Transforming Public Transportation Institutional and Business Models (2012)

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T R A N S I T C O O P E R A T I V E R E S E A R C H P R O G R A M TCRP REPORT 159 TRANSPORTAT ION RESEARCH BOARD WASHINGTON, D.C. 2012 www.TRB.org Research sponsored by the Federal Transit Administration in cooperation with the Transit Development Corporation Subscriber Categories Public Transportation • Administration and Management Transforming Public Transportation Institutional and Business Models Tamar Henkin Rob Padgette HigH Street ConSulting group Chevy Chase, MD I n c o n j u n c t i o n w i t h Sue Knapp Elizabeth Fetting KFH group Bethesda, MD Scott Baker AeCoM Arlington, VA Robert G. Stanley Washington, DC

TCRP REPORT 159 Project H-43 ISSN 1073-4872 ISBN 978-0-309-25869-2 Library of Congress Control Number 2012952621 © 2012 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA, FMCSA, FTA, or Transit Development Corporation endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The project that is the subject of this report was a part of the Transit Cooperative Research Program, conducted by the Transportation Research Board with the approval of the Governing Board of the National Research Council. The members of the technical panel selected to monitor this project and to review this report were chosen for their special competencies and with regard for appropriate balance. The report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the Governing Board of the National Research Council. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board, the National Research Council, or the program sponsors. The Transportation Research Board of the National Academies, the National Research Council, and the sponsors of the Transit Cooperative Research Program do not endorse products or manufacturers. Trade or manufacturers’ names appear herein solely because they are considered essential to the object of the report. TRANSIT COOPERATIVE RESEARCH PROGRAM The nation’s growth and the need to meet mobility, environmental, and energy objectives place demands on public transit systems. Current systems, some of which are old and in need of upgrading, must expand service area, increase service frequency, and improve efficiency to serve these demands. Research is necessary to solve operating problems, to adapt appropriate new technologies from other industries, and to intro- duce innovations into the transit industry. The Transit Cooperative Research Program (TCRP) serves as one of the principal means by which the transit industry can develop innovative near-term solutions to meet demands placed on it. The need for TCRP was originally identified in TRB Special Report 213—Research for Public Transit: New Directions, published in 1987 and based on a study sponsored by the Urban Mass Transportation Administration—now the Federal Transit Admin istration (FTA). A report by the American Public Transportation Association (APTA), Transportation 2000, also recognized the need for local, problem- solving research. TCRP, modeled after the longstanding and success- ful National Cooperative Highway Research Program, undertakes research and other technical activities in response to the needs of tran- sit service providers. The scope of TCRP includes a variety of transit research fields including planning, service configuration, equipment, facilities, operations, human resources, maintenance, policy, and administrative practices. TCRP was established under FTA sponsorship in July 1992. Pro- posed by the U.S. Department of Transportation, TCRP was autho- rized as part of the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA). On May 13, 1992, a memorandum agreement out- lining TCRP operating procedures was executed by the three cooper- ating organizations: FTA, the National Academies, acting through the Transportation Research Board (TRB); and the Transit Development Corporation, Inc. (TDC), a nonprofit educational and research orga- nization established by APTA. TDC is responsible for forming the independent governing board, designated as the TCRP Oversight and Project Selection (TOPS) Committee. Research problem statements for TCRP are solicited periodically but may be submitted to TRB by anyone at any time. It is the responsibility of the TOPS Committee to formulate the research program by identi- fying the highest priority projects. As part of the evaluation, the TOPS Committee defines funding levels and expected products. Once selected, each project is assigned to an expert panel, appointed by the Transportation Research Board. The panels prepare project state- ments (requests for proposals), select contractors, and provide techni- cal guidance and counsel throughout the life of the project. The process for developing research problem statements and selecting research agencies has been used by TRB in managing cooperative research pro- grams since 1962. As in other TRB activ ities, TCRP project panels serve voluntarily without com pensation. Because research cannot have the desired impact if products fail to reach the intended audience, special emphasis is placed on dissemi- nating TCRP results to the intended end users of the research: tran- sit agencies, service providers, and suppliers. TRB provides a series of research reports, syntheses of transit practice, and other support- ing material developed by TCRP research. APTA will arrange for workshops, training aids, field visits, and other activities to ensure that results are implemented by urban and rural transit industry practitioners. The TCRP provides a forum where transit agencies can cooperatively address common operational problems. The TCRP results support and complement other ongoing transit research and training programs. Published reports of the TRANSIT COOPERATIVE RESEARCH PROGRAM are available from: Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet at http://www.national-academies.org/trb/bookstore Printed in the United States of America

