Roads: Highway 407 East (Durham Region)

[junctionist]

If the province wants to build a highway, it's guaranteed it'll happen, even if it's a long extension through the middle of nowhere of a toll highway leased to a private firm. If a city wants transit, the most they'll get is some line stubs. Eventually, another mayor changes the expansion priorities transit doesn't really improve and the MTO says we need another highway.

 

[Haljackey]

If the province wants to build a highway, it's guaranteed it'll happen, even if it's a long extension through the middle of nowhere of a toll highway leased to a private firm. If a city wants transit, the most they'll get is some line stubs. Eventually, another mayor changes the expansion priorities transit doesn't really improve and the MTO says we need another highway.

The province sold the 407 for 1% of it's value to a private firm. (Yes, the highway actually is worth 100x more today than it was when the PCs sold it!) The new extension will be owned entirely by the province.

I just hope the tolls collected will be used to improve transportation infrastructure in the province (highways and transit) instead of wasting it on other things.

 

[Second_in_pie]

Well that took long enough! 3-4 years, seriously. let's get this thing built already

Could we please not?

 

[TOareaFan]

The province sold the 407 for 1% of it's value to a private firm. (Yes, the highway actually is worth 100x more today than it was when the PCs sold it!) The new extension will be owned entirely by the province.

Really, can you explain how it is that the highway was worth 100 times what the province sold it for? The highway was sold in a public fashion.....surely if one company was gonna get an asset like this for 1% of its worth/value...another company would have stepped up and, say, doubled the bid so that they would pay 2% of its value....yet that bid never materalized? How is that so?

 

[waterloowarrior]

Really, can you explain how it is that the highway was worth 100 times what the province sold it for? The highway was sold in a public fashion.....surely if one company was gonna get an asset like this for 1% of its worth/value...another company would have stepped up and, say, doubled the bid so that they would pay 2% of its value....yet that bid never materalized? How is that so?

Someone should tell Ferrovial... they are planning to sell a 10% share of the 407ETR for "only" 500 million euros ($626 million Canadian)....... putting the approximate value at $6.26 billion in 2010 dollars versus when it was leased for $3.1 billion in 1999 dollars (minus 11 years of the lease, plus hundreds of millions of capital spent improving the highway).... should have priced it at 31 billion lol

 

[DavidH]

The province has announced a Request for Qualifications leading to an RFP for this. The interesting point is that only the main line to Simcoe Street plus the west connector is going forward at this point.

 

[Haljackey]

Really, can you explain how it is that the highway was worth 100 times what the province sold it for? The highway was sold in a public fashion.....surely if one company was gonna get an asset like this for 1% of its worth/value...another company would have stepped up and, say, doubled the bid so that they would pay 2% of its value....yet that bid never materalized? How is that so?

Someone should tell Ferrovial... they are planning to sell a 10% share of the 407ETR for "only" 500 million euros ($626 million Canadian)....... putting the approximate value at $6.26 billion in 2010 dollars versus when it was leased for $3.1 billion in 1999 dollars (minus 11 years of the lease, plus hundreds of millions of capital spent improving the highway).... should have priced it at 31 billion lol

...Not to mention the land value of the 407 corridor. Between 1997 and 2010 the area's worth has grown exponentially.

The government simply sold to the highest bidder back then. We kinda got ripped off because the winning bid was quite low. Not sure why that was, but the government should have waited a bit for a more aggressive bid to take place. Thus the answer is once again political. They must of kept to their selling deadline instead of acting like a business and waited until the perfect moment / bid came to sell it.

Still, it's pretty crazy how quickly things can increase in price.

 

[DavidH]

The following article has the clearest summary I've seen on the revised 407 implementation plan:

http://www.thepeterboroughexaminer.com/ArticleDisplay.aspx?e=2620556

It seems the provincial and federal governments were a little ambitious when they announced in 2007 that they would extend Hwy. 407 east to Hwy. 35/115 by 2013.

Now the province aims to extend it to Simcoe St. in Oshawa -- not even halfway to the 115 -- by 2015. Stage 2 of the project, under a separate contract, would be the extension to Hwy. 35/115.

Earlier this week, Infrastructure Ontario started the pre-qualification process for potential bidders for the contract to build the road.
The government remains committed to extending Hwy. 407 to Hwy. 35/115 with the entire project expected to be complete in 2017, Peterborough MPP Jeff Leal said on Friday.

 

[nfitz]

"The provincial government would own and control the tolls on the new section of the highway. "

Hmm, interesting. I wonder who'd be running that ... Metrolinx? Hopefully the hardware works with what is currently being used on the rest of the 407; would be annoying to cart around 2 transponders!

I wonder if that first phase included the westerly 401 to 407 connector.

