Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

Posts Tagged ‘Evergreen Line

Financing the Evergreen Line

with 14 comments

MAJOR construction works on Vancouver’s Skytrain Evergreen Line are set to begin by the end of the month after the provincial government of British Columbia signed a finance-design-build contract for the $C 1.4bn ($US 1.39bn) project with the EGRT consortium, which is led by SNC-Lavalin.

That comes from The International Railway Journal – but my question to the readers of this blog concerns just one word. “Finance“. Why do EGRT need to finance anything?

If my understanding is correct, the funds for building this project come from three levels of government – Canada, BC and Translink. The good thing about government funded projects is that there is almost no risk – since the loans needed to pay for the outlays can all be “underwritten” by the taxpayers – you and me. That means that when governments go to the financial markets for loans, the interest rates they have to pay are lower than commercial activities.  You can buy so called “gilt edged” bonds, but the rate of return will not be anything like as great as if you buy commercial bonds or, even riskier, buy equities. The return won’t be great but it is (almost) certain. Governments of places like Canada, or BC or even Metro Vancouver do not normally welch on their obligations, because they have the power to raise taxes. Of course if there is a violent revolution then the bonds you bought will become worth very little: some people do sell  Chinese railway bonds from pre-revoltionary times.

You probably recall that the Port Mann Bridge was going to be a so called “private sector partnership” but they could not finance it. So it had to built using more conventional public sector financing – which, like I say, was cheaper.

So can someone please explain to me why we have to pay EGRT to finance this project as well as design and build it? I do understand that there are economies of management when contracts to design and build are let. And sometimes – but not in this case – operate and maintain too (like the Canada Line). But since this is an extension of the existing SkyTrain system, the operate and maintain bits are still with the Translink subsidiary British Columbia Rapid Transit Company Ltd.  And while the Translink web page is open about its operating companies, there are other companies it owns that do things that provide much better value for money than going to outside commercial ventures. Their own insurance, for instance. A nice little earner is also the sale of rolled coins – where Translink beats the banks, if you need lots of rolled change.

While right wing politicians have long made it an act of faith that the public sector is inefficient and wasteful, the reality is quite different. Some places do indeed compare P3s to public sector comparators – and the private sector doesn’t always win. Our own Partnerships BC has a quite different method of operations – “Our mission at Partnerships BC is to structure and implement partnership solutions which serve the public interest”  and indeed the Evergreen Line is one of their projects. You won’t find a public sector comparator on their site.

In case you missed the announcements, in the same edition of IRJ is the announcement of the 47km extension to RER Line E in Paris/Ile de France  for €2bn and of a recommended second Cross Rail project in London for £12bn. Now that’s what I call transit investment. The only equivalent size projects here are, of course, highways.

Written by Stephen Rees

February 7, 2013 at 11:09 am

2c for your thoughts UPDATED

with 61 comments

When the news radio called me about the Mayor’s “decision” to ask for 2c on the gas tax to pay for the region’s share of the Evergreen Line, I did not think I had much to say about it. After all, it was merely a recommendation – and would have to survive the summer and some public consultation. I recognize that the summer is a slow news time, but the amount of coverage this proposal is now getting is surprising me, though not the level of the “debate” so far. Perhaps the least expected contribution came from BC’s answer to Sarah Palin.

“When British Columbians say that they’re not really excited about paying more gas taxes, I get that. Because my focus as Premier is how do we make life more affordable for people rather than less affordable,” she said.

The Mayors were given very little leeway: they have to come up with a payment from this region’s taxpayers since the province and the feds have both already committed at their level. Since the current levels of taxes collected by Translink are only enough to keep on a current levels, the only way to raise $400m had to be an increase in currently permitted taxes. There is no time left in the funding agreement to come up with a new source so it either had to be property taxes or the gas tax, and the Mayors had made clear from the outset the very cogent reasons why property tax was not going to be the way they did it. Indeed, quite why our Premier thinks that the people of this region will like to see their property taxes raised is not exactly clear either. There is a $400m hit to our pockets and the only question is what is the most sensible way to do that. Property tax increases are no more “affordable” than gas tax increases.

As Geoff Meggs points out this also shows some lack of co-ordination inside Christy’s cabinet. Doesn’t she talk to her Ministers? Or is she deliberately trying to weaken Lekstrom?

