Loading...
HomeMy WebLinkAbout12/11/2012 07 Transit Five-Year Financial Forecast and Financial Plan i,; . 1 W , ; , a} *iu'� F,aiYi #geld: - BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. For Meeting of: December 11, 2012 rc t r�" : ,`R", a F s _ h_ .S', ' . # }'a'.�r v: :: - .� ` 3 �€ 3 '- h, r� �?,>.- ?.�.�,�'4�,� -:� 3�,,�. �:r .��h�ia�7'h�z�E�. - fir «. .... ��5w Y4_�:';';R -. ITEM TITLE: Transit five -year financial forecast and financial plan to provide for fund stability. SUBMITTED BY: Chris Waarvick, Public Works Director, 576 -6411 CONTACT Ken Mehin, Transit Manager, 576 -6415 PERSON /TELEPHONE: SUMMARY EXPLANATION: Yakima Transit conducted a Five -Year financial analysis to ensure financial sustainability and sufficient resources to replace capital inventory. If we maintain the current expenditure and revenue trends, we forecast budget deficits of $1.1 million and $1 4 million in 2016 and 2017, respectively. After a comprehensive review of Yakima Transit's operations, staff has identified $800,000 in savings annually. Yakima Transit is also proposing to increase rates for fares and passes, which would provide an additional revenue amount of $200,000. The combined value of expenditure savings and revenue enhancement is $1,000,000 or a 4:1 ratio of operational reductions to fare revenue increases The fare increase is only being sought after an exhaustive analysis of cost containment measures A public hearing will be required for many of the recommendations (draft attached). The cost containment measures include: modifications to Yakima Transit's insurance, service reductions for both the fixed - route and paratransit programs, and a modest fare increases for the fixed - route, paratransit, and vanpool programs. Staff respectfully recommends that the City Council provide staff direction on the cost containment and fare increase adjustments. Prior to the enactment of the recommendations, public hearings will be held. Those items requiring Council action (i.e. fare increase) will be brought back to City Council for action. The 2013 budget will need to be amended to reflect the final Council choices. The current 2013 budget is balanced. The reason for the cost containment measures is to reduce service costs in order to increase available funds for capital improvements, specifically buses. Five -Year Resolution Ordinance Other Financial (specify) Forecast & Financial Plan Contract: Mail to: Contract Term: Amount: Expiration Date: Insurance Required? No Funding Service Reductions And Fare Increase Phone: Source: APPROVED FOR City Manager SUBMITTAL: STAFF RECOMMENDATION: Staff respectfully recommends that the cost containment measures and fare increases presented be reviewed followed by direction to staff to pursue the cost containment and revenue enhancement recommendations. BOARD /COMMISSION RECOMMENDATION: ATTACHMENTS: Click to download ❑ Five -Year Forecast and Financial Plan ❑ Agenda Attachment - Summary Reference Tables ❑ Route Data - Map ❑ Draft Public Notice Yakima Transit Five -Year Forecast and Financial Plan FINANCIAL FORECAST This analysis consists of projected revenue and expenses of Yakima Transit based on maintaining existing transit costs, revenues, and service levels The forecast demonstrates capital and operating funding deficiencies need to be eliminated in order to stay solvent The result will require modifications to spending practices and will likely result in an optimization of service levels to balance operating and capital expenses At the current operating levels and with a normal vehicle procurement schedule, Yakima Transit will liquidate its $1 6M operating reserves and generate a negative balance of approx $1 1M FY 2016 and $14M by FY 2017 as reflected in the following table 5 YEAR ANNUAL CASH BALANCE 2012 2013 2014 2015 2016 2017 Ending Cash Balancewithout Recommendations $ 1,624 $ 1,976 $ 478 $ 504 $ (1,088) $ (1,397) Ending Cash Balance with Recommendations $ 1 649 $ 2 766 $ 2 272 _ $ 3 302 $ 2 714 $ 3 409 REVENUES The information contained in this section breaks down revenue streams and considers the outlook of those revenue sources Over the past couple of years, Yakima Transit has increased fixed route service with the assumption that revenues will increase overtime with those expansions, which has not been the case 2012 Yakima Transit Revenue Sources (in thousands of dollars) Other Grants 1 Sales Tax ■ Leases • Farebox IIII Contract Services (Selah) ▪ Grants Sales Tax ▪ Other Contract Services (Selah) 870 Farebox Leases 1 Year -End Estimates for 2012 & Projections for 2013 -2017, based on trending for 2010 -2012 Total Revenue (thousands) 2012 2013 2014 2015 2016 2017 Total Sales Tax $ 4,600 $ 4,669 $ 4,739 $ 4,810 $ 4,882 $ 4,956 Grants (Operating) $ 2,203 $ 2,815 $ 2,455 $ 2,751 $ 2,846 $ 2,916 Grants (Capital) $ 174 $ 718 $ 462 $ - $ 590 $ 72 Farebox $ 870 $ 895 $ 920 $ 946 $ 973 $ 1,001 Contract Services ( Selah) $ 244 $ 254 $ 266 $ 274 $ 285 $ 297 Leases $ 22 $ 20 $ 38 $ 40 $ 41 $ 41 Other $ 71 $ 71 $ 71 $ 71 $ 71 $ 71 Total Operating & Capital Revenues $ 8,185 $ 9,442 $ 8,951 $ 8,893 $ 9,688 $ 9,354 Sales Tax Yakima Transit utilizes a three tenths of one percent Transit Sales Tax Year Operating Tax Capital Tax Total Sales Tax (0.3 %) sales tax that was passed by voters in 1980. 