Calgary Public Transit II

[suburb]

Originally Posted by reflexzero

Seems odd that they would try to rip you off for $70.00 and then not have power.

$70 for a month of parking is hardly a rip off - especially when you have the free option. With an average of 22 working days per month and 10 hours per day parking, that is $70/220hrs for a reserved spot - or about $0.30 per hour. In comparison, you only get 5 minutes in many places for a quarter.

Personally, given they have the free option available now also, I think the price for a reserved spot should be more in the $100 range. That would likely cut down the reserved spots to 30%.

[outoftheice]

Interesting development in Toronto regarding Rob Ford's plan to build an extension to the Sheppard Subway. From the Globe article Ford pitches private financing plan for Sheppard subway extension. By: Kelly Grant http://www.theglobeandmail.com/news/nati...toronto-subway-extension/article1910067/ Of note...

...Mr. Towhey said the city intends to seek a private-sector partner who would build, design and finance an extension of the Sheppard subway east to the Scarborough Town Centre and west to Downsview station.

If the plan is approved by the province and city council, the city would continue to own the longer Sheppard line. The city would pay back the private consortium's initial investment using tax-increment financing and an increased transit-oriented development fee in a narrow band along the Sheppard line.

“We’re quite confident that there will be considerable interest in this kind of an opportunity for the private sector and the public sector to work together,” Mr. Towhey said...

Now I realize that this article is about Toronto, however I think it is the first time that a true private-sector partnership has been considered for financing the construction of a rapid transit line in Canada. Perhaps now is the time to bring this debate to Calgary? I have always been a strong advocate of building the North Central LRT up Centre Street and linking it in with the SE LRT. There's all kinds of benefits to doing this and I've expressed a lot of them on the website I created. http://www.growsmart.ca The biggest draw-back to the proposal is the huge cost associated with it... However a P3 would allow both the City and the Province to defer those expenses for at least 5 years while the construction takes place (and the economy continues to recover), and then break the cost down over a 30 year term. It also opens the door for the participation of the federal government by allowing them to spread their contribution over multiple budget years.

Mayor Nenshi has had a cold reception to his idea of a penny tax to pay for culture and art projects, but I think people may be a bit more receptive to the idea if the penny tax is associated with such a large scale project such as this. Imagine the following announcent from the Mayor's office: "We are going to build an LRT that stretches from the North end of the City to the deep SE. It will have a positive impact on a huge number of people in Calgary. It will help alter the development pattern of the City and bring us closer to achieving the goals set out in Plan It: Calgary. This represents a potential $11 Billion in infrastructure savings that can be passed on to taxpayers. Over the next 35 years we will collect an extra 1% of GST here in Calgary to pay for our share. This will allow us the freedom to pay for this project without impacting spending in other areas. Once we have repaid the private consortium, the tax will be dropped." I think that will have a lot more political traction than any plan to pay for rec centres or a library. Indirectly, it will still help these projects because it takes care of a huge piece of infrastructure spending and allows the City to divert more money towards other projects. The timing has never been better politically to approach the Provincial government for help with a P3 project of this scale. They will be seen as trying to do a lot for the City of Calgary without having to account for it financially until much further down the road. I'd be curious to hear what everyone else here thinks....

[polishavenger]

I dont understand P3's at all. The very idea that they are supposed to save money somehow seems compeltely untenable. All a P3 does is introduce a middle man who needs to get paid. I dont see how a private entity could deliver the same project cheaper than the city could. Both parties can draw on the same trades needed to build, but the city can probably borrow funds to build the project at a lower rate, and has no profit margins to make. Essentially the idea hinges on two assumptions which i dont necessarily agree with 1) The city cant do anything efficiently 2) the city cant source funds.

Sure the P3 allows the city not to borrow up front, but the lease back or repayment to the P3 partner will cost more in the long run.

[MalcolmTucker]

however I think it is the first time that a true private-sector partnership has been considered for financing the construction of a rapid transit line in Canada

The Canada Line was financed in part by a private company, whose share is paid back by availability payments, and after 30 years the line reverts to the public.

What proposed above isn't that new, only the method of financing the concession payments is. That being said, I doubt what they purport will go to finance the line would actually cover anywhere close to the payments need. Even with the existing funding in place (around $1 billion), there is still a huge hole to fill to finance what is being pitched.

