TO: KCATA Board of Commissioners

FROM: Frank White, III President/CEO

DATE: December 20, 2023

Response to Board Resolution to Seek New Funding and Review Possible Implementation of Fares

Background: At the July 2023 Board meeting, the KCATA Board of Commissioners approved a
Resolution of the Board of Commissioners to do the following:

1. The KCATA Board of Commissioners authorizes the KCATA CEO to

actively pursue and acquire new funding and revenue opportunities
from local, state, and federal governments, as well as private
entities where appropriate.
2. The KCATA Board of Commissioners instructs the KCATA CEO to
conduct a comprehensive study within 120 days and provide a
recommendation regarding the possible future implementation of
passenger fares for KCATA transportation services.

Discussion: President/CEO Frank White, III and Executive Staff formed the zero-fare task
force consisting of the Deputy CEO, COO and Chief Mobility & Strategy Officer,
as well as key KCATA staff as needed to conduct an analysis of potential funding
opportunities and a study regarding the re-implementation of fare collection.

The first authorization of the resolution asked for KCATA to pursue and acquire
new funding and revenue opportunities. This is an ongoing effort that has
included KCATA pursuing federal and state funding opportunities, which have
already resulted in substantive new funding from the State of Missouri.
Furthermore, KCATA through contractual partnerships have begun to develop
specific opportunities and economic impacts of investing in transit at a county-
by-county level KCATA’s economic development efforts have also begun to pave
a pathway towards generating new revenue from development fees. Lastly,
KCATA staff has begun to revisit former opportunities of partnering with
businesses, educational institutions, and other non-profit organizations to allow
for unique transportation accesses on the Iris service. In 2024, KCATA will
continue its efforts in evolving existing partnerships and developing new
partnerships to generate new revenues.

The second part of the resolution instructed the CEO to conduct a

comprehensive study within 120 days and provide a recommendation regarding
the possible future implementation of passenger fares. The Zero Fare Task Force
prepared a scope of work and selected Nelson/Nygaard to conduct a fare study
that included a financial analysis, study of policy considerations, and study of
current fare collection software & hardware solutions. A presentation of the

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 outcomes of this study are being provided today by Nelson/Nygaard. The
information gathered, analyzed and provided through this study illustrates the
robustness of implementing a fare system and identifies the key policy decisions
facing the Board should fares be reinstituted.

Upon review of the findings of the study, President/CEO Frank White, III and the
Executive Team recommend that KCATA develop a plan to reinstitute a fare
program that also provides opportunities to continue zero fare for constituents
with demonstrated needs while providing net revenue. Such a fare system
should be regional and coordinated with our stakeholders, partners, the public
and ATA employees.

The Board of Commissioners is asked to authorize the KCATA to prepare an

implementation plan during the first quarter of 2024 to reinstitute fares while
preserving zero fare options for those in need in 2025. The plan should
coordinate fare policies with regional partners, evaluates and coordinates fare
structures across all modes of services – fixed-route, Metro Flex, paratransit,
and on-demand services – and outline specifically detailed options of offering
fare collection solutions – hardware and software – throughout the KCATA and
RideKC system. The plan should include estimates of net revenue, capital costs
and identify and recommend Board policy items in order to be ready for
implementation in 2025.

Budget Impacts: The cost of developing an implementation plan via an extension of the current
contract with Nelson/Nygaard or another vendor is estimated to be $75,000.
Long term benefits will be quantified in the plan with estimates of new net
revenue to be generated beginning in 2025.

Review: Reviewed by Chief Mobility and Strategy Officer and internal task force.
Reviewed with ATU Union President.

Recommendation: It is recommended that the Board of Commissioners authorize the KCATA to

prepare an implementation plan during the first quarter of 2024 for reinstituting
a fare system in 2025 and that evaluates and coordinates fare policies with
regional partners, evaluates and coordinate fare structures across all modes of
services, and outlines specifically detailed options of offering fare collection
solutions throughout the KCATA and RideKC system.

