My thoughts on the latest installment in the John Tory SmartTrack “planning” saga are now up on the Torontoist.
Comments should be left there.
My thoughts on the latest installment in the John Tory SmartTrack “planning” saga are now up on the Torontoist.
Comments should be left there.
Metrolinx/GO has announced a series of public meetings through November 2016 dealing with some aspects of the electrification project.
GO Rail Network Electrification Transit Project Assessment Process (TPAP) (Hydro One as co-proponents):
• The focus of this round of public meetings will be to provide an update on the project and conceptual design of the Traction Power Supply and Distribution components.
• The focus of this round of public meetings will be to provide an update on the project and seek feedback on the environmental impacts.
• The focus of this round of public meetings will be on existing conditions.
Further information and a list of meetings is available in the Metrolinx announcement.
Two weeks ago, I wrote about the receivable on Metrolinx’ books for supposed “municipal contributions” that have not been paid, but instead have been funded temporarily by Queen’s Park. This has been going on for roughly a decade and the bills are piling up, now over a billion dollars.
I posed a series of questions to the Minister of Transportation’s Press Secretary, and received a friendly, sunny, but utterly uninformative reply.
Firstly thank you for your e-mail and questions – it is nice to e-meet you! I saw your blog piece from earlier this week and the Qs you submitted to Patrick re: the existing framework for municipal contributions to GO Transit growth and expansion capital costs, potential future municipal contributions to major transit initiatives in the region and the Province’s Dedicated Gas Tax Program.
There are two Regulations under the Metrolinx Act, 2006, which are intended to assist the Regions of Durham, Halton, Peel and York, and the Cities of Toronto and Hamilton, to collect development charges (DCs) to help offset their respective contributions to GO Transit growth and expansion capital costs:
1) O. Reg. 528/06, which sets an expiry date for GO Transit DC by-laws; and
2) O. Reg. 446/04, which prescribes the allocation of the expected municipal share of the GO Transit growth and expansion capital costs amongst the municipalities.
The municipal contributions to GO Transit growth framework were put in place to establish a fair and balanced approach to support GO capital expansion in communities across the region. All municipalities in the Greater Toronto and Hamilton Area benefit from an effective GO Transit network, and the Province remains committed to working with all of our partners to expand and deliver this network. Given the transformational $13.5 billion investment that the Province is making to strengthen the GO network through the 10-year GO Regional Express Rail initiative under the Moving Ontario Forward plan, we recognize that this commitment to working together with all of our partners to build and optimize an integrated, regional transit network is even more critical.
As you note in your email, the two Regulations permit GO Transit DC by-laws to help the municipalities offset their expected contributions – per the allocation formula set out in O. Reg. 446/04 – to Metrolinx for their share of GO Transit growth and expansion capital costs. The contributions made by municipalities are not directly linked to any specific expansion projects, but, rather, they are applied against the GO Transit growth and expansion capital program, as a whole.
With respect to your questions related to the Dedicated Gas Tax Program, the funding of two cents per litre of gasoline sold across the province was made permanent through the Dedicated Funding for Public Transportation Act, 2013. The Ministry of Transportation allocates these funds through the Dedicated Gas Tax Program based on a formula of 70% ridership and 30% population for eligible municipalities. All of the factors, including the funding envelope, ridership and population, are updated annually for each program year. The funding envelope for the 2015/16 program was $332.9 million, up from $321.5 million in 2014/15. The Province has provided the City of Toronto with more than $1.75 billion through the Gas Tax program since 2003, including $169.2 million for the 2015/16 program.
Thank you again for your questions.
[Email from Andrea Ernesaks, Press Secretary and Issues Manager, Office of the Hon. Steven Del Duca, Minister of Transportation, September 30, 2016]
Despite the reference to an “expiry date” for GO Transit Development Charge by-laws, this date has been changed every few years and currently sits at the end of 2016. Based on past experience, one might reasonable expect this will be extended again. The municipal allocations have not changed since this charge was introduced despite substantial shifts in population balance around the region and a change in the type of journey that the Metrolinx network serves, especially with planned expansion.
