Something is definitely in the air in Toronto, and it’s not just the unusually early arrival of spring and tree pollen. Suddenly, everyone is talking about transit expansion, and of paying for it with real money, not the fairy dust of “private sector” investment.
The latest installment comes thanks to Los Angeles of all places, a city-region with the political will and leadership to actually build rather than to whine endlessly about how they can’t afford to do anything unless some other government picks up the tab.
Back in early April, John Lorinc wrote in the Globe about the LA transit plan and the funding — a dedicated regional half-percent sales tax — that underpins the whole scheme. Two weeks later, Richard Katz was in Toronto talking about transit funding. Katz is an advisor to Mayor Villaraigosa, chair of the regional commuter rail system, Metrolink, and a member of the LA County Metropolitan Transportation Authority board.
Katz is an entertaining speaker, and his background as a California legislator responsible for important measures addressing transportation problems gives him a depth of experience with no equivalent in Toronto. His presentation covered a lot of ground, although it ran into swampland toward the end trying to explain how the financing schemes would work.
A few key issues need to be mentioned up front:
- Political leadership, transparency and inclusiveness are essential. Without a major figure like Mayor Villaraigosa championing the program, transportation improvements and funding for them would never get the broad political support needed. Plans have to be public and their benefits to a wide variety of communities well-understood.
- Los Angeles didn’t start to focus on transit yesterday, but started its rapid transit program in the 1990s. At that point, the work was ridiculed in some quarters as a waste of money, but it built the foundation for a broader network.
- LA’s half-cent sales tax, the subject of much recent comment in Toronto, is only one of several revenue sources for both capital and operating dollars. Indeed, there were two other half-cent taxes (for a total of 1½%) already in place, and the mechanism is familiar to voters.
Los Angeles County is a huge region of just over 4,000 square miles of which two-thirds is unincorporated even though there are 88 cities within the county. The largest of these is the City of Los Angeles (503 square miles) home to about 40% of the county’s population. By contrast, the City of Toronto is a mere 240 square miles. The City of Toronto’s population density is about 25% higher than the City of Los Angeles, but beyond these boundaries comparisons get tricky depending on what areas one includes as part of the “metropolitan” region.
From a transit planning point of view, both regions contain large areas whose populations and travel patterns are unlikely to be well-served by transit, but which contribute to overall regional demand especially if their population grows.
Los Angeles has been a large city-region for much longer than Toronto and its famous “sprawl” was made possible by a network of steam and electric rail lines, not to mention a large streetcar system. Privately-owned transit lines existed to support real estate development, a model that declined as personal transport became more common.
As the city’s transportation orientation shifted to cars (with some notorious help from anti-rail-transit practices by the automotive industry), the local and regional lines disappeared in the early 1960s. Some rights-of-way remained as the foundation for transit’s renaissance decades later.
Richard Katz’ presentation begins with an overview of the Los Angeles County Metropolitan Transportation Authority. Daily ridership is roughly equal to the TTC (which has a much smaller service area and population), although it is more concentrated to peak periods (less than half of TTC riding occurs during the peak). This translates to very different service levels and patterns in LA than we see in Toronto.
The most recent half-percent sales tax came through “Measure R”, a ballot initiative (we would call it a plebiscite or referendum) in the fall 2008 election that was approved by just over 67% of voters (a two-thirds majority was needed to implement a new tax). This tax is expected to generate $36.1-billion from 2010 to 2040 when the tax will expire. Only 35% of the revenue will be dedicated to rail expansion projects, 25% will go to operations and 20% to highway projects. This is an important distinction compared with Toronto where all debate has turned on the funding of transit capital at a time when local municipalities are cutting back on transit operating funding and service. As for highway funding, that’s part of the political reality in LA as the highway network is so important a part of local travel. A transit-only tax would simply not generate enough voter support.
A map of the Los Angeles transit system shows the many proposed extensions. For those unfamiliar with this network, the major routes are identified by colour, but three separate technologies are used:
- Subway: Red and Purple lines
- LRT: Blue, Gold and Green lines
- BRT: Silver and Orange lines
Overlaid on this is the regional rail system (roughly the equivalent of GO Transit) operated by Metrolink, the agency Katz heads.
Originally, five major projects (highlighted on the map) were to form the bulk of work in the first ten years of Measure R. However, Mayor Villaraigosa now seeks to accelerate the entire 30 year project into a 10 year window by borrowing the necessary capital up front, secured by the future Measure R revenues. This is intended not just as a shot in the arm for transit, but also for employment in the LA region that has fallen off greatly in recent years. This is a notable difference from Toronto where even the scale of the original Transit City scheme was criticized as being beyond the capability of the overheated local construction industry (strangely, this criticism has evaporated now that Queen’s Park wants to spend $10-billion on local transit over the coming decade).
