Case Studies of the Metropolitan Atlanta Rapid Transit Authority

Q Mass Transit usDepartnnen. ManaQemeiit: of Transportation w TranTppion CasG Stuclies of the "mesLory Metropolitan Atlanta ofTronsportcon ^^^-^ TraHSlt Authorlty

March 1981

Mass Transit Management: Case Studies of the Metropoiitan Atianta Rapid Transit Authority

Final Report March 1981

Prepared by The University of Georgia Department of Political Science Athens, Ga. 30602

Prepared for U.S. Department of Transportation Urban Mass Transportation Administration University Research and Training Program

Distributed by Office of the Secretary Technology Sharing Program

PREFACE

This is one of a series of reports distributed by the U. S. Department of Transportation's Technology Sharing Program on the topic of transit management. As a general rule, reports published in this series emphasize principles which are applicable to several properties, and try to be "technically neutral" setting out the advantages and disadvantages of alternative decisions and leaving the decisions to the users.

This document provides a unique chance to look inside the decision- making process of a major transit property. The stories are told, in many cases, by people who were actually involved as consultants to those who eventually had to make choices in the evolving MARTA system.

In the narratives, the researchers frequently describe themselves on a "third person" basis--"Golombiewski ," "Trattner," etc. Recognizing that this can give an extraordinary insight into the dynamics of system management, readers should also be aware that no such account can be totally objective, but can only strive for what the broadcast media call "fairness." Hopefully, this report does achieve such a balance between personal insight and dispassionate observation.

We would be interested in any comments you have on the report itself, or on future subjects to cover. Feel free to send any reactions to the following address:

Technology Sharing Program (1-40) U. S. Department of Transportation 400 Seventh Street, S. W. Washington, D. C. 20590

Attn: Al Linhares

TABLE OF CONTENTS

Preface i

Table of Contents iii

Introduction v

Assessing Electoral Defeat: New Directions and Values for MARTA I-l

MARTA and the 15(t Fare I I-l

Low Fare: An Economic Analysis of a Political Decision III-l

Reorganizing the General Manager's Office IV-T

Developing an Arbitration Process for Resolving Contract Disputes V-1

Marketing in MARTA VI-1

Appendix 1: Listing of Complete Series of Case Studies A-1

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INTRODUCTION

MASS TRANSIT MANAGEMENT: Case Studies of the Metropolitan Atlanta Rapid Transit Authority

Background of this Study

Atlanta, Georgia is typical of many of the nation's cities. It has faced the public transportation problems of reduced transit ridership, aged equipment, reduced service, increasing costs, lack of public support, and need for sources of finance, to name some. It is atypical in the sense that it is one of a very limited number of cities that is constructing a new rail rapid transit system.

The city now has a relatively new transit authority which has experienced a variety of gestation and early existence problems. Their solutions seemed to be worth sharing with existing and embryonic urban public transportation agencies, as well as other individuals interested generally in public agency management problems. This document is an attempt to document Atlanta's experience for these other groups.

With funding provided by an Urban Mass Transportation Administration University Research and Training grant, a team of faculty and graduate students at the University of Georgia, with support of the Metropolitan Atlanta Rapid Transit Authority (MARTA) General Manager, sought to develop a series of case studies on the various key management-oriented events and developments at MARTA. This document contains the six Case Studies considered to be of the most general interest, either in their original form or with minor editing. Eleven additional Case Studies, along with these six, have been placed individually in the National Technical Information Service (NTIS) located in Springfield, Virginia. Each of the Case Studies is separately available for purchase from NTIS, and a list is included at the end of this document.

MARTA - An Overview

MARTA was created in 1965 as a transit authority to expand and upgrade urban public transportation in Atlanta. MARTA basically provides two forms of transit- surface bus and rail rapid transit.

In 1972, MARTA bought out the existing transit operator, Atlanta Transit System, Inc., and proceeded to upgrade the bus service and add new routes and services. In February 1975, ground was broken for the start of construction of a rail rapid transit system designed to ultimately total 50 miles of dual track. Service on the first segment of the completed system began in June 1979.

Shortly after accepting the position of General Manager of MARTA, Alan Kiepper sought to set forth his overriding goal for MARTA. Basically, what he wanted was for MARTA to strictly avoid becoming "just another public agency" in the unfavorable sense. Also, he wanted it to become a model employer and a management innovator. This led to the experimentation with innovative approaches described here. MARTA now has new buses on the streets of Atlanta, as well as other new services, and three segments of the rapid rail system are in operation.

The Case Studies

The following paragraphs provide a brief introduction to, and set the stage for, each of the six Case Studies that follow.

1. A crucial point in MARTA' s evolution was the referendum of 1968, which had been intended to approve a bond issue that would provide money needed for advanced engineering, land acquisition, and construction of the first phase of rail rapid transit in Atlanta. That referendum was defeated.

" The case study , Assessing Electoral Defeat: New Directions and Values for MARTA y describes the re-examination MARTA conducted of itself and the changes which occurred, the campaign for public support of MARTA, and its final success in the 1971 referendum.

2. The next case reflects on the innovati veness of MARTA' s basic charter " in a narrow but significant particular. " MARTA and the 15(j: Fare details the history and the consequences of the decision to build support for the MARTA system by an agreement to keep the fares at a low level after MARTA took over the local bus property. Keeping the promise was not easy, and attempts to do so often resulted in media challenges.

" 3. A third case study--" Low Fare: An Economic Analysis of a Political Decision provides an al ternative perspective on the fare issue and how MARTA was chartered. The 15(t fare had multiple motivations. The fare decision made manifest sense to daily bus-riders such as Atlanta's low-income residents, including black riders who later contributed to the success of the referendum to authorize the system. However, the low-fare decision also apparently made sense to the more affluent residents, as a factor in gaining authorization of MARTA and its rapid-rail component. The case study implies that political sense, in this case, also had a strong economic justification..

" 4. Reorganizing the General Manager's Office " illustrates how MARTA sought to adapt its structure to its changing task, and to major shifts in political demands placed on the system. Of special relevance there is the broadly participative nature of the reorganization of the General Manager's office.

Basically, MARTA sought to involve a broad cross-section of people in the organization in the process of change. MARTA management recognized that their organization would in fairly rapid succession move from one basic preoccupation to another--f rom a small planning agency, to a bus operator, and then to a design- and then construction-focused organization before rapid rail became operational. MARTA had to make these several transitions with a minimum of

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waste motion and conflict, while balancing older preoccupations with new demands that had to be responded to sensitively and often with some speed. People had to be reoriented in these transitions, people with different loyalties, ambitions, and aspirations. The socio-emotional preparation that can cushion the inevitable shocks in the transitioning between the several states of the "same" organization required in MARTA-like projects is discussed in the study.

5. The next case illustrates MARTA efforts to be mangerially innovative in doing its work, as well as in choosing what work needs to be done. " Developing an Arbitration Process for Resolving Contract Disputes " discusses why and how MARTA sought to innovate procedures associated with a ti c kl i s issue that often consumes large chunks of management time and energies in transit properties.

6. Finally, MARTA also gave attention to functions--or related sets of activi ties--that are not heavily emphasized in some public urban transportation operations. " Marketing in MARTA " focuses on why and how MARTA sought to bring the Authority's several "products" to the attention of several specific publics. The marketing function has received some recent attention from public-sector agencies. The case describes some major individual and organizational issues that tend to be triggered by efforts to find a comfortable place for such a public-sector function.

- CASE STUDY I

ASSESSING ELECTORAL DEFEAT:

NEW DIRECTIONS AND VALUES FOR MARTA

Timothy A. Almy

William Bartley Hildreth

Robert T. Golembiewski

Assessing Electoral Defeat:

New Directions and Values for f^RTA

The morning of November 6, 1968 saw the length was at stake. The estimated cost of Metropolitan Atlanta Rapid Transit Authority the project was calculated to be $993 facing a deadly-serious question: Could the million, including interest payments. The Authority survive? Voters on the previous project would service Atlanta and two coun- day resoundingly defeated a referendum ties, Fulton and DeKalb. Long-range plans, important to MARTA. At issue was a bond however, anticipated service to three other proposal which would have provided the money metro counties — Gwinnett, Clayton, and needed for advanced engineering, land Cobb. The MARTA proposal called for rapid acquisition, and construction of the first transit to some thirty stations; and park- phase of rapid rail in Atlanta. The defeat and-ride stations would be built in outlying ended MARTA 's immediate hopes of transition- areas, while feeder buses would complement ing from a planning and coordinating agency the fixed-rail system. The MARTA plan to an operating rapid-transit system. remained, nonetheless, essentially a rapid- rail proposal. Initiation of service was MARTA being unsure of its own survival predicted for December 1978. was no new thing, however, since from its creation there were no assurances that rapid Did the public support these transit rail would ever become a reality in Atlanta. plans? A 1965 referendum revealed public Although the Georgia State Legislature passed commitment to rapid transit, to be sure, but the MARTA Act in March 1965, the establishment that commitment was largely conceptual and of the Authority was contingent upon voter symbolic. Public support for the general- approval in the metro-Atlanta area. In ized concept of rapid transit was easy for November 1965, local referenda ratifying the Authority to gain. The referendum in participation in the Authority succeeded in 1968 challenged this generalized support to four of five metro counties. This approval put up the cash for specific fixed-rail provided local governments with the constitu- routes with an enormous price tag. Atlanta- tional authority to contribute city or county area voters proved unready to reinforce their revenues to MARTA for rapid transit planning. symbolic support of rapid transit with the Even so, local participation in the funding required material commitment. of detailed engineering and construction programs would require additional referenda The defeat in November 1968 deal MARTA in each participating jurisdiction. So the its first significant failure. But that 1968 referendum defeat did not change MARTA 's failure became an opportunity for the basic condition but simply increased the Authority to contemplate its mistakes of uncertainty of its survival. the past and to consider alternatives for the future. This case focuses on MARTA during the transition period, 1968-1971, which culmin- ated in a successful referendum in November Dismayed at Losing and 1971 and propelled the embryonic Authority Used to Winning into complex engineering and construction projects. So this case provides perspective The election loss was an especial blow on how MARTA turned the 1968 defeat into to the efforts of the "downtown establish- success three years later. Three major ment" that had strongly supported the sections introduce major features of this referendum in the belief that a rapid rail critical turnaround. First, the case system in downtown Atlanta would be good for briefly reviews the 1968 Referendum. the city. The rail system, they thought, Second, attention gets directed at MARTA' would enhance the viability of the downtown examination and assessment of the reasons areas which in most other major cities were for its failure. Third, the new emphases decaying. A modern mass transit system and directions chosen by MARTA for its 1971 would provide an impetus to development and referendum plan will be highlighted. assure the continuance of the central city's retail and conmercial dominance. It was imperative to the merchants and retailers The Referendum of 1968 that the rapid transit plan get electoral support. The plan presented to the Atlanta voters in November 1968 was complex. A The 1968 defeat was dismaying, and four-corridor, fixed rail, rapid transit threatened the reputation of "progressive" system of slightly over forty miles in Atlanta, whose business and commercial " ;

interests had grown accustomed to successs the future of rapid transit in Atlanta. in convicing Atlantans of the need for change Limited by time and money, however, the and progress. That confidence convinced Authority had no alternative plans ready local civic leaders that rapid transit would at the time. be as successful as other "progressive" proposals backed by the downtowners. In the The defeat was clear-cut and indicated area of civil rights, as an illustration, serious problems ahead. Less than forty- the local Chamber of Conmerce referred to five per cent of the voters supported the -- Atlanta as "The City Too Busy To Hate" plan for financing the system. Some racial tensions and violence were counter- analysts noted after the election that the productive to good business. Normally level of opposition was not nearly as conservative Southern business interests important as the significant apathy that thus supported social and political policies Atlanta voters displayed about the transit progressive for the day and locus. A issue. This apathy was reflected in the buoyancy also characterized Atlanta's life fact that less than fifty per cent of those more generally. In 1964, for example. Mayor Atlantans voting in 1968 for President of Ivan Allen announced that local interests the U.S. completed their ballots and voted "were going to build a stadium on land we on the last measure on the ballot, the don't own with money we don't have for a team rapid transit referendum. The post-election we don't have." Soon, three major league efforts of MARTA and its supporters, there- professional teams were playing in that fore, had to focus on remedying apathy as stadium. much as opposition to MARTA.

"Progressive Atlanta" rested on a Clearly the "downtowners" had failed coalition of conservative whites and liberal to sell 1968 transit plans to area voters, blacks that had become the dominant political but the individuals who had been the major force in local politics. Since each group backers of the rapid transit concept reacted had become accustomed to the other's support, to the defeat with a commitment to continue. the business community had expected the black Their efforts in the several months after leadership to support rapid transit. the elections were centered on re-grouping and analyzing "what went wrong" in the The voters' rejection of the 1968 campaign. MARTA Board Chairman Rich referendum was shattering to the civic leaders reflected the common attitude in reflecting who had labored for the passage of the bond on the loss in a letter to former Governor issue. Particularly painful was the over- Carl Sanders, an advocate of the referendum. whelming rejection of MARTA by the black Rich mused that "in politics neijther defeat voters. For example, this frustration was nor vj_ctory is permanent . . . /£nd/ MARTA evident in a post-election letter from /wilV continue to work for a solution to Alexander Smith, a member of the Board of the transportation problem in Atlanta." Directors of the Chamber of Commerce, to Chairman of the MARTA Board Richard Rich, an important business leader in Atlanta. Smith The Post-Mortem: Inquiring reviewed the referendum failure and seemed into the Loss to speak for the Atlanta power structure. Smith outlined several changes needed the The electoral post-mortem sought to be next-time-around --expanding the MARTA Board, as open and critical as possible. The MARTA hiring a new public relations firm, changing Board of Directors sought explanations for the MARTA system to fit social realities, the defeat from close supporters as well as rethinking the finance plans, and so on. from opponents. These evaluations isolated Smith concluded that "none of us should be the following contributing factors: ashamed of losing . . . our only problem is we are simply used to winning . 0 technical disagreements over a fixed-rail versus a balanced The official MARTA response to the bus/rail system, in part resulting election loss indicated disappointment, but from the fact that a major transit not surprise. MARTA' s press release of study for Atlanta was not com- November 6 said "the people have spoken and pleted before election time, as they have made it very clear that many of antici pated; them are not sympathetic to the plan that MARTA has put together, and that this Board 0 incomplete public education thinks would be the key to the solution of program on the advantages of Atlanta's traffic problems." The news rapid transit for Atlanta; release went on to warn the citizenry that

"when the traffic doubles in Atlanta . . . 0 little visible political support ." we will no longer have a viable city. . . from local elected officials, and MARTA promised to explore alternatives for opposition from Governor Lester Maddox

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0 confusion about alternative objectives for the near-future. These rapid transit systems avail- objectives would involve both political able to Atlanta; and technical changes for MARTA, and sought a new "political respectability" by learning 0 opposition by leaders of the from the mistakes of 1968. The Board looked black conrnunity; to the detailed reassessment period to give substance to these new objectives, which 0 an unacceptable financial plan, were summarized in a 1969 in-house memoran- relying solely on the property dum having five major emphases: tax to repay bonded indebtedness; 1. Legislative: The MARTA Board must be made more representative of the 0 uncertainty of federal funds community, moving away from the to supplement local money; image of a downtown interest to a city-wide and representative body. 0 the placement of the MARTA bond question last on a ballot 2. Citizens Advisory Committee: MARTA already containing over one should establish an advisory com- hundred other referendum ques- mittee of prominent citizens of tions; both races to foster the acceptance of a transit system. 0 MARTA' s image as being techni- The advisory conmittee would help cally-oriented and not con- the Authority to redesign the system, cerned with social concerns, and could enlist the support of especially relating to blacks; community groups to sell the system and to the voters.

0 the proposed fixed rail system 3. Financial: MARTA must seek alter- did not allow flexible service natives to the property tax to to suburban and poor areas of finance the system. Detailed cost the region. estimates of the system must be prepared, and contracts with These were comprehensively devastating conclu- participating local governments sions. Some critics suggested that MARTA' should specify the amount and method election failure was largely self-inflicted, of financing the cost-shares of that MARTA was not a socially and politically specific local governments. responsive public agency, that it had presented a confused plan to area voters. 4. Revised System of Rapid Transit: MARTA should adopt a system that is MARTA staff and Board were aware that_ compatible with the needs of the future success at the polls would depend, in area, with emphasis on bus service large part, on the quality of their assess- having special relevance for the ment of the referendum failure. This poor and blacks as well as a rapid- reassessment would necessarily take several rail component linking suburbs and months. Before the initiation of this central city. lengthy process, however, the Board responded to inmediate pressures and identified several 5. A vigorous, well -organized campaign opportunities for early change. must be conducted by supporters of rapid transit that would not repeat the mistakes of last year. The Pressures for Change These recommendations for MARTA 's agenda The MARTA Board quickly responded to two were accepted by the Board with little hesita- major sources of pressure to alter its tion. An observer recalls that the major approach to planning, financing, and cam- concern of the MARTA staff was the poor image paigning — courting the black comnunity and of the Authority in the connunity -- an image local elected officials, who had been of being remote, technical, and unresponsive. obviously and perhaps deliberately neglected Another participant raised a different but or at least taken for granted prior to the related issue. One prominent Board member 1968 election. Rectifying those oversights commented that the success of MARTA was now occupied a number of executive meetings of very much dependent upon the support of the the Board of Directors held in the two months black corrmunity "a community unfortunately immediately following the election. After ignored in the last referendum, and a popula- soliciting input from leaders of the Atlanta tion without any representatives in MARTA." black comnunity and from elected officials, the MARTA Board tentatively settled upon s .

MARTA Reexamines Itself a comprehensive plan, which eventually was endorsed by the Chamber of Commerce in These and other concerns absorbed MARTA' August 1961 energies during a year-long reappraisal that would significantly change the Authority. The 1961 plan did not stimulate con- Following its failure at the polls, the struction of rapid transit, but it did Authority determined to change in directions encourage the establishment of the Inter- that would insure success at the next referen- governmental Rapid Transit Steering Comnittee, dum. Particular attention was devoted to composed of elected officials from throughout planning processes, financing, and campaign the metro area. It seemed to many that the strategy. Each emphasis will be reviewed in Chamber and ARMPC had successfully trans- the next three major sections. ferred their interests in rapid transit to a larger group of governmental leaders, a critical element in successful planning. Transportation Planning Assessed Not all area officials supported these MARTA was criticized by supporters and regional planning efforts. William Hartsfield, opponents alike for not providing mechanisms the mayor of Atlanta, opposed the comprehensive for the involvement of important groups in transit plan endorsed by the Chamber and their planning. Three groups in Atlanta were drafted by ARMPC. Some commentators noted especially critical to the success of the that Mayor Hartsfield was highly suspicious of MARTA referendum: area transportation plan- governmental organizations which might dilute ners, local elected officials, and non- the power of the central city. Whatever the political community leadership, especially case, Hartsfield did not accept the thesis that blacks. At the time of the 1968 election, no regional planning and effort were essential unified agreement existed among metro- for a successful transit plan. Hartsfield's transportation planners that the ["lARTA plan influence was short-lived because he could not was technically appropriate. Additionally, succeed himself in office. His successor was there were charges by opponents that MARTA Ivan Allen, the stimulant behind the joint had acted like a "super-government" and Chamber-ARMPC planning effort. ignored the wishes of elected officials, who claimed that they had been left out of the The next few years witnessed a series of planning process. Finally, the vote indicated planning efforts aimed at reassessing the that the resistance by black community leaders earlier Chamber-ARMPC plans, but major barriers to the referendum -- which was influenced by a to linking planning and construction still perceived exclusion from the planning process existed. Most of these new planning efforts -- had been instrumental in causing MARTA's were organized and managed by ARMPC, acting defeat. in behalf of the local governments in the area. These governments were forbidden by In sum, the transportation planning state law to expend any local money directly process stereophonical ly failed in one of its on transportation. ARMPC was a general plan- purposes: to develop the broad base of sup- ning agency which could spend money for port necessary for success at the polls. planning in all areas, including transit, but it could not spend money on construction. In A brief history of transit planning in transportation, the Atlanta Area Transporta- Atlanta provides detailed perspective on tion Study (AATS) performed that function. MARTA's failure to develop adequate support But ARMPC, AATS, and later MARTA often had from regional transportation planners, and different interests, on which greater detail also illustrates broader failure to provide will be provided later. mechanisms for involving important groups in WRTA planning. Eliminating this legal prohibition against local governments' spending money on The 1968 plan was the product of a long transportation became the focal point of relationship between the Atlanta Regional Chamber of Commerce activity in 1964. A new Metropolitan Planning Commission (ARMPC) and Chamber-inspired group, "A Rapid Transit Atlanta's business leadership. In 1960, Ivan Committee of 100," was formed to channel Allen, President of the Atlanta Chamber of private money into a lobbying campaign to Commerce, established contact with ARMPC soon change the Georgia Constitution to accomplish after its establishment to form an alliance this result. In November 1964, voters in the between government and business to plan a Atlanta area approved a constitutional amend- comprehensive rapid transit plan for the ment which allowed such local expenditures; region. The Chamber earlier had established and the State Legislature in 1965 approved a group called the Rapid Transit Steering the creation of MARTA, which would be Committee, of which Richard Rich -- later financed by local government contributions Chairman of MARTA -- was the chairman. ARMPC and could get into construction. and the Steering Committee worked to develop

I- 4 The nevy Authority suffered because of its This lack of support by the important small size and inexperience. Since its staff and influential Chamber of Commerce led the was too small to carry out regional transpor- Authority to seek outside confirmation of tation planning, MARTA turned over this its plan. The firm of Alan M. Voorhees responsibility to the most likely group, was hired to conduct a study of the rail ARMPC. This was reasonable. The planners in system and to make a policy recommendation ARMPC and its Executive Director, Glenn to the Board. Voorhees' services were paid, Bennett, had been instrumental in getting the in part, out of a federal grant to MARTA. MARTA Act passed through the state legisla- Additional funds were provided by the State ture. In addition, ARMPC was the region's Highway Department. The study was to be duly-constituted planning agency. MARTA was coordinated by the Atlanta Area Transporta- not. tion Study (AATS).

MARTA' s next concerns essentially The Voorhees report was expected in involved design and engineering. ARMPC and October 1968, one month before the proposed MARTA hired a consortium of engineering referendum. MARTA officials hoped that the -- consultants Parsons-Brinckerhoff , Tudor, report would support the PBTB plan. In -- Bechtel, or PBTB who would prepare prelim- turn, a favorable report might reduce uncer- inary engineering designs for the system. tainty about the technical features of the This technical study was to last for at least proposal; and it also might convince the one year and -- significant in later criti- Chamber of Conmerce to actively support the cisms -- PBTB was not required by either 1968 referendum. ARMPC or f-lARTA to consult elected officials on the plans they were developing. Instead, MARTA knew, however, that it had to gain PBTB was to prepare the technical report, the support of other planning agencies before while ARMPC and MARTA would later solicit it could approach the referendum with confi- reactions from local governmental officials dence. The Atlanta Area Transportation Study and civic leaders. (AATS) was one of these groups. AATS was largely a paper organization founded by the During the first year of planning, State Highway Department to create long-range neither MARTA nor ARMPC saw the need for local traffic projections for metro-Atlanta. MARTA involvement in planning. Some critics of the had worked infrequently with AATS in 1966 and 1968 MARTA referendum felt that this behavior 1967, as in using its traffic projections in indicated secrecy and avoidance. MARTA and developing the PBTB plan. But AATS had not ARMPC believed, however, that engineers and been a party to the development of the PBTB planners were able to go about their business plan. without much political interference and that planning was more efficiently managed. The role of AATS in MARTA activities was to change drastically in 1968. New federal The lack of civic and governmental guidelines mandated that federal construction involvement probably encouraged opposition to funds would not be available until the the technical report when it was finished, but Atlanta area had adopted a "comprehensive it is only certain that the report had rough- transportation policy." AATS was a state- going. PBTB presented its designs to ARMPC in designated transportation policy group, and August 1967. In September, ARMPC passed the any "comprehensive" plan needed its involve- designs to the MARTA Board which soon tenta- ment and support. Although the agency tively accepted the PBTB plan. Even before charged with that responsibility, AATS simply the MARTA Board approved the PBTB-ARMPC plan, did not provide that intergovernmental however, critics pointed out possible flaws. planning. One vocal critic was the president of the Atlanta Transit System, Robert Soninerville. No super agency coordinated the efforts Somnerville criticized the total reliance of the several transit-related agencies upon fixed rail, and argued instead for an operating in Atlanta, then, and MARTA recog- integrated system capitalizing upon the nized the seriousness of this condition. flexibility provided by buses. The Chamber of Alan Voorhees was asked by MARTA to include Corimerce's Transit Committee agreed that the in the AATS study an evaluation of the Sommerville plan had attractive features, and region's comprehensive planning abilities the Chamber began a study of its feasibility. in his report. That additional request -- However, MARTA remained unconvinced. It unknown at the time to MARTA -- would signif- rejected Sonmerville's recommendations and, icantly delay the final report. MARTA went indirectly, the Chamber's. Nonetheless, into the election not knowing the results of MARTA requested Chamber endorsement of the either the technical study, or Voorhees' MARTA fixed- rail plan. The Chamber questioned recommendations about comprehensive transit the complete reliance upon fixed rail, and did planning. not endorse the MARTA plan.

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What is the bottom-line concerning this wrongly, was interpreted by many civic and planning process? MARTA had accepted a rapid elected officials as "high-handedness and rail plan from ARMPC, which had contracted for isolation." With few exceptions, local the plan with PBTB. During the preparation of officials did not feel any sense of "owner- the transit prospectus, neither PBTB nor ARMPC ship and involvement" in the plan. Although had regularly involved local governmental local officials had many opportunities to officials, the Charter of Commerce, or AATS in request the Board to provide information, their deliberations. After the plan was com- consequently, they often chose not to do so. pleted, federal directives appeared that Local officials had many reservations about required "comprehensive, regional planning," the public's willingness to support a system which ARMPC, obviously, had not carried out. with such a big price tag, so they chose not Therefore, the MARTA referendum proposal to get involved. Disregarding the inter- suffered from a major liability when it came pretations of motives, all sides agreed to getting a funding cormitment from the after the 1968 election that MARTA erred in federal government. MARTA had not been able a big way in not pushing involvement in the to comply with the federal requirement prior planning process. to the 1968 election, because of AATS's inability to serve adequately as a comprehen- The erosion of support damaged MARTA's sive planning agency. Indeed, MARTA was still campaign effort. MARTA had not gained awaiting the Voorhees report which, in fact, political support before the election that was not completed until April 1969. More might have been influential in the campaign importantly, MARTA had not received the process. Its remaining prominent supporters unqualified support of other relevant transit- were members of an increasingly-reluctant planning agencies. Chamber and civic-business coimunity, who found themselves conducting a political If MARTA's failure to comprehensively plan campaign without the support of the politi- was major, its failure to gain the support of cal leadership in Atlanta. The lack of the political leaders of the City of Atlanta, political support also exposed MARTA to Fulton and DeKalb counties was fatal. By the charges that rapid transit mainly served time of the 1968 election, few political the interests of the business community, leaders in the metro-area were willing to the only visible advocates of the referendum. "jump on the MARTA bandwagon." In addition to the transit planning This lack of support has several explana- groups and the political community, the tions, the most powerful of which inhere in third influential party in the defeat of the basic philosophy of the MARTA Board, and the referendum was the weak support of the the attendant values reflected in the planning community leadership in Atlanta. The process. Specifically, the MARTA Board was result seemed to have a clear cause: very meant to be non-political, and determinedly little neighborhood and community involve- acted that way. Revealingly, no member of ment in the development of the rapid rail the Board could be an officeholder. This was design. an effort co keep the Authority "above" as wel 1 as "out of pol itics. This generalization holds especially in the case of MARTA's failure to gain the Moreover, MARTA's civic-business support support of the black leadership for the also was shaken. The MARTA Board was composed referendum. Black leaders had made many of males -- predominantly white, upper-middle efforts to have an impact on the design of class -- who were to act in the best interests the rail system, but they encountered the of the whole cormiunity. Close working rela- same obstacles facing political leaders. tionships between the Board and the civic- In the year before the referendum, the business conmunity would inevitably develop Atlanta Summit Leadership Conference (ASLC) because of their similar values and outlooks, had continually warned the MARTA Board and it was believed. MARTA's mode of planning General Manager that the black community hindered that, or at least cramped the fullest would not support a system that failed to development of that commonality. As the adequately serve poorer neighborhoods. In planning process evolved in 1967 and early fact, several weeks before the election, 1968, the civic-business leadership in Atlanta the ASLC issued a press release urging all and DeKalb County gradually became alienated Atlanta blacks to vote against the bond from MARTA. The planning process was essen- issue. In response, MARTA's Public Inform- tially technical; and the MARTA Board prided ation Office organized two meetings in itself on its ability to keep political con- predominantly-black neighborhoods to listen siderations out of transit deliberations. As to the concerns of residents. Critics the PBTB engineers were preparing their plans claimed that these forums were tokens, for routes, stations and mode of transport, empty symbols of concern intended to consequently, the Board did not seek out camouflage the reality that engineering local officials. This behavior, rightly or and financial plans were set. In any case. 1-6 Atlanta blacks overwhelmingly rejected the the MARTA system. Several financial referendum. issues were identified: federal commitment; state involvement; apportioning of These details of MARTA's post-election local government debt; bond type; source assessment revealed several important short- of local government revenue for debt comings in its transit planning. Certainly, retirement; and total system cost. Each the impression existed among MARTA's relevant aspect was evaluated by MARTA to determine publics that the Authority had operated if the 1968 arrangements would need to be secretly and avoided public input. The changed to insure future success at the mandate received by PBTB from both MARTA and polls. ARMPC contributed to that image. The "no- involvement" philosophy precluded public and In mid-1968 MARTA transit planners elected officials and civic leaders from did not have any definite commitment from actively participating in the design of the the U.S. Department of Transportation for system. The final system also neglected federal funds. Although the Urban Mass significant realities of the politics of Transportation Act of 1964 authorized the Atlanta in 1968, primary among them being the DOT to pay up to 66 per cent of the cost rapid dissolution of the old white leadership of new mass transit facilities, the Atlanta and the emergence of a new black leadership area was not guaranteed any specific amount with burgeoning authority and influence. In of federal dollars. Moreover, the failure addition, the evaluation highlighted the by ARMPC and MARTA to provide evidence that lack of intergovernmental coordination in the their transit plan met the criteria of preparation of the rapid rail design. This "comprehensive, regional planning" did not failure was critical in the inability of place them in a favorable position. The MARTA to secure federal conmitments for inability in the campaign to show specific engineering and construction, even if the dollar contributions from the federal 1968 referendum had passed. The other impor- government worked against MARTA, according tant learning from the assessment of the to post-election analyses. MARTA resorted electoral failure related to the image of the to a conservative guess that the federal Board. The Board's carefully-developed image share of the project would approximate -- detached, aloof and non-political — did 40 per cent. not generate positive responses from ordinary citizens. An awareness was evident in the The state's contribution, however, was post-election evaluations that the composi- well established. The state had passed a tion of the Board should begin to reflect the constitutional amendment in 1965 allowing political and social realities of the region. the legislature to pay up to 10 per cent of Finally, the post-mortem indicated that a new mass transit projects. MARTA expected viable, credible public advisory system was the full amount from the state. essential. Each of these concerns would compel MARTA to make some significant changes The financial prospectus thus provided in its decision-making style. that local governments would pay approximately one-half the total costs. The original transit plan called for a system Financial Reappraisal: Who Pays to be built in Atlanta and five metro and How ? counties. In June 1965, a referendum to participate in MARTA passed in four of The failure to capture the unqualified these five counties. Two of the four support of elected officials, transit experts, counties, Clayton and Gwinnett, were subse- and black leaders no doubt influenced voters, quently dropped out of the plan. Atlanta but opponents of the referendum focused on and the counties of Fulton and DeKalb were the financial aspects of the 1968 plan. the remaining three jurisdictions voting in Three points stood out. First, the reliance the 1968 referendum. The local government on the property tax to pay the local govern- share of the system's cost -- $377 million - ments' debt obligations was critical. Second, would be apportioned between the City and the failure of MARTA to have a definite the two counties. financial commitment from the federal government for its share of the project attracted How were the costs to be allocated? much adverse publicity. Third, the financial MARTA planners proposed to the local plan of the system was very complex and not governments that the costs be related to easily understood by the electorate. The benefits. Factors proposed to the partici- opponents did not focus upon those complex pants included: intensity of system use; issues, dwelling instead on the more emotional capacity to pay; economic benefit; and issue of heavy property taxes. amount of system located in each jurisdiction. Each local jurisdiction would con- A clearer understanding of these campaign tract separately with MARTA for a definite charges can be provided by brief discussion of sum of money that would be paid to the

1-7 Authority, following a detailed schedule of lesser importance. Local governmental payments over the several decades of indebted- officials expressed some discontent with ness. Most local leaders felt that this the apportioning of costs; and some diffi- openness of the MARTA plan was a positive culties developed in negotiating the four feature. Local governments would determine components of the formula. These disagree- the manner in which they would pay their ments delayed the signing of contracts indebtedness. until October 5, the last date for MARTA to get its referendum on the ballot. MARTA also had to decide about the type of bond to be issued. Two alternatives were The lessons were well -learned in the available. The participating local govern- 1968 electoral loss. MARTA sought to ments, by law, could issue general obligation secure legislation in the Georgia General bonds in their own names to meet MARTA Assembly which would provide funding obligations. Another alternative would be alternatives for Atlanta and the partici- that local jurisdictions would contract to pating counties, given widespread concern pay the principal, interest and charges on about reliance on the property tax. In bonds that MARTA would issue. Each of the addition, a definite federal promise for two proposals had advantages and drawbacks, funding of the new system was seen as which need not be detailed here. The agree- necessary for a successful future refer- ment reached by the Authority with the local endum. governments provided that MARTA issue bonds on the strength of the local government's contracts to pay a certain sum of money each Campaign Strategy in Review year. In addition to concerns about the These funding arrangements hung by a transit planning process and the financial very delicate thread, for Georgia law was plan, the shortness of the 1968 campaign very restrictive as to revenue sources avail- period was criticized. The failure of the able to cities and counties. Proposals for referendum surely indicated that the politi- local-option sales taxes had been defeated in cal campaign had not educated voters, with the 1968 legislature, for example. Many MARTA's own public information program elected officials were concerned, therefore, being especially culpable. That is, no that the only monies to meet bond obligations wonder that a three-week campaign failed to would come from ad-valorem or property taxes. accomplish what MARTA had not been able to The reliance upon the property tax was a do in two years. major campaign issue, and important in the defeat of the 1968 referendum. MARTA offi- A review of MARTA's public information cials concluded that alternative sources of efforts provides useful perspective on the local government taxes would have to be made 1968 election. MARTA in-house discussions avai lable. in late 1968 centered upon five campaign components: MARTA's public information Although the total system cost was (PI) program; the political campaign; the included on the 1968 ballot, the referendum length of the campaign; group opposition; was not a bond referendum in the strict sense. and leadership support. MARTA had acknowl- Instead, the passage of the referendum would edged the importance of public information constitute an approval of the contractual as an educational tool in 1966 when it arrangements between the local governments established an office of Public Information, and MARTA. The ballot showed the total price whose activities centered around publishing of the bond issue: principal, interest, and a newsletter, "Rapid Transit Progress." charges. Although the principal amounted to The newsletter was originally mailed to 5)377,600,000, the total contractual obligation local chambers of commerce, businessmen, was $933 million. MARTA officials applauded local clubs, corporations and elected this openness because it indicated the true officials. At the height of its mailing — obligation of the participating governments. the week prior to the referendum -- the Critics of the referendum pointed to this circulation was 15,000 copies. The lack of high cost, and post-election commentaries mass-mailing hindered educational efforts. seemed to indicate that the high price-tag Post-referendum discussions also pointed influenced voters. out the biases in the mailing lists. Almost no leaders in the black community received MARTA's financial critique surfaced the publication. several major concerns, but two were especially central. The reliance upon the PI also provided a speaker's bureau for property tax was viewed by most supporters as organizations who wanted to learn more the major weakness of the financial plan, about MARTA and rapid transit in Atlanta, followed closely by the unknown federal but that effort limped in a crucial particu- dollar-commitment. Other issues were of lar. According to MARTA figures, over

1-8 s

1,000 speeches were delivered to groups in The short campaign period was due to the two-year period preceding the election. two factors. First, Richard Rich, the A review of the groups requesting the Board Chairman, delayed officially request- speakers showed that MARTA had not provided ing ballot space until the Board had recom- much breadth to its speakers' program. puted the entire system cost to include an Most of the speeches were to civic clubs in estimated higher inflation rate. The Board the region's white communities, and only at raised the estimated inflation rate -- from the very end of the political campaign did PI 3 to 7 per cent 7- so as to provide voters conduct public forums in the black communi- with the best-available information. This ties of Atlanta. caution was prompted by BART's experience in San Francisco, which grossly underesti- Other MARTA PI efforts also had awkward mated total system cost. features even as they succeeded. The Author- ity provided an exhibit at the Southeastern Second, major delay resulted from the Fair in Atlanta in 1968. A rapid transit car consequent need to renegotiate the contracts was on display, and MARTA estimated that over with each participating local government. a half-million people walked through it. The recomputation for increased inflation Unfortunately, the car was not the type that raised the costs of the system by almost MARTA proposed using in its own system. The $125 million. The cooperating local govern- point was brought out several times in the ments had to approve the new payment sched- campaign. Similarly, MARTA sponsored a trip ules before the MARTA Board could authorize by interested civic leaders to Toronto and the election. These negotiations took Montreal to view rapid transit systems. Each longer than expected. participant paid his own way, and about ninety businessmen took advantage of the The decision to go ahead with the elec- opportunity. Very few black leaders were tion, given the short campaign period, was included on this trip, however, a point debated by the Board. Several Board members raised by the black leadership during the wanted to wait until after the November campaign. general elections, and have a special election. The special election, it was thought, Timing also limited the impact of other would focus public attention on rapid transit, PI efforts. As part of MARTA' s legal respons- and would allow a longer educational period. ibility under the charter, public hearings Other Board members disagreed. They felt had to be conducted by the PI Office before that a longer campaign period and a special the referendum. Fourteen hearings were con- election would only give MARTA opponents ducted in the three jurisdictions, with a more time to organize. Advocates of placing total attendance of 325. Two were held in the issue on the November 1968 ballot also the black communities, and provided the argued that the increased turnout due to the opportunity for black residents to voice presidential election would be in MARTA' criticisms about the ["lARTA planning process, favor. MARTA was unaware at that time that which they claimed excluded their inputs. In their issue would be placed last on the principle, these forums were to have been ballot containing 118 other measures. That held to solicit public inputs into the transit placement resulted because the official filing plan. The lateness of the hearings precluded of the referendum was not received by the this, and MARTA was criticized for not taking Georgia Secretary of State until the last citizen inputs seriously. filing day.

