CUSA-SFUO Lobby Document- Evaluating the Costs and Benefits of U-Pass Program

8/3/2019 CUSA-SFUO Lobby Document- Evaluating the Costs and Benefits of U-Pass Program

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Graduate Students’ Association of the University of Otta

Carleton University Graduate Students’ AssociationStudents’ Federation of the University of Ottawa

Carleton University Students’ Association

Prepared for the

City of Ottawa Transit Commission

Fall 2011



Table of Contents

Introduction 2

Projected Direct Revenue from the U-Pass 2Actual vs. projected revenue or the 2010-2011 Pilot Year 2

Efect o enrollment increases on U-Pass Revenue 2

Projected revenue rom annual increase o 2.5% 3Projected revenue increases rom combined annual 2.5% increase

applied to projected enrollment increases 3

Ontario’s Gas Tax Program 3

Review of the Cost of the U-Pass Program 3

Probable error in calculation o lost revenue rom the U-Pass 3

Students’ use o transers 4

Additional Cost Savings and Revenue Gains from the U-Pass 5

Reduced strain on OC Transpo Sales and Inormation Counters 5

Reduced sales commissions paid to vendors or pass and ticket sales 5Fare enorcement/Unpaid Fares 6

Environmental Benets and Reduced strain on the City o Ottawa’s

Inrastructure 6Sustained Ridership 6

Conclusion: Summary of Revenue Increases and Cost Savings 8

Resources 10

1

Student Action for Public Tr

S t ude n

f o r a

U - Pas



Introduction

For the last year, students have enjoyed the success o the Universal TransProgram (the ‘U-Pass’). With a at rate or access to transit across the City ostudents have changed their travel patterns and given up their cars in avopublic transit. The U-Pass has increased ridership and provided OC Transpo

reliable revenue stream.

In its 2011 budget documents presented to City Council, OC Transpo orec

million expense per year or the U-Pass program. This gure was estimatedmid-point o the pilot program and largely derived rom OC Transpo’s analstudent ridership surveys conducted in March and November o 2010. The

unions at Carleton University and the University o Ottawa have since condadditional research into the program. This research, in combination with to having completed a ull academic year o the program, provides additiointo the nancial viability o the U-Pass.

Most signicantly, the analysis conducted by the students’ unions stronindicates that the U-Pass program valued at the base rate of $145 per se

with annual maximum increases of 2.5%, is revenue positive for OC Tranthe City of Ottawa. This analysis is explained in detail throughout this doc

Students at both the University o Ottawa and Carleton University look or

discussions with the Transit Commission, City Council and OC Transpo on tand benets o the program with the goal o moving orward with a progrbenets all parties.

Projected Direct Revenue rom the U-Pass

Actual vs. projected revenue or the 2010-11 pilot yearDocuments prepared or the 2011 budget deliberations were prepared miway through the U-Pass pilot program and understandably relied on a num

o estimations. At this time, OC Transpo orecast revenue rom the U-Pass t$14,514,500. The actual revenue received rom the U-Pass was $14,648,28increase o $133,781 over projected revenue.

Efect o enrollment increases on U-Pass revenueBoth Carleton University and the University o Ottawa have seen signican

in student enrolment over many years and have orecast similar increases years to come. These increases need to be incorporated into any calculatiorevenue rom the U-Pass.

The additional revenue rom projected enrollment gures or both universcombined over actual revenue rom the 2010 pilot year are as ollows*:

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Notes

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2011: $322,1412012: $633,732

2013: $903,4282014: $1,104,102

*Note: Projected enrollment numbers or graduate and undergraduate students have been combined or both unbreakdowns o enrollments are available upon request.



