Report to/Rapport au:

Transportation Committee/Comité des transports

and Council/et au Conseil

9 May 2005/le 9 mai 2005

Submitted by/Soumis par: R.G. Hewitt

Acting Deputy City Manager/Directeur municipal adjoint intérimaire,

Public Works and Services/Services et Travaux publics

Contact/Personne-ressource: G. Diamond, Director/Directeur,

Transit Services/Service du transport en commun

842-3636 ext. 2271, gordon.diamond@transpo.ottawa.on.ca

Ref N°: ACS2005-PWS-TRN-0002

SUBJECT: TRANSIT SYSTEM MANAGEMENT POLICIES

OBJET : POLITIQUES DE GESTION DU SYSTÈME DE TRANSPORT EN COMMUN

REPORT RECOMMENDATIONS

A. That, at its meeting on 18 May 2005, Transportation Committee receive and table the “Transit System Management Policies” Report.

B. That, at its meeting on 1 June 2005, Transportation Committee consider and approve the following recommendations:

That the Transportation Committee recommend that Council:

1. Approve the following Transit System Management Policies as the guiding principles for management decisions concerning the transit system in support of the Ottawa 20/20 growth management strategy, the Official Plan, and the Transportation Master Plan:

a) The transit system will be managed to recognise its role as an essential part of the peak period commuter transportation system;

b) The transit system will be managed to provide a reliable transportation system for travel to all parts of the urban transit service area, seven days a week;

c) The transit system will be managed to recognise the City’s support for people with disabilities or financial restrictions;

d) The transit system will be managed to maintain an appropriate balance in funding between customers’ fares, other revenues, and property taxes;

2. Adopt the Transplan process of public consultation for new transit services and major transit service changes, as outlined in this report;

3. Confirm the use by staff of the following revised technical processes to support the Transit System Management Policies:

a) Establish and maintain an all-day base route network, to provide service seven days a week within an 800-metre walk of the home locations of at least 95 percent of residents of the urban transit service area, and a peak period base route network, to provide service during peak periods from Monday to Friday within a 400-metre walk of the home locations of at least 95 percent of residents in the urban transit service area;

b) Establish and maintain a comprehensive transit route network that achieves the aims of the Transit Service Strategy in the Transportation Master Plan and the Transit System Management Policies, such that all services provided above the levels defined in the base route networks are required to meet a minimum financial performance standard of 0.20 customers gained (or lost) per net dollar spent (or saved);

c) Develop and introduce fare payment methods that support the aims of the Transit Service Strategy in the Transportation Master Plan and the Transit System Management Policies;

4. Direct staff to prepare future budgets and service plans for the transit system that:

a) Provide for a minimum of 55 percent of operating costs to be covered by customers’ fares and other revenue and for the remainder to be covered by property taxes and provincial and federal contributions;

b) Achieve this system-wide revenue-cost ratio of 55 percent, up from the 2005 level of 51 percent, in a transition over three years,~~, by allocating any new gas~~ ~~tax revenues to reduce the contributions from property taxes~~ ~~and~~ by recommending fare increases above the rate of inflation in the budgets for 2006, 2007 and 2008;

c) For 2006, in accordance with this policy, that a 7.5% average fare increase be included in the 2006 budget directions document to be tabled and approved in July, 2005.

5. Receive for information the Transit Service and Fare Policy Manual of the technical standards, guidelines, and processes for the ongoing planning and management of the transit system (on file with the City Clerk).

RECOMMANDATIONS DU RAPPORT

A. Qu’à sa réunion du 18 mai 2005, le Comité des transports reçoive et présente le rapport intitulé Politiques de gestion du système de transport en commun.

B. Qu’à sa réunion du 1er juin 2005, le Comité des transports examine et approuve les recommandations suivantes :

Que le Comité des transports recommande que le Conseil municipal :

1. Approuve les Politiques de gestion du système de transport en commun suivantes qui serviront de principes directeurs pour que la prise de décisions en matière de gestion du système de transport en commun soit en accord avec la stratégie de gestion de la croissance Ottawa 20/20, le Plan officiel et le Plan directeur des transports :

a) le système de transport en commun sera géré de façon à reconnaître le rôle essentiel qu’il joue dans le système de transport des personnes aux périodes de pointe ;

b) le système de transport en commun sera géré de façon à offrir un système de transport fiable dans l’ensemble du secteur de transport en commun urbain, sept jours sur sept ;

c) le système de transport en commun sera géré de façon à respecter le soutien que la Ville offre aux personnes atteintes d’invalidité ou ayant des moyens financiers réduits ;

d) le système de transport en commun sera géré de façon à maintenir un juste équilibre en ce qui a trait au financement entre les tarifs, d’autres revenus et les impôts fonciers.

2. Adopte le processus de consultation publique Transplan, décrit dans le présent rapport, concernant les nouveaux services de transport en commun et les changements importants apportés aux services existants.

3. S’assure que le personnel utilise les processus techniques modifiés suivants afin d’appuyer les Politiques de gestion du système de transport en commun :

a) établir et maintenir un réseau de base composé de circuits offerts toute la journée, sept jours sur sept, afin de desservir 95 pour cent des résidents du secteur de transport en commun urbain dans un rayon de 800 mètres à pied de leur domicile, et un réseau de base composé de circuits offerts du lundi au vendredi aux périodes de pointe, afin de desservir 95 pour cent des résidents du secteur de transport en commun urbain dans un rayon de 400 mètres à pied de leur domicile ;

b) établir et maintenir un réseau complet de transport en commun qui atteint les objectifs de la Stratégie rélative au service de transport en commun du Plan directeur des transports et les objectifs des Politiques de gestion du système de transport en commun, tout en offrant des services au-dessus des normes définies pour les réseaux de base devant atteindre un rendement financier minimum de 0,20 client additionnel (ou perdu) par dollar net dépensé (ou économisé);

c) élaborer et mettre en œuvre des méthodes de paiement des tarifs qui sont en accord avec les objectifs de la Stratégie rélative au service de transport en commun du Plan directeur des transports et des Politiques de gestion du système de transport en commun.

