Millennium Line - Broadway Extension: Planning & Pre-Construction

[aberdeen5698]

Originally Posted by BCPhil

The income from property, not only stays constant no mater what service people use, but actually increases over time.

I'm not particularly opposed to the idea of funding transit though property taxes, but I want to point out the flaw in your argument: most of the property in Vancouver is residential and produces no "income" which increases over time.

Residential property does appreciate in value, but it doesn't translate into income for its owners because even if they were to sell for a profit they'd need to turn right around and spend that money on another property (whose price has also appreciated) to live on.

[st7860]

Originally Posted by aberdeen5698

I'm not particularly opposed to the idea of funding transit though property taxes, but I want to point out the flaw in your argument: most of the property in Vancouver is residential and produces no "income" which increases over time.

Residential property does appreciate in value, but it doesn't translate into income for its owners because even if they were to sell for a profit they'd need to turn right around and spend that money on another property (whose price has also appreciated) to live on.

Other than by playing 'games' with a tax free savings account, selling a principal residential property is the only way an average person can get a large tax free income.

[aberdeen5698]

Originally Posted by st7860

Other than by playing 'games' with a tax free savings account, selling a principal residential property is the only way an average person can get a large tax free income.

It's not a useful "income" because it's not something that's feasible to do every year as a way to earn a living. And when you do sell your principle residence, what are you going to do then - live on the street? In almost all cases people are going to spend that same money on a new residence, and unless they move to a less expensive area every time they do it they're not going to have a significant amount of money left over.

[Alon]

Originally Posted by jhausner

That has nothing to do with it. Firstly Tokyo and Osaka have major transit systems light years beyond the scale of ours that turn a profit, upwards of 30% so it isn't impossible though they make most of their profit (or make up the losses) via real estate which has nothing to do with the transit portion. But that's beside the point.

Tokyo and Osaka are enormous cities, with individual stations with several times the ridership of the entire SkyTrain network. The cities of Vancouver's size in Japan, like Sapporo, don't have profitable transit either, though their rail networks have fairly high farebox recovery (I believe 90% for Sapporo). Vancouver actually has very low operating costs, lower than in Japan because SkyTrain is driverless, but it has 2.5 million people to take the trains rather than 35 or 18.

Originally Posted by aberdeen5698

I'm not particularly opposed to the idea of funding transit though property taxes, but I want to point out the flaw in your argument: most of the property in Vancouver is residential and produces no "income" which increases over time.

Residential property does appreciate in value, but it doesn't translate into income for its owners because even if they were to sell for a profit they'd need to turn right around and spend that money on another property (whose price has also appreciated) to live on.

Residential property does generate income over time:that's rent. Home ownership is a weird way to pay rent to yourself to cover rising housing prices, but the quote-unquote normal way to run a dense city is to have low home ownership and then residential property generates rent, and upzoning means that the same amount of land generates more rent. Of course, lack of upzoning means there's a housing shortage and then the same amount of land generates even more rent, but the point is that in a neighborhood with growing housing demand, the amount of income you can generate out of residential property will rise.

[nname]

Even for many Asian cities, public transit is profitable because there is an extensive rail system that bring the cost recovery way up. AFAIK, even for Tokyo, bus operation alone are most often running at a loss. In fact, the cost recovery for Toei Bus last year was only 93%.

If Vancouver have more extensive rail infrastructure (Broadway line to UBC, some Surrey extensions, North Shore, etc), I wouldn't be surprised to see a recovery at the high 80s to low 90s by 2035 or so.

[BCPhil]

Originally Posted by aberdeen5698

I'm not particularly opposed to the idea of funding transit though property taxes, but I want to point out the flaw in your argument: most of the property in Vancouver is residential and produces no "income" which increases over time.

Residential property does appreciate in value, but it doesn't translate into income for its owners because even if they were to sell for a profit they'd need to turn right around and spend that money on another property (whose price has also appreciated) to live on.

Sorry, I forgot a word in there. Even with it missing I thought the sentiment was pretty clear.

It should read "income from property taxes", but that should be fairly clear seeing as I was talking about tax income almost the entire time. I wasn't talking about the individual owners income, but the government's. It is providing the service and needs the income.

