green bay transit service cost allocation study

Q Green Bay Transit Service

Cost Allocation StudyU.S. Department of

Transportation

Office of the Secretary

of Transportation

August 1986

TRANSIT SERVICE COST ALLOCATION STUFOR THE

GREEN BAY URBANIZED AREA

August, 1986

ByBrown County Planning Commission

TecKnical Report Documrnlation Pogc

I. Rrpori No. 2 Covr'oTirnf AccciKon Nc 3. R»cip.«o' « Coiolog No.

4. Till* and Subti lie

Green Bay TransitCost Allocation Study

.

Green Bay Urbanized Area

S. Raporl Oct*

August. 19866. P«'Jorming Orgonixa*ion Co<l«

- 8. Performing OrgonilQliOn Report No.

Brown County Planning Commis-sion Report #

7. Auihof'i!

Roger Kolb, Principal Planner

9. Pe'foiming Orgoniialion Nom« ond AdcU«st

Brown County Planning Commission100 North Jefferson StreetRoom 608, City HallGreen Bay, WI

10. Work Un.t No (TRAIS)

11. ConfrocI or CronI No.

13. Type of Report ond Period Covered

Final Report12. Sponsoring Ag*ncy Nome ond Add'cis

U. S. Department of Transportation

Urban Mass Transportation AdministrationFederal Highway Administration

Washington, D. C. 20590J^. Sponsoring Agency Code

IS. Supplemenla-'y Nolci

16. Abstract

The Green Bay Transit System is owned and operated by the City of Green Bay. Serviceis provided to the City of De Pere, Village of Allouez', and Village of Ashwaubenonunder cost sharing service agreements.

The purpose of this study is to analyze the current,transit cost sharing formulas

between Green Bay and the urban municipalities in terms of both operating and capitalexpenditures

.

The study report includes a detailed analysis of federal, state, and local operatingand capital funding formulas and expenditures for the Green Bay Transit Systemfrom the 1974 public takeover to 1986. A survey of medium-sized public transitsystems in Wisconsin was conducted in terms of local cost sharing formulas andservice contracts.

Study recommendations include a new depreciation "surcharge" for capital expendituresand written service contracts between Green Bay and the other municipalities.

17. Key Words

Transit Cost Allocation, Green Bay,

Wisconsin, Funding Formulas, OperatingCost, Capital Cost, Depreciation

18. Distribution Sio'rmenl

Avallal^le to the Public through theNational Technical Infonnation ServiceSpringfield, Virginia 22161.

19. Security Clostif. (of t^is report)

Unclassified

30. Security Cloisif. (of tSi s page)

Unclassified

21- No. of Pages 22. Pr,(

GREEN BAY TRANSITCOST ALLOCATION STUDY

FOR THEGREEN BAY URBANIZED AREA

Prepared by

Brown County Planning Coinmission

August, 1986

The preparation of this report was financed in part through a

joint planning grant from the U. S. Department of TransportationFederal Highway Administration, Urban Mass TransportationAdministration (UMTA Project #WI-08-8011) and the WisconsinDepartment of Transportation under the provisions of Section 112

of the Federal Aid Highway Act of 1973 and the Urban Mass

Transportation Administration Funding Act of 1964 (as amended).Local funding was provided by Brown County.

The contents of this report reflect the views of the Brown CountyPlanning Commission, which is responsible for the facts and the

accuracy of the data presented herein. The contents do not

necessarily reflect the official views or policy of theU. S. Department of Transportation. This report does notconstitute a standard, specification, or regulation.

TABLE OF CONTENTS

A. STUDY SUMMARY 9

B. TRANSIT SYSTEM OVERVIEW 9

1. Bus System Ownership and Operation 9

2. Level of Service 11

3. Transit Service Area Population 11

C. FEDERAL AND STATE TRANSIT ASSISTANCE 13

1. Federal Transit Funding 13

2. State Transit Funding 15

D. LOCAL TRANSIT FUNDING 2 0

1. Operating Expense 20

2. Capital Expense 21

E. LOCAL COST SHARING ANALYSIS 24

1. Survey of Other Wisconsin Transit Systems 24

2. Local Cost Sharing Alternatives 28

F. LOCAL COST SHARING RECOMMENDATIONS 31

APPENDIX A: Green Bay Transit Capital ImprovementDescription and Expenditures from1974 to 1986 33

APPENDIX B: Draft Service Contract Between the Cityof Green Bay and Other Municipalities 39

List of Tables

Table Title Page

A Comparisons Between 1974 and 1986Green Bay Transit Operations 12

B Green Bay Urbanized AreaPopulation Characteristics and Forecasts 14

C Federal Operating and Capital Grant TransitFunding for Green Bay Transit System from1974 to 1986 16

D 1986 Federal Transit Operating Assistancefor the Green Bay Urbanized Area 17

E State Transit Operating Assistance Expendedby the Green Bay Transit System from1974 to 1986 19

F Local Municipality Operating Assistance for theGreen Bay Transit System Operations from1974 to 1986 22

G Green Bay Transit Capital ImprovementExpenditures from 1974 to 1986 by ImprovementType 23

H Profile of Wisconsin Medium Sized TransitSystem Operations 25

A. STUDY SUMMARY

In January, 1986, the City of Green Bay Advisory Committenrequested that the Green Bay Transit Commisr . on study the currentTransit Cost Allocation System for both operating and capitalcost incurred by Green Bay, De Pere, Allouez, and Ashwaubenon.

The Brown County Planning Commission staff, therefore, undertookthe following Transit Service Cost Allocation Study as requestedby the Green Bay Transit Commission.

