To Upload Or Not To Upload, That Is Not The Question

In his continuing assault on the City of Toronto, one of Premier Doug Ford’s early promises was to take the TTC subway system completely off of the City’s hands. That scheme was cut back to handing Metrolinx the responsibility for planning and building new lines, with the existing TTC system left for future consideration.

Now, the Star’s Ben Spurr reports that the upload has fallen off of the table and a new “deal” will be proposed:

In exchange for Toronto supporting Ford’s pet project, the “Ontario Line” between the Science Centre (Don Mills & Eglinton) and Ontario Place (south of Exhibition Place), Ford would leave the existing subway system in Toronto’s hands. This is a huge retreat for a man once bent on eviscerating City Council’s control over transit, and it raises the question of “what next” for Toronto transit politics.

I have written before about the high cost of subway ownership:

In brief, there is a myth that the subway network “breaks even” because its high ridership, and hence revenue, more than pay for the cost of operations and maintenance. This has two fundamental flaws:

  • Much depends on the allocation of fare revenue, and the amount of the fare carrying a rider on a bus+subway trip, for example, belongs to each leg of the journey. There are various ways to do this, but they all produce distortions in a flat fare system with extensive free transfers between routes and modes. This process is even more difficult in the era of monthly passes and two-hour fares.
  • There is a huge ongoing capital cost for subway renewal, for systems, vehicles, stations and much more that do not last the mythical “100 years” subway boosters claim, but which must be refreshed on a regular cycle. Even the physical structure, the tunnel, needs major repairs to achieve its intended lifespan.

Cuts to provincial funding started years ago, and the Ford government has reversed plans to increase Toronto’s share of provincial gas tax revenue. The provincial contribution to ongoing capital maintenance is small. As for operations, the City pays the lion’s share of the subsidy and the riders pay most of the rest.

If Queen’s Park takes over the subway, it would hardly be fitting for Toronto to continue paying much of the cost of maintaining this asset, and it would become a new drain on provincial resources. Premier Ford never tires of telling us that these are stretched to the point where major cutbacks, not additional costs, are the focus of all government planning. True, the province would give up its share of surface system costs, but that is a small contribution compared to what the City already pays in operating and capital subsidies.

Doug Ford’s dream of being the Tsar of Toronto Transit Planning comes with a big price tag, and there is a good chance that the government is having second thoughts about whether the proposed changes are worth the bother and expense.

The challenge for Council is, however, more complex that one of embracing the Ontario Line, popping the sparkling wine, and celebrating the Premier’s retreat.

First off, if Toronto keeps the subway, it keeps the costs associated with it, and there is a large, unfunded backlog of major subway projects in the pipeline. The City counted on increased gas tax revenue promised by Premier Wynne to offset some of this backlog, but Premier Ford was quick to turn off that funding tap. Big dollars appeared to be coming from Ottawa through the infrastructure fund, but almost all of this has been tapped for a few major projects leaving a lot of the necessary but unsexy work with no funding. The first round of “infrastructure” spending went to a very large order of buses because this was the only work that could be accomplished in the politically-imposed timeframe for spending that would, in theory, be part of an economic stimulus package.

Second, if Toronto buys in to the Ontario Line project, the City will be on the hook for close to $4 billion assuming a one third share of the total cost, and this will be spent in a fairly short time given Ford’s claim that the line would open by 2027. That puts a huge capital burden on the City just when it has no headroom in its (self-imposed) budget rules to borrow more money. This will almost certainly elbow other badly-needed TTC work off of the table.

As for Ottawa, the two major parties have different positions on the Ontario Line:

  • The Liberals argue that the “plan”, including the “Initial Business Case” from Metrolinx, is far too simplistic for a federal commitment. They had already signed on for the TTC’s Relief Line project, but have yet to embrace the Ontario Line as an alternative.
  • The Conservatives say that they will “support” the Ontario Line, but are vague about the dollar amount. Some in the media have claimed that the Tories would pay 100% of both the Ontario Line and the Richmond Hill extension, but that is not supported by actual statements. Moreover, no federal government can afford to get into the business of fully funding transit capital projects because there would be a long queue of cities elsewhere clamouring “me too”. Indeed, it would be ironic to have an “Ontario” line fully funded by the federal government.

