The business case for two-way urban

Executive summary

Recommendation/Request they create opportunity. But, without the A 10-year capital allocation for rail infrastructure to connect the people to infrastructure must be established by the these jobs, this growth potential will be Province of and the Government of limited. Provincial and federal investment in Canada, to support full two-way GO Train infrastructure has the potential — a service on the (CN North calculated potential — to be leveraged to Mainline) in the 2014 Provincial and Federal increase income, GDP, tax revenue, and capital budgets. reduce transportation costs. This is the call to action. This is the time to shape the Transit builds innovation economic, social and environmental future A daring spirit of entrepreneurialism has of this province. We have never been better always defined this country and its people. positioned to have such a powerful impact. In Waterloo Region and , we are In Waterloo Region, and the city of Guelph, leaders in industry, in finance, in education the success of our businesses comes from ... in innovation. And, we have the success the quality, the dedication and the diversity stories to showcase our claims. This area is of our workforce. Traditionally, that home to some of the country’s — and the workforce has been local. But, nothing stays world’s — most brilliant minds and inspiring the same. Today, the talent and brilliance leaders. And, while we will always be proud also comes from beyond our borders. We of our history of retaining our work talent, must facilitate and enable this trend. Now is we are even more excited that we continue the time to purposely build that system that to attract the best and brightest from enables people to seize the opportunities in around the globe. this area of our province and to succeed. Locally, this region is renowned for private Now is the time to enable companies to sector success in several economic sectors… grow and enable innovation to thrive. especially technology. This region’s private Now is the time to plan and, ultimately, to sector has demonstrated its willingness, connect talent and opportunity. and, more importantly, its need, to grow and create employment. Leveraging the regional innovation economy Our startups and our globally-established companies continue to invest in the Waterloo Region and Guelph are well- economic future of this province and this known for strengths in diverse sectors: country. Quite simply, the private sector finance and insurance; manufacturing; has been telling us that they will grow our highly innovative post-secondary institutes; economy well into the future. That, they globally-competitive research institutes; have done. They create more than jobs; and, of course, its technology cluster.

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The region’s tech community has over ’s tech sector has the largest talent 1,000 firms employing 30,000 people. base in Canada; and two out of every three Anchor firms include BlackBerry, OpenText, new tech companies in Canada are Desire2Learn, Google, Cisco, SAP, Motorola, currently founded in Waterloo Region. Square and Agfa. Equally significant, the Combined, these tech clusters employ regional startup ecosystem — with over approximately 205,000 people, second in 1,000 startups formed since 2010 — is North America only to Silicon Valley — with drawing the attention of venture capital 387,000 employees. The parallels cannot be and tech leaders from Boston, New York ignored. And neither can the key difference: and Silicon Valley. that Silicon Valley is supported by two-way commuter rail service and the GTA– A much greater opportunity for growth Waterloo Region corridor is not (See exists if Waterloo Region and Guelph are Map A). linked directly to the with efficient passenger rail service. Large technology and insurance employers, as well as startup companies, are convinced that their long-term success hinges upon recruitment of talent from the larger regional labour markets. These employers also require direct and convenient access to markets, finance, and suppliers in the Greater Toronto Area. In fact, many firms have offices in both urban regions, with people moving back and forth daily. Given the poor reliability of the current commuter options and the economic, social and environmental cost of travel on Highway 401, improved rail transit is the preferred method, and ideal system, to move people between Toronto, Guelph and Waterloo Region.

However, the reality is that firms in Toronto, Guelph and Waterloo Region compete for talent and capital in much larger global markets. The potential synergies in the Waterloo Region to Toronto corridor would create a globally- significant regional innovation supercluster, comparable to the San Jose to San Francisco corridor...Ontario’s own Silicon Valley.

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Map A. Comparison of Toronto/Waterloo Region and Silicon Valley/San Francisco corridors See page 13 for large version.

Two-way GO Train service would be a Recommendation/Request catalyst in converting the current, disconnected startup ecosystems into one A 10-year capital allocation for rail infrastructure must be established by the large and internationally competitive corridor of innovation. This connected Province of Ontario and the Government of supercluster would have the capacity to Canada, to support full-day, two-way GO Train service on the Kitchener Line (CN compete head-on with not only Silicon Valley, but other global markets. It would North Mainline) in the 2014 Provincial and generate sufficient productivity and Federal capital budgets. employment gains, and related corporate The numbers tell the tale. This enhanced and personal income tax growth, to finance intercity transit service will create a globally the capital and operating cost of the competitive technology ecosystem with required rail infrastructure. It would also over 12,800 technology companies, 2,800 accelerate urban intensification and startups, and 205,000 technology enhance sustainability — both key employees. Net employment growth from provincial objectives. this investment is forecast at 37,600 jobs, which will generate $838 million in personal income tax annually in 2013 dollars (see Table A). All this by simply connecting Union

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Waterloo Region and Guelph innovation-driven employment intensification with supporting residential infill from two-way GO Trains

Table A Area of new Construction Total annual. development* value of Tech Total annual personal (sq.ft.) development employment income income tax Downtown 6,900,000 $1,431,739,996 6,500 $338,253,500 $105,365,965 Guelph Uptown 4,500,000 $959,080,000 7,000 $499,995,548 $164,898,532 Waterloo Research + Technology 1,000,000 $200,000,000 5,000 $357,139,677 $117,784,666 Park Waterloo Corporate 700,000 $210,000,000 3,500 $249,997,774 $82,449,266 Campus Kitchener’s Innovation 5,500,000 $1,237,785,000 15,600 $1,114,275,793 $367,488,157 District Total 18,600,000 $4,038,604,996 37,600 $2,559,662,292 $837,986,585 *Includes both office and residential development Note: This does not include any estimates for HST, corporate income tax and is based on industry standards for office building construction and employment generation. It also excludes the multiplier effect of tech employment, estimated to create 5 other jobs for every 1 new tech job.

Station, Pearson Airport, the city of areas and layover facilities (excluding , , Kitchener’s inflationary costs). Capital upgrades primarily consist of rail improvements of Innovation District, and growth areas along $318 million. Waterloo Region’s Transit route, which includes the ’s Economic impact of two-way GO Train Research + Technology Park. service

Full-day GO Bus service will also establish a The economic impact of higher-order rail ridership pattern and address the transit goes beyond the provision of immediate short-term need for improved efficient commuter services. Because transit transit between downtown Toronto, Guelph builds community, higher-order rail transit and Waterloo Region. is a catalyst for intensifying innovation and commercialization. Capital Requirements We have the opportunity, and the A 2009 Environmental Assessment obligation, to leverage the talent and minds estimated total capital costs to establish our power-clusters need. Commuter service two-way full day GO Train service to that is efficient and appropriate creates Kitchener at $396 million, including station high-density, pedestrian-oriented and

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transit-supported mixed-use districts. These will be in excess of the total one-time districts are proven optimizers of the social capital investment required. Other benefits dynamics of innovation. include an annual cost savings of $272 million (see Table B). Higher order transit reduces the need for parking and increases the density of station Conclusion areas, creating more vibrant urban spaces. Ontario and Canada are poised to create an Local startups, mid-sized firms, and foreign multi-national clusters within the urban enviable technology supercluster. We have employment districts will take advantage of the minds; we have the talent; we have the jobs. We also have the responsibility — the synergies created by proximity and access to major markets. It is the proximity economic, social, environmental — to bring to mentors, colleagues and talent that these forces together to create that supercluster. The Toronto to Waterloo facilitates both chance and purposeful Region corridor, consisting of Downtown interaction, and promotes a sense of community while facilitating collaboration. Toronto, Brampton, Guelph, Kitchener, and In addition, associated high-density Waterloo represents one of the most significant economic growth opportunities housing, cafes and pubs extend the social energy of the technology incubator into our for Ontario and Canada. Senior cities. As a result, urban employment governments play an essential role in the success of these world-class companies. districts are magnetic to startups and Environmental, social and economic venture capital. benefits will far exceed capital costs. With a density of startups comes the increased awareness and interest of capital A 10-year capital allocation to support full two-way GO Train service on the Kitchener managers and investors. This, in turn, increases the availability of capital and Line will immediately give global technology improves the chance of startup success and companies, mid-sized firms and startups the confidence to grow, the resources to growth. Together, we are building a positive cycle of entrepreneurial creation, innovate, and the support to become that investment and growth — all supported by technology supercluster that will rival transit and a high-density urban competing global innovation regions. environment. Transit builds community. Only then, will we have laid the foundation With the investment in GO Train Service, that will truly be the enabler of growth, total employment growth within the station success and innovation. areas served by the Kitchener GO line and the Waterloo Region LRT could grow by 37,600, by dramatically increasing the density of employment in these areas. Once fully developed, the increased annual personal income tax of $838 million alone

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Table B. Project scorecard results

A high quality of life Customer • Local firms are chartering buses to bring employees from Toronto service/market • 30,000 local tech workers with 34% commuting readiness • 32,000 daily trips each way between Waterloo Region and Guelph • Initial inbound ridership estimated at 1,271 Regional • Connects to and Waterloo Region’s multi-modal hub, connectivity which integrates with ION Light Rail Transit • 11 million sq.ft. of potential residential growth in transit station areas Building • Land is underutilized: parking lots, low-density, single storey buildings communities • $4 billion construction potential in urban growth centres/transit station areas Social need • Provides affordable transit service to 72,000 post-secondary students • Connects to hub of government, social and health services • Supports residential intensification and a vibrant, livable urban cores • Offers commuters housing flexibility, helping new Canadians in particular Benefit-cost ratio • Time savings estimate: $16-$124 million/year • Average accident cost: $2-$18 million/year • Savings from auto operating costs: $17-$128 million/year

• Cost of CO2 emissions: $330,000-$2.5 million/year • Total cost savings: $272 million/per year with medium growth A thriving, sustainable and protected environment Transit ridership • Burnside report projected between 9,000 and 16,000 riders by 2031 growth • Ridership can increase sooner: tech adds transit-oriented workers • Low growth: 5,031, medium growth: 9,588, high growth: 22,601 Greenhouse gas • Estimated to save 58 million metric tonnes emissions reduction A strong, prosperous and competitive economy Economic impacts • Improved competitiveness through access to a larger labour market • Intensification generates social capital to support innovation • New jobs generate $2.5 billion in annual income and $837 million in annual personal income tax Capital cost per • Estimated to range between $41,000 and $312,000 rider Operating • Initial ridership fares of $5.25 million with net operating costs of $750,000 revenue/cost ratio • Ridership could quadruple with low-growth scenario, increasing fare revenue Strategic fit Funding • $396 million cost is less than 401 expansion; Milton alone is over $500 million • Cost sharing among GO, VIA and CN may be possible Project readiness • Outbound service commenced in 2011 which established station stops • Guelph Central Station and multi-modal hub integrate rail with local transit GTHA network • $1.2 billion is already invested in the Georgetown South Project advancement • Extending service leverages this investments so the province gains full economic benefit Leverages other • Leverages Places to Grow and local policies: official plans, growth management initiatives strategies, transportation demand management • Aligns with government investments in innovation including $1 billion FedDev program, and the Ontario Research Fund

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Contents

Introduction ...... 1

Section 1: Ontario’s economic growth opportunity ...... 3 Introducing Ontario’s growth leaders ...... 4 Startup ecosystem strengths ...... 5 Future ecosystem opportunities ...... 7 Leveraging top startup ecosystems for growth ...... 7 Section 2: Building an innovation supercluster ...... 11 Comparing innovation clusters ...... 12 The growth question ...... 12 The role of infrastructure ...... 14 Proposed investment ...... 16 Section 3: Innovative cities in the Waterloo Region to Toronto corridor ...... 19 Planning for growth ...... 20 Complementary initiatives ...... 21 Growth management ...... 21 Transportation planning ...... 21 Summary ...... 22 Guelph’s Innovation Triangle ...... 23 Downtown Guelph ...... 23 University Research Park ...... 24 Guelph Innovation District ...... 25 Waterloo’s transit station areas ...... 25 Uptown Waterloo ...... 25 The David Johnston Research + Technology Park ...... 26 Waterloo Corporate Campus ...... 28 Kitchener’s Innovation District ...... 28 The catalyst developments ...... 29 Summary of development opportunities ...... 31 Section 4: The geography of innovation ...... 33 The compatibility of intensification and innovation ...... 34 Innovation in economic growth theory ...... 34 Innovation cluster theory ...... 35

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How innovation clusters work ...... 36 The role of talent ...... 37 Attitudes toward risk ...... 38 Economic impacts of innovation ...... 39 Supports job growth in other sectors ...... 39 Increases productivity and aggregate output ...... 39 Innovation clusters on the Kitchener Line ...... 41 Section 5: Proposed two-way GO Train service ...... 43 GO Transit expansion evaluation ...... 44 Project Prioritization Framework ...... 45 Primary evaluation of inbound GO Train service ...... 45 A high quality of life...... 46 A thriving, sustainable and protected environment ...... 52 A strong, prosperous and competitive economy ...... 54 Strategic fit ...... 57 Funding ...... 57 Project readiness ...... 58 GTHA network advancement ...... 59 Leverages other initiatives ...... 61 Summary of evaluation ...... 62 Section 6: Recommendations and conclusion ...... 63 Recommendation ...... 64 Conclusion ...... 64 Appendices ...... 67 Appendix A. GO Transit system map ...... 69 Appendix B. GO Transit Kitchener Line ...... 70 Appendix C. Ridership estimates ...... 71 Appendix D. Cost savings calculations ...... 72 Appendix E. Development potential in station area ...... 73 Bibliography ...... 75

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Figures

Figure 1. Transportation corridors in Southern Ontario and Silicon Valley ...... 13 Table 1. Population comparison ...... 16 Table 2. ‘Amendment 2’ Growth Plan forecasts ...... 20 Figure 2. Guelph’s Innovation Triangle ...... 23 Figure 3. Guelph Central Station ...... 24 Figure 4. Transit in Guelph ...... 25 Figure 5. Waterloo development areas along the ION Light Rail Transit route ...... 26 Figure 6. Uptown Waterloo development potential ...... 27 Figure 7. The David Johnston Research + Technology Park ...... 28 Figure 8. Kitchener's Innovation District ...... 29 Figure 9. Downtown Kitchener’s Tannery ...... 30 Figure 10. Artist’s concept of ‘One Victoria’ ...... 30 Figure 11. Massing potential around Downtown Kitchener’s multi-modal hub ...... 31 Table 3. Summary of development opportunities ...... 32 Figure 12. Metrolinx scorecard ...... 44 Table 4. Project scorecard indicators ...... 46 Table 5. Ridership estimates ...... 51 Table 6. Summary of benefits ...... 52 Table 7. Income and tax growth ...... 55 Figure 13. Georgetown South Project ...... 60 Table 8. Project scorecard results ...... 62

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The business case for two-way urban commuter rail

Introduction

This document presents the case for Section 3: Innovative cities in the Waterloo extending two-way GO Train service from Region to Toronto corridor, outlines the and Brampton to Kitchener. It reurbanization and economic development puts forward the Benefits Case Analysis potential of station areas along the CN (BCA) used by Metrolinx for project North Mainline and via the Waterloo Region prioritization. It then goes beyond the BCA ION LRT, to the medium density mixed-use to estimate the economic impact of the urban employment districts in Uptown investment over a 20-year period. This Waterloo, the University of Waterloo economic impact includes employment, Research + Technology Park and the personal income and personal tax impacts. Waterloo Corporate Campus. Together It could be expanded in subsequent analysis these districts have the potential to support to include GDP, corporate income tax and 18.6 million square feet of new office, HST, but these metrics were beyond the residential and ground floor retail space, scope of this work. and create 37,600 jobs in the first 10 years of full-day two-way GO Train service. These The document begins in Section 1: jobs will generate over $2 billion in personal Ontario’s economic growth opportunity, by income (2013 dollars) and over $800 million describing the economic context of the in personal income tax for the federal and communities at the end of the proposed provincial governments annually — in line. Waterloo Region and Guelph are high- excess of the one-time capital investment performing urban economies that deliver a required to extend two-way GO Train disproportionate amount of employment service out to Kitchener. and GDP growth in Ontario. More importantly, the explosion of technology Section 4: The geography of innovation, entrepreneurship in these communities lays out the argument that pedestrian- positions them to sustain high levels of oriented, medium to high density, mixed- growth into the foreseeable future. use employment areas are more effective than single-purpose remote office parks at Section 2: Building an innovation stimulating and supporting innovation. The supercluster, presents a powerful idea: that role of transit infrastructure in the with the appropriate modern infrastructure formation of these urban districts is connecting the Greater Toronto Area to paramount. It is impossible to achieve the Guelph and Waterloo Region, the provincial required density without both effective and federal governments can set the stage regional and intercity transit for one simple to create one of the world's most powerful reason: without it, too much land is innovation regions; a region that can required to park cars. But current urban compete directly with Silicon Valley and theory demonstrates that when cities are other high performing urban economies. effectively supported by transit, they

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become dense and vibrant and innovative. Waterloo Region and Guelph are on the forefront of reurbanization in Ontario and have directly linked this process to economic development by building an urban form that supports innovation and startup entrepreneurship.

