The Bogus Business Case for Fare Integration

In my reporting of the September 2017 Metrolinx Board Meeting, I reviewed a presentation on Regional Fare Integration. At the time of writing, only the summary presentation to the Board was available, but the full Draft Business Case appeared some time later. This is the sort of timing problem that Metrolinx has vowed to correct.

A basic problem with such a delay is that one must take at face value the claims made by staff to the Board without recourse to the original document. This will mask the shortcomings of the study itself, not to mention any selective reinterpretation of its findings to support a staff position.

In the case of the Regional Fare Integration study, this is of particular concern because Metrolinx planners clearly prefer that the entire GTHA transit structure move to Fare By Distance. However, they keep running into problems that are a mix of organizational, technical and financial issues, not to mention the basic politics involved in setting fares and subsidies. If FBD is presented as the best possible outcome, this could help overcome some objections by “proving” that this is the ideal to which all systems should move.

At the outset, I should be clear about my own position here. The word “Bogus” is in the article’s title not just because it makes a nice literary device, but because I believe that the Fare Integration Study is an example where Metrolinx attempts to justify a predetermined position with a formal study, and even then only selectively reports on information from that study to buttress their preferred policy. The study itself is “professional” in the sense that it examines a range of options by an established methodology, but this does not automatically mean that it is thorough nor that it fully presents the implications of what is proposed.

The supposed economic benefit of a new fare scheme depends largely on replacement of home-to-station auto trips with some form of local transit (conventional, ride share, etc) whose cost is not included in the analysis. This fundamentally misrepresents the “benefit” of a revised fare structure that depends on absorption of new costs by entities outside of the study’s consideration (riders, local municipalities).

The set of possible fare structures Metrolinx has studied has not changed over the past two years, and notably the potential benefits of a two-hour universal fare are not considered at all. On previous occasions Metrolinx has treated this as a “local policy” rather than a potential regional option, not to mention the larger benefits of such fares for riders whose travel involves “trip chaining” of multiple short hops.

One must read well into the report to learn that the best case ridership improvement from any of the fare schemes is 2.15% over the long term to 2031, and this assumes investment in fare subsidies. Roughly the same investment would achieve two thirds of the same ridership gain simply by providing a 416/905 co-fare without tearing apart the entire regional tariff. In either case, this is a trivial change in ridership over such a long period suggesting that other factors beyond fare structure are more important in encouragement or limitation of new ridership. Moreover, it is self-evident that such a small change in ridership cannot make a large economic contribution to the regional economy.

Specifics of the Board Presentation

The Board Presentation gives a very high level overview of the draft study.

On page 2:

The consultant’s findings in the Draft Preliminary Business Case include:

  • All fare structure concepts examined perform better than the current state, offering significant economic value to the region
  • Making use of fare by distance on additional types of transit service better achieves the transformational strategic vision than just adding modifications to the existing structure, but implementation requires more change for customers and transit agencies
  • More limited modifications to the status quo have good potential over the short term

“Significant” is the key word here, and this is not supported by the study itself. Ridership gains due to any of the new fare structures, with or without added subsidies, are small, a few percent over the period to 2031. The primary economic benefit is, as the draft study itself explains, the imputed value of converting park-and-ride trips to home based transit trips thanks to the lower “integrated” fare for such services, encouraged possibly by charging for what is now free parking.

A large portion of automobile travel reduction benefits come from shift from park and ride trips to using transit for the whole trip – highlighting the importance of exploring paid parking to also encourage a shift from automobile for transit access. (p. xiv)

However, local transit (be it a conventional bus, a demand-responsive ride sharing service, or even a fleet of autonomous vehicles) does not now exist at the scale and quality needed, and this represents a substantial capital and operating cost that is not included to offset the notional savings from car trips.

Fare by distance does perform “better” than the alternatives, but none of them does much to affect ridership. Moreover, the fare structure, to the limited extent that the study gives us any information on this, remains strongly biased in favour of cheaper travel for longer trips. An unasked (and hence unanswered) question is whether true fare by distance and the sheer scale of the GTHA network can exist while attracting long-haul riders and replacing their auto trips with transit.

On page 3, the presentation includes recommendations for a step-by-step strategy:

  • Discounts on double fares (GO-TTC)
  • Discounts on double fares (905-TTC)
  • Adjustments to GO’s fare structure
  • Fare Policy Harmonization

This is only a modest set of goals compared to a wholesale restructuring of the regional tariff, and it includes much of what is proposed by “Concept 1” in the study – elimination of the remaining inter-operator fare boundaries, restructuring GO fares (especially those for short trips) to better reflect the distance travelled, and harmonization of policies such as concession fare structures and transfer rules.

Further consultation is to follow, although as we now know, the first of the four steps has already been approved by TTC and Metrolinx.

On page 6:

Without more co-ordinated inclusive decision making, agencies’ fare systems are continuing to evolve independently of one another leading to greater inconsistency and divergence.

This statement is not entirely true.

  • The GO-TTC co-fare is an indication of movement toward fare unification, although the level of discount offered on TTC fares is considerably smaller than the discount for 905-GO trips. That distinction is one made by the provincial government as a budget issue, and it cannot be pinned on foot-dragging at the local level.
  • Assuming that Toronto implements a two-hour transfer policy later in 2018 (and the constraint on its start date is a function of Presto, not TTC policy), there will be a common time-based approach to fares across the GTHA. All that remains is the will to fund cross-border acceptance of fares (actually Presto tap-ons) regardless of where a trip begins.

Without question, there should be a catalog of inconsistencies across the region, and agreement on how these might be addressed, but that will involve some hard political decisions. Would Toronto eliminate free children’s fares? Would low-cost rides to seniors and/or the poor now offered in parts of the 905 be extended across the system? Will GO Transit insist on playing by separate rules from every other operator as a “premium” service? These questions are independent of whether fares are flat, by distance, or by some other scheme as they reflect discount structures, not basic fare calculations.

Pages 6 and 7 rehash what has come before on pp. 2-3, but the emphasis on fare by distance remains:

Fare by distance should be a consideration in defining the long-term fare structure for the GTHA. [p. 7]

“A consideration” is less strong language than saying that FBD should be the target framework. If this is to be, then Metrolinx owes everyone with whom they will “consult” a much more thorough explanation of just how the tariff would work and how it would affect travel costs. The draft report is quite threadbare in that respect with only one “reference” tariff used as the basis for a few fare comparisons, along with a caveat that this should not be considered as definitive. That is hardly a thorough public airing of the effects of a new fare structure.

