TTC 2019 Fleet and Capacity Plans Part II: Streetcars and Buses

Streetcars

There are several related projects in the 2019-2028 Capital Budget and in the 2019-2033 Capital Investment Plan. These include:

  • Completion of the 204 car Flexity order now in progress
  • Purchase of 100 additional cars for growth and expansion
  • Renovation of Russell Carhouse for maintenance of new streetcars
  • Major renovation of Harvey Shops for maintenance of new streetcars, and as the operating carhouse for (at least) 512 St. Clair

Allocation of the New Flexity Streetcar Fleet

As I write this on March 20, 2019, the TTC has received cars 4400-4535 from the Thunder Bay plant and 4572-4573 from Kingston. Of these, prototype 4401 is at Bombardier for production refits, and a pool of four to six cars will be out for major repairs for the next few years.

CEO Rick Leary has stated on a few occasions that the buses now on streetcar routes will come free for service on the bus network by year end when all new cars have arrived, and that all of the legacy CLRV/ALRV (standard sized and two-section articulated cars respectively) will also be retired this year. This directly contradicts his own Capital Investment Plan which shows that buses will still be required into the mid-2020s when, in theory, a further order of 100 streetcars would arrive.

However, even assuming that Bombardier does deliver the last of its order up to car 4603, there will not be enough new cars to cover service on all of the lines. The table below compares service as it existed back in 2006 before the new cars were ordered, the TTC’s plans for Flexity implementation in 2013, the current schedule requirements, and the number of streetcars needed if all routes return to rail operation.

The numbers above are divided into six sets:

  • The 2006 AM peak service requirement for all streetcar routes assuming that there are no construction projects underway. This is a blend of sources to avoid diversions and substitutions.
  • The actual service in March 2019 (current).
  • The streetcar service operated a few years ago on routes that now have full or partial bus operation.
  • A hypothetical March 2019 service assuming that the five routes now with buses (511 Bathurst, etc) were operated using streetcars.
  • The TTC’s June 2013 deployment plan for the new cars.
  • A hypothetical March 2019 service assuming current Flexity service for routes that have already converted such as King, and the 2013 deployment numbers for routes that have not.

For the purpose of this discussion, the ALRV fleet is assumed to have been retired even though, officially, schedules still call for five of them to run on 501 Queen. In practice these, and some CLRV runs, are operating with Flexitys.

The total fleet requirement including spares at 20% would be 216 cars, and this is 12 more than the TTC will actually have without allowing for a half-dozen cars undergoing major repairs. This means that it is impossible to operate the streetcar system without either trimming service or leaving buses on some routes. When there are construction projects that block streetcar service (such as the work by Toronto Water now underway on Dundas), there would be enough cars operate the rest of the network. Otherwise, the most likely candidates for buses are the perennial targets, the Kingston Road services 502/503.

Some routes – King, Spadina and St. Clair – have more service today than the 2013 deployment plan provided, but this means that there are not enough cars to handle the rest of the network as originally planned. Service improvements on the streetcar system are limited to the added capacity that Flexitys will provide on routes still using old cars (e.g. Queen), but there is no headroom from 2020 onward.

Expanding the Fleet

In the 2018 Capital Budget, the TTC planned to acquire 60 more streetcars in 2019-20 for ridership growth, and 15 in 2020-21 for new Waterfront service. In 2019, this has changed to a larger order in the mid-2020s. However, the budget is inconsistent in its presentation of needs and timing.

The chart below is adapted from the fleet plan as it appears in the budget. (The copy I have is in black and white muddying some details depending on colour.) This shows a proposed purchase of 95 cars in 2025-28. It is already out of date because the CLRV and ALRV fleets will be retired sooner than planned. This creates a shortage that prevents full return to streetcar service at the end of 2019 when the Flexity deliveries are supposed to be complete.

Projections out to 2043 show a very substantial increase in the streetcar fleet to almost double the planned fleet in the early 2020s. That’s a lot more streetcar service than we have today. However good this might look, it does not address the challenge that there are not enough cars for the lines and service levels today, and this will not change in the near future.

A few pages later in the budget is a project to purchase 60 new cars which clearly shows the need for 60 cars starting in 2020, with even more in the future. Of particular note is the text about the effect of deferral on service. This project description is obviously out of date, but that is a common problem with the budget.

The actual spending has been moved to 2024-27. It goes without saying that whatever the date, this is an unfunded project.

Adding to the inconsistency is the statement in the 15 year Capital Investment Plan that the TTC would purchase “approximately 100 additional streetcars from 2025 to 2028 to meet demand, at a cost of $510 million”. [p. 54]

A further problem lies in the planned renovation of Russell Carhouse to handle Flexity maintenance similar to the work now underway at Roncesvalles. This will take that site out of operation for two years. Without Russell’s capacity, there would not be enough room to accommodate the extra 60 streetcars if they were procured as originally planned.

The TTC is also considering major changes at Harvey Shops which, as currently configured, can only be used for a small number of Flexitys. The scheme is to revise the layout of tracks and service areas, and to make this an operating site for, at least, the fleet needed on 512 St. Clair. This would very substantially reduce the dead head mileage for 512 St. Clair cars that shifted to Roncesvalles Division from the carhouse at Wychwood, only a short distance north of Hillcrest, in 1978. However, this capacity would not be available until 2028, and the Fleet Plan shown above does not include it. That site would also substantially increase storage capacity on the streetcar system because, in another project, the TTC proposes shifting bus maintenance operations to a new as yet unknown location. This is separate from the construction of another bus garage in the 2020s.

All of this assumes that money will be found to pay for the larger fleet and facility changes needed to accommodate it. In the chart below, all figures are in billions of dollars including inflation. Note that the $370 million for the current 204-car purchase is the remaining money to be spent in years that are part of the Capital Investment Plan, not the total project cost.

