Commuter Rail Dallas Finance Metro Rail Toronto

Sinking Dreams of a Privately-Funded Subway in Toronto

» Mayor Rob Ford’s claim that he can build new subway with little public financing looks increasingly unlikely. But value capture remains one of many funding devices that should be considered seriously by transit agencies.

Last fall’s mayoral election in Toronto was a watershed moment for Canada’s largest city; in electing conservative Rob Ford to the top post, the public essentially rejected the approach that had been taken by former Mayor David Miller. For transportation, the change was particularly dramatic. Whereas Mr. Miller had advocated a network of surface-running light rail lines called Transit City, Mr. Ford lambasted this approach as a “war on cars” and declared that the only public transportation projects he would pursue would be in subways.

In March, in an agreement with the Ontario provincial government, he got what he wanted. The planned surface line on Eglinton would be replaced with a subway sponsored by the Province. The light rail line on Finch West would be put off to a later date, as would an extension of the Scarborough RT. And the Sheppard East light rail line — then already under construction — would be substituted by an extension of the Sheppard Subway, to be funded by the city.

That project now appears fiscally impossible.

The Mayor, pursuant to his electoral promises, said that the Sheppard Subway could be done with the commitment of no new city funds; rather, he claimed, private investors interested in development rights around stations would produce an increase in area property values. The city would be able to sell off enough station-area land and collect a large enough amount of new taxes to be able to pay for the project. The idea was that Toronto, like Hong Kong, would be able to build better transit through private development.

This week, the wildly optimistic proposal fell apart. Gordon Chong, the man appointed by Mr. Ford to head up Toronto Transit Infrastructure Ltd., the group meant to pioneer this public-private partnership, said that even with significant upzoning around stations, the private sector would be able to contribute a maximum of only 40% of the line’s C$4.2 billion estimated costs. And in a city where neighborhood groups have fought hard to prevent such zoning changes in the past, the prospect of 30-to-40 story towers in the backyards of single-family homes was not likely to be easily accepted by local residents — so that 40% was probably a high estimate.

Though federal funds could aid a bit, lacking provincial aid, the rest of the line’s costs would have to be paid for by other funding devices, such as road tolls, according to Mr. Chong. Mr. Ford, who made his campaign work on the basis of his predecessor’s supposed hated of cars, rejected the idea hastily.

While Toronto appeared in early 2010 to have four transit lines ready to go, it now is down to just one and a half — the Eglinton Corridor and the replacement of the Scarborough RT. Unless Mr. Ford makes a quick turnaround on the use of municipal funds for his Sheppard Subway (or provincial or national governments fly in for the rescue), the project will be dead in the water.

In some ways, that’s a pity: The financing scheme being considered — using value capture on surrounding properties to fund the project’s completion — is a reasonable one that should be used much more frequently in cities funding new transit lines. That is, to pay for a portion of total costs, since for now most cities will not be able to raise the kinds of funds from property development that Hong Kong has. Fortunately, its adoption by cities in the U.S. and abroad appears to be gathering steam.

In Paris, the just-approved 125-mile metro network will be partially financed through the sale of land around stations. And in North Texas, the development of a new 68-mile commuter rail line called the Cotton Belt is moving forward thanks to a tax-increment financing district that is being proposed for neighborhoods around stops.

In a talk at the Congress for the New Urbanism in Madison today, Mike Krusee of the Partnership for Livable Communities suggested that this new route between Fort Worth and Northern Dallas County could cover about $380 million of its $1.54 billion in total construction costs — and all of its operations costs — through value capture in the towns through which the line would run. In short, increases in property tax collections over a few decades would be used to subsidize the creation and maintenance of the new transit offering. Though the proposal has yet to be adopted (and the remaining $1.16 billion in construction costs has yet to be found), it demonstrates the potential of integrating private investment into what is otherwise a public project.

Most American transit system capital programs are financed purely through federal and state grants and municipal sales tax income.

It is indicative that in the first request for proposals for constructing the Cotton Belt, investors in Dallas apparently hoped that the private sector would be able to step in and pay for the whole project, said Mr. Krusee. Facing revenue shortfalls, the metropolitan area had abandoned full government financing for the program. Of course, just as in Toronto, that was not possible: 55 replies from companies provided no solution to the overall lack of funds. Only since Mr. Krusee’s Partnership proposed the value capture system have private developers become seriously interested in working to raise funds to pay for construction. Major transit-oriented developments are apparently planned around many of the stations.

