TN: Under new leadership, a ‘revitalized’ CARTA makes play for local funds

The Scenic City's public transit agency is seeking new and bolstered funding streams from local governments as its board of directors argues the organization now merits a deeper investment.

The Chattanooga Area Regional Transportation Authority is two years into its effort to overhaul an institution officials say was beset by self-defeating mediocrity and chronic underfunding.

The city — and I imagine the same holds true for the county — probably had very legitimate reasons for flat-lining their contributions," board Chair Johan de Nysschen said at a meeting last week, noting the lack of confidence local officials have historically had in CARTA. "Who wants to pour water into sand?"

He said the agency, under new leadership, got a mandate from Chattanooga administration: "Get your house in order, give us confidence, build your credibility, so when we believe in what you're doing, we'll support you financially. And I think that's where we are."

Approved last week, CARTA's preliminary fiscal year 2026 operating budget seeks, in addition to capital budget support, a combined $8.4 million from local governments like the city of Chattanooga and Hamilton County. That would be a $2 million increase from this year.

The rest of the revenue for CARTA's proposed $32.7 million operating budget — all told, a 10% total increase from this year — would come from the state and federal sources, as well as CARTA's own operations.

Neither this nor the operating budget is final as the new fiscal year begins July 1. Rather, the proposal approved by the CARTA board last week is an opening gambit for public support after what agency leaders say has been a systematic push to not just repair its own institutional foundation but to improve relations with local officials and show the agency to be a worthy public investment.

Agency officials had a hard time making this case in the past. The city of Chattanooga, which has made a flat $5.8 million contribution to CARTA's operating budget for years, did not last year match CARTA's then $8.3 million request, appropriating $6.3 million instead.

Now, for its coming operating budget, CARTA seeks $7.6 million from the city.

Hamilton County, after making what had long been a flat annual contribution of roughly $100,000, last year zeroed out its CARTA funding altogether.

In an interview last week, CARTA Chief of Staff Scott Wilson said the transit authority had in the past let its relationship with the county fester. Of late, he said, CARTA officials have been intentionally meeting with county commissioners and officials to see how the agency can support their priorities.

Now, CARTA leaders are hoping this work pays off. Beyond its bigger ask of the city, the agency is seeking roughly $583,000 in operations funding from Hamilton County, as well as $130,000 from East Ridge and $20,000 from Red Bank, where CARTA officials say they have also been trying to build better relationships.

CARTA leaders say the increased local funds would help expand door-to-door services like CARTA Go and the paratransit service Care-A-Van. The county dollars, CARTA documents said, would also help fund pilot programs for education-related transportation.

More broadly, officials said the increased local support would position CARTA to develop robustly in the future while maintaining current service levels for now.

"We are making headway in our efforts to revitalize CARTA," said CEO Charles Frazier, who took over the agency a little over one year ago. "Now is not the time to go backwards from our already pared back service."

Reboot

CARTA officials and staff say Mayor Tim Kelly's 2023 overhaul of the CARTA board, in which all but one member was replaced, marked a major institutional inflection point.

"You don't make changes at the scale that he implemented them on if you're happy with the way things are going," de Nysschen said in a February interview in the Chattanooga Times Free Press offices, alongside Frazier and Wilson.

De Nysschen said CARTA has for years been trapped in a vicious cycle. It had constrained resources. And for some good reasons and some bad reasons and self-inflicted ones, too, it was in key ways unable to deliver on many realistic basic expectations of a proper, well-functioning transit system for the Chattanooga community.

"And then because CARTA wasn't delivering, no one wanted to fund it," he said. "So it's like, 'When you do better, we'll fund you.' That's like saying 'We'll invest after you've shown the profit.' As a businessman, you know one has to precede the other."

A South African-born, longtime automotive industry executive who retired from his recent position as chief operating officer for Volkswagen's North American region, de Nysschen recalled at the time making an agreement with Kelly: The new board would work with new leadership to prove CARTA was a credible partner. But once this was done, he said, the city would need to recognize the institution has been chronically underfunded for years.

Even without a funding infusion, de Nysschen said, there were operational deficiencies management could control, regarding cost effectiveness, accountability and performance management systems — "basic things, which I'm sorry to say were rather absent."

He said it is not CARTA's job to run a profit — practically no American public transit authority does.

Yet he yet said effective business management principles could transfer to CARTA as it worked to secure its own revenue sources through better service — thus increasing ridership — and better management of public street parking and the Lookout Mountain Incline Railway, which the agency also runs.