Applying the model to Calgary, I'd bet you could finance at the top end 20% of a project with a local TIF, maybe another 5% with a local levy. Only the 5% would be new taxes (additional revenues to the city) whereas the TIF is only a tax distributor. Saying your paying for it using a TIF is the same as saying you're going to pay for it out of property taxes. All that is different is the name.

I would much rather the city ask citizens for a special purpose tax to pay for the project, to be eliminated once it is paid off, to be approved by referendum. What form the tax takes I don't especially care (property tax, local retail sales tax, gas tax, entertainment tax) as long as it is approved by citizens and isn't too distortionairy (like a land transfer tax would be)

[MalcolmTucker]

I dont see how a private entity could deliver the same project cheaper than the city could.

To save money the P3 has to be set up very carefully. Basically having the city design a project then tendering to a P3 partnership isn't going to save much if any money.

To really save money you have to be like how the Canada Line was planned. It was tendered as 'we need a line that travels this corridor, with stations at approximately these locations, that can carry this many people an hour, that can make the trip in this amount of time, and it has to be automated'.

With those factors the bidders were able to propose their different answers to the optimization problem. You could build Sky Train with its lighter vehicles and lower diameter tunnels but longer stations, or something else with shorter stations, higher diameter tunnels, and heavier vehicles. You could build massive stations designed to handle a long train every 10 minutes, or small stations to handle a train every 2 minutes.

It is very hard to figure out which costs less, especially when a traditional bid doesn't internalize the operating and maintenance costs to the bidder. When a P3 includes operating costs you might end up with a situation like Vancouver where the company decided it was cheaper to cut and cover a portion that was initially to be trenched, because it would save maintenance costs and improve reliability over time.

Also, because P3 partnerships need to turn over the projects in a state of good repair after 30 years, you ensure that the builders don't initially cut corners that would raise maintenance costs.

In the end, it is hard to get politicians to give up the amount of control needed to make P3s work. They have to give initial approval to a project that they have no idea what it will look like, that is just amorphous statistics.

[outoftheice]

Originally Posted by Sir.Humphrey.Appleby

I would much rather the city ask citizens for a special purpose tax to pay for the project, to be eliminated once it is paid off, to be approved by referendum. What form the tax takes I don't especially care (property tax, local retail sales tax, gas tax, entertainment tax) as long as it is approved by citizens and isn't too distortionairy (like a land transfer tax would be)

I agree with this idea. Pure hypothetical situataion here, so feel free to debate the numbers: I think we can use a reasonable estimate of $4 Billion as the cost to build the SE LRT to Seton and a Centre Street LRT to Country Hills. This cost will most likely be born mainly by the City and the Province, so let's say they will each pay $1.8 Billion and we are able to get a $400 Million commitment from the Federal Government to make up the rest. If the project were to be launched tomorrow, it would probably take 5 years to design/build. During this phase, the financial burden would be on the P3. Once the line is complete, we would enter a 30 year repayment phase, similar to what has been set-up with the province's latest ring road deals. Our $1.8 Billion commitment, spread over 30 years works out to a commitment of $60 Million every year. Nenshi's GST idea is supposedly worth $250 Million annually (source: http://www.calgaryherald.com/news/Aldermen+show+interest+Nenshi+talk+penny/4267431/story.html ) Using Nenshi's penny tax idea is more than enough to pay for such a critical piece of transit infrastructure. The only things missing are the political will-power to make such a bold move and the skills needed to sell it to the various levels of government and the people of Calgary. I think Nenshi may just be the one who can pull it off.

[frinkprof]

Originally Posted by You Need A Thneed

There only a total of 120 or so new P&R stalls between the two new stations.

Whitehorn never got full after MKWW opened. With the fee in place, I think it only ever gets 15-20% full now.

EDIT: sorry for the typos in my last post, was typing on my iPhone.

I realize that the 2 new stations won't bring many park and ride stalls. I am assuming some current park and ride users will switch to feeder bus or walking once the new stations open, which will presumably be closer to where they live, and thus be a more bearable feeder bus ride or maybe a walk for some.

[Bassic Lab]

Originally Posted by Sir.Humphrey.Appleby

To save money the P3 has to be set up very carefully. Basically having the city design a project then tendering to a P3 partnership isn't going to save much if any money.

