Transforming Public Transportation Institutional and Business Models (2012)

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30 Case Studies This appendix provides summaries of each of the 14 case studies conducted for this research effort. The agencies stud- ied were the following: • Advance Transit, NH/VT • Capital Area Transportation Authority (CATA), Lansing, MI • Champaign-Urbana Mass Transit District (C-U MTD), Champaign-Urbana, IL • Charlotte Area Transit System (CATS), Charlotte, NC • Chittenden County Transportation Authority (CCTA), Burlington, VT • Metropolitan Transit System (MTS), San Diego, CA • Metropolitan Transportation Authority (MTA), New York, NY • Metro Transit, Minneapolis/Saint Paul, MN • Regional Transportation District (RTD), Denver, CO • San Francisco Municipal Transportation Agency (SFMTA), San Francisco, CA • Southeastern Pennsylvania Transportation Authority (SEPTA), Philadelphia, PA • TransLink, Vancouver, British Columbia • Utah Transit Authority (UTA), Salt Lake City, UT • Washington State Intercity and Rural Bus Program Each of the case studies provides detail on the process by which the organizations listed above undertook change, with the goal of providing more detail for those interested in the specifics of how individual agencies achieved change. The research team focused predominantly on why organizations changed and how they accomplished change, with careful attention to transferability of processes. Case studies were conducted using a mix of telephone and in-person interviews and a review of available docu- mentation on the change that occurred. Interviews typically involved representatives from the transit agency or former representatives of the transit agency who were involved in the change process. In some cases, the research team interviewed outside stakeholders for a broader perspective on the process. For each of the case studies, the research team sought the following: 1. The “before and after” of the agency. 2. An understanding of why change happened. 3. A clear description of what changed. 4. If there were multiple elements of change, an understand- ing as to which of these elements came first, with the goal of identifying the degree to which one element of change promoted or led to others. 5. Detail on how the agency and people involved accom- plished the change, including involvement from those outside of the transit agency. 6. An understanding of the overall timeframe for change with key decision points or actions that allowed change to happen. 7. Clarity on the expectations for the extent of change prior to initiation of the effort. 8. An understanding of barriers faced by the agency in the process and how those involved in the change process moved beyond these barriers. 9. Information on what is left to be done. A p p e n d i x

31 Advance Transit, NH/VT Case study FoCus: Transition of a rural agency from exclusively serving captive riders to having a broader role through institutional partnership Type and Nature of Transformation There are two areas of focus for this case study. The first area of focus is a shift in vision from a typical small-town transit provider focused on the needs of transit-dependent riders to a more aggressive, proactive transit provider that is able to provide a level of service appealing to choice riders. The mind-set shifted from survival to “how do we get to where we want to be.” The second area of focus is that of collaboration and is more evolutionary. Advance Transit has always had community partners, but it has taken these partnerships to a higher level, which includes direct route sponsorship by the region’s two major institutions, as well as partnerships with municipal partners and private sponsors, and contributions from over 1,000 philanthropic donors. This institutional and municipal support allows Advance Transit’s fixed routes to operate fare-free. Table 2 provides a summary of the types of change made at Advance Transit. Reasons for the Change and How It Happened In the late 1980s, Advance Transit was operating in “sur- vival mode” according to the agency’s director. Like many rural transit programs, it had limited resources and required a line of credit to get through the typical cash-flow issues experienced by grant-funded agencies. The director and the board came to the realization that to maintain a successful program, the agency would need to take on a more proactive role in several areas, including planning, infrastructure devel- opment, and fundraising. Table 3 provides a summary of the forces leading to change at Advance Transit. Within a decade, Advance Transit transformed from an organization that almost exclusively served captive riders and struggled to meet annual financial needs to one that serves a significant number of choice riders and has strong part- nerships throughout the community. Advance Transit has taken partnerships to a higher level, including direct route sponsorship by institutions, municipal partners, and private sponsors, and contributions from over 1,000 philanthropic donors. Background Advance Transit is a private, non-profit agency that was cre- ated in 1984 to provide public transportation for the Upper Valley areas of New Hampshire and Vermont, including the Vermont townships of Norwich and Hartford and the New Hampshire municipalities of Hanover, Lebanon, Enfield, and Canaan. While the area is officially designated as rural, the presence of the two major institutions creates a significant ridership base for Advance Transit. Dartmouth College has a total enrollment of approximately 6,000 students, and the Dartmouth-Hitchcock Medical Center employs over 9,300 people. Advance Transit is governed by a board of directors that includes representatives from each of the municipalities served as well as representatives from local institutions, including Dartmouth College, the Dartmouth-Hitchcock Medical Center, and the Upper Valley Lake Sunapee Regional Planning Commission. Advance Transit’s stable, long-term leadership has been provided by the same executive director since 1987. Table 1 provides an overview of Advance Transit’s basic agency characteristics as well as the basic community characteristics of the Upper Valley. Characteristic Value Service Area 273 sq. mi Service Area Population 47,095 Annual Passenger Trips 841,864 Annual Revenue Miles 585,440 Annual Operating Expenses $3.0 million FY2009 Capital Expenses $1.8 million Source: 2009 National Transit Database. Table 1. Agency characteristics. Type of Change Primary or Secondary Mission Shift Secondary Funding and Governance Primary Measuring Goal Achievement Resource Management Secondary Retooled Workforce and Organization Secondary Collaboration and Integration Primary Technology Applications Table 2. Types of transformative change represented.

32 Planning and Infrastructure Development Advance Transit’s first major planning effort was con- ducted in the early 1990s in response to the agency’s need for an administrative, operating, and maintenance facility. The agency was awarded a technical assistance grant from the Community Transportation Association of America (CTAA) to conduct a facility study. The study’s completion came at an opportune time, as for the first time federal transporta- tion legislation allowed flexing of highway funding to transit projects (a provision of the Intermodal Surface Transporta- tion Efficiency Act of 1991, ISTEA). The Vermont Agency of Transportation (VTrans) agreed to flex the necessary fund- ing from its federal highway funds to fund Advance Transit’s facility, which resulted in the construction of the facility on the Vermont side of its service area. The expanded facility has been silver certified by the Lead- ership in Energy and Environmental Design (LEED) system and features solar panels on the roof. The solar energy har- nessed by these panels qualified Advance Transit to partici- pate in a feed-in tariff (FIT) program, through which the agency can sell its power to the grid at a higher cost-based rate. Advance Transit obtained a Certificate of Public Good from the state as an energy producer and earns about $10,000 per year from the panels. According to the director, if Advance Transit had not had the facility study in place, it would not have been able to capitalize on this new funding opportunity. Although this step preceded the agency’s recent transforma- tion, it highlighted the value of establishing visions and plans should funding opportunities arise. Service planning is also a key feature of Advance Transit’s proactive approach. Advance Transit keeps its 5-year Transit Development Plan current, as is required by VTrans, and uses this plan to implement potential service ideas when funding opportunities arise. Advance Transit has a capital plan in place that has pro- vided direction for the capital campaign. The current plan included the recent facility expansion that features environ- mentally friendly building designs, as well as a plan to upgrade the fleet to diesel electric and hybrid vehicles to improve air quality. This capital plan has been largely implemented using American Recovery and Reinvestment Act (ARRA) funds. Community Partnerships and Fundraising Concern for the future economic health of Advance Transit led the staff and board to research ways to broaden the rev- enue base of the agency. While planning has been critical for Advance Transit and has allowed the agency to take advan- tage of various grants, the economic reality of rural public transportation is that there generally are not enough funds to meet area needs. Advance Transit has used the following mechanisms to broaden its revenue base: • Community Partnerships. Advance Transit’s major insti- tutional partners provide $1.6 million annually toward its $4.5 million operating budget. This revenue supports high- frequency shuttle service geared toward Dartmouth Col- lege and the Dartmouth-Hitchcock Medical Center. This partnership was a business decision for the institutions, pro- viding a parking and transportation solution for the Medi- cal Center. The major facility location created new transit needs for this key regional employer. These transit services are open to the public and help provide a much higher level of public transportation than normally exists in a rural area. The expansion of service to support the new facility was a key component of the agency’s shift to serve a market beyond captive riders. • Sponsorships. A business will pay Advance Transit to spon- sor a vehicle in a manner similar to advertising. Advance Transit currently receives about $40,000 per year in spon- sorships. • Philanthropy. As a private non-profit agency, Advance Transit is permitted to conduct fundraising campaigns. About 5 years ago, the staff and board began to focus on philanthropy as a way to broaden the revenue base. Advance Transit now employs a part-time philanthropy develop- ment director. Advance Transit currently has a donor base of about 1,000 individuals/businesses and raises about $100,000 per year through its philanthropic program. This philanthropic effort has raised the community’s awareness of the public transportation services provided and helped broaden political support for the organization. It is more difficult to cut the agency’s budget when local donors sup- port its operation. Consequences of the Transformation Funding partnerships have expanded, and the agency has raised its profile within the community and is now considered a critical part of the local transportation system. Advance Transit’s shift from status quo survival mode to proactive visionary mode has resulted in a transit program that car- ries the second largest number of passenger trips per year in Funding and Finance New Technology Demographics and Society Sustainability, Energy, and Environmental Concerns Travel, Land Use, and Development Patterns Infrastructure Conditions Table 3. Forces leading to change.

33 Lessons Learned The Advance Transit case study provides a number of key lessons: • A proactive planning program is critical when looking for financial support, be it from governmental, institutional, or private sources. Well-researched capital, service, and financial plans provide justification for and a greater under- standing of the specific projects for which Advance Transit is seeking support. • The development of a philanthropy program takes resources and requires a long-term commitment and effort. While philanthropic donations do not generate enough revenue to supplant municipal or institutional funds, these programs can have the effect of broadening the awareness of and polit- ical support for a transit agency. • The process of building community partnerships requires direct involvement of the executive director. There must be staff support to run the transit program so that the execu- tive director can be free to attend related events and build critical relationships in the community. • Institutional partners are interested in the bottom line and a partnership arrangement must be a good business decision in order for them to participate. the state of New Hampshire (second only to the program at the University of New Hampshire). Over the past decade, ridership has more than doubled, and the proportion of choice riders has increased from just one in four to over half of all riders. The agency’s planning efforts also have allowed them to take advantage of numerous grant oppor- tunities that might not have been feasible without sound plans in place. The nurturing of community partnerships also has contrib- uted to the success of the program, as the major institutions and municipalities could have chosen other ways to meet their mobility needs, but instead chose to work with Advance Tran- sit to provide a comprehensive public transportation program for the region. Their contributions have allowed the routes to operate fare-free, which has promoted ridership, decreased traffic congestion and the resulting air quality problems, and decreased the demand for parking. While it is still a relatively small portion of the agency’s overall revenues, Advance Transit’s philanthropy program is becoming fully established and is helping the agency with its local matching fund needs. The program also affirms that Advance Transit is proactive in seeking out all avail- able funding opportunities, which is helpful when discuss- ing revenue needs with local municipalities and community partners. Capital Area Transportation Authority (CATA), Lansing, MI Case study FoCus: Collaboration on a data-based business model and a client focus The transformation that has taken place at the Capital Area Transportation Authority (CATA) is one of fundamen- tal change in the authority’s business model driven largely by collaboration. By combining CATA services with those oper- ated by Michigan State University (MSU) and by including an MSU presence on the CATA board of directors, the CATA business model has shifted from traditional service plan- ning and delivery guided by the experience and intuition of senior managers, to a business model based on collabora- tion, integration, and partnering using data-based planning and management. Background CATA began service in the Lansing area in 1972 following enactment of state-enabling legislation. CATA is governed by a 10-member, appointed board of directors and two non- voting members representing outlying Ingham County and MSU. CATA has approximately 300 employees, including approximately 200 vehicle operators. The Capital Area Transportation Authority’s 33 fixed routes are operated through two transportation centers serving downtown Lansing and MSU and a separate administra- tive facility. A variety of other services are available, includ- ing “Limited” or commuter bus services on three routes, advance reservation curb-to-curb services in four outlying areas, “Spec-Tran” ADA paratransit services, “Clean Com- mute” carpool matching and vanpool programs managed in partnership with many of the region’s employers, and Emergency Ride Home (ERH) service for Clean Commute participants. Table 1 provides an overview of CATA’s transit services as well as the basic community characteristics of the Lansing, Michigan, area.

34 Type and Nature of Transformation The focus of this case study is how collaboration among agency and university partners led to a more data-driven busi- ness model supported by improved information systems as well as expanded services and service arrangements, significant ridership increases, and broader sustained support across the community. The partnership that has evolved has shifted the CATA mission and internal philosophy to focus on service to clients and to view clients as full partners in service design and delivery. In addition, because CATA is supported by a property tax paid by all residents, community members are viewed as “stockholders” who should have maximum access to the ser- vices they support. In support of this philosophy, CATA has embraced a policy of no ADA complementary paratransit trip denials within the funded area. Table 2 provides an overview of the kinds of change that have occurred at CATA. With respect to governance, the consolidation brought to CATA a non-voting board member from MSU. The academic administrative influence has helped to increase attention to CATA performance based on data and analysis. This shift, in turn, launched efforts to upgrade technology and manage- ment systems. With this change in governance perspective, key processes have been transformed as well. Rather than present the board with proposed budget assumptions each budget cycle, staff facilitates discussion of 5-year assump- tions for categories of expenditure and programs, and the board debates and adopts assumptions to be used in build- ing the budget. These assumptions, in turn, determine what increases, if any, should be pursued in major categories as well as why and how available resources must be allocated. In this way, the board has a primary role in building the budget and necessary revenue streams. Goal achievement is defined more broadly since the con- solidation. In addition to traditional operating-based per- formance measures, CATA’s performance is now measured on the basis of the scope of services it provides, the breadth of the partnerships in which it is engaged, increases in the reliance on CATA across the community, heightened levels of public (and political) support at the ballot box, and the extent to which the board role remains focused on major policy decisions rather than operational detail. Collaboration and integration are now taking place with an number of entities, including CATA, MSU, the cities of Lansing and East Lansing, and local developers. Examples include the following: • Development of the MSU-CATA transportation center, in part, using excess funds for development of the downtown Lansing transportation center; • Expansion of an MSU commuter lot using federal capital, the ongoing operation of which is supported through an annual payment to CATA from MSU to offset the operat- ing costs of the CATA in downtown Lansing; and • Contracts with off-campus housing that assess developers for CATA services, as required by the city of East Lansing as a condition of development. With respect to technology applications, the consolida- tion of CATA and MSU services resulted in MSU influencing CATA to pursue state-of-the-art information technologies more aggressively as a core strategy to enhance data-driven planning and management. As a result, new information sys- tems have been introduced to support financial management, operations, maintenance, human resources, and paratransit. The system elements are linked and fully integrated. CATA’s use of these new systems to more efficiently schedule and cover bus operator planned and unplanned time off is esti- mated to save $800,000 annually. Reason for the Change and How It Happened Prior to 1998, CATA and MSU operated separate transit systems. Up to this time, CATA had periodically expressed interest in integrating or combining operations. With the Type of Change Primary or Secondary Mission Shift Secondary Funding Governance Secondary Measuring Goal Achievement Secondary Resource Management Retooled Workforce and Organization Collaboration and Integration Primary Technology Applications Secondary Table 2. Types of transformative change represented. Characteristic Value Service Area 136 sq. mi Service Area Population 277,316 Annual Passenger Trips 11.4 million Annual Revenue Miles 5.7 million Annual Operating Expenses $36.0 million FY2009 Capital Expenses $4.9 million Source: 2009 National Transit Database. Table 1. Agency characteristics.

