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RFD- 3863 Business Items   Item #   11. a.    
Regular Council Meeting Agenda
Meeting Date: 03/09/2020  
Title:    Regional Transit Services Commission (RTSC) - Levasseur
Department: Planning & Infrastructure  
Strategic Vision Element: Where People Choose to Live - A dynamic city with an exceptional quality of life Related Goal: Spruce Grove is a well-planned city, with a high ease of community connectivity and mobility for transportation and walkability.

Information
Request for Decision Summary
Since entering into a formal Memorandum of Understanding (MOU) in October 2018, a Transition Team consisting of elected representatives from the City of Spruce Grove and 12 other Edmonton Regional Municipalities have worked with a multi-disciplinary consulting team from Ernst and Young to develop a business case for a new Regional Transit Service Commission. The business case was made public in January 2020 and the report was presented and discussed in public session at the Committee of the Whole Meeting on February 18, 2020.  

Based upon the findings in the business case, further discussions with the Spruce Grove Transition Team and input from Council, Administration recommends that Council approve the formation of the Regional Transit Services Commission (RTSC). With Council approval, Spruce Grove and its regional partners will submit a joint request to the Government of Alberta to form a Regional Services Transit Commission established under the authority of Part 15.1 of the Municipal Government Act. The Councils of the other 12 municipalities will be voting to join or not join the RTSC throughout late February and early March.
 

Proposed Motion
 
That the Chief Administrative Officer be directed to provide notice in writing to the Deputy Ministers of Transportation and Municipal Affairs for the Province of Alberta that the City of Spruce Grove supports enactment of a regulation under the Municipal Government Act creating a Regional Transit Services Commission for the Edmonton Metropolitan Region including Spruce Grove as a Commission member, provided that the governance, financial and operating models for the Commission are consistent with the recommendations in the Ernst & Young report entitled, “Accelerating Transit in the Edmonton Metropolitan Region: Building a Regional Transit Services Commission.”
Background/Analysis
Regional Transit has been discussed and analyzed for well over a decade. The Capital Region Board supported a 2014 feasibility study, an Intermunicipal Transit Governance Study determined the viability of a regional based system. The report determined that initially that costs would be higher than what municipalities were paying but over time there would be a reduction of costs. The report concluded that moving to a regional transit system such as a commission was feasible.

In May 2016, the Metro Mayor's Advisory Panel released the report Be Ready or Be Left Behind, which emphasized the benefits to consider the Edmonton Metropolitan Region as a single entity for economic growth, social well-being and environmental sustainability, rather than multiple municipalities seeking to market and compete for economic growth. 

In order to achieve this, there was a need to work to build a regional transit system with shared investment and benefits. The City of St. Albert and Edmonton continued to work on a regional commuter service assessment into 2016 and recommended a three phased approach to implementing regional transit. Other municipalities were invited to participate in exploring the possibility of creating a Regional Transit Service Commission in June 2018. The City of Spruce Grove, together with 12 other municipalities, signed a Memorandum of Understanding (MOU) to participate in these discussions.

The City of Spruce Grove participated in 25 working team and transition team meetings from March 2019 to January 2020. The discussions regarding the RTSC were discussed in six council meetings over the same period. The final report, Accelerating Transit in the Edmonton Metropolitan Region: Building a Regional Transit Services Commission, was released on January 22, 2020, and represents the culmination of the 11 months of work, with the support and facilitation of the consultants from Ernst and Young.

Joining the Regional Transit Service Commission will transfer operations from a local independent model to a regional collaborative model. This model, like any multi-participant partnership, will see shared effort for a shared benefit, but also a slight reduction of autonomy. For the City of Spruce Grove a change to this service delivery model will require consideration of the following:

Service Delivery
  • The commission will manage all transit service delivery (commuter and local) rather than individual municipalities.
  • The transit services standards, drafted in the RTSC report, will apply across the region once finalized.
  • There will be a more holistic level of regional transit planning that will consider interlining (one bus services two routes consecutively) to reduce duplication of routes and maximize efficiency.
  • Enables greater access to transit planning expertise and integration, better preparing our communities for growth.
  • Greater potential to secure federal/provincial funding as a single entity rather than independent municipalities.
  • Local municipalities will be able to set local service levels, but will not be the sole decision makers for commuter services
  • The City can propose a different business model for delivery of commuter services if it makes financial sense, but would require regional consideration to ensure it does not affect region wide delivery.
  • An RTSC service centre for information support for customers will be an improvement over Edmonton’s 311 System.
Service Levels
  • The service levels for Spruce Grove will largely remain the same. Weekend service was included in the model, but consideration for implementing weekend service will need to be evaluated based upon demand.
  • The current routing along Yellowhead and into downtown via NAIT will need to be examined during the set up period to ensure the major locations our residents use are served, such as NAIT, the Royal Alexandra Hospital, Victoria School, MacEwan University and Government Centre.
  • The secondary route to West Edmonton Mall needs to be evaluated as it currently is not meeting expectations.
  • Travel throughout the region will be more seamless for transit users with Smart Fare.
  • The City will be able to set local service levels and will be responsible to cover those costs.
Financial
  • Joining the Commission will change the current financial model:
    • It is estimated that our current operating costs will be approximately the same for both commuter and local service; however, this may change if weekend commuter service is re-examined.
    • The RTSC start-up costs for Spruce Grove will be $31,000 in 2020 and $154,000 in 2021.
    • Reduced overlapping services and routes and maximizing economies of scale will reduce total costs among the 13 municipalities by an estimated $3.4 million per year by 2026. At this point these savings will not be returned to the municipalities as the commission will save the funds for growth.
Asset Management
  • Municipalities will transfer assets to the commission:
    • The City will transfer all buses to the commission in 2022, based upon the principle that no funds are required to be transferred as long as the same equipment is largely in use on the same routes benefiting the municipality that purchased the equipment.  
    • Assets such as Park and Ride and Bus Storage Building will remain assets of the City, but the commission will be responsible for operations and maintenance.
    • Municipalities will be required to create capital reserve funds or be prepared to pay lifecycle maintenance/replacement costs for assets such as buses.
Risks

The report that was prepared by Ernst & Young has to be considered in the context in which it was prepared, which was to articulate how the RTSC would conceptually operate and deliver services in the region. It is intended to provide a framework and business case which will enable municipalities to decide to join a regional commission based upon a developed strategy, regional transit service design concept, transit service delivery model, funding model, cost sharing approach, strategic plan and implementation plan.

Once all of the municipalities have voted, and the commission is ready to go forward, considerable work will be required to:
  • confirm transit service hours
  • do public consultation on routes and potential times
  • determine how local service will interface with commuter service
  • finalize service standards
  • have a governance model with policies and bylaws and the asset transfer process
A revised funding model will be provided by Ernst & Young to the participating municipalities once voting has been completed, taking into account that Strathcona County voted not to join the commission. This will be reviewed by the Transition Teams and, if required, may be brought back to each council to reconsider.

There are considerable risks inherent with a change such as this. The savings may not accumulate as estimated, integration of routes may not function as planned, higher services levels may be required and there could be challenges with integration of staff and functions into the commission.

These risks will be highly dependent upon the RTSC management and board to effectively optimize services, manage labour, and create an effective working relationship across the region.
Options/Alternatives
  1. Maintain Status Quo Service
The City of Spruce Grove would continue to operate local and commuter transit services independent of the commission. This would not change the current contractual arrangements with Edmonton Transit Service (ETS) for commuter service or Pacific Western Transportation for local service.
 
Advantages:
The City would maintain its autonomy for decision making of its transit programs including fiscal impacts and service control.
 
Risks:
  • Could harm our relationship with our Tri-Municipal partners and possibly Edmonton through ETS. Agreements with both Parkland County and the Town of Stony Plain may or may not continue to be honoured.
  • Access to bus stops, additional bus resources, and transit planning may be dropped or have increased costs.
  • There could be challenges in applying for future transit grants.
  • There may be requirements to cover capital costs to replace bus resources currently leased to Spruce Grove from ETS.
 
  1. Partner at the sub-regional level
The City of Spruce Grove could partner with others that do not join the commission.
 
Advantages:
In a partnership arrangement such as this there is a still both operational and fiscal autonomy, but it can be tempered by ensuring both parties are informed and transparent with costs, and changes to service levels.
 
Risks:
  • Depending on the nature of the partnership, contracts and negotiations can take considerable time to develop.
  • Both (or all parties) must be willing to compromise and fully support the partnership.
  • Depending on the results of the vote, the number of municipalities to partner with could be limited.
  • Issues with applying for grants, which becomes even more complex with partners applying for grants.
Consultation/Engagement
As part of the business case development, Ernst & Young conducted consultations with various key stakeholders throughout the greater Edmonton Region including the City of Spruce Grove, Stony Plain and Parkland County.

The public was informed about the Regional Transit Service Commission once the report was made public on January 22, 2020. The full report and the executive report were posted on the City of Spruce Grove website. The public was encouraged to comment on social media and through the Transit email link

On February 18, 2020 the RTSC report was presented and discussed with Council at the Committee of the Whole meeting.

It is expected that as the Commission is formed there will be extensive public engagement to discuss routes and frequencies with the public.
Implementation/Communication
Administration recommends supporting the motion to join the Edmonton Regional Transit Service Commission.

With the City of Spruce Grove projected to have a population between 55,000 and 65,000 by 2045, Transit will be an important aspect to attract residents and businesses to the City. This would mean a single administration of transit for all municipalities so that integrated transit planning across the region can be done, and capital purchases for capital equipment and maintenance can reduce costs.

