AB723: Bill Text

LRB-4228/1

ARG/JK/MES:kjf:md

2009 - 2010 LEGISLATURE

2009 Assembly BILL 723

February 11, 2010 - Introduced by Representatives Barca, Grigsby, Turner, Sinicki, Zepnick, Kessler, Toles, Young, Pasch and Fields, cosponsored by Senators Taylor, Lehman, Plale and Coggs. Referred to Committee on Transportation.

AB723,2,2 An Act to repeal 59.58 (6); to renumber 66.0615 (1) (a); to amend 20.395 (5) (iv), 32.02 (11), 32.05 (1) (a), 32.07 (2), 40.02 (28), 59.58 (7) (a) 1., 59.58 (7) (b), 59.58 (7) (c) 1. (intro.), 59.58 (7) (d), 59.58 (7) (e) 2., 59.58 (7) (f) 2., 59.58 (7) (f) 4., 59.58 (7) (g), 59.58 (7) (i), 66.0301 (1) (a), 66.0615 (1m) (a), 66.0903 (1) (d), 70.11 (2), 71.26 (1) (b), 77.54 (9a) (er), 77.708 (1), 77.708 (2), 77.9971 (1), 79.03 (3) (b) 4. a., 85.063 (3) (b) 1., 85.064 (1) (b), 85.11 (1) (a), 85.20 (4m) (a) (intro.), 85.20 (4m) (a) 6. e., 85.20 (4s), 111.70 (1) (j), 341.35 (title), 341.35 (1), 341.35 (2) (intro.), 341.35 (3m), 341.35 (4), 341.35 (5), 341.35 (6), 341.35 (6r), 341.35 (7), 345.05 (1) (ag) and 611.11 (4) (a); and to create 20.395 (1) (hy), 59.58 (7) (a) 2m., 59.58 (7) (a) 4., 5. and 6., 59.58 (7) (c) 1. h. and i., 59.58 (7) (e) 3., 59.58 (7) (k), 59.58 (7) (L), 59.58 (7) (m), 59.58 (7) (n), 66.0615 (1) (ad), 66.0615 (1) (ge), 66.0615 (1m) (ee), 66.0615 (1m) (em), 66.1041, 85.20 (4m) (a) 6. f. and 341.35 (9) of the statutes; relating to: the southeastern regional transit authority, the creation of interim regional transit authorities in southeast Wisconsin, requiring the exercise of rule-making authority, and making an appropriation.

Analysis by the Legislative Reference Bureau

Prior to the Biennial Budget Act, 2009 Wisconsin Act 28 (Act 28), the counties of Kenosha, Racine, and Milwaukee were required to create a Regional Transit Authority (the KRM authority). The KRM authority was responsible for the coordination of transit and commuter rail programs within these three counties but had no authority to manage or operate any transit system. The KRM authority was authorized to impose a rental car transaction fee within these three counties, which fee was to be used to hire staff, conduct studies, and prepare a report to the legislature and the governor, due by November 15, 2008.

Act 28 terminated the KRM authority as of October 1, 2009, and created a successor entity, the Southeastern Regional Transit Authority (SERTA). The SERTA is a public body corporate and politic and a separate governmental entity; it consists of the counties of Kenosha, Racine, and Milwaukee. The jurisdictional area of the SERTA is the geographic area formed by the combined territorial boundaries of the counties of Kenosha, Racine, and Milwaukee. The powers of the SERTA are vested in its board of directors. The SERTA's powers are limited but include all powers necessary and convenient to create, construct, and manage a commuter rail transit system connecting the cities of Kenosha, Racine, and Milwaukee (KRM commuter rail line).

