The TTC Board met on June 23 with a fairly modest agenda. This is the second last scheduled Board meeting before the October 2022 civic elections and, unless there is an emergency situation, the current Board will have little to do with transit’s future in Toronto.

This is an unfortunately typical situation in election years. By the time a new Board is in place to discuss key issues with the 2023 budget, fares, service levels and hoped-for subsidies, it will be a new Board presented with whatever plan management devises and with little chance for adjustment.

In a previous article, I wrote about the TTC’s funding crisis, a topic that receives almost no discussion at Board meetings. June 23 was no exception.

The major items on the agenda were:

• CEO’s Monthly Report
• Quarterly Financial Update
• 10-Year Fare Collection Outlook & Presentation
• Financial Statements for 2021

CEO’s Report and Financial Update

In my previous article, I dealt with some of the issues raised by the Financial Update. This report will, in future, be consolidated with the CEO’s Report (from which it was split some years ago). Given the superficial nature of the CEO’s Report, there is a danger that some of the fine-grained information we received in the Financial Report will be lost. Time will tell.

Ridership continues to grow although the TTC expects this to slow over the summer due to the normal seasonal drop in travel. However, they have implemented service cuts on only routes serving post-secondary institutions where demand will clearly drop. Many routes that would normally see Summer cutbacks will be left at their Spring service levels.

According to CEO Rick Leary, there will be substantial additions to service in September including a 25 per cent bump in subway service. However, with off-peak and weekend riding recovering more strongly due to work-from-home, the service hours may not be restored in the same places they were cut for the covid era. The details of September changes will not be available until late August unless the TTC decides to make a PR splash for effect sooner.

Demand on some transit systems that have a higher proportion of riders who do not have the option to work from home is back very strongly with demand in Brampton, for example, now reported as over 90 per cent of pre-covid levels. On the TTC, the degree of recovery depends on the route and location served, and complaints about overcrowding are common. This is also related to the TTC’s chronic inability to maintain reliable service headways (the time between vehicles).

Without giving any specifics, Leary noted that planning staff are working on new, more finely-grained statistics to report on routes grouped by type rather than the system as a whole. This will reflect different operating environments (e.g. construction) as well as demand patterns. Just how detailed a breakdown this will be remains to be seen.

The CEO’s Report continues to claim that there are few if any short turns, particularly on the streetcar system. This is trivially easy to disprove in day-to-day travel, and the claimed near-zero stats call into question the validity of other claims in the report. I will turn to some detailed breakdowns of actual operations in a separate article.

There is a particular problem with subway service suspensions for “security incidents” or “trespassers at track level”. Nowhere in the CEO’s report are there stats showing how often these occur, what the effect on passengers might be, and how the underlying events are changing in number or severity.

Vehicle reliability stats are, in most cases, quite good, but they are reported in a way that caps values at a target rather than showing what was actually achieved and whether there is a trend up or down developing “off the page” where we cannot see the details.

Capital Budget Adjustments

The Capital Budget will have at least three sets of adjustments for 2022. One set was shown in my previous article, and it is primarily the result of timing differences on three large budget lines.

A second set has been prepared as a contingency against the City’s desire to reduce its capital-from-current spending in 2022. It is not clear which projects will be affected as the list has not been published.

Finally, there will be a shortfall in actual-vs-budget spending on new buses because of supply chain issues.

These adjustments do not make spending vanish, but simply shift it a year or two into the future where. no doubt, some other project will be elbowed aside to make room.

Major Capital Project Status

In a previous article, I reviewed the perilous condition of the TTC Capital Plan due to lack of funding. This section summarizes some of the major projects already underway.

Line 1 Resignalling (ATC)

Work on the last phase, from Eglinton to Finch, is nearly complete. A cutover date was uncertain because the opening of Line 5 Crosstown will also involve a shift in train stopping locations at Eglinton (further north) to better distribute transferring riders on Line 1 trains. Current plans are to implement ATC to Finch and shift the stopping point later. This would allow the TTC to gain operational advantages of full ATC without being dependent on the Line 5 opening date. Cutover is projected for September 2022.

A Phase 6 has been added to this project for enhancements to the system including protection against the near-sideswipe incident at Osgoode pocket track due to a mix of manual and automatic operation.

Easier Access Phase III

This project will complete the installation of elevators in all subway stations. Eleven sites are under construction, and five are out to tender. Islington and Warden are special cases because they require new island bus platforms to replace the existing bus bays, and some of this work depends on planned redevelopment of the stations. There will be interim arrangements for accessibility to meet the 2025 provincial (AODA) requirement.

Various locations are affected by delays including conflicts with utilities and buildings, as well as property requirements and the effects of labour disruptions. For details please see the report beginning at page 27.

