Service Development FAQ

Private companies have provided various forms of "public" (or common carrier) transportation in the U.S. for centuries. There have been many operators of horse-drawn and waterborne services. We are most familiar with electric streetcars which began in the late 19th century and which were mostly replaced by buses mid-20th century. For many years transit was often operated by power or railroad companies and regulated by municipalities and state utilities commissions. In the 1910's governments at every level began publicly funded roadway construction programs and in the 1920's the mass produced automobile took hold. Except during World War II, this led to a long decline in transit's share of the travel market. By the 1960's transit operators could no longer make a profit or justify their transit investment, so they asked for subsidies or ceased operations.

Cities or entire regions were faced with this dilemma and in many cases began to subsidize and then acquire private transit operations. Implicitly the answer was yes. Much debated reasons are given: save energy; reduce pollution; provide mobility - especially for lower income, employment, elderly, etc.; improve quality of life — e.g., commute times, sprawl; public safety; and support economic development (attract private investment). Some smaller cities tried going without public transit and found themselves demonstrating through social service costs and business losses that all of the debated reasons are valid concerns.

Economics provides us with the means of analysis within the social context. Public goods and services are defined as those that offer society benefits greater than their costs, but don't necessarily make a profit. Economists have studied this extensively, including public transportation. The fundamental elements are cost, demand and price. People make decisions on travel (just as they do for any purchase) based on perceived value rather than actual price. Transit has a price (or fare), but on average it is below the cost of the trip. Only people who value the transit trip will ride (the demand), but for a given fare this means many will value the trip more than they are paying. In total, economists call this value the consumer surplus and have found that for transit it exceeds the total cost. Thus transit can be called a public service and municipalities can rightfully make decisions on investments in public transportation — regardless of the debated reason.

Today there are no unsubsidized metropolitan transit services in North America. There are privately operated transit services aimed at very specific markets. As an example New Jersey Transit operates service throughout the state, including Shore communities; however, private jitneys provide service along the casino resort area in Atlantic City. Large employers in isolated Western areas contract for bus service in order to attract workers. Examples may be seen in Colorado's ski and gaming industries. The Transmillenio BRT line in Bogotá, Columbia is an example of a self-supporting service.

The federal and most state governments tax gasoline and diesel fuels and place the money in "trust funds" for the sole purpose of funding the construction and maintenance of highways. This tax is often called a user fee for roads. Also some roads are funded directly through bonds that are repaid by tolls charged to vehicles using them. Therefore, some say that highways are not subsidized. However, many state and local road improvements are funded through property or sales taxes. Also economists find many indirect subsidies, such as traffic policing costs, higher insurance and medical costs or property taxes foregone when rights-of-way are expanded.

Transit investment and service development require that we ask several questions: What are the markets or demand? Should service be provided? If so, how much? What type of service should be provided? For RTD the general approach is to: Develop a family of services suited to a variety of markets. Connect all the services together to accommodate today's dispersed travel patterns. Match the level-of-service with demand, thus improving performance and sustainability.

The essential elements of any performance measurement are objectives, measures and analysis. To illustrate this, it is easy to use an analogy to the private firm:

The Private Firm

• Maximize profit
• Subject to maximum available investment
• Measure: profit/widget

The Transit Firm

• Maximize ridership
• Subject to maximum available subsidy (budget)
• Measure: subsidy/passenger

In the public sector the term performance is often used interchangeably with effectiveness and efficiency. Effectiveness measures attainment of the objective, or subsidy per passenger. Efficiency, or productivity, measures the ratio of what you get out to what you put into your service. How do I know RTD is operating efficiently? A very common measure of transit service productivity is boardings/hour, which also helps distinguish each type of service. A two-dimensional chart of these measures offers a convenient comparative analysis of all types of RTD services and illustrates relative performance among them. When standards and guidelines are applied, absolute judgments can be made about performance.