35 arrival of a new Vice President for Operations at MSU, the case for consolidation of CATA and MSU services was made and accepted by both parties as a sound “business” decision. The agreement included CATA’s purchase of MSU’s buses. The terms of the transition and the current service con- tract with MSU includes a “demand test” clause for routes serving MSU whereby new services are tested for 30 days. If use averages 15 passengers per hour or more, MSU will allow service to continue operating and fully support the allocated cost. Several key elements stood behind the transformation that has taken place at CATA: 1. Expanded collaborative ventures, including: the consoli- dation of CATA and MSU services; formal service agree- ments involving CATA, local governments, and local developers; and the addition of an MSU representative to the CATA board. 2. Introduction of a data-based management orientation and business model to CATA from MSU partners. 3. Implementation of an integrated, organization-wide net- work of state-of-the-art information technology to sup- port more data-driven planning and decision-making. These strategies coupled with necessary attention to strong growth in the university and regional markets have helped make CATA both more effective and more responsive in serv- ing the region and more relevant to the entire community. The transformation described is the product of over a decade of evolution in governance, policies, and procedures. This change has happened during a period of extraordinary sta- bility and continuity among both staff and board members. Table 3 provides a summary of the forces leading to change at CATA. Consequences of the Transformation The transformation described above has produced several important consequences: • From an operational standpoint, the act of integrating MSU services as part of the CATA system created a synergy throughout the community that has allowed the system to blossom, with ridership on the combined system growing from 4.5 million trips per year to over 11.0 million since the consolidation with MSU campus service representing 3 million. • From a budget and financial standpoint, CATA has been able to support service expansion and improvement as well as creative new service initiatives and business arrangements. • From a customer and community standpoint, CATA has sus- tained strong political and popular support as measured by strong public approval (57 percent to 72 percent) for 10 of 11 5-year property tax millage renewals or increases since 1983. Lessons Learned The CATA case study provides a number of key lessons: • Industry experience and intuition in planning and man- agement may no longer be sufficient to sustain success- ful transit planning and operations; the “business case” must be regularly examined on a data-driven basis, par- ticularly in response to new and varied public and pri- vate partners. • Collaboration, partnerships, and non-traditional arrange- ments are an increasingly critical part of maintaining the effectiveness of, the relevance of, and community sup- port for public transportation; these partnerships must be customer-focused and reflect a clear understanding of the different markets to be served. • Innovation and experimentation in service design and deliv- ery must be encouraged but managed under clear guidelines for assessing success, failure, and financial responsibility. • New information technologies and data systems are essen- tial to clearly and credibly demonstrate the benefit and value of new and varied service strategies and partnering arrangements, to ensure reasonable accommodations can be reached in labor negotiations, and to secure public sup- port. • Stability and continuity in staffing and governance may have contrary effects; although stability and continuity in staffing can result in a reluctance to let go of long-standing practices and thereby slow fundamental change, stable staffing and governance can also build confidence for embarking on fundamental changes. Table 3. Forces leading to change. Funding and Finance New Technology Demographics and Society Sustainability, Energy, and Environmental Concerns Travel, Land Use, and Development Patterns Infrastructure Conditions

36 Champaign-Urbana Mass Transit District (C-U MTD), Champaign-Urbana, IL Case study FoCus: Embracing technology through investment, organizational change, and collaboration with consequential improvements in customer satisfaction Type and Nature of Transformation The focus of this case study is how C-U MTD has embraced technology and transformed its organizational structure to maximize the benefits of the enhanced information that the agency now is able to access and share with its customers. Table 2 provides a summary of the kinds of change that have occurred at C-U MTD. Reasons for the Change and How It Happened The make-up of C-U MTD’s customer base and the level of accountability faced by the agency, given its funding sources, prompted the agency’s move to embrace cutting- edge technology. C-U MTD faces a student referendum on transit funding every 3 years. This routine vote of confidence provides a backdrop against which the agency must stay at the forefront of technology and other innovations. The uni- versity itself stands at the forefront of technology research, and the community expects C-U MTD to take full advantage of available technology. Table 3 provides an overview of the forces leading to change at C-U MTD. In 2001, C-U MTD completed a strategic plan that included an emphasis on mobility, partnerships, and technology. C-U MTD staff members encouraged technology improvements and the agency’s board of trustees supported such an invest- ment. These factors resulted in C-U MTD’s decision to pursue the implementation of a real-time passenger information sys- tem, including computer-aided dispatch (CAD), automatic vehicle location (AVL), mobile data terminals (MDTs), and associated software. This investment decision required inno- The Champaign-Urbana Mass Transit District (C-U MTD) has experienced an evolutionary transformation from a tran- sit agency that used only basic technology to one that has embraced technology to such an extent that this adoption has retooled the workforce and shifted the organizational struc- ture of the agency. The make-up of C-U MTD’s customer base and growing pressure for accountability prompted the agency’s move to embrace cutting-edge technology. Background The Champaign-Urbana Mass Transit District was cre- ated in 1970 after the private bus operator, City Lines, made a request to the Illinois Commerce Commission to cease oper- ations. Transit service began under C-U MTD, governed by a five-member board of trustees, in 1971. The board of trust- ees currently comprises seven members appointed by the Champaign County Board. C-U MTD serves the urbanized area of Champaign, Illinois, which includes the twin cities of Champaign and Urbana. The University of Illinois, with an undergraduate population of 30,000 students and a gradu- ate population of 10,000 students, is located in the middle of these twin cities. Since its inception, C-U MTD has part- nered with the University of Illinois to help provide mobility for the university. In 1973, the first two campus routes were implemented and, in 1989, the students passed a referendum to impose a student fee to fund transit services. A student ref- erendum is held every 3 years to set the fee, which is currently $50 per student per semester. C-U MTD has had stable, long-term leadership, with the same managing director since 1974. Table 1 provides an over- view of C-U MTD’s basic agency characteristics. Characteristic Value Service Area 41 sq. mi Service Area Population 123,938 Total Vehicle Fleet 114 Annual Passenger Trips 10.5 million Annual Revenue Miles 3.1 million Annual Operating Expenses $24.3 million FY2009 Capital Expenses $2.5 million Source: 2009 National Transit Database. Table 1. C-U MTD agency characteristics. Type of Change Primary or Secondary Mission Shift Secondary Funding and Governance Measuring Goal Achievement Resource Management Secondary Retooled Workforce and Organization Primary Collaboration and Integration Secondary Technology Applications Primary Table 2. Types of transformative change represented.

37 vative approaches to funding and procurement and organi- zational changes to fully support this change. C-U MTD partnered with two other transit agencies, CityBus (Lafayette, Indiana) and MetroLINK (Rock Island, Illi- nois), to form a consortium to purchase the hardware and software required for the system. This consortium allowed all three agencies to share the workload of the procurement and provided the group with additional purchasing power to obtain a lower price. As they worked through the procurement, C-U MTD’s director and board found that the agency did not have the capital funds to purchase the desired equipment and soft- ware, however, the agency did have enough operating funds through the state of Illinois to lease the equipment. C-U MTD went through with the consortium purchase using a lease agreement for its portion. These systems were installed in 2003. C-U MTD’s embrace of technology has since led to the full implementation of the following applications: • CAD, • AVL, • MDT, • Real-time passenger information, and • Automatic passenger counters (APCs). This new technology has supported C-U MTD’s imple- mentation of a passenger information program, called “STOPwatch.” STOPwatch provides real-time bus informa- tion via the following: • On-street electronic screens and kiosks, including audio; • Internet (STOPwatch.WEB); • Online trip planner (STOPwatch.JOURNEY); • Mobile phone via text message (STOPwatch.SMS); • Other web-enabled mobile devices (STOPwatch.MOBI); • Personal computer, desktop widget (STOPwatch. WIDGET); and • Google Transit integration. In addition, the university is now including real-time bus information as a scrolling band at the bottom of informa- tional video screens that are being installed at various build- ings on campus. After implementing the technologies, C-U MTD restruc- tured the organization to make full use of available data and ensure effective maintenance of the hardware and software. The new management structure includes three divisions: management information, service delivery, and market devel- opment, which includes technology, marketing, and planning. This new structure gave technology the focus that it needed in order for C-U MTD to successfully implement the improve- ments. Implementing these technologies also has required the addition of staff, including a position in the maintenance department to maintain the hardware, and positions in tech- nology, planning, and marketing. C-U MTD recently added staff responsible for social media and software development. These staff members are critical to ensuring that the technol- ogy is working properly, that C-U MTD is using it to its fullest capability, and that C-U MTD stays on the forefront of new technologies, in keeping with its customer base. Consequences of the Transformation The technological transformation has had an impact on customers, the organization, and the staff. Results from C-U MTD’s most recent customer satisfaction survey indicate that 98 percent of customers are satisfied with the services pro- vided by the agency. C-U MTD staff credit the STOPwatch program in part for this high rating and indicated that if this level of satisfaction is to be maintained, C-U MTD’s technol- ogy will have to stay at the forefront to keep pace with the community’s technological savvy. C-U MTD currently uses every available technological outreach strategy to provide customers with real-time bus information. This information allows customers to plan their trips efficiently, without hav- ing to wait for long periods at bus stops. While the buses may or may not be on time according to printed schedules, riders now perceive a high level of on-time performance. C-U MTD’s staff has generally embraced new technologies and, as a result of recent investments, there is now one data set used across the agency for stop times and locations. This same data source is used by operations schedulers, the planning staff, and the marketing staff and has contributed to improved effi- ciency and accuracy in the scheduling of drivers and vehicles as well as revisions in printed schedules based on more accu- rate timetables. The new technology also provides controllers with the ability to see where all of the buses are in real time so they can make immediate adjustments to service as needed. This ability is particularly helpful in a university transit setting where there are often traffic disruptions. These technologies also have transformed communication between customers and staff. Customers communicate with C-U MTD via text, social media, and web-based applications. Funding and Finance New Technology Demographics and Society Sustainability, Energy, and Environmental Concerns Travel, Land Use, and Development Patterns Infrastructure Conditions Table 3. Forces leading to change.

38 Lessons Learned The C-U MTD case study provides a number of key lessons: • The confluence of interest in transit and technology among younger people provides an opportunity for transit agencies to tap the support of this stakeholder group. A full embrace of technology is most replicable for agencies that have tech- nology-savvy customers, but customers can become tech- savvy if the product is useful and easy to use. • Stable long-term leadership can provide an environment conducive to organizational change. • Organizational change in a small agency may need to hap- pen slowly, as individuals move on to other jobs or retire and as new staff positions are added. • Consortium purchasing can be a valuable mechanism for maximizing an agency’s staff and financial resources. • Leasing equipment may be a viable option for implemen- tation if a system has operating funds but not capital funds. • The use of advanced technology does not necessarily save money. Additional staff members are likely to be needed to ensure that the technologies are working and that the agency is making full use of the improvements. Transit technology programs are not typically “plug and play.” Charlotte Area Transit System (CATS), Charlotte, NC Case study FoCus: Shift from static bus operator serving the city to a regional multimodal service provider through collaboration and changes in governance Over a period of less than 10 years, public transportation in the Charlotte region evolved from a city-run bus system serving a captive market to a multimodal agency with grow- ing ridership, an improved public image, and a more diverse customer base. While activities to support this transition happened over an extended period of time, a distinct change in governance and organizational structure, initiated in late 1998 with the approval of a one-half percent sales tax, served as a turning point in this transition. Much of this change hap- pened with the active support of key business leaders in the community and a mayor who believed Charlotte needed a strong transit system to support the region’s growing econ- omy. The change was facilitated by a new governance arrange- ment, an increase in funding, and a shift in the organization’s structure within the city of Charlotte government. In 1999, the system name changed from Charlotte Transit to the Char- lotte Area Transit System (CATS). Background The city of Charlotte has operated the city’s transit system since 1977 when service transitioned from a private operator. The transit staff was initially established as a unit within the Charlotte Department of Transportation (DOT) and the sys- tem was managed by the assistant director of transportation. A complex organization was set up to manage and operate the system within the constraints of North Carolina’s labor laws. Administrative staff and those operating the paratransit service worked directly for the city. A separate organization, Transit Management of Charlotte (TMOC), was created to hire transit operating staff for the bus system. The city hired a contractor to manage operations, service planning, and cus- tomer service. After the sales tax increase was approved in 1998, the tran- sit organization became its own department and business unit within the city of Charlotte. The agency’s first general manager was hired in 1999 to manage the newly created department. The city consolidated service planning, the call center, and safety and security. City employees include para- transit service operators, light rail service operators, planning specialists, and general administrators. The transit depart- ment now employs a staff of about 360 people. A separate organization continues to employ personnel to operate and maintain the bus operation. The city also continues to con- tract management services for the bus system. The general manager, assistant general manager, and the general manager of maintenance for bus operations are all employed by the city’s contractor. Table 1 provides a summary of CATS’ oper- ating characteristics. CATS is governed by the Charlotte City Council and the Metropolitan Transit Commission (MTC), which serves as the policy board. The City Council approves contracts, over- sees procurement, and approves the agency budget (without the authority for modification). MTC provides direction to the organization, including decisions on service, fare policy, and long-range transit plans. MTC is made up of nine voting members (the mayors of the seven municipalities in Meck- lenburg County, the chairman of the Mecklenburg County

39 Council, and a representative from the North Carolina DOT), and six non-voting members (representatives of each of the five surrounding counties and one from the South Carolina DOT). Type and Nature of Transformation As shown in Table 2, change was facilitated by a new gov- ernance structure and a substantial increase in funding and supported by a shift in the organization’s structure within the city of Charlotte government to raise the stature of the transit organization to a level on par with the city’s DOT. The transit organization and city also benefitted from an emphasis on collaboration across departments within Charlotte and with external stakeholders. Reason for the Change and How It Happened Change occurred as a direct result of the growing pressure on elected officials to respond to rapid increases in popula- tion and employment. There was a sense that the Charlotte region needed to develop an approach that more actively managed population and employment growth to remain competitive as a desired location for employers. Many leaders in the region suggested that Charlotte should take a different approach to managing growth, with the goal of avoiding the perceived problems of sprawl and congestion facing another fast-growing southern city, Atlanta. Existing resources avail- able for transit were not enough to move transit into its desired role within the region. Table 3 provides a summary of the forces leading to change at CATS. Building Consensus Around a Regional Vision The concept of transit as a transportation choice was first addressed in a city comprehensive plan completed in the 1980s. In the late 1980s and early 1990s, the city conducted several corridor studies that explored the possibility of fixed guideways to serve higher density corridors. Through these various planning studies, the region became increasingly aware of different options to address transportation invest- ment and regional growth. Efforts transitioned into a more political process in the early 1990s. In 1994, a “Committee of 100” was established at the suggestion of the City Council and Charlotte Chamber of Commerce with the responsibility of generating a consensus vision for regional transportation and land use. The group of political and civic leaders from across the region was charged with exploring strategies for long-term transportation investment and with recommend- ing revenue options to support the defined vision. The city of Charlotte took the lead in the development of the regional vision. Charlotte’s planning staff developed a regional development concept of “wedges and corridors” that consisted of higher density development in five corridors with lower density development in the “wedges” between these corridors. The concept would provide a choice of hous- ing types and reduce development pressure in lower density residential neighborhoods outside of the identified corridors. The corridors identified for high-density growth were pre- dominantly commercial and followed major highway and rail corridors connecting areas outside of Charlotte to the city center. Support was high for concentrating development in these locations. Type of Change Primary or Secondary Mission Shift Secondary Funding Primary Governance Primary Measuring Goal Achievement Resource Management Retooled Workforce and Organization Secondary Collaboration and Integration Secondary Technology Applications Table 2. Types of transformative change represented. Funding and Finance New Technology Demographics and Society Sustainability, Energy, and Environmental Concerns Travel, Land Use, and Development Patterns Infrastructure Conditions Table 3. Forces leading to change. Characteristic Value Service Area 435 sq. mi Service Area Population 758,927 Annual Passenger Trips 25.7 million Annual Revenue Miles 17.3 million Annual Operating Expenses $101.6 million FY2009 Capital Expenses $59.0 million Source: 2009 FTA National Transit Database. Table 1. Agency characteristics.

40 Shifting to a Focus on Funding After reaching a general agreement on the regional vision, the focus shifted to funding. The Committee of 100 adopted the wedges and corridors strategy and recommended a 1 per- cent local sales tax to fund supporting regional highway and transit improvements. While there was widespread support for the concept recommended, only York County, South Carolina, passed the local sales tax endorsed by the group. Counties in North Carolina, including Mecklenburg, faced the constraint that, in the state of North Carolina, the state legislature must approve any local tax other than a property tax, even those proposals that go before voters. Mayor Pat McCrory, elected as Charlotte’s mayor in 1995, accelerated advocacy efforts for increased public transpor- tation investment. He established a “Committee of 10” to implement the recommendations of the Committee of 100. The Committee of 10 included two area business leaders, two members of the Charlotte City Council, and members of the North Carolina Board of Transportation. The group reaffirmed the original recommendations, developed a 5-year implemen- tation plan, and endorsed a local option revenue source of a one-half percent sales tax to support public transportation. The head of the Mecklenburg County Commission, a Demo- crat, worked with Charlotte’s Republican mayor throughout the process, making the effort bipartisan. Mayor McCrory’s strong relationship with the business community provided key support. Bill Lee, the chairman of Duke Power, was instrumental in encouraging Mayor McCrory to address regional growth issues in order to main- tain Charlotte’s economic competitiveness. Other area busi- ness leaders, including Hugh McColl, the chief executive officer (CEO) of Bank of America, believed that if Charlotte were to continue to attract world-class corporations, it would need to have a robust transit system. Many of these business leaders provided support behind the scenes as the effort moved forward. Seeking State Authority to Implement Funding Strategy in Partnership with Other Regions In 1997, a bill was introduced to the state legislature by two other regions in the state to add a local rental car tax to support transit. Proponents of transit in the Charlotte region took the opportunity to seek approval for local rev- enue options together with these other proposals. The city of Charlotte and Charlotte Chamber of Commerce also closely coordinated advocacy efforts at the state General Assembly. The legislature approved the legislation, which gave Mecklenburg County the authority to seek a one-half per- cent sales tax for transit services. Advocating for a New Role for Transit—Achieving Voter Approval In the summer of 1998, the Mecklenburg Board of County Commissioners approved inclusion of the one-half percent sales tax referendum on the November ballot. The proposal was paired with a $100 million road bond authorization to frame the transportation investment proposal as multimodal. During the period just prior to the referendum, the city took a number of steps to support efforts for approval. Staff from the city of Charlotte led the development of the 2025 Integrated Transit and Land Use Plan. This effort involved substantial out- reach to the community and helped provide specifics on what citizens might expect should the referendum pass. The results of the plan were presented in July of 1998 to all mayors and councils of the municipalities within Mecklenburg County. In addition, as additional funding for transit was being con- sidered, CATS took advantage of a partially constructed and unused high-occupancy vehicle (HOV) lane along Indepen- dence Boulevard to establish the region’s first bus rapid tran- sit (BRT) facility in 1998. The use of this facility showed the public the potential value of exclusive guideways in providing transit service. The Charlotte Chamber of Commerce led advocacy efforts for the sales tax increase and the roadway construction bonds using funds generated from its members. The sales tax ref- erendum passed by a margin of 58 percent to 42 percent. Revenue collection began in April of 1999 and the resulting changes in the organizational structure of transit began. With Voter Approval, Agency Change Begins With the passage of the funding referendum, the MTC was officially formed and had its first meeting in January of 1999. The transit group that had resided within the Charlotte DOT became its own department within the city of Charlotte and the agency’s first general manager was hired in November of 1999. The city shifted service planning, the call center, and safety and security functions from contractors to city employees. In addition to these internal actions, the agency took steps to show progress publicly. Examples included the removal of advertising from the outside of buses, standardizing bus signs, increasing the number of bus shelters from just 50 to approximately 300, refurbishing transit shelters, and provid- ing real-time information on next bus arrivals. The agency also enhanced its capacity to reach out to the public by adding staff with public involvement experience. CATS also embraced market research to inform its decisions with the routine use of surveys and focus groups. The agency also began to more aggressively deal with customer complaints and now has a pro- cess that requires prompt resolution of all complaints.

