November 17, 2016 by Steve

TTC’s 2017 Operating Budget: More Creative Accounting (Updated)

The TTC’s 2017 Operating Budget will be discussed at a special Board meeting on Monday, November 21, 2016. When work began on this round, the TTC stared at a $231 million hole in its potential 2017 funding, and it was apparent that the Mayor’s request for a 2.6% cut in subsidy was small change beside the TTC’s much larger problems.

Updated November 17, 2016 at 6:40 pm: Responses from the TTC clarifying the treatment of externally recovered costs have been added to this article.

The Budget Report is now public, and initial media comment suggested that the TTC had wrestled that huge potential deficit to the ground. However, a lot of that is spin and accounting trickery, not a real reduction in the TTC’s needs.

Still facing a gap of $61 million, TTC management list many unpalatable ways that operating costs could be trimmed. In effect, the message to Council, and especially to Mayor Tory is this: being a “transit mayor” costs money, and it’s time to pay up.

This article looks at the Operating Budget, the one that provides service and handles day-to-day maintenance activities. In a separate article, I will review the Capital Budget.

Understanding The Budget Mechanics

The TTC (and all City agencies and departments) begin work on their next year budget midway through the year. The 2017 budget has been “in the works” for months and in many ways is based on 2015 rather than 2016 results because the year was barely half-over when the 2017 budget cycle started. This can lead to problems when the “current” year does not turn out as expected as happened in 2016.

An important first step in looking at TTC budget numbers is to recognize that any year-to-year comparisons are relative to the 2016 budget, not to the probable actual results for the year. This has some important effects:

The fare revenue projection for 2017 is based on a lower projected ridership than was used, but not actually achieved, in 2016. Therefore, revenues go “down” in this budget (without allowing for effects of a fare increase) simply to get the estimated ridership back to a reasonable level. 2016 was described as a “stretch target” for ridership, and the budget elastic didn’t stretch as far as hoped.
Some 2016 costs are coming in under budget, notably for employee benefits but also for diesel fuel. These are savings in actual spending in 2016, but they also show up as “reductions” in 2017 when they are rolled into the budget. It is important to distinguish between reductions in costs that affect actual spending in 2017 as opposed to simply being a lower budget number.
The 2015 budget included a “capital from current” item for the purchase of new buses. This is not an “operating cost” in the traditional sense, but it avoided putting the item on the City’s Capital Budget. For this reason, 2015 is an odd year in any stats unless the capital portion is factored out (notably from the claimed subsidy per rider). There is no such payment in 2016, and so a direct comparison with 2017 is possible without adjustments, at least until some of the TTC’s new budget tricks are factored in. For 2017, the TTC proposes to shift some operating costs onto the Capital budget and, as a result items that were billed to “operations” and counted as part of the rider subsidy in past years would disappear. The City Manager’s Office does not concur with this tactic. The point here is that year-to-year budget and subsidy comparisons cannot always be made without adjusting the figures to a common basis.

Another important factor is that in the total numbers reported in the media, the “conventional” and Wheel-Trans (WT) budget numbers are often conflated. When demand for WT is growing quickly, as is now the case with improved eligibility criteria from Queen’s Park, costs for this service grow proportionately. This cannot be wished away by budget hawks who care only to limit tax increases, but worse it can create a situation where the conventional system is pillaged for dollars to handle the WT demand. That is not the sort of conflict we should be seeing in budget debates, but it is inevitable when the extra cost of WT for 2017 is almost equal to the revenue from a 1% property tax hike.

Finally, there is a distinction between true savings that represent lasting reductions in expenses, and one-time benefits from procedural changes or special accounting provisions. The impression can be given that a budget is in much better shape than reality by giving the impression that a large initial deficit can be whittled down.

Getting From $231 Million to $61 Million

The budget gap was “closed” by a number of measures, some of which are simply savings against the 2016 budget that are carried forward into 2017. On an “actual spending” basis, the savings have already happened. They are not the result of new, recent actions by TTC management.

As I reported previously when reviewing at the Budget Committee discussions, the reduced healthcare costs were actually achieved as a saving in 2016 against that year’s budget. They are a reduction in 2017 only on a budget-to-budget basis because the $10.3 million was part of the 2016 budget as a starting point.

The recommended savings in the current report are:

Reduced PRESTO fees due to the delay in rolling out Metropass support. With less of the TTC’s revenue flowing through PRESTO, the cost of serving this does not have to be included in the budget. Note that this treats PRESTO costs as a net addition and does not include an offsetting saving in handling costs for Metropasses likely because the two modes would co-exist during a transition period.
As in past years, energy costs are expected to be lower than the previous year’s budget level. The saving shown here is $12 million, but $5 million of that is already projected to be saved in 2016 actual results as per the October 2016 CEO’s Report, p. 50.
Capitalization of City construction impacts. When the city tears up a street (for example the Queen Street watermain project now underway), the TTC incurs extra cost to divert and supplement service. This has been borne out of the operating budget but without an explicit chargeback to the capital project for which this should rightly be a cost. This appears to be a new practice for 2017 and it is unclear whether the City and its agencies have agreed to pay these charges. (See update below)
Elsewhere in the budget, there is a section on cost recoveries from Metrolinx for its construction project effects on service. This would be done on a cost recovery basis as with City construction, but it is unclear why one of these has been included as a “saving” but not the other. (See update below)
Delays in Bus Reliability Centred Maintenance. TTC management had proposed a higher fleet spare ratio and maintenance practices to pro-actively get ahead of failures rather than doing predictable repair work after a vehicle had already passed the likely failure time and possibly actually broken down in service. In the Capital Budget, the TTC is proposing a very large order of buses to replace the Hybrid fleet before its due date, and this would reduce maintenance needs by substantially lowering the average age of the fleet. It would also place a large chunk of the fleet under warranty effectively transferring operating maintenance costs to the Capital budget. This tactic has a downside as the TTC has seen in the past when a homogeneous fleet reaches its non-warranty period, and later the higher cost of maintenance (and staffing requirement) of older vehicles. This is a time bomb built into the budget even though it could “solve” a short term problem.
Reduced contracted services. It is unclear what this refers to, and I have sought details from the TTC. The largest “contract service” the TTC has is the provision of service in York Region, but this is done on a full cost recovery basis. If YRT takes over a service the net change to TTC’s budget should be zero. (See update below)

Update: The TTC has clarified the handling of externally funded costs in an email from Vince Rodo via Brad Ross.

With respect to City construction projects:

It has been a long standing practice for the TTC to charge the incremental cost of service to TTC capital projects. For example, when we tear up streetcar track, we run replacement bus service during the construction period. We charge the difference between the regular streetcar service and the bus service to that project as part of the cost incurred because of the project. In the past, we have not done that for City of Toronto construction projects. The city has agreed that the practice for TTC projects can be used for city projects too. So for example, if the city were closing an intersection for work and we had to re-route service round that, we will now be able to calculate that extra cost and bill it to the city, who will charge it to that project. Since these costs had to be covered by the TTC operating budget in the past, they have been included in the TTC operating budget. From now on, they will not show in our expenditures because there is no net cost to the TTC.

With respect to Metrolinx cost recoveries:

The Crosstown Master Agreement calls for Metrolinx to reimburse the TTC for incremental operating costs associated with the impact of Eglinton Crosstown construction on TTC service. For 2015, we billed them and they reimbursed us for $5.2 million. I don’t have a final figure for 2016, but I suspect it will be in that range. That is not included in our budgets because there is no net cost to the TTC. For 2017, it is similarly not included in our budgets because once again there will be no net cost to the TTC. So the treatment of this and the city construction above will be completely consistent on a go-forward basis: no net cost included in the TTC budget. We flagged this in the 2017 budget report because: (i) the quantum is increasing substantially in concert with the ramping up of Crosstown construction, (ii) it stays high for at least the next 5 years and (iii) because we are hiring 169 TTC employees to provide this augmentation of our service. If it were the same range as 2056 and 2016, we may not have highlighted it.

