$33 Billion and Counting

A political tremour ran through the transit world in Toronto recently with the TTC’s release of a 15-year projection of capital spending requirements at $33.5 billion. This does not include funding for most system expansion projects beyond the already-approved Scarborough Subway.

That number is big, but it’s no surprise to those who have been following TTC budgets for years. A major issue has been that “unfunded” or “below the line” projects don’t get the attention they deserve and are deliberately kept off of the books to reduce the apparent size of the City’s financial problems. Common tactics included omitting projects from the overall budget, or projecting their spending in a period just beyond the rolling ten-year horizon of capital planning.

Transit planning in Toronto and at Queen’s Park is reckless when it downplays the backlog of spending and associated subsidies facing public agencies. New spending and the inevitable photo ops for grinning, back-patting politicians are easier to fit into plans when you can ignore the transit system crumbling in the background.

Several budget reports will be before the TTC Board (and later at City Council) at its next meeting on January 24, 2019.

There is far too much material here to review in a single article, and so I will break this up over multiple posts. Some of the details behind individual projects will not be available until I obtain the full version of the Capital Budget known as the “Blue Books” which expand the line items from the “Blue Pages” into project descriptions and schedules.

A vital part of the new reports is a shift to a longer time frame (15 years) and the inclusion of all projects in the Capital Plan whether they have funding or not. The extent of the problem is quite evident in the following chart. The purple hatched area shows the requirements for coming years while the sold areas show known funding amounts in the medium term and hoped-for income thereafter.

The big drop in the City’s funding share in the early 2020s arises from the lack of borrowing headroom in the overall City budget. A big problem here is the crowding by major projects such as the Scarborough Subway Extension and the Gardiner Expressway rebuild within the overall borrowing plan. Current City policy dictates that the average debt servicing cost should not exceed 15% of City tax revenue over a ten year period. Planned spending in the next few years will eliminate the headroom for additional borrowing. This exactly coincides with the bulge in TTC capital requirements beginning in 2022. To put it another way, if funding continued at 2019 levels across the chart, there would still be a shortfall, but against a much higher base.

Even this chart does not tell the full story because the Capital Plan continues to push major projects beyond the ten-year line, and the financial pressures from system expansion are not fully accounted for here. As things stand today, less than 30% of the ten-year program is funded. Beyond 2028, the level of assumed funding is still well below historical levels.

($ billion) 2019-2028 2029-2033 Total 2019-2033
Funded $6.4 $3.4 $9.8
Unfunded $17.5 $6.2 $23.7
Total $23.9 $9.6 $33.5

System expansion projects will add a further $3.8 billion over the first ten years of the plan:

  • Line 2 Extension (formerly known as the SSE): $3.4 billion (subject to revision when an updated cost report is presented to Council in April 2019).
    • “While the 10-Year Capital Plan includes $3.360 billion in funding for this project (between 2019 to 2028), this project has an overall budget of $3.560 billion. This estimate, which includes $132 million to extend the life of the SRT until the Line 2 East Extension commences operation and a further $123 million to decommission and demolish the SRT, was based on 0% design. The project budget and schedule will be re-baselined in Stage Gate 3 report to City Council in April 2019, factoring in delivery strategy and schedule risk analysis.”
  • Relief Line South: $385 million will be spent in 2019-20 to support early works on this project. Some of this is already funded, but $325 million is being advanced into the current ten-year budget. Of this, the City proposes to provide half and looks to other levels of government for a contribution. The actual RL construction project is a separate entity which is not yet in the budget.
    • “The 10-Year Capital Plan includes funding of $385 million to complete current work only, which includes completing the preliminary design and engineering to between 15% and 30% complete, including developing a project budget and schedule.”
  • Waterfront Transit: The ten-year budget includes only $27 million in 2019-21 for design work on the planned extension from Exhibition Loop to the Dufferin Gate. Design work on any other Waterfront projects, let alone any construction, remains beyond the ten-year window.
  • Spadina Vaughan extension: Outstanding work on this project including close-out costs amount to $60 million in 2019, but this will be funded within the existing project.

