Multi-Region Vanpool Incentive Program … · Stantec Consulting Services, Inc. UrbanTrans Consultants, Inc. ... This study included a best practices review of the top tier of existing

Multi-Region Vanpool Incentive Program Costs, Revenues & Business Plan

Tasks 5, 6 &7 Memo

November 2011

Vanasse Hangen Brustlin

with

Foursquare Integrated Transportation Planning McCollom Management

Stantec Consulting Services, Inc. UrbanTrans Consultants, Inc.

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Vanpool Incentive Program November 2011

Costs, Revenues, and Business Plan

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Introduction Vanpools are one of the most efficient forms of passenger transportation. The Federal Transit Administration (FTA) considers vanpools that meet certain requirements as public transportation. Data for these vanpools may be included in reports to the National Transit Database (NTD). At present, data for vanpools operating in the Washington DC metropolitan region and Northern Virginia are not reported to the NTD, and reporting vanpool data to the NTD would result in an increase in the allocation of FTA Section 5307 funds to the region. It is estimated that there are between 850 and 1,000 vanpools operating in the greater Washington, DC metropolitan region. This total makes our region one of the largest markets for vanpooling nationwide. Among the vanpool programs that report to the NTD, only a few vanpool programs (Los Angeles Metro and King County Metro in the Seattle, WA are among them) have more than 1,000 vans. Most of the vanpool programs across the nation that report data to the NTD are the result of public sector programs that provide direct financial support to participating vanpools. However, unlike the vanpool programs currently reporting to NTD, public sector involvement has not driven the growth of vanpooling in the Northern Virginia region. The large number of vans operating in this region emerged organically as commuters seeking alternative transportation options discovered vanpooling primarily by word-of-mouth. Unique to the region is the large number of entrepreneurs operating a single van or small fleets of up to around 40 vans. These small vanpool operations, collectively referred to as owner-operators, typically grew by offering vanpool service to employees of large federal agencies in the regional core, advertising open seats on their vans by posting flyers on workplace bulletin boards and making direct contact with individual potential new riders. Few of the owner-operators have had the resources to regularly access private employers to promote their vanpools to private employees. In addition to the region’s owner-operator community, a couple of larger vanpool leasing firms collectively have more than 200 vans in operation the greater Washington, DC metropolitan region. While these firms are able to more widely promote their services, there remain potential vanpool markets that have yet to be accessed that even these firms have not yet penetrated. In 2010, the Virginia Department of Rail and Public Transportation (DRPT), the Northern Virginia Transportation Commission (NVTC), and the George Washington Regional Commission (GWRC) commissioned a comprehensive study of the feasibility of creating a public vanpool program for Northern Virginia. Along with the Potomac and Rappahannock Transportation Commission (PRTC), this group (referred to throughout the study as the “management group”) oversaw the Northern Virginia Vanpool Incentive Program Study. This study included a best practices review of the top tier of existing vanpool programs nationwide and the analysis of a number of individual issues related to vanpools (NTD reporting, vanpool technology, participant subsidies, and insurance and indemnification). Following the conclusion of the study’s research phase, the management team decided to pursue the creation of a Northern Virginia Vanpool Incentive Program. This Northern Virginia Vanpool Incentive Program Business Plan is the final task of this study and sets the stage for program implementation. The Northern Virginia Vanpool Incentive Program will solicit the participation of the existing private vanpool operators, including the owner-operators and leasing firms, to provide the vanpool service; the program will provide the first unified, recognizable brand for vanpooling in this region. The program will utilize existing ridesharing outreach efforts across the region and build upon these with vanpool specific



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marketing efforts and a new vanpool-specific regional database. The Business Plan is structured on the premise that the program will also offer a vanpool fare buy-down for commuters not currently receiving transit benefits from their employers; it is anticipated that these efforts will result in an expansion of the number of vans operating in the region. The region will accrue additional federal formula funds as a result of reporting vanpool data to NTD. These funds will be sufficient to not only support the continued operation of the vanpool program but also to provide additional funding for other transportation needs. This business plan contains a detailed outline for the initiation and operation of the Northern Virginia Vanpool Incentive Program, focused on the first three years of the program’s operation. Once a program begins reporting to the National Transit Database, it can take as long as two years from the end of the fiscal year reported to receive the additional federal formula funding. Thus, this plan provides a projection of the startup capital and resources that will be required for the first two years of the program, program costs and revenues following the startup period, and a program staffing and management plan. The business plan was written with the assumption that when launched, the Vanpool Incentive Program will be cooperatively operated by agencies within Northern Virginia. Following a startup period, the program may be expanded to include Maryland jurisdictions and the District of Columbia. An expansion of the program beyond Northern Virginia may require additional staff, but likely would not change the overall management structure and incentive program as described in this business plan. At its launch, the Vanpool Incentive Program will serve vans that have an origin or destination in Northern Virginia.1

Strategic Plan Program Purpose Establishing a regional vanpool program for the greater Washington, DC metropolitan region has been a goal of regional stakeholders for more than a decade. This Northern Virginia Vanpool Incentive Program will bring together the current private providers of vanpool service and the public sector’s ridematching and demand management expertise and marketing to catalyze new growth in the vanpool market.

Program Goals and Objectives Goals and objectives of the regional vanpool program were created to provide an overarching operating framework for the Northern Virginia Vanpool Incentive Program. The goals and objectives are SMART, or Specific, Measurable, Achievable, Realistic, and Timely. The following are the goals and associated objectives for meeting these goals, as established by the Vanpool Incentive Program study management team: Goal 1. Increase vanpooling in the region. While the overall number of vanpools in the region is

currently estimated at 850 to 1,000, the potential to expand the vanpooling market and shift current Single Occupancy Vehicle (SOV) commuters to vanpooling remains.

