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EcoPass: Employer-Sponsored Transit Passes
Community contextThe
City of Winnipeg is the capital of Manitoba and its largest city, with 635,000
residents that represent about 55% of the provincial population. The city sits
at the centre of the Winnipeg census metropolitan area (CMA) and its population
of about 690,000 people. The city’s population is increasing slowly and
steadily, and is expected to grow by 12% to about 710,000 by 2021.
Policy contextWinnipeg Transit actively supports the city’s important transportation objectives by:
In 2000, the City released a major transit policy report, Direction to the Future: The Guide to Better Transit for Winnipeg. That document recommended a framework for increasing transit ridership that included greater affordability of transit fares. It noted that two decades of fare increases had boosted transit’s operating cost recovery from 47% in 1980 to 67% in 1999. This rise had the effect of reducing the public subsidy, but also increased user costs at a rate much greater than inflation. To make transit more affordable for commuters, Direction to the Future recommended that the City develop an employer-sponsored transit fare program, identify potential employer participants, distribute informational and promotional materials, and develop a supporting administrative system.
Rationale and objectivesDirection to the Future offered the following rationale for its recommendation in favour of an employer-sponsored transit fare program:
At a more strategic level, Winnipeg Transit’s EcoPass program
was also created with an eye to providing tangible benefits for employers
(attractiveness to workers, reduced parking needs, public relations), employees
(fare savings, reduced driving and parking costs, convenience) and the community
as whole (higher transit ridership and revenues, decreased congestion, reduced
emissions, more parking for downtown shoppers and visitors).
ActionsInitial steps. In December 2000, following the release of Direction to the Future, City Council authorized Winnipeg Transit to negotiate and commit to employer-sponsored bus pass (EcoPass) agreements. A 5:1 cost sharing ratio between employers and Winnipeg Transit was proposed — in other words, for every 5% discount in the price of a transit pass offered by an employer to its employees, Winnipeg Transit would rebate 1% to the employer. In February 2001, Winnipeg Transit launched a demonstration with Manitoba Public Insurance (MPI), a major employer. MPI agreed to sell monthly transit passes to its employees at a 50% discount, and Winnipeg Transit rebated 10% to the employer. The short demonstration had the following results:
Pilot project. Following the MPI demonstration, Winnipeg Transit solicited interest in a possible EcoPass follow-up from about 180 local employers. A “teaser package” was sent and followed up with mail, phone calls and meetings. Staff found that organizations liked the program’s objectives and benefits, but many were concerned that it was unproven and didn’t want to be the first to implement it. Some also felt that the proposed 5:1 cost sharing formula was not sufficient to warrant their involvement. Staff concluded that the next step should be simultaneous EcoPass implementation at a group of employers. Winnipeg Transit held a luncheon and follow-up discussions with 15 major employers, during which it presented the EcoPass program as having the following benefits:
Six of the 15 major employers verbally committed to a joint pilot project that would let all parties assess EcoPass benefits, costs and operational issues. The possibility of longer-term agreements was left open for future consideration. In April 2002, City Council approved an EcoPass pilot project with the following characteristics:
Eight additional organizations joined the 2002 pilot project, for a total of 14 including several major employers such as the City of Winnipeg, Manitoba Telecom Services, CanWest Global Communications, the Winnipeg Airports Authority, and two local credit unions. Near the end of the six-month pilot project, Winnipeg Transit reviewed EcoPass sales and surveyed a number of major firms that participated. The results were very positive, reflecting increases in monthly pass sales, net revenues and transit usage. However, the most significant factor in the decision by all employers to continue the program was the reaction of their employees. Employees were very happy with the program, particularly the fact that employers were offering it voluntarily as a benefit for their employees. While two organizations withdrew from the program a few months later, it was not due to dissatisfaction but rather to limited sales that reflected the employers’ suburban-industrial locations where parking was plentiful and inexpensive, and transit service more limited. How the program works. After making contact with an interested employer, Winnipeg Transit (with permission) surveys employees to measure