Transportation Management Associations: A Reappraisal Transportation Management Associations: A Reappraisal

This article reviews the results of eight national transportation management association (TMA) surveys conducted between 1989 and 2003 using meta-analytical techniques. TMAs became popular as vehicles for dealing with traffic congestion and related problems in the late 1980s. Despite their initial popularity, however, many TMAs struggled in the 1990s, and by 2002 almost half of all TMAs formed in previous years had disappeared. Median TMA annual budgets bottomed out in 1991, but have since rebounded to a new high in 2003. TMAs today are more diverse in terms of organizational structure, offer a wider variety of products and services, and have better financial security. With higher gasoline prices and a heightened awareness of the security issues related to foreign oil dependence, the market for TMA programs and services seems likely to grow, if perhaps at a modest pace, during the foreseeable future. Introduction Transportation management associations (TMAs) first appeared on the scene in the late 970s or early 980s, although it was not until the late 980s that these were consistently labeled as such. The boom years of the late 980s and early 990s were followed by a time of challenge, during which many formative and operational TMAs ceased to exist. In the mid980s, TMAs were viewed by some as a form of panacea, destined to solve not only traffic congestion, but many other societal ills as well (Leinberger and Lockwood 986). Journal of Public Transportation, Vol. 10, No. 4, 2007 Elsewhere, developers, employers, and local governments have created TMAs to find solutions to transportation problems. Besides organizing ridesharing and vanpools, promoting staggered work hours, and lobbying for government-funded capital improvements, some TMAs are expanding their role into childcare, private police, and other services for their geographic areas. It is imaginable that TMAs, born of the traffic-congestion crisis, could mature into an echelon of government well-suited to the realities of our emerging urban villages. The reality may have been a little harsher than this early testimonial might otherwise suggest, but TMAs continue to persevere, and many are thriving in the first decade of the st century. The purpose of this article is to review the historical development of TMAs over the critical period of their first rise to prominence, to shed light on their prospects for growth, change, and innovation in the coming years. One broadly inclusive definition of a TMA is “an organized group applying carefully selected approaches to facilitating the movement of people and goods within an area” (Hendricks 004). Individual TMAs may vary in terms of their size and location, organization and management, revenues and expenses, membership and participation, and products and services offered. Alternative TMA labels include transportation management organization (TMO), transportation management initiative (TMI), and transportation management district (TMD), among others, although none of these has achieved the widespread popularity of the TMA acronym. To the extent that these alternative TMA designations represent real differences, TMOs are more action-oriented than TMAs, TMIs refer to TMA start-ups, and TMDs refer to special purpose tax districts and/or operating areas. Data Most of the data used to inform this article derive from eight national TMA studies conducted over a 4-year time period ( 989 to 003). These are the most complete data available on TMA planning, development, and implementation, and the most current as well: . 989: The Association for Commuter Transportation (ACT) compiled its first comprehensive national TMA directory in 989 (ACT 989). Ferguson ( 990) used these data to show that TMA characteristics varied significantly, depending on who initiated the TMA. Transportation Management Associations: A Reappraisal 3 . 990: The Urban Land Institute (ULI) evaluated transportation management through partnerships, with a particular focus on TMAs, between 986 and 990 (Dunphy and Lin 990). Their report focused especially on the evaluation of TMA results, measured in terms of observed changes in travel behavior. 3. 99 : The Georgia Institute of Technology conducted a national TMA survey under a grant from the Urban Mass Transportation Administration in 99 (Ferguson, Ross, and Meyer 993). Ferguson ( 997a) used these data to show how private sector participation affected and was affected by key TMA characteristics. 4. 