1 For the purposes of the Vanpool Incentive Program, Northern Virginia includes the areas covered by the Northern

Virginia Regional Commission and the George Washington Regional Commission.



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Objectives:

Support vanpool growth by reducing costs for commuters.

Maintain competitive provision and pricing of vanpool services.

Keep program simple, easy to understand, and easy to market. Goal 2. Increase regional federal Urbanized Area Formula Program (5307) funding. Reporting

vanpool data through the National Transit Database (NTD) will increase the regional apportionment of federal formula funding for urbanized areas (“5307”). This increased federal funding will be used to support the vanpool program, while also generating additional funding to support regional transit.

Objectives:

Facilitate the timely and accurate reporting of NTD data.

Maintain a surplus of additional 5307 funding generated by the vanpool program to support broader regional transit needs.

Goal 3. Reduce traffic congestion during the peak travel periods. The population of the greater Washington, DC metropolitan area will grow by 30 percent, reaching 8.6 million, by the year 2030. Despite this increase in population, major highway capacity increases are becoming increasingly difficult and less desirable. Vanpooling will be one of the key strategies employed to manage demand on the region’s highways and major arterials.

Objectives:

Convert SOV commuters to vanpooling.

Reduce Vehicle Miles Traveled (VMT) through the program’s growth. Goal 4. Improve regional air quality by reducing SOV commute trips. The vanpool program will

contribute to improvements in regional air quality through the reduction of SOV commute trips.

Objective:

Continually increase the contribution of vanpool to air quality emissions reductions.

Performance Measures As a new program, the Northern Virginia Vanpool Incentive Program will need to demonstrate its effectiveness to ensure continued support and participation. On an annual basis, the program will produce a brief report outlining how it is achieving its goals and objectives. The set of performance measures outlined in Table 1 provide a quantitative method through which the program can track its progress. Performance measures were selected both on the basis of their ability to measure progress towards their associated goal and objective(s) and also on the availability of required data.



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Table 1 Performance Measures Goal Objectives Performance Measures Source

Goal 1. Increase vanpooling in the region.

Support vanpool growth by reducing costs for commuters.

Maintain competitive provision and pricing of vanpool services.

Keep program simple, easy to understand, and easy to market.

Number of new vanpools formed. Internal database. Application form for new vans will include a question asking whether the vanpool is newly formed or an existing vanpool.

Number of vans in the program. Internal database.

Proportion of regional vans participating in the program.

Estimate based on data from the American Community Survey on the number of vans operating in the region, and the number of vans participating in the program.

Customer satisfaction ratings. Annual participant survey.

Goal 2. Increase regional federal Urbanized Area Formula Program (5307) funding.

Facilitate the timely and accurate reporting of NTD data.

Maintain a surplus of additional 5307 funding generated by the vanpool program, to support broader regional transit needs.

Percent of monthly reporting forms turned in on time and within one month of being due.

Internal database.

Return on investment. Dollar value of additional 5307 generated not utilized by the vanpool program.

Goal 3. Reduce traffic congestion during the peak travel periods.

Convert SOV commuters to vanpooling.

Reduction in VMT associated with the program’s growth.

Number of former SOV commuters in the program.

Internal database. Application form includes a question that asks whether any of the van’s riders are converting from SOV use. Application for individual fare assistance includes a question asking for the applicant’s prior commute mode.

VMT reduction analysis. Internal calculation.

Goal 4. Improve regional air quality through reduced vehicle trips.

The vanpool program will contribute to improvements in regional air quality through the reduction of SOV commute trips.

Air quality impact analysis. Internal calculation.



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Program Description The Northern Virginia Vanpool Incentive Program will be a new unique regional initiative, a joint project of a group of participating transportation commissions and local transportation agencies. The program will be operated cooperatively by the participating organizations, hereafter termed the oversight team. Providing day-to-day management of the program will be a dedicated staff of two full-time employees. Existing staff focused on ridesharing at the oversight team organizations will work with the new Vanpool Incentive Program staff to continue to provide ridematching assistance to vanpools and to also provide other program assistance and advice on an as-needed basis. At a minimum this will include staff from GW RideConnect and PRTC OmniMatch, but could expand to include staff at other organizations that provide vanpools ridematching assistance as well. As a cooperative public-private program, the Northern Virginia Vanpool Incentive Program’s attraction of the participation of as many of the existing private vanpool firms as possible will be critical to the program’s early success. To do this, the program will provide a “program participation payment,” which can be used by van owners as compensation for the time it takes to compile and submit the required NTD data, to buy-down rider fares, or for other expenses, such as a down payment on a new van. The program will also offer a monthly fare buy-down subsidy to commuters not already receiving a transit benefit from their employer. The fare-buy down will encourage growth in vanpooling by bringing down the cost for the commuter; it should also appeal to van operators participating in the program, since lower fares would incent new riders to join. Any vanpool operator, regardless of whether they are an owner-operator or a leasing firm, whose vans met established minimum vehicle requirements and report van data for NTD by the established deadlines will be able to successfully participate in the Vanpool Incentive Program. The main functions of the Northern Virginia Vanpool Incentive Program will be to:

Issue an application form for existing vanpool operators interested in joining the program.

