Today Tue Wed
It is forcast to be Mostly Cloudy at 11:00 PM EDT on April 21, 2014
Mostly Cloudy
20°/11°
It is forcast to be Rain at 11:00 PM EDT on April 22, 2014
Rain
15°/2°
It is forcast to be Partly Cloudy at 11:00 PM EDT on April 23, 2014
Partly Cloudy
11°/2°

78 Comments

cityscape

How Much Would a Scarborough Subway Extension Really Cost?

Why the headline-grabbing cost figures don't tell the whole story.

In May, city council met to discuss 15 different revenue tools—that is, different types of taxes and fees—to fund the proposed “Big Move,” Metrolinx’s long-term transit plan for the Toronto region. But there was a problem: a majority of councillors like public transit, but they don’t like to pay for it.

Councillor Giorgio Mammoliti (Ward 7, York West) put forward a motion in support of a Finch West subway, a line not included in The Big Move, but said he couldn’t support $1,000 per household in new taxes (although the recommended total would average $500 per household). Councillor Cesar Palacio (Ward 17, Davenport) said he couldn’t support taxing the middle class and working poor to pay for The Big Move. Councillor Frances Nunziata (Ward 11, York-South Weston) said that her residents couldn’t afford $100 a year for public transit if they weren’t going to get anything from it, let alone $1,000. “Are we crazy?” asked Nunziata during her speech to council. “We’re crazy!” she confirmed.

In particular, council showed no appetite for a property-tax increase, which was rejected by a 41-2 margin. But that was May. And since council is crazy, it’s about to debate this again. With a Ford-approved Scarborough subway extension within its grasp, council is more likely to approve tax increases than it was just a few months ago. Here’s a look at the funding recommended by City staff, the problems spending that money would pose, and how much it might cost the average taxpayer.

The Background

The proposed three-stop Scarborough subway extension currently has funding from the provincial government ($1.48 billion) and the federal government ($660 million). But subways are expensive, and there’s still a $910 million funding gap for the City to make up. According to the City manager’s July report [PDF]—which was prepared in only 10 days—the recommended way to fund the remaining $910 million is a mix of property taxes ($745 million) and development charges ($165 million).

Since a subway extension is a capital asset, it would be paid for over the course of 30 years, which is the maximum duration for municipal debentures. What this means is that the City would add to its debt, and would pay the interest and principal by increasing property taxes and development charges.

The City manager estimates that the required property-tax increase would be 1.6 per cent. If council follows staff recommendations, the increase would be phased in over three to four years, but already some councillors are balking at the amount needed. Councillor Gary Crawford (Ward 36, Scarborough Southwest), a member of the mayor’s executive committee, told the Globe that $745 million is a greater property tax increase than he’s comfortable supporting. At Wednesday’s TTC board meeting, Councillor John Parker (Ward 26, Don Valley West) expressed his opposition to the plan by using the mayor’s campaign rhetoric: “There is only one taxpayer and we’ve got to stop the gravy train.”

For his part, the mayor has repeatedly said that he supports no more than a 0.25 per cent tax increase each year for four years, which he claimed in a July council debate would only cost $5 per household each year. This is true for the first year of that plan, but by year four it would cost about $23 per average household each year, because property tax increases are cumulative. Another thing the mayor seems not to understand is that even if this tax increase were in place for 30 years, it wouldn’t be enough to finance the subway extension.

With an assumed 4.2 per cent interest rate, the 30-year loan for the subway extension would cost an estimated $38 million per year in additional property taxes. With one million households in Toronto, that’s $38 per home in 2013 dollars until at least 2044.

The Risks

The $910 million, or $38 million per year, is far from a final price tag. In fact, the TTC includes a 30 per cent variance in its estimates, meaning the City could end up paying far more if planning and construction problems arise (or, less likely, 30 per cent less). Unlike the fully-funded LRT plan, the subway plan contains no provision for the province to cover cost overruns. That means that if the $3 billion project exceeds estimates by 15 per cent, the City could find itself having to raise another $450 million through debt, which would cost an additional $342 million in interest over 30 years. According to the City manager, the responsibility for cost overruns still needs to be finalized, but it appears unlikely that the City will get additional concessions from the province. A September 10 letter from Metrolinx to the City said, “The extension of the TTC’s subway would be a City/TTC project, and the City would be responsible for project scope and schedule, including any cost overruns, operating costs and maintenance costs.”

