Hamilton council have ordered city staff to provide information that will help determine the final figure on the annual cost to the city for the operation and maintenance of the LRT system. They have two weeks to pull the numbers together. Metrolinx CEO Phil Verster told councillors that the best estimate of the O&M cost is $600 Million over 30 years or $20 Million per year. Asked why the government put the cost at $900 Million over 30 years in figures it released in December of 2019, it turned out that the $900 Million was a result of adding inflation over 30 years. In other words, both numbers are accurate depending on whether or not one chooses to account for inflation.
As the deferral motion read, staff have been asked to:
report back to GIC regarding the net operating costs after the 18 buses on the B-line have been removed, eliminating Development Charge Exemptions, fare revenue and the Hamilton Tax Increment Grant Program, and other incentives, that the City may build in to credit the cost of the LRT operations and maintenance.
Need to consider LRT impact on existing HSR revenues
Verster said the $20 Million operating and maintenance cost would be reduced, first by the LRT farebox revenue, and secondly by the elimination of 18 buses currently serving the east-west corridor. Staff are being asked to subtract from the operating and maintenance cost to the city, the savings from cancelling 18 buses on lines that will now be displaced by the LRT. What is missing from this request is some estimate of the revenue loss from the removal or major modification of those bus lines that will be displaced. The Lines that will be replaced or significantly altered as a result of LRT, in addition to the B-Line Bus route, will be the King Bus, currently the number one revenue generator, the University Bus- another significant farebox contributor and the Delaware Line. Four of the HSR’s top revenue producing lines will be either eliminated completely or have their ridership sharply reduced as a result of LRT. That means, just to maintain the status quo financially, the LRT ridership needs to come close to the combined ridership of the lines it will displace. So for council it’s not just the operating and maintenance costs they need to be concerned about, its whether the $30 Million annual subsidy to the HSR will go up. Verster, said with the increased capacity of LRT units and increased frequency, traffic on the LRT line could double over the next decade or so. But for that to happen demand has to be there. The HSR ridership had been going backwards before the pandemic hit, and with more permanent remote work a likelihood, it will likely not significantly increase for some time.
HSR kept out of the picture
This kind of financial analysis should have been requested years ago, but from the beginning of the LRT debate, HSR has been kept away from the table, no doubt because two previous transit directors, both purged, kept coming up with inconvenient truths—namely that major bus service enhancements would be needed (BLAST network) in order to get transit usage in Hamilton up to a point where it could support or would even need, LRT. But now that we understand, as Assistant Deputy Minister James Nowlan told councillors Wednesday, the actual movement of people is only but one of the reasons we spend billions on transit, (probably the number three reason, after economic uplift and social objectives) –maybe none of this matters.
Affordable Housing: Where’s the new money?
Speaking of social objectives, when Infrastructure Minister Catherine McKenna, made her triumphant announcement of the $1.7 Billion in federal cash for LRT she declared that the gift was contingent on “community benefits” being part of the deal. She referred specifically to affordable housing. In Wednesday’s discussion it was clear that from the provincial perspective at least, there is zero cash for affordable housing, just the possibility that there might be some spare land available for the purpose. As councillor Chad Collins observed, the extra billions over and above what would have been needed to install Bus Rapid Transit and BLAST, would have completely wiped out the waiting list at City Housing Hamilton. Poverty champions, Councillors Nann and Wilson, did not allow the lack of commitment to affordable housing dampen their enthusiastic support for LRT, and the property value uplift it will bring. Speaking of BRT, there was a moment in Wednesday’s Q&A session where Phil Verster was asked about Bus Rapid Transit, and he started to praise it, describing York’s BRT as “fantastic”– but , realizing who he was talking to, he quickly checked himself.
Mayor Fred Eisenberger warned councillors that if they don’t jump aboard LRT, the billions will go somewhere else, like Toronto, which is probably true; but at least in Toronto they actually can demonstrate the need for LRT and subways. Spending public money where it actually provides the most benefit to the most people is an outdated concept to be sure. Hamilton’s Anchor Institutions Leadership group, (HAIL), only one of which (Dofasco) is a significant payer of either income or property taxes, and whose members collectively account for about $3 Billion in taxpayer dollars each year, have studied the matter carefully, and are urging Hamilton council and senior governments to get on with the LRT and while they are at it, find some money to fund the BLAST system. They are right– in these times, what’s another few hundred million?