The Philadelphia Story

When Joseph Casey took over as general manager of the Southeastern Pennsylvania Transportation Authority (SEPTA) in 2008, he knew there was a big challenge in front of him.

Equipment and buildings across the system had been left in shambles from years of neglect, customer satisfaction surveys showed riders were not pleased with the overall service they were getting and budget dollars were scare. He knew something needed to be done immediately in order to save one of the largest and oldest transit systems in the U.S. and rebuild it as a strong, dependable system to serve one of the most populous regions of the country.

“We’ve been getting better press, but a lot of it has to do with getting some of the naysayers back on board,” Casey said. “We brought them on board early to show them why you should care about transit and that transparency has really benefitted us and improved our credentials.”

SEPTA is the sixth largest transit agency in the U.S., with more than 1.2 million passenger trips made per day, using trolleys, buses, subways, El trains and regional rail lines, which were all part of old transit agencies and rail companies that went out of business then formed into one authority between 1964 and 1983. While other big city systems are similar to SEPTA, leaders note it’s the only agency that directly operates all modes of transport by itself.

However, SEPTA also has an unsavory claim to fame — its age.

“We’re a legacy transit system and we get kind of upset when we here some of the other agencies say they’re a legacy system,” said Jeffrey Knueppel, , deputy general manager of operations and EM&C divisions of SEPTA . “I mean we go way back.”

Kneuppel said many of SEPTA’s assets date back to the early 1900’s. Some bridges running rail date back to 1882, catenary from 1915 is still in use and at some of the electrical substation Westinghouse equipment with patent dates of 1929 are still pumping electricity. Rail lines also run on different tracks as well. One line has trolley gauge track, while others run regular gauge and others are under-running third rail.

And because SEPTA was formed from old agencies that went bankrupt, Knueppel said service had been deferred for years before SEPTA even took over the assets.

Because of the age of its assets, SEPTA leaders said achieving a state of good repair was a core business goal put in place even before President Barack Obama’s “Fix It First” decree because despite rising ridership, they can’t expand service.

“How do you put an extension on your house when your roof is leaking,” Knueppel said.

An Immediate need of repair

In the Center City area of Philadelphia, city workers are constructing the Dliworth Plaza, a 120,571 square feet public area with green space near city hall, which SEPTA officials have described as a “mini” version Millennium Park in Chicago. Elevators are being installed as part of the project to provide ADA access to the subway station below and a grand entrance will be constructed as well to the station.

However, once the project is competed in 2014, people who leave the beautiful green space and new entrance below will then be greeted by a subway station that hasn’t been updated in 90 years.

And despite a yearn by SEPTA leaders to get the construction to extend deeper into the subway station and make updates where they’re direly needed — especially given 70 percent of those who work in the Center City commute via transit — the money isn’t there.

“This was a very, very expensive project,” Knueppel said. “And we’re not whining here, but we’re saying one of our biggest issues is capital funding. We’re going to have this beautiful grand entrance, but downstairs we have this. We’ve worked with the Center City District to make this entrance nice, but we wish we could go a little further in.”

SEPTA leaders said there’s plenty of work that could be done at the city hall station and they’re trying to get it done. Efforts are underway to revitalize the area and open up shops that closed long ago, but Kawasaki train cars dating from the 1980’s continue running in the subway, while the walls of the stations deteriorate. And the ceiling of the station is actually the floor of city hall itself.

To make matters worse, the station is used by the infrequent riders who use the system to get to the AT&T Sports Complex, souring their opinion of SEPTA given the shabby state of the station.

“When you have your infrequent riders, you want to be able to show off your good stuff,” Jerri Williams, director of SEPTA media relations said.

Although SEPTA is seeing a 23-year high in ridership, the capital funding available has dropped off significantly due to the inability of state leaders to implement a funding mechanism for transit, such as placing tolls on I-80, causing a $100 million drop in capital funds for SEPTA, which is a 15-year low.