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Projected revenue rom annual increase o 2.5%The students’ unions at both universities have agreed in writing to include in uture

reerenda questions an escalator clause that will enable OC Transpo to raise theprice o the U-Pass to a maximum o 2.5% per year beginning i n 2012. Applied tothe actual revenue rom the 2010-2011 year, annual revenue rom the program will

increase as ollows:

Projected revenue increases rom combined annual 2.5%increase applied to projected enrollment increasesWhen 2.5% annual increase is applied to the increased enrollment gures, the total

increase in revenue is as ollows:

Ontario’s Gas Tax ProgramAccording to the Ontario government, the City o Ottawa received $32,564,077 in gastax revenue or the 2010-2011 scal year. O this transer, 70% is based on ridershipnumbers. According to the gures the students’ unions received rom OC Transpo,

the U-Pass program has had a very positive impact on ridership numbers. The city-wide ridership increase was 5.7% or the rst our months o the U-Pass and 5.8% orthe subsequent three months. The U-Pass has been cited by many city ocials a s one

o the primary reasons or the increase in ridership and is a critical component o OCTranspo’s orecast o reaching 100 million transit t rips or the rst time in 2011.

The table below sets out possible scenarios o the U-Pass’ impact on the ridershipincrease using the 2010/11 ridership-based transer o $22,794,853.

Percentage Ridership Increase

Attributable to the U-Pass

Increase in Gas Tax Revenue

1% o the 5.7% increase $227,949

2% o the 5.7% increase $455,897

3% o the 5.7% increase $683,846

3.5% o the 5.7% increase* $797,820

4% o the 5.7% increase $909,994

5% o the 5.7% increase $1,139,743

Total 5.7% increase $1,296,742

*Based on the ridership fgures provided to the students’ unions by OC Transpo and the results o the two student ridership surveys,it is reasonable to iner that the city-wide ridership increase attributable to the U-Pass is approximately 3.5%.

Review o the Cost o the U-Pass Program

Probable error in the calculation o lost revenue rom the U-PassThe students’ unions at the University o Ottawa and Carleton Universitycommissioned two senior doctoral candidates who specialize in statistical analysis to

review the data collection, methodology and results o OC Transpo’s U-Pass surveysconducted in March and November o 2010. They identied what they strongly

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Notes

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2012: $366,207

2013: $741,5692014: $1,126,315

2011: $322,141

2012: $1,015,7822013: $1,683,8212014: $2,297,814

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believe are errors in the analysis conducted on behal o OC Transpo.

The most signicant errors appear in the analysis o the use o cash, ticketsO-Train ares. The statisticians commissioned by the students’ unions couldascertain or replicate t he gures presented by OC Transpo regarding the

o trips made by students using these paid ares a s OC Transpo did not indthey arrived at these numbers. Using the available data, the statisticians odiferences in the number o student trips made by each are type. This is pbelow.

Fare Type OC Transpo

Calculation

Statisticians’

Calculation

Dierence

Cash 3.61% 4.11% +0.50%Tickets 13.05% 10.42% -2.63%

O-Train 1.33% 0.76% -0.57%

Total 17.99% 15.29% -2.70%

The diference between 17.99% versus 15.29% o students using these aris signicant, particularly when applied to OC Transpo’s calculation o $3,1

in lost revenue per term ($6,318,922 per academic year) rom these are tydiference between OC Transpo’s gure and the gure produced by the staamounts to a decrease o approximately $947,838 in lost revenue per acad

A lack o data precluded the statisticians commissioned by the students’ uanalyzing OC Transpo’s calculation o lost revenue based on the sale o traDespite multiple requests by the students’ unions, the data required or s

analysis has not been provided.

Students’ use o transersWhen determining the overall amount o l ost revenue rom the U-Pass, OC

survey does not take into account the use o transers when making multipin a day. OC Transpo transers are good or an hour and a hal ater the rsride, and are widely used amongst riders or a second transit trip. These we

taken into consideration when students were asked how many trips they tday beore, and each trip was treated as a separate cash or ticket are in OCcalculation o lost revenue rom the U-Pass. Over 10% o students demons

they could have used a transer when answering the survey, and 23.8% o trips taken by students demonstrate conditions where transers could havused. While we cannot know how many o those students actually used trahas a major impact on the amount o lost revenue.

