TTC: Sheppard Subway Expansion (Speculative)

[gweed123]

The tender says "The plan will assume that the incremental tax revenues arising from the construction of the proposed Sheppard subway extension corridors as well as from the construction of the Eglinton-Scarborough Crosstown line can be applied towards funding the capital costs of the Sheppard subway extension projects. "

This is new, isn't it? In other words, the Fords want to pledge property tax revenue from all over the city to pay for Sheppard. The notion that public money would not go into this white elephant is simply a lie.

This actually does kind of make sense. You roll the property value increases into the funding for the next transit line. Assuming that every line you build generates a property value increase, you can continually roll increases from the previous project into paying for the next one.

This happens all across the development industry. The developer will place their most profitable units in Phase 1, and when those sell, they use some of the profits in order to help finanace Phase 2. Profits from Phase 2 help finance Phase 3, etc etc etc.

 

[unimaginative2]

Translation: Give us money, but we're not sure when you're going to get it back.

As Kevin from Dragon's Den says "ok, so where's the part where I make money?". A private investor will NEVER go for this project, unless there is a guaranteed payback on principal PLUS a few percent. The only business people who will go for this are:

a) really dumb, in which case a fool and his money soon go separate ways
b) a friend of Rob Ford, in which case the two will likely work out some kind of a deal that will end up screwing taxpayers royally, but will make one (or both) of them very rich

Obviously transit public private partnerships can work in some cases if they're structured right. Look at the Canada Line in Vancouver. They built 18km of real rapid transit for less than $2 billion cost to governments.

I'm amazed by how many anti-transit people like k10ery we have on a board called Urban Toronto.

 

[gweed123]

Obviously transit public private partnerships can work in some cases if they're structured right. Look at the Canada Line in Vancouver. They built 18km of real rapid transit for less than $2 billion cost to governments.

I'm amazed by how many anti-transit people like k10ery we have on a board called Urban Toronto.

Yes, I'm not saying they can't work right, I'm just saying THIS ONE isn't going to work right. I'm just saying that the demand doesn't justify the cost in this case.

The Canada Line PPP worked because there was demand for the line, and the private sector viewed it as a worthwhile investment, because they knew that the ridership that it would generate would guarantee them a return on investment, and then some.

All I'm saying is at this point, the only way to get the private sector interested is to structure the deal in such a way that it ends up fleecing the taxpayers.

 

[Markster]

The Canada Line PPP worked because there was demand for the line, and the private sector viewed it as a worthwhile investment, because they knew that the ridership that it would generate would guarantee them a return on investment, and then some.

Not just the level of ridership, but also the high-markup line to the airport. Similar to how the Airport Rail Link was going to be a PPP, since there's a captive market for airport transportation.

 

[k10ery]

Obviously transit public private partnerships can work in some cases if they're structured right. Look at the Canada Line in Vancouver. They built 18km of real rapid transit for less than $2 billion cost to governments.

I'm amazed by how many anti-transit people like k10ery we have on a board called Urban Toronto.

I'm touched that you noticed. But I'm not anti-transit. True, I am slightly anti-people who don't know what they're talking about.

The Canada Line is a standard DBO P3. It doesn't use TIF, value capture finance, or Underpants Gnomes to organize the financing. The capital contribution from the private sector is small. Are you one of those subway-or-bust people who voted for Ford because you believed his election promises? If so, I'm sorry.

 

[Justin10000]

I'm touched that you noticed. But I'm not anti-transit. True, I am slightly anti-people who don't know what they're talking about.

The Canada Line is a standard DBO P3. It doesn't use TIF, value capture finance, or Underpants Gnomes to organize the financing. The capital contribution from the private sector is small. Are you one of those subway-or-bust people who voted for Ford because you believed his election promises? If so, I'm sorry.

lol.

If the Canada Line is considered a successful P3, the Sheppard Subway will never be built.

 

[EnviroTO]

Hey, the Canada Line trains currently have just over a third if the capacity of a short Shepard Line train. Don't knock it.

 

[k10ery]

Steve Munro on robbing the ECLRT corridor to pay for Sheppard: http://stevemunro.ca/?p=5211

But let's not pretend that even this would be enough money. Suppose that Sheppard would cost $4.2 billion. To get a private company to put that money up, the City would have to pay the company 7% interest, plus 3% amortization of the capital, over 33 years. (These are the actual numbers for the Golden Ears Bridge P3. The Canada Line interest payments are hidden in the operating payments so we don't know how much they are. But they are similar.)

So the City needs $420 million a year from TIF. Since the City property tax rate is 0.6% (for residential and new MURBs) then we need transit projects to generate $70 billion in new residential development in order to cover the Sheppard capital costs through TIF. $70 billion!

In case somehow that does not sounds ridiculous enough, try thinking about 350,000 new condo units along the new transit corridors at $200,000 each.

I know there's sometimes resistance on this board to thinking about numbers. Too much like homework perhaps. But subway lovers please please tell me where I have gone wrong here.

 

[M II A II R II K]

Beyond PPP there's also creating a reason for people to travel to a certain location to increase ridership. Such as resurrect that York Centre development around Black Creek and turning most of Eglinton into a midrise corridor.