[Quotations above are from the 15 Year Capital Investment Plan and 2019-2028 Budget, pp 12-13.]

The Relief Line work includes tasks such as property acquisition, utility relocation and design for the tunnel boring equipment. Now that the line has political support, spending sooner rather than later is on the agenda, and about two years can be shaved from the original project schedule by doing the preliminary work now. This is a major change from the position taken by Mayor Tory during the election campaign, and the need to “do something” as soon as possible is now evident.

The change of magnitude in the Capital Plan – a jump from $6.5 to $33.5 billion – comes from two factors. One is the inclusion of the previously unfunded or unacknowledged projects, and the other is the extended time frame from 10 to 15 years.

In the table above, $6.1 billion worth of “unfunded”, “future consideration” and “deferred consideration” projects make up nearly half of the $12.6 billion total acknowledged in the 2018 Budget. Some of these have costs in the additional years totalling $3.3 billion.

An equally large collection of projects is shown as “Plan Changes” above.

  • Line 1 Capacity Enhancements: This is a collection of changes including completion of the Automatic Train Control (ATC) installation, acquisition of additional trainsets to expand service once ATC is fully activated, and station capacity improvements.
  • Line 2 Capacity Enhancements: The amount here looks small, but that is because related items are broken out within the table. The Western Yard (at Kipling Station), the T-1 Life Extension, and some of the “Other Changes” will contribute to the overall Line 2 costs.

The funding for the ten-year plan, such as it is, is broken down by source in the table below. This assumes the current funding arrangements with other governments and makes no provision for whatever costs Ontario might assume. As I write this, the provincial focus appears to be more on construction of new lines rather than existing facilities, and so the degree to which a budget that is largely for “state of good repair” might change is hard to determine. A worst case situation would be for Ontario to walk away from maintenance and renewal related funding to concentrate on system expansion.

Explanatory note: “Capacity to Spend Adjustments” are a piece of accounting magic introduced in recent years to reduce the apparent spending needs based on historical evidence that the TTC never spends all of the money it asks for. This is subject to two caveats. First, the underspending is often linked to project delays and the money is needed eventually, usually in the following year (note the 2017 carry forward below). Second, it is common to shift planned spending between projects as the details of their costs become evident. Underspending on one item might have a compensating overrun on another.

There is a table showing the details of the unfunded projects in the Capital Plan and Budget Report at p. 11. The table is not well organized into categories, and it mixes together three types of item:

  • The Capacity To Spend reductions described above.
  • Items that were part of the 2018 Base Budget but were unfunded. These showed up as a “Reduction” on the 2018 budget, and they are restored here. Any item below including “Reduction” falls in this group. These total $4.35 billion over the 10-year plan.
  • Items that are net new to the project list. These total $12.39 billion over the 10-year plan.

This table is not organized by mode. Some items, such as Capacity to Spend, shared facilities and administrative costs, cannot be assigned to a specific mode. The breakdown is:

  • Subway $11.04 billion
  • Bus $2.44 billion
  • Streetcar $1.70 billion
  • Unallocated $2.31 billion

Note that these are only the costs within the first ten years, and some of these projects have future costs to 2033 and beyond.

Fleet Plans

There have been a few significant changes to plans for the subway and streetcar fleets.

On the subway, the TTC has decided to attempt a ten-year life extension for the T-1 trains on Line 2 BD. Those who were hoping for new trains in the mid-2020s will have to wait somewhat longer. This brings up several related questions that will not be addressed until the Line 2 Renewal Plan (now over two years late compared to its original announcement) to be presented later in 2019:

  • The current fleet of T-1 trains (370 cars or 61 6-car trains) compares to scheduled service on Line 2 of 45 trains. Allowing for a 20% spare ratio, a 61-train fleet can support a scheduled service of about 51 trains. This gives enough trains to run every second train through to STC from Kennedy, but not enough to provide full service at the current 2’20” subway headway.  Full STC service will require at least 10 more scheduled trains, or more if stops are added or the line is extended to Sheppard.
  • Additional trains will be required to reduce the current 2’20” service to every 2’00” and to run full STC service. This would bring the line 2 fleet to about 77 trains including spares.
  • The TTC fleet plan shows an increase in available trains in 2026 for the extension, and again in 2031 for a two-minute headway. This sets the time lines for procuring additional trains, a project that would likely continue with the replacement of the T-1 fleet.
  • The T-1 fleet was not designed to run with ATC equipment, and the complexity of retrofitting this has not been addressed. It is not clear how much preliminary design or investigation has gone into such a retrofit. Alternately, the T-1 fleet could operate in manual mode on the extension provided that a basic level of signal protection is included. This needs to be designed into the extension as opposed to the situation on the Spadina extension where ATC was not included in the original design.
  • Because all of the T-1 fleet is now housed on Line 2 (contrary to original fleet plans when some of these trains would have remained on Lines 1 and 4), there is a shortage of storage space today, and this will get worse if more trains are delivered. However, the Western Yard at Kipling is shown in the plans in 2031 long after the first of the new trains would arrive.

The relative timing of the Line 2 renewal component projects continues to be a challenge within the TTC capital plans, and correcting this will likely add to the “bulge” in medium term capital requirements.

On the streetcar fleet, the TTC acknowledges the need for more cars, but the fleet buildup beyond the 204 cars now on order does not begin until 2024 completing in 2028. This would require 100 more cars (the currently proposed 60 plus 40 additional) all aimed at improving capacity on the system. Bus operation on some parts of the streetcar network would continue to the mid 2020s.

Again, the problem may be of timing with spending on more cars. Ideally, production would continue on with the Bombardier production line in Thunder Bay which will complete the current order in late 2019. A delay to 2024 implies an entirely new procurement cycle and raises the possibility that this expansion will never occur. The TTC’s plan pushes significant spending on new streetcars (and on additional shop facilities at Hillcrest) beyond the peak financing crunch in the mid 2020s.

Bus fleet planning is complicated by a few factors:

  • The transition to an all-electric fleet will substantially increase the unit cost of vehicles. The 15-year plan contemplates 2,300 “low/zero emissions buses at a total cost of nearly $3.7 billion”, or over $1.5 million per vehicle. This may be offset by lower maintenance and operating costs yet to be determined, as well as the benefit from shifting away from fossil fuel vehicles.
  • Charging infrastructure will be included at McNicoll Garage now under construction, and at a future Ninth Garage slated to open in the mid-2020s, but it must be retrofitted to existing garages. There does not appear to be a line item in the 10-year Capital Budget to cover these costs.
  • The fleet projection assumes that buses will continue to supplement streetcar service until the mid-2020s even though it would be possible for the TTC to acquire the added cars it needs sooner as discussed above.

As new rail lines such as Eglinton Crosstown, the Line 2 Extension, the Finch LRT and the Relief Line open, they will displace buses from routes that can be reallocated for improvements elsewhere without the need to buy more vehicles. The fleet projection in the 15 Year Plan does not include reductions in bus requirements co-incident with most rapid transit openings. According to plan, the new bus requirements for growth are 15 vehicles per year. This is less than 1% of scheduled service, and clearly growth in service will only be possible through a combination of buses released by rapid transit routes and purchase of more (or larger) vehicles.

Conclusion

The capital budget reports present a long-overdue 15-year view of projects and reveal the magnitude of the “below the line” items which now account for five times the spending in the approved, “funded” portion of the budget. The TTC Board and Management, and City Council have been derelict for many years in keeping the true needs of the transit system from view. What has been missed: planning and decisions that should have informed transit’s goals, realistic financial plans and calls on other governments for both contributions and revenue tools.

The backlog of basic system maintenance gets longer and longer while we crow about being “responsible” with taxpayer dollars.