Section 5: Proposed two-way GO Train service, presents the Benefits Case Analysis for the required service. It documents the quality of life, environmental, economic and policy alignment effects of the project. It posits that this project is one of the most important strategic investments for Metrolinx, GO and the Province of Ontario in the coming 10-year capital program.

Finally, Section 6 outlines conclusions and recommendations. Simply put, the provincial and federal government have an opportunity to advance provincial and national competitiveness with an investment in two-way GO Train service to Guelph and Waterloo Region. This project has the singular potential to position Waterloo Region, Guelph and the Greater Toronto Area as one of the innovation superclusters, in the league of Silicon Valley, Boston, New York and London- Cambridge, England. In time, the return on this investment will far exceed the initial capital cost or the ongoing operating cost of the system. By placing this project into the 10-year capital program, Metrolinx and the Province of Ontario put a claim against an exciting and prosperous future.

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Section 1: Ontario’s economic growth opportunity

The communities and clusters driving provincial prosperity

The business case for two-way urban commuter rail

product in 2012, comprising 4.3 per cent of Introducing Ontario’s the province’s GDP, but making up only 3.7 growth leaders per cent of the province’s population.2 Guelph has a much smaller employment The Toronto to Waterloo Region corridor — base — approximately a quarter of the consisting of Downtown Toronto, Kitchener-Cambridge-Waterloo CMA — but Brampton, Guelph, and Waterloo Region — generated $6 billion in GDP in 2009.3 represents one of the most significant economic growth opportunities for Ontario These results were made possible despite and Canada. manufacturing losses in Waterloo Region and Guelph over the past decade. Unlike The cities of Kitchener, Waterloo and other manufacturing centres, especially in Guelph have strong economic ties based on the United States, this part of southern proximity and a history of highly Ontario has continued to generate growth concentrated manufacturing activity. These opportunities. cities have diversified during the past decade as manufacturers sought new areas Waterloo Region’s economy is well-known of growth while other emerging clusters for its strength in finance and insurance, as rose to become nationally-recognized well as environmental business. Both industries, especially in technology. Guelph and Waterloo Region have emerging opportunities in life sciences, Outside of Toronto, the Kitchener- largely due to the presence of strong post- Cambridge-Waterloo Census Metropolitan secondary institutions in these Area (CMA) has created more jobs communities: the has (+26,700) since the recession than any research strength in agri-technology, and other Ontario CMA. The CMA’s employment the environmental industry, and the base has grown 10.1 per cent since October University of Waterloo Health Sciences 2008, compared to only 3.3 per cent growth Campus brings together medicine and for the province, demonstrating that this pharmacy in Downtown Kitchener. region is an important driver of provincial economic growth. Waterloo Region and Waterloo Region’s tech sector has Guelph have combined employment of prospered with the growth of large 363,200 as of October, 2013.1 companies like OpenText, SAP, Christie Digital, and Desire2Learn, as well as the The Kitchener-Cambridge-Waterloo CMA attraction of global companies like Google generated $22 billion in gross domestic

2 Mario Lefebvre, Alan Arcand, Robin Wiebe and Jane

1 McIntyre, “Metropolitan Outlook 2: Economic insights Statistics Canada, “Labour Force Survey, October into 15 metropolitan economics” (Ottawa: 2013”, CANSIM Table 282-0116. (Online: November 8, The Conference Board of Canada, 2012), p. 4. 2013). Available: http://www5.statcan.gc.ca/cansim/a26?lang=eng&re 3 Martin Prosperity Institute, “Guelph 3Ts Reference trLang=eng&id=2820116&pattern=labour+force+surv Report” (Online: April, 2009). Available: ey+census+metropolitan+area&tabMode=dataTable http://martinprosperity.org/media/pdfs/Guelph- &srchLan=-1&p1=1&p2=-1, [November, 2013]. Reference-Report.pdf [November, 2013].

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and Electronic Arts (EA). There are over education program.4 As a result, the 30,000 people employed in the tech sector university delivers an annual economic locally. But the most exciting growth impact of $2.6 billion, making it a significant potential is in the rapidly evolving startup contributor to Ontario’s economic ecosystem that includes digital media prosperity.5 According to Mike Lazaridis, co- companies (especially in apps and gaming), founder of BlackBerry and co-founder of the as well as advanced manufacturers in Quantum Investment Fund, “technology robotics and digital technology. The region transfer happens twice a year in Waterloo is home to internationally-recognized — it’s called convocation”.6 startups like Vidyard, Thalmic Labs and TribeHR. Waterloo Region and Guelph have The Communitech Hub is only a few years a combined 1,188 registered startup old, but has produced impressive results. Communitech has built a $107 million companies. public-private partnership, engaging Startup ecosystem hundreds of companies, the local community, the Province of Ontario and the strengths Government of Canada. The Hub brings Waterloo Region and Guelph have a long together startups, government agencies, history of collaboration between academia large multinationals (including Christie and business that has stimulated Digital, BlackBerry, OpenText and Intel), innovation. The startup ecosystem is academic institutions and support agencies anchored by the University of Waterloo, to act as an accelerator to fuel job creation including the David Johnston Research + and company growth. Technology Park, the Accelerator Centre Communitech clients generated $986 and VeloCity program, as well as Downtown million in economic impact in 2012, and The Kitchener’s Communitech Hub. Hub has supported the creation of 863 new The University of Waterloo is globally startup companies. In 2012, the economic recognized for its mathematics, engineering impact of Communitech’s digital strategy is and computer science programs. The university distinguishes itself from other 4 University of Waterloo, “Co-op at Waterloo” tech schools through its one-of-a-kind (Online). Available: https://uwaterloo.ca/find-out- more/co-op [August, 2013]. intellectual property policy, which permits 5 researchers to own and profit from their PricewaterhouseCoopers, University of Waterloo Economic Impact Study 2013 (Online: October 25, own work. This policy has made the 2013). Available: university attractive to both students and https://uwaterloo.ca/about/sites/ca.about/files/uplo ads/files/c003711_economic_impact_report_lr_v2.0_ academics, and has stimulated the creation final-s.pdf [November, 2013]. of many local tech companies. 6 Tara Vinodrai, “Battling ‘Waterloo’: Talent, quality of place and the 10-minute city” (Online: April 30, 2009), This is complemented by the school’s p.13. Available: purpose-driven education, which helped http://www.utoronto.ca/isrn/publications/NatMeetin create the world’s largest co-operative g/NatSlides/Nat09/slides/Vinodrai_Talent_QualityofP lace_Waterloo09.pdf, [August, 2013].

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more than $14 for every $1 of public 3,300 businesses launched by its investment (measure in terms of GDP).7 graduates.9

Perhaps one of the most noteworthy results The Downtown Kitchener Studio Project is is the 83 per cent five-year survival rate for another new collaborative partnership local startups — compared to a global under development that supports the industry average of 45 per cent. This digital media and arts clusters. The project demonstrates that the Waterloo Region brings together the startup ecosystem supports the successful School of Media and Design with University launch of firms, which translates to greater of Waterloo Critical Media Lab, Wilfrid economic impact. Laurier University, Christie Digital, and Communitech, among others, to create a This impact is more likely to be felt locally; 10,000 square foot digital arts centre to the Waterloo Region tech sector is highly develop and showcase art, design and integrated and loyal to the community, digital content. suggesting that startups are more likely to stay and grow locally, with the right Guelph has several support organizations resources. According to one Toronto driving its emerging startup ecosystem. startup entrepreneur, “…almost all of us ‘349’ (ThreeFortyNine) is a shared office aren’t tied to Toronto. We have all been space located in Downtown Guelph. This somewhere else, worked somewhere else, tech hub is home to groups and initiatives and got money somewhere else.”8 This such as Democamp, IgniteGuelph, Ontario suggests that the Toronto market is less Startup Train, Webmakers and many more. likely to retain its startups, but has a talent As well, the Guelph Technology and Design pool with depth of experience in multiple cluster group and the Innovation Guelph markets. hub support technology, design and entrepreneurship. Conestoga College has also worked hand-in- hand with the business community to Innovation Guelph (IG) is a member of the create programming that meets the needs Ontario Network of Entrepreneurs and of employers. This has helped make it home to one of Ontario's Regional Ontario’s fastest growing college, with over Innovation Centres. IG helps entrepreneurs, thought leaders, researchers and high potential companies grow and develop their businesses. Since launching in 2010, they

7 Communitech, “Communitech’s $107M digital have seen over 430 companies and strategy delivering ahead of schedule” (Online: April maintained about 100 active clients 23, 2013). Available: monthly. IG’s team has assisted with the http://www.communitech.ca/main- communitech/communitechs-107m-digital-strategy-

delivering-ahead-of-schedule/#.UpTMYcRDvVU 9 [November, 2013]. Conestoga College, “College Profile/Stats” (Online). Available: 8 Startup Genome, The Startup Ecosystem Report, http://www.conestogac.on.ca/about/profilestats.jsp 2012: Part 1, p. 54. [August, 2013].

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creation of over 200 new jobs, and helped largest theoretical physics institute in the retain an additional 250 jobs. IG has helped world), the Institute for Quantum to channel more than $11 million into client Computing and the Waterloo Institute for companies and an additional $9.7 million in Nanotechnology. More than $700 million angel investment into 17 companies. has been invested in the development of the quantum ecosystem. According to Many of Guelph’s entrepreneurs can be Lazaridis, building quantum devices has traced back to the University of Guelph’s significant implications for Canada’s School of Computer Science. The economy as, “we missed the whole silicon university’s commitment to innovation is revolution”. 10 These institutes position well-established, as demonstrated through Waterloo Region to be Canada’s leader in the work of the Catalyst Centre (CC). Acting the quantum revolution. as the University of Guelph’s technology transfer and industrial liaison office, the CC Leveraging top startup oversees intellectual property management, technology ecosystems for growth commercialization activities, and works in The 2012 Startup Ecosystem Report partnership with businesses to drive recognized Waterloo Region in its top 20 innovation. startup ecosystems in the world.11 The only other Canadian cities to make the list were Future ecosystem Toronto and Vancouver. If Toronto and opportunities Waterloo Region could work together to link their startup ecosystems, Ontario’s The Waterloo Region and Guelph startup competitiveness could receive a much- communities have a proven track record needed boost. and strong growth potential in current technologies, but some of the greatest Waterloo Region/Guelph and Toronto are potential lies in research that has yet to comparable in proximity to San Jose and become commercialized. In 2013 Mike San Francisco. Many of the technology Lazaridis and Doug Fregin announced the centres in Silicon Valley are about the same launch of the $100 million Quantum Valley size as Kitchener, Waterloo or Guelph, but Investments to support the there are fast trains in and out of San commercialization of quantum physics. Francisco, connecting tech workers with the Lazaridis and Fregin believe that Waterloo Region’s Quantum Valley will be the future Silicon Valley — not just a Canadian version 10 Greg Mercer, “The quest for Quantum Valley” The of the American centre, but the world- Record, (Online: Apr 20, 2013). Available: leader in quantum technologies. http://www.therecord.com/news-story/2626422-the- quest-for-quantum-valley/ [November, 2013].

Waterloo Region has established itself as 11 Startup Genome, The Startup Ecosystem Report, the global hub for quantum research, 2012: Part 1 (Online: 2012). Available: including the Perimeter Institute (the http://blog.startupcompass.co/pages/entrepreneursh ip-ecosystem-report [August, 2013], p. 2.

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business opportunities in the valley and the availability of specialized research and lifestyle that San Francisco provides.12 training services. If Ontario clusters were as effective as US clusters, wages would be Waterloo Region and Toronto are world- 14 $15,400 higher per worker.” class startup communities that could seriously challenge other locations around Waterloo Region and Guelph excel in the world, with the right investments to creating the right conditions for cluster support growth. support — from collaboration between industry and academia (University of This is important to the Province of Ontario Waterloo), a top management school as the province’s competitiveness is lagging (Wilfrid Laurier University School of the rest of North America, according to the Business and Economics), the most Task Force for Competitiveness, research-intensive comprehensive Productivity and Economic Progress. The university (Guelph), world-renowned province suffers from lower urbanization, research institutes (Perimeter Institute, which is a significant contributor to the Quantum-Nano Centre), and specialized 13 productivity gap. training services (Conestoga College).

While the task force suggests that Ontario Waterloo Region and Guelph’s institutes has a beneficial mix within its clusters, have provided the backbone for economic cluster under-performance is a significant growth, and the business community has part of its productivity gap. But the leveraged these support systems to explanation here better reflects the rest of commercialize innovation. As such it is no the province — this is where Waterloo surprise that the local tech startup Region and Guelph stand out as examples ecosystem is flourishing in this innovative of communities with the right support environment. This region is driven by new systems in place for growth. The task force opportunities due to its collaborative identifies weakness in Ontario’s clusters in nature and entrepreneurial spirit. According that they lack “specialized and sophisticated Mike Morrice, executive director of support conditions including Sustainable Waterloo Region, “people will university/industry research collaborations, 15 rally around an idea in this community”. quality of management schools, quality of scientific research institutions and the local This presents an important growth opportunity for the Province of Ontario, because it suggests that strategic 12 Terry Pender, “City offers grants to startups to revitalize downtown district”, The Record (Online: investments in the Waterloo Region to June 10, 2013). Available: http://www.therecord.com/news-story/3832765- city-offers-grants-to-startups-to-revitalize-downtown- 14 Task force on Competitiveness, Productivity and district/ [August, 2013]. Economic Progress, “A push for growth: the time is now”, p. 24. 13 Task force on Competitiveness, Productivity and Economic Progress, “A push for growth: the time is 15 City of Kitchener, Our region’s environmental now” The Institute for Competitiveness & Prosperity leadership: 2012 Corporate Consultation, (Kitchener: (Toronto: November, 2012), p. 24. September, 2012), p. 4.

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Toronto corridor will help the province to achieve growth that might not otherwise occur. An investment Waterloo Region and Guelph is an investment in an innovation cluster that is well-positioned to achieve prosperity based on the geography of innovation. This opportunity aligns provincial planning policy with economic models that demonstrate that intensification in urban growth centres delivers a significant financial benefit based on the principal that proximity increases collaboration and drives new growth.

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Section 2: Building an innovation supercluster

A comparison of the Waterloo Region–Toronto corridor to Silicon Valley

The business case for two-way urban commuter rail

North America only to Silicon Valley — with Comparing innovation 387,000 employees. A key difference is that clusters Silicon Valley is supported by two-way commuter rail service and the GTA– Waterloo Region has been increasingly Waterloo Region corridor is not. compared with Silicon Valley in national media. But this analogy is not strictly The growth question correct. Silicon Valley is commonly used to refer to the area between San Francisco and There are 1,188 startups in Waterloo San Jose. In reality, San Francisco is a key Region and Guelph, and another 1,666 in part of the Silicon Valley economy, by Toronto. Local startups are demonstrating providing a source of talent and their potential by attracting investment and entrepreneurship. The distance between international media attention, like Thalmic San Francisco and San Jose is about 90 Labs, creator of the MYO wristband that kilometres, with a population along the controls devices, and Vidyard, a video corridor of about 4.3 million people. The marketing and analytics company. These Waterloo Region to Toronto corridor is companies are graduating from their small similar — about 110 kilometres to offices and hiring staff. A significant factor downtown Toronto — and has a population in their location decisions will be access to of 6.2 million. We can see that the more talent to grow their companies. accurate comparison is between Silicon Real estate developers are stepping in to Valley, and the Waterloo Region to Toronto provide diverse space options in close corridor (see Figure 1). proximity to The Hub, as its graduates value The potential synergies in the Waterloo close connections with the accelerator. Region-to-Toronto corridor would create a There are small-scale renovations taking globally significant regional innovation place in the upper storeys of historic supercluster, comparable to Silicon Valley. downtown buildings, and the 175,000 Toronto’s tech sector has the largest talent square foot redevelopment of a former base in Canada, while two out of every factory into the Breithaupt Block, which will three new tech companies in Canada are be home to 1,000 tech and creative currently founded in Waterloo Region.16 workers, as well as the 200,000 square foot Combined, these tech clusters employ BarrelYards redevelopment in Uptown approximately 205,000 people, Waterloo. approximately 72 per cent of ICT employment in Ontario. This is second in

16 Terry Pender, “Region’s tech reputation could raise money for startups, Google says”, The Record (Online: October 10, 2103). Available: http://www.therecord.com/news-story/4149023- region-s-tech-reputation-could-raise-money-for- startups-google-says/ [November, 2013].

