Roads: Keep the Gardiner, fix it, or get rid of it? (2005-2014)

[sixrings]

Hey, a Ford idea I actually like...



If you’re asking me: ‘Would I pay $5 to get downtown quicker and not knock off 14 bicycle riders on the way down Queen St.?’ I would do it in a heartbeat.”[/SIZE]

Why not just make the far left lane a TOLL.... The infrastructure is already there... its a cheap conversion.... And he could still get downtown quicker and not knock off 14 bicycle riders. Plus some of the toll could be spent maintaining the expressway.

 

[Asterix]

Depending on what the toll amount is, it may break even after quite a number of years. On-going revenue is very important to a project like that. Having said that, the toll highway should be owned by the City, not a 407-style private company.

That's the key. I think if one were to do the rough math, one would find the toll amount would be completely unreasonable.

Here's one attempt at the numbers:

Say we've got 100,000 cars/day on the Gardiner (and we'll assume they'll all be tolled). That's 500,000/week (5 days/week). For 50 weeks a year, that gives us 25,000,000 cars/year. Quite possibly many of those are twice a days for their round trips.

Where are we tunneling from? Let's say Dufferin to Yonge since that would be a shade more than 4km. Any further and you can just add to the totals.

We'll ignore the crazy costs and likely impracticability of actually having exits from the tunnel anywhere between the start and finish (is there actually any room for access ramps at say Bathurst, Spadina, York, Bay, etc? Probably only if you take out a few existing condo towers.)

What would be a reasonable cost for that stretch, $3, 4 billion? I'm just guessing.

Let's go with $4 billion.

What would be the time frame the investors will want to see a return on their full investment? Does 20 years seem appropriate?

What rate of return would they want for risking that kind of cash for that length of time? How about 10% annual return? We'll completely ignore inflation (since we'll assume tollpayers will have no issue with annually increasing tolls).

Using TD's mortgage calculator, that spits out a monthly amount of just under $40,000,000 or about $460,000,000 per year. We'll also assume maintenance on this structure will be within any kind of estimation errors in these numbers.

So, for our 25,000,000 trips per year, we need to generate $460,000,000 to make it worthwhile for private investment. That gives us a toll of over $18. More like $37 a day for those who commute in and then out.

The question then becomes, is it reasonable to think that there are 50,000 people willing to pay $37 per day to use a 4km stretch of tunnel?

What happens once they exit the tunnel? Since we've now added extra capacity on the expressways, presumably more people are going to be enticed to drive downtown (whether they take the toll road or the free road). Does anyone think there is spare capacity on the local downtown streets or parking facilities for this extra traffic?

We're now left with people paying $37/day to save themselves five or ten minutes on a small stretch of the Gardiner so they can then spend an additional 15 minutes getting from the Gardiner to their final downtown destination, only to have pay more for parking that will probably be farther away.

I think it's safe to say that isn't reasonable, so the logical extension would be that there will have to be significant public money put in to this project. That should be a given as only a fool would think that invoking the 'private sector' clause automatically mean any and all public infrastructure would be 'free'.

The question then becomes, is that the best use of that public money? If taxpayers are going to be funding several billions of dollars for some transportation project, would they be getting better bang for their buck by dumping more cars into downtown or maybe getting more bodies downtown via something like the DRL?

Feel free to play with the numbers above. Dropping the cost of the tunnel by 50% still leaves a $9 toll for 4km of tunnel and increased congestion once you get out of said tunnel. Making the tunnel longer or figuring out how to squeeze in exits only makes the cost higher.

 

[BMO]

why would the private company build a second tunnel for the DRL, when the DRL will most certainly work against their goal of having more people use the Gardiner and pay the toll to pay for the tunneled highway?

if I build my own burger joint downtown, i'm not gonna build a McDonald's right beside me to take my business away.

 

[gweed123]

That's the key. I think if one were to do the rough math, one would find the toll amount would be completely unreasonable.

Here's one attempt at the numbers:

Interesting analysis, thanks. However, you are working under several assumptions which may not be the case:

1) That the investors will be a private company. If it is built using public money, ROI in a specific timeframe doesn't matter as much. Just look at the Confederation Bridge. I think it'll take something crazy like 100 years for the amount of money generated in tolls to actually pay for the bridge.

I think a more likely scenario would be that a private company would contribute a percentage of the costs (say 20%), in exchange for the toll revenue for the next 20 years (just using made-up numbers, the real numbers could be adjusted to amount to about a 10% profit for the company). The rest would be built using government funds.

2) That the land that the Gardiner is currently sitting on will not be sold. I highly doubt this would be the case. Even with significant engineering challenges of building overtop of a tunnel (although it has been done before), I think developers would jump at the opportunity for prime land like that. In fact, you would probably be able to fund 5-10% of the project just through those land sales ($200M-$400M).

I don't dispute the fact that a 100% privately funded venture would like to see a ROI asap, however I think that building this with 100% private money would never happen. Your analysis is built on the assumption that this would be a purely capitalist venture.