Enroll existing vans and vanpool passengers in the program.

Facilitate the creation of new vanpools and enrollment of new vanpools and vanpool passengers.

Manage the program marketing and branding activities.

Manage the online vanpool ridematching database, in conjunction with program partners, including GW RideConnect and PRTC OmniMatch.

Provide vanpool ridematching information from the Vanpool Incentive Program database to the regional Commuter Connections database.

Provide a data collection tool for vanpools to use for reporting.

Disburse program participation payments.

Disburse passenger fare buy-down subsidies.

Ensure that vendors meet all program requirements, including vehicle requirements and on-time data reporting.

Compile data and perform QA/QC for NTD data reporting.

Monitor and manage program finances on a monthly basis, providing updates to the program’s oversight team quarterly.

Manage all program contractors.

Own and provide as needed ADA accessible vans in the event that a mobility impaired commuter wishes to join a vanpool.



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During the two-year startup period, the program will focus on assisting as many of the existing vans as possible in joining the program, although not to the exclusion of new vanpools. Following the startup period, the program will focus more on increasing the number of vanpools in the region by emphasizing and facilitating new vanpool formation.

Organizational Plan

Introduction

The study team evaluated the core capacities of the study management team organizations and other regional organizations that could potentially play a role in the Vanpool Incentive Program. All of the organizations evaluated expressed an interest in participating in the program in some way, but indicated that should they house the vanpool program additional staff resources would be required. Throughout the course of the study the management team organizations also expressed their interest in maintaining the relationships that they have with the existing vanpools that they assist with ridematching and other services. Vanpools typically seek assistance from organizations operating within their home jurisdictions, and the organizations in these regions are best equipped to provide comprehensive one-on-one assistance. Thus, continuing these local relationships with existing vanpools, while establishing a regional incentive program emerged as the most appropriate and effective organizational structure. Ultimately, the study team and management team needed to define the following program elements:

What type of structure the Vanpool Incentive Program will have;

The appropriate fiscal agent for the program and the office space; and

The physical “home” of the program’s two full-time staff members.

Organizational Structure

After a review of the options available for creation of a new transit operation under Virginia law and discussion with the study management team, two possible organizational structures were considered in further detail. The first agency structure option explored in the Northern Virginia Vanpool Incentive Program study was to create a joint agency similar to the Virginia Railway Express (VRE) commuter rail. VRE is not an actual agency but a joint endeavor of PRTC and NVTC. However, the governing structure of VRE was deemed too complex for a Vanpool Incentive Program; unlike VRE, the vanpool program will not be making any large capital purchases or managing a large purchased transportation contract. Therefore, the study management group decided to establish the vanpool program as a cooperative “joint project” that consists of the interested agencies. The joint project will be formed through a memorandum of understanding among the interested commissions and local agencies. Representatives



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from these organizations would comprise the program oversight team, as described in the previous section. The oversight team would have the following responsibilities:

Hiring the Vanpool Incentive Program Director,

Meeting at least on a quarterly basis during the first two-year startup period of the program to monitor its progress.

Making changes to the program structure as necessary. For; for example, they would determine if additional staff need to be hired as the program expands.

Making decisions on contractor vendor awards for Vanpool Incentive Program services. Figure 1 is an organizational chart for the proposed structure for the Northern Virginia Vanpool Incentive Program. It includes two full-time employees, one senior and one junior, as well as a marketing contractor position, whose roles are discussed in detail in the Staffing Plan section. The blue boxes indicate staff and contractors of the Vanpool Incentive Program and the red boxes indicate staff of other agencies who will participate in operating the program.

The business plan recommends that Vanpool Incentive Program select a fiscal agent that operates existing transit service so that the Vanpool Incentive Program may utilize the NTD identification number (ID) of that agency rather than apply for its own. Since the Vanpool Incentive Program will not be its own agency, it cannot obtain an NTD ID. Among the existing study management team members, PRTC is the only organization operating existing transit service. While PRTC may make the most ideal fiscal agent at this time, the actual location of where the new program employees sit can be determined at a later date.

Figure 1 Program Staffing Plan

NVTC (NTD Assistance)

Other Regional Partners

Program Oversight

GW RideConnect

PRTC OmniMatch

Program Director

Marketing Contractor Program Associate



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Although NVTC does not work directly with existing vanpools, the Commission does have extensive expertise in NTD reporting. NVTC’s role in the new program, at a minimum, will include NTD collection and reporting assistance.

