This week, Council will vote on items that will impact billions of your tax dollars, the future of our city’s transit system, accountability in our local government and our quality of life- including questions relating to Mayor Tory’s SmartTrack proposal and our request for an independent judicial inquiry into the Scarborough Subway Extension.
I’ve prepared the following missive for you to ensure that you have an opportunity to be informed about, and engaged in, these important decisions before Council votes on them over the coming days.
Transit planning in Toronto is dysfunctional.
Our city now specializes in building transit that serves the fewest number of people for the largest amount of money. Our existing system is overcrowded. The Spadina Extension and the Sheppard subway have monopolized scarce resources, leaving most residents of Scarborough, North York and Etobicoke with long bus rides before being able to access rapid transit. These bloated projects are plagued by low ridership, requiring significant subsidies.
The last week has been marked by revelations in the Toronto Star that critical information regarding the Scarborough Subway and SmartTrack was, respectively, misleading and “adjusted”. In an article released last week, it was exposed that City Staff told Council and residents that a subway project practically drawn on the back of a napkin (see fig. 1) was as far along as the LRT plan that was supported by a 300-page environmental assessment.
Another piece just released in the Star today shows that City staff changed modelling to adjust numbers to boost case for the Lawrence East SmartTrack station at the urging of Metrolinx.
Enough is enough.
I have brought forward a Member’s Motion (see Attachment 1 for full text) to tomorrow’s meeting of City Council requesting a Judicial Inquiry into the 1-Stop Scarborough Subway. I have also submitted questions to Staff for clarification through an Administrative Inquiry on some of the issues cited in the Judicial Inquiry motion.
It is unacceptable that critical information presented to Council by Staff regarding the Scarborough Subway in Staff Reports, briefing notes, and on the floor of Council appears was at times inaccurate, misleading, or incomplete. This is deeply troubling given that a decision on a multi-billion dollar infrastructure project was based on the information provided.
Today’s news regarding SmartTrack unfortunately suggests that we need to shine a light on transit planning as a whole in Toronto.
The last time the City established a Judicial Inquiry, it was in regards to the MFP computer leasing scandal. The Bellamy Report resulting from that inquiry led to the establishment of our 3 accountability officers and other measures to safeguard the City’s contracting process. Torontonians deserve the same type of assurances that decisions affecting billions of their tax dollars are spent on transit projects that use our scarce resources to support the most residents possible in getting to work or school and back, quickly and comfortably, so they can have more time with their friends and family.
This week, Council will decide whether to approve Mayor Tory’s revised SmartTrack plan as Toronto’s top transit priority. As I’ve written previously, I commend Mayor Tory for accepting that the Western Spur (new heavy rail line to the airport) portion of his plan is unworkable. As your councillor, the question I’m considering now is whether or not the plan as presented this week is well thought out, reflects Toronto residents’ priorities for transit, has a transparent financing plan and is worth a large investment of your money.
SmartTrack is based on the Province’s GO Regional Electrified Rail (RER) plan, which entails electrifying existing GO tracks. This infrastructure will facilitate new trains that. As depicted in the map below, the province is already providing a number of stations in Toronto. The new SmartTrack plan consists of 6 additional stations at St. Clair West, Liberty Village, East Harbour (Unilever site), Gerrard, Lawrence East and Finch East. The cost of the 6 additional RER stations is estimated to be $1.463B. In lieu of the “Western Spur”, a heavy rail addition Mayor Tory promised during the campaign, the Mayor promised a western extension of the Eglinton Crosstown LRT (this was part of the earlier “Transit City” Plan). This portion of SmartTrack has been delayed.
Go RER/SmartTrack Map
While I support the concept of better utilizing existing GO lines to serve Toronto’s transit needs, there is simply not enough information in the staff report provided to Council to determine whether these 6 stations are a good investment. I can guess that the Unilever and Liberty Village stations make sense based on the expected and existing density, respectively, of each location but the report before Council tomorrow does not provide clear information on basic attributes of SmartTrack including how often the trains will run or the cost of individual stations. The latter omission makes it impossible to assess whether each station provides good value for your money. Further, as outlined below, there are major questions regarding overall transit priorities, the funding mechanism, and the data used for revenue and ridership projections. No reasonable person should be expected to make a decision on a public infrastructure project for over $1 billion dollars with this little information.
Also absent from this report is any context regarding where these lines fit into Toronto’s transit network. The City’s Planning Division spent years developing the Feeling Congested framework to assess the utility of transit projects.