The concurrent mention of the $13.5 billion to be spent on GO RER and “working with all of our partners” suggests that Queen’s Park might include RER in the cost base for calculation of future contributions from the municipalities. If this is so, then the Minister should say so, and all announcements should have a little side bar, an asterisk to a footnote saying, “oh, by the way, your municipal taxes will help pay for this photo op”.
Nothing in the legislation (acts and regulations) explains how “capital requirements” are calculated, which projects would be included, nor how the proportional allocation should be assessed against municipalities. It just appears out of thin air as part of the GO (now Metrolinx) budget. The amount is a not linked to specific projects, but somehow it gets calculated.
The info about the Gas Tax program is not news, but the concern municipalities have legitimately is that an increasing portion of this grant might be clawed back by charges to support Metrolinx rather than their own local programs. This is complicated by the fact that Queen’s Park threatened to withhold the Gas Tax from municipalities that didn’t play ball with the selection of Presto as their fare card. Going forward, we know that back charges for operation of the Metrolinx LRT lines to the municipal level are likely, but the amount has not yet been settled.
The basic point here is that the provincial largesse and support for transit comes at a price, and that will be carved out of money that nominally flows to municipalities for their own use on transit. Toronto’s $169.2 million is now split between the operating and capital budgets. Other monies do flow from Queen’s Park for TTC projects, but they are earmarked to those specific works such as the subway extension to Vaughan.
Moreover, given the state of provincial finances, will this billion dollar “debt” become payable by the municipalities? Toronto’s half-billion share would take a huge bite out of the city’s budget, and an ongoing charge of roughly $90 million could more than halve the value of the gas tax grant.
The Minister might contemplate some of the background information to the Metrolinx Investment Strategy reports which includes a history of GO Transit development charges, a description of the wide gap between the amounts actually collected and the amount anticipated (25% of GO’s capital program). Specifically the Metrolinx Review of Development Charges at pages 6-7. Note that this report dates from January 2014 and therefore does not reflect all of the charges that have accumulated to date. It also speaks of $100 million in revenue from municipal development charges, but the chart below clearly shows that this is far short of the “expected” contribution.
These are not trivial questions, and so I have asked, again, for an explanation. To date, nothing has come to my mailbox. My latest query follows below.
Rummaging in financial reports can lead to interesting discoveries, although we usually read about them when some financial hound exposes dubious accounting practices and drives down the value of a company’s shares. Indeed, the Globe’s David Milstead had a long article on just how pervasive the use of non-standard accounting has become in corporate reports.
In the public sector, various mechanisms are used to reduce apparent debt and exposure to future costs. Some of these involve judgements about just when bills and revenue will roll through the door, or of exactly who will pay these bills as they come due.
In a previous article, I wrote about the TTC’s newfound mechanism called “Capacity to Spend” which reduces future funding requirements by roughly as follows:
This is a basic case of revaluing the exposure to future costs to make long term funding (including borrowing) needs appear lower than they really are. This year brings an extra incentive with federal funding that requires matching municipal contributions, money Toronto does not have. But hey, presto!, if we reduce the future spending, at least on paper, we have “found” money with which to pay the local share of the fed’s new program.
Meanwhile up the road at Queen’s Park, a lovely myth for the past near-decade is that there is a “municipal share” to the GO Transit capital program. Most people don’t know about this, and Toronto has refused to actually pay into that pot for several years.
The mechanism was set up back when GO Transit was a separate agency, and it has been passed down through successor organizations to its current home, Metrolinx. The amount of money outstanding is not trivial.
By the end of Metrolinx’ fiscal year March 31, 2016, the accumulated balance of deferred municipal contributions totalled $1.1 billion. The proportions owed by each municipality are set by regulation, and Toronto’s share is just under half a billion. The proportions assessed to each region have not changed since this charge was instituted although one could argue that population shifts and the focus of GO expansion would suggest a different ratio is in order.
Toronto does not carry an account payable for this amount on its books. Meanwhile, in every financial statement, there is a note in this format:
Metrolinx realized a shortfall in municipal funding related to its capital program. The Province has provided funding to bridge the shortfall in the current year in the amount of $141,097 (2015 – $171,111) and the cumulative amount is $1,114,484 (2015 – $973,387). The Province will work with its municipal partners to address the funding shortfalls. [Note 12 to Metrolinx Draft Financial Statements for the year ended March 31, 2016]
What is unclear is whether Queen’s Park will ever call this debt due, or if it will simply be written off as a provincial contribution to GO expansion.
