The TTC publishes a statement, as part of the Chief General Manager’s more-or-less monthly report, showing a breakdown of revenues and costs.  The report linked here takes us to the end of May 2010.  (There are separate accounts for Wheel-Trans which is not part of this discussion.)

There are three sets of figures:  data for the current 5-week period (this interval is used to avoid variations due to lengths of months), year-to-date data, and full-year data.  These are further subdivided by actual and budget values.

On the income side, the total 2010 revenue is projected at $957.515-million against expenses of $1,412.034-million.  However, within the revenue, only $905.200m comes from the farebox, while $52.315m comes from other sources.  Charters and services operated under contract for transit systems in the 905 are on at least a break-even basis.  Although the expense of running them appears as part of the system’s total, this expense is completely offset by revenue (projected at $17.675m for 2010).

On the expense side, the total cost for subsidy purposes is reduced by two deferred items:  post-retirement expenses and accident claims.  These do not require cash outlays in the current year because they not be paid until future years.  This gets us to a net cost for operations of $1,368.684m and a projected shortfall of $411.169m.

The City has actually budgeted for a shortfall of $429.805m, but the TTC’s ridership and fare revenue held up better than expected in 2010, and the City’s full subsidy provision will not be required.  Any leftovers remain under the City’s control for year-end budgetary adjustments.

The deferred costs noted above are an accounting mechanism first introduced in 2006 for post-retirement benefits, and in 2009 for accident claims to ensure that the City transfers to the TTC only the cash that it actually needs to pay for current expenses.  Previously, deferred costs were included in the subsidy payment for the year they were accrued by the TTC.

This change reduces the City’s cash outlay in the short term, but creates a long-term payable for the City that will come due as and when the deferred costs must actually be paid.  The City hopes, of course, that the actual expense will be lower than projected and that they will pay in future, inflated dollars.

In future years, from the City’s point of view, there will be TTC-related cash outlays that are not part of the current TTC budget, but leftovers from previous deferrals.  Any discussion of a “rider’s fair share” must first determine whether the current TTC budget base will be used or the City’s version including the deferrals.  At some point, the deferred costs will start to come due, and this will offset cashflow savings from new deferrals in the current year.  Meanwhile, the accountants will have lots to mull over, and the politicians will be even more confused about TTC budgets than ever.

Using the full $1,412m projected TTC expenses for 2010, the breakdown of the cost shares is:

• Fares: 64.1%
• Contract services and charters:  1.3%
• Advertising:  1.1%
• Rent:  0.7%
• Commuter Parking:  0.6%
• Other Income:  .1%
  • Subtotal:  67.8%
  • Subsidy:  29.1%
  • Deferred:  3.1%

We hear a lot about getting the rider’s share down to 2/3 of the TTC costs, but this has already happened and, in fact, there has been a slight overshoot — riders now pay only 64.1% of total costs.  Meanwhile, the subsidy (current and deferred) is 32.2% coming, in 2010, entirely from the City.

A higher rider share has been suggested in some quarters, but the first question is “a higher share of what”.  Should riders contribute to the cost of contract services and parking lots, both of which have their own revenue sources?

If riders were expected to pay 75% of the total current expenses, this would require that fare revenue go up from 64.1% by 17%.  Miscellaneous revenue would bring in 3.7% leaving only 21.3% of the system’s costs to be recovered from subsidies.  This would take us back, more or less, to the Harris era of transit funding cutbacks.

A further complication with deferred expenses relates to pensions.  Like many organizations, the TTC’s pension liability is not “fully funded”.  This means that if the TTC were to go out of business tomorrow, there would not be enough money in the pot to pay out all existing pension claims.  However, the TTC argues that as a public entity, it is not going out of business, and should not be required to maintain a huge reserve to fully fund costs that would be paid out in future decades.  This matter is still under negotiation with the Ontario government.

If the ruling goes against the TTC, a very large infusion of cash from fares and/or subsidies will be required over coming years fully fund the pensions, but this will contribute nothing to service.  This liability would also apply to any agency that took over the TTC unless it was left behind as a “stranded debt”.

Vital in any of these discussions is the question of how big the TTC operating budget should be.  In many years past, growth in the dollar total was constrained to match available subsidies while keeping the percentages more-or-less at the target level.  This preserved the political fiction of good support for transit.  Service declines were obvious, but maintenance less so, at least in the short term.

The first question to answer is this:  what type and quality of service should the transit system provide?  What should transit look like?  We may not be able to reach that target in one budget year, but at least we would know how severe the shortfall is, and what tradeoffs are required.  Are we serious about providing greater mobility by transit?

Total system costs are affected by many pressures:

• Increases in the scale of operations.  More riders and service generate a requirement for more subsidy unless all new riders can be carried at zero marginal cost relative to the revenue they generate.
• Implementation of major new system components.
  • Opening the Spadina subway extension will add at least $10-million to TTC costs net of benefits to revenue.  At least in the short term, the majority of subway riders will simply shift from existing bus services, but they will receive a higher service quality for the same fare.
  • It is likely that the marginal costs for Transit City lines will be higher than current bus costs, if only because a superior service will be delivered both in capacity and frequency.  Metrolinx may pick up the tab, but this is not yet certain, and this only moves the cost from one pocket to another.
• Increase in materials costs, notably fuel and energy.  These factors go up (and sometimes down) beyond the TTC’s control.
• Increase in labour and benefit costs.
  • The last round of labour increases was imposed on the TTC by arbitration at 3% annually.
  • Some costs are driven up by changes in labour standards such as the maximum length of a work day.
  • Benefit costs are affected both by the terms of labour agreements, and by changes in costs from benefit providers.
  • It is possible that proposed legislation at Queen’s Park will freeze public sector wages for a few years, but this will not last forever.

Stirring all of this into a pot suggests that keeping the growth in TTC budgets to strictly inflationary levels will be difficult, let alone doing so while continuing to expand the system and provide improved service.

I have deliberately left out various forms of privatization.  Even assuming there would be a saving, that is only a short-term benefit.  Future transit costs will rise, just starting from a lower base, and we will have the same debate about fares and goals for transit service all over again.  It is important that we know what those goals are.  I’m not saying we should ignore the privatization debate, but we need to know whether the purpose is to reduce subsidy costs, temporarily freeze fares, or provide equivalent or better service for the same outlay.

Many groups call for fare concessions.  Just this year, student fares have been extended to adults although many are excluded because they are in short-term or non-degree programs.  Mayoral candidate George Smitherman proposes free travel for seniors between 1000 and 1400.  Some groups call for reduced fares for those receiving social assistance.  Some advocate a move to fare-by-distance or fare-by-time, as well as integration or co-fare arrangements with neighbouring transit systems.  At the most extreme, some even call for free transit.

Fares will almost certainly rise, and this should happen on a regular basis, not every two or three years when budgetary crises force the issue.  Creating a new concession fare will isolate some riders from the effect, for a time, but a lowered fare is not a frozen one.

All of these proposals deserve debate so that we can understand the benefits, costs, and relative merits compared with other service-related changes.

In the next article, I will turn to the mysteries of TTC subsidies and the competing claims about how the TTC is funded by various governments.

John Lorinc reports in the Globe that a system to be developed for Vancouver will use similar technology to that proposed by the TTC for its own smart card system, and come in at a fraction of the expected price for Presto.

Updated: Royson James weighs in on smart cards in the Star, and John Lorinc has an article on spacing.

In the case of the NDP request, the scope should look more widely than just Accenture which provides system development and operation.  However, some of the capital and ongoing staffing costs for the Presto project are carried in other budgets.  Any review needs to look at the whole picture, not just one contract.

Comparisons with Vancouver will be intriguing, but it will likewise be necessary to ensure an apples-to-apples comparison.  For example, the new system is to be implemented as part of a conversion of the Skytrain rapid transit stations from their current barrier-free design to use turnstiles.  This is intended to reduce fare evasion.  One big cost in Toronto is  for providing existing turnstiles with power and network links to handle Presto.  It is entirely possible that some components of the Toronto smart card budget will be covered by Vancouver’s turnstile retrofit budget.  (Similar burying of costs in multiple accounts occurs quite commonly in TTC budgets, notably for subway station renovations.)

Presto needs to be held to account for what it has produced and the expected cost of system expansion.  The fog of “commercial confidentiality” used, for example, to prevent revelation of the cost of a new city’s rollout (Ottawa) means that we have no way predict long term spending requirements, or to compare these with projects in other cities.

Ontario has just, thankfully, ended its relationship with SNC Lavalin for the Air Rail Link to Pearson Airport, and with this change we should have greater transparency and accountability for the project.

The same openness must apply to Presto.  If it is a demonstrably good and competitive system, then show us.

On July 26, I visited the folks at Presto and talked with Ernie Wallace, Executive Project Director, about the system and its plans.  Subsequently, I did some digging of my own, primarily on the Ontario government website.  The information below is organized to keep topics and the logical flow intact rather than to represent the sequence of the conversation.

How does the PRESTO System Project fit with various local and provincial agencies?

Presto started off as a project within the Ministry of Transportation, and a line item for the project still appears within the Ministry’s Budget Estimates.  The contract with Accenture is administered by Metrolinx as an agent of the Ministry.  Wallace himself, and other senior Presto staff, appear on the Metrolinx portion of the “Sunshine List” for highly-paid employees of Crown agencies.

Update: The PRESTO team is made up of seconded Provincial staff, GO employees, hired contract employees and contractors through vendors of record.

Metrolinx does not set policy or general direction for the Presto project.  This function remains at the Ministry.

The contract with Accenture covers the implementation and operation of Presto for a 10-year period for the eight transit agencies who signed on as the original members.  Any expansion of scope such as the now-in-progress Ottawa implementation would be subject to an add-on agreement between the Ministry and Accenture and, of course, an additional payment.

Fare policies remain with each of the local systems for which Presto provides services.  The electronic model (“fare topology”) for each system is built into Presto, including any “co-fare” agreements between operators.  The best-known of these are between GO Transit and some of the local carriers whose bus systems feed GO where the combined Presto fare is lower than the individual fares for each leg of the journey.  Similar schemes can be set up for any of the member transit systems.

The important point here is that a decision to give a combined fare (for example, to Mississauga Transit users who transferred to the TTC subway) is up to the local systems involved (and presumably their Councils for whom any change in fare revenue is of some interest).  Presto does not impose a co-fare on any cross-border travel, and would participate in decisions to implement one only to the point of technical feasibility.

The Metrolinx Board does not set fare policies except for GO Transit which is a division of Metrolinx.

What is the nature of the Accenture contract?

According to Ernie Wallace, this contract is in the public domain except, possibly, for some commercial terms.  If so, I believe that the Ministry could settle some debates about Accenture’s role simply by releasing the main contract and any subsequent amendments or additions.

Most importantly, Wallace challenged statements claiming that Presto’s and Accenture’s business model depends on expanding the reach of the system, particularly to the TTC, to ensure high transaction volumes.  Wallace states that Accenture is providing a specified service (implementation, rollout and support for 10 years on 8 systems) for a fixed price.

Today’s Star reports the scope of the contract this way:

The Ontario government says it has a $250 million contract with Accenture to develop and operate Presto by 2016. That includes the design and the software, the testing, the manufacturing and testing of devices.

This does not include the provisioning of devices for individual transit system stations or vehicles.

Although this may be a fixed price contract, what we don’t know is whether Accenture invested in staff and infrastructure based on a presumed expansion to other, larger systems.  Their pricing for add-ons of smaller increments could be affected by their expectations of future growth and recapture of the investment.

Update:  The following information was provided by Presto to explain the contract and budget arrangements.  In the quote below, “Estimates” refers to the Ontario government estimates, the formal process by which spending is approved by the legislature.  Presto and Metrolinx fall within the Ministry of Transportation.  “RBP” refers to Results Based Planning, and reports for all Ministries are available.  These include information about the previous year’s results and spending.

The contract is a public contract and the overall costs, terms and conditions including deliverable descriptions can be made available but the specific commercial terms and pricing is competitive information and cannot be released.  The planned budget for Ottawa is known but contract amendments have only been executed for initial planning and requirements gathering and specific service provider $ for change cannot be released by PRESTO.

The $14,368,000 is the total all in Operating budget for 10/11 including all operating contracts, program costs both people and administration/facilities etc.

[...] each year a capital allocation is provided (ie $50M) to cover all existing contract commitments, approved changes and capital investment of PRESTO, GO and Service Providers.

Accenture and their sub-contractors do all the software development engineering, manufacturing and maintenance. They operate the backend datacentres, call centre and provide the networks and network management

Both [the downtown Presto System Project office] and GO PRESTO offices are funded by MTO and one third of the SP teams costs as well and are in the estimates.

The annual RBP plans and allocations are all in for PRESTO as it relates to the PRESTO Program and all the related contracts and the GO PRESTO team.

And in a separate note:

I [Ernie Wallace] can discuss and show all the deliverables and total roll ups. We intend to put these up on the web but it will take about a week [...] .

The Accenture contract includes all the device costs for stations buses etc. along with infrastructure costs like networks.

Accenture’s contract is based on payment for deliverables and has no transaction fees or payments based on transit revenues or number of cards or volume devices or traffic etc. Added work is handled through a rigorous change process and is usually fixed price again by deliverable.

What are some of the technical details of Presto’s operation?

Two important components of Presto are the concept of an “electronic purse”, the value of pre-paid fares already in a user’s account, and preloaded “products” on the Presto card.  Each of these products represents one transit system.

This arrangement allows for some decentralization of processing in that a Presto reader on a bus can have a “conversation” with a card used on that bus system without “calling home” to complete the transaction.  This saves on real-time communication delays, and the challenges in some areas of getting reliable, fast cell coverage for the equipment on buses to communicate with the central network.

The trade-off is that this approach doesn’t work if the payment card isn’t “owned” by the system and used to store data.  Credit cards, for example, are “read only” and customer tracking all has to be done in the back office system for co-fare arrangements (or even transfers within one system) to be properly handled.

Presto can support flat fares, zone fares, distance-based and time-based fares and, as mentioned earlier, co-payment arrangements where trips across boundaries between operators trigger a discount fare arrangement.  All fares require that users “tap on” when they board a vehicle to begin their journey, and when they cross into a new transit system.  Zone and distance-based fares require users to “tap out” when they leave that leg of their journey.

Typically, users who fail to tap out are charged a large penalty fare as an incentive to formally complete their journey.  This can be confusing in a multi-carrier system such as we have in the GTA where each trip segment has its own fare rules.