4. Demande au personnel de préparer les prochains budgets et plans de fourniture des services de transport en commun de sorte que :

a) au moins 55 pour cent des coûts d’exploitation soient recouvrés par le biais des tarifs perçus auprès des clients et des autres sources de revenus et que la portion restante soit recouvrée par le biais des impôts fonciers et des contributions provinciale et fédérale ;

b) ce ratio revenus-coûts de 55 pour cent pour l’ensemble du système (alors qu’il est de 51 pour cent en 2005) soit atteint progressivement sur une période de trois ans, en recommandant des augmentations de tarifs supérieures au taux d’inflation dans les budgets de 2006, 2007 et 2008 ;

c) Pour 2006, conformément à la présente politique, qu’une augmentation du tarif moyen de 7,5 % soit incluse dans le document des directives budgétaires de 2006, qui sera présenté et approuvé en juillet 2005.

5. Prendre connaissance du Guide des politiques régissant les tarifs et les services de transport en commun comprenant les normes techniques, les lignes directrices et les processus nécessaires à la planification et à la gestion continues du système de transport en commun (déposé auprès du greffier).

EXECUTIVE SUMMARY

Assumptions and Analysis

The City of Ottawa’s vision for the future, as developed through the Ottawa 20/20 consultation process and as expressed in the Official Plan and the Transportation Master Plan, includes an important role for transit. The fundamental policies and standards under which the transit system is planned and operated were approved by Council as part of the Transportation Master Plan.

The Transit System Management Policies recommended in this report serve to translate Council’s vision into operational policies that are used in the management of the transit system. Staff also use a more detailed Transit Service and Fare Policy Manual of the technical standards, guidelines and processes for the ongoing planning and management of the transit system.

The current transit service design guidelines were approved by the former Regional Transit Commission in 1999, following a comprehensive review of OC Transpo operations by the consulting firm KPMG. The guidelines measure the financial performance of each route by calculating the revenue-cost ratio, a practice that goes back many years. The current minimum revenue-cost ratios are 35 percent in the peak periods and midday and 25 percent at other times. The guidelines set out a base route network that provides transit service within 800 metres walking distance of 95 percent of urban residents, and the minimum revenue-cost guidelines do not apply to this base route network. The base route network ensures a basic level of accessibility to transit across the urban transit area throughout the service day.

In the 2003 Universal Program Review, which led to the transit service reductions approved by Council as part of the 2004 budget and subsequently to the reinstatement of some of those services in 2005, a new approach was used to determine the priority of possible service reductions based on customers lost per net dollar saved rather than on a route-specific revenue-cost ratio. This new approach provided results that were more equitable and more technically sound, and the new minimum financial standard is recommended in this report for adoption.

The Transplan process is carried out each year to evaluate, consult on, and recommend new transit service and other major transit service changes. This report recommends the steps to be taken in conducting consultation with transit customers and other residents. The process specifies that staff will consult with the Councillors for the area affected by the change before and after the consultation with the public, and that if the Councillor and staff do not agree, the matter will be brought to the Transportation Committee for consideration.

Transit fares are designed to promote ridership and reward frequent use. The fare structure also provides reduced fares for seniors, students and children and some groups of people with disabilities. The report identifies the way that the fare policies support the objectives of the Transportation Master Plan and recommends that staff have the authority to develop and introduce new fare instruments that would not have an impact on revenues.

Financial Implications

There are no immediate financial implications of the recommendations in this report. The recommendation to set a system-wide revenue-cost ratio standard of 55 percent by 2008 will require transit fares to be increased by more than the rate of inflation in the next three years, and staff will incorporate these increases into the recommended budgets for 2006, 2007 and 2008. Service increases that are required to meet the policies and standards that are described in this report and to accommodate increasing transit ridership will be incorporated into the recommended budgets for future years.

Public Consultation/Input

Consultation on proposals for transit service changes and notification for customers of upcoming service changes is conducted as outlined in this report. The recommended policies in this report were presented to the Pedestrian and Transit Advisory Committee at its meeting of April 21, 2005.

RÉSUMÉ

Hypothèses et analyse

La vision de la Ville d’Ottawa pour l’avenir, élaborée par l’intermédiaire du processus de consultation du programme Ottawa 20/20 et exprimée dans le Plan officiel et le Plan directeur des transports, comprend un rôle important pour le transport en commun. Le Conseil a approuvé les politiques et normes fondamentales de planification et d’exploitation du système de transport en commun, un volet du Plan directeur des transports.

Les Politiques de gestion du système de transport en commun recommandées dans ce rapport servent à traduire la vision du Conseil en politiques opérationnelles appliquées à la gestion du système de transport en commun. Le personnel utilise aussi un Guide plus détaillé des politiques régissant les tarifs et les services de transport en commun pour les processus, les lignes directrices et les normes techniques à appliquer aux fins de la planification et de la gestion continues du système de transport en commun.

L’ancienne Commission de transport régionale a approuvé en 1999 les lignes directrices concernant la conception du service de transport en commun actuelles après un examen approfondi de l’exploitation d’OC Transpo de la part du cabinet de consultants KPMG. Les lignes directrices permettent de mesurer le rendement financier de chaque circuit en déterminant le ratio revenus-coûts, pratique appliquée depuis de nombreuses années. Le ratio revenus-coûts minimal actuel est de 35 pour cent en période de pointe et au milieu de la journée, et de 25 pour cent autrement. Les lignes directrices déterminent un réseau de base qui offre le service de transport en commun dans un rayon de 800 mètres à pied à 95 pour cent des résidents en milieu urbain, et les lignes directrices sur le ratio revenus-coûts minimal ne s’appliquent pas à ce réseau de base. Le réseau de base donne l’accès essentiel au transport en commun dans tout le secteur de transport en commun urbain tout au longde la journée de service.