There are other risks the City faces. While the provincial and federal funding is inflation protected, the City’s portion, funded by debt, carries interest-rate risk. According to the City manager in July’s council meeting, every increase of 25 basis points in borrowing costs would add $5 million a year to the project’s costs—the equivalent of an additional 0.25 per cent in property taxes.

This additional debt would also be added on to the City’s debt-service charges, and would raise the threshold of debt as a per cent of property taxes by one per cent, from 12 to 13 per cent. This would bring the City to within two per cent of its self-imposed debt ceiling.

There are costs on the operating side, too. The previous plan for this corridor called for a Scarborough LRT, which would have had its operating costs funded by the province. No such deal exists for a subway extension. The City would have to pay an estimated $32-64 million a year to maintain the three additional subway stations and pay for state-of-good-repair costs, money that would be an additional drain on the TTC’s limited operating funding.

Opportunity Costs

Whenever you make a big spending decision, it’s not just about what you buy, but what you could have done with the same amount of money. In Toronto’s case, there are a number of things that $745 million could pay for. For instance:

  • The TCHC’s $751 million state of good repair backlog
  • Flood protection for the lower Don River, at an estimated $600 million
  • Reducing the TTC’s $2.5 billion state of good repair backlog by 32 per cent
  • Resurrecting the 16.5 km Jane Street LRT line, at $630 million
  • At $12,000 each, a Kyle Rae-style retirement party every four hours for the next 30 years

The Conclusions

Raising money for transit investment is not bad in and of itself. What’s needed is an honest debate about the value of that investment relative to the full scope of the City’s financial exposure. Given the extremely preliminary nature of this subway plan—environmental assessments won’t be available for three to four years—costs could very well escalate, with property taxes likely making up the difference. In the meantime, committing to this subway extension also means the City gives up future financial flexibility, making it more difficult to fund future projects like the downtown relief line, deal with infrastructure problems as they arise, or maintain service levels.

Comments

  • OgtheDim

    Pixie Dust and Unicorn Emissions come quickly…..we are in need!!!!

    • dsmithhfx

      Rob saved us a billion dollars. He’s got it in a duffle bag under his desk. Use that.

      • wheeler98

        How do you think he paid for Fordfist?

  • wklis

    But wasn’t the private sector lining up to pay for subways, subways, subways?

  • Rob Ford

    SHUBWAYZZZ!!!

  • Gordon Yarley

    Please may saner heads prevail and get the damn DRL started already!
    Lakeshore east, and west LRT lines and Jane LRT would be great!

    • OgtheDim

      Jane isn’t going to happen. Can’t put it on the streets north of Bloor.

      • HotDang

        Have it end at the new subway station at Jane and Dundas then.

      • tyrannosaurus_rek

        Why is that?

        • HotDang

          Too narrow or whatever.

      • nevilleross

        Bullshit. Have it run above the street from Jane Station for a couple of blocks, then have it be underground when it gets north of Bloor. Simple.

        • nomoremicrophones

          jane station is right at bloor – did you mean have an LRT go underground north of dundas? also, jane has two significant valleys – the hurrican run off channel at alliance, and eglinton flats. just past wilson, jane dips again for black creek. underground on jane seems to have quite the challenges.

          • nevilleross

            Have the LRT replace the buses is what I’m talking about; that’s what should be done.

  • tyrannosaurus_rek

    $1,000 a year is nothing compared to what people pay for gas, car insurance, maintenance, roads, and other driving-related expenses. And people do that willingly. Fire these councillors.

    • tomwest

      Yes, but when I spend money on those things, they benefit me. Why should I spend money on something that doesn’t?

      • tyrannosaurus_rek

        Getting people out of their cars benefits you in yours. Getting your employees or coworkers to work on time benefits you. Having a backup plan for when your car won’t start or gets towed benefits you.