A special arrangement exists for GO customers who can define their “default” trip so that it is deducted as a standard charge when they travel.  This avoids the need to tap out at their destination, but also causes problems for any non-standard trip where a user must indicate a “non default” fare is requested by pressing a button on the Presto reader.

User confusion is inevitable, and this scheme only works because GO Transit is, today, primarily a commuter service rather than an all-day, two-way provider of regional transit where trips will have a much greater variety of origins and destinations.  (See Toronto Star articles here, here and here.)

I can’t help feeling that Presto was build for an age where technical constraints (or budgets) forced choices on system designers that are no longer appropriate, and that the “elephant in the room” of GO and its then-current self view as a commuter system have driven much of the overall design.

Update:  The following information was provided by Presto.

PRESTO was built largely on the latest card technology and security technology and using Microsoft operating systems and COTS software and utilizing a proprietary fare and device management system from Europe, future developments including those proposed for Ottawa and TTC will adhere to open architecture principles and standards and core systems will not be based on proprietary software.

What is the problem with co-payments beyond 35 trips a month?

Presto cannot currently handle co-payments in situations where a rider takes more than 35 trips in one month.  The reason for this lies in the underlying design of the fare calculation and charging mechanism.

In a co-fare situation, when you take a local bus and then a GO train, there are actually three parts to the fare calculation:

• You board a local bus.  At this point the system does not know you are planning to switch to a train, and it charges the full local fare.
• You transfer to the train.  At this point, the need for a partial refund of your local fare is evident.
• The system calculates your train fare and deducts the credit for your local co-fare.  However, if you are on the 36th trip or more in one month, the result of this value is negative.

This possibility was not contemplated when the system was designed, but Presto is working on it.  If the local transit system used the same scheme for fare calculations (free after 35 fares), there would be no problem.  However, the situation is complicated by the possibility that one could take local trips that did not involve GO, and these would be subject to local rules that could involve volume discounts or pass-type fares.  The interaction of co-fares and each local set of fare rules is a challenge for any cross-system fare card regardless of the technology.

What are Presto’s plans for open payment systems?

The Presto readers now in use cannot interact with standard media such as credit and debit cards.  The processes and rules for this are complex, and are the subject of international standards in the payment industry.  Presto is a very small fish in a very big pond, and must adapt its system to meet world standards.  However, Presto plans to install readers capable of handling standard media for its Ottawa rollout in 2012 and will retrofit the existing system.

Note that this only gets us to the point where a credit card is recognized by the reader.  What is still needed is the back-end system to track users, calculate their fares, and bill either a locally-maintained ePurse, or send a bill to the user’s credit card company.  Those who argue for a open payments system design claim that money would be saved on some components of the system both through standardization and by offloading some functionality to the payment system.

One obvious issue is the question of service charges.  If each fare is billed as a separate transaction, one would pay dearly in service charges (and interest if you run a balance on your credit card) for the “convenience” of using your credit card.  This could be avoided if the payment industry adopted a new scheme for “micro payments”, but this requires negotiations between the banks and the providers such as Presto or an independent TTC system.  Large transaction volumes are an important component here.

Presto plans to have open payment capability in the 2014-5 time frame.  Like so many other projects, this is driven by the Pan Am games.  Riders on the Air Rail link should be able to pay for their journey with a credit card directly rather than having to acquire a Presto card for this purpose.

With open payments, Presto hopes to support a “library” of cards that could include a province-wide university student card, a city services card, or any other type of card identifying a large group of travellers.  This could be done strictly as a means of convenience (students could register their cards for transit services wherever Presto operated), or Presto could become a service provider to agencies and institutions outside of the transit field.  My own view is that they should stick to transit and get that working before trying to turn themselves into a bank.

Related to open payments technology is the ability to use a mobile device.  In the simplest implementation, the device’s own identity is registered against “your” Presto account.  Billing would likely be against your ePurse.  However, mobile apps will eventually be commonplace allowing your “phone” to act as a surrogate for a physical account card, and your mobile device could itself become a library replacing physical credit cards.  That’s a future well beyond what is needed for a Presto open payments rollout.

Where does the TTC fit?

It is no secret that the TTC has been dragging its feet on implementation of smart card technology, although the subject has been under discussion for 10 years.  The original TTC estimate of $140-million (2000$) has bloomed to $416-million (2010$ plus escalation) based in part on a better understanding of the needed infrastructure changes.  This amount does not include planned system expansions (which bring the total to the $489-million figure reported by me and others), but it probably does include costs for some system aspects like wiring within stations that could be replaced by wireless communications.  The TTC has quoted Presto a 7-year implementation period which is probably excessive for connection to an existing system where the foundations have already been provisioned.

From the Star:

Presto officials have estimated those costs for the TTC would be about $320 million, including devices, upgrades to infrastructure, wiring, project management, devices and central system changes.

That’s $320m versus $416m, a tidy sum regardless of whose estimate one believes, and this must be funded somehow.

Update:  The following information was provided by Presto.

PRESTO was built largely on the latest card technology and security technology and using Microsoft operating systems and COTS software and utilizing a proprietary fare and device management system from Europe. Future developments including those proposed for Ottawa and TTC will adhere to open architecture principles and standards and core systems will not be based on proprietary software.

The original TTC estimate from a decade ago was only for hard and directly related TTC assets (devices etc) .  No PRESTO systems development was included. TTC’ s scope, business requirements, infrastructure needs and device requirements have increased dramatically.

Presto says that it is prepared to be ready both for the startup of Transit City (the Sheppard line) and for one line (likely Queen 501) on the TTC in time for the new streetcars which will use all-door loading.  However, the time for a commitment one way or another is now given the lead times to finalize the fare structure and build a TTC rollout into Presto’s plans.  This collides with the TTC’s own scheme for an open payments trial rollout in the 2010-1 period.

The TTC claims that banks are prepared to fund a trial installation of an open payment system on the streetcar network, or some subset of it.  That claim needs to be nailed down both as to scope and technology.  Whatever is installed must be the basis for expansion, not a throwaway, and future costs must be clearly understood up front (the banks may be less generous when it comes to a full system rollout) .

John Lorinc has an article in today’s Globe on the current state of affairs in various cities in the USA.

I am not convinced that a trial on only one TTC route will be workable because, unlike riders of GO and a few regional feeder systems, TTC riders have complex trip patterns of which the Queen car is only one part.  The impetus for some form of smart card is driven by the need to shift token users (and later ticket and even cash users) to a fare medium that can be used for travel through the system, including automatic entrances.  A workable transition plan for co-existence of smart cards and existing payment systems must be in place and well-understood when any trial begins.

The Question of Transfers

The TTC must also address its current complex fare structure regarding transfers.  The present rules are just about impossible to define in a way that an automated system can interpret because the topology of the system is so complex.  Defining the point at which one trip ends and another begins for fare purposes requires detailed knowledge of the network, of what a “reasonable” trip might be and extenuating circumstances.  What looks like an out-of-the-way route may simply be a matter of convenience, even an accessibility requirement to avoid using the subway.  A lengthy stopover could be a quick bit of shopping, a longer-than-expected lineup at Starbucks, or the perennial half-hour gap in Queen service.

A pre-requisite for any new payment system will be a change in TTC fares to a time-based system.  Such a move is more important even than the technology debate as it will be the basis of a new fare “topology”.  This will require fundamental changes in TTC operating practices such as how paper transfers will be issued and used during a transitional period, and this should occur well before a smart card rollout.

One could equally argue for a move to a zone or distance based system, but the political upheaval of such a move — the effect on fares for long-haul riders — would be a major barrier to the implementation.  By contrast, a time-based fare would greatly simplify travel, and would reduce costs for some who don’t buy a Metropass but would receive the convenience of, in effect, a short-term pass.

Some at TTC will say “we can’t afford to change fares”, but the simple fact is that the fare structure must change to one that is easy to understand, monitor (electronically) and enforce.  A fare must be based on something easy to calculate — the passage of time and/or distance — not on arcane rules almost unchanged since the 1920s.  A decision on a new fare structure cannot wait until the day before a smart card system goes live because the new rules must be embedded in the new system.

(For the historically minded, here are two rather elderly transfers that have long passed their allowed time of use.  On the left of each pair of images, we have a Winchester car transfer from the Toronto Railway Company on April 1, 1895.  On the right, we have a Bay car Toronto Transportation Company transfer from Nov. 19, 1924.  Parts of the text setting out the transfer rules will sound rather familiar.

(Collectors please note that the words “First day issued” were already on this transfer when I received it.)

The Reality of the Political Calendar

The TTC began to look at open payments as an option for its fare cards in 2009, and this interest escalated in 2010 when a contract was let for a detailed review and implementation plan.  A draft Request for Proposals (RFP) will likely come to the TTC’s August board meeting for approval, and with the lead time for such things, responses are not likely to be back before the current Commission whose last meeting is on September 30, 2010.

Where the proposal will go from there depends on the outcome of the October municipal election, the winner of the mayoralty race, and the makeup of the new Council and Commission.  Many of the initiatives started by the current regime will be suspect, if not outright ridiculed and discarded, for purely political reasons as the new administration beats its chest and sets off in a new, if vague, direction.  This will not be the time for continuing what the Miller/Giambrone regime started, especially a project that won’t yet be launched.

Although the “banking industry” is said to be eager to fund a trial implementation (just as MasterCard has money in the New York City trial), the details of such an arrangement will not be known until the TTC receives and publishes the responses to its RFP.

There are many questions to be asked about any smart card rollout whether it be Presto, a separate TTC system, or some hybrid.  However, we are unlikely to see a strong advocate for a TTC-based implementation, and technically savvy Commissioners/Councillors are hard to find.  Couple this to the TTC, a notoriously technology-averse organization with a reputation for bungling projects, and we don’t have a recipe for success.

That said, Presto has yet to show that it can handle a really big rollout either.  In its early days, the project itself went through upheavals in management and direction.  Any rollout in Toronto will require committed buy-in and participation by the TTC, and this will not come from a contentious us-vs-them relationship.

Presto still only serves a small subset of GTA riders and trip complexities.  We have already heard complaints about usability and customer service, and whether the model will scale up to be a truly GTA-wide medium remains to be seen.

Meanwhile, Transportation Minister Kathleen Wynne darkly hints that funding of other Toronto projects is threatened if TTC goes its own way on a farecard system.  Queen’s Park really needs to put its money on the table.  After delaying half of the already-announced spending on Transit City, Queen’s Park should think twice about forcing Toronto to pay substantially for an imposed fare collection system.  I don’t want to hear about all that gas tax — it would take three years of gas tax revenue to pay for a Presto rollout in Toronto, and that money is already earmarked for other transit improvements.  If this is an important regional strategy, then it needs to be funded as a regional service through Metrolinx and its long-awaited “Investment Strategy”.

Metrolinx and Queen’s Park must address local transit funding, fare structures and service.  Local operations, including fare collection, are a vital part of the regional network, and must be well-funded.  Any move to reduce fares for cross-border travel will require changes to subsidies, assuming Ontario will pay any.  Ontario talks about getting people out of cars and reducing congestion, but prefers to cherry-pick the projects it will support and fund, while leaving the rest to local municipal agencies and tax revenues.

Toronto and the TTC must set the stage for a move to smart cards with a fare structure review, preferably as early as the 2011 budget cycle, certainly no later than the beginning of 2012.  If we are moving to a time-based fare, this decision must be taken soon so that it can be implemented before smart cards are rolled out on the TTC regardless of the technology.

Too many candidates waste their time drawing lines on maps when there are operational issues like this facing the TTC and the City.  Fare structures are not just a technology debate for transit and IT geeks, they are basic to transit policy and service.  This issue, together with the need to fund a projected half-billion dollar operating deficit in 2011, is the challenge for the incoming Council and for Queen’s Park.

Mark Dowling, in a comment later in this thread, has pointed out that a TTC report last November cited a provincial requirement for participation in Presto as a condition for funding through various programs.  (See 4th paragraph on page 7)

This report must be read in the context of the amended recommendations approved by the Commission as reported in the Minutes:

Chair Giambrone moved that recommendation no. 1 contained in the report, be amended as follows:

“It is recommended that the commission:

1. Conditionally approve the adoption of the Presto Fare Collection System subject to satisfactory resolution of the issues outlined in attachment a, subject to:

* TTC and City staff discussions with representatives of the Federal Government, Provincial Government, Metrolinx and the City of Toronto to develop operating and financial agreements necessary to resolve the issues outlined in attachment a;

* TTC staff reporting back to the commission for approval of the operating and financial agreements that have been developed;

* TTC staff developing detailed business requirements for adopting the Presto System at the TTC to the satisfaction of the commission;

* TTC staff undertaking the engineering and design work necessary for future subway infrastructure modifications to provide power and communications to support smartcards”.

The motion by Chair Giambrone carried.

Chair Giambrone moved that the final bullet in attachment ‘a’, be amended as follows:

* “TTC and the City must not be bound to fare payment exclusivity that would preclude implementation of advances in fare payment approaches and technologies, such as and including open payments, mobile phone media, etc”.

The motion by Chair Giambrone carried.

Commissioner Milczyn moved that attachment ‘a’ be amended to include the following:

* “TTC and the City expect the presto system to be designed to support open architecture;

* TTC and the city remain cognizant of our own fare policies and the system must be designed with flexibility to allow for different fare policies”.

The motion by Commissioner Milczyn carried.

Chair Giambrone moved that the commission approve the report, as amended.

The motion by chair Giambrone carried.

Therefore, when I originally reported that the link between Presto and programs other than Transit City had never been brought to the Commission, I erred.  The main article below has been updated accordingly.

In turn, this begs the question of why this issue was not raised when the Commission approved a study of a separate system from Presto, and the degree to which the conditions for acceptance of Presto, as set out in the November 2009 motion, have or have not been met.

I have also corrected the expiry date of the current Presto contract to 2016.  The original date cited, 2011, appeared in another report that I was using as reference material.

The original post from July 23, with amendments, follows below.

The battle between the Presto and TTC Open Payment factions heated up earlier today with statements by various would-be mayors, the Board of Trade, Minister of Transportation Kathleen Wynne, and TTC Chair Adam Giambrone.

The following article appears on the Ministry’s website:

Minister Kathleen Wynne Stands By PRESTO

July 23, 2010 3:36 PM

The TTC’s recent focus on a duplicate fare system is troubling and a complete waste of precious taxpayer dollars.

The PRESTO card allows transit riders around the GTA to transfer seamlessly with one card from GO Train to bus or streetcar or subway, anywhere in the GTA. And best of all, the PRESTO system is also being developed to accept other cards — like debit or credit cards.