993: Commuter Transportation Services, Inc. (CTS) conducted a national TMA survey in 993 under the auspices of ACT, focusing on policies and procedures, especially management and personnel issues (CTS 993). Ferguson and Davidson ( 995) compared these national TMA survey results with those from several previous studies. 5. 995: ACT compiled a new national TMA directory in 995 (ACT 995). This directory was a revised and improved version of ACT ( 989). 6. 998: UrbanTrans Consultants, Inc. (UrbanTrans) conducted a national TMA survey under the auspices of ACT in 998 (UrbanTrans 998). This survey was a revised version of the one CTS conducted in 993. The results were summarized in an appendix of ACT ( 00 ). 7. 00 : ETF Associates (ETF) conducted a national TMA internet search in 00 . The purpose of this study was to identify the survival characteristics of all previously identified TMAs. 8. 003: The Center for Urban Transportation Research (CUTR) at the University of South Florida conducted a national TMA survey under the auspices of ACT in 003 (Hendricks 004). This survey was a revised and expanded version of the ones previously conducted in 993 and 998. The 989 and 995 data are closely related, as are the 993, 998, and 003 data. The 990, 99 , and 00 data are unique unto themselves. The 995 data have never before been used for scholarly research. Ferguson and Davidson ( 995) gave a cursory overview of several previous TMA studies, but focused mainly on comparing the 99 and 993 data. Hendricks ( 004) compared selected survey results from the 993, 998, and 003 studies. This article seeks to provide a more Journal of Public Transportation, Vol. 10, No. 4, 2007 4 comprehensive overview of survey results from all eight studies using a variety of formal and informal meta-analytical techniques (Hunter 98 ). Organization ACT ( 989) identified 5 TMAs nationally, of which many presumably were still in the earliest formative stage at the time the directory was compiled. Dunphy and Lin ( 990) identified 7 TMAs nationally between 986 and 990, of which only 34 were operational at the time. Ferguson, Meyer and Ross ( 993) identified 0 TMAs nationally in 99 , of which 64 responded to their survey. CTS ( 993) identified 36 TMAs in 993, of which 5 responded to their survey. ACT ( 995) identified 78 TMAs nationally in 995. UrbanTrans ( 998) identified 35 TMAs nationally in 998, of which 8 responded to their survey. Hendricks ( 004) identified 46 TMAs nationally in 003, of which 97 responded to her survey. It would appear that the number of TMAs in the United States grew rapidly from 989 to 99 , but leveled off sometime shortly thereafter. ETF Associates conducted a national search for TMAs in 00 (ETF 00 ), seeking answers to four simple questions: . How many TMAs are there? . In what year were they formed? 3. In what year were they disbanded (if relevant)? 4. Does the TMA have a website (if it currently exists)? ETF ( 00 ) identified a total of 37 active TMAs in existence in 00 , of which more than 00 currently maintained their own websites. Although the number of TMAs in existence in 00 did not rise much above the number previously identified in 99 , it would appear that there were more “fully operational” TMAs in 00 than in previous years. ETF ( 00 ) identified a grand total of 49 past and present TMAs based on information derived from various national studies, as well as personal contacts with industry professionals. Of these, TMAs were confirmed no longer to exist. In fact, many of these dissolved TMAs never really got off the ground in the first place, having failed to get past the earliest formative stages of development. This information was difficult but not impossible to ascertain, despite the short institutional memory frequently associated with failed public policy experiments. Transportation Management Associations: A Reappraisal 5 Year of formation was identified for all 49 of the TMAs included in ETF ( 00 ), with multiple data points available in many cases. Four previous studies provided this information for between 34 and 78 TMAs each, yielding a total of 5 data points representing 3 different TMAs (Dunphy and Lin 990; Ferguson, Ross, and Meyer 993; ACT 995; UrbanTrans 998). Year of formation was identified for an additional 8 TMAs from their websites and/or Internet correspondence. Year of formation was interpolated for the remaining 45 TMAs based on other information. Whereas definitive information was available for the year in which 04 of the 49 TMAs identified by ETF ( 00 ) were formed, the year of dissolution could be identified for only 3 of the TMAs that no longer existed. National trends in TMA formation are illustrated in Figure . As can be seen from this five-year moving average, the peak year for TMA formation was 