5 Sections 45 minutes Author: Shared-Use Mobility Center
This Learning Module offers a comprehensive overview of funding opportunities for shared mobility pilot projects including governmental resources at the local, state, and federal levels. The module touches on different partnerships that can help leverage financial resources and provides a wide variety of funding strategies, support mechanisms, and revenue sources. There are many great mobility related ideas and pilot projects in the United States, however, funding sources and strategies are often what inhibits a pilot from turning into a long-term solution.
Most shared mobility projects are funded through public-private partnerships.
Federal agencies are continuing to establish and expand funding programs to include shared mobility projects, specifically those centered around electrification.
Understanding partnership dynamics and models is critical to leveraging innovative funding solutions and lasting shared mobility programs.
States and transportation authorities are beginning to establish dedicated mobility offices to develop innovative mobility policies and support the development and implementation of emerging trends. Often, these offices issue competitive grant opportunities local entities can benefit from.
Private foundations, corporate entities, charitable organizations and nonprofits are sources of investment for shared mobility projects as they often make donations, invest, or establish grant opportunities.
Shared Mobility Funding Strategies
Traditional sources of funding through the government and local partnerships play an important role in funding shared mobility projects. However, those sources do not always cover the entire cost of a project, nor do they always supply the sustained resources needed to turn a pilot into a successful large-scale program. Other revenue streams and strategies can help to offset the money needed by local governments for transportation initiatives. This Learning Module will draw from pilot project examples, to explore potential funding options available for shared mobility projects, both traditional and more innovative programs and strategies. The Learning Module is organized by:
There are several other considerations that are inherently connected to a projects’ opportunities and decisions related to funding. The first is to ensure the mechanisms used to secure funding aligns with the projects’ goals. For instance, placing a shared mobility service in an area likely to generate higher levels of ridership can produce higher revenue, however this would not be a viable revenue strategy for a project with a goal of mobility equity. Mobility equity often requires that service is provided in lower density, harder to reach locations, where the revenue generated may be insufficient to operate a project. Another consideration is understanding the costs of the project. In general, costs can be sorted into two categories: capital costs and operational/maintenance costs. It is important to note that funding sources are sometimes restricted to either category. Lastly, understanding partnership dynamics and developing smart partnership models are critical to leveraging innovative funding solutions and lasting shared mobility programs. Equitable Public-Private Partnerships can help to share the risk and reward between a public agency and its private partner. These partnership models balance ownership, governance, management, operations, marketing, and funding. The way these partnerships are structured dictates organizational responsibility and how the funding is shared or distributed.
Shared Mobility Funding Strategies
The Traditional Government Funding Sources section provides an overview of the common sources and ways that federal, state and local governments might financially support shared mobility projects. Oftentimes these are through grant programs; however, items such as local fees and taxes can be a source of revenue for mobility related improvements.
Federal funding often sources a large portion of the capital and operations funding for shared mobility projects. Numerous federal agencies provide grants and other programs that involve funding options. These are typically competitive, require documentation of the project need, costs and benefits, and need dedicated staff to manage grant administrative duties. On November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act (IIJA), also known as the Bipartisan Infrastructure Law, which will bring forth billions of dollars in competitive funding available to cities, towns, and entities across new and existing programs. These new and existing competitive grant programs not only address transportation but also bring a renewed focus to climate, energy, and the environment. The law also further increases the amount of formula funding that will be designated to states, cities and local governments, greatly expanding the flexibility of funds under programs like the Surface Transportation Block Grant. For those specifically interested in transit funding, the Center for Transportation Excellence has outlined the transit ballot measures for each election since 2012, including the total revenue and the percentage breakdown of revenue types and where the funds would be allocated for each ballot measure, if passed.
When it comes to transportation, there are three main agencies that offer federal funding opportunities. These include:
These entities offer competitive grants and programming for transportation improvements that support innovative mobility, reduce traffic congestion, improve air quality, and enhance access. The US Department of Energy’s Office for Energy Efficiency and Renewable Energy (EERE) provides an additional resource to advance sustainable mobility by providing funding opportunities for electric vehicles and charging infrastructure.
