Please Note: We strive for accuracy and transparency. This report is heavily footnoted with sources and analysis. We invite corrections and comments: info@itpwatch.org.

This report is a culmination of several years of work following repeated requests from The Rapid for tax increases in the Grand Rapids area. As we began to analyze the operations of The Rapid, we were surprised to find just how ineffective and inefficient the system was. During our campaign against The Rapid’s tax increase in 2007, a spokesperson from The Rapid called us and claimed that the data we were publishing was incorrect. We strive for accuracy and transparency, so we asked that they send us any corrections so that our data would be accurate. They declined to do so. This is probably because we use data that The Rapid itself releases to the federal government. Thus, we concluded that our data was in fact correct.

In 2009, The Rapid once again asked for a tax increase to implement the Silver Line Bus Rapid Transit (BRT) line. We quickly pointed out the failures and ridiculousness of this plan. The purpose of our campaign was simply to publicize these issues to the voters. Our non-partisan taxpayer advocacy organization, Kent County Families for Fiscal Responsibility, created a project web site named “ITP Watch” to maintain ongoing scrutiny of The Rapid’s operations. Since The Rapid publishes nearly nothing of detail on its web site regarding its operations, we have continued to build out this project and added more data from other sources.

The 2009 tax increase failed at the ballot, the first time this has happened for The Rapid since its inception. Voters in Wyoming, Walker, Grandville, and Kentwood sent a clear message that the Silver Line was not wanted nor needed.

We’ve continued to scrutinize The Rapid’s operations using data that The Rapid is required to report to the federal government. The Rapid still fails to make any meaningful data publicly available online, so we’ve also had to rely on Freedom of Information Act requests to get the most basic of details.

The purpose of this report is to address several major arguments that The Rapid makes each time it asks for more money from taxpayers. We believe that The Rapid fails to make the case, and in a big way. This report only analyzes the fix route bus service that The Rapid offers. We do not analyze the “demand response” services, such as the Go!Bus. The far majority of The Rapid’s budget is spent on standard bus service. This area of spending also presents the greatest opportunity for improvement.

In compiling this report, we came to several important and somewhat surprising conclusions:

1. The Rapid’s bus services are exceedingly expensive and The Rapid loses $4.31 per passenger;
2. The Rapid is getting worse over time at taking advantage of economies of scale. The Rapid’s costs of adding each additional passenger has increased 262% over the last four years;
3. The management at The Rapid takes an incredibly cavalier attitude toward spending taxpayer money freely, with little regard for whether such spending is in the best interest of taxpayers.

While The Rapid is the least transparent major unit of government in Kent County, we strive for transparency ourselves.¹⁾ This paper is heavily footnoted so that anyone reading it can follow along and verify our data with public sources. Our disappointment with The Rapid’s management continues to grow as we attempt to get more detail from them on their operations. Our requests are met with demands for large fees to release information that the public should be aware of. In this day and age of easy Internet publishing, The Rapid has no excuse for withholding important information from the public, yet they continue on as though they should be immune to the watchful eyes of taxpaying citizens.

An additional source of frustration has been trying to get accurate information from The Rapid’s staff. We have been subjected to contradictory statements and what we believe are intentionally vague answers. For instance, we issued a press release regarding a Freedom of Information Act request we filed with The Rapid on the subject of the fuel efficiency of its buses. The response they sent us said that their standard buses get 4.45 miles per gallon while the hybrid-electric buses get 5.13 miles per gallon. When our press release went out, The Rapid’s spokesperson implied that we were lying, yet we had their documents to prove it. The Rapid’s director was then quoted in the Advance newspaper as stating that the standard buses actually get 4.4 miles per gallon and the hybrid-electrics get 5.2 miles per gallon. We aren’t sure if he was rounding in an attempt to widen the apparent efficiency gain, but those small numbers make a material difference. Our own analysis of The Rapid’s fuel usage, according to data reported to the federal government, shows that The Rapid’s buses are getting closer to 4.22 miles per gallon. Even though the numbers seem tiny, when over a million gallons of fuel are utilized each year, the resulting costs and efficiencies are significantly different. Yet we still can’t get a straight, clear answer on the issue. This is just one example of many where it has been difficult and frustrating to pin down The Rapid on the facts.

