Month: November 2017

by

TTC Board Meeting: November 28, 2017 (Updated)

Updated December 1, 2017 at 11:15 am:

The preliminary City of Toronto operating and capital budgets were presented at Toronto’s Budget Committee on November 30, 2017.

Operating Budget

To no great surprise for seasoned budget watchers, the Two Hour Transfer was not included in the funded budget, but instead appears among a long list of unfunded new or enhanced services. The total value of these proposals is $41.3 million (after considering any associated revenue), and they are competing for a much smaller amount of available headroom in the operating budget. (The list is on pp 12-14 in the appendices linked above.)

Although Council may approve many wonderful initiatives and the Mayor may hold many press conferences and photo ops exulting in the decisions, the money to pay for them is often not part of Council’s decision. What actually happens is that these are “nice to haves” thrown into the coming year’s budget hopper on the off chance funding will materialize by budget time. This has the effect of throttling the will of Council and feeding all of its decisions through the much more conservative outlook of the Budget and Executive Committees.

Council further limits this process by passing a budget directive early in the cycle (usually late spring) directing that property taxes for the coming year not rise by more than the rate of inflation. The actual increase is below inflation because commercial property rates are on a long downward trend thanks to rules imposed by Mike Harris to rebalance the relative tax levels for commercial and residential properties in Toronto. This will not complete until, probably, the 2021 budget after which tax increases will apply equally across the board.

Of the new revenues Toronto will receive in 2018, property taxes are actually only a small component, but Council debates inevitably turn on this source as a benchmark. The actual tax increase anyone sees is the result of several factors:

  • the tax rate change for their property class;
  • changes, if any, in separate levies such as the Scarborough Subway tax and the Mayor’s Infrastructure tax;
  • updated and/or phased in changes to the assessed value of property;
  • policy directions such as rebalancing rates between property classes (e.g. commercial vs residential).

Other new revenues can flow to the City through various rate structures notably TTC fares, although these have been frozen for 2018. A small increase in fare revenue is expected compared to the 2017 budget thanks to a changes in the relative number of fares paid of each type (passes, tokens, cash).

As things stand today, the funding to pay for the Two Hour Transfer simply isn’t there, but it may be found, almost like magic, as the budget process unfolds from now through February 2018 at Council. Another transit fare proposal, the first phase of the “Fair Fare” scheme in the Poverty Reduction Strategy, is also not funded.

This process creates a drag on implementation of new programs unless there is strong political support from the Mayor and his voting block on Council, and should serve as a warning to advocates for schemes such as the Ridership Growth Strategy. With luck, there will be proposals before the TTC Board before the hiatus of meetings for the 2018 elections, but anything the Board approves will be considered as an “enhancement” going into 2019 and could well be derailed. Add to this the chronic problems of vehicle and garage space shortages at the TTC, and there is a recipe for seeing little real growth in service until at least the 2020 budget year if not later.

This is the combined effect of a process that has valued capping spending above all other goals for many years. Infrastructure that would be needed to support growth doesn’t exist and has a multi-year lead time, and even the vehicles the TTC owns run less service than they could because improving service never comes with enough revenue to cover costs.

Passengers who have shorter waits or are less crowded do not represent extra revenue, and the marginal gain lies only with new fare-paying trips attracted to the TTC. On a grand scale this is seen for 2018 with the Vaughan subway extension where net new revenue does not come close to paying for the added operating cost of service, but this happens at a smaller scale whenever a bus runs more often and less crowded, but mainly with passengers who were already on the system.

A further problem for constrained budgets is that the cost of existing service goes up through inflationary pressure, and the population requiring municipal services including transit continues to grow. City management use that growth to show how the tax burden is actually declining on a per capita basis from $4,480 in 2010 to $4,262 in 2018 (presentation, p 17), and this is considered to be virtuous when in fact it shows not just “efficiency” but also a decline in service provided. The effect on individuals varies depending on which municipal services they consume, and the program-by-program effect is never reported.

Every year, the budget is hauled into balance through a combination of new revenues, reduced expenditures and “bridging”, a term for various accounting “fixes” that get the City past short-term problems. (Apologies for the subtlety of the colour changes in the chart below. It is from the City presentation.)  Note that the values below are “deltas”, the change from year to year, not the total revenue or spending in each category. Expenditure cuts (darker blue) have been a large chunk of the savings in recent years. By comparison, TTC fare increases are small change within the larger City context and, of course, there is no increase in 2018, a policy direction endorsed during the 2017 budget cycle.

However, City budgets are debated at the margin in that any fine tuning is achieved by tweaking revenue sources to accommodate new spending, and the proportional effect on thinks like fares, property taxes and other user fees tends to be higher than for the budget as a whole. The reason for this is that much of the City’s revenue comes from sources that Council cannot “tweak” in the course of setting its budget, and so the effect on what remains is higher.

The TTC Board decided that it would include the money sitting in the Transit Stabilization Reserve as 2018 revenue, just as they did in 2017 (although in fact this was not needed because of better-than-budget results). This keeps the year-to-year subsidy increase down to $24 million paying mainly for the new cost of the TYSSE and for transitional increases in fare handling while Presto and the legacy fares both remain in place. Using that reserve is an example of a “bridging strategy” because the reserve will not be available in 2019 if it is depleted  in 2018, and new revenue will be needed to replace it. That $24 million pressure from the TTC (with more to come from unfunded proposals) crowds other City departments and agencies by taking the lion’s share of new spending.

