The Sioux Falls Transit Experiment

It it's just it's a challenge in a state like South Dakota. My hope was just to turn a blind eye to it for about eight years

“and kick it to the next mayor if I'm being totally candid with you”

Eight years ago, Palton Haken took over as mayor of Sioux Falls, South Dakota. At the time Sioux Falls was a typical mid-sized American city big enough to warrant a fundraising stop by President Trump, but small enough to host something called the National Fescent Fest and Quail Classic. We've got 128 bird dogs, 40 different breeze represented that are going to be parading through the Convention Center before he became mayor to Haken wasn't a politician. He was running a digital marketing agency, but eventually he felt the call to serve

the city that had helped him grow his business. I was an entrepreneur so I wanted to bring some entrepreneurial principles to city government. His dream line some things and you know public entrepreneurship

we call it, but transit was never on the radar. It didn't take long for that to change. Almost immediately

after taking office, Mayor Ten Haken realized that the city had a big problem. Much of the city's core infrastructure wasn't keeping pace with this exploding growth. The seems like everywhere you go in Sioux Falls there's new development happening. The city is growing at a rate of about two and a half percent of the year which roughly translates into almost 6,000 people a year. The city in 256 square miles today Sioux Falls encompasses 85 square miles. Sioux Falls transit system in particular was struggling.

When Paul took the reins, the city's bus routes only covered half the sprawling city. Bus service was spotty and sporadic and barely anyone used it. Logistically it just was impossible. The

capital expanse on buses is incredible. We had a fleet of 30-foot-long buses with two people

at a time constantly. The math just didn't work for the city, but for a lot of Sioux Falls residents not having reliable transportation didn't work either. If a car wasn't affordable and the bus couldn't get them to where they needed to go, they were stuck. So what were you hearing from residents about the troubles? They were having moving around the city? Yeah. I mean I heard a lady who talked about she was not able to work because of her inability to afford the vehicle insurance gas,

all the stuff that comes with the owning of vehicle. I talked to another guy who he was using Uber every day to get two and from his place of work. So he was spending 60 bucks a day, 300 bucks a week on his transportation. He was making like 22 or 23 bucks an hour. That's a huge chunk of your

“paycheck every week just to get there. But that's how bad he wanted to work and wanted to get there.”

A few months into his first term. Ten Haken flew to New York City for a mayoral summit run by

former Mayor Mike Bloomberg. And one day while he's sitting in a session with other mayor's from across the country, a light bulb goes off. I got put in an innovation track for a day and the challenge is to look at an issue in our city that was just a big, hairy, challenging problem and transit kept coming in my mind and I'm like transit is just such a beast in Sioux Falls, but ultimately decided I'm going to use the resources of the Bloomberg Harvard

program and allocate those towards tackling transit and seeing if we can finally reinvent transit in the way we're delivering that service here in Sioux Falls. And that's exactly what he did. It wasn't easy and he definitely ruffled some feathers along the way. But Mayor Ten Haken and Sioux Falls found a solution to their transit problem. They reimagine how their bus routes could work together with a new fleet of on-demand shuttles, all guided by software. And the results

have been nothing short of game-changing. When my term is up, I'm going to be really proud of this. I'll look back on this as one of the winds that we were able to accomplish and change the way we

“delivered an important service in the city. I'm Andre Greenwald. I'm the Chief Policy Officer”

at Via. And this is mode shift. I show about the past, present, and future of how we move. In this episode, we dig into Sioux Falls transition from an antiquated inefficient transit system to a modern fully integrated one. And we explore how this more efficient, more expansive transit system has benefited the city and the residents who need it most. I talk a lot about the on-demand piece because that's been the biggest change to our what our previous system was, which has supplemented

the fixed routes system we had. And now we have 100% coverage of the city. Today, the population of Sioux Falls is around 225,000. The downtown is bustling just last year

massive playground, and dog park to the city. But when Ten Haken moved to the city more than two