One final thing we’d like to stress is that we’re not against public transit. We think it can be beneficial if operated in a responsible and effective way. We simply stand for more transparent government, efficient operations, and tangible societal and environmental benefits. The Rapid has shown that it does poorly at all three, and in some cases, extremely poorly. The Rapid could do far better than it does with the sizable amount of money it spends. Taxpayers need to demand far more accountability and openness from this opaque agency before increasing taxes and boosting funding.

FACT: Until ITP Watch put pressure on The Rapid to be more transparent, its web site did not include the annual capital (equipment and facility) costs in its annual budget reports. This under-reporting of its annual expenses was over $16 million a year.

Now that The Rapid has decided to publish some more data (but still not its full budgets), the public can get a better idea of what The Rapid costs.

When the true cost of The Rapid is calculated, we find that the typical Rapid bus costs $9.53 per mile²⁾ to operate (compared to about $0.56 per mile for a passenger car).³⁾ This means that it would take at least 17 passengers using Rapid buses at all times to be more cost efficient than a car. However, The Rapid’s buses only average about 7.3 passengers at any given time.⁴⁾

For a more “apples to apples” comparison, the standard transit industry practice for evaluating methods of transportation is to base comparisons on passenger miles.⁵⁾ This method multiplies the number of physical miles a vehicle is traveling by the average number of people who are using that vehicle. This calculation results in a number that allows for an accurate comparison of the allocation of resources utilized for each person who is using a vehicle. To better illustrate this, imagine that a Rapid bus travels 10 miles with an average of 7.3 people on it. That bus therefore provided 73 passenger miles of service. If a car with an average of 1.59 people in it travels 10 miles, that car has provided 15.9 passenger miles of service. With this information we can compare the costs and benefits of moving one passenger one mile using varying methods of transit.

Thus, The Rapid’s buses, which average 7.3 passengers at any given time, cost $1.29 per passenger mile to operate.⁶⁾ For a comparison, the average SUV has 1.92 passengers in it.⁷⁾ Therefore, a typical SUV costs $0.39 per passenger mile to operate.⁸⁾ For a more reasonable comparison, the average passenger sedan costs $0.35 per passenger mile to operate. These passenger vehicle costs include fuel, maintenance, tires, insurance, registration fees, depreciation, and finance.⁹⁾ It should also be noted that The Rapid’s costs do not include depreciation or finance costs.¹⁰⁾ For additional comparison, the Rapid Van service costs about $0.24 per passenger mile to operate.¹¹⁾

Furthermore, for each passenger who rides a Rapid bus, The Rapid loses $4.31.¹²⁾ Only about 10% of The Rapid’s cost of providing bus service is covered by passenger fares.¹³⁾

Using its current configuration of oversized and under-utilized buses, The Rapid is unlikely to achieve a high level of usage because the current outdated hub-and-spoke method of shuttling people around is inefficient, time-consuming, and inconvenient. Taking a bus downtown to get on another bus to go someplace just a couple of miles away from your starting point is a poor way to handle transit. Alternatives, such as smaller buses, more flexible scheduling and routing, and more effective utilization of resources could dramatically improve The Rapid’s cost effectiveness.

Moreover, The Rapid has shown taxpayers in other ways that it doesn’t take efficiency seriously. For example, The Rapid is spending $32 million on a new garage so they can store their buses indoors.¹⁴⁾ The Rapid spent $250,000 on an art sculpture for their headquarters.¹⁵⁾ Also, the director of the Rapid is one of the highest paid government employees in the county, making over $190,000 a year.¹⁶⁾ Despite most other levels of government in the state making cuts due to tight budgets, The Rapid gave all of its employees a raise in 2011.¹⁷⁾

The Rapid is spending more than $200,000 more per bus to buy hybrid-electric models. The Rapid has said that these buses save about $4,000 per year in fuel costs. It would take over 50 years for these hybrid buses to break even and justify the additional expense. Peter Varga, the director of The Rapid, was even quoted as saying “If our entire fleet consisted of hybrid electric buses, we would save $472,675 in [fuel] a year.”¹⁸⁾ Yet, what Mr. Varga doesn’t say is that replacing all of The Rapid’s 120 standard buses with hybrid-electrics would cost $61 million.