        • Your Momma

          such a simple concept, but it is always lost of the pro-car fools.

  • zamarax

    believe it or not I don’t agree with the tax hikes, the TTC needs to revist it’s billing plans, you should not be able to go from one wide end of the city to the other for $3.00, no other place in the world has it like this.

    • tyrannosaurus_rek

      They need to re-examine their advertising rates too. With the constant bombardment of ads on the TTC, how is it possible it only offsets the fare by 5 or 6 cents a ride?

    • OgtheDim

      Good luck getting a majority of council to go for zone fares. And good luck trying to run a business when people have to pay more to go across this city to work.

      Its not simple.

      • zamarax

        it is simple – Toronto is the only place in the developed world that is like this, at least to my knowledge.

        • OgtheDim

          OCtranspo, for one.

          Heck, most of Ontario.

          • Justin Bernard

            Montreal, Calgary, New York, Los Angeles..

          • Sean_Marshall

            OC Transpo does charge more for suburban express buses and rural connection routes which is sort of a fare-by-distance scheme, but the local (1 through 19 and 80-series and 100-series routes) and mainline Transitway routes (90-series routes) are flat rate with free 90 minute transfers. Most commutes to middle and outer suburbs are on the green extra fare express routes. York Region is the only local transit system in Ontario with a true zone fare system.

      • zamarax

        TTC Blue line, 38KM for 3 bucks? Get real.

        • OgtheDim

          Try telling that to the people in Malvern who work downtown.
          Or running a business on the edges and trying to get decent staff.

          • tyrannosaurus_rek

            Nobody decent lives near “the edges”?

          • OgtheDim

            Impossible to get all your staff living close to you. That, and its illegal to hire based on postal code.

            Quality comes from everywhere.

    • Lloyd_Davis

      TTC fares support its operating budget, covering about 65 percent, which is quite high for transit authorities in North America or Europe. And flat-rate fares are generally the rule on municipal transit systems throughout North America.

      The TTC once had zone-based fares, which were introduced with the advent of Metro Council, which required the TTC to expand its service into the suburbs.

      But when the subways were expanded beyond the old Toronto city limits, into Etobicoke, Scarborough (yes, Scarborough!) and North York, there wasn’t a practical way to charge subway passengers when they crossed a zone boundary. Also, the suburban zones ended up getting all combined into one big zone, so you could essentially go from Rexdale to Scarborough on one fare. So it was scrapped.

      With a fare-card system, you could conceivably debit subway riders based on distance travelled by making them put their card through a reader when they get on and off. Not sure if that would be practical on buses or streetcars, though. And anyway, in the short run, there’d be a significant cost for the technology. Other transit agencies charge for transfers. Problem with fare increases and these additional charges, though, is that they put the biggest dent in the wallets of those least able to pay — and who rely on transit already because they can’t afford to own, maintain and (downtown, at least) park a car. So you’d have to come up with some sort of rebate. Which would undermine the effect of raising the fare.

      Besides which, as I say, fares support the operating budget, not the capital budget. You want to build subways, subways, subways, you have to issue debt, debt, debt. And that gets paid out of property tax increases.

      • tyrannosaurus_rek

        “Other transit agencies charge for transfers.”

        Where? What an odd idea.

        I support distance-based fares though.

        • Sean_Marshall

          Washington DC not only charges by distance for its Metrorail system, but has separate fares for the buses; there are no transfers permitted if you pay cash, there’s only a discount for rail/bus transfers for farecard users (bus-to-bus transfers are free with a farecard). Buses aren’t generally fare by distance, though longer express routes and the BWI and Dulles airport routes are higher-priced.

          • Torontopoly

            I believe London is the same boat. Everything is distance based but a bus is an additional 90p with an Oyster Card if I remember correctly (lived there briefly in 2008). Correct me if I’m wrong and I’ll retract.

