Meeting of 1998-4-7 Special Meeting

Schumpert said an agenda item had been prepared in response to the initial agreement from the industrial prospect and a second draft was provided, which is the most current. He said staff took the proposals within the contract and provided a recommendation showing current requirements. This was discussed with the prospect’s representative and they understand it is simply a recommendation from staff and in no way indicates that it may be the City’s final position as it relates to any of the activities. He said he understood a meeting was held today which provided alternate proposals, and that he did not attend that meeting. The purpose of the meeting is to arrive at terms and conditions, which are acceptable to the Council, which the representative can agree to this evening or take back to the prospect for approval, and hopefully the next item to be presented will be the contract with agreeable language for approval by the Council.

Jere Barnthouse, 1503 NW 31st Street, said last fall a contact was received, through the Oklahoma Department of Commerce, about a prospect referred to as Roadrunner, which was looking for approximately 40 acres, as well as rail service access, and certain quantities of water. Estimated employment was 100 persons with annual payroll of $2.5 to $3 million. A proposal was structured for a cash incentive based on the amount invested in plant and equipment; Roadrunner estimated an investment of $100 to $125 million initially for plant and equipment. The proposal included providing the land for the plant, and the cash incentive was based on $100,000 per $10 million of investment; an investment of $100 million would be a $1 million cash incentive.

Barnthouse said the company came back after the first of the year talking in terms of investing as much as $160 million in plant and equipment in the Lawton area, and hiring approximately 110 employees, with salaries from $3 to $3.5 million annually, which would produce a salary range of $30,000. He said that salary range does not include benefits, which will be in the range of 33% and possibly higher, over and above the annual salary ranges quoted. Barnthouse said they knew the prospect was a company that recycles paper, and obviously it has to be a large company if they are going to spent $3 million for plant and as much as $100 million on equipment; the company is listed on the New York Stock Exchange and has sales in excess of $120 million annually. He said he spoke of the limitations on cash incentives and the representative informed him that more land would be needed than the 40 acres because they intended to hire more employees and enlarge the plant and bring in more equipment and wanted room to expand as their markets allow.

Barnthouse said the matter was presented to CCIDA because they had funds, and the task force had land and had entered into an option with other land owners to give the prospect a comfort level to make this work out. The Comanche County Commissioners made funds available, which were referred to as Home Finance funds, to CCIDA for the purpose of allowing CCIDA to bridge a gap. CCIDA is committed to Bar-S, and also to the Lawton Industrial Foundation to assist in construction expense on the new sewer line that has been installed in the Goodyear industrial park area. He said they suggested CCIDA think in terms of the total revenue from the one cent sales tax, which will expire at the end of May, and CCIDA agreed the number was possible but that they would wait until that happened, so that was the reason for the other funds to be made available for CCIDA to bridge the gap. The intent would be that CCIDA would use their own funds but it would allow them to bridge the gap until they know the cash position. There has been cooperation from CCIDA and the County Commissioners. A rail spur is needed and the local highway commissioner, Dr. Gibson, has put us in contact and we met with ODOT; part of the requirement to satisfy the prospect is the extension of Neal Boulevard, not only to the east property line of the industrial park, but also an additional 400 feet into property immediately to the east of the industrial park. ODOT will assist this prospect, and ODOT may have visited with the Department of Commerce and learned that the kind of prospect we are working with is the kind of prospect we will be able to work with after 15 or 30 years and these are words directly from the Department of Commerce, so we are dealing with a quality corporation that will hopefully be a future good corporate citizen.

Barnthouse said the firm initially visited 40 communities for the project location; it is down now to three communities, and two are serious contenders. He said he hoped something could be done tonight to make Lawton the successful community and bring in new jobs and significant investment in plant and equipment. He introduced Mark Sweeney, the site locator, with the Fleaur Daniel Company, which was a reputable and high caliber firm that worked only with companies who are serious about site location.

Mark Sweeney said he had been working with the client for more than nine months on the project and had been in the final stages since the beginning of the calendar year doing everything they could to make Lawton as competitive as possible as they make the location decision with the client. He said it is an extremely attractive company and a very attractive project for a community; the investment is expected to be $160 million, employment of approximately 110, average salary of over $30,000 and benefits are added on top of that. Sweeney said production workers’ average salary will be approximately $12 per hour, ranging from $8 to $16 per hour, so there are good salaries throughout the organization. He said it is a recycle paper operation, which also has a very positive impact for Lawton and surrounding communities in that the project will take in a considerable amount of waste paper of all kinds, which would have a positive environmental impact in the sense that they would be taking paper out of the normal landfill stream and diverting it for value added use in their facility.

