Metra board members Thursday advanced a plan to raise fares by nearly 11 percent next year and by a total 68 percent over a decade to help upgrade the oldest fleet among its peers.
The green light to 10 consecutive years of fare increases came with some trepidation that Metra riders would be hit with a 10.8 percent fare increase Feb. 1, but not see any new train cars for 2 1/2 to 3 years.
“We absolutely are asking our customers to be patient,” Metra CEO Don Orseno told reporters after Thursday’s board meeting. “It takes a long time to get these cars….”
But Orseno said, “When new cars are in place, they will have a more reliable, more comfortable ride.”
Stocked with a new CEO and mostly new board members in the last year, Metra Thursday unveiled grander plans than perhaps at any point in its 30-year history.
The agency outlined a 10-year, $2.4 billion modernization program that includes 10 years of fare increases — in part to bankroll debt service on Metra’s first-ever attempt to float bonds. The $400 million in bonds, and other funding sources, would be used to pay for $2.1 billion in upgrades to virtually Metra’s entire fleet and a $275 million federal safety mandate.
Although some board members wondered if the fare hikes would drive away riders, board chairman Martin Oberman said failure to address train cars with an average age of 30 years could result in more frequent breakdowns, erratic heating or air conditioning, and an overall loss of reliability.
“We will lose riders if we don’t grapple with this problem,” Oberman told his fellow board members.
The one- and 10-year plans sprinkled some price cuts amid the price increases. Among them: the return of the popular “10-ride ticket” for the price of nine and the acceptance of one-way tickets for 90 days, instead of the current 14.
Some board members liked the idea that bonds would be floated in four waves over a decade, giving them time in between to find other funding sources or efficiencies that could reduce fare hikes.
More drama ahead?
Staff also hinted Thursday that even more dramatic changes could lie ahead.
For possible action next year, Orseno said, Metra will be examining whether to charge a premium for rush-hour travel; to switch to a single flat-rate ticket, rather than ones tied to distance traveled; or to increase or decrease the number of “zones” tied to fares.
“I think the fare and service structure should be evaluated from top to bottom,” Oberman agreed.
All 11 board members agreed Thursday to release for public comment the budget for the plan’s first year, which packs an average 10.8 percent fare increase starting Feb. 1. And all but one endorsed moving forward with the broader 10-year plan, which could raise fares 68 percent by 2024.
Board member John Zediker of Du Page County said he abstained on the broader plan until he gets some answers on how it would be affected if predicted state or federal funding sources fall through.
Metra is hoping lawmakers will contribute $1.3 billion over 10 years to replace — or to rehab to “like new” condition — virtually the entire fleet and to install federally-required GPS-based safety measures.
Depending on the type of ticket, proposed rate increases varied widely. In the first year, some senior one-way and monthly tickets would jump more than 22 percent, while some full-fare 10-ride tickets would drop .3 percent. Across all tickets, the first year average hike was 10.8 percent, Metra estimated.
But even with the 2015 fare hikes, a Metra ticket is still a bargain, Oberman said.
Some price increases seemed high only because the current ticket price is low, he said. A one-way, full-fare ticket would rise between 50 cents and $1 a ride the first year, Oberman said.
By year 10, the closest ring of full-fare riders to Chicago’s Loop — in areas served by the CTA – would see at least a 100 percent jump in fares to $157 for a monthly ticket and to $5.50 for a one-way fare. But the average increase that year would be 3 percent.
Riders weigh in
Commuter reaction to the proposed increases varied.
“It’s terrible, because they already run terrible,” said Pilar Torres, 56, of Glen Ellyn. “It’s ridiculous.”
Torres said she’s already put up with a recent fare increase, and when asked if she would accept higher ticket prices in exchange for service improvements, she asked the question board members feared: “How long will it take?”
But Dave Stumpf, 52, of Elmhurst, was “fine with it.” Said Stumpf: “It sure beats driving. I can relax. I can read the paper and it costs a lot more than that in gas to drive and park.” .
“I’m fine with it because it sure beats driving,” Stumpf said. “I can relax. I can read the paper and it costs a lot more than that in gas to drive and park.”
Public hearings on the one-year plan were scheduled for Nov. 5 and 6, with a final board vote expected Nov. 14.
Only a small portion of the fare increases — $32 million of the $1.278 billion in fare hikes over 10 years — would cover debt service on the $400 million in bonds.
The biggest chunk of them — 54 percent over 10 years – would cover an estimated 3 percent annual growth in operating costs – everything from salary and benefits increases, to hikes in diesel fuel for trains, to jumps in the electricity running through the tracks of Metra’s Electric Line.
Riders got hit with a whopping 25 percent average fare increase in 2012 because Metra had ignored the steady march of rising operating costs – basically, of inflation, Oberman said.
