TTC 2022 Capital Budget: Board Meeting Follow-Up

This article is a follow-up to the TTC Board’s discussion of their 2022 Capital Budget at the meeting of December 20, 2021.

Links of interest:

The topics here are a bit scattershot as was the Board debate, but they include:

  • The Toronto Net Zero 2040 plan and electric buses
  • The conflict between budget planning timeframes and available funding
  • The growing backlog in State of Good Repair
  • Fleet replacement timing issues
  • Where the money comes from
  • The need to co-ordinate related projects within the budget
  • Funding for capital programs
  • Future subway demand and capacity enhancements

There is always a problem with the complexity of the budget that drops on Board members at most a week before the meeting where it will be approved.

There is no “Budget Committee” at the TTC, and so there is no group within the Board who are primed for the debate and can vouch for management’s work in the same manner as the TTC’s Audit & Risk Management Committee. The Board used to have a Budget Committee, but it languished under an uninterested chair (ironically, a member of Council’s hawkish right) and the current Board is unwilling to recreate it.

This says a lot about how seriously (or not) they take their oversight role. Let a few pencils go missing and the Audit folks will be all over the problem, but billions in capital spending and the underlying policy decisions go with little review. This should be a job for whatever TTC Board is crafted for 2023 after the next municipal election.

For those interested in the details, read on.

Toronto Net Zero 2040 Plan

City Council recently endorsed an ambitious plan to move Toronto to a net zero emissions status over coming decades. This is a large and complex proposal that focuses mainly on areas other than public transportation. There are substantial goals for greener and greater transit service, although Council did not actually endorse the most extensive proposed changes to service levels and fares.

I asked the TTC for clarification:

Q:

There appears to be some confusion among both deputants and some Commissioners about the degree to which the TTC plans dovetail with the City’s Net Zero strategy. As I understand the Council motion, they supported a fairly limited set of actions described in Appendix B to the City report that more or less align with work the TTC is doing (eBus procurements, red lanes, etc). However there is a much more aggressive set of proposals in Appendix C (which Council did not explicitly endorse) that would see a very large scale increase in TTC service. (70% more bus service, 50% more streetcar service, offpeak 3 minute subway headways)

None of the facilities, fleet or budget effects of that proposal appear in the CIP.

Can you confirm that the Appendix C proposals are not included in the capital plans?

Email from Steve Munro to the TTC of December 21, 2021

The TTC replied:

A: I’m told the report is massive and we’ve not done a full analysis yet.

Email from Stuart Green, Senior Communications Specialist, Media Relations and Issues Management, TTC of January 6, 2022.

The report certainly is massive, although little of it addresses transit issues. I have an article about the transit aspects of the NZ2040 plan in the works. Stay tuned.

The City has confirmed that Council only endorsed the portion of the NZ2040 plan that roughly aligns with work the TTC has already planned for eBus conversion and the transit priority corridors (red lanes, etc.)

Q: For clarification: There are, broadly speaking, two levels of a shift in the emphasis on transit in the short term plan to 2030 and in the longer term to 2040 and beyond. Reading the Council motion, it appears that Council has endorsed the short term plan (Appendix B), but has not endorsed the more aggressive targets of the longer term set out in Appendix C. Is this a correct interpretation?

Email from Steve Munro to CIty of Toronto Media Relations, December 28, 2021

The City replied:

A: Yes. City Council endorsed the targets and the actions outlined in Attachment B ‘TransformTO Net Zero Strategy’. Attachment C is a technical backgrounder report that was used to inform the targets and actions that were recommended and adopted.

Email from City of Toronto Environment & Energy Division, January 10, 2022

Both the NZ2040 program and the status of the eBus evaluation came up during the debate, although answers were rather perfunctory from staff. Indeed, the person nominally in charge of “innovation” at the TTC was unable to cite specifics of the vehicle comparison now underway.