No convincing rationale has been advanced for moving to a full fare by distance system, including for all local travel, and it persists mainly because Metrolinx planners are like a dog unwilling to give up a favourite, long-chewed bone. At least the draft study recognizes that there are significant costs, complexities and disruptions involved with FBD, begging the question of why it should be the preferred end state.

On page 8:

Amend [GO Transit fares] to address short/medium trips and create a more logical fare by distance structure based on actual distance travelled instead of current system to encourage more ridership.

This is an odd statement on two counts:

  • Lowering fares for short trips will encourage demand on a part of the GO system that overlaps the local TTC system, and will require capacity on GO that might not be available, especially in the short term before full RER service builds out.
  • True FBD will increase long trip fares on GO and discourage the very long haul riders whose auto-based trips GO extensions were intended to capture. The reference tariff implied by sample fares in the draft report is most decidedly not FBD with short haul fares at a rate about four times that of long hauls.

In other words, the goal as presented to the Board does not match the actual sample fare structure used in the draft study.

On page 14:

GO/UP uses tap on/off, other agencies are tap on only. Emerging technological solutions may allow tap on-only customer experience while maintaining compatibility with fare-by-distance or –zone structures.

The technology in question, as described in the study, would require all Presto users to carry a GPS enabled device that could detect their exit from vehicles automatically without the need to physically tap off. This requires a naïve belief that all riders will carry smart mobile devices to eliminate the congestion caused by a physical tap on/off for all trip segments, and is is a middle-class, commuter-centric view of the transit market.

On page 15:

Completely missing from the discussion is any consideration of loyalty programs such as monthly passes or other “bulk buy” ways of paying fares. Already on the TTC, over half of all rides (as opposed to riders) are paid for in bulk, primarily through Metropasses. GO Transit itself has a monthly capping system which limits the number of fares charged per month, and software to implement the equivalent of a TTC Day Pass through fare capping is already in place on Presto. (It has not been turned on because of the possible hit to TTC revenues if riders were to start receiving capped fares without having to buy a pass up front.)

Several issues are listed here that reflect the complexity of a system where the lines between local and regional service have already started to blur, and where simplistic segmentation of classes of service simply do not work. The argument implicit in this is that only a zonal or distance based fare will eliminate many of the problems, but there is no discussion of the benefits obtained simply by a cross-boundary co-fare plus time-based transfer rules to benefit multiple short-hop trips. This demonstrates the blinkered vision at Metrolinx and a predisposition to distance-based “solutions”.

For those who will not read to the end of the detailed review, my concluding thoughts:

There are major gaps in the analysis and presentation of the Draft Report. By the end of the study, it is abundantly clear that the target scheme is FBD and future work will aim in that direction. Metrolinx’ FBD goal has not changed, and this begs the question of how any sort of “consultation” can or will affect the outcome.

The remainder of this article examines the 189-page Draft Report and highlights issues in the analysis.

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TTC Board Meeting: November 28, 2017 (Updated)

Updated December 1, 2017 at 11:15 am:

The preliminary City of Toronto operating and capital budgets were presented at Toronto’s Budget Committee on November 30, 2017.

Operating Budget

To no great surprise for seasoned budget watchers, the Two Hour Transfer was not included in the funded budget, but instead appears among a long list of unfunded new or enhanced services. The total value of these proposals is $41.3 million (after considering any associated revenue), and they are competing for a much smaller amount of available headroom in the operating budget. (The list is on pp 12-14 in the appendices linked above.)

Although Council may approve many wonderful initiatives and the Mayor may hold many press conferences and photo ops exulting in the decisions, the money to pay for them is often not part of Council’s decision. What actually happens is that these are “nice to haves” thrown into the coming year’s budget hopper on the off chance funding will materialize by budget time. This has the effect of throttling the will of Council and feeding all of its decisions through the much more conservative outlook of the Budget and Executive Committees.

Council further limits this process by passing a budget directive early in the cycle (usually late spring) directing that property taxes for the coming year not rise by more than the rate of inflation. The actual increase is below inflation because commercial property rates are on a long downward trend thanks to rules imposed by Mike Harris to rebalance the relative tax levels for commercial and residential properties in Toronto. This will not complete until, probably, the 2021 budget after which tax increases will apply equally across the board.

Of the new revenues Toronto will receive in 2018, property taxes are actually only a small component, but Council debates inevitably turn on this source as a benchmark. The actual tax increase anyone sees is the result of several factors:

  • the tax rate change for their property class;
  • changes, if any, in separate levies such as the Scarborough Subway tax and the Mayor’s Infrastructure tax;
  • updated and/or phased in changes to the assessed value of property;
  • policy directions such as rebalancing rates between property classes (e.g. commercial vs residential).

Other new revenues can flow to the City through various rate structures notably TTC fares, although these have been frozen for 2018. A small increase in fare revenue is expected compared to the 2017 budget thanks to a changes in the relative number of fares paid of each type (passes, tokens, cash).

As things stand today, the funding to pay for the Two Hour Transfer simply isn’t there, but it may be found, almost like magic, as the budget process unfolds from now through February 2018 at Council. Another transit fare proposal, the first phase of the “Fair Fare” scheme in the Poverty Reduction Strategy, is also not funded.

This process creates a drag on implementation of new programs unless there is strong political support from the Mayor and his voting block on Council, and should serve as a warning to advocates for schemes such as the Ridership Growth Strategy. With luck, there will be proposals before the TTC Board before the hiatus of meetings for the 2018 elections, but anything the Board approves will be considered as an “enhancement” going into 2019 and could well be derailed. Add to this the chronic problems of vehicle and garage space shortages at the TTC, and there is a recipe for seeing little real growth in service until at least the 2020 budget year if not later.

This is the combined effect of a process that has valued capping spending above all other goals for many years. Infrastructure that would be needed to support growth doesn’t exist and has a multi-year lead time, and even the vehicles the TTC owns run less service than they could because improving service never comes with enough revenue to cover costs.

Passengers who have shorter waits or are less crowded do not represent extra revenue, and the marginal gain lies only with new fare-paying trips attracted to the TTC. On a grand scale this is seen for 2018 with the Vaughan subway extension where net new revenue does not come close to paying for the added operating cost of service, but this happens at a smaller scale whenever a bus runs more often and less crowded, but mainly with passengers who were already on the system.