In general, MARTA before the election The abbreviated campaign was managed by felt that its public information program was two firms -- Helen Bui lard and Associates, successful. Many brochures had been distri- and Gerald Rafshoon and Associates. Bullard buted and speeches delivered outlining "what and Associates were hired by "Rapid Transit MARTA intended to do" in the region. MARTA Now" to manage the overall campaign, while officials had not grasped the fact that local Rafshoon developed the media advertising civic and political leaders expected a differ- segment of the campaign. Bui lard's major ent approach, one that emphasized involvement. activities involved opening a campaign head- quarters in downtown Atlanta and distributing MARTA' s educational efforts should be rapid transit literature, including the distinguished from the actual political intendedly-wide distribution of a public campaign itself. MARTA was forbidden by educational brochure answering many questions state law to spend any money on the campaign, about MARTA. An estimated 200,000 copies so the supporters of the referendum organized were prepared, but because of the shortened a "Comnittee for Rapid Transit Now." This campaign these materials were not distributed Comnittee solicited $100,000 from downtown in any systematic fashion. Critics alleged retailers and merchants for public relations that most of the brochures were left on and media advertising, but its efforts were street corners in Atlanta and Decatur. hampered by the shortness of the campaign period -- three weeks. 1-9 Rafshoon was to conduct the media Atlanta -- and especially Jesse Hill, Jr. — campaign. Rafshoon 's concept -- which "Rapid had been opposed to MARTA since late Transit Now" approved -- sought to avoid any summer. Hill and others claimed that the discussion of "technical issues," such as planning process did not incorporate any routes, cost, technology. His perspective black concerns, and that the system was was that "rapid transit was packageable, like designed for the benefit of the downtown most products." The media campaign empha- merchants, as well as affluent suburbanites. sized the attractive and convenient nature of The neglect of a major bus component in the rapid rail cars. MARTA's plans was seen as deliberate neglect of blacks, who would be more dependent on Overall, the campaign may be best buses even as whites might profit more from characterized as having a take-it-or-leave-it the rail component. Hill also pointed out theme. For example, both Bui lard and Rafshoon to MARTA staff after the campaign that it argued against the Board detailing routes and was only in the last week prior to the station locations. The Board also was dis- election that a forum was even held in a couraged from considering some re-routing to black comnunity. black areas after criticism of the project by black leaders. The MARTA staff and Board Other issues were also important to the generally agreed with the campaign experts, black community -- paramountly, black employ- resisting any public efforts to modify the ment in MARTA, and black representation on system. This resistance probably enhanced the MARTA Board. The lack of both got much the image of the MARTA Board as being attention. Only one Board member was black. unresponsive to local community concerns. And only in the two-week period prior to the election did MARTA hire a black secretary and Although restricted from engaging in the community relations representative. After campaign, as such, MARTA was involved. the defeat, both of these staff members were MARTA's PI office was searching for appropri- dismissed by the Board because of a shortage ate ways "to sell the package." f'lARTA was of funds. urged by Bui lard and Rafshoon to take all available opportunities for free media exposure, which would not violate state law. MARTA During the Transition: Particularly important to Rafshoon was getting 1969-1971 MARTA on local television. Free air time was offered to MARTA by local radio-TV stations, In the interval between the 1968 and and it was accepted. Opponents then demanded 1971 referenda, MARTA struggled to demonstrably equal and free time under FCC regulations, and reject the earlier assumption that rapid they received immense publicity at no cost. transit would automatically gain voter approval The post-election concluded that MARTA's because of its intrinsic value. Three changes acceptance of free time was a serious mistake. reflect major shifts in MARTA emphases and directions. First, the Authority sought to Observers of the campaign defeat did not formally and informally involve citizens and uniformly conclude that its brevity contributed political leaders in the transit planning to the loss. Some observers felt that the process. Second, an attractive short-range short campaign really benefited MARTA, and that transportation improvement program evolved. a longer campaign would only have resulted in Third, MARTA developed a new approach to a more severe defeat. In any case, little financing the debt oblications of participat- organized opposition to the MARTA referendum ing local governments. developed. Much of the opposition emanated from one man -- Atlanta Alderman Everett -- Millican and one group the Metropolitan P ublic Involvement in MARTA Planning Atlanta Summit Leadership Conference, a black organization. Millican spent less than $9,000 MARTA activities in the two post-election in newspaper advertisements arguing against years focused on improving relationships with the MARTA plan. His opposition emphasized: citizen organizations and public officials, the failure to incorporate bus lines into the and especially by formalizing public involve- design; the lack of federal commitment; and ment. During the 1967-1968 planning period the lack of systematic planning, especially citizen input was informal and disparate. Prior the tardy Voorhees Report. Unfortunately for to a second campaign effort, citizen input was MARTA, its campaign did not answer these to occur in two ways: through the creation of challenges. a formal body, Citizens Transportation Advisory Committee (CTAC); and the use of meetings or Another source of opposition was The hearings by MARTA Community Relations staff with Metropolitan Atlanta Summit Leadership Con- neighborhood groups. gress, an offshoot of an important black organization -- the Atlanta Summit Leadership MARTA's intentions were motivated by the Conference, or ASLC. The black leadership in 1968 defeat as well as by federal guidelines which required comprehensive planning with

I- 10 substantial public input into transit plans, $135,475. Several Board members from Fulton but events in 1969 and 1970 were not favorable County thought that MARTA "ought to go into to major progress. In early January 1969, for hibernation," after which "bears come out a example, Richard Rich recommended to AATS that lot stronger than before." it establish a citizens advisory body that would assist in area-wide planning. This This lively debate between the MARTA recommendation was not quickly acted upon. Board and local government representatives The establishment of CTAC was not to occur did surface some festering issues. Roy until the end of the next year, 1970. More- Blount, Vice-Chai rman of the Board, said over, little formal or informal citizen that the Authority has had to "beg for every- involvement, public information or community thing that it has ever gotten from the local relations activities got launched during governments . . . local governments have 1969. Why? The MARTA operating budget had taken no responsibility for MARTA since we been slashed after the 1968 defeat to slightly were created.^' Another Board member, John over $125,000, and community involvement in Wilson, commented thatj'we /MARTA/ oug^ht to planning was difficult for a small staff of toss this hot potato /transportation/ back to five to achieve. Much of the year was devoted th^ose who have to face t^he responsibility to evaluating technical studies, such as the /the local governments V" The local govern- Voorhees Report. Many of these evaluations ments had some concerns of their own. Fulton were funded by UMTA grants to MARTA and ARMPC. County Commissioner Mitchell and Atlanta The major activity in planning was reassessing Alderman Farris both argued against any use and doing engineering designs on new routes, of the property tax to finance MARTA. Indeed, and PBTB operated on its own in this regard. the property tax caused the 1968 defeat, they added. Moreover, each of the delegations While ineffective in finding a vehicle also expressed disapproval of the ambiguity for citizen involvement, the Authority's of the contracts underlying the last referen- attention did turn to another important arena: dum. Delegates demanded that MARTA provide the area's public officials. The Authority specific details about total financial attempted to repair its political credibility obligations. Alderman Farris also criticized with elected officials. Political fence- MARTA for not heeding the advice of elected mending became of prime importance to MARTA officials that the 1968 campaign was too after its defeat. Soon after the election, rushed to allow local officials time to study representatives of local governments met with the design of the system. MARTA attendees MARTA officials in a series of meetings, remarked that the next referendum would be whose general tenor was reported by an fully coordinated with area officials. observer to be "strained," with MARTA seeking the support of "disgruntled and alienated" In general, the early meetings with local government officials while being limited local officials established certain expecta- in following-through. Some present at the tions for future relationships. MARTA was sessions remarked that many of the elected expected to be more open and solicitous of officials criticized MARTA's "too little, too local government concerns, to provide better late" approach to involving local governments coordination of transit plans with city and -- in 1968 planning decisions. In response, county plans. Local government officials MARTA Board members assured these officials who appointed the members of the Board of that some regularized pattern of involvement Directors -- were expected to provide support would be established in the future, somehow. to the programs eventually worked out by Consider that one major focus of discussion MARTA. Perhaps the character of the rela- between transit staff and local government tionship was best summed up by Roy Blount: leaders was the absence of coordination of MARTA's plans and projects with city and ... I can't see spending a great county plans. This coordination theme was to deal more time in our transit be repeated for the next eight or nine years, authority meetings, however well and is the subject of another case in this intended, unless we can get the series, MARTA and the City of Atlanta: The backing of the elected officials have appointed us to the job. Structuring of Intergovernmental Coordination . who The response by the General Manager was that coordination, "while desirable, was difficult The backing ought to be in the form to achieve" with such a small permanent staff. of a commitment that they recognize Originally, the proposed budget for the year that the MARTA Board has been after the referendum was just over $1 million. established by them, and that they The Board reduced that to $268,950 after the have every right and responsibil ity defeat. Even this amount was criticized by to tell us what is expected of us, Atlanta Alderman Milton Farris, who claimed so that when we produ ce they will that this expenditure was wasted until the understand that it is of their results of the Voorhees Report would be known. making as well as our own. Facing other local government resistance, the Board further reduced the requested amount to I-ll Political situations also developed working relationships with the Atlanta during the fall of 1969 that stimulated an black community. In November 1970, Morris increased concern for better liaison between Oil lard, a black, was hired as Director of the Authority and the black community. Community Relations. Atlanta held municipal elections and a new coalition of voters elected Sam Massell as The efforts of MARTA to push AATS to successor to Ivan Allen. Massell campaigned appoint an advisory committee were finally to attract black and white working-class successful in early June 1970. The Citizens voters. His anti -downtown campaign theme Transportation Advisory Committee (CTAC) was heralded an end to the white conservative/ created, with 60 members appointed by juris- black liberal coalition that had held power dictions cooperating in the MARTA planning in Atlanta for a considerable time. The effort. The MARTA Board applauded this move portents did not escape local observers. Thus and promised full support for the Committee. MARTA's former public relations firm made two The Authority was anxious to begin working specific recommendations to the Board: develop with the group to fulfill its federal a concerted public information program aimed requirements for citizen input, but Mayor at the black community; and show some commit- Massell was reluctant to fill the 23 posi- ment to hiring black staff as well as to tions allocated to the City. getting blacks on the Board. Massell 's resistance raised potential The MARTA Board took several important problems for MARTA's schedule. Board Chair- actions following the city election and the man Haverty spoke to Mayor Massell several subsequent resignation of Richard Rich from times in late 1970 to push the appointment the Board. His replacement was Jesse Hill, process along. Haverty was motivated by the Jr., a black insurance company president, who Board's concern that the referendum was less had been executive director of ASLC, and a than one year away, and the plan was already major critic of the MARTA planning process in in advanced stages. Citizen input was criti- 195&. Hill's appointment was made by cal at the earliest moment to give MARTA a Atlanta's outgoing mayor, Ivan Allen, who had comfortable lead on the desired three-month said after the 1968 referendum that he would campaign. Massell resisted these pressures. appoint a black, if given the opportunity. His main argument: he wanted to select individuals who would not act as rubber Moreover, new Board Chairman Rawson stamps for all MARTA actions. Additionally, Haverty urged his colleagues to request Massell was reported to have had some reserva- increased budgetary support from local tions about MARTA's commitment to citizen governments for the coniiiunity relations and participation. Nonetheless, by the end of public information programs that had been November the Mayor made his appointments. cut-back in late 1968. Relatedly, the Board of Directors passed a resolution asking AATS CTAC quickly encountered several to speed up the creation of a citizens' organizational problems which diluted its advisory board. This pressure was due, in effectiveness. The advisory committee held part, to the fact that MARTA did not qualify its first organizational meeting on December 5, for maximum federal grants for capital pro- 1970, but it was not aole to elect officers grams because of Atlanta's failure to establish until the end of January 1971 because a formal citizen advisory conriittees and to have quorum of appointees did not attend the first a regional transit plan. meeting. Even on the date in January when officers were elected, only 21 of 60 members MARTA also augmented its staff resources were present but the rules had been waived. in significant ways. One issue focused on the desirability of using internal resources for MARTA's schedule for transit planning public information and relations, or contract- also hindered the effectiveness of CTAC, and ing with an outside firm to do the Authority's provided no real opportunity for its input image-building. For several meetings, the into the financial plan. MARTA and local Board debated the pros and cons of this issue, government representatives had been nego- and decided to hire a Director of Public tiating for months over alternatives to the Information. The new Director would be a property tax. Finally, agreement was reached. member of the MARTA staff, answerable to the MARTA resolved the critical issue of local General Manager. Under the leadership of governmental financing in a meeting with area Jesse Hill and anticipating further delays by elected officials on January 7, 1971. This AATS in constituting an advisory committee, was a bare two weeks before CTAC would elect the Board also examined the usefulness of officers. MARTA sought the commitment of hiring a fulltime Community Relations Director. local leaders to insure the introduction and This position would complement the office of passage of needed legislation in the session Public Information, but would not get involved beginning that week. That schedule, however, in writing press releases, reports, and the all -but-precluded CTAC review. like. Hill conceived the role of Community Relations Director as one of establishing

1-12 The design process agreed to by MARTA and support a system that would not become PBTB also inadvertently diminished CTAC's operational for seven years, at best. involvement. MARTA had arranged with ARMPC MARTA' s second plan sought to blunt these and PBTB that the final plan for the system concerns with a short-term program that would be voted upon by the Board at its August would show early results. 1971 meeting. That meant the preliminary design had to be presented to the Board at its Consistent with the need for quick June meeting to allow modifications in the Improvements in public transit, MARTA design. Unfortunately for CTAC, MARTA staff planned to acquire the Atlanta Transit were not able to brief the corrmittee until the System (ATS). For a complete discussion of end of April on any of the major characteris- this acquisition process, read another case tics of the PBTB proposal. in this series, MARTA Acquires the Atlanta Transit System: 'Mho Assimilated Whom, and Members of CTAC were angered by what to What Degree? MARTA then applied to UMTA appeared to them to be duplicity on the part for $30 million to finance a $45 million of the Authority. One member consented to the short-term improvement program utilizing press that MARTA was no more interested in ATS as the base. MARTA' s short-range citizen opinions now than it was in 1968. improvements would approximately double the

MARTA answered this charge, and shifted the capacity of the bus system. Table 1 high- blame by suggesting the CTAC would have had lights the main areas of improvement. much longer to review designs if Mayor Massell had appointed the committee at the earliest The proposed improvements were many, opportunity. Massell did not respond to this each attempting to create new ridership for MARTA indictment. the bus system. A list of service changes documents the extensiveness of short-term Other efforts by the Authority, however, improvements: did successfully involve community groups in the planning process. The Authority's office 1. Eight new cross-town routes of Community Relations held a series of 13 designed to provide direct and public forums in May 1971. This provided an faster service between major opportunity for citizens to offer suggestions points in the metro area; for changes in preliminary designs, and the sessions were attended by an average of 45 to 2. Eight new radial routes and 50 residents. MARTA' s concern for black input seven radial route extensions was evident in that 4 of the 13 forums were designed to provide bus service held in black neighborhoods. to conmunities not served by ATS;

However well-intentioned, these public 3. Changes and revisions to 22 forums suffered from the same handicap as existing bus routes aimed at CTAC. Advanced engineering designs had to be improving travel times; provided to the Board by the first of June. Significant changes suggested by citizens 4. Six new rush-hour express services could not be incorporated into the PBTB plans designed to provide fast transit in such a short time. Critics of MARTA for downtown commuters; wondered why the public review stage was so short, and why the planning process could not 5. Upgrading service on 33 existing have allowed for more give-and-take between routes increasing service fre- citizens and planners. Again, the Authority quency; showed the record of its interest in citizen input stretching back to Rich's recommendation 6. Four hundred ninety new air con- in January 1969. According to MARTA spokes- ditioned buses which will increase men, it was the failure of other responsible the fleet to 866; agencies to establish citizen advisory committees quickly that was at fault. 7. One hundred and four passenger shelters at 80 major boarding areas; The Short-Term Improvements Program 8. Improvement of transit information A major flaw in MARTA' s 1968 position was services in the form of improved the massive fact that its program, even if telephone information service, a approved, would take many years to implement. redesigned schedule format, system The Authority's plan did call for a rapid rail maps and bus stop signs; system with feeder buses, but no proposals were offered which improved rapid transit in 9. A park-and-ride program directed the immediate future. Voters may have been toward accommodating rapid transit reluctant to pay increased property taxes to riders;

1-13 10. Enhanced mobility in the /black/ The decision concerning a finance neighborhood areas of Model scheme was invariable related to the short- Cities, Northwest Perry and run improvements program recommended by the Dixie Hill. Authority. For example, several Atlanta

TABLE 1

SHORT RANGE IMPROVEMENT PROGRAM

Purchase of ATS $12,958,100 Purchase 490 Buses 22,820,000 Other New Equipment 1,415,000 104 Bus Stop Shelters 260,000 Maintenance-Service Facilities 4,250,000 Park and Ride Lots 2,500,000

Professionalize Services 1 ,063,000

TOTAL $45,266,100

Several of these proposals were aimed directly leaders were willing to support the ^5% at convincing black residents that the MARTA sales tax proposed by suburban influential system was not downtown-oriented. These if, after a successful election, the recommendations for service to the black Authority would provide free bus transpor- neighborhoods resulted from a study performed tation. Mayor Sam Massell of Atlanta intro- for MARTA by Economic Opportunity Atlanta duced that idea at the eleventh hour. That (EOA), and included extensive interviews with idea sparked considerable debate among and potential transit-users. between the local representatives and MARTA officials, but was soon scotched when MARTA Generally, these proposals for short- General Counsel Stell Huie noted that the range improvements were designed to draw voter Authority was authorized to carry passengers attention away from the long-range, fixed- rail for fares, not for free. (For more back- system. The new philosophy at MARTA proposed ground on the fare issue, see another case that the transit plan had to be politically in this series, Mhat's Fair About Low acceptable. This acceptability, in sum, pro- Fare? ) Eventually, a compromise was vided immediate benefits to the community in reached, and local officials supported a exchange for its support at the polls and cash 3/4% sales tax along with a 15(t bus fare. registers. The length of commitment to the low fare was unsettled at that time, but eventually it became seven years. Financing the 1971 Referendum Plan The legal issue of getting authoriza- Commencing in early 1969, numerous tion for a sales tax increase was thorny. meetings were held by MARTA staff and Board State law was very restrictive in allowing members with local elected officials in the local governments discretion in revenue metro region. These formal and informal choices, and research concluded that enabling sessions eventually included 95 per cent of legislation was required. Approval was all the elected officials in the metro- obtained from all the local governments that governmental jurisdictions that would vote they would support the proposed legislation again on another MARTA referendum in 1971, when the bills were introduced in the General with especial attention going to the financing Assembly. of the rapid transit system. The Authority concluded from the comments of officials that The introduction of the needed enabling there was a difference of opinion between state legislation was delayed until the 1971 central city and suburban representatives. session of the Georgia legislature, for an Atlanta Mayor Sam Massell urged upon the group obvious reason. Governor Lester Maddox was the adoption of an income tax. Spokesmen for an opponent of MARTA, and had successfully the outlying communities believed that a sales vetoed much MARTA-related legislation in tax increase would be acceptable. Another 1968 and 1969. He was also a vocal opponent alternative envisioned the establishment of a of the 1971 referendum and urged its defeat. rapid transit district which would tax only Fortunately for the Authority, Maddox could those areas receiving direct benefits from the not succeed himself as Governor after 1970, system. 1-14 .

although he did successfully run for the The Campaign: Some office of Lieutenant Governor. And General Perspectives Maddox's successor -- Jinmy Carter -- had conmitted to support f^RTA. It was obvious to those charged with conducting the campaign in 1971 that sub- Even with Carter's support, the legisla- stantial changes in philosophy were needed. tive dynamics which eventually yielded a sales Two changes were paramount: a committee tax were both complex and chancy. Three major managing the campaign not identified with pieces of legislation were introduced, in the "downtown power structure" needed to be fact. Stripped of details, the final legisla- established, and an educational campaign tive package had two significant new features. acquainting area voters with the pros and First, although the state had agreed in the cons of rapid transit would be vital. original MARTA Act to pay 10 per cent of the total cost of the system. Governor Carter -- behind-the-scenes and successfully — argued Committee for Sensible Rapid Transit for a fundamental change in that particular. Carter believed that a sales tax collected in The lessons of 1968 were well-learned the MARTA region constituted a tax with a by MARTA. The political campaign of 1971 was state-wide basis, i.e., the sales taxes would conducted by the Conmittee for Sensible come from purchases there by Georgians from Rapid Transit. This was a politically active across the state, for whom Atlanta was a com- group of ten volunteers organized "away from mercial and entertainment magnet. MARTA was MARTA," but in fact selected by the MARTA eager for the support of Carter and accepted Board. Representation from both races was the loss of the state commitment. The final evident: two co-chairmen were selected, one financial plan did not include any direct black and one white. The group was conceived state contributions to the Authority, there- as a working group, rather than the group of fore, but Carter did suggest that the tax be prominent names associated with 1968's Rapid increased to 1% to compensate for the loss of Transit Now. Each of the eight other members the state contribution. HB 220, as amended, of the Committee were chosen because of reflected Carter's views. their political credibility in the various communities of Atlanta. Second, ex-Governor Lester Maddox -- serving as the newly-elected Lieutenant An aggressive political campaign also Governor and thus, ex officio , as President of required a full-time director. An experi- the Georgia Senate -- again impacted on MARTA. enced, campaign executive was loaned from Maddox held the entire MARTA legislative General Electric and served throughout the package as a hostage in committee, until campaign period with two paid secretaries. HB 220 was amended in two significant ways. The salaries of these three full-time people Thus the 1% sales tax was limited to 10 years, were paid out of general campaign funds after which time it would be reduced to ^5%; collected by a blue-ribbon task force of and the amendment also required that after 10 community leaders. years fare-box receipts would support one-half of the operating costs of the system, with the The major concerns of the 1971 Committee obvious goal of using much of the sales tax initially focused on fund-raising — a problem for capital investments in the system. that was less a matter of total amount than of sub- fund availability for specific pur- Even though changed in these two funda- poses. Solicitations were of two types, that mental ways, the MARTA legislation had bene- is. The first was for use by MARTA in its fitted from the unified support of local public educational program. The second was officials, which augured well for the referen- for the Committee to use for political dum. But Spring 1971 had yet to see any campaign purposes. The contributions to public commitment by the federal government to MARTA were tax deductible, but they could be finance the new MARTA plan. Opponents in 1968 used only for educational purposes, not pointed, with success, to the Authority's lack political ones. Consequently, a good deal of federal support for capital programs. How- of printed matter, billboard and bus adver- ever, as part of its short-term improvements tising, bumper stickers and lapel buttons program MARTA applied for an emergency grant were designed to be of strictly educational from UMTA, in the amount of $30 million. This nature, in the sense that the words "Vote would finance two-thirds of the short-range For" were not included in the messages. The improvements program planned by the Authority. far-smaller cache contributed to the Commit- The financial plan offered to the voters tee was spent to pay for radio and TV ads, assumed this level of federal support. In for renting the main campaign office, and fact, the federal cormiitment was announced for the salaries of the permanent staff. just four days before the referendum in November 1971 In addition, the Committee developed a large Speaker's Bureau. A Director was

1-15 appointed, again loaned by an Atlanta area was to create an understanding on the firm, whose major responsibility involved electorate's part of the need for rapid training numerous volunteers. Over 100 volun- transit. Subsequently, the campaign's teers were drawn from a variety of metro clubs advertising segment would motivate the and organizations. The speaking engagements voters to support the referendum. This were carefully monitored by the Director, and second segment would comprise the six weeks the material was packaged to represent the immediately prior to the election. official position of both MARTA and the Com- mittee. The post-referendum review of the The educational portion commenced with 1971 campaign indicated that the Speaker's a June 30 airing on all Atlanta TV stations Bureau was very effective in dispelling the of a thirty-minute show entitled "Rapid image that the Authority was out of touch with Transit: Who Needs It?" The film was civic and community organizations, or that the produced to highlight MARTA's transit system rapid transit plan was essentially the product -- its use of buses and trains. An explana- of downtown interests. tion of the financial plan was also included. This thirty-minute production was divided in The Conmittee staff also monitored refer- five portions: endum public relations. An orderly, controlled flow of information to the media and the public 0 Rapid Transit Who Needs It? was essential to the campaign. Three rules were adopted by the Committee that reflected 0 Rapid Transit How Does It Work? its concern with its image. First, the Commit- tee appointed a full-time press secretary who 0 Rapid Transit Who Does It Serve? was the only person authorized to issue press releases. This curtailed the practice of off- 0 Rapid Transit Who Pays For It? the-cuff statements to the media that could have damaged the campaign. Second, the Com- 0 Rapid Transit Who Rides It? mittee appointed a firm -- Wright, Jackson, Williams, Brown, and Stephens to serve as One short film was shown seven times each week public relations advisors in the black com- at 11 PM throughout the five-week period. munities. They worked with Rafshoon and Initial responses to the film were satisfying Associates as consultants. Third, the Com- to the Authority and to the Conmittee. mittee limited the number of people authorized to make public appearances on its behalf. The A Speaker's Bureau also carried the Executive Director and the Co-chairmen were "Message of MARTA" to the public. The the three individuals chosen. MARTA 's legal Speaker's Bureau enlisted the support of 100 counsel, Stell Huie, was chosen to answer individuals who underwent training for 10 questions on a day-to-day basis for MARTA, days on all aspects of rapid transit in especially questions that came from the press. Atlanta. Recruits were carefully drawn from These rules adopted by the Committee tightened community organizations in both the black the flow of reliable, accurate information to and white conmunity. Hundreds of speeches the media. These arrangements reduced the were made by these volunteers to groups much number of contradictory press releases and wider in variety than those addressed during public statements, and sought to insure that the 1968 campaign. the educational phase of the campaign had a consistent and coherent impact on the voter. Integrated with the educational program was an advertising campaign -- using radio, In general, then, the Committee for television, newspapers, bus cards, billboards, Sensible Rapid Transit provided the referendum and direct mailings. The advertising phase campaign with a group of politically-conscious adhered to the established strategy that volunteers. It provided a necessary on-going presented rapid transit in a straight^forward, link between MARTA and the campaign consultants. truthful and factual manner. Most of the The presence of the Committee indicated to commercials were developed from footage Atlantans that rapid transit was a bi-partisan, drawn from the film "Rapid Transit: Who bi-racial, progressive change that needed Needs It?" voter support. Coupled with the showing of the films, a survey of 700 potential voters was con- Educating and Motivating Voters ducted to test the usefulness of the films in encouraging voters to support the referen- The role of the Committee in educating dum. The survey turned up some results and motivating provides useful perspective on disturbing to the Authority. Again, apathy its operations. The duration of the political and disinterest were identified as major campaign was three months, August to November, elements to be attacked in the campaign. and its opening educational period lasted But this would be left to the advertising, approximately two months. Its primary thrust mass media element in the campaign.

1-16 :

The September survey of probable voters Per highlighted that the likely supporters of the For Against Cent referendum would be upper- and middle-class whites and blacks, and also that MARTA's supporters would have low turn-out rates. The Clayton County 3,300 11,117 23.1 media programs focused upon the advantages of Gwinnett County 2,500 9,506 20.8 the rapid transit system for the black com- DeKalb County 39,565 36,207 52.5 munity, getting to jobs and to the downtown. Fulton County 53,793 53,322 50.2 The upper- and middle-class white approach drew attention to the economic benefits All counties that rejected the plan were derived from the system. The thrust of eliminated from the project, but they advertising sought to motivate both groups to retained representation on the MARTA Board. vote in November. Post-referendum analyses turned to an A glimpse at the campaign budget for this appraisal of the victory. Several factors referendum implies the importance of educa- were thought to be important in the close tional and motivational programs. Rafshoon success. Perhaps the best review was pro- and Associates projected a budget of $288,500 vided to the MARTA Board in a study by an for the three-month campaign. The media costs executive close to the campaign. The report of the educational phase were nearly $18,000; is quoted below. the media costs of the advertising phase were $170,000. Production of all these media 1. Traffic - The fact of Atlanta's efforts required $70,000. The remainder of mind-boggling daily traffic the money was spent on a survey ($22,000), and crush cannot be disputed. Every agency compensation ($10,000). No estimates freeway, perimeter highway and are available for volunteer efforts, but a major artery suffers from serious major portion of the educational phase was traffic congestion for periods of implemented by the Speaker's Bureau. from three to seven hours each working day. The prospect of The educational and advertising phases of some relief in traffic congestion, the campaign were also directed at off-setting the thought that "there must be a possible opposition to the plan. The 1968 better way," had much to do with campaign was noteworthy in that MARTA and its the election outcome. campaign group. Rapid Transit Now, did not attempt to challenge the minimum opposition 2. Pollution - People today are con- that developed. The campaign of 1971 was cerned about the environment. meant to be aggressively responsive to what- Their concern is reflected in ever arguments might evolve. their close scrutiny of projects (such as 1-485) which ignore the in The 1971 opposition never did present a environment their implementa- feasible alternative to the MARTA plan, and tion. Because transit offered a their most effective arguments were racial and way to relieve concentrations of economic in nature. At base, the opposition auto-originated pollutants in argued that rapid transit would only distri- the downtown area and a way to bute lower-income blacks throughout the metro move the rapidly increasing area. Oppositely, black opponents claimed numbers of rush-hour comnuters that the system was a "white man's subway." without doubling the size of the Some observers felt after the election that freeway network, people supported these two conflicting viewpoints tended to transit. offset each other in the black and white communities. Polls also showed that the 3. Black Community - Blacks were opposition may have peaked too soon. The practically ignored as a political campaign strategy allowed sufficient time for force in 1968. They responded by the Committee to respond to most of the voting as a block against rapid attacks with its speakers and mass media. transit. They were included in planning, educational and advertising efforts in 1971. They Referendum Results Truth responded by voting like any -- in Balloting other average voter group healthy percentages were for and The vote on the rapid transit special against the issue. election was held on November 9, 1971, and success for MARTA required that at least 4. Community Self- Image - Atlantans Fulton (Atlanta) and DeKalb counties had to surprised themselves by voting approve. Success it was, but just barely, against rapid transit in 1968. a known as the referendum results show: In city for its pro-

I -17 gressive, forward and upward direction, people did not like the image of the two-time loser. This self-image may have been a positive factor in the referendum outcome.

5. The Winning Image - Although the opposition was quite vocal in the month before the campaign, transit proponents succeeded in achieving a "winning-image" for their candidate. This was achieved by obtaining the outrigf*t endorsement of most of the influential political, civic, fraternal, and religious leaders and organizations in the metro area (not including Clayton and Gwinnett Counties) and by emphasizing transit's positive effects on the city.

6. The Bus Improvement Plan - Transit campaign officials realized the difficulty of voting for something nine years away. They therefore decided to push the immediacy of the bus improvement program as part of the overall program. They did so with such success that later polls showed a need to de-emphasize the bus aspects of the campaign. The availability of frequent bus service with new equipment at low fares was a particularly important factor in securing the votes of the present-day bus rider.

7. The Low Fare - In the more affluent areas of the community the low fare was looked upon as a giveaway to the black conmunity and a hindrance to successful financial operation of the system. It probably cost f'lARTA many votes in those areas. But the low fare was a big factor in securing the vote in the less affluent, bus-riding areas of the community. The two effects thus tended to offset each other.

In general, the favorable results of the 1971 referendum showed that the lessons learned from the 1968 defeat could be put to good use. To repeat the quotation from Richard Rich, "in politics neither defeat nor victory is permanent."

1-18 CASE STUDY II -

MARTA AND THE ^5(t FARE

Carl W. Proehl , Jr.

Robert T. Golembiewski

MARTA AND THE 15(i FARE

Following the defeat of a November 1968 the two graups would have occurred regardless Referendum, the Metropolitan Atlanta Rapid of their color," states one white Atlanta Transit Authority (flARTA) successfully imple- citizen who finds it cheaper to take the ^1ARTA mented a strategy aimed at capturing the bus. "I fought for the 1971 referendum because support of two key constituencies in a 1971 I_ needed an inexpensive bus ride, too!" Referendum. The two constituencies can be differentiated too sharply to fit reality. Both constituencies were adamant in their But for approximate purposes, most observers resolve to hold MARTA to promises of low and see an inner-city constituency, largely black more transit services: MARTA had to "keep the and with strong ties to the national Democratic faith" and attempt to please two very different Party. Observers also distinguish a suburban sets of demands. Black Atlanta leaders, con- constituency, which was substantially white, fident of their decisive role in the passage of and with strong but variable ties to the the 1971 referendum, embraced the 15(t fare as national Republican Party. For details on the one symbol of their victory, and suburban passage of the 1971 Referendum, consult another Atlanta leaders sought to insure that MARTA case study in this series -- "Assessing Elec- would improve service for their constituents. toral Defeat: New Directions and Values for MARTA." The battle lines remained pretty much the same for the seven years covered by this case MARTA' s two key constituencies held widely- study. Given major ebbs and flows, the 15(t different views of how to distribute the costs fare was continually threatened by forces, and benefits of the mass transit program. The both external and internal to MARTA. leadership of the inner-city constituency focused on greater black participation in MARTA decision-making, as well as on greater employ- Birth of the 15(t Fare: ment opportunities for blacks. In response to From Failure to Success those concerns, MARTA officials began more minority hiring, promised the routing of a The 1968 referendum was doomed among blacks proposed rail system to black neighborhoods, long before the balloting, despite a heavy and also provided a very low-cost bus ride -- MARTA campaign which emphasized the convenience the 15(f fare, which was to remain in effect and low cost of mass transit. All major Atlanta until March 1, 1979, when a St increase would black organizations -- including NAACP, CORE, occur. Given an often-substantial sympathy and the Southern Christian Leadership Conference for inner-city concerns, the suburban constitu- -- came out against the referendum. Typically, ency emphasized the need for more bus service one black group announced: and a rapid rail system to outlying areas, even if this meant higher fares and curtailment We find that the rapid transit system of services in Atlanta. MARTA promised to as it is now planned is unacceptable provide numerous service improvements to its to the Negro community unless changes constituency outside Atlanta. are made in the proposed routes and services along with a clear understand- What motivated the formation of these two ing regarding employment and staff coalitions, which proved very stable? Race recruitment. Therefore, we cannot and economics both played parts, although most recomtiend MARTA to the Negro comnunity. observers tend to explain the coalitions in terms of one factor or the other. As for the In addition, according to some black leaders, racial motivations, one Atlanta legislator Atlantans would be burdened with paying for a tells of a conversation he had with a suburban transit system "for the rest of their lives" county official, who in 1971 expressed fears through a property tax which penalized small that MARTA would "dump job-seeking blacks into property owners while serving the interests of my county when we don't have enough work for business and industry. Black voters took the our own folks." Others emphasize economic advice of their leadership and helped to defeat issues: the 15(t fare provided help to lower the referendum, resoundingly. socio-economic groups in Atlanta while suburban citizens wanted more transit services and were The MARTA Board concluded that the primary willing to pay for them. "The problems between problem in gaining the black vote in any

II-l subsequent referendum was finding an accept- Mitchell Bishop, former MARTA able means for financing the rapid transit general manager Hank Stuart, and system, which included a way of financing I were quai 1 -hunting in South federal bonds as well as assurance that both Georgia when I received a call and state funding would be available to the from Governor-elect Jimmy Carter new transit system. who talked about the problem of a continuing commitment of state Three sources of revenue alternative to funds that Georgia could not the property tax seemed available: an income afford. Carter promised us passage tax, a payroll tax, and a sales tax. While any of a 1 per cent sales tax instead of the alternatives could meet the costs of of 3/4 per cent tax if we would building the rapid transit system, political give up state funding for MARTA. realities dominated. Although inner-city blacks favored an income tax increment devoted We didn't really lose anything to MARTA, both MARTA officials and Atlanta's since the state funds would be an white elected leaders believed that would be uncertainty from year to year, among MARTA' s suburban constituency. unpopular while the 1 per cent sales tax Further, Atlanta voters had previously rejected would be assured to the system. a payroll tax, and there was no reason to And just as Carter had promised, that MARTA could get them to change believe the 1 per cent sales tax passed thei r mi nds. the Georgia Assembly along with a rider stating that there would be The best alternative appeared to be a no state contribution to MARTA. proposal for increasing the sales tax, a proposal favored by MARTA' s suburban constituency Both Massell and Huie are "proud" of the although the black leadership appeared wary of compromise: Massell calls it "a stroke of the regressive nature of the tax. How then to genius" to which the black community could sell the sales tax? The first MARTA proposal agree. The low fare and an additional MARTA a cent tax and a called for one-half per sales policy promising to retain the 15(t fare until 40(t fare. Black leaders saw no benefit, how- 1979 helped gain black support for the 1971 ever, in trading the old transit system for a referendum. Black support, as it turned out, new system which charged the same fare and proved essential to the referendum's passage. tacked-on an increased sales tax. In response Shortly after the election. Vice Mayor Maynard to the concerns of black leaders, Sam Massell, Jackson told a City Hall news conference that the Mayor of Atlanta who had previously favored "the black community is responsible tor the an additional income tax, added a new wrinkle MARTA victory." An analysis of the referendum to the MARTA proposal: increase the local vote proved that he was right, though the sales tax percentage and provide free trans- margin of victory in Fulton County -- 471 portation to the citizens of metro Atlanta. votes -- was disappointing to some black Mayor Massell argued that any increase in the leaders who had fought vigorously for referen- sales tax would most greatly impact low-income dum passage. citizens of Atlanta. But free fares would in effect off-set the impact of the sales tax on That the fare and its duration were not the poor, since they were the largest users of specified in Georgia statutes proved to be public transportation. MARTA attorney Stell bane as well as boon, however. The enacting Huie dampened Massell's proposal by pointing MARTA legislation left the MARTA Board members out that the Authority was empowered only to -- originally, four from Atlanta, two from provide "public transportation of passengers Fulton County, two from DeKalb, and one each for hire," but Huie also pointed out that no from Clayton and Gwinnett County which had -- fare was specified. Hence the compromise rejected the 1971 referendum, but still a 15(t fare and an appropriate sales tax to retained Board membership due to voter ratifi- finance the system. MARTA Board member cation of the MARTA Act of 1965 -- with the Mitchell Bishop determined that an appropriate responsibility of setting the fare. One MARTA sales tax to go with the ]b(t fare would be staffer states: "We simply did not contem- three-quarters of one per cent. These sales plate the problems ahead in regard to the 15(t tax revenues, along with a state contribution fare. If the Board had established a policy -- to MARTA ten per cent of the cost of the to increase the fare when appropriate, then system -- and federal funds, would fund the people might not have expected the low fare system. from MARTA for seven years. If we had only known. ..." Another staffer finds that the The state contribution to MARTA presented problems encountered over the years following a political problem, because MARTA officials the referendum were brought on by MARTA realized that such an annual appropriation itself. States he; might not be renewed by future legislatures. Huie remembers how that grim possibility was Atlanta blacks didn't really con- finessed: sider the economic side of the 11- issue until MARTA dreamed up the Georgia Supreme Court. Faced with the same a PR 15(t fare as gimmick. In an decision -- whether to begin the 15C fare -- effort to get that darned referen- the MARTA Board was warned by MARTA attorney dum passed, everyLx)dy was promised Stell Huie that a Supreme Court decision everything and after it was passed, unfavorable to the Authority could undermine everybody started demanding every- the financial base of the transit system. thing. Huie advised the scheduled March 1 kick-off of the 15C fare be postponed.

The Fare's First Battle: Despite Huie's admonition, the MARTA MARTA and the Camp Law Suit Board voted on February 25, 1972, to lower the fare as promised. The summary position of the The first threat to the new transit MARTA Board on the 15C fare at that time is system and the ISC fare came quickly on the shown in Exhibit 1. William B. Schwartz heels of the 1971 referendum. Several law summed up the posture of the MARTA Board: suits were brought against the Authority — "We're attempting to show good faith with the and they all attacked the constitutionality people of the city and DeKalb and Fulton of the iMARTA enabling legislation, the one Counties" by beginning the 15C fare on per cent sales tax, and the 15(t fare. The schedule. The Board member from Atlanta went chief opposition came from Atlanta attorney on to say that if the Camp law suit made "it Ben Camp, who filed suit in Fulton County mandatory that we go back up on the fares, Superior Court charging that the one per cent then we will have to do it." sales tax was unconstitutional because it was to be levied on a local rather than on a state- Reaction to the action by the MARTA Board wide basis. Camp's suit also attacked the was positive, on definite balance. Ben Camp legislation on the grounds that the bill's was incensed by the decision, which to him title did not contain reference to MARTA's seemed "like an act of irresponsibility." But formation, and the Georgia Constitution general sentiment seemed in MARTA's corner; requires that the title of a bill control the and the Board action drew fulsome praise from content of the legislation. black leaders who called the decision a "giant step" which demonstrated that MARTA was "keep- The Camp suit forced the MARTA board to ing its commitment." Black Board member reexamine both its cormiitment to implement the Jesse Hill stated that MARTA and the black 15c fare on March 1, 1972, as well as its plans community "should guard over our mandate and to begin collection of the local sales tax on keep the faith rather than back down before a April 1, 1972. The Board could choose to law suit that was dismissed." Bill Maynard, postpone the 15( fare and collection of the president of the Atlanta Transit System, one per cent sales tax until after the Camp which was purchased by MARTA, reminded the law suit was resolved in court. This alterna- public that 15C had not purchased a bus ride tive posed both financial and political in Atlanta since July 26, 1957 -- and that dileimias. Thus six Atlanta area banks had the advent of the low fare would "be the first loaned MARTA $8.5 million so that the Authority time in the history of transit operations that could purchase the old Atlanta Transit System. a drastic reduction in the fare has occurred." However, the bank loans were contingent upon sales tax revenues which were to begin flowing The joy over the beginning of the 15(t shortly after April 1. If the 15C fare were to fare — on March 1, 1972, at 12:01 A.M. — was begin on March 1, MARTA would have to assume short-lived. Two days after the 15C fare responsibility for subsidizing the fares if the went into effect, the Georgia Supreme Court Camp suit prevented collecting the local tax. agreed to hear the Camp appeal of the dis- As a result, the Authority's borrowing would missed law suit. But the Court -- MARTA have to be increased -- a situation which the discovered much to its discomfort -- could not banks would not approve. Politically, more- render a decision until after April 3, which over, postponing the implementation of the 15C meant that it was very probable that the 15C fare would break a promise to the community, fare would have to go back to 40C on April 1. particularly the black citizens of Atlanta. The local sales tax could not be collected -- Black leaders including MARTA Board member, until the Camp suit was resolved; and the 15C Jesse Hill -- warned against violating the fare could not provide more than one month's "will of the people" and MARTA's commitment to operating costs. After that month, the fare the 15(t fare. would not be enough to keep the transit authority out of debt -- a situation created MARTA soon received some good news, but by law, as well as by the State Revenue its predicament remained. On February 22, Department which would not authorize MARTA to 1972, the Fulton County Superior Court ruled spend money from the H sales tax until the against Ben Camp's suit against MARTA. Yet, Camp law suit was settled. there was little comfort for MARTA because Camp immediately appealed the ruling to the

II-3 EXHIBIT 1

SUMMARY OF MARTA POSITION ON FARES

AS OF FEBRUARY 28, 1972

1. Fares will go down to ]St on March 1, 1972, as scheduled.

2. For the fares to remain at ]5i, two things are necessary:

a. sales tax must be collected beginning April 1; and

b. the law suit must be disposed of so MARTA can received the sales tax funds.