2006 $ 3,731,725 $ 750,000 $ 4,481,725 Sales tax revenue typically accounts for approximately 2007 $ 4,167,233 $ 570,000 $ 4,737,233 50 % - 55% of total transit revenue. Sales tax revenue 2008 $ 4,372,789 $ 482,000 $ 4,854,789 has remained consistent following the drop after 2008 2009 $ 4,104,186 $ 380,107 $ 4,484,293 Revenue projections for transit sales tax revenue are 2010 $ 4,244,532 $ 240,000 $ 4,484,532 anticipated to increase by 1.4% each year. Under this 2011 $ 4,193,641 $ 250,000 $ 4,443,641 assumption, Yakima Transit will be receiving 2008 2012 $ 4,408000 $ 200,000 $ 4,600,000 2013 $ 4,400,000 $ 269,000 $ 4,669,000 funding levels in 2015 2014 $ 4,400,000 $ 339,000 $ 4,739,000 2015 $ 4,400,000 $ 410,000 $ 4,810,000 2016 $ 4,400,000 $ 482,000 $ 4,882,000 2017 $ 4,500,000 $ 456,000 $ 4,956,000 Grant Revenue Yakima Transit utilizes both federal and state grants, which account for approximately 25 % -30% of Transit revenue. The information below is based on forecasted estimates for grants Yakima Transit anticipates receiving. If the grants are not received, Yakima Transit will need to revise expenses. Total Revenue (thousands) 2012 2013 2014 2015 2016 2017 Total Sales Tax $ 4,600 $ 4,669 $ 4,739 $ 4,810 $ 4,882 $ 4,956 Grants (Operating) $ 2,203 $ 2,815 $ 2,455 $ 2,751 $ 2,846 $ 2,916 Grants (Capital) $ 174 $ 718 $ 462 $ - $ 590 $ 72 Farebox $ 870 $ 895 $ 920 $ 946 $ 973 $ 1,001 Contract Services (Selah) $ 244 $ 254 $ 266 $ 274 $ 285 $ 297 Leases $ 22 $ 20 $ 38 $ 40 $ 41 $ 41 Other $ 71 $ 71 $ 71 $ 71 $ 71 $ 71 Total Operating & Capital Revenues $ 8,185 $ 9,442 $ 8,951 $ 8,893 $ 9,688 $ 9,354 At the state and federal levels, gas tax funds are not generating revenue at the same level that they once were, because vehicles are more fuel efficient. Due to the extended economic recession, revenues (including State and Federal funding) remained at or near prior year levels In an effort to help maintain at or near funding levels for public transportation, the State Legislature has allocated a new revenue source for public transportation Federal formula allocations are at or near previous years and the future outlook for funding public transportation is expected to diminish over the next couple of years With the federal government, there has been speculation that the "fiscal cliff" could result in a reduction of annual funding by 10 % -20 %, which would equate to a reduction in Yakima Transit's annual apportionment by $200K -$400K every year. 2 Farebox Revenue Farebox revenue consists of fixed- route, Dial A Ride, and vanpool payments. Farebox revenue accounts for approximately 10% of Transit revenue The data below is forecasted without another increase in fares On January 2009, the fixed -route and paratransit fares were increased. On October 1, 2012, fares were increased for the vanpool program. No other increases were instituted since the inception of these programs. Farebox Revenue (thousands) 2012 2013 2014 2015 2016 2017 Fixed -Route Farebox $ 513 $ 528 $ 544 $ 561 $ 577 $ 595 Dial A Ride Farebox $ 135 $ 138 $ 140 $ 143 $ 146 $ 149 Vanpool Payments $ 222 $ 229 $ 236 $ 243 $ 250 $ 257 Total $ 870 $ 895 $ 920 $ 946 $ 973 $ 1,001 Passenger fares play an important role in funding transit services, because fares ensure that the user participates in the cost of providing the service. A balance must be established between what the cost of the service is and what the passenger is willing to pay If the cost of the fare is too high, individuals who could drive may opt to purchase a vehicle instead of continuing to use public transportation. The cost per passenger to use the fixed -route service is $4 04 per passenger If those rates were charged, there would be a substantial decrease in ridership and as a result the costs would be spread across fewer users driving the cost per passenger substantially higher Bus Expense Cost /Trip Dial A Ride Expense Cost /Trip Vanpool Expense Cost /Trip 2010 1,312,116 $ 7,478,093 $ 5 70 87,484 $ 1,669,010 $ 19 08 101,768 $ 474,836 $ 4 67 2011 1,430,986 $ 6,244,989 $ 4 36 83,172 $ 1,381,647 $ 16 61 107,115 $ 359,967 $ 3 36 2012* 1,596,254 $ 6,449,563 $ 4 04 79,968 $ 1,229,060 $ 15 37 78,153 $ 351,286 $ 4 49 Bus Fare Rev Rev /Trip Dial A Ride Fare Rev Rev /Trip Vanpool Fare Rev Rev /Trip 2010 1,312,116 $ 430,497 $ 0 33 87,484 $ 131,226 $ 1 50 101,768 $ 225,310 $ 2 21 2011 1,430,986 $ 488,546 $ 0 34 83,172 $ 124,758 $ 1 50 107,115 $ 258,569 $ 2 41 2012* 1,596,254 $ 532,531 $ 0 33 79,968 $ 119,952 $ 1 50 78,153 $ 223,139 $ 2 86 *2012 data is estimated Selah Transit The city of Selah purchases transportation services from the city of Yakima. The service allows their residents to come to Yakima to purchase goods and services, as well as work for local employers, and vice versa. Currently, Selah's service consists of a portion of Route 10, which travels from the Downtown Transit Center along N 1st Street to and throughout the city of Selah. Selah pays for the time that the bus travels within the city of Selah. The costs are based on an hourly rate of the total cost for Yakima Transit to provide service. Selah also benefits from operating grants that Yakima Transit receives when the grant relates to the service being provided Service reductions and expansions are at Selah's discretion. The revenue derived from this program expansion cover the service provided and isn't expected to decrease in the coming years Vehicle Leases Yakima Transit leases vehicles to Medstar (Dial A Ride contractor) and to HopeSource (Yakima- Ellensburg Commuter) Those nominal payments are merely to help control the costs of maintaining those vehicles and to provide funds for replacement vehicles. The monthly cost to use vehicles is approximately $400 per month for a bus and $100 per month for any other vehicle. All of the vehicles that Yakima Transit purchased for the Yakima - Ellensburg Commuter were used vehicles that needed some repairs in order to make them roadworthy No 3 changes are anticipated for these