TTC Capital Budget 2010-2019 (4): Trimming to Fit

In response to long-term funding constraints at the City of Toronto, the TTC has amended its Capital Budget  to remove about $548-million from the 2010-2019 plan.

“Remove” is not quite the right word, but to explain what is going on, I will first give a short tutorial on how TTC capital planning works.

Above and Below the Line

Capital projects are classified into major groups with the following hierarchy:

  • State of Good Repair & Safety
  • Legislated Requirements
  • Capacity Enhancement
  • Improvement
  • Expansion

In theory, expansion comes last, at least if it has to compete with funding for groups that rank higher in the list.  However, much of the provincial and federal funding is project-based, and this tends to focus on major expansion projects.

“Below the Line” projects are those without funding.  Originally, this category was reserved for large projects, such as the Richmond Hill Subway, that were a gleam in someone’s eye, but for which funding had not yet been committed.  However, this clear distinction has blurred, particularly starting in 2010.

There is a major problem with the term “State of Good Repair and Safety” because, in some cases, a project may be a “nice to do”, not a “need to do”.  If everything is lumped into this category, we are back to the old budgeting style where there is really no distinction made, everything is “top priority”, and funding cutbacks require politicians to perform line-by-line budget surgery.

With the changes approved on October 29, a long list of projects has moved “below the line” even though they are, in theory, in the higher priority groups.  This happens because much of the budget is committed to large projects already in progress, or to items that are funded on a project basis by other governments.

We now have a situation where expansion projects appear “above the line” even though there are “repair” projects below the line.  The concept of priorities is, to say the least, muddled.

City Debt Targets

The City of Toronto funds a good deal of its capital programs from borrowing, and the growth in municipal debt is limited by a target on financing costs.  No more than 15% of the City’s income should go to debt service payments, and keeping to this target is vital to the City maintaining its good credit rating.

Working backward from that target, the City sets a cap on the amount and timing of debt it is prepared to finance on the TTC’s behalf.  Many projects that include some City funding are already in progress, and this causes the timing of new debt to be front-end loaded.  Over two-thirds of City spending for transit capital projects is in 2010-2014 with the remainder in the 2015-2019 period.  This creates a serious funding problem in the second half of the 10-year budget projection.

That funding only supports “above the line” projects, and a growing amount of work has been shifted “below the line”.  It isn’t cancelled, just lurking out of sight.

The danger, as we have seen many times before, is that new, large projects will jump the queue and pre-empt work that might not be critical today, but for which indefinite deferral is not practical.

Surprise Projects

For budget planners, and increasingly for advocates like me, the TTC has an annoying habit of discovering large projects that somehow were not included in the budget.  Many years ago, this might have been excused by a shorter planning horizon, and the fact that money was found, somehow, to handle this type of event.

Today, however, such oversights are major blunders that threaten the integrity of the budget process.  We often hear about politicians with pet projects, but here are three items that appeared for the first time in the budget update presented on October 29:

  • Bloor-Danforth Subway replacement of signal system ($300-million plus)
  • More Toronto Rocket trains, Wilson Yard expansion, more traction power ($400-million plus)
  • Accessibility requirements mandated by AODA ($100-million plus)

The fact that the original BD subway will be 50 years old in 2016 is no secret, and the 50-year age of the original Yonge line was part of the justification for the signalling project now underway for that route.  2016 is well within the 10-year planning horizon, and yet the budget contains no project for resignalling BD.  Moreover, there is no project for providing ATO equipment on the BD trains, a T1 fleet that will only be 20 years old in 2016.

The subway fleet plan, discussed in a separate post, foresees additional trains, but not all of these are associated with specific budget lines.

The budget contains many subprojects for accessibility, but it appears from the October 29 report that a further $100-million is needed above what is already in the budget.  No details are available.