Increasingly, transit systems across the country looking for expansion opportunities may have no choice but to look for similar deals: Agree to use tax revenues from property value increases on transportation corridors to the area, and development will follow. No such deals could mean fewer new transit lines in the future.

Image above: Subway station at Sheppard-Yonge, from Flickr user Kenny Louie (cc)

Light Rail Metro Rail Toronto

Agreement Reached Between Toronto and Ontario on City’s Transit Future

» After a strong push by new Mayor Rob Ford, the extensive planned network of surface-running light rail lines will be replaced by a light rail subway to be funded by Ontario. The city argues it can fund another subway extension project itself.

In 2007, Toronto looked to be pioneering a more cost-effective way of providing major new transit infrastructure: Rather than investing huge sums on short segments of new subways as it had done in the past, the city would construct dozens of miles of street-running light rail, connecting far-off parts to the city without breaking the bank.

The “Transit City” effort, pushed by Mayor David Miller, eventually garnered the support of Ontario Premier Dalton McGuinty, who agreed to use C$8.2 billion in provincial funds to complete 35 miles of rail on four lines, most of which would be above ground.

After the fall election of Rob Ford to the mayor’s office, however, the world of Toronto transit decision-making has turned upside down thanks to Mr. Ford’s insistence that no new transit lines be built within the street right-of-way, which he argued represented a “war on cars.” Today, Mr. McGuinty heeded that advice and announced that Ontario will fund just two of those lines — the replacement of the Scarborough RT with elevated light rail along the existing guideway and the construction of a crosstown light rail subway underneath Eglinton Avenue for a total cost of C$8.2 billion, both to be completed by 2020 as a unified line. That would be a total of about 15.5 miles of new transit for the same cost as 35 miles of Transit City projects.

Mr. Ford, who argued extensively during the mayoral campaign for extensions to the 3.4-mile Sheppard subway west to Downsview (C$1.4 billion for 3.4 miles) and east to Scarborough Center (C$2.75 billion for 5 miles), has dedicated the city to building that project. Funding would come from public-private partnerships that would fill the C$4.2 billion gap. Other previously proposed lines, including along Finch Avenue in the northwest section of the city, have relegated to future “express buses” whose service quality remains undefined.

In some ways, Toronto will benefit from this revised plan: Commuting times along subway lines are likely to be quicker than on street-running light rail, which even in reserved rights-of-way must deal with traffic intersections. And along Sheppard Avenue, the decision to extend the subway rather than force commuters to transfer to light rail will save people time and effort. But are those improvements enough to justify effectively doubling the cost of the construction program? Does putting the entire 12-mile Eglinton line underground — versus just 6 miles as planned before — justify eliminating plans for expanded service to an underserved part of the city?

Mayor Ford’s insistence on putting transit lines in subways was a response to his concerns about reducing space for automobile users, so the question is whether the increase in costs that it would require to put the corridors underground would produce a corresponding increase in benefits for all users (including those who will not receive new transit lines). Lacking complete data from a cost-benefits perspective, I’ll leave that an open question. One thing it is likely not to do is reduce congestion, since in big cities like Toronto road capacity is absorbed as soon as it is provided.

Removing street space from the purview of automobilists and dedicating it to transit users has produced resistance throughout the United States and Canada, but Toronto’s change of policy is particularly dramatic because construction had already begun on one of the lines, the Sheppard Avenue East light rail. Mayor Ford was elected on a platform of replacing the light rail plan with subways, so this change should have significant electoral support; nonetheless, the lack of funding for significant improvements in the northwest sections of the city will undoubtedly be controversial.

Most problematic is the financing plan Mr. Ford has put forth for the Sheppard extensions. During the election campaign, the candidate suggested that the C$4 billion subway be built mostly with Transit City funds. A limited sale of development rights would produce C$1 billion, of which 30% would be distributed to complete that project’s financing and the rest be devoted to road improvements.

