GTHA Transit: An Adult Conversation on Transit Funding

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Last week Metrolinx the over arching transit organizer of Ontario came out with their list of potential “revenue tools” to fund the much needed transit expansion within the Greater Toronto and Hamilton Area (I remember when it was not too long ago that it was considered the Greater Toronto Area and Hamilton would have hated being lumped in with anything to do with Toronto, but I digress)

and by now we have all seen Mayor Ford’s response:

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And this is going to surprise most…

I disagree with him!!!

sorta

As John Tory has stated many times on his show (likely to the chagrin of many conservatives) transit expansion that doesn’t throw us into further debt as a province will likely never see the light of day if we don’t somehow increase the revenue that we bring in per year. The current estimates are that we will likely need $2 Billion dollars a year over 20-25 years to adequately fund the transit that we need in this region and to somehow propose that we will get that without paying more is bordering on the side of crazy.

But does that mean that we have to start with taxing or “sucking” more money out of the taxpayers’ pockets…

In the words of my man Ed Reed “HELL NAW”

Transit Funding needs to be like much like a proper diet, balanced with an all of the major groups working together on a common approach. Like a balanced diet we will need more of some things and cutting back on others, combine that with some common sense forward thinking and proper planning and we might be able to get the job done.

Now I don’t fancy myself expert in Transit, I leave those qualifications to my father, a highly respected transportation engineer from whom I’ve learned a great deal about transit, but I do know a bit about Economics, Government, Politics and most importantly People; so here are my basic common sense things that I think need to be done to get this Transit funding issue to the next stage which is: ACTUALLY BUILDING TRANSIT!!!

1. Eliminate all local transit companies and amalgamate (dirty word) them under Metrolinx (Brampton Transit, Burlington Transit, Durham Region Transit, GO Transit, Milton Transit, MiWay (serving Mississauga), Oakville Transit, Toronto Transit Commission (TTC), and York Region Transit).

First off, I’m sick and tired of these disjointed systems, each of them with their own plans that are rarely coordinated & are never on budget (I’m looking at you TTC).

All of them with their own politician or heaven forbid, commission looking at new ways of wasting taxpayer money. Now putting it into the hands of the province will not eliminate all the bureaucrats and it doesn’t eliminate the likelihood of some contractor lining his or her pockets with public money (that’s point #3) but there should be some good in doing this.

a)     The first benefit would be the ability to create a cohesive plan that could be budgeted for years to come and less subjected ass-backwards city developers who have their heads in the sand about their connection to the rest of the region. Right now Metrolinx has a plan to expand the Transit system of the GTHA (The Big Move) that is attempting to guide the future of the region. While this plan may not be perfect it is at least a regional plan, something severely lacking in most of the infrastructure plans in each of these cities. But currently Metrolinx does not control a majority of what each of these transit systems will do because they are not the managers of it. Each of these transit systems are subject to reckless infighting of a city or regional councillors bent on changing their mind every other month because they figure it’s an avenue to higher office (*cough* Karen Stintz *cough*). Metrolinx controls the Go Transit system but how much more effective could it be if this suburban transit system was considered as a part of the overall strategy of one regional transit instead of TTC worry about TTC or Brampton transit worrying about Brampton transit. Combining all the systems into one regional system would allow for better integration of service standards (Presto), planning (Big Move) and remove a level of government bureaucrats often unable to master the extent of regional issues.

b)     Secondly it would eliminate the necessity for as many people working the same exact job just in a different region and thus overall reducing the amount of money spent on staff, money that could actually be put back into building transit. Currently there is The Metrolinx board and their employees that run the Go System. Then there is the TTC and its board and employees which run that system. Then there is the YRT, MiWay, Brampton Transit & DRT boards and all their appointed councillors and employees. The common thread here is that all of these different systems have employees doing the exact same task as the other just in a different transit board or system. How much more cost effective could it be if we had the amalgamated department under Metrolinx able to service the entire region with a common thread of specialized service and knowledge of the entire region.

c)      Lastly the reason you give it to the province is because it is a provincial issue, not a Toronto issue, not a GTHA issue it is a Province of Ontario issue. A common question during this process from many that don’t live in Toronto is: “why should I be paying for this transit when I don’t live in Toronto”. To which I ask some simple questions:

Do you work? Do you have a pension? Do you enjoy your healthcare?

