Challenges For TTC’s New CEO

Late in 2011, Andy Byford was hired by the TTC as Chief Operating Officer, a role in which he would understudy the then Chief General Manager, Gary Webster. Little did Byford know that he would inherit the top role faster than planned, in March 2012, after Webster was summarily fired for his failure to support the Scarborough Subway Extension at City Council. The term “to be Webstered” entered the Toronto lexicon as a synonym for what happens to those who speak truth to power.

The position of CGM was renamed as Chief Executive Officer in keeping with common use in business. As such, Byford launched a five-year plan to remake the TTC in his image, a process for which Toronto eventually won the American Public Transit Association’s “Transit System of the Year” award in 2017. Although frequently misrepresented, this award was not for the best transit service on the continent, but for the achievement of a management turnaround plan.

In late 2017, Byford became President of New York City Transit Authority, a role he had long dreamed of having, despite frequent claims in Toronto that he wasn’t planning to leave. This opened the TTC’s CEO position, and the former Deputy, Rick Leary, has been Acting CEO since Byford’s departure.

What challenges does the new CEO face? Broadly, these fall into three categories:

  • The political situation at Queen’s Park is in flux with a new Conservative administration headed by a Premier for whom subways answer every question, and who has talked of shifting responsibility for Toronto’s rapid transit network to Ontario from the City of Toronto.
  • Toronto’s Council and Mayor send mixed signals on transit’s importance for the city’s economic prosperity and the good of its citizens, while keeping the TTC hostage to a tax-fighting dogma that demands ongoing restraint in budget and subsidy growth.
  • The long-term effect of policies by all governments has been a wide gap between the funding needs – both capital and operating – and the money the TTC is actually allowed to spend. Many “big ticket” items are special projects like subway extensions, funded in part for their political benefit, but the hole left in day-to-day project funding continues to deepen.

Underlying all of these is a basic question: what is the TTC supposed to be?

At Queen’s Park

To the extent that Doug Ford’s intentions for Toronto’s transit are known, the primary component is a subway plan dating back to his late brother, Rob Ford, to create a “loop” subway via Sheppard linking the Scarborough extension west to Downsview. Ford has also given some support to a Relief Line providing more capacity into the core area and to the proposed Richmond Hill subway extension, but it is not clear what the relative priorities are or when funding would actually be available for construction, as opposed to planning and engineering.

The status of LRT routes in various stages of completion is uncertain. Ford claims that projects already underway will be completed, but has not defined just how far “underway” something must be to qualify. Eglinton is a sure thing, although the status of its surface operation from the Don River eastward will certainly be reviewed. Finch is on shakier ground, as are the LRT plans in Mississauga and Hamilton.

Not to be forgotten is the GO Transit system including the Regional Express Rail (RER) infrastructure and service expansions now underway, the incorporation of John Tory’s “Smart Track” service into GO, and the regional fare reductions that were announced in the Wynne government’s final budget. Population growth throughout the Greater Toronto and Hamilton area drives the RER plans, but a basic problem remains that RER is very much a service for the core of Toronto. Travel among suburbs, both inside and outside Toronto, is overwhelmingly by bus, and the Metrolinx Regional Plan does not offer much improvement on that score. Whether the current plans will survive is unknown.

In their campaign material, the Conservatives claimed that they would upload responsibility for the cost of subways from Toronto while leaving operations and revenues in the city’s hands. However, the scale of funding, $160 million annually, is only about a third of the TTC’s actual capital needs just for routine maintenance and renewal of the system. This does not include any expansion projects, nor many “below the line” items the TTC requires, but which are not yet part of its council-approved Capital Budget.

This would leave the subway’s operation in Toronto’s hands on the assumption that it is self-sustaining with fares covering routine expenses, but that is not necessarily true as the new Vaughan extension shows. That line added $30 million to the operating budget net of any new revenue (equivalent to a 1% property tax hike in Toronto). The line is carrying about 57,000 passengers per day according to the July 2018 CEO’s report [p 7], fewer riders than the 504 King streetcar.

[See So You Want To Own A Subway (2018 Edition) on this site.]

