San Diego Association of Governments

FY2013-FY2015 Triennial Performance Audit of the North County Transit District (NCTD)

FINAL AUDIT REPORT

June 2, 2016

FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

TABLE OF CONTENTS

EXECUTIVE SUMMARY ...... 1 SECTION I: INTRODUCTION ...... 4 SECTION II: COMPLIANCE REVIEW AND PRIOR AUDIT RECOMMENDATIONS ...... 19 SECTION III: MANAGEMENT CONTROL AND REPORTING ...... 24 SECTION IV: PERFORMANCE TRENDS AND FUNCTIONAL REVIEW ...... 28 SECTION V: CONCLUSIONS AND RECOMMENDATIONS ...... 44

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EXECUTIVE SUMMARY Transit operators that receive Transportation Development Act (TDA) funds are required to undergo triennial performance audits in the State of California. Triennial performance audits are a requirement for the continued receipt of State TDA funds for public transit under California Public Utilities Code (PUC) Section 99246. The performance audit is administered by the San Diego Association of Governments (SANDAG) and prepared by CH2M HILL. This report represents the State-mandated performance audit of the North County Transit District (NCTD) for Fiscal Years 2013, 2014, and 2015, the period from July 1, 2012 through June 30, 2015.

The TDA triennial performance audit of NCTD includes evaluations of: – Compliance with pertinent sections of the Public Utilities Code – Progress to implement prior performance audit recommendations – Agency goals and objectives and performance monitoring systems – System-wide and functional area performance trends

The objective of the performance audit is to assess compliance with PUC requirements, identify significant achievements as well as opportunities for improvement, and develop recommendations for short and long-term efficiency and effectiveness improvements. Several audit period accomplishments and challenges were noted in spite of both temporary SPRINTER shutdown and changes to LIFT operating model. Major accomplishments include: – Record ridership in FY2014 and FY2015 for all modes – Recovery and growth of service following service decreases in previous period – Continued implementation of Positive Train Control system – Development of more robust and proactive safety culture – Robust rail reliability statistics for both COASTER and SPRINTER – Continued implementation of JD Edwards Enterprise Resource Planning software NCTD is in compliance with Public Utilities Code (PUC) requirements with the exception of farebox recovery ratio for paratransit service. Additionally NCTD has made progress towards implementation of prior audit recommendations: – Compliance with PUC Requirements: NCTD is in compliance with all PUC requirements with the exception of paratransit farebox recovery ratio. The PUC mandates that the farebox recovery ratio for paratransit service must be at least 10.0%. In FY2015, the farebox recovery ratio for paratransit was 9.2% according to calculations based on data from the National Transit Database. – Progress to Implement Prior Audit Recommendations: NCTD has meaningfully addressed the four recommendations from the prior audit period. 1) While regional fare policy is set by SANDAG, NCTD initiated and led the preliminary regional discussion regarding fare simplification in September 2013. This led to the decision to implement a smaller fare simplification working group led by SANDAG. In January 2014, the Fare Simplification Working Group recommended that the region update the fare study from 2008 in order to determine any necessary modifications to the existing SANDAG Regional Fare Ordinance. The fare study update commissioned by SANDAG is currently underway. NCTD also is embarking on a joint procurement with MTS for mobile ticketing services. 2) NCTD analyzed BREEZE, LIFT, and industry peers for best practices regarding bundling contractor procurements, contract terms and conditions, and requests for proposals for procuring contractor services. These practices were analyzed in the bundled procurement of contractor service for SPRINTER and COASTER services which concluded after the end of this audit period. 3) NCTD has improved safety training for SPRINTER service by doubling the size of the Safety Department, instituting the Risk Roundtable meeting, and implementing the intermodal Integrated Safety Plan. 4) NCTD created the LIFT Performance Plan

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to monitor paratransit performance metrics. NCTD tracked contractor adherence to the Performance Plan until November 2013. At this time the LIFT contractor, the American Logistics Company, informed NCTD that it could not fulfill the remainder of its contract. Consequently, NCTD procured and implemented new contractor services. NCTD tracks performance of the new LIFT contractor through regular reporting out on progress. Performance indicator trends show the following: – System-wide operating cost per service hour, a measure of cost efficiency, decreased 10.1% during the audit period from $146.19 in FY2012 to $131.49 in FY2015. This was impressive given the 4.4% rate of inflation. The trend is a result of a 13.6% growth in operating costs and a 26.4% increase in vehicle service hours during the audit period. These costs reflect, in large part, increase in service following service decreases in the prior period and the higher staffing levels caused by the addition of new departments and functions. Operating cost per passenger, a measure of cost effectiveness, increased by 8.6% from $6.29 in FY2012 to $6.83 in FY2015. This is a result of a 13.6% increase in operating costs and a 4.6% increase in ridership. The increase in ridership is primarily the result of the economic recovery, and the increased service across all modes. – Service productivity decreased during the audit period. Passengers per service hour decreased by 17.2% while passengers per service mile decreased by 11.4%. Despite the gains in ridership, this is a result of a 26.4% increase in vehicle service hours and an 18.0% increase in vehicle service miles coupled with a 4.6% increase in ridership. It should be noted that LIFT accounted for a disproportionate amount of the increase in service hours and miles. This was largely due to a change in the LIFT operating model and a considerable increase in demand for paratransit. – Service hours per employee FTE, a measure of labor productivity, increased by 7.7% during the audit period from 882 in FY2012 to 885 in FY2015. This trend is a result of a 26.4% increase in vehicle service hours and a 17.4% increase in employee FTEs. – The NCTD system-wide farebox recovery ratio decreased during the audit period, from 23.9% in FY2012 to 22.5% in FY2015. NCTD farebox recovery during the audit period was still higher than the PUC mandated farebox recovery of 18.8%. – The average fare per passenger trip increased by 2.3% during the audit period, from $1.50 to $1.54. – The net cost per passenger trip increased by 10.6%, from $4.78 in FY2012 to $5.29 in FY2015, which was above the inflation rate of 4.4% over the audit period.

The system-wide TDA performance trends overall are indicative of the continued attention that NCTD placed on cost containment given service increases during the audit period. NCTD’s accomplishments position it well for continued cost containment in the future.

Three recommendations are offered for NCTD’s consideration: – Recommendation 1: Implement strategies to minimize operating costs for LIFT paratransit service. LIFT farebox recovery dropped below the PUC mandated 10% level in FY2015. NCTD should explore best practices to minimize operating costs in order to achieve compliance with the PUC. Additionally NCTD should implement strategies which will contain growth of operating costs given the likely increase in demand for paratransit. – Recommendation 2: Institute robust tracking and management system for excess capital inventory at rail maintenance facilities. Excess capital inventory from rail projects is currently stored at rail maintenance facilities. NCTD does not currently track this excess inventory. NCTD should incorporate this inventory into the current inventory tracking system and later in the JD Edwards system. NCTD should also consolidate the excess inventory at a centralized “lay-down” yard which can be done at no direct cost to NCTD. This would free up space at rail maintenance facilities and would potentially reduce the need for excess procurements for future rail capital projects.

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– Recommendation 3: Work with SANDAG to develop digital database for storing NCTD right of way data. NCTD owns its rail right of way. As a result, NCTD must process entry requests, rail safety plans, and associated work plans. NCTD does not have digital files for current right of way. NCTD should work with SANDAG to leverage SANDAG’s robust GIS system to create a digital database. This would greatly improve the efficiency of the right of way permitting process.

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

SECTION I: INTRODUCTION

The TDA triennial performance audit of the North County Transit District (NCTD) follows state guidelines. Triennial performance audits are a requirement for the continued receipt of State Transportation Development Act (TDA) funds for public transit under California Public Utilities Code (PUC) Section 99246. The San Diego Association of Governments (SANDAG) is responsible for administering the conduct of performance audits in the San Diego Region. SANDAG has retained CH2M (“study team”) to conduct the performance audit of the North County Transit District (NCTD). This report represents the State-mandated performance audit of NCTD for Fiscal Years 2013, 2014, and 2015, the period from July 1, 2012 through June 30, 2015.

The TDA triennial performance audit of NCTD includes evaluations of: – Compliance with pertinent sections of the Public Utilities Code – Progress to implement prior performance audit recommendations – Agency goals and objectives and performance monitoring systems – System-wide and functional area performance trends

The objective of the performance audit is to identify significant achievements as well as opportunities for improvements, and to provide recommendations for short- and long-term efficiency and effectiveness improvements.

Based on the study team’s experience conducting several TDA audits, the study team compiled a list of data from NCTD to conduct the preliminary review of the NCTD’s operations and financials and identify specific audit areas. The preliminary review was followed by on-site interviews with NCTD staff and management focusing on the TDA requirements as well as the specific audit areas identified in the previous step. Upon completion of the on-site interviews, the study team conducted a detailed review of the NCTD using data collected from reports/plans/documents and on-site interviews. Finally, the analysis and findings are documented in this report.

The methodology for the NCTD audit included site visits, interview, and data collection and analysis. Interviews were conducted with personnel responsible for the management and oversight of NCTD services:

– Chief Executive Officer – Deputy Chief Financial Officer – Compliance Officer – Chief Planning Officer – Manager of Service Planning – Controller – Manager of Finance – Manager of Customer Service – Chief Technology Officer – Chief of Transit Enforcement – Chief Development Officer – Chief Administrative Officer – Chief of Procurement – Contract Administration

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– Chief Operations Officer – Chief of Safety – Chief of Staff – Chief Financial Officer – Deputy COO – Bus Operations – Deputy COO – Mechanical – Deputy COO – Rail Operations – Deputy COO – Rail Systems

Background documents and other written information including those identified in Exhibit I-1 were collected and reviewed:

Exhibit I-1: NCTD Background Documents and Written Information Reviewed

Organization and staffing charts National Transit Database Data provided by operating units Reports, FY2013-FY2015 to support specific analyses Labor agreements in effect during the audit period State Controller Reports, Performance Objective Plans, FY2013-FY2015 FY2013-FY2015 Current NCTD Policies and Procedures Comprehensive Annual Financial Annual Performance Monitoring Reports, FY2013-FY2015 Reports, FY2013-FY2015 FY10-FY2012 performance audit report and responses to Adopted Budgets, FY2013- Service maps and brochures recommendations FY2015 NCTD website: www.gonctd.com Form B-10 and Related Reports, CHP Transit Operator SANDAG website: FY2013-FY2015 Compliance Certificates www.sandag.org CPUC SPRINTER Internal Safety Audit

The audit team also: – Visited NCTD operations and maintenance facilities (East Division/ SPRINTER; Maintenance of Way (MOW) Inventory Facility/ SPRINTER and COASTER, West and East Division/ BREEZE, and Stuart Mesa Maintenance Facility/ COASTER). Each site visit was accompanied by a responsible NCTD staff member. During the site visits, the study team also interviewed NCTD’s contractors for COASTER and SPRINTER rail operations. – Assessed compliance with applicable Public Utilities Code Sections, including progress and performance results relative to prior audit recommendations. – Compiled and analyzed performance indicator trend information for the system and the individual operations, as well as for major functional areas.

I.1. Overview

The North San Diego County Transit Development Board was created by California Senate Bill No. 802 on September 20, 1975 to plan, construct, and operate, directly, or through a contractor, public transit systems in its area of jurisdiction. In September 2002, Senate Bill 1703 modified the responsibilities of the Board by transferring responsibility for planning, programming, project development, and construction to the San Diego Association of Governments (SANDAG). In January 2006, the North San Diego County Transit Development Board was renamed to North County Transit District (NCTD). NCTD provides bus, van and train service for people in the northern half of San Diego County-from the rural areas of Fallbrook and Ramona and the Camp Pendleton Marine Corps Base, to the cities of Oceanside, Vista, Carlsbad,

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Encinitas, San Marcos, Del Mar, Solana Beach, and Escondido, plus the unincorporated areas of North San Diego County.

NCTD’s services are known and branded as: BREEZE (Fixed Route Bus), LIFT (ADA Paratransit Service), FLEX (Deviated Commuter and Demand Response), COASTER (Commuter Rail), and SPRINTER (Hybrid Rail). NCTD contracts with private operators to deliver these modes of public transit service.

NCTD provides fixed route bus (BREEZE), deviated commuter and demand response service (FLEX), commuter rail along the I-5 corridor (COASTER), hybrid rail service from Oceanside to Escondido (SPRINTER), and ADA paratransit services (LIFT) in the northern portion of San Diego County. NCTD serves a population of approximately 862,000 in an area of responsibility that covers about 1,020 square miles.

