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Recommendations for Revitalization: Saving the Metro Metro Internal Consulting Task Force Neal Dutta, Jeronimo de Miguel, Bobby Gautam, Jon Kamin. The Mandate. To resolve urgent need for capital and operating funding. To resolve flawed funding allocation structure.

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slide1

Recommendations for Revitalization:Saving the MetroMetro Internal Consulting Task ForceNeal Dutta, Jeronimo de Miguel, Bobby Gautam, Jon Kamin

the mandate
The Mandate
  • To resolve urgent need for capital and operating funding.
  • To resolve flawed funding allocation structure.
  • To create and implement a communications strategy that supports these initiatives.
objectives
Objectives
  • Address both immediate and systemic issues in Metro funding.
  • Develop a comprehensive communications plan that supports this pursuit of funding.
  • Adhere to Metro’s long-standing core mission, values, and planning initiatives.
agenda for change
Agenda for Change

Analysis -

  • Immediate Needs (Neal)
  • Systemic Funding Allocation (Bobby)
  • Integrated Communications Plan (Jon)
recommendations
Recommendations
  • Bond Issuance to address capital needs.
  • Enhanced Operational efficiency:
    • Fare Hikes, Advertising sales
  • Lobby for creation of appropriate long-term funding allocation structure.
  • Utilize dormant ad space to rally public support for Metro funding.
    • PR initiatives
problem urgent funding needs
Problem: Urgent Funding Needs
  • Capital Crisis:
    • Aging infrastructure in disrepair.
    • Passenger safety and security at risk.
    • $1.5 Billion needed over 6 Years - $250 million/year
  • Operating Budget Shortfall
    • Additional $25 Million in revenue needed to cover operating expenses in FY 2005.
analysis decision criteria
Analysis: Decision Criteria
  • Balances 2005 Operating Budget.
  • Provides immediate capital funding for infrastructure renewal.
  • Feasible to implement.
  • Maintains passenger satisfaction with services.
alternative 1 streamlining
Alternative #1: Streamlining
  • Reduce salary, operational expenses by 5% through service cuts and related layoffs.
  • Advantages:
    • Balanced operating budget for Fiscal Year 2005.
  • Disadvantages:
    • Low morale; may impact quality of service.
    • Alienation of passengers hit by service cuts.
    • Conflict with labor unions.
slide9

Alternative #2: Increased Fares

  • Raise all passenger fares by 5%
    • Fares are ‘sticky’: few alternatives.
  • Advantages:
    • Balances operating budget for 2005.
    • Relatively small increase.
  • Disadvantages:
    • Third consecutive increase – riders becoming increasingly dissatisfied.
slide10

Alternative #3: Bond Issuance

  • Minimum issuance of $500M over 2-6 years.
    • Federal backing of interest payments.
  • Advantages:
    • Satisfies immediate infrastructure needs.
    • Passenger experience enhanced by new infrastructure.
  • Disadvantages:
    • Interest expense increases operational shortfall.
slide11

Alternative #4: Ad Revenues

  • Metro leases just ¼ of potential ad space.
    • This revenue stream can potentially be doubled.
  • Advantages:
    • Balances operating budget for 2005.
  • Disadvantages:
    • Passenger resentment to bombardment of ads.
    • Reduced aesthetics, contrary to Metro policy.
slide12

Recommendation

  • Issue $500 million in bonds over two years to satisfy immediate capital requirements.
  • Increase sales of ad space by 50% in 2005 and 33% in 2006 to cover interest expense.
  • Increase fares by 5% in 2005 to cover operating budget shortfall.
slide13

Satisfaction of Decision Criteria

Passenger Satisfaction

Operating Budget

Capital for Infrastructure

Feasibility

Overall

Streamlining

Increased Fares

Bond Issuance

Ad Revenues

Blended Solution

Somewhat

Not at all

To a great extent

slide15

Problem: Lack of Annual Support

  • Negative media coverage has exposed Metro’s serious lack of resources.
  • Two potential reasons for this economic shortfall:
    • Lack of sufficient levels of government support.
    • Operational mis-management (as suggested by negative tone in media).
analysis not metro s fault
Analysis: Not Metro’s Fault…
  • Second-highest cost-recovery ratio.
  • GAO commended Metro management for capital investment practices.
  • It is widely recognized that passenger fares are insufficient to meet operating expenses.
analysis not metro s fault1
Analysis: Not Metro’s Fault…
  • Various Government contributions:
    • Do not contribute to operating expenses.
    • 2% of operating revenue comes from dedicated sources; national average is 33%.
    • No longer eligible for Urbanized Area Formula Program.
analysis decision criteria1
Analysis: Decision Criteria
  • Equitably incorporate Federal, State assistance.
  • Sustainable, feasible.
  • Consistent with Metro Mission, Objectives, Values.
the proposed solution
The Proposed Solution
  • Lobby for the tabling of a Bill through Congress.
    • Proposal for a coherent, sustainable source of funding.
    • Federal Government should match contributions made by each of the three states / regions.
  • Guarantees some quantity of support from Federal Government.
the proposed solution1
The Proposed Solution
  • Fixed levels of obligation for each contributor.
  • Regions experiencing extreme fiscal difficulties will be able to apply for partial relief.
slide21