Staffing Plan The number of employees needed to operate a public vanpool program varies widely among vanpool programs across the country, due in part to the number of vanpools in the program and the variety of ways in which the programs are managed. The purchased transportation vanpool programs which are most similar to the Northern Virginia Vanpool Incentive Program require fewer public staff than directly operated vanpool programs. In purchased transportation programs many functions are handled entirely by the private providers, including insurance, vehicle acquisition and maintenance, and vanpool participant management (such as safety issues, driver training, and managing interpersonal issues). Los Angeles County MTA is most comparable in size and complexity to the planned Vanpool Incentive Program of Northern Virginia (with nearly 1,000 vanpools) and has only 2.5 FTEs, as well a few other financial and managerial staff members who assist on an as-needed basis to manage their program. An analysis of the tasks to be performed by the program and the amount of time need per task was performed. For a vanpool program with 400 participating vans (50% of the existing fleet), it was estimated that 2 FTEs (a program manager and one support staff) would be required to staff the program, plus an additional 1.3 FTEs for marketing. Rather than hiring more than three full-time employees, outsourcing some of the functions of the Vanpool Incentive Program could present a more effective staffing solution. Houston MTA’s STAR Regional Vanpool Program is administered by one Program Director, and the rest of the program is staffed by a marketing and program management contractor. An internal analysis of the outsourcing of Houston’s STAR Regional Vanpool revealed that it was no more and no less expensive than if Houston MTA had directly operated the vanpool program. However, by outsourcing the marketing and subsidy distribution tasks to a contractor(s), the Northern Virginia Vanpool Incentive Program can benefit from any specialized expertise that the contractor holds. A marketing-focused contractor may also have other connections with regional stakeholders that can be leveraged to disseminate vanpool information more widely. Selecting a contractor that has the ability to process a large number of payments efficiently may also be a significant benefit. Hiring a contractor(s) with a dedicated focus on marketing and subsidy distribution will also reduce the variety of tasks that the vanpool program staff are required to do and allow them to concentrate on overall program administration, NTD data collection, and processing new vans into the program. Alternatively, the program could hire approximately 1.5 FTEs to focus on marketing and program payments. Table 2 presents a revised staffing scenario that redistributes the marketing and subsidy distribution hours to a marketing contractor. By outsourcing these tasks, the vanpool program will need just two



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FTEs. Regional partners, GW RideConnect and PRTC OmniMatch, can assist with customer service functions, particularly with the intake of existing vanpools into the new regional vanpool program to manage the workload for a Vanpool Incentive Program managed by two FTEs. The introduction of a new vanpool-specific online ridematching database through the program will automate some aspects of vanpools ridematching that GW RideConnect and PRTC OmniMatch staff currently perform manually, allowing staff at these organizations more time to assist with the implementation of the Northern Virginia Vanpool Incentive Program. Table 2 Staffing Requirements, 600 Van Program – Monthly Hours by Task (Outsourced Marketing and Subsidy Distribution)

Program Associate Program Director Marketing Contractor

Subsidy Distribution 0 0 95

NTD Data Collection 104 83 0

Program Administration 5 27 0

Marketing 0 0 105

Customer Service 51 56 0

Hours per employee 179 166 200

FTE per month 1.1 1.0 1.3

Total FTE 3.3

The tasks of the Vanpool Incentive Program employees and contractor(s) are as follows:

Subsidy distribution includes the monthly disbursements for the program participation payment and the fare buy-down subsidy (see description below in the Program Costs section).

NTD data collection includes the compilation, verification and QA/QC of NTD data submitted by participating vans and vanpool operators.

Program administration, which includes human resource functions, the payment of staff wages, payment of agency bills, addressing legal issues and other similar actions, as well as management of any program contractors.

Marketing

Customer service includes responding to general questions and concerns from vanpool operators, as well as assisting with enrolling new vans in the program.



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In planning for program growth to manage the demands on Northern Virginia Vanpool program staff, a near-term next step is to create a part-time Program Assistant position, working on NTD data collection and customer service. In the staffing scenario shown in Table 3, the Program Director’s customer service work will be largely reassigned to the Program Assistant; the customer service hours will be replaced by a an increased number of hours for program administration. The Program Director may need additional hours for program administration to work with the Marketing Contractor and any other future program contractors. This enhanced staffing scenario will not be necessary at the outset of the program; therefore the Program Assistant position is considered a near-term option, not included in the costs within this Business Plan. Table 3 Staffing Requirements, 600 Van Program – Hours by Task (Outsourced Marketing and Subsidy Distribution, Additional Assistant for Program Growth)

Program Assistant

(Optional)

Program Associate Program Director Marketing Contractor

Subsidy Distribution 0 0 0 95

NTD Data Collection 30 104 83 0

Program Administration

0 5 52 0

Marketing 0 0 0 105

Customer Service 50 51 25 0

Hours per employee 80 160 160 200

FTE per month 0.5 1.0 1.0 1.3

Total FTE 3.8

Contracts and Participant Agreements Vanpool operators desiring to participate in the Northern Virginia Vanpool Incentive Program will need to complete a two-step application process. The program will first issue an application form via a Request for Qualifications (RFQ), similar in nature to the RFQ issued by the Los Angeles MTA for their vanpool program. Interested vendors will respond to the RFQ with a completed application, including information about their vanpools operation such as how their operation is incorporated (non-profit, LLC, corporation), and other pertinent information. Once a vanpool operator is qualified to participate in the program, then individual participant agreements will be signed. Upon approval of the program application, van owner-operators and individuals leasing vans from vanpool leasing firms will then need to sign a program participant agreement. In this agreement, the owner-operators will consent to provide all of the required NTD data on-time and to the established program rules (Americans with Disabilities Act (ADA), vehicle age, minimum insurance, etc.). These agreements will include details on the vans that the vendor is proposing will participate in the program, including their age and the number of subscribed riders. The participant agreement signed by a vanpool lessor will be the same as that signed by vanpool owner-operators, but the responsibility for on-time



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NTD data reporting and adhering to the established rules is with the individual leasing the van rather than the van owner. Payments for on-time data reporting will go directly to the van owner-operator or lessor. Non-compliance with the program rules, failure to report NTD data on-time, and violation of the participant agreement will be grounds to dismiss a participating vendor or van from the Vanpool Incentive Program. Finally, individuals riding in vans in the Vanpools Incentive Program will need to a sign an “Individual Vanpooler Agreement.” On this agreement, individuals will be asked to provide their home and work contact information. This information will be used to confirm that the person is an actual rider. The program may also use this contact information to issue annual surveys to vanpool riders. The Individual Vanpooler Agreement will ask if the individual is receiving any commuter transit benefit, and if so, the amount of the benefit. For individuals requesting fare subsidy assistance from the Northern Virginia Vanpool Incentive Program, program staff will contact the individual’s employer to confirm that they are not already receiving any form of transit benefit. Individual participants will agree to report to the vanpool program when they leave the vanpool. They will also agree to notify the program if their commuter benefit status changes.

