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Old 07-20-2013, 11:02 AM   #1
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How to Fund Transit Without Raising Fares..

Read this article yesterday and seems like a potential solution to the mess in GVRD. It's an alternative to http://www.revscene.net/forums/68648...-problems.html

Thoughts?

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How to Fund Transit Without Raising Fares or Cutting Service


When Mark Aesch became head of the Rochester-Genesee Regional Transportation Authority, back in 2004, the metro area's bus system was in terrible shape. The agency carried a $4.5 million deficit and on-time performance was stuck at 76 percent. Officials wanted to approach the problem the way so many other city agencies were handling similar situations at the time: with a fare hike. Aesch said no.
"There was no way in my judgment we could ask the customer to pay more for an underperforming experience," he recalls.
Not only did Aesch keep his pledge not to raise fares, but in 2008 he actually lowered them. By the time he left the position, at the end of 2011, Aesch and his creative approach had transformed Rochester's bus system into a total winner. Buses drove fewer miles, carried more passengers, and boasted a 91 percent on-time record. The agency accumulated a $35.5 million surplus while decreasing its reliance on taxpayer funding by more than a third.


Aesch has since started a consulting firm called TransPro and written a book called Driving Excellence. His mission with both is to encourage transit officials to bring a "private-sector mindset" to public transportation. So far it's working. Last year, Aesch even stabilized the bus system in Detroit, of all places. If his methods can succeed there, they should do well in any number of struggling systems across the country.
"I think the model works in almost any location," says Aesch. "Improving the quality of the customer experience, creating that atmosphere where the individual employee is rewarded for organizational success that's critical. You can do that anywhere."
These days the public expects transit agencies to cut service or hike fares when funding runs low. But Aesch's entire philosophy is based on the belief that the best way to raise both ridership and revenue is by improving the transit experience.
In Rochester, Aesch and colleagues took aim at the poor on-time performance of city buses. Using data to evaluate system routes, they realized that much of the problem came from buses that were early, not late. Soon they identified the culprit: because routes had down time built in at the end, drivers were rushing to finish up and take a longer break.
As the system began to improve, Aesch created incentives to keep things moving in the right direction. He concocted a so-called "stock price" for the system and tied it administrator compensation. When performance improved, so did pay. Eventually enough drivers realized the advantages of merit-based compensation that the union voted to tie their paycheck to performance, too something Aesch says would have been "unimaginable" when he first arrived.


His biggest achievement came through securing partnerships with the community. Once bus service improved, Aesch sent out a sales force to college campuses, shopping centers, apartment complexes, and the like, and asked them to pay for the better service that now carried so many students and customers and residents through their corridors. Sometimes he drew a comparison to a utility: just as a housing development might pay the water bill for tenants, so too should it pitch in for transit.
"If the model of public transportation is simply to ask the taxpayer for more money or the customer for more money, it's a short path to reducing service and reducing quality," says Aesch. "You've got to go identify new business partners to fund public transportation with non-taxpayer dollars."
A big fear that many people have about a private-sector approach to public transit is that rewards efficiency at the expense of providing a social service. If a particular route isn't capturing much fare revenue, for instance, then business-minded officials might be more apt to cut it. That approach could end up stranding riders particularly those in low-income corridors.
Aesch says he's responded to this concern by creating a service metric that gives equal weight to ridership and fare recovery. So if a certain route does well at the farebox, it's a keeper, and if another route has a lot of riders, it's a keeper, too. What won't score well on this metric, he says, are those routes that neither make money nor seem to play a vital role in the community. These are the ones that efficient systems should be aiming to cut.
"You ask yourself the fundamental question: is public transportation responsible for providing service to the community, or providing return to the taxpayer?" he says. "The answer to that question, we concluded, is yes. So what we built was a performance-measurement system which takes both of those competing metrics and combines them into one score."
Last year Aesch's system passed what some might call the ultimate test. In the wake a series of embarrassing bus crises in late 2011, Detroit brought in Aesch to overhaul service. Despite being given only a year to produce results, Aesch improved on-time performance, kept ridership stable, avoided a fare hike, saved the agency roughly $39 million, and even improved customer satisfaction by 40 percent.
While he says the future of Detroit's public services is up to the emergency manager, he does think his year there proved that his methods can apply to transit agencies big and small.
"It's one thing to transform a transit agency Rochester, New York," he says. "It's another thing to reduce cost and improve customer satisfaction in the city of Detroit, where very few things succeed."
source: How to Fund Transit Without Raising Fares or Cutting Service - Eric Jaffe - The Atlantic Cities
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Old 07-20-2013, 11:15 AM   #2
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So....he does this by cutting routes that are not used in high capacity and routes that have lower ridership but are needed, he has the school districts, colleges/universities, and private businesses subsidize.