There was talk about possible federal funding to increase the proposed 300-eBus order to 400, although it is unclear where the provincial and municipal shares would come from. The Request For Proposals for those buses will go out in 1Q2022 for delivery from 3Q2023 to 1Q2025. The obvious way to handle possible extra funding would be to have an optional add-on to the base order(s) just as the TTC did with its new streetcars.

Responding to a question about power savings for eBuses, management waffled, and eventually said that $60 million in diesel costs would be saved annually, but without quantifying the offsetting cost for electric power as an offset. They expect to save 25 per cent on maintenance costs for an annual saving of $10m. It is not clear whether these numbers apply only to the 300 eBus fleet, to the full 2000+ bus fleet once it is converted.

Deputy Mayor Minnan-Wong wanted the numbers quantified because he proposes that the savings be used to fund future purchases. Although there was no discussion of this, such a move would effectively transfer the cost of new buses to the operating budget (and hence substantially to the farebox) because savings that might otherwise go to reduced operating costs and funding more service would be diverted to financing bus purchases.

This type of arrangement is the sort of thing would-be vendors of transit equipment push – using savings to pay off capital costs – although they probably also hope to provide the financing at a higher interest rate that the City would pay for borrowing directly. In an era where transit is seen as a cash cow by various industries, not as a public service, this sort of idea just sails through without debate.

I posed questions about the eBus program to the TTC:

Q: During the capital budget debate, there were questions asked about the eBus program, but only superficial answers. Will a report be coming to the Board with details of projected eBus operational savings not just on diesel fuel but vehicle maintenance, as well as info on the experience with the head-to-head comparison of three vendors’ buses?

Steve Munro Email, op. cit.

The TTC replied:

A: A second update on the head-to-head evaluation is planned for Q2 2022 following the second year of testing. This report will include an economic impact assessment that quantifies, among other things, the expected fuel savings over the next 20+ years.

Stuart Green Email, op. cit.

It is worth noting that the RFP for eBuses will be issued in 1Q2022 even though the report on vehicle evaluations will not be out until 2Q2022. Any RFP should be informed by the results of the trial operation and vendor comparison including “lessons learned”.

The Structure of the Budget

The TTC Capital Budget formerly included system expansion projects, but these have largely been taken over by the Ontario government through Metrolinx. Therefore, the cost and funding arrangements for their construction no longer appear in the TTC’s books.

However, the TTC will have a future operating requirement as these facilities open. In the case of lines like 5 Crosstown and 6 Finch, the vehicle maintenance will be performed under contract to Metrolinx by the P3 consortium who built each line, but the City will pay for it through the TTC Operating Budget.

In the case of extensions to existing lines, all of their cost will fall to the TTC who will do the maintenance work integrated with the rest of the system. There are extra costs on the TTC’s account lurking in some of the expansion projects notably the need for a new subway yard and maintenance facility on the Richmond Hill extension, and expanded capacity for subway train storage somewhere on Line 2. These appear in the TTC’s budget, not in the Metrolinx project budgets.

Additional trains to operate the extensions will be funded out of the Metrolinx project budgets, but the TTC has to find some place to put them.

A chronic problem has been that there are three major classes of work within the overall budget:

  • Ongoing state-of-good-repair projects such as infrastructure and vehicle renewal which are always with us. There might be ups and downs caused by timing (for example, a large scale replacement of part of the fleet), but there is always a need for funding to keep what we have today in good condition.
  • One-time projects such as major expansions of facilities or technology conversions such as the change from trolley pole to pantograph on the streetcar system, and garage facilities as electric buses replace diesels.
  • System expansion projects such as new subway and LRT lines. The big ones have been taken over by the Province, but things like the Waterfront and Eglinton East LRT will probably be City projects and will show up here.

The ongoing projects are not politically sexy, and yet they are central to the continued operation of the system. The one-time projects can trigger problems when there is a burst of spending competing for funding with the ongoing work. Although the groups exist as separate lines in the detailed budget, they are not always reported separately in the summary figures and charts. This is a special problem for the “out years” in latter parts of the 10-year and 15-year plans which lie well beyond the time when federal and provincial contributions might, or might not, come the TTC’s way. This creates a backlog in unfunded work.