Because I’m pretty sure that if you own a business or even if you work somewhere within the province, your organization or company or even your farm does business with someone in the city of Toronto or Hamilton or Mississauga or Markham. It is a known fact that gridlock with in the GTHA is sapping money from companies and their employees that are in the region. Without all of Ontario on board to make this transit system better, we all lose out on the opportunity to make those businesses be more efficient and cost effective and limits the ability for your company or business or farm to grow.

So maybe not employed by a business, maybe you are a retired teacher having worked for the union all your life and have retired to Bobcaygeon and feel as though you have no dealings in making the GTHA more efficient; That’s great I’m happy for you and hope you enjoy a long retirement. But assuming that you collect a pension and would want it to service you better and provide you with a better return. If this is case, I ask “where is OTPP located?” OH Right… it’s in Toronto. So once again there is an inherent benefit to the success of your assets by investing in the region.

Ok! so let’s then assume that you are in the upper reaches of this province, in a place like Thunder Bay or Temagami, living off the land and generally cut off from the outside world. It is safe to assume that even those people will still require the use of the healthcare system we all enjoy. While the healthcare system is not a picture of perfection it also works and it isn’t funded based on the tax dollars that the individual put in themselves. Imagine what our public healthcare system would be like if we all take that narrow-minded view point that comes out when it comes to transit.

So to those folks who don’t think GTHA transit matters to them because they don’t live there or don’t use transit, you inherently do need it to be successful and we all need to share in making it better so that we all can benefit whether that benefit is direct or not.

Just think… New York State got this right back in 1965 combining the 3 independent transit systems of New York City (August Belmont’s Interborough Rapid Transit Company (IRT), Brooklyn-Manhattan Transit Corporation (BMT) & the Independent Subway System (IND)) under the state managed Metropolitan Transportation Authority (MTA). While this system not perfect (most train stations still are not wheelchair accessible), it is far reaching (going as far as coastal Connecticut) and brings together a diverse city and the economic and social benefit has been felt all across America.

2. Allot a percentage of the cost of the transit development to be produced from finding inefficiencies and savings in Government (city and provincial)

“A Penny saved is a Penny earned”

Benjamin Franklin

In government, these words are usually ignored, but more recently the populist sentiment has taken hold all over North America. So much so that even NDP provincial leader Andrea Horwath has brought up the topic of “respect for taxpayers”. Now while this populist angle is nothing new it has special meaning in today’s world, with economic downturn and people attempting to do more with less, financial stewardship is like Gold.  After almost a decade of financial scandals and mismanagement both at the city level and provincial level, people want to know that politicians can actually save some money instead of just spending it.

This is largely why Rob Ford got elected and why he still receives strong support despite the circus that surrounds him. Torontonians that still support him believe that he has brought in an era of financial stewardship that haven’t seen since the days before amalgamation, they trust that he is earnest with the tax dollars and his of “respect the taxpayers”.

Now I believe that Mayor Ford is partially wrong in his belief that we don’t need to in some way pay a bit more to get the adequate transit solutions that the GTHA needs (Point #5), mainly because the region is so far behind. But the problem with the discussion so far has been whether or not we are going to pay more, but that issue is just about certain. The real topic from the start should have been;

What can governments do with the money they already have coming in?

The notion of inefficiency in government is one thing Rob Ford has always got right from day one when he was just a candidate for Mayor.

Government wastes too much money on running government

We’ve all heard the reports in recent years of government agencies just spending money every year on things they don’t really need to ensure their funding doesn’t get clawed back (buying new office furniture or computers that were just updated). We’ve also seen the sheer obscene rates of the simplest items costing hundreds of dollars when done for the government (Pencil Sharpener, need I say more). And these are just the smaller things, mention things like E-Health, or Power plants or Labour contracts, and you might have many residents ready to verbally dress you down.

All levels government know that there is money available in their current revenue streams to be able to dedicate to transit improvement.

But why do they never start the conversation there?

Quite simply it requires political will to search out the waste and the backbone to stand up to the special interest that makes a living off this waste & God knows that there have been very few politicians who have shown this type of fortitude over the last decade.

