I have been remiss in completing my coverage of the TTC Board meeting on May 28 as other issues and activities have drawn my attention.
The big issue was the $47-million so-called surplus in the 2013 operating results which I addressed in an earlier article. Let’s just say it was one of the less well-informed debates I have seen in my years watching the TTC.
Another issue of note was the matter of eliminating stops on the streetcar system, an issue also covered elsewhere on this site.
A fascinating motion was placed before the Board by one of the “citizen” Commissioners, Alan Heisey. Its purpose was to ensure that the Board formally schedule meetings for the purpose of (a) discussing general policies rather than specific agendas, and (b) in advance of labour negotiations (such meeting to be held in camera).
The motion includes a very troubling statement in its preamble to the effect that there has been no meeting of the Board to “discuss strategic and policy direction” since the appointment of the four citizen (non-Councillor) members of the Board in October 2012. One was attempted in January 2014, but could not proceed due to time constraints.
Considering the hype surrounding the appointment of outside “experts” to the TTC Board with the idea that they would contribute fresh ideas, the lack of any meaningful discussion renders these appointments almost useless. Members are at the mercy of management and the Chair for the items that are discussed and how much “blue sky”, if any, is presented in the public meetings.
Former Chair Stintz was all about “good news”, and complex debate on policy were simply not her style. An attempt by now-Chair Augimeri to bring reports on budget alternatives forward this year was shut down by Stintz and her faction on the Board lest it give ammunition to her mayoral opponents.
The Board adopted Heisey’s motion, but the actual execution of it will fall to the next Board who could decide, depending on the outlook from the Mayor’s office and Council, that a detailed examination of transit policy does not belong on a public agenda.
We shall see come 2015.
The CEO’s report gives updates to financial and performance data to the end of the first quarter, 2014. Ridership is down 1.5% from the budget because of the harsh winter, although it is up 2.1% on a year-over-year basis because the strong results of 2013 still dominate the running year-long total.
Although the budget hoped for 540m rides in 2014, the current projection is for 537m. On the financial side, the originally projected “break even” budget (subsidy required equalling subsidy committed by Council) no longer holds and a deficit of $8m is projected. The manner in which this will be handled depends on evolving ridership, revenue and cost trends over the year.
Once again, management blames the increased use of monthly passes as a factor in lower than expected revenue, despite the increase in the fare multiple in 2014. The basic point here is that people are using transit more (or at least trying to), and a higher proportion of riders is finding a fixed cost pass attractive. It is tiresome that for years management has blamed their most loyal customers for their financial problems.
A major increase in costs arises from construction projects at a greater than budgeted scope. When the operating budget was struck in November 2013, there were still hopes that Queens Quay would open in the spring, but the hard winter put an end to that. Indeed, anyone watching the project (and related work at Union Station) might have doubted the target even without the bad weather. Between Queens Quay and other construction activities in Toronto, there is considerably more replacement service needed than had been planned for in the budget.
The combined effect of the unplanned construction-related services and the possible shortfall in subsidy could affect the rollout of planned service improvements in fall 2014.
Service punctuality continues to be a problem, and the winter weather did not help. However, it is noteworthy that the report acknowledges that there are internal reasons contributing to performance problems:
In order to bring levels to target, efforts are focusing on improving efficiency by allocating more resources to minimize dwell times at crewing locations and end terminals. In addition, maintenance programs aimed at improving fleet reliability and minimizing signal problems and restricted speed zones are being implemented. [Page 8]
A major challenge in the maintenance of a regular headway is that terminal breaks and crew changes can trigger noticeable delays. It is also intriguing that fleet reliability is a problem on a line with the newest equipment, although according to another section in the report, performance of the TR trains is improving. Detailed metrics for the reliability of different types of equipment are not published.
The SRT continues to exhibit poor performance, and its relatively high score on headway maintenance is possible only because the schedules were changed to be less demanding. There is no published plan yet explaining how this fleet will be kept in operation until the Scarborough subway opens, nominally in 2023.
Surface routes suffered badly during the winter. The bus fleet rebounded in March, but streetcars continued to decline. Two factors were tagged in this: the water main construction project on Bathurst which was incomplete and suspended over the winter leaving the curb lane blocked in various locations, and problems on St. Clair:
The 512 St. Clair route was negatively impacted by passenger congestion at St. Clair West Station and inoperable transit signal priority at the St. Clair/Yonge intersection. The TTC has requested the City to restore the signal priority. [Page 10]
Passenger congestion? Is the real problem a lack of service, or at least of reliable service? As for transit signal priority, why is it allowed to be out of service for so long that it has a significant effect on overall reliability stats?
The TTC has still not posted first quarter reliability figures on a route-by-route basis, although I am advised that this will be done soon.
The financial statements for 2013 are presented in a format that may be unfamiliar to readers of past statements thanks to a change in the accounting standards for public sector agencies. The major change is that capital assets are now included in the books along with the revenues (subsidies) used to build them and the ongoing depreciation of assets that are in service.
In previous years, the financial statements for operations and capital were separated almost as if the operating and capital sides of the TTC were separate companies. (Also included in the consolidated statements are various subsidiaries and related corporations.)
Although this is a new standard, it can actually be confusing because aspects of the TTC that are funded through separate streams show up as one entity. This may establish the overall “cost” of the TTC, but unlike a private sector corporation where profits are used to pay for capital investment, almost all TTC capital costs are funded through contributions from various governments that are more dependent on political than market forces.
