Understanding SEPTA’s Statewide Economic ValueReport Highlights

June 2013

ECONSULT SOLUTIONS, INC.ECONOMICS | POLICY | STRATEGY

WHO WE ARE

QUANTITATIVE AND STRATEGIC ANALYSIS

RECENT PROJECTS

• Economic Development

• Real Estate

• Transportation

• Public Policy

• The value of open space

• Strategic Investment in Chicago Retail Corridors

• The Economic Value of SEPTA

• Impact of Supermarkets on Urban Land Value

THE ECONOMIC CASE FOR INVESTMENT IN SEPTA

WHAT WE EXAMINED

WHAT IS SOUTHEASTERN PENNSYLVANIA’S SHARE OF STATEWIDE TRANSPORTATION INVESTMENT?

ECONOMIC OUTPUT POPULATION TRANSPORTATION INVESTMENT

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

40%

32%

TRANSIT-13.3%

ROADS & BRIDGES-13.4%

27%

40% OF ECONOMIC OUTPUT, 32% OF POPULATION & 27% OF TRANSPORTATION INVESTMENT

SEPTA CAPTIAL INVESTMENT?

2012 INVESTMENT 34% BELOW 2010 PEAK

FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 $-

$100

$200

$300

$400

$500

$600

$354

$315 $342 $355

$431

$479

$426

$388

$316

$ M

ILLIO

NS

INVESTMENT AND CUSTOMER SATISFACTION

DECLINING INVESTMENT ASSOCIATED WITH LOWER SATISFACTION

FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY20136.00

6.50

7.00

7.50

8.00

8.50

9.00

0

100

200

300

400

500

600

Satisfaction

Capital Spending, 1 year Lag Effect

SATI

SFAC

TIO

N R

ATIN

G

CAPI

TAL E

XPEN

DITU

RES

IN $

MILL

ION

S

HOW HAS SEPTA’S RIDERSHIP CHANGED OVER TIME?

FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 270.0

280.0

290.0

300.0

310.0

320.0

330.0

340.0

350.0

300.7 305.2

295.3 298.3

301.0 298.7

296.6

307.2

325.1 329.6

321.0

334.0

339.3

Unlin

ked

Pass

enge

r Trip

s (M

illio

ns)

SEPTA’S RIDERSHIP IS AT A 23-YEAR HIGH

HOW EFFICIENTLY HAS SEPTA INVESTED PUBLIC FUNDS?

2005-2006 2007-2008 2010 2011 20120%

2%

4%

6%

8%

10%

12%

10.1%

6.3%5.8%

4.7%4.3%

CHANGE ORDER RATES (A MEASURE OF PROJECT COST OVERRUNS) CONTINUE TO DECLINE

HOW DOES SEPTA’S OPERATING EFFICIENCY COMPARE WITH OTHER PA TRANSIT AGENCIES?

SEPTA OTHER PA AGENCIES$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$1.49

$2.66

STATE SUBSIDY PER RIDER

SEPTA OTHER PA AGENCIES0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

42%25%

FARE RECOVERY RATIO

SEPTA’S EFFICIENCIES & RIDERSHIP GROWTH HELP KEEP SUBSIDY COSTS BELOW AVERAGE

HOW DOES SEPTA’S OPERATING EFFICIENCY COMPARE WITH INDUSTRY PEERS?

