Last spring, David Shumway made an unusual proposal to city officials in Redondo Beach and Santa Monica: Issue his American Trolley Lines a business license, and the Arizona-based company would operate a shuttle bus system in each city without public subsidies.
Shumway, who hoped agreements with the two popular beach cities would open the door to the Southern California market, told city officials that he could operate the bus lines at a profit--with revenues coming from fares, charter fees and advertising.
"This is a dream come true," Redondo Beach City Manager Timothy Casey said at the time. "Transit systems are notorious money-losers. If the private sector wants to assume the responsibility, we should let them."
But eight months and hundreds of thousands of dollars later, the private sector is having second thoughts. In fact, Shumway said in an interview this week, the free ride for Redondo Beach and Santa Monica will soon be over.
'Looking for Subsidies'
"I won't stand around and lose money very long," said Shumway, who has been operating two buses, designed to resemble turn-of-the-century trolleys, in each of the cities since the summer. "We are going to start looking for subsidies from cities. If we don't get them, then we won't operate in that city."
While Shumway declined to disclose how much money American Trolley has lost in Redondo Beach and Santa Monica, losses have been serious enough during the first six months of operation to force the company to reevaluate its strategy in Southern California, he said.
"I told the cities that I would do it on my own, but unfortunately we haven't been able to do that," Shumway said. "It has been a good experience, but, quite candidly, the costs have exceeded our revenues."
Much of the problem has been the so-called "California factor," Shumway said. Costs are higher in California than in Arizona--registering a bus for example, costs 40% more, he said--and the service is spread out over a year, rather than six months, as it is in winter-resort towns in Arizona. American Trolley operations in Phoenix and Mesa operate in the winter months only, and they are not subsidized, Shumway said.
Not Enough Income
Fares, advertising and charter fees simply have not been brisk enough to make up for the higher regional costs of operating in Southern California, he said. Riders pay 50 cents for a one-way ticket, advertisers pay $3,370 for an average ad on the outside of a bus for six months, and groups pay $50 an hour to charter a bus after hours.
The first sign of American Trolley's new strategy in Southern California surfaced last month in Manhattan Beach, where city officials were able to reach agreement with the company for trackless trolley service only after consenting to a $2,000 monthly subsidy.
The company initially asked for a $6,000 monthly subsidy, Manhattan Beach officials said, but when city officials balked, the length of the proposed bus route and the amount of the subsidy were pared down.
A similar drive for subsidies is under way in Santa Monica, where city officials are mulling over a proposal from Shumway that calls for payments from the city beginning next month. Ray Davis, city parking and traffic engineer, said the request did not come as a surprise to skeptics at City Hall.
"There were people who were skeptical at the beginning--the 'I-told-you-so types,' " Davis said. "As for the staff, it is now obvious that a private venture isn't going to make it on its own."
Davis said Santa Monica city officials have not decided what they will recommend to the City Council, which must approve any subsidy, but he indicated he favors a plan that would eliminate the 50-cent fare. Under that plan, the trolley would be free and the city would use county transit-tax money to subsidize the service. He estimated the subsidy could cost the city as much as $100,000 a year.
"We haven't been getting the ridership that we had hoped for," Davis said. "If we made it free, I think that would make the difference." Under such a plan, Davis said, the buses will serve as a shuttle service in the city's business district, helping to alleviate congestion and severe parking problems that are common to beach cities on the Westside and in the South Bay.
Shumway acknowledged that the number of riders in Santa Monica is well below projections, averaging between 100 and 200 trips a day. In comparison, Redondo Beach, a city with 30,000 fewer residents, has attracted twice as many riders, he said.
But even with more riders in Redondo Beach, Shumway said he may ask officials in that city to come up with a subsidy as early as next month. The Redondo Beach City Council issued American Trolley a six-month business license that comes up for review at the end of this month. Shumway said he will decide in the next two weeks whether to request the subsidy when that license expires or to wait until next June.