990. The number of TMAs formed each year has declined steadily since then, although the number of active TMAs formed each year has remained relatively stable for more than a decade. It would appear that overall stability in the total number of TMAs identified nationally in previous studies dating back to 993 is the result of two related factors: . The number of TMAs formed each year has declined. . The number of TMAs disbanded (or which failed to get past the formative stage) has declined even more. Figure 1. TMA Formation, 1980-2000 Journal of Public Transportation, Vol. 10, No. 4, 2007 6 The overall result is stability in the total number of TMAs in existence. This implies that there is still some turnover, but that the rate of turnover has decreased, the average age of TMAs has increased, and the percentage of TMAs that are “fully operational” is higher today than it was 0 or 5 years ago. TMA formation varies across space as well as time. Western states, especially California, were early leaders in the formation of TMAs (Figure ). Southern and midwestern states entered the field somewhat later. Although California continues to have more TMAs than any other single state, the regional distribution of TMAs is today more even than at any previous time. Figure 2. TMA Distribution 1990-2002 TMA formation also varies by metropolitan location. Of the 49 TMAs identified by ETF ( 00 ), 3 (93%) were located in the 48 standard metropolitan statistical areas with populations exceeding ,000,000. These same metropolitan areas account for “only” 54 percent of the total U.S. population, demonstrating that TMAs are primarily a phenomenon of large urban areas. Interestingly, of the 8 remaining TMAs located in rural and small urban areas (generally speaking the latter), 3 were still in existence in 00 , demonstrating that these out-of-theTransportation Management Associations: A Reappraisal 7 ordinary small urban TMAs had a much stronger likelihood of surviving than did their large urban counterparts. Older TMAs are significantly more likely than newer ones to use technology creatively (maintain websites, provide online matching, etc.), to be insured against liability damages, and to be incorporated as a nonprofit organization. Older TMAs have slightly larger governing boards with a somewhat higher percentage of voting members as well (UrbanTrans 998). There are clear advantages to survival for a longer period of time, so one might well ask what caused so many TMAs to fail as innovative public/private partnerships in transportation in the early 990s. Finance One possible explanation for the demise of so many TMAs seemingly at the height of their popularity is financing, or the lack thereof. TMAs in 989 had a median annual budget of $ 45,000, which fell by 99 to $ 0,000, only to rise again to a new high of more than $ 00,000 in 003. Adjusted for inflation, TMA financial resources fell in the early 990s, and were only restored to their 989 level in 003 (Figure 3). A large number of TMAs entered the market in the early 990s, starting out with limited resources, and attempted to build a secure financial base. Many would not succeed. Figure 3. TMA Finance, 1989-2003 Journal of Public Transportation, Vol. 10, No. 4, 2007 8 In 99 , TMAs estimated their median annual start-up budget at $80,000, their median current budget at $ 0,000, and their median anticipated 995 budget at $ 75,000 (Ferguson, Ross, and Meyer 993). The observed increase in TMA budgets between 99 and 993 was identified by some as a positive sign (Ferguson and Davidson 995). The median budget figures for both 995 and 998 remained well below those projected in 99 for 995, however, suggesting that many TMAs continued to struggle in their efforts to achieve financial security long after the crunch in 99 had passed. Only in 003 was there a significant increase in TMA financial resources over previous years, and then only in nominal terms. California TMAs differed considerably from their counterparts in other states in 99 . California TMAs in 99 projected that membership dues would increase considerably from 0 percent at start-up to 49 percent in 995, private grants would increase modestly from 3 percent to 40 percent, while government grants would decline precipitously from 50 percent to only 5 percent. In contrast to these major anticipated changes in California TMA financing, TMAs in other states in 99 projected that membership dues would increase modestly from 0 percent at start-up to 4 percent in 995, private grants would fall slightly from percent to 4 percent, and government grants would fall even more slightly from 63 percent to 57 percent (Ferguson, Ross, and Meyer 993). Of 