This study report provides a detailed anlaysis of federal, state,

and local operating and capital funding formulas and expendituresfor the Green Bay Transit System from the 1974 public takeoverthrough 1986. A survey of 12 public transit systems in

Wisconsin, operating in medium-sized urban areas, was carriedout in terms of local cost sharing formulas and servicecontracts.

A total of three local Green Bay Transit cost sharingalternatives were developed and analyzed. The recommendedalternative calls for maintaining the present operational costsharing formula and implementing a new depreciation "surcharge"for local capital expenditures on transit facilities andequipment. It was also recommended that written servicecontracts between the City of Green Bay (owner of the Transitsystem) and De Pere, Allouez, and Ashwaubenon be executed on an

annual basis. A draft copy of a proposed service contract is

contained in Appendix B.

B. TRANSIT SYSTEM OVERVIEW

1. Bus System Ownership and Operation

The Wisconsin Public Service Corporation (WPSC) provided electrictrolley car and bus service to the Green Bay urban area from 1916

to 1973. During the late 1960s, ridership decreases, combinedwith service cutbacks and rising operational losses, threatenedthe continuation of bus service.

In an effort to study what could be done to save the bus system,the Brown County Board formed a seven person Mass TransportationCommittee in July, 1971. In September, 1971, the MassTransportation Committee requested that the WPSC submit a

proposal for selling the bus system to Brown County. Asubsequent October 18, 1971 letter from WPSC to County ExecutiveDonald Holloway offered the bus system to Brown County for the

9

sum of $328,850, along with an offer to return the purchase priceback to the county for operating subsidy over a five year period.

In February, 1972, the county committee recommended thatcontinuation of bus service was an urban ar-- problem, and thatit would not be in the best interest of Brown County to own andoperate the bus system. The committee felt that the formation of

a metropolitan mass transit authority should be formed betweenGreen Bay, Allouez, Ashwaubenon, and De Pere to jointly own andoperate the system. In the Spring of 1972, WPSC announced thatit would be filing a petition for abandonment of bus service,effective January, 1973. At the same time, efforts to form a

metropolitan transit authority reached a deadend because underWisconsin State Statutes, only counties or individualmunicipalities could own and operate a public transit system.The only remaining alternative was to have the City of Green Bayown and operate the system.

In June, 1972, Green Bay Mayor, Donald Tilleman, appointed a 15

member "Study Committee on Mass Transit" to study the potentialcity purchase and operation of the bus system. After anextensive study of the WPSC bus operation and the impact of busservice abandonment, this city committee recommended that theCity of Green Bay purchase the private bus system, create a MassTransit Commission to negotiate the purchase price, oversee thebus system operation, and file for federal transit grant fundingto purchase the system and make improvements. During this sametime period, De Pere, Allouez, and Ashwaubenon adoptedresolutions supporting the City of Green Bay purchase of the bussystem and the filing of a federal transit grant application.

The City of Green Bay then entered into a lease agreement withthe WPSC to avoid abandonment of bus service. The city leasedand operated the bus system from February 4, 1973 to December 31,

1973 .

A five member Transit Commission was appointed by Acting Mayor,Harris Burgoyne, and approved by the Green Bay Common Council onFebruary 6, 1973.

On April 3, 1973, city residents passed a referendum in favor ofthe city purchase of the bus system by a large "yes" vote of18,347 (71 percent) to a "no" vote of 7,634 (29 percent).Finally, on December 31, 1973, the City of Green Bay purchasedthe WPSC bus system for an appraised value of $270,000. An UrbanMass Transportation Administration (UMTA) Section 3 federal grantfunded $216,000 (80 percent) of the purchase price. The originalpurchase price of $270,000 was also repaid to the City of Green

10

Bay by WPSC over the five year period of 1974 to 1978 to helpoffset operational expenses.

It was also agreed upon at this time that bus service would be

continued to De Pere and Allouez under financial contractagreements. On September 18, 1973, the ' Pere Common Councilpassed a resolution to request continuation of bus service to DePere, and acceptance of cost assessments for the service. A

similar resolution was passed by the Allouez Town Board onSeptember 17, 1973 to participate financially in the operation of

the Green Bay Transit System and to pay its estimatedproportionate share of the operating deficit.

In 1973, De Pere and Allouez were served with one 60 minute bus

route traveling down Webster Avenue into De Pere, and Ashwaubenonhad no bus service. In 1975, the Village of Ashwaubenon formallyrequested bus service, and a 30 minute loop route within the

village was initiated in February, 1976.

2. Level of Service.

When the city purchased the bus system in 1974, the level of

service provided to area residents was minimal. The 12 bus fleetprovided limited daytime service over nine routes. Ma3or serviceimprovements were implemented in 1975 upon the delivery of sixnew buses, and over the period of 1975 to 1984, an additional 11

buses were purchased to provide new and expanded bus routes andservice hours.

All route and service improvements implemented over the yearswere directly based on service requests from area residents,businesses, schools (University of Wisconsin - Green Bay (UW-GB)

and Northeast Wisconsin Technical Institute (NWTI)), and localelected officials. A comprehensive transit planning processcarried out by the Brown County Planning Commission has guidedthe Green Bay Transit Commission in implementing the most cost-effective and productive service improvements.

The Green Bay Transit System 1985-1989 Transit DevelopmentProgram , March 198 5 represents the current five year operatingand capital improvement plan for the transit system. See Table A

for a comparison of system operations between 1974 and 1986.

3. Transit Service Area Populations

The Green Bay urbanized area, as defined by the U. S. CensusBureau for U. S. Department of Transportation (DOT) federalhighway and transit funding allocations, consists of the entire

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City of Green Bay, City of De Pere, Village of Allouez, Villageof Ashwaubenon, Village of Howard, and a portion of the Town of

Bellevue (primarily north of STH 172). The total urban area is

approximately 82 square miles, which represents 15.6 percent of

Brown County's 525 square miles.