But wait! If we cast our minds back to Premier Ford’s plans for transit and Metrolinx’ so-called benefits case, we see that the whole thing is supposed to be magically financed and built by the private sector, not with public money. Why should the municipal or federal governments even have to contemplate “support” for the project when it is intended to be a P3, a private-public-partnership, that is in effect a long-term lease to be paid over (at least) 30 years, not an outright purchase.

Any government “signing on” to the Ontario Line needs to be sure (a) just what they are getting into and (b) make a long term commitment to pay their share of the future lease costs.

Ontario under both the Ford and Wynne/McGuinty governments claims that it needs to be in control and have ownership of projects because the province can “amortize” the cost and therefore do more, faster, than the City could. This is a pile of accounting trickery, to be polite.

Whether a government borrows money or enters into a long-term contract for someone else to build (and possibly operate/maintain) something with financial arrangements stretching over decades, it’s a debt, a need to pay back in the future what was borrowed, one way or another, today. The difference with provincial ownership is that on the books, any debt is balanced by an asset – the  brand new line – and there is no change in the net provincial debt. In a P3 arrangement, there is no debt per se, only a long-term commitment to pay off the P3 contract.

Of course, the only way one could realize the value of the new line would be to sell it, but on paper, the debt that built it vanishes. This arrangement is not available to the City, and its debt is supported by property tax revenue. not the City’s physical assets. That, in turn, limits the amount of debt the City can float, unlike Queen’s Park.

In all of the excitement about the Ontario Line and the on again, off again upload, a few other projects in Toronto have disappeared from view notably the Scarborough Subway Extension. How much of the money earmarked for that project will be siphoned off to the Ontario Line? How does Premier Ford plan to pay for the SSE, and how much does he expect to get from municipal and federal levels? Do we even know what the three-stop version of the subway will cost, or is this still a state secret?

This is further complicated by Mayor Tory’s own pet project, SmartTrack, although if any more pieces fall off of that plan, all that will remain are the blue and green colours of the campaign posters. Today, SmartTrack is nothing more than eight extra GO stations to be built at the City’s expense. Or maybe not depending on how the Ford-Metrolinx something-for-nothing scheme for transit oriented developments and contributions to capital funding actually works out.

Metrolinx remains evasive about actual service levels at the new stations and repeatedly fails to answer basic questions about which service plan they will actually operate. The City’s buy-in to SmartTrack, not to mention its projected ridership and network benefits, depend strongly on the service level and fare structure it will have, but neither of these has been nailed down.

Lurking in the background of all discussions about transit are two coming elections. The first, quite soon, may or may not displace the Liberals from power federally. If Ford does not gain an ally in a Conservative government there, he won’t be able to count on support for his Ontario Line or any other project lacking a rationale beyond his own need to meddle in Toronto’s transit planning. Even so, anyone who thinks a Tory government federally will bring better transit funding beyond a few election promises is dreaming. Recent pronouncements of “support” for the Ontario and Richmond Hill lines have much more to do with vote-getting than anything else. Just ask the people in Scarborough how they are enjoying that new subway they voted for.

The second, in 2022, will depose Premier Ford, although what or who he will be replaced with remains to be seen. The day is not far off when those making ten year transit plans must ask “what will the post-Ford era look like”. Do we spend the next few budget cycles pretending that current plans are real, or do we contemplate a “plan B”?

The entire Ford transit scheme has been half-baked from the day it was announced with all the weight of a finished plan that only later was shown to be very much a work-in-progress. The financial implications for both Toronto and Ontario of shuffling responsibilities for parts of the transit system have never been publicly explored, and frankly even our own transit Commissioners do not understand much of the detail in the TTC’s budget and plans. Now we may have a new plan, or rather the old plan with a few new provincial projects grafted onto it.

