Sheppard Subway

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Brother, Can You Spare $500-million?

The board of Toronto Transit Infrastructure Limited (a TTC subsidiary) met today to consider various matters, among them the need for more money.

A report by TTIL President and CEO, Gordon Chong ends with the statement

“the existing budget is woefully inadequate to complete the tasks of the Working Group.”

Paul Maloney of the Star covered the meeting (I was unable to attend due to a conflict elsewhere).  Although it’s early days, we now know that the projected cost of the subway has gone up from $4.2 to $4.7-billion.  Just to pay for that increase would take over 10 years’ worth of development charges levied in Toronto.

Chong lists six possible revenue sources to finance the Sheppard line:

  • Tax increment financing in the Sheppard and Eglinton-Crosstown corridors
  • A special city-wide transit development charge
  • Development rights on city-owned land in the Sheppard corridor
  • Federal funding original destined for the Sheppard LRT project
  • New federal funding from PPP Canada
  • Left-over Metrolinx funds from the Eglinton project

It is amusing to note that a subway touted as a “private sector” undertaking would be funded largely by new taxes and public sector money.

The Sheppard subway fantasy will, no doubt, become even more bizarre as details unfold.  Chong plans a report to Council in fall 2011.  Meanwhile, he estimates that the preliminary work needed to determine the cost and feasibility will set TTIL back up to $300-million.

Maybe they can start pre-selling sponsorships for the stations.  After all, condo developers understand the concept of selling vacant land.  Buy early!  Get ’em cheap!

[Elizabeth Church in The Globe also reported on this meeting.]

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Subway Financing Falling Apart? (Update 3)

Updated June 4 at 10:20 am: The Star has published an article discussing road tolls and other ways to squeeze money out of drivers to pay for transit improvements.  David Gunn weighs in on the folly of a Sheppard subway, and Toronto’s transit woes in general.

Updated June 2 at 2:00 pm: Inside Toronto has published an article discussing the zoning increases needed to make the Sheppard Subway a reality.  This includes an illustration of the intersection at Victoria Park developed at the density likely to exist.  The drawing is from Tridel, a well-known developer, not from some wild-eyed lefty trying to frighten the locals.

Although Mayor Ford has disowned the concept of road tolls as a revenue source for subway funding, Gordon Chong continues to press the issue saying:

“I was hired to put all the options on the table and that’s what I’m doing. Road tolls are off the table for the Ford administration. But they’re still part of the toolbox. If you choose not to use that tool, that’s your choice.”

Honesty about the real cost of Ford’s obsession with subways is rare, but refreshing.

Missing from the discussion is the whole question of what development at this density will mean for suburbs through which subways are built, and by extension along Eglinton Avenue which may encounter the same fate.  Just because you have a subway (or underground LRT) doesn’t mean that the neighbourhood or the roads can accept the resulting traffic and population.  Many people who live in the new buildings along Sheppard do not travel by TTC, and they will simply add to congestion on the road system.

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Think About Transit on Finch and Sheppard, But Not Yet

On May 30, I sat through a bizarre debate at Toronto’s Planning & Growth Management Committee.  Two motions proposed at Council were referred off to this Committee for action, one regarding Sheppard and the other for Finch.  The intent of these motions was to provoke a discussion of and request detailed information about the status of transit on the now-abandoned parts of the Transit City routes beyond the scope of the proposed subway extension project.

First up was Sheppard.  Councillor Raymond Cho, whose ward encompasses the northeastern part of Scarborough, is very disappointed that plans to improve transit to his constituents, and to the outer part of Scarborough generally, have been cancelled.  He asked that, at a minimum, consideration be given to taking the rebuilt SRT (now the Eglinton Crosstown line) further north to Sheppard as this would bring the rapid transit network across the 401 and much closer to Malvern.

Councillor Karen Stintz (also chair of the TTC) proposed that discussion of the issue be deferred “until such time as the Toronto Transit Commission’s plans for improved public transit on Sheppard Avenue are known”.

This is an odd stance to take given that there is no indication the TTC is working on any plans for improved public transit beyond the scope of the proposed Sheppard Subway to Scarborough Town Centre (STC).  Cho asked that at least a time limit for such a report be included in the motion, but this idea was not acceptable as an amendment by Stintz.

Councillor Joe Mihevc (former TTC Vice-Chair) argued that avoiding discussion now would lead to a finished product being presented for an up-or-down decision with no time for debate or public input.  He argued that people affected by the cancellation of Transit City want input into alternative plans now.  Stintz replied that Metrolinx is running a series of meetings regarding the Eglinton line, but what these have to do with service on Sheppard and Finch is hard to fathom.

