Special Report: Light Rail

LRT More Cost Effective to Operate, Attracts More Investment than BRT

It's clear from some of the comments about BRT that many people are unclear about what it means.

By Ryan McGreal
Published September 24, 2014

As the debate over Hamilton's rapid transit plan heats up, some people have been asking why we don't reconsider choosing bus rapid transit (BRT) instead of light rail transit (LRT) for the 14-kilometre east-west line between Eastgate Square and McMaster University.

Cleveland's Healthline BRT (Image Credit: Wikipedia)
Cleveland's Healthline BRT (Image Credit: Wikipedia)

It's clear from some of the comments about BRT that many people are unclear about what it means. Some people seem to think BRT amounts to express buses. If that were true, Hamilton would already have BRT: the B-Line bus, which has been running along the rapid transit route since 1986.

However, BRT is a lot more than just a bus that makes fewer stops. Properly designed, BRT is a rapid transit system of express buses running on dedicated lanes that are physically separated from automobile lanes.

BRT has passenger boarding stations rather than bus stops, and it runs at a high enough frequency that passengers can just show up at a station and wait for the next bus.

Almost as Disruptive, More Expensive

It's important to understand that BRT is nearly as disruptive to the street as LRT. The roadbed needs to be rebuilt and the asphalt surface replaced with concrete to handle the wear and tear of heavy buses running constantly on the road.

BRT is a little less than half the capital cost to build as LRT, but it has a significantly higher per-passenger operating cost. Most of the cost to operate a rapid transit system is paying drivers, and BRT needs more drivers to carry the same number of passengers as LRT.

Since the province has said it will pay 100 percent of the capital cost for Hamilton's rapid transit system, choosing BRT means the province saves money upfront but Hamilton ends up saddled with higher operating costs for every year thereafter.

According to the city's Rapid Ready comprehensive transit plan submitted to the province last year, the net levy cost for an HSR system including LRT will be $7.1 million lower than the cost of a bus-only system by 2031. The overall net operating cost per passenger will be $1.51 in a system that includes LRT but $2.28 in a system with just buses.

In other words, running the LRT will generate enough surplus revenue from riders to offset some of the cost of providing bus service across the rest of the city.

New Private Investment

Perhaps even more important, LRT will do a much better job of attracting new private investment to the city than BRT.

A recent study by the Institute for Transportation and Development Policy — a consultancy that promotes BRT — has generated headlines about the potential for BRT to attract new investment as well.

When you dig past the headlines and read the full report, it finds that a full, top-of-the-line "Gold Standard" BRT system attracts a similar relative return on investment to LRT.

That is, it reconfirms the conclusion that BRT costs less to build but attracts less new investment, while still costing more per passenger to operate.

In contrast, LRT costs more to build but attracts more private investment. All of the new developments that occur in the 800-metre corridor on either side of the LRT line will mean new property tax assessments on land that is already serviced.

Consider that last year, a small, three-storey office near City Hall was demolished. It went from paying $77,000 a year in property taxes to just $7,000. That's lost tax revenue we need to run the city and pay for our infrastructure.

More Property Tax Revenue

Now think of that process in reverse.

The property at 123 James Street North (at Vine) was assessed at a value of $371,000 in 2012 when it was a vacant lot. It paid $12,527.81 in property tax, of which $9,169.49 went to the city and the rest to the School Board.

New development at James and Vine under construction (RTH file photo)
New development at James and Vine under construction (RTH file photo)

Once its redevelopment as a new three-storey commercial building is complete, its assessed value is estimated to be $3,800,000. It will pay an estimated $144,459.24 in property tax, of which $93,919.24 will go to the city.

That's an increase of more than ten times in annual property tax revenue for the city.

Or consider 68 George Street at Caroline, the site of the Staybridge Suites Hotel. As a vacant lot in 2010, it was assessed at $436,500 and paid $17,955.66 in property taxes, of which $11,210.86 went to the city.

Sign going up at the Staybridge Suites Hotel (RTH file photo)
Sign going up at the Staybridge Suites Hotel (RTH file photo)

After redevelopment, the same site was assessed at $9,643,750 in 2013 and paid $350,273.11, of which $228,761.86 went to the city.

That's an increase of 20 times in annual property tax revenue for the city.

