Updated September 4, 2012:

The full set of Waterfront Toronto reports and the City Manager’s recommendations arising from them are now available in the Executive Committee Agenda for September 10.

I will not attempt to summarize all of the material in these, but a few critical points deserve mention.

Although the revitalization of the mouth of the Don River is a central theme in this entire project, and illustrations showing the effect abound in the reports and publicity, in fact this work has been relegated beyond the 30-year timeframe of the financial projections. The river mouth changes are in “phase 4” which is beyond the 30-year line.

Similarly, transit improvements to the area beyond the level of bus service, possibly but not necessarily as BRT with dedicated rights-of-way, are pushed off to phase 3 and beyond. Transit is now described as “demand led” rather than the “transit first” policy around which much of the East Bayfront and Port Lands were being planned.

The connection to Cherry Street under the rail corridor is not even costed in the report and lies off in the vague future.

The fundamental problem for Waterfront Toronto and for the City is that the economics of a self-financing project simply do not work. In the City Manager’s report, some shuffling of components allows the scheme to show a “profit” in the short term, the first decade, by the expedient of delaying or dropping expenditures to future years.

The City Manager’s Report shows the evolution of the costing model. The first cut (page 4) used conservative assumptions and produced a net cost of $189.2m for the first 30 years. This was reworked (page 5) with more generous assumptions to achieve a positive cash flow in the first decade, and a reduced net cost of $118m over 30 years. Note that the tables are clearly titled “phases 1 and 2” and therefore omit costs associated with the river mouth and with the upgrade of transit services to LRT.

As someone who has been involved in many of the public discussions of these plans, I am deeply disappointed on three counts:

The shift of “phase 3” beyond the 30-year line was not made clear by Waterfront Toronto in its recent public meetings. This verges on dishonesty from an organization previously well-known for plain dealing with the public.

The idea that Toronto would pre-build a good network of transit lines into the waterfront districts has been abandoned, and we are back to the standard TTC approach of running a bus, now and then, once a few people start to complain about service.

The myth that private sector development will somehow relieve the City (or other levels of government) from funding the Port Lands revitalization is exposed for what it is. If Toronto wants to reinvigorate this huge tract of land, it will have to invest money in the process. This issue — how to actually pay for the waterfront and what staging strategies could be taken — is completely absent. Council is asked to approve the proposed scheme without knowing what alternatives might be available or what financing strategies would be needed to achieve them.

Building new neighbourhoods of this scale requires major investment in infrastructure and in the operating cost of providing services. If Toronto is not prepared to pay these costs, then the Port Lands will sit empty for a long time. Someone may propose they be rescued with a special project such as an Olympic Games or a World’s Fair. That’s wishful thinking, and simply playing the slots at a race track may prove a better investment. We cannot make the future of the waterfront dependent on the world’s desire to let us put on a big party.

The original article from August 12 follows the break …

Waterfront Toronto held the fourth and final of its public consultations for the much revised Port Lands plan on August 8, 2012. This review is the culmination of the ham-fisted intervention in waterfront planning attempted about a year ago by the Ford brothers that was soundly rejected by City Council. Many community groups have worked for years on the waterfront file, and they banded together as “CodeBlue TO” to fight for the integrity of neighbourhoods, parkland and transit in the eastern waterfront.

Many groups and individuals watched and argued as Waterfront Toronto appeared to gut the original vision for the Port Lands. The grand park that won so much praise (not just locally, but internationally) suffered major cuts, and the Port Lands threatened to turn into just one more development project aimed at maximizing city revenue and accepting second best for design.

The fourth version of the review tries to aim between competing interests, but I can’t help feeling something has been lost along the way. Part of this comes from a recognition that the area (a block of land as big as downtown Toronto) will not develop as quickly as early plans hoped and that some of the industrial uses will remain for decades to come, possibly forever. In turn, this reduces the income available from development revenues and puts more emphasis on getting something built that will fund the public amenities. The sad part is that creating those amenities as an investment in the city’s future isn’t part of the agenda, at least of the current administration.

