A Private Corporation Working in the Public Realm

August 28, 2005, the most economically destructive hurricane to ever strike the United States powered up to a Category 5 storm. Katrina caused widespread devastation along the Gulf Coast states. The damage in New Orleans was worsened from the breaks in the levees and at least 80 percent of New Orleans was under flood water, and some parts of the city under 20 feet of water.

“You had a situation where the RTA had lost all of its infrastructure because of Katrina that when you came here, the staff that was here was still working in trailers,” says Justin Augustine, III, chief executive officer, New Orleans Regional Transit Authority and vice president with Veolia Transportation. “It truly was a tough situation, it really was. You had some really great folks that were here before, but unfortunately had been demoralized. The assets were gone, they were financially broke; nobody gave them even a simple chance in Hell of surviving.”

“When we first came to the authority, the RTA was faltering in terms of its inability to fund its pension obligations; it didn’t have any financial credibility in the marketplace.” Augustine continues, “They had a cash-flow problem; a situation where a previous union agreement was not cost-beneficial to the authority.”

One of the things Veolia did when taking over the RTA was to put together a series of plans to turn things around, including a capital improvement plan, a capital infrastructure plan, a long-term financial plan and a long-term transit plan. As Augustine says, they critically needed to set a footprint on how they would provide transportation in the community they were contracted to serve.

“We basically had to come in here and change the culture, recreate and establish a good morale, reposition technical staff to the right positions in which they could properly serve and be held accountable, bring in our corporate best practices, replace an entire transit fleet, rehabilitate the streetcar services in the system, reconstruct the buildings that had been destroyed and rebuild financial credibility in the marketplace,” Augustine states.

Veolia took over the contract effective Oct. 13, 2008, and it was an interim agreement. Augustine and an interim team of managers went in and then on Sept. 1, 2009, created a management contract. Post-Katrina, the RTA was clearly in trouble. Augustine says, “We thought business as we manage it, would be a perfect fit to come in to New Orleans and take over the transit authority under a delegated management contract; that’s kind of how we looked at New Orleans.”

Learning Transit Operations

Augustine’s background was in accounting and finance and he got involved in transit through his work with an international CPA firm, KPMG. “We were doing the financial feasibility study of the financials of the transit authority for the utility company,” Augustine says. “We took over the city of New Orleans as a client and I got to know the chief financial officer so when the RTA deal was put together by the state legislative, it went in to effect on July 1, 1983. They were recruiting for technical talent and one of the areas was in the financial arena; that’s how I got in to transit.”

Once he got there on the financial side, he became interested in the entire transportation concept. “For me it wasn’t just transportation, it was a people business and the needs of the community enhance the transportation.

“As a young man I was working on the financial side of the house; in the evenings I would go out in the operations parts of the facilities and would try to learn the operations.” Augustine continues, “They became my best mentors, the maintenance, operators and operations guys out there. I would spend basically 16 hours a day doing transit.“