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Agenda Item # 6

BOARD MEMORANDUM

Recommendation:

Review and comment on fare changes proposed for implementation in July 2007 and September 2007.

Background:

In September 2005, a proposal from a coalition of community groups concerned about declining
ridership on VTA’s bus and light rail system resulted in the VTA Board of Directors authorizing
the formation of the Ridership Initiative to Develop Energy Efficiency (RIDE) Task Force. The
Task Force met multiple times between October 2005 and August 2006 to discuss and develop a
comprehensive list of ideas for increasing VTA ridership. Included in those ideas were
suggestions of fare affordability and convenience, a summary of which is attached for easy reference.

Consistent with input from the Task Force, VTA subsequently extended promotional fares
including the 8-Hour Light Rail Excursion Pass and the Youth Summer Blast Pass. These fares
have been well received by VTA riders and staff is recommending that they be included in the VTA
fare tariff.

In addition to fares already tested on a promotional basis, staff is also recommending
selective reductions to day pass and monthly pass prices. These proposed
reductions would be consistent with the RIDE Task Force’s suggestion to reduce fares for
persons least able to afford them, and to make using VTA more affordable for persons who
need to transfer.

In July 2005, VTA initiated a Community Bus Service pilot program. This service, which uses
small-capacity gasoline powered buses, has now operated for almost two years on routes serving
Los Gatos and the Winchester light rail station in Campbell. The Community Bus concept has
been well received and will be expanded to additional areas beginning in July 2007, with a
second increment of implementation programmed for January 2008. While the pilot service was
operated without charging fares, free service is scheduled to end with the conclusion of the pilot
phase and fare collection will begin in July 2007. Staff has analyzed various options and is
recommending a new category of cash fares for Community Bus service.

The proposed fare changes were presented at the Board Workshop on April 27, 2007
as part of the Recommended FY 2008 and FY 2009 Operating Budget. The proposed fare
changes will also be a part of the biennial budget presentations scheduled for a series of
community meetings in early May. The fare recommendations will be presented along with
the recommended budget at all VTA Standing and Advisory committees during the month
of May 2007. A final recommended set of fare changes, including possible revisions in response
to public input, will then be presented to the Board of Directors for approval at their June 7, 2007
meeting, along with the final recommended budget.

Discussion:

Youth Summer Blast Pass
Historically, VTA has experienced a major decline in sales of Youth monthly passes and Youth
ridership during the summer when school is out and families often take vacation. In the summer
of 2005, VTA first implemented the Youth “Summer Blast Pass” promotion. The Summer Blast
Pass offered Youth (ages 5-17) a single pass, good for rides on VTA all summer (June, July, and
August) for a discounted price of $75 (compared to $147 cost for three individual monthly
passes). Value-added promotional tie-ins were also offered with merchants and attractions served
by VTA bus and light rail.

The 2005 Summer Blast Pass was considered successful with 1,456 passes sold. The promotion
was reauthorized in 2006 and achieved even greater response with 1,726 passes sold. The
promotional program has again been initiated for summer 2007. Due to the success of this
promotion, and to encourage Youth ridership every summer, staff will be recommending that the
Summer Blast Pass be added to the VTA tariff as a regular part of the fare structure at the price
of $75.00.

8-Hour Light Rail Excursion Pass
The 8-hour Light Rail Excursion Pass (Excursion Pass) was implemented in June 2006 on a
promotional basis, initially through December 2006. This new fare option is priced at twice the
one-way fare ($3.50 for Adults, $3.00 for Youth, and $1.50 for Senior/Disabled persons) and
allows customers to ride the light rail system for eight hours from the time of purchase. The
Excursion Pass responds to customer requests and the recommendations of the RIDE Task Force
by improving the convenience of fare payment on light rail. In particular, the Excursion Pass
fulfills a need for a “round-trip” rail ticket for persons attending major events when the rail
station platforms are crowded and access to the Ticket Vending Machines may be limited and
time-consuming, especially at the conclusion of the event. For example, the Excursion Pass
proved to be very helpful to VTA riders on July 4 and during the San Jose Grand Prix.

Following the initial success of the pilot program in 2006, the Excursion Pass was extended
through March 31, 2007. At the VTA Board of Directors meeting on March 1, 2007, the Board
authorized a further extension of the pilot program through June 30, 2007 to allow additional
time for further public comment prior to any formal action to include this fare in the tariff.

