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SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
WG 3 Market Organisation
17-18 April, Leipzig, Germany3rd Working Group Meeting on
Innovative Funding and Financing of Public Transport
Part 1: Introduction
Martin Ruesch, Rapp Trans AG Zurich, Switzerland
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Contents
• SPUTNIC Partners in MO• Scope of the workshop / topics addressed • Self-introduction of participants• Objectives / expectations for the meeting• Questions to be discussed• Programme for the WG Meeting• “Communication Rules”• Validation of problems/challenges
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Profile Rapp Trans AG, Switzerland• Consulting company in traffic
and transport
• Established in 1896
• Private limited company basedin Switzerland
• Subsidiaries in France (Paris), UK (London) and theNetherlands (Amsterdam)
• Around 70 transport and trafficconsultants
• More Information: www.rapp.ch
• Services in public transport– Public transport network and
service planning– Planning of tariff and fare systems– Planning and design of tariff and
transportation associations– Development of revenue distribution
systems– Development of financing models– Tendering projects– Organisation models– Monitoring/Controlling projects– Institutional consulting (regulation,
etc.)
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Profile VTI, Stockholm, Sweden
www.vti.se• VTI, Statens väg- och transportforskningsinstitut, carries outapplied research in the fields of infrastructure, traffic and transport.
• State owned, 170 staff in four towns, turnover 20 M €,• Public Transport and its links to urban planning, retail patterns and regional
development• Several Light Rail projects for instance costs compared to other forms of
guided transport and buses • Competition and Tendering in the Transport Sector• New contract forms in the PT sector
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Profile VVO – Public Transport Authority of Upper Elbe Region
Halle
BautzenGörlitz
Dresden
Leipzig
Plauen
Zwickau
Chemnitz
•established in 1998•4.800 m²•1,2 Mio. inhabitants•194 Mio. passengers per year•16 PT operators
Halle
BautzenGörlitz
Dresden
Leipzig
Plauen
Zwickau
Chemnitz
•established in 1998•4.800 m²•1,2 Mio. inhabitants•194 Mio. passengers per year•16 PT operators
• One of 5 PTA´s in the State of Saxony
• Main tasks of VVO:– Integration of
several Public Transport modes
– Timetable integration
– Integration of tariff and fare system
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Challenges relating to Market Organisation
• Low integration between local and regional(and national) transport networks and services, in overall mobility and transport planning
• Missing integrated tariff and fare systems• Decreasing public ressources for public transport and
lack of funds to finance investments and operation• Low contribution of revenues to cost coverage• Low co-operation between PT companies• Unstable or unclear regulatory setting• Unclear division of responsiblities between actors in PT• Frequent political interference• Low implementation of quality and performance
monitoring• Few incentives for PT operators to cut costs and
increase revenues
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Adressed topics within Market Organisation
• Topic 1: Integration and Tariff Systems
• Topic 2: Institutional Framework and Cooperation
• Topic 3: Innovative Funding and Financing of Public Transport
• Topic 4: Incentive Contracts and Monitoring Systems
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Self Introduction of Participants
• Institution / Company• Position• Experiences relating to funding and financing• Interests / Expectations relating to funding and financing
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Scope: Terms Funding and Financing
• Financing of investments if the necessary funds are not available at the time needed, namely by recourse to “other people’s money” (loans etc.)
• Funding the setting-up and operation of the PT system on the whole
The workshop will deal with funding and financing of infrastructure and equipment (rolling stock, ticketing system etc.) as well as operation of urban public transport.
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Funding Sources: Direct Commercial Revenues
direct commercial revenues
fares other business
advertising
services
sale of products
premises & facilities
freight transport
• Fares from PT users (adressedin Barcelona Workshop)
• Other businesses– Advertising– Additionnal Services – Sale of products– Premises and facilities– Freight transport
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Funding Sources: Indirect Non-Commercial Revenuesindirect non-commercial revenues
generalbudgetary resources tax exemptions cross utility fiunding specific taxes and levies
earmarked for PT
compensationfor publicservice obligation
subsidies
fuel tax rebate
car users employers propertyowners
shopkeeperstrade
other industries
fuel tax
vehicle taxes
parking fees
road pricing
Employeestax Value capture supplement to
sales tax
tourism tax
etc.
Tax IncrementFinancing
general land value taxes
etc.
etc.corporate taxes
etc.
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Financing Infrastructure and Equipment
• Special purpose infrastructure funds providingextrafunds
• EU-funding: Structural and cohesion funds• Loans connected to guarantees and conditions from
– International Finance Institutions– European Bank for Reconstruction and Development (EBRD)– European Investment Bank (EIB)– World Bank
• Private Sources– Private bank loans– PPP– Private finance initiatives
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Objectives for the meeting
• To identify and validate main problems/challenges, trends and challenges in CEEC related to funding and financing of PT
• To exchange information, experiences and know how on funding and financing between CEEC and other European cities/urban areas
• To present and discuss good practices examplesfrom operators and authorities from CEEC and other European Countries
• To derive conclusions on challenges and need for action
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Important questions to be discussed• What are the most pressing problems with respect to funding and
financing PT?• What are the most promising alternative funding and financing
solutions in urban areas?• How to devise operators’ internal strategies for generating additional
revenues by offering additional services creating new market potential?
