Where Have All The Riders Gone?

TTC ridership has been static for the past few years, as set out in the October 2018 CEO’s Report. Year-to-date ridership is down 3.2% compared to budget and 2.0% compared to 2017.

This is attributed to several factors:

Ridership has flatlined since 2014 due to various factors, including congestion, changes in customer mobility, and growth in digital ride-hailing services.

Another important factor that has adversely impacted ridership is the ongoing decrease in Metropass sales, which currently generate approximately 40% of total ridership. Specifically, there were 163,000 (-7%) fewer passes sold between January and August 2018, compared with the corresponding months in 2017. Although some of these lost sales have likely been offset by an increase in PRESTO e-purse transactions, the declining Metropass sales continue to have a significant impact on overall ridership trends. [p. 19]

The statements here present many factors, but do not attempt an analysis. One vital and missing component in the list is the question of service quality and capacity. If people cannot get on their bus, streetcar or subway train, or if the service is unpredictable enough, they will use transit as a matter of last resort, not as a first choice.

The entire concept of a monthly pass was to remove the incremental cost of taking another trip, something which (at least back in the late 1970s when the debate raged over whether Toronto could have monthly passes) was an important factor. Fares are still an issue, but service is a troubling component too.

The note about declining Metropass sales requires some explanation. The TTC, through user surveys, estimates the number of trips taken by the typical passholder in a month, and this sits at about 74. For every 100,000 passes they sell, they count 7.4 million trips. Obviously, the number of trips each passholder takes will vary, but things will average out. For example, in the first week of July when, by chance, I was part of the survey sample, I took 27 trips (and that’s counting a “trip” by the transfer rules then in effect). That translates to over 100 trips/month. The trips/day varied from a low of 2 to a high of 7. It was a busy week, and I made one or two round trips from home, plus a few stopovers, on the busiest days. If I had counted on the basis of the two-hour transfer, the “trip” count would have been close to 20 factoring out the stopovers and a few quick there-and-back-again round trips.

Because each Metropass sale translates to so many trips in the stats, the loss of a sale has a big effect on the total TTC numbers. However, the people who “fall off” the Metropass group are likely to be those whose usage was borderline break-even and for whom convenience of a flash-and-go card had a value in its own right. Presto eliminates that value, and it would be no surprise to see many passholders switch over. The actual trips lost to the TTC are, for these riders, fewer than the average Metropass usage.

The trips/pass for the remaining sales should go up if the low end of the market shifts to Presto, but it is not clear whether the TTC adjusts their multiplier frequently. The “lost” riding could be as much an effect of overcounting the lost pass sales (and associated trips), as it is a real decline in system usage. This problem will become even trickier with the two-hour pass available through Presto where trips that used to count as two (or more) fares will now only count as one.

Meanwhile, in response to the falling numbers, the TTC has plans:

To re-establish sustained ridership growth, a new Ridership Growth Strategy (RGS) is being implemented. RGS initiatives include implementing a two-hour transfer on PRESTO and relieving overcrowding on surface routes.

Research is also underway to analyze the changes in monthly Metropass sales and corresponding ridership impact. [p. 19]

If one goal of RGS is to relieve overcrowding, then it is clear that at least part of the system needs more service to handle demand even while official “ridership” is not growing. There may be routes with falling ridership, but even they must be viewed with caution lest the fall be the result of irregular or even reduced service.

Indeed, if there are overcrowded routes, why does the TTC not publish a list of routes, periods and locations where crowding is a problem that cannot be addressed without more capacity? Toronto cannot begin to talk about attracting new riders if it does not provide enough service to carry those who are already trying to use the system, or even understand the scope of the current system’s shortfall.

The two-hour fare will accentuate the split between the trend in “fares” (considered equivalent to “ridership”) and boardings on vehicles. (A “boarding” is one passenger getting on one vehicle, and each transfer counts as a new boarding, except on the subway which is considered one route for this purpose in TTC stats.) This will add to the confusion between apparently falling “ridership” and system crowding.