Take a look at the Family of Services Chart, representing the average of all routes within each type (or class) of service. Effectiveness (subsidy per boarding passenger) is the vertical axis and productivity (boardings per hour) is the horizontal axis. Since less subsidy and more boardings are better, services toward the top and right on the chart are better performers. The Mall Shuttle is by far the best performer — even without a fare — because it has such high ridership and service within a dense environment (and makes lots of connections). A distant, but by far, second best is LRT, which operates in relatively dense corridors and is so attractive for its reliable and speedy service. Access-a-Ride and FlexRide are demand responsive services at the low end of performance. Access-a-Ride meets federal requirements supporting the mandates of the Americans With Disabilities Act. FlexRide is designed to most efficiently serve our lowest demand areas. Please note that these are true apples-to-apples comparisons of performance: all fare revenues, boardings and costs - both operating and amortized capital — are included.

We can evaluate individual routes, route segments and even time periods using these same measures. Take a look at the Community Services chart, illustrating each CBD (at least one terminus downtown), Urban (no terminus in downtown, but in core metro area), Suburban (outside core area) and FlexRide route. (We have charts covering all types of services.)

It's easy to see how the individual routes for each type of service perform relative to one another. We have also depicted RTD service standards and guidelines to help make judgments about performance. Each rectangle labeled by service type represents the domain for routes that meet or exceed minimum performance requirements for that service type. Minimums are defined statistically to represent routes meeting or exceeding 10% of the performance for all routes in each category. So this is a case where it's bad to be "outside the box." Now you can see routes that don't meet the minimum standards for their service type.

Routes that perform minimally get minimum service frequency, typically every 30 minutes during peak periods and 60 minutes off-peak. The chart also depicts guidelines for routes where ridership significantly exceeds the minimum, and passenger loads justify more frequent service. The orange, dotted, vertical line at 25 boardings per hour represents the typical minimum productivity for a route to justify 15-minute frequency, and the green, vertical dotted line at 40 boardings per hour represents the typical minimum productivity for 10-minute frequency. You can see routes in different categories justify different levels of service.

For more information see RTD's Service Standards (PDF).

Routes that do not meet minimum standards and guidelines will need to be modified or promoted in some way to bring them into compliance. Those that cannot be brought into compliance are subject to cancellation. This process of evaluation, modification and promotion is cyclical and ongoing. Following are some recent examples:

• The Route 160 Brighton Circulator provided local circulation within Brighton every 60 minutes from 7:00 am to 6:00 pm weekdays only. The route was designed to connect all significant schools, senior facilities, and shopping within Brighton. Service began in January 1999 and carried 0.76 boardings/hour at $105 subsidy/boarding. Because of its poor performance and low potential for improvement, RTD looked at alternative ways to meet the need; thus, FlexRide service was proposed to replace Route 160. The new FlexRide in 2001 operated at 5.1 boardings/hour and $11.26 subsidy/boarding. The replacement performs much better, carrying more people for the same resources and meets minimum standards for this class of service. This is an example of providing alternative service delivery, shifting from one class to another to improve performance and sustainability.
• In 2001 Route 47 Coliseum operated at 8.0 boarding/hour and $11.79 subsidy/boarding, significantly below minimum standards for Urban class since its inception in January 1998. Residents, riders, community representatives and RTD extensively promoted the route and made other changes, but ridership did not increase. It was proposed for cancellation January 2002 and September 2002. At that time the RTD Board has decided to retain the route based on the special needs of the community and some of the riders. There is now a proposal to provide an alternative cost-share service, a less comprehensive, community-based program at a fraction of the cost.
• Performance on Route 475X Ken Caryl/Arapahoe was one of the worst of all Express routes, at $33.60 subsidy per boarding and 10.5 boardings per hour in 2001. The route was discontinued May 2002 and two vanpools were successfully created as a substitute for a number of the riders.
• Routes 8X — North Huron Express and 12X — North Washington Express were some of the RTD's earliest express services, established in the 1970's from Northglenn and Thornton. By the early 1980's they were the two highest patronized express routes in the system. However, when Wagon Road and Thornton Park-n-Rides were built circa 1980, new Route 120X began to siphon away riders. By 2001 Route 120X had grown to 3,900 weekday riders on 142 trips. Routes 8X and 12X had each declined to 60 or so riders on 6 trips, with selected trips observed with as few as 4 or 5 riders. Route 122X was established in 2001 to help relieve crowding on Route 120X. Ridership is now 1,000 per day on 20 trips. Routes 8X and 12X were discontinued in May 2003.
• The Cultural Connection Trolley (CCT) began in 1992 as a way for tourists and visitors to reach Denver cultural and other attractions. Over the years, fares, routes and schedules were changed to attract riders and improve performance. Although the CCT is valuable to Denver's tourism, RTD also recognized that it requires specialized sales and promotions to very specific markets that are very different from those RTD typically serves as a regional transit agency. Thus, in 2000 RTD sought proposals from private providers, more experienced in this type of service, to increase ridership and improve performance. In May 2001 CCT was contracted to Grey Lines, Inc. with the objective of phasing out RTD subsidy over three years. In 2002 the CCT had a subsidy of $21.77 per boarding. Due to budget limitations, it was proposed to discontinue the CCT as part of other service reductions in May 2003; however, Grey Lines agreed to take over the service without RTD subsidy (except for the free use of the trolley). This is an example of first contracting service and then privatization.
• The segment of SkyRide Route AS — DIA/Stapleton/Ward Road form Ward Rd to Stapleton had very low ridership: in 2002 1.94 passengers per trip, at a cost of $15.70 per passenger. The service standard for SkyRide requires a minimum of 15.6 passengers per trip at a maximum subsidy per passenger of $4.08. An extensive marketing campaign was conducted on this section of the route to boost ridership to meet the minimum SkyRide standard of 7.8 passengers per trip. Ridership during the campaign increased to 3.2 per trip, but fell after the free ride coupons had expired. This segment was discontinued May 2003, and is an example of modifying a route segment based on performance.
  As the above promotion and analysis proceeded, the Arvada community became concerned with preserving the service. A non-profit company, Ride Provide, was formed to operate direct service from Arvada to DIA, called the A-Line. The first year, beginning May 2003, RTD provided $100,000 and the City of Arvada and Arvada Urban Renewal Authority $25,000 each in start-up subsidies. This is an example of a cost-sharing public/private partnership experiment.
• The Routes Leap, Bound and Jump were developed to be part of the City of Boulder's high frequency community network to compliment the Hop and Skip routes. For these routes, specially painted buses were purchased, existing routes were modified and service frequency improved to every 10 minutes for a two-year experiment beginning January 2001 to determine the effect on ridership and productivity. Because the Leap was formerly only a peak-period service, both service hours and ridership increased by very high percentages; however productivity fell from 23.8 boardings per hour to 9.8, well below standards of 40 for 10-minute frequency or 25 for 15-minute frequency. The Leap was changed to a 30-minute frequency January 2003. The Bound was created in part from restructuring the Route 209. Both service hours and ridership increased substantially on the Bound/209 combined; however, productivity remained about the same, declining from 29.1 boardings per hour to 26.8. The Jump replaced Route 207 service and both service hours and ridership increased; however productivity declined from 26.1 to 21.6 boardings per hour. RTD recommended that frequency be reduced to every 15 minutes during the peak periods (30 minutes off-peak) for both the Jump and Bound, as warranted by standards. Instead, the City opted to pay the difference in the cost of operating 15-minute versus 10-minute frequency. This is an example of cost sharing, where a city or other entity can pay for services above the level warranted by RTD service standards, without adverse impact on resources allocated throughout the District.

Efficiency measures the ratio of what you get out to what you put in; so, RTD can try to get more riders or revenue for the same input or use less resources and dollars for the same output. Doing either is a never-ending task for RTD, and there is no limit to suggestions to accomplish this. RTD participates in national transit information exchanges and encourages internal ideas for efficiencies. Here are some examples of service development and marketing related efficiency measures.