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Figure 1. Transportation corridors in Southern Ontario and Silicon Valley

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But including the developments underway, According to the Startup Ecosystem Report, there is only enough existing vacant office Waterloo Region’s strength is its “close space in Downtown Kitchener to proximity and density of universities, accommodate approximately 2.6 years of helping talent flow into [its] startup growth as of 2013. Downtown office ecosystem.” But it warns that the region absorption is estimated at 11,250 square “…needs to make sure its graduated talent feet per month. During the last five years, stays in town [and] contribute to the the City of Waterloo has absorbed startup ecosystem as founders or as approximately 1.5 million square feet of employees. It will be crucial for Waterloo new office space including several suburban [Region] not to allow a brain drain. It is not campuses. To stimulate real estate guaranteed that Waterloo [Region] will development there has to be demand for continue to grow and become self- space, and if startups are not able to hire sufficient, as Toronto might get stronger and grow their local workforce, they will and steal away Waterloo [Region]’s best leave. talent.”18

The key factor that will determine the Despite these challenges, the region has still future of startups in the region is the become home to internationally-recognized ability to find the talent to fuel their companies that emerged from the very growth. While local post-secondary early startup culture, long before The Hub institutions continue to produce existed. This includes BlackBerry, outstanding graduates in engineering, Desire2Learn, and Canada’s largest computer science, business, digital media, software company, OpenText. As a result, graphic design and the arts, the region must the region already has a deep pool of compete with larger cities to appeal to experienced talent, in companies that were young workers. Silicon Valley has startups at one point in time. But this successfully attracted tech workers by speaks only to the expertise in the local offering both career opportunities and easy talent pool — not the availability. access to a San Francisco lifestyle — by train and shuttle. The University of Waterloo has The role of infrastructure effectively become “Silicon Valley’s The Region of Waterloo has recognized the Canadian Feeder School”,17 a name that important role that rail plays in transporting reflects the calibre of talent graduating people — from environmental benefits to from the school, but also the larger problem urban intensification to economic growth. of retaining this talent in a mid-sized city. The approval of the local ION Light Rail Transit system is a step forward in the movement of people within the region. But 17 Caroline Winter, “University of Waterloo: Silicon to fulfill the talent needs of the explosive Valley’s Canadian Feeder School”, Bloomberg Businessweek (Online: October 31, 2013). Available: startup ecosystem, it is necessary to http://mobile.businessweek.com/articles/2013-10- 31/university-of-waterloo-silicon-valleys-canadian- feeder-school [November, 2013]. 18 Ibid, p. 96.

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support the movement of people into the This is especially true for new Canadians, region. who may identify with a particular community that is not in close proximity to The congestion on the 401 Highway their place of work. By freeing up the combined with the environmental impact of mobility of people, transit will permit commuting and the costs of car ownership greater access to the many talented new hold little appeal to the tech worker. Large Canadians trying to balance a desire to feel technology and insurance employers, as a sense of belonging in a community, and well as startup companies, are convinced the need to access their place of work. that greater growth could be realized if Waterloo Region and Guelph are linked According to Stephen Lake of Thalmic Labs, directly to Toronto with efficient “’The lower labour and real estate costs in transportation infrastructure. Their long- Kitchener are good, but faster and better term success hinges upon recruitment of rail links to Toronto would also help a lot…’ talent from the larger regional labour The tech companies in Silicon Valley are a markets. As well, many firms have offices in short train ride to San Francisco, which both urban regions, with people moving bristles with restaurants, concerts and back and forth daily. “When we look long- culture. ‘Geographically we are the same term down the road, that train in and out of distance from Toronto as parts of the valley Toronto is the key missing piece in the from San Francisco, but we just don't have equation right now”, says Iain Klugman, that direct transportation link they have CEO of Communitech.19 down there.’”20

Two-way GO Train service not only fuels the The precedent for rail as a catalyst for growth of local startups, but makes the development has been set in Silicon Valley. Waterloo Region/Guelph–Toronto corridor The Caltrain connects San Jose and San more attractive to foreign direct Francisco (with easy airport connections in investment. Outside companies evaluate both cities), and along its path lie some of the accessibility of talent in making their the best-known tech companies in the location decisions and value the world: Google, Facebook, LinkedIn, Twitter, permanence of rail as a mechanism to Intel, Yahoo! and Apple (see Figure 1). access the deeper talent pool in the While the United States is commonly Toronto area. viewed as a larger market benefiting from It is cheaper to grow a business here than in greater scale, the population in Silicon Toronto, and cheaper for people to live Valley and San Francisco is actually lower here and travel to Toronto for than it is in the Toronto to Kitchener GO entertainment or work. But Toronto offers a Train corridor. The City of Toronto is three lifestyle that is worth a cost premium for times larger than San Francisco — not some tech workers employed in the region. including other parts of the Greater Toronto

19 Pender, “City offers grants to startups to revitalize downtown district”. 20 Ibid.

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Table 1. Population 2011 Census 2011 estimates from comparison of Canada21 2010 US Census22 City of Toronto 2,615,060 San Francisco 814,233 Brampton 523,911 Menlo Park 32,496 Other Toronto CMA 2,444,093 Mountain View 75,222 Guelph CMA 141,097 Palo Alto 65,484 City of Kitchener 219,153 Santa Clara 117,835 City of Waterloo* 98,780 San Jose 970,014 Other Kitchener- Other San Francisco 159,227 Cambridge-Waterloo CMA Metropolitan Statistical Area 980,288 Total population 6,201,321 Total population 4,335,391 * Does not include 45,000+ students

and Hamilton Area (GTHA) including City of Kitchener, but are home to some of Oakville, Oshawa, etc. the most innovative companies in the world. These small cities benefit from their As shown in Table 1, there are 6.2 million proximity to major centres and their transit people living along the Kitchener GO Train connectivity. Line, exceeding the 4.3 million people living in San Francisco and the cities along the Proposed investment Caltrain line. The largest community is San Jose itself, with 970,000 residents — All the conditions are falling into place to comparable in size to San Francisco itself. support the development of the local These mid-sized cities lack the advantages startup ecosystem. Local transit that Toronto offers in terms of an urban infrastructure is under development in both environment. Waterloo Region and Guelph, with the construction of the Kitchener multi-modal Along the Caltrain line are small cities like station to house Light Rail Transit, , Menlo Park — home to Facebook — with a and outbound GO Trains, as well as the population of only 32,000, and Mountain development of Guelph Central Station. The View — home to Google — with a ION Light Rail Transit will be in service by population of 75,000. These two cities have 2017. The Hub is producing startups at a a combined population less than half of the rapid rate, an average of about 290 per year. But local tech companies are already 21 Statistics Canada, “Population and dwelling counts, using private chartered buses to bring in for Canada and census subdivisions (municipalities with 5,000-plus population, 2011 Census” (Online). commuters from the Greater Toronto Area Available: http://www12.statcan.gc.ca/census- to meet their staffing needs. recensement/2011/dp-pd/hlt-fst/pd-pl/Table- Tableau.cfm?LANG=Eng&T=307&SR=1&S=11&O=A&R Two-way GO Trains are the missing piece PP=9999&PR=0&CMA=0 [August, 2013]. that could elevate the local startup 22 US Census Bureau, “Annual estimates of the ecosystem from impressive to a serious resident population: April 1, 2010 to July 1, 2012, 2012 population estimates” (Online). Available: contender to be the next Silicon Valley, http://factfinder2.census.gov/faces/tableservices/jsf/ creating an economic growth engine that pages/productview.xhtml?src=bkmk [August, 2013].

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will boost the competitiveness of the This report outlines many of the benefits of province, and Canada as a whole. such an investment. Most significantly, two- way GO Train service aligns local and Waterloo Region, Guelph and Toronto are provincial land use planning with the in need of greater connectivity in the form geography of innovation. The economics of of two-way GO Train service on the an innovation cluster necessitate proximity, Kitchener Line. This will facilitate the two- effectively increasing the collision rate way movement of people, ideas and between entrepreneurs, investors and expertise, modeled after Silicon Valley, but mentors. Thus the potential for with its own distinct advantages, including intensification around the GO Train stops in lower costs. this specific rail corridor will have a greater As urban economist Giles Duranton has impact because these communities are argued, clusters become congested and already realizing the economic advantages over-priced, leading firms to move, which of clustering in the urban growth centre. explains why many Silicon Valley companies have set up offices in places like Portland, Oregon.23 If Toronto becomes too expensive for startups, the province has an opportunity to retain these firms by investing in Waterloo Region and Guelph. Connecting the two startup ecosystems provides more choice for companies with respect to location; otherwise, there is a risk that they will be lost from the province.

Integrating Waterloo Region, Guelph and Toronto creates the necessary concentration of startup activity to attract the attention of venture capitalists, bringing greater investment to the province.

This in turn will generate economic growth that will benefit the Province of Ontario, more than offsetting the capital cost of investing in infrastructure.

23 Jonathan Rothwell, “Regional Inequality and ‘The New Geography of Jobs’” (Online: August 7, 2012). Available: http://www.newrepublic.com/blog/the- avenue/105854/regional-inequality-and- %E2%80%98the-new-geography-jobs%E2%80%99 [August, 2013].

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Section 3: Innovative cities in the Waterloo Region to Toronto corridor

The development of urban growth centres and transit station areas

The business case for two-way urban commuter rail

Planning for growth Table 2. ‘Amendment 2’ Growth Plan forecasts Kitchener, Waterloo, Guelph and

the Region of Waterloo are Year 2031 2036 2041 Population committed to land use and Waterloo Region 742,000 789,000 835,000 transportation planning that Guelph 177,000 184,000 191,000 Places to supports the provincial Total population 919,000 973,000 1,026,000 Grow Act, 2005 and related Growth Plan for the Greater Employment , 2006. Waterloo Region 366,000 383,000 404,000 Guelph 94,000 97,000 101,000 A study by the Neptis Foundation, Total employment 460,000 480,000 505,000 entitled Implementing the Growth Plan for the Greater Golden Downtown Kitchener and Uptown Waterloo Horseshoe, found that Waterloo Region is are expected to achieve a minimum density the only municipality in the Greater Golden target of 200 residents and jobs per Horseshoe to propose a minimum hectare, up from approximately 160 intensification target above the Places to currently, while Downtown Guelph is 24 Grow minimum of 40 per cent. In fact, the expected to reach a target of 150 residents region’s intensification rate averaged 47.5 and jobs per hectare, up from 95 residents per cent between 2008 and 2012. and jobs per hectare as of 2006.26

The province’s Amendment 2 (2013) to the These cities are more likely to meet the Growth Plan for the Greater Golden employment targets with strategic Horseshoe, 2006 forecasts a combined investment in business clusters that not population of over 1 million in Waterloo only offer the greatest growth potential, Region and Guelph, by 2041. Employment is but also have the most spin-offs, creating expected to reach over half a million (see employment opportunities in other service 25 Table 2). This represents job growth of or support industries. For every new tech approximately 75,000 in Waterloo Region job created, there are another five jobs alone.

24 Neptis Foundation, “Implementing the Growth Plan for the Greater Golden Horseshoe” (Online). Available: http://www.neptis.org/publications/how- will-growth-be- accommodated/chapters/intensification [November, 2013].

25 Province of Ontario, Growth Plan for the Greater Golden Horseshoe, 2006, Schedule 3: Distribution of 26 City of Kitchener, Kitchener Growth Management Population and Employment for the Greater Golden Strategy — 2011 Annual Monitoring Report (Online: Horseshoe to 2041 (Online: June, 2013). Available: October 12, 2011), p. 2. Available: https://www.placestogrow.ca/index.php?option=com http://www.kitchener.ca/en/insidecityhall/resources/ _content&task=view&id=398&Itemid=14 [August, CSD-11-133-KGMS2011AnnualMonitoringReport.pdf 2013]. [August, 2013].

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created, a multiplier three times larger than emphasizes vibrant urban spaces and manufacturing.27 reusing vacant and underutilized space to create mixed-use developments. Complementary initiatives The City of Guelph’s Official Plan Growth management complements the planning policy in Waterloo Region and aligns with Places to The Region of Waterloo has a long history Grow. The plan emphasizes compact of implementing policies that support development to avoid sprawl, and supports intensification, compact growth and vibrant safe, efficient and convenient urban spaces. In 2003, the award-winning transportation. Regional Growth Management Strategy was adopted to lead growth management The City of Waterloo’s 2012 Official Plan initiatives and shape the community recently came into effect and promotes together with . greater density and development opportunities across the city, with the There are also a number of programs and greatest concentration located in the policies designed to support the Uptown Waterloo urban growth centre and implementation of Places to Grow. For the ION Light Rail Transit station areas. instance, the Region of Waterloo’s Official Background studies forecast that the City of Plan prioritizes growth in existing built up Waterloo can accommodate 36,300 new areas and establishes a protected residents and 30,050 to 38,050 of total countryside. employment opportunities, which exceed the Places to Grow growth targets. The As well, the region’s brownfield financial proposed Light Rail Transit with two-way incentives program has contributed to the GO Train service will provide necessary creation of approximately 285 new infrastructure to realize these growth residential units and approximately 645,835 opportunities. square feet of non-residential floor area that together have resulted in building permits valued at approximately $57.1 Transportation planning million. Transportation choice is emphasized in the Region of Waterloo’s Transportation Master The City of Kitchener’s Official Plan and Plan, which establishes transit mode share Kitchener Growth Management Strategy targets supportive of reurbanization and (KGMS) align with both the region’s and the prioritizes investment in transit, cycling and province’s planning policies. The KGMS walking as the preferred method of managing growth-related traffic congestion.

27 Enrico Moretti, “The high-tech boom and the rest The Region of Waterloo’s implementation of us”, The San Francisco Chronicle (Online: November, 18, 2012). Available: of the ION Rapid Transit system will http://www.sfgate.com/opinion/article/The-high- significantly change the way people move tech-boom-and-the-rest-of-us-4045202.php [August, 2013]. around the region by providing a north-

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south light rail link along a central transit Summary corridor in Waterloo and Kitchener by 2017, The common theme among these policies is and into Cambridge in an understanding of the causality between 2014. The next phase of the ION Rapid urban density and transit, and Transit System will link Cambridge to corresponding impact on the livability of a Kitchener and Waterloo with light rail communities and economic growth. A study transit. The recently published Community of three suburban cities in the United States Building Strategy sets the framework for with transit-oriented redevelopment how the community will grow around rapid observed that “densification could never transit. have occurred this quickly if these cities The City of Kitchener’s Transportation did not have rich transit networks Demand Management Strategy also aims to providing very high-quality connections to reduce parking demand downtown by jobs, culture and destinations in their big 28 creating a more pedestrian-oriented and city neighbours”. Thus inbound GO Train livable community. Kitchener’s approach service will further both the regional and includes policy changes, physical provincial commitment to the Places to improvements, programs, and operational Grow Act, 2005. changes that reduce the proportion of The specific growth opportunities are single-occupant trips and thus enhance outlined for each of the development areas mobility and improve air quality. Kitchener in Guelph, Waterloo and Kitchener. These is one of the first municipalities to areas have the potential to add in excess of encourage single-file cycling in the urban 15 million square feet of office and core through the installation of bike super- residential space, but this growth requires sharrows. Greater transportation choice is transit improvements in order to reduce the also emphasized in the Kitchener Growth demand for parking and increase the Management Strategy. available space for productive use. The City of Waterloo’s Transportation Master Plan is based upon four guiding principles for transportation: ‘accessible, choice, sustainable and fiscally responsible’. The plan supports balanced transportation options, which includes increased emphasis on walking, cycling and transit.

As well, Guelph’s Downtown Secondary Plan outlines a transportation system that supports cycling, transit and pedestrian 28 Metrolinx, “GO Transit Lakeshore Corridor Express Rail Benefits Case” (Online: June, 2009), p. 24. traffic. Available: http://www.metrolinx.com/en/regionalplanning/proj ectevaluation/benefitscases/Benefits_Case_GO_Lake shore_Final.pdf [August, 2013].