It is no secret that the TTC is capacity constrained. Although the bus fleet is now more reliable than ever thanks to better maintenance and the retirement of old clunkers, the actual size of the fleet is not growing because there is no place to put any more vehicles. Expansion plans are limited, as I have written before, and this is a major problem for the TTC’s future. On the streetcar fleet, new cars are gradually replacing old ones, and on close to a one-for-one basis bringing greater capacity to King Street this year, and to Queen in 2019. Subway capacity will not improve until early 2020 at best on Line 1 YUS, and 2026 or later on Line 2 BD.

Even the new Express Bus network has limited benefit because so much of it simply rebrands service that already exists rather than making a real improvement in what riders experience. Of the changes to date, the most striking has come on 29 Dufferin, but on many routes the service is identical to, or only a slight improvement on, the old “E” branches that are now 900-series routes.

The TTC has research underway on the effect of pass sales on ridership numbers, but this potential effect of the Presto migration was hardly unknown. If anything, the TTC has been derelict in placing so much focus on “ridership” while ignoring the basic question of service quantity and quality.

Former CEO Andy Byford set a management goal for a reduction of short turns and an improvement in on-time performance. This triggered various responses:

  • On some routes, scheduled running times were inadequate to actual conditions, and short-turning was inevitable. Running times were lengthened (and service was often scheduled less often to stretch available vehicles to match longer trips). However, in some cases the padding has been excessive leading to dawdling vehicles enroute and queues of buses and streetcars that arrive early at terminals.
  • When even padded schedules didn’t eliminate short-turns, the edict went out “thou shalt not short turn”. This can be counterproductive because there are cases where short turns are needed, but simply are not done and vehicles remain in a pack following a long gap.

The matter of “on time performance” is a blatant case of cooking the metrics to make management look good.

  • Previously, the TTC measured “on time performance” at various locations along routes. The results were not pretty.
  • The metric was changed to look only at terminal locations on the premise that service which is on time at the start of its trip will remain so as it moves across the city. Alas that is not so.

As we will see in a series of articles I will start publishing in coming days, there is a common problem on many routes that service may begin with vehicle spacing that is close to “on time”, but it takes only a short distance along a route for vehicles to catch up to each other and run in pairs or triplets. A further issue is that the TTC considers a bus or streetcar “on time” within a six-minute window, and this is meaningless for the frequent service on major routes. Because the service quality goal is only measured at the terminal, the actual reliability seen by most riders (who board elsewhere) is considerably worse than the values management reports.

For its part, Council looks at ridership numbers, sees a system that is not growing and says “why should we give you more money”? When added subsidy does come, it is as likely to go into fare reductions as to service growth, but lower fares are cold comfort if a rider cannot rely on transit for a timely and comfortable journey.

TTC Modifies Transition to Presto Annual Pass

Because of potential disruption in Canada Post services, the TTC has announced that it will end the mailing of Metropasses to Monthly Discount Plan (MDP) customers effective immediately. For the months of November and December 2018, the TTC will credit accounts of customers who would receive these passes with the equivalent of the discount.

This will allow those still receiving MDP passes to purchase a regular Metropass while having a net cost equal to the MDP value.

The TTC is also encouraging MDP customers to shift to Presto cards and will provide a $6 credit to MDP users on November 1 to cover the cost of purchasing a new card.

The use of physical Metropasses as we know them will end on December 31, 2018, and only the Presto equivalents will continue.

Tickets and tokens will remain available until the start of August 2019, and will be honoured for an as-yet unspecified time thereafter.

 

TTC Board Meeting July 10, 2018: Part I

The July 10, 2018 meeting of the TTC was its last before the October 22 municipal election. When the new Council meets in early December, it will update the Councillor appointments to this Board and select a new Chair. Whether the existing Chair Josh Colle will return in that role remains to be seen, although he did not sound averse to the idea in his closing remarks. The political balance of the Board will depend on the new Council and on whether the Mayor feels more disposed to a better representation of the centre-left. The new Board’s first meeting will be on December 12, 2018.

