Anaheim must pay train station deficit from general fund

Anaheim’s signature transportation hub – the $185 million, glittering glass dome known as ARTIC – will for the first time since its opening in 2014 have its entire operating deficit paid out of the city’s general fund.

When the city cut the ribbon for the Anaheim Regional Transportation Intermodal Center in December 2014, officials predicted the station would attract 3,000 riders daily and pay for its own operating costs.

The city initially planned to cover some costs with a naming rights deal, but that hasn’t materialized, and for the past three fiscal years the station has operated in the red, with a $2.5 million deficit for 2016-17. The total cost to taxpayers this fiscal year, including debt service, operating expenses and personnel, is $6.9 million.

The past two fiscal years, the Anaheim Tourism Improvement District (ATID), a self-assessed public taxing district financed by businesses for improvements within the Anaheim Resort district, has subsidized property and operating expenses of nearly $2 million annually for ARTIC. The Anaheim Resort area includes Disneyland, the Anaheim Convention Center, hotels and other businesses.

In late March, two members of the district’s three-person board — Fred Brown, director of operations for the Desert Palms Hotel & Suites, and Kris Theiler, vice president of the Disneyland Park — raised questions about whether funding ARTIC was an appropriate use of the money and said they would not vote to pay for it again, according to city spokesman Mike Lyster.

At the March 28 meeting, the third board member, Assistant City Manager Kristine Ridge, moved to have ATID pay ARTIC’s shortfall. The motion died when neither Brown nor Theiler supported it.

Now that deficit will be paid for entirely by the general fund.

The city never has “depended” on the Tourism Improvement District funding to subsidize the station as staff has always budgeted for the full cost of ARTIC each year, said Lyster, and they then try to find “other sources of funding” such as the money from ATID.

He said the cost of running ARTIC doesn’t compete with other services and is only a fraction of the city’s total budget.

“$2.5 [million] out of $300 million is less than 1% of the general fund,” Lyster said.

This fiscal year ARTIC is projected to generate $1.4 million in revenue, in part from television shows and commercials filmed there, to offset its $3.87 million total operating budget.

Another $3 million in annual debt payments is paid for by taxpayers countywide through a half-cent sales tax for transportation projects called Measure M2.

Recently, officials also approved an advertising deal with the Honda Center that would guarantee another $80,000 in annual revenue for ARTIC.

But Anaheim Mayor Tom Tait, who has viewed ARTIC and the state high speed rail project it was built for as a waste of taxpayer funds, says the money spent on ARTIC’s operations and for debt service is money that could be spent on other city services.

Tait said he was “surprised” the Anaheim Resort district would not pay for ARTIC.

“It was built to benefit the resort district, that’s obvious, and the benefit will mostly go toward the resort,” Tait said. “They advocated strongly for the building of it.”

A quarter of the ATID funds are required to go toward transportation projects. In the past those funds have been used to pay for the environmental review process for the Anaheim streetcar project, after the Orange County Transportation Authority voted to stop any work on the project.

At the end of this fiscal year, the ATID transportation fund will have about $9 million, and is expecting an additional $4.4 million in revenue. They estimate another $4.9 million in 2017-2018.

“Now with the streetcar going away I don’t know what the money would go toward,” Tait said.

Tait has also argued, just three years after the station’s opening, another use should be found for ARTIC, pointing to the San Francisco Ferry Building, a former ferry station built in the late 1890s that has been turned into an indoor marketplace and food hall.

“It needs to be repurposed because it’s obviously not working,” Tait argued. “It was designed for high-speed rail, and that’s not going to be happening any time soon.”

A 2015 survey of total ridership at ARTIC estimated 2,406 people on weekdays and 3,878 people on days where there are special events in the area.

The national standard for counting ridership, however, counts a single passenger more than once based on their mode of travel. So if a passenger rides a taxi to ARTIC and gets on the train, they would be counted twice.

When you break down the numbers, the number of riders leaving ARTIC by train is 880 daily, with 702 people arriving by train, according to the 2015 study.

Since that study, ARTIC has garnered another 400 daily riders through a bus service to Mexico called Tres Estrellas del Oro.

The service, which is geared toward immigrant families and includes on-board amenities like Spanish-language television, takes passengers from Anaheim to Tijuana and Guadalajara.

This story was reported by Voice of OC, a nonprofit investigative newsroom, as part of a publishing agreement with TimesOC.