Eco Pass Program Evaluation Silicon Valley Leadership Group

Eco Pass Program Evaluation Silicon Valley Leadership Group Transportation Policy Committee July 11, 2012 Eco Pass Discussion 1

Study Context • Policy goals of building ridership, revenue neutrality • Called out by VTA Board Financial Recovery Committee • Program started 17 years ago • • Never evaluated or modified Other agencies more financially sustainable • Tri. Met (Portland) $22 M in annual revenue (10 x VTA’s) • Lack of data • Popular with users (100, 000+ employees) • Different users (professionals, students, etc. ), one product 2

Eco. Pass Study Peer & Literature Review Stakeholders Surveys Policy & Goals Development Policy & Citizen Input Operations and Ridership Alternatives Development Alternatives Analysis Program Implementation Project Structure 3

Schedule Feb-12 Tasks 1 -6 Existing Conditions Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Task 7 Alternatives Development Task 8 Alternatives Assessment Task 9 Implementation Task Force Meetings VTA Committees/Board Sept-12

Goals Eco Pass Program Goals and Objectives • Attract and retain riders, increase ridership • Revenue neutral Objectives • Ensure program is easy to administer and program rules are understandable and understood • Generate data to understand ridership, usage rates, and value • Minimize opportunities for fraud and abuse • Leverage technology to minimize fraud and abuse and to collect ridership and usage data • Provide a program with strong branding • Provide fairness, equity among participating organizations/individuals 5

Cost per employee VTA 1 -99 Employees 100 -2, 999 Employees 3, 000 -14, 999 Employees 15, 000+ Employees Downtown San Jose $144 $108 $72 $36 Areas served by Bus & Light Rail $108 $72 $36 $18 Areas served by Bus only $72 $36 $18 $9 RTD 1 to 24 Employees 25 -249 Employees 250 -999 Employees 1, 000 -1, 999 Employees 2, 000+ Employees Downtown Denver CBD $450 $417 $397 $388 $367 Major Transit Centers $177 $160 $146 $135 $128 Outer Suburban $83 $72 $63 $54 $51 Fee Structure

History of the Eco Pass Program Eco Pass History

Spring 2000 Summer 2000 Fall 2000 Winter 2000 Spring 2001 Summer 2001 Fall 2001 Winter 2001 Spring 2002 Summer 2002 Fall 2002 Winter 2002 Spring 2003 Summer 2003 Fall 2003 Winter 2003 Spring 2004 Summer 2004 Fall 2004 Winter 2004 Spring 2005 Summer 2005 Fall 2005 Winter 2005 Spring 2006 Summer 2006 Fall 2006 Winter 2006 Spring 2007 Summer 2007 Fall 2007 Winter 2007 Spring 2008 Summer 2008 Fall 2008 Winter 2008 Spring 2009 Summer 2009 Fall 2009 Winter 2009 Spring 2010 Summer 2010 Fall 2010 Winter 2010 Spring 2011 Summer 2011 Fall 2011 Eco Pass Ridership & Revenue/Ride 400, 000 $ 4. 00 350, 000 $ 3. 50 300, 000 $ 3. 00 250, 000 $ 2. 50 200, 000 $ 2. 00 150, 000 $ 1. 50 100, 000 $ 1. 00 50, 000 $ 0. 50 0 $ - ridership revenue per ride Operation and Ridership

Eco Pass Organization Locations Light Rail and (future) BRT Routes Operation and Ridership

Eco Pass Organization Locations Express Bus Routes Operation and Ridership

Eco Pass Utilization by Route • • Core routes get high Eco Pass use • 22 with 15, 175 weekday riders in Nov 2011 • 23 with 9, 445 • 522 with 5, 992 All Express and Limited Stop routes have a very high percentage of Eco Pass riders • Some close to 50% Operation and Ridership

Survey Results Examples Project survey response not overwhelming We selected 4 Example organizations based on good survey response rates: 1. School 2. Medium-sized company 500+ employees 3. Small company ~ 20 employees 4. Housing organizations ~ 60 residents Surveys