Here's one more example: 40 Bay Street South at Main, the site of the Homewood Suites redevelopment. As a vacanat lot in 2012, it was assessed at $760,000 and paid $28,434.02 in property taxes, of which $18,122.86 went to the city.

Homewood Suites (RTH file photo)
Homewood Suites (RTH file photo)

Once its redevelopment is complete, its assessed value is estimated to be $13,000,000. It will pay an estimated $473,796.18 in property taxes, of which $309,996.18 will go to the city.

That's an increase of more than 16 times in annual property tax revenue for the city.

Increased Property Tax
Location Pre-Development Post-Development
Assessed Value Property Tax Municipal Portion Assessed Value Property Tax Municipal Portion
123 James St N $371,000.00 $12,527.81 $9,169.49 $3,800,000.00 $144,459.24 $93,919.24
68 George St $436,500.00 $17,955.66 $11,210.86 $9,643,750.00 $350,273.11 $228,761.86
40 Bay St S $760,000.00 $28,434.02 $18,122.86 $13,000,000.00 $473,796.18 $309,996.18

Now think of all the empty buildings and vacant properties along the east-west LRT route that are just waiting to be redeveloped and generate new value and additional property tax assessment.

Sustainable Infrastructure Costs

Hamilton needs a lot more of this kind of investment to get its long-term infrastructure obligations in order. We have spent the past several decades investing heavily in expensive, low-density suburban infrastructure that does not generate enough property tax revenue to pay for itself.

If we want to reduce our infrastructure life cycle deficit, we need to generate a lot more value out of the infrastructure we have already built.

The good news is that the city has already done the important work of developing a land use policy for the area around the LRT line to encourage high quality new private investment that leverages the LRT line.

What we need to realize this promise is strong local political leadership that will hold Queen's Park to its promise of full capital funding.

A version of this article was published in the *Hamilton Spectator on September 23, 2014.*

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan writes a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. He also maintains a personal website and has been known to post passing thoughts on Twitter @RyanMcGreal. Recently, he took the plunge and finally joined Facebook.

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By jason (registered) | Posted September 24, 2014 at 10:58:52

More great info. Well written.

How typically 'Hamilton' of us that we have someone running for mayor under the promise of refusing hundreds of millions of $ from the province, and instead promising to build a transit option that costs us more to run every. single. year. No wonder we've always been the one languishing city in the Golden Horseshoe.
In most cities, nobody would run a campaign like that because they know they'd never get a vote other than from sympathetic family/friends. Here, they are considered part of the 'big 3'. Stunning.

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By Gored (anonymous) | Posted September 24, 2014 at 11:29:47

It blows my mind how any councilor can look at all the parking lots and empty spots and not see dollar signs. As long as they keep pissing away opportunity to grow downtown I don't believe any of them when they gripe about what we can and can't afford.

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By Starbuck (registered) | Posted September 24, 2014 at 11:50:57

I buy the argument that LRT is more cost effective than BRT, however I still remain skeptical that LRT overall, will not have a significant impact on the already heavily taxed property owner.

To date, residential taxes account for 70% of tax revenue for the city, while only 30% comes from the private sector. In addition, the recent mac report clearly stated that LRT alone will not be enough to sway business to invest along the B corridor. This is a fundamental argument for the pro LRT folks, who believe future investment along said route would sustain annual operational and infrastructure costs associated with LRT. The solution? According to RTH, one way to two way street conversions. RTH believes this would create an increase in ridership, which in turn would assist with the operational costs of LRT, as well as give incentive for private investment along the B corridor, which in turn would sustain the ongoing annual infrastructure costs.

If this is indeed the argument for LRT/BRT, I am very skeptical. I do not believe there would be enough vehicle to public transportation conversions, in the foreseeable future, to alleviate the immediate tax burden LRT/BRT would have on the taxpayer.

What Hamilton desperately needs is more business investment, resulting in greater tax revenue for the city coffers. That should be councils # 1 focus. I understand the urgency due to the provinces alleged promise to fund the build, however it’s madness to suggest once built, the system will not facilitate substantial property tax increases.

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By redmike (registered) | Posted September 24, 2014 at 19:49:31 in reply to Comment 104792

"I buy the argument that LRT is more cost effective than BRT" end of story yeah?

