Archive for August 2012
I was going to put EXCLUSIVE in large capitals in the title – but I have no reason to want to claim this information as my own. It is, after all, public domain or ought to be.
Last week, when I attended the SFU evening lecture (“Kiwi Urbanism”) I talked to Bob Paddon who is now Executive Vice President, Strategic Planning & Public Affairs at Translink. He was there to do a brief introduction, as Translink had made the contribution that made the evening possible. I started making notes as he spoke to me before the proceedings started. The discussion was prompted by me asking if the Evergreen Line funding was indeed “locked in” as the province has been saying. He assured me that it was, but then he went on to say that Translink is noticing an increasing gap in its revenue expectations. There has been quite a lot of information recently about how people are driving less in general. Much of the supporting information that I have seen has come from US sources – where the economy is taking much longer to recover from the recession and unemployment remains stubbornly high. While Canada has been somewhat better off, people are getting increasingly anxious as their disposable income has been static or declining. Gas prices in Vancouver have been a very high levels – although much of the local impact was attributed to a fire at the Cherry Point refinery and that capacity has since been restored. Not only are people driving less, but they have been getting more fuel efficient vehicles. To some extent, the reduction in driving can also be attributed to the opening of the Canada Line. I would like to be able to point to other major transit service improvements: apparently ridership is at least holding up under the present circumstances.
Bob later sent me a presentation, that examines the data on fuel sales that Translink has been looking at. He said that he would also provide me with a contact in the planning department with whom I could discuss this document, but so far I have not been able to have that discussion. Since a week has passed since I heard about this issue, I have decided to publish anyway, and stick to my own interpretation of what is a somewhat complex issue.
First, some context. In very rough order of magnitude Translink gets about half its revenue from taxes – and about half of that has been coming from fuel tax. The last Annual Report put it this way
Fifteen cents per litre fuel tax is applied to gasoline and diesel fuel sales in the transportation service region, with gasoline sales being 83 per cent of total revenue. Revenues are $12.5 million (3.9 per cent) unfavourable to budget. Total sales volumes in TransLink’s region have declined from the previous year by 5.3 per cent.
Over the last year the monthly revenue received from the Province has shown significant volatility. As a result of the carbon tax legislation changes made in 2009, the taxation process for fuel tax revenue has changed, which makes it difficult to forecast and compare trends. Another significant challenge of the revised process is the timing and magnitude of credits/refunds, which could go back four years. Discussions are underway with Consumer Taxation to examine the revenue capture and reporting systems. Further analysis will continue in 2012.
TransLink region experienced a decrease of 5.9 percent in 2011 fuel sales volume. High prices of fuel and a strong Canadian dollar would have contributed to the decline in fuel sales volume, which likely migrated to Fraser Valley Regional District and Whatcom County.
You can easily check yourself what gas prices are like by going to Gasbuddy.com. That is where I got the following information – and of course the volatility of gas prices means that the actual amounts will be changing continually, but this morning while gas prices in Vancouver were around $1.27 per litre, in Abbotsford they were $1.25. Since gasoline there does not carry the 15c/l that it does in Vancouver, you can see that some retailers are doing very well. Just over the border the average price (converted to litres, and assuming the dollar is at par) is $1.05. Bellingham is slightly lower at $1.0435 and Point Roberts (just one report and a bit out of date) was at $1.1492.
There have been reports recently of increased border crossings due to new higher duty free allowances – but that of course applies to overnight and longer trips. A savings of 20c per litre is obviously attractive, and people with high consumption vehicles are finding it worthwhile to buy large gerry cans to fill up at the same time as they fill their tanks. (The story about someone filling up garbage bags with gasoline turns out to have been a misunderstanding).
The following graph is one I concocted from the 2011 Translink Annual Report
This is perhaps not very beautiful as a graphic, but then it is the first time I have had to do anything like this for a number of years. It does show that Translink did get additional revenue as a result of the increase in gas tax, but as a share of the total, gas tax has been declining. From around 30% in 2007 to 26% last year.
The information in presentation that Bob sent me attempts to understand this and project its impact forwards. You can download the whole thing (TL Fuel Research – Rev Mgmt Comm – July 31) if you wish. I am just cutting and pasting the graphics
This shows that while there has always been volatility in reported sales volumes this became much more pronounced when reporting requirements changed due to the introduction of the carbon tax.
