New public transit plan for Mat-Su effective this summer; Borough to assume half the costs

The Matanuska-Susitna Borough will be sending out a Request for Information for a transport company to operate Mat-Su’s public transit system when the borough takes over the responsibility from Valley Transit, the nonprofit that now operates buses in the region.

The 2020 census declared parts of Mat-Su as urbanized areas compared with all-rural prior to the census, which changes the way federal funds for public transit are made available, Jason Ortiz, Mat-Su’s deputy director of transportation, told the borough assembly last Tuesday, Jan. 7.

Basically, it means the borough is now required to assume management of public transport with the federal government share of costs dropping from 90% to 50%, with the borough assuming the other 50%, Ortiz said. The arrangement makes Mat-Su eligible for up to $1.8 million in federal funds, although that would have to be matched dollar-for-dollar by the borough if all the federal money is accepted.

As it is currently configured the transit system costs about $3 million a year to operate with scheduled service by six buses on mainline routes including commuter service to Anchorage along with six smaller vehicles operated in an “on demand” service off the main street routes.

Mat-Su Health Foundation picks up 10 percent of the costs, supplementing 90% now paid by the federal government. Under the new system, which goes into effect this summer, the borough will pay half of the total cost, or $1.5 million, assuming the same level of service, Ortiz said.

Currently the borough does not contribute to public transport. The federal 90% funding is supplemented by the Mat-Su Health Foundation, which pays the other 10%.

There are less expensive options that would reduce the borough’s cost, but those would also result in lower levels of service, he said. A decision to cut costs, and reduce service, must be treated carefully because at some point service drops to the point that transit riders turn to other options. That will reduce use of the system as well as revenues from fares.

The assembly will make the decision on how much the borough will contribute as a subsidy, but in the meantime the borough will solicit indications of interest from potential providers through the Request for Information, which will be followed by a formal Request for Proposals once potential operators have been identified, Ortiz said.

Valley Transit, the current nonprofit operator, will likely be one of the potential providers submitting information.

A contract with a new transit operator needs to be in place by June 1 and the new service must begin July 1 under federal ruls.

If the borough were to operate the service as is, and assuming the $1.5 million annual share of $3 million I costs, the impact on property tax mill rates would be 0.107 cents per 100,000 of assessed value of property, according to estimates prepared by Mat-Su transportation officials.

That funding support would sustain the current service, which carries about 32,800 riders a year. The borough has mapped out four scenarios of funding and service, with an “Option” being status quo. Options B, C and D would involve less cost, and fewer riders at each level.

The least expensive would raise the property tax mill rate by only 0.72 cents per $100,000 of assessed value, but it would drop the passengers served to an estimated 18,400, according to the estimates.