1. FARE STUDY UPDATE Operations & Customer Service Committee October 21, 2014 1

2. Presentation Summary 1.Fare Related Requirements 2.Results of Existing Fare Structure Review by CH2M Hill Strengths & Weaknesses 3.Results of Peer Review by CH2M Hill 4.Opportunities for Simplification 5.Fare Study Context: Fiscal Sustainability Principles 2

3. Federal Fare Requirements FTA requires half fare discounts for seniors, persons with disabilities, and Medicare recipients during off-peak periods ADA regulations set maximum fare for complementary paratransit service at twice the fare of a comparable fixed route All planned fare changes are subject to a Title VI equity analysis to ensure that proposed new fares do not discriminate against minority or low income populations 3

4. State Revenue Requirements Colorado legislature requires (SB 154) that RTD must maintain a 30% cost recovery ratio –Revenues: farebox (excluding ADA), advertising, federal operating grants, federal formula bus grants and investment income –Costs: operations, maintenance, administrative and depreciation (excluding ADA, rapid transit planning, and interest payments on assets) –Current RTD SB 154 cost recovery ratio: 49.8% 4

5. RTD Existing Fare Structure Review 5 Regular Fares Discount Fares –Discount fares for seniors 65+, individuals with disabilities, Medicare recipients and students age 6-19 –Proof of eligibility is required when boarding

6. Existing Fare Structure Strengths & Weaknesses Light Rail Zone Structure Strengths: Higher fare for longer distance trips. Weaknesses: Difficult to understand; complex to administer/enforce; inequity with bus system; applying current zones to future I-225 corridor results in long trips in one zone. Bus Class of Service Structure Strengths: Ability to charge higher fare for longer and faster trips. Weaknesses: Complication added from combining class of service with distance traveled on Express, Regional and SkyRide trips; need to evaluate how to add BRT service and modify SkyRide rates with the introduction of rail service to the airport. 6

7. Existing Fare Structure Strengths & Weaknesses 7 Transfers Strengths: No additional fares upon boarding subsequent vehicles within a defined time window and the same service class; only pay for the up charge when transferring to more expensive class of service. Weaknesses: Complex transfer rules are difficult to understand and enforce; disliked by bus operators and fare inspectors; abused by riders; primary source of conflict between passengers and operators. Fare Enforcement Strengths: Barrier free light rail system has lower capital and maintenance cost and provides easy access for passengers; bus operators responsible for fare enforcement on the bus. Weaknesses: Bus operators responsible for enforcement and verification of discounts and transfers; complicated zone structure difficult to enforce; varied validation requirements for different media.

8. 8 Prepaid Fare Media Strengths: Provide discounted fares and convenience to regular and occasional riders; RTD partners with non-profit agencies to provide reduced fare media to low income individuals; EcoPass programs generate ridership. Weaknesses: Limited sales locations; complicated validation requirements on rail; complicated administration requirements for the non-profit agency program; EcoPass program not yet priced on actual utilization. Opportunities: Smart Card implementation (MyRide) will allow for many existing fare media issues to be addressed; potential for discounts without requirement of up front purchase. Existing Fare Structure Strengths & Weaknesses

9. Peer Review: Service Area Comparison 9 Source: National Transit Database, 2012 Note: Shaded data indicates peers that are larger than RTD for that indicator

10. 10 Peer Review: Fare Structure and Farebox Recovery Rates Source: National Transit Database, 2012 Notes: NTD does not include depreciation of capital in farebox recovery rates. RTD reports a 23.9% farebox recovery rate for 2012 including depreciation as part of the operating expenses. Shaded data indicates peers that are larger than RTD for that indicator

11. RTD is one of only three U.S. light rail systems with distance-based fares. 11 Peer Review: Light Rail Fares Source: Transit Agency Websites and National Transit Database, 2012 Note: Shaded data indicates peers that are larger than RTD for that indicator

12. RTD’s class-of-service bus fare structure is common among transit peers. 12 Peer Review: Bus Fares Source: Transit Agency websites and National Transit Database, 2012 Note: Shaded data indicates peers that are larger than RTD for that indicator

13. Transfers –Most other agencies also offer free transfers. –RTD’s 3 hour bus transfer period is notably longer. –Some agencies limit the number of transfers. –Portland and Dallas have gone to a 2-hour pass essentially turning transfers into short duration passes. Day Passes –Day passes introduced 20 years ago as a means of responding to transfer fraud. Passes available on bus and from TVMs. –RTD break even point at 3 trips which is in line with other agencies. –Many agencies sold day passes on buses or from TVMs. Discount Eligibility –Some agencies have gone to integrating proof of discount eligibility onto smart cards to minimize disputes with operators. 13 Peer Review: Fare Policies

14. Opportunities for Fare Simplification RTD is only one of three agencies with a distance-based light rail fare structure. Some agencies (e.g., San Diego and Portland) have recently eliminated zones to simplify fares. RTD’s light rail fare is higher than the bus fare for a trip with the same origin and destination. Offering comparable and affordable fares on light rail and bus may enable RTD to provide service more cost effectively. Surcharges for light rail and bus trips connecting to airports are common. To offset the impact on airport employees, discounted fares and passes are available for these employees. 14

15. Opportunities for Fare Simplification Smart card fare systems enable the introduction of accumulators and fare capping. The implementation of smart card can eliminate transfer abuse and improve enforcement. Some agencies are transitioning away from the concept of paying for a trip (and offering transfers) towards the concept of buying time. This can simplify fare enforcement by eliminating the need to enforce complicated transfer policies, such as no round tripping. Day passes are another strategy some agencies have adopted to minimize transfer abuse. Day passes are also popular among customers who cannot afford the up front cost of longer period passes and are convenient for social service agencies to distribute. 15

16. Fare Study Context: Fiscal Sustainability Principles 16

17. RTD Expenditures 17

18. Expense Inputs and Outputs 18 1 Hour of Service Expenditures Salaries & WagesInsurance Fringe BenefitsPurchased Transportation Materials & SuppliesDebt Service ServicesCapital Expenditures UtilitiesOther

19. RTD Base Revenue 19

20. Sales & Use Tax Trend 20 Note: Blue line shows the linear trend line for the actual sales & use tax revenue.

21. Farebox Revenue by Payment Type 21

22. Fares by Payment Type Trends 22 Notes: Ridership and Fare Change information circled for years with fare increases. Revenue and passenger figures are in millions.

23. 2015 Sustainable Operating Level (Base System) 23