The TTC clearly has plans to improve and expand the streetcar system, but there is a deadly combination of constrained capacity growth and rising demand which will not be addressed in the short-to-medium term. That drives potential riders away from transit and adds traffic that streets cannot absorb more demand.

Buses

For many years, growth in bus service has been limited because the TTC has no place to put more buses even if they bought them. This allowed TTC management to avoid the basic issue of how much service was really needed, and budget hawks on Council to avoid increasing TTC subsidies to pay for this.

The chart below is adapted from the fleet plan in the capital budget. The first column shows the fleet makeup before 2014 and then shows the procurements and retirements over the period to 2034.

  • The “Net” column is a check on the arithmetic to ensure that the numbers actually net out. There is an error highlighted in red where the TTC claims it will retire more buses than it actually owns. This has only a small effect on the future fleet size (five out of two thousand buses).
  • There are 200 hybrids and 60 electric buses in the 2019 budget, followed by a pause for one year in 2020 when there will be no purchases. This is partly a result of timing pressure to spend federal PTIF dollars within the required window, and partly to provide an evaluation process for the electric buses.
  • Electric bus purchases will begin in earnest in 2021 with the last of the existing diesel and hybrid fleet being retired by 2033.

The projected service requirements have changed since the 2018 version of the plan, and both versions are shown in the chart. Four planned major events will reduce bus requirements:

  • The Eglinton Crosstown LRT opens in 2021 replacing frequent bus services on several routes.
  • The Finch LRT opens in 2023 replacing bus service west of Keele Street.
  • The Scarborough Subway Extension opens in 2026 shifting the termini of many routes to STC station.
  • The planned expansion of the streetcar fleet in the mid 2020s eliminates the need for buses to supplement/replace streetcar services.

The use of articulated 18m buses will increase by 68 vehicles in 2021 if this plan holds. The next round of artic purchase in 2025-26 will replace the 153 diesel artics now in the fleet, but there are no net additions.

With the shift of the bus fleet to electric operation, the TTC plans to convert its garages at a rate of two per year. However, they have not produced a plan that aligns this conversion with the rate at which electric vehicles will replace diesels and hybrids.

Garage space continues to be an issue. The current capacity across seven garages is 1,631 buses compared to a total fleet of 2,012, a shortfall of 381. Even when McNicoll Garage opens in 2020 adding capacity for 250 buses, there will still be a shortfall with system capacity of only 1,881. A ninth garage to add a further 250 spaces is not planned to open until 2031. That garage, like many projects, sits in the “out years” of the capital plans so that it does not contribute to the shortfall in available funding over the 10-year span of the budget.

This puts the TTC and its would-be customers in a long-standing box when looking at service improvements. For another decade, Toronto will be told that there is no room for more buses beyond the current fleet plans. The planned growth in peak service from 2026 onward is under one per cent per year.

TTC management plans to bring forward a service plan later in 2019 which will examine future demand. A vital part of such a report will be to look not just at minimal ridership and fleet growth, but to consider what happens if service improves at a substantial rate. Oddly, there is provision for this in the streetcar fleet plan, but not in the bus plan.

The 15-year Capital Improvement Plan includes construction of a collision centre and heavy overhaul facility for the bus fleet. This would release space now used at Hillcrest allowing it to be repurposed as a new streetcar shops and depot. The engine shops now at Hillcrest would become obsolete with the migration to an all-electric bus fleet.

 

Will the TTC Presto Project Ever End? (Updated)

Updated March 19, 2019 at 4:00 pm: The TTC has replied to questions I sent about the new Presto spending. There is a major change in project scope.

Buried in hundreds of pages of the TTC’s Capital Budget are a few sheets on the implementation of Presto, the fare system foisted on Toronto by Queen’s Park.

According to the project description, the estimated final cost (EFC) for the TTC would be $44 million (this is net of subsidies from other levels of government). However, as the project budget shows, $43 million was spent to the end of 2017, and a further $19.4 million in 2018. Most of the costs booked to date have been under the category of “Project Management”.

The project is supposed to wind up in 2019, but there is a budgeted TTC cost of $17.3 million.

And lo and behold! In 2020 there is a further $49 million.

Both the 2019 and 2020 spending are net new in the budget this year, although $47 million of the 2020 amount is still considered to be “unfunded”.

On March 5, 2019, I asked the TTC what this proposed spending was to cover considering that the Project Summary (below) is silent on this new money.

And so a question for everyone who is following the Presto story: Why is there a total of $66.3 million in new money included in the 2019-2028 Capital Budget that was not there last year? What will it pay for? Will this spending ever end, or are will Toronto continue to discover costs for Presto it missed when the project to adopt this system was sold to the TTC Board and Council?

The TTC Replies:

A portion of 2019 added funding is to enable TTC farecard staff to continue work on PRESTO implementation (products, service standards, etc.)  There is also a portion of unspent 2018 funds carried forward into 2019.

Some 2019 costs and the 2020 cash flow is a preliminary estimate for the cost of an on vehicle ticket solution for buses that will allow customers to pay with cash to obtain a ticket that will allow them to pass through faregates.  This is a very early estimate that was developed as part of the comprehensive list of projects identified in the Capital Investment Plan.  As noted, aside from initial funds for a feasibility study this project is not funded.

The 2019 funding increase was two part:

a) Continued PRESTO implementation costs

The PRESTO rollout was anticipated to be substantial complete in 2018 with the rollout of the PRESTO Ticket product, and solutions for cross boundary travel, downtown express travel and other PRESTO payment products. MX was unable to deliver these items, particularly PRESTO Tickets, as expected in 2018 and delayed the implementation to 2019. Resources were also added to the capital program to addresses software quality and system performance issues. Additional capital funds were requested to accommodate and support the continued work and change to the PRESTO implementation plan.

b) Commence initial Cash on Surface (Farebox Replacement) work

A solution is required to allow cash paying customers transferring from surface vehicles (buses, streetcars, Wheel Trans) to enter non-integrated TTC stations with fare gates. Initial capital funds were added to year 2019 and 2020 as a very early estimate that was developed as part of the comprehensive list of projects identified in the Capital Investment Plan.  This funding is for business case development and feasibility analysis only.

