Creativity Helps Rochester’s Transit System Turn a Profit

Published: September 14, 2008

At a time when public transportation systems around the country are struggling with soaring fuel costs and pinched budgets, the bus system in Rochester has done something that few others would contemplate: This month, it lowered its single-ride fare.

Rochester’s Regional Transit Service is no behemoth. It carries 15 million riders a year, as many as the New York City transit system carries in two days. But as economic hard times have reduced tax revenues and increased demand for government transit subsidies, its experiences may provide valuable lessons for larger cities that are planning fare increases, like New York, Minneapolis and Cleveland.

The Rochester system, which expects to run a surplus for the third year in a row, has been able to reduce its one-ride fare in part by eliminating some low-trafficked routes, avoiding debt and aggressively raising revenues from other sources. The fare fell to $1 from $1.25 on Sept. 1.

It has, for instance, reached agreements with the local public school district, colleges and private businesses to help subsidize its operations, warning in some cases that certain routes might be cut if ridership did not increase or a local business did not help cover the cost. In recent years, income from these agreements has equaled or exceeded the income from regular passenger fares.

All the while, ridership has increased by 7.4 percent over the last two years in an area where the population has remained stable. And while only about 1 out of 6 customers pays the single-ride fare (the majority use daily, weekly or monthly passes), the transit service expects further ridership gains now with the fare cut in place.

“With gas prices at record highs, there is no better way to convince people who are beginning to look at public transportation,” said Mark R. Aesch, the chief executive of the Rochester Genesee Regional Transportation Authority, which runs the bus system.

Bus riders in interviews last week were generally pleased with the fare reduction, although some were upset that it did not extend to the multitrip passes.

“It’s the best thing that’s happened in a long time,” said Eric Johnson, 25, a construction worker who rides the bus several times a week and pays the single-trip fare. “With everything going up in price, for once something’s going down.”

Rochester’s successes seem all the more noteworthy given the trend in public transit fares around the country. In New York City, the Metropolitan Transportation Authority raised subway and bus fares for most riders last March, and it has proposed another increase that would take effect in July and a third in 2011. In Minneapolis, bus and light-rail fares are scheduled to go up next month, and in Cleveland, transit officials are considering both a fare increase and service cuts that would take place in November.

Any comparisons between Rochester’s transit system and its larger cousins must take into account the vast difference in scale. The Rochester system has 265 buses and an annual budget of $62 million. New York City Transit owns more than 4,500 buses and 6,200 subway cars, and it spends more than $6 billion a year to run them.

Still, the accomplishments in Rochester are notable. Efficiency has improved, with buses driving fewer miles, carrying more passengers and generating more revenue in fares. The transit agency has installed a satellite locator system in its buses to track whether they are on schedule. Next year, it will install electronic signs in some bus stops to tell riders when the next bus will arrive.

New York has struggled for years to make similar technologies work with its fleet, with only limited success.

And the Rochester authority has no debt, while the Metropolitan Transportation Authority, which runs the buses and subways in New York City, the Long Island Rail Road and Metro-North Railroad, is one of the biggest debtors in the nation, owing about $24 billion.

Just four years ago, the Rochester authority was in financial straits and facing large deficits. Since then, it has lobbied successfully for increases in state aid, receiving $32.8 million this year, up from $16 million four years ago. It helps that a local assemblyman, David F. Gantt, is chairman of the Assembly Transportation Committee.

The authority has banked its surpluses and now has $19 million in cash reserves. New York, the authority is projecting a budget shortfall of close to $1 billion next year.

The Rochester authority has also helped itself by working out subsidy agreements with local businesses and educational institutions.

One of the most important is with the Rochester City School District, which uses the Regional Transit Service as the primary bus system for nearly all of its students in the 7th through 12th grades. Several years ago, the school district paid the equivalent of a regular fare for each student rider, according to Mr. Aesch. But about three years ago, with the transit system facing a financial crisis, he began discussions with the district about radically altering the arrangement.

Mr. Aesch told school officials that the money they were paying to transport students only partly covered the cost and that the system could no longer afford the service without a significant increase in payments. The school district agreed to an increase, and it now pays about $2.22 for each student ride.

Even by paying a premium, the school district believes it is getting a good deal, said Jean-Claude Brizard, the superintendent. He said that during the current school year, the district will pay the Regional Transit Service about $10 million for student bus travel. But the district estimated that it if it contracted with a private company for the same service, the cost would be more than $2 million higher.

“We’ve saved a ton of money,” Mr. Brizard said.

The arrangement is one that transit officials in New York City could only dream of. The subway and bus system in New York City now provides millions of rides a year to students using free or half-fare passes. In turn, it receives a total of $90 million from the city and state. But according to the authority, that accounts for only half the value of the lost fares.

In Rochester, the transit system has also formed agreements with private businesses and colleges. It runs shuttle buses on the campus of the Rochester Institute of Technology and provides special weekend service to the campus, for which it receives about $1 million a year. The developer of an apartment complex in suburban Brighton pays $1,200 a year to ensure that a bus line runs by the property.

And last week, the Rochester authority announced a new agreement with Bryant & Stratton College, which has two campuses in the area. Under the deal, the college will pay $17,700 in exchange for 350 bus passes that it can distribute at a discount to students. In exchange, transit officials have agreed to continue service on a little-used section of a bus route that goes to the college’s campus in the suburb of Greece, and to run a bus there later in the day for students taking evening classes.

“They recognized that with gas prices high, and trying to attract students to the campus, they needed to keep that service in place in order to attract students to the school,” Mr. Aesch said, referring to the college’s officials.

Marc Ambrosi, a campus director for Bryant & Stratton, said, “On both sides there’s benefits.”

Expressing deep concern about the potential for future fare hikes in New York City, Gov. David A. Paterson created a commission in the spring to recommend long-term solutions to the New York authority’s deepening financial problems. But it is not clear how many of the lessons from Rochester might apply.

Jeremy Soffin, a spokesman for the authority, said that while he was not familiar with the arrangements in Rochester, the authority in New York had not pursued similar arrangements with private companies, and there were no bus routes with ridership so low that they could be discontinued.

But he said the two systems faced similar challenges.

“Even though we operate at a completely different scale,” Mr. Soffin said, “the commonality is that we both have to think creatively to fund the system where the fare doesn’t cover the cost of providing the ride.”

Source : The New York Times

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