66 California TMAs that have been formed at one time or another, only 9 remained active in 00 , producing a rather imposing 7 percent overall failure rate. Only the Midwest joined California with a failure rate exceeding half (53%). The average failure rate in all other parts of the country was only about 30 percent (ETF 00 ). Clearly, it would seem that California TMAs suffered a much higher mortality rate than those located in other parts of the country. To the extent that financial insolvency was a primary factor in the demise of TMAs generally, it would seem that California’s approach to TMA financing, eschewing government grants in favor of private grants and voluntary membership dues, may have been at least partially to blame. Many failed California TMA start-ups (as well as some of the more successful ones) were funded initially by Caltrans seed grants that were limited in duration to three years maximum (Diggins and Schreffler 99 ). California TMAs in 998 received more revenue from membership dues and less from grants than did those in any other region, showing that their 99 financial objectives were at least partially met. Northeastern and southern TMAs had the most resources in 998, followed by California TMAs, those in other western states, and those in the Midwest. Northeastern and southern TMAs spent the Transportation Management Associations: A Reappraisal 9 most money on marketing in 998. Northeastern and California TMAs spent the most money on direct service provision (UrbanTrans 998). What is perhaps most interesting about the information presented in Table is that TMAs that derive a higher percentage of their revenues from membership dues would seem to have a much higher propensity to fail as well. California and midwestern TMAs both derive about 40 percent of their revenues from membership dues. Both of these groups of TMAs are underfunded, at least in relation to northeastern and southern TMAs. Both groups have shown a much higher failure rate than those in other parts of the country. Since membership dues have long been touted by industry pundits as the best and most secure form of long-term TMA funding (Dunphy and Lin 990; Ferguson, Ross, and Meyer 993; Ferguson and Davidson 995), this finding is rather surprising, to say the least. It appears that purely voluntary membership organizations and dues often fail to provide sufficient financial stability for long-term TMA survival. Table 1. TMA Revenues and Expenses by Region, 1998 Other Budget Category Northwest Midwest South West California Office operations $6 , 85 $8 , 50 $86, 54 $5 ,073 $49,39 Marketing amd promotion $46,9 3 $ 5,6 5 $53,808 $ 4,854 $ 4,658 Capital services $ 9, 07 $4 7 $ ,44 $6,563 $ , 00 Other services $3 ,4 7 $ ,04 $ 7,404 $9,79 $3 ,333 Other $ 8, 79 $0 $35,4 3 $ 6,05 $ ,350 Total $198,810 $108,333 $194,231 $108,333 $140,833 Member dues $4 ,93 $4 ,583 $45,643 $ 3,973 $6 ,9 Grants and subsidies $ 43,568 $4 ,4 7 $ 0,07 $58,973 $45,890 Service fees $ ,7 9 $0 $6,4 9 $ 4,73 $809 Developer funding $4,4 7 $0 $ 3,750 $5,357 $ ,0 5 agreements Other $ 8,708 $ 4,333 $6,964 $ 8,393 $3 ,3 6 Total $221,354 $108,333 $192,857 $121,429 $152,941 R ev en ue s Ex pe ns es Journal of Public Transportation, Vol. 10, No. 4, 2007 0 Membership Membership in most TMAs is predicated on the interaction between two clearly separate and distinct principles. First, most TMAs serve a specific geographic location, which may include one or more cities, counties, travel corridors, activity centers, and/or an entire metropolitan region, or some significant part thereof. Second, within any given TMA’s clearly designated service area boundaries, it may seek to recruit members, volunteers or participants from among land owners, developers, employers, employees, residents, local governments, state agencies, transportation providers, and other potentially interested individuals and organizations in either the public or the private sectors. Well over 90 percent of all TMAs have membership programs of some type currently in existence. Service area definitions vary considerably by region (Figure 4). Most northeastern TMAs serve regions or multiple jurisdictions. Most southern TMAs serve CBDs or suburban/fringe activity centers. A plurality of midwestern TMAs serve individual cities or single jurisdictions. Western TMAs are the most diversified in terms of service area characteristics (UrbanTrans 998). Figure 4. TMA Type by Region, 1998 Despite such obvious differences in service area boundary definitions, there are no major differences in the populations served by TMAs in different parts of the country. The median TMA has 5 corporate members and serves a geographic