Finance Vancouver

Despite Extraordinary Ridership, Vancouver’s New Canada Line is Suffering

» Public-private partnerships have their costs.

It was originally supposed to open twelve days from now, but Vancouver’s Canada Line has already racked up millions of rides since it commenced operations in mid-August — and it’s now carrying almost 100,000 people a day on average. The 12-mile automated light metro, which was built at a cost of C$2 billion, was one of the first major works of transit infrastructure built with the help of a public-private partnership (PPP) in North America. The deal, which allows a company called InTransit BC to contribute about C$700 million to the project in exchange for the right to operate the line, was designed to lower costs for the taxpayer and bring the supposed efficiencies of the private sector into what has typically been seen as an exclusively government-controlled market.

The on-budget delivery of the project three months ahead of time was immediately hailed by supportive Liberals (center-right in B.C.; center-left elsewhere) and Conservative (right) Party members, who suggested that the PPP model was the face of future infrastructure investment. Lawrence Cannon, Federal Minister of Transport (Conservative) said in excitement that “This successful project clearly demonstrates the benefits of public-private partnerships in large-scale transportation infrastructure projects.”

Yet, faced with rising operations and maintenance costs, the benefits of such private involvement are now being put into question. Despite the fact that the Canada line will soon meet its required ridership to fulfill the contract it made with InTransit, the government will have to subsidize the project to a tune of C$14 to C$21 million a year — until at least 2025. That money will go to pay off the C$700 million put in by the private side of the exchange.

But TransLink, Vancouver’s transit operator and therefore entity responsible for those payments, is already operating under a structural deficit of C$130 million annually produced by a dysfunctional decision-making structure. An irrational chain of command on the agency’s board, which has exaggerated the conflicting interests between mayors and the British Columbia government, has prevented a stable source of funds from being committed over the years. The result? TransLink is planning increases in fares, likely cutbacks in service, and a probable delay in the construction of the proposed Evergreen SkyTrain Line, which it can no longer afford.

Though the PPP used to construct the Canada Line is hardly the cause of all of these problems, opponents of private involvement in public service provision are calling for a stop to their use. Politicians of the New Democratic Party (on the left) have argued that the government — both Liberal at the provincial level and Conservative in Ottawa — has been ideologically predisposed to favoring PPPs, and that the consequence is increased expenditures by the government for an inferior product.

There is substantial evidence for this conclusion. During the preliminary discussions over the construction of the Canada Line, the Liberal-controlled province repeatedly argued that private participation would have to be mandatory, no matter the costs, despite the fact that the TransLink board turned down the idea twice. Deputy Transportation Minister Dan Doyle wrote that “Any project constructed using provincial funding will be a public private partnership.” Only when British Columbia leaders blackmailed the board with money for the Evergreen Line and the federal government found more money for the Canada Line project (previously it was likely to be named the Olympic Line) did board members reluctantly change their votes in favor of the PPP process.

In an affront to democracy, the province reorganized TransLink substantially in the following years, putting far more provincial government appointees on the panel and continuously rejecting efforts by the localities to assemble new revenue sources.

Once the idea of a PPP was installed, the method used to implement it was deceitful and biased. A report comparing the costs of PPPs with fully public alternatives paid for by the Canadian Union of Public Employees demonstrates that the government’s justification of the use of private “risk” for the line — a British Columbia-sponsored report suggested that a public alternative would cost a full C$92 million more — ignored the fact that the public sector is able to borrow at a lower discount rate than private industry, a fact that would have saved Vancouver citizens millions of dollars. In addition, the government’s calculation showing higher costs under a public alternative was based on counting risks against the government twice. This despite the fact that in a project such as this, the “risk” is minimal to none, since a C$2 billion transit line won’t simply be abandoned; the public will keep these infrastructure assets operating, even if the private sector abandons them.

The problems with private involvement in the Canada Line project got even worse once the project reached the contracting stage, when the government was supposed to decide the preferred bidder based on the “efficiency” of offers from competing companies. Ignoring the fact that the other two SkyTrain lines operated using exclusive Bombardier technology, bidders were supposed to pretend like all forms of rapid transit were equal — so a non-compliant light metro scheme won out, meaning that the Canada Line will forever be incompatible with the rest of the SkyTrain system.

