September 24, 2024
Library and Community Services
DATE: September 24, 2024
TO: Mayor Martinez and Members of the City Council
FROM:
LaShonda White, Deputy City Manager, Community
Services
Nickie Mastay, Deputy City Manager, Internal Services
Lori Reese-Brown, Project Manager
Hope Lattell, Finance Manager
Subject:
Receive Performance Improvement Plan for the Measure
J funded R-Transit Program and Lower the Cost Pool Rate for R-Transit
FINANCIAL IMPACT: Lowering the cost pool rate for the Measure J funded R- Transit Program will reduce the Program’s administrative cost by the amount of the reduction, and increase the
cost to the City’s General Fund. Limiting Richmond’s
overhead rate to 20% would reduce the cost of general
administration from $490,000 to $139,000. The difference of $351,000 would increase the net cost to the City’s
General Fund by the same amount.
PREVIOUS COUNCIL
ACTION:
N/A
STATEMENT OF THE
ISSUE:
The administrator of the Measure J funds for paratransit services, the Contra Costa Transportation Authority
(CCTA) finds that Richmond’s overhead rate is exorbitant when compared to other recipients of the paratransit fund and are withholding their approval of the City’s FY 2024- 25 claim of $1.23 Million until the City addresses this issue, as well as other concerns identified in the
Authority’s audit of the R-Transit program.
RECOMMENDED ACTION: RECEIVE a presentation regarding the Richmond Paratransit Audit commissioned by the Contra Costa
AGENDA
REPORT
September 24, 2024
Transportation Authority; APPROVE the City of
Richmond’s responses to the Audit and the Performance
Improvement Plan; and AUTHORIZE the reduction of the
cost pool amount allocated to the Richmond Paratransit
Program by $351,000 in Fiscal Year 2024-25 which
would increase the General Fund’s obligation by
$351,000 – Community Services Department (LaShonda
White 510-620-6828).
DISCUSSION:
Richmond’s Transit Services
For nearly ½ century the City of Richmond has provided paratransit services for seniors and mobility impaired adults. The service has evolved into three programs that serve the residents of Richmond and surrounding unincorporated areas. For the users who require assistance there is the R-Transit program - a door-to-door demand responsive service using the City’s specialty equipped vehicles operated by trained City staff. A second program, launched in 2018, serves all seniors via an app that provides on demand curb-to-curb trips. Operations is provided through a contract with Lyft with the cost of each trip subsidized by the City. A third program is a door-to-door demand responsive service provided by a City contractor, TransMetro. It was created to be the back-up to the City’s paratransit service and thereby ensure that R-Transit clients are always served. Funding is provided from the Environmental and Community Investment Agreement (ECIA) with Chevron.
The City provides a fourth transit program called Richmond Moves. It was launched in 2022 and provides on demand shuttle service for all City residents from and to predetermined origins and destinations. Since it is available to all residents it is referred to as a micro-mobility service versus a paratransit service. Operations is provided by Nomad Transit, a wholly owned subsidiary of Via Transportation (Via). Funding is provided from the Transit and Intercity Rail Capital Program (TIRCP), along with a 50 percent match from the ECIA.
A summary of the City’s transit services is shown in the below chart.
Program Service Provider Eligibility Funding
Source
R-Transit Door-to-door City staff 55+
18-54 disabled
Measure J
R-Transit with
Lyft
Curb-to-curb
Lyft vehicle
Lyft 55+
18-54 disabled
Measure J
R-Transit with
TransMetro
Door-to-door TransMetro 55+
18-54 disabled
ECIA
Richmond
Moves
Corner-to-
corner
Nomad Transit
(aka Via)
All Residents TIRCP and
ECIA
September 24, 2024
The service area for the R-Transit services is shown below:
Measure J Fund
In 2004 the Contra Costa voters approved Measure J, which extended the half-cent local transportation sales tax, first established by Measure C, for another 25 years. The Contra Costa Transportation Authority administers Measure J funds. Program 15 of Measure J is dedicated to transportation for seniors and people with disabilities, commonly referred to as paratransit. Individuals with disabilities, as defined by the Americans with Disabilities Act (or ADA), must be served; and services not required by law, but reflect local community interests, such as non-ADA seniors, may be served.
The total amount of Program 15 funds and the set aside for each of the 7 eligible providers are calculated annually by the CCTA. The eligible providers are shown below.
1. Central Contra Costa Transit Authority (aka County Connection)
2. East Bay Paratransit Consortium
3. Eastern Contra Costa Transit Authority (aka Tri Delta Transit)
4. West Contra Costa Transit Authority (aka WestCAT)
5. City of El Cerrito
6. City of San Pablo
7. City of Richmond
Program 20 of Measure J is dedicated for additional transportation services for seniors and people with disabilities. For the West Contra Costa Subregion, of which Richmond is a part of, these funds may be used, but not limited, for vehicle replacements, the subsidy of sedan/taxi services, new services, an increase in demand, an increase in
September 24, 2024
costs, and a decline in revenues. The total amount of Program 20 funds and the set aside for each of the eligible providers are calculated annually by the CCTA.
