The Chong Report (I) (Updated)

Updated February 6, 2012 at 11:45pm:  The Chong report is now available online (linked below) together with a report from KPMG on financing the Sheppard subway.  Large chunks of the KPMG report are reproduced in the Chong report.

Original post from Feb 5 follows:

Gordon Chong’s report

Toronto Transit Back on Track
Sheppard Subway Development and Financing Study

will be released sometime this week, but a copy has already found its way to me.  This report was commissioned by Mayor Ford to explore the viability of his proposal, as stated in the purported Memorandum of Understanding with Queen’s Park, for the City to go it alone on the Sheppard Subway project.  The report is close to 200 pages long including its appendices, and I am not going to review it in a single article.

There is no question Chong’s mandate was to substantiate the need for and viability of the subway line, and to that end his report is coloured with sections intended to denigrate LRT alternatives and the political process that led to the Transit City proposal.  I will turn to this material in due course, but any decision on the subway project must stand on its own.  History is worth reviewing insofar as it provides technical background and shows the evolution of transit planning in Toronto.  Fighting old battles may score political points, but the subway must be justified on its own merits.

The cost and financing model are central to the thesis that the Sheppard line, and by extension a network of subways, is an appropriate goal, indeed the only goal, for Toronto.  The common wisdom is that “everybody wants subways”, but as with many aspects of public spending, what people want is not always what they will get.  Recent events in Toronto’s budget process are littered with lectures by Ford’s followers about fiscal responsibility and the need to make do with less.  We are told that the city and its taxpayers cannot afford to pay more.  We must, therefore, examine claims that major new public works are affordable with suspicion.

What is the estimated cost of any new project?  Are the numbers we are using credible?  Are subways actually cheaper than we have been told, and could a lower cost bring them within financial constraints of potential revenue?  Are public agencies the appropriate developers of such projects?  Are their costs (historical and projected) greater than might be achieved through another delivery mechanism?

While it may be a common Toronto sport to poke holes in TTC budgets, management practices and operations (a not uncommon thread on this blog), such criticism must be backed with a standard of accuracy and care.

How Much Will the Sheppard Subway Cost?

A central premise in this debate is that the TTC, and by implication the public sector generally, is unable to deliver this project at a reasonable cost.  An oft-quoted figure puts the TTC’s estimate of the project at $4.7-billion while an estimate from Metrolinx sits at $3.7-billion.  These numbers first appear in Table 2 in the Executive Summary, and they are routinely repeated as gospel.  One must read all the way down to page 147 and Table 38 to see the details. Here we see component costs that are generally higher for the TTC estimate than the Metrolinx one, but the details reveal that the billion dollar difference is not all that it seems.

Metrolinx estimates the cost of maintenance facilities at $138-million based on a per-car value of $2.66m.  A footnote on the table clearly states that the TTC estimate of $500-million is based on a new facility larger than is needed to hold just the fleet for Sheppard.  Why such a big difference?  Metrolinx assumes an expansion of the yard at Wilson and therefore a marginal increase in system capacity whereas the TTC makes provision for future fleet growth for demand and for system extension.

Wilson Yard has a looming problem with its size because there are limits on how fast trains can be pushed out for service buildup in the AM peak.  Already there is discussion of shortening the hours of subway service to retain an overnight maintenance window between the end of one day’s operations and the start-up of the next.  TTC plans include proposal for an underground storage yard north of Finch Station and, eventually, to a new carhouse somewhere in York Region.  We cannot simply keep stuffing more and more trains into Wilson.

This aspect of the cost difference cannot be counted as a penalty against the TTC because it addresses a completely different model of what would be built (and why), not some inherent flaw or inflation in TTC costing.

“Operating Systems” covers a range of items listed in the comparison.  For this, the TTC’s value is 4.5 times the Metrolinx value ($329m vs $73m).  This amount cannot be explained simply by claiming inefficiency at the TTC, and it is wildly out of scale with the differences in other items.  At the very least, anyone purporting to compare estimates would flag such a difference and explain it in their report rather than simply using the numbers without question.