A further problem for constrained budgets is that the cost of existing service goes up through inflationary pressure, and the population requiring municipal services including transit continues to grow. City management use that growth to show how the tax burden is actually declining on a per capita basis from $4,480 in 2010 to $4,262 in 2018 (presentation, p 17), and this is considered to be virtuous when in fact it shows not just “efficiency” but also a decline in service provided. The effect on individuals varies depending on which municipal services they consume, and the program-by-program effect is never reported.

Every year, the budget is hauled into balance through a combination of new revenues, reduced expenditures and “bridging”, a term for various accounting “fixes” that get the City past short-term problems. (Apologies for the subtlety of the colour changes in the chart below. It is from the City presentation.)  Note that the values below are “deltas”, the change from year to year, not the total revenue or spending in each category. Expenditure cuts (darker blue) have been a large chunk of the savings in recent years. By comparison, TTC fare increases are small change within the larger City context and, of course, there is no increase in 2018, a policy direction endorsed during the 2017 budget cycle.

However, City budgets are debated at the margin in that any fine tuning is achieved by tweaking revenue sources to accommodate new spending, and the proportional effect on thinks like fares, property taxes and other user fees tends to be higher than for the budget as a whole. The reason for this is that much of the City’s revenue comes from sources that Council cannot “tweak” in the course of setting its budget, and so the effect on what remains is higher.

The TTC Board decided that it would include the money sitting in the Transit Stabilization Reserve as 2018 revenue, just as they did in 2017 (although in fact this was not needed because of better-than-budget results). This keeps the year-to-year subsidy increase down to $24 million paying mainly for the new cost of the TYSSE and for transitional increases in fare handling while Presto and the legacy fares both remain in place. Using that reserve is an example of a “bridging strategy” because the reserve will not be available in 2019 if it is depleted  in 2018, and new revenue will be needed to replace it. That $24 million pressure from the TTC (with more to come from unfunded proposals) crowds other City departments and agencies by taking the lion’s share of new spending.

Among the factors listed in the revenue and expenditure changes for 2018 (p 27), there is a section headed “Prior Year Decisions”. This includes the TYSSE effect, but does not include the cost of the fare freeze decision on the 2018 revenues.  Had there been a fare increase, politicians would be forced to explain to riders how opening a new subway is not free and how York Region gets a free ride on Toronto taxpayers.

The City’s overall revenue and expense budget is summarized in the chart below. The TTC’s total expenditures of $1.974 billion consume about 18% of the budget, but 63% of this is paid for through the farebox. (Note that there is a common problem when “farebox” recoveries are cited for the TTC because other revenues such as advertising and parking are sometimes erroneously included as if they were rider contributions. Also, occasionally, the TTC funds some capital costs from current revenues and these do not properly belong in the “operating cost recovery” calculation.)

When the available revenue including assessment growth and inflation in property taxes are considered, the City has a small surplus of $3.4 million in the preliminary budget. A further $5 million will be available from a pending change in taxation of vacant property, although Council has already directed that this go toward the Poverty Reduction Strategy. Without further adjustments, these are the only funds now available to pay for the $41 million in approved but unfunded initiatives including the Two Hour Transfer.

Capital Budget

On the Capital side, there are a few points worth noting in the City Budget that bear on the TTC’s funding.

The City of Toronto has a policy that total debt service payments should not exceed 15% of property taxes. This was changed in recent years from a hard cap to one that considered the 10-year average debt ratio mainly to deal with a bulge in borrowing that will peak in 2021. That bulge would affect projections well into the next decade as lower-than-average borrowing in 2018-19 slips off of the chart but must be replaced by comparably low numbers in 2028 and beyond to hold down the average while the 2021 peak is “digested”.

Various adjustments to the budget change the shape of this chart and somewhat tame the peak. There are additions (funding for TCHC repairs and other unspecified “unmet needs”), but new provincial gas tax revenue announced in 2017 allows a reduction in the debt load producing the revised chart below.

The debt limitation, together with limited provincial and federal funding, is directly responsible for the TTC’s enormous list of unfunded projects. The new gas tax revenue will generally not go to transit projects (except possibly under “unmet needs”), but will offset other City borrowing needs.

Another change in projected City financing will be an increase in the “Capital from Current” amount. The proportion of funding provided by this source will rise from 12% of the 2018 budget to 22% in the ten year plan while debt falls from 32% to 22%. This will shift more of the spending in later years of the plan into the operating budget, although the dollar increase may be offset by a reduction in total annual funding needs assuming no major projects are added without dedicated revenue sources and/or subsidies from other governments.

Even with all of this spending, the “state of good repair” backlog across the city will continue to grow, notably at the TTC. This plan understates future funding requirements by its failure to include the TTC’s SOGR projects that are known to exist, but not included in the City’s plans. (Some other City departments, notably Transportation and Facilities Management, also have large unfunded repair backlogs. See p 63 of the presentation.)

Updated December 1, 2017 at 9:15 am:

The budget presentations, which contain slightly different information from the budget reports, are now online.

The Capital presentation has a more detailed breakdown of the “Capacity to Spend” reduction, and I have added this, plus a few comments, to that section of the main article (scroll down to the end).

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Mayor and TTC Chair Advocate For Time Based Transfers

Mayor Tory, TTC Chair Josh Colle and TTC Commissioner Mary Fragedakis have requested that TTC staff report later this month on the “costs and any other implications for the introduction of time-based transfers for PRESTO users” in 2018. This would make the single fare a payment for a limited-time pass rather than for an unbroken trip subject to transfer rules that predate the TTC’s origin nearly a century ago.

This proposal is pitched both as a way of assisting low-income riders (for whom multiple short trips by transit can be quite expensive) and local businesses (who would benefit from the hop-off, hop-on behaviour), as well as a way to reduce fare evasion whose cost is pegged at about $15 million annually. The more cynical among us would note that the change simply makes “legal” a behaviour TTC riders have engaged in since the dawn of time – maximizing the amount of travel possible for one fare.

The Presto smart card’s  operation would be greatly simplified with the elimination of the byzantine logic required to validate transfers between vehicles, and it would also remove the source of many disputes about overcharges when Presto does not recognize a change of vehicles as a legitimate part of a continuous trip.