Toronto’s Executive Committee will consider this cat’s cradle of projects, costs and political promises on October 23, with the report going to the full Council on October 29. Important questions to be asked include:

  • Just what is the “Ontario Line” beyond a doodle on a map? What detailed engineering has been done to substantiate that it can actually be built as proposed, and what will be the effects on neighbourhoods through which it will pass?
  • How much will it cost, and how much is each level of government expected to contribute to the capital funding?
  • What proportion of the capital cost will be born by the private sector partner in a DBFOM (design, build, finance, operate, maintain) contract, and how will this translate into future annual costs to funding governments and/or the transit system and riders?
  • Can the City afford its share of the capital cost within its debt envelope, and what effect will this have on the timing and financial viability of other City projects?
  • If the province does not upload the existing subway system, what are the financial implications for the City and for the backlog of transit capital projects especially considering the loss of expected provincial gas tax revenue?

Toronto’s transit riders cry out for better service, reliable service, all over the city, but calls for more buses or streetcars bring “we can’t afford it” and “we have no vehicles”. Valuable though parts of the Ontario Line (especially the north branch to Don Mills) may be, that $11 billion project will not make transit one bit better for riders waiting on many street corners across the city.

Before we break out the bubbly to celebrate defeat of the Tory Visigoths, what is the real future of Toronto’s transit system? Do we continue to spend every available penny on vanity projects, or do we look at the wider system, determine what is needed and commit to funding that need rather than propping up political egos and trolling for future votes?

13 thoughts on “To Upload Or Not To Upload, That Is Not The Question

  1. Excellent ‘editorial’! This is one of the best analyses I’ve read yet on the matter, albeit my view is biased, but complements Steve’s view in many ways. I think many of us see the same ‘writing on the wall’ even if we interpret it in slightly different ways.

    Some review of Steve’s many good points, just to set-up my observation:

    The Liberals argue that the “plan”, including the “Initial Business Case” from Metrolinx, is far too simplistic for a federal commitment. They had already signed on for the TTC’s Relief Line project, but have yet to embrace the Ontario Line as an alternative.
    […]
    If Ford does not gain an ally in a Conservative government there, he won’t be able to count on support for his Ontario Line or any other project lacking a rationale beyond his own need to meddle in Toronto’s transit planning.
    […]
    What proportion of the capital cost will be born by the private sector partner in a DBFOM (design, build, finance, operate, maintain) contract, and how will this translate into future annual costs to funding governments and/or the transit system and riders?

    The Globe stated in an article October 8:

    On Tuesday, the Liberals refused to guarantee that they would also fund the subway lines and instead pointed to a statement from Ontario Liberal candidate Marco Mendicino.

    “We are ready to support infrastructure projects; we’re just waiting for the Ford government to show up,” Mr. Mendicino said Tuesday.

    There’s an elephant in the room (lol…one of many) and that’s the Canada Infrastructure Bank (CIB) and the potential for the Libs, already proven in their calling Ford’s bluff on funding, to state:

    ‘We are going to invest roughly a third of what has been discussed loosely as the cost of a form of ‘Relief Line’ In Toronto, but the funds will go through the CIB to be matched there by the Province if they are serious, and with it leverage from the private sector for a ratio of 4:1 or thereabouts of what we invest. But since this will be via federal jurisdiction and oversight, and underwritten by the federal government, it will be federally incorporated as being “For the General Advantage of Canada” and thus federal planning and operational jurisdiction pertains.’

    I’d suggest this could be a corporate structure with the Federal, Provincial and Private Investors all on the board. And the likes of Doug Ford would howl!

    But what do the Queen’s Parkers expect? They act with impunity towards the City, and then demand funding from the Feds. You play by this kind of sword, you die by it.

    Toronto is chafing to be a ‘Charter City’. This is a complicated wish, for many reasons, but much of that wish can be granted by the Feds funding Toronto directly, which in some areas (housing for instance) they already are.

    One thing is very clear, or at least should be by now: QP is not going to pony up for any of their schemes. So let the Feds do it, and make the corridor usable for VIA and GO as well as local transit.