“Contingency” is a catch-all allowance in any project budget to allow for unexpected events and costs during construction.  Both the TTC and Metrolinx estimates allow about 26% over and above the component costs, and with the TTC’s costs being higher, so is the contingency in their estimate.

Sales tax is included in the TTC estimates, but it is not in the Metrolinx version.  This shows up by virtue of an HST Rebate in the TTC section of the table which has no equivalent on the Metrolinx side.  The HST is included in the component costs including the contingency factor, and the TTC unit costs are not presented on an equal, untaxed footing with the Metrolinx costs.  Again, this sort of adjustment is a basic requirement of financial analysis, but it is absent from Table 38.

There are likely other areas where differences between Metrolinx and TTC figures would bear scrutiny, but as the TTC numbers are not detailed here, nor are the assumptions on which they are based, it is impossible to dig further.

Taking what we can see into account covers about three quarters of the difference between the Metrolinx and TTC estimates.  Before we can believe the Metrolinx $3.7b estimate, the inconsistencies with the TTC numbers must be explained.  Both values may be legitimate given the underlying assumptions used in each case, but these are demonstrably different.  Saying that there is a $1-billion spread between the two is an apples-to-oranges argument.

Here, it suits Gordon Chong’s thesis that the TTC is an inherently poor steward of public funds and that the project could be delivered at lower cost through another agency or mechanism.

A January 2008 Metrolinx report on a study tour to the United Kingdom and Spain is included as an appendix to the Chong report.  Even a cursory reading of this document shows that there are significant differences in the environment in which large-scale projects were undertaken in these jurisdictions compared with Toronto.  A major source of savings lies in the scale and continuity of construction projects, a general agreement that the projects should go forward (possibly with less up-front review such as our Environmental Assessments), and a regulatory environment that reduces contention between proponent agencies and the companies actually building their projects.  (Buried in the report, by the way, are references to “Tram” (LRT) components of the Madrid system which are considerably cheaper per kilometre than their subways.)

The degree to which each difference between the European cities and Toronto contributes to differences in costs is not explored, and yet this is essential to any comparison.  The scale of their projects and longevity of their construction plans are not directly transferable to a single Toronto subway extension.  It is not enough to say “look at how cheaply Madrid builds subways” without also understanding why they can do it.

In my next article I will turn to the question of how we will pay for this project.

21 thoughts on “The Chong Report (I) (Updated)

  1. Steve,

    Is this report just about an eastward extension from Don Mills? If yes, then I agree with you about the yard issues. If there was Sheppard west connection, I would think the car movement situation would actually improve.

    Steve: It would be done in two phases. First east to STC, then west to Downsview. The problem with using Wilson is independent of whether the Sheppard line runs out of there or not. The path a train must take to reach the Sheppard subway crosses the Spadina line.


  2. Nice write up so far Steve. I think every transit fan eagerly awaits the release of it – not just for the Sheppard Line itself but as a possible template for the DRL as far as private financing goes.

    Anyway, to a specific question I have in your Part 1 report is the $1 billion dollar difference. I understand that you state that it is not what it seems due to the context of what is being discussed (maintenance yard at Wilson, taxes, etc) but does it mention anything about the costs associated to the building of the Stations themselves? A trip along Sheppard today shows these nice (yet costly) stations in place but it seems overbuilt from a practical point of view considering we are dealing with precious resources that are scarce.

    It seems to me that there is potentially hundreds of millions of dollars in savings by scaling back the grand designs of all the stations across the line to something a little more economical. Was the downsizing of stations in order to save money or allocate the funds elsewhere addressed in the report?

    Steve: We go through this whole business of “fancy” stations over and over again. When we build plain ones, people complain and want something fancy, but not too fancy (look at the Spadina line’s extension). When we build fancy ones, people want them simpler. The big expense is digging the hole. It’s worth noting that Metrolinx attitude to stations and accessibility is not as generous as the TTC’s, and they probably save money on that score, but without a few sample designs, we don’t know what the big differences really are.

