Public Advocates
Making Rights Real

131 Steuart Street
Suite 300
San Francisco, CA 94105

February 24, 2009

Chair Dodd and Commissioners
Metropolitan Transportation Commission
101 Eight Street
Oakland, California 94607

Re: Bay Area Allocation of Economic Stimulus Transportation Funds

Dear Chair Dodd and Commissioners:

As signed into law last week, the America Recovery and Reinvestment Act (“ARRA”) will pour $340 million in new transit formula funds into the Bay Area region. MTC staff proposes to take $70 million “off the top” for a BART expansion project, the Oakland airport connector, to allocate the remainder on the basis of an unfair formula, and to allocate none of the additional $150 million in STP funds to transit. We write on behalf of Urban Habitat and Genesis to note that the staff proposal departs from several longstanding MTC policies in ways that would disproportionately favor white and affluent transit riders at the expense of low–income riders of color. The Commission should not accept staff’s invitation to expose itself to further legal proceedings by violating federal laws that protect the right of low–income communities of color to equal treatment.

Genesis is a regional faith and values based organization. Its member institutions, fifteen and growing, are congregations, associations, union locals and other nonprofit community organizations. It unites thousands of people to work together and create a unified voice for social justice and public policy reform. Genesis is an affiliate of the national Gamaliel Foundation, the organization that trained Barack Obama when he worked for the Foundation as a community organizer in the 1980s. Genesis is a member of the national Transportation Equity Network. The goals of Genesis’ transportation work include a restoration of AC Transit service to its 1986 levels and the implementation of a free bus pass program for students.

Urban Habitat is a regional Environmental Justice organization that partners with grassroots, community–based organizations, social service agencies, research and advocacy groups, as well as elected officials and public servants to advance equity in transportation, jobs, land–use and housing. Urban Habitat's focus in transportation, since 1998, has been to improve public transit services for transit–dependent populations and to increase public participation in transportation planning.

Urban Habitat and Genesis are pleased that staff has now reversed its original recommendation that a second expansion project be funded out of transit formula funds. They respectfully request that the Commission approve an allocation of these formula funds that does not allow their use for any expansion projects, and that provides each operator with a share that reflects its share of the region's transit ridership.

They also request that the Commission convert some of ARRA’s $150 million in Surface Transportation Program (“STP”) funds into additional FTA formula funds. This use of STP funds is permitted by federal law, consistent with the purposes of ARRA and with existing MTC policy governing STP funds, and necessary to further mitigate the threat of massive service cuts and fare increases across the spectrum of Bay Area transit operators in this time of extraordinary economic crisis.

A. Background

Just over two weeks ago, staff floated a proposal to take some $145 million in FTA formula funds away from individual transit operators, and to direct those funds instead to two rail expansion projects, the BART airport project and the Caltrain “train box” portion of the Transbay terminal project. That proposal was first unveiled in a February 6 memorandum to the Programming and Allocations Committee. Despite the fact that it represents a significant departure from standing MTC policy, it was developed with no public process whatsoever.

After taking $145 million off the top for these two expansion projects, staff proposed allocating the remainder on the basis of an MTC–created formula that has never been used as the basis for allocating more than a small portion of FTA funds. Staff now proposes to use the same formula after taking the BART airport project funds off the top. Under that formula, which MTC developed, and has previously used, solely for apportioning the so–called “10 percent set–aside” of FTA funds, AC Transit and MUNI would receive a share of funds significantly smaller than their respective shares of transit ridership, while BART and Caltrain would receive significantly larger shares. Again, there was no public discussion of whether the use of this formula was appropriate in these circumstances.

With respect to $150 million in STP funds, the staff proposal would dedicate 100% to road and freeway projects, despite the Commission’s long–standing policy (reflected in past Regional Transportation Plans, and in the 2035 Plan that is now pending adoption) to allocate a portion of those "regional discretionary" funds to transit.(1)

Though not mentioned in staff’s memoranda, MTC’s decision–making is constrained by its over–arching obligations under Title VI of the federal civil rights act and the 1994 Executive Order on Environmental Justice (Exec. Order 12898). These provisions ensure that the benefits of agency funding and planning decisions are fairly shared by minority and low–income populations. For the reasons that follow, both these obligations will be violated by the decision staff has asked the Commission to make.

Mr. Heminger stated to the Programming and Allocations Committee that “we tried not to invent new policy, we tried not to invent new directions, but to rely on your existing directions.” In fact, however, the staff proposal departs from several significant Commission–adopted policies. First, in proposing to raid formerly sacrosanct transit formula funds for expansion purposes, MTC has disregarded its own longstanding policy with regard to the programming of those funds for system preservation, as reflected in MTC Res. 3688. It has also ignored both of the Environmental Justice Principles it adopted at the request of its Minority Citizens’ Advisory Committee in 2006. In adopting a formula for allocating the remaining FTA funds, staff has also violated these EJ Principles and federal law. And in proposing no share of STP funds for transit, staff has departed from settled Commission policy with regard to those funds in its Regional Transportation Plan.