• How to tap additional sources of funds for PT?• How to lobby towards the government for more resources or indirect
support?• How to make use of all available financing possibilities?• What are the possibilities and risks of relying on International
Finance Institutions?• How to access EU funding?
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Programme: Day 1 14:15 – 15:00 Working Group Session Part 1: Introduction
Rapp Trans
Introduction by cluster leader - scope of the workshop / topics addressed - self-introduction of participants - Objectives / expectations for the meeting - Questions to be discussed - Programme for the WG Meeting - “Communication Rules” - main trends and challenges in CEEC / other countries - validation incl. statements from experts & discussion
15:00 – 18:00 Working Group Session Part 2: Opportunities and risks of creating additional commercial revenues
Rapp Trans
Introduction by VVO incl. results from inquiry
Presentation: The case of the Verkehrsbetriebe Zurich (VBZ) by Dieter Egger, Rapp Trans (to be confirmed)
Presentation: Creating additional commercial revenues - a bouquet of possibilities - some German cases by Arne Beck, BSL Management Consultants
Structured group discussion addressing the key questions
16:30 – 17:00 Coffee break
Presentation: Experiences from an international operator by Michel Quidort, Veolia
Structured group discussion addressing the key questions
Conclusions
20:00 Dinner
Target17:30!
Moderation: Martin Ruesch
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Programme: Day 2 (morning)9:30 – 12:30 Working Group Session Part 3: Financing issues
VTI
Introduction by VTI incl. results from inquiry
Presentation: Financing PT projects by the EBRD by Guido Bruggeman, independent transport consultant (former EBRD transport specialist)
Presentation: Financing by International Finance Institutions - the Sofia case by Metodi Avramov, Public Transport Company Sofia
Presentation: Financing PT projects by the EIB by Krzysztof Szyszko, European Investment Bank (EIB)
Structured group discussion
11:00 – 11:15 Coffee break
Presentation: Funding and financing solutions for urban PT in Madrid by Angeles Echevarria, Equipo de Técnicos en Transporte y Territorio S.A. (ETT)
Presentation: Equity finance and risk sharing via PPP - the Pforzheim case by Arne Beck, Metropolitan Consulting Group
Structured group discussion
Conclusions
12:30 – 13:30 Lunch
Moderation: Bertil Hylén
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Programme: Day 2 (afternoon)
Moderation: Dieter Egger
13:30 – 15:15 Working Group Session Part 4: alternative (non-commercial) sources for funding PT
Rapp Trans
Introduction by Rapp Trans incl. results from inquiry
Presentation: Land value capture in Copenhagen by Bertil Hylen, VTI
Presentation: PT funding examples from Switzerland - tourism tax and infrastructure funds by Martin Ruesch, Rapp Trans
Presentation: EU funding of PT by Sebastian Emig, UITP
Structured group discussion addressing the key questions
Conclusions
15:15 – 16:00 Working Group Session Part 5: Main findings & outlook
Rapp Trans
Conclusions and main findings
16:00 – 16:30 Coffee Break
16:30 – 17:30 Closing session (Plenary)
20:00 Dinner
Moderation: Martin Ruesch
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
„Communication Rules“
• Discussions are the main part of the working meeting
• Presentations feed the discussions: Keep to the maximum of 15 minutes for the presentation
• Try to keep the focus on the topic innovative funding and financing
• Statements and inputs from your experiences are very welcome
• Please do not use your mobile, blackberry or labtop during themeeting!
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Results of Questionnaire: Main Problems for Funding
• low fare revenues / cost coverage (6)– difficult to increase fares– declining patronage– demand for salary increase (costs)
• municipal budget (4)• no/little state aid (3)• little funds from region• no long term investment plan• lack of PT legislation (responsibilities)
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Results of Questionnaire: Main Problems for Financing
• lack of public resources (6)• limited possibilities for bank loans (4)
– duration of PSC too short– credit rating
• lack of operator’s reserves (2)• missing legal framework for PPP on local level• slow procedures with EU financing• lack of political support
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Main Trends and Problems• Growing welfare, car ownership, urban sprawl and individualisation
with complex patterns of activity tend to decrease PT patronage and thus the degree of cost coverage by passenger fares
• Public funds for PT are being cut back due to general budget restrictions in most European countries and cities. However, at present some local authorities in some MS experience a budget surplus thanks to the thriving economy in general.