Au cours de l’Examen général des programmes en 2003, lequel a donné des réductions de services de transport en commun approuvées au Conseil pour le budget 2004 et la réinstallation ultérieure de ces services en partie en 2005, une nouvelle approche a été appliquée pour déterminer les réductions des services possibles par ordre de priorité selon le nombre de clients perdus par dollar net économisé au lieu du ratio revenus-coûts lié à un circuit. Cette nouvelle approche a donné des résultats plus équitables et techniquement logiques, et la nouvelle norme financière minimale est recommandée dans ce rapport pour adoption.

Le processus Transplan est appliqué chaque année pour évaluer, consulter et recommander des modifications à apporter au service de transport en commun et de nouveaux changements importants. Ce rapport recommande les étapes à franchir pendant la consultation avec les clients du transport en commun et d’autres résidents. Le processus précise que le personnel consultera les conseillers des secteurs où les changements auront des répercussions avant et après la consultation publique et, si le conseiller et le personnel ne sont pas d’accord, la question sera confiée au Comité des transports pour considération.

Les tarifs du transport en commun sont déterminés pour promouvoir l’achalandage et récompenser les utilisateurs fréquents. La structure tarifaire comprend aussi des tarifs réduits pour les personnes âgées, les étudiants, les enfants et quelques groupes de personnes atteintes d’invalidité. Le rapport spécifie comment les politiques tarifaires soutiennent les objectifs du Plan directeur des transports et recommande l’octroi au personnel du pouvoir d’élaborer et de présenter de nouveaux instruments tarifaires qui n’auront pas de répercussions sur les revenus.

Répercussions financières

Les recommandations de ce rapport n’ont pas de répercussions financières immédiates. La recommandation visant à établir pour tout le système un ratio revenus-coûts normalisé de 55 pour cent d’ici 2008, exigera des augmentations tarifaires du transport en commun supérieures au taux de l’inflation au cours des trois prochaines années et le personnel intégrera ces augmentations dans les budgets recommandés pour 2006, 2007 et 2008. Les augmentations du service nécessaires selon les politiques et normes décrites dans ce rapport et en prévision de l’augmentation de l’achalandage du transport en commun seront intégrées dans les budgets recommandés pour les années à venir.

Consultation publique/Commentaires

Ce rapport décrit le déroulement des consultations sur les propositions de changements à apporter au service de transport en commun et sur les avis de changements apportés au service à venir à l’intention des clients. Les politiques proposées dans ce rapport ont été présentées au Comité consultatif sur les piétons et le transport en commun au cours de sa réunion du 21 avril 2005.

BACKGROUND

Ottawa 20/20 and Transportation Master Plan

The City of Ottawa’s vision for the future includes an important role for transit. The vision for ensuring that Ottawa remains a liveable, green city was developed through the Ottawa 20/20 consultation process. The vision resulted in the development of an Official Plan and Transportation Master Plan that were approved by Council in September 2003.

The plans’ call for an emphasis on accessibility means creating land-use patterns that reduce the need to travel great distances across the city and that encourage alternatives to car travel. More compact and mixed-use development throughout developing areas of the city and a stronger series of urban centres to anchor the transit system are essential to achieving the plans’ transportation goals. The plans also call for the expansion of the rapid transit system and the introduction of complementary measures to support transit use.

The fundamental policies and standards under which the transit system is planned and operated were approved by Council in September 2003 as part of the Transportation Master Plan (TMP). Section 7.2 of the TMP, Transit Service Strategy, is attached to this report as Appendix A.

The Transportation Master Plan calls for transit to carry 30 percent of all motorised trips in peak periods by 2021, in comparison with today’s 17 percent. During this period, population is projected to grow from 825,000 to 1.2 million. In terms of transit ridership, the increase in modal share coupled with the population growth mean an increase from 89 million customer trips a year in 2004 to 246 million in 2021.

For transit services to play their intended role in the coming years, they will need to be expanded. The TMP projects an increase in the transit bus fleet from 950 today to 1,750 by 2021 in addition to an increase in light rail vehicles from 3 to 105. The plan estimates that net operating costs will increase by 80 percent in real terms over the period and the system-wide revenue-cost ratio will improve by approximately 10 percentage points by 2021.

Current Service Design Guidelines

The current transit service design guidelines were approved by the former Regional Transit Commission in 1999, following a comprehensive review of OC Transpo operations by the consulting firm KPMG (Exhibit 1). The guidelines use the revenue-cost ratio of individual routes to determine their viability, a practice that goes back many years. The current minimum revenue-cost ratios are 35 percent in the peak periods and midday and 25 percent at other times. The guidelines refer to a base route network that provides transit service within 800 metres of 95 percent of residences, to which the minimum revenue-cost guidelines do not apply (Exhibit 2).

In the 2003 Universal Program Review, which led to the transit service reductions approved by Council as part of the 2004 budget, a new approach was used to determine the priority of possible service reductions based on customers lost per net dollar saved rather than on a route-specific revenue-cost ratio. This new approach provided results that were more equitable and more technically sound, as described in greater detail later in this report.

Current Transit Fare Policies

Transit fares are designed to promote ridership and reward frequent use. The fare structure also provides reduced fares for seniors, students and children and some groups of people with disabilities.

In March 2002, Council approved the policy of maintaining transit fares in line with inflation and planning for increases each July at approximately the rate of the Consumer Price Index. This was also recommended in the KPMG comprehensive operational review in 1999.

The current transit fare levels were approved by Council as part of the 2004 budget, and were introduced in July 2004. Increases in line with inflation to commence July 1, 2005, were approved by Council as part of the 2005 budget. The current fares are shown in Exhibit 3.

Current Costs and Funding of Transit Service

In 2005, the budgeted direct operating costs for the transit system are estimated to be $224 million.