At the recent trial in Darensburg v. Metropolitan Transportation Commission, the plaintiffs presented evidence of the discriminatory effect of several MTC policies and practices, among them: (a) MTC’s Transit Capital Priorities (“TCP”) process for allocating FTA formula funds,(2) (b) MTC's policy for assigning uncommitted “regional discretionary” or “Track 1” funds in the Regional Transportation Plan,(3) and (c) MTC’s Res. 3434 transit expansion program.(4) Staff now proposes, for the very first time, to exacerbate the discriminatory effects of these longstanding policies by (a) funding expansion projects ineligible for FTA formula funds under the TCP process, (b) eliminating transit funding altogether for “Track 1” STP funds, and (c) adding FTA formula funds to the Res. 3434 “funding strategy.”

Genesis and Urban Habitat believe that MTC should revisit all three of these policies, to eliminate their discriminatory impacts.(5) Today, they oppose staff’s proposal to depart from these policies in allocating ARRA funds, because the proposed departures would actually exacerbate, rather than ameliorate, the existing discriminatory impacts of those policies.

Unjustified departures from settled policy, when they result in unequal treatment of minority populations, constitute strong evidence of unlawful discrimination. Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252, 267 (1977) (departures from normal policy indicate discriminatory intent, “particularly if the factors usually considered important by the decisionmaker strongly favor a decision contrary to the one reached.”) Here, the departures staff proposes have not been discussed in an open and transparent manner, are not justified by any data or policy rationale, and would have a significant additional adverse impact on low–income communities and communities of color, above and beyond the adverse impact of existing MTC policies.

The staff proposal would put the Commission at risk of violating federal law. Urban Habitat and Genesis respectfully urge the Commission to reject it.

B. MTC's Use of FTA Formula Funds for Expansion Would Represent a Major Policy Shift and Would Come at the Expense of Low–Income Riders of Color.

On October 15, at the trial of the Darensburg case, Deputy Director Therese McMillan, referring to the Transit Capital Priorities process embodied in MTC Res. No. 3688, testified that, by statute, transit formula funds under Sections 5307 and 5309 “are, in fact, eligible for expansion, but we do not, as a matter of MTC policy, program them to expansion.” Indeed, MTC’s policy accords expansion the lowest score in its ranking system a score of 8 out of 16.

The staff memoranda do not mention these facts, or otherwise indicate that staff’s proposal would mark an unprecedented departure from that longstanding policy. Nor do the staff memoranda offer any reasons for departing from that policy at this time. Apparently, the only rationale was a need to act in haste, leading Mr. Heminger to tell the Programming and Allocations Committee that there is no time for a rational discussion about how to spend these funds.

As noted above, in prioritizing federal formula funds for capital replacement purposes over operating/preventive maintenance needs, MTC’s Transit Capital Priorities process has a discriminatory impact on low–income riders and riders of color. High–minority operators (those with 70 percent or more riders of color) experience significantly greater operating shortfalls than lower–minority operators (60 percent or less riders of color). Nor is this impact justified, given that many other sources are eligible to close capital replacement shortfalls.

Despite the important shortcomings in MTC’s Transit Capital Priorities policy, however, the policy to restrict the use of FTA funds to system preservation needs, and to place them off–limits for capital expansion, is a sound one. That is particularly so in the context of ARRA, where system preservation needs will pump money into the economy much more quickly than even “shovel ready” construction projects, and where other major pots of funding are available for transit expansion purposes.(6) In particular, preventive maintenance expenditures can play a particularly critical role both in saving and creating transit operator jobs, and in providing the wider community with access to jobs in the local economy.

The staff proposal represents an unjustified departure not only from MTC policy regarding the use of FTA formula funds for preservation, but also from the two Environmental Justice Principles that the Commission adopted in 2006 for the express purpose of ensuring compliance with its obligations under Title VI and Executive Order 12898.

Principle #1 committed MTC to “create an open and transparent public participation process that empowers low–income communities and communities of color to participate in decision making that affects them.” Staff failed to honor this commitment when it developed a major policy change with neither transparency nor the participation of low–income communities of color. It only brought its proposal to its advisory committees on February 10, two business days after releasing the proposal, and the day before the Programming and Allocations Committee met. The lack of transparency was particularly acute with respect to the proposed formula, which was not disclosed until public comment from Urban Habitat and Genesis surfaced the issue at the Committee hearing. (See Section C, below.)

