Chicago launches PPP for transit payment system

The Chicago Transit Authority, the second largest mass transit agency in the US, is looking for private sector partners to fund capital expenditures for an open fare payment system for its 2,222 buses and 8 subway lines. The winning bidder may be given the exclusive right to collect money from the CTA’s 500,000 annual patrons.

The Chicago Transit Authority (CTA) is seeking an exclusive private sector partner to implement a new fare collection technology on its 2,222 buses and 8 subway lines.

The second largest mass transit agency in the US after New York, CTA is now soliciting proposals from prospective partners to provide the new technology in a public-private partnership (PPP) structure.

The technology, known as an open fare system, would move CTA riders from using agency-issued transit currency, such as the Chicago Card Plus, to open or standardised methods of payment, such as contact-less credit cards, debit cards and prepaid cards.

“With this new system, customers would benefit from the faster boarding times and the ease of use as nearly all fare transactions would be touch-and-go,” said Carole Brown, chairman of the Chicago Transit Board, in a statement.

CTA: in the market for a
fare upgrade

The CTA would not be the first transit agency in the US to implement such a programme but, with an annual ridership of more than 500,000, it would almost certainly be the largest project of its kind to date. Metropolitan transit agencies in New York, Los Angeles and San Francisco have each carried out open fare pilot programmes on parts of their transportation networks, according to a 12 August CTA board meeting presentation. And in Salt Lake City, the Utah Transit Authority recently awarded a contract to enable simplified electronic fare collection on its system.

In New York, the Metropolitan Transportation Agency partnered with credit card providers MasterCard and Citi for its pilot implementation of an open fare system. The Utah Transit Authority chose telecommunications giant AT&T as its partner for the fare system.

It is unclear how the CTA would structure the PPP, but the board meeting presentation mentions that the CTA will seek to access private capital to fund the expenditures necessary to implement the new system. Additionally, the CTA is also prepared to give the provider the exclusive right to service all the customers using the system once it is implemented, according to the request for proposals (RFP).

The winning bidder may also be given the opportunity to implement open fare billing regionally. Chicago’s Regional Transit Authority recently adopted a resolution calling for the implementation of an open fare system across all three transportation networks it oversees. This includes Pace buses and Metra commuter rail in addition to the CTA.

Expressions of interest and outlines of plans for the open fare system implementation are due 26 October. Binding proposals are tentatively scheduled to be due in May 2010.

William Blair & Company is CTA’s lead financial advisor on the deal. The firm also advised the city of Chicago on both of its parking transactions: the $563 million long-term lease of its underground parking garages in Grant and Millennium Parks and the $1.15 billion long-term lease of its on-ground parking meter system.

Consulting firm Peralta Garcia Solutions is serving as the co-financial advisor on the deal.