APPENDIX B
OUTREACH

Introduction

The outreach effort intended to talk directly with state DOT offices and professionals directly engaged in the decision-making and operation of fare-free transit implementation. The interviews provided a diverse perspective from both scope (across the United States) and scale (large to small states and agencies). The representatives we spoke with were very helpful and provided great insights. This added greatly to the findings of the literature review. The information below is a summary of those interviews and the important findings.

Highlights

In late January 2023, the research team conducted fare-free policy profile interviews with: Vermont Agency of Transportation (VTrans) and a Vermont consultant representing Vermont Transit Authorities

• California Department of Transportation (Caltrans)
• Hawaii Department of Transportation (HDOT)
• Virginia Department of Rail and Public Transportation (DRPT)
• Missouri Department of Transportation (MoDOT)
• Los Angeles, CA Metro (LA Metro)
• Hawaii County Mass Transit Agency
• City of Escalon, CA Transit
• Burlington, NC Transit
• Oxford, MS University Transit
• North Texas Metro Transit’s Retired CFO
• Kansas City Area Transportation Authority (KCATA) and RideKC

Additional feedback received in March/May 2024 was incorporated as it was available to provide the most current information. Profile summaries are provided below on discussions that covered general fare-free policy descriptions, funding sources, costs, advantages and disadvantages, and lessons learned. Some key highlights of these discussions are listed in Table 1 and Table 2 as they connect to the key goals of the research study.

Table 1. Summary of Highlights from DOT Outreach Interviews

Table 2. Summary of Highlights from Follow-up and Additional Outreach Interviews

Some primary findings were shared among interviewees involved in fare-free policy considerations. Staff and resource capabilities affect the deployment and the ability to monitor adequately the impacts that fare-free policies have. In rural systems, farebox recovery ratios were central to decision-making about whether to go fare-free or not. In urban systems, partnerships, and delicate balances that do not upset established funding agreements were central to zero-fare policies. State DOTs involved in fare-free policy covered a wide range of involvement, with some providing funding and limited guidance, and others providing programs that solicit and advise on how best to consider fare-free policies. Most appear to be neutral on the decision to implement fare-free service, leaving the decision to the individual agencies. COVID was the primary force of funding that motivated or was centrally placed in almost all fare-free policies as a result of the sheer scope and impact on ridership that occurred during the height of the pandemic.

Vermont Agency of Transportation (VTrans)

System Description and Role in Zero-Fare Policies

Transit service in Vermont is provided by Green Mountain Transit (GMT, Burlington, VT; 50% of ridership and budget in the state) and six other rural transit providers. One of the rural transit providers is located in both Vermont and New Hampshire. The entire state implemented fare-free service in March 2020 in response to COVID. The current direction is that GMT will transition back to charging fares, and the rural providers will focus on sustaining the fare-free program long-term. It was noted that pre-COVID fares made up 18% of the operations budget in GMT and 3-4% with the rural providers. Pre-COVID, Advance Transit saw a 20% increase in ridership with fare-free service. Some tourist services were also provided (fare-free for many years, but no service during COVID due to closures) access to ski mountains. Vermont was headed to a fare-free pilot pre-COVID, and the

pandemic forced the issue. Ridership at GMT is now nearing pre-COVID levels and is driven to a large degree by the university and hospital students/employees.

Funding Sources

The agencies were funded through the 5307 and 5311 programs. The state DOT flexes FHWA funds to support the transit program. The state DOT is very engaged in supporting transit and fare-free implementation. Non-Emergency Medical Transport (NEMT) is also provided by the transit agencies with commensurate funding.

Lessons Learned, Benefits, and Concerns

• Operational Benefits
  • Fare-free service simplified the use of the system, reduced boarding times and driver conflicts, and provided a reduction of risk for disease transmission. No COVID cases were linked to transit. They succeeded in protecting the public.
  • Fare-free service is a key part of future health crisis contingency planning.
• All-Day/Disruptive Riders
  • Some concerns about potentially disruptive passengers linked to fare-free service did not materialize.
• Neutral DOT role on the decision, but supportive of funding
  • DOT role seen as a coordinator rather than a decision-maker.
• Ridership
  • Rural authorities did not see a big change in behavior with fare-free service – more about operational impacts. Ridership increases in urban areas, possibly the same passengers using transit more frequently
• Equity Considerations
  • The equity impacts of free service for tourists and fares for essential services should be considered.
• Other
  • Micro-transit is being considered for implementation at some agencies. It is now expected that there will be fares for this premium service. Cancelations are considered to be an issue if no cost penalty is involved. An example was making three reservations for a single trip.
  • The NEMT service reimbursement calculations were found to be impacted by the fare-free implementation. The number of participants was impacted since they were not paying fares. This is an aspect that must be considered if NEMT is a part of the service.
  • Some concern was noted for the cost of service for persons with disabilities if the demand increases greatly.
  • GMT expects to take 3 to 4 months for stand-up fare collection after the period of fare-free service.
  • Now buying buses without fare collection equipment in place.
  • Recommended detailed discussion with a consultant who had evaluated multiple VT systems.

California Department of Transportation (Caltrans)

System Description and Role in Zero-Fare Policies

Caltrans provides general guidance on the use of various funding structures to transit agencies, of which approximately 12 continue to deploy fare-free and reduced-fare policies. Fare-free policies may be offered on a more limited basis for students and youth using these funds.

Funding Sources

During a three-month period at the height of COVID, the CRRSAA Act paid for statewide zero-fare programs at transit agencies in the state of California. During this time, the cost for 3 months of fare-free transit statewide was estimated to be $750 million (not implemented).