Program Rules Basic program rules, or terms and conditions, will be included in the participation agreement. All vans participating in the program must commit to comply with the following rules. This list of program rules may be expanded prior to actual program launch:

Vans must maintain a minimum of seven subscribed riders to enroll and remain in the Vanpool Incentive Program.

Van must maintain a minimum average daily occupancy of 70 percent.

Monthly on-time reporting of NTD required data is required. On-time means reporting the monthly data by the 15th day of the next month (e.g., February 15 for January data). Participants that consistently fail to report on-time will be dismissed from the program.

Vans must commit to non-discrimination of passengers on the basis of: race, sex, religion, national origin, age, income, and disability (ADA). Should a passenger with a physical disability express a desire to join an existing van, the Vanpool Incentive Program would provide a lift-equipped van for that vanpool.

Participants must maintain vehicles that are in safe, good working order. In the longer term, the vans will need to have a maximum age of seven years and no more than 200,000 miles. A sliding vehicle maximum age requirement will be implemented for the program start-up period in which initially ten-year old vans with less than 300,000 miles will be permitted to participate.

Indemnification of the Vanpool Incentive Program and all of the participating public agencies and transportation commissions.

Invalid use of the vanpool program, including misrepresentation of the program or inappropriate use of program affiliation, is prohibited.



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Implementation Timeline Using this Business Plan, along with the other reports developed during this study, the program is ready to begin initial startup work immediately. However , the uncertainty surrounding the federal subsidy continuation in 2012 and the need to identify startup funding makes a full go-live date of January 2013 more realistic, with the program beginning to incur administrative and marketing costs in July 2012. The anticipation is that the full-time employees of the program, along with the marketing contractor, will be hired and ready to work beginning in July 2012. July through December of 2012 will be used to implement the marketing plan, develop the necessary software for ridematching and data collection, and sign vanpools up for program participation.

Key Startup Tasks

Pre Program Staff Hire Tasks

In order to be ready for a January launch of the data collection element of the program, staff of the existing agencies, through the management team, will need to make the following hires and selections:

1. Hire one program director and one program associate.

2. Develop and issue an RFP and select a firm or firms for final development and implementation of a marketing plan and for distribution of subsidy.

3. Develop and issue an RFP and select a firm or firms for development and implementation of both technology elements of the program (data collection and ridematching).

Program Staff Tasks

The key tasks for the program staff and selected marketing and subsidy distribution contractor(s) are:

1. Work with data collection technology firm(s) to ensure the technology is designed to meet the

program needs and is delivered on-time.

2. Work with marketing contractor to develop and implement outreach plan for attracting existing

vanpools to the program.

3. Develop and issue an RFQ with application form for vanpool owner-operators, lessors, and

vanpool participants to join the program.

4. Develop agreements for owner-operators, vanpool lessors, and vanpool participants. Include

contractual requirements but also information to be able to measure mode shift.

5. Determine additional incentives for program participants, e.g., discounted maintenance and fuel

(including gas card for tracking purchases).



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6. Begin outreach to existing vanpool operators to educate them about the new program, in

conjunction with local ridesharing staff.

Program Costs

Assumptions

Based on data derived from the American Community Survey and information from MWCOG, PRTC, and GWRC, the number of vanpools having an origin, destination, or pass through the areas of interest – generally the areas served by NVTC, PRTC and GWRC – there are currently approximately 800 vanpools operating in Northern Virginia. Using the 800 vans as a starting point, the program costs were developed for two possible scenarios, as shown in Table 4. All cost and revenue calculations in this section are in constant, FY 2012 dollars. Because of the uncertainty about whether the current federal transit benefit will continue to be offered, several scenarios were created to reflect the possibility that some form of subsidy remains or that the subsidy goes away entirely. Scenario 1A assumes that a federal transit benefit of up to $230 per month remains, that vanpools receive a “program participation payment,” and the vanpool riders who do not already receive a subsidy through their employer receive a fare buy-down. Scenario 2A assumes the federal subsidy goes away and that vanpools continue to receive a “program participation payment;” however the rider subsidy does not remain, as the cost to subsidize those not already receiving a subsidy would become too high if the federal transit subsidy no longer existed. For both of these scenarios, a sensitivity analysis is shown to demonstrate the impacts on costs and revenues if participation were to increase to 75%. The sensitivity tests are referred to as Scenarios 1B and 2B. Table 4 Program Cost Scenarios

Scenario Vanpool

Participation Rate

Federal Transit

Subsidy Status

Payment for

Data Collection

Passenger Fare Buy-Down

1A 50% Remains Yes ($200/van) Yes ($50/unsubsidized

passenger)

2A 50% Goes Away Yes ($200/van) No

Subsidy Program

There are potentially two components of a subsidy program for incenting vanpool owner-operators, lessors, and vanpoolers to participate in the Vanpool Incentive Program:

1) Program Participation Payment, and 2) Subsidy/fare buy-down for passengers.