A brief description of each service is presented below.  BREEZE currently operates 33 routes in the North County service area, from early morning to late at night, seven days a week. Of the current active fleet of 163 buses, 120 of the newest vehicles are cost efficient environmentally friendly Compressed Natural Gas (CNG) models. First Transit operated the BREEZE service during the audit period.  COASTER provides commuter rail service seven days a week, north and south along the San Diego County coast between Oceanside and San Diego. COASTER service is provided by seven locomotives, 10 bi-level cab cars, and 18 bi-level passenger coaches. Transit America Services, Inc. was the contract operator responsible for maintaining and operating the trains during the audit period.  SPRINTER provides east-west mobility link between Escondido, San Marcos, Vista, and Oceanside. This hybrid rail service is delivered using European-style light rail vehicles with a current active fleet of 12 light rail diesel multiple units (DMU). TransDev (formerly Veolia Transportation) was responsible for maintaining and operating the trains during the audit period.  LIFT provides demand response and ADA paratransit service and ADA paratransit service for passengers who due to their disability to access fixed route service. During the audit period, NCTD had to switch the contracted operator of the LIFT service. In November 2013, American Logistics Company (ALC), informed NCTD of its inability to operate the service. ALC operated this service as a brokerage model, utilizing local taxi services and independent car services. Beginning April 2014, First Transit, the provider of BREEZE service, began operating and maintaining NCTD owned vehicles to deliver the LIFT service using a fleet of 53 vans and cutaways.  FLEX provides on-demand service in parts of southwest Carlsbad, Encinitas, Solana Beach, Escondido and Ramona, where BREEZE service is not available. FLEX vehicles take passengers anywhere within the FLEX zone or to the nearest transfer point on the BREEZE, COASTER, or SPRINTER. FLEX also provides deviated commuter service between Escondido and Ramona on a scheduled route. In November 2013, American Logistics Company (ALC), informed NCTD of its inability to operate the service. ALC operated this service as a dedicated fleet model utilizing NCTD owned vehicles in addition to operating the LIFT service. Beginning April 2014, First Transit, the provider of BREEZE service, began operating and maintaining NCTD owned vehicles to deliver the FLEX service using a fleet of 8 vans and cutaways.

Exhibit I-1 shows NCTD’s high-level organizational structure from the FY2013 actual financial reports.

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

Exhibit I-1: NCTD Organization Chart (FY2013 Actual CAFR)

Source: NCTD, FY 2013 CAFR

As the privatization of the bus service occurred, and other changes implemented, NCTD’s organization structure went through several changes. The current organization with ten Divisions is shown in Exhibit I- 2:

 Office of the Executive Director  Procurement and Contract Administration  Development Services  Information Technology  Operations  Transit Enforcement and Emergency Preparedness  Finance  Safety  Planning  Administration and Services

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

Exhibit I-2: NCTD Organization Chart (FY 2015 Actual CAFR, End of Audit Period)

Source: NCTD, FY 2015 Actual CAFR

Two significant points to note regarding the recent organizational changes:

 Procurements and Contract Services Division no longer reports through General Counsel’s Office  NCTD transitioned Transit Enforcement from private security firm to in-house services.

Total staffing levels started at 119 in FY2013 and ended at 153.50 in FY2015. This is a 28.9% increase during the audit period, of which 19 positions, or 15.9%, of the increase was attributable to transitioning security services from a contracted model to a directly staffed model. While the remaining 15.5 added positions, or 13.0%, represents an increase over three years, this headcount is still less than the FY2011 levels when NCTD had a total of 176.50 budgeted positions. The NCTD budgeted staffing levels, are illustrated in Exhibit 1-3.

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

Exhibit I-3: NCTD Staffing Levels (Budgeted Positions), FY2013-2015

Source: NCTD FY2015 Budget

BREEZE service was restructured and privatized during the previous audit period. Structural and service changes led to a significant drop in ridership during the previous audit period. The recession also led to a significant drop in ridership beginning in January 2009. The decline continued until ridership began to rebound in January 2011. Service changes and reductions on BREEZE occurred in FY 2008, FY 2009, and FY 2010 and were related to the implementation of the SPRINTER line. Service changes and reductions on BREEZE also occurred in FY 2011 and related to the first phase of the Mobility Plan. Service levels began to increase in FY 2012 as later phases of the Mobility Plan were implemented. NCTD was able to stabilize ridership during the current audit period. BREEZE ridership increased by 1.6%, surpassing 8 million unlinked passenger trips in FY2015. At the end of FY2013, SPRINTER service was suspended from March 9th, 2013 to May 18th, 2013 due to a rail vehicle maintenance concern. Following the shutdown, SPRINTER ridership quickly recovered and surpassed prior levels. COASTER ridership and service levels remained fairly constant, however operating costs increased as additional staffing was added. LIFT paratransit service was forced to change from a brokerage operational model to a dedicated fleet operational model due to a ruling from the State Court of Appeals. NCTD was given 120 days of notice to secure a new operations contract, obtain and train staff, create a scheduling center, and procure 53 ADA compliant vehicles. NCTD was able to accomplish the changeover and manage a large increase in demand for paratransit. System-wide ridership grew to 12.6 million annual riders in FY2015, a record number for NCTD.

NCTD costs increased due to several factors during the audit period. The overall net change was 13.6%, while inflation was 4.4% during the period. Service hours and service miles increased by 26.4% and 18.0% respectively. Service hours and miles both decreased during the prior period due to budgetary driven service reductions. NCTD also increased staffing levels as a number of functions were brought in house and as the agency moved to add additional safety staff. BREEZE operations costs increased by 3.8%, which was lower than inflation. Overall COASTER operating costs increased by 12.1%, however the increase was largely due to an increase in administrative staff. COASTER operations and maintenance costs decreased during the period. SPRINTER operating costs increased by 17.0%, however operating costs per passenger trip only increased by 2.1%. Changes to the operational model and a large increase in demand caused LIFT operating costs to increase by 121.2%. Despite operating costs growing faster than revenue, farebox recovery ratios generally performed well. The system-wide farebox recovery ratio decreased by 5.9%, from 23.9% to 22.5%, during the audit period. The BREEZE farebox recovery ratio remained constant at 19.5%, COASTER and SPRINTER farebox recovery ratios decreased by 5.1% and 3.2% respectively, and the LIFT farebox recovery ratio dramatically decreased by 42.2%. In FY2015, the LIFT farebox recovery ratio dropped to 9.3%, which was below the TDA mandate for paratransit services.

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Mode share for the different modes stayed very similar during the audit period. Exhibit I-4 illustrates that the BREEZE bus and COASTER commuter rail mode shares of total riders nominally decreased, while the SPRINTER and LIFT mode shares increased slightly. As point of reference, in 2006 BREEZE carried 85% of NCTD’s passengers. Exhibit I-4: NCTD Mode Share, Unlinked Trips

FY2012 FY2015

1.1% 1.6% 20.0% 21.9%

13.4% 63.5% 13.0% 65.4%

BREEZE COASTER SPRINTER LIFT BREEZE COASTER SPRINTER LIFT

BREEZE, the NCTD’s fixed route bus system, carries over 8.0 million passengers annually this is less than the 8.7 million riders BREEZE carried in 2009. The decline in BREEZE ridership is due to the introduction of SPRINTER service, which warranted the reduction of duplicative BREEZE service in the service area. BREEZE is composed of six service types: 1. Corridor 2. Local 3. Core 4. Local/Small Bus 5. Commuter 6. Rural

BREEZE service generally operates from approximately 5:30 am to 11:30 pm, with the service span varying by route. Service frequency typically varies between 30 to 60 minutes, with some 15 minute- headway service. The BREEZE system was fully privatized in July, 2011 and is operated by First Transit, using two operations and maintenance facilities. The West Division facility is located in Oceanside; the East Division facility is located in Escondido.

In the past, NCTD has structured the BREEZE service to balance coverage and productivity. However, financial pressures experienced over the last two audit periods have impacted NCTD’s approach. NCTD drafted the Mobility Plan as a way to improve service efficiency and provide greater connection with SPRINTER and COASTER. As per the Mobility Plan, NCTD has moved away from the coverage- influenced approach and currently focuses on passenger yield. NCTD continues to implement service changes to achieve higher productivity. More detailed information about the performance of the BREEZE system is presented in Chapter IV, Performance Trends.

COASTER, NCTD’s commuter rail line, experienced basically a flat ridership over the audit period (one percent increase). Transit America “TASI”, a subsidiary of Herzog, has had this 10-year contract since FY07. TASI operates the trains, maintains the equipment, track, signals and facilities. NCTD is responsible for contract management and oversight. The COASTER runs between the Oceanside Transit Center and San Diego’s Santa Fe Depot, with six intermediate station stops.

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COASTER operates 22 trains weekdays (with an increase to 26 trains on Friday nights, seasonally), 12 Saturday trains and eight Sunday/Holiday trains. The COASTER runs 365 days per year.

Since COASTER began service in 1995, it has experienced significant ridership growth serving approximately 1.6 million passengers in FY 2015, with most Park & Ride facilities near or at full capacity. This ridership is equivalent to about 5,500 weekday boardings. NCTD now also handles dispatching functions for COASTER and all other trains operating on the San Diego Subdivision. Ongoing maintenance activities for the COASTER service are performed by Transit America/TASI at the COASTER Stuart Mesa Maintenance Facility, located at Camp Pendleton. Exhibit I-5 provides the COASTER system map.

Exhibit I-5: COASTER System Map

SPRINTER ridership increased over the audit period despite challenges faced by NCTD. Ridership, has continued to increase over the audit period. Ridership increased by an impressive 14.6% over the three year period. The ridership increase far outpaced service increases which occurred during this time.

SPRINTER operates 18 hours/day and runs east-west between the Escondido and Oceanside Transit Centers, known as ETC and OTC respectively. SPRINTER runs under a temporal-separation shared track use program where SPRINTER utilizes the track for approximately 18 hours/day and freight trains get about six hours per night, up to five nights per week.

SPRINTER has 12 vehicles and is operated by TransDev with Bombardier as rail vehicle maintenance subcontractor. NCTD began managing fare enforcement on SPRINTER in July 2010. Both contractors, TransDev and Bombardier, have offices in a shared building along with NCTD. The Herzog contractor who runs COASTER, TransitAmerica, maintains the rail infrastructure of the SPRINTER line. Stations and parking lots are handled by NCTD Development Services staff and their subcontractors.

SPRINTER ridership dropped from FY2012 to FY2013 due to the two month suspension of service, then progressively increased through FY2015 to reach approximately 2.8 million riders. SPRINTER carried approximately 22% of NCTD riders in FY2015.

The SPRINTER system map is presented in Exhibit I-6.

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Exhibit I-6: SPRINTER System Map

SPRINTER service was interrupted in March 2013 given premature wear on brake rotors. NCTD took the responsible action of shutting down the system until this issue could be resolved to the satisfaction of the respective regulatory agencies and of NCTD. On May 15, 2013 the CPUC issued a letter to NCTD agreeing with the District’s request to resume SPRINTER revenue service as of May 18, 2013.

In response to the temporary shutdown of service, NCTD implemented several policies and initiatives to improve safety and risk reporting. NCTD submitted an internal safety audit to the CPUC in February, 2015. In order to promote standard operating procedures for all modes, NCTD developed the Integrated Safety Plan. This plan included over 79 standard operating procedures which were incorporated across all modes. The report also details all procedures which were to be handed over from NCTD to the contractors. In order to better track accidents, NCTD implemented an accident/incident notification process using the current Industry Safe software. In order to create a safety and risk geared culture, the monthly Risk Roundtable was created. The roundtable tracks risk items in a formal registry and individual items are discussed among members of various departments.

LIFT paratransit service changed considerably as it transitioned from a brokerage model back to a dedicated fleet model.

LIFT is a curb-to-curb shared ride service available to ADA-certified patrons. LIFT serves origins and destinations that are within ¾-mile of an NCTD fixed route, during the same hours as the corresponding fixed route (generally from 5:30 am to 11:30 pm). From FY2009 to FY2011, NCTD operated LIFT with a dedicated fleet through a contract with Lifeline Community Services. On July 1, 2011, NCTD transitioned the contract to American Logistics Company (ALC). ALC operated a brokerage, using taxis, limousine-like vehicles, and other transportation providers to serve the disabled community.

In November 2013, American Logistics Company (ALC), informed NCTD of its inability to operate the service. ALC was involved in a court case in the State Court of Appeals which centered on the employment status of the bus operators used by ALC. ALC claimed to be operating model similar to general rideshare services, wherein drivers are considered contractors. The State Court of Appeals ruled against ALC, requiring that operators be considered employees and be given similar benefit status. The ruling caused ALC to be financially unable to provide paratransit service for NCTD.

NCTD was given 120 days of notice to transition to a different contractor. NCTD negotiated a $300,000 penalty to ALC and then was able to secure a contract with First Transit, the current BREEZE contractor. First Transit took over LIFT operations on March 30, 2014. Once the First Transit contract was secured, NCTD needed to obtain and train drivers, reconfigure the TRAPEZE scheduling system, secure a

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The transition from one business model to another resulted in certain challenges. Operating costs for LIFT increased as a result of the switch back to the dedicated fleet model. The dedicated fleet model requires a greater number of service miles as vehicles must be dispatched from centralized locations. The brokerage model was estimated to save $8.7 million over six years, however NCTD is not able to realize the savings with the current dedicated fleet model.

