Finance

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Welcome to Walmart Station

It really was silly season at the TTC yesterday.  Commissioner Peter Milczyn asked for a report on naming rights for stations in return for corporate sponsorship.  A short debate ensued during which the Commissioners seemed to forget that barely an hour earlier they had approved a report entitled TTC Corporate Policy Review – Policy 2.8.2 Identification of Routes, Stations and Stops.  This report states quite clearly:

Normally, the station name will incorporate the name of the major cross-street at which it is located, so that the location of the station is clearly identified to customers as they travel through the system. If this is not possible (because, for example, confusion would result with existing station names, or because there is no major nearby cross-street), then the station name may be related to the area in which the station is located, or a major destination nearby.

A good example of the last class of station name is “Museum”.

I have a fundamental objection to corporate sponsorships on the basis of equity.  If you want to build a subway station, it will cost anywhere from $70-100 million, and even more for a large terminal or interchange, not to mention ongoing operating costs.  If Pepsi or Walmart wants to sponsor a station, let them shell out at least 2/3 of the cost so that, on an after tax basis, they’re paying at least half the price of the station. 

Meanwhile, you and I, who actually pay for the station through our taxes should expect that naming rights will stay in the public sector.

No sponsor wants to shell out $35-50 million, and they hope to buy a station for a few million.  For that they get a couple of escalators.   Maybe they could actually pay to maintain the escalators so that their logo isn’t associated with a machine sitting in parts all over the floor more often than it actually carries passengers.

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TTC Riding Counts — Are There More Passengers? (Updated)

The 2008 Service Plan report is out although only the cover document is posted online as I write this.  The detailed report is not yet up with the other Service Reports.

Updated April 20, 2008:  The report is now available online.

Once I get a chance to digest the updated route statistics, I will post them here.  However, it is worth noting that, as usual, several streetcar routes have riding counts that are years out of date.  We know that more recent data must exist because some service improvements are starting to work their way into the system, but it’s always troubling when the overall system reports don’t have current data.

Routes With Updated Riding Figures

  • 502/503 Downtowner & Kingston Road – 7,800 (up from 6,100 first reported in 2002)
  • 504/508 King & Lake Shore – 53,100 (up from 47,900 in 2005)
  • 501 Queen – 43,500 (up from 41,200 first reported in 2002)
  • 510/509 Spadina & Harbourfront – 48,000 (up from 43,400 first reported in 2003)

Routes With Unchanged Riding Figures

  • 511 Bathurst – 13,600 (unchanged since 2005)
  • 506 Carlton – 41,200 (unchanged since 2001)
  • 505 Dundas – 35,200 (unchanged since 2005)
  • 512 St. Clair – 31,000 (unchanged since 2002)

It’s good to see riding going up, but the infrequency of updated counts means that the so-called financial performance (a piece of creative accounting of the highest order) of major routes is misreported to their detriment. 

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The Mysteries of Capital Budgeting

A few people have left comments here asking when I am going to write about the Federal and Provincial budget announcements. From my silence, you may have assumed a big yawn, or simply too little time, or the sense that there are better things to do. Actually, it’s a bit of all three.

The TTC (and transit in southern Ontario in general) has a big problem thanks to the way governments make their announcments and finance large capital projects. It can be a real shell game trying to figure out how much money from any announcement is really there.

Rather than establishing a standing fund for transit capital projects from, say, a percentage of sales tax, governments use trust funds and other similar devices as holding tanks for money burning a hole in their pocket. Suppose you want a subway. Well, we set up a trust fund and let everyone contribute to it and, eventually, we can actually build it. Never mind whether this is really the best use of the money, it’s been earmarked and that’s what it’s for.

More subtle, however, is the accounting. Suppose you’re Ottawa and you have some spare change left over at the end of the year. Rather than paying down the deficit or lowering taxes (which would affect your revenue in future years), you stash the money in trust for a future project. This allows you to show it as an expense in the current year and have a nice press conference, even though you won’t actually have to spend it for as much as a decade depending on the project. In some cases, the money really is sequestered and earns interest that will contribute to the project, but there’s no guarantee.