The “Citizen” members of the Board (those who are not Councillors) will remain in place until Council deals with appointments to various boards and agencies early in 2019.

The TTC has appointed Rick Leary, who has been Acting CEO since Andy Byford’s departure, to the CEO’s position. Leary had strong support from the Board, and now he must deliver. It will be interesting to see how much of Byford’s style and work, if any, are carried over into this new era. [See Challenges For TTC’s New CEO].

A vital part of the Board’s responsibility (and through them, City Council’s) is a clear understanding of the future needs of transit in Toronto. This is not simply a case of planning a few subway lines, but of understanding how the network as a whole works and what its needs would be under various scenarios. This is especially true when addressing unmet needs of the existing system. From the CEO’s report:

In support of the City of Toronto’s ongoing focus on transformation, the TTC committed in the 2018-2022 Corporate Plan to undertake a comprehensive service review. In addition to assessing efficiency and effectiveness, the study will evaluate how best to provide services mindful of reliability, safety and system integration. Actioning this commitment will help inform deliberations of the newly-appointed Board in 2019. In tandem, as noted last month, we are also preparing an updated and comprehensive long-term Capital Plan that will provide full clarity on the TTC’s long-term capital requirements mindful of legislation, reliability, safety and service standards. The plan will be prepared over the course of 2018 and presented as part of the 2019 Budget process. [p. 8]

This woolly statement could be the basis for better understanding how the Capital Budget works and how its many projects fit together, or this could simply be a rehash of juggling costs back and forth to make the numbers come out right for City financial targets. If the TTC needs more money for bona fide projects, it should say so, and should make the spending levels and timing clear rather than hiding costs “below the line” or beyond the 10-year planning horizon.

Several items on the agenda bear on the TTC’s ability to carry riders, but they were not discussed or presented in that context. This is a fundamental problem for the TTC Board and for the new CEO.

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Metrolinx Mulls Fare System Changes (Updated)

At the April 26, 2018 Metrolinx Board Meeting, two of the public agenda items dealt with changes in fares and in the fare collection system:

Presto Mobile is a new smartphone app that is intended to become a single point of access to Metrolinx services including fare payment and trip planning.

On the fare integration front, Metrolinx is contemplating the effects of funding announced in the 2018 provincial budget to subsidize lower fares for short GO Transit trips, and for cross-border fares between Toronto and the 905-area municipalities.

For the sake of discussion, this article assumes that the provisions in the budget will actually be implemented regardless of which party forms the government after the election in June.

Updated May 7, 2018 at 9:50 am: Metrolinx has confirmed that the double discount for GO+TTC fares would still apply to the new $3 fare within Toronto.

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Queen’s Park’s Long Overdue Move on Fare Integration

The recently-announced Ontario Budget includes a lot of spending on transportation that transit riders in the GTHA can only hope to see delivered by whoever is in charge at Queen’s Park after the June 2018 election. Even though the budget is as much about vote-getting as about actual governance, it is worth looking at what the promised fare changes would bring if they are implemented.

From the press release:

  • Beginning in early 2019, the province is reducing the cost of GO Transit trips to just $3 for PRESTO users who are travelling under 10 kilometres anywhere on the GO network
  • All GO Transit and Union-Pearson Express trips anywhere within the City of Toronto will be reduced to $3
  • With proceeds from Ontario’s cap on pollution, the province will also provide fare integration discounts of up to $1.50 per ride for anyone who travels between the York, Durham, Brampton and Mississauga transit networks and the Toronto Transit Commission (TTC), saving regular commuters up to $720 every year
  • PRESTO card users travelling on GO Transit between Union Station and stations near Toronto, such as Port Credit, Malton, Pickering, Ajax or Markham will see fare reductions.

