May 2013 saw Toronto Council, in a fit of almost unprecedented irresponsibility, reverse its previous support for a Master Agreement with Metrolinx for the construction of four LRT lines. Instead, Council decided that it preferred that a subway replace the Scarborough RT rather than a new LRT line.

The primary reasons given for this change of heart were:

The subway is “only” $500m more expensive than the LRT option.

The LRT option would require a four year shutdown of service on the SRT corridor while conversion was underway.

The transfer between modes at Kennedy Station is an unpopular factor that would be eliminated with through subway service.

Greater future demand is projected for the subway option.

Without rehashing the details at length:

The difference in cost to the City of Toronto between the subway and LRT options is now known to be roughly $1b, although the exact components differ depending on the assumptions in the calculation.

The shutdown period would be at most three years, although this is still a very substantial service outage.

The revised transfer arrangements at Kennedy would place the LRT platform much closer to the subway platform and in a weather protected area.

Although subway demand is projected to be higher than for the LRT, the subway will serve a smaller walk-in market and will be more dependent on the bus feeder network.

Extension of the subway is highly unlikely.

Political Fallout

Metrolinx is rather perturbed that a sudden change of policy will affect procurements now in progress for the Eglinton-Crosstown project (which includes the SRT to LRT conversion) and the planned carhouse on Sheppard at Conlins Road where cars for the new Scarborough LRT would be based. Metrolinx has asked for clarification of Council’s position by August 2, 2013.

That is one day after the coming by-elections which have thrown any reasoned consideration of the issues out the window. All political parties and Councillors supporting the subway option blatantly pander to Scarborough voters. At Queen’s Park, statements by Metrolinx can be contradicted by the Minister of Transportation, if only by his absence of a definitive position. Vote-counting for both the by-election and the 2014 general election(s) has politicians falling over each other to prove their deep concern for Scarborough’s welfare.

Some of these pols held directly opposite, pro-LRT positions within 2013, but that is of little matter in the bid to give Scarborough only the best possible rapid transit money can buy.

Premier Wynne has been silent and absent from this debate, a marked contrast to her hands-on approach to her “new government” agenda. The opposition parties are no better preferring to bash the Liberal government rather than addressing the fundamental issues of the form, cost and funding of transit expansion.

The City Manager & TTC CEO Report

The City Manager and TTC CEO submitted a joint report to the upcoming Council meeting setting out many of the issues for debate.

Reactions from Councillors and the Mayor have been mixed. In particular the amount of new debt the City would have to take on, the means by which it would be repaid, and the degree to which this would crowd out other City projects have been discussed in local media, on Twitter and on Facebook by many parties. I will not attempt to summarize the various positions, claims and counterclaims here. The Council debate will almost certainly bring out even more creative interpretations of the available information, and a lot of misinformation as well.

The report is clear that the LRT option is much better understood because of previous approvals. Its design and effect on the network are reasonably well known. The subway, by contrast, requires more study both in terms of the land use changes it would require to justify the extra cost, and the effect of projected higher demand on other parts of the network including the existing subway system.

The report proposes that Council take one of two courses:

Approve the original LRT plan, or

Authorize the City Manager to renegotiate the Master Agreement with Metrolinx subject to various conditions, and embark on a program of funding through property tax increases, development charges, and whatever contribution might be obtained from the Federal Government.

Cost Estimates

On the cost side, the City/TTC estimates presume that the entire proposed Scarborough LRT budget of $1.8b will be available for a subway alternative. However, Metrolinx has already been quite clear that part of this budget includes the reconstruction of Kennedy Station to handle the Eglinton-Crosstown line and only roughly $1.48b would be available for a subway.

These numbers, and other costs related to each option, have yet to be agreed to by the TTC and Metrolinx. It is unclear, based on some comments from Metrolinx, who is doing the detailed estimates for each party considering that the TTC still provides some technical services to the Metrolinx project.

Estimates are further complicated by the need to include inflation from a base year of 2010$ to the presumed date of construction and debt service costs for the City’s share of the subway option if this not covered on a pay-as-you-play basis. There are far too many variables and unknowns for a fully informed debate, but we will go through one anyhow because the urgency is to vote for a subway, no matter what.

If the project goes forward, construction would not start for four years given the need for detailed design and a Transit Project Assessment (the simplified version of an Environmental Assessment). The opening date is projected in 2023, ten years away.

The TTC estimates the cost of a subway at $2.3b before inflation, and specifies that this is to be confirmed once the project reaches 30% design (which has not even started). The estimate is considered accurate ±30% giving a potential range of $1.61b to $2.99b in 2010$. When inflation is added, the $2.3b figure rises to $3.283b. This gives a potential upper bound of over $4b including inflation.

Queen’s Park has guaranteed LRT project funding including inflation. The proposed revisions to the agreement presume that the $1.8b (or whatever amount would come from the cancelled SLRT project) will also be inflated.

