7. Summary and Recommendations

In many respects, vanpooling produces the greatest benefits for commuters who work in urban areas. For these commuters, benefits accrue via not only fuel savings but also as a result of reduced parking and toll fees, shorter commute times related to the availability of high occupancy vehicle lanes, etc. Additional societal benefits result from reduced vehicle emissions, reduced traffic and parking congestion, fuel conservation, etc.

While many of these personal and societal benefits may not be factors in rural areas, some are. These benefits are related mainly to lower commuting costs, fuel conservation, and reduced vehicle emissions. Vanpooling in rural areas also produces additional benefits related to rural community viability and employer access to an expanded workforce.

North Dakota's ultimate decision regarding the creation of a state vanpool program will be a policy determination concerning the role that vanpooling should play in a comprehensive personal mobility program and the resources that the state is willing/able to devote to the program. If a program is reestablished, participation will then be up to individual employers and commuters. The benefits associated with the program will determine whether or not commuters will give up the personal freedoms associated with commuting via private automobile in favor of commuting with coworkers in a 7-15 passenger van.

From an economic perspective, commuting via vanpool in North Dakota will save participants money almost exclusively via vehicle operating costs rather than from costs associated with parking, toll roads, etc. Savings will vary depending on the price of fuel, the size and value of the cars and vans being used, daily commute distances, government subsidies, etc.

As discussed in Chapter 3, vanpoolers save the greatest amount if their participation in a vanpool allows them to function with one less vehicle, thereby eliminating all related operating and ownership costs. In many instances, however, vanpoolers will not be able to eliminate a vehicle. They will, therefore, continue to incur expenses such as loan repayments, insurance, etc. The only costs that will be eliminated are per mile operating costs and possibly lower insurance expenses. For comparison purposes, these are the costs that have been considered throughout this study. As discussed in Chapter 3, additional savings may be realized if the commuter's employer has a flexible spending plan which allows employees to pay for not only medical expenses and child daycare but also commuter vanpooling on a pre-tax basis.

Table 7.1 summarizes the cost advantages that vanpools have over single-occupant vehicles. This table is based on a 25-mile one-way commute, a van with seven paying passengers, and a flexible spending account that resulted in tax-related savings of $35 per month.

It should be noted that the hypothetical vanpool fares presented in Table 7.1 are reflective of a private vanpool that is operated with no related government incentives or cost-reducing features (see Figure 2.1 for underlying costs). These fares also assume the absence of a profit margin for a commercial vanpool company. The presences of any of these items would cause fare changes. Ultimately, actual vanpool charges and available tax incentives must be compared with actual private automobile commuting costs to determine true savings.

As Table 7.1 illustrates, vanpoolers achieve monthly savings over single-occupant vehicles regardless of whether the price of fuel is $2 per gallon or $3.25 per gallon; savings increase along with the price of fuel. As indicated in Table 7.1 and in Chapter 2, based on the assumptions outlined therein, the actual pre-tax cost advantages of vanpooling begin to occur when fuel prices exceed about $1.75 per gallon.

Additional savings, over and above those presented in Table 7.1, would also be realized if the number of paying passengers was increased to more than seven. Employer-provided incentives may also increase available incentives beyond those outlined above.

As discussed in Chapter 4, virtually all of the government-sponsored vanpool programs in the country provide some form of incentive to entice commuters to give up the personal mobility associated with private automobiles. In some instances, the incentives are highly visible and come in the form of monetary subsidies to offset monthly lease and operating costs. In New Jersey, for example, each program vanpool receives a monthly subsidy of $150 per month. In the Twin Cities, monthly vehicle lease rates are subsidized at a 55% rate; an incentive that is worth between $600 and $700 per month. Most programs offer ongoing incentives while a few limit them to initial offers to entice people to try vanpooling.

While some programs have readily visible incentives, others provide less visible cost-cutting services that reduce participants' monthly fares and bring them down to or below those ultimately achieved when directly subsidies are involved. These services are generally associated with programs that use government employees and purchase and maintain their own vehicles, purchase fuel, provide insurance, etc.

Whatever approach is taken, programs must ultimately achieve monthly fares that are attractive enough to entice commuters to give up the convenience of a personal automobile in favor of a multipassenger van. The exact fare that is necessary to cause this conversion will vary by individual and will be influenced by not only car vs. van cost comparisons but also by other economic factors (parking and toll fees, etc.) and noneconomic issues such as commute times, ride comfort and safety, reduced vehicle emissions, etc.

This chapter will discuss these and related matters and will present program design recommendations that the state may want to consider if it decides to reestablish a state-sponsored commuter vanpool program. Topics of discussion will include:

• Availability of financial resources
• Management
• Program features
• Marketing
• Cost estimates
• Monitoring

Recommendations specific to each of these topics will be presented at the beginning of each related section. Subsequent discussions will present the rationale related to each recommendation.