Two major features of original development plans are the victims. First off, the restructured mouth of the Don River and associated parkland, the very project that contributes so many of the “beauty shots” in pitches for this scheme (including its current version), does not actually happen until the later phases of the redevelopment. We’re being sold a beautiful vision of the waterfront with little guarantee that we will ever reach the stage where it is built.

Second, the transit service to the eastern waterfront and Port Lands has been downgraded from an LRT line to BRT (which may be little better than a bus now and then in a reserved lane) with a possible LRT upgrade in the distant future. The idea of investing in first quality transit for the waterfront has fallen off of the table, a victim of cost-cutting and short-sighted planning.

Some responsibility must lie with the TTC here because of the lengthy, convoluted planning and constant revisions (both to designs and to costs) for the eastern leg of the Waterfront LRT. Any project with enough design delays and cost escalations loses momentum, and other planning goes around it. Development in the East Bayfront (Yonge to Parliament) will be lucky to see the Bay and Sherbourne buses appear now and then, and the connection to Union Station will be a bus fighting its way through traffic to Front and Yonge. LRT is now spoken of as coming at least a decade, possibly two, in the future.

Another problem lies with demand planning and the eventual buildout of development in the Port Lands, East Bayfront and other neighbourhoods that would be served by new transit lines. The rationale for a Waterfront East line lay with a projected demand of over 4,000 passengers per hour at peak. To put that in context, the scheduled capacity of the King car in the AM peak is under 3,000 (although the line could use more service if only the TTC had cars and budget headroom). However, a goodly chunk of this demand originated in the Port Lands and it is unclear when and how much of this demand will actually materialize.

This leads to a Catch-22 situation. If the transit provided to the new developments is at the TTC’s “just enough” level, many residents will be faced with a decision of trying to use infrequent transit or driving (or cycling and walking where that is an option). The whole idea of “transit first”, of overservicing a neighbourhood (as would typically be done with a rapid transit project), of investing in good service to build demand, is no longer part of the equation.

This problem is not unique to the waterfront. All over Toronto, people make do with whatever service the TTC and their funding partner, the City, deign to give them. The attitude is that there’s always room for more riders riding fewer buses, and that transit is a drain on City resources rather than an investment in the quality of our neighbourhoods. We fantasize about tens of billions in rapid transit schemes, but lecture any rider with the temerity to demand better service about the parlous state of city finances.

The Fourth Proposal

This section follows roughly the sequence of the Waterfront Toronto Presentation.

Council’s direction for the review appears on page 2. It includes two critical requirements that have shaped the recommendations:

investigating opportunities to increase private sector investment involvement

identifying mechanisms for minimizing the City’s obligation to fund the development of the Port Lands

“Private sector investment” can mean just about anything ranging from developer contributions to pay for improvements related to their projects to private financing of the upgrade of waterfront lands and infrastructure. The key point is the minimization of City investment. In the best Toronto tradition, we want a new waterfront but we don’t want to pay for it.

Those readers who are unfamiliar with the evolution of waterfront plans may be mystified by references to a scheme called “4ws realigned”. Various arrangements of the river and the new developments over the years had their names and “4ws” came to be the preferred solution. Unfortunately, it has some major problems that somehow were missed when the “final” proposals were made to Council last year. These are addressed in the “realigned” version that will go to Council this fall.

The evolution of the plans is traced on pages 23 to 37 of the presentation. I will deal only with the plan as now proposed.

Pages 6 and 7 show downtown Toronto with an overlay of the Port Lands to give a sense of scale of the new development. This is somewhat misleading in that roughly half of the Port Lands will remain as industrial uses for the foreseeable future (all of the lands south of the ship channel, and the eastern end of lands to the north of the channel). All the same, it’s still a lot of land especially considering the amount of development coming on stream in nearby areas.

Page 8 subdivides the Port Lands into planning districts. The areas labelled “E” around the river are residential blocks, while area “F” is earmarked for retail development.