    The “Stations” part of the overall costing is about 25% higher for the TTC numbers, but that includes tax (omitted from the Metrolinx numbers). We also don’t know to what extent TTC costs include recovery of the sunk costs of earlier planning work.


  3. Steve says: The path a train must take to reach the Sheppard subway crosses the Spadina line.

    Well surely not at grade. And there are many options for connecting track, yard expansion and/or Allen rerouting that could increase yard throughput. Of course I’m assuming the Eglinton re-signalling team would be otherwise occupied.

    Steve: The original design was not grade separated because, I suspect, nobody saw this as a problem.


  4. Question: If, hypothetically speaking, Ford accepts the surface alignment for Eglinton East and skips on any prospect of a Finch B/LRT line, could there be enough money for an extension between Downsview and Sheppard-Yonge? No disrespect to the people of northwest Scarborough, but from a network standpoint, linking Sheppard to the Spadina line I think makes more sense than to link it with the Eglinton-Scarborough line.

    Steve: No. The link to Downsview will cost well over $1-billion and there isn’r enough budget room left over for that. And, no, I don’t agree that this should take precedence.


  5. The fact that Ford had no legal authority to cancel Transit City should mean that we are back to LRT on Eglington, Sheppard, and Finch W, unless Council votes for an alternative.

    Frankly if Ford wants to build subways so much he should focus on the DRL.

    But what are the chances of that happening … a common sense revolution and picking the appropriate transit technologies where it is needed.

    Regardless, I look forward to reading about the funding alternatives put forward by Gordon Chong and also your analysis Steve.


  6. Actually, given how much intensification of land use (major transition from single family homes to condos) is happening on Sheppard from Downsview station to Bathurst, I’m surprised the 196B isn’t running all day service everyday. I wouldn’t be surprised if the amount of people living along that section doubled from 2006-2016, especially once the TYSSE opens.

    That said, if both the Sheppard East and Finch West lines get restored, what happens to the (planned) connection between Don Mills and Finch stations? Is that basically dead, would it still be on the table as planned (but perhaps in the hydro corridor), or as a non-revenue track to save on maintenance facilities?

    Steve: That segment was added by the Premier as part of an announcement, and disappeared just as quickly when the Premier cut the scale of Finch back to the segment west of Keele. Easy come, easy go.


  7. There is this one nagging question that has been bothering me since the 2010 municipal election campaign. I hope that you will be able to answer in future posts on this subject.

    Whenever anyone talks about building a subway (instead of the approved LRT), why is the route only going to follow Sheppard as far as Kennedy before veering off to the Scarborough Town Centre? Why not continue eastward along Sheppard?

    Steve: Because the Sheppard subway was always going to end up at the Town Centre, not in eastern Scarborough.


  8. Steve, I know why several people are pushing for the DRL, but with this gang in charge, it’s like a snowball in hell… chance.Yes, it would serve many people coming from the eastern parts of the city. However, the project would be centralized in an area which we all know is inner city and I find that most of their projects are in inner suburbia( old North York, Etobicoke, Scarboro). Also, their votes weren’t from the area where the project would take place.

    Steve: The DRL is a separate issue from the revival of Transit City. It does not have funding, but Council is on record as saying that it has a high priority. The TTC has been dragging its feet because they don’t want to see money diverted to it, but Metrolinx is taking a renewed interest now that the idea of stuffing every last rider on the Yonge subway is falling out of favour.


  9. The more Ford’s allies reveal their plans, the clearer it becomes that their plans are based on more on dreams & ideology and “common sense” and personal opinions rather than data about public transport planning, as well as the Toronto city plan.

    The Transit City plan is based on the Toronto city plan, and are meant to provide local public transport for short distance trips. The routes chosen are based on existing and projected public transport demand, not on development potential.