In late 2023, the board unanimously moved to hire Frazier, an executive from Jacksonville, Florida's public transit authority who de Nysschen at the time described as an aspiring change agent.

Owing to the way it has developed, Chattanooga will always be car dependent, de Nysschen said. But his vision is a CARTA that can make the claim to be the transit authority for the whole community, not just those who have no other means of transport.

The idea "is to improve the quality and reliability and frequency and reach and all of these things," he said, "so that people who have a choice say, 'You know what? CARTA is compelling option. I'll take the bus today.'"

Year 1

Frazier said his first year at the helm was about assessing the state of CARTA and "fixing the foundation." According to the agency's 2024 report, CARTA restructured, added several new positions and an executive leadership team alongside dozens of staff training sessions — while establishing a vision for the future.

When it comes to transit, Frazier said his vision centers on "access to opportunity," the idea being that public transit gives people the chance to get to their job, school, workforce development opportunities, appointments, etc.

"We want to be a reasonable alternative to the personal vehicle," he said.

To this end, be said CARTA has implemented new programs like a partnership with the Chattanooga Public Library through which every student in Hamilton County can ride CARTA buses for free. The agency also late last year added an app through which riders can pay their fare with a phone. That option has for years been commonplace in transit systems elsewhere.

Frazier said he sees CARTA's other domains — public parking and the Lookout Mountain Incline Railway — in terms of their economic impact, their capacity to bring people into restaurants, events and the downtown core.

It is to this end, he said, that CARTA has, among other things, made the first hour free in its downtown parking garages. And it is exploring a way to develop land it owns at the base of the Incline Railway.

In a phone interview Tuesday, Lakecha Strickland, president of CARTA's Amalgamated Transit Union Local 1212, said that never in her 28 years with CARTA has she seen a leader like Frazier.

In the past, there was "no vision and no plan," she said, but under the new CEO, she sees bigger picture ambitions, and in the short run, proactive steps to get there.

She said she has seen improved quality and on-time performance, better organized goals, systematic use of data and a leader getting out into the community. Yet she said there are limits to what he can do.

"Our CEO's vision can't be achieved without the funding," she said. "We as union leaders are asking the community and other officials to get on board and give us what we need here to get to the next level. In every great city, they have a great transportation system."

Chris Crowe, the union vice president, agreed. The new management has had a far better relationship with the union, he said. Where he said before everything seemed like a fight, now there is a sense of collaboration.

There's a pride element, too. A 20-year veteran of the Incline Railway, Crowe recalled dilapidation — paint peeling off — for example, in the Incline Railway building. The new regime has begun to address such problems, he said. And he's hopeful for further improvement on the horizon, like air conditioned rail cars.

Financial pressures

Today, CARTA officials say serious financial pressures remain. Scarce increases over the years in local funding have not kept up with inflation, de Nysschen noted in the recent board meeting. Meanwhile, funds from a key pandemic-era federal program will be soon running dry.

CARTA has identified $43 million in unfunded capital projects. On the more expensive end, it needs to replace old vehicles that are increasingly costly to maintain, leaders say. On the cheaper end, officials say the agency needs, among many other things, a bus simulator for drivers, as well as bus shelters and signs, and administrative systems befitting a modern transit agency.

To these ends, CARTA is seeking, atop the operating budget requests, additional capital budget funding of $2.8 million from the city of Chattanooga and $620,000 from Hamilton County — figures agency leaders say would constitute the local match portions generally required in state and federal grant applications.

De Nysschen, during the meeting last week, urged board members to put themselves in the shoes of a local government leader determining how to spend scarce public resources.

Part of doing this, he said, meant showing that CARTA was not just making its systems more efficient and robust and attractive, but that it had some immediate skin in the game when it came to increasing revenue.

Debate emerged over how the agency should go about this last matter. The preliminary budget anticipates no fare increase on the fixed bus lines that constitute the bulk of CARTA's service — a measure de Nysschen said the agency hopes to stave off as long as possible. But some board members objected to fare increases on other fronts.

The retired educator LeAndrea Sanderfur was among those who worried about the impact the proposed $0.50 - $1.50, fare increases for Care-A-Van and CARTA GO might have on riders.

Another board member, the former longtime CARTA employee Bill Nye, opposed raising the Incline Railway adult fare from $20 to $23, given previous price increases not long ago.

Ultimately, however, after a longer-than-usual board meeting, all in attendance voted to approve the preliminary operation and capital budgets, except Nye, who abstained on both fronts. Asked why by a reporter after the meeting, he declined to elaborate.

"I just have my own reasons, he said.

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