BUDGET CONTEXT
Over the five-year period, 2008-2012, a total of
$4,400.9 million is required for the base capital program ($4,123.4 million if
the City’s unspecified budget reduction is assumed). Based on current funding assumptions, this
will leave a shortfall of at least $420 million for the base program over the
next five years - $698 million without a scope reduction by the City of $277.5
million. This is after assuming that we
will receive $481 million in long term vehicle funding from the Province and
$324 million from the Federal government for rail vehicle purchases. At the
present time, neither of these amounts has been secured. All combined, this means that there is about
$1.5 billion ($698M+$481M+$324M), in basic State-of-Good-Repair work that is
presently unfunded.
The 2008 capital program includes $751.6 million for
the base capital program. This amount will be reduced by $54.4 million for
unspecified budget reductions for a net request of $697.2 million. Based on current funding assumptions, there
is enough funding available to cover this amount in 2008, with one exception –
the required confirmation of funding for the streetcar fleet replacement order
that is scheduled for the spring of 2008 has not yet been received from either
the Provincial or Federal governments.
This places the TTC in the unusual position of having
the Spadina Subway Extension largely funded and MoveOntario 2020 announced by
the Province at the same time that we have up to a $1.5 billion funding
shortfall in base program funding. While
this report will outline plans to close this funding gap, it is not clear when we
will have answers on the funding necessary for the base program.
RECOMMENDATION
It is recommended that the Commission:
(1)
(a)
Approve the amended 2008 Capital Program in the amount of $751.6 million
($697.2 million City adjusted), as outlined in this report (and as shown in
Table 1) and the supporting documents:
·
TTC
2008-2012 Capital Program Overview
·
TTC
2008-2012 Capital Program (Blue Books)
(b)
Approve
the amended 2008-2012 Capital Program in the amount of $4.401 billion as
outlined in this report and the supporting documents.
(c)
Approve
the amended 10-Year Capital Forecast in the amount of $7.426 billion as outlined
in this report and the supporting documents.
(d)
Approve
the budget for the Spadina Subway Extension project which has an estimated
final cost of $2.634 billion, including $56.8 million in 2008 and $1.651
billion for the years 2008-2012 as shown in this report (see Table 3) and the
supporting documents.
(e)
Approve
expenditures in the amount of $22.9 million in 2008 and 2009 for Environmental
Assessments and preliminary work on Transit City Plan first priorities as shown
in this report (see Table 3) and the supporting documents.
(2)
Approve the Capital Staffing Plan summarized in
this report and detailed in the 2008 TTC Organization Charts.
(3)
Consider
this report in concert with the following:
·
the
TTC 2008 Operating Budget
·
the
TTC 2008 Wheel-Trans Operating Budget
·
the
TTC 2008 Departmental Goals and Objectives
·
the
TTC 2008 Organization Charts
(4)
Forward
this report to the City of Toronto for Council approval and confirmation of
funding:
(a)
In
the amount of $697.2 million for 2008 and $4.401 billion for the base 2008-2012
Capital Program and approval of the 10 year forecast.
(b)
In
the amount of $56.8 million for 2008 and $1.651 billion for the 2008-2012
Capital Program for the Spadina Subway Extension project including a new
project cost commitment of $220.8 million (see Table 3).
(c)
In
the amount of $5.8 million for Environmental Assessment work in 2008 and 2009
and $17.1 million for 2008 Transit City Plan first priority initiatives (see
Table 3).
(6)
Forward this report to the Ontario Minister of Transportation, the Ontario
Minister of Public Infrastructure Renewal, and to the Ontario Minister of
Finance, for consideration of TTC’s base and expansion capital needs and requesting
confirmation of funding.
(7)
Forward this report to the Federal Minister of Transport, Infrastructure and
Communities, for consideration of TTC’s base and expansion capital needs and requesting
confirmation of funding.
(8)
Forward this report to the Greater Toronto Transportation Authority, for
consideration of TTC’s base and expansion needs.