What I mean by it is if you charge a fixed % of the value of the property as tax, then from year to year the fluctuation is very small (and the tax % can be changed after the fact to reflect raising/lowering home values when the taxes are due once a year) so the government's income remains constant.

Whereas if you charge a fixed % on gas, that can fluctuate radically year to year, even month to month. The tax is subject to market fluctuation in the supply and cost of fuel, and if transit use goes up, then gas tax collected goes down. And it's worse if you charge a fixed amount, like a constant 15 cents on every liter. If the price of gas skyrockets, then people consume less, therefore the government gets way less. It doesn't even get a value reflecting the increase in the price of gas at all!!!! If it's a percent, then if gas doubles in price but cuts in half consumption, your income remains similar. But if you cut the consumption in half with a fixed tax, you cut your tax revenue in half.

The tax is collected for each transaction, so you also have no idea how much you will collect until after it happens. You can guess how much you will collect, but it's a guess. Property values are set by government bodies, and properties don't just vanish. I can't take my property to Barbados. And over time property values increase, and over long periods this at least matches inflation, and at best matches GPD growth. So if as an example, if I collect 2% of the property value in tax today, 10 years from now, that 2% will be at least equivalent in value adjusted for inflation.

And as infrastructure grows, so does the price of properties. Thus the tax collected goes up to help pay for the growing infrastructure. It's a nice natural cycle. As Translink provides more services, the properties near those services increase in value, therefor Translink takes in more taxes.

The problem right now, and why Translink has to keep increasing property tax, is because they rely too much on the gas tax, and the property tax is not as high as it should be. Instead of just increasing it over a couple years to levels that would keep translink running for decades, we have to do it by death of a thousand tiny paper cuts. It drives people nuts. A $23 average increase a year is peanuts, and it would have paid for a lot, but we have done it so many times (because of falling gas tax revenue) that people are tired of it.

[aberdeen5698]

Originally Posted by BCPhil

What I mean by it is if you charge a fixed % of the value of the property as tax, then from year to year the fluctuation is very small (and the tax % can be changed after the fact to reflect raising/lowering home values when the taxes are due once a year) so the government's income remains constant.

The easiest way to deal with that issue is to simply fix the total revenue to be raised per municipality and then apportion it to properties based on their value, exactly the same way the city already does using the mill rate. That way property value fluctuations are irrelevant - it only matters whether or not your property appreciates or depreciates more than the average for the municipality.

One of the nice side effects of that is that properties whose value increase or are higher because of their proximity to rapid transit pay a greater share. That's not what was previously proposed, and it may be politically unpalatable, but I think it has merit.

[Dave2]

Originally Posted by aberdeen5698

There's no saying whether or not the mayors might have agreed to make the property tax increase permanent as part of a a new funding deal. Unfortunately, the province backed out of the negotiations. The ball's in their court as far as I'm concerned...

Set the wayback machine to June 22 1978

Urban Transit Authority Act (Bill 19) Report stage.


MR. LEVI: I'd like to quote the telegram:

"The Greater Vancouver Regional District board adopted unanimously the following statement in respect to the Urban Transit Authority Act, Bill [9:

"That the Premier and the Legislature be advised that the board of directors of the Greater Vancouver Regional District welcome the introduction of the Urban Transit Authority Act as a good first step in dealing with the urban transportation problem, but that the Act should not be passed in its present form until the amendments are made to take care of the following concerns.

"The board does not wish the property tax used to pay transit deficits unless equivalent local costs are removed from the property tax base - for example, schools or hospital costs.

"The board contends that the financial formula should result in an overall benefit to the taxpayers of the region who are presently paying more than their share of transportation costs.

"The board believes that machinery to ensure the co-ordination of road and transportation expenditure should be provided in the legislation.

"The board contends that more authority should be given to the commission in the lower mainland area. It should be appointed locally rather than provincially.

"J.M. Campbell, Chairman of the Greater Vancouver Regional District board of directors'."

Mr. Speaker, this is a late plea, albeit late because the bill has been down, but presumably what has been happening in the local administrations is that they have been trying to anticipate in some respect exactly what the provincial involvement is going to be in the financial formula. That has not been forthcoming, so the local administrations have simply had to look at their own future costs. In trying to work out a variety of formulae they have arrived at the decision that the bill in its present form, because there is an absence of any information regarding the financial formula, is going to fall very heavily on the local taxpayer, and they are quite right. Having given up waiting for the minister to tell this House and the taxpayers just what the provincial role is going to be, they are asking for a hoist of this bill for six months. That's fair enough. I think that it is far too important. The minister has taken two and a half years to bring the bill in.