Fire Ventillation Upgrade and Second Exits

Fire ventillation upgrades are underway at several locations both to improve performance and to replace equipment that is at end-of-life. Although the project shows an end date of 2030, this is actually an ongoing process of system renewal.

• Second entrances are under construction or planned at stations to bring them to current fire code and improve access.
• Summerhill and Dundas West are in the design stage.
• Museum is in the tender evaluation stage although property easements with the University of Toronto are an issue.

Site conditions, unexpected complications and property issues affect other locations. See the report starting at page 31 for details.

Purchase of Buses

This project is defined as ongoing to 2036 for transition of the entire TTC bus fleet to zero-emission vehicles. Current funding is available for only for 336 hybrid-electric and about 240 battery-electric buses taking the project through 2025. Funding beyond that point has not been identfied, and approximately $3 billion is required.

The contract for hybrids was awarded in February 2022 to Nova (134 forty-foot buses) and New Flyer (134 forty-foot and 68 sixty-foot articulated buses).

The eBus contract is at the stage of tender evaluation and discussions with bidders. In spite of poor performance during trials, the availability of BYD buses is still listed as an “issue” rather than simply as a disqualification. One wonders what behind-the-scenes machinations are trying to keep BYD’s hopes for part of this contract alive. The contract will be awarded in the third quarter of 2022.

A full fleet electrification study is expected to be completed by the end of 2022.

Delivery of both types of buses could be delayed by supply chain problems, but there are no specific details in the report.

See the report beginning at page 33 for details.

EBus Charging Systems

This project will eventually provide about 2,200 charge points for electric buses. As described, the current plan is for all of these to be at garages. Of the estimated final cost of $766 million, only $118 million has been approved thus far. Like the bus purchase program, this is another project where the lack of full funding could hamper completion.

Phase 1 of the program would provide up to 50 charge points at Eglinton, Wilson, Birchmount, Malvern, McNicoll and Queensway garages by 2024.

See the report beginning at page 35 for details.

Purchase of 60 Streetcars

Sixty new streetcars will be delivered by 2026. This project is fully funded, although inflation and contract escalation could push up the final cost. The project is in the early stage of ramping up production.

In a separate project (not included here), Harvey Shops at Hillcrest will be modified to act as a fourth carhouse, and cars for the 512 St. Clair line will be based there. This work is fully funded.

Fare Collection / Presto

This project includes the rollout of remaining functionality of the existing Presto system and is separate from any future migration to a new generation of either Presto or a TTC-implemented system.

Many deliverables are still outstanding from the original contract, notably Open Payment, and it is fairly clear that Metrolinx will still be delivering on their commitments well up to the end of the current contract. See the following section on the 10-Year Fare Collection Outlook for more about Presto.

For a list of the work included in the current project, see the report beginning at page 41.

10-Year Fare Collection Outlook

The TTC has two related studies underway. There is a five-year fare policy review looking at changes that might be implemented in fare structures, and a ten-year fare collection review considering the mechanics of fare collection.

The presence of an update on only one of these streams in the agenda leaves a gap, but it is important that the TTC’s attitude is that business requirements and policy will drive the specifications for any new or upgraded fare system. Technology will not dictate the fare structure, or so they claim.

Some of Presto’s woes arose from technology limitations and from Metrolinx’ arrogance about fulfilling its contract with the TTC, or not. To be fair, the TTC created some problems of its own with the late adoption of the two-hour transfer, a function contemplated from the outset by Presto and implemented everywhere else in the GTA.

The timelines for the fare collection system and future changes are shown in this chart. There are several points worth noting:

• The point at which the TTC would give notice it is not renewing the Presto contract (yellow star on blue bar) coincides with Presto’s planned move to a new vendor (green bar). This could create a difficult situation of a double migration first within Presto and then to a “TTC” fare collection system.
• No matter which option is chosen, the TTC will go through a Presto migration in 2023 to 2025.
• Delivery of outstanding items in the Presto contract and settlement of TTC claims for, among other things, lost revenue, would occur by late 2024 (brown bar).
• Account Based Ticketing (about which more below) is planned for late 2025, again a difficult time given decisions about whether to stay with Presto. (light brown bar)
• The TTC plans to publish a business case by the end of 2022. This will be critical in deciding whether to proceed further with their own system, or whether the cost and risk of going on their own exceeds the potential issues of staying with Presto. Work planned for 2023 on procurement of a new system obviously would require a decision to make the change even though the formal date for notice to Presto is at the end of 2025.

Account Based Ticketing fundamentally changes the operation of the fare collection system. Today, Presto cards are “stored fare” media with a “wallet” of funds, as well as tokens representing various types of passes and discount eligibility, stored electronically on the card.

When a Presto user adds value to their card online (or by auto-reload), the change does not actually reach the card until the next time they “tap on”, and then assuming that their updated profile has been downloaded to whichever device they use. This is the reason for an up to one-day delay. When a reload occurs at a Presto fare machine, the update is instantaneous.

