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Originally Posted by MalcolmTucker
$342 million is the yearly cost of financing $6 billion over 30 years. The document referred to freeing up $6 billion for other projects. All in charges for $6 billion now is $10.219 billion over 30 years (given the predicted rates from the provincial government of 3.890%).
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You raise a valid point, however does that not just become an issue of the term length for the loan? If a 30 year repayment schedule becomes a 40 year repayment schedule the amount required annually decreases. (Although yes, the amount paid in interest would increase). Would it be possible to avoid the issue entirely by how the construction was tendered? For example, could you say to the winning consortium "We will pay you approx. $7.6 Billion over the next 35 years for $6 Billion in construction work today... how you arrange the construction financing is up to you." ? How have other large scale infrastructure projects across the country been financed?
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Originally Posted by MalcolmTucker
I wouldn't increase the tax like that. 5 cents raised $90 million in 2003, and $100 million in 2010. The grant is now at $119.6 million. So 2.88% compounded. But growth has been lumpy. I wouldn't count out technological change holding that number back, even with population and miles travelled growth. Plus you need the revenue at the front end of a loan, not the back end. Unless you want to pay even more interest.
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I'm not too sure how to deal with the issue of revenue at the front end vs the back end. Revenue will always increase as the population of the city increases. Again, due to population there is also limits to the amount of revenue you can reasonably hope to generate. I think a 7 cents/litre surcharge is pretty close to the maximum people would be willing to accept. As to your other point, there is always the issue of technological change when looking at revenues based on fuel consumption. It's next to impossible to accurately predict the path technology will take. I'm not too sure what the solution would be or if there actually is an accurate way to model this to make revenue predictions on. That being said if flexibility is built into any payment terms future trends might not have drastic effects on the program.
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Originally Posted by MalcolmTucker
The biggest issue with the fare surcharge is how to apply it to pass holders. 157325300 trips last year according to APTA. So a $0.14 per average trip. Again, the issue is you need the money near the front end, not the back end.
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Agreed that front end vs back end will always be an issue with any alternative funding proposal. In regards to the application of the fare surcharge to transit passes the report speaks to that. According to the 2011 Calgary Transit Fare Strategy Report 48% of transit ridership was made by monthly pass holders. The price of a monthly pass in Calgary is based on 42 rides per month on transit. Using this number the price of a monthly pass would increase by approximately $12/month or $3/week. About the cost of a cup of coffee/week. I'm sure actual ridership statistics differ from how CT calculates the cost of its monthly passes and that would have an impact on the accuracy of how much money is hoped to be raised but it at least gives you a general idea of what the impact would be on pass holders.
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Originally Posted by MalcolmTucker
Just have to deal with the interest charges and cash flow issues.
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There are definitely issues that require more in-depth study than what is offered in the report. My question would be why those in a position of leadership don't see the issue as important enough to warrant more in-depth studies. Who knows how successful Metrolinx will be in implementing their funding plan to build Transit City in the GTAA but at least they recognize the urgent need for the RT infrastructure and have come up with a concrete proposal to pay for it. Compare that to Calgary which seems to have taken a wishful thinking approach where people seem to hope that the money for the projects will arrive from the Province and the Feds before the city comes to a grinding halt due to population growth and a lack of infrastructure. These projects will only become more expensive with time. The cost to the city due to congestion will only become worse with time. The number of other projects that these LRT projects are going to compete with for funding (if the status quo is kept) will only increase with time. It's hard to quantify all of these costs but I would argue that this is a bigger challenge than finding a solution to interest and cash flow issues and yet this is the path Calgary is currently headed down.
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Originally Posted by MalcolmTucker
The federal contribution was from the post 2014 Building Canada Fund. We will get this money anyways whether it is for waterworks, playgrounds, roads, libraries, or transit. Since the report points to freeing up $6 billion for other projects, you can't count the Building Canada Fund towards the total. Now with a P3 Canada contribution, that would be different.
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Good point! Do you know how long the P3 Canada program is scheduled to run? If Calgary was to look at beginning construction of the 2 LRT lines in 2016 would funding from this program still be available?
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Originally Posted by MalcolmTucker
I'm not sure that the SETway money would be found money in that sense. Since I bought a Jag I didn't buy a Civic! Now I can go spend $20 grand on a vacation!
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I guess it depends on your perspective but I would tend to view it in a different light.... You are making a reasonable amount of money working your job and planning to use a portion of this money to buy yourself a Civic. It's not the car you want but it's the only car you can afford with the money coming in. Instead of settling for the Civic you decide to take matters into your own hands and get a second job that pays rather well. You decide that if you keep working this second job and put all of the money you make from it towards your car you can afford the Jag... which is the car you've wanted all along. So that's what you do. The thing is, you still have the income from your primary job that you were planning on using to buy the Civic. You no longer need to spend that money on the Civic because you now have the Jag so you actually can afford to go spend that $20 grand on a vacation. Are you working twice as hard than you were before? Yes. Are you getting more because of it? Yes. I see it as the same principle here in regards of a fuel and transit surcharge. If you create a second revenue stream that will be used exclusively to pay for the LRT construction, it frees up cash from your primary revenue stream to pay for other projects that you otherwise would not have had enough money to pay for.
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Originally Posted by MalcolmTucker
If their numbers worked, this is the way to go. Little reason to advocate something that on the first technical report to council will come in 35% over the proposed budget. Even if Transit City in Toronto is something like 1000% over at this point.
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Perhaps the numbers need further study and the policies require some modification however I do not think that is a reason to completely reject advocacy of the principles that they are founded on. Do you believe the status quo is sustainable? Personally I don't think it is. I also don't think that Calgary City Council has offered up any real solutions to the problem. At this point I think furthering any ideas that offer up some sort of concrete solution is better than continuing down the path that we are on now. The main thrust of the report is to advocate for a plebiscite in Calgary using the following question:
Do you support the creation of a temporary surcharge on fuel and transit fares that will be used exclusively to fund the immediate construction of the North Central LRT to North Pointe and the SE LRT to Seton?
Ask the people... see if they're willing to embrace the concept. Have a city-wide debate where all the pros and cons are discussed and give people the time to make an educated decision and then vote on it. It would be nice if someone on council would be brave enough to champion new taxes but we all know that isn't going to happen. Championing a plebiscite though is an issue that is a bit more politically acceptable. The worst that can happen is that we are still stuck where we are today and we sacrifice either the north end of the city or the south east end to pay for a marginal improvement to what currently exists. The best case is that the city can move ahead with construction decades ahead of the timeline that is currently planned and the entire city can enjoy a massive upgrade in infrastructure.