programs, although Medstar is currently receiving waivers on some of the lease payments because of the age of the fleet and Yakima Transit's inability to purchase replacement vehicles EXPENSES Yakima Transit operates fixed- route, vanpool, and paratransit services and participates in funding a commuter bus service between Yakima and Ellensburg These forms of transportation are addressed below by their overall cost to the budget The most important cost factors that must be taken into consideration with regard to transit include employment, fuel, and insurance For the last three years, the largest increases came from fuel and insurance Employment also increased, but only because service was expanded If there is an increase in pay for existing employees, it will have a significant effect on fixed -route costs The chart below shows how ridership and program costs are related You'll notice that the Dial A Ride program is far more expensive per passenger than the other programs Program Ridership (in thousands) Program Costs On thousands) 45 82 187 80 1,300 . Ellensburg 355 • Dial A Ride • Vanpool ▪ Fixed -Route 5,917 1,509 Total Expenses (in thousands) 2012 2013 I 2014 I 2015 I 2016 I 2017 Operating Expenses .. ::::::: L Fixed -Route $5,964 $6,203 $6,451 $6,709 $6,977 $7,256 Paratransit ADA $1,355 $1,463 $1,522 $1,583 $1,630 $1,696 Vanpool $355 $355 $373 $391 $411 $432 Yakima- Ellensburg Commuter $187 $103 $103 $104 $107 $111 Total Operating Expenses $7,861 $8,124 $8,448 $8,787 $9,125 $9,494 CapitalExpenses ................................................................................................................................ ............................... Misc $ 60 $ 70 $ 65 $ 80 $ 60 $ 65 Fixed -Route Buses $ - $ - $ 1,350 $ - $ 1,350 $ - Capital Grants $ 228 $ 896 $ 586 $ - $ 746 $ 103 Total Capital Expenses $ 288 $ 966 $ 2,001 $ 80 $ 2,156 $ 168 Total Operating and Capital $ 8,149 $ 9,090 $ 10,449 $ 8,867 $ 11,281 $ 9,662 Cashflow $ 36 $ 352 $ (1,498) $ 26 $ (1,593) $ (309) Ending Cash Balance $ 1,624 $ 1,976 $ 478 $ 504 $ (1,088) $ (1,397) 4 Fixed -Route Yakima Transit spends most of its funds on fixed -route service to transport 1.5M passengers per year. In a year in which buses are not purchased, the largest part of the cost is wages and benefits, which accounts for approximately 70% of the total cost to provide the service. Fuel (13 %) and insurance (5.4 %) make up the balance of the cost. The farebox recovery ratio fluctuates between 8 % -9 %. Fares should be increased to more closely match what estimated fare prices for the size of the system that Yakima Transit operates A recovery ratio above 12% is more desirable. Dial A Ride Because Yakima Transit operates fixed -route bus service, it is required to operate complementary paratransit services (Dial A Ride) to anyone who cannot ride the fixed -route system due to a disability. Currently, Medstar operates Dial A Ride under a contract with Yakima Transit Yakima Transit competed for this contract and was underbid by only $6,000. After only nine months of operating the service, the contractor has requested a 12% increase in compensation. Yakima Transit has agreed to a 3.7% increase (approx. $62,000) in rates for 2013. Even without providing an increase in compensation, the cost of the service is anticipated to increase over the next couple years, mainly based on fuel and insurance increases Service costs are based on use, the more the service is used, the more it costs. Although demand has decreased over the past two years, Yakima Transit is anticipating an increase in ridership for 2013. Riders pay a nominal fare to use the service. Under federal law, fares cannot be more than twice the cost of the peak fixed -route fare for an adult With the fixed -route fare set at $0 75 per trip, Yakima Transit can only charge $1 50 per paratransit trip At a cost of just over $15 per trip, it can become very expensive to provide the service. The farebox recovery ratio for this service is approximately 9 %. Vanpool The Vanpool program is similar to carpooling. Yakima Transit, however, owns the vehicles and pays for fuel, insurance, and maintenance Passengers are charged for those expenses through a monthly assessment based on miles driven and the type of vehicle Each passenger pays a portion of the total cost Yakima Transit hasn't calibrated vanpool passenger rates to truly capture the rising costs of fuel and insurance In October 2012, Yakima Transit increased the rates by an estimated 10 %. The rate change was based on a new formula that assesses a higher price for vehicles traveling further distances to cover the cost of using more fuel, increasing insurance costs (based on miles driven), and increasing maintenance expenses Prior to October 1, 2012, the cost recovery rate for this program was at 72% The new recovery rate is anticipated around 82% The Vanpool program was designed as a cost - recovery program, fares should reflect the actual cost to provide the service, meaning the service shouldn't be subsidized at the expense of other Transit programs Yakima - Ellensburg Commuter The Yakima- Ellensburg Commuter is operated by HopeSource (Ellensburg, WA) between Yakima and Ellensburg, providing 16 one -way trips per weekday The service began Nov 28, 2011 The demand for the service substantially increased since the initial start when they only operated cutaways. HopeSource is now only operating the large buses Last spring, average daily ridership was approximately 200 passengers In the Fall of 2012, ridership averaged around 300 riders per day. The 50% increase includes a general increase in ridership, 5 as well as, students