Based on municipality population estimates from the WisconsinDepartment of Administration ( DOA ) , the 1985 urbanized areapopulation was 151,258. This represents 81.2 percent of BrownCounty's 1985 population estimate of 186,176.

Transit service is provided to area residents of Green Bay, De

Pere, Allouez, and Ashwaubenon. The residents of Howard voteddown a referendum for new bus service to the village in 1976, andno formal request for transit service has since been made by the

Village Board. The Town of Bellevue is an extremely fast growingcommunity, and was considered a rural town until the last 1980

U. S. Census was conducted and new urban area boundaries wereestablished. Future transit service to Bellevue will be

considered as it continues to grow and become more urbanized.The Green Bay Transit System 1985-1989 Transit DevelopmentProgram, March , 1983 addresses existing urban residential areas

not currently provided with bus service, and identifies potentialnew service areas with sufficient population size and density to

warrant bus service within the five year period of 1985-1989.

Existing transit service is within walking distance(approximately three to four blocks) of an estimated 132,000urban area residents, which represents 87 percent of the totalurban population. See Table B for existing and forecasted urbanarea population by municipality.

C. FEDERAL AND STATE TRANSIT ASSISTANCE

1. Federal Transit Funding

The Urban Mass Transportation Act of 1964, established the first

federal transit funding program for urban transit system.Federal funding for capital improvement projects was provided on

an 80/20 matching basis under the Section 3 Program.

The City of Green Bay was awarded an UMTA Section 3 capital grantin December, 1973 to purchase the private bus system, six newbuses, bus shelters, and garage maintenance equipment. Nofederal or state operating assistance was available when the cityacquired the WPSC bus system.

Section 5 of the Urban Mass Transportation act of 1964, enacted

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funded the maximum allowable 50 percent of deficit. Unexpended

Section 5 carryover funds, in the amount of $220,685, were

combined with $590,125 in new Section 9 lunding for a total

funding level of $818,810. In 1986, the maximum federaloperating funds available to Green Bay is th.^ Section 9 operatingcap of $623,292. Carryover transit funds from the old Section 5

Grant Program were completely exhausted in 1985 for Green Bay.

See Table C for a summary of all the federal operating and

capital funds expended on the Green Bay Transit System from 1974

to 1986. For details on specific capital expenditures by year,

see Appendix A.

The Federal Surface Transportation Act of 1982, under whichcurrent transit funding is authorized, expires on September 30,

1986. A new transportation authorization bill will most likelybe enacted in 1986, which could change the existing transitfunding allocation formulas and operating assistance "cap".

2. State Transit Funding

Wisconsin provides transit oprating assistance to state transitoperations, but does not provide capital assistance. A one-timestate capital assistance program was created in the 1979 StateBudget Act for the purchase of buses. The program lasted only

two years and was eliminated in 1981.

The State Transit Operating Assistance Program, administered by

the WDOT, was created in 1973 prior to any federal operatingassistance legislation. As shown on Table E, the Green BayTransit System will have received $5,469,448 in state operatingassistance over the period of 1974 to 1986. State financing of

transit operations has greatly helped Green Bay and other

Wisconsin transit systems to improve service levels, increaseridership, and maintain reasonable passenger fare levels.

The original state funding formula was two thirds of the

operating deficit from 1974 to 1981. In 1982, the state changedthe formula from a deficit-based allocation of operatingassistance to a cost-based allocation. This allowedmunicipalities to keep any additional local revenues derived frompassenger fares or other sources, such as on-bus advertising.

Under the old deficit-based system, reducing the operatingdeficit by increasing local revenue resulted in less state aidreceived. The state funding formula, therefore, became 30

percent of total operating cost in calendar 1982. the statedistribution formula has since been raised to 35 percent of

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by Congress in November, 1974, created the first federaloperating assistance program, funding up to 50 percent of an

urban area's transit system deficit. The federally defined

deficit is basically total eligible operating expenses minusfarebox revenue.

Between 1975 and 1983, annual appropriations of UMTA Section 5

funds were apportioned to the Green Bay urbanized area under a

formula based 50 percent on urban area population and 50 percenton population density. Annual capital and operating assistancegrants were filed by the City of Green Bay, the designatedfederal transit aid recipient for the Green Bay urbanized area,

for 80 percent federal funds on all capital improvements and 50

percent deficit funding for operations. The funding allocationwas generally larger than the grant applications, which resultedin a balance of carryover funds. The federal Section 5 carryoverfunds could be expanded up to three fiscal years after they wereappropriated

.

The Surface Transportation Act of 1982 eliminated the federalSection 5 Capital and Operating Assistance Program and replacedit with a new Section 9 Funding Program for Capital and OperatingAssistance. The new Section 9 Program continued to providetransit funding allocations to each urbanized area, based on

population and population density, and maintained the 80/20capital and 50 percent deficit funding ratios. A major change in

the Section 9 Program was the creation of "cap" level of federalfunding allowed for operating assistance. In urbanized areas the

size of Green Bay (under 200,000 population) the limit on

operating funds amounted to 95 percent of the urban area's totalFY 1982 Section 5 appropriation. For Green Bay, this operatingassistance "cap" amounts to $623,292. Unexpended carryoverSection 5 funds remained available for capital or supplementaloperating assistance through 1985.

In urban areas with less than 200,000 population, federal transitfunds, under the UMTA Section 9 Program, are allocated directlyto the Governor of the State. In Wisconsin, the Governor has

delegated the responsibility for making the appropriate FederalSection 9 funding allocations to individual urban areas to the

Wisconsin Department of Transportation (WDOT). Under anallocation system implemented in calendar 1985, WDOT allocatesonly the maximum allowable Section 9 operating "cap" to

individual urban areas. The remaining balance of UMTA Section 9

funds are held by WDOT in a "capital funding pool" to bedistributed on an "as needed" basis.

