Maintaining Transit Effectiveness Under Major Financial Constraints (2014)

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7 CHAPTER TWO LITERATURE REVIEW The fi nancial challenge experienced by transit agencies was further demonstrated by the diffi culties experienced by suppliers to the industry. The same APTA report noted that 74% of private-sector businesses serving the public transit industry incurred fl at or declining business from 2010 to 2011 as a result of uncertainty in federal investment, a down economy, and a lack of investment in transit at the state and local level. Of those reporting a decrease in business, the average decrease was 25%. Fifty-six percent reported that they lost business from their public transportation clients, and 52% of businesses said they expected to lay off employ- ees or cut back hiring as a result. From 2010 through 2013, newspapers and journals around the country featured headlines demonstrating the troubled fi nancial state so many transit agencies had been experiencing: • “Regional Transit lays off 37 employees” • “MARTA to slash a quarter of service” • “MTA to eliminate more than 1,000 positions” • “Riders to feel steep CTA cuts Monday” • “Without state aid, MBTA GM leaning toward fare hikes” • “End of the line for PDRTA?” The following headline and story provide an illustrative example of the challenges many transit systems in the coun- try have faced: Community Transit to Cut Service in 2012 Community Transit CEO Joyce Eleanor announced that owing to continued low sales tax revenues the Snohomish County transit agency will resize its operations and cut its service 20% in February 2012. Community Transit cut service by 15% in June 2010, including elimination of Sunday and holiday service, but the long-term effects of the recession make another cut necessary. In 2007, before the recession began, Community Transit collected $76 million in sales tax revenue, its primary funding source. The past two years, sales tax collections have been stuck at about $62 million, Eleanor said. “These cuts are necessary to keep our agency sustainable, so that we can provide transportation for Snohomish County residents far into the future,” she said. The 2012 service cut will equal about 80,000 hours of service, roughly the same amount of service that was cut in 2010. “By this time next year we will have cut about a third of the service INTRODUCTION This chapter summarizes fi ndings from a literature review related to the subject of transit effectiveness. A search of the Transportation Research International Documentation (TRID) database was conducted to aid the review, using key words and phrases such as “transit effi ciency,” “transit cre- ativity,” and “transit effectiveness.” Articles from industry journal publications such as Mass Transit Magazine, Metro Magazine, and Passenger Transport were reviewed, as well as articles on public transportation issues featured in daily newspapers from around the country made available through a paid subscription service (http://www.transitnews.net). In addition, the author reviewed dozens of e-mails sent directly from transit managers in response to related research that described actions they had taken to either reduce their operating costs without harming their passengers or gener- ate new revenues to supplement their traditional sources of fi nancial support. Both kinds of actions help transit agencies minimize or avoid fare increases and service reductions. It can be argued that most public services have often oper- ated on fairly lean budgets. As one transit manager noted when agreeing to participate in the survey for this project, “Frankly, it is the age-old question, ‘How to deliver public services and facilities in times of dwindling resources.’ It is just that this time the dwindling resources problem was even more acute.” There is no doubt that most transit agencies throughout the country were under considerable stress in terms of fi nancial resources starting in fi scal year 2009. A report produced by APTA in August 2011, Impacts of the Recession on Public Transportation Agencies, noted that almost 80% of public transit systems had implemented fare increases or service cuts in 2010 or were considering them for the future because of fl at or decreased local and/or regional funding. Seventy-one per- cent of responding agencies saw fl at or decreased local and/or regional funding, and 83% experienced fl at or decreased state funding. The decreases followed an already stagnant fund- ing situation in 2010. Sixty-three percent of larger agencies implemented or approved hiring freezes, while 75% of larger agencies reduced the number of positions and 46% of larger agencies reported implementing or approving layoffs. Capital funding was also affected as 85% of transit agencies experi- enced fl at or decreased capital funding. Nearly one in three (31%) delayed vehicle acquisitions and 20% delayed capital maintenance (1).

8 and about a third of the employees that we had at the beginning of 2010,” Eleanor said. (2) Clearly, there has been great pressure on transit agen- cies, their suppliers, their employees, and their passen- gers. In response to this fi nancial squeeze, virtually every discipline and functional area within transit agencies has contributed to helping the agencies become more effi cient and cost-effective and, consequently, as effective as pos- sible in their community. Some of the ideas and techniques that have been developed generate relatively small amounts of savings or revenue, while others have had much more considerable impact on the fi nancial status of the transit agencies. Some of the techniques have allowed transit agen- cies to maintain levels of service that might have otherwise been cut, while others resulted in additional service in the community. Beyond the actual maintenance or addition of service, the various techniques also demonstrated to the communities they serve that the transit agencies were doing everything in their power to be good stewards of public funds and to provide as much service as they possibly could to the public before they considered asking for higher fares or increased tax support. This chapter will summarize various techniques that different transit agencies in the United States have imple- mented to help address these conditions. The techniques are presented by functional area within transit agencies that were identifi ed during the literature search through the vari- ous channels noted previously. A summary table of the vari- ous techniques is provided at the end of the narrative for each functional area. COST-EFFECTIVENESS TECHNIQUES IN TRANSIT OPERATIONS AND PLANNING Service Design Brown and Thompson of Florida State University examined the effects of different system designs on transit ridership by comparing a radial system that focused on providing service to the downtown (Tarrant County, Texas) to a gridlike sys- tem that connected employment and population, wherever they locate, as directly as possible by transit routes (Broward County, Florida). The analysis shows that the transit system that seeks to serve all the dispersed jobs in a service area carries almost 400% more ridership per capita than does the transit system that seeks to serve primarily central busi- ness district (CBD) jobs, while each bus mile operated in the gridlike transit system carries about 35% more passengers than each bus mile in the CBD-focused transit system (3). However, a later paper by Jaroszynski and Brown analyzed the experience of StarMetro in Tallahassee, Florida, which converted from a downtown-oriented radial system to a decentralized grid system in 2011. They found that the sys- tem, although adding service, actually lost ridership and effi - ciency, and cautioned that when modifying a radial system to a gridlike system, suffi cient frequency of service should be provided to account for the higher number of transfers likely to be necessary on the latter (4). The San Joaquin Regional Transit District (RTD) in Stockton, California, created deviated fi xed routes to serve areas formerly served only by general public and Americans with Disabilities Act dial-a-ride services. These new routes (with the same vehicles but newly designed vehicle graph- ics and a new name: Hopper) now serve fi xed-route as well as dial-a-ride passengers. The new service greatly enhances mobility options for RTD’s customers. In the county area of RTD’s service area, ridership increased by 86%, while costs per passenger went from more than $50 to $19 per trip (D. DeMartino, General Manager/CEO, San Joaquin RTD, personal communication, Feb. 22, 2010). Extra Board Effi ciency Research performed by the Oregon Transportation Research and Education Center (OTREC) University Transportation Center identifi ed commonsense techniques to help improve the effi ciency of the extra board (when bus operators fi ll in for the regular operators who are on vacation, sick, or absent for any other unforeseen reason) of TriMet in the Portland, Oregon, metropolitan area. For example, the prac- tice of granting personal days off on Fridays, Saturdays, or Mondays (which are typically lower attendance days among regular duty operators) could be discouraged, as could the practice of scheduling in-service training for operators on Fridays or Mondays. Operators may pass up a piece of assigned work when its report time is less than 9 hours from the previous day’s sign out. Pass-ups by regular duty opera- tors were found to add to the volume of open work, while pass-ups by extra board operators contributed to increases in both report time and time lost from missed pull-outs. Regular operator pass-ups occur as a consequence of the work selection process or as a result of trading their assigned work with another operator. Thus, the quarterly work selec- tion process should discourage operators from piecing runs together that include pass-up situations. Trades into pass-up situations should also be discouraged (5). Contracting for Service Contracting for fi xed-route bus services has been practiced at many transit agencies for decades, but there has been a distinct increase in contracting activity in the past 4 years, primarily because of the fi nancial stress experienced by transit systems across the country. Policy makers in New Orleans, Louisiana; Savannah, Georgia; Nassau County, New York; Austin, Texas; and North County San Diego, California, have all converted what had been publicly operated transit systems into privately operated services,

9 with the fi rst three being done under a delegated manage- ment contract in which the contractor is responsible for all aspects of management and service provision. The Nas- sau County contract of $110 million is the largest privately operated bus contract in the United States (6). Because of the heightened interests in fi xed-route bus service privati- zation in the 1980s and continued interest in the 1990s, a number of studies were conducted to examine cost savings and cost effi ciency gains expected from service contract- ing. The fi rst group of studies examined costs to provide transit service before and after contracting, and most of them reported cost savings and/or cost effi ciency gains in contracted services. A study of fi xed-route bus services in Denver by Peskin et al. showed 1-year cost savings of $2.5 million (12.5%) based on an incremental cost analysis and $5.1 million (25.8%) based on a fully allocated cost analysis (7). A fully allocated cost analysis of the Denver Regional Transit District by Public Financial Management reported savings of $40.1 million dollars (31%) or more over 9 years (8). Three studies on contracted service in the Foothill Transit system—commissioned by the Los Ange- les County Transportation Commission and conducted by Ernst and Young—showed a 43% cost savings (9–11). Teal and Teal and Nemer found signifi cant cost savings at the level of, on average, 39% for six fi xed-route services and 43% for six commuter bus services (12, 13). While most studies examined cost savings and/or cost effi ciency for the service contracted, Karlaftis et al. analyzed cost-effi - ciency for transit systems (14). They analyzed monthly data from an approximately 6-year period and found that cost effi ciency increased by 22% (an 18% reduction in cost per vehicle mile) after all transit service routes in the India- napolis transit system were contracted out to a private fi rm (15). A thorough review of the National Transit Database conducted by the National Center for Transit Research in 2011 revealed that contracted fi xed-route transit service costs considerably less than directly operated service, as shown in Table 1 (16). All-Door Boarding In July 2011, the San Francisco Municipal Transportation Agency (SFMTA, aka Muni) instituted an all-door boarding policy to reduce dwell time at bus stops for greater passenger convenience and to improve the speed of buses (Figure 1). SFMTA also added 11 fare inspectors to increase enforcement. An analysis of fi ve sampled routes conducted after the fi rst month of implementation showed increases in the percentage of customer boarding through the rear door and a correspond- ing decrease in dwell times of up to 16% at heavily used stops (17). Seven months after Muni changed its policy to allow all- door boarding, the agency reported continued improvement in service and a drop in fare evasion. On average, all-door boarding has saved buses up to 4 seconds of dwell time per stop, according to SFMTA. Even such seemingly small time savings add up on routes with dozens of stops. TABLE 1 OPERATING COST PER REVENUE-HOUR FOR FIXED- ROUTE SERVICE BY AGENCY SIZE 2008 Costs Florida Southeast U.S. U.S. All Agencies Directly Operated $ per Revenue-Hour Purchased Transportation $ Per Revenue-Hour $98.10 $54.27 $92.19 $74.47 $119.61 $88.92 Small Agencies Directly Operated $ per Revenue-Hour Purchased Transportation $ per Revenue-Hour $71.59 $61.15 $61.87 $60.17 $76.87 $75.61 Medium-Sized Agencies Directly Operated $ per Revenue-Hour Purchased Transportation $ per Revenue-Hour $77.48 $52.98 $85.74 $79.44 $96.50 $92.36 Large Agencies Directly Operated $ per Revenue-Hour Purchased Transportation $ per Revenue-Hour $104.98 $40.43 $100.01 $44.20 $129.58 $90.25 FIGURE 1 Passengers are allowed to board through all doors of SFMTA’s bus fl eet, allowing buses to more easily stay on schedule without the need for additional equipment. (Source: Brant Ward, San Francisco Chronicle.) When comparing the 7 months of all-door boarding with the same months the previous year, the fare evasion rate decreased from 4.6% to 3.5%. The San Francisco Transit Riders Union (SFRTU) applauded SFMTA for implement- ing the policy change. “SFTRU has been a staunch advo- cate for all-door boarding and this report shows that when Muni puts its trust in riders, riders will return the favor,” said Mario Tanev, who led the all-door boarding advocacy campaign for SFTRU. “Dwell times have gone down, and so has fare evasion. We don’t need to reinvent the wheel in San Francisco; we just need to learn to roll it forward faster” (18). The change might also have helped alleviate over-