BUDGET AMENDMENTS
At the September 19, 2007 Commission
meeting, staff was directed to move the Geospatial Initiatives project (next
bus arrival, internet trip planning, automated customer notification and,
E-commerce) into the base budget, thereby adding $4.0 million in 2008 and $6.5
million to the 2008-2012 capital program.
Station Modernization work for Pape, Dufferin and Yonge-Bloor Stations was
also moved into the base budget in the amount of $4.4 million in 2008 and $30.2
million for 2008-2012. Additional
amendments over the five-year period include a reduction of $28.170 million for
SRT cars, deferral by one year of the McNicholl bus garage ($40.775 million)
and adjustment for the $9.5 million estimated increase in bus expenditures in
2008 owing to delayed delivery of buses in 2007 (this will be handled through a
budget carry-forward by the City).
In addition to these amendments, the City
of Toronto intends to include an unspecified reduction of $54.4 million in
2008. This represents a 10% reduction in non-vehicle expenditures over this
timeframe (as well as additional reductions in 2008 to meet the City’s overall
corporate debt target), based on the premise that the TTC historically spends
in the range of 90% of its non-vehicle budget. While TTC staff agree with the
concept of a 1 year budget reduction in 2008, if it was extended for the 5
years, that would result in a scope reduction as outlined in Table 1.
The impact of these adjustments is shown
in Table 1 below:
TABLE 1
While these amendments have been
reflected in the Recommendations above, as a result of tight time constraints,
the supporting budget documentation (Blue Books and Overview document) and the
balance of this report does not reflect these amendments unless otherwise
noted. Updated material will be issued following Council consideration of the
budget in December.
FUNDING
The City of Toronto is responsible for
funding the TTC’s Capital Program.
Several Provincial and Federal programs are in place or are being rolled
out. An overview of these funding
sources is provided in Appendix B and details are available in the ”TTC
2008-2012 Capital Program Overview” document. Table 2
summarizes the projected funding as compared to budgeted expenditures for the
TTC’s base 2008-2012 Capital Program.
TABLE 2
Note: Funding for
the Spadina Subway Extension, Transit City and Waterfront projects are shown
separately from the base program requirements.
The table
shows that:
·
For 2008, after applying an
anticipated 10% unspecified budget reduction on non-vehicle purchases (by the
City of Toronto) of approximately $54 million, there is a net surplus of $4
million compared to anticipated expenditures. However, it is important to note that all of
this funding is not yet secured – most notably, Provincial and Federal funding
for the LRV procurement which is anticipated to be awarded in the spring must
be confirmed.
·
For 2008-2012 there is currently
projected to be a $698 million funding shortfall without a scope
reduction.
·
Without a scope reduction by the City, and if the
Provincial Long Term Vehicle Funding and Federal Building Canada Funds are not secured,
there may be a funding shortfall of up to $1.503 billion for the five year
period from 2008-2012 as outlined in Chart 1.
CHART 1
This places the TTC in the unusual position of having
the Spadina Subway Extension largely funded and MoveOntario 2020 announced by
the Province at the same time that we have up to a $1.5 billion funding
shortfall in base program funding.
It would be premature to spend money on expanding
the system if the normal state-of-good-repair replacement and rehabilitation of
the existing system is not fully funded. Consequently, staff has held
discussions with
City, Provincial, GTTA and Federal officials in an effort to close this funding
gap. These discussions have focused on
identifying transit projects that meet common strategic objectives that can
link the TTC’s priority state-of-good-repair needs with the MoveOntario 2020
initiatives. The following “packages” of
projects are under consideration:
1.
Streetcars – includes the acquisition of 204
LRV’s to replace the TTC’s current fleet of streetcars that are reaching the
end of their 30-year life ($1.25 billion).
The potential exists to pursue a joint procurement which should result
in lower overall vehicle costs and to meet both the needs of other transit
properties (i.e. Mississauga Transit) as well as providing for the vehicles
required to support the LRT network envisaged under Transit City and MoveOntario
2020.
2.
Scarborough Rapid Transit – the TTC’s plans for
conversion of the existing SRT line and replacement of the existing fleet of
SRT vehicles could be combined with the MoveOntario 2020 initiative to extend
the SRT line into the Malvern community for a total combined project in the
order of $1.3 billion.