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By Starbuck (registered) | Posted September 25, 2014 at 08:25:09 in reply to Comment 104819

No, not end of story... Never had an issue regarding one system or the other. I have an issue with the tax burden either system will have on property owners.

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By GrapeApe (registered) | Posted September 28, 2014 at 10:01:40 in reply to Comment 104827

This whole article is about tax burden. It is showing a reduced tax burden. As far as I can tell you're advocating for the lowest tax burden, which is fine, except there are two choices other than LRT: BRT (lower capital, higher operating, lower increase in tax revenue), or do nothing (no capital*, operating at a loss?, no new investment).

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By redmike (registered) | Posted September 25, 2014 at 11:28:18 in reply to Comment 104827

doing nothing is free. doing something costs money. we cant do nothing. we have to do something. we need to spend money. you say lrt costs the least amount of money. we say lrt costs the least amount of money. end of story yeah?

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By jeffzuk (registered) | Posted September 25, 2014 at 10:27:55 in reply to Comment 104827

Okay, and I've mentioned this before, I hope you were as equally opposed to such high-cost projects as Aerotropolis and Tim Hortons Field. Tim Hortons Field cost $145 million, with the city contributing $54M, the province $22M and the feds $69M source.

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By Pxtl (registered) - website | Posted September 24, 2014 at 12:23:05 in reply to Comment 104792

Here's the thing: We tried the current approach, for 50 years. You want to give it another 50, or do you want to switch over to the layout of places that are actually successful?

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By Starbuck (registered) | Posted September 24, 2014 at 12:55:23 in reply to Comment 104794

LOL At a time, of complete government mismanagement, which has left this province deeply in the red and as a consequence, the taxpayer is left with a hundred year old infrastructure to support, a diminishing health care system, as well as utility bills going through the roof, good luck with that argument. I am all for a utopian society, however it's going to take allot more than LRT and rhetoric to address the aforementioned issues in Hamilton. Lastly, "layout of places that are actually successful" again were not made successful by their transit system alone. Have you read about how successful Buffalo is doing with their newly built LRT?

Comment edited by Starbuck on 2014-09-24 13:01:08

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By kevlahan (registered) | Posted September 24, 2014 at 13:49:43 in reply to Comment 104797

Which "newly built LRT" in Buffalo are you talking about?

"Construction on Metro Rail began in 1979 and the line opened for regular service on May 20, 1985." http://en.wikipedia.org/wiki/Buffalo_Met...

Buffalo's project is not usually considered modern LRT (80% operates underground like a subway) and it is a textbook example of how to do everything wrong (including raising costs and decreasing economic benefit by burying much of the line and trying to build a project in a city that eventually lost 55% of its population).

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By Starbuck (registered) | Posted September 25, 2014 at 08:32:17 in reply to Comment 104807

I would like to refer you the recent Mac report which claims LRT would have no impact, outside of the west end of Hamilton. I would argue it's the same scenario.

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By Ryan (registered) - website | Posted September 24, 2014 at 14:21:13 in reply to Comment 104807

Even Buffalo's system has started to yield dividends in new development now that the city has finally gotten around to updating its land use and zoning plans for the transit corridor.

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By Starbuck (registered) | Posted September 25, 2014 at 08:46:11 in reply to Comment 104811

So how long will LRT be a tax burden until investment starts to flood in? I am amazed you advocate for such increases in taxation, when Hamiltonians are so heavily taxed, with nothing to show but a depleting infrastructure. This of course is mirrored at the provincial level as well. People are unable to afford the basics and here you write about spending major tax dollars on LRT, based on speculation that it will generate private investment. Astounding!

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By AnjoMan (registered) | Posted September 30, 2014 at 09:48:05 in reply to Comment 104829

From the article:

The overall net operating cost per passenger will be $1.51 in a system that uses LRT...

In other words, the system could already be profitable on ridership alone --- in other words, not a tax burden.

Comment edited by AnjoMan on 2014-09-30 09:48:11

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By Noted (anonymous) | Posted September 24, 2014 at 14:14:32 in reply to Comment 104807

en.wikipedia.org/wiki/Buffalo,_New_York#Demographics

1950: 580,132
1960: 532,759
1970: 462,768
1980: 357,870
1990: 328,117
2000: 292,648
2010: 261,310

Buffalo’s population dropped 55% between 1950 and 2010 and 27% between 1980-2010.

