Chapter 4 Section 4.08 Metrolinx—Regional Transportation Planning Follow-up to VFM Section 3.09, 2012 Annual Report RECOMMENDATION STATUS OVERVIEW # of Status of Actions Recommended Actions Fully In Process of Little or No Will Not Be Recommended Implemented Being Implemented Progress Implemented Recommendation 1 1 1 Recommendation 2 1 1 Recommendation 3 1 1 Recommendation 4 2 2 Recommendation 5 1 1 Recommendation 6 2 2 Recommendation 7 1 1 Recommendation 8 2 2 Recommendation 9 1 1 Recommendation 10 2 2 Recommendation 11 1 1 Total 15 5 9 1 – % 100 33 60 7 – integrated, multi-modal transportation network in Background the Greater Toronto and Hamilton Area (GTHA). In November 2008, Metrolinx formally adopted Chapter 4 • Follow-up Section 4.08 a Regional Transportation Plan (Plan)—also known Metrolinx, an agency of the government of Ontario, as “The Big Move”—that set out the priorities, poli- was created by the Greater Toronto Transportation cies and programs for implementing a transporta- Authority Act, 2006, now the Metrolinx Act, 2006 tion system within the GTHA. The Plan, which was (Act). According to the Act, one of Metrolinx’s key the result of two years of public consultation, was objectives is to provide leadership in the coordina- adopted by Metrolinx’s Board of Directors, which at tion, planning, financing and development of an 495 496 2014 Annual Report of the Office of the Auditor General of Ontario that time included representatives from the GTHA as well as other projects contemplated in years 16 municipalities. through 25. Among the Plan’s more significant proposals was In 2012, our review of the more significant to build more than 1,200 km of rapid transit with the projects in the early stages of the Regional Trans- aim of getting 80% of GTHA residents within 2 km of portation Plan identified a number of issues that rapid transit. The timeline for implementing the Plan Metrolinx had to address. Specifically: was 25 years. Its estimated cost of $50 billion related • We believed that Metrolinx’s initial assump- only to upgrading and expanding the regional trans- tions about projected annual ridership on the portation network in the GTHA, but did not include Union Pearson Express (UPE) may well have the maintenance that was expected to be required to been overly optimistic given the high cost of keep the additional transportation infrastructure in the fare. While a final decision had not been a state of good repair over its useful life. made on whether the UPE was to recover its In the first 15 years of the Plan, Metrolinx annual operating costs and any of its capital planned to implement a number of priority transit construction costs, if operating the UPE on projects, including various light rail and bus rapid a break-even basis was indeed the objective, transit projects in the GTHA, the Air Rail Link from achieving that objective may not be feasible. Toronto Pearson International Airport to Union • A region-wide integrated transit fare system Station in downtown Toronto (now called the was one of the Regional Transportation Union Pearson Express), revitalization of Union Plan’s key strategies. The Presto fare card was Station, and the continued development of the regarded as a key component in implementing Presto electronic fare card system. Its estimate this strategy. Metrolinx’s view was that the of the cost of these projects was approximately Presto fare-card system created the under- $33 billion, of which approximately $3 billion had lying technology platform needed for fare been spent at the time of our 2012 audit. Funding integration. But, at the time of our 2012 audit, for some of these projects was to come primarily the card had not facilitated fare integration from a 2007 provincial commitment of $11.5 bil- within GTHA transit systems because the fare lion, along with previously announced project structures across these systems were them- funding. Other projects—such as the Union Pearson selves not integrated. We noted the following Express (UPE) between Union Station and Toronto additional issues with respect to the Presto Pearson International Airport and projects to fare-card system: revitalize Union Station—were being funded from • When the Presto system was initially the province’s capital budget for GO Transit (the developed, the Toronto Transit Commission commuter rail and bus system serving the GTHA, a (TTC), which had over 80% of the transit division of Metrolinx). At the time it made the 2007 ridership in the GTHA, had not agreed to commitment, the province asked the federal gov- implement Presto on its system. However, ernment to contribute $6 billion toward the Plan’s at the time of our 2012 audit, the TTC, Chapter 4 • Follow-up Section 4.08 implementation. At the time of our 2012 audit, the along with the city of Ottawa, had con- federal government had committed $1.93 billion on ditionally approved Presto’s adoption a project-by-project