Councillor Anthony Perruzza (another former TTC Commissioner) asked about the cost to the city of the cancelled Transit City projects.  Stintz went into a convoluted explanation claiming that Transit City was put together before Metrolinx existed, that it was worked out as input to The Big Move, and that since Metrolinx decided to change its plan, there was no cost to the City.  Stintz claimed that since Transit City was never funded, there could not have been any costs.

This is simply not true on a few counts.  Metrolinx was created as the Greater Toronto Transportation Authority in 2006, and changed to its current name in 2007.  At the beginning of David Miller’s second term as Mayor in December 2006, it was already known that Queen’s Park was working on a comprehensive new transit plan in anticipation of the fall election.  Whatever Toronto had on the table would likely become part of it.  Transit City was announced early in 2007, and in June 2007, Premier McGuinty announced MoveOntario2020.  Metrolinx was charged with sorting through all of the projects in a long shopping list from the GTA regions and this, eventually, became The Big Move.

The TTC, with the approval of City Council, undertook a number of Transit City studies, and carried their costs on its own books.  Once the projects were officially funded, Queen’s Park reimbursed Toronto for the costs to date.  Some projects, such as Jane and Don Mills, never reached funded status, and the sunk costs on those projects remain on the City and TTC books.

The Memorandum of Understanding between Mayor Ford and Queen’s Park explicitly states that Toronto is on the hook to repay any subsidy already paid on Transit City projects (such as preliminary engineering and Environmental Assessments)  that are no longer part of the overall plan.  This affects the Finch and Sheppard LRT projects, and probably the SRT extension.

As for Metrolinx changing its plans, it was no secret that Mayor Ford was immovable on the elimination of surface LRT from the plans, and that Queen’s Park needed to salvage the Eglinton Crosstown line by making it an LRT subway.  The decision to cut Finch and Sheppard East out of the plan was simply a way to placate Ford, to free up additional funding for Eglinton, and to get out of the way of Ford’s Sheppard Subway.  This was not a unilateral Metrolinx decision.

As the debate continued, it was clear that Stintz was being too clever for her own good by trying to treat work-to-date as not part of “Transit City”.  This is an example of the gyrations through which Mayor Ford’s team will go to warp history to fit their agenda.

Councillor Adam Vaughan grilled Stintz on the issue of tolls, a subject recently raised by Gordon Chong who is running Toronto Transit Infrastructure Limited (TTIL), a TTC subsidiary.  Stintz attempted to claim that she has no reporting relationship with Chong even though she Chairs TTIL’s parent body.  Isolated by the TTIL board on which she does not sit, Stintz claims she has no responsibility for what Chong might say.  The irony here is that Chong, as a Ford crony, really doesn’t report to Stintz who is more and more only a figurehead at the TTC where major financial decisions are concerned.

Vaughan continued with questions about funding of the Sheppard line and the amount of development needed to generate revenues that would finance its construction.  He proposed that the Chief Planner report on development sites along the corridor and the potential effect of large-scale redevelopment at densities much higher than have been contemplated as part of Transit City.  Councillor Peter Milczyn (chair of the P&GM committee and vice-chair of the TTC), punted that idea off the table by suggesting that this be done as part of the quinquennial review of the Official Plan that will get underway later this year.  Vaughan and others responded that people should know now, not in the indefinite future, the implications of Ford’s financing schemes for development in their neighbourhoods.

Councillor Ana Bailão spoke laughingly to Vaughan as if Transportation City were already a done deal when in fact neither it nor the Ford MOU has ever been to Council, unlike Transit City which required both funding approvals and Official Plan Amendments.

The entire debate took on a surreal tone with the Ford faction (who control both the committee and the TTC) weaving a fable about how discussion now would be premature, and that the new “Transportation City” plan was getting the same level of debate and consideration as “Transit City”.  In fact, it is getting almost no debate, the very issue this faction complains about every time they talk about Miller’s exclusion of the right in the Transit City planning.

The Ford team spends far too much time justifying its actions, its lack of consultation and transparency, by reference to the Miller years.  That was a weak excuse months ago, and now it’s positively laughable.  A city is not governed on resentment for a man, for a regime no longer in power, but on a coherent, believable vision for the city.

In the end, the same fate met the requests for additional reports on both Sheppard and Finch — the issues, even a request for information, are deferred until the TTC gets around to proposing something specific for each of the corridors.  We already know what the Finch report looks like complete with its confusion of a golf course for a college in the route planning.  Nothing has been presented to the TTC on the Sheppard east corridor.