This is an outrageous situation.  Three major items collectively total almost $1-billion, about one sixth of the current approved 10-year budget, and I am sure we will be told that these are “must do” projects.  What other work will be displaced to make room for them?  Why are they not already in the 10-year plan?

The Effect of Federal Stimulus Spending

After much wrangling, there is a list of TTC projects that will receive stimulus money from Ottawa.  While Toronto welcomes any money it can get, there is a catch.  There is always a catch.

Many of the projects approved under this program were not previously funded — they were “below the line”.  Moving them “above the line” triggers a need for additional City spending that crowds other work off of the table either at the TTC or elsewhere in the City’s capital plans.

Some of the projects were originally planned for future years, and removing them from future budgets gives the impression that there is “more room” in those out years.  However, the City debt target limits total spending within the 10-year window, and moving projects between years, while it may attract stimulus dollars, does nothing for the City’s overall budget.

I will discuss the federal stimulus program and the projects it will fund in a separate post.

The Revised Capital Budget

The spending levels and funding sources approved on October 29 are summarizes in the October 2009 Ten-Year Funding Projection.  Note that this is only for the “base budget” and does not include the Spadina Subway extension nor the Transit City projects.

Provincial project-based funding includes partial or complete support of:

  • Automatic Train Control and TR subway cars:  $386-million
  • 204 new streetcars ($417m)
  • Spadina subway ($870m)
  • Transit City ($6.4-billion)
  • SRT conversion and expansion ($1.4b)
  • Total:  $9.506-billion

Federal project-based funding includes partial support of:

  • Spadina subway ($697m)
  • Transit City (Sheppard) ($300m)

The total base budget for 2010-2019 began at $7.096-billion.  In September 2009 Amendments the TTC made a number of changes, notably:

  • The bus fleet plan was adjusted to remove some vehicle purchases from 2011.
  • The mid-life rebuild of the bus fleet has been pushed beyond the 2019 window.  With the new, supposedly more robust designs for buses, the question is whether this rebuild will be necessary.  Alternately, will rebuilding be cost-effective versus simply replacing the vehicles?  This is a difficult question, and moving away from rebuilds would be a major change in the TTC’s maintenance and bus provisioning philosophy.  A difficult issue here is that many transit systems replace buses frequently (every 12 years at most) because funding is available for purchases, but not for maintenance, even though this may not be cost effective for large systems that can undertake their own repairs.
  • The program to overhaul CLRVs has additional funding, but the ALRV overhaul has been cut from the budget.  The ALRVs will be the first of the existing fleet to be retired when the new Flexities arrive.
  • Funding was added for the expansion of Transit Signal Priority as proposed in the Transit City Bus Plan.  This was cut again in October (see below).
  • Funding was added for the TTC’s portion of a revitalization study of Lawrence and Allen Road (see discussion below).

Before the October 29 meeting, there were extensive discussions between TTC and City staff to wrestle the Capital Budget to fit within City targets.  At further set of October 2009 Amendments moved about $600-million worth of projects “below the line” and/or out beyond 2019 so that they are no longer part of the Base Program.  Of this amount, about $52.5-million would have been funded from other governments, and, therefore, shifting these projects only yields a net saving of $548.2-million in City spending.  The net result is a funding shortfall of $300-million over the 2010-2019 period.

This may seem small, but it has been achieved by pushing many projects under the table.  Whether the system can actually be operated without these expenses remains to be seen.  As I said earlier, the TTC has a bad habit of lumping almost everything it does under “State of Good Repair & Safety” with no real sense of prioritization.

The largest of the deferred projects are described below.  I have reordered these items from the linked TTC list to put related projects together.