We had also added funds for the development of a fare payment solution for Wheel Trans contracted taxis in the event Metrolinx/PRESTO was unable to do so.

[Email from Stuart Green, March 19, 2019]

Continue reading

TTC 2019 Fleet and Capacity Plans Part I: Subway (Updated)

Note: At the time of publication (Noon on Monday, March 18, 2019), I await a response from the TTC to several questions on issues raised in this article. When the responses arrive, I will update the article.

Updated March 20, 2019 at 6:40 am: The spreadsheet of major project costs has been revised to show the correct final cost for the Line 2 Platform Edge Doors project. The value under “post 2028” was correct, but the EFC originally contained the value for the Bloor-Yonge project. This change does not affect the text of the article as PEDs were cited only in that table.

The TTC’s Capital Budget and Plan exist in a summary form in reports to the TTC Board and City Council, but there is a much more detailed version commonly known as the “blue books”. These are two large binders packed with information about capital projects.

For years, I have been reading them to sniff out issues that the general reports don’t cover or acknowledge. The 2019 edition became available at the beginning of March, and as I dove into it, many questions began to fill notes especially where there are direct conflicts between materials in the books themselves, and between these details and public statements and reports. Combing through this material may look like the height of transit nerdishness, but there is a crucial underlying issue here.

Cost-cutting politicians, not to mention ambitious transit managers, think that everything can be solved with a quick takeover of ownership and decision-making responsibilities. The temptation is to appear to do much while spending as little as possible. TTC and City practices chronically understate the capital needs of the transit system, and this makes a takeover appear cheaper than it really should be. Couple that with a government and its agency, Metrolinx, where detailed, long-range spending plans never appear in public, and we have a recipe for a system that will crumble from underfunding.

I cannot help but feel that project timings and overall plans for the system have been shuffled around without a thorough review of the effects especially where related plans overlap. Indeed, some project descriptions contain text that does not match the timing implied by the annual budget allocations. TTC management is supposed to be working on consolidated plans for both major subway lines, although the one for Line 2 was promised two years ago when Andy Byford was still the CEO.

A long-standing problem with capital budgets in Toronto, and not just at the TTC, is the overriding concern with the City’s debt ceiling. Toronto sets a target that the cost of debt should not exceed 15 per cent of tax revenue. Originally this was a hard cap for each year in a ten-year projection, but major projects in the near future made this impossible to achieve. Now the target is to stay at or below the ceiling on average. With a bulge in spending, and hence an increase in debt, in the mid 2020s, debt costs go over the line and this is “fixed” only by having years at less than 15% to make the average work out.

For a capital-hungry agency like the TTC there is a problem: future projects have requirements that simply do not fit into the City’s plans. The severity of this shortfall has been understated for over a decade by three simple expedients.

  • Project schedules in the budget are pushed beyond the ten-year mark where the related debt pressure would appear in City projections.
  • Projects are shown “below the line” in unfunded status with a hope that revenue sources such as new subsidies from other governments will appear.
  • Projects are omitted from from the budget completely.

The result is familiar to city-watchers with annual hand-wringing about the sky falling tomorrow, while somehow we manage to pay for today’s projects. In January 2019, the TTC knocked the legs out from this with the publication of a 15 year Capital Investment Plan revealing capital needs far greater than any numbers used in past projections. What had been a ten year, $9 billion plan that was roughly two-thirds funded (i.e. had known or likely monies available) went to a fifteen year, $33.5 billion plan with only one-third funded. This is just for “state of good repair”, and any system expansion sits on top.

In all of this lies a more subtle problem than simple financing. Years of shuffling projects made projected spending fit within City targets, and this served political needs to make key projects appear manageable. Overall planning, including the relationships between line items in the budget, took second place, if it was considered at all.

Capital planning requires a long-term view of the city and its transit system, and decisions made today have effects reaching more than a decade into the future. Toronto continues to suffer from delays in provision of new fleets for the surface system, including the garage space needed to hold a larger bus fleet, that go back at least to the era of Mayor Rob Ford. For years, the standard response to pleas for better transit service is that there are no buses and streetcars to provide more service, and even if we had them, we would have no place to put them. This flows directly from decisions to throttle spending.

Toronto faces the same challenge on its subway where decisions about the timing of spending, even of acknowledging the scope of requirements, limit the ability to address capacity problems.

This is a long article focusing on matters related to fleet planning, although there are related issues with infrastructure and facilities. Key points are summarized first, with details in following sections.

Continue reading

The Evolution of TTC Ridership and Fares 2005-2018

Recent discussions about TTC ridership and fare evasion included references to the numbers of riders who use each fare medium, but this was not published in detail in reports and presentations.

The TTC publishes a breakdown of ridership through the City of Toronto’s Open Data Portal including values for each type of fare annually back to 1985. Charts in this article use the data from 2005 onward. [Click on any chart to open an expanded version.]

Adult Fares

With the availability of Presto, Adult fare payments have been migrating to that medium for the past few years. The chart below shows the number of rides by fare type and the evolution of the preferred medium is clear over the years.

  • In 2005, the number of token fares (red) was lightly greater than the ticket fares (orange), but ticket use dropped off as this medium was withdrawn.
  • Metropass fares (dark blue, an estimated count of trips based on user diary records) grew  considerably to 2014, and then began to drop as Post Secondary passes (green) and later Presto (yellow) and Presto-based Monthly Passes (dark green) ate into Metropass usage.
  • Weekly passes have never accounted for much of the total. Other small fractions are broken out in a separate chart below.
  • Total Adult ridership has been falling since 2014, although this was masked in overall counts by the rise in Children’s trips with the advent of free travel.
  • Note that 2015 is shown with an asterisk. Ridership due to the Pan Am Games is not included in the totals to allow consistent year-over-year comparisons.
  • A Presto “SRVM” is a “Single Ride Vending Machine”.
  • Presto usage jumped substantially in early 2019 with the discontinuation of Metropasses, but this is not reflected in data to 2018 below.