It’s a smart system that connects us and makes the daily commute just a little easier. Already 7,600 commuters are using their PRESTO cards, and 500 more are joining every week.

The city and TTC made a commitment to PRESTO many times.

Gas Tax funding was provided to GTA Municipalities, including the City of Toronto, with the requirement that they participate in the PRESTO fare card system, provincial funding towards the cost of the City of Toronto’s replacement streetcars is also conditional upon the City’s full participation in PRESTO and we’ve communicated to the City that the 182 light rail vehicles for the four Transit City projects in Toronto must be PRESTO ready.

There are a lot of investments to make in public transit, and a lot of improvements to be made at the TTC. To waste money on a duplicate fare system makes no sense.

That’s a fascinating statement for a few reasons.

Updated July 24:  The link between Presto and other programs was reported to the Commission in a report from November 2009.  For some reason, this was not mentioned during Commission discussions of a study for a separate system based on open payments.  However, judging by the long list of conditions, many of which deal with technical and functionality issues with Presto, a related question to Queen’s Park is the degree to which this list has or will been addressed, and the implications for fares in Toronto if it is not.

Second, claims of a duplicate system bear closer examination.  There are 7,600 Presto cards in circulation with 500 more per week.   That’s going to get us up to something over 20,000 by the end of 2010.  The TTC sells over 450,000 Metropasses every month, and has many, many more regular users who pay token fares.  That’s a bit of a jump for the scale of Presto implementation.  Duplication?  Duplicating what?

Third, I believe that the only reason Presto moved on open payment capability was the competition from the TTC’s proposal.  Without that pressure, we could have sailed through a region-wide rollout unable to deal with credit cards or smart phones for fare payment.

Presto isn’t even planning to roll out in Toronto in a big way for a few years, by which time it will also support open payment technology.  Where is the wasted money?  Meanwhile, the TTC needs a new fare system by 2012 when new streetcars will start rolling down the streets of Toronto and use all-door loading.

TTC Chair Giambrone responded with this letter which also appears on his Facebook page.

TTC Chair Giambrone Clarifies PRESTO position

July 23, 7:00 pm

Recent media reports have made it clear that there is confusion about the relationship between PRESTO and the TTC’s proposed Open Standards electronic fare system.

The TTC has been a full participant in PRESTO since 2004 and confirmed its participation as recently as last November. It simply imposed conditions such as open and transparent procurement and an ability to adapt to new technology.

The fact is that funding has not been committed to implement PRESTO on the TTC. In 2004, $140 million was committed, divided evenly between the City, Queen’s Park and Ottawa, based on incomplete estimates that did not account for necessary capital work. The most recent estimate puts the cost of implementation at $490 million – leaving a $350 million shortfall.

The City needs increased funding just to operate the TTC, and to keep it safe and reliable. With its recent cuts to the Transit City light rail plan the Province has made it clear that they also cannot afford new spending on transit projects.

Given that no money is available to bring PRESTO to the TTC, the Commission prudently chose to explore partnerships with the financial sector to find a more cost effective, off-the-shelf solution. I am confident that a public-private partnership to deliver electronic fare collection to the TTC will be achieved in 2010.

Adopting an Open Standard system instead of custom-built, proprietary smart card such as PRESTO is the right thing to do. Even PRESTO staff have indicated that they intend to move towards accepting Open Standard fare payment as early as 2011. The two fare systems will be totally compatible and allow riders to move seamlessly between TTC and other regional transit operators.

PRESTO staff have reportedly expressed concerns that moving to Open payments may affect their business case. The project is governed by a contract between the Province and Accenture. Given that this contract has not been made public or shared with TTC staff I cannot comment on its specifics. This contract needs to be made public before an informed public debate can take place.

Should anyone question the TTC’s cost of Presto implementation, it should be remembered that Ontario already has a $250-million contract with Accenture for the trivial amount of use that Presto gets compared to the size of the TTC’s network.  What has that quarter-billion paid for?

In a separate Facebook post, Giambrone reviewed media coverage including this comment.

From the Star:

“Metrolinx said its next generation of readers – expected to be available in 2011 – should accommodate open payment options. But there are questions about how Presto’s revenue model would be affected if its card has to compete with others for transactions.”

The facts: A regional farecard was promised by the McGuinty Liberals in the 2003 election. Seven years later a phased rollout is just beginning, and Presto staff expect it to reach the TTC by 2015 at the earliest. TTC riders can no longer afford to wait. If we can skip a generation of technology we should, especially when we have good reason to believe an open payments system will be much more cost effective.

Media coverage of this is in The Star.

Mayoral candidates (and others) choose to portray Toronto and especially the TTC as a barrier to the transit improvements Presto may bring.  Without getting into the various statements, I can’t help feeling that if Presto were a TTC scheme, the candidates would all hate it as a reminder of the Miller era.  They need to focus on what various fare systems can do, how much they will cost, and when they will be implemented.

Will the first act of a new Mayor be commit Toronto, sight unseen, to a system that needs to scale up massively to handle TTC requirements, may lack flexibility and may cost more than an alternative?  Wouldn’t they demand that we review whether Presto is actually a good deal?  Or would a new Mayor be so keen to curry favour at Queen’s Park that he would sign first, and hope that any problems afflicted someone else later.

I have a few questions for Minister Wynne:

1. It has been no secret since late 2009 that the TTC was examining an alternative to Presto to obtain better functionality at lower cost, and that the only money Queen’s Park has on the table to date is 1/3 of $140-million, or less than 10% of the estimated rollout cost of Presto for the TTC.  With the links of Provincial funding being contingent on accepting Presto, why has this not been raised sooner, and why has Queen’s Park not addressed the substantial implementation costs for the project?
2. What are the terms of the Accenture contract?  As reported by the TTC quite some time ago, this is a 10-year contract expiring in 2016.  How much more will Queen’s Park pay to extend this contract and expand it to the scale of TTC operations, or is this included in the base price?
3. What are Presto’s technical capabilities for handling fares with the complexity of travel on the TTC?  Will TTC riders be forced into a less attractive or more expensive fare model to fit within the constraints of the regional system?
4. Why has there been no public discussion about fare policy and the implications for operating subsidies of consolidated fares across boundaries between the TTC and other systems?  That’s the “big win” so many riders are waiting for, but it’s the one nobody who funds transit wants to talk about.

I will be meeting with Presto staff on Monday, July 26 to learn about their capabilities and plans in detail, to the degree that they choose to share the information.

The Star reports that the TTC will proceed with a tender for an Open Payment system later this year with the intent of a 2011 rollout.  Mayoral hopeful Rocco Rossi has his own scheme called “Presto Plus”.  Can the TTC actually commit to a new system with the current regime still in office?  Rossi’s campaign confirms that he would cancel the TTC’s scheme if he were to become mayor.

Metrolinx would love to see the TTC sign on to Presto, but many questions remain about just what Presto can do for a truly integrated transit system.

Smart Cards are yet another example of the way that transit technology wars in the GTA get in the way of solving fundamental transit problems.  The technology choice becomes more important than the service it provides.  Here are a few questions anyone with “the answer” should consider.

What Will It Cost and Who Will Pay for the Technology?

Estimates of the Presto implementation for the TTC have ranged well over $400-million, and we don’t have a reliable figure for comparative purposes.  The scheme was originally expected to come in at about a third of that price.  We need a credible implementation cost with no hidden add-ons or scope creep.

The cost estimate has grown over time:

• November 2000 Fare Collection Study:  $140-million
• March 2004 Canada Strategic Infrastructure Funding announced:  $140-million shared between Ottawa, Queen’s Park and Toronto
• June 2007 Business Case Report:  $260-million (2006$) [Full report]
• 2010 Capital Budget:  $416-million plus costs related to Transit City and the two YUS subway extensions totalling $489-million

It is unclear how long the CSIF money will remain on the table, or if it was ever “real” funding.

Queen’s Park wants to pay 1/3 of the cost.  Bully for them.  The last time I looked, Queen’s Park hasn’t got two pennies to rub together and hopes that advisory panels of businessmen, civic luminaries and activists will carry the can for hard decisions on transit funding.  Who will pay the other 2/3?  Depending on the total cost, that’s a lot of money to spend on fare collection technology.

Over at the TTC, advocates of Open Payment systems claim that the implementation will be paid for by the banking system.  I would like to see that in writing, and whether there’s an upper limit to what the banks will invest in this rollout.  Of course, we won’t know this until after a Request For Proposals has made its way through the mill, and the details may still be considered as confidential commercial information.

What Can The Technology Do?

Presto is a stored value system, in the sense that you load money onto your card’s account, and as you travel around the network, Presto deducts the appropriate fare.  Open payment systems track your riding, and bundle this together in a bill periodically charging you (say via credit card or bank withdrawal) for usage.  That leaves a nice “float” in Presto’s hands of all the unspent fares, similar to the value of unused tickets and tokens for which the TTC has already been paid.

Presto has an automatic reload feature, but this presumes that you have an account that can be billed for that reload.  If reloads using cash are to be supported, then the whole infrastructure of add-value machines and cash handling must be added to implementation and operating costs.

Presto operates by deducting the value of “one fare” (whatever that may be locally) from the stored value of the card.  In the case of GO trips, it also calculates the fare appropriate to the distance travelled, and riders can have a “default trip” programmed on their account.  That default allows riders to avoid having to “tap out” at their destination.  It’s a nice idea, but it shows how much Presto is oriented to people making standard commutes, rather than a more complex pattern of travel through the network.

Open Payment systems work on the premise that people already have something that they routinely use, or can use, to identify themselves.  The obvious examples are credit and debit cards which can interact with contactless readers using RFID technology (Radio Frequency Identification).  However, this is also available using cell phones.  Regardless of the medium, a customer registers with the system to permit transit fares to be billed based on their identification.

Fare Policy is Not a Technology

Far more fundamentally, the question we should ask is this:  what types of fare arrangements would each system offer?

A vital question for proponents of either scheme is the menu of fare options that their systems can support.  Already, we know from the FAQ on Metrolinx site that there are some constraints in the fare combinations that Presto can handle.  Are there more?

Presto does not address the fundamental issue of fare policy.  All it does is to duplicate the existing fare systems.  Is this a system constraint, or does the capability of alternate fare models exist waiting only for policy direction to be implemented?

Everyone who crosses the 905/416 boundary complains about multiple fares.  Indeed, one big attraction of subway expansion north of Steeles Avenue is the disappearance of the fare boundary.  This is not a technology issue, it is a policy issue.  How much should we charge people to ride, and should crossing an invisible line incur a completely new fare?

If we give cross-border riders a discount, what will make up the difference in total revenue?  If we change to a zone system or a time based fare, what are the implications for riders elsewhere in the network?

If we attempt to duplicate the TTC’s transfer regulations, the system must track passengers as they move from route to route, and determine when a “new” trip begins.  That’s a lot of effort and infrastructure we could replace simply by moving to a time based fare.

Why is GO Transit a special fare zone?  How does this fit into The Big Move where GO’s rail lines are treated as if they were a regional rapid transit network?  How far out will we push the subway system so that riders can avoid a higher GO fare?

As part of its review of the Open Payment concept, the TTC has asked its staff to report on a variety of fare options so that we can have an informed debate on a future fare structure.  I have yet to hear a word on the issue from Metrolinx even though this is central to fare policy.

These questions are independent of whichever technology is chosen, but they must be answered.  Some aspects of the system implementation cost are directly linked to the fare structure.  A scheme for fare-by-distance, for example, will require that riders “tap out”.  This changes the passenger flow on vehicles and in stations.  Indeed, the “default trip” scheme on Presto was implemented specifically to avoid “tapping out” for the most common trips.

The Fine Print

The Presto system depends on back-end services provided to Metrolinx by Accenture who, as I understand things, bases their fees on transaction counts.  Without the TTC on the system, the potential fees are much lower, and the business model falls apart.

According to the 2007 TTC report, Queen’s Park has already paid $250-million to Accenture for the development of a GTA farecard system, not including any implementation on the TTC, and that contract goes back nearly a decade.  Is there a contractual arrangement requiring Queen’s Park to make up a minimum payment to operate Presto?  How much have we already invested in that system?  Will this be competitive with an Open Payment system?  Is Queen’s Park locked into a high-cost, proprietary technology?

Beyond Fares

If the transit smart card’s use extends to other services, this moves into an area where the banking industry is already well established.

An important difference between Presto and Open Payments is that the latter does not require reinvention of the banking system.  Banks already exist, and they know how to handle payments through a wide variety of outlets.  If Presto is to become a payment standard, then every store, every agency, must support Presto in addition to the standard bank payment systems, or alternately Presto must adhere to payment industry standards.

This is a case of the tail wagging the dog.

A related issue is “the unbanked”, those who operate only with cash on a day-to-day basis.  The banking industry views these people as a large untapped market.  Moving them to a smart card lifestyle is challenging, but it should be solved by the banking industry as a whole, not as a special function of the transit system.

Where Do We Go From Here?

It’s easy for mayoral candidates and provincial Pooh-Bahs to slag the TTC for its foot-dragging on smart card implementation.  [Yes, I know, "Pooh-Bah" almost by definition cannot be made plural.]  However, the question of “who will pay” has never really been answered, and on that basis the TTC has demurred at each opportunity.

Now with the experience of other systems, notably New York City, in moving to Open Payment technology, the TTC is starting to budge, encouraged by the possibility that they won’t have to pay for or operate a goodly chunk of the system.  I hope that we will see a reworked “business case” soon to substantiate this claim.

Our new streetcars, due to appear in only a few years, will force the TTC to shift away from pay-as-you-enter fare collection.  These cars will load at all doors, and passengers will generally not use a farebox or transfers.  This sets the TTC on a path to a complete revolution in its fare collection, and this will involve some flavour of smart card regardless of which technology is chosen.

Meanwhile, Queen’s Park has insisted that Presto be implemented on the Transit City lines.  The first of these, Sheppard, won’t be in operation until after new LFLRVs hit the city streets, and we will see which fare technology is actually implemented on Sheppard and other Transit City routes.

The TTC and Metrolinx must sort out a viable, common fare collection scheme, but more importantly the entire region must sort out an integrated fare policy.  This brings us directly to the question of operating subsidies from local governments and Queen’s Park, an issue nobody wants to touch.

Battling it out with razor-edged smart cards at dawn is so much simpler, but so much less productive.

• The Board Speaks!
• The Managing Director Reports
• We Have A Vision, We Just Don’t Know What It Is Yet
• Achieving 5 in 10, or Transit City Rescheduled
• GO Rail Service Expansion Benefits Cases
• A Question of Advocacy

The Board Speaks!