I am not sure how well this would be applied to the Lower Mainland as no other city that has massive transit is set up like ours....
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Old 07-20-2013, 11:23 AM   #3
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Just on the apartment complex item there. At enough buildings with enough people, we do our subsidizing by having a good 2 or 3 people at every building that have lived there for enough years to be locked a cheap lease, but aren't bad enough to warrant getting them out.

My hoarder is a prime example. He even rides his bike everywhere, so he's also a liberal wetdream.
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Old 07-20-2013, 12:13 PM   #4
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privatize that bitch so I can start my bus company with sprinters that have free wifi

wifi idea from nicotine

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Old 07-20-2013, 12:50 PM   #5
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Transit supervisors make $40 an hour..so fucking useless
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Old 07-20-2013, 01:06 PM   #6
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His next highest achievement.. get hired by Translink for $100mill a year.
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Old 07-20-2013, 01:40 PM   #7
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Transit supervisors make $40 an hour..so fucking useless
Useless because you never see them do what they do nor have you ever had the need for them to come and take care of a situation.
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Old 07-20-2013, 03:34 PM   #8
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Aesch says he's responded to this concern by creating a service metric that gives equal weight to ridership and fare recovery. So if a certain route does well at the farebox, it's a keeper, and if another route has a lot of riders, it's a keeper, too.
I'm not following.

The metric equally weighs ridership and fare recovery.

The routes that have high ridership, are keepers.

The routes that do well at the farebox, are keepers.

However, I would expect the routes that have high ridership to be the routes that do well at the farebox, because, of course, an increase in riders generates an increase in fares.

The poor writing of the article is a potential explanation, because it notes farebox revenue but not total revenue (farebox, advertising, community subsidy).

Nevertheless, I'm would expect the community subsidy approach to be ineffectual in the Lower Mainland. The low ridership routes serve residential communities, which have few institutions to offer to pay a subsidy. The high ridership routes serve business oriented communities, which have institutions to offer to pay a subsidy but already do well at the farebox.

I can see UBC and SFU contributing to a fund to bring rapid transit to their main campuses, as it benefits students significantly, but they're the only ones.

I'm disappointed by this thread, nothing brilliant, like Tranlink's use of Community Shuttles.

A focus on densification and effective city planning contributes more highly to the sustainability of transit than anything else.

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privatize that bitch so I can start my bus company with sprinters that have free wifi

wifi idea from nicotine

/thread
Translink does not have a monopoly on transit services, you're welcome to establish a private transit service. You'll not have considerable success offering $5-6 bus rides (the true cost), though...
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Old 07-21-2013, 12:19 AM   #9
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^ curious, how did you conclude to $5-$6 as the true cost?
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Old 07-21-2013, 12:30 AM   #10
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Interesting article.

Bear with me as I do love business-related articles:
--------------------------
The article is rehashing the old adage of privatization or bringing in a consultant or consulting company to solve things.

Obviously, if profits or reduction of costs is the aim, the article is correct.

But, it is not that simple.

You can't just cut routes that are unprofitable.

The whole point of public transit is..... being public.

It should cover a wide area for the vast majority of rider ships, EVEN if it is unprofitable.