• RTD uses articulated buses (63 seats, versus 43 on a standard bus) on routes with very highly peaked loads, where the alternative of higher frequency would be more costly and not provide additional customer convenience. Examples would include the Routes 15L, 16L 83L, 86X, 90X and 120X. Looking at the performance charts, one can see that these routes are some of the most productive in the whole system. As an example of the savings from using such vehicles, Route 15Ltd operates every 7.5 minutes during the morning peak, with 63 seats per bus. This translates into a peak hour capacity of 504 seated passengers. If standard 40' buses with 43 seats were used, 12 trips would be needed to provide the same capacity of 8 articulated buses. On a roundtrip basis, the use of articulated buses could save up to 10 peak buses on the Route 15Ltd alone.
• An HOV lane or queue jump allows buses to avoid congestion and save time; thus, making the service more attractive to riders while using fewer resources. Examples include "Downtown Express" HOV Lanes on US 36 and north I-25, the Lincoln & Broadway bus lanes between Ohio Avenue and Civic Center Station, the queue-jump on Lincoln and 13th Avenue, and "Right Turn Only - Buses Excepted" signs used to favor RTD buses in numerous jurisdictions.
  The US 36 HOV Lanes save in excess of six minutes per bus trip. With more than 300 bus trips per weekday scheduled to use the lanes, bus timesavings are in excess of 30 hours per day. With the majority of the savings achieved on weekdays, this amounts to 260 days X 30 hours, or 7,800 bus hours per year! The Lincoln and Broadway bus lanes save three minutes per bus trip, and with approximately 540 bus trips daily using the lanes, equals 27 hours saved each weekday. The 27 hours X 260 weekdays equals 7,020 hours per year. The queue-jump traffic signal at Lincoln Street and 13th Avenue saves only seconds and probably only half of the 290 trips per day can actually take advantage of the advance green (since buses arrive at random). However, the reduction in morning rush hour congestion and ease of operation for RTD Local, Express and Regional bus operations is substantial, as all of these buses formerly had to struggle to make their way to the Lincoln Street left turn lanes onto Colfax or 16th Avenues.
  The use of "Right Turn Only - Buses Excepted" signs has been on the increase throughout the District, as RTD staff has worked with the municipalities to gain their acceptance. Now several jurisdictions routinely place these signs at the nearside of intersections that have far-side bus stops. In this way, RTD bus drivers can legally use the right turn lane, which is free flowing in many cases, and go to the head of the queue to access the far-side bus stop. These numerous signs contribute to bus route timesavings and passenger handling efficiency.
• RTD promotes specific routes with direct mail to increase ridership. We first gather lists typically based on a ½ mile buffer of the route, either the entire length of the route or only the segment of it to be promoted. The mailing includes a two-question survey that the recipient is invited to complete and return for five free ride coupons. Our average response rate is 6-8 percent and the average coupon redemption rate is around 15%. Average ridership increase, combined for the routes that are promoted, is approximately 16 percent.

The major cost of operating a bus is the driver (about 52%). The difference for fuel consumption (about 5% of the cost) is 5.6 miles per gallon for a 30' bus, 4.5 mpg for a 40' bus and 3.6 mpg for a 60' articulated bus. Whenever possible RTD uses the right-sized bus; however, the time consumed pulling buses in and out of the garage often more than offsets other cost factors.

This really is a complicated question. Why do you see only three of twenty registers at the local supermarket in use? Why are there empty lanes of traffic? Why are airplanes half-empty? RTD, like other service businesses, needs to balance supply and demand over the months (for schools), days (e.g., weekend), hours (e.g., peak period and peak direction), and even location (e.g., downtown and suburb). Bus services must have continuity in their provision, for example, for driver shifts, vehicle utilization, service availability and route design. Accommodating all these factors produces the results seen on the street: an outbound bus practically empty, but packed on its way inbound in the morning; few riders at the end of a route, but jamming midway on the main arterial; few evening riders, but some trips needed to cover night shifts and "staying late."

