The dispute between the TTC and Metrolinx over the state of the Presto fare card system is headed to arbitration.

In his latest monthly report, which was released Wednesday, TTC CEO Rick Leary revealed the two sides are at an impasse over whether Metrolinx has met the requirements of the contract it signed with the TTC in 2012 to implement the fare card on Toronto’s network.

Leary reiterated the TTC’s position that “there are significant deliverables outstanding” in the contract, including requirements for Metrolinx to provide limited-use Presto tickets on streetcars and buses, set up an “acceptable” third-party network to sell Presto cards across the city, and implement open payment, which would allow riders to pay their fares with the tap of a credit or debit card.

Leary wrote that after meeting with Metrolinx CEO Phil Verster over the summer “it is clear that Metrolinx considers the contract deliverables complete” and “we were not able to reach a common understanding and agreement.”

Metrolinx is the provincial Crown corporation that owns Presto, and the TTC is the city transit agency.

According to the terms of the Presto contract, the side that formally initiates arbitration can propose an independent, qualified arbitrator to hear the dispute. If they can’t agree on an arbitrator, either side can apply to a judge of the Ontario Superior Court of Justice. The arbitrator’s decision will be “final and binding,” and no appeals are allowed.

In an emailed statement, Metrolinx spokesperson Anne Marie Aikins said the provincial agency “is committed to maintaining a strong relationship with the TTC.”

She said Metrolinx has implemented some outstanding Presto functions the TTC highlighted earlier this year, and is working to address other issues. Among them are the “gaps” in the network of Shoppers Drug Mart outlets that sell Presto, a key concern for transit advocates who say the current network of about 136 Shoppers stores that distribute the cards limits many residents’ access.

Aikins said Metrolinx is also “looking into the possibility of a limited pilot of open payments next year.”

She asserted Metrolinx didn’t agree the dispute had reached a point that arbitration was necessary, but the provincial agency has told the TTC “we’re happy to settle this through arbitration or mediation if this is the path they prefer to pursue.”

The former Ontario Liberal government imposed Presto on the TTC eight years ago. It was supposed to modernize the TTC’s fare collection practices and allow it to phase out older forms of payment like tickets and tokens. But at times reliability issues have plagued its implementation, and problems with the fare card system have repeatedly delayed the TTC completing the switch.

Most recently, the TTC said in the summer of 2018 it would stop selling tickets and tokens by the end of August 2019, and stop accepting them by the end of this year. But in a report in June, the TTC said those plans were on hold until Metrolinx met certain key terms of the contract, including making Presto tickets available at all subway stations, and enabling riders to use the fare cards to pay for TTC bus trips into Mississauga and York Region.

Metrolinx has since addressed some of those issues, and Leary said in his report the TTC will stop selling tickets and tokens by the end of this year. He didn’t say when the agency will stop accepting older forms of payment.

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As of June, the TTC had invoiced Metrolinx for $7.5 million in “lost fare revenue” as a result of faulty Presto devices. Metrolinx has refused to pay, arguing the TTC’s claims are “not valid” and the provincial agency has already borne most of the cost of installing Presto on the TTC.

Despite the Presto disagreement, the two agencies are becoming increasingly intertwined. As part of the Ontario PC’s transit upload plan, Metrolinx has been given control over new TTC expansion projects and is expected to play a key role if the province takes ownership of the subway network. The TTC will continue to operate the trains.

Abhya Adlakha is a breaking news reporter, working out of the Star’s radio room in Toronto. Follow her on Twitter: @AbhyaAdlakha

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