To really save money you have to be like how the Canada Line was planned. It was tendered as 'we need a line that travels this corridor, with stations at approximately these locations, that can carry this many people an hour, that can make the trip in this amount of time, and it has to be automated'.

With those factors the bidders were able to propose their different answers to the optimization problem. You could build Sky Train with its lighter vehicles and lower diameter tunnels but longer stations, or something else with shorter stations, higher diameter tunnels, and heavier vehicles. You could build massive stations designed to handle a long train every 10 minutes, or small stations to handle a train every 2 minutes.

It is very hard to figure out which costs less, especially when a traditional bid doesn't internalize the operating and maintenance costs to the bidder. When a P3 includes operating costs you might end up with a situation like Vancouver where the company decided it was cheaper to cut and cover a portion that was initially to be trenched, because it would save maintenance costs and improve reliability over time.

Also, because P3 partnerships need to turn over the projects in a state of good repair after 30 years, you ensure that the builders don't initially cut corners that would raise maintenance costs.

In the end, it is hard to get politicians to give up the amount of control needed to make P3s work. They have to give initial approval to a project that they have no idea what it will look like, that is just amorphous statistics.

I was under the impression that much of the flexibility, regarding vehicle/technology choice, in the Canada Line bidding was due to a conscious decision not to include future costs associated with having two different fleets of vehicles. That is, future savings to Translink through maintaining a single technology were not considered when awarding the contract.

I have no idea what kind of savings could be had by maintaining a single single fleet versus tailoring each line's technology to its needs. Either way, I fail to see how the companies bidding would ultimately make a better decision than the city could.

[MalcolmTucker]

Politicians make suboptimal decisions based on optics and public pressure all the time. Think about the planning of the West LRT where an unneeded grade separation was added, and the route was shifted to median running at a cost of at least $70 million

People decry the short stations on the Canada Line, and attacked the method of construction along Cambie St even though it saved money. Both those decisions likely saved a whole lot of money. If the local city council had its way those decisions would have absolutely been reversed. So would have been decisions to not build some stations that were logical due to low ridership, but that leave long gaps in service on the current line.

The Canada Line went $500 million dollars over budget and the government hasn't had to pay a penny against that.

As for fleet efficiencies, it is really hard to compute the value of them without the bidders having to internalize the cost of the entire system. In the beginning, you would still need a separate maintenance base unless you were going to truck trains from one line to the other, or build a $100+ million wye or diamond under either City Hall or Waterfront station.

In the end it isn't that a city can't make these decisions internally, it is just that in almost all instances they never do. Even if they have all the needed information in front of them, since the financial stakes are so long term and getting elected again is so short term, politicians can ignore certain issues that a company which is financially responsible to shareholders would not.

[Bassic Lab]

Originally Posted by Sir.Humphrey.Appleby

Politicians make suboptimal decisions based on optics and public pressure all the time. Think about the planning of the West LRT where an unneeded grade separation was added, and the route was shifted to median running at a cost of at least $70 million

People decry the short stations on the Canada Line, and attacked the method of construction along Cambie St even though it saved money. Both those decisions likely saved a whole lot of money. If the local city council had its way those decisions would have absolutely been reversed. So would have been decisions to not build some stations that were logical due to low ridership, but that leave long gaps in service on the current line.

The Canada Line went $500 million dollars over budget and the government hasn't had to pay a penny against that.

As for fleet efficiencies, it is really hard to compute the value of them without the bidders having to internalize the cost of the entire system. In the beginning, you would still need a separate maintenance base unless you were going to truck trains from one line to the other, or build a $100+ million wye or diamond under either City Hall or Waterfront station.

In the end it isn't that a city can't make these decisions internally, it is just that in almost all instances they never do. Even if they have all the needed information in front of them, since the financial stakes are so long term and getting elected again is so short term, politicians can ignore certain issues that a company which is financially responsible to shareholders would not.

Okay, I can see some savings from the design component of a design-build-maintain project. That said, savings at the expense of public opinion are not necessarily worth it. Alienating the citizens could make later programs unpopular. People forget that much of the decline of streetcar systems in North America was because they were run by private companies that consistently made unpopular decisions to save money.

Of course the theory that private financing would be cheaper than public still seems to rely on some form of magic occurring. P3s are still pretty new. It will be interesting to see how they play out over the coming decades. When Translink inherits the Canada Line and Alberta inherits the ring roads, we could discover that they not only cost more than publicly financed alternatives but also need expensive work because they are only designed to optimally function (both for build quality and capacity) for the length of the contract.

