A new contract between the Regional Transit Authority board and the company that manages its operations would cap the profit that can be made from the public transportation system and would provide small incentives and penalties based on specific standards.
The deal, which also calls for the hiring of an executive director who would represent the RTA board rather than Transdev, the French firm responsible for its day-to-day operations, appears to give the board a more hands-on role in many of the system’s operations than in the past. It also would shift the balance of power in the relationship between the public system and its private operators, giving the board more recourse should the company not provide the level of service expected.
The agreement was signed March 5 and was released to The New Orleans Advocate late Monday in response to a public records request.
RTA Board Chairman Salvador Longoria and officials with Transdev were not available to comment on the contract Tuesday.
Transdev, which was then known as Veolia Transportation, first took over the operations of the RTA in 2008 and signed its first long-term contract with the board the next year. That contract provided for a five-year agreement that could be extended for an additional five years; discussions about the extension have been underway since the last deal expired in the fall.
The board voted earlier this year to give Longoria the authority to sign a new contract.
The deal calls for Transdev to invest $375,000 of its money into the system each year. The board and the company will continue to negotiate a fixed fee for the services provided by Transdev each year.
However, the new deal includes caps on the amount Transdev can make for running the system. Previously, the company and board had negotiated a per-hour fee for the various transit services.
That fee will remain in place, but Transdev will be allowed to make no more than 4.55 percent profit on those fees and to charge another 5 percent for corporate overhead. Those restrictions will be enforced at the end of each year, when the company will have to “true-up” its costs with the board. The company will have to repay the authority if it made more profit than the cap allows, and either side will have to reimburse the other if the corporate overhead is above or below 5 percent.
The authority will be able to hire an accounting firm to audit Transdev if it does not trust the company’s numbers.
The board will be able to penalize Transdev if it does not live up to performance standards covering a range of issues, including ensuring that the system’s buses, streetcars and paratransit service for people with disabilities run on time, that vehicles do not break down, that preventable accidents are reduced and that ridership meets specific benchmarks.
Those standards include specific goals as well as rates that would lead to a $5,000 per quarter incentive payment or penalty. For example, Transdev is expected to provide on-time service — which means a bus or streetcar leaves its stop no more than one minute early and five minutes late — 85 percent of the time. If it provides on-time service more than 90 percent of the time, it will be rewarded, but it will be punished if it does so less than 75 percent of the time.
Further, the agreement gives the board greater control over management of the system’s operations. The chief executive officer of the authority will now be an executive director hired by the board, rather than Transdev VP Justin Augustine, who has served in the role in recent years.
The board will also be given the right to approve Transdev’s senior management team.
Follow Jeff Adelson on Twitter, @jadelson.