Sweeney said they had good negotiations with the county, which had been positive and aggressive on many of the up-front costs, including the land, rail spur and road extension. He said they are still in the final stages of negotiation on energy, and this is a very large user of energy. One remaining issue from a cost standpoint are the services provided by the City of Lawton. The firm will be a large water and wastewater user, and will generate a significant amount of solid waste as part of the process. As a result, conversations had been held with staff and on an individual basis with many of the council members to bring them up to speed on the project. There is a proposal from the firm on values of some of the services that would make Lawton clearly the operating cost leader in the decision process. Other informal discussions have been held since that time and they were anxious to hear the Council’s comments regarding the proposal.

Sweeney said they had requested additional land to accommodate the plant and room for growth because wherever the company locates will be the growth location for the company; a second line is anticipated when the market so demands, which could be any time from three years or longer, and an additional line would represent a $100 million investment and an additional 50 to 75 jobs. The original plan called for the decision to be made in the middle of March and it has been delayed a week at a time for both location and internal decisions, and the decision is expected at the end of this week. Similarly, it was expected at the end of last week and it was delayed a week and may be delayed yet another week but they are at the end of the decision process, and as far as Lawton is concerned, these are the only outstanding items for evaluation of this community.

Beller said Council received an alternate proposal sheet tonight. Sweeney said he was familiar with that and it came as a result of discussions with various Council Members. Beller said at one time the firm requested usage of 800,000 to one million gallons of water per day, and another proposal shows 2.5 million gallons; he asked if the 1.2 million gallons is the current figure. Sweeney said expected usage is still about 800,000 gallons per day, but because of the fact that they will use new technology in the process, they would not know the exact number until the system is operational. He said they were trying to preserve their ability to receive water for future expansion, and they would be comfortable using the figure of 1.5 million gallons per day, which would accommodate an additional line expansion, should it occur.

Beller said he met with Sweeney and Barnthouse and appreciated that opportunity, although they did not get to discuss some of the items. He said they discussed the solid waste tonnage and that he was given a figure today of 190 tons per day. Sweeney said they estimate 160 tons per day. Beller asked if that is the solid waste. Sweeney said that is all the waste stream that would be considered solid waste. Beller asked how many tons of treated waste were anticipated. Sweeney said the term treated waste is used in the agreement as a small subset of the waste stream and that he did not have a volume for that. Sweeney said they had attempted to make a distinction in the waste stream from normal trash that any business would generate to processed waste, which is waste that comes from the recycling process. He said within the processed waste stream, there is a subset called treated waste which has the potential to have value to the operators of the landfill because it is composed of paper fibers and mineral fillers, mostly clay, so it has potential to be used as the daily cap in landfill operations, so we are talking about two general components of the solid waste, the trash waste, and the processed waste, and within the processed waste there is a portion called treated waste that may have some value. Sweeney said they did not yet have an estimate of the component of the treated waste.

Beller asked if the City was being asked to accept the treated waste, pick it up and haul it to the landfill at no charge to the company. Sweeney said they proposed the City provide containers and that the hauling of the waste to the landfill is an item to be negotiated in the future. Beller said tonnage is mentioned on the processed waste and the proposal says it is expected to be 40% solids, and 60% water; he asked if that was a ballpark figure. Sweeney said it is expected to be very close, although it could vary depending on the process, and the value will be measured by staff because general landfill testing must pass the paint filter test, so there will be periodic testing of the waste to determine the percentage. Beller said there was a concern for the life expectancy of the landfill and if 160 tons of solid waste is added, the items should be considered in the proposal. Sweeney said the total weight is expected to be 160 tons, and of that, roughly 10% is expected to be trash, or 16 tons of items such as broken pallets, shipping materials, office items and normal business operating trash; that leaves 144 tons from the recycling process and that will be composed of 60% water. Sweeney said it will not be dripping water; 60% water is still a product you would be unlikely to squeeze any water out of. Beller said they used the analogy of an apple during their talk. Sweeney agreed and said the contention is that it is a high tonnage but because the material is subject to evaporation or being leached out with the other leachate in the landfill that it will have less than a 144 ton impact on the volume of the landfill. Sweeney said in addition, they do not have an estimate yet of the amount of paper going into the landfill that they would actually be diverting out for their use, so there would be a positive impact that would mitigate to some degree the volume impact on the landfill. Sweeney said they were asking for an advantageous rate to recognize the value of the project and the fact that it is a very high cost item for the company, but based on discussions with various Council Members, the proposal from the City is to make a distinction between the normal trash which would be treated at the full rate, versus the processed waste which would receive an advantageous rate and an acknowledgment of the solid versus water content.