Among the factors listed in the revenue and expenditure changes for 2018 (p 27), there is a section headed “Prior Year Decisions”. This includes the TYSSE effect, but does not include the cost of the fare freeze decision on the 2018 revenues.  Had there been a fare increase, politicians would be forced to explain to riders how opening a new subway is not free and how York Region gets a free ride on Toronto taxpayers.

The City’s overall revenue and expense budget is summarized in the chart below. The TTC’s total expenditures of $1.974 billion consume about 18% of the budget, but 63% of this is paid for through the farebox. (Note that there is a common problem when “farebox” recoveries are cited for the TTC because other revenues such as advertising and parking are sometimes erroneously included as if they were rider contributions. Also, occasionally, the TTC funds some capital costs from current revenues and these do not properly belong in the “operating cost recovery” calculation.)

When the available revenue including assessment growth and inflation in property taxes are considered, the City has a small surplus of $3.4 million in the preliminary budget. A further $5 million will be available from a pending change in taxation of vacant property, although Council has already directed that this go toward the Poverty Reduction Strategy. Without further adjustments, these are the only funds now available to pay for the $41 million in approved but unfunded initiatives including the Two Hour Transfer.

Capital Budget

On the Capital side, there are a few points worth noting in the City Budget that bear on the TTC’s funding.

The City of Toronto has a policy that total debt service payments should not exceed 15% of property taxes. This was changed in recent years from a hard cap to one that considered the 10-year average debt ratio mainly to deal with a bulge in borrowing that will peak in 2021. That bulge would affect projections well into the next decade as lower-than-average borrowing in 2018-19 slips off of the chart but must be replaced by comparably low numbers in 2028 and beyond to hold down the average while the 2021 peak is “digested”.

Various adjustments to the budget change the shape of this chart and somewhat tame the peak. There are additions (funding for TCHC repairs and other unspecified “unmet needs”), but new provincial gas tax revenue announced in 2017 allows a reduction in the debt load producing the revised chart below.

The debt limitation, together with limited provincial and federal funding, is directly responsible for the TTC’s enormous list of unfunded projects. The new gas tax revenue will generally not go to transit projects (except possibly under “unmet needs”), but will offset other City borrowing needs.

Another change in projected City financing will be an increase in the “Capital from Current” amount. The proportion of funding provided by this source will rise from 12% of the 2018 budget to 22% in the ten year plan while debt falls from 32% to 22%. This will shift more of the spending in later years of the plan into the operating budget, although the dollar increase may be offset by a reduction in total annual funding needs assuming no major projects are added without dedicated revenue sources and/or subsidies from other governments.

Even with all of this spending, the “state of good repair” backlog across the city will continue to grow, notably at the TTC. This plan understates future funding requirements by its failure to include the TTC’s SOGR projects that are known to exist, but not included in the City’s plans. (Some other City departments, notably Transportation and Facilities Management, also have large unfunded repair backlogs. See p 63 of the presentation.)

Updated December 1, 2017 at 9:15 am:

The budget presentations, which contain slightly different information from the budget reports, are now online.

The Capital presentation has a more detailed breakdown of the “Capacity to Spend” reduction, and I have added this, plus a few comments, to that section of the main article (scroll down to the end).

Continue reading →

by

The PC Ontario Transit Platform: Real Change or Smoke & Mirrors?

The Progressive Conservative Party of Ontario released its campaign platform that will take them into the 2018 election on November 25. This contains three pages on “Change that works for Transit Users”. How much of this voters will actually care about when the real headlines are tax breaks remains to be seen, but a review of these pledges is worthwhile to see what’s really involved and how it could affect transit in the GTHA.

The concept of “Change” is hard to grasp when, in many cases, the Tories simply claim that they will do what the Liberals have planned all along anyhow. The platform implies that the Libs really don’t mean to carry through, but that the new gang, given the chance, will make sure all of the promised chickens actually turn up on every pot.

Each of the bullets quoted below begins with the text “Patrick Brown and the Ontario PCs will …” as if Brown and his party were the government. L’état, c’est moi! This is precisely the sort of characterization for which the Liberals have been so rightly criticized.

Fulfill the existing commitments to two-way, all day GO train service and complete major transit projects already under construction, including those in Ottawa, Hamilton, and Kitchener-Waterloo. [p. 52]

Note that this is the “existing commitments”, not any new ones, nor is there any guarantee of service frequency. Many cities longing for full GO service will stay right where they are looking down the track and hoping for more trains to appear. The words “GO RER” do not appear in the platform, no doubt because that is a Liberal program, and it incites the same reaction in the PCPO that “Transit City” did for former Mayor Ford.

The text accompanying this bullet contains a few oddities:

  • The Finch West LRT project is among those the Tories will complete, although there is no mention of the extension to Pearson Airport. By analogy to other items in the platform, this should really be a city project, not a provincial one because it is not a subway.
  • The Hamilton LRT project is included, although some of the local Tories oppose it, and again this is not a subway.
  • The portion of the Eglinton Crosstown LRT now under construction is not mentioned, nor is the planned extension westward to the airport.
  • There is no mention of Waterfront transit which is mired in the “Reset” plan whose report has now been delayed to January 2018. Once upon a time, then Minister Murray “committed” that the sale of the LCBO lands on Queens Quay would go to transit, but that was long ago and commitments evaporate with a minister’s departure.

This point strikes me as avoidance of derailing works that are some ways “down the track” without making any commitments beyond them.

