Finance Toronto

To Immediate Controversy, Toronto Region Unveils Potential Revenue Sources to Promote $34 Billion in New Transit

» With C$16 billion in transit expansion already underway, Ontario wants to line up twice as much funding for dozens of new subways, light rail lines, and bus rapidways.

The Toronto region* already has one of the continent’s largest funded transit expansions under construction. By the early 2020s, Greater Toronto, Canada’s largest metropolitan area, will have four new light rail lines running on 52 kilometers of track; an 8.6-kilometer extension of an existing subway line; an airport express line; an improved central station; several bus rapid transit lines; and improved all-day commuter rail service. For a growing region with serious congestion problems, it’s a big expansion that will provide more rapid transit more quickly than any city on the continent.

Those improvements, however, hardly satisfy regional officials, who have plans for more than C$34 billion additional new transit lines. But the primary sources of funding for the current projects — Ontario Province and the Canadian federal government — aren’t yet ready to commit to such a significant investment. Thus the regional transit coordinating body, Metrolinx, developed an investment strategy released last month that recommended a variety of new funding sources that could provide the needed revenues to pay for these transit expansions.

Metrolinx’s investment strategy is notable in two ways: First, it takes responsibility for articulating clear new funding streams that would cover the cost of the transportation program. The report provides a compelling argument, founded on international comparisons, that the region must find new ways to sponsor transportation spending or it will suffer from increased congestion and reduced economic activity. It thus offers strong rhetoric for why new revenues must be established, and it documents why certain revenue sources are more effective than others.

Second, in line with the province’s “Big Move” transportation proposal, the investment strategy articulates a bold vision for the future of the Toronto region. Rejecting a car-focused approach, the strategy suggests that almost all new revenues be directed towards new public transportation capacity. Its goals including reducing the average automobile commute distance, reducing the percentage of commutes by car, and increasing the mode share of transit by more than doubling annual transit rides. Though the Toronto region’s transit mode share is currently higher than that of any U.S. city other than New York, less than five percent of employees working in its suburban areas take public transportation to work. There’s a lot of improvement to be made.

The plan does this not by simply stating idealistic goals as policy but by endorsing a more than tripling of the length of the regional rapid transit network (from 500 kilometers to 1725 kilometers) and a doubling of the percentage of people living and working within two kilometers of a rapid transit station (not just any old bus line). Moreover, it prioritizes projects using a series of empirical performance measures that nonetheless recognize the value of investment throughout the region, rather than just within the core city.

There are reasons to suspect that the funding strategy suggested by Metrolinx won’t pass political muster, at least not in its entirety (I’ll get to that by the end of this article), but the regional entity’s entrepreneurial approach to promoting new investment is a model for other urban transportation agencies. Too many U.S. metropolitan areas are content to develop their transit networks line-by-line, hoping that federal funding might parachute in and contribute half the cost. There is usually little thought about how to develop transit from a regional perspective, nor about how to dedicate new funding streams most effectively. Though many U.S. regions hope to reduce automobile mode share, they rarely propose a concrete way in which to accomplish that objective. Toronto is doing just that. Its leaders are promoting an alternative vision: A public transportation network plan whose investments will benefit most residents of the region, backed by dedicated revenues, making a more environmentally friendly, transit-oriented metropolis possible.

The investment strategy

As the following chart shows, investment in public transportation infrastructure in the Toronto region has ramped up tremendously over the past few years, primarily because of increasing support from Ontario Province. Former Toronto Mayor David Miller was a big supporter of transit expansion and was able to convince Former Ontario Premier Dalton McGuinty to invest massively in new light rail lines for the city after decades of regional spending largely constrained to highway expansion. Though Mr. Miller’s transit projects were cancelled by new Mayor Rob Ford, they were put back into play by a rebellious city council and now several are under construction.