That is the entire point of public transit.

However, I do agree with providing incentives to bus drivers and employees to produce better results.

Conclusion:

1-Do not cut unprofitable routes.
2-Compensate according to results instead of an "across the board same wage for all bus drivers (even the unproductive ones)".
3-Lower fuel costs which I believe Vancouver is doing very well with utilizing newer buses, more fuel efficient techs (diesel and natural gas), etc.
4-Buy-out long-time employees who get paid a lot more than newer, young ones.
5-Get rid of the dreaded interest expense which stands at 13% of $1.43 billion
https://buzzer.translink.ca/2013/03/...o-we-spend-it/
Translink is very close to breaking even.
If they somehow raise enough funds (like a one-time cash/capital infusion) to reduce the interest expense, Translink would be making money.
As it is, through a minute of a calculations, Translink paid $208.7 million in interest costs to cover $3.6 billion worth of total debt.
http://www.translink.ca/~/media/docu...al_report.ashx

To raise money, the company can do this:
1- Sell unwanted assets or old inefficient assets
2- Lobby for Federal help to get lower interest rates (borrowing from the Gov't is cheaper than borrowing from the capital markets)
3- Auction off profitable tolls to large companies. For example, the Golden Ears Bridge cost $800 million to build and collects tolls.
http://en.wikipedia.org/wiki/Golden_Ears_BridgeConservatively, if this is auctioned off, it could well sell for $800 million or more. Lets say it sells for $800 million. This could be used to reduce debt. Reducing $800 million from $3.6 billion will cut 20%+ of interest costs, which would put Translink into the black with $100 million to $200 million in the future net-fiscal year profits.

For future expansion:
4- A lot of expenses are for expanding the current infrastructure. To avoid this cost: for future projects, finance them by having large companies build them at THEIR cost, and have them collect tolls for 10 to 20 years and the bridges/toll-infrastructure will revert back to Translink assets. This is done in many countries where big conglomerates build the infrastructure, collect tolls for 20 years, maintain the roads, etc., then give them back to the government.
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Old 07-21-2013, 12:34 PM   #11
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The thing that people need to start understanding is the difference between a public company/crown corporation and privatizing a company.

People look at privatization as an answer. Why? Because we think that a profit motive will drive efficiency. Sometimes it works. If its a bloated industry filled with bureaucracy, then making it a profit-centric organization will streamline it. The public gets a cash infusion from the sale, and it carries on.

There is a different technique. Maintain ownership, but de-politicize an organization. The way I see it, we run into trouble because decisions aren't being made in a manner consistent with profit for anyone. Decisions can be made for a political end.

We continually tie translinks hands behind their back, and then tell them, "go, be fruitful and multiply"

Maintain the following service, at the following rates and the following roads without the supporting revenue and every so often, we're going to build some shit for you and tell you to run that too.

No. Hire a CEO. Tell the mayors to FO. Assemble a board of directors from across different industries to form a best in class council and leave the tax payer as shareholder.

The mayors council cannot and WILL NOT be able to sort out the needs of translink, from the needs of their constituents and the needs of their donors and supporters. Nope, never gonna happen.
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Old 07-21-2013, 12:48 PM   #12
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^ curious, how did you conclude to $5-$6 as the true cost?
Translink's transit spending/Translink's farebox revenue = approx. 56%, so the true cost is roughly double the fare.

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Originally Posted by Marshall Placid View Post
Interesting article.

Bear with me as I do love business-related articles:
--------------------------
The article is rehashing the old adage of privatization or bringing in a consultant or consulting company to solve things.

Obviously, if profits or reduction of costs is the aim, the article is correct.

But, it is not that simple.

You can't just cut routes that are unprofitable.

The whole point of public transit is..... being public.

It should cover a wide area for the vast majority of rider ships, EVEN if it is unprofitable.

That is the entire point of public transit.

However, I do agree with providing incentives to bus drivers and employees to produce better results.
You raise great points, overall, Marshall; I would like to address a couple of them, however.