The bands associated with monthly passes could overstate actual ridership depending on the accuracy of diary-based estimates. There is likely a drift between the ridership multiple (rides/pass) used to calculate the published figures and the actual ridership as discussed in my previous article about the Auditor General’s Report.

The data above show ridership values, and these are reformatted below as percentages of all Adult trips.

In order to make the low-usage media values clearer, the chart below includes only media for which less than five percent of Adult fares were paid with each type.

  • The Weekly Pass (turquoise) tops out at about 2.5% of all Adult fares in 2012 and then drops again on a clear downward trend by 2018. This pass will likely be replaced by some form of fare capping later in 2019, but there is no definite decision yet on this.
  • The two hour fare only came into use in mid 2018, and it does not yet represent a large number of trips. Indeed, counting these as “trips” is a challenge in comparison with the previous fare structure where a “free” transfer may have been valid, or not, depending on the nature of the trip.
  • The Presto Monthly Pass became available in mid-2018, but Metropass users opted not to convert to it in large numbers until 2019.

Senior and Student Fares

Seniors and Students receive approxiately a 1/3 discount over Adult fares at the ticket/token rate, although their discount for passes is lower. This means that more trips must be taken by a passholder to “break even” compared with paying by tickets.

  • There was a steady growth in Monthly Pass usage (dark blue) up to 2016 that was since reversed by Presto-based fares. Weekly passes (turquoise) accounted for a trivial number of trips.
  • Tickets (orange) and Cash (grey) have long been the dominant payment medium for this group of riders.
  • Presto fares (yellow) made a considerable inroad into ticket use in 2018.
  • Total ridership by Seniors and Students dropped slightly in 2018.

The chart below shows the same data as percentages of all Senior and Student fares.

The low-usage media for Seniors and Students are a small percentage of that market, which in turn is considerably smaller than the Adult fare market.

Children

The advent of free rides for children 12 and under more than doubled the estimated riding from this group. Presto “children” (although there is some dispute about how many of these are genuine) have added a few more.

Miscellany

Finally we come to a collection of fare media that collectively account for a small and declining amount of total ridership. Day Pass usage has been dropping thanks to Presto, and this medium will disappear entirely later in 2019.

Total Ridership

The jump of over 10 million rides associated with free children’s travel offset a chunk of the adult ridership loss as noted above. This also partly blinded the TTC Board and Senior Management from what was happening to their system overall. The decline of total ridership began in 2017, but the Adult decline had already been underway since 2015.

The complete set of charts in PDF format is linked below.

TTC_Ridership_Analysis_2005_2018

TTC Board Meeting: February 27, 2019

The TTC Board met at City Hall on Wednesday, February 27.

There was also a meeting of the Audit and Risk Management Committee at TTC Headquarters, 1900 Yonge Street, at 9:00 am on Tuesday, February 26 with many items that are also on the full Board’s agenda.

The City Auditor General’s report on Fare Evasion was on both agendas. Given its length and detailed content, I reviewed it in a separate article. An update on actions taken by the Board is included below.

Also in this article:

Continue reading

TTC Service Changes Effective March 31, 2019

TTC service changes for the schedule period running from the end of March through to mid-May 2019 are comparatively minor.

The reconstruction of King-Queen-Roncesvalles, originally planned to start this spring, has been delayed to 2020. Planned changes in affected streetcar services will not occur, although some revisions to 504 King are expected in May to address service reliability. The schedules for 29/929 Dufferin service have been left as originally designed for this period with all service extended to the Princes’ Gate Loop. This change will be reversed in May.

Construction begins on the CNR bridge over Coxwell Avenue. Half of the underpass will be closed at a time, and this begins with the northbound roadway. 22/322 Coxwell services will divert via Woodbine and Danforth.

Reconstruction of the bus roadway at Jane Station was planned to begin with these schedules, but work has been deferred until May. The new schedules provide for extension of the 26 Dupont and 55 Warren Park routes to Old Mill Station, but they will actually operate to Jane Station pending start of construction. At that time, the 35/935 Jane services will shift to on street loading on Jane Street.

On line 1 Yonge-University-Spadina, the crew relief and break point will move north to Vaughan Metropolitan Centre Station from Sheppard West Station.

Route 95/995 York Mills will be revised with weekday midday 995 express service added to the schedule. The midday 95B service to UTSC will be replaced with 95C service to Ellesmere Station as in the peak periods.

There are minor changes on several bus routes (see the linked summary for details) to adjust running times and headways.

Updated March 14, 2019: The number of vehicles on 167 Pharmacy North has been corrected in the spreadsheet linked below.

2019.03.31_Service_Changes

Fare Evasion on the TTC: The Auditor General’s Report

With official ridership stats flat or falling over the past few years, and the annual pressure to raise fares to balance the budget, the issue of fare evasion comes up regularly as an untapped revenue source. This became a particular concern with the move to all-door loading on, primarily, the streetcar network where the absence of a fare check at vehicle entry gives more scope for evasion than on buses or in subway stations.

Toronto’s Auditor General (AG) has issued a report and a video on this topic. They will be discussed at the TTC’s Audit & Risk Management Committee meeting on Tuesday, February 26, and at the full Board’s meeting on Wednesday, February 27.

The political context of fare management comes in on a few counts, and should be remembered when reading about dubious decisions and practices as flagged in this report.