As with any announcement, “the devil is in the details”, and I fired off a series of questions to clarify how this might all work. Responses came back from Metrolinx.

Q1: Regular GO Transit riders now enjoy a monthly cap of 40 fares on their travel. The 36-40th trips are at a discount, and from 41 onward, they are free. Will this apply to the new $3 fare? In other words, is there an upper limit of 40 x $3 = $120 to a rider’s cost of using GO within the 416, or is it open ended like TTC fares where there is no cap unless one buys a pass?

A: Details on this will be worked out as part of our implementation planning and work.

Q2: There are now co-fare arrangements between the 905 systems and GO, as well as between GO and TTC. If someone makes, for example, a YRT-GO-TTC trip, what discounts apply? Are the cofares cumulative?

A: YRT-GO Co-Fare, GO-TTC DDF. Yes, cumulative.

Q3: By analogy to Q1, if a rider makes a three-legged trip regularly, thereby becoming entitled to free rides for the GO segment after 40 trips, what happens to the co-fares? Do they still apply, or does the rider pay full 905 plus TTC fare in this case? The potential savings are “up to $720 per year”. Is this simply a calculation based on 20 commutes for 12 months, or will it be a capped saving?

A: Details on this will be worked out as part of implementation planning and work.

Q4: If someone has a Metropass (or its Presto equivalent), they are not entitled to the TTC-GO co-fare. Is it correct to say that their monthly cost would be the cost of the pass plus $3 times the number of GO trips taken within Toronto?

A: For adults, yes.

Q5: For clarity, is the $3 fare a flat rate even if riders transfer from one GO service to another, such as from Lake Shore to UPX, but stays within Toronto for their trip?

A: Yes as long as [the] individual uses the GO readers for their UP Express trip.

Q5a: If part of their trip is inside Toronto, but a second leg goes outside, does the $3 apply to the “inside Toronto” portion? Example: Rough Hill to Union to Weston is all inside Toronto, but Rouge Hill to Union to Airport is not.

A: Fares for any trips to and from Toronto Pearson Airport remain unchanged.

Q6: The co-fare for GO-TTC is relative to an assumed $1.50 per full adult fare with lower co-fares for those getting discounts like Seniors. Will the same apply to the 905-416 co-fare?

A: Details on this will be worked out in conjunction with the transit agencies.

In brief, the only thing that is nailed down so far is that discounts between each leg of a trip are cumulative so that, for example, a Miway rider travelling to a station within the $3 GO tariff zone and thence to a TTC route will get the Miway co-fare discount, the new low GO transit fare and the GO-TTC discount. Also, transfers between GO services do not attract another fare provided that the trip stays within the city.

Every thing else is to be “worked out”.

There are a variety of scenarios one can construct including the combined effects of bulk fares (passes) on 905 systems, the existing GO Transit monthly fare caps, and whatever co-fare/discount arrangements will exist. Anyone trying to work out the permutations has my sympathy. From the Metrolinx point of view:

The reason these changes will only be introduced in early 2019, is because Metrolinx needs time to work with our transit partners to ensure the various scenarios and all fare rules are in place. This budget provided Metrolinx with direction to move forward on fare integration. [Metrolinx email]

Leaving aside the question of whether the government in place for the 2019-20 budget will support whatever fare scheme Metrolinx comes up with, there are also obvious questions about the implications for service crowding and for possible changes needed in local route networks, mainly on the TTC, to provide better connections with GO stations. The lower fares may look attractive, but actually using the service could be challenging within Toronto.

