Fare Equity Options for Santa Clara County

Fare equity options for Santa Clara County Working Partnerships and Friends of Caltrain May, 2015 Executive Summary Metropolitan San Jose (Santa Clara County plus San Benito County) has the highest household car ownership rate in the U.S., 94% of households have automobiles according to the US Census . Meanwhile, 29% of households in Santa Clara County have household 1

income under $50,000 , which means that many low­income households in Santa Clara 2

County own cars. Automobiles are a substantial expense for low­income households ­ the average annual cost to carry an automobile is close to $9,000 according to AAA . 3

What are the barriers to low­income working households to using transit? Working Partnerships and Friends of Caltrain interviewed Santa Clara commuters, largely low income, to identify the role of price and other barriers to using transit. Overcoming barriers would create opportunities to reduce household costs and reduce greenhouse gas emissions. In this report, we review the survey results, as well as examples of initiatives in other jurisdictions, to assess opportunities for Santa Clara County to reduce the barriers One of draft goals for VTA’s 2016 transportation ballot measure is to improve access and service for very low­income populations. VTA currently offers two programs to assist very low income individuals with the cost of transit. The UPLIFT program provides 2,775 transit passes 4

per quarter for individuals served by social service programs. In addition, the TAP program is a pilot program funded by a $1.3 million grant from MTC, to offer 1,000 passes per month for 24 months at nominal cost for qualifying low­income individuals who are identified by the Santa Clara County Social Services Agency and Emergency Assistance Network. The goal of this study is to explore opportunities to improve access for a broader range of low­income workers in households making under $50,000 per year, who would not qualify for the social service programs, but have challenges in using transit. Financial stability is also an important goal for VTA, as is increasing transit ridership The analysis in this report considers the revenue risks and opportunities provided by various measures to improve access for low­income workers, as well as the potential consequences for transit ridership (and greenhouse gas emissions).

1 https://en.wikipedia.org/wiki/List_of_U.S._cities_with_most_households_without_a_car 2 http://www.mercurynews.com/business/ci_26312024/santa­clara­county­has­highest­median­household­income 3 http://newsroom.aaa.com/tag/your­driving­costs/ 4 http://www.mercurynews.com/my­town/ci_23864631/low­income­individuals­santa­clara­county­will­get

Summary Following is a summary of potential programs, and their potential effects on equity, transit ridership, and revenue. Equitable bulk discount programs would make the bulk transit discounts programs in Santa Clara County available to commuters range of incomes; today these programs, which are effective in incenting transit ridership, favor higher­income workers. Updating these programs for greater equity would provide improved transit access for low income commuters, with likely favorable outcomes for transit ridership, and low revenue risk. This is a strong potential “win”. Transfers and/or modified day­pass fares would reduce fare barriers for current and potential transit users. Bus/rail transfers may be particularly helpful and important as BART service starts. Improved transfer pricing would benefit equity, but would have a less certain outcome on revenue and ridership. A low­income fare program that was broader than VTA’s current pilot programs, along the lines of Seattle’s innovative new program, could reduce barriers to transit use for a larger range of low­income workers. Such a program would be large­scale and incur substantial costs, which could potentially be offset with fare structure changes. Ongoing regional studies may provide additional information about options and feasibility in the Bay Area.

Policy Description Revenue Ridership Equity

Equitable bulk discount

Currently GoPass and EcoPass are available to employees of larger organizations and can exclude employees of smaller companies and contingent workers. Make available on an equitable basis, focusing in high ridership areas

Neutral Positive High

Transfer policy Currently VTA does not offer transfers at all. Test availability in some circumstances.

Pilot test to assess if impact is positive or negative

Likely positive, test with pilot

Medium

Reduced cost day pass

Currently a Day Pass costs $6 ­ reduce to $5

Negative Neutral Medium to high

Low­income fare Provide a low­income fare similar to Seattle program.

Neutral if combined with fare increase

Likely positive

Very high

Primary Research Working Partnerships and Friends of Caltrain conducted a survey, focusing outreach on several commuter populations, including union members, employees at service businesses in Palo Alto, and riders on the VTA 522 express bus and at transit stops in Santa Clara County.