10 crowding, because riders boarding through the back door are more likely to fi ll up previously underutilized space in the back, leaving more room for passengers in the front. TABLE 2 SUMMARY OF OPERATIONAL TECHNIQUES TO IMPROVE COST-EFFECTIVENESS Transit Agency Technique Results San Joaquin Regional Transit District Establish deviated fi xed- route service to replace fi xed-route and paratran- sit service in areas of low demand Ridership increased 86%, cost per trip decreased from $50 to $19 TriMet Extraboard effi ciencies by discouraging personal days off on Friday, Satur- day, and Monday, and not scheduling training on Fridays and Mondays Savings of up to $1 million New Orleans RTA, Chatham Area Tran- sit Authority, Nassau Inter County Express, and North County Transit District Converting publicly operated transit systems to privately operated transit systems Average savings of 25% on operating costs San Francisco Municipal Transpor- tation Agency Allowance of all-door boarding on all buses 16% decrease in dwell time, better schedule adherence without need for more buses on route Rochester Genesee RTA, The “T,” New Jersey Transit, and Pinellas Suncoast Transit Authority Route performance analysis Saved millions of dollars by reducing service with little loss in ridership North County Transit District and Lynx Using smaller buses in areas of low demand Substantial savings in fuel and operat- ing costs Southwest Transit Reduced express service deadhead miles by park- ing buses downtown after in-bound trips to downtown Saved more than $100,000 a year in reduced fuel and maintenance Stark Area Regional Transit Authority and AC Transit Not allowing buses to idle more than 5 minutes Saved $200,000 at SARTA and $570,000 at AC Transit Santa Clara Valley Transportation Authority Shut down auxiliary power of light rail cars when parked Savings in electric- ity of more than $1,000 a day Chicago Transit Authority Utilizing scheduling soft- ware to reduce layover time through interlining Saved 100 vehicle- hours per weekday while also reducing vehicle requirements Gainesville Regional Transit System Training operators on how to deal with and counteract fare evasion Gained $50,000 per year in farebox revenue Service Productivity Evaluation The Rochester-Genesee Regional Transportation Authority (RGRTA) established a formal route productivity evaluation program whereby each route is scored using a methodology that combines cost recovery and customer count. Low-scor- ing routes are selected for further review, such as adjusting schedules to increase headway times, exploring opportu- nities for employers who benefi t from this route to partner with the authority and provide a subsidy for route support, or combining the route with another one that will still pro- vide service to most of the current customers. The authority has saved millions from this protocol without signifi cantly affecting customer service (R. Frye, CFO of the Rochester- Genesee RTA, personal communication, Feb. 17, 2010). In a similar fashion, “The T” in Ft. Worth, Texas, established a Route Monitoring Committee composed of volunteer opera- tors and customer service representatives who meet monthly with planning and scheduling staff to improve communication between the departments while creating an additional avenue to enhance service quality (Figure 2). “T” planning staff took advantage of this operating group’s understanding of existing service to provide an initial brainstorm of potential service reductions. In lieu of the high costs associated with detailed surveys and studies, and to track system effi ciencies, The T’s committee used multiple evaluation tools—including a route performance index (RPI), farebox passenger counts, board- ing and alighting counts, and origin-destination surveys—to recommend service reductions. The RPI is used to objectively measure the performance of a route relative to other routes within the same service classifi cation. The key performance indicators (passengers per hour, passengers per mile, and subsidy per passenger) are compared against a standard in each route category (radial, crosstown, feeder, circulator, and express). The standard is set based on the previous fi scal year’s average. Once the indices for each performance measure are calculated relative to each individual route, all values are nor- malized to a value of 1. A number of other suggestions from the Route Monitoring Committee and planning and schedul- ing staff were implemented as well, altogether reducing total bus hours by 4.5% and saving approximately $800,000 per year while having minimal impact on ridership (19). New Jersey Transit’s (NJT’s) Bus Service Optimization initiative resulted from extensive examination of each of NJT’s existing bus routes. The bus routes were broken down into 17 groups or geographic markets and reviewed using 20 separate metrics, including customers per hour, farebox recovery, and subsidy per customer. As a result of extensive study and analysis, NJT’s Bus Service Optimization initia- tive forecast more than $3 million in annual operation sav- ings. These savings were refl ected in the FY 2013 budget and helped keep fares stable for the nearly 250 million customers who use NJT services on an annual basis. From these sav- ings, NJT will immediately reinvest more than $1.02 million to expand and enhance bus service in the city of Newark, in addition to key corridors between Newark, Newark Airport, and Elizabeth. Bus Service Optimization will ensure that NJT uses its limited resources to provide the most effi cient service to the most customers while holding fares steady (20).

11 larger bus cost of $3.47) because of reduced operator costs negotiated as part of a 7-year, $178 million contract NCTD entered into with a transit management fi rm and the better fuel mileage achieved by the smaller buses. The smaller buses get 6–7 miles per gallon (mpg) compared with the 3.5 mpg the 40-footers achieve, on average (21). The Central Florida Regional Transportation Authority (aka Lynx) also replaced low-ridership fi xed-route service with smaller, more fuel-effi cient vehicles and contracted out the service on three routes to realize a savings of $1 million annually. The most dramatic change occurred in the town of Oviedo, where the cost of service decreased from $626,990 to $161,175 per year (L. Darnall, Chief Operating Offi cer, Lynx, personal communication, Feb. 23, 2010). Reducing Deadhead Miles and Idling and Scheduling Effi ciencies SouthWest Transit, the transit agency serving the southwest suburbs of Minneapolis, Minnesota, realizes savings in deadhead mileage by parking its buses near downtown Min- neapolis rather than returning them to their home base after their in-bound express routes are completed. In order to save expense and be greener, the agency implemented a strategy of leaving about 50% of its fl eet at the downtown destination area and shuttling the operators back to their garage, and reversing the process in the afternoon. The “Park Out” saves 665.4 mi per day of deadhead miles, or 125,761 mi annu- ally. This translates to 22,866 gallons of fuel not used and, considering the cost of fuel and maintenance, yields a gross savings of $129,282. This also improves the agency’s safety record by reducing the amount of risk related to the dead- head miles (D. Simoneau, Operations Manager, SouthWest Transit, personal communication, Feb. 17, 2010). The Stark Area Regional Transit Authority in Canton, Ohio, saves more than $200,000 a year by not allowing bus drivers to keep their buses running if they are idle for more than 5 minutes (22). Similarly, AC Transit in Oakland, California, estimated savings of $570,000 by limiting idling of buses (23). In March 2009, vehicle maintenance personnel for the Santa Clara Valley Transportation Authority in San Jose, California, began shutting down the auxiliary power on all light rail vehicles when they were parked. Auxiliary power is used to automatically start and stop train accessories (e.g., HVAC, lighting, and air compressor unit). Pullout operators then “aux on” their vehicles before beginning their safety walk-around. This resulted in a savings of approximately $1,000 per day or $360,000 per year (J. Smith, Chief Finan- cial Offi cer, Santa Clara Valley Transportation Authority, personal communication, Jan. 6, 2010). The Chicago Transit Authority (CTA) has saved more than $2.0 million dollars annually through more effi cient FIGURE 2 A meeting of the T’s Route Monitoring Committee that includes representatives of operations, planning, and customer service personnel. (Source: Mass Transit Magazine, June 30, 2010.) The Pinellas Suncoast Transit Authority (PSTA) in St. Petersburg, Florida, outfi tted a number of buses with auto- matic passenger counters and used them on all their routes to get a very accurate snapshot of exactly where riders were boarding and exiting. Through a meticulous route review pro- cess, ridership was analyzed by service day, route, trip, and bus stop. Route duplication was also reviewed and, in most cases, eliminated. This helped PSTA modify service in accor- dance with adopted guidelines to save 42,000 service hours while leaving virtually no customers without transportation. For every area affected by service changes, PSTA ensured that passengers had alternatives, and staff took time to explain where they could catch the bus, how far they would have to walk, and whether they would have to transfer (J.A. Recca, Director of Marketing, PSTA, personal communication, Mar. 3, 2010). Ridership was barely reduced. The Jackson- ville (Florida) Transportation Authority (JTA) reported that it accurately measures service modifi cations by utilizing transit industry tools such as automated vehicle location informa- tion and automated passenger counters. JTA has successfully reduced 1.2 million miles and approximately 51,000 hours of service without any signifi cant loss of ridership (J.B. Fish- burn, Deputy Executive Director & Chief Financial Offi cer, JTA, personal communication, Jan. 9, 2010). Vehicle Effi ciencies The North County Transit District (NCTD) in San Diego County, California, uses more 28-ft buses rather than 35- and 40-ft buses on routes where demand does not require larger buses. Leaders of the public agency say the 28-ft Star Trans buses cost less, are cheaper to operate, “go places the big guys can’t,” and better fi t the communities they serve. The smaller buses cost less than half what the 40-ft buses typically cost ($147,612 compared with nearly $400,000) and cost less to operate per mile ($2.14 compared with the

12 and other unique venues such as Angels Stadium, making the test as real a simulation as possible. The $52,000 facility was built as part of OCTA’s contract with C.A.R.E. Evalu- ators, which provides services to determine customers’ eli- gibility to use ACCESS. Each month, approximately 500 people are certifi ed or recertifi ed to use the service. Before the center was established, riders were put through an out- door evaluation that lasted an hour to test their ability to navigate uneven surfaces and curbs, but they did not board a bus. Evaluators can now test a customer’s ability to navi- gate multiple surfaces, board a bus, and pay the fare, all in a controlled environment. The testing today can be completed in 30 minutes instead of an hour. This center helps to accu- rately determine whether a customer can use the fi xed-route service for some trips, which can help to signifi cantly reduce costs. Subsidizing ACCESS service costs OCTA $50.17 per ride, versus $3.76 on the fi xed-route service (24). FIGURE 3 A view of the indoor paratransit certifi cation and travel training center of the Orange County Transportation Authority (Source: Metro Magazine, Mar. 30, 2012). The Washington Metropolitan Area Transit Author- ity (WMATA) in Washington, D.C., decided to change the method it was using to determine eligibility for paratransit services after seeing cost increases of 22% a year. During the 4 years that third-party rehab centers were used to make eli- gibility determinations, the paratransit budget doubled from $52 million to $104 million a year. WMATA had been relying on rehab hospitals, assuming they had the appropriate exper- tise to make decisions on people’s capabilities and paratransit eligibility. However, an investigation by WMATA revealed that the rehab center did not present the customers with the possibility of using bus or rail services. WMATA built its own facility at its headquarters, where paratransit assessments are now done. By streamlining its eligibility process and fi ne-tun- ing its travel training program, Metro has enabled customers with disabilities to travel more independently, improved the rider’s experience, and saved the transit agency $25 million in FY 2011 (Figure 4). Passengers will be eligible for paratran- sit services, get a half-price fare card, or participate in travel training and become fi xed-route users (25). vehicle scheduling. The effi ciencies were gained by using CTA’s scheduling software program, HASTUS, which offers an advanced vehicle scheduling tool called MinBus. MinBus optimizes vehicle schedules by looking for opportunities to reduce excessive layover through interlining bus routes. By using MinBus at three CTA bus garages with high peak- to-base ratios of service, CTA saved more than 100 vehicle hours per weekday while reducing peak vehicle require- ments. The optimization of MinBus software required staff training by the software vendor, GIRO, as well as staff time to run scenarios that saved vehicle hours and reduced peak vehicle requirements (J. Paquet, Vice President, Planning & Development, Chicago Transit Authority, personal commu- nication, Jan. 18, 2010). Fare Adherence Savings The Gainesville Regional Transit System in Gainesville, Florida, trained bus drivers on how to deal with fare eva- sion when it was reported that too many people were riding with fake IDs and some drivers were letting friends ride free. Administrative staff conducted ride checks and watched the security camera tapes to see who was paying and who was not. Operators were then trained on how to deal with passen- gers engaging in fare evasion. (The fi rst time the passengers are told they are being given a courtesy ride, the second time they’re given a warning, and the third time they are called off the bus by a supervisor.) Fake IDs were confi scated, and word is reported to have gotten around the system pretty quickly, resulting in a savings of $50,000 in farebox revenue (J. Gomez, General Manager, Gainesville Regional Transit System, personal communication, Dec. 17, 2009). COST-EFFECTIVENESS TECHNIQUES IN THE PROVISION OF PARATRANSIT SERVICES Functional Assessments of Paratransit Riders In an ongoing effort to improve service and provide it in the most cost-effective way possible, the Orange County Transportation Authority (OCTA) in Anaheim, California, completed one of only four state-of-the art indoor centers in the nation at which persons with disabilities can be qualifi ed for complementary paratransit service. The service, called ACCESS, provides a million rides annually (Figure 3). Rid- ers being evaluated are escorted through a series of tests that verify their ability to use fi xed-route services, includ- ing boarding and exiting the bus, navigating through the center aisle, and using the farebox. The simulator provides accurate and effi cient evaluation of riders’ abilities while also improving the customer experience for the 58,000 ACCESS customers. The indoor facility houses a 40-ft bus surrounded by actual sidewalks and operating traffi c signals to give users the feel of a real bus stop. It also contains curb- cuts and life-size murals depicting shops, business offi ces,