7.1 Availability of Financial Resources

7.1.1 Recommendation-Reestablish Vanpooling in North Dakota

It is recommended that North Dakota reestablish a vanpool program on a trial, turnkey basis using short-term funding sources that require little or no local match and/or approaches which allow passenger fares to be used as local match. The program should set a goal of establishing 10 vanpools per year during its three-year trial period.

This approach should be reassessed as the program matures. Based on the reception that it receives and the availability of future funding and manpower, alternate approaches may be warranted to make the program more attractive and to increase its cost- effectiveness and long-term viability.

As discussed in previous chapters, federal agencies such as the Federal Highway Administration (FHWA) and the Federal Transit Administration (FTA) have rules in place which provide considerable flexibility regarding the use of program funds for vanpool programs. While there are no program funds that apply specifically to vanpooling, states are able to use a variety of federal highway and transit funds to operate vanpool programs. Redirecting these funds to vanpooling does, however, reduce the amount of money that would otherwise be available to support other programs. A state must, therefore, make corresponding policy decisions concerning the use for federally appropriated monies.

In North Dakota's case, the North Dakota Department of Transportation (NDDOT) has appropriations in major funding categories that are typically used by other states to support vanpool programs. These categories and their match requirements, as discussed in Chapter 3, include:

• FHWA – Congestion Mitigation and Air Quality (CMAQ) – up to 100%
• FHWA – Surface Transportation Program (STP) – 80%
• FHWA – National Highway System (NHS) – 80%
• FTA – Section 3037 - Job Access and Reverse Commute (JARC) – 50-100%
• FTA – Section 5307 - Urbanized Area Formula Grants Program – 80%
• FTA – Section 5309 - Discretionary Capital Imp. and Acquisition Funds – 80-100%
• FTA – Section 5311 - Rural Public Transportation Program – 50-90%

Program funds are typically used to administer and promote the program and to purchase or lease vehicle purchases. Programs that purchase vehicles typically cannot use passenger fares for local match.

Given the availability of discretionary funds, reestablishing a state-sponsored vanpool program in North Dakota is not a matter of funding, but rather one of competing interests. As will be discussed in a later subsection, the amount of money required to operate a vanpool program is relatively small compared to highway construction costs or the costs associated with some transit programs. Vanpooling must, nonetheless, compete with other programs for available dollars.

With the goal of establishing ten pools per year during a three-year trial period, the program would have ten pools in operation at the end of Year One, 20 at the end of Year Two, and 30 at the end of Year Three. Related discussions throughout the remainder of this chapter are based on this level of activity.

7.2 Management

7.2.1 Recommendation-Contract for Program Operations and Promotions

If North Dakota decides to reestablish a commuter vanpool program, it may be advisable to use a turnkey approach to initiate service with little staffing commitment or long-term risk.

As discussed in Chapter 4, states and various local vanpool promoters have taken different approaches regarding the management of their respective programs. Some are run almost entirely with government personnel while, in other instances, commercial contractors are used.

While North Dakota may have theoretical access to sufficient federal money to support a vanpool program, corresponding human resources may be more difficult to provide. Agencies must operate with employee numbers authorized by the Legislature. If all agency positions are required to complete other work, little or no time may be available to administer a vanpool program.

These manpower needs extend, in some instances, beyond program administration. Many states, for example, purchase program vehicles via state contracts and some even maintain these vehicles with state maintenance personnel. Some programs provide vanpool insurance via state insurance mechanisms and several states provide vanpool fuel at state fleet fueling sites or at commercial sites via state credit cards.

All of these devices help reduce vanpool operating costs but they all have manpower costs associated with them. In some cases, these manpower needs may not result in incremental increases in personnel numbers or related costs but in others, additional manpower would be required to provide related services.

The advisability of providing these products and services in-house must be made on an item-by-item basis and is beyond the scope of this study. If it is determined that they can be procured or provided without hiring additional staff, it may, in fact, be beneficial to provide them internally. These same assessments should also be made if and when a program becomes sufficiently large to justify full-time positions to provide related products or services or when other related state programs have surplus staff time which may allow portions of various positions to be fully or partially assigned to a vanpool program.

In some instances, state or local vanpool programs are too small to fully internalize their program's operations or they do not have direct access to corresponding services or manpower. In such cases, administrators may choose to contract with a commercial entity to organize, administer, and/or promote the program.