As intended based on the goals of the research, survey respondents were disproportionately lower income. 75% of survey respondents (129) reported earning less than $50,000 annually, and 56% (96) reported making less than $30,000 a year. Santa Clara County’s median income is $93,500, the highest in the nation.

Transportation choices A majority of survey respondents reported that they drive alone to work or school, although the 40% share of public transit use in the sample is much higher than the county­wide transit mode share of only 3% of the population commute by transit . The disproportionately high rate of 5

transit use is due in part to conducting some of the survey interviews on buses and at bus stops. Another reason for the relatively high rate of transit use is because of the relatively survey population selected from low­income commuter groups. The average income of VTA transit riders is $43,000, according to VTA survey data . 6

5 http://planbayarea.org/pdf/Draft_EIR_Chapters/2.1_Transportation.pdf 6 http://www.vta.org/sfc/servlet.shepherd/document/download/069A0000001OahEIAS

Motivations for transportation choices

The survey asked respondents about their motivations for choosing how they commute to work or school. Respondents could choose up to three answers in a multiple choice format. The top response, for drivers as well as for transit users, was time, and the second choice was convenience. Cost was also a concern for a large number of respondents, with transit riders reporting cost as a motivation at a slightly higher rate.

Availability of transportation commute benefits A striking result from the survey was the strong correlation between transit use and the availability of transportation benefits from the person’s workplace or school. The survey asked commuters, “Does your work/school subsidize your commute?” Responses showed that 67% of those who received benefits use transit, a figure significantly higher than the 40% share of the entire group of respondents, and more than twice the 30% rate of those not who reported that they did not receive benefits. In a county in which a very small share of commuters overall use transit, this result suggests that transportation benefits, including EcoPass and GoPass programs, offer a strong source of leverage in encouraging the use of transit. The survey also showed a striking result regarding the recipients of transit benefits. Respondents who reported receiving commuter benefits and taking transit were decidedly higher income than the overall sample. Among all respondents, 55% make less than $30,000

annually, yet among the group reporting receiving transportation benefits only about a third make less than $30,000 per year.

Why might this be the case? In Santa Clara County, the Caltrain GoPass program is designed for larger employers and their full­time workers, and the EcoPass program is also strongly (although not exclusively) tailored for larger employers. The income disparity among recipients of transit benefits, and the strong correlation of transit benefits with transit ridership, is the basis for one of this report’s key recommendations. Commuters are time­sensitive With transportation time the most important factor for choosing a commute mode, the survey results showed a large difference in the commute time for driving compared to transit. Two­thirds of car­commuters reported commutes less than 30 minutes long. By contrast, less than a third of transit commuters reported that they reach their destination each day in under 30 minutes, and about half of them have commutes longer than 45 minutes. The time discrepancy between driving and transit is well known to anyone who uses transit in Santa Clara County ­ there are many routes for which VTA will take 2­4x the time of driving. Conversations with low­income workers, and with employers of low­income workers indicate that low­income workers are often highly sensitive to time. Many low­income workers have more than one job; and/or have school and family care responsibilities. The slow speed of transit poses a significant obstacle facilitating mode shift in the Santa Clara County. Direct improvements to transit speed, such as Bus Rapid Transit initiatives, have the potential to address this major barrier. Heavy rail transit ­ BART or Caltrain ­ provide travel times that are much more competitive, but historically has posed cost barriers.

Transfers and commute time The survey results did not directly show that transfers were a major barrier to the use of transit. Only x% reported that transfers were a major factor in their decision (quote raw data here). Respondents reported that they highly valued commute time, and analysis of the survey results showed that commutes requiring transfers were highly correlated to longer commute times. Roughly 15% of those with commutes shorter than a half hour reported that their journey includes at least one transfer, compared to 24% of those commuting for 30­45 minutes, 30% of commuters en route for 45­60 minutes, 61% of those traveling for 60­90 minutes, and at the top end, 89% of those with commutes over 90 minutes. In order to identify opportunities to increase transit ridership and mode share, it would be helpful for VTA, and for cities interested in reducing congestion, to further analyze the locations where transfer time greatly increases trip time to high­density employment centers for larger numbers of commuters. This analysis could identify opportunities to increase frequency, to provide greater schedule integration, and to shorten trip times for major commute patterns. Trip patterns, time and cost barriers There are some types of time sensitivity that have the potential to be addressed with price mechanisms. Heavy rail service (Caltrain and BART) are typically much more time­competitive with driving, but carry a higher price than bus service. Historically, slow bus service has been seen as a lower­end product compared to rail service, and is therefore