Probably the most astounding thing about this meeting, the first anniversary of the “new” Metrolinx, is that the Board members finally found their voices.  I was beginning to wonder if they were ever going to show some indication of earning their keep and actually asking hard questions of staff in public.  We’re not quite there yet, but at least the discussion gave an indication that the Board is thinking about its role.

As regular readers will know, I believe that organizations such as Metrolinx should be publicly accountable through an electoral process and through direct access to one’s representatives.  Boards that answer to nobody but the government which appointed them, and entertain no criticism from the public, can leave much to be desired.

To be fair to Metrolinx, even when it had a political board, much of the “public participation” was managed to achieve concensus with, more or less, what Metrolinx planned to do anyhow.  That other well-known transit board, the TTC, is elected, but has succumbed to the disease of being cheerleaders for the organization right-or-wrong.

Metrolinx has not had to actually do much (as opposed to GO Transit which was simply merged into its new “parent”), and we have yet to see how the Board and the Government will react if Metrolinx badly fouls up any of its projects.

The Managing Director Reports

GO Transit’s Managing Director, Gary McNeil, presented his regular public session report.  There is another one on the agenda in private session, but we don’t get to see that one.

GO is quite proud of improvements in its on time performance.  The information shows up in the Quarterly Customer Service Report also on the public agenda.  The report neglects to mention schedule changes implemented over the past half year so that published times better reflect actual conditions on the line.

Don’t mistake me, having trains and buses show up when advertised is a good idea, but it is odd that GO wouldn’t mention this as a reason why their stats have improved.

Riding is up on the system, moreso on buses than trains mainly due to capacity constraints.  This table of current demands on major corridors at Union Station is taken from the Benefits Case Analysis report on GO expansions discussed later in this post.

Over the summer, GO will review its priorities for future service expansion.  To what extent this might be constrained by funding cuts or deferrals is unknown as the GO side of the house appears to have come through the budgetary process unscathed.

Board member Joseph Halstead asked what the TTC is doing on fare collection.  McNeil replied that the TTC is looking at a parallel “open payment” system, and is working with the Province on integration of these systems.  Those of us who follow discussions at the TTC might think this a slight exaggeration.  On the TTC side, the grave concern is that by the time Presto is rolled out across Toronto, it will be “yesterday’s technology”.  This matter will, no doubt, reappear for debate before both Boards.

Presto readers are installed in 12 subway stations which have been identified as the origin of 80% of GO’s commuter market for the 905.  This allows the lion’s share of GO Presto users to board the TTC for their commute trips to and from Union Station.

We Have A Vision, We Just Don’t Know What It Is Yet

The Metrolinx Board gave some thought to a “Vision and Mission Statement” during a private meeting earlier in 2010, and a first cut at this showed up in a report on the May agenda.

Flame on.  As someone who worked in management of a very large public sector agency for a quarter century, I have seen my share of “Mission Statement” proposals and they are without exception steaming piles of equine effluvia, management games replacing productive work with the illusion of motion, and an absolute boon to consultants and facilitators.  Flame off.

The purpose of the exercise, I am told, is to aid in the unification of GO Transit and Metrolinx behind a common goal, mission, vision and set of corporate values.  In furtherance of this marriage, a separate set of statements was proposed for each organization.  This is rather like a marriage where each partner is reading from a different text.

• For Metrolinx
  • Vision: Transforming the Way the Region Moves
  • Mission: To Champion and Deliver Mobility Solutions for the Greater Toronto and Hamilton Area (GTHA)
• For GO Transit
  • Vision: To Be the Preferred Choice for Regional Travel across the GTHA
  • Mission: To be a Customer-First Regional Transit Service

The Board was not overwhelmed by this proposal, and sent the whole thing back to staff for another go.  CEO Rob Prichard suggested that they would try to come up with some corporate “values” that would support their mission(s).

Although Metrolinx has a mission to “champion and deliver”, I am unsure whether a sense of “advocacy” forms any part of this concept.  I will return to this later.

Meanwhile, if I am waiting at a streetcar stop for a “mobility solution” to appear, I will remind myself that Metrolinx’ mission is for regional travel, and that for the Queen car I must complain elsewhere.  Some day, Metrolinx will embrace the idea that regional journeys include local components that do not involve a private auto and a parking garage.  They don’t have to own and manage the local component, but they need to acknowledge and fund it.

It is rather quaint that Queen’s Park wants everyone to use its standard fare collection system, Presto, but has little interest in funding the local service improvements the growth of transit riding will require.

As I was making notes about the debate, I wrote “how long will they talk about this versus the substantive reports on project funding”.  Clearly I have sat through too many of this type of meeting.

Achieving 5 in 10, or Transit City Rescheduled

Just as the GO trains have been rescheduled so that the advertised times match typical day-to-day operations, Transit City and VIVA have been rescheduled to fit within Queen’s Park’s constrained budget.  I have written at length elsewhere on the new rollout plan for Transit City and will not duplicate that discussion here.

CEO Rob Prichard observed that Councillor Lindsay Luby had thanked him for the delay to the western end of the Eglinton LRT project as this will allow more time to sort out its design.  If every Councillor were so fortunate in having projects delayed indefinitely, we would never get anything done.  Oddly enough, the Councillors and MLAs who object to the proposed design in Mt. Dennis are not cheering about the new Transit City schedule, nor are they being consulted regarding alternate designs.

The Finch West and SRT projects, now scheduled to begin in 2015, York VIVA Phase 2, and the Transit City carhouses (Conlins Road and Norfinch) will be reviewed as possible “alternative financing” projects by Infrastructure Ontario.  I can only hope that “IO”, as it is called, and the whole PPP fetish held so dear by some will be much better understood by the time any contract must be signed for these lines.  How many more failed partnerships and horror stories such as the demise of London’s PPP must we hear of?

Rob Prichard observed that one problem with AFP is that liabilities accrue regardless of who builds the project.  Even if a private partner builds you a carhouse, for example, you are contractually obliged to pay for it.  From an accounting point of view, that’s a debt from the moment you sign the contract.  We can thank Enron and other scandals for changes to public sector accounting that prevent (or make more difficult) the hiding of public debt and future obligations through leases and third party transactions.  This makes IO’s work a tad more difficult when the announced Provincial policy is to limit the growth of debt.

The revised rollout plan includes purchase of cars for the four lines.  The total fleet, 182, is smaller than original plans because, of course, the full routes are not (yet) part of the grand design.  The contract is expected to be signed before the end of June 2010.

During the presentation, Metrolinx Vice-President Jack Collins mentioned that the projects already in hand will keep the project team at the TTC extremely busy.  This led to a question from Board member Peter Smith (formerly Chair of the GO Transit Board) asking whether the original scope of transit construction could have been achieved.  This was quite transparently a gambit to suggest that even if more money became available, TTC and Metrolinx would be unable to ramp up additional projects.

That begs the obvious question of how Metrolinx itself planned to spend $2-billion a year or more if the Transit City project office will be hard-pressed to spend less than $4-billion from now to 2014.  The obvious answer is that project offices scale depending on the amount of work.  Other teams are today looking after the Spadina Subway and many GO capital projects.

Collins observed that the construction industry is hungry and capacity is available in the industry because the private sector has pulled back on major investments.

Board member Paul Bedford (former Chief Planner for the City of Toronto) asked about the Pan Am Games and service to the Aquatic Centre at UTSC (University of Toronto Scarborough Campus).  Rob Prichard replied that the so-called “Morningside Hook” would cost about $165-million, but as it was not part of the original Sheppard LRT scheme, it would have to be dealt with as an “extra”.  In due course, he agreed that staff would report back in June on this option, and there appears to be strong support among the Board for this.  This is an obvious add-on to the Sheppard line not just for the Games, but as an eastern anchor for the line much as York U will be for the subway extension now under construction.

Note that on Page 16 of the presentation material, the location of Morningside Avenue is mistakenly shown as west of the interchange with the Scarborough RT when it is, in fact, somewhat to the east.  This explains the corresponding error in the map published with the Star’s background article.  It’s so nice to know that both our planners and our media are so well-informed on the geography of the city.

The Board has a short discussion on that difficult question “What Is LRT?”.  Collins was prepared to talk for an hour if he had to, but gave a thumbnail sketch setting out the major differences between the St. Clair and Spadina lines (which are much closer to “streetcars”) and the Transit City lines (which are a hybrid between fully grade separated rapid transit and street running, the latter to have better priority and more widely spaced stations than “streetcars”).

On the subject of capacity, Collins stated that Eglinton would be capable of 12K/hour.  To put this in context, that is 200/minute, or a three-car train (service design capacity, say, 450) every 135 seconds.  (The 450 number is derived by taking the design capacity of the CLRV, 74, doubling it and rounding up to 150, and then multiplying by 3.  This is a conservative value, and has plenty of headroom for surge/peak loads within a peak hour.)

To a question about the Air Rail Link (ARL), Prichard replied that this was a joint project between SNC-Lavalin, Ottawa and Queen’s Park.  GO Transit will charge the ARL for use of its tracks and for support services such as dispatching.

GO Rail Service Expansion Benefits Cases

As part of the review of the “Big 15″ projects within Metrolinx’ “Big Move”, the Board considered a compendium report on four proposals:

• Barrie Corridor
• Milton Corridor
• Richmond Hill Corridor
• Bowmanville Extension

This Benefits Case Analysis (BCA) report is summarized in the presentation given at the meeting.  I will deal with this report and related reports about the proposed Peterborough service (here and here) in a separate post.  Also, a report on the Stouffville Corridor is expected at the June Board meeting.

Among important points noted in the presentation:

• GO already has major capacity problems during the peak period and future service will outstrip the capacity of even the expanded Union Station.  A separate study about rail terminal options is expected to report in the fall of 2010.
• Rail corridors are limited in their number and capacity, and another rail yard will be needed to service trains.
• The service levels proposed for Milton, Barrie, Richmond Hill and Stouffville are a huge increase over today’s operation with all-day 30-minute headways in both directions and 10-minute peak direction service.
• Diesel Tier 4 technology is assumed, but this matter will also be picked up by the Electrification Study.  Indeed, the design of additional terminal capacity at Union may force electrification if the platforms are underground.
• All but the Bowmanville extension scored well on the cost/benefit analysis.  These numbers are always suspect at Metrolinx, but I will not comment on the information in the BCA report until I have fully digested it.
• The Richmond Hill corridor still scores over 1 (at 1.1) even if the Richmond Hill Subway is included in the network.  A full BCA for that subway proposal has not yet been published, but the numbers are rumoured to be quite uncomplimentary for this project.

A Question of Advocacy

Earlier I talked about the Metrolinx Vision and Mission statement which includes the concept of “championing” better transportation systems.  To that end, Metrolinx needs to move beyond a meek, “yes Sir, right away Sir”, response to Provincial funding cuts into an advocacy role.  Indeed, this is the heart of the cultural divide between Toronto politicians and Mayor Miller and those at Metrolinx and Queen’s Park.

Without question, it is the Government’s prerogative to set fiscal plans, and its agencies must live within them.  However, it is also the duty of agencies and Ministers to advise the Government on the implications and alternatives available for future budgets.

In particular, the transit funding cut has been justified as a necessary step to limit the growth of Provincial debt.  I will take the Government at their word that this is true, but if so, then the justification for withholding funding evaporates if the economy recovers more quickly than projected in the 2010 budget.  World events are uncertain, although there are indications that Ontario is in better shape now that it had planned to be.  Whether this holds remains to be seen.

Suppose there is more headroom for debt in 2011 than had been planned.  What Metrolinx projects should benefit from the ability to move back toward the original “burn rate” of the budgets for the “Big 5″ projects?  The time constraints on the SRT project likely prevent its being moved back to a pre-Pan Am schedule, but Finch West is a simple project independent of timing constraints.  All it needs is funding.

Metrolinx needs to embrace an advocacy role for transit — its funding, construction and operation — and this must include better funding for local operations.  Imagine if GO does operate half-hourly service all day on its major routes.  How will people reach their destinations if the train serves only a gigantic parking lot full of cars awaiting homebound commuters?  Metrolinx may think of local transit as “something we don’t do”, but its Big Move is doomed if local transit isn’t funded and operated at a level that complements much more extensive rail operations.

Funding is a big issue now both locally and regionally.  Funding needs its advocates, people who will take the political heat for new taxes and fees, people and organizations who can see, who have a vision of what transit will look like when it really is the preferred choice for travel.

Back in the dark ages when creative cheating on one’s transfer produced roughly the same effect as a ride-at-will pass, TTC management said a pass would simply not work in Toronto.  Over the years, they have trotted that story out for a lot of things, sadly, and the record is wearing out.  (It would have been a record, probably a wind-up grammaphone knowing the TTC back in those days.)

Then a strange thing happened.  Hamilton, little often-ignored Hamilton down at the end of the lake, got a monthly pass.  If it could work there, why not in Toronto?

Metropasses now account for over half of the rides taken by adult customers on the TTC.  With some luck we may see a shift to some form of smart card (that’s an article in its own right) and a much more flexible fare system on the TTC sometime this decade.

On Saturday, go have a coffee and a small pastry of your choice with a little candle, and sing Happy Birthday to your Metropass!

Thursday, April 15, 2010
6:30 to 9:30 pm
Committee Room 1, Toronto City Hall

Here is the meeting description:

Open payment is an exciting breakthrough in fare collection. Instead of using a traditional farecard, it allows transit riders to use their credit or debit cards – even cell phones – at the turnstile or farebox. A prepaid card will also be available for children and others who choose not to use their personal cards.

By using the same technology as every bank, business and retailer, transit operators can be assured that their fare systems will have the highest level of security and will never be obsolete. Visitors from across Canada and around the world will be able to tap and go without having to figure out how to buy a fare.

The TTC is a full participant in the Presto farecard project and continues to work with the provincial agency to identify funding to bring farecards to Toronto. By proceeding with open payment in parallel with Presto’s traditional farecard the TTC is leading a revolution on how riders experience public transit.

Come to an information session on open payments led by Paul Korczak, former Chair of the Transportation Council of the Smart Card Alliance, a current member of the Near Field Communications Academy, and is actively involved in peer reviews and public forums on transit fare payments around the world.

With all the discussion of Smart Cards, this will bring a much-needed update on the evolution of payment technology to Toronto.

504 King and 508 Lake Shore: 

King cars will continue turning back at Roncesvalles and Queen, but will reach there via Shaw and Queen Streets.  Watermain construction which last year caused Roncesvalles to be torn up last year moves to King between Ronces and Jameson.

