Seek a variety of funding sources to support a regional fare card project, and offer a finance plan that encourages participation.
Experience of seven partner public transportation agencies in the Central Puget Sound region of Washington in setting up a regional fare card program.
Made Public Date
07/13/2006

961

Washington
United States
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Identifier
2006-00225

Evaluation of the Central Puget Sound Regional Fare Coordination Project

Background

The Central Puget Sound Regional Fare Coordination (RFC) project involves seven agencies (six transit operators and one ferry system) agreeing on a standard fare card medium, coordinating the associated business and operational processes, centralizing certain activities such as "back office" financial functions required for fare revenue reconciliation between agencies, and managing a contractor that is providing the system installation and support. The goal of the RFC project is to offer public transportation customers in the Puget Sound region a single electronic fare medium – a fare card – that will enable them to travel seamlessly across the region using multiple transportation service providers. Fare integration across agencies was not an objective per se. The Interlocal Agreement that guides this project was signed April 29, 2003. Overall governance of the RFC project is vested in a decision-making Joint Board composed of the "Chief Executive Officer" from each of the partner agencies.

This lesson is based on the experience of the Puget Sound partners in implementing their regional fare card program. Project staff and partner agency representatives were interviewed and data collected primarily during the period from February 2003 through July 2005. The lessons learned that are represented herein reflect the findings from this evaluation and do not necessarily represent Agency conclusions or recommendations.

Lessons Learned

The development of a viable project finance plan in a multi-jurisdictional setting has proven difficult and at times required great flexibility on the part of the partner agencies. Innovation through partner subsidies, private donations, grant sharing and cost splitting can result in a viable finance plan that includes an array of funding sources. Even as the Regional Fare Coordination (RFC) partners have worked together to develop a finance plan agreed to by all parties, external factors, such as the voter-approved Motor Vehicle Excise Tax (MVET) repeal, have presented unforeseen barriers that nearly derailed the RFC Project. Through voter-approved sales tax increases meant to replace the funding lost to the MVET repeal and other remedial measures, these issues have been mitigated and the RFC finance plan has slowly taken shape.

The RFC project finance plan includes federal, local and private sources (Table 1). As of April 2003, the RFC project had received 12 federal grants, a donation from the Boeing Company and an appropriation from Sound Transit's (ST) technology fund. As presented in Table 1, regional revenues from these sources total $20.2 million, with a match requirement of an additional $7.2 million (1). The balance of capital funding is expected to be provided through partner agencies’ capital budgets and an appropriation from the ST Fare Integration Fund.

Table 1. Revenue Sources for Central Puget Sound RFC Project

Revenue Source

Match Requirement

Total Award

Total Match Requirement

Federal Section 5307

20%

$9,575,958

$2,393,990

Congestion Mitigation and Air Quality

13.5%

$2,686,000

$419,202

ITS Earmarks 5288

50%

$4,421,941

$4,421,941

Boeing Donation

N/A

$500,000

0

ST Technology Fund

N/A

$3,000,000

0

Total Image removed.

$20,183,899

$7,235,133

Some observations based on the Central Puget Sound RFC Project include the following:

 

  • Distribute financial resources equitably according to agency capital cost shares.

 

  • The RFC project was awarded numerous federal grants designed to assist the project. Rather than allocating individual grants to partner agencies, the RFC partners agreed to disburse grants to agencies according to the capital purchases shares presented in Table 2. This equitable approach has encouraged agency participation. To the extent that a partner agency expands participation in the RFC project, both its responsibility for project costs as well as its share of total grant revenue would grow commensurate with its participation.
  • Table 2. Capital Cost Shares for RFC Partner Agencies

     

    CT

    KCM

    KT

    PT

    ST

    WSF

    ET

    Equipment Share

    11.56%

    55.15%

    5.88%

    8.61%

    10.65%

    5.27%

    2.88

    CT = Community Transit, KCM = King County Metro, KT = Kitsap Transit, PT = Pierce Transit,
    ST = Sound Transit, WSF = Washington State Ferries, ET = Everett Transit

  • Establish financial mechanisms that help offset revenue shortfalls (both capital and operating costs) early in an agency’s participation in a regional fare card project.
  • Even with the passage of the sales tax measures designed to shore up funding eliminated through the repeal of the MVET and acquisition of several federal grants, several partner agencies found it difficult to make the business case to participate in the RFC project. In response, ST provided a financial subsidy to assist these agencies in joining the RFC project.
  • Under Puget Pass, a precursor to the RFC system, Sound Transit settled receipts and distributed them to partner agencies proportionally based on passenger estimates and average fares per boarding as established by surveys conducted once every two years. Puget Pass was viewed as an interim solution until the RFC system could be implemented. The Puget Pass system subsidized riders by allowing them to pay a single fare when traveling through multiple jurisdictions. However, this practice led to revenue shortfalls to local transit agencies. Sound Transit, in turn, established a fare integration fund in order to make up these fare box shortfalls and keep the local transit agencies whole in the Puget Pass system.

The regional fare card system will signal the end of the fare integration fund; however, ST has continued its financial commitment to the RFC partner agencies in an effort to get all the local transit agencies on-board with the regional fare card project. Sound Transit will fund RFC program capital costs not covered by regional grants for Everett Transit, Pierce Transit, Community Transit and King County Metro, and will pay the first two years of operating costs for these agencies. In addition, ST has contributed $3 million to the RFC project out of its technology fund. Sound Transit’s commitment to the RFC program and the subsidy it has provided to its partners was viewed by numerous agency representatives interviewed for this study as an important factor when making the decision to participate or drop out of the project.

(1) King County Metro, Community Transit, Kitsap Transit, Sound Transit, Washington State Ferries, Pierce Transit and Everett Transit. 2003. Interlocal Cooperation Agreement for Design, Implementation, Operation and Maintenance of the Regional Fare Coordination System. Seattle, WA.

Evaluation of the Central Puget Sound Regional Fare Coordination Project

Evaluation of the Central Puget Sound Regional Fare Coordination Project
Publication Sort Date
04/14/2006
Author
Cluett, Chris et. al.
Publisher
Prepared by Battelle for the USDOT FHWA

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