And you think TransLink has problems………

Vancouver is not the only city having financial problems with transit.

Toronto is mired in political vanity subway projects and the TTC is steaming full speed ahead into a financial iceberg as well.


The Scarborough Subway and Smart Track are about to collide


Anyone who thinks they can read between the lines of the two sets of council votes this week ai??i?? about the Scarborough subway and Smart Track ai??i?? should remember that what weai??i??re seeing now at City Hall is merely political foreplay.

The four quick votes against Josh Matlowai??i??s administrative inquiries into the Scarborough subway cost/corridor questions tell us nothing about councilai??i??s ultimate intentions with regards to that $3.4 billion-and-counting monument to Glen de Baeremaekerai??i??s insecurities. Nor does the impressive 42-2 vote in favour of the Smart Track studies reveal evidence of unity of purpose.

Rather, what really matters is that point off in the middle distance where these two sets of transit mega-project proposals, and their respective price-tags, intersect. Because they will, and that collision will likely occur approximately a year from now ai??i?? a kind of supercollider for Torontoai??i??s latest transit ambitions.

City and Metrolinx officials will spend much of the rest of 2015 analyzing the various configurations, how the two routes interact with one another, and how Smart Track fits into the provinceai??i??s $15 billion Regional Express Rail plan. At the same time, the Scarborough subway scheme will be subject to an accelerated approvals process that will look at corridor configurations, lengths, stations, etc.

But the crucial money/financing questions wonai??i??t hit council until next spring, at the earliest, and thatai??i??s when the bonfire of the vanities will begin in earnest.

As an aside, one of the reasons Torontonians are chronically confused about transit is that transit reports wash up on councilai??i??s agenda so frequently, and repeatedly, that itai??i??s often difficult to identify genuine decision moments. As the councillors well understand, those moments occur when they agree to spend or borrow money, and vote on motions that end in phrases such as, ai???authorize city officials to enter into agreementsai??i??ai??? We had one of those moments in the fall of 2012 ai??i?? when the City, the TTC and Metrolinx signed a master agreement to build the four LRT lines. Weai??i??re now facing the $75 million consequence of reneging, which is how you can tell it was a real decision.

Problem is, itai??i??s not always easy to determine where in the process the money vote will occur. Sometimes, what feels like the ninth inning is actually only the seventh inning (Exhibit A: the Scarborough subway vote last spring). But as I said, the councillors all know.

While city officials laid out a process and rough time-table at council this week, several externally-imposed financial imponderables could derail the process ai??i?? most notably the federal contribution to Smart Track. No one, including John Tory, has the foggiest idea how that one will play out. Until we all know the answer to said riddle, the rest is up in the air. After all, the quantum of the provincial contribution to Smart Track is obviously a function of the size of the federal investment. As long as we donai??i??t have answers, sit back and watch for more foreplay.

Amidst all those question marks, my sources tell me that city staff, once they turn their attention to the money issues, will make sure that council is presented with the full financial picture. After all, the combined price tag for Smart Track and the Scarborough subway could easily exceed $12 or $13 billion ai??i?? a substantial, though undetermined, portion of which will come from property taxpayers, development charges and city-issued debt.

Given that the cityai??i??s debt-service ratio will be perilously close to the mandated 15% ceiling by 2020 (the current level is 12%), itai??i??s clear that decisions on the two lines canai??i??t be made independently, both for financial reasons and also in terms of transit effectiveness.

Another piece of analysis we wonai??i??t see until next spring is city staffai??i??s take on the revenue potential for Toryai??i??s tax increment financing (TIF) scheme, which involves borrowing funds for infrastructure investment and paying down the debt using taxes generated by increased property assessment. During the election, candidate Tory claimed TIFs along the Smart Track corridor would bring in $2.6 billion.

What City officials will do, over the next year, is develop various scenarios for what kinds of revenues the City can actually expect, based on low, average and high-growth development projections on the corridor. Theyai??i??ll also quietly canvas the bond markets to see whether TIF notes will sell, and for how much.

