Before decisions are taken from examples in this manner, I think it’s important to also take in the context of that example. In some of my most popular posts on this blog I’ve noted how a lack of context has done so much to skewer opinions and affect decisions in our region.
The Canada Line P3 was a successful P3 because its ridership and fare revenue exceeded projections.
The Canada Line’s P3 system works like this: The private partner signs on to build the line and operate for 30 years, and makes a capital investment to reduce the public funding burden. This capital investment in the project is returned as a profit through the performance payments made during operation.
If fare revenue from ridership meets or exceeds the costs, financing proceeds as planned and excess operating revenue is returned to the taxpayer. If the fare revenue does not exceed the costs, that represents significant additional costs to taxpayers to subsidize operations.
Thankfully, the Canada Line is exceeding its ridership projections, as a result of carefully considred design choices made during the decision-making process.
But, this is where the proposed ground-level Light Rail system for Surrey, which I have been a heavy critic of through the SkyTrain for Surrey website, runs into a very major problem.
The Surrey LRT system will not recover its operating costs.
It will run into an operating deficit of millions per year from opening day and it will struggle to recover these costs if it manages to do so at all.
LRT’s operating deficit subsidy of $22 million ($2010) per year on opening day, growing to $28 million by 2041, is on top of the $60 million per year for capital financing that Mayor Linda Hepner declared to the Globe and Mail. On top of all of these costs, additional costs would need to be added to the performance payments to the private operator, so that the partner can receive its return on investment.
When all inflation is accounted for, the cost of financing the P3 LRT will be nearly $100 million annually on opening day. The city will obviously need to find a way to come up with this money, and I take it that more than a few really big axes will be making their way to other city services as a result.
Plan Misses the Mark
Perhaps a part of the reason for this shortfall is because the City wants to replicate SkyTrain frequencies by running LRT trains at a 5-minute frequency, increasing to a 3-minute frequency after approximately 20 years. This frequency is not done anywhere else with driver-operated LRT systems in North America. The tendency is to run at 5-10 minute frequencies during peak hours only, reducing to 15 minute frequencies during off-peak hours and weekends.
The higher frequencies do not necessarily solve the many issues with an LRT system and the challenges such a system in Surrey will face. Of the $27 million in annual costs required to operate Surrey’s full LRT network, only $5 million is expected to be recovered through additional fare revenues. Cut the operating frequencies in half (resulting in significantly worse service), and there would still be a major operating deficit.
This is because many of the riders on the future LRT system will be people who already pay their fares on existing buses. They are the transit-dependent people of the city, not the people who may have the choice to continue to drive if that is what continues to serve them better.
A previous survey of Canada Line riders revealed that trip speed is the most liked aspect of the line. Street-level LRT’s limitation to slower street-level speeds will certainly create challenges in being competitive.
Surrey’s LRT will suffer these operating deficits because as a slower and less reliable grade-level system, it will not attract as many passengers as an integrated, grade-separated extension of SkyTrain. In addition, LRT will be unlike our driver-less SkyTrain system in that each train requires a driver, meaning it is more expensive to operate and will be subject to design limitations that will have a major effect on its viability.
Surrey’s LRT will carry only 2970 riders/km on opening day.4 The Canada Line, which carries 122,000 daily boardings2, required 100,000 (5200 passenger boardings per km) to cover its annual operating costs.3
SkyTrain is a viable option
If SkyTrain is extended down Fraser Hwy. to Langley, it will carry 5443 riders per km on opening day.4 This is comparable to SkyTrain’s present system-wide average of 5693 riders per km.5
SkyTrain would offer faster, safer, and more reliable service – which would attract more ridership, generate more fare revenue and as a result cost only $6 million per year to subsidize operations.6 This would then be eliminated entirely with the concurrent optimization of local bus routes.7
Without an operating subsidy, SkyTrain would have a far better business case for a Canada Line-style P3 model. In any case, since the operations and maintenance component can be handled by the existing BCRTC, a newly created operating entity is not required. This will save taxpayers even more money as the P3 contract for SkyTrain would be a simpler Design-Build-Finance (DBF) model.
At the end of the day, I think there’s one particularly more significant number that exemplifies SkyTrain’s viability in Surrey over a ground-level Light Rail system.
SkyTrain would have a positive benefit/cost ratio of 1.45:1. The proposed LRT has a poor benefit/cost ratio of just 0.69:1.
A SkyTrain extension is clearly the only viable option for rail rapid transit in Surrey, and decision-makers in the city and elsewhere need to start taking a look at the hard facts.
According to data from the 2012 TransLink/MOTI joint study
Surrey Rapid Transit Alternatives Analysis (SRTAA) Phase 2 Evaluation
Available at [LINK HERE]
- SRTAA PAGE 369; Undiscounted value; measured over 30 years, with costs increasing to 2041 on year 2041
- ProTransBC (operator) website – http://www.protransbc.com/service-performance/
- TransLink media release – Addressing Canada Line capacity questions
- See SRTAA PAGE 301 for ridership estimates (divided by track lengths listed on SRTAA P. 347)
- Based on APTA ridership data from Q4 2014
- See attached graphic, or SRTAA PAGE 369
- Suggested on SRTAA PAGE 536: “For RRT 1A, savings of $170 million”