With respect to York Region cost recoveries:

The service the TTC operates in York Region under contract to YRT is included in the budget as both an expense and a revenue and that has been the case for decades. It is the service they request us to operate on their behalf.

With respect to contracted services:

The “reduced contracted service” has nothing to do with any of the items mentioned above. It has to do with reduced purchases of services such as IT, human resources, IT licenses, cell phones, etc. No impact on service on the street. It all about saving money everywhere we can.

The different treatment appears to arise from whether there is a net delta in the budget (i.e. a new condition, and therefore reported as a budget-to-budget change) or a continuation of an existing practice where costs and expenses always balance out. [End of update]

Four additional sources of revenue or savings are proposed:

A draw of $14.4 million from the Transit Stabilization Reserve. This money comes from “surpluses” (planned subsidies that were not needed in good years) that have been banked against lean years of which 2017 is most definitely one. This is not a “saving”, but rather one time revenue that can offset the budgetary pressure for 2017 only. The underlying costs will not disappear, and they will show up as part of the 2018 pressure.
A fare increase of 10 cents on the adult token rate, pro-rated through other types of fare (the details are discussed later in this article). The added revenue is net of the anticipated loss of riders. If pushback from the increase is less than expected, then the TTC could do better with new riders than planned, but many other factors will affect riders’ decisions about staying with transit.
The TTC proposes that the cost of new batteries for Hybrid buses of $8.5 million be transferred to the Capital budget. This is an interesting accounting debate because parts replaced during a major bus overhaul (typically at mid-life) are paid for from capital, while parts replaced in normal day-t0-day maintenance count against operations. However, the lifespan of these batteries is short enough that capitalization is an odd treatment.
Some TTC capital assets are not subsidized by the City in part because their lifespan is too short, and in some cases this is likely a holdover from the days of provincial subsidy when certain items were excluded from that funding. As an accounting mechanism, the TTC funds these purchases out of working capital, and recovers the money as a depreciation charge against the operating budget over their lifespan. The TTC proposes that this amount be treated by the City as a capital cost thereby shifting $29 million out of the operating budget.

The City’s response to the final two items is not exactly welcoming:

Both of these items were reviewed with City staff and not supported because they reflect a shift from the operating budget to capital, requiring City capital funding. Staff suggest these items be given further consideration by the City as they might help address the operating pressures while immunizing customers from service adjustments or further fare increases, to the extent possible. [pp. 5-6]

Fare Increase Options

TTC management recommend a ten cent increase in the adult token fare from $2.90 to $3.00 with proportional changes in all other fares except cash which would stay at $3.25. This is expected to bring in $27 million in new revenue, net of the loss of 1.2 million riders and the PRESTO fees that are a percentage of the revenue stream.

There is no discussion of the issue of special fares as a social benefit, and that issue will get tangled up in proposals to deal with the (at least) $61 million remaining gap between projected revenues and expenditures.

One set of proposals involves larger fare increases. These would inevitably trigger higher ridership losses than the proposed ten cent level, but this is really uncharted territory for the TTC. Moreover, there is the question of perceived value, and whether riders feel they would actually be ripped off by a fare increase if service did not materially, and fairly quickly, change for the better. Paying more for what many perceive to be inferior and declining service is no recipe for retaining customers.

In addition to fare increases, there is the question of the many forms of discount fare. The table below shows the estimated “cost” to the TTC of these fares. This is the sort of issue where fare:ridership elasticity can get very tricky depending on the nature of each market and the extent to which elimination or reduction of a discount is considered to be “unfair”. A related problem is the TTC’s perennial treatment of these concession fares as a cost, as if giving people cheaper rides drives up the cost of service, or represents revenue that might be available if only we could get everyone to pay a higher fare. This is directly contrary to many City objectives to reduce barriers to travel among many groups of citizens, and the recognition that mobility has a value.

Note: The 8 million lost rides by children does not incur a cost because they are travelling free today. However, it is an indication of how much more riding is done today by children, and the degree to which this unexpected bump in one rider class is masking declines in others, notably adults.

Service Cuts

Another way to trim the TTC’s budget gap is to roll back service improvements, possibly even to levels below those imposed by the Ford/Stintz regime. This would be a bitter pill for the “Transit Mayor” to swallow, and in the midst of such grandiose spending plans as we see on major capital projects, the idea that these services would not be funded should be deeply embarrassing.

This table shows quite clearly that the usual poster children for “waste” in the transit budget will not yield a great deal of savings, notably the “low ridership, high subsidy routes” and the night services. The big money is to be found is reducing Service Standards, and rolling back both the 10 minute network and the full service 19-hours-a-day policy.

Here are the current loading standards for TTC vehicles. Note that these are based on averages over a peak hour and some vehicles will have more passengers while others are half-empty either due to bunching, or because they are short-turned and are of little use to many riders. The TTC only reports averages, not max-min values nor standard deviations.

As things stand, the service budget for 2017 includes:

A 0.4% increase over the budget for 2016 for the target ridership level of 545 million, but no provision for ridership growth.
Annualization of improvements made in 2016 including express buses and earlier Sunday service.
Restoration of full streetcar operation on all routes including the conversion of 511 Bathurst and 514 Cherry to Flexity operation.
Opening of the Spadina extension (TYSSE) in December 2017 and concurrent reductions in contracted service for York Region.
Provision of new bus service to the Renforth Gateway.

Major Changes in Expenses

Several cost areas will contribute to the increase expense budget for 2017:

Collective bargaining agreement increases: $24.3m
PRESTO commissions and new faregate maintenance: $14.5m. This cost is almost entirely due to PRESTO fees because maintenance costs on the new faregates are largely offset by savings in maintenance on the old ones. At this point there is no offsetting saving shown for staff reductions due to PRESTO, but a discussion of this comes up later in the report.
TYSSE opening: $6m for 2017, projected at $30m for years following. Note that the extra cost of operating the extension is equivalent to revenue from a 1% property tax increase.
Cap & Trade: A $5.2m additional cost in fuel. According to the report “This is expected to increase the TTC’s diesel costs by 4.7 cents per litre and its natural gas costs by 3.3 cents per cubic meter.” The TTC has not produced consolidated figures showing the combined effect of price changes in fuel, the benefits of hedging, changes in consumption, and the new tax.
Hybrid bus battery modules: $8.5m. This is an operating cost that the TTC seeks to transfer to the Capital Budget as described earlier.
Accident claims: $6.2m. Actuarial evaluation of existing claims indicates a need to increase the provision for settlement. TTC self-insures except for disaster coverage.
Traction power and utilities: $5.5m. Again, it is clear that “lower energy costs” of $12m cited as savings earlier in the report have offsets elsewhere in the budget.

A full list with explanations is in Appendix D of the report.

Workforce Effects

A perennial issue at City budget time is the matter of “headcount”, to the point that some Councillors fetishize this to the exclusion of any other measure of a budget. Transit service, of course, requires people to operate and maintain it. If you buy a bus or a subway train, someone has to drive it, someone has to maintain it, and in the case of a subway, someone has to maintain the infrastructure the train runs on. The TTC projects changes in their workforce for 2017, but the big increases come in two areas: operators needed to provide service that will be paid for by others (Metrolinx) resulting from their construction projects, and additional staff needed to operate and maintain the subway extension net of savings on the surface network.

