Board of Directors Regular Meeting Agenda


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Meeting Date: 01/27/2016  

SUBJECT MATTER:
Receive, consider and act upon a recommendation from the Ad Hoc Transportation Committee regarding a proposed Park and Ride fare increase and other financial matters related to the Park and Ride program;
FISCAL IMPACT:
To be determined/reference attached financial scenarios
BACKGROUND:
In 2013, the Board of Directors approved a $2.00/round trip fare increase for The Woodlands Park and Ride program.  The fare was increased from $10.00/round trip to $12.00/round trip, and was primarily in response to higher operating costs incurred with a new service provider (First Class Tours) as the previous provider went into bankruptcy.  Since 2012, service provider costs have increased from $4.4 million annually to $6.5 million in 2015.  Although financial analysis presented to the Board during 2013 indicated that a fare increase to $13.00/round trip may be necessary in 2015 to sustain the Park and Ride program, no other fare increases have been implemented since 2013.
 
On January 13, 2016, the Ad Hoc Transportation Committee considered a $1.00/round trip increase to the bus fare, which would bring the round trip fare to $13.00.  Financial analysis presented to the Committee showed that without a fare increase in 2016, sufficient revenue would not be generated by the Park and Ride program to reimburse the Township’s Capital Replacement Reserve for monies advanced from the reserve to pay for the Township’s share of purchased buses. As a reminder, the Board previously authorized the purchase of 25 buses for the Park and Ride program with approximately 80% of the funding to be provided by an H-GAC grant totaling $11,300,000 and the remaining funding to be provided by an advance of $3,275,000 from the Capital Reserve.  The total purchase price of all 25 buses is anticipated to be $14,575,000.
 
The purchase of buses will result in lower operating costs for the Park and Ride program as the current hourly operating rate for Township owned buses is $149.95 versus an hourly rate of $209.83 for contracted buses, excluding FTA grant funds.  However, sufficient net revenue must also be generated by the program initially to reimburse the Capital Reserve account for the monies borrowed to purchase the buses.  The Board previously directed that the reserve be reimbursed over a period not to exceed five years from net proceeds generated by the Park and Ride program. 
 
Due in part to an approximate 15% decrease in ridership, from 727,378 one-way passengers in 2013 to a projected 602,763 in 2016, current analysis indicates that a $1.00/round trip fare increase will not be sufficient by itself to generate enough revenue to fully repay the Capital Reserve within five years.  Therefore, the Transportation Committee considered alternative repayment periods, including seven years and ten years, in addition to the $1 fare increase. 
 
After reviewing current financial projections for the Park and Ride program, the Transportation Committee decided to make the following recommendations to the Township Board:
  • Increase the Park and Ride fare $1.00/round trip, from $12.00/round trip to $13.00/round trip, effective May 1, 2016.
  • Extend the period of time to reimburse the Capital Replacement Reserve from five years to 10 years.
  • To the extent the Park and Ride program generates revenue in excess of the amount needed to fully fund operating expenditures and to reimburse the Capital Reserve based on a ten year repayment schedule, use such excess revenue to reimburse the Capital Reserve more quickly than ten years.
  • Once the Capital Reserve is completely reimbursed, use any excess revenue generated by the Park and Ride program to establish a reserve within the Transportation Fund for the future replacement of buses (which have an expected useful life of 12 years).
 
The Park and Ride financial analysis presented to the Transportation Committee is attached for the Board’s review.  The first page of the attachment summarizes three scenarios, each assuming no fare increase in 2016, based on five year, seven year, and ten year repayment schedules for the Capital Replacement Reserve.  As highlighted in blue, these scenarios project that over the next five years the Park and Ride program would run cumulative deficits of $3.1 million (based on a five year repayment), $2.2 million (based on a seven year repayment), and $1.5 million (based on a ten year repayment) without a fare increase.
 
The second page of the attachment summarizes scenarios based on five year, seven year, and ten year repayment schedules, but also includes a $1/round trip fare increase implemented in May 2016.  As highlighted in blue, projections indicate the program would experience cumulative deficits of $1.7 million (based on a five year repayment) and $0.8 million (based on a seven year repayment), but would break even over the next five years assuming a ten year repayment schedule.
 
The remaining pages of the attachment are detailed five year plans for each of the six scenarios summarized above.
 
RECOMMENDATION:
Approve the Ad Hoc Transportation Committee recommendations: 
  • Propose a Park and Ride fare increase of $1.00/round trip, from $12.00/round trip to $13.00/round trip, effective May 1, 2016, after public comment
  • Extend the period of time to reimburse the Capital Replacement Reserve from five years to 10 years.
  • To the extent the Park and Ride program generates revenue in excess of the amount needed to fully fund operating expenditures and to reimburse the Capital Reserve based on a ten year repayment schedule, use such excess revenue to reimburse the Capital Reserve more quickly than ten years.
  • Once the Capital Reserve is completely reimbursed, use any excess revenue generated by the Park and Ride program to establish a reserve within the Transportation Fund for the future replacement of buses.
Attachments
Park and Ride Analysis


    

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