13 aways for 12 paratransit vehicles to save about $65,000 per vehicle in capital cost and approximately 10 mpg in fuel cost (D. O’Regan, C-TRAN Controller, personal communica- tion, Feb. 19, 2010). The Santa Clara Valley Transportation Authority tran- sitioned to Toyota Prius hybrid vehicles for both paratran- sit services and nonrevenue agency vehicles. The hybrid vehicles increased fuel economy by as much as three times compared with the cars they replaced (J. Smith, CFO, Santa Clara Valley Transportation Authority, Jan. 6, 2010). Paratransit Contracting with Taxi Companies A number of agencies have reported considerable cost sav- ings by partnering with taxicabs through voucher arrange- ments to supplement regular paratransit service. Short trips are often less expensive by taxi than by contracted paratransit. • In Scottsdale, Arizona, it was reported that a trip using dial-a-ride services cost the city approximately $29. The same trip provided by a taxicab resulted in a bill- ing to the city of $9.47. • In Torrance, California, the average paratransit trip is $30, while the average trip cost using a voucher is $13. • Valley Metro Phoenix/Mesa reported a similar situ- ation—a paratransit trip for dialysis is $27.50, while a dial-a-ride trip is approximately $35. The average taxi voucher trip paid by Valley Metro is $8.00. Valley Metro staff noted that vouchers provide more capacity at lower per trip costs, which enables them to provide an additional 30,000 to 40,000 trips per year with the same budget. The Mesa Mileage Reimbursement pro- gram pays an average of $6.50 per trip, compared with an average dial-a-ride trip of $32.31. • In Flagstaff, a paratransit trip provided by the Northern Arizona Intergovernmental Public Transportation Authority is around $25. Mountain Lift Taxi Voucher pro- gram trips average between $7 and $8. These cost savings enabled the authority to increase the number of people who were able to access transportation services (26). • The Transit Authority of River City (TARC) in Louisville, Kentucky, benefi ts from using Yellow Cabs primarily in peak periods of the day for will-calls and for assorted “leftover” or hard-to-route trips that would otherwise require TARC to create an ineffi cient primary contractor route. Cab use can expand and contract easily with seasonal or daily surges in customer demand, allow- ing TARC to avoid maintaining costly primary contrac- tor/fi xed-fl eet infrastructure just to be ready for surges. TARC pays its primary contractor by revenue hour, and the contractor agrees to comply with paratransit regula- tions and requires its drivers to be trained. Consequently, making the contractor’s routing more effi cient (trips per hour) has been a priority, and the use of cabs has helped improve productivity directly and indirectly. The cabs TABLE 3 SUMMARY OF PARATRANSIT TECHNIQUES TO IMPROVE COST-EFFECTIVENESS Transit Agency Technique Results Orange County Transportation Authority and Washington Area Metropolitan Trans- portation Authority Established an in- house travel training and paratransit eligi- bility testing center WMATA saved $25 million in 1 year, while OCTA expects to save millions while reducing the cost of trips from $50.17 to $3.76 when using fi xed-route services Clark County Public Transportation Ben- efi t Area and Santa Clara Valley Trans- portation Authority Use of minivans instead of cutaways and hybrid vehicles instead of gasoline or diesel vehicles Vehicles achieve between 10 and 20 more miles per gallon Valley Metro (Phoenix) and Tran- sit Authority of River City Contracts with local taxis to supplement reg- ular paratransit service Reduces the cost of paratransit trips from $3.00 to $20 Milwaukee County Transit Produced 15-minute video to show the fi xed-route options to the provider commu- nity for those with disabilities Paratransit use has decreased as much as 20% among those liv- ing in assisted living facilities Stark Area Regional Transit Authority Established a fi rm no- show policy to help reduce missed trips Agency reported sub- stantial savings with very few penalties issued Central Costa County Transporta- tion Authority Provides vehicles and training to social ser- vice agencies that then provide trips for many who had used CCCTA paratransit service Paratransit ridership increases moderated and productivity on the transit agency paratran- sit system increased from 1.94 to 2.0 pas- sengers per hour FIGURE 4 A paratransit passenger is helped from a passenger van to visit the WMATA certifi cation and travel training center (Source: Metro Magazine, Oct. 2, 2012). Paratransit Vehicle Savings Clark County Public Transportation Benefi t Area (C-TRAN) in Vancouver, Washington, switched to minivans from cut-

14 are paid meter rates, which can be audited with manifest mileage estimates. Additionally, there are often a num- ber of people in the cab, comparable to cutaway use. The current Yellow Cab savings on average has been $2 to $3 per trip. The taxi savings fl uctuate with the cost of die- sel (used by the primary contractor fl eet) and cost of gas (which can raise cab meter rates). Annual savings have varied from $175,000 to $350,000, depending on fl uctua- tions in fuel costs. In addition, smaller vans used in the contractor’s fl eet get about six mpg more than the body- on-chassis vehicles, resulting in a savings of approxi- mately $40,000 a year in FY 2010 (P. Rao, Director, Paratransit and Customer Service, Transit Authority of River City, personal communication, Mar. 2, 2010). Fixed-Route Travel Training Milwaukee County Transit (MCT) in Wisconsin used New Freedom resources to develop a 15-min fi lm for commu- nity presentations to case managers, the provider com- munity, assisted living centers, and sheltered workshops as one way to shift paratransit rides to fi xed-route rides through a free-fare program. Paratransit use for those par- ticipants has decreased up to 20% in some cases. MCT also developed cost-sharing agreements with other state and federally funded human service programs and began a comprehensive bus stop inventory project to identify bar- riers to using fi xed route (C. Peot, Director of Paratransit Services, Milwaukee County Transit, personal communi- cation, Feb. 18, 2010). Paratransit Customer Policy Changes The Stark Area Regional Transit Authority initiated an ADA policy to educate and control late cancels and no- shows on paratransit services. In the fi rst months of this tightened program (with very few actual penalties to rid- ers), no-shows and late cancels were substantially reduced, thereby cutting costs of sending vehicles to unneeded loca- tions and enabling more service availability for needed rides (C.A. Kuczynski, Director, Finance & Administra- tion, Stark Area Regional Transit Authority, personal com- munication, Mar. 1, 2010). Paratransit Coordination with Nonprofi t Volunteer Associations The Central Contra Costa Transportation Authority (CCCTA) in Concord, California established the Commu- nity Connection program, which has allowed more trips to be made throughout the county at a very low cost as a result of partnerships with other programs that use volunteers and receive grants. CCCTA provides passenger vans that they would otherwise retire to social service agencies at no cost and provides training to volunteers and employees of the social service agencies on how to properly operate the vehi- cles. These agencies then provide trips to transportation- disadvantaged people who might otherwise use the far more expensive paratransit service offered by CCCTA known as LINK. Not only has this program expanded options for seniors with service tailored expressly for their individual needs, but capacity has been freed up on the LINK para- transit service for additional trips that were formerly taken by those now using a partner’s Community Connection van. Ridership on LINK was growing at a rate of more than 3% per year; as a result of the program it stabilized and actually fell in 2007 nearly 1.5% over the previous fi scal year. This allowed 10% more same-day trips to be accommodated, and LINK is able to focus on serving the very frail persons for whom it was designed, with no service denials and within budget. In FY 2008, ridership on LINK grew by 4.6%, but productivity increased from 1.94 to 2 passengers per hour. Nearly 23% more same-day trips were provided as well (C. Dahlgren, Director of Administration, CCCTA, personal communication, Feb. 17, 2010). COST-EFFECTIVENESS TECHNIQUES IN TRANSIT MAINTENANCE Electrifi cation of Bus Components • To improve energy effi ciency and reduce operational costs, Miami–Dade Transit (MDT) in Miami, Florida, initiated a pilot program to electrify key accessories on 13 county buses, which was deemed successful. The electrifi ed accessories include the propulsion system, the radiator fans, and the HVAC system. Electric power steering will be added when the manufacturer makes it available. The electrifi ed buses are expected to be 25% more fuel effi cient. Based on the anticipated savings, the county expects to recoup its investment in the new technology within 4 years. The agency plans to elec- trify other bus components, such as power steering, doors, air compressors, and wheelchair ramps (27). • The bus maintenance department at Portland, Oregon’s TriMet works on reducing parasitic loads on diesel bus engines to increase fuel mileage and reduce cost per mile of operation. The agency partnered with Engineered Machine Products (EMP) to develop NASCAR technology, including a new electrical cool- ing system that runs off a single, powerful alternator, which improves engine power and effi ciency to drive the wheels. When testing the EMP cooling system, TriMet noted a 5% to 8% improvement in miles per gallon, depending on time of year (S. Lomax, Acting Executive Director, TriMet, personal communication, Mar. 5, 2010). • The Potomac Rappahannock Transportation Commission (PRTC) in Virginia also experienced positive results on its commuter buses. Test results showed that the retrofi t- ted bus was 15% more fuel effi cient than buses without

