Feb 27, 2023 - News

The mysterious company with the keys to Charlotte’s bus system

Charlotte Area Transit System bus CATS

Photo: Alexandria Sands/Axios

For years, a private company that started in Paris has operated Charlotte’s buses. The arrangement between the local government and the contractor has gone smoothly enough that city leaders and riders rarely acknowledged it — until recently.

  • The contractual agreement between Charlotte Area Transit System and RATP Dev USA is coming to an end in a year. CATS contracts with an outside company since the city cannot collectively bargain with the existing bus employee union under state law.
  • For the first time in seemingly decades, there’s newfound attention on the city’s process to hire a third-party transit management company to run its buses.

Why it matters: RATP Dev hit a roadblock in recent months renegotiating a labor contract with the local bus drivers union. At the same time, the CATS bus system was losing its credibility. Riders who depend on public transit to get to work and their daily needs suffered from inefficient service.

The drawn-out negotiations lasted more than nine months. It left the public and officials out of the loop and wondering: Who exactly holds the keys to the buses?

  • Even CATS — the transit agency writing the checks to RATP Dev to pay the drivers — claimed it didn’t know the specifics of the newly signed labor contract. They said they didn’t have a copy to share.

WBTV, Axios’ partners, reported on the city’s relationship with RATP Dev in July. It found many elected officials were unaware of the company.

What they’re saying: Some council members have said they’d like a clause in the next contract for representatives of the chosen company to address council. No one seems to recall them ever appearing before a public body.

  • RATP Dev could not be reached. The phone number of their Texas office rings straight to a voicemail, which was not returned.

Driving the news: Within the next 45 days, CATS will launch a search for contractors interested in managing its bus system. RATP Dev could reapply to win the contract again, but CATS could also look for a new company.

The latest: Between July and February, RATP Dev and SMART Local, the union representing the bus drivers, were in prolonged negotiations. After multiple proposed labor contracts were shot down, drivers were close to going on strike. Doing so would have left around 18,000 daily passengers without a way to get around.

A final contract was agreed upon and ratified with a vote margin of 20 to 1.

  • “RATP Dev assures us that the union is satisfied,” Brent Cagle, the interim CEO of CATS, told Charlotte City Council earlier this month.
  • The agreement included pay increases and cut the number of allowable, unscheduled absences, Cagle reported. Also, employees will get double time for holidays, Juneteenth added as a holiday, night differential pay and an increase in the pension cap, a press release from SMART Local states.
  • Cagle later said CATS doesn’t know the price of the new labor contract, but he knew it would cost the city more.

How it works: Former CATS CEO John Lewis, who resigned in the fall amid criticisms over the bus system, explained to council this summer that CATS gave RATP Dev “broad parameters” for renegotiating the labor contract: “This is how much money you have to spend,” Lewis said. “How you spend it is up to RATP Dev.”

  • Lewis said he expected to see one of the largest percent wage increases yet, “in the double-digit range.” The starting pay for a driver is $18 an hour, and the average worker makes $25 hourly.
  • He also said RATP Dev was expected to correct an issue in the contract that let operators have 10 unexcused absences. The allowance led to systemwide delays last summer.

Ron Tober, who was CATS’ CEO from 1999 to 2007, told Axios that under his leadership, staff would meet with the transit management contractor at the time to craft a strategy for the bargaining: “What are you going to open with?” he said they’d ask. “What’s that going to cost us? And where’s the red line that we don’t want to go beyond?”

  • CATS initially contracted with a company called First Transit in the ’70s, according to Charlotte Observer archives. Tober said CATS was dissatisfied with the preventative maintenance inspections. In 2003 the city entered a contract with McDonald Transit Associates, which was later acquired by RATP Dev.

So, why does CATS need this arrangement with RATP Dev to begin with?

Flashback: Pre-World War II, the private sector profited off buses. After the war, more Americans bought cars, and transit ridership dropped.

  • “Running (buses) as a private operation and making a profit or at least breaking even became very problematic,” Tober told Axios. “It was either you lose your public transit system or the public sector begins to get involved in helping to maintain the financial stability.”
  • In 1976, the city of Charlotte bought the bus system from City Coach Lines. Its ridership had fallen from 6.7 million to 4.3 million passengers in three years, per Observer archives.
  • But like many bus businesses across the U.S., the systems’ workers were already unionized. Under North Carolina law, municipalities cannot collectively bargain with labor unions. But a federal law required the city to maintain the existing unions’ collective bargaining rights. So they had to bring in an outside company to run the system.

It’s common in the South for a private company to run the day-to-day operation of a public bus system.

  • RATP Dev also has a contract in Buncombe County, and this year it was awarded contact with Greensboro Transit Agency.

Of note: CATS incorporated rail and Special Transportation services into its system after it became a public entity, so those are city employees and are not covered by collective bargaining rights.

Timeline: The last time the city of Charlotte entertained bids for a transit management company was in 2018. Two businesses applied. The contract went to RATP Dev in 2019. At the time they were the current provider. It was a three-year contract that the city manager could extend for two more years.

  • The current contract expires next February.
  • CATS leaders have said they expect competition from bidders other than RATP Dev.

CATS declined an interview and did not respond to any questions sent for this story.

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