Of the 210 staff covered by 3rd party payments, 169 are for service operation in the Eglinton corridor where the TTC expects to receive $72.5 million from Metrolinx from 2017 to 2021. 36 are to provide frontline PRESTO support for which Metrolinx is responsible, but the TTC is acting as their agent. The remaining 5 are for vehicle repairs that are charged to others.

The staffing required to open a subway extension is considerable as shown in this breakdown for the TYSSE. Note that the saving in bus operators is considerably lower than the extra staff needed to operate and maintain the subway.

As for the PRESTO rollout, the lion’s share of savings from elimination of Station Collectors will be offset by the new staffing model for subway stations. Something that the TTC has never made clear is the degree to which the value of the Collectors was included in the fare collection costs that PRESTO is supposed to offset. Whether the “evolution” of stations will “meet and exceed customer expectations” is difficult to say considering that we still do not know the actual function and service quality the new Customer Service Reps are expected to provide.

A complete description of the purpose of all workforce changes is in Appendix G of the report.

Wheel-Trans

The Wheel-Trans budget is a major source of cost pressure for the City of Toronto. Demand is rising quickly due both to demographic changes and increased eligibility mandated by Queen’s Park. It should be noted that the TTC (and other municipalities) receive no provincial subsidy for their accessible services. Indeed, the cost of running WT in 2017 will be about 90% of the value of the operating and capital gas tax contribution Ontario makes to Toronto. This is not to suggest that increased WT service is bad, indeed it is long overdue, but to show the relative level of provincial support for transit generally against the cost of providing just this component.

Wheel-Trans expects to carry 28% more trips in 2017 than in 2016 which itself is expected to be 14% over 2015. WT has almost no revenues (fares cover a trivial amount of the total cost), and this rate of increase means a big jump in subsidy requirements from the City. The extra demand is projected to add $24m to the WT budget offset by only $1.5m in fares.

There is a very small increase in WT workforce because the additional trips will substantially be handled through contract services, not the TTC’s own fleet. Indeed, the TTC projects a reduction of trips carried on WT vehicles as trips shift to other modes and as the new “Family of Services” program diverts more trips to being partially served by the conventional system (i.e. WT handles the “last mile” portion of a trip between a subway station and the rider’s origin and/or destination).

How successful the TTC will be in shifting its WT demand between various types of service remains to be seen. This will involve not just a more complex booking system, but also the ability to ensure that connections between legs of mixed-mode trips actually work as planned.

Accessible transit is a fast-growing part of Toronto’s network, and City Council should ensure that it can be properly funded without endangering the base system used by all riders, including ambulatory WT passengers who can, in part, ride conventional transit if it is “there” and not crowded or erratic beyond their endurance.

Ridership Growth Strategy

At Budget Committee meetings, there has been talk of a new “Ridership Growth Strategy” to improve the TTC’s attractiveness and to return to an era of steady growth on the system. A report on this is supposed to be coming before the TTC Board early in 2017, although the rather grim situation painted by the budget report suggests this will be a wish list for the future. One might joke that it’s just the sort of thing someone might run on for re-election in 2018, if only there were a sense that there would be political support to pay for it.

Just keeping the TTC at the level it is now at in service and fares will be a huge political struggle with a Mayor and his supporters on Council who cannot get past their promise to limit tax increases and fund any growth or improvement from those mythical “efficiencies” we have heard about for years.

Anyone who looks through the list of “savings” in the TTC budget will realize that little of the reduction from that original $231 million gap for 2017 and the now-proposed $61m number is due to management actually squeezing blood (or possibly gravy) out of a stone. Some is the luck of changing costs, some is a matter of accounting, and some is wishful thinking that the City will take on more costs without actually treating them as part of the “operating subsidy”.

The shell game continues.

November 17, 2016 by Steve

Travel Times on Route 504 King (Updated)

Updated on January 28, 2017:

Changes include:

Addition of data for November and December 2016.
Reformattied chart pages so that data for years 2014, 2015 and 2016 appear on separate sheets.

With the launch of Toronto’s TOCore project, the city set in motion a complete rethink of what “Downtown” means and how it will evolve in coming decades. On some counts, one might argue that this work is long overdue as concentration of office and residential space in a very small area brings many problems for residents and businesses, not to mention a very competitive demand for a crucial resource – road space.

I will leave the debate on many of these issues to other people and forums, but as this is a transit blog, my focus is on understanding how transit works (or doesn’t) and what effects might result from various proposals.

In the Globe & Mail, Oliver Moore writes about “Complete Streets” and how this design philosophy could affect Toronto. Without question, better attention must be paid to improving the safety and usability of major streets by pedestrians (who are also transit riders) and cyclists who collectively outnumber the motor traffic.

King Street has long been the busiest of the downtown streetcar routes carrying about 65,000 riders every weekday. But these riders do not all travel to and from the business district at King & Bay, nor do they all travel in conventional am and pm peak commuting times. New demands on the shoulders of downtown such as Liberty Village and the St. Lawrence district include not only residents bound for jobs at Bay Street, but workers and students headed to offices and schools on counter-peak trips. Indeed, the term “counter peak” can seem odd when one looks at some of the demand patterns.

In 2014-15, I was retained by the City’s Transportation Department and the TTC to review the major streetcar routes with a view to identifying locations on the shoulders of peak periods where parking and turning restrictions should be extended beyond the traditional two hour window. As a result of this and other surveys conducted by the City, traffic regulations were changed in several areas. This brought some improvement, typically eliminating anomalies where the pm peak, for example, actually was worst for transit service in the hours just before and just after the “official” rush hour.

However, that review was considerably smaller than the goals of TOCore. A redesign of a street like King is an all-day effort, and one that could, depending on its scope, affect a great deal of the streetcar route. This is not a case of tweaking a few hours a day, but of reinventing the street.

Continue reading →

November 14, 2016 by Steve

The Travails of Cherry Street

A recent meeting of the Corktown Residents’ and Business Association included a discussion of problems with the new 514 Cherry service. As reported by thebuletin.ca

… a resident of the King/Sumach area … commented that the screech of the streetcars turning at King and Sumach was so loud as to prevent sleep. Apparently the issue has been ongoing since the inauguration of the 514 (Distillery Loop–Dufferin) line on June 19.

…

The issue—which took the meeting somewhat by surprise—was amplified by other attendees, who also noted that there were substantial problems with streetlight timings at the Cherry/Front and Cherry/Eastern intersections, as well as with poorly-delineated turning lane stripes which have led to vehicles accidentally getting onto the streetcar right-of-way and then being unable to get off. (There have been earlier, similar incidents with the slightly older right-of-way at Queen’s Quay.)

Deputy Mayor and area councillor Pam McConnell’s office was aware of the issues and noted that streetcar service was now suspended (replaced with shuttle buses) between 10 p.m. and 7 a.m. A public meeting was subsequently scheduled with the councillor’s office and the TTC.

Problems at King & Sumach have continued since the 514 opened for service including:

dewirements causing overhead to be pulled down
derailments
traffic signals that do more to delay transit service than “prioritize” it (this is also a problem further south on Cherry)

When the TTC began rerouting the 514 service late in the evening, the alleged purpose was “railgrinding” and this is still reflected in the URL for the service notice which is called “514_railgrinding.jsp”. The activities underway at the intersection were clearly aimed at the derailment problems by altering the rail profile on the curves.

There is a long-standing slow order for east-west operation on King that has nothing to do with this, but is no doubt related to a few cases of overhead failure.