[polishavenger]

In Calgary, I would never opt for private companies to run transit, at our density and riderships, transit is unprofitable if you are trying to provide a good system vs a money making system. I believe Hong Kong has a private public arrangement through the MTS, but they have huge ridership, and MTS owns a lot of the real estate in and above the stations.

[MalcolmTucker]

I think you misunderstand how P3 companies make money by running transit. In most situations outside of Hong Kong, and many systems in Japan, the private builder/operator is paid in other ways besides fare revenue.

In the case of the Canada Line since you have many rail-bus transfers to make the system work well, and system wide passes, it doesn't make sense to have the operator collect the fares. Translink gets all the fare revenue, and then pays the company that operates the Canada Line what is called an 'availability payment'. The payment unless the company really screwed up and is taking a financial hit covers operating and maintenance expenses, plus a portion of the initial capital outlay. There are also provisions for bonus payments or reduced payments based on exceeding or missing targets for performance. This is one of the reasons the Canada Line opened early - the overtime to get the line finished was more than worth the extra 4 or so months of getting the availability payment.

Basically the companies make money by playing the spread between the financing they can get and what they can get employee labour for and buy materials for versus what the government is willing to pay for it.

An example of a P3 that is making very little money, if any, is the confederation bridge to PEI. What keeps the companies in these money loosing contracts is that backing out would destroy their ability to get new business. Even with internalizing all the cost overruns on the Canada Line for example, SNC preserved its ability to win the West LRT contract.

[Bassic Lab]

Originally Posted by Sir.Humphrey.Appleby

I think you misunderstand how P3 companies make money by running transit. In most situations outside of Hong Kong, and many systems in Japan, the private builder/operator is paid in other ways besides fare revenue.

In the case of the Canada Line since you have many rail-bus transfers to make the system work well, and system wide passes, it doesn't make sense to have the operator collect the fares. Translink gets all the fare revenue, and then pays the company that operates the Canada Line what is called an 'availability payment'. The payment unless the company really screwed up and is taking a financial hit covers operating and maintenance expenses, plus a portion of the initial capital outlay. There are also provisions for bonus payments or reduced payments based on exceeding or missing targets for performance. This is one of the reasons the Canada Line opened early - the overtime to get the line finished was more than worth the extra 4 or so months of getting the availability payment.

Basically the companies make money by playing the spread between the financing they can get and what they can get employee labour for and buy materials for versus what the government is willing to pay for it.

An example of a P3 that is making very little money, if any, is the confederation bridge to PEI. What keeps the companies in these money loosing contracts is that backing out would destroy their ability to get new business. Even with internalizing all the cost overruns on the Canada Line for example, SNC preserved its ability to win the West LRT contract.

The labour aspect seems to be a driving force behind a lot of these plans. They are essentially an attempt to break public sector unions. How transferring money from people's wages to a companies shareholders works out to a net benefit for society is beyond me.

[outoftheice]

Correct me if I'm wrong, but aren't there also restrictions on how much debt the City is allowed to assume? My understanding is that the City would not be able to borrow $5 Billion to finance construction of both LRT lines itself, however using a P3 approach is a way to skirt these regulations....

[1ajs]

is it me or is the calgary transit google look up bit screwy with how it displays info............... missing the stop number extra useles info thats confusing.... no ability to just click on the stop and go straight to the schedule for that stop....... ect ect ect

compare winnipeg transits set up
http://winnipegtransit.com/en/stops


end rant of sorts

[frinkprof]

More information on the Park and Ride paid reservation system.

On April 4, Calgary Transit will implement a reserved parking program at some LRT park and ride lots. The cost to reserve a space will be $70 per month. The number of parking spaces set aside for reserved parking in each lot will be based on customer demand for each month up to a maximum of 50% of the spaces in each lot.
Calgary Transit was directed to begin implementation of this new service on the following schedule:

Lots at terminal stations - Crowfoot, McKnight West Winds, and Somerset Bridlewood, plus continuation of reserved parking at Fish Creek Lacombe.
Lots that currently have the highest usage (in addition to the above) – Dalhousie, Brentwood, Barlow-Max Bell, Shawnessy, Southland, Chinook, and 39 Ave S.
Remaining LRT station lots (depending on demand).
Reserved parking will not be available in parking lots that serve bus routes at this time but may be added to the program at a later date, based on customer demand.

