2. MAT Paratransit Service Options

In this section, the data and methodology used in the analysis are presented, as are general descriptions of each of the five MAT paratransit service options, and the results of the analysis for each alternative. The options vary only by service boundary and fare charged. The remainder of MAT's Paratransit operations policy is expected to remain in its present form. This will ensure compliance with ADA and allow the system to benefit from relative consistency as described in the previous section.

As a result of their formulation, the service options allow the issues of economic and political fairness, in addition to concerns of managing service cost, to be addressed. The issue of economic fairness is important as certain rides such as those longer than average or those originating or terminating away from municipal centers are considerably more expensive than others. The latter often incur higher costs because of the time it takes for MAT vehicles to reposition. As the financing MAT receives from the municipalities is unequitable, including the absence of funding contributions from the City of Dilworth, the question of political fairness also arises. Adoption of some of the alternatives may be unlikely, primarily due to adverse political ramifications. However, quantifying their impact should aid in the evaluation process.

Three of the five service options would impose a flat-fare for all paratransit rides provided by MAT, while the other two have a two-fare system based on the location of origination and termination of a ride. The flat-fare options include: metro service, where Dilworth, Fargo, Moorhead, and West Fargo are provided equivalent service as is the present case; three-quarter-mile service where only those areas within three-quarters of a mile in each of the four cities is provided service; and three-city service where the majority of Dilworth will no longer be provided paratransit service. The two-fare options include the two-zone option, where all parts of the metropolitan are included in one of two zones, and the three-city-two-zone option where service to most of Dilworth is eliminated.

Three of the service options considered would, for the most part, end service to the City of Dilworth. In two of these, service to Dilworth is specifically targeted for elimination. There are two reasons for including these service alternatives. The first relates to the cost of providing trips to or from the community which are much higher because of its location. The second, weaker argument, relates to the absence of local funding being provided by the city.

The contractual relationship between West Fargo and Fargo, described in the previous section, would likely be violated by the introduction of three-quarter mile service. The introduction of zonal pricing, which are the basis for two other service alternatives, would likely require the current contract between the cities to be amended.

2.1 Data and Methodology

The analysis relies on information available from MAT, which is the same as that reported to the Federal Transit Administration for inclusion in the National Transit Database, and various parameters from the literature. This includes actual ride data during the week beginning March 16, 2005, operating and financial statistics, and own-price elasticities of demand for complementary paratransit service.

Because of the complexity of transportation system analysis, the methodology used is not particularly rigorous. This should not diminish its pragmatic value as the estimates of financial and ridership changes that occur under each of the service options should be relatively accurate though they are neither precise nor the result of an elaborate model.

Fortunately, MAT's current paratransit service is located at the end of a service/cost continuum where no other service alternative will expand the service boundaries or lower the fare. As either an increase in fares or elimination of service to a geographic area will result in a decrease in ridership, MAT's current ridership, vehicle ownership, and operating costs are upper bounds across all considered alternatives.

The numerical results of the analysis focus on a limited number of operating and financial estimates. They do not, however, include values for the cost of the development and implementation of the new service policy regimes. These one time costs, especially in the case where premium fares are collected, are sure to be sizable and may be equal to, if not greater than, the annual cost savings they would create.

MAT's paratransit fleet is equipped with mobile data terminals (MDTs) and is managed with the aid of software and dispatch software. The presence of such technology readily provides MAT with the technical capability of adopting the more complex service alternatives considered. Being readily able to account for and collect the correct fare for premium fare trips, based on distance or zone, is necessary for the services to be successful.

For each of the service options, assumptions as to true parameter values are made. This is the case for the annual number of riders in geographic sub-regions, the costs of rides to distant areas, and elasticities. As a result, three estimates for each service option are made: one conservative, one moderate, and one liberal. The assumptions for each option are explained fully in their respective section.

2.2 Service Option I: Metro Service

2.2.1 Service Description

Presently, MAT provides uniform paratransit service to the communities of Fargo and West Fargo, N.D., and Moorhead and Dilworth, Minn, at a fare of $2. The first service option is to keep this system in place in its entirety.

Figure 1 presents the current municipal boundaries of the four cities and the locations of ride origin and termination during the week beginning March 16, 2005. They are not scaled to depict the number of rides that begin or end in a certain place.

2.2.2 Revenues and Costs

The revenues, costs, and number of unlinked passenger trips provided by MAT for the year 2004 are presented in Table 2. For the calendar year ending Dec. 31, 2004, MAT completed 39,705 unlinked passenger trips, an increase of nearly 14 percent over the previous year. It had fare revenues of $177,698 and operating expenses of $536,571 for the demand-response portion of its operations.