3. The MARTA Board will meet again late in March to decide whether it is necessary to

increase the fare on April 1 to a break-even point (40(t).

4. If the law suits by Mr. Camp and others are still pending and interfere with

MARTA' s financial program and the sales tax funds, then the fares will have to go up to provide the operating funds.

5. The key to the low fare has always been the sales tax. And anything that interferes with the flow of sales tax funds to MARTA will interfere with the reduced fares.

II-4 Reaction from the public and MARTA came cent lower in 1972 than they had been the quickly. The black-owned Atlanta Voice year before under the old fare structure. stated: "Poor people; Get your bus riding done this month, if you can, because the 15(t Consequently, the MARTA Board seemed fare lasts only 30 days." MARTA Board member hesitant to predict the future of the ^S

II-5 by Congress of the oil depletion allowance delayed, Kiepper added, the more it would which discouraged exploration; and new cost and the keener would be the competition automobile pollution devices which burned for federal funds. more gasoline. Reaction and counter-reaction to even MARTA's initial response was to hold the this tentative challenge to the ]Si fare came line on both service and the fare, by absorbing swiftly, which implied the significance of the greater deficit. In response to questions the points-at-issue. The Atlanta Constitution concerning rising fuel prices, Kiepper stated stated that "MARTA's record in terms of good in March 1973 that the crisis would drive faith on this issue of the low fare does not diesel fuel prices upward, but bus riders would inspire confidence." If the energy crisis not be stranded. Moreover, the 15(t fare would does create a shortage of rapid transit monies, not be raised. According to MARTA public the editorial continued, "maybe the first step affairs director Irving Breslauer, this was "a would be to cut some of the overblown staff matter of public policy. We are not going to salaries" rather than cutting services or increase the fare; we're going to keep the breaking the MARTA commitment to the voters faith." However, the percentage of the sales who passed the 1971 referendum. GM Kiepper tax used to subsidize the 15(t fare would have promptly sought to set the record straight, as to be increased, thus cutting down on the local he saw it, and in the process heightened the sales tax money available for construction and sense of the dilemma. MARTA officials had capital projects. made no recoimendation to raise the cost of the fare. Rather, in response to questions The pinch soon got much worse. In December from MARTOC, several alternatives were men- 1973, GM Kiepper told MARTOC the Marta Over- tioned as possibilities to help cope with view Cormittee formed by the legislature -- that rising costs. In addition to raising the while the Board was "loathe" to raise the fare fare, Kiepper stated that the MARTA Board sooner than 1979, the 15i fare had been placed might have to consider refusing service in jeopardy by the energy crisis. Kiepper cited expansion in order to conserve funds for several factors which clouded MARTA's fiscal capital construction, lengthen the period of position -- and the 15(t fare -- for the next few rail construction, delete portions of the years: rail and bus way system, or recommend extension of the sales tax of one per cent beyond 0 higher fuel costs 1982.

0 the need to extend bus service to Perhaps so. Mayor Massell observed, but cope with increased demand for MARTA needed to be reminded of a critical mass transit generated by the energy point. "I think it is a disservice to your cri si s present riders in Fulton and DeKalb Counties and potential patrons in the balance of our 0 the possibility of "a serious region to even suggest the smallest possi- energy-caused recession" which bility of increased fares," the Mayor wrote would bite into MARTA's sales tax Kiepper. The reason that MARTA was success- recei pts was the low fare ful , according to Massell, and that "only an emergency of the greatest

0 more cities scrambling for limited magnitude . . . would have sufficient impact federal funds for transit to raise the fare ahead of schedule." The importance of keeping the low fare, according Kiepper drew attention to a growing dilemna. On to Massell, was too great to be included in a the one hand, MARTOC member John Greer stated "laundry list of options every time some that he would "not budge from the" ^5t fare. minor change is necessitated." According to Greer, low-cost bus service the only mass transit that Atlanta had at the time MARTA soon faced more than a suggested -- should be maintained for drivers who might fare increase, however. On January 23, 1974, have to take the bus in lieu of spending more DeKalb County State Representative Elliott for gasoline for their automobiles. On the Levitas, chairman of MARTOC, disclosed that other hand, GM Kiepper noted the need for a his committee had proposed a bill to place a complex balance. Thus the 15(t fare had to be ceiling -- 40 per cent -- on how much of the weighed against increases in bus service. That MARTA local sales tax income could be used balance was determined on November 1, 1973, to subsidize MARTA bus operations. The sub- when extensions of bus mileage were first frozen. sidization of operating losses by sales tax More or less, service changes were henceforth revenues permitted the ^5i fare, and MARTA's accomplished within a fixed mileage- limit, by enabling legislation placed no ceiling on variously modifying routes and frequency of the percentage of sales tax revenues which service. Low fare and enhanced bus service could be utilized for that purpose. Without also had to be balanced against rail develop- the subsidy, the fare would have to be 45(t. ment. The longer the rail construction was The subsidy used for operating expenses -- up

II-6 "

from $700,000 in early 1972 to about $1 15^ fare. Special impetus came from some million per month in 1974 — had risen members of the Georgia General Assembly, steadily due to fuel and labor costs. as well as persons in Congress and the Levitas cited these rising operating costs, Ford Administration. and accused MARTA executives of being "spend- thrift" and wanting to live "a champagne life The attack from the General Assembly on a beer budget." came in several waves. In August 1974, MARTOC issued a' report stating that MARTA Levitas did not convince all relevant bus operations could be in a "financial publics, but he clearly got their attention. bind" by June 1975, at which time the Street- talk had it that the ceiling was part report estimated that the Authority would of a white suburban back-lash which had a have to use over 50 per cent of its tax definite preference if the question was: 15(i revenues to pay the difference between fare or more service? Whatever the case, the fare revenue and the cost of operations. -- Reverend Joseph Lowery representing the While MARTA was using only 42 to 44 per cent Atlanta Community Relations Committee and as a subsidy in August 1974, the MARTOC -- Economic Opportunity Atlanta spoke before report stated that "a small drop in the the MARTA Board on behalf of Atlanta's black local sales tax income coupled with unex- and poor on January 15, 1974. Lowery told pected increases in expenditures could easily the Board of plans to go to court to defend eliminate that six to eight per cent cushion." the 15?; fare if it were threatened by a MARTOC chairman Levitas made it clear that ceiling on the sales tax subsidy for the MARTA had made two commitments to the public: fare, and urged that MARTA join in any such first, to build a rapid rail system, and legal effort. The Atlanta Constitution only then to maintain the 15(t fare, if supported Lowery; and inner-city legislators possible. Suburbanite Levitas would not -- Representatives Ben Brown, John Greer, consider raising the 50 per cent ceiling in and Billy McKinney -- also decried the Levitas order to maintain the 15(i fare. He wanted to bill in similar terms as a "violation of the protect funds for building the rail system. trust" which voters had placed in MARTA. Further support came from newly-elected Mayor MARTA again began generating alternatives. Maynard Jackson of Atlanta before the City If worse came to worst, f^RTA proposed a Council in early February 1974. Jackson selective reduction in existing low-patronage urged t^RTA officials to "cut corners" to routes. Further special services -- such as preserve the ^St fare. MARTA 6M Kiepper also sightseeing and charter work -- also could be took issue with Levitas, countering that the discontinued, followed by a reduction in Authority managed its money "prudently." weekend and late evening buses. "If it should Kiepper added that MARTA wanted to both main- become necessary to reduce service to stay tain the 15i fare as well as have service within the 50 per cent lid on the subsidy," expansion continue at its present pace. stated Don Valtman, f"1ARTA assistant general manager for Transit Operations, "we will reduce Georgia Assembly action on the Levitas mileage in a very orderly fashion, not across- bill reflected a compromise. When the bill the-board." went to the floor of the Georgia House of Representatives on February 12, 1974, Atlanta The sides quickly formed again. Several Representative John Greer offered an amend- state legislators and MARTOC members -- ment to the legislation which raised the including Senators Bob Bell, Pierre Howard, amount of the sales tax revenues that MARTA Jr., and Jim Tysinger, all of DeKalb County, could spend on operating subsidies to 50 per as well as black Atlanta Representative Billy cent, rather than the 40 per cent proposed McKinney -- responded that the Authority passed. in the original bill. The amendment should raise the 15(t fare, given a choice between service reduction and raising the While the 15(t fare survived, the future fare. Many were surprised that McKinney -- a was unclear as the low fare reached its strong advocate of the low fare -- would second birthday. Representative Levitas endorse such a proposal. McKinney explained stated that he believed that -- whether the that "if they'd have to cut service and leave ceiling was 50 or 40 per cent -- there v/as the people on the street, it would be better "an excellent chance the fare is going to to raise the fare." Senator Bell agreed, have to be increased before 1979, no matter noting that it bothered him that people what." accepted inflation and the rising cost of MARTA, and "yet blindly adhered to the 15(t fare as if it were immutable and unchange- Third Year of the Fare: Congressional able." Oppositely, Atlanta Representative Help and More General John Greer, another MARTOC member, again Assembly Initiatives declared that he was "diametrically opposed to any raise in the fare in the foreseeable During the third year of the life of the future. 15(t fare, several forces struck hard at the II-7 Greer went on to say that MARTA should was a local decision. He said that he would wait to see if Congress approved federal advise MARTA: "It's your decision as to operating subsidies to transit systems which whether you continue the ]S

However, Herringer was a realist concern- So 1975 ended as it began -- in deep ing the politics of operating a transit division -- and 1976 brought a new threat to system. When asked if MARTA should maintain the 15(t fare from the federal level. To its low fare, Herringer responded that this explain, in January President Ford submitted II-8 1

a record $394.2 billion budget which contained a "very good job" in managing its bus system. a sentence which could be the epitaph to In Congress, the Ford proposal gained further Atlanta's 15c fare: "The budget limits to 50% support in the House Public Works Committee. the portion of transit formula grants that may Atlanta Fourth District Representative Elliott be used for operating subsidies in 1977 and Levitas -- formerly a member of the Georgia future years. " Formula categorical grants are Assembly from DeKalb County and MARTOC chair- provided by the federal government on a condi- man -- told MARTA officials that sentiment tional basis, and an agency like MARTA submits in his committee favored Ford's limitation. plans for approval to UMTA which makes a final However, both Levitas and Representative determination concerning the specific purposes Andrew Young suggested that a compromise for which a grant may be used, based on Con- might phase-in restrictions on the use of gressional guidelines. formula funds, rather than jumping immediately to the 50 per cent ceiling. GM Kiepper stated For MARTA and its 135,000 daily riders, that this would help, because it would allow the implications of that one sentence were MARTA more time to plan for a change in fund- ominous. During the past year, MARTA had been ing. However, gradual restrictions would utilizing al of its $3 million federal only defer and not prevent the arrival of the formula grant as a fare subsidy. This enabled day when the ]5

II-9 More Service Cutbacks or a Fare t^e hustle and bustle of down- Increase?: MARTOC Attacks town driving, the parking and Again in the Fifth Year all; well, I would be willing to pay a little bit more -- maybe Financial pressures and demands for more 304 or no more than 504. bus services continued to plague MARTA as the fifth year of the IGC fare began, and a major The reactions of bus riders provided new institutional element was added to an more ammunition for suburbanites and others already-volatile situation. Significantly, who advocated raising the fare. DeKalb that is, the Georgia legislature increased the County Republican Senator Bell attacked the size of the riARTA Board by four -- three of 154 fare which MARTA was "zealously guarding" them state officers who ex officio became at the expense of future construction. "You MARTA Board members, and the fourth an addi- operate under whole different concepts of tional member from DeKalb County. This action financing than I'm used to," Bell complained reflected state and DeKalb desires for greater to MARTA officials. "You spend everything influence over MARTA operations; and it was that comes in and don't set anything aside widely interpreted as a deliberate effort to for saving and depreciation," stated Bell, a shift political power away from the inner-city significant actor as Chairman of the Finance Atlanta black constituency, who openly worried Sub-Committee of MARTOC. Bell charged that that "MARTA was being taken away from us." the 154 fare gets support only because people "are locked into it politically and can't The concern about a state take-over afford to change positions. People want more proved overblown, in part because the state service but MARTA is limited. They wouldn't officers newly-appointed to the board were be if they raised the fare." MARTA, according already extremely busy, and often simply could to Bell, i;as a victim of its own success. not take dominant roles. But the balance-of- The DeKalb County Commission echoed Bell. power had been shifted to a noteworthy degree Chairman Bob Guhl echoed Senator Bell in on the date that the four new Board members proposing that 254 would be an appropriate took office -- February 20, 1976. bus fare. Said Guhl: "Our first concern is that we feel DeKalb County should be getting If anything, then, the cross-pressures on more bus service and second, we are very MARTA increased in early 1976, due both to the strongly concerned about the completion of enlarged Board and the continuing ravages of the rail system in DeKalb County." inflation. Signally, in late March 1976, Gfl Kiepper proclaimed that Atlantans v;ould have MARTA heard these messages, and responded. to pay higher bus fares or face cutbacks in Board chairman John Wright told MARTOC in June service. He stated that MARTA's pledge to 1976 that MARTA "never promised that everyone improve and extend the transit system services would get a bus route at their front door . . . and maintain the low fare had run afoul of we made a coninitment during the 1971 referen- rising costs of fuel, buses, and wages. As an dum that 90 per cent of the people would be ." example, Kiepper explained that bus drivers within a five minute walk of a route. . . made $3.72 an hour in 1972, were making $6.04 Wright added that MARTA had provided much an hour in 1976, and future negotiations might more mileage on bus routes in DeKalb and further raise those wages. Fulton Counties than had been promised, and had already provided bus services where they The reaction to the possibility of the were most needed. Representative John Greer higher fare was tested by Atlanta's Channel supported Wright's position, but added that 5-TV after Kiepper made his statements. The either raising the fare or cutting services consensus reached on a MARTA bus in late 1976 might have to be considered if the federal was that passengers found public transporta- subsidy could not be maintained. tion "a good deal even if it cost more than 15(t." Typical reactions from bus riders Congress would later reject Ford's include: proposal, but in Spring 1976 much sentiment favored the 50 per cent lid on the percentage Passenger 1: Since it is my only of federal formula grants that could be used UF'ITA means of transportation, I don't for operating expenses. Administrator think paying the higher fare would Patricelli said that transit systems around make any difference. the country were increasing employee wages and holding down fares, while they used Passenger 2: No, it wouldn't keep federal funds to pay operating costs. me from riding the bus. I'll still According to Patricelli, this represented an ride it all the time. "excessive dependence" on federal aid, "dependence which undercuts the incentive to

Passenger 3: I feel that maybe we seek greater productivity and operational could pay more because with the efficiency." Representative Bella Abzug, cost of living and gas, you know Democrat, New York -- voiced the sentiments II- 10 s

of the nation's transit systems. UKTA's force MARTA to raise the 15(t fare. Bell recommendations reversed a trend in public suggested that the extension of the tax transportation policy. "You're going to should be tied by the legislature to kill us!" she noted. increasing the ^5

ii-n "

While the General Assembly considered the 0 that MARTA immediately lift a tax extension, a MARTA staff report added freeze on bus service exten- spice to the debate. In late January 1977, sions imposed for budgetary one study projected that the ]5

For their part, suburban sources gener- tabloid. C ommon Cents , two r>lARTA Board members ally stayed on the offensive. A Gwinnett -- Fred Meyer of DeKalb County and Joseph -- County weekly, The Gazette , called the package Lowery of Fulton County presented the polar "Blackmail, MARTA Style," and chided the viewpoints. Meyer found the issue to be a Atlanta press for not recognizing MARTA's choice between two options: a low-cost "cunningly orchestrated campaign" to scare transportation system or "a high-sounding bill citizens into accepting the tax extension. of goods . . . with second-rate mass transit DeKalb County Senators Bob Bell, Jim Tysinger, that was neither fast, efficient, nor low- Bud Stambaugh, and Pierre Howard were more cost." Meyer also emphasized that the 15(J specific: the Authority had to boost the fare was adopted by the MARTA Board of Direc- fare from 15

raising the fare from 15(t to Z5i wi 1 1 never be kept.

0 that MARTA commit itself to Board member Lowery also pointed to MARTA extending its nortji line all the promises, arguing that to discontinue the low way to_Doraville /in DeKalb MARTA bus fare would reinforce citizens' "lack County^/ before it built the spur of faith and confidence in government." line to Northwest-Perry Homes, Lowery made a case that many accomplishments * the latter a key objective of -- many new buses, bus shelters, service Atlanta's black leaders during improvements, increased route mileage, and the 1971 referendum the maintenance of the 15(£ fare -- evidenced MARTA's attempts to keep its other commit- 0 that MARTA adopt and publish a ments. To illustrate, Lowery stated that set of standards governing when increased mileage had been given DeKalb it would extend existing bus County, where strongest opposition to the 15(t lines, create new ones, or dis- fare originated. About 56 per cent of the continue lines total monthly MARTA bus mileage since 1972

11-12 had been concentrated in DeKalb, he noted. and Dr. Sanford Atwood, John Glover from According to Lowery, MARTA's other major com- Clayton County, Ken McMillon from Gwinnett mitment consequently should be honored. County, and two ex officio state members of Fares should be kept low in order to attract the Board -- State Transportation Comnis- passengers, to restore public confidence in sioner Thomas Morel and and Revenue Commis- government, and to provide Atlanta with sioner Nick Chili vis. The three Atlanta reliable transit service. Board members -- John Wright, John Evans, and Dr. Johnnie Clark -- and Dr. Joseph Lowery from Fulton County stood opposed. Last Fight Over the Fare: Board member Meyer declared: "We've skirted Increasing Services and the this issue to the point where we almost have Local Sales Tax Extension our backs to the wall. We need a fare increase." Meyer called for early public In early April 1977, MARTA released a hearings regarding the fare increase, as new report which added fuel to the contro- required by law. While he disagreed. Board versy between its inner-city and suburban Chairman John Wright predicted that most constituencies. The report concluded that MARTA riders would accept an increase with- the Authority could face a hefty operating out much difficulty. "Many of them, I would deficit if bus service were expanded without say a majority, wouldn't object all that a corresponding hike in the 15C: fare. The much," Wright declared. report found that MARTA would have to choose between service expansion and the 1 BC fare The reaction of Atlanta leaders to the before the 1978 budget could be completed. proposed fare increase was one of anger, however. Board member Dr. Lowery accused The MARTA report -- prepared by the the two ex officio state Board members, Authority's Program Monitoring and Reporting Moreland and Chilivis, of "joining DeKalb, -- Unit was generated by a Board resolution. Clayton, and Gwinnett in a move to hurt -- -- The resolution adopted by a 6-5 vote poor people" and "violate" a promise. Mayor sought either to add new bus routes and Maynard Jackson lashed out at the surprise services promised in the 1971 referendum, or decision, vowing to take "vigorous action if to "show cause" why a particular service necessary" to avert the fare increase. should not be implemented. The target date Jackson said he would "do everything in my was June 1977. The Board then charged the power" to block the fare hike, and he assigned MARTA staff with reporting on the feasibility Associate City Attorney John Myer "to of adding the various new routes, after which research the City's legal position, if it the Board would decide whether to add all of becomes necessary to contest in court the the additional service, part of it, or none validity of such a fare increase." Jackson of it. was "particularly appalled" that the increase was made possible by the votes of Following debate that simmered and ex officio Board members plus those from sometimes sparked, the Board adopted a drama- Clayton and Gwinnett Counties which rejected tic proposal. On April 25, 1977, the MARTA the 1971 referendum. "We mu^st keep the _ Board acting on staff data surprised Atlanta faith with the two-county /_Fulton and DeKalb/ metro-citizens by voting 7-4 to raise the MARTA district, Atlanta especially," asserted MARTA bus fare to Zbt, v/i th a nickel for Jackson. transfers. Fred Meyer, a DeKalb appointee to the Board whose term would soon expire, Some action against MARTA resulted, in initiated the action which was to be effec- fact. In late April 1977, the Utilities tive on July 1, 1977. Meyer cited several Committee of Atlanta's City Council decreed reasons for the proposed fare increase: that MARTA had to guarantee the ^5i fare until March 1979 if it expected to close a 0 operating costs had risen faster major Atlanta thoroughfare in order to work than revenues on a crucial rail station. The action came on a motion by Councilman Hugh Pierce, who 0 an unanticipated degree of infla- explained that the threat of not closing the tion had occurred since the ^5t street was the "City's main leverage" to keep fare policy had been established MARTA from raising the 15(t fare. "We want to make sure the City of Atlanta is protected, 0 salary and benefits to operators based on what all of us said in 1971 when we had increased costs went out there to get votes," declared Councilman James Howard. "They can do what 0 additional costs had exceeded they want outside the City limits." annual revenues. This retaliatory action created instant In addition to Meyer, the 7-4 vote gained consternation among the MARTA staff who support from DeKalb Board members Bill Probst attended the meeting. Morris Dillard -- a

11-13 black activist during the 1971 referendum, voted 6-1 on a motion sponsored by Board and now the Authority's Assistant General member Joseph Lowery which asked the full Manager for Planning and Public Affairs Board to take a second look at its earlier pleaded with the committee not to make the resolution to increase the fare. This com- street closing contingent on the fare, and mittee action caused the Atlanta City predicted that such a move would "create very Council to reconsider its earlier threat serious difficulties" for NiARTA. Councilman about not closing a major Atlanta thorough- James Bond responded. "There may be a delay," fare. On the same day that the MARTA report -- he observed, "but it will be a delay on the was released with lobbying by MARTA Board part of the FiARTA Board in not rescinding the Chairman John Wright and Board member Lyndon fare hike proposal, and not on the part of Wade -- the Atlanta City Council returned the City," MARTA Board member Fred Meyer, the street closing-resolution to the Utilities who noted that the City had approved the Committee, in effect delaying its final closing of the street more than a year consideration. The City Council still before, said that MARTA could probably obtain remained adamant in opposing the fare increase a court order requiring the City to close the by adopting a separate resolution which street. "They've had a strictly political stated: "Any increase in the fare at this reaction to an economic question," stated time will compound the economic and financial Meyer. burdens of many of the Atlanta residents, particularly the poor." Holding a middle-ground between MARTA and the City of Atlanta became more diffi- Some Atlantans concluded that the April cult, as State Representative John Greer of MARTA report reflected great timing and, in Atlanta discovered. Greer chose a MARTOC any case, it provided impetus for important meeting of April 29, 1977, to call upon all decisions. Atlanta Journa l columnist John sides in the dispute to pull together. Greer Crown, for example, found it "absolutely criticized the MARTA Board's decision to fascinating that after what should have been increase the fare, as well as the vote by the an exhaustive research before the hike was Utilities Committee. When Greer suggested proposed that 'fresh information' should that a compromise might be reached by raising miraculously appear at this expedient the fare in July 1978, State Representative moment." Whatever the case, on May 9, 1977, Mildred Glover of Atlanta said that keeping the full MARTA Board passed 9-4 a resolution the fare until 1979 was "a matter of integ- sponsored by Chairman John Wright which rity." Bud Stumbaugh, DeKalb County State indefinitely postponed action on the proposed Senator and I'lARTOC Vice-Chairman, then fare increase. The Wright resolution, based blasted Greer and the City action. He on the new staff report, states: "It does threatened to introduce a bill in the General not seem necessary at this time ... to Assembly that would take away the City's raise the 15(t fare." Voting against the power over street closing permits in any case measure were Fred Meyer and Bill Probst of involving MARTA construction if the full DeKalb County, Harold Sheats of Fulton Council passed the resolution. "Councilman County, and Ken McMillon of Gwinnett County. Pierce says 'that they've got leverage'. Subsequently, the tentative budget submitted Well, we've got leverage in the General to the MARTA Board by GM Alan Kiepper in Assembly, and we'll use it if we have to," June 1977 focused on how the transit system Stumbaugh threatened. could both implement service improvements and still keep the ]5t fare. Kiepper 's One avenue for a working resolution budget message stressed, however, that the appeared on May 2, 1977. The MARTA Transit budget with its no-fare-hike projection Systems Operations staff released a report assumed that sales tax revenues would which had been ordered by the r4ARTA Board in increase by seven per cent during the fiscal early April 1977. The Board wanted to find year while inflation would stay below six per out if particular service improvements cent. The proposed budget passed on June 27, promised during the 1971 referendum could be 1977, quietly. implemented by June 1977 without raising the MARTA's suburban Board members persisted 15(t fare. The new study -- adding fuel to the controversy over the fare and contradict- in their attempts to raise the 15(i fare, In Meyer of ing the April report of MARTA' s Program however. mid-August 1977, Fred Monitoring and Reporting unit -- concluded DeKalb County again proposed a new fare that service improvements could be made, policy. Meyer, whose term on the MARTA Board though not by the deadline set by the Board. was to expire in December 1977, called for Basically, the stretch-out was unavoidable the fare to be set at the level necessary to because new buses would not be available from produce 35 per cent of the agency's operating MARTA vendors until some months later. costs. As costs went up, fares would increase a nickel at a time to insure that the fare The same day that the report was box produced the required revenue. At the released, the MARTA Operations Committee time, revenue from MARTA's ^5i fare paid only 11-14 about 21 per cent of the cost of operating to piece together a united front to extend the transit agency's bus system. The the one per cent sales tax beyond 1982. difference is made up from local and federal However, the extension remained so closely subsidies, as well as from various MARTA net tied to the 15$ fare that Atlanta and DeKalb money-makers — charters and sightseeing, officials both inside and outside MARTA advertising concessions, and so on. remained at loggerheads. Governor George Busbee pleaded for a compromise that would Board member Meyer urged that his pro- pave the way for positive action concerning posal would give mRlA a "fixed guide or the proposed legislation, but felt frus- policy on the fare." This would be in line trated over the deadlock. Busbee told a with comments made by Richard S. Page, new group of about sixty metropolitan leaders: head of UMTA, who had stated during a July "I want to support MARTA in any way I can, 1977 visit to Atlanta that bus fares should but everyone feels that we need to get our bear "a reasonable relationship to the over- act together." Busbee went on to say that all cost of the system." the proposed sales tax extension was "essential to the MARTA system," but termed it Meyer would be disappointed, but he "critical" that local leaders warring over remained undaunted. On August 25, 1977, the 15$ fare "resolve their differences" in KiARTA's Operations Committee rejected Meyer's order to maintain a united push to get the proposal. Meyer then urged that MARTA con- legislation passed. sider a fare hike before the 1978 Georgia legislative session. Otherwise, he warned, Representative Greer responded to the Georgia state lawmakers might reject MARTA 's Governor's suggestion. He proposed a four- proposal to extend the one per cent local point compromise to unify both Atlanta and sales tax, or might even pass legislation DeKalb support for the MARTA sales tax exten- preempting MARTA' s control over the fare. sion. First, Greer urged that MARTA keep the 15$ fare until March 1979, and then raise it In response to Meyer's proposal, MARTA to 25$. Second, the legislator proposed that officials decided to take a look at what MARTA adopt a plan giving priority to a other major cities charged for bus service. north-south line from suburban Doraville to The MARTA study examined the fare policies Hartsfield International Airport a route of five other cities with operations similar favored by DeKalb officials over some "spur in size and scope to MARTA's, to determine lines" such as the Perry Homes Branch favored whether any of them set fares to capture a by most black inner-city officials. The set percentage of operating costs. The third point of Greer's compromise called for results? The survey covered Baltimore, I<1ARTA to show what specific future additional St. Louis, Oakland, Seattle, and Pittsburgh, transit service it proposed to offer in which had bus fares ranging from ZSi to SOi. Fulton and DeKalb Counties. Finally, DeKalb The MARTA study found that, on the average, and Fulton County legislators were asked to about 39 per cent of the cities' transit unite with MARTA's inner-city constituency in operating costs came from fares, with tax supporting the sales tax extension. Greer subsidies generally making up the remainder. told DeKalb officials that the inner city constituency had "to back up on some things The report -- though largely ignored by and you've got to back up on some things." the Board -- again put MARTA on the hot seat as inner-city Atlanta and suburban Atlanta In response to Greer's proposal, the officials fought over the 15

11-15 from Doraville to Hartsfield for federal aid as the reasons for request- International Airport before the ing the extension of the sales tax. building of any "spur" lines such as the line into Perry After all those years, what does the Homes, a predominantly-black balance sheet show? The passage of the public housing project in west Greer-inspired proposal maintained the Atl anta life of the 15(t fare through March 1 , 1979, the very date originally promised, to the called for I-IARTA to increase almost-unanimous praise of the metro media annual bus service from ZQ for a promise kept. The fare was increased million miles to 30 million to 25(t, uneventfully, even though the miles by March 1979, with half original understanding called for a 5t of the service to be added no increase in 1979. Other parts of the MARTA later than June 1978. MARTA program over which battles had been fought staff members would submit a list -- the one per cent local sales tax exten- of proposed new service to the sion, and the date for the opening of the Board by January 23, 1978 rail lines -- all remain in doubt to this

day, March 1 , 1979. required the development of "service standards" by which the Board could judge proposals for additional bus service

This proposal kept flARTA's pre-referendum promise to its inner- city constituency -- to keep the 15g, fare for 7 years -- but it changed the ni ckel -a-year increase clause beyond that date. In return, MARTA's suburban constituency gaineo the promise of priority construction of the north-south line, plus an unspecified amount of additional bus service.

Opinions varied on the Board action. Atlanta Mayor Maynaro Jickson lashed out, labelling the Board action, unfair, illegal, and unwarranted . . . the city has been nailed against the wall," he said. "What did Atlanta get? Atlanta got a broken promise on the fare structure. Perry Homes got put on the back burner, and Atlanta got no promise of help on the one per cent local sales tax." However, DeKalb County Commission Chairman Walt Russell termed the compromise "satisfactory" and recommended that the DeKalb legislative delegation support the sales tax extension. State Senator Bell of DeKalb County agreed, stating that the plan was "no victory" for DeKalb County, but rather was a victory for service in which DeKalb could participate. "They have removed a major barrier that prevented us from considering an extension of the sales tax," declared Bell.

Despite the outcries from Mayor Jackson and other Atlanta black leaders, the MARTA Board accepted the compromise and quickly renewed its plea for an extension of the sales tax. The f^RTA Board -- encouraged by the positive support of DeKalb County -- unanimously adopted a resolution sponsored by

DeKalb member Daniel Rati 1 lo urging that the Georgia General Assembly extend the sales tax twelve years beyond 1982. The resolution cited "extraordinary inflation in construction costs" and "more intense" competition 11-16 CASE STUDY III -

LOW FARE:

AN ECONOMIC ANALYSIS OF A POLITICAL DECISION

John Bates

Low Fare:

An Economic Analysis of a Political Decision

On March 1, 1972, the Metropolitan Atlanta Directors has fairly broad powers to carry Rapid Transit Authority reduced bus fares from out its purpose, but only within the a 40(t base, with zoning and with a 5(f transfer framework of contracts with its constituent charge to a systemwide flat fare of ]5(t with governments. If the contract requires free transfers. Closely following the purchase indebtedness on the part of the local of a privately-owned bus company, the fare government, extends beyond one year in decrease constituted the first step in a compre- duration or is financed by optional sales hensive program of improvement approved by tax levies, then the contract must be formal voters in November 1971. and ratified by a majority of voters in the county affected. The low fare had immediate and dramatic effects. Transit ridership under private operation had been declining at about five Learning from a Past Failure percent per year, while fares were rising and service was cut back to maintain a break-even A contract proposal to build a fixed-rail (or slightly less) financial picture. Within transit system in two of the four metro the first week of MARTA low-fare operation counties -- Fulton and DeKalb Counties -- was ridership not only increased systemwide, but defeated by local voters in 1968. That pro- additional ridership on some major routes posal was flawed in several critical particu- caused overloads during the peak periods. lars. It required ad valorem tax financing; MARTA had to buy old buses from Cincinnati and did not make adequate provision for an Cleveland to manage the overloads until arrival existing private bus system; assigned tax of the first order of new, air-conditioned funds for capital costs only, with operating buses acquired as part of the approved compre- costs paid entirely by fares; and was rushed hensive program of improvement. to referendum several months before scheduled completion of a comprehensive transportation The flood of new riders came as a distinct plan for the entire region. surprise. The low fare was not initiated to gain riders, but as a political compromise Local urban transport advocates learned acceptable to low-income, central-city resi- from their experience. In November 1971, a dents to gain their approval of a sales tax new contract was proposed, differing from levy to expand the bus system and especially the 1968 proposal in four central ways: to build a rail transit system. 0 The proposal envisioned an The political choice of a low bus fare to integrated bus and rail regional gain a local funding-base for mass transit also public transit system, including I turned out to be shrewd public economics. This acquisition of the private bus I case will demonstrate that point through an company. ' analysis of costs and benefits for riders and nonriders from 1972 through 1977. The analysis 0 The rail transit part of the will follow a brief description of the evolu- program extended into all four tion of the financial arrangements and some member counties, although barely observations on the inmediate effects of low into two of them. fare on ridership patterns. The analysis itself will estimate the "fairness" of the 0 It included a short-range program sales tax/low fare method of financing public to improve the bus system during transportation by comparison with two alterna- the extended period it would tives. A technical appendix deriving some of take to design and build the ^ the parameters used in the analysis is rail system. incl uded. 0 The proposal called for financing through a one percent sales and Toward the "Atlanta Plan" use tax, with part of the tax going to subsidize low fares. MARTA is a single-purpose, limited- jurisdiction agency created by the General All four of these differences contributed Assembly of Georgia in 1965, under authority to the attractiveness of the 1971 referendum granted by amendment to the state Constitution to voters in Atlanta and in Fulton and in 1964. The single purpose is to plan, DeKalb Counties, and the unique approach to purchase, design, build and operate a system financing and the corrmitment to low fares of public transportation for hire in four may have started a national trend for designated counties. The MARTA Board of transit financing. This approach definitely 1 has long-term administrative and political not have payroll taxes on any level. Mutually, impact on MARTA, as well as on metro-area the MARTA Board of Directors and local riders and non-riders. elected officials decided that the problems of trying to get approval for a payroll tax were too great, and that source of funds was Some Early Assumptions dropped, leaving the sales tax and the income About Financing tax as viable alternatives.

The estimated cost of implementing the Thought about funding local transport MARTA program in 1971 was $1.42 billion, and also was limited in other crucial ways. That ad valorem taxes were ruled out as a funding is, thought about funding to this point source, because studies indicated that this presumed that taxes would be used to buy the was one of the major reasons for the 1968 bus company, obtain more buses, and build the defeat. A range of other tax sources was con- rail system. This concept also assumed that sidered, including sales tax, admissions and all operating costs would be met by farebox amusements taxes, auto license fees, gasoline revenues. This is a traditional method of tax, hotel and motel occupancy taxes and financing public projects, and is "equitable" cigarette taxes. Potential revenues were or fair by most definitions for flat or estimated for all of these with the results graduated income taxes or payroll taxes, but shown in Table 1. Only three of the taxes not for a sales tax. Equity usually means yielded enough revenue for further con- that people pay in proportion to their use, sideration: sales tax, payroll tax and or benefit, and/or a constant or increasing personal income tax. proportion of their income. With a sales

TABLE 1

POTENTIAL TAX REVENUE ESTIMATES FOR 1970 (All Figures in Thousands)

Admissions & Hotel & INCOME Cigar Sales Payrol Amusements Motel Personal Corporate Total Autos Gasol ine ettes

0.5% 0.5% 2% Increase 2% Inc. 1% 1% $5 ea. U/gal. 2i/pk

DeKalb 4,467 3,397 140 60 6,297 750 7,042 1 ,115 1,776 972

Ful ton 15,467 15,214 1,100 1,300 11,143 3550 14,693 1,415 3,270 1,526

19,934 18,611 1,240 1,360 17,435 4,300 21,735 2,530 5,046 2,498

Atlanta 13,700 13,815

DeKalb 3,913 3,138

Fulton 2,321 1,658

' Clayton 783 670 26 20 1,238 117 1 ,355 250 402 208

Gwinnett 617 296 14 10 769 83 852 185 355 164

Grand Total 21,334 19,577 1,280 1,390 19,442 4,500 23,942 2.965 5,803 2,870

Outside Atlanta

tax, people usually pay a smaller propor- Soon there were only two potential ^ion of income as income increases, sources of funding. Georgia already had a statewide sales tax and income tax, but did TTT-? 1

Political Mind-Expanding About he initially preferred using an income tax Financing Assumptions to fund MARTA to minimize the impact on the poor. Massell recalls; "It was at With only the sales and income taxes left the end of the meeting, and suddenly it as options to fund the urban transit system, came to me. Why not a compromise of the progress toward a financing method stalled. sales tax and a very low fare? Everyone Generally, representatives of suburban areas was shocked and surprised at the idea." preferred the sales tax to the income tax, Massell still supports very low fare for while central-city representatives objected transit services. He equates transit as strongly to the sales tax. Suburban repre- a public service not to police and fire sentatives felt that higher-income suburban- protection, but instead to public services ites would pay most of the costs, but would be like recreation facilities and libraries. least likely to use the system when built, Not everyone benefits from them, but since they have more diverse travel patterns everyone pays to provide them. in the areas with the lowest density of transit service. Low-income central city residents, on the other hand, spend a much Legislative Reprocessing higher proportion of their incomes on consump-

" tion goods and, therefore, pay a higher pro- Massell 's basic notion survived, portion of their income in sales taxes. Hence albeit with some correctives by state the opposition of Atlanta politicians to the legislators. The 1971 Session of the sales tax as a funding source. Georgia General Assembly convened in Atlanta in January, and one of the first The impasse continued until November bills introduced in the House by Representa- 1970, when a meeting of MARTA Directors, tive John Greer of Fulton County called for local government officials and state legis- a local option, three-quarter per cent lators was held to thrash out the matter. sales tax for urban transit in the MARTA Sam Massell , the Mayor of Atlanta, came up counties. The State Revenue Department with the seeds of the solution which broke quickly pointed out the difficulties in the log-jam. He observed that the central- establishing brackets for a three-quarter city objection to the sales tax was its per cent tax. Others realized another regressi veness , and noted that most transit potential problem, not associated with the riders were low-income central-city residents. sales tax. In 1966 the Constitution had He suggested that the sales tax be adopted, been amended to allow state funding for up but that the bus service be free. Mayor to ten per cent of t-IARTA's annual budget. Massell apparently overlooked the impact on Someone realized that ten per cent of $1.4 low-income people who did not or could not billion was $140 million. Over a seven use transit; and Massell and others may have to ten-year construction period that amounted generally accepted the notion that al poor to $14 to $20 million per year, not including people, and only poor people, ride the bus. a state share of operating costs in the Such inadequacies aside, the proposal had a budget. Legislators became concerned at major political attraction. For many being faced with that kind of annual appro- central-city residents, especially low-income priation. Both issues were resolved by blacks, the savings in bus fares would at increasing the tax rate to a full one per least compensate for an increased sales tax. cent. The extra one-quarter per cent of sales tax was legislatively defined as The Massell proposal caught on inmedi- constituting the State's ten per cent ately, but it had to be modified for legal contribution to funding MARTA. reasons. MARTA General Counsel Stell Huie quickly pointed out that the constitutional Who motivated this critical compromise? authority for MARTA defined what MARTA could MARTA's General Counsel Stell Huie recalls do as provide transit for hire ; free transit that then-Governor Jimmy Carter first raised would not be legal. MARTA planners and the issue of state funding with MARTA engineers quickly ran through their figures officials, since the Governor had a problem and came back with a conclusion that if the with committing state funds. According to sales tax was three-quarters instead of one- Huie, Carter urged changing the tax rate to half percent, then a fifteen cent fare would the full one per cent, while also prohibit- support the operation for several years. ing further state contributions. Huie Thus the "Atlanta Plan" for transit financing liked the compromise, since the additional was born, probably the first time in the tax funds would be ongoing and not subject United States that a political decision was to annual appropriations. The bill was made to subsidize transit up-front, without appropriately amended in the House Ways and any intent that farebox revenue pay for all Means Committee by Representative Greer. operations. Greer's bill sailed through the House Recalling that November 1970 meeting at with little difficulty, but experienced the Marriott Hotel, Sam Massell observes that very rough-going in the upper house. In III- 3 Georgia, the Lieutenant Governor serves as original plans. Specifically, January 1978 President of the Senate and exercises a level of service is 47 per cent higher than great deal of power over the legislative for February 1972 (measured in annual vehicle processes in that body. In 1971, Georgia's miles operated); and commitments were made Lieutenant Governor was former Governor for increases of about three and one-half Lester Maddox. His anti-big government per cent in the last half of fiscal 1978 and position put him squarely against the MARTA 1979. A major part of the bus service proposal; and Maddox also maintained a increase in 1979 will involve reconfiguration running feud with Governor Carter, an active of radial bus routes as feeders to rail supporter of the MARTA proposal. Maddox stations, with extensions and expansion into actively opposed the sales tax bill, claiming previously unserved areas. that the bill would give MARTA so much money that it could not only build an infinite transit system, but also could serve Coca- Automobile Users Take to the Buses Cola and fried chicken to all passengers. Experience with bus-ridership since 1972, The legislative mills ground so as to moreover, knocked all previous estimates into give something to both sides. Negotiations a cocked-hat. Total ridership increased from and compromises resulted in an amended bill 57.4 million passengers in calendar year 1971 that limited the one per cent tax rate to ten to 79.0 million in calendar year 1978 -- an years, reduced at that point but continuing increase of 37.6 per cent. This compares without time-limit at one-half per cent. The with estimates made in 1971 that the com- bill also required that after ten years the pleted service expansion program would tax could not provide more than one-half the increase ridership by 23.1 per cent. More operating costs. The amended bill was than half of that ridership increase, 12 per accepted by both houses, and signed into law cent, was expected to result from the fare by Governor Carter. reduction, with the balance caused by new riders using new services. The 12 per cent estimate derives from the historical marginal The 1971 Referendum Financial Plan elasticity for fare increases in Atlanta. For many years, when the fare rose, the With some significant technical adjust- ridership declined 2.5 per cent for every 10 ments, Massell's essential proposal got per cent increase in fare. embodied in various policy documents. For example, the financial plan was included in No one had any real idea how ridership the technical documents that supported the would respond to a fare decrease, so the contract between f^RTA and Fulton and DeKalb historical elasticity was assumed to work both Counties. Note that since the City of ways. That assumption proved very wrong. Atlanta did not have sales-tax power, county- Consider some details. The first week of the wide ratification was required. Atlanta did fare reduction, ridership rose 18 per cent, sign the contract, but only as an "assistance and averaged 16 per cent for the first 13 agreement." After combining all of the weeks. In November 1972, MARTA conducted a assumptions and estimates that went into survey and found that ridership had increased annual capital and operating costs, MARTA 30 per cent, comparing "new rider" and addi- staff and consultants estimated that the tional "old rider" trips with continuing "old operating cost per passenger in the eleventh rider" trips. That survey also revealed some year would be 70 cents. Because of the very interesting changes in the composition legislative limitation, the fare consequently of the ridership resulting from the low fare. would be 35 cents in 1982. To avoid a large Generally speaking, "new riders" -- people percentage increase between the tenth and who did not regularly use transit before the eleventh year, the adopted fare policy called fare reduction -- were predominantly from for a 15-cent fare for seven years, increas- higher-income families, higher at least than ing at five cents per year thereafter to most "old rider" families. New riders also reach the expected 35-cent level in 1982. tended to be younger, and had a car available more often, had a higher proportion of males (about half and half compared to two female Results of Sales Tax/Low old riders for every male), and they rode Fare Transit, I mostly on weekdays. Ninety per cent of the increase was made up of new riders on week- Since the fare was reduced in March 1972 days, while old riders showed no increase in and since the sales tax was first levied in weekday travel. On the weekend, however, Fulton and DeKalb Counties in April of that with much larger percentage increases in year, much has been accomplished. Expansion total trips, almost all increased ridership of the bus service included in the 1971 came from old riders making additional trips. referendum has been nearly completed; and (For more detailed information on changes in service has been expanded well beyond ridership characteristics, see the series of