But…

Maybe now with so much of the focus on transit improvement and politicians running scared from taxing their constituents more, we might find a few politicians, who can step up, and be leaders and start the trend. Maybe we the taxpayers of Toronto and Ontario can have someone that we believe can be trusted with any new revenue we decide to pay. Someone who we believe might actually build the transit we need.

3. Set the guidelines so that Contractors can’t rip off the system

Something is very wrong in this North America, somehow the term “government contract” means bleed them dry. It doesn’t matter if it is in Toronto, Calgary, Los Angeles, Houston or anywhere in North America, if there is a government contract to be filled especially regarding transit, there is a contractor looking at how feed at the government trough.

Now I shouldn’t completely throw contractors under the bus, they are often good business people looking to make a profit and as a firm believer in the free-market system I understand that they would. Often it’s bad planning and/or inept bureaucrats that cause cost overruns on these types of projects and the contractors are legitimately required to go in over budget, but lets not think for a second that they don’t welcome it to line their pockets on someone else’s dime.

But no matter if it’s the contractor having 4 guys standing around drinking coffee while they look at one guy working or some soft city councillor begging for another environmental assessment when there is already 6 completed, cost overruns tend to plague any transit project in recent memory. THIS NEEDS TO BE FIXED… PERIOD… END OF STORY.

 And Little Jimmy asks: “But how do you do that sir??”

The Answer: Private business

No I’m not saying like Kevin O’Leary that private business should run the entire operations. It’s a little more simplistic than that. What Metrolinx as project management should do is write up contracts, review processes and ultimately manage this like any private business would. Not very often does a project in the private sector run into cost overruns that stretch into the Millions; but why is that?

The private sector starts off by having project managers that make sure that every dollar spent is as properly assessed as possible. In conversation with my father he indicated that the biggest reason that cost overruns occur in government contracts is because there is no one minding the store. Too often there is no one looking after the expenses and making sure that they are keeping the project as close to estimate with many government managers/employees indifferent to where money is going. You just don’t find this in kind of incompetence in private sector projects, project managers tend to be more cost aware because they know if costs balloon, quite simply they get fired.

Secondly private businesses negotiate contracts with an understanding that a certain amount of cost overruns will be accounted for by them but beyond that the contracted party becomes liable for the overages. This puts an onus on the contractors to mind their cost associated with the project. When have we not seen a bunch of construction guys sipping Tim Horton’s huddled around one guy working especially in some of the construction work being done around the region. Now this is not to say that all contractors create a high level of waste but we need to develop a strategy that minimizes all levels of waste once we decide on building.

The final way to attempt to reduce these cost overruns is to live by the old rule:

“Measure once cut twice, Measure twice cut once”

Construction delays are killers of any government projects, and these delays are often attributed to planners readjusting the original plans. Sometimes they are for valid reasons (i.e. what works in a drawing doesn’t bare the same in application or just isn’t logistically possible) and sometimes it’s because they just plain didn’t know what they were doing (ex. St. Clair streetcar fiasco anyone). But there are the two main dreaded killers of any construction dream:

1) Public consultations; where every Tom, Dick and Harry often only thinking of themselves, come out and voice their opinion even though half of them don’t know what is going on. And the truth of the matter is; nothing will cause a right minded politician to change their mind quicker than the locals coming out with their pitch forks looking for blood;

2) The EA… The ENVIRONMENTAL ASSESSMENT; Environmental assessments are well intended means as to make sure of the overall environmental impact of a particular project, to ensure that the overall ecosystem will not be harmed by the project. This includes effects on water, air, natural habitats and the like, which most would say is necessary because nobody wants oil and dirt in their water. But lately EA’s have become a method of political operatives in an attempt to derail a project they couldn’t stop through normal methods. They know too well that the assessment will find no fault with the project (usually because one was completed in the beginning of the project) but their hope is that it will delay the work that needs to be done and more importantly waste the limited resources that the government has thus making the process much less likely to be completed or on budget.

