The Tangled Web of Waterfront Transit and Sidewalk Labs

The Waterfront East LRT (streetcar) is a years-overdue project. Development marches east from Yonge to the Don River along Queens Quay while transit service amounts to a handful of infrequent and unreliable bus routes. I strongly support the LRT plan, and participated in various advisory groups at Waterfront Toronto and the recently disbanded Sidewalk Labs Mobility Advisory Committee with the hope of seeing the LRT project come to life.

Toronto as a city talks a good line about “transit first” in the waterfront, but does nothing to support this. There is always some other project more important. During the early days of SmartTrack, there were even claims that it would make the Waterfront East LRT unnecessary. That was complete balderdash, along with claims that ST would replace every other project, including a Relief subway line.

Now Mayor John Tory has shifted his position on ST’s benefits somewhat, but keeping his personal project alive diverts attention and funding. A Waterfront Reset study now underway by City Planning, Waterfront Toronto and the TTC owes more to the demand for better transit to the Humber Bay Shores than to the new developments in the eastern waterfront. Political dynamics on City Council are such that the western extension could be first out of the gate leaving the eastern waterfront high and dry, so to speak, for better transit. Design for an extension of the existing streetcar track at Exhibition Loop west to Dufferin with provision to go further is already underway. [See the Exhibition Place Streetcar Link tab within the Waterfront Reset page.]

The most contentious part of the Waterfront Reset has been the link to Union Station. One might think that simply expanding platform space there would be the obvious solution, but there are competing interests. Some residents and other activists argue for a surface LRT straight through the Bay & Queens Quay intersection to the eastern waterfront, while the existing Bay Street tunnel would be repurposed for various other technologies including a moving sidewalk or some form of “people mover”. For a while, Waterfront Toronto’s former CEO was pushing for a “funicular”, although the term is more applicable to transit routes on steep hills than in a relatively flat tunnel.

The existing underground streetcar infrastructure, consisting of a ~540-metre long tunnel under Bay Street from Queens Quay Station to Union Station, opened in 1990. This existing link provides connections between the central-western waterfront, TTC Line 1, GO trains and buses, and the lower downtown core. The existing streetcar loop at Union Station is currently inadequate for present service levels, to and from the west only, because of its single, curved streetcar platform, on a single track, with insufficient space for present volumes of waiting and alighting customers, and the loop would not function effectively or safely if additional service from the east was added.

Currently, options for the link between Union Station and Queens Quay have been narrowed down to a short list of technologies: expanding the underground streetcar capacity at Union Station (loop expansion); or, repurposing the existing underground streetcar tunnel with an automated dual-haul cable-pulled transit system. The study area for the Union Queens Quay Link is illustrated below. [Waterfront Reset web page]

Two designs were presented at a recent public meeting, but I did not report on them here as there are still many details to be worked out. Drawings for these options are not available online.

  1. Two new north-south tracks are added under Bay Street, one on either side of the existing structure. Platforms would be built beside these new tracks so that passengers would load and unload along straight segments rather than on the congested curve at the north end loop. Two configurations are possible: in one all unloading would occur on the east (northbound) side with loading on the west (southbound) side, while in the other each side’s platform would serve one of the two waterfront routes. (For example, cars bound for Waterfront East could serve the east side platform while those going west stopped on the other side. The four-track structure would allow cars to bypass each other.
  2. The streetcar tunnel would be repurposed with a “People Mover” using one train in each half of the existing structure. Queens Quay Station would be substantially modified both as a southern terminus for the People Mover, and with a new underground LRT station. A surface option for this setup was dropped from the short list because of the volume of passengers who would be transferring between the PM and the LRT.

It is ironic that the impetus for removing streetcars from Bay Street came from the hope that the existing portal between Bay and York streets could be filled in, and that a new portal east of Yonge would not be required. However, the People Mover option, with its underground station, does not achieve this goal.

The next public meeting of the Waterfront Reset project will be held in the Brigantine Room at Harbourfront, 235 Queens Quay West, from 6:30 to 8:00 pm on Monday, March 4, 2019.

A third route into Union, the Bremner LRT, did not appear in the City proposals. It would, in any event, be impossible in the People Mover configuration. This proposal never made sense as Bremner is not wide enough to host an LRT route separate from Queens Quay West. A third service competing for platform space and track time at Union would make that interchange even more challenging than with only the west and east LRT services. City Planning could do everyone a favour by formally removing the Bremner route from their maps. This would also end a rather contentious debate about how a this route would affect the area west of Bathurst and south of Fort York.

The Union loop should and could have been expanded during the extended shutdown of streetcar service for the reconstruction of Queens Quay West and the nearby work on GO’s Bay Street Concourse (to which the expanded loop will connect), but there was no political will to spend money on streetcars at Union.

The Union Station connection will be the most expensive part of any upgrade to waterfront transit facilities, and this cost has been a drag on political decision-making. The Waterfront Reset is supposed to report to Council in April as part of an omnibus report on transit projects in Toronto. Once again, the waterfront could take a back seat to the favoured projects: SmartTrack and the Scarborough Subway Extension.

This is the context in which Sidewalk Labs and their proposed Quayside development join the story.

Quayside

Development of the waterfront has followed a standard pattern. Waterfront Toronto, funded jointly by all three levels of government, upgrades infrastructure (mainly utilities and roads), and manages the process for inviting development on public land that is serviced by the new facilities. Private developers bid for the sites, and Waterfront Toronto maintains input through its desigmn review process. (Some privately owned sites ignored WFT, but the majority of the land is in public hands.)

The Quayside site spans Queens Quay mostly between Sherbourne and Parliament Streets. What is quite striking here is the huge size of the Port Lands to the east and south compared with Quayside itself. [Map from Sidewalk Toronto website] The Port Lands are almost 30 times the size of Quayside and the same size as a large chunk of downtown’s business district. A share in any development there is a big prize.

Waterfront Toronto took a different tack with invited bids for a futuristic centre where new technology would be at the heart of the Quayside development. This would not simply be another new set of condos on the water. The winning bidder was Sidewalk Labs, a subsidiary of Alphabet Inc. which is also the parent of Google. This company has very deep pockets. Sidewalk Toronto is their local presence.

Original concepts for the area stirred both excitement and skepticism, but the debate quickly focused on technology issues related to invasive monitoring of activities at Quayside, the ownership of data collected, and the role of technology generally including autonomous vehicle (AV) technology from Waymo, another Alphabet company.

Central to the Quayside proposal is the reduction of the carbon footprint both through building design (construction and operating effects) and by shifting much transportation demand to modes such as walking, cycling, shared vehicles and transit. Transit is particularly important because the projected volume to and from the eastern waterfront exceeds 3,000 passengers per hour. The origin-destination pattern for these trips is not conveniently within the Quayside precinct, but spread over downtown. Incoming school and work trips originate even further afield. This is not a demand that autonomous vehicles can touch both for capacity and for reach of service in the foreseeable future, certainly not in the period when the waterfront will develop and be populated.