41 The agency moved forward with the implementation of light rail in the south corridor and began major investment studies in other corridors. The agency conducted hundreds of meetings related to these studies, which contributed to a general increase in the awareness of transit across the region. Changing Governance Structure The governance change created a policy board with one vote per jurisdiction, which is typically held by each jurisdic- tion’s city manager or mayor. The Charlotte City Council also approves the annual budget and the CEO of CATS contin- ues to report directly to the city manager. As a result, Char- lotte still maintains a high level of control. The policy board maintains authority over broad funding decisions for major capacity expansion. Initially, there was disagreement on the approach to governance for the new transit organization. The business community favored an appointed board. Local elected officials favored appointments by elected officials to maintain support for the organization and to better connect transit investment decisions to land use. In the end, the cho- sen approach established the current governance structure with a required review after 5 years. At the end of this 5-year period, a change was made to add a North Carolina DOT representative as a full voting member. Unexpected Challenges—a Threat to Revenue Controversy surrounding implementation of the first large light rail project resulted in a referendum to repeal the tran- sit sales tax that failed by a wide margin. The Chamber of Commerce was a key partner in defending the revenue source for public transportation investment and raised $630,000 from its membership to campaign against the referendum. The effort to avoid this repeal required another regional re- education effort on the value of transit investment and the goals of the regional plan. Staff now recognizes that there is a need to constantly educate the general public on the value of transit investment, particularly given the constant turnover of residents in this rapidly growing region. Consequences of the Transformation Changes in the transit system organization and funding levels have led to a rapid growth in ridership, financial stabil- ity, increased institutional capacity, an expansion of service to include light rail, and enhanced coordination between transit investments and area land use planning. The agency was able to increase routes by more than 75 percent, supporting a more than doubling of ridership between 1998 and 2010, with an average annual increase of more than 6 percent per year. The Charlotte area has been hit hard by the economic downturn and only in 2010 did ridership decline. Ridership increased every other year, even in those years with fare increases. The agency also was successful in implementing its first light rail line in 2007 and continues to pursue rail and BRT options in other corridors. Prior to the transition of the transit group to its own depart- ment, the relationship between land use and transit decisions was not strong. The decisions within these groups were made independently. Now, land use decisions are made with careful consideration as to how these decisions relate to public trans- portation services. Before the MTC was established, proposals for service changes and fare changes were caught up in City Council pol- itics. The establishment of a policy board with representation beyond the boundaries of the city of Charlotte has shifted the role of the agency toward being more regional in nature. Lessons Learned There were several key elements to the successful push for transit in Charlotte: (1) a good plan with strong buy-in from the public and the business community, (2) a clear strategy for implementation, and (3) a process to continue to refine the general approach as needed. Efforts for transformation offer a number of other lessons valuable for other regions consider- ing similar actions: • Collaboration with external stakeholders, including the Charlotte Chamber of Commerce and local elected offi- cials in area municipalities, in this case proved critical in gaining local political support for a revenue increase. • The coordination of land use and transportation provides a vision for investment that goes beyond moving people and can be critical in advocacy efforts. • A well-known “vision” for transit can prove critical, and col- laboration with the public, while it is time consuming, can provide a foundation that protects the transit revenue source. • Political champions are critical. Transit staff generally can- not drive the process and need elected officials who can stand behind it. Engagement with the region’s most signifi- cant community leaders can prove crucial to success. • Active engagement with the public should continue beyond an approval of a new funding source. • Building institutional capacity can take time in cities where high-quality transit is new.

42 Chittenden County Transportation Authority (CCTA), Burlington, VT Case study FoCus: Transformation from a local to a regional transit provider through agency consolidation The focus of this case study is Chittenden County Trans- portation Authority’s (CCTA’s) evolution from a single- county transit agency serving the greater Burlington, Vermont, area to a regional entity serving a five-county area. The transformation required the creation of an umbrella organization, Green Mountain Transit Agency (GMTA), to subsume a number of existing public transit systems in sur- rounding counties and, more recently, the merging of GMTA under CCTA in July 2011. The transition to a regional entity can be, in part, attributed to the successful relationship that CCTA built with GMTA over a 9-year period. Background CCTA is Vermont’s first and only transit authority. It was chartered by the Vermont General Assembly in 1973. Until recently, CCTA served only the greater Burlington area through its network of local fixed-route bus services within Chittenden County, commuter bus services from adjacent counties, and ADA paratransit services. CCTA recently expanded to serve five counties on a cohesive, regional basis. In fiscal year 2009, CCTA’s services in the greater Burling- ton area covered approximately 59 square miles and served a population of 86,000 with an operating budget of $9.2 mil- lion. With the addition of transit services operated under GMTA, CCTA now serves approximately 1,900 square miles in five counties and a population of more than 224,000 peo- ple with a combined operating budget of over $13 million. Core CCTA services provide about 2.6 million trips annu- ally with a vehicle fleet of 69 vehicles. The GMTA portion of the agency carries approximately 385,000 annual passenger trips. Table 1 provides an overview of CCTA/GMTA agency characteristics as well as the basic community characteristics of the service area. Outside Chittenden County, GMTA services continue to be differentiated by region: Capitol District, Mad River Val- ley, Stowe/Lamoille Valley, and Franklin/Grand Isle Region. GMTA service has different branding depending on the service area. Services include fixed routes in the Capital District, sea- sonal routes in Mad River Valley and Stowe, commuter routes throughout the region, community shuttles, ADA paratransit, Medicaid transportation, and demand-responsive services for elderly persons and persons with disabilities. Type and Nature of Transformation CCTA has always had partnerships with universities and col- leges, local businesses, and social service and non-profit orga- nizations within its service area. The change being explored in this case study has transformed the agency beyond its tradi- tional partnerships to the managing and operating of public transit services in several adjacent counties. As indicated in Table 2, the primary types of transformative change repre- sented by this case study include governance and collaboration and integration, but these changes also had the effect of shift- ing the overall mission of the organization over time. Reasons for the Change and How It Happened In 2002, one of the largest rural transit operators in the state (a private non-profit agency, Central Vermont Transportation Association [CVTA]—known as “Wheels”) filed for bank- ruptcy and closed its doors with 1 day of notice. The Vermont Characteristic Value (CCTA— Chittenden County) Value (GMTA Regional Services) Service Area 59 sq. mi 1,870 sq. mi Service Area Population 85,889 138,725 Annual Passenger Trips 2,552,000 385,800 Annual Revenue Miles 1,643,600 917,000 Annual Revenue Hours 117,500 53,900 Annual Operating Expenses $9.2 million $4.0 million FY2009 Capital Expenses $6.0 million N/A Sources: 2009 National Transit Database (for CCTA). FY 2011 data from VTrans and CCTA/GMTA, Census 2010. Table 1. Agency characteristics.

43 Agency of Transportation (VTrans) looked to neighboring transit agencies to see if any were willing to step in and take over the services, which led to CCTA restarting the service within 2 weeks. This initial action was the beginning of a trans- formation in CCTA that happened over the next decade. There were a number of other rural transit systems in neighboring counties also floundering or on the brink of collapse, including the network serving Franklin/Grand Isle counties northeast of Burlington, the Town of Stowe Transit System, and Mad River Valley. As indicated in Table 3, a funding crisis, deteriorating services, and changes in the demand for travel served as the key forces for change. The process of change took place between 2002 and 2011, with the following progression of key actions: 1. In 2002, the General Assembly granted CCTA the authori- ty to operate outside of Chittenden County, which allowed CCTA to create GMTA to take over public transportation services being provided in Central Vermont. 2. In 2003, CCTA created GMTA internally to operate the CVTA/Wheels services. During this time, VTrans bought CCTA new vehicles for the service and allowed the opera- tion of these vehicles out of the state-owned airport in Montpelier (former CVTA vehicles and its facility were tied up in court proceedings). 3. CCTA transformed GMTA into a Vermont private non- profit, 501(c)3, but with a CCTA-appointed board. 4. GMTA then transitioned to an independent 501(c)3 with its own board that contracted with CCTA for management services. 5. In 2011, CCTA absorbed the services and service areas where GMTA operated. GMTA was dissolved, and the CCTA hired GMTA’s employees. External pressure motivated many agencies to become part of the newly created GMTA. In 2003, VTrans conducted performance/compliance reviews of its rural transit systems and discovered that many did not have the administrative staff or procedures in place to manage their federal/state grants properly. These agencies faced the requirement to either hire administrative staff or join together to create one entity that could administer their programs efficiently and effectively. As a result, over a period of more than 5 years, many of the neighboring transit systems elected to join GMTA: • 2003—Mad River joined GMTA. • 2004—Town of Stowe (contract) joined GMTA. • 2005—Stowe was absorbed into GMTA. • 2006—Rural Community Transportation (RCT) fixed routes in Lamoille were transitioned to GMTA. • 2009/2010—Network in Franklin/Grand Isle was absorbed into GMTA. GMTA operated as an independent 501(c)(3) non-profit with management services provided by CCTA. After these tran- sit systems were absorbed by GMTA, additional change resulted in the complete transition of transit services in the five coun- ties into a single provider. As of July 1, 2011, the CCTA charter changed to allow municipalities outside Chittenden County to join CCTA as member communities. On June 30, 2011, the GMTA non-profit was formally dissolved, with CCTA assum- ing the GMTA name when operating rural public transporta- tion services in Washington, Lamoille, Franklin, and Grand Isle Counties. Incremental Changes in Governance The governance of the new GMTA followed an incremental path. During its inception and “emergency” creation period, it was governed by a subset of the CCTA board and staff (two CCTA board members and three staff members). When the private non-profit agency was first created, it was governed by its own board with members appointed by the CCTA board. Eventually, when GMTA became an independent agency, it had its own locally appointed board of directors, which was com- posed of representatives from municipalities, regional planning organizations, and the Regional Elderly and Disabled Partners Advisory Committee. With the CCTA/GMTA merger in July 2011, the GMTA board was merged with the CCTA board Table 2. Types of transformative change represented. Type of Change Primary or Secondary Mission Shift Secondary Funding Governance Primary Measuring Goal Achievement Resource Management Retooled Workforce and Organization Collaboration and Integration Primary Technology Applications Table 3. Forces leading to change. Funding and Finance New Technology Demographics and Society Sustainability, Energy, and Environmental Concerns Travel, Land Use, and Development Patterns Infrastructure Conditions

44 and the CCTA Board of Commissioners was reconfigured and expanded to include representatives from Washington County, Franklin County, Lamoille County, and Grand Isle County. Building Local Political Support for Change The executive director of CCTA presented the change to the CCTA board as an opportunity to fill a needed service gap while assisting VTrans in its efforts to protect existing service. CCTA benefitted through improved VTrans support, which enabled CCTA to expand commuter services in the region. At the local level, municipalities were initially wary of CCTA and worried that they would not retain control over service decisions. This concern led to the creation of the indepen- dent GMTA entity and board and the contract for manage- ment services with CCTA. While the adoption of this structure addressed concerns regarding local control, under the man- agement contract arrangement, CCTA effectively operated two organizations for two boards. In the fourth year of its 5-year contract, CCTA created a committee made up of the CCTA and GMTA boards to explore whether GMTA should hire its own staff or merge with CCTA. Committee deliberations resulted in a proposal to eliminate duplicative efforts and merge the boards and organizations. Consequences of the Transformation The transformation has benefitted customers and has affected the organization and its staff as follows: • The change successfully averted the elimination of key mobility services in parts of the five-county region now served by CCTA. • The merged organizations have achieved a significant improvement in efficiencies with reduced staff and cost (initially estimated at $200,000). • Over time, CCTA was able to hire additional staff while maintaining some of these savings. • CCTA is better positioned to compete for state dollars and to start new commuter services. An ongoing challenge has been CCTA’s ability to secure local funding from some of the communities served by GMTA. To tailor local contributions to the services being provided within communities, CCTA created a “fare share” formula to differ- entiate between (1) towns providing services only to elderly persons and persons with disabilities and (2) towns that also provide fixed-route/commuter services. Nonetheless, solicit- ing the local contributions from some communities has been a struggle. Lessons Learned The CCTA case study provides several key lessons: • Building the trust of rural communities requires a great deal of outreach. CCTA hired an outreach coordinator to work with the communities. • Even in circumstances where change begins in the wake of an “emergency,” long-term organizational and governance shifts are likely to continue over an extended period. • Organizational changes can continue to evolve and respond to political input. • An evolutionary governance approach can help protect community support while allowing organizations to shift quickly to protect existing services. Metropolitan Transit System (MTS), San Diego, CA Case study FoCus: Shift in institutional arrangements to encourage multimodal planning and focus the transit agency on operations This case study focuses on the impact of 2003 legislation that consolidated all development, construction, and plan- ning functions from San Diego Metropolitan Transit Devel- opment Board (MTDB) and North San Diego County Transit Development Board (NSDCTDB) into the San Diego Asso- ciation of Governments (SANDAG), which is the region’s metropolitan planning organization (MPO), and refocused the responsibilities of the former two agencies on operations. The consolidation moved the region away from thinking modally to planning and implementing the optimal mix of transportation investments at the corridor level. The consoli- dation also led to more efficient and faster project delivery, improved system connectivity, and higher quality transporta- tion services.

45 Background San Diego MTDB was formed in 1976 by passage of Cali- fornia Senate Bill 101. The agency was created primarily as a transit development entity to plan and construct transit guideways in the urbanized south coastal area of San Diego County; however, it was also responsible for operating or con- tracting out these transit services. In its early years, MTDB focused on the development of the light rail transit system. In 1980, just prior to the completion of the first light rail tran- sit segment, MTDB established San Diego Trolley, Inc. (SDTI) as a subsidiary to operate the service. After the start of the light rail transit revenue operation in 1981, the agency switched its focus to fare policy planning and introduced a regional monthly pass that was accepted by the three major transit operators in the region: NSDCTDB, operating in the suburban and rural northern coastal areas of San Diego County; San Diego Tran- sit Corporation (SDTC), operating bus service in the City of San Diego; and SDTI. In 1985, SDTC joined MTDB as a second operating subsidiary. MTDB’s role thus evolved during its first decade from being primarily a development entity to taking on an expanded role in operations. Over the next two decades, MTDB led expansion of San Diego’s light rail transit system; developed bus yards, transit centers, and bus shelter programs; provided capital support to SDTC and SDTI; and regulated the operation of Taxicab Administration services. In 2003, California Senate Bill 1703 transferred all devel- opment, construction, and planning functions from MTDB and NSDCTDB to SANDAG. The bill also changed MTDB’s name to the Metropolitan Transit System (MTS) and limited the agency’s primary responsibility to transit operations. MTS continued to coordinate with SANDAG on capital project development. Table 1 shows the agency characteristics of MTS. Type and Nature of Transformation This case study focuses on the change that resulted from the 2003 legislation that consolidated all development, construc- tion, and planning functions from MTDB and NSDCTDB into SANDAG. The legislation also limited the primary responsibilities of MTDB and NSDCTDB to transit opera- tions. These transformations in governance and organization successfully moved the region away from thinking modally to planning and implementing the optimal mix of transporta- tion investments at the corridor level. Table 2 shows the kinds of change that have occurred at MTS. Reasons for the Change and How It Happened In 2000, there were five dominant transportation entities in the San Diego region: MTDB (and its operating subsidiaries), NSDCTDB, SANDAG, the airport, and the port. State Sena- tor Steve Peace led a reform effort to coordinate decision- making among these entities. Supported by a committee of local stakeholders, he drafted a bill to consolidate the five enti- ties and form a Regional Infrastructure and Transportation Agency (RITA) that would be responsible for all transpor- tation-related matters in the region. The bill faced political opposition. In reaction to RITA, several regional governance studies were conducted to explore and propose alternatives. Over the next 2 years, the bill was revised multiple times and was finally passed into law in January 2003. Legislation Mandated a Change in Governance The legislation dismantled the independent governing boards of SDTC and SDTI. The general managers of SDTC and SDTI became chief operating officers of bus and rail, respectively, and reported directly to the MTS CEO. The new relationship between MTS and its operating subsidiaries was formally established through operating agreements and corpo- rate policies, which clearly defined the roles and responsibili- ties of each entity. MTS also restructured the agreements for its contracted bus services (Chula Vista Transit and National City Table 2. Types of transformative change represented. Type of Change Primary or Secondary yradnoceS tfihS noissiM yradnoceS gnidnuF yramirP ecnanrevoG Measuring Goal Achievement tnemeganaM ecruoseR Retooled Workforce and Organization Primary Collaboration and Integration Secondary Technology Applications Table 1. Agency characteristics. eulaV citsiretcarahC im .qs 604 aerA ecivreS noillim 2.2 noitalupoP aerA ecivreS 826 teelF elciheV latoT noillim 3.88 spirT regnessaP launnA noillim 3.92 seliM euneveR launnA Annual Operating Expenses $202.7 million noillim 1.29$ sesnepxE latipaC 9002YF Source: 2009 National Transit Database.

