July 20, 2020 - From the July, 2020 issue

Planning LA Metro’s Recovery From Pandemic: Phillip A. Washington & Joshua Schank

The CARES Act, passed by Congress late March, earmarked $25 billion in federal funding to support transit systems across the US impacted by the pandemic. From the June MetroConnect TownHall, TPR excerpts LA Metro CEO, Phillip A. Washington, and Chief Innovation Officer, Joshua Schank, who discuss the agency’s strategy for COVID recovery. Washington details the intricacies of the CARES Act allocation processes for the region, and Schank also shares the impetus, mission, and equity-centered initial recommendations of Metro’s internal Recovery Taskforce.


Phillip A. Washington

"Since the March 20th stay-at-home orders, [METRO] lost a lot of boarding and fare revenues on our bus and rail system. We believe the gradually recovery will start in the first quarter of the next fiscal year…and may take up to two years to return to pre-COVID levels. Our fare revenue is between $250 - $300 million a year, so you can see the huge impact."—Phillip A. Washington

Phillip A. Washington: The first thing I want to do is explain our financial status to allow you to understand exactly what our revenue sources are, what we're doing, what we're thinking, and how we plan to move forward with the many capital projects that we have.

Since the March 20th the stay-at-home orders, we lost a lot of boarding and fare revenues on our bus and rail system. We believe the gradual recovery will start in the first quarter of the next fiscal year—which is September of this year—and may take up to two years to return to pre-COVID levels. Our fare revenue is between $250 to $300 million a year, so you can see the huge impact.

We're looking at an estimated gap in funding of $1.8 billion over two fiscal years. This is sales tax, fare revenue, and our total operation expenses. Sales tax is our largest and primary source of revenue, so when you think about the four measures that we have—Prop A, Prop C, Measure R, and Measure M—that's the full sales tax impact we're talking about. 

These estimates assume a recovery starting by September 2020, which is our hope — a gradual recovery in terms of how the public goes out and spends sales tax money. We're also looking at the potential of a recurrence of COVID-19. We hope that that does not occur, but these do not take that into account. We will continue to monitor and revise these estimates as we receive information, and we will present those to our board.

The last thing here is a sales tax deferral. In April, the governor signed a state order allowing for a sales tax deferral for small businesses, which basically says that small businesses don’t necessarily have to pay sales taxes for a time. Even though at some point we’ll receive this sales tax back, there is cash flow challenge because we will not be receiving that sales tax when we otherwise would have.

The president signed the $2 trillion CARES Act on March 27th. On April 2nd, the Federal Transit Administration (FTA) began to designate amount for each geographic area of the United States. On April 10th, we found out what the LA County portion would be. Keep in mind that $25 billion of the $2 billion went to transit, and it was portioned out around the country based on an existing formulaic program, the 5307, with certain metrics to it.

We gathered our LA County apportionment and began to review the allocation with the various stakeholders. Our stakeholders are the muni operators, like Big Blue Bus and Foothill Transit. The apportionment that was provided to us was not all our money. We had to distribute various apportionments to the Munis (municipal operators), Metrolink, Access Services, and some of the Tier 2 bus operators.

After we worked with them to determine those allocations, we had to take those allocations to the LA Metro Board of Directors for them to approve it. They approved it at the May Board meeting, and it I’m happy to say it was approved unanimously. We had to then submit those allocations to SCAG which is the MPO (metropolitan planning organization) for them to submit it to FTA.

In August or September, the FTA will begin their review and approvals, and only then can we draw down the funds that were apportioned to LA County. This is invoice-based process, which means we have to submit invoices for the expenditures that we are requesting. COVID-19 cleaning expenditures, lost revenues, etc. have to be approved in invoice form, then we can go into the system and draw that money down.

The LA County apportionment was $1.068 billion, but keep in mind that we stand to lose $1.8 billion. That goes to show that we will not be able to cover all of our loses with the federal apportionment, especially when we had to distribute some of this $1.068 billion to the Munis smaller bus companies, Metrolink, and Access Services. We’ve put the intent of the CARES Act up because it’s important to note that the intent of this money is to cover operating expenses that we are incurring due to ridership and revenue losses from COVID-19, not capital projects. That is important for contractors and consultants to understand.

Reimbursement for these eligible expenses. One of the good things is that the CARES Act stimulus talks about allowing us to go back to January 20th, 2020 for a 100 percent reimbursement. That means that once we submit the invoice and it’s approved, then we will get 100 percent of that reimbursement, but we don’t start drawing down this money until about August, September, or even as late as October. This is why we have to defer some of the capital projects as well.

We are pursuing FEMA funding in addition to the CARES Act money. I’ve got a team working on eligible expenses for both, so our hope is that we will actually receive FEMA money before CARES Act dollars.

We are truly Mother Metro when it comes to making distributions of all of this money. In our discussions with the various stakeholders, I wanted to make sure that we had concurrence from all of the Munis, Metrolink, Access Services, and all of the operators on the amount of money they would receive based on the existing criteria in the 5307 formulaic program that is administered by the FTA.

