TTC customers will be on the hook for years to come to cover the growing cost to build the Downtown Relief Line (DRL).

The Downtown Relief Line (DRL), the darling transit investment among Toronto’s city planners, will come to saddle both TTC customers and taxpayers with billions of dollars in costs for years to come. Using updated figures released from Toronto’s planning department, the DRL will likely cost at least 35% more to build than current estimates, require tens of millions of dollars annually in operating subsidies from other transit customers or taxpayers and will attract just a small number of new customers.

The rationale for putting billions of public dollars at stake to build the DRL and then tens of millions of dollars in subsidies to operate it is simple: the TTC is crowded during the morning commute. But rather than look at targeted ways to alleviate that congestion – such as peak and off-peak fares – transit planners are pursuing the most expensive and financially risky option.

The new figures from the city’s planning department provide reason enough for a major rethink.

The price tag to build the DRL has more than doubled from initial estimates of $3 billion to the current figure of $6.8 billion (in future dollars). Even that larger figure understates the true cost of constructing the DRL. The new estimate is based, according to city planners, on “the lowest degree of project definition” and the final bill is expected to be as much as 35% higher – pushing the price tag to $9.18 billion. The current $6.8 billion estimate also excludes other billion dollar costs, such as flood mitigation and financing costs, which will add billions more to the final figure.

Ignoring the capital costs of building the DRL, the new subway won’t attract enough new riders to offset the additional operating and maintenance costs needed to operate it. The new figures suggest the DRL will attract 13,400 new riders to the TTC on weekdays and another — using data for current transit lines — 3,350 on weekends and holidays. Because the subway line serves areas in the city that are already well-serviced by streetcar and bus routes, most of the DRL’s passengers – 177,000 during the week – will simply be customers that switched from transit routes already in operation to the new subway. Just 7% of the DRL’s riders will be new TTC customers.

Fares from new customers will bring an additional $12 million in revenue for the transit agency. Yet, the annual operating and maintenance costs will be more than $43 million – leaving a $31 million hole in the TTC’s finances each year that will have to be paid for either by charging all transit customers more or by higher subsidies from the city’s general revenues. Future fare increases may close that gap to some degree.

The DRL will also remain as much as half empty during the busiest travel periods, according to the city’s planning department. It expects ridership on the DRL during the peak morning rush of between 13,000 and 17,000, or about 43% to 56%, respectively, of its capacity.

The ridership figures themselves are likely significantly overstated since they don’t include other transit plans, such as Mayor Tory’s Smarttrack proposal that will take riders off subway lines during their commute into the downtown core.

The city’s own cost-benefit analysis shows that the DRL is a loser.

City planners show that the total lifecycle costs of the DRL are $3.5 billion more than the benefits. Even those figures are dodgy, since the agency’s cost-benefit analysis includes all sorts of soft variables such as “crowding relief” that boost the benefits of the DRL. Not to be thwarted by a poor cost-benefit analysis, city planners say the “local economic benefits” of the project can’t be captured in a simple economic model. In the end, the planners promise to “ensure economic evaluation of transit projects” like the DRL capture all sorts of other vague “benefits” to make the economics look less awful.

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 by phone at (416) 964-9223 ext 236