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 FW/bs

Attachments Fare Study Report

Page 32 of 305
 KCATA Fare
Collection Study
Board Update

December 20, 2023

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 PROJECT OVERVIEW
Project Overview
1. Financial Analysis
§ Understand potential revenue
challenges driving decision to
re-evaluate fares
§ Estimate potential revenue if
fares are reinstated
– Based on 2019 fare
policies
– Incorporate free fares
for specific groups
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2. Policy Tradeoffs
§ Identify fare policy goals
§ Evaluate tradeoffs of potential
fare policy scenarios
– Alignment with goals
– Qualitative ridership &
revenue impacts
– Technology
requirements
– Peer agency experience
3. Fare Collection
Technology Options
§ Peer review of fare collection
technologies
§ Rough order of magnitude
cost estimates for up to three
technology solutions
§ Timeline for implementation
of new fare collection
technology
2
 PROJECT OVERVIEW

Project Schedule
Sept Oct Nov Dec
Task 0: Project Management & Administration Project Management & Coordination

Data Collection
Task 1: Financial Analysis
Analysis

Develop Goals & Scenarios

Task 2: Policy Tradeoffs

Task 3: Fare Collection Technology Options

Interviews & Cost Estimates

Task 4: Findings and Recommendations

Final Recommendations

Executive Policy Goals & Update to KCATA Board

Scenarios Workshop of Commissioners

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 Financial Analysis
Results

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 FINANCIAL ANALYSIS
Methodology
§ Goal: Develop an order of
magnitude fare revenue estimate
for KCATA if fares were to be
reinstated
§ Based on assumption that the 2019
fare policies and pass programs
would be reinstated
– Additional analysis considers impact
of new or revised policies, such as
low-income fares
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1. Industry standard fare
elasticities (impact of fares on
ridership)
2. Low and high total ridership
estimates
3. Used 2019 Average Fare per
Boarding for high and low
scenarios
4. Baseline high and low revenue
and ridership estimate
5
 FINANCIAL ANALYSIS

Summary of 2019 Fare Policies

2019 Fare Statistics

• Average fixed route fare per boarding: $0.64
($0.71 for all service)
• Total fare revenue: $8.8 Million
• Cost of fare collection: approx. $750K for the region

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6
 FINANCIAL ANALYSIS

Financial Modeling Results – Ridership & Revenue

§ Reinstating fares is forecast to

KCATA Ridership Forecasts
result in a 17% - 33% decrease 12,000,000
11,291,000

in ridership 10,000,000
9,410,000

– Forecast to result in lower ridership 8,000,000 7,527,000

than 2019 levels consistent with most 6,000,000 $0 $7.1

other transit agencies 4,000,000
$5.8 Million
Million
§ Reinstating fares is forecast to 2,000,000

generate $5.8 to $7.1 million of -

Current Fare Free Low Forecast with Fares High Forecast with Fares

unrestricted funds on an Fixed Route + Flex Freedom Paratransit

annual basis
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 FINANCIAL ANALYSIS

Financial Modeling Results Summary

Reduced ADA
paratransit
high estimate
Free Low Income operating costs
$7.1 Million Fare Program could save $1.8 to
could reduce $3.8 M
low estimate revenue by $0.8 to
$5.8 Million $1.2 M

§ Implementing a low-income fare program would

reduce revenue
§ Reduction in ADA paratransit trips could result in
operational cost savings
§ Additional considerations for capital and
ongoing maintenance costs of fare collection
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 Policy Considerations

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 POLICY TRADEOFFS

Peer Agencies Interviewed

1. Dayton RTA
o Fare: $2
o Cashless, rolling 31-day fare capping on mobile and smart card
o No additional discount programs besides the required senior & disabled half fare

2. Des Moines DART

o Fare: $1.75
o Extensive half fare program, including refugees, individuals receiving food, housing, or workforce assistance
o Mobile options, no smart card

3. Indianapolis IndyGo
o Fare: $1.75
o BRT, weekly fare capping on mobile and smart card (MyKey)
o High school students & veterans ride free with MyKey accounts

