{"id":49567,"date":"2014-08-27T13:29:55","date_gmt":"2014-08-27T17:29:55","guid":{"rendered":"http:\/\/spacing.ca\/toronto\/?p=49567"},"modified":"2014-08-27T13:29:55","modified_gmt":"2014-08-27T17:29:55","slug":"lorinc-john-torys-hypothetical-scarborough-subway-problem","status":"publish","type":"post","link":"https:\/\/spacing.ca\/toronto\/2014\/08\/27\/lorinc-john-torys-hypothetical-scarborough-subway-problem\/","title":{"rendered":"LORINC: John Tory\u2019s not-so-hypothetical Scarborough Subway problem"},"content":{"rendered":"

\"feature-lorinc\"<\/a><\/p>\n

After Olivia Chow\u2019s horrible week last week, John Tory has seen his transit platform placed under a high-power microscope in recent days, with skeptical analyses<\/a> of his tax increment financing scheme,\u00a0 the timelines he claims will be required<\/a> to build his centre-piece Smart Track project, and his various statements<\/a> about the importance he will (or won\u2019t) assign to the Finch West and Sheppard East LRT projects.<\/p>\n

What\u2019s gone missing from this debate, but should now be resurrected, is a discussion about Tory\u2019s take on the Scarborough subway. With Karen Stintz out, Tory is the only cogent candidate backing the three-stop extension, so voters definitely shouldn\u2019t forget to ask how he\u2019ll manage that project if elected.<\/p>\n

Throughout the campaign, Tory\u2019s take on the Scarborough subway is that council has made its choice, so it\u2019s time to move on. But the practical reality is that the next mayor and council will face many more decision points about this project (e.g., the required environmental assessment), including some potentially costly ones (e.g., the final budget for the re-construction of Kennedy Station, and the long-term financial impact of Tory\u2019s Smart Track project on ridership\/revenue on the Scarborough extension). All told, Tory\u2019s position bears further scrutiny.<\/p>\n

On Tuesday, I asked the campaign to answer the following questions: Does Tory think the $910 million tax increase approved by council for the Scarborough subway, and which has now begun to appear on property tax bills, will be sufficient to cover the entire cost of the project? And if not, how will he propose to raise the funds needed to cover any shortfall?<\/p>\n

Campaign spokesperson Amanda Galbraith provided this reply: \u201cWe are confident in the City\u2019s cost estimates.\u201d She declined to respond to the second part. \u201cWe\u2019re not going to get into hypotheticals.\u201d<\/p>\n

The problem is, those hypotheticals aren\u2019t so hypothetical.<\/p>\n

As Spacing<\/em> reported earlier this year<\/a>, an internal Metrolinx memo drafted in May, 2013, and obtained through a freedom of information request, estimated that the actual cost could be as high as $3.3 billion, even though only $3.05 billion has been allocated (municipal property tax hike, plus contributions from the province and the feds). And that figure excludes other outlays relating to \u201csunk costs\u201d incurred by Metrolinx on the aborted Scarborough LRT project, as well as the cancelation of 48 Bombardier light-rail vehicles (LRVs).<\/p>\n

Indeed, one of the first orders of business for the new mayor will be responding to a report detailing those two issues. In an interview with Spacing<\/em>, Jack Collins, Metrolinx\u2019s executive vice-president for rapid transit implementation, outlined the process now underway between the City and Metrolinx.<\/p>\n

Earlier in the summer, the City retained an outside audit firm to review Metrolinx\u2019s claim that it had spent $85 million on the Scarborough LRT and the Sheppard maintenance and storage facility. Metrolinx, Collins says, believes the final figure, which the City has agreed to reimburse, \u201cis still in [the $85 million] range.\u201d<\/p>\n

But he also confirmed that the sunk costs don\u2019t include the cancellation penalties related to the 48 LRVs that Metrolinx won\u2019t be ordering for the Scarborough LRT. \u201cThat\u2019s a further item we need to resolve.\u201d<\/p>\n

In May, 2010, the Metrolinx board awarded Bombardier with a contract for 182 LRVs. The trains aren\u2019t actually in production yet \u2014 they\u2019re still in the design phase, says Collins. Still, he adds, \u201cWe\u2019re at a point where we need to sit down with Bombardier. They\u2019re going to have to provide an estimate of the damage associated with cancelling part of the order.\u201d<\/p>\n

It\u2019s a financial detail that will likely come slip-sliding across the next mayor\u2019s desk at some point in 2015. Whoever is wearing the chain of office will find themselves forced to decide how much the City is willing to hand over to make things right with Bombardier. Will it be a case of “in for a penny, in for a pound?” Or will the Bombardier penalty, when added to the sunk cost reimbursement, future capital cost overruns and operating shortfalls, make the project simply too costly for Toronto residents? Tory won\u2019t go there now.<\/p>\n

Before she left the race, Stintz told me that Bombardier is not going to make things unpleasant for a large domestic customer. Still, the City cut its order by more than a quarter, so Bombardier will want something by way of compensation.<\/p>\n

It\u2019s worth pointing out that none of these questions will be resolved before the next council takes office. The results of the City\u2019s third-party audit of the sunk costs have yet to be released. It is not on this week\u2019s council agenda and council sources say they haven\u2019t heard anything about the final figure.<\/p>\n

Finally, outgoing city manager Joe Pennachetti hasn\u2019t yet released the wording of the revised master agreement between the City, Metrolinx and the TTC for the remaining LRT projects (Eglinton, Finch West and Sheppard East). According to Collins, that document \u2014 the original version of which was approved in November 2012, after intensive negotiations between council, the TTC and then Ontario transportation minister Bob Chiarelli \u2014 should be much like the first one, except with the language about the Scarborough LRT \u201cdeleted.\u201d Furthermore, council, when it approved the Scarborough subway, authorized the city manager to take responsibility for revising the document.<\/p>\n

Yet as of the final session of this council, that revised master agreement has not yet been signed as far as I could determine (as of early August, Collins confirmed it was still under negotiation). In other words, if a new mayor arrives in office with other priorities, it\u2019s possible that this contract could be cracked open yet again, notwithstanding Tory\u2019s claims in the media this week that the Finch\/Sheppard LRTs are provincial projects and thus not something he\u2019ll need to worry about.<\/p>\n

Quite the contrary: the next mayor, soon after taking office, will find him or herself contending with the aftermath of this council\u2019s LRT wars, as well as price-tag issues related to the Scarborough subway. And none of it will be theoretical.<\/p>\n

photo by Alex Guibord<\/em><\/a><\/p>\n

\n
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After Olivia Chow\u2019s horrible week last week, John Tory has seen his transit platform placed under a high-power microscope in recent days, with skeptical analyses of his tax increment financing scheme,\u00a0 the timelines he claims will be required to build his centre-piece Smart Track project, and his various statements about the importance he will (orContinue reading “LORINC: John Tory\u2019s not-so-hypothetical Scarborough Subway problem”<\/span><\/a><\/p>\n","protected":false},"author":4051,"featured_media":49570,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ngg_post_thumbnail":0,"_ef_editorial_meta_paragraph_assignment":"","_ef_editorial_meta_date_first-draft-date":"","_ef_editorial_meta_checkbox_needs-photo":"","_ef_editorial_meta_number_word-count":"","footnotes":""},"categories":[2,8],"tags":[],"class_list":["post-49567","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-politics","category-transit"],"acf":[],"yoast_head":"\nLORINC: John Tory\u2019s not-so-hypothetical Scarborough Subway problem - 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