For me, the Mobility Advisory Committee was a frustrating experience. There was a clear conflict between Sidewalk telling us about their wonderful technology and the committee’s ability to review and comment critically, if only thanks to time constraints, the number of committee members and infrequent meetings. There was far too much “sizzle” and far less hard detail, not to mention a sense that Sidewalk was rather full of themselves about their brave new technology world. The design for Quayside includes provision for AVs, and to some extent the proposed road layout was gerrymandered to increase the contiguous territory where AVs could operate without having to deal with a major artery such as Lake Shore Boulevard.

A fundamental problem with any discussion of AVs is that Quayside is quite small, and most of the local trips within it would be taken on foot or by cycling. AVs might be handy for some journeys, but they would not be the backbone of travel because most trips started or ended well outside of the Quayside area. If AVs were going to have any meaningful presence in Quayside, the project scope had to expand, but how this would occur was not obvious until the Star’s revelation of Sidewalk’s and Google’s designs on the wider waterfront.

A parallel and much more high profile controversy related to the data that would be collected by a very technologically active environment integral to the Quayside proposal. This is a transit blog and I will not delve into all of the threads that debate took, but the discussion served an unexpected purpose. With all of the focus on privacy and the integrity of personal data, other aspects of Sidewalk’s scheme and their wider designs faded into the background. The cynic in me suspects that for all that this might have annoyed Sidewalk, there was an advantage that the bigger picture of development scope and infrastructure funding did not receive the same attention, at least until the Star broke the story.

There was always a nagging suspicion that the real prize for Sidewalk was the wider waterfront, but most discussions looked only at the comparatively small Quayside district. The problem with only reviewing that small precinct is that neither transit nor any AV scheme will rise or fall on the comparatively modest demand of one development district, but of the combined effect of building throughout the waterfront.

A Leak at Sidewalk

On February 14, the Star’s Marco Chown Oved revealed that Sidewalk had designs on the entire Port Lands. His article is based on a presentation deck that has not been released. I asked, and he replied:

A revised presentation was issued by Sidewalk, but it does not include some of the more contentious text cited in Oved’s article.

The foundation of Sidewalk’s proposal is that they would not only finance infrastructure installation throughout Quayside and the Portlands, but that they would be repaid by tapping into future municipal revenues. They would not become developers, but would reap their reward as others built in the area they had serviced.

Internal documents obtained by the Star show Sidewalk Labs plans to make the case that it is “entitled to … a share in the uptick in land value on the entire geography … a share of developer charges and incremental tax revenue on all land.” … estimated to be $6 billion over the next 30 years. [Oved]

This sounds promising if you are a politician accustomed to finding someone in the private sector to take costs off of your hands, at least in the short term. However, it is a form of borrowing just like any debt, and there is no indication of the return Sidewalk (or its funding parent, Alphabet) would expect on its investment. Moreover, there is a risk that economic circumstances will change over coming decades and development could slow or stop in Toronto. Would that risk be part of any deal, shared with Alphabet, or would they expect payment even for infrastructure supporting vacant lots?

Development Charges are poorly understood in Toronto. They are levied city-wide against all new buildings, both residential and commercial, to recoup part of the cost of infrastructure upgrades. They are not site-specific, and buildings everywhere pay the cost of new infrastructure regardless of where it is needed. For example, new buildings downtown helped pay for the Spadina subway extension. (Provincial rules on the DC formula require that the portion of any benefit to existing properties be excluded from the calculation.) It is far from clear that the DC revenue from the Port Lands would be needed only to pay for infrastructure there.

As for tax revenue, property taxes support many municipal services of which only a small portion is capital debt service. Scooping marginal new revenues to pay back Sidewalk’s investment would starve the city of money it needs to support the new population, and this would also dilute the funds available to service City debt overall. (I will avoid the black hole of explaining how City debt financing works here.)

The idea of “Tax Increment Financing” (TIF) has been floated before and it was central to John Tory’s SmartTrack scheme. This something-for-nothing mirage has evaporated. We will now see the City investing substantially in new GO stations while having no control over the service provided to them or the fares charged. Indeed, some of the waterfront lands Sidewalk eyes for TIF benefits were likely also part of the original SmartTrack scheme. One can only collect a tax increment once, and one might even debate which of several projects (SmartTrack, GO RER, Relief Line, Waterfront LRT) contribute to the uplift in land values and taxes.

The revenue streams Sidewalk seeks are municipal, and their proposal is silent on any investment from the provincial or federal levels. Waterfront Toronto, by contrast, is built on a tripartite arrangement with all governments, notably in its signature project the Don Mouth regeneration. If Sidewalk expects to be repaid for its contribution, where are the other “partners”?

Looking more broadly, other financing entities might be interested in this project, and Sidewalk/Alphabet should not be given any preference. One way or another, the investment has to be paid back, and the affected governments will have to get the best deal (including possibly some self-financing) among whatever is on offer.

Earlier I mentioned that it was clear that Quayside alone was too small to be significant in its own right for some of Sidewalk’s goals. Oved quotes Sidewalk Labs CEO Dan Doctoroff:

“We don’t think that 12 acres on Quayside has the scale to actually have the impact on affordability and economic opportunity and transit that everyone aspires to,” Doctoroff said.

This is not exactly news, but a great deal of “consultation” took place on the basis that only the 12 acres were under consideration.

Brand new in the Sidewalk proposal is a new Google Canada headquarters located on the west side of New Cherry Street, a prime spot within “Villiers Island”, a new island that will be created as part of the Don Mouth project. [From p. 10 in the updated Sidewalk presentation deck]

This would have an interesting effect on the initial size of Sidewalk/Google’s presence by placing a major employment node on Villiers Island. If Google/Waymo want a testbed for AVs, this would put their HQ firmly in the neighbourhood and would increase the initial scope of “AV territory”, although this requires that streets be “AV friendly”.

One big concern about AVs is their co-existence with the LRT line. In an illustration of the new Queens Quay, an AV is clearly shown in front of a streetcar on the “LRT” right-of-way. Bad enough that there is a conflict with AVs stopping on the right-of-way, but with the expanded scope possible to serve the Google HQ, will Waymo expect to use the LRT right-of-way throughout the eastern waterfront? Would this be a condition of the contract for any financing of the LRT project?

Sidewalk knows that the LRT is an important component of waterfront development.

To encourage development, Sidewalk will finance an LRT expansion through the area and fund the construction of “horizontal infrastructure” such as “the power and thermal grid, and waste removal.”

“This is something that is on nobody’s realistic drawing board. We would ensure it gets financed and all we want to do is get paid back out of the increase in value in terms of property taxes and developer charges that are only possible when that LRT gets extended,” said Doctoroff.

“To be clear,” Doctoroff said. “We would not own the LRT. It would remain public.” [Oved]

However, it is not clear how much of the LRT Sidewalk would actually finance, and if this were only the eastern end through Quayside, this could leave the critical link to Union Station in doubt.

In the wider scope, Sidewalk envisages a second phase with an LRT extension south of the Ship Channel to serve land that is now intended to be primarily industrial (at the east end) and recreational (at the west). There is no sense of whether this is a tactic to increase future returns, or simply blue-skying by Sidewalk’s planners. Going over the Ship Channel (twice) will be an expensive proposition as lift bridges will be required to provide clearance for ships entering and leaving the channel. (The existing bascule bridge on Cherry Street will remain, but it cannot carry an LRT line.)

