It is crucial that the same attention and level of engagement be given to the procurement process as was given to the campaign to get LRT in Hamilton.
By Christopher Redmond
Published May 29, 2015
With the historic announcement on May 26 that the provincial government would provide full capital funding up to $1 billion for Light Rail Transit (LRT) in Hamilton, the feedback from people around the city has been mostly positive and has created a real sense of excitement and anticipation for what is next for the city.
And so there should be. A lot of hard work has gone into pursuing LRT here in Hamilton over the past number of years, from people here at Raise the Hammer and other advocates both inside and outside of the municipal and provincial governments. Not to mention, LRT represents a big step forward in the long-term development of the downtown core, especially in the east end.
However, it is important not to lose sight of the details of the proposed LRT plan amid all of the enthusiasm and excitement around the project.
More specifically, it is crucial that the same attention and level of engagement be given to the procurement process as was given to the campaign to get LRT in Hamilton. The procurement process is almost always where projects like this run into trouble - both in design and in financing.
Ontario has long been a steadfast supporter of the use of Public-Private Partnerships (P3s) for infrastructure projects across the province. P3s are a form of privatization where governments enter into partnerships with private consortia to work together to build infrastructure projects, with the private consortium typically providing the bulk of the capital needed to fund the project.
It is argued that P3s allow governments to tap into the expertise of the private sector, while also reducing costs and sharing financial risks. However, in recent years, evidence has emerged to suggest that P3s do none of this, and in reality, they actually cost the public more money. (If you are interested in reading more about this, check out CUPE's many reports detailing P3s.) Still, despite this new evidence, P3s continue to be used to move infrastructure projects forward.
In Ontario, under the guidelines of Infrastructure Ontario - the crown corporation set up by the Ministry of Infrastructure in Ontario to deliver infrastructure projects - all large projects must be delivered through an alternative financing and procurement delivery model, also known as a P3.
Moreover, the government of Canada has established a crown corporation known as Public-Private Partnership Canada (PPP), which demands all infrastructure projects requiring federal funding to incorporate a P3 aspect. What this means for LRT in Hamilton is that any LRT project will undoubtedly be delivered through a P3 model.
P3s come in many different forms, ranging from Design-Build and Design-Build-Finance to Design-Build-Finance-Maintain and Design-Build-Finance-Maintain-Operate. The difference in which type of P3 is selected can have drastic long-term effects.
The Design-Build and Design-Build-Finance setups see the private sector have a much smaller involvement with the project. Once the project is built, their involvement essentially ends.
Meanwhile, in a Design-Build-Finance-Maintain or a Design-Build-Finance-Maintain-Operate setup, the situation is much different. In particular, these types of P3 setups see the private sector more heavily involved in both the designing and building of the project as well as in the maintenance and operation aspects. This means that the private sector has a much greater vested interest and higher levels of control over the entire project.
In Ontario, the norm has been for P3 projects to be set up in the Design-Build-Finance-Maintain or the Design-Build-Finance-Maintain-Operate fashion. This has led to mixed results, to say the least.
The 407 highway, for instance, is seen by many as one of the worst examples of a P3 project in Canada, as the government lost hundreds of billions of dollars in potential revenues with a 99-year lease that cost investors only $3.1 billion to sign.
Another example is the VIVA transit system in the York Region. Looking at the VIVA system from afar, it is hard to argue that it has been anything but a success. However, a closer look reveals a system that has been hijacked by a private operator who has raised fares more than five times since the service began in 2005.
Fares now stand at a staggering $4.00 for a regular ride, $4.50 for an express ride, and $5.00 for a two-zone ride. These are some of the highest public transit rates in the world, and the regional government has very little recourse in stopping the operator from continuing to raise fares moving forward.
Another example, albeit from British Columbia and not Ontario, is the Canada Line. In fact, the Canada Line, although a much bigger project in scale, closely mirrors that of the planned LRT in Hamilton.
Like VIVA, the Canada Line looks like a major success from afar. Ridership numbers have been very good since the line opened in late 2009, and it has arrived at a point where some have suggested that the line is nearing capacity.
Moreover, it has provided the City of Vancouver with a direct link from the airport to the downtown core and has helped connect commuter communities to both the airport and the downtown.