Once InTransit was in charge, it set out to minimize costs, and since it had only its profit margins to answer to and not citizen concerns, it picked a cut-and-cover tunnel for the primary section of the line instead of a bored tunnel that had originally been planned. The PPP process, based on the efficiencies of the free market, did nothing to solve the problems of the hundreds of affected merchants on Cambie Street that saw huge declines in business during years of heavily intrusive construction. Meanwhile, 19 planned stations were reduced to only 16 because of cost increases. The two southern termini of the line, shooting off to Vancouver Airport and to Richmond, were built as cheap single-track spurs, limiting capacity and making further extensions basically untenable.

The resulting line, while successfully attracting tens of thousands of users, is underbuilt. Stations are too short to accept more than two cars at a time, a huge problem if ridership increases; the fact that they’re underground means they’re unlikely to ever be expanded. Meanwhile, stops are bare, with few amenities: they’ve clearly been cost-cut.

All this, and TransLink will still be responsible for up to C$21 million in annual payments to InTransit, partially thanks to an agreement that the province forged in which it will hand back between C$152 and C$250 million in “performance” assessments. So much for the large private contribution to the project — and goodbye to the promise that taxpayers would not have to subsidize the line as long as ridership reached 100,000 a day.

This is not to suggest that the same project, under the management of a public authority, would have arrived more cheaply and without problems. There is a long history of rapid transit projects coming in at costs higher than originally planned. Very few transit lines in the world are operated without public subsidies, so it was probably unreasonable for British Columbia to have ever assumed that somehow passing an aspect of the project off to the private sector would mean profitable operations.

Rather, the difficulties with the implementation of the Canada Line are reflective of a peculiar political reality that suggests that private involvement in infrastructure should be advanced, and that the methods of promoting that view should eschew normally held views of democracy and rationality. Assuming the public sector could have built this project at a cheaper cost — quite a reasonable proposition — shouldn’t it have done so? If the locally chosen TransLink board wanted a government-controlled project, shouldn’t it have had the choice to make it so, rather than be forced into the deal as a result of the decisions made by provincial officials?

If InTransit goes belly-up because of some unforeseen economic crisis or poor investment, will the government have to assume its debts to keep the Canada Line operating? Why should a private company profit in the good years while forcing the public sector to take the hit during the bad ones?

On the other hand, would a public project, like so many before it, have been beset by the petty demands of too many local interests, or of powerful political interests? If the Canada Line is underbuilt today, would a public version, submitted to community group after community group, have been overbuilt and have represented a far more significant burden on the government’s budget?

Where is the appropriate middle ground between the two?

I don’t have a clear answer to any of these questions, but the Canada Line story suggests that the recent move towards experimenting with private involvement in infrastructure creation may be moving too quickly. Governments shouldn’t be biasing study results, intentionally expressing an unwillingness to admit the advantages of the public-sector. Nor should projects such as this one be so oriented towards meeting some predetermined return on money spent that long-term value is sacrificed. If that’s what PPP means today, it’s not worth it.

25 replies on “Despite Extraordinary Ridership, Vancouver’s New Canada Line is Suffering”

Yeah — my issue with these contracts is the vast majority of them are structured to provide profit under most circumstances. Why not offer some sort of innovative investment strategies that allow for increased rates of return for successful projects built years ahead of their time? In theory ‘the market’ would do a great job picking these projects out and have some sort of performance bonus (build it into excess farebox recovery with required contributory costs by the government to the operating entity). Allow the operating entity be the one who offers the lowest operating cost bid — require a specific amount of government contribution over X years, a specific fare structure agreed upon at build, and allow private partners to provide financing with a benefit that if the line does well they make scads of cash, but if it does horribly poorly, they dont get back as well of a return (or their return goes negative over time).

The point is, PPP’s need to have real skin in the game. I’ve not seen one that does yet. Most of them seem to sound like the private company is profiting or going bankrupt, and that the government will be stuck with the ball regardless, so its more like borrowing poor credit lines at high cost — sounds a lot like what those crazy house brokers with shell buyers were doing a few years back.