The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. On the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, on its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. The Transportation Research Board is one of six major divisions of the National Research Council. The mission of the Transporta- tion Research Board is to provide leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisciplinary, and multimodal. The Board’s varied activities annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individu- als interested in the development of transportation. www.TRB.org www.national-academies.org

C O O P E R A T I V E R E S E A R C H P R O G R A M S CRP STAFF FOR TCRP REPORT 159 Christopher W. Jenks, Director, Cooperative Research Programs Crawford F. Jencks, Deputy Director, Cooperative Research Programs Lawrence D. Goldstein, Senior Program Officer Anthony Avery, Senior Program Assistant Eileen P. Delaney, Director of Publications Ellen M. Chafee, Editor TCRP PROJECT H-43 PANEL Field of Policy and Planning Franklin L. Spielberg, Falls Church, VA (Chair) Debra W. Alexander, Capital Area Transportation Authority, Lansing, MI Andrew Bata, MTA, New York City Transit, New York, NY Stephen G. Bland, Port Authority of Allegheny County, Pittsburgh, PA Nat Bottigheimer, Princeton, NJ Robert I. Brownstein, New York, NY Robin Cody, SunRise Consulting, Concord, CA John W. Fuller, University of Iowa, Iowa City, IA Jerome M. Lutin, Holland, PA Amy Van Doren, Marin Transit, San Rafael, CA Doug Birnie, FTA Liaison Matthew Lesh, FTA Liaison Carolyn Jeskey, Community Transportation Association of America Liaison Petra Mollet, APTA Liaison

F O R E W O R D TCRP Report 159 provides an analysis of and strategy for defining and implementing transformative change in institutional and business models for operating and maintaining public transportation systems. It addresses a wide range of issues important to contin- ued efficient operations, including responding to the needs of affected customer markets, improving operating procedures, implementing effective capital asset management, carry- ing out long-term planning and mission definition, improving and expanding functional areas as well as expertise and technical skill sets of the workforce, identifying and improv- ing necessary business practices, identifying and implementing innovative funding mecha- nisms, implementing performance measures and improved governance models, identifying required organizational structures, and instituting effective area-wide collaborative prac- tices. The report identifies the components of transformative change and develops a sub- stantive typology to assist agencies in organizing and structuring an approach to defining and implementing components of productive change. The report further examines poten- tial consequences of change that should be considered by agencies or organizations contem- plating new institutional and business models. The analysis is based on a detailed case study approach that examines experience in 13 locations throughout the country and one in Canada, representing a diverse set of agen- cies with widely varying demographic and operational characteristics. These case studies are described in detail, and case study outcomes are used to help define what contributes to successful implementation. Each of the case studies describes background conditions and agency characteristics, type and nature of transformation undertaken, rationale for change, approaches to planning and infrastructure development, methods of community and agency collaboration and cooperation, outcomes and consequences of change, and lessons learned. The target audience for this study includes leaders who are seeking to transform public transportation organizations. Within transit agencies, the audience includes general man- agers, deputy general managers, and other senior leadership. Outside of transit agencies, the target audience includes political leaders, regional business leaders, leaders in partner transportation and planning agencies, and other key stakeholders that have the ability to influence the direction of public transportation. While public transportation organizations face tremendous variation in the markets they serve; in the modes in which they operate; and in how they are organized, governed, and financed; there are common change strategies that are beneficial within the diverse transit industry. This is a fundamental conclusion of this research. Based on the commonality of issues, what emerges is a process or strategy on how to plan, evaluate, and address the components of By Lawrence D. Goldstein Staff Officer Transportation Research Board