Knueppel said in terms of bringing the system into a state of good repair it was estimated at $4.7 billion in 2011 dollars. In order to eliminate the backlog in a 20-year timeframe, $658 million per year would need to be allocated to capital projects. In order to keep the backlog of work at its current level, $329 million per year would need to be spent.

SEPTA currently spends $200 million per year on capital projects.

Knueppel said SEPTA’s chief engineering officer of safety even has the chance of replacing every single signal system on the property during the course of his career.

“As crazy as it is, we saved the transformers from one of our substations. We saved the parts from 1931,” he said. “Because the Reading system is a one of a kind system, so we had to save a transformer from 1931.”

Despite the age issues, Knueppel said there are no speed restrictions due to track conditions within SEPTA, with the exception of one portion of the Norristown line. The speed restriction is due to a 3000 feet long viaduct built in 1912 in need of structural and paint repairs. Due to the lack of capital funds, SEPTA will only have enough money to replace the timbers.

Knueppel said SEPTA won’t run anything that isn’t safe, but it’s getting harder to do so. One viaduct on the regional rail line he said was closed by Conrail before SEPTA took it over due to safety concerns, but it was reopened after work was performed in 1984 to keep it open another 25 years. The viaduct is still operating with those same repairs in place.

“It’s safe and we do a lot of things to it, but we wish we could replace it,” Knueppel said. “This was designed for very light steam locomotives.”

Rebuilding a giant

SEPTA has a lot of needs in terms of repairs, but if it's modernized, Philadelphia could have a world class transit system. 

“One of the things is look at our rail system. It’s very extensive and in that this region was very blessed to have a very large transit infrastructure in place,” said Richard Burnfield, CFO and treasurer of SEPTA. “When you compare Philadelphia to other cities, they’re spending billions of dollars to build what we already have. Our challenge is to fix it and bring it back to a good state of repair.”

The workhorse of SEPTA is the Market-Frankford Line running west-to-east through the heart of the city. Part El, part subway, the line dates back to the early 1900s and up until a few years ago, most of the infrastructure along it was almost as old as the line itself. When the agency decided it was time to make upgrades along the line, they started by taking SEPTA’s maintenance and construction crews and third party crews and placed them all under the leadership of the new infrastructure division in order to get all crews on the same page and at the same meetings in order to complete the rebuild as efficiently as possible.

“It brings a lot of ownership into the capital projects too,” said Robert Lund, assistant general manager of maintenance, engineering and construction for SEPTA. “They realize they’re not just building it and walking away.”

Knueppel said all projects are tackled through a hybrid of in-house workers and third party agencies in order to stretch capital dollars while speeding up the projects and allotting the work to those who can do each job best. When multiple contractors are involved, he said one will not be brought in until their piece of work is ready to do in order to avoid delay claims.

Although SEPTA workers are trying to modernize stations, Knueppel said a lot of the structures are deemed historic, so a careful approach to the projects are necessary, and third party workers skilled in restoration are needed.

Brunfield said SEPTA has been very active in getting a sense from the community in what’s wanted out of the rebuilds and restorations. While planning the Allen Lane station reconstruction on the regional rail line, Burnfield said there was a strong sense of community around the station and once it was restored to its original state, the community has helped to maintain the station.

“That station has really been a sense of pride of an area of the city that was beginning to transition,” he said. “Our investment has really helped that community out.”

But with the lack of capital funding hindering update efforts, SEPTA leaders have had to become more creative in approaching projects. While making improvements to a station in West Philadelphia a couple years ago, Knueppel said SEPTA learned to do a lot more of its work during summer when less people are riding the system and doing longer service shutdowns as opposed to just weekend work to get the project completed quicker and more efficiently. While the renovations were underway, express bus service was offered for riders in order to lessen the inconvenience to them.

During the rebuilding of the stations along the Market-Frankford line, SEPTA also reached out to the community around stations, such as the 60th Street station in West Philadelphia during the design phase. And while looking into a new parking structure at the 69th Street station, the agency is looking into a public-private partnership in order to accomplish the project in a cost efficient manner.