Page 10 shows the evolution of development. The most important factor in reclaiming the Port Lands is flood protection. All of these lands and a goodly chunk of south Riverdale lie in the flood plain of the Don River. The “100 year flood” territory (an extent of flooding I have not seen in my lifetime) is shown as the “Existing” state of the area.

In Phase 1, a new spillway is created west of the Don Roadway linking the current foot of the Don River south to the ship channel. This reduces the flood exposure of lands between Cherry Street and the lake allowing for their development. Phase 2 adds a berm along the Don Roadway that protects lands to the east.

Phase 3 realigns the mouth of the Don and consolidates it with the existing slip between Cousens and Polson quays. Instead of emptying through the Keating Channel (at the north end of the Port Lands), the river would flow south parallel to the Don Roadway and then west through the lands south of Commissioners Street.

This scheme considerably increases the flow that can be handled by the main path of the river and eliminates potential flooding into developed areas. It also creates a large park around the new river mouth, the signature element of the whole proposal.

“Phase 4” is a postscript to the plan. It presumes that eventually the owners of the Lafarge cement plant on the north side of Polson Quay will decide to relocate from the Port Lands. At this point their land would be redeveloped and include a naturalized south bank of the realigned river.

Page 11 shows the main transportation elements for the Port Lands. A major change since earlier versions is that Commissioners Street is retained in its current east-west layout rather than dodging north closer to the Keating Channel. This change is possible because the new Don River alignment is further south and no longer conflicts with the existing street.

As in previous plans, Cherry Street is shifted west from the point where it emerges under the rail viaduct south of the Distillery District. It shifts back to its existing alignment south of the slip between Cousens and Polson quays.

Page 12 shows additional changes in the plan to accommodate industrial activity in the port. The western dockwall of Cousens Quay is used by Redpath Sugar to tie up boats over the winter season, and the northern dockwall of Polson Quay is used by Lafarge. Maintaining navigation access to these areas requires that the nearby lands not extend into the lake as originally proposed. The area south of the shipping channel remains industrial, although improved access across the ship channel is proposed via new lift bridges.

Pages 14 and 16 show hypothetical views including Cherry, Bouchette and Commissioners Streets with LRT. That’s a bit of a stretch, and I can’t help thinking the presentation borders on dishonesty by showing a mode that won’t actually be there for decades, if ever. We will be lucky to get the route south on Cherry let alone the other two. Indeed, the LRT plans (see Phase 3 below) place streetcars on Don Roadway, not on Bouchette, an honest mistake no doubt, but troubling for the inaccuracy.

Page 19 shows the Phase 1 state of development. This includes a realigned Cherry Street with a BRT on Queen’s Quay East and the new Cherry south to the ship channel. The LRT spur from King through the Canary District stub ends at the rail corridor. Worth noting here is the large amount of hatched gray area north of the lake shore. These are future developments (some now under construction) that will compete with the Port Lands in Toronto’s housing market. They are notably closer to downtown.

Page 20 shows the Phase 2 development of the Film Studio district. This will be mainly retail space and it is unclear how that type of development will (a) co-exist with the studios and (b) draw its customers to an out-of-the-way location that is poorly served by transit and remote from residential areas in the waterfront. This is not the Eaton Centre or Yorkdale. This part of the plan is important to the financing of the entire scheme because of the relatively high value assigned to retail space. If the retail plans don’t work, neither do the financial projections.

Page 21 brings us, finally, to Phase 3 and an LRT network that is built after the fact on a presumed base of the BRT implementation. This sort of evolution sounds good in theory, but one wonders whether the initial BRT infrastructure will be designed for easy conversion to LRT, whether money will be saved today by making it harder to convert in the future.

An argument can certainly be made for earlier construction of LRT connections from the eastern waterfront via Commissioners to Leslie Street and the new Ashbridges Bay carhouse. This would provide the TTC with an alternate access to its major new streetcar yard and would establish the infrastructure needed for LRT operations as development in the Port Lands builds out.

The “Business Case”

An “upfront investment” of $150-300 million will be required to provide infrastructure for the early phases of redevelopment. It is unclear whether these funds will come back to the city through development charges, future tax revenues, or some other mechanism, but one way or another the spending is necessary to launch the process. I suspect this number will rise as components that are not strictly part of Waterfront Toronto’s plans (such as advancing some of the LRT construction) are added to early phases.