Because funds are announced and allocated for projects, we have a few TTC budget lines that are flush with cash, but many that go begging. To further confuse things, these are divided into “above the line” and “below the line” items. “Above” means that the project has Council approval, although it may not yet be fully funded. “Below” means that Council has not yet blessed the project, although other governments may be waiting in the wings with contributions. That’s how pet projects get built, and there’s all sorts of jockeying to ensure that favoured schemes find their way “above the line”.

For those with the stomach to actually read through the TTC’s Capital Budget (two very thick blue binders containing more details about the TTC than even the most hardened transit fan will ever want to see), it’s important to keep in mind both the project status and the source of funding, if any. “State of Good Repair” projects almost always go “above the line” as they have first call on any available funds. Toronto has sad history with deferred capital maintenance (projects large enough that they are funded from the capital rather than the operating budget) and even now we are still making up for this in many areas.

Funding comes from a dizzying collection of programs as each government seeks to rebrand its transit spending with yet another scheme. These are often time-limited, or overlap in various ways with existing programs, and it can be difficult to figure out where the next dollar will come from. In the agenda for the March 26 TTC meeting, a report talks about the funding problems, but the detailed information from the appendices is missing.

Appendix A gives a breakdown of the various programs that fund (or are hoped to fund) the capital program from 2008 to 2012. The numbers down the right hand margin refer to explanatory notes in Appendix B. I am not going to detail these here, but if you make it all the way to the fifth page, you will begin to understand why we have so many problems with planning capital spending for transit.

It gets worse. Look closely at Appendix A and you will note three circled figures in the 2008-2012 column. Line 3 is $481-million of Provincial money that, when the report was written, had not been confirmed. Line 8 is $324-million of Federal money that’s in the same boat. Down at the bottom, is a $278-million “unspecified reduction” that the City made in the budget plans on the assumption that the TTC usually underspends on its capital projects due to generous contingency provisions, or because projects are cancelled or rescheduled beyond the five-year budget window.

The funding shortfall starts out at $420-million, but when these three amounts are added back in, it rises to $1.503-billion.

Provincial announcements made after the report was completed reduce this by $360-million to $1.143-billion, and the recently concluded agreement with Ottawa has released more funding as well. However, this still leaves a great deal to be found, and does not even touch the many “below the line” projects notably the new streetcar purchase and the SRT renovation. Funding must be in place by fall 2008 for the streetcar order to be executed with a supplier, and the SRT project requires funding by September 2009 to be started on schedule.

If you thought all of that was complicated, there’s more. Late last week, there was much confusion over how much, exactly, Queen’s Park had announced to fund capacity expansion on the Yonge-University subway. The relevant section of the Budget has a table of “Metrolinx Transit Projects” (table 1 on page “34” which is really quite near the top of the linked document), and further information about GO Transit funding on page “35”. GO is still separate from Metrolinx and its funding is not yet bundled.

The Yonge Subway Capacity Improvements total $293-million, and this is intended for the Automatic Train Control system. However, this project extends beyond the TTC’s five-year budget window, and only $189-million will be spent in that period. That’s why the TTC shows the smaller amount in its updated figures. The total cost of the ATC system is estimated at $342-million of which about $4-million had been spend by the end of 2007.

This is the sort of confusion that arises when governments announce project-based funding, but transit agencies must restate this into current and future budget years to show where top-up municipal contributions might be needed, or where there will be pressure to defer or reduce some projects.

If you are still here at the end of all of this, congratulations!

This hopelessly convoluted way of planning and budgeting for transit clearly shows it is not a priority, not an important, entrenched program, but a series of ad hoc political announcements designed to give the impression of movement on a serious problem for the GTAH. The underlying question is whether municipal, or at least regional, agencies will be trusted with spending transit funds, regardless of where they come from, or if their every move must be balanced and monitored from two senior governments.

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Service Changes for March 30, 2008

Updated March 30, 2008: The attached spreadsheet has been updated to include information on the projected changes in vehicle loads and the list of outstanding changes that are awaiting sufficient resources to be implemented.

