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22 tion was not involved in the development of the program and which resulted in a lack of understanding of and stake never saw itself as a stakeholder. in the program at the administrative level. Initial success. The success with the student program The I-Ride program is an example of adapting a U-pass created interest in the faculty and staff program. program to serve other public and private employers. The success of the U-pass program generated interest among Sustainability has emerged as a factor supporting the public-sector employers in a similar program. Ease of admin- employer pass programs, but Capital Metro views sustain- istration, reasonable cost, and the desire to be perceived as ability as the icing on the cake, not a key factor in getting the a "green" employer are major factors that generate interest program to where it is today. in the program. The flexibility afforded by phasing in pro- gram costs is another important factor in maintaining public Lessons Learned employer interest. Capital Metro offered the following lessons learned: Other Programs Develop a strong relationship with the department Austin is the capital of Texas. The state was a natural market responsible for administering the program. for an employer pass program. Capital Metro had a pass pro- Define responsibilities for marketing the program as gram with the state in which it provided free passes for dis- part of the agreement. Ideally, the transit agency would tribution to state employees. The passes were lightly used, be able to have direct contact with employees as part of primarily because plenty of free parking is available for state the marketing plan. employees. In contrast, at the university, parking is limited Avoid flash passes. If employee passes cannot be read and a parking permit can cost as much as $408 per year for by the farebox, use agency-developed fare media. This staff and $602 per year for commuting students. helps to track ridership data. Factors outside of the agency's control, particularly the The local newspaper, the Austin American-Statesman, availability and cost of parking, are critical aspects of began a similar program with Capital Metro involving the program success. distribution of free passes to its employees. The newspaper did not want to expand parking. As with the state, plenty of free parking was available for its employees. KING COUNTY METRO, SEATTLE, WASHINGTON Factors Contributing to Success King County Metro operates Capital Metro credits the following factors as contributing to public transportation service the success of employer-based fare programs: in the greater Seattle area. The service area has a population of 1.9 million. King County Metro operates 966 peak buses Parking availability and cost. The University of Texas (942 directly) and 120 peak trolleybuses. Annual ridership had the courage to restrict parking on campus. Capital is 113.9 million, including all services operated (FY 2007). Metro cites this as the biggest single factor contribut- King County Metro uses the GFI cents-a-bill farebox, with ing to the success of the U-pass program for both stu- no Ticket Reader/Issuer Machine unit. dents and faculty and staff. By contrast, city and state employees had plentiful free parking. King County Metro reported three employer-based fare Affordability. The student program is funded by stu- programs, which evolved one out of another. It began with dent fees, and the university funds the faculty and staff one of the first University Pass (U-pass) programs in the program. Students and university administrators view United States, migrated to a Flex Pass program, and eventu- the programs as reasonably priced. ally included the Puget Pass. Density of development. The university campus is densely developed, and the decreased need for parking U-pass Program structures frees up land for additional development on campus. City employment sites are scattered through- King County Metro began a U-pass program with the Univer- out Austin. sity of Washington in 1991. The U-pass program was open to Partnership. Capital Metro worked with the university students, faculty, and staff on an opt-out basis. Students are to tailor routes to meet student needs. Capital Metro's given a U-pass sticker when they register, and if they do not existing routes already served neighborhoods with high want to pay the fee, they return the sticker to the office and concentrations of staff residences. The city agreement request a refund. The University of Washington orders, prints, was negotiated at the highest levels of city government, and distributes fare media on King County Metro's behalf.

