Analysis: Does a local law need to change so a Bloomington public bus can run outside the city?

If Bloomington Transit wanted to run buses outside of Bloomington’s city limits, what, if any, legal requirements would have to be met?

Specifically, what legal requirements would have to be met, in order for Bloomington Transit to serve educational and employment centers like Ivy Tech or Cook Medical—which are outside the city limits on the western edge of town?

In the last few years, the standard answer has been: An amendment to a local law  would have to be enacted by the city council.

But a closer look at the local law, and a state statute, suggests that a change to the local law might not be needed.

Instead, the city council would just have to approve any proposed bus service outside the city’s boundaries.

A request from BT to run buses to specific locations outside city limits could presumably be placed on the city council’s agenda by BT—just like approval of its annual budget and tax rate is placed on the city council’s agenda. BT could not force the city council to grant approval.

But that stands in contrast to an ordinance that would change city code. BT does not have the right to place a proposed change to city code on the city council’s agenda, much less force the council to enact it.

Why is this legal issue about the geography of BT’s service area somewhat pressing?

Legal questions about bus service outside the city’s boundaries have arisen in the context of Bloomington mayor John Hamilton’s proposed increase in Monroe County’s local income tax (LIT), from 1.345 percent to 2.2 percent.

On May 4, the LIT rate increase will appear for the third time on the city council’s agenda.  It has been postponed twice before. For the city of Bloomington alone, the proposed LIT rate increase would generate about $18 million of annual revenue.

About $5 million of that $18 million is proposed to support public transit initiatives. Around $2 million of the $5 million would support a new east-west express route, connecting the eastern and western edges of town. The funding of the new route, and the other transportation initiatives, would entail transfer of LIT revenue from the city of Bloomington to BT through some kind of interlocal agreement.

The conceptual map for the new east-west express route does not show it extending past the city boundaries on the west, to serve Bloomington residents who attend classes at Ivy Tech or work at Cook Medical.

The gap in that service has been noted in recent city council meetings about the proposed LIT rate increase. Factoring into the deliberations has been an assumption that a change to the local law would be required, in order to extend service beyond the city boundaries.

Greater Bloomington Chamber of Commerce director of advocacy Christopher Emge said last week during public commentary, that the chamber supports ”amending Chapter 2.76 of the Bloomington Municipal Code, enabling BT to provide service outside the city limits.”

Emge added, “This would be essential to that east-west express line coveted by most of the community.”

In his remarks delivered towards the end of last Wednesday’s session councilmember Steve Volan stated, “I would be happy to author the legislation permitting Bloomington Transit to serve select areas outside the city.”

The same issue arose two years ago when the BT board deliberated on the final report from its consultant, Foursquare ITP, about revised route configurations.  That report included a proposed extension of Route 3 outside the city limits, to serve Ivy Tech and Cook Medical.

In January 2020, before the pandemic derailed BT’s plans to roll out new routes, based on the consultant’s study, BT’s board mulled which of the consultant’s recommendations to follow.

The board discussed at its January 2020 board meeting whether to ask the city council to enact an ordinance change in order to adopt the recommended Route 3.  The five-member board decided not to push the uncertain politics surrounding the question.

The pandemic-delayed new route configurations, which don’t include an extension of service outside the city boundaries, are supposed to get final consideration at the BT board’s May 17 board meeting, and be rolled out in August of this year.

What does Bloomington’s local law actually say about Bloomington Transit’s service area boundaries? Here’s the section of city code that is often cited as preventing any bus service outside of city boundaries: [BMC 2.76.040]

2.76.040 – Boundaries.
That the boundaries of the Bloomington Public Transportation Corporation shall be coterminous with the boundaries of the city of Bloomington.

That section of Bloomington’s local law is part of the ordinance enacted in 1982 to establish the Bloomington Public Transportation Corporation.

But it does not appear to be included in order to define the service area boundaries—even if that’s an understanding common enough that the B Square has previously reported it as a fact.

Instead, it looks like it’s included in order to satisfy the state enabling statute’s requirement that the taxing district be defined as a part of the ordinance establishing the transportation corporation.

Here’s how the enabling statute reads (emphasis added in bold) [IC 36-9-4-10]:

IC 36-9-4-10 Public acquisition of systems; declaratory resolution; creation of public transportation corporation
Sec. 10. (a) If, as a result of its studies under section 9 of this chapter, the municipal legislative body finds that public acquisition of the system would fulfill one (1) or more of the conditions listed in section 5(a)(2) of this chapter, it may adopt an ordinance:
(1) declaring that public acquisition of the system is in the public interest of the municipality;
(2) providing for the creation of a public transportation corporation;
(3) specifying the number of directors of the corporation; and
(4) setting forth the boundaries of the taxing district of the corporation.
…
…

The taxing district to which the statute refers is the property taxing district. The rate of property tax levied by BT in 2022 is about 3.5 cents.

That is close to the 3.3-cent increase in Bloomington city taxes that will be required to finance one of the $5.8-million general obligation bonds that are a part of the revenue package that has been proposed by the Hamilton administration. The bond issuances have been approved by the city council. One of the issuances is still waiting for approval from the board of park commissioners.

The BT property tax levy for 2022 will generate about $1,474,095, which is roughly 10 percent of BT’s annual budget.

So altering that oft-cited part of city code, in order for BT to provide service outside the city boundaries, looks like it would, in fact, expand BT’s taxing district. Expansion of the tax district would be a weightier political proposition than expanding the service area to include some locations just outside the city’s boundaries.

Are there any legal requirements that have to be met, in order to expand service outside the city boundaries, which are the same as for the taxing district?

The state enabling statute provides an explicit statement of the requirements, and they include approval from the city council (emphasis added in bold) [IC 36-9-4-29.4]:

IC 36-9-4-29.4 Expansion of services outside operational boundaries
Sec. 29.4.
…
(b) A public transportation corporation may provide regularly scheduled passenger service to specifically designated locations outside the system’s operational boundaries as described in IC 36-9-1-9 if all of the following conditions are met:
(1) The legislative body of the municipality approves any expansion of the service outside the municipality’s corporate boundaries.
(2) The expanded service is reasonably required to do any of the following:
(A) Enhance employment opportunities in the new service area or the existing service area.
(B) Serve persons who are elderly, persons with a disability, or other persons who are in need of public transportation.
(3) Except as provided in subsection (e), the expanded service does not extend beyond the boundary of the county in which the corporation is located.
…
…

The political lift that it would take to win the city council’s approval for a specific expansion of service would likely be lighter than for some kind  of  ordinance change, with broader implications. And it doesn’t look like the local law needs to be changed, in order to run a public bus outside of Bloomington’s boundaries.

The question of the legal requirements for extending service outside the city boundaries is one that is supposed to get some scrutiny in connection with BT’s development of a strategic plan. That plan is to be developed with the aid of a consultant, which has not yet been selected. Two consultants responded to the initial RFP. BT is now asking the two respondents to resubmit proposals with a clarified scope of work.

BT has historically paid the city of Bloomington for the city’s legal department to do basic legal work like review of contracts. But the legal question of extending service outside the city’s boundaries is one that will be tackled by BT’s outside counsel.

At its March 2021 meeting, the board approved an agreement with the Rothberg Law Firm for legal services.

It’s possible that the vote on the LIT rate increase will be taken by the city council on May 4, even if there’s no clear answer to the legal question about extending service beyond the Bloomington’s city boundaries.