The Better Way will get a lot bigger under a new $12.4 billion plan to extend the Sheppard subway line in both directions and build a new Eglinton light rail line from Jane St. to Kennedy station.

As first reported at thestar.com, Premier Dalton McGuinty is to announce Thursday that the province will spend $8.2 billion on the new 20-km Eglinton Crosstown Metro. It would run underground all the way from Black Creek to Kennedy station and continue above ground along the existing Scarborough Rapid Transit route, which would be converted to the same LRT technology.

But it will be up to Mayor Rob Ford and council to determine how to finance the $4.2 billion for the Sheppard subway extensions he wants to build west to Downsview station and east to Scarborough Town Centre.

Questions remain about whether it is feasible to raise that much using development charges and tax increment financing.

“There are only four ways to do it: existing revenue tools, like property taxes; a private-public partnership; increased federal funding; or, down the road, some kind of new funding arrangement with the province,” one source confided.

The provincial funding had previously been earmarked for Transit City, a plan for more extensive light rail on Eglinton, Sheppard, Finch and the Scarborough RT route.

But Ford declared that deal dead when he took office, vowing there would be no more tracks down the middle of streets like the St. Clair line. As a result, the Finch line, which was to run from the coming Finch West subway station to Humber College, has been scrapped.

While Transportation Minister Kathleen Wynne was tight-lipped Wednesday, she confirmed a deal was “close.”

“There's no more money, but on the Eglinton line we want to get going,” said Wynne, mindful that the Liberals hold 19 of Toronto's 23 seats and face an election Oct. 6.

“It's been a back-and-forth conversation for a number of weeks,” she said of the ongoing negotiations. “The whole point of this ... has been to find the common ground, to find a way to preserve our principles and to allow the city to move forward on what it wants to do.”

Construction will start this year, with completion set for 2020.

Ford's dream of an extended Sheppard subway would be the city's $4.2 billion responsibility alone — in the west, it would run 5.45 km from Downsview station to Yonge; in the east, it would go from Don Mills to Scarborough Centre. It could be completed by 2019.

The plan would take traffic off the Bloor-Danforth subway, according to one provincial source. Studies show many riders would switch to the Eglinton LRT to travel to the Yonge and Eglinton area.

Under former mayor David Miller's administration, Metrolinx was prepared to fund about 56 km of light rail on dedicated lanes by about the end of the decade.

The goal was to enhance commutes in some of Toronto's “priority neighbourhoods,” such as Jane and Finch, that don't have good access to rapid transit.

Light rail advocates argue that LRT lines, while better suited than subways to suburban population densities, encourage mid-rise development that leads to livelier, pedestrian-friendly streetscapes.

Ford disagreed, saying constructing LRT lines snarls traffic and removes precious driving lanes.

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In a major concession, meanwhile, the TTC will abandon its pursuit of an “open payment” system and work with Metrolinx to implement the Presto fare card already in use.

“That's a big win,” said one provincial insider, recalling the feud between Queen's Park and the previous TTC administration over Presto.