Under current law, upon approval by its board of directors, the SERTA may impose a rental car transaction fee, in the counties of Kenosha, Racine, and Milwaukee, of not more than $18 per transaction, except that the SERTA's board of directors may have this fee annually adjusted for inflation. From each rental car transaction fee, the SERTA may retain not more than $2 per transaction for administration of the SERTA and may retain the remainder for expenditures related to the KRM commuter rail line, including planning, construction, maintenance, operations, and engineering expenditures. The SERTA is the only entity in the counties of Milwaukee, Racine, and Kenosha that may submit an application to the Federal Transit Administration under the federal New Starts Grant Program (New Starts application) for funding for the KRM commuter rail line. By July 1, 2010, the SERTA must submit a New Starts application to enter the preliminary engineering phase for the KRM commuter rail line. Transit system operators in Kenosha County and Racine County receiving state transit aids must provide copies of all of their annual and long-term transit plans to the SERTA as these plans become available.

Act 28 also authorized the creation of several new regional transit authorities (RTAs): the Dane County RTA, the Chippewa Valley RTA, and the Chequamegon Bay RTA. Each RTA, once created, is a public body corporate and politic and a separate governmental entity. Act 28 also specified the powers and duties of these three RTAs. In brief, for each, the RTA's authority is vested in its board of directors and its bylaws govern its management, operations, and administration. An RTA may: operate a transportation system or provide for its operation by contracting with a public or private organization; impose, by its board of directors adopting a resolution, a sales and use tax in the RTA's jurisdictional area at a rate not exceeding 0.5 percent of the sales price if certain conditions are satisfied; acquire property by condemnation; and issue tax-exempt revenue bonds. An RTA has a duty to provide, or contract for the provision of, transit service within the RTA's jurisdictional area. Rates and other charges received by an RTA must be used only for the general expenses and capital expenditures of the RTA, to pay interest, amortization, and retirement charges on the RTA's revenue bonds, and for specific purposes of the RTA and may not be transferred to any political subdivision.

This bill authorizes the creation of a new type of RTA known as an Interim Regional Transit Authority (IRTA), which is a public body corporate and politic. The bill also makes significant changes relating to the SERTA.

Under the bill, the governing body of a municipality or county (political subdivision) within the area comprising the counties of Kenosha, Milwaukee, Ozaukee, Washington, Racine, and Waukesha (southeast Wisconsin) may, by resolution, create an IRTA consisting of the political subdivision or may join together with one or more other political subdivisions to jointly create, by adopting identical resolutions, an IRTA. An IRTA may be created only if at least one of the political subdivisions creating the IRTA operated a transit system receiving state transit aids as of the effective date of the bill and each political subdivision creating the IRTA commits to provide certain levels of funding for the IRTA. An IRTA may include no more than one county and all municipalities included in the IRTA must be located within the same county. After an IRTA has been created, a political subdivision within the same county may join the IRTA if the governing body of the political subdivision adopts a resolution identical to the existing resolutions of the IRTA's members (participating political subdivisions) and if the IRTA's board of directors adopts a resolution allowing the political subdivision to join the IRTA. However, the resolution of the joining political subdivision may specify what the composition of the IRTA's board of directors will be after the political subdivision has joined the IRTA and, if the IRTA's board of directors approves the joinder, the IRTA's board of directors thereby agrees to the new composition of the IRTA's board of directors after the joinder.

The jurisdictional area of an IRTA is the geographic area formed by the combined territorial boundaries of all participating political subdivisions of the IRTA. If the IRTA includes a county, the jurisdictional area of the IRTA is the county territorial boundaries. Any resolution creating an IRTA or joining an IRTA must include provisions relating to the IRTA's board of directors and must specify all revenue sources on which the IRTA will rely for funding and the minimum amount of revenue that the IRTA will commit to satisfy the revenue requirements applicable to the IRTA. After an IRTA is created, the participating political subdivisions of the IRTA may amend or modify their resolutions creating or joining the IRTA if they remain identical, although a few changes can be made without the need for formal amendment or modification of the resolutions creating or joining the IRTA.