        • Lloyd_Davis

          Chicago is one that comes immediately to mind. Basic fare is $2.25 for the L trains, $2.00 for the buses, and transfers are 25 cents each. If you use a prepaid card, you get debited the base fare when you start your trip. Then, if you transfer between modes, or from bus to bus, you swipe your card again and it docks you 25 cents.

          (Since tracks are often shared by more than one route on the elevated portions, you can switch between trains for free. You can also switch between the elevated and subway lines at designated points.)

          I believe you can also get off a bus or train and then resume your trip within a certain time frame for just the price of a transfer. Not sure about that, but I once took the train from the north side to my downtown hotel, checked out of the hotel and picked up my luggage, and then boarded the train to go to O’Hare airport. My fare card was only charged 25 cents. Which would’ve been cool, except I’d topped it up that day to cover those last two train fares. So the CTA got the extra two bucks anyway.

          From what I can make out on their website, Philadelphia’s SEPTA system charges a buck a transfer.

          • Sean_Marshall

            I have a D-DOT (Detroit) Woodward bus transfer from 2003. I paid 25 cents for it in addition to the $1.50 cash fare at the time. I wasn’t planning to transfer to another D-DOT bus when I asked for it, I just wanted the souvenir.

    • https://paul.kishimoto.name/ Paul Kishimoto

      “no other place in the world has it like this.”

      Beijing’s Line 10 is 57 km long. The entire subway system has a flat fare of CNY 2, which is about 30 cents Canadian. Downvoted!

  • Lars Nordgren

    According to the TTC, the life expectancy of the LRT is 40 years, for the subway 100 years.
    Why did we decide to buy expensive new street cars for downtown, when David Gunn states that we could have achieved the service with buses. We are also wasting valuable waterfront land building a new streetcar garage. Where was the outrage about that.
    The downtown elite is upset that the suburbs are not putting up with ‘good enough’ anymore!

    • OgtheDim

      When asked about life expectancy, the question is answered based on the life of the tunnel vs. the life of the outside rails.

      The cars last about the same.

      As do the rails.

      BUT, and this you maybe haven’t thought through.

      Cost of LRT infrastructure above ground to maintain is the cost of a few shelters and the rails.

      The cost of subway infrastructure below ground is

      The tunnels
      heating
      lighting
      seats
      stairs
      elevators
      ticket takers (automated or not)
      turnstiles
      air conditioning
      washrooms for maintenance staff
      cleaning

      etc. etc. etc.

      I suggest you do a bit more thinking through what actually happens in transit rather then focus on a proof text.

      I’m no downtown elitist.

      I’m a right of centre person who lives in Willowdale who takes that boondoggle called the Sheppard subway every day.

      And I despise the idea that “good enough” is why Scarborough shouldn’t get a subway.

      Scarborough shouldn’t get one because ITS A WASTE OF TAXPAYER’S $.

      • Lars Nordgren

        Thanks for confirming your belief that folks in Scarborough should stand outside freezing their butts off in a shelter, while you are comfy in your subway.
        The SRT is a total write-off after 30 years, the subway is still ticking along.

        • MER1978

          Have you been in one of our subway stations lately… much of the time the air is muggy and they’re sweltering hot… hardly the luxury environment you seem to think they are.

          Also you do realize that there is a LOT more to the network than just subway… hundreds of thousands are taking the streetcar system alone… and then there are thousands of buses… I suppose we could just build subway for absolutely everyone… oh wait we can’t do that because we don’t have unlimited money.

          • tyrannosaurus_rek

            If Scarborough gets a subway extension just to spare them a transfer, everyone in the city deserves door-to-door subway lines.

        • OgtheDim

          Oh, I freeze…3 buses each way per day + that subway. You wanna tub thump about who freezes more?!?!

          BTW, unless people actually live on the line, they will still be freezing waiting for a feeder bus.

          The SRT is at total write off because it was a BIll Davis political decision. Do some research.

          • Lars Nordgren

            So just because I disagree with your learned opinion, I should do more research.
            And, this subway has left the station! Perhaps you should research the art of politics……

          • OgtheDim

            Lars, if you want to play tether troll, please be aware I’ve been doing this since 1985.

            Ur no Rich Rosen.