  • Station Modernization ($74.9m).  Work will continue on Pape and Dufferin that are already underway, but no further work will be done on Woodbine, Chester, Museum or any other site that has not yet reached the construction stage.
  • Fire ventillation upgrade ($52m).  The project to add more ventillation to existing stations has proven far more complex and expensive than originally expected.  The TTC is attempting to figure out a way to achieve the safety improvements at lower cost.
  • Easier Access Phase III ($60.2m).   This is part of a large bundle of accessibility retrofits to the TTC system.
  • Warden Station Phase I ($19m).  This project is supposed to be at least partially funded by redevelopment of the lands around the station from which revenue should offset the cost of reconfiguring the station.
  • BRT from Finch to Steeles ($24.2m).
  • Various roads and structures (65.6m).
  • Scarlett Road bridge ($5m).  This is a provision to rebuild the underpass at Scarlett Road and Dundas so that a future LRT line would have a dedicated right-of-way.  This route (a potential extension of the St. Clair streetcar to Kipling Station) is not part of Transit City and, personally, I don’t think it would ever be built.
  • Bremner Streetcar Expansion Loop Design ($4m).  The status of the entire Bremner streetcar project is unclear as I discussed in an article about waterfront transit.  Some design and co-ordination will be required in light of the City’s Union Station project and that may partly resurrect this budget item.
  • Lawrence Avenue Revitalization ($0.3m).  This is the same study that was added in September 2009’s amendments.  It is intended to support a large City project to revitalize the lands at Lawrence and Allen Road.  This is the one item in the proposed cuts that was not approved by the Commission.
  • Bus Network Plan Improvements ($5.5m), Bus Purchases ($33.5m), Roadway Design Improvements $12.1m) and Traffic Signal Priority Expansion ($29.2m).  These are all parts of the Transit City Bus Plan.  Some of TCBP survives because it does not require a large capital investment, although the exact timing of implementation will depend on decisions made in the Operating Budget process over coming months.
  • Transit Signal Priority ($22.m), offset by additional buses to compensate for lack of priority ($2.9m).  These are signal changes planned for routes that are not part of the TCBP.
  • Industrial Facility Requirements ($78.3m).  This appears to be a mixed bag, albeit a rather large one, of sub-projects to improve field offices for some TTC staff, as well as some necessary health and safety improvements.  It is not clear at this time which parts of the overall project were actually cut.
  • Facility Energy Conservation ($20.4m).  Various energy-saving changes require large capital investments with varying degrees of payback, some of which are not a direct financial benefit to the TTC.
  • Downtown Relief Line Study ($3m).  This was to be the TTC’s study of the DRL as directed by Council earlier this year.  Given that Metrolinx is also supposed to be studying the DRL, it is unclear which agency should fund the study.
  • CIS Replacement ($50m).  The proposed replacement of the vehicle monitoring system (CIS) is very expensive (the amount here is only part of the total).  It is unclear whether this has simply been pushed beyond 2019, of if the scheme has been sent back for review.

Out of Sight

During the discussion of the small expenditure for the Lawrence Avenue Revitalization study, TTC staff were quite firm in stating that they had cut only the low-priority items, and everything remaining needed to remain in the budget.  This may be so, but much is still lurking “below the line” and may compete with other projects for funding.

A small example is a proposal to replace the existing Bus Terminal with a new building stretching from Bay across Elizabeth Street (which would be closed) to Centre Street at a cost of $27-million.  Considering that the TTC’s subsidiary that owns the Bus Terminal as its only asset already owes the TTC roughly $15-million in accumulated losses from past years, I can’t help wondering what business the TTC would have in this market.  If Metrolinx or the private bus industry wants a terminal, let them build it with their own money.  The TTC has not been in the interurban bus business for decades, and the Bus Terminal is the last remnant of the old Gray Coach Lines.

A large example is a proposal to implement platform doors in subway stations at an estimated cost of $1-billion.  While I can sympathize with the goal of reducing passengers’ ability to reach track level and the other claimed benefits of this system, I have a big problem with the cost.  If it is intended as a mechanism to control platform crowding and boarding, then it is only needed at major stations.  If it is intended to prevent access to track level, then it is needed at all stations.  In either case, Automatic Train Control and precision stopping are a pre-requisite.  ATC for the Bloor-Danforth line was only recently identified as a future cost, and it is not even in the budget.  Likewise, money to retrofit BD trains with ATC electronics has not been included.

