Report to/Rapport au:

Transit Committee/Comité du transport en commun

and Council/et au Conseil

11 March 2008/le 11 mars 2008

Submitted by/Soumis par: Nancy Schepers/Deputy City Manager/Directrice municipale adjointe

Planning, Transit and the Environment/Urbanisme, Transport en commun et Environnement

Contact/Personne-ressource: A. Mercier, Director/Directeur, Transit Services/Services du transport en commun

613-842-3636 ext. 2271, alain.mercier@ottawa.ca

City Wide

Ref N°: ACS2008-PTE-TRA-0001

SUBJECT:	RESPONSE TO COUNCIL BUDGET DIRECTION - transit LEVY POLICY review

OBJET :	RÉPONSE AUX DIRECTIVES BUDGÉTAIRES DU CONSEIL – EXAMEN DE LA POLITIQUE CONCERNANT LA TAXE SUR LE TRANSPORT EN COMMUN

REPORT RECOMMENDATIONS

That the Transit Committee recommend Council approve:

1. The elimination of the Town Transit Area (TTA), and a sharing of net operating costs for transit service in the Urban Area (as defined in the Official Plan) across all properties in the Urban Area, starting in 2008;

2. New funding of $550,000 in 2008, $1.35 million in 2009, and $1.44 million in 2010 and subsequent years, to be included in the budget for urban transit service, to allow for increases in service to urban standards in Stittsville and the reduction of rural express fares to express fares within the Urban Area, as detailed in this report;

3. New funding of $2.6million in 2008 to purchase four new buses for delivery in 2009, to allow for service increases in Stittsville; and,

4. The sharing of net operating and capital costs for transit service provided from park and ride lots between the Urban Area and Rural Transit Areas A and B, proportionately, according to use of the lots and services, starting in 2008 at 78 percent urban and 22 percent rural, and to be revised in 2009 based on new surveys.

RECOMMANDATIONS DU RAPPORT

Que le Comité du transport en commun recommande au Conseil d’approuver :

1. l’élimination du « Secteur urbain de transport en commun » et le partage des frais d’exploitation nets du service de transport en commun dans le secteur urbain (tel qu’il est défini dans le Plan officiel) par l’ensemble des propriétés dudit secteur à partir de 2008;

2. l’inclusion dans le budget du service de transport en commun urbain d’un nouveau financement de 550 000 $ en 2008, de 1 350 000 $ en 2009 et de 1 440 000 $ en 2010 et les années suivantes, afin de permettre l’amélioration du service offert à Stittsville pour atteindre les normes urbaines et l’abaissement du tarif de transport express en zone rurale au niveau du tarif express demandé dans le secteur urbain, ainsi qu’il est expliqué dans le présent rapport;

3. l’allocation en 2008 de 2 500 000 $ en nouveaux fonds pour l’achat de quatre nouveaux autobus (pour livraison en 2009) afin de permettre les augmentations de service à Stittsville;

4. le partage proportionnel des frais d’exploitation et d’immobilisations nets pour le service de transport en commun entre le secteur urbain et les secteurs de transport en commun ruraux A et B à partir des parcs-o-bus, selon l’utilisation des parcs-o-bus et des services, et sur la base d’une répartition en 2008 de 78 % des frais au secteur urbain et de 22 % aux secteurs ruraux, cette formule devant être révisée en 2009 en fonction des résultats de nouveaux sondages.

BACKGROUND

In June and July 2005, Transportation Committee and Council considered a staff report with recommendations to change the area over which property taxes are collected to fund the net capital and operating costs of the transit system (Urban Transit Area Review, at Transportation Committee, June 15, 2005, and at Council, July 13 to 15, 2005).

The staff report recommended expanding the Urban Transit Area (UTA) to include all of Stittsville and Kanata West and certain parts of South Nepean and South Gloucester, to phase-in the full transit tax rate over four years, and to improve service to those new areas to conform with the service standards applied in the current Urban Transit Area.