The transpo infrastructure that hit Buffalo hardest was the St. Lawrence Seaway.

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By kevlahan (registered) | Posted September 24, 2014 at 13:44:44 in reply to Comment 104797

It is now well understood that sprawl (low density housing built on the edge of existing cities) is in fact one of the major factors in increasing taxes. One of the main ways LRT will decrease taxes is by encouraging better use of already serviced urban land, and this article shows that re-developing vacant lots and buildings generates a huge amount in new taxes, which reduces the need to raise tax rates.

In addition, the operating costs of LRT are far lower and in fact it is estimated to actually make money for the city (75 cents per passenger). This also lowers costs instead of raising them.

Indeed, the latest issue of the Economist specifically mentions sprawl as one of the biggest factors driving unnecessary costs for cities.

And yet, self-described fiscal conservatives who get upset about investments in transit (that discourages sprawl and uses serviced land much more efficiently) don't worry at all about the billions cities are spending subsidizing sprawl.

Just one example, from Edmonton:

"Over the next 30 years, just 17 of more than 40 developing and future neighbourhoods will cost the city more than $500 million more than they provide in taxes, user fees and other revenues."

"Divided evenly across existing Edmonton homes, the cost of this future sprawl would be $60 per home per year, starting now. And then in 30 years, the average cost rises to over $300 per year, every year."

http://www2.canada.com/edmontonjournal/n...

That's not half a billion in taxes, it is the subsidy other parts of the city will have to pay to build sprawl above what those neighbourhoods will generate in taxes!

Talk about mismanagement and tax increases!

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By Dewitt (anonymous) | Posted September 24, 2014 at 13:23:59 in reply to Comment 104797

Yes, mismanagement, has resulted in increased costs to you and I as tax payers. However, I would argue mismanagement is bound to happen when it follows from bad planning. Let's better plan so we can better manage. LRT is a great start.

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By Starbuck (registered) | Posted September 25, 2014 at 08:50:12 in reply to Comment 104804

Great, just don't plan with my tax dollar unless you can prove the invetment will not add an additional burden to the taxpayer. Proof by the way, not speculation!

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By redmike (registered) | Posted September 25, 2014 at 11:31:30 in reply to Comment 104831

mandating public buildings that people in wheelchairs can access is an additional burden on the taxpayer. prove there is a return on investment. you cant? no access for people in wheelchairs from now on then.

Comment edited by redmike on 2014-09-25 11:31:48

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By Starbuck (registered) | Posted September 25, 2014 at 13:44:12 in reply to Comment 104841

Please! The folks at RTH have been selling LRT as a huge return on investment. I'm arguing that it won't be. I'm arguing that there won't be an influx of private investemnt to offset the annual operational and infastructure costs, as Ryan and the gang are arguing. It would take years for that to come to fruition, as outlined in the recent mac report. Your comparison of LRT to wheel chair accessibility is like apples to oranges.

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By arienc (registered) | Posted September 25, 2014 at 11:25:11 in reply to Comment 104831

Great...just make sure you are consistent with your philosophy and ask for the same proof for other projects that will potentially add additional burden to the taxpayer, such as Aerotropolis, Mid-Pen and brand-spanking new access roads and sewers in Binbrook and Glanbrook.

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By slodrive (registered) | Posted September 25, 2014 at 14:30:55 in reply to Comment 104838

Exactly! Blows me away at how many people/ politicians say 'fiscal responsibility' with public transit, yet trumpet about a Mid-Pen highway that NO ONE in the general public has asked for.

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By Pxtl (registered) - website | Posted September 25, 2014 at 14:47:01 in reply to Comment 104854

And CHML, the Spec, and CBC Hamont completely give him a pass on this. He's planned billions of unnecessary infrastructure hand-outs for home-builders but gets to paint himself as a "conservative" because he opposes the very same transit upgrades every other major Ontario city is getting (and we'll be paying for regardless).

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By Starbuck (registered) | Posted September 25, 2014 at 13:45:42 in reply to Comment 104838

I respectfully refer you to my reply above to redmike...