15 the electrical cooling system. By retrofi tting 29 more buses, PRTC will save approximately $133,000 per year in fuel costs. The cost of the cooling system retrofi t will be recovered in less than 3 years (28). TABLE 4 SUMMARY OF MAINTENANCE TECHNIQUES TO IMPROVE COST-EFFECTIVENESS Transit Agency Technique Results Miami-Dade Transit, TriMet, Potomac Rap- pahannock Transpor- tation Commission Electrifi cation of bus components, including the propulsion system, radiator fans, and heat- ing, ventilation, and air conditioning systems Agencies report an increase in engine power, fuel savings of up to 15%, and a return on investment in less than 3 years Lane Transit District Purchased diesel fuel in bulk when prices were low and stored it off site to be able to draw down when prices spike The agency saved $250,000 and has a supply in the event of fuel shortages Palm Tran Purchased Puradyn oil fi lters to clean oil and increase intervals between oil changes, and use synthetic oil to triple the mileage between oil changes Less need for main- tenance for oil changes, and syn- thetic oil use for older fl eet resulted in a savings of $11,000 IndyGo Inventory software confi gures updates of min-max levels and reorder points based on use history, and techni- cians on the fl oor can order parts from their workstations Only the parts needed are ordered in the quantity needed based on historical use and technicians have 15% more time to work on the fl oor versus waiting at the parts counter Eight Canadian transit systems Agencies have joined together to buy parts as part of an Integrated Planning Forecasting and Replenishment program Bulk/joint purchas- ing through a supply chain consultant has resulted in a savings of 15% on parts from more than 380 different suppliers TriMet Remanufacture rather than recycle worn transmission parts High return on investment and a savings of $250,000 TriMet Use local machine shops to produce light rail parts deemed to be excessive in cost from original equipment manufacturer Hundreds of rubber seals were purchased at signifi cant savings Rockford Mass Tran- sit Division Utilized capital funds to build a body shop and paint booth and now does 95% of its body work in-house Cost of repairs has been reduced from $65 per hour to $36 per hour and elimi- nated mark-up on parts Utah Transportation Authority Contracted for cleaning services for all of its facilities Saved $200,000 per year Multiple agencies Reduced bus washing from every day to only when needed based on weather Reduced use of water and cleaning supplies by up to 50% FIGURE 5 The Engineered Machine Products electrical cooling system for buses that provides a fuel-mileage- effi cient alternative to hydraulic cooling systems (Source: The Oregonian, Aug. 20, 2009). Fuel and Fluids Effi ciencies Lane Transit District (LTD) in Eugene, Oregon, bought a 6-month supply of diesel fuel when the price was low in 2009 and stored it in a secure fuel tank facility that had excess capac- ity. When diesel prices escalated, LTD began to use the stored fuel instead of buying at the market rate. While the strategy resulted in a relatively short-term benefi t, LTD was able to pro- tect at least $250,000 of fi xed-route service that would other- wise have had to be eliminated. In the event of an emergency that cuts off fuel supplies, LTD is assured of a source (assum- ing delivery is possible). Should market prices drop again or look as though they will spike, capacity exists to add to the stored fuel. The fuel is stored in a secure off-site facility and the purchase price included delivery. Stored diesel fuel has a shelf life of approximately 18 months, which can be extended with additives and by mixing in newer fuel (D. Hellekson, CFO, Lane Transit, personal communication, Feb. 25, 2010). Puradyn’s oil fi lter systems were installed in two buses at Palm Tran in West Palm Beach, Florida; they are designed to clean the oil to increase intervals between oil changes. Palm Tran experienced an increase in oil change intervals from 6,000 mi to 18,000 mi on these two buses. The agency also changed from mineral-based transmission fl uid to synthetic in the older portion of its bus fl eet, which extended the drain interval from 12,000 mi to 48,000 mi. This change produced a savings of $11,000 in 2009 (J. Kavaliunas, Maintenance Director, Palm Tran, personal communication, Sep. 1, 2009). Parts and Inventory Management Effi ciencies The Mincom Ellipse system has helped the maintenance team at IndyGo in Indianapolis, Indiana, improve inventory turnover and cost control through improved purchasing practices, the procurement bidding process, and judicious inventory counts resulting from automatic cycle counting. The system also con- fi gures updates of min-max levels and reorder points based on

16 use history. The Associated Parts List function plays a key role in maintenance effi ciency. By pulling parts and kitting them in the shop before work is scheduled, maintenance tasks are expe- dited. As well, the Link-One part ordering system has enabled technicians working on the shop fl oor to order parts from their work stations instead of wasting time waiting at the parts coun- ter. Mechanics have been trained on the new system. Wireless Internet access is now available in the garage and laptops have been stationed to encourage use of this new process. In the past, 15% of staff time could be spent waiting for parts. Now, IndyGo technicians spend more time actually working on vehi- cle maintenance, which allows more productivity in an 8-hour shift. The most obvious benefi t is that less overtime is being accrued to complete maintenance tasks (M. Moles, Director of Maintenance, Indianapolis Public Transportation Corporation (IndyGo), personal communication, Apr. 2, 2010). Eight Canadian transit systems have entered an agreement to join together to buy parts as part of an Integrated Planning Forecasting and Replenishment program that has saved 15% on the price of parts to date and is expected to have many other savings. The consortium retained the services of a supply chain consultant to develop key performance indicators for the eight partnering agencies, which had 26 different types of buses and typically worked with 380 different vendors with 44,500 stock-keeping units. Stock keepers’ processing time can now be diverted to other functions. There is full transparency with all part costs and markup. Vendors like it because of dedicated volumes and predictable manufacturing schedules (29). TriMet has worked with Voith to revise its transmission parts reclaim program. Critical used and worn transmission parts are now put through a remanufacturing process instead of being recycled. TriMet identifi ed parts to be restored to original manufacturing specifi cations that show a high return on investment and saved more than $250,000 as a result of this program (S. Lomax, Acting Executive Director, TriMet, personal communication, Mar. 5, 2010). TriMet’s light rail purchasing staff uses local machine shops to produce repair parts that are determined to be excessive in cost or are diffi cult to obtain (e.g., long lead times). A recent example was a rubber seal that TriMet’s purchasing department determined was too expensive from the original equipment manufacturer for the material involved. After fi rst determin- ing that the seal was not a safety-sensitive part, Purchasing commissioned a local rubber shop to produce an exact dupli- cate for fi rst article testing. Once the new seal was approved by rail maintenance staff, hundreds were ordered for a special overhaul project at signifi cant cost savings (B. deHamel, CFO, TriMet, personal communication, Dec. 28, 2009). Miscellaneous Actions to Reduce Maintenance Expenses • The Rockford Mass Transit Division (RMTD) in Rockford, Illinois, used capital funds to build a body shop and paint booth and now does 95% of its body work in-house. The agency calculates the cost of pay- ing for its own body repair technician at approximately $36/hour; it had been paying an outside vendor $65/ hour. Keeping the function in-house also gives RMTD a better handle on supply cost and eliminates the markup on parts (D. Engelkes, Maintenance Manager, Rockford Mass Transit District, personal communica- tion, Dec. 16, 2009). • While some support functions cost less to do in-house, others are less expensive when contracted out. The Utah Transportation Authority reported savings of $200,000/year when it contracted out cleaning services for its facilities (J. Benson, Chief Operating Offi cer, Utah Transit Authority, Dec. 10, 2009). • The Chattanooga Area Regional Transit Authority reduced the cleaning of administrative and maintenance facilities from 5 days a week to 3 by having staff empty their own recyclables and individual trash receptacles (J. Veron, Director of Planning and Transportation, Chattanooga Area Regional Transportation Authority, personal communication, Dec. 17, 2009). • A number of transit agencies report that they reduce the number of times they wash their buses by adjusting for weather and need. COST-EFFECTIVENESS TECHNIQUES IN ADMINISTRATIVE MANAGEMENT Transit agencies across the country have taken a number of actions to reduce costs associated with computer networks, health care, purchasing, and other administrative func- tions. Samples of the types of actions that have been taken to increase effi ciencies and reduce costs are provided here. Competitive Procurement of Administrative Services The Red Rose Transit Authority in Lancaster, Pennsylvania, sought competitive bids for banking services after using the same bank for more than 10 years. On an annual basis, the authority requires a bank to handle roughly $8 million in various operating funds and grants. By seeking competitive bids, Red Rose saved $25,000. The new bank also picked up the cost of twice-a-week courier service to pick up farebox revenues (D. Kilmer, Executive Director, Red Rose Transit, personal communication, Mar. 1, 2010). Revised Work Week for Administrative Staff The Gainesville Regional Transit System (RTS) administra- tive staff changed from a 5-day to a 4-day, 10-hour-a-day work week. This resulted in $10,000 in cost savings, primar- ily owing to a reduction in utility costs (J. Gomez, General Manager, Gainesville RTS, personal communication, Dec. 17, 2009).

17 information while they are on the road serving customers by going through a secured virtual private network (VPN) pipeline to the Internet. A VPN works as a private Internet tunnel to allow authorized personnel to access corporate information from public domains. It took the agency about 6 months to develop the data warehouse application. The application is transferable to other transit agencies that run similar programs running (e.g., Trapeze, Siemens, GFI, and SAP Enterprise Resource Planning). The application is also fl exible enough to allow agencies that do not run the same programs to redirect the data sources with small modifi ca- tions. In addition, Omnitrans introduced server virtualiza- tion techniques (a combination of Microsoft and VM Ware) Administration Technology Savings Omnitrans in San Bernardino, California, developed an in- house web-based data warehousing application capable of automatically consolidating various data sources from pack- age software such as SAP’s Enterprise Resource Planning, Trapeze, Siemens, and GFI to generate uniform reports and to extract data such as NTD and TransTrack. This ware- housing application saved the agency around $400,000 just on the customized NTD report quoted by a third party vendor. The application also cut the manual process time from more than a few weeks to a few minutes. The web- based application also allows agency employees to look for TABLE 5 SUMMARY OF ADMINISTRATIVE TECHNIQUES TO IMPROVE COST-EFFECTIVENESS Transit Agency Technique Results Red Rose Transit Competitive procurement of banking services Saved $25,000 annually and received free courier service to pick up farebox revenues Gainesville Regional Transit System Changed administrative staff from 5-day to 4-day work week Saved $10,000 in utility expenses Omnitrans Developed an in-house web-based data ware- housing application capable of automatically consolidating various data sources from pack- age software to generate uniform reports and to extract data such as NTD Saved $400,000 in NTD costs alone and cut down manual process time from more than weeks to a few minutes. Also allowed access to remote authorized personnel through a secured Virtual Private Network Denver Regional Transit District Use of “thin client” hardware in place of per- sonal computers Dramatically reduces set-up and maintenance time, uses 10% of the energy used by personal computers, provides three times longer life, and is 90% recyclable Greater Cleveland Regional Trans- portation Authority In-house development of TransitStat, a perfor- mance monitoring program and philosophy Saved $15 million over fi rst 2 years through better analysis of utilities, inventory, accidents, overtime, etc. Bay Area Rapid Transit Opt-out program for employees that can be covered by spouse’s or previous employer’s health care program Providing $100 a month to those who opt out of using health care insurance provided by BART; saved $4 million over 8 years Southeast Pennsylvania Transporta- tion Authority Contracts were ratifi ed that called for union employees to contribute 1% of a 40-hour work week, and management employees to contribute 5% of their premium for health care (Specifi c savings not reported) Akron Metro Hiring a Third Party Administrator for Family Medical Leave Act (FMLA) administration A 15% decrease in the use of FMLA at Akron New Jersey Transit Hired a consultant to hire a consultant to exam- ine the agency’s medical, prescription drug, and dental plans Identifi ed opportunities to reduce the cost of these plans by negotiating a better cost structure Chittenden County Transportation Authority Switched from a premium based co-pay to a high deductible plan Health care cost increases reduced to 0% and 6.7% the 2 years after the switch, with better coverage Stark Area Regional Transit Authority Instituted a Flexible Savings Account savings plans for pre-tax payments of health care costs and established a self-insured layer to hospital- ization care Saved $350,000 per year over previous expenses Hillsborough Area Regional Transit Authority Collected a portion of health care premiums from its employees and made claims payments of $100,000 or less without relying on an insur- ance company beyond administrative services Anticipated savings of $1 million annually based on prior years experience AC Transit Hired third party administrator to address work- ers compensation claims and medical bills Saved $930,000 annually on average Knoxville Area Transit Had workers compensation carrier speak directly to employees on what their stake is in fraud A reduction of their premium for 3 years and expected further reductions in the future Pace Loss portfolio transfer to an insurance company Pace paid the company $5.4 million to accept workers com- pensation and auto liability and was able to reduce the claims reserve by $7.1 million, thereby generating a one-time income recognition of $1.9 million