 

[DavidH]

"The provincial government would own and control the tolls on the new section of the highway. "

Hmm, interesting. I wonder who'd be running that ... Metrolinx? Hopefully the hardware works with what is currently being used on the rest of the 407; would be annoying to cart around 2 transponders!

I wonder if that first phase included the westerly 401 to 407 connector.

Yes, the first phase will include the west connector in Whitby. I wonder if that would be tolled, though - it seems that if they toll it, a lot of traffic will just get diverted to Lake Ridge, which is an 80 km/h road with no slowdowns except at traffic lights at major intersections, and only a kilometre or so west of where the connector will be. Granted its only a two lane road, but still...

I don't think having two transponders would be a risk; the problem would be getting two bills each month should you cross the boundary.

As for "who will be running that", I guess it depends on whether the Metrolinx investment strategy moves to wider tolling. If we are going to have tolls on other highways, it makes sense for Metrolinx to handle it. Even the existing 407 tolling could be moved to a Metrolinx-controlled entity in order to ensure a single point of contract for drivers, although of course the Consortium would still set the toll rates.

 

[nfitz]

Yes, the first phase will include the west connector in Whitby. I wonder if that would be tolled, though - it seems that if they toll it, a lot of traffic will just get diverted to Lake Ridge, which is an 80 km/h road with no slowdowns except at traffic lights at major intersections, and only a kilometre or so west of where the connector will be. Granted its only a two lane road, but still...

Interesting question. Lake Ridge doesn't however have an interchange with the 401, so unless they are dumb enough to add one, it would only divert local traffic. Also, it's on the west-side of the area where Whitby can be expanded, so over time I'd expect the speed limit to drop to 60, and to have more traffic lights.

I don't think having two transponders would be a risk; the problem would be getting two bills each month should you cross the boundary.

I guess it depends on whether the Metrolinx investment strategy moves to wider tolling. If we are going to have tolls on other highways, it makes sense for Metrolinx to handle it.

That's what I'm wondering. It only seems logical to have Metrolinx handling it ... and once they do, it makes it a lot easier for them to start expanding tolls to other roads, as they'll have all the technical and operational stuff dealt with, and it simply (simply! ha!) becomes a policy decision from the Ontario government.

 

[waterloowarrior]

There actually now is a plan for a Lake Ridge interchange (from what I've read, originally they thought it would be too close like you mentioned)... the whole 401/407/Lake Ridge interchange will be relatively elaborate, the 401 will be shifted to the north and there will be all sort of different ramps.
http://www.407eastea.com/downloads/2009/Aug/chapt/Chapter 8.pdf (slide 8)... warning 85 mb pdf

I agree though that future development will make this route less attractive.

 

[TOareaFan]

...Not to mention the land value of the 407 corridor. Between 1997 and 2010 the area's worth has grown exponentially.

The value of the land that the actual road sits on, though, is simply a present value discounting of the income the road can produce. The existance of the road may have caused the surrounding lands to increase in value (although cerntainly not by the factor of 100 that you previously mentioned) but that is because the road is there...that same effect does not apply to the road itself because that land was/is/always will be single use land - a road corridor.

The government simply sold to the highest bidder back then. We kinda got ripped off because the winning bid was quite low. Not sure why that was, but the government should have waited a bit for a more aggressive bid to take place. Thus the answer is once again political. They must of kept to their selling deadline instead of acting like a business and waited until the perfect moment / bid came to sell it.

I think I get what you are saying but don't agree. We (the taxpayer) did not get ripped off by accepting the highest bid in the market place at the time. We got fair market value. My house has doubled in "value" since I bought it 8 years ago.....did I rip the builder off? I don't think so. Your "calculation" also does not factor in the cost of capital (ie. the province was in debt, needed to repay some debt and repaying debt imrpoved the province's credit rating and lowered their cost of debt on all of their outstanding debt) nor the cost of maitenance and upgrades to the base road they sold.

Based on the fact that the market appears to valuing the much larger (than it was) 407 at around $6billion...it would appear the taxpayer was treated quite fairly by the market place at the time.

Still, it's pretty crazy how quickly things can increase in price.

I agree with that statement (although I don't think it applies to the 407).

 

[nfitz]

There actually now is a plan for a Lake Ridge interchange ...

Oh boy ... that would probably lead to cheating ...

... though what they could do is scan everyone coming off the 401, whether they go on Lake Ridge or the 407-connector. And if they get on the 407 again further north, just charge them anywayl or make the 401 Lake Ridge ramp tolled to begin with.

 

[Dan416]

Oh boy ... that would probably lead to cheating ...

... though what they could do is scan everyone coming off the 401, whether they go on Lake Ridge or the 407-connector. And if they get on the 407 again further north, just charge them anywayl or make the 401 Lake Ridge ramp tolled to begin with.

Or we could start charging nominal rates on all 400-series highway. Nothing as high as the 407, but something. Less than half what 407 ETR charges. Maybe 1/3-1/4.