Meanwhile, the traffic signals here and at other locations on Cherry appear to be on a fixed cycle that has no relationship to whether transit vehicles are present. So much for “transit priority”.

On the subject of wheel squeal, the TTC’s official line is that the new streetcars are supposed to be self-lubricating, and that this would be triggered by GPS information. That’s a good line, but it does not fit with actual conditions.

There is a wheel greaser on the southbound approach to Distillery Loop.
The GPS-based automatic greasing has not yet been turned on for the new cars. (Anyone with contrary information is welcome to correct me in the comments.)
Most of the service on 514 Cherry is provided by CLRVs that do not have automatic greasers.

I have outstanding requests for further information on these issues to both the TTC and to City Transportation, and will update this post as and when they reply.

November 9, 2016 by Steve

SmartTrack’s Next Steps

After a day-long debate, Toronto Council has approved continuing along the path set by Mayor John Tory to study and possibly to build the transit lines branded as “SmartTrack”. Although this proposal is now much different from the scheme that was Tory’s campaign centrepiece, the idea of SmartTrack continues to receive broad support among Councillors.

The debate covered a lot of ground with two related threads: how would Toronto actually pay for SmartTrack, and how much of the larger transit network many hope to see will actually be built.

Council has yet to consider a long-term financing strategy and possible “revenue tools” (new taxes in plain English) to deal with the combined capital and operating budget demands of the would-be network. Although there was much talk of the lost decades of underinvestment in transit, Council has yet to show that it really is ready to spend Toronto dollars (as opposed to money from any other source) at the level that will be needed. City staff will present a report on financing options in a few weeks, and the reaction to this will be telling.

What Did Council Approve?

Below is a consolidation of the staff recommendations and amendments adopted by Council arranged to keep related issues together. For full information, please refer to the detailed record of the item.

Note that in all cases where approvals relate to “SmartTrack” this includes both the six new GO stations and the Eglinton West LRT extension unless otherwise noted.

Process:

(1) Adopt the “Summary Term Sheet and Stage Gate Process” which includes details of the many parts of the proposed agreements and (2) authorize the City Manager to negotiate and execute agreements with the province to implement this.
(3) Request staff to report at Stage Gate 5 for final approval of full funding for SmartTrack. A report on more definitive costing and the financing funding strategy has been requested for an earlier step in this process. See (18) below.
(4) Approve the confidential staff recommendation regarding settlement of the Georgetown corridor funding issue. See also recommendation 15.

Technical and Planning:

(5) Proceed with planning and design for the six SmartTrack GO stations, report back to Council, and launch the Transit Project Assessment Process (TPAP). This was amended by two further requests that the work include improvement of:
- the placement and access points of the Liberty Village Smart Track Station to maximize connectivity, and
- pedestrian connections to the existing Exhibition Place Station for both Liberty Village and Exhibition Place.
(6) Confirmation of city support for transit supportive land use plans for areas around the SmartTrack and GO RER stations. Amendments related to this included:
- Amending the development strategy for public lands at stations, including air rights, to create ongoing operating revenue streams from development resulting from that strategy.
- Directing the Chief Planner to report in January 2017 with options to develop a comprehensive plan for managing development and growth related to transit expansion.
- Confirming that the Official Plan as well as other plans, bylaws and policies, are not changed by this decision on this item. The intent of this is to forestall any claim for additional density by would-be developers in advance of the passing of updated plans for area affected by transit projects.
(7) Proceed with planning and analysis of the Eglinton West LRT extension up to Stage Gate 3 including finalization of stops and grade separations, provide a scope for this project up to the Renforth Gateway, and provide a class 4/5 estimate of the project’s cost, and conduct the TPAP. Note that this is a more restrictive approval seeking more detail than in the case of the ST/GO stations in (5) above.
(8) Request a financial contribution from Mississauga and Pearson Airport to the outside-416 portion of the Eglinton West extension.
(9) Ensure that the proposed new station design at St. Clair and Keele includes improved road operations and is co-ordinated with the St. Clair West Transportation Master Plan. A significant part of this would be the widening of the underpass east of Keele Street to remove the existing choke point.
(10) Request Metrolinx to consider grade separations at Progress and at Danforth on the Stouffville corridor, with the proviso that any option closing existing roads would not be considered. This was amended at Council to add requests for grade separations at Passmore, McNicoll, Huntingwood and Havendale.

At Council, there was an attempt to have items (7) and (8) deferred until after the Waterfront Transit Reset report is considered by Council in 2Q17, effectively putting both of the proposed Etobicoke LRT proposals on the same approval timeframe. The deferral motions did not pass.

Finance:

(13) Approve $71m for preliminary planning and design on SmartTrack (the 6 new stations plus the Eglinton West LRT)
(14) Include $2b in net capital requirements for SmartTrack (stations plus LRT) in the city’s 10 year capital projections.
(15) Approve $95m for settlement of the Georgetown South issue with the province.
(16) Approve $62m for Toronto’s share of 5 grade separation projects.
(17) Approve $60m for GO capital expansion (2 stations at Bloor/Lansdowne and at Spadina on the Barrie corridor). This was amended to ask that staff work with Metrolinx on including the study and design of the Railpath along the Barrie line between Bloor and Dundas West.
(18) Request staff to develop the financing and funding strategy, and report back when a class 3 cost estimate is available for a definitive Council commitment to the SmartTrack project.

Two additional amendments ask for:

strong TTC in developing procurement options, and
negotiations with the province for resumption of operating subsidies.

Commitment to the full cost of the new stations and the Eglinton West LRT will not occur until much more detailed cost estimates come back to Council over the next year (or possibly more). In the event that Council opts not to proceed with any component for which Metrolinx has spent money on development prior to the point of final approval, Council will be responsible to reimburse Metrolinx for its costs.

With respect to the additional grade separation studies requested for the Stouffville line, it is unclear how work on this would be funded, although one might expect Metrolinx to respond with a request for some up-front payment and guaranteed participation in funding if any of these goes ahead.

The Status of Other Major Transit Proposals and Projects

Planning and building any part of SmartTrack should be seen in the wider context of other transit needs and schemes, let alone wider demands on the city’s operating and capital budgets.