Day Passes
Day passes are primarily used by riders making trips requiring transfers, or those making more
than two VTA trips during a day. Information from the 2006 “On Board” Survey and data from
VTA fareboxes indicate that 19% of riders use day passes, with 4.4 boardings per day pass. In
response to the suggestions of the RIDE Task Force, staff has reviewed day pass pricing and
plans to recommend reductions in day pass fares, as follows:

The day pass for Adults is currently $5.25.
The proposed Adult day pass is $5.00. 
The % change for the Adult day pass is -4.8 %. 
The Express day pass is currently $10.50.
The proposed Express day pass is $10.00. 
The % change for the Express day pass is -4.8 %. 
The Youth day pass is currently $4.50.
The proposed Youth day pass is $4.00. 
The % change for the Youthg day pass is -11.1 %. 
The Senior/Disabled day pass is currently $2.25.
The proposed Senior/Disabled day pass is $2.00. 
The % change for the Senior/Disabled day pass is -11.1 %. 

The proposed day pass pricing is intended to be more affordable and improve rider convenience
by eliminating the need for coins. Pricing for Adult and Youth day pass tokens will be adjusted
to match the changes in day pass pricing.

Monthly Passes
Monthly passes are used by VTA’s most loyal riders, including the transit dependent and those
who choose to use VTA for convenience, environmental, or other reasons. Over the last several
years, VTA has experienced a 14-18% annual decline in monthly pass sales for Youth and
Senior/Disabled passes. At least part of the decline is attributable to increased pricing and
reduced discounts over the last several fare changes. In response to these trends, and in keeping
with the suggestions of the RIDE Task Force to increase fare affordability, the following reductions
to monthly pass prices for Youth and Senior/Disabled riders are recommended:

The Adult monthly pass currently is $61.25. 
There is no proposed price change for the Adult monthly pass. 
There is no % change in the Adult monthly pass.
The monthly Express pass currently is $122.50. 
There is no proposed price change for the Express monthly pass.
The Youth monthly pass currently is $49.00. 
The proposed Youth monthly pass is $40.00. 
The % change in the Youth monthly pass is -18.4 %
The Senior/Disabled monthly pass currently is $26.00. 
The proposed  Senior/Disabled monthly pass is $20.00. 
The % change in the Senior/Disabled monthly pass is -23.1 %

Community Bus Fares
Like all other VTA transit services, the Community Bus routes are expected to generate fare
revenue to offset, in part, the cost of the service. All Community Bus vehicles will be equipped
with fareboxes and VTA day passes, monthly passes, and EcoPasses will be honored.

Where cities or other groups wish Community Bus services to operate free of fares within a
particular area, they may elect to provide local contributions “in-lieu” of fares. This approach is
already being used for services including the DASH, Airport Flyer, Great America and River
Oaks shuttles and others where contributions or grants support at least 20-25% of the route
operating cost. In some cases, contribution levels are higher to support higher service levels.

Staff has reviewed fare pricing for Community Bus type services and is recommending a new
category of cash fares for Community Bus services. Community Bus rates would apply to single
ride cash fares on Community Bus vehicles only. Community Bus riders requiring transfers to
other VTA buses or light rail would still benefit from purchasing VTA system day passes or
monthly passes. Proposed Community Bus fares compared to current regular fixed route fares
are as follows:

The Adult day pass current Bus/Rail, single ride fare is $1.75. 
The proposed Adult community bus single ride fare is $1.00.
The Express current Bus/Rail, single ride fare is $3.50. 
There is no proposed changes in the Express community bus single ride fare.
The current Youth day pass for Bus/Rail, single ride fare is $1.50.
The proposed community bus single ride fare  is $0.50 . 
The Senior/Disabled day pass current Bus/Rail, single ride fare is $0.75.
The proposed community bus single ride fare  is $0.50.

The proposed Community Bus cash fares would be applied to all VTA routes which are
scheduled to regularly operate using Community Bus vehicles. The exception to this rule would
apply only to those services where external subsidies are provided to enable free fares.
Community Bus cash fares would apply on Community Bus routes even if a full-size vehicle
were occasionally needed to meet a peak trip load.

Effective Dates for Changes

Community Bus Fares
Implementation of Phase I of the Community Bus program is planned for July 2, 2007.
To minimize customer confusion, it will be proposed that Community Bus cash fares be
implemented at the same time. 

