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Algoma Central Railway Passenger Rail Service

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Algoma Central Railway Passenger Rail Service Algoma Central Railway Passenger Rail Service ECONOMIC IMPACT ASSESSMENT May 30, 2014 To: Algoma Central Railway (ACR) Passenger Service Working Group c/o Sault Ste. Marie Economic Development Corporation 99 Foster Drive – Level Three Sault Ste. Marie, ON P6A 5X6 From: BDO Canada LLP 747 Queen Street East Sault Ste. Marie, ON P6A 5N7 TABLE OF CONTENTS TABLE OF CONTENTS ............................................................................. I EXECUTIVE SUMMARY ............................................................................ 1 Introduction .............................................................................................. 1 Background ............................................................................................... 2 Purpose of the Report .................................................................................. 2 Revenue and Ridership ................................................................................ 2 Stakeholders ............................................................................................. 3 Socio-Economic Impact ................................................................................ 3 Economic Impact ........................................................................................... 4 Social Impact ............................................................................................... 5 Conclusion ................................................................................................ 6 INTRODUCTION ................................................................................... 8 Background ............................................................................................... 8 ACR Passenger Rail Ridership and Revenues ........................................................... 8 Current Situation ........................................................................................ 9 Stakeholders ........................................................................................... 10 Working Group ......................................................................................... 11 History ................................................................................................... 12 SCOPE AND METHODOLOGY .................................................................... 13 Scope of Review ....................................................................................... 13 Information and Data .................................................................................... 13 Stakeholder Survey ...................................................................................... 14 Methodology ............................................................................................ 14 ASSUMPTIONS/QUALIFICATIONS ................................................................ 15 ECONOMIC IMPACT ............................................................................. 15 General Assumptions – Economic Impact ......................................................... 16 Direct Impact .......................................................................................... 17 ACR Rail Line Operations ............................................................................... 17 Indirect Impact ........................................................................................ 18 Railway Passenger ....................................................................................... 18 Tourism Passenger ....................................................................................... 19 Outdoor Sport or Recreation Passenger (OSoR) ..................................................... 19 Lodge Passenger .......................................................................................... 20 Private Cottages .......................................................................................... 23 Indirect Impact Summary ............................................................................... 24 Induced Impact ........................................................................................ 24 Total Economic Impact ............................................................................... 26 Other Considerations ................................................................................. 26 SOCIAL IMPACT ................................................................................ 27 Tourism ................................................................................................. 27 Communities ........................................................................................... 28 First Nations ............................................................................................ 28 Employment ............................................................................................ 28 Road and Land Access ................................................................................ 29 Road Access ............................................................................................... 29 Future Impacts ........................................................................................ 30 Page | i PROGRAM COMMITMENTS TO PROVIDE SERVICES AND CONSULTATION .......................... 30 Algoma Central Railway .............................................................................. 31 VIA Rail Subsidy ........................................................................................ 31 Tshiuetin Rail Transportation (TRT) ............................................................... 31 Keewatin Railway Company (KRC) ................................................................. 31 Stakeholder Position on Remote Community Policy/Definition ............................. 32 SUMMARY OF FINDINGS ........................................................................ 33 General .................................................................................................. 33 Economic ................................................................................................ 33 Social .................................................................................................... 34 Conclusion .............................................................................................. 36 POST STUDY NEXT STEPS ...................................................................... 36 APPENDIX A – ACR RAIL LINE ROADS, TRAILS AND WATER CROSSINGS APPENDIX B – STAKEHOLDERS APPENDIX C – REVIEW DOCUMENTS APPENDIX D – STAKEHOLDER SURVEY APPENDIX E - LETTER FROM PRENTISS AND CARLISLE APPENDIX F - LETTER FROM CHIEF KEETER CORSTON APPENDIX G – ECONOMIC IMPACT TABLES APPENDIX H – GROUP OF SEVEN/GLENN GOULD TRAIN EVENT APPENDIX I – STAKEHOLDER SUGGESTIONS Page | ii Note to the Reader: This analysis, conducted by BDO Canada LLP, Chartered Accountants and Advisors, is considered preliminary in nature and provides a preliminary assessment of the economic (quantitative) and social (qualitative) impacts associated with the ACR passenger rail service. The purpose of this assessment is to compile available information and survey data to quickly respond to Transport Canada’s (TC) termination of financial assistance and help enable affected stakeholders to make the case for and obtain a one year extension of federal support for the ACR passenger service. This extension is intended to allow stakeholders to undertake a more comprehensive assessment of ACR/CN operations and service, its impacts on the region’s economy and identify opportunities for a more sustainable freight and passenger services as well as tourism development opportunities. Much of the information is excerpted from previous reports and studies recognized in the scope of review. In support of the work undertaken by BDO, the Sault Ste. Marie Economic Development Corporation undertook a survey of stakeholders (Appendix D). BDO did not independently verify the information, data or survey nor were they responsible for its design or distribution. During the next year, a comprehensive socio-economic impact assessment is required to determine the impacts/benefits of having the ACR passenger service operational for the foreseeable future. Page | iii EXECUTIVE SUMMARY Introduction In January 2014, CN announced it was terminating the passenger service from Sault Ste. Marie to Hearst as a result of the Transport Canada (TC) decision that the ACR Passenger Rail Service no longer met the criteria to qualify for their Remote Passenger Rail Program (RPRP) and therefore, program funding was to be ceased effective March 31, 2014. Although this announcement came in January of 2014, the decision was made on November 18, 2013, which represents the date, on which CN (owners of the ACR) were advised of the RPRP program change by TC. CN concluded that it would be unable to continue passenger service operation without incurring an additional $2.2 million loss and would therefore terminate the service. Note: CN/ACR originally planned to cease passenger rail service to coincide with the termination of the subsidy, but subsequently extended the scheduled service end date to April 30, 2014. The timeframe between the decision, announcement and cancellation is a matter of months and has left stakeholders; especially, those that use the passenger service to transport guests/clients to their remote operations and goods and materials to their facilities, searching for answers as to what to tell customers and how will they sustain their livelihood
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