  • As the TTC shifted to larger vehicles, primarily on the streetcar system, an important goal was to increase the ratio of riders to operators. However, as all-door boarding and Proof-of-Payment (PoP) became more common, the need to validate fare payments went up. The politicians who control TTC funding at the Board and Council levels have a fetish for “head count” where limiting the growth in staff, or better still reducing their numbers, takes precedence. The result was that the number of Fare Inspectors did not keep pace with the growth in PoP.
  • Presto was forced on the TTC by Queen’s Park under threat of losing subsidies for other programs. There is a strong imperative to report only “good news” about Presto both at Metrolinx and at the TTC for fear of embarrassing those responsible at both the political and staff levels for this system. Getting the system implemented took precedence over having a fare system that worked.
  • Historically the TTC has claimed that fare evasion on its system amounts to about 2% of trips. With fare revenue for 2019 budgeted at $1.2 billion, this would represent a loss of about $24 million in revenue. If the actual evasion rate is higher, assumptions built into the PoP and Presto rollouts especially about the scale of enforcement required, are no longer valid.

Through all of this, there are many examples of poor co-ordination between Metrolinx/Presto and the TTC, of poorly thought-out implementations of procedure and of operational practices that simply do not achieve the best possible results. There is plenty of “blame” to go around, but a fundamental problem is that the system “must work” for managerial and political credibility.

The AG conducted a six-week review of actual conditions on the subway, streetcar and bus networks in November-December 2018 and found that the actual evasion rate was substantially higher, especially on the streetcar system.

The dollar values shown here are built up from mode-specific evasion rates and the level of ridership on each mode.

Problems with Presto contributed about 5% to the $64.1 million total in lost revenue, but this does not include issues with fare gates or TTC practices regarding “crash gates” in stations which allow fast entry for riders with media that can be checked visually. The proportion of such riders has dropped substantially with the end of Metropasses, and will fall again when tokens and tickets are discontinued later in 2019.

The report contains 27 recommendations all of which have been accepted by TTC management. The challenge will be to see how they are implemented.

Summary

The Auditor General’s findings fall into broad groups:

  • The challenges of self-service fares where entrances are not always checked
  • Presto equipment reliability and performance
  • The ratio of fare inspection staff to the number of passengers
  • Deployment issues for fare inspectors

A related issue is that the way the TTC estimates ridership might not accurately reflect conditions in the field. The reported drop in “ridership” in the past few years could lie as much in the methodology of counting multi-trip (pass) usage and shifts from old-style passes to Presto as in a real loss of riders and system demand. Moreover, a weakening in the rate of growth is clear going back longer than Presto has been available on the TTC, or Proof-of-Payment was in widespread use.

Continue reading

Toronto City Budget 2019 and the TTC

The City of Toronto launched its 2019 budget on January 28 and as usual the overwhelming preoccupation is to keep property taxes down. This has pervasive effects throughout the budget in ways that are not always obvious.

The TTC has been granted an increased subsidy for 2019 (matching the one built into their own recently-approved budget) of $22 million. This is a combination of a $25.3 million bump for the “conventional” system and a $3.3 million cutback in Wheel-Trans funding because ridership growth has not been as strong as originally projected for 2018.

Another big bump lies in the Toronto Police Service who will get $30.3 million more for 2019. An important difference between the police budget and the TTC subsidy is that the City only funds about one third of total TTC costs, and so the proportionate increase on the gross TTC budget is much lower. Every City dollar going to the TTC has to be matched by two dollars from riders.

Across most other City departments and agencies, the money dedicated to the large agencies drains the pot available to everyone else.

Operating Budget and Property Taxes

The City budget process begins with the presumption that residential tax rates will go up by the rate of inflation which, for this year, is 2.55%. Other property classes rise at a slower rate as a matter of policy (a practice dating back to the Mike Harris era) driving down the ratio of non-residential to residential rates to make Toronto taxes on businesses more competitive with the 905 municipalities.

  • Commercial rates will go up by 1.28%, half of the residential increase.
  • Industrial rates will go up by 0.85%, one third of residential.
  • Multi-unit residential (apartment buildings) have a 0% increase courtesy of a provincially imposed freeze a few years ago.

Eventually (projected at 2023 in last year’s budget), the commercial and industrial ratios to residential will reach their target, and these taxes will start to rise at the same rate as inflation. However, in the meantime, although we have an “inflationary” tax increase, the City does not get the full benefit of that across all property classes and the overall revenue increase is only 1.8%. In turn that applies to the 37% of the total budget that comes from property taxes. The rest comes from user fees like TTC fares and transfers from other governments which might not rise at the rate of inflation, if at all. Any shortfall in that 63% of non-tax revenue directly eats away at programs and creates demand for better support from the property tax base.

The TTC gets its $22 million (one of the smaller increases in subsidies in recent years), but the budget problems are far from over.

Within the TTC budget, as I previously reported, there is a $24 million unspecified reduction that is hope to arise from various sources that together are worth about $32 million. The TTC has to “win” on 75% of these to find the savings they need, but they start behind the 8-ball with about 25% of the total being a claim against Metrolinx for the cost of supplementary bus service thanks to congestion from the Crosstown project. If Metrolinx doesn’t pay up, the TTC will have to run the table and get every other potential saving to break in their favour.

On the City side, there is more creative accounting.

Although the solid waste rate increase looks as if it is “inflationary”, the rebate reduction is a hidden tax increase because it involves $35 million in cost (the rebate) that in previous years was paid from the property tax. The City’s intent is to roll back all of these rebates over the next three years so that all solid waste fees represent the full cost of sevice rather than a subsidized one. The effect is somewhat like reducing transit subsidies while failing to mention that fares were going up. This dodge was picked up immediately by the media, and is among the many bits of sleight of hand Matt Elliott describes in his new City Hall Watcher blog.