The City report calculates that the value of the provincial monies would be (billions of dollars):

Original Budget Kennedy Adjustment 2010 Inflated 2010 Inflated SLRT Budget $1.800 $1.480 Sunk Costs .085 .085 Available for Transfer $1.715 $2.448 $1.395 $1.991

It is unclear whether this would actually happen, or if Queen’s Park would simply make a block transfer in current dollars to a trust account as they did for the Spadina Subway. Inflation protection would then depend on investment returns of the trust funds. Equally, Queen’s Park might chose not to include inflation at all leaving this as an exposure to the city. According to the report, the Metrolinx payments might be stretched over a period of time leaving the City with financing costs to bridge the project.

The Minister and Premier’s silence on such a basic issue does not help the debate one bit, but the City analysis contains critical assumptions about how Queen’s Park would calculate its contribution.

To the cost of the subway itself must be added the expense of keeping the SRT alive for eight years longer than anticipated, and eventually of demolishing the existing structures.

2010 Inflated Subway Cost $2.300 $3.283 SRT Life Extension .096 .132 SRT Decommissioning .075 .118 Total $2.471 $3.533

This leads to two outcomes (inflation included) depending on the presumed Metrolinx Kennedy budget transfer:

Original Adjusted Budget Budget Subway Option Cost $3.533 $3.533 Provincial Contribution 2.448 1.991 Net Cost to City $1.085 $1.542

Note: The figures shown here have been rearranged from the City report (Table 1) for clarity. The “Adjusted” figure is slightly different from the report which contains arithmetic errors.

These numbers are also subject to the caveat about ±30% in the accuracy of the subway cost estimates.

Finally, the TTC is concerned that the additional demand a subway extension would bring would trigger the need for Automatic Train Control (ATC) on the BD line. This project, with a $450m plus inflation pricetag, is not in the current 10-year capital plan. This raises, but does not answer, the obvious question of whether any new demand, regardless of technology used in Scarborough, will trigger problems with the BD subway’s capacity and with demand at Bloor-Yonge.

Given the comparatively close values for demand with either technology (as compared to the existing BD subway ridership), even the lower projected LRT demand could put the BD line dangerously close to being full. Why has this issue not been explored in the past?

Financing

The City’s share of the project can be funded in several ways:

In the short term, a dedicated tax increase of 1.1% to 2.4% could go into a reserve fund that would initially be used to pay for the project. Once these funds were exhausted, the revenue from the new tax would be dedicated to paying off 30-year debentures.

Development charges could be imposed. By Provincial Law, DCs can only be used to fund the cost of new infrastructure triggered by new development. Therefore, the full cost of the subway cannot be charged to this revenue stream. The projected revenue from DCs, depending on the scenario, ranges from $104m to $330m over the life of the project, possibly longer. Using DCs to fund 25% of the City’s share will require legislative changes.

Federal Government contributions. For purposes of estimating, a contribution of $418m to $660m by Ottawa is assumed. It is unclear how these amounts are arrived at because they are not, as claimed in Table 2, 50% of the City’s share of the project.

Potential transit oriented development rights (if any). It is unclear what development the subway might encourage or the timeframe in which anything will be built. Past experience shows that the City will have to carry financing costs for a considerable period before TOD rights start to pay dividends.

Property taxes are very controversial both in the general sense of many years in which “no new taxes” were the watchwords at City Hall, and in the specific sense that this increase would go to fund a project for Scarborough from city-wide revenue. Mayor Ford has proposed a new tax at a much lower level than any of the scenarios presented in the report. The effect would be to produce a much lower reserve going into the project, and a much lower revenue stream with which to pay down debt in the out years.

Development Charges are already a matter of concern for the real estate industry which faces a proposed doubling of these fees in 2014 even before the Scarborough Subway is added to the list of projects these would finance.

Future Cost Pressures

If the City extends the subway, the new asset will be owned by Toronto, and its future operating and maintenance costs will be on the City’s account. Some offset may come from Metrolinx, but this is by no means certain. We know already that the Spadina Extension to Vaughan will increase net operating costs for the TTC after it opens in 2016, and a similar change is likely in Scarborough. The subway will almost certainly not “make money” from net new riders.

Further out lies the problem of capital maintenance: station equipment, rolling stock, roadbed and signalling. These are all costs which we see on the aging YUS and BD lines, and they will begin to affect the Scarborough Subway some decades down the road.

The LRT network, as a Metrolinx asset, would be operated and maintained at its expense, possibly funded through some of the new provincial “revenue tools”.

Building “Excess Capacity”

In the LRT/Subway debate, the question of surplus subway capacity (or conversely “planning for future growth”) inevitably comes up. There is, however, a fundamental problem with any outlying part of the rapid transit system. It is impractical to fill it to capacity at outer stations if there is already substantial demand on the inner part of the line. In effect, the “free” capacity available at STC is dictated by how much room remains on trains westbound at Sherbourne.

The situation is slightly more complex if we can assume that a substantial chunk of Scarborough capacity would be used for local trips, or would be bled off by, say, the Eglinton-Crosstown and/or Relief Line. All the same, there is no way that a future 20k/hour peak demand could be handled in Scarborough if this completely saturated the Danforth subway east of Yonge. We already see a comparable problem on Yonge with demand originating north of Eglinton.