This would also make fare integration across the 416-905 border simpler by unifying TTC transfer policies with those of the local 905 systems. What remains is the need for a funding mechanism to provide a co-fare arrangement between operators.

This is a surprising reversal for Tory and Colle who, in past years, treated the time-based fare as “too expensive” despite its many advantages. Previous estimates pegged this at a $20 million annual cost.

With CEO Andy Byford showing strong support for this policy as part of a Ridership Growth Strategy, the move is clearly on to make this change. The timing for the election year is an extra benefit for politicians looking for a transit improvement.

Now if only they would fund better service.

Postscript:

This should be the final nail in the coffin for the ill-conceived Metrolinx proposal to shift transit fares to a distance-based charge. With all of the GTA operating on a time-based system, and zones vanishing internally (York) and between regions (cross border fare sharing), there is zero justification for a wholesale upheaval in a flat fare arrangement. Metrolinx should wake up and drop this from its policy proposals.

TTC Plans Flatlined Service and Fares for 2018 (Updated November 17)

Updated November 17, 2017 at 6:30 pm

The TTC Budget Committee met today and considered the draft 2018 Operating Budget. Between the original release (described later in this article) and today’s meeting, Mayor Tory and two members of the TTC Board endorsed the concept of a two-hour fare to replace the complex transfer rules now in place.

Although this was listed as the second item on the revised meeting agenda, Commissioner Mary Fragedakis moved that it be considered first. This re-ordering was a procedural move to forestall a standard tactic used at City Council where a motion setting the next year’s tax increase is introduced and passed before the budget which it will fund. The result is that any proposed budget changes must fit within the already-approved tax level rather than having taxes set after the budget is finalized. In this case, the motion regarding a two-hour fare was only a report request, and the order was less critical. That request passed by a vote of 3-1 with Budget Chair John Campbell in the negative as he opposes the two-hour fare scheme.

The meeting then turned to a series of deputations which, as these things tend to do, fell on largely hostile ears. A favourite tactic is to challenge members of the public to explain “how would you do  it”, despite the fact that the issues are complex and do not fit within an answer of a few sentences. The Budget Committee itself cancels more of its meetings than it holds, and opportunities for an open debate about transit policy options and the budget rarely occur.

Beyond information already in the budget report, there were a few additional items of note in the staff presentation.

The Cost of the Vaughan Extension

This comes up from time to time, and it is clear that the Committee did not fully understand the costs and revenues associated with the extension.

For some time, a cost increase of $30 million annually has been cited for the TYSSE. However, the 2018 Budget only includes a $25 million bump because $5 million had already been included for start-up costs and operation in the 2017 Budget.

The $25 million comes from a combination of new costs, and revised revenues. The TTC now receives $8 million for bus services operated on contract for York Region, but those services will be assumed by the Region when the subway extension opens. The TTC will continue to operate the vehicles, but now at their own cost and so this is a net increase in costs because of the lost revenue. That amount is partly offset by a combination of $3 million in new fare revenue and $1 million in parking revenue.

Ridership

The projected ridership for 2018 is 539 million, a growth of 3 million over the probable results for 2017, but below the originally budgeted target of 543.8 million. The change from 2017 to 2018 arises from several factors:

Increases:

  • 4.8 million rides due to economic growth
  • 2.1 million rides due to service improvements and the GO Transit co-fare
  • 1.5 million more rides by children (who travel free of charge)
  • 1.2 million new rides from the TYSSE
  • 0.5 million additional rides counted due to improved reliability of Presto readers
  • Total: 10.1 million

Note that most of the expected ridership on the TYSSE will be by existing riders changing travel patterns, not by net new riders. This is further constrained because York Region Transit will continue to serve York University directly thanks to a lack of agreement on a co-fare between YRT and TTC. Riders who were anticipated to show up as YRT-TYSSE-YorkU trips will not be using the subway. It is ironic that there will be more new rides by children on the system as a whole than by riders on the subway extension.

Half a million rides were estimated to have not been counted in 2017 because failing Presto readers were unable to charge these fares. The TTC’s Brad Ross advises that these are

“rides not counted, assuming they still rode but couldn’t pay. The TTC is in the process of accounting for all lost revenue due to out-of-service Presto readers.”

Reductions:

  • 0.5 million rides due to increased subway closures
  • 0.7 million rides due to the elimination of the Public Transit Tax Credit
  • 2.8 million rides due to decreasing sales of Metropasses and Day Passes
  • 3.1 million rides due to a reduction in the average number of trips taken on each Metropass
  • Total: 7.1 million

This provides the net increase of 3 million over 2017 probable results.

Expense Risks

The budget has been drawn up on a conservative basis and leaves several areas where the outcomes in 2018 could be different than projected. The $14 million now sitting in the Transit Stabilization Reserve could be used to offset some of this risk, provided that Council does not scoop the reserve simply to hold down the subsidy increase.

Some of the items below refer to savings that allowed 2017 to show a “surplus” (actually a reduced requirement for subsidy), and these might not all continue into 2018.

The budget contains a provision for $4.1 million in extra costs through the provincially mandated payment for two emergency leave days per year. This has been estimated conservatively, and TTC staff advised the Committee that the worst case cost could be $18 million.

The History of TTC Budget Variances and Subsidies

For many years, the TTC has consistently come in under budget for the annual subsidy requirement. In the table below, the amounts are for the subsidies, not for the overall operating costs. This always leaves the TTC in a position for its next year estimates that a budget-to-budget subsidy flat-line actually represents an increase over actual requirements in the current year.

The subsidy per rider will go up in 2018 because of the fare freeze. Although this takes Toronto back to the level of 2010, that does not allow for cost inflation over that period which has been well above the CPI.

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TTC Board Meeting October 16, 2017 (Updated)

The TTC Board will meet on October 16. Among items of interest on the agenda are:

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GO/TTC Co-Fares: A Glass Half Full

Today, October 6, 2017, the Government of Ontario announced that there would be a $1.50 co-fare between GO Transit and the TTC. This long-overdue change begins, but does not fully address, problems faced by transit riders who cross the City’s border and faced a full extra fare to ride on two separate transit systems.

Ontario is lowering the cost of commuting for people in the Greater Toronto and Hamilton Area (GTHA) by introducing a 50 per cent discount for PRESTO card users who transfer between GO Transit or the Union Pearson Express (UP Express) and the Toronto Transit Commission (TTC), in both directions.