“decades ago to get his MBA, Sioux Falls looked a lot different. When I moved here in 2000,”

we were probably the 130,000, maybe 140,000. We had pretty dead downtown. We had probably 40% vacancy, not a lot of businesses coming down here, not a lot of people coming down here to do much, downtowns are the heartbeat of a community. And if a downtown is not thriving, the rest of the community probably has some challenges. But Ten Haken fell in love with the city. He joined a nonprofit working to revitalize the downtown, and he put his MBA to use by launching

a successful digital marketing firm called Click Rain. The company ran campaigns for politicians around the country, including current Senate majority leader John Thune. It was the definition of success. But after a few years, he wanted something more. The company was doing well. I had great freedom

“with my schedule. Every entrepreneur's dream, and it just rang how for me. And then I went through”

a couple of Bible studies with some men and some books that I read and started to think about my bituary. And if I passed, and how would I want to be utilized? And I wouldn't want to be utilizes a good marketer that set up great my space pages back in the day for political candidates. I just felt the tug to unwind myself from this business and serve people in a much bigger way. Ten Haken thought about becoming a missionary or running a larger company. But when the

mayor seat opened up, he sold Click Rain and threw his hat into the ring. I decided that I would run for this office, kind of expecting to lose if I'm being extremely honest with you if I don't win or figure out what's next. But he did win, barely. The election went to a runoff and Ten Haken came out on top. At the age of 40, he was sworn in as mayor Sioux Falls. Four years later,

he was re-elected with 73% of the vote. In his second term, the mayor partner with Via

to modernize Sioux Falls transit system, making it the first city in the country to fully transition its entire public transit network to a software enabled integrated transit model. I wanted to talk to the mayor about this experience of re-invisioning transit, the challenges he faced getting it over the finish line and the lessons he learned. But first, I need to get to the bottom of something. Do I have this right that you were a mascot for the Sioux Falls Sky Force, which is a

G-League professional team for a bed? Is that true? Yeah, you dug it in the archives and not my proudest hour, but yes, I mean, when you're newly wedged and you're trying to make ends meet any money counts. But yeah, I was a mascot for three seasons for our G-League team, the Sky Force, which is now the affiliate for the Miami Heat. But Thunder was a wolf and I did marketing, a graphic designer in the day, and at 430, I'd go over to our rena in changing to a wolf

costume and practice some donks off the trampoline and do that sort of stuff. Sometimes we have a two-game three-game home stand over the weekend and then I'd go back to work and do it all again the next weekend. And so I did that for a few years and actually was quite a blast doing that. I love sports, I love basketball and got to see some great players come through the farm system and so it's pretty cool experience. That actually is really cool. I hate to tell you that we're

big next fans, but I will forgive the Miami Heat Association. Okay, let's get into transit.

“I'd love it if you could give our listeners some context. Like, why exactly was transit?”

It's such a hairy problem for Sioux Falls when you became air. It's important to zoom out and look at what is transit look like in a state like South Dakota in a city like Sioux Falls. Sioux Falls is 220, 225,000. The whole state is 900,000.

So our MSA is about 330,000. Our Metro statistical is about a third of the whole state

lives in this MSA here. We're 85 square miles. So ton of sprawl, we're in a dense city. And to try and cover 85 square miles with the public transit system is impossible. We had a fixed route bus system that may be covered maybe 50% of the city. We're cranking out these old diesel buses and are highly inefficient, highly environmentally unfriendly. So we're delivering an antiquated system not only in terms of coverage, but with old buses and old fleet to deliver it as well.