FLEX is a deviated commuter and demand response system available to anyone, within certain service areas. Flex was also operated by ALC until March 30, 2014. On March 30, 2014 First Transit began operating FLEX service under a new contract.

Fares were not modified in the NCTD service area during the audit period. The last major fare changes were made prior to the audit period in 2011.

NCTD fare structures and fare levels differ among service modes. – The base fare for BREEZE was decreased from $2.00 to $1.75 in July 2011. Fifty percent discounts are provided for senior/disabled/Medicare patrons. Youth under 6 ride for free. – The base fare for SPRINTER remained at $2.00 during the audit period. Fifty percent discounts are provided for senior/disabled/Medicare patrons. Youth under 6 ride for free. – COASTER utilizes a zone based fare structure. Single ride fares range from $4.00 to $5.50 depending on the number of zones crossed. Fifty percent discounts are provided for senior/disabled/Medicare patrons. Youth under 6 ride for free. – The base fare for FLEX is set at $5.00. Fifty percent discounts are provided for senior/disabled/Medicare patrons. Youth under 6 ride for free. – The LIFT paratransit one way fare is set at $3.50. NCTD also sells 10 ride LIFT Ticket Books for $35.00. NCTD offers various regional fare products. As of the end of the audit period, NCTD offers: – Regional Day Pass, Regional 14-Day Pass, Regional Monthly Pass valid on BREEZE / SPRINTER / MTS Regular Bus – Senior Local Day Pass valid on BREEZE / SPRINTER – Regional Rapid Express Monthly Pass valid on BREEZE / SPRINTER / MTS Regular Bus & Premium Bus / MTS Trolley – Premium Day Pass valid on BREEZE / SPRINTER / COASTER/ FLEX / MTS Regular Bus & Premium Bus / MTS Trolley.

It should be noted that approximately 70% of NCTD fare revenue is attributable to the monthly passes described above. The cash fare discount for senior/disabled/Medicare riders is set at 50%, in accordance to federal mandated. The monthly pass discounts are set at 75% for senior/disabled/Medicare and at 50% for youth riders. Exhibit I-7 provides NCTD’s fare structure from FY2005 to FY2014. No changes to the fare structure were made in FY2015. Therefore, the FY2014 fare structure and fare levels are also reflective of the FY2015 fare structure and fare levels.

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Exhibit I-7: Fare Structure for NCTD Services (as of FY 2015 Budget) BREEZE and ADA Fares

Source: FY2015 Budget

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COASTER FARES

Source: FY2015 Budget

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SPRINTER FARES

Source: FY2015 Budget

NCTD continues its commitment to control costs and has continued implementation of the Comprehensive Operations Analysis (COA). The COA, called the Mobility Plan, was implemented the five phases between 2011 and 2014. The COA resulted in re-routings of bus services, alternative methods of service delivery, use of smaller, more cost-efficient vehicles in some areas, as well as other service adjustments to strengthen service productivity. Additionally the plan included steps to increase connectivity with SPRINTER services.

I.2. Accomplishments and Challenges

From fiscal year 2014 to 2015, NCTD ridership increased 0.9% surpassing 12 million boardings again and resulting in the highest annual system-wide ridership in NCTD history.

System-wide In fiscal year 2015, NCTD worked to increase efficiency and revenues in order to mitigate the effects of a relatively weak economy. NCTD focused on increasing ridership through additional marketing, college ridership programs, and other activities. In an effort to increase service efficiency and promote access across modes, NCTD drafted the Mobility Plan. NCTD implemented the Mobility Plan in five phases between 2011 and 2014. The Mobility Plan was a major BREEZE bus route restructuring to better integrate the BREEZE bus system with the SPRINTER light rail line. Under the Mobility Plan, NCTD staff analyzed each route, made appropriate revisions to maximize ridership, and enhanced system integration with SPRINTER service while serving the needs of the greatest number of people with the available

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG) resources. In FY2015, NCTD monitored performance of the BREEZE system and continues to make minor refinements to BREEZE schedules to continue to improve service efficiency and reliability.

NCTD has increased staffing levels during the audit period. This is in part due to the addition of strategic departments and functions, as well as the transfer of certain functions from contractors to directly staffed positions. During this period NCTD has added: a Planning Department with staff trained in preparation of environmental impact assessment documents, additional safety staffing, dedicated engineers and architects, and a staff attorney. Increased staffing levels have come at a time of changes within the organization. The organizational changes have resulted in significant turnover in staff, particularly for staff in senior positions. The average current tenure for the eight Division Managers is 1.7 years in the position.

SPRINTER Service The NCTD audit period includes the successful recovery of the SPRINTER service, which was temporarily shut down in 2013. The shutdown provided an opportunity to re-evaluate SPRINTER procedures, and apply lessons learned to other modes. This led to the O&M procurement, a contract which drew upon on the lessons learned. NCTD also hired CPUC staff which resulted in an increased knowledge and experience within the Safety Department.

NCTD has faced challenges in purchasing maintenance parts for SPRINTER rail cars. Rail cars were produced by Siemens, a German company. NCTD was able to purchase the rail cars by obtaining a waiver from the FTA Buy America requirement, however this waiver has not extended to the purchase of maintenance parts. This has been challenging as it restricts the number of companies NCTD can procure parts from.

BREEZE Bus In fiscal year 2009, NCTD projected annual operating deficits as funding streams diminished and operating costs were projected to increase. At that time, the BREEZE operating cost per revenue mile was projected to increase to $10.36 by fiscal year 2014. In response, NCTD made proactive changes in order to maintain transit services, by reducing staff, renegotiating and restructuring contracts, and signing innovative bus and paratransit contracts. These changes helped close a significant budget shortfall and lowered the future operating costs of service delivery. The actual BREEZE operating cost per revenue mile for FY2014 was $7.55 and reduced to $7.50 in FY 2015. This represents cost containment compared to the FY2009 projections. The cost containment was the result of the improved operational efficiencies from contracted operations and maintenance of the BREEZE bus system.

Capital Projects In fiscal year 2015, NCTD continued implementation of positive train control (PTC) initiatives on service area along the Los Angeles-San Diego-San Luis Obispo (LOSSAN) corridor. PTC is a proactive, automated system for preventing train collisions and other hazards. NCTD is on track to complete project implementation and submit to the Federal Railroad Administration (FRA) prior to December 31, 2018, the legally mandated deadline.

Also in FY2015, NCTD and SANDAG continued joint work on numerous projects on the LOSSAN corridor. These included replacing railroad bridges, track installation, track realignment, and additional improvements. One specific project that was completed during FY2014 was the San Luis Rey Transit Center. The transit center improved connectivity between bus and rail services. These projects will help to expand and integrate service, enhance connections between modes, and improve the customer experience.

Safety NCTD implemented a system-wide safety audit process. The audit evaluated both CPUC and FTA requirements for the entire system. NCTD doubled the size of the safety and security staffing levels and has instituted the Risk Roundtable. The Risk Roundtable is a monthly meeting which formally tracks and discusses risk items within NCTD. Members of operations, planning, maintenance, and other departments attend the Risk Roundtable. NCTD also developed the Integrated Safety Plan. The plan covers all modes and includes a focus on standard operating procedures for safety practices. NCTD has also moved

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG) towards creating a more data driven safety culture. NCTD highlighted this change in culture by implementing an accident/incident notification process using the current Industry Safe software. This notification process allows NCTD to more accurately track incidents and standardizes reporting of accidents and incidents.

I.3. Report Outline

The remainder of the performance audit report is organized into the following four sections: – Section II- Compliance Review: Assesses NCTD compliance with specific PUC requirements and discusses the status of prior audit recommendations. – Section III- Management Control and Reporting: Examines the management structure and performance monitoring systems in place to help reach NCTD goals and objectives. – Section IV- Performance Trends and Functional Review: Examines system-wide performance trends as well as trends in the major functional areas: operations, maintenance, and planning and administration. – Section V- Conclusions and Recommendations: Outlines recommendations and potential implementation strategies for NCTD to capitalize on improvement opportunities.

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SECTION II: COMPLIANCE REVIEW AND PRIOR AUDIT RECOMMENDATIONS

The compliance review assesses compliance with PUC requirements and implementation of prior audit recommendations. Activities conducted by NCTD and each of the NCTD service providers to comply with TDA requirements are described in this section. TDA performance indicator results and trends are discussed in Section IV – Performance Trends and Functional Review.

PUC requirements verified as part of this performance audit include the compliance requirements for transit operators stipulated in the California Department of Transportation TDA Performance Audit Guidebook for Transit Operators and Regional Transportation Planning Entities (2008) and TDA Statutes and California Codes of Regulations (2009).

With the consolidation of operations in the NCTD service area, some of the compliance findings have been made for NCTD as a whole. Where appropriate (e.g., where operators continue to file separate financial audits and State Controller reports), findings have been made for particular NCTD services.

Compliance is assessed at three levels: – Fully compliant. – Partially compliant, with additional actions required to achieve full compliance. – Non-compliant or not applicable.

Compliance to measure progress towards implementing prior audit recommendations has been measured in three categories: – Fully implemented. – Partially implemented but further progress is warranted. – Not implemented or not applicable.

II.1. Compliance Review

Code Compliance Reference Operator Compliance Requirements Finding Verification Information PUC Section Uniform System of Accounts and Records: The Full State Controller Report submittal 99243 transit operator submitted annual reports to the RTPA Compliance dates: based upon the Uniform System of Accounts and FY2013: 10/17/2013 Records established by the State Controller. Report is FY2014: 10/14/2014 due 90 days after end of fiscal year (Sept. 28) for paper filing, or 110 days (Oct. 18) if filed FY2015: 10/15/2015 electronically. PUC Section Annual Fiscal Audit: The operator has submitted Full Annual fiscal audit submittal dates: 99245 annual fiscal and compliance audits to its RTPA and Compliance FY2013: letter of transmittal dated to the State Controller within 180 days following the January 31, 2014 end of the fiscal year (Dec. 27), or has received the appropriate 90 day extension by the RTPA allowed by FY2014: letter of transmittal dated law. December 30, 2014 FY2015: letter of transmittal dated January 25, 2016

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Code Compliance Reference Operator Compliance Requirements Finding Verification Information PUC Section CHP Certifications: The CHP has, within the 13 Full CHP certification dates during the 99251 months prior to each TDA claim submitted by an Compliance audit period for TDA claims made operator, certified the operator’s compliance with the following fiscal year: Vehicle Code Section 1808.1 following a CHP FY2013: East 12/18/2012 inspection of the operator’s terminal. West 12/04/2012 FY2014: East 10/24/2013 West 12/13/2013 FY2015: East 10/15/2014 West 12/17/2014

PUC Section Transportation Planning Agency Regulations: The Full NCTD submitted its TDA claims and 99261 operator’s claim for TDA funds is submitted in Compliance proper documentation to SANDAG compliance with rules and regulations adopted by the for Article 4 and 4.5 revenue each RTPA for such claims. year for FY2013, FY2014, and FY2015. A TDA Claims Checklist is used to indicate compliance with

each required element, such as financial/ performance reporting forms, resolution of the governing body authorizing the claim, description of service provided, and other attached exhibits.

PUC Section Budget Changes: The operator’s operating budget Full FY2013: 6.1% 99266 has not increased by more than 15% over the Compliance FY2014: 0.3% preceding year, nor is there a substantial increase or FY2015: 0.9% decrease in the scope of operations or capital budget provisions for major new fixed facilities unless the operator has reasonably supported and substantiated the change(s).

Source: State Controller Reports (including specialized and non-specialized service), minus depreciation

PUC Section Data Definitions: The operator’s definition of Full NCTD operating statistics are 99247 performance measures are consistent with Public Compliance collected and performance Utilities Code Section 99247, including (a) operating measures are calculated in cost, (b) operating cost per passenger, (c) operating accordance with PUC requirements. cost per vehicle service hour, (d) passengers per vehicle service hour, (e) passengers per vehicle service mile, (f) total passengers, (g) transit vehicle, (h) vehicle service hours, (i) vehicle service miles, and (j) vehicle service hours per employee.