The table on the ollowing page sets out a ew possible examples o the ec

impact o transers.

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Resources

2003 The Costs o Travel In Ottawa: Final Report. Delphi-MRC.

2009 U-Pass – Pilot Program Evaluation. Transportation and Public Works Committee, City o Edmonton.www.edmonton.ca/transportation/Report_on_U-Pass_Perormance_during_the_3_year_Pilot_Program.pd

2009 Cooper, Caitlin Elizabeth. Creating a Transit Generation: The Efect o the U-Pass on Lielong TransitUse. ir.lib.su.ca/bitstream/1892/10772/1/etd4436.pd

2010 2009 Fall Usage & Attitude Survey. OC Transpo/Core Strategies.

2011 U-Pass Survey: Ottawa & Carleton University Student Trip Patterns. OCTranspo/Core Strategies.

2011 U-Pass: Survey Results and Financial Analysis. OC Transpo.

2011 Ontario Supports Municipal Transit. Ministry o Transportation, Government o Ontario. www.mto.gov.on.ca/english/about/transit/municipal-transit.shtml

2011 2011 Marketing Plan. OC Transpo. www.octranspo1.com/images/les/about_oc/transit_planning/

marketing_plan2011.pd

2011 Quarterly Report to Council Q1. City o Ottawa. www.ottawa.ca/calendar/ottawa/citycouncil/

occ/2011/07-13/edco/01 - ACS2011-COS-ODP - Document 1 ENG.pd



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EstimatedBenchmarks

Number of Trips

Percent of Total Transit

Trips

OC TranspoEstimated Loss

for

Cash and Tickets

per Term

Total EstimatedDecrease in Lost

Revenue per

Term

0% Transer Use 0 0% $6,318,922 $0

25% Transer Use 78 6% $5,942,946 $375,976

50% Transer Use 157 11.9% $5,566,970 $751,952

75% Transer Use 235 17.9% $5,190,994 $1,127,928

100% Transer Use 313 23.8% $4,815,018 $1,503,904

OC Transpo’s nancial analysis shows an annual loss in revenue o $6,318,922in tickets and cash ares because o the U-Pass. However, i even a quarter o subsequent trips used a transer, this loss is decreased by $375,976. I hal o students

used a transer, the loss is decreased by more than $750,000 per year.

Additional Cost Savings and Revenue Gains romthe U-Pass

Decreased strain on OC Transpo Sales and Inormation Counters With more than 50,000 U-Passes being printed at Carleton University and theUniversity o Ottawa, there are tens o thousands o OC Transpo users that no longer

purchase their are media rom OC Transpo. As a result, OC Transpo is seeing savingson printing and material costs as well as stang hours. The students’ unions do nothave the necessary inormation to put a clear dollar gure on the amount o savings,but believe it to be tens or hundreds o thousands o dollars per year.

Reduced sales commissions paid to vendors or pass and ticket

salesOC Transpo is saving a signicant amount o money in commissions to outside retail

outlets. OC Transpo pays a 1% commission on all are media sold outside o its ownretail outlets. The U-Pass is the only are media sold rom an outside outlet that doesnot require the payment o a commission.

At the Carleton University Students’ Association’s convenience store alone, more than$10,000 was eliminated in OC Transpo commissions or pass and ticket sales when

the U-Pass was implemented. By eliminating the need or commissions to be paid oneach and every one o the over 50,000 U-Passes in circulation, OC Transpo is savingtens o thousands o dollars per year1.

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1 For example, according to the spring 2010 OC Transpo survey 43% o ull-time students had a transit pass o some type. Thisamounts to roughly 22,000 students. I 50% o these students previously used a non-OC Transpo outlet or a regular student monthlypass, the savings over 8 months would be $66,000.

