Finance

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Creative Financing for the Sheppard Subway

The City of Toronto has issued a proposal call on behalf of Toronto Transit Infrastructure Limited (TTIL) for consultants to work on the business model for the extensions of the Sheppard Subway.

One option previously discussed to fund transit expansion has been “Tax Increment Financing”.  Comments in various places, including from members of the development industry, suggested that the scale of development needed on Sheppard Avenue to finance the subway extensions was not attainable.

We now know that the Ford regime intends to cast the net much wider to fund their pet project:

The plan will assume that the incremental tax revenues arising from the construction of the proposed Sheppard subway extension corridors as well as from the construction of the Eglinton-Scarborough Crosstown line can be applied towards funding the capital costs of the Sheppard subway extension projects. The plan will provide a separate forecast of incremental tax revenues for each of the four corridors (Sheppard W., Sheppard E., Eglinton, Scarborough RT).

In other words, additional tax will flow not just from Sheppard, but from the Eglinton-Scarborough line funded by Queen’s Park.  This begs the question of how we would ever fund rapid transit entirely with TIF revenue when we must raid the benefits of other projects.

The Memorandum of Understanding between Mayor Ford and Queen’s Park does not specify where TIF would be applied, only that it is an option to be explored and Queen’s Park would assist with any necessary legislative changes.

This is turning into a shell game where future city revenues that would pay for many improvements and ongoing operations will be mortgaged to fund one subway expansion.

[Thanks to Jamie Kirkpatrick at the Toronto Environmental Alliance for spotting this.]

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In Case You Haven’t Noticed

With the recent emphasis on Customer Service as the TTC’s new mantra, I am rather harder on them for certain types of issue than I might otherwise be.

One important part of CS is accurate information.  Not only is it useful to riders, it gives some indication that the organization cares to make their journey more comfortable with alerts about unusual conditions.

Sunday, May 15 is the date of the Goodlife marathon, and the TTC helpfully tells us about delays and diversions with posters and e-alerts.  Here is one I just received:

SUNDAY: Rolling road closures for GoodLife Toronto Marathon impacts TTC routes: 5, 14, 33, 65, 72A, 94, 97-320, 127, 504. Expect delays.

Last updated May 14, 2011 18:59:30

Route 33 Forest Hill no longer operates on weekends.  “Expect delays” is something of an understatement.

Meanwhile in another part of the world, the service change notice and revised schedule have finally appeared at Broadview Station for route 8 Broadview.  The TTC appears to be slowly catching up with the backlog from service changes implemented a week ago.

At times, I feel like I’m just kvetching, but one would hope that the TTC folks responsible for maps and service notices paid attention to timeliness and accuracy.

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TTC Meeting Wrapup May 2011

The TTC Agenda for May 11 contained a number of items of interest.  In a previous article, I reviewed the preliminary report for the Finch bus service improvements.

Items detailed below the break are:

  • PRESTO Update
  • Adam Giambrone’s Office Expenses
  • Station Ambassadors
  • Chief General Manager’s Report for January-February 2011
  • 510 Spadina Additional Service South of King Street
  • Additional Commissioners

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Secret Service Cuts

Today, the money-saving service cuts went into effect on many routes.  At this point, the TTC’s magnificent customer service efforts have not seen fit to post notices at stops on the affected routes, nor to change the posted schedules.  They have managed to place small yellow stickers saying “hey, no service”, but left the old schedules in place.  I don’t know if the yellow stickers are up system wide because checking that out is lots of work.

So far, the TTC’s effort consists of:

  • A “good news” press release and media event stressed the service additions (almost all of which were routine seasonal changes) while omitting any mention of the service cuts.
  • Updated schedule info is online, but not on schedules posted at stops.
  • There are “no service” stickers on affected stops, but I don’t know how extensive this work is, especially where routes with different hours of service share the same stop.
  • System maps have not been updated to show route segments with limited hours of operation.

At Broadview Station, there is no indication that 62 Mortimer and 8 Broadview no longer operate after 10pm Sundays.

On a related topic, the TTC must dust off its Service Standards and address issues on which they were silent earlier this year:

  • Will the screenline of 10 riders per hour continue to be applied for future service cuts?
  • Will walking distances to service be considered both as they apply to future cuts, and to reviews of the cuts that have been implemented?
  • What mechanism will be used to monitor and, if justified, to reintroduce service, and what standard will apply?

Please use comments on this post to help track the degree to which missing or incorrect information about the service cuts is a system-wide problem.

And remember to tell all your friends that this is “for the greater good”.

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TTC Fouls up Variety Village Service Plan (Updated)

Updated April 26 at 2:30 pm:

I received a note from the TTC castigating me for the “gotcha” nature of this article.  In effect, in my zeal to show this as a staff error, I left out information that would have painted a different picture.

The background for this is that at the December 2010 meeting (the first of the new Commission), there was a presentation on the options for serving Variety Village.  This presentation is not available online, but was sent to me with the complaint.  Given its size, I have excerpted the portion relating to the proposed 12 Kingston Road split in which it is clear that (a) service would be removed from Kingston Road at some hours and (b) staff do not support this option.