In addition to CRRSAA funding, Caltrans maintains a funding structure that can be used to support fare-free policies across the state. During COVID, the funding structure from the LTF, State Transit Assistance (STA), Low Carbon Transit Operations Program (LCTOP), and Self-Help Counties Local Sales Taxes advanced the use of zero-fund and reduced-fare policies. Table 3 details a sample of transit agencies that applied for fare-free funds with the LCTOP funding programs.¹

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¹ Source: Caltrans Division of Trail and Mass Transportation, Received: February 1, 2023.

STA funds are distributed to counties, cities, and MPOs for use in planning, operations, and capital investments. LTF is distributed to counties and cities for operations and capital expenditures. Both LTF and STA funds are distributed to counties with over 500,000 (except LA County) in population, relying on metrics tied to ridership and population figures as a distribution mechanism. LCTOP is usually combined with self-help counties with a local sales tax for a match but may be used to fund operations.

Lessons Learned, Benefits, and Concerns

• Importance of securing a champion for fare-free policy
  • Active local advocates motivate many fare-free policy deployments.
• Investments in integrated fare payment systems facilitate fare-free policy deployment options
  • The current state focus on an integrated fare payment system (Cal-ITP) is anticipated to enable greater use of fare-free policies and deployment adaptations tailored to local funding sources and regional partners.
• Neutral stance from California DOT
  • Caltrans is not monitoring or collecting drawbacks and advantages for transit agencies to consider the use of fare-free policies.
  • Caltrans provided a fare-free transit symposium to exchange ideas on different ways to leverage fare-free policies, including: time of day rates during off-peak hours, on certain routes, or when collection proves more costly than offering fare-free.
• Data sources for monitoring results and funding are connected
  • LTF and STA funds will report the triennial use of funds for fare-free and how they were used.
• Paratransit and micro-transit are difficult costs within fare-free policy deployments
  • Paratransit and micro-transit are major challenges in any fare-free consideration.
• University partnership complications with fare-free policy
  • Some transit agencies relying on university partnership funds may lose this source of funding when they go fare-free, which has nationwide strategic implications.
• Equity and geographic diversity are major elements of the California experience
  • Equity impact analyses are unclear with fare-free policies due to the mix of universities and employers participating in fare-free-like programs.
  • Fare-free deployments took place across a variety of rural, small urban, and urban transit agencies.
  • It is difficult in California to get fare-free policies deployed for select groups to receive fare-free through legislation because it is often voted down or vetoed by the governor.
• Difficulties of monitoring the impacts of fare-free policies
  • Because fare-free was widely deployed during a period when COVID caused such tremendous upheaval for transit services, ridership, and fare revenue metrics, there was difficulty determining whether any of the more optimal scenarios or settings for fare-free policies could be replicated.

• Going fare-free can reduce data on ridership if this data is tied to smart cards and fare revenue boxes, and not APCs.
• Getting transit agencies with limited staff to report on the outcome of fare-free policies is difficult.²
  • Retaining the smart card system because of the data and link to fare revenue and ridership the smart card system provides.
• Future Developments:
  • There remain many unknowns due to long-tail societal impacts on ridership (e.g., telecommuting) from COVID with planned Phase I and II deployments.
  • Funding must be secured for Phase II for the low-income rider program, which will be a substantial cost. Presently, much depends on the LA Metro board.
  • California incentivized developers to offset the generation of new vehicle miles traveled with mitigation expenditures that may favor transit program funding if the offered program delivers a maximum reduction in VMT.
    • SCAG report recommended VMT improvement specifically tied to the expansion of the Fareless System Initiative (FSI) from just students participating to all students, which may get developers to focus on sponsoring schools.
    • This may be a future direction in transit funding for LA Metro.

Hawaii Department of Transportation (HDOT)

System Description and Role in Zero-Fare Policies

Through its statewide planning office, HDOT coordinates and supports three rural transit agencies in their rural transit program:

• Maui County, which is contracted,
• Kauai County, which is in-house, and
• Hawai’i County, which is a mix of contracted drivers and in-house maintenance.

Hawaii County Transit supports fixed route and paratransit services with two urban area concentrations on different sides of the island with a service area that stretches across the entire Big Island. Hawaii County Transit is the only transit service provider in the state of Hawaii with a fare-free transit policy in effect. The decision to pursue a fare-free policy was made at the county level.

HDOT does not have any available data on specific ridership from Hawaii County Transit. They are currently in the process of requesting more data from Hawaii County since their fare-free policy has been in place for one year and it would be good to know if the policy is providing a return on increased ridership. No official fare-free policy guidance has been provided by Hawaii DOT.

Funding Sources

HDOT does not provide any state DOT funding to transit providers. COVID relief funds from

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² Source: Wiggins, S. (2021) Metro - File #: 2021-0574: Board Report Item: Fareless System Initiative. Available at: https://metro.legistar.com/LegislationDetail.aspx?ID=5135460&GUID=2E7254C2-C71A-4F5F-9B63-163015D127DC&G=A5FAA737-A54D-4A6C-B1E8-FF70F765FA94&FullText=1 (Accessed: 8 February 2023).

CRRSAA and American Rescue Plan Act (ARPA), which require no match-funding, support the current fare-free policy in Hawaii County, which is slated to continue until 2024, at which point the funds will be depleted. Before the fare-free service, operating costs annually were about $13 million, with a fare revenue of about $1 million and a 7-8% farebox recovery rate.

Maui and Kauai discussed fare-free internally and decided to use COVID funds for operations in comparison to Hawaii County.