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Guelph’s Innovation playing an increasingly important role in attracting the tech sector. Triangle The City of Guelph has begun exploring Downtown Guelph focal points for cluster development that With a recently-approved Downtown include three key areas: Downtown Guelph, Secondary Plan and Downtown Community the University Research Park, and the Improvement Plan, Downtown Guelph is Guelph Innovation District. Known as the undergoing a significant transformation. Guelph Innovation Triangle, each area Small-scale and larger development intends to increase the region’s proposals are moving forward and shaping competitiveness, with Downtown Guelph

Figure 2. Guelph’s Innovation Triangle

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the city’s core. Over $85 million in private investments have been made to date with new residential projects bringing over 400 new residents to the city centre. The city also proactively used provincial and federal infrastructure stimulus funding towards new projects such as Market Square (a seasonal outdoor public ice rink

and interactive water Figure 3. Guelph Central Station feature), major infrastructure renewal of future development in the downtown as projects and completed the construction of mixed-use, innovative and catalytic. the new intermodal terminal — Guelph Central Station. Adjacent to the Guelph Central Station is the Riverhouse Condominiums, Guelph’s The development of Guelph Central Station first high rise condominium project in the is proving to be a strategic investment that Central Business District. The project sold has attracted increased interest in out in months. Various other development surrounding properties. A former industrial projects are under discussion and will site on 5 Arthur Street South is now owned diversify the development activities in the by Fusion Homes, who have submitted their core in coming years. development application for a proposed mixed-use development. The project will University Research Park include up to 750 dwelling units and a range The University Research Park is partially of commercial uses on the three hectare developed with more than 60 companies site. and organizations focused on agri-food, life sciences, biotechnology, the environment Another site of interest is the city-owned and support services. Baker Street parking lot. Baker Street is one of the largest parcels of developable land A total of 61 hectares of prime, serviced left in the downtown core. The proposed land is now available for lease in Research redevelopment includes a new central Park North. public library, as well as residential, post- secondary, community and commercial uses. The project exemplifies the direction

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Figure 4. Transit in Guelph

Guelph Innovation District Waterloo’s transit station The City of Guelph is proposing an Official areas Plan amendment to establish the Guelph While the GO Train stops in Downtown Innovation District Secondary Plan. The Kitchener, the station is not the end of the Secondary Plan is supported by a line for commuters. The future multi-modal Federation of Canadian Municipalities hub will connect riders to other parts of the Green Municipal Fund Grant. region using light rail. The City of Waterloo The city has identified growth potential for has identified several growth areas that the more than 436 hectares bounded by stand to directly benefit from transit York Road, Victoria Road South, the York- improvements including Uptown Waterloo, Watson Industrial Park and the city’s the David Johnston Research + Technology southern boundary, south of Stone Road Park, and the Northfield Station Area, which East. is targeted for development as the Waterloo Corporate Campus (see Figure 5). The Guelph Innovation District is vital to meeting employment and housing targets Uptown Waterloo consistent with Guelph’s Growth Uptown Waterloo is a thriving retail and Management Strategy and the province’s cultural core that has over 450 businesses Growth Plan; supporting an economic including several research institutes, a cluster focused on green-economy and satellite university campus and a growing innovation sector jobs; and offering office sector with anchor tenants such as opportunities for integrated energy RBC Dominion Securities and KPMG. As a planning as part of the Community Energy designated urban growth centre, the Initiative. uptown core has over 1,500 residential The area is central to building partnerships units built and under construction during with the provincial and federal government, the last five years, with another 1,000 units as well as public and private organizations. under review or planning stages. There is

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Figure 5. Waterloo development areas along the ION Light Rail Transit route

the potential to add another 3.1 million The city has the potential to accommodate square feet of residential space. 1.4 million square feet of new office space in the core area that could be developed In recognizing the importance of with the right supporting transportation maintaining a balanced uptown with the infrastructure. Light Rail Transit will provide impact of Light Rail Transit, Waterloo City the impetus for the first stage of growth Council approved the Uptown Core and two-way GO Train service could further Priorities to promote job growth in the the intensification in this area. uptown area.

Over the next several years, the primary The David Johnston Research + focus of the City of Waterloo is to support Technology Park job creation in the urban growth centre, The David Johnston Research + Technology particularly on the planned BarrelYards Park was developed to provide a supportive redevelopment site that is under base for radical, high-impact research. It is a construction, as well as the expansion of comprehensive partnership among the the Shops of Waterloo Town Square, and University of Waterloo, the Government of development of several infill sites (see Canada, Province of Ontario, the Region of Figure 6). Waterloo, the City of Waterloo,

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Figure 6. Uptown Waterloo development potential

Communitech, and Canada’s Technology The cornerstone of the park is the Triangle. Accelerator Centre (AC) which is an award- winning incubation centre for the The 49-hectare research park is located on cultivation of technology entrepreneurship. the University of Waterloo’s North Campus, The AC has 45 companies currently in and is one of the largest research parks in residence and 250 mentors and advisors. It Canada. The first phase of the park is has also successfully retained 84 per cent of designed to accommodate 1.2 million its graduates in the local community and square feet of office space when complete; it is currently 857,000 square feet. Today the park is home to 50+ companies and approximately 3,500 knowledge workers.

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Figure 7. The David Johnston Research + Technology Park

100 per cent of its graduates remain in oriented development that will result in Ontario.29 700,000 square feet of office space supported by additional integrated retail The R+T Park is located adjacent to a future and restaurant space. The first phase of LRT station area. University of Waterloo development is under construction and is officials anticipate that with the launch of expected to house up to 3,500 tech the ION LRT, an additional 500,000 square workers. feet of office space can be developed on existing vacant properties, plus an Kitchener’s Innovation additional 500,000 square feet will be added through intensification. Combined, District this will create enough space for at least Kitchener’s Innovation District is rapidly 5,000 additional jobs. transforming both Downtown Kitchener and the regional economy. The district is Waterloo Corporate Campus home to major employers like Google and The Waterloo Corporate Campus is a 16- Desire2Learn, as well as the University of hectare development at the Northfield ION Waterloo School of Pharmacy and Light Rail Transit stop in north Waterloo. McMaster’s Michael G. DeGroote School of The campus will be a mixed-use, transit- Medicine satellite campus.

29 Accelerator Centre, www.acceleratorcentre.com [November, 2013]

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Established digital media companies, like become one of Ontario’s leading job Electronic Arts (EA), have recognized local generators, making investment in opportunities and responded by locating supporting infrastructure a relevant offices in Downtown Kitchener. Local provincial budgetary issue. startups are emerging in the district by the hundreds and attracting international The catalyst developments recognition (e.g., Thalmic Labs, one of In the early 2000s, the west end of 30 CNN’s top startups to watch). Downtown Kitchener was essentially stagnant; it was home to surface parking, a This transformation is an excellent scattering of small business and a municipal representation of public-private partnering. public works yard. The only promising The investments in the Innovation District redevelopment project — Kaufman Lofts — were made possible through the efforts and was on hold because its developer observed expenditures of municipal, regional, a weak residential condominium market in provincial and federal governments. All the core. three local post-secondary institutions have come to the table. The private sector But the district was about to be responded. Now the district is poised to transformed. In less than 10 years, the

Figure 8. Kitchener's Innovation District

30 CNN, “The CNN 10: Startups to watch” (Online: June, 2013). Available: http://www.cnn.com/interactive/2013/06/tech/tech- list-startups/ [August, 2013].

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downtown neighbourhoods that touch the district benefitted from over $700 million in construction projects.31

The precipitating investment was a $30 million commitment by the City of Kitchener to bring the new University of Waterloo School of Pharmacy to the corner of King and Victoria.

This triggered two other key catalyst projects — the redevelopment of the nearby Lang Figure 9. Downtown Kitchener’s Tannery Home to The Hub, Desire2Learn and Google Tannery into inspiring office space, and the decision to proceed on the Kaufman Lofts, directly across from the new attracted Communitech’s attention, and pharmacy campus. These three projects was quickly converted into the one-of-a- combined for $168 million in investment in kind digital media centre called ‘The Hub’. close proximity to King and Victoria. The Tannery complex also attracted local The redevelopment of the district picked up tech star Desire2Learn, and one of only speed as the former Tannery space three Google offices in Canada; known as a highly productive and expanding location.

With the Tannery filling up quickly, other established tech companies, like Electronic Arts (EA), sought other nearby locations in downtown.

This office growth has supported demand for residential condos in the core, notably the 205-unit tower called ‘One Victoria’, another project under development at the corner of King and Victoria, and City Centre Condominiums, under construction as part of a multi-phase mixed-use development on the former Figure 10. Artist’s concept of ‘One Victoria’ Centre Block. In total there are 2,800 (currently under construction) residential units proposed or under construction in the downtown

31 City of Kitchener, AMANDA Database, 2001–2013. neighbourhoods, which could translate into

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Figure 11. Massing potential around Downtown Kitchener’s multi-modal hub

another 5,000 residents in proximity to the Summary of development district. opportunities There are 25 redevelopment parcels in the The redevelopment opportunities in district, within a 600-metre walking radius Kitchener, Waterloo and Guelph have the around the multi-modal Hub. There is the potential to add 37,600 workers and have a potential to add over 5 million square feet construction value of $4 billion. These infill of office and residential space, including opportunities will revitalize the urban over 15,000 employees and 4,000 residents. growth centres, converting former parking Currently, the tech office leasing rate in this lots and factory space into productive district is running at approximately 11,000 mixed-use developments. square feet per month, putting the full build out of the district at 22+ years. However, until higher order transit is in place, including two-way GO trains, the scale of future development is limited by the availability of surface parking with only 1,500 additional parking spaces in the district and a modal split of 80 per cent single occupancy vehicles. Future district employment is limited to 2,000 jobs. Two- way GO Train service is required to achieve the full potential of Kitchener’s Innovation District.

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Table 3. Summary of development opportunities Area of new Construction value of Tech development* (sq.ft.) development employment Downtown Guelph 6,900,000 $1,431,739,996 6,500 Uptown Waterloo 4,500,000 $959,080,000 7,000 Research + Technology Park 1,000,000 $200,000,000 5,000 Waterloo Corporate Campus 700,000 $210,000,000 3,500 Kitchener’s Innovation District 5,500,000 $1,237,785,000 15,600 Total 18,600,000 $4,038,604,996 37,600 * includes both residential and office development

The concentration of this employment in pedestrian-oriented high-density mixed-use areas reinforces provincial planning policy. But more importantly, it accelerates the speed of innovation and commercialization in ways not possible in low-density single- use employment parks. The next section will address this phenomenon in more detail.

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Section 4: The geography of innovation

The importance of innovation clusters in economic growth

The business case for two-way urban commuter rail

32 The compatibility of innovation” ) who best described the role of the entrepreneur and innovation as intensification and drivers of growth. In The Theory of innovation Economic Development33 Schumpeter describes economic activity as a circular The geography of innovation is the flow which leads to a stationary state, mechanism that amplifies the impact of unless it is altered through innovation. The transit infrastructure. Intensification around entrepreneur disturbs this equilibrium and transit station areas complements land use is the prime cause of economic planning and supports environmental development. With time, nearly all objectives. By increasing the rate of social businesses fail — victims of innovation by collisions and facilitating collaboration their competitors — but general prosperity among highly skilled, creative people, high outweighs the wreckage.34 density mixed-use areas accelerate new technology formation and Schumpeter was the first economist to commercialization. In this context, transit theorize on entrepreneurship and with time has a much greater financial impact and his arguments are increasingly relevant, community benefit than simply moving especially that of “continuing people from home to work. It allows the innovativeness”. His "perennial gale of creation of a city that can drive innovation creative destruction" increases aggregate and compete in the global knowledge output and the "living standards of the economy. masses".35 In short, it entails progress. Innovation in economic Creative destruction refers to the process in which technology and innovation create growth theory new ways of doing things, leaving the old The concepts of innovation and technology ways behind. “Technological innovation have been integrated into economic growth might destroy entire businesses, industries, models primarily in the last half century. In the 1950s, the Solow-Swan Growth model first identified the role of new technology as a means to overcome stagnation. But this 32 Thomas K. McCraw, “Prophet of Innovation: Joseph remained an exogenous factor until the Schumpeter and Creative Destruction”, Harvard University Press (Cambridge: 2010). Endogenous Growth Theory was developed 33 in the 1990s, when its creators worked Joseph Schumpeter, The theory of economic development: an inquiry into profits, capital, credit, technology into the growth equation, and interest, and the business cycle. Translated from the identified the concept of human capital, German by Redvers Opie (New York: 1961). especially knowledge and skills. 34 McCraw, “Prophet of Innovation: Joseph Schumpeter and Creative Destruction”.

But it was economist and political scientist 35 Ulrich Witt, “Innovation, externalities and the Joseph Schumpeter, the “prophet of problem of economic progress” Max-Planck-Institute for Research into Economic Systems (Germany: January 17, 1996), p. 113.

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or streams of employment while allowing helped advance understanding of what sets new enterprises to grow in their wake.”36 them apart from traditional clusters. These clusters differentiate themselves from static Innovation economics is a growing clusters through their social capital; they economic doctrine based on the principle are willing to collaborate and cooperate, that economic policy should target 39 and not simply “clumping together”. innovation as a mechanism to improve productivity, not relying on factors of The role of innovation in a cluster was first production (land, labour and capital) alone outlined in The Competitive Advantage of to bring about economic growth. Nations. Michael Porter presented his theory on the role of geographic Innovation cluster theory concentrations of related businesses in achieving greater productivity and Innovation is widely accepted as an innovation. important factor in economic growth, but it is not easily created through policy Productivity and innovation are strongly intervention. It is difficult to establish the influenced by the proximity of firms, related behaviours and attitudes that are so critical businesses, suppliers, service providers, and to innovative thinking. According to logistical infrastructure in a particular economist Enrico Moretti, “cities can create field—such as IT in Silicon Valley, cut a fertile soil for the seed of innovation to flowers in Kenya, and diamond cutting in germinate, but they can’t plant the Surat, India.40 seed.”37This puts Waterloo Region at an advantage in that it already has a well- Globalization challenged Porter’s cluster established innovation cluster. theory, as companies sought low cost inputs abroad. But Porter’s theory is The innovation cluster is the next perhaps more relevant than ever. incarnation of the traditional business cluster. The concept of “regional innovation According to Porter, the first impact of clusters (RICs)”38 in the United States have globalization was to diminish the impact of location, by allowing international 36 Jackson Allison, “Creative destruction”, Big Think companies to gain an advantage over (Online: August 22, 2013). Available: http://bigthink.com/cornering-history/creative- destruction [August, 2013].

37 Mariwyn Evans, “What makes and keeps a city 39 Cluster Navigators “What is an innovative cluster?” hot?” (Online). Available: (Online). Available: http://realtormag.realtor.org/commercial/briefs/artic http://www.clusternavigators.com/content/view/28/ le/2013/03/what-makes-and-keeps-city-hot 75/ [August, 2013]. [September, 2013]. 40 Michael E. Porter and Mark R. Kramer, “Creating 38 Bruce Katz and Mark Muro, “The New "Cluster Shared Value” Harvard Business Review (Online: Moment": How Regional Innovation Clusters Can January–February 2011). Available: Foster the Next Economy“ Brookings Institution http://www.hks.harvard.edu/m- (Online: September 21, 2010). Available: rcbg/fellows/N_Lovegrove_Study_Group/Session_1/ http://www.brookings.edu/research/papers/2010/09 Michael_Porter_Creating_Shared_Value.pdf [August, /21-clusters-muro-katz [August, 2013]. 2013].

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companies that were “stuck in a domestic flourishes when its entrepreneurs and orientation”.41 partners can collaborate, especially through face-to-face interaction. But as companies increasingly accessed global markets, it was no longer a Entrepreneur Anthony Goldbloom of Kaggle competitive advantage; now, a company moved his company from Melbourne to San must source inputs from the lowest-cost Francisco because being in a cluster location. The presence of so many global “makes serendipity possible”: he can have markets and companies has essentially more face-to-face meetings, and he is more nullified the advantage. likely to “bump into someone interesting”, such as a venture capitalist.44 According to Porter, “This new phase of globalization is paradoxically putting a It was urban theorist Jane Jacobs who greater and greater premium on what I call coined the term “social capital”, 45 a term the ‘home base’ — the unique critical mass that has can be understood in many ways. of skill, expertise, suppliers and local Putnam defines social capital as “networks institutions that makes certain locations of trust and norms of reciprocity.”46 the innovation centers in a particular business. In the future, nations are going The value of social capital and networks is to be increasingly competing for these often mistakenly thought to be the force home bases, because they are the sources that attracts creative people to a of wealth and high wages.”42 Porter further community. Rather, social capital is the mechanism that permits “an ordinary argues that the scale of the firm is less 47 important than the scale of the innovation person to do very creative things”. These 43 “links form one by one, and occasionally cluster (the network, the infrastructure). dissolve, forming a complex, intricate, and How innovation clusters work dynamic web of personal interaction. It is through these ties … that relevant Innovation clusters are more complex than information gets conveyed to alert traditional clusters because innovation is individuals… it makes ordinary people facilitated through the social dynamics of clustering firms. While traditional clusters 44 The Economist, “The geography of start-ups: benefit from proximity to suppliers or something in the air”, (Online, October 27, 2012). Available: http://www.economist.com/news/special- distribution networks, an innovation cluster report/21565001-why-birds-tech-feather-flock- together-something-air [August, 2013]. 41 Rowan Gibson, “Michael Porter on Strategic 45 Sanford Ikeda, “Economic Development from a Innovation – Creating Tomorrow’s Advantages” Jacobsian Perspective” from New York University Innovation Excellence (Online: December 29, 2011). Colloquium on Market Institutions and Economic Available: Processes, p. 12. (Online: February 28, 2011). http://www.innovationexcellence.com/blog/2011/12 Available: http://econ.as.nyu.edu/docs/IO/18509/Ikeda_2011Fe /29/michael-porter-on-strategic-innovation-creating- b28.pdf [August, 2013]. tomorrows-advantages/ [August, 2013]. 42 Ibid. 46 Ibid.