“Transparency” is not a word I would use to describe transit planning in Toronto under Mayor Ford.  In time we may see what, if anything, the TTC comes up with for the two corridors.

Meanwhile, the 2012 operating budget, almost certain to bring service cuts and fare increases, is expected to surface at the June 8 TTC meeting.  The city’s huge deficit going into the budget process will make any talk of new service on Finch, Sheppard or any other corridor seem like a distant memory.

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Creative Financing for the Sheppard Subway

The City of Toronto has issued a proposal call on behalf of Toronto Transit Infrastructure Limited (TTIL) for consultants to work on the business model for the extensions of the Sheppard Subway.

One option previously discussed to fund transit expansion has been “Tax Increment Financing”.  Comments in various places, including from members of the development industry, suggested that the scale of development needed on Sheppard Avenue to finance the subway extensions was not attainable.

We now know that the Ford regime intends to cast the net much wider to fund their pet project:

The plan will assume that the incremental tax revenues arising from the construction of the proposed Sheppard subway extension corridors as well as from the construction of the Eglinton-Scarborough Crosstown line can be applied towards funding the capital costs of the Sheppard subway extension projects. The plan will provide a separate forecast of incremental tax revenues for each of the four corridors (Sheppard W., Sheppard E., Eglinton, Scarborough RT).

In other words, additional tax will flow not just from Sheppard, but from the Eglinton-Scarborough line funded by Queen’s Park.  This begs the question of how we would ever fund rapid transit entirely with TIF revenue when we must raid the benefits of other projects.

The Memorandum of Understanding between Mayor Ford and Queen’s Park does not specify where TIF would be applied, only that it is an option to be explored and Queen’s Park would assist with any necessary legislative changes.

This is turning into a shell game where future city revenues that would pay for many improvements and ongoing operations will be mortgaged to fund one subway expansion.

[Thanks to Jamie Kirkpatrick at the Toronto Environmental Alliance for spotting this.]

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The Mythical Private Sector Subway

The Ford Administration and its followers at City Hall would have us believe that transit developments in Toronto can be had essentially free of public cost and that the private sector, whatever that means, will pony up the investment to build the subway.

Almost as soon as the scheme for a privately financed Sheppard Subway was announced, the wheels started to come off the plan.  Actually, “come off” assumes that it had wheels to begin with, and statements by the Fords showed clearly that they had not worked through the details.

Oddly enough, their hands were out for any public sector funds that might be available including $330-million or so originally earmarked by Ottawa for the Sheppard LRT, up to $650m in “left over” funding that might not be needed for the Eglinton tunnel project by Queen’s Park, and whatever investment could be pried loose from Ottawa’s “PPP Canada”.  Additional money might come from a quick sale of waterfront lands by the City to would-be developers.

The scale of the Sheppard project may well shrink to only the eastern leg from Don Mills to Scarborough Town Centre so that the total cost stays in the $2-billion range.

Recently, I learned that Queen’s Park had offered $2b toward the Sheppard Subway provided that the Fords would allow the eastern part of Eglinton to remain on the surface, but this was turned down flat.  So intransigent is the Mayor on the subject of incursion by transit into road space that the possibility of substantial funding for his pet project was not an option worth embracing.

You may have noticed by now that there isn’t a lot of private sector money in this story, except for the buy-out of waterfront lands, and that’s a sale of public assets, not a private sector investment in transit.

Meanwhile, we hear a lot about private sector investment elsewhere, usually with little context.  Vancouver’s Canada Line comes up now and then, including in comments on this site, and some people think it’s a private sector show all the way.  In fact, various public agencies have over $1-billion in the project, more than half of the total cost.  Even the “private” partner, a joint venture, includes investment agencies that manage public funds including pension plans.

Probably the most successful example of investment-supported transit is in Hong Kong, but this must be seen in the context of local conditions.  Not only is Hong Kong an extremely dense city, it is one in which the land ownership and planning are firmly in public hands.  Private buildings abound, but they sit on land leased from the public sector which reaps the benefit of land development.  (For an extensive look at the Hong Kong system’s financial and planning development, see Rail+Property Development by Cervero and Murakami [14MB]).

Leaving aside whether Toronto would ever support densities such as those found in major Asian cities like Hong Kong, there are important issues that do not get discussed here.