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

Code Compliance Reference Operator Compliance Requirements Finding Verification Information PUC Requirement – Revenue Ratios: Operator has Partial Farebox Recovery Ratios System- Sections maintained a ratio of fare revenues to operating costs Compliance wide: 99268.2 at least equal to: 20% for urban areas, 10% for non- (ADA FY2013: 23.9% 99268.3 urban areas, 10% for services for elderly and Paratransit FY2014: 23.4% 99268.4 handicapped persons. For NCTD, the system-wide FY2015) ratio shall be not less than the ratio achieved in FY2015: 22.5% 99268.5 FY1979 (18.8%). For ADA Paratransit Service, the Farebox Recovery Ratios for ADA 99269 ratio must be 10.0% Paratransit Service: FY2013: 14.1% Source: Comprehensive Annual Financial Report FY2014: 11.9% FY2015: 9.3%

PUC Section Employee Retirement System: The current cost of Full NCTD offers a defined benefit 99271 the operator’s retirement system is fully funded with Compliance pension through an independent respect to the officers and employees of its public contract with the California Public Employees’ Retirement System transportation system, or the operator is implementing (CalPERS). The Comprehensive a plan approved by the RTPA, which will fully fund the Annual Financial Report provides retirement system for 40 years. the current cost of the retirement system. CAC Section Required Findings: If the operator receives state Full The two primary sources of Federal 6754(a)(3) transit assistance funds, the operator makes full use Compliance aid are FTA 5307 and FTA 5309. of funds available to it under the Urban Mass During the audit period, NCTD Transportation Act of 1964 before TDA claims are received both federal operating and granted. capital grants:

Source: Comprehensive Annual Financial Report FY 2013: Operating ($16,716,608) Capital ($21,150,562) FY 2014: Operating ($15,606958) Capital ($10,290,419) FY 2015: Operating ($13,325,904) Capital ($9,089,131)

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

II.2. Prior Audit Recommendations

Exhibit II.2-1 Recommendation #1 Response

Recommendation – Develop strategies to improve fare simplification and integration, including with regional partners SANDAG, MTS, Amtrak and Metrolink

Recommended Actions – NCTD should consider strategies to simplify the fares as much as possible, and develop a more simplified fare transfer policy, working with its partner agencies, including SANDAG, MTS, Amtrak and Metrolink. Building on existing peer to peer working groups is most likely the most effective way to proceed. The CompassCard and CooCoo tools can be enabled to support the recommendations.

Update – NCTD does not have complete control over implementing this recommendation. Considering that regional fare policy is determined by SANDAG and designing and implementing the recommendation requires partner agency actions/recommendations, NCTD can only be expected to lead and engage in regional discussions to advance the cause for regional fare simplification and integration. Based on the actions taken by NCTD as documented below, this action is marked as complete.

This recommendation required NCTD to work with the regional partners to simplify fares and develop a more simplified fare transfer policy, working with its partner agencies, including SANDAG, MTS, Amtrak, and Metrolink.

NCTD initiated and led the preliminary regional discussion regarding fare simplification in September 2013. This led to the decision to implement a smaller fare simplification working group led by SANDAG. NCTD worked with the regional Fare Simplification Working Group engaging with the two other stakeholders in the region, MTS and SANDAG. With the agreement of the stakeholders to the concept of fare simplification and integration, a smaller working group was created to conduct the Regional Fare Study, which will be led by SANDAG. This study is in preliminary stages and is anticipated for completion in Fiscal Year 2017. This study will analyze the concepts of fare simplification and integration.

In addition, NCTD and MTS conducted a joint procurement to have the same vendor and platform for mobile ticketing which resulted in the selection of Globe Sherpa mobile ticketing solution. In the past, NCTD piloted CooCoo system while MTS piloted the Masabi system for mobile ticketing. Integrating the mobile ticketing vendor and platform will enhance the ability of the transit customers to use the same mobile solution to buy tickets instead of downloading two different apps, and allow the transit operators to maximize the mobile ticketing point of sale by offering regional fares previously not available when separate mobile ticketing contractors were utilized.

Exhibit II.2-2 Recommendation #2 Response

Recommendation – Examine best provisions for performance standards, incentives and disincentives within recent contracts (BREEZE, LIFT) and apply where applicable to contracts for other modes.

Recommended Actions – It is recommended than NCTD tasks its Contracts and Procurement department to document the applicable provisions, discuss with Rail Operations/Operations Oversight and make recommendations to the CEO. Then, once approved, work with the contractors to execute the changes by amending the respective contracts as appropriate.

Update – This action is completed.

In 2014, NCTD embarked on an effort to evaluate the alternative procurement strategies for procuring rail operations and maintenance services for COASTER and SPRINTER modes. As part of this effort,

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

NCTD proactively conducted industry best practices for bundling the procurements, terms and conditions, and request for proposals. In addition, NCTD conducted an assessment of strengths and weaknesses of existing procurement documents from both bus and rail to identify strengths to leverage and weaknesses to improve in future contract. As part of the industry best practices, NCTD evaluated the alternate compensation models and performance standards and disincentives in the peer contracts.

Based on the lessons learned and industry best practices, NCTD developed a detailed Scope of Work and RFP document for both rail modes in a bundled contract, which clearly defined performance standards and liquidated damages. Liquidated damages are disincentives or penalties levied on the contractor for failing to meet the established standards. The liquidated damages established by NCTD cover the full spectrum of O&M activities, including train operations, vehicle maintenance, maintenance of way, systems, customer service, safety, and regulatory compliance.

To support the oversight, management, and administration of the contract performance standards, NCTD has developed internal oversight plans and management plans along with tools required to monitor contractor performance.

In December 2015, NCTD Board approved an award to Bombardier Transportation Inc., for COASTER and SPRINTER rail operations and maintenance. Bombardier will start revenue service in July 1, 2016. The effectiveness of the performance standards and the liquidated damages in the contract will be evaluated during the next performance audit.

Exhibit II.2-3 Recommendation #3 Response

Recommendation – Provide additional oversight and training to SPRINTER vehicle maintenance staff.

Recommended Actions – In light of NCTD’s most recent changes to the SPRINTER oversight program reviewed by the CPUC, NCTD should, over the next audit cycle, evaluate the oversight and training processes for identifying, reporting, and mitigating safety issues in a timely manner. NCTD should consider additional staffing resources and the efficacy of the oversight by Operations and by Safety.

Update – This action is completed.

NCTD addressed this recommendation head-on and has addressed this issue comprehensively from different angles.

Internally, NCTD made changes to its oversight and training procedures and increased staffing in its Safety department. Immediately following the shutdown, NCTD hired two experts in its Safety department, who used to work with the CPUC and were intimately familiar with the issues. In fact, NCTD’s Safety department headcount has almost doubled since then. Upon hiring them, NCTD completed a comprehensive internal audit of the entire SPRINTER system, and the findings from this audit were submitted to the CPUC in the annual reports. In addition, NCTD implemented an Integrated Safety Management System Plan, which was submitted to the CPUC as well.

Strategically, NCTD embarked on an effort to change the entire agency’s culture on safety as well as contractor’s attitudes, perspectives, and philosophy on safety. Subsequently, NCTD initiated and completed the development of standard operating procedures (SOPs) that incorporated industry best practices and lessons learned. These procedures were then provided to the contractor for implementation. In addition, NCTD is moving towards a data-driven approach by logging, tracking, and analyzing data to monitor safety performance. NCTD is creating a unified Operations Control Center where all contractors can be housed under one roof and working with Safety staff to control the flow of information. Upon implementation, NCTD’s ability to use data to drive decisions will be significantly enhanced.

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

Externally, NCTD’s approach to manage and oversee its contractors changed since the SPRINTER interruption. NCTD required staffing changes on the contractor’s side, which led to shake-up of the contractor staff managing SPRINTER operations. Most notably, the lessons learned from SPRINTER experience were transferred to COASTER oversight and management as well. This also led to NCTD making a strategic decision to bundle its contracts and procure a turnkey contractor for delivering all rail operations and maintenance services beginning in 2016. During the contract development, NCTD was meticulous in crafting a very detailed scope of work and developed performance metrics and standards to monitor and penalize the contractor for poor performance.

Exhibit II.2-4 Recommendation #4 Response

Recommendation – Carefully track Performance Plan adherence for LIFT contractor through regular reporting out on progress and continued customer surveys.

Recommended Actions – NCTD ought to carefully track the Performance Plan adherence for its contractor, through regular reporting out on progress achieved for the key metrics of on-time performance, number of missed trips, related trends and customer complaints. Reporting out should be to executive staff on a monthly basis, and more if requested. Secondly, NCTD should assess the appropriate frequency and approach to the customer surveys, and what meaningful feedback is extracted from these efforts. Update – This recommendation is not valid anymore as explained below. However, NCTD continues to track performance of LIFT contractor through regular reporting out on progress.

In second half of FY2012, LIFT experienced a degradation of service from its contractor. NCTD had recently made a switch from the dedicated fleet model to a broker-based system under a contract with American Logistics Company. While productivity gains and cost efficiencies were realized initially, there was some degradation of service over time. Consequently, NCTD implemented a Performance Plan to address the deficiencies.

However, in November 2013, American Logistics Company informed NCTD that due to regulatory impacts it could not perform the services and decided to cease operations, giving NCTD only four months’ notice to transition service to another contractor. Consequently, NCTD entered into a sole source agreement with First Transit to transition service back to the dedicated fleet model. This required NCTD to procure the vehicles required to provide the service.

Extraordinary circumstances and events have rendered this recommendation invalid. The contractor who was providing the service when the last audit was performed is not operating the service anymore and hence the Performance Plan is invalid.

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

SECTION III: MANAGEMENT CONTROL AND REPORTING

As part of the Comprehensive Strategic Operating and Capital Plan, the Board of Directors established the following eight major agency goals.

Goals 1. Placing service to our customers first 2. Ensuring the safety and security of our employees and customers 3. Delivering high-quality transit services 4. Demonstrating good stewardship of federal, state, and local funds 5. Managing transit assets in a manner that sustains and promotes current and future transportation services 6. Securing adequate revenue, protecting our assets, and getting the maximum return on the public investment 7. Working in partnership with our communities and other stakeholders 8. Encouraging innovation, creativity, and leadership

Performance towards achievement of each agency goals is tracked by NCTD and the results are reported to the Board of Directors on a monthly or quarterly basis. Each agency goal has specialized measures or initiatives which are tracked. The measures and initiatives include data trending for key performance metrics, monitoring and oversight programs, stakeholder outreach programs, and many more. Exhibit III-1 displays the specific initiatives and measures tracked for each goal.

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

Exhibit III-1: Summary of NCTD Strategic Goals and Tracking Measures

Source: NCTD Comprehensive Strategic Operating and Capital Plan FY16-25

In addition to monitoring performance towards agency goals, NCTD produces several types of performance reports. Major performance reports include:

– Departmental Quarterly Reports – Contract Oversight Comprehensive Reports – Monthly Performance Report

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

– Web-based Performance Monitoring Dashboard – National Transit Database Report

Descriptions of each report are as follows:

Departmental Quarterly Reports Departments have developed monthly and quarterly performance reports that include data specific to their functions and responsibilities, and summaries of milestones accomplished during that quarter. Departmental quarterly reports are submitted to the NCTD Board of Directors.

Contract Oversight Comprehensive Reports Comprehensive reports are prepared by bus contract operations and maintenance staff and rail operations staff using performance metrics and maintenance summaries as reported by contractors.

Monthly Performance Report Operations contractors provide weekly modal performance reports. For each mode, this report provides a detailed overview of service delivery, service effectiveness, service efficiency, service quality, and safety performance. Weekly performance reports compare performance against contractual performance goals, and are summarized monthly for inclusion in the comprehensive monthly report.

Web-based Performance Monitoring Dashboard NCTD is in the process of overhauling the provision of providing online data and analysis regarding service performance through a business intelligence platform that provides closer to real-time performance data. The performance metric dashboard contains statistical data and charts in regards to service delivery, boardings, revenue, and operating costs.

National Transit Database The NTD was established as the nation’s primary source for information and statistics for the transit systems of the United States. Recipients or beneficiaries of grants from the FTA under the Urbanized Area Formula Program (§5307) or Other than Urbanized Area (Rural) Formula Program (§5311) are required by statute to submit data to the NTD. Over 660 transit providers in urbanized areas currently report to the NTD through the Internet-based reporting system. As a recipient of both 5307 and 5311 funds, as well as numerous other grants, NCTD provides statistical information to NTD.

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SECTION IV: PERFORMANCE TRENDS AND FUNCTIONAL REVIEW

IV-1. System-wide Performance

This section of the report provides results of the analysis of TDA and functional performance indicators. The review of TDA performance indicators identifies system-wide trends to assess the overall efficiency and effectiveness of NCTD. Functional area performance trends are also examined by mode (i.e., fixed route bus, commuter rail, paratransit and light rail) to provide additional clarification of performance results.

The TDA performance indicators are as follows: – Operating Cost per Service Hour: measure of cost efficiency – Operating Cost per Passenger: measure of cost effectiveness – Passengers per Service Hour: measure of service productivity – Passengers per Service Mile: another measure of service productivity – Vehicle Service Hours per Employee Full-Time Equivalent (FTE): measure of labor productivity.

The metrics tracked in the report were calculated using the data submitted by NCTD to the National Transit Database from Fiscal Year 2013, 2014, and 2015. For Fiscal Year 2015, data was sourced from the Original Submission report, which may be different than the close-out report. Additional data from the CAFRs, annual Bus Operations Performance Reports, and the annual Fleet Maintenance Plans was incorporated as needed. The performance trends cover the period from FY2013 through FY2015, with FY2012 used as a base year to provide a point of reference for the analysis. It should be noted that any differences between the values and metrics reported in the TDA audit report and other publicly available sources, such as the NCTD CAFR, may be attributed to different data sources and data definitions. Rail service metrics reported in the report reflect train car miles/hours as opposed to train miles/hours.