Principle #2 committed MTC to “collect accurate and current data essential to understanding the presence and extent of inequities in transportation funding based on race and income.” The staff proposal before you is based on no data whatsoever that might demonstrate its fairness to racial minorities and low–income communities.

To the contrary, the available data indicate clearly that the proposed decision will have a discriminatory effect on those communities. Regionally, MTC’s 2007 transit demographic survey determined that nearly 70 percent of bus riders are people of color, compared to only 52 percent of rail riders. (On average, transit riders of color comprise 61 percent of all transit riders.) Of the $13 billion in transit expansion investments adopted as part of MTC Res. 3434, however, 94 percent are for rail projects.

As the staff memoranda did not address these facts, we believe it is important to bring to the Commission’s attention both that staff’s proposal departs from adopted Commission policies, and that the effect of those departures would disproportionately harm minority and low–income transit riders. The Commission’s awareness of these facts should lead it to reject the staff proposal, as a matter of both sound policy and compliance with federal law.

C. The Proposed Allocation Formula Would Discriminate Against Low–Income Riders of Color By Placing A Lower Value On Their Transit Trips Than On Those Of Rail Commuters.

At the Programming and Allocations Committee hearing, Urban Habitat and Genesis raised questions about the formula by which staff proposed to allocate the remaining FTA funds. That formula was not disclosed in the original staff memo, and is described in only the most general terms in the February 18 memo.

When Urban Habitat and Genesis compared the proposed allocation percentages to ridership shares, they were alarmed to note that AC Transit and MUNI were slated to receive a smaller share of funds, and BART and Caltrain a larger share, than is justified by their percentage of ridership. The funding shares proposed by staff, and corresponding ridership shares, are as follows:

Operator/Ridership Share/Proposed Funding Share

AC Transit/13.8%/9.5%




Staff has now disclosed that these allocations are based on the formula MTC adopted for the allocation of a small slice of the FTA formula fund pie—the so–called “10 percent set–aside.” Again, there has been no rationale disclosed for the use of this allocation methodology and no discussion of alternatives. Notably, there has been no consideration given to ridership or to rider hardship.

If each transit rider’s trip were weighted equally, AC Transit would receive about two–thirds (63 percent) the funding that BART receives. Under staff’s proposal, however, AC Transit would receive less than 40 percent as much as BART. In sum, staff’s proposal places on an AC Transit rider’s trip only two–thirds the value that it places on the trip of a BART rider.

MTC’s transit demographic survey demonstrated that 78% of AC Transit riders are people of color, compared to 53% of BART riders. It also demonstrated that AC Transit riders have extremely low household incomes (below $25,000) at more than twice the rate of BART riders. These disparities are significant, as is the impact of the proposal on AC Transit and MUNI, whom the proposal would deprive of $ 14.6 million and $68 million, respectively.

MTC has never before adopted a formula for allocating economic stimulus funds. Ideally, that formula would be based on a combination of ridership, community need and the secondary economic impacts of the funding in creating jobs. It is especially important that ARRA implementation honor Title VI and Environmental Justice provisions, due to the disproportionate impact that the economic crisis is having on low–income and minority residents.

Economic research demonstrates that operating uses of funding have a far greater economic “multiplier effect” than capital uses.(8) Moreover, system preservation uses including preventive maintenance pump money into the local economy faster than new construction that will not produce secondary economic benefits for years.

If the time is lacking to develop an appropriate stimulus formula through an open and transparent public process, then at a minimum, a share proportional to ridership should be adopted to ensure that discriminatory impacts are avoided and that communities most in need are not short–changed.

D. Consistent With Commission Policy, A Portion of The STP Funds Should Be Devoted to Transit Shortfalls.

In addition to the FTA formula funds, the region will receive $150 million in Surface Transportation Program ("STP") funding. STP funds are “flexible” federal funds in the sense that they may be used for both highway and transit purposes.(9) Staff’s proposal would direct all of those funds to freeway and local road projects. Again, this proposal departs from existing Commission policy.(10) Indeed, it departs from the proposed Regional Transportation Plan that the Commission plans to adopt next month.

The proposed 2035 Plan would, as in past RTPs, allocate “regional discretionary” funds (among them, STP funds) to a mix of policy goals: local street and road shortfalls, transit shortfalls, regional programs, and expansion projects (both transit and highway). All told, approximately 20 percent of these “discretionary” funds would go toward transit capital shortfalls.

As with MTC's Transit Capital Priorities policy, there are significant equity problems with this longstanding MTC policy. Since 1994, the Commission has elected to direct all of those transit preservation funds to capital replacement needs, though staff is well aware that both CMAQ and STP funds can be readily converted to FTA funds and, when converted, are eligible for all the purposes, including preventive maintenance, for which FTA funds may be used. See, e.g., MTC Res. 3738 (providing BART with $22 million a year in STP funds for preventive maintenance). Genesis and Urban Habitat believe that the Commission should change that policy, which has a discriminatory impact on low–income riders and riders of color, and should instead allocate RTP discretionary transit funds equally to transit operating and capital shortfalls.

