Last week Torontonians awoke to news that their transit system is no longer theirs. Instead, the provincial transit agency, Metrolinx, is giving it to an unknown private consortium to build and run as a profit-making operation. Well, not all of it, just the four light-rail lines that city council laboriously retrieved from the mayor’s garbage can six months earlier.

So, what’s wrong with creating privately run transit lines within the TTC network? Well, first of all, in taking over management of the projects, Metrolinx will have to set up an entirely new organization, duplicating the TTC’s transit expansion department, which has had engineers, planners and designers working on these four lines since 2008. How much will it cost taxpayers to disband one department and create a new one? How much existing planning and design work and professional expertise will be sacrificed?

Time will be lost as well, as start-up dates are delayed yet again. For example, although the Sheppard East project is ready to go, work will be suspended while Metrolinx invites bids from private companies, evaluates proposals and then signs a contract with the winner to design, build, finance, maintain and operate all four lines (as one giant project).

We might wonder how much time it will take high-paid accountants, lawyers and civil servants to scope out contracts for such a breathtakingly complex undertaking. Although Metrolinx claims it will be able to make up for lost time, TTC staff disagree. In Vancouver, the private company building the Canada Line met the deadline by, among other things, leaving out three of the planned stations.

The new aspect being introduced in Toronto is private financing. The winning consortium will borrow the money to finance the work so the government does not (appear to) have to pay for it. The puzzle is: how can private companies make profits on public transit systems that (due to postwar urban sprawl) are hardly ever profitable and rely on public support? The answer is that government will still pay the loan costs over the long term by reimbursing the consortium. In addition, as seen in other cities, private profits may be increased by raising fares, reducing service, refinancing debt and flipping ownership.

In fact, going the private route will cost taxpayers more over the long term because banks charge private companies higher interest rates than they charge governments. For example, if the government were to borrow a billion dollars at 3 per cent, the yearly interest payments would be $30 million. If the private company borrowed at 6 per cent, the yearly payments would be $60 million. Examples of higher costs for projects done in other municipalities are cited in a report by University of Manitoba professor John Loxley: “Asking the Right Questions: A Guide for Municipalities Considering P3s.”

But we’ve skipped a step in the planning process. Before the government even considers turning a project over to a private entity, it must — according to guidelines established by Infrastructure Ontario — conduct a value for money (VFM) assessment. Such an analysis compares the cost to taxpayers of the same project carried out by the public sector versus one carried out by the private sector. Only if the analysis shows a significant savings for taxpayers can the government entertain the option of going the private route, at which point it can invite private bids for the work.

It seems Metrolinx jumped over this step and moved ahead on the assumption that the light-rail projects will be carried out by the private sector — that being the whole point of the takeover. Now we are told that finally a VFM analysis is being conducted and will be completed by the end of October.

But, what if the VFM indicates it would be cheaper to have the TTC construct and operate the lines? We won’t know because, whatever the outcome, the study will not be released until after a contract has been signed — and the full details will never be made public due to corporate confidentiality. Only the auditor general will have access to the full analysis.

One hopes the Toronto Transit Commission will stand up for the best interests of both transit users and taxpayers by insisting that a cost-comparison analysis be done independently of both Metrolinx and Infrastructure Ontario, both of which have demonstrated their bias. One would also hope that the provincial auditor general would examine the integrity of the VFM analysis before companies were invited to bid, rather than waiting until after the project has been competed.

Joell Vanderwagen is an urban planner who specializes in public education about transit systems and transit-supportive planning.

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