who have decided to live at home with their parents instead of leasing an apartment Cost savings for students who chose to stay at home is somewhere close to a $6,500 in lease & utilities savings per year, money that could be used to offset college tuition costs, but also could be spent locally In 2012, the cost for the service was higher than what was initially anticipated. The main reason for this is that Yakima Transit purchased used vehicles and fixed them up so they were roadworthy Yakima Transit provides the vehicles for this service for a monthly fee. The program's costs should remain relatively flat going forward and ridership Is anticipated to continue to rise Yakima Transit's contract cost for the service Is $66,000 per year through June 30, 2013 A two -year extension Is anticipated On September 1, 2012, the fare for the service was increased from $3 to $4 per one way The monthly passes increased from $100 to $125 per month. The farebox recovery ratio for this service is approximately 40 %, although it is increasing every day, because ridership is continually increasing. General Forecast The following tables summarize the budget gaps identified in the 5 -year Financial Forecast The table below shows the breakdown of operating and capital costs along with revenues. The information is forecasted based on 2010 -2012 trending You'll notice in the table that in years 2014 & 2016 reserves (ending cash balance) dips The reason for the negative cash flow for those two years Is because Yakima Transit Is showing bus purchases (three buses in 2014 & 2016). A strong reserve account (ending cash balance) is necessary, because state and federal funding isn't certain Total Revenue (thousands) 2012 2013 2014 2015 2016 2017 Total Sales Tax $ 4,600 $ 4,669 $ 4,739 $ 4,810 $ 4,882 $ 4,956 Grants (Operating) $ 2,203 $ 2,815 $ 2,455 $ 2,751 $ 2,846 $ 2,916 Grants (Capital) $ 174 $ 718 $ 462 $ - $ 590 $ 72 Farebox $ 870 $ 895 $ 920 $ 946 $ 973 $ 1,001 Contract Services (Selah) $ 244 $ 254 $ 266 $ 274 $ 285 $ 297 Leases $ 22 $ 20 $ 38 $ 40 $ 41 $ 41 Other $ 71 $ 71 $ 71 $ 71 $ 71 $ 71 Total Operating & Capital Revenues $ 8,185 $ 9,442 $ 8,951 $ 8,893 $ 9,688 $ 9,354 Total Expenses (in thousands) 2012 I 2013 I 2014 I 2015 I 2016 I 2017 Operating Expenses Fixed -Route $5,964 $6,203 $6,451 $6,709 $6,977 $7,256 Paratransit ADA $1,355 $1,463 $1,522 $1,583 $1,630 $1,696 Vanpool $355 $355 $373 $391 $411 $432 Yakima - Ellensburg Commuter $187 $103 $103 $104 $107 $111 Total Operating Expenses $7,861 $8,124 _ $8,448 $8,787 $9,125 $9,494 Capital Expenses Misc $ 60 $ 70 $ 65 $ 80 $ 60 $ 65 Fixed -Route Buses $ - $ - $ 1,350 $ - $ 1,350 $ - Capital Grants $ 228 $ 896 $ 586 $ - $ 746 $ 103 Total Capital Expenses $ 288 $ 966 $ 2,001 $ 80 $ 2,156 $ 168 Total Operating and Capital $ 8,149 $ 9,090 $ 10,449 $ 8,867 $ 11,281 $ 9,662 Cashflow $ 36 $ 352 $ (1,498) $ 26 $ (1,593) $ (309) Ending Cash Balance $ 1,624 $ 1,976 $ 478 $ 504 $ (1,088) $ (1,397) Sales Tax Revenue increases are estimating using a 1 5% increase in any given year Operating expenses for any one program typically costs 3 % -5% in any given year In many instances the total revenue for a given year may seem high, however, there is typically a related grant expense While the ending cash balance may seem high, one capital improvement project can substantially reduce that amount 6 Yakima Transit typically replaces vehicles at an annual rate of 1 5 Fixed -Route buses, 1 5 Vanpool vans, 1 5 Dial A Ride vans, and 1.5 Dial A Ride cutaways per year. There isn't enough money in the capital budget to allow for these purchases Buses typically cost $450K, Vanpool vans $38K, Dial A Ride vehicles $37K vans (lift equipped), and cutaway buses $85K Cost Containment and Savings Measures Based on the results of the preliminary Five -Year Financial Forecast, we are confronted with some challenging budget decisions over the next several years It is clear we must develop a longer -term strategy for dealing with both our current and future budget reality. The projected budget shortfalls are not the same as budget deficits Yakima Transit will have budget deficits only if we do not change operations and continue with vehicle procurement. However, by looking ahead and taking corrective measures to close these projected shortfalls, we can avoid actual budget deficits and complete erosion of our reserve accounts. Without making the appropriate adjustments to spending and without raising program fares, replacement vehicles cannot be purchased without substantially drawing down the reserve accounts or in the alternative borrowing money from some other source At the current spending levels, it even makes it difficult to purchase buses and vehicles through state and federal grants, which typically pay 80% of the total cost of the vehicle A balance of reductions in services and an increase in fares needs to be considered in order for Yakima Transit to continue to purchase reliable vehicles for operations Expenditure Reductions ➢ Insurance ($150K). In 2012, Yakima Transit was charged $399K for the following insurance services: Vanpool $58K, Dial A Ride $43K and Fixed -Route Services $72K, Admin $4K, Employees $19K, WSTIP Other $10K, and City Insurance Services $205K. After working with the Washington State Transit Insurance Pool (WSTIP) our main insurance provider, Yakima Transit has realized it can save approximately $150K per year by switching nearly all of the coverage over to WSTIP This coverage has a $5K deductible and only covers actual value instead of replacement cost, which is better than what Yakima Transit receives through the City of Yakima's program. The