Outside of the typical grant programs offered under these entities, the COVID-19 pandemic has brought forth emergency relief funding programs established by the federal government to support mobility services, including those that are shared-use. For instance, the Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $25 billion to transit agencies across the country to support the continued operation of essential transportation services and other related expenses during the pandemic.
Formula grants are non-competitive grants awarded to recipients who are predetermined. These grants are usually administered and managed by State Administering Agencies and the amount of funds are allocated to recipients based on a formula often set by governmental legislation and regulations. This legislation specifies eligibility requirements and how the funds will be distributed among eligible recipients. A local match of 20% is often required.
The Surface Transportation Block Grant Program (STBG) was reauthorized under the Surface Transportation Reauthorization Act of 2021 to now include funding for electric vehicle charging infrastructure and vehicle-to-grid infrastructure.
Capital Investment Grants Program (Section 5309): This FTA discretionary grant program provides funding for transit capital investments, including heavy rail, commuter rail, light rail, streetcars and bus rapid transit. Under the IIJA, $8 billion of the newly allocated $23 billion will be used to invest in new high-capacity transit projects that communities choose to build.
Enhanced Mobility of Elderly and People with Disabilities (Section 5310): This program provides funding for projects aimed at improving mobility for seniors and people with disabilities in all size markets. Found in 49 U.S.C. Chapter 53, Section 5310, reauthorized under FAST Act.
Formula Grants for Rural Areas (Section 5311): This program provides capital, planning and operating assistance to states that support public transportation in rural areas (populations less than 50,000).
Urbanized Area Formula Grant (Section 5307): This FTA program allocates Section 5307 funds as subsidies to eligible public transit agencies to use for capital equipment (buses, equipment, structures, etc.), planning, job access and reverse commute projects, mobility management, and some limited operating expenses related to the federally required assistance transit agencies must provide to persons with disabilities. This grant program was used by the City of Valdosta to sustain operations of Valdosta On-Demand, an on-demand microtransit service in Valdosta, GA that was initially funded through the CARES Act.
National Rural Transit Assistance Program (RTAP): This program, housed under the FTA, provides resources, technical assistance, and partner collaboration for rural transit initiatives.
The Congestion Mitigation and Air Quality Program (CMAQ) helps fund transportation projects that seek to reduce transportation related carbon emissions. CMAQ is often administered by local Metropolitan Planning Organizations, is used in nonattainment areas, and is often a popular funding mechanism to help support bikeshare programs. Under the recently passed IIJA, funds under CMAQ can now be used for shared micromobility, including bike share and shared scooter systems, as well as for the acquisition of medium- or heavy-duty zero emission vehicles and electric charging infrastructure.
The National Electric Vehicle Formula Program: This program, established under the IIJA and spearheaded by the Department of Transportation, dedicates $5 billion to states for the deployment of EV infrastructure including its operations and maintenance. The funding also establishes the Office of Energy and Transportation, a collaboration between the Department of Transportation and the Department of Energy to coordinate work on electric vehicle infrastructure.
Competitive Grants, also known as discretionary funding, are awarded based on a competitive process, which includes preliminary review to determine eligibility and a proposal selection where applications are reviewed and scored by an established panel. These grants are only awarded to a select few entities.
Grants for Buses and Bus Facilities Formula Program (Section 5339): The Grants for Buses and Bus Facilities Formula Program provides funding to states and designated recipients to replace, rehabilitate, and purchase buses and related equipment as well as construct or modify bus related facilities. The Low- or No-Emission Vehicle Program, a subprogram under this initiative, provides funding for bus and bus facility projects that support low and zero-emission vehicles.
The Alternative Fuel Corridor Grant Program: This program, established under the IIJA, funds investments along the Alternative Fuel Corridors that states have already been working on. The program looks to get publicly accessible electric charging infrastructure implemented along alternative fuel corridors.