8-Hour Light Rail Excursion Fare
The 8-Hour Light Rail Excursion Fare is recommended tobecome a regular part of the
VTA tariff as of July 1, 2007, thereby ensuring continued availability of this fare option
after the expiration of the current promotion.

Day Pass and Monthly Pass Fares
Changes to pricing for day passes and monthly passes require additional lead-time due to
printing and distribution requirements, coordination with third-party vendors,
reprogramming of fareboxes and ticket vending machines, and notification to riders of
the fare changes. To accommodate these activities, and assuming a June approval by the
Board of Directors, day pass and monthly pass price reductions are proposed to take
effect September 1, 2007.

Youth Summer Blast Pass
Preparations for a third year of sales for the Youth Summer Blast Pass are already well
underway as a promotional program (sales will begin in May). Therefore, the effective
date for adding this fare into the tariff is not critical for 2007 sales. It is proposed that
this fare be added to the tariff effective September 1, 2007 at the same time as proposed
day pass and monthly pass changes.

VTA Fare Policy Considerations
The VTA Fare Policy, adopted by the Board of Directors in December 2003, addresses farebox
recovery and fare structure goals for VTA. The Fare Policy does not specify fare pricing or
describe all VTA fare types; rather, these details are contained in the tariff. The Fare Policy
specifically states:

“7. The Board may establish pricing for additional types of fare media or special
fare sales programs as it determines necessary to meet the overall goals of VTA.
Such media or programs shall be included in the tariff.”

Consistent with Existing Fare Policy
The proposals to establish the 8-Hour Light Rail Excursion Pass and the Youth Summer
Blast Pass as regular elements of the VTA fare structure are thus consistent with the Fare
Policy. The proposal to adjust pricing of day passes, is also consistent with the Fare
Policy.

Inconsistent with Existing Fare Policy
Proposed price reductions for Youth and Senior/Disabled monthly passes will result in
discounts on these passes greater than specified in the Fare Policy. The key provisions of
the Fare Policy are the standards for Youth and Senior/Disabled (and Express) fares, as
follows:
• Fares for Youth riders shall be 80-90% of fares for Adult riders
• Fares for Senior/Disabled riders shall be 40-45% of fares for Adult riders
• Fares for Express bus services shall be priced at twice the equivalent Adult fare
 
The following table summarizes current and proposed Adult, Express, Youth, and
Senior/Disabled fare pricing along with pricing ratios established in the Fare Policy:

The current cash Adult fare is $1.75. 
The current Adult day pass fare is $5.25.
The current Adult monthly pass is 61.25. 
The proposed cash Adult fare is $1.75.
The proposed Adult day pass is $5.00. 
The proposed Adult monthly pass is $61.25. 
The current and proposed Express cash fare  is $3.50
The current Express day pass cash fare is $10.50. 
The current and prosposed monthly pass fare is $122.50.
Target ratio vs. Adult - - - - - - - - 200 % - - - - - - - -
The current and proposed Express cash, day pass and monthly pass ratio is 200%
The Youth current cash fare is $1.50. 
The Youth current day pass fare is $4.50. 
The Youth current monthly pass fare is $49.00.
The proposed Youth cash fare is $1.50. 
The proposed Youth day pass fare is $4.00. 
The proposed Youth monthly pass is $40.00.
Target ratio vs. Adult - - - - - - - - 80-90 % - - - - --
The current ratio for Youth cash, and day pass is 86%
The current ratio for Youth monthly pass is 80%
The proposed ratioYouth cash fare is 86%
The proposed ratio Youth day pass is 80%
The proposed ratio Youth monthly pass is 65%
The current Senior/Disabled cash fare is $0.75. 
The current Senior/Disabled day pass fare is $2.25. 
The current Senior/Disabled monthly pass is $26.00. 
The proposed cash Senior/Disabled fare is $0.75.
The proposed Senior/Disabled day pass is $2.00. 
The proposed Senior/Disabled monthly pass is $20.00.
The target ratio vs. Adult- - - - - - - - 40-45 % -  - - - - - -
The current Senior/Disabled ratio for cash is 43%
The current Senior/Disabled ratio for day pass is 43%
The current Senior/Disabled ratio monthly pass is 42%
The proposed Senior/Disabled ratio for cash is 43%.
The proposed Senior/Disabled ratio for day pass is 40%. 
The proposed Senior/Disabled ratio for monthly is 33%