"Please! The folks at RTH have been selling LRT as a huge return on investment. I'm arguing that it won't be. I'm arguing that there won't be an influx of private investemnt to offset the annual operational and infastructure costs, as Ryan and the gang are arguing. It would take years for that to come to fruition, as outlined in the recent mac report. Your comparison of LRT to wheel chair accessibility is like apples to oranges".

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By jeffzuk (registered) | Posted September 25, 2014 at 14:15:04 in reply to Comment 104848

City Manager Chris Murray: "We think investing in transit, LRT specifically, in the City of Hamilton is something fundamental to our growth."

And according to the Hamilton Light Rail Initiative website, the Hamilton Chamber of Commerce, Hamilton Halton Home Builders Association, Realtors Association of Hamilton-Burlington, Downtown BIA and International Village BIA all support LRT.

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By z jones (registered) | Posted September 25, 2014 at 21:05:07 in reply to Comment 104853

Please, none of that compares with an anonymous opinion on the internet!

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By mrjanitor (registered) | Posted September 24, 2014 at 12:43:38

Interesting article on why Transit improvements are important to retain younger folks.

http://www.theglobeandmail.com/globe-inv...

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By mikeonthemountain (registered) | Posted September 24, 2014 at 13:06:31 in reply to Comment 104795

Great article. The demographic they describe includes me. As a young man in Hamilton I spent upward of 30% of my salary on driving, when you consider being young and new to the workforce, car payments, and insurance for a young male. Gas to Burlington, sitting in traffic on the QEW hating my life and racking up maintenance costs.

After spending some time in Europe I saw how care free car free can be. When I got back I couldn't sell my car fast enough. Gas had just spiked to $1.40. It was a psychologically challenging adjustment at first. But very quickly the quality of life surpassed any (actual or perceived) convenience I had lost. The stress was gone - didn't care about the gas price. Didn't care about insurance rate inflation.

The only crappy and unnecessary aspect, was spending an extra number of years on Hamilton Mountain, suffering the huge distances and poor connectivity and road rage.

The point of my sharing this comment is, after having tried it myself, I can vouch that cars, in some circumstances, especially in the GTA, are more of a burden than they're worth. Not missing it at all. Private vehicles will always exist (thankfully!) but someday the pervasiveness, the conquering of all public space by large heavy fossil fuel burning things, will be looked back on same as smoking inside schools and other public places. The future will be good!

As for me ... I will eventually buy a car, yes of course. Currently the car free life is working so well, I actually don't have a purchase date in mind. Eying the evolution of Tesla/electric, and Toyota/hydrogen. At this point, still young and healthy, might as well wait for these to reach middle class consumer scale.

Add higher order transit, and safe cycling infrastructure, I am absolutely certain this mindset is more prevalent and latent than many folks realize.

Comment edited by mikeonthemountain on 2014-09-24 13:12:13

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By Starbuck (registered) | Posted September 24, 2014 at 13:12:35 in reply to Comment 104799

If McHattie has his way, Hamilton will have swayed Telsa motors to the city...

"McHattie also spoke about “introductions” he’s making between the McMaster Automotive Research Centre at the McMaster Innovation Park and the directors of the Nikola Tesla Education Corporation (NTEC), which is a local non-profit focused on inspiring youth to pursue higher education in fields related to inventor, Nikola Tesla".

Wouldn't that be ironic. lol

http://www.cbc.ca/news/canada/hamilton/n...

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By Pxtl (registered) - website | Posted September 24, 2014 at 13:19:10 in reply to Comment 104800

Tesla Education is unaffiliated with Tesla Motors. Its' a tiny foundation dedicated to the memory of the 19th-century Serbian inventor after which Telsa Motors is named.

McHattie shouldn't even be touting this relationship.

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By Starbuck (registered) | Posted September 24, 2014 at 13:23:36 in reply to Comment 104801

Interesting. I appreciate the info.

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By mrjanitor (registered) | Posted September 24, 2014 at 12:50:37

"Homebuyers will fork over extra cash to live near efficient public transport. With real-estate prices in urban centres climbing alongside the cost of gas, it’s easy to see why. Then there are hard-to-find parking spots, steep rates for parking lots, and headache-inducing traffic jams."

https://ca.finance.yahoo.com/blogs/pay-d...

