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For Immediate Release

March 28, 2017

Media Information on Capital Area Transits Engagement with McDonald Transit Associates

When then General Manager Bill Jones resigned in February, Capital Area Transit (CAT) had a
golden opportunity. During Jones term, CAT service, performance and finances had declined. With his
departure came the opportunity to bring in competent management to address current issues, while
positioning CAT for the future.

There were 3 principle options:

1. Engage a neighboring transit authority, such as Yorks rabbittransit or Berks/Lancasters South

Central Transit Authority (SCTA), to provide interim management services as part of
transitioning CAT to transit regionalization/consolidation.
2. Engage a non-regional resource to provide interim management services as part of transitioning
CAT to transit regionalization/consolidation.
3. Engage an outside resource to ensure CAT remains fundamentally as is going forward.

Based on the recommendation of CAT Board Chairman Eric Bugaile and a consultant hired by CAT,
the decision was made not to go with option 1. This decision was made despite the fact that
rabbittransit and SCTA both have gone through the process of consolidation, operate far more cost
effectively than CAT, know CATs operations, i.e. know how to operate a public transit service, and are
committed to the goal of efficient transit regionalization for South Central Pennsylvania. Most
importantly, option 1 would have put all CAT funding partners closer to the goal of achieving over $5
million in savings from a 5-year waiver on local match funding offered by PennDOT while improving
service. Deferring regionalization represents significant foregone savings for CATs funding partners.

In going with McDonald Transit Associates (MTA), a transit management consulting firm from Texas,
CAT has incurred significant additional expenses; most of which could have been avoided had it chosen
option 1.

As it does with management in general, the terms CAT agreed to for McDonalds engagement are, in
a word, generous:

For supplying a General Manager, MTA receives $18,962 per month; or some $227,544 on
an annual basis
CAT reimburses all living expenses for the GM in Harrisburg
CAT picks up the cost of support services from McDonald to the tune of Senior Corporate
Staff ($155/hour) and Support Corporate Staff ($85/hour).
CAT picks up the cost of incidental expenses, such as local travel, communications, etc.

The contract is for six months, with an option to extend. While theres no way of telling exactly how
much in the end this could end up costing area taxpayers, something along the lines of a quarter million
annualized would be a conservative estimate. As hefty as that cost might be, it pales in comparison to
the foregone savings (approximately $1 million annually or $5 million over the next five years) of CATs
decision to not regionalize by going with option 1. Not all those who didnt support Option 1 are
necessarily against regionalization. Many believe with justification that CAT needs major overhaul in
preparation for any type of consolidation. Bringing in an outsider might be a way to achieve this if, at
the end of the stipulated six months, the next step is administrative consolidation with other regional
transit providers. Hence, option 2 above could have a good outcome in spite of the foregone savings
from local match waiver and additional costs paid to MTA. However, if McDonalds contract is extended
past the six months, it would be an indication that CAT management wants no part of regionalization.
This would be option 3 above, in which the regions taxpayers would foot the bill for CATs spotty service
for years to come.