Also, re: single tracking. VTA’s line to mountain view sort of suffers from this (and stupid, stupid, stupid routing). It should be the poster child as to why you don’t single track — they have a ton of ridership as a feeder into MTV caltrain, but can’t service it properly due to synchronization issues with the rest of the VTA service. Some of the ‘connections’ with caltrain have 20-30 minute lead time on the departure of the train! So yeah, even if you don’t extend it, if you are meeting another service and are single tracked you get totally screwed. Really hard to provide quality service down the road if the unexpected happens.

The cut and cover business to me seems overblown. If this line stands for a 100 years, will we ever talk about the complaints of onstreet merchants? That seems like a case where the private sector being able to ignore political pressure is actually a postiive

I’ve heard a lot of arguments about the Canada Line, and supposedly cut and cover was used in place of bored tunnel on the Cambie St. section because it is a faster construction technique, and the Line had to be ready for the Olympics in Feb 2010. Who knows if this is actually true, or just a lie to shift the focus of the argument. The bottom line is, more than 80, 000 people use line and by almost every metric, it’s an absolute success. Capacity can be increased to three times the current level with train frequency increases (cheaper on an automated metro) and if Vancouver continues to develop more metro lines,(Evergreen Line, West out to UBC along Broadway) the Canada Line will be even more successful. Many people would have liked to see this line get a gold plated treatment and to have been compatible with the existing Skytrain system, but if that meant it wouldn’t have been built, I’d say that most are on board with this pared-down version of a metro line. The only real question that remains: Will the whole line have to be retrofitted in the near future if ridership continues to increase beyond forecasted levels? With so many underground stations, that will be one costly endeavor indeed.

It sounds like what you are really saying is that TransLink and governance in British Columbia is a mess and allowed ideology to interfere with sound decision making.

I think you are letting ideology interfere with you’re own judgment here too. This case proves nothing about public-private partnerships in general. Some work and some don’t.

This seems to me to be upside down and backwards. If there is going to be a Public-Private partnership, why should it involve the Private sector contributing capital finance – which the public sector can do more cheaply – in return for sufficient subsidies from the public sector to provide a profit on top of the higher private cost of capital?

Turning this around would involve the public side providing the finance, as with an interest-cost subsidy, and the private side refunding the capital cost with user and access fees.

Now, if it is pointed out that not all projects can yield the operating surplus to pay sufficient user and access fees to refund the capital cost – then focus this kind of public/private partnership where they can. Steel-Interstate electrification and provision of Rapid Freight Rail on STRACNET rail corridors would be one example of where they could.

Andrew S: You’re right to some extent, but the real problem with using cut-and-cover on the Canada Line is that the controversy over the failure of Cambie Street businesses has made future investment in rapid transit politically difficult. For example, I think I heard that businesses on Broadway were fighting a future SkyTrain extension to UBC because of the Cambie fiasco — never mind that it would probably be built under 10th Avenue instead of Broadway.

It’s not fair, but TransLink took most of the blame for the problems on Cambie, and they’re still saddled with a lot of ill will because of that.

This seems to me to be upside down and backwards. If there is going to be a Public-Private partnership, why should it involve the Private sector contributing capital finance – which the public sector can do more cheaply – in return for sufficient subsidies from the public sector to provide a profit on top of the higher private cost of capital?

Perhaps so politicians can insist that No Tax Dollars are being used for financing–and have this be true until the private entity defaults on the bonds and the public then gets to pick up the tab?

WRT the single track segments, they are just between the penultimate and the terminus statons on each of the branches (which have half the frequency of the mainline track (the downtown terminus, with higher frequency) is double tracked).

In terms of the financing, if this was a fully government funded project, I suspect that it would not have been built. Following the bid process (i.e. after the submission of its fixed price bid), construction costs escalated – so InTransitBC had to find something on the order of $500 million in additional financing. It obtained that through investments from two pension funds who invest in development projects such as shopping centres and other infrastructure projects – BC Investement Management Corporartion and Investment Caisse de Depot et Placements de Quebec – on the strength of the business case for the Canada Line. Try finding an extra $500 million from government sources.
Prior to construction, there were howls from the press and opponents claiming that the line would never reach 100,000 passengers per day. It is in that climate that costs were kept down and the line not overbuilt. You just have to look at Toronto’s Spadina Line Extension to see an line that will be seriously overbuilt.