III- 4 reports prepared by MARTA for the Fare criteria for judgment here? Ideal conditions Reduction Research Study, and the monograph: of equity here are said to exist if: "Effect of Fare Reduction on Transit (1) payments made are directly proportional Ridership in the Atlanta Region: Summary to benefits received; or (2) all groups of of Transit Passenger Data" published in individuals with similar socioeconomic TRANSPORTATION RESEARCH RECORD NUMBER 499 by characteristics pay equally, and all groups the Transportation Research Board of the of individuals in increasingly wealthy National Research Council in 1974.) strata pay increasingly in proportion to their greater wealth. If these conditions cannot be met, because of the nature of the Results of Sales Tax/Low publicgood or because a satisfactory Fare Transit, II financing source cannot be found, then true inequity is defined by the condition where Much has been made of the increase in increasingly-wealthy strata pay proportion- MARTA ridership following the fare reduction, ally more, a "progressive" condition. as well as of the fact that most of the increase resulted from people who were not the traditional primary market for transit. Fairness of the 15-Cent Fare On the surface, it might appear that Mayor Massell's assumption was not correct. The Three cases demonstrate the comparative ridership increase suggests that combining fairness of the Atlanta Plan — low fare/ low fare with sales-tax financing benefits sales tax method of financing. Case I "new" and higher-income riders rather than relates to a no-public transit alternative, those Massell wished to benefit. where all trips have to be made by some other means. The cheapest probable alternative is the private automobile, at Toward Economic Test of A Political Decision least considering only the marginal costs of trips and assuming that a car is avail- That possibility gets tested here. This able and is used for other trips as well. analysis asks whether or not, in the long If this assumption is not true, then run, low-income people have benefited in the automobile travel costs, or taxi, or some way the political decision-makers anticipated. other option, are probably much higher for Put alternatively, the question is whether or comparable comfort and convenience. The not the distribution of costs/benefits from second alternative (Case II) is the tradi- the Atlanta Plan meets economic tests of tional method of public financing where fairness. there are both direct and indirect benefits — the method originally proposed for

1 . Defining Economic Fairness . We MARTA. Here everyone pays the tax for distinguish three approaches to testing fair- capital expenditures, and the users pay ness, two of which provide little challenge. the full amount of operating costs in To begin, should public funds be spent at all direct proportion to their use. Case III in the issue-area? We can dispose of this analyzes what actually happened under the question quickly because the political deci- Atlanta Plan. sion to spend public funds on urban transportation, both for highways and transit, has Comparing the three cases rests on been made. Urban transportation is a mixed- several conventions. For all three cases, benefit public good, with private benefits the actual number of transit trips made on accruing directly to the people who use the the MARTA system for the five-year period transportation system, and public benefits from July 1, 1972, through June 30, 1977 accruing to the conmunity at large through (shown in Table 2) will be used for the the very existence of the system. Urban analysis. For any period, only that public transportation is therefore "eligible" portion of the total sales tax collections for public funding. Moreover, should the which were allocated to operating costs particular MARTA project within the issue- (Table 3) will be used for determining area be supported by public funds? The individual costs, because we are dealing MARTA proposal resulted from an extensive with the fairness of the fare and because analysis of alternatives and was specifically it will be several years before the effects approved by voters. The second test is of the capital program can be estimated. satisfied. Also, in determining benefits, the benefit is assumed to equal the actual cost of The final test of fairness asks whether providing each trip. Some economists will or not the particular method of financing object to this procedure. They would chosen to fund the project is equitable — do maintain that the ridership would not have the costs and benefits get distributed in been as high if the fare were higher, which fair ways? Determination of equity involves is probably true, and that consumer surplus a value judgment, of course. What are the (the difference between value received and

III-5 D

TABLE 2

TRANSIT OPERATING STATISTICS FISCAL YEARS 1972-1977 (Vehicle Mileage and Passengers are in thousands)

1973 1974 1975 1976 1977 TOTAL

For 12 Months Ending June 30: Revenue Passengers 51,681 56,357 57,934 59,504 59,782 285,309 Transit Passengers 14,475 15,963 16,303 17,855 19,234 83,820

7/1 907 77 "JCQ 7Q m c ICQ 1 9D 1 Ota 1 rassengers DD , I 00 1 C.yO\\) /y ,u 1 OOy , 1 CO Vehicle Miles Operated 22,419 24,637 26,985 27,203 27,507 128,751

As of June 30: Vehicles in Service 603 689 715 735 735

Route Miles 1 ,367 1 ,527 1 ,587 1 ,670 1,812 Annualized Vehicle Miles of Service 24,955 26,380 26,922 27,308 28,926

TABLE 3

STATEMENT OF TRANSIT OPERATING COSTS AND REVENUES FISCAL YEARS 1973-1977 (in thousands)

7/1/72 7/1/73 11^11'^ 7/1/75 7/1/76 thru thru thru thru thru 6/30/73 6/30/74 6/30/75 6/30/76 6/30/77 TOTAL

EXPENSES Transportation 12,479 16,866 20.077 21 .692 23,827 94,941 Maintenance 4,998 7,809 10,222 11,008 12,523 46,560 Administration and General 6,127 5,588 4.505 4,957 6,531 27,708 Total Expenses 23,604 30,263 34,804 37,657 42,881 169.209

Direct Revenues Passenger Revenue 7,754 8,269 8,472 8,875 8,898 42,268

Special Operations and Other 1 ,215 1,015 972 1,058 1,291 5,551 Total Transit Service Revenues 8,969 9,284 9,444 9,933 10,189 47,819 Net Service Expenses over Revenues 14,635 20,979 25,360 27,724 32,692 121 ,390 Federal Operating Assistance Funds 2.418 3.346 4,098 9.862 Sales Tax Funds Applied 14,635 20,979 22,942 24,378 28.594 111 .528 Per Cent of Total Sales Tax Required 31.5% 41 .5% 45.0% 46.2% 49.4% 43.1%

III-6 the price one is willing to pay) is not a This computation rests on conservative real benefit. However, the actual benefit assumptions: an average trip length of received i_s the difference between actual five miles, along with a marginal cost of price paid and value received. Also, automobile use of 15(i per mile. This 15^ microeconomic theory assumes perfect competi- figure includes costs of gasoline, tion, perfect information, and perfect maintenance, parking, depreciation, incre- substitutabi lity of alternatives none of mental insurance (because of using automo- which apply to the real world of urban bile for trips to work), and probably transportation. constitutes a conservative estimate.

For the five-year period considered, Case I demonstrates clearly the regres- MARTA carried a total of 369,128,000 passen- siveness of the no-transit alternative. ger trips — of which 83,820,000 were trans- Although the calculations are based on trips fers to make the second or subsequent leg of by transit-user families, the results also the 285,308,000 actual origin to destination apply to non-transit-user families. (revenue passenger) trips. A total of $285,593,000 was collected in sales taxes, with $111,528,000 allocated to operating 2. Case II : The Traditional Public costs. This allocation supplemented Financing Method . Table 5 presents estimates $42,208,000 in fare revenues, $5,551,000 in of per family costs for transit-user families other operating revenues, and $9,862,000 in under the traditional financing method. Here federal operating assistance that constituted the user pays the full operating cost through Jt»169,209,000 in total operating expenses. a break-even fare. Transit non-users have The average cost per (revenue) passenger for the same cost per family in this case as all the five-year period was 59. 3^, with a sub- families bear in Case I. The distribution of sidy rate (sales tax only) on 65.9 percent. cost for transit users is still regressive, Transit service revenues contributed 28.3 but not so much as in Case I. The cost per per cent of total operating cost. trip is the total five-year operating cost divided by total (revenue) passengers for 1 . Case I : The No-Transit Alternative : the period, or 59. 3t. Table 4 presents estimates OT the proportion of annual family income required to fund 258 million-odd trips by auto transit. See Appendix 1 for derivation of the numbers of transit-user families, and average family incomes.

TABLE 4

CASE I: THE NO TRANSIT ALTERNATIVE: PER CENT OF ANNUAL FAMILY INCOME FOR AUTO ALTERNATIVE TO TRANSIT

Total Transit Trips - Five Year Period 285,308,000

Transit User Families > 93,034 Annual per Family Trips 613.3

Average Trip Length (Miles) 5.0 Cost per Mile $0.15 Auto Cost per Trip $0.75 Annual per Family Cost $459.98

Income Percent of Group Annual Income

Less than $5,000 9.2% $5,000-$9,999 4.6% $10,000 and Higher 2.6%

Total 3.5%

III-7 TABLE 5

CASt II: THE TRADITIONAL METHOD PERCENT OF ANNUAL FAMILY INCOME FOR TRANSPORTATION TRIPS BY TRANSIT USERS AT FULL COST/NO TAX FINANCING

Five year Total Cost $169,209,000 Average Annual Cost 33,841,800 Transit User Families 93,034 Ppr Family Annual rn<;t $363 76

Income Percent of Group Annual Income

Less than $5,000 7.3% $5,000 - $9,999 3.6 $10,000 and Higher 2.1

Total 2.8%

Case III: The Atlanta Plan. Table 6 Transit users are not the only ones presents estimates of annual costs per paying for operating costs of transit, transit-user family, and of the proportion of however. Table 7 presents the transit annual family income required to pay these operating cost burden for non- transit costs under the sales tax/low fare method. user families added onto the automobile Here it shows a net benefit for all transit- costs for their trips (the same number of user families, with the benefit largest for trips per family as for transit users to low-income families and declining as income preserve comparability). When the tax rises. This reflects a "progressive" distri- burden is added to the cost of private bution. travel, the distribution of costs for

TABLE 6

CASE III: THE ATLANTA PLAN PERCENT OF ANNUAL FAMILY INCOME FOR TRANSPORTATION TRIPS BY TRANSIT USERS WITH SALES TAX/LOW FARE FINANCING

INCOME GROUP Less Than $5,000- $10,000 and $5,000 $9,999 higher Total

Five-Year Fare Cost $15,427,820 $16,484,520 $10,355,660 $42,268,000 Five-Year Tax Cost 6,726,203 15,707,732 12,043,793 32,777,728 Five-Year Total Cost 22,154,023 30,102,252 22,399,453 75,045,728 Five-Year Value Received 61,761 ,285 65,991,510 41 ,456,205 169,209,000

Five-Year Net Cost (Benefit) ($39,607,262 ) ($35,799,258) ($19,056,752) ($94,163,272) Transit User Families 33,957 36.284 22,293 93,034 Per Family Total Net Cost (Benefit) ($1,166.40) ($986.64) ($854.83) ($1 ,012.14) Per Family Annual Net Cost (Benefit) ($233.28) ($197.33) ($170.97) ($202.43) Percent of Annual Income Benefit) (4.7%) (2.0%) (1.0%) (1.5%)

III-8 TABLE 7

CASE III: THE ATLANTA PLAN PERCENT OF ANNUAL FAMILY INCOME FOR TRANSPORTATION -AUTO ALTERNATIVE UNDER SALES TAX CONDITION

INCOME GROUP Less than $5,000- $10,000 and $5,000 $9,999 higher Total

Five-Year Tax Cost $2,419,093 $14,174,268 $62,456,911 $79,050,272 Nontransit User Families 12,212 37,518 115,108 164.838 Per Family Tax Cost $198.09 $377.80 $542.59 $479.56 Annual Per Family Tax Cost 39.62 75.56 108.52 95.91 Annual Per Family Auto Cost 459.98 459.98 459.98 459.98 Per Family Annual Total Cost $499.60 $535.54 $568.50 $555.89 Percent of Annual Income 10.0% 5.4% 3.2% 4.2%

What's Fair About Low Fare? A Summary transit non-users is very regressive. There are more transit-user than non-user families The preceding analysis has demonstrated in the lower- income groups, however, and the relative fairness of three methods of considering all members of each income group financing for different income groups, for together, as shown in Table 8, results show a transit-user families, as well as for non- progressive distribution of net costs. The transit-user families. To complete the lowest income group almost breaks-even on the picture. Table 8 presents the cost distri- average, and the higher income groups on the bution for income groups as a whole for average bear a growing proportion of net cost.

TABLE 8

CASE II: THE TRADITIONAL METHOD PERCENT OF ANNUAL FAMILY INCOME FOR TRANSPORTATION -ALL HOUSEHOLDS AT FULL COST/NO TAX TRANSIT OR AUTO

INCOME GROUP Less than $5,000- $10,000 and Total $5,000 $9,999 higher

TRANSIT USERS Per Family Annual Cost $363.76 $363.76 $363.76 $363.76 Number of Families 33,957 37,284 22,793 93,034 Total Annual Cost $12,352,257 $13,198,302 $ 8,291.241 $33,841,800

NONUSERS Per Family Annual Cost $459.98 $459.98 $459.98 $459.98 Number of Families 12,212 37,518 115,108 164,838 Total Annual Cost $ 4,227,400 $12,987,519 $39,846,671 $57,061,590

ALL FAMILIES Total Annual Cost $16,579,657 $26,185,821 $48,137,912 $90,903,390 Number of Families 46,169 73,802 137,901 257,872 Per Family Annual Cost $359.11 $354.81 $349.08 $352.52 Percent of Annual Income 7,2% 3,5% 2,0% 2,7%

III-9 Case II, and Table 9 does the same for the fare transit resulted from political com- Atlanta Plan. Table 4 I shows the Case promise. Whether the fare is 15(t or ]0t or condition, since in that instance there 25(t, applying the sales tax/low fare method are no transit users. makes non-riders pay for the benefits they

TABLE 9

CASE III: THE ATLANTA PLAN PERCENT OF ANNUAL FAMILY INCOME FOR TRANSPORTATION, ALL HOUSEHOLDS AT SALES TAX/LOW FARE TRANSIT OR AUTO USE

INCOME GROUP Less than $5,000- $10,000 and $5,000 $9,999 higher Total

TRANSIT USERS Per Family Annual Cost ($233.28) ($197.33) ($17.97) ($202.43) Number of Families 33,957 36,284 22,793 93,034 Total Annual Cost (Benefit) ($6,873,919) ($7,344,735) ($4,614,000) ($181832,654)

NONUSERS Per Family Annual Cost $499.60 $535.54 $568.50 $555.89 Number of Families 12,212 37,518 115,108 164,838 Total Annual Cost $5,101,115 $20,082,389 $65,438,898 $91,632,402

ALL FAMILIES Total Annual Cost (Benefit) $772,804 $12,747,654 $60,824,898 $72,799,748 Number of Families 46,169 73,802 137,901 257,872 Per Family Annual Cost (Benefit) $16.74 $172.73 $441.08 $282.31 Per cent of Annual Income

(Benefit) 0.3% 1 .7% 2.5% 2.2%

The results from Table 4 through Table 9 are receive -- whether those benefits be presented graphically in Figures 1 and 2. reduced traffic, more available gasoline, Figure 1 distinguishes between transit user or cleaner air. It gives the biggest break and non-transit user segments of each income to low- income transit riders, who need the group for each case, while Figure 2 considers benefit the most, with all riders coming the income groups as a whole. out ahead and higher income non-riders paying out the most absolute dollars. A The analysis shows what's fair about the different tax-base would shift things 15-cent fare. Overall, it is considerably around a little, as would a different fare better for transit users, of every income level. That shifting, however, would only group, than either no-transit or the tradi- change degree and not result: low fare, tional method of financing mixed-benefit tax-supported transit is fairer than no public goods. What's not fair about the transit or full user-charge (farebox) 15-cent fare is that -- considering income support of operations. groups as a whole -- low-income, non-transit user families are hardest hit of any group The 15-cent fare has proved to be very under the Atlanta Plan. However, the absolute fair for Atlanta. cost per family is only slightly increased, and virtually any cost for anything severely impacts that group. At least those low-income families who can and do use transit end up well ahead, while higher-income families who do not use transit must carry a greater share of the load.

The 15-cent fare came about serendipi- tously, while the concept of sales tax/low

III-IO FIGURE 1 DISTRIBUTION OF COSTS TRANSIT USER AND NONUSER FAMILIES

$5,000 $10,000 $15,000 $20,000 FAMILY INCOME

iii-n FIGURE 2 DISTRIBUTION OF COSTS ALL HOUSEHOLDS

AUTOMOBILE ONLY

$5,000 $10,000 $15,000 $20,000 FAMILY INCOME

III-12 Appendix 1. STRATIFICATION OF RIDERSHIP VOLUME AND ESTIMATION OF NUMBER OF TRANSIT-USER FAMILIES, BY INCOME GROUP.

To assess the share of sales tax paid by persons in various income groups and to estimate the benefits received, we stratify the total number of revenue trips by income group and estimate the number of transit-user families in each income group. This can be done using data from the 1972 ridership survey. Table lA shows the number of weekly trips made by persons in each of four income groups, as determined from that survey.

TABLE lA

WEEKLY PERSON TRIPS BY TRANSIT BY FOUR INCOME GROUPS

PERCENTAGE OF WEEKDAY SATURDAY SUNDAY 7-DAY WEEK TOTAL TRIPS

Less than $5,000 67,361 40,868 16,452 394,125 36.5%

$ 5,000 - $ 9,999 74,007 37,884 13,652 421,571 39.0

^10,000 - $19,999 40,047 13,731 3,881 217,847 20.2

$20,000 and Higher 8,552 3,227 894 46,881 4.3

All Income Groups 189,967 95,710 34,879 1,080,424 100.0

Source: MARTA Fare Reduction Research Study, On-Board Survey Phase

The percentage distribution of weekly trips is derived, and in Table IIA those percentages are applied to the total ridership for the five-year period to derive passenger estimates for each income group. In further computation and tabulation, the two higher income groups are added into a single group to conform to group definition utilized by the U.S. Bureau of the Census.

The 1970 Census reported a total of 257,872 families and unrelated individuals within

Fulton and DeKalb Counties who are arrayed, by income groups, in Table II lA.

Utilizing these totals and estimates of per family sales tax payments, actual tax payments for families in each income group can be derived, as shown in Table IVA. There the estimated annual tax per family is applied to the total number of families in each income group to obtain an initial estimate of total sales tax per year. This total of sales taxes applied to operations is allocated to each income group in the same proportions found in the initial estimates,

III-13 TABLE IIA

ESTIMATED PERSON TRIPS BY TRANSIT FOR FOUR INCOME GROUPS (July 1972 - June 1977)

INCOME PERCENT OF VOLUME OF GROUP TOTAL TRIPS TRIPS

Less than $5,000 36.5% 104,137,000

$ 5,000 - $ 9,999 39.0 111 ,270,000

$10,000 - $19,999 20.2 57,632,000

$20,000 and higher 4.3% 12,269,000

Source: MARTA Fare Reduction Research Study (On-Board Survey Phase, and Operating Reports).

TABLE I IIA

FULTON AND DEKALB COUNTY, GEORGIA NUMBERS OF FAMILIES AND UNRELATED INDIVIDUALS BY INCOME GROUP

INCOME NUMBER OF PERCENT OF LEVEL FAMILIES TOTAL FAMILIES

Less than $5,000 46,169 17.9%

$ 5,000 - $ 9,999 73,802 28.6

$10,000 and higher 137,901 53.5

Total 257,872 100.0%

Source: U.S. Census (1970), Table P-4.

III-14 TABLE IVA

DISTRIBUTION OF INCOME TAX BURDEN (OPERATING EXPENSE PORTION BY INCOME GROUP)

INCOME GROUP Less than $5,000- $10,000 and $5,000 $9,999 Higher Total (5,000) (10,000) (17,500) (13,116)

Number of families and unrelated individuals $ 46,169 $ 73,802 $ 137,901 $ 257,872

Initial estimate* of annual sales tax per family 33 63 90

Applied estimate of annual sales tax per fami ly 1,523,577 4,649,526 12,411,090 18,584,193

Distribution of burden 8.2% 25.0% 66.8% 100.0%

Allocation of sales tax revenues applied to ooeratina ro

Contribution to operating subsidy per family 198.08 211.1^ 540.25 432.49

per family/per year $ 39.62 $ 75.56 $108.05 $ 86.50

Percent of annual family income 0.8% 0.8% 0.6% 0.7%

Estimates from Eva C. Galambos, An Evaluation of Major Revenue Sources to Finance Rapid Transit in Atlanta (November, 1970), with figure for low income group representing a weighted average of Galambos' estimates for $2,000 and $4,000 annual income families.

which are 8.2 percent for families with income less than $5,000, 25.0 percent for families with income between $5,000 and $10,000, and 66.8 percent for families with income greater than $10,000. When these percentages are applied to the total sales tax allocation to operating costs, subsidy from each income group is obtained and by division the subsidy contribution per family and per year is obtained.

There have been changes in income group distribution since the 1970 burden estimates and the 1972 survey; there have also been changes in total families. To allow in part for these changes, "average" family income will be estimated at $5,000 for the low-income group,

$10,000 for the middle-income group and $17,500 for the upper-income group. Retaining the

1970 estimate of family units, the areawide average family income is estimated at $13,116.

It may easily be seen that contribution per family per year represents a smaller proportion

III-15 of income as income increases. This verifies that the sales tax is regressive unless consideration is given to the compensating effect of the low fare.

To properly consider the effects of the low fare in compensating for the regressi veness of the sales tax, it will be necessary to derive a division of families in each income group into transit user and nonuser families. This is done in Table VA using data obtained in the home interview phase of the 1972 survey. In that study, phase surveys were conducted in

1,239 households. Assuming the same percentage distribution by income group as were found for on-board passengers, the number of transit user families is estimated as shown.

TABLE VA

ESTIMATING OF NUMBER OF TRANSIT USER FAMILIES, BY INCOME GROUP

Number of families and unrelated individuals 257,872

Number of home interview samples* 1 ,239 Expansion factor 208.13 Transit user household samples* 477 Estimated transit user households 93,034

TRANSIT PERCENT OF PERCENT OF USER FAMILIES IN PERCENT OF INCOME GROUP TOTAL TRIPS FAMILIES INCOME GROUP TOTAL FAMILIES

Less than $5,000 36.5% 33,957 73.5% 13.2%

$5,000 - $9,999 39.0 36,284 49.2 14.1

$10,000 and higher 24.5 22,793 16.5 8.8

Total 100.0% 93,034 36.1% 36.1%

*From MARTA Fare Reduction Research Study, In-Home Survey Phase.

III-16 CASE STUDY IV -

REORGANIZING THE GENERAL MANAGER'S OFFICE

Robert T. Golembiewski

Richard F. Perkins

. .

REORGANIZING THE GENERAL MANAGER'S OFFICE

The old Shafter Cow experienced change desire involved developing a close-knit team directly. Just before 5:13 A.M., on April 18, of executives who would play increasingly 1906, the cow stood contentedly, no doubt active roles in determining Authority policy, thinking bovine thoughts. Just after 5:13 a group of colleagues with Kiepper as primus A.M., huge forces which she could not under- inter pares. While asserting definite per- stand — the great Frisco earthquake -- sonal control over the evolving MARTA, then, swallowed her, leaving only a bit of her Kiepper at the same time insistently sought tail showing above ground. 1 to develop his Senior Staff -- all those in

Figure 1 who reported to him, with the This case study describes another kind of exception of the Federal Relations Coordina- change, neither as catastrophic nor as dramatic tor and the Assistant Secretary to the as the change caused by the 1906 earthquake. Board of Directors -- into a group of policy But for the Board of Directors, the General advisors Manager, and the staff of the Metropolitan Atlanta Rapid Transit Authority (MARTA), a As the Short-Range Program neared com- basic reorganization in 1975 provoked the pletion in 1974, the priorities of MARTA same kinds of phenomena the earthquake pro- began to change and the structure in

duced -- surprise, anxiety, fear, frustration Figure 1 began creating serious problems. and pain. Some even felt as if they were The new priorities related to designing and swallowed up by events over which they had especially building the rail system -- a

very 1 ittle control more complex task requiring intricate schedules that required spritely response. The new priorities were poorly served by Past as Prologue the existing organization. GM Kiepper felt that the organization was cumbersome, slow In very real senses, the 1975 reorgani- moving, lacked team work, and that the zation came as a necessary evolutionary stage, Long-Range Program was not advancing as it a kind of organizational shifting from first should. The Board shared his feelings, as gear. Created by the Georgia legislature to did many of the Senior Staff. design, construct, and operate a mass transit system, only an embryonic organization existed Frustration, pain and pressure occurred when a new General Manager, Alan F. Kiepper, in three sets of relationships prescribed by was appointed in March 1972. An organization the structure. First, the Board increasingly structure, along classic lines, was designed came to the opinion that progress was not by a management consulting firm, positions substantial enough, while Kiepper often saw were filled; and MARTA began work on its two their attempts to correct the situation as an major programs -- a Short-Range Program and a invasion of his territory. Long-Range Program. The Short-Range Program called for the up-grading of the surface Second, Kiepper felt that he was not transportation system which MARTA had acquired getting adequate information and support in 1972. The Long-Range Program called for from his Senior Staff, and most Board members the designing, constructing and operating of a agreed with him. Flashpoints developed rapid rail transit system. throughout the structure, and several personnel changes were made on the Senior Staff. The two programs were worked simultane- Special concern focused around: Transit ously but, for many reasons, the Short-Range Systems Development, headed by Assistant Program assumed initial priority. That pri- General Manager Peyton Tabb; and Administra- ority was reflected in various ways, most tive Services, whose first AGM had been prominent among them being the basic organi- replaced by Morris Dillard. zation of MARTA sketched in Figure 1. That structure encouraged — even required -- that The TSD situation was extremely complex, GM Kiepper enforce this priority in a hands-on involving major pushes-and-pul 1 s within MARTA mode. Kiepper clearly was "the head" in the as well as between TSD and MARTA 's general structure -- everything of any consequence engineering consultant -- Parsons-Brincker-

flowed through his office in a highly- hoff, Tudor, Bechtel , or PBTB. TSD sought to centralized mode. While Kiepper insisted on serve as a "strong" in-house staff to monitor early and tight control, his longer-run PBTB, which provided the technical numbers 1 1 1

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IV-2 and muscle, and both TSD and PBTB sought to for power and dominance were being played develop suitable organizational elbow-room out; tension and wariness often charac- with respect to the broad MARTA authority terized their dealings with each other; system. The state of relationships in 1975 lack of adequate information escalated satisfied none of the major actors. their frustration; and they went to work, to meetings, made decisions, and talked in The Administrative Services situation the halls with uneasiness about the future was more direct. The AGM for Administrative and their part in it. Services had not been recomnended by MARTA 's consultant, but was added by the Board to These corimon features rest upon complex provide a senior "black" position. The think- constellations of events and actions affecting was that it would be difficult or impossible ing the three sets of major actors. Atten- to recruit blacks for most other AGM positions tion turns to each of these actors, in turn. — which required senior construction/engineering experience for the TSC) slot, major experience in bus and rail transit for Transit The Board . 1975 marked the end of an Operations, and so on — at MARTA salary era for the MARTA Board. The Board through levels. It was believed that such hiring would early 1974 had been made up of leading be far easier for Administrative Services, with Atlanta citizens -- figures of considerable responsibilities which included personnel, wealth and influence, in the main; and that general services, and other activities with an Board could count among its many blessings "internal" thrust. There had been two AGMs for the active support of the business and com- Administrative Services, both blacks. The 1975 mercial conmunity as represented (for incumbent -- Morris Dillard -- had a strong example) by the Atlanta Chamber of Commerce. track record at MARTA, first in the pre- The chairman of the Board in 1974 was Allen Referendum organization working for the rapid Hardin, a prominent Atlanta contractor. transit system, then in MARTA' s Coirmunity and still Relations office, later as Kiepper's The old order changed mercurial ly. By executive assistant. But Dillard was not late 1974, several terms had expired, several experienced in the Administrative Services resignations took place, and new appoint- role which he assumed in February 1974, and ments -- made by various political bodies at did not feel comfortable in that role nor city and county levels -- came from a differ- satisfied with his performance, which facts he ent strata of the Atlanta metropolitan com- had discussed with GM Kiepper. munity. They were younger and lower-tier prominent citizens. In particular, black Third, strained relationships developed representation on the Board was strengthened. among Senior Staff members, with all being In a palace revolution, moreover, a widely- more or less involved from time to time. Espe- known Atlanta labor leader, John Wright, was cially tender spots did exist, however. Robert elected Chairman of the Board. Nelson, the AGM for Finance and Administration, felt that his area of responsibility was not The new Board began developing its own getting Kiepper's proper attention, and that special chemistry. Overall, the 1975 Board the General Manager was focusing too much on was less sure of itself, was more responsive Tabb and Dillard. Others felt that they could to diverse constituencies with less of a not get the services and supplies they needed regional view, had less local backing from from Dillard's department. the business and conmercial cortinunities, and was much more diverse in background, economic position, and experience in governing a The Unfolding Constellation of Forces complex public project. In addition, members generally had more time to give to their The drama of the 1975 reorganization re- Board work than did their predecessors; and flected the impact of a turbulent constellation Board members certainly began to assert of forces, roughly from November 1974 through themselves openly in response to their con- February 1975. Those forces surrounded three stituencies. One specific point illustrates sets of actors: the various personalities on the cross-pressures. The "new" Board the Board, GM Kiepper, and the Senior Staff. inherited the "old" Board's General Manager, and the prevailing talk in the streets had The common features of those contending it that the Board was only a rubber stamp forces are clear. Perhaps basically, the major for Alan Kiepper, and did not exercise much actors were committed to a major public works influence over what took place. Board program, in fact, the program in the southeast; members sought to scotch the street-talk and they were variously concerned about its in various ways, as by organizing themselves progress, with some even beginning to doubt that into standing committees to work with the there would be a rail system. Disenchantment principal functions of the Authority -- existed between some of these actors; struggles operations, system development, finance.

IV-3 . , .

etc. Chairman Wright placed great emphasis on "The atmosphere was tense. There was the work of the comnittees and named strong wariness between the Board, myself and the chai rpersons Senior Staff. I felt caught between the Board and the Staff." But the transition between the old Board and the new went neither swiftly nor surely. Kiepper' s issues with the Board were Evidence of that point was overwhelming. To both specific and general. Although several i 1 1 ustrate only: Board members provided unwavering support, to note the key specific issue, a few Board -- Board members often felt frustrated and members thought that the trouble was so uneasy in making decisions. They could not serious that he ought to be removed. Others agree on who should be the Bond Counsel, for felt that the trouble was less serious, that example. The Board postponed, delayed, dis- all he needed to do was delegate more and to cussed, made a decision, then re-opened the make stronger demands for getting the rail subject and made a new decision. From the system moving. Pervading this very-practical Board's point of view, decision-making often issue, Kiepper was in-transition concerning was complicated and difficult because informa- the new Board. On the one hand, he had tion from the staff was not available, or was relished the freedom implicit in the broad inadequate oversight of the "old" Board, which often simplified his job and magnified his own -- Board members saw the Senior Staff at direct influence. At the same time, the GM odds with each other and often concluded that ideologically saw value in an active and Kiepper was not on top of what was happening participative Board, although he did not and could not get the staff sufficiently relish competitors for his power. Moreover, together on data or recommendations coming to Kiepper realized that MARTA was in the midst the Board. The GM's wide span of control of transitioning from an idea to a concrete became a central target for Board members as building program that would impact on the they tried to find ways to get the information full range of local institutions, traditions, for the burgeoning range of decisions in which and policies. The old Board was ideal for Board involvement was required by their newly- sustaining the MARTA concept and getting it instituted system of active conriittees. accepted. But implementing that concept would profit from the kinds of skills and -- The Atlanta press, the Chamber of contacts represented on the new Board, even Commerce, and downtown business interests were though its members gave no sign of being cautious if not suspicious of the new Board, content with exercising control only via and some concern developed that the rail system broad pol icy-making might never be built. Newspapers reported gleefully on the happenings in MARTA, and A basic problem for Kiepper, perhaps emphasized several embarrassments that charac- the problem, thus became one of distinguish- terized late 1974 and early 1975. Blame was ing useful efforts by the Board to partici- directed at both the Board as well as GM pate in and to own the program, from efforts Ki epper. to simply diminish the authority he needed to function effectively. Mistakes were easy Chairman John Wright puts the time in to make, obviously, and especially under the perspective. He remembers: "The Board was in threat of losing his job. And the costs of transition and still very divided. We were failure to make correct discriminations divided about the competence and effectiveness were great, especially in the sense that a of the General Manager; divided about our power well-intentioned effort to participate/own, and influence and about whether or not some of if interpreted as an effort to wing-clip, the Senior Staff as well as the General Manager would very likely encourage just such ought to be fired." In the words of another emasculating efforts. Similarly, the failure Board member: "Differences about racial to recognize and respond to a wing-clipping matters disrupted our work together and the effort also could be dangerous. Kiepper and black/white issues were far from being his external consultant. Dr. Robert T. resolved." Moreover, Wright also explains Gol embi ewski , spent much time seeking to that the situation got so serious that "MARTA distinguish the two kinds of thrusts, and in was clearly in trouble and had to cope with planning appropriate responses. public and political threats. We got concerned about our survival. The Governor thought Kiepper's specific problem with his that the MARTA Board had deteriorated and ought Board inhered -- the GM concluded, as a to be replaced by the people who put in the general matter -- in the inadequate perform- Disneyland monorail." ance of the Senior Staff, and that constituted his major concern. Kiepper felt they did not work together as a team for the The General Manage r. GM Kiepper was in overall good of MARTA. Oppositely, in fact, trouble on two fronts. As he himself observed: he saw them often supporting only their own

IV 4 .

departments, protecting their own territory. Often rooted in insufficient For example, it was not uncommon for one Senior respect for plans and schedules Staffer to come to Kiepper with data "proving" of others. GM Kiepper is a that another Staffer was currying favor with major contributor to this certain Board members, was disloyal, or just problem. incompetent. Kiepper especially needed information from his Staff about progress in design- 0 Insufficient delegations of ing ana building the rail system, and he was authority are made by the GM to not getting it. He said later: "I don't think the Senior Staff. they were trying to mislead or deceive me or the Board, but they thought they were protect- 0 The GM needs to pay more atten- ing me and the Board from being the target of tion to, and give more time to unfavorable criticism in the newspapers." What- his work with the Board, leaving ever the cause, Kiepper sought to stimulate the far more details to the Senior input he needed, as by weekly meetings with the Staff. principals from KiARTA's Transit System Develop- ment and also from MARTA's general engineering These symptoms were particularly distressing, consultants, PBTB. He dreaded those early given one awesome fact -- the workload in meetings because he was so often just the MARTA was escalating rapidly, and the end of referee between the two principals, his AGM and the things that needed early doing was no- the PBTB executive. where in sight. Left alone, then, things would get worse at an increasing rate. Here Kiepper was torn. He had a major commitment to succeeding with his present Senior Staff, whom he had personally recruited The Senior Staff . The Senior Staff per- in almost all cases. But performance problems ceiveJTerTouFTroubTe with both the General were a fact of life, and the three months Manager and the Board, as well as between them. beginning with December 1974 were difficult Some Senior Staff felt that their jobs were in ones for Kiepper. After much counselling, jeopardy and that they might not be around much discussion, and evaluation, Kiepper gave poor longer. Their performance review sessions and performance ratings to three of his principal their weekly one-to-one meetings with the subordinates General Manager made them anxious about their future. The GM's difficulties added a volatile Kiepper came to another conclusion: both ingredient to Senior Staff concerns. Nearly he and MARTA needed a third-party view of what half of the Senior Staff thought it would be was wrong and what needed to be done. Consul- good for them if the General Manager were tant Richard F. Perkins interviewed thirty of fired; but a majority felt this action would the Senior Staff and their immediate subordi- be bad news for them. "We were scared to nates during January 1975. He put together a death we might get a new master," said one of report that was presented to the GM, and then the Senior Staff. Others were equally con- to the Senior Staff on the first Saturday in cerned that the old master would remain. February. The report contained few surprises for the GM or the Senior Staff, but confirmed Issues of power and preeminence charac- the impressions of most. In capsule, Perkins' terized the Senior Staff throughout late 1974 report pointed out that: and early 1975. The most glaring power issues were expressed in terms of differential 0 There is lack of cooperation, access to the General Manager. One Senior support and mutual understanding Staffer echoed the sentiments of most of his between members of the Senior colleagues, if not all. "It was a time when Staff. there was a terrific amount of disenchantment with each other and with the General Manager," 0 Most meetings at the Senior Staff he notes. "The core problem had to do with level are unproductive. accessibility. Some of us had to wait outside his office cooling our heels when we needed to 0 The decision-making process is see him, while others could go right in to see unclear, slow, and lacks decisive- him and get what they wanted. We were angry ness. at him and at each other. Talk in the halls focused on who was currently on top of the 0 The "turf" issue is preeminent in General Manager's totem pole." the working relationships of the Senior Staff. The Senior Staff and the Board also had serious problems. Th^ Senior Staff problem 0 The consultant observed an in- with Board members had to do with the ques-

ability or unwillingness to plan tion: "What can I say to which specific Board

ahead and to keep to schedules. member, and what can't I say." When the Board

IV-5 created standing committees via wrnch individual 0 There had been a change in the Senior Staffers had regular access to several Board's leadership and member- Board members, things became a little easier. ship. However, standing committees also created a vehicle by which Senior Staff members could 0 Board standing committees had curry favor and advance their own cause with been formed. members of the Board, or could be thought to be doing so. In the words of one Senior Staffer: 0 MARTA was gearing up for the "There was a lot of politicking going on between first phase of construction for some Staff members and some Board members who the rapid rail system. were disenchanted with the General Manager -- and two Board members encouraged this in their 0 The General Manager had been on attempt to develop their case against the the job for three years. General Manager." 0 The consultant Perkins' study Two fundamental points of agreement also confirmed all was not well. existed between Senior Staff and the Board. Both were concerned about the lack of visible GM Kiepper summarized the stakes involved, progress on the rail system. And both agreed if matters were allowed to continue without with these words of one Senior Staffer: "The forceful intervention. The momentum of the General Manager had too many people clamoring Authority could be jeopardized after a suc- for his attention. Because he didn't delegate cessful great-leap-forward in improving an enough authority so that we could act without existing bus system that was doing well. checking with him, work went slower and slower." Moreover, relationships between himself, Increasingly, Senior Staffers articulated a the Senior Staff, and the new Board could conmon remedy for what ailed them: "What we have been ruptured. And there was one a need around here is Deputy General Manager." other matter at stake: '^ly_ job," Kiepper The genesis of this idea cannot be dated recalls. precisely, but a major and confidential recommendation to this effect had been made to GM So GM Kiepper carefully touched the Kiepper by one of the AGMs in a memo dated proper bases. The General Manager consulted December 1, 1974. The AGM noted: "So that with John Wright, chairman of the MARTA there should be no suspicion that my proposal Board, about the possibility of a Board/' is self-serving should you look favorably upon Staff retreat. Wright enthusiastically this specific recommendation, for your inform- approved. And Kiepper announced to the ation I am not a candidate for the position." Senior Staff that their ongoing discussion about a restructured MARTA and also about relationships with the new Board would have Key Events Before the Showdown a broader forum. Senior Staffers reacted variously to the news that a retreat would GM Kiepper decided on a process for resolu- be held March 2-4 at Callaway. "All aboard tion of these obvious issues, a process which he for Callaway," one wag on the Senior Staff had used at other critical times in MARTA's was heard to say. The more general feelings life. The process involved an off-site retreat were anxiety, mixed with relief that it was or workshop, and was characterized ideally by about time. high degrees of openness as well as of owning ideas and feelings by participants. The work- GM Kiepper took two other major prepar- shops shared much in coimion with "team develop- atory steps before the Callaway session. He ment" activities, and drew practically and accepted a suggestion by one Senior Staff philosophically on that body of research and member -- Robert Nelson, the Assistant practice called Organization Development.^ For General Manager for Finance and Administra- example, three such events had been held earlier tion -- who offered to prepare for the at the Center for Continuing Education at the General Manager a brief paper outlining University of Georgia in Athens. Details are structural changes to make the Authority provided in another title in the UMTA Case Study more effective. Project on MARTA Management, "Facilitating Tran- sitions to the Several MARTAs." Nelson's reorganization introduced a Deputy General Manager, and arrayed the Early in 1975, GM Kiepper began planning required functions as in Figure 2. Nelson for the first workshop involving the new Board deliberately left the organization boxes and the Senior Staff. The setting was to be at blank, but he did describe for GM Kiepper Callaway Gardens, Ga., a lovely spot; and the the impact of the change on existing staff. issues and stakes were awesome. In summary, Nelson intended substantial changes in both these major developments and data had to be rank and persons, the details of which have taken into quick and efficient account: no special relevance here. He then described

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IV-7 several new systems that would be installed: Option 3: Major Structural Change management by objectives, and a unit for over- -- two Deputy General all MARTA Program Planning and Reporting. Managers, as sketched in Figure 3. Along with the new organizational chart, Nelson raised some questions for Kiepper's Option 4 : GM Focuses on External consideration that would be relevant if Nelson Relations; Deputy for were the deputy. Would Nelson have some time Internal Operations, as each day with the General Manager? Would he in Figure 4. have full authority to direct the work of Transit Operations and Transit System Develop- The rationale underlying Options 3 and 4, ment? What would be the physical layout of the especially, sought to deal directly with offices? Nelson also proposed some strong and the major Board and Senior Staff complaints early training in interpersonal relationships -- reduced span of control and more delega- so that he would not have to "force feed" the tion of authority, so as to free the staff. General Manager to give greater attention to the Board, as well as to attend to the The General Manager then asked Dr. Perkins, external relationships so critical to the consultant who conducted the management MARTA 's success. study, to write him a confidential paper suggesting several alternative organizational None of the options met with Kiepper's structures which would reduce his span of complete approval and acceptance. He control, providing a rationale for each one. indicated that the Deputy concept repre- The consultant prepared such a paper with four sented major problems for him. He would options for realigning the top tier of the take the options, study them, and come to Authority. The consultant and the GM met on the Callaway session with a "broad brush" February 26th to review these four options, proposal of his own for a new structure -- which would assist Kiepper in preparing a a proposal which would provide clear presentation he was planning to make at the guidance for both Board and Senior Staff, opening of the Callaway Gardens' session. but which also would provide ample room for specific inputs from both.

