New plans for Scarborough subway won’t help it

Calls for another stop to be added to the proposed Scarborough subway will only make it more uneconomic.

A recent push by Toronto city councillor Glenn De Baeremaeker to expand the scope of the proposed Scarborough subway will only make the economics of the project worse. An expansion would increase the project’s already escalating price tag and act as a further drain on the TTC’s finances.

De Baeremaeker wants the TTC to consider adding a fourth stop to the subway — from current plans to build three stops. He says the costs of adding another stop would be marginal — $100 to $150 million, compared to an overall price tag that could hit $4.5 billion.

However, riders across the system — as well as taxpayers across the city — will be left footing the bill through ongoing faster-that-inflation fare hikes and increased property taxes (which is already the case as a result of the project).

As Consumer Policy Institute has shown in the past, the Scarborough subway is an economic white elephant and this new addition would only make the project more of a financial burden. It also highlights the political nature of the project and the low priority transit planning accords economic feasibility and respect for TTC customers.

On August 2, 2013, we wrote:

The City estimates that the final price tag for the project will be $3.28 billion when adjusted for inflation and assuming that it is completed by 2024. That’s equivalent to $2.3 billion in 2010$ (the number most often quoted by politicians). On top of that, the city will be on the hook for an additional $250 million related to keeping the current Scarborough Rapid Transit (SRT) line in operation until 2023 and eventually tearing down the SRT. Adding those figures together brings the total up to $3.5 billion.

But the very public secret to all of these numbers is that they could be dramatically off base. TTC officials admit that costs could be as much as 30% higher than originally estimated. Taking the current figures and applying a worst-case scenario – never a bad idea when dealing with massive public works projects – the total figure for Scarborough’s new subway line could be more than $4.5 billion. Even if the TTC is only undershooting the cost of the project by 15%, that would still add an additional $500 million to the final price tag.

In a report to City Hall, the TTC said the proposed Scarborough subway would move as many as 9,500 passengers per hour per direction, yet would have the capacity to move more than 30,000 – meaning that more than two-thirds of the subway’s capacity would be wasted. And that’s only considering times of peak operation. If we consider that the number of riders will fall dramatically in off-peak hours, but capacity will remain the same (a problem that plagues most transit systems), the inefficiency worsens.

Officials at City Hall admit that the project will “result in a surplus capacity that may not be required within a reasonable long term planning horizon.” Worse still, they say the new subway line would impact the City’s ability to fund other important transit projects. It might also add to Toronto’s outstanding debt, the report adds. 

De Baeremaeker’s call for another subway stop could push the price tag of the Scarborough subway to $4.7 billion, assuming the 30% escalation used by the City to determine the cost of infrastructure projects is applied to the new subway stop and then added to the $4.5 billion price tag for the entire project.

Because the Scarborough subway will be a money loser for the TTC, the agency will pass the added costs on to its other customers in the form of higher fares. It will also have to rely on Toronto tax payers and the province for subsidies to pay for the operating costs associated with the new line. It’s time to bury this idea all together.

Brady Yauch is an economist and Executive Director of the Consumer Policy Institute (CPI). You can reach Brady by email at: bradyyauch (at) consumerpolicyinstitute.org or at (416) 964-9223 ext 236.

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