City of Charlotte

Charlotte Area Transit System

(CATS) Management Roadmap

Priority Areas of Focus Andy Belknap, Managing Director

December 12, 2022 Sam Lieberman, Senior Manager
Mahdi Aluzri, External Consultant
Andrea Miller, External Consultant
Vicki Sun, Senior Consultant
Presentation Overview – Areas of Focus
Roles and Responsibilities

Service Provisions and Reliability

Leadership, Management, and Organizational
Culture
Communication

Contract Management

Budgeting and Finance

Governance

2
Overview

3
 Engagement Objective

Provide a high-level roadmap with priority areas of focus to

improve the efficiency and effectiveness of CATS
management

4
To Inform Our Observations and Strategic Focus

Reviewed Reviewed other

Conducted 19
documents, transit systems
interviews with Surveyed City of
including
21 individuals • CapMetro (Austin, TX)
Charlotte CATS
budgets, ACFRs,
from RATP • CAT (Savannah, GA)
employees1
audits, and • IndyGo (Indianapolis, IN)
Dev/TMOC, CATS
customer • LBT (Long Beach, CA)
and other City
surveys for the • MATA (Memphis, TN) 1Didnot include RATP
departments
last 3 to 5 years Dev/TMOC employees

5
 Important Documents that Guide CATS
For context, we reviewed:
• 2030 Transit Corridor System Plan
• CONNECT Beyond Regional Mobility Plan
• Interlocal Agreement with the Metropolitan Transit
Commission
• Charlotte Regional Transportation Planning Organization
(CRTPO) Memorandum of Understanding
• CapMetro (Austin, TX)

• CRTPO Bylaws
• CAT (Savannah, GA)
• IndyGo (Indianapolis, IN)

• City of Charlotte Municipal Code • MATA (Memphis, TN)

• LBT (Long Beach, CA)
Did not include RATP
1

• State and Federal Transit Regulations

Dev/TMOC employees

6
 Outside Our Scope

• Organizational assessment of the department

• Workload analysis
• Review of service delivery operations
• Review of division roles and responsibilities
• Interviews with City Council or other elected or
appointed officials outside the City organization (e.g.,
MTC Board)
• Discussions at the regional level
• RATP Dev/TMOC employee survey

7
 What We Learned From Employees
Leadership,
Roles and Service Provision and
Management and Communication Budgeting and Finance Governance
Responsibilities Reliability
Organizational Culture
• There is confusion • There are varying • Mid-management • CATS is siloed • Within CATS, a lack of • There is interest in
and concern around opinions on how to staff are relatively internally in the engagement and CATS transitioning to
procurement policies improve bus new and would department and transparency about a regional,
and procedures operations, but no benefit from training externally across the budget has been independent entity
consensus and professional other City frustrating to staff • The current
• There is strong development departments, with governance and
interest from staff in • There is a strong some exceptions reporting structure
steps being taken to belief that the • There are good needs real change
address safety executive leadership working relationships
concerns, team’s working across divisions
absenteeism, and relationships need to except for Finance
hiring challenges improve • There is a need for
better coordination
between CATS and
City communication
and marketing

8
 Major Operational Issues Did Not Surface
• Interviewees like what they do and want to perform
• More than 75% of survey respondents are motivated to do a
good job
• Operational service delivery platform (inhouse and contract
services) is typical but must rely on contract management best
practices and adequate staffing
• Strong interest by Rail Division interviewees for improved
resource acquisition practices
• Lean organization; inability to fill vacancies is having a real
impact
• BOD operational issues are complex
Opportunities for operational
improvements exist but need a
 Existing contract terms and conditions
strategic focus.  Contract management practices
 Declining ridership
 Safety
9
 What’s Needed: A Shared Mission and a
Collaborative Team to Accomplish It
Goals
 Ensure executive leaders and managers understand it takes a team to deliver
this community-wide service
 Clarify roles and responsibilities
 Strengthen contract management

Key Objectives
• Establish clear expectations for performance and how the department will work together
 Conduct facilitated teambuilding session(s) with the executive team, followed by sessions
with department leadership/management team
 Develop and implement a plan to improve the organizational culture of the department
• Establish clear roles and responsibilities with respect to managing a bus operations contract
10
 What’s Needed: A Shared Mission and a
Collaborative Team to Accomplish It (continued)
Goals
 Ensure executive leaders and managers understand it takes a team to deliver
this community-wide service
 Clarify roles and responsibilities
 Strengthen contract management

