A look at the REM project that reveals the giant project mixes good investments and bad investments, but the caisse will make us pay for them all.

Ever since the Caisse published their REM proposal, I have been trying to figure out whether their project makes sense. This post takes a hard look at the cost/benefits.

With the REM, the Caisse wants to take over the electrified, 30km long Deux-Montagnes commuter rail line, which is owned by the public, expand and convert it into a 67-km automated light metro, and have the public foot half the bill.

Not only does the project require 2.5 billion of direct public financing, it also includes a lot of implied financing and costs:

taking over public assets, for example the Deux-Montagnes line, and the existing busway in the Champlain Corridor

having the public provide infrastructure, like the right of way on the newly built Champlain bridge

causing the government to write off hundreds of millions of assets, such as the Pointe-Sainte-Charles maintenance center, or the existing Deux-Montagnes line rolling stock

pocket a percentage of real estate taxes from developments near the line, via a scheme called tax-increment financing

Given all this, we should ensure that the project is a good investment. A project of this magnitude should only receive public support if it can show a good cost-benefit ratio.

The easiest way to gauge whether a project is a good investment is to look at the projected ridership relative to the construction cost. Every dollar spent on transit should give us as many riders as possible. If another project can attract more riders per dollar, then that should be built instead.

The cost-benefit ratio should also be considered for every constituent part of the project. The REM is a huge project made of various parts that have very different ridership levels and probably different cost-benefit ratios.

The Caisse only ever talks about the REM as a whole. And as a whole, it’s very hard to get a sense of the costs and benefits, which is why it’s worth splitting it into individual parts for analysis:

The Existing Deux-Montagnes line from Central Station to Deux-Montagnes (30 km)

The Brossard Branch Central Station to Brossard (15 km)

The West Island Branch to Sainte-Anne-de-Bellevue (16 km)

The Airport Branch (5.5 km)

The Benefit: Weekday Ridership

The Caisse has refused to provide their ridership study. When I asked them about it at their town-hall meeting, they said they will publish it this fall, or maybe next year.

Their documentation only gives us a high level view of the projected ridership, which unfortunately (and probably intentionnally) combines the West-Island Branch and the existing Deux-Montagnes line under the “Deux-Montagnes” heading:

The table does not provide the current ridership numbers for the individual West-Island and Deux-Montagnes branches. So how do we find out the ridership for each of them?

To further complicate things, the Caisse provided the following map, which only shows the ridership increase for each branch:

So there’s no easy way to see what the total ridership is going to be like in the West Island. Luckily for us, we can actually combine the two sources to get a better picture of what’s going on.

The map tells us that the ridership along the West Island branch will increase by 11K riders per day. If we add up the numbers from the map and the table, we see:

Ridership projection for 2021 (Deux-Montagnes and West-Island line) Today’s ridership on the Deux Montagnes line, from table:

(According to the AMT it was actually 31K in 2014, and 30.4K in 2015) 27,000 Additional Ridership on the Deux Montagnes line, from map: 22,000 Today’s ridership on the West-Island line: ??? Additional Ridership on the West-Island line, from map: 11,000 Total: 60,000

The numbers we have add up to 60K, which is actually the same as the total projected ridership for both branches! This essentially means the Caisse assumes 0 riders on the West Island Branch today and the given +11K ridership on that branch is actually the total ridership on that branch.

11K, for 16 km of new track?!

There are bus lines in Montreal that get three times that ridership! For example, the 121 and the 141 get a weekday ridership of 30K (see page 24).

And in this context, when we say ‘ridership’, we’re actually counting trips. Since people, especially commuters, will generally make two trips per day, 11K means only 5500 people will be served by that line.

I’ve been staring at these documents for 3 weeks, and I hadn’t noticed this number trick until now. Combining the ridership of the two branches in the table is quite clever, it effectively hides how low the ridership is on the West Island branch.

The low ridership is probably due to routing the REM along a highway that is surrounded by a semi-industrial area, which in turn is surrounded by low-density suburban housing. It’s so far from where people live and the access will be so miserable that not many will take it.

In any case, we get the following estimated weekday ridership drilldown:

Deux Montagnes branch: 49K (including 30K today)

Brossard branch: 80K

Airport branch: 10K

West Island branch: 11K

The Cost: Construction Cost

The Caisse provided no drilldown of their construction costs either. I asked several people at their townhall, and they told me they will publish no information about that. I asked Denis Andlauer, their operations director, whether I could assume 100M for elevated lines and 200M for underground lines, and he gave me a non-committed maybe to that. At least he didn’t disagree.

What we do know is the total cost of the project, approximately how many kilometers will be underground, overground, on ground level, on existing track, and on an old freight track. We also know how many new grade crossing removals there will be, and how many stations.

I created a spreadsheet to collect the cost in a model to add up all the numbers we have. The idea is to create reasonable estimates, that are not too far off from what the Caisse is working with, to get an idea how much each branch will cost. This gives us the following drill-down for the branches:

Items

Collecting all the expenses required for all the branches: the various kilometers built either underground, overground, elevated, or by just rebuilding track (for the Deux-Montagnes line). Note also the separate items for stations, removing of crossings, and vehicles.