Ontario Transit Capital Funding

The region’s 25-year “Big Move” transportation plan was approved in 2008. The proposal includes the currently funded lines, but also a slew of other projects that would blanket the region with new rapid transit. By the early 2030s, the plan suggests, the region will have two additional subway extensions, three additional reserved-corridor BRT lines, two additional light rail lines, and a significantly improved commuter rail system that will implement regular all-day service on all lines and electrify two lines. Every area of the region will see improved service, and the large majority of residents would be placed within easy access of rapid transit. The plan’s name is hardly a misnomer.

These projects were selected through a “prioritization framework,” as summarized in the following chart. This included a cost-benefit analysis (“BCA”) for each project, which took advantage of empirical measures such as projected ridership, job creation, travel time savings, and costs. Political issues, such as whether the projects were seen to be a priority to officials and a guarantee that all parts of the region would be included (geographic equity), were then addressed to select the final list of proposed projects.

Strategic Project Priotization

To be fully implemented (including the “Next Wave” future projects), however, Big Move requires at least C$34 billion in new funding, or about C$2 billion more a year.

Metrolinx conducted a series of public engagement processes over the course of the previous six months to determine whether public support for new revenues could be amassed, and what kinds of revenues would be considered most appropriate of 25 potential tax sources. MASS LBP, a firm that specializes in consulting with the public, was hired to run 12 roundtables that engaged stakeholders directly. The firm produced a wonderful piece of marketing called the “conversation kit” that includes a series of information cards that allow the public to quickly evaluate different revenue sources, transportation options, and make international comparisons. Having handled it myself, the kit is a device other agencies attempting to determine public opinions about a project should absolutely engage.

Finally, Metrolinx randomly selected 36 representative citizens from around the region, who committed to four Saturdays to learn about transportation issues and develop a “reference panel” on regional transportation investment. These people, informed by experts but not experts themselves, recommended a series of measures to fund all of the proposed transportation investments in the Toronto region.

Following the roundtables, consultations, and input from municipalities, Metrolinx recommended a series of dedicated revenue sources to fund its new public transportation program. According to the plan, the sales tax in the metropolitan area would be increased by 1 percentage point (up from 8%, contributing about C$1.3 billion per year); an additional five-cent levy would be placed per liter of gas sold (that’s about a 20-cent per-gallon increase in U.S. terms, representing C$330 million per year); a fee would be placed on parking lots owned by businesses (equivalent to about C$0.25/space/day year, and totaling C$350 million per year); and new development charges (C$100 million per year) would be added.

Metrolinx argues that other funding tools, such as toll lanes, paid parking at transit stations, value capture, and the sale of publicly owned land, also be considered. Low-income residents will be provided a tax credit to offset some of the additional fees they would incur.

In sum, the more than C$2 billion to be raised each year would be distributed primarily (75%) to the new capital projects included in the Big Move plan. Once these projects are completed, funds will be used to fund maintenance costs and Metrolinx’s share of operating costs. Of the remaining C$500 million, about C$100 million will go towards improving existing highways, C$300 million to municipalities for local roads and transit, and C$100 million to walking, biking, and other assorted transportation projects.

Metrolinx’s investment strategy argues that the lack of transit system growth in the Toronto region has reduced the quality of life. “The consequence [of a lack of new transit spending] has been an overcrowded transit system, slowed commutes, increased greenhouse gas emissions, and barriers to economic growth,” the strategy articulates. With 100,000 new residents joining the region every year, the problems will increase. New funding is required.

Even with all of the new taxes, the public won’t see a huge hit to their pocketbooks, as the following chart makes clear. The cost of a brand-new transit network will be about 1/20th of the amount the typical Ontario household currently spends on owning personal vehicles annually.

Personal Spending

Political obstacles

The release of Metrolinx’s revenue strategy was greeted with immediate criticism from certain elected officials. Federal Finance Minister Jim Flaherty flatly refused to consider a sales tax increase only applicable to the metropolitan area, as Metrolinx has proposed (the Canadian government is run by the Conservative Party (on the political right), whereas Ontario is led by the center-left Liberal Party). Toronto Mayor Rob Ford — who is facing a complete breakdown of his power thanks to a drug scandal — has rejected the idea of any new taxes at all, and early polls suggest little public support for the idea.