Lessons Learned, Benefits, and Concerns

• Funding is the key
  • Funding from COVID made fare-free policy decisions possible, requiring no match. With 5311, 50% is allowable as an operating expense requiring a significant match should a transit agency consider deploying a fare-free policy.
  • The reason Maui decided against this is that the COVID funds are temporary and that there would be pushback from riders when they have to reinstitute the fare.
  • Another item is that Hawaii County has a dedicated fund for transit, earmarked from county revenue sources. Maui and Kaui have a surcharge on their general sales tax. So, they have to compete for those funds against other capital projects, where the Hawaii County fund is dedicated to transit. This probably had a strategic impact on their willingness to pursue a fare-free policy, given the temporal quality of CRRSAA and ARPA funds.
• Trends in transit ridership
  • Transit ridership was on the decline before COVID.
• Fare collection costs are a primary factor
  • Where fare collection costs approach fare revenue, fare-free policy may make sense. Hawaii County had 7-8% of fare box recovery, while Kaui and Maui were higher.
  • If the net to fare is 7% or below and transit ridership is on the decline, it may make sense to implement fare-free policies to meet the needs of the transit-riding public more effectively and reverse course on ridership trends.
• Concentration of poverty
  • Hawaii County has a concentration of poverty, with an average income level lower than the state average income level and an opportunity cost that made sense for the Hawaii County Transit committee.
• Leadership
  • The Hawaii County DOT director and planning director were involved and championed the effort with their transit director.

Virginia DRPT

System Description and Role in Zero-Fare Policies

In February 2020, the Virginia General Assembly HB 1414 transportation omnibus bill created a transit ridership incentive program (TRIP) that sets aside a portion of the funding within the program for zero- and reduced-fare programs. The goal is to reduce barriers to transit use among

low-income communities. The program funds system-wide zero-fare operations, where 38 transit members can apply for funding, technical support, and guidance on initiating zero-fare programs. This program also has a separate application for transit agencies to offer riders reduced-fare passes as a supplemental program. Lastly, the TRIP zero- and reduced-fare program has an application focused on the development of zero-fare zones and zero-fare corridors. DRPT’s transit and planning divisions oversee the program.

Any successful grant recipient receives through the zero- and reduced-fare TRIP program 3 years of state funding for fare-free deployment that requires a 20% grant match in year one, a 40% grant match in year two, and a 60% grant match in year 3. Grantees are required to administer a fourth year with 100% local funding for system-wide zero-fare projects. Some agencies in Virginia remain committed to zero-fare policies, while others relied on funding during the pandemic and are now collecting fares again. The TRIP program began seeking applications in September 2022, so it remains in the early stages.

DRPT also provides grant application technical assistance, for which rural transit agencies can receive 50% funding with a 50% local match. The technical assistance can go toward fare policy development, fare studies, and equity studies to improve their three-year grant applications.

At the time of publication, Charlottesville Area Transit³, FXBGO!⁴ In Fredericksburg, GRTC⁵ in Richmond, VA, DASH⁶ in Alexandria, Mountain Empire Transit⁷, Mountain Lynx Transit⁸, the Fairfax Connector, CUE⁹ in the City of Fairfax, and Petersburg, VA transit¹⁰ have fare-free policies.

Funding Sources

The Virginia General Assembly funded the TRIP program. CRSSA and ARPA funded other elements of fare-free policies that have occurred prior to the TRIP program funds being made available.

Lessons Learned, Benefits, and Concerns

• Fare-free policies can be politically divisive
  • Transit systems have boards across multiple agencies with different political views on fare-free funding, and transit staff wants to avoid having the argument come up across the governing bodies.
  • There are fare and funding complexities and nuances for fare-free policy that quickly get lost in any divisive political discussions.
• Equity
  • The motivation for creating the system was increasing equity among riders.

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³ https://www.charlottesville.gov/539/Fare-Options, Website accessed May 1, 2024.

⁴ https://www.fredericksburgva.gov/1684/Fares, Website accessed May 1, 2024.

⁵ https://ridegrtc.com/fares/and-rates/, Website accessed May 1, 2024.

⁶ https://www.dashbus.com/, Website accessed May 1, 2024.

⁷ https://meoc.org/transportation/, Website accessed May 1, 2024.

⁸ https://district-three.org/index.php/public-transit/, Website accessed May 1, 2024.

⁹ https://www.fairfaxva.gov/government/public-works/cue-bu, Website accessed May 1, 2024.

¹⁰ https://www.petersburgva.gov/299/Petersburg-Area-Transit, Website accessed May 1, 2024.

• Performance
  • Ridership data and qualitative passenger surveys are the two primary sources of performance metrics tied to monitoring fare-free policy.
• Justifying fare-free
  • Urban systems will justify primarily based on increased use of service, increased ridership, and impacts on low-income riders. Most are confident in their applications and in proposed metrics that they will have data justifying the fare-free policies.
  • Rural systems will justify, based on their low fare-recovery ratio, that it will not be difficult to maintain since their system is so small and they are looking for less funding.
• Intent of the increased yearly match
  • TRIP is designed to wean transit systems off of state funding so that local transit agencies learn to deploy fare-free policies by making the case to local boards to provide local funding sources once the justification for the increased service and ridership becomes clear at the end of the three-year period.
• Technology improvements
  • TRIP funds technology improvements to replace fare box systems with APCs. TRIP also helps with guidance on technological and procurement strategies and considerations if there is a longer-term commitment to fare-free policies.
• No safety concerns associated with fare-free policies have been raised by transit providers, which may be because of lower ridership during COVID.
• Loitering is a concern, but a simple advisement from the operator to riders that they must depart at the end of the route resolves it.
  • Dash in Alexandria reported metrics for “riding without destination” and provided their operators with specific language and guidance on how to address it.
    • This trend has not risen to the level that it shows up in qualitative surveys from other riders.
  • Dash in Alexandria also had overcrowding that impacted service.
• TRIP provides flexibility because different transit agencies have different needs
  • Reduced-fare pass programs for eligible riders in low-income communities may be a better fit, where a transit agency relies more heavily on the revenue collected at the farebox.
  • This is why TRIP as a program was designed with different means by which a transit agency can submit applications for funding.
  • The corridor or zone-based funding has not been used as of the date of the interview.
• COVID funding was the impetus for the TRIP program
  • Funding was to be available in July 2020 from COVID relief, and VDRPT felt it was a great time to obtain state funding to formalize the approach to fare-free policy.
  • VDRPT underwent targeted outreach to plan for a state-level role in fare-free guidance, grant applications, and application assistance. This study supported the

proposed development of TRIP.

