The TTC Board will meet on March 23, 2016 at 1:00 pm in Committee Room 1 at City Hall. The agenda includes many items of interest:

CEO’s Report and Ridership Update

This month’s CEO’s report closes out the 2015 year with more-or-less final financial and ridership numbers.

For the full year, farebox revenue is down by 2.8% relative to budget although one-time income offset this slightly for an overall shortfall of 2.3%.

Expenses were 0.9% below budget, but actual operating results were actually better than this. Of the $14.8 million shortfall, $5.2m was due to the acceleration of a “capital from current” payment for new buses that was originally planned for the 2016 budget year. Notwithstanding the lower-than-anticipated revenue and the accelerated capital spending, the operating subsidy required in 2015 was $10.1m below budget. Originally, the TTC had planned on a $9m draw from the city’s transit stabilization reserve fund, but this is not actually needed to balance the books.

Variations at the line item level are common in budgets of the TTC’s size, and this is usually a matter of normal fluctuation as opposed to bad management. Major factors in 2015 included:

A $32.4m shortfall in fare revenue partly offset by a $4.4m payment by a supplier in settlement of a defective parts claim. This type of revenue is a one-time event and cannot be counted on in future years.

Non-labour expenses (supplies and services) were $15.4m below budget.

Energy costs came in $7.1m (hydro and utilities) and $4.5m (diesel fuel) below budget.

Leasing expenses were $6.1m below budget because planned leases of garage and warehousing space did not occur in 2015.

A further $10.2m arose from savings in other areas including employee benefits.

The accelerated capital-from-current payment of $5.2m.

Accident claims were $13.5m above budget.

Overages in other lines came to about $3.3m.

Indeed, most lines in the expense statement were below budget levels, but this was substantially offset by the capital payment and accident/claims cost.

Some of the savings in 2015 were incorporated as new base values in the 2016 budget (the Non-Labour line was cut by $10m). While this reduces the budgetary call for subsidy or fares in 2016, it also eliminates “padding” that could offset shortfalls in other aspects of the 2016 results.

[Details at pp 46-48 of the CEO’s report]

The TTC has not yet published a full accounting of the extraordinary costs and revenues related to the Pan Am Games. About 4 million free rides were carried for that period, but this cannot be directly related to operating costs or fare revenue because extra service benefited all riders.

Ridership results for early 2016 are the subject of a separate report in which TTC management now predicts a considerably lower ridership and fare revenue for 2016 than was budgeted.

When the 2016 budget was passed by the Board, the original target of 555 million rides was considered to be an aggressive goal. As we know from ridership tracking published in the February 2016 CEO’s report, the numbers were tracking below 2014 levels from May 2015 onward.

This was initially blamed on bad weather in the 2014/15 winter, but the drop continued throughout 2015 and into 2016. The drop in February 2016 counts is particularly troubling because this winter was considerably milder than in 2015. “Winter” does not fully explain what is going on.

It is not unusual for the TTC to “aim high” on its ridership projections as this inflates projected fare revenue while lowering the subsidy request from the City. As long as ridership is strong and expenses come in under budget, the TTC has headroom within which to absorb unexpected bad results, or even provide for modest growth. However, with cuts imposed by the City, that headroom has vanished and a ridership shortfall versus budget is bad news indeed. This is compounded in 2016 by ridership coming in lower than 2015 actuals, never mind the optimistic budget projections.

One factor used in TTC ridership estimates is the state of the economy and the rate of employment growth. This figure remains positive, although at a lower value now (1.0%) versus May 2015 (2.5%). In other words, if ridership falls despite job growth, the TTC is not staying “ahead of the curve”.

A related issue, however, is that over half of all TTC trips are now outside the peak period, and many of these are not work trips. Even if employment-related travel is rising, this could be offset by a decline in other transit market segments that are more sensitive to other factors such as lower fuel prices.