Commit an additional $5 billion to build new subways in the Greater Toronto Area. [p. 52]

This bullet follows a long section of text which trots out some of the usual complaints, and cites Mayor Tory’s desire to get on with actual building rather than endless debate. “Shovels in the ground” is the aim, although this is selectively applied to subway projects: Scarborough, Sheppard East (Don Mills to STC), the Relief Line (unclear as to the short, medium or long versions) and the Richmond Hill extension of the Yonge subway. These are cited as “prime candidates for development”, but to that end, the Tories ante up only “an additional $5 billion” and are quite clear that they expect matching money from Ottawa.

Ottawa already has an infrastructure program, although you would never know it from the Tories’ platform. The main questions here are how much of the national program is earmarked for Toronto, and will Ontario build new subways fast enough to qualify under that scheme.

This brings us to the obvious point that new subways, with the possible exception of Scarborough’s, could only barely be under construction before the 2022 election, and there is no guarantee of the Tories being around to deliver on their “commitment”. Meanwhile, there are Liberal spending plans, although these are equally vague thanks in part to the dereliction by Metrolinx in giving any sense of priorities for, benefits of or costs related to the new Regional Transportation Plan’s components.

The platform cites “the combination of insufficient capital, antiquated municipal accounting rules, and a lack of political leadership at the provincial level” for the long delays in provision of new transit. Physician heal thyself. Two decades ago, the Tories walked away from municipal transit, and the Liberals have been slow to return. Transit continues to be a contest among politicians that their one favoured project might be blessed rather than a collaborative effort to fund and build a network.

The choice of projects is geographically skewed and omits large areas from the catchment of new lines. How the list addresses needs in the GTA overall is a mystery. As for the $5 billion (or $10b if the feds come to the table), the first bite out of this will be consumed by the proposed provincial assumption of the Scarborough subway’s cost (see below), and whatever is left over will be used on other projects. That won’t get those tunnel borers very far, and certainly will not build all of the lines cited in the platform.

As for those “antiquated municipal accounting rules”, possibly the PCPO could enlighten us as to how they would change these rules to free up additional spending capacity for cities across Ontario, not just in Toronto. Those rules exist to require cities to use a more [ahem] conservative set of accounting rules to ensure that they don’t get too deeply in debt, a constraint by which parties of all stripes at Queen’s Park are not subject.

Provide help for commuters across the Greater Toronto Area by ensuring that the provincial government assumes responsibility for maintenance and investments in Toronto’s subway infrastructure. [p. 53]

This is a truly bizarre statement because commuters across the GTA depend on far more than the Toronto subway system to get them to work. Indeed, Toronto shells out considerable dollars through operating and capital subsidies to keep what is really a regional asset operating. The portion of the Vaughan extension north of Steeles will add about $10 million to Toronto’s annual costs with almost no return via new fare revenue or subsidy from York Region. Making Ontario responsible for “maintenance and investments” would certainly be welcome as an upload, but this would be a very large new cost for Queen’s Park.

As I discussed in a previous article, the subway system accounts for about a third of the TTC’s Operating Budget and about half of the Capital Budget. Net of provincial contributions Ontario already pays (gas tax), this would leave Queen’s Park with about $1 billion in new annual costs just to keep the existing system running, and no offsetting revenue because the platform commits to leaving all of the fares in Toronto.

Part of Queen’s Park’s new responsibility would involve the greater use of private sector design-build-finance-maintain contracts which, the platform claims, would accelerate the rate of construction on new lines. This would also, as the Provincial Auditor has complained, add to cost and create the need to manage contracts that would not exist if the assets were kept in house. This is part of the creative accounting we have seen under the Liberals and clearly favoured by the Conservatives which converts traditional debt to a long term lease arrangement with the physical property (i.e. a new subway line) as an offsetting asset. Presto! The provincial debt stays down, even though there is an unavoidable long term payment commitment.

The platform states that the government “will assume responsibility for the physical subway infrastructure – tracks, tunnels and stations”, although there is more to infrastructure (notably vehicles, yards and shops) than this list. The TTC would remain as the operator/maintainer under contract, and fare revenue would stay with Toronto. I will return to the issue of fares later.

This would be done “in partnership with the Mayor of Toronto”. It may have escaped the Tories that such agreements are made with the City of Toronto through Council, not the Mayor’s office.

The existing subway system is an asset of the city paid for with municipal, provincial and federal dollars. It is one thing to assume the cost of routine and capital maintenance and operations, but quite another to transfer the asset to the province merely to suit accounting trickery, or worse, to enable future resale.

All of this is intended to “create a structure that takes advantage of the province’s balance sheet to maximize provincial investments”. That goobledygook brings us back to provincial accounting rules and debt transformed into DBFM contracts. Would it be churlish of me to point out how often the PCPO has pilloried the Liberals for creative accounting?

This is all explained as a regional benefit through co-ordinated planning, ensuring that Toronto gets long-awaited subways, relieving commute times across the GTA and increasing economic growth while reducing red tape and arbitrary delays. This is pure doctrinaire BS. Commute times might improve, but mainly for riders in certain sections of Toronto and central York Region, not “across the GTA”. We do not suffer from an excess of red tape, but of the lack of will to spend region-wide on transit.