Option 1 : Minimal Structural Changes With these preparatory steps as a A. Maintain the present organizational backdrop, Kiepper asked consultants structure Golembiewski and Perkins to develop a general plan for the workshop, which evolved B. Clearly delegate to Mr. Nelson into two basic tracks. Thus some time would day-to-day internal management; be spent by Board and Senior Staff alone, adding the program information and working on their internal issues. Senior control function to him, with Staffers would concentrate on the implica- additional staff, if necessary. tions of Perkins' management study for their The basis for better infonnation relationships and their structure of work. and control would be a Management Considerable time and effort had already by Objectives (MBO) system. been devoted to both themes, of course. The Board was at a different place, and inter- C. Install an effective Management by views were conducted by Dr. Golembiewski to Objectives System provide data and agenda items for the Calla- way discussion. The second design track in which each Assistant General sought to use the workshop as a vehicle for Manager sets: specific objec- building a more effective Board/Staff team tives, negotiated with the GM, for accomplishing MARTA 's mission, and including target dates; per- especially by considering whether some new formance review agreements; form of organization would improve MARTA 's and plans for corrective action. functioning.

Option 2 : Defer any structural or personnel changes until What Happened at Callaway? after a six to eight months' experience with an MBO pro- was a social gram focusing clearly on The first Board/Staff event Board on results, then making any hour given by the Chairman of the followed by dinner. structural changes in light Sunday evening, March 2, nervous laughter, and of performance review. There was considerable a high degree of superficial cordiality, introductory Build the control and infor- which carried over into the sketched the mation system around MBO. work session. GM Kiepper IV- 1 '

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IV-10 purpose of the workshop; Drs. Golembiewski and 0 which 2 or 3 colleagues each Perkins explained their two-track design, very Board member saw as giving the briefly; and then the Board went to one room lowest ratings to the Board's while the GM and Senior Staff went to another. effectiveness With their respective consultants, each group agreed to work on these topics: All responses were coded numerically, and presented on a single visual. The interest 0 Mission was intense. Board members could only guess who (for example) #3 or #6 were. But they 0 Role and function could get a very definite idea of the range of opinion about Board effectiveness; and 0 Restraints in the present working they often could compare a member's rating relationships of Board effectiveness with the perceptions of others as to the rating that member would 0 Agreements for improved working give. "We got right down to it," one Board relationships member noted. "It was obvious quickly that there was a lot we needed to know about each What follows is a capsule recap of the other to function effectively. Take #5. He various sessions, taken primarily from the con- was ranked highest on evaluating Board sultants' report on the workshop, the General effectiveness by three of us; two of us saw Manager's notes, and the memories of some Board him as lowest; and he put himself smack in and staff participants. the middle."

The introductory design sought to provide Sunday Evening and Monday Morning: Two a model not only for looking at internal

Tracks of "Internal" Work . The Board and the relations, but also for reviewing relations Senior Staff with GM Kiepper met separately for with GM Kiepper and the Senior Staff. The this extended period of time. Generally, the Board members shared a mutual concern that two meetings had a similar purpose: to deal they needed to be more active and potent in with concerns internal to the two groups; to overtly influencing MARTA actions, in force- dissipate or focus any free-floating anxiety; fully showing they were "on top of things" and to focus a? specifically as possible on the and in generating a real sense of greater key agenda items, many of which had a high and progress. They moved on to develop a list unavoidable potential for anxiety associated of "relational" concerns and problems, which with them. focused particularly on scheduling a formal performance review for GM Kiepper before the entire Board, and on generating specific Four Shifts in Board Dynamics concerns that would be raised with Kiepper in that first cormion appraisal of his work. A complete recapturing of events is Concerns were discussed in detailed, and neither possible nor necessary, but the flavor sometimes heated, terms. There were differ- of the Board meeting can be sketched with ences of opinion about what was wrong and essential accuracy. Board members met with what needed to be done. But no one doubted their consultant who fed back to them the that a new tocsin was born, as Board members results of his interviews, in a mode that shared their concerns with one another, at encouraged Board members to focus on their own length, and in several cases for the first interaction first, and then on their relation- time. That tocsin -- "Build the railroad" -- ships with the GM and his Senior Staff. appealed to all, perhaps especially to the three new members of the Board. The character of the Board's "internal" issues and how they were presented may be This agreement was not gained unevent- illustrated briefly. Consultant Golembiewski fully. Oppositely, in fact, the Board's immediately presented the Board with the data meetings had a double-bind character, espe- -- they could only have guessed about before cially early. For example. Board members data concerning how they and their colleagues were concerned about acting decisively to perceived the effectiveness of the Board. In enhance their credibility, but a serious his interviews, Golembiewski solicited three division on the Board existed about the GM. kinds of perceptual data: Oversimply, three clusters of Board members were clear going into Callaway: roughly a 0 how individual Board members each third were solid supporters of the GM; a rated Board effectiveness smaller cluster led by Fred Meyer were vigorous opponents; and there was a large 0 which 2 or 3 colleagues each Board "swing" cluster composed largely of the member saw as giving the highest new Board members and the new leadership. ratings to the Board's effectiveness IV-11 " . s

Race also added a volatile element to noted they were not yet ready to take a Callaway. Black influence on the Board had position with respect to GM Kiepper. In sharply increased recently, overall. Two new addition, Meyer's strongest support blacks representing Atlanta recently were added typically came from Sheats, as well as two to the Board, and Drs. Joseph Lowery and Johnnie or three Board members who missed the Clark promised to be activist members. Lowery's Callaway meeting. Sheats was preoccupied credentials for activism reached back to early with the theme of "building the railroad," civil rights days, in fact. A third black Board and seemed satisfied with scheduling the member -- Lyndon Wade -- had been one of the session for Board review of Kiepper' major architects of the recently-successful performance. change in Board leadership. This changing racial composition of the Board required careful Fourth, attention began to shift -- building of new relationships, and the process sometimes in halting ways, but nonetheless was slow overall, commonly eventful, and often clearly toward ways of asserting the clamorous. For example, a third new Board style of the new Board. The emphasis was member -- Harold Sheats, representing one of the on Kiepper/Board spheres of influence, which white and affluent metro counties -- was quoted got expressed in several ways including the in late October 197b to the effect that he issue of where the GM was to sit at Board would be pleased "if blacks got up off their meetings. GM Kiepper sat next to the Board haunches and stopped begging for handouts." chairman, at the "head" of an oval seating Those words and the attitudes associated with arrangement, and participated actively and them encouraged a minor fire-storm in the local even dominantly with both the old Board and media -- with four black state legislators the new. The old Board preferred this demanding Sheats' s resignation and also drew highly-central role for him. Substantial considerable attention during the early Board new Board opinion would place Kiepper at a meetings table, off to the side and clearly outside the Board's oval seating arrangement, where The Board dynamics were subtle, but their he would be on-call and less likely to be resolution was clear. To simplify, four major seen by the media and spectators as in con- shifts occurred over time. First, the Board trol. The relocation of the GM was dropped relished its new experience with the public after awhile, but the underlying issue sharing of information about the interviews, as remained. Quite often, the issue of Board well as discussion about Board relationships, prerogatives got reinforced by racial under- CM Kiepper, and so on. The sessions started tones, as in the case of the Board's secre- early, and went on long past the breaks as well tary, a black. The old Board had been as into normal recreation and sleeping time. pleased to assign their secretary to Kiepper's "I didn't dare leave," one Board member said in direct supervision (see Figure 1). But the unleashing a torrent of knowing laughter, "for new Board questioned that arrangement and, .fear they would start talking about me and I'd hioreover, felt that the secretary should not miss all my 'feedback'." The store of available continue to have a lower salary than Kiepper's information increased sharply, interpretations Executive Secretary. In addition, definite often shifted as new inputs were shared, and Board opinion called for additional help to some "facts" previously generated among clusters be assigned directly to the Board secretary, of two or three Board men±)ers were radically who previously had called on the GM's office altered on the basis of open discussion. "We staff when overloads threatened. were hot to trot," one Board member recalls. "There were no great revelations for me, but Relevant to these four major shifts on many of my suspicions were confirmed or laid to the Board, consultant Golembiewski wrote in . rest his notes: "The Board has definitely shifted. Be alert for efforts to challenge or reinforce Second, Board members Sheats, Lowery, and the new balance." Evidence of both challenge Clark mutually grew to appreciate how much they and reinforcement soon appeared. shared the desire "to build the railroad," despite other differences, and all came to a growing appreciation of the personal character- Senior Staffers Refine GM's Proposal istics- behind the "white conservative" and "black activist" stereotypes they had of one While these four major shifts in Board another. dynamics were occurring, GM Kiepper and the Senior Staff picked up where they had left Third, the opposition to Kiepper led by their earlier discussions of the workshop aims Board member Fred Meyer tended to lose momentum. and ambitions. After emphasizing some norms The emphasis in Board discussions had a dimin- for their work together -- openness, honesty, ished anti-Kiepper flavor over time, and staying on the subject, and so on -- the GM increasingly sought positive steps toward provided Senior Staff with a detailed set of building the railroad. Relatedly, new black guidelines and boundary conditions for the Board members -- and especially Lowery -- openly reorganization process. Kiepper began by

IV-12 expressing his concerns about MARTA; he sketched Communications and Marketing -- would both general and specific goals for a restruc- accomplish several major purposes. turing to reduce those concerns; and he con- Directly, GM Kiepper's span of control cluded by outling a method for restructuring would be reduced, since two of those MARTA. Exhibit 1 sketches Kiepper's presenta- offices presently reported to him. More- tion. over, the aggregation would provide a position taking better advantage of AGM During Kiepper's prefatory conments, the Morris Dillard's experience and strengths Senior Staff kept silent. Kiepper's proposed than his present internally-oriented assign- method for moving toward a restructuring of ment, Administrative Services. MARTA got their especial attention, however. He proposed that the organizational model would GM Kiepper did not have to repeat his evolve out of give-and-take discussion with notice that Figure 5 was a first-cut and Board and Senior Staff. The basic constraints subject to revision. The Senior Staff went were that a monitoring system for goals/ to work on the proposal, energetically and schedules would be included, and that existing purposefully. Some of those major purposes, budgetary authorizations would have to fund any at least, were mutually exclusive. As one new organizational model. Consultant Perkins AGM recalls: "My goal was the same as characterizes the meeting's tone in these everybody else's goal -- to keep what I words: "Some heads nodded in approval; and all have -- power, authority, prominence, access body language indicated that Senior Staffers to the General Manager and recognition -- were tense, anxious, and waiting for the words and to get more." which would describe whether or not they were going to gain or lose power in the new organ- What emerged from the intense interac- ization," tion between the GM and the Senior Staff had a cousinly resemblance to Kiepper's Following his introductory comments, Kiepper first-cut proposal, as Figure 6 shows; and drew on a sheet of newsprint the first-cut of a the structure was in no sense final. The proposed organizational chart for restructuring structure was accepted by some, more or less MARTA, which is reproduced in Figure 5. Kiepper as it stood: but most Senior Staff had reflected three key concepts in the new struc- problems with it, of one degree of serious- ture: creating a Deputy General Manager; ness or another. For example, Peyton Tabb — developing a new organizational unit called the AGM for Transit System Development -- saw Project Monitoring and Reporting; and aggregat- the Program Monitoring and Reporting unit as ing a number of present offices that had an at least usurping a function that had been "external affairs" focus. lodged in his department, and perhaps even as a direct criticism of what he had been The three key notions reflected in Figure 5 doing. And the AGM for Communications and are directed at pressing problems. Straight- Marketing was angry -- indeed he felt betrayed forwardly, for example, the DGM was intended to -- since he had been hired with the specific free Kiepper from some detail , and to permit understanding that he would report directly more extensive delegation. But Figure 5 clearly to the GM. The same point applied to Tabb, stops well short of AGM Nelson's proposal in as well as to others. But it was less Figure 2 for shifting activities to the DGM. salient for them, although still not an For example. Transit Operations -- MARTA's issue that could be dismissed. Other Senior substantial bus services -- still report to the Staffers also were anxious as well about what GM in Figure b, while Figure 1 moves that large the new Program Monitoring and Reporting unit office under the DGM. would mean. They asked: "Will that unit be monitoring and reporting on m^ performance as Relatedly, PM & R represented an attempt to well as that of Transit System Development?" correct the problem of communicating progress Possible changes in title and salary made some and problems about the development of the fail even more fearful. "Am I still going to be system -- Kiepper's problem and the Board's an Assistant General Manager, or an Assistant problem. The unit's specific responsibility to the General Manager, if I no longer report would be to gather information on all the directly to him?" This typified the questions aspects of operation and compile periodic being asked as the Senior Staff broke for reports on progress against the agreed-upon lunch. No one could answer that question. milestones in MARTA's overall plan. The reports Nor could anyone answer the key question: would inoicate what was on-schedule, highlight which personnel would occupy what positions potential problems, and flag more serious in the new organizations? problems that needed imnediate attention. Paramountly, however, both critics and Finally, the aggregation of an "external supporters of the Figure 6 structure had affairs" unit -- composed of Intergovernmental serious concerns beyond possible loss of Relations, Community Relations, as well as prestige, power and access. Specifically,

IV-13 .

EXHIBIT 1

GM KIEPPER'S ORIENTATION RE REORGANIZATION

1 . Concerns

(1) With advent of rail construction MARTA has entered a new phase of development.

(2) Need for reevaluation of organization in light of new requirements

- Greater External Focus Future determined by outside forces

- More flexible organization that can evolve and adapt to changing needs

(3) Need to:

(a) Clearly establish goals and schedules

(b) Monitor progress against goals & schedules

These need to be done for entjj^.^ organization. Absence /of goals and schedules/ has

encouraged involvement of General Manager and Board in excessive problems

2. General Goals for Restructuring

(1) Stren gthen effectiveness and coordination

(2) Focus for me on the external relations

(3) Free General Manager from internal administrative responsibilities

(4) Improve coordination of external units

3. Specific Goals of Restructuring

(1) Free General Manager for greater attention to the MARTA Board and -- with their help -- fur greater attention to these external publics;

- UMTA & other Federal agencies

- /Georgia^/ General Assembly

- Local Governments

- Atlanta Regional Commission

- Community groups/press

- PBTB /^MARTA's general engineering cousultants/

- Transit Industry

MARTA's future destiny depends on quality of decisions

( 2 ) Improve Decision Making proces s

Focus on goals and schedules and monitoring thereof

IV-14 Exhibit 1 , concluded

(3) More effective use of key personnel

4. Proposed organizational model

(1) Will evolve out of discussions

(2) Restructuring will be accompanied by joint Board/staff development of goals dules for monitoring system

(3) Can be accomplished within existing budget

IV-15 ' ' ' 1

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IV-17 ,

all Senior Staffers felt anxious about what the 0 Staff Counsel should have an Board was discussing and how they would respond expanded role to reduce "outside" to the proposed organizational structure. legal costs.

0 Structural change was not enough. Monday Afternoon: Testing "Relational" In addition, MARTA needed an

Aspects of the Two Tracks . The lunch break organization-wide system for provided an opportunity for consultants to setting goals, objectives, and compare notes. The timing was just right for schedules, beginning with the "bringing the two tracks together," as it were. Board. The Board had made a number of decisions, and specified a number of goals for actions that 0 The Board was to be involved in required early decisions. And the restructur- some of the personnel appointments ing discussed by the Senior Staff was responsive which would be made following the to many of these decisions and goals. Consider- recrgani zation able progress had been made by both groups, and neither set of products was yet cast in con- Basically, these variations spoke directly crete. GM Kiepper and the two consultants to the issue of enhanced Board prerogatives, agreed it was time to bring the two groups into sometimes reinforced by racial undertones. direct contact for some mutual testing. Board aspirations for new influence are clearest, for example, in seeking direct The Board met with the staff on Monday reporting relationships with three afternoon to review the proposed reorganization individuals/offices, in prescribing a of the Authority. Consultant Perkins explained goal-setting and scheduling system focused the proposed changes, and the General Manager around the Board, as well as in the major and several staff members spoke in support of Board role in the new appointments attendant the proposal. Some Senior Staff were noticeably to the reorganization. Racial undertones silent during the discussion. attached most directly to the Board Secretary, AGM for EEO, and the head of Contracts and Board members responded significantly in Procurement, incumbents in all of which two ways. The import of the first effort offices were black. escaped some, although it certainly pleased several attendees. Imnediately after Kiepper The processes of proposal generating spoke, Board member Sheats spoke to this effect: counter-proposal did not go smoothly, espe- "Whatever the new organization, we've got to cially with the many issues which only take gooa care of Morris Dillard, He's done detailed consideration of the in-process great work." Consultant Golembiewski inade a structure could even hope to resolve. Anger note for himself: "A major reinforcement of was displayed; strong words and some inflam- the shift observed in Board discussions. Will atory statements were made; and some Senior others see it?" Most heard the message and got Staffers felt punished by the statements the point. made by some Board members. The black members of the Board were exercising more No one missed the meaning of a second power and influence than they had before. Board reaction to the proposal. The proposed structure well-suited many Board concerns, but Nevertheless, as the Monday afternoon not all. In response to the proposed organiza- session came to an end, semblances of agree- tion, the Board developed six major variations ment began to emerge. The General Manager on two themes: a more active Board role; and accepted most of the Board's demands. The more visible progress in moving beyond the real Board compromised on their original demands advances of having developed a first-rate that the Board's Assistant Secretary, the network of bus transit. Specifically: Assistant General Manager for EEO, and the new head of the Program Monitoring and 0 The General Manager should spend Reporting Unit report directly and only to two-thirds of his time on "building them. The compromise allowed direct and the railroad." simultaneous reporting to the Board and the General Manager. In the negotiations out 0 The following three individuals and of which the compromise hatched, the General their staff should report directly Manager indicated his eager willingness to to the Board: spend two- thirds of his time on building the Assistant Secretary to the Board railroad. The Board also would be involved Assistant to the General Manager in the development of the concept for the for EEO new Program Monitoring and Reporting unit, Program Monitoring and Reporting as well as in staffing it. Adjustments would be made in the compensation of the 0 Contracts and Procurements should be Board's secretary, as well as in providing a separate unit and upgraded. additional help to that office.

IV-18 :

Monday Evening and Tuesday f^rning : 0 "Did the Board really have Substantial but Incomplete Consensus-Building . more power, or were they just -- Monday evening saw the two groups Board and given the symbols of power?" Senior Staff -- meeting separately. The discussion was eventful in both locations, and the 0 "What will happen as the resolution was similar in each case. General Manager gets deeply involved with 'building the In its meetings, the Senior Staff generally railroad'?" came to see substantial merit in the new structure, on growing balance. By noon Tuesday, the The General Manager felt better about "winners" — those who had gotten more power and the results of the workshop than most -- influence clearly accepted the new structure. others. He felt that there had been an And acquiescence was growing even among the acceleration in the involvement of the Board, "losers," if only because they recognized they a freeing up of the organization, and a much were fighting a losing battle. The AGM for higher level of mutual support and sharing. Conmuni cations and Marketing was the most vocal He did have misgivings about whether or not about the pain he felt. He said to the staff's the Deputy General Manager position would consultant, "I'll send my resume' to you. See work. Going outside was not considered if you can find me another job. I won't work seriously, given the pressure of time and for Morris Dillard if he becomes the Assistant Kiepper's no-cost pledge. But the only General Manager for Planning and Public Affairs. reasonable and available internal candidate I came to MARTA to report to the GM." for DGM -- Robert Nelson, the Assistant General Manager for Finance and Administra- Most Board members articulated a wait-and- tion -- was an avowed competitor for the see attitude in their discussion, but some General Manager's job. In addition each man advocated a more active posture. For most was wary of the other, and neither was members, attractive commitments had been made comfortable in a subordinate role. that promised vigorous response to their concerns, but only time would tell. A minority was more aaamant, and the subject of firing the The General Manager also hoped that the General Manager was unsuccessfully broached. new structure would work, although he recog-

In Dr. Golembiewski ' s words: "It never came to nized some unresolved problems. The officials a vote, but it was a clear intent on the part of units focusing on external affairs would of some Board members." have to thrash out their difficulties and learn to work together under the leadership The end-state at Callaway thus can be of Morris Dillard. Then, too, he was uneasy described as substantial but incomplete consen- about having Program Monitoring and Reporting sus-building, with major issues still open. As directly responsible to the Board as well as the worksliop ended at noon on Tuesday, that is, to himself. few participants felt completely happy about the outcomes. For example, Morris Dillard came out of Callaway with an assignment far more to Apres Callaway his liking and with a heightened organizational status, but he knew there were problems ahead. Three lines of development briskly fol- The Board members felt they had increased their lowed the return to Atlanta. The General power and had made clear their demands to the Manager at Callaway created a task force to General Manager, but only time would tell implement the basic agreements developed whether this would help build the rail-line. there, to meet March 5-6. Subsequently, some conflictful aspects of the restructuring were Senior Staffers saw paper changes -- boxes addressed. Finally, Kiepper and AGM Nelson and names in new places on the chart. They sought to define the DGM role to their mutual were not sure that the paper changes would satisfaction. really become operational. The talk in the cars as they drove back to Atlanta dwelt on such questions Implementing the Basic Agreements . The task force for implementation was manned by 0 "Will the General Manager genuinely the four AGMs and Dr. Perkins, the Senior delegate administrative details to Staff's consultant, and they moved quickly to the Deputy General Manager -- to legitimate the essential Callaway agreements, Bob Nelson?" as well as to transform them into a reasonable sequence and schedule of events for 0 "Will Kiepper and Nelson be able transitioning toward the new structure. The to work together, given their task force also would prepare a resolution personalities and managerial for GM Kiepper's approval that would go to styles?" the Board. Together, these men generated IV-19 the Staff Paper on Organizational Restructuring, responsible for coordinat- presented in Appendix 1. Among other points, ing our external functions the paper proposes to: including Planning, Inter- governmental Relations, Com- 0 install the Deputy on March 10 munity Relations, Urban Mass following Board action, and inform Transportation Coordination, the entire organization of the and Communications and change Marketing.

0 begin work on the PM&R unit 2. A Program Monitoring and Reporting Unit will be estab- 0 clarify by mid-April the organiza- lished assuming many of the tion responsible for the "external functions presently delegated affairs" thrust to the Division of Program Control. This group will 0 by mid-April complete the change- report directly to the Board over of responsibilities from the of Directors and the General Executive Assistant to the Deputy Manager and will assist in General Manager setting organizational goals and objectives and in moni- On March 10, the Board accepted in princi- toring program progress. The ple the changes in structure, instructing the staffing of this Unit will be staff to implement them. The next day, GM determined within the next Kiepper issued this memo: few days.

TO: Senior Staff 3. Robert W. Nelson has been Di rectors named Deputy General Manager and will assume direct respons- FROM: Alan F. Kiepper ibility for the Department of General Manager Transit Operations, Legal Services, Contracts & Procure- Realignment of Responsibilities ment, and all other supportive services, including the Divi- For the past two months we have been sions of Personnel and General reviewing our experience and analyzing Services. In addition, the the ability of our organization and Deputy General Manager will staff to meet the challenges of the provide day-to-day administra- future. Dr. Richard Perkins assisted tive support to the General us in this effort and each Director and Manager and all other elements member of the Senior Staff provided of the Authority. valuable input. These changes are effective today, March 11, Almost without exception the staff 1975. believed that the General Manager must somehow free himself to devote more of In addition to the structural changes set his time and effort to our Long-Range forth above, we are embarking on a com- Program. In addition, there was a prehensive program with our Board of unanimous belief that our organization Directors which will involve the estab- needs to be more flexible, responsive, lishment of solid goals, objectives, and and task-oriented. schedules.

Last week the Senior Staff met with We believe these changes, many of them our Board of Directors for two days to proposed by you will not only free the review our progress to date and to General Manager from the many routine discuss ways by which we can increase matters requiring his attention, but will our effectiveness. As a result of produce a more flexible, responsive, these discussions, we have Board con- and task-oriented organization. Their currence and support in initiating the implementation and effectiveness will several significant organizational depend upon your continued support and changes set forth below. enthusiasm.

As I 1. Morris J. Dillard has been General Manager, want to thank each named Assistant General of you for your openness and cooperation Manager for Planning and in the organizational review process. Public Affairs and will be

IV-20 Problem-Solving the Conflictful Details . reserved to himself the continuing direct

Appendix 1 notes that some issues were still supervision of Swinford and King. This unresolved, as in section 2B (1.), and the approach had multiple possible costs, and principal irresolution involved the "external also represented a continuing demand on the affairs" group. A staff-consultant task force GM's time. had the responsibility for developing a final- ized plan and organization chart. The basic The latter recomnendation went to the roadblock? Two key Assistants to the General Board on April 14, 1975. See the details in Manager -- one for Intergovernmental Affairs Appendix 2, Organizational Restructuring and the other for Coimuni cations and Marketing Status Report of April 14. Basically, — were hired by Kiepper with the understanding Kiepper' s decision rested on the integrity that they would report directly to him. The of his word. "I had to keep my promise," he new structure called for them to report to an recalls, "although I realized the coordinat- A6M for Planning and Public Affairs -- Morris ing-only role could be troublesome for

Oil lard. The two key AGMs resisted the change. Dillard." He adds: "And of course I understood that my decision probably would not A consultant met with the external affairs sit well with some Board members." executives to see if they could work out an acceptable form in which supervision of PPA No one was completely happy with the could be handled. Three persons in the group resolution, including Kiepper; and active had no problems in being directly responsible displeasure was not hard to find. Several to AGM Dillard -- the Director of Planning, the Board members thought that Morris Dillard, as Director of Community Relations, and the Assistant General Manager for Planning and Federal Relations Coordinator. They had Public Affairs, was being demeaned and weak- reported to Dillard in the past. Jim King in ened by not having direct control and super- Intergovernmental Affairs and William Swinford vision of the two AGMs. Moreover, one of in Corrmuni cations and Marketing were adamant those two assistants made it clear to con- about directly reporting to the General Manager. sultants that he was not going to make a genuine cormitment to even Dillard's The Board and the General Manager wanted a coordinating role. Nevertheless, the Board final report from the external affairs execu- affirmed the decision and the organization tives by mid-April, but the issue was dead- change was "completed." However, everyone locked. The results of some intense meetings: recognized that some of the paper had a very heated discussion, very strong differences very shaky future. of opinion, and for several weeks, no resolution. GM Kiepper recalls: "I promised the two men they would report to me, no doubt about it. Finalizing the DGM Role . While the So their recollection of that point did not "external affairs" issue hung fire to be surprise me. What did surprise me was the resolved only by the GM's decision, the intensity with which they insisted on the DGM's role and functions were agreed to by direct reporting relationship with me." From Nelson and Kiepper. On March 17 and again Dillard's point of view, the issues were more on April 7, GM Kiepper sent two important understandable. He preferred line control over memoranda to DGM Nelson spelling out their King and Swinford, believing in the integrity agreements. The March 17 memo included this of the "external affairs" grouping and arguing time-table: for corresponding authority. Not only a loss of personal influence was at stake, moreover. 1 . For the next two to three weeks

The Board had been concerned lately not only I suggest that you concentrate about its own prerogatives, but also had taken on the new units which have been major steps to see to it that blacks in MARTA assigned to you; namely, the got their just due. Dillard was a black incum- Divisions of Personnel and General bent in a traditionally "black slot," which Services, and the restructuring of complicated the resolution of the clash of the newly established Division of needs and preferences in this case. - Contracts and Procurement. While it is necessary that we defer GM Kiepper came to believe he had two temporarily a decision on the basic choices when the matter was stripped to head of Finance and Administra-

elementals, and both choices had unattractive tion, I do believe that by and features. Kiepper could order the two resist- large the former Finance and Admin- ing Assistants to the GM to report to Dillard, istration Divisions have sufficient and risk the probable departure of both men. momentum and quality leadership Alternatively, Kiepper could charge AGM Dillard to permit them to function with with the responsibility for coordinating the minimum supervision from you work of the sub-units in the Department of during this period Planning and Public Affairs, while Kiepper

IV-21 : ,

2. A second important task, and one Board, the Division of Equal which you share with Robert Duval! Opportunity, and the General my Executive Assistant, is planning Manager's office staff, except for the transition or transfer of the Executive Secretary 1. administrative responsibil ities Administrative activities are from my office to yours. I have defined as those not directly given Mr. Duvall specific instruc- related to the prime mission of tions in considering those adminis- these organizations, e.g., trative responsibilities which personnel, budget execution, should be retained in the Office of office space and supplies, and the General Manager and the staffing other supporting activities required to properly execute them. and services. It will therefore be necessary for you and he to work very closely D. Log and screen all incoming together to assure an orderly mail and take action on all transition. I've asked him to items falling within the above give me a draft of such a plan by areas of assigned responsibil- March 21. ity.

3. The second phase of the transition E. Provide administrative support to the new organization will for the Board of Directors, involve the naming of a head for working closely with the the Finance and Administration Assistant Secretary to the group and the actual transfer of Board. administrative responsibi 1 ities. It is my hope that this can be F. Provide the administrative sup- accomplished within the next 30 port for Staff Meetings, includ- days and I suggest that we work to ing the definition of action this end. items and related follow-up.

Ihe April 17th memo spells out the details of G. Maintain the Assignment Monitor- the DGM role, and deserves reprinting here: ing System.

Phase Two Implementation of H. Provide the supervision for the Recently Announced members of the General f'lanager's Organization Change office staff, with the exception of the General Manager's Execu- Effective Monday, April 7, 1975, imple- tive Secretary 1, Mrs. Spivey. mentation of the recently announced organization change will move into I. The General Manager's files will phase two. Further refinements in the be maintained by the office implementation of the Deputy General staff, under the supervision of Manager concept are included in phase the Executive Secretary 1, two. Specifications and responsibili- Mrs. Spivey. ties are as fol lows J. You will become Acting General A. Your office will be relocated to Manager in the absence of the the office presently occupied by General Manager. the Executive Assistant. K. Correspondence to chief execu- B. Full responsibility for and tives of local government authority over all functions of agencies, ranking elected offi- the Division of Contracts and cials, chief executives of UMTA, Procurement, the Division of Chairman of APTA and other Staff Counsel, the Department of persons of similar rank or Transit Operations, and the prominence will be prepared for Department of Finance and Admin- the signature of the General i stration. Manager. Other routine correspondence will be prepared for C. Responsibility for administra- the signature of the Deputy tive activities of the depart- General Manager or, preferably, ment of Transit System Development, delegated to the appropriate the Department of Planning and staff member. Public Affairs, the Division of Program Monitoring and Reporting, L. Prepare by noon daily an inform- the Assistant Secretary to the ation sheet for the General

IV-22 Manager covering the previous Given the elusiveness of the tasks some 24-hour period. If necessary, useful summary is possible about how the a supplementary information several major sets of actors viewed what sheet will be prepared at the happened. end of the day. This information sheet will include items received or occurring during From the Board's Point of Vi ew. The the period deemed to be of MARTA Board that went through the f975 significance to the General reorganization was a new one -- with several Manager. new members, a larger representation of blacks, and a new leadership. That experi- The orderly transfer of functions from ence was significant to Board members, the Executive Assistant to the Deputy perhaps critical in shaping what the Board General Manager is important to the would become. Specifically: continued smooth operation of this office. I expect you an^d Bob Duval 1 0 The Board members had gained /the Executive Assistant/ to maintain more direct control over the close coordination during this period. affairs of the Authority.

In accordance with our agreement, a 0 The Board had developed a greater 30-minute meeting will be scheduled cohesiveness. on Monday, Wednesday, and Friday at 9:30 a.m. In addition, the one hour 0 Their basic priorities had been weekly status meeting on Wednesday agreed to by the GM. afternoon will be continued. On the last Wednesday of each month the 0 The Board had reasonable expecta- afternoon meeting will be expanded to tions of getting better informa- a two hour meeting. The last hour of tion. this meeting will be devoted to discussing the experiences of the 0 Board members had come to know previous month, for the purpose of Senior Staffers in direct ways. improving our performance. These themes get significant counterpoint in These new internal administrative the words of a Board member: "We took responsibilities are broad in scope charge," he concluded. "For the first time, and will present many challenges in the Board as a group asserted itself. The the months ahead. I look forward to GM's span of control had been reduced and a a productive and rewarding association. DGM had been put into place. The GM's position was strengthened, and we decided to cc: Mrs. Juanita C. Spivey, Executive give him a new chance." At the same time, Secretary 1 the Board sought to avoid overcommi tting Mr. Robert D. Duval 1, Assistant itself to details of management and supervi- General Manager for Finance & sion. That would be undesirable in a Administration management sense. Moreover, neither the Chairman nor the Board envisioned a full- time job, even given their desire to be Three Perspectives on What active. The legislation enabling MARTA had Happened at Callaway a similar view of the Board role: it basically provided that members be compen- Figure 7 depicts the final structure of sated for up to 10 official meetings a month, work consistent with the April 7th memo. In at $50 per meeting. some important senses, that single exhibit encompasses all that happened at Callaway and its several aftermaths. Indeed, for the From the GM's Point of View . GM Kiepper astute organization watcher, the signs are bold. realized the risk at Callaway, but he had survived the showdown, and also strengthened In other significant senses, no chart or his position with the Board. He now had the paper can reasonably reflect what happened -- opportunity to rid himself of details and to the depth of feelings involved in the events at concentrate on the new priority -- "to build Callaway and the subsequent activities that led the railroad." The Senior Staff had come to the Board's formal action on April 14, 1975. somewhat closer together, in addition, and Powerful and volatile words were spoken. Pain the GM had lost no real power as MARTA 's was felt by some in the compromises and conces- Chief Executive Officer. Perhaps most sig- sions that were made. Anxieties ran high. nificantly a massive reorganization with Nevertheless, some decisions were made that major potential for divisiveness -- between gave each set of actors some, if not all, of Board and GM, between GM and Senior Staff, what they wanted. and between Senior Staffers -- had been ^I11 ) ' I

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IV-24 .

brought off, with a balance of support from all traumatic changes which they knew were major sources. And events had moved toward the necessary, on balance, and which were made ideal of an active Board, without smothering with a substantial involvement of all management with excessive controls. interests, and with quite explicit guidelines from the Board and their General Significantly, also, both Board and Senior Manager. Several individuals had real Staff experienced a lessening of the tension reason to be concerned about their jobs and wariness that had existed in the organiza- before Callaway, in addition, but all the tian. The air was cleared between the parties, changes were made with the same executive to a substantial degree. The stage was set for team. Overall, again, understanding and a new kind of drama, given the deeper under- willingness to cooperate increased, even standings and friendships that had developed in though some harsh words were spoken. the relatively free exchange of thoughts and Senior Staffers also saw the real possi- feel i ngs bility that with a Deputy General Manager decisions might get made in a more timely Overall, also, the underlying issue way. Their working relationships and under- throughout the reorganization was the distribu- standing of individual Board members had tion of organizational power. The Callaway been improved. And the survival of GM sessions were their most volatile and painful Kiepper promised that things would be more when individuals saw the gaining or losing of stable for awhile. Several quotations from power as enhancing or diminishing them as several Senior Staffers convey the sense of persons. Some participants gained power, and these prevailing viewpoints: some lost. So all interests were not somehow -- similarly served. The consequences for 0 "The concessions made to the -- both Board ana Senior Staff included public Board were peripheral to the sharing of relevant information, and agreement basic issue. We all survived by most about the general thrust of required the Callaway encounter so our changes. The concerns, or even fantasies, worst fears weren't realized." about what cliques or factions would or could do, generally, were overridden by group 0 "The D6M concept is right in decisions within broadly-accepted senses of theory and if it works we and what had to be done. MARTA will function better."

Some equalizing of the distribution of 0 "When we returned from Callaway power and authority between the Board and the life got easier for some of us GM also occurred. It was clear at the end that -- the GM was concentrating on the Board would be better informed and more building the railroad." involved in the crucial MARTA decisions. More- over, although the GM's job description gives 0 "I knew other staff members him the authority to hire all personnel for the better and that was a real plus staff positions, he shared with the Board the for me. I felt easier about power to influence his decisions about the dealing with the Board and knew selection of personnel for staff positions. more clearly what their biases That sharing is also reflected in the Board's and priorities were." agreement to the dual reporting relationships for the Board's Secretary, PM&R, and EEO staff. Some Consequences in the So where does it all come out for GM Mid-Range Aftermath Kiepper? Given the perspective of nearly two years, he concludes: Did MARTA live happily, forever and ever, after the reorganization? The The timing had been good. We came out reorganization contained some seeds of with a fair amount of agreement on the success, some of failure, and some whose major points in the organization. The consequences have yet to work themselves Board was more interested in personnel out. The 18 following months provide than in the boxes on the chart. While examples of all three kinds of outcomes: the Board was interested in their own prerogatives, they found a way to have 0 The AGM for Transit System greater involvement. We all came out Development resigned in June of the experience with a greater sense 1975 and the GM took control of urgency. In all, it was a very for some three months while a healthy exercise and a positive move. search for a successor took place, an assumption of responsibilities by the GM that was at

From the Senior Staff's Point of View . least eased by the reorganization The Senior Staff had undergone a set of and the transition by the GM IV-25 towdrd spending two-thirds of his time on the railroad.