Premier Kathleen Wynne was at Union Station in Toronto today to announce that adult, senior and youth/student TTC riders will pay a TTC fare of just $1.50 when they use a PRESTO card to transfer to or from GO Transit or the UP Express. The discount will launch in January 2018, shortly after the Toronto-York Spadina Subway Extension will begin service to six new stations. For people whose regular commute includes GO/UP Express-TTC transfers, this step towards regional fare integration and more affordable transit options will save about $720 per year. [Ontario government press release]

For some types of trips, this is “good news”, but it is far from the panacea some, notably Mayor Tory, touts:

“Thanks to bold leadership at City Hall and Queen’s Park, we have found a way to give a discount to those who use a mix of our transit systems. Transit will now be more affordable for Toronto residents who ride a mix of the TTC, UP Express and GO Transit to get around the city. This agreement also moves us a step closer to make sure that SmartTrack will cost Toronto residents the same as the TTC. We need to make sure that the transit we are building and maintaining remains affordable.” [From the press release]

The primary beneficiaries of this change will be GO Transit commuters who can now use the TTC to and from a Toronto GO station (most likely Union) for the “city” end of their journeys. That $720/year saving translates to 240 round trips at $3 each. That’s 48 weeks’ worth of travel taking into account at least two weeks of vacation plus an equal number of statutory holidays.

To put this into context, the annual cost of commuting by GO from Oakville to Union is about $3,400. Someone who now uses TTC for their city trip (say from Union to Queen’s Park) would pay $1,440 in TTC fares at $3 each making a total of $4,840 for both systems. The new discount will save about 15%. Conversely someone who now walks from Union has the TTC option at a lower marginal cost than before.

This is a good deal, as far as it goes, for GO Transit riders, but the story is much different for other travellers.

Cross-boundary Travel on Local Bus Systems

Riders from Mississauga, Brampton, York Region and Durham Region transit systems will still pay two fares to cross the boundary to or from Toronto.

This will apply to riders entering the new Spadina subway extension, even if they travel to stops north of Steeles Avenue or to York University, now served directly by YRT buses.

Metropass Users

The discount only applies to riders who pay the full TTC adult fare via Presto ($3.00). Passholders will not receive any discount. This is a benefit to those who use GO a lot, and the TTC less so.

  • Cost of a monthly pass (on discount program): $134
  • Cost of 40 co-fare trips at $1.50 each: $60
  • Cost of 20 full fare trips at $3.00 each: $60
  • Total cost: $120

If the number of TTC-only trips goes up, say to 25, the combined cost ($135) would exceed the value of a Metropass.

Students and Seniors

This group of riders already travels at a reduced fare of $2.05 if they are using Presto. The discount to a $1.50 co-fare does not represent as much of a saving to them as it does to “adult” riders. This will also be true for any new group to whom reduced fares are offered such as ODSP recipients.

TTC-GO Trips Within Toronto

For riders who now attempt to make trips using both services inside Toronto, the co-fare will represent a discount over their current pricing. However, the high cost of travelling by GO will remain a large barrier to people who might move from an all-TTC route to a TTC-GO route.

For example, the monthly cost of travel using Presto from Agincourt to Union Station is $223.25 (based on 40 trips/month). Assuming that a rider will save $60 per month on TTC fares, this would still be an increase of over $160/month to commute from Scarborough to downtown via TTC and GO. That is not exactly the “equal to TTC fare” goal of John Tory’s SmartTrack, and it is unclear just who will step up to pay the subsidy needed to make it so.

Moreover, someone who is already a frequent TTC rider is also likely a passholder, and it may not be worth their while to trade in the capped price of a Metropass to “enjoy” the co-fare available on GO.

Because of inconsistencies in GO fares, the situation at Mimico is different because the monthly GO cost is only $177.70. Even so, this remains a substantial premium over a pure TTC fare, and  puts this option well beyond the means of many TTC riders.

Finally, many GO stations in Toronto are difficult to reach by transit or have only limited service. This is another barrier to “integrated” travel on GO and the TTC.

This co-fare and its subsidy are a beginning, but only a small one, toward the dual goals of reducing cross-border fare premiums and making GO more affordable within Toronto. A small cake and a few balloons may be an appropriate celebration, but hold the champagne.

 

Metrolinx Board Meeting: September 14, 2017 (Updated)

Updated September 14, 2017 at 6:00 pm: An inconsistency in the opening date for the Finch West LRT between the Capital projects update and the project’s website has been flagged by a reader. Snapshots have been added to this article.

The Metrolinx Board met on September 14 to consider various reports. I have already written about the Fare Integration update, and will devote separate article(s) to the “Next Big Move”, the updated regional plan.

Other items of interest on the agenda included:

Presto Update and Quarterly Report

The roll out of Presto continues and TTC, even with a relatively low take-up rate to date, now accounts for more Presto taps than any other agency in the network. However, this only slightly more than one quarter of all Presto “taps” on a monthly basis (6.6 million for TTC vs about 24m for all systems). As the proportion of Presto-based TTC trips rises, TTC figures will dwarf all other agencies.

Status updates of note:

  • Readers are now performing well, but problems remain with the add value machines. A new generation of machines is now in testing and these will be rolled out across the system in the near future, including on the about-to-open Spadina subway extension to Vaughan.
  • There is no plan to introduce “open payments” (credit/debit cards, etc) on Presto in 2018 because Metrolinx is pre-occupied with the TTC roll out. Something might appear in the following year, but a related issue is that security standards for bank card transactions keep changing and getting tighter requiring ongoing design updates.
  • Presto sales and reload functions in Shoppers Drug Mart stores have been well received.
  • Presto supports “UPASS” programs. These are specific to each institution, not a system-wide standard implementation. Improvements coming in November:
    • UPASS program core functionalities enabled as part of PRESTO Vouchers solution.
    • UPASS program will provide discounted fares to university students in their respective districts through their local transit agency and universities.
    • Students will be able to electronically load discounted passes onto their cards through the PRESTO Customer Website, and universities can add eligible students through the PRESTO Vouchers portal.
  • Presto has negotiated a new agreement with various client agencies. There was no information in the presentation about how willing these agencies/cities were to accept higher service fees to fund the Presto system.
  • Presto is developing a new privacy policy for disclosure of data to law enforcement agencies. Public feedback on their proposals will be sought through a web survey, stakeholder groups and public sessions. The Information and Privacy Commissioner will review management proposals to ensure that they comply with applicable laws. A proposed policy update will come to the Board in December 2017.