Enter into discussions with the City of Toronto about air rights over future subway stations that it builds. These air rights should be used to increase housing supply, which in turn promotes housing affordability, and increases economic activity. [p. 53]

In the middle of a discussion of new subway lines, this bullet appears. In that text “subway stations that it builds” actually refers to the province even though the text could imply that they are built by the city. This idea appears out of nowhere as if somehow the housing crisis will be solved by building over subway stations. In fact, only one future station, the one at Scarborough Town Centre, is even in the pipeline, and development around it is already planned. If the Tories were serious about this policy, they would turn their attention to existing stations throughout the network, including the GO stations now surrounded by parking lots.

Assume responsibility for the city’s share of the Scarborough Subway Extension, including the more than $200 million cost escalator that the province has refused to fund, provided that the city makes a significant financial investment in extending the Eglinton Crosstown project to Scarborough’s University of Toronto campus. [p. 53]

The eventual cost of the SSE is an unknown quantity today, and if anything is subject to increase beyond mere inflation as detailed design proceeds. It is standard practice for Queen’s Park and Ottawa to cap their contributions at a fixed value for municipal projects, although Ontario is happy to quote its own projects with a base price plus an unspecified allowance for inflation. This allows the province to low-ball its cost estimates by quoting 2020 work in 2010 dollars. Capping contributions is done specifically to avoid scope creep where municipal plans expand by spending “thirty-three cent dollars”. For example, all of the cost overrun on the Vaughan extension has been funded by Toronto and York Region under their cost sharing agreement with no extra money coming from other levels of government.

A provincial commitment to paying the city’s share of the SSE is like writing a blank cheque so that any design problem can be solved just by sending the bill to Uncle Patrick up at the Pink Palace.

As for the LRT line to UTSC, this was originally part of the consolidated “plan” for Scarborough transit, the deal that convinced subway opponents to buy in because the LRT sweetened the pot. All the money, of course, is now dedicated to the subway extension. It is unclear just what the platform means by a “significant contribution” from Toronto, nor where the remainder might come from for this project.

Call on the Federal Government to match the new provincial subway funding commitment. [p. 54]

Yes. Of course. It’s an Ontario program but someone else should help to pay. A nice 50-50 split to spread the load around just as some federal programs like PTIF assume that others will help to pick up the bill. Given that the Tories’ “commitment” is rather small (especially once the SSE takes its share), Ottawa should have little problem matching it. The real problem will be waiting to see whether any of the projects advances far enough to draw on funding from any government.

Make Ontario’s transit systems more customer friendly, starting with free, reliable, consistent WIFI on GO Trains. [p. 54]

The text accompanying this bullet states:

… customer service levels on the GO train lines are not up to par. The government should focus on getting transit built, but it should also focus on making commuting a better experience.

When I read “promises” like this, I have to wonder how they get into platforms, and whether every post-it note from policy conferences simply was swept up from the floor. Without question, there are customer service and friendliness issues at Ontario’s transit systems (plural), but WIFI on GO is hardly the place to begin addressing this. At no point does the platform address any increase in service beyond that already in the GO RER plans, nor is there any “commitment” to improved funding to encourage the buildup of local transit on which all of these new GO services will depend for “last mile” access.

Make Ontario’s transit systems more customer friendly, by harmonizing fares where possible, allowing for online ticket purchases for GO services, and by ensuring all facilities accept the same forms of payment. [p. 54]

More “customer friendliness” including fare “harmonization”, although there is no description of just what this might mean. Online ticket purchases are already possible with Presto, and that system is used in much of the GTHA thanks to the heavy hand of Queen’s Park. “Forms of payment” is a rather broad term that takes us all the way from the simplest of Smart cards up to bank cards and mobile apps. The real issue with “ticketing” is a harmonized back end system that can handle multiple ways a rider might identify themselves and charge rides to their account. This item has the feel of a platform written by someone who rarely uses transit.

Fulfill the existing commitments to complete the environmental assessment for the Southwestern Ontario High Speed Rail project. [p. 54]

That and a few billion will get you a somewhat faster train to London and beyond, but don’t hold your breath. The High Speed Rail project (and a kindred boondoggle, the Hydrogen Train) are great exercises in appearing to be doing something while “committing” to schemes that are either unaffordable or technologically immature. This “commitment” simply avoids the Tories looking like they oppose HSR without actually making any plans to built it.

A much more useful platform, from any party, would be a wider discussion of passenger rail and bus services, and not just in southern Ontario. However, the Tories have written off transit in all but a few markets.

The next section of the platform is entitled “Change that works for Drivers”, and it is a screed against the evils inflicted on motorists by the Wynne government. Oddly, it is less than half the length of the transit section, although clearly the Tories are playing to the idea that too much attention goes to transit riders and projects.

Overall, the PCPO platform share with all such documents a certain lack of editorial rigour having been pieced together from a variety of proposals originating in multiple policy conferences. Some were accepted, some were modified and some were rejected – the result has a stitched-together feel and an assumption that most people will only read the sections they care about. Such is political life. The “money” platform is always key and, as usual, voters will be bribed from their own pocketbooks.

How much of the transit platform will actually be implemented once the complexities and costs become evident? That is quite another question.

by

I Want A Pony

Everybody has a transit plan these days. Even if it ain’t worth the paper it’s printed on, nothing stops an endless deluge of photo ops. Look at me! Look at the wonderful things I am doing for YOU!

I am not a Mayor nor a Minister, and the likelihood of my getting a series of photo ops beyond selfies (and never mind that page in the Globe) is rather small.

My needs are simple. My demands are few.

I just want a pony.