Satisfaction of Decision Criteria

LU/Tokyo

TTC

Seoul

Ours

Equitable Funding

Sustainable / Feasible

Mission

Somewhat

Not at all

To a great extent

funding strategy 5 years on
Funding Strategy: 5 Years On…
  • Concentrate on consumer-friendly methods of increasing passenger-revenues.
  • Allow Metro to sustain greater operating cost burden, decrease reliance on governmental assistance.
problem acquiring funding
Problem: Acquiring Funding
  • Efforts to procure funding can be greatly enhanced with public support.
    • Public comprehension of problem Pressure for funding Government acknowledgement of will of constituents.
  • Ability to convince public of need will be critical factor in ultimate success.
analysis metro riders
Analysis: Metro Riders
  • Many Metro riders are key influencers.
    • Commuter segment – dominated by Federal Government employees.
    • Media representatives.
  • Target key influencers to re-shape public opinion, indirectly secure funding.
analysis metro riders1
Analysis: Metro Riders
  • Clean, safe, reliable, inexpensive transit.
  • Few viable alternatives:
    • Horrendous traffic
    • Rising gas prices
    • Lack of affordable housing in core
    • Therefore, ridership is ‘sticky’.
  • Metro riders often have few alternatives: will be highly receptive to communications.
analysis negative exposure
Analysis: Negative Exposure
  • Public support may be difficult to secure.
    • Service deterioration has created negative image.
    • Compounded by negative media exposure.
  • The compelling, rational response…
    • Lack of funding Infrastructure decay.
    • Management is not part of the equation.
    • Harness negative spotlight into rallying cry.
decision criteria
Decision Criteria
  • Generate support amongst key influencers.
    • Will pressure Government to act.
  • Revitalize image.
  • Cost-effectiveness:
    • Asking for funding, credibility could be damaged.
the proposed solution2
The Proposed Solution
  • Strategic communications campaign.
  • Central message:
    • Lack of funding leading to deterioration - more money will fix Metro.
    • Focus on Metro’s social, economic impact.
the proposed solution3
The Proposed Solution
  • Targeted: reach interested parties directly.
  • Transit advertising commands high recall / comprehension rates.
  • Cost-effective: do not need to pay for space.
expected outcomes
Expected Outcomes
  • Shift blame from WMATA to Government.
  • Pressure will force Government to consider funding proposals.
  • Secure at least some portion of immediate $1.5B funding needs.
implementation
Implementation
  • Internal advertising.
    • Transit ad space.
    • Metro website, sympathetic lobby groups.
    • Only cost is for media development ($500K - $2M) and opportunity cost of lost ad sales.
  • Extensive PR (through traditional media).
implementation1
Implementation
  • Successful Precedent: Toronto Transit Commission
implementation2

The Metro depends

on public support.

To find out how you can help save Metro, click here.

Save the Metro!

Implementation
  • Integration with Web Communications
implementation3

Save Metro

  • A part of your life.
  • Metro is a major contributor to DC’s Social,
  • Economic and Environmental well-being.
          • Years of budget cutbacks have left the system in dire need of upgrade. Over the next 5 years, Metro will require $1.5 Billion just to meet today’s service levels.
  • Metro needs your support. Contact your local, state and federal representatives, and tell them Metro deserves more.
  • Save the Metro
Implementation
  • Integration with Web Communications
implementation4

Where would you be without Metro?

Metro needs your support.

For more details,

call 1-800-4WE-MATA

Public transit saves

Metro needs your support.

For more details,

call 1-800-4WE-MATA

our community.

Implementation
  • Usage of Transit Media Space; fully integrated.
implementation5

Public Transportation: A Renewed Call for Support

  • Metro Needs $1.5B – Smith
  • Immediate, long-term funding sought for complete overhaul of system infrastructure.
  • Kamin, Gautam, de Miguel, Dutta
  • Graphics: Breakdown of funding needs
  • Federal response
Implementation
  • Public Relations push: need 3rd party support.
implementation6
Implementation
  • Printed material distribution, one-on-one conversations.
    • Set-up information booths at key downtown stations during evening rush hour.
  • Do not need to speak to every rider!
    • Active citizens will demand information.
    • Will also contact Government representatives.