 

[gweed123]

why would the private company build a second tunnel for the DRL, when the DRL will most certainly work against their goal of having more people use the Gardiner and pay the toll to pay for the tunneled highway?

if I build my own burger joint downtown, i'm not gonna build a McDonald's right beside me to take my business away.

Because: 1) The demand on routes like this is more than enough to accomodate both. The demand would be well in excess of the capacity.

2) If the tunnel is being built through private venture (or even through a PPP), it would make sense for the company to get a % of the fare revenue from the DRL as well, considering that they helped build part of it. Both aspects of the tunnel would contribute revenue to the company. It's like Best Buy and Future Shop. Either way, the same parent company is getting your money.

 

[CapitalSeven]

I'm surprised this thread got to 12 posts without anyone uttering the words "big dig." Clearly this is the year of magical municipal accounting. Toronto can build, not just a 4.7 billion subway on Sheppard with magical private money and NFL stadium in the portlands with Disneyland monorail, but also thanks to fiscal fairies a multimodal tunnel through the unstable landfill of the central waterfront that will make all of everyone's dreams come true.

 

[gweed123]

I'm surprised this thread got to 12 posts without anyone uttering the words "big dig." Clearly this is the year of magical municipal accounting. Toronto can build, not just a 4.7 billion subway on Sheppard with magical private money and NFL stadium in the portlands with Disneyland monorail, but also thanks to fiscal fairies a multimodal tunnel through the unstable landfill of the central waterfront that will make all of everyone's dreams come true.

Everyone always touts the Big Dig as an underground highway construction failure. The reality is that many of the cost overruns, delays, and problems that the Big Dig faced were completely separate of the engineering, and were very project-specific problems. Most of the delays resulted from striking/quitting contractors, administration delays, etc. This type of BS can happen on any construction project.

If part of the tunnel had collapsed, or if people were dying from a faulty ventilation system, then I'd say you have a point. But the massive increase in costs was at the admin and contracting end of the project, not the actual construction end. (PS: I do know that a panel of the roof in the Ted Williams Tunnel fell a few years ago, but that was a design flaw with the panels. Shit happens. You learn why it happened, and don't make the same mistake)

 

[CityPainter]

This is my initial thought process:

1. It would cost many billions of dollars to implement such a tunnel. I suspect no private corporation would volunteer to undertake such a boondoggle, so it would be up to the government to build it, meaning those billions of dollars would come from... taxpayers. So those screaming about being overtaxed will get taxed either way.

2. It would take many, many years to build. Probably close to a decade. This would be a decade of construction, road closures, and additional traffic gridlock, all while the population of the GTA continues to grow and no other major transit or infrastructure projects take place because this one is eating all the funds.

3. When it's all done and working perfectly, we'd just have a more convenient way to funnel cars into the downtown, where they'd immediately be met with gridlock on our side streets and ever-fewer places to park. At rush hour the tunnel itself would be like a long tubular automobile prison as cars waited eons to exit. So: billions of dollars and many years later, we've solved nothing.

Besides, if people are apparently willing to spend $5 a trip to drive in some tunnel that doesn't even exist yet, why not just save the billions and put a smaller toll on some of the roads we already have?

 

[Asterix]

1) That the investors will be a private company. If it is built using public money, ROI in a specific timeframe doesn't matter as much. Just look at the Confederation Bridge. I think it'll take something crazy like 100 years for the amount of money generated in tolls to actually pay for the bridge.

I was basing it on Dougie's musings from the cited Star article:

“What I would be in favour of, and this is just an example, say we have a real creative company that wants to tunnel underneath the (Gardiner Expressway) and when you’re coming downtown you have an option, either paying $5 similar to the 407, $5 to go under the tunnel or you can do it for free on top and wait an extra 45 minutes, it’s really up to the public,†Ford said.

When he said "a real creative company", I assumed he meant a private company and not the taxpayer.

I think a more likely scenario would be that a private company would contribute a percentage of the costs (say 20%), in exchange for the toll revenue for the next 20 years (just using made-up numbers, the real numbers could be adjusted to amount to about a 10% profit for the company).

I admit to being a little hazy on this accounting. How is this beneficial to the costs/revenues for the government vs public funds covering that additional 20% of the costs while not giving up 100% of the revenues?

2) That the land that the Gardiner is currently sitting on will not be sold. I highly doubt this would be the case. Even with significant engineering challenges of building overtop of a tunnel (although it has been done before), I think developers would jump at the opportunity for prime land like that. In fact, you would probably be able to fund 5-10% of the project just through those land sales ($200M-$400M).

Again, going with Dougie's plan of keeping the free Gardiner on top, so assumed that meant you wouldn't be developing on that space.

But say you did sell off the land for development, those buying the land would be faced with higher building costs, so what kind of revenues will they be needing from their finished products to cover that, plus profit, plus a decent contribution to the tunnel expenditures?