Conclusions

I cannot avoid the sense that Sidewalk has badly overplayed their hand, and in the process has compromised whatever discussions were in progress on their plans.

According to Oved:

One slide states there have been “weekly briefings with officials from the three levels of government,” and “regulatory dispensations,” have been drafted to allow the plan to go ahead.

The whole Sidewalk process has been shrouded in confidentiality agreements, and this has not engendered trust with folks like me, not to mention Council members, who try to keep tabs on what is happening. It is a classic problem of public-private partnerships where all critical debate and decisions happen behind closed doors beyond the ability of anyone outside an inner circle to review.

How much has actually been committed is impossible to know. Sidewalk may have been told “if you want to do X, then you will need dispensation Y”. What we do not know is whether those dispensations are simply for discussion or have the active support of staff and politicians in the various governments.

Sidewalk’s position is further undermined when they reveal that they view problems with public perceptions to be related to the narrow issue of technology use and control [see Oved]. The broader implications of a runaway development scheme cooked up behind closed doors are not mentioned. Implications of widespread information technology presence are understood by a relatively small group, but questions of “done deals” and influence in high places are political issues everyone understands.

The entire proposal contains many sweeteners including sustainability, support for the emerging industry of wood buildings, and supposed improvements in the infrastructure of delivering services to a community. These may offset concerns about invasive technology, but are all of these simply a smokescreen for a much bigger grab for control of the Port Lands?

The ink was barely dry on the Oved story when David Rider reported that a source at Queen’s Park told the Star’s Robert Benzie that the plan “had no chance of proceeding”.

“There is no way on God’s green earth that Premier Doug Ford would ever sign off on handing away nearly 500 acres of prime waterfront property to a foreign multinational company that has been unable to reassure citizens their privacy and data would be protected,” confided the high-ranking Progressive Conservative insider.

All public agencies and officials involved in this project need to go on record about their knowledge of and support for the Sidewalk proposal. This is not the time for bromides about the wonders of new technology and much-needed development.

If we are giving away control of the waterfront, it’s time we all knew what is going on.

Queen’s Park Wants Toronto’s Subway: The Terms of Reference

The City of Toronto and Province of Ontario have published the Terms of Reference [TOR] for the “uploading” of subway planning, assets and funding to the provincial government.

The Ford Conservatives ran on a platform that included uploading the subway to Ontario while leaving day-to-day responsibility for it in Toronto’s hands.

  • Assume responsibility for subway infrastructure from the City, including the building and maintenance of new and existing subway lines (the “upload”); and,
  • Keep responsibility for day-to-day operations, including labour relations, with the City. [p. 1]

The scheme is intended to confer various benefits:

  • Expedited implementation of a greater number of priority regional transit projects, made possible by the Province’s ability to accelerate procurement, permitting and approvals, and to effectively undertake capital construction;
  • An enhanced ability to plan a more efficient regional transit network across the GTHA, with improved connectivity achieved, for example, through fare and service integration; and,
  • A greater fiscal flexibility to invest in and deliver additional transit projects, and to address essential deferred maintenance needs, which would be effected through amortized provincial capital expenditures on owned assets. [p. 1]

Leaving aside the enmity between Premier Ford and his former colleagues on Toronto Council, this is a classic case of debate over “governance” (who is in charge, who does what) while completely avoiding critical questions about “who pays”. There is a cottage industry in this sort of thing. “Governance” studies replace serious discussion about backlogs both of expansion and maintenance born of a lethal of combination of “we deserve” and “nobody pays”.

“Expedited implementation” has two basic requirements: decisiveness and financial commitment. Neither of these has been present in governments for some time, even without fundamental changes in political philosophy. Indeed, it is difficult to understand how a government so burdened with the need to drive down spending can talk about financing multiple concurrent transit megaprojects, let alone take over the cost of an existing system.

A “more efficient regional transit network” means different things depending on who is speaking. To some, “efficient” means significantly lower costs and is a red flag signalling union busting and privatization. Integration of service and fares has nothing to do with the ownership of transit systems, but rather with the rules under which they operate and are funded. If Queen’s Park wanted to let Mississauga Transit carry passengers in Etobicoke, this could be done with a simple amendment of the City of Toronto Act. The problem of a double fare between 905 systems and the TTC is a question of funding. If the total fare to carry someone from Richmond Hill to Bloor and Yonge is to fall, something has to make up the difference. Who actually owns the services (bus or subway) has nothing to do with it.

“Greater fiscal flexibility” for new transit projects and deferred capital maintenance is certainly available to Queen’s Park whose accounting regimen is very different from the one imposed on the City of Toronto, not to mention provincial access to a wider range of revenue streams. Toronto’s capital plans are hamstrung by two factors: one is the cap on borrowing costs relative to property tax revenues, and the other is Toronto’s decision to use up borrowing headroom on a few major projects. Ontario would simply borrow and leverage this debt against the “asset” of the transit system, or alternately would bury debt in the future cost of a partnership with a private company who would finance, build, operate and maintain provincial assets.

This is a politically motivated takeover, and the real questions lie in just what mechanism will be used, who will own and maintain what, and what potential exists for lasting damage to transit in general.

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Metrolinx Board Meeting: February 7, 2019 (Updated)

Updated February 10, 2019 at 9:00 am: Notes from the Board meeting have been added at the beginning of this article.

Relief Line Business Case

When the agenda was released, the Relief Line report created quite a stir with an apparent shift in Metrolinx’ position on the staging of subway expansion projects. Where “relief” taking precedence over the Yonge north extension only referred to the southern section (Pape to Osgoode), Metrolinx now shows a shortfall in capacity if the northern section (Danforth to Sheppard) is missing from the network.

This prompted a letter from Frank Scarpitti, Mayor of Markham and Chair of the York Region Rapid Transit Corporation Board. The heart of Scarpitti’s objection is that the Metrolinx report uses a mixture of demand models and assumptions to arrive at its conclusion, and that this is out of step with previous studies and approvals.

The Relief Line Business Case Development presentation paints a flawed picture of the ridership modelling work being undertaken by Metrolinx, in conjunction with York Region and City of Toronto staff. The vague and contradictory information being used to update the public on slide 7 regarding Line 1: Ridership Demand and Network Effects has, once again, pitted two critically needed infrastructure projects against one another, namely the Relief Line against the Yonge Subway Extension. This positioning is not supported by the ridership modelling analysis and is at odds with the advice and information presented by Metrolinx at a recent meeting.

On June 25, 2015, Metrolinx released the results of the Yonge Relief Network Study to the Board. Supported by a Stakeholder Advisory Committee and a Peer Review Panel, the Board endorsed the finding that “With the Yonge North Extension, the Yonge Subway will still be under capacity.”

The Relief Line Update uses a blend of data and methodologies to make broad assumptions about future ridership. Each subsequent ridership model claims to have better information, more detail and more sophisticated analysis. Some models include independent findings and more recently, to our objection, some have been relying heavily on market driven employment and population data, contrary to the required obligation of all municipalities to follow the Provincially-mandated “Growth Plan” numbers.