As earlier mentioned, two of three paratransit services provided by the City of Richmond are funded through Measure J. To receive the annual funds the provider must submit a CCTA claim form. The claim includes information about the program’s previous, current, and next year’s performance and finances. The review and approval of the claim has four steps involving the CCTA staff; a subcommittee of the Paratransit Coordinating Council (PCC); the PCC; and the CCTA Board.
In FY 2019-20 Richmond’s claim was approved and Measure J funding was dispersed for FY 2018-19 and FY 2019-20. In FY 2020-21 and again in FY 2021-22 the claim process was suspended due to COVID, but Richmond, like the other providers, received Measure J funds. In FY 2022-23 the City prepared a claim but according to the CCTA was not received. The issue of the missing claim was not resolved and that resulted in the loss of Measure J funding for that year. In FY 2023-24 the City filed a claim but it was deemed to be incomplete. For a 2nd year the issue was not resolved that resulted in the loss of Measure J funding. In February 2024, the CCTA Board authorized an audit of the Richmond paratransit program for the five-year period from FY 2018-19 through FY 2023-24. The audit was completed in June 2024.
What Happened Between 2022 and 2024
The workload of the staff in the Transportation Division in Community Services exceeded staff’s capacity. The manager of the Division spends less than 50 percent of their time overseeing paratransit services with the remainder of their time allocated to micromobility services (i.e. Richmond Moves, bikeshare, and car share programs), expanding EV charging systems, parking, transportation demand management, and regional transportation coordination. While more attention to the gathering and analysis of accurate performance and financial data could have occurred, the attention of staff was on the operations of the paratransit services, the expansion of the Lyft program and the development of the Richmond Move program. It is noted that the Lyft program, advocated by the Division manager, grew its ridership to be 10 times larger than the original paratransit service.
When the City was notified of the CCTA audit, City staff from Community Services and Finance, including both Deputy City Managers worked collaboratively to prepare for and respond to the audit findings. In addition, the Deputy City Manager of Community Services retained the services of a consultant with MRG to assist in effectively responding to the audit findings.
The transfer of the Transportation Division from the Community Services Department to the Public Works Department was envisioned to occur in 2022, at the time the current Community Services Department was being constituted. That transfer, however, was delayed due to a change in leadership in Public Works and the need for the new Director to focus on his existing cadre of services.
What is Happening Now
September 24, 2024
The formal transfer of the Transportation Division from Community Services to Public Works is scheduled to occur in FY 2024-25. In anticipation of the official transfer, vacant positions in Community Services - Transportation have been repurposed in Public Works, which has enabled Public Works to begin to build a comprehensive transportation division. The division will be engaged not only in transit services, but it will also be the lead in traffic calming, safety improvements, micromobility services, EV charging systems, parking, transportation demand management, and regional transportation coordination.
The Transportation Division will be led by a new Transportation Manager, funded by the salary savings from the deletion of the existing division manager position of Project Manager II, who is before the end of the calendar year 2024. The new position is subject to the approval by Richmond’s Personnel Board and the salary range approved by the City Council. The Public Works Department is planning to establish the position before transferring the Transportation Division to Public Works.
In addition, through collaboration with Human Resources, the position of Paratransit Coordinator or similar classification will be created subject to the constraints of the Measure J funded annual budget. The new position is also subject to the approval by Richmond’s Personnel Board and the salary range approved by the City Council. The Community Services Department is planning to establish the position before transferring the Transportation Division to Public Works.
Performance Improvement Plan
The Measure J Audit produced 29 recommendations. All recommendations are addressed in the Performance Improvement Plan (Plan), which was collaboratively and thoughtfully developed with the consultant and City staff. The following chart shows the Plan’s desired outcomes, its relationship to audit recommendations, and the schedule to develop and utilize the outcomes. Additional information regarding the 13 outcomes are described in the August 19, 2024 transmittal to the CCTA attached to this report. City staff is recommending that City Council approve City staff’s responses to the CCTA Audit findings and the proposed plans for implementing the audit findings. The consultant from MRG will support City staff in operationalizing the audit findings. The City’s responses to the Plan, along with the CCTA Audit and other relevant documents, are included in Attachment 1.
September 24, 2024
Cost Pool (Overhead)
The Audit highlighted that a significant portion of Richmond’s Measure J Paratransit Program is budgeted for administrative costs (aka overhead). The FY 2024-25 Measure J Claim includes $489,624 for administrative costs and $695,352 for operating costs, excluding the Lyft subsidy. That means that for every $7 spent to operate the paratransit service, another $5 is spent on overhead. This equates to an overhead rate of approximately 70%. In comparison the overhead rates for the Measure J providers that comprise the West Contra Costa County Subregion is shown below.
