Will the TTC Presto Project Ever End? (Updated)

Updated March 19, 2019 at 4:00 pm: The TTC has replied to questions I sent about the new Presto spending. There is a major change in project scope.

Buried in hundreds of pages of the TTC’s Capital Budget are a few sheets on the implementation of Presto, the fare system foisted on Toronto by Queen’s Park.

According to the project description, the estimated final cost (EFC) for the TTC would be $44 million (this is net of subsidies from other levels of government). However, as the project budget shows, $43 million was spent to the end of 2017, and a further $19.4 million in 2018. Most of the costs booked to date have been under the category of “Project Management”.

The project is supposed to wind up in 2019, but there is a budgeted TTC cost of $17.3 million.

And lo and behold! In 2020 there is a further $49 million.

Both the 2019 and 2020 spending are net new in the budget this year, although $47 million of the 2020 amount is still considered to be “unfunded”.

On March 5, 2019, I asked the TTC what this proposed spending was to cover considering that the Project Summary (below) is silent on this new money.

And so a question for everyone who is following the Presto story: Why is there a total of $66.3 million in new money included in the 2019-2028 Capital Budget that was not there last year? What will it pay for? Will this spending ever end, or are will Toronto continue to discover costs for Presto it missed when the project to adopt this system was sold to the TTC Board and Council?

The TTC Replies:

A portion of 2019 added funding is to enable TTC farecard staff to continue work on PRESTO implementation (products, service standards, etc.)  There is also a portion of unspent 2018 funds carried forward into 2019.

Some 2019 costs and the 2020 cash flow is a preliminary estimate for the cost of an on vehicle ticket solution for buses that will allow customers to pay with cash to obtain a ticket that will allow them to pass through faregates.  This is a very early estimate that was developed as part of the comprehensive list of projects identified in the Capital Investment Plan.  As noted, aside from initial funds for a feasibility study this project is not funded.

The 2019 funding increase was two part:

a) Continued PRESTO implementation costs

The PRESTO rollout was anticipated to be substantial complete in 2018 with the rollout of the PRESTO Ticket product, and solutions for cross boundary travel, downtown express travel and other PRESTO payment products. MX was unable to deliver these items, particularly PRESTO Tickets, as expected in 2018 and delayed the implementation to 2019. Resources were also added to the capital program to addresses software quality and system performance issues. Additional capital funds were requested to accommodate and support the continued work and change to the PRESTO implementation plan.

b) Commence initial Cash on Surface (Farebox Replacement) work

A solution is required to allow cash paying customers transferring from surface vehicles (buses, streetcars, Wheel Trans) to enter non-integrated TTC stations with fare gates. Initial capital funds were added to year 2019 and 2020 as a very early estimate that was developed as part of the comprehensive list of projects identified in the Capital Investment Plan.  This funding is for business case development and feasibility analysis only.

We had also added funds for the development of a fare payment solution for Wheel Trans contracted taxis in the event Metrolinx/PRESTO was unable to do so.

[Email from Stuart Green, March 19, 2019]

Continue reading

TTC 2019 Fleet and Capacity Plans Part I: Subway (Updated)

Note: At the time of publication (Noon on Monday, March 18, 2019), I await a response from the TTC to several questions on issues raised in this article. When the responses arrive, I will update the article.

Updated March 20, 2019 at 6:40 am: The spreadsheet of major project costs has been revised to show the correct final cost for the Line 2 Platform Edge Doors project. The value under “post 2028” was correct, but the EFC originally contained the value for the Bloor-Yonge project. This change does not affect the text of the article as PEDs were cited only in that table.

The TTC’s Capital Budget and Plan exist in a summary form in reports to the TTC Board and City Council, but there is a much more detailed version commonly known as the “blue books”. These are two large binders packed with information about capital projects.

For years, I have been reading them to sniff out issues that the general reports don’t cover or acknowledge. The 2019 edition became available at the beginning of March, and as I dove into it, many questions began to fill notes especially where there are direct conflicts between materials in the books themselves, and between these details and public statements and reports. Combing through this material may look like the height of transit nerdishness, but there is a crucial underlying issue here.

Cost-cutting politicians, not to mention ambitious transit managers, think that everything can be solved with a quick takeover of ownership and decision-making responsibilities. The temptation is to appear to do much while spending as little as possible. TTC and City practices chronically understate the capital needs of the transit system, and this makes a takeover appear cheaper than it really should be. Couple that with a government and its agency, Metrolinx, where detailed, long-range spending plans never appear in public, and we have a recipe for a system that will crumble from underfunding.

I cannot help but feel that project timings and overall plans for the system have been shuffled around without a thorough review of the effects especially where related plans overlap. Indeed, some project descriptions contain text that does not match the timing implied by the annual budget allocations. TTC management is supposed to be working on consolidated plans for both major subway lines, although the one for Line 2 was promised two years ago when Andy Byford was still the CEO.

A long-standing problem with capital budgets in Toronto, and not just at the TTC, is the overriding concern with the City’s debt ceiling. Toronto sets a target that the cost of debt should not exceed 15 per cent of tax revenue. Originally this was a hard cap for each year in a ten-year projection, but major projects in the near future made this impossible to achieve. Now the target is to stay at or below the ceiling on average. With a bulge in spending, and hence an increase in debt, in the mid 2020s, debt costs go over the line and this is “fixed” only by having years at less than 15% to make the average work out.

For a capital-hungry agency like the TTC there is a problem: future projects have requirements that simply do not fit into the City’s plans. The severity of this shortfall has been understated for over a decade by three simple expedients.

  • Project schedules in the budget are pushed beyond the ten-year mark where the related debt pressure would appear in City projections.
  • Projects are shown “below the line” in unfunded status with a hope that revenue sources such as new subsidies from other governments will appear.
  • Projects are omitted from from the budget completely.

The result is familiar to city-watchers with annual hand-wringing about the sky falling tomorrow, while somehow we manage to pay for today’s projects. In January 2019, the TTC knocked the legs out from this with the publication of a 15 year Capital Investment Plan revealing capital needs far greater than any numbers used in past projections. What had been a ten year, $9 billion plan that was roughly two-thirds funded (i.e. had known or likely monies available) went to a fifteen year, $33.5 billion plan with only one-third funded. This is just for “state of good repair”, and any system expansion sits on top.

In all of this lies a more subtle problem than simple financing. Years of shuffling projects made projected spending fit within City targets, and this served political needs to make key projects appear manageable. Overall planning, including the relationships between line items in the budget, took second place, if it was considered at all.

Capital planning requires a long-term view of the city and its transit system, and decisions made today have effects reaching more than a decade into the future. Toronto continues to suffer from delays in provision of new fleets for the surface system, including the garage space needed to hold a larger bus fleet, that go back at least to the era of Mayor Rob Ford. For years, the standard response to pleas for better transit service is that there are no buses and streetcars to provide more service, and even if we had them, we would have no place to put them. This flows directly from decisions to throttle spending.

Toronto faces the same challenge on its subway where decisions about the timing of spending, even of acknowledging the scope of requirements, limit the ability to address capacity problems.

This is a long article focusing on matters related to fleet planning, although there are related issues with infrastructure and facilities. Key points are summarized first, with details in following sections.

Continue reading