Key Objectives
• Conduct an analysis of the organizational structure to position executive leaders and managers
for the demands of a regional transit service and effective operational delivery
• Develop an RFP for a new bus operations contract in accordance with best practices
• Focus on what will be required to improve the public’s perception about bus services
• Develop a policy process to assess the CATS governance structure to ensure it is reflective of an
agency that delivers regional transit services
11
Roles and Responsibilities

12
Existing Governance and Reporting Structure
MTC • Can remove CEO through majority City of Charlotte • Council approves final
Board vote budget
(8 voting
members • Oversees long-range Countywide Mayor and City • City Manager hires and
from •
transit planning
Provides input on and approves
Council dismisses CATS CEO
• Develops and approves
Mecklenburg CATS budget
City Manager organizational policy
County • Directs CATS operational and
strategic policies
Towns)

• Budget input and recommendations CATS Oversight Categories:

• Transit alignment/project, improvements to
CTAG system performance and customer service  Budget
recommendations  Policy
 Planning
• Budget input and recommendations
• System improvements, fares, routes,
CATS  Operations
 Hiring and dismissal
TSAC schedules, policies, performance standards, authority
recommendations
• Receives complaints

13
 A City Department Providing A Regional Service
• CATS is a City department, but serves as a community-wide Role clarification will be
transit agency important for future federal
• Having two major policy bodies (MTC and City Council) and a funding in support of the 2030
CEO who reports to the City Manager can lead to confusion Transit Corridor System Plan.
about decision making authority
• Community engagement is confusing; public goes to both
the City Council and the MTC
• Contract bus drivers who walk and talk like City employees
is an unusual arrangement
• BOD represents the majority of what CATS does; needs to
be held accountable through appropriate contract
management practices
• Lack of consensus by staff about when to follow City policy
and procedures

14
Service Provision and Reliability

15
 CATS Service is Rebounding
• 80% of the Charlotte community believe CATS provides value to their community.
• CATS ridership increased by 20% this year and is 49% of pre-pandemic levels,
compared to 54% nationally.
• Rail ridership increased by 87%, or 57% of pre-pandemic levels similar to national
light rail ridership.
• Fixed route ridership has declined by 10% since the beginning of the year and is 43%
of pre-pandemic levels, lagging behind national bus ridership recovery of 60%.
• Vehicle operator availability declined by 15% in the past year.
• In Q4 2022, on-time performance declined by 2% for fixed route service. Rail and
paratransit on-time performance improved over the last quarter by 2% and 7%,
respectively.
• Customers with access to 15-minute or better service has improved by 74% since last
quarter and by 59% over the last year.
Source: CATS TRAX Q4 FY 2022 Results, September 28, 2022

16
 Staffing Vacancies Have Real Impacts
Authorized Staffing from FY 2019 to FY 2023 • CATS authorized staffing has grown 7% since 2019
900
845 845 845
but bus staffing has only grown 2%
828 838

800
• CATS department wide vacancy rate is 17%
700
• Current vacancy rates among CATS’ three main
610 service divisions:
583 588 580
600
535  Bus Operations: 15%
500
 Special Transportation Service (paratransit): 19%
400  Light Rail (LYNX): 27%
300  In a survey of 71 transit agencies across North
200
Carolina, there was an average 20% transit operator
vacancy rate in August 2021.1
100
 Eight of the surveyed agencies reported
0 vacancies of 50% or higher
2019 2020 2021 2022 2023

RATP Dev/TMOC - Bus Operations Division City (CATS)

• A focused class and compensation analysis will be
required to address City transit positions
Source: CATS staffing information as of September 2022, received from CATS HR 1Source:North Carolina Department of Transportation’s “Compensation
Survey of North Carolina Transit Systems, Final Report” (Issued December
17
2021).
Leadership, Management, and Organizational
Culture