18 Results are measured weekly as opposed to monthly, quarterly, or yearly (31). Health Care Savings Health care costs have been a major driver of higher transit costs in the past decade. A survey conducted by Deloitte in 2010 and shared during an APTA webinar on December 11, 2012, indicated that 76% of all employers say health care cost containment is one of their fi ve top strategic challenges. Transit agencies have been very active in identifying ways to continue to provide quality health care while costs are rising and revenues are often declining. The following are some actions they have taken: • The Bay Area Rapid Transit (BART) district in Oakland, California, offered employees and retirees $100 a month if they voluntarily opted out of the dis- trict’s medical benefi ts plan, if they were covered under the plan of a spouse or previous employer. This action saved the district $4 million over 8 years (Dorothy Dugger, General Manager, BART, personal communi- cation, Mar. 30, 2010). • In many transit agencies, employees were required to contribute a greater share of their salary toward health care benefi ts. At the Southeastern Pennsylvania Transportation Authority (SEPTA), union employees who have ratifi ed contracts contribute 1% of a 40-hr work week, and management employees contribute 5% of their premium (D. Layton, Operating Budget Specialist, SEPTA, personal communication, Nov. 23, 2009). • Akron Metro in Ohio hired an expert in Family and Medical Leave Act (FLMA) management and experi- enced a 15% decrease in the use of FMLA. New Jersey Transit hired a consultant to examine the agency’s medical, prescription drug, and dental plans to iden- tify opportunities to reduce the cost of these plans by negotiating a better cost structure with the benefi ts manager (M. Lihvarcik, Acting Chief Financial Offi cer and Treasurer, New Jersey Transit, personal communi- cation, Nov. 23, 2009). • The Chittenden County Transportation Authority (CCTA) in Burlington, Vermont, switched from a premium-based co-pay to a high deductible plan and reported savings of approximately $300,000. The agency’s health care increases were 0% and 6.7% in the fi rst 2 years after switching plans, and the health insur- ance product provides broader coverage to employees. Under CCTA’s old plan, medical plan benefi t expenses increased more than 25% in both years (C. Cole, General Manager, CCTA, personal communication, Feb. 24, 2010). • The Stark Area Regional Transit Authority in Ohio instituted a fl exible savings account plan for pre- tax payments of health care costs and established a self-insured layer for hospitalization care; it to consolidate the number of servers; so far, they have been reduced from 75 to 57, with a goal of reducing the number to 12. The reduction of physical servers saves the agency approximately $500,000 every 5 years on server replace- ment costs, and reduces energy consumption and physical data center space usage. Server virtualization also shortens the disaster recovery time from 3 days to less than an hour. By introducing virtualization technologies from vendors such as Microsoft and VM Ware, any company can signifi - cantly reduce recovery time from days to hours, assuming the company has the workable hardware available for recov- ery. Virtual technology employs what is called “snapshot” technology in conjunction with a dynamic resources assign- ment capability to make quick recovery a reality (W. Tsuie, Director of Information Technology, Omnitrans, personal communication, Nov. 30, 2009). Thin Client Work Stations The RTD in Denver, Colorado, is using “thin clients” rather than personal computers to eliminate hard drives and save all information to central servers. A thin client, formerly known as a “dummy terminal,” today is a compact piece of computing technology that accesses data remotely through a connection to a server and brings a virtual desktop to the user. This dramatically reduces setup and maintenance time, uses 10% of the energy used by personal computers, pro- vides three times longer life, and is 90% recyclable (30). Management by Data Analysis The Greater Cleveland Regional Transportation Authority (GCRTA) in Ohio created TransitStat, a performance moni- toring program/philosophy. Based on similar systems estab- lished by the New York City Police Department and the city of Baltimore, Maryland, it requires managers, as a team, to use information systems to defi ne, measure, analyze, improve, and control operations, and links performance to the author- ity’s business strategies and goals. The management team, representing all disciplines in the agency, meets weekly or biweekly for performance-monitoring forums. These meet- ings are chaired by the executive director and assisted by a dedicated budget analyst who uses off-the-shelf software from Microsoft to track performance trends in virtually any area of the agency. These meetings ensure that the people needed to address issues are at the table and are jointly devel- oping solutions. Between 2008 and 2010, TransitStat helped develop cost savings totaling nearly $15 million. The follow- ing are examples of the variety of savings identifi ed: • Inventory reduction—$750,000 • Lighting retrofi ts—$499,912 • Reductions in towing expenses—$252,000 • Electrical savings—$1,000,000 • Overtime savings—$4,399,501 • Health care audit—$1,000,000.

19 saved $350,000/year over previous expenses (C.A. Kuczynski, Director, Finance & Administration, Stark Area Regional Transit Authority, personal com- munication, Mar. 1, 2010). • After paying $5.4 million more in premiums to insur- ance companies than it paid in employee claims over 5 years, the Hillsborough Area Regional Transit Authority (HART) in Tampa, Florida, decided to become self- insured in 2011. The agency collected a portion of health care premiums from its employees and made claims payments of $100,000 or less without relying on an insurance company beyond administrative services. This move made fi nancial sense for HART (32). Workers’ Compensation Savings A number of agencies reported that they hired a third party with special expertise to help address the diffi cult issues associated with workers’ compensation claims and medical bills. AC Transit in Oakland, California, hired a consulting fi rm that specializes in monitoring workers’ compensation and reviewing all medical billings received by self-insured public agencies. The attention to detail and the challenging of charges being assessed to the agency has saved an aver- age of $930,000/year for AC Transit (K. De Stigter, Chief Human Resource Offi cer, AC Transit, personal communica- tion, Mar. 4, 2010). Knoxville Area Transit (KAT) in Tennessee has seen a reduction in workers’ comp claims by doing some small things to raise employee awareness. KAT invited the work- ers’ compensation carrier in for safety meetings. The carrier focused on the employee stake in fraud and how each case affects each employee. The carrier also talked to the employ- ees about cost and how that affects their paychecks. As a result, most employees take workers’ compensation more seri- ously, and some employees have reported others they thought were “playing the system.” KAT experienced a reduction in its premium for 3 years and expected further reductions in the future (C. Reynolds, Director of Risk Management, Knox- ville Area Transit, personal communication, Nov. 23, 2009). Loss Portfolio Savings A loss portfolio transfer (LPT) is a method in which one party transfers future claims payment obligations (for one or more past annual periods) to another party for a fi xed sum. The difference between an LPT and an annual insurance program is that an LPT is for past periods and an annual insurance program is for events yet to occur. The seller of the portfolio is able to remove some liabilities from its bal- ance sheet. Properly done, an LPT is one of the few prod- ucts in insurance that can be a win-win deal for both parties. Pace in Arlington Heights, Illinois, transferred the liability for all workers’ compensation and auto liability claims that occurred from 1984 through 1998 to an insurance company. Pace paid the insurance company approximately $5.2 mil- lion to accept the liability and was able to reduce its claims reserve by $7.1 million, thereby generating a one-time income recognition of $1.9 million. The following are some of the reasons the insurance company could accept the liabil- ity for substantially less than the amount of Pace reserves: • Pace’s return on its investments is much lower than the insurance company’s earnings. The insurance company can earn substantially more because it does not have the restrictions on investments that a government agency has. • The liabilities assumed by an insurance company are often transferred to an offshore captive, with lower reserve requirements than those in the United States. This allows the insurance company to use part of the premium for other business purposes. • Certain tax issues benefi cial to an insurance company are not available to Pace, and certain regulatory requirements cause losses to be of some value to an insurance company (T. Brannon, Manager of Planning and Development, Pace, personal communication, Apr. 3, 2002). COST-EFFECTIVENESS TECHNIQUES THROUGH STRATEGIC USE OF FACILITIES AND GREENER UTILITIES Transit agencies have engaged in a variety of actions to help generate new revenue from strategic use of their facilities and properties beyond allowing advertising on them. Examples include performing vehicle maintenance work for profi t for other agencies, charging for parking under guideways, leas- ing rights-of-way along rail corridors and tunnels to telecom- munications companies to install fi ber-optic cable, selling surplus property or charging rent for the use of property being held for future development, and charging the fi lm industry for access to transit facilities and equipment (33, p. 4). Leasing Rights-of-Way A number of agencies have leased space along their rail lines or tunnels to the telecommunications industry to allow the installation of fi ber-optic cable, resulting in millions of dol- lars in new revenue. Miami-Dade Transit leased space under its elevated rail line to a supermarket that needed additional parking spaces (33, p. 39). Managing Excess Offi ce Space One of the silver linings for transit agencies that have had to downsize owing to tight fi scal constraints is that they might have excess offi ce space that provides opportunities to consolidate. This can result in either reduced rental pay- ments or the ability to rent space out to others. New Jersey Transit was able to consolidate functions and staff, allow- ing it to vacate one fl oor of its corporate headquarters and

20 save $500,000 (M. Lihvarcik, Acting Chief Financial Offi - cer and Treasurer, New Jersey Transit, personal communica- tion, Nov. 23, 2009). The Chicago Transit Authority (CTA) will make $8.1 million over 15 years by leasing 21,770 ft2 of excess space on the 11th fl oor of CTA headquarters to the National Able Network, a nonprofi t organization that offers workforce development programs, counseling, training, and job placement services to veterans, low-income adults, and others (34). At SEPTA, the lease of railroad station buildings and space at the 1234 Market Street headquarters building generated $7.5 million in fi scal 2009 (D. Layton, Operating Budget Specialist, SEPTA Finance Division, personal com- munication, Nov. 23, 2009). Leveraging Parking Facilities for Revenue Many transit agencies in the United States own parking facilities that serve transit riders and sometimes other pur- poses. The Massachusetts Bay Transportation Authority (MBTA) decided to securitize the parking facilities at more than 100 locations by selling bonds secured by future park- ing revenues. In essence, this entailed selling to investors the long-term income associated with nearly 50,000 parking spaces in exchange for a lump-sum payment to the agency that could be used to reduce MBTA debt payments (35). Utilities Savings Utilities can also provide major potential cost savings for transit agencies, as well as reductions to the agencies’ car- bon footprints. Ozark Regional Transit in Arkansas saved 25% on its annual electric/natural gas bill by converting to fl uorescent lighting, adding a waste oil heater to an indoor wash rack, and replacing the exterior administra- tion building windows and adding awnings (P. Pumphreys, General Manager, Ozark Regional Transit, personal com- munication, Dec. 15, 2009). The Santa Clara Valley Transit Authority (VTA) in San Jose, California, installed solar panels at three bus maintenance yards to save money on utilities and reduce carbon emissions. Through a “power purchase” agreement with the panel manufacturers and Wells Fargo, VTA did not have to purchase the panels but will buy the electricity produced by them at rates expected to save $2.7 million over 20 years. The panels will provide shade for the buses parked underneath and will remove the same amount of greenhouse gases as planting 10,000 acres of trees (36). Understanding Electrical Rate Structures and Managing Accordingly Connecticut Transit lowered its electricity rates by agreeing to run building generators when general demand for power is high. Local utility companies provide very advantageous rates to customers who are willing to run generators during peak demand periods (33, p. 142). Long Beach Transit (LBT) in California requested energy and material audits through various outside organizations, such as Southern California Edison, Los Angeles Water TABLE 6 SUMMARY OF TECHNIQUES TO IMPROVE COST-EFFECTIVENESS THROUGH STRATEGIC USE OF CAPITAL FUNDS AND GREENER FACILITIES Transit Agency Technique Results Multiple rail agencies Leasing rights-of-way of rail corridors for plac- ing fi ber-optic cable or other uses Can generate millions of dollars in lease fees New Jersey Transit, Chicago Transit Authority, and Southeast Pennsylva- nia Transportation Authority Managing excess offi ce space due to reduced staff Savings or revenue of approximately $500,000 per year at NJT and CTA, and more than $7 million in revenue for SEPTA Massachusetts Bay Transportation Authority Securitizing parking facilities by selling to investors the long-term income associated with nearly 50,000 parking spaces Received a lump sum payment that can be used to reduce debt payments Santa Clara Valley Transit Authority Entered a “power purchase” agreement with solar panel manufacturers and Wells Fargo to cover bus maintenance yards Did not have to purchase panels and will save more than $100,000 per year for 20 years on utility bills Connecticut Transit Purchased generators and agreed to run them when general power demand is high Receives advantageous rates from local utility company Long Beach Transit Had utility and materials audits conducted by sup- pliers of electricity, water, and waste management Saved $50,000 per year through lower rates for electricity, rebates, and recycling Pinellas Suncoast Transit Authority Using solar-powered trash compactors at transit centers that reduce the number of pick-ups required and communicate electronically Saves $9,000 per year through more effi cient maintenance activities Southeast Pennsylvania Transporta- tion Authority Clean offi ces during the day to diminish need for lights at night, motion detection light switches, fi lm on south facing windows, using LED lights when possible Has experienced a 12% reduction in energy use with associ- ated reductions in energy bill Southeast Pennsylvania Transporta- tion Authority Installation of a wayside energy storage device at substations Savings of $190,000 a year and the opportunity to earn thou- sands of dollars in revenue by selling stored power