The Spadina Subway extension to Vaughan (TYSSE) is scheduled to open at the end of 2017, although startup costs will affect the TTC’s operating budget before any passengers are carried. For 2018, the current estimate of the annual operating cost to Toronto is $30 million including whatever marginal fare revenue the extension will bring in. This line’s capital was covered roughly one third by each level of government, with about 60% of the municipal share falling to Toronto based on the proportion of the route within its boundaries.
The Scarborough Subway from Kennedy Station to Scarborough Town Centre remains the subject of much debate. Although its capital cost is already covered by money from all three levels of government, the proportions are unequal, and any increase to the overall Scarborough transit scheme will be on the city’s tab. The extension will be part of the TTC’s operation along with the net new operating cost, an unknown amount at this time. A critical issue will be whether the cost estimate overall will hold or increase before final project approval, and how this will affect what actually gets built.
The Eglinton Crosstown LRT is now under construction by Metrolinx between Kennedy Station and Mount Dennis (at Weston Road) with a planned 2021 opening, subject to issues about vehicle delivery. This project’s capital cost is funded totally by Ontario, but operating costs will be billed back to Toronto at an anticipated annual net amount of about $40 million in then-current dollars.
The Eglinton East LRT extension from Kennedy Station to University of Toronto Scarborough College is part of the Scarborough package approved with much fanfare earlier in 2016. The capital cost is part of the same “pot” as the Scarborough Subway extension, but how much will actually be available after that extension’s scope and price are firmed up remains to be seen. This will be an early test for Council. Does it really believe in a “network”, are councillors willing to accept the extra cost as part of building our city, or is the argument still dominated by an outlook claiming that tax restraint must take precedence. An updated Scarborough report is expected in coming months.
The Eglinton West LRT extension from Mount Dennis to the Renforth Gateway (at the western city boundary) and then north to Pearson Airport is part of the SmartTrack package. Funding for the line is still uncertain because city plans depend on contributions from Ottawa (likely as part of the Liberal’s infrastructure program), from Mississauga and the airport authority (GTAA) for the portion outside of Toronto. This extension is now the more expensive portion of “SmartTrack”, and ironically appears to survive mainly because of that branding despite opposition from some Etobicoke councillors.
Like the central part of the Crosstown, the two extensions would be operated at the city’s expense even though the lines would be owned by Metrolinx.
The Metrolinx GO RER program is provincially funded, although the matter of the municipal contribution to GO’s capital remains a sore point between Queen’s Park and the GTHA. Toronto will pay for six new stations as part of SmartTrack and will also contribute to two stations on the Barrie corridor (Bloor/Lansdowne and Spadina). GO RER’s net operating costs will all be a provincial responsibility, and the amount of service that will actually operate depends on future subsidy levels for Metrolinx. Similarly, the full build-out of RER fleets, electrification and service levels will depend on future provincial budget decisions.
The Relief Line remains under study thanks to a provincial infusion of $150 million, and both city and TTC staff emphasize that it is a necessary part of Toronto’s future network. While some relief to Yonge line crowding will come from GO RER and the new SmartTrack stations, this will only blunt but not stop the growth in subway demand. A big problem, as readers have discussed here at length, is the project’s scope and the perception that it is intended for a comparatively small part of the system’s ridership, downtowners. The further north the eastern RL branch goes beyond Danforth (to Eglinton or even to Sheppard), the more it performs a service for the city as a whole, but this benefit is routinely underplayed relative to the cost of a new north-south subway. Major capital spending for the Relief Line would not begin until the mid 2020s, but this will still compete with other city priorities.
Waterfront LRT to the west is popular with councillors from southern Etobicoke and has begun to overshadow the shorter eastern LRT line in debates. Both parts of a future waterfront network are under review with the “Reset” study now in progress that has only progressed to the point of developing a moderately long list of options. The strategy appears to be to keep this list as open as possible as long as possible so that political fights over the details are held off at least until there is a better understanding of what will work and what the options might cost. Like the RL, waterfront transit has suffered from being perceived as a “downtown” project despite the scale of development it will have to serve.
The Finch West LRT is still on the books, and Metrolinx hopes to begin work in this in 2017. There remains some opposition to the line, and it will be a test of the Wynne government’s resolve to see whether actual work is pushed back beyond the 2018 election.
The Sheppard East LRT is also still on the books, although it is no secret that many politicians at City Hall and Queen’s Park would love to see this sacrificed for a Sheppard Subway extension. The LRT would be a provincial project with some federal money. There has not yet been any cost sharing commitment to a subway replacement from any government in part because the cost is unknown. It will almost certainly be greater than the LRT line, and like the extension north from Kennedy, will serve a considerably smaller part of Scarborough than the LRT would have. Any decision on this point is likely to fall to the next provincial government, although it will likely be part of the electioneering to reinforce the “subway champion” brand by all parties if this scheme gains traction at Council.
The Richmond Hill extension of the Yonge Subway is a project long-sought by York Region, but the idea is tangled up with network relief from GO RER, the Relief Line and other capacity improvements still pending for the existing subway. Some of these, such as added operating cost for more trains on Line 1 YUS, and capital cost for station capacity impeovements, will fall to Toronto. Whether any of the funding pools now thought to be available for transit projects generally will still be available by the time a decision on Richmond Hill faces council, indeed whether this decision will even be in Toronto Council’s hands, are questions for a future beyond any of the existing governments.
Not to be forgotten for its demand on city funding is the surface transit system including the bus and streetcar network. While billions in new projects preoccupy debates, a long-standing problem faces Toronto with population growth, much of it “downtown”, that has not been matched by additional transit. Indeed, transit service today is little changed from twenty years ago largely because the TTC streetcar fleet sits roughly at late 1990s levels, and traffic congestion has been responsible for service cuts to stretch the available fleet. Current operating budget plans at the TTC foresee a major shortfall in 2017 that appears unlikely to be addressed by a supposedly pro-transit council and mayor, and this will almost certainly continue into the 2018 election year. On the capital side, the TTC requires an additional batch of streetcars beyond the 204 now on order from Bombardier. Both the financing and supply of this fleet expansion are on shaky ground. As for the bus fleet, TTC management seems more preoccupied with simply replacing its existing fleet of hybrid buses with diesels rather than actually expanding the level of bus service to Toronto.

In this context, the SmartTrack decision is only a small part, and Council has yet to be presented with a comprehensive view of the effect building a real transit network, rather than a few lines, will have on its budget and future financing requirements.

November 7, 2016 by Steve

The SmartTrack Shell Game With TIF

Ever since Mayor Tory’s election campaign, we have been told that SmartTrack is a something-for-nothing project that would bring vastly improved transit service to Toronto at little or new added cost to taxpayers. This would occur through the hocus-pocus of Tax Increment Financing TIF).

For those new to the subject, the premise here is that building a new transit line causes property values to rise and new development that would not occur in the absence of the transit investment. That generates new tax revenue that could be used to pay off the construction debt. However, the city’s staff, who are bending over backwards to make Tory’s transit plans workable, do not see TIF as coming close to paying for Toronto’s share of SmartTrack.

Toronto Transit Plan Punted From Executive Committee

On October 26, 2016, Toronto’s Executive Committee was supposed to receive a report dealing with a wide range of transit issues.

… the City Manager will be providing a report to Executive Committee with recommendations on the Transit Network Plan, including information on cost-sharing discussions with the Province of Ontario on a range of transit projects, as directed by City Council in July 2016 (EX16.1). This report will also include an update on the planning and technical analysis for SmartTrack, Relief Line, and Scarborough Transit. Additional time is required to ensure proper consultation and coordination with relevant stakeholders including the Toronto Transit Commission, Province of Ontario and Metrolinx. [Placeholder item in the agenda]

This report is not yet available as discussions with Queen’s Park are ongoing. A deadline facing Council is that Metrolinx wants a commitment to specifics of SmartTrack work that will be bundled with the RER construction contracts that will go to tender early in 2017.

Given the time constraints, it is possible that the report will go directly to Council at its November 8 meeting. In theory, materials for the Council Meeting should be posted in advance, and for November 8, the usual deadline is only days away. Whether the materials are actually available in advance remains to be seen. This would put a major debate before Council with almost no advance briefing or public debate.

SmartTrack is not the only time constrained project as an updated transit plan and cost estimate for the Scarborough projects, not to mention a financing scheme for the entire package, needs to be dealt with so that work can begin. Any spending commitments will also affect the City’s budget which will be formally unveiled at the start of December.

As material becomes available, I will provide updates and commentary.

October 22, 2016 by Steve

TTC Service Changes Effective Sunday, November 20, 2016

There are comparatively few service changes pending for the November-December 2016 schedules as it’s late in the year, and the TTC’s main concern is to constrain costs in anticipation of a revenue shortfall for 2016.