Under the new project, however, almost all of the Transit City dollars would be spent on Eglington and Scarborough lines, leaving a maximum of C$650 million in Ontario funds for the Sheppard line. Would the City of Toronto be able to raise more than C$3 billion from development rights just along the Sheppard corridor? Does it even have that much land to sell?

For a point of comparison, Hong Kong’s newest subway lines use such development rights sales to aid in their financing — but they still require significant public aid to complete the funding package. And that’s in a far denser city where land values are much higher than in Toronto.

Thus the deal today does not actually guarantee the completion of the Sheppard Avenue subway extensions — it only assures the Toronto public that the funded Eglinton Crosstown Line and the renovations of the Scarborough RT will be completed by 2020. A few years ago, that might have been enough to make anyone happy. But after Transit City was announced, funded, and had begun construction, it feels just a little disappointing.

Elections Light Rail Metro Rail Streetcar Toronto

When Voting for the Lesser of Two Evils Could Save a Transit System

» In a three-way race for Toronto mayor, picking the best candidate could result in the worst outcomes for the city.

Because the U.S. political system is basically a two-party duopoly, few electoral races offer more than a singular comparison between a Republican and a Democrat. In terms of transportation issues, there frequently is little question about who is the better candidate. Nonpartisan elections offer an alternative by opening up a broader range of choice for voters.

Case in point is Toronto, where local voters are going to the polls Monday to pick their new mayor. There, three candidates have made it to the end of the race, right-wing Rob Ford, centrist George Smitherman, and left-wing Joe Pantalone, the last being the heir to current Mayor David Miller. A new poll suggests Ford is leading the race with 43.9% of expected votes; Smitherman follows with 35.6% and Pantalone is expected to receive 15%. The election has one round and is not an instant runoff.

Despite the choice this election offers, voters interested in preserving the quality of North America’s third-largest transit system may unfortunately have to stomach voting for a less-than-ideal candidate to prevent a truly dangerous one from winning. Ford’s positions are dangerously anti-transportation alternatives and could spell trouble for Toronto’s chances to dramatically improve its mobility options over the next decade. For people hoping to keep up the momentum, voters would might naturally prefer Pantalone may have to choose to be strategic rather than idealistic by supporting Smitherman instead. Multi-party electoral systems have their downsides, too.

Mayor Miller has been in office since late 2003 and has been a strong proponent of increased investment in his city’s transit capital program: His 2007 announcement of the eight-line light rail Transit City program and his subsequent campaign to get Ontario provincial funds to pay for the projects were groundbreaking and entrepreneurial on a scale few cities have dared to dream up. After all, 75 miles of new rail lines serving new crosstown routes are no drop in the bucket; if built, they would fundamentally change the ability of people in Toronto to get around by rapid transit.

Yet candidate Ford, who at the moment appears to be on a fast-track to winning this race, would discard the Transit City plan full-stop. Using rhetoric to inflame already disenchanted suburban residents, concerned that their priorities aren’t being considered by a center-city focused city hall, Ford has declared that he will fight to “end the war on cars” (words that are uncomfortably similar to those of British Conservatives). How will he do so? By eliminating bike lanes from major streets and, even worse, by dismantling the city’s 47-mile downtown streetcar system, which serves 285,000 daily customers. Ford claims that these are disruptive to the free-flow of automobiles in North America’s most-congested city, but removing the transit infrastructure now would likely mean never getting it back.

Ford’s comments are couched in familiar conservative terms of “fiscal responsibility,” but it is clear from his message that he is simply more interested in promoting car travel than transit. By removing streetcars, Ford would have to cancel an already finalized C$1.2 billion contract with Bombardier for 204 new trains at a potential penalty of C$100 million and buy 550 new buses as well as construct two new $100 million bus garages. Because Toronto’s streetcar vehicles carry three times as many passengers as buses, operations costs would expand dramatically and the number of buses on the streets would multiply significantly; meanwhile, passenger comfort would decline. How more buses carrying fewer people would result in less traffic congestion as Ford seems to imply is unclear.

In exchange for the large network of light rail lines Mayor Miller has proposed to implement (construction is underway on one corridor already), Ford would build new subways that sound good in theory but which would ultimately mean far less transit expansion because of their higher costs. But subways are more convenient for Ford because they’re buried underground, safe from interrupting the travel of his precious automobiles.