I could not help feeling a sense of monument-building in the desire to accelerate projects by a mayor whose time in office faces term limits this year. The spike in spending the compression of a 30-year program into 10 will create is shown on page 11 of the presentation. Presuming that this can be funded, what was not explored is the “after” situation where the pace of construction falls off and revenues for 20 years into the future are tied up paying down the debt. The Mayor and his staff have invited investment from a Chinese state agency who, amusingly, accuse LA of being too “socialist” because they seek to generate employment and development with public money.
Both the transit and highway construction work are expected to generate huge numbers of jobs and spinoff economic activity including taxes that will be collected at various levels of government. This is not unlike the argument advanced by Metrolinx as part of their benefits analyses for transit projects. The underlying debate, however, must always remain whether spending is done wisely and on projects that will prove useful in the long run.
Like our Metrolinx, LA’s MTA argues that the new transit lines will take many cars off the road, reduce congestion, lower fuel consumption and eliminate some pollution. This is true only if that represents a real reduction in traffic levels. On that score, it is not clear, especially in Toronto, that traffic (and all the effects it brings) will get any better, particularly as the built-up area of the GTA reaches further out into low-density development and diffuse origin-destination patterns.
Population in the City of Los Angeles grew by under 10% from 1990 to 2010 at a rate of about 15,000 annually (3.49m to 3.79m). The County of Los Angeles grew from 8.86m to 9.81m over the same period, and is projected to grow to almost 14m by 2040. Whether this growth will actually be achieved and where it will occur relative to transit and road networks was not explored in Katz’ presentation. By comparison, the GTA expects to see 100k more residents per year for the indefinite future, and many of these may locate beyond easy reach of transit.
Looked at over a 30-year window (page 9 of the presentation), there will be $269-billion in transportation spending. However, comparisons with the GTA require that this be adjusted to put things on an equal footing. About 35% of the spending will be on rail and bus operations and another 33% will go to roads. About 9% will go to debt service (about which more below). Only 20% of the total goes to bus and rail capital requirements.
Measure R will fund about 13.4% of the total, and a further 30.9% will come from state and federal governments. The remainder, 55.5%, shows up as “local”, but this is actually a combination of other sales tax revenues and fare income.
More details are available in a second presentation on Measure R. This was not included in Katz’ talk, but it gives a better understanding of what is going on.
Page 5 includes a graph of LA County’s population from 1990 to 2011. Although there was strong growth from 1996 to 2004, this flattened out.
Page 7 shows the revenue history from the first of the half-percent sales taxes, Proposition “A” starting in 1984. The effect of economic fallout starting in 2008 is quite clear, and it is noteworthy that the 30-year forward projections for increasing tax revenue assume that the rate of increase will decline in the out years. However, as with any economic projections, a severe slump could hobble growth and throw the whole scheme out of whack.
Conservative projections for future revenue growth are essential especially for any debt that will be funded from this stream. The ratio between expected revenue and debt service (page 9) has been kept high to ensure good bond ratings.
Page 12 lists several constraints on the repurposing of Measure R revenues noting that transfers between subfunds can only be done between the transit and highway capital funds, that this can only be done once per decade starting in 2019, and that approval of both the Metro board and voters is required. Contrast this level of open distrust that governments will keep their word with the situation in Ontario where money and “commitments” shuffle around like leaves in the wind.
Page 15 shows that each subfund has its own targets for current and debt financing. None of the operating funding can incur debt, but must be paid out of current tax revenues.
What appears to be happening, however, is that the ratio of Measure R income to the debt it must service will be considerably lower than for the earlier tax measures. This implies that most of the Measure R money devoted to transit capital is already spoken for and anything beyond already announced projects (including some that do not yet have full funding) will require new revenue sources.
Translating all of this to a GTA context takes some doing, and would have been helped by a comparative overview of the economies, geography and politics of the Los Angeles and Toronto regions. The LA experience shows that if there is a will to take on new revenue sources, then capital and operating investments can follow.
What Toronto lacks is leadership at the municipal and provincial levels. I will turn to the general problem of funding transit and the required scale of investment in my next article.
Thanks to Bart Reed, Executive Director of the LA Transit Coalition for a few corrections (including a howler where I had the Red Line opening a decade early), and for the following comment.
LA hasn’t built new roads in decades. Yes, segments were finished around the Southern CA region, but in the Los Angeles regional basin, the bulk of the highways were completed decades ago. Some projects like the carpool lane system are still being built today, but that is road widening.
You can absolutely live a lifestyle in Los Angeles without a car, unlike the misstatements of some of the commentators.
My 10 Tiger Team interns are looking at bus rail connectivity at Metrolink Stations. Forcing changes to make the bus system work with the trains will also be a paradigm shift. One project at a time.
Ah yes … making buses and trains work together seems to be a problem not confined to the GTA.