The TTC is expected to officially tap into the provincial Presto fare card system this week.

A TTC staff report before the city councillors on the transit commission Wednesday recommends the city and the TTC begin negotiating this month with Metrolinx and the province on the financial and operating terms for adopting Presto.

It also recommends the TTC abandon plans to contract an outside provider for an open standards payment system, something that would have put the financial onus of installing and maintaining electronic fare collection on a third party for the next decade.

It’s not clear how long it will take to roll out the green smart cards or how much it will cost taxpayers to equip hundreds of streetcars, buses and subways with electronic card readers.

The plan is a major turnaround for the TTC, which in the past has argued that Presto technology is out-of-date and too expensive to implement.

But a memorandum of understanding that the TTC would adopt Presto was part of Mayor Rob Ford’s latest transit expansion agreement with the province.

Under the deal, the province agreed to spend $8.2 billion on the new underground Eglinton Crosstown line while the city scrapped plans for light rapid transit on Finch and Sheppard Aves. in favour of extending the Sheppard subway line.

According to the TTC report, the Presto agreement is contingent on the province meeting the TTC’s business and operating concerns, including the provision of open payments through Presto.

TTC officials would not comment Sunday on the report, which is expected to be published Monday or Tuesday.

Open payments allow users to tap a debit card, credit card or a cellphone on a reader to deduct their fare.

Some transit properties already working on open payments are Chicago, Washington and New York.

Under a project called Presto Next Generation, Ontario’s card could be expanded for use on other services and merchandise such as car sharing.

Presto officials have said they will be piloting an open payment system this year but it would be at least another year before that feature is widely available.

There will be $140 million available for the TTC to adopt Presto — shared between the province, Ottawa and the city. TTC staff and the city will have to talk to the federal government, however, about the steps required to obtain that third of the funding under the Canadian Strategic Infrastructure Fund, says the TTC report.

But, says the report, “it is important to note that the $140 million is not sufficient to fully implement the Presto smartcard system at the TTC.”

The balance of the cost would remain a “below-the-line” item in the TTC’s 2012-to-2016 capital budget, “and would proceed only upon identification of additional funding commitments.”

That means it would be on a long wish list of still-unfunded transit improvements.

Some earlier estimates have put the cost of installing Presto on the TTC at more than $300 million, although no official updated figure has been published.

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Presto has been a source of tension between the province and Toronto. While Ontario shelled out $250 million to Accenture to design, build and operate Presto to the specifications of regional transit providers, some former TTC commissioners suggested the technology was out of date before it was installed.

All the other municipalities in the region have accepted the proprietary Presto system. But since 85 per cent of transit trips in the Toronto area include the TTC, the advantage of being able to ride across municipal borders on one regional fare card hasn’t materialized.

Presto allows commuters to load a dollar value on their cards. When the card is tapped on a reader at the transit station, the fare is automatically deducted from the rider’s e-purse.

Transit riders have spent about $20 million on fares using Presto cards on the area’s other transit systems, including GO’s rail network.

York Region is finalizing its testing and Durham is set to launch the system on June 27. Ottawa is also adopting Presto on its buses next year.

The province has paid to put Presto readers at 12 Toronto subway stations, but the TTC has long maintained it doesn’t have the money to install the electronic system across the city.

Only one company, U.S.-based ACS Transport Solutions, a division of Xerox, bid on the TTC’s call for an open standard payments system.

The conditions for that contract were that the outside provider would be responsible for all capital costs and would have 13 years to design, build and operate a fare collection system at a cost no greater than what the TTC currently spends on fare collection — about $70 million annually or 7 per cent of its fare box revenues.

The ACS bid expires June 15.

Under open payments, transit operators function like other retailers and accept payments by riders using cards issued by an outside institution. Riders that don’t have credit or debit cards get a reloadable card that can be used for transit and non-transit payments.

One source close to the Presto project suggested that the electronic system would likely be phased in across the TTC, possibly starting with the subway system and then moving to the buses and streetcars.

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