The $160 million figure is suspiciously close to the subsidy Toronto received in recent years from provincial gas tax. With Ford’s distaste for such taxes, it is not clear whether this will actually be “new money” for Toronto.

These questions must await, at the least, the Throne Speech to be delivered on July 12 and any follow-up elaborations of government policies.

Much of this may lie beyond the new CEO’s direct responsibility, but what happens with provincial policy and with regional transit affects the TTC, especially to the degree that the TTC is forced to carry riders thanks to the limitations of the regional network.

At City Hall

Provincial policy – and this goes back many years – focuses on rapid transit construction and leaves the “local” surface routes to Toronto (and all municipalities). The provincial assumption of the Transit City LRT scheme blurred this distinction, but in general the bus and streetcar routes are at the mercy of City Council for operating subsidies and much of their capital costs.

The recent arrival of federal money through the Public Transit Infrastructure Fund (PTIF) has yet to bear fruit much beyond a large-scale replacement of city buses in the near term. PTIF in general could be a difficult source to tap given that it is tri-partite in design, and assumes co-operation by all three levels of government. Queen’s Park could have an effective veto on projects simply by refusing to allocate its share. The Waterfront Transit expansion is an area which the Conservatives have already said is not on their list, and a rapidly growing part of the city could be starved for transit simply because the Premier does not like streetcars. The federal and city governments need to figure out a way around this.

The surface system is more than a few LRT projects. It is a large network of bus and streetcar lines that are vital parts of the TTC system. Buses move people not just to and from the subway, but between many parts of Toronto that are beyond the subway’s reach. The streetcar system serves the dense and growing “old” City of Toronto where population and job growth outstrip the rest of the city. [See “How Does The City Grow, June 2018”]

Both the bus and streetcar networks are constrained by their respective fleets and facilities. Whenever the TTC is asked about adding service on bus routes, the standard response is that they have no place to put buses even if more were purchased. The garages are full, and even when McNicoll Garage opens in 2020, it will simply absorb the overcrowding at all existing garages. A further new garage is not planned until 2026. On the streetcar network, the 204-car order now in delivery from Bombardier was expected to handle demand for some time, but growth in the “streetcar city” has been much stronger than expected, and even an add-on order for 60 cars will barely keep pace with demand over the coming decade.

A further problem is that running more service adds to the TTC’s deficit and, thereby, to the cost to Toronto taxpayers. Toronto could not have achieved the limitation in tax growth of the past decade if the TTC had been funded at a level to address the growing population. Indeed, a major concern today is that the TTC’s ridership problems may be due to running out of room for growth or even driving away riders who have an alternative.

The King Street Pilot which began in November 2017 showed that there was a large, latent demand for transit service, and this has not yet been fully met by extra capacity on the street. (The growth has mainly been from replacement of older, smaller streetcars by the new Flexitys, not by operation of more vehicles.) How many other routes could benefit simply from extra capacity? Some changes are in the works for the bus network in fall 2018, but even these are constrained by available fleet and subsidy levels.

The “Ridership Growth Strategy” has a noble goal, but service standards cannot be improved (or even met) without vehicles, operators and the funding to provide service.

Both City Council and the TTC Board show two competing views of what transit should be:

  • The majority view is that the TTC should be constrained to stay within City budget goals, limiting the growth of subsidies and fares, while attaining “efficiencies” to wring more out of the existing budget.
  • The minority view is that in a vibrant city like Toronto, simply marking time is not enough, and the TTC should actively plan for a stronger growth rate with revenues to match.

This contrast is reflected in TTC budgets and plans by that most subtle of limitations – the proposals, the options that never make it into print for fear of the political fallout a call for more funding and better service would provoke.

The City and the TTC face big problems thanks to a combination of City financial policy and the timing of major TTC projects. Provincial law dictates that debt service cannot exceed 25% of the tax-supported budget, and Toronto takes a conservative approach by limiting itself to a 15% cap. Recently this was amended to be 15% smoothed over the 10-year planning window (allowing the value to drift higher for part of that period), but that only buys time on paper as new projects keep appearing to drive up total debt needs. Any reduction in revenues, either from an economic downturn or a retrenchment in provincial spending, will squeeze the funding available to the City for TTC operations and capital.