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23 An important incentive for the University of Washing- Even at a reasonable price, the Flex Pass was a new con- ton was that the city of Seattle withheld building permits for cept with a cost attached. To ease the acceptance of the the campus because of concerns about traffic impacts. With program, King County Metro made the decision to phase the U-pass program, fewer cars are parked at the university in program costs over the first 3 years. It estimated first- than in 1991, despite an increase of 23% in the number of year cost based on the value of existing employee use of people on campus every day (campus daytime population is transit. As an example, assume this is $10,000. As the pro- 70,000). A total of 45,000 students, faculty, and staff partici- gram generates ridership, the second-year cost could rise pate in U-pass, which has expanded to include neighboring to $30,000. King County Metro's Board decided to charge transit agencies (Community Transit and Sound Transit). only one-third of the increased cost in the second year (in this case, the employer would pay $17,000 for the second Flex Pass year, not $30,000). In the third year, the employer would pay two-thirds of the increased cost (or $23,000). This In 1992, after observing the success of the U-pass program, phasing in of program costs in the first 3 years kept employ- King County Metro saw an opportunity to expand the pro- ers interested. gram to smaller-scale customers. The city of Bellevue had adopted an aggressive commuter trip reduction program in In exchange for what some in the agency referred to as accordance with state regulations, but its transit benefit relied "discount pricing" (King County Metro never used that term on monthly pass sales. King County Metro approached the officially), employers had to agree to two provisions. First, city and proposed what became the Flex Pass program. All employers would not require employees to pay more than 50% city employees would receive a Flex Pass that was good for 1 of the cost of a Flex Pass. Second, employers would make the year in exchange for a fee paid by the city. The city estimated Flex Pass available to all employees. The employer had some the initial fee after completing a survey of existing employee leeway in defining "all employees"--for example, full-time transit use, and the fee then would be adjusted in subsequent only or no contracted employees. The agreed-on definition years based on actual Flex Pass usage. was included in the contract with King County Metro. King County Metro had a complex fare structure at the Within 7 to 8 years, 200 employers had signed up for the time of implementation, with zonal fares and express fares. Flex Pass program, mostly public-sector employers such as To simplify administration and customer understanding, cities and state agencies. The transit agency was beginning Flex Pass was designed as a single fare medium good on to drown in administration, because each contract had a all King County Metro services. Two other benefits were separate negotiated cost. King County Metro adopted a phi- assigned to enhance the value of the Flex Pass: losophy that cost would depend on the level of service (mea- sured by per capita ridership). The statewide CTR program Flex Pass could be used as a vanpool subsidy; it had a produced a detailed longitudinal database that King County set value that would be credited to any city employee Metro used to calculate per capita use of transit within 15 in a vanpool. areas of the county and to establish the program cost within Any Flex Pass customer could be part of a Guaranteed each area. For companies with fewer than 500 employees, Ride Home program (not mandatory). location within the county determined the per employee cost of the program, which ranges annually from $65 in rural One challenge of implementing the Flex Pass program areas to $390 in downtown Seattle. with the early participating public agencies and private com- panies was its success in gaining new ridership. Often in the Although King County was the regional employment first year of the program, market share tripled (i.e., from 5% center, the Flex Pass was not accepted on other transit sys- to 15% of commuters). This led to a problem with sustain- tems within the region, which presented another challenge. ability, because the participating agencies and companies did In 1999, Sound Transit began regional bus and train service not budget resources to sustain such cost increases. In more and reached an agreement to participate in the Flex Pass pro- urban locations such as downtown Seattle, where baseline gram. King County Metro continued to handle all the pro- levels of transit use are higher, the market share for transit gram administration and would design custom passes good went from 45% to 55%. on Sound Transit and connecting local systems. King County Metro collected $9 million in revenue for Sound Transit in From the city of Bellevue's point of view, Flex Pass offered 2008, and Sound Transit never "touches" the program. The several important benefits. It was simple to administer, with employer is free to negotiate with other transit agencies to a single invoice and a single point of distribution. The pro- accept its Flex Pass. gram maximized access to the transit system at minimal cost (as employee benefits go, the Flex Pass is reasonably priced). King County Metro now manages 600 Flex Pass custom- It was flexible: employees could use the Flex Pass as partial ers, and contracts 300 agreements with small employers to payment for a vanpool program. two business associations. This level of activity is difficult