This is a good example of a project that has been inching along, just out of sight, for several years, growing in cost as it went.  The justifications proliferate to match the scope creep.


Future budget discussions both for 2010, and in the next cycle, 2011, will emphasize the need for ongoing, predictable funding.  Alas, the TTC appears to be able to generate projects faster than money appears on the table.

Support for transit is a good thing.  After all, I am a transit advocate.  This support must be tempered, however, by ensuring that we don’t spend whatever new money might come to the TTC or Metrolinx on projects of dubious value.  Future projections must be realistic, and they must include some indication of how critical (or not) they might be.

The challenge for both the City and the TTC will be to establish a “reasonable” and “sustainable”  level of funding for ongoing repairs and for system expansion.  The TTC must actually stick to these figures for more than a year or two rather than finding yet more ways to create budget shortfalls.

21 thoughts on “TTC Capital Budget 2010-2019 (4): Trimming to Fit

  1. I thought the TTC had already started studying the DRL? Does this pretty much delay the project indefinitely?

    Steve: No, this money was to fund that study. However, given that Metrolinx is also going to study the DRL, and in a larger context, the TTC study might have been less thorough than we actually need.


  2. Doesn’t Metrolinx require TTC staff to study the DRL, considering that it will cross and/or connect with multiple existing subway lines?

    Steve: Somehow I suspect the TTC would absorb the cost of any work they do with Metrolinx internally, as opposed to having $5-million to play with.


  3. I wonder if they would consider the little things they could do to save money. For example, I always print on my printer in duplex (two sides) to save on paper. It does add up.

    If the TTC should have to increase fares, they should increase it but with change to allow stopovers, which is not allowed (in theory) at this time.


  4. To save money (and it does all add up) one also wonder why the monthly Ride Guides exist – OK they don’t cost all that much but…

    Why not adverts on the back of transfers or on the Monthly Passes? (In my opinion better than covering steeetcars in ads !)

    Steve: I frequently see people consulting Ride Guides downtown. Despite all the hoopla about online access, we have yet to produce a PDA that gives the necessary overview of the city to be used as a good reference map. Also, many people don’t have one. As for advertising on passes and transfers, I rarely look at the back of my pass, and ads on transfers would be rather tiny. They would jostle for space with the terms of use. The hole in the capital funding is in the billions, and some of this is due to poorly thought-out projects and priorities. We can save more money by ditching one bad project in the budget than we will ever make back on transfer advertising or dropping the Ride Guides.

    By the way, you may recall a big brouhaha here recently about the inaccuracies in brand new maps in subway stations. People use them.


  5. I would actually support digitizing the in-station ride guides. Higher in capital, lower in upkeep and cheaper in the long run.

    Steve: And probably as accurate as the TTC’s website.


  6. I may have used the wrong terminology – I meant the monthly “things” that hang on hooks in streetcars/buses and tell you about some things that are happening that month. The TTC Maps are certainly useful in print.

    I agree that ‘we’ need billions but sometimes looking at small things can start or encourage a culture of better financial control. Most people can understand sums of a few thousand dollars but huge ones are in some ‘foreign language”!

    Steve: Some of the notices hang in bundles for the entire month they are up and are a complete waste of paper. Examples are the periodic exertions about escalator safety and the plugs for transit constables. These handouts can serve a purpose provided that they contain information people can use — current events, how to get to “x”, etc. The event guides do contain a central area map, but you have to know it’s there. They were originally sponsored by the Yellow Pages, but not any more.

    Unfortunately, the TTC seems to have as much of an internal marketing campaign — keeping its own squeaky wheels quiet — than one aimed at being useful to riders.


  7. The stations that were modernized but cancelled were indeed Woodbine, Chester, but how can Museum be on the list when it already has been modernized?