This graph shows gasoline sales only (not diesel) and also indicates an increasing divergence between Ministry data and that of the industry (Kent is a consulting company that collects fuel sales data).
This year fuel sales have been declining generally
The “leakage” trend is not as clear – but note that there is no data for the cross border shoppers
Declining demand may be more prevalent this year (note that the data now refers to absolute volumes, not percentages as above)
The really big change is the decline in diesel sales
The presentation can only speculate about why this might have occurred.
- Reduction in trucking activity in Metro Vancouver?
- Purchases in the Fraser Valley?
- Fuel switch in heavy-duty vehicles?
For example, garbage trucks in Vancouver have recently been converted to use natural gas instead of diesel.
There will continue to be research into these trends. The last slide of the presentation shows the intended structure of the work
The problem, of course, is that extrapolating from previous trends is a bit like steering a ship by studying its wake. There is nothing in the presentation about mode share – nor does that appear in the annual report. The broader transportation survey that might help address that issue only happens once every five years, and of course the census data on journey to work – which was one of the few very good indicators – is no longer collected with the scrapping of the long form.
There is something happening here. People are not driving as much – some of that is due to better trip chaining, switching to walking and cycling, use of new media (no one goes to the video store any more now that they can download movies, most banking is done on line too). One of the drivers is not just that gas prices climbed but the expectation is that they are not going to get any cheaper. Cutting spending at the pump is one of the few areas where individuals can actually influence the outcome of their own personal budgeting. The decline in gas sales has been going on for a long time, as the reduction in the number of gas stations makes apparent. The decision to implement tougher corporate average fuel economy standards for vehicles also means that recent technological improvements have been directed more at fuel efficiency than performance.
There always has been some “leakage” across the border – and out into the valley. But the Gasbuddy information seems to support my own view that much of the difference between gas pricing on ether side of the Langley/Abbotsford line has been swallowed up by the gas companies. The decision to go to the US means that people are planning ahead to make a trip just to get gas and put up with sometimes long waits – and much engine idling. Clearly those who are going down are not just buying milk. I can clearly recall warnings that we used to issue when discussing the potential for greater gas revenue, that the wider the gap between gas prices in South Surrey and Blaine, the greater the revenue loss would be. Of course we had no real data then either – just lots of anecdotal “evidence”.
What Bob Paddon was saying to me last week was that this needs to be incorporated in future assessments of Translink’s finances: they are currently off $30m a year in their fuel revenue expectations. Which in a $1.2bn budget is not a disaster, but obviously has to be replaced somehow. In general the organization has done all it can to find efficiencies – as demanded by the Province and the Transit Commissioner – but as this trend seems likely to continue, future cuts will have to come at the expense of service, as there are no longer the opportunities for savings that have already been achieved.
Gavin Lister and David Irwin spoke at SFU on August 16, describing two projects their design company Isthmus is currently working on. The first is Hobsonville Point a former NZ Defence Force airbase which is now being redeveloped as a mainly residential suburban area. They showed a video which I have been able to embed.
The other is an urban redevelopment in Auckland called Vinegar Lane which uses the site of a former vinegar factory for mixed use. Both projects are aimed at increasing density, affordability and sustainability. The both “reinterpret our history”.
As part of Isthmus’ ongoing research and development we have been looking to overseas locales for a range of inspiration and direction. Increasingly we see Vancouver as a benchmark in many areas related to urban design and transportation. Isthmus directors David Irwin and Gavin Lister are currently in Vancouver meeting with built environment professionals. Much of their study trip is focused on exploring urban intensification typologies and strategies that Vancouverites call “gentle density”.
The company is a design practice that incorporates landscape architecture with design/build projects.
Auckland is located on a narrow isthmus, with ocean on both sides, and is a field of volcanos (extinct or dormant) that were terraced by the Maoris as fortifications. This legacy of land forms, with a heavily indented coast line - “the wild west coast” which was largely ignored by earlier development – presents both challenge and opportunity.