Table 5. Revenues and Costs for actual 2004 service

Source:Metropolitan Area Transit

2.2.3 Pros and Cons of Continuing Current Service

The metro service option provides a high level of customer service delivered by a single, uniform system which is easier to manage than some of the alternatives. However, such service comes at a high cost financially. The option is not fair in an economic sense as individuals who take longer, more expensive trips pay the same fare as other riders. As the City of Dilworth does not provide local funds, though their residents receive the same service as residents of the other municipalities, there is a degree of political unfairness in MAT's current paratransit service policy.

2.3 Service Option II: Three-Quarter-Mile Service

2.3.1 Service Description

This service option provides the minimum amount of service as mandated by ADA. Here the service area extends three-quarters of a mile from existing MAT fixed routes. This results in the loss of service to the majority of the city of Dilworth, portions of residential Fargo and West Fargo, and industrial and non-developed portions of Fargo and Moorhead. Figure 2 visually displays the boundaries of the three-quarter-mile service area and the ridership nodes from the week of March 16.

2.3.2 Revenues and Costs

To estimate the ridership, revenues, and costs incurred under the three-quarter-mile service policy, a few assumptions need to be made as neither the actual annual number of rides nor the actual average operating expense per unlinked passenger trip are known with certainty.

During the week following March 16, 2005, there were 34 trips originating or terminating in areas outside the three-quarter-mile boundary. This equates to 1,768 trips per year. A conservative value of 1,560 trips used in the analysis corresponds to 30 trips per week and the more aggressive value of 1,976 trips corresponds to 38 trips per week. The conservative, moderate, and liberal estimates of the actual operating expenses of the forgone trips are $13.48, $16.85, and $20.23. These values corresponded to 100, 125 and 150 percent of the actual operating expense per unlinked passenger trip during 2004. It is assumed that the average fare revenue per trip, $4.48 will remain constant across all scenarios.

Two terms, presented in Table 3, need to be defined. The first term, uncovered expense is operating expense less fare revenue. The second is the term savings, which is the difference between the uncovered expenses under the current service policy versus a particular alternative. For example, using the metro service option in Table 3, the operating expense, $536,571, minus fare revenue of $177,698 yields an uncovered expense of $358,873. Under the moderate set of assumptions, the savings from implementing the three-quarter-mile service option, $21,953, is equal to the uncovered expense under the metro service option, $358,873, minus $336,920, the uncovered expense under the three-quarter-mile alternative.

Table 6. Estimated Revenues and Costs for Three-Quarter-Mile Service

The annual savings from implementing three-quarter-mile service is expected to range from $13,565 to $31,747 based on the preceding assumptions. Fares are expected to decline between $7,515 to $8,308 and operating expenses between $21,082 to $40,055. Under the set of most liberal assumptions, 1,976, or 38 rides per week would be forgone. At most, this might allow to the three-quarter-mile service removing one vehicle from the road.

2.3.3 Pros and Cons of Three-Quarter Mile Service

The three-quarter-mile service option is the lowest cost service alternative. Though it continues to provide uniform service, it also results in the largest number of forgone rides because some areas will no longer receive MAT paratransit service. There is an element of political unfairness as residents who desire to travel to or from outlying areas will no longer be able to do so. Service to a large portion of Dilworth is also lost which aggressively compensates for the absence of local contributions to MAT. Much of the areas of growth in West Fargo and Fargo, in the southwestern part of the metropolitan area, would also lose service under the three-quarter-mile alternative. The three-quarter-mile service option would likely violate the current contractual agreement between West Fargo and Fargo.

2.4 Service Option III: Two-Zone Service

2.4.1 Service Description

The third service alternative divides the metropolitan area into two zones. Zone 1 consists of areas within three-quarters of a mile of MAT fixed-route service. Zone 2 consists of the remaining parts of the four communities as shown in Figure 3. Rides originating or terminating within Zone 2 are subject to a fare of five dollars compared to the existing two dollar fare.

2.4.2 Revenues and Costs

As the service option includes a fare increase, assumptions regarding the own-price elasticity of demand for ADA complementary service in the Fargo-Moorhead area are necessary. Values are based on previous studies as summarized by Spielberg and Pratt regarding changes in ADA complementary paratransit fare in Sheboygan, Wis. This is the only ADA complementary paratransit elasticity referred to in the literature. No studies calculating the own-price elasticity of demand with zone implementation of paratransit were found by the authors. As the true rider response is not known, a range of values for the elasticity of demand are included. The conservative elasticity value used is -.1, the moderate estimate -.26, and the liberal estimate -.4. As with three-quarter-mile service, the average fare revenue within Zone 1 is assumed to be $4.48 and the operating expense cost per unlinked trip ranges from $13.52 to $20.23. Estimated operating measures under two-zone service are presented in Table 4.