4. Milwaukee MCTS
o Fare: $2
o BRT, free streetcar, daily and monthly fare capping on mobile and smart card (WisGo newly launched)
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10
 POLICY TRADEOFFS

Key Policy Takeaways from Peer Agencies

• New fare technology projects provided an opportunity to simplify
fare structures
• Peer agencies are moving in a direction to minimize or eliminate
cash payments on the bus
• Community partnerships are opportunities to provide free or
reduced rides to passengers who need them while preserving
agency revenue for service
– Consider programs working with nonprofits, schools, businesses, or low-income housing

• Understand top agency priorities before selecting a technology

solution
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 FARE IMPLEMENTATION

Steps for Further Study

Preliminary Fare Collection Goals
1. Set agency objectives
– Formalize fare collection goals Ease of use
minimize friction for riders to limit ridership loss
2. Develop fare structure (tariff)

Public Outreach & Engagement

Preserve access
for all riders
– Conduct refined modeling
3. Define payment types & Promote affordability
for all riders
technology options
Sustainable revenue stream
4. Develop pass programs maintain or increase service

Technology solutions
5. Set fare collection & affordable, efficient operations, and passenger
options
enforcement procedures
RideKC Regional integration
– Considerations for BRT & paratransit one KC transit system

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12
 POLICY TRADEOFFS

Decisions to Set Fare Structure (tariff)

Single Ride*
Adult $A Set base fare, reduced-rate fare,
Reduced Half Fare $a and transfer policy
*Transfers free with electronic payment only
Day Pass
Adult $(2×A)
Example of passes priced based
Reduced Half Fare $(2×a)
on a fare multiplier compared
Monthly Pass to single ride (2× for day pass,
Adult $(32×A) 32× for monthly)
Reduced Half Fare $(32×a)
Paratransit** Example of paratransit fare
structure set at 2× fixed route
Freedom (ADA) $(2×A)
fare with free rides for ADA
Freedom On-Demand $5 first 5 miles, $2 each mile after
eligible on fixed route
**Paratransit fares on a per ride basis only – no transfers or day/monthly
passes, all ADA eligible passengers ride fixed route for free, personal care
attendants ride for free on Freedom
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 POLICY TRADEOFFS

Implementation Considerations
RideKC

Eligible Half Fare Regional

Iris Microtransit Cash
Riders Coordination

§ Federally required § Maintain current § Does KCATA want § Regional alignment

half fares: seniors, Iris fare structure or to consider going and reciprocity of
cash-free on Local fares consistent
people with disabilities, update?
and Medicare card with previous
holders § Fixed route fare for vehicles? agreement or expand
§ Consider half fare connecting trips or § If so, will need to to include all fares
charge a premium ensure technology including passes?
for additional
groups fare? system is accessible § Level of regional
§ Consider rates and addresses agreement required
§ Many agencies opportunities for for fare decisions
offer youth a half based on distance including free or
and zone unbanked
fare if not free reduced fares for key
groups?
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 POLICY TRADEOFFS
Pass Program Considerations
Bulk Discount Programs
§ Consider reinstating or modifying 2019 employer
and university pass programs
– Structured with a deep discount on a per pass cost
but must purchase for all students or employees
– Consider expanding similar programs to low-income
housing developments, healthcare providers, and
veterans
§ These programs rely on partner organizations to
manage much of the administration
§ Programs could result in significant and predictable
revenue for KCATA
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RideKC
Free or
Discount
KCATA Free or Reduced Fare Programs
§ Consider implementing a low-income fare free
program
§ Multiple decisions about the administration of an
income based free or discount fare program
including eligibility and verification requirements
§ These programs are often set up to complement
not replace free pass programs often administered
by social service organizations.
– Confirm if a typical social service program would
also be offered to provide discounted single ride,
day, or monthly passes to organizations that they
can sell or give to their customers
15
 Fare Collection Technology
Options & Timelines

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 TECHNOLOGY OPTIONS

Key Technology Takeaways from Peer Agencies

§ Fare capping is used as a strategy to reduce cash payments
– Provides flexibility for riders to pay as they go while getting the best value
– Most agencies are offering daily & monthly fare capping for passengers using mobile
accounts and smart cards, and will offer fare capping with open payments