Nowadays 24/7 employment is more prevalent. From the 2001 RTD Customer Satisfaction Survey we note that availability of evening service rated 3.4 out of 5 and weekend service 3.1, ranking first and fourth worst of all attributes. They achieved the same rankings as service attributes in most need of improvement.

Night service is fairly easily defined and is almost universal in our industry. Demand and service levels drop to the midday level at about 7:00 pm. Strong routes drop off substantially again about 9:30 pm. and main trunk routes again about midnight. Bus service in suburban areas is little used after 7:00 pm. The exceptions to these observations are almost always due to the presence of a major activity center, such as a regional mall or DIA. Overall Saturdays are about 50% of weekday vehicle hours of service and ridership; Sundays are about 40% of hours and 30% of ridership.

Based on this empirical evidence and RTD's service standards, RTD is able to adjust service levels depending on ridership and other factors.

• In general minimum performance begets minimum service.
• When route performance is much lower than minimum (10% of average for the class), it is usually a candidate only for discontinuing service altogether or another alternative.
• Routes will have different frequency of service by time of day and by route segments based on ridership.
• Suburban or urban fringe areas are most amenable to alternative services, such as FlexRide instead of regular bus.
• When there is more than one route in or near an area of poor performance, restructuring the routes is typically recommended.
• An area in transition, such as declining or growing population or employment base, is an opportunity for reevaluation and change.

Special circumstances, such as low-income or special needs riders, major activity centers or parking issues make service more sustainable.

It has been said that politics is the art of allocating limited resources to competing demands. Certainly equity is a matter of public policy, but we can also rely on facts and analyses to guide the decisions. The equity question usually revolves around one's perception of getting a fair share or what is deserved. Sometimes this is construed to be an accounting of getting back what is put in, say dollars of service versus dollars of taxes (fair share). Sometimes it is construed as receiving the highest value for resources expended, say the most riders for the public dollars (what is deserved). We help resolve these perspectives with the following approaches.

RTD explicitly recognizes that only one type of service cannot possibly meet all the expectations of such a diverse District. That is why RTD has a Family of Services composed of its different classes of service, each having its own minimum standards. However, this set of performance standards applies throughout the District to ensure an equitable evaluation of each route or service, that is, how each ranks relative to others and standards within its class. When choices are ranked by effectiveness and efficiency, it helps policy makers make decisions based on value. Those routes that rank lowest receive the most scrutiny regarding inclusion in the budget.

No service is always an alternative for very poorly performing service. Other alternatives may be less costly, but somewhat inferior, for example, a parallel route farther away, a trip requiring a transfer, or less frequent service. An alternative could improve performance, such as in Brighton. Sometimes an alternative is something different altogether, such as a vanpool or a non-profit service. RTD has a Family of Services because decision makers want to have choices to consider when contemplating a particular request or recommendation.

What is the appropriate type and level of service for each community? Cities have asked RTD how much sales tax revenue RTD receives from its businesses and the cost of transit services operating within the cities to determine if they are getting a fair deal. However, RTD is a mosaic of cities, counties and special districts (e.g., metro or RTD Directors' districts); in fact there are about forty cities, eight counties and fifteen Directors' districts in the RTD District. At the same time bus routes and rail lines cut through multiple jurisdictions, some more than once. At one Rail station (Oxford), stairs to the boarding platform are in one city and the sidewalk leading to them are in another. How do you carve it up? How do you decide who benefits from what service? The inherent difficulties in these questions are the very reasons why metropolitan areas have created regional transportation districts throughout the U.S. to operate transit services. For transit, benefits and costs cross physical boundaries and the whole is greater than the sum of its parts.

RTD does not design routes with the specific municipal boundaries or sales tax collections in mind. Our customers' travel patterns rarely, if ever, recognize these boundary issues; and a service development process that does would, likewise, not be able to properly match our services to the markets. Customers, non-riders and stakeholders, alike, find themselves on both sides of this issue, oftentimes having to switch sides as their personal circumstances change.