Joe Pantalone, on the other hand, has been a full-throated defender of investments in public transportation, pushing the Transit City plan as strongly as the current mayor. He has promoted a 1,000-kilometer bike route plan that would ensure increased safety and convenience for those who choose to cycle around. Under his leadership, it is hard to imagine the city falling behind in the development of alternatives to the automobile.

Unfortunately, Pantalone is so far behind in the polls that a vote for him would help split the vote enough to put Ford in office. People who want to see the improvements he is promoting may have to vote against Ford, not for Pantalone.

In this case, that means checking off the box for George Smitherman. Though his transportation proposals has been relatively vague and he has not proven himself to be willing to put his political ambitions on the line for improved transit, Smitherman has generally supported the Transit City plan and has developed a plan to fund the local transportation network through gas taxes and profits from the power and parking authorities. He has regrettably asked for a moratorium in new bike lanes.

Steve Munro, an influential local transportation advocate, has reluctantly endorsed Smitherman, suggesting that the three-candidate election leaves progressive voters no choice but to vote centrist unless they want the conservative to win with a minority of votes. If Smitherman isn’t perfect, his efforts will be improved by the decisions of the larger city council.

Is Munro right? Is it worth sacrificing one’s ideals and voting against someone rather than for someone else?

Update, 25 October: Rob Ford has won the race, getting about 50% of the vote.

Image above: Streetcar in Toronto, from Flickr user Diego Silvestre (cc)

Commuter Rail Finance Toronto

Toronto’s Airport Link in Public Hands After Collapse of PPP Deal

» In pulling out, engineering firm SNC-Lavalin cites concerns that project wasn’t going to have its operations subsidized.

For investors interested in infrastructure projects these days, there is apparently a lot of low-hanging fruit to pick. This, at least, is the argument made by Montréal-based contractor and engineering firm SNC-Lavalin, which has pulled out of a years-long commitment to operating Toronto’s planned airport connection train because the regional transportation authority refused to subsidize the service.

The construction of a new two-mile corridor between an existing rail track and the airport was to be fully paid for by government investment. The Canadian federal government pushed a public-private partnership (PPP) deal for the project’s operation in the early 1990s in exchange for a commitment for national funds to back up local money.

According to an SNC-Lavalin spokesman, “When there are so many other infrastructure projects that are proceeding at this time, the banks are not interested in projects without a fixed income stream.” This leaves regional transit agency Metrolinx in charge of the program’s implementation and responsible to pay for operating shortfalls if necessary. Other transportation organizations hoping that assembling a PPP will allow for a transit operation with no public subsidy should put their dreams in check.

Once the Air-Rail Link opens in 2015 in time for the planned Pan-Am Games, it will offer 22-min service between downtown Toronto’s renovated Union Station complex and Pearson Airport at 15-minute frequencies over a 15.5-mile corridor. The Air-Rail Link is an integral part of the overall upgrade of the Georgetown South corridor, which will eventually allow up to 400 commuter trains to use this line that extends into the city’s northwestern suburbs.

The irony of the loss of SNC-Lavalin’s involvement since 2003 through a subsidiary called the Union-Pearson Air Link Group is that it may in reality mean fewer public expenditures than originally foreseen. Metrolinx, which is also pursuing the Toronto region’s ambitious expansion of rapid transit, claims that it can get the project built for a lower cost than SNC-Lavelin had estimated. In addition, if fares are high enough, the operation may well be able to make money, in which case the profits will go to the public sector instead of into the hands of a corporation.

If Metrolinx is indeed able to save money by relying on its own expertise instead of that of an engineering firm, it may be able to transfer some already committed funds to the electrification of the line — a long-sought improvement for residents of the surrounding area, who claim to be choking on diesel fumes. In addition, the transit agency has the opportunity to refine its decision-making about who will use the line; does it want to price the service high, providing premium benefits like downtown baggage check-in? Or is it interested in reducing costs to attract as many riders as possible? Metrolinx will be able to alter the financial structure of the service over the years to adjust to changing conditions, something that would not have been feasible under a long-term fixed PPP.

The public agency has the added benefit of being able to take advantage of its existing facilities to keep up the line; even if it buys new trains, it can store and maintain them in the same buildings used by GO Transit commuter trains. It can take advantage of its already existing team of experts to make sure the tracks stay in order. So there are some significant benefits to exiting from the PPP deal.