This charge is intended to recover costs for general GO expansion, and it does not include:
Missing from all of the annual reports is any indication of just which GO projects these contributions aided. Indeed, the amounts are intended to go into the general subsidy pot at GO without being tied to its work with the assumption that everyone benefits from “more GO” in the end.
An ongoing problem with provincial funding is that there are various ways that the gas tax grants now paid to municipalities are clawed back. There has been almost no change in the level of gas tax provided, and the amount coming to Toronto has been sitting at about $160m for many years. (Toronto apportions this partly to capital and partly to operations.) The effective value of this contribution falls due to inflation. If Toronto had actually paid their Metrolinx assessment in recent years, this would have wiped out half of the gas tax grant.
In 2017, the TTC is making provision in its budget for additional costs related to Carbon Taxes. This will further erode the contribution from Ontario.
The combined effect of all this will be that, at some point, all of the provincial contribution via gas tax will be consumed by paybacks under various levies and fees.
In an attempt to illuminate this issue, I posed a series of questions to the Minister of Transportation:
Which projects now underway or planned will trigger additions to this outstanding balance including, but not limited to, such things as:
- Ongoing GO improvements (non-RER)
- GO RER
- LRT and BRT projects
In other words, although Ontario has not actually collected on the receivable, will it continue to grow and, in effect, will municipalities be expected to eventually contribute to “provincial” projects, and at what level?
Many projects do not fit into the classic GO Transit model of serving downtown Toronto. For example, York VIVA BRT, The Hurontario and Hamilton LRTs, and the Toronto Crosstown and Finch LRTs serve a very different travel demand from GO’s rail network.
Will the formula for allocating these costs be changed to reflect the service territory and areas benefiting from the projects where municipalities are expected to make a contribution?
Although Ontario makes significant investments in transit, its budgetary effect at the local level will be offset by chargebacks including:
- The deferred Metrolinx receivable above
- Future costs for Presto which is expected to become self-sufficient and will require increases in service fees to local providers to do so
- Future costs for LRT operations
Starting in FY 2011-2012, there was a large increase in the annual charge added to the receivable, an average of $183m/year over the last five years, of which Toronto is responsible for $81.6m/year. What projects contributed to this charge and what was their total value (in effect, my question is what proportion of these projects was back-charged to the municipalities)?
When I receive a reply to these questions, I will update this article.
Toronto Council has approved the transit plan for Toronto featuring Mayor John Tory’s SmartTrack line and the Scarborough Subway after a long debate on July 14, 2016. Notwithstanding severe problems with financial pressures and the blind faith needed to expect that the entire package can actually be funded, Council added a few pet projects that never quite fade from view thanks to the efforts of individual members.
LRT proposals for Eglinton East and West survived the vote largely because they are part of larger packages – SmartTrack in the west, and the Scarborough Subway Extension in the east. The subway debate has so polarized camps that “LRT” is synonymous with third class transit simply because it was the heart of the “non subway” option. Without the bitterness of the SSE that required subway advocates to paint LRT in the worst possible light, its potential role in Toronto’s future network might not have been so poisoned while other cities embrace this mode.
Staff recommendations in the report were amended in some respects, and a few new clauses were added, notably one asking for City staff to pursue a co-fare arrangement with GO Transit.
The Waterfront Transit Reset report is a separate agenda item and, at the time of writing, Council has not yet dealt with it.
The Finch West and Eglinton Crosstown LRT projects are under Metrolinx, and they are already underway to varying degrees.
Note: The figures showing revenues and costs for UPX have been corrected as of 12:35 pm, June 30.
A section on future ridership requirements vs operating costs has been added.
Updated 5:30 pm June 30, 2016: Due to conflicting information in the Metrolinx Annual Report, it is possible that the level of subsidy per rider has been overstated in the original article. Pending clarification from Metrolinx, I have added a separate version of the calculation taking into account both sets of figures.