Since the CARES Act money could not cover all of our losses, I put out a call for action to reduce expenses and adhere to our Metro Mobility and Affordability Plan. We created two buckets to reduce expenses. The first is work that will continue and the second is other projects and programs we’re currently evaluating with the objective of staying on the Measure M schedule. One of the things that I will say about the second bucket is that we have been so aggressive over the last two years of accelerating projects that the worst that can happen—even with this deferral of three to six months—is that we will stay on the Measure M schedule. Now, there are people out there that actually think that the accelerated schedule is actually the Measure M schedule, but it’s not.

In the first bucket, we obviously have COVID-19 expenses. We’ve got to continue that and spend money on it, at least until we receive the CARES Act reimbursement and that’s not until September or October. We have to hang on to the revenues that we have to do this work.

The second bucket is, like I mentioned, other projects and programs we’re evaluating with the objective of staying on the Measure M schedule. As opportunities arise for projects in this bucket, we will move them expeditiously. We still want to move these projects as much as we can and be in a position to be shovel ready if and when Congress votes on a stimulus designed for capital projects. This becomes very important for us to make sure that we keep the projects that are being deferred for three to six months in a position to move quickly if mana falls from heaven. The idea is to evaluate these projects on a case-by-case basis, because there are some projects in this bucket two list that are grant-funded or near completion on environmental review; they’re in different stages, so if it makes sense to us move these projects and have the funding to do so then we will do so. 

Joshua Schank: I’m going to go through what LA County’s Metro’s Recovery Task Force is all about…; then, I’ll go through some of the early action items that Phil Washington has referenced. The Task Force is an internal Metro operation made up of multiple departments within LA Metro, and in composing this team we were looking for leaders and up and comers who have ideas because the task force is all about change and coming back with a “new normal.”

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We’re trying to maintain mobility without congestion, address some of the inequities that we’ve seen in our transportation system, and do it within this window of opportunity. Our goal is to come out with a report at the end of September, but we’re issuing monthly reports in the meantime and have already issued some early action items as well.

As I mentioned, the folks that we have on this task force tend to be people who have participated in our leadership program, Women and Girls Governing Council, EnoMAx, and programs where people are asked to think about how to make change. That’s what this task force is about: recommending new ideas. We’re not an implementing body, we’re a recommending body, so it is up to us to help all of Metro to figure out how to move thee recommendations forward.

We brought 12 early action recommendations to the Metro Board last month, and we’re bringing another six this month. We choose them based on timeliness, impact, and cost/saving revenue, and they’re all going through a rapid equity assessment. Our chief equity officer is part of this group, and she created an equity tool that allows us to rapidly assess these recommendations to ensure that we’re trying to make recommendations that improve equity in all cases.

One, we surveyed Metro customers to better understand how we can emerge from this and prioritize the customer experience. This has been done, and we’re already reviewing the results of that survey and determining how we want to use that information.

Two, work with the Board to authorize cities to repurpose some of their funding in order to advance slow and safe streets. This has also already been done, the board took this action last month through a board motion.

Three, make sure that we are trying to put the best possible product out on the street as far as cleanliness. We’re looking different options for how we might improve cleaning and make it more efficient because it does cost a lot of money.

Four, look at where we can put bus-only lanes in areas where Operations has identified as congestion hotspots. Before the congestion comes back is a good time to start planning and implementing these things, and we’re already partnering with cities around the region to do that.

Five, getting riders to have masks is critical to safety on our system. We want to not only make sure that we are distributing them, but that we’re distributing where they’re needed the most.

Six, we’re looking at potentially introducing a contactless method of payment through our new transit app. This would be a different way of paying that would allow people to avoid any kind of contact with human beings or machines. We’re also looking at whether off-peak service as a promotional opportunity could be made free for some period of time in order spread out the peak, limit the number of people crowded together, and also incentivize people to come back to our system.

Seven, the goal of Metro’s Vision2028 strategic plan is to encourage fewer single-occupancy vehicle trips, and telecommuting is one way to do that. We’re looking at updating our own telecommuting policy, but also how we can work with employers around the region to encourage either telecommuting, staggered work hours, and other things that ensure that people don’t just jump back into their cars as the default.

Eight, we’re looking to restore frequent transit service and stay ahead of demand, prevent overcrowding, and retain rear door boarding as an option.

Nine, we have to prioritize your major capital projects in the recovery framework. We have to make sure we’re doing the ones that have the greatest contribution towards economic recovery, mobility, and ridership first.

Ten, our bike share system is due for a re-look. The Planning Department has already started studying potential options including rebidding the contract or potentially bringing bike share in house. We’ve noticed that while transit ridership has dropped off substantially—as has bike share use—bike share use has dropped off less. People do seem more comfortable with the bike share than they do with transit, at least at this moment. We don’t want people to jump in their cars and making bike share work better as we come out of this could be a way to encourage people to avoid driving alone.

Eleven, we’re working with security and operations to figure out how we can house people and connect unhoused riders with services. This is critical not just for those who are unhoused, but also for other on the system in order to ensure social distancing and comfort for our customers.

Finally, we’re looking at how we can pilot and expand other alternative mobility services that can supplement our network. We’re already planning our own micro-transit launch and we have our mobility on-demand service with Via at several stations, but there are other partnerships we can do to go beyond these existing ones to make sure we can cover service adequately for those who need it the most without sacrificing the service we already have. We have limited resources and we’ve got to explore all options for providing coverage for mobility in this county.

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© 2020 The Planning Report | David Abel, Publisher, ABL, Inc.