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Valley Bus Zone Would Break Even, MTA Is Told

Transit: Agency could save $20 million by subcontracting to outside operators elsewhere, consultant's report says.


The MTA could save more than $20 million by subcontracting its bus lines to outside operators, except in the San Fernando Valley, where an independent transit zone would probably just break even for the county transit agency, according to a consultant's report.

After studying how the Metropolitan Transportation Authority could divest itself of its bus operation, the consultants concluded the embattled agency--saddled with $7 billion in debt--should consider a package of alternatives including:

* Creation of several small semiautonomous agencies around the county that could privatize bus services;

* Expansion of the Foothill Transit Zone, which has privatized management and operation of MTA's bus lines in the San Gabriel Valley;

* Turning over control of some lines to existing municipal operators such as those in Long Beach or Santa Monica


If the MTA divested all of its bus operations, the report said, the agency would save $22 million. The bulk of that savings, however, would come from reduced expenses in the San Gabriel Valley and the South Bay.

Savings from a semiautonomous agency for the Valley--the only area where advocates have mounted an effort to establish such an entity--would be minimal, according to the report. While it would slash the cost of MTA's bus operations by about 17%, the transferal of the Valley lines would also cut MTA's revenue by the same amount, it said.

The report was prepared by consultants from Booz-Allen & Hamilton, KPMG Peat Marwick and the law firm of Riordan & McKinzie, at the request of some MTA board members. A copy was obtained Monday by The Times.

Divesting the MTA of its bus operations would be a complex endeavor likely to draw fire from the MTA's transit unions and bus riders, the report warned.

The chief model for such an experiment in localizing control over bus operations is the Foothill zone, which the MTA's predecessors established in 1987. By most accounts, Foothill has raised the quality of service and slashed fares on the 26 lines it took over, but critics contend its reduced costs were achieved at the expense of its workers, who are paid far less than the MTA's.

Based on their experience with the Foothill zone, unions representing MTA's drivers and mechanics have threatened to sue to stop the agency from establishing new Foothill-like zones.

Julian Burke, the MTA's CEO, may present the report at the MTA board's meeting this week. Consultants said the various divestiture plans already have at least eight supporters on the 13-member board.

A spokesman for county Supervisor Mike Antonovich said the report bolsters his previously announced position. "Mike has been calling for the past year for a public-private partnership to take over bus service to the San Fernando Valley," said the spokesman, Cam Currier. "It has been our position that turning surface transport over, the sooner the better, is in the best interests of both commuters and taxpayers."

The report noted that regardless of how many zones are created, the new operations will be subject to the federal court consent decree governing the MTA's bus service. That would "lessen the degree of local control" provided, and could scare off municipal operators who might have been interested in taking over some of the lines, it said.


Lawyers who worked on the study suggested the MTA would face a difficult, but not insurmountable, legal fight if it established a transit zone for the Valley. In particular, under state law, the MTA would have to show that a Valley zone would not "substantially divert" riders or revenue from the system it already operated. That language could become a major issue, the report said, because a Valley zone would divert 17% of the agency's bus revenue and 15% of its bus passengers.

Whatever the MTA decides to do, the consultants said, it should decide quickly. The agency has an unusually high number of union employees eligible for retirement over the next four years, and the MTA could avoid layoffs if it divests within that period, the report said.

What's more, the agency needs to replace its aging bus fleet and could purchase new ones designed to meet the requirements of the individual zones, the report said.

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