The Relief Line Update being presented to the Metrolinx Board on February 7, 2019 has, according to Metrolinx staff, blended the findings of at least three different models and does not accurately represent any of the individual modelling analyses. Slide 7 suggests that, in 2041, Line 1 will be below capacity and then over capacity when the Yonge Subway Extension is added. This is completely inaccurate – current Metrolinx modelling shared as recent as January 21, 2019 demonstrates that the Yonge Subway Extension adds a relatively minor number of riders to the peak demand location and, in no case, is it the cause of Line 1 becoming over capacity.

The facts are that only 20% of the new riders on an extension of the Yonge Subway line would be headed south of Bloor. Ridership growth on Line 1 is directly related to population and employment growth in Toronto. In fact, models show that ridership on Line 1 will exceed capacity regardless of whether the Yonge Subway Extension is constructed. We believe that by promoting the shift of as little as 10% of people from peak hour travel from the Extension to the Richmond Hill GO Line, and by using fare structure and level of service incentives, that substantial relief on Line 1 can be achieved while the Yonge Subway Extension is being constructed.

Modelling also shows that the majority of riders (80%) on the Yonge Subway Extension are headed to Toronto’s uptown employment centres north of Bloor, including St. Clair, Eglinton and York Mills. Furthermore, the Yonge Subway Extension will also serve a large number of Toronto residents that work in York Region Other initiatives are underway, or should be underway, to alleviate Line 1 capacity problems. Metrolinx’s 2015 study concluded that a number of planned and funded initiatives such as Automatic Train Control, more Rocket Trains, GO Expansion, and the opening of the Line 1 extension to Vaughan Metropolitan Centre will add capacity and offload the Line 1 demand.

These are serious challenges to the professional quality of work presented by Metrolinx planners.

The June 2015 report cited here was the Yonge Relief Network Study and it contains the quotation about the subway remaining under capacity even with the Yonge North extension. However, this depends on a number of factors:

  • The model year is 2031
  • Then-current projections for population and jobs
  • Assumed diversion levels for ridership to TYSSE and GO RER, net of demand added by new projects especially the Crosstown LRT at Eglinton

The reported projected that the volume/capacity ratio would have been 96% (2031) over the peak hour meaning that the super-peak would be above the line. The claim that the subway would still have capacity is “true” only on average and with no headroom for growth. Metrolinx planners should have known better to make that statement in 2015.

Metrolinx staff pointed out:

  • They are modelling for 2041, ten years later
  • The 2016 Census shows that core area employment is growing faster than predicted
  • Modelling now includes factors for latent demand and safety considerations at stations and platforms
  • If there is no alternate relief in place by 2041, the Relief Line North will be required

Staff also reported that although the Relief Line South approved concept (Pape to Osgoode via Carlaw and Queen) has a positive Business Case, the value is only slightly above 1.0. All six of the options were close to 1 and so the distinction between them is not as strong as the simple over/under status in the report might imply. With only a small positive margin, factors such as cost control and encouragement of Transit Oriented Development along the line will be important to maintain the supposed benefit.

CEO Phil Verster argued strongly that building the Relief Line does not preclude building other projects. His concern is to build more transit and build faster. Metrolinx is looking at (unspecified) new technology and innovation from industry to speed up the process. More than one line could be built concurrently, but the critical point is to open them in a sequence that causes the desired redistribution of demand.

Verster admitted that Metrolinx has not done enough to look at the Richmond Hill GO corridor for its potential contribution to relief.

A Board member asked whether the staff have identified a “tipping point” in safety for their studies. There is not a single value, but rather a variation from one location to another depending on local demand, station geometry and passenger flows.

Unspoken through all of this was the years of delay in admitting that a problem even exists, let alone of doing something about it. GO’s ability to provide relief has been downplayed for various reasons including the need to regrade the south end of the line to make it flood-proof, the winding valley route’s limitation of travel speed, and operational conflicts with CN’s freight traffic that limit GO capacity to Richmond Hill. Meanwhile, candidate John Tory’s SmartTrack campaign claimed that his scheme would eliminate the need for a Relief Line, and TTC projections did not raise alarms about capacity and safety issues until the situation at Bloor-Yonge could not be ignored.

“Relief” will not come from any one line or project, but from the contributions of several.

Financing and deliverability studies will be reported in spring 2019 for the Relief Line South, and a preliminary business case for the Relief Line North will be available by year-end.

This entire exchange shows the problems brought on by oversimplified presentation decks for the Board. In their oral remarks, Metrolinx staff displayed a more extensive grasp of the issues and details than contained in the Powerpoint deck.

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Thirteen

Today, January 31, 2019, this blog celebrates its thirteenth birthday.

Looking back over the past year is a dispiriting exercise, and I have been rather despondent through much of the fall thanks to political events at Queen’s Park and City Hall.

Transit limps along after years of underspending. Tax fighters cling to the idea that even an increase just to cover inflation is excessive, and constantly seek “efficiencies” rather than looking for improvements our city so badly needs. Marquee projects get the political attention, but they vacuum up available dollars while leaving promised new lines years, if not decades, away. Toronto has been running on hot air, and the deep freeze is more than a passing winter storm.

This will not be easy to fix especially when many politicians more than a few kilometres from Queen and Bay regard spending on Toronto as a provincial or national embarrassment, if not another chance to say “fuck off” to the city. If there is a silver lining to that dark cloud, it is the long-overdue recognition that transit needs far better funding than it receives. The backlog of unmet investment simply to keep the lights on and the wheels turning is much larger than transit officials would acknowledge in the past. The risk is that the hole is so deep, the time needed just to show a credible improvement so long, that as a city and region, we will just give up on transit. That would be a disaster.

In 2006 when I started this blog, the economy was buoyant, David Miller was Mayor, and there was a sense that Toronto might actually build a transit network. Despite its faults, the Transit City plan came out in early 2007, and gave Toronto something to aim at beyond eternal fights over a few kilometres of new subway.

Civic activism, especially among a new generation, was on the upswing, and the blog was born from the repeated question “what would you do”. The comment threads became as important as the articles themselves, and there are times I feel as if my online living room is a long-running salon for a mixture of political activists, professionals, transit geeks and city watchers. Note that these categories are not mutually exclusive and it’s OK to talk about recent sightings of 4523 while pondering the future of the transit universe.

Yes, this is unashamedly a pro-LRT site, and by “LRT” I most emphatically do not mean that piece of technological crap foisted on Scarborough by the Tories so many years ago. Queen’s Park pols of all stripes have a lot to answer for in the perversion of Toronto’s transit growth, and they showed no sign of changing over the decades.

There is a role for both streetcars in the most conventional sense and for LRT (streetcars on a semi-exclusive right-of-way) in Toronto and other cities. While Toronto agonized, Kitchener-Waterloo and Ottawa built their lines. Within the old TTC network, growing population density will feed a revived streetcar network if only we ever get enough cars to serve it properly, and give them the street priority over other traffic the riders deserve. Toronto’s tragedy is in Scarborough where years of political posturing, of selling a subway as the only thing worth building, the line that Scarborough “deserves”, will leave riders waiting for buses for years to come. On Toronto’s waterfront, better transit awaits the will to make a comparatively small investment to support huge population growth and a gaping hole in mobility to what was to be a “transit first” neighbourhood.