Auckland and Vancouver share a common heritage of being part of the British Empire. There was a regular steamer service connecting the two ports as travel between New Zealand and England was quicker across the Pacific, then overland through Canada than the other way around the world. Like Vancouver it was a streetcar city, through the grid follows the topography more closely. Much of the city has linear density focussed on the arterial roads. Auckland embraced the idea of becoming a motorway city in the 1950s with a connecting series of towns, [formerly linked by railway]. In recent years houses have got bigger, lots smaller and construction cheaper: they share the common experience of leaky homes.
Indicator Auckland Vancouver
Population 1.4m 2.3m
Density 2,900/km² 5,250/km²
Annual Income per cap $56k $82k
GDP $66bn $81bn
Auckland has to increase its density to remain within its current urban boundary but also to improve affordability. In recent years 20 local councils have been amalgamated into a single authority.
New Zealand has been the country of a suburban paradise. There are now only three large scale integrated developer/builder companies. There many small builders, but no “giant building machine” to deliver the large number of homes that will be required to meet expected rapid growth in the next forty years. There is “fantastic architecture” based on wooden frame “NZ vernacular”.
Hobsonville Point is a site of 160ha where 3,000 homes will be constructed at much greater density than has been common. It is 15km from Aukland with access by motorway. As part of the development a new fast ferry service is to be introduced with a competitive 20 minute journey time to downtown. The site was a former airbase and some of the “heritage” buildings are to be preserved. The overall density will be 25 dwellings per hectare but the objective in the longer term is to go to 40. The site has a spine road (Ponsonby) that was a streetcar route with townhouses and apartments. The coastal edge will feature a walk/bike trail and be a green edge to each precinct. There will be a heritage element to the architecture and a Marine Industries Precinct [in the former hangars]. Already demand for the houses is exceeding expectations as people are attracted by the farmer’s market and amenities such as public art and playgrounds.
While this form of suburban development is working well and selling in future over 60% of “new product” has to be within the growth boundary. This requires a different approach. Single family homes on the fee simple suburban model can get finance from the banks up to 90% of the price. Strata “urban title” can only get 60% finance. The remit then is to develop attractive fee simple urban development with 100% site coverage. There is an available model for such development Borneo Sporenburg in the Netherlands.
A former vinegar factory in Auckland was demolished, in preparation for redevelopment as a mall with four levels of underground parking. The developer went bust in 2008 leaving a huge hole to be filled. Isthmus is proposing to build a new subdivision based on fee simple ownership and 100% lot coverage. The edges of the site will have commercial development with a new 12m lane (“Vinegar Lane”) to provide access to the interior residential lots. These will vary in size and individual owners will have the ability to construct what they want with the design parameters of lot coverage and height. Current permitting is based on FAR2 but they intend to ask for FAR4. A lot of mixed use is expected with a wide range of potential outcomes. This presents a challenge for the conventional planning, as usually permits are not issued until a complete design is presented. There were many possible plans and layouts shown. [Unfortunately none of these appear to be available on line.]
Q & A
I asked for more detail about transportation. There is no streetcar or light rail – actual or proposed – for either site. The Auckland Rail Loop is a heavy rail electric train service now being advanced [but does not appear to touch either]. Hobsonville will allow for a 5minute walk to the ferry or a “high quality” motorway bus service. There are established ferry services already with feeder bus in other suburbs so the “ferry tradition” is well understood. It is expected to be a fast catamaran [no vehicles].
Private open space in the Vinegar Lane development will be within the buildings. While there is no requirement for green buildings, all the ideas discussed so far included roof gardens, but there could be green roofs or green facades – so far there are “no real clients” (individual home owners). There is no social housing component in either project.
“We are taking twenty lessons from Vancouver, this is just one that might work for you. We had a an issue of a four storey hole in the ground, and thought the answer we came up with was interesting.”
“Vancouver has embraced change” the approach to increasing density is varied and it is not all about shiny thin towers – there is “streetcar [city] stuff. They spoke about build quality and the distinct look architecturally but “where is the contemporary twist? They are all 1920′s using cheaper materials” like plastic siding ”it’s fake!”
They were intrigued by the idea that the path to affordability lay through mortgage helpers – laneway houses and secondary suites to rent out. The gentle density had achieved 10 homes on sites that used to accommodate three – that’s a good lift.