This will bring inevitable cries that precious resources desperately needed by the horsey sector out there in suburbia are being diverted to downtown.

There will have to be a regional plan where ponies are included as a potential transit mode. Funding will be required. Environmental assessments. Business cases. Demand models.

Consultants will grow rich studying the (re-)integration of four legged motive power into our transit mix while lobbyists, indistinguishable from used car salesmen, who will show us how the byproduct of this new(old) technology can solve all of our energy needs.

Mayoral candidates will saddle up to endorse the scheme, along with their cohorts, a motley band of planners who cannot read maps, professors who grade on any curve as long as it results in an A+, and financiers who claim that equine transport will be self-financing.

There will be an election. There are always elections. Every party will jump on the bandwagon saying that swan boats are outdated. Fie on old technology that doesn’t give the voters what they need, nay, what they deserve!

Politicians will discover that well-trained ponies can be “self-guiding” and take riders to and fro without the need for a driver. A provincial agency will be created to harness this stunning new development! Its first hires will be a photographer and a publicist.

The feds might even concoct a Pony Transportation Investment Fund.

But I just want a pony, and I want it NOW.

Alas, it cannot be. It is the process, the claims, the studies and above all the photo ops on which the transport world turns, not on actual delivery. We might even see a new pony barn built, but reining in taxes will prevent any actual ponies from cluttering up the civic plans and budgets.

by

Mayor and TTC Chair Advocate For Time Based Transfers

Mayor Tory, TTC Chair Josh Colle and TTC Commissioner Mary Fragedakis have requested that TTC staff report later this month on the “costs and any other implications for the introduction of time-based transfers for PRESTO users” in 2018. This would make the single fare a payment for a limited-time pass rather than for an unbroken trip subject to transfer rules that predate the TTC’s origin nearly a century ago.

This proposal is pitched both as a way of assisting low-income riders (for whom multiple short trips by transit can be quite expensive) and local businesses (who would benefit from the hop-off, hop-on behaviour), as well as a way to reduce fare evasion whose cost is pegged at about $15 million annually. The more cynical among us would note that the change simply makes “legal” a behaviour TTC riders have engaged in since the dawn of time – maximizing the amount of travel possible for one fare.

The Presto smart card’s  operation would be greatly simplified with the elimination of the byzantine logic required to validate transfers between vehicles, and it would also remove the source of many disputes about overcharges when Presto does not recognize a change of vehicles as a legitimate part of a continuous trip.

This would also make fare integration across the 416-905 border simpler by unifying TTC transfer policies with those of the local 905 systems. What remains is the need for a funding mechanism to provide a co-fare arrangement between operators.

This is a surprising reversal for Tory and Colle who, in past years, treated the time-based fare as “too expensive” despite its many advantages. Previous estimates pegged this at a $20 million annual cost.

With CEO Andy Byford showing strong support for this policy as part of a Ridership Growth Strategy, the move is clearly on to make this change. The timing for the election year is an extra benefit for politicians looking for a transit improvement.

Now if only they would fund better service.

Postscript:

This should be the final nail in the coffin for the ill-conceived Metrolinx proposal to shift transit fares to a distance-based charge. With all of the GTA operating on a time-based system, and zones vanishing internally (York) and between regions (cross border fare sharing), there is zero justification for a wholesale upheaval in a flat fare arrangement. Metrolinx should wake up and drop this from its policy proposals.

by

TTC Plans Flatlined Service and Fares for 2018 (Updated November 17)

Updated November 17, 2017 at 6:30 pm

The TTC Budget Committee met today and considered the draft 2018 Operating Budget. Between the original release (described later in this article) and today’s meeting, Mayor Tory and two members of the TTC Board endorsed the concept of a two-hour fare to replace the complex transfer rules now in place.

Although this was listed as the second item on the revised meeting agenda, Commissioner Mary Fragedakis moved that it be considered first. This re-ordering was a procedural move to forestall a standard tactic used at City Council where a motion setting the next year’s tax increase is introduced and passed before the budget which it will fund. The result is that any proposed budget changes must fit within the already-approved tax level rather than having taxes set after the budget is finalized. In this case, the motion regarding a two-hour fare was only a report request, and the order was less critical. That request passed by a vote of 3-1 with Budget Chair John Campbell in the negative as he opposes the two-hour fare scheme.

The meeting then turned to a series of deputations which, as these things tend to do, fell on largely hostile ears. A favourite tactic is to challenge members of the public to explain “how would you do  it”, despite the fact that the issues are complex and do not fit within an answer of a few sentences. The Budget Committee itself cancels more of its meetings than it holds, and opportunities for an open debate about transit policy options and the budget rarely occur.

Beyond information already in the budget report, there were a few additional items of note in the staff presentation.

The Cost of the Vaughan Extension

This comes up from time to time, and it is clear that the Committee did not fully understand the costs and revenues associated with the extension.

For some time, a cost increase of $30 million annually has been cited for the TYSSE. However, the 2018 Budget only includes a $25 million bump because $5 million had already been included for start-up costs and operation in the 2017 Budget.

The $25 million comes from a combination of new costs, and revised revenues. The TTC now receives $8 million for bus services operated on contract for York Region, but those services will be assumed by the Region when the subway extension opens. The TTC will continue to operate the vehicles, but now at their own cost and so this is a net increase in costs because of the lost revenue. That amount is partly offset by a combination of $3 million in new fare revenue and $1 million in parking revenue.