estimates are based on actual insurance quotes from WSTIP. The City's insurance costs include a fund to reimburse divisions for losses they incur With WSTIP, Yakima Transit has a small deductible and, in some instances, first dollar coverage. This coverage also covers workplace issues like sexual harassment, general harassment, and other wrongful acts that employees might do The total amount includes $50K for city insurance services that for the most part cover past incidents and incidents that exceed the stop loss coverage. Service Reduction - Extended Hours Service ($240K per year). The extended hours service provides for an additional hour of service later into the evenings (from 7pm -8pm instead of ending at 7pm) on Routes 1 -7, 9, & 10 Route 8 was extended an hour earlier into the morning (starts at Gam instead of lam) Yakima Transit intends to cut the Extended Hours service as of March 1, 2013. This was established as part of a grant that Yakima Transit received from the State. The grant ran for two years. At the end of the 3rd quarter, average ridership across all routes was 7 3 passengers per hour Yakima Transit anticipated ridership above 16 passengers per hour by the end of the demonstration period. The fixed -route system as a whole averages approximately 25 passengers per hour 7 > Reduction in Holiday Service Dial A Ride and Fixed Route ($72K) Yakima Transit operates fixed - route service on four union - recognized holidays (Martin Luther King Day, President's Day, Veteran's Day, and Day after Thanksgiving) and two other holiday -type days (Day after Christmas and New Years Eve) Yakima Transit pays overtime to drivers who work on those days, as well as, their normal paid holiday time Yakima Transit also operates Dial A Ride service on those days and other holidays that Yakima Transit does not operate their fixed -route service Yakima Transit is proposing to eliminate service on these six holidays and reduce paratransit services to the same days that the fixed -route service is operated The savings amount was calculated by taking the hours of service that would be operated and multiplying it by the cost for an hour of fixed -route service The included Dial A Ride amount was based on information obtained in the Dial A Ride database for 2011 > Eliminate Free Summer Service ($17K) Over the past couple of years, Yakima Transit operates free fixed - route services in the summer (June 16 - Aug 26) on weekends The total is based on Yakima Transit's fare average per passenger ($0 408) In 2012, Yakima Transit would have received approximately $17,000 for the services to provide 40,802 passenger trips > Service Reduction - Half -Hour Midday Service ($240K per year) Certain routes provide a higher level of service than other routes by adding an additional half -hour service Mid -day ridership is lower than any other point in the day Yakima Transit plans to make cuts to the mid -day service for the routes that have half -hour service The variable cost is approximately $89 47 per hour The analysis of route costs have been completed Staffing and service reductions can be implemented to generate $240,000 in annual savings Yakima Transit is proposing cutting back two hours of midday service for the half -hour routes on Routes 2 (tan), 5 (tan), 6 (brown), 7 (green), and 9 (green), for a total cut of 10 hours per day Route 6 has also been considered for service reductions on Saturdays and may also be instituted ate. ae / rav,n ° I T GCei nRC Le c,'• RivaRtl ` LaXOVnle Rd YN.-,I I.. Scal`�c �\ 3 Q En Vo.�cn p... L ,c„ YeMim 1 s w, ,:ell, LV e� W UncCA I, pro 1, .2- p Sammimeu Ave 'Thin r 5 . , V! ^.I'. eznux See IT \ 'F 9,L .,.I # .. ., N N ,I. Po,I:mi VTO I Ile Pa • c. ` • WYObF :I.,: v �' -EN b. i1191vtl. � l—_ • ,1 W V M 1 Fon . [ r mrwi � - Tao,- NM ATV.d _Mead Ave I VI 1 4 q �. .. .?sM1in fnn 6vo 4ah11112 AI S4" T=,m�nal 0. �MC�ll;el d ��+,.R � � V -- ' Rd [ j >Rn J I > 100% Vanpool Cost Recovery Ratio ($83K per year) The cost recovery rates for the Vanpool program were at 72% On October 1, 2012, Yakima Transit increased the Vanpool rates by 10 % -15% depending upon the type of van that is being used, resulting in an increase to approx an 82% cost recovery rate An additional increase in rates is anticipated on March 1, 2013, to recover 100% of the vanpool cost from patrons 8 Yakima Transit spends close to $1 2M of their funds on fixed and general admen costs Of that, $66K has been allocated to the Vanpool program. This allocation allows the vanpool program to pay its fair share of transit overhead Even at a 100% cost recovery ratio, the savings achieved by the vanpool payments is substantial. Many of the vanpool vans travel to one of Hanford's sites On average, the Hanford trip is 110 miles round trip (28,600 miles /year). The average vanpool van gets approximately 14.78 miles to the gallon (2011 data). A vanpool van carries approximately 8 84 passengers (2012 trend) On average at $4 per gallon, an individual driving alone getting 24mpg would pay $4,766 per year alone just for fuel to travel roundtrip Yakima Transit's fuel cost for that trip is $7,740.18. With 8.84 passengers (average), the total fuel cost for that trip is $875 59 per passenger The average vanpool cost is $1,761 61 per year per person, which includes all the expenses associated with the program Driving alone or carpool would expect much higher costs Total Cost Cost /mile Annual Cost Monthly Cost Passenger Cost Passenger Cost Vanpool Costs per van Monthly Annual Fuel $ 120,417 45 $ 0 2089 $ 5,975 06 $ 497 92 $ 56 33 $ 675 91 Administrative $ 36,579 92 $ 0 0635 $ 1,815 08 $ 151 26 $ 17 11 $ 205 33 