Even under the current Commission policy, however, the staff proposal represents a dramatic departure. It allocates not a dollar of STP funds to transit shortfalls capital or operating. By allocating a proportional share of ARRA STP funds to transit capital rehabilitation, MTC could free up formula funds under Section 5307 for preventive maintenance purposes, and help avert major cuts in service and increases in fares.

Moreover, the transit operating and capital shortfall projections on which the Commission based its most recent decision about the allocation of “discretionary” funds are now in need of significant revision. Among other things, the worsening economy and the elimination of State Transit Assistance (“STA”) funds in the new California state budget have severely curtailed transit operating funds. As a result, operators across the region are facing unanticipated new operating shortfalls this year, many (including AC Transit’s) in the range of 10 percent of operating budget.

The Commission should revisit its RTP policy with respect to STP funds. Whether or not it does so, however, it should not depart from that policy today in a manner that would exacerbate existing inequities by allocating none of those funds to transit.

E. Conclusion

Genesis and Urban Habitat respectfully urge the Commission to reject the Staff proposal, which departs from established Commission policy as adopted in MTC Res. 3688, in the Commission's two EJ Principles, and in its past and proposed Regional Transportation Plans.

The Commission should not divert FTA funds for expansion purposes, something that its own policy prohibits. It should allocate the $340 million in FTA funds equitably, based on ridership. At a minimum, it should allocate $46,920,000 to AC Transit, its fair share of the $340 million, and $152,320,000 to MUNI. And it should not allocate the STP funds in a manner inconsistent with its Regional Transportation Plan policy; instead, it should assign a portion of the STP funds to transit, in order to cover larger–than–projected transit shortfalls.

Very truly yours,

Richard A. Marcantonio

Cc: Rosy Leyva,
Francis Chin, General Counsel

1. The $490 million in FTA formula funds and flexible STP funds is only about a third of the total stimulus package that MTC is allocating. Another $462 million in State–delegated funds (primarily through the STIP) are proposed to go almost exclusively to freeway projects, and staff is planning to seek another $450 million in federal discretionary funds, including $400 million from the $8 billion high–speed rail pot, for expansion projects.

2. The TCP process prioritizes funds for “Score 16” transit capital rehabilitation projects, and shortchanges “preventive maintenance” operating uses, which are accorded a score of only 9 out of 16.

3. Since the 1994 RTP, MTC has devoted a share of these “Track 1” funds including STP and CMAQ to transit capital replacement shortfalls, but none to transit operating shortfalls.

4. By devoting nearly 95 percent of this $13 billion transit expansion program to rail projects, MTC not only shortchanges bus riders, but also creates an increased strain on the limited pool of available transit operating (and capital replacement) funds.

5. Nearly two years ago, in your letter to then–Assemblywoman Loni Hancock, dated March 22, 2007, you promised that MTC would be conducting “A reexamination of our current transit capital programming and allocation priorities to assess whether changes would increase benefits to low–income riders. This process will commence once the Commission completes its deliberation on the Proposition 1B transit funds.” The same promise was made to MTC’s Minority Citizens’ Advisory Committee. To our knowledge, MTC has not kept that promise.

6. As the American Public Transportation Association notes, “Every $1 billion invested in public transit capital projects generates 30,000 jobs, and the same amount invested in transit operations generates 60,000 jobs.” See Cambridge Systematics, Inc. and Economic Development Research Group, A QUANTITATIVE ANALYSIS OF PUBLIC TRANSPORTATION’S ECONOMIC IMPACT, October 1999. (

7. If the proposed $70 million BART expansion funding is included, BART’s share of the $340 million rises to nearly 40 percent.

8. Investment in transit operations creates twice as many jobs as the identical investment in transit capital projects. See note 6, above. Moreover, $1 invested in transit operations produces $3.20 in increased taxable business sales. American Public Transportation Association, Statement of
National Purpose (

Conversely, $1 in service cuts resulting from operating deficits yields $10 in local economic harms, from lost wages and productivity, and increased transportation costs. Orain & Associates, and Byrd R., Using Public Transportation to Reduce the Economic, Human and Social Costs of Personal Immobility (1998), Appendix (prepared for the Transit Cooperative Research Program of the Transportation Research Board, National Research Council) (bus service cuts prompted by a $4.8 million operating budget shortfall cost minority and low–income riders $48.1 million).

9. See

10. It also ignores the California Attorney General’s conclusion that, as a matter of reducing greenhouse gas emissions to comply with A.B. 32, MTC should devote a greater share of funds to transit.