43 Ibid. 47 Ibid.

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extraordinary by placing them in a network their own; and thus it becomes the source in which information and opportunities, of further new ideas.”50 conducted by dense social ties, come at them from many and often unexpected The role of talent directions. And dense social networks also Transportation itself can be considered a make it much more likely that useful factor of production, with improved access novelty spreads to those for whom it has to labour through commuter infrastructure 48 net value…” and a reduction in access cost.51 But the role of talent in an innovation cluster is The Expert Panel on the Socioeconomic especially important because people are Impacts of Innovation Investments not only an input or factor of production, developed an innovation ecosystem but agents of further growth and framework that “conceptualizes innovation innovation. The traditional factors of as the result of an intricate set of activities production were land, labour and capital, and linkages between innovation actors.” but the entrepreneur is outside this; “the The panel notes that it is nearly impossible entrepreneur and the firm are one and the to understand or measure these activities at same”.52 And entrepreneurs need access to a micro level as “the sheer volume of more than just their own labour inputs, interactions and complicated feedback young tech companies also need money loops makes it difficult to understand the and advice. 53 workings of an innovation ecosystem”. 49 Innovation clusters with established leaders This was perhaps best described in simple will often create a talent and venture terms by economist Alfred Marshall based capital diaspora. According to Silicon Valley on his 19th century observation that firms in entrepreneur Brian McClendon, formerly of the same industry were often tech company Silicon Graphics, “The geographically near each other. diaspora of Silicon Graphics created many, “Proximity… created something in the air… many companies throughout the Valley…as if one man starts a new idea, it is taken up by others and combined with suggestions of 50 The Economist, “The geography of start-ups: something in the air”.

51 Dr. Jean-Paul Rodrigue and Dr. Theo Notteboom, The geography of transport systems (New York: 48 Ibid. 2013). Available: http://people.hofstra.edu/geotrans/eng/ch7en/conc 49 Council of Canadian Academies, “Innovation 7en/ch7c1en.html [September, 2013]. Impacts: Measurement and Assessment. The Expert 52 Peter Klein, “Is entrepreneurship a factor of Panel on the Socioeconomic Impacts of Innovation production?” Organization and Markets (Online: Investments”, Council of Canadian Academies December 14, 2006). Available: (Ottawa: 2013), p. xiii. Available: http://organizationsandmarkets.com/2006/12/14/is- http://www.scienceadvice.ca/uploads/eng/assessme entrepreneurship-a-factor-of-production/ [August, nts%20and%20publications%20and%20news%20rele 2013].

ases/ontario_inno/roi_fullreporten.pdf [August, 53 The Economist, “The geography of start-ups: 2013]. something in the air”.

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a diaspora we communicate and we contact Another advantage of the Waterloo Region and we hire each other and we steal each economy is having a wider pool of other’s people.” The recycling of people is industries and skills to draw upon. “It’s not as important as that of money.54 just engineering talent,” says Dennis Crowley, head of Foursquare, which is 55 Google already has a diaspora of its own. based in New York. “You can find that all The Economist According to , New York’s over the place. We may have a whole bunch programming pool was deepened when of engineers, but we also have a whole Google started putting engineers into its bunch of product people,” providing office in the city in 2003. Google alumni expertise in marketing and creative have since set up or joined startups there. 58 development. In England, London-based startups also see the presence of Google and other big Attitudes toward risk companies as a boon. 56 Along with the creative energy and When PayPal was bought out by eBay for exchange of ideas that occurs in innovation $1.5 billion, many of its employees went on clusters, a certain tolerance for risk is to found and invest in other startups, supported. For example, the PayPal buyout including Facebook, LinkedIn, YouTube, and by eBay “gave some very young, very others. This group became known as the ambitious people the confidence to try for “PayPal mafia”. “From one buyout, an another big win and an experienced 59 entire ecosystem of wildly successful tech network to fund them.” companies was spawned in Silicon Valley.”57 As well, economist Edward Glaeser notes Waterloo Region can thank BlackBerry and that “an abundance of local employers also other established tech firms for a local provides implicit insurance against the 60 talent diaspora that is actively influencing failure of any particular startup.” the local startup cluster. With the addition Thus, innovation clusters tend to become and growth of the Kitchener Google office, self-sustaining ecosystems, in that they the local startup ecosystem is positioned to support a culture in which risk is seen as benefit from the depth of talent these rewarding and opportunities to rebound companies attract. from failure are unconstrained, thus creating the necessary conditions (i.e., plentiful startups, available venture capital) 54 Ibid. to make those cultural perceptions reality. 55 Ibid.

56 Ibid. 58 The Economist, “The geography of start-ups: 57 something in the air”. Ryan Holmes, “Can a successful exit by a Canadian tech firm jumpstart innovation in Canada?”, The 59 Holmes, “Can a successful exit by a Canadian tech Financial Post, (Online: July 18, 2013). Available: firm jumpstart innovation in Canada?”. http://business.financialpost.com/2013/07/18/can-a- successful-exit-by-a-canadian-tech-firm-jumpstart- 60 Ikeda, “Economic Development from a Jacobsian innovation-in-canada/ [August, 2013]. Perspective”, p. 9.

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The scale of this startup activity further Export-driven clusters generate wealth as supports the attraction of additional employees effectively earn their wages venture capital. outside the municipality, but spend it within, effectively expanding the local pool Economic impacts of of wealth. This creates demand for retail innovation and service industries that for the most part employ people without post-secondary education. In this way, export-driven Supports job growth in other companies create opportunities for less- sectors educated workers outside their industry.63 While innovation can occur in any industry, the local startup cluster in Waterloo Region But what differentiates tech jobs from is primarily focused on software, hardware manufacturing is wages. In 2005, median (especially mechatronics) and digital media. employment income in occupations in processing, manufacturing and utilities was This is beneficial to the entire community as $33,941 compared to $55,125 in tech jobs tech companies draw upon other industries (engineers, designers, technologists, for support, supplies, and other inputs. And testers).64 The wage difference translates tech workers spend their wages locally, into greater economic impact per worker. creating other spinoffs. According to urban But the wage gap will be more substantial economist Enrico Moretti, “for each new with time; between 2000 and 2005 median high-tech job in a city, five additional jobs manufacturing wages grew by 2.6 per cent, are ultimately created outside of the high- compared with 12.5 per cent growth in tech tech sector in that city, both in skilled worker wages. Workers in “hot cities” — occupations (lawyers, teachers, nurses) those that are experiencing significant job and in [service] ones (waiters, growth — are making two to three times hairdressers).”61 what identical workers make in cities that are losing ground.65 Tech and manufacturing clusters are often compared because they are both export Increases productivity and driven, but the five-to-one tech industry aggregate output multiplier is three times larger than that of manufacturing, estimated to be 1.6.62 Metropolitan economies that carry multiple clusters (e.g., Tokyo, , London) essentially fuel national economies through 61 Enrico Moretti, “The new geography of jobs” cited by Leslie Brokaw in “The Multiplier Effect of their pools of human capital, innovation, Innovation Jobs”, MIT Sloan Management Review (Online: June 06, 2012). Available: http://sloanreview.mit.edu/article/the-multiplier- 63 Moretti, The new geography of jobs. effect-of-innovation-jobs/ [August, 2013]. 64 Statistics Canada, “Employment Income Statistics in 62 Enrico Moretti, “Local Multipliers”, American Constant (2005) Dollars” 2006 Census of Population, Economic Review (Online: May 2010). Available: Statistics Canada catalogue no. 97-563-XCB2006063.

http://emlab.berkeley.edu/~moretti/multipliers.pdf 65 [September, 2013]. Moretti, The new geography of jobs.

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quality places, and infrastructure. Cities due to lower multifactor productivity (MFP) become “innovative spaces” and “cradles of growth in Canada.69 creativity” as drivers of innovation.66 Multifactor productivity reflects, among According to The Brookings Institution, other things, the contribution to “metros contain and aggregate key ‘drivers’ productivity from aspects of innovation not of local and national prosperity—factors already embodied in the capital stock.70 such as local innovation capacity, a place’s store of human capital, its basic MFP growth represents, for example, the infrastructure and quality of place. In that increasing value from inputs of capital and sense, cities and suburbs gather together labour through inventive activity, more what matters and — through their density efficient organization of work, new and diversity — augment its value and marketing practices and business models, 67 the payoff from performing R&D, other impact.” innovation and particularly the insights of More specifically, firms with higher entrepreneurs.71 innovation expenditures per employee (input) are more likely to have higher Most program impact measurements alone innovation sales per employee and higher cannot capture innovation. Innovation is 68 not a process isolated at the program level, labour productivity (impacts). with a linear relationship from investment Industry Canada researchers Rao, Tang and to impact. Assessing the full impact of Wang have analyzed the Canada-U.S. labour innovation investments requires capturing productivity gap from 1987 to 2006 and contributions related to the functioning of found that about 90 per cent of the gap is the entire ecosystem.72

However, recognizing the link between transit services and “agglomeration economies”, Chatman and Noland have

66 attempted to quantify the economic impact The Brookings Institution, “Metro Policy: Shaping a new federal partnership for a metropolitan nation” of transit and implicitly, innovation clusters. (Online, 2008), p. 4-103. Available: They estimate that “wage increases range http://www.brookings.edu/~/media/Research/Files/R eports/2008/6/metropolicy/06_metropolicy_fullrepo from $1.5 million to $1.8 billion per rt.PDF [August, 2013]. metropolitan area yearly for a 10 per cent 67 The Brookings Institution, “Metro Policy: Shaping a increase in transit seats or rail service miles new federal partnership for a metropolitan nation”, p. 4.

68 Council of Canadian Academies, “Innovation and Business Strategy: Why Canada Falls Short. The Expert 69 Panel on Business Innovation”, Council of Canadian Ibid, p. 38. Academies (Ottawa: June, 2009), p. 34. Available: 70 Ibid, pp. 33-34. http://www.scienceadvice.ca/uploads/eng/assessme nts%20and%20publications%20and%20news%20rele 71 Ibid, p. 36. ases/inno/(2009-06-11)%20innovation%20report.pdf [August, 2013]. 72 Ibid, p. xiii.

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per capita.”73 So while innovation itself may be difficult to measure, there appears to be measurable benefits that can be linked to the infrastructure that facilitates the agglomeration necessary to achieve a cluster of innovation.

Innovation clusters on the Kitchener Line According to Ikeda, “The expectation of increasing one’s … productivity through contact with a diverse range of people is what attracted and continues to attract people to urban life.”74 Through these actions of individuals seeking to maximize their own economic outcomes, urbanization results, bringing greater wealth to the entire community. As Glaeser puts it, “There is a near perfect correlation between urbanization and prosperity across nations”.75 It is in this way that Waterloo Region and Guelph each have the capacity to influence the prosperity of Ontario and Canada. Through greater agglomeration of people around a transit node, the social dynamics of innovation are supported, bringing to life Schumpeter’s creative destruction as new industries and businesses support economic growth where others have fallen.

73 Eric Jaffe, “Public Transit Is Worth Way More to a City Than You Might Think” The Atlantic Cities (Online: August 14, 2013). Available: http://www.theatlanticcities.com/jobs-and- economy/2013/08/public-transit-worth-way-more- city-you-think/6532/ [August, 2013].

74 Ikeda, “Economic Development from a Jacobsian Perspective”, p. 9.

75 Edward Glaeser, Triumph of the City: How our greatest invention makes us richer, smarter, greener, healthier, and happier. (New York: 2011).

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Section 5: Proposed two-way GO Train service

An evaluation of the proposal according to key development criteria

The business case for two-way urban commuter rail

GO Transit expansion comprehensive analysis using the Metrolinx Project Prioritization Framework, which evaluation ultimately results in advice to the provincial GO Transit is the regional public transit government — the final decision makers. service for the Greater Toronto and For growth and expansion capital costs the Hamilton Area (GTHA), serving Greater province provides one-third of GO’s capital Golden Horseshoe communities including funding needs, with the objective that the Waterloo Region, Barrie, Beaverton, federal and municipal governments will Peterborough and Niagara Falls (see contribute the remaining two-thirds. Appendix A). The local contribution to such a project In 2009, GO Transit merged with Metrolinx, does not necessarily translate into funding an agency of the Government of Ontario dollars, but rather there is an expectation created to coordinate all modes of that local government takes ownership for transportation in the GTHA.76 the local portion of the project, such as the development of station areas, parking and Expansion of GO Train services requires

Figure 12. Metrolinx scorecard

76 Metrolinx, “Metrolinx Overview” (Online). Available: http://www.metrolinx.com/en/aboutus/metrolinxove rview/metrolinx_overview.aspx [August, 2013].

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other amenities. Waterloo Region has between Kitchener and Toronto is also used already made a significant investment in the by VIA Rail, which offers two trains each multi-modal station area — the designated way between Kitchener and Toronto, but GO Train stop — which means that there VIA service is not scheduled to should be little additional impact on local accommodate most commuters.78 As well, budgets. the CN North Mainline must accommodate CN freight traffic, managed by Goderich- Metrolinx Project Prioritization Exeter Railway (GEXR) under a long-term Framework lease with CN ending in 2018. GEXR is ultimately responsible for operation and Potential projects are evaluated in a maintenance of the corridor.79 framework that takes into account the overall goals and objectives of “The Big The 53-kilometre line between Kitchener Move” — a transportation plan for the and Georgetown is a single-track line that Greater Toronto and Hamilton Area. The requires infrastructure upgrades to permit framework is constructed in two stages: the two-way commuter service. The 2011 primary evaluation and implementation Burnside Business Case suggests that some screen. This process results in a project service improvements can be made for scorecard that enables analysis and approximately $48.4 million. The 2009 consideration of strategic fit (see Figure Environmental Study Report, also by 77 12). Burnside, estimates that the full cost of installing a second track to maximize service Primary evaluation of benefits will cost $396 million.

inbound GO Train service The many benefits of service expansion will Trains leaving Downtown Kitchener more than offset the capital investment currently travel on the CN North Mainline costs, and will apply to all communities on track, which is designated as the Kitchener the line, not just Waterloo Region or Line (formerly the Georgetown Line) for Toronto. But the impetus for this GO’s commuter service. This includes a stop investment proposal is the unique in Guelph, ultimately connecting into Union economic opportunity to invest in the Station via Brampton, Malton and Weston, innovation clusters in Waterloo Region and among other stations (see Appendix B). Guelph, and as such that will be the focus of this evaluation. There are currently two early morning GO Train departures from Kitchener, with returning trains departing Union Station 78 Terry Pender, “Via Rail is cutting service to and during early evening hours. The line from Kitchener” The Record (Online: June 27, 2012). Available: http://www.therecord.com/news-

77 story/2606278-via-rail-is-cutting-service-to-and-from- Metrolinx, “Project Prioritization” (Online). kitchener/ [September, 2013]. Available: http://www.metrolinx.com/en/regionalplanning/proj 79 R. J. Burnside & Associates, “Business Case for ectevaluation/projectprioritization/project_prioritizat Passenger Service GTA to Kitchener”. (August, 2012), ion.aspx [August, 2013]. p. 3.

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The primary evaluation framework takes Employment growth is primarily in The into account quality of life, environmental Tannery, with residential development impacts and economic benefits. Each of concentrated at the corner of King and these areas of evaluation has accompanying Victoria. At that intersection 270 units were indicators in the Metrolinx scorecard (see created in Kaufman Lofts, attracting an Figure 12). estimated 486 residents. Another 205 units are planned in ‘One Victoria’, which is Table 4. Project scorecard indicators expected to house over 300 residents upon A high quality of life its completion, and City Centre Customer service/market readiness Condominiums will add nearly 400 units on Regional connectivity/destinations the landmark Centre Block. In total, the Building communities (land value uplift) downtown neighbourhoods were home to a Social need 81 Benefit-cost ratio population of 30,812 people in 2012. A thriving, sustainable and protected While the greatest impact on Kitchener is environment the immediate employment area around Transit ridership growth Greenhouse gas emissions reductions the station stop — and its growth potential A strong, prosperous and competitive — local transit connections, especially LRT, economy at the multi-modal hub will make it possible Economic impacts for inbound travelers to connect to other Capital cost per rider employment areas in the region. The Operating revenue/cost ratio region’s tech sector employs over 30,000 people with 34 per cent commuting to the A high quality of life region.82 The region also has a well- Quality of life considerations in the project established finance and insurance cluster scorecard (see Table 4) include market that employs over 21,600 people (with 10 readiness, regional connectivity, land value per cent commuting to the region), and uplift, social need, and costs/benefits. frequently connects with the Toronto area for business.83 Market readiness The market for two-way GO Train service is The Kitchener-Cambridge-Waterloo Census mainly composed of commuters, students, Metropolitan Area currently employs and visitors. 81 City of Kitchener, Economic Development Within the walking radius around the Population Estimates, 2012. Downtown Kitchener multi-modal hub is a 82 R. J. Burnside & Associates, “Business Case for smaller district ― formerly known as the Passenger Service GTA to Kitchener”, p. 4. warehouse district ― that makes up part of 83 Statistics Canada, “Labour Force Survey, October Kitchener’s downtown core (see Figure 8, p. 2013”, CANSIM 282-0112 (Online: November 8, 2013). Available: 29). This 14-hectare area currently employs http://www5.statcan.gc.ca/cansim/a26?lang=eng&re 1,747, up from only 471 ten years ago.80 trLang=eng&id=2820112&pattern=labour+force+surv ey+census+metropolitan+area&tabMode=dataTable 80 &srchLan=-1&p1=1&p2=-1 [November, 2013]. City of Kitchener, Downtown Database, 2003–2013.