To maintain its credibility with its customers, all tax-paying residents and stakeholders, RTD applies the same performance measurement system throughout the District to insure equitable treatment for all communities, markets or requests. (It is also a requirement of the federal DOT's implementation of Title VI of the Civil Rights Act that benefits and services are equitably distributed without regard to race, color or national origin.) Credibility is hurt from the perception that some communities receive special attention or preference. But, a large government agency must also be flexible. Like any successful business RTD must be able to try new things and accommodate individual community desires.

For this RTD has developed a cost-share policy. This policy allows the use of revenues and other funds, such as from state or federal grants, private businesses or local governments, to support transit services. Factors considered in implementing cost-share service include: financial feasibility; level of financial support from local governments, private employers or businesses; community support for the service; and ridership and performance. If the cost-share service meets RTD service standards and guidelines during the test period (usually two years), RTD considers extending its participation in the net cost. If it does not, RTD funding participation may be reduced or cease, or a partner may choose to fund it. This policy has provided the foundation for a variety of partnerships to demonstrate a variety of services, recently including the Cultural Connection Trolley (CCT), Bee-Line (along Colorado Blvd. with Transportation Solutions), Leap and Bound, Link (in the DTC with SETA), A-Line and others.

Wasn't transit provided by the private sector? discusses the general trends and rationale leading to public takeover of transit in the U.S. Two other pertinent forces were at work after WWII. On the local side was the explosion in metropolitan (both urban and suburban) growth. On the federal side was the huge effort to develop a national highway system and other infrastructure in and among both the urban and emerging suburban areas. Since metro areas are composed of multiple jurisdictions, this growth and development posed some thorny issues to policy makers and administrators, including, prioritizing projects, funding mechanisms, accountability, implementation responsibility and coordination. For many municipal services these issues are easily dealt with at the city boundary — police department A serves only jurisdiction A's side of the street, or the cubic feet. of water in the pipe crossing the city line. But land-use and, especially, transportation were not easily dealt with — stop the road at the city line? Fortunately a process was emerging to address this problem; it was called the 3-C process for comprehensive, continuing and coordinated planning. This process became an enduring requirement for all urban areas to receive federal transportation funding (promulgated through metropolitan planning organizations such as DRCOG), and regional transportation districts have been a logical derivative.

At the time of RTD's creation, transit customers were also frustrated by the lack of coordination of fares and services among the multiple private companies then trying to operate in the region. The RTD was mandated by the General Assembly to establish a unified system. This did not happen overnight, but a look at old information reveals today's progress. Projects such as the Union Station intermodal terminal and planned bus focal points at new Rail stations point toward the future.

Community groups have demanded the final say on the route, vehicle type, service levels and fares, regardless of any "outside" considerations. However, RTD is a regional agency composed of many cities, counties and districts and must ensure equitable treatment throughout. Allowing community-by-community decision-making has already proven unworkable — a primary reason for creating regional transportation districts in the first place. The RTD Board is responsible for making these decisions.

The Colorado legislature declares in the Regional Transportation District Act: "That the creation of the regional transportation district will promote the public health, safety, convenience, economy, and welfare of the residents of the district and of the state of Colorado."

Like any municipal agency, RTD is chartered by the state, specifically by the Regional Transportation District Act. States vary in the actual creation mechanism, such as by election or application. The Colorado legislature created the RTD in 1969 and designated the area comprising the District, which it has subsequently modified. Other areas can come into the District by petition or election; RTD can annex on its own only those areas it completely surrounds. The initial Board of Directors was appointed, but that was changed in 1982 to an elected Board with fifteen districts. The District is authorized to develop, maintain and operate a mass transportation system for its residents, and has all the privileges and liabilities of a public body politic and corporate, including, entering contracts, property condemnation, limited taxing authority, borrowing money and setting fares. The principal source of revenue for the RTD operating and capital budget is sales tax revenue, levied at the rate of 0.6% fare revenue is second largest source, representing about 19% of annual operating expenses. The state mandates the minimum percentage of its operating costs that RTD funds by revenues (fares, federal grants, other), which is currently 30%. The state also mandates the minimum percentage of its services (non-rail) that must be provided by competitive contract, currently 50%.

