Analysis of Operating Revenue Enhancement Opportunities for Miami-Dade Transit Phase II

1. Analysis of Operating Revenue Enhancement Opportunities for Miami-Dade TransitPhase II Miami-Dade Citizens‘Independent Transportation Trust April 2012 A Report by Infrastructure Management Group & Planning and Economics Group

2. Operating Revenue Enhancement Opportunities: Project Overview • The Phase 1 Revenue Enhancement report identified the full spectrum of alternatives for increasing operating revenues to MDT and to reduce the gap projected in 2014 in the MDT Pro Forma. • This Phase 2 report examines the most promising selected options from the Phase 1 study in further detail. • This project developed an implementation plan for the selected potential revenue streams • Required steps • Responsibilities, • Cost • Challenges • Likely range of revenue for MDT.

3. Operating Revenue Enhancement Opportunities – Phase II: Potential Revenue Enhancements • System Revenue • Advertising and marketing revenues Naming Rights • Right-of-Way Leasing, particularly for billboards and cell towers • Premium fares for the new Airport Link • Non-System Revenue • Business Licensing Fees • Tolling • Utility Fees

4. Operating Revenue Enhancement Opportunities: Methodology • Project methodology was based on Phase I research, literature reviews, and discussion with County staff and outside experts. • For advertising: • Inventory of potential assets not currently being offered to advertisers. • Then estimate the media value of new advertising assets based on the number of “impressions” • For business fees, tolling, and utility fees: • Models developed for each source to estimate the revenue that could be generated by either directing a portion of the revenue to MDT or adding an incremental fee that would be directed to MDT. • For all revenue enhancement areas: • Legal and political review of implementation issues

5. Operating Revenue Enhancement Opportunities: Advertising • MDT advertising revenue is well below the peer average.

6. Operating Revenue Enhancement Opportunities: Advertising • The Miami market is above average in population and density.

7. Operating Revenue Enhancement Opportunities: Results- Advertising and Naming Rights • Between $3.46 and $13.66 M annual revenue to MDT is possible if all the reviewed advertising assets were applied.

8. Operating Revenue Enhancement Opportunities: Results - Tolling • Using a portion of MDX tolls for MDT has significant revenue potential

9. Operating Revenue Enhancement Opportunities: Results – Business Fees • Business license fees per transaction vary from $37.50 to well over $100 depending on the business classification. • On average, business taxes were $95.64 per transaction in fiscal 2010. • Directing 1% of business fees to MDT with the same number of ratepayers as 2010 would yield just under $160,000. • At this rate, it would require directing 6.25% to raise an additional $1M annually.

10. Operating Revenue Enhancement Opportunities: Results – Utility Fees • Water, Wastewater, and Electricity Fees are possible revenue sources , but are likely to meet resistance.

11. Operating Revenue Enhancement Opportunities: Results – Implementation Issues • Legislative action will be required for certain advertising assets, but others are within MDT’s control.

12. Operating Revenue Enhancement Opportunities: Results – Implementation Issues • Business fee changes can be implemented locally. • One issue with business fees is that any funds, by law, would flow to the County General Fund, and could not be directly sent to MDT. A separate agreement or policy would be needed to provide MDT with funds equal to the amount collected for this purpose. There is a model for this with the County Maintenance of Effort, general funds provided to transit with the passage of the half-penny surtax. • Providing tolling revenue from the MDX system to MDT is at the discretion of the MDX board. • Indenture and bond covenants may restrict flexibility. • Water, wastewater, or electric fees is straightforward and entirely controlled by the County, but there are political issues.

13. Operating Revenue Enhancement Opportunities: Conclusions • The revenue sources analyzed could potentially generate substantial revenue for MDT. • Advertising and tolling, in particular, have the most revenue potential. • Implementing many of the revenue sources will be challenging. • Administrative, financial, and political obstacles exist. • System revenue sources cannot fill the entire projected budget gap. Half or more of the gap must be filled with other sources. • Ramping up the potential revenue sources for the 2014 budget year will require immediate action. • Tolling is a key potential new source for revenue, with the MDX conversion to open road tolling and the implementation of toll lanes on I-95 in the County by FDOT. However, restrictions in bond covenants will complicate implementation.

14. Operating Revenue Enhancement Opportunities: Recommendations and Next Steps Recommendations: • Focus on tolling and advertising opportunities • Business fees are secondary priority • Utility fees are likely to be too controversial to implement Next Steps: 1) Report Finalization • Integrate OCITT and CITT final comments • Finalize report and publish 2) Implementation • Prioritize revenue enhancement actions • Introduce concepts to Mayor, MDT, and other key stakeholders • Develop implementation strategy for each revenue enhancement