Transit Ordinance
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FAQs for Cities and Municipalities Considering a Transit Benefit Ordinance
If you are considering adopting a similar or identical transit benefit ordinance to the ones that have already been legislated, the following Frequently Asked Questions may help.
What do transit benefit ordinance do?
It requires employers of a certain size (e.g., 20 or more employees in San Francisco, and 10 or more employees in Richmond and Berkeley) to offer a transit benefit program. This includes part-time employees working an average of 10 hours a week or more. The program can be either, 1) a pre-tax plan [this option saves employees income taxes, while saving employers payroll taxes], 2) a transit subsidy of a minimum amount, or 3) an employer-provided shuttle service.
Why go to the trouble of creating this ordinance?
This is a rare opportunity to create environmental legislation that is supported by both the business community and city government. It also benefits local transit agencies struggling with budget cuts, as well as reducing traffic congestion and CO2 emission.
Why does it have the support of the business community?
The business community understands that they need to show that they have a commitment to the environment. They also want to show support for a program that has cost savings built in through a reduction of payroll taxes--and not be another unfunded mandate. Employers do not pay the 9% payroll tax on all funds employees set aside through the pre-tax program. It also offers other perks like the potential to free up street parking for customers. To quote the San Francisco Chamber of Commerce: “While the Chamber generally opposes mandates on business, the city’s newest requirement that businesses with 20 or more employees working in San Francisco establish a program to promote the use of public transit can be an economic benefit. In addition to helping to reduce greenhouse gas emissions by getting people out of cars and onto transit, the law can be a money-saver for businesses.” The Chamber should know—it has offered transit benefits for over 10 years.
Which key business groups have shown their support?
In all jurisdictions that have passed ordinances, each of their chambers of commerce have voiced support (see letters of support). Additionally, there are merchant associations (e.g., The Downtown Business Association in Berkeley (http://www.downtownberkeley.org/) , The Union Square Merchants Association in San Francisco). Other business groups include BOMA SF (a leading voice for the local commercial real estate industry http://www.bomasf.org/); the Golden Gate Restaurant Association (www.ggra.org), and Transportation Management Association of San Francisco (http://www.tmasfconnects.org/index.php).
What made the program rollout successful?
Various cities have offered a series of employer workshops--both live and via webinar--to give employers the information they needed to understand the details and create a program. The workshops were vendor-neutral and lasted about one hour. One city sent a one page flyer with their business license renewals. Various chambers have also given workshops for their members and material was posted on business association websites Cities have created webpages within their city sites, and the SF Dept. of the Environment created a separate website to focused on the ordinance, including a list of vendors http://www.commuterbenefits.org/.
What is the key element toward getting an ordinance passed in a municipality?
There needs to be a champion who is either an elected official (council member, alderman, etc) or someone well connected within the entity. Ideally there will be a department that can manage public information and compliance. Many cities have environmental departments or green business programs.
Are there any elements of the ordinance that might be less applicable to other cities or municipalities?
The third option given to employers—transportation furnished by the employer at no cost—will most likely be not realistic for most employers. And for those for whom it is realistic, they will still likely offer the pre-tax as well.
What have been the key arguments against the ordinance?
The most common argument relates to a concern that businesses do not have the money or the time to manage a transit benefit. The 9% average payroll tax savings pays for a third party benefits administrator to usually more than pays for the cost of managing the program. As soon as this point is understood, opposition begins to fade.
How is the enforcement handled?
It varies. Some cities have passed long grace periods to minimize the number of employers that do find out about the program. Most cities have small fines in place. In San Francisco it is partially dependent on anonymous complaint calls from employees alerting the city through a hotline. They also send out a compliance form to businesses. Some cities also manage “311” numbers into which the hotline can be integrated. This would mean that no funds need to be set aside to pay for tracking/follow up. San Francisco monitors the program through its Department of the Environment. The city has also created posters for employee break rooms. In Berkeley the Department of Transportation manages the program.
What amount of city staff time is involved in ensuring compliance?
This mainly depends on the level of enforcement the city or municipality elects. Two cities are considering adding a check-box to their business license renewal form that asks for confirmation that a transit benefit program is in place. The business license department would have material available to hand out to businesses. One city is considering not approving business license renewals unless a program is in place. San Francisco’s enforcement process does require more staff time, but also results in a higher level of compliance. They estimate that with a city the size of San Francisco and the level of enforcement they employ, it requires one FTE position. This includes educational outreach. They believe that the resulting reduction in VMT and the increase use of transit justifies the staff time involved.
What else can employers do to encourage smart commute options?
In each of the cities with ordinances, employers have the option to sign up for a free guaranteed ride home program. Employees who use the bus, train, ferry, vanpool, carpool, bicycles, or walk to work on the day of an unexpected emergency can take a taxi or rental car, or other form of transportation home to deal with the crisis, and the program will reimburse them.