Wednesday, March 11, 2015

Transit referendum and Pandora's box

When financial numbers involve billions, many of us struggle to gain understanding and perspective. Usually, the beneficiaries of large scale spending are the worst sources of information. Here's an example.

A "fact-check" statement from the paid-for-by-taxpayers Mayors council website says:
A “Yes” to Transit vote would cost average households $125 a year.
Readers are invited to click on a link to view "the math" and that brings up a PDF file that states:
The Mayors’ 10-year plan to improve transit and transportation as the region grows by one million more people will cost the average household $125 a year. That’s about 35 cents a day.
You don't have to be a mathematician to know an average is calculated by dividing a sum by the count of numbers contributing to that sum. Transit referendum proponents claim the 0.5% tax will raise a sum of $250 million and they admit the count of households in Metro Vancouver is 967,948. Those numbers produce an average of $258.28 in new tax collected for each household.

TransLink proposes to spend $7.5 billion to expand its asset base. Financing that amount at 4.45%, the effective rate it paid to the Municipal Finance Authority according to TransLink's most recent annual report, would require annual payments for 20 years of $568 million.

That results in an average burden of $587 per household, almost five times the amount suggested by the Mayors Council.

The tax proponent's website also states:
The Mayors’ 10-year plan to improve transit and transportation as the region grows by one million more people...
The implication intended is dishonest. If Metro Vancouver grows by 1.24%, the annual percentage forecast by Stats BC, population will grow by 310,000 in ten years, not by one million they want you to believe.

However, there is more important set of facts ignored by the Mayors Council and their army of public relations operatives. Substantial capital expenditures result in additional operating costs and when those are not covered by transit fares, there is an additional burden placed on taxpayers. These reported numbers are taken from the 2013 annual report, the projected numbers I calculate:


It is egregiously wrong to pretend that a yes vote on this transit referendum will affect families by only $125 a year. It could be ten times that amount.

Personally, I'm not against improving transit but there are fundamental questions that we must ask and they are not part of the conversation that most municipal politicians and plutocrats want to hold.

TransLink management, I've said repeatedly, is a too comfortable place for too comfortable people. They claim to serve the less privileged people of British Columbia but those customers are often the ones at or below British Columbia's individual median income of about $30,000 a year (Statistics Canada. Table 111-0008). We need to ask if we should pay executive salaries a dozen times greater than what half the system users earn and we need to rethink the levels paid for many other TransLink positions that result in 6-figure salaries.

However, restraint and moderation is not going to happen when people who've grown fat at the public trough are making decisions. There is a very small clique that chooses TransLink directors and they cast eyes over very few candidates, none from groups that typically use transit. That governance structure is the first change needed. Without substantial movement down the road of reform, I'm not prepared to vote yes to a regional sales tax.


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17 comments:

  1. Google Search Results click to view the Mayor's Council's Math and others

    This is just a tad condescending from our Mayor's, maybe the Municipal elections SHOULD have include the VOTE:

    FACT CHECK: “No” to Transit side is misleading voters with mythical math
    A “Yes” to Transit vote would cost average households $125 a year
    FOR IMMEDIATE RELEASE February 6, 2015
    Vancouver, BC – The “No” side’s baseless claims, mythical math and random calculations demonstrates they are not producing facts to back their arguments. In this latest claim, they have no idea how households really spend their money and how the PST is applied to goods and services.

    The Mayors’ 10-year plan to improve transit and transportation as the region grows by one million more people will cost the average household $125 a year.

    That’s about 35 cents a day. The mayors’ calculation considers how much money households make and how much they spend on PST-eligible items.

    They also looked at how much of the tax would be paid by households, businesses and visitors, to come up with a realistic cost for an average household.
    In fact, households making less than $100,000 per year – about 70% of Metro Vancouver’s households – will pay between $53 and $116 per year for more buses, better roads and more transit options.

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  2. If the population did grow by 1 million, imagine how bad congestion would become.
    I thought the problem was congestion.

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    Replies
    1. The problem already is congestion. The answer is TDM (traffic demand management). But it's good to have transit options too, which this referendum does not do an adequate job of providing.

      There is no evidence the population will grow by 1 million. All there is, is an extrapolation of a line on a graph - no mechanism has ever been offered to explain our projected population growth. We are in a real estate bubble caused by Asian hot money which will come to an end as China's output slows and financial responsibility catches up with the people shovelling money out of China as fast as possible. There are few jobs here - all we do is build each others' houses and condos, and serve each other coffee.

      Delete
  3. You address elephants in the room that many yes supporters don't want discussed. They propose to increase the size of the system but don't mention that taxpayers must pay much of the extra operating costs, as well as interest on money borrowed for capital spending. Where is that extra cost in the Mayors' calculations?

    They say taxpayers won't have to pay for the entire transit expansion program because the federal and provincial governments might contribute to capital costs. But of course those government get their money from taxpayers.

