P3 Subways - How to do it?

[kpad]

All right, I bought uTOpia tonight, and I'm feeling rather bouyant after reading a few chapters. It certainly gets the good ol' imagination running (even if most of its ideas are patently ridiculous).

I'm sick of our pathetic little transit map, especially after having the metro maps for Madrid and other similar-sized cities rubbing in my face over at SSC.

So, here's my proposal: We have a relatively enlightened provincial government, and a left-leaning transit-friendly municipal government. With the current budget and debt situations provincially and municipally, no one can front the capital necessary for subways. So, why not have these enlightened governments negotiate a contract for P3 construction and operation of subways? Get SNC-Lavalin and someone else to get a consortium together (the "Consortium").

Here's how it would work.

Scope of Agreement:
The Consortium would be granted a contract to operate Toronto's entire subway network. It would assume operational control of existing lines for a yearly lease payment (indexed to the CPI and to profit from the lines). It would be required to build a subway network over the next 15 years that would include the completion of the Sheppard line to SCC, the replacement of the SRT, the Eglington line with a spur to the airport, and the DRL (along the western alignment proposed by the Weston Group, with an eastern leg to be negotiated). Ten years into the agreement, the parties would have to start planning for the next building cycle (which would assess growth and need at that time). The Consortium, in turn, would be granted a 99-year lease to operate the existing and new lines. Profit levels would be capped, and lease payments could be indexed to revenues (perhaps in the order of 5 percent).

Fares:
With the 407 controversy in mind, the fare structure would be written into the contract and would be ironclad. However, the Consortium would be guaranteed a minimum level of income from the lines, backed by the provincial government. Appeal of the fare formula, as written into the contract, would be to a special arbitrator, who would consider: (a) the Consortium's need to make a profit; and (b) the accessibility of the system. Fare zones would be implemented. Fares would rise, in a manner to more closely reflect European rates.

The provincial government could support the development and affordability of the system by certain key actions, including:
- paying for all necessary EAs, and cutting all the red tape that can safely be cut;
- waiving capital and other taxes for the Consortium (thereby reducing the need for higher fares due to profit caps; think of it as an indirect fare subsidy); and
- provide rider subsidies by waiving taxes on transit fares and by even providing 'rider incentive programs' which gives tax credits for transit pass purchases.

The province and the city could also pay the Consortium for "upgrades" to the network - ie, the Consortium would be under contract to deliver certain quality subway stations (think Sheppard line), but the province and the city could pay for art installations and for other upgrades. If the Consortium makes a certain level of profit, they could be required to funnel a portion back into the system through upgrades.

Okay, so the above model is not perfect. But, I want input. I'm seriously thinking of drafting a proposal of an innovative approach to finding the necessary capital to get the shovel in the ground, not just on another spur, but all over the city. The private sector is the only way, I think, given the current financial situation. So, why not? Cap profits; build an ironclad contract; and get them digging.

Thoughts? (PS I'm an articling student. The contract would be a nightmare to draft, and it would take a long time. But, "just get it done" should be the motto of this project.)

 

[spmarshall]

Re: Enlighten me: Cons of P3 Subways?

The private sector is the only way, I think, given the current financial situation.

I don't think this is true. There's bond issues, a tool that we should look at, as well as that governments are just afraid to spend money, but it isn't a terrible financial situation that makes P3 the only way. A bond issue would raise money quickly, with payments over time, much like a P3, but unlike a public-pirate partnership, there's no profit motive raising the cost (as has been seen elsewhere), apart from the profit that contractors make in more typical tendering processes.

 

[cdl42]

Re: Enlighten me: Cons of P3 Subways?

I seriously love how people keep saying that we need to build a DLR in Toronto.

 

[kpad]

Re: Enlighten me: Cons of P3 Subways?

When I say, "given the current financial situation", I mean the political climate surrounding Ontario's debt and deficit. The government just can't afford to go on a building spree. Anything that drives up the province's debt is a political killer.

But, ignore that issue. Assume it's given. What I'm trying to get at with my post is this: What is the ideal P3 model for Toronto's subways?

Once that model is devised, you can then compare it to the public model, and pick. The problem is that the P3 discussion is never based on this sort of ideal model, it remains a scare-crow man (set up to be defeated).

I want to see real alternatives. I want shovels in the ground. Enough negativism and lingering.

 

[afransen TO]

Re: Enlighten me: Cons of P3 Subways?

I'm fine with private construction. I don't think there are any significant benefits to be gained by having it financed or operated by the private sector (short of union busting, which probably wouldn't happen anyway), with many potential pratfalls.

Governments simply have a much better borrowing capacity than the private sector. The money market wouldn't bat an eye at a government borrowing $5 billion for transit infrastructure. But if it was a private consortium?

 

[unimaginative2]

Re: Enlighten me: Cons of P3 Subways?

The construction process of many TTC projects takes incredibly long. My friend worked on one of the streetcar track replacement crews, and had some horror stories to tell about productivity. During that SRT report, they talked about modifying the line to accept longer Vancouver-style cars. They suggested that it would take a year during which the line would need to be completely shut down, simply to reduce the tightness of the turn in that tunnel and modify Kennedy.