2016.11.20_Service_Changes

Construction Projects

Various diversions will end with this schedule period or shortly thereafter:

Construction at St. Clair and St. Clair West Stations will be complete allowing:
- resumption of streetcar service over the full 512 St. Clair route,
- operation through the bus loop by 74 Mt. Pleasant and 88 South Leaside, and
- the interline between 126 Christie and 33 Forest Hill will be broken, and these routes will once again access St. Clair West Station Loop.
Construction at Neville Loop will be complete allowing resumption of 501/301 Queen streetcar service to the east end of the line.
Water main construction on Queen is expected to end by November 30 at which point the Queen car will return to its normal routing between Spadina and Shaw.

The list of routes affected by the Eglinton Crosstown project continues to grow, and additional running time will be provided on 7 Bathurst, 11 Bayview, 29 Dufferin, 33 Forest Hill, 56 Leaside and 90 Vaughan (the peak period 90B branch to Eglinton West Station will not operate). Generally speaking, these routes will not get added vehicles, but the headways will be stretched to accommodate congestion. The November 2016 changes only affect weekday schedules, but weekend changes will occur in the future.

Streetcar Shortage / Exhibition Loop

The continued shortage of streetcars will trigger the following arrangement for service to Exhibition Loop:

511 Bathurst will be operated with buses, and these will run through to the Exhibition grounds replacing the existing 509 shuttle service. Streetcars will return in early 2017 when vehicles will become available from bus substitutions elsewhere (notably the west end of 501 Queen) and from delivery of additional new cars.
509 Harbourfront cars will turn back at Fleet Loop until construction at Exhibition Loop completes in mid-December.

Trimming Service

Various routes and periods will see small changes to frequency of service to free up resources and reduce costs. The projected changes in loading on the affected routes remain within the Service Standards.

Routes 121 Front-Esplanade and 514 Cherry will be modified so that their hours of service match the standard 6 am to 1 am pattern (8 am on Sundays).

Christmas Period Schedules

The Christmas period for 2016-17 will be three weeks long because the holidays land on a weekend. Reduced service will operate through to the second weekend in January 2017 because schools will be closed for the first week of the year.

The TTC anticipates free transit service on New Year’s Eve, but has not yet announced a sponsor.

October 21, 2016 by Steve

City Manager to Council: Put Up or Shut Up

On October 17, Peter Wallace, appeared at the University of Toronto’s Munk School to present the fifth annual City Manager’s Address under the title “What We Do Is What We Fund”. The presentation deck and the webcast are available online.

With the formal Budget Launch for 2017 about a month away, it would be nice to think the City Manager would actually be as blunt as the title of my article rather than the more diplomatic title of his address. I doubt we will see this, however, as Wallace knows who pays his salary. He was quite open in saying that proposing actions that Council will not accept is not a wise move.

As befits the academic setting, these events are very collegial affairs and one could draw an intricate web linking the attendees, their professional backgrounds and employers to each other. Somewhere far away is the brawl of Council with truculent, ill-informed members more intent on self-promotion than city building.

To nobody’s surprise, the basic message is, as it has been for years, that the city has aspirations beyond its means, and that hard decisions are required on the scope of spending plans and the revenues needed to support them. Wallace described the City as someone who reads the news about health effects of tobacco, but figures that “it hasn’t killed me yet” is an excuse to remain a heavy smoker. In another analogy, he likened the City’s forward planning to driving down a dark road using only the parking lights.

Amusing though these lines might be, the real question is whether Wallace will, like his predecessor, collude with the Mayor and the budget hawks to paper over fiscal problems, or put the issues squarely before Council. In his 2015 address, shortly after being appointed as City Manager, Wallace took the strong position that policy decisions are the role of Council, not of the bureaucracy. He would put the options before the politicians, but they had to choose. This sounds good in theory, but it depends on which options are even offered for debate and the degree to which their benefits or shortcomings are actually explained.

In the transit context familiar to readers here, the TTC rarely produces an “aspirational budget”, one that says “here is what we could do, and here are the resources we need” because it is far too embarrassing to its political masters to confront what might have been with their own short-sighted penny-pinching. TTC budgets are all about fitting within a constrained financial envelope of limited subsidy and fare increases.

On the wider level of the City, Council actually manages to pass many motions saying what it would like to do, but far fewer actually paying for these programs. Some Councillors have found to their chagrin that saying “we want” is not the same as “you will provide” as a direction to City management. If the money isn’t there, “we want” simply adds to the wish list that may or may not be addressed.

Wallace began by cataloguing the many great things about Toronto, its high international ranking as a place to live and conduct business, and the many initiatives that combine to support this.

This collection looks almost progressive, but it suffers from a mismatch between expectations and funding. The Poverty Reduction Strategy together with the TCHC improvements are critical parts of keeping Toronto a great place for those who do not share in its flagrant wealth, but both of them are underfunded. SmartTrack still gets a special mention even though it is only part of a much broader requirement for transit growth. This shows that the Mayor’s signature program continues its outsized role in ongoing transit debates. A “conversation about fiscal sustainability” sounds like a cozy tea party but for Council’s rejection of all methods by which this might be achieved.

The stats for Toronto are impressive [p. 2]:

The city of Toronto is home to 2.8 million people and nearly 90,000 businesses

Canada’s largest city and the fourth largest urban area in North America

8.2% of Canada’s workforce

Toronto’s gross domestic product (GDP) accounted for 26% of Ontario’s GDP and 9.5% of Canada’s output in 2014.

But the expectations are also high:

Residents and businesses expect and value the services provided by the City

Increased demand for public investment to offset congestion, carbon, and threats to poverty

The problem is that neither residents nor businesses actually want to pay for these services or investments, and the commonly heard cry is that taxes are “too high”. In fact, the business community has a good deal thanks to the provincially mandated reduction in the level of taxation relative to residential (owner occupied) properties. For several years, and continuing until 2020 or so, commercial taxes will rise at 1/3 of the rate of residential, and so the cost increases are disproportionately shouldered by residential taxpayers. They, of course, loathe the idea of paying more, let alone at a rate greater than inflation, and so that total tax take for the City actually rises below inflationary rates. This is further complicated by the fact that property tax is only about one third of total revenues, and other streams may be constrained by market conditions or by the penury of funding governments.

Wallace observed that if Toronto’s taxes had actually increased at the inflationary rate since amalgamation (1998), a good deal of the current fiscal problem would not exist. However, three zero-increase years under Mel Lastman and one under Rob Ford, combined with below-inflation increases in other years have left Toronto’s tax base about 20% below where it would have been otherwise.

“Revenue must be part of the solution” is a key point in Wallace’s presentation, and yet it is precisely the revenue issue which challenges Council and runs headlong into the “gravy train” rhetoric which claims that the problems lie with excessive spending. Debates are hostage to this premise.

Austerity has been part of Toronto budgets for years, but there is limit to what can be squeezed out of the budget after many years of retrenchment. Wallace emphasizes that “Savings and efficiencies are critical, but insufficient” and moreover that we “Cannot rely on narrative regarding future revenue sources or operating funding from other governments”. [p. 6]

The City is quite proud of its ability to wrestle down “opening pressures” on annual budgets to a level where the required tax increase can support demands for more operating dollars, and the following chart is intended to demonstrate how effective this has been over the years.

This chart purports to show how well the City has achieved “efficiencies” to rein in year-over-year rises in costs. The amber columns show the “opening” values which represent the projected growth in expenses net of any known changes in revenue, but before any tax increases. The blue columns show the “savings” achieved during the budget process.