46 Transit). Consolidating the work rules, pension plans, and other labor matters proved challenging, however, and these remained separate by agency. The consolidation also changed SANDAG’s governance structure. SANDAG’s board is composed of 21 members: one representative from each of the 18 cities in San Diego County, with two voting members for the City of San Diego and two representatives from the county government. Before the consolidation, each member city held one vote, and all votes were weighted equally. After the consolidation, in addition to the tally vote, each member city representative now holds an additional vote weighted by population. For a motion to pass, both tally and weighted votes must represent the majority. Agencies Shifted Internal Staff Resources in Response to New Roles The legislation mandated the consolidation of the devel- opment, construction, and planning functions of MTDB and NSDCTDB into SANDAG. SANDAG became the region’s designated recipient for federal transit funds. As a result of the consolidation, SANDAG transitioned from an organi- zation focused on research and long-range planning to one that was also responsible for development and construction within a multimodal context. These added responsibilities ensured that SANDAG would ensure that projects included in the long-range plans would be implemented. Project Development Emphasis at SANDAG There were some tensions between SANDAG, NSDCTDB, and MTS related to the transfer of the development functions that were overcome with effective project delivery. SANDAG delivered technical resources and funding support during the construction of NSDCTDB’s first light rail transit sys- tem. The system was at risk of losing federal funds due to FTA’s perception that NSDCTDB lacked the adequate tech- nical capacity, but SANDAG provided the expertise needed to augment NSDCTDB’s technical skills. The newly founded development function dramatically changed the workforce composition at SANDAG; the percentage of engineers in the workforce increased from less than 3 percent to approxi- mately 30 percent. Movement to Multimodal Planning The benefits of consolidation are seen in maximized mobility in the San Diego region. Through its short- and long-range transportation plans, SANDAG has been success- ful in bringing highway and transit together and balancing the needs of its member cities. SANDAG’s board has adopted a structured process to objectively review goals and priorities, establish performance measures to determine whether goals are being attained, and set evaluation criteria to guide invest- ments. Land use is changing and investments are naturally shifting toward transit. The most recent 40-year transporta- tion plan includes four new trolley lines and proposes only one new highway and few road-widening projects. Consolidation Improves Public Support for Funding In 1987, San Diego area voters approved a one-half-cent transportation sales tax, called TransNet. One-third of the sales tax proceeds were allocated to transit. The consolidation of agencies helped ensure public support for a measure to extend the dedicated half-cent sales tax for another 40 years. The original TransNet sales tax was set to expire in 2008. Following the consolidation, voters approved a reauthoriza- tion measure in 2004 to extend the TransNet sales tax for an additional 40 years. SANDAG attributes this success partly to the consolidation, which presented the agency as a coherent entity focused on both planning and development. In addition to administering local sales tax revenue, SANDAG also administers all federal and state funding sources. The agency has benefitted from legislation passed in 1997 that allocated 75 percent of the State Transportation Improvement Program to regional MPOs, with the remaining 25 percent allocated to the California Department of Trans- portation (CalTrans). SANDAG’s ability to manage all these resources has allowed it to effectively leverage federal funds for the optimal benefit of the region. Table 3 summarizes the forces leading to change at MTS. Consequences of the Transformation The transformation has allowed MTS to focus on opera- tions and consolidate all other decision-making responsi- bilities with SANDAG. The latter organization was able to move the region away from thinking modally to planning and implementing the optimal mix of transportation invest- ments at the corridor level. This has resulted in easier and faster project delivery, improved system connectivity, and higher quality transportation services. Table 3. Forces leading to change. Funding and Finance New Technology Demographics and Society Sustainability, Energy, and Environmental Concerns Travel, Land Use, and Development Patterns Infrastructure Conditions

47 The consolidation has allowed the governing board of SAN- DAG to take a holistic look at the surface transportation issues facing the region and to make transportation and land use decisions simultaneously to address those issues. In response to the region’s natural evolution, 82 percent of all new hous- ing currently planned in San Diego County is multifamily with an emphasis on transit accessibility. The consolidation has allowed the board to evaluate each corridor in SANDAG’s network separately, determining the optimal mix of highway and transit improvements. A flagship project of the agency is the $1.5 billion invest- ment on Interstate 15 comprising a multimodal facility with managed lanes. A bus rapid transit (BRT) system operating on the Interstate ensures that passengers have a competitive alternative to driving. The project has a state-of-the-art pric- ing facility, which can adjust prices every 6 minutes, provid- ing transit users and carpoolers premium levels of service. The net revenue generated is reinvested in the system to enhance transit in the corridor. The consolidation made it easier and faster for SANDAG to construct the facility and transform one of the most congested corridors in the region to one of the best performing. The consolidation also has allowed MTS to focus on opera- tions, which has improved the quality of public transporta- tion services. Following the consolidation, MTS conducted a Comprehensive Operational Analysis of its bus system. The agency restructured 95 percent of its bus routes and, as a result, bus ridership increased by 12 percent and the farebox recovery ratio increased from 25 percent to 43 percent. Lessons Learned The San Diego MTS case study provides a number of key lessons: • Transitioning responsibilities such as long-range planning away from a transit operating agency has the potential to improve the long-term prospects for transit investment despite a perceived reduction in authority for the transit entity. • Changes in institutional arrangements can have the ben- efit of building public support for transportation invest- ments by improving the credibility of those organizations responsible for implementation. • Shifting responsibilities for long-term planning can pro- vide the benefit of allowing a transit agency to focus on its core competency, transit operations, but an effective and collaborative relationship across agencies is critical to this transition. • Shifting organizational roles can allow for complex mul- timodal project implementation that is more challenging under an agency with primarily transit expertise. Metropolitan Transportation Authority (MTA), New York, NY Case study FoCus: Centralization of business services to improve efficiency While New York’s Metropolitan Transportation Author- ity (MTA) has consolidated and taken on responsibility for various transit providers over the course of several decades, prior to the late 2000s, the agency had not fully taken the opportunity to identify and reduce duplicative functions and resulting costs within the organization that emerged through these consolidations. In response to the need to improve the efficiency of business services across the orga- nization, MTA successfully moved forward with an effort to bring these functions into a centralized business services unit that provides support for all of its subsidiaries. MTA identified the need for business service consolidation a num- ber of years ago and took the opportunity to make the con- solidation happen during the recent fiscal crisis faced by the agency. Background New York’s MTA acts as the oversight agency responsible for managing seven operating subsidiaries, including New York City Transit, Long Island Railroad, Long Island Bus, Metro-North Railroad, Bridges and Tunnels, MTA Bus, and Capital Construction. The agency was first established in 1968 and has continued to consolidate services provided by a number of operators across the region since its creation. The agency is a public benefit corporation of the state of New York governed by a 17-member board that is appointed by New York’s governor, with recommendations provided by the city of New York and the counties for which the agency provides service. Appointments are approved by the New York Senate. MTA oversees public transportation operations

48 for an approximately 5,000-square-mile area that is home to 14.6 million people. Service extends across 12 counties in New York, including all five of New York City’s boroughs and two counties in Connecticut. MTA is the largest public trans- portation provider in the United States, carrying almost one in three public transportation trips in the country. Table 1 shows the agency characteristics of MTA. Type and Nature of Transformation Over the course of several decades, MTA absorbed a num- ber of transit agencies, but separate business services remained within these operating units. MTA’s subsidiaries, or “operating agencies,” are relatively independent organizations. To improve the efficiency of providing business services across the organi- zation, MTA brought these functions into a centralized busi- ness services unit to provide support for all of its subsidiaries. MTA identified the need for business service consolidation a number of years ago and seized the opportunity to make the consolidation happen during the recent fiscal crisis faced by the agency. The fiscal crisis led to more widespread support for this type of change across MTA and the operating agencies. Table 2 summarizes the types of change that occurred at MTA. Reasons for the Change and How It Happened The initial concept of business services consolidation was the result of an identified need to consolidate informa- tion technology services. The MTA board became aware of duplicative efforts as MTA’s operating agencies approached the board with periodic, uncoordinated requests for the pur- chase or enhancement of back-office information technology systems. At the request of the board, MTA funded a study led by two major consulting firms that documented the case for a consolidated business service center. Although greater coordination of information technology services served as the initial motivation for change, the agency recognized the potential value of consolidating other services as well. The MTA board endorsed the study in 2008. A new enterprise system, already used by a number of MTA’s subsidiaries, was selected to support a number of back-office functions, includ- ing finance, human resources, procurement, and payroll. Although the board endorsed the study in 2008 and moved forward with implementation, resistance remained strong within some of the operating agencies until the financial cri- sis and economic downturn hit the agency in 2009. At that time, MTA projected a $900 million operating deficit. Actions considered to reduce the budget shortfall included a furlough of employees, but senior management within the operating agencies preferred to reduce the number of employees rather than go forward with an agency-wide furlough. The required staff reductions served as a catalyst for the operating agencies’ decision to emphasize reductions in areas where the potential for consolidation was greatest. Support for the consolidation of business services came with the expectation that reduc- tions in staff that supported business service functions across the operating agencies, would result in fewer staff reductions elsewhere. Table 3 provides an overview of the forces leading to change at MTA. MTA hired an outside consulting firm in 2008 to guide the process of transitioning services from a decentralized structure to a consolidated unit within MTA headquarters. Throughout 2009, there was significant work underway that was related to information technology to support the change. During this period, the operating agencies provided support Characteristic Value Service Area 5,000 sq. mi Service Area Population 14.6 million Total Vehicle Fleet 15,171 Annual Passenger Trips 3.5 billion Annual Revenue Miles 689.3 million Annual Operating Expenses $9,727.4 million FY2009 Capital Expenses $4,712.7 million Source: MTA for service area and population, 2009 FTA National Transit Database for other data (as reported by each of the operating agencies.). Table 1. Agency characteristics. Type of Change Primary or Secondary Mission Shift Funding Governance Measuring Goal Achievement Resource Management Secondary Retooled Workforce and Organization Primary Collaboration and Integration Technology Applications Secondary Table 2. Types of transformative change represented. Funding and Finance New Technology Demographics and Society Sustainability, Energy, and Environmental Concerns Travel, Land Use, and Development Patterns Infrastructure Conditions Table 3. Forces leading to change.

49 to identify potential changes in business processes necessary to facilitate the transition. In late 2009, the size of the operat- ing deficit emerged and, as a result, by 2010, there was more receptivity to the concept of a shared service center as a means to reduce staff. The agency expects to achieve a savings equal to the cost of the contracts for consultants to implement the transition within as few as 6 years. In support of the process to undertake the consolidation of business services, the implementation team engaged sub- ject matter experts from each of the operating agencies to help map the business processes and direct development of an Enterprise Resource Planning (ERP) system. Each of the operating agencies conducted extensive training of staff prior to going live with the new system. Phase 1 of implementation took place in January 2011. All finance functions were consolidated, including payroll and accounts payable. By the middle of 2011, all finance func- tions were consolidated with the exception of payroll, which will be consolidated in two phases. Phase 2 will be completed in 2012. Consequences of the Transformation The transition to a centralized delivery of business ser- vices allowed MTA to make a significant reduction in the net head count of those providing related support. There are fewer people in the consolidated service center than were in the operating agencies prior to the transition. While allowing short-term reductions in staff resources, over the long-term, the consolidation of human resources and accounts payable will allow the agency to focus more on ways to improve the approach to those activities. There is general agreement that the agency faced some chal- lenges in the first phase of implementation, although these challenges were within the range of expectations given the magnitude of the organizations involved and the workload shifted to the centralized service center. Some of these chal- lenges were attributed to issues with communication across the operating agencies and perhaps insufficient engagement in the business process reengineering during the early stages of the project due to limited available staff time. Despite these initial challenges, the overall success of the implementation process has led to a belief that MTA can accomplish still more through a continued push to improve financial accountability across the agency. MTA also is moving forward with the consolidation of other elements of informa- tion technology, the media center, call centers, and even email, with a move away from seven different email systems to one. Lessons Learned The MTA business consolidation effort provides an example of the challenges faced by large and complex transit operating agencies as they seek to make improvements that enhance the efficiency of internal services. Many of the inef- ficiencies addressed through the business services consoli- dation had existed for a number of years and resulted from a merging of organizational functions without a concerted effort to identify opportunities for cost savings. The case study highlights the potential for efficiency gains by stream- lining processes that have been in place for many decades. The key lessons from this case study are the following: • A change process of the type arrived at by MTA requires a significant information technology component, but is more of a change management project than an informa- tion technology project and requires active engagement to identify necessary process reengineering. • Providing adequate training and communication through- out the organization is critical to success, particularly dur- ing the transition. • Commitment from the most senior levels in the organiza- tion is critical for a change process of this magnitude in a large and complex organization. • Challenges, such as the economic downturn and financial crisis faced by MTA in 2008/2009 provide opportunities to implement controversial change processes that can benefit an organization. Metro Transit, Minneapolis/Saint Paul, MN Case study FoCus: Creation of a new body to facilitate regional funding for transit and shift responsibility from state to local resources Transit governance in the Twin Cities region has changed multiple times over the past 45 years, with the most recent change occurring in 2008 with the creation of the Counties Transit Improvement Board (CTIB). This case study focuses on this change, which has transformed the funding and gov- ernance structures in the region to establish a dedicated

50 funding source for transit. As a result, the region has been able to accelerate transit expansion projects. Background Metro Transit was created as part of the Metropolitan Council (Met Council) in 1994 following the Minnesota Legislature’s enactment of the Metropolitan Reorganization Act. The Act consolidated many transit responsibilities in the Twin Cities region (among other region-wide functions) into the Met Council. The Met Council is a quasi-state agency with members appointed by and serving at the will of the governor. Metro Transit was formed as the transit operating division of Met Council and the primary transit operator in the region. Prior to 1994, transit services in the Twin Cities region were provided by the Metropolitan Transit Commission (MTC). The Minnesota Legislature created MTC and the Met Council in 1967 as two separate entities with distinct respon- sibilities. The Met Council was responsible for “coordinat- ing the planning and development of the metropolitan area” for various functions, including transit, parks, airports, and libraries. MTC was charged with providing transit operations and developing a comprehensive transit plan for the region in collaboration with the Met Council. Throughout most of the 1970s and early 1980s, each organization had a different vision regarding transit development. During this same period, the Minnesota Legislature estab- lished other transit governing entities in the region. In 1974, the Transportation Advisory Board (TAB) was formed as a component of the region’s metropolitan planning organiza- tion (MPO). While the Met Council is the designated MPO, the creation of TAB was a response to federal regulations requiring local elected officials to serve on the MPO. In 1980, the Minnesota Legislature authorized county Regional Rail- road Authorities (RRA) to levy taxes for the development of rail transit in the Twin Cities region. In 1981, several subur- ban transit providers formed after the Minnesota Legislature established the Metropolitan Transit Service Demonstration Program that allowed eligible suburban communities to “opt-out” of the regional service provided by MTC. Finally, in 1984, the Minnesota Legislature established the Regional Transit Board (RTB), which diminished the transit devel- opment functions of MTC—limiting its responsibilities to transit operations and short-term planning. A decade later, the Minnesota Legislature changed transit governance once again with the enactment of the Metropolitan Reorganization Act. The Act abolished both MTC and RTB and consolidated their functions into Met Council, with Metro Transit as one of the operating divisions. In 2008, the Minnesota Legislature authorized the creation of the CTIB to provide a dedicated source of transit funding in the region. Currently, there are several organizations with transit responsibilities in the Twin Cities region: • Met Council is a regional entity funded by the state legis- lature whose members are appointed by the governor. It provides wastewater treatment services, housing, and park services to the region and, as the MPO, maintains com- prehensive authority for transportation planning and for transit operations, including the following: – Operation of regular bus route, light rail, and commut- er rail transit services through Metro Transit, its transit operating division. – Operation of contracted regular bus route service, Amer- icans with Disabilities Act/dial-a-ride services, and a van- pool program through its Metropolitan Transportation Services (MTS) division. – Development of the long-range transportation plan and all transit planning functions through the MTS division. • The TAB administers certain federal transportation and transit grants and comments on the long-range transpor- tation plan developed by the Met Council. The short-term transportation improvement program, another main task of the Met Council (as the MPO), is approved by the TAB followed with Met Council concurrence. • The county RRAs, each of which is governed by its respec- tive county, have the capacity to provide property tax rev- enue for rail projects in their county. • CTIB primarily provides transit funding to the region, although it is also involved in transit planning activities. • The 12 suburban communities that “opted-out” of regional transit service in 1981 are receiving transit services from one of six suburban transit providers rather than from Metro Transit. Table 1 provides an overview of Metro Transit’s agency characteristics as well as the basic community characteristics of the service area. Characteristic Value Service Area 624 sq. mi Service Area Population 1,858,545 Annual Passenger Trips 76.3 million Annual Revenue Miles 24.8 million Annual Operating Expenses $300.2 million FY2009 Capital Expenses $195.8 million Source: 2009 National Transit Database. Table 1. Agency characteristics.