• Marketing and Branding
  • All transit systems with zero-fare have marketing and branding of the service associated. Some apply for funding to do community outreach, while others have a $25,000 line item for marketing, such as the Fredericksburg subsidized pass program.
  • The TRIP program requires all participants to ensure they are marketing the fare-free policy adequately and using the DRPT insignia in this marketing to reflect the TRIP program.
• DRPT and the TRIP program are trying to make fare-free policy a non-political issue
  • One potential approach is giving more control to local boards to obtain buy-in.
  • Making the decision into a discussion on data without relying too heavily on ridership numbers.
• Capability and staff/resource wealth
  • Some transit systems have a planning staff of five people and are super qualified to deliver a fare-free policy that meets the needs of TRIP, while others do not.
  • Balancing who receives funding in the application process is very complicated. Marketing TRIP to those two transit agencies is also difficult because VDRPT wants the rural systems to have successful applications in comparison to urban transit systems with more capacity.
• TRIP is volatile politically because it receives a lot of attention at every gathering of the Virginia General Assembly.
  • DRPT will hire a contractor to help overhaul the TRIP program in the coming year to make application guidelines more user-friendly and enable a more qualitative discussion.
  • Presently, the application requires transit agencies to forecast their ridership using 2018 numbers going 5 years forward, which brings up workforce issues.
    • Urban systems use a T-best analysis, vs. a rural system which may have a best guess estimate.
  • The overhaul will try to level the playing field on scoring criteria and processes.
• VDRPT created a COVID contingency plan
  • If COVID or something similar returns, the current response plan would open the TRIP program to one year of zero-fare relief to be offered to all transit agencies.

Missouri Department of Transportation (MoDOT)

System Description and Role in Zero-Fare Policies

The state has a range of transit agencies from large Metro (St. Louis, which provides service in both Missouri and Illinois, Kansas City, which provides service in both Missouri and Kansas) to small urban and rural providers. To the best of the researchers’ knowledge, Kansas City was the only large metro agency in the state that implemented fare-fee service during the pandemic. Small urban and rural providers provided temporarily fare-free or reduced fares in many cases during COVID with most returning to regular fares.

Funding Sources

No additional state funding for fare-free transit in Kansas City (not eligible as a large metro). It should be noted that the Missouri DOT does provide KCATA and Streetcar state funding through the STA Program to assist with their transit operation cost, which would cover their increase in cost due to their fare-free service. Prior to July 1, 2022 the funding level for this program was at $1.7M. In July 2022, the funding in this program increased to $8.7M and in July 2023 increased to $11.7M. These state dollars can be used as a match to FTA federal programs. Over a three-year period, KCATA and the Streetcar have received an 85% increase in allocated funding from this state program.

Lessons Learned, Benefits, and Concerns

• Neutral DOT role on decision, limited opportunities for funding
• Other
  • The Missouri Public Transit Association is having discussions on fare-free service as an option.
  • Recommended investigating the experience in Kansas City.
  • Note that reports from the Kansas City system are included in the literature review.

Vermont Transit Authorities (Analysis by Consultant to Multiple Agencies and the DOT)

System Description and Role in Zero-Fare Policies

Vermont has a single small urban agency in Burlington (GMT, 110k population, 40-50 buses at peak pullout, 2-2.5M trips per year) and multiple rural agencies. The fare-free operation has been in place since the start of COVID. GMT began returning to fare collection on April 1, 2024, with some routes scheduled for fare collection on May 20, 2024. One commuter route will remain fare-free.¹¹ Some students and faculty are provided fare-free service by agreement with the university. There is a group of institutions that are part of the Unlimited Access Program including the University of Vermont, the UVM Medical Center, Champlain College, and Saint Michael’s College. Rural agencies are projected to continue fare-free operations. Going into COVID, two agencies were already fare-free. Some had routes that were fare-free and/or very low fare.

Funding Sources

The agencies in Vermont use a wide range of funding mechanisms. In the urban area, there are some state funds available, local partners (cities) contribute, and there are agreements with the local university for service. The agreement is with the Transportation Management Association, which includes the university and the other institutions listed above. GMT has since its inception assessed its member municipalities under its taxation authority. This only applies to nine urban/suburban municipalities while a tenth contributes voluntarily either based on local budget lines or via petition at a Town Meeting. Rural districts have funding agreements with ski resorts, state funds, human service agencies, and Medicaid transportation. Some colleges also contribute, and some agencies have philanthropic programs seeking private donations. Vermont flexes highway funds. The state flexes over $20M in highway funds, which is greater than the FTA apportionment.

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¹¹ https://ridegmt.com/gmt-fares/, Website accessed on May 1, 2024.

