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BART’s Business Model July 31, 2018 What is Public Transit’s Business Model?

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BART’s Business Model

July31,2018 WhatisPublicTransit’sBusinessModel?

2

BARTBackground

Basic Facts

• Regionalrailrapidtransit

• ElectedBoardofDirectors:9• Comprisedof3Counties:

- Alameda,ContraCosta&SanFrancisco- ServesSanMateo- WillserveSantaClarain2019

• 414,166weekdayriders(FY18)

• 121revenueroutemiles• 5lines,plusOaklandAirport

• 48stations• 48,000+parkingspaces

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel?

3

• FY19AdoptedBudget• Operating: $922M• Capital: $1,355M

• RailFareboxRatio(FTAFY14):(FareRevenue/OperatingCosts)• SF/OAK(BART) 78%• NYC(NYCTA) 63%• WashDC(WMATA) 62%• Boston(MTBA) 60%• Philadelphia(SEPTA) 55%

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel?

BARTBackground

Basic Facts

WeekdayTripsbySub-Area• 52%:Transbay• 27%:intra-WestBay• 21%:intra-EastBay

BetterBART,BetterMarketStreet

2/3rdsofBARTtripsbeginorendonMarketStreet

WeekdayRidership(FY10– FY16)• Growth: 29%• Growth: ~100,000• June2015 433,000

4SPUR:WhatisPublicTransit’sBusinessModel?July31,2018

RelatedtotheBARTStrategicPlan• Core:RelatedtoBART’sVisionandMission– SeamlessMobility– Movepeoplesafelyandreliably– ReduceRisk(safety/service/reputational/financial)– Howdotoday’sdecisionsaffectBART’slong-termoutlook?

• Dynamic:RelatedtoBART’scurrentandfutureenvironment– ImproveCustomerExperience– GenerateRevenue– ReduceCosts/CostNeutral

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel?

BART’s Business Model

5

BART Strategic Plan Framework

Strategic Plan and FY19 Budget

StrategicPlanprovidespolicydirectiontoBudgetprocess&decisionmaking

StrategicPlanfunction:LinkingPolicy guidance,Riskinformation,andBudget decisions

July31,2018 7

Ten-Year Financial Outlook

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel?

-$70

-$60

-$50

-$40

-$30

-$20

-$10

$0

$10FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28

Millions

8

BARTDAS,July2014

Riders by Station, by Time of Day

0

500

1000

1500

2000

2500

3000

3500

4000

4500

4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00

CombinedStationEntries&Exitsin15MinuteIncrements

MT

EM

PL

CC

19th

BK

16th

12th

24th

MA

BP

ED

PH

Montgomery

Embarcadero

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel? 9

10

TheBeforeandAfterEffectsofBART

Transbay Service

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel?

Recent BART Ridership Trends

101.0 103.7110.8

117.8 117.1126.0 128.5

124.2 120.6

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18

Annual Trips (millions)

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel? 11

Rail Ridership Trends At Peer Agencies

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel?

0.2%

-10.4%

-4.7%

-1.3% -0.2% -0.8%

-4.5%

BART WMATA(DC)

MARTA(Atlanta)

CTA(Chicago)

MBTA(Boston)

NYMTA SEPTA(SEPenn)

Year-to-year%change(CalendarYear2016vs2015)

Note:Thesedataarebasedon“unlinkedpassengertrips.”

Source:http://www.apta.com/resources/statistics/Documents/Ridership/2016-q4-ridership-APTA.pdfUnlinkedpassengertrips

12

Transbay AM Floating Peak Hour, Peak Direction Ridership

02,5005,0007,500

10,00012,50015,00017,50020,00022,50025,00027,50030,000

Peak Hour Ridership

2015 2016 2017 2018

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel? 13

Ridership by Day of Week

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel? 14

Ridership Trends

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel? 15

Fare Revenue

$274 $278 $291 $299 $318 $353 $353 $383 $399 $392 $393

$9 $19

$27 $33 $39

$35 $40 $41 $43 $49

$53 $54

$60 $63 $60 $61

$0

$100

$200

$300

$400

$500

$600

FY08 FY09 FY10 FY11 FY12 FY13 FY 14 FY 15 FY 16 FY 17 FY18 Est

Annual Fare Revenue (millions)

Core System CPI-based Fare Increase SFO Extension

DateofIncrease

AverageIncrease

1/1/2006 3.7%1/1/2008 5.4%7/1/2009 6.1%7/1/2012 1.4%1/1/2014 5.2%1/1/2016 3.4%1/1/2018 2.7%

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel? 16

Capital Sources

17Totalexcludes$7Minreimbursablecapitalexpenses

FY17-31 CIP Major Investment ProgramsNeed and Funding

NeedandFunding(millions)

$- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000

CapitalAssetRenewalPrograms

Big3(includingTCMP)

CoreCapacity(ExcludingTCMP)

AccessEnhancementandStationMod

BARTMetro

EarthquakeSafetyProgram

SystemExpansion

OtherNeeds

CommittedFunds DiscretionaryFunds FundingGap

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel? 18

Capital Budget History

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel? 19

Operating to Capital Allocations

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel?