The Sun gets itself into an interesting position “Transit taxes odious but necessary for growth of our city”. The link says that it is a “story” but there is no by line and it reads like an editorial. They sum up

“In the past, the province has stepped in and vetoed transit fundraising plans, including an earlier vehicle levy and a proposed parking stall tax. We hope that doesn’t happen this time.”

But Christy does seem to be ready to repeat the steps taken by the last caretaker premier, Ujjal Dosanjh – who went down to a stunning defeat in his last provincial election despite his last minute, and probably illegal, rejection of the vehicle levy.

For those of you who are of a mind to stick to the “no new taxes” mantra just take a read of what happened in California when they slashed their car tax. It is becoming very clear that the right wing belief that leaving money in tax payers’ pockets is the right thing to do in any set of circumstances is just that: a belief. Some people believe in Santa Claus too. Faith is holding on to a belief despite all evidence to the contrary. I have always been very much impressed by the American constitution’s requirement of a complete separation between church and state. What I cannot fathom is the right wing’s ignorance of why that is so important.

Added July 13

Blair Lekstrom is now saying that  “he has the full support of Premier Christy Clark in agreeing to Metro Vancouver mayors’ plan for a two-cent gas tax increase for TransLink.”

“I stand behind what I’ve committed to,” Lekstrom said Wednesday, adding he has spoken with the premier and ensured they’re both on the same page.

“Nobody likes new taxes – I would concur with that.”

But he said the mayors can count on the province legislating the fuel tax increase this fall – as he promised – provided mayors formally vote for it in a pending financial supplement after public consultation and review by the TransLink commissioner.

“I will not waver one inch,” Lekstrom said. “This has gone on far longer than I think the public wanted.”

Clark has also penned a letter to mayors pledging her support, he confirmed.

Written by Stephen Rees

July 12, 2011 at 3:15 pm

“Mayors consider raising taxes to pay for TransLink”

with 17 comments

The Vancouver Sun headline is deliberately misleading to attract attention. One Mayor – Peter Fassbender – is anticipating what might happen at a meeting next week. Nothing in the story is news, and nothing in the story suggests that any other Mayor has supported this idea publicly. The provincial government has made it very clear that it wants property taxes to rise to pay for the Evergreen Line. They have been very clear about that. Fassbender has been talking up the role of the Mayor’s Council – but basically the province is not at all interested in making the Mayor’s lives any easier.

Martin Crilly puts out a report – which is fine – talks about road pricing. But that isn’t going to happen – and couldn’t happen fast enough anyway to dig Translink out of its present hole.   No-one needs to listen to the Transit Commissioner: he is irrelevant.

The gap between the gas tax inside the Metro boundary and just outside it is already large – and is a gift to gas station operators on the outer edge, since they can appear to sell cheaper gas. But the difference between a gas station in Aldergrove and one in Abbotsford is much less than the tax difference in the two jurisdictions. The government is so unpopular now that it could almost do anything it likes without making matters worse – but since Gordo got back from his holidays, the mood has changed. He obviously wants to get his own ratings up – and, bafflingly, he seems to be succeeding. No-one ever went broke underestimating the intelligence of the public. Of course the spin would be to blame the tax increase on Translink – but not nearly enough people would believe that – would they?

I think Fassbender is trying to soften people up for the increase in property tax which is about the only option left open – other than saying no to a new transit line once again. Last time the Mayors did that they lost control of regional transit. Not many Mayors outside of the north east sector are willing to see their voters’ taxes increased to pay for the Evergreen Line – and certainly none south of the Fraser where transit remains undersupplied after ten years of regional “direction”.

“We have a window of time to either come up with our commitment or the government will have to do something else,” Fassbender said. “[A financial supplement] is the only way we can come up with our share. What it looks like I don’t know yet because it hasn’t been developed.”

That sounds a lot like capitulation to me

UPDATE

It is worth taking a look at Frances Bula’s blog – she seems to be talking to the Mayors, although only Corrigan (of course) was willing to go ont he record. The real difference is to what is above is their perception that new sources of revenue (something the province was NOT willing to discuss before) are now “on the table”.

“I don’t think we’re caving to anything,” said Langley mayor Peter Fassbender, the chairman of TransLink’s Mayors’ Council. “If the province was saying, ‘We’re not willing to talk about other options,’ this would be a no-go. But I see a willingness on their part to say, ‘Let’s put everything on the table.’”