It is anticipated that it may take approximately two months to fully establish the reserved areas in all of the lots and this too will be based on customer demand.

If you would like to be notified about when we will begin accepting reservations and how the program will work please sign up for Calgary Transit Email Alerts for park and ride, starting Wednesday, February 23. You will be able to specify which lots you are interested in learning about. When you have signed up, we will automatically email you the information as soon as it is available.

http://www.calgarytransit.com/html/park_and_ride_changes.html

[Bassic Lab]

Originally Posted by outoftheice

Correct me if I'm wrong, but aren't there also restrictions on how much debt the City is allowed to assume? My understanding is that the City would not be able to borrow $5 Billion to finance construction of both LRT lines itself, however using a P3 approach is a way to skirt these regulations....

I'm not sure if we could legally separate the liability of P3 payments from the liability of debt. We really wouldn't want to either way, we have a debt ceiling for a reason. It would be very difficult to cover the roughly 350 million a year that it would cost on a 30 year amortization. We would be much better off trying to cobble together funding from the province and feds to build the SE LRT and then expanding it north as funds become available.

[MalcolmTucker]

Well, it all depends. If we could get a 30 year funding agreement from the province at $200 million a year starting in 2017, with the agreement being that the amount comes first out of the gas tax/MSI/everything, before it transfers to the city, and then get the feds to buy into $60 million a year dedicated from the federal transfer it could be doable.

Raising $90 million from the city shouldn't be all too hard. Remember the agreement would cover operations and maintenance while the city gets the fares.

I whipped up a quick excel sheet that uses payment availability to calculate the size of capital investment a business may be willing to make based on the assumptions contained within:


I'll post this excel sheet with areas marked that you can modify on google docs in a couple minutes.

Edit:
Here it is:

You can modify the cells marked green. https://spreadsheets.google.com/ccc?key=...51anEtc2VOQUFYM2c&hl=en&authkey=CNOOkdUG

[Bassic Lab]

Originally Posted by Sir.Humphrey.Appleby

Well, it all depends. If we could get a 30 year funding agreement from the province at $200 million a year starting in 2017, with the agreement being that the amount comes first out of the gas tax/MSI/everything, before it transfers to the city, and then get the feds to buy into $60 million a year dedicated from the federal transfer it could be doable.

Raising $90 million from the city shouldn't be all too hard. Remember the agreement would cover operations and maintenance while the city gets the fares.

I whipped up a quick excel sheet that uses payment availability to calculate the size of capital investment a business may be willing to make based on the assumptions contained within:


I'll post this excel sheet with areas marked that you can modify on google docs in a couple minutes.

That is a pretty good interest rate for a private corporation. Alberta might be able to borrow at 4% but I would be shocked if SNC Lavalin could. A 5% return on investment for the bidder also seems lower than what they would want out of the deal.

If we could get an agreement from the province to pledge that kind of money for that long it would make life easier. I think in that situation it would be better to try to convince them to finance it while we forgo provincial funding for the term of the loan and make our own contribution.

I would not be surprised if the operational profit on a combined N-SE line was in the neighbourhood of 150-200 million a year in 2010 dollars. The city has reported operational expenses on the current LRT system of roughly $0.25 per rider. The question is how would that change the current revenue versus cost situation for Calgary Transit. If we would end up with significant savings it could really help us to afford a major contribution.

[MalcolmTucker]

The interest-rate isn't there to show the cost of debt that is issued, it is used only as a comparison to alternative uses of capital. 4% today is way above T-Bills. Most of the time you don't issue debt on the market at all, but have either a equity or debt stake sold to a huge pension fund in private. Since the contract for payment is signed with the government, and is backed by collateral (the transit line itself), debt rates should be rather competitive, especially on a project of that scale. Also, the effective 'interest rate' it should be compared with is profit margin + rate, so at any rate below 9% they still make money. In a risky world a project like this is really low risk after the thing is built and running, and that lack of risk can be used by both the government and the P3 to really squeeze down the chain to the capital investors.

I am not arguing that it doesn't cost more over time in most situations, but what the government gets in return is absolute cost certainty. If there is a decade with runaway inflation, the P3 has to eat the higher operational costs and the government is in the clear.