Public Transportation Innovation (5312): This FTA federal funding program provides funding to develop innovative products and services assisting transit agencies in better meeting the needs of their customers. Eligible projects can focus on facilitating the deployment of research and technology development, the implementation of research and technology development to advance the interests of public transportation, or the deployment of low or no emission vehicles and associated technology.
Mobility innovation initiatives, under the FTA, supports innovative pilot projects to experiment new mobility services and technologies. Past and ongoing funding opportunities include the MOD Sandbox, MOD On-Ramp, Integrated Mobility Innovation (IMI), and Accelerating Innovative Mobility (AIM), and Enhancing Mobility Innovation of which are described below.
Access and Mobility Partnership Grants, under the FTA, look to improve access to public transportation by building partnerships among health, transportation, and other service providers.
State funding typically stems from tolls, taxes, bonding and debt, state DMV fees, state grants, and transportation budgets. In the State of California, the California Air Resources Board (CARB) offers opportunities to fund shared mobility solutions through programs like Clean Mobility Options Voucher Pilot Program and the Sustainable Transportation Equity Project (STEP). Other states, like Michigan and Minnesota, have put out grant opportunities through their DOT’s to advance shared mobility and transportation innovation. These funding sources vary from one-time opportunities to programs that see on-going investment each year.
Many state funding programs and opportunities related to transportation can be found on state agency websites, specifically those dedicated to the departments of transportation, economic development, and the environment. States like Michigan have established dedicated mobility offices through partnerships between state agencies creating a one stop shop for interested parties to catch up on the latest mobility news, events, and funding opportunities. Michigan’s Office of Future Mobility and Electrification works across state government, academia and private industry to develop dynamic mobility and electrification policies and support the development and implementation of emerging mobility trends. In addition, the National Conference of State Legislatures provides a transportation funding and finance state bill tracking database offering real-time information about transportation funding and finance bills that have been introduced in the United States.
Examples of State Programs and Funding Opportunities
Local public funding can show the private sector the local government’s commitment in a public/private business model. Local funds are often used towards capital costs rather than operational costs because operating expenses are more likely to fluctuate . Since federal grants often require a local match of 20%, finding local funding is essential to securing grants and implementing transportation related services and improvements .
Regional governmental entities such as MPOs may administer programs that award local funding to projects supporting improved transportation access and liveable communities. For instance, Regional Transportation Authority (RTA), a unit of local government created to oversee finances, to secure funding, and to conduct transit planning for the Chicago Transit Authority (CTA), Metra, and Pace, established the Access to Transit program in 2012. This program awards funding to small-scale capital projects that improve pedestrians’ and bicyclists’ access to public transportation, including micromobility projects.
Local funding can come from a variety of sources including:
Taxation is one of the most common ways cities, towns, and municipalities finance local infrastructure projects. General taxes, such as sales tax, property tax, and local income taxes often finance local street improvements, transit, etc, however, more communities are leveraging local option taxes as a way to raise funds for specific projects. Local option taxes are new tax options that fund infrastructure related improvements through state level authorization or local voter approval at the county or municipal level. This sort of tax option was utilized by the Missoula Urban Transportation District to finance service expansion of the local transit network.
Other opportunities include leveraging funding associated with construction and development. While dependent upon the location of transportation improvements or development projects, development impact fees, special assessments, and funding directly from developers can support site-specific or general investment in shared mobility infrastructure and services.
Additionally, establishing or leveraging existing tax districts, such as Tax Increment Financing (TIFs), can raise revenue for both large and small transportation projects. In the City of Chicago, local TIF Districts have allocated funds to support the installation of Divvy stations and bikes within their boundaries. In San Francisco, TIF financing is supporting the redevelopment of the Transbay Transit Center, a multimodal transportation hub.