Capital Projects Update and Quarterly Report

Metrolinx’ large inventory of capital projects continues, notably the Crosstown LRT, but also expansion of GO corridors.

There was a lengthy discussion of Union Station capacity, and among the information that came out was that Metrolinx is considering a reconfiguration of the station with fewer tracks and wider platforms. This would provide more passenger handling capacity, a key requirement considering the anticipated rise in service on all corridors. A new layout would also imply that services would be “hooked up” east and west of Union rather than terminating there. This would considerably simplify operations. A study of Union’s future requirements will come to the Board in December 2017.

Metrolinx is planning to study the status and appropriateness of Hydrogen technology to their operations:

  • A feasibility study on the use of hydrogen fuel cells as an alternative technology for electrifying GO rail service and the UP Express is underway
  • Ontario is committed to running electrified trains on the GO rail network by 2025. Studying the feasibility of hydrogen rail technology is part of our due diligence to ensure that we choose the appropriate technology.
  • Metrolinx has had discussions with the Germany-based National Organization Hydrogen and Fuel Cell Technology (NOW) to learn directly about early experience
  • Metrolinx is committed to bringing industry leaders together for a symposium later this year to explore the potential application of hydrogen fuel cell technology

This will be useful if only to get a current view of the technology’s maturity and applicability, assuming that there are no Ministerial interests in forcing a conversion on Metrolinx. According to staff, they are operating on the basis that RER will be rolled out with existing electrification technology.

Updated September 14, 2017 at 6:00 pm:

In the Quarterly Report, there is a status table for all of the projects. The Finch West LRT is shown with an In-Service date of 2022.

However, the project’s web page shows a 2021 opening. I have asked Metrolinx to clarify this discrepancy. Thanks to reader Kass Forman for catching this.

2016-2017 Annual Report

The Annual Report includes, under the heading of “Being responsive & accountable”, the following statement [p. vii]:

Metrolinx is:

  • Increasing transparency in its financial, labour, realty, freedom of information, support fleet, information technology and capital projects details, so that Corporate and Administrative Costs are easier to understand.
  • Increasingly relying on evidence-based cost drivers to strengthen the data used to allocate costs to capital and operating programs.

These are fascinating claims considering the degree to which Metrolinx is a secretive organization. Far too many background studies are published, if at all, long after the Board has made a decision and the time for public input which could have been informed by such studies has passed.

“Freedom of Information” should occur naturally (as it would for a municipal agency), not when it is forced on Metrolinx by a formal FOI request from the media.

Easy understanding of costs will be more challenging because of corporate restructuring to amalgamate former divisions (Presto and UPX) into the main body of Metrolinx.

The integration and consolidation of operations under one management structure will deliver core Metrolinx services to customers and allow us to leverage internal learning and skills so we can adapt quickly and respond to our dynamic and fast-changing region. While we will maintain the identities of each service brand externally, we will be looking for opportunities to help our customers and the public understand the connections between each service and product. Beginning next fiscal year, we will report on our consolidated transit operations division, which will combine data and statistics for GO Transit and UP Express. [p. viii]

This will make determination of the profitability or cost of individual segments that have been treated as independent divisions more difficult, along with the degree of cross-subsidy that might exist between various aspects of Metrolinx’ businesses.

I asked Robert Siddall about this during the press scrum after the meeting. Siddall is the Metrolinx CFO, but is also Acting President and CEO pending the arrival of a recently-appointed CEO in October. He replied that with UPX becoming operationally part of GO Transit, it did not make sense to attempt to break it out as a separate cost and revenue centre. He was silent on the question of Presto.

For 2016-17, Presto received $14.8 million in usage fees. Operating costs were not broken out. [See charts on pp 35 and 38 of the report.] Oddly, the Presto update earlier in the agenda treated the negotiation of the client agreement with UPX as if this were a completely separate agency rather than part of GO Transit. The degree to which there are cross-subsidies between GO and UPX trips and Presto is completely hidden.

To Kirby, or Not To Kirby

The line in the Annual Report about “evidence-based cost drivers” is particularly amusing given the situation at both the provincial and municipal levels.

Ben Spurr in the Star has reported on political interference with the stations selected to be part of GO’s coming expansion. Specifically, the Lawrence East and Kirby Stations were originally not to be included in the list recommended to the Metrolinx Board, but this changed after intervention by the Minister of Transportation.

During the press scrum, Metrolinx Chair Rob Prichard performed a not-too-elegant dance around repeated questions about just how the change in Metrolinx’ official position on these stations came about. Boiling many answers down to their core, he argued that although the Board had considered the matter of the station list on three occasions, they only actually voted on it once. Moreover, it is Metrolinx’ job, he argued, to provide advice based on information and analyses they have. Such decisions are a combination of technical analysis and art, he said. It was a performance not quite at the level of Swan Lake. [I will leave it to the reader to decide whether Prichard was auditioning for Prince Siegfried or Baron von Rothbart.]

An obvious question here is this: Metrolinx is supposed to give advice based on their expert technical studies (and whatever art they might muster). However, if the Cities of Toronto and Vaughan have new information about development plans for these two station sites, one must ask why Metrolinx staff and consultants did not have this as part of their study. How credible is any plan Metrolinx produces if “new information” can arise with clear political motives to swing decisions?

Fare Integration Update

As I previously reported, Metrolinx has rethought its approach to integration so that it can actually achieve something rather than endless discussion. Specifically, the Board approved:

  1. The Metrolinx Board endorse the step-by-step strategy outlined in the Report and that staff report back on December 14th 2017 on means to advance the strategy which includes:
    • Discounts on double fares (GO-TTC)
    • Discounts on double fares (905-TTC)
    • Adjustments to GO’s fare structure
    • Fare Policy Harmonization
  2. Staff undertake to engage the public and key stakeholders (including municipal elected officials) on advancing the step-by-step strategy
  3. Staff post the consultant’s Draft GTHA Fare Structure Preliminary Business Case

After a long period when Metrolinx was attempting a “big bang” change in fare policy, they are now trying a “step-by-step” approach intended to deal with the most annoying inconsistencies in regional policy without actually tearing the entire structure apart. Although it is clear Metrolinx would like to reach an end-state based on fare-by-distance, they will settle for an interim configuration for “two to five years”, according to Leslie Woo, Chief Planning Officer. Politically, that is equivalent to saying that the matter is deferred sine die.

