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Fares and Service /Policies and Funding

Transit CommissionFebruary 18, 20150Transit Funding at a Glance#Transit Funding at a GlanceTransit operating costs are funded from:Customers faresProperty taxesOther revenue

Fare revenue + tax revenue + other revenue = total revenue = total costs

Capital requirements (expansion and renewal) are funded from property taxes, development charges, and senior levels of government

#2Transit Funding in 2014Transit operating budget $465 million in 2014Transit operating costs $364 millionContributions to capital reserve $96 millionContributions to pension $5 million

Transit operating costs of $364 million were funded from:Customers fares $183 million in 2014Property taxes $143 million in 2014Other revenue $38 million in 2014(includes Provincial gas tax revenue)#3Transit Fare RevenueFare structure continues from one year to the next except when policy decisions are made by Commission and Council

Fare levels are set by Council decision

Fare choices are made by customers

Actual ridership depends on many factors, most of which are driven by the economy/market

#Service and Funding ChoicesHow many hours of service to operateXCost per hourFare levelsXRidershipTax ratesXAssessmentDecisions by Commission/CouncilDetermined by economy/market#5Transit Operating Budgetin its Simplest FormFare levels x Ridership+Tax rates x Assessment=Hours of service x Cost per hour

#Transit Affordability#Affordability Criteria Transportation Master PlanAffordability defined:Using conservative assumptions, there is adequate funding to deliver the service and provide the related infrastructure from existing sources.

It is important to note that the affordability assessment is for all transit capital and operating costs for the period to 2031/2048, including new infrastructure, bus operations, bus replacement, Transitway maintenance and expansion, support systems lifecycle, and many other aspects.

#Transit AffordabilityComprehensive transit financial model (capital and operating) was updated with the assistance of PricewaterhouseCoopers LLP

Includes all TMP capital projects to 2031 and post TMP capacity to 2048 was assessed

#Transit AffordabilityConservative assumptions used:No new revenue sources Transit taxes and fares increase at rate of inflation of transit costs modeled at 2.5% each yearSenior governments share in capital costs of rail projects at $975 M each (construction year dollars)Conservative assumptions for development charge revenue and useConservative ridership assumptionsCapital cost estimates include adequate contingenciesConservative fleet plan and bus operating costs

# $ 317Summary of Major Capital Items ($ 2013 millions)CostSeniorGovernment ContributionLight Rail Transit (LRT)O-Train Extension to Bowesville$ 99PLRT -Tunney's Pasture to Baseline980PLRT -Lincoln Fields to Bayshore396PLRT 500PTotal Infrastructure$1,975Vehicles453PStorage Facility 50Total LRT Including Vehicles$2,478Bus Rapid Transit (BRT)Transitway -Bayshore to Moodie76Baseline Transit Corridor131Transitway -Eagleson to Kanata North 110Total BRTTransit Priority Projects $ 200Total Capital Costs$2,995-Blair to Place dOrlansTransportation Master Plan Transit #Cost and FareComparisons With Other Cities#Comparisons Across CanadaEvery city has different circumstancesDifferent geographyDifferent densitiesDifferent demographicsDifferent employment patternsDifferent service policiesDifferent vehicle typesDifferent funding policies#

Ottawas cost per trip is near the middle of the range of Canadian citiesCities with lower costs have rail systems or shorter trip lengths#14Examples of Cost DifferencesToronto and Montral have economies of scale from very high capacity Subway/Mtro trainsToronto and Montral have higher population densities, and many suburban areas are outside the municipal boundariesMany customers in Mississauga, York Region, Laval, Longueuil travel to work/school in Toronto, MontralWinnipeg has short average trip lengths

#Cost Influences in OttawaMany high-capacity buses $Faster operations on Transitway $

Long trip lengths through Greenbelt $Fewer customers required to stand $Maintenance costs of bus-only Transitway $#

Ottawas average fare is near the middle of the range of Canadian citiesCities with lower fares have more provincial funding or lower costs#Examples of Fare DifferencesCities with higher average fares:May have higher operating costsMay have less funding from municipal or provincial taxes

Cities with lower average fares:May have lower operating costsMay have more funding from municipal or provincial taxes#

Sources of Funding in Canada#Provincial Funding Across Canada

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Revenue-Cost Ratios Across Canada#Funding Policies in OttawaTransit affordability policiesFare increases at 2.5% per yearTarget for 55% revenue/cost ratioBudget in 2014 was 53%Budget for 2015 is 53%Provincial gas tax revenue to both operations and capitalFederal gas tax revenue eligible only for capitalTarget for 60% revenue/cost ratio after Confederation Line opensSavings from Confederation Line to be used towards the capital costs of Stage 2 and other system expansion#Transit Fares in Ottawa#Fare PolicyTwo base policy questions when setting transit fares:

What proportion of costs will come from fares?