Exhibit IV-1 shows NCTD system-wide TDA performance indicators during the audit period. Exhibit IV-1: NCTD System-Wide TDA Performance Indicators Verified TDA Statistics & Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Operating Costs $75,978,744 $78,830,402 $81,741,144 $86,349,565 13.6% Unlinked Passengers 12,081,295 12,133,052 12,528,480 12,640,292 4.6% Vehicle Service Hours 519,721 575,534 584,207 656,694 26.4% Vehicle Service Miles 8,346,229 8,851,866 9,093,570 9,852,077 18.0% Employee FTEs 632 692 692 742 17.4% Operating Cost per Service Hour $146.19 $136.97 $139.92 $131.49 -10.1% Operating Cost per Passenger $6.29 $6.50 $6.52 $6.83 8.6% Passengers per Service Hour 23.25 21.08 21.45 19.25 -17.2% Passengers per Service Mile 1.45 1.37 1.38 1.28 -11.4% Service Hours per Employee FTE 822 832 844 885 7.7% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database. Employee full-time equivalents (FTEs) from SANDAG Form C reports.

The main findings from Exhibit IV-1 are as follows: – System-wide operating costs increased by 13.6% during the audit period. The increase in operating costs outpaced the Consumer Price Index, which increased by 4.4% during the three year period. – Operating costs per service hour decreased 10.1% during this period, while operating costs per passenger increased by 8.6%.

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– Overall ridership increased by 4.6% during the audit period. In contrast, ridership dropped by 3.6% during the previous audit period due in part to the economic recession. In FY2015, system- wide ridership surpassed FY2009 levels. – Vehicle service hours and vehicle service miles greatly increased by 26.4% and 18.0% respectively during the period, as service was restored following the recession.

Exhibit IV-2 shows system-wide fare revenue indicators during the audit period. Exhibit IV-2: NCTD System-wide Revenue Performance Indicators Base Data and Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Operating Costs $75,978,744 $78,830,402 $81,741,144 $86,349,565 13.6% Farebox Revenues $18,169,760 $18,910,726 $19,274,834 $19,438,167 7.0% Net Cost $57,808,984 $59,919,676 $62,466,310 $66,911,398 15.7% Unlinked Passenger Trips 12,081,295 12,133,052 12,528,480 12,640,292 4.6% Farebox Recovery Ratio 23.9% 24.0% 23.6% 22.5% -5.9% Average Fare per Passenger Trip $1.50 $1.56 $1.54 $1.54 2.2% Net Cost per Passenger Trip $4.78 $4.94 $4.99 $5.29 10.6% Farebox Recovery, Fixed Route Bus 19.5% 21.5% 19.7% 19.5% 0.1% Farebox Recovery, Commuter Rail 39.5% 38.5% 39.5% 37.5% -5.1% Farebox Recovery, Light Rail 19.2% 15.5% 18.4% 18.6% -3.2% Farebox Recovery, Demand Response 16.0% 13.8% 11.5% 9.2% -42.2% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database

The main findings from Exhibit IV-2 are as follows: – The system-wide farebox recovery ratio decreased by 5.9% during the period. Overall farebox recovery was in compliance with PUC requirements. The BREEZE farebox ratio nominally increased by 0.1%, and stayed constant at 19.5% during the period. The farebox ratios for COASTER and SPRINTER services both modestly decreased during the period by 5.1% and 3.2% respectively. LIFT ridership and operating costs greatly increased during the audit period. As a result, the LIFT farebox recovery ratio decreased by 42.2% during the audit period. In FY2015, the LIFT farebox ratio dropped to 9.2%, which was below the TDA mandated farebox ratio of 10% for paratransit service. – The most important trend was the increase in net cost during the audit period. Unlinked passenger trip and farebox revenue both increased, however operating costs increased by a greater amount during this period. – The average fare per passenger trip increased by 2.2%, from $1.50 to $1.54. The increase in average fare was largely due to increased ridership in the higher fare SPRINTER and LIFT services. – Farebox revenue increased from $18.2 million to $19.4 million, a 7.0% increase, during the audit period. By comparison, system-wide ridership increased by 4.6% during the same period.

The rest of this chapter includes the following sections: – BREEZE Fixed Route Bus – COASTER Commuter Rail – SPRINTER Light Rail – LIFT Paratransit / FLEX demand response

Each section includes an overview of performance against TDA performance indicators, followed by a discussion of performance at the functional level.

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IV-2. BREEZE Fixed Route Bus Operations Performance

BREEZE ridership increased during the audit period. NCTD was able to contain operating cost increases by providing more efficient service through the implementation of the Mobility Plan.

Exhibit IV-3 shows BREEZE TDA performance indicators during the audit period. Exhibit IV-3: TDA Performance Indicators for BREEZE Fixed Route Bus Service Verified TDA Statistics & Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Operating Costs $41,009,341 $40,992,781 $42,064,413 $42,580,865 3.8% Unlinked Passengers 7,905,588 8,347,213 8,135,330 8,030,008 1.6% Vehicle Service Hours 391,500 447,578 439,172 467,622 19.4% Vehicle Service Miles 5,237,788 5,720,095 5,568,575 5,677,315 8.4% Employee FTEs 432 459 449 453 4.8% Operating Cost per Service Hour $104.75 $91.59 $95.78 $91.06 -13.1% Operating Cost per Passenger $5.19 $4.91 $5.17 $5.30 2.2% Passengers per Service Hour 20.19 18.65 18.52 17.17 -15.0% Passengers per Service Mile 1.51 1.46 1.46 1.41 -6.3% Service Hours per Employee FTE 906 976 979 1,033 14.0% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database. Employee full-time equivalents (FTEs) from SANDAG Form C reports.

Main findings from Exhibit IV-3 are as follows: – Ridership increased by 1.6% from 7.91 million rides in FY2012 to 8.03 million rides in FY2015. BREEZE ridership dropped during the previous period due to the recession and service restructuring. Ridership in FY2015 was lower than it was in FY2009. – Operating costs increased by 3.8% during the audit period which was lower than the rate of inflation which was 4.4% during the same period. NCTD was able to minimize growth of operating costs by providing more efficient service through the implementation of the Mobility Plan during the audit period. – Staffing levels increased as overall BREEZE FTEs increased from 432 in FY2012 to 453 in FY2015. This follows three year period in which total FTEs decreased. FTE levels are calculated by dividing hours submitted to NTD by 2000, so the number may reflect some additional overtime. Staffing levels in FY2015 were lower than in FY2009 prior to privatization. – The measure of employee productivity, service hours per employee FTE, increased by 14.0% from 906 in FY2012 to 1033 in FY2015.

Exhibit IV-4 shows BREEZE Bus fare revenue indicators during the audit period.

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Exhibit IV-4: BREEZE Bus Revenue Performance Indicators Base Data and Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Operating Costs $41,009,341 $40,992,781 $42,064,413 $42,580,865 3.8% Farebox Revenues $7,994,043 $8,809,782 $8,272,553 $8,307,371 3.9% Net Cost $33,015,298 $32,182,999 $33,791,860 $34,273,494 3.8% Unlinked Passenger Trips 7,905,588 8,347,213 8,135,330 8,030,008 1.6% Farebox Recovery Ratio 19.5% 21.5% 19.7% 19.5% 0.1% Average Fare per Passenger Trip $1.01 $1.06 $1.02 $1.03 2.3% Net Cost per Passenger Trip $4.18 $3.86 $4.15 $4.27 2.2% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database

Main findings from Exhibit IV-3 are as follows: – BREEZE fare revenue increased by 3.9% during the audit period. Revenues increased at a similar rate compared to operating costs, which increased by 3.8%. As a result, the farebox recovery ratio remained relatively unchanged at 19.5%. – The average fare per passenger increased slightly from $1.01 in FY2012 to $1.03 in FY2015. – Given that operating costs increased quicker than ridership, the net cost per passenger trip increased from $4.18 to $4.27 during the audit period.

Exhibit IV-5 shows BREEZE fare revenue indicators during the audit period. Exhibit IV-5: BREEZE Operational Performance Indicators Base Data and Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Operations FTEs 289 335 334 340 17.8% Total Operating Costs $21,020,913 $21,952,263 $22,285,005 $23,192,307 10.3% Vehicle Service Hours (VSH) 391,500 447,578 439,172 467,622 19.4% Vehicle Service Miles (VSM) 5,237,788 5,720,095 5,568,575 5,677,315 8.4% Total Vehicle Hours 423,432 481,946 474,949 497,598 17.5% Total Vehicle Miles 5,886,371 6,407,021 6,233,337 6,381,255 8.4% Unlinked Passenger Trips 7,905,588 8,347,213 8,135,330 8,030,008 1.6% Passenger Miles 37,257,148 39,705,582 41,251,051 38,759,521 4.0% VSH per Operations FTE 1,355 1,338 1,316 1,374 1.4% VSM per Operations FTE 18,124 17,100 16,692 16,683 -7.9% Service Miles per Service Hour 13.4 12.8 12.7 12.1 -9.3% Service Hours / Total Hours 92.5% 92.9% 92.5% 94.0% 1.6% Service Miles / Total Miles 89.0% 89.3% 89.3% 89.0% 0.0% Oper Cost per Passenger Trip $2.66 $2.63 $2.74 $2.89 8.6% Oper Cost per Passenger Mile $0.56 $0.55 $0.54 $0.60 6.1% Avg Psgr Miles per Psgr Trip 4.7 4.8 5.1 4.8 2.4% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database and SANDAG Form C Reports.

Main findings from Exhibit IV-5 are as follows: – Staff counts shown for BREEZE Operations include both agency and contracted staff. Total reported staff grew 17.8% during the audit period, based on NTD and Form C Reports. – Service hours and service miles increased by 19.4% and 8.4% respectively during the audit period.

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– Operations efficiency metrics showed mixed trends. Vehicle service hours per operations FTE increase by 1.4% during the period, while vehicle service miles per operations FTE decreased during the period. – NCTD’s fixed route bus operations costs increased by 10.3% from $21.0 million in FY2012 to $23.2 million in FY2015. This can be attributed to an increase in service during this time. Vehicle operations costs were lower in FY2015 than in FY2009. – Operations costs per passenger trip and per passenger mile increase by 8.6% and 6.1% respectively. – The ratio of service hours to total hours increased from 92.5% to 94.0% from FY2012 to FY2015. The ratio of service miles to total miles stayed constant at 89% during the same period.

Exhibit IV-6 shows BREEZE Bus maintenance indicators during the audit period. Exhibit IV-6: NCTD BREEZE Maintenance Performance Indicators Base Data and Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Maintenance FTEs 86 93 83 82 -4.7% Maintenance Costs $8,018,677 $9,580,417 $10,170,376 $10,254,004 27.9% Total Vehicle Hours 423,432 481,946 474,949 497,598 17.5% Total Vehicle Miles 5,886,371 6,407,021 6,233,337 6,381,255 8.4% Peak Vehicles 125 137 137 137 9.6% Total Vehicles 150 163 166 165 10.0% Revenue Vehicle Failures 276 329 366 489 77.2% Veh Hours per Maintenance FTE 4,924 5,182 5,757 6,068 23.2% Veh Miles per Maintenance FTE 68,446 68,893 75,556 77,820 13.7% Maintenance Cost per Active Vehicle $53,458 $58,776 $61,267 $62,145 16.3% Maintenance Cost per Vehicle Hour $18.94 $19.88 $21.41 $20.61 8.8% Maintenance Cost per Vehicle Mile $1.36 $1.50 $1.63 $1.61 18.0% Veh Hours per Active Vehicle 2,823 2,957 2,861 3,016 6.8% Veh Miles per Active Vehicle 39,242 39,307 37,550 38,674 -1.4% Total Miles Between Failures 21,327 19,474 17,031 13,050 -38.8% Spare Ratio 20.0% 19.0% 21.2% 20.4% 2.2% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database and SANDAG Form C Reports.

Main findings from Exhibit IV-6 are as follows: – Maintenance costs increased by 27.9%, while inflation increased by 4.4% during the audit period. – Maintenance cost metrics also increased. Maintenance costs per active vehicle, per vehicle hour, and per vehicle mile increased by 16.3%, 8.8%, and 18.0% respectively. – NCTD was able to maintain a spare ratio of 20.4% in FY2015 for BREEZE service. This was in line with the FTA’s guideline of a 20% spare ratio. In FY2013 the spare ratio of 19.0% was slightly below the FTA guideline, and was slightly above the guideline in FY2014 at 21.2%. – Maintenance staffing levels decreased by 4.7% as maintenance FTEs decreased from 86 to 82 from FY2012 to FY2015. – Revenue vehicle failures showed a significant, gradual increase. From FY2012 to FY2015, revenue vehicle failures increased by 77.2%. During this period, NCTD tightened its oversight of its contractor for the BREEZE service, and it is likely this increased level of scrutiny resulted in a higher number of failures being identified. – The increased number of failures also led to a decrease in the miles between failures. The Agreement with First Transit stipulates that the minimal average requirement is 16,000 miles

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between failures, or mean distance between failures (MDBF). NCTD saw MDBF drop off significantly during the audit period. Mean distance between failures decreased by 38.8% from 21,327 miles in FY2012 to 13,050 in FY2015. This figure was below the mandated level of 16,000 miles between failures set in the Agreement with First transit.