Also, the three days in February 2016 cited originally as “missing” were actually free days and these were not included in Metrolinx counts to avoid skewing the averages. Similarly, reporting “zero” for these days would skew the averages. Therefore, the approach taken below of using the previous week’s data, during a period of little change in ridership, allows the moving average and overall trend to more accurately reflect what would have happened in the absence of the promotional weekend.
Updated 5:45 pm June 30, 2016: Metrolinx has confirmed that there is an error in their Annual Report.
Metrolinx has published the ridership for the Union Pearson Express up to the end of May, 2016. The daily counts rose dramatically once fares were reduced on March 9, 2016, and the values are running well above the original projections after a long period of poor performance.
Exact origin-destination counts are not available, but Metrolinx reports that about 80% of travel is to and from the airport while the remainder are trips between other stations on the line.
Note: In the source data, values are zero for February 13-15, 2016 as this was a free weekend for promotional purposes. The values from February 6-8 have been substituted for continuity.
Total ridership to March 31, 2016 (the end of the fiscal year) was 751,500.
The revenue situation for operations up to March 31, 2016 is revealed in the annual report. Budgeted revenue for UPX was considerably higher than actual.
Source Actual Per Rider Budget Fares $15,165,000 $20.18 $43,275,000 Other Revenue $ 8,762,000 $11.66 $ 7,093,000 Total $23,927,000 $31.84 $50,368,000
According to the report:
UP Express non-fare revenue of $8.8 million consists of sponsorship and partnership revenues earned in the year. [p 43]
Updated June 30, 2016 at 5:30 pm:
There are two separate sets of figures in the Annual Report related to the subsidy. One claims that the subsidy paid was $63.2m while other shows this value as the total operating cost of UPX. This leads to different calculations of the per rider subsidy. For completeness, I have left both calculations below pending clarification from Metrolinx.
(As of 5:45 pm Metrolinx has confirmed that their original report was in error.)
Metrolinx has published both the total revenue and the total cost for UPX, and from this we can deduce the operating subsidy.
Per Rider Total Cost $63,200,000 $ 84.10 Revenue $23,927,000 $ 31.84 Subsidy $39,273,000 $ 52.26
With a total cost of $63.2m for 10 months’ operation, an annualized value would be about $76m. If the average fare falls to $10 (half the level with the original tariff), then 7.6m riders would be required to break even.
That is equivalent to about 20,800 riders per day, roughly 2.5 times the current level of demand. This would require an average load of about 144 per train on every trip, both ways, to and from the airport, close to a 2-car train’s capacity. (Calculation based on 4 trips/hour each way, 18 hours/day)
A break-even situation is not in the cards for UPX, and it will continue to drain subsidy dollars from other more widely-used parts of GO operations.
Original version (based on erroneous Metrolinx report):
Metrolinx received approximately $233.8 million in operating subsidies from the Province of Ontario, of which $71.2 million was allocated to the direct costs of PRESTO operations and $63.2 million to the direct costs of UP Express. [p 44]
Yes, just over 1/4 of the subsidy paid to Metrolinx went to support the UPX. This does not include any capital amortization which is provided for separately.
Per Rider Subsidy $63,200,000 $ 84.10 Revenue $23,927,000 $ 31.84 Total Cost $87,127,000 $115.94
With a total cost of $87m for 10 months’ operation, an annualized value would be about $104m. If the average fare falls to $10 (half the level with the original tariff), then 10.4m riders would be required to break even.
That is equivalent to about 28,500 riders per day, roughly 3.5 times the current level of demand. This would require an average load of about 200 per train on every trip, both ways, to and from the airport, greater than the train capacity. (Calculation based on 4 trips/hour each way, 18 hours/day)
A break-even situation is not in the cards for UPX, and it will continue to drain subsidy dollars from other more widely-used parts of GO operations.
For the past months, Toronto Planning, the TTC and Metrolinx have hosted a number of public consultation sessions leading up to two critical meetings on the same day: June 28, 2016.
One will be the Toronto Executive Committee’s consideration of a series of reports on various transit proposals.
The other will be the Metrolinx Board’s first meeting in four months with several related items on the agenda.
Reviewing all of this material will require several article that I hope to finish before the meetings where these issues will be discussed actually occur.