A key role for the new CEO will be to advocate for the improvement of transit while navigating the political environment and conflicting views for the TTC’s future.

At The TTC

The APTA 2017 Transit System of the Year award regularly draws sarcastic responses from riders because their day-to-day experience does not reflect what they hope for. If this is the “best”, then prying people out of their cars will be a thankless, doomed task.

Service quality was not the basis of the award, and it is in this area where the TTC really needs improvement.

Some problems can be traced to the chronic problems with system capacity: too few buses, streetcars and trains. This inevitably leads to strained routes. However, there is more to the story. One part, as discussed in many articles on this site, is the problem of headway management, the inability of the TTC to keep its vehicles from bunching, and the unpredictability of service. Bunching is an inevitable part of transit operations, but the challenge is always what to do about it.

The TTC has a very long history of blaming external factors first, and only grudgingly taking steps to address internal problems. The mythology of the “best transit system” runs deep.

A management truism is that one cannot manage what one does not know, and to that end, the TTC has pages of metrics about system behaviour that appear in the monthly CEO’s Report. However, service measures are presented at a very high level of averages over the entire operation, not at the level needed to see where problems lie. This masks effects that occur at the level a route, time of day, or location. Recently, route-by-route on time departures have been reported with a three year trend. This is a start, but it does not address the basic fact that if service is measured only at terminals, and relative to a generous definition of “on time”, the numbers won’t reflect what riders actually see.

Ridership is another problem, and the TTC has acknowledged that latent demand exists on its network. This was shown dramatically with the King Street Pilot where a relatively small change in travel time, but a larger improvement in reliability, coupled with the extra capacity of larger new streetcars to bring a large jump in riding. Clearly there was a market for better transit service if only the TTC would provide it.

For many years, the goal of TTC budgets has been to fit within available funding.

Management’s job is to achieve the goals its political masters set, but there is a wider question of whether hiding the TTC’s shortcomings serves the broader goal of improving transit service, or hampers the case for aggressive pursuit of funding. Andy Byford took the approach that if the TTC could show it can find “efficiencies”, the effort would pay off in better political support. In fact, the budget hawks still resent TTC spending.

On the capital side, the TTC has a long list of needs and desires, but what it does not have is a consolidated view of spending priorities or a sense of how projects are linked. A current example lies in the proposed renewal of Line 2 Bloor-Danforth which comprises many elements: new trains and signals, a new yard, station upgrades and greater capacity at key locations. The components of this renewal are scattered through the capital budget, and many important items are unfunded. With a budget planned on a departmental basis rather than on a system basis, the links between projects are obvious only to those who know TTC operations inside out. Key linkages that would inform budget decisions by the TTC Board and Council are absent.

This can be a deliberate strategy, common in large organizations, to break up big projects into chunks so that each one can be fought for and digested. This fails, however, when the piecemeal approach leads to poor choices and bad co-ordination as Toronto saw with the resignalling contracts for Line 1 Yonge University Spadina.

For both operating and capital plans, there is a problem of not knowing what we don’t know. For example, the bus fleet plan assumes a fairly slow growth of service over the coming decade, but includes, at least in its public form (see p. 4 of a report on new garage locations), no information about the underlying assumptions or the effects that changes to those assumptions would bring to the plan. Some TTC Board members have repeatedly asked to know the effect of demand growth at higher rates, but this has never been produced. Another hidden effect in fleet plans will be assumptions of diverted ridership as new rail lines (subway or LRT) replace bus operations. If the delivery of these new services slows or is cancelled, there would be effects on the bus fleet.

On the streetcar network, the effect of stronger-than-expected growth is clear in recent updates to fleet projections, with vehicles and facilities originally thought to be over a decade away now becoming pressing matters. This reflects another problem with budget planning – the effects of future events are at times “parked” beyond the ten-year planning horizon to artificially reduce the apparent need for medium-term capital spending. That might make the City’s financial position look better (by reducing future borrowing and/or tax needs), but it short-changes transit riders when long lead time items are “discovered”, but cannot be acted on.