This number is made up of $156.7 million for wages and benefits (for City employees in the Transit Services Branch as well as employees in other branches of the City who work in support of the transit system), $23.8 million for the cost of fuel for buses and trains, $23.2 million for the cost of maintenance and parts for buses and trains, $12.8 million for the cost of maintenance of the Transitway, the O-Train line, Transitway and O-Train stations, and garages, and $7.5 million for other administrative, supervisory, and support costs.

As approved in the 2005 budget, the direct operating costs are to be funded by $110.6 million in fares paid by transit customers, $2.5 million in other transit revenues, $2.2 million in provincial gas tax revenue to the City and $108.7 million collected from property taxes.

Thus, the direct operating costs in 2005 are projected to be covered 51 percent by fares and other transit revenues, one percent by Provincial gas tax revenue and 48 percent by property taxes.

Capital costs for transit, including infrastructure, buses, trains, IT systems, contributions to capital reserves, and debt servicing, are funded entirely from property taxes, development charges, and provincial and federal funding.

DISCUSSION

Translating Council Policy into Transit System Management Policies

To achieve Council’s vision for the City, transit services will need to become the mode of choice for more commuters. To do this, the planning and operation of the transit system needs to be governed by operational policies that result in comfortable, convenient, reliable, safe, direct service at a reasonable price.

It will also need to provide a reliable transportation system for travel to all parts of the urban transit area, seven days a week.

The Official Plan and the Transportation Master Plan also call for an accessible and equitable transit system, a transit system that will be accessible to people with disabilities and one that offers reduced transit fares for select groups to contribute to social goals.

The Transportation Master Plan is developed on the expectation that the costs of transit service will be shared between transit customers and property taxpayers and that, as the city grows and the productivity of the transit system increases as a result of the construction of the future rapid transit network, the share borne by the transit customers will increase by approximately 10 percentage points by 2021.

Each of these four goals is discussed in the following sections, illustrating how the Transit System Management Policies are designed to ensure their achievement.

Transit as Part of the Peak Period Transportation System

Recommended policy:

The transit system will be managed to recognise its role as an essential part of the peak period commuter transportation system.

The provision of a fast, convenient alternative to the car for the peak period commute trip is essential to support the Official Plan’s and the Transportation Master Plan’s goal of a city that uses transit for a greater part of all travel. The City’s goal, as expressed in the Transportation Master Plan, is for 30 percent of all peak period motorised travel (by car and by transit) to be made on the transit system.

The aim that 30 percent of all motorized peak period travel will be by transit is achievable. Already, over 30 percent of all peak period travel to and from Orléans is by transit, and over 55 percent of work trips to the central area from Orléans, Barrhaven, and Kanata are made by transit. The aim that transit ridership will increase by 3 to 5 percent each year is achievable with the continuing growth of the City, growth of the City’s economy and with the planned rapid transit network expansion. In the last five years the average increase in transit ridership was 3.5 percent.

It is important to note, though, that growth in transit ridership relies not only on the continuing improvement of transit service but also on a continuing change in urban development, as guided by the land use policies in the Official Plan

This first Transit System Management Policy reflects Council’s direction to build and operate a transit system that both attracts and accommodates a large number of trips made to work and to school during the peak periods of the day. In doing so, it both supports and requires a more compact, more accessible city. The provision of good transit service offers a choice to travellers, it avoids the requirement that people need to use a car to have access to opportunity, and it provides transportation for those who cannot or do not wish to use cars.

Staff use several processes, guidelines, and standards within this general management policy. The peak period base route network is defined (Exhibit 4) to provide transit service during peak periods from Monday to Friday to within 400 metres (a five-minute walk for most people) of 95 percent of the residents of the urban transit service area. The network is expanded into new areas as the city grows. The services are designed to match customers’ observed travel needs and the service frequency is determined by the service capacity standards defined in the Transit Service and Fare Policy Manual. Briefly, service is designed so that, averaged over the busiest hour, all customers are accommodated comfortably, with some customers required to stand, at the point on the route with the highest passenger volumes. Where there is sufficient demand, direct service is provided to downtown and to major employment locations.

Where ridership levels are high, service is frequent, as guided by the service capacity standards. The prices of fares for individual trips and for monthly passes are set to encourage regular use of transit every day. The transit system is budgeted to provide reliable service.

Service reliability is critical in attracting and retaining transit ridership. The aim is to operate all scheduled trips on time with the expectation that at least 99.5 percent of all scheduled trips will be provided. This means that, on average, no more than 200 bus trips per week should be missed. A key finding of the 1999 KPMG Comprehensive Review was that OC Transpo must only provide the services that it can provide reliably with the resources it has. At the time of the review, resources were overstretched and the result was that on most days more than 0.5 percent of trips were being missed. Improvements to return to the target of 99.5 percent were recommended.

The standards within these procedures have been set based on longstanding practice in Ottawa, by previous decisions of Council and the former Regional Transit Commission and by adopting best practices used at other transit systems. The 400-metre guideline for an acceptable walking distance compares, for example, to a guideline of 450 metres used in Vancouver and a guideline of 300 metres used in Toronto. Measurements to decide whether a service should be changed are based in most cities on the walking distance, frequency of service, travel time on-board, number of transfers required, and reliability of service. The level of fares and the levels of discount for frequent travellers closely match those of other cities.

Of the total $200 million cost to operate the transit system in 2004, approximately $120 million, or 60 percent of the total, was used to operate the service during peak periods. A number of fixed costs are incurred based on the size of the peak period service, such as the maintenance costs of the fleet of buses, the maintenance costs of the Transitway and its stations, and the maintenance costs of the bus stops across the City. Approximately $56 million is collected each year in fares from customers travelling in peak periods and other revenue, resulting in a net cost for peak period service of approximately $64 million each year. These figures illustrate the costs that would still be incurred if transit service were provided only in peak periods. In fact, the transit system is managed as a service that is provided seven days a week, and therefore, the ridership at off-peak times spreads and defrays some of the fixed costs.