Let's face it, the Greater Vancouver Regional District, which certainly has the major part of the transportation system in the province, is probably looking at an incredible number of millions of dollars of costs, and they want to know from the minister exactly what is going to be the contribution by the provincial government.


MR. BARBER: You guys are going to be paying more for transit, and you don't seem to know it yet.

What I'm worried about is the potential anomaly that may exist. Given that a municipality may, under section 3 of this Act, be bound to enter into an agreement, we may find that a municipality like Vancouver, for the purposes of its transit, will impose a tax at the pump of 3 cents a gallon. [ 0.7 cents/l ]


JULY 11, 1977

MR CURTIS: Mr. Chairman, if we started tomorrow morning to introduce commuter rail using existing track between Vancouver and the Coquitlam area - and a little further, the hon. member for Dewdney (Mr. Mussallem) would hope.... We're two years away. If all the approvals, Treasury Board and everything else, had fallen into place, we're two years away.

Now with respect to light rail - some form of rapid transit between downtown Vancouver and New Westminster - we're a good number of years away. Again, if it was started tomorrow - no more studies, just do all the design work, place orders for your equipment and put it all together - the initial planning would stretch well into 1979.

Part of the problem is that the right-of-way is not available from point A to point B. There are interruptions. I'm subject to correction but I believe it's around Nanaimo Street where you start picking up the light rail, the B.C. Hydro rail right-of-way. I think it's around Nanaimo. But from Nanaimo in, there are gaps and very major impediments.

MR. G.F. GIBSON (North Vancouver-Capilano): Mr. Speaker, I have a question to the Attorney-General in his capacity as being responsible for Oakalla. On January 20, the hon. member for Burnaby-Willingdon (Mr. Veitch) said in this House:

It's indeed unfortunate we've had so many breakouts from that institution in the past few weeks, and the Attorney-General has assured me that he's instructed the officials to take the necessary steps which will eliminate this problem.

[Dave2]

Originally Posted by aberdeen5698

The easiest way to deal with that issue is to simply fix the total revenue to be raised per municipality and then apportion it to properties based on their value, exactly the same way the city already does using the mill rate. That way property value fluctuations are irrelevant - it only matters whether or not your property appreciates or depreciates more than the average for the municipality.

One of the nice side effects of that is that properties whose value increase or are higher because of their proximity to rapid transit pay a greater share. That's not what was previously proposed, and it may be politically unpalatable, but I think it has merit.

http://www.leg.bc.ca/hansard/31st3rd/31p_03s_780612z.htm

MONDAY, JUNE 12, 1978

Night Sitting

Mr. Rogers: All rapid transit systems could be paid for if, when you put the system in, you could recapture the land appreciation around the station. If you could find a way to do that, you could put in a system for nothing. Wherever that hole pops up through the ground and those people come out, that land just soars in value, regardless of land freeze or whatever. The pressure is too great. You talk about winning the lottery. The guy who owns the lot near that tube station, underground station or bus station is the real winner. If we could find a way to capture or somehow tax that land.... I don't know how you can do it fairly. Somebody has been living in that house for a long time and their neighbourhood has been shot. It's going to change.

Don't let anybody fool you. The minute you put in a rapid transit system, you entirely change the type of neighbourhood and the style of living. You've got to seriously ask yourself whether you really want to do that.

Now there's another little area that would be apropos to discuss, Mr. Speaker, but it's not quite true. I was thinking of a case of beer, you know, because a case of beer costs the same in Burrard right across from the brewery and the liquor store there where they make it, as it does in Kleena Kleene, or Anahim. Lake, or Upper Moose Pasture in the mountains, or Bella Coola, or Bella Bella, or Skidegate, or anyplace else. I want to tell you that beer drinkers in the city of Vancouver are subsidizing the people in the wilderness, and that just happens to be a point of fact.

I'll tell you one thing about computers,. Little boys with bubble gum can fix them in no time at all if they are allowed access to them.