I tend to agree with Corrigan

Burnaby Mayor Derek Corrigan believes that regional mayors are about to get taken for another ride by the province, one where they’ll be left paying all the bills again.

“When will they learn? They keep buying into these promises and then they get taken to the cleaners.”

Interesting to note too that the people who read this blog care a lot about their cell phones, and tramcars of course, but have much less to say about taxes.

Written by Stephen Rees

September 16, 2010 at 9:50 am

Posted in transit

Tagged with ,

Mayors fear being railroaded on transit financing

with 3 comments

BC Local News

Speculation about what the province intends to do about financing the Evergreen Line continues.  The Mayors think they ought to be consulted – but it looks rather like legislation is in the offing

The province’s solution is expected to be contained in a new overhaul of TransLink, with legislation possible as early as next month.

And, so far at least, Victoria is not returning the Mayors’ calls. Instead heavy hints are being dropped – as I noted in my most recent comments. It does seem to be a very odd way of going about a big decision making process. Conducting an exchange not directly, but in the pages of the press – with all sorts of nods and winks, but no actual information. I suspect that it could be an officially sanctioned “trial balloon” – something not at all unknown elsewhere. The government faces a tricky decision so leaks some information in the hopes of getting an early indication of what the reaction might be. If the response is muted, full steam ahead: if hostile, then a quick rethink is possible  since it does not look like a “flip flop” as no actual decision was announced. And it’s all very deniable so far.

The problem of course is all of the province’s making. On the one hand they hog tie the regional authority and accuse it of inefficiency, and limit its funding. But on the other hand they did promise to build both the Canada Line and the Evergreen Line and the project to build the latter as a SkyTrain extension has been rumbling along for a while now. And, as Frank Luba was pointing out last night on CBC radio, the problem is not just the financing of the missing $400m capital, it is also Translink’s inability to pay for the operations and maintenance costs of another rapid transit line, since the extra fares they collect will not cover anything like those costs.  It does seem highly improbable that there are savings of the scale required within Translink, which is what the province appears to believe. And there will be howls of rage if the whole region has to pay more for transit which many of them will not be able to use. Places like Surrey, with low transit mode share now and only a token rapid bus project on the way, will much more annoyed than the residents of the Tricities will be pleased. This political accounting is what will, in the end, make the difference. All the figures for deciding what to build and where were long ago set into a form which cannot now be changed without all kinds of embarrassment. Do not expect any change from SkyTrain – or the route. It is going to be all about how to raise $400m. I would bet that a P3 partner would be produced if times were normal – but P3s are not easy to fund these days. So maybe the Mayors Council gets the chop after all?

UPDATE Frances Bula in the Globe and Mail, Monday March 15 with a useful summary of the current state of play

Written by Stephen Rees

March 10, 2010 at 8:37 pm

Posted in regional government, transit

Tagged with

Province pushes Evergreen Line ‘aggressively’

with 55 comments

Vancouver Sun

No it doesn’t. There is absolutely nothing new in this story at all. It is simply a rehearsal of what the current provincial administration has been saying all along.

Transportation Minister Shirley Bond said Tuesday the province expects to start construction on the line linking Burnaby, Port Moody and Coquitlam by early 2011 and have it running by late 2014.

There’s a reference to the use of transit during the previous couple of weeks, but given that those conditions (street closures and a lot more transit service than usual) are not going to be seen from now on, it is not a relevant concern to 2014.

But, she added: “We’re still expecting the region to pay its fair share of this project.”

In other words, there is still a gap that Bond wants filled by property tax – which she knows the Mayors will not go for.

Bond said she is reviewing the comptroller-general’s report on TransLink and expects to find some wriggle room around the governance of the transportation authority. She said that will “shape” how the funding is provided.

Which I see as a not very veiled signal that if necessary the Province will force the funding of the project through over the opposition of the Mayors. This government now feels very secure, can summon a legislative majority if needs be, and is not prepared to listen to anyone who dares to disagree with them.

At the same time the provincial budget concentrates on more road building. The only transit project is the Surrey Rapid Bus – which again is not exactly news. And the huge amounts of money that were added to the debt in recent years – and are planned to be added in the next three years – shows that the BC Liberals are far from reluctant to find money for projects they really care about. And they are still determined to press ahead with gating SkyTrain even though it is quite clear that will be a complete waste of money and can never pay for itself.