For all my love for rail transit, the case for much better bus service cannot be shouted too loudly. Buses carry over half of all transit trips in Toronto, and the subway would starve for riders without them. The TTC’s goals for better service are modest, and that is being kind. Showing a major change requires both a larger fleet and more garage space neither of which we will see in the near future. Only limited increases are planned over the coming decade. The TTC is content to advertise “express” services that, for the most part, already existed and now have only a new route number, not more buses. This is a sham, and both the TTC and Council should be embarrassed by the repeated claims that the express bus network is an “accomplishment”.

Fare policy in Toronto and in the GTHA needs a major revamp, but this should not be left in the hands of Metrolinx planners who see Toronto’s riders and their fares as a handy way to balance the books on cross-border travel costs. Queen’s Park looks to take over Toronto’s subway, although they have yet to commit to funding at the level it really needs. Never far in the background is the Metrolinx scheme to treat the subway as a “premium” service.

What we never discuss as a city is what transit should look like. This does not mean drawing your favourite fantasy map regardless of the modes you prefer, or the colour of lines. How much mobility should be available to everyone? How broadly should this be supported by public funding?

Should transit investment be hostage to whatever “private sector” financing scheme is the flavour of the day, or should transit be provided as a basic service funded from taxes on the economy as a whole? Should Scarborough, just as one example, be told it can’t have a new route or station because no developer is willing to put up the money?

All of this is very dark, gloom-and-doom stuff, and we must not lose sight of the fact we activists are all trying to make things better for transit and many other parts of city life. The swan at the top of my posts, and my Twitter handle @swanboatsteve, come from a sense of humour, even if that whimsy is only a defense against what passes for political leadership these days.

Thanks to all the readers whether you leave comments or not (the lurkers know who they are) because robust discussions about the future of our transit system are important.

The Swan Boat Salon remains open!

Toronto City Budget 2019 and the TTC

The City of Toronto launched its 2019 budget on January 28 and as usual the overwhelming preoccupation is to keep property taxes down. This has pervasive effects throughout the budget in ways that are not always obvious.

The TTC has been granted an increased subsidy for 2019 (matching the one built into their own recently-approved budget) of $22 million. This is a combination of a $25.3 million bump for the “conventional” system and a $3.3 million cutback in Wheel-Trans funding because ridership growth has not been as strong as originally projected for 2018.

Another big bump lies in the Toronto Police Service who will get $30.3 million more for 2019. An important difference between the police budget and the TTC subsidy is that the City only funds about one third of total TTC costs, and so the proportionate increase on the gross TTC budget is much lower. Every City dollar going to the TTC has to be matched by two dollars from riders.

Across most other City departments and agencies, the money dedicated to the large agencies drains the pot available to everyone else.

Operating Budget and Property Taxes

The City budget process begins with the presumption that residential tax rates will go up by the rate of inflation which, for this year, is 2.55%. Other property classes rise at a slower rate as a matter of policy (a practice dating back to the Mike Harris era) driving down the ratio of non-residential to residential rates to make Toronto taxes on businesses more competitive with the 905 municipalities.

  • Commercial rates will go up by 1.28%, half of the residential increase.
  • Industrial rates will go up by 0.85%, one third of residential.
  • Multi-unit residential (apartment buildings) have a 0% increase courtesy of a provincially imposed freeze a few years ago.

Eventually (projected at 2023 in last year’s budget), the commercial and industrial ratios to residential will reach their target, and these taxes will start to rise at the same rate as inflation. However, in the meantime, although we have an “inflationary” tax increase, the City does not get the full benefit of that across all property classes and the overall revenue increase is only 1.8%. In turn that applies to the 37% of the total budget that comes from property taxes. The rest comes from user fees like TTC fares and transfers from other governments which might not rise at the rate of inflation, if at all. Any shortfall in that 63% of non-tax revenue directly eats away at programs and creates demand for better support from the property tax base.

The TTC gets its $22 million (one of the smaller increases in subsidies in recent years), but the budget problems are far from over.

Within the TTC budget, as I previously reported, there is a $24 million unspecified reduction that is hope to arise from various sources that together are worth about $32 million. The TTC has to “win” on 75% of these to find the savings they need, but they start behind the 8-ball with about 25% of the total being a claim against Metrolinx for the cost of supplementary bus service thanks to congestion from the Crosstown project. If Metrolinx doesn’t pay up, the TTC will have to run the table and get every other potential saving to break in their favour.

On the City side, there is more creative accounting.

Although the solid waste rate increase looks as if it is “inflationary”, the rebate reduction is a hidden tax increase because it involves $35 million in cost (the rebate) that in previous years was paid from the property tax. The City’s intent is to roll back all of these rebates over the next three years so that all solid waste fees represent the full cost of sevice rather than a subsidized one. The effect is somewhat like reducing transit subsidies while failing to mention that fares were going up. This dodge was picked up immediately by the media, and is among the many bits of sleight of hand Matt Elliott describes in his new City Hall Watcher blog.

The refugee contribution is hoped-for subsidy from Ottawa matching their 2018 payment toward housing refugees. The issue is under discussion between Mayor Tory and the Feds, but if this does not come through, it will leave a big hole to fill with cuts elsewhere.

The Capital contribution reduction relieves the spending pressure in the Operating Budget, and hence on property taxes, but this comes at a cost. More capital works are paid for with debt rather than from current revenue, and the projected jump in 2020 to get back on track with this item will make balancing that budget harder. Capital-from-current, or CFC, is the equivalent of renovating your house, but paying some of the cost out of today’s income to reduce borrowing. If you get in the habit of borrowing more, it is much harder to return to a budget where you pay-as-you-go at a comfortable rate. The 10 year Capital Plan foresees CFC rising from $340 million in 2019 to $426 million in 2020 and more than doubling to $754 million by 2026.

Finally, there is $10 million in an unspecified reduction that the City Manager hopes to find within management staff, and indicated that similar savings might be attempted in future years.

Not shown in this list is the Land Transfer Tax (LTT) because it is assumed to bring in the same revenue for 2019 as it did in 2018 even though the monthly numbers have been falling through the latter part of 2018. City staff offered little beyond fond hopes that this revenue stream will recover through 2019.

Collectively between the City’s and TTC’s budget, there are many changes that cannot be reproduced year-over-year, or which depend on economic luck to work in our favour. We might muddle through 2019, but in 2020 we could be in for a shock.

One cut that was buried in the details is that the transit Fair Pass program, Phase II, will not be fully implemented as originally planned. In this phase, recipients of Child Care or Rent Supplement allowances were to become eligible, but in fact only those getting the Child Care allowance will join the Fair Pass program in 2019. Another problem with the Fair Pass pricing – many “eligible” riders don’t use transit enough to make buying the pass worthwhile – is a separate problem not even addressed in the budget.

Capital Budget

The Capital Budget faces severe funding problems in the 2020s because the City’s appetite for new projects, not to mention needed ongoing State of Good Repair (SOGR), exceeds its available borrowing headroom. The City’s target is that debt service costs not exceed 15% of tax revenues. This used to be a hard cap so that no individual year could crest above the line, but is now treated as a moving average.