2010.12 Variety Village Route 12

The December report accompanying the presentation includes an earlier report on Variety Village which mentions the split 12 Kingston Road service as an option, but recommends against it.  There is no mention in the 2004 report that a split service would remove buses from Kingston Road completely during some periods of operation.

The loss of service with this option is not mentioned in the April report or recommendation approved by the Commission, nor in the “Commission Highlights” posted after the meeting.  It is quite clear that this was seen as a “good news” story, and that the Commission did not understand (or if they did, care to acknowledge) that a service cut was involved.

The original post from April 25 follows below.

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Reading the Fine Print

The TTC’s Audit Committee recently considered the Draft Financial Statement for 2010, a report that will likely show up on the regular meeting agenda in May.  As usual, the interesting parts are buried in the notes.

Last fall, I wrote about the manner in which the TTC is financed and the baffling array of programs and reserve funds through which money flows to various parts of the TTC operating and capital budget.  This article continues with the info for 2010.

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The Mythical Private Sector Subway

The Ford Administration and its followers at City Hall would have us believe that transit developments in Toronto can be had essentially free of public cost and that the private sector, whatever that means, will pony up the investment to build the subway.

Almost as soon as the scheme for a privately financed Sheppard Subway was announced, the wheels started to come off the plan.  Actually, “come off” assumes that it had wheels to begin with, and statements by the Fords showed clearly that they had not worked through the details.

Oddly enough, their hands were out for any public sector funds that might be available including $330-million or so originally earmarked by Ottawa for the Sheppard LRT, up to $650m in “left over” funding that might not be needed for the Eglinton tunnel project by Queen’s Park, and whatever investment could be pried loose from Ottawa’s “PPP Canada”.  Additional money might come from a quick sale of waterfront lands by the City to would-be developers.

The scale of the Sheppard project may well shrink to only the eastern leg from Don Mills to Scarborough Town Centre so that the total cost stays in the $2-billion range.

Recently, I learned that Queen’s Park had offered $2b toward the Sheppard Subway provided that the Fords would allow the eastern part of Eglinton to remain on the surface, but this was turned down flat.  So intransigent is the Mayor on the subject of incursion by transit into road space that the possibility of substantial funding for his pet project was not an option worth embracing.

You may have noticed by now that there isn’t a lot of private sector money in this story, except for the buy-out of waterfront lands, and that’s a sale of public assets, not a private sector investment in transit.

Meanwhile, we hear a lot about private sector investment elsewhere, usually with little context.  Vancouver’s Canada Line comes up now and then, including in comments on this site, and some people think it’s a private sector show all the way.  In fact, various public agencies have over $1-billion in the project, more than half of the total cost.  Even the “private” partner, a joint venture, includes investment agencies that manage public funds including pension plans.

Probably the most successful example of investment-supported transit is in Hong Kong, but this must be seen in the context of local conditions.  Not only is Hong Kong an extremely dense city, it is one in which the land ownership and planning are firmly in public hands.  Private buildings abound, but they sit on land leased from the public sector which reaps the benefit of land development.  (For an extensive look at the Hong Kong system’s financial and planning development, see Rail+Property Development by Cervero and Murakami [14MB]).

Leaving aside whether Toronto would ever support densities such as those found in major Asian cities like Hong Kong, there are important issues that do not get discussed here.

  • Who profits, and how soon?  If land is held in the public sector, the profit from  appreciation thanks to transit construction remains there too.
  • Will the City simply hand over land to developers to do with as they please, or will there be a recognition that city building involves us all?
  • Will new neighbourhoods to be planned both as attractive, pedestrian-friendly spaces where people will want to live even at high densities, or will we see a continuation of the tower-in-a-parking-lot so common in many developments?
  • Will we build car-oriented suburbs, generating even more congestion, along what is supposed to be a major transit corridor?
  • Will the Sheppard line be funded only with development along its corridor, or will other parts of the city, such as the waterfront, have development revenues siphoned off leaving them bereft of transit?
  • How much of the scheme depends on the City fronting the initial construction cost in the hope of future development revenues to pay the capital and operating expenses?
  • Will Council be allowed to perform, in public, a full review of the terms of any arrangement, or will we sell our transit system’s future in a back room deal?

PPPs are notorious for requiring careful structure of contracts, performance criteria, penalties and ongoing management.  Toronto’s political culture prefers to walk away from such responsibility in the public sector.

One way or another, Toronto will commit a pot load of money to a Sheppard subway of dubious value, and force Queen’s Park to bury the entire Eglinton line at great cost.  Billions will disappear into these projects while other parts of the transit system beg for funding.

The private sector may wind up funding some portion of the Sheppard project, but transit overall is still very much a public issue.  Long term funding will depend on public revenues.  We cannot avoid the debate on fares, tolls or taxes, with the assumption that magically money in the private sector will build, operate and maintain our transit system.  Somewhere, the public will spend more, or sell assets, or give away benefits as a tradeoff.  Nothing is free.

