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Multimodal Planning and Implementation Services, Contract No. 354R10

Capital Planning for Small and

Medium-Sized Transit Systems:A Resource Guide, August 2006

Prepared for:

Pennsylvania Department of Transportation

Capital Planning for Small & Medium-Sized Transit Systems

A Resource Guide August 2006

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Introduction Public transportation services provided by smaller transit systems, some based on shared-ride operations, offer significant economic and quality of life benefits in Pennsylvania especially for the elderly, disabled, low-income and student populations. Capital assets, including existing revenue rolling stock such as buses and vans, fixed facilities such as buildings, and major capitalized equipment such as vehicle lifts and diagnostic equipment, are funded through a variety of local, state and federal programs, through grants, subsidies, and farebox collections in Pennsylvania. Despite the availability of these funding sources, resources are limited and both the Pennsylvania Department of Transportation (PENNDOT) and the transit agencies must make decisions about how to spend funds prudently. PENNDOT must determine on an annual basis and for a much longer term planning horizon total statewide transit capital needs. Successful public transportation agencies in the United States develop long term strategies for investing in capital assets by identifying and prioritizing transit needs. Once the needs are identified, agencies develop phased plans that prioritize the purchase of specific equipment and facilities over time that help them achieve service goals and meet the demands of the region. The larger public transportation agencies in Pennsylvania develop short and long-term capital plans based on sophisticated analyses of needs and priorities. Smaller transit systems, which comprise the majority of public transit services in the Commonwealth, do not have the information and formalized tools that help them determine needs and priorities and to conduct long-range capital planning. PENNDOT has begun filling this gap though the development of this Resource Guide for capital planning for small and medium-sized transit agencies. This Resource Guide is comprised of three different reports that address different aspects of capital planning and a Capital Asset Model which is a planning tool that has been developed for Class 4 and 5 systems.

Capital Planning Best Practices The Capital Planning Best Practices Report broadly outlines the process that Class 3, 4 and 5 systems could use to develop a capital improvement plan and uses examples from transit authorities in Cambria and Berks counties to demonstrate how these steps are effectively accomplished in Pennsylvania. Importantly, the report concludes that best practices include the following actions by transit agencies:

• Utilize a rational capital planning process

• Conduct capital planning on an annual basis

• Base project priorities on a long-term capital investment strategy

• Use Estimated Useful Life to determine asset replacement schedules



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• Engender the support of federal, state and local officials

• Partner with the regional MPO or RPO

• Build community support for the capital program

• Develop a vision for the system that is compatible with community goals Capital Planning Model In an effort to assist smaller shared-ride systems with capital planning, a Capital Planning Model was developed to provide both a near term as well as extended projection of capital asset needs for Pennsylvania’s Class 4 and Class 5 transit systems. The model was constructed to respond to the growing need for an organized, electronic, and user friendly means to compile a:

• uniform inventory of system assets;

• schedule of statewide capital needs;

• framework for prioritizing investment alternatives, and

• basis for apportioning limited public funds The Capital Planning Model and instructions for using it may be found on the CD that is contained in this binder. Microsoft Excel is used as the platform for the model and it is designed to be user friendly for transit agency staff. The model is menu-driven so that the user inputs a current capital asset inventory using drop-down lists and established settings for ease of use. The database is segregated by types of capital assets and as the user inputs information, data is processed and a consolidated system capital plan is automatically generated. This plan is a snapshot of the entire database that sums total capital spending needs by fiscal year, source of funding, and defined capital asset categories over an extended 30 year period. The compact format of the model permits it to be moved electronically between individual system managers and PENNDOT so that an aggregate statewide capital plan can be readily established for these numerous small systems. While the model is currently designed to operate as a PC- resident application, PENNDOT plans to enrich the capabilities of the model and to transfer the application so it may be accessed through the internet. The Capital Planning Model is one of many tools that are being developed to rationalize, simplify and streamline capital planning in the Commonwealth. Maintenance Garage Evaluation The Maintenance Garage Evaluation Report is designed to help rural Class 4 and 5 systems in Pennsylvania to understand and estimate the cost of insourcing vehicle maintenance, and to help them decide if this effort may be warranted. Many smaller transit systems rely on a network of outside mechanical repair and maintenance services to keep their vehicles in revenue service. While these arrangements can work, the expense of moving vehicles between service garages and the home office, the threat of significant vehicle downtime and the possibility of service disruptions, can lead transit systems to



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consider bringing maintenance and repair functions in-house. From the research conducted for this report it is clear that constructing and staffing an in-house maintenance and repair facility is more expensive than contacting this out to private garages. But for transit systems that are able to afford it the increased control over the vehicles and the enhancement of service to riders appears to be worth the cost. Cost information and the decision-making framework that is outlined in this report are based upon work that was conducted for the Union-Snyder Transportation Alliance (USTA), a shared-ride transportation provider in central Pennsylvania. Maintenance & Administration Building Needs Assessment The Maintenance & Administration Building Needs Assessment Report was prepared specifically for USTA and it is included in this binder as an example of the analysis and documentation that must be prepared in order to utilize federal capital funds. Currently, USTA contracts vehicle maintenance and repair work to a single local garage. While the garage is performing satisfactorily, USTA is concerned about its long-term reliance on this one provider to keep its vehicles in service for its customers. Recently, USTA received nearly $3 million in federal earmarks from the Section 5309 Capital Bus program of the Federal Safe, Accountable, Flexible, Efficient Transportation Act, A Legacy for Users (SAFETEA-LU) and wished to determine if using the earmarks for a new maintenance and administration facility was cost effective. An analysis of the costs and benefits of insourcing and an analysis of USTA’s financial and administrative capabilities showed that the transit agency could indeed assume responsibility for building and staffing a new facility. The Needs Report was prepared on behalf of USTA for the Federal Transit Administration (FTA), the agency that administers the funding, and it was submitted for review by the FTA. Recently, the FTA notified USTA that the Needs Report was reviewed and accepted and the earmarks will be released to USTA subject to securing the local match.

Capital Planning Best Practices

Technical Memorandum August 2006

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Acknowledgments This report was produced in collaboration with Global Insight, Inc., an economic and financial analysis and forecasting company located in Eddystone, Pennsylvania.



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Table of Contents

I Introduction................................................................... 4 Transportation Planning in Pennsylvania ...................4

II. Capital Improvement Plans ........................................ 6

III. Examples of Capital Planning in Pennsylvania ........ 8 Cambria County Transit Authority ..............................8 Berks Area Reading Transportation Authority ............9

IV. Best Practices.......................................................... 12

V. Conclusions .............................................................. 15



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Appendix A: Inventory and Needs Based CIP B: Interview Guides C: Estimated Useful Life Guidelines (PennDOT) D: Route & Marketing Study Elements

Figures Figure 1: Capital Planning Process



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I. Introduction Public transportation in Pennsylvania is an important element of the state and regional economy. Economic growth, productivity, job creation and efficient land development patterns depend on the availability of mass transit. Services provided by smaller systems based on shared-ride operations offer significant economic and quality of life benefits because they provide mobility for the elderly, disabled, low-income and student populations. The capital programs of transit systems are funded through a variety of local, state and federal programs, through grants, subsidies, and farebox collections. Despite this menu of funding sources, transit system needs always outstrip available monies. As a consequence, transit authorities are faced with making tough choices about how to spend limited resources. Many public transportation agencies in the United States, including several of those in Pennsylvania, have developed a long term strategy for investing in capital assets by identifying and prioritizing transit needs. Successful transit systems take stock of their existing operations and establish service goals that are compatible with current and future demographic and economic trends. In this way, the agencies can determine the gap between current and desired service and develop a capital investment strategy that meets these needs. Once the needs are identified, agencies can develop a phased plan that prioritizes the purchase of specific equipment and facilities over time that will help them achieve service goals and meet the demands of the region. This report was designed to help Class 3, 4 and 5 systems in Pennsylvania to understand how meaningful capital plans are developed by describing a capital planning process that is based on “best practices.” The report broadly outlines the process that a transit agency could use to develop a capital improvement plan and uses examples from two transit authorities in Pennsylvania to demonstrate how these steps are effectively implemented in the Commonwealth. A companion report was prepared that includes tools and a uniform template for asset replacement and life-cycle costing that will be most beneficial to transit systems seeking to project capital needs. Transportation Planning in Pennsylvania Pennsylvania has 16 Metropolitan Planning Organizations (MPOs) and 7 Rural Planning Organizations that are responsible for developing a transportation planning work program that includes: developing a long-range transportation plan; prioritizing capital projects; developing and helping to implement the county/regional transportation improvement program (TIP); identifying and developing proposed projects; collecting and analyzing data; and promoting system maintenance and preservation. Each regional unit has advisory and technical committees that address all modes of transportation and consider economic development, land use, environmental and other issues. Committee members are comprised of officials and citizens in the region and representatives from the various transportation and county planning agencies.