Ridership declines were reported by other GTHA agencies, although the amounts varied. GO Transit was up by 0.9% in 2015, but this could be a combination of new riding from service expansion offset by a general decline elsewhere. GO has not yet published detailed ridership numbers for its 2015-16 budget year. Riding is also down on major Canadian transit systems. This implies that the change cannot be attributed strictly to local effects. Whether it is a broad trend, or will reverse in time, remains to be seen.

Metropass sales have been down in 2014, and then to a greater extent in 2015. This has an effect that shows the problem of averaging in reporting of “ridership”.

A pass is sold for the equivalent of 49 fares, but the average usage of a pass is 73 trips/month.

The most likely “lost customer” for passes will be someone for whom the increase in pass costs in 2014/15 pushed them “over the line” and back to token fares because they no longer saw the pass as a “good deal”.

Such a passenger was probably only taking in the mid-50s of trips per month, but they are counted as a loss of 73 trips per month.

With half of the total “rides” being by Metropass, the link between revenue dollars and trips is not as straightforward as with everyone paying by cash or token. Even a passholder will vary their usage from month to month depending on circumstances, but as long as the pass represents a lower cost and higher convenience, they will not switch back to single fare media.

This will become even more challenging for the statisticians with the rollout of Presto and possible new fare structures including equivalent-to-pass functionality such as capping of trip charges per day or per week, or the implementation of the two-hour transfer creating a limited-time equivalent of a pass.

The basic question the TTC should be addressing is “are the buses full” because fare-based counts will become less and less meaningful. Presto can provide some data in that regard, but the basic observation and management of service crowding do not require advanced technology, only the will to acknowledge what is happening on the street. TTC service goals have always been “subject to budget availability”, but the degree to which service falls short on this account is rarely reported.

One response to the 2016 fall in ridership could well be a freeze on service improvements. Riders packed on overcrowded vehicles might be forgiven for thinking that the TTC’s priorities do not extend to them despite all the fine words about service and customer focus.

The drop in fare revenue is projected to be about $30m over the course of 2016. As mentioned above, some of the “padding” was taken out of the 2016 budget, and City Council arbitrarily cut the TTC’s subsidy by $5m leaving it up to the transit system to figure out where this might be saved. This is the same Council whose Mayor trumpets $50m in new funding for TTC service when in fact the City’s subsidy has only gone up by about $20m from $473.7m in 2015 to $493.6m in 2016.

The TTC offers a list of potential actions to deal with the shortfall:

• Monitor Metropass sales to determine if sales trends improve once the full-year impact of the March 2015 fare increase ends;

• A freeze on further service additions until it can be determined if the year-to-date ridership results are only temporary or more indicative of a lasting trend;

• Expense reductions that would be achieved from across-the-board service reductions in 2016 and 2017;

• Draw from the TTC Fare Stabilization Fund (which has a balance estimated at approximately $15 million);

• Additional operating subsidy from the City; and

• A review of action that can be taken to ensure only children age 12 and under are riding free.

This list does not address much more fundamental structural problems with the TTC’s budget that will appear in 2017 and beyond as the cost of the Vaughan subway extension builds into the cost base. As more riders are carried long distances, possibly with some sort of integrated regional fare, the cost per rider will go up. Any further shift to pass-like pricing (any form of interval-based capping) could increase “riding” counts, but not necessarily with a comparable increase in revenue.

Increased service at peak times and improved service reliability on many bus routes started on February 14 as part of Toronto City Council’s $95 million investment in TTC service. “These service improvements are the type of sensible and caring investments expected by Toronto residents. We need a reliable transit system so people can get to work on time and get home faster to spend more time with their families,” said Mayor John Tory. “This year we will continue to make bus service on many of our routes more frequent and reliable,” said TTC Chair Josh Colle. [CEO’s report, p 23]

The statement above has no place in a CEO’s report because it is a political interpretation, not a management review or plan. Indeed, Council might have “invested” in the TTC, but as noted above they have clawed back some of this with a subsidy increase below the level needed to fund the extra service they claim to support.