  • Who profits, and how soon?  If land is held in the public sector, the profit from  appreciation thanks to transit construction remains there too.
  • Will the City simply hand over land to developers to do with as they please, or will there be a recognition that city building involves us all?
  • Will new neighbourhoods to be planned both as attractive, pedestrian-friendly spaces where people will want to live even at high densities, or will we see a continuation of the tower-in-a-parking-lot so common in many developments?
  • Will we build car-oriented suburbs, generating even more congestion, along what is supposed to be a major transit corridor?
  • Will the Sheppard line be funded only with development along its corridor, or will other parts of the city, such as the waterfront, have development revenues siphoned off leaving them bereft of transit?
  • How much of the scheme depends on the City fronting the initial construction cost in the hope of future development revenues to pay the capital and operating expenses?
  • Will Council be allowed to perform, in public, a full review of the terms of any arrangement, or will we sell our transit system’s future in a back room deal?

PPPs are notorious for requiring careful structure of contracts, performance criteria, penalties and ongoing management.  Toronto’s political culture prefers to walk away from such responsibility in the public sector.

One way or another, Toronto will commit a pot load of money to a Sheppard subway of dubious value, and force Queen’s Park to bury the entire Eglinton line at great cost.  Billions will disappear into these projects while other parts of the transit system beg for funding.

The private sector may wind up funding some portion of the Sheppard project, but transit overall is still very much a public issue.  Long term funding will depend on public revenues.  We cannot avoid the debate on fares, tolls or taxes, with the assumption that magically money in the private sector will build, operate and maintain our transit system.  Somewhere, the public will spend more, or sell assets, or give away benefits as a tradeoff.  Nothing is free.

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Subway City? (Update 3)

Updated April 2, 2011 at 6:30 am: Additional details about the plan have been provided by Metrolinx.  The dialog below has been slightly edited from email exchanges, but preserves the sense of the conversation.

Q:  The Memorandum of Understanding (MOU) refers to both Black Creek and Jane as western terminals for the Eglinton line.  However, these are over 1km apart.  Where will the line actually end?  How will the line connect with the GO corridor if it ends at Black Creek?

A: The exact terminus for the Eglinton line, which is in the Mt. Dennis area, will be determined through a future additional study due to the vertical and horizontal alignment (how steep the grades can be climbing out of the tunnel and which side of the road we will be on to approach the yard) between Black Creek Drive and Jane Street. The objective is to make the connection to the GO rail corridor.

Q:  When does Metrolinx expect to have a preliminary design proposal for the section of the line east of Leaside that will now be substantially underground?

A:  We are meeting with the TTC now to discuss the timing for the preliminary plans and profiles for the underground segment.

Q:  The SRT replacement is described as ending at STC. Does this mean that McCowan will be abandoned as a station? Will the proposed right-of-way beyond McCowan to Sheppard and Malvern be protected to allow for future extension of the route? Is there any plan for an eastern yard so that trains would not all have to be based at the Black Creek yard?

A: The Scarborough LRT would follow the same route as the existing SRT and will include McCowan Station. At this time, there are no plans to close McCowan Station. We do see value in potentially re-using the McCowan yard for at least a layover site and we will need to study this further.

Q: Although the MOU states the number of stations on the Toronto projects, it does not mention this with respect to Eglinton.  The press release specifies 26 stations.  When will Metrolinx produce a station plan for the new line?

A: The exact number and location of stations for the Eglinton-Scarborough Crosstown LRT project will be finalized as part of the environmental assessment amendment process.

We expect the Eglinton project will have about 26 stations along a 25-kilometre stretch, and we’re pleased to provide this as a single-seat trip for residents from Scarborough to the Mount Dennis Area.

Since the new Eglinton project has changed from the previous concept, the working assumption now is that the station spacing across the route is approximately at 1 kilometre.

We want to make certain that residents get the best use from the Eglinton line, so we are taking more time to study the specifics of the project to determine the exact number and best locations for the stations along the Eglinton line.

The finalization of the Eglinton line and the locations of the station will be part of the preliminary engineering and Environmental Assessment, which is expected to be completed in the coming months.

Comment: The 26-station count includes not just Eglinton but also the SRT.  There were 26 stops on the Transit City version of Eglinton, not including Kennedy, and 6 more on the SRT.  The new combined route will have to go on a diet, and the roughly 1km average spacing implies that some stations will be dropped.  Throughout the Transit City debates, Metrolinx consistently wanted fewer stations on Eglinton, although at the time the underground section was shorter.

Q: Although the MOU makes reference to “LRT”, for certainty does this mean “Light Rapid Transit” as in the Flexity cars recently ordered from Bombardier, or is Metrolinx contemplating a return to ICTS Mark II technology once proposed for this route? This is an important decision as it affects the ability of the line to be extended.

A: On June 14, 2010, Metrolinx announced a $770M purchase of Light Rail vehicles from Bombardier, which included vehicles for the SRT upgrading project. We expect that we will need about 130 LRTs for the adjusted plan, but we will have to sit down with Bombardier and discuss the details. At this time, we do not plan to change from LRT to ICTS MARK II technology.