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By jeffzuk (registered) | Posted September 24, 2014 at 13:03:04

And then there's this: Employment Gains Spur Housing Growth in Pittsburgh, Cleveland:

A burgeoning young, knowledge-based workforce is contributing to housing and overall economic growth in Pittsburgh and Cleveland, according to the latest Home Value Forecast from Pro Teck Valuation Services.

"With today's youth looking for work/life balance while struggling to pay off student debt and other obligations, it's easy to see why Pittsburgh, Cleveland and other Rust Belt cities could see a renaissance in the years to come,' said Tom O'Grady, CEO of Pro Teck Valuation Services.

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By Ryan (registered) - website | Posted September 24, 2014 at 14:17:42

Since we're posting links to timely and relevant newspaper articles, I give you: GTA home buyers prefer walkable neighbourhoods, study says. (h/t to the RTH reader who sent this to me.)

An Environics survey for RBC and the Pembina Institute confirms that most people prefer it when even suburban neighbourhoods function like cities, with easy access to transit, shops and services.

The 2014 Home Location Preference Survey, being published Wednesday, confirms that the vast majority of home buyers — 81 per cent — would choose less car-dependent neighbourhoods over big lawns and extra bedrooms — if cost were not a factor.

Seniors and adults aged 18 to 35 were most likely to prefer more walkable, transit-oriented locations. Those respondents said they would pay more to live in that kind of neighbourhood even if it meant downsizing their home.

Also, larger families with three or more children showed a growing interest in more walkable neighbourhoods. Some 51 per cent of those respondents said they would prefer a walk-friendly suburb, up from 40 per cent in 2012.

Walkable neighbourhoods: they're not just for urbanist hipsters any more.

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By Starbuck (registered) | Posted September 25, 2014 at 14:00:51 in reply to Comment 104810

The change of attitude is because... " “people are frustrated with having to take such long commutes, and the trade-offs (in terms of smaller homes) may be worth that,”

Hamilton, does not have a congestion problem. I would be curious of the results if the same polling was conducted in Hamilton

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By Crispy (registered) | Posted September 24, 2014 at 14:35:18 in reply to Comment 104810

If we are going to build an LRT corridor, let's do it right and make it only accessible to transit and cyclists. The trains won't get held up in any kind of traffic making it much more appealing to riders. Plus it will make the entire corridor much more pedestrian friendly.

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By Ryan (registered) - website | Posted September 24, 2014 at 14:41:51 in reply to Comment 104812

The plan is for the LRT line to run on dedicated, physically separated lanes with signal priority at intersections.

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By Crispy (registered) | Posted September 25, 2014 at 09:05:25 in reply to Comment 104813

Good. Let it only be accessible to transit and cyclists.

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By Pxtl (registered) - website | Posted September 25, 2014 at 09:47:37 in reply to Comment 104832

Cyclists will not be included. Letting cyclists drive on the LRT tracks is like letting cyclists ride on the tracks of a subway line.

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By Crispy (registered) | Posted September 25, 2014 at 11:53:19 in reply to Comment 104833

Not on the tracks but on the road way beside the tracks. Well out of the range of the LRT.

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By Ryan (registered) - website | Posted September 25, 2014 at 12:32:33 in reply to Comment 104843

I'd love to see a two-way protected cycle track on Main Street extend all the way from the current short stretch across Hwy 403 through downtown to the east end.

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By LRTFan (anonymous) | Posted September 24, 2014 at 21:42:52

Unfortunately LRT is the ballot box issue and McHattie its biggest champion is DOA politically speaking of course. So, let's not waste votes in that direction.

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By highwater (registered) | Posted September 28, 2014 at 13:08:35 in reply to Comment 104821

Hi Larry!

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By citation_needed (anonymous) | Posted September 25, 2014 at 14:13:15 in reply to Comment 104821

Do we have any reliable poll results that speak to this?

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By Ryan (registered) - website | Posted September 26, 2014 at 06:16:30 in reply to Comment 104852

I have not been able to find any poll results - just rumours. And since all the rumours contradict one another, we're left with blind guessing.

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By jeffzuk (registered) | Posted September 24, 2014 at 22:02:29 in reply to Comment 104821

Don't believe the hype.

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