WRT capacity –
The capacity was established by Canada Line Co. (formerly RAV Co, a TransLink subsidiary) in keeping with the Livable Region Strategic Plan (which does not foresee Richmond (which lies on a flood plain and earthquake sensitive lands) as a population growth concentration area. InTransitBC simply built to the specifications – ultimate capacity is 14,000 ppdph (lower than SkyTrain to reflect Richmond’s place in the region).
There is also a parallel route available for a seond metro line to Richmond via the Arbutus corridor, an abandoned rail line that has been zone by the City of Vancouver for transportation use (zoning upheld by the Supreme Court of Canada). Expect that corridor to carry a second line in 50-100 years.

As a piece of infrastructure, I wouldn’t say the Canada Line is suffering; I think it is working well for our context (we have a fast, grade-separated metro with ATC, up to a similar standard as the Expo and Millenium Lines and it goes to places where people want to go. Some of the limitations must be placed with the request for proposals (RFP), the P3 proposals just built up to that spec. If we wanted 80 metre platforms on an underground system, it could have been requested, but with a higher price. The RFP listed important standards (YVR asked for a ~25 min travel time to downtown, City of Vancouver asked for a tunneled line) and dropped some (the need to use bombardier’s skytrain – we would have had to build a new train yard anyway, and interlining the C-line with the existing E-line would mean to turn the track south from waterfront station, drawing the C-line away from the CBD).

I do agree that there are limitations – Brighouse terminus connects to buses to further out and can get quite crowded. Short platforms ok if the trains are running well, but quickly overflow if there is a delay (which happens infrequently, for now).

There are pros and cons of a P3. Your post certainly highlights the cons by linking to disgruntled merchants in one neighbourhood and to the union of public employees – compelling reading, but certainly people with an axe to grind.

We’ve built it, there are some limitations, but people like it – time will tell how it will work out for us.

P3 projects are a cruel joke on the taxpayer — a financing mechanism that is inherently more expensive than government bonding or funding from taxation and should only be used when the other two are simply not available and when government is not organizationally capable of delivering a project in-house. The private sector never has been and never will be able to borrow as cheaply as the government, so why make the government pay private sector interest rates plus a profit?

The dirty little secret is that in Britain, where the P3 was basically invented, government’s organizational capability was decimated during the Thatcher years and then further ossified by Blair, making turnkey projects from outside contractors attractive to government ministers no matter how expensive they were. The end result is fewer projects at higher cost.

I agree that we were taken for a ride by our right-wing govenrment. And you are correct they have no regard for democracy – you’d be amazed at the number of Bills before the house that step on the Canadian Charter of Rights and Freedoms. Expect to see a lot of civil action against the legislation. They are in short, a bunch of fascists.

On to the Canada Line. It’s not as bad as you make it out to be. The stations are 40 metres long and are designed to be expanded to 50metres to handle three-car trains. The trains are full heavy rail metro scale – cars are 3 metres wide and 22 metres long. IntTansit BC simply built to the RFP specifications, which was a system that can handle 15,000 people per hour per direction. When expanded to 3-car trains and a frequency of 90 seconds on the main common stretch, the system will accommodate this. 90 second headways is feasible with the moving-block signal system and automatic control – this is essentially the same as SkyTrain. So the fault of the capcity issue lies with the BC Government.

The LIM skytrain (the other two lines) have 80 metre platforms, but narrower trains – 2.4 metres wide. Even so, this system can currently handle 30,000 people per hour per direction, with trains as close as 45 seconds apart, but nominally int he peak every 108 seconds.

The stations are fairly basic in design, but the finish is good quality and they are functional. The single track is at each end of the branch lines leading to the final station. With the automated train operation, the train can enter the station, unload, load and leave within 60 seconds. A train frequency of 3 minutes can be handled even with the single track line to the terminus; so the single track is not a detriment to the maximum planned capacity for the line.