The situation is further complicated by the plans existing with multiple timelines:

  • A 10-year view that coincides with the City’s budgetary planning process.
  • A 15-year view that looks beyond the horizon used by the City.
  • A 25 year (at least) view that picks up long-range needs and informs the Real Estate Investment Plan for real estate requirements given the long lead time and difficulty of locating the type of lands the TTC will require.

Until the TTC started to publish longer-range plans a few years ago, a common tactic was to push projects that made an uncomfortable bulge in future spending beyond the 10-year line. This made the long-range capital needs artificially low, and led to surprises when expensive new budget lines appeared. Moreover, it made new expansion projects appear affordable by hiding the projects that might compete with them for funds.

This is still happening, although even the 10-year budgets are not very rosy in their later years when there is less available funding than needs. This is clearly seen in a chart of funded vehicle and infrastructure spending over the coming decade.

It is self evident that Toronto will not be reducing vehicle spending to zero by 2030 with major items such as ongoing eBus purchases and expansion of the subway fleet, nor should infrastructure spending actually decline remembering that none of this is for system expansion, only state of good repair. This is a fictional plan that might make the City’s future spending look good in a rolled-up city-wide plan, but which very substantially understates actual needs.

The unmet needs are summarized in the chart below. This shows how even the short-term 2022-2026 need require funding just at a time when governments will say “but we’re already building out your subway network” and “we have other portfolios to fund as well as transit”.

Where The Money Comes From

  • For the funded portion of the 10-year capital plan, two thirds comes from the City with the remainder coming from the provincial and federal governments. Note that this does not include funding of major projects like the Crosstown which are on the provincial books.
  • The question of getting more from Development Charges arose, but there are two important points about them. First, they now pay for less than ten percent of the City’s share, or about five per cent of the total funded program. Second, the level of these charges is determined by provincial law and they can only be assessed for projects linked to demand growth associated with new buildings. (There is a further wrinkle that Toronto assesses them city-wide and so that, for example, charges levied for the Spadina subway extension are borne by condos across the city.)
  • Vice-Chair De Laurentiis asked that future budgets include more information about the benefit of projects so that the Board is better equipped to argue for funding. One might suggest that a Budget Committee whose job was to better understand the details and rationale for projects might be a useful addition.

The big challenge here lies with senior governments who are happy to fund one-of projects with photo ops and ribbon cuttings, but much less interested in money just to keep the lights on.

The City papered over this problem a few years back with the Mayor’s City Building Fund which will finance half of the $12 billion program through a property tax increase that began with 1 per cent in 2020 and 2021, and will rise to 1.5 per cent in 2022 to 2025. How will the projected shortfalls in coming years be funded, and will there be any appetite to continue these tax increases into 2026 and beyond? (Note that the CBF also helps to finance housing programs, another portfolio crying out for greater spending.)

The State of Good Repair Backlog

The chart below shows the projected backlog in funding for ongoing state of good repair. The upper taupe coloured line shows the total backlog, while the lower red one omits vehicle overhauls and replacements. In effect, the gap between them is the cost of infrastructure renewal and replacement. The much lower blue line is the available funding assuming existing programs continue as is.

This is clearly not a sustainable arrangement. For many years, the TTC got by year to year funding their capital needs while keeping the arrival of a deficit situation parked in the future hoping for new funding. The problem Toronto faces is that new funding has arrived, but much of it goes to specific projects, not to basic system maintenance.

The problem with funding and replacement cycles is clearest with vehicle projects although it can affect infrastructure projects as well such as the need to completely replace a subsystem like signals as one project, not piecemeal. Some of the problems with the Line 1 ATC project arose specifically from an attempt to do it “a bit at a time” rather than presenting a billion dollar proposal in one go.

The TTC’s fleet replacement pattern is quite “spiky” through a combination of past purchase patterns and changes in overhaul vs replacement policies.

Rail fleets are acquired in large batches, often for the entire fleet for a line. Current plans call for a new Line 2 fleet in 2026-2030 including Automatic Train Control (ATC). Additional trains will be required for the Scarborough and Richmond Hill extensions, as well as for capacity improvements to handle growing demand.