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24 to manage, even with simplified, consistent contracts. Total than 100 employees are required to develop a program. The program revenue exceeded $36 million in 2008. Puget Pass program, which originated in the late 1970s and early 1980s in a somewhat different form, was the first How did King County Metro get so many public agen- acknowledgment of employers as an important customer cies to participate? The statewide CTR law helped, and King in the transit marketplace. In the mid-1990s, King County County Metro administers the law on behalf of many cit- Metro realized the need for a voucher program to help ies within the county and has coordinated with the cities in employers. The Puget Pass can be used as a transit pass or terms of different programs offered. The ease of administra- can be treated as cash and applied to the cost of participating tion of Flex Pass is a compelling argument to the cities, espe- in a vanpool program. cially those that manage their own programs. In addition, with accurate pricing, the Flex Pass is a relatively inexpen- The Puget Pass is accepted by all regional providers sive employee benefit. except for Kitsap Transit, which has a similar pass. The regional scope of the program appealed to employers with These two reasons to participate (ease of administration employees living outside of King County. An employer and relatively low cost) apply to private- and public-sector could meet the commuting needs of all its employees. The employers. A third reason to participate among the cities program provides a specific customer with a specific product might be termed "walk the walk." A city that is encouraging appropriate to his or her needs, subsidized by the employer. reduced commuter trips should do its share by participating All employers have to agree to subsidize the cost of a Puget in the Flex Pass program. The success of the Flex Pass pro- Pass by at least $5.00. gram is shown by a customer retention rate well over 90%. When an employer designs a program with high levels of King County Metro also worked with the state of Wash- subsidies for employees and widespread eligibility, ridership ington. Different departments within state government made and revenue are maximized. King County Metro uses local different decisions regarding employee commuter benefits. and Congestion Mitigation and Air Quality Improvement All offices of the Washington State Department of Transpor- Program (CMAQ) funds to provide incentives to encourage tation (WSDOT) in King County are part of the Flex Pass employers to design an appealing program. For example, in program. In the current fiscal environment, WSDOT is con- the first year of program participation, the employer is asked sidering an increase in the employee co-pay amount. Another to pay 85 cents on the dollar, with the remaining amount department that participated in the Flex Pass program is dis- covered through local and CMAQ funds. Incentives such continuing several employee benefit programs, including as these encourage employer participation and promote Flex Pass. One office of this department in downtown Seat- the provision of high subsidies to employees and universal tle made the business case that its continued participation in distribution. Flex Pass made economic sense, but this was the only office of the department still enrolled in the Flex Pass program. Migrating to a Smart Card The Flex Pass program is an example of adapting a Each of the three programs in Seattle, Washington, has an U-pass program to serve other public and private employ- analogue in the ORCA (One Regional Card for All) Smart ers. The success of the U-pass program generated interest Card program, which began a limited rollout in April 2009. among public-sector employers in a similar program. Ease The ORCA smart card will be used by all seven major of administration, reasonable cost, and the desire to be per- transit agencies serving a four-county area in and around ceived as a "green" employer are major factors that generate Seattle. interest in the program. The flexibility afforded by phasing in program costs is an important factor in maintaining public The U-pass program is unique and remains mostly the employer interest. same. Kitsap, Pierce, and Everett Transit will now partici- pate in U-pass. Puget Pass The Flex Pass program will be known as Passport. The The U-pass and Flex Pass programs have been very success- Passport is a fully regional card in King County, and is good ful, but King County Metro realizes that these programs are on any transit provider within the region. Six transit agencies not appropriate for all employers. The third program is more are participating in the Passport program. traditional: selling monthly passes to employers through consignment. This pass is now known as the Puget Pass. The Puget Pass program will be known as Business Choice. Transit agencies also will provide vouchers that are The CTR law has been an effective lever in encourag- good within the system. The employee can decide to which ing employer participation, because all employers with more product to assign the voucher.