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290,600 people and the Guelph Census incoming travelers, a GO Train link will Metropolitan Area employs 72,600. serve the transit needs of tourists as well. According to the 2011 Transportation Tomorrow Survey (TTS) there are 19,800 With 55,000 full-time students in Waterloo people commuting from the GTA to Region ― and more than half living outside 88 84 the region ― and another 17,400 students Waterloo Region and the City of Guelph. The TTS also confirms a high number of at the University of Guelph, as well as commuters between Waterloo Region and research institutes, an established finance the City of Guelph: 32,000 trips daily in each and insurance cluster, and a growing tech 85 sector, the Kitchener’s Innovation District direction. employee base is clearly not the only source Specific tourism numbers are not available of ridership. But local tech companies for just Waterloo Region, but over 8.8 appear to be the best source of demand for million people visited the regional tourism service; companies like Google are already organization area, which include Waterloo, busing in employees from the GTHA, Perth, Wellington and Huron.86 Waterloo demonstrating that there is an immediate Region staff have identified over 790,000 need for outside talent. people came to just this region to visit friends and family — our largest tourist The 2009 Environmental Study Report category.87 While specific information is estimated total initial ridership between 2,300 and 5,000.89 lacking on the origin of these visitors, these This was refined in the aggregate numbers give some sense of the 2012 Burnside Business Case which scale of visitors to the area. Given the high estimated initial westbound ridership of 90 utilization of the Toronto airport for 1,271. This estimate was based upon Paradigm Transportation Solution’s market

penetration assumptions. These 84 Ministry of Transportation, Transportation Tomorrow Survey 2011, assumptions use modal share for the http://www.mto.gov.on.ca/english/about/TTsurvey.s Lakeshore West corridor as it “represent[s] html the ‘mature state’ of the GO service 85 R. J. Burnside & Associates Limited, “Georgetown to/from the west of the GTA”.91 But this to Kitchener Rail Expansion Environmental Study Report” (Online, July 13, 2009), p. 5. Available: does not take into account the industry mix http://www.gotransit.com/public/en/docs/ea/george between transit nodes, demand for inter- town-kitchener/rail_expansion_esr.pdf [August, 2013]. city connections, the demographic mix of commuters or the suitability of alternate 86 Ontario Ministry of Tourism, Culture and Sport, “Regional Tourism Profiles” (Online: 2006–2010). Available: 88 Burnside & Associates, “Business Case for http://www.mtc.gov.on.ca/en/research/rtp/rtp.shtml Passenger Service GTA to Kitchener”, p. 4. [August, 2013]. 89 87 Ibid, p. 5. Region of Waterloo, “Waterloo Region Profile: Statistics, Trends & Forecasts” (Online: February 4, 90 Burnside, “Business Case for Rail Passenger Service 2011). Available: GTA to Kitchener”, p. 15. http://www.regionofwaterloo.ca/en/regionalGovern ment/resources/waterlooregionprofile.pdf [August, 91 Burnside, “Business Case for Rail Passenger Service 2013]. GTA to Kitchener”, p. 14.

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modes of transportation. The use of provides seamless access to the regional commuter transit in U.S. cities vary from a transit system, and supports higher density high of over 50 per cent in New York City to development. Metrolinx describes these a low of about 1 per cent in Oklahoma hubs as “places of connectivity where City.92 different modes of transportation — from walking to biking to riding transit — come Further, mode choice is influenced by together seamlessly and where there is an factors including the concentration of retail intensive concentration of working, living, and amenities in walking distance from the 94 shopping and/or playing.” workplaces of commuters, additional connectivity in the form of bus transit, as This description demonstrates the well as a short supply of parking.93 In this compatibility of GO Train service with respect, Downtown Guelph, Downtown provincial objectives, as Kitchener’s Kitchener and Uptown Waterloo are well- Innovation District is already under a suited toward the attraction of transit riders transformation to become a hub of transit, given the retail and restaurant mix that are high-density housing and office/commercial developing in these downtown cores, as space. well as the connectivity that the multi- To accommodate ION Light Rail Transit by modal hub will offer upon completion. 2017, the region is constructing a multi- Therefore, without additional knowledge of modal hub in Downtown Kitchener. GO the flow of workers and the value Trains will be accommodated in the multi- proposition provided by GO Train in the modal hub along with VIA Rail. A nearby Lakeshore West corridor, it is difficult to central bus terminal will complete public determine if these modal shares are transportation options in the area. representative of the potential Toronto-to- Kitchener market, but there are indications Other local strategies are in place to further reduce reliance on personal vehicles. The that these valuations may be conservative. City of Kitchener’s Transportation Demand Regional connectivity Management Strategy and Cycling Master The creation of “mobility hubs” is an Plan support alternative modes of important priority in “” (the transportation. Downtown Kitchener’s GTHA’s transportation plan). It calls for a award-winning streetscaping prioritizes system of connected mobility hubs that pedestrians, and new cycling initiatives are underway, such as the application of bike

92 Wikipedia, “Transportation in the United States” sharrows in the core. (Online). Available: http://en.wikipedia.org/wiki/Transportation_in_the_ The City of Guelph designed Guelph Central United_States [September, 2013]. Station to be a multimodal hub of 93 Robert Cervero, “Office Development, Rail Transit and Commuting Choices” Journal of Public Transportation, Vol. 9, No. 5 (Online: 2006), p. 41. 94 Metrolinx, “Mobility Hubs” (Online). Available: Available: http://www.nctr.usf.edu/jpt/pdf/JPT%209- http://www.metrolinx.com/en/projectsandprograms/ 5%20Cervero.pdf [September, 2013]. mobilityhubs/mobility_hubs.aspx [August, 2013].

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transportation options with support from acquisitions and land consolidation for the Transportation Demand Management mixed-use development projects. During (TDM) Program. The TDM program the last five years, there has been $345 encourages active transportation, carshare, million in construction value built in the carpool and public transit through a variety uptown area, particularly in residential of policies, programs and incentives. The mixed-use buildings, a new hotel, several 2012 Cycling Master Plan will further office buildings and several major expand Guelph’s cycling network through expansions including the Stephen Hawking new active transportation connections and Centre at the Perimeter Institute and bike lanes, as well as additional bicycle Centre for International Governance parking facilities over the next five to 10 Innovation campus expansion. years. The city recently added on-site The $350 million BarrelYards development parking at Guelph Central Station for Community Carshare which has seen is the largest urban redevelopment project significant uptake by members across the in Waterloo Region. Uptown Waterloo is also home to The Shops of Waterloo Town city. The city's fare integration allows Metrolinx pass holders to ride Guelph Square which sold this August for about $72 million, representing the highest value of a Transit at a reasonable cost. commercial acquisition in the region. With these programs in place, GO Train Further north, the former NCR lands were users have many options available to them purchased for about $23 million in 2009 for to access the Kitchener’s multi-modal hub redevelopment along the Light Rail Transit or Guelph Central Station, without reliance route. Today, this site is being developed on a personal vehicle. This is especially for a $160 million project with first phase relevant given that over 2,800 residential under construction. It is anticipated that units are currently in the planning stages in land values will continue to increase with the downtown Kitchener neighbourhoods, time and in proximity to light rail transit along with another 5.6 million square feet system however, full build out will be of planned residential space in Downtown largely dependent upon the ability to Guelph. Uptown Waterloo can attract new companies into these station accommodate another 3.1 million square nodes. feet of residential development. The While Kitchener’s Innovation District has opportunity to invest in two-way GO Train service to this location leverages the attracted significant investment in recent programs already underway to facilitate years, redevelopment is concentrated alternative modes of transportation in the around the intersection of King and Victoria. The balance of the district is region, and support high density residential mostly underutilized. It is characterized by living along the corridor. an urban form consisting of a large parcel Land value uplift fabric, currently occupied by remnant 19th In recent years, Uptown Waterloo has and early 20th century multi-storey factory experienced significant commercial

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buildings and single storey retail/service As well, the location of GO Train service in buildings as well as surface parking lots. the multi-modal hub is ideal to meet community service needs. Downtown The district has demonstrated that it has Kitchener is the centre of the region with significant development potential. The respect to the provision of services Tannery redevelopment best illustrates the including hospitals, social service agencies, value increases realized so far. It was regional and provincial government offices, purchased in 2007 for $10 million, and the consolidated provincial courthouse. underwent $20 million in improvements It is home to the central bus terminal, and sold in 2012 for $60 million. Because meaning it is accessible for community much of the land in Kitchener’s Innovation members relying on affordable transit. District is currently undervalued, investment in transit will have a greater Downtown also features satellite campuses impact on land values than it might have of the University of Waterloo, Wilfrid otherwise. The downtown neighbourhoods Laurier University, McMaster University and have already benefitted from over $700 Conestoga College, with easy access to the million in construction values in recent main campuses using the bus transit years. system. The region is home to 55,000 full- time post-secondary students, including The Urban Growth Centre target for 3,600 students in the downtown core, and Downtown Guelph is 6,000 new people by there are another 17,400 students at the 2031. Recent building activity suggests University of Guelph. Guelph is on its way to meeting or exceeding that target. With respect to land use planning, the downtown Kitchener area is already facing Social need growth constraints with respect to parking. Social and community impacts take into A new 449-space temporary parking lot has account health and lifestyle, accessibility, been created in Kitchener’s Innovation and land-use planning. District to help meet demand while light rail In terms of health and lifestyle, community is still under development. But to achieve members will benefit from reduced auto- long-term intensification requires an dependency, the health benefits of walking improvement in the ratio of workspace to and pollution reductions. Residential parking, presenting land use planning intensification in the area will provide challenges. The optimum use of the space is residents with high-density housing options as mixed-use and office space, with public in an accessible environment. For transit as the primary mode of commuters, GO Train service offers a transportation to work, alleviating the balanced lifestyle with access to multiple upward pressure on parking demand, and markets for housing, entertainment and making former parking lots available for work. redevelopment.

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The City of Guelph’s Downtown Secondary and as such will be used for estimating costs Plan outlines a transportation system that savings. 95 works for all urban modes of travel with well-designed streets accommodating Relevant cost calculations include time pedestrians, cyclists, transit vehicles, saved, costs of accidents, costs of car loading and private vehicles. With the ownership and CO2 emissions. Full recent completion of Guelph Central calculations can be found in Appendix D. Station, the city core now supports a high In terms of user benefits, based on current level of local and regional public transit. The travel times passengers may not realize city is currently undergoing a significant gains in absolute travel time, but comprehensive parking study focused on the quality of the time more than public on-street and off-street parking compensates for this. Tech workers can use facilities that will continue to support their time on the train to continue their existing and new commercial, institutional work, or safely engage in other activities and employment uses. not possible on the highway. If workers Benefit-cost ratio commuted for an average of 45 minutes When compared with the alternative — each way, this would be valued between primarily use of a personal vehicle on the $16 million (initial) and $124 million per 96 401 Highway — inbound GO Train service year (medium growth). offers significant benefits to both As well, the train offers far greater individuals and the province. reliability when the alternative — the 401 For these estimates several ridership — is prone to congestion and accidents that scenarios will be considered, as shown in cause significant costs in terms of time Table 5. delays. The average accident cost (in terms of health care costs and damage to personal Table 5. Ridership estimates property97) for a 100 km drive to work is Initial scenario 1,271 Low growth scenario 5,031 Medium growth scenario 9,588 95 Burnside & Associates Limited, “Georgetown to High growth scenario 22,601 Kitchener Rail Expansion Environmental Study Report”, p. I. See Appendix C for full ridership calculations. 96 Based on business value of time of $35.16/hr The 2009 environmental study report on ($2008) (Source: Metrolinx, “GO Rail Options Benefits Case Assessment”, p. 87.) and transportation the proposed service predicted total ridership projections. ridership by 2031 of between 9,000 and 97 HDR Corporation Decision Economics, “Costs of 16,000, so the high-growth scenario above road congestion in the Greater Toronto and Hamilton may be unrealistic when combined with Area: Impact and cost benefit analysis of the Metrolinx Draft Regional Transportation Plan“ outgoing ridership, but the other scenarios (Online), p. A2-7. Available: fall within the predicted ridership range, http://www.metrolinx.com/en/regionalplanning/cost sofcongestion/ISP_08- 015_Cost_of_Congestion_report_1128081.pdf [September, 2013].

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Table 6. Summary of Initial Low growth Medium High growth benefits (1,271 riders) (5,031 riders) growth (9,588) (22,601) Value of time $16,422,972 $65,007,060 $123,895,368 $292,039,082 Cost of accidents $2,325,083 $9,203,376 $17,540,489 $41,345,440 Vehicle operating costs $16,939,888 $67,053,168 $127,794,995 $301,231,059

CO2 emissions $332,155 $1,314,768 $2,505,784 $5,906,491 Total user benefits $36,020,098 $142,578,372 $271,736,637 $640,522,072 per year

between $2 million (initial) and $18 million between $330,000 (initial) and $2.5 million per year (medium growth).98 per year (medium growth).

Transit options are desirable for young This brings the estimated annual value of people who are not yet able to assume the benefits to $36 million per year based on costs of car ownership, or prefer more baseline ridership, but potentially reaching environmentally-friendly transit options. $272 million per year based on the medium growth ridership scenario (see Table 6). The average age of entrepreneurs funded Without a time frame for construction it is 99 by Y Combinator is 26. While not all difficult to express this value in terms of a startup founders are young, many of their payback period, but, without taking into employees are, as startups appeal to account any other benefit, using the younger, more risk-tolerant workers. As baseline ridership scenario these cost such, the transportation preferences of savings alone will pay back the capital young adults are relevant to the startup investment in approximately 11 years. ecosystem. The auto operating costs for a Based on the low growth scenario, this round trip to work based on the ridership payback period is nearly cut only three scenarios is between $17 million (initial) years. and $128 million per year (medium 100 growth). A thriving, sustainable and The environmental impact has its costs as protected environment well; under the same ridership scenarios, The Metrolinx scorecard (see Table 4, p. 46) the cost of CO2 emissions would be considers projected new riders, and greenhouse gas emission reductions, with

98 respect to environmental benefits. Based on $0.07 per km (Source: Metrolinx, “GO Rail Options Benefits Case Assessment”, p. 87.). Transit ridership growth 99 Roya Wolverson, “The best age for a start-up The 2009 Environmental Study on GO Train founder”, Time, (Online: March 14, 2013). Available: http://business.time.com/2013/03/14/ask-the- expansion from Georgetown to Kitchener expert-the-best-age-for-a-start-up-founder/ [August, forecasted initial total ridership of 2,300 to 2013]. 5,000 daily trips, and approximately 9,000 100 Based on $0.50/km ($2008 and costs) (Source: Metrolinx, “GO Rail Options Benefits Case Assessment”, p. 87.).

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to 16,000 total daily trips by 2031.101 The Kitchener Line, demonstrating that the right development opportunities in Waterloo strategic investments in rail will draw Region and Guelph support the long-term ridership. ridership forecast, but suggest that it is achievable long before 2031 if office The primary development opportunity for ridership is the growing commuter development can keep pace with demand. population in the area surrounding the At current absorption rates, Kitchener’s future multi-modal station. It will become Innovation District alone would attract an the pedestrian access node for the additional 6,750 jobs within 10 years, in Innovation District, based on a walking occupations that tend to attract transit radius of 600 metres (see Appendix E). users. But even using a more conservative estimate, this would add another 700 There are several land parcels that have riders, enough to justify two inbound been redeveloped (e.g., The Tannery), but there remain single-storey retail/service commuter trains. buildings and parking lots that have obvious The Burnside Environmental Study Report potential for new development, as well as (2009) and Business Case (2012) present historic factory buildings that have the very conservative ridership estimates that capacity to accommodate much higher do not reflect any adjustment in the employment densities. behaviours of households and firms in response to the launch of commuter train Many of the older industrial buildings have service. For example, Burnside identifies been adapted to office use or are currently that 34 per cent of tech workers commute under renovation or adaptive re-use, from outside Waterloo Region, but only resulting in a density of approximately one 3.82 per cent live within two kilometres of employee per 200 square feet, a the commuter rail line. But with no conservative estimate given that office available service into Waterloo Region at space per worker is shrinking quickly, and is this time, there is no incentive for now only 170 square feet per employee in 103 households to reside in proximity to rail San Francisco and Silicon Valley. The lines. Over time, this will shift. single storey service uses and surface parking lots all constitute redevelopment As well, population alone will not determine opportunities that have the potential to add demand for service. Silicon Valley’s Caltrain transit-oriented employees and residential has daily ridership over 40,000,102 along a pedestrians to the multi-modal station area. corridor with a lower population than the The map in Appendix E illustrates the 101 Burnside & Associates, “Georgetown to Kitchener parcels of vacant land or low-density Rail Expansion Environmental Study Report”, p. I.

