Transforming Public Transportation Institutional and Business Models (2012)

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10 c h a p t e r 2 To expand and update previous research in the area of fundamental change, the research effort conducted as part of this study relied on extensive interviews with public trans- portation organizations that had recently undergone funda- mental change. Four simple, qualitative criteria were used to screen and select agencies to study based on readily available information and with the goal of identifying appropriate and diverse examples of change: 1. Each type of potentially transformative change, as defined below, should be represented. 2. The scope of changes to be examined should be significant. 3. The consequences of the changes, actual or anticipated, should be positive. 4. There should be a greater rather than a lesser degree of transferability among the cases selected. The case study research relied in large part on the perspec- tives of those who manage and work for the transit agencies explored. In some instances, the research team also conducted interviews with individuals from outside of the organization who were involved in the process of change at some level. The case studies represent a point in time, and the research team expects that some of the changes highlighted in the research may be seen in a different light in the future. Despite these acknowledged limitations, the cases studied in this research highlight a number of consistent and transferable lessons. 2.1 Types of Transformative Change Table 2.1 provides a typology of the categories of changes considered “transformative” in their nature, scope, and con- sequences. The categories are an expansion of the dimensions of change that were first suggested in TCRP Report 97 (Stanley et al., 2003). Past experience in exploring fundamental orga- nizational change has revealed important lessons with respect to the types of change being considered: 1. Institutions involved in “transformative” change seldom experience change in only one of the dimensions noted; more often, changes take place across several of these dimensions simultaneously. 2. “Transformative” change is shaped by context, such as circumstances, history, evolving governance philosophies, and leadership, as well as future institutional strategies. 3. Accomplishing “transformative” change does not depend on accomplishing the types of changes noted in any specif- ic order. For instance, wholesale adoption of new informa- tion technologies may trigger changes in organizational structure, roles and responsibilities, and vice versa; formal mission shift may trigger new collaborative and integra- tive actions and vice versa. 2.2 Scope of Transformative Change Regarding the scope of change, “transformative” change and innovation refers to change that is more extensive than incremental changes in standard or traditional business prac- tices, moving toward broader adoption within the industry of what might be viewed as “emerging” conventional practices. Transformative changes are “directed,” or forward-looking, institutional changes and innovations that set future bench- marks for an entire industry. While crises of various sorts played a role in driving the changes in some of the agencies studied, it is important to look beyond changes that are largely crisis-driven or reac- tionary in nature. In the case of the U.S. transit industry, the most prevalent and persistent crisis affecting agencies of all sizes is inadequate resources. For many of the orga- nizations studied in this research, the perception may be that change was triggered by a funding crisis, but, in fact, the plans and roadmap to change were in place prior to the financial crisis. In these instances, the financial crisis sim- ply provided a trigger to move forward with transformative change. Defining Examples of Transformative Change