Moreover, despite the on going slump in container imports, and the serious prospect of continuing economic recession in the US, the South Fraser Perimeter Road construction will also go ahead. The whole of the Gateway project ought, of course, be subject to a serious rethink, given the changed circumstances – but the Liberals are committed to business as usual. All the rest of the declared intention to tackle global warming is simply greenwash.

Written by Stephen Rees

March 4, 2010 at 8:39 am

Posted in transit

Tagged with

Mayors suggest Evergreen Line switch to save money

with 40 comments

Jeff Nagel, BC Local News

The on again, off again saga of the Evergreen Line gets stranger and stranger. The Mayors – those people that the Provincial Government thinks are not competent to run local transit in Metro Vancouver  (although they do everywhere else in BC) – have made a very sensible recommendation. Since there is now not enough money to build the Evergreen Line as a SkyTrain extension, why not go back to Translink’s original plan and build it as light rail? This would save $400m – which is pretty much the shortfall currently needing to be filled.

Translink's Concept of the Evergreen LRT

Translink's Concept of the Evergreen LRT

But provincial Transport Minister Shirley Bond will not hear of it – and neither will the federal government. And, of course, it is the provincial government that is refusing to allow Translink the new funding sources that they need to pay for their share of the capital cost of the project – plus of course its on going operations and maintenance.

TransLink CEO Tom Prendergast told the board he has heard suggestions Ottawa might pull its funding for the Evergreen Line if federally preferred SkyTrain technology was abandoned or if the project takes too long to move forward.

If they put this in a tv sit com it would stretch credibility. Actually, I would not be at all surprised to hear that the feds are going to start looking for ways to get out of some of their commitments, given the unprecedented size of the deficit – but so far that has not happened – and all we have are “suggestions” from an unidentified source. So the reality may be different.

The process by which LRT was originally chosen for this line – and its route – was actually very unusual for BC. It was a completely objective, technical review run by staff (actually Clark Lim, who is now at UBC) and there was no political interference. Until the decision was announced, which is when the amazing, and actually tendentious, claim was made that the SkyTrain premium was not significant and the benefits of not having to change trains at Lougheed were well worth paying extra for.

If there was any objectivity in this process, or any respect for local democratic decision making, then the senior levels of government would say, yes we recognize that there is a funding problem which we cannot resolve so we agree that a scope reduction to LRT is a reasonable way to get this thing built. But that is not the case, as is obvious when you read the blethering that Jeff Nagel is now reporting.

It is a very good illustration of that old saw “the best is the enemy of the good”. The most likely outcome of this disagreement is that nothing at will get built and the arguing about whose fault that is will continue interminably. Heaven forbid that we actually do something with rapid transit in this region that not only fits in with the agreed regional strategy but actually makes some sense.

Written by Stephen Rees

September 28, 2009 at 6:50 pm

Posted in Light Rail, transit

Tagged with

This reform needs a rethink

with 7 comments

Richmond Review Editorial

(note: the editorial published in the Review was a shorter version of one that appears in the Surrey Leader) This article has been revised in view of comments received.

The Black Press is gradually becoming more critical of the BC Liberal Government. This in itself is not remarkable – it is almost inevitable that over time the media will become more critical of any government. This particular editorial though is mainly about accountability – and how there will be less of it in future.

But the real stinger for me is this:

The board ultimately agreed—but only just—to push the Richmond-Vancouver rapid transit line ahead of other priorities. It drained any trust Victoria had in the locally elected mayors and councillors, who will be booted off TransLink’s board in January.

It is not about “trust”. The Board of Translink was doing what it was appointed to do, as set out in the Greater Vancouver Transportation Authority Act, a piece of provincial legislation. Every government, once it is elected inherits a system from previous governments, and it has to continue with what it inherits until there is enough legislative time to change some parts of it. It is simply unrealistic to think that a new government can simply come in and start doing everything differently, since they are as much bound by the law as everybody else.

The Canada Line was not in Translink’s strategic plan, as Richmond already had the B Line. The GVTA is bound to support the LRSP as it is the legally mandated Regional Growth Strategy. The BC Liberals did not repeal any of the legislation (Growth Strategies, GVTA Act etc). The Canada Line was a recreation of a former idea of a rapid transit line to Richmond that had been around prior to the previous NDP government. But that was a while ago. The thing about plans is that they only work if you stick with them. That is what a strategy is: we all agree to follow the same path – even if privately we might have reservations about it – since that will ensure the best chance that we will end up where we intend. Now this is not as exciting and daring as making it up as you go along. But is also less confusing for everybody, since a strategy works by replacing uncertainty – and if there is anything that markets, and investors, and indeed almost everybody involved in trying to achieve some goals, is uncertainty.

