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HomeMy WebLinkAboutAgenda 06-02-2026; 8-j - Approval of an Updated Increased Cost of Existing Service Policy for Transit 1 ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: June 2, 2026 Action Agenda Item Number: 8-j SUBJECT: Approval of an Updated Increased Cost of Existing Service Policy for Transit DEPARTMENT: Transportation ATTACHMENT(S): INFORMATION CONTACT: 1. Updated ICES Policy — Track Sarah Williamson, Interim Director, Changes Transportation Department, 919- 2. Updated ICES Policy — Clean 245-2008 Copy PURPOSE: To approve an updated Increased Cost of Existing Service (ICES) Policy, part of the Transit Governance Financial Policies and Procedures. BACKGROUND: In 2011, Orange County voters approved a half-cent sales tax to fund public transportation improvements. The sales tax proceeds can only be used for projects that have been approved by the Orange County Board of Commissioners (BOCC) and the GoTriangle Board of Directors. The Interlocal Agreement for Transit Governance, executed in 2023, includes Financial Policies and Guidelines. Among these policies and guidelines is a policy for Increased Cost of Existing Service (ICES). Representatives from Orange County and GoTriangle have collaborated on minor edits to this policy to bring it up to date and allow Orange County to continue to receive ICES in FY26 and future years. The GoTriangle Board of Directors is also required to approve this update before it can be implemented. The item is anticipated to be considered on a GoTriangle Board agenda later in June 2026. FINANCIAL IMPACT: Orange County Transportation will receive approximately $30,000 from the Orange County Transit Tax in FY26 for ICES. ALIGNMENT WITH STRATEGIC PLAN: This item supports: • GOAL 4: MULTI-MODAL TRANSPORTATION OBJECTIVE 1. Identify priorities and resources necessary to implement the Orange County Transit Plan. OBJECTIVE 2. Increase community awareness of all modes of transportation including transit, bike and pedestrian, vehicle, and all other modes. OBJECTIVE 3. Support road projects that address congestion and reduce commute time using the County's Complete Streets policy. 2 OBJECTIVE 4. Coordinate transit investments with municipal and county land use planning to reduce vehicle miles travelled and to provide more equitable access to shopping, employment, medical centers, college campuses, etc. OBJECTIVE 5. Invest in implementing the County' s Safe Routes to Schools plan. OBJECTIVE 6. Update transportation related plans to provide more multi-modal options including rural Orange County. RECOMMENDATION(S): The Manager recommends that the Board approve the updated Increased Cost of Existing Service (ICES) Policy. 3 Increased Cost of Existing Services (ICES) UPDATE Spring 2023- Parties and Implementation Partners will refer to legacy language from prior Transit Governance ILA to define how operators can seek funding to support increased cost of services. This language is shown below. The Orange County Transit Multi-Year Vision Plan (Plan) provides that all funding for bus services will be appropriated based on the supporting financial plan/model to Chapel Hill Transit(CHT), GoTriangle, and Orange Public Transit(OPT).The use of these bus service funds shall be limited to the support of new bus services above and beyond the existing transit system services in place at the time of the adoption of the local option % cent sales tax in November of 2012. However, CHT and OPT may use a portion of the bus service funds provided in the Plan to pay for the increased cost of existing services during the duration of this Agreement in the manner described below. The "CHT Share" shall be a percentage derived by dividing the CHT local expenditures for bus services each year by the total of local expenditures for bus services by both CHT and OPT in that year.The "OPT Share" shall be a percentage derived by dividing the OPT local expenditures for bus services each year by the total of local expenditures for bus services by both CHT and OPT in that year.The respective CHT and OPT local expenditures for bus services in any year shall be based initially upon the audited financial statements for the fiscal year ending June 30, 20117. Local bus services expenditures shall include assigned overhead without any consideration of federal or state financial assistance. The ,dee+erminat;en ef the CHT Share and OPT Share wall be made each yeaF thereafter based UPGR the Mest reeent audited The determination of the CHT Share and OPT Share will be made each year thereafter for CHT based upon the most recent audited annual local expenditures for bus service and for OPT based upon an end of year financial statement for the transportation services department bus service attested to by the Chief Financial Officer of Orange County as to its accuracy and completeness. CHT may use a portion of the bus services funds provided in the Plan up to a maximum amount that equals the CHT Share percentage of the prior year total receipts from the Orange County local vehicle registration fee of$7.00 permitted by Article 52 of N.C.G.S. 105. OPT may use a portion of the