Council did not approve those recommendations, but instead established a new Town Transit Area for Stittsville so that property taxes collected in Stittsville would fund the net operating costs of transit service in Stittsville and would contribute to the net capital costs at the same rate as in the UTA. Council approved as follows:

- That a Town Transit Area (TTA) be created that aligns with the urban boundary of Stittsville;

- That a Town Transit tax levy be introduced to ensure that the taxpayers of Stittsville pay the full net costs of the transit services their community receives;

- That the Town Transit tax levy include the same capital contribution as the UTA levy;

- That the TTA and Town Transit Levy be introduced in 2006;

- That every three years, starting in September 2005, OC Transpo carry out a Town Transit Review, modeled on its highly successful 2001 Rural Transit Review, during which staff work in close collaboration with ward councillors, residents and business owners to evaluate the changing transit needs of communities within the TTA and formulate recommendations for City Council to meet those needs and cover the costs.

Following from this decision, service levels in Stittsville have been increased, but not as much as to comply with the UTA service standards, and property taxes collected in Stittsville to fund transit are higher than previously, but not as high as in the UTA (in 2007, for a typical residential property, $306 in Stittsville and $486 in the UTA).

At its meetings of December 3 to 12, 2007, Council considered the following motion and referred it to Transit Committee:

WHEREAS Council approved in July 2005 that the Transit Tax be reviewed every 3 years;

AND WHEREAS the last review of the tax areas was undertaken in 2005;

AND WHEREAS the cost of the construction of Park ‘n Rides should be borne city-wide in consideration of the usage of rural residents of our Park ‘n Ride system;

THEREFORE BE IT RESOLVED THAT the capital cost of Park ‘n Rides be distributed equally across the Urban, RTA A, RTA B and TTA effective on the 2008 tax bill;

AND BE IT FURTHER RESOLVED THAT staff undertake a review of the Transit tax with the aim of bringing new communities into the UTA and eliminating the TTA;

AND BE IT FURTHER RESOLVED THAT this review be undertaken and implemented prior to the setting of the 2008 tax rate.

This report responds to that motion.

DISCUSSION

Current Transit Levies

Property taxes to fund the net capital and operating costs of transit service are now collected at different rates in four different areas, and different service standards apply in these areas:

· Urban Transit Area (UTA) – The UTA extends from Kanata to Orléans and from the Ottawa River to Barrhaven, Riverside South, and Leitrim. It is generally the developed part of the Urban Area (as defined in Schedule B of the Official Plan), with the exception of some areas, which were developed before the urbanized part of the City grew to approach them. Service is provided to bring 95 percent of the population within a five-minute walk of transit service in peak periods and within a ten-minute walk at other times of the day. Taxes are collected to cover the net operating costs of transit service provided in the UTA (total operating costs less fare revenue) and to cover the net capital costs of transit equipment and infrastructure (total capital costs less contributions from other levels of government). In 2007, the UTA levy for a typical residential property assessed at $279,000 was $486.

· Town Transit Area (TTA) – The TTA covers the boundaries of the village of Stittsville (defined as the part of the Urban Area that was in the former Township of Goulbourn). Stittsville is the largest of the developed parts of the Urban Area that is not part of the UTA. Service is provided at levels that were adopted following public consultation in 2006. Peak-period service is provided within a five-minute walk of most of the area, and all-day service is provided within a 20-minute walk of most of the area. Fares for direct-to-downtown express service are higher than they are in the UTA. Taxes are collected to cover the net operating costs of transit service in Stittsville and to cover the net capital costs of transit equipment that is used to provide service in Stittsville. In 2007, the TTA levy for a typical residential property assessed at $279,000 was $306.

· Rural Transit Area A (RTA-A) – RTA-A is a ring around the urbanized part of the City, including most of the villages that are closest to the urbanized part of the City. RTA-A includes Richmond and most of Goulbourn; North Gower and Manotick and the eastern half of Rideau; all of non-urban Nepean; Carlsbad Springs and all of non-urban Gloucester; and Cumberland Village, Navan, Sarsfield, and Vars, and all of non-urban Cumberland. Service is provided in peak periods only, generally with two or three morning trips and two or three afternoon trips. Fares for direct-to-downtown express service are higher than they are in the UTA, and are the same as in the TTA. Taxes are collected to cover the net operating costs of transit service in RTA-A and to cover the net capital costs of the transit equipment that is used to provide service in RTA-A. In 2007, the RTA-A levy for a typical residential property assessed at $279,000 was $96.