NCTD’s BREEZE administration further reduced staffing levels and increased productivity during the audit period. Exhibit IV-6 illustrates some of the key administrative data and metrics.

Exhibit IV-7: BREEZE Bus Administration Performance Indicators Base Data and Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Administration FTEs 57 31 33 30 -46.7% Vehicle Service Hours (VSH) 391,500 447,578 439,172 467,622 19.4% Vehicle Service Miles (VSM) 5,237,788 5,720,095 5,568,575 5,677,315 8.4% Unlinked Passenger Trips 7,905,588 8,347,213 8,135,330 8,030,008 1.6% VSH per Administration FTE 6,868 14,345 13,472 15,382 124.0% VSM per Administration FTE 91,891 183,336 170,815 186,754 103.2% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database and SANDAG Form C Reports.

Main findings from Exhibit IV-7 are as follows: – The number of administrative FTEs for the fixed route bus system was drastically reduced from 57 to 30 during the audit period. This marks the second straight audit period in which BREEZE administrative FTEs significantly decreased. From FY2009 to FY2012, administrative FTEs decreased from 132 to 57. This continued decrease can be attributed to the efficiencies realized from the First Transit contract. – The decrease in administrative FTEs allowed for even greater increases in administrative effectiveness. Vehicle service hours per administrative FTE and vehicle service hours per administrative FTE increased by 124.0% and by 103.2% respectively. – The number of customer complaints greatly increased during the audit period. In FY2012, there were 791 total complaints. That number rose to 954 in FY2013, dropped to 895 in FY2014, and then increased to 1,250 in FY2015. The increase is due to NCTD bringing customer service in- house from MTS; NCTD believes they were more diligent about asking more probing questions and documenting input.

IV-3. COASTER Commuter Rail

COASTER service and ridership remained fairly constant over the audit period. Operating costs increased as did staffing levels.

Exhibit IV-8 provides TDA performance indicators for COASTER Commuter Rail.

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Exhibit IV-8: COASTER TDA Performance Indicators Verified TDA Statistics & Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Operating Costs $17,602,811 $18,766,975 $19,308,163 $19,741,329 12.1% Unlinked Passengers 1,624,211 1,629,196 1,673,816 1,641,525 1.1% Car Service Hours 34,927 35,010 35,318 35,161 0.7% Car Service Miles 1,400,512 1,392,446 1,394,955 1,391,367 -0.7% Employee FTEs 94 110 112 113 19.7% Operating Cost per Service Hour $503.99 $536.05 $546.69 $561.46 11.4% Operating Cost per Passenger $10.84 $11.52 $11.54 $12.03 11.0% Passengers per Service Hour 46.50 46.54 47.39 46.69 0.4% Passengers per Service Mile 1.16 1.17 1.20 1.18 1.7% Service Hours per Employee FTE 372 319 315 313 -15.9% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database. Employee full-time equivalents (FTEs) from SANDAG Form C reports.

Main findings from Exhibit IV-8 are as follows: – COASTER operating costs increased by 12.1% during the audit period. This outpaced inflation which increased by 4.4% during the same time. The bulk of the increase in operating costs occurred from FY2012-FY2013. NCTD was able to minimize the increase in operating costs during FY2014 and FY2015. – Additional operating cost metrics increased during the audit years. Operating costs per service hour and operating costs per passenger increased by 11.4% and 11.0% respectively. – COASTER ridership increased by 1.1% during this period from 1.62 million trips in FY2012 to 1.64 million trips in FY2015. – Employee FTEs continued to increase during this audit period. From FY2012 to FY2015 the number of COASTER FTEs increased from 94 to 113. However, the terms of NCTD’s contract with Transit America meant this did not create any additional costs for NCTD. – Service productivity increased during the audit period. Passengers per service hour and passengers per service mile increased by 0.3% and 1.7% respectively.

Fare revenue indicators for COASTER Commuter Rail increased over the audit period. This is shown in Exhibit IV-9.

Exhibit IV-9: COASTER Revenue Performance Indicators Base Data and Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Operating Costs $17,602,811 $18,766,975 $19,308,163 $19,741,329 12.1% Farebox Revenues $6,955,444 $7,222,779 $7,627,368 $7,400,569 6.4% Net Cost $10,647,367 $11,544,196 $11,680,795 $12,340,760 15.9% Unlinked Passenger Trips 1,624,211 1,629,196 1,673,816 1,641,525 1.1% Farebox Recovery Ratio 39.5% 38.5% 39.5% 37.5% -5.1% Average Fare per Passenger Trip $4.28 $4.43 $4.56 $4.51 5.3% Net Cost per Passenger Trip $6.56 $7.09 $6.98 $7.52 14.7% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database

Main findings from Exhibit IV-9 are as follows: – Farebox revenue increased by 6.4% during the audit period, while operating costs increased by 12.1%. This trend caused the farebox recovery ratio to decrease by 5.1% during the audit period. In FY2015, the farebox recovery ratio was 37.5%.

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– The average fare per passenger trip increased by 5.3% during the audit period, while the net cost per passenger trip increase by 14.7%.

Exhibit VI-10 provides COASTER Commuter Rail operations performance indicators.

Exhibit IV-10: COASTER Commuter Rail Operations Performance Indicators Base Data and Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Operations FTEs 22 27 27 31 40.0% Total Operating Costs $7,785,394 $7,471,951 $7,296,783 $7,658,868 -1.6% Car Service Hours (CSH) 34,927 35,010 35,318 35,161 0.7% Car Service Miles (CSM) 1,400,512 1,392,446 1,394,955 1,391,367 -0.7% Total Car Hours 40,554 40,548 40,725 40,509 -0.1% Total Car Miles 1,479,039 1,470,707 1,480,811 1,471,448 -0.5% Unlinked Passenger Trips 1,624,211 1,629,196 1,673,816 1,641,525 1.1% Passenger Miles 44,591,922 44,875,290 47,124,736 45,885,614 2.9% CSH per Operations FTE 1,588 1,297 1,308 1,142 -28.1% CSM per Operations FTE 63,660 51,572 51,665 45,174 -29.0% Service Miles per Service Hour 40.1 39.8 39.5 39.6 -1.3% Service Hours / Total Hours 86.1% 86.3% 86.7% 86.8% 0.8% Service Miles / Total Miles 94.7% 94.7% 94.2% 94.6% -0.1% Oper Cost per Passenger Trip $4.79 $4.59 $4.36 $4.67 -2.7% Oper Cost per Passenger Mile $0.17 $0.17 $0.15 $0.17 -4.4% Avg Psgr Miles per Psgr Trip 27.5 27.5 28.2 28.0 1.8% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database and SANDAG Form C Reports.

Main findings from Exhibit IV-10 are as follows: – The COASTER operations staffing levels increased from 22 in FY2012 to 31 in FY2015, a 40.0% increase. This follows a 57.1% increase in operations staffing levels during the previous audit period. – Total operating costs for COASTER decreased by 1.6% during the audit period. This is reflective of the slight decrease in service miles which occurred during this period. – The increase in staffing while service held constant led to a 28.1% drop in car service hours per operations FTE and a 29.0% drop in car service miles per operations FTE. – Ridership increased by 1.1% during the audit period. Given the increase in ridership and decrease in operating costs, the average cost per passenger trip and average cost per passenger mile decreased by 2.7% and 4.4% respectively.

Exhibit IV-11 shows the COASTER Commuter Rail maintenance performance indicators.

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Exhibit IV-11: NCTD COASTER Maintenance Performance Indicators Base Data and Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Maintenance FTEs 58 59 62 55 -4.8% Maintenance Costs $5,290,004 $5,375,524 $6,203,436 $5,252,158 -0.7% Total Car Hours 40,554 40,548 40,725 40,509 -0.1% Total Car Miles 1,479,039 1,470,707 1,480,811 1,471,448 -0.5% Peak Cars 24 25 24 24 0.0% Total Cars 35 35 35 35 0.0% Revenue Vehicle Failures 15 15 8 2 -86.7% Car Hours per Maintenance FTE 699 692 659 734 5.0% Car Miles per Maintenance FTE 25,501 25,097 23,961 26,657 4.5% Maintenance Cost per Active Car $151,143 $153,586 $177,241 $150,062 -0.7% Maintenance Cost per Car Hour $130.44 $132.57 $152.33 $129.65 -0.6% Maintenance Cost per Car Mile $3.58 $3.66 $4.19 $3.57 -0.2% Car Hours per Active Car 1,159 1,159 1,164 1,157 -0.1% Car Miles per Active Car 42,258 42,020 42,309 42,041 -0.5% Car Miles Between Failures 98,603 98,047 185,101 735,724 646.2% Spare Ratio 45.8% 40.0% 45.8% 45.8% 0.0% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database and SANDAG Form C Reports.

Main findings from Exhibit IV-11 are as follows: – The number of COASTER vehicle failures decreased from 15 in FY2012 to 2 in FY2015. This number decreased dramatically from FY2013 to FY2014 and from FY2014 to FY2015. The FY2015 may be an anomaly in a trend that is typically in the 14-15 failures per year, on average. This excellent safety improvement is due to three reasons: NCTD increased the number of staff in Safety; assigned two quality inspectors; and hired a third party contractor to review maintenance practices. These improvements to rail reliability also benefited SPRINTER. – The drop in the number of vehicle failures also materialized in an improvement in the number of car miles between failures. Car miles between failures increased from 98,600 in FY2012 to an outstanding 735,700 in FY2015. This exceptionally high number in FY2015 is the result of an unusually low number of failures in FY2015. However, rail car reliability was quite good over the entire audit period. Car miles between failures was above 98,000 in each year. – Maintenance costs decreased by 0.7% during the audit period. While the overall decrease in maintenance costs was minimal compared to the base year, NCTD was able to contain cost increases during the first two years of the audit period. Operating costs dropped from $6.2 million in FY2014 to $5.3 million in FY2015. – Maintenance costs per active car, per car hour, and per car mile decreased by 0.7%, 0.6%, and 0.2% respectively. – There was no change in the spare ratio during the audit period. The spare ratio remained constant at 45.8% during the audit period. Previously, NCTD decreased the peak time car capacity (26 cars to 24 cars), affecting the spares ratio.

COASTER administrative costs increased as staffing levels have increased. Exhibit IV-12 shows several key indicators.

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Exhibit IV-12: NCTD COASTER Administration Performance Indicators Base Data and Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Administration FTEs 14 24 23 27 89.3% Car Service Hours (CSH) 34,927 35,010 35,318 35,161 0.7% Car Service Miles (CSM) 1,400,512 1,392,446 1,394,955 1,391,367 -0.7% Unlinked Passenger Trips 1,624,211 1,629,196 1,673,816 1,641,525 1.1% CSH per Administration FTE 2,495 1,459 1,516 1,327 -46.8% CSM per Administration FTE 100,037 58,019 59,869 52,504 -47.5% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database and SANDAG Form C Reports.

From 2012 to FY2015, COASTER administrative staffing levels increased by 89.3% from 14 to 27 FTEs. Given relatively stable service and ridership levels, administrative performance metrics decreased during the audit period. Car service hours per administrative FTE and car service miles per administrative FTE decreased by 46.8% and 47.5% respectively.

NCTD was able to make strides in decreasing the number of customer complaints for COASTER service. In FY2012, there were 111 customer complaints. This number increased to 124 in FY2013. Customer complaints decreased to 93 in FY2013 and then sharply decreased to 58 in FY2015. Overall, customer complaints decreased by 47.8% during the audit period.

IV-3.2. SPRINTER Light Rail Services

As described in detail in earlier sections of the report, SPRINTER service was suspended for just over two months in late FY2013. Despite this challenge, SPRINTER ridership quickly recovered and exceeded FY2012 levels in FY2014.

Exhibit IV-13 provides SPRINTER Light Rail performance indicators.

Exhibit IV-13: SPRINTER Light Rail TDA Performance Indicators Verified TDA Statistics & Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Operating Costs $13,804,726 $14,725,284 $15,031,520 $16,147,814 17.0% Unlinked Passengers 2,417,606 2,000,888 2,551,106 2,769,686 14.6% Vehicle Service Hours 30,305 24,179 30,780 31,260 3.2% Vehicle Service Miles 666,212 530,642 676,132 687,068 3.1% Employee FTEs 53 65 66 75 40.8% Operating Cost per Service Hour $455.53 $609.01 $488.35 $516.56 13.4% Operating Cost per Passenger $5.71 $7.36 $5.89 $5.83 2.1% Passengers per Service Hour 79.78 82.75 82.88 88.60 11.1% Passengers per Service Mile 3.63 3.77 3.77 4.03 11.1% Service Hours per Employee FTE 572 374 466 419 -26.7% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database. Employee full-time equivalents (FTEs) from SANDAG Form C reports.