 

[rbt]

Steve Munro on robbing the ECLRT corridor to pay for Sheppard: http://stevemunro.ca/?p=5211

But let's not pretend that even this would be enough money. Suppose that Sheppard would cost $4.2 billion. To get a private company to put that money up, the City would have to pay the company 7% interest, plus 3% amortization of the capital, over 33 years. (These are the actual numbers for the Golden Ears Bridge P3. The Canada Line interest payments are hidden in the operating payments so we don't know how much they are. But they are similar.)

So the City needs $420 million a year from TIF. Since the City property tax rate is 0.6% (for residential and new MURBs) then we need transit projects to generate $70 billion in new residential development in order to cover the Sheppard capital costs through TIF. $70 billion!

There is a good chance the city will receive $1.1B additional funds from the feds; I believe they still have $350M tied to Sheppard. The province may or may not match that additional $1.1B. A Hudak promise of that type will require McGuinty do so as well.

GTAA seems to be borrowing at about 5.5% per annum for 30 year bonds but they have a pretty solid revenue stream. TIF relies on new development. An 80's style crash would make all development disappear for a long time.

I'm not entirely certain how TIF gets it off the books as debt either. I could see us borrowing a matching $1.1B in this manner and making it work, particularly if we can do so at the cities normal bond rate (roughly 4% for their 30 year bonds).

This might be enough to get from Don Mills to SCC.

Sheppard should be slightly cheaper than normal because:
1) we will have spare TBMs
2) EA process is shorter due to the other EAs done on this stretch
3) there will be gobs of T1 trains available as extras so no rolling stock to buy.
4) Ditto for Yard space. Short-trains (4-car) are easier to store.
5) We can build for 4-car train station boxes. 4-car trains at 90 second headways is significantly more capacity than we run on Sheppard today, likely enough for 30 years. A second $2B expansion project can be made in 30 years to extend to 6-car trains.

 

[k10ery]

I'm not entirely certain how TIF gets it off the books as debt either. I could see us borrowing a matching $1.1B in this manner and making it work, particularly if we can do so at the cities normal bond rate (roughly 4% for their 30 year bonds).

This might be enough to get from Don Mills to SCC.

Not bad: I can see that a smaller, shorter Sheppard is proportionately less ridiculously unaffordable

For the record, a P3 does not take the debt off the City's books, as long as there is a repayment guarantee. For example, 100% of the debt for the Canada Line and the GEB is on Translink's balance sheet.

 

[ssiguy2]

PPP can work but of all lines Sheppard is the worse case.
I have never heard of a PPP to EXPAND a line but just to build new ones. I don't know how it's going to work but if the city and TTC wanted a PPP it should be for an Eglinton crosstown or DRL.
BTW, you are absolutely right about the Canada Line being ridiculously under built but I must point out that that was NOT the fault of the private investment {InTransitBC} but rather the province. The province only wanted a line with 15,000 pphpd hence the stations are very small. The province also assumed all trains running every 2 minutes and each 2 car train could carry 400 passengers each which they have a crush capacity of 330. The Canada Line, in just 20 years, will be hopelessly over capacity but make no mistake that it is the province's fault and not the concept of the PPP.

 

[ssiguy2]

PPP can work but of all lines Sheppard is the worse case.
I have never heard of a PPP to EXPAND a line but just to build new ones. I don't know how it's going to work but if the city and TTC wanted a PPP it should be for an Eglinton crosstown or DRL.
BTW, you are absolutely right about the Canada Line being ridiculously under built but I must point out that that was NOT the fault of the private investment {InTransitBC} but rather the province. The province only wanted a line with 15,000 pphpd hence the stations are very small. The province also assumed all trains running every 2 minutes and each 2 car train could carry 400 passengers each which they have a crush capacity of 330. The Canada Line, in just 20 years, will be hopelessly over capacity but make no mistake that it is the province's fault and not the concept of the PPP.

 

[nfitz]

Canada Line trains seem a bit short ... but if it can deliver 15,000 at peak, then that's not too shabby. So perhaps in 20 years it is too busy and then they have to build another line. Perhaps down Granville - if they can build at the same cost, it would still have been cheaper for 2 lines than for a single massive monster subway line like we build them in Toronto.

I don't see how having multiple lower capacity lines is a worse thing than having a single massive monster subway line - and ultimately is a better thing.

 

[Mapleson]

Sheppard should be slightly cheaper than normal because:
1) we will have spare TBMs
2) EA process is shorter due to the other EAs done on this stretch
3) there will be gobs of T1 trains available as extras so no rolling stock to buy.
4) Ditto for Yard space. Short-trains (4-car) are easier to store.

Some correct me if I'm wrong, but I thought the CBM for Eglinton were LRT-sized and could not be reused for Sheppard without relining the existing section to make it not worth the savings?
As for Yard Space, 4-car consists are easier to store, but they still have to have extra area compared to present and it makes sense to preserve area to expand it to 6-car lengths, unless they plan for a new maintenence/storage yard in 25-30 years.