The problem with this chart is quite obvious. Years 2020 to 2026 are all “above the line”, while 2019 is “below the line”. This means that no borrowing can be added until years beyond 2028 while the Cit digests the years of higher borrowing. The future poverty of our capital budget is baked in to this chart.

That bulge in the 2020s also matches the bulge in the TTC’s capital needs, most of which are unfunded, in its 15 year Capital Plan.

During his presentation, the City Manager observed that the City was taken by surprise by the TTC plan which represented a five-fold increase over spending the City “knew about”.

Horsefeathers.

The TTC has been producing a Capital Budget for some years that clearly shows about $6 billion in funded projects plus another $3 billion in unfunded items, and many more that are “below the line”, not even formally in the 10-year budget. To this must be added an extra five years’ worth of spending in the 15-year budget, and the long overdue acknowledgement of some capital projects that were no secret to any TTC watcher.

The change simply is that the City can no longer pretend that only the approved $6 billion worth of projects actually exist.

The City’s overall SOGR level appears to rise moderately over the next decade, but this too is an illusion as City staff pointed out during their presentation.

In the chart below, the green line shows the total backlog which rises from $7.759 to $9,506 billion, a modest 22.5% increase over 10 years. However, the other lines split out three components:

  • The Gardiner Expressway’s reconstruction from Jarvis to the DVP eliminates its SOGR backlog (red).
  • Toronto Water’s ongoing investment in new plant reduces its backlog from $1.453 to $0.208 billion (blue).
  • All other components of the backlog rise from $4.227 to $9.243 billion or more than double (amber).

Without the $3.5 billion backlog from the Gardiner and Toronto Water, the 10 year increase in the SOGR deficit is far from modest, and shows a city unwilling to pay to maintain what it already owns.

Looked at in more detail, the situation for some accounts is even more dire.

  • Transportation Services (mainly roads and bridges) goes up to three times its current backlog.
  • The TTC backlog grows from a sliver to $0.755 billion, and this does not include expansion projects nor the formerly below-the-line items now in the TTC’s Capital Plan.
  • The TCHC backlog increases by 80% leaving a large amount of public housing in Toronto in much worse shape than it is today.

To put the TCHC backlog in proportion, it is only slightly less than the cost of the Scarborough Subway Extension. Why do we have money for a new subway, but not for housing?

[Adapted from City Budget Presentation at p. 46]

The City Budget Appendices break down planned spending into departments, agencies and projects. The last page includes planned spending and borrowing.

The Scarborough Subway Extension is near the bottom at a cost for the next 10 years of $3.328 billion. This is based on the current SSE cost estimate which is to be revised in April 2019 based on current design work. Note that there is comparatively little borrowing for the City’s share of this project thanks to the accumulated revenue from the SSE levy which is bringing in about $40 million annually.

SmartTrack does not appear explicitly in this budget because it is currently bundled in the line for Facilities Management under Corporate Services. The project estimate will be updated in April, and at that point the project line, at least for funding purposes, will be moved to the TTC budget.

The Gardiner also does not appear here with its own line because it is part of the Transportation Services budget.

There is no money for any other substantial TTC expansion, only for design work on a few projects included within the TTC’s budget.

In April 2019, City staff plan to bring forward a compendium report on all of the major projects (SSE, SmartTrack, Waterfront, Gardiner and others) with up to date estimates. This will obviously trigger changes in the Capital Plan as published here.

As yet there is no sense of how the City of Toronto and other governments who help to fund transit will actually pay for everything the politicians have put on maps, and for everything Toronto needs.

TTC Operating Budget 2019: Part II – Revenue and Expenses

This article continues my examination of the TTC’s 2019 Operating Budget which began with a review of the proposed fare increase.

Understanding the budget can be challenging because it presents the TTC’s status in a manner that does not directly align with actual experience. Every year, the new budget is prepared showing the changes from the previous one, but in fact operations during any year rarely produce the budgeted numbers by year-end.

Factors such as shifts in energy prices, unexpected changes in labour legislation, and extraordinarily bad weather can combine to throw off the final results. Depending on circumstances, this can have various results.

  • If the budget is running tight because of unexpected expenses or farebox revenue falling below projections, service increases planned for late in the year could be deferred, or some maintenance might be put off to the following year.
  • Expenses may be high in one account, but lower in another, and collectively these could offset each other.
  • Revenue may run higher than expected and planned service improvements might be deferred with the combined effect of creating a “surplus”. This is not unusual when budgets are crafted with room to handle in-year variations. It also sets a base for the following year’s budget higher than might otherwise be available.

On a total budget of $1.9 billion, a few percent one way or another is to be expected. However, two percent, or $38 million, is equivalent to more than 1% on the property tax if this were a shortfall to be covered by the City. A further problem is that from the Council’s point of view, only the “net” budget matters because that is the part which the City pays for. This magnifies swings in the budget so that a 1% change at the gross level becomes a 3% change at the net level assuming other revenue (mainly fares) comes in as expected. By year-end, any shortfall cannot be made up from the farebox, and the City would have to absorb it all.

This budgetary math creates a situation where there is strong pressure to keep the subsidy requirements below budget and, ideally, to “give back” unused subsidy to address other City funding requirements. The TTC may aim to improve service and operate according to standards, but this is all “subject to budget”.

These are budget-to-budget numbers and they show a 3% increase in the requested subsidy from $741 million to $763 million. The “conventional” system goes up by $25 million, but this is offset by a reduction in the Wheel-Trans subsidy caused by lower-than-projected growth during 2018 relative to the budget.

2018 Probable Results

Some context for the 2018 numbers is available in the CFO’s Financial Update for the third quarter of 2018. Although revenue is lower than projected, expenses are even lower requiring less subsidy than the budget foresaw. This will eliminate the draw from the Stabilization Reserve leaving these funds available for use in the 2019 budget.

The TTC’s goal is to preserve improvements that affect customer service, and this is achieved by whittling away at expenses behind the scenes. “Efficiency” is always a watchword, but there is a point where there is nothing left to cut without harm to the organization. In 2019, the TTC has again managed to find cost savings, although some of these have external causes and/or are one time changes that cannot be sustained in future budgets.

Through all of this, there is only minimal discussion of service improvements simply to keep up with the Board-approved Service Standards.

As I reported previously, the TTC’s scheduled service on the bus network only increased from 1,560 to 1,582 vehicles between the November-December 2017 schedules and their 2018 equivalent. The Express Bus Network added about 30 buses to affected routes, but this means that service elsewhere at best held steady.

The January 2019 CEO’s Report shows that the TTC is attempting to address overcrowding and has made some progress since 2017, at least on paper.

Riders in the real world might beg to differ, especially in recent days where system reliability coupled with increased demand has given transit a very black eye.

The TTC’s Service Budget includes provision for a roughly 2.8% increase in 2019.

Although the TTC reports on route reliability, the most recent report is for August 2018. This measures “on time departures” from terminals which do not represent the service most riders see along major routes. As I have discussed in other articles, the “standard” which is measured has so much slack in it than the bunched service commonly seen by riders falls within the allowable “on time” standard.

If the TTC is going to improve its credibility with riders, not to mention get better utilization out of its fleet, it must address service reliability by doing more than reporting a meaningless index.

As for crowding, the TTC has not published route-level riding and crowding statistics for a few years, and there is no tracking data to show the state of the system.