Now the fixes to these issues are not easy but there needs to be a solid plan on how to minimize these cost overruns and delays. Maybe they’ll need to ensure that when they begin these plans they are out front with what is being proposed, using the latest in graphic design technology to allow the planners to minimize the gaffes that occur in drawing process. Drawing from private enterprise we will source out the best architects’ to create the best plans. Then gov’t could hire outside agencies whose task it will be to objectively set accurate budgets and follow up on them knowing that along the way they understand that their performance is expected to be at the level of any work they do in the private sector with the same consequences. Once the graphic plans are made we create an initial EA looking at maximum impacts on a worst case scenario based on those plans and offer them up for public consultation but advise that the consultation is based on the EA not the general plan because there is an agreement on the work needing to be done. From this consultation we can reassess the areas that were of concern and make a final presentation of the work that will be done and for the purposes of transparency we will release the EA and the contracts that were created for the contractors on a going forward basis to ensure that those contractors are made public and the public can hold them and the government accountable.

While most of this is not ground breaking, these efforts must be a priority to gaining overall public trust for this expansion and that is what is needed at this time because we the people just don’t believe what most of gov’t is selling and it is part of this political divide on a subject we all agree on.

4. Attract Private Sector Funding

Air Rights – Property Development – Public Private Partnerships – Municipal Bonds – Lotteries and Casino’s

If we are going to look at what revenue tools are available in terms of taking money from taxpayers, there should be an equal public effort to obtain as much private sector and investment dollars as possible. The likelihood that we can achieve what we need without taxpayer resources once again is very low, but there is no denying that many of those people are feeling the squeeze and we need to maintain a focus of using their dollars as a last resort.

As noted above there are several options in which we get investments in our infrastructure from the private sector, and right now while the world is looking for a safe haven for investing, most economist will tell you that the GTHA is prime for investors

Toronto and the rest of the GTHA need to recognize this and Metrolinx should strive to capitalize on this interest in the region, by using the tools listed above. So let’s examine some of these tools and why they will interest investors:

Air Rights & Property Development and Sales:

 Nothing attracts more business than proximity to transit, whether its retail or real estate transit proximity can boost your cash flow exponentially. With the size of region and the amount of transit that is likely to be built and renovated businesses, developers and general investors will find that these new stations and transit ways will be prime real estate to establish their operations. Whether it be locating their operations in the heart of Toronto like Coca-Cola or Corus Entertainment or reaching the new areas like Honda in Markham, the GTHA has seen several operations take hold here. Spurring these investments to continue will be the task of not only the cities and the province but as well it will require bold and forth right options provided by the transit innovations that Metrolinx develops. With that thought in mind, Metrolinx if they become the managers of all entire system should explore selling the air rights on several existing stations (such as a redeveloped Warden Station in Scarborough) or selling portions of properties (such as portions of parking lots at several Go Stations) to developers so that they can monetize these huge swaths of land. These options are investments that developers would be more than willing to put capital towards. Capital that could in turn invested in the infrastructure so desperately needed.

Private Public Partnerships (P3‘s):

Private-Public Partnerships have been a tool that has recently has been used as an approach to building public infrastructure, an approach that is being used all over the world to create great public spaces.

P3’s are already been used in transit expansion within the region, as the YRT formed a P3 to begin work on the Viva route that is currently in operation and is expanding to create necessary right of way routes for the buses (which may eventually become LRT’s). In Los Angeles, METRO has also used P3’s to help modernize their stations and help create energy efficient facilities and all of this work is being done in a climate of financial uncertainty and tight budgets. But examples of the success of P3’s are not limited to North America, several cities such as Maharashtra, India and Saint Petersburg, Russia have used several public private partnerships to lead their respective regions to the highest levels within their burgeoning economies.

While P3’s are not the complete answer to what ails GTHA transit funding, it can definitely be a tool to get the private sector involved in evolving the GTHA, one of Canada’s gem’s into a world renowned metropolis on par with the Tokyo’s, London’s and New York’s of the world.

Municipal Bonds:

Municipal infrastructure bonds are an easy revenue stream as a means of funding transit, as they offer up a certain amount of money to the government that can specifically go to funding a portion of the project. These bonds depending on the cycle of issuance can be consistent revenue for an organization such as Metrolinx, during a lengthy project and are helpful in filling budget shortfalls. NAVCanada and Hydro One Inc. are regularly issuing traditional bonds that are usually snapped up by pension funds looking for a decent return (around 5%-6%), with low risk which is often provided by municipal bonds. Inherently there is a cost associated in issuing bonds as they are expected to mature and be paid back to the investing party but the hope of this instrument is that the upfront money provided and long maturity period will provide ample opportunity for the issuer to acquire the funds to pay off the debt.