Conversely, in some cases, related contracts may be executed with other governmental or nonprofit entities such as metropolitan planning organizations or transportation management associations. These entities do not face the personnel constraints that may limit many state agencies. Corresponding programs may be tied to a particular region or community or, as is the case in Maine, related programs may be offered on a statewide basis. These operating entities may also be able to procure many of the benefits that are sometimes associated with state-run programs (tax-exempt fuel purchases, state contract vehicle purchases, etc.).

Timely implementation is also an issue. Developing and implementing a vanpool program is likely to take longer if internal mechanisms are required for all the various functions that might be handled by state personnel. Contracting for services, especially from an entity that is already operating similar programs elsewhere, should permit the program to be up and running in far less time than might be possible otherwise.

There does not seem to be a correlation between management models and the size of a program. As discussed in Chapter 4, Connecticut's 300-pool program is run via contracts with private, nonprofit organizations while Utah's 264-pool program is run with state personnel. Michigan runs its 133-pool program via a contract with a commercial service provider. Maine's modest nine-pool program purchases vehicles via state contract and contracts with a local council of governments to promote and manage the program.

As indicated earlier, the proposed approach should be reassessed as the program matures. The ability to access various state purchasing programs (vehicles, fuel, insurance, etc.), to procure personnel to promote and administer the program, and the overall size of the program may suggest that internalization may, in the future, produce greater efficiencies, lower fares, and increased participation.

It may be necessary to use a state employee on a one-quarter time basis to oversee the program and to assist the contractor with administration and promotion. Assuming an annual salary of $40,000 and fringe benefits at approximately 33%, the cost of this function would be approximately $13,500 per year. A similar amount might be spent annually for related office expenses, travel, etc. Double this amount might be appropriate during the first year to cover initial start-up costs such as printing brochures, etc.

The cost of contract management is estimated at 10% of annual vehicle lease costs. As will be discussed in later sections of this chapter, vehicle lease rates may equal about $1,250 per vehicle per month or about $15,000 per year, including maintenance and insurance. Assuming a ten-pool program and management costs at 10%, the Year One cost of this service is estimated to be about $15,000. Year Two costs would be $30,000 and Year Three costs would be $45,000.

7.3 Program Features

There are several potential disincentives associated with vanpooling. These disincentives include things such as reduced vehicle comfort, longer commute times, loss of personal freedoms, need for emergency transportation, etc. Some of these disincentives may be overcome via the economics associated with ridesharing and some may be addressed by program features that help eliminate or reduce them. The following subsections present recommendations related to these inherent disincentives. Hopefully these program features and incentives will make North Dakota's vanpool program attractive to a significant number of state commuters.

7.3.1 Recommendation-Vehicle Size, Style, and Age

The program should operate with vehicles designed to transport between seven and twelve passengers. Vehicles should be equipped with features such as front and rear heating and air conditioning, individual reading lights, etc. Pools should also have the option of equipping their vehicles with adjustable reclining seats rather than traditional bench seats.

It is doubtful that many commuters will convert to vanpooling based strictly on economics. Commuting convenience and comfort are also important considerations. This is the basis for recommending that program vehicles be nicely equipped and that pools have the option of specifying vehicles with individual (vs. bench) seats. These features are especially important for longer distance commutes. For safety reasons, it may be advisable to avoid vehicles that are designed to carry 15 passengers.

The vanpool programs discussed in Chapter 4 have varying expectations concerning vehicle life. Some continue to use the traditional four years or 100,000 mile measure while others expect as much as eight years or 200,000 miles of use.

It is recommended that detailed maintenance records be maintained to help the program determine how long program vehicles should be kept in service. This information will be invaluable when assessments are eventually made concerning the long-term use of commercial operators to provide and maintain program vehicles.

From a participant's perspective, a vanpool program should provide reasonably priced, competitive rates. Services should be provided in a manner that minimizes commuting times and provides rides in a comfortable and safe setting. Participation commitments should be of short duration and provisions should be made to accommodate mid-day emergency trips by riders. Drivers' administrative responsibilities should be minimal and they should be compensated for their efforts (driving, maintenance, administrative, etc.). Program personnel should be available to answer questions. Recommendations related to each of these items are presented in subsequent subsections.

Concerning vehicles sizes, styles, and ages, a few of the vanpool programs discussed in Chapter 4 operate 15-passenger vans but it appears that the majority operate either seven passenger mini-vans or 9- to 12 passenger vehicles. The primary reasons cited for not operating larger vehicles include safety, comfort, and the logistics of dealing with a larger number of passengers.

Vehicle comfort may be one excuse that some commuters would cite as a reason for not riding in a vanpool. Some programs overcome this potential obstacle by equipping all vehicles with individual adjustable reclining seats for each passenger. This enhancement would have some impact on initial vehicle costs and would reduce the capacity of a traditional 12-passenger van down to nine. The capacity of a traditional nine-passenger model would be reduced to seven.