Deux-Montagnes Branch Brossard Branch West Island Branch Airport Branch total underground track 0.0km 2.9km 0.0km 3.0km 5.9km elevated track 0.0km 6.6km 9.2km 2.5km 18.3km at-grade track 0.0km 5.5km 7.1km 0.0km 12.6km upgrade track 30.0km 0.0km 0.0km 0.0km 30.0km vehicles* 84 42 42 32 200 stations 13 4 5 2 24 crossings 14 0 6 0 20

*I calculated the number of vehicles per line by taking the travel time for each branch (20min-40min) and the trains knowing the frequency on the Brossard and Deux-Montagnes branch will be twice the frequency of the airport and West Island branch.

Cost Assumptions

We can get some some ideas about construction cost and rolling stock cost by referring to similar existing systems. The following shows the cost assumptions. All costs are given in millions.

underground cost/km 200$ elevated cost/km 100$ at-grade cost/km 30$ upgrade cost/km 10$ vehicle cost 3.5$ station cost 30$ grade separation 15$

Resulting Costs

In million dollars:

Deux-Montagnes Branch Brossard Branch West Island Branch Airport Branch totals underground track 0$ 580$ 0$ 600$ 1,180$ elevated track 0$ 663$ 920$ 250$ 1,833$ at-grade track 0$ 164$ 213$ 0$ 377$ upgrade track 300$ 0$ 0$ 0$ 300$ vehicles 294$ 147$ 147$ 112$ 700$ stations 390$ 120$ 150$ 60$ 720$ crossings 210$ 0$ 90$ 0$ 300$ totals: 1,194$ 1,674$ 1,520$ 1,022$ 5,410$

If the cost assumptions are changed, the cost for the branches will change. But since they always have to add up to 5.5 billion, the variation is actually not that big.

It turns out that the cost of the four branches are surprisingly similar, the biggest number isn’t even double the smallest..

It also appears that the cost of the West-Island Branch and the Brossard branch end up being fairly similar, although the Brossard branch gets more than 7 times the ridership!

The updates on the Deux-Montagnes line may also end up being relatively expensive, all those stations rebuilds and grade crossings will add up. And even if rebuilding the actual line is cheap per kilometer, there are many kilometers on that line.

The Cost/Benefit

If we divide the cost per ridership, we get the following table.

cost ridership cost/rider ($) Brossard branch 1,674M$ 80K 20,926$ Deux-Montagnes branch 1,194M$ 19K 62,842$ Airport branch 1,022M$ 10K 102,200$ West Island branch 1,520M$ 11K 138,182$

Compare this to other transit projects:

construction cost weekday ridership cost/rider C-Train (lrt) 582M$ 187K 3,110$ Edmonton lrt 404M$ 70K 5,774$ Pie-IX Busway (brt) 316M$ 70K 4,514$ Laval Extension (metro) 829M$ 60K 13,825$ Canada Line (light metro) 2100M$ 135K 15,441$ Blue Line Extension (metro) 3000M$ 80K 37,500$ Spadina Extension (metro) 3184M$ 100K 31,840$ Pearson Express (heavy rail) 456M$ 5K 91,200$ Mascouche Line (heavy rail) 671M$ 6.5K 107,692$

Basically, the airport and the West Island branch are very expensive compared to their utility, and are bad investments. Both branches are as bad and worse in terms of investment than the Mascouche line and the Pearson Express, the worst transit projects I know of in Canada.

The upgrades to the Deux-Montagnes line are not a very good investment, since we could most likely achieve those extra 20K riders by keeping the existing technology and upgrading it incrementally to reach service that runs every 15 minutes.

By contrast, the Brossard branch will be a very good investment.

If we look at the table again, we see that the Brossard branch will basically cost the same as the West Island branch, although it will bring more than 7 times the ridership!

By throwing all these disparate investments into the same project, the Caisse is effectively using Brossard to prop up the West Island and airport branches.

It’s also using the most profitable (self-financing) line of the AMT, the Deux-Montagnes, line to support the West Island and airport branches.

Taking over the Deux-Montagnes line was not part of the government mandate given to the Caisse – it was actually quite a surprise when they announced the project. It’s possible that without it, the REM may not be profitable overall, with the West-Island and Airport branches having such low ridership. It seems like the Caisse decided to take over the line to sweeten the deal for themselves.

In the end, it is the Deux Montagnes and Brossard riders who will subsidize the operation of the other branches. That is, if the REM even turns out to be profitable overall.

And every taxpayer will subsidize their construction, because the Caisse will take over existing infrastructure, which are public assets, and because half the line will be paid directly by our taxes. And our public money will pay for the bad investments along with the good ones.

It comes down to the Quebec government mandate that was given to the Caisse, a checklist of three items: Brossard, West Island, airport.

But this checklist approach to transit planning doesn’t work; we need an integrated regional plan that considers all of the Montreal region and will improve transit for everybody, incrementally, starting with the most cost-effective projects.

Some more thoughts on the Deux-Montagnes line The Deux-Montagnes line could most likely get those extra 20K trips without spending a billion to rebuild the line. We could most likely achieve it by improvements and changing operations for a few hundred million. Meanwhile, without the Deux-Montagnes line, the self-financing ratio of the AMT will plummet and all the municipalities served by the other lines will have to pick up the slack. Consider the self-financing ratios of the AMT lines: The Deux-Montagnes line has a 55% self-financing ratio. And that’s despite being operated like an old-timey railroad with infrequent service and multiple staff on the train (at least one fully certified railroad engineer and a conductor). If it was re-organized like a transit line, it could become profitable even without full-on automation, and without having to rebuild the whole line.

Thanks to JC for her help in writing the article.