STATEMENT OF ISSUE
StarMetro requests approval to implement the following changes in its fare structure: reduce the 31-Day Pass reloadable SmartCard from $41.25 to $38.00; and (2) implement a one-time $3 service fee on the initial purchase to cover the cost of printing and purchasing all reloadable SmartCards. The requested changes would make the 31-Day Pass reloadable SmartCard a better value than the existing 31-Day Pass, which currently costs $41.25 for each purchase. In addition, the $3 service charge, mentioned above, would apply to all reloadable SmartCards offered by StarMetro. The purpose of the proposed changes is to make the 31-Day Pass reloadable SmartCard more cost effective and affordable to riders, improve system efficiency, increase ridership and encourage riders to use reloadable SmartCards. These changes will also help in implementing decentralization of the route structure next summer. If approved, the fare change will take effect April 13, 2009 to allow sufficient time to send out public notices, make equipment and sign changes to accommodate the new fee structure and to update and reprint the ride guides.

RECOMMENDED ACTION
Option 1 – authorize and approve the proposed changes to the StarMetro Fare Structure, effective April 13, 2009. Authorize and appropriate receipt of the anticipated service fee ($22,500) in StarMetro's FY09 budget. Approve the supplemental appropriation of $22,500 to buy the cards from StarMetro's FY09 operating budget and authorize the expenditure of these funds.

FISCAL IMPACT
If approved, the proposed service charge will fund the cost of printing and purchasing the reloadable cards rather than StarMetro bearing the cost. StarMetro is estimating $22,500 in revenue being generated by the $3 service charge to be used to purchase additional SmartCards for customers. The reduction in the cost of the 31-Day Pass reloadable SmartCard should be revenue neutral with savings from increased ridership, increased system efficiency, and increased sales. The Office of Budget and Policy has reviewed this item, and it is in compliance with City guidelines.

Ronald Garrison, Executive Director, StarMetro

Anita Favors Thompson, City Manager

For information, please contact: Brian Waterman, Transit Planning Administrator, 891-5564

SUPPLEMENTAL MATERIAL/ISSUE ANALYSIS
HISTORY/FACTS & ISSUES
If approved, the initial purchase of a 31-Day Pass will be $41. This includes the cost of the SmartCard and the 31-Day unlimited ride fare. All reloads of this pass will cost $38.

During FY 2008, all fare cards offered by StarMetro were reloadable SmartCards. StarMetro expended $33,884 issuing these fare cards (which included 17,200 7–Day, 7–Day Reduced [specifically for elderly and disabled riders], 31-Day, and other reloadable SmartCards). StarMetro spent an additional $5,072 in printing supplies for these reloadable cards. In previous fiscal years, the cards and printing supplies were purchased using the balance of an existing purchase order issued to FareLogistics, which has expired. On average, 50% of the 7–Day users and 25% of the 31-Day Pass users reloaded their cards. By implementing the proposed fare changes, riders will be steered towards reloading the cards, which will save staff time, purchasing of cards and printing supplies, and provide a dedicated funding source to facilitate new reloadable fare cards. The proposed $3 service charge would apply to all reloadable SmartCards offered by StarMetro. If approved, the fare changes are scheduled to take effect on April 13, 2009 to allow sufficient time to send out public notices, make equipment and sign changes to accommodate the new fee structure and to update and reprint the ride guides.

The fare changes represent the first step in a process to make the fare media system more customer friendly. The changes include, but are not limited to, accepting credit cards to purchase and reload passes; installing remote, automated pass purchasing and reloading stations; allowing for reloading passes online and/or at the farebox; and moving to a single fare card. It is anticipated that it will take up to four years to develop and implement these proposed changes.

CHARITABLE CONTRIBUTIONS
Not applicable, as this request is for a service charge affecting the initial purchase of reloadable fare cards and the cost of the 31-Day Pass.

OPTIONS

1. Authorize and approve the proposed changes to the StarMetro Fare Structure, effective April 13, 2009. Authorize and appropriate receipt of the anticipated service fee revenue ($22,500) in StarMetro's FY09 budget. Approve the supplemental appropriation of $22,500 to buy the cards from StarMetro's FY09 operating budget and authorize the expenditure of these funds.

Pros: Helps to facilitate the decentralization of the route structure;
Makes the 31-Day Pass reloadable SmartCard more affordable and more competitive when compared to the other fare types;
Cost of creating the Fare Card is included in the purchase of the card;
Increased efficiency in the system; and
Increased ridership.

Cons: Some customers may choose not to take advantage of purchasing and using the SmartCards due to the $3 service charge, even with the $3 reduction for the 31-Day Pass.

2. Do not approve the proposed changes and provide guidance to staff.

Pros: No changes to the existing fare structure.

Cons: Costs of purchasing and printing the SmartCards are not included in the current
budget;
Makes it more difficult to decentralize the routes;
Increased staff time; and
Continued inefficiency in the system.

ATTACHMENTS/REFERENCES
None.