transit systems were still privately owned. Proposition 55, on the May 1962 municipal ballot, would have issued $6.5 million in general-obligation bonds and established a 10-year tax levy to cover RCT's $300,000 annual operating deficit, created a new city Transit Commission, and given the city authority to take over the transit system if a majority of council approved. The city's voters turned it down by a 7-to-5 ratio. The three-day suspension of all RCT service in November 1968, angered the council and again led to consideration of municipalizing the system. In 1966, RCT was sued by the suburban "Blue Bus" lines consortium, after announcing plans to extend service into areas that were outside the city and which the Blue Bus companies considered to be their territory. The court ruled in favor of RCT, and the expansion proceeded. Transition to public ownership By 1968 Rose City Transit Company was nearly bankrupt. It sought council permission for another fare increase (to 40 cents) and threatened to discontinue all service if this was not approved. On December 12, 1968, the city council declined to vote on the request and instead voted unanimously to revoke RCT's franchise, effective in six months, and to plan for the city to take over the transit system after that period. Commissioner William Bowes explained that it was felt the long trend of ever-increasing fares and declining patronage seen under private ownership was not sustainable, and that it was in the public interest for the transit system to be municipalized. In January 1969, mayor Terry Schrunk appointed a seven-member Mass Transit Advisory Commission to examine the issues and consider options for the future of public transit in the city. In June, it recommended that the city take over the system, taking possession of its vehicles and properties and giving RCT revenue certificates for the appraised value, an action the city said was provided for under the franchise agreement. However, other factors complicated the situation and delayed action for months. RCT said it considered the city's termination of the franchise to be invalid and continued to press for a fare increase. Meanwhile, in May 1969, the Oregon Legislature approved a bill (House Bill 1808) allowing the creation of multi-county mass transit districts with taxing authority and boards of directors to be appointed by the governor. The city council postponed the original mid-June takeover date by 60 days, but by August,