In the context of increasing discussions about the role of the private sector in the creation of public infrastructure, Toronto’s example may be worth considering. The refusal of Metrolinx to agree to subsidize the operations of the Airport link rang the death knell for the financing scheme of a project that was supposed to be self-funded thanks to its primary clientele, relatively wealthy air travelers. This, of all transit projects, should be able to make up its operating costs. But the deal evidently was not good enough for SNC-Lavalin.

Lyon’s Rhônexpress program, now under construction in southeastern France, may be the only truly sustainable model for private investment in such an airport line. There, the corporate sponsor contributed some of the construction dollars up front in exchange for an annual public subsidy. This guaranteed contribution from the taxpayers, spread out over a long time period, may be the only way to convince corporations to be involved in a PPP process in the usually profitless transit world. A more open-ended situation, in which it is simply assumed that a private operator will be able to make money over the long-term, does not seem likely to attract much interest.

Image above: Map of Georgetown South rail project, from GO Transit

Elections Light Rail Metro Rail Toronto

Hazy Future for Transit City as Toronto Gears Up for Mayoral Election

» A sour economy puts Mayor David Miller’s hopes of an eight-line light rail network in jeopardy. But so far, the election to replace him has demonstrated just how much Toronto wants to be a transit city.

Missed in the hoopla over transit currently absorbing Toronto’s motley crew of mayoral aspirants is the fact that the city — just three years after its current mayor went full-bore in favor of new investments — is already underway in the construction on a new light rail line, the first among four that have received actual funding commitments from Ontario Provincial officials. That’s in addition to a subway line extension also being built and signed contracts for hundreds of new subway trains and streetcars. This city is serious about its future in public transportation.

That’s a rapid turn-around from decades of stagnation. Like most big North American cities, Toronto hasn’t had the wildest success extending its rapid transit network over the past twenty years; the 3.4-mile Sheppard Subway that it opened in 2002 was just the remnant of what was once supposed to be a massive re-envisioning of the region’s commuting patterns.

But financial circumstances and economic difficulties got in the way, much, unfortunately, as appears to be happening now.

After introducing his 75-mile Transit City light rail transit plan in 2007, Mayor David Miller began his campaign to convince other leaders to come on board; Ontario Premier Dalton McGuinty agreed in Spring 2009 to fund the first three corridors along Eglinton, Finch, and Sheppard (now under construction) — and to replace the moribund Scarborough RT line with light rail. McGuinty’s own staff developed an even larger plan called Move Ontario under the auspices of the newly formed Metrolinx regional transit agency to fund similar projects outside of the city, including a network of “Viva” bus rapid transit lanes in York Region, just north of Toronto. But that support for infrastructure investments dimmed over the past year as construction cost estimates exploded and tax revenues slumped.

What was once supposed to be a 15-year, C$6 billion plan with eight east-west and north-south connections across the region has become an $8.15 billion plan with just four truncated east-west corridors. After last month’s decision by Ontario to reduce spending on transit by C$4 billion over the next five years, Metrolinx has reduced overall route length by 14 miles to 33 miles of new construction, cutting out 24 stations from the four lines that are funded. Completion of these initial routes is now delayed from 2016 to 2022.

The other four lines — including the Jane, Don Mills, Waterfront West, and Scarborough-Malvern light rail corridors — are stuck in planning purgatory.

Mayor Miller is understandably upset about the gutting of his proposal, and last week he accused Premier McGuinty of changing the rules behind his back, despite the fact that the two had evidently agreed to a cutback plan several weeks back. Transit City was to be sponsored almost entirely by provincial, not municipal, funds. Now Toronto is advancing a proposal to lend Ontario C$1.5 billion to begin construction more quickly — an idea that the province’s staff has rejected outright. Miller’s political positioning is seriously weakened by the fact that he isn’t running for reelection and that his appointed chair of the Toronto Transit Commission (TTC), Adam Giambrone, has been racked by scandals. Similarly, claims of incompetence on the part of TTC staffers and the reckless pursuit of an expensive new headquarters have diminished Miller’s arguments.