The refugee contribution is hoped-for subsidy from Ottawa matching their 2018 payment toward housing refugees. The issue is under discussion between Mayor Tory and the Feds, but if this does not come through, it will leave a big hole to fill with cuts elsewhere.

The Capital contribution reduction relieves the spending pressure in the Operating Budget, and hence on property taxes, but this comes at a cost. More capital works are paid for with debt rather than from current revenue, and the projected jump in 2020 to get back on track with this item will make balancing that budget harder. Capital-from-current, or CFC, is the equivalent of renovating your house, but paying some of the cost out of today’s income to reduce borrowing. If you get in the habit of borrowing more, it is much harder to return to a budget where you pay-as-you-go at a comfortable rate. The 10 year Capital Plan foresees CFC rising from $340 million in 2019 to $426 million in 2020 and more than doubling to $754 million by 2026.

Finally, there is $10 million in an unspecified reduction that the City Manager hopes to find within management staff, and indicated that similar savings might be attempted in future years.

Not shown in this list is the Land Transfer Tax (LTT) because it is assumed to bring in the same revenue for 2019 as it did in 2018 even though the monthly numbers have been falling through the latter part of 2018. City staff offered little beyond fond hopes that this revenue stream will recover through 2019.

Collectively between the City’s and TTC’s budget, there are many changes that cannot be reproduced year-over-year, or which depend on economic luck to work in our favour. We might muddle through 2019, but in 2020 we could be in for a shock.

One cut that was buried in the details is that the transit Fair Pass program, Phase II, will not be fully implemented as originally planned. In this phase, recipients of Child Care or Rent Supplement allowances were to become eligible, but in fact only those getting the Child Care allowance will join the Fair Pass program in 2019. Another problem with the Fair Pass pricing – many “eligible” riders don’t use transit enough to make buying the pass worthwhile – is a separate problem not even addressed in the budget.

Capital Budget

The Capital Budget faces severe funding problems in the 2020s because the City’s appetite for new projects, not to mention needed ongoing State of Good Repair (SOGR), exceeds its available borrowing headroom. The City’s target is that debt service costs not exceed 15% of tax revenues. This used to be a hard cap so that no individual year could crest above the line, but is now treated as a moving average.

The problem with this chart is quite obvious. Years 2020 to 2026 are all “above the line”, while 2019 is “below the line”. This means that no borrowing can be added until years beyond 2028 while the Cit digests the years of higher borrowing. The future poverty of our capital budget is baked in to this chart.

That bulge in the 2020s also matches the bulge in the TTC’s capital needs, most of which are unfunded, in its 15 year Capital Plan.

During his presentation, the City Manager observed that the City was taken by surprise by the TTC plan which represented a five-fold increase over spending the City “knew about”.

Horsefeathers.

The TTC has been producing a Capital Budget for some years that clearly shows about $6 billion in funded projects plus another $3 billion in unfunded items, and many more that are “below the line”, not even formally in the 10-year budget. To this must be added an extra five years’ worth of spending in the 15-year budget, and the long overdue acknowledgement of some capital projects that were no secret to any TTC watcher.

The change simply is that the City can no longer pretend that only the approved $6 billion worth of projects actually exist.

The City’s overall SOGR level appears to rise moderately over the next decade, but this too is an illusion as City staff pointed out during their presentation.

In the chart below, the green line shows the total backlog which rises from $7.759 to $9,506 billion, a modest 22.5% increase over 10 years. However, the other lines split out three components:

  • The Gardiner Expressway’s reconstruction from Jarvis to the DVP eliminates its SOGR backlog (red).
  • Toronto Water’s ongoing investment in new plant reduces its backlog from $1.453 to $0.208 billion (blue).
  • All other components of the backlog rise from $4.227 to $9.243 billion or more than double (amber).

Without the $3.5 billion backlog from the Gardiner and Toronto Water, the 10 year increase in the SOGR deficit is far from modest, and shows a city unwilling to pay to maintain what it already owns.

Looked at in more detail, the situation for some accounts is even more dire.

  • Transportation Services (mainly roads and bridges) goes up to three times its current backlog.
  • The TTC backlog grows from a sliver to $0.755 billion, and this does not include expansion projects nor the formerly below-the-line items now in the TTC’s Capital Plan.
  • The TCHC backlog increases by 80% leaving a large amount of public housing in Toronto in much worse shape than it is today.

To put the TCHC backlog in proportion, it is only slightly less than the cost of the Scarborough Subway Extension. Why do we have money for a new subway, but not for housing?

[Adapted from City Budget Presentation at p. 46]

The City Budget Appendices break down planned spending into departments, agencies and projects. The last page includes planned spending and borrowing.

The Scarborough Subway Extension is near the bottom at a cost for the next 10 years of $3.328 billion. This is based on the current SSE cost estimate which is to be revised in April 2019 based on current design work. Note that there is comparatively little borrowing for the City’s share of this project thanks to the accumulated revenue from the SSE levy which is bringing in about $40 million annually.

SmartTrack does not appear explicitly in this budget because it is currently bundled in the line for Facilities Management under Corporate Services. The project estimate will be updated in April, and at that point the project line, at least for funding purposes, will be moved to the TTC budget.

The Gardiner also does not appear here with its own line because it is part of the Transportation Services budget.

There is no money for any other substantial TTC expansion, only for design work on a few projects included within the TTC’s budget.

In April 2019, City staff plan to bring forward a compendium report on all of the major projects (SSE, SmartTrack, Waterfront, Gardiner and others) with up to date estimates. This will obviously trigger changes in the Capital Plan as published here.

As yet there is no sense of how the City of Toronto and other governments who help to fund transit will actually pay for everything the politicians have put on maps, and for everything Toronto needs.

TTC Operating Budget 2019: Part II – Revenue and Expenses

This article continues my examination of the TTC’s 2019 Operating Budget which began with a review of the proposed fare increase.