Transportation Management Associations: A Reappraisal area that encompasses 5,000 commuters nationally. This varies from a high of 36 members and 30,000 commuters in the South to a low of 0 members in the Midwest and 6,600 commuters in the West. Although there are some differences among regions in terms of total TMA membership, such differences do not appear to vary systematically based on either service area boundaries or financial characteristics. In 998, 6 percent of all TMA members nationally were businesses, 7 percent government agencies, 8 percent developers, 5 percent nonprofits, and percent residents. These figures varied hardly at all by region. The average TMA reported a net gain of five members in 998, with only two of 6 respondents admitting to an actual net loss in TMA membership during that year. TMAs in the South claimed the greatest market penetration, with 5 percent of the potential market included within their membership, followed by the West at 36 percent. The Northeast and Midwest lagged behind at percent each (UrbanTrans 998). The most popular TMA recruitment strategy in 998 was peer-to-peer contact, which basically entailed using current members to recruit new ones in the private sector (73%), followed by personal letters from the TMA executive director (66%), brochures (56%), cold calls (44%), and governmental or contractual mandates ( 6%) of one kind or another. The single most effective technique in 998 was peer-to-peer contacts (43%), followed by mandates (30%), letters ( 3%) and anything else ( 4%). Clearly, mandates were underutilized as a recruitment device in 998, based on their reported effectiveness (UrbanTrans 998). It would appear that membership is rising for almost all TMAs, at least among those choosing to participate in the 998 national study. TMA membership does not seem to relate to either TMA finance or the propensity of TMAs to succeed or fail, however, at least not in any observably systematic fashion. This suggests that TMA membership, at least by itself, cannot explain either TMA financial success or the survivability of TMAs. This once again seems strange and unexpected, requiring further thought and analysis. Services Membership has its benefits, and it is these benefits that determine the desirability of membership, which is the propensity of individuals or firms to join organizations as members, to maintain their organizational membership in good standing, and to pay their membership dues on a regular and timely basis, if and as required Journal of Public Transportation, Vol. 10, No. 4, 2007 for the continuation of both their membership and any of its associated benefits. In the case of nonprofit organizations, the question of membership benefits can at times become somewhat more obscure to public view. Is membership in a TMA a form of profit-making activity, a charitable contribution to society, a necessary adjunct to other related decisions (such as the location of economic activities across both time and space), all of the above, or none of the above? TMAs may choose to provide specific programs and services to their members, to nonmembers located within their designated service area boundaries, or to others located outside their service area boundaries on a special or case-by-case basis (Ferguson 997a). TMAs may choose to provide particular programs and services directly, indirectly through brokerage or referral, or not at all. TMAs may chose to provide programs and services at cost, at a higher price than cost (as a private firm does to generate profits, or simply to cover indirect overhead in the case of nonprofit organizations), at a lower price than cost (a form of subsidy), at no cost (free of charge, although one could argue that membership dues broadly cover all or at least a portion of related costs), or even at negative cost (in the form of a cash payment, voucher, or other financial instrument that exceeds the out-of-pocket cost to the commuter or other designated beneficiary of the program and/or service). Member services may be distinguished in terms of pricing policy as loss leaders (subsidies), nonprofit (break even), or income producing (profit centers). Most nonprofits, including most TMAs, base their pricing schedules on a cost or subsidy basis, ignoring overhead, treating office and administration expenses as a sunk cost. Subsidies paid to corporate members and their employees are a tangible benefit of TMA membership, a return on the investment of membership fees that have already been paid. Subsidies paid to nonmembers and their employees are nominally free, but may come with strings attached, such as the expectation of future membership, and