Friday, February 3, 2023

Will New Hanover County bail out WAVE or hand it over to Wilmington?

WAVE Transit is facing a deficit of over $300,000 in the coming fiscal year, with over $3 million in capital project needs that - as of right now - are unfunded. (Port City Daily photo / File)
WAVE Transit is facing a deficit of over $300,000 in the coming fiscal year, with nearly $3 million in capital project needs that – as of right now – are unfunded. (Port City Daily photo / File)

The Cape Fear Public Transit Authority — better know as Wave — has asked New Hanover County to implement a $7 vehicle registration fee to cover growing budget shortfalls.  One county commissioners has countered, suggesting that the county should walk away from Wave entirely.

NEW HANOVER COUNTY — Wave Transit, now facing millions of dollars in deficit and unfunded capital needs, is asking the county for financial assistance. Will the county help stabilize Wave’s failing financial situation – or dissolve the 14-year partnership with Wilmington and ask the city to run its own public transportation in a more limited municipal area?

On Monday, Steve Kelly Sr., vice-chairman of Cape Fear Public Transit Authority (WAVE) board, made his case to New Hanover County Commissioners, including fellow Wave board member Jonathan Barfield. Kelly asked the county to approve a proposed $7 vehicle registration fee to help right the authority’s financial ship (the fee could generate around $1.3 million annually, according to Wave).

Kelly told county leaders that WAVE has known for over a year that it would need “some form of dedicated local funding” to keep public transportation up and running at current service levels. In April of last year, Wave’s in-house short-term plan identified growing financial needs, confirmed by an expert study, produced by the consulting firm Transpo, and delivered in August 2018.

Deficits, unfunded capital needs, “fiscal setbacks”

“At current levels of funding, and without any expansion of service, Wave’s annual operating deficit is projected to exceed $300,000 by fiscal year 2022. Capital needs within that time frame will amount to $2.8M, and these needs are not factored into those deficit figures,” according to Kelly’s presentation.

Since last year, Kelly said Wave has “suffered further fiscal setbacks,” including Hurricane Florence, the federal government shutdown, a $170,000 reduction in state funding based on gas-tax revenue, loss of the federal Alternative Fuels Tax Credit (a credit for using natural gas, which offset fuel prices by the equivalent of $.50 per gallon), and the loss of $357,000 state funding based on a rural status for New Hanover County

Kelly said these losses mean Wave will not be able to add new routes to growing areas, including Monkey Junction, Porter’s Neck and the northern part of the county. In fact, Wave will have to cannibalize its own fund balance to stay afloat, utilizing $390,275 – over three-quarters of its $501,311 total fund – and leaving only $111,036.

According to Kelly, “the lack of a reasonable fund balance makes it difficult to respond to shocks such as hurricanes and government shutdowns. Besides, there is a limit to how long you can survive by dining on your own innards.”

Kelly asked commissioners to bring the vehicle registration fee proposal to a vote.

“Whatever the outcome of that vote may be, Wave needs to know how things stand,” Kelly stated in his presentation.

Funding sources

In fiscal year 2018-2019, which ends at the end of this month, Wave received just over $1 million of its $8.8 million budget from passenger fares. The majority of funding came from federal and state agencies, including Federal Transit Administration grants ($3.4 million, over a third of the budget), NCDOT (just under $900,000), and UNCW ($783,000).

Locally, Wilmington supplied $1.4 million, while New Hanover County and several of its departments supplied around $900,000. Wilmington and New Hanover County have provided additional funding for Wave – to help cover what state and federal grants do not – since 2003, when the two merged their respective public transit systems in 2003 (after a one-year the merger was formalized in 2004, creating the current iteration of Wave).

Wave's 2018-2019 revenue sources. Note: FTA is the Federal Transit Administration grant funds. (Port City Daily photo / WAVE)
Wave’s 2018-2019 revenue sources. Note: FTA is the Federal Transit Administration grant funds. (Port City Daily photo / WAVE)

Commissioners weigh in: Increase support Wave or withdraw completely?

While Kelly was asking for a specific measure to help Wave make ends meet, at least two commissioners positioned the debate in more general terms – should the county support Wave, or withdraw from the authority completely.

New Hanover County Board of Commissioners Chairman Jonathan Barfield said he’s long supported a dedicated fund balance for WAVE.

“Nothing has changed,” Barfield said, referring to comments he’s made in previous interviews and at Wave board meetings. “That’s still my answer – if we’re serious about public transportation, then something has to be done. There is no dedicated funding source for public transportation, so we need to answer the question, ‘how do we make up that hole,’ so to speak.”

Barfield stopped short of saying whether he would support the $7 registration fee, but reiterated he thought preventing the funding shortfall at Wave was important.

Commissioner Rob Zapple agreed, saying “public transportation in our community is absolutely appropriate, if we look at communities our size, there’s a certain point in the development and size of the community, if you don’t want people clogging up the roads, you have to look into that.”

Zapple said that he thought it was important to provide a stable funding source for Wave.

“We want to prevent [Wave] from having to come to us every two years saying the sky is falling,” Zapple said.

“A mass transit system is a part of our future. The sooner we find a way to fund it, the better. Wave also needs to find a way to make things work better,” Zapple added, saying he hoped to see more in-depth conversations about ways to improve Wave in the future.

In the short-term, Zapple said he agreed with the idea of a registration fee, but would like to see a phased-in approach.

“Jumping to a seven dollars fee, is one way to do it. Personally I would like to look in a phased approach. We could start at a $3 and phase it up, over a three to five year period. It seems jolting, to me, for people in our community to all of the sudden have the fee,” Zapple said.

Commissioner Woody White, on the other hand, was directly against the fee, citing concerns about Wave’s business model.

“My primary concerns about Wave is that they continue to see themselves as a regional public transportation service, when they should be more of a municipal service. They have a history of expanding routes without any revenue sources in place to pay for these expansions, and then seek funding after the fact – bad way of running a business,” White said, adding that Wilmington and the county modified the interlocal agreement governing Wave to help prevent the authority from running out revenue.

White said Wave ridership was “stagnant and falling” due to the region’s economic growth, and noted that driving habits in the outlying areas of the county had not changed in the way envisioned when Wave was created 14 years ago.

“The vast majority of people opt not to ride the bus. I challenge anyone to find more than 2 or 3 people on the outer routes at any given time. We are witnessing the best economy in our lifetimes with the lowest unemployment and the highest wage growth. North Carolina is outperforming the nation in these metrics. Coupled with the disruptions that platform-based ridership like Uber and Lyft are causing, the consumer now has more choices than ever, and cheaper fuel. These external factors pose existential challenges to our public transportation. Spending more money at a time when less people ride buses is not smart,” White said.

White said the county should “withdraw from WAVE, and the City should resume running it in the densely populated areas where demand makes sense for its operation.”


Send comments and tips to Benjamin Schachtman at ben@localvoicemedia.com, @pcdben on Twitter, and (910) 538-2001

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