As discussed in Chapter 3, commercial vanpool operator VPSI uses a four-year, 100,000 mile vehicle replacement schedule. Many of the publicly operated programs discussed in Chapter 4 use something similar but some have higher use and age expectancies. Pools which accrue 100 vehicle miles per workday will travel approximately 100,000 miles in four years.

7.3.2 Recommendation-Subsidize Monthly Fares

Fares should be subsidized by approximately $60 per nondriver passenger per month and pools should set their own fares to cover related lease payments and fuel costs.

There are several real and/or perceived disadvantages associated with vanpooling (less comfort, longer ride times, loss of freedom, etc.). Some of these items may be addressed directly by various program design features while others are best addressed via competitive pricing. For a variety of reasons, what works in one part of the country may not necessarily work somewhere else.

As stated in the Federal Transit Administration's 2005 Transit Cooperative Research Program report on vanpools, vanpooling does not lend itself to quantitative analyses and empirical evidence may be the best means of establishing direction and scale (Evans and Pratt). Trial and error may be the ultimate test and North Dakota should especially monitor both its experiences and those of Fargo-Moorhead to determine what program modifications are warranted in future years.

Chapter 4's discussions concerning existing vanpool programs included information on monthly passenger fares charged by each program. Where possible and for comparison purposes, this information focused on pools which travel a total of 50 miles per day. Pool sizes vary widely depending on the size vehicles used by each program. Table 7.2 summarizes the fare information presented in Chapter 4.

Some of the vanpool programs discussed in Chapter 4 charge a monthly rate plus the cost of fuel. Where fuel expenses represent a supplemental expense for passengers, monthly fare amounts in Table 7.2 are adjusted to reflect these costs based on gasoline at $2.50 per gallon; a price that was representative of prices in effect when fare information was obtained from the programs listed. Fargo-Moorhead's program initiated service in September 2005; its fare is calculated as if fuel was available at a price comparable to the other programs listed.

It should be noted that the monthly fares reported in Table 7.2 are not fully allocated costs. As discussed in Chapter 4, these fares represent the amount that passengers are charged. In many instances a portion of the costs are paid by the sponsoring program – a subsidy to encourage participation.

As discussed elsewhere in this report, vanpoolers in some areas realize cost savings beyond the differential that exists between personal vehicle operating costs vs. monthly vanpool fares. These savings relate primarily to factors such as toll and parking fees. Vanpoolers in rural areas like North Dakota typically do not achieve these savings.

It should also be noted that Fargo-Moorhead is only planning to subsidize fares during each pool's first year of operation. Thereafter, fares will increase by slightly over 10% for riders and by over 50% for drivers. FM-COG's fare structure is admittedly experimental and changes may be made, if necessary, to encourage participation. Based on the comparisons presented in Table 7.2, higher fare subsidies may be necessary.

As reported earlier, vanpool fares are relatively inelastic – once passengers are committed to vanpooling, they are not likely to return to commuting via automobile because of modest fare increases. Attractive fares may, however, be required to achieve initial involvement.

As discussed in Chapter 4, some programs require that pool participants pay the cost of fuel. Excluding the two lowest fares in Table 7.2 (programs which use state fleet fuel and mechanics and Fargo's admittedly experimental fare) produces an average monthly fare of approximately $81, including fuel. Reducing this monthly total by the cost of fuel produces a monthly fare of approximately $56.

As indicated in Table 2.1, it costs about $189 to commute to work in a single-occupant automobile, assuming a 50-mile daily round trip and fuel at $2.50 per gallon. The program's summarized in Table 7.2 do, therefore produce significant financial savings for participants. Additional tax-related, toll, and parking savings may also result.

Based on anticipated average monthly leases of $1,250 per month and the $60 per passenger monthly subsidy, a pool with seven paying passengers would incur monthly lease-related payments totaling $830 or approximately $120 per passenger per month. Subsidy payments would total $420 per month ($60 for each of seven paying passengers). By way of comparison, the Twin Cities' vanpool program discussed in Chapter 4 provides an average monthly subsidy of $690 to its pools.

This $120 monthly fare for a 50-mile daily roundtrip is considerably higher than the fares summarized in Table 7.2. It may, however, be inadvisable to undercut those being initially charged by Fargo-Moorhead's new program. This fare, plus anticipated fuel costs, would still produce monthly vanpool vs. private automobile savings of nearly $50 (25%) for participating commuters.

As discussed in Chapter 3, additional tax savings of up to $35 per month may be achievable for some participants. Time will tell if this savings and other vanpool advantages are significant enough to entice commuters to forego the independence associated with commuting via personal automobile. Participation should be monitored to make a more accurate assessment.