Top 5 Performing Rapid Transit Projects A. Relief Line (subway) E. Don Mills LRT N. Scarborough Malvern LRT R. Waterfront West LRT V. Waterfront East LRT
Next 5 Top Performing Rapid Transit Projects
C. Durham-Scarborough BRT F. Eglinton LRT West Extension K. Jane LRT P. Steeles LRT/BRT West W. Relief Line East Extension (Source: City Planning)
The above map shows the rankings of proposed transit lines using City Planning’s evaluation criteria. If Staff are, in effect, recommending that SmartTrack be built ahead of other projects that were deemed to perform better, such as the Relief Line, some explanation needs to be provided.
Financing Equally concerning is Tax Increment Financing, one of the financing mechanisms recommended to pay for SmartTrack.
Required City Contribution
Less Expected Federal Funding @ 40% of Contribution
Required City Net Funding Contribution (anticipated in 2025)
Total, $M (2025)
Estimated Debt Financing Charge (30-year debt in 2025)
Average Annual Debt Service Offset:
Net Tax Incremental Financing Revenues (net of IMIT grants)
City Building Fund/ Tax Supported Requirement
SmartTrack Stations Program Required Funding Summary
During the 2014 Mayoral campaign, John Tory pledged to fund the City’s contribution toward SmartTrack entirely through a mechanism never before used in Ontario called Tax Increment Financing(TIF). As the chart above shows, TIF is now required to fund roughly a third of the project – $525 million in 2025 dollars including financing costs.
As this Hemson report assessing the SmartTrack funding strategy stated: “TIF is not a revenue source in itself, rather it a method of dedicating a share of taxation revenue received in a given area to a specific purpose”. Depicted in the chart below, under a TIF, infrastructure is funded by capturing property tax revenue in the area surrounding the new asset that presumably wouldn’t have been created without the initial investment.
Professor Kevin Ward, Dept of Geography, University of Manchester
A public investment in a new stadium on a greenfield site (for example, the Canadian Tire Centre where the Senators play in Kanata outside Ottawa) is a classic example of how, if employed, a TIF might have had merit. In this example, a TIF may be a reasonable funding tool as any new restaurants, hotels, or souvenir stores in close proximity could reasonably be attributed to the stadium. The idea is that, over time, the government recoups its investment from the new property tax revenue at no cost to municipal ratepayers. As well, the municipal services required in the area could be minimal if it is largely commercial.
Canadian Tire Centre in Kanata, Ontario
Using a TIF to fund SmartTrack, however, is deeply problematic.
To start, as shown in the map below, the City proposes the establishment of TIF zones around all 14 stations built as part of the GO RER network, not just the 6 SmartTrack stations. That means that the City proposes to capture property taxes from new development to pay for SmartTrack from areas in which growth cannot be attributed to SmartTrack.
SmartTrack Tax Increment Zones
A Report by Strategic Regional Research Associates (SRRA), forecasted that the majority of the growth attributed to SmartTrack would occur in the close to downtown, such as the Unilever site and Liberty Village. In these high growth areas, it is dubious to attribute new development to the introduction of a station. Liberty Village, for example has no problem attracting growth, is almost built out in the residential section, and much of the employment-designated area in the western portion has heritage protection which limits development opportunities. In fact, SSRA modelled growth based on 12 storey office buildings in this section of Liberty Village despite a cap on height almost half that number.
The residents of Liberty Village desperately need new transit because of the density that already exists. To suggest that significant new growth will occur as a result of that needed transit does not match up with the reality on the ground.
SSRA’s commercial office projections, which formed the backbone for the TIF projections, were peer reviewed by Cushman & Wakefield as well as Ernst & Young. Both firms raised serious concerns about the impacts on TIF revenue resulting from the assumptions and data that SSRA used.
As Ernst & Young points out, SSRA states that they used the Provincial Growth Plan as the basis for their macro growth projections for Toronto. The SSRA report was completed in 2015. While the Plan was updated in 2017, it obviously wouldn’t have been available in 2015. The most up-to-date Plan would have been done in 2006.
The SSRA report also does not factor in the time elapsed between the report completion date (2015) and the year in which the City starts collecting TIF revenues (2019). This means that developments already underway or approved in between those years would be part of the 2019 base year and could no longer be collected under TIF. The discrepancy could result in inflated revenue projections.