Transit agencies can flex funds from a huge array of federal highway programs to fund transit supportive infrastructure. Flex funding allows investments in any pedestrian project within a half-mile of a fixed-route transit stop and any bicycle infrastructure project within three miles of a fixed-route transit stop to maximize transit supported infrastructure and improve transit access. Under U.S. Federal Code, funds from Federal Highway programs can be transferred for public transportation projects so that administrative duties are assigned to the FTA. Flexible funding allows entities to make much needed transit, pedestrian, and bicycle improvements within their transportation networks, however, funding still has to be secured through the regular calls for projects. Eligible programs for flex funding include but are not limited to the Congestion Mitigation and Air Quality (CMAQ) program as well as the new Carbon Reduction Program that arose from the recently passed bipartisan Infrastructure Investment and Jobs Act.
Shared Mobility Funding Strategies
Successful planning, development, and implementation of shared mobility services and infrastructure depend on partnerships established between various stakeholders. Stakeholders, such as transportation agencies, employers, non-profit organizations, private mobility operators and governmental entities, utilize partnerships as a way to leverage funding for improved mobility.
Federal government partnerships is a way to pool funding and resources across agencies with similar interests and motivations. The Partnership for Sustainable Communities, for example, was a joint project, founded in 2009, between the Environmental Protection Agency, the U.S. Department of Housing and Urban Development, and the U.S. Department of Transportation. The Sustainable Communities Initiative provided grants to improve regional and local planning efforts that integrate housing and transportation. While the program ended in 2016, it is an innovative concept of bringing together these three agencies in a single program that could be looked to as an example.
Another multi-agency federal program of interest is the Civic Innovation Challenge, funded by the National Science Foundation, in partnership with the U.S. Department of Energy and the U.S. Department of Homeland Security. This research and action competition funds ready-to-implement, research-based pilot projects that address community-identified priorities on a local scale. In 2021, the University of Wisconsin-Milwaukee and the Southeastern Wisconsin Regional Planning Commission used this funding to launch FlexRide Milwaukee, an on-demand service that connects Milwaukee residents to employers located in the Menomonee Falls/Butler area.
Local government partnerships can similarly connect local governments and other important stakeholders to work together, develop, and deploy new technologies and resources. For example, PlanetM, for example, in Grand Rapids, Michigan is a concierge service composed of government agencies, mobility organizations, communities, educational institutions, and research and development and connects any mobility-focused company or investor to the Michigan automotive ecosystem. This program funded an $8 million innovative grant through the Michigan Mobility Challenge that aimed to address core mobility gaps for seniors, persons with disabilities, and veterans. One of the recipients was a project called The Rapid, an 8 month pilot for an on-demand paratransit service run by private microtransit operator Via, and non-profit Disability Advocates of Kent County.
Private foundations or entities, charitable organizations, non-profit organizations are sources of investment for projects. These organizations can make either donations or grants with a charitable purpose to support building or operating local infrastructure.
Public-private partnerships are contractual arrangements in which a public partner (government entity) forms partnerships with the private sector to finance, design, build, operate or maintain a variety of different projects, including those related to shared mobility. In the transportation space, private partners tend to offer the latest transportation technology and services, making it common for public entities to engage in such arrangements in order to get innovative pilot projects off the ground. The number of entities involved, level of involvement, and type of involvement will vary across partnerships.
For P3s to work there needs to be a dedicated revenue stream. Often the private partner will provide some or all of the funding to cover upfront project costs, but there is usually an incentive or method of repayment that is received over the duration of the partnership.
Regional power utility companies are a potential partner in shared mobility projects, specifically those with an electrification component. Utility companies can cut across public and private funding infrastructure depending on if they are publicly or privately owned. They can act as a project sponsor, offer direct funding, or offer in-kind services to help pay for infrastructure, such as electric vehicle charging equipment. LA Department of Water and Power (LADWP) was a core partner in the BlueLA pilot project, providing management support, station design services, and funding. As a municipal utility, LADWP had more flexibility and familiarity with other city programs and agencies than its private utility counterpart.