offered at a lower prices for similar routes. Also, the lack of transfer pricing results in higher trip prices for commute trips requiring bus to bus transfers. To assess these as potential issues, we analyzed the trip patterns of survey respondents. Are price­sensitive commuters choosing to drive rather than to take a faster but more costly trip option? In the survey, trip origin data were collected in the form of the zip codes of workers' home addresses, while destination data were typically collected in the form of the street addresses of employers. About 2/3 of the survey responses had usable destination data with addresses and/or complete, valid zip codes. Given the smaller number of survey responses to the questions about where people live and work, and the lack of precision in the locations specified in the responses, it is not possible to draw quantitative conclusions about the share of respondents who have time­competitive but relatively costly transit options available to them. However, given the available data, several patterns emerged from the analysis: 1. Transit is a feasible commute option for perhaps 1/3 to 1/2 of the workers in the survey data set, with total trip times ranging from 30 to 70 minutes for those workers. About 3/4 of the commute trips could be made in 90 minutes or less using transit. 2. For transit trips between 30 minutes and 90 minutes, one transfer and only one transfer between transit services is usually required. Between 50 and 75 percent of these "feasible transit commutes" would require one transfer. For trips 30 minutes or less, a transfer is usually not required, while two transfers are needed only in a small number of cases, usually for longer commutes. 3. The most common transfer type is from one VTA bus to another VTA bus, comprising about 1/2 the feasible transit commutes. VTA bus to Caltrain is another common type, comprising about 1/4 of the feasible trips. Other common transfer combinations in the data set include VTA Light Rail + Caltrain and SamTrans bus + Caltrain. Some feasible trips would require the use of a free employer shuttle, such as the Marguerite shuttles available for workers commuting to Stanford University.

These patterns among potential transit trips were consistent even for geographically disparate parts of Santa Clara County. For both workers heading to Palo Alto and those whose destination is within San Jose, for example, the ranges in transit times and costs, the number of transfers required (usually one), and the types of transfers required (bus + bus, bus + Caltrain) are surprisingly similar. However, the small size of the data set and its use of zip codes as origin data may mask differences in transit patterns for different parts of the Peninsula/South Bay.

The trip pattern data suggest that public transit may be feasible for more of the region’s workers, however transfer cost and transfer time pose barriers. Sample potential transit routes for Santa Clara County Commuters (incorporate this in one graphic) 7

Example Transit Trips Requiring One Transfer

- blue lines = VTA bus routes, green lines = Caltrain line

- red markers = origin destination pairs, yellow markers = transfers

Trip 1: South Mountain View to Downtown Palo Alto

- VTA Bus 51 + Caltrain, 50 min, $5.25

Trip 2: South Santa Clara to San Antonio Shopping Center, Mountain View

- VTA Bus 57 + VTA Bus 522, 75 min, $4.00

Trip 3: Southeast San Jose to Downtown San Jose

- VTA Bus 39 + VTA Bus 22, 85 min, $4.00

7 GIS analysis. For each usable origin ­ destination pair, Google Transit was used to determine the time, cost, number of transfers required, and transit services required (VTA bus, Caltrain, etc.) if the worker were to commute using transit. With only zip codes available as the workers' origins, several locations were chosen within the residential areas of the given zip codes to determine likely ranges in transit trip times and costs. Even though zip codes are relatively large areas through which several bus/rail routes pass, typically a single transit option (such as boarding a VTA bus then transferring to Caltrain, for example) is the fastest available even for residences located in different areas of a given zip code. More precise origin data (such as the worker's home address or the intersection nearest to the worker's home) would allow these transit trip times and costs to be estimated more accurately, with narrower ranges, and would allow an analysis of the actual transit alternatives available to each worker. Accurate origin data would also allow walking time (to and from transit stops) and transfer time (total time needed to transfer between services) to be calculated for each trip. Also, an assessment could be made of the potential benefits of bicycling rather than walking to and from transit stops, which might reduce the total trip time and make transit a feasible commute option for some workers.

