Transit Revenue/Cost
Ratio-Additional
Information
Recommendation:
That the May 9, 2008, Transportation
Department report 2008TD4833 be
received for information.
Report Summary
This report provides additional
information on Transit’s
Revenue/Cost Ratio, specifically
demographics, social or
environmental policy objectives and
extent that land use patterns affect
the efficiency of transit service
delivery.
Previous Council Action:
At the December 2007 City Council
Budget meeting, the following motion
was passed.
That the Transit Revenue/Cost Ratio
report due to Council in spring 2008
include:
a. Demographic projections for
revenue risk of an aging
population vis-à-vis the fare
scheduled.
b. An accounting mechanism for
forgone revenues for pricing and
service strategies designed to
achieve social or environmental
policy objectives (triple bottom
line).
c. Analysis, with input from Planning
and Development Department, of
the extent to which our land use
patterns (both overall, nodal and
corridor density, as well as nonresidential drivers) affect the
efficiency of transit service
delivery.
Report
Demographics
The revenue risk of an aging population
vis-à-vis the fare schedule will be
somewhat offset by large growth in the
30-39 and 50-64 age demographics. By
the year 2041, Edmonton’s population is
forecast to grow by 65.6% and people
aged 65 and over will account for 20%
of the overall population as opposed to
12% in 2006. Traditionally the 65+ age
group take advantage of discounted
seniors fares, however within the fare
schedule the overall effect on the
Revenue/Cost (R/C) ratio is forecast to
be offset by the higher paying regular
transit ridership.
The risk is that, to offset the expected
growth in the 65+ age market, we must
maintain or grow revenues from our
commuter market. The higher revenue
from these riders helps ensure that we
maintain a healthy R/C ratio. If we do
not adequately market to this group to
maintain and grow market-share we
could negatively affect our R/C ratio due
to diminishing returns from a growing
senior subsidized market.
A second risk that must be considered is
an imbalance between fares that will
cause disparity amongst our riders.
Increasing transit fares for some to
cover subsidized deep discounts to
others, without increasing the value of
transit for those who pay more poses
the danger of undermining customer
satisfaction as well as result in
increasing fare evasion. As fares
increase, low income groups and
individuals who do currently qualify for
ROUTING - City Council | DELEGATION – R. Boutilier/C. Stolte
WRITTEN BY – P. Waisman/D. Mulloy | May 9, 2008 – Transportation Department 2008TD4833
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Transit Revenue/Cost Ratio-Additional Information
concession fares will become more
vocal about this perceived inequity.
Accounting Mechanism
With regard to an accounting
mechanism for forgone revenues for
pricing and service strategies designed
to achieve social or environmental policy
objectives (triple bottom line), Edmonton
Transit has no specific strategies
designed to achieve social or
environmental policy objectives. By its
nature, these objectives are a byproduct of public transit. Our current fare
structure allows us to gain a better
understanding of the revenue impact on
our overall R/C ratio by providing certain
subsidies but does not detail the
elasticity effects on that same R/C
ratio if the subsidies did not exist nor
does it take into account the social
impact of not providing such subsidies.
Environmental benefits are realized by
maintaining and increasing transit
ridership. Examples of the
environmental benefits of choosing to
ride public transit over driving a
standard automobile are the reduction of
Green House Gas emissions. For an
average length commuter trip, a transit
commuter emits 15.1% less CO2 gas
into the environment than an automobile
commuter. With every vehicle that is
taken off the road by people switching to
public transit, the net effect of that alone
could have a positive effect on the
environment. Increased use of public
transit also has positive effects on
overall air quality, reduced noise
pollution, and decreased energy
consumption.
The social benefits of public transit that
provides affordable transportation to all
groups and accessibility to everyone,
results in improving the quality of life for
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the community overall. Groups that
further benefit from accessibility across
the city and to City services are seniors,
youths, students and low-income
individuals. These groups are less likely
to own a car. Our current Fare Policy
supports these groups by providing
subsidized fares to ensure that we
maintain affordability relative to income
levels and demographic travel needs.
All transit commuters share the added
economic benefits of reduced travel and
parking expenses, reduced costs
associated with automobile ownership
as well as the benefits of a healthier
lifestyle which often includes less travel
related stress and more walking.
Promoting active transportation, such as
walking or cycling, is a key element of
Health Canada’s national strategy to
encourage physical activity. Together,
public transit and active transportation
complement each other, and offer a
“suite” of travel alternatives that help
individuals adopt multimodal lifestyles
and minimize their automobile use.
While there are no forgone revenues
associated with the benefits mentioned
above, there are programs currently
offered by Edmonton Transit that further
contribute to these benefits and have
positively impacted Edmonton Transit’s
bottom-line by growing ridership and
increasing revenues.
From surveys of students, The U-Pass
program, which made transit available to
40,000 post secondary students,
resulted in 4% new riders. Surveys of
employees that signed onto the
ETS@Work program show that 1/3 of
those that signed up are new to transit.
Transit Revenue/Cost Ratio-Additional Information
Land Use Patterns
The extent to which our land use
patterns (both nodal and corridor
density, as well as non-residential
drivers) affect the efficiency of transit
service delivery have not been
quantified, however common initiatives
such as Transit Oriented Development
(TOD) and regional planning can
improve mobility and the efficiency of
transit by optimizing service delivery.
TOD defined as high-density urban
development within walking distance of
high capacity transit terminals or stops
is characterized by compact, mixed-use
development, a high-quality walking
environment, and easy access to transit
facilities.
TODs that promote the use of transit
and the decreased use of singleoccupant vehicles have clearly
established environmental benefits and
combat urban sprawl.
Areas which incorporate TOD land use
development polices that create more
compact, mixed, multi-modal, walkable
communities often drive 25-30% less
and use non-motorized modes two to
four times more often than residents of
more conventional, automobileorientated communities.
An environmental benefit to the
community is the contribution to the
conservation of prime agricultural land.
Urban sprawl has a significant negative
impact on surrounding agricultural
areas, and strategies such as infill and
TODs prevent sprawl and preserve
agricultural spaces.
TODs improve urban water drainage
and conserve water due to less
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construction of paved surfaces to handle
increasing traffic flow and congestion.
They also help conserve and protect
sensitive and fragile areas such as
wetlands. Compact and planned
development, including TODs, destroys
far less fragile lands than sprawl
development. Studies have shown that
planned compact development reduces
consumption of fragile environmental
lands by almost one-fifth when
compared to trend (sprawl-like)
development.
Policy
Edmonton Transit System Fare Policy
C451D
Focus Area
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Social and Cultural
Environment
Economic Development
Governance