The commission can also utilize additional means for funding and may be more successful at attracting federal and provincial grant funding due to its scope of operations. Working as a commission may also advance other innovations like priority lanes and signals across the region that will give transit greater speed over the private automobile, making it more efficient and attractive.

There will be a joint media release once all of the votes are completed.
Impacts
If Council elects to join the RTSC, the City of Spruce Grove will continue to operate existing transit services as it presently does. We will continue to look at ways to operate efficiently and make the required changes. We will continue to work with our Tri-Regional Partners and with Stony Plain as they introduce local and intermunicipal service planned for fall 2020. Any significant service changes will be discussed with the Corporate Leadership Team and if required will brought before City Council before being implemented.

The following timeline is expected:

2020-2021
  • Municipalities will continue to operate and deliver services independently.
  • An application will be submitted to the Government of Alberta to form a Regional Transit Commission in the spring of 2020.
  • Detailed planning will include the development of policies and bylaws as part of the commission stand up.
2022
  •  The Commission will commence operations of transit services for all members by mid-2022.
2026
  • Edmonton Transit Service (ETS) local routes may be uploaded to the Commission. This will grow the commission’s network four or five times larger than the 2022 operations.

Fiscal Impact
Financial Implications:
The Business Case identifies an anticipated regional savings of $5.5 million per year, starting in 2026, through cost savings related to redundancy of routes and more cost effective transit service planning. The cost of running the Commission is estimated to be slightly over $2 million per year. It is estimated that the net shortfall from start-up, fixed and incremental costs related to the operation of the RTSC will be fully covered through savings and efficiencies by 2025. (Service efficiencies are discussed in the RTSC report on page 135).

Cost allocations the City of Spruce Grove 2022 to 2026 (Thousands $)
2022 2023 2024 2025 2026 Total
$ 1,954 $ 1,984 $ 2,025 $ 2,065 $ 2,104 $ 10,132
 
The table above represents the expected cost of operation not including RTSC overhead and any capital costs planned or expected over the period. Based upon our current costs the difference between the RTSC operating model and the status quo represents an annual reduction in operating costs of 0.75%.
The cost above include:
  • Base fee (a small fixed component and variable component based upon population)
  • Regional service allocation (distribution of the collective RTSC regional service routes)
  • Local service allocation (local service uploaded to the commission for the benefit of the specific municipality).
  • Enhanced service allocation (cost of additional services developed in consultation with a municipality and allocated by the requesting municipality) Note: Spruce Grove does not have any allocation for enhanced service as part of the Business Case.
 
RTSC Funding Shortfall (Total System)

The total RTSC funding shortfall was calculated using aggregated, annual forecasted costs of operating separate transit agencies plus one-time, start-up costs of establishing the Commission, plus recurring incremental costs and less transit service efficiencies.
 
Account        (in thousands $) 2020 2021 2022 2023 2024 2025 2026
Base Case Funding Shortfall     55,679 56,507 57,698 58,842 59,975
Add: One time/start-up costs 864 1,877 1,141 531      
Add: Recurring Incremental Costs 17 2,524 1,711 2,042 2,218 2,202 2,136
Less: Service Efficiency Savings 0 0 (1,685) (2,322) (3,615) (4,907) (5,500)
TOTAL RTSC Funding Shortfall 881 4,401 56,757 56,757 56,301 56,138 56,610
Net savings in annual shortfall compared to base case 881 4,401 1166 250 (1,397) (2,704) (3,364)
Cumulative net increase (savings) in annual shortfall compared to Base Case 881 5,282 6,448 6,699 5,302 2,597 (767)
Net savings in annual shortfall compared to Base Case translate to an estimated $3.4 million per year by 2026 at which time start-up costs of operating the Commission have been recovered.

The table above indicates the set-up and operating costs of the RTSC. These costs will be imbedded into the costs to the municipalities at their relative percent of the total operating costs. For the City of Spruce Grove our operating cost are 3.5% of the total. Applying this per cent one time/start-up costs and the recurring incremental costs the costs before start-up are:

2020 = $30,835
2021 = $154,035

If council votes to accept joining the RTSC, a new Corporate Plan initiative will need to be created to include these costs for 2020 and 2021. There are attempts to inquire if there could be federal or provincial funding the first two years.
 
Attachments
No file(s) attached.

City Council and Committee of the Whole agendas and minutes are posted on the City of Spruce Grove website for information purposes only. These agendas may be changed at the discretion of Council by the addition or deletion of items. Anyone reviewing the draft agenda should do so on the understanding that it is subject to change by Council.

All attachments are in PDF format, and require the Adobe Acrobat Reader plug-in for viewing.

Audio from the most recent City Council and Committee of the Whole meetings are available via podcast on the City of Spruce Grove website.



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