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Report ID: 20-134a   
Type: Regular - Finance & Audit
Meeting Body: Board of Directors - Regular Meeting
Meeting Date: 4/28/2021 Final action: 4/28/2021
Recommended Action: Consider receiving an updated report on the possible effects of "free" fares on AC Transit and a review of how it is implemented at other agencies.
Attachments: 1. STAFF REPORT, 2. Att.1. Fare Rev Scenario, 3. Att.2. Cost of Fare Collection, 4. Master Minute Order
TO: AC Transit Board of Directors
FROM: Michael A. Hursh, General Manager
SUBJECT: Update on Possible Effects of Free Fares

BRIEFING ITEM

RECOMMENDED ACTION(S):

Title
Consider receiving an updated 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 fareless operation.

BUDGETARY/FISCAL IMPACT:

There are no budgetary impacts from this report.

BACKGROUND/RATIONALE:

This report provides an update to a report that was presented to the Board in June 2020 but was prepared before the shelter-in-place and other significant effects of the pandemic. Staff has continued to monitor the topic and is providing this update. The District, like many transit agencies, had a temporary period in 2020 when it did not collect transit fares but has since resumed collection, so the overall discussion about "free" fares - or "fareless" systems - is still relevant.

The farebox revenue that the District is receiving has been significantly reduced during the pandemic. While ridership is expected to pick up as businesses and the state reopen, it is far from clear what the trajectory of the District's ridership levels will be over the coming months and years. In the prior report, the District showed $57 million in farebox revenue for FY 2018-19 and was on track to approach $62 million for FY 2019-20 before the pandemic. The total fare collection over the past 12 months, which is effectively only six months of collections, was only $8.6 million. Staff currently expects about $29.8 million in fare revenue for FY 2021-22.

Attachment 1 shows an illustrative scenario of farebox revenue return through FY 22-23. This scenario assume...

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