Ridership

The projected ridership for 2018 is 539 million, a growth of 3 million over the probable results for 2017, but below the originally budgeted target of 543.8 million. The change from 2017 to 2018 arises from several factors:

Increases:

  • 4.8 million rides due to economic growth
  • 2.1 million rides due to service improvements and the GO Transit co-fare
  • 1.5 million more rides by children (who travel free of charge)
  • 1.2 million new rides from the TYSSE
  • 0.5 million additional rides counted due to improved reliability of Presto readers
  • Total: 10.1 million

Note that most of the expected ridership on the TYSSE will be by existing riders changing travel patterns, not by net new riders. This is further constrained because York Region Transit will continue to serve York University directly thanks to a lack of agreement on a co-fare between YRT and TTC. Riders who were anticipated to show up as YRT-TYSSE-YorkU trips will not be using the subway. It is ironic that there will be more new rides by children on the system as a whole than by riders on the subway extension.

Half a million rides were estimated to have not been counted in 2017 because failing Presto readers were unable to charge these fares. The TTC’s Brad Ross advises that these are

“rides not counted, assuming they still rode but couldn’t pay. The TTC is in the process of accounting for all lost revenue due to out-of-service Presto readers.”

Reductions:

  • 0.5 million rides due to increased subway closures
  • 0.7 million rides due to the elimination of the Public Transit Tax Credit
  • 2.8 million rides due to decreasing sales of Metropasses and Day Passes
  • 3.1 million rides due to a reduction in the average number of trips taken on each Metropass
  • Total: 7.1 million

This provides the net increase of 3 million over 2017 probable results.

Expense Risks

The budget has been drawn up on a conservative basis and leaves several areas where the outcomes in 2018 could be different than projected. The $14 million now sitting in the Transit Stabilization Reserve could be used to offset some of this risk, provided that Council does not scoop the reserve simply to hold down the subsidy increase.

Some of the items below refer to savings that allowed 2017 to show a “surplus” (actually a reduced requirement for subsidy), and these might not all continue into 2018.

The budget contains a provision for $4.1 million in extra costs through the provincially mandated payment for two emergency leave days per year. This has been estimated conservatively, and TTC staff advised the Committee that the worst case cost could be $18 million.

The History of TTC Budget Variances and Subsidies

For many years, the TTC has consistently come in under budget for the annual subsidy requirement. In the table below, the amounts are for the subsidies, not for the overall operating costs. This always leaves the TTC in a position for its next year estimates that a budget-to-budget subsidy flat-line actually represents an increase over actual requirements in the current year.

The subsidy per rider will go up in 2018 because of the fare freeze. Although this takes Toronto back to the level of 2010, that does not allow for cost inflation over that period which has been well above the CPI.

Continue reading →

by

TTC Board Meeting Preview November 13, 2017

The TTC Board will meet on November 13 with a full agenda. Among the items of interest are:

The Board will also receive a presentation on the Metrolinx Draft Regional Transportation Plan. If there are any new developments on this front at the meeting, I will report on them in an update to this article.

Notable by their absence are two long-awaited reports:

  • The Ridership Growth Strategy. This has been repeatedly promised, but not delivered. I spoke with Andy Byford at an event launching the King Street Pilot on November 9 and asked about this project. He advised that there would be an interim report at the December Board meeting setting out a work plan to verify that the strategies staff are looking at line up with what the Board actually wants to study. Then there would be a separate report or reports in 2018 with specifics of implementation. He reiterated past comments that the plan would be very “aggressive”. Note that a few RGS-related changes are listed in the 2015 Service Improvements Review, although they lack funding.
  • The Bloor-Danforth line renewal plan. This plan will address the need for a new fleet in the 2020s, a new carhouse, resignalling and conversion to automated operation, station upgrades, and any other work that reasonably fits in a package where a unified, co-ordinated approach will reduce overall project costs. The only problem is that Toronto has no funding for most of this. A related issue is that some work, notably a fleet capable of automated operation, will likely be needed for the Scarborough Subway Extension planned to open in the mid-2020s. Byford believes that this report will be coming to the Board in early 2018.

(The Board will consider its 2018 Operating Budget at a special meeting on November 28, 2017. The City of Toronto 2018 budget launch will occur on November 30, 2017.)

Continue reading →

by

Metrolinx Board Meeting Followup: October 26, 2017

Updated Nov. 2, 2017 at 2:50 pm: Typos corrected, notably “DBFOM”.

The Metrolinx Board met on October 26 with an agenda that was largely discussed in private. This article is a follow-up to the preview published before the meeting.

A major item on the confidential agenda concerned “Benefits Management and Realization”. Why this was handled at such great length in private is a mystery, and I attempted without success to clarify the topic of discussion with Metrolinx.

I asked:

Is this the issue of identifying, encouraging and capturing some of the benefits of transit expansion?

In a thoroughly opaque reply, Metrolinx stated:

Benefits management is a process to help us maximize project value as Metrolinx plans, builds, operates and connects transit projects in order to provide benefits to the region. [Email of Oct. 23 from Scott Money in Metrolinx Communications]

A major problem for Metrolinx and for the Regional Plan in general is the propensity to build stations surrounded by parking lots and structures (GO) or free-standing architectural sculptures that make integration with future development quite difficult. On a smaller scale, Metrolinx will have to get used to thinking smaller, in the sense that stops on BRT and LRT lines should not be planned around massive growth but depend on medium density locally plus intersecting feeder routes.