Lessons Learned, Benefits, and Concerns

• General observations
  • The interviewee provided multiple reports with detailed information, which were included in the literature review.
  • Drivers very much appreciated fare-free operation – no conflicts over fare collection, safety during COVID with rear entry, and less contact.
• All-Day/Disruptive Passengers
  • All-day/disruptive passengers did occur but was not a pressing issue. Policies in place to address.
• Fare Policy
  • Consider which fares are “hidden” – university students/faculty and hospital employees whose fares are paid through separate agreements.
  • Need to be ready to answer the question, “Does it have value if it is free?”.
  • Fare policy for micro-transit might need to be considered differently – concern over a high no-show rate.
  • Rural areas have had a positive experience if made whole financially.
• Ridership
  • Ridership impacts were mixed. In urban areas, ridership increased, but these additional trips appear to be the same people riding more often versus a shift away from cars. In rural areas, the fare-free service was helpful for riders, but it did not increase ridership appreciably.
• Operations
  • There is little or no data to evaluate the impact on dwell time.
  • Very positive passenger feedback. The system was easier to use, with no exact change requirements or embarrassment over unfamiliarity with the system.
  • Disaggregated application (local vs. commuter routes) is a possible alternative.
• Other
  • An interesting analysis technique was noted – utilize a comparison of lost riders to lost cost. It is a similar comparison to comparing the cost of a new service with the projected increase in ridership.
  • Medicaid NEMT may have formula issues with fare-free service. This has to do with the definition of a member and keeping them on the rolls for the service, which has negative funding implications.
  • Choice riders are taking their cars. The services help those who need them most.

LA Metro

System Description and Role in Zero-Fare Policies

LA Metro provided system-wide fare-free service in response to the COVID pandemic from March 2020 to January 2022. During this time, LA Metro established a task force to track the fare-free policy, studying the advantages and disadvantages. This effort led to a decision to implement a fare-free pilot program for K-14 students.

Decision- makers decided before COVID (in 2016) to initiate the U-Pass college pass program for

college students attending schools in LA County to use any participating rail or bus transit service within the county to travel for free. In June 2021, LA Metro decided to implement a multiphase FSI covering a two-year period ending June 2023 to include as Phase I all K-14 students at participating schools in Los Angeles County using an application and pass-based system which also provides origin stop and ridership data. Phase II will include low-income riders as part of the Low-Income Fare is Easy program once the required funding has been identified.

Funding Sources

Funding sources include the 2020 Coronavirus Aid, Relief, and Economic Security Act (CRSSA), 2021 ARPA, and Partnership Contributions/Agreements with Community Colleges and K-12 School Districts. Ongoing fare-free service is focused on K-14 and college students. During the initial pilot period for Phase I, partner school districts pay a universal rate of $3 per student for all K-12 students enrolled, and community colleges pay $7 per student.

Lessons Learned, Benefits, and Concerns

• Motivation:
  • Primary motivation for fare-free policy around COVID was the safety of the driver and passengers, helping avoid proximity to the driver as the passengers entered the transit vehicle.
• Fare-free policy analysis elicits a fine balance between expansion of service to attract increased ridership to designated passenger types versus the estimated cost to provide increased service:
  • A careful consideration in the current approach to FSI multiphase system is to balance reducing the cost to provide increased transit service and access services by limiting the expanse of the fare-free policy.
    • Board report indicated the universal fare-free policy would result in a $550 million annual increase in transit service and access service costs to meet projected demand, of which $302 million would be for access services alone to LA Metro.
• COVID CARES and ARPA accelerated planning and deployment of FSI multiphase fare-free programs
  • FSI Phase I was planned during COVID, using a 9-month task force studying the advantages and disadvantages to plan possible phases of FSI. This began in March 2020 and ended around December 2020. Then in March, they approached the board to get approval for Phase 1 using ARPA.
  • FSI Phase I started in one school district as a pilot in August 2021, and then the entire program deployed starting October 1st.
  • Low-income changes to FSI came in November 2021, and then fare collections restarted in January 2022 with the FSI Phase I in place.
• More than 2 months of planning is needed to deploy a fare-free program.
  • Because LA Metro was reliant on smart cards, the volume of students accessing the web portal to apply overwhelmed the system.
• Funding structures for FSI enable greater data analysis through the smart card system on ridership and use:

• This data analysis is used to bill school districts based on the percentage of students boarding and enables better data on where to improve outreach to students to raise awareness of the benefits of FSI’s fare-free program.
• A universal fare-free system was considered as an alternative, but the annual impact from a cost perspective was $500M to $1 billion. A significant portion was in increased access services (paratransit).
• All-Day Riders:
  • During COVID, homeless populations increased in LA County, and there was a corresponding increase in riders experiencing homelessness, who were also being pushed out of public spaces, like parks.
  • LA Metro instituted a homeless outreach program getting those experiencing homelessness at stations and on transit routes and lines to get them into more supportive mental health or housing.
  • No increased costs from additional security.
• Safety and Security:
  • Security and safety incidents went up during COVID, of which most were attributed to lower ridership, exposing those riders to potential threats of violence.
  • LA Metro found that safety and security concerns were largely addressed on routes with increasing numbers of riders, which gave riders a sense of security from having more fellow passengers observing bad behaviors.
  • LA Metro anticipated lower driver assaults with the elimination of fare collection, but driver assault incidents only increased during the universal fare-free policy tied to COVID.
  • Increased student ridership was not qualitatively or quantitatively contributing to heightened safety and security concerns.
• Increased Ridership:
  • Student ridership has steadily increased, displaying a trend of 11% of student riders in October 2022 and 14% in November 2022.
  • Pre-COVID California State University-LA had overcrowding associated with the U-Pass program, but no overcrowding has taken place during FSI Phase I or COVID fare-free policies.
• Farebox Recovery Cost Savings:
  • No cost savings resulted from fare machine operations reduction from COVID fareless policies because positions were temporarily moved to other jobs within LA Metro.
    • A report provided by LA Metro on the FSI farebox estimated annual savings at between $14.5-26.3 million, which comprises the total non-labor amount for fare collection costs, assuming the 282 full-time employees would be reallocated to other positions within the agency.¹²
  • Retaining the smart card system because of the data and link to fare revenue and

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¹² Source: Wiggins, S. (2021) Metro - File #: 2021-0574: Board Report Item: Fareless System Initiative. Available at: https://metro.legistar.com/LegislationDetail.aspx?ID=5135460&GUID=2E7254C2-C71A-4F5F-9B63-163015D127DC&G=A5FAA737-A54D-4A6C-B1E8-FF70F765FA94&FullText=1 (Accessed: 8 February 2023).

ridership provided.