However, a closer looks reveals a number of flaws and serious problems with the project. First and foremost, the costs of the Canada Line ballooned from $1.35 billion to more than $2.5 billion, as the private consortium continued to increase the budget on the project.
Second, the contract signed with the private operator through the P3 procurement process, which spans 35 years, states that the regional authority must subsidize the private operator any time ridership numbers fall below 100,000 riders per day. This, along with other factors, has led to the operating costs of the Canada Line to be more than double that of the other SkyTrain lines in the Vancouver area.
Finally, any improvements and/or upgrades needed for the Canada Line fall to the regional government, as these fall outside 'maintenance' and were deliberately left out of the P3 contract during procurement. This is especially important now that there are reports that the line is reaching capacity and major changes will need to be made to increase capacity in the future.
Moreover, and also pertinent to LRT in Hamilton, the design plans of the Canada Line were changed many times throughout the procurement process. In fact, the P3 contract revealed that it was actually negotiated into the contract that the private consortium could change, expand, or contract the parameters set out in the contract as long as "the impacts of those changes - on urban design, neighbourhood, environmental, business, or project objectives - were taken into consideration."
This clause in the contract allowed the private consortium overseeing the Canada Line to be able to introduce changes to the design after it was approved by the regional government, including things like elevating the transit in places where not originally planned, a shortening of station stops, the elimination of certain stops, the use of cut and cover construction, and the elimination of turnstiles at certain stations (which the regional government ended up having to pay for in the end, as they felt they were necessary).
It is important to note that what allowed this clause to be included in the contract was the fact that there was a very high level of secrecy surrounding the Canada Line procurement process, something that is typical of P3 projects.
This meant that there was a lack of transparency and a real lack of information about what the project would actually entail, right up until the start of construction. Even high-ranking government officials and elected city councillors were kept in the dark about the final bids during the procurement process.
It was argued that the secrecy was needed so as to ensure the most fair and competitive bids. However, the only thing that it actually ensured was a lack of public engagement and consultation on the project.
Public engagement has long been a key aspect of good public policy as it is argued that not only that those affected by public policy should have a say in it, but also that it almost always leads to more effective and legitimate policy and decision-making. However, in most, if not all cases, of P3 projects it is almost never a crucial part of the procurement process.
Most recently, P3 public transit and transportation projects in Ontario have begun to move away from the Design-Build-Finance-Maintain-Operate, and instead only go with the Design-Build-Finance-Maintain setup.
In particular, the Eglinton Crosstown LRT in Toronto and the Confederation Line LRT project in Ottawa have both opted for this approach. In both cases, the already established transit authorities will operate and control the LRT systems.
However, it was recently announced that the ION Stage 1 LRT project in Waterloo would be a Design-Build-Finance-Maintain-Operate setup.
In Hamilton, red flags have already been raised that suggest that the LRT project will be a Design-Build-Finance-Maintain-Operate P3.
In particular, at the announcement no one was willing to comment on who would operate the system. One would assume that if it was the plan that the LRT would be run by Hamilton's public transit operator, Hamilton Street Railway (HSR), that would have been part of the announcement or at least been alluded to in some more direct way.
It remains to be seen what is planned for LRT in Hamilton, but it already seems that public input and public control are threatened by the P3 procurement process, especially as a Design-Build-Finance-Maintain-Operate P3.
Whatever the P3 may end up looking like for LRT in Hamilton, it is imperative that the public, as well as our elected officials, are diligent in demanding public consultation and engagement throughout the procurement process.
The only way we can ensure an LRT system that is both financially feasible and designed to serve our public transit needs best is if the public and elected officials are consulted along the way.
Even in Hamilton, where a city council is consistently split on even minor issues by a suburban vs. urban vote, and where LRT decisions could go awry because of this chasm among councillors, it is still crucial that they are involved in every step along the way.
Related to this, it is important that city councillors make it clear to Metrolinx that public consultation is a requirement in any procurement process. It is only through public consultation and the involvement of our elected officials that we can hope to avoid the same pitfalls that the Canada Line and other P3 projects before it have fallen victim to.
This article is not meant to be pessimistic, and I understand that people are still basking in the glory of the long-time coming LRT decision. Instead, it is intended to shed light on the procurement process, which often flies under the radar at the time and ends up being very important as the project gets under way.
Canadian Council for Public-Private Partnerships (CCPPP). (2015). P3 Projects: Ontario Transportation.
