17 030 Policy 333 EasyPass

,411 JTM'' c Report No: Meeting Date: 17-030 January 25, 2017 Alameda-ContraCostaTransit District STAFF R E PORT T...

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,411

JTM'' c

Report No: Meeting Date:

17-030

January 25, 2017

Alameda-ContraCostaTransit District

STAFF R E PORT TO: FROM:

ACTransit Board of Directors

SUBJECT

Board Policy 333, AC Transit EasyPassFares for 2017 and 2018

Michael A. Hursh, General Manager

ACTIONITEM RECOMMENDED ACTION(S)

Considerconfirming the July 1, 2017 implementation of the July 1, 2016 EasyPasspricing as well as the July 1, 2018 EasyPasspricing outlined in Board Policy 333 for use in structuring multi-year EasyPass agreements. BACKGROUND/RATIONALE

The AC Transit EasyPassprogram offers discounted Clipper-card based annual passesto employers,two-and-four-year colleges and residential communities within the AC Transit service area. EasyPassesoffer the same travel benefits as does a 31-day transbay pass, and must be purchased for the entire eligible population. The first EasyPassbegan with UC Berkeley in 1999. Currently there are 14 clients with about 71,000 eligible participants and more than 47,000active EasyPasses in circulation. In September through November 2016, EasyPassusers netted 1.5 million boardings.The program willgenerate about $5.3 million dollars in fiscalyear 2017

In 2006, staff presented a plan to standardize EasyPasspricing and other EasyPasselements using two pricing matrices - one for businessesand residential communities and a second for colleges

In September 2007, the AC Transit Board of Directors adopted the EasyPasspricing matrix for businesses and residentialcommunities,and in 2009 for two-and-four-yearcolleges. In 2011, the EasyPasspricing matrices were incorporated into Board Policy 328 (now 333). As the Board has not approved

a fare increase since 2011, there

have also been no increases to EasyPass

pricingmatrices since2011. Although EasyPasspricing has been standardized, the process of converting an interested

prospectto an active EasyPass client is resource-intensive for both the District and the prospectiveclient; the averagetime to onboard a new client is three months. As such, most EasyPass agreements have negotiated terms between two and five years. Entering into multiyear contracts maximizesstaff resources,and allows the District to forecast program revenue and clients to budget for EasyPassexpenditures.

Traditionally, staff has used Board Policy 333 and subsequent Board actions related to fare increasesto forecast client pricing in multi-year EasyPassagreements.Thus,staff currently uses 2011 pricing matrices as the baseline for EasyPasspricing. This is problematic because the 1 of 4

Report No. 17-030 Page2 of 3

inability to quote EasyPass pricing beyond 2011 levels restricts staff's ability to determine EasyPass pricing beyond one year, since the Board has yet to confirm fare changesfor fiscal years through 2020. Without the ability to confirm multi-year EasyPasspricing, the District cannot realize the full revenue potential as outlined in Board Policy 333 with multi-year agreements. This is of particular concern as the District has seen increased interest in EasyPasswithin the residential community as more cities look to implement "green" development policies and mitigations that reduce the need for more residentialparking and discourage single occupancy driving

Therefore,staff is requestingthe Boardconfirm the July 1, 2017implementation of the July 1, 2016 and July 1, 2018, EasyPasspricing matrices as specified in Board Policy 333. This will allow staff to execute multi-year agreements through 2020, thereby reducing staff time spent on pricing-related discussionsand annual renewal processes.Approval also allows the District to realize EasyPass revenue increases in the coming years for current and future EasyPass clients. At this time, there are seven new EasyPassclients slated to sign on by March that would be affected by the Board's decision. BUDGETARY/FISCAL IMPACT

If the planned EasyPasspricing matrices are implemented in 2017 and 2018, gross revenue for

the existing14 EasyPass clients would increaseto about $5.8 million and $6.1 million, respectively. This revenue projection does not include new clients, or the loss of any existing clients. New agreements for prospective clients and contracts for renewing clients would use the following pricing model moving forward: e 8 e

Remainder of fiscal year 2017: July 1, 2011 pricing matrices Fiscalyear 2018: July 1, 2016 pricing matrices Fiscalyears 2019 and 2020: July 1, 2018 pricing matrices

Staff does not anticipate any changes to the existing client base or EasyPassparticipant use becauseof an EasyPass price increase.Preliminary analysis also shows no Title VI impact in implementing EasyPass pricing asstipulated in Board Policy333. [t shou]d be noted that the abi]ity to use the existing 2016 and 20].8 pricing matrices mode] wi]] not preclude potential changes to the EasyPasspricing matrices in the future. If through additional District-wide or EasyPass-specific pricing evaluation it is determined that changesto

the existingpricing matricesare needed, all new agreementsthereafter would be subject to any newly developed and Board-approved pricing matrices. ADVANTAGES/DISADVANTAGES

The advantagesto implementing the EasyPasspricing matrices in Board Policy 333 would be to provide stability in determining EasyPassagreement pricing through 2020, maximize limited staff resources for the program, and to realize EasyPassrevenue increases while still allowing for flexibility in future District fare policy actions. There are no known disadvantages 2 of 4

Report No. 17-030 Page3 of 3 ALTERNATIVES ANALYSIS

An alternative to the requested action would be to wait for staff to request Board approval for

fare changesin each relevant fiscal year. However, this would prevent staff from quoting EasyPasspricing beyond 2011 and 2016 matrix levels for at least seven pending clients, which would either keep the EasyPass pricing artificially low in multi-year agreements,or necessitate only a maximum two-year agreement, with the latter being unsustainable with the existing EasyPass staff. PRIOR RELEVANT BOARD ACTION/POLICIES

Board Policy 333 -- Fare Policy Board Policy 328 -- Fare Policy: Amended December 11, 2013 Board Resolution No. 16-009 Staff Report 17-017 Scheduled Fare Increase -- July 1, 2017 ATTACHMENTS

1. EasyPassPricing Matrices 2011-2020

Approved by:

Michael A. Hursh, General Manager

Reviewed by:

Denise Standridge, General Counsel Michele Joseph,Director Marketing and Communications Nichele Laynes,Marketing Manager

Prepared by:

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