The 504 shuttle bus will be rerouted and extended to run between Shaw and Dundas West Station bothways via Roncesvalles looping via Strachan, Douro and Shaw.

No date has been set yet for resumption of streetcar service on Roncesvalles, but this is expected to be in the late fall.  The diversion via Queen and Shaw is expected to last to the end of August 2010.

502 Downtowner and 503 Kingston Road Tripper

The reconstruction of Bingham Loop, deferred from 2009, will occur this summer.  Buses will replace streetcars over both routes until mid-August.

Replacement bus services will loop via Victoria Park, Meadow and Blantyre to Kingston Road.  The peak service on both routes will be improved from 7’30″ to 6’00″, but offpeak service on the 502 will remain at 20′.

22 Coxwell and 70 O’Connor

Reconstruction of the bus loop at Coxwell station requires the removal of all bus service.  Routes 22 and 70 will interline, and all of the “O’Connor” service will run through to Queen or to Victoria Park depending on the time of day.

Existing interlines between the O’Connor, Gerrard and McCowan routes will be discontinued during this period.

72 Pape

Construction at Pape Station requires that the Pape bus be rerouted to loop at Donlands Station.  Passengers transferring to this route from the subway at Pape will do so using on street stops.  This diversion will last until the end of 2010.

The seasonal extension to Cherry Beach will operate during the evenings Monday to Friday, and all day on weekends and holidays.  This will run until Labour Day.

512 St. Clair

The mixed streetcar and bus operation on St. Clair is expected to last until the latter part of June 2010 at which point the TTC hopes to restore streetcar service to Gunn’s Loop.

509 Harbourfront and 510 Spadina

The seasonal fare collection scheme on Queen’s Quay will be in effect until Labour Day.  No fares will be collected eastbound on Queen’s Quay between Bathurst and Union Station on weekends after 3 pm, and there will be collectors stationed in the tunnel linking the Union Station Loop to the subway.

One PCC car will operate on the Harbourfront route on Sundays until September 5, 2010 between 1130 and 1930.  This will run as an extra, and will be subject to availability of both a car and an operator.

Seasonal Route Extensions

• 72 Pape to Cherry Beach (see above)
• 28 Davisville to the Brick Works
• 29 Dufferin to Ontario Place (service south of Dufferin Loop will be split between the 29B Ontario Place and 29D Princes Gate branches)
• 86 Scarborough to the Zoo
• 85 Sheppard East to the Zoo
• 510 Spadina King short turn extended to Queen’s Quay on weekends
• 165 Weston Road North to Wonderland

Other Route Changes

• 25 Don Mills service north of Steeles removed (York Region request)
• 29 Dufferin trial service in Exhibition Place rerouted to operate via Manitoba Drive, Canada Drive, Princes’ Blvd., Nunavut Rd., and Nova Scotia Ave to Manitoba Drive.
• 224 Victoria Park North service extended to Elgin Mills (York Region request)
• 96B Wilson route changed via Claireville Drive
• 96C Wilson service removed from Thistledown Blvd. early mornings and late evenings

Service Level Changes

Many route have new schedules starting on May 9 primarily for seasonal changes in demand.  The details are in a spreadsheet linked below.

2010.05 Service Changes

This all began with a media advisory Tuesday night that there would be an important announcement the following morning.  Don’t be left out in the dark.  Get there early with your cameras for the best position!  The next twelve hours brought rampant speculation about Mayor Miller resigning to take a job elsewhere, about a reversal of his decision not to stand for a third term, or just about anything else the pundits could spin to fill air time, print columns or websites.

The announcement was an anti-climax after the buildup.  Commentary switched to “why didn’t you know sooner” and variations on how the Miller crew had been misleading the public about the severity of Toronto’s financial position.  Lost in all of this chest-beating was the fact that this surplus is a windfall, a one-time benefit of circumstances coming out better in 2009 than expected.  Many of the savings that produced the surplus have already been factored into the 2010 budget, and we cannot expect a repeat performance — a $350-million surplus overall — in future years.

That’s where the TTC comes in.  For 2010, the City will provide all of its operating subsidy, roughly $440-million, and not a penny will come from Queen’s Park.  The total operating budget is about $1.4-billion, and if it rises as projected by 5% or so in 2011 (through a combination of wage and service increases), this will add $70-million.  Oddly enough, this is almost exactly the amount of the proposed tax stabilization reserve that would carry forward into 2011.

Mayor Miller claims that we could see a 2011 with no fare increase, a 3% property tax jump and a balanced budget.  The kicker is that he assumes he will be able to conclude an agreement with Queen’s Park for the resumption of shared operating subsidies in 2011.  The response was predictable given that this is an ”ask” of about $250-million for 2011 before the province has even published its budget for 2010.  I was rather surprised that Miller spoke as if this were a done deal when, if we are to believe Queen’s Park, it is at best still under discussion, and the question of a partial or complete TTC takeover by Metrolinx is still bouncing around the rumour mill.

Regardless of whether the province steps in with operating subsidies, my position on this situation is quite clear.

First, we should not prejudge the use of surplus money from 2009 in the 2011 budget.  Over and over politicians and advocates who support transit speak of the importance of good transit service.  Fare freezes make good pre-election sound bites, but they don’t address the issue of providing better transit service.

Second, this is one-time money, not an ongoing revenue source.  If we use $70-million to freeze fares in 2011, that amount will have to be found anew in 2012 in addition to another $70-million to handle that year’s cost increases.  That’s a prime recipe for big jumps in fares and cutbacks in service, especially if the City is governed by a less transit-supportive Council and Queen’s Park hasn’t stepped in to help out with TTC costs.

Yes, there may be ways to increase the effectiveness of transit spending.  I don’t want to get into a big debate here about everything from wage controls to outsourcing or breaking up the TTC.  These are, to an extent, red herrings in the long term because they will at best achieve a temporary drop in cost pressures.  Eventually, costs will reach a new plateau from which they will grow and we will be back to the same debates about fares, subsidies and service levels. 

We should have these debates, if only to satisfy ourselves of the validity (or not) of alternative ways to provide transit in Toronto, but the long term issue of rising transit costs will not go away, particularly if we expect large-scale increase in transit use throughout the GTA.  The underlying policy issue, however, is what we expect our transit network to accomplish, and what the failure to improve transit’s market share means for the future of the region.

Meanwhile, Toronto must concentrate on maintaining and improving the attractiveness of transit, and anything that artificially hides the ongoing increase in costs simply threatens transit in future years when the increases must be faced.  The 2009 surplus should be seen for what it is, a one-time benefit to a city that tightened its belt and came through the year in better shape than expected.  Toronto should not prejudge transit policies for 2011 and beyond based on a one year windfall and an as-yet unseen provincial funding agreement.

As expected, the Metrolinx Board approved the proposed increase in GO Transit fares at its recent meeting.  The contrast with the debates about TTC budgets and fares was quite striking.  The greatest potential for discord came with the presentation of an anti-increase petition.

The bottom line for this increase is “to ensure fiscal responsibility and meet the needs of a growing market of commuters” (presentation to the Board, page 2).  That’s shorthand for keeping the subsidy requirement under control, paying for the operations we have now and giving us some headroom to do more.

GO customers are, after all, from a very different market than the TTC.  Their median family income is $100k, they live well outside the core, and auto travel is already an established part of their lifestyle.  85% are fully employed, 9% are students and 1% are seniors.  They are travelling on GO overwhelmingly by choice and good service, in all aspects, matters.

40% of GO riders use monthly passes and another 40% use 10-trip tickets.  This is not unlike the TTC where the monthly pass accounts for over half of the adult trips, and a large majority of those remaining use token fares.

The purpose of the fare increase was to raise revenue by $14.6m in fiscal 2010.  Provincial subsidy will also jump for 2010 from $52.6m to $72.1m, but over half of this changes adjusts for one-time revenue in 2009/10 that allowed for a lower subsidy in that year.  GO’s total operating budget is $386.7m, and they expect to carry 56m rides.

By comparison, the TTC’s fare increase is project to raise somewhere between $36m and $50m depending on which figures you believe.  In 2010, the City will carry the entire $430m TTC subsidy while Queen’s Park spends its way through this budget cycle propping up Ontario’s economy.  The TTC’s proposed total operating budget is $1.37b, and they expect to carry 462m rides.

GO’s workforce, including contract staff, is 1,938.  The TTC’s proposed “conventional system” workforce for 2010 (as discussed in another thread), excluding contractors, is 10,491.  This number omits Wheel Trans, Capital Projects and Toronto Coach Terminal.

The TTC’s budget is only 3.5 times GO’s, but there are far more staff (5.4:1) and riders (8.2:1).  The subsidy per rider on GO is $1.29.  On the TTC it is about $0.93.

Earlier, I mentioned the potential for discord at the Metrolinx meeting.  The protocols for these meetings accept the public’s presence only grudgingly, unlike meetings for municipal agencies such as the TTC where in camera discussions are allowed on only a handful of grounds.  There are no deputations at Metrolinx, unlike the City of Toronto where a long history of public involvement would be impossible to silence.

The Directors, with few exceptions, ask no questions in the public session, and everything has clearly been worked out beforehand.  They’re just one big happy family.

Alas, thanks to an email slip-up, Metrolinx’ attitude slipped into view.  An internal email from Rob Prichard, Metrolinx CEO, was cc:ed to the petion’s originator in error.  From this, the clear intent was to give the petition as little exposure at the meeting as possible and assume that the Board would ignore it.  They did.

The original article from February 12 follows the break.

The Metrolinx Board will consider a GO Transit fare increase proposal at its February 19 meeting.  This increase is proposed to take effect on March 20, 2010.

The fare increase would, generally speaking, involve an across the board 25-cent increase in all single ticket fares.  There would be a ”top up” fare of up to $3 for the Niagara Falls excursion service.  It is unclear what would happen to this once rail service to Niagara Falls becomes part of the standard schedule.

The proposal will also standardize the relationship of the various discount fares to the single ticket rates.

• 10-ride tickets will cost 9.25 single fares for adults, 8.5 single fares for students
• monthly passes will cost 33 single fares for adults, 26 single fares for students

The fare bylaw also includes provisions for various special cases such as group rates as well as for ticket refunds.  The contrast with the TTC, where management invents new rules with every fare increase, is quite striking.

I will review the budget and the sources of increased costs for 2010 in a separate article, but the fare increase deserves special mention.  TTC staff have a bad habit of stating almost everything relative to something else, and this makes reference to a zero base tricky.  Money shuffles around rather like a game of Three Card Monte, and only if you’re very good, can you find the lucky card.

The 2010 Shortfall, Then and Now

First off, we get a description of the budgetary shortfall.  This is the difference between planned expenses and known revenue (either fares, subsidies or other income).  This shortfall, originally stated as $106-million in November, then $131-million in December (both before any fare increase), has been whittled down to $46-million by various means, some of which are only accounting changes.

In past budgets, the TTC made provision for accident claims in the year of the accident even though the payout may be years in the future.  The City of Toronto’s standard way of handling such claims is to expense them in the year they occur, and this takes a $25-million reserve off of the 2010 budget.  This is a one-time saving which only puts off costs to future years.  Eventually, we will reach a point where there is nothing left in the old claims reserve account, and the cost of settlements will show up as a current item.

When the Commission approved the fare increase, staff claimed that it would bring in $48-million in new revenue.  Well, sort of.  They deduct $2-million as the cost of implementing the Transit City Bus Plan (for 2010) because that was part of the fare increase package, and this leaves us with $46-million, net.  Of course, the TCBP will only run for a few months at the end of the year, and its full year cost will have to be factored into the 2011 budget.

Next, the staff predict that ridership will fall from 472-million (2009 probable) to 462-million (2010 budget) even though riding has actually been growing relative to 2008 all year.  The total is below the budgeted projection, but not below 2008 levels.  That loss of riding allows the service budget to be cut by $9-million.

Miscellaneous reductions and the transfer of Special Constable costs to the Toronto Police Service yield another $5-million, and this brings the gap down to $46-million.

Fare Revenue — Now You See It, Now You Don’t

Recall that staff claimed the 11% fare hike would bring in $48-million.  You may also recall that the TTC’s revenue stream is roughly $900-million, of which most is from the farebox.  One might reasonably expect to see around $90 million from the fare hike, but it doesn’t work that way.

Because the TTC assumes that we will lose 10-million rides, we also lose the revenue associated with those rides.  At the 2009 average fare of $1.78, that translates to $17.8-million dollars, or a bit over$20-million if you include the extra 25¢ the fare increase would bring.

Next, the TTC believes that the fare increase will disproportionately affect riders who pay expensive fares — single cash fares and adult tokens, and that the effect will be lower or negligible for the various concession fares.  This will drive the average fare down by 2.5¢ relative to what it would have been otherwise, and that “costs” $12-million.  This, of course, is money the TTC never had.  What they are saying is that if everything had stayed the same, they would have taken in $48-million more, but that’s not how the real world works.  In effect, the benefit of the 11% fare hike were overstated by about 33% because they were shown on a gross rather than a net basis.

(Other income from advertising and parking change a bit, but the effects net out to zero.)

This means that after an 11% fare increase, the TTC’s revenue stream will only rise from $904-million to $940-million, or about 4%.

Expenses rise by $82-million from $1.298-billion to $1.380-billion (6.3%), and this leaves the $46-million funding gap after the net new revenue is included.  I will look at the issue of costs running above the rate of inflation in a separate article.

What Happened Between November and December

When the Commission discussed the proposed fare increase in November, the shift away from expensive fare forms was already underway, and the projected 2009 revenue was below budget.  It is unclear whether the presumed drop in revenue for the 2010 budget continues this change pro-rata into 2010, or if this is an additional drop arising from continued shifts from full to concession fares.

In the three scenarios presented for a fare increase (see page 8 of the November report), the revenue benefit ranged from $50.4-million to $62.5-million depending on the pricing option for the Metropass, and the projected riding losses ranged from 11.5 to 12.5-million.  Keeping the Metropass at the same pricing multiple only cost $12-million in lost revenue against the highest projection.  Even with this included along with lost riding in calculations, the net revenue projection was about $50-million.  Now it is only $36-million.

Why has there been such a shift in projections in only one month?  Why were higher numbers shown to the Commission in November, only to be adjusted in the December budget presentation?  What has changed in the methodology of staff riding and revenue estimates?

If riding continues to increase in 2010, even with the fare increase, then the TTC will have both a greater demand and greater revenue.  However, increases generally do not bring in enough to cover the cost of more service, and the system will be constrained in reacting to growth if this occurs.