They were impressed by homes where there was private open space on top of the garage with three levels above. This also provides security over the back lane which has become the front entrance for some homes.
Frank Ducote spoke about the contract between the planning process in NZ and Canada quoting Ray Spaxman, twenty years ago, asking NZ planners “Aren’t you proud of your developers?” He detected that there was still apparently some adversial attitudes, unlike the cooperative approach here. This was acknowledged “twenty years ago there was some shocking stuff done – but a new design led team at the new unitary authority indicated a change in attitude at City Hall. However while policy planners may be sympathetic “permitting planners” (the people who have to give consent to the detailed plans) are a different matter.
Asked about the impact of the Christchurch earthquake, they said that ground conditions in Auckland were different. However a review of codes and public building stability is ongoing as Wellington seems especially vulnerable. The Christchurch City Blueprint is now available, but for many home owners the pressing needs are for insurable shelter – homes that can be built quickly.
CORRECTED 16 August – my math was at fault
TransLink’s $171-million program to install faregates at SkyTrain stations and the SeaBus in Metro Vancouver isn’t expected to reduce policing costs
So then all the expected savings have to come from collecting more fare revenue. One way you can tell when somebody’s lying is that they do not answer the question directly but point to some other true statement that makes them look better. So when you look at Translink’s performance recently on fare gates, you have to take into account how often the new smart card gets brought into the discussion. Smart cards could have been introduced at any time, once the new machine readable tickets were introduced. It is just matter of plug in modules for ticket vending machines (TVMs) on buses and stations, and they were designed that way. Similarly the payback calculations treat contributions from provincial and federal governments as cost reductions – which from a narrow, institutional perspective (commonly accepted standards of bookkeeping) might be acceptable but for public sector accounting is simply a fudge.
The province provided $40 million and the federal government contributed $30 million from the Building Canada Fund. TransLink will fund the additional $100 million.
So we ought to be looking at the payback on $170m not $100m. But we also need to discount the effect of the introduction of the long overdue new regulations that put fine collection revenue into Translink (not the province) but also give them powers to collect those fines. When it comes to people saying how much fare evasion has been reduced the period between now and the new gates going live will be the critical one to assess the effectiveness of these measures. Note that the possession of a driver’s licence is important to make these rules work. What happens when someone has no license is less clear. So far as I am aware, we are still in this country not required by law to carry an identification document with a valid mailing address. This seems to me to be a critical weakness of the collection of fine revenue.
Transit police Chief Neil Dubord said some 60,000 violation tickets were issued last year, and similar numbers are expected for 2012. In 2011, TransLink lost $14.5 million in revenue, which is a combination of people not paying or paying only a partial fare and travelling into extra zones.
Of that figure, $7.7 million in fare evasion occurred on rapid transit, with $6.2 million on buses. So far in 2012, TransLink has lost $6 million in revenue.
These figures are very different from those that Frank Luba was quoting yesterday from earlier Translink reports.
TransLink did audits in 2004 and 2008 that showed annual losses to fare evasion on the rapid transit system were between $5 million and $9 million. But another TransLink report from 2005 showed that yearly operations and installation costs for the system amortized over 20 years would be $30 million annually.
Now $14.5m is a lot more than $5m but then fares have gone up a lot since 2004. Fare revenues last year were $356.6m (Translink 2011 Annual Report) so the evasion rate is still around 4%. Actually, the evasion rate is probably higher than that, simply because this only counts those who were caught, and accepts what they said about their journey as truthful. There will be some people travelling on tickets they were not entitled to (concessions and passes) and others making longer journeys but only buying a single zone. If there was much better data on travel that did not depend on ticket purchase data then there might be a better understanding on the extent of evasion, but we have for many years preferred to cut the cost of data collection to the point where I begin to doubt the validity of a lot of what is said about travel here.
There is nothing said about the additional operating costs of moving to a gated rather than an open system. This extends far beyond policing costs, but also requires some insight into how the staffing needs to change to cope with the new system. I would not expect Translink to be forthcoming on these kinds of details (but see that 2005 data Luba quoted) and anyway the use of Compass already makes the situation confusing enough. Let us assume that they are lucky enough to cut evasion in half in the first year of operation and let us further credit all of that to the gates – forget the extra revenue from fines. So now Translink has $7m a year to pay down the $100m it is spending – and again we assume that policing and operating costs are a wash. Which is pretty much what Doug Kelsey was saying yesterday.