    But, the subject that Translink employees and contractors really want off the table is the amounts paid to them. As much as I object to paying executives the highest transit salaries on the continent and many millions to favoured consultants, I question the need to pay typical transit workers amounts approaching or exceeding a hundred thousand a year. As you point out, most of the people using the system get paid far, far less.

    There is something wrong here that needs to be talked about.

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  4. Recently we had a discussion in our house of buying another car. The offspring said he could find a suitable used one for about $12,000 and he could afford to pay part of the cost, which he calculated to be only $333 a month. I asked who would pay for interest, gas, repairs, tires, insurance and parking? He didn't want to talk about those items.

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  5. And what's this about a recent property purchase by Translink?
    According to Bob Mackin, Business in Vancouver --
    Translink bought the property from Bombardier in 2004 for $17.2 mil.
    Within a year, sold it for $8.2 mil - loss of $9 mil.
    The buyer flipped it within six months and sold for $13 mil - gain of $5 mil but Translink lost $9 mil in the same time.
    Translink has been renting the place since 2012 and just bought it back for $13.9 mil.
    What a joke!

    How on earth can we trust these "managers" to operate Translink; even with Jimmy P. watching over them?!?

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    Replies
    1. For what it is worth, I think this is the reason why TransLink repurchased the building.

      I have been told by two different sources (Ottawa/UK) that Bombardier wants to abandon SkyTrain ART production due to lack of sales, in fact only 7 such systems have been built since the late 70's with one going to be torn down within the next decade (Toronto) and the Yougin Korea SkyTrain mire in litigation between the city and Bombardier. Only Vancouver keeps building with ALRT/ART.

      A hint that this is indeed true, Bombardier now calls their proprietary rubber tired airport people mover system SkyTrain.

      I would not surprise me if TransLink bought the technical patents and jigs from Bombardier and use the the old assembly building as a small SkyTrain production plant.

      If there is no SkyTrain cars being built, the cost to replace cars or purchase new ones will rise dramatically! It costs about $50 million for a company to design and test a new car to meet the strict specifications of the current MK. 2 car.

      If TransLink wants to refurbish or replace the older MK.1's or order new cars for the proposed Broadway subway, the purchase of the building and convert it back to a production plant makes some sense to some. The problem is, we will never rid ourselves of SkyTrain and any sensible transit planning will be lost with the argument that will go like this; "We invested about $50 million to purchase and convert the former fabrication plant into a production plant and spent a further $20 million or so to purchase the ART patents, we just have to continue building with SkyTrain!"

      I forgot one minor detail, SNC Lavalin hold the engineering patents for SkyTrain and i would not be surprised that a former SNC Chairman, Gwyn Morgan has not been singing sweet nothings to Premier Photo-op and her entourage, that building SkyTrain cars in Burnaby would be a very good idea.

      If this is true, the taxpayer will be taken on a rather bumpy FastFerry ride to financial oblivion.

      Delete
    2. good stuff, Malcolm. A question - if Translink abandoned Skytrain in favour of a proper size car, would the railbed have to be rebuilt as well, or is there something that would fit the existing railbed?

      Delete
    3. The Expo and Millennium Lines have severe load and size restrictions and unless we use the same sort of vehicle (LIM powered), the guideways are about as useful as an elevated garden, like NYC "High Line". We must also not forget that the guideways will become life expired in about 20 years and very expensive renovations must happen. This is the downfall of Toronto's SRT , I.C.T.S. (SkyTrain) line, the guideway is becoming rapidly life expired and the line is to be converted to a subway or LRT.

      The Canada line is another story, not being SkyTrain, rather an elevated railway operating heavy-rail electric multiple unites, the guideway is far more robust. One can operate almost any type of train on the elevated and subway route. The problem with the Canada Line is that the stations are very small, making the Canada Line capacity constrained. The cost to increase capacity of the Canada line to that of the rest of the SkyTrain system is about $1 billion to $1.5 billion.

      A German transit specialist who worked for Siemens said it would be cheaper to build a stand alone LRT line using the Arbutus corridor (cost $100 million) from downtown Vancouver to Steveston and Ironwood Mall (CN R-o-W is $61 million) in Richmond and convert the the Canada line to LRT, thus greatly increasing capacity, while at the same time, extend "rail" transit in Vancouver at a an affordable cost.

      Cost of a 7 km Broadway subway to Arbutus, $2 to $3 billion.

      Common sense ideas are not welcome at TransLink.

      Delete
  6. I am a teacher and have just received a "newsletter" from the BCTF telling me to vote Yes in the referendum. I find this to be totally outrageous on their part especially with the "reasons" given why I should vote yes. I am sure that other "union" members in this province will be receiving or have already received similar propaganda from their union executive.... None of them really think this through but only parrot what they are told to by the BC Federation of Labour who has its own self interests here.

