My thanks to Peter Miasek who sent me the link to this item on York Region’s website.

Recently, Ontario’s Deputy Minister of Transportation, Bruce McQuaig, wrote to York Region advising on the financial and operational framework for “designated projects” as defined in the recently enacted Metrolinx legislation.  This letter can be found among several pieces of correspondence bundled into one PDF starting on pages 12-16.

I understand that a similar letter went to the City of Toronto, but it has not yet appeared in any public debates, partly because there are so few of them currently.  It is alluded to in a TTC report on Transit City funding.

The scheme begins with a desire by Queen’s Park to bring its books into line with current accepted accounting principles.  What this means, in practice, is that instead of shipping money off to York Region and Toronto, never to be seen again except as part of the Provincial Debt, Ontario will now own the assets purchased with those funds.  Nothing in the letter explains how those portions of projects funded by others such as Ottawa would be treated, nor what would happen with extensions of existing lines owned municipally like the Yonge-University Subway.

The assets would be depreciated over their expected lifetimes and would show up as an offset on the provincial books to the debt raised to fund them.  This is a neat bit of accounting that ignores the fact that an asset only has a real value if you could sell it and recapture your investment, but it keeps the bean counters happy and makes the books look better for the politicians.  To quote the letter:

Through retaining the risks and rewards of asset ownership over regional transportation assets, the Province can best achieve its accounting and financial management objectives.

This, of course, has nothing to do with transit and could equally refer to a hospital, a school or a highway.

There are some fine words about partnerships with the municipal governments coupled with concern about “value-for-money to taxpayers and transit customers”.  Then we get into the details.

Ontario, through Metrolinx, will own and control the Sheppard LRT, Eglinton LRT, Finch LRT, Scarborough RT and VIVA Next Bus Rapid Transit.  Ownership, from an accounting point of view, requires control and this means that Queen’s Park can’t just build the lines, they have to actually appear to manage them rather than effectively ceding them to municipalities via a long-term lease.  This does not prevent Metrolinx from contracting with local agencies for construction, operation and maintenance, but on paper, the lines remain Queen’s Park’s property, and they could be assigned to some other entity if they chose to do so.

Terms of any operating agreement would be set at 75% or less than the expected lifespan of the asset so that, in a worst case scenario, Metrolinx would regain control of a line before it was run into the ground.  A great deal of legal verbiage must be created to define the criteria to which local agencies (or any private entity) will be held by Metrolinx.  This strikes me as an opportunity for a huge bureaucratic waste of time especially if all parties involved are in the public sector.

Metrolinx will define project scope, budgets and schedules, and any changes will require their approval.  Given the total absence of political input from the municipal level to Metrolinx, these discussions will likely happen in private.  Of note is the exclusion for Metrolinx funding of ancilliary upgrades to utilities, streetscaping, etc. that are thought to be add-ons of convenience for a municipality rather than an integral part of a transit project.  It will be interesting to see what standards Metrolinx defines as the “basic” level it will fund, and how much will fall on municipal budgets.

Queen’s Park wants transit riders to “experience the benefits of a regionally integrated and inter-operable system”, and the Presto fare card will be a requirement for all of the designated lines.  In a telling comment, the Deputy Minister states:

 … the Province and Metrolinx will … monitor the evolution of technologies, and will consider how to plan for enhancements and improvements as part of an overall strategy to sustain the Presto electronic fare collection system.

“Evolution” will no doubt include a recognition that this is not a situation where Ontario should develop or adapt a proprietary technology, but should work with internationally recognized electronic payment standards and systems.  The time is long past when Ontario could get away with building “roll your own” systems, and they need to look at the extensive experience in other jurisdictions.

While Metrolinx is working on the benefits of a regional service, they will also need to address the integration of GO Transit fares and service into the wider regional system.  GO, as a separate entity, has remained aloof from regional integration except as it suits them with cost sharing arranements in 905 municipalities.  These arrangements are to GO’s advantage because the joint fares with local operators are much cheaper than the cost and development effects of building more parking at stations.

Finally, Infrastructure Ontario will act on Metrolinx’ behalf for projects that are to use Alternative Financing and Procurement (AFP).  This is a variation on a PPP in which the asset may actually be built and held by a private company and leased to Metrolinx.  The accounting fig leaves are thick on the ground here.  One way or another, Ontario borrows money, Metrolinx builds something (or has it built for them), and, likely, the local operating agency contracts to run it.

Lurking under all of this is a clear indication that it is Queen’s Park, not the Metrolinx Board of Directors, who runs the show.  To be fair, it is their money (or more accurately our money), but the opportunities for interference and sheer bureaucratic incompetence are legion.  There’s a reason transit has been in local hands for decades — the Ministry of Transportation hasn’t the first idea how to operate large systems, nor any feeling for the local issues involved.

Metrolinx itself becomes little more than a construction planning and, later, a holding company on the Province’s behalf.  This should not overly tax the skills of the new, non-political Board, for whom all of the important decisions will be made elsewhere.