Following the money on Doug Ford’s TTC subway takeover trick

The Ford campaign claimed that a takeover would cost $160 million per year, but recent estimates from the TTC set a much higher annual value: over $1 billion



Doug Ford, the man who fancies himself Toronto’s czar, is poised to grab the TTC’s subway network in the name of making things better for commuters. But will it?

His claim is that only with the decisiveness, speed and fiscal capability of the provincial government can the logjam of subway building in Toronto be broken.

Unlike Ford’s abrupt cut to Toronto council’s size, the subway upload will get a longer study by Queen’s Park.

There is a promise of public consultations and, according to the Terms of Reference released last week, three major options will be discussed. In all schemes, Ontario will be responsible for any expansion of the system and building of new subways. The only question is whether the province would take ownership of the entire network, only the new portions or leave the system in Toronto’s hands.

Toronto would remain responsible for the day-to-day operation and maintenance of subway lines, but expansion and major renovation, replacement of worn-out equipment and facilities would be funded by the province. Revenue from the fare box would stay with Toronto to pay for the city’s share of subway costs with the unspoken assumption that the subway breaks even. This avoids the complex problem of splitting revenue between subway and surface networks or the creation of a separate subway fare zone.

The government claims that better transit cannot be delivered without provincial ownership. Commuter travel will improve with new lines and integrated service and fares across the Toronto boundary.

The Ford government’s target is clearly those taking longer trips from the outer parts of the city and the 905, with its focus on three big subway projects: the Scarborough extension of the Danforth subway line, the Relief Line from downtown to Don Mills and the extension of the Yonge line to Richmond Hill.

A special advisor to Queen’s Park, Michael Lindsay, supported by Metrolinx, will recommend the eventual model.

However, with legislation planned by spring 2019, it is hard to believe that a choice on the preferred option hasn’t already been made.

Transportation Minister Jeff Yurek recently said, “Any great leader would take a look at all options,” but he was talking to the skeptics on Toronto council, not about the Premier.

Although both the city and province will hold consultations, confidentiality provisions in the study agreement will limit the information actually available to the public.

Yurek says that discussions will offer a chance for commuters to tell stories of how the public transportation system fails them today, an outlook that presumes more cheerleading than consultation.

If the process is simply meant to continue Ford’s attack on Toronto council, almost nothing will stop the upload, and studies and consultation are window-dressing on a done deal.

Debates on the subway’s value and how much Ontario would pay Toronto do not address the long-term problems. The challenge lies in the real cost of owning the subway.

The Ford campaign claimed that a takeover would cost $160 million per year. Recent estimates from the TTC set a much higher annual value: over $1 billion.

In past years, much-needed work was omitted from the approved project list to reduce Toronto’s spending and borrowing projections, but this left a huge backlog for system renewal. After years of getting by, the TTC now faces a decade when capital requirements go up just as the city’s ability to fund them goes down.

In recent budgets, the TTC’s projected 10-year capital need was upwards of $10 billion, more than half of that for subway projects. Commitments from various governments cover only two-thirds of that. Now the TTC has published a much longer list of “below the line” projects, so-called because they fall below the line where available funds run out.

This pushes the 15-year total up to $33.5 billion, including $22 billion for major subway projects such as new trains, track, signals and station upgrades. That’s just to keep the existing system working, and the bills for expansion would add even more.

Ford is in a tricky situation. The subway capital requirement is nearly 10 times higher than his election platform claims, and yet this government’s every move aims to reduce, not add, to spending.

Creative accounting can come to the rescue in two ways. The provincial government can amortize the cost of a new subway line over its lifetime, and balance this against the slowly declining book value. In theory, there is no new net debt.

The alternative is an arrangement where the financing and some of the cost risk sit on private sector books and the government is, in effect, making lease payments. Neither of these get rid of the need to borrow, only disguise it by another name.

There is a myth that the private sector will pay for everything, and that stations can somehow be financed through contributions from new development.

The model cited is a new Mimico GO station. The province has struck a deal with a developer to rebuild the station, but covering construction costs for a GO station is a far cry from the cost of new underground stations on lines that do not yet exist. This kind of scheme simply cannot raise enough to pay for stations, let alone for the tunnels between them or the trains to carry passengers.

The province must play a bigger role in funding transit, a role abdicated by the Mike Harris government two decades ago. Debating ownership avoids the basic issue that transit costs a lot of money to own and operate.

Promises for new lines are the easy part no matter who owns the subway, but plans to spend billions on new lines tomorrow do not keep the trains running today.     

Steve Munro is a Toronto-based author and transit advocate.

@nowtoronto

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