Main findings from Exhibit IV-13 are as follows: – From FY2012 through FY2015, operating costs increased by 17.0%, whereas the Consumer Price Index over the same period increased by 4.4%. This is in part a result of an increase in vehicle service hours, vehicle service miles, and employee FTEs. – As a result of all of these factors, operating cost per passenger increased 2.1% from $5.71 in FY2012 to $5.83 in FY2015.

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– Operating costs per service hour experienced increases throughout the audit period increasing from $455.53 per service hour in FY2012 to $516.56 per service hour in FY2015 for an overall increase of 13.4%. – Combined with the 3.2% increase in vehicle service hours and the 14.6% increase in passengers, passengers per service hour improved by 11.1% over the audit period. – The number of Employee FTE’s decreased significantly over the audit period by 40.8% from 53 to 75. However, service hours per employee FTE decreased significantly at 26.7%.

Fare revenue indicators for SPRINTER Light Rail services increased over the audit period. This is shown in Exhibit IV-14.

Exhibit IV-14: SPRINTER Light Rail Revenue Performance Indicators Base Data and Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Operating Costs $13,804,726 $14,725,284 $15,031,520 $16,147,814 17.0% Farebox Revenues $2,650,993 $2,280,064 $2,763,574 $3,002,250 13.3% Net Cost $11,153,733 $12,445,220 $12,267,946 $13,145,564 17.9% Unlinked Passenger Trips 2,417,606 2,000,888 2,551,106 2,769,686 14.6% Farebox Recovery Ratio 19.2% 15.5% 18.4% 18.6% -3.2% Average Fare per Passenger Trip $1.10 $1.14 $1.08 $1.08 -1.1% Net Cost per Passenger Trip $4.61 $6.22 $4.81 $4.75 2.9% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database

Main findings from Exhibit IV-3 are as follows: – Farebox revenue increased by a robust 13.3% during the audit period, while operating costs increased by 17.0%. This caused the farebox recovery ratio to drop by 3.2% from 19.2% in FY2012 to 18.6% in FY2015.

– Given that ridership increased faster than farebox revenue, the average fare per passenger trip decreased from $1.10 to $1.08 during the audit period. Additionally, operating costs increased faster than ridership. This caused the net cost per passenger trip to increase by 2.9%, from $4.61 to $4.75, during the audit period.

Operating costs for SPRINTER Light Rail services increased over the audit period. This is shown in Exhibit IV-15.

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Exhibit IV-15: SPRINTER Operations Performance Indicators Base Data and Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Operations FTEs 35 40 40 45 29.4% Total Operating Costs $5,707,980 $5,491,854 $5,223,107 $6,569,673 15.1% Car Service Hours (CSH) 30,305 24,179 30,780 31,260 3.2% Car Service Miles (CSM) 666,212 530,642 676,132 687,068 3.1% Total Car Hours 30,430 24,286 30,913 31,408 3.2% Total Car Miles 668,757 533,741 679,376 690,288 3.2% Unlinked Passenger Trips 2,417,606 2,000,888 2,551,106 2,769,686 14.6% Passenger Miles 21,210,390 18,103,048 22,178,144 24,354,812 14.8% CSH per Operations FTE 866 603 766 690 -20.3% CSM per Operations FTE 19,035 13,233 16,819 15,167 -20.3% Service Miles per Service Hour 22.0 21.9 22.0 22.0 0.0% Service Hours / Total Hours 99.6% 99.6% 99.6% 99.5% -0.1% Service Miles / Total Miles 99.6% 99.4% 99.5% 99.5% -0.1% Oper Cost per Passenger Trip $2.36 $2.74 $2.05 $2.37 0.5% Oper Cost per Passenger Mile $0.27 $0.30 $0.24 $0.27 0.2% Avg Psgr Miles per Psgr Trip 8.8 9.0 8.7 8.8 0.2% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database and SANDAG Form C Reports.

Main findings from Exhibit IV-15 are as follows: – Operations staffing levels increased in FY2013 and FY2015. Over the audit period employees increased from 35 in FY2012 to 45 in FY2015. – Given the considerable increase in operations FTEs and minimal service increases, car service hours per operations FTE and car service hours per FTE both decreased by 20.3% during the audit period. – Service productivity measures improved as ridership growth outpaced service growth. Service miles as a proportion of total miles and service hours as a proportion of total hours reached 99.5% in FY2015. This was the result of TransDev’s committed strategy to minimize deadheading. – Operations costs and ridership increased at similar rates during the audit period. Operations cost per passenger trip and operations costs per passenger mile nominally increased by 0.5% and 0.2% respectively.

Many maintenance indicators for SPRINTER Light Rail services increased over the audit period. This is shown in Exhibit IV-16.

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Exhibit IV-16: SPRINTER Maintenance Performance Indicators Base Data and Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Maintenance FTEs 10 11 11 12 19.0% Maintenance Costs $4,838,213 $4,979,073 $5,327,392 $4,624,887 -4.4% Total Car Hours 30,430 24,286 30,913 31,408 3.2% Total Car Miles 668,757 533,741 679,376 690,288 3.2% Peak Cars 8 6 8 8 0.0% Total Cars 12 12 12 12 0.0% Revenue Vehicle Failures 119 36 12 13 -89.1% Car Hours per Maintenance FTE 3,043 2,149 2,736 2,639 -13.3% Car Miles per Maintenance FTE 66,876 47,234 60,122 58,007 -13.3% Maintenance Cost per Active Car $403,184 $414,923 $443,949 $385,407 -4.4% Maintenance Cost per Car Hour $158.99 $205.02 $172.34 $147.25 -7.4% Maintenance Cost per Car Mile $7.23 $9.33 $7.84 $6.70 -7.4% Car Hours per Active Car 2,536 2,024 2,576 2,617 3.2% Car Miles per Active Car 55,730 44,478 56,615 57,524 3.2% Car Miles Between Failures 5,620 14,826 56,615 53,099 844.9% Spare Ratio 50.0% 100.0% 50.0% 50.0% 0.0% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database and SANDAG Form C Reports.

Main findings from Exhibit IV-16 are as follows: – Overall maintenance costs decreased by 4.4% during the audit period. The higher maintenance costs in FY2014 correspond to increased maintenance inspections resulting from the disruption of service late in FY2013. – The decrease in maintenance costs is impressive given that total car miles and total car hours both increased by 3.2% during the audit period. – Maintenance labor productivity also increased, despite an increase in maintenance FTEs during the audit period. Car hours per FTE and car miles per FTE both decreased by 13.3%. – Maintenance cost metric improved during the audit period. Maintenance costs per active car decreased by 4.4%, and maintenance costs per car hour and maintenance costs per car mile both decreased by 7.4% – The number of revenue failures drastically decreased during the audit period. However, the previous audit report indicated that the FY2012 level was an anomaly and not reflective of average levels. During FY2014 and FY2015, the number of failures settled to 12-13. – Maintenance staffing levels increased from 10 FTEs in FY2012 to 12 in FY2015.

NCTD increased administrative staffing for SPRINTER Light Rail services during the audit period. This led to a decrease in administrative performance metrics during the audit period. This is shown in Exhibit IV- 17.

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

Exhibit IV-17: SPRINTER Administration Performance Indicators Base Data and Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Administration FTEs 9 13 15 17 93.3% Car Service Hours (CSH) 30,305 24,179 30,780 31,260 3.2% Car Service Miles (CSM) 666,212 530,642 676,132 687,068 3.1% Unlinked Passenger Trips 2,417,606 2,000,888 2,551,106 2,769,686 14.6% CSH per Administration FTE 3,367 1,818 2,108 1,797 -46.6% CSM per Administration FTE 74,024 39,898 46,310 39,487 -46.7% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database and SANDAG Form C Reports.

From FY2012 to FY2015, NCTD progressively increased the number of administrative staff from 9 to 17, an almost doubling of the administrative staff. As a result, labor productivity measures decreased despite an increase in service during the period.

The number of customer complaints for SPRINTER service fluctuated during the audit period. In FY2012, there were 66 customer complaints. This figure increased to 99 in FY2013, dropped to 30 in FY2014, and then increased to 57 in FY2015. Despite the fluctuations, overall customer complaints decreased by 13.6% during the audit period.

IV-3.3. LIFT Paratransit and FLEX Demand Response Services

This audit period saw great changes for the LIFT paratransit and FLEX demand response service. Ridership significantly increased during this period. Additionally, moving LIFT from a brokerage operating model to a dedicated fleet model led to significant increases in operating costs for NCTD. As a result of the change in operating model, FY2015 cost statistics should be considered the new baseline. NCTD began operating FLEX service in June 2012. NTD statistics include both FLEX and LIFT.

Exhibit IV-18 provides LIFT paratransit / FLEX demand response TDA performance indicators. Exhibit IV-18: LIFT Paratransit/ FLEX Demand Response TDA Performance Indicators Verified TDA Statistics & Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Operating Costs $3,561,876 $4,345,362 $5,337,048 $7,879,557 121.2% Unlinked Passengers 133,890 155,755 168,228 199,073 48.7% Vehicle Service Hours 62,989 68,767 78,937 122,651 94.7% Vehicle Service Miles 1,041,717 1,208,683 1,453,908 2,096,327 101.2% Employee FTEs 53 59 65 102 92.5% Operating Cost per Service Hour $56.55 $63.19 $67.61 $64.24 13.6% Operating Cost per Passenger $26.60 $27.90 $31.73 $39.58 48.8% Passengers per Service Hour 2.13 2.26 2.13 1.62 -23.6% Passengers per Service Mile 0.13 0.13 0.12 0.09 -26.1% Service Hours per Employee FTE 1,188 1,164 1,211 1,202 1.2% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database. Employee full-time equivalents (FTEs) from SANDAG Form C reports.

Main findings from Exhibit IV-18 are as follows: – The demand for LIFT / FLEX grew rapidly during the audit period. From FY2012 to FY2015, ridership increased by 48.7%.

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

– The increase in ridership and the change in operating model away from the brokerage model led to an increase in vehicle service hours and vehicle service miles, 94.7% and 101.2% respectively. The LIFT brokerage model allowed the nearest driver to answer a service call, as opposed to having drivers start from a base location. This allowed the brokerage model to require fewer vehicle service miles and fewer deadheading miles in order to provide paratransit service for NCTD. Given the drastic change in the LIFT operating model at the end of FY2014, FY2015 statistics should be viewed as the baseline going forward. – The increase in ridership and service, caused by the transition away from the brokerage model, caused 121.2% increase in operating costs. – The change away from the brokerage model caused staffing levels to greatly increase as more functions needed to be brought in house. LIFT / FLEX staffing levels nearly doubled from 53 FTEs to 102 FTEs during the audit period. – Labor productivity increased as service hours per employee FTE increased by 1.2% from 1,188 in FY2012 to 1,202 in FY2015. This increase in labor productivity is noteworthy given the operational changes which occurred during this time.

Exhibit IV-19 provides LIFT paratransit / FLEX demand response revenue performance indicators. Exhibit IV-19: LIFT Paratransit / FLEX Demand Response Revenue Performance Indicators Base Data and Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Operating Costs $3,561,876 $4,345,362 $5,337,048 $7,879,557 121.2% Farebox Revenues $569,280 $598,101 $611,339 $727,977 27.9% Net Cost $2,992,596 $3,747,261 $4,725,709 $7,151,580 139.0% Unlinked Passenger Trips 133,890 155,755 168,228 199,073 48.7% Farebox Recovery Ratio 16.0% 13.8% 11.5% 9.2% -42.2% Average Fare per Passenger Trip $4.25 $3.84 $3.63 $3.66 -14.0% Net Cost per Passenger Trip $22.35 $24.06 $28.09 $35.92 60.7% Percentage Change Consumer Price Index (CPI-All) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database

Main findings from Exhibit IV-19 are as follows:

– As described in previous sections, operating costs for LIFT more than doubled in part due to a change to the LIFT operating model. It is difficult make comparisons across all three years. – Combined ridership increased by 48.7% during the audit period. Increased ridership did lead to an increase in revenue. However, ridership growth outpaced growth in revenue causing the average fare per passenger trip to drop by 14.0% during the period. – The net cost per passenger trip increase substantially from $22.35 in FY2012 to $35.92 in FY2015. – Given the substantial increase in operating costs, the farebox recovery ratio decreased from 16.0% in FY2012 to 9.2% in FY2015. In FY2015, the farebox recovery ratio was below the TDA mandate of 10% for paratransit services.

Exhibit IV-20 provides LIFT paratransit / FLEX demand response operations performance indicators.