You’ll also notice that a service called “Rapid Van” is referenced in the above chart. This is the Rapid’s van pool ride share service. This type of service, also sometimes known as a “jitney,” is far more successful at providing cost-effective mass transit. The Rapid Van service is dramatically better for the environment than The Rapid’s fixed-route bus services, yet The Rapid only spends 0.5% of its annual budget on this service.¹⁹⁾ For more information on jitneys, please see the next section.

FACT: We recognize that public transportation is important for many people to get to work who can’t afford a car. However, the way The Rapid currently operates is very inefficient.

According to the Census Bureau, about 4,200 people in the Grand Rapids area depend on public transportation (The Rapid) to get to work.²⁰⁾ The amount taxpayers spend on the Rapid each year could be used to buy each and every one of these individuals a taxi ride, and money would be left over. ²¹⁾

Alternative forms of public transit have been shown to be far more efficient, pollute less, and provide superior service. One such example is shuttle buses, sometimes referred to as “jitneys,” which allow passengers to share rides, have a much more flexible schedule, and reduce transit time.²²⁾ Smaller vehicles are used far more efficiently and effectively and result in dramatically lower pollution than transit buses. The Rapid already runs a service call Rapid Van, allowing for easy carpooling. Our own analysis of the Rapid Van service shows that by utilizing this option, passengers reduce their CO2 emissions by a whopping 59% over using The Rapid’s buses. The Rapid Van service similarly is much less expensive to operate, costing only $0.20 per passenger mile, compared to $1.29 per passenger mile to operate The Rapid’s buses and $0.35 per passenger mile for the average car. Furthermore, The Rapid’s passenger fares cover about 39% of the cost of a van trip, compared to only 10% of bus trips. These vans operate with an average of 3.5 passengers, meaning that they are operating at 50% of capacity. Compare this to The Rapid’s large buses, which operate roughly at about 9% of capacity.

We understand the importance that public transportation has to a lot of people in Kent County. Our argument is simply that The Rapid is a huge money loser, inefficient, and ultimately adds massive amounts of pollution to the environment. Wouldn’t it make more sense to address the problem directly with better, cheaper, and more effective alternatives? We think so, but The Rapid doesn’t take these problems seriously. The Rapid seems to be far more interested in flashy and “perception” projects rather than giving taxpayers a greater value for their money.

FACT: According to the American Community Survey, a report released by the US Census Bureau, about 1.6% of workers in the Grand Rapids area use public transit to get to work. That’s about 4,200 people out of 258,000 workers.²³⁾ As a comparison, 9.1% of workers, nearly 24,000, carpool to work each day. Carpooling costs taxpayers nothing and is far more effective at reducing congestion than mostly-empty buses.²⁴⁾

In addition, only about 0.3% of all passenger miles ridden in the Grand Rapids area are via public transit. One can hardly make the argument that The Rapid reduces congestion in any meaningful way.²⁵⁾

The graph below compares the methods that workers in the Grand Rapids area use to get to work. As you can see, far more people carpool than use The Rapid, yet, the cost to taxpayers is virtually nothing ($182,538 is spent on the Rapid Van service). The Rapid’s bus service cost more than $38 million in 2009, yet just about as many people walked to work as used The Rapid. Wouldn’t resources be better spent subsidizing and encouraging methods of transit which result in a much higher return on investment than adding gigantic, mostly-empty buses to an already underutilized system?

FACT: Yes, it is true that The Rapid has been doing a good job of adding passengers. Between 2005 and 2009 The Rapid has gone from just over 6 million annual trips to about 8.8 million annual trips. That’s an increase of about 47%. In the same time period, The Rapid’s cost of providing fixed-route bus service has increased about 39%, to about $42.4 million. On the surface this appears to be an impressive improvement.