0 Board concern with its power vis-a-vis the GM continued to moderate as new issues came to the fore.

0 The DGM concept worked only partially, and DGM Nelson resigned ten months after he took the job. The Executive Assistant position was reestab-

1 i shed.

0 The GM delegated substantially more than before, and especially to the AGM for Transit System Development appointed in September 1975.

0 The Planning and Public Affairs cluster never functioned as a cohesive department.

0 The Board hired a contractor to detail the work of the PM&R unit and develop organi ^^ation goals and schedules. In this consultation, PM&R survived in somewhat altered form.

0 Planning and Public Affairs was later restructured (with new personnel) giving AGM Dillard direct supervision of the Communications function.

There were other resignations, modifications and improvements. And the end of the organizational changes, as MARTA's priorities continue to shift, is not in sight. Appendix I.

Staff Paper

ORGANIZATIONAL RESTRUCTURING

1. Rationale for the Proposed Change

A. Background

The proposed change is the result of concerns which have been expressed by the Board and by the Staff of MARTA. The Staff concerns are to some extent a response to the results of the recent Management Survey. The following steps have already been taken in the development of this proposal.

(1) The General Manager has been considering a proposed change.

(2) A proposed change was presented to the Staff at the recent Board-Staff Workshop.

(3) The Staff participated in modifying and improving a proposed structured change.

(4) The proposed change was presented to the Board for their review and advice.

(5) The Board gave important suggestions and criteria that should be met in any restructuring of the organization.

(6) The Staff reviewed the Board's suggestions, modified their proposal and appointed a task force to refine the proposal. The Staff Paper represents the work done by the task force.

B. Board Concerns Which Influenced the Proposal

(1) The Board expressed a strong concern that the General Manager and the total organization should focus increased attention on the construction of the new rail rapid transit system.

(2) Further, the Board supported the Staff's concern that there should be greater coordination of activities that relate to community and governmental relations, particularly as they assist in expediting the construction of the rail transit system.

(3) The Board also expressed concern for a definite improvement in the program monitoring and reporting system and the direct transmittal of such information to them.

(4) The Board also stated a concern that a system of Goals, Objectives and Schedules should be developed and that this process should begin with the Board.

(5) The Board indicated that any proposed change in the organization should be done with the present budget restraints.

(6) Further, the Board expressed concern about

a. The personnel decisions in any proposed change.

b. The contracting and procurement function.

IV-27 . e

Appendix I, continued

c. The direct relationship of the Assis- tant Secretary to the Board

d. The relationship between the Board and the EEO responsibility of the organization

e. The cost of outside legal services.

C. Staff Concerns Which Influenced the Proposal

(1) The crucial need for the General Manager to focus increased attention on building the rail rapid transit system requiring the reduction of his span of control

(2) Increased attention by the General Manager on the groups and agencies which provide for policy, funding and community acceptance of MARTA's effort

(3) The delegation of authority by the General Manager for administrative details

(4) An improved prograin monitoring and reporting function.

(5) Improved utilization of the human resources in the organization.

(6) Improved organizational decision making at all levels.

2 . General Pro posal - Narra t iv

A. The proposal calls for the establishment of a Deputy General Manager who would be responsible to the General Manager for all routine activities for the administration and operation of the organization to provide for the General Manager's concentration on Transit Development Specifically, the Deputy General Manager will be responsible for:

(1) The management and administration of the following functions:

a. Transit Operations

b Finance and Administration

(2) The provision of back-up services for the Board Secretary

(3) The appointment of Robert W. Nelson to the position immediately following Board action.

B. The proposal calls for the designation of an Assistant General Manager for Plannii and Public Affairs Specifically, he will be responsible for coordinating the work of

Planning Intergovernmental Relations Communications and Marketing Community Relations UMTA Coordination

IV-28 Appendix I , continued

(1) The procedures for achieving improved coordination of these functions will be developed in consultation with this Assistant General Manager, the Assistant to the General Manager for Intergovernmental Relations, the Assistant to the General Manager for Communications and Marketing, the Directors of Planning and Community Relations, and the UMTA Coordi- nator.

(2) The appointment of Morris J. Dillard to the position immediately following Board action.

C. The proposal calls for the establishment of a new unit in the organization to perform for the Board and the management a Program Monitoring and Reporting function.

(1) This group and its functions will be developed by a Board-Staff task force. It may be selected from outside.

(2) The unit will provide reports directly to the Board and the General Manager.

(3) A realignment of present functions and personnel will provide the staff for this unit.

(4) This unit will assist the Board in an early installation of a total organizational Goal, Objective and Schedule System.

(5) A unit leader will be appointed as soon as possible, in consultation with the Board.

D. This proposal calls for the establishment of a separate unit responsible to the Deputy General Manager for contracts and procurement,

E. This proposal provides for the continuation of the reporting relationship between the Assistant to the General Manager for Equal Employment Opportunity, the General Manager, and the Board.

F. This proposal calls for input and a decision by the Board about the role and relationship betvyeen the Board and the Assistant Secretary.

G. The staffing of the proposed organizational change can be accomplished within the general guidelines of the present budget. Personnel presently at work in MARTA are currently seen in the new positions at or near their present pay scale.

H. The proposal calls for an expanded role for the Staff Counsel . . .

3 . Propos ed Implementat io n Schedule

March 10 -- Board action and designation of Board Personnel to work with Staff on formation of PMR group.

March 11 -- Appointment of Deputy General Manager

-- Appointment of Assistant General Manager for Planning and Public Affairs

— Communication to MARTA Staff and other appropriate groups

-- Implementation of the revised organization

IV-29 Appendix I, concluded

March 12-14 -- Appointment of an Acting Director of Program Monitoring and Reporting

March 15-30 -- Planning by a Board-Staff task force for an improved monitoring and reporting system

March-April -- The establishment of general goals and objpc.tivr's by the Board

March-May -- The establishment of organizational, departmental and unit li-ader goals, objectives and schedulos in support of the Board's Goals anil Objectives

IV-30 Appendix II.

STATUS REPORT

ORGANIZATIONAL RESTRUCTURING

April 14, 1975

Status of Reconmendations

Each of the general proposals adopted at the March 10, 1975, Board Meeting are set forth bflow -- followed by a brief narrative report of related actions taken, matters not yet resolved or implemented, and present status.

2. General Proposal - Narrat ive

A. The proposal calls for the establishment of a Deputy General Manager who would

be responsible to the General Manager for all routine activities for the

administration and operation of the organization to provide for the General

Manager's concentration on Transit Development. Specifically, the Deputy General

Manager will be responsible for the management and administration of the

following functions - Transit Operations, Finance and Administration to include -

Finance, Management Systems, Personnel, General Services, Contracts and Procure-

ment. Staff Counsel, MIM, and Claims.

(2) The provision of back-up services for tha Board Secretary.

(3) The appointment of Robert W, Nelson to the position immediately

following Board action.

As proposed, Robert W. Nelson was appointed Deputy General Manager on March 12, 1975, serving as both Assistant General Manager for Finance and Administration and Deputy General Manager until April 4, 1975. At that time Robert C. Duval was appointed Assistant General Manager for Finance and Administration and Mr. Nelson was able to begin full assumption of his new responsibilities. Several of the actions initially proposed to be accomplished in this restructuring have not yet been fully implemented, these include the following:

(a) Effective day-to-day administrative relationships and supervision of

the Department of Transit Operations have not yet been initiated due

primarily to the Authority's present involvement in the budget review

process.

IV-31 Appendix 1 1 , continued

(b) The provision of additional back-up services for the Board Secretary

has not yet been possible; however, it is anticipated that this matter

will be dealt with as part of the FY 76 budget review process.

B. The proposal calls for the designation of an Assistant General Manager

for Planning dnd Public Affairs, Specifically, he will be responsible

for coordinating tne work of Planning. Intergovernmental Relations,

Communications and Marketing, Community Relations, and UMTA Coordina-

tion

(1) The procedure' for acliieving improved coordination of these functions

will be develo(ied in consultation with this Assistant General Manager,

thp Assistant to thr- General Manager for Intergovernmental Relations,

the Assistant to thi General Manager for Communications and Marketing,

the Directors of Planning and Community Relations, and the UMTA Coordina-

tor.

(2) Thp appoi ntnif-nt of Morris J. Dillard to the position imiDediately following

Board action.

As proposed Morris J dillard was appointed Assistant General Manager for Planning and

Public Affairs on March 12. 1975, Mr Dillard was able to immediately assume his new

responsibility with the transfer of the Division of Personnel and General Services to the

Departmpnt of Finance and Administration Due to the fact that several of the key units of

this Department had previously functioned under the sole direction of the General Manager,

the development of procedures for achieving improved coordination within the Department

has been difficult However, budgetary and reporting relationships have been established

to the point that a formal organization chart was issued on 4/7/75.

to perform for th(- Board and the management a Program Monitoring and

Reporting function

(1) This group and its functions will be developed by a Board-Staff

Task Force. It may be selected outside.

The unit (2) will provide reports directly to the Board and the General

Manager.

(3) A realignment of present functions and personnel will provide the

staff for this unit.

IV-32 Appendix II, continued

(4) This unit will assist the Board in an early installation of a total

organizational Goal. Objective and Schedule System,

(5) A unit leader will be appointed as soon as possible, in consulta-

tion wi th the Board .

The establishment of this unit of necessity involves the coordination of many existing functions within the Department of Transit System Development, Unfortunately, during the past months the various staff elements involved have been involved in extensive review meetings with UMTA and PBTB and have thus been unable to give full consideration to the necessary realignment of

responsibilities. Robert C. Duvall in addition to his new responsibility as Assistant General

Manager for Finance and Administration, has been appointed Chairman of the Staff Task Force to work with the appointed Board representatives in developing a Work Program for the activation of the Program Monitoring and Reporting Unit. It is my understanding that the Chairman of the Board

plans to appoint the Board representative to this Task Force in the near future. The plans for activating this unit will inc'lude the determination of staffing level, the development of position descriptions, the development of an organizational charter, the realignment of present functions, and the development of goals and objectives with a related management reporting system to insure adequate monitoring of progress against these defined goals,

D. This proposal calls for the establishment of a separate unit responsible to the

Deputy General Manager for contracts and procurement.

While reorganization and staffing of the new Department of C&P is underway

and new systems and procedures are being developed, it is not expected that

the rolp of this unit will change significantly until certain key vacancies

are filled.

E. This proposal provides for the continuation of the reporting relationship

between the Assistant to the General Manager for Equal Employment Opportunity,

the General Manager, and the Board.

The existing relationships between the Assistant to the General Manager for

Equal Employment Opportunity, the General Manager, and the Board continue

to be effective and no change is anticipated in this area,

F. This proposal calls for input and a decision by the Board about the role and

relationship betv/een the Board and the Assistant Secretary,

This relationship has not yet been resolved by the Board.

lV-33 Appendix 1 1 , concluded.

G. The staffing of the proposed orqafiizational change can be accomplished within

the general guidelines of the present budget. Personnel presently at work

in MARTA are currently seen in their new positions at or near their present pay

scale.

To date all of tht changes which have been implemented have been accomplished

within the present budget.

II The proposal calls for an (Expanded role for the Staff Counsel

ronsol idation of ligal services, operating claims, and MARTA Insurance

Manaqi'rs has been deferred i>f-nding further Board review of these functions.

IV-34 NOTES

1. Donald Fabun, et al . , The Dynamics of Change . (Englewood Cliffs, N. J.: Prentice-Hall,

1967), p. 1.

2. Robert T. Go! embiewski , Renewing Organizations ; The Laboratory Approach to Planned Change

(Itasca, 111.: F. E. Peacock, 1972); and Wendell L. French and Cecil H. Bell, Jr.,

Organization Development : Behavioral Science Interventions for Organization Improvement

(Englewood Cliffs, N. J.: Prentice-Hall, 1973).

IV-35

CASE STUDY V -

DEVELOPING AN ARBITRATION PROCESS FOR RESOLVING CONTRACT DISPUTES

Jeffrey B. Trattner

Gerald J. Miller

Developing an Arbitration Process for Resolving Contract Disputes

Three major constraints faced the Metro- This case 'study describes the effort to politan Atlanta Rapid Transit Authority (MARTA) defuse the destructive potential for conflict when staff members readied construction contract among MARTA, UMTA, and contractors over the documents for bidding. First, plans entailed an handling of contract disputes. Three MARTA ambitious and optimistic schedule, with a no- strategies aimed to limit conflict -- assum- frills budget. Second, the Urban Mass Transit ing part of the risk of performance, using Administration (UMTA), the major federal source federal contract language and legal precedent, of funds, would approve contract awards and and providing absolute limits for work- audit payments to contractors, and this put stoppages due to contractual disputes. These UMTA in a strategic position to look over alone, however, could not prevent some inevit- MARTA' s shoulder, if not to second-guess at able disagreements over contracts. After much leisure decisions made in a fast-paced program. effort and several dead-ends, MARTA executives Third, the Authority was an unknown contract found their stopper. They settled on a method -- -- manager a new kid on the block in con- for resolving contractual disputes unique in struction and equipment markets with no track public transportation contracting -- arbitra- record in managing any construction, no less a tion. It generated confidence among all billion-dollar-plus program. parties that any disputes involving contract performance would be treated fairly, quickly, and cheaply. Anticipating the Worst in Contract Disputes How Contract Disputes Can Occur Consequently, pervasive uncertainty charac-

terized both MARTA actions and those of the MARTA 's concern about resolving contract primary groups with which Authority executives disputes was well-founded. Consider the would deal. MARTA staff members felt cautious ubiquitous conditions out of which contract about the degree of control UMTA would exert, disputes arise: when the contract or the as well as about maintaining stiff budget and design fails to show contractors clearly what schedule constraints. Authority executives, work to do and how it should be aone. At best, moreover, were wary about the possible tendencies construction plans often require later engineer- of contractors to exact profits and impact the ing or design changes which force "change- schedule. In addition, UNTTA and contractors orders." Change-orders vary in their impact on experienced their own misgivings. UMTA adminis- the contract to which both engineer and con- trators assumed a major risk in granting the tractor initially agreed. The contractee will largest amount of federal transit dollars ever tend to seek up-dates of plans and designs, to to a local construction program. MARTA' s tight benefit from hindsight, new experience, or more schedule and budget counseled caution for con- mature reflection. And contractors especially tractors, especially in considering whether fear that change-orders will result in added and how much to bid on MARTA work. work without additional or adequate compensation. Disputes occur when a contractor dis- Experience in public works projects made agrees with the engineer's interpretation of it very clear to all three parties -- MARTA, the work required in a construction contract UMTA, and the contractors -- that trouble would with payment above that agreed to in the come, if anywhere, from contract disputes. original contract. Major potential for such Contract disputes spelled trouble for MARTA in disputes exists, because MARTA will revise both time and money. To UMTA, disputes meant contracts for five general types of changes. possible generous awards to contractors to avoid protracted delays. On the other hand, contractors could envision paltry profits Changes Deriving from "Value Engineering" and much agitation in getting the railroad built. A way of steering clear of such poten- With the least potential for conflict, the tial horribles had to be found by MARTA execu- contractor may suggest a change, based on tives, if they hoped to maintain the schedule "value engineering." By allowing the con- and budget, to avoid adverse second-guessing by tractor to initiate, MARTA encourages the UMTA, and to obtain the confidence of contrac- contractor to think of better ways to accom- tors. An equitable, inexpensive and expeditious plish the work. If the contractor can means of resolving contract disputes was needed. alternatively meet or improve on specifications and also can prove that there is no else is. They were here before MARTA con- sacrifice in quality, he can share in any struction and will be here afterwards." savings. Many local agencies are chronically under- staffed, and cannot deal in timely ways with the volume of plans which MARTA produces. Unexpected Field Conditions Some government agencies sign-off on drawings and then later may require changes, as field A second kind of change results from conditions become clearer or after they have field conditions which differ from initial been able to really review the plans. expectations or assumptions, a common situation that provides ample potential for honest differences, not to mention New Ways Bring Changes sharp-dealing. For example, plans may require a contractor to compact ground to The final type of change-order occurs a certain density. However, the ground when, after contracts have been let, MARTA might cover a long- forgotten garbage site, engineers find a better way of doing things limiting the degree of compaction possible. In other words, as technology or experience The standard density set in the contract advances, MARTA takes advantage and clianges would be impossible to achieve, and the contracts accordingly. contract must be changed, but the extent of such change can be a sticky issue. Why Contract Documents Can at Best Reduce the Chance of Disputes Engineering Errors in Original Plans The inevitability of change requires A third kind of change occurs when a special attention in MARTA contracts, which contractor finds that engineering plans have two basic parts. The first part -- the contain mistakes. The sources can be general contract -- specifies general condi- legion. The language in the specifications under which work is to be done. A tions may be incorrect; field conditions second "special conditions" section is tailored may differ; or there may be an error in to the particular construction project. A the drawings. change can occur in either. Although the special conditions section seeks to anticipate problems, some always resist prediction. One. Changes of Mind or Will MARTA staff member explains: "We try to anticipate everything and provide for it. We

MARTA also may decide to change plans never really quite think of everything. . . . or engineering concepts for approaching a There is no such thing as a perfect contract. project. These changes often result from Construction contracts by the nature of the the efforts of outside interests -- espe- beast will require changes." cially railroads, telephone, electric, gas, and other utilities, as well as the city, county, and state governments with which Special Stresses on the MARTA ilARTA works. For example, railroads are Contracting Process sensitive to any potential impact on their tracks. If MARTA needs to impose on their In addition to the nature of the beast, right-of-way, railroads may require MARTA contracting in MARTA had additional potential to work with the former's specifications. for frustrating the construction schedule and Also, the Georgia State Department of budget. Basically, construction contracts do Transportation controls interstate high- not cheaply provide leisure to solve problems. ways, and must approve plans which call Construction is dynamic, and changes must be for altering routes or controlling traffic. made quickly to keep the project going. To Similarly, the cities control changes exacerbate this already-dominant tendency, affecting sewer and water lines. Many MARTA's construction schedule was quite tight. lines were built around the time of the Thus one close MARTA observer concludes that Civil War and -- since they would disinte- the schedule may have been "overly optimistic. grate if in the path of construction It did not leave enough room for mistakes or MARTA by agreement must replace them to contingencies for bad weather, labor problems, present standards. In the case of city natural disasters, and so forth, which in sewer and water lines, their disturbance fact, did occur in many contracts." Further by I^IARTA may be unanticipated, requiring reducing the ability of the contract to a change in a contract to replace them. anticipate and thus avoid disputes, a large The cities or counties may also ask for number of MARTA contracts were bid in depressed changes after city planners have approved economic circumstances. The recession of the the original design plans. One MARTA mid-1970's initially favored MARTA, and staff member states: "We're in a hurry resulted in lower bids. Assume that contrac- with the building program, and no one tors made bids on contracts only high enough V -2 to keep their firms going. Thus MARTA's prevented in some instances, and that they initial advantage might fade as the Atlanta could be restricted to reasonable boundaries economy improved, and the inevitable change- in almost all cases. The first-cut at orders would give contractors opportunities appropriate strategies sought ways to elim- and motivation to reopen the bargaining on inate some of the more obvious potential for contracts. MARTA executives wanted desper- contractual disputes. ately to maintain schedule, while also realizing this left them far more vulnerable As a first strategy, MARTA chose to in negotiating about the costs of any changes assume the liability for contractor accidents, than they had been under competitive bidding. both those involving construction workers and In other words, keen competition in a tight those between contractors and third-parties economy often had kept bids unexpectedly low, not connected with the work. For example, but there would be no competition among con- MARTA would pay claims for workmen's compensa- tractors when changes occurred. Well-placed tion, as well as claims resulting from observers feared that contractors might accidents between an Atlanta resident and a bludgeon i-lARTA at the negotiating table. contractor's vehicle while the driver was at Also, the changed bargaining relationship work. forced MARTA engineers to evaluate very critically the need for every change. One A second strategy involved the decision observer noted this ever-present question in to use federal contract language, a decision the minds of construction project managers: influenced by two factors. First, in the Do we want the change very badly? development of the contract documents for the MARTA construction program. Authority execu- The impact of contract documents on the tives gave greatest consideration to UMTA's change process also was affected by the funding reserved right to approve various contract formula. The contract with MARTA included a actions, either prospectively or through the face amount and a contingency fund. The con- audit process, based on federal regulations. tingency was generally 10 per cent, and provided This fact urged as much certainty as possible an obvious target for increasing the amount a in contract documents. A common source of contractor could get paid as a result of con- legal knowledge and experience would lessen tract changes. For awhile, street talk also the likelihood of divergent opinions regarding proposed that MARTA would retain a substantial the propriety of various actions MARTA might "surplus" because of its favorable bidding take in administering contracts. Second, experience, and f*1ARTA executives were concerned MARTA executives also attached considerable that this erroneous but oft-repeated rumor importance to the size, scope, and experience might encourage contractors to aggressively of would-be contractors, and consequently seek hefty settlements for change-orders. most construction and equipment companies bidding on MARTA projects would be national

firms than local ones. Contractors ,i rather . Contractors Lack Knowledge re Bidding might not be familiar with Georgia Law or Georgia contracting practices, but they would The efficacy of contract documents also more-than-likely be familiar with practices would be sorely tested because contractors used by federal agencies. Many contractors necessarily lacked intelligence crucial to would be afforded a certain degree of comfort bidding. Contractors analyze past agency if MARTA contract language and practices — .contract management in bidding on a new pro- the "boilerplate" -- were rooted in federal ject. The contractor looks at the track rather than state law. record of the buyer and determines how conflicts were resolved in the past. If its These two factors convinced MARTA staff record reflects arbitrariness or delay, the members to model MARTA's contract documents -- agency may receive bids with large "slack" as especially as to general conditions -- after the contractor increases his bid to compensate federal contract documents, as far as practic- for anticipated problems involving agency able. This key decision sought to maximize interpretations of the contract. Given MARTA's stability. In addition, federal contracting newness, all contractors suffered in their processes and regulations were the most ability to estimate with sophistication. This sophisticated and extensive available. lack of knowledge acted as a counter-weight to economic conditions and strong competition. MARTA executives also chose a third Authority executives realized, and increased strategy to avoid construction delays. Once the possibility of stickiness in negotiations a change was decided on, MARTA wanted it about change-orders. implemented whether the contractor agreed or disagreed. MARTA executives thus inserted clauses in contracts requiring work to pro- MARTA Seeks Strategies to Reduce the ceed while the contract dispute worked its Chance of Contract Disputes way to resolution. Therefore, with or without agreement over changes, the schedule would Although inevitable, MARTA executives not be impacted by contract disputes. The believed that contract disputes could be contractor had the option of filing a claim V-3 for payment, of course, but could not stop The BART-PBTB model had definite work, and no claims would result from schedule advantages. It kept disputes out of the slippages occurring over disputed changes. courts and sidestepped the federal -local law problem. Moreover, the general engineering consultant not only had experience in MARTA Evaluates Strategies to handling contract disputes but also was Resolve Contract Disputes familiar with the MARTA contracts and contractors. In addition, PBTB had sufficient While some disputes could be nipped in the staff to deal with contract disputes, while bud -- as by MARTA' s assumption of risk, using MARTA would have to hire additional staff if federal contract language in documents, and by it took on the job. At least, then, adopting contract clauses preventing delays due to the BART/PBTB model could save valuable time changes -- disputes could arise over many and capitalize on existing experience. other issues, some of them involving big dollars. MARTA executives searched for a However, this first approach also had method to handle those disputes that could not severe disadvantages which could threaten be avoided or finessed — a method that was the budget and the quality of contractor work. inexpensive, expeditious, and fair. Consider only three points. First, the approach lacked built-in safeguards to cut Three important legal considerations costs. To avoid litigation, PBTB might be influenced the decision as to how best to encouraged to settle disputes through handle those unavoidable contract disputes. bargaining with contractors who wanted to Paramount ly, federal agency oversight muddled increase their pay-out. PBTB had few bargain- the legal basis for dispute-handling. Although ing chips, and might be exposed to allegations state law normally governed contract adminis- that they had to "buy their way out of dis- tration, the heavy infusion of federal dollars putes." Second, PBTB's contract with MARTA and the potential for UMTA second-guessing was a cost-plus-percentage arrangement based warned MARTA executives that federal law and on the overall cost of the project. Third, regulations would govern the project as much as PBTB's additional design role -- the design state law, if not more so. In handling dis- of stations and rail lines for MARTA -- might putes, one eye had to focus on Washington. conflict with the dispute-settlement role. Relatedly, no settled body of state law existed For example, PBTB engineers and architects which related to sophisticated construction might be accused of concealing initial design contract disputes. An existing but relatively mistakes in a flurry of change-orders. undeveloped body of Georgia law might not suffice. Finally, most parties sought to keep Jeffrey Trattner, MARTA Staff Counsel, disputes away from relatively unsophisticated concluded that the disadvantages of the BART- judges and juries whose inexperience might PBTB model outweighed the advantages. Dispute jeopardize prompt fairness, and also cost both settlement, he felt, had to be handled outside MARTA and contractors dearly in time and money. MARTA to avoid conflicts and additional costs. Furthermore, to control change-orders, he An aggressive search resulted for strate- suggested and got approval for locating gies to deal with the unavoidable or unmanage- authorization of change-orders within MARTA able residuum of contractual disputes, within proper rather than PBTB. the three major constraints just detailed. In preview, MARTA executives evaluated informal methods of dispute-handling, reevaluated judi- Reevaluating the Courts cial methods, investigated administrative models, and finally concluded that an inde- MARTA executives next reevaluated the pendent panel could best settle disputes courts for handling contract disputes, but the through arbitration. constraints proved overwhelming. State courts would prove unworkable due to the complexity of contract cases, and the possible bias of In-House, Informal Approaches those who would hear the case. Basically, complicated contract documents could over- The legal problems in dispute-handling whelm the already-burdened courts, with conse- initially led MARTA executives to consider quent time-lags and contractor motivation to non-legal or informal methods, specifically protect self against delays in judgment. In handling the disputes within-house. MARTA's addition to the detailed and specialized general engineering consultant -- Parsons- language of the contract, complex drawings — and can swamp courts with information. Brinckerhoff , Tudor, and Bechtel (PBTB) had charts supervised disputes during Bay Area Rapid To really get down to the dispute before a jury Transit construction. Not surprisingly, then, requires an education about basic elements of MARTA executives early investigated the utility contracts, as well as their application in the of a similar arrangement in Atlanta. particular case. This takes a great deal of

V-4 . .

money and time. With an educated audience, Court reviews ABCA decisions, but that or one having a degree of familiarity with court has little expertise in disputes construction, parties can rely on a certain arising under federal contracts. Put level of assumed knowledge. Both parties get otherwise, the U.S. Court of Claims hears more meaningful discussion, and resolution federal contract disputes, with limited of the dispute more likely will rest on exceptions. MARTA 's problem with state informed discussion of the merits of the courts might reappear in federal guise, if case. In addition, a jury is disadvan- the WMATA model were followed. tageous because its decisions can be made as a result of ephemeral considerations. In sum, following the WMATA model Overloaded with information, a jury may make promised a less-than-ideal solution to decisions on factors other than the merits MARTA executives. of the case. Persuasive arguments aside, for example, the lawyer's personality might become a large issue in and of itself. Also, Board of Contract Appeals at DOT according to Trattner, "No one in Atlanta is neutral on the subject of MARTA." The climate MARTA executives also investigated of opinion may work for or against MARTA; but other federal agency methods, and looked in the contractor may be cautious because "most detail at the Board of Contract Appeals in are outsiders, not Atlanta natives, who might the U.S. Department of Transportation. be viewed as carpetbaggers by a jury." Finally, local courts might invite UMTA Several advantages of that approach suspicion. Since granting more than 800 seemed obvious. Basically, since MARTA million dollars to MARTA encouraged close would be dealing with UMTA in the administra- oversight, the inexperienced local courts tion of the capital grant, some Authority could reinforce UMTA's motivation to exert staff members felt that the Department of tight control TransDortation Board of Contract Appeals (TBCA) might prevent some UMTA second-guessing. So the MARTA decision was not difficult. TBCA would fit MARTA's situation well for two Local courts -- lacking the necessary train- other reasons. Thus the Board reputedly had ing and experience -- might yield decisions that high competence. Many federal procurement would cost MARTA exorbitantly in dollars and specialists rated the DOT Board as excellent time. In addition, reliance on local courts in overall ability and professionalism. also might encourage more detailed pre- and Moreover, the Board had wide-ranging expertise. post-decision review by Uf-ITA. Consequently, Due to the many different transportation MARTA executives doubted the wisdom of using specialties among DOT agencies using TBCA, state courts as dispute-handlers. the Board had achieved sophistication in dealing with an array of construction contract claims The WMATA Model As a result of procurement specialists' MARTA staff members next looked toward the ratings and his own analysis of the cases Washington Metropolitan Area Transporation facing the DOT Board, Trattner moved to Authority. WMATA used the U.S. Army Corps of solicit DOT interest. The move met with both Engineers Board of Contract Appeals (ABCA), on agreement and opposition. Some DOT staff an ad hoc basis, contracting with the Army members regarded the use of TBCA as innovative Board to hear contract disputes when necessary. and managerially advantageous. Simply, TBCA participation in MARTA contract claims settle- Trattner found that this arrangement had ment would encourage uniformity and reduce drawbacks in MARTA 's case. First, ABCA has duplication in UMTA audits/reviews. Simpli- limited experience with many of the types of fication of audits and oversight also might contract disputes MARTA would encounter. decrease the need for interference or over- Second, MARTA executives disliked the tenta- control by UMTA in local decision-making. tiveness of ABCA's decisions. Under the law However, other DOT administrators opposed which gives jurisdiction to ABCA, its decisions TBCA participation for two reasons. First, would not be final and binding on the MARTA they believed that TBCA had no legislative Board of Directors, who could reject the deci- authority to review MARTA contract disputes. sions of the Army panel. In practice, this has In fact, a DOT order stated that specific never occurred but, according to a MARTA legal authority would be necessary to enter observer, the threat remains and works to into an agreement with a local government. undermine confidence in the process. Third, Second, DOT officials expressed concern that MARTA bears the entire cost of using the the TBCA would have to apply Georgia law to Engineer Board to hear its disputes. The ABCA many of the contract disputes, a condition performs the service on a cost-reimbursable DOT officials felt that TBCA was not competent basis, at an estimated rate of approximately to satisfy. $50,000 a year. Fourth, the U.S. District

V-5 MARTA's Staff Counsel argued that specific reviewed his research on state arbitration DOT orders and regulations did allow TBCA law and found that some states have enacted participation. Trattner's assistant Bruce arbitration legislation, while others have Bromberg urged that these rules even encouraged not. Georgia was in-between -- "a kind of TBCA intergovernmental agreements. Moreover, gray state" where there appeared to be a Trattner explained that federal contract conflict as to whether courts could compel language would remedy the state-law problem. arbitration without a state statute. That Contractors and MARTA, as a result of federal is, where two parties agree initially to contract language, would agree to use federal arbitrate a dispute, but one of the parties procurement law to govern the handling of refuses later, could the other party go to disputes. Although he offered rebuttals to court to order arbitration? Trattner found UMTA officials' argument, Trattner failed to one "oddball decision" which seemed to say convert the DOT opposition, who prevailed over courts could not compel arbitration, while the DOT pro- innovation group. another opinion stated the opposite.

The attempt to involve DOT -- although Acknowledging the conflict, AAA's superficially simple -- actually covered six Aksen suggested another approach. He months, from May to October 1975. During this observed that federal arbitration law applied time, MARTA awarded two contracts without any when the parties engaged in interstate com- clause specifying ways of settling disputes merce. The interstate commerce provision over claims. Other contracts would be awarded would apply in MARTA's case because most shortly, also without such a clause. Without Authority contractors are out-of-state con- a method to which the contractor and MARTA tractors and because MARTA builds with 80% were bound by contract, both parties might federal money. Aksen argued that constituted have to deal with the issue of how to settle a enough of an interstate connection to apply contract dispute as well as with settling the federal rather than state law. dispute. The first meeting with Aksen convinced Trattner. He drafted a contract clause Arbitration prescribing arbitration and negotiated some details of an agreement with AAA. For details After receiving DOT's final decision, of f^RTA contract features related to arbitra- Trattner began looking at other alternatives. tion, consult Appendix 1. "Fortuitously," he recalls, "someone suggested

or I had it in the back of my mind the possi-

bility of using arbitration. I had gotten Gaining the Approval for some literature which related to the American Arbitration at MARTA Arbitration Association (AAA) and described what they called construction industry panels -- Trattner had to get approval for this for arbitration." Trattner found that AAA had approach from both MARTA General Manager only recently set up specialized panels to deal Alan Kiepper and the MARTA Board of Directors. with construction disputes. The panel concept, Trattner developed his strategy around two AAA style, already had gained wide support major points -- the probable lower cost of from major associations in the construction arbitration as opposed to other methods, and industry such as the American Institute of the favorable opinion of MARTA construction Architects and the Construction Specifications staff about arbitration. Institute. A very compelling argument in favor of Wide endorsement stoked Trattner's arbitration, Trattner felt, would be the money interest. He and Bruce Bromberg, his Senior saved. "In the long run, arbitration might Associate Counsel, met for initial discussions turn out to be the least costly alternative. with AAA's General Counsel, Gerald Aksen, to For example, using TBCA, we would have to explore the possibility of using AAA for dispute enter into a contract to bear the expenses of settlement. In the first meeting, Trattner all sides," With AAA arbitration, in con- examined the AAA processes and experiences with trast, a minimal registration fee would be construction contract litigation. To ascertain paid. In addition, who pays additional costs AAA arbitrators' expertise in construction, would be decided by arbitrators assigned to a Trattner searched the files of available AAA specific case, based on a fee schedule. arbitrators at random to ascertain their quali- fications and background. He found that AAA No less important an argument, MARTA had numerous qualified people available to hear staff members -- especially including Assist- disputes, and that their track record was good. ant General Manager for Transit System Development William Alexander -- favored Trattner also expressed concern about state arbitration. Past experiences with arbitrat- legal barriers to arbitration. Could state law ing disputes convinced construction managers hinder reliance on arbitration? Trattner that it could work at MARTA. Staff members'

V-6 reactions reflected general favor in the and conclusive with no right of construction industry, as Trattner found. appeal except in very rare Almost unanimously, moreover, construction instances. Most attorneys by staff wanted to avoid the courts. nature don't ever like anything that has no right of appeal. Following the talks with Aksen at AAA, They don't particularly care to Trattner met with f'lARTA GM Alan Kiepper. put all their eggs in one basket. Trattner explained the arbitration process, reported the reasons why he thought it would Trattner also found that Meyer opposed work, and also recomnended that MARTA use AAA. arbitration for three additional reasons: GM Kiepper approved Trattner 's request to the lack of valuable court rules such as propose arbitration to the Development Commit- discovery; use of affidavits rather than tee of the Board of Directors. actual testimony; and its common inapplica- bility to subcontractors as well as prime Trattner did some pre-presentation visit- contractors. Consider the usual failure to ing, and talked with three Board members to use rules of discovery, a legal term explain the situation. His first stop was referring to counsel's right to look at the Lyndon Wade, chairman of the Development Com- opponent's case before the hearing to avoid mittee. Wade reacted positively, and encour- surprises. Under arbitration, discovery does aged Trattner. The Chief Staff Counsel then not usually apply, while courts apply it talked with Harold Sheats, a new Board member quite liberally. Attorneys proceed blindly and also Development Connitteeman. Sheats had under arbitration, only guessing the strategy been a lawyer and Fulton County Attorney for and evidence that will be used by the other 25 years, in and around public construction side. Moreover, arbitration usually allows for much of that period. He expressed no ex parte affidavits rather than the presence feeling about AAA arbitration, either way. and live testimony of witnesses. Affidavits However, Sheats was concerned about another might limit cross-examination and conse- related issue, the size of legal services quently the full development of the issues- fees and billings from law firms outside in-dispute. Finally, Meyer objected to the MARTA. Arbitration would use in-house staff limited applicability of arbitration, that is, -- Trattner' s Office of Staff Counsel -- to to prime contractors only. Since prime con- handle all arbitration. The reduced costs tractors typically subcontract to many other promised by Trattner attracted Sheats, who firms, limiting arbitration to the primes became an advocate for AAA arbitration. reduces its potential for problem resolution, perhaps severely. In fact, many disputes Trattner 's visits to Board members were occur between the buyer (such as MARTA) and not all positive, but all proved informative. a sub-contractor, leaving the buyer to deal The third Development Committee member Trattner with the sub-contractor through court pro- talked to was Fred P. Meyer, also an attorney. ceedings and the prime contractor through Meyer opposed arbitration because it generally arbitration. The complexity of the process limited the flexibility of the trial lawyer, increases costs and neutralizes the prime and because he supported reliance on outside contractor's ability to deal with change. counsel in the present particular. Two aspects of Meyer's position proved most Trattner made mental notes to tailor revealing. First, Meyer's opposition to the MARTA' s use of arbitration to respond to most process of arbitration developed from his of Meyer's concerns, but Counsel was not experience as a practitioner-lawyer, Trattner persuaded about reliance on outside lawyers, concluded. Trattner observes: for two basic reasons. First, in-house counsel had more familiarity with the problem A private practitioner doesn't like to be arbitrated. "One of the advantages of arbitration, as a general rule. He arbitration was keeping it in-house because would rather handle the case in our attorneys have been with the contract court than arbitrate. Arbitration, from its inception through all the problems." generally speaking, among practi- Second, Trattner argues that the Office of tioners does not have a particularly Staff Counsel was organized to handle con- good name, due to misinformation and tracts, so involvement in arbitration would a lack of recent information about represent only an extension of the Office's the process and how it developed principal purpose. Given this background, over the years. In Georgia, parti- according to Trattner, "It would have been cularly, arbitration has gotten extremely costly to turn a /partially- some bad press because of the con- developed arbitration/ package over to an flicting court decisions and the outside attorney who was not working in uncertainty which unsettled law construction at all, and say 'OK, here it produces. Also, practitioners point is.' Even with our background we still spend out that arbitration is always final many, many hours preparing when we go to arbitration."

V-7 "

Trattner's next stop was the full heard by a three-man panel , one of whose Development Committee. Because initial members would be a lawyer. reaction among construction staff members had been good, Trattner asked TSD's head To prevent the uncertainty resulting Alexander to accompany him before the Com- from unsettled state law, a second potential mittee. Trattner explained the pros and cons problem, the arbitration clause provided of arbitration; Meyer raised questions about that all questions arising under contracts in-house or outside counsel responsibility must be governed by and decided according to for arbitration, but the issue failed to the law applicable to U.S. Government procure- excite other members; and Alexander expressed ment contracts. This linked MARTA disputes satisfaction with the proposal. After dis- with the thirty years of federal precedent. cussion, the Committee voted to approve the In addition, the link allowed for introduction use of arbitration. of evidence, representation by counsel, and other normal federal requirements of due The Development Committee reported the process. proposal favorably to the full Board of Directors on December 8. The Board routinely Trattner also set up a triggering pro- passed a resolution approving arbitration. cedure for arbitration which prevented a third problem, the premature resort to the process. Under this process, a contractor cannot resort Implementing Arbitration at MARTA to arbitration until he receives a Final Decision from MARTA denying a contract claim. Having secured Board approval, Trattner In effect, MARTA executives must state: "Our began implementing arbitration by adopting decision is final, except insofar as you have procedures to meet complaints raised earlier a right to demand arbitration." Trattner by Board member Meyer. In addition, Trattner observes: "What we intended was to make sure installed three other mechanisms for solving that the contractor didn't go off half-cocked key problems: guaranteeing a legal presence on a preliminary denial of a claim," thus in arbitration cases, resolving the conflict precluding close scrutiny of all factors in federal and state law, and preventing a involved. premature resort to arbitration.