Canadian Union of Public Employees. (2003). Public derailment? Why publicly operated rapid transit is better for the Lower Mainland. CUPE Publications: CUPE 7000, May 2003.
Canadian Union of Public Employees. (2009). Time to come clean on the real costs of P3s. CUPE Publications, April 2009.
Figueredo, J.C. (2005). Public Participation in Transportation: An Empirical Test for Authentic Participation. A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the Department of Public Affairs in the College of Health and Public Affairs at the University of Central Florida Orlando, Florida.
Halvorsen, K. E. (2003). Assessing the effects of public participation. Public Administration Review, 63(5): 535-543.
Lanovaz, D. (2005). P3 ring road will be highway robbery, says CUPE. Canada NewsWire, 3 March 2005.
Pearce, S. (2013). Region considers hike in YRT/Viva fares. York Region, 11 September 2013. http://www.yorkregion.com/news-story/4073949-region-considers-hike-in-yrt-viva-fares/
RAVCO. (2003). Project Definition Report. Draft for Public Consultation, 27 February 2003.
Schwandel, R. (2012). Vancouver Sky Train. Robert Schwandl's Urban Rail Blog, 27 July 2012.
By myrcurial (registered) - website | Posted May 29, 2015 at 09:20:54
The 'who' in the monitoring is also important, especially as we've seen a certain councillor constantly blowing stadium related sunshine. Given Hamilton's most recent P3 experience, I think that the further we are from a P3 for LRT, the better it will be.
By credmond (registered) | Posted May 29, 2015 at 18:28:36 in reply to Comment 111835
Sadly, I don't think we will be seeing any major infrastructure projects in Ontario that are not P3s moving forward. The provincial government and the current federal government are very committed to using P3s.
I think it't more a case of understanding P3s better, refining their use, and striking a balance where the public good is best served and the private sector is able to do what it needs to do, aka make money.
By mdrejhon (registered) - website | Posted May 29, 2015 at 12:35:09
A related topic is construction disruption.
I propose we lobby really, really hard to make Main Street a 1-way street before the LRT construction nightmare begins. Even if some residents may not want the LRT, need to support local businesses, and this is a separate topic to consider.
We need detours around LRT construction sites. Making Main 2-way solves this. By Main Street a 2-way street, we have a 4-lane-wide corridor plus permanent (or offpeak) streetside parking in the 5-lane sections.
King businesses can choose to relocate to Main street, to help revitalize it, and avoid being disrupted by LRT construction. Even for businesses that choose to stay on King, the increased midday stopping traffic means more pedestrians can walk over to the parallel King Street to patronize businesses. Also, it is observed not many cars stop on King Street because of focussing on keeping up with beautifully-synchronized traffic lights (I like them, I own a car, I live in Ward 3, but zero shuttered storefronts is preferred...) and most King businesses cater to pedestrians of the surrounding residential areas. Our city has a great opportunity where we won't have the "30% bankruptcy" situation Portland had during LRT construction. Make it target 0% goal. Let's make Main 2-way! We saw what happened to James Street.
By LOL_all_over_again (registered) | Posted May 31, 2015 at 11:03:31 in reply to Comment 111851
By mdrejhon (registered) - website | Posted June 02, 2015 at 14:51:04 in reply to Comment 111901
Agreed that 2-way conversion, by itself alone, does not necessarily revitalize.
However, you realize:
Let me point out John Street is more of a residential street in many sections (north of Cannon), and south of that is a big batch of parking lots. That is a LOT more difficult to revitalize. John Street versus most of Main Street is an apples-to-oranges comparision. Go to Google Maps and do a northwards Google Street View walk at Cannon & John, you will see what I mean.
Also, consider the more favorable area around Augusta street, that area was greatly helped a lot by the 2-way conversion of both James and John, with both streets benefitting in that region. Now some of us go to the restaurants and pubs on/near Augusta instead of Hess street. The revitalization of John is more patchwork, understandably, but I understand why.
Revitalization needs to be done correctly, and on the correct streets. Main/King are excellent candidates for 2-way revitalization given the high business density along the whole route. Main used to be a bustling retail street historically (witness the 1930s bank buildings as an example -- e.g. King&Holton), and so the residences along Main are usually former businesses, and not nearly as dense as the residential houses/apartments (e.g. northern parts of John Street, north of Cannon street), and some are former businesses converted to residences that can be reconverted to businesses. Obviously, it will be a gradual and eventual process, beginning with the downtown area, and extending eastwards, but it's a long term journey.