In theory, buses should be an ongoing, stead requirement, but in practice there are spikes in orders especially when funding becomes available on a time-limited basis and/or with specific technology requirements. This happened with Hybrid buses, and the situation appears similar for eBuses.

The TTC’s decision to shift from an 18-year to a 12-year replacement cycle has accelerated the need for new buses, and the change to eBus technology will raise the average cost of a bus. These two factors combine to make a bulge in bus replacement capital requirements that, for a few years at least, will be offset by special subsidies.

TTC plans to order 300 Hybrid buses and 300 eBuses. The Hybrids will be the last diesel powered vehicles in the fleet, and they will be due for retirement in the mid 2030s.

Rapid TransitFleetAcquiredRetirementNotes
Line 3 SRT28 1983-19862023
Line 2 BD T-13701995-20012026-2030A proposed 10 year life extension has been dropped in favour of 80 new trains (480 cars) some of which will go to Line 1.
Lines 1 & 4 TR4802009-20172039-2047
Bus
Orion VII Diesel2902006-2010Due
972011-20122023-2024
Orion VII Hybrid3542006-2009Due
Nova LFS Artic Diesel1522013-20142025-2026
Nova LFS Diesel8642015-20182027-2030
Nova LFS Hybrid2552018-20192030-2031
Flyer, Proterra & BYD eBus602019-2020Prototype fleets for evaluation
Streetcar
Flexity32012-2013Prototypes
Flexity572014-2017Deliveries were very slow for the early part of this order.
Flexity1442018-2020
Adapted from TTC Scheduled Service Summary for January 2, 2022

The Need for Co-ordinated Planning and Funding

A vital part of budget planning is the fact that many individual projects scattered through different sections of the budget and “owned” by different departments are actually part of a larger whole. The TTC is now flagging some of these linkages, although more exist. This will help both in advocacy for line items that may appear insignificant on their own, and in guarding against cherry-picking of deferrals.

A new fleet of subway trains is required to replace the existing T-1s used on Line 2 BD and to supplement the Line 1 YUS fleet. This triggers a need for more storage and adaptation of facilities that were not designed for 6-car trainsets. (The T-1s are built as pairs that can operate independently.)

The issue of space for delivery of new trains has not yet been addressed. Originally, the TTC planned a new carhouse and yard near Kipling Station, but this has been pushed off into the 2030s when it might become part of a Line 2 western extension project. New storage will be provided on the outer ends of the Richmond Hill and Scarborough extensions, but this will not be available until these lines are available for service in 2030.

For the streetcar fleet, three projects have been flagged including the reconstruction of Russell Carhouse to include facilities for maintenance of the Flexity fleet’s roof-mounted equipment, the conversion of part of Harvey Shops at Hillcrest to an operating carhouse, and completion of the conversion of the overhead power supply system for pantograph operation.

The bus fleet has a system-wide change in progress with the move to an electric fleet. Although limited charging facilities have been installed for the prototype eBuses, a full retrofit of existing garages will require replacement of diesel fuelling by charging. The next bus garage to be built will be all-electric from the outset.

New vehicles are politically sexy both to show off Toronto’s commitment to transit and a migration to a “green” system, as well as the job creation buying anything new creates. However, keeping the system running is just as important, and that requires overhauls and maintenance. No vehicles run forever, and they cannot reach their design lives (12 years for buses, 30 for rail vehicles) without major overhauls.

Similarly the infrastructure supporting the network, particularly the rail modes, requires regular overhauls and sometimes complete replacement (e.g. escalators). Much of this infrastructure is unseen, but vital, such as the pumps and ventillation systems for the subway, and the electrical supply network.

Gazing Into The Future

There are many requirements for facility expansion to handle more service including a new garage, subway train storage and station capacity problems. A particular issue at many stations is the vertical circulation capacity. It is one thing to run more trains/hour with ATC, but quite another to get passengers onto and off of platforms.