If we're already targeting virtually all of the next few years of condo demand to Sheppard to fund their subway, is there extra demand for Gardiner condos? (Also noting the many doom and gloom reports about the saturation of the condo market already with the sizeable percentage of investor purchases.)

But as I said previously, those numbers are just ball park guesses. Anyone is free to adjust them as they see fit (or to fit their own preconceptions).

 

[SimonP]

The CPP just bought 10% of Highway 407 for $900 million, so the entire value of that highway is now about $9 billion. How do traffic levels on the Gardiner compare to the 407?

If we're tolling highways, a lower risk option might be to sell off the DVP. You'd get several billion for it. That money could then be used by the city to bury the Gardiner and build a DRL. Once the UnderGardiner is built, and usage numbers are discovered, it can then also be sold off to pay down the rest of its construction costs.

 

[CDL.TO]

Big Dig is relevant, but probably even moreso is the Sydney Cross City Tunnel. Just over a year after opening, the project was insolvent, even with a $4.50 (with transponder) or $7 (without) toll, for only a 2.1 km tunnel. They also closed and re-routed local streets to try and force drivers in to the tunnel.

Just like with the Sheppard Subway, the dreams of the brothers Ford do not seem to have a solid business case.

 

[M II A II R II K]

This is the referenced projections report.

PDF: http://www.bot.com/Content/NavigationMenu/Policy/VoteOntario2011/Reaching_Top_Speed.pdf

 

[gweed123]

I was basing it on Dougie's musings from the cited Star article:

When he said "a real creative company", I assumed he meant a private company and not the taxpayer.

He must have buddies who are interested in running charity companies, because no private company would fund 100% of that project.

I admit to being a little hazy on this accounting. How is this beneficial to the costs/revenues for the government vs public funds covering that additional 20% of the costs while not giving up 100% of the revenues?

Not exactly sure what you mean by this. All I was trying to say is that the government isn't as concerned with recouping costs as the private sector component would be. So you give them first crack at the toll revenue in order to have them get their money back.

Again, going with Dougie's plan of keeping the free Gardiner on top, so assumed that meant you wouldn't be developing on that space.

I'd rather have an expanded Lakeshore Blvd on top afterwards. That would still leave quite a bit of space open for development.

But say you did sell off the land for development, those buying the land would be faced with higher building costs, so what kind of revenues will they be needing from their finished products to cover that, plus profit, plus a decent contribution to the tunnel expenditures?

If we're already targeting virtually all of the next few years of condo demand to Sheppard to fund their subway, is there extra demand for Gardiner condos? (Also noting the many doom and gloom reports about the saturation of the condo market already with the sizeable percentage of investor purchases.)

I think there will still be demand. And even if it sits there for 10 years after the construction to wait for the market to bounce back, it'll still be sold off eventually.

But as I said previously, those numbers are just ball park guesses. Anyone is free to adjust them as they see fit (or to fit their own preconceptions).

Mine are too. I was more just challenging the assumptions than the numbers themselves. At this point in the discussion, it's the methodology and the assumptions that you base it on that matter, not the numbers.

 

[M II A II R II K]

Big Dig is relevant, but probably even moreso is the Sydney Cross City Tunnel. Just over a year after opening, the project was insolvent, even with a $4.50 (with transponder) or $7 (without) toll, for only a 2.1 km tunnel. They also closed and re-routed local streets to try and force drivers in to the tunnel.

Just like with the Sheppard Subway, the dreams of the brothers Ford do not seem to have a solid business case.

What about the costs of doing nothing though.......

 

[Asterix]

He must have buddies who are interested in running charity companies, because no private company would fund 100% of that project.

Absolutely.

Not exactly sure what you mean by this. All I was trying to say is that the government isn't as concerned with recouping costs as the private sector component would be. So you give them first crack at the toll revenue in order to have them get their money back.

What I mean is that if we are looking at just the two choices:
1) Have private company contribute 20% of cost for 100% of toll revenue for 20 (or X) years.
2) Public pays 100% of cost and gets 100% of toll revenue.

After 20 years, will the public have paid net more money via 1) or 2)?

I think there will still be demand. And even if it sits there for 10 years after the construction to wait for the market to bounce back, it'll still be sold off eventually.

Presumably since many people will likely still rather buy a condo downtown than on Sheppard, even if the Sheppard budgeting expects every last one of them for the next 10 years to buy on Sheppard.

However the longer one waits to sell off something to recoup costs already expensed, the more that ends up costing.

Mine are too. I was more just challenging the assumptions than the numbers themselves. At this point in the discussion, it's the methodology and the assumptions that you base it on that matter, not the numbers.

I think the main conclusion is that no way any form of this concept can be implemented without big taxpayer dollars. Whether such a project is the most productive use of those big taxpayer dollars is the question, one that I think most will come to the same conclusion that there are far better ways to spend big taxpayer dollars to address transportation issues.