Discussion of the “business case” begins on page 50. The introduction reiterates the desire to minimize city investment in infrastructure and the hope that the project will be self-financing, or at least paid for by the Tooth Fairy otherwise known as the “private sector”. This raises two big problems. First, development charges that would be applied against specific developments, placing a premium on land the city might sell, will simply depress the price they might otherwise receive. Second, if some of the infrastructure is financed by the private sector, the borrowing costs will be higher than for public sector investment, and this will translate to future higher payments to service this debt.

Page 52 lists the many impediments to development of the Port Lands. This is not comparatively clean residential or farming land out in the suburbs, this is industrial land sitting on fill. The entire site is remote from the city and poorly connected for road and transit access. There is a limit to the degree a beautiful view of the lake will generate sufficient extra value to pay for infrastructure upgrades. Indeed, the further east one goes, the less that being “on the lake” is a factor. Anyone travelling through the future retail district today may know the lake is nearby, but it’s certainly not a prominent feature.

Page 53 details the estimated cost of developing the Port Lands property north of the ship channel, and this totals $1.9-billion. Some of this would be recouped from development charges and more might come from regional charges such as the proposed transit levy, but there are many fingers in those pies and no guarantee that the waterfront will get an early, priority call on this funding.

Moreover, it is not clear exactly what the $1.9b actually buys and does not buy. I asked about the transit component, and was told that this only pays for the BRT, not the future LRT even though that is supposed to be part of Phase 3. This sort of low-balled pricing is exactly the thing that screws up so many projects when Council discovers that new spending beyond their expectations is required.

Waterfront Toronto conducted a projection of the market for various types of space (residential, retail, etc) over the next 30 years to determine how much of the $1.9b could be offset by development revenue. The numbers come up short, and at this point we get into some financial hocus-pocus where the answer can be anything you want depending on the assumptions you make. A great deal of this exercise is an attempt to mask the fact that tax revenue, regardless of what we call it, will be required to make this scheme work.

The degree to which city-wide revenue streams should be used depends on what they were intended to pay for (e.g. a transit improvement tax) and whether they are net new revenues (a regional development charge, in effect a tax on new construction). If money is redirected from existing streams, that is simply a decision on spending priorities within the current tax structure like any other budget decision.

One funding source that was explicitly rejected was “Tax Increment Financing”, the premise that increased taxes from new development should be used to fund the infrastructure improvements that made this development possible. The problem is that with land that is generating little tax revenue today, TIF funding would strip the city of revenue it needs for operations such as police, fire, transit and social services. We would simply have a shell game where “new” tax revenue paid for the infrastructure investment’s debt, while “old” tax revenue would be redistributed from other parts of the city to pay for the new neighbourhood’s services.

The presentation concludes that “a public/private partnership is required to accelerate revitalization”, but does not spell out just what this means. Someone has to shell out the funding for the initial investment in infrastructure, and there will likely be ongoing net costs such as transit once the neighbourhoods are built. A bit of accounting trickery can shift these costs to other budget lines, or balance them with new revenue streams such as a transit tax, but this does not make the costs vanish. If we want new neighbourhoods and better services, we will all pay for them one way or another.

Conclusion

The Port Lands scheme is improved in the sense that it might actually be achieved, and it now recognizes the constraints on which lands are suitable for development. All the same, it’s a long-term plan that will compete with many others through changing political times in Toronto’s future.

I can’t help thinking of the Waterfront East transit scheme and its LRT network as a cousin of that derelict ship, Captain John’s Restaurant, a dubious diner recently closed for non payment of rent and utility charges. Like Captain John’s, the transit plans never leave the dock, and the outside promise, the drawings, the bold “transit first” planning, is never quite matched by the dwindling bill of fare. Toronto seems destined to view transit with a few buses and, maybe, reserved lanes as good enough for the waterfront, and to stop planning seriously for anything more.