This would conveniently allow someone in, say, the midst of an election campaign, to promise added funding to cover the cost of bringing the TTC into a consolidated fare system, to rationalize GO transit’s fares, and to sort out some regional inconsistencies such as the TTC’s transfer policies.

If Toronto adopted the two-hour transfer, this would make a seamless cross-border trip simple to implement and administer for Presto users. With the 416/905 barrier out of the way, the “need” to completely reorganize fares would drop substantially, and the political leverage to go “all the way” to fare-by-distance would be reduced almost to vanishing.

One issue came up during the scrum, and it will be thrown into the hopper for December’s report: the integration of UPX fares with the rest of GO. It makes no sense to operate UPX effectively as a short turn service on the Kitchener line while charging different fares. Moreover, integration of UPX trips with the wider GO tariff, including any TTC co-fare, is essential if Metrolinx is to play by the same rules they expect of every other transit agency.

Particularly important to any discussion about alternative fare schemes will be an open revelation of how each arrangement would affect different types of riders. Metrolinx has always been silent on the effect of a distance-based fare and premiums for “rapid transit” (e.g. subway) on long-haul suburban commuters within Toronto. Failure to publish this information puts the “debate” in the ludicrous situation of asking for a faith-based approval rather than one based on actual evidence. This kind of “planning” and “consultation” at Metrolinx must stop if they are to achieve their goals for transparency.

Metrolinx Contemplates Regional Fare Integration, Again

As regularly as the seasons come and go, Metrolinx produces new reports on its long-running contemplations for a new regional fare system. Like the seasons, reports come and go, but there is little real progress toward an actual solution.

The root problem has always lain with Metrolinx. Although it bemoans the inconsistencies among fares in regional agencies, Metrolinx itself has clung to one fare model – fare by distance – as the Nirvana to which all should aspire. If there is something to be said for the current report, it is that at last there is a shift it focus and a recognition of two essential issues on the provincial side of the discussion:

  • Metrolinx’ existing fare structure is not purely a fare-by-distance system, but contains many inequities and idiosyncrasies built up over the years. In particular it discriminates against short and medium distance travel, but that is only one of its problems.
  • Integration across the 416 boundary will not occur without some new type of subsidy. Previous attempts to craft a revenue-neutral fare scheme inevitably required pillaging from Toronto (where most of the fare revenue is actually collected) to provide a subsidy for the 905.

The Executive Summary includes the following points from a consultant’s study that led to a Draft Business Case (this document has not yet been posted online):

  • All fare structure concepts examined perform better than the current state, offering significant economic value to the region
  • Making use of fare by distance on additional types of transit service better achieves the transformational strategic vision than just adding modifications to the existing structure, but implementation requires more change for customers and transit agencies
  • More limited modifications to the status quo have good potential over the short term
  • Further analysis has been conducted on other aspects of the fare system such as concessions, products, and loyalty programs
  • Metrolinx and GTHA transit agencies continue to independently make decisions regarding fares that widen the gap that fare integration needs to bridge

At the risk of prejudging the outcome, it is quite clear where this is heading. There will be come sort of “limited modifications” to achieve the “good potential over the short term”, and we may never actually reach, nor need to reach, the end state.

Staff recommend that the Board approve the following:

  1. The Metrolinx Board endorse the step-by-step strategy outlined in the Report and that staff report back on December 14th 2017 on means to advance the strategy which
    includes:

    • Discounts on double fares (GO-TTC)
    • Discounts on double fares (905-TTC)
    • Adjustments to GO’s fare structure
    • Fare Policy Harmonization
  2. Staff undertake to engage the public and key stakeholders (including municipal elected officials) on advancing the step-by-step strategy
  3. Staff post the consultant’s Draft GTHA Fare Structure Preliminary Business Case

Metrolinx argues that an integrated fare strategy would require substantial standardization of fare policies notably the discount structures for concession and loyalty fares and rules regarding the validity of transfers. While the 905 systems use time based transfers, the TTC requires a new fare if there is a stop-over or doubling back on a journey. This and any other “local options” complicates Presto, and as we have seen in the case of the TTC leads to odd behaviours due to the difficulty of mapping trips and “valid” transfers under all circumstances. Although the report does not mention this, TTC management have already indicated tentative support for time-based transfers (this is to be part of a forthcoming Ridership Growth Strategy). The problem lies in the political arena where City Council will have to cough up funding to offset the cost.

Until the study is actually published, we should take the statement that “all fare structure concepts examined perform better than the current state” because an essential part of any new structure would be the elimination of the boundary between TTC and other fares. This does not necessarily endorse any of the alternatives.

Like a dog with a bone, Metrolinx simply will not give up on its preferred alternative:

Fare by distance should be a consideration in defining the long-term fare structure for the GTHA

The question here is what is merely “a consideration” and what is an unchangeable goal across the entire network.

Metrolinx acknowledges that it has to talk to people, and that it simply cannot impose its will on the region.

A formal and inclusive decision making process needs to be put in place to establish the longer-term GTHA fare structure vision

This is a rather odd statement considering all of the study this issue has been through, and the degree to Metrolinx has previously claimed widespread agreement. Moreover, it implies that someone might actually disagree, although the outcome of such a position is unclear. Would Queen’s Park welcome local political input (after demolishing the original Metrolinx that included local politicians) if it provided a way to impose unwanted policies on individual members of the region?

What is particularly galling about this summary is that after all this time we still do not see worked examples of possible fare structures and their effects on various types of trips, on groups of riders and on the revenue streams of each transit agency. Possibly this is in the as-yet unpublished report, but if it isn’t, Metrolinx will effectively admit that the real effects are not as rosy as their claims. The most obvious question any new scheme will encounter is “what’s in it for me” both as positive and negative issues.

