Archived columns and blog posts by Matt Elliott

Spadina cost overruns a cautionary tale for the Scarborough subway

By: Metro Published on Fri Mar 06 2015

In light of news that the unfinished Spadina subway extension project is behind schedule and about $400-million over budget, it feels timely to present some some reminders about Toronto’s next big subway project — the Scarborough extension.

Because in a lot of ways, the story of woe on the Spadina line foretells the same kind of trouble for the Scarborough project, except the Scarborough subway comes with even more risk, uncertainty and potential to destroy the city’s finances.

First, a reminder that the $3.56-billion cost of the Scarborough subway is an estimate. It’s an estimate that was cobbled together very quickly in the summer of 2013, after the Ontario government decided to become Subway Champions at the very same time they were attempting to win a by-election in Scarborough.

The original Scarborough subway report notes that the TTC’s cost estimates are “based on historical cost per km to be confirmed at 30% design. The accuracy of these estimates should be considered +/- 30%.”

Reminder: 30 per cent of $3.56 billion is more than one billion dollars. Long before a shovel even hits the ground, we're being warned that this could cost us more than a billion dollars than anticipated.

Next: a reminder that this subway, which some have called a “done deal”, doesn’t even have a confirmed route yet. There are multiple competing options. Which should immediately make any talk of real costs or a construction schedule suspect.

Because how do you accurately plan a subway project when no one even knows where the subway will go?

Reminder that in addition to whatever money is spent keeping the RT going, already $74.8 million has been wasted due to the decision to scrap the approved and ready-for-construction Scarborough LRT.

Reminder that we shouldn’t be blasé about that waste — it’s a hell of a lot of money. Rob Ford won election in 2010 ranting about, among other things, a $12,000 retirement party. The Scarborough LRT cancellation costs could fund similar retirement parties for more than 6,000 people.

Reminder that city councillors have been told, in plain English, that they are on the hook for any Scarborough subway cost overruns. City manager Joe Pennachetti’s October 2013 report to council puts it clearly: “the funding commitments of both the provincial and federal governments are based on pro forma cost estimates. There is currently no indication that either government would adjust its contribution in the event of cost over-runs or estimation errors.”

In other words, if those high-level estimates that could be off by as much as 30 per cent turn out to somehow be off by as much as 30 per cent — or more — there’s no basis for thinking the provincial or federal government will come to the table with more cash.

Reminder that this has serious implications for Toronto’s finances, because the city has very few funding options. The bulk of the city’s share of the subway costs are to be paid by a dedicated 1.6 per cent property tax increase — any subway overruns would most likely mean further dedicated tax increases.

But given mayor John Tory’s aversion to property tax increases that even match the rate of inflation, a move to get more subway funds from the tax base could very likely mean city services feel the squeeze.

But that’s not the worst of it. The worst part is that having the Scarborough subway project on the books actively hurts the city’s ability to fund critical infrastructure.

When council first approved the subway option, they were warned by the city manager that “if the City decides to undertake the subway project, it will place pressure on the City's ability to maintain debt service ratios below guidelines. Furthermore, it will directly reduce budget flexibility to address ongoing operational and service levels issues now and in the future.”

At the time, councillors were presented a list of capital projects identified as needing major investment, including $2.5 billion for TTC state-of-good-repair, $750 million for affordable housing repairs and “significant capital needs” for Transportation Services, Parks and Toronto Water.

That last one is notable considering a bunch of the city’s old pipes froze up this winter and left people without water.

But, hey, is reliable water infrastructure really more important than a subway?

A reminder that council didn't even need to make that choice. There was a fully-designed alternative backed by transit and planning experts that would have avoided all of this.

The Scarborough LRT was to be 100 per cent financed by the provincial government. Metrolinx would have been on the hook for capital maintenance costs, estimated at between $30 million and $40 million per year. The LRT would have left the city with about a billion dollars in potential spending room, to be put toward projects like Tory’s SmartTrack or the long-needed relief subway line. It was to be fully grade separated and open years earlier.

Reminder that, yeah, I’ve said all of this so many times before.

But on a day when we’ve just learned about cost overruns and delays on the city’s other subway extension, these reminders seemed timely. Tory and council still have a small window of opportunity to reconfirm the original master agreement and revert to the LRT. By doing so, they’d get rid of all the risk and uncertainty tied up in the subway project. It’d give Toronto the freedom to focus on other priorities. It'd give Toronto the ability to finally move on.

A final reminder: there’s still time to fix this.

This post was originally published at on 2015-03-06T00:00:00.000Z

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Matt Elliott

City Hall watcher, columnist and policy wonk in Toronto.
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