The challenge can be compounded when a major route through a station is out of service for construction as with the escalator from King Station southbound to the concourse. The TTC is lucky that demand is not at the full pre-covid level. Stations need to be engineered for less than ideal conditions when a pathway is out of service, but that is an expensive retrofit to existing structures.

The main report (covered in my first article) contained considerable detail that was omitted in the staff presentation deck, although some components show up in Line 1 and 2 enhancement plans (see below).

I posed this question to the TTC:

The presentation on Line 1 and Line 2 enhancements does not include many items that are in the Real Estate Investment Plan in the main report notably including the potential western extension of Line 2 and the Western Yard. Is there a consolidated project list detailing the scope and purpose of items that are in the REIP and CIP?

Steve Munro Email, op. cit.

The TTC replied:

Appendix B covers the scope of the REIP and the CIP/10-year plan scope will be documented in the blue books.

Stuart Green Email, op. cit.

This answer takes a bit of explanation. As noted earlier, the TTC’s capital plans exist in various overlapping formats.

The “Blue Books” are (or were in pre-pandemic times) quite literally two vary large blue binders containing detailed information about every project in the CIP, but only for the next 10 years.

Usually I borrow a set and make selective copies. This has not been possible during the pandemic, but I hope to make arrangements with the TTC for an electronic copy. The 2022 Blue Books have not yet been assembled and will probably not be available until after Council considers the TTC’s 2022 Budget.

At this point, it is not clear how much, if any, information will be available in a document with a 10-year horizon regarding works planned for 2032 and well beyond.

Subway Ridership Growth

Although the state of transit demand a decade hence is subject to a lot of second-guessing including forecasts of substantially more work-from-home activity, it is by no means certain that the existing inventory of office space will sit empty. For example, more employees might occupy the same space for fewer hours each on a hotelling basis. Indeed, until the recent pandemic wave, system demand was rising above 50 per cent of former levels and a full recovery was expected in a few years. On the scale of major transit project planning, that is trivial.

(One might also ask, with just a twinkle in one’s eye, why we are building new subway extensions when “nobody is going downtown any more”.)

The TTC’s projection of peak demand on Lines 1 and 2 is shown below. For reference, the design capacity of a TR subway train is 1,100 people (more will fit, but at the expense of severe crowding and long station stops as people push onto and off of the trains). The projected 38,500/hour on Line 1 is equivalent to 35 trains/hour compared to 26 on the pre-pandemic schedules. On line 2, the 31,300/hour is equivalent to 28.5 trains/hour.

Particularly for Line 1, this has implications for station capacity and for the resiliency of service.

Lines 1 and 2 Enhancement

The TTC has undertaken major studies of the future needs of both Lines 1 YUS and 2 BD for future capacity expansion. Some of the work this entails appears in the budget report, but without much detail. There has been no public discussion of the relative priority or timing of these works, and the studies themself have not been published. The scope of the proposals is extensive. Several of the works listed here go beyond the 10 and 15 year horizons of the capital plan, and so their cost does not show up in medium term funding projections.

The reference to “DFF construction” involves the change from ballasted track that is used throughout the system on open cuts and at locations with special work (turnouts, crossings, etc.) with track mounted on a concrete slab. This is not a trivial change, and it is not yet clear how it would be accomplished without shutting down portions of a line for some period. The segment from Eglinton south to Muir Portal (south end of Davisville Yard) has been a maintenance problem for years, but it is not the only location.

Adding peak service to the subway requires a more robust power supply, on top of which much of the existing infrastructure is elderly.

Not mentioned in the Line 2 list is the proposed new yard west of Kipling Station. The City is expropriating this land for a subway yard. The pressure to build it immediately dropped when the Ontario Line plans put a new yard at Thorncliffe Park rather than the Relief Line plans to use space at Greenwood.

I have already asked for a copy of the Line 2 report, and will try to get the Line 1 report as well to present the issues and proposals in more detail.