21 FIGURE 7 Solar trash compactors in Pinellas County, Florida, reduce the frequency of required trash removal. Other Green and Energy-Saving Initiatives SEPTA initiated a number of changes at its headquarters build- ing to help save $100,000 annually in utility bills (38). Offi ce cleaning schedules were changed to daytime to eliminate the need for most lights to remain on after hours. In addition, the agency installed motion-detection light switches, more effi - cient chillers and boilers, and less energy-hoggish elevators and escalators. Film has been applied to southside windows to eliminate the sauna effect the sun was having on offi ces and the need for power-hungry fans to beat the heat. SEPTA is also testing light-emitting diode (LED) lighting in some areas of its headquarters for possible use throughout the entire building, as well as at its train stations and bus depots. The agency is also considering whether to use the Market Street roof to capture wind power. These changes have contributed to a 12% reduc- tion in energy use at SEPTA (39). The agency has increased its commitment to energy effi ciency through a recently released Energy Action Plan that could save more than $2 million a year through reductions in energy use alone, with additional ben- efi ts expected. Included in the plan is a fi rst-of-its-kind wayside energy storage device, funded by a state grant and installed at a power substation on the Market–Frankford Line, projected to save SEPTA up to $190,000 a year on energy costs and generate thousands more in new revenue as the stored power is resold on the energy market. A newly installed propulsion control system on the Broad Street Line has made subway operations more effi cient and cut power costs by nearly 13%. The plan aims to leverage these savings to help fi nance much-needed capital improvements, many of which are on hold indefi nitely owing to funding cuts (C. Baker, Kansas City Area Transportation Authority, personal communication, Feb. 23, 2010). COST-EFFECTIVENESS TECHNIQUES IN TRANSIT MARKETING OF ADVERTISING OPPORTUNITIES Marketing includes many functions. Clearly, it involves market analysis to identify potential riders and the develop- Department, and Waste Management. All the audits were free and identifi ed adjustments that could be made to main- tenance plans and contracts that have saved the agency more than $50,000/year. Electricity plans were changed and work was shifted to lower-rate tiers, reducing the agency’s bill by more than 15%. LBT changed its Southern California Edi- son rate plan to a “Base Interruptible Program.” In the event of an overload on the grid, the agency is required to immedi- ately shut down electricity and use its emergency generator. Charges for this rate program are based on time-of-use, with evening usage being the lowest cost. The agency shifted its heavy-use work—which includes trap cleaning and steam cleaning—to the evening. LBT discovered and applied for rebates available for programs getting ready to start and received more than $17,000 in 2010. The agency also real- ized an annual savings of more than $30,000 by empha- sizing a recycling program. Solar-based irrigation clocks were installed that automatically contact a weather station to receive watering schedules and provide better input for maintenance, reducing overall water use (J. Rentino, Main- tenance Analyst, Long Beach Transit, personal communica- tion, Feb. 22, 2010). Solar Trash Compactors An example of making transit facilities more energy effi cient and inexpensive on a smaller scale has been implemented by the Pinellas Suncoast Transit Authority in St. Petersburg, Florida, which has installed solar-powered trash compactors at its transit centers to reduce the need for costly trash pickups. Sensors inside the solar-powered trash cans keep track of how full they are and trigger a compaction cycle when needed. Once the can is full and can no longer be compacted, it sends an e-mail to PSTA’s Facilities Maintenance Department tell- ing staff it’s ready to be emptied. This real-time notifi cation allows crews to pinpoint pickups and make their rounds with greater effi ciency, saving the agency $9,000 per year (37). FIGURE 6 Some transit agency facilities are prime candidates to collect solar power from panels placed above maintenance yards or transit centers, such as these at Akron Metro purchased with federal capital grants (Source: Akron Metro website).

22 ment of strategies to inform people of available services and attract them. For the purposes of this report, marketing also includes the sale of advertising space on vehicles, in facili- ties, and almost anywhere else a pair of eyes or ears might notice. There have been many successful programs to sell space on buses, trains, and transit stops and stations, but the opportunities for companies to benefi t from the exposure they can receive through transit have mushroomed in recent years. Every dollar collected through such programs helps transit agencies avoid fare increases or tax increases needed to support their system. The following are some examples of recent, innovative methods to make money from the sale of advertising. Onboard Audio Advertising The Kansas City Area Transportation Authority (KCATA), working with a company called Commuter Advertising, is one of a small but growing number of transit agencies in the country generating new advertising revenue for transit sys- tems by means of location- and time-based audio/visual mes- sages using existing annunciation systems on board transit vehicles. There were no start-up costs for KCATA. In addi- tion to advertisements, the audio information that is broad- cast includes the announcements of reroutes, snow alerts, and schedule changes. The ads are uploaded about every 10 days, and the staffperson who handles stop announcements on board buses takes care of the upload. KCATA is reimbursed for its minimal hours by Commuter Advertising, which claims they have made hundreds of thousands of dollars for clients including the Greater Dayton Regional Transit Authority, Toledo Area Regional Transportation Authority (TARTA), Champaign-Urbana Mass Transit District, Rockland County Department of Public Transportation, Pace, and the Jackson- ville Transportation Authority. KCATA will receive 40% of all revenues, with an expectation of receiving $60,000 in the fi rst year and higher amounts in the future. The audio ads open up opportunities for smaller businesses that might not be able to afford print or other electronic media advertising. With audio ads, businesses can purchase specifi c stops and specifi c times of day for a modest cost. The buses’ global positioning systems trigger brief announcements on the interior public address systems as the vehicles pass an advertiser. The ads might advise riders that a particular shop is offering a special that day to passengers. National fi rms have also expressed interest. While a few people have complained about the audio ads, transit agency representatives report that there have been no strong objections to the program (40). Announcements TABLE 7 SUMMARY OF TECHNIQUES IN TRANSIT MARKETING OF ADVERTISING OPPORTUNITIES Transit Agency Technique Results Kansas City Area Transportation Authority, Greater Dayton Area Tran- sit Authority, and Jacksonville Trans- portation Authority Onboard audio advertising on buses that pro- vide news, transit information, and advertising Revenues ranging from $60,000 to more than $100,000 per year at small and midsize transit agencies, with no cost to install New York City Transit, Chicago Transit Authority, and Big Blue Bus of Santa Monica LED advertising panels on the street side of buses Still being tested, potential to triple advertising revenue due to fl exibility to change messages and be seen at night TriMet, New York City Transit, Greater Cleveland Regional Trans- portation Authority, and CTA Selling the naming rights to streetcar stations, BRT lines, major subway stations, and vehicles Revenue has ranged from $500 a month for streetcar stops to $250,000 a year for BRT lines to $4 million (one time) for major rail stations Valley Transit (Phoenix), Denver RTD, and Caltrain Wrapping advertising on light rail and com- muter rail vehicles Income has ranged from $100,000 to $600,000 per year Metropolitan Atlanta Regional Trans- portation Authority, and Santa Clara Valley Transportation Authority Selling ads on the agency website Santa Clara received $15,000, but expects, as do other transit agencies, to earn more given the high level of traffi c Massachusetts Bay Transportation Authority Leasing space for billboards on transit property facing major roads Agency has earned more than $1 million in revenue and expects more Massachusetts Bay Transportation Authority Contract for an online store carrying MBTA items such as mugs, T-shirts, etc. The store raised $35,000 for MBTA in its fi rst month Chicago Transit Authority Digital ad space at transit stations and on bus exteriors Guaranteed a minimum of $3.3 million for all 5 years of a base contract with the Titan advertising company for digital ads on 92 displays at 17 rail stations and on 25 buses Chicago Transit Authority Groupon pre-purchased 250,000 3-day passes paying CTA $1.8 million upfront. Each pass is sold for $7.53 wholesale and offered to Groupon members for $9 instead of the regular price of $14 This brings an immediate infl ux of capital and hundreds of thousands of potential new riders to expand CTA’s rider base Chicago Transit Authority Partnering with online grocery stores accessible through cell phone applications at transit stations No reports of revenue realized, but this also allows customers to make better use of commute time Chicago Transit Authority Vending machines and ATMs at transit stations Redbox Videos provides CTA with 7% of revenues and fi nancial institutions are paying almost $1 million annually for space for ATMs

23 Sale of Naming Rights An increasing number of transit agencies are earning new revenues by selling the naming rights to stations, routes, and vehicles. TriMet has sold the naming rights to Port- land, Oregon, streetcar stops to local businesses for $500 a month, generating about $250,000 a year. In Portland, stops are identifi ed by street names as well as sponsors. The busi- nesses get their names on each side of the stop shelter and in an audible announcement inside each car when it reaches the stop. TriMet also sells sponsorships of the cars them- selves for $25,000 a year. The Chicago Transit Authority let Apple reserve naming rights to a station in exchange for $3.9 million in station renovation money, and Philadelphia’s SEPTA sold a station’s naming rights to AT&T for $3 mil- lion over 5 years (44). New York’s Metropolitan Transporta- tion Authority sold the naming rights for a subway stop in Brooklyn for $4 million to Barclays Bank, whose name is also on the nearby Barclays Center sports arena (45). The Greater Cleveland Regional Transportation Authority sold the naming rights (The Healthline) to its Bus Rapid Transit route on Euclid Avenue to area hospitals served by the line for $6 million dollars, to be paid at a rate of $250,000 a year for 24 years (Figure 9). Rail Advertising Wraps Buses wrapped in advertising have been generating revenue for transit agencies for many years, but only recently have rail cars been used for such purposes (Figure 10). Valley Transit in Phoenix and the Denver Regional Transit District have recently sold the rights to place ads on the exterior of trains. Original estimates for revenue have been substan- tially exceeded and now top $600,000 a year for Valley Transit (46). In Denver, the largest ads cover the entire side of a light-rail car (88 ft long) and 10% of each window. For safety, ads cannot be placed on the bays in the car’s front and back. RTD was scheduled to receive $1.6 million in 2012. The monthly rate for a full-side ad per car is $4,900, exclud- ing production (47). Caltrain in San Carlos, California, has collected approximately $100,000 annually in revenues for selling advertising space on the exterior of its commuter rail cars (48). Alcohol Advertising Many transit agencies are allowing alcohol to be advertised on buses and trains because of the substantial revenue that can be gained. While there was some concern about nega- tive community reaction, most major urban areas are fairly immune to this form of advertising. For bus systems, some have reported that they try to not place ads for alcohol on routes in close proximity to schools or churches (H. Foose, Public Information Offi cer, Metro Light Rail, Valley Transit, personal communication, Mar. 27, 2012). CTA allows alco- hol ads on trains but not on buses, and not at stations where will override advertising as needed. TARTA was scheduled to receive 30% of revenue from the audio ads during the fi rst 2 years, and 35% after that (no revenue estimate was available) (40). The Southwest Ohio Regional Transit Authority in Cin- cinnati, Ohio, also decided to add broadcast advertising inside Metro buses, a move that could generate as much as $200,000 in revenue for the transit system in the next 3 years (41). Hill- sborough Area Regional Transit in Tampa, Florida, has also contracted with Commuter Advertising, with projected rev- enue of more than $460,000 over a period of 5 years (42). Digital Exterior Advertising Digital advertising using LED lights on the sides of buses is being tested in a number of cities, including New York, Chicago, and Santa Monica, California. The digital light boards, similar to digital billboards facing many highways, are installed only on the sidewalk-facing side of the buses, and the advertisements freeze while buses are on the free- way, so that drivers of other vehicles aren’t distracted by fl ashing lights. Companies are able to buy ad space on the boards, which can cycle through ads every 2.7–10 seconds. Members of the risk management departments in Chicago and New York reported that they hadn’t seen any increase in accidents. The advantage of digital advertising is that mes- sages can be changed as often as the agency likes and can be programmed for maximum effect by time of day. The elec- tronic sign is visually appealing and visible during evening hours as well as daylight hours. With all of this new capa- bility, the digital boards have the potential to increase ad revenues fourfold. Early estimates put the fi gure at almost $6 million for Santa Monica’s Big Blue Bus (43) (Figure 8). However, the digital panels are quite expensive ($50,000+) and carry some risks, such as damage should an accident occur, and the implementation of these signs remains limited to major markets such as New York and Chicago. FIGURE 8 Digital LED ad signs on the side of buses are more visible at all times of day and night and are programmable to allow more ads to be shown and more revenue to be earned (Source: Suja Lowenthal, Santa Monica Big Blue Bus).