Meanwhile, columnist Steve Munro argues that the $2 billion in revenues that the plan would raise may not be enough to fund the proposed projects, and that Toronto city councilors have all sorts of zany ideas about the appropriate projects to be funding, which in most cases do not seem to align with the plans Metrolinx has in mind.

Nonetheless, Liberal Ontario Premier Kathleen Wynne has shot back that she will defend the big new investment in public transportation — particularly if the Canadian federal government continues to refuse to develop a national transit funding strategy. She argues that traffic problems in the Toronto region are significant enough to merit new taxes. She and Metrolinx CEO Bruce McCuaig have argued that, rather than endorse a sales tax increase just in the Toronto metropolitan area, they might push a provincial-wide increase.

That would require defending the new taxes and imposing them on people far from Toronto, which might elicit an outcry. Yet Wynne argues that any money collected from outside of the metropolitan area would be spent outside as well.

Metrolinx’s revenue program, then, has a long way to go before it’s the law. But the sheer ambition of the proposal, and, more importantly, the willingness of at least some politicians to promote the tax increases it would include, are positive signs for the future of Toronto. As the investment strategy notes, “We could choose to pause after the current $16 billion investment is completed, and resume an ad hoc approach to transit expansion in our region. But the threat to our economic performance and quality of life is too great to take that risk. The alternative? To reaffirm our commitment to invest in a better future.” Other city leaders could learn to think the same way.

* The Toronto region is known as the Greater Toronto and Hamilton Area (GTHA) by locals, including Ontario province, as the region extends far beyond the confines of Toronto. For simplicity’s sake, I call it “Toronto region” here.

Images above from Metrolinx.

20 replies on “To Immediate Controversy, Toronto Region Unveils Potential Revenue Sources to Promote $34 Billion in New Transit”

Yes. :-)
(Well, defining “reasonably priced” is hard, but there’s no gold plating that I’ve seen).

Can someone explain to me why they are continuing the Sheppard Ave line not with metro but with light rail?

Because the forecast passenger volumes are well within the capacity of LRT, and the vastly higher expense of a subway extension is not offset by removing the transfer penalty from the change of mode.

(Also, a subway would have fewer stops, and actually increase journey times for some people).

What’s with these folks? I mean everyone knows transit is a communist plot to increase urban financial activity, enhance livability and increase sustainability.
As to heavy ridership, one might note that the Queens Boulevard IND 4 track trunk line was built when much of the environs were open land but is now overwhelmed with riders.

Titus, the Sheppard subway line was part of 1985’s Network 2011 proposal which would have built the first phase of three new subway lines:

*Sheppard rapid transit, extending east along Sheppard from the subway at Yonge St.;
*Eglinton West rapid transit, extending west along Eglinton from the subway at Allen Rd.; and
*Downtown Relief subway Line, which would have run on the outskirts of the congested downtown pseudo-‘loop’ and diverted passengers away from the heavily congested interchange stations)

As well as a short extension of the Spadina subway extension from Wilson Ave. to Sheppard Avenue, at which point the city would decide what to do with the Spadina line…continue north to/beyond York University, interchange with a westwards extension of the proposed Sheppard line, or complete the loop by extending Yonge and Spadina to meet somewhere to the north.

After the stock market crash in 1987 the Liberal Government of Ontario lost power and was replaced by the New Democratic Party, which decided to upgrade the Eglinton West line and Sheppard lines to full subways, and proceeded with construction of the extension of the Spadina line to Sheppard Ave. (Downsview Station).

After the recession of the early 1990s, the Progressive Conservative party was elected in Ontario and chose to cancel the remainder of Network 2011, citing the deficit.

Mel Lastman, then ‘conservative’ Mayor of North York (and later mayor of an amalgamated Toronto) and Jack Layton (a councillor from Toronto) agreed to push for the construction of the Sheppard subway instead of the Downtown Relief Line.

However, because of cost overruns,the Sheppard line was only built from Yonge St. to Don Mills Road (instead of Victoria Park, as originally planned fir the first phase).