51 Type and Nature of Transformation The focus for this case study is the most recent change in transit governance in the Twin Cities region, specifically, the creation of CTIB in 2008. Emphasis is on the funding and gov- ernance structure transformations that have resulted in accel- erated investment in transit expansion in the region. Table 2 summarizes the kinds of change that occurred at Metro Transit. Reasons for the Change and How It Happened Until recently, transit in the Twin Cities region was funded primarily through property taxes and state general funds. In 2001, the Minnesota Legislature prohibited the use of prop- erty taxes to fund transit operations and replaced this fund- ing source with an allocation of 20.5 percent of state Motor Vehicle Sales Tax (MVST) funds, starting in fiscal year 2003. The allocation was later increased to 21.5 percent and again to 36 percent by fiscal year 2012 (as the result of a 2006 con- stitutional amendment that dedicated 100 percent of MVST to transportation). Despite the increases in percentages of MVST revenue allocated to transit, the total net funds col- lected through this source were well below projections, due to the recession. At the same time, the Minnesota Legis- lature reduced state general fund allocations. Consequently, the Met Council faced significant challenges in its ability to pay for regional transit operations and was unable to provide necessary funding to leverage federal capital funds to invest in transit improvements. The Minnesota Legisla- ture was unwilling to raise additional statewide taxes and instead provided the seven-county region with the author- ity to form a joint powers board that could levy a sales tax to provide a regional transit funding source. Given Metro Transit’s funding situation and the state’s lack of commitment to transit expansion projects, local elected officials recognized the need for a dedicated transit funding source to achieve the local vision for transit. County RRAs were not able to achieve this vision for two main reasons: (1) each RRA acts as a separate political entity focused mainly on the interests of its respective county, and (2) the RRAs are limited in their capacity to generate enough funds given that they are only authorized to levy property taxes. CTIB was thus created as a regional body “to facilitate investment in transitways in the Twin Cities region, collaboratively plan and develop policies for transit investments, advocate for state and federal funding and transportation policies sup- portive of transitways, and provide for public education and information.” The Minnesota Legislature authorized the seven counties in the Twin Cities region to levy a one-quarter-cent sales tax and an excise tax of $20 per motor vehicle to fund transit improve- ments. Five counties (Anoka, Dakota, Hennepin, Ramsey, and Washington)—representing 90 percent of the metropolitan area population and the source of 95 percent of the seven- county region’s sales tax collections—agreed to enact the sales tax. In less than 6 weeks, the five counties successfully negoti- ated a joint powers board and established principles for the allocation of funding. This timeline was driven by the sales tax potential of the upcoming Republican National Conven- tion to be hosted in Minneapolis/St. Paul. The counties began collecting the sales tax in July 2008 and CTIB received its first revenue in September 2008. Table 3 provides an overview of the forces leading to change at Metro Transit. Governance Structure Promotes Regional Collaboration The five counties forming CTIB have voting representa- tion on the governing board, weighted equally by population and sales tax revenues. These counties hold 95 percent of the votes and are represented by local elected officials; the chair of Met Council holds the remaining 5 percent of the votes. The two counties that elected not to impose the sales tax are still part of the organization, but have non-voting rep- resentation. For any motion to pass, 63 percent of the votes Type of Change Primary or Secondary Mission Shift Secondary Funding Primary Governance Primary Measuring Goal Achievement Resource Management Retooled Workforce and Organization Collaboration and Integration Secondary Technology Applications Table 2. Types of transformative change represented. Funding and Finance New Technology Demographics and Society Sustainability, Energy, and Environmental Concerns Travel, Land Use, and Development Patterns Infrastructure Conditions Table 3. Forces leading to change.

52 are needed in conjunction with the support of three of the five voting counties. For long-term financial commitments (over $100 million in more than 5 years), a super majority is needed, with 75 percent of the votes and the same level of county support. This structure was devised to guarantee a fair joint tax agreement and to protect the interests of all five counties. By law, CTIB also had to establish a Grant Evaluation and Ranking System (GEARS) committee, which included rep- resentation at the county and city levels. The cities within the five counties that constitute CTIB originally conditioned their support of the authorizing legislation on being a part of CTIB’s governing board; the GEARS committee was negoti- ated as an alternative to gain the cities’ support. The commit- tee is responsible for evaluating grant applications, primarily from Met Council according to criteria established by CTIB, and for making recommendations to the board. With the creation of CTIB, responsibilities for transit governance in the Twin Cities region became even more fragmented. The relationship between CTIB and Met Coun- cil was contentious at first. CTIB’s perception was that Met Council did not have an aggressive transit plan and that its political advocacy was limited because of its structure. Met Council is governed by a board of 17 members, all of whom are appointed by the governor. The creation of CTIB, with a different governance structure, resulted in differing priori- ties and confusion over roles and responsibilities. CTIB was primarily formed to generate a reliable funding source for capital expansion projects and their ongoing operations. At the time of its creation, CTIB had a vision for transitways in the region and was using the funds generated through the one-quarter-cent sales tax to realize that vision. While CTIB’s vision was generally consistent with the Met Coun- cil’s, there were minor differences, particularly related to the timing and sequencing of transit investments over the long term. In more recent years, the tensions between CTIB and Met Council have been dissipating, especially with the change in administration at the state. The two entities have developed an effective working relationship to resolve many of their dif- ferences and to advance transit investments in the Twin Cities region. Regional Transit Funding Facilitated by the Creation of CTIB Funding for transit in the Twin Cities region has always been complicated, with a variety of revenue sources, includ- ing the state MVST, the state general fund, federal funds, pas- senger fares, and property taxes levied by county RRAs. The addition of CTIB funding further added to this complexity. CTIB can decide which transitways to fund, but its funding decisions must be consistent with the MPO’s Transportation Policy Plan (TPP). Furthermore, any grants awarded by CTIB to Met Council must supplement, not supplant, the operating and capital assistance provided by the state as stated in the authorizing legislation. CTIB raised approximately $90 million for transit during its first year of taxation and made its first award in fall 2008, the same year it was founded. By fiscal year 2012, CTIB will have awarded grants totaling approximately $475 million. As part of CTIB’s creation, the board negotiated which transit- way projects to fund (following CTIB’s creation, projects to be funded were selected through the annual grant solicitation process) and agreed to pay the counties’ associated operat- ing subsidies from CTIB revenue sources, rather than county RRA funds. The CTIB has accelerated transitway expansion in the Twin Cities region by providing a dedicated funding source that reduced the reliance on state funding and allowed the region to maximize leverage of federal funds. As a result of CTIB’s creation, capital funding for transitway projects has changed. After a federal Full Funding Grant Agreement (FFGA) is signed, the expectation of funding for specific projects is as follows: • 50 percent of the funding is provided by the FTA, • 30 percent of the funding is provided by CTIB (the maxi- mum allowed), • 10 percent of the funding is provided by the state (the max- imum allowed), and • 10 percent of the funding is provided by the county RRA(s) in which the project will operate. Prior to CTIB’s creation, the capital funding percentages were as follows: • 50 percent was provided by the FTA, • 33 percent was provided by the state, and • 17 percent was provided by the county RRA(s) in which the project operated. The new funding structure poses some concerns on the capital front. For any transitway expansion project, the Min- nesota Legislature limits the state’s contribution to 10 per- cent of the project’s capital cost and CTIB’s contribution to 30 percent. This means that federal funding shortfalls can only be covered by Met Council, counties, and/or other local project partners. On the operating front, CTIB is committed, per the authorizing legislation, to fund 50 percent of the net oper- ating costs of transitway projects for which it has provided capital funding. There is concern that CTIB funding is being used to supplant, not supplement, state funds. Reliance on

53 CTIB funds for operating assistance reduces its ability to fund capital expansion. At the same time, additional invest- ment in transitways will not be successful if Met Council and CTIB do not have the funding needed to sustain opera- tions. The Minnesota Legislative State Audit report observed that Met Council faces a significant challenge to long-term financial sustainability unless it identifies new operating funding sources. Met Council also has expressed concern that the existing bus system is underfunded. The backbone of Metro Transit has been and continues to be bus service, which has been experiencing steady increases in ridership. In 2009, bus ser- vice provided almost 90 percent of the transit rides in the region. However, there is currently no reliable structure in place to fund the continued operations of the current system, let alone its growth. Consequences of the Transformation Prior to the creation of CTIB, the Twin Cities region had integrated transit operations and transportation planning, resulting in an aggressive long-range transit program. While the region was able to fund construction of the Hiawatha light rail line and, in part through the state DOT, the North- star commuter rail service, regional leaders were impatient with the inconsistency of the state’s commitment to funding for investment in additional corridors. The creation of CTIB has increased the Twin Cities region’s capacity to develop large-scale federally funded tran- sit projects. Since its creation in 2008, CTIB has authorized $475 million in grants, an amount which has been matched by approximately the same amount of federal funding. CTIB has supported the design and construction of a number of transit stations along existing transitways. CTIB and the RRAs have provided the local funding commitment required to secure federal funding for the Central Corridor light rail line and continue to support the development of the Southwest light rail line. Neither of these projects would have moved forward as quickly without CTIB’s funding commitment. Additionally, CTIB has committed capital funding for the Cedar Avenue bus rapid transit (BRT) line. On the operating front, CTIB is committed to funding 50 percent of the net operating costs of the Hiawatha and Central Corridor light rail lines, Northstar commuter rail line, the Cedar Avenue BRT line, and the 35W BRT line. Lessons Learned The Twin Cities Metro Transit case study provides a num- ber of key lessons: • Regional governance changes coupled with dedicated regional funding can mobilize other entities and financial resources to implement transit investment. • Even a region with strong popular support for transit invest- ment and with a powerful, integrated transportation agency can benefit from changes in regional governance to acceler- ate transit investment. • The state role in local transit can be beneficial, but can also result in fluctuations in the amount of commitment to the regional transportation vision with political changes or changes in available state financial resources. Regional Transportation District (RTD), Denver, CO Case study FoCus: Mission shift to moving people through collaboration The underlying feature of the Regional Transportation District’s (RTD) transformation lies in a shift in mission. Over a decade or more, RTD has changed from an agency focused largely on moving vehicles to an agency whose mis- sion and success is focused on moving people. The result has been a continuing evolution in the RTD business model and organization that features new strategies in partnering and in resource use that are geared to increasing the availability and effectiveness of an increasing range of services while reducing the associated public subsidy per trip. Background Denver’s RTD is the regional authority responsible for the planning, provision, and oversight of public transportation for over 40 cities and towns in all or portions of eight counties around Denver, including all of Boulder, Broomfield, Den- ver, and Jefferson Counties, and parts of Adams, Arapahoe, Douglas, and Weld Counties. Table 1 provides an overview of RTD’s basic agency characteristics as well as the basic charac- teristics of the Denver, Colorado, urbanized area.

54 RTD is a public agency that was created in 1969 by the Colorado Assembly. RTD’s governance is somewhat unique in the transit community: the 15-member board of directors is elected on staggered 4-year cycles by popular vote from 15 designated districts in the region. RTD operates under a “Family of Services” concept that includes fixed-route bus service, express bus service, light rail, shuttle services, ADA paratransit service (“Access-a-Ride”), public demand- responsive services (“Call-a-Ride”), a user-side subsidy taxi voucher program (“Access-a-Cab”), “Bike-n-Ride” services, vanpools, free shuttle service on Denver’s downtown mall, a guaranteed-ride-home program, and a number of other services, including special event services supporting regional universities as well as professional sports events. In addition, RTD operates 74 park-n-ride facilities throughout the region. An extensive program of coordinated rail transit and highway improvements is underway throughout the Denver region. The FasTracks transit expansion program, supported through a 2004 sales tax referendum, includes 122 miles of new commuter rail and light rail, 18 miles of BRT, added rail station parking, and redevelopment of Denver’s Union Station into a multimodal terminal. Elements of the Fas- Tracks program are being carried out through large-scale, public-private partnership agreements, such as the $2 billion, 35-year “design-build-finance-operate-maintain” agreement for the East Line to Denver International Airport (DIA) and the Gold Line to Arvada. Also unique to RTD is the statutory requirement, enacted in 1988, requiring that RTD contract out a specified portion of its services. The initial 20-percent contracting requirement applied to all fixed-route bus services. Through several itera- tions, the contracting requirement was increased to include at least 50 percent of all rubber-tired service. Due to a change in the political environment, the legislation was recently amended, and now RTD may contract out its services up to a cap of 58 percent of all rubber-tired services. Contracted ser- vices today account for approximately 57 percent of all RTD rubber-tired services, including approximately 45 percent of its fixed-route service and all ADA paratransit and general public demand-responsive services. Type and Nature of Transformation The underlying feature of the RTD transformation lies in a shift in mission. Over a decade or more, RTD has changed from an agency focused largely on moving vehicles to an agency whose mission and success is focused on moving peo- ple. The result has been a continuing evolution in the RTD business model and organization that features new strategies in partnering and in resource use that are geared to increas- ing the availability and effectiveness of an increasing range of services while reducing the associated public subsidy per trip. Table 2 summarizes the kinds of change that occurred at RTD. The fundamental shift in mission noted above has taken place in parallel with other noteworthy transformations. Leadership at the agency has played a major role in the trans- formation of RTD. Over a 14-year period, the former general manager brought to RTD a non-traditional and flexible per- spective and operating philosophy, reflecting extensive prior experience in managing contract services and taxi opera- tions. In addition, several current senior staff members were recruited to both amplify this new philosophy and to exercise creativity in implementing new initiatives. The willingness and confidence to innovate were critical factors during a time of continued growth in the region’s economy and population. With respect to governance, RTD has had an elected board from its inception. Half of the 15 board members are elected by popular vote from designated districts every 2 years and can serve a maximum of 8 years. A major factor in the success of this governance model has been the active role of the busi- ness community in recent years in helping to recruit prospec- tive RTD board candidates from among community leaders, in an effort to ensure the strongest leadership and broadest vision possible. Measures of achievement and resource management dur- ing this period of transformation have revolved around change and evolution in RTD’s system of service standards that has resulted in a recognition of the need for realistic Type of Change Primary or Secondary Mission Shift Primary Funding Secondary Governance Measuring Goal Achievement Secondary Resource Management Secondary Retooled Workforce and Organization Collaboration and Integration Primary Technology Applications Table 2. Types of transformative change represented. Characteristic Value Service Area 2,326 sq. mi Service Area Population 2,619,000 Annual Passenger Trips 98.2 million Annual Revenue Miles 55.8 million Annual Operating Expenses $384.7 million FY2009 Capital Expenses $410.4 million Source: 2009 National Transit Database. Table 1. Agency characteristics.

55 variation among types or classes of service. Where these standards cannot be met for services proposed, alternative operating and/or funding arrangements are often sought with sponsors, client groups, or other providers. In the final measure, service decisions are driven in large part by finding the arrangement that satisfies demand with the lowest public subsidy per trip. From the standpoint of organizational change, transforma- tions have been modest but critical. Most significant perhaps is the encouragement of flexible perspectives and creativity among staff in building partnerships outside RTD. This shift in focus has required that RTD bring into the organization new, non-traditional skills (e.g., contract negotiation and management) and knowledge (e.g., of private for-profit and non-profit enterprises). New organizational priorities also have required that roles change within RTD and among part- nering agencies to better serve the people-moving mission. Collaboration and resource integration have been the hall- mark of the transformation of RTD, along with flexibility and creativity in exploring how best to meet travel needs. RTD takes an active role in working with service requests, sponsors, contractors, and funding partners to find alternative arrange- ments when RTD service standards cannot be met or when alternative service delivery schemes can lower the public sub- sidy. Examples include collaboration with the Metropolitan planning organization (MPO) to support the management of the rapidly growing vanpool program, collaboration with local governments to support localized services through cost- sharing arrangements where RTD operations are not feasible, collaboration with the state to guide multimodal capacity expansion projects, collaboration with human service agen- cies through capital support and cost-sharing arrangements, and collaboration with private providers and contractors in major project initiatives as well as in the use of resources and assets. Although planning and decision-making can be character- ized as “data-driven” at RTD, the application of state-of-the- art information technologies has largely followed, rather than led, the transformative changes that have taken place at RTD. Automatic passenger counters (APCs) are in use to support the data-driven approach. Smartcard technology implemen- tation is currently underway as are applications for real-time mobile, or cell-based, travel planning. In the process, infor- mation technology has become a core function within RTD. Reasons for the Change and How It Happened The Denver region has experienced rapid growth for sev- eral decades, supporting the need for an increased role for public transportation. Changes in demographics and the shift in expectations that arrived with newcomers from other parts of the country helped to build support for an increased role for transit. Given this support and approval for additional funding sources, the agency has responded with continued expansion. Table 3 provides an overview of the forces leading to change at RTD. The principal driver of RTD’s transformation has been the flexibility, creativity, and new sense of mission— moving people rather than vehicles—brought to the agency by the former general manager. His extensive experience in contracting and taxi operations provided a crucial fit given RTD’s requirement to contract out significant portions of its service. Senior staff hires share the former general manager’s philosophy and continue to serve the revised mission, which has greatly heightened and sustained the relevancy and sup- port for transit in the region. The “transformation” at RTD has been an evolution- ary process spanning a decade or more. The continuity in executive staff and business leaders’ heightened attention to improving RTD governance under the elected board model have allowed sustained progress. Subsequent activities and actions at RTD are focused on several key areas: • Continued build-out of the region’s light rail network (2013–2016), commuter rail project (2016), and track- sharing agreements, as well as Union Station redevel- opment (2014) through a combination of federal full funding grant agreements (FFGAs) and a design-build- finance-operate-maintain public-private partnership; • Ongoing implementation of a regional Smartcard system and associated customer-based information technologies; • Bus improvements in support of new rail services; and • Examination of policy trade-offs as funding availabil- ity tightens and costs increase, i.e., how to balance broad regional service demands and variable performance among services. RTD faces several challenges in its continuing transfor- mation: • It will be difficult to maintain current levels of service under current funding conditions. Funding and Finance New Technology Demographics and Society Sustainability, Energy, and Environmental Concerns Travel, Land Use, and Development Patterns Infrastructure Conditions Table 3. Forces leading to change.

