BC Business
Few organizations are weighted with as many societal problems as a regional transportation authority. Whether it’s rising fuel prices, traffic congestion or climate change, the called-for solution is often to get more people on trains and buses. That’s certainly the line B.C.’s provincial government has taken, pledging more than $14 billion worth of new and ongoing transit improvements over the next 12 years, for which the province is contributing $4.75 billion. And while managers at TransLink seem happy about the attention, they’re also curious about how the rest is going to be paid for. While the province can demand services, it’s up to TransLink to figure out how to pay for them. The province has granted TransLink the authority to raise money through user fares, road tolls, vehicle charges, property taxes, fuel taxes and hydro taxes. However, what the province gives, the province can just as easily take away. When TransLink tried to generate income in 2006 by taxing parking stalls, opposition from businesses persuaded the province to take away its powers to create new parking taxes. As it stands, TransLink is set to run a deficit just trying to keep up the service it currently offers. So the question remains: where’s the money going to come from for all these wonderful new services? BCBusiness convened a round table to tackle the thorny issue of TransLink funding. Weighing in are TransLink CEO Thomas Prendergast; Surrey Mayor Dianne Watts, who is also the chair of TransLink’s Mayor’s Council; and Lawrence Frank, an associate professor in UBC’s School of Community and Regional Planning and Institute for Resources, Environment and Sustainability. Tom, what is TransLink’s funding situation? Thomas Prendergast: Although we have a surplus right now, if we sustain our current service levels, we will be short the funding we need at the rate of about $150 million a year. We are in a region that is going to see another million people, I think, in the next 20 years. You’d assume you’d have to grow that service; you couldn’t just sustain it. On top of that, commitments have been made from a standpoint of greenhouse gas emissions and in terms of goods movements for the Pacific gateway strategy. The $150 million just sustains where we are today, which I think most people would hold as not acceptable. I mean, Surrey’s demands for public transportation are probably greater than other areas across the region. Mayor Watts’s constituents aren’t going to sit still if we just sustain where they are today. What are Surrey’s needs as far as expanded transit services? Dianne Watts: The high-growth communities that will absorb 68 per cent of Metro Vancouver’s growth over the next 20 years are Langley, Surrey, Coquitlam and Abbotsford. In Surrey, for instance, we are the second-largest city in the province, with 453,000 people, and we’ve got four stops on the SkyTrain line. Unacceptable. So what does a good future plan look like, if it’s more than just sustaining the current system? Lawrence Frank: This region has to catch up with the demand that’s already here. We’re in a fortunate position: we have people hungry to use transit. People are waiting an extra bus to get onboard. From a philosophical perspective, we need to look at the role of public transportation in society. I think it’s to promote the environment and to help balance opportunities for people who don’t have as much access to cars. We have to be looking at affordable housing near transit as well. This is a critical issue, and I think it’s going to become region-wide as Surrey continues to develop. We have an incredible amalgam of factors that make investing in public transportation the right thing to do for our society. We just need to find the resources to do it and it will pay for itself in many ways that we don’t currently account for. It’s money well spent. What sort of expansion is TransLink looking at, and what’s it all going to cost? Prendergast: If you start with the SkyTrain extensions, it looks like we have all the partners lined up for the Evergreen line to Coquitlam. Then there’s a need to extend the line into Surrey and an extension possibly to UBC in the western part of Vancouver. We also need bus rapid transit (BRT). We need the frequent transit network. The SkyTrain investments: billions of dollars. BRT investments: hundreds of millions of dollars. Frequent transit network: scores of millions of dollars. Watts: There’s also the $14.2-billion announcement made by the provincial government. They’re coming to the table with $4 billion; $500 million is to be raised outside of the Metro Vancouver area; and you’ve got the rest coming from the feds and TransLink. Well, the feds haven’t stepped up to the plate, so we’re trying to plan transit based on a grant process, and a wish and a prayer that someone’s going to hand us the money. [pagebreak]
With all these goals, what are TransLink’s options for raising money? Watts: We basically have a shopping list of tools legislated from the provincial government. Such things as fare increases, property taxes and three cents of the gas tax. The parking stall tax was also on there. TransLink spent $6 million to implement that and, because the business community made such an uproar, the provincial government then said, “OK, we’ll take that back.” It doesn’t matter what structure you have, what process you put in place, we have to have a sustainable revenue source. Full stop. And that is not there. Prendergast: You’ve got to have sustainable funding. I was born and raised in the days when the gas trust in the U.S. was the golden goose that would never stop giving. Well, guess what? It’s broke now because consumption is down, fuel efficiency is up, and so it’s not a funding source that’s sustainable. We shouldn’t be relying on it. Most metropolitan regions or agencies like TransLink do not depend on one or two funding sources, because in a span of 20 years one will be up while one’s down. You try to get five sources, three of which will carry you through while the other two are down. Are the tools TransLink has now enough? Prendergast: What we have to define first is, if $150 million a year just gets you to maintain the status quo, and that’s not sufficient, what levels do we need to get to? I dare say that number’s in the hundreds of millions of dollars: 200, 300, something around there. Once you define that, then you’ve got to look at your available funding sources. But if you don’t define the level of service that the people want, you’re constantly chasing your tail. That’s a collective decision that the region’s got to make. And you’re trying to appropriately charge for the improvement that people will get utilization from. In New York, they charge more money in the tolls for the bridges and tunnels than what it takes to maintain them, and they plow that back into transit improvements. The idea is, yeah you’re paying more, but someone else will take transit and he won’t be in a car crowding you out of the lane you’re in. And it’s accepted. But the public’s got to buy into that. Frank: I think that’s another sustainable funding source; it’s just not enacted. Tolling has been on the books on TransLink before; it’s just a politically difficult issue. But from a perspective of what shapes people’s travel behaviour, tolls are very important. I think we need to reward the behaviour we want, and you unfortunately have to make it cost more to do the wrong thing. For example, developers who want to build projects farther away from public transportation should pay more. It’s just a distance-based impact fee system. It’s been done in a few places. These things are available to us. [pagebreak]