Understanding the budget can be challenging because it presents the TTC’s status in a manner that does not directly align with actual experience. Every year, the new budget is prepared showing the changes from the previous one, but in fact operations during any year rarely produce the budgeted numbers by year-end.

Factors such as shifts in energy prices, unexpected changes in labour legislation, and extraordinarily bad weather can combine to throw off the final results. Depending on circumstances, this can have various results.

  • If the budget is running tight because of unexpected expenses or farebox revenue falling below projections, service increases planned for late in the year could be deferred, or some maintenance might be put off to the following year.
  • Expenses may be high in one account, but lower in another, and collectively these could offset each other.
  • Revenue may run higher than expected and planned service improvements might be deferred with the combined effect of creating a “surplus”. This is not unusual when budgets are crafted with room to handle in-year variations. It also sets a base for the following year’s budget higher than might otherwise be available.

On a total budget of $1.9 billion, a few percent one way or another is to be expected. However, two percent, or $38 million, is equivalent to more than 1% on the property tax if this were a shortfall to be covered by the City. A further problem is that from the Council’s point of view, only the “net” budget matters because that is the part which the City pays for. This magnifies swings in the budget so that a 1% change at the gross level becomes a 3% change at the net level assuming other revenue (mainly fares) comes in as expected. By year-end, any shortfall cannot be made up from the farebox, and the City would have to absorb it all.

This budgetary math creates a situation where there is strong pressure to keep the subsidy requirements below budget and, ideally, to “give back” unused subsidy to address other City funding requirements. The TTC may aim to improve service and operate according to standards, but this is all “subject to budget”.

These are budget-to-budget numbers and they show a 3% increase in the requested subsidy from $741 million to $763 million. The “conventional” system goes up by $25 million, but this is offset by a reduction in the Wheel-Trans subsidy caused by lower-than-projected growth during 2018 relative to the budget.

2018 Probable Results

Some context for the 2018 numbers is available in the CFO’s Financial Update for the third quarter of 2018. Although revenue is lower than projected, expenses are even lower requiring less subsidy than the budget foresaw. This will eliminate the draw from the Stabilization Reserve leaving these funds available for use in the 2019 budget.

The TTC’s goal is to preserve improvements that affect customer service, and this is achieved by whittling away at expenses behind the scenes. “Efficiency” is always a watchword, but there is a point where there is nothing left to cut without harm to the organization. In 2019, the TTC has again managed to find cost savings, although some of these have external causes and/or are one time changes that cannot be sustained in future budgets.

Through all of this, there is only minimal discussion of service improvements simply to keep up with the Board-approved Service Standards.

As I reported previously, the TTC’s scheduled service on the bus network only increased from 1,560 to 1,582 vehicles between the November-December 2017 schedules and their 2018 equivalent. The Express Bus Network added about 30 buses to affected routes, but this means that service elsewhere at best held steady.

The January 2019 CEO’s Report shows that the TTC is attempting to address overcrowding and has made some progress since 2017, at least on paper.

Riders in the real world might beg to differ, especially in recent days where system reliability coupled with increased demand has given transit a very black eye.

The TTC’s Service Budget includes provision for a roughly 2.8% increase in 2019.

Although the TTC reports on route reliability, the most recent report is for August 2018. This measures “on time departures” from terminals which do not represent the service most riders see along major routes. As I have discussed in other articles, the “standard” which is measured has so much slack in it than the bunched service commonly seen by riders falls within the allowable “on time” standard.

If the TTC is going to improve its credibility with riders, not to mention get better utilization out of its fleet, it must address service reliability by doing more than reporting a meaningless index.

As for crowding, the TTC has not published route-level riding and crowding statistics for a few years, and there is no tracking data to show the state of the system.

Continue reading

TTC 2019 Operating Budget: Part I – Fare Increase

The TTC’s Operating Budget and a proposed fare increase will be considered by its Board on January 24, and subsequently by Council through its budget process. Management recommends a ten cent increase in the adult and senior/student fares with proportionate increases in multiple fare media (passes or their equivalent on Presto).

The new fares are projected to generate $25.6 million in revenue the TTC otherwise would not get for the nine months from April 1 (when they would go into effect) through year-end. The TTC is also seeking $22.0 million in additional City subsidy to cover costs, many of which were already mandated by Council, that only existed for part 2018.

Working through the Operating Budget is always a challenge not least because the numbers are presented on a budget-to-budget basis with little reference to actual results. What typically happens each year is that if a shortfall by year-end is foreseen, expenses will be cut back to fit the available funding. Conversely, results can be better than expected and the TTC winds up with a “surplus” which is really a lower subsidy draw than budgeted.

Unexpected costs and savings can occur for a variety of factors including changes in pricing versus initial estimates (common for energy costs), legislative changes affecting employee working conditions and benefits, ridership above or below forecast, and a mix of fare revenue that yields a different average fare per ride. Collectively, these amounts can range above $100 million and many of them are not under the TTC’s direct control. Council, however, is terrified by even a $10 million extra call on subsidies because this represents roughly a 1/3% property tax increase. Ideally (for the politicians), the TTC should come in under budget and thereby “save” money versus original subsidy projections.

I will explore the TTC’s costs and revenues in the second half of this article, but for now the question on everyone’s mind: fares.

Fare Structure

To save everyone asking, yes, I support the fare increase, but with some caveats discussed later in this article.

For many years there has been a call for the TTC to return to a 2/3 farebox, 1/3 subsidy ratio as a “fair” balance between riders and government support. In the 2019 proposed budget, fares will cover 62.6% of total expenses, and a further 3.7% will come from miscellaneous revenue such as advertising.

There is a basic problem with picking any target as the “ideal” farebox:subsidy ratio. If policies such as fare freezes drive the ratio down, there will be “relief” for riders in the short term, but eventually one will reach the new plateau and be faced with annual increases. One cannot simply keep moving the goalposts especially when better service and system capacity are important to the transit system’s credibility.