56 • While the capital expansion program continues, perhaps at a somewhat slower pace, operating funding for rail and sup- porting bus services remains a challenge in the immediate future. • Needs for capital replacement continue to increase. • As greater emphasis is placed on performance as funds get tight, pressure may build to reduce the least productive ser- vices, e.g., demand response, while the demand is expected to grow. • As RTD approaches the current 58-percent cap on con- tracted rubber-tired services (bus and demand response), it may be necessary for RTD to operate more of its fixed- route service in-house or else operate some of its most costly service, e.g., demand response, to stay under the cap. Consequences of the Transformation The shift in mission, increased funding, and resulting changes in the organization have had the following effects: • From an operational standpoint, various partnering and cost-sharing arrangements adopted to meet its people- moving mission have allowed RTD to meet its service stan- dards, minimize per-trip subsidies, carry on a major capital expansion program, and sustain strong political and com- munity support. • From a budget and financial standpoint, RTD has broad- ened services offered in the region while minimizing per- trip costs and has found creative means to continue its rail expansion program. • From a customer and community standpoint, RTD carries out a regular cycle of customer satisfaction surveys that con- sistently demonstrate a high degree of customer approval. In addition, passage by significant margins of major regional funding initiatives attests to sustained and broad commu- nity support and the acknowledged relevance of transit in the Denver region. Lessons Learned The primary lessons from RTD’s experience include the following: • A fundamental shift from a mission of moving vehicles and a basic engineering orientation to a mission of moving people has the power to change an organization. • Enlightened leadership, broad leadership experience, and leadership continuity are critical to achieving funda- mental change in a traditional organization and business model. • Flexibility and creativity are crucial developing more effec- tive products and services. • Collaboration, integration, experimentation, and partner- ing are critical to transforming an organization. • Adherence to data-driven decision-making through ser- vice standards appropriate to types of services and markets and cost-effectiveness in using public funds can be effec- tive in maintaining an agency’s focus. • Transformations such as the type experienced at RTD may take years to accomplish. San Francisco Municipal Transportation Agency (SFMTA), San Francisco, CA Case study FoCus: Fundamental reorganization to support integrated multimodal planning, management, and mobility The transformation that has taken place at the San Fran- cisco Municipal Transportation Agency (SFMTA) is one of fundamental organizational restructuring and consolida- tion of multimodal responsibilities for the entire city-county transportation network into a single agency governed by a single policy board. As important, the agency’s traditional, transit-oriented operating mission has been expanded to optimize “the use of transportation assets and the quality of the travel experience regardless of which mode or combina- tion of modes are being used.” (Substantial portions of this case study and all quoted passages are taken from a profile prepared APTA that appears on the APTA website (www. apta.org) under “Hot Topics/Mobility Management.”) Background Prior to 1999, San Francisco Municipal Railway, or Muni, was the operating agency responsible for the extensive system of multimodal transit services provided throughout the city and county of San Francisco. Muni’s transit services include

57 diesel and electric trolley buses, light rail, cable cars, and demand-response services that have operated under the city’s “Transit-First Policy” since 1973. Muni services historically have been planned and operated in coordination with the ser- vices of several other major transit providers in surrounding jurisdictions that serve San Francisco travel markets. Public transportation within the San Francisco–Oakland urbanized area is provided by 28 transit operating agencies serving 101 municipalities, most of which have responsibility for a portion of the region’s street and highway network. The region’s nine counties act as congestion management agen- cies under state law. With the passage of Proposition E in 1999, voters directed the 2002 formation of the SFMTA, combining responsibilities for Muni’s transit network and responsibility for city streets under the San Francisco Department of Parking and Traf- fic. The separate commissions governing each of the orga- nizations were dissolved and a single seven-member SFMTA board of directors was created, appointed by the mayor and subject to confirmation by the city and county board of supervisors. Responsibilities were further consolidated in 2009. Passage of Proposition A resulted in merging the for- mer San Francisco Taxicab Commission into the SFMTA, giv- ing SFMTA the added authority to regulate the taxi industry and other for-hire services in San Francisco. Table 1 provides an overview of SFMTA’s operating statistics. Type and Nature of Transformation The transformation that has taken place at the SFMTA is one of fundamental organizational restructuring and con- solidation of multimodal responsibilities for the entire city– county transportation network into a single agency governed by a single policy board. As importantly, the traditional tran- sit-oriented operating mission, based to a large extent on a 1973 “Transit-First Policy,” has been expanded to optimize “the use of transportation assets and the quality of the travel experience regardless of which mode or combination of modes are being used.” This change in mission together with the shift in governance and organizational structure served as primary change elements in the transformation to a multi- modal organization. Far-reaching reorganization within SFMTA is firmly rooted and reflects the mission shift noted above. Table 2 summarizes the kinds of change that occurred at SFMTA. Reasons for Change and How It Happened The principal driver of SFMTA’s transformation was the increasing frustration of city and county elected officials and citizens with the complications inherent in bridging the interests, responsibilities, programs, and resources of separate municipal transportation agencies and commissions. Ever- increasing demand for additional transportation services in the city that has come with population growth, a desire to more aggressively address the impacts of the transportation system on the environment, and a general recognition of the need to invest in aging infrastructure led to reforms that addressed long-standing limitations in the organizational structure. Table 3 provides an overview of the forces leading to change at SFMTA. It was not until 2002 that the SFMTA was officially created by combining the professional staffs responsible for public transportation, traffic, and street parking, as described above. Transportation responsibilities were further consolidated in 2009. Efforts to mesh these professional cultures, policies, and processes continue even today. Within SFMTA, the new Type of Change Primary or Secondary Mission Shift Primary Funding Secondary Governance Primary Measuring Goal Achievement Secondary Resource Management Secondary Retooled Workforce and Organization Primary Collaboration and Integration Secondary Technology Applications Secondary Table 2. Types of transformative change represented. Funding and Finance New Technology Demographics and Society Sustainability, Energy, and Environmental Concerns Travel, Land Use, and Development Patterns Infrastructure Conditions Table 3. Forces leading to change. Table 1. Agency characteristics. Characteristic Value Service Area (San Francisco City–County) 49 sq. mi Service Area Population (San Francisco City–County) 845,559 Annual Passenger Trips 227.1 million Annual Revenue Miles 29.1 million Annual Operating Expenses $610.5 million FY2009 Capital Expenses $62.6 million Source: 2009 National Transit Database.

58 divisions made up of formerly independent agencies are now drawn together in reconciling policy and management pro- cesses and in sharing a common customer orientation, under the guidance of a single policy board. The current SFMTA organizational structure includes the following: • Division of Administration, Taxis, and Accessible Services • Division of Capital Programs and Construction • Division of Finance and Information Technology • Division of Transit • Division of Sustainable Streets The Division of Sustainable Streets has the most direct responsibility for integrating and reconciling multimodal decision-making for planning, programs, and investment across the entire city-county surface transportation network. The Division of Sustainable Streets includes five subdivisions: • Long-range planning and policy. • Livable streets. • Transportation engineering. • Transportation operations. • Parking facilities. The consolidation of responsibilities for the entire surface transportation network has led to a new, ongoing effort to introduce and track the effect of all transportation decisions and investments on the broader set of region-wide goals, including access within the region, greenhouse gas emissions, and utility consumption. The combination of these operational and strategic measures is intended to provide a mechanism to assess the sustainability of both the overall transportation sys- tem and the SFMTA itself and to reconcile conflicting demands on the use of limited transportation rights-of-way. Integration of responsibilities, policies, assets, and resources is taking place on a number of levels as a result of the new SFMTA organizational structure and approach. Key themes or initiatives include the following: • Sharing street space. Efforts are underway to make opera- tional the notion that finite street space and capacity has to be rationed or allocated among competing users in varying ways to effectively sustain mobility, safety, economic vital- ity, and environmental quality. • Policy and strategy integration. First priority is given to maintaining a state of good repair in infrastructure, fol- lowed by efforts to optimize use of available capacity, then by demand management, and then introduction of other modes to add capacity. SFMTA is hiring the agency’s first travel demand management coordinator to develop proj- ects and programs that reduce the use of the automobile and service delivery trips in the city for all trip generators. • Plan integration. Plans in place or underway provide a mechanism for integrating policy and strategy within the city and county area. For instance, the Better Streets Plan and Pedestrian Strategy focused on the pedestrian environ- ment; the San Francisco Bicycle Plan has been developed to be consistent with the Transit-First Policy and a Climate Action Plan (CAP), and a new Cycletracks Strategy is being developed to advance a 100-mile, grade-separated, in- street bicycle network. Outside SFMTA, active collaboration takes place with local land use, development, environmental, social service, and related agencies and other region-wide interests. Citizen advi- sory councils also are active in each area of SFMTA responsibil- ity as well as on major projects. Finally, SFMTA meets regularly with all the transit providers inside and outside of the city of San Francisco service area to address mutual mobility needs. The new organizational structure has taken on a number of activities that benefit from a multimodal approach and vision, including the following: • Development of a climate action strategy; • Revised asset management and state of good repair needs assessment; • Publication of the SFMTA Annual Mobility Report to measure progress; • Development of a pedestrian action strategy; • Development of a transportation demand management (TDM) program; • Expansion of the parking management system; • Broadened use of the Clipper card across modes and services; • Greater attention to data sharing and implementation of the NextMuni real-time arrival data system and data access through wifi, web, and personal devices; • Development of SFgo, the city’s transit and emergency vehicle signal priority and synchronization project; and • Execution of a transit data license agreement to facilitate access to and use of real-time transit data and information. Principal barriers and challenges to the transformation of the SFMTA include the following: • Marshalling the funding and financial resources to support the entire range of multimodal services; • Managing competing priorities for shrinking resources; • Maintaining a focus on and developing measures to assess how operational and investment decisions affect broad regional goals; • Balancing the use of limited street space and right-of-way among different modes and users; and • Merging the corporate cultures, policies, and processes of pre-existing modal organizations.

59 Consequences of the Transformation Operationally, efforts to rationally allocate road space among various modes and users have begun to leverage the inherent capabilities of specific modes to meet specific mar- ket needs in appropriate settings and to support the broader economic, developmental, and environmental goals of the city, county, and region. Plans for the future include continu- ing elimination of modal conflicts and operational inefficien- cies as well as greater safety across modes. From a budget and financial standpoint, combining respon- sibility for all aspects of surface transportation has brought greater funding flexibility by making available a broader array of revenue sources to support multimodal planning invest- ment decisions made through a unified process under consis- tent policies. As a single agency responsible for a multimodal transportation network, SFMTA can draw on a variety of fund- ing sources not typically available to traditional transit operat- ing agencies, including parking revenue, traffic fine revenue, and development fees. Multiple funding sources, not typically available to single mode agencies, allow the system to fund operations from a diverse source of revenues and can mini- mize major service disruptions experienced by other agencies during economic downturns. The ability to meet with land use agencies and execute devel- opment agreements that address impacts to the multimodal transportation network allows for greater cooperation as well as agreements for funding capital projects (e.g., rights-of-way, facilities, streetscapes, etc.) and operating resources that would have been very difficult to coordinate otherwise and that sup- port a holistic approach to meeting transportation needs. From a customer and community standpoint, consoli- dated SFMTA responsibilities offer the prospect of contin- ued improvements in service, access, and mobility; more understandable, timely, and transparent decision-making; and a more direct means of pursuing broader city, county, and regional goals. The merging of various commissions has allowed cross-pollination of ideas and problem solving to include better outcomes for projects and programs that would not have been so successful prior to the merger. Lessons Learned While the ultimate success of the SFMTA is yet to be deter- mined, the primary lessons from the SFMTA experience include the following: • Funding and financial stress on transportation agencies, systems, and providers strengthens the case for embracing more sustainable mobility strategies. • A fundamental mission shift from moving vehicles and dealing with modal transportation assets in isolation to moving people under a unified set of roles, responsibili- ties, and processes offers tremendous power to shift the focus of an organization. • Enlightened political leadership and advocacy groups are critical to the integration of traditionally separate centers of modal responsibility and for supporting continuing internal staff efforts to integrate policy and procedures. • Transformation of governance models, organizational structure, policies, and processes is a long-term process, and merging different organizational and professional cultures across transportation modes and professions can involve inherent difficulties. • Change should be viewed as part of an evolutionary pro- cess unfolding over the long term, rather than as a single revolutionary and instantaneous event. Southeastern Pennsylvania Transportation Authority (SEPTA), Philadelphia, PA Case study FoCus: Shift to agency focus on customer service through organizational changes, employee development, and technology investment The Southeastern Pennsylvania Transportation Authority (SEPTA) is accomplishing a quantum change in its relationship with riders and the general public. Employees have a reaffirmed commitment to treat riders as valued customers and recognize that the general public is composed of stakeholders who sup- port the system financially and expect good stewardship and public benefits such as congestion relief and improved air qual- ity in return. To further these goals, SEPTA has instituted orga- nizational changes and workforce development strategies to reinforce the shift in emphasis. SEPTA expects that the ultimate results will be greater public acceptance, increased ridership, and stronger support for funding and operations initiatives.

60 Background SEPTA is now the nation’s sixth-largest public transpor- tation system and the largest in Pennsylvania. SEPTA’s ser- vice area covers the counties of Bucks, Chester, Delaware, Montgomery, and Philadelphia with service to Trenton and West Trenton in New Jersey and Newark, Delaware, on regional rail. SEPTA service consists of 117 bus routes, 3 trackless trolley routes, 3 high-speed lines, 8 trolley lines, and 13 regional railroad lines. On February 18, 1964, the Pennsylvania General Assembly established SEPTA to pro- vide public transit services for southeastern Pennsylvania after consolidating the remnants of bankrupt private opera- tors. SEPTA’s acquisition of transit companies by year is the following: • 1968—Philadelphia Transportation Company (PTC) • 1969—Philadelphia Suburban Transportation Company (also known as Red Arrow) • 1976—Schuylkill Valley Lines (Frontier) • 1983—Regional Rail (Conrail) • 1984—Opening of the Center City Commuter Tunnel to join the previously separate Penn Central and Reading Railroads in Center City Philadelphia. Table 1 summarizes the agency characteristics of SEPTA. When SEPTA was first created, it melded the cultures of former private sector monopolies. In the early years, this situ- ation required that company leaders focus more on funding and cost control than customer service. SEPTA now embraces the idea that to be successful providing first-class public transportation, a transit agency needs to be connected to the needs of its customers—including riders, regional stakehold- ers, taxpayers throughout Pennsylvania, and political leaders. SEPTA works to create a level of awareness and understand- ing that public transit is vital not only to southeastern Penn- sylvania, but to the economy across the Commonwealth. Type and Nature of Transformation Over the past 3 years, SEPTA has succeeded in changing its corporate culture through senior management’s con- certed focus on listening to and responding to customers. The current general manager’s emphasis on the “four Cs” of customer service—cleanliness, convenience, courtesy, and communication—provides a simple matrix for prioritizing and planning SEPTA programs. By creating a formal customer service program, SEPTA has a well-defined blueprint for action built around the “four C” components. Table 2 shows the types of change that occurred at SEPTA. Reasons for the Change and How It Happened New leadership within the organization recognized the threats to the organization and placed a high priority on cus- tomer service. The general manager and policy makers based this initiative on the perception of SEPTA by riders, the public generally, the legislature, and state and local elected officials, as well as SEPTA’s image in the news media. Table 3 provides an overview of the forces leading to change at SEPTA. Type of Change Primary or Secondary Mission Shift Secondary Funding Governance Measuring Goal Achievement Secondary Resource Management Secondary Retooled Workforce and Organization Primary Collaboration and Integration Secondary Technology Applications Secondary Table 2. Types of transformative change represented. Characteristic Value Service Area 1,800 sq. mi Service Area Population 5.1 million Annual Passenger Trips 348.3 million Annual Revenue Miles 89.0 million Annual Operating Expenses $1,081.9 million FY2009 Capital Expenses $481.9 million Source: 2009 National Transit Database. Table 1. Agency characteristics. Funding and Finance New Technology Demographics and Society Sustainability, Energy, and Environmental Concerns Travel, Land Use, and Development Patterns Infrastructure Conditions Table 3. Forces leading to change.