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 Position the Leadership and Management Team for
Success – Organization Structure
Metropolitan Charlotte
Transit City Council
Commission
CATS CEO oversees 11 direct reports
• Too broad a span of control for such a major City Manager

enterprise Chief Executive

Officer Executive
• Impacts the CEO’s ability to focus strategically and Director of Public
Transit
Assistant

proactively and address the issues that are

important but not urgent Finance
Marketing, Information and
Chief Operations
• Challenging for division leaders to communicate
Communications and
Technology
26 FTE Customer Service 218 FT / 13 PT
31 FTE 13 FTE

effectively and seek direction

• Pending changes in executive leadership provide an Accounting Safety and Resiliency and
Human Resources
Operations Security Sustainability
9 FTE
9 FTE 21 FTE 1 FTE

opportunity to position the CATS organization Contract

Administration
Bus Operations

structure for the future 3 FTE

Development
25 FTE
Transit Planning
14 FTE
129 FT / 13 PT

Financial Planning Rail Operations and

and Budgets Facilities
4 FTE 74 FTE

Alternative options around organization structure will Financial Reporting

and Grant
Accounting
Civil Rights
4 FTE
Legal
5 FTE
Transit Training
10 FTE

need more analysis 8 FTE

Source: Management Partners’ rendition of CATS organization structure based on CATS organization chart.

19
Leadership and Organizational Culture Are Key to
Operational Success
Requires clear expectations about how staff in the
department is expected to work together

Relies on department leaders to make changes and

improvements to build trust

Requires an organizational culture that encourages a

commitment to its mission through collaboration and
shared values

20
Communication

21
Perceptions of Leadership and Organizational Culture Issues
Employee survey and interviews indicated
• Lack of communication and cooperation at the executive level
 Communication issues lead to divisions being siloed
 Only 42% of respondents agreed or strongly agreed
communication between their section/division and others is
good
• Lack of transparency from senior staff
 Lack of transparency from executive team during budget
development and high-level finance decisions hampers staff’s
ability to manage and understand their budgets
Employee Survey Response Rate • Low employee morale
 Belief that executive team does not foster a positive work
335 out of 477 CATS staff
environment
responded (70% response rate)
 Only 41% of respondents agreed or strongly agreed morale in
their section/division is good

22
 Consistent and Clear Communication
• Bus operators do not always hear a consistent message from RATP Dev/TMOC and
CATS management
• Survey results indicate communication in the organization needs improvement.
Only about half of respondents agreed or strongly agreed with the following:
• 58%  Communication between staff in their section/division is good
• 53%  Communication from their section division/manager to staff is good
• 42%  Communication between their section/division and others is good
• Need to understand why employees feel communication isn’t good and identify
improvements
• Clear communication in an organization with complex, interrelated functions is
critical for collaboration and effective service delivery
• Breaking down silos increases transparency and trust and can increase efficiency
• Building cross-functional teams to tackle complex issues always improves the
result

23
Contract Management

24
City Role is to Ensure Bus Contract Performance
CATS
Chief Executive Officer

Operations
Chief Operations Officer

RATP Dev
CATS Bus Operations (Transit Management of
General Manager Charlotte)
General Manager

- Bus operations capital planning - Bus operations

- Bus operations policies and procedures - Fleet maintenance
- Contract monitoring and performance - Fleet related procurement
evaluation - Labor negotiations
- Performance data development and - Recruitment and hiring
monitoring
- Training programs

Note: Dotted lines indicate contract services.

25
Contract Management Is Not Supervision Or Operational Direction

Contract Management Principles That Support Good Contract Management

Standard contracts with Clear scope of work,

methods of payment, Identification of those with
consistent terms, Positive relationships
performance measures, authority to make final
conditions, and legal required processes, among key stakeholders
decisions
language deliverables, and reports

Designated
Regular performance and
Accountability stakeholders with
compliance reviews
authority to resolve issues

26
 Current BOD Contract Constrains Bus Operations
To clarify roles and responsibilities and reduce liability exposure, a bus
operations contract should indicate:
• It is the contractor’s responsibility (not the City’s) to manage and operate bus
services, including supervision, labor and employee relations (no City uniforms
or email)
• The City’s role is to monitor contract performance, rather than provide
operational direction
• Specific service expectations (i.e., specific routes, policies)
• The contractor is responsible for training in compliance with federal
requirements
• What City property and equipment will be used by the contractor, along with
standards and expectations related to its use, maintenance, and replacement
• The City’s obligations are contingent on receipt of federal and state transit
funds