A later subsection will recommend that monthly passenger fares be set on a per vehicle, rather than a per passenger, basis. This approach would provide incentives for pools to operate at full capacity and to thereby reduce actual monthly fares below the level discussed in preceding paragraphs. Further related discussions will be presented in a subsequent subsection of this chapter; corresponding fare information will be presented in Tables 7.3 and 7.4.

It is also recommended that each pool be allowed to set its own monthly fare to cover related lease payments and fuel costs. Most of the vanpool programs discussed in Chapter 4 prescribe monthly lease rates; some include the cost of fuel in quoted rates and some do not. Administrative burdens and budgetary risks obviously occur when quoted rates include fuel costs, especially when prices fluctuate as they did throughout 2005. These problems can be avoided by charging pools a set rate which covers all nonfuel expenses. Pool members should then assess themselves whatever is required to cover this lease expense plus the cost of fuel; adjustments can be made as each pool's situation dictates.

Based on an average subsidy of $420 per pool per month, the program would incur related subsidy costs of $5,040 per pool per year. Assuming 10 start-ups per year, Year One subsidy costs would total $50,400. Year Two costs would equal $100,800 and Year Three costs would total $151,200.

7.3.3 Recommendation - Subsidize Drivers

Drivers should ride free of charge and be able to use the vehicle for personal use of up to 10% of its total mileage, as long as that use does not interfere with the vanpool's needs. Up to two backup drivers per pool should receive an annual subsidy of $100.

North Dakota should draw from the experiences of other programs and allow drivers to ride free. This compensation is in recognition of the responsibilities undertaken by drivers. These responsibilities include driving, recruiting riders, scheduling maintenance, collecting and remitting fees, and satisfying reporting requirements. Backup drivers should also be compensated for their services.

The cost of subsidizing primary drivers will not increase program costs beyond those discussed in the previous subsection since those costs are based on recovering all unsubsidized lease payments from each pool's passengers. Spreading those subsidies out over all the passengers in each pool, both driver and passengers, does, however, actually reduce per passenger subsidies from $60 per passenger per month to $51.25 per passenger per month.

The proposed $100 per year subsidy for up to two backup drivers per pool would cost the program $2,000 in Year One, $4,000 in Year Two, and $6,000 in Year Three.

7.3.4 Recommendation - Subsidize Empty Seats

The program should make allowances for costs associated with vacant seats. Fare structures should be based on the assumption that all vehicles will operate with one vacant seat. The program should pay for the cost of any additional vacant seats for up to one month after the seat becomes vacant. Thereafter, riders would experience a fare increase until that seat is filled. Exceptions could be made for extenuating circumstances.

Requiring passengers to bear the cost of empty seats would discourage participation. The program should give pools up to one month to fill vacant seats and to thereby avoid related expenses. Corresponding subsidies could be limited to $300 per pool per year to control costs and to encourage aggressive recruitment by pool riders when vacancies occur. Assuming a $300 empty seat subsidy payment per pool per year, a ten-pool program would incur corresponding costs of $3,000 annually.

7.3.5 Recommendation - Calculate Fares on a Per Vehicle Basis

Passenger fares should be calculated on a per vehicle basis based on the assumption that drivers ride free and that one seat will be vacant at all times.

Establishing a fare structure on a per passenger basis would require the program to estimate how many passengers would be riding in each vehicle. This approach would produce obvious shortfalls if vans run at less than projected levels. It would also provide riders with no incentives to recruit additional passengers when vacancies occur.

To address these deficiencies, it may be beneficial to quote passenger fares on a per vehicle basis. Corresponding fares could be calculated based on the assumptions that drivers ride free of charge and that one seat would be vacant at all times. Doing so would encourage pools to operate with no vacant seats and to thereby reduce actual monthly fares below projected levels. This approach would also negate the need for other incentives designed to encourage riders to recruit new participants to fill vacant seats.

Table 7.3 presents a hypothetical monthly per vehicle fee schedule based on the approximate vehicle lease being charged the new Fargo-Moorhead program by VPSI. These monthly lease costs are then reduced by $60 per passenger, based on the assumptions that drivers ride free of charge and that there will be one vacant seat in every vehicle at all times. The end results of these calculations are monthly fee amounts that would be required from each of the various size vans identified in Table 7.3.

As per the recommended fee per vehicle approach, vanpools would be required to remit monthly payments equivalent to the amounts shown in Table 7.3. Each pool would calculate its per passenger fees based on the number of passengers in the pool.

As indicated earlier, the subsidies and fee amounts in Table 7.3 are based on the assumptions that drivers rider free of charge and that there will be one vacant seat in each pool at all times. Table 7.4 is an extension of Table 7.3 in that it divides each pool's monthly vehicle fee by the number of paying passengers in each pool to determine each passenger's monthly fare. The table also calculates what fares would be required and savings that would result if the each pool is operating at full capacity rather than with one vacant seat.