Green Bay Transit federal operating assistance in calendar 1985

18

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expenses in 1984, and 37 1/2 percent of expenses beginning in

1986. The current 37 1/2 percent of expense state fundingformula was approved as part of the 1985 State Budget Act, whichcovers state fiscal years 1986 and 1987 (July 1, 1985 - June 30,

1987). The source of revenue for the stat "s transit assistanceprogram is the segregated transportation fund, which includes all

state motor fuel taxes, motor vehicle registration fees, anddriver's license fees. State motor fuel taxes, which comprise 65

percent of the transportation fund revenues, were "indexed" as of

April 1, 1985 to account for changes in motor fuel consumptionand increased transportation program costs. The gas tax indexingsystem will insure that the State Transportation Fund will remainin sound financial shape in upcoming years. The current stategas tax is 17.5 cents per gallon.

The state operating assistance will continue in the future, butthe funding ratio formula may be changed. There are currently 38

municipalities and counties in Wisconsin receiving state transitoperating assistance, ranging in size from the very largeMilwaukee County Transit System to a small shared-ride taxiservice in Ripon.

The level of future state participation in funding urban transitsystem operations will again be studied and discussed by theWisconsin State Legislature as part of the upcoming new 1987

State Budget Act to be adopted by July 1, 1987 for fiscal years1988 and 1989 (July 1, 1987 to June 30, 1989).

D. LOCAL TRANSIT FUNDING

1. Operating Expense

The City of Green Bay owns and operates the Green Bay TransitSystem and is the "designated recipient" of federal and stateoperating and capital assistance. Operational cost-sharingagreements between Green Bay, De Pere, Allouez, and Ashwaubenonfor bus service are basically the same today as originally agreedupon between the municipalities in 1973.

The operating cost allocation formula is relatively simple,whereby each community is charged for the level of bus serviceoperated, and credited for farebox revenue collected within itsmunicipality. As part of the budget process each Fall, the totaloperating expenses are divided by total estimated bus miles toarrive at a cost per mile figure. On a monthly basis, operatingexpenses are calculated by multiplying the budgeted cost per milefigure times the total bus miles (revenue and deadhead) traveled

20

within each municipality. Daily farebox revenue is countedseparately for each route serving Ashwaubenon, Allouez, and De

Pere, and credited against their operating expenses. Thetransit system bills each municipality for the total monthlyoperating deficit (expense minus farebr revenue). As the

federal and state operating assistance ib received during theyear, the transit system reimburses each municipality, based onits precent of total bus miles operated. Throughout the calendaryear, all the monthly billings are based on a budgeted expenseper mile estimate. Upon completion of the financial audit, the

billings are reconciled to actual expenses. Any overcharges, asa result of lower than anticipated actual expenses, arereimbursed to the individual municipalities. Operating expensesbilled to the municipalities include all salary, fringes, bus andbuilding maintenance, utilities, insurance, marketing, printing,fuel, and office expense. Federal and state regulations strictlygovern what is considered an "eligible" transit operatingexpense. Special charter and contract services are not eligiblefor federal or state assistance. Also vehicle and buildingdepreciation is "not" an eligible operating expense.

Due to the excellent working relationship between the transitsystem and the communities receiving bus service, there has neverbeen any written service contracts. When the operating budgetand state operating assistance grant application is developed in

the Fall preceding the new calendar year; Ashwaubenon, Allouez,and De Pere Administrators are informed as to what they shouldbudget for transit service cost in the upcoming year. Over theyears, this bus operational cost sharing and billing process usedby Green Bay Transit has undergone extensive review and approvalby federal (UMTA), state (WDOT) and local (Jonet, Fountain, VandeLoo and Glaser, CP. A.) financial auditors.

The level of local operating funding has varied substantiallyover the years, ranging from zero in both 1984 and 1985 to a highof $348,174 in 1986. Major factors affecting the amount of localfunding are federal and state operating assistance, the level of

service operated, farebox revenue, and other revenue from on-busadvertising and interest. See Table F for a summary of localoperating assistance expended on Green Bay Transit operationsfrom 1974 to 1986.

2. Capital Expense

Since the City of Green Bay purchased the WPSC bus system onDecember 31, 1973, all capital expenditures have been funded withcity, federal, and state funds. Capital improvementexpenditures, as shown on Table G, from 1974 to 1986 amount to

21

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$5,035,312. All major capital expenditures have been funded with80 percent federal funds under UMTA Section 3/5/9 capital grants.The City of Green Bay has received a total of $3,982,770 in

federal capital improvement funds, and expended $996,648 in

matching 20 percent local funds. State fi'- ding, in the amount of

$55,894 , was received in 1983 to supplement, local funding for thepurchase of six new buses in 1983. The short-lived state capitalassistance program for the purchase of buses existed for only a

two year period.

The City of Green Bay has paid for all of the required 20 percentlocal share on all capital purchases and construction projects.Transit service agreements with De Pere, Allouez, and Ashwaubenonhave strictly dealt with operating expenses and not capitalimprovements. Equipment and facility depreciation changes arenot considered an eligible operating expense as per UMTA and WDOTguidelines and regulations. Depreciation has never been chargedto De Pere, Allouez, and Ashwaubenon.

The City of Green Bay, therefore, has clear title to all transitequipment and facilities. If transit service were to beeliminated in De Pere, Allouez, or Ashwaubenon, there would be no

reimbursement of contributed capital. UMTA regulations requirethat all equipment and facilities purchased with 80 percentfederal funds be inventoried and identified. If any federallyfinanced facilities or equipment are sold, 80 percent of theselling price must be returned to UMTA.