New York (MTA)

Wash. DC (WMATA)

Phila. (SEPTA) Chicago (RTA) Boston (MBTA)0%

10%20%30%40%50%60%70%80% 77%

68%

52% 52% 51%

HEAVY RAIL

New Jersey (NJT) Phila. (SEPTA) Boston (MBTA) Chicago (RTA)0%

10%20%30%40%50%60%70%80%

59% 57%

45% 41%

COMMUTER RAIL

Boston (MBTA) Phila. (SEPTA) New Jersey (NJT)0%

10%20%30%40%50%60%70%80%

49% 46%

23%

LIGHT RAIL

New Jersey (NJT)

Chicago (CTA)

New York (MTA)

Phila. (SEPTA)

Wash. DC (WMATA)

Boston (MBTA)

Chicago (Pace)

0%10%20%30%40%50%60%70%80%

45%38% 36%

30%25% 23% 19%

BUS

SEPTA’S FARE RECOVERY RATIO IS WITHIN A COMPETITIVE RANGE OF INDUSTRY PEERS

NOTE: THE NATIONAL TRANSIT DATABASE DOES NOT COUNT REIMBURSEMENTS FOR FREE & DISCOUNTED SENIOR CITIZEN TRAVEL IN PENNSYLVANIA AS FARE REVENUE, DEFLATING SEPTA’S FARE RECOVERY RATIO BY APPROXIMATELY FOUR PERCENTAGE POINTS

HOW HAS SEPTA’S CAPITAL FUNDING CHANGED OVER TIME?

FY1995

FY 1996

FY1997

FY 1998

FY 1999

FY 2000

FY 2001

FY 2002

FY 2003

FY 2004

FY 2005

FY 2006

FY 2007

FY 2008

FY 2009

FY 2010

FY 2011

FY 2012

FY 2013

FY 2014

FY 2015

0

100

200

300

400

500

600

700

REJECTION OF I-80 TOLLING FOR ACT 44

$191 M FROM ARRA

$ M

ILLI

ON

S

SEPTA’S CAPITAL FUNDING IS AT A 15-YEAR LOW

HOW MUCH CAPITAL FUNDING DOES SEPTA RECEIVE COMPARED WITH ITS INDUSTRY PEERS?

Chicago (RTA) New Jersey (NJT) Wash. DC (WMATA)

Boston (MBTA) Phila. (SEPTA) $-

$200,000,000 $400,000,000 $600,000,000 $800,000,000

$1,000,000,000 $1,200,000,000 $1,400,000,000 $1,600,000,000

$1,352,000,0

00 $1,160,000,0

00

$1,000,000,000

$883,000,000

$311,000,000

$957,000,000

$1,152,000,0

00 $997,000,000

$815,000,000

$304,000,000

FY 2012 FY 2013

PER…PASSENGER $2.07 $4.36 $2.40 $2.21 $0.92PASSENGER MILE $0.34 $0.36 $0.49 $0.49 $0.19VEHICLE MILE $6.96 $7.27 $7.75 $9.16 $3.47

SEPTA’S CAPITAL FUNDING IS ORDERS OF MAGNITUDE BELOW COMPARABLE AGENCIES

HOW MUCH ADDITIONAL FUNDING DOES SEPTA NEED TO ACHIEVE A STATE OF GOOD REPAIR (SGR)?

FY2012 FY2014 FY2016 FY2018 FY2020 FY2022 FY2024 FY2026 FY2028 FY2030 FY20320

1

2

3

4

5

6

7

8

9

ELIMINATE BACKLOG IN 20 YEARS ($652M/

YEAR)

MAINTAIN EXIST-ING BACKLOG ($329M/YEAR)

CURRENT LEVEL OF SGR SPENDING

($200M/YEAR)

SGR

BACK

LOG

($ B

ILLI

ON

S)

+$129M PER YEAR TO MAINTAIN BACKLOG; +$452M PER YEAR TO ELIMINATE IT

ECONOMIC IMPACT METHODOLOGY

STANDERD I-O ANALYISIS2,166 capital projects from FY 2004 to FY

2012

Projects split into 23 unique capital budget

departments

Average the past 5 years of activity from

each department

Non-local, non-state spending drops out

Non-local, state project costs stay in the state

model

Expenditures are then apportioned by RIMS II

category

Total costs are aggregated by RIMS II category and inputted

into the model

Local, state projects stay in both the state

and local models

Expenditures are then apportioned by RIMS II

category

Total costs are aggregated by RIMS II category and inputted

into the model

WHAT DOES SEPTA MEAN TO THE REGION’S ECONOMY?