But if these choices are politically difficult, will the municipalities support them? Frank: A component that I think is blocking our ability to get some of the more creative strategies in place is the public. It’s so confusing for people to understand. Making a developer pay more for non-central developments sounds like a political nightmare. But it’s completely rational. It’s being done in California. They were sued right away by developers, as you’d expect, but this year they won the lawsuit. California’s going to use the law statewide as a basis for its greenhouse gas mitigation. So how did they do it? I think we could bring them here and have them educate people. Watts: The region can play a role too. If somebody came to the City of Abbotsford and said, “We want to put an industrial complex way out here,” there should be a trigger that says, because there’s no transportation out to this area, here’s the additional charges. It makes total sense. If you’re going to get the benefit of cheap land, you’ve got to contribute to the rest of the community as well. You can’t just suck it dry and then leave town. You can’t go back to the residential owner and say, “We’re upping your taxes again,” because property taxes pay for police, for fire service, for recreation facilities. So to say the whole thing should go toward transportation would cripple the municipalities. And that’s why several municipalities are in a bad way and looking for other ways to increase the tax base. Frank: Another source is joint development, which is ground leases from real estate development around transit stations. This is going to be a huge thing for TransLink because that encourages sustainable urban centres, gives an incentive to use transit and puts the public sector and the private sector developers together. So how can the idea of co-development help raise funds for transit? Prendergast: There’s a decision made for a transit route and we’ll buy property up. We’ll want to make an improvement to the neighbourhood and work with a developer to put in high-density commercial or residential development. We cannot treat developers as if they’re vicious people. People make investments because they want to make money. However, if TransLink puts in an infrastructure improvement and then the municipality makes a zoning change and the developer sees a benefit, the municipality should share in that, as should TransLink. And I don’t know what the developer will do with his or her money, but I’ll tell you the municipality and TransLink will plow it back into the municipality and the transit system. At the end of the day, the developer still has to make a profit, so we don’t want to take all their money away. But if you look back, we could have done a better job doing this. Watts: Take the first stop into Surrey: there’s no density there, and TransLink owns it. Put density in; we’ll change the zoning. It makes sense. [pagebreak]
How much opportunity is there for these kinds of deals? Prendergast: They’re just a solid funding source that we should pursue. We probably just took it for granted that we were going to do this anyway and stopped short of pushing the envelope a little. Don’t look at them as gold mines, though. Frank: Transit agencies can operate as a developer to an extent, but there are limits. This could become 10 per cent of the funding base in the future. Prendergast: But I come from a model where you lean on the states and the federal government to help pay for infrastructure improvements, for at least 50 if not 70 per cent. And I do know that the regions that can get their act together have a greater likelihood of spending that money. I have heard that Ottawa says, by and large, they’re willing to fund things here because there is a sense that there’ll be an agreement, that it would be dollars well spent and they’ll see a return on their investment. And that’s something that I don’t think all of Canada can say. Watts: And I think the different levels of government have to realize that we’re a major port. We’re a major crossing for goods movement. So what that means for the country is dependent upon infrastructure investments. Prendergast: At the end of the day, there’s an impact on the region, and I think people should be remunerated for that. But that really is a federal mandate. And if the provincial and federal governments have made commitments on greenhouse gas emissions, these transportation alternatives will help us achieve those goals. There’s no reason why we shouldn’t be getting funding from those sources. Frank: But there’s no formal federal role for transportation as far as I can tell in Canada. We have an ad-hocracy. It’s very different from the U.S. You have no rational basis to know that you have any sustainable long-term funding. As bad as the U.S.’s land-use planning has been because of a lot of highway building, there are a lot of good things that have come out of having a very significant federal role in transportation. I think that could really help us here in Canada. Watts: That’s right; that’s why we need a national transportation strategy. But there isn’t a provincial transportation plan either. And so, it’s very difficult to plan a region that should be integrated. We’ve just heard from the TransLink board about the reconstruction of the Pattullo Bridge, and we all support that. Well, guess what? There’s no money. Ten years ago, the provincial government gave it to TransLink with no money attached. And how’s that going to impact the twinning of the Port Mann? Has anybody done that analysis? Probably not. So we’re going to dump millions and millions of dollars over here without looking at the impact over there. It’s insane. Any rational person would just give their head a shake. We need one transportation plan with the provincial government: that’s key. And then you’re not going to build the thing unless you have sustainable funding. So you either stay at the status quo and have a $150-million operating deficit or the other levels of government need to step up to the plate. But given that we don’t have a master plan and we don’t have sustainable funding, how do we get there? Prendergast: What I would like to be able to do is convince the feds that the lack of transportation policy is hurting Canada. It’s certainly hurting us in the Lower Mainland. A lot of things need to be fixed with the U.S., but there are known amounts of money that you’re going to be getting for infrastructure that the region can’t pick up for itself. Then it would be a requirement on our part to make sure we come up with the operating dollars to fund some of the stuff, because nobody wants to spend a dollar to put an improvement in if the people that have to operate it can’t fund it. It’s a three-legged stool: if two of the three parties are there and the third isn’t, it’ll fall over. It just can’t work.