HomeMy WebLinkAbout5/20/2025 Item 6g, Horn - Staff Agenda CorrespondenceCity of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: May 20, 2025
TO: Mayor and Council
FROM: Matt Horn, Public Works Director
VIA: Whitney McDonald, City Manager
SUBJECT: ITEM 6g - AUTHORIZE EXECUTION OF OPEN-LOOP PAYMENT
SYSTEM AGREEMENTS AND AN AMENDMENT TO SB 125
COOPERATIVE AGREEMENT WITH SLOCOG FOR REIMBURSEMENT
OF COSTS
Staff received the following question regarding the recommendation to authorize the
execution of agreements to implement an open-loop payment system that will deploy fare
capping technologies. The question is below with staff’s response shown in italics:
1) Can you please provide more explanation of what “fare capping” is and why
the proposed upgrades help provide this service/feature?
Fare capping is a pricing strategy used by transit agencies to ensure that riders
never pay more than a certain amount for rides over a specific period - usually
daily or monthly. It provides the benefits of unlimited rides allowed with a pass
without requiring riders to pay the full upfront cost. Instead of buying a pass in
advance, riders pay per ride. As they continue to ride, the system tracks how much
they've spent using a single bank card. Once they reach a pre-determined cap
(e.g., the cost of a day or month pass), any additional rides during that time period
are free. The cap then resets at the beginning of each new period.
Fare capping provides several important benefits for both public transit riders and
transit agencies. For riders, it ensures fairness and affordability by placing a limit
on how much they can be charged over a day, week, or month—regardless of how
many individual fares they pay. This is especially helpful for low-income riders who
may not be able to afford the upfront cost of a monthly pass but still use transit
frequently. Fare capping encourages greater use of public transportation, as it
removes the pressure to decide in advance whether a pass is worth purchasing.
This approach promotes equity by benefiting both occasional and regular users
and making transit more accessible to everyone.
For transit agencies, fare capping can lead to increased ridership and improved
public perception, as riders view the system as fair, simple, and easy to
understand. It also streamlines operations by reducing the need for physical pass
infrastructure and minimizing cash handling, which can lower administrative costs.
Overall, fare capping supports a more equitable and efficient transit system that
benefits the community as a whole.