Metro on Thursday delayed consideration of a $37 million contract for a new fare system so transit officials can ponder how it would affect efforts to eliminate fares altogether for some riders.

The Metropolitan Transit Authority board of directors was scheduled to approve the seven-year agreement, but the item was pulled from the agenda in the morning, Chairwoman Carrin Patman said, “in light of the fact we are also doing a free fare study.”

The transit agency is researching options for eliminating fares, or eliminating them for certain groups of riders, such as schoolchildren and college students.

Patman said she spoke with Tory Gattis, a local blogger who has argued for free transit as a way to boost use, on Wednesday after the Houston Chronicle reported on the agency’s plans to expand payment options. Gattis, she said, urged the board to give the contract more consideration in view of the fare study.

“I agree we need to think carefully about the connection between the two,” Patman said.

FARE PLAY: Cash could be left behind as Metro revamps, expands fare options

She said she expected that the board would take up the delayed contract next month, around the same time agency staff will be ready to discuss some of the preliminary findings in the free fare study.

Though fares make up a small percentage of Metro’s budget — $67.6 million, or 11.1 percent, of its 2017 operating revenues, according to federal data — eliminating them entirely can be tricky. Transit agencies must follow federal laws, which require fares to be fair and equitable for all users, based on the type of service offered. Removing fees for bus or rail use likely would mean Metro also would have to remove fares on paratransit for disabled and elderly passengers, an increasingly costly part of the agency’s budget.

Eliminating fares also could complicate federal funding for major agency projects if officials in Washington worry that Houston is not bringing in enough money to share the costs of projects.

The fare study also will examine how partnerships or agreements with other entities can be used to offer free rides. In the past, Metro — which bans outside advertising — has offered free rides to Houston Texans and University of Houston football games via light rail, through sponsorships in which the agency has received money and in return advertised the free rides on buses and trains. The agency also suspended fares briefly after the bus system was redesigned in 2015.

Though some transit agencies offer free rides in partnerships with schools or within certain fare-free zones to encourage bus use in urban areas, Chapel Hill, N.C., is the only large transit agency to entirely remove fares in the U.S. That transit system is heavily subsidized by the University of North Carolina, the main campus of which is in Chapel Hill. Several small systems in college towns offer free transit.

Free ride programs have faced ups and downs in other cities, with transit systems similar in size to Houston. Portland, Ore., offered free trips within a special zone for nearly 40 years and saw huge gains in transit ridership as a result. The free zone, however, also led to complaints of increased crime and vagrancy, and it made enforcing fares difficult in a larger region around the zone. Tri-Met, Portland’s transit agency, abolished the fare-free zone in 2012.

The one-month delay in approving the contract with INIT, Innovations in Transportation Inc., for new software and management of its fare collection system, including new validators on buses, is not expected to have any effect on Metro’s plans to revamp its fare payment system. Officials estimate that it will take Metro roughly two years to develop, install and operate the new system.

The deal with INIT would upgrade Metro’s payment system, offering riders new ways to pay fares, such as via contactless credit cards that let riders simply tap a card reader and smartphone wallets such as Apple Pay.

To replace all of Metro’s aging fareboxes and systems, officials said, Metro could spend as much as $100 million over the next 15 years.

Gattis, in a Twitter post Wednesday, called spending that much to collect about $70 million each year “silly.”

“$100 (million) could buy and operate enough buses to handle the surge in demand from going fare-less with only a 6 percent revenue loss,” he wrote.

dug.begley@chron.com