    Here’s the Constitutional authority for the Feds to step in:

    92 (10 c) the Parliament of Canada is empowered to legislate on “Such works as, although wholly situated within the Province, are before or after their Execution declared by the Parliament of Canada to be for the general Advantage of Canada or for the Advantage of Two or more of the provinces.”

    [Source]

    What could the Ford regime possibly say? “No”? Upload the Ontario Line!

    Liked by 1 person

  2. As any 22 year old, with a freshly delivered VISA or MasterCard in hand knows – if you charge it, it’s free. Similarly P3 projects. No need to worry about the exorbitant interest rate or profit to the provider – instant gratification without cost makes it all worthwhile.

    Ford had to cancel Canada Day celebrations at Queen’s Park to avoid getting booed. I understand he gets booed in “small c” conservative country as well. It does seem a certainty that after 2022 there will be no more Ford.

    Liked by 1 person

  3. Doug Ford does not like being compared to Donald Trump. Then: Stop acting like Trump North! A rookie premier with zero experience in provincial governing he acts like a bull in a china shop wrecking everything in sight. Then, back tracks a bit and declares victory. Just like Doug Trump, I mean Donald Ford, easy to get them mixed up.

    Torontonians voted for a mayor and got Twin Mayors instead! Couldn’t keep his nose out of things. Now, we again have Twin Mayors as “Doug the Thug” wants to run City Hall in the same poor manner as Queens Park.

    Doug Ford did not win the election. Kathleen Wynne lost it. Same thing with Trump. He didn’t win the election, Hillary Clinton lost it although in fact she had the most votes!

    Liked by 1 person

  4. Both the subway upload and the Ontario Line are good ideas in their own rights and Premier Doug Ford need not bully City Council into supporting one at the expense of the other. I support both the subway upload as well as the Ontario Line but I have lost all respect for Ford repeatedly backtracking on every single promise. I am sure that Ford would have backtracked on Council size reduction (a good idea that I supported and still support) as well if Council agreed to remove streetcar tracks from Etobicoke or something. I will not be voting PC again for as long as Ford is their leader.

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  5. I like the basic idea of the Ontario Line, that it runs from Ontario Place to the Ontario Science Centre, & that it is a “relief line” to the Yonge line. (I don’t like the Queen Street routing at all.) I would prefer using compatible subway design, not pie-in-the-sky. Agreed, the lack of planning detail and financing detail is worrisome. I am wondering if an amalgamation of the Relief Line and the Ontario Line might be in order? In other words, pick the pieces that are usable, in order to expedite.

    Steve: There is a big problem with trying to splice the Ontario Place extension west from Osgoode Station because of the area it must traverse. One big advantage of crossing downtown further south would have been easier access to the rail corridor without going under a forest of condos. The political decision to put the Relief Line under Queen Street creates problems for both schemes. There are also issues with the elevated construction proposals especially at the Don River / East Harbour. It’s not just a case of picking the pieces of each plan we like.

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  6. Steve said:

    To Upload Or Not To Upload, That Is Not The Question

    Toronto’s transit riders cry out for better service, reliable service, … the Ontario Line … will not make transit one bit better for riders waiting on many street corners across the city … what is the real future of Toronto’s transit system? … do we look at the wider system, determine what is needed and commit to funding that need

    Toronto’s most notable public transit fault is the cross structure of subway Lines 1 and 2. A strategic answer would be to build a grid structure of rapid transit which provides redundancy. The proposals of the Line 2 extension and the Line 1 extension re-enforce the cross network?

    Breakdowns on Line 1 or Line 2 are extremely disruptive with no alternative lines to provide relief. Parts of Scarborough and Etobicoke are far away from any subway service. The bus routes, connecting these remote areas to subways, are long and the buses get clustered because of traffic congestion.

    In many public sessions, there are intervenors who say, “We just want you to start building something.” Steve’s point of people conflating their wait at a stop to the solution of the Ontario Line is lost in their frustration.

    Ford believed he had the solutions to Toronto’s transit problems. He didn’t and has dumped the problems back to Toronto. I hope people understand that the Sheppard subway was a stupid idea and can understand they need more convincing that the Ontario Line truly addresses overcrowding on Line 1. Emotions have overtaken reason.