E. LOCAL COST SHARING ANALYSIS

1. Survey of Other Wisconsin Transit Systems

There are 12 public transit systems in Wisconsin operating in

medium-sized (population between 50,000 and 200,000) urban areas.These include: Green Bay, Appleton, Beloit, Eau Claire,Janesville, Kenosha, LaCrosse, Oshkosh, Racine, Sheboygan,Waukesha, and Wausau. The systems vary in size and level of

service, as seen on Table H, but all operate similar type fixedroute bus service with federal and state operating assistance.

An initial screening of the system operations was carried out to

determine which bus operations provide services to more than onemunicipality within its service area. The 1984 Wisconsin UrbanMass Transit Annual Report , published by the WDOT was used to

screen the transit system operations.

Of the medium size transit operations. Green Bay is one of the

24

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largest in terms of bus miles traveled and population served.

Outside of Green Bay, Racine, Waukesha, Sheboygan, and Wausauserve more than two municipalities within their urban area.

A phone survey of these five transit operators, serving more thantwo municipalities, was carried out to determine what type of

operational and capital cost sharing arrangements existed betweenthe municipalities.

All of the transit systems contacted use basically the sameformula as Green Bay for sharing the transit operational costbetween municipalities. A budgeted expense per mile (or expenseper hour) figure is multiplied by bus miles traveled within eachmunicipality, to arrive at total operating expense permunicipality. In all cases, farebox revenue collected withineach municipality is credited against operating expense. Thefrequency of billing the municipalities varies between systems.Green Bay was found to be the only system which bills themunicipalities on a monthly basis. Most of the other systemsbilled on a quarterly basis, as per their annual serviceagreements. All the other systems, outside of Green Bay, havewritten service agreements between the operating city and theoutlying municipalities.

None of the systems surveyed shared capital improvement costswith outlying municipalities. In all cases, the owner andoperator of the system used 80 percent UMTA funding for capitalimprovements, and paid the entire 20 percent local share. BothAppleton and Racine include a facility and equipment depreciationexpense within their overall operational expense charge to the

other municipalities. Service contracts and cost allocationmethods used by Appleton, Racine, and Sheboygan were furtherstudied as to their potential use in Green Bay. Both Appletonand Racine transit operations are very similar to Green Bay in

terms of service level and area population. Sheboygan is

somewhat smaller than Green Bay, but provides an excellent level

of service to area residents. An overview of each of the threesystems is as follows:

Appleton (Valley Transit System)

Valley Transit is owned and operated by the City of Appleton.The system has 19 regular bus routes covering 160 route miles onweekdays and Saturdays with no evening service. Appleton' s 1986transit operating budget is $2,676,000, with farebox and otherrevenues of $442,000. The City of Appleton had a 1980 populationof 59,032, and a transit service area population of 124,703.Transit service outside of Appleton is provided to Kaukauna,

26

Neenah, Menasha, Kimberly, Little Chute, Combined Locks, and

Grand Chute under written service contracts.

A depreciation charge for equipment and facilities is billedto Appleton and the other seven ' mmunities receivingtransit service. The depreciation charge is based on bus milestraveled within each municipality. It is considered a

"surcharge" and is kept in a segregated account to be used onlyfor capital purchases. For capital items purchased with 80

percent federal funds, the municipalities are billed for only 20

percent of the depreciation cost. The segregated depreciationfund currently has $85,000 which will be used for future capitalexpenditures. Annual interest from the fund is returned to themunicipalities. If a capital item specifically benefits onemunicipality, that municipality is required to pay the full localmatching share. When any capital item is sold, the proceedsrevert back to the depreciation fund. All depreciationcontributions by individual municipalities are accounted for and,

if service is terminated within a community, its proportionatedepreciation payment is returned to the municipality.

The overall formula has been in effect and working very wellsince 1978. It took over a year for all the municipalities to

agree to the formula. On a service level basis, the City of

Appleton comprises 75 percent of the service. When major capitalpurchases arise, such as the new 3.5 million dollar bus garageconstructed in 1983, the City of Appleton bonded for a majorityof the 20 percent local share.

Racine

Racine Transit is owned and operated by the City of Racine. Thesystem has 12 regular routes covering 162 route miles on weekdaysand Saturdays with no evening service. The 1986 operating budgetis $3,043,000, with farebox and other revenues of $764,000. TheCity of Racine had a 1980 population of 85,725, with a transitservice area population of 130,135. Transit service outside of

Racine is provided to Caledonia, Mt. Pleasant, and Sturtevant.Racine also has special service contracts with the University of

Wisconsin - Parkside and the Racine School District.

Service contracts between Racine and the other municipalitiesbasically consist of the same formula used in Green Bay. Eachcommunity is billed for the operating expense, minus fareboxrevenue. A budget figure for overall system expense per mile is

multiplied by the number of bus miles traveled within themunicipality. Each municipality is given credit for federal andstate operating assistance.

27

Racine pays for all the capital cost, including the 20 percentlocal share on federal grants. Depreciation for equipment and

facilities is included in the expense per mile figure billed to

the municipalities.

Sheboygan

The Sheboygan Transit System is owned and operated by the City of

Sheboygan. The system has nine regular routes covering 124 routemiles on weekdays and Saturdays, including weekday eveningservice. Sheboygan's 1986 transit operating budget amounts to

$1,663,000, with $459,000 in farebox and other revenue. The Cityof Sheboygan had a 1980 population of 48,085, and a transitservice area population of 54,989. Transit service outside of

Sheboygan is provided to Sheboygan Falls and Kohler, underwritten service contracts.