Burnfield said SEPTA’s capital budget is half funded by the federal government while the other half is made up of funds from the commonwealth of Pennsylvania, the city and local counties. Despite the capital funding issues, the agency is helped out by the lottery, which funds senior citizen riders and a 45 to 46 percent cost recovery by the system.

“There used to be a requirement before Act 44 passed in 2007 that SEPTA had to recover 50 percent of costs from the farebox,” Burnfield said. “It’s a challenge, but we still made it. It’s still a challenge, but we’re still well into the 40’s.”

With the leadership’s commitment to replacing items like catenary, Knueppel said the enthusiasm for the job has spread to the workers performing the maintenance and replacements. Since the beginning of the replacement of wire in the past 13 years, workers replaced lines, which hadn’t been replaced since the 1930’s.

Because of that enthusiasm, it has also helped SEPTA keep a very aggressive schedule to replace aging equipment. In one instance, Knueppel said a bus loop project where the loop was reconstructed and traffic reversed onto a highway that had just been rebuilt by the state went from planning to ribbon cutting in just 16 months.

“I often say I have a need for speed,” Knueppel said. “That’s one of the other ways you stretch your capital dollars. No fooling around, OK? You keep moving.”

Because of the speed SEPTA has done its work, Burnfield said it has been easier for the agency to get competitive grants from the Federal Transit Administration because it shows the agency can turn work around quickly. When American Recovery and Reinvestment Act legislation was first floated in order to get people back to work, Knueppel said SEPTA was able to get 54 different contracts out and signed less than one year after the signing of the bill. Design work was started eight weeks before ARRA was signed into law, Knueppel said, on a gamble the legislation would be passed.

“We’ve received some other competitive grants based on our track record,” Burnfield said. “When we tell folks we can get something done, we can show that we mean what we say.”

Knueppel said right now SEPTA is putting together plans to try and extend the life of the Broad Street subway cars to get at least 40 years out of them and identifying other fleets that can have their life extended in order to replace others.

“We always are trying to be frugal,” Knueppel said. “We kind of have to.”

Rebuilding a workforce

When Casey first took over as general manager, one that really stuck out and needed to be changed immediately — customer service. He said SEPTA’s reputation wasn’t good and customer satisfaction scores on surveys “weren’t pretty,” so he raised customer service to an assistant general manager position and hired Kim Scott Heinle to oversee the division.

“You don’t build a house until you have a foundation,” Heinle said. “And that foundation is your internal service, so what we’ve done is ensure that SEPTA people are working to help SEPTA people get their jobs done, so there’s a lot of training, a lot of communication and there’s a lot of putting your money where your mouth is in terms of how you deal with people and building positive relationships so the people on the front line get it because they’re living it now.”

They then put together a business plan to address customer service, focusing on the “four C’s”—courtesy, cleanliness, communication and convenience. Riders immediately paid attention to the effort and Casey said customer satisfaction survey scores jumped from 7.2 to 7.9 by 2010.

Heinle said since taking over the position in 2008, his department has worked with SEPTA employees and operators to handle confrontations and creating social skills. The changes have even trickled down to the hiring process to make sure the best candidates are being hired for the job.

“A little over a decade ago, we used to focus on for hiring bus drivers, people with driving experience. It wasn’t working. We kept getting drivers that hated people,” Heinle said. “Now we flipped it. Now we do a battery of tests to find out whether people we’re talking to have the social skills and ability to interact and relate with people and we’ll teach them how to drive.”

Casey said when he first started on the job he was brought to a restroom facility at a station and shown the condition it was in. Within a month he had people engineering improvements and had the bathroom rebuilt. Now a facilities improvement team has been formed to address issues and let SEPTA employees know the commitment to employees and the agency is real.

“I got a card signed by every operator out there. They just appreciated it so much,” he said. “Now we’re going to each and every employee facility to respond and fix up their facilities because we can’t ask you to treat our customers well unless we treat you well. It’s a snowball.”