  • On Lakeshore West, most inbound trains run express from Clarkson to Union with local trains only every half hour in the AM peak. The same arrangement applies outbound on the PM peak.
  • On Lakeshore East, there is a similar pattern with express trains skipping all stops from Rouge Hill to Union, and local trains running roughly twice/hour in the peak, albeit on an irregular headway. Some additional service is provided at Danforth (Main) and Scarborough stations by the Stouffville line’s trains.
    • TTC services in southern Etobicoke and Scarborough focus on the Bloor-Danforth subway, and actually reaching the GO stations (or using the TTC as a connecting service from them) is not easy.
  • On the Milton corridor, trains operate only in the peak period, peak direction although for someone at Kipling Station, the all-local service now operated would actually be better than what is provided at, say, Mimico on the Lakeshore West corridor.
  • The Barrie corridor and the Vaughan subway extension are in direct competition with each other, although service is far more frequent, especially during the off-peak, on the subway than on the hourly GO train, and the GO stations within Toronto are not well-served by the TTC network (other than the connection point at Downsview Park station).
  • The Richmond Hill corridor, like Milton, has only peak service, and its stations within Toronto are poorly served by the TTC.
  • The Stouffville corridor has all-day service with stations that potentially could connect with TTC feeder routes at Steeles (Milliken), Sheppard (Agincourt) and Eglinton (Kennedy). As on Lakeshore, the tradeoff will be for a faster trip bypassing the subway.
  • The Weston corridor is a special case because it hosts not only the GO Kitchener service but also the Union Pearson Express (UPX) trains which provide the most frequent of GO services within Toronto.

The fare reductions for trips from the near-Toronto stations in the 905 could shift some travel away from the subway, although few of the stations are well-located for this purpose. The Richmond Hill corridor is the most obvious of these, but the limited service there does not offer a lot to diverting demand.

As a follow-up question, I asked Metrolinx whether they had any demand studies to show travel patterns with the new fares, to the degree that these are known. Their reply is pending, and I will update this article when I receive further info.

It is well-known that the demand models are sensitive to three factors: trip speed, service frequency and fare level. This came out quite clearly in the background studies for SmartTrack and the Scarborough Subway where ST would succeed in drawing significant riding only if it operated frequently and cheaply, as originally touted in John Tory’s campaign. Just how many riders the lower GO fares, by themselves, will attract remains to be seen. A related problem, of course, is the question of train capacity if many actually shift to GO.

Not to be forgotten in all of this are the cross-border travellers between the 905 and 416 (in both directions) for whom a discounted fare will be a benefit. However, if this is only available to riders paying the full adult fare in each jurisdiction, this could undo the benefit now enjoyed by pass users who will not get any further discount. This would be particularly important if a pass holder took many “local” trips on the TTC in addition to cross-border trips into the 905.

In general, riders who already enjoy some sort of discount like seniors and students will benefit far less from the new tariff.

Whether any of this will come to pass is purely speculative at this point given the tenuous status of the current government and the well-known, vague bluster of their principal opposition.

Metrolinx (and by implication its political masters) have wasted years on pursuit of “fare integration” schemes that began with the premise of revenue neutrality to limit the government’s cost through added subsidies, and with the underlying view that distance-based fares were the end state at which they would aim. Had the option of added subsidy and reduction of short-haul GO fares been part of the mix a few years ago, the entire debate over fare integration could have taken a completely different path and a new tariff would already be in place.

Transit policy should arise from reasoned, open evaluation of alternatives, including those that may require an “investment” to make them work, not from a deathbed change of heart by an unpopular government facing defeat at the polls.

A Few Questions For Metrolinx

The recent publication of updates to the New Stations review together with information at two public SmartTrack station meetings raises several questions about Metrolinx plans and their methodology in evaluation of the worth of new facilities.

In attempting to dig through the contradictions, I asked Metrolinx for the detailed background reports for their updated “business cases” for new stations, and was advised that there are no reports beyond the technical paper that is part of the board’s agenda for their March 8, 2018 meeting.

This is not a credible statement.