3.
Subway Capacity – before proceeding with
expansion of the Yonge Subway to York Region, capacity of the existing line
must be increased. Projects currently
contained in the base capital program that are consistent with this MoveOntario
2020 vision include: introduction of automatic train control (ATC) on the
Yonge-University-Spadina line, replacement of the H6 subway cars, completion of
the Yonge BRT and improvements to the Yonge/Bloor interchange.
4.
Accessibility – the AODA (Accessibility for
Ontarians with Disabilities Act) requires full accessibility by 2025. The TTC
is moving forward to achieve this goal with its bus fleet by 2010, its stations
by 2020 and light rail by 2018. A Provincial
commitment for long-term sustainable funding for accessibility would assist
with projects underway or required such as installation of elevators in all
stations and Wheel-Trans vehicles as well as contribution towards the
Wheel-Trans operating budget.
5.
GTA Farecard – funding in the amount of $140
million has been identified under the Canada Strategic Infrastructure Fund,
however, it is currently estimated that this project will cost in the order of
$260 million.
Chart 2 summarizes the cash flow associated with
these ‘packages’.
CHART 2
If funding beyond that currently assumed to be
available (see Table 2) can be provided for these funding packages, then this
would significantly reduce the 2008-2012 funding shortfall of $698 million and
would allow the TTC to address its state-of-good-repair needs and at the same
time move forward and expand the transit network as set out in MoveOntario 2020. Failure to achieve this funding would require
both the TTC and the City to reconsider how best to invest the funds available
to ensure that the existing system can be maintained in a state-of-good-repair.
DISCUSSION
The TTC Base Capital
Budget covers the acquisition of new and replacement transit assets needed by
the TTC for the provision of public transit services within the City of Toronto
and under contract with adjacent municipalities.
The
priorities of the TTC Capital Budget remain unchanged. They are:
·
State of Good Repair/Safety
·
Legislated
·
Capacity Enhancement
·
Improvements
·
Expansion
In the
sections below, these various elements will be described at a summary-level;
the supporting documents to this report describe the projects in successively
more detail.
ECONOMIC CONTEXT FOR THE BUDGETS
With the
rapid growth in the GTA and the City of Toronto over the past decade or so and
with the projected growth in population, employment and economic activity
projected for the region over the coming decades, there is clearly a need for
significantly expanding Toronto’s and the GTAs transit system network. The TTC’s annual ridership level has grown
from 372 million in 1996 to an expected 464 million in 2008: a 25% growth at a
time when the City of Toronto population grew by a little over 5% (from 1996 to
2006). In light of this growth, the TTC has struggled at times over the past several
years to keep up with the daily ridership.
With the TTC in the midst of a decade-long level of record retirements
of transit operators and other skilled employees, with limits on the numbers of
new hires that can be adequately trained, with the lead time for ordering buses
at 2 years plus and rail vehicles at 3 or 4 years, with the lead time to design
and construct new maintenance facilities at upwards of 5 years and with major
rail expansion taking even longer, planning for growth is a highly complicated
and critical exercise.
In addition
to the expansion of the system that is so desperately needed, the existing
system needs to be maintained as a prerequisite. With in excess of $10 billion in existing
assets, many of which last for decades, the state of good repair and
rehabilitation portion of the budget is worth over $4.4 billion over the next 5
years alone. In total, the Spadina Subway Extension will cost about $2.6
billion and Transit City Plans about $8.3 billion (including vehicle
requirements and maintenance & storage facilities). Without guaranteed and
predictable long-term capital and operating funding, planning for these
expenditures can be speculative.
Both the TTC
and GO Transit, and to a lesser degree the rest of the transit systems in the
GTA, are in an enviable position that most transit systems in the world would
dearly love to be in: both systems today have pent up demand for service. Adding service directly results in additional
ridership. Residents in the City of
Toronto and the GTA want and will use more of both systems. To live in a city
and a region that accepts public transit as a viable and often preferred mode
of travel is a lot less common than would seem evident to the average Toronto
resident. Most cities have to spend hundreds
of millions and often billions of dollars to attract riders without any real
guarantee the service will be fully utilized.