Continue reading

TTC 2019 Operating Budget: Part I – Fare Increase

The TTC’s Operating Budget and a proposed fare increase will be considered by its Board on January 24, and subsequently by Council through its budget process. Management recommends a ten cent increase in the adult and senior/student fares with proportionate increases in multiple fare media (passes or their equivalent on Presto).

The new fares are projected to generate $25.6 million in revenue the TTC otherwise would not get for the nine months from April 1 (when they would go into effect) through year-end. The TTC is also seeking $22.0 million in additional City subsidy to cover costs, many of which were already mandated by Council, that only existed for part 2018.

Working through the Operating Budget is always a challenge not least because the numbers are presented on a budget-to-budget basis with little reference to actual results. What typically happens each year is that if a shortfall by year-end is foreseen, expenses will be cut back to fit the available funding. Conversely, results can be better than expected and the TTC winds up with a “surplus” which is really a lower subsidy draw than budgeted.

Unexpected costs and savings can occur for a variety of factors including changes in pricing versus initial estimates (common for energy costs), legislative changes affecting employee working conditions and benefits, ridership above or below forecast, and a mix of fare revenue that yields a different average fare per ride. Collectively, these amounts can range above $100 million and many of them are not under the TTC’s direct control. Council, however, is terrified by even a $10 million extra call on subsidies because this represents roughly a 1/3% property tax increase. Ideally (for the politicians), the TTC should come in under budget and thereby “save” money versus original subsidy projections.

I will explore the TTC’s costs and revenues in the second half of this article, but for now the question on everyone’s mind: fares.

Fare Structure

To save everyone asking, yes, I support the fare increase, but with some caveats discussed later in this article.

For many years there has been a call for the TTC to return to a 2/3 farebox, 1/3 subsidy ratio as a “fair” balance between riders and government support. In the 2019 proposed budget, fares will cover 62.6% of total expenses, and a further 3.7% will come from miscellaneous revenue such as advertising.

There is a basic problem with picking any target as the “ideal” farebox:subsidy ratio. If policies such as fare freezes drive the ratio down, there will be “relief” for riders in the short term, but eventually one will reach the new plateau and be faced with annual increases. One cannot simply keep moving the goalposts especially when better service and system capacity are important to the transit system’s credibility.

The table below is taken from the TTC’s 2019 Operating Budget report.

The single fares for both adults and seniors/students will rise by ten cents, and so there is a higher percentage increase on the concession fares than those for adults. The various classes of passes go up by roughly ten cents times the existing “fare multiple” versus single fares. For example, a regular monthly pass is $146.25, or 48.75 times the $3 single fare. The pass goes up by $4.90, or 49 time ten cents. Other passes shift by their respective fare multiples.

Fare increases are often criticized as hurting those who cannot afford to ride transit and this is part of a larger issue with poverty in Toronto. Toronto has a “Fair Pass” program which provides a discounted pass to those who qualify, although the list in the current phase of this project is quite restrictive. The three phases proposed in 2016 were:

  • Phase 1 – starting in March 2018 – includes only Ontario Disability Support Program and Ontario Works clients not in receipt of transportation supports
  • Phase 2 – starting in March 2019 – extends eligibility to residents receiving housing supports or child care fee subsidy whose household income falls under the Low-Income Measure +15% eligibility threshold
  • Phase 3 – starting in March 2020 – extend eligibility to all other Toronto residents living with an income below the Low Income Measure +15% threshold.

The estimated cost of this program was

  • $4.8 million in 2018,
  • $13.0 million in 2019,
  • $36.2 million in 2020 and
  • $48.0 million at full rollout in 2021.

There is no indication of whether the second and third phases will be funded by the City although statements by the Mayor imply that programs already in the works would be funded for 2019. The bigger jump will come next year.

The TTC and the City face difficult choices about expenses and revenues, but this should not stop them from looking beyond current approvals.

  • The Fair Pass should be funded as proposed for Phase 2 in 2019, and direction should be given that funding for Phase 3 be included in the 2020 and following budgets. That is a challenge for Council because the jumps in 2020 and 2021 represent roughly a 1% property tax increase between them.
  • The concept of a Fair Pass discount should be reviewed for poor seniors for whom the Fair Pass is only a minuscule discount compared with regular seniors’ fares.
  • Presto cards should be available from the TTC at a nominal cost, say $1 or $2, not the $6 now charged. Riders should not be dependent for cheaper or free cards on TTC giveaway programs when they occur.
  • With the move of cash fares to a collection mechanism that will issue a fare receipt, the two-hour fare should be extended to those who pay cash. This is the only group who will not have this privilege under the current plans (see below). For the purpose of the two-hour transfer, any single fare should be eligible.

The shift to electronic media will continue this year as various existing formats are phased out. I clarified some issues with Heather Brown at the TTC, and her replies are quoted below.

  • Although the Day Pass is shown in the table above, the TTC intends to drop it at a date to be announced later in 2019. Their position is that the two-hour fare introduced in late 2018 provides a discount for chained trips (hop off, hop on riding), and the Day Pass is now superfluous. This also means that the weekend and holiday “family pass” function of the Day Pass will disappear. However, there are still plans for a Day Pass ticket (see below).
  • Although this is not before the Board in January, management plans to recommend that the Weekly Pass be replaced by a trip cap within Presto. The number 16 has been suggested, but this is still to be confirmed when the Board discusses the matter in February.
  • Tokens and tickets will be replaced by Limited Use Media or “LUMs”, cardboard versions of Presto cards that will be valid in “one-ride, two-ride and day-pass ticket formats”. LUMs will be available for purchase from Presto machines starting in June. Fares paid using them will get the same two-hour transfer privileges of regular Presto cards. Current plans are to stop sale of tickets and tokens in late summer 2019, and stop accepting them for fare payment in 2020.
  • LUMs will only be available for Adult fares. Those who wish to receive concession fares will have to switch to using a Presto card.

Cash fares will continue to be accepted on buses and on the older streetcars pending their retirement, and in subway stations where there is a farebox available.

“Once we no longer have fare boxes at those stations / across the system, customers wishing to pay buy cash will need to purchase a PRESTO Ticket. Those customers who want to continue to pay the concession fare should switch to a PRESTO card and set their card to deduct a youth/senior fare.”

Someone who pays cash into a farebox will need a receipt that is capable of being read by fare gates for connections at locations that do not have a closed transfer connection (e.g. Dufferin Station) and this would also apply to cases where buses are substituted on routes normally served by new streetcars with fare vending machines.

“Customers will be provided with a product that will open the fare gates. We’re still looking into what this option will be.”

Fares paid by cash will not be eligible for the two-hour transfer privilege.

“Customers who pay by cash aren’t eligible for a timed transfer. The transfer rules for those customers paying by cash will remain as they are today, a one-way continuous trip, with no stopovers, within a reasonable amount of time. Customers who require transfers on a streetcar, after the C/ALRVs retire must pay at the Fares and Transfers Machine and obtain their transfer from there, as they do today on the low-floor vehicles.”

The arrangements for cash fares still do not address how someone with a paper fare receipt such as that issued on a streetcar will access a subway station, especially if the transfer rules enforce only “official” transfer locations and a car is on diversion, a common situation downtown.