Appendix 1 discusses “Key Fare Integration Challenges” and is somewhat more realistic than previous attempts at the topic. First up is the question of “tapping off”, a pre-requisite to fare-by-distance. The report acknowledges that tapping off is not the effortless addition to fare collection procedures:

Emerging technological solutions may allow tap on-only customer experience while maintaining compatibility with fare-by-distance or–zone structures

and

As GO fares require origin/destination information, any regional fare structure requires either:

  • acceptance that different customer behaviours will be required depending on service type,
  • moving all transit to tap on/off, or
  • new technological solutions

Other issues include the handling of cash fares and mobile ticketing.

With respect to distance travelled, there is a notable difference between GO and TTC subway fares because the former are distance based and skewed against short trips, while the latter are flat and provide free transfers to connecting services. The report observes:

As GO fares cannot feasibly be flat, any regional fare structure requires either:

  • acceptance of different approaches to distance based on service type, or
  • moving all services to fare by distance/zones

The problem with this statement lies in the term “service type”. Metrolinx has previously touted the idea of “premium” services that would include all rail-based modes, while leaving buses untouched. This arises from a flaw in a previous study that did not consider “bus rapid transit” because (it is claimed) there were no BRT services when it was undertaken. Such is the quality of Metrolinx “research”.

If we decide that some services should pay a premium fare, the obvious questions is “what is a premium service and why should I pay more for it”? This is easy to argue for GO rail because these are express services with widely spaced stops (although even that model is under attack thanks to SmartTrack and the Minister of Transportation’s love for extra stops), but much harder for subways, let alone LRT and BRT that are a much lower step up from local transit than a GO train.

Each municipality has its own local concession fares often in response to local history or to the perceived value of certain types of discounts. Toronto has free rides for children, while seniors’ and students’ fares vary around the region, and there are different approaches to discounts (if any) for disadvantaged groups. How all of these will be reconciled is a knotty question: does the most generous arrangement get implemented across the board, or do the outliers (e.g. Toronto with children’s fares) drop their concessions? What is the appropriate multiple for loyalty programs such as the Metropass?

Unless Queen’s Park is willing to sever the link between farebox revenue and local service costs by providing subsidies for a more generous (and “integrated”) fare system, this discussion won’t get very far. Indeed, it might still run into problems if municipalities that do not now offer “discount X” get a provincial subsidy when others who provide this out of local funds today are left with that cost.

The whole study of Fare Integration has bumbled along for quite some time without any clear answers, but with an attempt to preserve the status quo from Metrolinx’ point of view. This has wasted a great deal of time when a better-informed conversation might have taken place. With an election coming in June 2018, the current proposal adds to the consultation, but conveniently punts a decision beyond the end of the current government’s mandate.

Station Conversion For Presto

Through the fall and winter of 2017-18, the TTC will be converting all remaining stations and entrances to use fare gates and Presto card readers. There are station-specific notices, but for readers’ convenience I have consolidated all of the information here. The first two pages of the following pdf contain the information in textual format, and the remainder is a Gantt chart. The information is current as of September 9, 2017. Stations are in sequence by line. If a station is not shown, either it has already been converted or the TTC has published no information about it.

2017_TTC_Presto_Station_Closings

There are variations on the way the program will roll out depending on the station.

  • Some entrances/stations will not close for this project, but will be converted in stages with access maintained throughout construction for passengers.
  • Some entrances/stations will have only selective late night closings (generally after 11pm), and work will otherwise take place maintaining a pathway for passengers.
  • Some stations/entrances will close completely for some or all of the conversion project. There will be weekend closings for selected stations in the downtown “U” on Line 1 YUS, but many of the secondary entrances will close completely for over a month.

During construction, riders will not be able to purchase fare media from the station collectors while their booths are close.

Even after the shutdown periods, work will continue at some locations for an extended period.

Following the conversion, riders will still be able to pay with all fare media at the main entrance of stations, but the secondary entrances will support either a combination of Metropasses and Presto, or only Presto in some cases. Details are in the linked chart.

Postscript: Notices for the closing of stations on lower Yonge Street include the following info:

During the early and weekend closures subway trains will not stop at the station. Customers should use [nearby] stations to access the subway or board a northbound or southbound 97 Yonge bus.

Of course, the 97 Yonge bus does not run on lower Yonge Street except during weekday peaks when the stations will be open. The TTC has been advised of this and will, in due course, fix the affected pages. No need to kvetch here in the comments.

So You Want A TTC Fare Freeze in 2018

In his continuing program of bribing the electorate with promises that the City cannot afford, Mayor Tory has asked the TTC to bring forth a 2018 operating budget containing no fare increase. This would come, of course, just in time for his re-election campaign where Tory could brag about all the transit wonders he has bestowed on our fair city.

Fare freezes are simplistic approaches to a “transit policy” not unlike fantasy subway maps and promises that tax increases will be held at no more than inflation. Can’t fit it all into the budget? There must be efficiencies, cost cutting that will solve problems, because as we all know public agencies like the TTC are rife with fat just waiting to be trimmed. That’s a great story, and it plays to the wing of Council whose only concern is to be re-elected for keeping taxes down.

The reality is not quite what it is made out to be.

TTC faces a shortfall in its budget for 2018 thanks to increasing costs and expansion of its subway service. The degree of this shortfall has probably been understated. There is no provision for improved service (net of the subway extension) because ridership is expected to remain fairly static. The cost increases cannot be wished away with an appeal to make the TTC more “efficient” both because of their scale, and the many cuts that have been made in recent years responding to subsidy constraints.

Several projects-in-progress are expected to bring efficiency savings to the TTC in future years, but not in 2018. Moreover, some “savings” are really an ability to do a better job with existing resources, not to cut costs.

“Fare equity” means different things to different people, and can be argued from viewpoints that trigger quite different outcomes.

“Poverty reduction” is a key strategy for City Council, but much more as a talking point than a real, financial commitment. TTC fares are part of this strategy, but there is a danger this will get lumped into overall transit costs rather then be recognized as a need for dedicated, separate funding in the City budget.

The inherent economic value of simply having good transit service at an acceptable price rarely enters the discussion even though billions in tax revenue and development opportunities hinge on transit’s existence.

Policy discussions consistently avoid complex issues regarding fare discounts and service quality, and there is little understanding of the menu of options available should Toronto and the TTC choose to pursue them. As in so many past years, the TTC enters its budget cycle in crisis mode – how will we find all the money – having studiously avoided the details of its budget and of revenue options.

Perish the thought that the TTC might actually suggest or even advocate for new fare and service policies without first getting the Mayor’s blessing and staging a press conference to announce his decision.

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