The politically expedient move for Tory and his backers would simply be to believe the most optimistic revenue scenario, and choose accordingly. But the reality is that the capital markets will have to absorb a massive release of City of Toronto debt, which is secured against investment decisions that may not happen for decades and are subject to macro-economic unknowns. Indeed, investors have never seen City of Toronto TIF bonds before. The markets will price accordingly, but itai??i??s safe to assume the City will pay a premium ai??i?? i.e., higher servicing charges on the operating budget ai??i?? because it will be pushing out so much speculative debt on top of all the other borrowing the City does in normal course.

Bottom line: if council wants to limit the Cityai??i??s exposure to costly debt charges, it may have to consider additional revenue tools to finance Smart Track.

All the while, more granular cost estimates on the Scarborough subway will come into sharper focus, and I fearlessly predict those numbers will go up every time de Baeremaeker and Scarboroughai??i??s newest grievance-monger, Jim Karygiannis, open their mouths.

In the past, council has tolerated project budget inflation due to mission creep or unexpected complexities, e.g., St Clair right-of-way, Queenai??i??s Quay, Union Station. But the foregoing mega-projects pale in comparison to the Scarborough subway, raising the spectre of mind-boggling budget overruns.

Consider the yelling about the Union Station revitalization, which has seen its cost jump by $80 million, to $795 million. But a 10% increase or overrun on the Scarborough subway budget, a figure that is significantly less than the contingency on the Queenai??i??s Quay revamp, could top $350 million or more, enough to pay for half the Queenai??i??s Quay East LRT. And that number may only be part of an equation that includes additional outlays for Smart Track due to higher borrowing costs, lower-than-expected federal transfers, etc.

Point is, the financial uncertainties associated with one will affect the viability of the other.

About a year or so from now, council will be asked to cast votes on reports that include numbers with dollar-signs, and theyai??i??ll likely be requested to make choices about how to mitigate those very large costs. Among those choices will be service scenarios generated by the cityai??i??s expert transit advisors that reveal the redundancy writ large on these two parallel sets of rapid transit schemes.

So ask yourself this question: if Tory and the rest of council have to choose between these two megaprojects in order to mitigate the cityai??i??s long-term financial risk, which one will they throw overboard?

From where I sit, it seems almost inevitable that weai??i??re barreling down the tracks towards a political either/or moment.


5 Responses to “And you think TransLink has problems………”
  1. Haveacow says:

    I love John Lornic and would have easily voted for him but, it is easy to see why John Tory beat him to the mayor’s chair. Smart Track and the GO RER are essentially the same thing! What is essentially happening is that a GO Commuter Rail Line will be double tracked and re-signaled so that every 10-15 minutes all day in both directions a large 12 car express surface subway train will run between Markham into Downtown Toronto through to somewhere in the west end still to be determined by GO. The city won’t have to pay for any or essentially very little of the Smart Track plan because the province is already doing it for them. That’s why the mayor’s Smart Track plan is so politically brilliant. He just re-announced something the province was going to do and put another name on it. By doing this all he did was push up an existing timetable which told the province that, we are OK with this and please get on with it! The provincial government has just responded by making announcement that John Tory knew was already coming. This article was obviously written before the announcement was made by the province/Metrolink/Go Transit.

    Phase 1 of Smart Track/ GO RER expansion plan starts next year, paid for entirely by the province. Phase 1 is the double tracking of the Stouffville (Lincolnville) GO Line from Scarborough Junction to Markham. Starting in 2016, 5 km out of 11 km portion of this line will be double tracked from Agincourt Station to south of Unionville Station. The remainder will be done in 2017 and 2018. Electrification starts around 2019 and will continue till 2023-25?. The best part of the plan is that the existing GO Commuter Rail Line doesn’t have top be shut down and can be kept running throughout the construction. To be fair, the western leg of the Smart Track plan will have to be looked at because it does make a big assumption about phase 2 of the Eglinton LRT from Weston to Pearson Airport. But even if only the portion from Markham to Union Station through to Bloor/Dundas West is built, it is still for the city of Toronto, a big win. The plan solves a huge expensive problem for Toronto and the TTC, it eliminates the need for the lion’s share of the downtown relief subway line. That saves $4-6 Billion for the city and the province pays for it and runs it through GO Transit. There are some connection issues between the existing GO Stations and existing TTC Stations on the route but, they can be dealt with easily and that’s where city money most likely will be involved.

