Update 5 p.m. — This article has been updated to include comment from the Wilmington Urban Area Metropolitan Planning Organization. It has also been updated to note the WAVE Executive Director Alberty Eby issued a press release, denying that WAVE has any plans to suspend service; Eby declined to address the email sent from WAVE’s finance director to Wilmington and New Hanover County, on which Eby was copied, that explicitly stated WAVE would be ‘forced to suspend operations’ without a loan.
WILMINGTON — WAVE has notified city and county officials that without a loan or cash advance of $700,000 it will be forced to suspend operations in mid-February. WAVE said this is a new shortfall, in addition to earlier financial difficulties, and came from delayed grant funding that is “no fault of the Authority.”
WAVE stated the shortfall was caused in part by a delayed funding request made by the Wilmington Urban Area Metropolitan Planning Organization (WMPO) as well as ongoing financial difficulties at the North Carolina Department of Transportation (NCDOT). WMPO denies its request was ‘delayed.’
WAVE also stated that it needs a loan, not new funding, and that it still expects to receive the delayed state and federal grants.
New Hanover County confirmed on Thursday that the Cape Fear Public Transportation Authority (WAVE) notified the financial offices of the county and Wilmington of the situation on Tuesday, January 21. The county and city are currently “determining next steps and how to proceed.”
WAVE did not indicate in its request how much of the $700,000 it was requesting from Wilmington and NHC individually.
WAVE has faced increasing financial difficulty over the last year; recently, the Authority cut service hours to address a pre-existing $745,000 deficit. Earlier this month, New Hanover County Chairwoman Julia Olson-Boseman and Wilmington Mayor Bill Saffo announced WAVE would be restructured. While Saffo was more positive about WAVE’s performance, Olson-Boseman said the restructuring would, in her mind, include liquidating the current board and administration, saying she had “no faith” in WAVE’s leadership.
$1.2 million in delayed funding
The email sent Tuesday afternoon by Joseph Mininni, WAVE’s director of finance and administration to New Hanover County Chief Financial Officer Lisa Wurtzbacher and Wilmington Assistant Financial Director Bryon Dorey.
“On behalf of Cape Fear Public Transportation Authority we are requesting a loan or cash advance of $700,000 on fiscal years 2021 funding. Through no fault of the Authority receipt of federal and state funding associated with fiscal year 2020 totaling $1,197,000 has been delayed. This request is in above and beyond any addition support being considering for fiscal year 2020. Without a loan or advance the Authority will be forced to suspend operations as soon as February 15th of this year,” Mininni wrote.
Mininni noted that the request was “due to the delay in [State’s Maintenance Assistance Program (SMAP)] funding in the amount of $697,000 and a Federal Grant in the amount of $500,000. Last week we were notified by the state that this year’s State SMAP funding that was scheduled to be released in January was being delayed until an unknown future date due to NCDOT’s own cash flow issues.”
Mininni noted that, without NCDOT’s financial issues, WAVE would have received about half of the $1.2 million in funding in October.
The half-million dollars in federal funding are also being delayed. According to WAVE, WMPO did not request an allocation to the Authority on time and, due to that delay, the funds will not be received until June. WMPO disputes this, saying it received a funding a request for additional funding from WAVE in August, and followed appropriate procedure to ‘flex’ the funding from a different federal program and allocate it to WAVE.
Mininni concluded by acknowledging pre-existing concerns about WAVE’s financial stability.
“We understand that this is an unusual and large request and that there will be many questions and concerns considering the precarious financial state of the Authority. We are available and willing to respond to each of those to the best of our ability,” he wrote.
Timeline of the shortfall
According to internal emails provided by New Hanover County, Wurtzbacher followed up with WAVE for additional information and a timeline of when the Authority realized there would be funding shortages.
According to an email sent from Wurtzbacher to County commissioners, “Wave learned of the SMAP funding delay January 7th and there isn’t a firm indication at this point of when that funding will be made available. Wave also indicated that they discovered in November that the WMPO had not requested the federal grant funding for Wave, so it was subsequently applied for and the grant received initial approval in January, but still has further federal approval processes to go through.”
Wurtzbacher also noted that while the WAVE Board was “generally aware” that it would be making this request, the board had not been formally notified of it. WAVE staff plan to do that at today’s meeting, according to Wurtzbacher.
Wurtzbacher noted that WAVE had not provided additional details on whether it would shut down particular routes or all operations, saying that would likely be determined after the Authority’s board discussed a plan.
New Hanover County is currently considering a response to WAVE’s request; a Wilmington spokesperson said city staff would bring a recommendation on the issue to City Council at its February 4 meeting.
Port City Daily has also reached out to WAVE’s Executive Director Albert Eby, who has not commented on the Authority’s situation since Olson-Boseman and Saffo announced restructuring plans. Eby didn’t respond, but issued a press release denying that WAVE had any plans to suspend service; Eby declined to comment on Mininni’s email, although he was CC’d on it.
Port City Daily also reached out to the [W]MPO, which was apparently part of a significant portion of the Authority’s shortfall, although Mininni stated to Port City Daily that WAVE was not ‘blaming’ WMPO.
WMPO Executive Director Mike Kozlosky said he, “would not characterize the timeline as ‘a delayed request from the MPO to allocate funding to the Authority.” He noted that “[t]here is a process that is required to flex and allocate these funds.”
Kozlosky offered the following description of the process:
The federal funds referenced in the e-mail are Surface Transportation Block Grant Program-Direct Attributable (STBGP-DA) funds. These funds are Federal Highway Administration (FHWA) funds that are sub-allocated to the MPO as a result of the MPO’s Transportation Management Area (urbanized area over 200,000 population) designation. The project and activity eligibility requirements are outlined in 23 USC 133: Surface transportation block grant program.
These STBGP-DA funds are discretionary and awarded by the MPO Board through a competitive process. The MPO received a funding request from the Cape Fear Public Transportation Authority for these funds in August 2019. The MPO Board supported the allocation of $500,000 in FY 2020 STBGP-DA funding to the Cape Fear Public Transportation Authority for public transportation actives (preventative maintenance and ADA) on September 25, 2019. This funding allocation provides additional funding to the Authority that are not specifically earmarked or guaranteed as such. Since these federal highway funds are being used for public transportation activities, they are required to be flexed from FHWA to the Federal Transit Administration (FTA). The flex request was submitted from the MPO to the North Carolina Department of Transportation on October 23, 2019. The administrative modification was published as part of the NC Board of Transportation’s and Wilmington Urban Area MPO Board’s agenda (Administrative Modification 20-1) in January and will be considered for formal approval by the NC Board of Transportation and Wilmington Urban Area MPO Board in February.
This article will be updated with any new information any responses from stakeholders in public transportation.
Send comments and tips to Benjamin Schachtman at firstname.lastname@example.org, @pcdben on Twitter, and (910) 538-2001