Fairs had not been touched and forever. Fairs are golden calf. You can't really raise rates.

the same buses, the same stops, the same fares, year after year after year. Despite the fact that we're adding new walmarts, new mental health hospitals, new clinics, new places where some of our transit riders needed to get to, but we weren't adjusting the system to meet the demand or meet the need of our typical transit riders. And how would you describe that typical transit riders in Sioux Falls? They're not riding it because they're tree huggers and they don't want

to use their car. They're riding it because this is a quality of life issue for them. It's their only way to navigate our city. And so it's their only way to get to the grocery store. It's their only way to get to their medical appointment. Especially, and obviously with our paratransit riders

“who without paratransit, it's the only way to get out of their apartment. And so ensuring that that”

is a smooth and well executed system is really key as well. And so I started to shift my mindset that transit is not a like a pool or a park. It's like water or electricity to this this population. Like they depend on it every single day to live their life. And when you when you shift your mindset

on that, you see how critical it is and it makes you think about it differently. It's not just an

amenity, you know, it's like a necessity. Okay, so you have this system that just wasn't quite the right fit for the city. And then I know you went to this Bloomberg program for city leaders at Harvard. What happened next? Well, the first thing we did, again, with the assistance of, you know, coach that came in from the Bloomberg Harvard program is we put together what we called a core team in the city. And I'm talking city employees, librarian, firefighter, someone in my public health team,

a cop. I mean, I've just found 10, 15 people who wanted to send to be part of this core team

“and let them start to ideate solutions. And I think one of the challenges in government sometimes is”

the people that are closest to the problem are often the worst at solving the problem because they they've been too close to it for so long. And then when you have a cop that comes in who knows nothing about transit and says, why, why do we do this like this? Like why wouldn't we just have that route go over here? And everybody looks at it and says, yeah, I guess that's pretty good idea,

but we're just so mired in the details that we have never thought about it that way. And so we put

together this core team and they through so much spaghetti at the wall on what we should do. We should blow up the whole system. We should just buy everybody a car instead of because when we look at what we're spending per rider, it's like we could almost, you know, start to buy people. I mean,

“I'm half kidding, but we were like no idea was too crazy. Do we add more stops, more fix routes,”

do we get rid of all our large buses? Do we jack the fees and do more subsidies? Do we make transit free for everybody? And we ultimately came to the conclusion that the challenge was a couple things. One we need to increase coverage. But two, we need to solve the, you know, the last mile problem that is such a big deal between, you know, where the stops are on the fix route and where the people are living. So there's all these other gaps where people who don't have, they're not close

to a fix route. And we can't just put fix routes all over. It's not efficient. We don't have the

capital, we don't have the drivers, we don't have the resources. And that ultimately led us to the

hope of doing an on-demand system, but we didn't have the resources to do that and then now as you do that. So we decided it was time to kind of blow things up and put our transit partnership out to RFPs. Let's talk for a minute about the cities RFP and RFP rate that stands for request for proposal to when the companies submit applications for a city contract. So the city of Sioux Falls contracts with third party provider to provide our transit services and we'd

we'd had the same provider for many, many years. They had been a good provider for us, but it was time to see if there was other girls that wanted to date us. And I'll be honest, the RFP was weighted towards sticking with our existing provider. It's kind of where it was headed. And I rarely do this. This is not my leadership style. I am not a helicopter leader, I trust my people, but they came to me and said, hey, mayor, I think this is where the committee's landing and it's going this way.

So we got to change. We got to do something different. And I would rather innovate and publicly

“experiment and fail than not do anything. So this company called via was another girl that we were”

looking at dating and then and like, let's let's ask her out. And we did and we switched to via knowing that there's going to be some switching costs here and there's going to be some headaches and there's going to be some cheese that's going to be moved in the community, the people who are used to waiting at the same stop every day on this fix route for the last 20 years and now that's going to move on them. But it's my belief that your constituents, whether it's transit or public

safety or infrastructure, they would rather have you as a government try and fail at something

then not to try as long as you're transparent and upfront and saying, hey, we're trying something new.