Under the bill, an IRTA's powers are vested in its board of directors. With certain limitations, an IRTA's board of directors is determined in the resolutions creating or joining the IRTA. However, the board of directors of an IRTA that includes Milwaukee County is established by statute.

The bill requires an IRTA to do all of the following: 1) provide, or contract with existing transit providers for the provision of, transit service within the IRTA's jurisdictional area, except that a Milwaukee County IRTA must contract with the Milwaukee County board for the IRTA to provide transit service in Milwaukee County; and 2) provide transit planning within the IRTA's jurisdictional area. An IRTA's transit plans must be submitted to SERTA. An IRTA is also authorized to do any of the following: 1) acquire a local transit system by entering into a transfer agreement with the owner of the system; 2) provide, or contract for the provision of, transit service outside the IRTA's jurisdictional area if it would benefit residents within the IRTA's jurisdictional area; and 3) apply for and utilize state and federal funds. If an IRTA applies for federal or state funding, the application must first be submitted to the SERTA, which must then provide the application to the appropriate federal or state agency. If the application results in the receipt of any federal or state funds, those funds must first be received by the SERTA, which must then forward the funds to the IRTA.

Under the bill, an IRTA may generate revenue by doing any of the following: 1) imposing a local motor vehicle registration fee; 2) levying a room tax of up to 2 percent on the privilege of furnishing hotel and motel rooms to transients, similar to the current law room tax that a municipality may impose; 3) imposing, by the adoption of a resolution by the IRTA's board of directors, a sales and use tax if approved in a referendum in the IRTA's jurisdictional area; or 4) charging a membership fee to the participating political subdivisions of the IRTA. However, a Milwaukee County IRTA may only impose the sales and use tax, as described in item 3) above. An IRTA must generate specified amounts of revenue, from any one or a combination of revenue sources. Within two years after the creation of an IRTA, the IRTA must either: 1) generate revenue sufficient to offset a 30 percent reduction in passenger fare revenues resulting from transit operations or to provide an 8 percent increase in transit service, or a combination of both, as compared with passenger fare revenues and transit service as of the time that the IRTA was created; 2) invest an amount, equivalent to the revenue that would be sufficient to provide an 8 percent increase in transit service, in either improving existing capital assets of the IRTA or making new capital purchases and improvements for the IRTA; or 3) if the IRTA includes Milwaukee County, increase transit service to a level equal to or greater than the level of transit service provided in Milwaukee County in 2001. In addition, the revenue generated must be used to implement either the specified reduction in passenger fares or the specified increase in transit service, or a combination of both, or the investment must actually be made by the expenditure or commitment of funds for the applicable purchases or improvements (phase 2 revenue threshold). Within four years after its creation, the IRTA, in addition to continuing to meet the phase 2 revenue threshold, must improve the interconnectivity of its transit system by linking with other modes of transportation and improving cross-county links (phase 3 revenue threshold).

The bill requires the Department of Transportation (DOT) to determine and certify whether each IRTA has met these revenue thresholds, but, in doing so, DOT must make allowances if a municipality or county has joined an IRTA after its initial creation. Subject to the allowances made by DOT, if an IRTA does not meet these revenue thresholds within the applicable time limits, the IRTA is not eligible for incentive funding provided by SERTA (discussed below). Subject to the allowances made by DOT, if an IRTA does not meet these revenue thresholds within two years after the applicable time limits, the IRTA must be dissolved and responsibility for providing transit service and transit planning, as well as all assets, liabilities, rights, and obligations of the IRTA, must revert to the participating political subdivisions of the IRTA.