• Future Developments:
  • There remain many unknowns due to long-tail societal impacts on ridership (e.g., telecommuting) from COVID with planned Phase I and II deployments.
  • Funding must be secured for Phase II for the low-income rider program, which will be a substantial cost. Presently, much depends on the LA Metro board.
  • California incentivized developers to offset the generation of new vehicle miles traveled with mitigation expenditures that may favor transit program funding if the offered program delivers a maximum reduction in VMT.
    • SCAG report recommended VMT improvement specifically tied to the expansion of the FSI from just students participating to all students, which may get developers to focus on sponsoring schools.
    • This may be a future direction in transit funding for LA Metro.

County of Hawaii Mass Transit Agency, City of Escalon, CA Transit, and Burlington, NC Transit

System Description and Role in Zero-Fare Policies

County of Hawaii Mass Transit Agency

The County of Hawai’i Mass Transit Agency operates fixed route and paratransit services covering the Big Island, and two urban areas, including rural areas in between. Buses range from 25-40 feet in length. Motivations to implement fare-free policy were based on a low rate of farebox recovery and declining ridership. Pre-COVID, there was also a financial audit of farebox recovery processes requiring greater attention and increased costs to ensure processes were accurate and verified. Considering potential returns to a fare-based system, the transit agency is considering instituting a Genfare system with smart cards, which will cost $21,000 per bus. Annual ridership has doubled from 294,000-588,000 since the transit agency added more routes, instituted fare-free policies, and added a vanpool program that is not fare-free. The agency website now lists transit fares.¹³

City of Escalon, CA Transit

Escalon Transit carried 1,800 passenger trips annually, with a fare box recovery rate of 1%. Escalon uses a Genfare system. California has a law where rural transit systems must meet a specific farebox recovery ratio, so the decision was made to institute a fare-free policy there as well, at around the same time. The result was a 3% increase in ridership, which is primarily for older adults and low-income riders. The Escalon Transit also elected to pursue passenger per hour and cost per passenger as its performance measures of choice, instead of ridership. The agency website shows that bus service remains fare-free.¹⁴

Burlington, NC Transit

In Burlington, NC a small transit system also instituted a fare-free policy with the primary motivation to eliminate administrative costs and associated impacts on municipal government.

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¹³ https://www.heleonbus.hawaiicounty.gov/home-transit, Website accessed on May 8, 2024.

¹⁴ https://www.cityofescalon.org/government/departments/transit_service, Website accessed on May 8, 2024.

Note that fares resumed on December 18, 2023.¹⁵

Funding Sources

The primary sources of funds enabling fare-free policies are the ARPA and CRRSAA relief bills passed during COVID. Prior to the fare-free policy, the transit agency collected $550,000 in annual fares with a cost to collect them of $380,000.

Hawaii County Mass Transit relies on a general excise tax to provide funding sustainability, and if the council sees value in the fare-free policy, the transit agency can incorporate $500,000 into the operating budget once ARPA and CRRSAA funds are depleted.

Escalon, CA, relies on the California TDA as its source of funds, without any need for general funds from the city. That means the cost of a fare-free policy is already included in the operating expenses since it becomes a matter of subtracting expenses from revenue for the net cost. A match for net costs is effectively zero since the fare-free policy results in no revenue and just expenses.

Lessons Learned, Benefits, and Concerns

• Low farebox recovery and decreasing ridership were prime motivations for fare-free policy deployment
  • Hawaii County Mass Transit developed a master plan, which first considered a fare-free policy to improve ridership and analyzed the cost to collect fares vs. the revenue.
  • Funding from CRRSAA and ARPA enabled them to enact the fare-free policy plan.
• Efficiency and safety were major advantages
  • No disputes with bus operators occurred during the period of deployment for fare-free, enabling quicker boarding, and enticing more to consider public transit because of not having that barrier for fare collection.
• Rider policies
  • Burlington, NC, Escalon, CA, and Hawaii County Mass Transit maintain the same policy, which is that all riders must have a destination to deter all-day or joy riders.
  • Hawaii County Mass Transit developed a security plan stressing to drivers the importance of watching out for all-day riders and took on an increased annual cost of security of $200,000 associated with the fare-free policy. Previously, security was maintained only at bus stops and stations. Now, security rides along on all transit buses in Hawaii County Mass Transit.
• Legislative considerations in California
  • Ongoing discussions on TDA reform to make transit for students free, removing the barrier of kids going to school.
  • This will have an impact on farebox recovery ratios, and there will be an associated need to then reassess strategic funding and revenue implications, which

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¹⁵ https://www.linktransit.org/, Website accessed on May 8, 2024.

could influence more toward fare-free policies or less in other settings.