The truncated nature of the line, the shorter stations (roughed in for 6 cars but finished for 4), and the shorter trains (4 cars instead of 6) led to the derisive “Sheppard ‘stubway’ tag.

Since the line opened many politicians have been pushing to extend the ‘stubway’ both east and west. However, the TTC sees a westward extension as too costly (requiring a new bridge over, or tunnel under, the Don River). Similarly the eastwards extension would require a tunnel under the Don Valley Parkway and continuous tunneling to the proposed original phase 1 terminal at Victoria Park, as well as the proposed final destination of Scarborough Town Centre.

Finally, the original proposal for the Sheppard line was yo connect two new suburban ‘centres’ (mini downtown cores in the suburbs) in Scarborough and North York. Because of the recession, neither core grew significantly…though North York Centre had the advantage of being along a subway line, compared to the isolated Scarborough centre. Some people argue that, had the line been completed the Scarborough centre would have developed but that is another story.

Anyways, to make a long story short, the Sheppard line never really had the density to justify a subway, the upgrade and selection of Sheppard for a subway was political, the line was not long enough to reach both centres, and the commercial/office space meant to anchor both centres never fully materialized.

When rapid transit proposals reappeared with the Transit City plan, it was thought that Sheppard should be converted to an LRT line allowing the eastwards and westwards extensions to take place on the surface, meaning more km of rapid transit could be built for the same amount of money.

However, political objections from subway supporters (who feared that a Sheppard East LRT would doom their desired extension and saw…perhaps rightly…that Mayor Miller intended to build Sheppard East first,to do exactly that) … delayed the project until the Great Recession hit in 2008.

At this point, the Liberal government of Ontario cut back on the Transit City proposal, leaving Sheppard East as it is today…an LRT line that will run further than a subway extension could.

Unfortunately, this means that for a small number of commuters (including Scarborough residents studying at York University) getting across town in 2018 means:

1. Walk/take a bus to the LRT station.
2. transfer to LRT (today they have the option of a ‘Rocket’ bus)
3. Sheppard East LRT (rocket bus today) to Don Mills Station.
4. Transfer to Sheppard subway.
5. Sheppard subway to Yonge station.
6. Transfer to ‘Rocket’ Bus.
7. Bus to Downsview Station (and York University today).
8. Transfer to Spadina subway.
9. Spadina subway to York University.

Of course, that sounds worse than it actually would be.

Sorry for the overlong post, but that’s the story behind Toronto’s flatlining public transit.

Cheers, Moaz

Thanks for you detailed analysis. So is the current plan to convert the existing heavy rail subway to serve light rail trains?

Say, Moaz, somehow I think Sheppard East and Eglinton West were slated as full subways right from the start under the Liberals and that the NDP simple decided to build both subways in phases at the same time, rather than to build one and then the other so both parts of then-Metro Toronto could both get suways at once.

For parking, the recommended “average levy would be 25 cents per day per space” according to the site — not C$0.25/space/year. I was trying to figure out where we have 87 million parking spaces to tax, and thought I should go look that up.

Otherwise, great article.


No, the Sheppard subway line will stay as it is, so the scenario I outlined ought to be in place by 2018.

A better example of the LRT vs Subway debate can be found in the argument that the Scarborough RT should be replaced by a 2 stop subway extension following a new route (Scarborough Subway) vs. a 7 stop LRT line (using the existing route plus an extension).

Also worth noting is that the partially-underground Eglinton Crosstown LRT line will be using 3-car LRT trains that will carry 80 more people than the 4-car Sheppard Subway.

Cheers, Moaz

Thanks. I thought your 2018 outline was a temporary situation until compatibility was achieved…it’s bizarre that they would handle it this way.

The Big Move has a number of really strong ideas, particularly that it doesn’t neglect local transit needs in favour of the flashy, big-ticket items, or that it treats the TTC as an important partner rather than an adversary (like it has in years past). The only real junk project is the airport rail link, but that was forced upon them by politics (as was its design). The funding plans are sane and well-grounded, and tethers the entire vision to reality rather than fantasy by acknowledging that nothing can happen unless there’s money to pay for it.