Desired Outcome
& Audit Recommendation #
2024 2025
July Aug Sept Oct Nov Dec Jan Feb Mar April May Jun
e
1 Accurate performance and
financial data
1, 4, 5, 12, 13, 19, 20, 23
2 Continuous monitoring, evaluation,
& incremental improvements
3, 4
3 Functional paratransit vehicles
16 4 Capable paratransit drivers
17,21,22
5 Lower administrative cost (cost
pool allocation)
7, 8, 9
6 Measure J funding for FY 2024-25
Approved
1,2,5,6,9
7 Resolution of Measure J funding in
previous fiscal years
5, 6
8 Transfer paratransit program to
Public Works
5 9 Increase # of clients and # trips
15, 24, 25, 26, 27, 28
10 Increase customer satisfaction
29 11 Reduce cost/trip – ambulatory and
non-ambulatory
10, 11
12 Assessment of service delivery
options for FY 2025-26
13 Measure J funding for FY 2025-26
Approved
2
September 24, 2024
Program Expenditures West Contra Costa County Subregion Providers City of
Richmond
City of San
Pablo
City of El
Cerrito
West Contra
Costa Transit
Authority
General Administration $489,624 $61,800 $33,295 $222,334 Paratransit & Excursion
Operations $695,352 $273,500 $138,671 $1,845,153
Overhead Rates
(Admin/Operations)
70.4% 22.6% 24.0% 12.0%
Source: FY 2024-25 Measure J Claim Forms
The reduction in the cost of overhead would increase the amount of Measure J funds available for operations that could be used to expand services and/or address unmet needs. For this reason, the CCTA strongly recommends that Richmond lower its overhead cost.
The administrative cost of the Richmond R-Transit program consists entirely of the City’s cost pool. The cost pool is a proportionate share of expenses by the City’s internal services and the general liability expense that supports the delivery of direct city services. Examples of internal services include legal, financial and human resources.
Council Options
The Administration has identified three options for the consideration of the City Council.
The options and the consequences are shown below:
1. Limit Richmond’s overhead rate to 20 percent (Staff’s Current Recommendation) - This proposed amount is comparable to other Measure J claimants. For FY 2024-25 Richmond’s ratio of administrative costs to operating costs is 70.4%. The average ratio of the other claimants in the West Contra Costa County Subregion is approximately 20%. Limiting Richmond’s overhead rate to 20% would reduce the cost of general administration from $490,000 to $139,000. The difference of $351,000 would increase the net cost to the City’s General Fund by the same amount. On the other hand, the reduction in overhead costs would increase the likelihood that the Measure J claim for FY 2024-25 would be approved, thereby avoiding the possible loss of $1.23 million in the General Fund if the claim was denied. The “savings” to the paratransit program of $351,000 could be budgeted to increase services and/or address unmet needs.
2. No change – The Measure J funded paratransit program would not deviate from the City’s existing allocation of the Cost Pool. The current citywide allocation already reflects a reduction in the full recovery of overhead charges. Lowering the cost pool allocation further for the paratransit program will negatively impact the City General
September 24, 2024
Fund by the amount of the reduction. For example, lowering the recovery of administrative costs by $350,000 would increase the net cost to the City’s General Fund by the same amount. However, if the City’s decision to not lower its administrative charges resulted in the loss of Measure J funds, the impact on the General Fund would be the loss, in FY 2024-25, of $1.23 million.
3. Full exemption from Cost Pool allocation – The exemption of the Measure J funded paratransit program from the Cost Pool would increase the net cost to the City’s General Fund by $490,000. The “savings” to the paratransit program of $490,000 could be budgeted to increase services and/or address unmet needs. Richmond, however, would stand alone out of the 7 claimants for Measure J paratransit funds, to forgo any funding for the organization’s administrative costs.
Option 1, limiting Richmond’s overhead rate to 20 percent, is recommended because it is responsive to the recommendations of the Audit, it is in-line with the overhead rates of the other providers in the West Contra Costa County Subregion, and it results in additional funds being available to expand paratransit services and/or address unmet needs.
NEXT STEPS
City staff continues to meet collaboratively with CCTA staff to discuss the implementation of the R-Transit audit to ensure successful service delivery for patrons.
A focus on work will include but is not limited to the development of a paratransit rider's guide, standard operating procedures, improved outreach, increase in ridership, and implementation of customer satisfaction surveys. The City will continue to work with Human Resources on staffing needs. In addition, the City is working with CCTA staff to resolve and receive outstanding Measure J funding revenue from FY 2021-22 to FY 2024-25 to substantially reduce or remove the current negative fund balance.
The City presented an update to the CCTA Paratransit Coordinating Committee on September 16, 2024, and there are plans for a presentation and update to the CCTA Board in October or November 2024. The CCTA Board will be charged with deciding regarding if Richmond’s Performance Improvement Plan is sufficient to allow Richmond to keep its Paratransit program or if a decision will be made to transfer Richmond’s program to another jurisdiction. If the City is unable to retain the paratransit program, City staff will return to City Council as soon as feasible to discuss next steps. City staff is optimistic that Richmond’s Performance Improvement Plan demonstrates Richmond’s dedication to continuous improvement and serving the residents that use paratransit services.
DOCUMENTS ATTACHED:
Attachment 1 – Transmittal to CCTA Regarding the FY 2024-25 Draft Paratransit Performance Improvement Plan including CCTA Audit
September 24, 2024
Attachment 2 – Draft Paratransit Performance Improvement Plan Slide Deck