For Scenario 1A, the subsidy program is indeed composed of these two payments: each vanpool receives a monthly payment of $200 for participation in the program plus $50 per passenger not already



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receiving a transit subsidy. That $50 per passenger payment will be paid to the vanpool owner or lessor but will be passed on to the passenger. Based on survey results of existing vanpool participants, it is assumed that, on average, there are three unsubsidized passengers per van, resulting in a $150 fare buy-down per van. This results in an average per-van subsidy of $350, recognizing that for vans with a higher number of unsubsidized riders, i.e., non-federal workers, the total payment will be much higher. After the total number of vans participating in the program exceeds the current regional fleet total of 800, it is assumed that all additional participating vans will be new vans formed to take advantage of the Vanpool Incentive Program. As a result, for each van over and above 800 it is assumed to be comprised of new vanpool riders not receiving an employer transit subsidy. For all of these vans it is estimated that the cost would be $700 per van, $500 total for per passenger payments and $200 for program participation. Note that this payment scheme only applies to the sensitivity tests, as in the baseline scenarios of 50% participation, the participation does not reach 800 vans in the five year time period. For Scenario 2A, the subsidy program is composed of a flat payment of $200 per van for program participation only.

Administrative Costs The administrative costs of the Vanpool Incentive Program include staff costs for the program itself, costs incurred by existing ridematching staff at PRTC and GWRC, and cost of for the marketing contractor who will cover the marketing and subsidy distribution aspects of the program. Based on estimates of time required for distribution of subsidies, collection of data, ridematching, and administrative functions, the program staff assumes one FTE for a program director and one FTE for a Program Associate, as described above. The annual administrative costs consist of program staff ($204,000), existing ridematching staff ($100,000), and the marketing/subsidy distribution contract(s) ($151,200).

Marketing Costs In addition to the marketing contractor, there will be additional annual marketing expenses of $300,000 per year for the purchase of collateral material and media buys.



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Technology Costs Starting the Vanpool Incentive Program will necessitate two major technology investments: 1) a ridematching website and associated back-end database, and 2) NTD data collection technology, including data entry applications and the back-end database. Development of the ridematching website and database will require detailed design, including a technology requirements definition. It is estimated that this will cost approximately $100,000 initially. In addition, $10,000 is programmed every two years for any necessary software upgrades. The NTD data collection technology includes the development of software for vanpool owner-operators and lessors to use for reporting required ridership, mileage, and cost information. It also includes the development of a back-end database that the Vanpool Incentive Program staff will use to review the data submitted and export it into NTD-ready format. It is anticipated that the data collection software will be available to users via a web interface and Smart Phone applications. It is estimated that this will cost $50,000.

Program Revenues 5307 Revenues Once the Vanpool Incentive Program has been operational for two years, 5307 apportionments will become available for funding the program; additional revenues above program costs will be allocated to the program partners as decided upon in the allocation formula. As quickly as the first full fiscal year of service (July 2013 – June 2014), all costs are recouped on an accrual basis (i.e., not received until later). Once the program has been up and running for two and one-half years, 5307 funding received no later than June of each year will exceed the following fiscal year’s program costs.

Startup Funding As the 5307 revenues generated by the program will not be available for the first several years of the program, the Vanpool Incentive Program will need to identify funding for the start-up period. One option is for The Northern Virginia Transportation Authority (NVTA) to set aside $200,000 in CMAQ funds for program startup, and the Fredericksburg Area Metropolitan Planning Organization (FAMPO) to set aside $200,000. This $400,000 will cover part of the cost of the initial start-up period of July through December, before the program goes “live,” but not the full operating costs needed for the program until the 5307 revenues become available. In total (including the $400,000 for the organizational period), the following are the startup costs needed before the 5307 revenues are received (assumed to be June 2015) to directly fund program operations:

Scenario 1A (Federal Subsidy Remains, 50% participation): $6,793,317



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Scenario 2B (Federal Subsidy Goes Away, 50% participation): $4,824,067

If the program is very successful and participation increases from 50% of all vanpools to 75% of all vanpools, the startup costs for the scenario where federal subsidy remains will increase by $2,629,200 to $10,288,013. If the federal subsidy goes away and participation increases from 50% to 75%, the startup costs will increase by $1,502,400 to $6,895,963.

Program Costs and Revenues – Six Year Plan

Table 5 shows the overall assumptions for costs and revenues that have been worked into the two

cost/revenue scenarios developed for this business plan.

Table 5 Basic Assumptions for Vanpool Program Costs and Revenues

Assumptions

Operating Days per Month1 21

Number of Existing Vanpools 800

Percent of Existing Vanpools 50%

Percent of Existing Vanpools 75%

Number Daily People Riding/VP2 7

Number of Subscribed People/VP 10

Average One-Way Vanpool Distance 40

Percent Subscribed People Unsubsidized3 30%

Percent Subscribed People Unsubsidized 100%

Monthly Data Payment/VP $200

Monthly Subsidy for Unsubsidized People $50

Passenger Fare Reduction (Up to 50% Van Cost) $350

Vanpool Annual Growth Rate 10.0%

Vanpool Monthly Growth Rate 0.797%

Salary FTE Manager $87,400

Salary FTE Support $48,600

Number FTE Support 1.0

Benefits as % of Salary 50%

Total Cost of FTEs $204,000

Total Monthly Cost of FTEs $17,000

Existing Rideshare Staff Time Charged4 $100,000

Marketing Contractor Outlays5 $151,200

Total Administration Costs6 $455,200

Monthly Administration Costs $37,933

Annual Marketing Expenses $300,000

Monthly Marketing Expenses $25,000

VP Operating Cost /VRM7 $0.45

Section 5307 UZA $/VRM8 $0.42

Notes: 1. Operating days per month based on common industry practice.