Proposed Community Bus single ride cash fares also vary from the Fare Policy by
providing a discount for Youth that exceeds the policy target, while the effective discount
for Senior/ Disabled riders is slightly less than the policy target, as shown below:

The Adult proposed CB cash fare is $1.00.
The Youth proposed CB cash fare is $0.50. 
The Youth Target ratio vs. Adult is 80-90 %
The Youth Effective CB ratio is 50%
The Senior/Disabled proposed CB cash fare is $0.50. 
The Senior/Disabled target ratio vs. Adult is 40-45 %
The Senior/Disabled proposed ratio is 50%

Implementation As Exception to Existing Fare Policy
As noted above, proposed price reductions for Youth and Senior/Disabled monthly passes
as well as, proposed Community Bus cash fares for Youth and Senior/Disabled riders fall
outside the price ranges established in the current Fare Policy. Staff is planning to
recommend that the Board of Directors approve the proposed prices as exceptions to the
Fare Policy. Staff is not proposing to revise the Fare Policy at this time, but will monitor
rider response and sales patterns. Revisions may be recommended in the future if
experience demonstrates that changes are justified.

Title VI Impact Analysis
Per Title VI of the Civil Rights Act, VTA is to ensure that we provide our services without
discrimination. When making significant service and fare changes we are required to do an
analysis of these changes to assess their impacts. VTA has analyzed the impacts of the
Community Bus fares and the reductions to Day and Monthly pass prices and found they are
consistent with the requirements of Title VI.

Farebox Recovery
The Fare Policy indicates a VTA goal to achieve a farebox recovery ratio of 20-25%. The
Fare Policy recognizes that farebox recovery is not simply a function of fares, but rather, it
is a result of fares in combination with ridership productivity and cost efficiency, as
reflected in the statement below:

In order to increase farebox recovery, the average fare per boarding must
increase, ridership per hour of service must increase, or costs per hour of
service must decrease. Or more realistically, to achieve the level of
farebox recovery that VTA requires, all three of these components must
improve.

The Fare Policy also recognizes that “VTA’s primary mission is to attract and retain
riders”. As described in this memorandum, the various fare changes being planned for
next year are focused on this broader mission rather than on increasing farebox recovery
towards what may be an unrealistic goal. The Comprehensive Operational Analysis
(COA), proposed for implementation in January 2008, includes improvement of farebox
recovery as a primary goal. We will continue to monitor farebox recovery and strive to
improve this measure through ridership, cost efficiency, and fare related measures.

Alternatives:
The Board could choose to keep fares unchanged and not adopt a new Community Bus fare
structure. This would result in riders continuing to pay current fares and the existing VTA cash
fares adopted by the Board would apply to Community Bus service.

Fiscal Impact:
Net fiscal impacts of adding the Youth Summer Blast Pass and 8-Hour Light Rail Excursion
pass into the fare tariff will be insignificant since these fares are already in place. Fiscal impacts
of  proposed day pass and monthly pass fare reductions, as well as impacts of proposed
Community Bus cash fares, are estimated to total approximately $1.1 million annually, or
3.2% of annual fare revenues and these impacts are included in the recommended FY 2008
and FY 2009 biennial operating budget. However, the expectation is that the fare reductions
will increase ridership to effectively offset the reduction in revenue.

Attachment

Ride Task Force
Categorized List of Ridership Ideas

Fare Affordability and Convenience
1. Address affordability of transit
2. Offer a deeper discount for low-income, seniors and disabled individuals
3. Conduct price-sensitivity analysis and create a pilot program to determine the effect on
ridership of fares at various price points
4. Expand the pass options; e.g., offer to sell a weekly pass on the bus; consider offering
an evening pass 5. Installment payment for passes
6. Promote use of passes as a way to increase convenience for riders and income stream
for the agency
7. Expand token system to include disabled/senior fares
8. Make transit more attractive to youth
9. Partner with schools to encourage youth to take transit
10. Allow installment payment for passes
11. Make the VTA Rapid Service free to reduce boarding times
12. Improve pricing strategies such as parking cash outs, etc.
13. Create a dual fare media process with Caltrain so that passengers can purchase tickets
for both systems at one time (either at VTA or Caltrain, rather than needing to purchase a
ticket at each). This would encourage people to view the systems as well integrated and
reduce the number of times that people need to use a point-of-purchase.

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