Under the bill, when three IRTAs have been certified by DOT as meeting the phase 3 revenue threshold, DOT must provide notice of this fact to every IRTA created, specifically identifying these three IRTAs. If DOT subsequently certifies any additional IRTA as meeting the phase 3 revenue threshold, DOT must provide notice of this fact to the SERTA and to every IRTA created, specifically identifying the additional IRTA certified as meeting the phase 3 revenue threshold. After DOT provides one of these notices identifying an IRTA, each IRTA identified in the notice must begin the process of winding down and dissolving and must complete this process no later than 120 days after receiving the notice. As part of the IRTA's winding down process, all of the following must occur: 1) the assets and liabilities of the IRTA must become the assets and liabilities of the SERTA; 2) all tangible personal property, including records, of the IRTA must be transferred to the SERTA; and 3) all contracts entered into by the IRTA, in effect at the time of the winding down, are transferred to the SERTA. The SERTA is the successor to the IRTA. The IRTA terminates on the 120th day after the IRTA receives the DOT notice.

The bill makes some modifications relating to the SERTA regardless of whether the SERTA becomes the successor to IRTAs, and it also makes significant changes to the form and function of the SERTA if the SERTA becomes the successor to IRTAs.

The bill makes the following changes to the SERTA, regardless of whether the SERTA becomes the successor to IRTAs:

1. The SERTA consists of both the counties and cities of Kenosha, Racine, and Milwaukee, not just the counties.

2. The SERTA's board of directors must include certain members from IRTAs, if they are created, regardless of whether these IRTAs reach their phase 3 revenue thresholds and merge into the SERTA.

3. The SERTA may use a portion of the rental car transaction fee it imposes to provide, until June 30, 2011, incentive funds to IRTAs. There is a limitation on the amount of incentive funds that may be awarded, as well as other criteria and limitations related to the SERTA's providing these incentive funds.

4. Beginning on July 1, 2011, the SERTA may provide, from state transit aids, incentive funds to IRTAs to assist them in providing transit service in their jurisdictional areas. The SERTA's bylaws must specify a method for providing these incentive funds and the limitations and requirements applicable to incentive funds identified in item 3. immediately above also apply these incentive funds.

5. The SERTA may provide nonfinancial transit assistance to any IRTA, including reviewing the transit plans of the IRTA.

6. The bonding limit for revenue bonds issued by SERTA is increased from $50,000,000 to $250,000,000.

7. The SERTA is the only entity in southeast Wisconsin that may submit a New Starts application for funding for any purpose.

8. The bill clarifies that SERTA may operate the KRM commuter rail line itself or may contract for a rail service to operate the KRM commuter rail line.

Under the bill, after at least three IRTAs have been certified by DOT as reaching their phase 3 revenue thresholds, these IRTAs merge into SERTA. As the successor entity to these IRTAs and to any subsequent IRTA that DOT certifies as having reached its phase 3 revenue threshold, the SERTA changes in all of the following ways:

1. As discussed above, the IRTAs' assets and liabilities, personal property, records, and contracts are transferred to the SERTA as the SERTA becomes the IRTAs' successor. The SERTA must assist each IRTA in an orderly transfer.

2. Within 120 days after DOT certifies an IRTA as having reached its phase 3 revenue threshold, the SERTA must assume responsibility for providing transit service and transit planning within the old jurisdictional area of the IRTA. In assuming this responsibility, the SERTA has all options for providing transit service that were formerly available to the IRTA and the SERTA must impose sales and use taxes, and may impose a room tax, in the IRTA's old jurisdictional area if the IRTA imposed these taxes and if the SERTA adopts a resolution to establish the tax rate or impose the room tax. The SERTA has all powers necessary and convenient to carry out these responsibilities.

3. After the SERTA has assumed responsibility for transit as described in item 2. immediately above, the SERTA's jurisdictional area changes to cover only the old jurisdictional areas of all IRTAs to which the SERTA has become the successor. However, for purposes of the rental car transaction fee, if the IRTA included any of Racine County, the SERTA's jurisdictional area includes all of Racine County unless the SERTA's board of directors votes otherwise or unless the SERTA's board of directors does not include a member representing Racine County. Also, for purposes of imposing sales and use taxes and the room tax, the SERTA's jurisdictional area does not include the old jurisdictional area of an IRTA that did not impose sales and use taxes or a room tax.