    The two Mayors John Tory and Rob Ford focused on vanity projects, touting them as the solution and they stifled public discourse to properly define Toronto’s transit problems and appropriate solutions. We lost a lot of time which could have gone into refining solutions. We’re still looking for good answers.

    Liked by 1 person

  7. The Tory majority on Council/Clowncil did a ‘bait-and-switch’ with the Eglinton E LRT being part of the Suspect Subway Extension package, until nope, oop$$, no money for LRT. Now, the Ford Cons have done a ‘break and switch’ – smashing up first the Council to make the theft of the TTC assets far easier, until oop$$, far too many hidden and looming costs, and yes, maybe there is a responsibility to ensure safety. The only way we can get to rationality is to have external to Canada consultants with UIPT/APTA review our messes and schemes, and then have a VERY wide open set of suggestions as to how to get Relief function first, and then to a megaproject perhaps. Even the Ontario Line is only about half of what was proposed in 1957, so yup, pretty pathetic, from being too political, and ‘carservative’ as we are unable to have any degree of user pay for the vehicles it seems, compared to transit, so we can get more hung up on transit costs vs. the usually hidden vehicular subsidies.

    Liked by 1 person

  8. After all his life crying SUBWAYS, SUBWAYS, SUBWAYS – people are left wondering why Premier Ford will not build the Downtown Relief Line as a subway. The reason is that Premier Ford was told by former Metrolinx CEO Bruce McCuaig that there was ZERO chance that anyone other than Bombardier was going to get the contract for any line built as a subway or streetcar technology. The former Metrolinx CEO, Mr McCuaig, is now an executive director at the Canada Infrastructure Bank as well as a senior vice-president at AECOM. Mr McCuaig, who was involved in a bitter legal fight with Bombardier over Bombardier’s repeated delays in delivering LRT vehicles for the Eglinton Crosstown, advised Premier Ford against using subway or streetcar technology for the new line in what Mr McCuaig hoped would be the final nail in Bombardier’s coffin. The result is that Bombardier’s Thunder Bay facility is now on the brink of closure and it is not all bad news given that they made third rate products delivered years late as evident by the TTC’s streetcar order as well as the still malfunctioning doors on the new subway trains. Alstom is coming to the GTA (thanks to Mr McCuaig) and hopefully, Siemens can come too. In other words, the demise of Bombardier is not all bad news.

    Steve: You seem to know a lot about Bruce McCuaig’s access to Doug Ford’s ear. I think the whole idea of a new line and technology has a lot more to do with Metrolinx trying to prove they can out do the TTC and get a pat on the head from their boss who was, after all, quite impressed with what Metrolinx put forward.

    Liked by 1 person

  9. McCuaig is an interesting figure, doubtless, but some posters had best link or otherwise reference their claims. Blogs and newspaper reader comments are getting more abstract as time goes on. Fake News is epidemic:

    Bruce McCuaig to leave Metrolinx to accept new role at Canada Infrastructure Bank

    TORONTO: March 28, 2017

    Prior to joining AECOM, McCuaig worked in the Privy Council Office of the Government of Canada as a member of the team dedicated to launching the Canada Infrastructure Bank where he was responsible for developing and implementing a program of outreach to municipalities, provinces, and other public agencies across the country.

    Steve: I have a hard time believing McCuaig is whispering in Doug Ford’s ear about anything considering that he has been a Liberal appointee both provincially and federally.

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  10. The Star ran a pretty good editorial yesterday (Monday) “Don’t stick city with Ford’s bill'”. Of note is a phrase that the ‘upload’…’basically amounts to theft’.

    Frod the people, right? Especially transit users in Toronto, though absolutely we need Relief, and I wish we’d explore Relief function, (silver buckshot), not a relief megaproject, maybe.

    Liked by 1 person

  11. There’s an elegant and easy answer to Ford from the City:

    The Ontario Line is a Metrolinx project. Run with it. Can’t handle it? Then hand it off to the Feds.

    Steve: I have a hard time believing McCuaig is whispering in Doug Ford’s ear about anything considering that he has been a Liberal appointee both provincially and federally.