Blue LA car share that rents all-electric cars. Credit: Nico Vougas
Public-public partnerships are partnerships between two or more public organizations or authorities which allow them to leverage their shared capacities and pool resources. Partners can include non-profit organizations, schools or park districts, government agencies, transit agencies, etc. For example, the Downtown Memphis Commission and Memphis Medical District Collaborative, partnered with the Memphis Area Transit Authority (MATA) to fund Groove OnDemand, an on demand microtransit service that covers Downtown, the Medical District, South City, and New Chicago. While the Downtown Memphis Commission and Memphis Medical District Collaborative originally collaborated to transform the old Groove, a fixed-route shuttle to the Medical District, into what is now known as Groover OnDemand, partnering with MATA was instrumental to getting the service on the ground.
Shared Mobility Funding Strategies
This section includes descriptions of both common and innovative strategies and support mechanisms that communities can leverage during the planning and development stage of a project.
Bundled transit is the concept of looking at destinations within a city as potential partnerships and leveraging shared motivations and interests across these entities to fund projects or services.
Health organizations, such as hospitals and health insurance companies, can be incentivized to fund shared mobility projects to get their patients or members to and from their appointments. Getting to medical appointments on time can be difficult for various reasons, whether it is feeling too sick, not having a driver’s license, or having limited access to transportation. High no-shows and cancellation rates cost health organizations large sums of money, motivating them to look toward solutions, such as mobility-on-demand, to reduce these occurrences. In some instances, shared mobility providers can provide Non-Emergency Medical Transportation (NEMT), opening up partnership opportunities. For example, Logisticare is a non-emergency medical transportation service provided free to members through Blue Cross Complete of Michigans‘ services. Transportation network companies (TNCs) such as Uber and Lyft are also partnering with other players in the healthcare space, such as the electronic medical record companies Cerner and Epic, to embed the ride-calling technology into the electronic medical record.
Entertainment-based entities may be interested in funding shared mobility projects or services that increase access to facilities and events. Sporting event transit validation is a concept in which sporting venues contract with transit agencies so that ticket holders for the sporting event can ride buses and trains free on game days. Seattle, Ottawa, Phoenix, and Salt Lake City have zero-fare transit programs that follow this model. Shared mobility projects could look to these types of events as sponsors or direct funders to help draw a diverse crowd to the stadium and reduce drunk driving on the way home by covering first-mile/last-mile options. Theaters, concert halls, museums, airlines, and amusement parks, are all examples of other venues that could adopt the bundled transit model and become partners for shared mobility projects.
Employer-Based Programs are mutually beneficial programs that align employers with transit services. Employees are encouraged to participate in an employer-based program because it can improve employee morale and productivity, reduce late arrival rates, and offer the ability to work while commuting. Companies are also more attractive to potential employees as this broadens the region where an employee might be able to live while getting to work, creating a more accessible and equitable workplace environment. Lastly, employers save money through tax benefits, reduced overhead costs associated with parking expenses, and mileage reimbursements. Shared mobility projects could look to employers for funding as an innovative way for their employees to commute to work, specifically in harder-to-reach regions with apparent first-mile/last-mile problems to employment centers. In some cases, transportation demand management (TDM) requirements instigate an employer-based program, but some are generated without this incentive or regulation. Seattle found great success with its TDM programs, achieving a 75% non-single occupancy vehicle mode share as of 2017. This mode-shift occurred when Seattle was experiencing significant growth in its population and its central business district.
Goods delivery through transit is an innovative approach by which transit services adapt their passenger services to transport essential goods such as medicine and food. While integrating these services can come with many regulatory and logistical barriers, it prompts innovative partnerships and can increase revenue streams. Private microtransit operator, Via, recently acquired Fleetonomy to accelerate its foray into logistics and last-mile goods delivery. Other examples of food and package delivery programs specific to persons with disabilities are summarized in National Review of Public Transit COVID-19 Delivery Programs.
Private grants are another source of funding that agencies and nonprofit organizations can apply for. Boulder B-Cycle hired a part-time worker to solely apply for individual grants such as Patagonia and the Gates Foundation .