• Initiating a fare-free policy
  • In Hawaii County, this required a memo describing how to implement free fare, and in the case of Escalon, it was a simple request to the council to make the system free.
• Monitoring for overcrowding
  • In Hawaii, the fare-free policy began in February 2022, with a month-after-month increase of 10-15% ridership. It is not overcrowded now, and ridership growth is assumed to taper off in February 2023.
  • Hawaii County Mass Transit will scale up services in case increased ridership does not taper.
• Staff resource benefits
  • Fare-free policy in Hawaii County freed up account clerks to take on other responsibilities that were falling behind at the agency.
  • Hawaii County Mass Transit is doing more to automate business processes within the agency, so fare-free policies align well with this objective.

Oxford-University Transit (OUT, Oxford, Mississippi)

System Description and Role in Zero-Fare Policies

The OUT system serves the City of Oxford, Mississippi, and the University of Mississippi. Service includes fixed route buses (30 – 30’ and 40’ buses) and paratransit that focus on city routes, campus routes, student housing routes, and a Safe Ride Service on Thursday, Friday, and Saturday nights.

OUT was founded in 2008 and has grown to be the largest transit service in Mississippi, with pre-COVID ridership of 1.4M trips per year. Due to the partnership agreement with the university, students did not pay fares to ride, but non-students did pay a fare. In the summer of 2019, a fare-free pilot was conducted when student traffic was low. The results revealed a 25% increase in ridership during that summer period. In March 2020, OUT adopted a fare-free service that has continued beyond COVID and has been continued to the present day. Prior to the adoption of fare-free service, the system collected $20,000 in fares as part of the $6M budget. Fare collection costs were found to be about the same as the revenue that was being collected. Routes also provide service to voting sites, the food bank, and medical facilities. Service for persons with disabilities is provided, but the service demands are low (9-10 trips per day). The rider population outside the university traffic is generally low-income and transit-dependent.

Funding Sources

OUT receives federal funding through the 5311 program. Funding for the required match and additional service is provided by the University of Mississippi, The City of Oxford, and through funding agreements with apartment complexes serving the student population. The funding mix did not change with the introduction of a fare-free service.

Lessons Learned, Benefits, and Concerns

• University and Local Community Funding supported Fare-free transit implementation
  • Leveraged a unique set of funding sources to increase access and remove barriers to transportation for riders with social or economic challenges.
• All-Day/Disruptive Riders
  • Some all-day riders (often fell asleep) when temperatures are at the extremes of hot and cold. Implemented a policy that after one trip around the bus route, the drivers work with the passengers to assist them in finding their destination. Late-night service involved some intoxicated passengers that required intervention by security personnel.
• Importance of securing a champion for Fare-free policy
  • It is important for a local champion to push for fare-free service. The General Manager proposed the change and made an effective case to the governing body.
• Neutral stance from Mississippi DOT
  • Limited engagement with the state DOT in the provision of fare-free service.
• Other
  • The current intent is to continue the fare-free service indefinitely. Fare collection expenses were considered to be too high to be practical.
  • A possible funding approach was anecdotally mentioned in the discussion from a community in Montana. The current price of a gallon of gas was added to every water bill to provide matching funds. No specific details were provided, but it does point to the need to find creative funding methods acceptable to the community members.

North Texas Metro Transit Retired CFO

System Description and Role in Zero-Fare Policies

Post-COVID, there has been much interest regarding fare-free service, but no specific actions have been taken. The focus of our conversation was on the future – particularly from the perspective of a large, urban transit system CFO.

Funding Sources

Outside of FTA funding, the primary source of local funds is a dedicated sales tax.

Lessons Learned, Benefits, and Concerns

• Strategic funding considerations
  • Consider all sources of fares and revenue related to fares. Will revenue from university, NGO, and employer-funded fare programs continue if a zero-free policy is implemented?
  • Can the objectives of a fare-free system be achieved with another method (example: low-income and youth programs)?
  • Is there a commitment to bondholders pledging fare revenues as a source of repayment?
  • Does the loss of fare revenue impact the funding available for state of good repair projects?

• Balancing between potential reductions in service optimization and increased ridership
  • The decisions should be anchored in a customer-focused solution. Does the implementation force a choice between service levels/reliability/vehicle condition and lower fares?
• Multimodal considerations
  • Does this program apply to shared-use mobility, on-demand, scooters, and microtransit services? If so, is it for last-mile service only, within a zone, or throughout the service area/
  • Does the program apply to commuter buses, commuter rail, and light rail?
• Balancing scope of fare-free with equity
  • From an equity perspective, does it make sense that fare-free service is provided to higher income riders and that the increased service use is provided inclusive of affluent areas?
• Potential impacts to travel demand management
  • Fare-free service eliminates the opportunity for pricing signals to influence rider choices during peak/off-peak hours. While ridership has been reduced during COVID, it is likely to return with a risk to the capacity of the existing service vehicles.

KCATA and RideKC

System Description and Role in Zero-Fare Policies

Kansas City is a mid-size urban area with five transit operators across the region all operating under the RideKC brand. 5307 funds are provided to KCATA as the federal designated recipient. The RideKC Streetcar system runs through a transportation development district (TDD) which funds the fare-free policy on the Streetcar through the support of sales and property tax from stakeholders within TDD. The Streetcar is being expanded from 2 miles to 6 miles. It was planned for fare-free operation from its inception.

Kansas City had a unique role within the context of this study because they were a large agency that implemented fare-free service pre-COVID. A fare-free policy on the bus system was partially implemented in 2017 with the veterans’ program, along with programs with school kids. COVID drove the decision to implement a regional fare-free policy in March 2022, which has remained in place since that time.¹⁶ Pre-COVID, the wider bus system solicited partners in BlueCross BlueShield, universities, hospitals, and social services with rider discounts. The City of Kansas City, MO, has two sales taxes dedicated to transit and covering a portion of the citywide zero-fare policy ordinance, with the mayor championing zero-fare policies.