Opportunities to improve fare equity Based on the primary survey research, and additional examples of fare coordination and fare equity initiatives in the Bay Area and elsewhere, there are a variety of approaches that could be used to improve equitable access to transit, while increasing transit ridership in Santa Clara County.

Expand bulk­discount programs for key high­density geographic areas Explore transfer discounts and lower day pass fares Comprehensive low­income fare policy

In evaluating these initiatives, VTA has a set of relevant goals, including:

Improving equitable access Increasing transit ridership and reducing greenhouse gas emissions Revenue and financial stability

We will evaluate the potential fare equity policy initiatives based on their potential impact on these different goals. Expand bulk­discount programs Based on the primary research, bulk­discount benefits such as EcoPass and GoPass have a 8 9

major impact on the level of transit ridership. However, the research indicated that these programs may be disproportionately available to higher income commuters. A focused approach to address this disparity would be to extend bulk­discount transit pass offerings to targeted high­density work centers and residential neighborhoods. Currently, bulk­discount passes are sold to large employers and educational institutions, but are are for the most part unavailable to people who work at smaller employers, and people who are contractors/contingent workers at larger employers. This poses an equity problem, since many low­income workers are employed at small firms, for example retail and restaurant service workers, or are part of a contracted workforce, for example, janitorial and security workers at high­technology firms. A very recent example of this approach could be a model for a broader initiative. In the last few months, VTA has agreed to extend its EcoPass offering to the Palo Alto Transportation Management Association, a new nonprofit which has been tasked by Palo Alto City Council with a goal of reducing single occupant vehicle trips and parking demand in downtown Palo Alto, a dense employment center with over 10,000 workers. The Palo Alto initiative is not the

8 http://www.vta.org/getting­around/Fares/Eco­Pass­Pricing 9 http://www.caltrain.com/Fares/tickettypes/GO_Pass.html

first such agreement offering EcoPass to smaller employers in a concentrated area. VTA currently provides the EcoPass to a cluster of businesses at the San Jose International Airport, including the smaller employers providing retail and other services at the airport. However, this approach, offering an EcoPass to a geographic cluster of business and workers, is not yet common. Caltrain offers a GoPass to large employers with a minimum purchase price of $15,120 , a 10

price point which is out of reach for smaller employers. GoPass is also available to individual large multi­family residential developments. However, Caltrain has not yet offered the GoPass offering to any employment centers or other dense destinations. The potential equity benefit provided by a geographically focused GoPass offering is particularly notable, since the average income of a Caltrain passenger is $117,000 . Given 11

the priority that low­income workers report that they place on travel time, it seems extremely unlikely that lower income workers simply choose not to take Caltrain because of a qualitative preference for bus service or driving, and more likely that low income workers are priced out of access to the Caltrain service. Consequences for VTA goals Equity Primary research suggests that low­income workers are disproportionately underserved by GoPass and EcoPass benefits. Employment centers with highly paid employees also include sizeable numbers of lower­wage employees who work in food service, security, transportation, and other occupations. Therefore, extending bulk pass benefits to people in high­density locations has a high potential for equity benefit. Ridership and greenhouse gas emissions According to the primary research in this study, transportation benefits including bulk­discount programs have a substantial impact on ridership. Therefore, extending the EcoPass and GoPass programs to employees in high­density geographic areas has a high likelihood of increasing transit ridership, decreasing vehicle miles traveled, and decreasing greenhouse gas emissions. Revenue The structure of the bulk­discount pass programs is intended to be “farebox neutral”. 12

Participants purchase passes for the entire population of an employer or residential development at a deep per­person discount. Not all of the people within the population will use

10 http://www.caltrain.com/Fares/tickettypes/GO_Pass.html 11 http://www.caltrain.com/Assets/_Marketing/pdf/2013+Caltrain+Triennial+Customer+Survey+­+Report.pdf 12 http://svlg.org/wp­content/uploads/2011/10/B_ECO_Pass_9.26.12.docx.