This can be misleading in a few ways:

There is no distinction between pressures arising from inflation, growth in services provided, and one time effects such as the transfer of a cost between the provincial and municipal level. Therefore, the relative importance of these factors is hidden.
Budgets are always compared on a budget-to-budget basis, not budget-to-actual. As I have already written, many “savings” the TTC hopes to achieve in 2017 are actually due to variations between budgeted and actual costs in 2016, some of which have nothing to do with actual “management”. The TTC always “saves” money on diesel fuel, but this occurs because the budgeted price is almost always higher than what they actually pay, and the “saving” is reported year after year as if it were an achievement.
A decision to raise fares or fees is not a tax measure, but it reduces the pressure on property taxes. The degree to which such measures contribute to the “savings” is not broken out.
Some “savings” are simply accounting tricks to shift costs into other years, notably the City’s approach to provincial termination of social service equalization payments. The City effectively borrowed money from itself pushing the actual need to pay for this transfer into future years, and that bill is now due.

This chart would be much more informative if the major components were broken out so that the contribution of each factor would be evident.

The “opening pressures” for 2017 and 2018 are substantial: $607 million and $438 million respectively. Buried in these numbers is the net additional cost of operating the Spadina subway extension (TYSSE), a new cost which until recently has received little public debate.

The City has many potential sources of revenue, but tapping any of them requires a political acknowledgement that more money is actually needed. Many Councillors, and to a great extent Mayor Tory, simply cannot get past this.

From the list above, many items have not been implemented although Toronto has the legal authority to do so. There is the parking levy (a space-based surcharge on land used for parking) and the specialty taxes allowed by the City of Toronto Act (COTA). The personal vehicle tax was implemented, briefly, but dropped under the Ford regime. A report on the many options will come forward as part of the budget process.

Wallace noted that the increase in user fees has outstripped the growth rate for property taxes, and that TTC riders have contributed more to the City’s revenue growth than the property tax over recent years. A fast growth in fees and rates has also taken place, notably in water rates, and soon to come for solid waste, so that these services are not cross-subsidized by other revenue streams, and so that their capital requirements can be funded directly by those consuming these services.

Four points set a crucial context for the debate, and especially the degree to which decisions on finding new revenue must take place:

Ontario has no financial capacity to increase funding, and uploads of City costs to the province are “reaching maturity” (a polite way of saying that little more will happen).
Land transfer tax (a substantial portion of City property tax revenue) depends on the continued level of activity and prices in the real estate market.
Prior operating budget deferrals must be addressed.
Asking for more money from Queen’s Park and Ottawa will not produce more funding.

Mayor Tory has said that he recognizes the need to find new revenues, but is less forthcoming about just how this would be done. There is a planned 0.5% property tax increase dedicated to financing transit projects, but this is a drop in the bucket beside actual needs. Asset sales such as Toronto Hydro bring one-time revenue and forego current income.

At the TTC, there have been some savings from outsourcing and from a move to one person crews on subway trains, but these are small relative to the overall budget, and they are one-time reductions that cannot be reproduced each year to deal with the demand for more service and the basic inflationary increases in costs.

The Capital Budget received less attention from Wallace, although it is key to many of the projects Torontonians have been tempted by as Council and the Mayor pursue new road and transit spending, parks and other social improvements. The problem is that the City’s ability to finance projects is much lower than the cost all of them would entail if they proceeded. This is illustrated by the “iceberg chart” which is now a familiar part of City budget presentations.

This chart does not include some of the recently announced schemes such as the Rail Deck and Don River Parks, and it is unclear whether it includes the required City contribution to Metrolinx expansion, notably the cost of additional SmartTrack-related infrastructure. New and updated costs for many transit projects will come to Executive Committee on October 26 in an as-yet unpublished report.

For all that the City Manager is frank about the need to address Toronto’s fiscal problems, there is no sense that Council and the Mayor will embrace substantial change particularly in the run-up to the 2018 election cycle. Photo ops will continue and (despite global warming) that iceberg will grow. How Mayor Tory and his supporters plan to square great city dreams with their own budgetary rhetoric is a mystery.

October 12, 2016 by Steve

Presto’s Problems Multiply

From the Toronto Star:

Presto card rollout on TTC running millions over budget by Ben Spurr
Presto lets riders transfer to a new set of headaches by Edward Keenan

Presto’s rollout on the TTC is over budget and fraught with problems. This is not new to anyone who has been following the project, or at least following it to the degree that the agencies involved provide reliable information.

As of March 31, however, the agency had spent $276.7 million deploying Presto on the TTC, according to numbers provided by Metrolinx. That’s almost $22 million higher than the agency’s 2012 estimate of $255 million.

The $276.6-million figure doesn’t reflect work that has yet to be completed or was finished after March 31; those jobs include completing Presto deployment at all subway stations, installing additional self-serve reload machines and fare vending devices across the network, and rolling out fare card readers on all 1,900 TTC buses and 500 Wheel-Trans vehicles.

Also unaccounted for are the future cost of upgrading the Presto system — which currently enables riders to pay their fare with a tap of a prepaid card — to allow for direct payment using credit or debit cards, and the cost of migrating TTC passes onto Presto. [From Ben Spurr’s article]

Metrolinx attempts to offload their problems on the TTC. Reliability problems were first blamed on unusual power supply issues on the older streetcars, but then the issue turned out to be far worse on the bus fleet. Presto’s primary implementation to date is on buses, and this is hardly a new environment for the fare card machines.

Now the cost increases are blamed on scope creep in the TTC contract including the fit-out of the old streetcar fleet and the installation of new fare gates in subway stations.

Meanwhile, complications for riders are legion as Ed Keenan describes: difficulty in obtaining and loading money on fare cards, inconsistent rules for their use, overcharges (and undercharges) for transit rides, and a complete lack of benefits compared to the existing system.

Metrolinx loves to deflect criticism to others, but is slow to accept the blame for shorcomings of its own system’s design.

At the outset, Presto as it existed was a more primitive system designed for a simpler environment: GO trains and buses, with riders who mostly took predictable commuting trips to and from Union Station. As its role expanded to other systems, the shortcomings became obvious to the point that the “Next Generation” Presto was developed for Ottawa. Even then, it had major implementation problems.

The GTA fare structure has long been biased against trips to and in Toronto. Unlike the 905 systems, there is no “co-fare” between the TTC and connecting systems notably GO Transit, and GO’s fares within the 416 compound this problem by charging substantially more to travel shorter distances.

Presto has been touted as the basis for “regional fare integration”, but this has different meanings to different people. At its simplest, Presto would be one card that could “talk” to any fare machine and charge the appropriate “local” fare, little more than standardizing the “currency” of fare transactions without any other changes. On a more aggressive level, fares would be “integrated” so that the cross-border penalty would be reduced or eliminated. It is self-evident that getting rid of fare penalties will cost somebody money in the form of higher fares overall, or increased subsidy. However, Queen’s Park wants a “revenue neutral” scheme so that added subsidies are not required.

Metrolinx has wrestled with new fare structure concepts for a few years, and push-back on their original proposals has delayed the production of a final recommendation. Behind the scenes, the always-preferred option was “fare by distance”, a concept familiar to GO, although not actually implemented “fairly” across its network. This brings very substantial operational problems because the fare system must “know” both the origin and destination of each trip requiring “tap on” and “tap off” for each leg of the journey. This evolved into a scheme to make “rapid transit” a distance-based premium fare zone, a scheme that preserves GO’s rail premium, but destroys the “integrated” nature of the subway within Toronto’s system.

The effect might be to lower fares for cross-border trips (a small minority of all GTA travel) and improve the attractiveness of GO+TTC rides, but at a higher cost to TTC users for whom the subway is an integral part of most travel.

Metrolinx also neglected to determine whether LRT and BRT lines would be “rapid transit” because none of them existed in the data used for their study. Such is the quality of forward thinking at our provincial agency.

