In the minds of most Hamiltonians the LRT deal with the province is straightforward—Ontario gives Hamilton a $1 Billion LRT system– for free. Except that may not be quite the case depending on future negotiations between the city and Metrolinx—the provincial transit agency in charge of the project. At issue is who gets the fare box revenue from the LRT—the city or Metrolinx?

Both the City of Hamilton and Metrolinx have told the Bay Observer that the question of who gets the revenue is still to be negotiated. The question arose following a staff report last month to the LRT subcommittee at which a proposed Memorandum of Understanding between the city and Metrolinx was presented to Hamilton councillors. The memorandum states, “the Project will be designed, built and owned by Metrolinx and operated by or on behalf of Metrolinx on lands in the City of Hamilton which Metrolinx will either own or in which it will have real property interests.”

This suggests initially at least, that Metrolinx as owner of the system would own the fares it collects on the LRT line. If this is what ends up being the case it could place an additional burden on Hamilton taxpayers since the LRT will be replacing two of the city’s most lucrative bus routes—the King Street line and the current B-Line bus.

Hamilton Transit boss Dave Dixon confirmed that LRT could affect the HSR’s bottom line if Metrolinx gets to keep the revenue because LRT will displace two of the city’s more lucrative bus routes—the King line and the B Line. The busy King Line is by far the most profitable of Hamilton’s bus routes—essentially self-supporting through fares. The B Line generates just under 60 per cent of costs through fares. Displacing these two routes with LRT would leave the HSR holding the bag with a collection of routes mostly operating at below 50 percent fare box recovery—9 routes recovering less than 30 percent from fares. Dixon says Metrolinx has not resolved the fare-sharing issue with the other municipalities who will be constructing LRT systems. The Bay Observer asked Mr. Dixon about the distances between LRT stops and how this might affect mobility-challenged persons. He said it would be unusual to operate a local bus service with more frequent stops on top of an LRT system but the idea has not been ruled out. Council and Metrolinx are pushing to get an agreement signed and contracts let ahead of the anticipated 2018 provincial election, in case there is a change in government.

At present the HSR costs about $60 Million to operate and gets just over half that amount back in fares. A 2010 IBI report said the HSR operates well in comparison to other municipal transit systems, but noted Hamilton bus fares are low relative to other cities and that this will hamper needed improvements aimed at increasing ridership. The city had adopted through Vision 2020 a long term goal of doubling ridership by 2020, a goal that clearly will not be attained.

Providing a fresh perspective for Hamilton and Burlington

2 Comments to: LRT may not be “free” after all.

  1. N. Ladyka

    February 12th, 2016

    If that’s the land use along the LRT route, I don’t think there will be a lot of ridership revenue anyway. It looks like a ghost town.

    Reply
  2. Rob V

    February 13th, 2016

    So we’ll be losing a line that is almost self-sufficient and a line that can cover 60% of its costs… So let’s say that these two lines cost $1,000,000 to operate. They generate maybe $900,000, at the very highest end. That means if the line does not run anymore we are still saving $100,000. That $100,000 could be spent elsewhere to improve other lines.

    If the lines were generating more than they cost then this story would make sense, but losing two lines that don’t make money, even if they generate more revenue than other lines, is not a bad thing.

    Reply

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