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Under the federal transportation authorization bill, the Safe, Accountable, Flexible, Efficient Transportation Act, A Legacy for Users (SAFETY-LU), certain allocations of funds are administered by the MPOs and RPOs who are partners in the planning for the use of all transportation funds. Federal legislation also requires the regional planning units to produce and oversee a TIP, the region's short-range investment plan. The TIP prioritizes the region’s transportation related projects within the constraints of federal funding that Pennsylvania can reasonably expect to receive within four years. SAFETY-LU also mandates the preparation and update of a long-range regional plan to set a policy for transportation improvements and establish a list of priority investments for a 20 year period. The long-range plan is very important because it provides a vision of the region's future growth and development; determines regional plan consistency in order to locate and implement future transportation facilities and services, and provides guidance and direction for municipal, county and state agencies to make infrastructure investments. Importantly, the long-range plan serves as the foundation for developing the region's TIP. Updates to the long-range plan are required every three years. The state DOTs, including PennDOT, are responsible for a number of activities that affect the metropolitan planning process. State DOTs are charged with the development of statewide long-range plans, which include the long-range transportation plan developed by the MPOs and RPOs. Currently, Pennsylvania’s long range-transportation plan is PennPlan MOVES. State DOTs participate actively in the process by which projects are prioritized and included in the TIP. Each DOT also develops a Statewide Transportation Improvement Program (STIP), which is formed of the all the TIPs developed by the regional units. The STIP is approved by the United States Department of Transportation (USDOT). This process also helps to satisfy Pennsylvania’s mandate to develop a Twelve-Year Transportation Program. The TIP projects become the first four years of PennDOT’s Twelve-Year Program, which is the State’s commitment to support these projects with federal and state funds. Thus, transit capital plans in Pennsylvania are developed within the framework of a comprehensive state and regional planning process that formulates both long and short-term investment goals and priorities. Within this context, transit agencies are responsible for both capital and service needs in their respective service areas. They are the principal source for identifying transit projects for inclusion in the transit portion of TIP. They also carry out many of the transit planning activities, both funded through the regional planning program and through other sources.



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II. Capital Improvement Plans A capital improvement plan (CIP) is an annualized program of capital facility and equipment needs – usually programmed annually in near-term requirements (3-6 years) and forecasted for longer-term needs (10-20 years). A CIP can either be "needs based" or financially constrained. A needs-based CIP is prepared irrespective of financial capacity to fund the plan, while a financially constrained CIP presents prioritized improvements based on the financial capacity to fund the plan. In the past, plans represented an idealized vision of the future and they became little more than “wish lists.” Today, transportation planners in the Commonwealth are required to prepare capital plans that are constrained by the revenues that are reasonably expected within the planning timeframe. To prepare a CIP there must be an accurate understanding of the replacement value and condition of the existing capital asset base and a projection of future service needs. The capital asset base is defined as existing revenue rolling stock (revenue vehicles), fixed facilities (administrative, maintenance, and passenger), and major capitalized equipment such as vehicle lifts, diagnostic equipment, and maintenance vehicles. Also, implicit in development of an accurate financially constrained CIP is a projection of future capital funds availability and overall financial capacity to supply the forecasted service levels along with any capital asset expansion and maintenance costs. The major elements of a comprehensive CIP include the following:

• Forecasted service requirements

• Inventory of existing physical plant and equipment

• Assessment of maintenance practices and requirements

• Projection of replacement or major rehabilitation needs of existing capital asset base

• Projection of needed expansion (capital items) to meet forecasted service requirements (if service growth is anticipated)

• Projection of available capital funding, to include, but limited to, the following sources: − Local agency bonding/debt capacity − Government grant assistance (local, state, and federal) − Other sources (usually dedicated funding sources) − Pay as you go (cash outlays from existing reserves or other revenue

sources)

• Prioritization mechanism for programming capital needs to meet funding capability in the near- and long-term future (for financially constrained plans).

Figure 1 is a flow chart that depicts a model for the overall capital planning process.



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Figure 1: Capital Planning Process

Appendix A presents an example of an inventory assessment and 5-year needs based Capital Improvement Plan.

Future Service Requirements(analyzing socio-economic data, recent service history, forecasted service market growth, etc. - includes analysis of capacity to fund future

operations)

Asset Base Inventory and Assessment(evaluate equipment age as compared to expected useful life, major rehabilitation

practices, and replacement cycle)

Forecast of Capital Asset Base Needs(considering replacement schedules and maintenance practices, forecast major rehabilitation and replacement needs)

Forecast Service Expansion Capital Needs

(considering service plans, project needed capital asset expansion to meet future service

levels)

Evaluate Funding Capacity(project capital revenue sources for fiscally

constrained plans)

Compare Funding Capacity to Capital Needs

Step 1

Step 2

Step 3

Step 4

Funding available to meet Capital Needs?

Program CIP Needs into Capital Budget

Return to Step 1 with Focus on Prioritizing Needs and Evaluating Maintenance Practices

Yes No

Source: DMJM Harris



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III. Examples of Transit System Capital Planning in Pennsylvania Transit agencies face many challenges when developing a capital plan that will satisfy both their immediate and long-term needs. This section of the report will describe the process that two transit authorities in Pennsylvania undertake to prepare capital plans which are considered examples of “best practices.” The DMJM Harris team interviewed management at the Cambria County Transit Authority (CamTran)1 and the Berks Area Reading Transportation Authority (BARTA)2 about their capital planning process, and sought to develop a coherent methodology that combines the best features of these two systems.3 The interview guides that were used at CamTran and BARTA appear in Appendix B to this report. Cambria County Transit Authority The Cambria County Transit Authority (CamTran) provides both fixed bus route and demand responsive transit services in Cambria County, Pennsylvania. CamTran has 16 fixed bus routes operating in the Greater Johnstown area and several buses service the Richland area. ADA curb-to curb service is available for persons with disabilities who qualify. Reserve-A-Ride service is available in Greater Johnstown. In northern Cambria County, CamTran+ operates five fixed bus routes, including one between Johnstown and Ebensburg and it also operates all CamTran's specialized services. CamTran also owns and operates the Johnstown Inclined Plan, the steepest vehicular incline in the world. CamTran conducts capital planning on an annual basis to determine transportation priorities and to plan funding. The annual planning process involves the senior management team, the directors and managers of the primary agency functions, and solicits needs from this team for inclusion in the plan. In addition, the CamTran senior management team reviews historic system performance indicators and looks at on-going and developing trends that may affect their local transit operations. The Authority's inclusive planning process promotes consensus around capital priorities, and program timing. This process seeks to eliminate the need for emergency capital expenditures, and provides a ready inventory of projects for unexpected capital allocations. Every three years, the transit agency prepares a Schedule of Needs that is based on a periodic review of regional demographics that drive the demand for transit services. This process seeks to anticipate network shifts that could alter the timing or location of capital priorities, and to uncover unforeseen opportunities.

