1 / 37

The Mandate

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.

cairo-walker
Download Presentation

The Mandate

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

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

  2. 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.

  3. 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.

  4. Agenda for Change Analysis - • Immediate Needs (Neal) • Systemic Funding Allocation (Bobby) • Integrated Communications Plan (Jon)

  5. 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

  6. 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.

  7. Analysis: Decision Criteria • Balances 2005 Operating Budget. • Provides immediate capital funding for infrastructure renewal. • Feasible to implement. • Maintains passenger satisfaction with services.

  8. 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.

  9. 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.

  10. 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.

  11. 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.

  12. 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.

  13. 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

  14. Projected Cash Flows*

  15. 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).

  16. 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.

  17. 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.

  18. Analysis: Decision Criteria • Equitably incorporate Federal, State assistance. • Sustainable, feasible. • Consistent with Metro Mission, Objectives, Values.

  19. 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.

  20. The Proposed Solution • Fixed levels of obligation for each contributor. • Regions experiencing extreme fiscal difficulties will be able to apply for partial relief.

  21. Satisfaction of Decision Criteria LU/Tokyo TTC Seoul Ours Equitable Funding Sustainable / Feasible Mission Somewhat Not at all To a great extent

  22. 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.

  23. 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.

  24. 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.

  25. 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.

  26. 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.

  27. Decision Criteria • Generate support amongst key influencers. • Will pressure Government to act. • Revitalize image. • Cost-effectiveness: • Asking for funding, credibility could be damaged.

  28. 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.

  29. The Proposed Solution • Targeted: reach interested parties directly. • Transit advertising commands high recall / comprehension rates. • Cost-effective: do not need to pay for space.

  30. 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.

  31. 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).

  32. Implementation • Successful Precedent: Toronto Transit Commission

  33. 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

  34. 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

  35. 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.

  36. 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.

  37. 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.

More Related