If, in fact, there is a future demand well beyond LRT capability in any of the suburban corridors, the problem is much more challenging that simply a technology choice — it is that the central subway will be completely overloaded. Careful study of evolving demands and of network travel behaviour is essential to avoid over committing network capacity.

City Debt Targets

For many years, Toronto has had a conservative approach to its capital and operating budgets. The total debt (and hence the annual cost of debt service) is kept low enough that the operating budget is not squeezed out by debt costs. This is the classic problem faced by anyone with a house that is more expensive than they can afford. Either they must cut back on day-to-day costs to fund their mortgage, or they must find a cheaper house, or the household income must be increased. In a municipal context, this translates into reduced services, increased user fees and higher taxes.

If the City takes on the Scarborough Subway project, this will crowd the capital budget which also includes a very substantial list of new, unfunded projects of at least equal importance to the subway line.

Ridership Estimates

The original projections for the LRT and Subway options date from a 2006 study. At that time, the expected annual demand on each technology was 31m and 36m riders respectively. These numbers corresponded to peak hour volumes of 8.0k and 9.5k respectively.

Recently, an updated transit network and land use model pegs the subway ridership at 14k peak. No comparable revised estimate is provided for the LRT option, and the report implies that all of the change would only accrue to the subway.

At the very least, any new demand projections must be performed for both modes and use the same underlying transit network (the subway projection includes the DRL which might also be responsible for attracting ridership depending on its configuration).

This part of the report verges on dishonesty and is saved only by a caveat that further study is needed. This study will not, however, occur before Council commits itself to a choice of technology.

In any event, such a large increase in SRT corridor ridership relative to the current level of about 4k peak would have a major effect on the BD subway further west. It is unclear whether the existing network can accommodate the demand. Even if more frequent service is operated on BD (thanks to new signalling), the interchange at Yonge may not be able to handle the higher arrival rate of transfer passengers.

City Planning Considerations

Beginning at Page 19, the report contains a section entitled “Planning Considerations” which discusses the “Feeling Congested” review now underway as part of the Official Plan update. The critical paragraphs state:

It emerges from this preliminary evaluation process that the LRT line and the subway proposal serve somewhat different travel markets. The LRT technology more appropriately reflects city building policy goals contained in the Official Plan, where-in transit capacity is matched to a range of potential future land use outcomes. Preliminary forecasting work suggests 10.2% of the LRT’s ridership would come from outside the City of Toronto. By comparison, 14.6% of the subway’s ridership would come from outside the City of Toronto. The LRT line focuses more on local travel needs, and provides opportunities for placemaking – creating complete communities within the city- whereas the subway offers a more express service that increases its appeal to regional riders. … The LRT line will operate in an established corridor of proven transit demand that is currently being under-served by the at-capacity RT line. In this sense, the LRT line puts new and improved transit capacity where it is most needed. Included in the improved service is a much more convenient transfer arrangement at the Kennedy Station. [P21]

Rather clearly, City Planning emphasizes that the proposed LRT line does a better job of serving Scarborough, but that does not appear to be the goal of the subway’s proponents.

The planning section goes on to note that the Scarborough corridor ranks lower than other priority transportation projects including service to the Waterfront and the eastern Relief Line both of which are integral to the ongoing development of transit capacity for a Toronto that claims to be building transit-oriented neighbourhoods.

Conclusion

I am under no illusion that Council will have a miraculous conversion and see the Scarborough LRT as its preferred option. Whether a decision to abandon the LRT option will have any effect beyond delaying the inevitable collapse of the SRT without advancing the subway scheme much beyond some preliminary engineering is quite another matter.

Too many people are too concerned to give the impression that only subways will do, and all the fine words from fiscal conservatives about responsible transit spending will be buried under fairy tales of private sector participation and federal contributions.

Nobody wants to be the advocate for LRT because it has been so badly represented here in Toronto, something for which the TTC must take a large share of the blame. For decades when other cities in North America and Europe built LRT, Toronto steadfastly maintained it would never work here. Options for LRT expansion were downplayed, excluded from alternatives assessments on the basis of specious if not dishonest analyses. While other cities could point to shining new lines, all Toronto gets to see is a streetcar system where the TTC can’t even provide reliable service and get “transit priority” that actually benefits transit vehicles. Is it any wonder people want subways?

Earlier, I used the word “pandering” and this implies a certain lack of wisdom in the electorate. Sadly, North Americans have a long history of listening to demagogues and voting for what they have been convinced is the “right” choice. Rob Ford, at least, has always been honest about his goals — subways everywhere and lots of room for cars on city streets. Others who purport to be friends of transit change their stripes to suit the situation, and for them I have special contempt.

A fearless prediction: Council will choose the subway option, but won’t commit significant funds to pay for it hoping that the Tooth Fairy will pay a visit soon. This will leave Queen’s Park in the delicate position of deciding whether Council has met provincial conditions for a technology change, or if the LRT project should still go ahead. Possibly by August 2, 2013, the political landscape will have shifted, and we will get a definitive answer. Meanwhile, the vacillation from Minister Glen Murray, and the silence from Premier Wynne, are a sad testament to business-as-usual in the so-called “new government” at Queen’s Park.