· Rural Transit Area B (RTA-B) – RTA-B is the outer ring around RTA-A and the urbanized part of the city. RTA-B is made up of all parts of the city that are not within the other three areas. RTA-B includes all of West Carleton and non-urban Kanata, the very western part of Goulbourn, the western half of Rideau, and all of Osgoode. No conventional transit service is provided by the City in RTA-B. Some commuter services are provided by independent bus companies, with no financial contributions from the City. The City provides Para Transpo for qualifying people with disabilities. Taxes are collected to cover the net costs of Para Transpo service (pooled with RTA-A). In 2007, the RTA-B levy for a typical residential property assessed at $279,000 was $26.

Expanding the Urban Transit Area to encompass all properties within the Urban Boundary

Staff recommend that the net operating and the net capital costs for transit service in the Urban Area be shared across all properties in the Urban Area and no longer in a more narrowly-defined Urban Transit Area. This change would be effective April 1, 2008.

This change would mean that property taxes to support the transit system would be the same in the current UTA and in the following developed areas: Stittsville, certain parts of Nepean (Merivale at Fallowfield, Winding Way, and Heart’s Desire), and certain parts of Gloucester (River Road, Renaud Road, Navan Road, and Notre-Dame-des-Champs west of Mer Bleue)

The Urban Area has a boundary that is fixed in the Official Plan and which changes infrequently. There would thus no longer be a need for Council to approve the expansion of the Urban Transit Area as each new area is developed.

Transit Service to Stittsville

To follow the same service standards that are applied in the current Urban Transit Area, an increase in transit service to Stittsville would be required. To allow for these increases, new capital funding of $2.6 million is required for the purchase of four new buses, and new net operating funding is required of $550,000 in 2008, $1.35 million in 2009, and $1.44 million in 2010 and subsequent years.

This additional funding would allow for:

· A new local route, operating seven days week, every 30 minutes, to bring more residents within a 10-minute walk of all-day service (to start at most times of the week in September 2008 and before 8:00 a.m. Monday to Friday in September 2009);

· A service increase to 30-minute service on Route 96 on Sundays (to start in September 2008);

· Two more morning trips and two more afternoon trips on Route 263 (afternoon trips to be added in September 2008 and morning trips to be added in September 2009); and,

Lower fares on Routes 261, 262, and 263 so that they would be the same as on express routes in the UTA (to begin in May 2008).

These recommendations would put downward pressure on the revenue-cost ratio as the new service is located in a non-central part of the city and would have lower-than-average use and occupancy. In addition, monthly Express bus passes for Stittsville residents would be reduced from $114 to $90, as they would now use an Express pass rather than a Rural Express pass.

Further details of this analysis and recommendation are in Document 5 of this report.

Funding the Costs of Park and Ride Service City-Wide

Staff recommend that the net operating costs and the net capital costs for transit service from park and ride lots be shared as follows, effective April 1, 2008:

· The proportion used by urban residents, across properties in the urban area;

· The proportion used by rural residents, across properties in the rural areas; and,

· The proportion used by residents outside Ottawa, across all properties city-wide.

Based on the most recent counts of use of the park and ride lots, this would result in the park and ride costs being shared 78 percent across properties in the Urban Area and 22 percent across properties in the rural areas. New counts would be taken in 2008 to confirm or adjust these proportions for 2009.

Staff estimate the annual net operating cost of maintaining and providing service from park and ride lots at $5.14 million in 2008. Based on the above proportions, this would be shared at $4.01 million from the Urban Area and $1.13 million from the rural areas. Staff estimate that, on an ongoing basis, approximately six percent of the capital costs of the transit system are devoted to building park and ride lots and the associated transit stations and to buying buses to provide service from park and ride lots. In 2008, this fraction of the capital budget is $3.32 million, and would be shared at $2.6million from the Urban Area and $0.73 million from the rural areas.