It is all very well for politicians at Council to be be tax fighters on one hand, and giveaway artists with selected fare freezes or cuts on the other, but at the end of the day somebody has to pay to operate the transit system and provide service. Blaming riders for not using the system enough and threatening service cuts while overcrowding remains a problem on many routes is completely the wrong way to address this problem.

Service Reliability

Service on the Yonge-University subway (Line 1) improved in 2015 over 2014 with both the number of delays and the minutes of delays declining. Meanwhile, on Bloor-Danforth (Line 2), the number of delays went up substantially with the only good news being that the delay minutes went down (in others words, more delays, but shorter).

For both lines, the trains/hour through the peak point continues to lie below the scheduled level begging the obvious question of which factors contribute to this situation and how reliably the target level of about 25.5 can be achieved. In all of the discussion about subway capacity, the matter of this consistent shortfall in scheduled versus actual service has not been addressed.

On the streetcar system, “on time performance” continues to improve reaching 40% in January 2016. The problem with this figure is that it measures only service at terminals, and then within a margin of error of six minutes which makes gapping and bunching acceptable within the scoring system for frequent routes. There is no measure of headway reliability which, as shown in analyses elsewhere on this site, can be quite erratic. The number of short turns in January 2016 has dropped to less than 25% of its value a year ago, and this is certainly good news for streetcar riders.

As for the bus network, on time departures sit at 74.3% for January, only slightly better than in 2015, and short turns are down about 10% from last year. However, these numbers are “spiky” and vary month to month. Whether there will be a sustained improvement remains to be seen.

[See charts on pp 25-34]

Equipment reliability presented a mixed bag of results for January.

The new TR fleet on the YUS fell about 40% in its mean kilometres between delays (MKBD) for January by about 40% relative to December 2015 after a long climb throughout the past year. This value is just at the TTC’s target for reliability, but it is not clear whether this is a one-time drop from which the fleet has already recovered, or if for some reason the high numbers achieved in lte 2015 could not be sustained.

Meanwhile on BD, the T1 fleet reliability has been running at a consistent level for the three months since November 2015, an improvement over the winter 2014/15 numbers. This could be a weather-related improvement, and future months will show whether this can be sustained. The data for 2015 include two big spikes in performance in July and especially in October. July could be understood as the result of pro-active maintenance in advance of the Pan Am Games, but October is an outlier.

Reliability for the CLRV and ALRV fleets fell in January back to levels of a year ago. Difficulties with these cars are attributed to a shortage of parts, but that does not explain in service failure rates, only an inability to maintain and repair the fleet. These cars suffer from well-publicized problems in cold weather that were supposed to have been addressed by advance maintenance in fall 2015. The benefit is not reflected in actual performance for January 2016, although this could be due to other factors.

The new Flexity streetcars are running at an MKBD well above values for the older cars, but still at less than half of the target value which is a pre-requisite for the supply contract going beyond 60 cars. Despite the TTC’s enthusiasm for the “very high level of reliability and availability” of the Flexitys, this must be tempered by asking why they are still not achieving the contracted performance and just what a reasonable target might be. [Quote taken from the report on Bombardier Flexity Deliveries at p. 4]

The bus fleet’s reliability increased through the second half of 2015, but dropped in January 2016. This is put down to bad weather, a rationale that oddly was not applied to other fleets that experienced a similar drop.

[See charts on pp 39-42]

Additional Streetcar Overhauls and Bombardier Flexity Deliveries

The TTC proposes to undertake considerable work on the CLRV and ALRV streetcar fleets with the cost to be recovered through the “liquidated damages” claim against Bombardier for late delivery of the Flexity fleet.

30 CLRVs will be overhauled at an estimated cost of $9.1 million. (Note that a program to overhaul ALRVs is already in progress.)

The non-overhauled CLRVs and ALRVs will see refurbishment of critical systems at a cost of $25m.