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  7. I looked at the mayors site and see that their headline claims opponents are the " 'No' to Transit" side.

    That is another example of dishonesty.

    Being opposed to giving Translink hundreds of millions through a sales tax is NOT the same as opposing transit.

    I am very much in favour of transit but I think it should be improved throughout the province by gathering a fair share of natural resource revenues by ending provincial subsidies to natural gas producers like the $400 million spent by the gas ministry and the $600 million or so they giving to subsidize drilling programs. That billion dollars a year would allow enough money to avoid the transit sales tax and would provide hundreds of millions for transit elsewhere in the province, like on the Highway of Tears between Prince George and Prince Rupert.

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  8. The YES side is lost in an ennui of "motherhood and apple pie" on this issue. It seems that the YES side fully beleives that the more money we throw at TransLink the better transit will be.

    Ain't so.

    The YES sides hubris by refusing to accept proven methods to move transit customers in an AFFORDABLE fashion means the taxpayer is going to ante up a lot more money than one would think.

    The most worrisome project is the Broadway subway to Arbutus. A realistic cost for this project is between $2 billion and $3 billion, but there is more. Subways are notoriously expensive to operate, because of the extra costs for electricity (subways consume more electricity than the trains operated there in) for lighting, escalators, elevators, ventilation fans, drainage pumps etc. All of this must be regularity maintained and the subway must be cleaned on a regular basis, again a very costly procedure. Because subway stations are much further apart than let's say LRT, a shadow bus service must be operated to convey passengers too and fro, thus, unlike modern light rail which sees operational costs about half of that of buses on a transit route, subways only add onto the burden of operational costs.

    The YES side also claims that they will add 400 new buses to the existing serviced, but what they don't say is that they will be hiring 1,200 to 1,600 new employees to drive, maintain and manage them. Factoring annual wages, pensions, etc., the annual cost of this alone will be between $90,000,000 to $120,000,000

    In the real world, transit operators are trying to reduce operational costs, while still providing a good product for the transit customer, but in Metro Vancouver, TransLink does not give a damn about the customer or the taxpayer.

    What really shocks me is that so many so called intelligent people have been so duped by the TransLink flim-flam.

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  9. I haven't really thought this through, but shouldn't the developers that want to bring these 1 million people here have to buck up and provide a means to move them all around? What portion of development fees and licences are dedicated to transit? Someone is going to make a lot of money developing a piece of property that has increased in value because I have made transit available with my own money...... transit that I (or anyone else in the region) wouldn't need otherwise......assuming of course the money I have already paid was actually being spent by competent people on quality equipment that would have kept us out of the obvious predicament we are in in the first place.

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  10. I don't know if the numbers are correct for either side, what I do know is nothing the government does is ever as cheap or as well thought out as they claim and there are AWAYS "hidden" costs that come to light later for the taxpayer to bear. In a phone call out on this issue Mayor Robertson said the numbers were for 5 years only and that costs would be looked at after that.... worrisome to say the least. Yes we need better transit, but misleading statements, scare tactics and half truths we don't need.

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  11. Recall, last municipal election? The Mayors insisted that they didn't want their positions on Funding for Translink ground rules be dictated by Christy Clark. The elections should have been more about Translink than the Candidates abilities to simply run City Hall. We can't turn the clock back on that 2014 November election, guaranteeing four year terms to the winners, but .... are the Mayor's from the previous terms living by what they said back then about Translink funding?

    TransLink needs to come up with another $30-million a year as of next year on top of the $40-million already being raised through an increased gas tax to cover the line’s construction costs.

    Langley Mayor Peter Fassbender, ..... vice-chair of the TransLink mayors’ council, said the Premier seems to be “drawing the line in the sand” without even bothering to talk to mayors who struggled for the past two years over the difficult decision of what new funding mechanisms to request.

    “She has never talked to me or Mayor [Richard]Walton, [the chair]” Mr. Fassbender said. Nor does she seem to have talked to her own cabinet members, he said. “I’m never surprised at things the Premier says. I think she makes decisions in isolation.”

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  12. I live in North Vancouver and have watched the Government promise a third seabus on 3 different occasions over the years.
    10 years later, we still only have 2 seabusses. Now Translink is asking me to accept a new tax to pay for better transit. In North Vancouver, 'better transit' means a third seabus. Sure, we have gotten a third Seabus before, only to have one of the other 2 taken out of service.
    What makes this promise of a third boat any different than the last 3 times??
    Translink financial management, as well as the mayor's lying to the public has made my decision easy! Vote NO.

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  13. yep a refurbish lions gate traffic jam, a bigger ferry port for Horse you pay, a slow boat to down town with taxi favored operating hrs, now the if you give us enough money we can fix anything crowd wants more but they have proven time and time again they can't and they don't.

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