“One of the fundamentals of this plan is that we are no longer going to pretend that the cost of operating a rail road every year doesn’t go up. It does,’’ said Oberman.
Although the fare proposal compounds to a 68 percent rise in rates over 10 years, Oberman noted that the cost of a gallon of gasoline has jumped 85 percent during the same time period.
“When you say fares are going up 68 percent, that’s what you have to compare it to,’’ Oberman said.
“It’s not as if only Metra fares are going up and everything else is staying stable.
“This is just reality. And I think our riders will understand it. This is one thing I am very optimistic about. Overall, they may not be delighted, but they will understand it and I think if we will explain it, they will accept it.
“We will find out.”
Flight tied to fares
An industry-wide rule of thumb is that transit systems can lose 3 percent of riders for every 10 percent of fare increases, said Joseph Schofer, assistant dean of Northwestern University’s Robert R. McCormick School of Engineering and Applied Science.
However, Schofer said, “Metra is so dominant in the market in terms of quality of service, it’s likely to lose less.’’
Suburban commuters far from the Loop, in particular, probably have few other options.
“The competition is the automobile but for a lot of people, the auto is a terrible alternative because of all the expense and congestion,” Schofer said.
Metra sustained a 1.7 percent loss of riders a year after its 2012 fare hike of 25 percent, said Metra spokesman Michael Gillis. Its new plan assumes that by the end of 2015, it will see a 1.1 percent drop in fare revenue due to ridership loss and changes in the kind of tickets purchased.
“We expect after that, we will not see any decreases,’’ Gillis said.
Plus, by 2024, riders would have contributed to the replacement of virtually every train, or to the rehab of trains to “like-new” condition, as well as the locomotives that drive them, officials said.
“”The vast majority of our riders will wince and pay more,’’ predicted Oberman. “I think most people understand you can’t do this for free.’’
During Metra’s August Board meeting, officials seemed to be setting the table for a fare increase.
Staff conceded that Metra had raised fares three times since 2010 – more than any of its peers. Despite doing so, board members were told, Metra’s average monthly fare of $175 was far lower than the average at four of five comparable transit systems serving areas around New York City, Newark and Boston. Averages for those peers, similarly calculated, ranged from $277 to $313.
In addition, board members learned Metra would need $320 million to keep its system in a “state of good repair’’ in 2015, but anticipated getting only $210 million in revenue to cover those costs. For that reason, board member Norm Carlson has consistently called Metra’s funding model “unsustainable.’’
The latest Regional Transportation Authority assessment estimated Metra would need a hefty $9.9 billion over the next decade to achieve a “state of good repair.’’ Oberman said Metra’s smaller $2.4 billion plan addresses the most critical of those needs – the state of Metra’s aging rolling stock. To try to bite off all $10 billion would have been “kind of meaningless,’’ he said, “ because nobody is going to give you $10 billion.’’
Challenge in Springfield
The 10-year plan also requires Metra to do a sales job in Springfield. However, Metra’s Gillis said that under Gov. Pat Quinn’s eight-year term, Metra received $1.1 billion from two state capital programs, so obtaining a $1.3 billion from another state capital bond program over 10 years does not seem unrealistic.
Steve Schlickman, former RTA executive director who now serves as director of the University of Illinois at Chicago’s Urban Transportation Center, called it “very chancy” to assume state lawmakers will come up with another capital program that could benefit Metra anytime soon.
“The history of the [Illinois] capital program has been very episodic,’’ Schlickman said. “They will do a bond program for five years, then they won’t do another one for another five to six years. “
Although former Governors Jim Thompson and George Ryan oversaw capital bond programs, in between, former Governors Jim Edgar and Rod Blagojevich did not, Schlickman said.
“The big question is, next year, when [Quinn’s] bond program is over, will the legislature and governor support another five-to-six year capital program? I don’t know. They also have to deal with extending the income tax increase as well, and with pension reform.
“Will they do a capital program as well? I think it’s at least 50-50,’’ Schlickman said.
A lead salesman in Springfield is expected to be Oberman, an appellate attorney with a largely winning record known to many as the former alderman of the city’s 43rd Ward. Oberman said he’s already explained Metra’s needs to legislative leaders and has been “quite pleased with the reception.’’
“People said `This sounds like a responsible program,’ ’’ Oberman said.
Budget documents will be available by Oct. 17. Public comment on the 2015 budget and fare hike is currently being accepted by email at firstname.lastname@example.org. Or, riders may express their views on the one-year budget at two sets of public hearings.
The first set will be held Nov. 5 at the Homewood Village Hall, the Hanover Park Police Department, the Kane County Government Center and the Mundelein Village Hall.
On Nov. 6, more hearings will be held in Metra’s downtown board room, at the Clarendon Hills Village Hall, the Will County Office Building and the Woodstock Village Hall.
Contributing: Stephano Esposito