• May 20th, 2011
• 1 Comment

Federal transit law allows local match to be provided in many forms… including commitments of privately-financed capital, e.g. buses, rail cars and vans.  Fare revenue, however, is precluded from use as a local match mechanism.

Accordingly, a private provider of public transportation who makes an 80% federal / 20% private capital investment in vehicles may not use passenger revenue to recover the unsubsidized portion (20%) of their capital investment.

For all but a single mode of public transportation, this is a practical reality… The costs of service provision preclude the ability of a conventional transit service provider, public or private, to collect funds in excess of operating costs. In fact, the typical public transportation service recovers less than 40% of its operating expense and none of its capital expenses from fare revenue.

Commuter vanpooling, however, because of its comparatively low capital and low operating costs, CAN recover 100% of its operating expenses and a portion of its capital expense... but private providers of public vanpool services, e.g. VPSI and Enterprise, are precluded from using this revenue to recover the unsubsidized portion (20%) of their capital investment. These private providers of public transportation services would like to expand their capital investments for the purchase of vans to serve more commuters, but today it requires a local match from a public source. Public funds are in short supply… federal, state and local… private investors are willing and able to step up to the plate... and fare revenue is a viable source, but...

Private providers of commuter vanpool services have already purchased ~8,000 vans… a financial commitment of $250 million.  These private companies are willing to expand their services and to use privately-provided capital in conjunction with the use of federal transit funds and policies, e.g. the FTA Capital Cost of Contracting. Essentially, the law allows the privately-provided commuter van to be used as local match... but the private provider of public transportation service (vanpool) is prohibited from using fare revenue to recover the unsubsidized portion (20%) of his capital investment.

The Association for Commuter Transportation has proposed to amend 49 U.S.C. 5323(i) by inserting at the end the following:

# # #

To learn more about the amendment, click here to read full article (PDF)