1 Interview, Cambria County Transit Authority, Walter Hoffman, Director of Finance and

Controller and Rose Lucey-Noll, Chief Assistant to the General Manager, February 22, 2006, Johnstown, PA.

2 Interview, Berks Area Reading Transportation Authority, Dennis Louwerse, Executive Director, March 21, 2006, Reading, PA.

3 PennDOT classifies BARTA and CamTrans as Class 3 (Small Urban Transit) transit properties.



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Over the past several years, CamTran has developed a high level of coordination with Johnstown Area Transportation, the local metropolitan planning organization (MPO) that prepares the annual Transportation Improvement Program (TIP). In coordination with the MPO, CamTran prepares a Long Range Transportation Plan that addresses capital needs over a 30-year horizon. In addition, CamTran prepares an annual four-year Transit TIP document that quantifies the capital funding requirements of numerous discreet transit projects. The project timing and priorities in the TIP submission are made consistent with the CamTran Short Range Plan, Program of Projects, and a Financial Capacity Study that is developed by the Cambria County Planning Commission. The majority of projects that are proposed, are included in the MPO's Twelve-Year Transportation Program. CamTran routinely participates in MPO meetings, complies with MPO procedures and invites a cursory review of its capital program. Periodically, CamTran meets with the state and federal congressional delegations to ensure that officials are aware of CamTran services and needs. The latter is a well organized and structured effort to engage officials in discussion with CamTran so that the delegation can actively support the transit agency in obtaining funding. Additionally, CamTran meets frequently with local rural planning agencies to build continuing support. The CamTran capital program investment strategy focuses on system maintenance and preservation, as local needs are relatively static. CamTran determines its system maintenance and preservation investment priorities using an asset replacement schedule based on PennDOT's published Estimated Useful Life (EUL) guidelines as presented in Appendix C. The agency routinely requests asset replacement just prior to the expiration of its EUL, recognizing that funding vagaries often delay the arrival of replacement capital. CamTran capital assets include land, buildings, revenue and service vehicles, shop and garage equipment, furniture and office equipment and other miscellaneous revenue equipment. Berks Area Reading Transportation Authority The Berks Area Reading Transportation Authority (BARTA) provides bus transit service in the City of Reading and Berks County, and operates 31 local bus routes, three park-and-ride express bus routes and one special express bus route that provide daily service throughout the metropolitan Reading area. All but three bus routes, the Route 4W/4E, the Niteline and the Berks Heim Express, provide transfers to other routes at the BARTA Transportation Center (BTC), located at the intersection of South 8th and Cherry Streets in central Reading. Route 4W/4E is a cross-town bus route that serves the Spring Street corridor, and the Niteline and Berks Heim Express are evening-only services. All of BARTA’s bus routes operate under a set schedule along a fixed route.



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BARTA also provides demand responsive shared-ride services throughout Berks County. Services are administered, managed and dispatched by BARTA and are known as the BARTA Special Services Division. The BARTA service area has experienced significant commercial and residential growth during the past 30 years, with much of the growth occurring in the more suburban portions of the urbanized area. Like CamTran, BARTA plans for its capital program on an annual basis to determine transportation priorities within available funding. BARTA reviews historic system performance indicators and looks at on-going and developing trends that affect transit operations. BARTA involves the senior management team, the directors and managers of the primary agency functions in planning its capital program. Final decisions rest with the Executive Director and the Operations Manager for BARTA. There is a high level of coordination with the Reading Area Transportation Study (RATS), the local metropolitan planning organization (MPO) that prepares the annual Transportation Improvement Program (TIP). BARTA meets with the RATS Planning Committee which reviews the transit agency TIP, and is a member of both the Technical Committee which endorses the BARTA TIP, and the Coordinating Committee which apportions local funding to the BARTA TIP. Periodically, BARTA meets with the congressional delegation to ensure that officials are aware of BARTA services and needs. This is a well organized and structured effort to engage officials in discussion with BARTA so that the delegation can actively support the transit. In contrast to other transit agencies in Pennsylvania, BARTA seeks out federal earmarks for itself. In addition to its involvement with the MPO and officials, the BARTA Executive Director is an active and well-known member of the local community who consciously works to raise the public profile of public transportation in general and of BARTA in particular. The Executive Director participates in the Chamber of Commerce and works with a number of planning agencies to increase public and private investment in downtown Reading and in other locations in the region. The BARTA Transportation Center was not only a transportation improvement, but also a catalyst for spurring the redevelopment of a section of Reading. There has been $20 million dollars spent on redevelopment projects in Reading over the past 15 years and transportation improvements have played a major part in this activity. BARTA’s primary mission is to enhance mobility for residents, but the agency believes that it has a larger role in the community; BARTA sees that public transportation can support local economic development, jobs creation and other goals in ways that are mutually beneficial. The Executive Director urged other transit agencies to become a part of the larger community and to continually look for ways to use public transportation to achieve this vision.



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BARTA prepares a five-year strategic outlook, called the Comprehensive Route and Marketing Study, which examines public transportation services provided by BARTA within the Reading metropolitan area and nearby communities. The objective of the study is to develop specific proposals for the BARTA public transportation system and recommendations with regard to existing and future service. Appendix D presents an outline of the types of information collected and analyzed in the Route and Marketing Study. Based on these proposals and recommendations, BARTA prepares financial forecasts that identify the magnitude of subsidy and capital expenditures. In the interview with BARTA, the Authority’s management explained that the study contains important information that helps the agency makes decisions about which routes should receive limited transit resources. In the past transit agencies were required by FTA to prepare this type of study which was formerly called the Transportation Development Plan. The Comprehensive Route and Marketing Study contains information about regional demographics, and identifies the current and future major trip generators for work trips and senior travel. Service standards for the fixed route bus system are defined and they provide a means to assess current services. The set of service standards includes four major aspects of service - service attributes, operational attributes, passenger comfort and convenience, and fiscal condition. The gap between the actual and desired performance of the routes provide a basis for suggesting improvements to remedy any current deficiencies and exploit future opportunities. The Study also contains a route diagnostics analysis which measures the efficiency of each route from a financial and productivity standpoint. It also contains the results of ridership surveys and visual inspections. BARTA prepares a separate report for shared-ride services in its Special Services Division. Once these reports are complete, BARTA prepares a five-year capital budget projection and then defines specific projects. The BARTA capital program addresses two broad investment strategies: system maintenance and system expansion. System maintenance calls for continued investment in the BARTA transit infrastructure to bring it to a state of good repair and to provide safe and reliable transit service. System expansion increases transit capacity to serve the needs of growing markets and complements prior investments. BARTA determines its system maintenance investment priorities using an asset replacement schedule based on PennDOT’s Estimated Useful Life (EUL) of the asset; the agency replaces assets prior to the expiration of its EUL. BARTA considers the concept of “useful life” of facilities and equipment as key to planning its capital program. BARTA uses EUL as a guide for when its capital assets need to be replaced, however, vehicles purchases are based on the availability of funding and they are spread out over time.



