RT’s Henry Li sees Golden opportunity for turnaround

By Metro Chamber|August 5, 2016|News Coverage|

RTLooking at budget documents for the Sacramento Regional Transit District is like upending the fried circuit board of an aging light-rail train.

The transit system has higher operating costs than similar transit agencies in other cities but maintains fewer hours and miles of service. Ridership fell by more than one million passengers last year, even though the system added new service — the 4.3-mile “Blue Line” to Cosumnes River College — a year ago.

The agency raised fares in July after burning through $6.6 million in reserves over the past three years. Without the fare hike, it appears likely that RT would have spent the last of its reserves this summer and teetered toward insolvency.

The agency has seen its credit rating downgraded twice over the last year.

Now, if RT can’t improve its finances by quickly gaining riders, it could be forced to cut service. And if that happens, some of Sacramento’s neediest residents may lose transportation to their jobs, doctors or babysitters, said Henry Li, the agency’s new general manager.

“Some people who depend on our service will not have access. That may affect their lifestyle or even their job,” he said.

A public transportation veteran, Li joined RT in March. He assumed the head job July 1 and has been tasked with turning things around at the transit district.

In addition to providing transportation, a well-functioning transit system is critical to Sacramento’s local economy in ways that may not be readily apparent to those of us who don’t ride the light rail or buses, according to economic development officials.

Public transit can help reduce traffic congestion, making it easier for employees to get to work and back home to spend time with their families. A high-performing transit system also could help attract companies to locate in Sacramento.

A golden opportunity

Despite its precarious finances, RT will soon have what Li says is its best opportunity in a generation to turn its performance around —the opening of the Golden 1 Center. At RT’s headquarters on 29th Street in midtown Sacramento, a digital billboard shows a countdown ticker to the first major event at Golden 1, the Paul McCartney concert on Oct. 4.

The opening of Golden 1 is expected to bring an influx of new riders, as basketball fans and concert-goers try to avoid downtown traffic and expensive parking. RT managers and civic and business leaders hope that if the public transit system can serve riders for Golden 1 Center events, those riders will become regular users.

“What is going to happen is you are going to get a lot of eyes when the Golden 1 Center opens,” said Warren Smith, president of the Sacramento Republic FC soccer team, which hopes to build a downtown arena in the railyard. Smith sits on a business advisory council to RT.

“We’re hopeful that when people use RT, they have a quality experience and want to do it again,” he said.

In early 2015, Smith and other downtown business representatives issued a report that said the “prospects offered by a project like the (downtown arena) come along only once in a region’s history” and will provide an “unparalleled opportunity” to reintroduce RT to the public.

“We need a vibrant regional transit system,” said Peter Tateishi, CEO of the Sacramento Metro Chamber of Commerce.

In recent months, Tateishi delivered a message to local business leaders about RT’s obligation to address reliability, cleanliness and safety. Tateishi said if he tried to commute to work with RT from his home in Carmichael, it would take over two hours with multiple transfers.

“We are getting more and more calls from employees running late because they are stuck in traffic,” Tateishi said. “When transportation becomes a productiveness issue, that is an issue for the workplace. We need a reliable system so employees can get to work on time.”

Reflection of the community

Beyond the logistical issues, the condition of public infrastructure is a barometer of a community’s values, said Barry Broome, CEO of the Greater Sacramento Area Economic Council.

“When the buses and trains are dirty and not well maintained, that’s a reflection of us as a community and that’s not how I want Sacramento to be reflected,” Broome said.

Broome, Tateishi and others from Sacramento’s business community have praised Li, who has promised a new era of transparency and accountability and a “customer-first” focus for RT.

In October, RT’s previous general manager Mike Wiley announced he was retiring after 38 years with the agency. RT’s board replaced Wiley with Li, who has spent 20 years in public transit, working as a chief financial officer for the Jacksonville Transportation Authority and transportation agencies in Virginia and Georgia.

Under Li’s leadership, RT hired 16 employees to clean buses, trains and stations. The agency also hired 25 fare checkers to verify that riders have tickets on most afternoon trains and every night train. It laid off 20 employees in administrative jobs in June. Li has said additional layoffs are under consideration.

RT ArenaShortage of tax dollars

Li said RT’s financial problems and underperformance, compared to peers in other cities, stem partly from the system receiving fewer tax dollars than other transit agencies.

In Los Angeles, for example, the Los Angeles County Metropolitan Transportation Authority benefits from three separate half-cent sales tax measures. Contrast that to RT, which receives a sixth-of-a-penny sales tax bump through Measure A, he said.

Other comparable transit agencies in Denver, Cleveland and Santa Clara also reap far more revenue from dedicated sales taxes, RT officials noted.

RT would be a major beneficiary of Measure B, which will appear on the November ballot in Sacramento County. It would add a half-cent sales tax for transportation infrastructure.

But funding isn’t the only challenge. Li also pointed to an internal failure: years of overly optimistic revenue assumptions and avoidance of tough decisions regarding budget cuts.

Outgoing general manager Wiley recently faced a public firestorm after reports that he was eligible for over $285,000 in annual retirement payments, with more than one-quarter of it coming from RT’s operating budget. Wiley and the RT board agreed to reduce the package in response to complaints.

Li declined to comment on perceptions of overly generous retirement packages. He did say, however, that RT’s unionized workers feel that they sacrificed in the years following the recession.

Ralph Niz, president and business agent for the Amalgamated Transit Union Local 256, which represents bus and rail drivers, said the agency’s troubled finances are the result of years of poor communication between managers and organized labor.

“You can’t say it’s one person’s fault,” he said. “It goes on deaf ears year after year.”

Breaking down barriers

The silence ended about five months ago when board chairman Jay Schenirer reached out to Niz and started a conversation that led to the hiring of safety agents, Niz said. Niz also said that he has a positive working relationship with Li as the two sides head into labor negotiations later this year.

Li said he is intensely focused on improving communication across different departments to help change what he described as an entrenched culture of complacency.

“The comments you will hear are, ‘We can’t do this, we cannot do that,’ or ‘we have some barriers to do that,’” Li said. “Now if you sit in a meeting, everyone is saying how they can get this done quickly and perfectly. That is the mentality change — to make sure everyone is trying to help our customers.”

When Golden 1 opens, RT will run six additional trains on the night of the first major event at the center, Li said.

The greatest challenge in front of RT is establishing contingency plans to quickly shuttle passengers in case a train breaks down, he said.

“If it’s cleaner, safer and more secure, news will spread in the community, and lots of customers will try our system,” Li said.

On July 25, the RT board received a two-year update on a series of reforms. The board listened as department heads read positive rider comments and exulted in before-and-after cleaning pictures of trains and stations.

Multiple board members said they could not remember a time when the agency received so much positive customer feedback.

“We have decided to put ourselves under a microscope,” said board member Phil Serna, who also sits on the Sacramento County Board of Supervisors. “I’m feeling like this is the first time I’m hearing about tangible, visible, real change to this system.”

Source: Sacramento Business Journal

RT Graph

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