27
Budget and Finance

28
 Who Sets CATS’ Strategic and Budget Priorities?
CATS Internal Process MTC Approval

Finance
Division and CEO submits CTAG and TSAC MTC Board and MTC Board
CEO begin proposed review proposed public review and approves budget
Budget kickoff budget and send can give input (by Apr 30)
budget budget to MTC
(mid-Sept) recommendation (Jan 30 to Apr 30)
development (by Jan 30)
(Oct to Nov) to MTC Board

Entire budget process can take 10 to 12 months and

involve multiple review steps by different stakeholders
Council Approval
Conference committee Council and Mecklenburg
County must convene a 6- If contested Council reviews and either approves or
produces committee report
for Council and MTC member conference contests CATS budget
approval1 committee to develop a
consensus budget (May to June)
(within 60 days)
(within 60 days)
1Any MTC member town dissatisfied with the recommendation of the MTC or with
the capital and operating programs approved by the Charlotte City Council may
withdraw from MTC membership.
29
 Sales Tax Is the Critical Revenue Source
CATS Revenue Sources for FY 2021
$10,001,256 Passenger Fares and Services
$14,702,805

Major revenue sources Sales Tax

• Half-cent sales tax - 55%
• Operating assistance - 15% Charlotte MOE
• Maintenance of effort (MOE) - 14% $24,928,652
Operating Assistance

$23,308,600 $88,225,411 Non Operating Revenue

Note: The Interlocal Agreement that formed the MTC requires each town to annually transfer to Charlotte a maintenance of effort (MOE) amount equal
to its agreed upon local expenditure for transit services.
Operating assistance is comprised of federal grants, including CARES and ARPA funding.
Non-operating revenue is comprised of federal grants and state funds.

30
Bus Operations Remains A Large Share of What CATS Does
CATS Operating Expenditures in FY 2021
$90,000,000
Bus Operations
$80,000,000
$70,000,000 • Comprise majority of CATS services in
$60,000,000 terms of ridership (60% in FY 2021)
$50,000,000
$40,000,000
• Have been significantly impacted by
$30,000,000 pandemic; hard to draw trends
$20,000,000
• Made up over 51% of CATS’ total
$10,000,000
$-
operating budget in FY 2021
• Are hampered by vacancies and fleet
maintenance issues
• Are the focus of public perception
from more than just bus riders
Source: City websites, budget documents, and ACFRs for FY 2021 and FY 2022
31
 Transit Expansion Will Require Additional Funding
CATS Revenues from FY 2017 to 2023
$250,000,000
• Operational budget appears to be in good
shape for current operations; also building
$200,000,000 reserves
• Revenues and expenditures continue to
$150,000,000 increase but perceptions about service
(especially buses) is growing worse
$100,000,000 • Major components that will impact budget
• Daily operations
• 2030 Transit Corridor System Plan
$50,000,000
• CONNECT Beyond Regional Mobility Plan
• Availability of federal funding
$-
2017 2018 2019 2020 2021 2022 2023

Total Revenues

Source: City website, budget documents, and ACFRs for FY 2021 and FY 2022

32
Governance

33
 An Opportune Time to Review the Governance Model
• Transit services and operations have expanded significantly over
the last 24 years since the establishment of the MTC and the
regional transportation system operated by CATS in 1999. (Transit
Governance Interlocal Agreement dated, February 16, 1999,
amended in 2005).
• Countywide one-half percent local sales tax has helped to expand
service and financial investment countywide.
• Continue the critical partnership with the Centralina Regional
Council to advance the CONNECT Beyond Study
Recommendations of exploring regional partnership structures,
including governance.
• Alternative governance and operational models in similar regions
provide high quality, effective and responsive service (see slides
that follow for details).
34
 Alternative Governance Models
Service Service Area Annual Operating Budget Capital Budget
Agency
Population (Square Miles) Ridership (FY 2022) (FY 2022)

Capital Metropolitan Transportation 1,400,000

542 16,900,000 $318,600,000 $303,800,000
Authority (CapMetro) (2021)
1,302,649
Charlotte Area Transit System (CATS) 675 6,500,000 $247,960,000 $62,130,000
(2021)
265,000
Chatham Area Transit (CAT) 438 2,900,000 $30,330,000 $38,460,000
(2022)
IndyGo (Indianapolis Public 964,582
402 5,000,000 $123,300,000 $111,700,000
Transportation Corporation) (2020)
848,449
Long Beach Transit (LBT) 107 18,300,000 $114,100,000 $71,900,000
(2019)
706,976
Memphis Area Transit Agency (MATA) 280 5,000,000 $78,500,000 $25,100,000
(2020)