The hypothetical fares in Table 7.4 are based on a five-day work week and do not take fuel costs and possible tax-related savings into consideration. As presented in Chapter 2's Table 2.2, fuel costs for a van that travels 50 round-trip miles per month would total approximately $229 per month, assuming fuel priced at $2.50 per gallon. For a pool with seven paying passengers, this expense would increase monthly commuting costs by about $32.70 per month. As discussed in Chapter 3, participants with access to tax savings related to flexible spending accounts might experience offsetting savings of $35 per month.

The fares presented in Table 7.4 are higher than many of the fares being charged by the programs reviewed in Chapter 4, as summarized in Table 7.2. As indicated earlier, vanpoolers in urban areas save additional money in ways that North Dakotans would not, most notably via reduced parking and toll fees.

Table 7.5 presents a comparison of the personal automobile operating costs originally presented in Table 2.1 and hypothetical vanpool fares for a nine-passenger van, as described in Table 7.4, with one vacant seat. The costs presented in Table 7.4 are based on 50 miles per day and are adjusted to include the cost of fuel. Additional van savings of $15 per month would be realized by passengers if they recruit to keep the vehicle running at full capacity.

As Table 7.5 illustrates, the vanpool cost advantage over private, single-occupant automobiles increases along with fuel prices. Similar occurrences result as daily mileages and/or occupancy numbers increase.

As a result of the relatively high fares being proposed and the lack of these other cost-saving factors, North Dakota's vanpool program may not be as attractive as those operated in other areas. As Table 7.5 illustrates, however, these fares do represent a significant savings versus the cost of commuting in a single-occupant vehicle. As is the case with all of the vanpool programs discussed in Chapter 4, only time will tell if the proposed fare schedule and related incentives are significant enough to lure commuters out of their personal automobiles.

7.3.6 Recommendation - Easy Termination

Program participants should be allowed to cancel their pool rider agreement with 30-days notice.

Requiring vanpool drivers or riders to enter into long-term commitments regarding their participation in a vanpool would create a significant program disincentive. None of the programs discussed in Chapter 4 required termination notices of more than 30 days. North Dakota's vanpool program should be constructed in a similar manner.

7.3.7 Recommendation - Emergency Rides Home

North Dakota's vanpool program should include a guaranteed ride home feature to provide riders a guaranteed ride home up to twice a year in case of emergency.

As is the case with short-term cancellation provisions, virtually all of the vanpool programs discussed in Chapter 4 have provisions which provide riders with a way to get home during the workday in case of emergency. Most of these programs use transit, taxis, or rental cars; in some cases employers provide vehicles to accommodate such trips.

The means used to provide guaranteed rides will, in many instances, be dictated by the services available at the worksite. All of North Dakota's cities with populations of 5,000 or more have local taxi operators and presumably have auto dealerships that would be willing and able to rent vehicles on an emergency basis. Employers that are located in rural areas may not, however, have access to transit or taxi services. Local car dealerships could, in some instances, be called on to rent vehicles on a per-day basis. In other instances, the program may need to work with employers regarding the use of company vehicles.

None of the programs discussed in Chapter 4 reported any abuses regarding the use of their guaranteed ride home program. Most do, however, place limits on participant utilization of the program. Two trips per year and a maximum of $50 per trip may be reasonable. Corresponding agreements should be worked out, in advance, with local taxi operators, rental car companies, or auto dealerships.

As indicated earlier, the state and local vanpool programs discussed in Chapter 4 considered their guaranteed ride home programs vital but they were, nonetheless, seldom used. Assuming a utilization rate of one per rider per year and a per use cost of $50, such a program would have an annual cost of $400 for a pool with eight riders, including the driver. A state program with ten pools would have an associated annual expense of $4,000.

7.3.8 Recommendation-Safety and Accountability

To promote program safety and sound pool management, driving record and credit checks should be performed on all primary drivers. Additional driving record checks should be performed on each pool's backup drivers. All primary and backup drivers should be required to take a defensive driving course prior to driving and at least once every four years thereafter.

Several of the state and local vanpool programs discussed in Chapter 4 require that primary drivers undergo satisfactory driving and credit records checks prior to undertaking their driving duties. The need for a good driving record is self-explanatory. Having a good credit check relates to the individual's responsibilities regarding fee collections and remittances and overall trustworthiness. North Dakota's vanpool should impose similar requirements.

As is the case with primary drivers, most vanpool programs require that backup drivers have good driving records and that all drivers, both primary and backup, regularly attend a defensive driving course. North Dakota should have similar requirements. Defensive driving courses should be attend at least every four years - a schedule that is consistent with that required of state employees by NDDOT's Fleet Services Division.

