Anaheim is mulling a takeover of the Anaheim Transportation Network, the resort transit operator that moves millions of people a year, as the service is exploring ways to raise revenue or make cuts to address budget challenges.
ATN runs a network of resort buses centered around the city’s resort area. The transportation provider says rising labor costs in recent years, paired with scant increases in revenue, have created a budget situation that has led to discussions for the city to take control of the service.
Central to ATN’s service are the ART buses www.ocregister.com/2019/07/15/anaheims-bus-network-is-becoming-more-electric-and-less-paper-based/
that circle around the resort area taking tourists and workers to their destinations, including the Disneyland Resort, serving more than 8 million people a year, ATN officials said. ATN also provides transit service for travelers flying into John Wayne Airport and around downtown Anaheim.
“Everything is on the table,” ATN CEO Diana Kotler said, “Whether it’s a city-led agency, or whether it’s a continuing operation of ATN as it is.”
ATN in the last two years has twice asked and received funding from a tourism district transportation fund that hotels pay into to address its budget deficits. The latest request was approved in March by a city committee overseeing that funding, giving ATN $1.55 million.
The money was contingent upon ATN’s board approving a letter of understanding between it and the city that calls for exploring ATN becoming a city-led transit agency.
The letter of understanding, which Kotler said ATN’s board has now approved, allows city officials to review ATN’s financial and operation documents and establishes a 90-day exploratory period “during which both parties will collaboratively evaluate the feasibility and potential benefits of establishing a city-led transit agency intended to assume the management, assets and operations of ATN.”
“We’ve had some conversations over the past several weeks about continuing the good work in partnership between the city and ATN and looking at the future of this system and how to best make it sustainable,” Assistant City Manager Greg Garcia said at a March 19 Anaheim Tourism Improvement District Transportation Committee meeting.
City spokesperson Mike Lyster cautioned that there is no clear path ahead for what control the city might look to have over ATN.
“We know there’s a need for a service,” Lyster said. “We want to do a study to look at whether there could be an advantage to putting this under the city umbrella that might make it cost-effective.”
The Anaheim Tourism Improvement District Transportation Committee at that March meeting approved hiring a consultant to study options for the city to consider.
A few scenarios moving forward include the city administering a contract for the operation, the creation of a city-run transit agency or keeping ATN the same, but responding to its budget challenges, Lyster said. The city expects these discussions to go through the summer.
The Anaheim Tourism Improvement District is funded by a 2% assessment on nightly room rates at participating hotels in the resort area. The majority of the money goes to Visit Anaheim for marketing, but 25% of it is set aside for transportation improvements.
That money is overseen by a three-member transportation committee comprising a city official, a hotel representative and a Disney official. ATN does not regularly receive money from the Anaheim Tourism Improvement District.
ATN is primarily funded by fare revenues and about 70 hotels around the resort area, including some in Garden Grove, that pay into the transportation provider. ATN was created in the late 1990s as the Disneyland Resort and the Anaheim Convention Center expanded to encourage public transportation use over personal automobiles. It has a fleet of about 80 battery-electric buses.
ATN is looking at a number of funding sources and will look to increase what it charges hotels by the maximum amount it can by 5%, Kotler said. ATN’s board must approve any raises and 5% is the max set by its contracts with hotels.
While its officials said they will be looking for costs to cut in the budget for the upcoming fiscal year, the transit operator will also have to negotiate a new contract later this year with the labor union that represents the drivers.
More than 70% of the transportation provider’s operating costs go toward labor, Kotler said. Fare increases would likely lower the number of people who choose to use the buses since the service is competing on cost with rideshare services and families who might choose to park at the resort. ATN charges $4 for a one-way fare and less for children and seniors.
“We believe that if fares were to increase, we would lose a large percentage of our passenger market to the rideshare companies,” Kotler said. “So, we have to be very careful about how we approach the fare policy … We feel that the fares need to stay at the current level.”
One of ATN’s major routes is a line from a Disney parking lot to the theme parks’ gates.
Kevin Gidden, general manager of arrival experiences at Disneyland Resort, who sits on the Anaheim Tourism Improvement District Transportation Committee, said at the March meeting that “ATN is an important part to what we do and the guests that we serve.”
Gidden said he was supportive of finding a sustainable path forward to maintain the level of service ATN provides and not have it come back annually for more funding from the Anaheim Tourism Improvement District.
The fund has supported miscellaneous transportation improvements like reworking intersections, building bollards and adding signage throughout the resort. It has nearly $35 million in cash reserves.
Kotler said she’s optimistic that ATN’s relationship with the city will move to a solution that will maintain the service it provides.
“I think that’s the point of the exploratory period,” Kotler said. “To have frank and honest conversations that have built on the relationship of trust to determine what is the best path forward for a public transit system in the city of Anaheim.”
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