Delegated Management Contract In New Orleans Opens New Chapter For Transit in the US

New Orleans, long known for its fine jazz and easy-going lifestyle, made an historic move on July 1, 2009 when the Board of Commissioners of the New Orleans Regional Transit Authority (RTA) unanimously approved terms on a delegated management contract with Veolia Transportation. The agreement is a first of its kind in the US and is the culmination of a year long relationship between our company and the City of New Orleans.

This historic agreement is based on an ambitious, phased plan to improve public transportation and mobility in New Orleans over the next 10 years, as a cornerstone of the city’s continuing renewal following Hurricane Katrina.

Veolia Transportation has been operating public transportation in New Orleans under a traditional management contract with the New Orleans RTA since October of 2008. This new contract substantially expands the company’s scope of responsibilities, as explained further below.

The ten-year contract (five years, with a five-year option) begins September 1, 2009. Under this “Delegated Management” contract, Veolia Transportation will be responsible for performing all activities of the transit authority below the Board level. This means that Veolia will be responsible for all aspects of the public transportation system in New Orleans, including operations, safety, maintenance, customer care, routes and schedules, capital planning, budgeting, employee salaries & benefits, human resources, marketing, ridership growth, grant administration, as well as all the other typical functions of a transit authority.

Veolia will continue to report to the Board of Commissioners of the New Orleans RTA, which sets the direction for the RTA and is responsible for establishing RTA policies including fares, service and operations, as well as approval of each year’s annual transportation development plan and budget.

Given its operating expertise, the company expects to significantly improve and enhance service, as well as to be able to generate cost savings over the agency’s current expense levels.

A Unique Partnership between the Private and Public Sectors

New Orleans is the first time in the United States that the “delegated management” model is being fully deployed. Specifically, this is the first time that a private sector company will assume all of the functions and operations of a transit authority, and also all of the commercial risks involved in managing, operating and maintaining a city transit system, including legal, financial, insurance/safety-related and operational risks.

This “Delegated Management” model is widely used in Europe, but is not well known in the U.S. Simply put, it means that the RTA Board of Commissioners will fully delegate the management and operation of the transit authority to Veolia Transportation, which will assume responsibility for all the transit authority functions and operations as described above, reporting to the RTA Board of Commissioners which will oversee its contract performance, policies and budgets.

This model is widely used in Europe because it enables cities to benefit from private-sector expertise and efficiencies, under direct oversight from a public sector board. Because of the large number of contracts managed worldwide by Veolia Transport, the company can draw from national and international technical expertise, systems, processes and talent to improve and expand the transit system more quickly and efficiently.

A Model That is Somewhat Similar to Foothill Transit

Veolia Transportation also acts as the transit authority in Foothill Transit, in the Los Angeles area. The major difference is that in Foothill Transit, Veolia manages all administrative, financial and planning functions of a transit authority, but contracts out operations of bus and paratransit to two private sector operators. By contrast, whereas in New Orleans, Veolia will function as the transit authority and will also perform all bus, paratransit, streetcar and circulator operations.

The Vision for the Future

Veolia Transportation, Mayor Nagin, and the RTA Board have a multi-faceted vision for improving mobility in New Orleans during our contract term, including enhancing the performance of the transit system, expanding streetcar service, collaborating with area transit authorities to improve inter-modality across the region by synchronizing bus timetables with those of neighboring parishes, improving customer signage, shelters and the entire customer experience, implementing a BRT, and much more.

Facts about Transit in New Orleans

Our relationship with some surrounding communities in the New Orleans area goes back many years when we began operating transit bus service on the west bank in Jefferson Parish in 1949. In 2005 when Katrina struck, Veolia Transportation provided aid to the community by delivering donated food and clothing, and contributing $1 million to help rebuild this devastated city.

In 2008 the RTA granted a management contract to Veolia Transportation and nine of our employees took on key roles. During the 9 months since October, the team has made significant and visible improvements in many aspects of the service in New Orleans. In the first 100 days after the October launch, our team launched The Lil’ Easy, a unique, custom-designed neighborhood circulator that now operates in three areas of the city; the Lower 9th Ward, Lakeview, and Gentilly.

The contract encompasses fixed route, streetcar, paratransit and Lil’ Easy services. The contract includes operation 93 buses, 66 streetcars, 10 Lil Easy vans and 42 paratransit vehicles. Vehicles currently cover 14,000 miles and transport 31,500 passengers every day.

For further information, please contact Dick Alexander, SVP of Business Development, Veolia Transportation. (Dick.Alexander@veoliatransportation.com)