102 Bay Area Council Economic Institute “The 103 Dan Levy, “San Francisco Leasing Slows Amid economic impact of Caltrain modernization” (Online: Office Boom”, Bloomberg (Online). Available: June, 2012), p. 3. Available: http://www.bloomberg.com/news/2013-05-14/san- http://documents.bayareacouncil.org/caltrainecon.p francisco-leasing-slows-amid-office-boom-real- df [August, 2013]. estate.html [September, 2013].

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commercial properties, which are The optimum development scenario — a redevelopment sites in this area, based five-fold increase in employment density in upon a five to 15-year development time the multi-modal station area — will hinge frame. This collection of land assets will be on implementation of the ION Light Rail redeveloped to create a medium to high- Transit system (already underway) and density research and technology district. establishment of inbound GO Train commuter service. It is clear that the multi- The station area within 600 metres of the modal station area can and will support the multi-modal station has the potential to intensification required to justify inbound host over 15,600 employees and an GO Train service. additional 4,000 residents under a medium density scenario (see Appendix E). The Greenhouse gas emissions reduction value of this new construction would Based upon 1,271 riders, and an average exceed $1.2 billion.104 As well, as identified trip length of 53 kilometres, there will be 8 in Section 3, there is the potential to add million metric tonnes of emission 37,600 employees in total including reductions per year.106 Based on a medium Downtown Kitchener, Waterloo Transit growth scenario, almost 58 million metric Station Areas and the Guelph Innovation tonnes of emissions will be saved. Triangle (see Table 3, p. 32). The combined These estimates do not taking into account development has a potential construction any other potential users, as well as the value of $4 billion in 2013 dollars. environmental benefits of concentrating As the primary market for riders, employment in proximity to the station Kitchener’s Innovation District has the area, reducing transit emissions from travel potential to add between 1,500 and 5,000 within Waterloo Region. new riders. Under a low growth scenario, there would be enough riders to support A strong, prosperous and three 12-car GO Trains, with a capacity of competitive economy approximately 2,000 riders each. 105 A Economic benefits are evaluated in the medium growth scenario would bring total project scorecard (see Table 4, p. 46) based ridership to 9,588 justifying five inbound upon economic impacts, capital cost per trains. rider and the operating revenue/cost ratio.

Economic impacts The proposed two-way GO Train service on 104 Based upon square footage identified in Appendix the Kitchener Line presents a unique E and construction costs identified in the City of Kitchener Downtown Financial Incentive Review investment opportunity. While transit Discussion Paper, 2013. improvements typically make a location

105 GO Transit “Quickfacts: GO Green Initiatives” more desirable for business, Kitchener’s (Online: June, 2013). Available: http://www.gotransit.com/public/en/docs/publicatio 106 Based on 0.23 kg per km travelled (Source: ns/quickfacts/Quick_Facts_GO_Green_EN.pdf Metrolinx, “GO Rail Options Benefits Case [August, 2013]. Assessment”, p. 87.).

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Table 7. Income Total annual and tax growth Direct Average Total annual Marginal personal employment wages income tax rate income tax Downtown 6,500 $52,039 $338,253,500 0.3115 $105,365,965 Guelph Uptown 7,000 $71,428 $499,995,548 0.3298 $164,898,532 Waterloo Research + 5,000 $71,428 $357,139,677 0.3298 $117,784,666 Technology Park Waterloo 3,500 $71,428 $249,997,774 0.3298 $82,449,266 Corporate Campus Kitchener’s 15,600 $71,428 $1,114,275,793 0.3298 $367,488,157 Innovation District Total 37,600 $2,559,662,292 $837,986,585

Innovation District is already under a larger labour market and encountering less dramatic economic transformation, with congestion on roadways”107 additional momentum underway in Downtown Guelph and along Waterloo LRT Direct and indirect wages The Waterloo Region innovation ecosystem stops. Therefore, an investment in inbound has demonstrated its capacity to generate GO will not incite change, but rather will significant wealth for the province of leverage the momentum already underway, Ontario; in 2009, it generated $18 billion in creating a much more significant impact revenue.108 than transit improvements could make in isolation of other growth factors. Through Based upon projected employment gains of capital investments, the rate of change of approximately 15,600 (see Appendix E) in growth itself can be accelerated. Kitchener’s Innovation District alone, this investment will generate over $1.1 billion in Metrolinx considers a number of potential direct annual wages, and including economic impacts that are measurable, development areas in Waterloo Region and including wages, but also points out other intangible benefits including “…improved regional competitiveness for metro-area 107 Metrolinx, “VIVA Benefits Case” (Online: businesses that now have lower costs of November, 2008), p. 20. Available: http://www.metrolinx.com/en/regionalplanning/proj doing businesses, including access to a ectevaluation/benefitscases/Benefits_Case_VIVA_fin al.pdf, [August, 2013].

108 PricewaterhouseCoopers, University of Waterloo Economic Impact Study 2013 (Online: October 25, 2013). Available: https://uwaterloo.ca/about/sites/ca.about/files/uplo ads/files/c003711_economic_impact_report_lr_v2.0_ final-s.pdf [November, 2013].

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Guelph, there is the potential to realize $2.5 In a recent study on transit service and billion in direct annual wages. While some productivity, Chatman and Noland, of this growth may occur without inbound attempted to quantify the economic impact commuter service, local tech companies are of the agglomeration that occurs as a result already struggling to find local talent, which of transit service. Their results showed that demonstrates that this growth cannot be every time a metro area added about four assumed to occur without supporting seats to rails and buses per 1,000 residents, infrastructure investment. the central city ended up with 320 more employees per square mile, an increase of These wages will produce an annual tax 19 per cent. benefit of $837 million dollars, demonstrating that this project will more A 10 per cent expansion in transit service than pay back its capital investment cost (by adding either rail and bus seats or rail (estimated at $396 million in 2009).109 miles) produced a wage increase between $53 and $194 per worker per year in the Based upon Enrico Moretti’s five-to-one city centre. The gross metropolitan product employment multiplier, an investment in rose between 1 and 2 per cent, as well.110 the tech ecosystem will create significant This study helps define the quantifiable employment in other industries, adding jobs economic benefits that transit can that are both skilled and unskilled. stimulate.

Other temporary wage benefits will be Other impacts realized during the construction phase of Other impacts include increasing land the rail line, as well as other associated values and development along the rail spending. corridor. Kitchener has already witnessed The launch of inbound GO Train service will the magnitude of these spinoffs after its provide the necessary stimulus to facilitate $30 million investment in the University of redevelopment of Kitchener’s Innovation Waterloo School of Pharmacy resulted in District. The estimated construction value $168 million in construction values. This for full build out of the district is $1.2 represents only three development projects billion, providing significant economic tied directly to the initial investment; there benefits through an increasing assessment has been over $700 million in construction base, as well as jobs in construction and values the downtown neighbourhoods other design/development occupations. comprising the district and adjacent areas. Combined, Kitchener, Waterloo and Guelph The city’s Economic Development have the potential to create $4 billion in Investment Fund (EDIF) provided $110 construction values in their urban growth million toward catalyst projects, and to centres and transit station areas. date, properties in proximity to these investments have increased in value by $30

109 Burnside & Associates, “Georgetown to Kitchener 110 Eric Jaffe, “Public Transit Is Worth Way More to a Rail Expansion Environmental Study Report”, p. III. City Than You Might Think”.

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million more than expected growth, inbound GO Train service, valued at over reaching a total assessed value of $222.9 $500 million. million.111 Operation revenue/cost ratio According to the Metrolinx framework, While specific operating figures are not yet other long-term impacts including available, GO Transit has one of the best households’ freed up vehicle operating cost-recovery ratios in the world, typically expenditures, estimated to range between recovering 81 per cent of its costs through $17 million and $128 million per year, and fare revenue.113 This suggests that the transportation cost savings to area ongoing need for provincial cost subsidies businesses. will be more than offset by provincial tax revenue increases due to wage growth. To compare, according to an economic impact study of the proposed Caltrain According to Burnside, based on 1,271 daily Modernization Program, “the construction riders, annual fare box revenue would be benefits along with the long-term benefits $5.25 million and net operating costs would would provide mid-range economic benefits be $750,000.114 in the state by an estimated $2 billion. These estimates are reached by adding Strategic fit gross regional product, state and local The Metrolinx scorecard considers several taxes, increases in residential property aspects of a proposal’s strategic fit, values, increased property tax collections, including funding, project readiness, GTHA and the value of time saved by Caltrain network advancement and the possibility to 112 riders.” This demonstrates the magnitude leverage other initiatives. of economic impact of rail lines.

Capital cost per rider Funding The capital cost of $396 million works out The required funding for service expansion to between $41,300 and $311,566 per rider must still be accounted for in provincial as shown in Appendix D. These capital costs budgets, but should not be compared to a are actually lower than the relative costs of zero-cost scenario. The population growth expanding the 401 Highway. The full costs and transportation demand along the of expansion from Trafalgar Road to corridor necessitate transportation Cambridge are unknown, but the Milton improvements. portion alone will exceed the capital cost of

111 City of Kitchener, Economic Development 113 Richard White, “Metrolinx Board approves GO Investment Fund Impact Analysis as of 2012 (Online: Transit fare increase”, Transit Toronto (Online, May, 2013), p. 5. Available: January 9, 2012). Available: http://kitchener.ca/en/businessinkitchener/resources http://transit.toronto.on.ca/archives/weblog/2012/0 /ED_EDIFImpactAnalysis.pdf [August, 2013]. 1/09-metrolinx_.shtml [August, 2013].

112 Bay Area Council Economic Institute “The 114 R. J. Burnside, “Business Case for Rail Passenger economic impact of Caltrain modernization”, p. 4. Service GTA to Kitchener”, p. i.

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The 2009 Environmental Study Report The 401 portion targeted for earliest demonstrated that commuter rail is the redevelopment is across Milton, where preferred solution compared to expanding proposed widening is expected to cost $440 Highway 401 capacity, or alternatives million for construction and $76 to $112 including providing bus service, million in property costs.119 This implementing transportation demand demonstrates the relatively higher cost of management (alone) or doing nothing.115 investing in 401 expansion compared to rail service expansion; the Milton-area From the province’s perspective, the widening alone exceeds the estimated $391 increasing usage of the 401 Highway results million cost of inbound commuter service in accident costs as well as maintenance on the Kitchener line. While the 401 will costs. Diverting commuters to rail supports require some expansion to accommodate the ongoing usability of the 401 at a lower increasing usage, diverting commuters to cost. trains will minimize the combined capital The 401 Highway is largely at capacity costs of transportation investments between Cambridge and Trafalgar Road. necessary to move people efficiently. Forecasts predict that the 26-kilometre As well, rail provides significant economic stretch known as the “Hespeler to Halton” and environmental benefits and is corridor will require expansion from six compatible with land use priorities, lanes to eight lanes by 2016, with 10 lanes especially intensification in the urban 116 needed by 2031. But this project is still in growth area. the preliminary design stage with an environmental assessment underway.117 The cost estimate for inbound GO Train service does not take into account possible According to Chatman, economic benefits 120 cost sharing among GO, VIA, CN, etc. of public transit investment tend to be Further exploration of the alternative greater in communities where their existing funding may reduce its impact on the transit networks are already at capacity provincial budget. (e.g., 401 Highway).118 Project readiness In 2009 R. J. Burnside and Associates

115 Burnside & Associates, “Georgetown to Kitchener prepared the “Georgetown to Kitchener Rail Rail Expansion Environmental Study Report”, p. I. Expansion Environmental Study Report” 116 Brent Davis, “Major expansion proposed for Highway 401”, The Record (Kitchener: December 1, 119 insideHALTON.com, “Milton residents learn more 2009). about Hwy. 401 widening plans” (Online: June 15,

117 2012). Available: Highway 401 Improvements, “Project Overview”, http://www.insidehalton.com/news-story/2889970- (Online). Available: http://www.highway401- milton-residents-learn-more-about-hwy-401- hespeler-halton.ca/highway401/overview.asp widening-plans/ [August, 2013]. [August, 2013]. 120 118 Burnside & Associates, “Georgetown to Kitchener Eric Jaffe, “Public Transit Is Worth Way More to a City Than You Might Think”. Rail Expansion Environmental Study Report”, p. III.

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initiating the process for service expansion. initial capital investment introducing GO The completion of this study was an Services to the historic station. Guelph important step in preparing the project for Central Station has been designed to enable implementation. The study investigates expansion and higher levels of transit. This impacts with respect to environmental multi-modal hub can now support the constraints, heritage and First Nations, economic growth of the downtown by parking, layover facilities, and noise levels, reinforcing its connectivity and transit among others. supportive land uses ensuring Guelph is linked to the rest of Ontario. Outbound commuter service commenced in December 2011, establishing a presence for With these developments already under GO Train service in the stations along the construction, inbound GO Train service is route. the one missing link to create a fully integrated transit system in Waterloo To establish two-way service requires an Region and Guelph; a necessary step to infrastructure upgrade to add another realize the full benefit of the GO Transit track. This undertaking seems significant, investments made so far. but is relatively small compared to the magnitude of investments that are being GTHA network advancement made in GO Train service on the west side GO Transit is investing $1.2 billion in the of the GTHA (see ’network advancement’ Georgetown South Project on the Kitchener below). Line extending from Union Station to Inbound GO Train service can be slotted in Georgetown. between these existing capital investment This project includes the addition of projects already underway, as well as local multiple tracks in the Georgetown corridor, transit investments in the multi-modal hub, bridge modifications, and two major and Waterloo Region’s ION Light Rail Transit developments: the creation of the Union system. Pearson Express and the West Toronto As well, the Guelph Central Station opened Diamond Grade Separation (see Figure 121 in 2011, providing a hub for the city’s local 13). bus service and regional transit systems including VIA Rail, Greyhound, and GO Transit. As the single central transit hub, Guelph Central Station plays a critical role in implementing the City’s Transit Growth Strategy.

121 The Big Move, “Georgetown South Project: Guelph Central Station is now equipped to Funded & Underway Project Profile” (Online: accommodate and coordinate all planned November, 2012). Available: transit functions. The recently completed http://www.bigmove.ca/wp- content/uploads/2012/11/GTS_SHeet-12041.pdf Kiss’ n ‘Ride is one of the final pieces of the [August, 2013].

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Figure 13. Georgetown South Project

The (UP Express) will National, and VIA Rail services.124 GO connect Union Station with Pearson Airport, Transit paid $160 million to buy the CN rail using an existing 22-kilometre section of line that runs on this line, to accommodate track on the Kitchener Line, and a newly service expansion including two-way service constructed 3.3 km rail spur. 122 to Brampton, and the UP Express. This gives GO control over dispatching, so its trains 123 This project is valued at $456 million, 125 and will have priority. will involve improving infrastructure to accommodate the UP Express, as well as The Grade current and future GO Transit, Canadian Separation is another important component of the Georgetown South Project; a rail-to- rail and rail-to-road grade separation. It will 122 Brandon Leal, “Metrolinx working on massive Georgetown rail corridor expansion”, urbantoronto.ca (Online: June 7, 2013). Available: 124 Leal, “Metrolinx working on massive Georgetown http://urbantoronto.ca/news/2013/06/metrolinx- rail corridor expansion”.

working-massive-georgetown-rail-corridor-expansion 125 [August, 2013]. Tess Kalinowski, “Train service to improve to Georgetown, Brampton”, The Star (Online, April 9, 123 Metrolinx, “Union Pearson Express” (Online). 2009). Available: Available: http://www.thestar.com/news/gta/2009/04/09/train http://www.metrolinx.com/en/projectsandprograms/ _service_to_improve_to_georgetown_brampton.htm upexpress/upexpress.aspx [August, 2013]. l [August, 2013].