Here I will begin with SmartTrack because of all of the proposals, that has been the most threadbare one throughout the public consultation. It is complicated by being a joint project with Metrolinx who own the tracks over which the trains will operate, and who now quite clearly will also own and operate the trains regardless of what the service is called.
Updated June 6, 2016 at 11:30 pm: The chart of the demand profile for the Eglinton East LRT has been updated by City Planning to correct an error in labelling where inbound and outblound values were reversed. The new chart has been placed into this post, and the link to the source pdf has been updated below.
Public consultation sessions are coming to an end on the “motherlode” of transit projects (as they were described earlier this year by Toronto’s Chief Planner, Jennifer Keesmaat). This process will soon bring a consolidated set of reports and recommendations for Council. So far, the presentations have been subdivided between various projects.
A major challenge for politicians, the media and the general public is to sort out all of these schemes and to understand how they all fit together. This is not just a question of how we will finance all of the projects, but of how each project and the choices made for it will affect everything else. Where typical studies in Toronto might have wrestled with whether a new line should go under street “A” or “B”, and where the stations might be located, today’s work requires understanding of how the network will evolve over time and how it will work as a whole in a few decades.
The process is complicated further by having municipal (City Planning & TTC) and provincial (Metrolinx) components, and the secretive nature of Metrolinx studies means that some vital information about its projects is not yet public. The Metrolinx reports are expected to appear on their Board’s agenda for June 28, and this implies public availability sometime in the preceding week.
The consolidated City reports should be available on June 21 when a briefing session is to occur at City Hall a week before the June 28 Executive Committee meeting.
Metrolinx has published a set of documents containing the “Initial Business Case” for the GO Transit Regional Express Rail (GO/RER) network.
[Note that except for the Summary, the documents are large PDFs.]
This article begins a review of these documents and of the various RER proposals examined in the Metrolinx studies.
Work on this review of GO/RER began in April 2014 following the announcement by Queen’s Park of its commitment to the RER concept. Unlike previous reports, this study looks in depth at all of the GO corridors, and reviews the technical issues associated with both increased service and electrification. This is not a final review, and much engineering work remains to be done, but there is a great deal more information now publicly available as the basis for discussions.
These documents were completed sometime in 2015 as is clear from references to future events that will occur later in the year, notably reports from the City of Toronto on SmartTrack. That scheme gets only passing mention, some of it the usual political cover story, because the specifics had yet to be decided. Exactly what the incremental effect of ST will be beyond the proposed GO/RER configuration is not yet known. Preliminary information in City reports implies that ST will amount to considerably less than was foreseen by the Tory election campaign, possibly as little as a few more stations and some sort of TTC/GO fare integration.
Five scenarios were reviewed to compare the effects, benefits, costs and technical issues associated with various possible future networks.
This progression implies a certain sequence of events during the study where a full build is impractical and the original 10-year plan was not aggressive enough with electrification, a key component of the announced government direction.
The estimated capital costs rise from $5 billion for scenario 1, through $10b, $12b and $19b for scenarios 2 to 4. The price tag for the latter is well above what Queen’s Park has available, and scenario 5 was developed with a projected cost of $13.5b. All but scenario 4 are said to be achievable by 2024. Given that it is now 2016, and this is a 10 year plan, that date probably requires some adjustment.
Scenario 5 is the 10-Year Plan Optimized, it represents significant progress towards implementing the service levels of Scenario 4. It goes beyond the investments and service included in Scenario 3 (10-Year Plan), with electrification also to Bramalea, Barrie, Stouffville and to Pearson Airport. This scenario and the resulting recommended RER program has been defined to maximize return on investment while mitigating risks. Depending on resolving various challenges, it can be delivered over 10 years for approximately $13.5 billion. It does not preclude, but rather prepares for, services to Milton and Kitchener to be eventually electrified and frequent all-day services introduced when agreement is reached on co-existence of GO and freight on these privately-owned corridors. [p. iv, Full Report]
Annual ridership is expected to go up by a factor of 2.5 over the coming 15 years, but operation costs will not rise at the same rate. The study postulates that an operating profit would be possible, eventually, but that will depend a lot on future fare policies, and on the evolution of trip patterns (length, direction, average fare). The ridership model foresees that “hundreds of thousands” of auto trips would be replaced by GO ridership each weekday comparing scenario 5 to scenario 1. The proportion of trips and its relationship to expected growth is not specified in the Executive Summary. (Possibly in the demand modelling later.)
