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Managing Transportation Demand With Subsidized Transit Passes

Managing Transportation Demand With Subsidized Transit Passes

Offering subsidized transit passes is a powerful TDM strategy that makes it easier for people to take transit.

John Holmes
October 4, 2023

Cities, developers, and employers all use transportation demand management (TDM) to meet sustainability goals and reduce traffic. Offering subsidized transit passes is a powerful TDM strategy that makes it easier for people to take transit. Jawnt helps employers meet their TDM goals by enabling them to offer subsidized transit passes as an employee benefit. In this guide, we’ll explore the benefits of TDM and explain how subsidized transit passes can help employers achieve their TDM goals. But first, let’s explain exactly what TDM is.

What is TDM?

Transportation demand management refers to the broad set of strategies that encourage travel by modes that are cheaper and create less traffic than driving.

While many people may not have heard of TDM, they likely encounter TDM strategies in their daily lives. TDM strategies include:

  • Bike parking outside your local grocery store,
  • Workplace carpool programs, and
  • Employee commuter benefits, like subsidized transit passes.

More advanced strategies include:

  • Unbundling parking spaces from apartment leases to create a little additional friction for owning a car and reduce the cost of housing for people who choose to live car-free.
  • Offering secure bicycle valet parking at large events, such as festivals and concerts.
  • Positioning a screen in the lobby of a commercial building with real-time arrival information for surrounding transit routes.

Now that we understand TDM, let’s explore why employers are motivated to engage in TDM practices.

Why manage transportation demand?

Most destinations in the U.S. are expected to provide or otherwise be near parking. Building a parking garage or maintaining a lot is expensive. Parking garages cost $25k-$50k to construct per parking space, in addition to land costs. Open lots in busy areas can easily surpass $10k a space. When the parking is owned by the city, the cost is passed on to taxpayers, diverting resources away from other issues. On-street parking also bears the opportunity cost of what else could be done with the public right-of-way (such as wider sidewalks, bike lanes, or transit priority lanes). Charging a few bucks an hour or a few hundred for a monthly parking pass rarely makes a dent in the actual cost of providing parking. As an employer, hospital, retailer, etc., convincing people to leave their cars at home and arrive by any other means is good for the bottom line. 

Discouraging people from driving is also often a regulatory requirement. In neighborhoods that are already densely developed and congested with traffic, or concerned about climate impact, zoning requirements may institute parking maximums to limit the number of new cars. The municipal planning department may also require new developments to propose other strategies that will reduce the number of cars its future users will need. If a new building can only provide parking for 50% of its occupants, the owner or lessees need to find ways to make transit, bikes, and walking more appealing to their employees, visitors, and occupants.

Whether motivated by cost savings or regulation, both situations require TDM. Next, let’s go deeper on why subsidized transit passes are a boon for TDM. 

How can subsidized transit passes support TDM goals?

Subsidized transit passes make taking public transit cheaper for commuting employees and residents of apartment buildings. As a result, individuals with access to these passes are more likely to travel by transit and less likely to drive alone. 

From the perspective of employers and developers, subsidized transit passes are a cost-effective tool to comply with local TDM regulations and manage transportation demand for their businesses and residential buildings. To understand the power of subsidized transit passes as a TDM measure, let’s look at a few recent examples from major metropolitan areas. 

Cambridge, Massachusetts

Like all urban college campuses, space is at a premium at MIT, and parking is a perennial issue. In 2016, to manage transportation demand on campus, MIT began providing free transit passes to 10k faculty and staff. MIT distributed these passes through the MBTA’s Institutional Pass Program, in which employees can take unlimited rides, but employers only pay for the cost of rides actually taken. After the first year, they found that for only $200 per employee, employee transit ridership increased by 10% and decreased demand for on campus parking by 8%. MIT has since implemented several other TDM programs, all of which contribute positively to the Institute’s economic and TDM goals.

San Francisco, California

San Francisco has crushing rush hour traffic and an extensive transit network, making it the perfect place to implement TDM.

When a new construction project is proposed in San Francisco, the developer is required by California state law to estimate the new vehicle miles that the project will generate. Developers then work with the San Francisco Planning Department to determine the level to which they need to mitigate that demand for automobile trips. San Francisco gives them a number of points to collect. For example, a 10k square-foot office building in a medium-density area would require 12 points, while a 500-unit residential building downtown with 100 parking spaces would require 21 points.

The developer then turns to San Francisco’s TDM menu. The San Francisco Planning Department created a comprehensive menu of TDM strategies for office, residential, commercial, and other kinds of buildings, each weighted by its relative impact.

Under San Francisco’s TDM policy, subsidized transit passes score big. Fully subsidized passes are worth a whopping eight points. To meet their 12-point goal, the office developer could offer fully subsidized transit passes, provide ample quality bike parking (another four points), and call it a day.

The TDM menu also includes several more complex and expensive strategies that score much lower. On-site childcare is worth just two points, and real-time transportation information displays are only worth one point.

Seattle, Washington

Seattle has been at the forefront of TDM policy for decades. King County Metro created its first Institutional Pass Program (similar to the MBTA’s that serves MIT) in 1991. That same year, through the statewide Commute Trip Reduction law, King County Metro began requiring employers with at least 100 employees to select a number of TDM strategies from a list. That list includes several effective TDM practices, including Guaranteed Ride Home, carpooling, bike parking, and subsidized transit passes.

The combination of Institutional Pass Programs and the requirement for TDM has been highly effective, and today 60% of transit trips in Seattle are made with employer-provided transit passes.

Maximize transportation options with subsidized transit passes

While there are dozens of TDM strategies a city, developer, or employer could pursue, subsidized transit passes are a proven, high-impact, low-cost tool to encourage alternatives to driving for employees and residents. Jawnt’s platform for unified transit benefits can help your organization offer subsidized transit passes and meet your TDM goals. To learn more, visit our website

John Holmes

The Jawnt blog

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