The expansion plans contained in this report and the associated
ridership projections are achievable, if they are funded by the Commission’s
funding partners.
THE BASE BUDGET: STATE-OF-GOOD-REPAIR
As has been
the case for the past decade or more, the TTC Capital Budget is dominated by
the State-of-Good-Repair portion of the budget.
This is as it should be.
For the year
2008, 84% of the $752 million base budget (before the unspecified budget
reduction) is for the state-of-good-repair portion of the budget. The major expenditures items are: $176
million for the purchase of buses, $79 million for payments for the new Toronto
Rocket subway trains, $55 million for initial payments on the new LRV cars to
replace the aging existing fleet of streetcars, $156 million for rehabilitation
of buildings, structures, tunnels and bridges, $49 million for trackwork, $51
million for various signals, electrical and communications equipment, $43
million for vehicles overhauls and $22 million for various IT projects. In
addition, the TTC will spend $20 million on legislative projects (mostly
environmental programs and elevator installations), $3 million for minor
capacity enhancement projects, $70 million for improvements (mostly for the
reserved lanes on St. Clair and the redevelopments at Kipling and Islington
Station) and $29 million on non-rail expansion projects (the BRT to York
University being the biggest single project).
For the
5-years 2008-2012, a total of $4.401 billion is budgeted for the base budget.
Of this, over $3.6 billion or 81% plus is for the state-of-good-repair. As can be seen from Chart 3 below, almost $2
billion or 54% of this part of the budget is for vehicle fleet needs.
CHART 3
Each program or project element
identified above is described in detail in the Blue Books and the “2008-2012
Capital Program Overview” documents. A high level summary of expenditures
(before amendments and with no City unspecified budget reduction) is attached
as Appendix A to this report.
HOW TO HANDLE THE GROWTH
The TTC’s
long-term plan for accommodating the growth envisioned by the City of Toronto’s
Official Plan and growth plans for the GTA generally falls into the following
areas:
The SUBWAY System
The Yonge-University-Spadina
subway is largely operating at maximum capacity during rush hour,
particularly southbound from Finch station in the mornings, utilizing the
existing technology of the line. To
increase that capacity, the TTC has the following plans:
·
The Toronto Rocket (TR) Trains: These new trains currently under order are
designed to be 3 times more reliable than the most reliable subways the TTC
currently runs and because there is an open gangway, the trains can carry an
extra 10%-13% more riders than current trains.
This increase in reliability and extra passenger carrying capacity
effectively means we will carry more riders on the existing system than we are
currently able to. In addition, a $312 million project for the advanced
replacement of 126 H6 cars from 2017, will result in a significant option price
reduction as well as increased safety, reliability and efficiently thorough the
exclusive operation the TR fleet on the Y/U/S line.
·
Spadina Subway Extension: This
extension into York Region, not only will provide greatly improved service to
York University, it will spur transit-oriented development both within the City
of Toronto and within York Region. Large
commuter parking lots and major bus-subway interface terminals, will not only
allow for improved connections between TTC, York Region Transit and GO Transit
services, it should allow for a lessening of York Region ridership flowing into
the Yonge Subway at Finch station and a corresponding increase to the Spadina
portion of the line.
It
is currently estimated that this project will cost in excess of $2.6 billion,
including $1.65 billion over the next five years and $56.8 million in
2008. This cash flow has been identified
in the 2008-2012 budget request to the City and confirmation of funding
approval up to $225 million over the next two years has also been requested.
·
YUS Re-Signaling and Automatic Train Operation: One of the most
significant initiatives the TTC has for increasing the capacity of the Yonge
Subway (and effectively putting off the ultimate need for another north-south
relief subway into the downtown core) is the $342 million project to re-signal
the Yonge subway line. The existing
signal system was installed with the line when it was built over 50 years
ago. By replacing it with industry
standard, state-of-the-art signaling equipment and equipping the line with
automatic train control, closer headways (the time between trains) and coupled
with the new TR subway trains a significant increase in carrying capacity and
regularity of service will be achieved.