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IV. Best Practices Based on research about capital planning and the interviews with BARTA and CamTran a set of best recommended practices has been developed for use by Pennsylvania’s smaller transit systems. Utilize a rational capital planning process. The capital planning process can be modified and adapted to the special needs of each agency, but the process involves the same basic steps: identify needs, identify funding availability and sources, use a process to identify priorities, and develop a comprehensive capital plan. Both BARTA and CamTran use this basic process outline to ensure rational decision-making so that the true needs and priorities of the agency are identified and funded. Conduct capital planning on an annual basis. The best performing transit agencies conduct capital planning on an annual basis. They generally maintain detailed inventories of their vehicles and other capital assets – including age and condition -- and know when they should be replaced. As a result they are able to make informed choices about how to spend available funding. Both BARTA and CamTran plan their programs on an annual basis and involve their senior management team in the process so that needs are identified from all areas of the organization. This yearly process is important because it provides the local planning agencies with the transit priorities that need to be incorporated into the TIP. Make decisions about project priorities based on a long-term capital investment strategy. While transit agencies must plan and make choices each year about how to spend resources, the most effective agencies make these decisions within the context of longer-term goals for the system. Thus, agencies should periodically review the regional demographic and economic information and trends that drive the demand for its services and, based on this analysis, determine the long-term capital needs of their systems. Transit systems should seek to identify changes in the marketplace to take advantage of new and changing markets to that its services can grow and remain relevant. This can be accomplished through a combination of:

1. Periodic ridership surveys 2. Analysis of regional business and housing or commuting patterns 3. Outreach to local business and planning organizations 4. Benchmarking with neighboring transit systems

Once systems have scanned these trends in the marketplace, they can then compare it to their current service routes, frequencies and facilities to determine if changes should be made to routes and schedules. Such changes will impact operations and equipment utilization and, possibly, facilities. CamTran and



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BARTA periodically review their needs based on an analysis of their region’s trends so they may develop a long term investment strategy. It is common for transit agencies to have a two-prong approach to capital investment – investment that maintains or brings the current system into a state-of-good-repair (normalized) and investment that expands or grows the system. Typically, the former is considered a higher priority than the latter. Use the concept of Estimated Useful Life to determine when capital assets should be replaced. Large transit authorities examine their physical infrastructure and categorize each element of the transit system according to a conditions assessment and asset useful life criteria. This approach ensures that equipment such as vehicles are upgraded or replaced according to normal replacement cycles that are defined by industry or government-established standards. This ensures that capital assets do not fall into a state of disrepair that would reduce the reliability of services and compromise system safety. BARTA and CamTran stated that they base their asset replacement on PennDOT’s EUL standards that relate to the number of years or miles that a capital item is projected to be functional. Engender the support of federal, state and local officials. It appears that transit agencies that are in regular and sustained contact with state and local officials are more successful in obtaining public funding for their basic and discretionary capital programs. Both CamTran and BARTA regularly hold meetings and telephone conversations with their federal and state elected officials to talk about their transit system performance and needs. And both systems have aggressively sought and received federal earmarks for transit projects. Each of the agencies interviewed stated that they met frequently with local officials and interacted with them on a regular basis while working on community-related projects. Again, regular communication with officials leads to increased support for transit agencies and their capital needs. Partner with the regional MPO or RPO. Effective transit agencies work hand-in-hand with the regional planning units throughout the year. CamTran and BARTA both noted that the transit elements of the TIP that they submit are not mere add-ons to the highway and roadway portions of the document – transit capital projects that request funding support the collective goals and strategies of the region. CamTran and BARTA regularly participate on committees so that the needs of the transit systems are well-known so that transit projects and funding requests are supported by MPO committee members and the organization as a whole. The systems believe that this coordinated approach to regional planning has relieved road congestion, expanded economic development, and improved local quality of life at a lower cost than could be achieved without this intentional collaboration.



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Participate on an on-going basis in the larger community to build support for the capital program. An interesting finding of the interviews is that transit agencies that are most successful in obtaining funding for capital projects appear to be highly involved in their communities. This involvement is useful for a number of reasons. First, if an agency is knowledgeable about local transportation needs than it can be more effective at providing services that meet local requirements. For example, the agency can proactively plan for service to new commercial and residential areas if it is aware of anticipated development. The transit operator that works with local businesses and employers will be aware of the potential for serving markets with new or revised services. Second, working closely with community leaders can ensure transit systems that public transportation becomes a planning partner in local improvement efforts. For example, BARTA’s community orientation led to the construction of a new transportation center in downtown Reading, and a focus for redevelopment. Third, local participation can help insure that local matching funds will be made available, and can open up opportunities for alternative funding sources. In sum, a high level of participation raises the profile of transit in the community and leads to local support of the agency’s capital program and funding. Develop a vision for the transit system that is compatible with community goals. Being able to articulate a vision for public transportation appears to help transit agencies set priorities and make decisions about the capital program that are in their long-term best interest. The most meaningful vision for transit may be how transit investment in improvements that help communities to achieve goals such as economic development, quality of life, and protecting the environment and others. BARTA’s approach to vision asks the following question to officials and the public, “How can public transportation help you meet your goals?” Interestingly, BARTA has chosen to define its vision of transit so that it incorporates a broader purpose in the community at large.



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V. Conclusions A sound and well-designed program of capital investments can provide a transit system with a host of benefits including improved system reliability, reduced operating costs and increased ridership and farebox revenues. A capital improvement plan is the end result of a rational process that inventories assets, identifies needs, assesses funding availability and resources, and prioritizes investments. While this might appear to be a relatively easy task, the more in-depth the consideration of future investments, the more likely the agency will be able to fund and sustain a long term capital investment strategy. This strategy should be based upon the vision for transit in the community, knowledge of historical and current system performance and an awareness of the market forces and trends that will influence transit in the future. It is clear that the more a transit agency is visible and active in transportation planning circles and in the broader community, the more successful it will be at garnering support and financial resources for its capital program. Participation in committees of the local MPOs and RPOs appears to be very important so that officials support the inclusion of high priority transit capital projects in the regional TIP. In addition to increasing support for its capital program, transit operators who extend themselves to the larger community keep up-to-date about local development and improvement projects so that they can develop network strategies that have the best opportunity to increase ridership and remain relevant in the marketplace. These best practices, combined with the proper planning tools can be used to help transit agencies develop a capital program that meets the needs now and into the future.

Maintenance Garage Evaluation

A Cost Model August 2006

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Acknowledgments This report was produced in collaboration with Global Insight, Inc., an economic and financial analysis and forecasting company located in Eddystone, Pennsylvania.



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Table of Contents

I. Introduction........................................................... 4

II. Data Sources ......................................................... 5

III. Maintenance Options ............................................ 5 Outsourcing ................................................................. 6 In-sourcing................................................................... 6

IV. Comparative Costs ................................................ 7 Current Maintenance Costs ......................................... 7 Capital Costs ............................................................... 8 Operating Costs......................................................... 15

V. Potential for Cost Savings................................... 18 Eliminated Office Lease Expense.............................. 18 Better Overall Driver Utilization.................................. 19 Lower Incidence of Vehicle Vandalism...................... 19 Other Cost Savings.................................................... 20

VI. Conclusions......................................................... 21



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Appendix Evaluation Template

Figures & Tables Figure 1: Blair Senior Services Garage - Interior

Figure 2: Blair Senior Services Garage - Exterior

Figure 3: Somerset County Garage - Interior

Figure 4: Somerset County Garage - Exterior Table 1: Average Outside Maintenance Costs

Table 2: Comparative Building Construction Cost Data

Table 3: Comparative Space Allocations and Cost

Table 4: Comparative Labor Costs

Table 5: Comparative Labor Utilization

Table 6: Comparative Utility Costs



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I. Introduction Pennsylvania’s Class 4 and 5 transit systems provide a valuable public service. For the elderly and disabled in rural communities, these systems provide economical and comfortable door-to-door service. From home to doctor, work, shopping, or to activity centers, these systems are often the only available means of transport for their patrons. These systems are funded through a variety of local, state and federal programs, through grants, subsidies, and farebox collections. For many, services have expanded to accommodate longer trips, larger geographic areas, or increased use; however, the availability of operating monies has not kept pace with this demand. Systems are increasingly under pressure to become more efficient while providing more services. For most of Pennsylvania Class 4 and 5 public transit systems, bus and van maintenance represents the largest non-payroll operating cost. Managing a fleet of 20 or more vehicles, several of which may be out of service for maintenance or repair at any given time, can be logistically complex. Transit agencies must move buses and vans to and from repair contractors, shuttle drivers to and from the mechanic’s garage, and redistribute scheduled runs among available equipment and drivers to keep regular service operating for passengers. Smaller transit systems are forced by lack of scale to outsource bus and van repair to one or more local garages who may not appreciate that vehicles need to be repaired as quickly as possible since residents depend upon on-demand transit to conduct their daily activities. Systems with 20 or more buses and vans may look at in-sourcing maintenance activities, but are overwhelmed by the need to locate, staff, and manage repair operations on top of their current workloads. These complexities may lead some systems to outsource maintenance when insourcing could provide better overall service while other systems may choose to insource these functions, not recognizing the added costs of operating an in-house maintenance facility. This report is designed to help rural Class 4 and 5 systems in Pennsylvania to understand and estimate the cost of insourcing vehicle maintenance, and to help them decide at what point such an effort might be warranted. The data contained herein can be used by interested operators to estimate the costs of a maintenance in-sourcing program. It includes proxy figures for items such as land acquisition and preparation, building construction and maintenance, labor cost and utilization, and expected savings. Applying these figures can help save significant time in data collection, and provide a template for analysis. The data can be used in conjunction with the evaluation template provided in the Appendix or in concert with the Excel spreadsheet model available from PennDOT.



