The Sonoma Marin Area Rail Transit District’s (SMART’s) 45 mile commuter rail service in the North Bay from Santa Rosa to the Larkspur Ferry is funded by a ¼ cent sales tax through 2029. This week North Bay voters decisively rejected the proposal to extend the sales tax for an additional 30 years through 2059, thereby forcing the District to address its budgetary and operational problems in a realistic manner. Past mistakes and unwise decisions regarding cost, scheduling, projected ridership and rail operations have lead to a system that is both excessively costly and underused. Things have gotten to the point where the District’s total operating expense now exceeds its revenue. Fortunately there are 9 years of guaranteed sales tax funding remaining, giving the District sufficient time to reform its management and operations so as to provide a better and more effective service, and thereby improve its standing with the voters.

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Two things are abundantly clear: First, the high cost and low rider attraction of commuter rail in suburban settings poses a formidable hurdle for the District. Ridership is low in large part because the SMART simply cannot deliver enough travelers to their desired destinations. In the SMART–Hwy 101 corridor, SMART attracts under 0.5% of the daily travelers. Because of this low ridership the rail service currently has virtually no impact on either traffic congestion or climate change. Second, SMART’s operating expense is excessive and must come down significantly. Here’s how things are today:

• SMART’s farebox recovery ratio is under 10%, meaning that 90% of SMART’s operating cost is currently paid by the tax payers.
  
  
• SMART’s operating expense is currently running well above $52 per one way passenger trip. For comparison, FTA’s National Transit Database data shows the equivalent expense per passenger trip for Golden Gate Transit as $24, for Golden Gate Ferry as $14, for Marin County Transit as $8, for Sonoma County Transit as $14, for Caltrain as $8 and for the Altamont Commuter Express (ACE) as $13. SMART’s current operating cost structure is clearly not sustainable and represents a problem that must be addressed and dealt with immediately.

SMART accompanied its January 2020 extension to Larkspur with a 12% increase in scheduled trains, a new station in Novato, and free/reduced cost ride promotions. Ridership grew in January and February of 2020, with average weekday ridership of 2,850 and 2740 respectively vs. 2,200 to 2,600 weekday riders from August 2017 through October 2019. Hopefully, these ridership gains can be sustained, but even so, SMART’s financial status is precarious. Existing conditions suggest it is inevitable that near-term SMART fare increases, service adjustments and other cost savings will be required to meet budgetary constraints.

Here are four early action proposals for consideration:

1.  In order to bring down its bond payments SMART must immediately address the bond debt repayment pickle that it created for itself a few years ago.
   
   
2. An examination of SMART’s travel market has not been undertaken for over a dozen years. Before contemplating expansions, an independent analysis should be commissioned to provide ridership projections for 2025, 2035 and 2050 for the existing 45 mile system, as well as for the prospective extensions to Windsor, Healdsburg and Cloverdale. Estimated costs for the passing track additions needed to enable shorter headways also need updating.
   
   
3. A second independent transit consultant should be retained to assist SMART in developing a rail service operations model that discriminates between fixed and variable operating costs and identifies the scheduling, operations and administrative changes needed to reduce SMART’s costs to match available revenues.
   
   
4. North Bay carriers including SMART must collectively do a better job of integrating their fare collection systems, schedules and transfer arrangements.

More on this subject will following in the next edition of this newsletter.