One of my readers, Brent, sent in a long note with a summary of service changes that will take place in one week. His introductory comments were:

I see the service summary is out early like usual this time (as opposed to the top secrecy back before the February improvements) and it shows most of the main service changes. (Searching the PDF for “Mar-08″ and “Apr-08″ highlights all the adjustments.) I have compiled them below (I have no life!!), except for cases where there is no noticeable change and it may relate to minor trip adjustments.

Note that the Bathurst streetcar has service reductions on Saturday what with the replacement of CLRVs with ALRVs…

The St. Clair service sounds interesting. With tracks to the carhouses cut off, they’ll just run the same 7 streetcars at 3-minute intervals all day until the late evening, when presumably they’ll just park them somewhere on the ROW and run buses instead (since of course we can’t run the buses on the ROW anyway…)

One service change that doesn’t show up as a change in the schedule is the decoupling of the Evans bus from the Prince Edward bus on weekends, which means that the Evans bus will end up with a 15-minute layover (plus 45 minutes round trip traveling) to maintain a 30-minute headway.

Special arrangements for St. Clair are required because track from Bathurst Station Loop north to St. Clair will be replaced, and a captive set of cars will remain on St. Clair for the duration. These will run a three-minute headway between the two subway stations until mid-evening when the full route will switch over to bus operation.

The TTC has not posted a service advisory for this project on their site yet, but I suspect that this arrangement will carry through until June given the speed of track construction jobs of this size. Even then, until the reconstruction from Vaughan to Dufferin is completed, streetcars will be limited to serving the east end of the line.

One notable problem that the TTC has not addressed is overcrowding in the AM peak period on 509 Harbourfront. With the construction diversions, this seems to have fallen off of the radar, but there was a deputation at the TTC last year from people complaining that cars were full eastbound before they reached Bathurst Street. The new service is actually slightly worse than what was there a year ago in the AM peak, although some off-peak headways have been shortened.

As we know both from riding experience on the 509 and the analysis of CIS data for this line I published earlier this year, the schedule for service on Harbourfront is often more creative writing than reliable fact. In an analysis of the 511 Bathurst route now in preparation will confirm, layovers at Exhibition Loop are quite generous and eastbound service on Fleet is quite erratic. The TTC really needs to start treating the new residential neighbourhoods on Queen’s Quay and Fleet to good, reliable service, not as a seasonal tag end of a route serving an amusement park.

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A Day on the TTC

Robert Wightman sent in the following comment about problems maintaining service on, mainly, the streetcar system on Tuesday, March 25.

I spent yesterday afternoon rush hour working at home and listening to the scanner for TTC surface operations and this is what I heard.

Russell could not send out all scheduled service because they did not have enough equipment available. A car on Carlton and one on Queen went disabled and had to be pushed to Russell. This took 4 cars out of service and screwed up the lines for awhile. The line inspectors must know that a Commissioner lives in the Beach because they turned two WB cars at Russell and sent them back to Neville.

A fight broke out on a WB Queen car in front of the City Hall so the WB service went along Richmond to York thus bypassing the delay and the subway.

A Spadina car went disabled in the Station and had to be pushed out. They decided to push it out to the street before locking out the brakes, bad move as it lost air on the curve and they had to crank the brakes off. They could not use the spare track as there was a car using it to “dry out”. It was waiting for the emergency truck as it had no fans and the windows were too steamed up to see out. This screwed up Spadina for a while.

Another car broke a bar under the front truck and had to be escorted back to Russell by the emergency truck. Again there was no vehicle available to replace it.

The emergency trucks were running all over the system making minor repairs to cars that were still in service but had no heat, one wiper missing, doors that wouldn’t open, lights that didn’t work.

The subway had a train with a pair of cars that went disabled so they drove it onto the tail track at Finch until they could fix it.

The system is broke and it isn’t getting fixed. The Inspectors managed to find enough cars that were to run in to replace the missing cars after the rush hour. How much of the service problems are caused by equipment failures each day? Yesterday was not good weather but this still seemd like a lot of problems for one rush hour.

Both equipment and operator shortages remain a big problem especially for the streetcar system. We need some honest answers from the TTC about just how many cars are really available for service and why so many are sitting in the shop. I don’t think the situation has been presented with as much urgency as it deserves, and we still face the impact of having the St. Clair line fully back in operation sometime this fall or winter. New cars won’t be here for years, assuming we somehow find a way to find them this fall when it’s time to place the order.