Examples from Survey Results Current Eco Pass Revenue School Medium Size Housing Small Business Organization $225, 000 $38, 304 $1, 794 $4, 320 20% Farebox recovery $3, 040, 241 $38, 075 $1, 545 $37, 129 25% Farebox recovery $3, 799, 729 $47, 587 $1, 931 $46, 404 Denver RTD $ 4, 875, 000 to 9, 800, 000 $ 103, 740 to 208, 544 $ 4, 224 to 7, 771 $ 11, 700 to 23, 520 DART (Dallas Area Rapid Transit) $ 7, 800, 000 to 21, 600, 000 $ 165, 984 to 459, 648 $ 18, 720 to 51, 840 $ 5, 928 to 16, 416 Note: Calculations are preliminary. Not all these trips would be made on transit without the Eco Pass. Studies found that Transit “induced demand” from Eco Pass programs can be up to 200%. Surveys

Additional Findings VTA Eco Pass Ridership • Ridership: 16% (13% Bus, 26% Light Rail) • Revenue: 8% Task Force Meetings • Want a menu of options (Eco Pass, discount bulk passes, Clipper Direct, and Annual Subscription, for example) • Employers want to use Eco Pass to promote transit • Everyone is concerned about lack of data 14

Alternatives Assumptions In the future, the Eco Pass program should: – Use electronic fare media (e. g. , Clipper) with photo IDs to manage eligibility, minimize fraud, provide data – Generate sufficient revenue to become and remain revenue neutral, including regular price adjustments – Distinguish among major institutional markets with significantly different ridership characteristics (Employer, Student, and Residential) 15

Alternatives Considered • Alternatives based on the “insurance” approach of the traditional Eco Pass 1. Status quo 2. Modified status quo 3. Usage-based design • Non-Eco Pass alternatives 4. Discounted bulk sales of monthly passes (with or without Eco Pass Program) 5. Cancel program/rely on Clipper Direct 16

Question #1 • You are local business leaders. If VTA were your business, how would you design the Eco Pass program? 17

Question #2 • What program alternative (listed or new) would be best for VTA Eco Pass? 18

2. Modified status quo alternative: pros / cons Advantages § Updates pricing and pricing strategy § Addresses abuse concerns § Provides means of validating underlying IDs § May resolve bus ridership data collection § Splits program into groups to better reflect ridership patterns § Maintains potential to attract new/increased ridership Disadvantages § May not simplify program or make it easier to understand § May not improve availability of light rail ridership data § May continue the lack of data to assess current performance against revenue objectives § May price some employers out of the program § Fairness, equity § Intended to improve equity across participating organizations § Increased revenue 19

Question #3 • What implementation approaches will help make this transition go smoothly? 20

Next Steps - Alternatives Analysis (Consultant) - Program Implementation 21

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1. Status quo alternative: pros / cons Advantages § Maintains existing revenue and ridership Disadvantages § Does not updates pricing and pricing strategy § Does not simplify program or make it easier to understand § Does not improve availability of light rail ridership data § Does not address abuse concerns § Lack of data to assess current performance against revenue objectives § May price some employers out of the program § Fairness, equity 23

3. Usage-based approach: pros / cons Advantages Disadvantages § Requires ability to track ridership by employer, if not by employee § Protects against revenue risk by tying payment to potential and actual usage § Potential for year-to-year variability in pricing by market § Requires LR riders to tag § Considering previous year’s usage § May price some employers out of the reduces cost for organizations where program participation is low § Fairness, equity § Payment due in advance § Task Force and VTA program managers § Maintains potential to attract do not recommend as it disincentivizes new/increased ridership promotion of VTA ridership. § Provides means of validating underlying IDs and addresses abuse concerns § Updates pricing and pricing strategy § Increased revenue 24

4. Discounted bulk sales of passes: pros / cons Advantages § Reduce uncompensated boardings § Link payment to volume/size of purchase § Discounts to incentivize large purchases § Reduce abuse associated with “unused” Eco Passes Disadvantages § Attractive primarily to current transit users § May not incentivize much additional/new ridership § Need to decide demand for the year in advance § Fairness, equity § Increase average fare per Eco Pass boarding § Address concerns of employers who do not understand Eco Pass and do not want to buy a pass for every employee 25

5. Cancel program/rely on Clipper Direct: pros / cons Advantages § Reduce revenue risk § Reduce abuse associated with “unused” passes § Increase average fare per Eco Pass boarding § 3 rd party administrator fees are charged to employers Disadvantages § Attractive primarily to current transit users § May not incentivize much additional/new ridership § May create problems with contract employees 26