 

[wyliepoon]

Re: Enlighten me: Cons of P3 Subways?

Bringing in a P3 to develop Toronto's subway network is a nice way to provide Toronto with a much-expanded subway network with world-class transportation trains, technology and service (with potential bidders like SNC-Lavalin, Bombardier, Siemens, Serco and of course... MTR). I admit I know next to nothing in this area, besides reading up on a few articles on Canada's only current P3 rapid transit project... Vancouver's Canada Line. However I think I'll raise some questions...

- Will P3 consortiums be interested in running the existing network and building extensions at the same time? I don't know how much profit our subway can potentially make. The fact that the subway is showing its age, and some stations appear to be falling apart doesn't help in making the network attractive to potential bidders.

- Will the fare system of the subway be integrated with that of TTC surface transit? If not, that would mean a lot of changes- no more free transfers between buses and subway, stations with bus platforms would have to be reconfigured to fit the new fare control system, and hopefully there will be some smart fare card system that will be used for both systems.

- What will happen once the 99 years are over? This is perhaps the biggest problems with P3s- the transfer of infrastructure back to the public sector. We're probably hoping that municipal finances would be in better shape one century later, but anything can happen. Will the city be in the condition after 99 years to handle the existing network plus all the extensions?

Some suggestions to the P3 plan above...

- Scrap the part about making the consortium build projects planned by the TTC. Some private companies involved in P3 subway projects (MTR, for example) have their own planners, who are probably better than the conservative planners over at TTC. The bidding consortiums would each be required to submit their designs of the expanded system.

- Add station development rights into the package to be handed to the consortium. The consortium, as part of the contract with the city, will buy development rights over subway stations. This will not only sweeten the deal by letting the consortium make more money with property development, but will also help with the city's intensification process.

 

[officedweller]

Re: Enlighten me: Cons of P3 Subways?

I'm not sure if a private consortium would want to take on a system that requires upgrades on day 1 - i.e. signalling, etc.. I suspect the TTC would have to complete its program before handing over the entire system. I doubt that there's a new line that could be operated as a P3 in TO - except maybe a Weston ROW subway to downtown. Extensions to existing lines (whether Sheppard, SRT replacement or York extension) would not be be able to be operated separately. The Shepard Line could probably be handed over, but since it doesn't run into the downtown, there would be a weak financial case for a private entity to want to take it over.

WRT fare integration, using the Canada Line as an example, Translink retains some power regarding the operation of the line - i.e setting and collecting fares, changes to feeder bus routes and bus frequency - but because of that, Translink assumes some risk for meeting ridership figures.

The Final Report on the Canada Line procurement is now available:

Bulletin:
www.ravprapidtransit.com/...ews112.pdf

Full Report:
www.ravprapidtransit.com/...ews113.pdf

The text of the 35 year concession agreement with InTransitBC (SNC-Lavalin et al) is here (edited for confidentiality) - scroll to the bottom of the page:

www.ravprapidtransit.com/...sp?ID=4#38

 

[EnviroTO]

Re: Enlighten me: Cons of P3 Subways?

P3 means private company makes profit off taxpayers and means nothing more than that. P3 doesn't mean cheap, doesn't mean efficient, etc... it means private company trying to make money. I don't think many people in London would be raving about the benefits of P3. What the TTC needs is a good manager, financial tools to raise money, and for politicians to step aside so they can focus on priorities based on need and cost recovery. P3 doesn't mean anything more than a private company makes a profit from money that could have been otherwise been directed at public improvements. We need TTC managers and politicians with brains and spines and need financial tools to be given to the TTC, not SNC Lavalin trying to make a quick buck. Unlike T3 or the GTAA the ability to recover costs from fares and fees is basically impossible so the only place that money will come from is from higher fares and larger budgets alotments from city council.

 

[Antiloop33rpm]

Re: Enlighten me: Cons of P3 Subways?

I wont say that P3's cannot work but for the most part they seem to be little more than a formula for public money heading to private pockets. I have yet to see any strong proof that P3 arrangements result in increased efficiency and better management of projects. Does this mean the idea should be ruled out? No. But P3's are not an instant solution to getting transit built in Toronto.

As some other forum members have mentioned before, what is really needed for public transit in Toronto is to move past simply looking at streetcars and subways as the only solution to transit problems. They have their place, and in cases like extending the University line to York and beyond and replacing the SRT, subways make sense. But what about an S-Bahn type system? What about overhauling GO, buying up track and building dedicated lines and creating better rail infrastructure that can support "both" local and express, inner and inter city services? What about integrating transit systems better so that it is easier to travel across city and municipal borders?

In other words, what about ideas that actually make sense, both in terms of moving people around the city, and financially. What about vision?

If someone were to actually propose ideas and solutions that didnt just accomodate 416, 905, young, old, poor, or some other demographic or political segment, then maybe there would actually be widespread public support for these projects and the desire of the masses to see more transit expansion would give it the push that is needed. Why can't people in Toronto work with the 905 regions on creating regional solutions? All the typical Toronto/Mississauga/905 bickering does is step on each others toes and slow any progress that could be made with a little bit of co-operation and civility. Why not gather city and municipality heads from across the GTA (from Peterborough to London) together and lobby the government together for more support towards public transit projects?

