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AC Transit Directors Approve Bus Transfer

By J. Douglas Allen-Taylor
Tuesday August 07, 2007

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 NABIs 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 affect the district’s budget. 

“I want to know where the figures come from that justify these transfers, and what is the overall plan for the district’s bus fleet,” at-large Boardmember 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 that she had switched her vote from abstaining to approval this time “only because FEMA is waiting for the buses in New Orleans for the Katrina victims, and they are really needed down there.” 

It is not clear how AC Transit’s NABI buses will be used to support Katrina victims in New Orleans. 

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 Hurricane Katrina victims in New Orleans. That number was increased to 20 in early April. ABC offered a purchase price of $85,000 each for the buses. 

In its March 21 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 NABIs if they were to remain in district hands. “After seven years, virtually everything has to be redone on these buses,” Johnson said by telephone.