[jsbertram]

I found this informative video on building TBM tunnels (from the San Francisco Central Subway YouTube site)

http://www.youtube.com/watch?feature...&v=qx_EjMlLgqY

Nice to see the animated traffic on the street overhead is operating as normal - drivers and pedestrians blissfully unaware of the tunneling going on below.

We'll see something like this being used for building the Evergreen Tunnels.

[GMasterAres]

Originally Posted by Alon

Tokyo and Osaka are enormous cities, with individual stations with several times the ridership of the entire SkyTrain network. The cities of Vancouver's size in Japan, like Sapporo, don't have profitable transit either, though their rail networks have fairly high farebox recovery (I believe 90% for Sapporo). Vancouver actually has very low operating costs, lower than in Japan because SkyTrain is driverless, but it has 2.5 million people to take the trains rather than 35 or 18.

Valid points. When I did research on the profitable transit systems though they said all of them are profitable because the companies invest in other markets that make them enough profit to make up the gap left through transit.

So for example the 2 big ones that make a profit make the gap up through their real estate branch. I guess one could argue then they aren't a transit company but rather a real estate company that runs a public transit network. Like MTR for example which generates a profit of $148 billion.

How so? Property management and development.

The problem we have in general world wide is this notion that Government doesn't need to make a profit and that they ultimately should either just balance everything or run a deficit. I know in the past companies like ICBC have tried dipping into the property market and it isn't easy and/or can burn you, but it is certainly worth investigating if we want to expand our transit system.

*shrug*

[s211]

Originally Posted by jhausner

Valid points. When I did research on the profitable transit systems though they said all of them are profitable because the companies invest in other markets that make them enough profit to make up the gap left through transit.

So for example the 2 big ones that make a profit make the gap up through their real estate branch. I guess one could argue then they aren't a transit company but rather a real estate company that runs a public transit network. Like MTR for example which generates a profit of $148 billion.

How so? Property management and development.

The problem we have in general world wide is this notion that Government doesn't need to make a profit and that they ultimately should either just balance everything or run a deficit. I know in the past companies like ICBC have tried dipping into the property market and it isn't easy and/or can burn you, but it is certainly worth investigating if we want to expand our transit system.

*shrug*

ICBC dipped into the market, operating as some insurance companies do, offsetting liabilities with assets. They weren't in the real estate market to make a pure profit.

[LeftCoaster]

Important note that's a profit of $148 billion HKD.

148 billion USD would make it by far the largest and most profitable corporation in the world.

[GMasterAres]

Originally Posted by s211

ICBC dipped into the market, operating as some insurance companies do, offsetting liabilities with assets. They weren't in the real estate market to make a pure profit.

Good point. Probably why it didn't work out entirely favorably.

[GMasterAres]

Originally Posted by LeftCoaster

Important note that's a profit of $148 billion HKD.

148 billion USD would make it by far the largest and most profitable corporation in the world.

Sorry yes I should have been more specific. With conversion in and around $19 billion USD I think. Still nothing to shake a stick at and imagine what Translink could do with that money. Granted though we're talking a completely different level of business here that is invested in many major markets including London, Beijing, etc.

They do operate in Melbourne though which is arguably the Vancouver of Australia. So I think it is still feasible for things to be done differently here in Metro Vancouver and we need government and agencies to think outside the box of "Transit has to lose money sorry that's the law!."

[BCPhil]

Originally Posted by jhausner

Sorry yes I should have been more specific. With conversion in and around $19 billion USD I think. Still nothing to shake a stick at and imagine what Translink could do with that money. Granted though we're talking a completely different level of business here that is invested in many major markets including London, Beijing, etc.

They do operate in Melbourne though which is arguably the Vancouver of Australia. So I think it is still feasible for things to be done differently here in Metro Vancouver and we need government and agencies to think outside the box of "Transit has to lose money sorry that's the law!."

You are off by about a factor of 10. The numbers on the wikipedia page have the decimal misplaced. Their revenue is 33.424 billion, not 334.24 billion HKD.

http://www.mtr.com.hk/eng/corporate/file_rep/PR-12-013-E.pdf

According to their balance sheet for the year 2011, their total net income (which is gross profit - all expenses) is $1.99 billion USD.

That's off fare revenue of $1.7 billion USD (inside HK), not bad, but almost half their net sales that lead to the net income comes from "railway subsidiaries outside of Hong Kong".