Trattner immediately dealt with practi- MARTA' s Arbitration Model in Action tioner-lawyer objections in a new contract clause. The basic arbitration clause was How does the MARTA arbitration model work written so as to allow use of federal rules in practice? To illustrate, we will first of discovery, by which parties to a contract sketch the change-notice/change-order process, dispute could examine each other's evidence the series of events out of which disputes before the arbitration hearing. Moreover, arise. Next, we will briefly illustrate how the clause prohibited ex parte affidavits. disputes get handled through arbitration. According to Trattner: "We wanted witnesses for cross-examination at the hearing." Finally, the arbitration clause became manda- The Change Process: The Setting tory in all subcontracts. When a dispute for Disputes arose, all parties would get involved. With the clause in all subcontracts, Trattner The process of changing the work outlined observes: "All of us will be in the same in engineering designs and undertaken by a arbitration forum. We may all say that the contractor who wins an award begins when one of other guy is at fault, but we are at least five conditions obtains. The contractor may convinced that the guilty party is in the find a better way of doing work. Or field room. conditions may differ from those assumed in engineers' plans. Alternately, the contractor In addition to meeting practitioner-lawyer may find mistakes in original designs or objections, Trattner acted on three other plans. MARTA engineers also may decide to potential problems. First, the new contract change plans as a result of input or demand clause provided that at least one member of from some other agency such as railroads or the the arbitration panel must be an attorney, in state, counties, or cities. Finally, MARTA part to ensure that the panel enforced rules engineers may change plans to take advantage of of discovery. Trattner felt that only an new technology or experience. attorney could adequately deal with each side's desire for fairness in applying federal rules 1 , The Initiating Change-Notice . A for reciprocity in revealing evidence. To change-notice based on one of the five condi- further ensure the essential attorney pres- tions initiates the process of changing work. ence, the clause required a one-man panel -- A change-notice essentially outlines the change a lawyer -- for disputes under $25,000. needed, and provides for review by MARTA staff Disputes involving more than $25,000 would be members and negotiation with the contractor. V-8 2. From Change-Notice to Change-Order . as objective reviewer, analyzing contract A typical facilities contract change-notice -- documents for both legal and engineering based on a request originating either with the implications. To handle both substantive contractor, MARTA, or the Authority's general and legal aspects. Office of Staff Counsel engineering consultants (now Parsons, Brincker- includes a civil engineer/lawyer. This -- hoff and Tudor, or PBT) starts with the ambidexterity "makes us both useful and Resident Engineer, RE, who prepares the notice potentially troublesome," Trattner feels. with a justification and preliminary cost "From the engineering standpoint, there is estimate. The notice goes up the MARTA' s TSD not much that we can't understand. No chain of command for approval. matter how complex the change-order, we can us^ual lyjdecipher what they are talking about. Three factors guide TSD officials' review /We car[/ read the drawings and the technical of a change-notice. First, these officials specifications and decide whether or not it want to create and maintain a reputation for makes sense." fairness and flexibility in dealing with contractors. According to AGM/TSD William Both UMTA second-guessing and the Alexander, MARTA reviewers have the power to necessity of an overall view explain the break contractors through inflexibility in pivotal role the Staff Counsel's office administering changes. The injudicious use assumes in contract matters. According to of such power backfires, however, and results Trattner: in h.igher bids as word gets around in the contracting community. Second, TSD officials /Staff Counsel/ is the one point want to motivate contractors to finish work within the Authority where all the quickly. Inflexible change-notice reviews pieces come together, short of the could provoke contractors to resist time-saving GM. We are independent of everybody measures for which they might go unrewarded. else. We are the only office that Third, smooth day-to-day operating relations has an overview of the whole program. between MARTA construction managers and con- Most important, if-there is a problem tractors are at a premium. Inflexibility and with UMTA auditors, we wind up unfairness in handling changes would create defending the matter. If something adversaries out of parties who could cooperate. goes to arbitration, we wind up Thus, the TSD approach to change-notice review handling the arbitration. It is only gets based on the goals of expediting work and right that we should know what is maintaining cooperation with contractors. happening in advance and concur in it. "After_all," says Alex^ander, "we have to live with /the contractors_/ every day." Staff Counsel reviews the change-notice initially to determine whether the contractor The change notice also goes to the Office is entitled to extra payment or whether he is of Staff Counsel for review as it goes up the already obligated under the terms of the con- TSD hierarchy. Two basic reasons explain the tract to perform the change. In addition. involvement of Staff Counsel. First, UMTA Counsel analyzes the notice for form and reserves the right in all prime and sub- substance. This involves answering questions contracts to audit under certain conditions such as: Is the language clear? Are the for a period up to three years following pay- references accurate? Are we citing the right ment. The potential costs to MARTA are authority for proceeding with the change? The great. As Trattner explains: "If we process initial review by Staff Counsel also points a change-order, and we take a position, settle out other implications of the change, such as it, and pay a claim resulting from the change- the effect on any impacted or associated con- order, the federal government can come back a tracts. Finally, counsel determines whether year later, review the paperwork and say that authority exists to issue the change-notice as we have not justified this change-order. such -- whether funds exist. They will, therefore, declare this change-order ineligible for federal participation or for 80% After the Staff Counsel review, the notice payment. You can't stand too many of those." goes to the contractor. The contractor replies Hence MARTA' s concern about legal and contrac- with a proposal, which returns to Staff Counsel tual scrupulosity, and hence also the involve- for review. Counsel then provides engineers ment of the Office of the Staff Counsel. with an opinion on the allowability of the cost, including both cost of any additions as Second, Staff Counsel provides an inde- well as (in Trattner's words) "if we are delet- pendent review by in-house resources with no ing an item to make sure we get the kind of direct involvement in construction, who are credit we should be getting."

beyond subtle conf 1 i cts-of-interest. MARTA negotiators should ask themselves: "Are we The engineers then negotiate with the enforcing our contract rights; are v.-e paying contractor. If the two parties agree, a for things that we otherwise should not be change-order is drafted. At this point. Staff paying for?" The Office of Staff Counsel acts Counsel again reviews to assure that the

V-9 negotiated position is consistent with prior attorney in Staff Counsel who originally reviews. After this review, the order goes reviewed and denied the claim prepares to the AGM/TSD for final approval. another analysis and reviews his work. If he reaches the same conclusion. Staff

3. Handling Disputes . The change process Counsel requests the AGM/TSD to convene may provoke disputes between contractors and MARTA's whimsically-named Gray-Haired MARTA engineers not amenable to negotiation, of Council. Consistent with the felt-need for course. For instance, based on a legal position timely decisions. Final Decisions are to be taken by Staff Counsel, the MARTA negotiator rendered within two weeks after the con- may not accept the contractor's cost estimate tractor's request. for a change and the contractor may refuse to sign the change-order without the price con- The Gray-Haired Council consists of a cession, MARTA engineers then issue a uni- group of senior MARTA employees who act as lateral change-order which directs the contrac- advisors to AGM/TSD Alexander in making the tor to perform, giving him 30 days to protest final decision on the contractor's request. the order by submitting a claim. In another The tongue-in-cheek appellation was inspired instance, MARTA engineers may issue a letter by AGM/TSD William Alexander who observed change-order, directing the contractor to per- that in such disputes MARTA "needed some form. If the contractor feels entitled to gray hair, some wisdom of the ages." The additional funds for this work, he may then Council's formal membership includes MARTA's submit a proposal for negotiation. If after Director of Construction and Director of negotiation the contractor disagrees with Engineering, the PBT Project Director, the f^RTA's position, he is directed to perform the PBT Director of Construction, and Trattner

change and f i le a claim. as Staff Counsel. Other PBT engineering staff members may take part, depending on The process for attempting to resolve any the subject matter. In addition to the usual disputes involves a number of steps, of which members, the Gray Hairs convene with the arbitration is the last and final one. For attorney who did the research, the TSD Project details about the procedures by which contrac- Engineer, and the Resident Engineer. The tors make a claim against MARTA, consult Council examines the drawings and the contract Appendix 2. documents; the attorney presents the case and his recommendation; and then the floor opens As a first step toward that final resolu- for discussion. According to one member: tion, the Resident Engineer examines the contractor's claim. RE -- the TSD representa- It is pretty free-wheeling discussion. tive at the worksite -- provides a factual It tries to introduce the practical analysis of the contractor's claim. He pre- considerations. For example, while we sents the circumstances objectively in a may think we may have a good legal report to his superior -- in this instance, position, we start to get into the the Project Engineer. After developing the practicalities of who is going to be facts, the Resident Engineer may deny the the expert witness. What kind of wit- claim. Otherwise, he remains silent. The ness would the Resident Engineer make? contractor, in either case, then submits the What kind of documentation do we have claim through the Resident Engineer to TSD's to support our position? From the Division of Construction. The Division standpoint of the arbitration panel, evaluates the claim, along with TSD's Division how reasonable a case does the contrac- of Engineering and Staff Counsel. If all tor have? Is there more than one three groups recommend the contractor's reasonable interpretation? What's the position, the AGM/TSD signs approval. If one industry practice? Are we stipulating recommends denial, the claim goes back down something that is out of the ordinary? the chain of command to the RE who informs the contractor that the claim is denied, and the We throw all of these things out for contractor has a right to request a Final discussion. We call for more informa- Decision. tion such as whether we have interpreted this particular clause differ- The Final Decision constitutes the ently on other contracts. The discus- unsatisfied contractor's last step before sion ranges from ten minutes to two arbitration. This triggers a process set up hours. At the end of it, I think we as MARTA's fail-safe mechanism, one in which hash out almost everything. more MARTA staff members get involved in the decision-making process. When the contractor Then we say: "Let's go around the table requests a Final Decision, the RE reviews the and see where we stand." The Council's Final claim again and adds any additional informa- Decisions to date have been unanimous, but tion found since the original analysis. From variable in direction -- sometimes in favor the RE, the request goes to the Project of the original Staff Counsel decision, other Engineer, and then to Staff Counsel. The times agreeing with the contractor's request.

V-10 or even some middle position for negotiating assess liquidated damages, particularly for a a settlement. "good" contractor who had some "bad luck," but with whom they had a positive work- The Council serves three major purposes experience, and perhaps with whom they look in maintaining the integrity and momentum of forward to working again. But Staff Counsel the MARTA rail construction program. First, has no such experiences or expectations. the Council brings over 100 years of con- According to Trattner: struction-contract expertise to bear on a particular problem. Second, it brings We will fight for every nickel that together people who had nothing to do with the we think the Authority is entitled original decision directly, and who can pro- to, for two reasons. First, we are vide a fresh approach to the problem. Third, in the ivory tower, and we don't the Council provides high-level flexibility have to work with the contractors. in dealing with contractors. The group may It is easy for us to take that posi- meet some of a contractor's objections while tion. Second, we fear UMTA audi- dismissing others, tors. The UMTA folks, if they audit us and disagree on that assessment A short case illustrates the timely of liquidated damages, can leave us flexibility the Council can provide. The holding the proverbial bag. If we Council dealt with a contractor's claim for release $250,000 in liquidated damages, relief from "liquidated damages." MARTA 80% of those dollars are federal contracts charge contractors liquidated dollars. UMTA can say: "If you are damages of so many hundreds or thousands of so generous, you can use just local dollars for every day the contractor delays funds, and we'll take our 80% out of finishing work beyond the stipulated comple- your hide." tion date. The penalty ends when MARTA makes a determination of "substantial completion" We want to make sure that we can agree — the building is finished, the lights work, with the TSD position and that there or whatever. Debate or dispute can exist is enough paper and justification in about the date of substantial completion, the file to provide an audit trail. however. MARTA cannot always rely on the usual litmus test: Is the facility useful The contractor facing a $250,000 assessment for the purpose intended? Normally, that is submitted a mass of material, letters of com- an easy determination, but MARTA has few munication and excerpts from his diary, normal situations. While a contractor may through the RE to the Project Engineer as "substantially complete" a station, contracts well as to Staff Counsel. A stack of material often may require other tasks of the con- several inches high accumulated, including the tractor. For example, construction may RE's factual analysis. Initially, Staff require relocation of water mains, a task for Counsel's lawyer-engineer reviewed all the which MARTA is responsible to the City of material and recommended that AGM/TSD Alexander Atlanta, by agreement. Completing this task deny the requested relief. Alexander did so, is as important as building the station for and the contractor then requested a Final two reasons. First, if the water main is not Decision. Trattner observed: "I got into it relocated, it may impact adjacent and subse- after that and read all this material, includ- quent contractors. Second, the city may stop ing additional material the contractor had work at the station or other sites if the submitted since the denial. After reading it, contractor fails to fulfill MARTA's responsi- I became concerned because the contractor had bility. Thus the contractor has more to do implied but had not stated that MARTA prevented than merely complete the facility for the substantial completion." This implication purpose intended. Establishing and applying could mean that the contractor was entitled to legal principles to cover substantial comple- relief from some or all of the liquidated tion on MARTA contracts, likewise, is a very damages. detailed exercise, and decisions vary case- by-case. Therefore, the Gray-Haired Council had several major points to resolve. Did TSD or In the present case, TSD officials as Staff Counsel take the correct position on well as the Resident Engineer held that sub- liquidated damages? And what of the unraised stantial completion took place much earlier claim that MARTA could potentially face? than Staff Counsel felt it did. In round Before the Council finally decided the matter, terms, let us say. Counsel's estimate amounted the contractor and his attorney came to see to $250,000 in liquidated damages. TSD staff Trattner and shared their general expectations members proposed that $100,000 was about right. concerning a reasonable settlement of what they admitted was a debatable situation but The opinional differences may reflect one in which they should not bear total or differences in experiences and roles, as often even major responsibility. Trattner recalls: happens. TSD and PBT may be less eager to

V-11 .

When we convened the Gray-Haired encourages guessing about their probable Council, the Staff Counsel attorney inclination. Depending upon the nature of presented the case. Then we dis- the claim, there are at least five different cussed the practical consequences kinds of backgrounds represented on an AAA of the $250,000 assessment. I gave list. AAA may propose attorneys who have my opinion. After reviewing all of only general legal expertise and some or no the paper I concluded that the construction background, as well as attorneys contractor could probably make a with a construction background -- such as a pretty good case for raising a claim patents attorney who is also a mechanical against which we might not be able engineer. Some proposed arbitrators may come to sustain our positions. We had from the contractor community, including originally gotten into it because I owners of construction companies, for instance. thought TSD would give away the AAA also may propose academicians, such as a farm, in releasing liquidated professor of civil or mechanical engineering. damages. The more we got into it,— Architect-engineers are often included, the more concerned I was that we particularly those who work as consulting MARTA, TSD, and PBT — probably had engineers for design with no involvement in instead been responsible for other construction. Finally, there are government actions that had contributed to the employees who would be counsel-equivalents at contractor being late. state, local, or federal levels. Depending on the subject matter of the claim involved, The Council discussed the issue, and con- the parties must decide which mix of arbitra- cluded that the MARTA negotiators could reduce tors is most acceptable. Trattner observes: the liquidated damages from $250,000. They directed the Project Engineer and the RE to go It's akin to selecting a jury. In back to the contractor and negotiate a settle- one sense, you've got much less ment -- "starting high and settling for about information because you can't ques- $40,000." No Final Decision was rendered. tion these people as you can poten- The strategy worked. The Authority got tial jurymen. In other senses, you $42,000 from the contractor in negotiations, have much more information about and the Authority agreed to a complete release panel members. You've got a little of claims. biographical blurb, and advice solicited from people in MARTA and 4. Going into Arbitration . A few disputes PBT who have backgrounds in con- reach the final stage of resolution -- arbitra- struction and engineering. Those tion. No ifs, ands, or buts will be appropri- people know something about what ate. Both MARTA and the contractor agree in backgrounds predict what decisions; signing the original contract that the deci- and they may even know people on the sion of the arbitration panel will be final. list. It comes out to be an educated guess. The arbitration process gets triggered after an adverse Final Decision from AGM/TSD Limits do get placed on AAA in proposing Alexander, when the contractor may choose to panel members to encourage objectivity -- a initiate the arbitration process by filing a problem usually caused by a conflict of notice with both MARTA and the American interest. "We have insisted from the begin- Arbitration Association. The notice spells ning," says Trattner, "that we did not want out the specific issue over which the contrac- anybody on the list from the Atlanta area, tor and MARTA conflict. because the odds are that we would have a conflict sooner rather than later. It's AAA then takes over the administrative inevitable; the project is so large." Trattner aspects of the arbitration process. The related one example. "The certainty of a primary activity involves providing MARTA and conflict was proven very dramatically when we the contractor a list of arbitrators -- recently received an AAA list that included including in the list the arbitrators' back- the name of a local attorney. On that same -- grounds and areas of expertise from which day, he filed a law suit against us." the parties choose a panel. Identical lists are- furni shed to all parties. The parties The striking of names may continue, review the lists; strike those who are objec- according to MARTA's arbitration procedure, tionable to them; and rank all acceptables in through two lists of ten names each. If AAA order of preference. finds agreement impossible, the Association imposes a panel. As yet, AAA has not imposed The process of striking arbitrators may a panel involve gamemanship, a thrust-and-parry to bargain over who will hear the dispute. The At the same time the parties select information provided by AAA about the proposed panel mambers, they begin the discovery arbitrators' backgrounds is limited, and process. The parties interrogate each other

V-12 .

in writing to ascertain anything relevant to the claim. If either party fails to provide information the other party or parties finds necessary, the matter gets referred to the attorney member of the panel whose decision is final

All preliminaries concluded, the parties schedule an arbitration date with AAA and file pre-trial memoranda with the panel members if necessary.

The panel meets with the parties, who can call witnesses and examine and cross- examine them. All witnesses must appear before the panel, as a rule. If attendance is impossible, a witness may be examined at another time and a deposition taken, providing that the party examining the witness gives the other party reasonable notice as to time-and-place.

After hearing the evidence, the panel allows further memoranda from the parties, decides the issue, and assesses costs.

V-13 Appendix 1. MARTA CONTRACT CLAUSES RELATING TO ARBITRATION

1. Any dispute concerning or arising out of or in connection with any decision, determination, or other action by the Authority or its duly authorized representatives, or arising otherwise out of or in connection with the performance of the Contract, or arising out of or in connection with the warranty of the Work, shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then in effect. For this purpose, arbitrators shall be appointed by the American Arbitration Association in accordance with Section 12 of the said Rules. If the amount in dispute is less than

$25,000, one arbitrator, who shall be an attorney, shall be appointed; if the amount in dispute is $25,000 or more, three arbitrators, at least one of whom shall be an attorney, shall be appointed, and all decisions and awards shall be made by a majority of them, as provided in

Section 27 of the said Rules. The arbitration proceedings shall be governed by and conducted in accordance with this Article, the said Rules, and Title 9 of the United States Code. The parties stipulate and agree that this Contract evidences a transaction involving commerce within the meaning of Section 2 of the said Title 9 of the United States Code,

2. The Authority will finance the Work in part by means of a grant under the Urban Mass

Transportation Act of 1964, as amended, administered by the U.S. Department of Transportation under a capital grant contract between the Authority and the United States. In order to ensure that the Contract is performed in all respects in conformity with the said capital grant contract and with the laws and regulations governing the same, all disputes subject to this

Article, and all questions arising in connection therewith, shall be governed by and decided according to the law applicable to U.S. Government contracts.

3. Arbitration in good faith of all disputes subject to this Article shall be a condition precedent to the commencement by either party of any action at law, suit in equity, or other proceeding involving any such dispute, and this Article shall be specifically enforceable under the applicable arbitration law. The arbitrators' award, and their decisions of all questions of law and of fact in connection therewith, shall be final and conclusive, and their awards shall be enforceable as provided in Title 9 of the United States Code.

4. Notice of the demand for arbitration shall be filed in writing with the other party to the Contract and with the American Arbitration Association. In the case of a dispute arising out of or in connection with any decision, determination, or other action by the Authority or its representatives, no demand for arbitration shall be made until the Contractor has received

V-14 written notice explicitly stating that the decision, determination, or action involved is final subject only to arbitration in accordance with this Article. In all such cases the Contractor shall file his notice of demand for arbitration within thirty days next after he has received such notice, unless, in the case of the particular decision, determination, or action this

Contract prescribes a different time, in which case such different time shall control. In the case of a dispute arising out of or in connection with the warranty of the Work, the notice of demand for arbitration shall be filed within a reasonable time, not in excess of one year, after the dispute has arisen. In the case of all other disputes subject to arbitration under this

Article the demand for arbitration shall be filed within a reasonable time after the dispute has arisen, but in no event more than six months after the Authority has formally accepted the Work as provided /elsewhere^/. Failure to file a timely notice of demand for arbitration of any dispute subject to arbitration hereunder shall constitute a waiver of all claims and rights in connection with such dispute.

5. The parties mutually promise and agree that after either has filed a notice of demand for arbitration of any dispute subject to arbitration under this Article, they shall, before the hearing thereof, make discovery and disclosure of all matter relevant to the subject matter of such dispute, to the extent and in the manner provided by the Federal Rules of Civil Proce- dure. All questions that may arise with respect to the fulfillment of or the failure to fulfill this obligation shall be referred to an arbitrator who is an attorney for his determination, which shall be final and conclusive. This obligation shall be specifically enforceable.

6. Arbitration under this Article and all hearings in connection therewith shall be held in Atlanta, Georgia. All witnesses who testify at such hearings shall be sworn and subject to cross-examination by the adverse party; depositions may be used if, in the discretion of the arbitrator or arbitrators, the deponent is not reasonably available to testify thereat, and provided that the deposition offered in lieu of his testimony was taken under oath and after reasonable notice to the adverse party of the time and place thereof; notwithstanding sections

30 and 31 of the aforesaid Rules, an ex parte affidavit shall in no event be considered over the objection of the party against whom it is offered.

7. The Contractor promises and agrees that the provisions of this clause shall be included

in all subcontracts into which he may enter for labor to be performed on, or materials or supplies to be delivered to, used in, or incorporated into the Work, and that if any dispute subject to arbitration under this Article involves labor, materials, or supplies furnished under any such subcontract, the rights and liabilities of the Authority, the Contractor, and all

V-15 subcontractors who are or may be involved shall be determined in a single arbitration proceeding.

8. The Contractor shall carry on the work and maintain the progress schedule during any arbitration proceedings.

V-16 .

Appendix 2. MARTA PROCEDURES FOR CONTRACTOR CLAIMS

I . Contractor Claim

1. Iranediately after receipt from the Contractor, /Resident Engineer/ prepares a

factual analysis, without reconmendations , and submits to Construction Division. Negotiations will not be conducted with Contractor, although additional information may be requested.

2. Staff Counsel and Engineering Division advice sought and decision reached. Communicate to Resident Engineer.

3. Proceed as directed by the Authority to:

a. Initiate change notice, or

b. Communicate denial to the Contractor indicating right to appeal to the Authority submitting any additional documentation in support of his claim. Resident Engineer's letter to Contractor will not indicate that the decision or determination is "final, subject to arbitration" or words to that effect.

J. Contractor's Request for Final Decisions :

1. Submit to I*1ARTA Construction Division.

2. Directors of Construction and Engineering, MARTA and /PBT/, Project Director, Engineer and Chief Staff Counsel will evaluate basis of dispute and will meet with Assistant General Manager for Transit System Development to provide him with recommendations.

3. If so decided by the Assistant General Manager for Transit System Development, Construction Division in coordination with Staff Counsel shall prepare a Final Decision for the signature of the Assistant General Manager for Transit System Development.

4. Delivers Final Decision to Contractor and records date, time and name of Contractor's representative receiving Final Decision.

5. Foregoing will be accomplished within 2 weeks (where possible) from Construction Division's receipt of Contractor's request for a Final Decision.

K. Contractor's Request for Arbitration :

1. Forward all related documents to MARTA Construction Division. Assist in evaluation and preparation of arbitration package.

2. Coordinate preparation of arbitration package, and provide necessary support of Staff Counsel

V-17

CASE STUDY VI -

MARKETING IN MARTA

John W. Bates

Marketing in MARTA

"Marketing" comnunicates much or little. there is a consumer need that cannot, or It is a commonplace term in business, with will not, be met by the private sector, people relating immediately to the image of or when a product is necessary to increase salespersons pushing products to make com- or protect public well-being. Note that missions for self and profit for company. public sector marketing should not be The image of marketing in the public sector confused with public relations. Public is frequently a blank screen, in contrast. relations -- both in the public and pri- How could a public agency have anything to vate sectors — deals with the image of sell? the organization, not with consumers' needs and desires. There has been increased interest recently in marketing in the public sector, Without doubt, public-sector marketing particularly in public transit with the Urban has been a Johnny-come-lately. For many Mass Transportation Administration (UMTA) years the only major literature in transit funding special efforts in transit marketing, marketing was Lewis M. Schneider's Marketing and many transit agencies have created Urban Mass Transit .^ Dr. Schneider analyzed marketing organizations. This case reviews transit marketing from the private-sector MARTA 's marketing efforts. viewpoint, and concluded that its marketing strategies were woefully weak, and also that much more effort was required in Some Basic Conceptual Distinctions advertising and in providing air-conditioned vehicles. Most transit companies were This case begins with conceptual basics. broke, or getting there fast, if still One academic group proposes this definition of privately-owned; or they were already being marketing: "... the process in a society operated as necessary evils by municipal by which the demand structure for economic governments. Hence very little new equip- goods and services is anticipated or enlarged ment was bought, and there was no money for and satisfied through the conception, promo- advertising. Dr. Schneider's theory was tion, exchange and physical distribution of not tested. Transit's orientation remained such goods and services."' A large part of focused on production efficiency, that is, the business marketing literature, explicitly lower operating costs as contrasted with or by implication, adds the words "to achieve increasing the market. a profit." The basic trend changed, definitely if How does this concept, especially with not so quickly. Federal funds for transit its emphasis on profit, relate to the business appeared in the 1970s, and many air-condi- of a governmental or quasi-governmental tioned buses were bought. Still more agency, such as a transit agency? The rela- properties also converted to public owner- tionship may be understood with more clarity ship, with increasing subsidies to cover when additional marketing concepts such as operating costs. Since it is difficult to "marketing orientation" and "marketing justify expenditure of public funds for concept" are considered. advertising a deficit operation, the emphasis remained on holding or reducing An organization has a marketing orienta- costs. Instead of advertising, transit tion when it focuses activities on the types marketing entered an era of merchandising, and quantities of products desired by poten- focusing on the package and its attractive- tial consumers of the products, and when the ness. New paint jobs and graphic identi- enterprise shapes its production accordingly. fiers appeared; and catchy names came into This contrasts with a production orientation, vogue, such as "Magic Carpet" in Minnea- where a conveniently or economically produced polis, "The Ride" in Denver, and "The Bus" good is sold to as many consumers as will, or in Honolulu. Minneapolis also painted can be persuaded to, buy it. The marketing classic cars on the sides of buses, so concept is a philosophy that includes the people could ride to work in a Cord or a marketing orientation, where the business is Dusenberg. UMTA contributed "demonstration organized and operated with a consumer funds" to try out various other merchandising orientation. schemes to improve transit's image with the public, such as fare-free days to encourage Marketing in the public sector seeks to people to give mass transit a try. apply the marketing concept, along with a consumer orientation, to the provision of This approach was sound in principle, public goods. Public goods are created when but its results were underwhelming in mass transit. Merchandising schemes are basic to 0 marketing functions and private sector marketing to supplement responsibilities within general advertising, or in lieu of it. Two- MARTA, including the coordin- for-one and one-cent sales and attractive ation of activities, as well packages are designed to get consumers to try as the lack thereof; a product. If the product satisfies their needs, they will probably buy again at the 0 MARTA' s "marketing mix" — higher, profit-making price. If the product the product, price, and pro- does not bring satisfaction, however, the motion of transit in Atlanta; consumer will not make the repeat buy. The and basic transit product merchandised in the early 1970's was the same product that had 0 methods and procedures used been losing customers for forty years, and by MARTA to market its pro- the losses continued. duct, some successes and failures, and plans for the This experience with merchandising future. encouraged some fundamental rethinking. By the mid-1970' s, transit operators and UMTA began to look at their basic product -- its MARTA 's Position in the Market pricing, its competition, and its consumers. A new era began, one of market research and Although MARTA has a monopoly in metro product segmentation -- terms familiar to public mass transit, the Authority still marketing professionals but new to transit. faces stiff competition. Primarily, MARTA Transit began to consider the marketing competes with private autos; and it also concept, with a look at categories of con- secondarily competes with other modes of sumers and their specific travel needs. It transport, such as taxicabs, walking, or is too early to tell if this approach to bicycles. Discounting the secondary modes, transit marketing will work, either with the which account for a negligible proportion consumers themselves or with the transit of "productive" as opposed to recreational industry, which is still basically production- or pleasure travel, MARTA accounts for about oriented. five to six per cent of total regional travel, up from four per cent in 1970-1972. About 80 per cent of all personal travel in From the General Case the region is made by automobile drivers, to the Specific and about 14 per cent by automobile passengers. There are about 4,000,000 daily Some specific experience may be instruc- person-trips made in the Atlanta region, tive concerning the broader issue of transit with more than 200,000 made on MARTA. MARTA' properties gearing-up to a full marketing share of total travel has increased by 20 effort. This case describes the growth of per cent over the last six years. Revenue the marketing effort within the Metropolitan ridership increased 30 per cent and total Atlanta Rapid Transit Authority (MARTA), a ridership, including transfers, increased growth that parallels that of the industry in 35 per cent. Historical data on transit many ways. The case provides an opportunity ridership, levels of service provided, fleet to follow the evolution of one effort in size, and route mileage are given in Table 1. public-sector marketing -- to consider the what and the how, and perhaps to make some Appearances are substantially deceiving guesses as to how the new era of transit in this case. MARTA 's "small" share of the marketing will fare. The analysis process total personal travel market is much "larger" focuses successively on: than it might seem. That is, only a certain proportion of total trips are candidates 0 MARTA' s "position" in the market either for transit or for any mode that does -- locally as one of the com- not provide extreme flexibility in destina- petitors for personal transpor- tions served and in time and duration of tation services, as well as an travel. MARTA carries 30 to 35 per cent of influence on national transpor- all CBD (Central Business District) work tation policy; trips, and about 10 per cent of all regional work trips. Over the next several years, 0 the environmental forces and as rail transit services, are implemented, factors that affect MARTA MARTA 's share of CBD work trips will increase marketing; to about 40 per cent, and the share of all work trips vyill increase to about 20 per cent 0 the broader organization into Projected levels of patronage and operations which MARTA marketing must fit are presented in Table 2. and the perambulations of marketing responsibilities in the organizational structure; VI-2 TABLE 1

TRANSIT OPERATING STATISTICS FISCAL YEARS 1972-1977 (Vehicle Miles and Passengers are given in thousands)

1972 1973 1974 1975 1976 1977 1978 (Projected)

For 12 Months Ending June 10: Revenue Passengers 45,810 51,681 56,357 57,984 59,504 59,782 61,037 Transfer Passengers 12,816 14,475 15,953 16,303 17,855 19,234 19,414 Total Passengers 58,626 66,156 72,310 74,287 77,359 79,016 80,451 Vehicle Miles Operated 19,236 22,419 24,637 26,985 27,203 27,507 28,234

As of June 30: Vehicles in Service 534 603 689 715 735 765 783 Route Miles 1,137 1,367 1,527 1,587 1,670 1,812 1,878 Annualized Vehicle Miles of Service 20,767 24,955 26,380 26,922 27,308 27,519 28,426

TABLE 2

OPERATING SUMMARY PROJECTION

1978 1979 1980 1981 1982 1983

For 12-Month Period Ending June 30 Bus Vehicle Miles'/ (000 omitted) 27,850 29,700 30.500 31,000 31,000 31,000 Rail Car Miles - 2/ 720 2.630 3,930 4,300 6,500 Revenue Passengers (000 omitted) 61,750^/ 64,350 69.500 73,800 78,500 88,000

As of June 30 Bus Vehicles in Service 804 841 841 851 861 861 Route Miles 1,920 2.000 Vehicle Miles of Service (000 omitted) 29,250 30,200 30,800 31,000 31 ,000 31 ,000

Rail Cars in Service 100 120 120 150 System Miles 73/ 12V 145/ 156/ 197/ Car Miles of Service 1.440 3,820 4,260 4,700 6,500

l/Ooes not include special service operations

^^1978 total passenger boardings of 81.5 million includes 20 million transferring passengers

"^^Avondale to Georgia State 4/ 'Avondale to Hightower

^'^Avondale to Hightower: Garnett to North Avenue

^''Avondale to Hightower: Garnett to Arts Center

7/Avondale to Hightower: Lakewood to Arts Center Patronage levels not adjusted for possible fare changes. Vl-3 MARTA's activities are important not in the region. These forces -- cultural only to the Atlanta region in providing and social, political and legal, and expanded capabilities for personal transpor- economic relate to each other and to tation, but they are also important nationally. MARTA in complex ways. To risk a bad pun, there is a lot riding on

MARTA, in multiple senses. Only seven U.S. 1 . Cultural and Social Environment . cities currently have rail transit systems At least until the late 1960's, owning and (New York, Boston, Chicago, Philadelphia, using an automobile was a social activity San Francisco, Cleveland, and Washington); as well as a means of mobility. As one and two of these systems have been built in consequence, the use of public transit the post-war era (San Francisco's BART in 1972 became associated with lower social status. and Washington's METRO in 1975). The Linden- Part of this was generated by psychological wold Line of the Port Authority Transit Corp- factors related to a desire for release oration in Philadelphia is also new, and very from shortages and unavailability of successful, but it is a single-line commuter luxuries caused by the depression and war service feeding into the older Philadelphia years. Public policy also contributed to SEPTA system. Two other cities besides the decline in transit by fostering suburban Atlanta are actively constructing rail transit low-density housing far removed from transit systems (Miami and Baltimore), and a new high services, as well as by providing modern standard trolley system (called light rail) expressways to met the new travel patterns. is underway in Buffalo. Both the Washington So people with higher incomes and cars and BART systems have been plagued with moved to the suburbs; and people with lower mechanical and operating problems after incomes stayed in the central city, still extensive overruns in costs and schedules. served by transit. This reinforced the class Both of these transit programs have been stigma associated with transit. Transit criticized, with some people pointing to them properties did not have the capital or as proof of the inappropriateness of major operating funds to extend services to the transit programs. suburbs, moreover, particularly services good enough to compete with publicly-funded In this context, MARTA's prominence came automobile support-systems like expressways. early and the Authority may constitute the test case for public mass transit. MARTA These powerful trends have been buffered attracted major national attention in 1972 some, if they have not been reversed. During when -- after an earlier and successful public the 1960's concern about the environmental referendum -- a sales tax was levied to help impacts deriving from suburban sprawl and fund an integrated system of bus and rail still-more intensive development of auto- transit, the bus fare was lowered, and the oriented facilities tended to increase low fare generated a major (and unexpected) interest in transit as an alternative. Some dramatic increase in ridership. MARTA's early people moved back to the city, some bought success may even have contributed to the non-luxury cars, and some sought out transit success of transit in general in gaining as a means of social protest. The promotion larger amounts of federal support. If MARTA's of transit by interest groups generated some rail transit program is also successful, then public support that allowed transit operators the critics of major transit programs may be to increase their competitive position, if refuted. If the MARTA program is plagued by only slightly. And transit properties gave problems similar to those of BART and METRO, new attention to service, comfort, and then increased or even continued federal availability that helped make public transit support may be difficult to obtain. more acceptable to middle- and higher-income people. This emphasis on short-term success is

unfortunate, because changes in urban structure 2. Political and Legal Environment . and major changes in travel patterns take many In some urban areas, political decisions years to develop. Recall that the major encouraged transit use by directly inhibiting changes which followed major freeway and or even prohibiting automobile travel in highway developments took several years. The portions of the city, or during certain times fact remains, however, that MARTA will be of day. In other places-, priority rights-of- expected to attract large numbers of passen- way on streets and highways have been given gers quickly, and this implies a major role to transit. None of these special treatments for marketing in MARTA, patently. are available to MARTA, although MARTA con- tinues to propose special bus lanes and similar features. National policies require The Environn^nt for Transit Growth local areas to achieve maximum use of existing facilities, but these Transporta- A major role in the development of tion System Management (TSM) efforts in MARTA's marketing program will be played by Atlanta l.ave so far given little attention the environmental forces and factors working to direct pro-transit projects.

VI-4 The primary political and legal advantage 1979 budget proposal includes a hold-the- for MARTA derives from the dedicated one per line level of transit funding. Both the cent sales tax in Fulton and DeKalb Counties, House and Senate propose substantially and that blessing is limited in significant higher levels of funding, but the Adminis- senses. After MARTA was approved by referen- tration talks about an anti-inflation veto dum, the General Assembly limited the propor- if the appropriations are not brought into tion of sales tax to be used for operating line. The Administration proposal repri- expenses. The tax itself is to continue at oritizes existing funding levels to the one per cent only until April 1982, moreover, detriment of areas with aggressive and/or and then will be reduced to one-half per cent. capital-intensive programs. "Friends of Efforts to extend the duration of the full tax transit" on the national level have to have been unsuccessful, although elected work very hard to overcome anti -trans it officials have used the tax extension as a groups. The latter are influenced by bargaining tool to force the MARTA Board of academic critics who maintain that transit Directors to adopt specific fare and service -- especially rail transit -- is uneconomi- priorities. cal, ineffective, undesired, and energy- hungry. The pending transit appropriations The positions adopted by suburban and bills include some highway spending to central city officials are in direct conflict, placate some of the opposition. and neither side appears ready to compromise, or to accept compromises adopted by the Board The pro-transit forces could use more of Directors. One such compromise was adopted and bigger successes by public transit on in January 1978, when the Board committed to the local level as their prime arguing hold the fifteen-cent fare level until March point. Hence, again, the importance of 1979 as well as to expand service during effective marketing efforts at transit fiscal years 1978 and 1979 by at least two properties like MARTA. million annual vehicle miles, or about seven per cent over then-current levels. Roughly, 3. Economic Environment . The present the 15-crnt fare sought to gain support from economic environment both helps and hurts central -city interests, and the new routes transit. The cost of owning and operating would meet suburban needs. The mayor of an automobile has increased steadily over Atlanta characterized these efforts as a the past few years, although some of these betrayal of trust, because the compromise costs such as gasoline have increased in also provided that the fare after March 1979 carefully-managed and small increments. would rise to 25 to 35 cents, and thereafter The cost advantages of transit have become would je set at whatever level it would take more obvious as a consequence, especially to meet the legal requirement that no more in places like Atlanta where the fare is than half the tax receipts go to operations. very low. At the same time, however, The 1971 financial plan called for the fare operating and capital costs of transit to increa:.e only five cents per year from properties have increased drastically. For 1979 through 1982. When the preliminary example, the relative cost of diesel fuel budget for fiscal year 1979 was presented to for buses has increased more than gasoline. the Board of Directors, it projected an Labor costs also have increased substan- increase to 35 cents to meet expected operat- tially since transit has been taken over by ing costs. The Board of Directors responded public agencies, similarly, and labor by freezing MARTA hiring. A powerful urban accounts for about 80 per cent of transit legislator -- also chairman of MARTOC, or the operating costs. Some adjustments in labor f'ietropolitan Atlanta Rapid Transit Overview rates were probably necessary, since the Conriittee, the state legislative committee poor financial situation of many properties overseeing the Authority -- countered by had held wages down. threatening to have the legislature set the fare at 25 cents. In contrast, the vice- Increased costs have also affected chairnan of that conmittee comes from a capital development programs. The purchase suburban county. He continually advocates price of a bus more than doubled from 1973 increasing the fare so as to give his county to 1978. In Atlanta the cost of the rail its "fair share" of transit service, while transit system -- estimated at $1.3 billion refusing to accept MARTA staff analyses main- for a seven to eight year construction taining that service is equitably distributed period -- officially reached $2.3 billion within the service area. as of the last estimate, and MARTA refuses to make a new total cost estimate because Nationally, the political and legal of inflation costs and an uncertain con- environment for transit remains cloudy. The struction schedule. President's 1977 energy message contains almost no reference to public transportation, Overall economic conditions within although the urban policy message does Atlanta also affect MARTA, although some- include some transit considerations. The times in opposite directions. The 1973-74

VI-5 .

recession did not impact Atlanta's real 4. Department of Planning and estate-oriented growth rate until later than Public Affairs : Responsible for the rest of the country, for exaiTiple. When all externally-oriented activi- the slow-down in construction did appear, ties, including community rela- it hurt economically. At the same time, tions, local government and however, MARTA began its heavy construction local agency coordination; activity, and this helped the Atlanta economy coordination of all activities and gave MARTA the benefit of lower bids from relating to the Urban Mass hungrier contractors. But low employment Transportation Administration hurts MARTA by impacting the number of work (UMTA) of the U.S. Department trips, which comprise about two-thirds of all of Transportation; public inform- transit trips; and higher unemployment among ation, customer services, media central city blacks also impacts a large relations, marketing; and for proportion of MARTA 's captive riders. all long-range, systemwide program and service planning.