Beller said the term of the contract is proposed at 15 years and that he was uncomfortable with that length of commitment by the City. Sweeney said the facility is designed for an operating life, from a financial standpoint, of 25 years, and the reality is the company has no plans to leave or shut down, so 15 years sounds like a long time, but their financial analysis is done on 20 year terms. Sweeney said their firm suggested adding escalators to the contract on the rates for water and sewer. Beller asked if it was on five-year intervals. Sweeney said yes, and what they meant to convey was it would be five-year intervals even within the first 15 years, so every five years there would be the opportunity for the City to increase the contract rate by an escalator amount, and there was some disagreement on the escalator amount, but their thought was that every five years, beginning with the first five years, that there would be an escalator break point to protect the City. Sweeney said they recognized with their client that it would be an issue and would be difficult for the City to commit to these rates without any chance for adjustment for a long period of time.

Beller said he did not like the 7% up front and that the Airport Authority used 15% every five years. Sweeney said they were hoping for 5% and Beller said that is only 1% per year. Sweeney said in terms of the volume, they were talking about a potentially significant amount of money, even at a 5% increase every five years. Beller said he would support it to the extent the City could afford it and that he realized there is an expense involved in economic development. Sweeney said he was prepared to accept the terms discussed tonight, with the exception of the escalator.

Beller asked if they were speaking of the same terms and Sweeney said yes, he had discussed the alternate with his client late this afternoon and they were in general acceptance of the City’s alternate, and that it had not been proposed to them as the City’s official position but based on the discussions, they were comfortable with most of the items discussed informally both last Friday and today with the various council members. Sweeney said there was still an exception on the escalator clause, and hopefully the 1.5 million gallons per day of water.

Sweeney said their proposal had a number of items that, based on the alternate, they had back off on, such as the meter and some of the rates they would have preferred, and that they had tried to be flexible and recognize the City’s limitations and would ask the same in terms of their business decisions and future costs regarding the longer term and cap. He said it adds long term stability and potential success for the operation should it come to Lawton, and that they were fairly close to reaching an agreement. Beller asked if the City Manager had been apprised of the terms and if he had attended the discussion. Williams said only he and Shanklin attended the session earlier today and that the City Manager has a copy of the proposal and could comment.

Shanklin asked Sweeney if the firm would purchase paper if it were collected by a local business. Sweeney said they would take every scrap of paper that Lawton generates and more. He said current plans do not call for the company to be in the collection business from individuals, although some time in the future the company may consider participating in putting up bins, but the more efficient way to collect is an entrepreneurial business opportunity which would create yet more jobs. Sweeney said many communities do not have private sector recycling programs because the market price for recycled paper has not hit that critical stage, and in their financial plans they had included escalating prices on recycled paper because of the impact they expect to have on the demand for that product; they expect it would be financially feasible for a person to get into that business. Shanklin said civic groups are interested in recycling and it would decrease the amount deposited in the landfill.

Beller asked Sweeney to comment on the odor that may emanate from the plant as they had discussed earlier. Sweeney said paper mills have a reputation in the eastern part of the country for emitting a very strong odor which comes from breaking down the cellulose found in trees. He said this process does not use trees, but it uses paper, so there is no breaking down of cellulose and that stage is not a part of their process so there is no odor generated and it would not be a paper mill in that sense of the word.

Warren said he appreciated the work that had gone into the project. He said Council should remember and understand that whatever decision is made on the cost of treated water, such as the sixty-six cents, that it is tied in for five years, which may be acceptable. Warren said at the same time, the City will be tying Goodyear into sixty-six cents for the next five years and their contract is up right now and we are working monthly or on some basis now, so the City is basically agreeing to both if this is approved.