But there are also some baffling long-term absences of planning. Union Station, in particular, is getting a facelift without addressing why it is such an unpleasant and inefficient transit hub; namely its tiny platforms that require ten minutes to clear (limiting headways massively, as well as passenger circulation), lack of level boarding, and extremely slow and prone to congestion approach tracks. Getting a new roof and a new concourse is nice and all, but despite the obvious problems it will have with regards to capacity in the future, nothing has been done to fix those problems (despite Metrolinx’s awareness of the issues). In addition, there seem to be little plans for accommodating the increase in ridership they expect (there’s been some talk of building a new terminus station in the Bathurst Yards, which is a mediocre idea at best) or for the introduction of improved intercity/high speed rail.

Also, the treatment of GO itself is baffling, given it’s Metrolinx’s biggest responsibility. People have been crowing for new subways for so long, it’s extraordinarily strange that everyone has seemed to have forgotten that there numerous grade-separated rail corridors already exist in the GTA and are being mostly or wholly underused. There are plans for improving GO service, but they’re either very limited in scope (two-way service) or are projected to take extraordinarily long to introduce (as much as 10 years for introducing two-way service on some lines, and a stunning 16-21 years to electrify the Lakeshore line).

Many people don’t seem to realize that GO Transit cannot simply add more service as in most cases it does not own the rail corridor itself. Rather CN and CP do and they would rather see the corridors used for freight than passenger traffic.

That being said, GO via Metrolinx has been gradually buying up lesser-used tracks and building parallel ones where it can so that it can provide the additional service independently. The buying and building spree however means much of their growth funds have been tied up there rather than in expanding the fleet and hiring the necessary staff to operate it.

You can either look at it as a catch-22 or an investment in future service (which is apparently what they’re spinning it as) where tracks in some cases are literally being laid for future improvements. It will just take some time for them to pay off as some tracks need improvements or the fleet and staff needs to be grown.

One troublesome area is the network’s third busiest corridor, the Milton Line. It’s the only one owned by CP and is their main east-west line through the area. Additional service will require additional trackage, which won’t come cheap either due to the several bridges that would need to be widened and the nature of some of the development that had occurred along the corridor. As a result, improvements here have been bumped to long-term rather than the short- or medium-term.

Actually, that’s not much of an issue anymore. Metrolinx and GO have bought the vast majority of the railway lines on which GO Transit runs, just in the last couple of years.

Metrolinx now owns:
(1) Everything through Union Station;
(2) The entire Lakeshore East line;
(3) The entire Stouffville line;
(4) The Richmond Hill line as far north as Doncaster (where it becomes the CN mainline)
(5) The entire Barrie Line;
(6) The Kitchener line as far as “Halwest” (where it becomes the CN mainline)
(7) The Milton line as far as West Toronto Diamond (where it becomes the CP mainline)
(8) The Lakeshore West line to somewhere in Oakville.

In addition, all but one of the crossings of the CP mainline, not counting the merges with the mainline, are either grade-separated or being grade-separated (the exception is the Barrie line). And all the crossings of the CN mainline (again not counting the merges with the mainline) are grade-separated.

The decisions to make Eglinton and Sheppard light rail instead of subway were for political reasons (Toronto municipal politics is totally dysfunctional). An obvious alternative to Eglinton would have been to make the outer sections elevated rail similar to the SkyTrain, but this was never considered. Similarly the Sheppard subway does not have enormously high ridership because it is short and the North York Centre area never had as much employment growth as originally expected, also most of its riders are transferring to the Yonge line which is severely overcrowded. Therefore the David Miller administration proposed to extend it with less expensive light rail. However there are a lot of new condominium developments along Sheppard, especially near Bayview and the 401 which runs parallel has severe traffic congestion in rush hour, so there is a decent enough case for extending the subway in my view.

It makes me wonder, what if Chicago and the state of Illinois would deploy these kinds of resources. This is reminiscent of the RTA’s “moving beyond congestion” plan, except better presented and marketed, and with more coherent ideas of how to pay for it.

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