Main-King are really prime candidates for long-term generational-league revitalization.
Comment edited by mdrejhon on 2015-06-02 15:00:44
By DowntownInHamilton (registered) | Posted June 02, 2015 at 22:48:14 in reply to Comment 111933
By mdrejhon (registered) - website | Posted June 03, 2015 at 10:23:08 in reply to Comment 111939
Arguably John hasn't really revitalized on the scale, but new places DID open (see jason's post containing list of new improved establishments on John street). Some places take longer to revitalize.
I have gone to both Hess and Augusta, and yes, it is definitely true that Hess has become more of a clubbing scene. Yes, I agree it is one factor. But the point is, 2-way King HELPED towards it.
You just indirectly proved my point: Multiple things need to simultaneously happen (concurrently with 2-way conversion) in order to revitalize a 2-way street. A 2-way street just doesn't revitalize itself. Grander plans (more expensive) takes longer to materialize, sometimes 10 or 20 years.
Over the decades, I have visited many cities, overseas and here, and have witnessed revitalization that worked and did not work, and I understand why John is only patchworkingly opening a few restaurants, while the rest looks ugly. I have an understanding of why Main is a much better 2-way revitalization candidate than John.
Converting a 2-way street only for the sake of converting a 2-way street, is a bad idea. It does no revitalization, and only frustrates car owners. Agreed. It needs to be done properly. I have no disagreement with you on this angle. I am a car owner. But you're still missing my point, DowntownInHamilton.
Comment edited by mdrejhon on 2015-06-03 10:30:39
By mdrejhon (registered) - website | Posted June 03, 2015 at 12:21:54 in reply to Comment 111952
Correction "2-way streets", not "2-way King" (that slipped my proofread).
By mdrejhon (registered) - website | Posted June 03, 2015 at 10:37:07 in reply to Comment 111952
On the subject of Hess -- it has a love and hate relationship. Yes, I know about the stabbings, etc.
Hess is still, on average, a fun place for a lot of McMaster students and I respect the area's existence in the Hamilton fabric, and it should be improved (especially crime!). At least on-per-capita it is much safer than the nightscene in some parts of Toronto (e.g. Dundas and Sherbourne, not too far from former Regent Park), and look forward to seeing it re-diversify slightly from being only clubbing. Even Hess doesn't even appreciably bump Hamilton's crime rate well above certain areas of many major cities, but being a smaller city we hear more often about the incidents. But ambulance sitting in a Toronto nightclub area or even Canada's Wonderland from a stabbing or death. I know I'm statistically more likely to get killed in a car accident than stabbed at Hess, so I am not afraid to walk through from time to time, as while I am beyond clubbing, I have friends who beg me to have me take them there...
Incidentially, all the pubs/bars will be a nice bump to LRT ridership without needing designated cars or trying to catch a taxi -- Nice ridership bump -- the bar closing period -- as long as they're aggressive about cleaning up the LRTs before next morning (occasional drunk people throwing up is not a nice thought), if they plan running the LRT into bar closing time period to capture the bar-closing surge. I'm all for LRT serving the bar crowd, provided an overnight santization (And if popular, maybe nighttime ambassador to manage things).
I've since grown out of the clubbing scene, but not all my friends have, so occasionally still accompany -- and I see changes to the scene over the years in some cities. The LRT should help diversify Hess again a little bit, as it could use a more healthy mix of clubbing and non-clubbing businesses. I still remember the dangerous sections of Yonge street...
Comment edited by mdrejhon on 2015-06-03 10:50:09
By jason (registered) | Posted June 02, 2015 at 23:08:00 in reply to Comment 111939
south of King since 2-way conversion:
Now not surprising, as the main drag through the hood has become a vibrant business district, new condos/lofts are being built within a couple blocks of John. 5 separate condo projects built or under construction in the Augusta/Walnut/Young/John block.