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permit the GO commuter line to run Ontario Research Fund from 2004 to underneath the CP freight line, creating 2011.129 safer and more efficient service. This part of 126 Investment in two-way GO Train service on the project is valued at $400 million. the Kitchener Line is essentially a capital An expansion of service on the Kitchener investment in an innovation centre, and Line will support better integration with the supports the money that has already been existing $1.2 billion in investments within committed toward economic growth in the the GTHA, and potentially support other province. uses of rail into Kitchener, including Further, this investment leverages tourism, as riders will gain access to and Toronto’s west-side GO Train upgrades from Pearson Airport. already underway under the $1.2 billion Leverages other initiatives Georgetown South Project, providing the final link to maximize the economic benefit Both the provincial and federal to all the communities along the corridor. governments have committed funds in support of innovation in Ontario. The The proposed inbound GO Train investment federal government has committed to the also supports provincial planning policy, five-year $1 billion FedDev program which, especially the Places to Grow Act, 2005. for example, provided $4.85 million in Under the Growth Plan for the Greater 127 funding to eight Toronto-area startups, Golden Horseshoe, 2006 municipalities must as well as $2-million to six angel investing meet certain density and intensification groups as part of the program’s mandate to targets. Uptown Waterloo, Downtown 128 stimulate small business innovation. Kitchener and Downtown Guelph must plan for their urban growth centres to attract As well, the province has already population and employment growth, and to committed approximately $1.1 billion in the encourage a mix of activities and uses. The municipal and regional governments are 126 Metrolinx, “Georgetown South Project: West actively supporting transit-oriented Toronto Diamond Grade Separation” (Online). development and intensification in the Available: http://www.gotransit.com/gts/en/project/wtd.aspx urban growth centres. [August, 2013].

127 Jameson Berkow, “FedDev intervention produces

some success stories”, The Financial Post (Online: 129 March 25, 2012). Available: “Ontario Research Fund Research Excellence” http://business.financialpost.com/2012/03/25/fedde (Online: September, 2011). Available: v-intervention-produces-some-success-stories/ https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&s [August, 2013]. ource=web&cd=4&ved=0CDcQFjAD&url=http%3A%2F %2Fwww.uwo.ca%2Fresearch%2F_docs%2Fresources 128 Jameson Berkow, “Ottawa gives $2M to Ontario %2FORF- angels”, The Financial Post (Online: November 29, RE%2520SSAH%2520Road%2520Show%2520Present 2011). Available: ation.ppt&ei=vO0oUv_6KOqe2QWBnYDYAg&usg=AF http://business.financialpost.com/2011/11/29/ottaw QjCNGBEtYpffDZ47xxxpZjM_R1LBWSGg&sig2=Du06sL a-gives-2m-to-ontario-angels/?__lsa=6c87-e6b0 NpunHDL4UHwi86lA&bvm=bv.51773540,d.b2I [August, 2013]. [August, 2013].

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Summary of evaluation Table 8. Project scorecard results A high quality of life Customer • Local firms are chartering buses to bring employees from Toronto service/market • 30,000 local tech workers with 34% commuting readiness • 32,000 daily trips each way between Waterloo Region and Guelph • Initial inbound ridership estimated at 1,271 Regional • Connects to Guelph Central Station and Waterloo Region’s multi-modal hub, connectivity which integrates with ION Light Rail Transit • 11 million sq.ft. of potential residential growth in transit station areas Building • Land is underutilized: parking lots, low-density, single storey buildings communities • $4 billion construction potential in urban growth centres/transit station areas Social need • Provides affordable transit service to 72,000 post-secondary students • Connects to hub of government, social and health services • Supports residential intensification and a vibrant, livable urban cores • Offers commuters housing flexibility, helping new Canadians in particular Benefit-cost ratio • Time savings estimate: $16–$124 million/year • Average accident cost: $2–$18 million/year • Savings from auto operating costs: $17–$128 million/year

• Cost of CO2 emissions: $330,000–$2.5 million/year • Total cost savings: $272 million/per year with medium growth. A thriving, sustainable and protected environment Transit ridership • Burnside report projected between 9,000 and 16,000 riders by 2031 growth • Ridership can increase sooner: tech adds transit-oriented workers • Low growth: 5,031, medium growth: 9,588, high growth: 22,601 Greenhouse gas • Estimated to save 58 million metric tonnes emissions reduction A strong, prosperous and competitive economy Economic impacts • Improved competitiveness through access to a larger labour market • Intensification generates social capital to support innovation • New jobs generate $2.5 billion in annual income and $837 million in annual personal income tax Capital cost per • Estimated to range between $41,000 and $312,000 rider Operating • Initial ridership fares of $5.25 million with net operating costs of $750,000 revenue/cost ratio • Ridership could quadruple with low-growth scenario, increasing fare revenue Strategic fit Funding • $396 million cost is less than 401 expansion; Milton alone is over $500 million • Cost sharing among GO, VIA and CN may be possible Project readiness • Outbound service commenced in 2011 which established station stops • Guelph Central Station and multi-modal hub integrate rail with local transit GTHA network • $1.2 billion is already invested in the Georgetown South Project advancement • Extending service leverages this investments so the province gains full economic benefit Leverages other • Leverages Places to Grow and local policies: official plans, growth management initiatives strategies, transportation demand management • Aligns with government investments in innovation including $1 billion FedDev program, and the Ontario Research Fund

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Section 6: Recommendations and conclusion

A strategic investment opportunity for two-way GO Train service

The business case for two-way urban commuter rail

Recommendation growing total revenue and gas revenue, Ontario is being outspent on transit per The Province of Ontario and the capita by every province. There is now a Government of Canada must establish a 10- spending gap between Ontario and some of year capital allocation for rail infrastructure its peer provinces, which threatens to support full-day, two-way GO Train Ontario’s future prosperity, and therefore service on the Kitchener Line (CN North creates a need for dedicated transit funding Mainline) in the 2014 provincial and federal in the province.130 capital budgets. This enhanced intercity transit service would connect Union Station, This report demonstrates the economic Pearson Airport, with Brampton, downtown benefits for investments in transportation Guelph, Kitchener’s Innovation District, and infrastructure — benefits that will translate growth areas along Waterloo Region’s Light into increases in provincial tax revenue, Rail Transit route including the University of more than paying back the cost of Waterloo’s Research + Technology Park, investment. creating a globally competitive technology Two-way GO Train service will leverage the ecosystem with over 12,800 technology significant economic and city-building companies, 2,800 startups, and 205,000 momentum already underway in Waterloo technology employees. Net employment Region and Guelph. The opportunity is growth from this investment is forecast at amplified by the construction of the ION 37,600 jobs, which will generate $838 LRT through Waterloo and Kitchener, and million in personal income tax annually the developing downtown core of Guelph. (2011 dollars). Two-way GO Train service will unlock the This process for launching inbound GO Train potential in these areas and create an even service includes initiating and completing stronger and more connected business necessary planning work as construction community. will require a long planning horizon. This Combined, these areas are targeted for may involve advocating for Metrolinx to redevelopment that will result in over undertake an immediate complete 37,600 new employees and an estimated scorecard evaluation of inbound GO Train 9,588 riders based upon a medium growth service on the Kitchener Line. scenario. At full development, this Finally, to establish a ridership pattern and translates into $2.5 billion in direct wages to address the immediate short-term need for improved transit between downtown 130 Martin Prosperity Institute, “You can’t get there Toronto, Guelph and Waterloo Region, full- from here: Ontario’s Transportation Funding Gap” (Online: August 28, 2013). Available: day GO Bus service is requested. http://martinprosperity.org/2013/08/28/you-cant- get-there-from-here-ontarios-transportation-funding- gap- Conclusion 2/?utm_source=Insight%3A+You+Can%27t+Get+Ther e+from+Here%3A+Ontario%27s+Transportation+Fun A recent transit funding study by the Martin ding+Gap&utm_campaign=Insight-Global- Prosperity Institute indicated that despite Cities&utm_medium=email [September, 2013].

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and $838 million in tax revenue per year, attractive to young people are at a demonstrating a full return on the capital competitive advantage over Silicon Valley, investment of $396 million in less than 10 as San Francisco is not known for its night years, sooner if multiplier employment is life, let alone the smaller places on the way considered. In addition, the costs saved per to San Jose. 131 rider will total $272 million per year. Waterloo Region, Guelph and Toronto can Improvements in transit become a self- together offer an attractive environment perpetuating cycle, accelerating growth for startups – Toronto offers an urban place which spurs ridership increases. The and Waterloo Region and Guelph offer a permanence and profile of rail sends a low-cost highly collaborative startup strong message that the government takes ecosystem. development seriously. New development then in turn creates more demand for As well, younger startup hubs are transit trips, further fueling the success of increasingly attractive to entrepreneurs the initial investment. This growth is seeking something different. Alexander realized from startups and existing Ljung of startup SoundCloud was drawn to companies, as well as an improved capacity Berlin from Stockholm by the German to compete for foreign direct investment capital’s “strong intersection of technology and venture capital. and art” and “creative chaos”. He sees a “sense of reciprocity” among its startups:132 The importance of investing in two-way commuter GO Train service to Waterloo Guelph has become a place where Region is best understood through its technology intersects with various capacity to influence the concentration of disciplines, as demonstrated through startup activity in these cities. The social initiatives such as ‘349’ (an ‘unconference’ dynamics of innovation are heavily and coworking space) and Democamp, influenced by the face-to-face interaction which combines science and art, bringing that is made possible in a pedestrian- artistic influences to its events. In Waterloo friendly high-density district. Region, the Kitchener Studio Project reflects the collaboration between media, By connecting local companies with the technology and design. These initiatives talent to fuel their growth, local startups demonstrate that Waterloo Region and will make a significant impact on the Guelph have that ‘something different’ that economic prosperity of the region and startups seek. province, creating work opportunities in other sectors, and generating new wealth Combined with the research in quantum computing, the area is well-positioned to through innovation. compete with the biggest startup Waterloo Region and Toronto are 131 positioned to compete with some of the The Economist, “The geography of start-ups: something in the air”. best startup ecosystems in the world. The 132 Economist suggests that cities that are more Ibid.

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ecosystems in the world. The opening of Innovation drives the the Mike & Ophelia Lazaridis Quantum- competitiveness of our business Nano Centre featured legendary physicist sector; generates the income that Stephen Hawking, who proclaimed that sustains our standard of living; “this place is special”.133 alter[s] the way we interact with each other and the natural world; The Globe and Mail long ago recognized the and solves (and sometimes unique collaborative environment and creates) the technical and social entrepreneurial spirit, describing the region problems we face. By corollary, it is as “a cultural and economic model that also well established that when provides a beacon …it's the blueprint for innovation is non-existent or how other communities can become lagging, industries and jurisdictions economic warriors in the global battle for stagnate or fall behind in economic jobs and growth. It holds the key for 135 progress and prosperity. ] Canada's economic survival and perhaps dominance”.134 It is important to distinguish between investments in economic growth and These benefits do not just affect the economic development. According to Ikeda, immediate station area at the end of the economic growth refers to rail line in Downtown Kitchener’s producing/consuming “more of the same,” Innovation District, but rather the entire while economic development refers to region, the communities along the producing “more different (and better) Kitchener line, the Toronto startup things.” Ikeda argues that of the two ecosystem, and the provincial economy. concepts, development has the more It is innovation that drives economic profound impact on the human condition prosperity and strategic investments in since “doing things differently” entails innovation cluster will alter the change. The focus of economic competitiveness of the provincial economy. development is on the causes and In the words of the Canadian Council of conditions that promote or retard change 136 Academies, for the better. Clearly, an investment in two-way GO Train service can positively influence change, profoundly affecting the prosperity of the regions along its path, and the province itself.

133 Knowlton Thomas, “Introducing Quantum Valley, 135 Canada’s first real answer to Silicon Valley”, Techvibes Council of Canadian Academies, “Innovation (Online: September 24, 2012). Available: Impacts: Measurement and Assessment. The Expert http://www.techvibes.com/blog/introducing- Panel on the Socioeconomic Impacts of Innovation quantum-valley-canadas-first-real-answer-to-silicon- valley-2012-09-24 [November, 2013]. Investments”, p. 2.

134 Tara Vinodrai, “Battling ‘Waterloo’: Talent, quality 136 Ikeda, “Economic Development from a Jacobsian of place and the 10-minute city” Perspective”.

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Appendices .

The business case for two-way urban commuter rail

Appendix A. GO Transit system map

Source: www.gotransit.ca

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Appendix B. GO Transit Kitchener Line

Source: www.gotransit.ca

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Appendix C. Ridership estimates The initial ridership estimate from the 2012 Burnside Business Case is 1,271, but this estimate is based on low modal shares and does not reflect the addition of transit-oriented riders in the immediate station area of Kitchener’s Innovation District, as well as in Waterloo and Guelph. It is used as an ‘initial’ scenario to provide a conservative estimate of usage in the early days of service. Several other ridership scenarios have been constructed, as follows:

1. Employment growth potential is 37,600. 2. The estimates in the Burnside Business Case are based on 30,889 trips into Waterloo Region. While 11,600 of these trips originate in close proximity to the 401, the modal shares already reflect the preference of some individuals to commute using a personal vehicle.

Ridership Ridership Assumptions Calculation scenario estimate Based on 2012 N/A Initial scenario 1,271 Burnside Business Case 1,271 baseline The Burnside Case uses 10% market + penetration for work based travel 10% of estimated for riders in close proximity to the Low growth employment growth station. Since the Innovation 5,031 scenario District workforce is already transit- oriented, they will either live in close proximity to the line, or adjust their behaviour more quickly. Modified baseline of U.S. modal share is 17% for 4,324 (14% of trips commuter rail. Comparable data estimated by are not available for Canada. But Medium growth Burnside) Ottawa has 14% adoption of 9,588 scenario + commuter transit which is a 14% of estimated reasonable market to model, based employment growth on the high concentration of tech workers in the city. Modified baseline of Silicon Valley has approximately 10,193 (33% of trips 33% market penetration of estimate by commuter rail. This is a fully mature High growth 22,610 Burnside) market with a significant scenario + concentration of tech workers, so 33% of estimated this scenario could require more employment growth time to come to fruition.

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Appendix D. Cost savings calculations Calculation of cost savings are based on the Metrolinx GO Rail Options Benefits Case Analysis, Appendix 2. Other assumptions are based on the Burnside Business Case.

Value of time saved per hour: $35.16 Auto operating costs per kilometre drive: $0.51 CO2 per km driven: $0.01 Cost of accidents per kilometre driven: $0.07 Average trip length per rider: 53 kilometres Average trip time: 0.75 of an hour Work year 49 weeks, with five-day weeks Emissions saved per rider: 0.23 CO2 kilograms per kilometre Capital cost of investment: $396,000,000 Ridership is based on Appendix C.

Riders 1,271 5,031 9,588 22,601 Value of time $16,422,972 $65,007,060 $123,895,368 $292,039,082 Cost of accidents $2,325,083 $9,203,376 $17,540,489 $41,345,440 Vehicle operating costs $16,939,888 $67,053,168 $127,794,995 $301,231,059

CO2 emissions $332,155 $1,314,768 $2,505,784 $5,906,491 Total user benefits $36,020,098 $142,578,372 $271,736,637 $640,522,072

Emissions saved per year 1,271 7,639,557 5,031 30,239,664 9,588 57,633,037 22,601 135,849,301

Capital cost per rider 1,271 $311,566 5,031 $78,712 9,588 $41,300 22,601 $17,521

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Appendix E. Development potential in station area

Area Residential Existing projects (sq.ft.) Land use Employees units 1. Health Science Campus 200,000 Institutional 1,000* 2. Kaufman Lofts 270,000 Residential 270 3. 72 Victoria St S 85,610 Office 300 4. The Tannery 350,000 Office/Retail 1,700 Total 905,610 3,000 270 Future projects 5. Breithaupt Block 175,000 Office 875 6. The Tannery Block B 300,000 Res/Retail 300 7. Health Science Campus 500,000 Office/Inst 2,500 8. Bramm Research Park 700,000 Office 3,500 9. Vic-Charles-Francis-King 500,000 Office/Retail 2,500 10. Manulife Parking Lot 320,000 Office 1,600 11. Francis Charles Water 240,000 Residential 120 Hall’s Lane 12. 319-345 King St W 80,000 Retail/Res 80 13. Breithaupt Block Ph2 300,000 Residential 300 14. Wellington King CN 400,000 Office/Res 1,000 200 15. 77 Agnes 400,000 Residential 400 16. Boehmer Box 150,000 Office 750 17. Icon Condominiums 100,000 Res/Retail 100

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18. 152 Shanley St 60,000 Residential 60 19. 44 Gaukel St 300,000 Res/Office 330 250 20. Victoria/Weber St 150,000 Mixed use 750 21. 111 Ahrens St W 132,000 Office 181 22. 81 Moore Ave 30,000 Residential 30 23. Breithaupt/Duke/Weber 170,000 Office 850 24. 150 Breithaupt St 112,000 Office 560 25 City Centre 400,000 Residential 397 Condominiums Total 5,519,000 15,396 2,237

Grand Total 6,424,610 18,396 2,507

* includes student population

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