Good news, DART riders. It’s not bad news, at least.
The Ankeny City Council this week signed off on an amendment to DART’s charter that will allow DART to issue government bonds. All 20 of DART’s member communities had to agree to the change before it could happen, and Ankeny’s was the last vote needed.
Sounds boring, I know. But what it means is significant: DART can now go forward with its plan to retire $3 million in existing debt with a more favorable kind of debt – notably, the repayments will be spread out over 10 years instead of five. And that means savings in DART’s operating budget of $300,000 annually, money that can be spent on bus service.
To be clear, these aren’t new savings, as much as we would like to restore some of the bus service cut in April. So while it’s a shame DART had to cut bus service at all, at least this means service won’t have to cut further this year. Not great news, but not bad news either.
The background on this can be hard to follow, but it starts with two words: pedestrian accidents. DART has been involved in some in the past few years, as every wise-guy loves to remind us. DART has admitted liability in some cases, but let me point out that it has found to not be at fault in others. This is a very touchy subject for DART employees, as you might imagine – and a topic I imagine I’ll return to frequently in the future.
At any rate, lawsuits against DART followed, some resulting in large settlements, much of which came directly out of DART’s pockets, not its insurer’s. (May I also point out that DART has better insured itself for the future.) Paying these settlements all at once would been a serious hit to the budget, so DART instead took out a traditional, five-year loan from a local bank to cover the settlements and spread the payments out over time.
Then the national recession hit, DART’s budget got squeezed, and the managers here began looking for every possible way of saving money to preserve as much bus service as possible. One option: cheaper debt.
DART found that it could save considerably sums by issuing government bonds instead of sticking with the traditional loan. Except there was a catch: DART’s charter was silent on the matter, meaning it was unclear if DART had the authority to issue bonds.
Though this is believed to have been the result of an oversight, DART didn’t assume anything. Rather, General Manager Brad Miller asked DART’s member cities to amend the charter so as to put it in black and white.
With all 20 member communities now on board, it’s a matter of going through the motions to put the plan in play. Next up: a public hearing at Tuesday’s Commission meeting.