Insurance $ 57,613 00 $ 0 1000 $ 2,858 73 $ 238 23 $ 26 95 $ 323 39 Maintenance $ 69,766 82 $ 0 1210 $ 3,461 80 $ 288 48 $ 32 63 $ 39161 Office Expenses $ 29,463 27 $ 0 0511 $ 1,461 95 $ 121 83 $ 13 78 $ 165 38 Total Est Cost $ 313,840 45 $ 0 5445 $ 15,572 61 $ 1,297 72 $ 146 80 $ 1,76161 Revenue Increases Revenue increases are necessary in the analysis of how to balance operating and capital costs. Fixed -Route and Paratransit Fare Increases. The following table shows fare increases being proposed for both the fixed -route and paratransit (Dial A Ride) programs. Fares were increase in 1980 and again in 2009. The 2009 increase covered a 29 -year period where the costs to provide the service have substantially increased over that period. That increase was a small step in trying to offset past years of low fares while trying to cover the 2008 rise in fuel prices. In 1980, the cost of a gallon of diesel was $0.82. In 2008, that price hovered around $3 81 per gallon, exceeding $4 75 per gallon in June and July In the Fall of 2012, that price was slightly above $4 per gallon. current current Proposed Anticipated Proposed Fare & Pass Rate Increases Fare Revenue Fare Revenue Adult Single TicketlCash Fare $ 0 75 $ 114,859 $ 1 00 $ 145,488 Youth Single Ticket/Cash Fare $ 0 50 $ 93,918 $ 0 75 $ 133,833 ADA Single TicketlCash Fares $ 0 35 $ 48,015 $ 0 50 $ 67,221 Adult Monthly Passes $ 17 00 $ 113,060 $ 25 00 $ 142,988 Youth Monthly Passes $ 12 00 $ 88,701 $ 18 00 $ 114,424 ADA Monthly Passes (not Dial A Ride) $ 5 00 $ 29,994 $ 12 00 $ 57,588 ADA (Dial A Ride) $ 1 50 $ 130,500 $ 2 00 $ 160,080 Total $ 619,047 Total $ 821,623 Total Revenue Increase $ 202,576 All -day passes are three times the fixed -route single ticket fare Partial -day passes are twice the fixed -route single ticket fare after 9 15am Monthly passes are increasing at a substantially higher rate than single tickets because when the last rate increase too effect, monthly passes were not increased 9 When the last fare increases went into effect, there was little affect on ridership The fixed -route fare price increased from $0.50 to $0.75 for an adult; the youth fare increased from $0.35 to $0.50 and the fare for persons over age 62, people with disabilities, Medicare cardholders increased from $0 25 to $0 35 At that time, there wasn't an increase in the monthly passes Paratransit fares increased from $1 00 to $1 50 There was a slight decrease in ridership on the Dial A Ride program; however, that decrease should be associated with a change in retirement /nursing facilities that have opted to provide transportation options for their clients. Following an analysis of other transit agencies in the state of Washington, on average Yakima Transit's fare rates should be close to $1.27 per adult fare, $0.90 per youth, and $0.62 per ADA passenger. The monthly passes are set at or below 25 trips per month When taking the 2009 increases into account, this increase will have the effect of doubling the single - ticket fares over a 5 -year period, however, as the survey depicts, the fares are still lower than the state levels for an agency this size. Conclusion The table below includes the revenue increases and cost containment savings necessary to secure financial sustainability of the transit system. The cost containment and fare increases represent a 4:1 ratio of cost containment to fare increases. Cost Reduction & Savings 2012 1 2013 1 2014 1 2015 1 2016 1 2017 (in thousands) Switch from City Insurance to WSTIP $ - $ 150 $ 150 $ 150 $ 150 $ 150 Eliminate Extended Hours Service $ - $ 175 $ 240 $ 240 $ 240 $ 240 Reduction in Holiday Service $ - $ 36 $ 72 $ 72 $ 72 $ 72 Eliminate Free Summer Service $ - $ 17 $ 17 $ 17 $ 17 $ 17 Service reduction (removing 10 service hours) $ - $ 175 $ 240 $ 240 $ 240 $ 240 Vanpool Rate Increases $ 25 $ 62 $ 83 $ 83 $ 83 $ 83 Total Savings $ 25 $ 615 $ 802 $ 802 $ 802 $ 802 Fixed -Route and Dial A Ride Fare Increases $ - $ 202 $ 202 $ 202 $ 202 $ 202 Total Fare Increases $ - $ 202 $ 202 $ 202 $ 202 $ 202 Total Cost Reduction and Savings $ 25 $ 817 $ 1,004 $ 1,004 $ 1,004 $ 1,004 For Fixed Route, the 2011 cost to provide an hour of service was $103 17 per hour The variable amount is $89 47 5 -YEAR ANNUAL CASH BALANCE 2012 2013 2014 2015 2016 2017 Ending Cash Balance without Recommendations $ 1,624 $ 1,976 $ 478 $ 504 $ (1,088) $ (1,397) Ending Cash Balance with Recommendations $ 1,649 $ 2,766 $ 2,272 $ 3,302 $ 2,714 $ 3,409 The Five -Year forecast and Financial Plan represents a balanced approach to setting aside revenue for capital procurement projects. The strategy allows Transit to eliminate potential revenue shortfalls and make critical investments in capital Moreover, the strategy will allow Yakima Transit to continue to provide essential reliable service to our passengers. 