South Tahoe transit authority to file for bankruptcy |

South Tahoe transit authority to file for bankruptcy

Annie Flanzraich

SOUTH LAKE TAHOE, Calif. – The South Tahoe Area Transit Authority will hire an attorney to file for Chapter 11 bankruptcy, the agency’s board of directors voted Friday.

The decision is part of an effort to release $667,000 that was frozen by a Douglas County judge back to STATA, said attorney Mike McLaughlin.

“They really need that money if they have a chance of sustaining their operation,” McLaughlin said.

In June former BlueGo transit operator MV Transportation filed a complaint for breach of promissory note in Douglas County. The lawsuit contends that when STATA broke its contract with MV Transportation May 28, it needed to immediately pay back the $825,000 MV spent to improve BlueGo’s fleet and facilities. MV and STATA had previously arranged a payment plan.

In response to the suit, District Court Judge Dave Gamble froze STATA’s $667,000 in assets, bank accounts and fare box revenue pending the final decision on the lawsuit, McLaughlin said.

Another complaint filed by MV in Douglas County District Court, MV claims that STATA owes MV more than $3 million, including the $825,000 for repairs and additional money in back payments.

“We are disappointed that STATA intends to file for Chapter 11,” wrote Jessica Woelfel, a South Tahoe attorney representing MV. “The $667,000 currently held by the court is a mere fraction of the money owed MV and we are disappointed that STATA has not released these funds to MV, but seeks to avoid payment.”

While STATA believes it owes MV money, the amount is what is in question, McLaughlin said.

“The bottom line is that STATA is going to try and continue to try to discuss resolving those claims with MV, but it still needs funds to operate,” McLaughlin said.

Part of the reason MV needs the $667,000 is to pursue the Nevada Department of Transportation’s request that STATA hire a professional grant administrator.

In June, NDOT told the STATA board that it would not fund the agency’s request for grant funds for the 2011 fiscal year. The current STATA budget anticipates that NDOT would fund $770,000 through grants.

The agency’s “insufficient staffing levels for proper financial management, federal grant compliancy issues,” and “current financial status,” were the reasons NDOT listed for not funding the grants in a July 22 memo.

Transit Resources Center Nevada operates BlueGo’s transit system and STATA has hired an interim transit manager Jot Bennett. NDOT would like another individual to manage grant money full time, said Derek Kirkland, a NDOT transportation planner.

“They may be running the service fine, but we want to make sure there is someone providing oversight and the money is being used what they say it’s being used for,” Kirkland said.

To address the situation, STATA authorized the Tahoe Transportation District to provide administrative services through Sept. 30. However, STATA does not know if TTD will provide that service after September, which creates a need for the frozen $667,000, McLaughlin said.

“Having those funds might allow STATA to go out and find that professional grant manager or the funds might be used to resolve the debt with MV,” McLaughlin said. “STATA needs those funds if it has a real chance of continuing operations.”

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