Implementation and Outcomes of Fare-Free Transit Systems (2012)

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Providing public transit on a fare-free basis for all passengers has tantalized public policy- makers for decades. Proponents claim that if other public services such as schools, libraries, and parks (as well as most roads) are considered important enough to provide at no charge to the user, then providing everyone in the community with at least a basic means of mobility should also be a public good. The purpose of this synthesis is to document the past and current experiences of public transit agencies that have planned, implemented, and operated fare-free systems. An exten- sive literature review and the results of a survey of public transit agencies that provide fare- free service are used to document such important issues as: • Why and where have fare-free public transit systems been implemented? • How was the system conceived and implemented? • What was the funding environment and institutional structure? • What were the intended and actual outcomes? • What are the benefits and challenges of a fare-free public transit system? • What is the business case for operating on a fare-free basis? • If a fare-free policy was discontinued, why and how was it discontinued? • What evaluations were conducted after the fare-free system was implemented? Fare-free public transit is currently provided in more than three dozen communities in the United States. Not included in this number are fare-free zones in downtown districts, exclusive university campus transit services, or other limited subsystem modes that might be offered on a fare-free basis such as automated guideways or other local circulators. This report focuses on public transit agencies that are either direct recipients or sub-recipients of federal transit grants and provide fare-free service to everyone in their service area on every mode they provide. Identifying the public transit agencies providing fare-free service required Internet searches, communications through listservs, and other forms of personal contact through committees of APTA and TRB. This synthesis provides the first comprehensive listing of public transit agencies that provide fare-free service in the United States. Thirty-two of the 39 agencies that were identified responded to the survey that was sent to them either electronically or by means of an interview with the Principal Investigator, representing a response rate of 82%. This report focused on policy and administrative issues although survey responses and reports from the literature search provide statistics on changes in ridership increases associated with fare-free service. The major findings of this synthesis include the following: • Fare-free public transit services are typically found in three different categories of com- munities: (1) small urban areas with relatively modest ridership and large rural areas with relatively low ridership, (2) resort communities that carry significant numbers of passengers because of populations that swell inordinately during tourist seasons, and SummaRy ImplementatIon and outcomeS of faRe-fRee tRanSIt SyStemS

2 (3) university-dominated communities where the clear majority of passengers in the service area are college students, faculty, and staff. • Though a small number of public transit systems in larger urban areas have experi- mented with some version of fare-free service (including Denver, Colorado, in 1979, and Austin, Texas, in 1990), and a few others have carefully analyzed the potential impacts of implementing fare-free service more recently (including Portland, Oregon, in 1999, and San Francisco, California, in 2008), no public transit system in the United States with more than 100 buses currently offers fare-free service. Finding the source of funds to replace their substantial farebox revenues has proven too difficult, particularly during times of tight budgets. • The largest jurisdictions currently providing fare-free service are Indian River County, Florida, and the island of Hawaii, both with populations of approximately 175,000. With 7,500,000 annual trips, Chapel Hill Transit in North Carolina carries more than twice as many passengers as any other public transit system offering fare-free service. • Fare-free public transit makes the most internal business sense for systems in which the percentage of farebox revenue to operating expenses is quite low. In such cases, the cost associated with collecting and accounting for fares and producing fare media is often close to, or exceeds, the amount of revenue that would be collected from passengers, particularly when taking into account the capital costs of fareboxes and money counting equipment and facilities. • FTA Section 5311 grants to small urban and rural public transit systems are reduced by the amount of fares the systems collect, providing further incentive for such systems to not collect fares. As a consequence, by providing fare-free service, these small agen- cies receive more federal assistance while providing their local passengers with free mobility. • In states such as Indiana and Florida, where part of the transit agency’s state financial support is determined by formulas including total ridership, transit agencies can gener- ate more total revenue by eliminating fares because ridership will increase substantially as a result. • Fare-free public transit in resort communities is regarded as a vital component of what makes the community attractive to visitors. Many ski resort towns now believe they need to provide fare-free public transit service to remain economically viable and competitive with other resort communities. • In locales such as resort towns and university-dominated communities, there are often crush loads of passengers at many stops. The fare-free policy facilitates faster boarding, allowing passengers to board through all doors without the need to take the time to pay a fare or swipe a fare card. The reduction in dwell time helps to reduce travel time, thereby preserving service quality and avoiding costs associated with the need for placing more buses into service. • Providing fare-free public transit service is virtually certain to result in significant rider- ship increases no matter where it is implemented. Evidence from the literature search and returned surveys indicate that ridership will usually increase from 20% to 60% in a matter of just a few months, and even more in some areas. The most recent institution of fare-free public transit service that occurred in Corvallis, Oregon, in 2011 resulted in a 43% increase in ridership within two months, with no increase in service hours. • Although public subsidy and sometimes total cost may increase, the subsidy per passenger drops significantly. The effectiveness and productivity of the public investment in transit is enhanced. • Some public transit systems that have experimented with or implemented a fare-free policy have been overwhelmed by the number of new passengers or been challenged by the presence of disruptive passengers, including loud teenagers and vagrants. Transit agencies could be well served by developing local ordinances to provide them with the authority to deal effectively with disruptive passengers. They could consider working with local teenagers to inform them of their rights and responsibilities as passengers. Agency managers could also work with local law enforcement and the local courts to

3 gain their understanding and support for assistance when needed in dealing with disrup- tive passengers. However, it is important to note that most managers of fare-free transit systems did not regard disruptive passengers as a significant problem. Many noted that their bus operators prefer to deal with a few more disruptive passengers if it means that they do not have to deal with fare collection and fare disputes. • Systems offering fare-free service in areas of higher potential demand for public transit need to be aware that increased ridership might also result in the need for additional maintenance, security, and possibly additional equipment to provide sufficient capacity and/or maintain schedules. This will add to the expense of operating the system, and these expenses need to be factored into the cost–benefit equation when determining if fare-free service should be provided. The literature review and agencies responding to the survey indicated that if service quality deteriorates, gains in ridership will be offset by a defection of passengers with other mobility options. • Reports documenting past fare-free experiments indicate that a relatively small percent- age of the additional trips (from 5% to 30%) were made by people switching from other motorized modes. Most new trips were made by people who would have otherwise walked or used a bicycle, or would not have made the trip if there was a fare to pay. A disproportionate amount of new trips were made by existing riders, as well as students and seniors who were much more sensitive to transit pricing than automobile users are. In more recent implementation of fare-free public transit, it appears that choice riders are more likely to use the service. • Fare-free transit has been a source of community bonding and pride that also has helped local communities earn positive recognition. A number of communities offering fare- free transit have received state and national awards as “best places to live.” Fare-free service is reported to help bridge the divides that exist in “town and gown” communities.