    Sadly, too many people think that Eglinton and Sheppard will redevelop, or that the buses will bring in large numbers of passengers to the Eglinton and Sheppard lines.

    What’s worse is that it’s becoming clear that these issues are becoming more about personality and ego and ideology rather than planning and what is the best public transport option for Toronto.

    This should not be about Rob Ford, but it has become that way, with two sharply polarized extreme views (both from his own perspective and the “anti-Rob Ford” point-of-view) that are taking us away from building the public transport that Toronto needs.

    That said…I’m looking forward to read the rest of your comments on the Chong report.

    Cheers, Moaz


  10. The Gordon Chong report’s findings perplex me. Originally we were hearing that it was unlikely that the private sector would fund more than 30% of the Sheppard subway extension’s costs at the most. Now that figure has doubled to 50-60% of the construction costs and those costs are now, seemingly arbitrarily, $1 billion less than expected. The poorly explained billion dollar drop in construction cost and sudden 100% the increase in projected private sector funding is cause for concern to me because it sounds like this report has become political, as if designed to allow enough revenue in to make the project look workable without having to resort to unpopular things like road tolls once it was made clear that those were not permitted. That “write me a report telling me what I want to hear” type of approach from the mayor’s office deeply concerns me.

    As for the existing Sheppard line’s ‘extravagant’ stations, everybody needs to remember that those were stripped down. At the time the line was built, those stations were considered budget stations since only four cars worth of space was finished out and things like putting tile over the concrete walls on the other side of the tracks and drop ceilings below the concrete roof slabs to hide all the utility pipes etc. were omitted, and they were held up as an example of how to deliver tasteful artwork and make the stations look attractive on a low budget.

    I’m not a Sheppard subway extension supporter but I do have a question about the costs of the extension plans: The existing Sheppard line’s cost vs. the costs of extending it east to Scarborough Town Centre or west to Downsview are interesting. The original line at $1 billion paid for a good length of subway as well as two very expensive engineering and construction challenges at Yonge St. where the track connections with the Yonge subway had to be built and the new subway station constructed in the space between the existing Sheppard station and the road up above, and the Don River crossing. Granted, there is the 404 crossing going east and the valley crossing going west plus track connections at Downsview, but the amount of open space around Downsview vs the situation at Yonge St. should ease the engineering and construction difficulty and lower the cost of building that interchange compared to the one at Yonge St. Still, have construction costs risen so much during the intervening time that $1 billion worth of subway extension, which doesn’t include those two expensive sections at Yonge St. and the Don River, won’t go as far distance-wise?

    Steve: The original Sheppard line opened ten years ago, and at a minimum you have to allow for inflation. Also, some of the costs were buried in other budget lines such as the cars and carhouse space (which for the level of service wasn’t much). The Metrolinx cost estimate at $3.7b would buy 12.7km of new tunnel for a price of about $300m/km. Even this is double the cost of the original Sheppard line. It’s fascinating that everyone points to the really low-cost subways overseas and complains about TTC pricing, but neglects to mention that even the Metrolinx price is higher (without adjusting for the errors in their comparison to the TTC’s numbers). Construction costs have gone up a lot in general, but Chong does not attempt to split apart increases that anyone building a new subway would have to bear from those peculiar to the TTC. Looked at another way, one might ask how it was that the TTC could build the original Sheppard line so “cheaply”, and use that as a starting point for comparison.


  11. Hi Steve,

    Long time reader, first time commenting. Loved your reaction about the retirement of the H4’s.

    I agree with TTC Passenger in that this report reads like a “tell me what I want to hear” report. Also, I stopped reading when I saw the images and headlines pertaining to “streetcar accidents”. What impact, if any, will this have on tomorrow’s special meeting at Council?

    Steve: The Ford folks will drag out a great deal of bilge, I expect, as they are not bright enough to leave the more dubious parts of Chong’s report in well-deserved darkness. It is the exaggeration, the selective presentation of “facts”, that undermine Chong and hand support to the pro-LRT faction.