A new CEO must address the dearth of information about the TTC itself, about the system’s condition and the alternative futures Toronto might face depending on how transit responds to the City’s evolution. Years of underfunding dug a hole from which the TTC must escape. Toronto is not New York City, and our system is not in as dire need as the mess Andy Byford now faces. But it is always politically easy to make just one more cut, to defer just one more year, in the vain hope that political fortunes will bring new money to transit. The problem is that the reduced budgets become the “normal”, and things once thought to be essential must now fight just to get back on the approved, funded list.

One crucial metric, of course, is “ridership” – how many people actually take the TTC and how much revenue do they bring in. This has many important components.

Although the TTC’s operating budget is roughly $1.8 billion for the “conventional” system (Wheel-Trans has a separate budget), Council really only cares about the subsidy which totals $579 million. Revenue is a much higher amount at $1.2 billion, and so a 1% shift in revenue ($12 million) represents about twice the shift in subsidy requirement. Similarly, any overruns on the expense side of the ledger are measured against their effect on subsidy, not against the budget as a whole.

A related problem is that the link between rider counts and revenue can shift depending on the types of fare paid. If more people pay with cash, the fare per ride goes up, whereas if more pay with passes, the fare per ride goes down. There will be a fundamental change in the ride-to-fare linkage at the end of August 2018 when Presto users will enjoy a two-hour transfer free of the arcane rules about when a new fare is technically required. This could drive up the demand for service (rides) without producing new revenue. TTC has always reported its demand on a “linked trips” basis where one ride over multiple vehicles equals one fare. This connection falls apart for users of any form of pass (including a time-based fare) because rides on individual vehicles using a pass do not necessarily represent one “trip” in the conventional sense.

Although the TTC reports declining “ridership”, actual riders on vehicles do not see this effect. As the fare system evolves, it will be even more important to understand how demand on the system is changing and where the shortfalls lie. If there is a new “ridership” number that nobody really understands, then planning the TTC will have no grounding. To that end, the TTC is long overdue on reporting actual demand levels, as a function of crowding, on its routes. All-day numbers have not been published since 2014, and there is no public report where the trends across the system can be seen. Moreover, latent demand does not show up in riding counts, and its existence is only revealed when a major change such as the King Street Pilot shows what can happen with better service.

The new TTC CEO will have the challenge of finding out and reporting on just what is happening with TTC service and demand, as well as the physical condition of the system. More will be involved than catchy slogans or marketing campaigns. Crowded, unreliable service is the equivalent of a lineup at a bakery with an empty window. The most delectable aroma wafting out the door will not undo the disappointment of empty shelves.

What Is The TTC Supposed To Be?

A fundamental question for any would-be CEO is this: what will the TTC’s role be under your watch?

The usual nostrums about striving to be the best simply are not enough, especially without a sense of the gap between “today” and what “the best” really means.

Andy Byford was a gifted communicator, but he ran aground plugging an award that did not square with day-to-day experience. There has to be a message people can believe and results they can see.

If a new CEO sees their role as just keeping the lights on, the wheels turning and the politicians happy, they will have failed before they start. Transit is supposed to be a vital part of travel within our city, and the slogan “Take The Car” should not be credible, should not bring knowing looks from anyone who hears it.

A new CEO must be perceived as open and honest, as someone who, when the chips are down, will speak truth to power and advocate for better transit. Toronto is hungry for more transit, and not just for a few subway lines. Getting there will take advocacy on many fronts together with a strong belief in what the TTC could be.

A new CEO must convince Toronto that there really can be a better day, show how it could be achieved and support the political effort needed to deliver truly “the best” service to transit riders.

Meanwhile On Metro Morning

On July 9, former Chief Planner Jennifer Keesmaat and I spoke with Metro Morning’s Matt Galloway about the challenges facing the new CEO. This segment is available from the CBC’s website.

Chosen But Not Announced

Late on July 9, the TTC’s Brad Ross tweeted:

The next CEO of the TTC will not be announced tomorrow, though there will be [a] candidate recommended to the board in private session. Once an employment agreement is reached with the individual, we will announce. But that won’t be tomorrow.

11 thoughts on “Challenges For TTC’s New CEO

  1. Star has a story: it’s acting CGM Mr. Leary.

    At least he knows a few of the shituations… including the foul politricks where facts don’t mean a darn thing eg. in Scarborough, tho we have to spend $$$ out there, yes.