Between November and December, there was a substantial increase in the pre-increase budgetary shortfall (up from $106 to $131-million) and a decrease in the net benefit of the new fare structure (down from about $50 to $36-million).  That’s a big swing in one month, and TTC staff should be called to account for such major changes.

In the next article, I will turn to the expense side of the TTC’s budget.

Oddly enough, the projected increase in revenue is well under 11% thanks to the estimated loss of riders due to such a big jump in fares.  The idea of a freeze last year may have seemed good at the time (going into a recession), but the consequences of having two years’ worth of increase at one time is the downside.

The Commission overrode staff’s recommended fare scheme and held the Metropass multiple at the same level as in 2009 so that it would rise to $121 rather than $126 (to $111 instead of $116 for subscribers).  In a major new policy, the Commission, reacting to a large and well co-ordinated campaign, removed the age limit for student passes and extended them to post-secondary students effective September 2010.  This will save them $22 off of a regular Metropass.

The Commission also agreed to pursue a target of 60% farebox recovery to bring Toronto’s system to a level closer to other Canadian systems.  What remains to be decided is how that 60% level would be achieved.

Fare policy should never be made in the heat of a budget debate, but nobody seems to want to discuss the issues at any other time.  This brings gains, if any, to the squeakiest wheels, not necessarily the most deserving.

I expect all sorts of ill-will to come my way for saying this, but we hear a lot about the effect of transit fares on “the poor”, whoever they may be today.  Are students “poor”?  In past fare debates, they have been painted by advocates for welfare recipients and the working poor as coddled members of a class who could look forward to substantial incomes.  Yes, some students come from backgrounds of limited means, but does this entitle them to fare discounts?

The poor, those for whom budgeting consists of day-to-day decisions about what they can spend, choose not to buy passes because this would represent a single large outlay and because they are unsure of actually needing a pass for the entire month.  The sad fact is that “the poor” tend to pay single fares, or at best token fares, because that’s what their cash flow permits.

Taking the farebox recovery to 60% is presumed by many to mean “freeze the fares”, but that’s both shortsighted and not necessarily the best policy.  The TTC budget for 2009 was roughly $1.3-billion, and a 10% reduction in fare recoveries represents $130-million of new “expense”.

• The reduction might be achieved by running more service, changing the standards so that buses and streetcars ran more frequently with more empty space (even seats!).
• It might be achieved by changing the fare structure.
  • The TTC has already priced the implementation of a time-limited fare (unlimited riding for one fare for two hours) at about $15-million annually.
  • Over a decade ago, the cost of senior/student fares relative to adults was bumped in a revenue grab to stave off a larger adult fare increase.  Should this be reversed?  All in one go, or over a few years?  How much would it cost?
• As a fare freeze, that might last two years, after which we would be back into a debate about a fare increase at least at the level of inflation.

Better service benefits everyone not just by making the system attractive and improving its political base (without which better subsidies are unlikely), but also by reducing the time wasted by riders trying to get from “A” to “B”.  The time spent waiting for a bus or streetcar to show up can be a significant part of someone’s trip, and unreliability further extends the period a rider must allow for the “routine” delays that may occur. 

Time-limited fares would simplify the entire transfer mechanism (establishing a clear yes/no test for transfer validity), but would also act as a limited-time pass giving people who must make a number of linked, short trips the ability to travel without paying many fares.  (Yes, there are day passes, but they’re not always available when and where you need them, and four fares may be more than you want to pay.)

Adjusting the ratio of senior/student fares to adults would improve the lot, financially, of a group that were treated in the past as cash cows, a captive market that would bear any increase.  There will always be fare increases eventually, but there is also a strong argument for restoring the ratio between adult and the concession fares to historic levels.

Smart cards are mentioned often, but the system should allow someone to qualify for bulk discounts (equivalent to passes) based on their usage history without having to pay for an entire week or month of transit use up front.

If the intention of that 60% target is simply to freeze fares, that’s nothing more than a call for greater subsidies without the riders putting any money into the pot, and it will do nothing to change the quality of transit (or the fare structure).  Two years from now, we will be back in exactly the same place.

If the intention is to have a full debate about how we might adjust fares and service, then that’s worthwhile.  We can talk about investing in transit, in making the system more equitable, in improving service and reliability.  Those are changes where new subsidies provide lasting results for riders, not bandaids to defer real discussion until the next budget crisis.

• Report 2a 2010 TTC Operation Budget – Fare Increase
• Report 2c Review of Smartcards at the TTC and the Presto Smartcard System

Today the TTC will consider fares for 2010 as recommended by staff as well as a number of alternatives that will come forward from both the Commission and from other deputations at this meeting.  Also on the agenda is a report detailing conditions for the the TTC’s participation in the Presto Smartcard project.  These items are related.

First, with respect to the fare increase, my position is simple:

• A fare increase is unavoidable, and indeed might have had less effect both in the media and in the general public if there had been an increase for 2009 rather than a fare freeze.
• The proposed increase will not raise all of the $100-million plus shortfall forecast by the staff report.  Additional funding will have to come elsewhere either by added revenues or by adjustments to the budget and service.  Having no increase at all is not an option.
• The proposed increase in the Metropass price multiple from roughly 48 to 50 fares is contrary to the direction the TTC has been taking with the Ridership Growth Strategy, and there has been no public discussion of this or many other possible changes in the fare structure.

I concur that a 25 cent increase in the base adult fare is reasonable under the circumstances, but all other pricing including passes should rise proportionately without penalizing any subgroup of riders.

Metropass users now account for over half of the adult trips on the TTC, and this proportion continues to grow.  Indeed, with various incentives such as the monthly discount plan, volume purchases and the income tax rebate, passes are well on their way to being the dominant form of fare payment in Toronto as they are in many other cities.

As the TTC moves to smart cards, the distinction between a “pass” and a single “token” fare will become even more blurred and pricing will likely move to a more general discount system based on volume of use within a period of time (week, month, holiday period, etc).  This is hardly the time to be tinkering with the Metropass multiple, especially when many other possible changes in the fare structure are on the table.

A troubling comment in the report notes that overall costs will increase in 2010 by 7% due to several factors, and that this rate of increase will continue for the foreseeable future.  This is an alarming projection, and staff should produce considerably more detail to substantiate this claim.  How much is a presumed allowance for future service improvements, for labour, for materials and energy?  If this rate is unavoidable, how will the TTC’s funding sources – fares, municipal and provincial subsidies – keep up?  This is a vital part of TTC planning comparable to the long-range projections in the recent Capital Budget debates, and it should form a core part of the Operating Budget report in December.

Fare policies are rarely debated except when a fare increase is proposed, and the discussions are always in the context of a change that must be approved “today”.  Alternative proposals emerge, some on the day of debate, and they are considered in the political heat of the moment rather than as part of an overall fare strategy.

With the Ridership Growth Strategy, Transit City and more recently the Transit City Bus Plan, the TTC put forward a range of options, discussed the implications of each, priced them and estimated the benefit for ridership and overall system attractiveness.  I believe that the same process is essential to a review of fare policy.

Recently, we learned through the media that extension of student pass pricing to post-secondary students would be proposed today by deputants and championed by Chair Giambrone.  The estimated cost is cited as $2.5-million, but there is no source material for this, nor do we know if it is an annualized cost, or merely the cost to provide the lower-priced passes effective in September 2010.

We also learned that a time-based fare which would provide, in effect, a time-limited pass in place of a transfer would cost $15-million a year, and the Chair dismissed this as an unreasonable cost.  Is it?  Has there ever been a debate on the issue relative to the many other changes both in service and fares the TTC might implement?

How might a combination of distance and time-based fares work to address both cross-boundary and short-trip convenience issues that are often parts of fare debates?

The TTC will move to Smartcards starting likely in 2012.  This technology is integral to all-door loading on the new streetcars, and it is a condition of funding by Queen’s Park for the Transit City network which will open beginning in 2013.  The TTC will put forward its business requirements for a Smartcard system, and it is essential that these requirements capture all of the options for a future fare structure.  The last thing we need to be told, after spending nearly half a billion dollars to implement the system, is that “the computer can’t do it”, or that some option we might have had wasn’t in the specification and is, therefore, not available.

Before the TTC finalizes its business requirements, there must be agreement about just what those requirements are.  These would embrace not only fare media (stored value systems, credit/debit cards, cell phone) but fare structures, payment systems and distribution schemes that take into account the wide variety in TTC user locations, riding patterns and demographics.

The TTC’s network is by far the most complex and the most heavily travelled within the territory that Presto will eventually serve.  Toronto must not be hamstrung in fare policy by a simplistic model based primarily on commuting trips, limited network connectivity and simple trip patterns.

Although Presto is a provincial initiative, the TTC and the City of Toronto should seize control of the debate on fare policy and technology which will overwhelmingly affect TTC riders.  I strongly urge the TTC to launch such a debate.  Final approval of the TTC’s participation in Presto may be hard to withhold given the straightjacket Queen’s Park placed Toronto in with respect to Transit City, but that approval should only be given once Toronto is sure which capabilities it wants in that system.

In summary, I urge the Commission to:

• Approve a 25-cent increase in adult token fares with proportionate increases in other fare prices as shown in the first of three scenarios in the staff report.
• Ensure that a detailed explanation for the anticipated ongoing 7% increase in operating costs is included in the Operating Budget report for December 2009 together with a description of how these increases might be addressed and contained.
• Launch a fare policy review program including a report on fare options, costs and ridership effects; consultation with the public, members of Council, group and agencies representing various constituencies such as students and the poor.

The most important fact about Tuesday’s TTC decision, whatever it will be, is that it will not set, once and for all, either the fare and service levels for 2010, nor general fare policy for the future.  Any attempt to do so runs directly into the limitations of the TTC’s mandate and the simple truth that neither the City nor Queen’s Park have clearly stated how much the TTC might get in operating subsidies for 2010.

For next Tuesday, as I have said many times, I support the proposed 25-cent token fare increase with all other fares rising proportionately.  The attempt to grab $5 extra a month from Metropass holders is an unfair, precipitous action brought forward by TTC staff who have always fought against making the pass “the better way” to travel.  That the scheme was announced by a press release rather than by a formal proposal from the Commission itself raises serious questions about who is setting policy at the TTC.

If the Commission adopts this fare scheme, the TTC will still be about $50-million in the hole going into the 2010 budget process.  At this point we have no idea what sort of tradeoffs this might entail, and the Commission is asked to implement a fare change without all the facts on the table.

As I mentioned in my previous article, TTC staff claim that the system’s costs will rise by 7% per annum for the foreseeable future, but they do not quantify the source of this magnitude of change.  Some factors listed in the staff report are non-recurring or have a limited effect on future budgets.

Next Tuesday, as we always see when fare increases are on the table, there will be many groups calling for various changes in fare structures ranging from a complete freeze to new discounts for certain groups of riders.  I believe that the Commission, and by extension the City, should not be making fare policy on the fly.  We are all badly served by “debate” that is inevitably presented as a decision that must be taken today lest the sky fall tomorrow.

Among the proposals we will likely hear are:

• A complete freeze on fares.  This is extremely unlikely as both the City and Queen’s Park are in no mood to dole out more transit subsidies.  That 7% annual increase would have to be absorbed through internal economies and service cuts.  Moreover, we would face the same debate again next year.  Everyone talks about the “fair” proportion of subsidy and fare revenue, but once you pick a level (68% by fares is the current magic number), then fares must increase every year to make up their proportion of a rising total budget.
• Scale the increase in pass pricing to the token rate rather than bumping the pass fare multiple from 48.4 to 50.4.  This keeps everything on the same balance, and leaves in place the general policy (originated in the Ridership Growth Strategy) that the multiple should fall over time.
• Extend Student Pass pricing to university-age students.  This proposal has the support of Chair Adam Giambrone as reported by spacing’s website and would cost the TTC $2.5-million annually.  The likely implementation date would be September 2010, and so its effect on next year’s budget would be small.
• Create some sort of discount fare for people on some form of social assistance.  This really is beyond the TTC’s mandate and ability.  If the City (or any other agency) wants to give some group, however defined, TTC fares at a discount, they are free to do so through their own budget.

Any new fare scheme must be considered in the context of Smart Cards which will be implemented over the next 4 years or so.  For example, the creation of a new class of tickets for the socially disadvantaged is meaningless if tickets themself will cease to exist.  Conversely, if all fares will be paid via some form of Smart Card or even a credit card, there will be equity issues about how those with limited means would use and manage such fare media.  The demographics of TTC ridership is very different from the commuter market now enjoyed by Presto for its demo program.

A broader question of any form of concession fare will be how one qualifies to receive it.  Some people are formally clients of various welfare systems, others are merely poor.  Why should one group have access to cheaper transit but not another?  This is a debate that belongs before the social agencies and City Council, not the TTC.

The TTC has a problem of its own in the declining proportion of riders who pay the “standard” token fare.  Metropasses have represented more than half of all adult riding for a few years, and this proportion will continue to grow.  Moreover, if capping is built into Presto (such as is already available on the customer loyalty program from GO, or other systems), then people will get “Metropass” pricing simply by using the system a lot.  This will be quite different from today where one must conciously buy a pass (if the TTC doesn’t run out) and worry about whether the up front cost will be recovered in the coming month.

Fewer and fewer riders will “pay retail” for transit, and the link between revenue and ridership will be tenuous.  The philosophy by which the City makes transportation available to its citizens will change from a per usage charge to a flat rate once a certain threshold is passed.  There may be several thresholds — time based, zone based, calendar based — but we should not use the limitations of old ticket-and-transfer based systems to dictate the options for future fare structures.

The TTC has, to its credit, brought forward multi-year plans for service including the Ridership Growth Strategy, the Transit City Bus Plan, and of course the Transit City LRT network.  Metrolinx has a Regional plan, aka The Big Move, but it lacks three critical components:  funding for local services to feed the regional network, funding for capital construction beyond an initial group of projects, and an overall philosophy of fare and revenue integration for the GTA.

The TTC, Metrolinx and the regional systems must conduct broad discussions about exactly transit is going.  That doesn’t mean drawing lines on maps, but determining how a network will operate, who will pay for it, what sort of fare structure will be implemented, what standards will exist for local and regional services.

Metrolinx, which prefers to operate in relative secrecy these days, may not be the ideal entity to begin this discussion.  Toronto should lead the way as the largest part of the regional transit network, and should emphasize openness in this process.