No depreciation charge is billed to the municipalities andSheboygan pays 100 percent of the capital cost, including the 20

percent local share on federal grants. All the municipalitiesare billed for operating cost in the same manner as used in GreenBay and most of the other transit systems in Wisconsin. Anexpense per mile figure is first calculated as part of the budgetprocess. The municipalities are then charged for bus milesoperated in their communities and credited for farebox revenuecollected

.

2. Local Cost Sharing Alternatives

In consideration of municipal transit service agreements used byother similar sized public transit operators in Wisconsin, GreenBay Transit should consider the following cost sharingalternatives

:

a . Alternative #1

The first alternative would be to make no changes to

present transit cost sharing agreements between GreenBay, De Pere, Allouez, and Ashwaubenon. The existingsystem of charging each municipality its local share of

operating cost based on actual bus miles traveled andpassenger fares collected within its community, is a

fair and widely accepted method of sharing operationalcost. The City of Green Bay, as the owner and operatorof the bus system, could also continue to carry outcapital improvements with 80 percent federal assistanceand 20 percent city funds. By having the city continueto fund the entire 20 percent local share, clearownership and title to the buses and transit facilities

28

would be maintained. If service was to be discontinuedin De Pere, Allouez, or Ashwaubenon, the City of GreenBay would not have to reimburse capital contributionsto the municipality losing the service.

Alternative #2

A second alternative would be to maintain the presentoperational cost sharing formula and include a separatedepreciation "surcharge" for transit facilities andequipment, similar to the formula used by ValleyTransit in Appleton. Valley Transit bills the City of

Appleton and the seven other municipalities an annual"surcharge", based on bus miles traveled within eachcommunity and a 12 year depreciation rate on facilitiesand equipment. The surcharge funds received from eachmunicipality is kept in a segregated account to be usedfor future capital purchases. There is a provision in

the service contract, whereby if Valley Transit were to

cease oeprations, the balance of the depreciationaccount would be returned to the municipalities in the

same ratio as it was paid in.

As stated previously, depreciation expense is not

eligible for federal or state operating assistance. A

depreciation "surcharge" would, therefore, have to be

segregated from normal operating expenses charged to

each municipality. A depreciation expense is includedin the annual transit system financial audits conductedby Jonet, Fountain, Vande Loo and Glaser, C.P.A.Incalendar 1985, the total depreciation expense, as

stated in the financial audit report, amounted to

$252,611. Depreciation is calculated based on the costof depreciable assets to operations over theirestimated useful lives on a straight-line basis.Depreciable assets include the bus garage office andmaintenance building, 29 buses, service vehicles andgarage maintenance equipment, office furniture, 22 bus

shelters, and the Adams Street Transitway facilities.Nearly all the depreciable assets have been purchasedwith 80 percent federal transit grant funds and 20

percent City of Green Bay funding. Any depreciationsurcharge to the municipalities would have to be basedon the non-federal 20 percent contributed capital, andbus miles traveled within each community.

In using the calendar 1985 depreciation cost of

$252,611, the 20 percent local share of contributed

29

capital, and the current bus mile ratio, the

depreciation charge would amount to the following:

Municipality

1986

Share of

Bus MilesDepreciationSurcharge

Local OperatingAssistance

1986

Green BayDe PereAshwaubenonAllouez

81. 50%

4.95%8.05%5.50%

$41, 175

2, 501

4, 067

2,779

$283,76217.23528, 028

19, 150

TOTAL 100.00% $50,522 (20%) $348, 174

Since the City of Green Bay funded the entire 20

percent local share of the capital expenses, the city

total surcharge from De Pere, Ashwaubenon, and Allouezwould amount to $9,347, to be kept in a segregatedcapital depreciation account for use in funding thelocal share of new equipment and facility improvements.

c . Alternative #3

The third alternative would be to maintain the existingoperational cost sharing formula, and charge "all" theparticipating municipalities for the 20 percent localcapital cost of new equipment and facility improvementsbased on their share of bus miles. If bus service wereto be eliminated in a given community, the contributedcapital paid by the municipality would have to bereturned. For example, if bus service was discontinuedin Ashwaubenon, Ashwaubenon * s contributed capital fornew replacement buses or garage improvements would be

very difficult to pay back, since the buses and garagewould not be liquidated as a result of the minorservice cutback. Also, approval for the purchase of

any new buses or other capital improvements would haveto be obtained from each of the four individualmunicipalities contributing to the 20 percent non-federal share. Following is a calculation of the 20

percent local capital funding on the proposed calendar1987 UMTA capital grant for the purchase of three newreplacement buses and 10 bus shelters:

should not be charged a depreciation surcharge. The

30

Municipal ity

1986 Shareof Bus Miles

20 PercentLocal Capital

Cost

Green Bay 81 . 50% $74,491

De Pere 4.95% 4,524

Ashwaubenon 8.05% 7 , 358

Allouez 5.50% 5,027

100 .00% $91 , 400

F. LOCAL COST SHARING RECOMMENDATIONS

In consideration of the three previously stated local cost

sharing alternatives for the Green Bay Transit System,

Alternative #2 is the most feasible method of having De Pere,

Allouez, and Ashwaubenon share in the capital cost. The

depreciation "surcharge" method is a fair and equitable means of

charging the municipalities for the purchase of buses, bus

shelters, and facility improvements. The "surcharge" to De Pere,

Allouez, and Ashwaubenon is a simple equipment and facilityusage charge, which can be easily segregated from the normal

operating assistance payments.

Alternative #2 would present problems in terms of potentialdelays in obtaining approval of capital purchases from four

individual municipalities, entitlement to equipment and

facilities, and the payback of contributed capital if servicecuts were to be implemented. The survey of other Wisconsintransit systems found two systems using a depreciation surchargeand "no" systems requesting a share of 20 percent contributedcapital from other municipalities.