The following actions are recommended to support this policy:

- Approve the concept of the peak period base route network, as detailed later in this report;

- Confirm the continuing use of the current service and fare policies and procedures;

- Note that staff will present future budgets aimed at continuing towards the ridership goals in the Transportation Master Plan, by expanding transit service to both attract and to accommodate increasing numbers of customers.

Transit as a City-Wide Transportation Service

Recommended policy:

The transit system will be managed to provide a reliable transportation system for travel to all parts of the urban transit service area, seven days a week.

Like the first Transit System Management Policy, this second one reflects Council’s goal to both build and support a more compact, more accessible city. The quality of service provided outside peak periods supports peak period ridership, because it accommodates trip times that do not coincide with the busiest hours of the day (for instance, for shift-workers, customers who occasionally need to work late or customers whose school hours vary from day to day) and because the provision of service all week long bolsters the confidence that customers have that the service will be there when they need it. The provision of transit service seven days a week allows people to have the choice to live and travel in Ottawa without a car, and accommodates those who are unable to use a car.

In addition to those described earlier, staff use two main procedures to design and manage the service within this policy. The all-day base route network (Exhibit 2) is defined to provide transit service seven days a week to within 800 metres (a ten-minute walk for most people) of 95 percent of the residents of the urban transit service area. In fact, ridership at off-peak times is high enough on many routes that are basic to the peak period network to allow them to operate through longer hours, or even all week long. The financial performance standard is used to decide which additional services should operate over and above those defined by the all-day base route network.

The all-day base route network has been defined (with updates) since 1999, and was adopted by the former Regional Transit Commission following the comprehensive review of the system. A similar concept is used in many cities. A new financial performance standard was developed for the Universal Program Review in 2003, and was used to respond to Council’s directions on funding levels in the 2004 and 2005 budgets; this new method is described in greater detail later in this report. It represents a best practice in the public transportation business by measuring the value and results of change and by being based on both changes in ridership and changes in funding. An increasing number of transit systems are moving away from older financial performance measures to ones similar to this.

Of the total $200 million cost to operate the transit system in 2004, approximately $80 million, or 40 percent of the total, was used to operate the service outside peak periods. The average unit costs to provide the service are lower than in peak periods, because the fixed costs are established by the peak period requirements. Approximately $55 million is collected each year in fares from customers travelling outside peak periods and other revenue, making the net cost of off-peak period service approximately $25 million each year. These figures illustrate the marginal costs that are incurred in addition to those that would be required if transit service were provided only in peak periods; in fact, the ridership at off-peak times spreads and defrays some of the fixed costs.

The following actions are recommended to support this policy:

- Approve the financial performance standard, as detailed later in this report;

- Confirm the continuing use of the current service and fare policies and procedures;

- Note that staff will present future budgets aimed at sustaining and increasing the value of the transit system as a reliable transportation service all week long, by making improvements to encourage increasing ridership outside peak periods.

Support for Groups of Transit Customers

Recommended policy:

The transit system will be managed to recognise the City’s support for people with disabilities or financial restrictions.

Both current practice and the policies of the Transportation Master Plan recognise the need for the transit system to give support to disadvantaged people. Support is given to students and seniors by offering lower fares than the regular adult fares. Support for people with disabilities is given by building and operating a system with fewer physical barriers to travel and by offering a specialised door-to-door service for those whose disabilities restrict than from using the accessible conventional transit service.

It is customary for transit systems to offer lower fares to seniors and students. The lower fares are offset in part if these customers use the service outside the busiest times of the day, or use the services less-frequently than an every-day worker, but the greatest part of the reduction is a subsidy that Council has decided to designate, for social reasons. Seniors are offered a 60 percent discount on the price of a monthly pass. Full-time students are offered a 20 percent discount on the price of a monthly pass. Examples of fare reductions in other cities are shown in Exhibits 5 and 6. Exhibit 5 shows that, for seniors, Ottawa offers a fare reduction in the middle of the range for Canada. Since a decision of the former Regional Transit Commission in 1987, Ottawa offers one of the highest subsidies in Canada to post-secondary students; in most cities, the eligibility for student fares ends at either the end of high school or at age 21, while in Ottawa full-time students are eligible for reduced fares until they graduate from college or university.

All new buses that have been purchased since 1997 have been low-floor buses with ramps for access by wheelchairs and scooters and two designated secure areas for wheelchairs and scooters inside the bus. Currently, approximately 50 percent of the fleet is low-floor and, as the fleet continues to be replaced, the entire bus fleet will be made up of low-floor buses by 2015. The acquisition of only low-floor buses and light rail cars and the construction of fully-accessible stations has become an industry standard throughout North America and Europe, and it is now very rare for any new urban transit bus to be anything other than a low-floor bus.

In addition, Transitway and O-Train stations and other transit facilities are designed to be accessible by wheelchairs and to be as easy to use as possible for customers with a range of disabilities.

Of the total net funding of $89 million in 2004 from Council for conventional transit operating costs, $8 million is designated for the reduced fares for students and $3 million for the reduced fares for seniors, for a total of $11 million. In addition, a 20 percent subsidy on regular fares is provided, up to a maximum of $375,000 each year, to Ontario Works participants.

There are also costs resulting from the acquisition of only low-floor buses. The first two series of low-floor buses that OC Transpo purchased had a markedly lower capacity than the standard high-floor buses (33 versus 46 seats) and while increased costs are currently reduced by operating those particular buses on routes and individual trips with lower ridership, as system-wide ridership grows there will be a cost to operate more low-capacity buses to carry a set number of customers. The newer series of low-floor buses now being purchased have a higher capacity, approaching that of standard high-floor buses (41 versus 46 seats); this has been accomplished by having a floor level in the rear part of the bus that is above the wheels and transmission, thus allowing for more seats to be installed, and by requiring approximately five more customers to stand than on a standard bus.

