With much talk about “new revenue tools” and debates over the least objectionable way to extract $2-billion or more from taxpayers in southern Ontario, the actual purpose of the Metrolinx “Investment Strategy” has faded into the background.  Somehow the act of collecting all that money has become more important than figuring out what, exactly, we are going to do with it.

But, you say, don’t we have the Quick Wins?  The Big Seven?  The Second Wave?  Shovels are in the ground and all we need is the will to spend!

Things are not quite that simple.

What we do not have is a clear sense of what we will achieve and when we will achieve it.  In 2008 Metrolinx produced The Big Move, our regional transportation plan with two very broad objectives — a 15 and a 25 year plan.  Demand projections, including a vision of what traffic and transit might look like, only considered the fully-built 25-year plan, something we already know will not be finished (if ever) within the projected time span.

Some projects received a “Benefits Case Analysis”, but these studies considered each line in isolation rather than looking at what subsets of the whole plan would contribute to the network.  Indeed, the biggest “benefit” of many lines would be the money spent to build them, not their contribution to transit overall.  This would follow the tradition of transit projects in the GTHA as economic and job stimulus packages first, with transportation improvements as an afterthought.

An “Investment Strategy” is not simply a matter of figuring out where new revenues might be found, but of recommending the best way to use them, to “invest” in the future of the region. Continue reading →

In a recent comment, a reader questioned the disparity between the $34-billion cost of the Metrolinx “Next Wave” projects and the sum of the individual projects listed on the website.  These projects are:

Brampton-Queen BRT     $  600 million
Dundas BRT                600
Durham BRT                500
GO Expansion            4,900
GO Lakeshore Express    1,700
GO KW Electrification     900
Hamilton RT             1,000
Hurontario LRT          1,600
Downtown Relief Line    7,400
Yonge North Subway      3,400
Total                 $22,600 million

A big chunk of the difference between these two numbers can be explained by a factor which is new in the “Next Wave”, a provision of 25% of whatever funding is available for local transit, regional highways and other smaller projects.  This would eat up $8.5b out of the total leaving $25.5b for the next wave of “Big Move” projects.

I wrote to Metrolinx asking for an explanation of the remaining $2.9b, and this is their response.

Transforming the transportation network in the Greater Toronto and Hamilton Area is similar to any renovation project, and $50 billion was a planning number that was developed in 2008 for the Regional Transportation Plan, also known as The Big Move. As we move through assessments and delivery, we will have harder numbers, so that figure will change.

However, prior to the assessments and delivery, we’ve built a contingency into the $34 billion cost of the Next Wave projects, which accounts for a difference in numbers.

It should be noted that more than $16 billion from all three levels of government has been allocated to the “first wave” of projects drawn from The Big Moves list of top priorities. This is the largest financial commitment to transit expansion in Canadian history. [Email from Metrolinx February 5, 2013]

I will take at face value the statement that the $2.9b is “contingency”, but note that this was not mentioned in any of the presentation materials nor on the website.  To me it looks more like an “oops”.

This is not simply a question of catching Metrolinx out on an incomplete or inaccurate presentation.  We are now engaged in a debate about regional transportation and funding, and it is vital that this take place in a fully informed context.  An amount of $2b/year is commonly used as a reference point for the amount of funding that must be delivered by any new revenue tools.  This was in the original “Big Move” budget of $50b delivered over 25 years, and shows up most recently in the City of Toronto’s “Feeling Congested” outreach program.

That original number was in 2008$ and it included some provision for future operating costs.  However, it did not include inflation, nor did it include the recently added provision for local transit and road projects which would take 25% off the top of any new revenue stream.

The $50b was supposed to finance 52 separate projects listed in The Big Move, but between the “first wave” and “next wave” list, many still remain outside of funding plans.

If the Investment Strategy report expected from Metrolinx late this spring is to have any relevance to the discussion, it must include current estimates of capital and operating costs to be funded from new revenues, and must provide for inflation.  Either the capital provisions must be escalated to future dollars, or the future revenue from new tools must be discounted to present day.  We cannot discuss our long-term funding needs with a mixture of dollar values spanning decades.

Public transit projects have a long history of coming in over budget for various reasons.  Some of this is bad planning and some is scope creep, although it could be argued that these are often related.  There is always the issue of unexpected circumstances, not to mention the treatment of large public transit projects as an opportunity for every nearby utility to have their plant upgraded at the project’s expense.  Past funding for Metrolinx projects has always been announced as $x-billion plus inflation so that a $16b or $34b “commitment” may actually be much larger in as-spent dollars.

A further wrinkle is the use of private sector financing, construction and operation through “AFP” (Alternate Finance and Procurement), a methodology now in favour both in Ottawa and at Queen’s Park.  In this scheme, part of the capital cost of a project is assumed by a private partner, and this can reduce the capital outlay required during construction by the public sector.  However, that money has to be paid someday, and the payments show up on the operating budgets through mechanisms such as leases and revenue guarantees.  That will be a future call on the new revenue streams, and it must be built into the long range Investment Strategy.

Finally, some transit costs have been borne through non-Metrolinx budgets including various transfers to municipalities (now mainly the gas tax, although the infrastructure fund may be revived in a future budget) and a clawback to GO transit via a tithe to help pay for its capital program ($20m from Toronto this year).  All of these funding streams need to be sorted out and presented in one place so that a rational view of what is needed going forward is available for everyone to see.

Metrolinx should take greater care with its announcements and fiscal plans so that its credibility is not undermined by simple questions about arithmetic, and so that the funding they seek will actually match the funding they will need.