We know that this has the possibility to create some heartburned headaches. We know that. So just bear with us. But we're going to take some lessons from this if it does go bad, tweak to degrees of change and keep fine tuning. And it could be a huge flop. It could go well. But what we have been doing for 25 years is no longer feasible. Well, I'm glad you asked us out in that date, Mayor. Okay. So Sioux Falls went from about covering half of the city with

“this transit system to 100% coverage. How did exactly just do that without blowing up your budget?”

Well, you do that by getting rid of some of your dog fix routes. You know, so we look at some fix routes we were doing and saying, hey, you know, the average ridership on these four fix routes that we've been running for the last six years, the data is showing we can get rid of those and just supplement those with on demand and still be in the black afterwards. I mean, there has to be because we can't just keep adding to it because transit is not, it's not a profit center for a city.

You know, but the goal of a city is not to make money. You know, people always ask,

Mayor, you run in the city like a business. You know, we, we got some doge going on, you run it, you know, run it like a business. I'm like, wow, sometimes, but the goal of a city is not to make money. That's the goal of business. Our goal is to lose as little as possible and deliver the services that are needed to our residents. So transit loses a lot of money. It costs a lot of money, but what's the most efficient way we can deliver that service? Well, capitalizing

on the grants we get, the federal funding, the local dollars we get. Because areas can now be served by on demand, micro transit, the city was able to focus on making its effective bus routes that much better. For example, by getting rid of weird loops and dramatically increasing frequency, and the results have been pretty impressive. With the same workforce and budget, many more people are writing transit than ever before. Ridership on buses alone is up 37% over the last year

and pair transit is vastly improved. And you've touched on this a little bit, but I'm curious how you would summarize the results of the system that's been in place for, you know, just a couple years now. Every success metric that we have on our scorecard has been exceeded. So our ridership is up on demand continues to grow. That's been a real home run because people are increasingly used to this uberized world that we're living in and the on demand system is an uber-esque type of

transportation. So we've conditioned, you know, our communities around the world to think like uber

“and on demand really does that. Mayor, I think in a number of places, you know, various transportation”

modes are quite siloed, right? So there's a pair of transit system. That might be quite separate from the fixed route system. Maybe there's some other provider who's doing a pocket of on demand transit, which is increasingly common across the country. But I think in two falls, it's fair to say that it's all quite integrated. And I'm just curious if you've seen advantages to that system either from your perspective or from the perspective of riders who are using the system.

Yeah, that's one of the benefits of the data we get is we can see the folks that have used multiple modes of transit to complete their their journey, right, to complete their ride. So maybe they used on demand to get to the fixed route and then jumped on the fixed route ride to get to their final destination vice versa. And they they work seamlessly together. So the software, the app, the way that the rides are requested, those those can work and dovetail together.

to let us see how many people are taking advantage of kind of a multiple mode journey, you know,

“when they're when they're using the system. What's been the response of employers and see falls”

is this like new system helping them access more of the workforce. During the pandemic, we had an Amazon fulfillment center that, you know, wanted to build here. And they were very bullish on our transit system and they said, what is your transit? We got to make sure we have a stop out here because we know from the other communities that we built in transit and access to transit

is pretty critical to our workforce. And that was kind of a light bulb moment there for us to

do. It's like, all right, some of these major employers that we're going to be recruiting and bringing to town are really going to start relying and depending on this and looking at this with their sites, electors and others when they're looking at a community like Sioux Falls. And so candidly,

“it wasn't top of the list initially, but as we went on, we now have so many more employers that”

have access to a new workforce that they didn't have access to before because they have employees that they can tap into, who otherwise maybe could have access there, their business. So we have 1.7, 1.8% unemployment. So we have so many job openings right now. And so if we can connect employers to an employee base and otherwise they would have access to it's a huge home run. To, you know, maybe state the obvious. So many issues feel hyperpartisan today. And I'm just curious.

