Wednesday, April 2, 2014

Fact #5: Rob Ford promised $1B in private subway financing and raised $0

Really?

It’s true. In Rob Ford’s unfortunately titled “A Transportation Plan that makes sense for Toronto” , Rob promised that by 2015 he would pay for a Sheppard subway and Danforth subway extension using a mix of public and private funds:


"This Transportation Plan will cost $4.7 Billion over five years
The Province of Ontario has already committed $3.7 Billion to fund Phase I of Transit City. We will work with the province to re-allocate this funding to our Subway Plan. The remaining $1 Billion will be raised through private financing.

Partnering with the Private Sector
Subways bring new development and increase property values. We will work cooperatively with the private sector to sell development rights along our new subway corridors, raising at least $1 Billion in new development-related revenue. This money will be allocated on a priority-first basis as follows: $300 Million to complete the Sheppard Line Stations and $700 Million to fund the Roads Plan." (2010 Transit Plan p.6) 

After his election Rob tried selling the idea to developers but didn't get any interest. Rob’s Scarborough subway extension  is now being funded entirely with your tax dollars.

Why should I care?

Rob loves to say that he brings a businessman’s touch to city hall. This would be great – if it were even remotely true. Rob’s business experience is limited to some largely symbolic roles his family business, where the overriding concern was to keep him away from sharp objects until his family sent him off to a taxpayer-funded daycare program on Queen St. W.

Rob’s plan to cross the city with subway tunnels was a perfect chance to prove his business acumen, and he fumbled badly. Private subway financing (where companies provide the cash to build up front in exchange for a for-profit long-term operating contract) works where ridership will cover costs (Rob’s Sheppard plan wouldn’t) and where there is sufficient density above-ground to build offices and stores above subway stations (which Scarborough isn’t). Not surprisingly, what works in Hong Kong doesn’t always work east of the DVP. Done poorly, these partnerships end up like the 407, where taxpayers cover the cost and a private company gets to make all the money.

After he was elected Rob made a few half-hearted attempts to get investors on board, but was crippled by a lack of formal business training, experience with public-private financing and any understanding of how private organizations balance risk and opportunity.

Having made a campaign promise to drum up $1B in private financing during his first term, Rob now has six months to come up with the remaining $1B.

How do I know you’re not lying?

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