The $33.5 billion does not include any provision for:

  • Cost escalation on the Scarborough Subway
  • Construction of the Relief Line
  • Construction of the Yonge North extension
  • Construction of the Waterfront streetcar network from Etobicoke to the Don River
  • Construction of the Eglinton Crosstown extensions

Some of these might be viewed as Metrolinx projects, and some may be inherited by Queen’s Park as part of a subway upload, but one way or another all of them will compete with basic maintenance and renewal for funding.

Although there are many rapid transit schemes in the works, the status of the surface network is less definite, and spending appears to be focused more on technology change than service improvement.

There is no analysis of the operating cost effects of the evolving system, new costs that will compete with existing operational funding and with other City programs.

Project scheduling is dominated by the funding and financing crunch of the mid 2020s. This problem must be solved to avoid putting much of the TTC in a deep hole of deferred maintenance from which recovery would be long and difficult. Service expansion, ironically at a time when there is call for transit to do more, is hamstrung today and could be impossible in the future.

The need for very substantial transit funding is critical, and the effect of a choice to not pay, to make do, leaves the City vulnerable to a long-term decline of its transit system.

Coming Next

In following articles, I will review the 15 Year “Making Headway” report, the Operating Budget and issues regarding provincial subway upload. Stay tuned.

14 thoughts on “$33 Billion and Counting

  1. It’s absolutely sickening that TTC is delaying the long-planned additional 60 cars that are required to run current streetcar services. Comments elsewhere in the presentation material make it clear, that with the delay of 60 cars for another 5 years, will mean continued buses replacing streetcars until 2026. This isn’t acceptable.

    Cost-wise they are budgeting $360 million for the first 60 cars – or $6 million a car. Which seems low given that the second lowest bidder a decade ago was $7.5 million a car.

    Meanwhile Bombardier offered an option price on those cars for $3.5 million or $210m for 60 cars.

    Perhaps 264 cars is a bit unnecessary for current operations though surely dropping a $100 million or so for 30 cars that would be delivered in 2020 is important.

    Like

  2. Putting off the purchase of the addition streetcars is a false economy. It make the most cost effective sense to buy them now while production continues – you end up with a single standardized type. If you wait 5 years technology will have changed, a re-design will be needed and Bombardier (or other vendor) will charge more for a special production run.

    Obviously the only hang up here is money and the political will to deal with Bombardier. Get the city to order the cars and let Bombardier carry the financing if they want the sale, after screwing the delivery of the first cars it is the least they can do.

    P.S. Mr. Ford how about keeping some Ontarians employed by building them here? Pull out your wallet and buy Ontario! This would be cheap, easy and good publicity.

    Like

  3. Waterfront West LRT as well as East Bayfront LRT should both be cancelled because the costs are too high and articulated buses can provide the same service for far cheaper.

    Steve: And your position on suburban subway expansion?

    Like

  4. Are there any details on the Bloor-Yonge Station Expansion for the dedicated eastbound platform?

    Steve: I have not seen a recent detailed design, but basically it would put a new platform along the south side of Yonge Station for use by eastbound trains in the same manner as the new northbound-to-Yonge platform was added at Union, and there would be some expansion of the mezzanine level to accommodate vertical circulation and access to the existing Bloor Station.

    Like

  5. On streetcars, do we not have some above the ‘204’ coming as compensation from Bombardier? Not enough I’m sure, but still a few?

    Steve: There has been no announcement on exactly how Bombardier will “pay” compensation. The TTC could take the $50 million in liquidated damages and use it for something else.

    ***

    Also, the conversion of Hillcrest to a streetcar only facility……..at 900M? Does that number make sense to you Steve? I can’t quite wrap my head about that for a maintenance building and storage tracks.

    Steve: There is more going on than simply shuffling space for storage tracks. Hillcrest is nearing its 100th birthday, and I suspect this project involves a lot more than streetcar storage. There are other projects in the Capital Plan to establish major maintenance and collision repair facilities for the bus fleet. There was a study last year of the Hillcrest property, but it is long on ideas and short on specifics of how the site would be reorganized. This is one of many aspects to the new plan that I will be chasing TTC for details of just what is involved.