Discounts for multi-system fares as well as timed transfer functionality are handled by the Presto card readers which have to “know” about any of the tariff options they will encounter. Changing the tariff is not a trivial update.

In an Account Based System, a fare card or other readable device including credit/debit cards and smart phone apps, the user’s “wallet” exists on a central billing system where fares for all travel are reconciled against the appropriate tariff. This removes the need for onboard fare collections and for card readers to update information on the cards. The system allows for a much more flexible tariff (assuming the capability is built in from day one), but it is a major change in system architecture.

An important distinction here is that “open payment” can be much more “open” as fares are calculated in the “back office” based simply on rider identification through a tapped card, not by real-time charges against an account. This can also bypass the issue of service charges for micropayments by bundling charges over a period of time.

The current “open payment” plan has a limited function as shown by this chart. It will only be available for adult riders in the initial rollout in the second half of 2023. The reason for this is that it will only support charging a standard fare, not any of the discounts because it is impossible to know what the rider might be entitled to. By contrast, Presto cards (and their virtual equivalent as a phone app) will handle all fare types.

This is all very frustrating especially considering that the TTC contemplated this type of functionality before they were strong-armed into the Presto family.

Considering the might of the provincial government and its love of dictating policy to municipal agencies, it is hard to believe that they would even think about allowing the TTC to split off from Presto. Possibly they will have the good sense to keep quiet about this choice and let the TTC come to a realization that conversion would be expensive and risky, much as giving the finger to Presto would feel very good.

2021 Financial Statements

The financial statements are rather dry reading of primary interest to people who are following the TTC over a longer period and want access to definitive numbers from bygone years.

This year, we have the near-end of a long-time TTC subsidiary, Gray Coach Lines, now known as Toronto Coach Terminal Limited. This company lost money for years and its accumulated deficit was secured by the value of its property. After control of the terminal was leased out, TCTI started to turn a profit and gradually that deficit was wiped out.

In 2021, the TTC transferred management of the buildings and land to the City of Toronto for $4.2 million. This transaction will be triggered by any approval for redevelopment, and at that point the last remaining asset of Toronto’s interurban coach company will move off of the TTC’s books.

Other useful information in the financial statements is a clear presentation of the sources of subsidy funding. Typically, money received via the City is reported as if it came from Toronto taxpayers even though in fact it might come from a senior government. However the Financial Statements, specifically in Notes 14 and 15, show where the money really comes from.

Provincial Gas Tax appears in both the Operating and Capital subsidies because this revenue is split by the City of Toronto to fund both budgets. Of particular note here is the size of the Safe Restart Agreement payments which offset losses due to the pandemic. These will be lower in 2022 because of the recovery in progress, but the real challenge comes in 2023 if governments do not include any funding for this in their 2023-24 budgets beginning on April 1, 2023.

In the more detailed view of the subsidies, a few points should be noted:

• The TTC books a liability for post-retirement benefits within their pension plan, but they do not actually lay out the money until the benefits are incurred. The City treats these as an account payable to the TTC and keeps the cash in its own accounts until it is actually needed.
• A large contribution to the TTC Stabilization Reserve Fund was made in 2021 from a settlement with Metrolinx regarding costs of supplementary service operated by the TTC during LRT construction projects, and from under spending in the 2021 operating budget. This effectively “parked” money until 2022 when, depending on actual results and the amount of extra covid funding the TTC actually gets, it might be drawn down to help cover any shortfall.

Capital subsidies come primarily from the three governments. The lion’s share is carried by the City of Toronto. Note that provincial spending on its own projects does not appear here and so Ontario’s total transit capital spending is considerably greater than the numbers shown.

In the detailed breakdowns, various items are broken out:

• Provincial Gas Tax is the share of the total tax that is allocated to capital programs. Federal Gas Tax is now called the “Community-Based Fund”.
• The Streetcar Program consists of the purchase of 60 new streetcars and the renovations at Harvey Shops.
• The LRV Car Project is the original 204 streetcar order which is now effectively complete.
• Other amounts under CSIF, PTIF and Quickwins are remnants of older targeted subsidy programs (see reserves section below). When money comes out of the reserves, it is recognized as a current subsidy in these tables.

In the provincial reserves, most of the money is from gas tax which flows into and out of the reserve in the same year. Sometimes, the amounts do not exactly match due to timing.

CSIF and Quickwins were programs where funding was transferred to the TTC/City when it was announced, and so this money shows up in reserves until it is actually spent. More recent programs run on a pay-as-you-go basis with the funds released by the provincial or federal governments only as expenses are actually incurred, and so they create no reserves. That is how the streetcar subsidy streams, for example, work.