TO: AC Transit Board of Directors
FROM: Michael A. Hursh, General Manager
SUBJECT: Possible Effects of Free Fares
BRIEFING ITEM
RECOMMENDED ACTION(S):
Title
Consider receiving a report on the possible effects of "free" fares on AC Transit and a review of how it is implemented at other agencies.
Body
STRATEGIC IMPORTANCE:
Goal - Financial Stability and Resiliency
Initiative - Financial Efficiency and Revenue Maximization
Reductions in farebox revenue and the possible offsetting increases in ridership would impact the District's financial position and outlook and the expense of free fares for the riding public.
BUDGETARY/FISCAL IMPACT:
There are no budgetary impacts from this report.
BACKGROUND/RATIONALE:
There have been a few transit agencies and/or cities in the news recently over deliberations or decisions to remove fares (i.e. "free" fare) for most or all of their service. The reasons for this vary, with the most common being economic fairness and environmental benefit. It is important to note that there have long been systems with free routes or specific areas within their service. AC Transit, for instance, provides free Broadway Shuttle service under contract from the City of Oakland.
This report was prepared before the shelter-in-place and other significant effects of the coronavirus pandemic. The District is currently not collecting fares as are many other transit agencies throughout the country, but this situation is temporary and so the overall discussion about "free" fares is still relevant. The farebox revenue amounts in the report are also pre-pandemic and should all be scaled down when thinking about the impacts of "free" fares over the next few years, but are still useful for discussion purposes. One unknown outcome of the current pandemic is if any agencies are more likely to consider or implement "free" fares after we emerge from the pandemic period.
AC Transit
For FY 2018-19 the District recorded $57.0 million in fare revenue, ...
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