Now comments from the mayoral field — the candidate who wins on October 25th will ultimately find him or herself in charge of the TTC, which runs the subway — has put the whole expansion program into doubt.

Candidate Rocco Rossi made the first move in January when he announced he wanted a stop to all current Transit City projects, a move he premised on fiscal “responsibility” but one that sounded a lot more like simply pro-car rhetoric because he argued concurrently for the ban of bike lanes from some downtown streets. Now he’s out with a new proposal that would lay two kilometers of subway track a year — an idea that would undoubtedly cost more and produce fewer long-term results than the current Transit City projects. Rob Ford, who was once a transit opponent, is now towing a similar line, as is Sarah Thomson, a marginal player. Joe Pantalone, close to the mayor, and George Smitherman are likely to come out in favor of light rail extensions, though the latter has yet to be entirely clear about his long-term goals for transportation.

There are valid reasons to criticize Mayor Miller’s Transit City: the light rail lines, running at street-level with about twice as many stops per mile as the existing subways, won’t speed commuters from the inner suburbs as much as perhaps is needed. The choice of a different technology will require transit users to make more transfers and diminish the effectiveness of the existing network. Some corridors may demand higher-capacity vehicles than those proposed for these lines.

Much of the anti-light rail sentiment stems from the problems experienced over the past few years in the construction of a reserved right-of-way for the St. Clair Avenue Streetcar, which dismayed business owners and locals for its disruption to the street.

Most importantly, but less mentioned by politicians is the fact that Transit City doesn’t improve access to the downtown core, exactly the improvement Toronto may need most. Despite the fact that a downtown relief subway line, designed to alleviate congestion problems on the system, has been considered since at least 1985 and is even included as a possibility in the province’s transit plan, Mayor Miller makes no provisions for it. Transit City chooses instead to connect moderate-density outlying neighborhoods with each other.

More subways might theoretically be more appropriate for a city the size of Toronto, but the focus of this year’s mayoral candidates on underground corridors over light rail glosses over the fact that Mayor Miller’s choice of street-running light rail wasn’t a coincidence: It was a result of a realization that neither the city nor the province would be able to afford the cost of tunnels for these corridors, and that the city needs to be realistic about what it can build. 75 miles of subways would cost tens of billions of dollars that no one has. Though most will be built above ground, I should note that some sections of the Transit City network, including the midsection of the Eglinton Crosstown Line, are to be placed in a subway.

While there’s been plenty of talk about building new subway lines in Toronto over the years, proposals — no matter how well worked out — aren’t worth anything unless they’re backed by political power. That’s what David Miller added to the game. By promoting his massive and perhaps even too ambitious Transit City scheme as if his life depended on it, he secured provincial aid and shamed the region into actually moving forward. A less-than-perfect light rail line that riders can actually use is worth far more than a subway whose only existence is in the glimmer of a planner’s — or politician’s — eye.

The shouts in favor of subways by many of the city’s mayoral candidates haven’t been followed by any specifics about what routes would be prioritized and descriptions of what would be done for neighborhoods left without new transit access. One of the strengths of the Transit City proposal is that it is very clear in laying out the city’s future transit network; it doesn’t leave choices about new rail routes to future study, which inevitably mean delays and little actual accomplishment.

Nevertheless, Mayor Miller’s continued insistence that his program be built with the province’s money is starting to seem a bit out-of-whack. Since he’s not going to be at City Hall next year, what game is he playing? Does he think his legacy depends on the successful completion of his original project? Why doesn’t he make sure that something is built by cooperating with Premier McGuinty?

But maybe Miller’s legacy is not the transit system itself but rather his ability to make public transportation a matter of prime political concern for his city. Whether or not Transit City is completed as he hoped, he has managed in the midst of a difficult economy to convince the province to spend C$8 billion on rail transit expansion projects over the course of just ten years — a feat matched by few cities anywhere in the world. Though the candidates running to replace him may be promoting very different schemes for his city’s future, they are, right and left, universally in favor of more public transportation.

Cities throughout the United States and Canada should look to Mayor Miller’s ambition and political positioning as an example for how one politician can promote a seachange in mentality towards investing in transportation. One big plan, backed by significant funding commitments, can force everyone hoping to advance politically to jockey for first place in promoting the best possible transit improvements.