(updated May 9, 2020)
Last month BATWG wrote an article about the North Bay voter’s decisive rejection of the Sonoma Marin Area Rail Transit District’s (SMART’s) proposal to extend its sales tax for an additional 30 years through 2059. At the time we did not foresee the worldwide economic ravages of the Coronavirus pandemic nor its devastating effects on public transportation. The Coronavirus pandemic has upended every transit system in the USA.
Like other transit providers, SMART must undertake rapid policy and operations changes to meet the new conditions. Unfortunately, as discussed last month and below, SMART’s financial and rail operating circumstances were already much more in disarray than those of other Bay Area transit providers. Even before COVID there was already an overwhelming need for the District to put its financial house in order.
(resume reading here)
Novel Coronavirus Impact on SMART
A few weeks ago SMART’s was carrying roughly 3,000 riders a weekday. Ridership is now a tenth that amount. This has dropped fare collection levels by about $90,000 a week. Weekend service has been eliminated and weekday service cut 38 to 16 scheduled trains. Concurrently sales tax revenue – the funding backbone of many transit agencies – has fallen dramatically. SMART foresees $11 million in lost revenue for just the remainder of this fiscal year, with no end in sight.
SMART’s Unique Problems
SMART has four unique difficulties that distinguish it from other transit providers. First, it suffers an overhang from years of lowball cost estimates and public promises it couldn’t keep. Second, thanks to earlier Board decisions it is now saddled with a long-term bonding program with escalating annual debt payments – which now amount to $16.7 million a year or nearly 33% of SMART’s total annual revenue. Third, SMART’s carrying capacity is limited by its single track operation, shortage of well-located passing tracks and overly short station platforms. Even using three-car trains during peak hours, if SMART’s ridership were ever to reach say 6,000 riders a day (still not a high ridership for a commuter rail line) its carrying capacity would be exceeded. And lastly, SMART’s FY20 operating budget was way out of line, even before COVID-19. In fact the projected FY20 operating expense of $41.3 million and pre-COVID projected ridership of 6,000 riders (3,000 two-way riders) per weekday has resulted in a nightmarish $56 of operating cost per passenger trip, a figure 2 to 8 times higher than that of other Bay Area transit operators. SMART’s cost-effectiveness numbers were and are certainly now untenable. Extreme near-term service cuts and other adjustments designed to reduce costs and improve performance are now required to rectify the situation.
Here are 10 immediate-action improvements that warrant attention:
- Given its precarious financial state and COVID-19, SMART should be shut down for the remainder of the fiscal year and perhaps longer.
- During that downtime SMART directors should adjust operations, finances and future plans as necessary to bring costs into line with anticipated revenues. Continuing to permit operating costs to soar above anticipated revenues as has been the case during the past 3 years could easily lead to the permanent shutdown of the service. If on the other hand these steps are taken in an effective way they will go a long way toward regaining needed public confidence and support.
- SMART must refinance its bonding program to bring down the excessively high bond payments.
- The Board should engage an executive search firm to recruit experienced rail management personnel as the current GM’s contract expires in 2021.
- It should also retain an independent transit consultant with passenger rail operating expertise to assist in identifying the scheduling, operations and administrative cost reductions needed to match available revenues.
- To cut costs and improve management performance, SMART should consider contracting out its entire operation to a highly qualified transit rail operating company.
- Allegations have surfaced that in signing an 80 year, sole-source, no-bid fiber optic cable agreement with Sonic Telecom LLC, SMART may have violated public procurement regulations and in the process denied itself over $400 million in badly needed funding. The Board of Directors should initiate an independent investigation of this action and make contractual and other adjustments as necessary.
- SMART’s recent service extension to the Larkspur Ferry terminal (pre-COVID) has created severe traffic impacts in San Rafael and increased SMART’s own operating costs, while attracting barely more riders than the bus line it replaced did. SMART should curtail or eliminate rail service to Larkspur and work with the Golden Gate Transit District to reinstate direct bus service to the terminal.
- SMART and other North Bay carriers must collectively do a better job of integrating their fare collection systems, schedules and transfer arrangements. If SMART remains in operation its train schedules need to be consistent from hour to hour to facilitate timely bus transfers.
- In view of its precarious financial state, SMART must forego all extensions of service for the foreseeable future. Instead, interim bus-bridge services should be established where and as necessary.
These restraints, while perhaps disruptive in some cases, are badly needed to bring SMART’s finances under control.