61 Customer service initiatives were implemented from the top down with a change in organizational structure to create an assistant general manager of customer service who reports directly to the general manager. Customer service initiatives were also implemented from the bottom up, with invest- ments in technology, collaboration with advocacy groups, and implementation of training programs such as new-hire training and continuing education training called “SEPTA Connect.” Changing the Organizational Structure In 2008, a new Customer Service and Advocacy Division was created with an assistant general manager of customer service reporting directly to the general manager. The new assistant general manager’s principal job is to make sure that customer service is a priority across the entire organization and that all managers consider customer service during their decision-making processes. The agency made several addi- tional organizational changes to reinforce the emphasis on customer service. Investments in Technology SEPTA has embraced a number of innovative communica- tion strategies using new technology, including an online chat service for SEPTA’s website. SEPTA also has included more real-time information on its website, is replacing the phone system with new Integrated Voice Response (IVR) software, and is creating more phone capacity with a modernized Automated Call Distribution (ACD) system. Together, these investments will dramatically improve the ability of SEPTA’s customers to access both automated trip planning informa- tion and live agents. Collaboration with Advocacy Groups and the General Public SEPTA has expanded its collaborative efforts with a num- ber of community organizations. In 2008, the Customer Service and Advocacy Division created the Youth Advisory Council (YAC), made up of high school and college students, to engage a younger generation. Outreach to railroad and transit advocacy groups has helped mitigate the traditionally adversarial relationships of these groups with SEPTA. SEPTA engages non-riders with a program called “SEPTA Customer Connection.” Through this program, SEPTA holds events at SEPTA facilities and “meet-and-greets” at key area attrac- tions, SEPTA representatives visit schools, encourage groups to tour SEPTA’s facilities, and encourage employees to actively participate in civic activities as representatives of SEPTA. Integrating Customer Service into Employee Training and Performance SEPTA has invested in training programs for new hires and current employees. New employees must now pass a week- long social skills training course before advancing into for- mal new-hire technical training. Since 2010, this “social skills” prerequisite training has been mandatory for all new bus and trolley operators. In the fall of 2011, SEPTA expanded this pro- gram to include new railroad conductor trainees. Another key training program is called “SEPTA Connect.” These are weekly classes in which current employees can work on enhancing their technical and social skills. The general manager partici- pates in all customer service classes along with other assistant general managers and the head of operations. Integrated with new training are efforts to celebrate employee achievements. The General Manager’s Recognition Task Force nominates employees for special consideration based upon acts “above and beyond.” There are also programs to ensure that all compliments and commendations are received promptly, and “employee of the month” programs exist in nearly all depart- ments. In addition, there are presentations at SEPTA’s monthly board meetings in which SEPTA employees are recognized for outstanding service. Consequences of the Transformation SEPTA conducts comprehensive market research through a customer survey every other year, with the last one completed in the fall of 2010. The results of this recent survey were much improved as compared to the 2008 survey. Since 2008, the number of customer commendations received each month has been higher than commendations received in the same month in the prior year 85 percent of the time for the last 36 months. This change indicates a slow but steady change in the way SEPTA’s front-line employees interact with its cus- tomers. More subjectively, employees feel that their reception among the general public is improving. There is a general sense that the “mood” on the street about SEPTA is getting better and that the company’s overall reputation is improv- ing. The ability to deliver reliable, personalized service can go a long way toward creating a legion of passionate and loyal customers. Lessons Learned The SEPTA case study provides a number of key lessons: • Organizational changes can reinforce desired shifts in agency priorities—in this case the desire to emphasize customer service.

62 • Investments in training and employee development also can reinforce an agency shift, and such investments are critical even during times of tight fiscal budgets. • Engagement with the public can contribute to improve- ments in customer satisfaction. SEPTA leadership believes that a customer deserves to be heard and responded to promptly. A lack of response may result in fewer complaints, but not necessarily an increase in customer satisfaction. SEPTA’s measure of success regarding complaints is how quickly they can respond to the customer personally. • Outreach and improved collaboration with advocacy groups can help mitigate once adversarial relationships. SEPTA has brought organizations into the process in a meaningful way, with activities related to lobbying, writ- ing articles, and contributing to a presence in the capital. • Excellence in customer service does not have to be costly. TransLink, Vancouver, BC Case study FoCus: Regional agency elevated from a regional planning organization to one responsible for land use planning, transit operations, and roadway development with a shift from provincial to regional control As a result of the frustration of local governments and their regional planning agency with the rate of investment in trans- portation and the desire of British Columbia’s government to disengage from local transit and road responsibilities, a radi- cal realignment of functions took place in 1999. TransLink was created to combine transit and major roadway planning, investment, and operations region-wide, and was entrusted with powers of taxation. TransLink has accomplished a sig- nificant increase in the rate of transportation investment, an increase in transit’s mode share, and improvement in cus- tomers’ ratings of its performance. Background In the 1990s, Greater Vancouver had the highest per capita automobile ownership in Canada and the impacts were of major concern to the region’s leaders and its residents. At that time, Vancouver’s regional planning agency, the Greater Van- couver Regional District (GVRD), had responsibility for land use planning and the development of the regional major road network while the province owned and operated the regional transit system, BC Transit. GVRD resolved to change the course of transportation and development. In 1999, GVRD’s nego- tiations with the provincial government culminated in the creation of TransLink, officially known as the South Coast Brit- ish Columbia Transportation Authority. It was the first North American transportation authority responsible for develop- ment and operation of both roads and transit. TransLink has taxing authority, a key change from its predecessor, BC Transit. Prior to the creation of TransLink, the Vancouver metro- politan area was one of only a few regions in Canada where transit was operated by the provincial government. Origi- nally, the BC Electric Railway Company operated public tran- sit in Vancouver. BC Electric was purchased by the provincial government in 1962 and transferred to the Bureau of Transit Services in 1976, then to the Urban Transit Authority in 1978, and later renamed BC Transit. TransLink has a multitiered governance structure that includes a nine-member board of directors, the Mayors’ Council on Regional Transportation, and the regional trans- portation commissioner. The board has responsibility for making decisions in the interest of TransLink within limits established by the authorizing legislation. The Mayors’ Coun- cil is composed of representatives from each of the region’s 21 municipalities, as well as the Tsawwassen First Nation, and collectively represents the interests of citizens. The Mayors’ Council appoints the TransLink board of directors and the commissioner. It approves the transportation plan, regional funding, and borrowing limits. TransLink delivers services through contractors and its operating subsidiaries, including Coast Mountain Bus Com- pany, British Columbia Rapid Transit Company Ltd. (Sky- Train), and West Coast Express Ltd. The agency is responsible for over 220 bus routes with a fleet of over 1,525 vehicles; 3 ferries; HandyDART, a custom transit service for people with disabilities; 3 automated light rail services; 2 commuter rail services; the operation and maintenance of the 2,400-km (1,490-mile) major road network; 3 bridges; the transit police; and AirCare, the vehicle emission testing and inspection system. Table 1 summarizes the agency characteristics of TransLink. Type and Nature of Transformation The focus of this case study is the governance and mission change that has happened over the past decade with increased emphasis on coordinated land use and transportation invest-

63 ment. Although TransLink is a new entity, it carries on the regional heritage of the GVRD and integrates regional land use and transportation planning with transit investment and operations and roadways. Table 2 lists the types of change that occurred at TransLink. Reasons for the Change and How It Happened During the 1990s, local governments in the Vancouver region were demanding increased investment in transpor- tation while the province was pursuing a policy of fiscal restraint. The provincial government managed BC Transit and had started the commuter rail system in 1996. The region was undergoing extensive growth, and there was concern that transit was not keeping pace. The provincial government was not interested in continuing to provide service and was fac- ing increasing costs to plan, manage, and fund a transpor- tation system that supported regional land use, air quality, and economic objectives. The GVRD developed a land use plan for the metropolitan area with four key areas of empha- sis, including transportation, and recognized the need for a regional government structure. The GVRD’s evolving vision for regional transportation can be tracked through three planning documents published in the 1990s. These docu- ments outlined key transportation priorities and strategies that would later lead to the creation of TransLink: 1. Creating Our Future established measurable goals and tar- gets and committed to a transportation policy that gave walking, cycling, transit, and goods movement a higher priority than the private automobile. 2. Transport 2021 detailed specific strategies for how to achieve increased transportation choice by managing land use, transportation demand, and transportation supply. A key proposal in Transport 2021 was some form of road user charge to help fund the major transit fleet expansions and transit and road infrastructure improvements. 3. Livable Region Strategic Plan, GVRD’s first growth man- agement strategy was derived from Creating Our Future. One of the four main principles in the plan was increasing transportation choice. Once GVRD and the provincial government agreed that a regional government was needed, the Vancouver region and the provincial government each identified a person to nego- tiate the governance and funding to support this new entity. The negotiation process took 2 years and concluded with an agreement to give the new authority responsibility for transit and major roads in the region. TransLink was established with a board structure, which helped in gaining acceptance from the municipal govern- ments, but that structure has evolved over time. Two gov- ernance models were considered, a political board and a professional board. Initially, the decision was made to cre- ate a political board of 15 elected officials, including mayors, councilors, and members of the Legislative Assembly with the responsibility of providing oversight. The creation of a political board generated some concern among stakehold- ers, including the port and the airport. In 2007, there was a change to the governance of TransLink due to a funding dispute between the provincial government and local govern- ments on a specific project. The province minister asked for a review of TransLink’s governance, which was undertaken in 2006 and resulted in a governance change in 2007. In that change, the 15-member political board was replaced with a 9-member professional board appointed through an inde- pendent selection process. Three members rotate each year. Each year, a screening panel selects five potential members, of whom the Mayors’ Council chooses three. When created, funding also was a key part of the agree- ment negotiated between the province and the local gov- ernments. Existing funding sources, including parking sales taxes, fuel taxes, and local property taxes, were transferred to TransLink. TransLink advocated for a new vehicle levy to support increased funding, but has been unable to get the support of the provincial government, which it needs to administer this particular revenue source. The expectation is that TransLink will be allowed to implement the levy in the near future. Despite maintaining local taxing authority, Characteristic Value Service Area 1,149 sq. mi Service Area Population 2.4 million 2010 Scheduled Transit Service Boarded Passengers 347.2 million 2010 Scheduled Transit Service (Miles) 94.1 million 2010 Annual Expenses $1,366.6 million 2010 Expenses $1,358.3 million Source: TransLink 2010 Annual Report. Table 1. Agency characteristics. Type of Change Primary or Secondary Mission Shift Secondary Funding Primary Governance Primary Measuring Goal Achievement Resource Management Secondary Retooled Workforce and Organization Secondary Collaboration and Integration Secondary Technology Applications Table 2. Types of transformative change represented.

64 long-term sustainable funding is still a challenge. Table 3 pro- vides an overview of the forces leading to change at TransLink. Consequences of the Transformation The creation of TransLink contributed to increased levels of investment, ridership growth, and an improved coordination of development and transportation investment. TransLink has increased bus service hours by 40 percent, implemented two rail lines, and made strides in the coordination and con- sistency of policies in the major road network. Road plans, as well as transit plans, no longer stop at municipal boundaries. Ridership has more than doubled since 1999, and there have been significant increases in land use density in tran- sit corridors. The region’s transit mode split has increased from approximately 10 percent in 1999 to 12 percent in 2011, in contrast to declines in other areas of Canada and in the United States during the same period. Customer service rat- ings reached their highest levels ever in 2010. Lessons Learned The TransLink case study offers a number of key lessons: • Aligning funding authority, long-range planning, and project implementation responsibility has the potential to accelerate the implementation of a long-term vision for transportation. • Integration of highway and transit planning has the poten- tial to improve decision-making for both modes. • Integration of transit, highway, and land use planning can lead to an increase in the role of transit in a region’s trans- portation system. • Shifting funding sources to the local level has the potential benefit of bringing long-term stability and local control. Funding and Finance New Technology Demographics and Society Sustainability, Energy, and Environmental Concerns Travel, Land Use, and Development Patterns Infrastructure Conditions Table 3. Forces leading to change. Utah Transit Authority (UTA), Salt Lake City, UT Case study FoCus: An exceptional emphasis on collaboration with external and internal stakeholders to change the regional role for transit The Utah Transit Authority (UTA) has undergone almost continuous change since its formation in 1970 as it has con- tinued to expand service to cover the rapidly growing Salt Lake City region. Some of its more remarkable changes have occurred since the late 1990s as the agency moved from being a regional bus operator to a multimodal operation manag- ing bus, light rail, and commuter rail. At the same time, the agency has actively embraced partnerships with key regional organizations and local elected officials. It also has built its internal capacity through an active promotion of leadership and through efforts to engage employees at all levels. Background UTA was formed in 1970 to address a growing regional transportation need. By the 1960s, private transit service oper- ated in the Salt Lake City region had deteriorated to the point where transit service was inadequate to serve transportation- disadvantaged persons. To address a growing concern over declining service, UTA was formed, and over the next several decades, the agency expanded rapidly. In 1974, the first local quarter-cent sales tax was passed to fund the transit agency, and, during the 1970s, UTA tripled the size of its bus fleet. In the early years of the new organization, UTA struggled with a number of operating challenges related to reliability. Ser- vice expanded through the 1980s, with most of this expan- sion in suburban areas of the region. During this period of expansion, UTA’s board emphasized service “coverage,” with performance measures to track the percentage of households within one-quarter mile of service. As service expanded, the cost per mile of service remained reasonable, while the cost per passenger mile increased. Despite increased costs, the growing economy of the region provided revenue that allowed for continued service expansion. By the early to mid-1980s, the regional view of transit started to change. In 1980, transit investments were considered for

65 the I-15 corridor in a joint transit and highway Environmen- tal Impact Statement. As a part of this analysis, multimodal scenarios were developed and evaluated. In the early 1980s, analysis conducted by the metropolitan planning organization (MPO) concluded that a regional growth policy coordinated with transit investment would help the region address regional congestion challenges. By the late 1980s, the transit market also started to change. UTA carried more university students and an increasing number of commuters. As the ridership char- acteristics changed, the board developed a strategic plan to better define UTA’s mission and resolved differences of opin- ion among board members on whether the agency should be run like a business or act primarily as a social services agency. The strategic planning exercise marked the point at which the agency began to shift its focus to markets. More recently, the agency has changed the overall role of public transportation within the region’s transportation sys- tem. UTA completed its first rail line in 1999, with a second extension to the site of the Olympic Stadium completed in time for the Olympics in 2002. The agency’s first commuter rail project was completed in 2008. UTA is currently man- aging five different capital projects that will further expand the role of rail in the region over the coming decade. Table 1 provides a summary of UTA’s most recent operating charac- teristics. The UTA Board of Trustees is made up of 15 members. Eleven are appointed by municipalities and counties that provide agency funding and the remaining four members are appointed by the state, including a representative of the state department of transportation (DOT). The state legislature recently approved the addition of the four state representa- tives, although no state funds are provided to UTA. Type and Nature of Transformation UTA has undergone continuous change since its creation, but the pace of change accelerated in the late 1990s. Since that time, the agency has undertaken a number of specific actions to transform the organization and the role of transit within the Salt Lake City region. Actions of note include the following: • A shift in emphasis from service “coverage” to strong tran- sit markets; • An active emphasis on collaboration with key regional organizations (e.g., the Wasatch Front Regional Council, the Utah Chamber of Commerce, and Envision Utah); • Increased outreach and partnership with local elected offi- cials across the region; • An effort to actively improve employee morale and labor relations; • The development of project implementation capacity; • A shift in the role of the UTA board away from agency management to high-level policy; • Continued increases in financial support from area local governments; and • An expansion of service, including the addition of light rail and commuter rail. The specific elements of change within UTA are diverse and any one of them would be considered significant within an organization. Together, these changes have transformed UTA from a regional bus operator to a dynamic, multimodal organization with the capability for project delivery, inno- vative management, and the ability to respond to continued market changes. Table 2 indicates the types of transformative change represented by UTA, including nearly every category of change. Reason for the Change and How It Happened The changing role of transit within the Salt Lake City region was driven in large part by the culture of the region, a strong local economy, and the long-term pace of population growth. Characteristic Value Service Area 1,412 sq. mi Service Area Population 1,744,417 Total Vehicle Fleet 1,032 Annual Passenger Trips 37.2 million Annual Revenue Miles 33.1 million Annual Operating Expenses $204.1 million FY2009 Capital Expenses $656.7 million Source: 2009 National Transit Database. Table 1. Agency characteristics. Type of Change Primary or Secondary Mission Shift Secondary Funding Secondary Governance Primary Measuring Goal Achievement Secondary Resource Management Secondary Retooled Workforce and Organization Secondary Collaboration and Integration Primary Technology Applications Table 2. Types of transformative change represented.

66 The influence of the Church of Jesus Christ of Latter-day Saints and the commitment of its members to preserve the quality of life in Salt Lake City also played an important role. Population growth in the Salt Lake City region continues unabated, and area leaders continue to seek ways to manage this growth in a way that protects the assets of the region. Transit is considered a key part of that strategy. Within this context, the impetus for change was multidimensional and consisted of the following key drivers: • Regional interest in maintaining a high quality of life in the Salt Lake City region was perceived as threatened by continued and rapid population growth; • An emphasis on lean operations did not allow UTA to respond to the demands for an increased role for transit within the regional transportation system; • Active involvement in agency management by the UTA board made it difficult for the board to provide a long- term vision and for the agency to respond quickly to day- to-day challenges; • Poor employee morale made it difficult to attract and retain high-quality employees; and • There was a need to generate long-term funding support to expand service. Table 3 provides an overview of the forces leading to change at UTA. The organizational strategies undertaken to promote change included actions that were both internal and exter- nal in nature. The agency’s success in maintaining long-term, stable leadership and its fiscal strength provided an environ- ment within which change could happen. Several specific actions were taken that contributed to fundamental change within the organization: • The board of trustees shifted its focus away from agency management to high-level policy by delegating more man- agement authority to the UTA general manager. • The agency emphasized collaboration across multiple dimensions, including – Partnerships with other key regional organizations, including the region’s MPO (the Wasatch Front Regional Council) and the non-profit, Envision Utah, to promote a long-term vision for transit investment in the region. – Partnership with the business community through the Utah Chamber of Commerce. – Dedicated staff resources at the highest levels to work closely with mayors across the region to improve rela- tionships with local elected officials. • In response to the changing expectations for transit within the region, the agency shifted its focus from transit service “coverage” to strong transit markets likely to see the high- est demand. • Management within UTA dedicated staff and financial resources to improving UTA staff morale and institutional capacity at all levels. Foundation of Fiscal Stability and Stable Leadership As UTA began to enter a period of change in the mid to late 1990s, the agency had the financial stability to undertake change, even if identified strategies required additional finan- cial or staff resources. John Pingree, the general manager at UTA for almost two decades, focused on managing cost and maintaining fiscal discipline. Although this emphasis created some tension with labor unions, the culture of fiscal discipline has carried on beyond his tenure. The agency also has benefit- ted from strong local financial support. In the 1990s, revenue from sales tax increased due to strong local economic growth. Although revenue growth moderated during the recession between 2000 and 2002, the passage of a new tax in 2000 mod- erated the effect of the more recent economic downturn on the agency. UTA also has maintained stable leadership that has encour- aged innovation throughout the organization. Mike Allegra, who has served as the general manager since April 2010, is only the fourth UTA general manager since the agency was established in 1970. Leadership has promoted innovation and, as a result, a number of innovations have emerged from within the organization. A Changing Role for UTA’s Board of Trustees The board of trustees shifted its role from agency manage- ment and oversight to an emphasis on long-term vision and high-level policy. As UTA continued to expand through the 1980s and 1990s, the board was active in a number of issues facing the organization. Committees were frequently formed around specific topics, and the volunteer board members Funding and Finance New Technology Demographics and Society Sustainability, Energy, and Environmental Concerns Travel, Land Use, and Development Patterns Infrastructure Conditions Table 3. Forces leading to change.