Although the focus of this report is on conventional transit in 2004, a net contribution of $19.5 million was made from property taxes to Para Transpo. This service is provided for people who are unable to use conventional transit services. Para Transpo provides approximately 750,000 passenger trips per year at a cost of $21 million per year. Revenues from customer fares are approximately $1.5 million.

Para Transpo service will continue to be required to accommodate trips that it will never be possible to carry on regular transit. However, it is expected that as regular transit becomes increasingly accessible, it will be possible to contain the increase in Para Transpo service levels at less than the level of population growth. Para Transpo registrants are encouraged to use the conventional accessible transit service where and when they can and an Accessible Transit Specialist was added to Transit Services’ establishment this year to develop travel training programs and work with the elderly and disabled communities to identify and remove barriers to their use of conventional transit.

Another report is before Committee today, recommending the introduction of a reduced price bus pass for people with disabilities and low incomes. This pass would be available to people who receive the Ontario Disabilities Support Payments. It would replace the current program that allows wheelchair, scooter and walker users to use regular transit free and is supported by the Accessibility Advisory Committee.

The following actions are recommended to support this policy:

- Confirm the continuing use of the current service and fare policies and procedures in support of people with disabilities and financial restrictions; and

- Approve the introduction of a reduced price pass for ODSP recipients, as recommended in another report on this agenda.

Funding Sources for Transit

Recommended policy:

The transit system will be managed to maintain an appropriate balance in funding between customers’ fares, other revenues, and property taxes.

Recommended process:

Staff will prepare future budgets and service plans for the transit system that:

- Provide for a minimum of 55 percent of operating costs to be covered by customers’ fares and other revenue and for the remainder to be covered by property taxes and provincial and federal contributions;

- Achieve this system-wide revenue-cost ratio of 55 percent, up from the 2005 level of 51 percent, in a transition over three years~~, by allocating any new gas tax~~ ~~revenues to reduce the contributions from property taxes and~~ by recommending fare increases above the rate of inflation, if required, in the budgets for 2006, 2007 and 2008;

- Advise Council annually through the budget process of the required changes to fares and funding to achieve the objectives of the Transit Service Strategy in the Transportation Master Plan and the Transit System Management Policies.

It has been the practice in most Canadian cities for many years for the operating cost of transit services to be primarily funded by the fares paid by customers and for the remainder to be funded from a combination of municipal property taxes and provincial contributions. The municipal and provincial support for transit operating costs is provided for several reasons: for equity with the road maintenance subsidies provided for those who travel by car; to reduce fares and increase service and thus encourage travellers to choose transit, the healthier choice for the city and for the environment; to allow and support travel by those people who do not use cars; and to recognise the value of transit to non-users, for instance by avoiding increased road construction and maintenance costs.

In Ottawa, as in all but the largest cities in Canada, the share of the total cost of transit service paid directly by customers through their fares has been between 50 and 60 percent over the last 15 years.

The system-wide revenue-cost ratio is calculated using a standard method across the country, developed by the Canadian Urban Transit Association. Revenue is comprised of all revenue from customers’ fares and revenue from other sources, such as advertising. Cost is comprised of direct operating costs. Some costs related to the funding for the replacement of capital assets that are classified as operating costs under the City of Ottawa’s financial methods are classified as capital costs under CUTA methods, and thus are excluded from the system-wide revenue-cost ratio.

The system-wide revenue-cost ratio can change from one year to the next for many reasons. Costs increase with higher input costs, principally wages, benefits, fuel, and parts. The overall cost to operate the system continuously increases as the City grows, as new customers in new suburban areas make longer trips; these added costs are generally offset by new fare revenue from increasingly intensive use of the system throughout the City and by reduced requirements for resources because of economies of scale as the transit system grows. Costs were reduced in 2004 when some routes with low ridership were discontinued. Revenues increase when fares are increased. Higher ridership levels increase fare revenue, but can also increase costs when service increases are needed to accommodate the growth. Changes in bus design and technology can both increase and reduce costs, but the trend in recent years has been increased costs.

The revenue-cost ratio has fluctuated widely over the last ten years from a high of 59 percent in 2002 to an estimated low in 2005 of 51 percent. The decline from 2002 to 2005 was largely because of increases in the prices of fuel and parts above the rate of inflation, the end of the OMERS holiday on pension contributions, and because of decisions to hold the annual fare increase at approximately the rate of inflation and to fund the increases in costs over the rate of inflation by increases in property taxes.

In the years to 2021, the system-wide revenue-cost ratio will be improved by the increased productivity made possible by the construction of the rapid transit network. Light rail cars will carry more customers per dollar of cost than buses do, and buses operating on Transitway extensions will carry more customers per dollar of cost than those operating in mixed traffic along with cars. Annex B of the Transportation Master Plan showed the projected ridership, required fleet size, and projected operating costs for the transit system for the years until 2021. The figures in the TMP showed that the system-wide revenue-cost ratio would remain stable at about 57 percent (the 2001 level) until after the completion and opening of the first new light rail line. From that time, the greater capacity of the light rail cars would reduce the operating cost required to carry each customer, and the convenience of the new light rail lines would attract new customers that would not otherwise have travelled on transit. The reduced costs per person and increased fare revenues would result in an increased system-wide revenue-cost ratio. As the light rail network and extensions to the Transitway network are completed, the system-wide revenue-cost ratio was expected to rise by ten percentage points to approximately 67 percent by 2021.

But increased costs have been experienced since the TMP was prepared, particularly for fuel and bus parts. The decisions to fund those costs from property taxes, in order to hold transit fare increases at the rate of inflation, have meant that the productivity improvements will start from a current-day system-wide revenue-cost ratio of 51 percent and not the 57 percent of 2001, on which the plan was based.