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II. Data Sources The data and figures contained in this report were generated from a series of interviews with five PennDOT transit systems. These include:

1. Blair Senior Services (Blair County, PA)

2. Somerset County Transportation Services (Somerset County, PA)

3. USTA (Union-Snyder Counties, PA)

4. CAMTRAN (Johnstown, PA)

5. BARTA (Bucks County, PA) The average costs were developed primarily from the Blair County, Somerset County, and Union-Snyder County agencies that provided detailed cost data. BARTA and CAMTRAN provided valuable process information, and some cost data. Collectively, these data provide factored estimates for the costs of operating a vehicle maintenance garage, and the comparative costs of outsourcing these same functions to local garages.

III. Maintenance Options One area in which Pennsylvania’s Class 4 and 5 systems are looking for savings opportunities and service delivery improvements is in vehicle maintenance and repair programs. Pennsylvania’s Class 4 and 5 systems have basically three alternatives for vehicle maintenance:

1. Outsource vehicle maintenance to local garages;

2. In-source vehicle maintenance at a owned or leased facility; or,

3. Some hybrid of these alternatives as might be possible through a county or school district garage or through a public-private partnership with a local service provider.

For purposes of this report, outsourcing and in-sourcing are considered. The diversity of arrangements that could exist in hybrid applications should be evaluated by Class 4 and 5 providers against the other two alternatives. It is entirely possible that such a hybrid arrangement could provide substantial utility to the local transit agency, and save significantly on operating costs. Each one is likely to be unique based on the availability of local providers and their specific circumstances.



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Outsourcing Outsourcing of vehicle maintenance is a common practice of rural transit agencies. Passenger vans can be taken to new-car dealerships, local private garages, county garages, or other facilities for maintenance and repair (M&R). Obviously, private providers are profit driven and, as such, may not provide the speed of repairs or the quality of maintenance as desired by the transit agency. Some of the interviewed systems maintained excellent working relationships with their local providers, while others struggled to get vehicles repaired, parts ordered, and problems corrected. Unfortunately, the inconsistent nature of vehicle maintenance may mean that once vehicles are delivered for repair at a private garage, they will not receive the attention afforded more profitable or urgent work. The systems interviewed cited specific incidents where vehicles waited weeks for repair parts, requiring the acquisition of back-up vehicles or redesigned route schedules. These costs are largely hidden in general overheads, but can be significant. In addition, bringing vehicles to and from private garages can reduce driver utilization significantly. Interviewed systems reported that some garages will dispatch mechanics to pick-up vehicles, while others require the driver to wait with the vehicle until smaller repairs are completed. On the other hand, the benefit of outsourcing is that services are sized to meet demand - if the vehicles require little repair work, costs are reduced. Outsourcing vehicle repairs, while a necessity for very small systems, may not always provide the most cost effective method for system maintenance. In-sourcing Rural public transit systems with fleets in excess of 15 vehicles may determine that bringing vehicle maintenance functions “in house” is an attractive alternative. The results of the interviews, and the analysis of the USTA historical cost data suggested that a single full-time mechanic, working 40-hours per week, could maintain a fleet of around 12-15 vehicles depending on condition. This suggests that systems of less than 15 vehicles lack sufficient scope to justify the hiring of a single full-time mechanic. A part time arrangement might be feasible, but was not considered in this analysis. With insourcing the transit system provides its own maintenance and repair operations. This most likely includes operating a garage, hiring and training mechanics, purchasing an inventory of repair parts, and coordinating roadside repair. While our benchmark systems generally outsource discreet and more complex repair activities, such as glass, transmission, and body repair, most repairs and operating maintenance are performed by a mechanic employed by the transit system in a system-owned garage. Insourcing also involves the on-



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going management of maintaining and repairing vehicles. Procedures and processes must be instituted and followed to ensure that vehicles are prepared for revenue service. The advantages of insourcing are primarily related to operational control, and the reduction of “indirect” operating costs such as driver wait time, back-up vehicles, management support, and component purchases. Service may also prove to be more reliable and safe for patrons if a transit agency takes over its own maintenance and repair. The collective experience of the benchmark systems is that insourcing maintenance and repairs increases operating costs but that the trade-off of enhanced control, vehicle availability and operational efficiency mitigates the majority of these increases. And while the benchmark systems saw operating costs rise, most believe their decision to insource has improved their service delivery and the safety of their vehicle fleet.

IV. Comparative Costs An evaluation of vehicle maintenance alternatives involves the comparison of current practices and costs with proposed practices and costs. The analysis of current maintenance and repair costs, including the separate analysis of labor and parts costs, provides the basis for more comprehensive comparative investigation into the economic impacts of in-sourcing. For our benchmark systems, we were able to obtain either outsourced costs or in-sourced costs. Logically, once the changeover is made to an in-sourced operation, the work and costs are transferred from external expenses to internal ones. As USTA is currently performing this exact analysis, their current maintenance and repair costs serve as the proxy for average external M&R costs 1. Current Maintenance Costs A Class 4 and 5 transit system seeking to evaluate the comparative economics of in-sourced maintenance should first understand the costs of their current repair program. Using data developed from our benchmark transit systems, we developed some average expense estimates for outsourced maintenance. These are further broken out by parts and labor. Both parts and labor costs will likely vary from garage to garage. Parts costs are often subject to arbitrary mark-ups, while labor rates reflect the technical certifications of the mechanics, the prevailing hourly wage rates, and the availability of qualified local resources.

1 We were also able to obtain historical outside repair cost data from Blair Senior Services.

Using Producer Price Index (PPI) inflation factors, we adjusted these costs to current levels. That analysis closely matched the current USTA costs on a per-vehicle basis; that confirmation suggested that the USTA numbers could serve as a suitable proxy for other Class 4 and 5 transit systems in the Commonwealth.



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Transit systems considering in-sourcing maintenance functions should ideally utilize their own historical performance data as a basis for evaluation. Nevertheless, the average data provided by the benchmark systems should help establish a baseline cost estimate for internal evaluation. These data appear in Table 1. Table 1: Average Outside Maintenance Costs

Metric

Average Annual Parts Cost

Average Annual

Labor Cost Total M&R Cost

Per Vehicle $ 1,599 $ 1,609 $ 3,208 Total Fleet (20-vehicle mini-buses)

$ 31,980 $ 32,180 $ 64,160

Capital Costs In evaluating the comparative costs of in-sourcing versus outsourcing, capital and operating costs are the two primary cost categories that must be considered. For this analysis, capital costs are assumed to include:

• Land acquisition costs; including purchase, permitting, remediation, and preparation costs.

• Building construction/modification costs; including design services, construction management; construction materials and facility erection.

• Outfitting costs; including the cost of repair tools, basic parts inventories, and vehicle lift apparatus.