The evaluation of new stations depends heavily on the projected demand at each location. This demand depends on several factors:

  • The frequency and capacity of service provided at the station
  • The travel time to destinations for trips served by the station
  • The cost of a trip
  • Feeder services for riders including connecting transit routes and parking lots

Land use patterns around the station are also a factor, but they are secondary in two senses. First, demand projections are generally run against a fixed land use model while changing other factors such as service frequency and cost. Second, land use is not under the direct control of a transit agency while service and fare factors are, and they can have a much more immediate effect on demand.

The newly modelled demand for stations follows on from the Initial Business Cases (IBCs) of 2016:

The overall methodology and approach to modelling used in carrying out the business case analysis is consistent with the approach used in undertaking the 2016 IBC’s and has been independently peer-reviewed and validated. In particular, the current business case analysis measures and captures the same key benefits (e.g. new station users benefit from the station) and impacts (e.g. delays to upstream riders due to the station). The current business case analysis for new stations take advantage of updated input information, including GO rail service assumptions, land use, connecting rapid transit infrastructure, and a refined approach to ridership forecasting and modelling.

The economic and financial cases for each new station depend on forecasts of how travellers will respond to the presence of a new station. Stations can support increased system ridership by providing a new access opportunity that may be closer to household locations and employment, school, or other travel destinations. Individuals who use the new station benefit by saving time relative to their previous travel option – travelling farther to another GO station, or using a different transport mode such as subway, bus, or auto. Existing GO passengers that do not use the station, on the other hand, can be delayed if they travel on a train that now stops at the new station. Examining travel time savings, delays, and modal shifts is the focal point of the business case analysis. [p 7]

Metrolinx is all about “transparency”, and in that spirit here are several questions about their models and plans.

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Toronto’s Transit Capacity Crisis

In recent days, Mayor Tory has announced, twice, a ten point program to address crowding on the TTC. The effectiveness of this program is limited by years of bad political decisions, and the hole Toronto has dug itself into is not one from which it will quickly escape.

This article is a compendium of information about the three major portions of the “conventional” (non-Wheel-Trans) system: subway, bus and streetcar. Some of this material has appeared in other articles, but the intent here is to pull current information for the entire system together.

Amendment February 15, 2018 at 5:30 pm: This article has been modified in respect to SmartTrack costs to reflect the fact that over half of the cost shown as “SmartTrack” in the City Manager’s budget presentation is actually due to the Eglinton West LRT extension which replaced the proposed ST service to the commercial district south of the airport. A report on SmartTrack station costs will come to City Council in April 2018. Eglinton LRT costs will take a bit longer because Council has asked staff to look at other options for this route, notably undergrounding some or all of it.

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TTC Board Meeting February 15, 2018

The TTC Board will meet on February 15, 2018. Among the items on the agenda are:

Scarborough Subway Extension (SSE)

The SSE itself is not on the agenda, but it has been the subject of much recent debate over when the projected cost and schedule for the extension will be released.

In the November 2017 CEO’s Report, the project scorecard included a schedule showing that 30% design would be complete in the second quarter of 2018, and an RFP [Request for Proposals] would be issued in the third quarter. Even when this report came out, former CEO Andy Byford was hedging his bets about a spring 2018 date saying that more work would be needed to verify and finalize the figures. A key note in this scorecard states:

EFC [Estimated Final Cost] was approved in 2013 based on 0% design. With the alignment/bus terminal now confirmed by City Council, the project budget and schedule will be confirmed as design is developed to the 30% stage, factoring in delivery strategy and risk. The performance scorecard will continue to report relative to the project’s original scope, budget and schedule, as approved by Council in 2013, until the project is rebaselined at the 30% stage in late 2018.

In other words, neither the schedule nor the projected cost reflected the evolving and expanding design of this project.

Jennifer Pagliaro in the Star wrote about the result of a Freedom of Information Request that revealed a briefing to Mayor Tory in September 2017. That briefing included a statement that the cost estimate for a Stage 3, 30% design, would be available in September 2018.