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How to Build a Subway — Let Me Count the Ways

As everyone knows, the public sector wastes huge amounts of money on overblown, out-of-control projects, or at least that’s the prevailing view in some quarters. One major side-effect of Ottawa’s participation in funding the York subway extension (or TYSSE: Toronto-York Spadina Subway Extension), in an insistence on value-for-money and the maximum participation by the private sector.

Leaving aside that the TTC doesn’t actually build anything itself, and contracts out a vast amount of the design/engineering work, there is a perception that (a) subway construction projects could be better run and (b) there is (even more) opportunity for private sector participation.

A report on this week’s TTC agenda discusses the various options for delivering this project and includes some revealing information about the pros and cons of various approaches. I will leave it to those who are interested to read the full text, but a few things caught my eye.

First off, there are many ways and degrees in which a private sector company or consortium can be involved in large projects like this all the way from complete design, finance, construction and operation down to a basic contractor who bids on a job, builds a box and leaves.

In the review of options, the variants where operation rested with a private entity were rejected outright because the TYSSE is part of an existing, operating, public-sector subway line. Experience elsewhere suggests that private operation tends to occur only when a new, free-standing line is built such as the Canada line in Vancouver.

Financing options are not discussed at length, but this issue always turns on the question of whether a private partner can provide capital at a lower cost than a public agency. This also involves some creative accounting. A privately owned line (and its associated capital debt) does not appear on the public books. This scheme is commonly used to hide debts (think Enron), although generally accepted accounting practices for governments make this more difficult to pull off. Even if a government is not technically exposed to the debt, the last thing any (well almost any) provincial government will do is to let a subway line close because its owner is bankrupt.

We have heard a lot lately about borrowing from large investment pools such as pension funds. Whether this is done on a government basis or by an arm’s length agency, somehow the interest and debt must be paid. Either this is a direct charge against current operations, or it is transferred to a government through a subsidy arrangement (no doubt with an appropriate management fee).

As for construction, the difference between the two main options depends on whether the TTC designs it all and contractors just build it, or if the TTC says “build me a subway station” and the contractors design to a general set of specs and deliver a finished product. A working group from the construction industry reported that their preference is to leave the design to the TTC for contracts under $100-million, or where there will be multiple contractors (possibly including the TTC itself) onsite. This relieves the contractor of having to manage (and assume risk of) portions of the work not under his control.

For large contracts, it may be worth a contractor’s while to bring the design work in house provided that the job is fairly generic and does not require skills in special systems peculiar to transit. For example, building an empty box that will become a subway station or tunnel structure is a fairly straightforward task while design and co-ordination of the many subsystems fitted within the structure are complex and outside of their regular scope of work.

One point not mentioned here is that the industry’s skill base depends strongly on what they do most of the time. An important observation about Madrid in recent studies is that their continuous program of system expansion allows the industry to develop expertise and continuity of staff that would not otherwise be possible. In Toronto, there are only so many subways to go around among the major players, and we don’t build them very often.

Finally, there is a breakdown of the TYSSE’s estimated cost — $2.09-billion in 2006 dollars, or $2.633-billion assuming completion by 2015. This date could slip if various governments spend time squabbling about whether the project passes a private sector sniff test, adding to the cost.

For all you readers who have wanted a subway station of your very own, we see station costs of $73-to-$100-million depending on the complexity. Of particular note is a 26% contingency. This rather generous $400-million slush fund (a cool half-billion with inflation) will allow considerable overruns while keeping the project “on budget”. At this point, I will be generous and hope that this is for “things we haven’t thought of in the preliminary design”, but at some point this needs to be nailed down. I doubt we will ever know how much contingency everyone builds into their estimates (public or private partner) and yet there is probably more money on the table in this one line than in any savings, real or imaginary, from increased private sector participation.

I should mention the rolling stock. The estimate shows 56 cars, although it is physically impossible to buy them in this quantity as they now come in married sets of 6. Even with these cars, the TTC will not have enough “Toronto Rockets” to completely replace the existing fleet on the Yonge-University-Spadina line, and another car order will be needed. Thunder Bay will be churning out cars for years.

