MTC issues phase 1 draft report of financial efficiency review of area transit agencies

The Metropolitan Transportation Commission (MTC) has issued the draft report for Phase 1 of a two-phase financial efficiency review  (FER) being conducted of four of the Bay Area’s largest transit agencies — Alameda-Contra Costa Transit District (AC Transit), Bay Area Rapid Transit (BART), Caltrain and San Francisco Municipal Transportation Agency (SFMTA)—as required by state Senate Bill 63 (SB 63). The review is being conducted by the newly formed FER Independent Oversight Committee.

Also known as the Connect Bay Area Act, SB 63 established a Public Transit Revenue Measure District, covering Alameda, Contra Costa, San Francisco, San Mateo and Santa Clara, Calif., counties, placing a regional sales tax measure on the November 2026 ballot in these counties to raise new revenue for public transit, upgrade riders’ travel experiences and fund other transportation improvements.

If the proposed measure qualifies for the ballot and is approved by voters, funds captured from the tax would be allocated to AC Transit, BART, Caltrain and SFMTA to support operations and prevent major service cuts. Funding would also be transferred to other Bay Area transportation agencies—including the Alameda County Transportation Commission, the Contra Costa Transportation Agency, the San Mateo County Transit District and the Santa Clara Valley Transportation Authority (VTA)—for continued support of those transportation purposes.

Phase 1 of the review covers cost-saving and revenue-raising measures taken by the transit agencies from July 2019 through June 2025. This included agency responses to the economic pressures and changing travel patterns resulting from the COVID-19 pandemic; describes near-term opportunities for the agencies to increase and improve service with existing resources; and identifies real estate development opportunities that could increase ridership and revenues in the coming years.

The draft FER report shows the four agencies have made more than $1 billion in operating cost savings since 2020, namely through workforce adjustments, service reductions and revamped investment policies.

The draft report also suggests numerous near-term strategies that each agency could implement for further efficiency. These include:

• Reconsidering the timeline for a transition to zero-emission bus fleets.
• Reducing barriers to fare payment for new customers through improved employer- and institution-sponsored transit pass programs.
• Assessing scheduling efficiencies.
• Implementing more transit-priority projects on local streets to provide faster and more reliable speeds for buses and streetcars.
• Boosting non-farebox revenues via parking fees, leasing fiber and other communications assets and capturing regenerative braking credits—compensation agencies can receive for feeding electricity generated during braking back to the power grid. 

The report recommends that transit agencies track and notify of any additional cost-saving or revenue-enhancing measures over time and the financial impact of any implemented strategies using the same framework used in the Phase 1 analysis. Additionally, the report recommends that MTC create a uniform approach for reporting on transit agencies’ financial conditions and tracking progress on early action strategies to support consistent and transparent communication with decision-makers and the public. 

The MTC says that the Phase 1 draft report provides an inventory that showcases the transit agencies’ opportunities to capitalize on their real estate assets—including through joint ventures with development firms—to deliver more long-term value through lease revenue and ridership growth.

MTC notes that it will undertake a second phase of analysis if voters approve an SB 63-enabled regional transit sales tax measure in November 2026. It further notes this multi-year phase requires a deeper evaluation of cost structures and strategies to support financial sustainability. A second phase also will be subject to review and final approval of the FER Independent Oversight Committee.

The Public Transit Revenue Measure District, which was established by SB 63 to administer the potential tax revenue, determined in January 2026 that it would not pursue a measure directly. However, an independent signature-gathering effort is underway to place the measure on the ballot via a petition.