• Indirect (external) beneficiaries (employers, landowners etc.) of PT will be growingly integrated into PT funding, thus internalising their external profits and relieving public budgets
• Growing liberalisation and competition might help to reduce costs and deficits
• Concern about the environment, policies of supporting PT and modal shift may increase acceptance of subsidies for PT
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Main Challenges• To create acceptance for the fact that in most cases fare revenues alone
cannot fund a PT system• To establish reliable and sustainable funding mechanisms for urban PT
enabling PT operators to work within fair framework conditions• The increasing constraints on public budgets have to be offset by innovative
financing models and alternative sources of revenues• To identify alternative ways to fund infrastructure and operation, e.g. by
identifying external beneficiaries of PT and by internalising their windfall profits
• To identify measures and options to generate additional revenues, e.g. by commercialising stations or other real estate assets or by applying new business models (advertising, freight transport etc.)
• To simplify funding structures (too many different PT funds hinder an efficient and integrating PT financing)
• To find ways and means to finance the urgent renewal of neglected infrastructure, equipment and creation of new services
• To identify alternative ways to finance infrastructure and equipment, such as Public Private Partnerships or loans by International Finance Institutions
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
WG 3 Market Organisation17-18 April, Leipzig, Germany
3rd Working meetingInnovative funding and financing of Public Transport
Part 2: Opportunities and risks of
creating additional commercial revenues
Martin Ruesch, Rapp Trans AG, Zurich, Switzerland
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Programme Part 2 (15:00 – 18:00)
• Introduction/Overview• Results from the Inquiry• Presentation by Mr. Dieter Egger, Rapp Trans• Presentation by Mr. Arne Beck, BSL Management
Consultants• Structured group discussion
Coffee break• Presentation by Mr. Michel Quidort, Veolia• Structured group discussion• Conclusions
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Introduction/Overview
Main challenges regarding additional commercial revenues:
• offsetting the increasing constraints of public budgets byalternative sources of revenues
• identifying measures and options to generate additional commercial revenues
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Introduction / Overview
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Introduction / Overview
direct commercial revenues
other businessFares
services
advertising
sale of products
freight transport
premises & facilities
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Advertising
• main supplementary source of income for PT operators in most European cities
• although the significance of this business varies largely:Paris 11% of totalrevenuesDublin it is only 1%
• “design” or “style” in line with the political correctnessof the PTO
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Renting/selling of premises and facilities
• use of premises and facilities by renting:– shops and offices– spaces for vending machines (e.g. at bus stops)– car parks
• leasing the right of way to use the infrastructure• leasing the right to communication companies in order to lay any
kind of transmission wires• Dublin: buildings are hosting telecommunication masts, fibre optic
cables are installed into railway track beds and overhead-lines are used to carry voice and data signals
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Providing additional servicesStockholm: • underground metro equipped with a
mobile phone network• access is rented to telecommunication
service • expanded to offer WiFi-Internet-access
in all bus-stop weather sheltersBucharest:• PT operators offer car services to third
parties (mechanic, electric, tin, dye work and vulcanisation)
Dresden:• DVB (PTO) offers Sightseeing-Tours by
bus
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Sale of products• use of the extensive distribution
network by selling additional goods• London underground ticket offices
also sell tickets for major tourist attractions
• merchandising using the image of public transport
• London underground name and symbol have a very strong brand association with London and many people choose to buy these items as a souvenir
• Sold items also include scrapped vehicles and station signs or old train seats that have been used for recycling into cushions
• Berlin’s PTO sells underwear bearing the names of metro stations
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Freight transport• Matkahuolto Group in Finland offers
freight services in connection with PT• making use of the company’s
comprehensive scheduled bus network
• on certain lines bus operators get more money from freight than from passenger transport
• removement of passenger seats to have more space for freight transport –in addition to the usual 10m³ luggage room
• some cities have also investigated freight transport to city centre stores by means of metro/light rail tunnels
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Results from the Inquiry
What kind of supplementary revenues are common in PT?
• Supplementary revenues range from 2 Mio. – 22 Mio. € per year (1 – 13 % of operational costs).
• Most common (5 out of 7 people) is advertising range from 0,6 Mio. – 12 Mio. € per year.
• Quite common (3-4 out of 7 people) are– Additional services (maintenance, building, energy)– Renting of premises/vehicles.
• Rare (1 out of 7 people) is selling of products.
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Results from the Inquiry
Supplementary revenues are contribute to the PT financing?• “Yes, it can contribute.” 57 %• “Yes, it should contribute.” 71 %
What are the main barriers for supplementary revenues?• Strategic reasons 86 %• Missing entrepreneurship 71 %• Legal obstacles 43 %• No market 14 %
SPUTNIC – Strategies for Public Transport in Citieshttp://www.sputnicproject.eu/
Strategies for Public Transport in Cities
Funded by the EU
Structure of group discussion
Most of the experts think, that supplementary – also commercial - revenues can contribute to PT financing.
• In which fields do you see still opportunities?• What are the strengths of PT with respect to additionnalservices?
• Where are the limits of commercial revenues?• Which risks are linked with the generation of commercial revenues?
• If the frame is optimal – Which maximum contribution commercial revenues could/should have?