Because Council will not meet until 2019, numbers that might have been available before the election would not be released until after the new Council takes office. After the story appeared, City staff replied:

The cost information referenced in page 9 of the October TTC briefing deck refers to the planned timing for initial cost inputs from TTC engineering staff. These are not the full cost estimates necessary for consideration by Council. Further work will be required to appropriately account for financing, procurement model, market assessment and other critical factors. The final cost estimate, subject to the variability ranges noted below, will include these inputs.

This additional work will be undertaken by various TTC staff as well as city officials from corporate finance, financial planning, city planning and other divisions. [Tweet from Jennifer Pagliaro, February 7, 2018]

I wrote to the TTC’s Brad Ross about this conflicting information, and particularly about the question of how an RFP could be issued in 3Q18 when Council would not be approving that the project pass beyond “stage gate 3” until 2019. He replied:

No RFP will be issued until after Council approval. You will note in the Key Issues and Risks section of the scorecard from November reads, “The performance scorecard will continue to report relative to the project’s original scope, budget and schedule, as approved by Council in 2013, until the project is rebaselined at the 30% stage in late 2018.”

To be consistent with the report to Council in March 2017, only the revenue service date was revised in the scorecard (from Q4 2023 to Q2 2026). The TTC recognizes and acknowledges that this has led to confusion. The TTC will be taking steps to ensure greater clarity in its next CEO Report in March 2018. [Email of February 9, 2018]

The February CEO’s report states:

Work continues to progress design towards Stage Gate 3, expected in fall of 2018. At this time, the project will provide initial cost inputs from the TTC team (includes detailed costs for the Scarborough Centre station, tunnel, Kennedy station, systems, property and utilities). Further work is underway by the new Chief Project Manager with key stakeholders within TTC and the City to define the activities, approval process and timelines to arrive at the final Class 3 Cost Estimate, Level 3 Project Schedule, and associated Risk Analysis.

As requested by City Council, a report will be presented at the first opportunity to the Executive Committee, TTC Board and City Council, which is expected to be Q1 of 2019. [pp 15-16]

The debate, as it now stands, is about releasing whatever material will be available in September 2018 so that it can inform the election debates. Additional costs as cited by the city would sit on top of the September numbers, but at least voters and politicians would know whether the SSE’s cost has gone up just for the basic construction, let alone factors related to financing and procurement that would be added later.

Meanwhile, SSE promoter Councillor Glenn De Baeremaeker speaking on CBC’s Metro Morning said:

I don’t think it matters what the costs are.

This has been taken to read that money is no object, and that well may be the political reality in Scarborough – there is no way the many politicians who have so deeply committed to the subway project can back out. De Baeremaeker continued:

Whether the costs go up or the costs go down, people who have tried to sabotage the subway and stop the subway, will continue to try to sabotage it, they’ll continue to try to stop it, and they will never vote for it. So I would challenge the Councillors who say “I want to see the cost”. My response is and if it’s a reasonable cost, will you support the subway? Well, no. [At 3:26 in the linked clip]

What De Baeremaeker does not address is whether he has an upper limit beyond which even his enthusiasm might be dimmed. Also, on the question of a “reasonable cost”, what has been lost here is the fact that the subway “deal” was sold on the basis that the $3.5 billion included the Eglinton LRT extension to UTSC Campus. What had been a $2 billion-plus subway when it was approved as a compromise by Council, quickly grew to $3 billion-plus, and the LRT extension is left to find alternate funding. One could reasonably ask whether the LRT was ever really part of the deal, or was simply there as a sweetener that pulled in wavering supporters who now see just how gullible they were.

A related issue that has not yet surfaced is the question of whether building the SSE for a 2026 opening will require concurrent changes in timing and/or scope for the planned renewal of the Bloor-Danforth subway including a new signalling system and fleet. A report on the renewal is expected in April 2018, although this date has changed a few times over past months. The TTC/City capital budget and ten year plan do not reflect this project, at least with respect to timing, and probably with respect to total cost.

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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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