2. Figures for daily vanpool riders and subscribers pulled from Census Transportation Planning Package and agency data.

3. Percent of subscribers who don't receive a subsidy to ride is based on survey information conducted for this project and previous vanpool surveys.

4. Existing rideshare staff time charged consists of 50% of staff time for all OmniRide and GW RideConnect staff.

5. Marketing contractor outlays based on the amount of time needed to administer the marketing program and distribute the subsidy. 6. Costs associated with administration and operating the vanpool program (staff and marketing) pulled from industry standards

7. Value for vanpool operating cost per vehicle revenue-mile estimated from NTD data associated with other vanpool programs.

8. Figures associated with 5307 funding and incentives pulled from the FY2010 FTA apportionments

9. All costs are shown as constant FY2012 dollars.



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Section 5307 Bus Incentive $ $0.01

Number of Vanpools and Participants

The number of vans in the program and the number of participants are based on an initial capture rate of 50% of the existing 800 vans. In addition to the initial 400 vans, the number of vanpools is assumed to grow at 10% per year, resulting in a total vanpool participating of 624 by the end of the five year plan period. These growth numbers are conservative based on the assumption that the federal transit benefit continues. While the removal or reduction of that benefit will impact vanpool participation and transit ridership, it is impossible to say how the change will impact the use of vanpools, as in most cases switching to another mode of travel will cost more out-of-pocket than paying the full fare for the vanpool.

Overall Costs and Revenues

Tables 6 and 7 show the costs and revenues by quarter for each baseline scenario. These tables do not

represent a pro forma cash flow, but rather costs incurred by quarter and revenues earned by quarter.



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Table 6 Total Costs and Revenues by Quarter – Scenario 1A (50% Participation, Federal Subsidy Remains)

FY13 FY14 FY15 FY16 FY17

July 2012 through June 2013





Vanpools

Revenue Miles 4,112,640 8,841,840 9,723,840 10,696,560 11,763,360

Passenger Miles 28,788,480 61,892,880 68,066,880 74,875,920 82,343,520

Operating Cost (NTD) $1,850,688 $3,978,828 $4,375,728 $4,813,452 $5,293,512

Monthly Payment $489,600 $1,052,600 $1,157,600 $1,273,400 $1,400,400

Rider Subsidy $367,200 $789,450 $868,200 $955,050 $1,050,300

Administration $329,600 $455,200 $455,200 $455,200 $455,200

Marketing $298,000 $300,000 $300,000 $300,000 $300,000

Reporting Technology $50,000 $0 $10,000 $0 $10,000

Ridematching Technology $100,000 $0 $10,000 $0 $10,000

Cost $1,634,400 $2,597,250 $2,801,000 $2,983,650 $3,225,900

FTA Revenue Miles Apportionment

$1,733,996 $3,727,950 $4,099,824 $4,509,948 $4,959,739

FTA Incentive Apportionment $517,200 $1,139,648 $1,257,698 $1,389,158 $1,533,836

FTA Total Apportionment $2,251,196 $4,867,598 $5,357,522 $5,899,106 $6,493,575

Funding Difference (Accrual) $616,796 $2,270,348 $2,556,522 $2,915,456 $3,267,675



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Table 7 Total Costs and Revenues by Quarter – Scenario 2A (50% Participation, Federal Subsidy Goes Away)

FY13 FY14 FY15 FY16 FY17






Vanpools

Revenue Miles 4,112,640 8,841,840 9,723,840 10,696,560 11,763,360

Passenger Miles 28,788,480 61,892,880 68,066,880 74,875,920 82,343,520

Operating Cost (NTD) $1,850,688 $3,978,828 $4,375,728 $4,813,452 $5,293,512

Monthly Payment $489,600 $1,052,600 $1,157,600 $1,273,400 $1,400,400

Rider Subsidy $0 $0 $0 $0 $0

Administration $329,600 $455,200 $455,200 $455,200 $455,200

Marketing $298,000 $300,000 $300,000 $300,000 $300,000

Reporting Technology $50,000 $0 $0 $0 $0

Ridematching Technology $100,000 $0 $10,000 $0 $10,000

Cost $1,267,200 $1,807,800 $1,922,800 $2,028,600 $2,165,600

FTA Revenue Miles Apportionment

$1,733,996 $3,727,950 $4,099,824 $4,509,948 $4,959,739

FTA Incentive Apportionment $520,924 $1,148,225 $1,267,359 $1,399,810 $1,545,839

FTA Total Apportionment $2,254,920 $4,876,175 $5,367,183 $5,909,758 $6,505,578

Funding Difference (Accrual) $987,720 $3,068,375 $3,444,383 $3,881,158 $4,339,978



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Pro Forma Cash Flow Table 8 shows the cash flow for both scenarios; positive numbers in the balance row indicate a surplus and negative numbers indicate a deficit. It is anticipated that the balance will be filled through CMAQ, RSTP, and other grant funding. Table 8 Pro Forma Cash Flow for All Scenarios

The following charts and tables show the costs and revenues received on an accrual basis, the cumulative dollar amount needed to fund

program startup before FTA payment, and the cost breakdown for Scenarios 1A and 2A. It also shows the sensitivity of Scenarios 1B and 2B in

terms of the change in startup funding required if participation increases from 50% to 75% of existing vanpools. The total amount of funding

needed to fund the program in advance of receipt of FTA funds is $6.79 million in Scenario 1A and $4.82 million in Scenario 2A. In Scenario 1A,

the amount of FTA funds received in June 2015 to fund FY 2016 (starting July 2015) will not be sufficient to cover the full year worth of costs; the

funds will be drawn dawn at the end of February 2016, requiring “gap funding” in March – May 2016. The amounts needed on an annual basis

are shown in the tables under the header “Annual Cost vs. FTA Revenue Realized Two Years Later.” Note that the FTA payment is assumed to

arrive on June 1 of each year.

