200 S. Anaheim Blvd.
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Anaheim, CA 92805
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www.anaheim.net
CITY COUNCIL AGENDA REPORT
City of Anaheim
DEPARTMENT OF PUBLIC WORKS
DATE: OCTOBER 8, 2024
FROM: DEPARTMENT OF PUBLIC WORKS
SUBJECT: AGREEMENT WITH THE ANAHEIM TRANSPORTATION
NETWORK TO FURTHER DOCUMENT TRANSIT ROLES
ATTACHMENT (Y/N): YES ITEM # 15
GOVERNMENT CODE § 84308 APPLIES: NO
RECOMMENDATION:
That the City Council, by Motion:
1. Approve an Agreement for Public Transportation Services (Agreement) between the City of Anaheim (City) and the Anaheim Transportation Network (ATN) to document roles in response to the State Controller’s comments regarding its ability to ascertain whether the City of Anaheim is a transit operator that is required to submit Financial Transaction Reports as part of State Transit Assistance funding processes; and
2. Authorize and direct the Director of Public Works, or his designee, to take the necessary actions to implement and administer the Agreement.
DISCUSSION:
State Transit Assistance (STA) funds are derived from the statewide sales tax on diesel fuel. These funds are allocated by the State Controller’s Office (SCO) to eligible county transportation planning agencies for the provision of public transportation services.
Fifty percent of STA funds are allocated according to an operator revenue share formula. The formula allocates funds to counties based upon their share of total qualifying revenues of all STA-eligible operators in the county in proportion to the total qualifying revenue of all STA eligible operators in the state.
Once the SCO completes these calculations and their recommended appropriations are included in the state budget, they are distributed to county transportation planning agencies.
In Orange County, these calculations (and allocations) have been focused upon the Orange County Transportation Authority’s (OCTA) and City of Laguna Beach Transit’s revenue reporting. ATN believes that its operator revenues should be deemed eligible for inclusion in the SCO’s formula calculation, which if approved, would result in increased STA revenues being allocated to Orange County.
Agreement with the Anaheim Transportation Network to Further Document Transit Roles October 8, 2024
ATN has also argued that if approved, the increment of increased STA revenues resulting from the inclusion of its fare revenues should be returned to Anaheim for the provision of transit services in the City. ATN estimates this amount to be approximately $1,300,000 per fiscal year.
In advancing these discussions, ATN has engaged with various stakeholders including the City, OCTA, and SCO, to determine appropriate next steps for pursuing this change. Based upon these discussions, it appears that the following actions need to be pursued.
1. The SCO needs to determine, based upon the City’s and ATN’s legal formation documents, if the City qualifies as a transit operator that is required to submit a Financial Transaction Report (FTR). If the SCO determines that ATN’s revenues qualify for inclusion in STA formula calculations, then the STA allocation to Orange County will be modified to reflect an increased funding amount.
2. Next, OCTA as the county transportation planning agency will need to annually certify that the City is an STA-eligible transit operator. If the City is certified as an STA-eligible transit operator, a cooperative agreement between OCTA and the City will need to be established for the administration and expenditure of the funds being distributed to the City. This process will likely resemble the process which is currently followed by OCTA and the City of Laguna Beach.
3. After the OCTA cooperative agreement is executed, the City will need to execute a passthrough agreement with ATN in order to pass on all of the funding requirements imposed by state statutes, the SCO, and OCTA from the City to ATN. Once this agreement is executed, the City should be able to distribute STA funds.
During the past year, the City and ATN have worked to address the first action identified above.
ATN submitted its franchise agreement with the City for SCO consideration. The SCO responded that the franchise agreement did not establish that the City meets the definition of a transit operator. Further, the SCO stated that additional documentation needed to be provided showing that the City, with ATN service, meets the definition of a transit operator.
Specifically, the SCO identified needing to see details on operations, compensation, ownership, quality and maintenance of the operating equipment, route and time schedules, and collection of fares.
Given this input, ATN has worked with its legal counsel and the City to develop the attached agreement, which addresses each of the SCO specified topics. It should be noted that this agreement does not change ATN’s existing franchise agreement with the City. Instead, it more explicitly documents ongoing actions, roles, and responsibilities which are currently being performed so that the SCO can make a determination if the City qualifies as a transit operator that is required to submit a FTR.
While approval of the attached agreement is recommended, it should be noted that OCTA has expressed concern with the inclusion of Recital F. OCTA has stated that it strongly opposes any effort to divert funds from state and/or federal sources that OCTA would otherwise receive that will impact their ability to provide countywide transit services.
Agreement with the Anaheim Transportation Network to Further Document Transit Roles October 8, 2024
Staff acknowledges both OCTA’s concern and ATN’s request that Recital F be included in the agreement; and is generally comfortable with Recital F moving forward as this agreement does not obligate funding and any future action with regard to state or federal funding will require significant dialogue between OCTA, ATN, and the City. Future City Council actions will also be required to approve funding agreements, so there will be continued and ongoing opportunities for dialogue and stakeholder input, should any of the efforts identified in Recital F start being advanced by ATN.
Finally, if the SCO’s review of this agreement results in a favorable finding, the City (and ATN as appropriate) will advance to steps two and three as described above. Each of these steps will require future negotiations with appropriate stakeholders as well as city council input and approval.
IMPACT ON BUDGET:
There is no budgetary impact.
Respectfully submitted,
Rudy Emami
Director of Public Works
Attachment:
1. Agreement for Public Transportation Services in the City of Anaheim