Marketing Role in MARTA Three standing committees of the Board of Directors -- Development, Operations, The marketing function must fit into and Finance -- each monitor one of the first the overall organization, obviously. In a three departments, in order. The Staff marketing-oriented organization, marketing Committee, a fourth unit of the Board, has concepts permeate the entire organization, overall responsibility for personnel and regardless of the location of the unit carry- equal employment opportunity, as well as for ing the marketing label. In a production- monitoring the Department of Planning and oriented organization, the unit with the Public Affairs. marketing label is frequently found off to one side, with little influence on organiza- 1 . MARTA's Orientations . From the tion policy and practice. time of its organization in 1966 until the successful referendum in 1971, MARTA was MARTA's overall organization in 1978 is definitely a marketing-oriented organization. shown in Figure 1. There are four major All efforts were directed to research and units in the organization, or departments, planning to devise a program which would each headed by an Assistant General Manager. meet the needs of existing transit consumers The General Manager receives staff support and stimulate additional demand for transit from several assistants, four of whom manage services. The program had to be packaged, the major departments of the Authority: priced and promoted for existing and potential markets, in such ways that voters --

1 . Department of Transit System both users and those who might never use the Development (TSP)! Responsible for product -- would approve it. The first design, construction, land acquisi- proposal was rejected in 1968. A new plan, tion and all other actions necessary with a different product -- integrated bus for implementation of the rail and rail system with short-range bus transit transit system, including, in improvements instead of a new rail system coordination with the Department of and continuation of the existing, separate Transit Operations, preparation for bus system -- was devised. Moreover, a new the initiation of rail service pricing policy provided for a sales tax and operations low fare, with taxes going to capital and operating costs. This contrasted with prop-

2 . Department of Transit Operations erty tax with capital costs and fares to (DTO): Responsible for all service cover operations. operations, including rail services when begun. This encompasses provi- After a 1971 referendum approved the sion of line operating functions and new approach to pricing, MARTA's orientation supervision, dispatching, maintenance changed. Three priorities emerged: improv- of vehicles and facilities, scheduling the bus system; holding the fare con- ing, route definition, operating stant, regardless of inflation and costs of standards and monitoring, patron and additional services needed but not included facilities security and definition in the plan; and building the rail system. of bus capital programs and schedules. Bus services were expanded, both to meet the commitments of the plan and to meet the 3. Department of Finance and Adminis- largely-unexpected increase in ridership.

tration : Responsible for all adminis- Even more new services were requested by trative and housekeeping support previous ly-unserved areas, and had to be functions, including personnel, provided when feasible. The original plan accounting, treasury, investment called for 106 bus-service improvements, management, computer services, but through January 1978, a grand total of internal audit, contract management, 286 service improvements were implemented. procurement, and administrative Operating costs increased substantially services. during that period and, for a time, total VI-7 .

operating mileage had to be frozen in order Services had been transferred to the to maintain the 15-cent fare. The improve- Department of Finance and Administration. ments were made by deleting marginal or Staff Services became the Department of little-used service to obtain mileage to be Planning and Public Affairs, with coordin- put into new services or into maintenance of ating responsibility for two assistants service on overloaded routes. The operating to the General Manager: Communications orientation was production efficiency. and Marketing, and Intergovernmental Marketing philosophy during part of this Relations. Marketing continued to be an period implied that MARTA had all the riders extension of the usual, external communica- it could handle, and did not need any more. tions functions.

By 1975 the growth of ridership generated Marketing functions were scattered by the low fare and public awareness carrying during this time period. Promotion first over from the referenda campaigns , reinforced was in the Division of Communications, and by expansion of service levels, began to fade. later in the office of the Assistant At the same time that the total service level General Manager. Customer Relations and was frozen, legislators and other public offi- information were in the Department of cials began to complain about the rate of Transit Operations, in the Transportation expenditure of the sales tax for operations. division, and research and service design These complaints were duly reported in the were in the Division of Transportation media, along with citizen lawsuits and com- Engineering and Evaluation in DTO. At the plaints resulting from the construction same time, the Division of Planning was program. This generated considerable negative trying to become more involved in operations publicity. MARTA management began to realize planning and research. that a more effective and coordinated response to both the public and private markets was Some signs of a marketing consciousness needed, and efforts were directed to incor- surfaced, but briefly. Early post- referenda porating an effective marketing program into efforts of the Division of Planning were the organization. devoted to rail system development -- such activities as environmental impact assessment 2. The Perambulation of Marketing and station area development planning -- as

Responsibility . The initial post-referenda well as to pro-transit aspects of the long- organization included no unit with a marketing range regional transportation planning label. However, there was a Division of process. A major effort in the operations Communications, which included a Community area involved an analysis of the impacts of Relations branch, in the Department of Staff the fare reduction on ridership patterns. Services along with Planning, Personnel, and As that effort neared completion in 1973, General (administrative) Services. Communi- Planning tried to convert that one-shot cations would later be home-base for the effort into an on-going market research marketing function. activity. The Division of Transportation Engineering and Evaluation decided that they Despite major reshufflings through 1974, had all the information they needed to the situation with respect to marketing did manage bus operations, however, and the not basically, change. Community Relations effort was shelved. Transportation Engineer- had been upgraded to full division status; ing's information and data-gathering programs and the Division of Corrmuni cations became focused entirely on ridership counts and part of the General Manager's staff, headed utilization, without consideration of rider by the Assistant to the General Manager for characteristics or overall trip requirements. Communications and Marketing. This office They focused on matching supply and utiliza- actually did no marketing, however, just tion -- on production management as con- communications -- media relations, publica- trasted with demand, either existing or tions, special tours, and other public potential relations activities. Customer services and consumer information, such as system maps, In 1976 Communications and Marketing route timetables, and telephone information began to be interested in marketing as well were still handled in the Department of as promotion, and proposed that some market Transit Operations. This v/as a carryover research work be initiated. Planning person- from the days of the Atlanta Transit System, nel suggested that they do this work -- based the privately-owned bus company which MARTA on their experience and capabilities in acquired in 1972. The graphics involved in research — as an alternative to employing the maps and timetables had been revised, to outside research firms. Communications and reflect the new MARTA image, and the telephone Marketing also began to attempt to draw information service was significantly customer service and information activities expanded, with accompanying promotion. under its umbrella, and discussions about transferring the telephone information By 1975, the personnel and general service from Transit Operations were initi- services functions of the Department of Staff ated. Comnuni cat ions and Marketing also

VI-8 undertook to update and improve the system information service, BUSLINE, was trans- route map, and proposed that this work be ferred to Public Information. done by an outside firm. Planning submitted a proposal to do the map work as an internal consultant, and was given the job. Marketing Functions and Responsibilities Also during 1976, Planning and Transpor- tation Engineering began intensive discussions The structure for marketing activities to resolve conflicts about their assignments stabilized in 1978 after perambulating of responsibilities. This was precipitated by through various areas of MARTA, with the an overall organizational assessment that noted unit wearing the marketing label designated the similarity of existing assignments for as the Division of Planning and Marketing operations planning and service design, and of the Department of Planning and Public recommended that Planning get all service Affairs (PPA). Having the label, however, design, evaluation, and operations planning. does not mean Planning and Marketing fully The organization recommendation also included controls the marketing function. The overall assignment of overall marketing responsibility marketing structure will be outlined briefly to Planning, including day-to-day operations in terms of the functions of marketing and planning and evaluation. "Final" service their organizational homes, the responsi- design remained in Transportation Engineering, bilities of the Division of Planning and but with Planning serving as an internal Marketing, and the efforts to coordinate consultant, on call. Longer-range operations the various functions and organizations to planning and "preliminary" service design achieve a coordinated marketing program. work was assigned to Planning, as was a major role in design of the feeder-bus network for Looked at more closely, for MARTA's rail services. purposes, marketing has five functional areas: market research, service design, service Finally, during 1976 Planning completed implementation, promotion, and evaluation. its part in a major MARTA activity -- develop- Different organizational units have responsi- ment of MARTA's program to serve the elderly bilities for all or parts of these functions, and handicapped. This effort had begun in as summarized below and shown in Figure 2. 1972 as the emerging MARTA recognized that such special efforts were going to be required 1. Market Research . Ongoing data of transit operators. Planning had conducted collection and analysis of the supply of a special marketing study, with detailed transit service and passenger utilization backgrounding in the problem areas, research are performed by the Evaluation and Analysis into the size and needs of the particular Branch of DTO's Division of Transporation market segment, evaluation of alternatives, Engineering and Evaluation. Primarily, this design of a specific product, and development activity involves stationing a traffic- of an implementation and marketing plan. The checker at a point where one or more routes program of special transit services for the pass, and the checker estimates the number elderly and handicapped was adopted by the of people in each bus when it goes by, listing Board of Directors in August 1976, and the the volumes for each route. The "point first special services were begun in October. checks" are at or near the location where When federal regulations on elderly and the largest number of riders is usually on handicapped public transportation were issued the route, as determined from "riding checks" in November 1976, MARTA was already in full with checkers riding each bus on a route and compliance. keeping up with boardings, departures, and net riders on the bus. Since the point Out of such activities, the Division of checks are made where each bus has its maximum Planning in January 1977 became the Division load, they are called "maximum load point" of Planning and Marketing. This was based in counts. Maximum load point counts are made part on organizational recommendations, the frequently, but riding checks (where one seeds of recognition of the need for a checker must be assigned to each bus on a coordinated marketing effort. Planning 's route instead of being able to count several growing involvement and existing capabilities routes from one location) are made only when in marketing-type activities, the successful absolutely necessary. Special surveys and work on the elderly and handicapped program, market research studies are also performed and Planning's willingness to take on a job by the Marketing and Research Branch of the that just was not being done anywhere else. Division of Planning and Marketing in PPA. At the same time. Communications and Marketing These special studies are performed irregu- was redesignated as the Division of Public larly, on an as-needed basis. Ridership Information, which was assigned to the Depart- surveys by Marketing are more concerned with ment of Planning and Public Affairs, headed by rider trip-patterns, attitudes, and charac- a Director. The marketing reorganization was teristics than with gross volumes of riders. completed in July 1977 when the telephone The data from both ongoing riding counts VI-9 studies are used by and the market research 4. Promotion . All public information both DTO and the marketing unit to draw and customer service functions are assigned inferences about ridership so as to modify to the Division of Public Information of existing services and project the value of the Department of Planning and Public additional services. The data are also used Affairs. In some cases, for special pro- to derive and employ models of transit-user jects, the Division of Planning and behavior relevant to long-range planning for Marketing will design and implement a systemwide or corridor studies promotional program in conjunction with Public Information.

FIGURE 2

MARIA'S MARKETING FUNCTIONS AND RESPONSIBILITIES

MARKET RESEARCH

Marketing and Research (PPA) Evaluation and Analysis (DTO)

SERVICE EVALUATION SERVICE DESIGN Evaluation and Analysis (DTO) Transportation Engineering and Evaluation (DTO) Marketing and Research (PPA) Transit Systems Planning (PPA) Marketing and Research (PPA)

PROMOTION SERVICE IMPLEMENTATION

Public Information (PPA) Transportation Engineering and Evaluation (DTO) Marketing and Research (PPA) Transportation (DTO)

DTO = Department of Transit Operations PPA = Department of Planning and Public Affairs

2. Service Design . The responsibility 5. Evaluation . Evaluation of existing and full authority for service design rests services can be the first, or research, step with the Division of Transportation Engineer- in the marketing cycle; or it can be the ing and Evaluation through its Bus Scheduling last step if evaluation leads to modifica- Branch. Suggestions for routes and services tion of service. This activity is performed are offered by Planning and Marketing branches, by the same MARTA units that do market especially for major systemwide or large-area research. revisions such as the reconfiguration of radial bus routes to serve as feeders to rail stations. Marketing's Organizational Homes in MARTA

3. Service Implementation . After new services and revisions to existing services The Division of Planning and Marketing are designed and scheduled by Transportation wears the label for marketing responsi- Engineering and Evaluation, they are assigned bility, but it has only a limited area of to the Transportation Division, DTO, which is direct authority. Planning and Marketing responsible for scheduling operators, dis- has three branches — Urban Design, Transit patching, and supervision. Public timetables Systems Planning, and Marketing and and schedules are printed by Transportation Research. Urban Design serves as a bridge Engineering and Evaluation for distribution between system planning, engineering, and by transportation supervisors, or by the construction. Its marketing function Division of Public Information. involves translation of community needs

VT-10 and desires about the placement and function dismay at one meeting when a subject was of rail transit stations and other major introduced for discussion that he did not facilities into preliminary designs to be know about beforehand, for example, even completed by engineers. Transit Systems though it had been discussed earlier with Planning does long-range systemwide planning one of his managers. That director objected and corridor studies, and also is involved about the Marketing Review Group to the in the reconfiguration of existing bus Assistant General Manager for Planning and routes into rail -system feeder services, but Public Affairs, maintaining that it was only as broad-gauge and preliminary work to ineffective, and actually hindered communi- be made final by Transportation Engineering. cation and coordination. If this is not Marketing and Research was originally clear to the reader, imagine its impact on designated as the Research and Development the marketing staff. Branch. This branch handled development of the elderly and handicapped program, and the Effectiveness of the Marketing Review 1972 fare reduction research studies. The Group (MRG) ended when the Assistant General staff in this branch turned-over completely Manager for Planning and Public Affairs during 1977, except for the manager, allowing created a special task force, separate from restaffing with marketing-oriented rather MRG, to plan the information programs for than research-oriented professionals. Market- the initiation of rail transit services. ing and Research does special market-research The Director of Public Information was named studies and promotional programs, and has one to chair that task force, and its members of three graphic artist positions within were drawn from the professional, submana- MARTA. There are three professional staff, gerial staff of the Marketing and Research not including the graphics artist and the Branch and the Division of Community Rela- manager, in the Marketing and Research tions, assisted by a graphics artist from Branch. TSD. The task force report, prepared by the chairman, outlined a 12-month information All customer service activities and most program for rail service initiation, with promotional efforts are handled by the Divi- the task force continuing to coordinate and sion of Public Information. This division supervise the program. The Director of has the BUSLINE telephone information service, Planning and Marketing gave the program distributes individual route schedules, has itself favorable review. But he pointed out internal publications, media relations and that the task force duplicated the Marketing all advertising activities. The more general Review Group, except for leaving out all conmunity contacts are assigned to the Divi- operating department representation; and he sion of Community Relations, which works with also noted that the task force's members citizens' groups and organizations to explain (except for Public Information) could not what MARTA is doing, as well as to feed back commit their organizations to implement any the concerns of the cormunity. decisions. He suggested a merger of the two groups, or a reconstitution of the Marketing Review Group. Coordination of Marketing Functions The Assistant General Manager for When marketing was assigned to the Planning and Public Affairs accepted that Planning Division, the Director of Planning reconmendation. On March 15, 1978, he and Marketing quickly established a coordin- abolished the Marketing Review Group and ating body whose single function was to mini- organized the Rail Activation/Bus Realign- mize duplication or neglect of important ment Marketing and Information Program marketing functions where responsibilities Coordination Task Force, with himself as rested in different units. The Marketing chairman. The task force consists of Review Group consisted of the Directors (or Division directors, with no delegation their delegates) of Planning and Marketing, permitted. It has the same membership as Community Relations, Public Information, the Marketing Review Group, except that the Transportation Engineering and Evaluation, Rail Start-up Division of the Department of and Transportation. The Manager of Marketing Transit System Development replaced the and Research chaired the group as the Director Division of Transportation. of Planning and Marketing's delegate. The Assistant General Manager for The Marketing Review Group had some Planning and Public Affairs now had active initial successes, but its effectiveness waned. overall coordination of MARTA 's marketing Some members began to miss meetings with programs. At least within three divisions regularity, while others apparently failed to in his department, coordination is directed pass on to their staffs or superiors the through specific project and activities results of discussions. In other cases, MR assignments; and voluntary or informal Group members did not know about things that cooperation and coordination are required were happening within their own divisions. on an inter-departmental rather than on an The Director of Public Information expressed inter-divisional level. . .

What Should Transit Marketing Do? 2. continue to expand bus service into areas not new served, while Marketing does not exist for its own sake, maintaining and improving the or at least it should not. Marketing should level of service in areas now have particular objectives which match the served; overall objectives of the major organization, and which focus on particular audiences or 3. increase both bus and rail target markets. ridership enough to hold the line on unit passenger costs, even How does MARTA ireasure up to this though operating costs per vehicle obvious but elusive notion? Two points pro- mile may be increasing, so that vide some sense of how MARTA 's "is" approaches fares can be held at obviously this "should." low levels;

4. obtain legislative approval Transit Objectives a la UMTA for extension of the sales tax at the one per cent level beyond 1982 The Urban Mass Transit Administration in order to increase borrowing defined transit's objectives in general in power for additional, faster rail 1972. Three prime objectives seek to: system expansion and to continue subsidy funds for fare maintenance; 1. provide mobility for persons and who -- because of age, income, dis- ability or other reasons -- have no 5. obtain additional grants of alternative travel mode; federal capital funds to extend the rail system, or to retire 2. decrease the relative propor- bonds. tion of urban travel using the private automobile (reduce conges- This latter set of objectives is not as clean tion); and as the first set, and it implies such obvious conflicts as: expand service but hold fare 3. exert a positive force on urban at a low level development patterns.

MARTA addresses these objectives through MARTA' s Target Markets a three-part program. First, the sales tax/ low fare method of financing reduces the One way to work around these conflicts total cost of transportation for people who involves targeting the marketing program to need financial assistance. Second, the certain parts of the population -- putting the significant expansion of bus service and effort where it will yield the greatest soon -to- be -he re rail transit service provides results. This requires a clear understanding more travel opportunities for transit cap- of the target markets so that MARTA can tives and, with the low fare, makes transit "position" its product and its promotion. much more attractive to the rider who has a choice. To this point, note that a 1977 MARTA has not formally declared its survey of transit ridership by the Marketing target markets. If it did, there might be and Research Branch showed more than 40 per three: captive riders, choice riders, and cent of transit riders would make their the body politic. Captive riders are those transit trip as an automobile driver if they people who have no choice but to use transit; did not use transit, and more than 20 per choice riders are those people who have the cent would ride with an auto driver.'^ option to use an automobile but -- because Finally, construction and operation of the of relative costs, service availability, rail transit system will make key areas more convenience, or social factors -- choose accessible, opening them for more intensive transit for some trips. The body politic land development. MARTA works closely with encompasses the people in the service area local government planners and private devel- and their representatives -- elected, opers in designing transit stations to maxi- appointed, and self-designated. These criti- mize desirable land intensity and use. cal persons pay taxes, appoint members of the Board of Directors, elect local and state Given the political and legal environ- officials, and variously enhance or limit ment, locally and nationally, MARTA must also MARTA' s capabilities to serve the other two achieve some more pragmatic objectives. These markets have not been formally stated, but the objectives might be phrased in such terms: Careful attention to these market targets can be rewarding, but that attention 1. complete and put the rail system can be difficult to sustain. For example, into service effectively and with large MARTA may dismiss the captive rider market ridership, on time and within budget. too quickly, on the ground that this market s

is already well-served. A large proportion enterprise combines its product, price, of MARTA riders hip fits the traditional promotion, and place (or distribution). captive rider image -- lower income, central Place or distribution in public transit city resident, minority. A 1972 MARTA study, is meaningless, since distribution is however, showed that although nearly 75 per really part of the product. Pricing, cent of lowest income families (less than product, and promotion are significant to $5,000 per year) were iransit-user families, MARTA and are discussed in detail here. 25 per cent are not. And half the families with incomes in the $5,000 to $10,000 range were not transit-using households. These MARTA 's Product households are the most likely users of midday and evening weekday service; signifi- One of the cardinal rules of business, cantly, service which can be provided or often observed in the breach as much as in expanded at low marginal cost. performance, prescribes knowing what business you are in. MARTA and the entire com- Choice riders will account for most of munity may be somewhat confused about its MARTA 's growth, at least on the weekday, but business, and what its product really is. they constitute a difficult marketing target. In some people's minds, MARTA's business is Not only must the service be acceptable, but building a rail system. Media and news- people must become convinced of its value. makers, and sometimes even MARTA staff, Choice riders are more expensive to serve occasionally refer to "when MARTA is built," because their trips are longer, moreover, and skipping over the fact that MARTA has a high level of service is necessary. The operated an expanding bus transit system captive rider has no choice but to wait, since 1972. Others think only of running regardless of the headway between buses or the expanded "bus company," to which the trains, but the choice rider can get back in rail system will be added later. Few view his car and drive. Reaching out to capture MARTA as being in the business of personal suburban choice riders may account for MARTA' transportation, yet most see MARTA competing decline in the number of revenue passengers with the private automobile. per vehicle mile -- from over 2.4 in 1972 to less than 2.2 in 1975, 1976, and 1977, after What is MARTA's business as its users that ratio had increased from 2.3 in 1971. see it? The most important attributes of Choice riders also tend to be peak-hour, MARTA's product -- as identified by passen- work-trip riders, with higher marginal costs gers in the 1977 ridership survey -- include than nonpeak, nonwork trips. In addition, low cost, avoiding traffic and parking they also tend to require service on a full- problems, and energy conservation. Attri- day basis -- to provide the security of butes of lesser importance include reduced knowing there is a way to get home, or back pollution and making better use of indi- to the car, during the day, as well as to vidual time. Passengers identified these provide night service for security against greatest needs for improvement: adding more being delayed in leaving the office. With buses to existing routes, better adherence the exception of crosstown routes -- some of to published schedules, improving comfort which are poorly utilized -- MARTA operates by having more seats available, and improving no services designed especially for travel convenience by having buses available more patterns of potential suburban choice riders. often and precisely when expected. Inter- Existing crosstown routes were designed on estingly, MARTA operations staff are very the basis of transfer requirements of existing proud of their performance in adhering to riders, and judgments about the attractiveness schedules, a view apparently not totally of shopping malls and office parks, not on the shared by passengers. basis of potential travel patterns of riders- of-choice. MARTA has a certain flexibility in its product mix, but exploitation of that While marketing programs for choice and flexibility has been quite limited. Thus captive riders can focus on providing direct MARTA provides several types of service: service, marketing to the body politic cannot. full service radial routes, express and Despite the temptations toward self-serving limited stop radial routes, crosstown routes, and "hype" public relations, marketing to the special collector and distributor routes, community at large can be truthful and informa- "reverse commute" routes, as well as special tive. The body politic, transit user or no, services for the elderly and handicapped. must know that transit exists, that it has Some routes operate all day, every day; utility, and that the existence of a viable some operate all day on weekdays only; some transit system is of value to them indi- have Saturday but not Sunday service; and vidually, either directly or indirectly. some routes operate during weekday peak periods only. MARTA also operates charter, sightseeing, and special events services. MARTA' s Marketing Mix Except for charter and sightseeing, however, all are traditional public transit services Marketing literature frequently refers operating on a fixed route, fixed schedule, to the "marketing mix," or the way an pre-scheduled and group ride basis. State VI-13 law prohibits MARTA from taxi cab operations; combined system for seven years with a labor agreements limit the way buses are 15-cent fare. The fare would then scheduled and operated; and federal regula- increase by five cents each year to the tions affect competition with other transpor- eleventh year, and then it would be set to tation services. MARTA has not experimented pay half the operating costs. Delays in with services other than the traditional ones, starting the rail program, federal funds except for the elderly and handicapped program, not available on the hoped-for schedule, feeling that any other type of service would and escalating costs of both capital be inappropriate, besides, goes the prevailing development and operations began to view, MARTA staff has plenty to do with the squeeze the fare. MARTA froze the total services they do provide. level of bus operations to avoid going over the 50 per cent tax allocation level until Evidence suggests that the degree of federal operating assistance became avail- flexibility is decreasing, moreover. Consider able in 1975. only one example. Routes and schedules are established by operating staff who historically In spite of rising costs of operations, enjoyed significant independence in route and along with rising costs of everything else, schedule design, given the improvements approved political interests in Atlanta have held by the Board of Directors and included in the that the 15-cent fare was a sacred commit- referendum program. Recently, the Board of ment and should change only in the terms -- Directors which under state law has full prescribed in 1972. In January 1978, the powers to establish routes and schedules after Board of Directors decided the issue by public hearings -- has taken a more direct establishing that the 15-cent fare would role in route approval, especially as pressure hold until March 1, 1979, but then would for maintaining the fifteen-cent fare has increase as needed to the 25 to 35-cent increased. MARTA has continued as policy the level. Thereafter, it would be set each old requirement of specific approval from local year, as part of annual budget approval at governments to operate buses on their streets. whatever level would be necessary to meet Some feel that this approval is no longer the legal limitation of sales tax use. necessary, but the question has not been brought to a head even though one route Whatever else, f^ARTA has much experi- included in the referendum program was ence with fares greater than 15 cents. rejected by one small city a number of times, When MARTA acquired the Atlanta Transit in spite of continued requests by area resi- System, for example, three routes served dents for the service. areas outside Fulton and DeKalb Counties -- two into Clayton County where the 1971 referendum was rejected, and one into Cobb MARTA 's Price County which declined to join MARTA in 1965. These routes continued, but with passengers State law gives the MARTA Board of boarding and debarking outside Fulton and Directors full power to set fares after hold- DeKalb paying the original fare. A special ing public hea rings, with the restriction shuttle to Atlanta-Fulton County Stadium that at least half of the tax revenues must events continued at the 40-cent fare. A go to the capi tal development program. On new reverse-commute route established into April 1, 1982, existing law mandates a tax- Gwinnett County also has a surcharge for rate reduction to one-half per cent from the out-of-county passengers. The four out-of- current one pe r cent, and the required set- county routes get evaluated periodically, aside of reven ues for capital purposes will and fares are set for the out-of-county be 40 per cent portion to pay full marginal costs. Since June 1975, elderly and handicapped passen- MARTA 's low fare/sales tax method of gers on regular route services during financing was a major breakthrough in transit nonpeak operating period pay only one-half financing. Before development of that concept, fare, or seven cents. The fares on the transit programs were traditionally financed special elderly and handicapped services by public funds for capital development only, are higher, 25 cents for the special elderly with fares or user fees paying all operating service (E-BUS) and $1.00 for the lift- costs. The MARTA method resulted from a equipped bus service (L-BUS). political compromise with the low fare offsetting the regressi veness of sales taxes And no doubt exists that the 15-cent on low income families, which assured MARTA fare has meant doing more and more for less of dedicated funding large enough to proceed and less. In fiscal year 1973 the total with the program. The plan also turned out operating costs per revenue passenger was to be good public economics. The original 51.5 cents; that increased to 71.7 cents financial plan, developed in early 1971, for fiscal year 1977, or 39.2 per cent. anticipated having enough local and federal For the same period, the consumer price funds to build the 53-mile rail system, to index increased 44.9 per cent. With the expand the bus system, and to operate the 15-cent fare, then MARTA 's services in the VI-14 aggregate are severely underpriced, both in paid and pre-addressed to MARTA, and it terms of the cost of the services provided gets major use. About three million and in relation to general price levels. schedules are distributed annually.

Despite such prodigious and multi- MARTA's Promotion channelled effort, some little experimentation suggests much can still be done to get MARTA's promotional efforts can be information about MARTA services into classified as both shotgun and rifle, with user's hands. For several years, new some activities covering both areas. But MARTA routes and services were promoted by those activities are severely constrained, distributing copies of new schedules door- whatever their character. For exanple, early to-door in the area served by the new route. in MARTA's operating life, a small amount of During 1977 some new routes were promoted paid advertising focused on the price and the by sending schedules by mail along with an general expansion of service. Paid adver- announcement about the new service. In tising did not continue, however, because of 1978, Marketing and Research began printing the difficulties in justifying any expenditure schedules as clip-outs in neighborhood- of public funds for advertising, except for oriented newspapers which accepted them as required legal notices. commercial advertising.

Instead of paid advertising, MARTA The SYSTEM MAP is a graphic rendering developed an intensive public service announce- of all bus routes on an area street map and ment program for the electronic media, as well also includes general service information, as a comprehensive "news bureau" approach for the map is distributed by MARTA free on the print media. MARTA utilizes several request, and also through banks and other channels for continuing promotional efforts, institutions. Several area banks include and undertakes special promotions that employ the system map along with the schedule request the regular channels as well as "project- card in the kits they provide new customers. specific" channels. These do not provide the Before 1977, only about 12,000 system maps combination of control, placement, and focus were distributed each year. After the map necessary for effective advertising. However, was enlarged and improved by Planning and they are far better than nothing. Marketing, however, distribution increased to about 60,000 per year. The regular channels include the BUSLINE schedule information service. Traffic Watch, TRAFFIC WATCH is a program begun by the system map and individual route schedules, MARTA in 1976, and this issue-specific public service announcements and publications. activity provides great coverage and free BUSLINE provides schedule information, and exposure for MARTA. All MARTA buses have travel counseling over the telephone. BUSLINE radios, and operators call in traffic reports operates 16 hours per day, seven days per at preselected locations during weekday peak week. A staff of 19 information clerks and periods. They also report any special supervisors answers about 150,000 requests conditions, such as accidents. A member of each month, compared to about 4,000 for the the Public Information staff stationed in the » similar service offered by Atlanta Transit radio room collects these reports and prepares System. In addition, about 30,000 calls are a 30 to 45-second sumnary every ten minutes. lost each month because of capacity limits. The sunmary is transmitted by wire directly Interestingly, the loss rate remains about the to participating radio stations for their use same even when the capacity is expanded. live, recorded for delayed re-broadcast within MARTA decided to hold-the-1 ine on expanding five minutes, or as information for their ' BUSLINE, consequently, and emphasizes use of own announcers. Eleven area radio stations the individual route schedules by regular participate in TRAFFIC WATCH, and provide t transit riders. almost total market coverage.

Schedule Distribution involves the print- MARTA receives several benefits from this ing of individual route maps and timetables service. First, MARTA receives exposure for each route, and then getting them to users. frequently during prime drive-time. Thus the Schedule racks are maintained by MARTA at sunmaries all utilize leads such as: "a MARTA .". several locations in the central area, and operator reports extreme congestion at . . MARTA's Public Information provides bulk The regular MARTA announcer also has estab- quantities of schedules for distribution by lished a persona as "the MARTA Lady." Second, other agencies such as Georgia State University. in exchange, each participating station pro- BUSLINE operators also try to obtain the name vides two minutes of MARTA public service and address of the callers in order to mail announcements daily -- 30 seconds each during them copies of the schedule asked about. the morning and afternoon drive-times and one Schedule request cards are available in minute during the remainder of the day. pockets in all buses, so patrons may mail in T. William Swinford, Assistant to the General their requests. The request card is postage Manager for Communications and Marketing when VI-15

I TRAFFIC WATCH began, estimated that the com- convenient measure of impact. Using direct mercial value of the free air-time MARTA mail and door-to-door distribution of received was at least $200,000 per year. schedule information for new or modified services was described earlier, as was the A spin-off of TRAFFIC WATCH occurred trial program of printing schedule informa- when WGST, the station carrying Atlanta tion as clip-outs in area newspapers. A Falcon football, reported traffic conditions special brochure also was distributed by for the stadium area as part of the pre-game direct mail and as inserts in neighborhood show for home games. This helped promote the newspapers to promote two of MARTA's Park/ Falcon Flyer, MARTA's special service to the Ride lots. These two lots have unused stadium from suburban shopping centers. parking capacity, and the brochure detailed routes and schedule information, location Public Service Announcements for radio and accessibility, and economic advantages are prepared monthly by MARTA staff, usually of park-and-ride versus driving to work. with "MARTA Lady" Beverly Molender as the This program resulted in increases of 19 announcer. A copy of the tape is provided to and 25 per cent in daily lot utilization, each of the TRAFFIC WATCH station participants or about 40,000 annual passenger trips. for broadcast during the month. These The promotion cost about $4,000, not announcements relate to safety, convenience, including staff time, and gained ten addi- the image of bus drivers, MARTA- related street tional users per dollar expended. closings and construction activities, and ."families" of bus service such as crosstown Another special promotion accompanied routes, park/ride lots, and elderly and the initiation of the DOWNTOWN LOOP — handicapped services. The focus is on special bus service following a circular systemwide services and on the MARTA image route connecting major hotels, exhibition rather than specific routes and services. as conference sites, and so on. Marketing and Research developed a special graphic Agency publications are the last major identifier and a schedule that used a color- channel of promotion. MARTA has three regular coded map instead of the tradition listing publications: RIDERS' DIGEST, distributed in of schedule times. Downtown businesses gave about 120,000 bi-weekly copies on-board buses; financial support to the service, and used TRANSIT TIMES, which is distributed bi-monthly MARTA- provided graphics as "drop-ins" for to employees; and THIRD FRIDAY, which was their own advertising. MARTA also developed formerly distributed monthly to all interested a series of free-standing posters and dis- parties. THIRD FRIDAY was suspended in late plays to be exhibited in hotels, stores and 1977 while the entire publications program hotel rooms, but costs prohibited continuing undergoes review and modifications. RIDERS' that effort. DIGEST includes progress reports on rail system development, announcements of improve- Other targets-of-opportunity have ments and modifications to bus service, kudos motivated special programs. For example, to operators sent in by passengers, and when scattered federal offices relocated to announcements of public interest. TRANSIT the 101 Marietta Building downtown, MARTA TIMES is a traditional internal newspaper with staff met with move coordinators and groups stories of interest to employees, along with of employees to explain bus services and to service anniversaries, promotions, birthdays, provide materials. The same effort will be retirements, and so on. THIRD FRIDAY included expended when the new Russell Building for status reports on operations and rail system federal offices is completed in 1978. development, grant awards, and other "mile- stone" information. Successes and Failures MARTA also publishes an ANNUAL REPORT, in Transit Marketing required under law, which includes all of the information and public relations type stories Historical marketing efforts have met common in corporate annual reports, as well as with varying degrees of success, and so it is the financial information mandated by statute. with MARTA. In most cases, evaluation of In addition to the ANNUAL REPORT, state law marketing effectiveness is difficult because requires another financial responsibility information impacts cannot be separated from report to be published in the newspapers service impacts. Moreover, some programs semi-annually, THE MARTOC REPORT, named after might even be too successful, as is the case the General Assembly's Metropolitan Atlanta with BUSLINE, where so many people used the Rapid Transit Overview Committee and origin- service that it became almost unmanageable. ally published as a legal advertisement. The elderly and handicapped services program satisfied federal requirements and received In addition to the regular promotional critical praise. But the services have not channels, special promotions are undertaken on attracted significant ridership, especially a project-by-project basis, and in the ideal for the handicapped, and the cost-per-rider case cost/benefit determinations provide a may be too high to continue. The Downtown VM6 Loop service received a lot of attention a 0 Individual SCHEDULES for all -- disproportionate amount for a single route of the reconfigured bus but the ridership remains very low. routes.

Generally, however, estimates of market- 0 A RAIL USERS' MANUAL, explain- ing's impact pose -- serious problems problems ing how the rail system and in calculating costs/benefits, in distinguish- reconfigured bus system works ing effects attributable to marketing or and how to use it. promotion, and in allowing time for efforts to mature. The park/ride promotion showed some 0 A comprehensive SYSTEM DIREC- attributable effects, and the effects of TORY that includes the map, TRAFFIC WATCH are significant although not individual schedules for all quantifiable, except for the value of free routes, and the USERS' MANUAL. advertising received as trade-outs. The new bus system map must have been successful , but 0 A short film showing the the only measure lies in the demand for rail system and how to use it. copies. These channels will be employed in a variety of modes — direct mail, handout at neighbor- What Will MARTA Marketing Become? hood meetings and at "preview" tours of rail stations, and so on. The objective will be The advent of rail service will create to have the maximum number of people know -- new challenges for marketing not only in about the system, how it works, and how to the opportunities for information provision use it effectively before rail service and presentation, but in the technical and begins. institutional framework of the entire rail start-up program. The technical marketing Advance knowledge is important. The challenge encompasses all of the development probability that things will go wrong tech- work remaining before trains run in revenue nically during early operations is high service: construction project completion, enough. Adding to that the congestion and rail car delivery and testing, operating confusion created by passengers who do not system installation and testing, and, very know where to go, or when, could cause a important, all of the activities necessary to nightmare. To this point, one member of the reconfigure bus services to serve as feeders Board of Directors has stated that he believes into outlying outer stations and as distribu- a major part of the early problems encountered tors from downtown. The institutional by the Washington METRO resulted from insuffi- environment includes all of the decisions on cient prior education of passengers. start-up dates, fares, initial operating levels, and whether or not bus reconfiguration In fact, it seems that the rail start-up occurs similtaneously with rail service. not only poses challenges for MARTA marketing; the quality of that start-up probably also Bus reconfiguration is very complex, with will go far toward determining the future of about one- fourth of MARTA' s bus service to be marketing in MARTA, Which way marketing goes replaced with an entirely new operating con- at MARTA, increasing or decreasing in impor- cept when the first rail segment goes into tance, will in large part be determined by operation, all of which will require the active how effectively the story of rail start-up participation of nLanerous local governments. is told to the potential passengers, and In effect, MARTA must design an entirely new also by how well the rail system works. bus system, prepare new operating instructions Marketing's future at MARTA depends on the for the new routes, prepare and distribute new overall success of the operating program. schedule information to customers, and inter- If operations succeed, then marketing will face that new bus system with the rail service probably be allowed to grow and expand. and the remaining three-fourths of the existing If major problems in operations occur, how- bus system. Ideally, all of this should occur ever, marketing may well be viewed as an without reducing service, or giving the expensive luxury that must not be allowed impression of reducing service to all of the to interfere with the important work of people now using the bus where rail will running the system. become available. Then all of these people, plus everybody else who might be attracted to the rail system, must be taught how to use the new package of services. Several primary channels of information are planned. These incl ude:

0 The BUS SYSTEM MAP, updated to include rail lines and with the reconfigured bus routes. VI-17 NOTES

1. Statement of the Philosophy of Marketing of the Marketing Faculty, the Ohio State University College of Commerce and Administration, as quoted in Stewart H. Rewoldt, James D. Scott, and Martin R. Warshaw, Introduction to Marketing Management (Homewood, Illinois: Richard D. Irwin, Inc., 1977), p. 5.

2. Lewis M. Schneider, Marketing Urban Mass Transit (Boston: Harvard University School of Business Administration, 1965).

3. Guidelines for Applications for Grants for Capital Assistance Projects (Washington: Urban Mass Transportation Acknini strati on, U.S. Department of Transportation, 1972).

4. 1977 Bus Passenger Survey Report (Atlanta: Metropolitan Atlanta Rapid Transit Authority, Februay, 1978), Table 8.

5. John W. Bates, "Using Sales Tax to Support Low Fare Pricing of Transit Services in Atlanta," Urban Transportation Economics (Washington: Transportation Research Board National Academy of Sciences Special Report Number 181, 1978), p. 48

VI-18 APPENDIX

The following is a list of the full series of case studies developed by the University of Georgia on the experiences of the Metropolitan Atlanta Regional Transit Authority (MARTA). All reports are available at cost through the National Technical Information Service, Springfield, Virginia 22161.

1 . Developing an Arbitration Procedure for Resolving Contract Disputes:

Preparing for the Worst While Hoping for the Best , by J. B. Trattner and G. J. Miller, July 1979. (NTIS Accession Number PB 81-154775, Price Code A02).

2. Assessing Electoral Defeat: New Directions and Values for MARTA ,

by T. A. Almy, W. B. Hildreth, and R. T. Golembiewski , July 1979. (NTIS Accession Number PB 81-154783, Price Code A02).

3. Structuring Intergovernmental Coordination: MARTA and the City of

Atlanta , by T. A. Almy, July 1979. (NTIS Accession Number PB 81-154791, Price Code AOS).

4. The MARTA Relocation Appeals Panel , by G. J. Miller, July 1979. (NTIS Accession Number PB 81-154809, Price Code A03).

5. Marketing in MARTA: Evolving an Innovative Role in Mass Transit , by J. W. Bates, July WIT. (nTIS Accession Number PB 81-154817, Price Code A02).

6. Designing the West Lake Station Area , by R. T. Golembiewski , July 1979. (NTIS Accession Number PB 81-154825, Price Code AOS).

7. The MARTA Code of Ethics: "Conflict Between Private Interests and Public Responsibilities ..." by R. T. Golembiewski, July 1979. (NTIS Accession Number PB 81-154833, Price Code A03).

8. Reorganizing the General Manager's Office , by R.F. Perkins and R. T. Golembiewski, July 1979. (NTIS Accession Number PB 81-154841, Price Code A03).

9. MARTA 's EEO Office: Three Complementary/Conflicting Roles , by R. T. Golembiewski and M. J. Anderson, July 1979. (NTIS Accession Number PB 81-157406, Price Code AOS).

10. Relocating the Elderly: Six Cases of MARTA' s Impact on People , by N. C. Rothman, July 1979. (NTIS Accession Number PB 81-157414, Price Code A02).

1 1 . Whatever Happened to SOS? Conmunity Conflict and Transit Development ,

by T. A. Almy and C. W. Proehl , Jr., July 1979. (NTIS Accession Number PB 81-157422, Price Code A02). ,

12. Facilitating Transition to the Several MARTAs , by R. T. Golembiewski July 1979. (NTIS Accession Number PB 81-157430, Price Code A03).

13. Transportation for the Elderly: Happy Faces on a MARTA Bus , by C. W. Proehl, Jr., July 1979. (NTIS Accession Number PB 81-157448, Price Code A02).

14. MARTA and the ^St Fare: Keeping Whose Faith Until March 1979? by C. W. Proehl, Jr. and R. T. Golembiewski, July 1979. TNTTS Accession Number PB 81-157455, Price Code A02).

15. "You Seem to Have Given Up on Us You Don't Seem to Care for the Authority, " by R. T. Golembiewski, July 1979. (NTIS Accession Number PB 81-157463, Price Code A03).

P 16. What's air About Low Fare? An Economic Analysis of a Political Decision ,

by J. Bates, July 1979. fNTIS Accession Number PB 81-157471 , Price Code A02).

17. MARTA Acquires the Atlanta Transit System: Who Assimilated Whom, and To What Degree?, by G. J. Miller and R. T. Golembiewski, July 1979. (NTIS Accession Number PB 81-157489, Price Code A03).

us GOVERNMENT PRINTING OFFICE 1981 341 428:1078 NOTICE

This document is distributed by the U.S. Department of Transportation in the interest of information exchange. The United States Government assumes no liability for its contents or use thereof. DOT-l-81-1 DOT LIBRARY

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