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Amendment 9 to the CEA between DOTD and RTA to revise Exhibit K
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DESCRIPTION: Execute an amendment to the CEA between DOTD and RTA related to the ferry service’s State annual operating subsidy schedule |
AGENDA NO: Click or tap here to enter text. |
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ACTION REQUEST: ☒ Approval ☐ Review Comment ☐ Information Only ☐ Other |
RECOMMENDATION:
recommendation
Authorize the Chief Executive Officer to execute an amendment to the Cooperative Endeavour Agreement (CEA) between the Department of Transportation and Development (DOTD) of the State of Louisiana and the Regional Transit Authority (RTA), specifically Exhibit K, as provided in the attached draft of Amendment No. 9.
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ISSUE/BACKGROUND:
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RTA’s management present for this Committee’s consideration and referral to the Board of Commissioner approval and issuance of a resolution authoring the RTA’s Chief Executive Officer to execute an amendment to the existing (CEA) between the RTA and the DTOD add transfer dates and estimated transfer amount between July 1, 2023 (Project Year 11) and July 1, 2032 (Project Year 20), for up to $5,140,000 per year. This amendment will increase the total maximum estimated compensation since the CEA became effective and Project Year 2032, to $99,046,641.00.
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DISCUSSION:
The CEA, effective since February 16, 2014, regulate the cooperative endeavor agreement between RTA and DOTD related to the ferry service. Amongst the CEA’s exhibits is Exhibit K, the State Annual Subsidy Schedule, which contain the statement of annual ferry subsidy, including the schedule of transfer of estimated funds. While several sources of State provided funding has subsidize the ferry service, the main source of State funding to subsidize the ferry service is pursuant to RS 48:25.1(A), known as the Transportation Trust Fund, and RS 48:25.2, known as the New Orleans Ferry Fund.
In the case of the Transportation Trust Fund, RS 48:25.1(A) provide that “[t]he [DOTD][ ] shall…contribute from its operating budget not more than four million dollars annually for the continued operation of the Chalmette ferry..." On the other hand, for the New Orleans Ferry Fund, RS 48:25.2 require that,
A. …beginning July 1, 2019, and each year thereafter, after compliance with the requirements of Article VII, Section 9(B) of the Constitution of Louisiana, and after making the allocation for state highway fund No. 2 for the Greater New Orleans Expressway Commission, the treasurer shall deposit into the fund, an amount equal to the total of all of the funds derived from the collection of registration and license fees and taxes collected by the state pursuant to R.S. 47:462, and as provided in R.S. 47:481, in the parish of Orleans.
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C. Monies appropriated from the [New Orleans Ferry F][ ]und shall be used exclusively by the [DOTD][ ] to fund operations of the Chalmette Ferry and to provide service formerly operated by its Crescent City Connection Division.
The actual amount of the subsidy derived from the New Orleans Ferry Fund is subject to Revenue Estimating Conference Forecast.
As per Exhibit K, as amended to date, since February 16, 2014 (Project Year 1) and July 1, 2022 (Project Year 10), the DOTD has transferred annually the following amounts:
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Project Year/Period |
Transfer Date |
Transfer Amounts |
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Project Year 1 |
February 16, 2014 |
$975,760 |
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Project Year 2 |
July 1, 2014 |
$5,500,000 |
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Project Year 2 |
January 1, 2015 |
$680,881 |
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Project Year 3 |
July 1, 2015 |
$4,800,000 |
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Project Year 4 |
July 1, 2016 |
$4,800,000 |
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Project Year 4 |
November 1, 2016 |
$700,000 |
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Project Year 5 |
July 1, 2017 |
$5,630,000 |
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Project Year 6 |
July 1, 2018 |
$4,000,000 |
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Project Year 7 |
July 1, 2019 |
$4,000,000 |
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Project Year 8 |
July 1, 2020 |
$6,280,000 |
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Project Year 9 |
July 1, 2021 |
$5,140,000 |
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Project Year 10 |
July 1, 2022 |
$5,140,000 |
Since its effective date, the CEA has been amended on occasions, amongst other reasons, to add project years and/or to increase the maximum compensation payable to the RTA for each project year. The latest amendment to Exhibit K, incorporated as part of Amendment No. 8 to the CEA, increased the maximum estimated compensation to $47,646,641.00, until Project Year 10, with a transfer date of July 1, 2022. To add project years beyond July 1, 2022, and further increase the maximum estimated compensation for transfer dates of July 1, 2023, and beyond, Exhibit K must be further amended.