In order to return the system-wide revenue-cost ratio to its previous higher level, staff will prepare budgets over the next three years that will incrementally increase the ratio to 55 percent by 2008. The opening of the light rail line in 2009 will allow productivity improvements in 2010, and the opening of subsequent phases of the rapid transit system through the following 10 years will allow the ratio to continue to be increased, towards a target of approximately 65 percent by the time of the completion of the full rapid transit system.

Depending on the increases of input costs to the operation of the transit system, principally fuel costs, and on the provision of provincial and federal gas tax revenue, this transition toward a system-wide revenue-cost ratio of 55 percent over the next three years will likely require fare increases above the rate of inflation.

The following actions are recommended to support this policy:

- Confirm the continuing use of the current financial measures and methods;

- Note that staff will calculate and present the system-wide revenue-cost ratio resulting from budget recommendations in future years’ draft budgets;

- Note that construction of the rapid transit network will allow for productivity improvements, resulting in increases in the system-wide revenue-cost ratio, as each phase is completed and opened;

- Note that staff will develop recommendations for future years’ draft budgets based on an aim to increase the system-wide revenue cost ratio to 55 percent by 2008, and that this will likely require recommended fare increases above the rate of inflation.

Consultation Process for New Services and Major Service Changes

Recommendation:

Adopt the Transplan process outlined below for public consultation for new transit services and major transit service changes.

Once each year, a package of proposals for major service changes[1] is developed to respond to the growth of the city and changes in customers’ travel needs. The proposed changes are presented for consultation to transit customers that would be affected and to residents in the areas where new services would be added.

The service change proposals are developed based on observed travel requirements and suggestions from customers, front-line transit staff, and other City staff. Suggestions are evaluated to determine their effect on customers and their costs.

The recommended process for consultation is as follows:

1. Initial consultation with the Councillors whose wards are affected, to outline major issues and to determine whether a public open house is appropriate;

2. The proposal is published on octranspo.com and on leaflets which are distributed on-board buses and door-to-door to houses and businesses in the area affected;

3. A public open house is held in the area affected, if required;

4. Comments from transit customers and area residents and businesses are collected, compiled, and examined to determine whether the proposal should be revised;

5. Consultation with the Councillors whose wards are affected, to discuss the results of the consultation and any revisions which have been made to the proposal, and to determine whether the Councillor concurs with the proposal;

6. If the Councillor does not concur, a staff report with a recommendation will be presented to Transportation Committee;

7. If the Councillor does concur with the proposal, or if the proposal has been approved by Transportation Committee and Council, the service change proceeds to implementation.

Every major service change is reviewed after one year, based on actual ridership levels, comments from customers, and operating experience.

Revised Technical Processes

Base Route Networks

Revision to process:

Establish and maintain an all-day base route network, to provide service seven days a week within an 800-metre walk of the home locations of at least 95 percent of residents of the urban transit service area, and a peak period base route network, to provide service during peak periods from Monday to Friday within a 400-metre walk of the home locations of at least 95 percent of residents in the urban transit service area.

The current service design guidelines specify a base route network of services to run through the full service day, seven days a week, to bring transit service within a ten-minute walk, or 800 metres, of the home locations of 95 percent of urban residents. The current minimum financial standards do not apply to the base route network.

A change is recommended to supplement this all-day base route network with a base network of peak period services, to bring transit service within a five-minute walk, or 400 metres, of the home locations of 95 percent of urban residents.

The recommended all-day and peak period base route networks are shown in Exhibits 2 and 4.

Both base route networks establish a minimum service, to give accessibility by transit service to all parts of the Urban Transit Area. Service is provided more frequently, through as much of the day and on as many days of the week as possible, as determined by ridership and by the amount of funding made available by Council. Additional routes are also operated to reduce walking distances for customers, again as determined by ridership within the level of funding available.

The base route networks will be expanded into developing communities as they grow.

Financial Performance Standard

Revision to process:

Establish and maintain a comprehensive transit route network that achieves the aims of the Transit Service Strategy in the Transportation Master Plan and the Transit System Management Policies, with all services provided above the levels defined in the base route networks required to meet a minimum financial performance standard of 0.20 customers gained (or lost) per net dollar spent (or saved).

The financial measure that was previously used in Ottawa for evaluating and comparing existing and proposed transit services was the revenue-cost ratio for each bus route. This measure has been found to be unsatisfactory since it takes no account of the degree of benefit that the route provides for individual customers and for the transit network as a whole nor whether alternatives are available to the route.

When staff developed the list of possible service reductions that was considered by Council in preparing the 2004 budget, a different method was used. Because of the difficulties with comparisons based on the revenue-cost ratio, a new measure of customers lost per net dollar saved was used. This measure has the following advantages:

- It reflects the availability of alternative transit services for affected customers;

- Different benefits that the service provides to customers (e.g., reduced walking distance, reduced travel time, reduced number of transfers) can be evaluated thoroughly;

- The effects of service increases and reductions under consideration can be compared directly;

- Forecasts of ridership change can include consideration of the economic or demographic situation of customers;

- Instead of a pre-set minimum level, a minimum can be set to correspond with the changing funding priorities of Council; and

- Comparisons can be made with other transit projects or ideas under consideration from time to time.

The new financial measure would be used for comparisons among existing and proposed transit services. The minimum value of 0.20 customers lost per net dollar saved is consistent with the current minimum performance standards, following the 2005 budget decisions. The services cut in the 2004 budget ranged to a high of 0.30 customers lost per net dollar saved. Customer feedback on the impact of these reductions led to the re-instatement of services between 0.20 and 0.30 customers lost per net dollar saved in the 2005 budget.

Fare Payment Methods

New process:

Develop and introduce fare payment methods that support the aims of the Transit Service Strategy in the Transportation Master Plan and the Transit System Management Policies.

Each year transit fares are included in the draft budget. However, there are occasions between budget discussions when it would make good business sense to introduce a new fare instrument. It is recommended that staff be given the authority to do this as long as it is within Council’s policy direction. An example of this would be the introduction of an annual adult pass or a universal pass (“U-pass”) for college and university students.