Carleton University Students’ Association

Students’ Federation of the University of OttawaCarleton University Graduate Students’ Association

Graduate Students’ Association of the University of Ottawa

Chantle BeesoVice President Student [email protected]

613-520-2600 x.1607

Amalia Savva

[email protected]

Kelly Black Vice President [email protected]

613-520-2600 x.3879

Taiva Tegler

External Comm. à l’[email protected]@gsaed.ca613-562-5800 x.6671



Fare enorcement/Unpaid FaresWith the creation o the U-Pass program, almost all ull-time university stu

are paying or the use o Ottawa’s transit system and the need or are enoon routes heavily used by students, including the O-Train, is reduced. Similikelihood that students are using transit services without payment is sign

decreased.

Environmental Benets and Decreased strain on the Cit

Ottawa’s InrastructureIn February 2010, the City’s Transportation Committee reviewed the actuathe societal costs o car, transit, cyclist and pedestrian usage on the City’s round that a single car trip cost the city $2.50 on average as compared to $

trip utilizing public transit. According to the U-Pass surveys conducted on OC Transpo, students’ car usage has decreased signicantly since t he implo the U-Pass. Previous to the U-Pass, approximately 29% o students tookusing a private vehicle every day. Ater the U-Pass was implemented, that

was reduced to just over 24%.

With more than 50,000 participating students, the U-Pass could be crediteeliminating 2,500 car trips per day. As these students move to transit, ever

city saves roughly $1,900 in actual and societal costs. This amounts to ovein savings per year on road inrastructure and repair and societal costs sucand air quality.

This estimate is conservative compared to the ndings in the City o EdmoU-Pass Pilot Program Evaluation. In 2009, this st udy was conducted by theTransportation and Public Works Committee o the City o Edmonton in or

review the true cost o their U-Pass Pilot Program. It reviewed the immedialong term nancial implications o the U-Pass to the City. The program wasize to the City o Ottawa pilot program with two universities participating

The survey asked “Without the U-Pass, how many o your transit trips per wwould you have taken by car?” The average response was 4 trips per week.a transit report showing that 30 automobile drivers shiting to transit can

savings worth between $0.15 and $1.73 per kilometer, and extrapolating tstudent population switching rom cars to transit, the study estimated theroadway costs to be $1,293,440.

In the City o Edmonton U-Pass Pilot Program Evaluation, it was estimatedCity also saved $49,536 per year in environmental costs. This gure was re

looking at how many car trips were avoided because o the U-Pass programestimated that riders annually helped eliminate over 1,981 tonnes o carb

rom the environment. Using the value o this level o tonnage on the carbmarket, it is valued at almost $50,000 per year. By reducing congestion and

overall carbon ootprint, the U-Pass program also increased the health andbeing o residents.

Sustained RidershipIn the survey conducted as part o the City o Edmonton U-Pass Pilot Prog

Evaluation, 50% o surveyed graduating students rom the two universitie

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Conclusion Cont’d

The City must take into consideration the savings and additional revenue thathave not been identied by OC Transpo in their cost-benet analysis o the U-Passprogram.

According to these calculations, the estimated net gain for the City of Ottawaand OC Transpo after ve years of the program will be between $9.68 millionand $21.85 million. It is acknowledged that these calculations involve the use o

estimates, although the estimates applied are generally conservative and severalsignicant cost saving areas have been omitted entirely rom the calculation. Whilediscussion on the use o estimates is warranted, alterations to the estimates are

unlikely to negate the considerable nancial benet o the program or the Cityo Ottawa. For instance, even i sustained ridership is removed entirely rom thecalculation, the City o Ottawa and OC Transpo still have a net gain ater ve years.

The students’ unions have already agreed to include annual increases o up to 2.5%in the membership reerenda questions that are required to continue the programin subsequent years. However, there is concern that signicant and immediateincreases to the initial price o $145 per term will lead to a substantial decrease in

support amongst students.

We look orward to working with OC Transpo representatives, the Transit Committee,

and City Councillors to nd the true value o the U-Pass or uture years in an efort tocreate a program that is both nancially sustainable or the City o Ottawa and ofersan attractive rate or students.