Metrolinx has committed to publishing information about its private sessions in the future, and it will be interesting to see how much we actually learn about evolving thoughts on this issue. After all, this meeting was billed as a “strategy session”.

The New CEO Introduces Himself

Metrolinx’ new CEO, Phil Verster, made a few remarks most of which were predictable as so much at Metrolinx meetings can be.

His focus since joining the agency has been on talking to customers and front line staff, especially those who do the invisible tasks that keep the system running. He has also been consulting with Metrolinx staff and management about the importance of positioning the agency to get the most out of the investment in the RER (Regional Express Rail) program over the coming years.

Among many projects, Verster spoke of the Kipling mobility hub (recently announced with a media event by sundry politicians), a project that has been brewing for over a decade.

Fare integration was another topic Verster focused on with the recently announced GO-TTC co-fare arrangement being the first step to region-wide integration. This will affect business case analyses, travel behaviours and patterns. New travel, of course, will depend not only on fares, but also on service, a topic on which Verster was silent.

In a telling comment, Verster observed that while Metrolinx has a lot of capital improvements underway, it is important to remember “the soft stuff” of organizational improvement, transparency to the community, and becoming an organization that represents transit in an objective and positive manner.

Being “objective” is a topic that returned in other discussions as the meeting went on.

Regional Transportation Plan Update

Antoine Belaieff presented an overview of the RTP consultations to date. He reported that reception to the draft plan as been generally positive, but that there is continued impatience for system improvements. Riders want seamless fares and service, have diverse opinions on parking and station access, and are interested in seeing how the plan will be staged and implemented. At the municipal level there were few surprises because local planners have been involved in developing the draft, although there is some interest in adding projects to the plan. Stakeholders want clarity about the first/last mile problem and how the growth in travel with RER will affect station access. There is continued interest in long and short haul goods movement by truck and rail.

There have been “fairly technical” discussions about roles and responsibilities for Metrolinx vs the provincial government, especially with respect to the provincial Growth Plan, and a desire for “crisp and concrete” language.

Phil Verster observed that the plan should not be “final” but should be open to changes. It should not be an “event” but an ongoing process.

Board member Upkar Arora asked whether people have been flagging omissions in the plan, have concerns about the environment and sustainability, or are split between an urban/suburban view of the plan.

Belaieff replied that, if anything, people are having to digest a “rich” plan that has a great deal to absorb. Feedback on environment issues has been supportive because of the plan’s “call to action”. Suburban areas tend to focus on how the plan will support growth both through new stations and with expansion that is timely relative to development.

Board member Rahul Bhardwaj asked whether “we hearing from the right people” or just those who are usually engaged, and using an unfortunate phrase, referred to the “silent majority”. Belaieff replied that he was pleased to see audiences not just of his planning friends, but that there was genuine input from “everyday” people. Getting attendees to meetings is hard, and Metrolinx is counting on local networks to help with this, but both “planning intellectuals” and “real people” were present. Leslie Woo, Chief Planning Officer, noted the need to reach marginalized communities.

Woo advised that there will be a report in December on the feedback Metrolinx has received and how it will affect the next version of the document. In parallel staff are working on economic information and will propose “a way forward” with the plan and its implementation. She proposed that the plan not be considered as finite, but as a generator of more specific studies.

One statement caught my ear, namely that this is a plan for ten years, after which there will be a new plan. That is technically correct, in that there is a legal mandate to review the plan every decade (the current review is triggered by that), but the RTP is intended to look forward a quarter century and given the lead time for the most complex projects, a ten year outlook simply won’t do.

As for the comments about “real people” at meetings, this cuts two ways. On one hand, it is vital that the plan be shaped by genuine public opinion as opposed to the “usual suspects” be they those of us who always comment on anything, or politicians who warp transit plans to suit their electoral goals. On the other hand, public opinion can be skewed by biased presentations, and some of the activism so familiar in transit circles arises directly from the need to provide contrary views to the official versions. Being “engaged” should not disqualify one from providing input to a vital plan, and engagement does not necessarily translate to agreement.

The finality of a plan, or its openness to change, is always a tug of war at the planning and political levels. Plans that are open to constant change can leave us with a situation where changing priorities and limited funding guarantee that nothing actually happens. On the other hand, the lack of published details behind many parts of the plan, specifically ridership projections, land use assumptions, project costs and priorities leave us with a full network for 2041 but no sense of how we will get there, or how subsets of the plan would perform.

Hydrogen Trains

Phil Verster introduced this report as an examination of an alternative “green” way to implement non-diesel propulsion for GO saying that there will be a very important feasibility study of the technology this fall. Mark Ciavarro, VP of RER Implementation, took the Board through the presentation (linked above) together with Peter Zuk, Chief Capital Officer.

Ciavarro noted that interest in hydrogen as a fuel goes back to 2012 when it was still a relatively new technology and, at the time, not worth further pursuit. In September 2016, Alstom unveiled a pilot and the vehicle is now in testing, although in a different, much smaller form than trains GO would use. The test train reaches a maximum speed of 140 km/h, and 60 trains are on order. Chief Operating Officer Greg Percy noted that GO’s top speed now is 90m/h or 150km/h. Greg Verster stated that speeds of 180-200km/h and up lie in High Speed Rail territory.

Chair Rob Prichard noted that there is a terminology issue in that all locomotives are electric, but the question is where the energy comes from. [Diesel locos generate their power on board while “electric” locos obtain power from an overhead wire. In both cases the actual propulsion is provided by an electric motor. However, truly electric trains give the option of powering all cars, not just the locomotive, and this changes a train’s performance.]