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  2. Im really hoping someone will take care of the west side of Toronto. At least Scarborough and East side has potential subway extention and relief line being planned.

    On the west side?? What is going on?

    I felt very ashamed when Rob Ford cancelled the Transit City plan which included Eglinton LRT from Pearson Airport. After the Eglinton LRT starts from Black Creek. Etobicoke residents get absolutely nothing.

    I know there are a lot of condos are being built near Humber Bay area in Etobicoke and that area really lacks transit. I know the new bus line to Mimico GO station was started, but that is clearly not enough..

    Looks like Rob Ford definitely hurt Etobicoke commuters a lot.

    I’m hoping there will be somebody who can address dismal transit situation in the west side of the city especially in Etobicoke.

    Steve: If Etobicoke politicians, including our new Premier, were not so dead set against “streetcars”, you might get something. But they would rather preserve road space and demand an underground line through an area that cannot possibly support it. In the process it will lose stops due to cost and be less convenient. But, subways are the answer to every problem in the land of Ford.

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  3. Councillor Campbell for Ward 4 is one of those who insists on a subway west of the Humber and/or grade separated intersections that will benefit motorists but make things worse for pedestrians.

    The vast majority of autos along Eglinton West have ONE person (the driver) in them while buses struggle move a heavy volume of riders in slow traffic. Richview Expressway was a good solution at low cost. Numbskulls at Silly Hall sold off that protected right-of-way.

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  4. Raymond said: “Numbskulls at Silly Hall sold off that protected right-of-way.”

    Isn’t the most responsible numbskull for that our current premier?

    Steve: That would be his late brother.

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  5. It is time for the new CEO to get on with building ASAP the subway loop in Scarborough which is what Ontario voters voted for in the election.

    Steve: As there has been no engineering work done on the subway loop, it is unlikely that construction could get underway during the current government’s mandate. As for Ontario voters, I suspect most of them don’t give a damn about Scarborough’s subway, and indeed might be rather pissed off if the Tories blow millions that could be spent outside Toronto on that project. What is likely, however, is that any redesign of the Scarborough subway to link with that loop will interfere with the SSE project and delay its opening date from the current 2026 plans.

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  6. Steve said: As for Ontario voters, I suspect most of them don’t give a damn about Scarborough’s subway, and indeed might be rather pissed off if the Tories blow millions that could be spent outside Toronto on that project. What is likely, however, is that any redesign of the Scarborough subway to link with that loop will interfere with the SSE project and delay its opening date from the current 2026 plans.

    Ontario voters outside of Toronto don’t give a damn about what Toronto builds whether subway, streetcars or swanboats. The ones that do seriously oppose subway connections to Scarborough Centre reside in Toronto proper. There are many ways to connect the Sheppard line to the SSE project that won’t result in further delay. Hopefully the Sheppard extension gets the design rolling ASAP as the last thing the City needs is further delays or debate.

    Steve: The election outside of Toronto was fought on resentment of “Toronto gets too much”, just as in Toronto suburbs the line is “those downtowners get everything”. The last time I looked, Scarborough was part of Toronto when seen from outside the 416. People who would be glad of spending in the millions in the rest of Ontario will resent billions going to give Scarborough its subway. At some point, Ford has to decide whether he is Mayor of Toronto, still settling scores with David Miller, or Premier of Ontario.

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  7. Y’know, the farebox recovery ratio of the TTC is so high, I wonder if it might be possible to reorganize the TTC into an independent, profitable organization (with a 30-50% increase in fares), and then leave all the politicized, subsidized stuff as “add-ons” that the city directly pays the TTC for. This way, the TTC could focus on delivering the best transit it can without having to worry about politics or having to beg the city for funding. The city would have to directly pay for any political decisions. Subsidies for the elderly and the young and the poor? Paid for by the city. Expensive lines to nowhere? Paid for by the city. Wheel-Trans would unfortunately also end up being directly paid for by the city too.

    Stuffing as many services into the TTC as possible and then having a single lump-sum subsidy hides too many bad decisions by the politicians. Carving out a profitable slice of the TTC would finally make it possible to evaluate exactly what the city is subsidizing and to compare their effectiveness. Of course, then there’ll be arguments over rights-of-way and network effects, but it makes for an interesting thought experiment.

