Belgium or Bust 

As AC Transit's service and finances took a wrong turn, its employees made more than 100 trips to Europe — possibly for nothing.

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AC Transit officials specified that they would only accept proposals for "true low-floor" buses. They contended that low-floor buses, which could be boarded without an extra step up if AC transit were to build special platforms, would speed up commute times, making them ideal for BRT. At the time, several North American bus makers were selling low-floor models. AC Transit had even purchased some from an Alabama manufacturer the year earlier. But those buses had platforms at the rear of the bus that required passengers to walk up a few steps to get to the seats in the back. By contrast, the Van Hools had low floors from front to back, though most seats sit on a one-foot-high platform that requires a step up. Fernandez' staff described the Van Hool's design as "true low-floor," and deemed the Alabama design unacceptable.

The agency also demanded three doors on all its new forty-foot buses and four doors on all the sixty-footers. Fernandez believed the extra door also matched perfectly with BRT, as he envisioned riders with pre-purchased tickets boarding through any one of the vehicle's open doors. Indeed, when he asked the board to award a no-bid contract to Van Hool, he listed seven reasons for approving the deal, and five of them focused on the extra doors.

At the time, there was an American bus maker developing a three-door model with "true" low floors — Orion Bus Industries of New York. But in an interview, Fernandez said that if Orion had submitted a bid, he would not have seriously considered it, because of Van Hool's track record but also because of a previous dispute between his agency and Orion. "We had a bad experience with them," he said. "Van Hool had been building that type of bus, the low-floor bus, for twenty years."

Sure enough, Van Hool was the only bus maker to bid on the deal. One other American manufacturer, Gillig Corporation of Hayward, which had sold more than 120 buses to AC Transit in the early 1990s, asked for and received an extension on the bidding deadline to determine whether it could afford to design and build a new bus for a single customer. But the East Bay bus maker ultimately decided that AC Transit's strict requirements would be too costly, especially after agency officials said they wanted ones with diesel engines and weren't interested in Gillig's eco-friendly hybrid buses.

In December 2001, seven months after Fernandez requested the no-bid contract, the AC Transit board approved virtually the same exclusive five-year deal with Van Hool. But because the Belgian company was the sole bidder, it managed to extract several concessions from the agency. Among them was Van Hool's demand that AC Transit pay all the costs associated with sending employees to training sessions in Belgium, including airfare, hotels, and meals.

Travel records show that no AC Transit employee has spent more time in Belgium than Stuart Thompson. As the agency's on-site bus inspector, Thompson has been living near the Van Hool factory on the taxpayers' dime since September 2002. In addition to his $2,300-a-month flat, AC Transit pays for his cell phone, utilities, and security alarm, plus provides him with a $50-a-day food allowance, including weekends. The public agency even shells out $400 a month for his housekeeper.

But Thompson's most costly expense, according to travel records, is his auto allowance. Instead of riding the bus, AC Transit's European bus inspector seems to prefer traveling by car — at great cost to the public. Taxpayers paid an average of $2,637 a month for Thompson's auto allowance during the past three years. His total Van Hool-related expenses came to at least $529,044 from 2001 to October 2007. And that's not counting his $121,097 annual salary.

Industry experts say that it's not unusual for transit agencies to send inspectors to watch buses being built from the ground up. But if AC Transit had purchased North American-made buses, the agency's expenses would have been far lower. Some transit agencies also keep costs down by hiring inspectors who live near the bus factories. "That way there are no living-away-from-home expenses," said Brian Macleod, senior vice president of Gillig, which manufactures buses for transit agencies throughout the United States and is accustomed to on-site inspectors. "It's a tremendous expense to send someone overseas when you could have contracted with a local inspector."

But Fernandez said the extra costs are worth it. "I, myself, wouldn't hire outside inspectors because I don't believe you get the same commitment to building buses," he said. AC Transit is "very fortunate" to have an experienced inspector such as Thompson who is willing to live in Europe, he added. And Thompson's auto lease is costly, he said, because it includes fuel, maintenance, and insurance. "It's not like he's running around in a stretch limousine."

But he almost could have, for the amount of money AC Transit has shelled out. From late 2004 through June 2007, the agency paid $84,390 for Thompson to lease a car.

Travel records also show that several AC Transit employees have used their trips to Belgium as an extra job perk. Either before or after they visit Van Hool, the employees set off for Madrid, Paris, or London. The employees paid for their train fare, vacation hotels, and spouses, but AC Transit foots the bill for the single biggest expense: airfare. Fernandez said he neither encourages nor discourages such trips, noting that the agency only pays the airfare and the business-related expenses and not the vacation travel. But he also said the relatively cheap European vacations were a good "employee relations" policy.

Yet agency travel records also raise questions as to whether business expenses are all AC Transit pays for. In January 2004, the agency spent $919 on a three-night stay in Paris for Amy Franjesevic, the agency's graphic arts and publicity coordinator. She stayed at the Hotel Saint-Louis along the River Seine. Or consider AC Transit's Marketing and Communications Director Jaimie Levin, one of the biggest cheerleaders for the Van Hool buses. AC Transit paid for Levin and Charles Kalb Jr., the agency's procurement and materials director, to spend six nights each at a Madrid hotel in May 2003 after they visited Van Hool. The price tag of the excursion was at least $2,974.

Fernandez said Levin, Kalb, and Franjesevic's trips were legitimate business expenses, even though records make no mention of what AC Transit business was involved. Levin and Kalb, he said, went to Madrid for an international bus show and Franjesevic, according to Levin, visited Paris to get a first-hand look at that city's transit marketing design efforts. When pressed as to why these explanations were not mentioned on travel reports, AC Transit General Counsel Kenneth Scheidig said employees should do a better job completing the forms.

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