Funding Sources

The primary funding sources for RideKC Streetcar are the sales and property taxes within the TDD where the Streetcar operates as part of a special funding mechanism in the state of Missouri. Pre-COVID, the wider bus system solicited partners in BlueCross Blue Shield, Universities, hospitals, and social services with discounted riders to cover the cost of these riders, which was not zero-fare

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¹⁶ https://ridekc.org/fares, Website accessed May 1, 2024.

but somewhere in between what the city currently has post-COVID and post-COVID relief support.

The City of Kansas City, MO, has two sales taxes dedicated to transit and covering a portion of the citywide zero-fare policy ordinance, with the mayor championing zero-fare policies.

Lessons Learned, Benefits, and Concerns

• Motivation:
  • The primary motivation for the RideKC Streetcar zero-fare policy was eliminating friction for use and encouraging multimodal users in the TDD to overcome skepticism on what is considered a new mode for some.
  • The primary motivation for zero-fare policy on the regionwide bus system and paratransit services was economic benefits through increased ridership, transit performance through reduced dwell times, and safety around COVID through reduced engagement at the door and rear boarding options.
• Cost savings were primarily over fare collection costs
  • A 10% farebox recovery ratio costs the RideKC $500k annually.
  • Farebox updates for vehicles were pending because they were aging out and would have cost RideKC at least $8 million to install across the regional fleet of buses.
• RideKC Streetcar TDD considerations
  • The TDD, as a funding source for zero-fare relies on special property taxes and sales taxes in the district, which means they also require density to support zero-fare on the RideKC Streetcar.
  • As the line expands and approaches lower-density establishments with reduced sales and property taxes, zero-fare becomes less economically viable.
  • In case the TDD density equation or future sales and property taxes do not cover costs, RideKC Streetcar has made deliberate design decisions so that platforms and streetcars contain electrical conduits to enable fare box recovery to be instituted should this need become apparent.
• Security
  • Most security incidents were over fare disputes before they initiated zero-fare policy in 2020.
  • Incidents have increased between riders which may stem from overcrowding, some persons riding without destinations, or due to riders with issues.
  • Bus operators have requested a return to front door boarding and fares so they can monitor problem riders or riders that have been banned from boarding the bus more closely and to ensure all riders have a purpose and destination.
  • Since 2019, Ride KC bus systems security has increased from 4 to 26 security officers to address increased incidents with riders simply riding without a destination., and with a segment of that population having mental health and/or addiction issues.
  • RideKC relies on KC police officers who can arrest and Titan security officers

who can detain. Most security officers are either at transit stations or roaming the system in their own vehicle to check stops and other locations. There are problem routes where incidents are of a higher frequency, so the placement of security is strategic.

• Some incidents have to do with bus operators moving people out of their seats at the end of the line. Since the increase in these incidents, now bus operators simply call security officers to handle the removal of the rider who will not depart.
• RideKC implemented a policy where the service vehicle is emptied at the end of a route for cleaning and maintenance, which helps address all-day riders but enforcing the policy is a challenge and leads to some incidents with riders.
• RideKC Streetcar also hired off-duty police officers to supplement security and partnered with business districts to provide on-street staff to routinely ride the car and maintain a presence.
• Overcrowding
  • RideKC bus system reduced services on transit while retaining the zero-fare policy, which means they are getting close to overcrowding.
  • The drop in ridership associated with COVID was not as severe because the zero-fare policy was already in place during COVID.
• Public outreach and surveys on zero-fare help prove support and raise concerns
  • There are some anecdotal inputs indicating a segment of the ridership community holding a preference to pay fares to reduce the impact on perceived ride quality associated with an increase in all-day riders and those riders perceived to be potentially disruptive.
  • Onboard surveys riders are supportive of zero-fare policy because of the convenience factor of getting on and off the bus without the worry and hassle of smartphone apps or payment.
• Covering the universal zero-fare policy for ADA ridership was a large risk that never materialized
  • There was a significant fear that the ADA paratransit costs ($40 per trip) would increase dramatically to cover the zero-fare policy and resulting demands, which would represent an unconstrained liability on the part of RideKC.
  • This did not happen as of the date of this interview.
• Finance represents the largest challenge
  • Had COVID never occurred, likely, the regional transit operators would not have adequate finances for universal zero-fare.
  • Figure 1 displays estimated zero-fare costs of $10.2 million for the Kansas City, MO, portion of the RideKC zero-fare policy, which is covered by the current two sales taxes until FY 2024.¹⁷
  • Kansas City, Missouri, championed zero-fare policies and supports it financially

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¹⁷ Transit Zero Fare Impact Analysis (April 2022) MARC. Available at: https://www.marc.org/transportation/plans-and-studies/transit-zero-fare-impact-analysis (Accessed: 21 March 2023).

within city routes and services, but the larger external region may return to fare-based systems.

• Reestablishing new partnerships with veterans’ services, universities, hospitals, Blue Cross Blue Shield, and others is being evaluated for the future to offset the loss of revenue due to fare-free service on the bus systems.

  

• Future Developments:
  • RideKC Streetcar will expand to a six-mile route within the TDD with a zero-fare policy covering the entire route. The state of Missouri TDD is fiscally responsible as it is a capital project that also provides 20 years of operations and maintenance.
  • A permanent fare-fare policy under RideKC will be difficult given that the entire region and five transit operators participate currently under one brand. These include the City of Independence, Johnson County, KS, and Wyandotte County, KS, operating without dedicated funds beyond the City of Kansas, and they represent a challenge given the continuing costs, which may go unfunded as COVID relief funds recede.