT project from the very beginning when they stated the project would cost $16.5 million. The project cost has ballooned to at least $45 million. PSTA never told the public a new funding source is required for the CA BRT.

But PSTA has a history of being dishonest. In 2014, PSTA was forced to return over $350K to the Feds when they got caught using federal transit security funds on their Greenlight Pinellas rail tax marketing campaign. PSTA's CEO responsible for the misuse of those Federal funds, Brad Miller, is still at PSTA. Instead of being held accountable for his malfeasance, the PSTA Board has been handing Miller pay raises ever since. That should be disturbing to all.

Now the pandemic has devastated PSTA's transit ridership. It is causing paradigm shifts that may change the landscape of traditional transit forever. The transit "choice" rider has disappeared.

We know now that Floridians preference for using our individual vehicles rather than using public transit probably saved lives. Dispersion helped keep us safer and healthier. That preference is not going to change.

Less than 2% used transit in Pinellas County before the pandemic and transit ridership may never recover to even that small level.

PSTA is depleting its Reserves to cover their operating deficits and fund capital costs of the CA BRT boondoggle. This is not a financially sustainable model and the CA BRT project will hasten the bankruptcy of PSTA.

PSTA must stop the costly CA BRT project now. PSTA cannot afford the project and it is certainly not needed since transit ridership has disappeared.

PSTA must start addressing their fiscal distress instead of paying lobbyists to pursue bailouts.

That due diligence must include the PSTA Board hiring a new CEO and a new CFO.

If the current PSTA Board members are not up to the task and refuse to do this, then they need to resign and new members appointed who will.

And NO bailouts should be provided by the State or the Feds to PSTA who was fiscally failing long before the coronavirus pandemic.

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