Table 7. Estimated Revenues and Costs for Two-Zone Service

The savings from the change range from $2,705 to $17,312, the number of trips forgone from 283 to 1,061. Fare revenue declines are estimated to be between $1,118 and $4,191. Because of the inelastic nature of paratransit service demand, the increase in fare results in only a small decrease in total fare revenue, as the higher fares offset the slight decline in ridership. Operating expenses are expected to decline between $3,823 and $21,503. Under the most liberal set of assumptions, 1,061 trips per year, about 21 per week would be forgone. At most this might equate to the two-zone service removing one vehicle from the road.

2.4.3 Pros and Cons of Two Zone Service

Two-zone service results in a moderate cost savings, but requires additional resources to manage. There is also a political cost to having lower levels of service in outlying areas. A degree of economic fairness is introduced as those who make trips to distant locations impose higher costs on the system, costs which are offset to some degree by higher fares. Satisfactions levels may also suffer as customers will need to be educated about the service. Two-zone service would likely require an adjustment to the current contractual agreement between West Fargo and Fargo.

2.5 Service Option IV: Three-City Service

2.5.1 Service Description

The three-city service option would end service to those parts of Dilworth more than three-quarters of a mile from existing MAT fixed-route service while continuing to provide service to all parts of the other three communities. This service option results in a loss of service to a large portion of the city as seen in Figure 4. However, service to the entire city is not ended in order to maintain compliance with the ADA. This alternative is considered as the provision of service to Dilworth imposes significant costs on MAT paratransit services as a whole as trips either originating or terminating in the city require significant time to reposition vehicles. For the week of March 16, service was provided to a single origin/termination location in this area.

2.5.2 Revenues and Costs

Different values for the number of annual unlinked passenger trips that would be forgone under the service policy change range from 416 on the conservative side to 520 on the more aggressive. The values used correspond to eight, nine, the actual number during the third week in March, 2004, or 10 unlinked trips per week on average. The average operating expense per ride ranges from $13.51 to $20.27, 150 percent of that value. Average fare revenue is expected to remain the same at $4.48 per trip. Estimated revenues and costs are presented in Table 5.

Table 8. Estimated Revenues and Costs for Three-City Service

Fare revenue is expected to decline by between $1,862 and $2,372. The expected decrease in operating expense ranges from $5,662 to $10,541. Annual savings from eliminating service to Dilworth is expected to be between $3,760 to $8,214 based on the preceding assumptions. Under the most liberal set of assumptions, 520 trips per year would be forgone under three-city service, likely resulting in no change in the current fleet size.

2.5.3 Pros and Cons of Three-City Service

The three-city service option results in a modest savings in expenses in exchange for a decrease in rides delivered. The option maintains a uniform system in the areas that retain service. As with three-quarter-mile service, the three-city alternative aggressively compensates for the absence of local funding from the City of Dilworth.

2.6 Service Option V: Three-City-Two-Zone Service

2.6.1 Service Description

The three-city-two-zone service option is essentially the same as the two-zone service option described previously. Once again, the four cities will be divided into two zones based on their proximity to MAT fixed-route lines with those within three-quarters of a mile being unaffected. Trips within the cities of Fargo, Moorhead, or West Fargo and originating or terminating beyond that area will be subject to a $5 fare. However, under this option service to those parts of Dilworth more than three-quarters of a mile from MAT fixed-route service will no longer be provided service as seen in Figure 5.

2.6.2 Revenues and Costs

The assumptions for the three-city-two-zone service option are the same as those for the two-zone service described previously. Elasticities of -.1,-.25, and -.4 are used. Operating expense per unlinked passenger trip once again range from $13.51 to $20.27 and average fare revenue is for Zone 1 trips is remains at $4.48. Table 6 presents the estimated revenues and costs for three-city-two-zone service.

Table 9. Estimated Revenues and Costs for Three-City-Two-Zone Service

The number of unlinked trips forgone ranges from 632 using conservative assumptions to 1,269 using liberal ones. Fare revenue is expected to fall between $2,498 to $5,013; operating expense from $8,545 to $25,720. This results in expected savings from $6,047 and $20,707. Under the most liberal set of assumptions 1,269 trips per year would be forgone. At most this might equate to the three-city-two-zone service removing one vehicle from the road.

2.6.3 Pros and Cons of Three-City-Two-Zone Service

Adopting the three-city-two-zone service option will result in modest decreases in both trips delivered and financial cost. The system would loose a degree of uniformity in exchange for an increase in economic fairness. As in the two-zone option, riders traveling to or from distant locales will be required to pay a higher fare to offset the higher cost of the rides. Three-city two-zone service would also likely require an adjustment of the contractual agreement between West Fargo and Fargo.