By DowntownInHamilton (registered) | Posted June 03, 2015 at 22:20:51 in reply to Comment 111940
By mdrejhon (registered) - website | Posted May 30, 2015 at 23:10:39 in reply to Comment 111851
Ooops, I meant "lobby really, really hard to make Main Street a 2-way street"
By samuelson (anonymous) | Posted May 29, 2015 at 22:26:06
I can understand P3s where you need capital to build the thing, but in our circumstance it would be like the 407 - we put in all the capital then sell it for cheap to a private company. That doesn't seem like a P3 to me, but simply privatization. What would be preferable in my opinion is if a non-profit public or semi-public entity could operate it, to ensure some control is exerted and to keep it out of municipal political hands.
By Fred Street (anonymous) | Posted May 30, 2015 at 15:25:25
Design-Build-Finance-Operate-Maintain is the misfortune that has befallen Waterloo Region as well, despite having committed $250M to the project. Given that the majority of Hamilton councillors essentially refuse to incur any costs related to LRT, it’s not clear what leverage the City of Hamilton has.
By Keith (anonymous) | Posted May 30, 2015 at 18:57:10 in reply to Comment 111883
Waterloo Region embraced and celebrated the fact they went with a DBFOM model. They know exactly how much they will need to contribute over 30 years and set the performance and service standards the consortium has to perform to. They know what they're doing and have set a model we should embrace in Hamilton.
By Rimshot (anonymous) | Posted May 31, 2015 at 10:30:05 in reply to Comment 111889
By Fred Street (anonymous) | Posted May 30, 2015 at 15:25:51 in reply to Comment 111883
It’s also debatable whether the HSR merits any additional level of responsibility on the transit file, given that it has basically swallowed the status quo for the last 20+ years.
By Noted (anonymous) | Posted May 30, 2015 at 15:31:18
By Keith (anonymous) | Posted May 30, 2015 at 18:55:30
The statements about VIVA/York Region Transit in this article are misleading and in some instances wrong. York Regional Council (composed of elected members) is the one that controls and sets fares based on the recommendation of staff. York Region staff still continue to maintain all aspects of service planning including setting schedules, routing, and service standards. The only outsourced aspect of the entire system is the operation which is contracted out to a number of vendors. This has always been the way in which transit has been operated- dating back prior to the formation of YRT when each city operated its own independent transit agencies.
The reason the fare is so high is become the Region has put its skin in the game to making transit better, with high levels of service in the urban area and moderate service to all rural population settles. You can take YRT from Finch Subway station to Lake Simcoe- a distance nearly twice as far between Bayfront Park and Caledonia. York is now working towards achieving a 50% fare recovery rate which requires riders to chip in. Cash fare is high - as in every reasonable system- but the deep discounts for tickets, weekly and monthly passes encourages active use. This in no way a result of privatization but the result of growing and expanding transit to support an integrated multi-modal system.
By Keith (anonymous) | Posted May 30, 2015 at 20:10:08 in reply to Comment 111888
Your comments on the Eglinton Crosstown are also not entirely true. The stations, tracks and signal systems are being delivered through a DBFM contract.
By LOL@LOL (anonymous) | Posted May 31, 2015 at 18:56:51 in reply to Comment 111899
Author says: P3 projects aren't necessarily cheaper and are sometimes more expensive.
LOL reads: LRT is a money pit!
As always you are just seeing what you want to see. Stop wasting everyone's time.
By Riddle me LOL (anonymous) | Posted May 31, 2015 at 17:26:29
Chicken: How did I get here?
By AmIMissingSomething? (anonymous) | Posted June 01, 2015 at 08:51:46
A lot of the commenters seem to be missing the point of this article. The author isn't saying that LRT is expensive, rather they are pointing out that the way that the government now chooses to fund projects creates issues that are both expensive and take away much control from the local government and public at large.
P3s are not a necessity, especially in a time when the cost to carry debt has never been cheaper. Infrastructure projects like this do not need to be 100% funded through P3s because in reality the government can borrow money at a better rate than any private company. P3s unnecessarily raise the cost of projects and cause government to overpay for infrastructure for long periods. The only reason p3s are the preferred method of funding is because it allows governments to use accounting tricks to help balance budgets.
By Fred Street (anonymous) | Posted June 01, 2015 at 11:37:49 in reply to Comment 111908
Unfortunately, majority governments tend to do what they want to do — and when the agency in question was created under that government's leadership (founding IO CEO David Livingstone even went on to serve as former Premier McGuinty's "double-delete" Chief of Staff), even constructive criticism can be dismissed.
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