bus services funds provided in the Plan up to a maximum amount that equals the OPT Share percentage of the prior year total receipts from the Orange County local vehicle registration fee of$7.00 permitted by Article 62 of N.C.G.S. 105. The suggested scenario/formula below is drafted for future consideration by parties and implementation partners upon the next deliberation of the Multi-Year Transit Vision Plan. Purpose Transit operators in Orange County are able to use one Locally Dedicated Transit Funding Source (the County Vehicle Registration Tax, pursuant to N.C.G.S. 105-570, which is levied at$7.00 per year)to supplement projected increased costs of existing, or baseline, services that were in operation prior to the passage of the County's% cent sales tax dedicated to public transportation investment. ICES Policy 4 An equitable formula is to be used by the Tax District Administrator in determining annual allocations of available funds from the projects County Vehicle Registration Tax for each fiscal year to all operators providing services within Orange County(Chapel Hill Transit, Orange Public Transit& GoTriangle). Variables include: • Total Revenue Service Hours for Fixed Route Bus Services, per provider, at the end of FY2013 • Total Expenditures for Fixed Route Bus Services, per provider, at the end of FY2013 • Average annual historical cost escalation rate, per provider, from FY2013 to current fiscal year 5 Increased Cost of Existing Services (ICES) UPDATE Spring 2023—Parties and Implementation Partners will refer to legacy language from prior Transit Governance ILA to define how operators can seek funding to support increased cost of services.This language is shown below. The Orange County Transit Multi-Year Vision Plan (Plan) provides that all funding for bus services will be appropriated based on the supporting financial plan/model to Chapel Hill Transit(CHT), GoTriangle, and Orange Public Transit(OPT).The use of these bus service funds shall be limited to the support of new bus services above and beyond the existing transit system services in place at the time of the adoption of the local option % cent sales tax in November of 2012. However, CHT and OPT may use a portion of the bus service funds provided in the Plan to pay for the increased cost of existing services during the duration of this Agreement in the manner described below. The "CHT Share" shall be a percentage derived by dividing the CHT local expenditures for bus services each year by the total of local expenditures for bus services by both CHT and OPT in that year.The "OPT Share" shall be a percentage derived by dividing the OPT local expenditures for bus services each year by the total of local expenditures for bus services by both CHT and OPT in that year.The respective CHT and OPT local expenditures for bus services in any year shall be based initially upon the audited financial statements for the fiscal year ending June 30, 2011. Local bus services expenditures shall include assigned overhead without any consideration of federal or state financial assistance.The determination of the CHT Share and OPT Share will be made each year thereafter for CHT based upon the most recent audited annual local expenditures for bus service and for OPT based upon an end of year financial statement for the transportation services department bus service attested to by the Chief Financial Officer of Orange County as to its accuracy and completeness. CHT may use a portion of the bus services funds provided in the Plan up to a maximum amount that equals the CHT Share percentage of the prior year total receipts from the Orange County local vehicle registration fee of$7.00 permitted by Article 52 of N.C.G.S. 105. OPT may use a portion of the bus services funds provided in the Plan up to a maximum amount that equals the OPT Share percentage of the prior year total receipts from the Orange County local vehicle registration fee of$7.00 permitted by Article 62 of N.C.G.S. 105. The suggested scenario/formula below is drafted for future consideration by parties and implementation partners upon the next deliberation of the Multi-Year Transit Vision Plan. Purpose Transit operators in Orange County are able to use one Locally Dedicated Transit Funding Source (the County Vehicle Registration Tax, pursuant to N.C.G.S. 105-570, which is levied at$7.00 per year)to supplement projected increased costs of existing, or baseline, services that were in operation prior to the passage of the County's Y2 cent sales tax dedicated to public transportation investment. ICES Policy An equitable formula is to be used by the Tax District Administrator in determining annual allocations of 6 available funds from the projects County Vehicle Registration Tax for each fiscal year to all operators providing services within Orange County (Chapel Hill Transit, Orange Public Transit& GoTriangle). Variables include: • Total Revenue Service Hours for Fixed Route Bus Services, per provider, at the end of FY2013 • Total Expenditures for Fixed Route Bus Services, per provider, at the end of FY2013 • Average annual historical cost escalation rate, per provider, from FY2013 to current fiscal year