    Steve: Museum was only partly done. There was a proposal to add a new emergency exit at the south end to Queen’s Park as well as revised entrances at the north end.


  8. How can Warden Phase 1 be delayed when it is sceduled for completion by 2011 and the Federal Stimulus funds arrived?

    Steve: If you look at the bottom of the list of amendments, you will see that there is about $50-million of lost subsidy money caused by projects dropping from the list.


  9. Steve, you mention Automatic Train Control and you use the acronym ATO. I’m confused.
    What is the correct acronym and what does it stand for?

    While you’re at it, what are the projected dates for the first of the new subway cars andalso for the new streetcars?


    Steve: My apologies — I need to be a bit more rigourous in my use of the acronyms. ATO is automatic train operation in which the computer system drives the train. ATC is automatic train control in which some degree of control is exerted including speed restrictions and braking. In order to achieve some of the claims made for the new signal system such as precision turnaround times at terminals and matching train locations to platform doors, one must be almost entirely at full ATO. This has intriguing implications for the handling of on board crews, and I don’t think the TTC has fully thought that out yet.

    The first of the TR trains will arrive early in 2010 followed by testing. I don’t have a date yet for revenue operation. The first of the new streetcars will arrive in late 2011 for testing. These will be prototypes, and production cars will not be in service until late 2012, more likely 2013.


  10. Are we back in the 90’s? Isn’t this how the Sheppard Subway got approved, but the infrastructure was so bad that streetcar wires were holding up the poles and not vice-versa, and we had to borrow buses from other systems?

    Steve: For the next few years we are ok, but if no new reliable source of funds appears by, say, 2015, we will be in a very deep hole for ongoing maintenance. In effect the City is using up ten years’ worth of borrowing room in the first half of decade.


  11. Since 100% of the buses will be accessible by 2013 the latest, they can go for a life extension on the wheel chair accessible buses temperorary and then they can save even more money and use that money for Warden station & Lawrence Allen Study.

    Steve: The Lawrence Allen study was left in the budget by the Commission as I noted. Warden Station can wait until there is a development proposal on the lands to be vacated by the TTC at that intersection. Let the new development pay for the work, not the City.


  12. When are the CLRV’s going to be rebuilt?

    Will they install Air-conditioning on the CLRVs when they get the upgrade?

    They should bring back CLRV 4063.

    Steve: They are getting an overhaul, not a rebuild. That change was made after the decision to buy a completely new fleet of streetcars. 4063 is in pieces and is not coming back.


  13. I know 100,000 has been slashed from the University Renansaince program.

    But do you know when the makeover at St.Patrick and/or Osgoode station is supposed to start?

    Steve: Don’t hold your breath. Personally, I find this a huge waste of money, a chance to funnel tax-deductible private contributions through a charity that is supposed to do good works in order to wind up with a half-finished station reno.


  14. Even with the future modernization delayed or cancelled? We would have Victoria Park, Dufferin & Pape not affected not to mention Union as well and maybe St. Patrick.

    That would mean we would finally have 4-5 less boring station on Toronto’s Subway system (metro system some would call it).

    Steve: Don’t hold your breath for St. Pat’s as I said before.


  15. What would be the approximate cost if TTC chooses to put in double sided platforms on both the Yonge Line and the Bloor Line?

    How long might this take?

    Steve: I presume you are talking about retrofitting the existing system. This would be enormously expensive and would require completely shutting down the lines. The underground structures — mezzanines, escalators, elevators, utilities — are all laid out based on side platforms and would all have to be moved. In effect, you would be completely rebuilding entire stations.

    This is totally impractical. It’s not a question of cost.


  16. “Since 100% of the buses will be accessible by 2013 the latest…”

    I really wonder if this is going to happen. The TTC still has a number of high floors, as does OC Transpo, that would still be “servicable” in 2013. It would cost more money than is currently allocated for fleet replacement to fully retire these fleets. I can see the Ontario Government allowing an extension of a couple of years for the high floor fleet.