Schumpert said the City currently serves Goodyear, Bar-S and Pecan Valley from this section of the water system. Based on maximum use of all those users, operation of the four existing pumps would be required; however, it is not known when Bar-S will reach maximum usage, nor this firm, and that Pecan Valley is not a large user. Schumpert said the City currently has the capability to provide the 1.5 million gallons, although the staff would be more comfortable with the 1.2 million gallons per day, realizing there would be a need, for a number of reasons, to upgrade the pumps which could be programmed for the future.

Schumpert asked Sweeney if separation of the types of trash would take place at the plant. Sweeney said yes, they are requesting a number of containers because the waste is drawn off of the process at various stages; regular trash waste would be collected in containers separate from the processed waste. Sweeney said within the various draw offs from the process, that material which has potential value would also be collected separately so there would be no separation cost to capture that, so there would be a very clear distinction from a collection and disposal standpoint.

Schumpert said the volume is the critical item in the landfill and in this case, it would appear that the tonnage, with the exception of the water, would be in actual weight, although we would not know the bulk. He said staff has not had the opportunity to visit a similar site to see how much volume they are putting in the landfill because the company has remained anonymous. Schumpert said the City pays by ton to the State and there is not a better solution for doing that, and in this case, there would be maximum compaction from this product because it will be as condensed as possible, but we also would not be able to tell how much of the paper stream is being pulled out. He said one of the nice things about the company as it relates to recycling is they will take anything other than books; they will take corrugated, computer paper, magazines, slick paper, colored, posters, or whatever, so it would be easy to tell residents to put paper in a bag as opposed to separating the types of paper, and that would be easy for the City or from a business standpoint.

Jerry Ihler, Public Works/Engineering Director, said 24 20-yard containers were requested and asked the estimated frequency of the pick up. He said the City currently has two reever trucks and if 24 containers are to be picked up every day, there will be a need for four more reever trucks, which cost approximately $80,000 each. Beller asked how many trips would be needed for 140 tons a day. Ihler said the reason for his question was to determine the number of trips required. Beller said we would make the number of trips necessary. Schumpert said additional trucks may be needed.

Beller said one clause in the agreement states that the rates would be paid as set by the Lawton Water Authority and the City Council, and if the rates are raised, the company’s rates would also increase. Schumpert said that is not included in the alternate proposal. Sweeney said the parties anticipate that the consumer would meet the large volume clause and be subject to negotiation for a contract; he said they would be like anyone else, but if they meet the large volume user category, this would be the terms they would prefer.

Beller asked if everyone else was comfortable with the 15 year term. Shanklin said it is five year terms. Mayor Marley said it would be renegotiated at five year intervals, beginning with the first five. Beller said it is really a five-year contract, with four five-year extensions. Cruz said the proposal is for a 15 year contract, but price negotiation at each five-year term. Beller said the sheet shows a maximum of 7% per five year term. Sweeney said the alternate proposal is not their alternate, but the alternate proposal that arose from discussions primarily coming from some members, although they recognized it was not the official city council position. Sweeney said their proposal was the item received last night, and the alternate came from some members, based on discussions where they had agreed to many of the alternates; however, on the one issue, they would like to see the cap at 5% as opposed to 7%. Sweeney said his client was quite comfortable with the alternate proposal, with the exception of the percentage cap and would rather have 1.5 as opposed to 1.2 million gallons per day of water.

Sweeney said it was their idea to discuss the escalator provision and in the large volume user ordinance, it appeared only four-year contracts were required with two-year break points. He said they were not comfortable with that and would like it changed, and that the escalator would apply only to water and sewer and that is their preference also. Sweeney said they were requesting an increase every five years that is capped at a maximum of 5% on the water and sewer rates.

Sadler said the cap would allow 1% per year, although it would not raise as much money as if it were 1% per year instead of waiting five years to raise it five percent. He asked if the cost to produce the water was known. Beller said ninety-three cents per thousand, but that economic development had an associated cost. Mayor Marley said Goodyear pays sixty-six cent. Beller said he would agree to the 5% escalator and the project should not be held up for a discussion of 2%.

