CATS may consider company managing N.O. transit

Published Jan 21, 2013 at 10:00 am (Updated Jan 21, 2013)

As the CATS board ponders a consultant's recommendation that it contract out its executive staff positions in order to increase efficiency and improve service, it will be looking in part to New Orleans for advice.

The Crescent City's Regional Transit Authority moved to a so-called delegated management model in 2009, when it hired Veolia Transportation to manage, operate and maintain its system. While that arrangement is far more extensive than that recommended by the consultants for Baton Rouge's public transit system, Veolia will likely be among the companies from which CATS will solicit bids for a management contract, should the board move in that direction.

So what has been the experience in New Orleans? According to statistics, the costs of operating buses in New Orleans in 2011 was actually more than in 2009, when Veolia took over the RTA—$14.28 per vehicle revenue mile as compared to about $12 per vehicle revenue mile—but still less than in 2008, when it topped $17 per vehicle revenue mile. However, New Orleans city leaders say the level of expertise Veolia brings to the system is what is most beneficial about the arrangement.

"They have done a good job of reimagining the bus lines here and are really good at planning and strategic use of resources," says Cedric Grant, deputy mayor for facility, infrastructure and community development. "When you are financially constrained, you have to go with the entity that can give you optimum efficiency."

That said, Grant notes that while a more efficiently run system is better, the RTA is still plagued by financial problems, a situation confronting mass transit systems throughout the country.

"The issue is not so much about whether or not you privatize," he says. "It's more a question of how much it costs to operate a system and how to subsidize transit. That's a question every system in the country is facing."

A larger story on the experience of New Orleans and other cities that have partially privatized their transit systems is included in the new issue of Business Report, which hits newsstands Tuesday.