    Absolutely agreed, I was just clarifying that McCuaig has moved on to Chhotu. The only other appointment I know of besides his employment with AECOM is his teaching capacity. Don’t be so quick to deride McCuaig. He might still have the keys to the car.

    But yes, it’s the unwritten (although clearly obvious between the lines) reason he left was due to the ‘invasion’ on the doorstep.

    McCuaig had a very interesting position with the InfraBank, and extremely little was written or divulged about it. The Liberal connection might yet still prove invaluable if the Feds do, as I believe they will (and will have to) step into the railway transit situation.

    As discussed a year or so back in this forum, it is highly unlikely they’d do it directly, not even for VIA’s HFR would this be the case, but do it through the CIB leveraged with private capital.

    P3 distasteful to some? I can understand that, but the coffers aren’t as flush as they were, and Ford’s only choice is to do it Private anyway, and God help us all in his dealing with it.

    Best the Bank do it, with informed oversight from the likes of McCuaig. He was far from perfect in his time at Metrolinx, but at least he knows what he’s doing.

    Better a trained driver drive erratically than a total fool … McCuaig will have studied how best to approach P3 models. And I trust the Bank holds a retainer with McCuaig still for needed input on decisions.

    Anyone who has the smarts to get out of the way of a dump truck barrelling toward them full tilt has more acumen than those who stayed behind at Metrolinx to do their ‘new master’s bidding’ … like hostages with guns to their heads. See them nod in agreement like puppets …

    Liked by 1 person

  12. Newest development here.

    And I scoured for more detail on McCuaig last night. As I stated, any insight as to what he worked on precisely and any published record of it is sparse if that. Best articles on it are by the Globe’s Bill Curry, who has written excellent articles on VIA’s HFR and other transportation/transit issues with federal implications.

    Here’s one.

    Above article links this.

    Bear in mind this is retrospect, even if just a few years, but the message has suddenly come full circle again.

    From the first link:

    The government’s rationale for launching the bank is that it will be able to bring together various forms of capital – such as government funding, private investors and pension funds – to build large projects more quickly than would have been the case with government funding alone. The projects would be a variation of public-private partnerships, which are already widely used in Canada for infrastructure projects. Critics warn that such deals can sometimes come back to haunt future governments, such as the Ontario PC government’s privatization of Highway 407 in 1999. The province sold the highway to investors for $3.1-billion and allows them to profit from toll collection for the following 99 years.

    Part of the federal bank’s role would be to offer a team of experts to government decision makers so that deals are negotiated in a way that protects the long-term interests of taxpayers.

    As head of Metrolinx, the Ontario government agency that plans and runs transportation infrastructure in the Greater Toronto and Hamilton Area, Mr. McCuaig would be very familiar with the types of massive projects that would attract the interest of institutional investors and the new bank.

    Today’s Star reports:

    The federal share of funding for the Ontario Line would come out of $4.9 billion in transit spending the Liberal government allocated to Toronto in its 2017 federal budget.

    Perhaps…but it won’t be nearly enough to build what has to be built, and built to a size and way to actually serve its need. Running undersized metros akin to the Dockland Railway in the UK (or equiv, the DLR rolling stock is now dated) is not even being done by London anymore. They’re running full-sized mainline trains in tunnel through the city centre and miles outside of the city. (Crossrail and Thameslink). The trains are capable of 100 mph operation and Automatic Train Operation, running every two and half minutes in the core.

    Think RER. Now there’s a phrase you haven’t heard for a while. Doing it to Metrolinx’ RER scheme would also allow VIA HFR to share the same tracks with EMUs. How abstract is that?

    Well, VIA have undertaken studies to do it with REM in Montreal through the Mount Royal Tunnel.

    This is complicated by REM being a narrow body gauge, like the Scarborough RT. If the Feds do become involved in the Ontario Line, they should make sure it’s RER gauge, and stone three birds with one kill. (sic). Local, Regional, Inter-Provincial all on one line. As the Europeans do. And have for a generation.

    We’ll be hearing a lot of discussion about this in the next while.

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