67 faced increasing time requirements to support these activi- ties. The board recognized the issue and embraced reform to follow the “Carver Model” of governance. In that model, an agency’s board fully empowers the professional staff. The board defines broad policy and provides a long-term vision for an agency. The board establishes what the general man- ager cannot do, but allows everything else within the con- straint of the approved agency budget. All communication from the board must pass through the general manager. The effect of this change resulted in less day-to-day management from the board, reduced the number of board committees, and allowed the group to focus on leading the agency’s long- term vision. The change also effectively de-politicized a num- ber of efforts and helped free up staff resources to focus on other initiatives. Building Partnerships with Local Elected Officials In an effort to build support within the community, UTA management made and continues to make a conscious effort to work more closely with local elected officials to improve these relationships. After the failure of a funding referendum in 1992, UTA staff recognized that they were operating too independently and needed to build more support within the community. UTA’s senior staff routinely meets with mayors from throughout the region, with the goal of increasing the level of understanding of the agency and to air disagreements on specific issues. Many of the mayors are now champions of UTA, including the last few Salt Lake City mayors. Partnership with Key Regional Organizations When John Inglish began his tenure as UTA’s general man- ager in the late 1990s, he more actively engaged with a num- ber of key regional organizations under the belief that the agency should partner with everyone possible. A key part of the change has involved outreach and collaboration with pri- vate and public organizations that have served as advocates for UTA, including the Wasatch Front Regional Council (the region’s MPO), Envision Utah (a regional non-profit focused on regional land use strategies), the Utah Chamber of Com- merce, and the Church of Jesus Christ of Latter-day Saints. The Wasatch Front Regional Council is the MPO for the Salt Lake City region. A number of senior leaders within UTA once worked for the MPO, and senior staff supports the MPO’s role in setting regional transportation policy. The MPO and Utah DOT share authority and provide an effec- tive checks and balances system. The MPO must approve the regional Transportation Improvement Program (TIP) for the state to include these projects in the State Transportation Improvement Program (STIP), and without the approval of the STIP, the projects included in the regional TIP cannot move forward. UTA also has worked closely with Envision Utah, a public- private partnership formed to focus on strategies to protect Utah’s environment, economic strength, and quality of life. This organization serves in an educational capacity within the region. Envision Utah created a “Quality Growth Strategy,” with the goal of providing a sustainable way to accommo- date the expected population growth through 2040 in Utah. The focus of this strategy is termed the “3% strategy” which calls for 33 percent of the future development to be accom- modated on 3 percent of the land, near key transit stops and road corridors. The principles of this land use plan include (1) focusing growth in economic centers and along transpor- tation corridors; (2) creating significant areas of mixed use development throughout the region; (3) targeting growth around transit stations; (4) encouraging infill and redevelop- ment to revitalize declining neighborhoods; and (5) preserv- ing rural, recreational, and environmentally sensitive areas. Finally, UTA’s partnership with the business community through the Utah Chamber of Commerce has helped to build stronger support for transit within the community. The busi- ness community recognizes that transit is vital to the region’s economic development and UTA actively supports efforts to attract new employers by working closely with the Chamber to provide needed support. The Chamber acts as a supporter of UTA and has publicly endorsed a number of the proposed revenue increases for UTA. Shift from Service “Coverage” to Markets UTA made a conscious decision to shift its emphasis from maximizing service coverage to serving strong transit mar- kets where demand is expected to be highest. This change was first conceptualized in the 1990s, but the change took a number of years to implement. UTA conducted an in-depth market analysis that informed service reconfigurations in 1999 in Utah County, in 2003 in Weber County, and system- wide in 2007. The changes in service, which included reduc- tions in geographic coverage and increased frequency for core areas, resulted in an increase in ridership with a similar level of service. An Emphasis on Employees UTA’s senior staff recognized the need to improve employee relations across the agency and did so by actively engaging employees in agency decisions. The agency also addressed issues that contributed to poor morale. Prior to 1997, UTA

68 struggled with employee relations. The agency’s long-term emphasis on fiscal discipline, while beneficial to the agen- cy’s fiscal stability, had the effect of undermining employee morale. There was a general lack of trust in agency manage- ment and disputes with the labor union were common. Shortly after taking over as general manager in 1997, John Inglish began to actively engage employees to solve agency problems. He organized approximately 15 “diagonal slice” teams made up of staff from all levels and from various UTA departments, and the teams were tasked with identify- ing strategies for addressing issues within the agency. This approach to problem-solving has continued and is now fun- damental to the agency. Working with employees to reach decisions creates stronger buy-in among employees to imple- ment the change. In its efforts to improve relations with organized labor, UTA addressed a long-standing difference in pension ben- efits between management and labor. Prior to this change, management’s pension benefit was more generous and served as a source of tension. UTA’s management proposed parity in pension benefits and to promote this change focused on edu- cating leadership within the union on how pensions work. The change was subsequently supported by the union and resulted in an increase in labor costs of about 5 percent for UTA. Although labor costs increased, this change addressed this long-standing source of mistrust. UTA also changed its approach to grievances. Previously, the agency would defer decisions on grievances until the point of contract negotiations. As a result, labor negotiations tended to focus more on these grievances than on core com- ponents of the labor contract. The agency now deals with grievances filed by the union immediately rather than wait- ing until the time of contract negotiation. Both sides have more energy to focus on the core of the labor contract, and the negotiation process generally progresses more smoothly. The multitude of changes made to improve employee morale within the agency have reduced turnover and helped recruiting. As an unintended consequence, UTA’s 2,000 employees have now become strong advocates for the organization. Improved employee relations played an important role in the approval of the funding referendum in 2000, and employees continue to serve as advocates for local funding referenda. Consequences of the Transformation The successes of UTA’s transformative change are appar- ent both inside and outside the organization. The agency has successfully transitioned from a regional bus operator to an agency that now operates bus, light rail, and commuter rail service. UTA also has built the institutional capacity to deliver projects and is now managing the completion of five major rail projects simultaneously. The agency also continues to receive broad support in the community, with continued approval of local ballot initiatives to increase taxes to support UTA. With the increased revenue, the agency has been more able to respond to demand for increased service. Total ridership has increased from 24 million in 1998 to 39 million in 2010, and the regional market share for tran- sit is now estimated at about 3 percent. Within some travel markets, however, the change is more dramatic. In the late 1980s, the transit market share of travel to the University of Utah was estimated at about 5 percent, but today that share has reached as much as 40 percent. The agency, which once carried primarily captive riders, has now shifted to a market that is estimated at approximately 70 percent choice riders. Lessons Learned UTA’s successful transformation over the last two decades offers a number of lessons beneficial to other organizations seeking to undertake similar efforts: • Building trust with employees can have wide-ranging ben- efits, including reduced turnover and improved service quality. • Collaboration with key regional organizations can help build broad support. • Outreach to mayors can serve as an effective method to broaden support. Given the high proportion of funding that comes from local sales taxes approved by referenda, these relationships have helped UTA gain support from local elected officials as these ballot initiatives come before the voters. • Stable leadership and solid finances can provide the envi- ronment for change. Senior UTA staff built trust with the board of trustees and with employees to create an environ- ment open to innovation. • Increased delegation of authority to the general manager can accelerate change. UTA is now able to respond more quickly to unanticipated challenges by keeping issues out- side of the political environment. Many of the innovative approaches to specific issues have likely happened as a result of this change.

69 Washington State Department of Transportation, Public Transportation Division, “Travel Washington” Intercity and Rural Bus Program Case study FoCus: Transition of a state DOT transit program from a grants administrator to a leader in defining and implementing a statewide network Type and Nature of Transformation WSDOT’s decision to develop a statewide intercity bus plan was the result of concern about the intercity bus service losses, concern about some of the existing services funded with the state’s federal intercity bus funds, and the idea that it is the state’s responsibility to create and maintain a network of statewide transportation services. This plan was completed in 2007 and included an effort to identify a statewide inter- city network that included both unsubsidized intercity bus services provided by private for-profit firms and subsidized rural intercity routes. The state now has a direct role in the design of intercity bus services, including routes, schedules, stops, equipment, fares, and information. The state also can control to a much larger extent how the service connects with the national network of intercity bus services and other modes, including require- ments for interline tickets and stops at particular terminals. This change in the state role includes performance and ser- vice monitoring, with provisions for contract termination if measures are not met in a timely manner. The change in the state’s role was accompanied by the development of a new way to provide the required operat- ing match for Section 5311(f) operating assistance by allow- ing the inclusion of the value of capital used in connecting unsubsidized intercity bus service as an in-kind match for the federal operating assistance on subsidized routes. This new matching approach was proposed to FTA and was allowed as a 2-year demonstration pilot project for the Section 5311(f) program. The new services funded under the WSDOT PTD program are branded and promoted with a distinct statewide identity (Travel Washington) and a regional flavor for each route based on local products (the Grape Line, for example). Table 1 provides a summary of the types of change that occurred at WSDOT. Reasons for the Change and How It Happened There were several factors leading to the change in the intercity program business model at WSDOT. One was the Greyhound service reductions, which created publicity around the issue of declining rural bus service and led to calls for action by WSDOT. WSDOT was using some of its The state of Washington made a major change in the busi- ness model for the rural intercity bus program in which the state role, as administered by the Washington State Depart- ment of Transportation (WSDOT), changed from that of being a passive provider of funding to meet local initiatives to taking responsibility for developing a statewide network of connecting services. This effort involved identifying gaps in the network and then using available federal funding to contract for specific services to fill these gaps. This change has successfully addressed reductions in the state’s intercity bus services and has provided critical transportation services to many small urban and rural areas in the state. Background The Public Transportation Division (PTD) of WSDOT administers the FTA’s Section 5311 program of rural public transportation assistance, as well as the Section 5310, 5316, and 5317 programs. The PTD also administers state funding for public transportation. The Section 5311 program provides funding for capital, operations, administration, planning, and marketing for transit systems in urbanized areas with fewer than 50,000 people. Section 5311(f) sets aside 15 percent of each state’s overall Section 5311 allocation specifically for rural intercity projects unless the governor certifies that the state has no unmet rural intercity bus needs. In the WSDOT public transit program, a single statewide grant solicitation is conducted for all types of public transit projects. Under this Consolidated Grant Program, all poten- tial projects are evaluated and ranked in the same pool. This approach was developed to avoid “funding silos.” For those projects selected for funding, WSDOT assigns the most appro- priate funding program. Under its public transit program, WSDOT had previously used its Section 5311(f) allocation to fund several projects that could be classified as intercity service projects under the federal guidelines. However, in 2004, restructuring of Grey- hound Lines’ nationwide service resulted in the loss of service to a number of points in Washington. Local concern over the loss of these particular services led PTD to realize that under the Consolidated Grant Program it could only respond to local applications and that it had no way to proactively seek to implement particular services if there was no qualified local applicant with a sufficient local match.

70 Section 5311(f) allocation to provide operating assistance in areas of the state, but not in those areas losing bus service. There was no way under the program structure, at that time, to use the available funding to address service losses or needs elsewhere unless a local agency or provider applied for fund- ing and could provide a local match. The state also struggled with limited ability to address non-performance and compli- ance issues among recipients of Section 5311(f) funding. In addition to the public (and legislative) concern about loss of Greyhound services, other departmental planning efforts suggested a need for rural intercity connections in other locations. The federally mandated, locally coordinated, human service–public transportation planning process iden- tified some unmet rural intercity needs, particularly in places losing intercity bus service. These factors all acted as a catalyst in the state’s decision to conduct a study of rural intercity bus service needs, policy, and program options. Table 2 provides an overview of the forces leading to change at WSDOT. The resulting study was The Washington State Intercity and Rural-to-Urban Public Transportation Network Plan. It identified rural intercity bus needs and the programmatic and regulatory issues involved in addressing them. It pro- posed a new role for the state that would involve defining and maintaining a statewide intercity network consisting of both unsubsidized intercity bus services and gap-filling rural intercity services with some public funding. The plan defined potential corridors, estimated costs, and demonstrated sus- tainability under existing Section 5311(f) allocation levels, utilizing a new way to define a local operating match using the in-kind value of unsubsidized connecting service. Implementation of the plan’s recommendations required actions from a number of different parties. In Washington, entry into intrastate bus service is still regulated by the Wash- ington Utilities and Transportation Commission (WUTC) and firms are required to obtain operating authority for particular routes and services. Firms without such author- ity are not allowed to compete with the firm holding the authority. Legislative action was required to allow WSDOT’s selected contractors the ability to operate. State legisla- tion was required to change this process so that WSDOT’s selected contractor could provide service authority held by an incumbent (but non-performing) carrier. The selected contractor is required to obtain the required authority from the WUTC. A second major action involved FTA approval of the proposed in-kind funding match for Section 5311(f). This involved the development of the proposal and the presen- tation of it to both FTA headquarters and regional staff, resulting in the development of the “Pilot Project” funding guidelines, which have since been administratively renewed several times. Within WSDOT, these activities required an initial increase in staff support beyond that previously provided for the rural intercity bus program. Initially, the development of new poli- cies, coordination with outside agencies, and development of a Request for Bid competitive procurement for services required a full-time staff member. Over time, this position has been able to transition to one-half of a full-time equivalent position with some additional staff resources required when a new route is being developed and contracted. Additional sup- port for the new business model has come from local advisory committees and from the contractors themselves. The implementation of the initial corridor, from Walla Walla to Pasco, involved the development of a Request for Bid competitive procurement, coordination with the local transit operations for stops and ticket sales support; coordination with Greyhound Lines both for the in-kind match and for the development of a full interline ticketing and information agreement; and support for the selected contractor in oper- ating the service, developing the branding, and developing a website. This initial process began as the plan was being completed, and the service, dubbed “The Grape Line,” began in December 2007. Subsequent corridors began service over the coming years, including the “Dungeness Line,” the “Apple Line,” and the “Gold Line.” At this point, WSDOT is fully uti- lizing its available federal intercity bus funding, so expansion under the current conditions can only take place as ridership and revenue increases. Type of Change Primary or Secondary Mission Shift Primary Funding Secondary Governance Measuring Goal Achievement Resource Management Primary Retooled Workforce and Organization Secondary Collaboration and Integration Secondary Technology Applications Secondary Table 1. Types of transformative change represented. Funding and Finance New Technology Demographics and Society Sustainability, Energy, and Environmental Concerns Travel, Land Use, and Development Patterns Infrastructure Conditions Table 2. Forces leading to change.

71 Consequences of the Transformation The transformation has allowed WSDOT to fully utilize the available Section 5311(f) program funding in a way that addresses the federal goals of the program as well as state goals for improved mobility. Under the new program, no state or local operating match is required. This allows State Mobility Program transit funding to be used in other programs, while enabling the state to address rural intercity mobility gaps. The new business model, in which the state contracts for par- ticular services, allows for the state to create a complete inter- city bus network with very limited public funding. Through a combination of unsubsidized private intercity bus transporta- tion and the Travel Washington routes, WSDOT provides for a coordinated statewide public transportation network. Implementation of service in four corridors under the revised program has provided meaningful connections to the national intercity bus network, including shared sta- tions, interline ticketing, user information (through both the WSDOT and the intercity carrier information systems), and coordinated schedules. Where feasible, connections also are provided to Amtrak intercity rail passenger services and to airports with commercial service. All of these routes provide service in areas that contain more than 100,000 residents that would otherwise have no access to intercity travel (or even regional trips). This subsidized network generated approxi- mately 26,000 intercity trips in 2009. The Washington State program has become a model for other states in terms of the change in state function to a more active role that includes the identification of gaps in the statewide network and the use of contracts or grant solicita- tions to fill these gaps. With FTA’s endorsement of the in- kind funding match, many other states are now also using this same tool to match operating assistance under Section 5311(f). The use of this funding method is working to create connecting networks wherever it is applied. Lessons Learned The change that happened in Washington State provides a number of lessons important to others considering similar change: • Change and successful implementation requires staff time and focus. Adding program aspects that require new roles adds staff requirements. • Even within the perceived confines of federal program reg- ulations, new ways of doing business are possible. • Change can take place if institutions look beyond exist- ing practices. In this case, WSDOT was willing to consider separating out the rural intercity program from the state’s Consolidated Grant Program, which had been developed specifically to avoid creating funding silos. • Collaboration with local committees and groups, as well as with potential operators, can provide additional support for implementation of useful services—in this case, both of these activities were previously left to the local appli- cants (to a large degree).