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

Exhibit IV-20: LIFT Paratransit / FLEX Demand Response Operations Performance Indicators Base Data and Base Year Audit Review Period % Change Performance Indicators FY12 FY13 FY14 FY15 FY12-FY15 Employee FTEs 53 59 65 102 92.5% Operating Costs $3,561,876 $4,345,362 $5,337,048 $7,879,557 121.2% Vehicle Service Hours (VSH) 62,989 68,767 78,937 122,651 94.7% Vehicle Service Miles (VSM) 1,041,717 1,208,683 1,453,908 2,096,327 101.2% Total Vehicle Hours 62,989 68,767 78,937 122,651 94.7% Total Vehicle Miles 1,055,001 1,227,539 1,478,714 2,552,881 142.0% Unlinked Passenger Trips 133,890 155,755 168,228 199,073 48.7% Passenger Miles 1,125,217 1,266,105 1,570,855 2,426,584 115.7% Total Vehicles 49 64 58 61 24.5% Operating Cost per Service Hour $56.55 $63.19 $67.61 $64.24 13.6% Operating Cost per Psgr Trip $26.60 $27.90 $31.73 $39.58 48.8% Passengers per Service Hour 2.13 2.26 2.13 1.62 -23.6% Passengers per Service Mile 0.13 0.13 0.12 0.09 -26.1% Veh Hrs per Employee FTE 1,188 1,164 1,211 1,202 1.2% Vehicle Miles per Active Vehicle 21,531 19,180 25,495 41,851 94.4% Passenger Miles per Psgr Trip 8.40 8.13 9.34 12.19 45.0% Percentage Change Consumer Price Index (CPI-U) 1.2% 2.1% 1.0% 4.4% Source: National Transit Database and SANDAG Form C Reports.

Main findings from Exhibit IV-20 are as follows: – Passenger miles per passenger trip increased significantly during the audit period. From FY2012 to FY2015, passenger miles per passenger trip increased from 8.40 to 12.19, a 45% increase. Additionally, LIFT / FLEX ridership increased by 48.7% during the audit period. The increase in ridership and the increase in passenger miles per passenger trip, in turn caused passenger miles to increase by 115.7% during the audit period. – Operations FTEs increased by 92.5% during the audit period. The majority of this increase came from FY2014 to FY2015. This increase was caused by the different in the staffing needs of the dedicated fleet model compared to the brokerage model. – The number of total vehicles increased by 24.5% from 49 to 61 vehicles during the audit period. It should be noted that the previous contractor ALC was providing paratransit service via taxi or other commercial vehicles. The transition back to the dedicated fleet required NCTD to procure 53 paratransit vehicles. – The number of customer complaints greatly increased during the audit period. In FY2012, there were 165 customer complaints. In FY2013, this increased to 202, decreased slightly to 199 in FY2014, and then increased 261 in FY2015. It should be noted that part of the increase can be attributed to a 48.7% increase in ridership during the period. Additionally, the change in operating model for paratransit likely contributed to the increase in the number of complaints. It is expected that as customers get more accustom to the dedicated fleet based service that the number of customer complaints will decrease.

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

SECTION V: CONCLUSIONS AND RECOMMENDATIONS

NCTD is in compliance with all but one PUC requirement and has made satisfactory progress to implement prior audit recommendations: – Compliance with PUC Requirements: NCTD is in compliance with applicable PUC requirements with the exception of farebox recovery for paratransit services. The PUC mandates that paratransit services maintain a farebox recovery ratio of 10.0%. In FY 2015, the paratransit farebox recovery ratio was 9.2%. – Progress to Implement Prior Audit Recommendations: NCTD has taken appropriate steps to address the prior audit recommendation which related to working towards a simplified fare structure, providing additional training to SPRINTER staff, and applying bus contract best practices to rail contract procurements. In regards to fare simplification, SANDAG coordinates regional fare policy. However, NCTD has been an active member of the Fare Simplification Workshop and has been working with MTS on a joint procurement for mobile ticketing. NCTD improved SPRINTER training by conducting an internal safety audit, doubling staffing levels of the Safety Department, implementing standard operating procedures, implementing data driven safety reporting, and instituting the Risk Roundtable program. NCTD also implemented best practices when selecting the SPRINTER and COASTER contractor by developing internal oversight plans and management plans along with tools required to monitor contractor performance.

The system-wide TDA performance trends overall are indicative of the NCTD efforts of increasing service and staffing levels during the audit period. Staffing levels have increased as NCTD has moved several functions in-house. SPRINTER service was suspended for just over two months in late FY2013. When service resumed, NCTD implemented additional safety and risk safeguards. These measures helped SPRINTER performance metrics quickly recover and exceed previous levels. The LIFT paratransit operating model drastically changed during the audit period. Given the State Court of Appeals ruling against ALC, NCTD was forced to move away from the brokerage model for paratransit services. With 120 days of notice, NCTD was able to secure an operating contract with First Transit, obtain and train new operators, redesign the TRAPEZE scheduling system, build a dispatch/reservation center, and procure 54 vehicles. This move away from the brokerage system and increased demand led to large increases in operating costs which negatively impacted cost performance metrics.

NCTD has had many successes during the audit period. In the aftermath of the SPRINTER shutdown, NCTD has created a more robust safety culture at all levels. This included: rigorous internal safety audits, implementation of Risk Roundtable, doubling the size of the Safety Department, and developing the Integrated Safety Plan. NCTD has continued implementation of the Mobility Plan to improve service efficiency. Key capabilities and staff were added to safety, planning, and engineering departments. System-wide ridership hit record levels in FY2014 and FY2015. NCTD was also able to replace ALC as the paratransit / demand response contractor and mobilize a new contract within a 120 day time period.

The following recommendations are provided for consideration by NCTD: 1) Implement strategies to minimize operating costs for LIFT paratransit service. 2) Institute inventory tracking and management system for rail facilities 3) Develop digital database for storing NCTD right of way data.

Recommendation 1: Implement strategies to minimize operating costs for LIFT paratransit service.

Issues and Opportunities – During the audit period, NCTD paratransit operating costs increased by $3.5 million from FY2013 to FY2015. This was largely caused by the transition away from the paratransit brokerage operating model to a dedicated fleet model. In November 2013, American Logistics Company (ALC), informed NCTD of its inability to operate the service. ALC operated this service as a brokerage

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG) model, utilizing local taxi services and independent car services. Beginning April 2014, First Transit, the provider of BREEZE service, began operating and maintaining NCTD purchased vehicles to deliver the LIFT service using a fleet of 53 vans and cutaways. In general, the brokerage model had natural cost efficiencies as it did not require centralized storing and maintenance of paratransit vehicles. Transitioning from the brokerage model to the dedicated fleet model led to unavoidable cost increases. Additionally, demand for paratransit increased by 48.7% during the period. The increased demand led to an increase in service which also increased operating costs. In general, operating costs did scale closely with the increase in service hours and service miles. However, the increase in operating costs from the required changed in the operating model and the increase in demand caused the paratransit farebox recovery ratio to drop below the TDA mandate of 10%.

Recommended Actions – NCTD should implement greater cost control measures for LIFT paratransit service. As demand has increased over the past several years NCTD should implement strategies to contain operating costs as service increases. These actions could include realizing greater scheduling efficiencies through the TRAPEEZE system and or setting contractor mandates for increases in operating cost per service mile or cost per service hour.

Expected Results – Implementing contract management strategies would help to reduce paratransit operating costs which would move paratransit farebox recovery to be in compliance with the TDA mandates. Containing growth in operating costs per service hour would allow NCTD to minimize operating cost increases given greater future demand from an aging population.

NCTD Response –NCTD has already begun assessing strategies to improve the LIFT farebox recovery and to contain growth of operating costs, including but not limited to the following strategies:  Procurement of new contractor with revised performance standards and cost structure is being developed for contract start date of July 1, 2017.  Enhancing the NCTD certification and suspension process to ensure certification is only provided to eligible customers.  Consideration of restructuring service area to include zones for LIFT ADA paratransit service.  Collaborating with SANDAG and MTS to complete a fare study to simplify fares. Simplified fares may result in an increased bus cash fare and related ADA paratransit fare, thus positively impacting LIFT farebox recovery.

Recommendation 2: Institute robust tracking and management system for excess capital inventory at rail maintenance facilities.

Issues and Opportunities – NCTD procures a nominal amount of excess capital inventory for rail capital projects. This is a fairly standard procedure which prevents secondary parts procurement due to unplanned need. However, maintenance staff noted that excess inventory from capital projects had been piling up at maintenance facilities. This inventory was not tracked in the current inventory system. Maintenance staff did not know exactly what inventory was located at which facility. The lack of formal tracking of excess inventory led NCTD to re-order inventory which was already present at rail maintenance facilities. NCTD currently implements an inventory tracking system for vehicle parts. This excess inventory could be incorporated into the current inventory management system. This inventory could also be integrated into the JD Edwards system when it becomes fully operational. Storing the excess inventory at each maintenance facility presents a logistical problem. NCTD staff noted that there is sufficient space at the vacant lot “lay-down” facilities to house this inventory. NCTD has a stipulation in the rail contract agreements wherein the contractor shall move inventory at no charge to NCTD.

Recommended Actions – NCTD should ultimately work to incorporate tracking excess capital inventory in the JD Edwards system. Prior to full implementation of the JD Edwards system, NCTD should integrate this inventory into the current inventory tracking system. NCTD should also draft a plan to house the inventory at one centralized lay-down facility. This plan should then be presented to the rail contractor which would move the inventory at no charge to NCTD.

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FY2013-2015 Performance Audit of NCTD San Diego Association of Governments (SANDAG)

Expected Results – Implementing a more robust inventory system would reduce excess inventory procurement for capital projects. Moving excess inventory to lay-down sites would free up space at maintenance facilities and would remove site obstacles and safety hazards.

NCTD Response – NCTD enters completed CIP projects into JD Edwards as fixed assets. NCTD also enters completed SANDAG CIP projects on behalf of NCTD into JD Edwards as fixed assets. Assets identified in this recommendation are related to CIP projects, and are not traditional consumable inventories. These items consist of (1) spare parts from CIP projects which are included in the overall cost of the CIP projects and tracked in fixed assets at the completion of the respective projects, and (2) obsolete fixed assets removed from service that are pending disposal. NCTD has explored consolidating these spare assets at an existing property in San Marcos, but received notification from the City that the NCTD property cannot not be used primarily as a storage facility. Subsequently, NCTD has identified a location in Escondido that will only require minor improvements, such as fencing, in order to make this property operational as a central location for NCTD owned right of way spare assets. NCTD is examining the identified assets for purpose of determining items that are obsolete and eligible for disposal.

Recommendation 3: Work with SANDAG to develop digital database for storing NCTD right of way data

Issues and Opportunities – The NCTD Construction and Development division is responsible for Engineering, Real Estate and Facilities. The division handles State of Good Repair projects, (e.g., repair, rehabilitate or replacements). Within the audit period they were responsible for State of Good Repair evaluations of NCTD’s 62 bridges. The division also manages the permitting process for the NCTD right- of-way. This includes reviewing and approving right-of-entry requests, rail safety plans, associated work plans, providing encumbrances (e.g., easements, licenses) on ROW for utilities, and filing legals and plats. NCTD has grown their in-house engineering expertise to support non-SANDAG engineering needs, as well as knowledge needed to support SANDAG engineering and construction. NCTD provides oversight/ review of the SANDAG work. NCTD is an active partner in SANDAG work, reviewing change orders, compliance, coordination with operations, and safety departments. The NCTD interviews noted that the Construction and Development division lacked digital files of the NCTD right-of-way. NCTD had previously investigated implementing a GIS-based system however it was deemed too costly.

Recommended Actions – NCTD and SANDAG could investigate developing a process/ procedures that allows for NCTD to develop a library of digital data as SANDAG advances engineering and construction projects. SANDAG’s GIS program has a robust offering that may provide interim solution.

Expected Results – Developing a geospatial database that would eventually streamline the permitting process as well as provide data required for the engineering and construction projects which NCTD undertakes and or supports.

NCTD Response – NCTD owns the rail and right of way on the inland rail (Escondido Subdivision), and owns the rail and right of way on the coastal rail (San Diego Subdivision) from county line through Del Mar (approximately 41 miles). On the remaining 20 miles of the San Diego Subdivision, NCTD owns the rail, but MTS owns the underlying right of way. NCTD has access to right of way surveys which allows NCTD to accurately process permits. NCTD will explore this recommendation with SANDAG along with other initiatives that are underway to include purchasing a real estate module with GIS capabilities and obtaining gap survey/property line information from BNSF, the prior owner of the railroad right of way. Currently, SANDAG has the NCTD ROW agreements that have been provided by NCTD in digital files in the Sharepoint Database which select NCTD employees have access to over the internet. Additionally, SANDAG has a set of as built plans for LOSSAN Projects in the agency’s digital files in the Sharepoint Database which select NCTD employees have access to over the internet.

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