If you look at just sales from HK operations only (fares + rent) - expenses for HK operations only = a ruff HK only EBITDA, that gives you $1.2 billion USD income before interest, tax and amortization expenses.

Still pretty good, but not this amazing Godsend everyone makes it out to be.

[BCPhil]

Originally Posted by jhausner

Valid points. When I did research on the profitable transit systems though they said all of them are profitable because the companies invest in other markets that make them enough profit to make up the gap left through transit.

So for example the 2 big ones that make a profit make the gap up through their real estate branch. I guess one could argue then they aren't a transit company but rather a real estate company that runs a public transit network. Like MTR for example which generates a profit of $148 billion.

How so? Property management and development.

The problem we have in general world wide is this notion that Government doesn't need to make a profit and that they ultimately should either just balance everything or run a deficit. I know in the past companies like ICBC have tried dipping into the property market and it isn't easy and/or can burn you, but it is certainly worth investigating if we want to expand our transit system.

*shrug*

The main thing we try to avoid when running crown corporations is corruption.

If translink were motivated by making profit, then would it be operating in the region's best interest, or in it's shareholder's interests?

Already, we've had years of allegations that the Evergreen line goes through Port Moody to benefit the friends of city council members who own land near planned stations. The line could have down all the way down Lougheed, but maybe it didn't because it benefits more cronies by going through Port Moody?

And that is with a public crown corporation. Imagine if it was run by a wealthy board of directors who already owned a lot of land in the region: where do you think the lines would go? To where you live or to where they own land?

We do our best to avoid that by planning transit that benefits the region before pocketbooks. If translink were to plan lines around where translink could buy property first, then where would the lines go? to where nothing is, or worse, where shareholders already own land.

Instead of benefiting people who have already invested money in the region, like say along Broadway, Skytrain would be extened up Burke Mountain to where land is available for purchase at low prices, meanwhile ignoring everyone along the Broadway Corridor and in Surrey.

We would constantly be asking ourselves why is Translink doing this? In an attempt to make a buck or because it is good for the people?


The other problem is that it involves more money up front. So instead of building the Evergreen line at $1.4 billion, Translink would need $2 billion for the line and land purchases. Maybe over the next 20 years Translink could pay back that debt with ever increasing rents/leases or land sales and development, but maybe not. It is speculation, and therefore greater risk. When tax money is used, risk should be avoided as much as possible.

Miscalculating and building a transit line no one uses is bad, spending twice as much to also build some buildings no one uses is a disaster.

[officedweller]

There's a also a political element as to how far TransLink would be able to foster Transit Oriented Development.

You already have the public complaining about TransLink operating roads as well as transit.

Likewise, you also have people complaining about municipalities like Surrey getting involved in projects with their own municipal development corporations.

If TransLink actually built projects itself, it would probably hit a wall of criticism. To date, I think it generally just sells off surplus properties and/or rights in and around the RoWs.

[Alon]

Originally Posted by jhausner

Valid points. When I did research on the profitable transit systems though they said all of them are profitable because the companies invest in other markets that make them enough profit to make up the gap left through transit.

So for example the 2 big ones that make a profit make the gap up through their real estate branch. I guess one could argue then they aren't a transit company but rather a real estate company that runs a public transit network. Like MTR for example which generates a profit of $148 billion.

That's not really true. The sources that say this tend to rely on second- or third-hand information. If you check more direct corporate statements about profitability, you'll see that the MTR and the Japanese railroads make money on both transportation and real estate, though real estate profit margins are higher.

See:

http://www.jrtr.net/jrtr10/pdf/f02_sai.pdf

http://www.mtr.com.hk/eng/corporate/file_rep/PR-09-024-E.pdf

The reason those companies do both transportation and real estate is synergy. If you build a railroad, you increase the value of the real estate along it, so you might as well buy it up before building the line. But if you have densely-developed real estate, then you can make a profit on operating transit from it to city center, especially if you have a monopoly. If Tokyu is broken up tomorrow into separate real estate and transportation divisions, both divisions will be profitable. But then both divisions will slow down their investment, because each division's investment pays off to both divisions, and if there's separate ownership there's less incentive to invest.

[red-paladin]

Look at all the money CPR made from real estate.