Not only was the Canada Line not in the strategic plan but it had features that were unknown. It is the first major public transportation P3. It would not connect with the existing SkyTrain. It would be in a very expensive bored tube – something not seen in any line so far built here or planned here. And it would run through a relatively low density area (where change in land use was not very likely) to a place the LRSP had determined should not be a growth concentration area since it was subject to both flooding and ground liquefaction in the event of seismic activity. Let us leave aside any consideration about the political allegiances of the area.

Given the above, the Translink Board would have been derelict in its duty not to question the province’s proposal. Except that it had been cooked up by its own former CEO who had personally directed the creation of the project. And he is a man who does not recognize that anything he has a hand in can have any taint of conflict of interest. As he himself has always been at pains to make clear. And, by the way, he was also City Manager for the City of Vancouver prior to going to Translink, and the City of Vancouver was not going to see much rapid transit spending as the Broadway rapid transit line was itself highly controversial, and the Coquitlam extension (now known as the Evergreen Line) had been the on again, off again priority for years – even before the extensions into Surrey. And the best thing about the Canada Line, as far as the City of Vancouver was concerned, was it removed a threat to the home of the “creme de la creme” – The Arbutus corridor.

The Black Press is right. It is a “serious erosion of local democracy”. The problem is that the GVTA itself is not especially democratic and hence not known for its responsiveness to local concerns. Some might think that is an advantage in a regional body, but the real problem that I see in a “two steps removed” election process is that people do not feel that – despite its cloak of legislative authority – the Board is representative or responsible (in the sense of other democratically elected bodies).

The GVTA is sui generis. There is nothing else like it. The GVRD is one step removed from municipal elections – and that in itself causes a problem for most voters. There are all sorts of crown corporations and provincially mandated boards and agencies, but the GVTA does not report to the Province – not should it. The whole idea of the GVTA was that the province was supposed to get out of the regional transit business. Nowhere else in Canada does the Province deliver local transit services itself (with the exception of GO Transit – where there is no one regional municipal body covering the whole of its service area).

The proposal that will be brought back to the leg this fall is driven by a combination of spite and pique. Neither of these is a respectable reason for legislating administrative changes to regional transportation. It is based on a misconception, that regional transportation should be run just like any other commercial enterprise. That is a big mistake. We can already see the damage that this approach is doing to the region by the attitudes and aspirations of the boards running our port and airport. More business for them is not necessarily the best thing for the region – far from it. The residents of the region are suffering now from more pollution from shipping and truck movements and noise from aircraft, as the traffic for other places is now routed through here rather than Seattle or Oakland. And it is just not good enough for these boards to simply shrug their shoulders and say that this is a cost of doing business.

I think that reform is needed. I think what we need is a democratically elected body that is in charge of both regional planning and transportation. All of it. You cannot possibly be successful trying to plan transport if you do not ensure that it fits the development pattern. The LRSP is being whittled away, as is the ALR. Yet this region has made it clear that it did not, and does not, wish to develop in the same way as most other North American cities have developed. The fact that one or two politicians elected to the provincial legislature think differently is simply not important. The fact that they can command a parliamentary majority is. But one of the other meanings of “responsibility” is that an elected politician is supposed to set aside personal preferences, and allegiances, and act in the best interest of all the people – not just those who might vote for him next time. And in my mind there is no doubt that the integration of regional transport and land use planning is very important, and must be done better in future than it has been up to now.

The problem with the new Board is not so much that it is not going to respond to complaints about fare hikes: none of its predecessors did either. The problem will be that that the people running it in future will not be concerned about much more than “the bottom line” – the way most business people learn to think. We even have the Premier telling us the Evergreen Line does not have a business plan! Well, it is actually better planned than any other line – including the Canada Line. And what is the value of a plan (build it in bored tube) if you change it once you see the size of the invoice (ok, cut and cover along Cambie)? Making cities livable is not entirely and solely about making money.

Written by Stephen Rees

October 18, 2007 at 1:36 pm