Zuk stated that GO is electrifying its network and the question is how this would be done. They are doing a feasibility study of hydrogen and other potential technologies. In Germany, commercial uses of hydrogen goes back to 2002, but there is a question here of the scale and applicability to large commuter rail operations.

Verster observed that the application of hydrogen trains in Germany would be to rural lines where electrification infrastructure is not cost effective. The train is small, and the issue is whether the technology can be scaled up. There will be challenges and that is why Metrolinx is conducting the feasibility study. There are hydrogen fuel cell applications in LRT and buses, but this is the first train. Surplus electricity can be used to create hydrogen, and that first stage is always expensive. This is a key part of the study.

Board member Carl Zehr asked whether the study will look at the transition to and integration of hydrogen technology. Verster replied only the technical feasibility is  being studied in the immediate future. His main objective is to deliver RER at the best cost and time. With respect to using the technology on track that GO does not own [portions of some corridors are owned by CN and CP which operate freight traffic over them], hydrogen trains could avoid the need for overhead contact systems (OCS) on non-GO trackage but there is no regulatory framework for this yet in Canada.

Zuk noted that each component of hydrogen fuel cell technology has been around for years. What is new is their integration into a rail system. Metrolinx needs to determine if and how fuel delivery will work, and how the technology would fit into EMU (electric multiple unit) trains.

There will be a symposium to assess the state of the technology on November 16, 2017 (see p. 13 in the presentation deck) and this will be open to outside parties. Whether this means media and the general public is as yet uncertain.

Rob Prichard wondered whether GO Transit would be the last system to build an overhead based system. The obvious rejoinder is that the whole world is building these systems. Verster replied that Metrolinx should not engage in delivering a program that is dependent on research and development.

The study will likely be done by the end of 2017 with a report for the February 2018 Board meeting.

During the press scrum after the meeting, the Star’s Ben Spurr asked Chair Prichard and CEO Phil Verster what made them think hydrogen technology is even possible. Verster replied unambiguously that there are significant community ridership benefits in RER, and Metrolinx will not jeopardize this based on a technology that is not ready to market. He observed that the study will affect RER procurement – under a DBFOM scheme (where a bidder does everything from designing to operating and maintaining the system) there is a question of what technologies a provide might bid.

Spurr also asked about Metrolinx attempting to position Ontario as a global leader, and whether this is a transit agency’s role. Verster replied that Metrolinx should “scan the horizon” to know what is available.

The DBFOM reference raises the question of whether Metrolinx is planning to outsource its RER operations completely on a turnkey basis. I attempted to obtain clarification of this from Metrolinx later on (the scrum ran out of time), but replies yielded no information at all. As for hydrogen itself, it is clear that there is a tension between the basic action of getting an update on the technology, and a political stance that would provide Ontario (and its politicians) with yet another chance to show off advanced technology. Our experience in that regard is less than stellar.

GO/TTC Discounted Double Fare

This report is substantially the same as the one presented at the recent TTC Board meeting. It deals with the proposed agreement between Metrolinx and the City of Toronto/TTC to implement the first stage in a planned four-stage evolution of regional fares:

a) Discounts on double fares (GO-TTC)
b) Discounts on double fares (905-TTC)
c) Adjustments to GO’s fare structure
d) Fare Policy Harmonization

Leslie Woo expects to report to the December Board meeting on all of these.

During the scrum, Rob Prichard observed that although the GO-TTC co-fare is a three year agreement, he feels that unwinding it is unlikely because it is so clearly the right policy direction. If anything, it will be rolled into a more extensive set of integrated fares.

We can only hope that Metrolinx has moved beyond regarding the matter of time-based fares (the two-hour transfer) as a matter of local policy rather than as a potential key part of regional integration for non-GO services. All systems outside of Toronto now use this scheme, and York Region recently eliminated its zone fares. Only the TTC remains as an exception, and there will be a proposal in the coming Ridership Growth Strategy that Toronto move to the two-hour transfer.

This could leave Metrolinx in the position of trying to foist fare by distance, their long-favoured scheme, on local systems that have already standardized on a flat, time-based fare.

Governance

The agenda included a private session item on governance which will be public at the December meeting. This may deal with the issue of which items and reports are dealt with in private session, and which are made public, especially before rather than after they are massaged to fit political reaction.

Rob Prichard, after much prodding in the media scrum, allowed that the controversy over Kirby and Lawrence East Stations was a “catalyst for discussion”. Phil Verster took a shot at the issue by saying that there are four phases to the benefits case process and the station review is at stage 1. There will be more information later in the cycle. Ben Spurr challenged him on the sequence of a Ministerial announcement that appears to seal the decision. Verster replied that communities should get a sense of direction, but that Metrolinx has a long way to go in the maturity of how they work with benefits cases. These are not an absolute science but have strategic overlays leading to a policy decision.

The Globe’s Oliver Moore asked if the Ministerial intervention was appropriate. Verster replied that he cannot comment, but wants to look forward. Metrolinx will give informed advice and options, but it is up to the politicians to make decisions.

These statements dip and dive around the issue, and the comments about the uncertain nature of benefits cases beg the question of the value of the degree to which Metrolinx has relied on these in the past as definitive studies. Either they can hide behind studies as the work of “experts”, or they can recognize them as works in progress that might not be “mature”.