Cushman & Wakefield and Ernst & Young both warned against SSRA’s assumption about how much office space each worker will be afforded in new developments in making their office space projections. Despite the market trending toward denser work environments, SSRA used an average of current urban and suburban office spaces, resulting in an assumption of 209 sq. ft. per office worker as shown in the “Base Case” below.
The base case projection for development projects a yield of $1.454B, $1.567B, $1.791B under, respectively, low, medium, and high growth scenarios. Ernst and Young performed several sensitivity tests for TIF yields. In the chart below, the firm has lowered the anticipated office space to 150 sq. ft. per worker to be more in line with expected market demand. As shown below, this one adjustment results in yields that are 8-9% lower across the growth scenarios which would result in a shortfall requiring property taxes of $115.8M, $143.5M, and, $143.1M, respectively, from low to high growth scenarios.
This review by Ernst & Young was not attached to the Staff report. The City’s Staff Report on the financing strategy does not provide any detail on the funding risks cited in the review.
The only project of a similar scope to be financed using TIF, at least in part, is the $3-billion Hudson Yards project in Manhattan, which includes a subway extension and other infrastructure. According to a May 2016 report released by New York City’s Independent Budget Office, expected development has fallen far short of projections, leaving a shortfall of more than $141 million to be borne by taxpayers.
A report on the use of TIFs in Chicago by the Cook County Assessor’s Office found that the financing tool was ineffective: “Despite the extensive use of TIFs in Chicago there is little empirical evidence of the effectiveness of TIFs in promoting economic growth, while there is some indication that they benefit disproportionately from already occurring growth.”
TIFs strike me as basically a shell game played with City revenues, and it will be residents left footing the bill if Mayor Tory loses this gamble.
Service Frequency In the main section of the City Staff report, the map below depicts service frequencies for SmartTrack/GO RER.
The chart below shows Metrolinx’s service levels.
The figures in the two charts appear to be the same except for Lawrence East Station in Scarborough. The City states that 7 trains will run every hour, or one train every 8.6 minutes while the Metrolinx chart states that only 4 trains will run every hour, or one train every 15 minutes. It is important to note again that SmartTrack is simply 6 additional station to Metrolinx’s GO RER plan. Metrolinx will run the trains and determine service frequency.
The service frequency discrepancy puts other elements of the City’s case for SmartTrack into question. The most obvious impact of fewer trains would be a significant drop in ridership. Fewer users could have several ancillary impacts, including lower fare revenue and lower than projected development potential around stations which would further jeopardize TIF revenues.
The Staff report backed up their service frequency claim by citing previous Staff City reports, which are not relevant.
I share Toronto residents’ frustration about the lack of progress on public transit over many decades. Far too often, politics has come before people when it comes to transit planning and the decisions made. I want our city to focus on relieving the existing overcrowding on our subway, bus and streetcar lines and expand our rapid transit network to truly connect Toronto’s neighbourhoods.
Ultimately, many residents will continue to be reliant on their cars until we finally have a transit system that is accessible, affordable and actually gets people where they need to go.
On your behalf, I will continue to advocate that we move forward now on building transit that’s based on evidence and focused on Toronto’s real and pressing needs.
NOTICE OF MOTION
Accountability and Transparency in Transit Planning: Authorizing a Judicial Inquiry into Information Provided to Councillors Regarding the Scarborough Subway Extension and the Scarborough Light Rail Line at the July 2016 Meeting of Council
1. On July 4, 2016, a briefing note produced by the TTC appeared on CP24 regarding the possibility of moving forward with the SLRT. The contents of the briefing note were cited numerous times by Staff and Councillors during the Council meeting of July 12, 2016.
2. Against Council procedure, the TTC only shared the note with the office of the Mayor and the TTC Chair.
3. The Briefing note did not say that the SLRT was a project of Metrolinx, nor did it say that Metrolinx would be responsible for the cost of the SLRT as per the still in force Master Agreement.
5. The Briefing note incorrectly inflated the cost of the SLRT by assuming that the start of construction would have to wait until work on the Eglinton Crosstown was completed at Kennedy. However, an April 25, 2012 Metrolinx Board Report states that Metrolinx was explicitly planning to start at the north end of the line first to speed up construction time.
6. The TTC stated that they believed that construction required for the SLRT at Kennedy Station was the “critical path” of the project, meaning that the construction would take longer at Kennedy then the rest of the other construction elements. The TTC did not check this information with Metrolinx.