basis. This combined funding subject to the satisfactory resolution of was expected to sustain the Plan’s implementation some key issues. To meet the require- until about 2018. By 2013, Metrolinx was to provide ments of Toronto and Ottawa, Presto Next the province with recommendations for funding the Generation (PNG), was being developed at implementation of the remaining unfunded pro- an anticipated cost of $498 million. In total, jects contemplated under the Plan’s first 15 years more than $700 million could be paid to Metrolinx—Regional Transportation Planning 497 the contractor for developing the original the cost of replacing the switches in the Union Presto system and PNG, which would place Station Rail Corridor could be more than Presto among the more expensive fare-card twice the amount of the original purchase systems in the world. order, which totaled about $38 million. • Rather than competitively tendering the Although those GTHA municipalities and tran- procurement of the development of the sit agencies we talked to questioned the priority Presto Next Generation system, Metrolinx given to some of the projects within the Regional decided to develop it by way of open-ended Transportation Plan, they generally supported the change orders under the existing vendor’s Plan. However, some GTHA municipalities indi- contract. We believed tendering would cated that Metrolinx needed to provide more regu- have, at the very least, informed Metrolinx lar updates on the major projects in the Regional of potential new developers and whether Transportation Plan and on the Plan’s overall other vendors might have had more cost- status, including the strategies being considered to effective technology solutions. fund the as-yet unfunded projects in the Plan. • Since going into service approximately two years earlier, Presto’s overall usage within participating GTHA transit systems was only about 18% at the time of our 2012 Status of Actions Taken on audit. Although seven of the eight muni- Recommendations cipal transit agencies in the 905 area code had implemented Presto, overall Presto Metrolinx provided us with information in the usage on those systems was even lower, at spring and summer of 2014 on the current status only 6%. These transit agencies could not of our recommendations. According to this infor- completely eliminate their old fare systems mation, a third of the recommendations in our in favour of Presto because of some of the 2012 Annual Report have been implemented. For fare card’s limitations. example, Metrolinx, after consulting with stakehold- • The contract for the Presto base system con- ers, had provided the Ministry of Transportation tained 22 measures designed to gauge the with an investment strategy to fund projects within contractor’s performance in such areas as the Regional Transportation Plan. The agency had system availability and customer manage- also put measures in place to regularly report on ment. In 2011, the contractor failed to meet project costs and their progress towards completion. the set standard in nearly a third of the Our other recommendations are requiring more measures, but Metrolinx did not seek any of time to be fully addressed, such as defining the the related penalties stipulated in the con- business model under which the Union Pearson tract. The contract also contained reliability Express will operate to ensure that it will be a measures for the devices used by the Presto viable and sustainable operation. In conjunction base system, but neither the contractor nor with the provincial government and transit provid- Chapter 4 • Follow-up Section 4.08 Metrolinx tracked this information. ers, Metrolinx still needs to develop a strategy for • The two major projects related to the revital- implementing better fare integration among GTHA ization of Union Station had experienced transit systems. significant cost increases over their initial cost The status of the actions taken on each recom- estimates. For instance, the cost of restoring mendation is described in the following sections. the train shed could reach $270 million—25% over Metrolinx’s initial estimate. Similarly, 498 2014 Annual Report of the Office of the Auditor General of Ontario Union Pearson Express (Formerly cost of $22.50 or more. As would be expected, called the Air Rail Link) the percentages that would not use the Union Pearson Express increased as the proposed Cost Recovery price increased. Recommendation 1 This prompted us to recommend that Metrolinx Metrolinx should work with the Ministry of should work with the Ministry of Transportation to Transportation to clearly define the business model clearly define the business model under which the under which the Air Rail Link (ARL) should operate Union Pearson Express should operate and periodic- to ensure that the ARL will be a viable and sustainable ally update its projected ridership at various pos- operation.