How will fares be collected from different customer groups?#Average Fares and Fare TypesThe average fare is a composite of all fares paid by all customers for all trips on the transit systemTotal Revenue / Total RidershipCan also be shown in detail from all fare types chosen by all customers

Average fare allows proper comparison among cities, as cities may have quite different fare structure and pricing strategies#Fare Types and Ridership 2014

These customers pay more than the average fare, and in doing so contribute toward the travel costs of these customers, who pay less than the average fare#Councils Core Fare DecisionsFares will be set to fund 55% of operating costsFare increases at 2.5% per yearFare discounts for:Frequent travellersSeniors, students, childrenODSP recipients and Para Transpo registrantsFare premium will be charged to express route customersInfrequent transit users, those who pay in cash, will pay the full cost of their trips#Recent Fare Policy DecisionsCommunity Pass 2006Free Wednesdays for seniors 2007-09Presto monthly passes transferrable 2012Presto e-purse fares 2012End of semester pass and annual pass 2012Seniors discounted cash fare 2012#Transit Service Standards in Ottawa#Transit Service and Fare PoliciesAdopted 2005Amended 2008, 2009

Meeting customers travel needsEvaluation of route changesExpanding the transit systemSetting transit faresMaintaining a balance in funding for transit#Access to Transit ServicePeak period routes Bus stop or station within 400 metres (a five-minute walk for most people) for 95% of the population of the urban areaAll-day routes Bus stop or station within 800 metres (a ten-minute walk for most people) for 95% of the population of the urban areaAdditional routes beyond these minimums where supported by proven ridership levelsSimilar standards in place in most cities#Access to Transit ServiceStandards allow that up to 5% of population is beyond 400 m / 800 mGenerally, this applies to:Isolated areas where road network does not permit bus operationIsolated areas where population/employment is too small to warrant bus serviceAreas where consultation has determined that bus service will not be providedNew areas before population is large enough for bus service to meet minimum financial standard#Service FrequencyMinimum service levels:30 min service15 min service on Transitway/O-Train60 min or less frequent service if the route would not meet minimum financial standard at 30 min

More frequent service than minimum:Frequency governed by service capacity standardsAim for convenient 15 min service on most routes, where ridership allows#Service Capacity StandardsSome customers need to stand during peak periodsStandard applies to total customers travelling in the busiest hourFor midday, evening, and weekend, the standard is for all customers to have a seat availableThese are more comfortable standards than in most other citiesService Capacity StandardsPeak periods/peak directionMaximum average number of customers on each busResulting in:Bus typeSeated customers Standing customersDouble-decker bus90828Articulated bus705515Diesel 40-foot bus (Invero)45414Hybrid 40-foot bus (Orion VII)45387#Route / Time PeriodFinancial PerformanceSpending or saving alternatives can be compared using a standard financial performance measure:For spending: Customers gained per net dollar spentFor savings: Customers lost per net dollar saved

Not used for service required by minimum standardsNo new service should be added that has lower financial performance than current servicesCurrent services are all over 0.20 c/$#Transit Ridership in Ottawa#RidershipAnnual ridership is the number of complete customer-trips from origin to destination made by all customers in a full year

Note that one customer may make two or more customer-trips each day, and one customer can often make 500 or more customer-trips per year#Ridership Over the YearsStrikes: 1996, 2008/2009Ridership in 2014 was 97.1 million customer-trips#38Influences on RidershipEmploymentPopulationGas prices for motoristsWeatherFare changesParking costs and availabilityTraffic congestionCost of car ownership and maintenance

#Influences on Ridership

#What will ridership be in 2015?2014 budget was based on ridership of 97.1 million (actual from April 2013 to March 2014)Ridership in the most recent 12 months (January 2014 to December 2014) has been 97.1 millionConference Board of Canada forecasts Ottawa employment to increase by 1.3% in 2015Draft 2015 budget is based on ridership of 97.3 million#Influences on Fare Choice by CustomersBreak-even point between single-ride fares and monthly pass price

Comfort with electronic Presto card vs cash/tickets

Convenience of pass/e-purse vs cash/tickets#Revenue and Ridership Resulting from Fare Changes

A lower increase in fares would increase ridership and reduce fare revenueApprox $400,000 in cost to gain approx 60,000 customers (0.15 c/$)Investing the same in service improvements yields more customers#432015 Recommendations#Recommended FaresFrom July 2015

#2015 Recommended Service ImprovementsO-Train Trillium LineShorter waiting times and increased capacity

Bank Street*Shorter waiting times and increased capacity on Saturdays, Sundays, and holidays

Barrhaven South*Shorter waiting times midday, evening, and Saturday

* Funded from $1.0 M identified for service improvements#2015 Recommended Service ImprovementsHunt Club Road*Access to transit in new commercial area

Kanata North*Access to transit in new residential areasShorter waiting times in employment area, midday

Kanata South*Access to transit in new commercial areaAccess to transit in new residential areas

* Funded from $1.0 M identified for service improvements#2015 Recommended Service ImprovementsOrlans SouthAccess to transit in new residential areas

Stittsville*Access to transit in new residential areas

Para TranspoIncreased number of trips accommodated

* Funded from $1.0 M identified for service improvements#2015 Recommended Service ImprovementsService improvement proposals developed by staff Councillors briefed Councillors conducting consultation during budget consultation processFebruary 18 Budget considered by Transit CommissionMarch 11 Budget considered by CouncilMay-June Customer informationJune 28/29 Service change date#Governing StandardsAreaAccessCapacityFrequencyBank StreetBarrhaven SouthHunt Club RoadKanata NorthKanata South / Stittsville#Other Service Changes 2015First 12 of 37 new double-decker buses to arriveFirst buses to arrive with CCTV security camerasAllows for investigation of crime and claimsFirst buses to arrive enabled for Wi-FiAllows for possible Wi-Fi service by independent providersNot recommended to fund Wi-Fi from OC Transpo budgetAll new buses to arrive with passenger countersAllows better data collection for service monitoring#Questions?#