Maybe if someone created a transit plan for the GTA that was actually worthwhile and not some multi billion dollar subway bondoggle then there would actually be the support necessary to get projects underway.

 

[ahrvojic]

Re: Enlighten me: Cons of P3 Subways?

All the typical Toronto/Mississauga/905 bickering does is step on each others toes and slow any progress that could be made with a little bit of co-operation and civility.

The economic, infrastructural, and social inseparability of the region makes the toe-stepping even more outrageous. The whole "416/905" thing needs to die more than anything.

Every politician in the GTA should be shown this.

 

[Antiloop33rpm]

Re: Enlighten me: Cons of P3 Subways?

A few more points to add to this discussion.

1) Using Madrid (as the most recent example) as a method of showing Toronto's transit incompetence really doesnt hold any water. A newspaper article is at best an abstract for understanding the whole story behind Madrid and its recent construction of its subway lines. What where the transit problems and realities before this line was built? Was there a desperate situation that required lines to be constructed fast? Why subways? Perhaps density and limited space made that the only option available. Etc. Etc. Toronto and Madrid are two different cities with two different sets of transportation issues located in two different societies. What applies in Madrid might very well have little to no relevance to Canadian cities.

And the cries of 'this city has a building by architect X', or 'that city built Y kilometers of subway' do little to add substance to the debate. They demonstrate a certain insecurity that if directed in a positive manner can offer real life cases on problems and possible solutions, but far too often, result in a keeping up with the Joneses mentallity that does not do Canadian cities and its citizens justice.

2) It often seems to be missed in the debate over public vs. private but what about the successes that the public has had in building infrastructure in the past? One of the best examples that comes to mind are the 401 and 407 (before it was privatized). Both of these highways are no doubt huge undertakings that required a great deal difficulty, capital, and initiative to complete. The 401 in particular is, for better or worse, an awesome example of civil engineering and highway construction. Both done under the watchful care of the public, both done in a manner and time span which seems to have been satisfactory to people.

Take this example one step further. What effect has privatizing the 407 ETR had on speeding up and making its construction more efficient? While priorities have changed somewhat since its initial construction, there is still an incomplete segment linking it with the 401 and any expansion undertaken since it was handed over to the Spanish consortium really does not seem to have gone any faster than when it was under public ownership.

I have yet to be convinced that there can be anything more than marginal savings in time and money at best by using P3 arrangements and reducing the public role in large scale infrastructure projects.

3) Going back to my point about lackof vision I can offer an example to illustrate this point clearer.

Take the case of Blue 22 and the Weston Rail corridor. This corridor is important to many groups and transit comissions and has resulted in some of the following suggestions, proposals and points of interest.

- Blue 22. The much discussed and debated private rail link from Pearson to Union Station.
- GO Transit, and their use of the corridor as an essential link in offering commuter service to the GTA.
- Weston Community Coalition, and their calls for the corridor to be used a TTC subway/LRT local transit route for Toronto.
- VIA Rail, which has not made a formal proposal, is also a group interested in this corridor for its own needs.

Four groups, each with their own ideas, proposals and needs. They all make valid points, and could each be argued to be important. Yet none of these cases, on their own, really would be a project/proposal that would be worth a possible Billion dollar or more price tag. No proposal stands out as being one that offers benefit to more than one or two demographics at best.

But what if someone where to make a proposal where 3 or 4 sets of passenger only tracks where built through the corridor that could be used by any transit or rail operators? Instead of wasting the space for a single use track such as a subway, or accomodating only one or two transit systems, you make it available to anyone who wants to operate on the tracks? So while there may still be the billion dollar price tag to retrofit the corridor into a high frequency passenger rail corridor, it would then be opened up for VIA for long haul, GO for commuter, a private company if they wanted to offer a premium Pearson to Union service, and even the TTC if they wanted to offer local/express S-Bahn type service.

Suddenly you have a proposal which not only uses the limited space more efficiently, but will offer increased and better service to a wider number of rail and transit users. And obviously the more people who will benefit from the project, the more public support it will gain, and projects which have a lot of public support are also likely to be built faster and with less political resistance.


If you want to look at why transit in Canadian cities (in this case, Toronto) has really become stagnant, I would suggest it really has nothing to with the public system being unable to perform (given it has been more than capable in the not too distant past and is still very much the case). Instead it has to do more with a lack of public interest and support in transit at the momment, as well as a lack of visionary, or even just plan good ideas. Canadians are an intelligent lot of people yet when I see a the plans put forward for transit and transportation solutions, I start to wonder just how smart we really are. In addition there are probably dozens of other factors that play into why we havent seen large scale transit investment yet.

Probably one of the other major reasons, which is worth repeating, is that in many cases, subways dont make a lot of sense and are not a logical way to spend money. Subways might be the best choice sometimes, but in the case of Toronto (and much of the GTA), the biggest challenges that the city faces in building a strong transit network do not require a subway, and moving past that single minded train of thought would be a good start to getting better ideas into the public realm and daily discourse.