These three capital components represent the largest group of costs in the maintenance insourcing evaluation. Indeed, if the Class 4 and 5 systems are forced to bear the full cost of their capital items, insourcing maintenance is likely to be a net loss for the agency. Each of our benchmark systems received substantial grants and subsidies to facilitate the insourcing of maintenance and repair functions either through county and state bonding or through state and federal grants. One obvious source for capital funds is federal grants through the Federal Transit Administration (FTA). These were used by several of the benchmark systems to offset all capital costs. These monies were usually made available through federal “earmarks” championed by the local congressional representatives. Land Acquisition and Preparation For the benchmark systems, land acquisition and preparation costs represented nearly 20% of total capital costs. Total capital costs include the purchase price of the land, preparing the site, and constructing a building. For purposes of evaluating the cost of in-sourcing, an average figure of $125,000 for acquiring



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one acre of land was selected for the USTA comparison. Land preparation costs, as detailed below, total nearly $70,000 per acre. Obviously, the actual cost is likely to vary significantly based on the region, the location of the parcel within the region, the topography and geology of the site, and access to utilities for the site. The benchmark systems all cautioned that sufficient land be acquired in the initial purchase to accommodate future expansion opportunities. The site dimensions are likewise influenced by the size of the vehicle fleet, for vehicle parking, and the maintenance building. Based on the data developed from the benchmark systems, we presume approximately a one acre footprint for the maintenance facility, which would accommodate two or three repair bays and one wash bay, and an additional one acre for each twenty parked vehicles. This results in a two-acre footprint for a twenty-vehicle system, 2.5 acres for a 30 vehicle system and so forth. Obviously, it is preferable to purchase additional property at the outset to allow future expansion as needed. Land preparation costs were assumed to reflect a 'typical' site’ that would not need substantial grading, and that would have reasonable access to utility services. These items could represent substantial costs in the project and, as such, the choice of a specific site is a critical element in determining the project’s overall capital cost. Also, there may be wide differences in cost by region. For purposes of this analysis we utilized the following average figures:

1. Site grading $ 5,000/acre

2. Utility access $ 40,000/site (water, gas, electric, sewer)

3. Permitting $ 10,000/site

4. Contingencies $ 13,750/acre (25%)

5. Total land preparation $ 75,000 for a 2 acre site The choice of a developed site can significantly reduce these costs, as grading and utilities may already be present. One of the issues frequently encountered in previously developed sites is environmental clean-up. None of the benchmark systems had any experience with these costs, nor were they familiar with the potential liability risks associated with improper clean-up. For this analysis, we did not attempt to quantify the costs of environmental clean-up for a developed site; rather we presumed an undeveloped site was selected. Clearly the costs of environmental remediation should be included in any in-sourcing analysis, but as these are likely to be site specific, they are not analyzed in this report.



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Although several of the benchmark systems had explored the potential of reconfiguring an existing site, their analysis found that the costs of renovation were greater than the costs of new construction. Such renovation assessments are plainly site-specific, a subject that is explored more fully in the next section. Building Construction and Renovation Although the benchmark systems all represented new construction, each evaluated the potential for renovating an existing building. In one case, a "teardown" was considered, and was ultimately rejected as a more attractive site became available, as a means of securing a build-ready site. Obviously, the cost of a teardown is a function of the type of building to be removed and the access to the site. As we had no specific data for comparison, teardowns were not considered in this analysis. Likewise, building renovations were evaluated by the benchmark systems and determined to be more expensive than new construction. This is not to say that a suitable facility cannot be made useful at less cost than new construction. Indeed, the benchmark systems were familiar with agencies who had located buildings, suitable configured for their needs and within their service regions, which were available for sale or lease. To the degree such a facility can be located and renovated competitively, this outcome is desirable. For the purposes of this analysis however, we will provide estimates for new construction, as this was the path chosen by our benchmark systems. The construction costs for our benchmark transit systems differed considerably based on the regulations attached to their funding. Blair Senior Services funded their construction through county grants and conventional bank loans, while Somerset County funded construction through Federal earmarks provided through the FTA. While both agencies utilized a competitive bid process, the procurement regulations associated with the Federal funding appeared to raise construction costs significantly. Likewise, the design of the two facilities is reflection of their funding sources. The Blair facility is a steel skin over a wood and metal frame, and the Somerset facility is a steel skin over a heavy steel beam framework. Photos of these two facilities appear in Figures 1 through 4.



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Figure 1: Blair Senior Services Garage - Interior

Figure 2: Blair Senior Services Garage – Exterior



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Figure 3: Somerset County Garage – Interior

Figure 4: Somerset County Garage – Exterior



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For purposes of this analysis, both construction types are represented in Table 2, and should be evaluated based on the design preferences, and funding sources appropriate to the specific project. Table 2: Comparative Building Construction Cost Data

Construction Costs Blair Senior Services Somerset

County USTA

Estimate Benchmark

Average

Year Constructed Various 1998+ 2005 2008 (est.)

Type of Construction

Steel over Wood and

Metal

Steel over Structural

Beams

Steel over Structural

Beams

Size of Building (sq.ft.) 18,600 9,004 10,000 13,802

Building Cost Total $475,000 $670,000 N/A $572,500Building Cost per sq.ft. $25.54 $74.41 N/A $41.48

Construction costs also varied based on the size of the maintenance area relative to the total space. In the case of Blair Senior Services, the facility performs four distinct functions:

1. Administration offices (3,600 sq. ft)

2. Indoor parking for vehicles (12,120 sq. ft)

3. Vehicle maintenance and repair (2,400 sq. ft)

4. Parts and record storage (480 sq. ft) For the Somerset County facility, three distinct functions are supported:

1. Administrative offices (2,227 sq. ft)

2. Vehicle maintenance and repair (4,550 sq. ft)

3. Parts and record storage (2,227 sq. ft) The plentiful storage area in the Somerset facility is designed for future administrative expansion. The current needs are substantially less. It should also be noted that the cost of the Somerset building includes the cost of undertaking the federally-required environmental process regulated by the National Environmental Policy Act (NEPA) to demonstrate that there will be no significant environmental impact as a result of the building. A comparison of the benchmark facilities and their respective space allocations are shown in Table 3.



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Table 3: Comparative Space Allocations and Cost Construction Costs Blair Senior

Services Somerset

County USTA

Estimate Benchmark

Average Fleet Size 36 23 32 30

Size of Building (sq.ft.)

Administration 3,600 2,227 4,500 2,914

Indoor vehicle parking 12,120 - - 6,060

Maintenance 2,400 4,550 4,600 3,475

Storage 480 2,227 900 1,354

Total Sq.ft. 18,600 9,004 10,000 13,802

Building Cost Total $475,000 $670,000 N/A $572,500

With access to federal earmark monies, the Somerset facility was designed to accommodate future expansion. The Blair Senior Services incremental construction approach, however, has yielded a facility which is always sized to meet current needs. Here again, the availability of funding determined the most appropriate approach to construction in terms of building size, features, design, and function. Agencies considering new construction should utilize those numbers that are most appropriate to their circumstances and funding availability. Outfitting Costs Outfitting a vehicle maintenance and repair facility can be very expensive. Computerized diagnostic equipment, vehicle lifts, and parts inventories represent substantial investments, and require regular maintenance themselves. The benchmark systems took different approaches to financing these items based on the availability of funding. Blair Senior Services has adopted a more incremental approach, funding capital purchases as operating revenues allow. Although Blair has utilized conventional bank financing for building construction, they have preferred to capitalize tools and parts inventories out of operating cash. Somerset County utilized federal grants to fully outfit their maintenance facility. Clearly the availability of these funds permitted Somerset to take a ‘turn-key’ approach to outfitting. In addition to these items, the garages needed to secure standard mechanics tools which include the common sockets, wrenches, and screwdrivers used in most repairs. While some mechanics own their own tools, and bring them to whatever job they hold, both benchmark systems believed that outfitting the maintenance facility with a supply of basic mechanics tools was both necessary and appropriate.