§ Providing transfers only for passengers paying electronically is another

strategy to reduce cash payments
§ Agency card-based systems are the best practice as some individuals may not
have access to mobile or credit cards
– There is a push to implement pass programs on mobile as a strategy to reduce the cost of
providing smart cards

§ Define agency priorities before selecting a technology solution – tradeoffs will

likely have to be made due to costs
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 TECHNOLOGY OPTIONS

Fare Collection Technology Components

Milwaukee MCTS System –

Mobile Account or Smart
Card

DART full function farebox

Rendering of Dayton RTA Ticket Vending Machine

IndyGo Fare Validator on the bus

Simple farebox from Community
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 TECHNOLOGY OPTIONS

Approach 1: Phased Implementation

Refurbish current fareboxes or
procure simple fareboxes

Anticipated timeline to begin collecting

fares: 6 – 18 months

Begin collecting cash and visual

verification mobile payments Monitor mobile payment usage

Full system implementation

timeline could vary based on
KCATA priorities and needs for
Options
Procurement forfor
newprocurement
fare system,of upgraded fare collection system: new technology
1) newand/or
including card system cash fareboxes
new and mobile validators
2) newfareboxes
cash-collecting card and mobile system (no fareboxes), or
3) new cash fareboxes and a new card and mobile system

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 TECHNOLOGY OPTIONS

Approach 2: Full New System Implementation

Initiate procurement process

Maintain free
and new fare collection
fares
system specifications

Anticipated timeline to begin

collecting fares: up to 2 years for
Contract with vendor(s) to a full system implementation
Establish new fare
design and deliver new fare
policy
collection system

Implement
Implementnewnewfare
fare policy and new fare collection system
collection

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 TECHNOLOGY OPTIONS

Technology System Implementation Process

Agency priorities and fare policies defined prior to start of the implementation process

RFP Advertised
Vendor Contract Award

System
Proposal review including System development,
Systems requirements and Testing &
demonstrations and contract hardware manufacturing,
technical specifications Pilot
negotiations and installation
(3-5 months) Phase
(8-12 months) (6-9 months)
(6-9 months)

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 TECHNOLOGY OPTIONS

Fare Collection Costs

§ Fare collection equipment: approx. $2.5 - $6 Million investment
– One-time costs: Onboard mobile & card validators, cash fareboxes, ticket vending machines, back-end
portal
– Fare policy decisions should inform final requirements for the technology procurement

§ Fare collection system maintenance

– Typically, 5 -10% of farebox revenue goes into maintenance of fare collection system
– New technology results in a shift in how maintenance costs are spent
o less on cash handling and collection; more on software maintenance and credit card transaction fees

§ Increased staffing needs and responsibilities

– Systems maintenance technicians
– Accounting and marketing staff focused on fares including for the administration of any discount
programs

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 Conclusions & Next Steps

Page 55 of 305
 CONCLUSION

Benefits to KCATA of Reinstating Fares

§ Provide additional source of unrestricted revenue that could be
used for service or capital improvements
§ Anticipated operational cost savings for ADA paratransit
§ Potential to address issues related to loop riders who may ride the
bus seeking shelter or for other non-transportation reasons
§ Opportunity to provide free or reduced fares for those most in
need while supporting the notion that transit riders help cover the
cost of providing the service

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 RECOMMENDATION

Recommended Board Process for Next Steps

Board decision to further evaluate options for implementing fares

3–6-month business and policy decision making process

• Define fare structure, fare media, and pass programs
• Identify fare collection technology procurement needs aligned with priorities
• Develop agency staffing plan to support fare collection
• Work with FTA on process for Title VI equity analysis and conduct analysis
• Set agency fare collection and enforcement policies

Board approves structure, pass programs, collection and

enforcement policies, and sets date for fare collection to begin
• Additional board actions will be required to allocate budget and approve contracts
for fare related capital projects and staffing

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 Thank You

Lacy Bell
l.bell@nelsonnygaard.com

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