So far as expansion – at the airport, there is nowhere to go, so it is moot. In Richmond, it may be a problem, but the final station was designed so it could handle two platforms in the future.

At Waterfront, downtown Vancouver terminus, only one track is used, the other is used for spare train storage. The one platform use here works too with trains running every 3 minutes – the turn around is fast and amazing to watch.

40-50 meters is very short for a metro – I think the only major metro in the world with trains this short is the Paris system. Even 80 meters is only common in old legacy systems – upgraded and new systems plan on train lengths of 120-200 meters.

Copenhagen’s Metro (opened 2006) has 60 meter platforms.

Of note, the other P3 bid IIRC had longer platforms, but had the line above ground in a trench/at-grade south of 49th Avenue.

Tokyo’s oldest line has 96, and the newer lines are at 160-200. New York lengthened its platforms so that the shortest non-shuttle lines run 144-meter trains, while the longer lines run 180-meter trains. Toronto’s subway cars are 140 meter long, Montreal’s top at 150, and Washington’s are 185 meter long.

Yes, the train station are small with limited capacity to expand… this is not news to anyone! However, when comparing the station lengths/frequency of trains/etc (total capacity), its hard to compare vancouver (600,000 residents in city, 2.3million in region) to places like NYC or Toronto, both double or more in size to Vancouver metro.

Also, as mentioned, there is a parallel track just about 1 km away from the current location of the Canada line…. the future is safe.

All being said, we can all agree that the capacity will be an issue in short time. Translinks reports show that the 150,000 daily capacity will be problematic, by 2021 they expect 141,000 riders…. mighty close to the final (all built out, all trains bought, etc) ability of the system.

Future planning hopefully will be a bit more forward thinking…. its completely fine to build 40/50 m stations…. but would it kill anyone to keep the tracks level and straight for another 50 m after the stations? Would that have really added to the cost of the system? (Probably 1/100 the cost now versus later, mostly at yaletown station and Olympic station I would assume).

Seems like its about today at the expense of tomorrow…

Regarding longer platforms, that change would have had serious cost implications for the construction and design of the system.

The short platforms allow reasonable operating gradients between stations on the hill on Cambie St. between False Creek and Queen Elizabeth Park, which is quite steep. The stations are also very close to the surface (due to cut and cover construction). If longer platforms were to be built, the uphill stations from False Creek (Broadway City Hall and King Edward) would have had to be deeper to maintain a reasonable gradient between stations. (i.e. shortening the distance between stations means a steeper gradient between stations if the same difference in elevation is maintained – so to reduce the gradient over the same distance, you must reduce the gain in elevation => deeper uphill station)). That would mean that Broadway City Hall and King Edward Station and the tunnel around them could not have been cut from the surface but would have had to have been bored tunnel. A deep bore tunnel would have also eliminated the possibility of a future station at 33rd Ave. due to its depth.

Also, given that Little Mountain (Queen Elizabeth Park) is a former volcanic cone, an additional Tunnel Boring Machine with cutting heads specific to harder rock boring would have been required to traverse the harder rock in that area (the cut and cover excavation used blasting to get through).

Your comprehension of politics would be much enhanced if you accepted that liberals are right-wingers BY DEFINITION. They are so not just in British Columbia but EVERYWHERE. They are so in Russia. They are so in France. They are so in Germany. They are so in Canada, at the federal and provincial levels. And they are so in the Naziesque USA.

Right-wing and left-wing have standardized, well-understood definitions in political and international science. A left-winger is someone who believes in social justice, or something else, as the key economic organizing principle. A right-winger is someone who believes in capitalism. A centrist is someone who’s agnostic to economic ideology.

By this internationally understood standard it’s clear the NDP are centrists, that there is no left-wing party at the federal level in canada. And that the USA is about as politically balanced as 1940 Germany.

The other meaning of liberal is of course the term of abuse used in the USA. This term of abuse has as its meanings (both original and current) ‘sexual liberal’. Which basically means “fags, homos, and nigger fuckers”. US Democrats are conservatives who happen to be fags, homos and nigger fuckers.