A summary of this transit service cost allocation studyrecommendations is as follows:

1. Depreciation "Surcharge"

Beginning in calendar 1987, charge De Pere, Allouez, andAshwaubenon a depreciation "surcharge" based on their estimated1987 ratio of bus miles and the audited 1986 total facility andequipment depreciation expense. Surcharge funds received fromthe municipalities should be deposited in a "separate" interestbearing account to be used to offset the City of Green Bay's 20

31

percent local share of UMTA funded capital improvements. If

service were to be totally eliminated within a municipality, the

municipality would be paid back its proportionate share of

depreciation payments from the balance of the current year's

depreciation fund account.

2 . Service Contracts

Service contracts should be signed on an annual calendar year

basis between the City of Green Bay and De Pere, Allouez, andAshwaubenon. The service contracts should specify the level of

service, passenger fares, anticipated state and federal operatingassistance, the depreciation "surcharge", and insurancecoverage. See Appendix B for a draft copy of a proposed servicecontract between Green Bay and the municipalities.

3. Operating Assistance

Maintain the existing operating assistance formula, whereby eachmunicipality is billed for its proportionate share of the

operating deficit, based upon its percentage of total bus milesoperated, and reimbursed for state and federal operatingassistance as it is received by the City of Green Bay. Thecurrent monthly billing process creates unnecessaryadministrative work. Each municipality should be billed for four

equal quarterly payments, based on the approved calendar year

budget and the Wisconsin Department of Transportation operatingassistance contract. Reconciliation of the actual operationaldeficit will be made, based on the annual calendar year financialaudit

.

See the draft Green Bay Transit Service Agreement in Appendix B

for details on the recommended method of allocating transitoperating and depreciation cost between the municipalities.

32

APPENDIX A

GREEN BAY TRANSITCAPITAL IMPROVEMENT DESCRIPTION AND EXPENDITURES

FROM 1974 TO 1986

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APPENDIX B

DRAFT GREEN BAY TRANSITSERVICE AGREEMENT

Draft

GREEN BAY TRANSIT SERVICE AGP'^EMENT

THIS AGREEMENT is made between the CITY OF GREEN BAY,

WISCONSIN, hereinafter referred to as the "City", and the

, hereinafter referred to as

, on this day of,

1986.

WHEREAS, the City is a Wisconsin municipal corporationacting by and through its authorized agents; and

WHEREAS, the City owns and operates a public transitsystem under the provisions of Wisconsin Statute 66.943; and

WHEREAS, both the Urban Mass TransportationAdministration of the U. S. Department of Transportation and theState of Wisconsin Department of Transportation assist in thesubsidization of the operating deficit under formula grantprograms; and

WHEREAS, seeks to contract withGreen Bay for the provision of public transit service from GreenBay to and within ; and

WHEREAS, Green Bay may contract with

,for the receipt or furnishing of

transit service under the provisions of Wisconsin Statute 66.30:

THE PARTIES HERETO AGREE AS FOLLOWS:

1. SERVICE LEVEL

During the term of this agreement. Green Bay shalloperate regularly scheduled bus service to

,

as described in Attachment A. Any changes to the level of busservice, as described in Attachment A, will require the priorapproval of the Green Bay Transit Commission and the appropriatelegislative body of . Such changesin service levels may require a corresponding adjustment in thepercentage share of the Gross Operating Cost attributable to

40

2. FARE STRUCTURE

During the term of this agreement, the bus fares shownin Attachment B schedule of tariff shall be in effect.

3. DEFINITION OF TRANSIT SYSTEM EXPENSES

(a) Operating Expenses mean costs accrued to the Green Bay

Transit System by virtue of its operations, as definedin Wisconsin Statute 85.20 (1) (g) and in TRANS 4.04

Wisconsin Administrative Code, as per the WisconsinDepartment of Transportation operating assistancecontract with Green Bay for the period of January 1,

1987 through Decemaber 31, 1987.

(b) Depreciation Expenses are defined as the amountnecessary to offset the scheduled depreciation of

capital assets of the Green Bay Transit System.Capital assets include all transit facilities,vehicles, and equipment that have a tangible, long term

value. Depreciation schedules shall be based on the

acquisition price and the useful life expectancy of

each individual capital asset, with the length of the

depreciation period varying according to the class of

asset depreciated. For depreciation purposes, the

value of those capital assets that are acquired withpartial federal and state funding assistance shallinclude only the local share of the acquisition price.The amount of depreciation payments shall be adjustedon an annual basis, if necessary, to reflect actual

costs.

4. DEFINITION OF TRANSIT SYSTEM REVENUE

(a) Farebox Revenue is defined as the total of cash,

single-ride ticket, and monthly pass passenger farescollected through the farebox in the course of dailybus operations.

(b) Other Operating Revenue is defined as all moniesreceived from the sale of on-bus advertising, specialfare subsidies from government agencies, and proceedsfrom the sale of used motor oil and bus parts, and allother sources.

(c) Total Operating Revenues are defined as the total

revenues from bus passenger fares and other revenue as

cited above.

41

5. DEFINITION OF TRANSIT SYSTEM DEFICIT

Net operating deficit is defi. jd as the WisconsinDepartment of Transportation eligible operating expense, minustotal operating revenue.

6. METHOD OF ALLOCATING TRANSIT EXPENSES BY MUNICIPALITY

Operating expenses and depreciation expense areallocated to each municipality, based upon the percentage of

total annual bus miles operated within a municipality as a

proportion of the total miles of service provided to allparticipating municipalities.