transit, but overall a higher percentage do so, with the intended result that the transit agency’s revenue is the same as if the program had not been used, but the level of ridership is increased. VTA conducted a study several years ago in partnership with the Silicon Valley Leadership Group showing that the EcoPass was not meeting its farebox neutrality goal. In response to 13

the study, VTA decided to converting the EcoPass program to Clipper, for better data collection, and then to adjust fares to achieve neutrality. Once this has taken place, expansion of the EcoPass program should be expected to be farebox neutral. Caltrain has increased GoPass prices, and plans an additional increase, in order to achieve farebox neutrality. Transfer pricing and day pass pricing Low­income workers are both time and price­sensitive. However, faster rail­based transit has a higher price structure than slower bus service. The disparity is even worse if a commuter does not live within walking distance of the rail station, and needs a bus connection to the train. Currently, Caltrain offers local bus fare credit on VTA or SamTrans buses for holders of a monthly pass for two or more zones. However, a monthly pass costs $126 up front for a 2­zone fare ­ $56 more than the price of a VTA monthly pass. In addition, many low­income 14

workers have uneven shifts, and a monthly pass would not be cost­effective. The equity and access issue will be exacerbated when BART extends into Santa Clara County. BART does not offer a monthly pass, and has been eliminating the paper­based BART­Plus fare that was intended to provide transfer pricing for BART users. Currently, MTC is implementing a pilot program to test the effect of transfer discounts between BART and AC Transit, with the goal of increasing transit ridership in the inner East Bay . The 15

pilot program under way is testing two transfer options, with a few hundred riders. One group of riders will receive a $1 discount on transfers both ways, from AC Transit to BART or from BART to ACTransit. (Currently there is a 25c cash or 50c Clipper transfer discount available only from BART to AC Transit) The second group will consist of holders of 31­day AC Transit passes ($75) who will get a 15% discount on BART fares. The cost of the pilot was budgeted at $230,000, and results of the pilot are expected to be published in October/November. The report is intended to include proposals for how revenue sharing would function, if a transfer program was implemented as a result.

13 http://svlg.org/wp­content/uploads/2011/10/B_ECO_Pass_9.26.12.docx. 14 http://www.caltrain.com/Fares/farechart.html 15 http://apps.mtc.ca.gov/meeting_packet_documents/agenda_2043/6j_Res.4060_Rev.pdf

In order to reduce the current inequity of Caltrain use, and to prevent similar inequity when BART service launches in Santa Clara County, it would be helpful for VTA to pilot test a similar transfer structure. Since Caltrain service is available today, and the average salary of Caltrain riders is strong circumstantial evidence of equity issues, it would be feasible to start such a pilot with Caltrain, and extend to BART when BART service opens. Day pass cost Another option to study, to reduce the cost of multi­leg transit trips, is the cost of a day pass. Currently VTA has set the price of a day pass at $6 , which is a 33% discount over the cost of 16

a round trip with a transfer. When studying transfer options, it may make sense to also study reducing the cost of a day pass to $5, to assess if this may help to increase transit ridership and reduce vehicle miles travelled and greenhouse gas emissions. Consequences for VTA goals Equity Our primary research provided indirect evidence of inequity in the impact of the lack of transfer pricing. Low­income commuters reported being both price­sensitive and time­sensitive. Small­sample GIS analysis suggests that a notable percentage of low­income workers have Caltrain options that would be practical from a schedule perspective.. And the average income of Caltrain riders clearly indicates that the service is not serving low­income workers. The arrival of BART service would exacerbate current issues. Therefore, a pilot test of a transfer program would provide helpful information to test the hypothesis that such a program could improve equity. Ridership and greenhouse gas emissions Given the circumstantial evidence, it is not possible to make strong predictions about the impact of such a transfer program on transit ridership and greenhouse gas emissions. However, we do see that a very high proportion of low­income workers in Santa Clara County drive to work. A pilot program could assess the impact on ridership. Logical outcomes might include:

diverting transit ridership from slower bus to faster train, providing equity benefits but not overall transit ridership increase and GHG emissions reduction.