            In other news:
            You were the one who equated the dying SRT technology with LRT. I rebutted. If you can’t handle being rebutted…..

            Oh, and this is far from over. The EA hasn’t even started yet. Lots of time for this to change.

          • Testu

            I love how every time one of these articles comes up someone who usually spends their time trolling the Sun’s comment section will stumble over here and try to stir things up.

            They invariably get schooled because they haven’t the faintest clue what they’re talking about and slink off after a couple non sequiturs.

            I wonder how much more fulfilling it would be to actually spend some time learning the subject matter?

          • vampchick21

            Given that you think downtown dwellers all have magic subway stops outside their front doors…..yes, you should do some research. Start with imposing a map of the current subway system over a map of the city and look hard.

          • nevilleross

            Here’s something for you to study so that next time, you aren’t regarded as a moron when it comes to talking about subways and LRT: The Toronto LRT Information Page

          • Don River

            Next time you call someone a moron, you might want to post the correct link.

          • nevilleross

            Big whoop. At least the stupid neocon moron can Google-search it.

          • Don River

            Pointless site regardless. It’s patently obvious what York Region will get on Yonge up to Richmond Hill.

          • nevilleross

            Pointless only to morons like you and him who know NOTHING about public transit, and so vote in politicians like Ford that pull stupid shit like this.

          • Don River

            It’s already in the Big Move you idiot. York Region is getting a subway extension to Richmond Hill, the only question is when, and it’s got absolutely nothing to do with the crack smoking mayor.

            I’ll put up my knowledge of public transit against a douchebag like you any day of the week.

        • MER1978

          It’s fun to pretend like Toronto is somehow the arctic etc.

          Maybe if we had consistently cold weather we could look into installing heaters like the ones Ottawa has for its Fallowfield BUS transitway station where users hit a button to turn on the heaters for 10/15 minutes.

          I would rather they put that money into more vehicles on the road myself… but what do I know about brutal cold Toronto weather… I walk 20 minutes to and from work every weekday all year.

        • vampchick21

          I live and work downtown and take surface transit twice a day, 5 days a week. Trust me, in winter I stand and freeze my butt off too in a shelter – if there even is one at my stop. Trust me, the vast majority of people coming into downtown to work on the subway live in Etobicoke, North York and Scarborough.

          Seriously, stop bloody thinking that downtown dwellers have magic fucking subway stops outside their doors. LOOK AT A MAP. I live nowhere near the subway. To get to a subway I have to take a bus to Bloor or a Streetcar to University. PAY ATTENTION.

        • nevilleross

          Thanks for confirming that most people from suburban Toronto are stupid dumbasses that vote for idiots like Rob Ford and can’t take time to learn or understand about transit. You’ve just made most of suburbia look like fools to the rest of the planet.

          • Don River

            Get real. The rest of the planet doesn’t care who our mayor is.

          • nevilleross

            Unfortunately, id does, since most news about Toronto’s been about how he fucking up all of the time (he’s even appeared on The Daily Show! Get your head out of your ass and face reality.

          • Don River

            It only matters what the American celebrity system thinks of us if one is a starfvcker. Fortunately I’m not cursed with that affliction.

          • nevilleross

            It’s not just the Americans, asswipe, but the rest of the world, wondering if we’ve lost our minds here in Toronto by voting for somebody like Ford. Better wise the fuck up and stop supporting this fool and his shitty transit ideas.

          • Don River

            Get real, the rest of the world cares even less.

            Stop embarrassing yourself with the drama queen act.

          • nevilleross

            You’re the one that needs to get real, asswipe-about Ford, and this upcoming white elephant subway line that he wants to build in Scarborough for ignorant morons like you that don’t know any better about what modes of public transit work best in certain areas. You and all of the other assholes that voted for Ford have just saddles the city with yet another subway to nowhere that will be as wasteful as the Sheppard Stubway.

          • Don River

            Feel better? Now go back on your meds and post another reply in another week or two.

          • nevilleross

            Go back on yours, you neocon asswipe.