This transit feel like one of those to you. What's not partisan at all? It hasn't been here. And I'm a Republican and typically Republicans aren't supposed to care about social causes. I mean, if you just kind of look at what our lane is, it's lower taxes, it's spending less, it's putting more in reserves, it's cutting waste fraud in abuse, it's Bible, all those things. And, you know, caring about the social issues is more, you know, than the Democrats side. And

for me, the topic of transit really indirectly cares for a lot of the people on the lower end of our social spectrum who need this service. The great thing I love about local politics in a city of this size is, is partisanship really doesn't exist. There's no RD way to fill paddles or to run a bus system or to do economic development or a purple city that just tries to do the right

thing and I always pick on Washington a little bit too and like, hey, while you're duking it out

over, you know, the bill that you're trying to pass to get the government back open or whatever it is, we're just busy solving like real problems here and keeping things moving and getting people to work through a new transit system and, you know, making things happen. Does transit come up at all when you've talked to other mayors? I would say almost every mayor that I talk to, I talk to a lot of them struggles with transit. There's very few mayors that say, oh, transit is a home run for us in

our community, no issues. Typically, it's a pain point for them as it was for me for, you know, several years before we made this switch. There's quite a few who have reached out to kind of understand how we made this transition to this kind of multimodal system with on demand and

“parent fix and all working together. And I think that's why it may be scarce. Some leaders”

are off to say, this is just maybe too big of a lift right now. When you look at what's the ROI

in the payback and politicians, leaders, we're always looking at, and this is going to sound

really narcissistic, but what's going to get us the most adabois and we're going to be the most popular with the community and, you know, solving transit isn't like something you put on your headstone. And so it's just, it's a challenging one. I feel like maybe one advantage of the way that you reformed it is not not talking about some light rail line that's going to take, you know, 10 or 20 years to get put into place. It's actually relatively fast as far as government goes. Well,

in the benefit to of a city like Sioux Falls is it's still small enough that you can implement a system and it can have impact quickly versus a Denver or Chicago or a Memphis or, you know, that there's so big that to make a big overhaul takes millions of dollars and lots of logistical challenges to kind of unring the bell of what's been done and fix. It's just, it's a lot of work. So what's why I love about a community our size is it's big enough to have kind of larger

city amenities. But if we see a problem, we can identify it and pivot and find a solution that can

paying for an Uber to get to and from his job every day. And I'm just curious, do you know how this

“new system has impacted him? Now he's using our own demand system and he's keeping a majority of”

that in his pocket now. That's money that he's going to be able to reinvest in the community,

use for groceries, you know, it stays in our tax base, like all the things. So there's stories

like that that are out there that are very reassuring for me to hear that we're, you know, we're doing the right thing for our community. Mary, you mentioned you are at Terminal Meded. Do you know

“what's next yet? You know, I don't know what's next. I love Terminal Meds though. I think they're”

good thing because they give you an urgency, a shot clock to get things done instead of thinking,

oh, maybe I'll tackle that my next term or I'll away because I got to secure this voter base right now and I don't want to touch that issue. And right now you can just kind of govern on a

“band-in and do what's right and not have to worry about, you know, who you upset or who you please”

or whatnot, but it's been a joy to be in the public sector, but I'm ready to get some privacy back and I was an entrepreneur before this and I'm looking for it to maybe go back to the entrepreneurial space for a little while and maybe start my own gig, whatever that looks like. Mary, Tenhaken, thank you so much for joining us today. It was really great to learn about your work on Transit and Sioux Falls. My pleasure. Thanks for having me on.

Tenhaken is the mayor of Sioux Falls, South Dakota. Most shift is produced by latitude media and partnership with via. The show is hosted by me, Andre Greenwald. The show is produced by Max Savage Levinson and Bailey and Steven Lacy. Sean Marquand mixed the show and wrote our theme song. It's also produced by me, Andre Greenwald, Francis Cooperman and Karina Salin from via. You can listen to [email protected] or anywhere you get podcasts. Thanks for listening.