Estimates of Tax Rates

The recommendations in this report would shift part of the tax burden that is currently carried by property owners in the Urban Transit Area to property owners in the parts of the Urban Area that are not within the UTA and to property owners in rural areas.. In general the levy rate in the current Urban Transit Area would decrease, while the levy rate for properties in the Town Transit Area and Rural Transit Area A and B would increase. Exact levy implications will be provided at Committee. Further details of this analysis are in Document 6 of this report.

RURAL IMPLICATIONS

The recommendations of this report would result in a higher contribution from property taxes collected in the rural areas to the cost of providing transit service in Ottawa, by adding a new contribution from rural property taxes to fund the use of transit services in the urban area by rural residents.

CONSULTATION/PUBLIC NOTIFICATION

A full process of public consultation was last conducted on the matters discussed in this report in 2005. At that time, five open houses were held, at City Hall, in Barrhaven, in Stittsville, in Notre-Dame-des-Champs, and in Leitrim. Residents were able to provide comments by mail, fax, e-mail, and through an on-line questionnaire. In all, 221 completed questionnaires were received, as well as 116 written submissions from individuals and community associations. Of those who completed the questionnaire, the majority reported that they never used transit and that they did not support sharing the capital and operating costs to provide transit more widely than they were at the time. The full details of the consultation results are in Document 4 of the 2005 report Urban Transit Area Review. In addition, consultation on the transit levy portion of the tax bill and transit services in general was undertaken as part of Budget 2008 consultations.

FINANCIAL IMPLICATIONS

The recommendations in this report would increase net operating costs by approximately $550,000 in 2008, $1.35 million in 2009, and $1.44 million in 2010 and subsequent years. Capital costs would be increased by $2.6 million in 2008 only.

SUPPORTING DOCUMENTATION

Document 1 Urban Area

Document 2 Urban Transit Area

Document 3 Stittsville Town Transit Area

Document 4 Rural Transit Areas A and B

Document 5 Transit Levy and Transit Service in Stittsville

Document 6 Allocation of Costs by Area and Tax Estimates

DISPOSITION

Upon approval of this report:

· Transit staff will reduce the fares for travel on direct-to-downtown express services within Stittsville and other parts of the Urban Area that are not currently within the Urban Transit Area;

· Transit staff will begin a process of consultation for the extension of Route 163 into Stittsville to provide new all-day service to areas now beyond a ten-minute walk of stops on Route 96;

· Fleet Services and Supply staff will negotiate for the acquisition of four new buses;

· Finance staff will calculate in detail the revised tax rates for approval by Council; and,

· The City Solicitor will place the necessary by-laws on the agenda of Council for enactment by City Council:

o The enactment of a new by-law to establish the Urban Transit Area to reflect the Urban Area in the Official Plan.

o The repeal of the Town Transit Area by-law 2005-529.

o The enactment of a new by-law to establish the Rural Transit Areas to reflect the revised boundaries.

TRANSIT LEVY AND TRANSIT SERVICE IN STITTSVILLE DOCUMENT 5

In 2005, Council established the new Town Transit Area (TTA) to isolate the costs of providing transit service in Stittsville and to ensure that property taxes collected in Stittsville would cover the net capital and net operating costs of the transit services provided there.

In 2006, following an extensive process of consultation with transit customers and residents of Stittsville, transit service was improved in several ways:

· Route 96 was extended into residential and employment areas in the southeastern part of Stittsville;

· Route 96 was increased to 30-minute service at most times from Monday to Saturday;

· New Sunday service was introduced on Route 96, every 60 minutes;

· A new Route 261 was introduced, replacing the eastern part of the previous Route 262; the route operates with four new morning trips and four new afternoon trips; and,

· Route 262 was extended to serve new residential areas in the southern part of Stittsville; the service was increased from four to six morning trips and from four to six afternoon trips.