    • HotDang

      Why shouldn’t you put up with “good enough?” What’s wrong with “good enough?”

      We downtown elites have been living with “not good enough” for at least a decade.

    • MER1978

      “The downtown elite is upset that the suburbs are not putting up with ‘good enough’ anymore!”

      Well or people from all over the city who will be paying for this wasteful extension aren’t impressed with the BS logic being used to justify its construction.

    • Lloyd_Davis

      Gunn also thought it was insane to run the entire Eglinton Crosstown LRT through a tunnel, but Ford wanted it and we got it. As for replacing streetcars with buses, that’d be a brilliant idea if the streetcar routes didn’t follow streets where there’s on-street parking. So buses would occupy the same space as the streetcars do, except of course when they’re swerving in and out of traffic to take on and drop off passengers. Living near the stretch of track shared by streetcar routes 504 and 505, I’ve seen how effective buses are at replacing the streetcars whenever there’s track work or some other disruption (for instance, the fire at Gerrard and Broadview). Gunn’s a straight-talking guy, so I’m sure he would not blush if I used the word “clusterfuck” to describe the result.

    • tyrannosaurus_rek

      Have you been downtown during morning rush hour and had to rely on streetcars? They’re barely keeping up, just as packed as the subway; no way in hell buses could do the job.

    • dsmithhfx

      You must like paying higher taxes for less service. Seems to be the Ford Nayshun way.

    • OgtheDim

      On another note: valuable waterfront land?!?!.

      You ever been down there? Its across from a Canadian Tire Rio-Can mall.

      Its not like its on a jetty at the foot of Yonge.

  • vampchick21

    Because they’ve bought into bs rhetoric from a born rich politician hook, line and sinker. Because they think taxpayer dollars are a precious, precious resource that must be stored in a giant room for a talking duck to swim in.

  • Lloyd_Davis

    Well, as we can see, our political leadership don’t understand the benefits of improved transit (and planning transit according to evidence-based methods rather than political expediency), so there’s no way they can make the case to citizens.

  • MS

    I’m not averse at all to paying taxes for transit. I’m averse to paying taxes for this stupid transit – a subway tunnel that will run 90% empty for the foreseeable future – when there is good, necessary transit that desperately needs to be undertaken and isn’t going to be, because all the money has been spent stupidly.

  • crazy town

    Ah Toronto…you so crayyyyzaaay

    Cheers

  • OgtheDim

    You can say it but it won’t get you anywhere on the transit file.

    Transit has been a Metro thing for close to 60 years now.

  • Steve Fleck

    Well said. That pretty much sums Rob Ford up. How Ford supporters get conned into this, is extraordinary. It’s not that complicated, but somehow Ford has duped them time and again. The Ford policy strategy seems to be tell people what they want to hear, even if it’s a total fantasy or completely improbable.

  • tyrannosaurus_rek

    I don’t disagree. I took issue with the claims that $1,000 a year is too much to spend on transit and doesn’t benefit anyone in cars. We should have been digging the DRL back in the 80s and 90s, and if Ford hadn’t turned city hall into a circus we’d be counting the months until Transit City’s completion.

  • OgtheDim

    Elevate = expensive

  • TomLuTon

    The original RT cars were found to have a wider turning radius than previously thought, which is why the turning loop at Kennedy was abandoned and the entrance to Kennedy was rebuilt. Skytrain cars are a later version of the RT cars, and are incapable of making the rebuilt tight turn into Kennedy Station, and there is no room to rebuild the entrance again.

    Originally there was a plan (circa 2006) to build a new Kennedy RT station between the bus terminal and the GO tracks, but this was abandoned when Transit City was proposed. The RT would have been rebuilt into an LRT, connected to the Eglinton line, and then extended north to meet the Sheppard LRT

  • walrusaurus

    If subways “last over 100 years” why is the Yonge line completely shut down south of Bloor for this entire thanksgiving weekend? Why is the Yonge line between St. Clair and Eglinton going to be shut down completely for *two full months* next year for repairs?

    “Subways last 100 years and LRTs last 30″ is complete bullshit populist vote-pandering propaganda.