The price of any new fare instrument would be set to be revenue-neutral and thus have no impact on approved budgets. Any proposed fare change that would affect the budget would be recommended for consideration by Council through the annual budget process.

Transit Service and Fare Policy Manual

Staff maintain a Transit Service and Fare Policy Manual to guide the continuing management of the transit system at the technical level.

Most of the policies, guidelines, and standards in this manual are unchanged from those that have been in place in the past. Some changes are recommended, and these have been described in this report, along with the background and the reason that the change is being recommended.

The policy manual is grouped into four main sections:

- Transit System Management Policies – As discussed in the previous section of this report.

- Transit Service Policies – This section describes the design of the transit network, the design of individual routes, the hours of service, the financial performance standard for individual routes and time periods, minimum service levels, and service capacity standards.

- Transit Fare Policies – This section describes the calculation of fare levels, frequent traveller discounts, reduced fares, premium fares, and transfers between services.

- Consultation and Approval Processes – This section outlines the ways that consultation is conducted with transit customers and City residents, from the high-level discussions when each year’s budget is determined, through the annual Transplan consultation process on major route changes, to the ongoing detailed two-way communication with customers about the provision of service.

The full set of policies is documented in the Transit Service and Fare Policy Manual. A copy of this manual (revised to incorporate the changes described in this report) is on file with the Clerk’s office.

CONSULTATION/PUBLIC NOTIFICATION

Consultation on proposals for transit service changes and notification for customers of upcoming service changes is conducted as outlined in this report.

The Transit System Management Policies recommended in this report, and an overview of the technical processes in the accompanying Transit Service and Fare Policy Manual, were presented to the Pedestrian and Transit Advisory Committee at its meeting of April 21, 2005. Copies of this full report are being provided to the members of PTAC in advance of the Transportation Committee meeting.

FINANCIAL IMPLICATIONS

There are no immediate financial implications of the recommendations in this report.

The recommendation to set a system-wide revenue-cost ratio standard of 55 percent by 2008 will require transit fares to be increased by more than the rate of inflation in the next three years. Subject to City Council approval, staff will incorporate these increases into the recommended budgets for 2006, 2007 and 2008.

The table below shows the impact on the price of a regular monthly pass under the following three scenarios:

1. Annual fare increases in line with the CPI;

2. Annual fare increases in line with the cost of inflation projected for transit services (with bus parts and diesel fuel rising above the CPI); and

3. Annual fare increases designed to cover inflationary pressures and to increase the system-wide revenue-cost ratio to 55% by 2008.

				Regular Bus Pass Price Based On
Year	Revenue/Cost %	CPI %	Transit Inflation Exceeding CPI %	CPI¹ $	CPI² and Transit Inflation $	CPI,³ Transit Inflation and Increased R/C Ratio $
2005	50.5			65.00
2006	52.0	3.0	1.4	66.95	67.86	69.88
2007	53.5	3.0	1.5	68.96	70.91	75.13
2008	55.0	3.0	1.6	71.03	74.18	80.79

Service increases that are required to meet the policies and standards that are described in this report and to accommodate increasing transit ridership will be incorporated into the recommended budgets for future years.

The 2005 budget identified continued budget pressures for 2006 and 2007, even after considering rate of inflation increases in fees and service charges and taking into account assessment growth from new properties. Without adding any new programs or capital projects, the 2006 tax increase is estimated at approximately 7 percent.

As in the 2005 budget, there are basically four means of funding additional program requests: identify new sources of revenue, through offsetting program reductions, increase existing fees, and increase taxes.

This request is offset by increases to existing fees.

SUPPORTING DOCUMENTATION

Exhibit 1 – Service Design Guidelines 1999

Exhibit 2 – All-Day Base Route Network 2005

Exhibit 3 – 2004/05 Fares

Exhibit 4 – Peak Period Base Route Network 2005

Exhibit 5 – 2004 Seniors’ Fares

Exhibit 6 – 2004 Students’ Fares

Appendix A – Transit Service Strategy, excerpt from Transportation Master Plan

Appendix B – Official Plan and Transportation Master Plan Transit-Related Sections

Transit Service and Fare Policy Manual (on file in City Clerk’s Office)

DISPOSITION

Upon approval of this report, staff will incorporate the recommended policy changes into the standard procedures used to plan and operate the transit system.

[1] A service change is considered to be a major route change if the change would result in operation on a street currently with no transit service or if the change would result in a longer walk, a longer travel time, or an additional transfer for more than 100 customer-trips each day

1 From October 2004, the Provincial Government has dedicated a share of the gas tax. This can be used for operating costs to support transit growth. In 2005, $2.2 million of the transit operating costs were covered in this way.

¹All-day service from Manotick was removed in 2004.

²Peak-period and all-day service is also provided in Stittsville, which is part of the Urban Area as defined in the Official Plan but part of Rural Transit Area A as defined by Council in 2002.

Category	Fare
Cash Adult	$2.60
Cash Child	$1.35
Cash Express Route	$3.75
Cash Rural Express	$4.75

Ticket Adult	$1.80
Ticket Child	$0.90
Ticket Express Route	$2.70
Ticket Rural Express	$3.60

Regular Adult Pass	$63.00
Express Adult Pass	$78.00

Regular Student Pass	$51.75
Express Student Pass	$60.00
Regular Student Annual Pass	$497.00
Express Student Annual Pass	$576.00

Adult Express Rural Pass	$98.00
Student Express Rural Pass	$78.50

Senior Pass	$25.75

O-Train Ticket	$2.00
DayPass	$6.50 on the bus $6.00 if pre-purchased

Gold Parking Permit	$36.00
Regular Parking Permit at Baseline Station	$15.50
Adult Photo ID	$6.25
Student Photo ID	$4.25