  12. Is the how many times can you repeat yourself report? Okay already you think LRT is evil incarnate and subways will cure all that ails society.

    Also see figure 3, Premier George Dew… the MPP for High Pork too?

    Steve, are any of these folks engineers? And I’m not referring to the HO scale kind!


  13. I’ve had this thought kicking around for a while, and it might be about as crazy as putting a dedicated busway along the hydro corridor so it goes nowhere near Humber College, but here we go anyway:

    Practicalities aside, might it be a good idea to retrofit the Stubway to handle LRTs (lower the platform height, change the track, etc), extend the LRT from Don Mills to Scarborough East, and extend it north-west to Yonge and Finch, then have it continue along Finch to Humber/airport?

    When Stintz floated her compromise proposal with a Finch busway in both directions, it seemed a bit ridiculous to me that we’d have two rapid transit lines east of Yonge, one major street apart. By through-routing Finch West all the way to Sheppard East (with a stubway retrofit), we eliminate the yard space/travel time issue for subway cars from Wilson yard, and get rapid transit across the top of the city on the two streets that apparently need it most.


    Steve: Retrofitting the Sheppard line for LRVs would require major changes at stations because of the platform heights and, in turn, this could affect the transition to the tunnels. Technically possible, but not simple. Connecting Sheppard to Finch is, I believe, a bad idea because we would have to build a new line linking the two, money that could be better spent elsewhere. The section of the Finch route east of Keele is something for a future day as and when money is available.


  14. Also – why do we need TTIL? I know it’s just a political tool to get the Shepherd line built, but why are we spending any money keeping it? If I was a councillor I would be having a meeting to shut down this money pit as possible…they don’t even have the TTC on their list of potential partners on page 104…

    Steve: TTIL was a shell company with a small amount of money left over from previous TTC consulting activities. Toronto Transit Consultants Limited (TTCL) was its old name.

    This was a convenient way to let Gordon Chong do work under a “transit” umbrella using money that had already been “spent” while avoiding political oversight by Council. Strictly this was not true as the assets of the old company showed on the TTC’s books. Now the company is worthless and the TTC will have to show an operating expense when this value is written down in their 2012 financial reports.

    This sort of accounting dodge has been used by governments for ages — create a separate company that operates under the rules (notably confidentiality) of a private firm and arrange for money to flow to it without the need for the niceties of public approval. This sort of thing is often used to bury surpluses.

    The absence of the TTC as a partner or in the “thank yous” shows just how much contempt the Fords and Chong have for the folks who do the work.


  15. “meant to provide local public transport for short distance trips”

    That is the fundamental problem with the Transit City proposal in the first place. The Transit City lines might be a minor improvement over buses for a short trip along Sheppard or whatever but people doing long trips will continue to drive because they are too slow. The severe congestion on GTA highways strongly suggests that many people are travelling long distances around the GTA. Transit City would have only been marginally faster than the buses that it would have replaced and too many transfers would have been required to cross the city. If all the people who currently drive suddenly decided to use them then they were be totally overwhelmed, because the capacity of a LRT is much lower than the capacity of Highway 401 in Toronto, and around the same as the car-carrying capacity of an arterial road like Sheppard. Subways (or elevated subways, or high frequency GO trains, or whatever) are a lot more effective at competing with driving for longer trips, and on corridors like Sheppard/Eglinton where rail corridors don’t exist then GO trains are not an option. They also have much higher capacity than LRT, which is needed in a huge city like Toronto.


  16. From what I read in Gordon Chong’s Report it seem that the Transit City Proposal appeared out of nowhere, without TTC’s prior review, despite a history of multiple Transit plans and City Council discussion that were leaning toward a subway on Sheppard Avenue.

    Just Saying.

    Steve: Actually TTC staff did have a go at the Transit City plan before it was released, and yes it was a major change in direction. That doesn’t invalidate the idea that the time was come to end the focus on subway building just as years earlier we ended the fetish for expressways.