In all these tools, the private sector invests in the public realm with the expectation of a return on their investment, and if government is to leverage an increase taxes and tolls as method of expanding transit, then the province needs leverage the business interest in the GTHA. The private sector will want access to a population that is expected to reach over 8.6 million by 2031 and the gov’t should open the investment avenues as wide as possible for the mutual benefit of all.

5. Find the appropriate Public revenue tools

 Ok they’ve twisted our arms long enough…

Let me say something most right leaning politicians won’t say…

We are going to need to pay something extra to get the transit we need…

God it hurts to say that, but I have to say it because several generations of politicians and the public dragged their feet about building an adequate transit and highway infrastructure for the future. Imagine where we could go and the possibilities if we had a multi lined system that reached as far as Square One in the west, McMaster in the south, Pearson, Vaughan & Markham in the North, and now be under expansion to the east end to places like Frenchman’s Bay and Ajax Downs in the east.

But that isn’t the case and we now need to make the sacrifices so that our children are not dealing with our stupidity and spending more money trying to rectify our wasted time and money.

Looking at the Metrolinx proposals here are the ones that I would think would make the most sense and provide the best financing while still minimizing the financial burden on the people:

Parking Levies:

This really is low hanging fruit, as this is the least intrusive tax that they have suggested, since it only applies to the people that choose to park their cars at pay lots within the region. Now they are also suggesting that they may begin to charge for parking at Go Terminals which will be fine for many riders as the alternative in many cases will be more expensive. Metrolinx currently estimates that a region wide $1 per day per space parking levy has the potential to generate $1.4 billion dollars annually, and this is likely not including spots that’s that they currently charge for. And even though I would like to see any new taxes added clawed back at the end of this project period, this fee could be continued as it will monetize the many parking spaces that exist in the region and will also allow for this to be a maintenance fund for the new infrastructure that will be built.

Transit Fare Increases:

When the list came out TTC chair Karen Stintz stated that to her a transit fare increase dedicated to transit infrastructure was quote “the least amenable to her”, mainly because she won’t be able to use the increases later to cover her budget. Seriously, she boldly stated that increasing fares shouldn’t be on the table across the board because she can’t stomach not getting increases in fares for her regular budget. Well I won’t belabour the point of her “talent” as a leader but unfortunately for her a fare increase is one of the best options in maximizing the funds that can come in. Of the options that are out there, there is no more appropriate revenue tool than fare increases, its transit riders pitching for transit expansion. Now how you accomplish fare increases is entirely different thing. With a Metrolinx takeover and a complete distribution and use of the Presto fare system there maybe options in regards to zoning of fares similar to that of the London Transport system, which has similarity to the way that we currently make payments for Go Transit.

Ultimately whatever way that Metrolinx would implement this increase it would need to be as across the board as possible and then any necessary inflationary increases that Ms. Stintz was concerned about should be covered by the increased ridership that would be experienced due to the improvements that are being made. Estimates from Metrolinx indicate they anticipated a revenue increase of $50 million based on a $0.15 cent increase across the board, but this is not including any sort of adjustments based on the amalgamated transit region.

Sales Taxes:

This is the most dangerous tax to add because its effect is universal, touching all those who are in the region; poor or rich, drive a car or take transit and its dangerous because politicians even when this initiative would be over and done would be so addicted to the extra cash flow they will not be able to remove it from the budget.

But it also is worth $1.4 million at 1% and for a project requiring roughly 2 billion annually this is likely going to be a necessary evil in accomplishing what this region so sorely needs. This kind of tax for infrastructure is not uncommon as Los Angeles has recently approved a regional sales tax that is projected to raise $2.5 billion which was voted in by the citizens.

When all is said and done this type of issue is not going to be settled in a balanced manner if we the taxpayers of Ontario, don’t voice our concerns and make clear to politicians what we want. Make clear that before we are willing to accept paying more, we need more from them, more accountability; more transparency; and more of the truth.

The time for games is over and we need to get this done now, RIGHT NOW!!!

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Posted on April 15, 2013, in Politics and tagged , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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