  2. Justin Bernard says:

    John Lorinic isn’t a politician. He’s a well respected municipal affairs journalist here in Toronto. The point of John’s article and what many of us have been saying is the Bloor Danforth Extension and the Stouffville branch of Tory’s SmartTrack plan is in the same corridor and the city is on the hook for both at the moment.
    The city cannot afford two megaprojects that on paper, will serve the same area. It’s madness and one will be dropped. The question is, which one?
    Unfortunately, our council is full of egotistical idiots who’re more concerned about their career than making sound choices,
    We still don’t even know what technology Tory’s plan will utilize. His plan calls for additional stations on the GO lines, but will they be high floor or low floor? GO Transit platforms are basically concrete slabs in which passenger make two steps into the GO train.
    So yeah. It’s nice on paper that SmartTrack will use existing GO lines, but in reality, Tory shifted a chunk of the provincial budget onto us to pay for. How is that smart?
    Smart Track will NOT eliminate the need for a DRL. Toronto needs a new subway to parallel the Yonge Line. Smart Track isn’t going to reduce capacity on the Yonge Line.

  3. Haveacow says:

    They are not in the same corridor they are over a 2 km apart at the end of each line. Yes they are connected at Kennedy but hardly in the same corridor. Many transit systems have lines that parallel each other at far closer distances and for much greater line lengths. Different cities have different tolerances for parallel transit lines and their use. That particular right of way has the capacity to be the nexus for many lines not just one. For example, the parallel north-south TTC bus lines in Scarborough (Warden 68 and Birchmount 17) are too close together and one of the them would be axed if you use LA’s transit practices not the TTC’s.

    The RER GO line will save the Yonge line because it will take away the single biggest point source of passenger flow on the line. It will eliminate up to 80% of the transfer traffic from the Bloor Danforth Subway east and west. The direct link to eastern Scarborough will also finally also reduce transfer traffic on all east bound surface lines that lead to Scarborough, freeing up much capacity for the locals who really need it. When we modelled it back a few years ago we estimated that, with the right set up, move up to 300,000 people a day at full capacity. Remember GO is presently expanding all the platforms on the Stouffville Line to handle 12 car trains.

    Yes John Lornic was a want to be politician, who broke in at the same time John Tory did. He just never won anything. That’s not to say he is not a brilliant guy who has a keen insight into urban affairs and urban planning. I have known John for a long time he is a good person.

  4. Haveacow says:

    This is a link to the picture of the planned GO E/DMU (the diesel prime mover is removable and convertible to Electric propulsion) that will operate on the lines used for the GO RER/ Smart Track. They (Metrolink) are ready to order for the conversion to electric propulsion. It was made official last year at a Metrolink meeting. The only question is what electric locomotive GO will use as a stop gap measure as more of the new E/DMU’s come on line to replace the existing GO coaches as they retire.

  5. Justin Bernard says:


    I think you’re confusing John Lorinc with someone else. I asked John if he ever ran for office and he said no. He’s a journalist and no a politician.

    As for the Scarborough Subway, the TTC expanded the study area, most likely because they know SmartTrack will have an impact on ridership. They both serve same area. For me, it’s overkill to have to high capacity rapid transit lines within 2km of each other, but that is what happens when both projects are politically motivated.

    I’m confused by the claim GO RER will reduce traffic by up to 80%. GO transit fares are significantly higher than TTC fares. Even with 15 minute service on the Stouffville line, it’s not going to reduce traffic on the B-D line much. Doesn’t help the Stouffville line doesn’t connect with Scarborough Town Centre. Also nearly all E-W connections to Scarborough are North of Eglinton Ave. There is no way the Stouffville branch of the GO RER will reduce transfers at Bloor-Yonge station by 80%. Just no possible.

    Also, that Railway Gazette link you provided is for the redesigned GO cab car for the their current push-pull sets. The cab incorporates Crash Energy Management technology and crumple zones. It’s not for the future electric rolling stock. Metrolinx put out an RFI for EMUs, electric loco and bi-,mode locos recently.

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