It was recommended earlier that North Dakota's program avoid the use of 15-passenger vans. If that size vehicle is used, however, it is recommended that drivers have either a commercial driver's license or take a corresponding safety course. These requirements are consistent with NDDOT mandates regarding the use of Fleet Services' 15-passenger vans.

7.4 Program Marketing

7.4.1 Recommendation - Work through Major Employers to Promote Program

North Dakota's vanpool program, if reestablished, should focus its promotional efforts on major employers.

Experiences with these employers and their employees may suggest that certain program refinements are warranted. It is also expected that related successes would create more widespread interest within the state's business community.

In addition to marketing the program directly to and via major employers, efforts should be made to educate other employers via associations such as the North Dakota Chamber of Commerce, local affiliate organizations, etc. Press release and other publicity mechanisms should also be used to reach not only the business community but the general public.

Employer participation is not critical for a vanpool program to succeed but it is necessary for some commuters to achieve maximum benefits. This requirement is predicated on tax-related benefits that can be accessed by vanpoolers only if their employer has a flexible spending account program as described in Chapter 3 and if the program provides for deductions for commuting expenses.

As indicated in Chapter 3, related tax savings equal approximately $35 per month for an employee who spends at least $105 per month for vanpool fares. Participating employers also realize savings as a result of lower taxable salaries and related obligations related to Social Security, unemployment taxes, etc. Annual savings may approach $175 per participating employee.

As explained in Chapter 5, additional employer support may come in many forms. Common support mechanisms include information dissemination, preferential parking, flexible work hours, use of company vehicle in case of mid-day emergencies, ride-matching service to identify potential pool participants, or even direct subsidies to encourage participation.

Working through major employers is one way to promote vanpooling to a significant number of employees with relatively minor costs. These employers also have the largest concentrations of employees with common work schedules – a feature that facilitates vanpooling. They also have information regarding home addresses and can help identify workers who might be commuting over similar routes – another factor that is a prerequisite for vanpools.

7.5 Monitoring

7.5.1 Recommendation - Monitor Program Achievements and Costs and Redesign to Achieve Maximum Efficiencies and Results

North Dakota's vanpool program should be monitored closely and redesigned, as appropriate, to achieve maximum efficiencies and results.

The preceding recommendations call for the implementation of a turnkey vanpool program which uses a commercial vanpool company to initiate service. Subsidies comparable to those charged by Fargo-Moorhead are proposed to encourage participation.

It is unknown whether or not the proposed subsidies will be sufficient to encourage participation and it appears that program costs might be lower if the program transitions to one that is operated in-house. Ongoing assessments of both North Dakota's program as well as the one recently established by Fargo-Moorhead should be made to determine what level of rates is necessary to achieve desired levels of participation. Additional assessments should be made to determine what program features should be managed directly be the state (vehicle acquisitions, maintenance, fuel purchases, insurance, etc.) to reduce program costs and subsidy levels. Reduced program costs may also permit higher subsidies and higher participation without a corresponding increase in overall subsidies.

7.6 Cost Estimates

As discussed in the preceding sections of this chapter, total program costs are going to depend on a number of factors including lease rates, trip lengths, the number of pools in operation, the level of subsidy provided to each pool, administrative manpower needs (internal or contracted), and program marketing expenditures. Based on the assumptions outlined earlier, it is estimated that fare subsidies will equal about $410 per pool per month or about $4,920 per pool year.

It was suggested earlier that North Dakota set a goal of establishing ten vanpools per year for each of the next three years. Based on this goal and the annual costs outlined above, Year Two fare subsidies would total $98,400 and Year Three fare subsidies would equal $147,600. Total projected program costs are presented in Table 7.5.

Ft. Collins' vanpool program, as described in Chapter 4, operates with an occupancy rate of nearly 90%. Assuming a similar rate in North Dakota and vans with an average capacity of nine, a ten-pool program would provide 42,120 rides annually. As indicated in Table 7.5, the subsidy per ride during Year One would equal approximately $2.73. Subsequent years' subsidies would drop to $2.08 and $1.98, respectively.

By way of comparison, in 2004 the average subsidy per trip for all of North Dakota's publicly supported transit systems was $2.91 per one-way trip. Per trip subsidies for the state's fixed route transit systems ranged between $2.76 and $2.91. (Mielke, Miller, Ripplinger, Peterson, and Hough). As a component of a comprehensive personal mobility plan, vanpooling has the potential to operate at significantly lower per ride subsidies than other transportation service options.