Schumpert said he was concerned over the 1.2 versus 1.5 million gallons per day in water. Sweeney said if city staff was comfortable with 1.2 only, they would not let that kill the deal for Lawton, and they fully expected the water usage to be about 800,000 gallons, so 1.2 would be adequate, although 1.5 would allow good comfort for potential future expansion and they would strongly prefer it, but if it came to an hierarchy of issues, the 5% would be more important. Beller asked Ihler if he could produce the 1.5 million. Ihler said tonight was the first time he had heard the 1.5 million; he said he was comfortable with 1.2 million, but even with that, if Bar-S does not expand to their full capacity, which is 1.2 million, then the 1.5 could be met, and the 1.5 could be met today with the existing system and the current users being Goodyear at 1 million gallon; Bar-S is currently .2 million but we are obligated to 1.2 million. Ihler said the 1.5 million would really tax the system; 1.2 would be acceptable. Shanklin said the company would not use 1.5 million for six or seven years and there will be many changes during that time, hopefully with more industries coming and good problems to solve as a result, and suggested leaving it at 1.5 million gallons.

Williams said he would offer a motion to ask staff to bring back at the April 14 Council meeting an ordinance amending sections in the City Code regarding sewer, water and landfill rates that would meet the terms in the alternate proposal. Shanklin said that would be done without a motion. Schumpert said additional negotiations may take place, and suggested waiting for a final agreement to change the regulations. Williams said he understood that Sweeney felt the client would agree to the terms. Sweeney said he expected that it would be agreeable. Mayor Marley said he felt it should be brought back next time to show good faith, and if it has to be brought back again due to further negotiations, that could also be done. Schumpert said should the firm select another site, he would not recommend changing the city code. Williams said Council would have that option when the ordinance change is returned.

Julie Sanders, Transportation Planner II, said the plan was distributed previously and a summary was included with the agenda packet. Recommendations are being sought tonight regarding how to proceed with the final report. The preliminary report covers two basic route structures, and contains four options with varying costs. The proposal is for a fixed route system operated as a "pulse" system to be located in the downtown area; it is referred to as a pulse system because all the buses would come to the downtown area at the same time and leave at the same time. Maximum mileage for a route is 16 miles, which is what a rider could expect to ride for one hour in a bus. There will be a strong coordination effort between the existing providers, such as MedTrans, the nutrition project, or Goodwill, and the public transportation system is not expected to take the place of the existing providers, but to supplement them.

Sanders said the federal requirements for a fixed route system include a complementary para transit system, which is a system for those who cannot make it to the fixed route system and a different type of vehicle will come to their door. All buses will meet ADA requirements, with plans for 22 passenger buses with two tie downs. ADA service is initially expected to be contracted out, possibly through one of the existing providers or a taxi voucher system, not to be operated by the public transportation system at least initially.

Beller asked if there would be two handicapped lifts on each vehicle. Sanders said all vehicles will be lift equipped and have two handicapped tie downs. Beller asked why the ADA would be contracted out. Sanders said there are individuals who cannot physically make it to the bus stop in a fixed route system, and for those individuals, you must provide the same type of transportation system that is available to the public. Many handicapped individuals can make it to a bus stop and can ride the public transportation, and the complementary para transit is for those who cannot physically make it to the bus stop. Beller asked if those persons would call in for transportation. Sanders said they would call in the day before, similar to the MedTrans system, and there is a screening process where requirements must be met for the dial a ride or the demand response system and it is not open to everyone.

Sanders said six public meetings have been held since December, and comments received were the need for evening service for students at Cameron and Vo Tech, Fort Sill personnel, and service workers along the arterials. The report reflects operations Monday through Friday on a 12 hour system, and that the evening services should be contracted out through a subscription service or voucher system with requirements set by the Transit Trust or Council as to who would be eligible for that service. There is also the possibility of a specialized transit system where there are major generators, for example, Bar-S or ChemPack or hospitals or Cameron, because buses would be needed only in the morning and evening during shift changes.

Sanders said the Transit Task Force was formed in 1996 and spearheaded the contract with McDonald Transit to develop a transit plan. The report was presented to that group yesterday, to the Planning Commission, and to the Transportation Technical and Policy Committee today. Recommendations were made for a Monday through Saturday service and extending from a 12 hour to a 13 hour day, with the service on Saturday being a one hour increment of time, also, there is a great need for evening service for students.