are thus linked to marketing and recruitment efforts. Subsidies paid to firms and employees outside the designated TMA service area boundary typically include no future expectations whatsoever, and are thus essentially a form of charity (Table ). Prices higher than market rates (or the TMA’s cost basis, whichever is higher) are a form of profit taking, although in the case of indirectly provided services there may be some basis for a modest mark-up to cover TMA costs related to brokerage or referral services, similar to those imposed by travel agencies, for example. Some products and services may not be available at all, either because the TMA does not provide these services, or more generally because these are not provided, are Transportation Management Associations: A Reappraisal 3 not suitable, or are not relevant to the local service area. Membership-based TMAs need not offer any of their products and services to either nonmembers or firms and employees outside their designated service area. If and when TMAs do offer benefits of any kind to nonmembers, it is not necessary for them to employ the same pricing policy. A TMA may exclude any nonmember from receiving a product or service that is available to members, or to offer such products and services to nonmembers at a higher price. The only previous national study to consider direct versus indirect TMA services offered was the 99 Georgia Tech study (Figure 5). The most common type of TMA service offered in 99 was information (e.g., carpool, vanpool, and transit information). The least likely was on-site services, which includes childcare, banking, etc. With the exception of on-site services, which were relatively uncommon in 99 , all services were offered indirectly by between 5 percent and 7 percent of responding TMAs, a limited range of variability that suggests TMAs were more limited by the availability of selections than selective in their choice of indirect services to offer. The 993 CTS, 998 UrbanTrans and 003 CUTR surveys each included a set of related questions about the availability of TMA services to TMA members (regardless of price) and to nonmembers (with or without a nonmember price surcharge). The use of TMA services as a marketing tool (provided to nonmembers at the same price as members) has increased gradually from 38 percent in 993 to 40 percent in 998 and 43 percent in 003. The use of price surcharges to exclude Table 2. TMA Services by Membership, Location, and Fee or Charge Members Non-Members Outside Service Area Fee or Charge Direct Indirect Direct Indirect Direct Indirect Not available Not offered Unavailable Excluded Unavailable Excluded Unavailable (at any price) Higher price Profit Mark-up Profit Mark-up Profit Mark-up Market price Market Broker Market Referral Market Referral (or cost basis) Lower price Subsidy Subsidy Marketing Marketing Charity Charity Free (no charge) Inclusive Inclusive Marketing Marketing Charity Charity Negative price Incentive Incentive Marketing Marketing Charity Charity (cash bonus) Journal of Public Transportation, Vol. 10, No. 4, 2007 4 nonmembers from TMA services (a negative enticement to join the TMA) has fallen from 9 percent in 993 to 0 percent in 998 and 6 percent in 003. The number of TMA services included in each successive ACT survey has grown, and the labels in many cases have changed, sometimes expanding, sometimes contracting, the definition of the specific service in question. Four general types of TMA services are included in all three national ACT TMA surveys. These include marketing and public relations, employer services, commuter services, and parking services. Marketing and public relations include regional and local advocacy and promotional materials and events. These services have declined in importance relatively speaking in recent years, but continue to be among the most popular offered by TMAs (Table 3). Employer services include ETC training, trip reduction plan preparation, site design assistance, and employee surveys. These services have declined slightly as well, with a new service, tax benefit assistance, emerging as the most popular among these in 003. Commuter services have expanded over the years, increasing in both number and relative popularity between 993 and 003. Parking services are the least common type of TMA service, and declined slightly between 998 and 003. Figure 5. TMA Services, 1991 Transportation Management Associations: A Reappraisal 5 Ta bl e 3. T M A M em be rs S er vi ce s, 1 99 320 03 Journal of Public Transportation, Vol. 10, No. 4, 2007 6 Ta bl e 3. T M A M em be rs S er vi ce s, 1 99 320 03 (c on t’d .) Transportation Management Associations: A Reappraisal