10 Summary Reference Tables Cost Reduction & Savings 2012 1 2013 1 2014 1 2015 1 2016 1 2017 On thousands) Switch from City Insurance to WSTIP $ - $ 150 $ 150 $ 150 $ 150 $ 150 Eliminate Extended Hours Service $ - $ 175 $ 240 $ 240 $ 240 $ 240 Reduction in Holiday Service $ - $ 36 $ 72 $ 72 $ 72 $ 72 Reduce Free Summer Service $ - $ 17 $ 17 $ 17 $ 17 $ 17 Service reduction (removing 10 service hours) $ - $ 175 $ 240 $ 240 $ 240 $ 240 Increasing Vanpool Rate $ 25 $ 62 $ 83 $ 83 $ 83 $ 83 Total Savings $ 25 $ 615 $ 802 $ 802 $ 802 $ 802 Fixed -Route and Dial A Ride Fare Increases $ - $ 202 $ 202 $ 202 $ 202 $ 202 Total Fare Increases $ - $ 202 $ 202 $ 202 $ 202 $ 202 Total Cost Reduction and Savings $ 25 $ 817 $ 1,004 $ 1,004 $ 1,004 $ 1,004 For Fixed Route, the 2011 cost to provide an hour of service was $103 17 per hour The variable amount is $89 47 cu rrent current Proposed Anticipated Proposed Fare & Pass Rate Increases Fare Revenue Fare Revenue Adult Single Ticket/Cash Fare $ 0 75 $ 114,859 $ 1 00 $ 145,488 Youth Single Ticket/Cash Fare $ 0 50 $ 93,918 $ 0 75 $ 133,833 ADA Single Ticket/Cash Fares $ 0 35 $ 48,015 $ 0 50 $ 67,221 Adult Monthly Passes $ 17 00 $ 113,060 $ 25 00 $ 142,988 Youth Monthly Passes $ 12 00 $ 88,701 $ 18 00 $ 114,424 ADA Monthly Passes (not Dial A Ride) $ 5 00 $ 29,994 $ 12 00 $ 57,588 ADA (Dial A Ride) $ 1 50 $ 130,500 $ 2 00 $ 160,080 Total $ 619,047 Total $ 821,623 Total Revenue Increase $ 202,576 All -day passes are three times the fixed -route single ticket fare Partial -day passes are twice the fixed -route single ticket fare after 9 15am Monthly passes are increasing at a substantially higher rate than single tickets because when the last rate increase too effect, monthly passes were not increased 5 -YEAR ANNUAL CASH BALANCE 2012 2013 2014 2015 2016 2017 Ending Cash Balance without Recommendations $ 1,624 $ 1,976 $ 478 $ 504 $ (1,088) $ (1,397) Ending Cash Balance with Recommendations $ 1,649 $ 2,766 $ 2,272 $ 3,302 $ 2,714 $ 3,409 2011 Fixed -Route Ridership 2012 Fixed -Route Ridership e` 6) • / Yaki Club -^" 1 SummiMew! Lincoln el Routes Passengers Pass Flour Pass Mu? Routes Proj Ridership Pass Four Pass Mile Crus'� 1 68,782 17229 1 035 1 75,715 17 861 1 039 10 (sun) 4,476 16573 1 147 10 (Sun) 6411 16870 1 142 • 2 TleionlNOb Hill _ 10a 6698 13973 0.905 10a 6612 13 743 0.820 10p 16333 17 049 1 135 101) 26829 18 271 1 152 3 Mead1FruiNale 10x 83,450 22356 1 502 10x 84,791 22 597 1 518 I 2 116524 23664 2060 2 126665 29371 2013 4 Fruitvale /Mead - 2x 96342 30953 2 177 2x 97473 30 944 2163 3 84,820 22.866 1:379 3 87,004 23 610 1817 ` 5 Nob Hill J Tieton 4 96527 23496 1856 4 96745 24288 1815 \., Rosl Haven Ry 5 86715 27 926 1970 5 91,771 27 642 1971 6 FairAve 1 North 1st St 5x 109,752 29 444 2051 5x 106712 29 765 2 058 6 116218 23 530 23%3 6 132,304 32 100 2 627 \� 6x 11Z095 31945 26%3 6x 125,201 34698 2921 _ _� 1 2,, _. ',• -`� 7 40 Avenue/Washington 7 82,805 26287 1977 7 85,196 27190 1772 7x 91,405 25668 1334 7x 97,701 27185 1995 - _ - -- --- __ -- _ J = - 8 Lincoln JSummitView • 8 53,404 16.913 10%3 8 56083 17 235 1018 - - ! - - • 9 103,678 25327 1898 9 114,519 26857 1945 ` a 9 1st Streetl Washington 9x 73,461 23 503 1695 9x 74,655 23 953 1716 Q < am 7,810 90.814 8.903 am 6,688 80903 6 525 '- '4 10. °Selah pm 14,844 175 669 23114 pin 16,211 196 097 18 007 . _ Total 1,429,139 25407 1835 Iota! 1,50285 26 316 1851 ^ • 4.• $ • • r i u C rtval- • • • Sc.:nlr. fir �� �. . -- —r- ' \ii lb , Englewood Ave i . . � 6 • , e!rri!!rt�, . 0.1 O c1 W Yakima Ave `Q../ N' :- - • • I A °° W Chestnut Ay. T 1 1 -. 4 , Franklin Par{. C5 • Q '_ ..1., if `t V a �, N l . ,le C. E . .�:1 - .:. W K f n > m arson Fair o t. co r ¢ y m y ark. Park • c) W Nob F' : - • • .. .... . ' '-" - E Nob ill Blvd - _ • v Rd — L — Wide HnJ7n c re ek N h W V •Ave- - I '; • • Rand all Park Emil 'i Kissel Tahoma t1 Q ' 1 1 i 1 n E M eacl Ave . . Park Cemetery - o ...ashingtonAve Yakim Ai _ 0 ' � �� , Termina I Fld Q � Coolidge Rd y cl .Apply Trey 3 km S)-' J r r c V.," L.V. „ a.. 1 � '`:c;: $ vall l M . 2 mi 1 ' NOTICE OF PUBLIC HEARING Yakima Transit DRAFT DATE December 11, 2012 TO Transit Passengers and the General Public FROM Ken Mehin, Transit Manager SUBJECT Modification Of Transit Service And Increase In Fares And Passes For The Fixed- Route, Vanpool, And Paratransit Programs HEARING DATE Thursday, January 10, 2013, at 6pm HEARING LOCATION: City of Yakima Council Chambers, 129 N. 2nd Street, Yakima, Washington 98901 NOTICE OF OPEN RECORD PUBLIC HEARING An open- record public hearing will be held on Thursday, December 13, 2012, at 6pm at the City of Yakima Council Chambers, 129 N. 2nd Street, Yakima, Washington 98901. You are welcome to attend the public hearing. You may submit your written comments on this project to Ken Mehin, Transit Manager, 2301 Fruitvale Blvd , Yakima, WA 98902 If you need more information about the proposed changes to Yakima Transit's system, please contact Kevin Futrell, Transit Project Planner, by phone at 509 - 576 -6422 or email at kfutrell(Wci Yakima wa us BACKGROUND Yakima Transit is required under Executive Order 12898 to follow a public process in order to avoid adverse human health or environmental effects from our programs, policies and activities on minority populations and or low- income populations. This means that Yakima Transit must incorporate environmental justice and non - discrimination principles into transit planning and decision - making processes, as well as, project- specific environmental reviews. The Department of Transportation has issued guidance /policy (DOT Order 5610 2(a)) on how objectives of the environmental justice will be incorporated into programs and policies including 1) to avoid, minimize, or mitigate disproportionately high and adverse human health and environmental effects, including social and economic effects, on minority and low- income populations; 2) to ensure the full and fair participation by all potentially affected communities in the transportation decision - making process, and, 3) to prevent the denial of, reduction in, or significant delay in the receipt of benefits by minority and low- income populations. In addition, Title VI and DOT regulations prohibit intentional discrimination against people on the basis of race, color, and national origin. The goal is to provide a fair distribution of the benefits or burdens associated with Federal programs, policies, and activities. The Federal Transit Administration