Transit is a large and expensive part of the municipal and provincial budgets, and we need an open discussion about options and goals.  Even if we cannot afford everything we might want today, the options, the possibilities, need to be on the table.  That approach informed RGS and other proposals.  You can’t have an informed discussion if you don’t look at alternatives.  You can’t react to changing cirsumstances (a new government more favourable to transit funding) without having ideas “ready to go”.

Election years are not the best times to start major consultations because every politician, and not a few advocates, tend to jockey for position and headlines rather than for serious, well-informed debate.  But that debate must start, if only to force those who would lead Toronto to show their hand, to talk in paragraphs, not sound bites, about their visions for transit.  Citizens must also articulate their view of transit.  What sort of service do they want?  How much will they pay in fares, in taxes?  Where should the transit system be in five years?

That’s the real challenge for public transit, and this won’t be decided on Tuesday afternoon by the TTC.

The new price for adult tokens will be $2.50, up 25 cents, with all other fares increased roughly pro-rata.  The one exception is the Metropass for which the proposed fare multiple (the ratio between the pass price and the token price) would be bumped by the equivalent of two fares.  This places the burden of the fare increase disproportionately on the Metropass users.

The TTC projects essentially flat ridership and service for 2010 relative to 2009.  Projected riding is 473-million, up only 2-million over the likely 2009 level.  Other than the full-year effect of service changes added during 2009, no major service improvements are planned for 2010.

A particularly striking comment in the report is that TTC costs are expected to rise next year by 7% and to continue rising at that rate for the foreseeable future.  A number of factors are cited, but they don’t all make sense over an extended period.

• Labour costs.  The TTC is committed to wage increases at the currently contracted levels, but unless there is a major change in economic circumstances, the next round of bargaining will almost certainly result in a lower rate of increase.
• Energy costs.  It is unclear whether all of the TTC’s energy costs (diesel fuel, electric power) will rise at greater than the rate of inflation and if so, by how much.
• General inflation.  Since labour and energy are already out of the mix, this only affects costs such as materials.
• Annualized service increases.  This affects only 2009.
• Low floor bus adjustments.  By the end of 2009, high-floor buses are planned to be less than 10% of the bus fleet, and by 2013, last of them will be retired.  The capacity adjustment for changing to low-floor buses will be completely worked into the system substantially in 2010 when 58 of the remaining 100 “New Look”s are retired.
• Construction and congestion adjustments.  Some additional construction effects can be expected as programs such as watermain replacement ramp up, but this will hit a new plateau at some point.
• Increased vehicle and facility maintenance requirements.  I can understand better facility maintenance (although stations are covered in a separate bullet), but if anything the vehicle maintenance costs should start to drop with the implementation of large new fleets of vehicles in all modes.

If we are looking at a sustained 7% growth in the TTC’s operating budget, even without service improvements, the underlying reasons must be clearly understood.  This has very serious implications for transit funding, service and fares in the coming decade.

The TTC projects that, relative to the 2009 budget and without a fare increase, revenue would be $13-million lower and expenses $93-million higher for a combined shortfall of $106-million.  This does not take into account the City’s request for a 5% cut in funding requirements.  The details of this are not included in the online report.

Revenue will be lower than the 2009 budget because more riders are using concession fares of some form:  passes, students, seniors, children.  The budgeted ridership for 2010 will be the same as in 2009, but the TTC expects to get less revenue than they had budgeted for in 2009 because the average fare is falling.

With the gradual shift of riders to some form of pass, not to mention a future migration to smart cards and whatever schemes they might bring for fare incentives, revenue forecasts will become more complex.  The term “average fare” may cease to be meaningful depending on what that fare can buy (time based usage, integration with other transit operations).

Metropass holders now account for 46% of all TTC riding and 41% of the revenue.  TTC staff claim that this disparity bears examination because pass users may be getting too much of an advantage.  This is a faulty analysis.  Indeed, if the use of passes (or an equivalent pricing scheme through smart cards) grows, the vast majority of revenue will come from pass holders.  As a group, pass-based trips will always generate less revenue per trip, just as token-based trips generate less revenue than cash fares.

The average pass generates 70 trips per month, of which 3 are by someone other than the holder of the pass.  This makes the average fare per trip quite low, this must be take in context.  Some of those extra trips simply wouldn’t occur if they could not be made at zero marginal cost.  Some of those trips would not necessarily generate extra fares as riders would organize their travel to minimize fare payments and use their transfers.  Many of those extra trips, being on transit, bring savings to the pass holder and to the City because they avoid the need for an extra auto with its associated costs.  Unfortunately, those savings do not show up in the TTC’s budget.

The TTC argues that the Metropass fare multiple, now sitting at 48.4 (before the effects of either the discount available to monthly subscribers or the tax rebate) should be raised to 50.4.  This would add $5 (two fares at the new rate) to the price a pass would have at the current multiple.  Little riding would be lost to the TTC because pass holders already get a good deal on fares, and there is no incentive for them to switch back to tokens or change their riding habits.  Only the marginal users, who are right on the borderline of breaking even with passes, would drop back.

This would have an odd statistical effect.  Those riders would use far fewer fares than the 70/month assumed for a passholder and so “ridership” for this group would go down quite drastically (from 70 to something under 40).  However, the remaining hard-core pass users would continue to ride at historical rates, and the rides/pass value would go up.  No doubt, this could be used in future years to show how pass holders are even more out of whack with “average” riders.  However, the “average” rider is becoming a pass holder, and it’s time the TTC stopped looking at them as the coddled exception.

If the Metropass is held at a 48.4 multiple and all fares rise based on a $2.50 token rate, the TTC projects it would lose 11.5-million rides.  Most of these would be from the higher-priced media used by casual riders who are more sensitive to fare increases.  The net revenue gain would be $50.4-million.  For each +1 in the Metropass multiple, the TTC would get roughly $6-million more revenue while losing about .5-million rides.  The proposed change in the Metropass multiple is worth about $12-million to the TTC.  Whether it is justified in the sense of “fairness” is quite another matter.

The staff report talks about ways in which current costs can be trimmed (one example is the switch from biodiesel to regular fuel, a change already approved by the Commission).  However, we don’t know which potential savings have already been worked into the proposed budget and which remain as areas for additional improvement.

The budget as described in this report does not meet the targets the TTC itself describes — a need to find over $100-million annually plus whatever cutback will occur in revenue from the City, Province or other sources such as parking and advertising.  We will hear, no doubt, how the sky will fall if the money is not found somewhere so that service and quality can be maintained, but this has not been quantified.

I don’t want to see the TTC slip back into just “making do” with inadquate year-to-year funding as that leads not only to poor service and unacceptable maintenance issues as we learned all too well in the Russell Hill subway accident.

Next week, we will see the usual melee of speakers at the TTC meeting all pleading their variations on how fares should be structured.  Many of the issues they will raise cannot even be settled by the TTC itself either because the decisions belong elsewhere, or because the TTC cannot force other governments to give it money.

The TTC, the City and Queen’s Park need to map out a service, fare and funding strategy on at least a five-year basis just as they would with other parts of the budget.  If a new philosophy of transit financing comes along, plug it into that model, see what happens, and agree that this new direction will be implemented.  These discussions should happen regularly as we consider the increasing role transit is expected to play across the GTA.

I will comment further on this matter after the meeting and whatever material is presented there.

This has to rank among the more bone-headed moves the TTC has made.

The TTC has a fetish for collecting money, and the more it can get, the better.  In the name of eliminating bogus tickets, the TTC got rid of them for adults.  Ooops!  That was the fallback medium everyone used in the period when tokens vanished before a fare increase, but now it’s gone.

Some people may try to switch to a Metropass rather than taking a chance on token availability during December.  Indeed, some regular pass users who switch to tokens for that “short” month (from a commuter’s point of view) may stay with the Metropass.  Will the TTC have enough?  Don’t count on it, and it’s far too late for them to order more.  If you’re planning to buy a pass, don’t wait until November 30th.

Paying that cash fare doesn’t just hit riders for one direction on their trip.  Someone commuting home via the subway with a bus or streetcar at the end of their trip may try, but fail, to get tokens on their outward trip.  The next morning, they still won’t have tokens and will have to pay cash again for the inbound journey.

If the TTC had wanted to be the tiniest bit generous, it would have lowered the cash fare to $2.50 for the period leading up to the fare hike, at least trying to meet riders half way.  But, no.  The problem the TTC itself created will cost riders 50 cents more per trip for the next seven weeks.

Behind all this lurks the question of smart cards on the TTC.  Once fare collection is automated, the amount of fare can be changed on a whim, with no lead time, and no possibility of hoarding.  However, a lot comes along for the ride with the technology.

The original estimate for implementing Presto! on the TTC was $140-million, and the TTC got Federal funding (CSIF) to pay for it.  There was a small problem.  The estimate ballooned by another $277-million with no money in sight.  (This is one of those many “below the line” projects in the Capital Budget, hidden, but lurking.)

There are many unanswered questions about Smart Cards for Toronto.

• What is so expensive about bringing them to the TTC?
• Why is there no public report with details of the new, higher estimate, only a few pages buried in the capital budget (page 1,533 for dedicated readers)?
• How much will it cost to operate and maintain the new system compared to the existing one, even allowing for the supposed reduction in fare evasion?
• How much real enforcement will the TTC put in place?
• What fare structure is contemplated?
• Is the system designed with an expensive, complex back-end to aid in detailed trip tracking and billing?  What will be the marginal costs and benefits of such a system?
• What is the role of credit/debit cards as the “smart card” medium rather than a dedicated system?
• Who will own and maintain the system?  The TTC or Metrolinx?

The world-wide embrace of smart technology shows us that this is hardly something new, something Ontario and Toronto have to develop from scratch.  What’s the problem?

A huge, hidden issue has nothing to do with technology, but with subsidies.  Everyone talks about getting rid of fare boundaries, and there are many ways to slice that pie.  (Please, readers, don’t send in your proposals yet again, I will delete them.)  But switching the fare revenue around inevitably means that some will pay more so that others pay less.

“Paying more” can be achieved by raising some of the fares, but it can also be achieved with increased subsidies.  These are tradeoffs nobody wants to talk about.

To both TTC and Metrolinx:  Stop hiding this debate behind closed doors and start talking about how fares might be collected in a unified system.  How will fares be used to attract both the long-haul commuter and the casual, short-trip rider?  How will boundaries between systems, including those with GO Transit, be eliminated?  When will fares and service be treated as tools to encourage people out of their cars, to support local and regional planning ambitions, not just nuisances to be debated every year at budget time?

The TTC has confirmed that existing Metropass subscribers will not pay at the new rate until their renewal comes around.  For example, if your annual renewal is in June, you will pay at the old rate up to and including the May pass.  If your renewal date is January, then you will get the increase as soon as it comes into effect.

New subscriptions are now being taken effective January 2010, and so they will be at the new rate, whatever it winds up being.

Original post:

TTC staff propose that fares rise effective January 3, 2010.

Table of 2010 Fare Increases

As expected, the Metropass takes the brunt of the increase.  Passholders will see their prices go up 16% on Monthly Discount Plan (MDP) subscription, slightly less otherwise.   The token rate will go up only 11.1%.

I am sure that we will hear that 11% figure a lot in the coming weeks even though the primary way adult fares are collected today is by passes.  Any politician who tries to duck that 16% figure deserves to be called out for misrepresentation.

This change represents a triumph of the bean counters, who have always hated passes and regard them as a drain on the system, over equitable increase in TTC fares.  Reducing the fare multiple (the number of token fares represented by a pass) was an integral part of the Ridership Growth Strategy, and the TTC is now moving backward.

Metropass users are loyal, and those who have subscriptions don’t have the option of changing quickly anyhow.  The “elasticity” of this market, as modellers like to say, is quite favourable to the TTC, at least in the short term.

How long into 2010 will it take for staff to tell us that they have still underestimated the use of Metropasses, that the average fare is below their projections, and that for 2011 we must again raise the multiple?  After all it started out at 52 for everyone (there was no MDP in 1980).  Why not just turn the clock back 30 years?

I have no doubt the Commission will endorse what the staff have proposed.  We have been softened up for this announcement for weeks, and the TTC would not issue a press release about it without fair cartainty that the proposal would go through.

There is no question that the TTC needs a fare increase to balance its books.  However, there has been no public discussion about changing the long-range policy of bringing the pass price down relative to tokens.  What other parts of the Ridership Growth Strategy will we abandon next?

We will get a perfunctory debate at the TTC’s November 17 meeting.  There will be much hand-wringing, but in the end I expect the very Commissioners, the “left wing”, are more likely to support their Chair and the staff proposal rather than talk about “fairness” in the fare structure.

Maybe Admiral Adam can explain on his new TV program starting tomorrow night (November 5, 8 pm on CP24) why the TTC will bump Metropass fares so disproportionately.  His constituency should be the people, the transit riders, of Toronto, not his management staff.

There are two questions:

• How big an increase will the TTC need?
• How evenly will the increase be applied to different fare types?

As I already reported, TTC management has been up to its usual tricks of blaming heavy use of Metropasses for its financial woes.  For months, they have been preparing us (and priming Commissioners) to tell us how we are losing too much money on passes, and their value, relative to tokens, must go up.

We have heard this song for years, but through a period when lowering pass pricing was an integral part of the Ridership Growth Strategy, it was ignored.  Now, the TTC wants more money, and Metropass holders are convenient, dedicated transit users who can be counted on to cough up almost any increase.

What would, what should a fare increase look like?

The TTC’s 2009 projected operating results look like this:

• Total expenses:  $1.3-billion
• Fare revenue:  $836-million
• Other revenue (advertising, etc):  $49-million
• Subsidy:   $416-million (of which only $394-million is committed by the City)

Leaving aside where the missing $22-million will come from, the City has directed that all agencies should reduce their net funding requirements by 5% for 2010.  On a base of roughly $400-million, that’s $20-million for the TTC.  However, we also know from pervious reports that the TTC expects its funding needs to rise by $80-million in 2010, and that brings us to a total of $100-million required in new revenue.

Advertising and parking are unlikely to contribute anything, and advertising may even decline continuing a trend from 2009 where the budgetted $16-million is turning into a protected $13.7-million.  One has to wonder why we put up with all that advertising on the TTC for only 1% of the total revenue, but that’s a subject for another day.

(You can read the recent Chief General Manager’s Report, but Appendix A) with the details isn’t on the TTC’s site. I have scanned it for your convenience.)

On a straight percentage basis, if the entire $100-million is coming from fares, then the TTC needs to collect 12% more farebox revenue in 2010.  However, an increase of this size may deter some riding, and a larger jump, something like 15%, will be needed to achieve the target.  Even this assumes that recent experience, in which riders stayed with the TTC provided that service remained good (and “good” is open to some interpretation here), will hold up to a 15% jump.