Employee recognition programs are also adding a positive effect. Casey has even been innovative and when advertisers can’t sell ads, SEPTA now barters with local businesses to supply gift cards or tickets to sporting events in lieu of cash payments and the items are then given to employees being recognized for their work.

Employees are also highly encouraged to be proactive in addressing issues that may arise with riders in order to address them before they get out of control. Employees are told they’re the “customer intelligence agency,” so they can detect issues and alert supervisors if something is brewing.

“Quite frankly, it used to be that people came in, they got their job, they went to the depot, worked 30 years, came back, got their retirement plate and that was their connection to SEPTA,” Casey said. “Now it’s more than that.”

From archaic to avant-garde

Years of strapped budgets have led to antiquated equipment throughout SEPTA, but it has also provided benefits now that leaders are looking to take it into the next generation. In 2011, SEPTA awarded a contract to ACS to design a new open fare payment system. John McGee, chief officer of new payment technologies, said SEPTA hadn’t spent any money on fare payment collection for years and while the current system works well, it’s too rigid and not customer friendly.

While some agencies began to upgrade their payment systems years ago, McGee said it’s better they waited because those upgrades would’ve been outdated already.

“It’s probably something we couldn’t have done a couple of years ago. The reason is we needed a very strong communication system to get this to work,” McGee said. “One of the issues Salt Lake City has is because where they sit in the basin, even today they don’t have excellent cell coverage and as a result real time is a problem. For us, we have excellent cell coverage so all transactions will be real time, so someone can walk into a 7/11 and decides to walk out with a gift card they purchased there, they’ll be able to immediately use that to pay for transit.”

With the changes to fare collection, McGee said it’s expected to improve the impression people have of the transit system. Right now people meet gatekeepers at stations who are behind bulletproof glass and can’t easily communicate with the public, but with the new system, those gatekeeper roles will be changed as zone offices will be set up to monitor stations via video and provide customer support by phone.

McGee said 10 percent of SEPTA customers currently pay cash, but that number is expected to drop to five percent after the implementation of the new open fare payment system. The system will also offer a fare card to riders who don’t possess a contactless credit card or phone, which will act like a regular debit card, but no fees will be assessed if it’s only used for transit.

However, about 30 percent of the population is unbanked, so McGee said they have to go to check cashers where they pay extraordinary fees and the use of the SEPTA card for general purpose use will provide a better option.

“When shopping, we’ll be offering them an alternative debit card that’s probably the lowest cost around and that’s an advantage for everyone,” he said.

While other agencies have been implementing are in the process of implementing open payment systems, SEPTA didn’t have the funds to do it themselves, so Casey said it’s being paid for with a low interest loan, which will have to be repaid within five years. Casey said it’s expected to produce economies, such as the elimination of paper transfers, less staffing needs and third party administration of the system to help pay for itself.

The system will also have riders tap out, allowing the agency to set up zone fares and charge more for longer trips.

“Will we turn 100 percent in five years? I don’t think so, but we’ll have a major portion of it through those economies,” he said.

Green giant

Philadelphia Mayor Michael Nutter has made a commitment to sustainability because he wants the region to be the cleanest and greenest in North America. Transit inherently has a positive environmental impact, so Casey said the call for sustainability was a natural fit so it was elevated in SEPTA’s business plan.

“Sustainability for SEPTA is really about business sense,” said Erik Johanson, strategy and sustainability planner for SEPTA. It’s about making our business more sustainable by improving our operating performance and it also improves our environmental sustainability.”

Part of the sustainability commitment was the purchase of 500 hybrid buses, replacing one-third of SEPTA’s bus fleet. Johanson said the buses were purchased with the environment in mind, but they also save 40 percent in fuel costs compared to diesel buses, which saves the agency tens of thousands of dollars each year. The buses will pay back within eight to 10 years, reduce maintenance costs and they were purchased with a federal grant so no additional SEPTA investment was required.

SEPTA’s Fox Chase rail station was the first in the country to become a LEED silver certified station. And in 2012, the agency became the first on the east coast to be given a gold recognition for sustainability by the American Public Transportation Association (APTA).