Quote:
3-Lower fuel costs which I believe Vancouver is doing very well with utilizing newer buses, more fuel efficient techs (diesel and natural gas), etc.
Translink researched the possibility of transitioning to a CNG (compressed natural gas) fleet, and the payback period for the initial investment was approximately six years. I do not believe they're currently planning to make the transition, because of the upfront cost and budgetary restrictions.

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4-Buy-out long-time employees who get paid a lot more than newer, young ones.
The collective agreement allows employees to reach their full earning potential very quickly, so this would be an ineffective strategy for Translink.

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1- Sell unwanted assets or old inefficient assets
Translink currently does this, and quite effectively. Translink acquires a large amount of real estate to perform expansions, and once completed they use their political influence to rezone the real estate not utilized and resell it at a profit.

Quote:
3- Auction off profitable tolls to large companies. For example, the Golden Ears Bridge cost $800 million to build and collects tolls.
Golden Ears Bridge - Wikipedia, the free encyclopedia
Conservatively, if this is auctioned off, it could well sell for $800 million or more. Lets say it sells for $800 million. This could be used to reduce debt. Reducing $800 million from $3.6 billion will cut 20%+ of interest costs, which would put Translink into the black with $100 million to $200 million in the future net-fiscal year profits.
Translink does not own the Golden Ears Bridge, it leases it, so selling it is not an option.

The Golden Ears Bridge does not show a profit, rather it loses approximately $41 million annually, because Translink's pre-construction projections overestimated traffic levels.

Quote:
For future expansion:
4- A lot of expenses are for expanding the current infrastructure. To avoid this cost: for future projects, finance them by having large companies build them at THEIR cost, and have them collect tolls for 10 to 20 years and the bridges/toll-infrastructure will revert back to Translink assets. This is done in many countries where big conglomerates build the infrastructure, collect tolls for 20 years, maintain the roads, etc., then give them back to the government
The Golden Ears Bridge and Canada Line were built through this approach.
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Old 07-21-2013, 01:40 PM   #13
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maybe if people who jumped on for free, actually PAID for their ride.. and those who get caught PAID for their fines.
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Old 07-21-2013, 01:54 PM   #14
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You raise great points, overall, Marshall; I would like to address a couple of them, however...
Thanks for the facts.

Didn't know them until now.
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Old 07-21-2013, 01:57 PM   #15
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I am in support of reducing buses and manpower and hope that they start on the UBC-broadway skytrain line asap, I really hope they push through with it despite all the nimbyism. If I recall correctly, during peak hours of the 99 B-Line there is a bus every 5 minutes? And besides students I heard people just jump on it for free as all the doors open.

The evergreen line and the UBC line will dramatically change Translink's finances while reducing costs (long-term) and pollution. Thankfully Translink is fortunate enough to have automated trains, NYC and San Franscisco can't implement them due to unions.
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Old 07-21-2013, 11:49 PM   #16
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I am in support of reducing buses and manpower and hope that they start on the UBC-broadway skytrain line asap, I really hope they push through with it despite all the nimbyism. If I recall correctly, during peak hours of the 99 B-Line there is a bus every 5 minutes? And besides students I heard people just jump on it for free as all the doors open.

The evergreen line and the UBC line will dramatically change Translink's finances while reducing costs (long-term) and pollution. Thankfully Translink is fortunate enough to have automated trains, NYC and San Franscisco can't implement them due to unions.
3-door boarding happens on the 99 B-Line for reasons of efficiency. Should the bus driver spend 5 minutes at every stop checking each rider for fares, or should fare evasion be risk managed considering that all UBC students carry a U-Pass?

People always look at the small picture when it comes to cost savings. Faregates are going to cost over 100 million to the taxpayer. Are those costs justified? Maybe over 40 years, but certainly not over 10.
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Old 07-22-2013, 12:39 AM   #17
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wait a minute.. those guy with green jackets working on the canada line make $40 an hour??
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