1. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Regulation & Finance Unit 7: Forecasting and Encouraging Ridership

2. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Outline Review transit regulations. – What are the limitations on growth? Consider underlying funding structures. – How do we organize growth? Options for funding sources. – Who can fund growth?

3. Materials developed by K. Watkins, J. LaMondia and C. Brakewood …or Ensuring Future Transit Increasing ridership demand versus Decreasing funding sources How can we respond?

4. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Option 1: Increase Fares

5. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Option 2: Reduce Service

6. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Option 3: Get Innovative In order to address the future of transit service, we need to understand – Regulation – Funding Structures – Funding Sources

7. Materials developed by K. Watkins, J. LaMondia and C. Brakewood TRANSIT REGULATIONS

8. Materials developed by K. Watkins, J. LaMondia and C. Brakewood The Need for Government Control Socially important but financially non- remunerative service Support for lightly used suburban areas Avoidance of profit-gouging monopolies Minimal duplicative, uncoordinated services

9. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Public Takeovers Most transit agencies were private, but faced many challenges – Public need ≠ capital gains – Opposition from auto-industry – Difficult to enforce ordinances Public consolidation of agencies

10. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Types of Ownership Today Private Companies – Typically in small communities – Receive indirect or direct financial assistance from government – Often hired as contractors to operate systems

11. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Types of Ownership Today City Area Public Agencies – Typically in small-medium sized communities – Receive direct government funds – Several forms: Quasi-private company Utility division Municipal agency

12. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Types of Ownership Today Regional Transit Agencies – Typically in large mega-regions – Serve inter-city travel routes – Several forms: County-owned transit agency Regional transit authority Regional transit district State-owned transit agency

13. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Integrating Transit Many agencies remained uncoordinated, fragmented until late 1960s Major effort within public ownership is to coordinate systems Failure to do so, loss of revenue and limited efficiency

14. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Role of Transit Regulations Like all transport systems, important to have: – Coordination – Safety – Reliability – Reasonable fares Some modes are highly regulated

15. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Safety Regulations Ensure safety of the traveling public and the other potentially affected parties

16. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Safety Regulations Impact... Structural elements and design of transit infrastructure Vehicle design and performance Frequency and scope of vehicle maintenance Operational practices Training of drivers and personnel

17. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Economic Regulations Ensure reliability and permanence of services Protect public from being overcharged Prevent losses to operators due to duplication of services

18. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Economic Regulations Impact... Franchise growth – Minimal control – System control Fare charging – Floors on fares – Maximum fare limits – Full control Quantity and quality of service – Limits on frequency, reliability, speed, comfort, etc.

19. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Social Regulations Achieve or test certain technical/ operational innovations Provide certain levels of mobility and special services for population groups/ geographic areas/ types of trips/ etc.

20. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Social Regulations Impact... Develop, test, demonstrate new technology Maximum impacts – Noise & air pollution – Evacuation procedures – Fire protection Specialty programs – Reduced fares for students/ elderly

21. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Deregulation? Pro Deregulation Regulations are inefficient and wasteful Economic regulations affect economy Takes too much red-tape for development Anti Deregulation Unfair allocation of costs Social needs of underprivileged travelers Support allows for economic vitality

22. Materials developed by K. Watkins, J. LaMondia and C. Brakewood TRANSIT FUNDING STRUCTURES

23. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Funding of Different Modes

24. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Allocation Concerns Passenger vs. Freight Transport Intercity vs. Urban Transport Operating vs. Investment Costs

25. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Revenue Structures Revenue from Users – Passes/ admission – Used on operations General Government Budget Funds – General budget, typically from taxes – Most flexibility in application Special Government Funds – Earmarked funds, typically federal – Very specific application

26. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Ratio of Revenue to Expenditures by Mode

27. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Sources of Transit Funds

28. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Percentage of Transit Funds

29. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Operating and Capital Funds

30. Materials developed by K. Watkins, J. LaMondia and C. Brakewood % of States’ Transport Budget for Transit

31. Materials developed by K. Watkins, J. LaMondia and C. Brakewood How Does Our State Compare? http://gis.rita.dot.gov/StateFacts/ Economy & Finance – Transportation Finance – Gasoline Tax Rates Passenger Travel – Public Transit – Urban Transit Ridership

32. Materials developed by K. Watkins, J. LaMondia and C. Brakewood TRANSIT FUNDING SOURCES

33. Materials developed by K. Watkins, J. LaMondia and C. Brakewood

34. Types of Taxes Transportation user taxes – Fuel/motor vehicle taxes, parking taxes, tolls Economic benefit-related taxes – Employment taxes, real estate taxes Broad-based taxes – Sales taxes, income taxes, property taxes Other sources

35. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Financing Tools

36. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Financing Tools

37. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Grant Programs

38. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Local Sources Source: Transportation for America

39. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Local Sources Source: Transportation for America

40. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Public-Private Partnerships A contractual agreements between a public agency and a private partner, where the partner participates beyond simple procurement.

41. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Public-Private Partnerships Pro Risk Transfers Access to Private Capital On-time Completion Expertise and Technical Capacity Con High Cost of Private Capital Experience Differential Loss of Public Control Labor Loss

42. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Conclusions Funding is a critical issue for agencies Safety, economic, and social regulation ensure that transit agencies run safe, sustainable, and fair systems. Transit funds come from fares, general governmental budgets and special governmental funds. Public-private partnerships are seen as a new way to fund transit in a budget restricted time.

43. Materials developed by K. Watkins, J. LaMondia and C. Brakewood Reference Materials in this lecture were taken from: Vukan Vuchic, “Urban Transit Operations, Planning and Economics” (2005) Transportation For America, “Thinking Outside the Farebox”, http://t4america.org/wp- content/uploads/2012/08/T4-Financing- Transit-Guidebook.pdf.