The TYSSE will be interesting if, for nothing else, showing us whether there is money to be saved on subway projects with greater private sector know-how at work. Alas, we won’t have an answer to the question for about 7 years, and we will have spent $2.5-billion finding out.

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Waiting for the 501 — An Operator’s View

[Updated March 17, 2008: I have received various comments with schemes for alternate ways to operate the 501/502/507 in various combinations. None of these will be posted here as this debate could go on forever. The next round in the discussion will come with the TTC’s own proposals expected in May.]

On March 6, Ed Drass wrote about the Queen car’s problems and the various options that might improve service, some day. The article is not yet up on the Metro News website, but the link here will take you to an index of Ed’s columns.

Recently, I received a long note from an operator about the problems of the new way the line is being managed. These are grouped in blocks by general subject with my own comments interspersed. Continue reading →

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Service Improvements, Someday

Peter Kuitenbrouwer in the National Post has a series of articles talking about crowding on the TTC.

One more person, and this subway’s gonna explode

If you ignore the smell, the bus is still the better way

A seat on the Queen streetcar? Don’t make me laugh

The February 17 service improvements are a start, but it’s no secret that there’s a long way to go. A few changes are in the wind as described in a TTC report from their February 27 meeting.

We learn that more service will come with the March 30 and May 11 schedule periods to address the backlog of overcrowding, at least on the bus routes.

In the fall, further improvements will change the peak hour loading standard for bus routes. Across the board, the standard will be improved by 10% so that the acceptable average loads, now in the mid-50s depending on vehicle type, will be reduced by 5 or 6. This won’t mean 10% more service on every route because some lines are running below the new standard already and won’t be eligible for more service. (These tend to be short routes where cuts today would have a severe impact raising the average load above the line or making the headway unacceptably wide.)

Also planned for the fall is a return to full hours of service on most routes so that if the subway is open, the routes are operating at least a 30-minute service. 2009 may bring a 20-minute maximum, but that’s a budget issue for next year.

Meanwhile, we see little discussion of streetcar or rapid transit service because both suffer from constraints in fleet size. That may be the situation, though I am skeptical, but what is missing is a projection of what we would need if we made the same changes in loading standards for the rail modes. Continue reading →

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Queen’s Park, Metrolinx & the TTC (Updated)

Late last week must have been slow for real news when both the Star and Globe devoted considerable space to musings at the Pink Palace about a Metrolinx TTC takeover. Furious backpedalling all ’round with denials from Metrolinx’ Rob MacIsacc and cries of “hands off” from Mayor Miller.

Lurking under this sort of scheme are claims that just don’t hold up to scrutiny.

First up is the oft-heard desire for “seamless integration” of transit. Boiled down to its essentials, this means I should be able to ride from anywhere to anywhere for one fare with convenient integrated service wherever a change of route or mode is needed.

Riding on the back of this is a scheme for fare-by-distance charging and smart cards. While this may keep the technology companies and those who value appearance over substance as transit policy, this is totally the wrong end of the “solution”.

If the desire were to give everyone an integrated fare between the TTC and the 905 systems, we could do it tomorrow either with the GTA pass or some area-specific version. The big problems are how to divide up the revenue, what to charge and whether there will actually be any service in the 905 with which a 416 rider can seamlessly connect.

These are organizational and financial issues. As long as each transit system is expected to keep its own books, raise its own revenue, and account for every penny (perish the thought we might needlessly run one more bus than necessary), the rules of the game create agencies that defend their revenue turf.

As long as we maintain artificial distinctions between who gets to pick up riders on which street (again partly a turf war), we will have duplicate services.

As long as we starve transit agencies for funds, the clear goal is not to improve service but to minimize costs. This is totally contrary to any claims that our public goal is to get more people riding transit.

You don’t need a quarter-billion’s worth of high technology to fix these problems which, indeed, will still remain if we don’t fix the underlying way in which revenue is allocated to operators. If the fare barrier at Steeles Avenue is eliminated, somebody is going to have to pick up the difference — the TTC and its riders, York Region or Queen’s Park. Nobody wants that debate, but we can sidestep it so long as we focus on Presto! rather than on how it will be used.