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NextBus Data Feed Change Breaks Apps & Bookmarks

On April 6, NextBus introduced a new data feed structure.  The major change in this version is that the stop nomenclature used internally by the application has been revised to match the stop numbers used for the TTC’s vehicle arrival text message system.  Other updates include some schedule related information in the data feed (run, crew and trip numbers) that will probably be of more use to an internal app that “knows” about the schedules.

This change has side-effects both for users of the NextBus site, and for 3rd-party applications based on the data feed.

Any NextBus user who has bookmarked a stop for easy retrieval will find that the bookmark does not work.  The reason is that the bookmark includes the old stop identification, and this does not exist any more.  You will need to recreate the bookmark.

Users of Whereismystreetcar will find that it is working, sort of, while the author adapts his code to the new data feeds.  There is a similar problem with old bookmarks on this app, and any you have created must be redone.

I don’t know about other apps based on the NextBus feed, but if users could let me know what’s working and what’s not, I can maintain status info here.

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TTC Meeting for April 2011 (Update 2)

Updated April 6, 2011 at 7:20 pm:

I forgot to mention in my earlier update that there was talk going around the meeting that only half of the Sheppard Subway scheme (the eastern half) might be pursued in the short term (the next decade) to keep the cost down to $2 billion and change.  This echoes a comment by Vice Chair Peter Milczyn in yesterday’s Toronto Sun.

Updated April 6, 2011 at 5:00 pm:

At the Commission meeting, very little happened.

The new, but not yet official, Chief Customer Service Officer was introduced and he made a few remarks about his hopes for the new position.  He has a real challenge in front of him.  Customer Service may be the kind of thing Commissioners love to smile brightly and gush about, but wait until we start talking money, or the negative effects of cutbacks on the perceived quality of the system.

As expected, the proposed split of the 12 Kingston Road bus so that half of its service would run via past Variety Village (via Birchmount and Danforth) was approved.  This will begin operation on May 8, but the community shuttle bus (run by Wheel Trans) from Main Station will continue to run until Victoria Park Station (route 12’s terminus) becomes accessible later this year.

Unlike the previous meeting, Commissioner Minnan-Wong did not belabour the public session with inquiries about contract cost changes.  Some of these questions should be asked, but without implying that every change is a sign of waste and incompetence.  Whether he was equally silent in the private session before the main meeting, I don’t know.

However, in what must be the greatest example of how petty the new Commission (and the Ford regime) can be, there was continued discussion of the fact that former Chair Giambrone overspent his 2010 expense allowance by approximately $3,400.  The issue will come back to the May Commission meeting, and there were dark hints that more serious measures would be taken.  Considering that for many years, none of the Commissioners or Chairs has used all of their expense budget, this is really small potatoes.  However, it’s more important than worrying about how to pay for a $4.2-billion subway with magic beans.

The big issue, relatively speaking, was the new Toronto Transit Infrastructure Limited report.  This company, renamed and resurrected from an older, inactive TTC subsidiary, will be used as a home for work on the “Toronto Subway Project” (the official name for the Sheppard Subway extensions in the Memorandum of Understanding with Queen’s Park).  It has $160,000 sitting in the bank from the original setup capital out of TTC when it was created, and retained earnings from work performed years ago.  This nest egg will allow it to operate without any funding approvals for the short term.

We learned that Gordon Chong, a former Councillor and Commissioner, has been retained at $100k/year as President, CEO, Secretary, Treasurer and Co-Chair.  The other directors and officers who are members of Council will not be paid for their work on TTIL.

A rather convoluted motion was passed by the Commission stating that it would approve paying invoices on TTIL’s behalf provided that a mechanism was set up for Council to fund them.  Presumably this would be required once they burn through their $160k nest egg.

Former Vice-Chair Mihevc spoke as a deputant, and raised a number of issues about the Sheppard Subway notably the lack of detailed information on the way it will actually be funded, what the effects will be for ongoing system subsidy requirements (as compared with the Transit City LRT lines originally proposed), and what type of service would be offered to those areas where the LRT plans have been cancelled.

A report on what to do with Finch West is expected back later this year, and the 2012 budget review will include provision for whatever is recommended.  Obviously, this won’t involve any significant construction such as a BRT lane and stations.

The Commission swatted these requests aside, and Vice Chair Milczyn said that “we don’t need to know what future subsidies might be” because in every past case the TTC has always just opened new lines and absorbed the cost.  The desire to not debate the wisdom of the Sheppard proposal, which hasn’t been approved by anyone yet other than the Mayor, was quite clear.  After the meeting, a press scrum with Chair Karen Stintz was notable for its evasiveness.  In the end, it all comes back to “the Mayor wants it”.

As long as Council has enough cheerleaders who let Mayor Ford get away with this sort of thing, it’s hard to understand why we even bother holding public meetings.

The original post from April 2 outlining major agenda issues (most of which were not discussed at all), follows the break.

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