Privatized busing comes to San Francisco

San Francisco is not a convenient place to live. And with the rising cost of living, the growing population and the shortage of housing, it’s becoming less convenient by the day.

A booming tech industry has brought thousands of new residents to San Francisco, all needing a way to get to work. Public transit infrastructure is operating over capacity. While city agencies scramble to meet rising demand, private companies are stepping in with market-based solutions for top-tier customers.

The result is something more insidious than just a private bus for those who can afford it: the idea that infrastructure traditionally subsidized by public money for the public good now can, should and will be a private moneymaker. 

San Francisco is not a convenient place in part because it has not aspired to be. Despite having regional train transit, local rail cars and buses, many parts of the city are not served well by public transit. The Muni rail and bus system, otherwise known as “the people’s railway” is more than 100 years old, and it shows. Residents love to complain about Muni, and not without cause. The service is notoriously slow, in no small part because of the city’s gridlock. Despite the urban density, car culture is alive and well, in part because of poor public transportation. There’s a reason that Uber and Lyft were born and flourish here and the city is home to the new bus services Chariot and Leap.

There are many commutes in need of solutions, but Chariot and Leap have chosen to tackle precious few of them. 

The startup buses feature very limited service areas. Chariot serves four short routes, and Leap currently features one. Chariot crowdsources its routes, while Leap worked with the San Francisco Municipal Transportation Agency to map its route, avoiding public bus stops and congested streets. They are licensed by the state public utilities commission, but they chose their service areas without surveys, studies or input from professional transit planners.

Leap founder Kyle Kirchoff worked in software marketing before launching the company. He likens the service to a first-class plane ride: a high-end option for those who can afford it but not on par with a private jet.

Leap’s amenities reflect its ideal customer. 

Whereas Leap is a $6 pour-over coffee with hints of chicory and clove, Muni is the $1.50 Styrofoam cup from the corner store with the burnt aftertaste. While the city booms, the troubled agency is in a constant state of bust, running an annual deficit with millions of dollars more in deferred infrastructure maintenance. Its daily ridership is growing, with more than 700,000 ticketed rides daily, but the city’s per capita ridership is in decline. More of the city’s new residents aren’t getting on the Muni bus.

Leap’s boosters say Muni could learn from the private bus service — although it has been running for only a month and has no ridership data yet.

But Leap’s advantage comes not just from comfy seats and coconut water but also from privatization. It can refuse or change service at any time and avoid certain laws, regulations and established labor unions. It is able to do these things not because it is better, smarter or faster but because it is newer, smaller and richer. 

For instance, it is not compliant with the Americans With Disabilities Act, and as a private service, it doesn’t necessarily need to be, though Kirchoff says it’s a priority for the future. The company’s buses were purchased at auction and overhauled by local designers and architects, who removed their wheelchair lifts, replacing them with high-end bars and armchair seating. (A plan for AstroTurf flooring was nixed.) 

If these first-class jitneys are a market-based solution, they seem somewhat confused about their market, its capacity and their role in it. Leap insists that it “does not provide transportation services,” emphasizing its transportation management software projects. But no matter what its investors might tell themselves, these are not technology companies. Leap is selling bus rides, not bus software.

And city bus rides traditionally don’t make money. Those fares are significantly subsidized by tax dollars that keep the system running. Even without large infrastructure to maintain, unionized employees to pay living wages and poor customers to serve, the margin on a bus ticket is, at best, rather slim. If the public rides don’t make money, where might private transit profits come from? The private vehicles feature more-expensive amenities and lower capacity, so the companies might pay their nonunionized drivers less; they might raise ticket prices or change routes on a whim; they might have additional pricey optional amenities. Or, like the city systems they’re purportedly disrupting with a profit model, they might turn no profit at all, subsisting instead on a heavy diet of venture capital and angel investments.

Leap may seem new, but the transit debate is more than 100 years old. Public transit is public because we’ve all agreed to a social contract that privileges society’s need to get around a city — a whole city — over transit’s need to turn a profit. We also value public dollars over private ones. Muni’s budget shortfalls are big, but they’re backed by public commitment, and they still pale in comparison with the burn rate of an average boom-era venture-capital-funded startup. While private buses intend to turn a profit, the odds aren’t on their side.

Still, Leap stokes so many of less-wealthy San Francisco’s burning fears because it makes visible the city’s wealth-and-privilege divide, which was present long before this recent tech boom. It’s a bright symbol of inequality in a city where many feel increasingly under siege by private interests. And no matter your socioeconomic status, paying $7 for coconut water is just obscene.

But for all the coconut water, reclaimed wood, leather seats, private social networks and hip attendants, private buses will not displace public ones, at least not in this form. This month Muni is rolling out its biggest service upgrade since 1980, with new and improved service on its most crowded routes. Even if all the Muni users along Leap’s service line were to suddenly rise up against the public bus and shell out nearly three times as much for their daily commute, Muni would barely feel the impact. Not to mention this seems wildly unlikely. When I rode Leap at 6 p.m. on a Monday evening, the only other passengers were people who work for Leap.

What is far more plausible is not market-based competition but influence, with more investment of private money and priorities into public services from both industry and consumers. Opponents of public transit tax subsidies lobby for fare hikes in cities across the country. In San Francisco, Google is already funding free Muni rides for youths. Across Silicon Valley, community benefit agreements that swap private-development rights for public-infrastructure funding are growing. Why build your own bus system when you could just buy the one that’s already running and increase service to the areas you care about the most?

Public transit is the great equalizer, but only when a city wishes it so. If San Francisco does not sort out public-transit funding and service, private industry might do it for the city, one way or another.