    Like

  6. Instead of retrofitting the T1s on Line 2, would it be possible to move the TRs (which presumably can run under both ATC and non-ATC) over, and buy new trains for Line 1 instead?

    Steve: That’s an obvious option, but it still requires a net new fleet. Also there are more trains needed for Line 1 than Line 2, especially with planned headway reductions and the Richmond Hill extension. This option was considered when the TTC was looking at 7-car trains for YUS, but that idea appears to have fallen off of the table.

    Like

  7. You stated that about 11 billion (or about 1/3) could be directly assigned to the subway system. If Ford follows through with his idea of taking over ownership of the subway system then wouldn’t those costs be the responsibility of the new owners?

    Steve: Actually, that $11 billion is only from the “unfunded list” which is roughly $17b of the $33b total. There are many other projects that are subway-related, and the total percentage is above 50%. The Tories claimed that the takeover could only cost them $160m per year. This was probably based on a bad understanding (or possible total ignorance) of the magnitude of the unfunded project list.

    Like

  8. From WT website: ( )

    “Waterfront Toronto together with the TTC and the City of Toronto began an Environmental Assessment (EA) in March 2006 to determine the appropriate transit facilities for East Bayfront and future waterfront communities in the Port Lands. The study, which was designed to analyze the long term residential, employment, tourism and waterfront access needs for the area, began as an Individual EA for the entire eastern waterfront and was converted to a Class EA process specific to East Bayfront transit in October 2007.”

    So, here we are 12 or more years later still discussing – if even that – a project which was trumpeted as ‘transit first’ and one that would avoid the problems in other parts of the City where people had already moved into an area, bought cars and become car-dependent. SAD!

    Steve: And as you probably know, we are soon to see what will be recommended for the Union Station connection. I have no faith in the City’s desire to do anything about this project.

    Like

  9. Hi Steve, I am wondering if the TTC is on track to meet the AODA (Accessibility for Ontarians with Disabilities ACT) requirement, which all the subway stations (except for line 3 SRT) should be made accessible by 2025.

    I think Warden and Islington are the two last stations planning to be accessible by 2025. I don’t know about Warden Station since I don’t live in the area, but I heard everything is stalled for Islington Station until the completion of Kipling Transit Hub. Even if the transit hub is completed by 2019 or 2020, I don’t know if things can be planned at Islington. I know there are a lot of things to do for Islington including demolishing that outdated bus bays and making a new accessible terminal for the buses. I think it will be a miracle if it can be all done until 2025.

    I also think current PC government of Ontario (who’s been very hostile to the most vulnerable and minorities) could either delay or scrap that act as well, which is probably the worst case scenario.

    What is your view about that?

    Steve: Both Islington and Warden are tied up with hoped-for development proposals. The private sector will provide, don’t ya know? Both of these are sites that would be superb for the city to use as part of its affordable housing strategy, and at Warden, the north parking lot is one of the sites. Nothing however on the south side where the terminal is. I cannot help thinking that some heads need to be knocked together in the city.

    Everything else should be done for 2025, and it will only be these stations that might miss the target provided that the province, if they take over subway assets, keeps going at the planned rate.

    Do I trust DoFo? Not one bit.

    Liked by 1 person

  10. It sure seems like a major mess that’s been festering for a few years, even decades, and how to have much respect for the various Boards and politicians when it sure feels like the system is on the fragile side, despite the massive support it gets? Part of it seems related to how we disguise car costs/subsidies, and then ignore them, so public transit mobilities, despite the real costs, seem costly (and are). But do other cities/systems have such a Mess?? Do they have Vehicle Registration Taxes that feed transit? Does our sinkhole situation result from the Ford factor? (And I still won’t join Cycle Toronto despite a number of good people there, as the bike lanes on Jarvis campaign I think helped let the Ford factor rise in to power, sigh).