Regional Fares

The question of regional fare integration has fallen into a black hole ever since the ascension of the Ford government at Queen’s Park and the repudiation of the previous government’s spending promises. These included a $1.50 discount for cross-border trips for adult single fare payers using Presto, as well as lower fares for short distance trips on GO Transit. What, if any, part of this will be implemented will probably have to wait at least for the provincial budget in March 2019.

That discount, of course, was flawed in that it was not available to those who travelled using a pass, only single fare riders, and the GO+TTC cofare already in place offers a much smaller discount for seniors and students than for adults.

There has been no public discussion of integrating fares so that, for example, a “two hour fare” ignores the boundaries between all local transit systems.

All of this is further complicated by Queen’s Park’s planned “subway upload” and the as-yet unknown financial arrangements for operations and maintenance of the system.

$33 Billion and Counting (Part II)

In the first article in this series, I reviewed the Capital Budget and Plan that covers the years 2019-2033 for the TTC. There are three reports on the January 24 Board agenda related to this subject:

This article concentrates on the “Making Headway” report which is a glossy overview of the 15 Year Capital Plan. It is a generally good report, although there are annoying omissions of detail that would flesh out its argument.

This report deals mainly with “state of good repair” (SOGR) projects that involve rejuvenation of existing infrastructure and expansion necessary to handle growing demand. New lines are not, for the most part, included in the report although plans for them are reflected in SOGR planning where they trigger expansion of existing capacity. Leaving out new projects like the Richmond Hill extension may be a political decision, but this means that the context for some recommendations is incomplete. A useful update would be to produce a consolidated plan showing the “new” projects and the time-critical events they trigger (such as fleet expansion or replacement and station capacity issues).

For many years, the TTC, the City of Toronto and its so-called funding partners have been content for the official SOGR backlog to stay out of sight. This has the triple benefit of reducing the projected borrowing TTC projects will require, making the benefit of capital funding the TTC does receive (mainly from gas tax) appear larger than what is needed, and avoiding difficult questions about spending on new projects in the face of a gaping hole for existing maintenance. This must stop, and the “Making Headway” report certainly puts the TTC’s needs in a different, and far more critical, light.

A backlog of deferred maintenance has grown, putting the safety, accessibility and sustainability of our transit system at risk despite the need to move more customers more reliably than ever before. [p. 7]

One cannot help remembering the soothing words of TTC management in the early 1990s when recession-starved governments cut back on transit maintenance, and the TTC said they could get by on the money they received without compromising the system. Then there was the fatal crash at Russell Hill and, bit by bit, Toronto learned just how badly the TTC’s condition had fallen. The CEO at the time (a position then called “Chief General Manager”) went on to become a Minister in the Harris government that slashed provincial transit funding completely. Things appear to be different today with the TTC calling out for better funding, although at a time when the last thing any politician wants to hear is a plea for more spending.

One page should be burned into the souls of anyone who claims to support transit’s vital role:

It is easy for the need to invest in our base transit system to be overshadowed by the need to fund transit expansion. But investing to properly maintain and increase the capacity of our current system is arguably even more important.

Population growth and planned transit expansion projects such as SmartTrack, the Relief Line South, the Line 2 East Extension to Scarborough and new LRT lines on Eglinton and Finch West will add hundreds of thousands more customers to Toronto’s transit network.

The result will dramatically increase pressure on a system already grappling with an aging fleet, outdated signals on key subway lines, inadequate maintenance and storage capacity, and tracks and infrastructure in need of constant repair.

Without the investments outlined in this Plan, service reliability and crowding will worsen, as the maintenance backlog grows and becomes more difficult and costlier to fix. This is the fate now faced by some other major transit systems in North America that allowed their assets to badly deteriorate.

Our customers, our city, our province and our nation can’t afford to let that happen. [p. 8]

This is not the message recent and current leaders in Toronto and Ontario wanted to hear, and they collectively are to blame for the mess we are in today.

Although some items, particularly those in the second decade of the plan, are not fully costed, the items are included to raise awareness that they exist.

Given the scale of the investment required, however, it would be irresponsible to delay conversations about funding until estimates are exact. [p. 9]

There is a mythology about transit assets, particularly subways, that they last a century. This is nowhere near the truth, and those who push such claims as a justification for subways as a preferred mode are flat out liars. Only the physical structure lasts many decades, and even that requires ongoing repair. Components such as trains, track, escalators, electrical systems, signals, tunnels, pumps and station buildings require repair and replacement at regular intervals. The Yonge subway, now over 60 years old, is on its third set of trains, and the Bloor-Danforth line on its second. All of the track has been replaced two or three times. Stations do not have their original escalators, and the ones now in place are coming due for major overhaul or replacement. The list is endless. A subway is not a “build it and forget it” project any more than a new car or a new house.

When the existing system is asked to carry far more riders, more is needed than a new coat of paint. More trains and bigger stations are just a start, and the analogy would be trading up to a family SUV or moving to a bigger house. If Toronto were a stagnant city with little population or job growth, this would be less of an issue, but Toronto is instead a booming area facing problems of growth it cannot serve or chooses not to serve adequately.

The chart below shows how many aspects of a transit system are linked together. We cannot simply say “buy more buses” or “run more trains” and think that every problem is solved. This problem is compounded when any “improvement” we make vanishes into the black hole of deferred maintenance, making up for what we should have done years ago.

Seen from a high level, the $33.5 billion plan breaks down like this:

Of the “funded” portion, about one third depends on assumptions regarding available funds from various sources in the second decade of the plan, and the remainder is based on the current known commitments of various government. This is less than certain with provincial plans to take over ownership of the subway system and responsibility for funding its capital maintenance. Note that in the chart above, 65% of the total is subway related. This would leave Queen’s Park on the hook for $22 billion over 15 years, and that does not pay for system expansion.

(For clarity, some of the spending included above is on works in progress such as the ATC signalling on Line 1 YUS, and the delivery of new streetcars. Only the costs in 2019 and forward are included in the figures here.)

Funding vs Financing

This report deals with the funding needs of the transit system. The distinction is often blurred between getting the money (funding) and paying for it (financing). The distinction is that if you buy a car, somebody (you, or more likely your bank) pays for the vehicle. The dealer and the automaker are happy, but you now have a debt. That’s “financing”. A slightly more creative scheme would be for you to rent the car so that someone else (a leasing company) actually owns it, but this is still “financing”. Real money changed hands somewhere, although the leasing company would get a better price on a fleet purchase, and they have tax write-off opportunities that you probably don’t.

Money could come from outside investors who may simply provide financing secured by future revenues (taxes on new development, for example), or might build or buy and even operate assets on our behalf. But one way or another, we have to pay for them unless new money with no strings attached appears out of thin air. That’s how one-time grants for major projects like subway extensions work. Governments give the TTC money with which to build new lines, but the cost stays on the government’s books and is not a future charge against the transit system. That’s a system the province doesn’t like one bit, and that is why Ontario wants to own and finance projects if only because the accounting looks better without that “gift” to Toronto.

There is a great debate over where we will find $33.5 billion, but there is no way to make that number vanish short of simply not undertaking the projects it will fund.

Continue reading

$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.

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