SUMMARY POINTS

• RTD is a 100% political subdivision of the state, empowered to provide public transportation.
• RTD does not make a profit. It does charge fees for use.
• RTD levies taxes, which are used to subsidize its expenses.
• The minimum percentage of expenses that must be recovered by revenues is mandated by the state.
• The minimum percentage of services that must be provided by competitive contract is mandated by the state.

It is worth making a distinction between these terms, because people interpret them differently. In a contract for service, RTD specifies all the details of operation, maintenance, schedules, fares, vehicles etc. and the contractor specifies the rate (cost per in-service hour) it will charge RTD for provision of the service. Privatization, on the other hand, means that the service provider also pays -or shares in - the cost of the service, and this is also often called public/private partnership.

The obvious answer is because the state legislature says so. Its rationale is basically that competitively procured services may be less costly and provide opportunities for disadvantaged business enterprises. However, RTD contracted for services prior to passage of the law that made it a requirement. And contracting has been used in many industries over the years. Prudent management asks several questions. Is the function under consideration a part of the core of the business? If not, it is more susceptible to contracting, while facilitating more focus on the core. Can the function be performed less expensively and/or with better quality? Does contracting provide more flexibility, for example, to experiment or offer new opportunities? Of these questions the most focus is on cost and quality, and while there has been considerable research on the topic in transit, there have been no conclusive results. Most transit agencies, for instance, do find cost savings; however, they also find that service quality may vary from the norm expected by customers. Many transit agencies contract out various types of service to various degrees and there is no consensus or formula to determine what is right. It could be surmised, and it follows from our market-based economy, that the threat of competition is all that is needed to benefit from contracting, and the amount is best left to prudent management and the supplier marketplace.

The following reference is suggested for more information: Contracting for Bus and Demand-Responsive Transit Services: A Survey of U.S. Practice and Experience (PDF).

This is more a philosophical or policy question than a technical one; although for U.S. transit systems, there aren't many opportunities for the private sector to share in the benefits and profitable routes are rare. Instead RTD has a range of public/private partnerships and cost-sharing arrangements. At one end of the spectrum, anyone qualified to do so and not requiring an RTD subsidy may provide bus service within the District (as provided in our charter). There are many private charter bus companies and non-profit paratransit services in our metro area, but none offer an unsubsidized route or service comparable to RTD's. The closest might be the CCT. Barriers to the entry of private, unsubsidized carriers include skepticism in the lending community and insurance risks and cost. The era of privately owned urban transit systems was also an era of much different legal concepts for liability.

Cost-sharing partnerships are distinct from public/private partnerships in that our partner is another governmental or non-profit organization and is how RTD accommodates the priorities and concerns of communities within its District. These cost-sharing arrangements provide for trying new services, supporting special services, or continuation of routes that do not meet RTD service standards. RTD has quite a range of these agreements. Partners include cities, counties and non-profit transportation management organizations (TMO's). Funding sources include these organizations and state and federal grants. Non-RTD funding ranges from a few thousand dollars to hundreds of thousands per year (sometimes millions and for limited periods). Services include: shuttles like the Link in the DTC, ShopCart in Littleton and CATCO Shuttle in Castle Rock; DRCOG RideArrangers and Ft Collins VanGo vanpool programs; senior services in Boulder and Adams County; and the Jump and Bound bus routes in Boulder.

RTD analyzes several factors to maximize the cost savings when putting together a package of services for a Request for Proposal from private contractors. These include: capability of the contractors; location and capacity of bus garage facilities; deadhead — the out-of-service time between garage and bus route; continuity and proximity of the group of routes for the package; and number and types of vehicles required. Since contracts are for a limited time and services and contract requirements change, the mix of contracted routes is also subject to change.