In this context, a decision by the TTC on the fare structure to be implemented has been almost impossible, although the TTC must be faulted for keeping a real discussion of the options and limitations under wraps for so long. The TTC missed a chance to market the new fare system with more convenient fares and refuses to address a simplified fare structure, notably time-based transfer validity. That decision immensely complicates the fare calculation requirements for Presto in determining where a “new” trip starts and a second fare should be charged.

For its part, the TTC opted to enlarge its fare gate upgrades from a limited scale needed to bring Presto and accessibility to all entrances, to a full-scale replacement across the system. And, oh yes, with the capability to require “tap out” for all passengers (ignoring that a huge volume of passengers transfer to and from surface routes without using a turnstile). In effect, TTC management enabled by stealth a fare structure that has not been debated or approved by the TTC Board (at least publicly) or by City Council.

The TTC also decided to accelerate the Presto implementation by a year so that it would be fully operational at the end of 2016. This would serve two purposes. On one hand, Metrolinx could brag that the Toronto rollout was “complete” and trumpet huge additional usage (along with the service fees) by Presto. On the other, the TTC could move ahead with its redeployment of station staff who would no longer be selling fare media. Things have not quite worked out as planned, and it is likely that we will not see substantial conversion to Presto until the end of 2017.

Presto itself has design limitations, not least the fact that so much of the fare calculation occurs between the card readers at stations and on vehicles and the card itself, rather than in a back-end system. This is responsible for the oddity that updates to Presto accounts do not actually arrive at the card when they are made online, but only later when all devices in the system learn of the changes through periodic updates. “Open payment” support for credit cards is coming, but until the tracking and calculation of fare discounts is done by a central system, credit cards will only support the equivalent of a cash fare, not the discount schemes available to Presto cardholders. That is not a truly “open” system.

We’re not supposed to talk about any of this because everything Metrolinx and its masters at Queen’s Park do is perfect, Ontario is a transit Nirvana for transit policy going back decades. If we were honest, we would be discussing the alternatives, including technical limitations and funding requirements, but instead the only important work is the manufacture of ever more photo ops.

Try harder.

October 10, 2016 by Steve

Does Toronto Owe Metrolinx Half a Billion? (2)

Two weeks ago, I wrote about the receivable on Metrolinx’ books for supposed “municipal contributions” that have not been paid, but instead have been funded temporarily by Queen’s Park. This has been going on for roughly a decade and the bills are piling up, now over a billion dollars.

I posed a series of questions to the Minister of Transportation’s Press Secretary, and received a friendly, sunny, but utterly uninformative reply.

Firstly thank you for your e-mail and questions – it is nice to e-meet you! I saw your blog piece from earlier this week and the Qs you submitted to Patrick re: the existing framework for municipal contributions to GO Transit growth and expansion capital costs, potential future municipal contributions to major transit initiatives in the region and the Province’s Dedicated Gas Tax Program.

There are two Regulations under the Metrolinx Act, 2006, which are intended to assist the Regions of Durham, Halton, Peel and York, and the Cities of Toronto and Hamilton, to collect development charges (DCs) to help offset their respective contributions to GO Transit growth and expansion capital costs:

1) O. Reg. 528/06, which sets an expiry date for GO Transit DC by-laws; and
2) O. Reg. 446/04, which prescribes the allocation of the expected municipal share of the GO Transit growth and expansion capital costs amongst the municipalities.

The municipal contributions to GO Transit growth framework were put in place to establish a fair and balanced approach to support GO capital expansion in communities across the region. All municipalities in the Greater Toronto and Hamilton Area benefit from an effective GO Transit network, and the Province remains committed to working with all of our partners to expand and deliver this network. Given the transformational $13.5 billion investment that the Province is making to strengthen the GO network through the 10-year GO Regional Express Rail initiative under the Moving Ontario Forward plan, we recognize that this commitment to working together with all of our partners to build and optimize an integrated, regional transit network is even more critical.

As you note in your email, the two Regulations permit GO Transit DC by-laws to help the municipalities offset their expected contributions – per the allocation formula set out in O. Reg. 446/04 – to Metrolinx for their share of GO Transit growth and expansion capital costs. The contributions made by municipalities are not directly linked to any specific expansion projects, but, rather, they are applied against the GO Transit growth and expansion capital program, as a whole.

With respect to your questions related to the Dedicated Gas Tax Program, the funding of two cents per litre of gasoline sold across the province was made permanent through the Dedicated Funding for Public Transportation Act, 2013. The Ministry of Transportation allocates these funds through the Dedicated Gas Tax Program based on a formula of 70% ridership and 30% population for eligible municipalities. All of the factors, including the funding envelope, ridership and population, are updated annually for each program year. The funding envelope for the 2015/16 program was $332.9 million, up from $321.5 million in 2014/15. The Province has provided the City of Toronto with more than $1.75 billion through the Gas Tax program since 2003, including $169.2 million for the 2015/16 program.

Thank you again for your questions.

[Email from Andrea Ernesaks, Press Secretary and Issues Manager, Office of the Hon. Steven Del Duca, Minister of Transportation, September 30, 2016]

Despite the reference to an “expiry date” for GO Transit Development Charge by-laws, this date has been changed every few years and currently sits at the end of 2016. Based on past experience, one might reasonable expect this will be extended again. The municipal allocations have not changed since this charge was introduced despite substantial shifts in population balance around the region and a change in the type of journey that the Metrolinx network serves, especially with planned expansion.

The concurrent mention of the $13.5 billion to be spent on GO RER and “working with all of our partners” suggests that Queen’s Park might include RER in the cost base for calculation of future contributions from the municipalities. If this is so, then the Minister should say so, and all announcements should have a little side bar, an asterisk to a footnote saying, “oh, by the way, your municipal taxes will help pay for this photo op”.

Nothing in the legislation (acts and regulations) explains how “capital requirements” are calculated, which projects would be included, nor how the proportional allocation should be assessed against municipalities. It just appears out of thin air as part of the GO (now Metrolinx) budget. The amount is a not linked to specific projects, but somehow it gets calculated.

The info about the Gas Tax program is not news, but the concern municipalities have legitimately is that an increasing portion of this grant might be clawed back by charges to support Metrolinx rather than their own local programs. This is complicated by the fact that Queen’s Park threatened to withhold the Gas Tax from municipalities that didn’t play ball with the selection of Presto as their fare card. Going forward, we know that back charges for operation of the Metrolinx LRT lines to the municipal level are likely, but the amount has not yet been settled.

The basic point here is that the provincial largesse and support for transit comes at a price, and that will be carved out of money that nominally flows to municipalities for their own use on transit. Toronto’s $169.2 million is now split between the operating and capital budgets. Other monies do flow from Queen’s Park for TTC projects, but they are earmarked to those specific works such as the subway extension to Vaughan.

Moreover, given the state of provincial finances, will this billion dollar “debt” become payable by the municipalities? Toronto’s half-billion share would take a huge bite out of the city’s budget, and an ongoing charge of roughly $90 million could more than halve the value of the gas tax grant.

The Minister might contemplate some of the background information to the Metrolinx Investment Strategy reports which includes a history of GO Transit development charges, a description of the wide gap between the amounts actually collected and the amount anticipated (25% of GO’s capital program). Specifically the Metrolinx Review of Development Charges at pages 6-7. Note that this report dates from January 2014 and therefore does not reflect all of the charges that have accumulated to date. It also speaks of $100 million in revenue from municipal development charges, but the chart below clearly shows that this is far short of the “expected” contribution.

These are not trivial questions, and so I have asked, again, for an explanation. To date, nothing has come to my mailbox. My latest query follows below.