There is now an “accounting surplus” which arises primarily from the infusion of subdies on capital projects. This totalled just over $1-billion in 2013 and created assets that will over time be depreciated. However, current depreciation is much less than the capital subsidy revenue for 2013, and so there is a surplus on paper.
Financial Assets and Liabilities are now shown to give an appreciation of the future exposure of the TTC, and through it the City of Toronto. On the Asset side, the roughly $1-billion is substantially accounted for by Subsidies Receivable (see accounting note 5). Many of the TTC’s costs are booked when they are incurred, but are not actually payable immediately (notably benefits and accident claims). The City does not advance funds for this portion of the operating subsidy until it is actually required thereby avoiding having to pay out the money from City accounts.
Non-financial Assets totalling just over $7-billion are the tangible assets of the transit system at their cost ($12.8b) less accumulated depreciation ($5.6b). This does not represent the replacement cost of the assets. The “accumulated surplus” for the TTC is almost entirely made up these tangible assets, not of money waiting to be dispersed in a dividend or invested in expansion (see note 12).
The Consolidated Statement of Operations and Accumulated Surplus similarly combines what used to be called “operating” and “capital” accounts. Revenues include fares and other miscellaneous income, operating subsidies and capital subsidies for a total of $3.2b. On the expense side, the numbers include both the cost of day-to-day operations and the net capital expenditure (the difference between capital income and the change in depreciated value of assets). This gives us about $734m in “surplus” which should not be confused with the recently reported $47m difference between the budgeted and actual operating subsidy.
Notes 13 and 14 set out the various subsidies the TTC receives. On the operating side, $91.6-million came from provincial gas tax while the rest came from the City of Toronto. (The gas tax flows through the City accounts so that the total City subsidy to the TTC is larger than the net cash requirement. To the City, the transferred gas tax is “revenue”.) In these statements, the subsidy sources are split apart.
Other provincial subsidies totalling $155m are split roughly half-and-half between project specific funding (such as the 1/3 share in the new streetcar purchase) and general capital subsidies from gas tax revenue ($71m). A reserve that had been used to fund subway car purchases since 2007 was completely consumed in 2012 and provided no income in 2013. Other reserves holding provincial funds from past years have been substantially exhausted. These arose initially from “one time” grants to the TTC that typically were made when Ontario had extra money looking for a home at fiscal year end. This was common before the 2008 fiscal crisis, but not since.
Two programs whose costs formerly appeared on the TTC’s books as capital projects, the Presto fare card and the Transit City LRT lines, are now in Metrolinx hands and they no longer appear in the TTC’s accounts.
Finally, federal subsidies of about $158m are almost entirely from gas tax revenue. Note that this does not include monies for the Spadina Extension project that flow separately as described above.
Sorting out the claims by various governments on how much they spend on Toronto’s transit system can be complicated because:
- Some money flows directly from current revenues to the TTC via the City and is spent in the year it is received (gas tax).
- Some money flows into reserve accounts outside of the TTC and is an “expense” to the funding government when it is made, but is treated as “revenue” by the TTC when it is drawn from the reserve.
- Some “spending” takes the form of a commitment to pay future costs. This results in no current expense to the funders, and the revenue comes to the City and TTC only as required to cover ongoing capital work.
- Some transit assets are owned by Ontario (GO Transit, Eglinton Crosstown LRT, Presto). Spending on these is recorded in provincial accounts, not in City or TTC books. Moreover, provincial “commitments” to future work do not represent real spending today.
The Dupont Station report is an update on the progress of the design for accessibility and includes a presentation showing the proposed station layout.
The Ossington Station report is the contract award for construction. It also includes diagrams of the proposed layout for the station.
Of note in the body of the report is a remark that:
To date, 32 stations have been made accessible and all remaining stations are to be made accessible by 2025, subject to available funding.
Because of the shortfall in long-term capital funding, the TTC has been attempting to get a special subsidy from Queen’s Park for the Easier Access program. This request has been rejected.
From time to time, readers ask me what is happening with the regional bus terminal at Kipling Station. The problem lies with Metrolinx and Hydro One because of hydro’s concerns about the use of their land. Metrolinx has not been pressing the issue as the situation was not critical, but the TTC discovered that Islington Station is gradually becoming unfit for bus operations due to structural problems. This station was to be rebuilt some years ago as part of a redevelopment plan, but that project fell through.
Metrolinx has now agreed to pay $7.1-million toward a shoring system that will brace the bus roadways so the MiWay can continue to operate from Islington safely while awaiting the new terminal at Kipling planned for 2019. The shoring will be installed in 2016.
The Prince Edward Viaduct carries the Bloor-Danforth subway over the Don Valley. It was built nearly a century ago and included provision for a lower level that would have carried streetcars from the then-suburbs of Toronto into a downtown subway system. The bridge piers are in need of repairs that cannot be delayed, and the City wishes to undertake the work in 2014 in advance of the Pan Am Games next year.
This project requires changes to the TTC’s physical plant at the subway level at a cost of almost $2.8-million.
This project was not included in the 10-year capital plan, and to make room, other projects have been set aside to 2015 when their cost will be included in the next 10-year plan. These include:
- $750,000 for subway and SRT track renewal
- $832,000 for changes to the streetcar power feeder system at intersections to allow isolation of lines from nearby power cuts
- $750,000 for replacement of cables
- $450,000 for replacement of streetcar track switch equipment
The exact details of the deferred work are not included in the report.