11 2.3 Consequences of Transformative Change In defining what constitutes “transformative” change and innovation, it is important to consider the consequences of the changes made by an agency or organization. The full conse- quences may not be clear for some time following the introduc- tion of transformative change but may include, among others: • Heightened recognition of the “relevance” of the services offered; • Increases in non-single occupant vehicle (SOV) use; • Increases in service availability, convenience, or variety of service options; • Reduced cost to the customer or to the taxpayer; • Improved operational efficiency or service reliability; • More streamlined decision-making processes; • Enhanced access or flexibility in the use of resources; • Positive impact on community goals; and • Enhanced political and community support. 2.4 Change Explored in Case Studies While the reasons and approaches for change vary widely, the 14 organizations studied in this research exemplify the significant potential for change that exists within the public transportation industry. In many of the regions examined, the change that happened was so fundamental as to transform the reach and role of multiple transportation organizations, including transit operators and regional planning agencies. Table 2.2 provides a brief summary of the change evaluated in each case study and the consequences of the change. In all of the case studies, change occurred over a number of years, and more often over the course of more than a decade. Detailed descriptions of all 14 case studies are included in the appendix to this report. Mission Shift Transit service delivery TO transportation, environmental, and land use steward role Narrow focus on transit service TO broad focus on “mobility” and “access” Asset-oriented mission TO customer-oriented mission Operations-oriented mission TO quality-oriented mission Funding Adapting to new and broader sources of revenue and financial support Addressing threats or uncertainty surrounding existing funding sources Responding to increased accountability or expectations related to existing or new funding sources Governance Enhanced regional role and/or regional coordination Enhanced or modified governance structures Changes in oversight role of governing body Measuring Goal Achievement Integration of customer quality measures with operational and budget measures Integration of measures of community goals (e.g., sustainability and livability) with customer, operational, and budget measures Resource Management Innovation in generation of resources and revenues and their use Application of performance measures in policy, budget, and operating decisions Innovation in capital and infrastructure management Enhanced private sector participation Retooled Workforce and Organization Innovation in human capital management, including public/private model Renewed focus on recruiting/retention, training, and succession planning Addition of new capabilities, skills, and capacity Revised/realigned roles and responsibilities Collaboration and Integration Collaboration across modes, jurisdictions, and programs Collaboration across organizations (public and private) Integration of assets (public and private) such as facilities and equipment Integration of financial and human resources Integration of operational, managerial, and decision-making roles Technology Applications Adoption of state-of-the-art information technologies Implementation of real-time data and customer service applications Changes in information access and use policies and procedures Application of enhanced asset management Table 2.1. Types of transformative change.

12 Transit Agency Change Evaluated for Case Study Consequences of Change Advance Transit (NH/VT) Shift in service to target choice riders in collaboration with regional institutions and other area partners. These new partners needed the new service to meet changes in institutional locations and resulting travel patterns. The agency now plays a key role in regional mobility and serves the needs of major regional institutions. Service now attracts more choice riders (54 percent) compared to 10 years ago (25 percent) and is the second largest in New Hampshire as measured by ridership. Capital Area Transportation Authority (CATA) (Lansing, MI) Shift from operational mission guided by experience and intuition to one based on collaboration, integration, and partnering using data-based planning and management. An enhanced partnership with Michigan State University (MSU) encouraged the change to a more analytical approach. Decisions are now based on a more analytic framework with a shift from an annual to a long-term planning horizon. As a result, the agency has increased ridership and sustained strong public support as measured by approval for property tax millage renewals or increases. Champaign- Urbana Mass Transit District (C-U MTD) (Champaign- Urbana, IL) Agency fully embraced technology with a supporting change in the organizational structure. C-U MTD has completely transformed its communication approach with real- time information delivered through multiple means. Resulted in improved customer satisfaction, an improved perception of reliability, continued community support, and high levels of customer satisfaction. The transition to using one data set for stop times and locations also has improved the accuracy and efficiency of scheduling. Charlotte Area Transit System (CATS) (Charlotte, NC) Agency changed from a bus operator serving the city with relatively static service to a regional multimodal service provider. Shift involved governance changes and an increase in internal staff capacity with business involvement and collaboration to push for change. Between 1998 and 2010, CATS increased service by more than 75 percent, expanded its service area, opened its first light rail line, expanded commuter bus service, and more than doubled ridership. Local land use decisions are now coordinated with transit investments. Chittenden County Transportation Authority (CCTA) (Burlington, VT) Agency changed its role from serving a single jurisdiction to serving multiple counties. Most expansion occurred through the takeover of other systems, which was required to protect existing services that were in The agency improved service and increased efficiencies through the merger of several operating agencies. By taking responsibility for an expanded service area, the agency transitioned from providing crisis. service in a single county to serving a five-county region with a wide variation in service type. Metropolitan Transit System (MTS) (San Diego, CA) Change involved integration of transit operations with a shift of all planning and development functions to the regional metropolitan planning organization (MPO). Operations planning and support functions later moved back to the transit agency with long-term planning remaining at the MPO. The transformation of agency roles has allowed the transit agency to focus on operations while the San Diego Association of Governments (SANDAG) manages other decision-making responsibilities. MTS restructured most of its service, increased bus ridership 12 percent, and improved the farebox recovery ratio from 25 percent to 43 percent. SANDAG now leads the region’s emphasis on complex multimodal transportation projects. Table 2.2. Agency case studies.