requires Yakima Transit to maintain a policy on the process that must be undertaken for fare increases and service modification. This notification and the hearing that will follow this notification are part of that process. The measures being proposed below are part of an effort to control operating costs in order to maintain funds for capital improvements, including purchasing fixed -route buses and paratransit vehicles. FARE & RATE INCREASES Yakima Transit will be increasing rates for the fixed - route, paratransit, and vanpool programs; and, eliminating free fixed -route and paratransit services during the summer These changes have been discussed thoroughly and are part of Yakima Transit's efforts to continue to provide adequate service to the general public. Increasing Rates For The Vanpool Program. The vanpool program is a Yakima Transit cost - recovery program operated for commuters who rideshare to worksites more than 20 miles from the City of Yakima. The program is designed to connect commuters up with each other in order for them to commute together to save on commuting costs. For the past couple of years, Yakima Transit has not adjusted rates to cover the full cost to provide the service including increases in insurance, fuel, and administrative costs. The increases that are being proposed will get the program back to a 100% cost recovery rate, eliminating subsidies that have been provided. Eliminating Free Service During The Summer In the past, Yakima Transit has provided free bus and Dial A Ride services on Sundays and Saturdays in an effort to shift passenger trips to other days of the week. Yakima Transit is proposing to continue to provide the services but at the normal fare rate. Fixed - Route and Paratransit Fare Increase. Yakima Transit is proposing to increase fares for all programs. The fare increase for the fixed -route service is anticipated to be increased as follows: Proposed Fare & Pass Rate Increases Proposed Current Fare Fare Adult Single TicketlCash Fare $ 0 75 $ 1 00 Youth Single TicketlCash Fare $ 0 50 $ 0 75 ADA Single TicketlCash Fares $ 0 35 $ 0 50 Adult Monthly Passes $ 17 00 $ 25 00 Youth Monthly Passes $ 12 00 $ 18 00 ADA Monthly Passes (not Dial A Ride) $ 5 00 $ 12 00 ADA (Dial A Ride) $ 1 50 $ 2 00 All day passes are three times the fixed -route single ticket fare Partial day passes are twice the fixed -route single ticket fare after 9 15am Under federal guidelines, ADA single- ticket fares cannot be more than twice what the peak -hour rate is for an adult. There is not a similar restriction on Youth fares. The fare increase is based on analysis of other transit systems across Washington State. Yakima Transit's system is considered a mid -level system and the resulting fare is still below the expected fare for the transit agency's size. Additional fare increases may be proposed in the next couple of years. The Dial A Ride fare rate is set at the federal maximum, which is twice the rate of the peak -hour rate. Yakima Transit does not have two or more rate schedules that would typically be designated peak or off peak; as a result, the rate is considered the peak rate. SERVICE MODIFICATION Yakima Transit is proposing several service modifications. Service modifications that are being proposed include: eliminating the extended -hour service, eliminating service on designated holidays, and reducing service on five routes (2X, 5X, 6X, 7X, and 9X) during a two -hour block during the mid -day from half -hour service to hourly service. These cuts are part of an overall plan to reduce operating expenses in order to provide funding for capital expenses like new buses and paratransit vehicles. Eliminating the extended -hour service. This service was initiated as part of a grant program to determine if individuals would use the service later into the evenings. Like many of our other expansion projects, this was requested by many passengers. Having run the service for 2.5 years, it has been determined that the service does not have enough ridership (5 -8 passengers per hour depending on the route) to justify continuing the service. This service would have been cut regardless of funding issues. Alternatives have been considered including running only six routes or running just six routes and expanding the service another hour into the evening. Ultimately, cutting the service completely is what has been proposed. Eliminating service on designated holidays. Yakima Transit intends to cut bus and paratransit services on nationally recognized holidays. These days typically have low ridership and cost Yakima Transit substantially more to provide the service than non - holidays, due to overtime for drivers, dispatchers, and other staff needed to work on these days. Reducing service on five routes. Yakima Transit intends to reduce mid -day service on Routes 2X, 5X, 6X, 7X, and 9X during a two -hour block from half -hour to hourly service. Several different alternatives were considered including cutting a half -hour route all together or cutting any one of Routes 1, 3, 4, or 8. A cut to the mid -day service on routes that provide half -hour service was deemed to have a lower impact than completely cutting other routes. This service cut covers nearly the whole service area. Notice of Decision Following the hearing, the Transit Manager will issue a final decision on route modifications, service cuts, and fare increases. Fare increases must be approved by City Council through an ordinance that will modify YMC § 7.90.020 must be approved by City Council at a normal City Council meeting. The ordinance will go into effect 30 days following City Council approval.