·
Union Station 2nd Platform: Design of
this second platform is underway and funded through the Waterfront Revitalization
Corporation. When completed, it will help alleviate the current overcrowding of
the station. It will also significantly increase the passenger boarding
capacity of the station and should markedly reduce the dwell time at the
station for trains loading and off-loading customers; contributing to more
regular service on the YUS subway.
·
BRT on Yonge Street from Finch to Steeles: This $24 million project will serve to
accommodate demand and improve bus regularity to and from York Region on Yonge
Street to and from Finch station, as a precursor to the extension of the Yonge
Subway northwards. This initiative
builds on facility improvements completed at Finch Station for a new bus exit
and new transit priority signaling.
·
Yonge Subway Extension to Highway 7: The
Province’s MoveOntario 2020 Plan calls for extending the Yonge subway north to
Highway 7. All of the Yonge subway
related projects noted above are required prior to the extension of this line
in order to ensure sufficient carrying capacity, reliability and regularity
south of Finch to accommodate the ridership generated by this extension.
·
Other Capacity Issues: In the
longer term, adding a 7th car to the Toronto Rocket trains,
improvements to the movement of trains at the terminal stations to allow
quicker turnaround time and the possible
installation of platform edge doors will all be examined to further enhance the
carrying capacity of the YUS subway.
The Scarborough RT
This line has
been operating at capacity during rush hour for several years, with
supplementary bus service in place to attempt to handle the growth. The proposed plan is to convert the existing
system to utilize longer vehicles, which are needed to replace the existing
fleet and ultimately to extend the line to the Malvern Community. This combined $1.3 billion project would
allow the TTC to properly service an area that’s been underserved for years.
Bus Fleet
The
Commission is in the process of replacing its aging buses with modern,
accessible hybrid buses. Once completed,
the TTC will have the largest fully accessible bus fleet in Canada by 2010 and
the largest hybrid fleet by far in Canada.
Streetcar and LRT Network
The existing
Streetcar Lines are all either freshly rehabilitated or are in the process
of being rehabilitated. Where practical,
such as on St. Clair Avenue, the lines will be converted to lines within
segregated rights-of-way to remove them from mixed traffic in an effort to
improve the regularity of the service.
In addition, transit priority measures are being installed to
improve transit vehicular movement.
Lastly, and most importantly, a new fleet of 204 accessible modern LRT
Cars (Light Rail Transit) will be procured over the next few years to
replace the aging existing fleets that are approaching the end of their useful
life.
Transit City, a $6.1
billion plus plan to construct an interconnected network of LRT lines
throughout the City of Toronto, and ultimately connecting to the transit
systems in the 905 area, was approved by the Commission on March 21, 2007.
There are 7 major projects included in this plan:
·
Sheppard East LRT
·
Finch West LRT
·
Eglinton LRT
·
Jane LRT
·
Don Mills LRT
·
Waterfront West LRT
·
Malvern LRT
It
should be noted that the $6.1 billion figure included early estimates of
vehicle requirements, however it did not include costs for the necessary
maintenance and storage facility requirements to support this expanded LRT
network. Vehicle requirements have also been reassessed to determine more
realistic assumptions for LRV loading standard capacity, average operating
speeds and maintenance spares ratios. Total costs for Transit City are
currently estimated to be in the order of $8.3 billion.
Under the
Province’s MoveOntario 2020, as announced on June 15, 2007, the design and
construction of this network is to be funded 2/3 by the Province and 1/3 by the
Federal Government.
It
is currently estimated that the MoveOntario initiatives (inclusive of Transit
City projects) will have a total cost in the order of $11.6 billion, including
$4.2 billion over the next five years and $19.9 million in 2008. Transit City
Plan Environmental Assessment (EA) work that commenced in 2007 ($1.3 million)
will continue in 2008 and 2009 (an additional $5.8 million) for a total
estimated cost of $7.1 million, with a further $17.1 million required to allow
engineering, design, and associated work to commence on the first priorities of
the Transit City Plan. This cash flow has been identified in the 2008-2012
budget request to the City and confirmation of funding up to $22.9 million over
the next two years has also been requested. The MoveOntario 2020 also includes
extensions to the SRT ($0.8 billion) and the Yonge Subway line north to Highway
7 ($2.4 billion).