Private investment can be a large portion of the local funding provided for shared mobility projects. Specifically, it can provide financial support for the often 20% local match required of many federal funding programs.
Sponsorships [4, 5] often involve a longer-term relationship between the vendor and the sponsor and can take the form of several different partnerships. They are a common source of funding. Given the higher private investment associated with a sponsorship, they are sometimes identified through staff and board connections and by targeting companies that support green and/or healthy living initiatives . A good source for finding such sponsorships can be through green conferences or business association meetings . Prices, contract length and other stipulations regarding the location and extent of the marketing value can vary on the program. Sponsorships come with a level of risk when affiliating the shared mobility project with a private company, should the company have image problems that the project is then promoting . Since this is such a heavily relied on source of funding for shared mobility projects, we have included a few differentiating factors and partnership options to consider [1, 5]:
System-wide sponsorship vs. multiple sponsorships
Specific types of partnerships & sponsorships
The establishment of dedicated mobility offices such as LA Metro’s Office of Extraordinary Innovation (OEI) can create a space to generate innovative mobility processes and programs such as LA’s Unsolicited Proposals and Public Private Partnerships that encourages the private sector to present innovative ideas directly to Metro for evaluation, leading to a demonstration, pilot project, or potentially full deployment across Metro’s system. The District Department of Transportation (DDOT) in Washington D.C. offers a similar program for unsolicited project proposals.
Membership organizations such as the National Association of City Transportation Officials (NACTO) organize cities and transit agencies together to exchange ideas, insights and practices as well as offer grant opportunities. NACTO is an association of 81 major North American cities and transit agencies and recently awarded 10 member cities to receive grants of $25,000 as part of their Streets for Pandemic Response and Recovery program. The City of Minneapolis Public Works was one of the recipients who plans to use this money to expand the defined use of Mobility Hubs beyond being a place where people can connect multiple modes of transportation and respond to the new needs of the community due to COVID-19 and civil unrest. Another organization that functions similarly is the Urban Sustainability Directors Network (USDN) which aims to connect local government practitioners to improve urban sustainability in part by offering various grant and funding opportunities.
Crowdsourcing, the practice of obtaining information or funding by enlisting a large number of people to join, typically on the internet through companies like Kickstarter, Ioby, and Indiegogo, is a viable solution for a small portion of the costs of a new project, particularly one that serves a specific community need. Transit Center and Ioby launched a campaign in 2016 for transit-oriented projects called “Trick Out My Trip” where the Transit Center matched every dollar, up to $100 per donation
In-kind donations are when a public organization offers their services such as staff time, right-of-way use, or reduced street parking cost. This option is most commonly used for community-based projects serving a unique need.
Asset recycling is an innovative funding mechanism used for infrastructure that typically involves selling, leasing, or repurposing of government-owned assets (airports, seaports, toll roads, electric utilities, transmission grids, etc.) to tap latent capital for other infrastructure projects. One study found that public-private partnership long term leases for existing U.S. infrastructure could generate between $720 to $885 billion. These funds could be adapted to finance transit or other mobility projects. Earmarking these funds for shared mobility projects could also be a marketing strategy to showcase a commitment to equitable, environmentally sound projects. When pursuing this avenue of funding, it is critical that public input and need drives the decision making process. Unlike top-down approaches, community guided transportation investment empowers citizens and strengthens equity. Asset recycling was first used in Australia and can be referenced as a successful use case.
Leveraging state resources/infrastructure is one way to potentially reduce the capital cost required for projects, depending on the mode. For example, the Alternative Fuel Corridors program seeks to build fast-charging infrastructure along interstate corridors, providing state resources for inter-jurisdictional planning, public education, and signage. For a shared mobility project involving electric vehicles, being aware of and utilizing this infrastructure might reduce the anticipated cost to pilot. Another example of this kind of resource sharing is CapMetro’s innovative interoperability between Proterra and New Flyer electric buses and chargers, allowing the agencies to use each others’ chargers. This is an excellent example of investing in infrastructure that reduces funding required for future fleets and projects.