What would this mean for fares, assuming everything went up more-or-less lock-step.

• Tokens are now $2.25, and they would have to rise to $2.60.
• Cash fares, now $2.75, would have to rise to $3.15, more likely to $3.25.
• Metropasses, now $109  ($100 on subscription) would go to $125 (or $115) before allowing for the income tax credit.

We won’t know what is actually proposed until, at best, the agenda for November 17th’s meeting goes online probably about November 12th.  However, the report itself may be held down as a supplementary item, and we won’t see it until the evening before the meeting.  Some talkative Commissioners may, however, start discussing the options in advance to gain debating advantage.  It wouldn’t be the first time.

If the carping about Metropass “losses” continues, we can expect to see them go up by something like 20% while the token and cash fares are spared the same fate.  This could give us fares like this:

• Tokens up to $2.50
• Cash fare up to $3.00
• Metropass to $130, or $120 on subscription.

This would move the fare multiple for passes up from 48.4  to 52 (from 44.4 to 48 on subscription).  The Federal income tax credit for transit passes is currently at 15%, and this reduces the effective multiple to about 38 using 2009 pricing for pass subscribers.  However, if the base price of the pass goes up, the multiple would also rise (to roughly 41 in the example here).

There will be huge temptation to limit the token increase to a quarter (if nothing else, it makes a nice sound bite) and stick the pass holders with a bigger jump.  Passholders make up a large chunk of TTC ridership, and for 2006, the last year in which the TTC published a detailed ridership analysis, adult passholders accounted for 38.5% of all rides on a moving annual average basis.  They accounted for almost half of the adult riding, and have without doubt overtaken all other adult fares as the primary source of riding from 2007 onward.  (By contrast, in 1996, pass holders accounted for less than one third of adult riding.)

In brief, pushing the Metropass price multiple up will affect over half of all adult rides taken today on the TTC, and a large increase in pass pricing risks affecting the TTC’s single largest market.

A fare increase is essential to preserve service quality, but the TTC should leave the relationship between different fares as it is today.  If not, they risk screams of outrage from pass holders whose fares will take a big jump for which they will see little or nothing by way of improved service.

If my scenario here is alarmist, if I am painting a huge jump in pass pricing that is not actually on the table, I invite anyone from the TTC to make a public statement disavowing such a plan.

(In the interest of full disclosure, I am a Metropass subscriber, and will continue to be one because I use the TTC a great deal.  I am one of those on whom they “lose money”, although many of my trips have little marginal cost to the TTC.  If I were forced back to tokens, it would make the initial cost of jumping in a cab that much cheaper.)

The devices will be similar to the metropass slide readers currently in use at subway stations and will be mounted on top of fare boxes. If a fake pass or token is swiped or dropped in, the devices will beep and a screen will tell operators that a counterfeit has been detected, said TTC Chair Adam Giambrone. The machines will spit fake tokens, he said.  [Full article]

The TTC never rests in finding new ways to slow down service.  One huge advantage of the Metropass is that one simply waves it in the general direction of an operator.  They may nod or say “thanks” or just go about their business, but people can pile onto a vehicle.  Imagine if each pass holder has to swipe their card on entry.  Pay-as-you-enter slows TTC service enough, but Metropass validation?

What will they do for all door-loading at busy stops?  What will they do once streetcars board at all doors and fare handling is self-service?

By the way, the project cost according to the Capital Budget (page 1,179) is $5.368-million, of which a smaller amount is budgeted for 2010.

The TTC may save money on counterfeits, but how much will they lose in service delays?  Do they even care?

If the TTC is looking for cuts in their Capital Budget, this is a prime example.

Here, with my comments, are the replies.  The questions have been slightly reformatted so that they can stand outside of the context in which they were written.

1. What is the proper procedure in the case of a fare dispute or other disagreement with an operator? At Exhibition Loop where the TTC Times Two rule would apply, cars have time to kill and a discussion with the operator would probably not hold up service.  If you’re sitting in traffic at, say, Queen and Shaw, things are a little trickier.

• Proper procedure for the customer, as with all fare disputes, is for the customer to pay a fare, retain their original proof of payment (Transfer in this case) and contact Marketing and Customer Service after the fact.
• It would have been prudent for the operator to contact CIS to determine whether the transfer was valid or not, the operator did not and apparently chose to delay their trip and then drop the issue.
• A reminder notice will be posted, and ensure all Supervisors are aware of the policy that allows such transfer use.

2. Is there a generic requirement on all routes for operators to carry passengers around the loops? In many cases there are loops that have stops on them.

• At night after subway closure, we do not allow customers to stay on vehicles as they enter subway stations i.e. 306 night cars into Dundas West/Main and cars into Broadview after closing or before opening, etc.
• We also stop taking customers into High Park after 9:00pm (This is printed on the stop card WB on Howard Park at Parkside Drive).
• All vehicles (Bus and Streetcar) are required to service all stops on ‘On-Street’ loopings. This is sometimes an issue for some operators’ interpretation on Transfer Validity i.e. is it valid only for travel around the loop or for the following trip.
• The customer issue on the 507 (Queen to Parliament) branch of Queen is that cars have layovers NB on Parliament at Shuter. Of course, any customer normally wishing to transfer to a 504 car to get north on Broadview would want to stay onboard and transfer to a Dundas or King car NB at Dundas and Broadview.
• The customer issue on the 500 (Queen to Shaw) branch of Queen 501 is that cars have a layover on Dufferin North of Queen.
• The operator issue on either the 500 or 507 branches of the 501 route is that having customers onboard their vehicle during a ‘recovery’ layover is not desirable, particularly during the evening.

I will give Brad Ross the benefit of the doubt and assume he means that “500″ cars lay over on Dufferin north of King.  If they are laying over north of Queen, Adam Giambrone has started to build the Dufferin streetcar without telling anyone.  There’s also a rather thick wall in the way.

The issue about operators having people on vehicles while laying over is inconsistent with previous statements that people could ride around the loops.  Either they can or they cannot, and the TTC needs to sort this out.  Also, there are many locations where vehicles routinely lay over with passengers onboard — every subway station for example.

I can understand the premise at work here, but it doesn’t hold up to a very basic issue — that the TTC exists to provide service, and designing routes so that people are kicked off before major transfer points is incredibly bad customer service.  If the TTC or Local 113 is really adamant about this, they should reverse the direction of the loops so that passengers can travel outbound as far as possible before the cars turn back toward downtown.  For cars turning at Shaw, the layover is after they reach Dufferin, and there is no reason passengers could not be carried to King and Dufferin where they could connect with the bus.

Brad Ross acknowledges that the two policies (no layovers with passengers on board vs. carrying people around loops) are inconsistent, and that the TTC needs to sort this out.

3. What is the policy for vehicles going out of service on carhouse trips? It is extremely common for cars running to and from Spadina to run in service, and a similar arrangement applies to other routes. Is there a different policy for bus garage trips which run clearly marked “Not in service”?

• As long as the vehicle is fit for revenue service (Not disabled; carrying a farebox and transfers with a transportation operator), the vehicle remains in revenue service while running into or out of service. One of the reasons for this is that, since they can not pass an ‘in service car’ there is no advantage to the commission of operating out of service – No trip time savings.
• Buses used to be in service while entering or leaving service. That changed in either the late seventies or early eighties. They ‘deadhead’, thus the commission saves some running time on the ‘deadhead trips’ because the buses can operate with no interruption to/from the garage.

4. If a vehicle is on diversion, is it supposed to serve all stops it encounters enroute, not just the ones on its “home turf”?

• Yes, Streetcars are always in service on diversionary routings, whether the diversion is planned or not. Again, there is no real advantage to ‘deadheading’ as the can neither pass a car on its own route nor be passed by a car on their home route. The critically important issue is for the streetcar operator to ensure any boarding customers are aware that it is a diverted car and also to announce any turns off of the diverted route, and to issue transfers to customers who might have neglected to get them on paying their fares.

This doesn’t address the issue of bus diversions, and I’ll leave that for a future response from the TTC.

The Chief General Manager’s Report for the first quarter of 2009 notes that although ridership continues to grow, revenue is below budget.  Why?  More Metropasses were sold than expected in January-March, and this trend is continuing into the second quarter.  The TTC had budgeted on a higher average fare-per-ride, and the more who travel with passes, the lower this average falls.

Rumours of budget related service cuts started to surface a few weeks ago, and one change effective June 21 is explicitly listed as being due to budget.  (I will report on that in a separate post on June service changes.)  This is an odd state of affairs considering that there is a buffer for service growth on the TTC”s budget, and there has been no report to the Commission of pending service cuts (or of deferred service improvements).

Moreover, in a separate report, the TTC plans to launch an ad campaign seeking organizations to be part of a Metropass Affinity Program where pass holders would receive discounts to products or events.  The intention is, wait for it, to sell more Metropasses by making them even more attractive.

The TTC has a long-standing love-hate relationship with the Metropass going right back to its origins 29 years ago.  Each pass is seen, by some, as a loss of revenue, a loss of individual fares that might otherwise be collected.  Of course, a pass is also an incentive for users to ride the system and get all those “free” extra trips, exactly the sort of mindset an auto driver operates in every day.

Those 260,000 monthly pass holders are now responsible for over half of the adult trips on the TTC.  Budgets and fare policies must recognize that there is a demand for flat rate purchase of transit services, and that this market will grow both through pricing incentives and improved service.  Cutbacks because too many people buy passes are a laughable, but unfortunately predictable response to what should be a transit success story.

One major topic in all discussions is the question of flat fares versus fare-by-distance, and this inevitably gets pulled into questions about “equality” in the way that we price transit so that riders are not penalized by things like zone boundaries and operator service territories.  However, any fare system brings its own benefits and problems.  We may solve problems for one group of riders, and create a new set of problems for others.

This article considers fare-by-distance by analogy to the existing TTC system.  It is intended as a “back of the envelope” calculation to give readers a general sense of the numbers and is not intended to be a prescription for any particular implementation.  What is important is that anyone talking about fare structures cannot simply wish away problems of any system by saying “everything will be fixed with Presto!” or similar, simplistic bilge.

For 2008, the projected revenue (almost entirely fares) for the TTC was $887-million for a ridership base of 466.7-million.  That gives an average revenue per trip of $1.90.  Note that this stirs together all the fare media and classes of riders including:

• Monthly, weekly and daily passes
• Adults and concession fares
• Token and cash fares
• Other income such as advertising

Worth noting is the average per-trip subsidy of $0.65.  That translates to a $303-million subsidy requirement.  Any change in subsidy arrangements (higher/lower per trip) must address this very substantial funding line in the TTC’s budget.

In looking at fare-by-distance, we must first determine how much to charge based on current riding habits.  This is rather challenging because we do not have average trip length information.  Some trips are quite long, others, especially those taken with passes where there is no marginal cost, are extremely short.  For the sake of argument, I am going to use Canadian Census commuting information.

The Toronto Census Metropolitan Area (which includes a lot more than Toronto City proper) has a median commuting distance of 9.4 km.  The map linked here shows that this value is much higher in the outlying areas and much lower downtown.  The median commuting distance for the City itself is only 7.5 km.  (The median, as opposed to the average, is the value where half of the commutes are above and half are below.)

If we take these median values as the average trip length (that’s a big leap, but I have to start somewhere), then the revenue per kilometer is $.253 (if we use the Toronto City median) or $.202 (if we use the CMA median).  One caveat here is that the distances reported by Statistics Canada are “crow fly” values and the actual commutes will generally be longer.  This would tend to lower the revenue per kilometer based an actual trip paths.

That range from 7.5 to 9.4 km is interesting from another point of view.  If we draw a circle around Queen and Yonge with an 8 km radius, the east and west boundaries are almost exactly the old Queen line, Neville to Humber.  The north boundary is Lawrence Avenue.  This area roughly duplicates the old TTC zone 1 which was mainly the pre-amalgamation City of Toronto.  In other words, the median commute distance is roughly on the scale of the old City measured outward from downtown.

What this would mean is that on a purely fare-by-distance model, fares would likely be lower within the old zone 1 and higher outside of it.  For example, the distance from Queen and Yonge to Steeles is 16.6 km, and a strictly fare-by-distance calculation would expect to receive $3.80 (plus subsidy) from such a trip.  Distance to the outer corners of the 416 are even longer.  Going north to Richmond Hill adds another 5 km, for a trip that is close to three times the median value.  I am quite sure that the residents of Richmond Hill and environs expect to pay one, standard TTC fare to get downtown, not three.

By contrast, the GO Transit fare from Richmond Hill to Union is $4.78 based on a 10-trip ticket, or about $4.30 for a monthly pass.  Therefore the revenue GO gets from such a commuter is in the same ballpark as TTC fare revenue redistributed on a distance basis.

I repeat that this is a rough estimate for the purposes of discussion, but it’s a discussion nobody wants us to have.  Metrolinx and Queen’s Park buried any questions about revenue tools, and by extension fares, well into the next decade.  If there is to be any integration of regional and local systems, the question of fare levels and structures must be addressed.

Fare-by-distance inherently penalizes the long-haul rider.  Yes, in theory, they pay the cost of using more service to make their trip, but the larger issue is that this fare may deter them from moving from auto to transit.  Many discussions of cross-boundary fare integration have, at their core, an implicit assumption that fares for cross-border riders will go down.  This would be true for short commutes, say from the southern 905 into the northern 416, where the trip length is lower than, say, 8km.

However, the long trips would pay more, and fare-by-distance would allow the TTC to charge suburbanites, who have been highly subsidized in their travel to downtown, a fare proportionate to the length of their trip.  This is quite likely completely contrary to the planning goals Toronto and Queen’s Park have for moving more people onto transit.

How you collect the money — the technology, the inspection regime — is immaterial to this discussion.  I don’t care if the fare card is GO Green or TTC Red, the question is how much I will have to pay to use it.  This is the sleeping issue in regional transit integration, and it will be the transit equivalent of road pricing for politicians.

We need to understand and agree first on the nature of GTA fares and the social goals we hope to achieve by increasing transit use.  Can we justify a higher subsidy on the basis that the alternatives — driving those who can afford it into cars, and penalizing those who live on the outskirts but must commute by transit — are more expensive than improved subsidies and service?

Once we answer these questions, then we can turn to specifics of the technology.  What we don’t need is a razzle-dazzle show that employs armies of consultants and technicians to build a “solution” to what is really a political, policy question.