their transit use and potential EcoPass uptake. This provides “baseline” data that is useful in later program evaluations. Willing employers sign a “Sales Agency Agreement” and agree to a six-month evaluation period. Employers become sales agents for Adult Monthly Bus Passes and Handi-Transit Passes. Winnipeg Transit delivers transit passes to workplaces that sell 25 or more each month, but to control distribution costs it requires smaller orders to be picked up. At the end of each month, Winnipeg Transit collects from employers the net receipts and any unsold passes. Employers are responsible for determining which employees are eligible (e.g. full-time versus part-time), how much they pay for a pass (e.g. 30% or other discount), and how they pay (e.g. cash, cheque, payroll deduction, credit card). Winnipeg Transit does provide employee communication materials including brochures, posters, surveys, correspondence, route maps and timetables. It also conducts site visits and offers personalized route planning for interested employees. Winnipeg Transit offers a rebate to companies that sell discounted passes to employees. A 3:1 cost-sharing ratio is offered to companies that sell passes to employees at a 30% discount, earning them a 10% rebate from Winnipeg Transit. A 5:1 cost-sharing ratio is in effect for any discount below 30%, and for incremental discounts above 30%. For example, a discount of 10% earns a rebate of 2%, while a discount of 50% earns a rebate of 14%. Currently, employers are offering discounts on a $69.30 monthly pass of 30% to 100% (i.e. monthly savings of $21 to $69.30). The federal government currently views the employer’s portion of the discount as a taxable benefit, meaning that employers need to report benefit amounts in employee earnings. The taxable status of transit benefits has definitely diminished both employer and employee participation — it requires considerable paperwork on the part of employers, and discourages employees by reducing the effective size of the benefit.
Results The six-month EcoPass pilot project in 2002 had the following results at participating employers:
Pilot project employers also indicated that continued participation by the City (i.e. selling EcoPasses to its own employees) was important. By mid-2003, one year after the pilot project began, results at participating employers included:
By the end of 2004 (30 months after the pilot project began) EcoPass participation had grown from 14 employers and a market of 14,000 eligible employees to 23 employers and 19,500 eligible employees. Key results at participating employers included:
Nick Iafolla, Manager of Marketing and Customer Services for Winnipeg Transit, said, “We’re very pleased with the program results to date, but the credit really has to go to the companies participating in the program. They’ve made a significant commitment to help protect our environment by reducing congestion, and at the same time are providing a valuable benefit to their employees.” ParticipantsThe EcoPass program is operated solely by Winnipeg Transit. The Marketing and Customer Services Division is responsible for overall program management, promotion and client relations, while the Treasury Division is responsible for the monthly distribution of transit passes, collections and reconciliation. Employers administer the program at their own worksites, acting as sales agents for Winnipeg Transit. Resources
Over the first two years of the EcoPass program, promotional and development
costs were about $30,000. About $5,000 is needed each year for brochures,
posters and transit media advertising. These amounts are taken from existing
budgets, and have been easily recovered through annual net revenue increases of
at least $115,000 resulting from the program. TimelineJanuary 2000. Direction to the Future: The Guide to Better Transit for Winnipeg recommends an employer-sponsored transit fare program. December 2000. Winnipeg Transit given authority to negotiate employer-sponsored monthly bus pass (EcoPass) agreements February to April 2001. Limited EcoPass demonstration at one employer (MPI) April 2002. Council approval of six-month EcoPass pilot project June-November 2002. Six-month pilot project with 14 employers November 2002. Approval of ongoing program based on pilot project success Lessons learnedImportant lessons learned through Winnipeg Transit’s EcoPass include:
Next steps
To support continued growth of its EcoPass program, Winnipeg Transit plans to
expand its marketing efforts including the development of a physically distinct
EcoPass card that offers stronger product branding potential. It also plans to
work with the Canadian Urban Transit Association and other allies to lobby for
federal legislation that could make employer-provided transit benefits
non-taxable. To minimize administrative costs, the agency may also set a minimum
threshold in terms of monthly pass sales for program participation by employers. |
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