    Steve: Where this thought experiment runs aground is that the capital budget of the TTC for ongoing renewal of the system, never mind expansion, is not part of the farebox recovery ratio. If this were included, the annual costs to be borne by the TTC would go up by about $0.9 billion to a total of $2.7 b, and the farebox ratio would be about 45%.

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  8. Ming: Y’know, the farebox recovery ratio of the TTC is so high, I wonder if it might be possible to reorganize the TTC into an independent, profitable organization (with a 30-50% increase in fares).

    One can only hope that Premier Ford and Mayor Tory will begin privatizing parts of the TTC as a pilot project to see if it reduces costs and improves service. I am not saying that we should privatize the whole of the TTC immediately but to try it out on a small scale to see if it improves outcomes.

    Steve: Small scale privatization is easy and will always show an “efficiency” in the short term because costs a public agency with a long mandate must bear, such as system renewal, are not part of a quickie privatization’s balance sheet. If that were not bad enough, a private company gets tax writeoffs that constitute a form of subsidy.

    As I said in a previous reply, the TTC’s farebox recovery ratio looks good because it does not include capital costs. When you find a private company willing to finance and operate the Scarborough Subway, let me know. The Fords claimed years ago the private sector would build Toronto’s subways, but I don’t see them queuing up for the privilege. With Premier Ford’s newfound love of simply terminating private contracts without compensation, he would have a hard time finding a private “partner” who would actually trust him.

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  9. Steve: The election outside of Toronto was fought on resentment of “Toronto gets too much”, just as in Toronto suburbs the line is “those downtowners get everything”. The last time I looked, Scarborough was part of Toronto when seen from outside the 416. People who would be glad of spending in the millions in the rest of Ontario will resent billions going to give Scarborough its subway. At some point, Ford has to decide whether he is Mayor of Toronto, still settling scores with David Miller, or Premier of Ontario.

    Scarborough is very much part of Toronto and it’s the main reason why its Centre is being effectively connected to subway line. I don’t agree with your narrow interpretation that people believe “Downtowners getting everything” but their politicians surely continue to be disrespectful given the wealthy, subway rich riding most belong to. A few of them still choose to have little understanding or respect for residents in areas outside the Core and continue to be counter productive to the entire City. Thankfully they are no longer able to be involved in this discussion and no area outside of Toronto is going to help their poorly planned LRT cause.

    Steve: It was not my interpretation that “downtowners get everything”, but that of Doug Ford and his election campaign, not to mention years of the “Scarborough deserves a subway”.

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  10. Steve: It was not my interpretation that “downtowners get everything”, but that of Doug Ford and his election campaign, not to mention years of the “Scarborough deserves a subway”.

    I understand why the slogan bothers you, but I also understand why it resonates with residents here. The neglect and lack of focus in many facets in Scarborough since amalgamation has become increasingly problematic.

    When attention did shine this way on transit we received a completely hacked-in, centrally segregated transit plan preventing any subways extensions to our Centre once again all the while we began to build subway into York region centres. For such a massive neglected area the hypocrisy and fear over overspending on key details in Scarborough has become a sad reality that’s backfired in a big way. And some councillors Downtown still choose to spend a significant chunk of their work life chopping away and fighting against the choices of residents from outside, and far less affluent areas. This complete lack of understanding, respect only gives the “Scarborough deserves a subway” more strength and reason to the people who actually live here.

    Steve: I think we have both made our points here.

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  11. Joe M said: “Scarborough is very much part of Toronto and it’s the main reason why its Centre is being effectively connected to subway line.”

    Amusingly, Doug’s desire to add back the two stations to the SSE project increases the chance that it will be cancelled. With that dramatic an increase in costs and the guarantee that it will cause the project to miss the current opening date, he may just turn around and save Ontario taxpayers billions by killing it at the risk of upsetting a small group of voters that would vote for him anyways.

    Steve: Moreover, there is a very high chance that construction will not start within the current mandate, and so a Ford, once again, will simply be an agent of delay rather than real progress.

    Like

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