7 . PAYMENT SCHEDULE

agrees to pay Green Bayan amount equal to its proportionate share of projected annualoperating deficit and depreciation expenses of the Green Bay

Transit System. These payments will be made in four equalamounts and are due on or before the following dates during eachcalendar year: January 15; April 1; July 1; and October 1.

Green Bay will send an invoice four weeks in

advance of the due date of such payments.

8. REIMBURSEMENT OF FEDERAL AND STATE FUNDS

All operating assistance grant revenues received fromfederal and state sources will be used, to the full extent of

those funds, to reimburse each participating municipality for its

proportionate share of its eligible operating deficit. The

federal and state assistrance reimbursement will be based on the

percentage of total bus miles operated as outlined in paragraph7. Such payments will be made within twenty (20) days of actualreceipt of all applicable federal and state operating assistancefunds

.

9. FINAL RECONCILIATION

An independent financial audit will be conducted by a

qualified firm to determine the actual operating deficit and the

proportionate share of actual cost for each participatingmunicipality. A final reconciliation statement, based upon theresults of the financial audit, will be provided to

no later than May 1st of the followingcalendar year. Any necessary adjustments of overpayment or

underpayment by will be made in the

42

next calendar year following publication of the financial auditreport. For example, calendar 1986 overpayments will be creditedon the calendar 1988 quarterly billings, based on a May, 1987

audit report.

10. FINANCING OF CAPITAL ASSETS

(a) Depreciation payments will be made in accordance withthe upcoming calendar year percentage of bus milestraveled within the municipality times the previousyears audited facility and equipment depreciationexpense. All depreciation payments and proceedsreceived by Green Bay from the disposition of anycapital assets will be recorded and deposited in a

separate capital purchase account. The localmunicipality depreciation funds and any accruedinterest earned on their investment will be used onlytoward the acquisition and/or replacement of communalcapital assets necessary to provide transit servicewith the entire system.

(b) If the total of these accumulated funds is inadequateto finance the local share cost of a communal capitalasset(s). Green Bay will advance the necessary moniesfor the acquisition.

(c) If a capital asset can be proven to directly andexclusively benefit one municipality, that municipalitywill be required to pay the local matching share to

acquire the asset. No such capital assets shall be

acquired without the prior approval of the affectedmunicipality.

11. INSURANCE

At all times during which Green Bay shall provide theabove-cited bus service in ,

GreenBay shall carry and keep in force insurance coverage insuringGreen Bay against liability for personal injuries or propertydamage arising out of the operation of such bus service, andcovering each and all of the buses used by Green Bay in thatservice

.

12. RECORD/INFORMATION TO BE PROVIDED

(a) Green Bay will notify in advanceof all Green Bay Transit Commission meetings and willprovide copies of the minutes of such meetings.

43

(b) Green Bay will arrange to have its financial recordsaudited annually by an independent auditor and to

provide with a copy of

the final audit report. In addition, a designatedrepresentative of mayinspect the financial records of Green Bay, uponrequest

.

13. OPERATING AUTHORITY

Green Bay shall have sole and ultimate authority andresponsibility for the operation, control, and direction of busservice operated within

,pursuant to

this agreement, and in accordance with terms herein.

14. TERMINATION

Either party may terminate the AGREEMENT ninety (90)

days following the delivery of a written notice to the otherparty. will pay for pro-rated servicecost up to and including the last day of service.

15. DISPOSITION OF CAPITAL ASSETS UPON TEMRINATION

If, as a result of the termination of this AGREEMENT,any capital asset acquired with federal financial participationwill no longer be used for transit purposes, that asset will be

disposed of in accordance with prevailing Federal Urban MassTransportation regulations. The proceeds from the disposal of

the asset will be distributed to federal and local sources in

proportion to their original contribution. The local share of

those proceeds will be redistributed to the participatingmunicipalities, as follows:

(a) If unilaterally terminates theagreement, will receivepayment only for the current local share value of anydirect benefit capital assets previously acquired by

will also be given right of first refusal to buy outthe non-local share value of any such asset{s) at thecurrently appraised fair market value.

(b) If Green Bay finds it is necessary to temrinate allAGREEMENTS system-wide and to dispose of all assets,

will receive paymentfor the following:

44

(1) One hundred (100) percent of the current local

share value of any direct benefit capital asset(s)acquired by .

(2) Its proportionate allotment, based on currentpercentage of total bus miles operated, of

the balance of the communal assets' depreciationfund

.

16 MISCELLANEOUS

In no event shall Green Bay be deemed to be in defaultof any provision of this AGREEMENT for failure to perform, wheresuch failure is due to strikes, walkouts, riots, civil

insurrectons or disorders, act of God, adverse weatherconditions, or for any other cause or causes beyond the controlof Green Bay.

17. TERM OF AGREEMENT

This AGREEMENT will remain in effect until modified or

terminated and will be binding upon the parties mutually and upontheir successors and assigns.

IN WITNESS WHEREOF, the parties have affixed their

hands and seals this

198

VILLAGE (CITY) OF

day of

CITY OF GREEN BAY

BY: BY :

Name

:

Title:

Name: Samuel J. HalloinTitle: Mayor

ATTEST; ATTEST;

Name

:

Title;Name: Paul J. JanquartTitle: City Clerk

45

1]

LB

NOTICEThis document is disseminated under the sponsorship of the

Department of Transportation in the interest of information

exchange. The United States Government assumes no liability

for its contents or use thereof.

The United States Government does not endorse manufacturers

or products. Trade names appear in the document only because

they are essential to the content of the report.

This report is being distributed through the U.S. Department

of Transportation's Technology Sharing Program.

DOT-l-87-05

TEChMDlDGV ShflHJMGA PROGRAM OF THE U.S. DEPARTMENT OF TRANSPORTATION

green bay transit service cost allocation study

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