Subsidizing projects draining TransLink’s funds

Vancouver Sun

By Kelly Sinoski

After taking on ‘ridership risk’ for Canada Line and Golden Ears Bridge, company says they won’t break even for at least four years

TransLink expects to have to subsidize its two largest transportation projects — the Canada Line and the Golden Ears Bridge — for at least four years before ridership is high enough to reach a break-even point.

Those costs are a large part of the reason for the financial crunch that has TransLink looking for as much as $450 million a year in additional funding to operate Metro Vancouver’s transit system and its major roads.

Both the rapid transit line and the new bridge were built as public-private partnerships, and in agreements with its partners, TransLink took on most of the “ridership risk” for both projects.

That means TransLink will have to subsidize both of them until ridership hits forecast levels, which the regional transportation authority acknowledges will take years.

The Canada Line, to open in August, isn’t expected to see its projected 100,000 riders a day until 2013; the Golden Ears Bridge is expected to break even in about five years.

“It’s very rare for any transit system to make money, let alone break even,” TransLink spokesman Ken Hardie said.

“By accepting the [ridership] risk we control the fares or the tolls. It’s always been in the financial model that we would go a couple of years paying a higher subsidy.”

TransLink’s financial cash crunch will arrive by 2011 as it runs out of reserve funds. It says it needs $450 million a year to expand and operate transit services. If it fails to raise the money, it many have to reduce services, or postpone projects such as the long-awaited Evergreen rapid transit line to Metro’s northeast quadrant.

For the Golden Ears Bridge, TransLink will collect the toll revenue and pay a fixed monthly amount to bridge contractors Golden Crossing General Partners.

Golden Crossing began receiving $500,000 a month in June, with increases to $4 million a month in 2011 and to $4.8 million from 2015 to 2041. On top of that, Golden Crossing will get $316,000 a month for operations and maintenance of the bridge.

Hardie wouldn’t provide dollar figures for the Canada Line, but said TransLink must provide operator InTransitBC with operating costs and some capital, as well as debt-service costs of $38 to $39 million over the life of the agreement.

TransLink will collect the fares, so the closer the Canada Line comes to ridership targets, the better financial position TransLink will be in.

“The ridership will catch up over time,” he said. “By 2013 we’ll get some idea of what fare revenue is coming in and how much we would have to subsidize that line.

“We’ll probably not have as high a subsidy [as is needed for bus service]. … Rapid transit in this region comes closer to covering its costs than buses.”

Hardie said the Expo and Millennium SkyTrain lines already cover their costs, so TransLink is not providing a net subsidy. But he said transit in general normally runs at a loss because of high operating costs. On all modes of service, TransLink recovers only about 45 per cent of its operating costs at the fare box.

Roads are also money losers. For example, motorists on Kingsway pay no user fees, but TransLink pays Burnaby $13,000 per lane-kilometre to maintain the road.

“The fact is, our previous boards have committed us to a very aggressive expansion and our current board has maintained that,” Hardie said. “It was done with the full knowledge that our operating costs would overtake us.”

TransLink’s cash crunch explains why it is scrambling to boost ridership on the Canada Line, using its buses to funnel riders to the new rapid transit line.

Travel time between downtown Vancouver and Vancouver International Airport will be 26 minutes.

Hardie said TransLink expects a “slow ramping up” of riders on the line. Among other things it will expand its Employer Pass Program, in which employers along the route are offered annual discounted fares if they sign up 25 people or more employees to ride transit.

The same strategy was used to build growth along the Millennium Line. Ten years ago, there were only 1,500 people signed up to the program; now it has 20,000 subscribers.

“The more people we can get on transit and using it, the more our fare revenue,” Hardie said. “Every time you put in a new transit route it’s heavily subsidized. What we want to do with Canada Line is shorten that lag as soon as possible.”

Hardie said despite complaints from commuters, such as those using the No. 351 bus from White Rock, TransLink has decided to terminate such routes at the Canada Line’s Bridgeport station.

He said the decision will free up some of the long-haul buses for more service between south Surrey and Richmond.

“One reason we’re building rapid transit is because the surface transit is more clogged up,” he said. “Your rapid transit becomes the backbone and your bus service becomes your ribs. It’s going to attract a lot of new riders because it’s going to provide travel time reliability.”

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