Sanders said four options are included in the report and the committees recommended Option 2B as the preferred route. She said that route would be used to prepare budgets and will be discussed in public hearings; routes may be modified as needed in the future. There are three possibilities for types of operation: the City could have a department to operate public transportation; Transit Trust could develop an organization to operate public transportation; or it can be contracted out. The transit report goes into great detail on the options, and the committees have all initially recommended that a consultant or private firm be contracted to develop a public transportation system, to operate it and get it running because the first years of operation are critical as far as how the citizens react and support public transportation.

Sanders said Option 2B is a five, fixed route system. One route would begin downtown, travel to the far southeast side of town (Park Lane), then to the northwest into the Terrace Hills Addition. This route would have two buses, both of which would start at the downtown area at the same time and each would go to the end of the route, then return to the central business district. If you were riding on this route going from Park Lane to Terrace Hills, you would not transfer to another bus when downtown and the bus on the east route would become the bus on the west route once it comes back from the central business district. Two buses are proposed with a 60 minute headway, meaning there would be a bus leaving the central business district every 60 minutes.

Sanders said another route would start in the downtown area, go to the Patterson area, then Pioneer Park, Section 6000 at Fort Sill, and make the loop through the commissary area, hospital and back downtown; this would be a loop system and two buses are proposed for the route. Another route would start at the central business district, go down F Avenue to Lee Boulevard, by DHS, by Cameron and up to the northwest section of town, and returning on Ferris. Another route would pick up the major portion of the central area of town and connect with the Ranch Oaks area, through the Lawton View Area, giving access to the Health Department, Cameron and to shopping areas, and also goes to the King Center area, then returning to the central business district. Another route would begin downtown and make a loop to the far west side of town traveling on Lee, 67th, then back on Gore. Two buses are recommended for each of the routes, with each bus starting in the downtown area and leaving every 30 minutes in a clockwise and counter clockwise direction, meaning there would be a maximum of a 30 minute wait between buses on this type of system. This helps reduce the cost of the public transit system by not having the buses follow each other and provides a better service to the citizens at a lower cost. Routes were generated from the six public transit meetings; initial routes did not provide as much coverage, nor as much coverage to Fort Sill as was needed for the military personnel.

Williams said a smaller route was previously proposed for Fort Sill and an expanded route is suggested now. He asked if this proposal meets the needs of the Fort Sill personnel. Sanders said the transit report was presented to the Commanding General by Jim Beavers, who is on the task force, and it was felt that the currently proposed route would better serve the needs of Fort Sill. Sanders said they were under the impression that the 6000 area was only for trainees, but there are also permanently stationed personnel living in that area; the route was brought along Randolph Road to make it accessible to more housing areas, to the library and a couple of other places in addition to the PX and commissary. She said it then goes back down Sheridan and new barracks are being built in that area, so that would provide additional access. The concept is that persons from a concentrated area should not have to walk more than six blocks to be able to access public transportation.

Jeffrey Pulis, McDonald Transit, presented budget slides stating the budget was prepared for a five day a week, 12 hour day, schedule. If the expanded service of six days a week, 13 hour day, is accepted, the budget will be recalculated. The start up year includes cost for purchase of vehicles, as well as other equipment, bus stops, shelters and so on, with a relatively small operating budget in terms of getting staff on board and trained. Another column shows costs for the first full year of operation of the system; then the seventh year cost estimate is shown because that is the year the vehicles would be replaced, considering a seven year life span, and the figures include inflation estimates. The entire fleet may not be replaced in one year, but there could be a transition in that regard. Pulis said to have the local match funding for equipment replacement in the seventh year, an amount is included in each year’s budget to be set aside to fund the replacement costs.

Beller asked if that was included assuming the public transit system would be the low bidder. Pulis said yes, and the budget is built on ten buses to serve the fixed routes, plus one bus in operation for the shuttle for Fort Sill, and the amount shown as cost is subtracted from the total in revenue, and if that bid is not successful, there are other ways to use the vehicle. Beller asked if the service would still be offered in the 6000 area and back through town. Pulis said yes, that is separate and apart and does not go all the way to the airport, which is a need Fort Sill has.

Pulis said an empty row is shown in operating revenue for the Oklahoma Department of Transportation public transit revolving fund. The fund is available now but we are not positive it will be available later, although there are no plans to do away with it. The amount would be based on the route mileage of the system so the decision on the system would affect the route mileage. Pulis said the current rate is twenty-four cents per annual route mile; the system has about 650,000 miles per year which would raise over $100,000 per year, although there is not that much money in the Department of Transportation so it would be a lesser amount and that is the reason the column is left blank, there are too many unknown factors, but funding can be expected from that source.