5 thoughts on “TTC 2022 Capital Budget: Board Meeting Follow-Up

  1. Is there a budgeted plan to upgrade/replace the streetcar switches?

    Steve: There has been a line item in the budget for this for years, although work was deferred for quite some time. They are supposed to have resumed replacement of the old electronics, but I am waiting to get the detailed project reports in the “Blue Books” to verify the status of this and many other “small” projects that are never reported on at the Board level.

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  2. Several weeks ago you reported “The Russell Carhouse project includes expansion and configuration of the carhouse to suit the Flexity streetcars. At Leslie Barns, a proposed second exit from the site have been cut from the budget.”

    In the Presentation Deck attached to this post it states on Page 29.

    Key Changes:
    • Russell Carhouse Modifications & Extension
    • Non-Revenue Vehicle Electric Charge Systems
    • Line 1 and 2 Capacity Enhancement projects
    • New Streetcar Maintenance & Storage Facility
    • Leslie St. Second Exit

    The other ‘key changes’ are all, I think, still planned. Is the Leslie 2nd exit now back in their plan or is the key change that it has been deleted?

    Steve: The new streetcar maintenance facility and the second exit from Leslie were both stripped out of the budget. I think this is in the main report which I covered in the first article, but I will check.

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  3. I suppose the 2041 target for Station Capacity improvements at Spadina means we can look forward to only a single streetcar fitting in that station loop for a good while yet.

    Steve: Yes, it was sad to see that they had not addressed that problem. I can’t help wondering if it would be cheaper to change the door controls so that cars could load with the first door beyond the platform and the front door closed.

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  4. I’m looking at the chart “Unfunded in the CIP”. The biggest items top to bottom, in $billions, are:

    1. Purchase subway cars, $1.7, need funding for 2022 (deliver by 2026-30), “We need 80 new subway trains…”
    2. Subway maintenance & storage facility, $2.3, need funding for 2023, (deliver by 2030), “… add storage in time for delivery of trains.”
    3. Purchase electric buses, $1.6, need funding for 2022
    4. Scheduled fleet repair (State-of-good-repair), $1.2, need funding for 2023

    Noting that streetcars need only $103 million more.

    “T-1 [subway car retirement on] Line 2 BD, retiring 370 cars during 2026-2030, A proposed 10 year life extension has been dropped in favour of 80 new trains (480 cars) some of which will go to Line 1.”

    Steve wrote: “A new fleet of subway trains is required to replace the existing T-1s used on Line 2 BD and to supplement the Line 1 YUS fleet. This triggers a need for more storage and adaptation of facilities that were not designed for 6-car trainsets. (The T-1s are built as pairs that can operate independently.)

    The issue of space for delivery of new trains has not yet been addressed. Originally, the TTC planned a new carhouse and yard near Kipling Station, but this has been pushed off into the 2030s when it might become part of a Line 2 western extension project. New storage will be provided on the outer ends of the Richmond Hill and Scarborough extensions, but this will not be available until these lines are available for service in 2030.”

    My questions are this: Would not storage space be built first before the new cars arrive? Is the TTC planning to scrap cars ahead of receiving new cars so as to make space? Funding for new trains needed by 2022, vs. funding for new storage needed by 2023, and delivery of new trains 2026-30, vs. delivery of new storage by 2030.

    Steve: The whole business of subway fleet planning is a mess that has not been entirely unscrambled. Originally, there was to be a new yard at Kipling which would be designed around the new fleet and which would be used to receive the cars (conveniently right beside the CPR). However, the City was looking to reduce its capital requirements, and Rick Leary was happy to defer ordering new trains and, instead, refurbish the T-1 fleet for another decade. This has big problems because of the lack of ATC capability on these cars, and for the unknown reliability going forward. The deferral of the SSE opening to 2030 gave the TTC some breathing room, and the idea of a new fleet came back onto the table. As for a yard to handle them, space opened up, sort of, by virtue of the OL, with its own carhouse at Thorncliffe Park, removing the need for Greenwood as the Relief Line carhouse. There is still the question of how a new fleet coming on stream will be tested and co-exist, and that is what the TTC presentation alludes to.

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