The table below is taken from the TTC’s 2019 Operating Budget report.

The single fares for both adults and seniors/students will rise by ten cents, and so there is a higher percentage increase on the concession fares than those for adults. The various classes of passes go up by roughly ten cents times the existing “fare multiple” versus single fares. For example, a regular monthly pass is $146.25, or 48.75 times the $3 single fare. The pass goes up by $4.90, or 49 time ten cents. Other passes shift by their respective fare multiples.

Fare increases are often criticized as hurting those who cannot afford to ride transit and this is part of a larger issue with poverty in Toronto. Toronto has a “Fair Pass” program which provides a discounted pass to those who qualify, although the list in the current phase of this project is quite restrictive. The three phases proposed in 2016 were:

  • Phase 1 – starting in March 2018 – includes only Ontario Disability Support Program and Ontario Works clients not in receipt of transportation supports
  • Phase 2 – starting in March 2019 – extends eligibility to residents receiving housing supports or child care fee subsidy whose household income falls under the Low-Income Measure +15% eligibility threshold
  • Phase 3 – starting in March 2020 – extend eligibility to all other Toronto residents living with an income below the Low Income Measure +15% threshold.

The estimated cost of this program was

  • $4.8 million in 2018,
  • $13.0 million in 2019,
  • $36.2 million in 2020 and
  • $48.0 million at full rollout in 2021.

There is no indication of whether the second and third phases will be funded by the City although statements by the Mayor imply that programs already in the works would be funded for 2019. The bigger jump will come next year.

The TTC and the City face difficult choices about expenses and revenues, but this should not stop them from looking beyond current approvals.

  • The Fair Pass should be funded as proposed for Phase 2 in 2019, and direction should be given that funding for Phase 3 be included in the 2020 and following budgets. That is a challenge for Council because the jumps in 2020 and 2021 represent roughly a 1% property tax increase between them.
  • The concept of a Fair Pass discount should be reviewed for poor seniors for whom the Fair Pass is only a minuscule discount compared with regular seniors’ fares.
  • Presto cards should be available from the TTC at a nominal cost, say $1 or $2, not the $6 now charged. Riders should not be dependent for cheaper or free cards on TTC giveaway programs when they occur.
  • With the move of cash fares to a collection mechanism that will issue a fare receipt, the two-hour fare should be extended to those who pay cash. This is the only group who will not have this privilege under the current plans (see below). For the purpose of the two-hour transfer, any single fare should be eligible.

The shift to electronic media will continue this year as various existing formats are phased out. I clarified some issues with Heather Brown at the TTC, and her replies are quoted below.

  • Although the Day Pass is shown in the table above, the TTC intends to drop it at a date to be announced later in 2019. Their position is that the two-hour fare introduced in late 2018 provides a discount for chained trips (hop off, hop on riding), and the Day Pass is now superfluous. This also means that the weekend and holiday “family pass” function of the Day Pass will disappear. However, there are still plans for a Day Pass ticket (see below).
  • Although this is not before the Board in January, management plans to recommend that the Weekly Pass be replaced by a trip cap within Presto. The number 16 has been suggested, but this is still to be confirmed when the Board discusses the matter in February.
  • Tokens and tickets will be replaced by Limited Use Media or “LUMs”, cardboard versions of Presto cards that will be valid in “one-ride, two-ride and day-pass ticket formats”. LUMs will be available for purchase from Presto machines starting in June. Fares paid using them will get the same two-hour transfer privileges of regular Presto cards. Current plans are to stop sale of tickets and tokens in late summer 2019, and stop accepting them for fare payment in 2020.
  • LUMs will only be available for Adult fares. Those who wish to receive concession fares will have to switch to using a Presto card.

Cash fares will continue to be accepted on buses and on the older streetcars pending their retirement, and in subway stations where there is a farebox available.

“Once we no longer have fare boxes at those stations / across the system, customers wishing to pay buy cash will need to purchase a PRESTO Ticket. Those customers who want to continue to pay the concession fare should switch to a PRESTO card and set their card to deduct a youth/senior fare.”

Someone who pays cash into a farebox will need a receipt that is capable of being read by fare gates for connections at locations that do not have a closed transfer connection (e.g. Dufferin Station) and this would also apply to cases where buses are substituted on routes normally served by new streetcars with fare vending machines.

“Customers will be provided with a product that will open the fare gates. We’re still looking into what this option will be.”

Fares paid by cash will not be eligible for the two-hour transfer privilege.

“Customers who pay by cash aren’t eligible for a timed transfer. The transfer rules for those customers paying by cash will remain as they are today, a one-way continuous trip, with no stopovers, within a reasonable amount of time. Customers who require transfers on a streetcar, after the C/ALRVs retire must pay at the Fares and Transfers Machine and obtain their transfer from there, as they do today on the low-floor vehicles.”

The arrangements for cash fares still do not address how someone with a paper fare receipt such as that issued on a streetcar will access a subway station, especially if the transfer rules enforce only “official” transfer locations and a car is on diversion, a common situation downtown.

Regional Fares

The question of regional fare integration has fallen into a black hole ever since the ascension of the Ford government at Queen’s Park and the repudiation of the previous government’s spending promises. These included a $1.50 discount for cross-border trips for adult single fare payers using Presto, as well as lower fares for short distance trips on GO Transit. What, if any, part of this will be implemented will probably have to wait at least for the provincial budget in March 2019.

That discount, of course, was flawed in that it was not available to those who travelled using a pass, only single fare riders, and the GO+TTC cofare already in place offers a much smaller discount for seniors and students than for adults.

There has been no public discussion of integrating fares so that, for example, a “two hour fare” ignores the boundaries between all local transit systems.

All of this is further complicated by Queen’s Park’s planned “subway upload” and the as-yet unknown financial arrangements for operations and maintenance of the system.