7. The same 2012 Metrolinx Board Report, states that, at the time, the Eglinton Crosstown was expected to be completed in 2020 and the SLRT’s completion date was 2019. These construction timelines required that work occur simultaneously at Kennedy Station to facilitate both projects.
8. Further, Par. 90 of the Auditor General’s (AG) report on the briefing note states that the AG contacted Metrolinx staff during their investigative process to determine if changes could have been made to accommodate starting the build of an SLRT at Kennedy Station. Metrolinx advised that: “There would have been many critical path items on the project (e.g. tunneling, stations), therefore it is not accurate to say that it was a major element on the project. The Kennedy Station was designed to accommodate an extension into Scarborough. If the City decided to proceed with LRT the design would need to be modified. The design was in early stages in 2016, and this likely could have been accommodated.”
9. Par. 100 of the AG’s Report states that Bruce McQuaig, former Metrolinx CEO, emails the Andy Byford, former TTC CEO, on June 29 to ask him how the TTC arrived at the $3B cost estimate for the SLRT.
Mr. McQuaig tells Mr. Byford that the starting figure of $1.8B should be reduced by $320M. Despite the individual responsible for the SLRT telling Mr. Byford that he was incorrect, Mr. Byford did not change the cost estimate to reflect this information despite ample opportunity.
He didn’t issue a correction when the briefing note was leaked to CP24.
He didn’t change the figure when a revised copy of the note to the Mayor’s office almost a week later
10. There was no balancing information regarding the SLRT in the briefing note. An objective analysis of the SLRT should have included, at a minimum, information stating that:
capital costs would be borne by Metrolinx
provides more stops for a lower cost
serves more priority neighbourhoods
Could be built faster
More advanced stage of design than the subway
Would be in its own corridor and capable of travelling at the same top speed as a subway
Misleading SSE Completion Timeline
11. The chart below from the July 2016 SSE Staff Report states that the construction completion date (2025) is contingent upon Council choosing an alignment at that meeting in the third bullet underneath the chart
12. The recommendation regarding the SSE before Council at the July 2016 meeting was: “3. City Council request the City Manager and the Chief Executive Officer, Toronto Transit Commission to remove from consideration the 3-stop McCowan Scarborough Subway Extension (SSE) and continue to develop an SSE Express option, by conducting the following: a. retaining the services of a third-party rail transit construction and cost –estimation expert to undertake a risk assessment and detailed review of the TTC’s 5 percent design cost estimates for the McCowan corridor and other possible express subway alignment options”
13. The Staff Report presented a completion date and cost that assumed a choice not even available to Council. The recommendation regarding the subway does not provide the option to choose an alignment. The March 2017 SSE Staff Report states that the line will now be completed in mid 2026.
14. During the Questions to Staff portion of the debate on EX 16.1 Developing Toronto’s Transit Network Plan to 2031 at the July 12, 2016 Council meeting, Councillor Colle asks the Chief Project Manager for the Scarborough Subway Extension a question regarding the design completion status of the project Councillor Colle: “And where would the subway be at design percentage of design completion? Around 5 (per cent) I think I’ve heard?”
Chief Project Manager: “Uh, we’re currently at about 5 per cent, yes.”
15. The Chief Project Manager’s answer is reinforced by the same chart provided in ’11’ from the Staff Report which states that the cost estimate provided was “developed at approximately 5% design”:
16. These statements from City Staff contradict information provided by consultants after the July meeting.
17. In its TTC Estimate Peer Review of the SSE dated November 4, 2016, Hanscomb provided the chart below which shows the documentation that they used to base their peer review of the TTC’s work. Hanscomb notes that they were careful to base their review on the same documentation that the TTC used.
18. The chart indicates that all of the documents were dated after the July 12, 2016 Council meeting except “Technical Memo + sketches 1-22” which relate only to the design of the station. Despite the name, the document only contains 3 sketches. All are hand-drawn.
19. Hanscomb’s report states that the SSE was at 2-5% design with all of the documents that were received. That statement conflicts with the statements from City and TTC Staff cited above that the subway was at 5% at the July 12 Council meeting given that the single completed document at that time was related to the design of the station only.
1. City Council authorize the City Clerk to establish a judicial inquiry, similar to the Toronto Computer Leasing Inquiry presided over by Justice Bellamy, to investigate the information provided to Council regarding the Scarborough Subway Extension and the Scarborough Light Rail Transit project in the lead-up to, and at, the July 2016 meeting of Council.