And Over To You Mr. Cow – TransLink’s fiscal Realities
First posted by zweisystem on Wednesday, March 2, 2022
One of the RftV’s many friends, Haveacow is a Canadian transportation specialist. He uses the Avatar Haveacow because in the arcane world of Canadian and American public transportation, speaking the truth may find you out of a job.
An American transportation Engineer who has helped Zwei in the past, found this out when the long arms of SNC Lavalin and Bombardier caused him much worry due to a not to pleasant factoid about our locally venerated SkyTrain light-metro system.
TransLink is seldom honest with the public, but with the TransLink’s new CEO taking to the stump, drumming up support for new taxes for TransLink one can believe that TransLink is in dangerous economic peril.
This, of course , is not new and has been long predicted by experts outside the metro Vancouver/TransLink bubble.
Gerald fox had a terse comment about financial ills in his 2008 critique of the Evergreen Line and stated:
“But, eventually, Vancouver will need to adopt lower-cost LRT in its lesser corridors, or else limit the extent of its rail system. And that seems to make some TransLink people very nervous.“
TransLink is nervous and Mr. Cow gives detailed insight at TransLink’s financial ills in a comment in the previous post. Insight that the Hive or the mainstream media do not give, nor care to give.
A subsidy of $157.6 million in 1992, translates to $275 million in today’s money.
Over to you Mr. Cow!
When you have a regional transit agency like Translink it’s very difficult to not use taxation as a form of operating funding. When I refer to taxation, I mean taxes the transit agency itself can levy against taxpayers. I knew a long time ago that agencies that use this revenue or somewhat dubious private investment funds filled with taxpayer funding to fund not just operating budgets but a portion of future capital budgets as well, are headed for great troubles unless, they are very, very careful. North America is full of regional transit agencies that have done this since the 1960’s and been burned financially, some are still paying for it (SEPTA, MBTA, TriMet, MPAT and PATCO come to mind).
When I saw that a not to small amount of funding from Translink itself was required to fund Stage 1, 2 and 3 of their 10 year capital works funding plan (2018-2028), I started to worry for Translink. This is the current 10 year plan that has several high order projects like, the phase 1 of the Millennium Line extension to Arbutus, the original SNG LRT Line, which were all part of stage 2 of the plan. Projects like phase 2 of the Millennium Line extension to UBC and the LRT extension from Surrey to Langley (which was actually affordable), which were funded in stage 3 of the 10 year plan.
However the most important parts were the hundreds of smaller, state of good repair and operational improvements in all 3 stages of the plan. Many of those were highly dependant on Translink’s funding. Many of these desperately needed items can’t happen without the portion of funding from Translink’s coffers. As early as the implementation of stage 1 of the 10 year plan, Translink’s own financial documents questioned if the planned funding from Translink for stages 1-3 would be enough (about $725 million). These comments were usually in the “financial risk portions” of the documents, at the end of the financial documents. The parts after they would show how great their financing ability was and how “on track” they were going towards their financing goals. These comments are essentially, under the category of “look guys and gals we’re just covering our buts here”. The public and many politicians have been conditioned over the years to ignore these sections but they all said the same thing essentially, “we really need a lot more funding in the future than we currently have but we are ok for now. However, one catastrophe and everything changes, forever”. Without a lot of these little projects being completed many of the big ones become impossible.
The Catastrophe Begins
First, a fool (the current Mayor of Surrey), believed he could fund a 16km long Skytrain line with the same amount of funding for 11 km of surface LRT, a yard and its LRV’s. He didn’t understand that just the concete alone for a 16km long, above grade Skytrain line was going to cost almost as much as the entire LRT Line over the original 11 km distance in phase 1 of the LRT plan. The new Skytrain extension price didn’t include new trains where as the LRT price did. This cost was added into a Skytrain vehicle order which was now costing around $727 million. The final cost of that contract has gone up, believed to be now around $800 million simply due to the length of the contract being extended multiple times let alone inflationary costs and not immediately nailing the cost down at the time of it’s announcement. This is a common error made by agencies. Other cost increases have and will occur because Bombardier was bought out by Alstom
This mayor didn’t realize that, if this line became a Skytrain line a massive new operations and maintenance yard (OMC#5) would be needed, this alone will add $350 – $600 million in cost to the line, depending on the yard’s capacity and capabilities.
He also didn’t know that surface LRT along the highway median through certain portions of the Surrey to Langley LRT line (phase 2) was cheaper because an above grade Skytrain line running at the north side of the highway alignment would mean, building a concrete viaduct through 3 to 4 km’s of wet unstable soil as well as bog and swamp.
There’s a few more cost surprises coming and it all depends on the choices made by Translink in the extension’s final design. So 2 LRT lines costing a combined $3.4-$3.5 Billion covered by 2 different stages of the 10 year plan as well as everything 27 km’s of LRT operations would need is replaced with, 16 km of Skytrain, costing $3.95 Billion and rising, not including the trains or financial risk costs, with the final price rising because none of these costs have been finalised yet.
This forced the Province to take over the project because Translink could no longer afford its portion of the costs. The original LRT money now doesn’t even cover the 7 km long first stage, in the originally 2 stage funding plan. Then the plan became a single stage plan, all 16 km to be built at once, all having to be covered by the provincial government. This maneuver alone will raise the cost of the line not to mention, the extra time costs Translink is now forcing on the project to modify its entire 10 year funding plan. Remember Covid 19 hadn’t hit yet and a reworking of the 10 year funding plan was already needed by late 2019. This means costs for materials that were to be ordered, based in 2021-2023 costs now have to be all budgeted at costs based in 2024 and later, adding at the least, 2 years of increasing inflationary cost to this project, let alone any other inflationary costs. That’s why I know the line cost will continue to go up. The entire $3.95 Billion cost for the Surrey to Langley extension is based in ordering construction materials based on prices for 2021, 2022 and 2023 levels. The line’s new cost benefit analysis being done by the provincial government won’t be complete until late 2022 at the earliest. Then they have to finalize cost estimates. Which aren’t truly, actually known until the tendering process is complete.
Then Covid 19 hit!
Yes the Fed’s bailed out Translink on its operating funding from 2020 through part of 2022 but that doesn’t cover capital costs. Funding that was supposed to go into the existing 10 year plan from their own taxation was extremely degraded because of Covid 19 costing not only the total missing amount of funding for capital project costs versus pre Covid levels but the future potential interest, that holding some of that cash would have provided towards Translink’s portion for stage 3, 10 year plan funding. The federal government is spending $750 Million this year in operating funding relief (operating funding only) to bail out transit agencies but that’s for all Canada not just Vancouver. This continues to put a bigger and bigger hole in capital funding until Translink’s tax levies return to pre Covid levels, sometime between 2024-2028. This may never happen if electric vehicles take hold in a big way because they (Translink) rely on a lot of gas taxes for their funding. Hence the call for new funding sources from Translink’s CEO.