Jul - Dec 2012 (Startup Period)

Jan - Mar 2013

Apr - Jun 2013

Jul - Sep 2013

Oct - Dec 2013

Jan - Mar 2014

Apr - Jun 2014

Jul 2014 - Jun 2015

Jul 2015 - Jun 2016

Jul 2016 - Jun 2017

Scenario 1A

Costs $400,000 $611,950 $622,450 $632,950 $643,800 $654,650 $665,850 $2,801,000 $2,983,650 $3,225,900

5307 Revenues $0 $0 $0 $0 $0 $0 $0 $2,251,196 $4,867,598 $5,357,522

Difference -$400,000 -$611,950 -$622,450 -$632,950 -$643,800 -$654,650 -$665,850 -$549,804 $1,883,948 $2,131,622

Scenario 2A

Costs $400,000 $430,600 $436,600 $442,600 $448,800 $455,000 $461,400 $1,912,800 $2,028,600 $2,155,600

5307 Revenues $0 $0 $0 $0 $0 $0 $0 $2,254,920 $4,876,175 $5,367,183

Difference -$400,000 -$430,600 -$436,600 -$442,600 -$448,800 -$455,000 -$461,400 $342,120 $2,847,575 $3,211,583



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Scenario 1A – Annual Cost vs. FTA Revenue Realized Two Years Later

FTA Revenue is distributed approximately two years after each fiscal year. Percentage reflects return on investment for each year’s grant funding (realized approximately two years later upon FTA payment).

Fiscal Year Costs FTA Revenue ROI

2013 $1.63M $2.25M 38%

2014 $2.60 $4.87 87%

2015 $2.80 $5.36 91%

2016 $2.98 $5.90 98%

2017 $3.23 $6.49 101%

Scenario 1A - Cumulative Start Up Funding Needed and Net Cash Position

Cumulative Funding Needs = $6.79 million Gap Funding Needs = $0.71 million

Profit is a function of the net offset of FTA Revenue

received and costs incurred in each fiscal year.



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Scenario 1A – Cost Breakdown (in thousands of $) Fiscal Year ‘13 ’14 ‘15 ‘16 ‘17

Monthly Payment

$490 $1,053 $1,158 $1,273 $1,400

Rider Subsidy $367 $798 $868 $955 $1,050

Admin $330 $455 $455 $455 $455

Marketing $298 $300 $300 $300 $300

Reporting Technology

$50 -- $10 -- $10

Ridematching Technology

$100 -- $10 -- $10

TOTAL COST $1,634 $2,597 $2,801 $2,984 $3,226

Scenario 1A vs. 1B (50% vs. 75% Participation)

Cumulative Grant Requirement

Scenario 1A Scenario 1B

$6.79 million $9.07 million



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Scenario 2A – Annual Cost vs. FTA Revenue Realized Two Years Later

FTA Revenue is distributed approximately two years after each fiscal year. Percentage reflects return on investment for each year’s grant funding (realized approximately two years later upon FTA payment).

Fiscal Year Costs FTA Revenue ROI

2013 $1.27 $2.26 78%

2014 $1.81 $4.88 170%

2015 $1.92 $5.37 180%

2016 $2.03 $5.91 191%

2017 $2.17 $6.51 200%

Scenario 2A - Cumulative Start Up Funding Needed and Net Cash Position

Cumulative Funding Needs = $4.82 million

Profit is a function of the net offset of FTA Revenue

received and costs incurred in each fiscal year.



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Scenario 2A – Cost Breakdown (in thousands of $) Fiscal Year ‘13 ’14 ‘15 ‘16 ‘17

Monthly Payment

$490 $1,053 $1,158 $1,273 $1,400

Rider Subsidy -- -- -- -- --

Admin $330 $455 $455 $455 $455

Marketing $298 $300 $300 $300 $300

Reporting Technology

$50 -- -- -- --

Ridematching Technology

$100 -- $10 -- $10

TOTAL COST $1,267 $1,808 $1,923 $2,029 $2,166

Scenario 2A vs. 2B (50% vs. 75% Participation)

Cumulative Grant Requirement

Scenario 2A Scenario 2B

$4.82 million $6.12 million



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Ongoing Program Elements

Annual Survey of Program Participants

The Vanpool Incentive Program should institute an annual survey of program participants to ascertain

their satisfaction with the program, one of the performance measures identified above. In addition, the

survey should also help the program staff to identify areas for improvement and measure the extent to

which the vanpool program is reducing vehicle miles traveled and single occupancy vehicle use.

Continual marketing and outreach The initial marketing push during program startup will be focused on attracting existing vanpools to join the Vanpool Incentive Program. Subsequent marketing efforts will need to be focused on the formation of new vanpools in existing and new markets.

Documents

Multi-Region Vanpool Incentive Program … · Stantec Consulting Services, Inc. UrbanTrans Consultants, Inc. ... This study included a best practices review of the top tier of existing