Equipment resourcing is the idea of utilizing used equipment as a tool to reduce the funding required. Shared mobility projects that require a smaller fleet or less equipment might consider this route. The small town of Pocahontas, Iowa adopted this model and purchased 3,600 used bikes from a larger operator and successfully kept capital costs down. Additionally, nonprofit Houston Bikeshare, was presented the opportunity to buy used bikes from nonprofit Denver Bike Sharing when it decided to shut down. The deal saved more than 100 bikes and 45 docking stations and offered the nonprofit an affordable opportunity to expand its network, particularly into underserved communities.
Cap-and-Trade Dollars are part of a growing effort to mitigate greenhouse gasses. One carbon credit is equal to one ton of carbon dioxide. It is used to measure, regulate, cap, and allocate greenhouse gas emissions to drive industrial and commercial processes towards less carbon-intensive approaches. Examples of organizations leveraging this model are the California Air Resources Board (CARB) and the Regional Greenhouse Gas Initiative (RGGI).
RGGI is unique in that it is a cooperative effort among Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia to cap and reduce carbon dioxide emissions from the power sector. It is the first mandatory market-based program in the United States to reduce greenhouse gas emissions. These groups are great resources to leverage for funding opportunities.
California Air Resources Board (CARB) is part of the California Environmental Protection Agency that is tasked with protecting the public from harmful pollutants and developing programs and actions to combat climate change. Their programs range from requirements for clean cars and fuels to innovative solutions to reduce greenhouse gas emissions. Los Angeles’ EV carsharing pilot is an example of a shared mobility project supported by CARB’s Low Carbon Transportation Investments, a program funded out of the Greenhouse Gas Reduction Fund with proceeds from the state’s cap-and-trade program.
Settlement funds can be a source of funding for shared mobility projects depending on the motivations and interests of the entity awarded the settlement funds. For example, $2 billion of the settlement funds from the United States v. Volkswagen Group of America et al., will be spent on national zero emission vehicle investments and $2.9 billion will be used to establish an Environmental Mitigation Trust, which states can use to invest in transit projects that will reduce NOx emissions. States across the country have used the settlement funds for EV mobility programs. Additionally, states are using Johnson & Johnson’s $26 billion opioid settlement deal to fund transportation projects that support opioid recovery and prevention services.
Permit fees are when a city interested in soliciting new shared mobility services charges a permit to providers looking to operate within their city limits. Designing a successful permitting program requires a balance of incentives and regulations. In general, a permit fee should not be onerous to the point that it dissuades companies from locating to a city. Flexibility and covering the administrative costs is an important aspect to encourage multimodal transportation. Examples of cities initiating a permit fee for a bike-share program include Seattle, which utilized a very high fee of $250,000, Denver, which flexes its permit fee based on revenue potential, and Dayton, which is outlined below:
Shared Mobility Funding Strategies
This section provides descriptions of sources of revenue that offer entities a return on investment and support projects after their implementation. Often they rely on the service or project already being underway.
Advertising includes a contract with a company to provide a regularly changing graphic display and message independent of the shared mobility service. This funding strategy can be a cyclical investment because local businesses that advertise on the shared mobility service often encourage their patrons to engage with it. For companies, an increase in users will lead to increased exposure. Free shuttles that serve tourist destinations are often heavily funded through advertisements. An example of a pilot project leveraging advertising for funding is Lake Nona, Florida’s AV pilot, Move Nona. Given that advertising is a common funding source, agencies often have a webpage outlining advertisement opportunities and potential costs (see SUMC Move Nona Case Study).
User Fees are fees collected from those who utilize a service or facility. Farebox revenue is a common source of revenue for operations and maintenance costs of shared mobility projects. Additionally, it is a good fit for cities that regularly hold large events, concerts, or conferences because the city can rely on a spike in usage to generate revenue . For instance, Austin’s BCycle leveraged the annual South by SouthWest Festival to gain a 50% increase in service use.