4. After DOT certifies that the first three IRTAs have reached their phase 3 revenue thresholds, and with each certification of an additional IRTA thereafter, the membership of the SERTA changes. Instead of the counties and cities of Kenosha, Racine, and Milwaukee, the members of SERTA are the political subdivisions that were participating political subdivisions in the IRTAs certified by DOT. However, if Racine County was not a participating political subdivision in an IRTA consisting of municipalities located in Racine County, Racine County may still subsequently join the SERTA. The SERTA's board of directors also changes; a director who is not from a political subdivision that was a member of an IRTA may be removed from the board and, if not removed, has limited voting rights.

5. After DOT certifies that the first three IRTAs have reached their phase 3 revenue thresholds, the SERTA may use proceeds of its revenue bonds for the additional purposes of constructing new capital improvements to the SERTA's transit system and for acquiring existing transit systems.

6. After DOT certifies that the first three IRTAs have reached their phase 3 revenue thresholds, the SERTA is limited in its expenditures of locally derived revenues for purposes related to the KRM commuter rail line. These locally derived revenues are local motor vehicle registration fees, room taxes, sales and use taxes, and membership fees received by the SERTA within the political subdivisions of the SERTA's jurisdictional area. SERTA may expend these locally derived revenues for purposes related to the KRM commuter rail line only if these revenues are expended in proportion to ridership of the KRM commuter rail line in each political subdivision, as calculated annually by DOT. In addition, these locally derived revenues may not be expended for construction, operation, or management of the KRM commuter rail line if the expenditure would result in a reduction of transit service in the political subdivision where the revenues were generated. However, by unanimous vote of its full authorized membership, the SERTA board of directors may override either or both of these limitations.

The bill authorizes IRTAs to impose a local motor vehicle registration fee and makes IRTAs eligible to receive grants under DOT's Southeast Wisconsin Transit Capital Assistance Program, created in Act 28. If the SERTA becomes the successor to an IRTA, the SERTA also succeeds to any local motor vehicle registration fee imposed by the IRTA. The SERTA is already eligible, under current law, for DOT's Southeast Wisconsin Transit Capital Assistance Program.

Under the bill, certain provisions of current law that apply to the Dane County RTA, the Chippewa Valley RTA, and the Chequamegon Bay RTA also apply to IRTAs, including the following:

1. An IRTA has authority to acquire property by condemnation.

2. Employees of an IRTA are participatory employees under the Wisconsin Retirement System (WRS) if the IRTA elects to join the WRS.

3. Employees of an IRTA are covered by the the Municipal Employment Relations Act, under which all matters relating to wages, hours, and conditions of employment are subject to collective bargaining and all municipal employees are expressly granted the right to self-organize and to bargain collectively through a representative of their choice.

4. An IRTA is a "local governmental unit" for purposes of the prevailing wage and hour law. Under current law, certain workers employed on a public works project contracted by a local governmental unit must be paid at the rate paid for a majority of the hours worked in the person's trade or occupation in the county in which the project is located, as determined by the Department of Workforce Development, and may not be required or permitted to work more than ten hours per day and 40 hours per week, unless they are paid 1.5 times their basic rate of pay for all hours worked in excess of those hours.

5. An IRTA is treated like municipalities, counties, and other political subdivisions for purposes of claims and liability resulting from the negligent operation of a motor vehicle and may participate in organizing municipal insurance mutuals to provide insurance and risk management services.

6. An IRTA may enter into intergovernmental cooperation contracts with other governmental units.

7. IRTA property is not subject to state and local property taxes.

8. An IRTA is eligible for urban rail transit system grants and commuter rail transit system development grants from DOT.

If the SERTA becomes the successor to an IRTA, these provisions also apply to the SERTA.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.