7.7 Sequence of Events

Based on the recommendations set forth in the preceding portions of this chapter, the following sequence of events might be considered for program implementation:

• Recommendations adopted.
• Funding sources identified and committed.
• Staff assigned to implement and administer program.
• Request for proposals prepared and sent to commercial service providers.
• Draft informational brochure and program guidelines prepared.
• Commercial service proposal selected and contract executed.
• Program guidelines finalized in conjunction with contractor.
• Informational brochure finalized and printed.
• Promotional efforts initiated and pools formed.
• Program administration, promotional efforts, and monitoring continue.
• Program reassessments made and modifications implemented.

Based on Fargo-Moorhead's recent experiences, it is anticipated that as little as three to six months may be required to initiate service.

7.8 Summary

In a traditional sense, vanpooling is a way to conserve energy and reduce commuting costs, pollution, traffic, and parking congestion. In a broader sense, vanpooling does all these plus it augments a community's comprehensive personal mobility program and provides commuters with alternate means of getting to and from work.

Vanpooling is especially attractive in urban areas where participants save money not only via the cost differential between vans and single-occupant automobiles but also as a result of lower parking fares, toll charges, etc. Additional savings are often realized as a result of governmental and/or employer subsidies and federal tax incentives.

Despite the additional advantages that may be available to urban vanpoolers, there are numerous vanpool programs in the country that operate in rural areas like North Dakota. Programs are designed to provide a combination of economic incentives and various program features that are significant enough to convince commuters to give up the personal freedoms associated with commuting in their private automobiles.

Vanpooling began in earnest in the 1970s and experienced significant growth through the mid-1980s; North Dakota was a part of that growth. Falling fuel prices and interest rates, along with concerns related to employer liability, caused vanpool numbers to decline from the mid-1980s through the 1990s. That trend has, however, been reversed and national vanpool numbers are rising again.

This resurgence in vanpool numbers relates to rising energy prices, new federal incentives which encourage vanpooling, and a trend that has related programs being operated by state and local units of government and local transportation management organizations. New program operating models have addressed the liability concerns of older, employer-run programs and new program features are making commuting via vanpool more and more attractive.

The federal government's involvement with vanpooling includes not only the tax incentives mentioned above but also latitude which allows state and local units of government to utilize various sources of federal money to underwrite all or a portion of the costs associated with their programs. These monies are not, however, set aside specifically for vanpooling. Rather, vanpooling must compete with other programs to achieve a priority which convinces state and local policymakers that some of these funds should, in fact, be used to encourage commuting via vanpool.

North Dakota has access to federal funds to reestablish a commuter vanpool program in the state. A survey of major employers and subsequent visits with affirmative respondents suggests that there may be sufficient interest to warrant such an action.

Many of the state and local vanpool programs that operate around the country do so with a wide variety of related services being provided by the sponsoring entity. These services include vehicle procurement, tax-free fuel purchases, government-provided liability insurance, and vehicle maintenance via government mechanics. This management and operational structure depicts a significant commitment on the part of program sponsors and helps the programs achieve some of the lowest fares in the country.

These programs did not, however, start overnight. In some cases, they have been operating continuously for several decades. Other programs, either as a factor of age, resources, or philosophy, use a different tactical approach and contract for services from other governmental entities, non-profit organizations, or commercial service providers.

In North Dakota's case, perhaps the quickest and most risk-free way to initiate service would be to contract with a commercial service provider. There are two major commercial vanpool operators in the United States; one operates over 4,100 vanpools and the other operates over 1,000. Their monthly lease rates appear, at first glance, to be relatively high but they do include things such as vehicle maintenance and liability insurance. Related services also come with little risk given the fact that individual pools or even the entire program may be terminated with little notice.

As the preceding paragraph suggests, vanpool programs that use commercial service providers tend to pay higher subsidies to offset the relatively higher costs associated with such services. These higher subsidies are necessary in order to make the programs competitive with private automobile commuting costs. A review of several vanpool programs around the country indicates that vanpool prices must typically be significantly below private car costs in order to entice commuters to give up the personal freedoms associated with driving alone.

It is recommended that North Dakota reestablish a commuter vanpool program and that it do so with services provided by a commercial vanpool operator. The program should be run on a three-year experimental basis. Related costs and utilization should then be reassessed and a determination made concerning its continuance. At that point, the state would also be in a better position to decide what types of modifications might be appropriate, up to and including the provision of related goods and services via state procurement contracts and state personnel.

The end results of this phase-in approach would be an enhanced personal mobility program for state residents, increased viability for rural communities and employers, and the achievement of many of the attributes that are traditionally associated with ridesharing via vanpool. This approach will also put the state in a better position to determine if its residents and its business community want and need vanpooling. The responses from both should ultimately determine what, if any, long-term role the state should play in commuter vanpooling.