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The collective amount of their items was approximately $100,000. This included vehicle lift equipment including 2 lifts at $10,000 each, basic replacement parts inventory at $20,000 total, and diagnostic equipment and mechanics tools at $40,000 total. This estimate was validated in an interview with the Mifflinburg School District’s head mechanic and was used in the USTA analysis. Operating Costs Operating costs for the benchmark facilities are a function of several items, including:

1. Labor costs

2. Utility costs

3. Miscellaneous costs Labor Costs The cost of labor is the single most significant operating cost in the analysis, representing between 55% and 65% of total annual operating expenses. And while there is some regional variation in labor costs, based on the findings from the benchmark systems, these regional differences are not likely to make a difference in the final evaluation of maintenance insourcing. The benchmark systems each believed they were paying competitive wages, and neither system anticipated problems in hiring and retaining employees. They believed that the transit garage was a superior work environment versus local private or “chain” garages, which emphasize output over quality. Blair County cited long-tenured mechanics as evidence of this fact. Comparative labor cost information for Blair Senior Services and Somerset appear in Table 4. Table 4: Comparative Labor Costs

Labor Costs Blair Senior Services

Somerset County

USTA Estimate

Benchmark Average

Mechanics 3.0 1.5 2.5 2.3Hourly Wage (Mechanics) $15.00 $20.00 $17.00 $17.50

Burden Rate 33% 30% 33% 32%Hourly Total $19.91 $26.00 $22.57 $23.07Annual Wages (Mechanics only) $72,850 $56,640 $88,740 $74,340

Annual Cost Fringe Benefits $23,858 $16,992 $29,062 $23,665

Total Labor (Mechanics) $96,708 $73,632 $117,802 $98,005



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Labor utilization has a clear and significant impact on operating costs, and there are likely to be substantial differences between systems in this area. Our assessment in this area included the benchmark data, as well as labor data for USTA’s private provider. We found that average utilization rates require a single full-time employee (FTE) per each twelve to fifteen transit vehicles 2. Table 5 provides additional detail on comparative labor costs for the two benchmark systems and the overall average. Table 5: Comparative Labor Utilization

Labor Utilization Blair Senior Services

Somerset County

USTA Estimate

Benchmark Average

Fleet Size 36 23 32 29.5

Fuel Type Gas Gas Diesel

Mechanics 3.0 1.5 2.5 2.3Utilization (average vehicles maintained per mechanic)

12 15 13 13

Utility Costs Utility costs are similar to labor costs in that they are region specific. Heating and cooling costs are climatologically driven as are snow removal costs. Likewise, lawn maintenance expenses vary based on soil quality, rainfall, and climate. And whereas telephone and security services are relatively consistent across regions due to competitive market forces, electric and gas rates can vary widely from region to region. For transit systems considering insourcing vehicle maintenance and repair, local information is most appropriate to this analysis. Existing electric, gas, phone, and security services bills can provide approximations for these figures for any regionally specific analysis. The comparative costs for Blair Senior Services and Somerset are provided in Table 6 as is the average of these two systems. Until such time as more detailed local data is available, these data can provide an estimate of costs for inclusion in any comparative analysis.

2 This presumes 8 hours per day at 236 working days. Systems with different working

arrangements (weekly hours, holidays, and vacation) might need to adjust labor utilization rates accordingly.



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Table 6: Comparative Utility Costs

Utility Costs Blair

Senior Services

Somerset County

USTA Estimate

Benchmark Average

Total Sqft 18,600 9,004 10,000 13,802 Heated Sq.Ft. 6,480 9,004 10,000 7,742 Utility Costs

Electricity $7,000 $3,116 $3,763 $5,058Natural gas $2,520 $4,309 $3,889 $3,414Water/sewer $625 $1,000 $1,392 $813Trash $2,380 $2,400 $2,400 $2,390Lawn / Snow $ - $4,720 $6,476 $2,360Property Insurance $830 $902 $946 $866Security Systems $2,810 $1,360 $1,511 $2,085Building Maintenance $2,810 $1,777 $1,913 $2,293

Subtotal Utility Costs $18,975 $19,584 $22,290 $19,279Total Utility Costs per Sqft $1.02 $2.18 $2.23 $1.40 Miscellaneous Costs In addition to the labor and utility costs, the benchmark systems noted a variety of other costs related to the transition from outsourced to in-sourced maintenance and repair. These included:

1. The ongoing certification of mechanics,

2. The updating of equipment for changes in vehicle technology,

3. The potential liabilities associated with purchasing, storing, and disposing of hazardous substances on-site,

4. The cost of management time expended during the transition, including time spent: − Overseeing the construction − Staffing the facility − Developing procedures and processes − Coordinating the ongoing maintenance of the facility

With the exception of the mechanic certification costs, the benchmark systems could not readily quantify these costs; they collectively believed, however, that they represented a significant additional burden to their investment of time and a modest increased investment in dollars. Benchmark systems suggested that these costs and issues not be overlooked by Class 4 and 5 systems when analyzing of the relative merits of in-sourcing maintenance and repair. As they could not be quantified by our benchmark systems, we excluded them from our quantitative analysis.



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Mechanics that perform annual vehicle inspections are required by the Commonwealth to be certified every year. The cost of this annual certification was provided by Blair Senior Services, the only one of the benchmark systems that maintained certification. For Blair County, these costs averaged $630 annually per certified mechanic. Blair found that they needed two certified mechanics for vacation and sick time coverage. Smaller systems may not require this additional certification, preferring instead to utilize a private garage for the infrequent state inspections conducted during employee vacations and sick days.

V. Potential for Cost Savings Despite the additional operating costs of in-sourcing, the benchmark systems found that there were some realized savings that offset a portion of the additional expense. These included:

1. Eliminated office lease expense

2. Better overall driver utilization

3. Lower incidence of vehicle vandalism

4. Other cost savings Eliminated Office Lease Expense For our benchmark systems, the construction of a multi-use facility that included both maintenance and administrative space meant that they no longer needed to rent office space. Some systems pay minimal rent in county-owned facilities such that this savings is not as great as would be expected using full-market rates. However, in the case of our interviewed systems, the expansion of county services consumed the available space, and some were forced to explore leasing office space – at full market rates – in the local community. The construction of a multi-purpose building not only eliminated the current rental costs, but protected them against future office rent increases as well. For our USTA evaluation, these savings represented some $15,000 in savings, or about $12 per sq.ft. annually. USTA also anticipated another modest cost savings as they currently lease additional space for records storage which could be moved to an owned facility. One of the benchmark systems also identified the opportunity to lease-out the space in their building they had reserved for expansion in the short term. As this had not yet developed, we excluded this opportunity from our analysis.



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Better Overall Driver Utilization The benchmark systems were quick to identify that one of the benefits anticipated from in-sourcing was better driver utilization. These systems pointed out the significant cost of driver time spent waiting at the mechanic for vehicle repairs, shuttling drivers back and forth from private garages, transporting vehicles to car washes and, in some cases, washing vehicles. In addition, Blair Senior Services found that the indoor parking garage saved approximately 1/2 hour per vehicle during inclement weather as drivers previously needed to remove snow from their vehicles that were parked outdoors. For the USTA analysis we analyzed two specific driver utilization benefits. The first of these is time lost during vehicle repairs, whether incurred at the private garage, on the road, or during a vehicle transfer. Working with USTA management, we determined these cost savings to be approximately $18,000, or about $500 per driver per year. A second utilization benefit from the in-sourcing of M&R can be derived from vehicle washing. In Somerset County there is a dedicated wash bay located inside their maintenance facility, while Blair Senior Services utilizes a portable "wash buggy" just outside the facility. For USTA, we estimated these savings, including both the labor and the direct vehicle washing expense, to be approximately $11,600, or about $360 per driver-vehicle combination annually. Collectively, the lease cost avoidance and the improved driver utilization represented nearly 90% of the identified savings. Lower Incidence of Vehicle Vandalism Another cost savings opportunity identified by the benchmark systems was a lower incidence of vehicle damage resulting from their storage in a secure lot. In the case of Blair Senior Services, vehicles are stored indoors, whereas in Somerset County, the vehicles are stored in an outside fenced lot. As fairly rural counties, neither system had experienced significant vehicle vandalism as might be expected in more urban locations, but Blair County measured a noticeable reduction in vandalism when their vehicles were secured at the end of the day. We projected similar performance for USTA, who currently parks vehicles at an unsecured county lot and at an unfenced private garage. These savings were estimated at $2000 annually for indoor storage, and $1000 annually for secure outdoor storage. These moderate savings reflected the expected costs of two broken windshields.



