PUBLIC TRANSIT

Case Studies

Helping Chicago’s public transit agencies implement an innovative fare payment system

Capital Metropolitan Transportation Authority: Austin
Capital Metro was locked in an extensive dispute with the union representing transit workers over the outsourcing of transit services to a private contractor. After issuance of a Sunset review report, the Texas State Legislature directed the agency to sunset a private non-profit entity, contract out its remaining bus and paratransit services to private contractors, and to achieve certain cash reserves. To accomplish this, the agency sought to freeze the current underfunded governmental pension plan and allow a contractor to start fresh with a 401(k) or other bargained retirement plan. The union tried to block this action arguing that section 13(c) requires the “carry over” of the terms and conditions of a collective bargaining agreement to the new employment relationship with a contractor, including the pension plan. The dispute was subject to an arbitration process, during which the requirements of 13(c) were thoroughly briefed, including reliance on the 1994 DOL Las Vegas determination addressing service transitions under 13(c) handled by the attorneys involved.  The arbitration panel rejected the union’s argument and to preempt the union’s challenge of the decision, Capital Metro filed in court to confirm the award, stay the union’s demand for arbitration under the pension plan and obtain a declaratory judgment on alleged successor obligations under the plan.

Regional Connector Project: Los Angeles Metro
Thompson Coburn has provided extensive assistance to Los Angeles Metro for a number of years regarding the development of its Capital Investment Grant (CIG) projects, and in particular addressing and satisfying the substantive and procedural requirements of the Federal Transit Administration’s (FTA) CIG program. Recently, the Firm assisted Los Angeles Metro on these issues in connection with the Regional Connector project, a 1.9 mile underground LRT line in downtown Los Angeles. Similar to our assistance on previous CIG projects, this work includes advice and assistance relating to the FTA requirements for entering the various states of project development; coordination with FTA CIG and regional office staff; assistance in the annual CIG submittals to FTA; addressing Project Management Oversight Contractor (PMOC) issues; addressing and advising on overall Federal grant and Letter of No Prejudice (LONP) issues; assisting in the development and implementation of project schedules, including the coordination of procurement schedules with the FTA CIG process; and assistance in the development and review of capital funding strategies and plans. This work culminated in the execution of a Full Funding Grant Agreement (FFGA) with FTA for the project, with CIG funding of $670 million. Our work on Regional Connector also included developing design build terms and conditions and related construction documents, and assisting in the implementation of the design build procurement process.

Westside Project Section 1: Los Angeles Metro
The Firm assisted LA Metro in the development and implementation of the design build procurement process for the Westside Purple Line Extension Section 1 Project, a 3.9 mile heavy rail subway project below Wilshire Boulevard in Los Angeles. This work included advice and assistance in the development of procurement documents and contract terms and conditions, assisting during the procurement question and answer process, and assistance in the technical/responsiveness review of proposals. For this project, the Firm also assisted Metro in the FTA CIG project development process, performing tasks similar to those outlined above for Regional Connector. The work also led to the successful negotiation of an FFGA with the FTA for CIG funding of $1.25 billion.

4th and Prater and Virginia Street Bus Rapid Transit Projects: Reno, Nevada
Thompson Coburn has assisted the Regional Transportation Commission of Washoe County (RTC) in the development of two Bus Rapid Transit (BRT) small starts projects under the CIG program, including the proposed purchase of electric buses. This work has involved assisting in the development of materials for FTA to enter into the project development phase, project budget and funding issues, compliance with CIG program requirements, FTA rating issues, associated FTA appropriations issues, Buy America hurdles, project definition and scope issues, vehicle purchases, and working to obtain Letters of No Prejudice (LONPs). This assistance has involved meetings with FTA Headquarters, FTA Regional personnel and the PMOC, participation in FTA reviews, and congressional meetings. We have also worked on the solicitation and contracting process for construction contractors for the CIG projects, one of which utilized a Construction Manager at Risk (CMAR) procurement.

California Pension Reform and 13(c)
Thompson Coburn represented the State of California, acting through the California Department of Transportation, and the Sacramento Regional Transit District (SacRTD) in California v. United States Department of Labor, Case No. 13-cv-2069 (KJM), in the United States District Court for the Eastern District of California. California and SacRTD challenged the Department of Labor’s controversial determination that California’s landmark pension reform law (PEPRA) prevented California transit entities from complying with the Section 13(c) labor protection requirements which immediately cut off millions of dollars in federal grants and placed over a billion dollars of federal grants in jeopardy.

The U.S. District Court found in favor of the State of California and SacRTD and against the U.S. Department of Labor (Department) on claims by California and SacRTD that the Department’s determinations regarding the impact of California’s pension reform on California transit agencies’ ability to obtain federal transit funding violated the Administrative Procedures Act. The Court’s decision paved the way for the State to apply its pension reforms to public transit workers without jeopardizing the ability of California transit agencies continue to receive FTA funding.

Dallas Area Rapid Transit (DART)
Thompson Coburn filed a brief on behalf of DART in the U.S. Supreme Court, opposing a Petition for a Writ of Certiorari filed by Amalgamated Transit Union Local No. 1338 (ATU). In the brief, DART opposed the ATU’s request for a writ of certiorari to consider whether the Texas Supreme Court correctly held that Congress did not preempt, by implication, a Texas state governmental entity's immunity from suit when Congress enacted Section 13(c), which conditions a state transit entity's receipt of federal funds on the state workers' collective-bargaining rights. DART argued that the case did not warrant the Court's certiorari review because the Texas Supreme Court's decision aligns with the Court's constitutional precedent and the reach of, and limits on, Congress' constitutional authority. The ATU’s petition for a writ was denied by the Court.

City of Chicago and Chicago Transit Authority
Thompson Coburn has represented the City of Chicago and the Chicago Transit Authority (CTA) on a varied array of finance matters for both transportation-related and non-transportation-related projects. Representative transactional matters for the City have included public finance transactions for O’Hare International Airport. At O’Hare, Thompson Coburn most recently served as disclosure counsel in connection with $812 million and $1.947 billion issuances of General Airport Senior Lien Revenue and Revenue Refunding Bonds – the latter of which was the largest bond issue in the City’s history. We previously served as underwriter’s counsel in connection with a $248.75 million issuance of Customer Facility Charge Senior Lien Revenue Bonds for the development of a consolidated rental car facility at O’Hare, a transaction that also included the coordination of a related U.S. DOT TIFIA Loan for the project.

Representative projects for CTA have included general transactional matters, bond counsel and issuer’s counsel engagements in connection with lease-purchase financings, and service as special counsel in connection with the procurement (DBFOM), contracting and implementation of its Ventra fare collection system for CTA and regional commuter rail and bus systems, Metra and Pace.  Our work included drafting the request for proposals and structuring the procurement process, development of a model contract, negotiation with various proposal teams, award and closing of contract documents, and ongoing legal advice and contract supplements relating to contract implementation. The extensive legal issues addressed included issues of federal funding and regulatory compliance, service level agreements, intellectual property, bank regulatory matters regarding open standard fare cards, and state regulatory compliance.  The Ventra fare collection system was the first of its kind in the United States, and the joint implementation of the system among CTA, Pace and Metra was the first cooperative partnership for a regional fare program in the Chicago region.