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Conclusion: Summary o Revenue Increasesand Cost Savings: Diference rom OC TranspProjected Loss o $3 Million in 2010-11 Base

Item 2010-11 2011-12 2012-13 2013-14 2014-15

Actual

Revenue

$133,781 - - - -

Projected

Enrolment

with 2.5%

annual

increase

- $322,141 $1,015,782 $1,683,821 $2,297,8

Gas Tax

Revenue*

- $797,820 $797,820 $797,820 $797,82

Probable

error in the

calculation

o Lost

Revenue

$947,838 $947,838 $947,838 $947,838 $947,83

Use o

Transers

(25%)

$375,976 $375,976 $375,976 $375,976 $375,97

Reduced

are media

costs

undetermined undetermined undetermined undetermined undeterm

Reduced

sales com-missions


Fare En-

orcement/

Unpaid

ares


Inrastruc-

ture Sav-

ings*

$450,000 $450,000 $450,000 $450,000 $450,00

Sustained

ridership

at 33% and

50%

- $716,280/

$1,933,392

$1,432,560/

$3,866,784

$2,148,840/

$5,800,176

$2,865,1

$7,733,5

Total: $1,907,595 $3,610,055-

$4,827,167

$4,831,988-

$7,266,212

$6,216,307-

$9,867,643

$7,546,

Net loss/

gain to Cityo Ottawa

and OC

Transpo us-

ing $145 perterm base

price

LOSS OF

$1,092,405

GAIN OF

$610,055-$1,827,167

GAIN OF

$2,019,976-$4,454,200

GAIN OF

$3,404,295-$7,055,631

GAIN O

$4,734,5$9,603,0

participating in the U-Pass program stated that they intended to continue usingpublic transit as their prime commuting option ater graduation. U-Pass participation

has been shown to build a culture o ridership amongst students that continues asstudents move into the city ’s workorce. The City o Edmonton estimated the value o building sustained ridership through the U-Pass program at $2,018,277 per year.

Other studies, such as Elizabeth Caitlin Cooper’s 2010 study o ormer U-Passholders at Simon Fraser University, ound that 53% o ormer U-Pass holders becamerequent transit users ater graduation and an additional 23% became occasional

users.

Between 2006 and 2010, Carleton University and the University o Ottawa have

graduated an average o 12,699 students per year. It has been estimated that at least

50%, or 6,350 graduates per year, stay within the Ottawa area2. I the survey resultsrom the City o Edmonton study were applied to the City o Ottawa’s U-Pass, 3,175

graduates would carry their ridership habits post-graduation. Based on OC Transpo’s2009 Fall Usage and Attitude Survey, which indicates 23% o Ottawa residents usetransit as their primary mode o travel, the 3,175 graduating transit users wouldrepresent an increase o approximately 1,714 riders who otherwise would not choose

transit as their primary mode o travel. I only 33% o graduates continued to usetransit as their primary mode o travel, the i ncrease would be 635 riders.

I all o the graduates who converted to transit purchased a monthly transit pass at$94.00 per month, it would result in signicant sustained are revenue as displayed inthe chart below.

Year of

Graduation

2011 2012 2013 2014

Estimate of

Graduates

Remaining in

Ottawa

6,350 12,700 19,050 25,400

Revenue

change if 23%

use transit as

primary mode

$0 $0 $0 $0

CumulativeRevenue

change if 33%

use transit as

primary mode

$716,280 $1,432,560 $2,148,840 $2,865,120

Cumulative

Revenue

change if 50%

use transit as

primary mode

$1,933,392 $3,866,784 $5,800,176 $7,733,568

2 The alumni departments estimate 53% (Carleton University) and 55% (University o Ottawa) o graduates stay within the greaterOttawa area.

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*These estimates are based on the 2010-11 base year. Enrolment projections or uture years have not been appliedestimates but will urther increase OC Transpo’s revenues.