Typical user funding mechanisms for shared mobility projects are annual/monthly membership, weekly/daily passes, pay-as-you-go, and penalty fees. Farebox revenue should not be the sole financial source backing a project because rider usage can fluctuate. However, farebox revenue can significantly support shared mobility operating costs. For bikeshare, US companies have seen the percentage of operating expenses recovered by user revenues range from 36% (Boulder BCycle) to 97% (Capital Bikeshare), depending on the system. Part of the success of bikeshare farebox recovery comes from the large number of tourists who purchase the more profitable single-day passes.
User fees can take the form of subscription based models:
Monthly subscriptions are a unique form of charging users for micromobiity and microtransit projects, resulting in more reliable and/or higher revenue streams. For example, a new company in the Netherlands started a bikeshare company, Swapfiets, that operates by leasing bikes out for months at a time, starting at 39.99 euros per month while providing free bike repairs or replacements. This model shifts the capital and operating costs by not requiring fixed docking stations or rebalancing bike operations but does rely more heavily on more employees for repair and replacement service.
Cooperatives: Co-operative models, specifically in the case of carsharing, provide financial, environmental, and social benefits. Users pay a one-time deposit that the carshare company can use for start-up capital costs, such as buying cars. As co-op members, users pay a reduced fee per hour to use the vehicle. Depending on the program structure, participants get their deposit back if they no longer want to be a part of the co-op. Previously known as Co-operative Auto Network (CAN), Modo is an example of a carsharing company that uses a co-op model. The company initially charged a $3,300 per vehicle per year premium; its current membership model includes a $500 deposit and a $4 an hour fee. The co-op model is typically only viable for middle- to upper-class communities, given the upfront user costs. While there are no active co-op models in the United States today, the concept offers an excellent opportunity to raise capital while keeping customer usage fees down.
Mobility as a Service (MaaS) describes the use of a single application with a single payment channel for a diverse menu of transportation options—public transportation, ride-, car, or bike-sharing, taxi, scooters, or car rental. Achieving this may be through a subscription-based model where the user has access to various modes under one monthly fee. If MaaS can provide better service with seamless access to multiple modes, then usage of transit — and revenue — may increase. There are large and still unanswered questions about developing cost sharing and payment across participating stakeholders in a way that is equitable and proportionate to the services received.
Licensing products is a strategy used by Dallas Area Rapid Transit (DART) to license their Mobility as a Service (MaaS) app, GoPass. DART contracted a consulting firm, KPMG, to complete a feasibility study evaluating the scalability of GoPass to a national platform. The licensing revenue streams come from mandatory onboarding fees to new agencies using the GoPass, licensing fees for agency operation (program management fees and ticketing revenue share), optional feature development, and platform extension revenue opportunities. One example of a city that has rolled out the GoPass is Tulsa Transit. DART hopes that the revenue generated from leasing its GOPass app will help to support its continued development.
Air rights, also known as floor area ratio or FAR, is defined as the ratio of a building’s total floor area to the area of its zoning lot. Some buildings have a substantial amount of unused FAR and have the opportunity to sell these air rights. This sale is potentially a very lucrative idea to generate needed revenue for things like building improvements. New York City, an already very dense city with little to no ground space left to build on, is taking advantage of this coveted real estate. While there is no precedent for transit agencies selling the air rights above their train stations, this could be a potentially viable opportunity to generate revenue for shared mobility projects.
Parking spaces can be accessed, divided, and ultimately used in ways to generate revenue. These often underutilized assets hold opportunities for taking stock of how current transit parking fees are operating, make-shifting space near transit stops into parking for first mile/last mile shuttle connections or carshare spots, and repurposing unused parking lots as a revenue generator. One study found that Chicago could generate space for 1,188 new residential units and provide at least 167,000 square feet of new commercial area if only nine of the 230 Metra stations in the Chicago region were used more efficiently. Another Chicago example, the CTA generates a small amount of revenue from renting out space under the “L” for parking.