The Flexity contract has been through various changes in the proposed delivery schedule. As of March 17, 2016, 18 cars have been produced of which 16 are in service, 1 is a prototype used for training (4401) and 1 is a prototype at Thunder Bay for retrofits (4402).

The work is expected to allow reliability of the CLRV and ALRV fleets to remain at the target reliability levels for these fleets. Some work will be carried out at Greenwood Shops but most will be done at the Harvey Shops at Hillcrest.

As well as making up for Bombardier’s late deliveries, this will enhance the ability of part of the old streetcar fleet to survive until a follow-up order of new cars can be delivered in the early 2020s.

Kipling Interregional Terminal

After an extremely long delay, the new Kipling bus terminal project will finally get underway later in 2016. The idea of a new regional terminal at Kipling was first approved by the TTC in 2004. It has passed through several stages (the report contains a history of this) including a transfer of project responsibility to Metrolinx. A major stumbling block in more recent stages has been that Hydro One no longer is prepared to host structures much beyond a parking pad on their corridors. (Parking can be easily removed or temporarily closed, whereas buildings cannot.)

Concurrent upgrades to Kipling Station include accessibility provisions at the north parking/drop off and at the south entrance (Kipling GO). The final complex will be fully accessible between its components (TTC, MiWay, GO bus and rail, and parking).

The project is expected to go to tender in fall 2016. The cost is primarily to be funded by the Province of Ontario with a contribution of $5.5m from the City of Mississauga.

The original site proposed for the new terminal lies on Hydro lands, and this was unacceptable to the utility.

Two new options were proposed that shifted the Metrolinx terminal south and west adjacent to Kipling GO station.

The primary difference between the two options is the layout of Acorn Avenue and the surrounding parking lots.

Metrolinx favours option 1 and has subsequently modified its terminal design.

Another critical factor in this process was that the TTC does not want to give up any parking because this represents lost revenue and ridership. Moreover, the new parking layout will result in an increased fee to Hydro One for the use of their land. To compensate for this, Metrolinx proposes to slightly expand the total available parking so that the extra revenue (assuming good utilization) will offset the cost of the extra Hydro lands.

The location of the new parking areas are shown in the aerial view below.

Scarborough Subway Update

At the February meeting, the TTC Board asked staff to report on the work they were doing in support of the revised Scarborough Subway project (SSE).

Prior to the February 2016 City Executive meeting, the TTC had been working on the “three-stop subway” on a McCowan alignment ending at Sheppard East Station. This has now changed to a one-stop subway ending at Scarborough Town Centre. Part of this included consideration of using a single 13m diameter bore that could hold both running tracks plus part of the station structure. A single bore would avoid the need for cut-and-cover for large box structures associated with stations and their nearby crossovers. However, with the reduction to a single station at the STC terminal, the saving in station costs vanishes as an offset to the higher cost of a large single bore. (Management notes that some of the work required to investigate this option will be applicable to the Relief Line which will have more stations.)

Two tunnel options remain under study:

A pair of standard 5.5m wide tunnels such as used on the Spadina subway extension, or

A single 10.5m wide tunnel.

The single tunnel option would allow crossovers to be built within the bored tunnel structure, but would not have room for station platforms.

Although McCowan appears to be the favoured corridor, the TTC will also study the SRT, Brimley and Midland corridors again. The report is silent on the matter of additional stops, especially one at Lawrence East.

A significant issue for the SSE is the eventual configuration of SmartTrack (or whatever the enhanced service in the GO corridor ends up being called). In one of the two ST configurations still under study, stations at Lawrence East, Ellesmere and at Finch East have disappeared. Together with planned headways about 50% wider than the 5′ originally claimed for ST, and with fewer stations, the demand distribution between the subway and ST is bound to shift. This has not yet been addressed.

To date, about $14m has been spent on the SSE project, but for the next few months, the TTC will only provide support for City Planning’s work in finalizing a corridor choice. This decision will go to the TTC Board and Council in June 2016, after which detailed design work will resume.