In some ways, all is good with the San Luis Obispo County Regional Transit Authority. Ridership is up about 9 percent, and buses are packed front to back during peak periods. Enticed to public transport by rising gas prices and the gasping economy, more people are jumping on the bus despite two fare hikes in three years.
Why, then, does the RTA need $300,000 to avoid cutting services?
On Jan. 25, in a back conference room of the auditor-controller’s office in the San Luis Obispo County Government Center, some of the county’s top financial experts listened as RTA Executive Director Ed King pleaded his case: the agency needs a county bailout. Speaking before economic brainiacs like Auditor-Controller Gere Sibbach, Treasurer Frank Freitas, and Deputy County Administrator Dan Buckshi, King stressed the RTA is caught in a fiscal pickle.
Yet ridership and fare rates have little to do with the budgetary quagmire in which the agency now finds itself. Indeed, the problem can be traced to a multi-million-dollar sprucing up of its new digs at 179 Cross St. in San Luis Obispo. Back in March 2008, the RTA took out a private loan of about $4.7 million to outfit the building and add such improvements as more parking areas, equipment for fixing the buses, and security improvements. Those costs came in under budget, but the RTA still owed its lender, Santa Lucia Bank, a hefty $3.6 million to upgrade a building it rents and doesn’t own.
That was when things were good—or at least didn’t totally suck, as has become the case with pervasive state cuts to transportation and an economic climate that’s spooked banks into keeping genuine capital on their books. Santa Lucia, it turned out, decided to buffer its own finances by mandating more RTA capital at the ready. In recent weeks, King told the advisory committee, the bank has required the agency to keep $847,000 on hand in collateral, also putting up its fleet of buses, Runabout, and Dial-a-Ride vehicles.
Simply put, the RTA can’t guarantee it will always have $847,000 on its books.
The sole provider of buses between SLO County communities, the RTA operates on a budget of about $7 million. It raised base bus rate fares 25 cents in August—following a 25-cent increase in 2008—bringing the average bus ticket to $1.50. Additionally, cash from state and federal grants on which public transportation greatly depends (fares take care of less than 20 percent of the RTA’s costs) are becoming less dependable.
Without help, King warned committee members, the RTA is looking at cutting services—in effect chopping routes so it could afford its loan on the Cross Street building. But King also tempered his forewarnings with cautious optimism.
“I think by the end of this fiscal year we’ll be in pretty decent shape,” he said.
He later told New Times: “We are optimistic that the county will agree to the line of credit. If they do not, staff will develop alternative solutions to ensure appropriate cash flow to meet our financial obligations.”
One of the solutions on the list would be eliminating weekend services, according to an RTA employee.
In order to keep everything peachy with Santa Lucia, the agency would need about $300,000 in county cash ready to go. Members of the committee came up with a loose proposal they thought might work, allowing the county to give the RTA short-term loans of about $25,000 apiece with a modest 4-percent interest rate.
“I don’t think that’s why we’re doing this—to make money,” Auditor-Controller Sibbach said. “We’re trying to keep this agency going.”
Indeed, loaning county money to keep the RTA from gutting services is fairly unprecedented. The county is statutorily required to keep lines of credit for local schools and small service districts that don’t hold their own treasuries, Deputy County Administrator Buckshi explained. However, setting aside a line of capital for a struggling agency isn’t something the county has really done before, nor something officials want to make into a habit.
“The issue with RTA is considerably different,” Buckshi told New Times. “One, we’re not statutorily required to do it, and essentially what they are asking for is a line of credit. They are required to carry a minimum amount of cash on hand, and they’re dipping below that level.”
To move forward, the RTA will have to gain approval from its board of directors in early March and then take the request promptly to the Board of Supervisors. At the debt committee meeting, Buckshi and others made clear that they’ll emphasize to county supervisors this request is a one-time deal. In other words, other cash-strapped agencies need not apply just because the RTA got some help—or so officials hope will be clear when they make their presentation to supervisors.
Despite doling out relatively small amounts of money to the RTA—if the request is approved—Buckshi said he worried what would happen if the loan isn’t repaid, given the county’s equally dire economic situation.
“That would be messy,” he said.
News Editor Colin Rigley is in severe need of a bailout. Help him out at firstname.lastname@example.org.