35
 Alternative Governance Models (continued)
Number of
Agency Governing Body Role of the Governing Body1
Members
Board - (8 members) 3 members represent
Capital Metropolitan
the metropolitan planning area, 1 represent smaller Manage and operate the system; establish rules, rates, fares,
Transportation Authority 8
service area cities, 1 each from Travis and Williamson tolls, routes, schedules; adopt annual budget
(CapMetro)
Counties, 2 members from the City of Austin
Direct policy; provide input on service and operations issues;
Charlotte Area Transit Charlotte City Council (12 elected members)
20 recommend and approve annual budget and long-range
System (CATS) Metropolitan Transit Commission (8 voting members)
transportation plans
Board - represents Chatham Co., unincorporated Co. Address policy issues related to transit system operation; set
Chatham Area Transit (CAT) 9
area, disabled residents, Savannah City fares, service levels; allocate resources; adopt annual budget
Possess executive and legislative power; assess local income tax
IndyGo (Indianapolis Public
Board - Three appointed by Mayor; four by Council 7 subject to the City Council’s appropriation authority; determine
Transportation Corporation)
rates, routes, hours, service standards
Board - Seven appointed by Mayor and confirmed by Manage system; establish rules, rates, fares, tolls, routes,
Long Beach Transit (LBT) 7
Council; two City Manager non-voting representatives schedules; adopt annual budget
Supervise operations; establish rules, rates, fares, tolls, routes,
Memphis Area Transit Agency Board - nominated by Mayor and approved by City
9 schedule; prepare an annual budget and submit to Mayor and
(MATA) Council
Council for approval
1To address complexities related to financing and construction, some agencies have established joint powers authorities or other agencies to oversee construction of capital improvements projects.

36
 Alternative Governance Models (continued)
Agency Management Agency Formation
Capital Metropolitan CEO is Board-appointed
1985
Transportation - Prepares proposed operating and capital budgets; assists Board in developing policy; implements
Voter referendum
Authority (CapMetro) policy
CEO is appointed by the City Manager with concurrence of Mecklenburg County Manager and a
board member appointed by the MTC who is not a Charlotte or Mecklenburg County representative;
Charlotte Area Transit 2000
City Manager authority to remove CEO or through majority vote of the MTC Board
System (CATS) Enterprise department
- CEO/CATS prepares proposed annual budget with direction from City, requiring MTC and final City
approval. CATS staff are City of Charlotte employees or contract personnel.
CEO is Board-appointed 1987
Chatham Area Transit
- Manages CAT operations and employees; administers contracts; advises Board; implements Board Pursuant to state legislation and local
(CAT)
policy ordinance
1975
IndyGo (Indianapolis CEO is Board-appointed
Consolidated City of Indianapolis-
Public Transportation - Manages IndyGo employees; administers contracts; advises Board; provides policy
Marion County ordinance as an
Corporation) recommendations
independent municipal corporation
CEO is Board-appointed 1963
Long Beach Transit
- Responsible for day-to-day management of the organization; prepares proposed budget for Board Non-profit corporation; City is sole
(LBT)
approval; assists Board in developing policy; implements policy shareholder
CEO is Board-appointed 1975
Memphis Area Transit
- CEO and staff are Mid-South Transportation Management, Inc. (MTM) employees; MATA is operated City ordinance as a component unit
Agency (MATA)
by Mid-South Transportation Management, Inc. (authority) of the City

37
Management Roadmap Objectives

A collaborative team that An organizational culture that

actively commits to the shared encourages transparency and
mission and values staff retention

A governance
structure
accountable and
transparent to the
community it serves
Clear expectations about how Clarified roles and
the department will work responsibilities with respect to
together and accountability for contracted services
doing so

38
 Next Steps

Reinvented
Leadership Transit governance
Targeted plan
development Organization Contract and management Clear structure that
to fill
and structure performance services RFP in communication reflects
vacancies
management analysis management accordance with protocols community-
more quickly
teambuilding best practices wide service

39
 Thank You
Andy Belknap | [email protected]
Sam Lieberman | [email protected]
Mahdi Aluzri | [email protected]
Andrea Miller | [email protected]
Vicki Sun | [email protected]