    Steve: Considering that full accessibility is not mandated until the 2020s, the government doesn’t have to do anything.


  17. Re: Station Improvements

    Dufferin & Pape are (apparently funded),

    You’ve stated that you don’t know what happened/is/isn’t happening at Lawrence West, what about the second exit (Castle Frank) and whatever is happening at the south side of Rosedale’s platforms and North York Centre?

    Steve: As I have already said, the Commission put the money for the Lawrence West study back into the budget even though staff wanted to pull it. This is a project already well advanced in the planning stage by other City agencies.

    The second exit at Castle Frank is under construction with completion expected next year.

    Rosedale is an ongoing repair of disintegrating platform slabs.

    There is nothing going on at North York Centre from a TTC point of view. Any works there are related to entrance connections by adjoining developers or repairs to water penetration. This station already meets fire code with two separate exits and is not on the list for rehab.

    Re: “University Renaissance”

    I was reading in Spacing/BlogTO/Torontoist … something about the “University (Stations) Renaissance. Is this the program to repair/restore St. Andrew/Osgoode?

    Steve: The proposals for St. Pat’s and Osgoode are in the same vein as the half-baked job at Museum. Osgoode would become an Opera-themed station, while St. Patrick would be related to the Art Gallery. Both stations need rehab work, and the real issue will be whether the TTC should be paying anything toward extra decorative elements. There is also an indirect subsidy via the tax laws because the private sector contribution is funneled through a registered charity.

    Given the difference between the proposal and what we actually got at Museum, I don’t hold much hope that the other two stations would look half as good as proponents have claimed.

    If they ever do Queen’s Park (now dead-boring gray), the logical sponsor would be the Government of Ontario. We would need two complete sets of wall coverings, one in Liberal Red, the other in Tory Blue. Possibly a cross-aisle could get NDP orange, or green, or whatever coulour they are using these days.


  18. A significant capital expense in the near future will be the yard for the new downtown cars. One option would be to contract Bombardier build, staff and operate the new Portlands yard, with the City leasing the land to them and in turn BBD maintaining the cars to a specified availability level. This would remove the need for capital financing by the City and thus the impact on debt/bond rating, although the contract could allow the City to buy out BBD at a later date if City finances had recovered to the point where there was enough borrowing headroom.

    I entirely agree with the bus terminal point. TTC should simply announce that it will shut down the terminal at the end of current contracts with Greyhound etc. and tell the operators that Metrolinx will have responsibility for finding them a new home. The building should then be transferred to Build Toronto rather than remain a windswept eyesore like Eglinton Surface. However, given the private operators are already complaining about competition from Metrolinx’ subsidiary GO they might not find the notion of Metrolinx finding them a home a cheerful prospect.

    Steve: There is an accounting problem with having Bombardier build and staff the Portlands yard. If the City enters into any long-term arrangement from which it cannot escape, that’s the same as if they committed the money themselves. It is a future liability. Changes in acceptable accounting rules for public bodies closed that loophole. There is also the small matter of how local 113 would look on a proposal to outsource maintenance, and the fact that this will also be an operating yard with lots of local 113 operators who might look dimly on driving cars out of a Bombardier facility.

    As for Eglinton, I believe that the City is in the late stages of entertaining development proposals for this site. The timing is partly affected by the need to work in the new Eglinton LRT subway interchange.


  19. I’m sorry Steve, I asked my question incorrectly?

    How much would it cost to convert Yonge/Bloor Line Station (up & down) The platforms on the Yonge Line and the Bloor Line ( At the Bloor/Yonge Line transfer stations)………………… a double sided platform, in order to increase passenger flow?

    How long would it take to do approximately?

    Steve: What you ask is physically impossible without completely rebuilding the stations. The work could almost certainly not take place with trains running through, and this would effectively close the line.


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