    Presumably, one of the more logical things we could do is totally scrap the Scarborough Subway Extension, which would save a billion or two, and if Mr. Ford wanted to pay for it, he could dig deep and pay for it himself with his $$, right? Meanwhile, I think it’s slippery that the TTC is using a Line 2 Extension label – maybe they didn’t like the Suspect Subway Extension acronym, so let’s adapt this new name to Line 2 ‘Expense-shun” – although of course we need to spend in Scarborough, but also in the rest of the City to preserve the system.

    There is such a dire need for triage of surface relief measures done this term and/or to meet the opening of the Eglinton line, that we should go slow on a costly stubway in the core while we do this urgently needed set of measures up to Eglinton, and yes, for me, that’s the Don Valley in some form/route, including the DVP, and the adjacent spurline and Bayview. Bypass B/D, and have semi-express service to the core, entering somehow south of Queen.

    Other surface measures include having Relief of RER etc. by enhancing the Main/Danforth connection and service to the core, and isn’t the build-up in Danforth pressure obvious out at Main, and thus be a better place to have relief?
    There are other surface options too; yes, bikeways. Part of that silver buckshot approach.

    Surface options take political will, and good carservatives everywhere, will tend to thwart any transit priority measure.

    And speaking of surface, and unfunded costs, I do hope that the repairs of all the streetcar track beds at the outermost edges are included and acted upon quickly: it’s a real set of hazards for cyclists.

    Thanks Steve. We’re so very lucky you have the depth of knowledge for analysis, and the more neutral description of a horrible mess, and still care to share.

    Like

  11. So does a 10 year life extension mean that the T1’s will begin retiring 10 years later than planned (ie 2036)? I always thought that the main roadblock with the T1 replacement is designing and building the next generation trains and the new yard, and getting funding for both. But if they’re going to need new trains to be delivered starting in 2026 for the SSE anyway, then I don’t see why the T1’s would need a major life extension, given that their replacements would already be arriving and ready to replace them (if the initial deliveries between 2026 and 2031 will be used for service expansion only, and the T1 retirement begins in 2031, that would only extend their lifespan by 5 years).

    Steve: This is precisely the point I will be making in a second article now in the works for publication Monday. I think what is really going on is some budget flim-flam to stretch out the T-1 replacement delivery. They’re still planning to get new trains for lines 1 and 2 starting in 2024. The charts are in the “Making Headway” report and I will include them in the next article.

    Like

  12. I support the DRL but it is too expensive. Let us build a cheap shallow express DRL with few stations which themselves should be small and only functional. We don’t need grand stations like the Spadina subway extension. Anything over and above that like extra stations, grand North Korean style stations should be paid for by those residing near those stations.

    Steve: I suspect that those who wanted more grandeur in stations on the Spadina extension were thinking more of Moscow than of North Korea. Digging the DRL as a shallow line would be tricky because of the things it has to go under including the Danforth and Yonge-University subways, and the Don River. As for those residing nearby stations, they are not the only beneficiaries. Don’t forget that there are or will be commercial developments along the way, notably at East Harbour. Residents should have to pay for everything.

    Like

  13. Steve said: And as you probably know, we are soon to see what will be recommended for the Union Station connection.

    The answer is available under the KISS principle. Put Harbourfront Line at street level from QQW north to Front W then west to Bathurst, south to QQW and east back to Bay. Which is what should have been done in the first place. No loop needed.

    Now you can put the Queens Quay East line into the subway northward to Union Stn.

    Like

  14. All things considered (T1 life extension, new trains supposedly coming in the picture as soon as 2024-25, and the T1 replacement delivery being stretched over a longer time period), what does that mean for the T1’s? Are they still expected to begin retiring in the mid/late 20s (and last into the early/mid 30s with the stretched out replacement schedule)? Or are none of them expected to begin retiring until well into the 30s?

    Steve: The situation with the T1’s is hard to work out and I think it’s a case that TTC wants to push their replacement out of the 10 year window for budgetary reasons. However, other events affect this including the SSE, ATC on Line 2 and the future of Greenwood Yard as the base for a Relief Line now claimed to be opening in 2029.

    Bluntly, I don’t think that the TTC has done anywhere near as thorough a job of working through dependencies in their capital planning as they should.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.