change, and how to coordinate and collaborate with a widely diverse audience on methods for achieving change in a beneficial way. A critical step in that process involves carrying out a concise self-assessment that begins the conversation with the broad range of affected agencies on how they might approach the complex and often controversial process of transformation. Another important conclusion of the research is that the most notable change efforts occurred within a context of strong collaboration with local and regional leaders. While internal agency leadership appears critical to success, the most successful agencies approached the transformation process by carrying out a broad coordination and collaboration effort involving many partners. In several cases, change was driven by leaders from outside of the transit agency. The research also highlights that change often takes an extended period of time and benefits from stable leadership through that extended process. This report serves as a roadmap for those seeking improved institutional and manage- rial models that assist public transportation agencies in addressing change in demand, change in institutional responsibilities, change in financing, and other critical evolutionary requirements. It is a complex process that requires a systematic approach bringing all those involved into the transformation process.

C O N T E N T S 1 Summary 9 Chapter 1 Introduction 9 1.1 Research Objective 9 1.2 Report Organization 10 Chapter 2 Defining Examples of Transformative Change 10 2.1 Types of Transformative Change 10 2.2 Scope of Transformative Change 11 2.3 Consequences of Transformative Change 11 2.4 Change Explored in Case Studies 15 Chapter 3 Drivers of Change Faced by the Transit Industry 15 3.1 External Forces for Change 17 3.2 Effect of External Drivers on a Diverse Transit Industry 18 3.3 Drivers of Change Among Agencies Studied 19 Chapter 4 Themes for Successful Change Strategies 19 4.1 Collaboration and Partnership Are Essential to Successful Change 20 4.2 Successful Change Requires a Clear Vision 21 4.3 Stable and Supportive Leadership Is Necessary to Support Change 21 4.4 An Effective Governance Structure Is Required for Fundamental Change 23 4.5 Change Requires Sufficient Internal and External Agency Resources 23 4.6 Targeted Workforce Development Supports Change 24 4.7 Change May Require Realignment of Agency Authority with Other Regional Agencies 24 4.8 Understanding the Risk of Failing to Change Supports Success 25 4.9 Summary 26 Chapter 5 Development of a Strategy for Fundamental Change 26 5.1 Recommended Actions for Implementing Fundamental Change 27 5.2 Agency Self-Assessment 28 5.3 Conclusion 29 References 30 Appendix Case Studies 31 Advance Transit, NH/VT 33 Capital Area Transportation Authority (CATA), Lansing, MI 36 Champaign-Urbana Mass Transit District (C-U MTD), Champaign-Urbana, IL 38 Charlotte Area Transit System (CATS), Charlotte, NC 42 Chittenden County Transportation Authority (CCTA), Burlington, VT 44 Metropolitan Transit System (MTS), San Diego, CA 47 Metropolitan Transportation Authority (MTA), New York, NY 49 Metro Transit, Minneapolis/Saint Paul, MN

53 Regional Transportation District (RTD), Denver, CO 56 San Francisco Municipal Transportation Agency (SFMTA), San Francisco, CA 59 Southeastern Pennsylvania Transportation Authority (SEPTA), Philadelphia, PA 62 TransLink, Vancouver, BC 64 Utah Transit Authority (UTA), Salt Lake City, UT 69 Washington State Department of Transportation, Public Transportation Division, “Travel Washington” Intercity and Rural Bus Program 72 List of Acronyms and Abbreviations