24 students make up more than 7.5% of riders (49). Selling ads for alcohol products is expected to generate $1.2 million additional dollars for CTA. FIGURE 10 Light rail and commuter rail trains that are fully wrapped with vinyl advertising are highly visible and very attractive to a number of businesses (Source: Metro Magazine, December 2012). New Ad Opportunities Transit agencies seem to be selling advertising opportunities on every surface that might be seen by a suffi cient number of people to be of interest to companies looking to promote their products. • The Massachusetts Bay Transportation Authority (MBTA) is selling space on its Charlie Card (50). It is also selling ads for its website, which has a half million unique visitors per month (51). • The Metropolitan Atlanta Regional Transportation Authority (MARTA) has partnered with Municipal Media to run rotating advertisements at the top and bottom of its webpage and is exploring additional opportunities with other vendors in order to maximize its earnings. The pilot is estimated to generate about $1,000 to $5,000 a month for MARTA at no cost to the authority (52). • Many agencies have sold space on their system maps to earn suffi cient revenue to pay for the cost of producing the maps. • Some agencies are selling space for vinyl ads on the fl oors of their buses (53). • MBTA has earned more than $1 million by leasing space for billboards on property it owns that faces major highways. In addition to selling space on its vehicles and facilities, MBTA has created an online store, MBTAgifts.com, which sells myriad transit- touting items, including magnets, mugs, notebooks, greeting cards, and even fl ip-fl ops printed with a map of the subway. The store raised $35,000 for the MBTA in the fi rst 30 days it was open. Operation of the store is contracted out, and MBTA receives a percentage of everything sold (54). • Some of the nation’s larger transit agencies sell the rights for advertisers to engage in “station domina- tion,” in which an entire station becomes an enormous ad. This tactic allows advertisers to blanket a station FIGURE 9 Cleveland’s Healthline, which operates on the corridor that serves the heart of the city including the major hospitals and downtown (Source: Wikipedia).

25 with a variety of ads promoting the same product (e.g., decals on the platforms, ads wrapped around columns, and posters hanging from the shade canopies) (55). • Interactive touchscreens are being used to bring in rev- enue in ways that can also assist passengers navigate the transit system (Figure 11). A project by the New York City MTA and the innovation fi rm Control Group plans to bring interactive high-defi nition displays to the subway stations. These screens will display ads but also show real-time information, such as a countdown to the next train, delays, service updates and outages, and a subway navigation map that will show users how to get to any sta- tion they tap (56). The Chicago Transit Authority is guar- anteed a minimum of $3.3 million for all 5 years of a base contract with Titan advertising company for digital ads on 92 displays at 17 rail stations and on 25 buses (mentioned earlier under digital advertising on bus exteriors) (57). Transit Fare Media Sales CTA is partnering with Groupon, the deal-of-the-day web- site that has an estimated 36.9 million active customers and nearly 900,000 daily page views. This exposure allows CTA to advertise to a national and international audience. The part- nership offered discounted 3-day passes to riders, marking the fi rst-ever partnership between the Chicago-based daily deal site and a U.S. transit agency to sell fare media, accord- ing to CTA. Groupon prepurchased 250,000 three-day passes and paid CTA $1.8 million up front. Each pass is sold for $7.53 wholesale and offered to Groupon members for $9 instead of $14, the current price of a 3-day pass. The offer has a limit of four per person. Groupon will own the cards it purchases until they are sold and is responsible for selling the passes. This brings an immediate infl ux of capital and hundreds of thou- sands of potential new riders to expand CTA’s rider base (58). Partnering for Online Shopping at Transit Stations A new way of advertising at transit stations not only earns transit agencies revenue but also allows commuters to spend their time more usefully while waiting at stations. Transpor- tation media sales company Titan, online grocery store com- pany Peapod.com, and transit agencies have partnered to use ad space at major stations to more closely engage riders dur- ing their commute (Figure 12). Peapod launched more than 100 sites at commuter rail stations in Boston, Connecticut, New York, New Jersey, Philadelphia, Washington, D.C., and Chicago. The virtual store technology features billboards with grocery “aisles” on the train platforms. Commuters with iPhones, iPads, or Android phones scan a QR code on the billboards to download a free PeapodMobile app and shop by scanning bar codes of the products displayed in the aisles. After registering on the Peapod website, commuters can use the time they are riding on the train to make selections from the online store and schedule home deliveries for the next day, or days or even weeks later. Once on the PeapodMobile app, customers have access to more than 11,000 products (59). Vending Machines and ATMs Another passenger convenience that also brings in addi- tional revenue to transit agencies is the provision of vending machines at popular stations. CTA passengers can now rent a fi lm or video game at some rail stations. The installation of FIGURE 11 High-defi nition interactive displays that provide passenger information will also display ads at highly traveled train stations (Source: SmartPlanet.com, Mar. 20, 2013).

26 Redbox kiosk machines is the result of feedback from the pub- lic about what amenities riders want at CTA facilities (Figure 13). Redbox pays CTA a $35 monthly fee to cover electricity costs at each station, and CTA receives 7% of rental revenues (60). CTA has also expanded concession agreements with fi nancial institutions for placement of ATMs at rail stations. The fi rst phase of the ATM enhancement program will gener- ate approximately $4.7 million over a 5-year period beginning in the second quarter of 2010. CTA is negotiating with other fi rms for further expansion of the ATM program, which will generate additional income (E.K. Gaynor, General Manager, Budget and Performance Management, Budget and Capital Finance, CTA, personal communication, Feb. 26, 2010). FIGURE 12 Transit passengers in many cities can make more productive use of their commute time by taking advantage of virtual grocery shopping at major stations (Source: Metro Magazine, Jan. 2013). FIGURE 13 Vending machines for popular items bring convenience to transit passengers in Chicago and rental revenue to the CTA (Source: Chicago Tribune, Dec.19, 2011). IMPROVING TRANSIT EFFECTIVENESS THROUGH NEW FINANCING AND FUNDING Property tax and sales tax revenues continue to be the primary source of funding for most transit systems in the United States. However, a few communities have recently received approval from taxpayers to establish new types of revenue to support transit operations. Vehicle Registration Fees In 2010, taxpayers in Marin County, California, approved a $10 increase in vehicle registration fees, which will gener- ate more than $2 million to be divided among many trans- portation-related projects, with transit collecting 35% of the revenues. This new source of funds did not replace existing revenue sources and passed with 60% of the vote (61). Transportation Utility Fees In Corvallis, Oregon, the community voted in favor of the establishment of a transportation utility fee (TUF) to pay for its transit system. Starting in February 2011, a TUF of $2.75 was assessed to single-family residential customers’ bills each month. The fee for transit operations replaced the portion of the city’s general fund (property taxes) previously dedicated to transit, making those funds available for other uses, such as the library, parks and recreation, and police and fi re departments. It also insulates the transit fund from possible cuts to the general fund to deal with the city’s $3.1 million revenue shortfall. In addition to the fee being dedi- cated to transit, the city made the transit system fare-free and immediately saw a 40% increase in ridership (62). Gas Taxes In December 2009, the General Assembly of Rhode Island approved increasing the motor fuel tax by 2 cents to generate almost $9 million a year, which has all been provided to the Rhode Island Public Transportation Authority. The author- ity had been running a $12 million budget defi cit, and offi - cials were considering cutting service by 20% to stay solvent through the fi scal year. That would have meant eliminating 4.7 million trips per year, and eliminating and reducing bus routes. The Sierra Club and the Save the Bay environmental groups provided signifi cant support in the passage of this new revenue stream (63). Sales Taxes on Purchases Made over the Internet Virginia recently approved a landmark transportation bill that assumes $258 million in tax receipts from online sales— about 65% of which would go toward infrastructure and abolishing the state gasoline tax. Maryland is also relying on this new source of revenue, if approved by the United States Congress. The state plans to apply online sales tax revenue toward offsetting an increase in its own gas taxes. Plans call for phasing in a hike of 20 cents per gallon between now and 2016, but about 7 cents of that could be offset by Internet sales taxes. If Congress does not pass the Marketplace Fair- ness Act, both states will be left with revenue shortfalls in