Updated February 2, 2013 at 12:30 am:  The costing for Next Wave projects has been corrected to reflect that spending for local projects and roads is included in the total of $34-billion rather than as an additional cost on top of that number.

The Ontario Liberal Party has a new leader, and soon the province will have a new Premier.  Although I am not a Liberal supporter, I am extremely pleased by Kathleen Wynne’s rise to head our provincial government.  She represents the progressive wing of the party, and a fresh outlook after the increasingly frustrating reign of Dalton McGuinty.  A change of focus is already evident with social services, education labour relations, job creation and transportation infrastructure getting prominent mention.

Transportation is not first on the list, but it is vital to the GTHA.  Mobility has many benefits for business and for individuals.  Transportation infrastructure, especially transit, has far too often been treated as a cost to be avoided, to be offloaded, to be deferred while we strangle in congestion.  That congestion isn’t just on roads, plugged highways and arterials, but on the very transit systems we keep telling drivers can be our way out of the mess of 21st century gridlock.

The scope of what we need is enormous.  Within Toronto, we are accustomed to annual ridership figures now over half a billion, although this is well below half of all the journeys in the city.  Elsewhere in the greater Toronto area, transit does well to carry 10% of all travel.  The GTHA requires much, much more investment in transit infrastructure and in service to attract a larger share of the market.  Making transit a credible alternative to the automobile will not be easy, and reaching a target of 1/3 of work trips by transit in 2031 requires far more than a few trains and buses.

“More of the same” is not an option for a new government, especially one with a tenuous minority in the legislature.  Transportation problems are too big and have been set aside for another day for far too long.

Later this year, we will see the long-awaited Metrolinx “Investment Strategy”, a document that should have been published at least two years ago.  The necessary background information has been available for some time, but nobody at Queen’s Park wanted to talk about new “revenue tools”.  This lack of political fortitude and leadership, coupled with project funding delays and scope changes, cost the GTHA more lost time and compounded the deficit in transit building.

Fortunately Ontario now has a Premier-designate who is willing to talk about raising the money necessary to improve transit.  The challenge will be to actually go from talk to implementation and the creation of a funded transit plan.

We are at an important time in the political and economic cycle for the debate and real progress to begin.  Too many big announcements came just at high points when the economy boomed, only to lose the momentum to a downturn, retrenchment, and a shift of focus away from transit expansion, let alone changes in government. This pattern stretches back to the early 1970s and the Davis government’s aim to build cities for people with transit rather than with cars.

We are having the difficult, “mature” conversation about new taxes (whatever we might call them) when times are tougher.  Building transit funds into the base of government spending rather than as good-time baubles will be a major change, if it happens.

Continue reading →

Updated October 9, 2012 at 5:30 pm

Toronto’s Executive Committee considered a report on transit funding mechanisms today.  In the following report, I have included only the most interesting or important of comments to give the flavour of the debate.

The proceedings were rather odd in that a presentation, cued up for City Staff, was never heard, but a “private citizen” managed to give a half-hour long deputation thanks to many friendly questions from Committee members.  That “citizen” was Dr. Gordon Chong, former head of Toronto Transit Infrastructure Limited, an all-but-bankrupt subsidiary of the TTC used to conduct a study of the Sheppard East subway extension for Mayor Ford.

Chong liberally drew on his transit experience including years as head of the Greater Toronto Services Board, a provincial agency predating Metrolinx.  Throughout his deputation, the highly misleading map of four cities’ subway system was projected to emphasize how little Toronto has done.  (That map purports to show how little Toronto has in comparison with London, New York and Madrid while ignoring the fact that these were much larger cities, much sooner.)

A “glaring omission” from the collection of transit plans in the staff report, Chong said, was his own Sheppard report and the information produced by KPMG about tax increment financing (TIF).  Chong clearly implied that the report was biased, but missed the fact that the Council motion directed the inclusion of “approved” plans for review, something Chong’s most emphatically was not.  As for TIF, it is mentioned, but rejected as a funding mechanism as staff argue that such revenue is needed for general support of city services and should not be earmarked just for transit capital projects.

Councillor Michael Thompson pursued the scheme of a Scarborough subway with a BD extension that would loop back along Sheppard to close the loop at Don Mills Station.  Chong replied that if Toronto could deal with the “money issue”, then there is no reason we can’t have the best in transit.  Thompson observed that a casino might bring in $75-100m annually and could fund transit projects.  The oddity here is that both treat any new money as a bonanza to be used for the best possible transit (where they want it) when fiscal conservatives might be expected to argue for careful husbanding of whatever loot might come their way.  There is also the small problem that the municipal share of projected revenue for a Toronto casino is probably an order of magnitude lower than the Councillor’s claim.

Various Councillors mused about a regional agency to dispense transit dollars and decide which projects should be built.  An underlying assumption was that, of course, the network of suburban Toronto subways would rank high on the list, and nobody seemed to contemplate that a 905-dominated agency might have other more pressing needs or think that the investment in all those subways was of dubious value.

Chong had only veiled contempt for the “expert panel” who reviewed his report and recommended, instead, for the LRT option on Sheppard.  He strongly supports subway construction presuming the money is available, supported by the best possible feeder bus network.  Councillor Norm Kelly asked whether the LRT plan was “an aberration”, and Chong replied that all previous TTC Chief General Managers had supported subways.  Although he invoked the name of David Gunn, he neglected to mention that Gunn boycotted the opening ceremonies of the Sheppard line.

Next the Committee turned to questions of staff. Continue reading →