  17. Sorry Andrew, but subways operate at nominally much lower speeds than GO trains and are not really comparable. Subway has a tough time competing with highway travel because of much lower speeds. If we take into account actual origin-destination pairs of the 401 vs Sheppard travelers, I don’t think a subway there would be as helpful as you think.


  18. @ Andrew

    You are correct that Transit City cannot compete with driving for long trips. However, this not the purpose of Transit City. Even if we hypothetically replace every proposed LRT with a subway people who drive from Markham to Mississauga or from Woodbridge to East York will continue to do so as long as their employer provides free parking and fuel remains affordable. The 401 drivers and Transit City passengers represent two different demographics. You might be right that an LRT on Finch will only save a few minutes travel for most people. But it will offer other advantages to current transit takers:

    1) Ride comfort. No more bumpy buses.

    2) Reliability. Service will be as reliable as subway since it will have full signal priority and passengers will load from all doors. No bunching due to overcrowding.

    3) If two or three car trains are running every 4-5 minutes most people will be able to get a seat even during the rush hour. Moreover, you will be able to bike to a stop and take your bike on board.

    3) Accessibility. No need for elevators/escalators and long walks through the corridors. Just cross two lanes of traffic.

    4) If there are no patrons waiting and a stop is not requested there is no need for an LRV to stop. Another advantage of light rail over heavy rail.

    5) 24 hours service. Unlike subways that have tunnels requiring nightly maintenance suburban lines can run all night, just like downtown streetcars.

    6) Access time. Very few bus stops need to be removed and that means that people will still have transit at their doorstep. With subways many people will most certainly have to walk more which will eliminate the time saved especially for short trips.

    7) Visibility. People will see the city from the trains. They will know which stores are on their way to work. They will be able to run errands and get back on the train. A huge marketing boost for businesses along LRT corridors.

    8) Operating cost. While doubling the subway coverage will raise operating costs by hundreds of millions yearly an LRT network will be cheaper to operate than existing bus routes for two reasons: fewer drivers are needed and less vehicle maintenance is needed with brand new cars. Therefore, after the implementation of Transit City the TTC would be able to use the surplus operating funds to improve service on routes not converted to LRT such as downtown streetcars or suburban buses without a significant fare increase.

    Once again, whoever needs or chooses to drive won’t be affected since traffic lanes will be preserved. Free parking alongside Transit City routes would be preserved as well. The LRT network will help current TTC takers without inconveniencing the drivers. It is not meant to force drivers to take transit. An alternative to driving for long distance commuters is out of scope of Transit City.


  19. Andrew said:

    The severe congestion on GTA highways strongly suggests that many people are travelling long distances around the GTA.

    And also said:

    Subways (or elevated subways, or high frequency GO trains, or whatever) are a lot more effective at competing with driving for longer trips, and on corridors like Sheppard/Eglinton where rail corridors don’t exist then GO trains are not an option.

    In order to reduce or shift some of these trips to public transport (and therefore, reduce the congestion or more likely, decrease the rate of growth in congestion), Metrolinx and GO have to be the ones to step up.

    We need expanded all-day GO service on the main GO lines, expanded GO service on other railway corridors, and expanded GO bus service either operating in bus lanes or busways.

    Some of these necessary steps have been taken in some parts of the Greater Toronto + Hamilton area. The HOV lanes on the QEW and 403 (which are making GO bus services more reliable during peak hours) are good examples. The Mississauga Transitway (really a busway for GO and MiWay buses) is finally being built (well, partially) and phase 1 will open in 1-2 years.

    Has Metrolinx done enough to market these changes and projects really well? Does the traveling public see GO bus service as “rapid transit” or an alternative to driving from suburb to suburb (or suburb to midtown Toronto).

    I think that right now, most people do not feel that GO service is “rapid transit” unless it is an express commuter train to Union Station. It is up to Metrolinx to change that perception and they just don’t seem to be doing that.

    Cheers, Moaz


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