With these improvements, the service that is provided in Stittsville is approximately two-thirds of the level of service that would be provided if the Urban Transit Area service standards were applied there. There remain times of the week when the base route operates every 60 minutes instead of every 30 minutes, there remain substantial areas of Stittsville, which are beyond a ten-minute walk of all-day transit service, and there continues to be a higher fare charged on the express routes than is charged in the UTA.

In 2007, the TTA levy for a residential property assessed at $279,000 was $306. This is 63 percent of the $486 that is collected in the Urban Transit Area for a residential property with similar assessment.

Property taxes collected in Stittsville do not contribute to the costs of service provided from the park and ride lots, though approximately 43,000 customer-trips are made from the park and ride lots in Kanata by residents of Stittsville. The costs to provide that service are paid entirely from property taxes collected in the UTA.

If Stittsville were part of the UTA and the same service standards were applied there as in the rest of the UTA, the following changes would be justified:

· A new local route, operating seven days week, every 30 minutes, to bring more residents within a ten-minute walk of all-day service;

· A service increase to 30-minute service on Route 96 on Sundays;

· Two more morning trips and two more afternoon trips on Route 263; and,

· Lower fares on Routes 261, 262, and 263 so that they would be the same as on express routes in the UTA.

To make all of these changes, four more buses would be needed in the fleet. The soonest that these buses could be ordered and delivered would be September 2009. Those buses would have a capital cost of approximately $2.6 million. As the buses would not be available until 2009, the increases in the morning peak period could not be made until then (from September 2008 until September 2009, the local route would begin at approximately 8:00 a.m. and the increases on Route 263 would be made only in the afternoon peak period).

The net operating cost of these changes would be $1.44 million in a full year. Because some of the changes would be introduced in September 2008 and others in September 2009, the costs would be phased-in over the years from 2008 to 2010.

The recommendation earlier in this report to share the net operating costs of transit service across the entire Urban Area would treat Stittsville in the same way as the rest of the urban area. Based on the above analysis, staff recommend that the transit budget be increased by $550,000 in 2008, $1.35 million in 2009, and by $1.44 million in 2010 and subsequent years, to fund the service improvements to apply the current UTA service standards to Stittsville, and that capital funding of $2.5 million be approved to purchase four new buses for delivery in 2009. A process of consultation would begin immediately to plan the details of the new local route, likely an extension of Route 163 in Kanata West. The recommendation to reduce rural express fares to express fares within the Urban Area would reduce the cost of a monthly pass for direct-to-downtown service from Stittsville from $114 to $90.

ALLOCATION OF COSTS BY AREA AND TAX ESTIMATES DOCUMENT 6

2007 Costs

	UTA	Stittsville TTA	RTA-A / RTA-B	Totals
Net operating	$88.25 million	$1.58 million	$1.57 million	$91.40 million
Net capital	$54.81 million	$0.85 million	$0.55 million	$56.21 million
Totals	$143.06 million	$2.43 million	$2.12 million	$147.61 million
Taxes¹	$486	$306	$96 / $26

^{1. For a residential
property assessed at $279,000.}

2008 Costs¹, if divided as in 2007

	UTA	Stittsville TTA	RTA-A / RTA-B	Totals
Net operating	$101.44 million	$1.67 million	$2.13 million	$105.24 million
Net capital	$54.58 million	$0.81 million	$0.53 million	$55.92 million
Totals	$156.02 million	$2.48 million	$2.66 million	$161.16 million
Taxes¹	$530	$312	$120 / $40

1. For a residential property assessed at $279,000, without the effects of reassessment.

2. Does not include recommended service increases in Stittsville.

2008 Costs², if divided as recommended in this report

	Urban Area	RTA-A / RTA-B	Totals
Net operating	$102.53 million	$3.26 million	$105.79 million
Net capital	$57.26 million	$1.26 million	$58.52 million
Totals	$159.79 million	$4.52 million	$164.31 million
Taxes¹	$518	$256 / $93

1. For a residential property assessed at $279,000, without the effects of reassessment.

3. Includes recommended service increases in Stittsville of $0.55 million in operating costs and $2.6 million in capital costs.