Fiscal capacity

access and waiting times two or three times more highly than time spent in a vehicle. Taking this value into account is critical when planning trunk-fed corridors.

Objective 2: Does the solution contribute to integration of the overall transportation system?

Regardless of the reform’s timeline and strategy of implementation, the solution designed should consider the entire transportation system and be consistent with master plans for citywide mobility and land use. local or partial analyses of transport networks may lead to suboptimal solutions. For example, partial analyses can easily underestimate the cost of feeding passengers into the new service (all else remaining equal, given lower demand density, the operating cost per passenger-kilometer should be higher than that of the trunk services) or undervalue the restructuring of routes along a corridor. When analyzing the entire system, a business scale is generated, which brings the possibility of structuring economically balanced business units (in which the more profitable services compensate for the less profitable ones). This helps planners structure a more robust model with a long-term horizon.

FISCAL CAPACITY

The elusiveness of financial self-sufficiency

After the success of early BRT PPPs in Colombia and mexico, most urban bus PPPs were planned as self-sustaining (assuming the public provision of infrastructure); however, self-sufficiency proved impossible for most projects. The operation of some trunk corridors with high demand density and lots of short internal trips may have been sustainable; however, in most cases, only the part of the system directly related to the corridor (including less profitable feeder and other conventionally operated routes) was considered, and the early sustainability quickly vanished. If an entire city system is considered, the system will need subsidies, with few exceptions. Subsidies are needed because the operating revenue generated by the most profitable corridors is lower than the deficit generated by the less profitable services in the rest of the city. Regardless of an operator’s legal structures and arrangements, when planning the financial structure of a project, it is best practice to adopt a citywide perspective. At a minimum, the financial structure must consider all services directly affected by or related to the operation of a trunk corridor.

The limits of alternative sources of funding

Planners should realistically assess the ability of the public transportation authority to leverage alternative sources of funding and to estimate potential revenues from these sources. After realizing that most projects are not financially self-sustaining, planners should discuss alternative sources of funding (see table C.3 in appendix C for a list of funding instruments).3 experience shows that most of these instruments are technically and politically difficult to implement. even when they are successfully implemented, the income generated is not as significant as expected.