27 is based on the size of the development at the permit stage and the number of anticipated transit trips. Service must be spread throughout the 10 districts using the county’s ser- vice standard of providing bus trips every half hour (66). Although it has taken a great deal of careful planning to develop the transit concurrency system, and it is not a pana- cea for limited funding, it has generated more than $4 mil- lion for transit operations and capital projects. Tapping Alternative Revenue Sources The Port Authority of Allegheny County received support from an unexpected source in 2012 when the Allegheny Regional Asset District (RAD) board unanimously approved a $3 million allocation to PAT, a move that helped unlock millions more in state aid so the fi nancially strapped transit agency could avoid grievous cuts. Traditionally, RAD has supported libraries, cultural facilities, parks, and stadiums. However, the executive director of RAD persuaded the board that transit is an asset in its own right, supporting many of the other cultural assets that RAD subsidizes. This was not intended to be an ongoing source of support for transit but to help it manage while looking for other, more permanent sources of funds (67). Private Activity Bonds Public-private partnerships are common in other coun- tries but fairly rare in the United States. These partner- ships between a private entity and a government agency are entered into to accomplish something that neither party alone could do; they spread the risks and costs for new proj- ects between public and private parties. The private part- ners enter such agreements to earn a profi t over time. The programs already approved in state budgets. In Maryland, drivers would be hit with the full 20 cent hike in gasoline taxes. “They’re going to get the money they want for trans- portation,” said Stephen Lee Davis of Transportation for America, “whether it’s coming through the Internet sales tax or not.” The consequences for Virginia will be a little more extreme. Instead of abolishing its gas tax as planned, the state will reverse course and raise it. Both states intend to supplement existing levels of transit investments with these new revenues (64). Developer and Employer Impact Fees The city of Boca Raton in southeast Florida developed a cre- ative way to raise money for public transportation by requir- ing developers and employers to contribute to its cost. City offi cials refer to “voluntary contributions” whereby large employers are asked to make annual or one-time contribu- tions if they are on a route that transports their employees or customers. “Voluntary” contributions are also part of devel- opment approvals. Based on either the square footage of developments or the amount of traffi c they would generate, developers contribute a certain amount to the city’s shuttle service. In return, developers get a break in other areas, such as the amount of parking they would have to provide. These fees provide approximately 24% of the revenues necessary to operate the service, which is seen as consistent with the city’s sustainability goals (65). Broward County, Florida, has been a leader in using impact fees for transit, for both capital and operating pur- poses. Broward County essentially overlaid a transit impact fee program on a Florida road impact fee program structure. The fee is assessed in 10 transit concurrency districts and TABLE 8 SUMMARY OF NEW FUNDING AND FINANCING TECHNIQUES TO GENERATE NEW REVENUE SOURCES FOR TRANSIT Transit Agency Technique Results Marin Transit Increase in annual vehicle registration fees of $10 Marin Transit collects 35% of the revenue generated, which resulted in $700,000 in 2011 Corvallis Transit System Transportation utility fee replaced revenue from property taxes Resulted in slightly more revenue and insulated revenue for transit from reductions in the general fund Rhode Island Public Transportation Authority Motor fuel taxes were increased by two cents statewide $9 million additional dollars were generated and dedicated to the state transit system, avoided a 20% cut in service Transit agencies in Virginia and Maryland Sales taxes on purchases made over the Internet Both states intend to supplement existing levels of transit investments with these new revenues Boca Raton Circulator Developer/employer voluntary contributions Annual or one-time contributions are made as part of the development review process, paying for 24% of the system costs Broward County Transit Impact fees are assessed for new developments as part of a “concurrency” system Fees collected can be used for capital or operating purposes; over $4 million has been collected Port Authority of Allegheny County (PAT) Financial support from the Allegheny Regional Asset District (RAD), a special-purpose area- wide unit of local government that supports regional assets PAT received $3 million in an unrestricted grant from RAD that also leveraged million of additional state and federal funds Denver Regional Transit District Public-private partnership to help fi nance the Eagle P3 light rail expansion project Private activity bonds were sold demonstrating the potential that exists to use private sector participation in transit projects

28 public partner is able to leverage its limited funds to attract private investment for a capital project that is likely to be done more quickly, and therefore less expensively, with pri- vate partners often retaining the responsibility for design, building, operating, and maintaining a transportation facil- ity. The Denver RTD successfully sold private activity bonds for its Eagle P3 light rail expansion, demonstrating the potential that exists to use private-sector participation in transit projects (68). Surcharges on Tickets to Large Events San Francisco Supervisor Scott Wiener has called on the city to study what a ticket surcharge of $1–$3 on tickets for large events would mean for the San Francisco Municipal Transit Agency’s funding. Early numbers suggest that such a fee on music and sporting events could bring in somewhere between the low millions and the tens of millions of dollars, depending on the price and the size of the events to which the surcharge applied. Sporting events and large concerts add riders to the system and can add stress to local transit agen- cies, especially when those events coincide with the morning or evening commutes or other high-traffi c scenarios. This method of raising new revenue for transit has not yet been approved but is being considered in San Francisco and some other cities (69). IMPROVING TRANSIT EFFECTIVENESS THROUGH PARTNERSHIPS Given the constraints that transit agencies have felt in terms of revenues from traditional sources, many of them seek to leverage their resources by forging new partnerships that bring nontraditional sources of support. These partnerships allow transit agencies to provide services or facilities where they would not otherwise be affordable or feasible. Private- sector partners have included shopping malls, business parks, museums, hotels, major employers, hospitals, casinos, and associations of businesses that pay partially or fully for new service. Public-sector partners include military bases, universities, public schools, transportation management associations, downtown development authorities, conven- tion centers, social service agencies, and cities that help pay for new or extended service. These agreements not only help pay for new hours of service but can also allow opportuni- ties for transit agencies to restructure service in parts of the community (33, p. 6). These partnerships can also improve the transit agency’s image and relevance in a community, and can result in improved quality of service for passengers. Partnering with Major Employers An excellent example of a nontraditional partnership exists between the Monterey-Salinas Transit agency (MTS) in California and the Presidio military base in Monterey. This service is intended to meet the transportation needs of students, faculty, and staff of the Presidio of Monterey (a military training base) who commute to work or school from the communities on the Monterey Peninsula and from Salinas and San Jose on weekdays (Figure 14). The service, which includes 12 new or redesigned commuter routes, is fully integrated with existing bus service, operates on fi xed schedules, and uses established bus stops (70). The mili- tary base was becoming overwhelmed with private vehicles and, with security concerns becoming more prominent, the Presidio leaders wanted to fi nd transportation alternatives for those who worked at the base. While the transit service funded through the agreement is intended to primarily address the needs of the personnel on the base, it is open to TABLE 9 SUMMARY OF PARTNERSHIP TECHNIQUES TO IMPROVE COST-EFFECTIVENESS Transit Agency Technique Results Monterey–Salinas Transit Agreement with the Presidio military training base in which base personnel used the Federal Transit Bene- fi t/Transportation Incentive Program $1.5 million was made available to pay for 12 new routes pri- marily benefi tting the military base, but open to the general public Intercity Transit Partnership to provide vehicles to a nonprofi t employment agency that expands mobility for peo- ple seeking employment and job training “Village Vans” has provided more than 42,000 trips and 94% of clients have found employment, reducing the need for spe- cialized transportation Lake Erie Transit Partnership with the local Road Commission to build a new biodiesel fueling station The fueling station is nearby the transit agency allowing easy access to more affordable alternative fuel Massachusetts Bay Transportation Authority Provision of Wi-Fi capabilities on board MBTA trains Wi-Fi will be installed at no cost, benefi ting passengers and providing advertising revenue for the private partner Santa Clara Valley Transportation Authority Allowing private paratransit contractor to move from a leased facility to a facility transferred to SCVTA from the county sheriff SCVTA paratransit expenses were decreased by $250,000 per year Santa Clara Valley Transportation Authority Agreement with farmer to let his sheep and goats graze on SCVTA property not yet developed Saved $14,000 per year in fi eld maintenance and herbicides Broward County Transit Interlocal agreements with 20 municipalities to provide local circulator service with minibuses and partial operating funding provided by BCT Broward County Transit has been able to straighten out its county routes and let cities provide local circulator services, resulting in reduced costs and increased ridership

29 the public as well. The full hourly costs associated with this service, which amount to more than $1.5 million annually, is paid by the Federal Transit Benefi t/Transportation Incen- tive Program established by Executive Order 13150 through the Department of Transportation; the commuter service is being used by approximately 1,000 military base person- nel (H. Harvath, Assistant General Manager, Finance and Administration, Monterey-Salinas Transit, personal com- munication, Feb. 18, 2010). FIGURE 14 Monterey–Salinas Transit has been able to expand its service in the community through a partnership with the Presidio Military Training Base (Source: Metro Magazine Dispatches, June 26, 2013). Partnering with Nonprofi t Agencies Intercity Transit in Olympia, Washington, partners with a program called Village Vans, which provides transporta- tion assistance for low-income residents pursuing employ- ment and job training (Figure 15). Transportation can also be provided to child care centers or food banks that can help stabilize people’s lives. The drivers of the vans are trainees; they are not paid but receive work experience, job search coaching, and skill-building lessons. Intercity Transit pro- vides the vans, and grants provide the majority for operating expenses. Since it started in 2002, 94% of all trainees have found successful employment. This program has the strong support of 20 community service organizations and has pro- vided more than 42,000 trips since its inception (71). Partnering with Other Public Agencies Lake Erie Transit (LET) in Michigan partnered with the Monroe County Road Commission (MCRC) to build a new biodiesel fueling station that will reduce the transit agency’s operating expenses by enabling it to purchase biodiesel and save on fuel costs. The station was built on MCRC prop- erty. The partnership allowed MCRC to upgrade its existing fueling station and provided LET with a nearby, affordable biodiesel fueling location. By collaborating, the two agen- cies met their needs and avoided potential duplication in the future. Compared with traditional diesel, the use of biodiesel will save thousands of tons of exhaust emissions that cause smog and acid rain, as well as particulate matter (72). FIGURE 15 Nonprofi t agencies such as Village Vans can complement services provided by transit agencies and help keep costs for specialized transportation low (Source: Bus Ride Magazine, May 2010). Broward County Transit (BCT) in Florida has reached agreements with 20 of the 30 cities in the county to mini- mize meandering routes that serve condominiums and other facilities that are off the grid system (Figure 16). BCT leases (for $1 a year) minibuses to the cities and provides techni- cal assistance in terms of scheduling, while the cities operate the minibuses with their own personnel or through contracts that they manage. This has allowed BCT routes to stay on the major roads, providing faster and more direct service that helps to build ridership. The cities provide more customized service in their communities, which allows people to get to the front door of a shopping center or condominium. BCT provides approximately half the operating cost for the city cir- culators, which is 75% less than the amount it would cost BCT to provide the service itself. All city circulators are required to connect with BCT routes at the nearest transfer center. Hence, the circulators serve as feeders to and distributors from the county system, thereby increasing mobility and transit rider- ship and minimizing the fi rst mile/last mile challenge many transit passengers face. The city circulators also help reduce the cost of paratransit service, because the circulators can often accommodate the needs of people with disabilities (33). Partnering with Private-Sector Entities The Massachusetts Bay Transportation Authority (MBTA) will be seeking bids and a partner to install enhanced Wi-Fi capability at no cost to enhance the amenities that more than 50,000 passengers can enjoy on trains, ferries, and at select commuter rail stations (Figure 17). The enhanced Wi-Fi ser- vice would be a win-win-win proposition: the MBTA will

30 have the capability installed at no cost, passengers will be able to enjoy its benefi ts at no cost, and the successful bid- der will get an advertising and commercial partnership with MBTA. The New York Metropolitan Transportation Author- ity (MTA) pursued a similar partnership for its wireless net- work in the Grand Central Station and Park Avenue tunnels, as well as on Metro-North trains and the Long Island Rail- road, at no cost to the MTA. The arrangement is expected to provide signifi cant improvements in customer service, rail- road operations, and emergency management, and improve radio communication for operating department employees, the MTA Police, and other fi rst responders (73). FIGURE 16 Broward County Transit’s community bus program has resulted in more extensive customized service in 20 different cities at very low cost to the transit agency because of partnerships with the cities (Source: Broward County Transit). FIGURE 17 Transit agencies are seeking partnerships to have Wi-Fi installed in their trains and express buses to enhance passenger amenities while also generating revenue at no cost to the transit agency (Source: Sarah Fisher/Daily Free Press Staff). The Santa Clara Valley Transportation Authority (VTA) in San Jose, California, was able to decrease paratransit expenses by approximately $250,000 per year by moving the contractor’s operating facility from its leased facility to a location already being leased at no cost to VTA as a result of a property use exchange with the County Sheriff (J. Smith, Chief Financial Offi cer, VTA, personal communication, Jan. 6, 2010). VTA also engaged in a very low-tech but effi cient and green way to maintain the grounds on one of its properties: VTA welcomed a herd of sheep and goats to graze at the Cerone Division dur- ing the spring months, at no cost to VTA (Figure 18). Allow- ing the sheep and goats to graze reduced the need to mow the fi elds several times and reduced the need to apply herbicides to control the growth of vegetation. VTA saved approximately $14,000 by partnering with these professional grazers. FIGURE 18 VTA uses a low-tech method to save money by partnering with a local sheep farmer to maintain open fi elds at one of their properties (Source: Joseph Smith, CFO, VTA).