$428 $467 $498 $524 $498 $486 $524 $561 $569 $610 $637$690

$743

$24$34

$50 $8 $34 $59$64

$84 $113$148

$144$123

$127

$63$70

$66 $68 $68 $68$62

$62$58

$56 $49$50

$51

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$-

$100

$200

$300

$400

$500

$600

$700

$800

$900

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18Budget

%Ope

ratin

gFund

sAllo

catedtoCap

ital/A

ccess

Ope

ratin

gExpe

nditu

res($M

)

OperatingExpense AllocationstoCapital,Access,andReservesDebtService %ofOperatingFundsAllocatedtoCapital/Access

20

RelatedtotheBARTStrategicPlan• Core:RelatedtoBART’sVisionandMission– SeamlessMobility– Movepeoplesafelyandreliably– ReduceRisk(safety/service/reputational/financial)– Howdotoday’sdecisionsaffectBART’slong-termoutlook?

• Dynamic:RelatedtoBART’scurrentandfutureenvironment– ImproveCustomerExperience– GenerateRevenue– ReduceCosts/CostNeutral

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel?

BART’s Business Model

21

Near Term Focus and Issues

• OperatingEssentials– OpenBARTtoAntioch– May2018– IntegrateNewRailCarsintorevenueservice– StaffanexpandedHaywardMaintenanceComplex

• InitiativestoImproveCustomerExperience,ReduceCosts,GenerateRevenue– QualityofLife

• Homelessness• Cleanliness• FareEvasion• Safety&security

– Administrativeprocessefficiencyimprovements– AccessandParkingimprovements

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel? 22

Ridership and Employment Trends

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel?

300,000

320,000

340,000

360,000

380,000

400,000

420,000

440,000

460,000

480,000

500,000

1,800,000

1,900,000

2,000,000

2,100,000

2,200,000

2,300,000

2,400,000

2,500,000

BARTRidershipvsSF-Oak-HaywardMSAEmployment

SF-Oakland-HaywardMSAEmployment AvgWeekdayRidership

12per.Mov.Avg.(SF-Oakland-HaywardMSAEmployment) 12per.Mov.Avg.(AvgWeekdayRidership)

23

Non-Passenger Revenue Opportunities

• TransitOrientedDevelopment• Advertising• TheBARTDigitalRailwayandDigitalStrategy

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel? 24

CurrentTODPortfolioStatus Station TotalUnits

AffordableUnits

%AffordableOffice(SF)

Retail(SF)

CastroValley(1993) 96 96 100%FruitvalePhaseI(2004) 47 10 21% 27,000 37,000PleasantHillPhaseI(2008) 422 84 20% 35,590Hayward(1998) 170 0 0%Ashby(2011) 0 0 0% 80,000RichmondPhaseI(2004) 132 66 50% 9,000MacArthurPhI(2016) 90 90 100%SanLeandroPhI(2017) 115 115 100% 5,000 1,000WestDublin(2013) 309 0 0%EastDublin(2008) 240 0 0%SouthHaywardPhI(2017) 354 152 43%

1975 613 31% 112,000 82,590MacArthurPhII(begins2017&2018) 787 56 7% 39,100SanLeandroPhII(2017-2019) 85 85 100%WalnutCreek(began2017) 596 0 0%ColiseumPhaseI(2017-2019) 110 55 50%WestPleasanton(2017-2019) 0 0 0% 410,000PleasantHillBlockC(begin2018) 200 0 0%FruitvalePhaseIIA(begin2018) 94 92 98%

1872 288 15% 410,000 39,100

GRANDTOTAL 3847 901 23% 522,000 121,690

Completed

TOTALCOMPLETED

TOTALUNDERCONST.&PLANNED

Constructio

n/

Plan

ned

LandLease/Sale

Participation*Ridership

Revenue from Transit-Oriented Development

• Revenueislongterm:fromchoicesmade10-20yearsago

• Pastpriorities:ridership,parkingreplacement,longtermrevenue

• CityRedevelopmentplayedmajorroleinmostcompletedprojects

• Decisionsmadetodaycouldaffectrevenuein7-10years

2018BARTTOD-GeneratedRevenue

*TransitBenefitFees,RevenueSharingforRetail,ParkingGarages

$740k

$184K~$3Million

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel? 26

Revenue Share Opportunity

BasedonOUTFRONTnetrevenueprojection,totalestimatedpaymentstoBARTcouldbeapproximately$272M,ofwhich$160Misguaranteed.

$9.0M$12.0M $12.0M $12.0M $12.0M $13.0M $14.0M $15.0M $16.0M $17.0M $18.0M

$10.0M

$.5M

$2.4M $4.7M $6.0M$11.3M $11.6M

$15.1M $15.2M $15.1M $15.1M $15.0M

$-

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

October1,2018- June30,2019

FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29

BARTRevenueShareOpportunity(basedonOutfrontprojection)

SigningBonusPaymenttoBART(Guaranteed)

MinimumAnnualPaymenttoBART(Guaranteed)

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel? 27

Digital Railway – Current State

FY16

Fiber&CellularRevenue

$8.5M

• UndergroundCellularNetwork• AboveGroundCellularTowers• DarkFiber

FY17

Fiber&CellularRevenue

$9.7M

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel? 28

Digital Railway – Business Units

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel? 29

Areas to Watch

• Potentialforfurtherridershipdeclines• BallotmeasuretorepealSB1,reducingBART’sSTAallocation

• NextEconomicDownturn• ImpactsofNationalPolicies

July31,2018 SPUR:WhatisPublicTransit’sBusinessModel? 30

DiscussionandQuestions

Concluding Remarks

31July31,2018 SPUR:WhatisPublicTransit’sBusinessModel?