The rate of demand increase on GO overall is projected at 2.3% which is lower than recent levels, but allows for some leveling off in a more mature service.
One big issue is the problem of getting riders physically to and from the GO trains. Either this will be done with substantially improved local transit services (an option that brings many issues associated with fare integration and cross-system subsidies), or with parking. The cost estimates include $750m for 15,000 new parking spaces, or $50k per space. At that scale, simply paving empty lots is not an option. The study notes the possibility that some of this cost “may not be necessary if service integration and fare integration with local transit services can be improved”. [p. v]
Those 15,000 spaces represent nowhere near the ratio of new parking spaces to existing facilities that the projected ridership growth would entail if everyone arrived by car. Parking charges are listed as a way of raising additional capital for the RER project, and of encouraging a shift to ride sharing and public transit feeder services.
It is amusing to read about the benefits of proven technology, something for which Ontario has not been noted in past endeavours.
Virtually all of the works are within existing rail corridors, so environmental and community impacts are limited mostly to noise and vibration. RER will use proven technology that is working around the world. [p. v]
Descriptions of RER cite similar operations in more than 50 city regions worldwide [page 6], and list a number of factors that simplify implementation [p. 4]. I cannot help thinking of how badly past studies have downplayed the benefits of LRT which bears a family resemblance, but at a local rather than a regional level.
The first electric railway opened in 1883 (the Volks Tourist Railway on the Brighton seafront in the U.K.). Ever since that time, electric traction has increasingly become the default source of power for the world’s more intensively used rail systems. [p. 14]
Finding this statement in a Metrolinx report is quite amusing considering some of the remarks made during community meetings on electrification before Metrolinx and GO “got religion” on the subject. The report skirts that debate by observing that GO is now at the threshold where electrification makes sense:
Until recently, diesel traction has been the appropriate mode of traction for the GO rail operation. However, the service enhancements envisaged in the near future will take GO rail beyond the threshold of service intensity appropriate for electrification. Continued use of diesel traction will become a source of financial and economic inefficiency. [p. 14]
Metrolinx intends to pursue discussions with the railways regarding the upgrades needed on their trackage, and also intends to review “modern, proven technology” with Transport Canada and the railways.
This is an “initial” analysis, and changes are likely depending on the evolution of expectations, changes in provincial funding, and who knows what political meddling that could arise.
A decade is a long time in politics, and the likelihood that the current governing parties or councillors will still be in place at that distant time is minuscule. Moreover, changes could come at any level part way through the project, and only a very strong, unshakeable commitment (i.e. very popular and difficult to derail) is likely to survive. This is not simply a case of showing up for a photo op or two with a gigantic prop cheque, but of supporting the plan for the long haul, including building a constituency that can survive beyond current governments. The arrival of a Ford-equivalent who simply wanted to start over with his own plan would be disastrous.
In the City Planning report at Executive Committee on March 9, 2016, two options for the configuration of a “combined” SmartTrack and GO Transit/Regional Express Rail (RER) service remain on the table. These are referred to as Option C and Option D.
The number of trains/hour cited here has bothered me for some time, and a recent conversation with Jonathan Goldsbie of NOW Magazine got me digging a bit deeper. Here is the service plan for the Stouffville and Kitchener corridors as shown on the Metrolinx RER website, in the “How Will I Benefit” page.
Peak service on the Stouffville corridor totals 7 trains/hour or one every 8.6 minutes as shown in Options C and D.
In the Kitchener corridor, there are 8 trains/hour, but two of these are service to Kitchener which would run express from Bramalea to Union leaving only 6 “local” trains in that segment.
The service levels and station plans have profound implications for the transit network now under study.
The obvious question here is “where is SmartTrack”? In fact, it has completely vanished from the map, and at best would be represented by a handful of new stations, none of which is in Scarborough in Option D.
Is this the master plan, the culmination of John Tory’s election campaign and all of the vitriol poured over his critics?
The emperor has no clothes.