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Other Cost Savings There are other potential cost savings opportunities that were identified by the benchmark systems although they were not quantified. Both Blair and Somerset Counties believe that bringing preventative maintenance (PM) in-house results in cost savings when compared to performing these activities at a private garage. Cost savings are a result of increased efficiencies and reduced cost of parts. In-house maintenance permits the storage of vehicle service and repair histories on-site. The experience of others in this area suggests that an in-house PM program will be more efficient because transit agency mechanics will be working on the same vehicles every day, thus building specific and detailed knowledge about the fleet. This increased experience is projected to reduce in-service breakdowns. In addition, it is likely that the transit agency can purchase parts, perhaps at bulk or special rates, which would reduce the prices that they pay for parts through a private garage. Another way for transit agencies to reduce operating costs is to consider taking on outside mechanical repair or maintenance work from local, county or other public and private entities. This additional work would ensure that there is no downtime for employee mechanics and also help defray some of the operating costs of the new maintenance building.



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VI. Conclusions Based on the interviews and analysis of the benchmark transit systems, it appears that the decision to insource or outsource vehicle repair and maintenance is largely a non-economic one. Systems chose to insource for reasons of control and predictability of repair and maintenance, or as a result of federal capital funding becoming available. Nearly all recognized that insourcing results in added operating costs and that absent capital grants and subsidies such a program would not have been initiated. Looking back, the benchmark systems could see that insourcing repair and maintenance provided them with better information on their fleets, allowed them to expand more quickly and with fewer resources, and improved service delivery for their patrons. In the case of our benchmark systems, they were able to do this with an acceptable increase in operating expenses. The experience of the benchmark systems is most likely typical of other agencies. From planning to implementation, maintenance in-sourcing is a two to three year program. This can extend much longer, based on the availability of funding for the garage, or the search for a suitable site. With the goal in mind however, Class 4 and 5 systems can begin to prepare for in-sourcing and look to exploit opportunities as they arise. Both the outsourcing and in-sourcing options are viable. The most appropriate choice for any Class 4 or 5 operator is a function of system size, growth expectations, and capital availability. Understanding the projected capital and operating costs will hopefully permit other Class 4 and 5 transit systems to decide intelligently on which alternative is most suitable to their operations. The data presented herein should allow reasonable comparison of the alternatives and a clear awareness of the economic implications of the choice.

USTA Maintenance & Administration Building

Needs Assessment Report May 2006

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Acknowledgments This report was produced in collaboration with Global Insight, Inc., an economic and financial analysis and forecasting company located in Eddystone, Pennsylvania. The authors gratefully acknowledge the contributions of the Union-Snyder Community Action Agency (CAA) Joinder Board which is a joint governing body composed of the Snyder and Union County Boards of Commissioners. We wish to thank the following Joinder Board members:

Union County

• William Haas, Chairman Commissioner

• Preston Boop, Vice Chairman Commissioner

• John R. Showers, Secretary Commissioner

Snyder County

• Steve Bilger, Commission Chairman

• Rick Bailey, Commission Vice Chairman

• Richard “Buddy” Bickhart, Commission Secretary

The authors also appreciate the participation and efforts of Cynthia Ann Zerbe, Administrator of USTA and Harry Adrian, Executive Director of the Union-Snyder CAA in the preparation of this report.



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Table of Contents

I. Introduction............................................................ 5 Project Background........................................................... 5 Report Contents................................................................ 6

II. Purpose & Need..................................................... 7

III. Project Context ...................................................... 9 The Community................................................................. 9 Union/Snyder Transportation Alliance (USTA) ............... 10

IV. Data Collection .................................................... 12 USTA's Current Maintenance Operations....................... 12 External Benchmarks...................................................... 13

V. Project Goals and Alternatives ............................ 17 Identification of Project Goals ......................................... 17 Identification of Alternatives ............................................ 17 Evaluation of Alternatives ............................................... 19 Decision Matrix ............................................................... 24

VI. Assessment of USTA Capabilities ...................... 27 Potential Cost Savings.................................................... 27 Transition Planning ......................................................... 29

VII. Conclusions ........................................................... 32



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Appendices Appendix A: Federal Documents 1. Federal Register, Volume 69, No. 28, February 11, 2004, Notices,

pages 6733-4, page 6765

2. Federal Transit Laws, Title 49 Transportation, Subtitle III General and Intermodal Programs, U.S.C. Chapter 53, Mass Transportation, 5309 Capital Investment Grants & Loans

Appendix B: USTA Data 1. USTA Vehicle Maintenance and Repair Expenses, 2001 - 2004

2. USTA Fuel Usage, 2001 - 2004

3. USTA Vehicle and Equipment Inventory

4. USTA Customer Satisfaction Survey, 2004

Appendix C: Pennsylvania Transportation Funding and Reform Commission, USTA Audit 1. Operating Performance Measures by Mode, FY 1996 – FY 2005

2. Financial Performance Measures by Mode, FY 1996 – FY2005

3. Detail of Government Subsidies for Operations in Dollars, FY 1996 – FY 2005

4. Ridership by Mode and Fare Type, FY 1996 – FY 2005

5. Fare Schedule by Mode, FY 1996 – FY 2005

6. Number of Employees, FY 1996 – FY 2005

7. Five Year Forecast of Operating and Cash Results in Dollars, FY 2005 – FY 2010

Appendix D: Interview Guides & Highlights 1. Blair Senior Services, Inc. Guide

2. Blair Senior Services, Inc. Highlights

3. Somerset County Transportation System Guide

4. Somerset County Transportation System Highlights

Appendix E: Construction & Operating Cost Assumptions 1. Cost Items and Definitions



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Appendix F: List of Potential Sites 1. Internet Search

Appendix G: Blair County Senior Services, Inc. 1. Maintenance Shop Design Considerations

Appendix H: County Resolutions 1. Union & Snyder County

2. Snyder County Legal Opinion

Figures & Tables Figure 1: Map of Union and Snyder Counties, PA

Figure 2: USTA Passenger Trips, FY 1996 – FY 2005

Table 1: Regional Demographic Forecast: Union and Snyder Counties, PA

Table 2: Project Alternatives: Construction & Operating Costs

Table 3: Comparison of Alternatives Matrix – Project Goals



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I. Introduction The Union-Snyder Transportation Alliance (USTA) is the shared-ride paratransit transportation provider in Union and Snyder counties in Pennsylvania. Over the past few years the Alliance was the recipient of multiple federal earmarks, totaling nearly $3 million, for the construction of a vehicle maintenance facility. USTA currently contracts vehicle maintenance and repair work to a single local garage. The average annual cost (FY2000-2005) for these maintenance and repair services for a small-bus fleet of 32 vehicles is approximately $112,000 annually. It is USTA's

desire to draw-down the earmarks to begin design and construction of a maintenance facility. As a precondition of that effort, the United States Department of Transportation through the Federal Transit Administration (FTA) has requested that USTA prepare a "Needs Assessment" for the proposed maintenance facility. This report seeks to provide the justification for USTA's proposition to construct a multi-purpose maintenance and administration facility using the earmark monies. Project Background In the fall of 2004, USTA was advised by FTA of the availability of $485,437 in Section 5309 Capital Bus program funds for the construction of a vehicle maintenance facility. Subsequently, in early 2005, USTA received notice that an additional grant of $1,457,667 in Section 5309 Capital Bus program funds was awarded to USTA for the vehicle maintenance facility. In December 2005, the Alliance was notified of a supplementary award of $9