Comment: “At this time” are three little words that could do a world of damage to future LRT expansion in Toronto.  Metrolinx owes us a definitive answer in the context of their Big Move plan.

Q: The Sheppard East LRT’s costs to date are chargeable to Toronto, but one piece of work already underway is the Agincourt Station grade separation. Is this going to proceed independently of the LRT project as a GO improvement? If so, will it be built with room for a future LRT right of way if that scheme is resurrected?

A: At this time, there are no plans to change the current design for the Agincourt grade-separation. The grade separation construction work that is currently underway at the Agincourt GO Station to separate the GO tracks from Sheppard Avenue will proceed independently of the former LRT project.

It is important to note, though, that this grade separation construction work is an important safety improvement for GO commuters and drivers that use Sheppard Avenue. This grade separation is a project that has benefits to GO’s operations and traffic.

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Ford Proposes Privately Built Sheppard Subway (Updated)

Updated February 17, 2011 at 10:00 am:

Councillor Doug Ford talked to Matt Galloway today on Metro Morning.  Listen to how he slides all over the place without giving specifics of how the money would be raised and simply says that such schemes have worked elsewhere.  No details, but the usual put-downs of “nay sayers” as if anyone with the nerve to criticize is a foe of progress.  Sounds very 50’s to me.

In a separate interview, MPP Greg Sorbara, former Minister of Finance and heavyweight proponent of the Spadina Subway, explains that, while the proposal may look interesting, the devil is in the details, and at the end the public pays.

Original article from February 16 at 16:44:

Mayor Ford’s office has proposed to Metrolinx that the Sheppard subway be extended west to Downsview and east to Scarborough Town Centre as a private sector deal with the City according to articles in the Globe and the Star.

The expansion would be privately financed, but owned by the City with the cost to be repaid out of development charges and tax increment financing.

What is unclear at this point is the amount of development that would be needed along the extended line to actually pay for its construction without adding to the City’s debt, nor is it clear how much of the proposed Provincial and Federal contributions to the Sheppard LRT would be available for a Sheppard Subway project.

This scheme leaves a number of other projects up in the air including:

  • the remainder of the Sheppard LRT’s scope from Kennedy (where the subway would veer south to STC) to eastern Scarborough and, possibly, to the UofT Scarborough Campus
  • the replacement of the SRT as either an LRT line (part of any remaining LRT-based Transit City network) or as a BD subway extension
  • the status of the proposed Eglinton and Finch LRT lines, although the former as an LRT subway hybrid seems fairly certain to be built

A long term plan to finance a subway using future revenues presumes that the money to pay for its construction, debt financing and developer’s profit will actually materialize.  This begs the question of station location and spacing because there would be little development on land far from stations spaced widely as on the most recent extensions to the subway.  Enough land and development potential must exist to pay for the subway over time, and the locations must be sufficiently attractive to would-be builders that they will pay a premium to locate their buildings on subway sites.

Whether the subway would generate net new development or merely attract buildings away from other sites is hard to say given that major redevelopment of the older commercial/industrial strips in Scarborough and North York is not already underway.

Would existing neighbourhoods in which new stations (and their associated development) would be placed welcome a complete change in their density and character?  This may be viable on Sheppard, but not in other neighbourhoods with well-establish, stable residential land use.  Indeed, some routes, like a Downtown Relief Line, would be built as part of a wider network to spread demand and give access to new parts of the city.  Should the locations a DRL would pass through enroute to downtown pay the cost in redevelopment effects because that’s where a line is drawn on a map?

The extensions would cost $3.4-$4.4-billion according to the Star, and this would translate to an annual debt service cost of $200m at 5%.  That’s a lot of new tax revenue, although the amount would be lower depending on the amount of principal that can be paid off through development charges.

As with other private development schemes around the world, the real challenge lies in the details of any contract.  Who, for example, will be responsible for upkeep of the infrastructure and repair of any premature faults that appear over the period of the lease-purchase?

My reaction to this is mixed.  The Sheppard Subway may be the apple of some advocates’ eyes, but it is not the most important transit expansion project in the GTA.  Regardless of how it is financed or who builds it, this will divert considerable investment and attention from other projects and may well pre-empt any expansion of LRT service to the northeast.

On the other hand, we have been hearing about the wonders of privately developed transit for so long, part of me wants to say “put up or shut up” to those who would pursue this course.  Is the project really viable?  Will the city see the revenues needed to pay for the long term lease-purchase of the new line, or will future taxpayers be on the hook to bail out the project?