The agency’s headquarters has even earned an Energy Star because it harvests all storm water and energy despite running on a shoestring budget because simple changes like moving the cleaning crews to the daytime shift reduced energy consumption.

The agency is also partnering with a free library to offer digital libraries at train stations where riders can scan books and podcasts into their phones. And to combat the food desert issue, Casey said SEPTA has partnered with a local food trust to allow them to reach out to riders at stations.

“This resonates very well with the younger generation,” Casey said. “They understand how transit is a green industry, but our commitment extends beyond that and I think that resonates very well with our riders.”

Means to an end

With a commitment to rebuilding SEPTA and making improvements across the board, leaders are already seeing their efforts pay off in a big way. Energy savings from new equipment and modernization of stations has freed up more money to start plans for other capital projects and targeted investments into recent projects has led to increases of ridership in recent years, with more than 39 million boarding SEPTA last year.

“Our dependability is our strong point,” Knueppel said. “We keep it moving.”

Rider Ennis Suttles, of Philadelphia, was aboard the Market-Frankford line when he reached out to Knueppel to thank him for the job SEPTA does in serving its customers. Suttles said he has rode transit systems in other major cities, but none of them match the ease of use SEPTA has.

“Hands down it’s the best,” Suttles said. “You just get on and you’re there.”

One third of SEPTA’s rail fleet was recently replaced with Silverliner V cars. Other Silverliner IV cars in service are from the 1970’s while Silverliner II and III cars were getting retired just shy of 50 years of service in 2012. While the agency wants to upgrade the rest of its fleet, Knueppel said the new sets have already improved on time performance dramatically. Performance was 95 percent during March and on one weekday that month, it reached 99 percent.

When SEPTA got the new Silverliner V vehicles, it also unwittingly became the first rail operator in the U.S. to have seats designed to meet new safety standards.

Gene Germaine, director of business development for Kustom Seating, said after the company got the contact to provide seats to Hyundai Rotem for the trains after another contract had fallen through with a Chinese seat manufacturer, Kustom Seating provided a new design set to meet safety requirements despite the standard not being in place at the time.

“We went ahead knowing the signoff on the new standards was inevitable,” Germaine said. “No one really talked about it, but we knew about so we just designed and built it.”

Andrew Gillespie, chief engineer of the engineering, maintenance and construction division said the new trains automatically transfer diagnostic information to maintenance in order to alert of any issues. The new regional trains also brings with Wi-Fi incorporated, which allows for geographically specific messages to riders dependent on where the train is at. It also opens up potential to do specific advertisements for riders.

Despite issues obtaining capital funding, SEPTA has been careful in managing its money to keep the system moving. While many agencies let employees gradually come back once they’re downsized, Burnfield said SEPTA never lets those employee spots come back. Each year every route is ranked on performance so adjustments can be made to improve them to make it the best system possible. Burnfield said the agency’s budget has also been balanced for 13 straight years and has been audited numerous times.

“The worst thing they could find is that our board members, we give them lunch twice a month and on one invoice it said ‘gourmet potato chips,’ and they called us out on buying gourmet potato chips, so I get Pennsylvania Herr’s potato chips now for our unpaid board,” Burnfield said. “If that’s the worst thing you can find about SEPTA, then I’m very proud about what we’ve done.”

It may seem like a daunting task to meet the challenges presented to SEPTA, but leaders said they keep a positive attitude and remind people the system is a vital economic engine to the region.

Knueppel said SEPTA has proven itself a good steward of taxpayer dollars as well and shown it can operate efficiently despite have 1,000 less employees than in the 1990’s while having more robust ridership.

“Right now as you can see our future is threatened despite our best efforts,” he said. “We’re spending $200 million per year to get rid of the backlog and we’re still $130 million short of keeping ourselves at the same backlog level, but we’re ready to go and the stimulus really showed that. Right now we have $500 million in projects that we consider shovel ready and consider ready to go in case federal or state funds increase.”