shifting solo drivers to transit commutes, increasing ridership and reducing greenhouse gas emissions

minimal impact, since other obstacles are more important barriers to using transit In Santa Clara County, emerging Transportation Management Associations are strongly motivated to reduce vehicle trips to high­density employment centers. Partnering with a TMA

16 http://www.vta.org/getting­around/fares

might help to assess and reduce barriers in addition to price barriers. For example, the recent commute survey conducted by the Palo Alto Transportation Management Association showed a large share of commuters who also use their cars for mid­day trips and errands. The availability of carshare and/or guaranteed ride home programs can address this additional barrier. Revenue The impact on transit revenue would depend on the impact on ridership.

if the effect is to divert transit ridership from slower bus to faster train, the affect would be to divert some revenue from VTA’s bus service to Caltrain or BART service

if the impact is to shifting solo drivers to transit commutes, the result would be increased transit revenue

if the ridership impact is minimal, revenue impact will be minimal. Therefore, one of the goals of the pilot would be to assess revenue effects, and make any recommendation for fare­sharing if the benefits are of value, but the revenue share changes. Low­income fare The most robust approach to improving would be to implement a low­income fare that is more comprehensive than the current UPLIFT and TAP programs designed to serve very low income residents who have support from social services. The Seattle system is a role model for the comprehensive approach low­income fare approach. The Seattle program is broadly targeted at low­income people making less than 200% of the Federal Poverty level (which is currently $23,340 for an individual, $40K for a family of 3, and $48K for a family of 4.) Approximately 500,000 individuals have incomes below 200 percent of the federal poverty level in King County—about 25 percent of the county’s population. An estimated 45,000 to 100,000 riders are expected to apply and qualify for the reduced­fare program. 17

Launched in March 2015, Seattle implemented the discount program at the same time as an overall fare increase; with net revenue for the transit system is expected to be positive. The Fare increase is expected to bring in about $10,000,000 in additional revenue, while the discount program will cost $7M to $9M per year in reduced fares and administrative costs. The program is planned to be consistent with the agency’s 25% farebox recovery target.

17 http://kingcounty.gov/transportation/kcdot/MetroTransit/AdvisoryGroups/LowIncomeFare.aspx http://metro.kingcounty.gov/am/reports/annual­measures/financial.html http://metro.kingcounty.gov/am/reports/2014/transit­fares­report.pdf http://www.westseattleherald.com/2014/08/14/news/king­county­metro­will­introduce­low­income­fares

According to the terms of the program, qualifying riders pay a reduced fare of $1.50 per ride, compared to a price of $2.50 to $3.25 for the standard adult fare (depending on time of day and zones). The program is implemented using the ORCA card. To conduct the substantial work to qualify and enroll riders, Metro is partnering with the Public Health department which helped enroll more than 165,000 King County residents for health care under the Affordable Care Act. Individuals need to re­qualify for the program every other year. Currently, starting in 2015, the MTC is conducting a study exploring the potential of regional means­tested fares for the Bay Area . The goal of the study is to develop scenarios to fund 18

and implement a regional means­based transit fare program or programs in the 9­county Bay Area, and to determine the feasibility of implementing the scenarios. For VTA, it makes sense to leverage the research and learn from the outcomes of the MTC research program. Based on the outcomes, there may be opportunities for action in Santa Clara County. Consequences for VTA goals Equity A broadly targeted low­income fare would a large potential impact on equity by reducing fare barriers to transit use. Ridership and greenhouse gas emissions By reducing price barriers, a broadly targeted low income fare has the potential to increase transit ridership. However, since travel time is the highest priority for commuters, the impact of a fare program may be limited without complementary initiatives to increase travel times, via faster service, increased frequence/reduced wait time, and focused improvements to transfer times. A program would need to apply to fast rail service, not only slow bus service, to address the need for competitive travel time. Revenue A low­income fare discount would reduce revenue from low­income commuters, and would add substantial administrative costs. For transit agencies, a corresponding increase in general fares, as in Seattle, could result in overall increase in revenue.

18 http://apps.mtc.ca.gov/meeting_packet_documents/agenda_2338/2f_Regional_Means.pdf

Remaining tasks

Details: The report is intended to include proposals for how revenue sharing would function, if a transfer program was implemented as a result. Footnote to TMA survey