The Ongoing Story Of The Growing "Partnership" Between The Alameda-Contra Costa Transit District And The Belgian Manufacturing Company




Berkeley Daily Planet
August 7, 2007
By J. Douglas Allen-Taylor

[This article is slightly modified from the original to correct a reporting error.]

The General Manager for the Alameda Contra Costa Transit District says that a trade-in of 16 existing North American Bus Industries (NABI) buses five years early for new Van Hools is still in the economic interest of the district, even though the $1.35 million federal interest in the NABI’s cannot be transferred to another debt, as the district earlier anticipated.

In a memo to AC Transit board members requesting that the district go forward with the trade even without the federal interest transfer, General Manager Rick Fernandez said that “the District would ultimately save money by pursuing this arrangement.”

But figures documenting exactly how AC Transit would save that money continue to be missing from district public documents on the proposed trade, and AC Transit Board Vice President Rebecca Kaplan, who abstained on the NABI-Van Hool transfer when it first came before the board earlier this summer but voted for it last month, said she will no longer support such transactions unless they include detailed financial information on how they will actually effect the district’s budget.

“I want to know where the figures come from that justifies these transfers, and what is the overall plan for the district’s bus fleet,” At-Large Board member Kaplan said in an interview late last week. “I’ve told staff that this information needs to be included when these transactions come before the board again.”

Board members authorized the continuation of the 16 bus sale-and-buy on a 6-0-1 vote, with board member Elsa Ortiz continuing to abstain, as she did when the issue previously came before the board. Board President Greg Harper, who cast the sole nay vote when the transfer originally came before the board, supported the transaction this time around.

Kaplan said she voted approval for the NABI bus sale the last time it came before the board because “the buses had been promised to emergency responders in the gulf coast, due to their emergency bus-buy which they were seeking to finish fast before this year's hurricane season, in order to avoid a repeat of what happened in Katrina. When Katrina hit, emergency responders did not have buses available, and thus, residents who did not own cars were stranded and abandoned. Emergency responders were seeking to buy some more buses quickly in order to avoid a repeat of this aspect of the Katrina failure. They could not wait to order new-built buses. They had to find 'used' ones they could buy quickly.”

The NABI-Van Hool transfer originally came before the board in March, when Fernandez told board members that the district had received an offer from the ABC Company, the U.S. distributor of Van Hool buses, to purchase 10 AC Transit NABI buses for use by the Homeland Security Agency for Katrina Hurricane victims in New Orleans. That number was increased to 20 in early April. ABC offered a purchase price of $85,000 for the buses.

In its March 21st resolution authorizing the original transfer, the board gave permission to Fernandez “to transfer all of the remaining Federal interest in the [NABI] Buses to another federally funded asset yet to be determined.”
The federal interest comes from the subsidy provided to AC Transit when the NABI buses were originally purchased by the district in 2000. That subsidy is contingent on the district keeping the buses for the federally-recommended operation life of public transit buses—12 years. The federal government requires a pro-rated reimbursement for that subsidy whenever local transit districts retire or sell such buses earlier before 12 years. In this case, AC Transit was proposing getting rid of the NABI buses five years early.

In his July 2 memo recommending continuation of the NABI-Van Hool transfer, Fernandez wrote that “staff was working with the FTA [Federal Transportation Authority] to approve a transfer of the federal interest in these buses to a future capital project. However, staff has recently been informed by FTA that it will not approve the transfer of the federal interest; the alternative is to reimburse the federal interest (based on straight-line depreciation). Staff has evaluated this alternative and determined that it still would be in the District’s best interest to proceed with the proposal.”

In both March with the original 10 bus transfer and again in April with the 6 bus addition, Fernandez wrote board members that the “fiscal impact [of the bus transfer] will be determined by the proceeds of the sale, estimated at $850,000, the cost of the original procurement of the new buses, and the net reduction in maintenance costs required for keeping the older buses in good operating condition.” But Fernandez also noted in his original March 21 memo that “the proposed early bus replacement will result in a $1.2 million savings to the region.”

In neither one of those first two memos did Fernandez estimate the maintenance savings. In the July memo which revealed the dropping out of the federal interest transfer, however, Fernandez wrote that “it is estimated that the District would save $1.488 Million in maintenance costs.” Fernandez estimated that the saved maintenance costs of the 16 NABI buses would be $93,000 a bus.
But where that $93,000 maintenance figure comes from is not included in the director’s memo.

AC Transit Public Information Officer Clarence Johnson said that the figure comes from the anticipated cost of replacing transmissions and seats, repainting, and “putting in a new engine” for the existing NABI’s if they were to remain in district hands. “After seven years, virtually everything has to be redone on these buses,” Johnson said by telephone.

The Van Hool Connection