ANNUAL IMPACTS CAPITAL INVESTMENT OPERATIONS TOTAL

DIRECT OUTPUT($ M) $265 $920 $1,185

INDIRECT & INDUCED ($ M) $305 $1,586 $1,892

TOTAL OUTPUT ($ M) $570 $2,506 $3,077

TOTAL EMPLOYMENT 4,079 19,971 24,050

TOTAL EARNINGS($ M) $170 $1,201 $1,371

SEPTA SUPPORTS JOBS, TAX REVENUES, AND ECONOMIC PRODUCTIVITY

ECONOMIC VALUE OF SEPTA

MEASURING THE GAINS ASSOCIATED WITH TRANSIT INVESTMENT

• Lower over all costs of travel by lowering congestion• Time• Parking

• Fewer travel fatalities and injuries• Reduced travel related pollution• Agglomeration economies

• Productivity is enhanced in dense environments. • Variety of location choices—urban, suburban and exurban • More travel options for households• Lower transit operating costs

INVESTMENT AND OPERATING COSTS

LOWER INVESTMENT RAISES TRANSIT OPERATING COSTS

10 9 4 3 2 1 -

0.20

0.40

0.60

0.80

1.00

1.20

1.40

AGE OF BUS

MAI

NTE

NAN

CE C

OST

PER

MILE

($)

SEPTA AND GREATER PHILADELPHIA TRAVEL COST

WITHOUT SEPTA DRIVERS AND TRANSIT RIDERS COST INCREASE DRAMATICALLY

Transit Users Net Increase in Cost: $581 million.

Shift to driving: $336 million Parking: $182 million Shift to private transit $502 million

Costs are partially offset by savings of $439 million that otherwise would have been spent on SEPTA fares.

Regional Drivers Net Increase in Costs: $1.37 billion.

Value of time lost: $1.19 billionParking cost increase: $176 million

Safety Costs from Additional Auto Travel: $134 million

Total Increase in Travel Cost: $2.08 Billion Annually

PERSPECTIVE ON TRAVEL COSTS

• Travel Cost Is Like a Tax, But Worse• Reduce the Competitiveness of a Region

• No Revenue For Providing Services

• Negative Impacts of Increased Travel Cost• Employment• Real Estate Values• Tax Revenues• Safety Impacts

WHAT ARE THE LONG-TERM ECONOMIC & FISCAL IMPACTS OF ELIMINATING SEPTA?

CITY OF PHILADELPHIA

COMMONWEALTH OF PENNSYLVANIA

JOB LOSS (246,000) (102,000)

EARNINGS LOSS ($ M) ($9,700) ($6.700)

PROPERTY VALUE LOSS($ M) ($59,000) ($95,000)

TAX LOSSES ($ M) ($1200) ($409)

DECIMATION OF THE CITY OF PHILADELPHIA

TRAVEL COSTS AND TRANSIT SYSTEM REDUCTION

LOWER INVESTMENT RAISES TRAVEL COSTS

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

0

500

1000

1500

2000

2500

PERCENT OF SEPTA SERVICE ELIMINATION

TRAV

EL C

OST

S ($

MILL

ION

S)

WHAT ARE THE LONG-TERM ECONOMIC & FISCAL IMPACTS OF STATUS QUO FUNDING LEVELS?

CITY OF PHILADELPHIA

COMMONWEALTH OF PENNSYLVANIA

JOB LOSS (59,458) (24,772)

EARNINGS LOSS ($ M) ($2,355) ($1,631)

PROPERTY VALUE LOSS($ M) ($14,296) ($8,443)

TAX LOSSES ($ M) ($289) ($99)

A MASS MIGRATION FROM CITY, WITH SEVERE IMPACTS ON THE REGION & COMMONWEALTH