Amendment No. 9 to the CEA is intended at revising Exhibit K of the CEA to add the transfer dates and the estimated transfer amount between Project Year 11 and Project Year 20 as follows:
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Project Year/PeriodTransfer DateTransfer Amounts |
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Project Year 11 |
July 1, 2023 |
$5,140,000 |
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Project Year 12 |
July 1, 2024 |
$5,140,000 |
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Project Year 13 |
July 1, 2025 |
$5,140,000 |
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Project Year 14 |
July 1, 2026 |
$5,140,000 |
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Project Year 15 |
July 1, 2027 |
$5,140,000 |
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Project Year 16 |
July 1, 2028 |
$5,140,000 |
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Project Year 17 |
July 1, 2029 |
$5,140,000 |
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Project Year 18 |
July 1, 2030 |
$5,140,000 |
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Project Year 19 |
July 1, 2031 |
$5,140,000 |
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Project Year 20 |
July 1, 2032 |
$5,140,000 |
For CY23, the RTA approved an operating budget that contemplates $13,548,520 in expenses, $6,886,978 in revenues from all sources (State subsidy, fares and federal assistance for preventive maintenance), thus anticipating a deficit of $6,661,542. Distributing said expenses by service for 2023 but excluding the cost of maintaining the Gretna terminal ($153,561), the Canal St service is estimated to cost $7,232,036 in 2023 and the Chalmette service $6,162,923. Applying the current available revenue, also by service (but prorating the New Orleans Ferry Trust, fares and federal assistance based on the 2022 ridership), $1,342,919 can be allocated to the Canal St service and $5,544,059 to the Chalmette service, leaving then a distributed operational deficit by service of $5,889,117 for the Canal St service and of $618,864 for the Chalmette service (when adding the cost of Gretna, the total sum is $6,661,542).
To maintain a zero-balance budget, this anticipated deficit will require transferring RTA funds to the ferry service. The source of the RTA funds is out of the federal assistance received as a result of the Covid pandemic, which is not a recurrent source, and as RTA has needed to transfer some of these funds to support its other operations and services, the remaining funds are anticipated to soon be exhausted. Therefore, unless additional recurring State funding is provided, the ferry service might run out of funding by December 31, 2023. This, given that RTA has only approved Covid funding as part of the approved ferry service operating budget for CY23, considering that the State’s next fiscal year begins on July 1, 2023, and that the internal administrative practice has been to exhaust the State provided funding before RTA’s own funds are disbursed.
To account for this, Amendment No. 9 also includes language clarifying that the DOTD and the RTA recognize and acknowledge that State Annual Subsidy Schedule detailed in Exhibit K will need to be revised if additional State subsidy are made available to the ferry service and that, in the event that no additional State subsidy become available in the future, the RTA retain all terminal rights afforded to it under the CEA.
FINANCIAL IMPACT:
This amendment will increase the total maximum estimated compensation since the CEA became effective and Project Year 2032, to $99,046,641.00.
NEXT STEPS:
RTA’s management recommends that this Committee submit for the Board of Commissioner’s approval the issuance of a resolution authoring the RTA’s Interim Chief Executive Officer to execute the corresponding amendment to the CEA, specifically Exhibit K, as provided in the attached draft of Amendment No. 9.
ATTACHMENTS:
1. Draft of Amendment No. 9
2. Draft of the Resolution herein requested
Prepared By: Jose A Ruiz-Garcia
Title: Chief Marine Officer
Reviewed By: Gizelle Banks
Title: Chief Financial Officer
3/7/2023
Lona Edwards Hankins Date
Chief Executive Officer