13 Table 2.2. (Continued). Metropolitan Transportation Authority (MTA) (New York, NY) Decades after the consolidation of different operating agencies, MTA has centralized a number of duplicative business service functions that were previously delivered independently by each of the operating agencies. Transition to centralized delivery of business services allowed for a significant reduction in staff and, over the long term, will allow the agency to focus on ways to further improve its approach to these activities. Metro Transit (Minneapolis/St. Paul, MN) Change in the region involved creation of a new body to facilitate regional funding for transit. The change involved a shift in responsibility for funding and decision-making from the state to the region. The creation of the Counties Transit Improvement Board (CTIB) increased the Twin Cities region’s capacity to develop large-scale, federally funded transit projects. Since its creation in 2008, CTIB has authorized about $500 million in grants and has supported securing about $1.5 billion in federal funds. Regional Transportation District (RTD) (Denver, CO) Agency changed its focus from moving vehicles to moving people in a continuing evolution in business model and organization. Change was supported by new strategies in partnering and in resource use to increase the availability and effectiveness of service. The agency did so while reducing the associated public subsidy per trip. Partnering and cost-sharing arrangements adopted to meet its new people-moving mission have allowed RTD to meet its service standards, minimize per-trip subsidies, carry on a major capital expansion program, and sustain a high degree of political and community support. San Francisco Municipal Transportation Change involved consolidation of multimodal responsibilities, including roadways, parking, bicycle planning, Efforts to manage limited road space using various modes have begun to take better advantage of Agency (SFMTA) (San Francisco, CA) pedestrian planning, and taxi regulation for the entire city-county transportation network into one agency governed by a single policy board. the inherent capabilities of each mode in meeting market needs. Combined responsibility has brought greater funding flexibility and offers the prospect of continued improvements in service, access, and mobility. Southeastern Pennsylvania Transportation Authority (SEPTA) (Philadelphia, PA) The agency instituted an enhanced emphasis on customer service with corresponding organizational changes to reinforce the focus. The agency also now focuses on non-users as key stakeholders. Customer service ratings have improved significantly since the new customer service initiative began. There has been a steady change in front-line interactions with customers. TransLink (Vancouver, BC) The agency changed from a transit operator to a regional multimodal organization with land use authority. The shift in role happened as the province moved away from its role as the provider of regional transportation services with a corresponding emphasis on regional delivery. Ridership has more than doubled since 1999, bus service hours have increased by 40 percent, and the agency has constructed two rail lines. The region’s transit mode split increased from 10 percent to 12 percent between 1999 and 2011, customer service ratings reached record levels in 2010, and land use density has increased in transit corridors. Transit Agency Change Evaluated for Case Study Consequences of Change (continued on next page)

14 Utah Transit Authority (UTA) (Salt Lake City, UT) The agency transitioned from a regional bus operator to one that operates bus, light rail, and commuter rail services. Change happened with active community collaboration to build political support, an effort to build institutional capacity, and a change in the role of the board. A market that was once made up primarily of captive riders is now estimated to be approximately 70 percent choice riders, and annual ridership has increased from 24 million in 1998 to 39 million in 2010. Washington (Statewide) Washington State DOT shifted its role from grants manager responding to funding requests to an active manager of intercity bus with innovative financing approaches. Under the new business model, the state contracts for identified services rather than responding to specific subsidy requests. The change has resulted in a complete statewide intercity bus network with limited public subsidies and now serves as a model for other states. Transit Agency Change Evaluated for Case Study Consequences of Change Table 2.2. (Continued).