It’s ironic that many cross-border services are now operated by TTC on contract to other agencies and the only “impediment” is the fare at Steeles Avenue. Maybe York Region would opt to pay the TTC more to carry its customers. Maybe a special subsidy could be arranged just as it is for Oakville passengers connecting with GO Transit. Why is it okay to have a special fare arrangement for GO Transit feeder services, but not for 905-to-TTC riders?

The “seamless barrier” is one of those transit myths that get dragged out regularly to avoid discussing the real issues. The line between the 416 and 905 could disappear tomorrow if only someone wanted to pay for it and co-ordinate the overlapping services where they exist.

This brings me to that shining example of Ontario’s contribution to transit, the GO system. Remember that GO is not paid for entirely by Queen’s Park, but levies a tithe against the municipalities. Only last week, a tripartite agreement with Ottawa was finally settled when Toronto agreed to pony up its share of a GO Transit funding request.

Metrolinx has been churning out discussion papers (green ones to solicit comment now, white ones to set policy soon) like sausages, and they hope this will lead to a Regional Transit Plan by “Spring 2008”. Whether they mean March 21 or June 22, I am not sure, but even the later date is very optimistic. Moreover, it is troubling because we recently learned that the RTP is also to stand in for the first two steps of the already shortened Environmental Assessment process.

We risk having a regional plan rammed through with little opportunity for comment or intelligent debate that could commit us to a complex and explicitly laid-out network long before we have a chance to consider how it will all fit together. Moreover, there is no mandatory ongoing review and process for change of the plan making “getting it right” at the outset all the more critical.

While Queen’s Park muses about a TTC takeover, they should look closer to home first. GO Transit has been in the commuter rail business for decades, with small forrays into buses, but with the focus on peak period, downtown oriented services. It does not matter what the agency name might be, there is a need for long-distance capacity around the GTA that does not stop at every lamppost. Riders in Oshawa don’t want a tour of Pickering, Scarborough, North York and Etobicoke on their way to Mississauga where they might arrive just in time to go back again.

GO’s service reliability raises questions about its ability to take on a larger role. Riders are cranky about crowding and unexpected changes in schedules, and there is even an online petition demanding a fare rebate when service runs late.

GO, however, has been at least as constrained for funding as the TTC and thinks only of its core services. Expansion comes in small jumps because they have no firm commitment from any level of government to do more.

I might believe that a Provincial agency could do a passable job with the TTC if the current one were actually looking beyond a narrow mandate as a commuter service. Imagine the example Queen’s Park could show of what their bounty could bring to transit. So far, what we have is unimpressive as a replacement for the TTC.

This is not to say that the TTC couldn’t use some housecleaning. However, any “new broom” had better know what it’s doing, not just come in to sell off the furniture and declare huge but ephemeral savings.

One particularly troubling aspect to some comments in this debate is the political slant. Adam Giambrone is out-and-out NDP, and David Miller certainly is not a Tory. Toronto Council is, if not in the grip of the left wing, at least not quite as right-wing as it was in the Lastman days.

What’s the solution? Take them over? Well we tried that with amalgamation, and after a few years of flailing around, look what we have: a moderately left Council with a moderately left Mayor. The voters have spoken.

If anyone has designs on the TTC or on GTAH transit in general, let the decisions be made for legitimate reasons of management, finance, operations and community involvement, not because some politician wants to score points for a coming election. We have seen decades of Provincial interference in transit both in funding and in technology choices that had much more to do with so-called economic development and pandering to voters than with production of useful transit infrastructure.

Message to Dalton McGuinty: Leave the TTC alone. Let Metrolinx continue with its planning, and don’t force the issue of a final plan so quickly and so permanently that we regret everything and start over in ten years.

Recognize that building and running more transit, getting a bigger share of the travel market, is going to cost a lot of money, and some of that will come from the public purse. Keep your chequebook handy.

Don’t substitute the illusion of action — organization and re-organization — for the real needs of transit systems throughout the GTAH.