To see why, you have only to note that the common french word libertine translates into the esoteric word ‘free-spirit’. There’s obviously a lacunae in the American culture, one that was filled by ‘liberal’. This becomes obvious when you consider that Americans despise others’ sexuality. So the correct translation of libertine into the American language is NOT free-spirit but liberal, with all the attendant scorn.

Getting back to economics, if you want to look for economic liberals in the USA, look no further than redneck country Texas. Where free environmental laws allow every coal-spewing power plant to pollute and every citizen to die of arsenic and mercury poisoning. That’s liberalism!

Sigh. At least in European countries, socialism and communism are well-enough defined that liberalism has some meaning against it. In the USA, the only political parties are the Corruption Party and the Antedeluvian Corruption Party. To claim that one or another is more or less liberal than the other is ludicrous. Conservative? Sure. Fascist? Oh yeah. Anti-Left? Yeah. But actually liberal? Hell no.

So you see, liberal doesn’t even have any well-defined meaning in the USA. Other than of course as a term of abuse. And your attempt to pretend that there exists a left-wing in American politics (other than the lone socialist senator from Vermont) just to avoid facing the fact you live in one of the most totalitarian and autocratic nations in history is a joke.

Finally, there are more left-wing conservatives (and there are plenty) than there are left-wing liberals. Except of course the self-subverting seriously confused puppies of Moderaterna in Sweden.

The Canada Line’s problems are representative of many areas of infrastructure investment across Canada. TransLink is under-funded, and some of its actions border on the inexplicably stupid. (There was the chronic shortage of trolleybuses, finally alleviated (but not fully resolved) with recent new orders.) The Canada Line itself amounts–in Vancouver’s reality–to a gadgetbahn. It’s proven technology, but the technology is incompatible with what already existed, and I suspect it requires more mechanics to maintain the fleet than would be the case with a single-technology network. Meanwhile, the most logical extension in the network–via Broadway to UBC–is on no specific timetable, not that a timetable would matter if you look at the convoluted planning for the Evergreen Line (on, off, on as LRT feeder, revised to LIM extension, now looking for money and still open to more political meddling). The Arbutus corridor seems to be visualized as either LRT or streetcar, which might or might not tie into planned streetcar lines, which might or might not get built. Meanwhile, there are no plans to extend any rail service to North Van or West Van, which means you’re either stuck hoping there isn’t a backup on the bridge (no real discussion of a second span @ Lion’s Gate), or you get to wait 15 minutes for SeaBus.

And just when I thought the right-wing trolls were getting obnoxious and offensive, along comes the prior poster with an absolute train wreck of a post. Somewhere in all the ranting and swearing I’m sure there’s an astute political observation (one that isn’t can’t be gleaned from a Poly Sci 101 text), but I’m not sure what it is. The jist of the post seems to be “politics in the US are more to the right than politics in Europe”–ya think?

But as far as intemperate left-wing broadsides go, I’ve seen FAR better than this freshman effort–both in content and in style.

But thanks for playing.

It should be noted that the “prior post(er)” referred to in post 21 is post 19, not Drewski’s comments in 20. He beat me into the queue I guess. :)

I think that the use of the word “suffering” is a bit much. Every public transit system is subsidized (fares do not pay for operating and capital costs).

Regarding the Canada Line, I believe it provides the best “bang for buck” compared to other systems that have been completed recently:

Seattle – Light Rail from Downtown to Airport
Length: around 15 miles
Cost: USD $ 2 billion +
Ridership: around 20,000 per day now

Phoenix: Light Rail through downtown, airport, Tempe, etc
Length: 20 miles
Cost: USD $ 1.4 billion
Ridership: 20-30,000 per day now

LA: Gold Line extension
Length: 6 miles
Cost: USD $ 900 million
Ridership: 12,000 per day now

Vancouver: Canada Line from downtown to airport and central Richmond
Length: about 20km = 12miles
Cost: CAD $1.9 billion
Ridership: 85,000 – 100,000 per day now

The Gold Line and the Seattle light rail project were both major boondoggles, with some of the highest per-rider costs of American light rail. The Phoenix project was not, but its ridership has risen far above 30,000 – it’s now approaching 50,000.

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