We've asked the tram's executive management committee to hold off on making final decisions on what the tram fare will be so that we can make sure that all options to lower the proposed $4.00 round trip fare have been duly explored and considered.
There are a few options, and we'd like your opinion on the course we should take. First though, a little background.
You'll get to see this view very soon!!!
BACKGROUND
Originally, the former tram project managers assumed -- and told the public -- that the tram would be part of a seamless public transit system, and that its fare would be the same as a TriMet or Streetcar ticket. Today, this would mean that the fare would be set at $1.70 and that transfers and passes from streetcar and TriMet would be honored as fare to get on the tram.
But, we've now learned that the operating expenses for the tram will be more than the original project managers estimated. In 2004, the former tram project staff initially pegged the annual operating costs at $900,000, whereas we now know that it will actually cost a about $1.76 million a year to operate the tram. Needless to say, that affects the final calculus - and yet there is still more to consider.
Presently, the City of Portland has a cost-sharing arrangement with OHSU where OHSU covers 85% of the operating costs, while the city picks up the remaining 15%. That means that the city is on the hook for about $240,000 a year.
Current estimates are predicting that there will be roughly 1300-1500 passengers a day. Per passenger, the operating cost comes out to roughly $4 per person.
Some people want to charge a $4 fare to fully cover costs. Others say that the city should just find the $240,0o0 to subsidize the 15% of the operating costs that the city is on the hook for. If that happened, we could seamlessly integrate the tram into Portland's public transit network, accept TriMet and streetcar tickets on the tram, and set the fare for $1.70. 
[0]Tram car at Tram Tower
(We come to the $240,000 operating cost subsidy figure by assuming that almost all people riding the tram arrive to the South Waterfront with a transit pass of some kind, and therefore do not pay anything directly to the tram.)
Here are some of the real-world wrinkles that make a final decision a little tricky:
While it might seem pretty straightforward: either A) open up the tram to everyone as part of the transit system and subsidize its operations, or B) charge $4 to cover all of the costs, there are a couple additional considerations that make issue a bit more complicated.
First of all, many Portlanders feel like the city, through the statements of the previous tram project managers (who are no longer with the city), promised a TriMet fare, and that it should not go back on its word.
Another Tram ViewThat duly noted, there is another issue at hand. Specifically, the 85%-15&% cost sharing agreement the city has with OHSU will most likely change in about 2 years. At that point, the city and OHSU will split costs based on observed ridership. OHSU will cover a percentage of the $1.76 million operating costs based on whatever the share of the tram ridership comprised of OHSU-related riders. The city will pick up remain operating costs- those of the general public.
That means that if the city makes the tram fare either really cheap or almost free for people to ride, you'd expect that the the public share of the ridership would go up. And, it could go up by a lot. If this were to happen, the city could have to pay a lot more than $240,000 a year.
For instance, if the public ridership accounted for 50% of the overall ridership (650 of the 1300 per day) during the first two years, the City's portion of the tram's annual operating costs would increase from about $240,000 per year to $815,000 per year in 2009-2010. If 15% of the public riders (98 per day) purchased a $1.70 tram ticket, that would provide the city only $55,000 a year in revenue, leaving $760,000 more to cover.
In addition to the cost sharing issue, there are a couple other things to consider. First, since their has not been a tram built in the U.S. since the 1960's, PDOT's ridership estimates are just that- estimates. Potentially, the ridership could be wildly different that the current 1300-1500 per day currently expected. Tram Tower
Of course, if ridership were a lot higher than 1500 per day, this would make the cost per rider go down significantly, though that may or may not end up an important point depending on the fare that gets charged, and how much of it is collected directly by the tram (as opposed to TriMet and Streetcar).
A second consideration is that of parking meter revenues, which in the South Waterfront are expected to bring in up to $600,000-750,000 a year in new revenue by 2009/2010 in the future [update: we are reevaluating this date, as the 2009-2010 was a low-confidence, back-of-the-envelope calculation. RC]. This could significantly subsidize the tram's operations, and indeed, it was originally planned that this would be the case.
Lastly, there is an argument out there that says that we should charge the $4 fare in order to capture as much revenue as possible from tourists, who are expected to flock to the tram, though we are unsure of the size of those flocks. Some folks think that it is not good to subsidize tourists, who'd be more than willing to cough up $4 to take the trip.
On the other hand, though, there are those who say that Portland's seamless transit system helps make the city such a great place to live. They want to build on that tradition and include the tram in the current system.
So, what do you think?
We are grappling with this issue, and would love your input. Sam supports the goal of making the Tram part of a seamless transit system, but also wants a financially responsible fare.
He has been meeting with the stakeholders involved--OHSU, TriMet, Streetcar, and PDOT staff--to determine a fare system that works for everyone. There are a lot of things that need to be worked out, and they will have to be worked out by the end of the week, Friday, January 19.
Your vote will help us gage the best path to take. Let us know what you think.
Vote for your preferred tram fare now. [0]
Thanks!
UPDATE: We forgot to mention that The Oregonian editorial board weighed in on Wednesday [1].