A Private Corporation Working in the Public Realm
On contract to the New Orleans Regional Transit Authority board of commissioners, Veolia Transportation runs all day-to-day aspects of the transit agency.
Augustine left the agency in 1985 and went to Austin, where he was the general manager there. After that he did work in Africa. “I had a company called American Transportation Corporation. We were a private company and they had an investment group called New Africa Advisors, which was aninvestment firm in South Africa post-Apartheid. Thirty percent of that investment portfolio was transportation-related.” He explains, “I partnered with them to help them get 30 percent of their portfolio in finding transit opportunities throughout Sub-Sahara Africa.”
He came back to the United States in 2000 and came back with Veolia as regional vice president on the West Coast before coming back to New Orleans.
A Different Kind of Business Model
Normally in the private sector, a contractor runs a part of the operation. As Augustine explains, “We may run paratransit operations or we may run maintenance operations, but here in New Orleans, we are the public authority.
“From my office on down, every employee is a Veolia employee and we only have the board of commissioners for the RTA and the RTA is one employee, which is basically like an assistant to the board.”
Veolia runs the day-to-day function of the entire organization, the maintenance, transportation, finance, accounting, procurement, legal, human resources, safety, grants. “You name it,” Augustine says. “Everything an authority has to do is a Veolia responsibility.”
With this arrangement, Augustine says it’s a prime example of a good public-private partnership. “But you have to be careful because although you’re a private corporation, you still work under the public guise.
“You’re receiving public funds, federal grant money, state funding, sales tax monies, so when you’re spending those monies, you still have to follow federal procurement processes.
“Our objective is to keep the organization financially sound and at the same time be mindful of the needs of the general public. Veolia doesn’t own any of the assets; the assets are still owned by the regional transit authority. The facilities, the buses, the streetcars, the transit police cars, the maintenance facilities, all of the assets are still assets of the regional authority.”
A downside was that they had to basically downsize the organization, Augustine says. “The now-private model, we just didn’t need that many employees to manage the system the way they had the system managed before.
“We have to be cost-competitive; we have to be profitable; we take on a lot of the risk of this authority.” He continues, “If we’re not very smart in our business practices, then we can not turn a profit, and more importantly, we can’t deliver the service under the cost structure which we committed to in our contract.”
He explains that they have access to the corporate resources of Veolia and since they’ve been at the RTA, they’ve had about 75 technicians from around the world come in. “Kind of like a SWAT team for us.” He says, “They come in and assess and review and analyze certain areas of our business and our operations and put the best practices from Veolia in place and then train the staff how to maintain it and then they go away.”
Rebuilding the RTA
Rebuilding post-Katrina involved rebuilding the infrastructure, thefinancial credibility and the service for the communities the RTA serves. For the credibility in the financial marketplace, Augustine says that within a year and a half, the RTA bond ratings went from negative triple B- pre-Katrina, Zero post-Katrina, to triple A-rated bonds from the MSNT and very good-rated bonds from Moody’s when they went out on the market for its first bond issues. “It saves volumes in terms of the amount of work and efforts we put in to this organization to right the financial credibility of our organizations.
“Today the RTA has one of the best bond rates in the whole state of Louisiana,” he states.
With a displaced population and then people coming back to the area, the RTA had to deal with the changing demographic shifts in the city. “We had to be very creative as to how we would set the system up for future growth and at the same time, reconnecting areas of the city that had been disconnected after Katrina,” Augustine explains.
“We have a five-year plan on how we see the changing demographics of the city based on re-population there and our transit services adjust accordingly.”