Additional
details on Transit City Plan and MoveOntario 2020 are included in the capital
program supporting documentation.
The total
budgetary request for the base capital program, Toronto York Spadina Subway
Extension and the Transit City Plan first priorities for the 2008-2012 Capital
Program are provided in Table 3 below.
TABLE 3
WORKFORCE IMPLICATIONS
At the end of
2007, the TTC had an approved capital workforce of 1,123. More than half of these positions were for
hourly-rated workers who perform most of the major rehabilitation work on the
Commission’s assets covering everything from track installation to structural
work in the subway to signals, electrical and communication equipment work to
revenue vehicle rebuilds. The bulk of the rest of the employees are for design
and project management for major capital projects. The positions are tied to specific capital
projects and once those projects (or series) of projects are completed, the
employees are transferred to other projects for which they are suited.
In addition,
the Commission utilizes a series of external consultants, mostly for design and
IT project services, when the volume or skill of internal employees isn’t
sufficient to complete the capital program. During 2007, the TTC undertook an
analysis of both traditional engineering/construction work and IT project work
and have developed plans that will take a few years to complete to bring some
of this work in-house, where cost-effective and where there’s enough long-term
work to warrant the hiring of full-time employees and reduce the dependence on
consultants. Lastly, the Commission will be increasing its capital workforce to
accommodate new major projects, such as the Spadina Subway Extension and the MoveOntario
2020 projects as they receive funding approval.
The capital
workforce will increase as follows in 2008:
|
AREA |
2007 |
2008 |
CHANGE |
|
Engineering/Construction |
183 |
255 |
72 |
|
Spadina
Subway Extension |
3 |
21 |
18 |
|
ITS
Projects |
20 |
31 |
11 |
|
All Other |
917 |
880 |
(37) |
|
Total |
1123 |
1187 |
64 |
The listing
of all of the capital positions is included in the companion report to the
report entitled 2008 TTC Organization Charts, which list each position
in the Commission, including all of these capital jobs.
For 2009, it
is anticipated that there will be another increase in both the
engineering/construction and ITS areas as more consultant work is brought
in-house both to save money, to retain knowledge in-house and to handle the
increased workload. Further, commencing in 2009, it is anticipated that an
additional 5 to 8 staff resources will be required in the Legal, Materials
& Procurement and Finance Departments to support the Spadina Subway
Extension project.
SUMMARY
The TTC is
charged with the responsibility for providing efficient, safe and affordable
public transit to the residents of the City Toronto. The Capital Budget
detailed in this report attempts to strike the correct balance between keeping
the existing system in a state-of-good-repair, maximizing the use and useful
life of assets and providing for substantial expansion of the network over the
next decade or so. The plans contained
in this report ensure the City of Toronto continues to become the Transit City,
complete with extensive interconnections to the GO Transit and 905 transit
systems to form a comprehensive network throughout the GTA region: a Transit
City for all the world to see.
The public
has demonstrated their willingness to use public transit. The plans are
practical and achievable. All of this is dependent upon funding from all three
orders of government to achieve these plans.
While large sums of money have already been committed, not all of it has
been secured. Most importantly, significant
parts of the state-of-good-repair portion of the budget (the highest priority
portion of it), remain unfunded. Expanding the systems, as much as it is
needed, only makes sense if the existing system is property funded. The future looks bright. All that is needed is to close the remaining
funding gap and then getting on with the plan.
- - - - -
- - - - - - -
November
9, 2007
1-14-AMF
Attachment: Appendix A - 2008-2012 Capital Program
Summary
Appendix B – Summary of Funding Programs
Supporting Documents: TTC 2008-2012
Capital Program Overview
TTC 2008-2012 Detailed Blue Books