Pulis said they were conservative on the fares in terms of estimates of ridership and included a seventy-five cent fare. Most systems would end up averaging fifty cents per ride because you would provide discounts for senior citizen, student, and monthly passes. Advertising revenue receipts are possible from the sale of advertising space on the buses, and new technology allows for "wraps" where the bus contains a large advertisement, which these buses could do. Advertising can also be sold at the bus stops and benches and decisions would be required concerning control of the advertising. Funding was not included for those who would need special transportation outside of the fixed routes and that would have to be worked out after the basic system is established. Many other pockets of money are available to assist with those types of services, such as a subscription bus service where persons sign up for transportation to and from night school and pay for it in advance at a different rate from the normal fare.

Shanklin asked the reasons for the budget figure differences on the three columns. Pulis said the 1998-99 column shows purchase of vehicles, and cost of replacement is shown in the last column, which also includes operational cost for that seventh year. The middle column shows the annual expense to operate the system, and funds are included each year to meet the local match in the seventh year for the vehicles. Shanklin asked what the fares alone would generate. Pulis said $195,700 is included in the budget for the seventh year of operation, and at an average of fifty-cents, that means less than 400,000 trips in the seventh year and that is set at 20% lower than their guess as to actual ridership to make sure they did not give too rosy of a picture. Shanklin asked if it is planned for this to operate in the red from the beginning and stay that way. Pulis said in terms of having to be subsidized by local revenues, definitely. Shanklin asked if Pulis knew of any bus or transit system that operated in the black and Pulis said not in this country. Shanklin asked if the Las Vegas system operated in the black and Pulis said there are some express, individual services that make a profit, but not a full public transportation service for an entire community. Mayor Marley said a subsidy from the City would be required and a question is how much of a subsidy would be required; he pointed out that no advertising revenue is shown or how it would fit into the system.

Pulis said the cost to add Saturday service, as well as one additional hour of daily service, is approximately $200,000, which would need to be added to the total annual financing, so it would be $1,087,000 for the total annual financing required. He said you would subtract out of that $1,087,000 all of the fare revenue, as well as other special express type services such as Fort Sill, and the remaining portion would be divided 80%-20% between FTA and the local government entity, so local funding is $217,000 and the source for that funding is up to the City or Transit Trust, except that it cannot be other federal money, so the ODOT money could be used as part of that local government funding, as well as any other advertising revenue. Pulis requested permission to use these assumptions to formulate the final report, budget and recommendations.

Williams said he wanted public transportation to be available and Lawton should take advantage of the 80% federal funding. He said those funds are not being sent to Lawton at this time due to lack of a public transportation program; the service has been identified as a need for the last ten years in surveys. Beller said it would be a good program and expressed concern on the funding. Mayor Marley said the operating years show local funding requirements, but they can be offset by advertising and state funding, which would drive the cost down. Mayor Marley said if the cost is $200,000 per year, it would be one twelfth of a cent which is a low cost, and this has been identified as the number one need for about ten years. Williams said the Saturday service is needed and Beller agreed it would be especially helpful to Fort Sill.

Shanklin said if it is started, the best possible service should be provided. He asked how it could be stopped if that becomes necessary in the future and how the FTA would react. Sanders said the service can be discontinued and the assets sold, then FTA would be reimbursed at a prorated cost on the buses and equipment. Shanklin asked if FTA had a good track record. Sanders said it is very good and ISTEA funds highways and road constructions, and federal approval is expected the first of May. She said Oklahoma will be receiving additional funds with the new bill and there is a larger share for communities under 200,000 for public transportation for which Lawton would qualify. Sanders said ODOT annually sends Lawton a letter saying it is entitled to about $600,000 a year for public transportation but because that system is not in place, they request that the funds be spent in counties that have public transit or for rural transportation systems. Pulis said the FTA assigns federal funds to Oklahoma and there is a formula for that, so when Lawton does not use its allotment, the funds do not go back to the federal government, they remain in the state and others use the money. Beller asked if that was the blank column and Pulis said that was for a different fund. Shanklin asked if funds are available that are not listed and Pulis said yes. Shanklin asked if Lawton would have to provide a match regardless of how much was available from others and Pulis said yes. Mayor Marley said it is an 80%-20% requirement.