Anders Rasmusson Public Transit Finance in Vancouver, British Columbia Addressing Budgetary Challenges in Metropolitan Regions Supervised Research Report Submitted to Raphaël Fischler School of Urban Planning McGill University October, 2010 PUBLIC TRANSIT FINANCE IN VANCOUVER, BRITISH COLUMBIA Abstract This research project analyses public transit planning and financing in the Canadian City of Vancouver, British Columbia. The South Coast British Columbia Transportation Authority, commonly referred to as TransLink, is a made-in-BC solution to the region’s particular geographical and organizational challenges. However, TransLink continues to face fiscal problems paying for growing operating costs and implementing plans for future transit expansion. The financing and provision of public transit in metropolitan regions is inherently a political process. This process is complicated in areas with competing and overlapping governance structures – each with their own objectives and spending priorities. Given Metropolitan Vancouver’s public authorities, responsibilities and fiscal and political realities, it becomes clear that TransLink must evolve to simultaneously address budgetary challenges and to meet goals to improve the performance and delivery of an effective public transit system. Possible solutions to TransLink’s budgetary challenges are compared and analysed in the context of the region’s local planning history and culture. Ce projet de recherche vise à faire une analyse de la planification et du montage financier du réseau de transport public de la ville canadienne de Vancouver en Colombie-Britannique. La South Coast British Columbia Transportation Authority (L’administration des transports de la côte sud de la Colombie-Britannique), mieux connue sous le nom de TransLink, offre des solutions sur mesure et développé localement afin de répondre aux défis particuliers que posent la géographie et aux enjeux organisationnels. TransLink fait cependant face à des problèmes fiscaux découlant de coûts opérationnels croissants ainsi que de la mise en œuvre du plan d’expansion de son système de transport en commun. Le financement et l’allocation dedeniers publics aux systèmes de transport en commun des régions métropolitaine est essentiellement une démarche politique. Ce processus politique est particulièrement complexe lorsque les différents pouvoirs publics agissent dans des champs de compétence superposés et concurrent – chacun ayant des objectifs et des priorités budgétaires divergentes. Compte tenu des pouvoirs de l’administration gouvernementale, de ses responsabilités ainsi que de la situation financière et politique de la région métropolitaine de Vancouver, il est clair que TransLink doit évoluer en faisant face aux défis budgétaires tout en rencontrant simultanément ses objectifs visant à améliorer les performances et les services d’un système de transport en commun efficace. Différentes voies pour solutionner les défis budgétaires rencontrés par TransLink sont dans ce travail comparées, analysées et placées dans le contexte historique et culturel local de la planification régional. Acknowledgements It is a pleasure to thank the individuals who made the writing of this research project possible. My sincere thanks to my supervisor, Professor Raphaël Fischler, for your guidance throughout the entire process. Without your experience and advice this project would have been even more difficult to complete. Professor David Brown, your timely recommendations were thoughtful and very much appreciated. I am especially grateful for the support of my family. Your patience and support throughout my entire education has not gone unnoticed. Finally, I owe my deepest gratitude to Pascal-Hugo Plourde for your unending commitment and love. You were both a source of great inspiration and distraction, and I am thankful for both. Table of Contents 1.0 INTRODUCTION ......................................................................................................1 1.1 Report Structure ...................................................................................3 1.2 Methodology ........................................................................................3 2.0 REGIONAL CONTEXT ...............................................................................................5 2.1 Metro Vancouver ..................................................................................5 2.2 TransLink .............................................................................................11 2.3 Fiscal Context ......................................................................................17 2.4 Political Context ..................................................................................20 3.0 FINANCING TRANSIT IN VANCOUVER ..................................................................24 3.1 TransLink Revenue Mechanisms .........................................................24 3.1.1 User Fees ..........................................................................26 3.1.2 Property Tax ......................................................................28 3.1.3 Fuel Tax .............................................................................28 3.1.4 Hydro Levy ........................................................................29 3.1.5 Parking Sales .....................................................................29 3.1.6 Non-tax Sources ................................................................30 3.1.7 Capital Financing Agreements...........................................30 3.2 The Cost of No Solution ......................................................................31 4.0 FISCAL ALTERNATIVES ...........................................................................................34 4.1 Increased User Fees ............................................................................35 4.2 Increased Property Taxes ....................................................................36 4.3 Increased Fuel Taxes ...........................................................................37 4.4 Vehicle Levy ........................................................................................29 4.5 Payroll Tax/Income Tax .......................................................................40 4.6 Carbon Tax ..........................................................................................40 4.7 Congestion Pricing ..............................................................................41 4.8 Non-Tax Sources .................................................................................43 54.9 Annual Provincial Transfer ................................................................44 5.0 ANALYSIS & RECOMMENDATIONS ........................................................................45 5.1 Analysis Discussion ............................................................................45 5.2 Alternatives Evaluation .......................................................................47 5.3 Recommendations .............................................................................49 5.2.1 Short Term Recommendations ..........................................49 5.2.2 Long Term Recommendations ...........................................51 PUBLIC TRANSIT FINANCE IN VANCOUVER, BRITISH COLUMBIA List of Figures Figure 1: Metro Vancouver and the lower Mainland Figure 2: Local Governments of Metro Vancouver Figure 3: TransLink’s Rapid Transit Network Figure 4: Rapid Transit Network and Proposed Expansions Figure 5: 2006 Median Commuting Distance by Place of Residence Figure 6: TransLink’s Projected Funding Shortfall Figure 7: TransLink’s Governance Model Figure 8: 2009 Revenue (millions) Figure 9 2009 Expenditure (millions) Figure 10: TransLink Fare Zone Map Figure 11: Transit Share of City Property Tax & Utility Charges Figure 12: Canadian Fuel Price Comparisons, 2008 Figure 13: International Retail Gas Prices List of Tables Table 1: Population and Population Growth (2002-07) in Large Canadian Census Metropolitan Areas Table 2: Metro Vancouver 2006 Population and Dwelling Counts Table 3: Transit User Fee Comparison across Canadian Cities as of September, 2010 Table 4: Congestion Pricing System Comparison Table 5: Summary of Alternatives Evaluation OCTOBER, 2010 vi PUBLIC TRANSIT FINANCE IN VANCOUVER, BRITISH COLUMBIA 1.0 Introduction Academic research, political commentary and urban planning debates have placed a great deal of attention on metropolitan regions, their problems and their governmental structures. Municipalities that form metropolitan regions have interdependent relationships, overlapping and opposing interests, and exhibit varying levels of cooperation and integration. A particular challenge that urban planners face when planning at a regional scale is the difficulty determining and coordinating transportation and land use across areas involving multiple municipal bodies. A classic problem for municipalities in a metropolitan region is that area- wide concerns are often not met by policy-making institutions of a similar scope. Policy co-ordination among local units of government is difficult, and decisions made in one local city will frequently have consequences that impact neighbouring municipalities. Metropolitan areas are closely tied to the global economy, and regional authorities must continually assess and monitor trends to develop strategies for continued economic development. A region’s transportation network plays a role in supporting the economic activity