If we look closer, we’ll see that The Rapid dramatically expanded its services in 2000 after a mandatory property tax levy was implemented. This means that The Rapid, as currently funded and organized, is only about ten years old. As a result, The Rapid started at a very low level of service, making it relatively easy to improve performance and increase ridership. The problem is that, with time, The Rapid’s growth rate has decreased. The chart below shows that The Rapid’s ability to add more passengers each year has reached a downward sloping path. ²⁶⁾

Much of the increase in passengers is due to the several factors which do not include standard fixed-route growth: the number of people in downtown Grand Rapids using the free DASH shuttle along with students from Grand Valley State University, Grand Rapids Community College, and Grand Rapids Public Schools. While The Rapid is reimbursed for these operating costs, over the past couple of years, the number of passengers using the regular bus lines has been relatively flat.²⁷⁾

While the absolute numbers of passenger trips is increasing, the cost of adding those passengers is rising faster. Instead of taking advantage of economies of scale and reducing the cost of the Rapid on a per-passenger basis, costs are increasing. Because of the enormous amount of money The Rapid spends on capital projects, the loss (or subsidy) per passenger incurred by The Rapid has risen from $3.52 in 2006 to $4.31 in 2009. If The Rapid were getting more efficient, that number would be decreasing each year.

Another method for measuring the effectiveness of an organization’s growth is to measure the cost to provide each additional unit of service. In other words, how much does it cost The Rapid to add one more passenger to its buses? The chart above shows that this marginal cost to add a passenger has been increasing over the past several years. In 2006, it cost The Rapid only $1.44 to add one passenger. In 2009, it cost The Rapid $4.06 to add one passenger.

Over time, The Rapid is apparently having more difficulty filling its buses. Rather than focusing inward on better utilizing its existing resources or trying to boost ridership on existing routes, The Rapid asks for tax increases nearly every two years to add even more underutilized buses.

FACT: The Rapid occasionally commissions extremely expensive studies to justify their inefficiency, but we can analyze the facts using publicly-available data, without sending a bill to taxpayers.

The Rapid’s Transit Master Plan web site states: “The Rapid’s cost per passenger is $3.00. The average among peer systems (similar service area and population – 400,000-500,000) is $4.26.”²⁸⁾ We take issue with two problems in this statement.

First, the calculations we make regarding cost per passenger include capital costs. The Rapid refuses to include these costs when calculating its expenses. This means that The Rapid only uses the costs of fuel, personnel, etc. when it makes such statements. This is akin to only counting the cost of gas for your car and not the cost of the car itself when figuring out your monthly budget. But that is why The Rapid states that it only costs $3.00 to transport one passenger. The Rapid is required to report capital costs to the government, however. The real cost, when including The Rapid’s capital expenses, rises to $4.79 per passenger. Taxpayers bear $4.31 of that cost because the average passenger fare received by The Rapid is $0.48. This is just one way which The Rapid seeks to mislead the public regarding its true costs.

Second, we find it odd that The Rapid is comparing itself to other transit agencies solely based on the population of the area being served.²⁹⁾ We decided that it would be fairer to compare The Rapid to a transit agency right next door which spends about the same amount of money.

The Lansing area transit agency (CATA) spends almost as much as The Rapid on operating costs providing traditional fixed route bus service ($25 million vs. $26 million spent by The Rapid). As a comparison, in 2009 (the latest year in which the data is available) CATA carried 23% more passengers than The Rapid.³⁰⁾ Furthermore, CATA’s operating cost per trip was $2.31 (22% better than The Rapid) and it recovered 60 cents per trip in fares (25% better than The Rapid). Surprisingly, while providing service to 23% more passengers than The Rapid, CATA did so with 23% fewer buses than The Rapid.

In 2009, bus fares in Grand Rapids covered less than 16.3% of operating costs (and, of course, none of the capital costs. If we factor in capital costs, The Rapid only recovers 10% of the cost of providing bus service through passenger fares). By comparison, CATA recovered 26% of operating costs through passenger fares.

The Rapid’s Buses carried an average 7.3 people over the course of a day. The buses of the Lansing’s CATA carried an average of 10.89 riders.

The Rapid seems to spend a lot on capital expenses. Between 2007 and 2009, The Rapid spent about 45 cents on capital costs for every dollar of operating costs. For comparison, CATA spent about 15 cents on capital costs for every dollar spent on operating costs.

We conclude that the Rapid is already spending a lot of money and not getting much of a return for it. The problem is not a shortage of money but too much money — and spending it in the wrong places. The Rapid is shockingly expensive to operate. The agency needs to focus more on serving riders and not on bilking taxpayers out of more money.