Kelsey said TransLink is optimistic the system will “pay for itself,” with savings of $7.1 million every year, starting in 2014.
CORRECTION But the faregates only impact SkyTrain. So if they cut fare evasion there in half, there is only $3.8m in “new” revenue, since evasion on SkyTrain is said to cost $7.7m a year now.
I do not see how this “pays for itself”. I also see no estimate of how much it is going to cost to rebuild Main Street and Metrotown stations to allow for the gates to be installed – all of which I think needs to be charged to the Faregates account since it would not be necessary (however desirable) if the project had not proceeded. I suspect too that the gaping hole on the revenue protection fence that will exist until these two stations are gate fitted, which will also significantly lower the expected savings.
The decision to install faregates was made by Kevin Falcon when he was Minister of Transport. It made no sense then and it makes no better sense now but we are stuck with it. It is also too late now to turn back the clock and unmake it, and the BC Liberals are now so low in the polls that one more scandal can add nothing to the balance. Next year they are gone, and then – hopefully – some more sensible transit (and related) policy making will be seen. Not that that was a feature of previous NDP governments, but we must have hope, mustn’t we?
I have just been sent an invitation by Translink to an event this afternoon
Date: Monday, August 13, 2012
Time: 2:30 p.m.
Place: Marine Drive SkyTrain Station (Canada Line), Westside inbound concourse level
Marine Drive at Cambie Street, Vancouver, BC
What: Wai Young, Member of Parliament for Vancouver South, together with the Honourable Blair Lekstrom, Minister of Transportation and Infrastructure and Member of the Legislative Assembly for Peace River South, and Doug Kelsey, chief operating officer TransLink, will be attending an event to mark the installation of the first faregate at TransLink facilities around Metro Vancouver.
Please note: The faregate will be installed but it won’t be operational until 2013, when all the faregates are installed and ready.
Over the weekend Frank Luba was actually celebrating his (obviously) earlier invite on twitter
So of course I and others had to correct him. Faregates will not end fare evasion – they will just change the way its done. Every system – with or without gates – has fare evaders. The systems that have always had gates since day one also have dedicated teams trying to reduce fare evasion. I have watched their operations in London, Paris, New York – and indeed some of those systems are quite open about the cost benefit ratio of their operations against evaders. Unlike BC. First of all isn’t it a bit strange for the provincial and the federal politicians to be front and centre at an event like this? If transit were adequately funded in the the first place perhaps quite so much attention would not be focussed on the relatively small sums involved. And one thing that you can be sure of is that no-one is going to be talking about how much this system is going to cost to operate. Already we know that its capital cost cannot be recovered simply from everyone paying the correct fare – even if the system could actually deliver on that (it can’t, of course). But that also ignores how much it is going to cost to shift operational personnel from their current duties to looking after the fare gates and ensuring that people who cannot get through them – legitimately – can be reasonably accommodated.
We need a lot of money invested in transit in this region – even if we are going to stand still at current mode share let alone the once much touted but now essentially forgotten imperative to increase it. Faregates do nothing to get more people onto transit. The assertion that they will make the system safer is simply baseless. There is, unfortunately, as much or more crime on gated systems. Just because there are crowds of people and some criminals see that as a more efficient way to channel their own efforts. Effective policing will continue to be important: just because the gates will check the tickets does not mean that security can be lowered. If they do improve the perception of safety that will quickly change with the first high publicity incidents.
I see no reason to be manipulated by the PR system. This is simply two unpopular governments trying to get themselves in front of the cameras doing something that will be, briefly, popular. Unfortunately, what the majority want, in this case, is not going to be delivered. I wonder what the next magic bullet will look like.
Georges Pompidou was responsible for converting the quais along the Seine through the centre of Paris into an urban expressway. It used to be the place for strolling, or fishing – and soon will be again. It is part of the world wide movement that has seen many such ideas reversed. Cities have been part of the human experience for millennia – cars for a century. In the same way that the Romans made rules to keep carts out of the centre of their city two thousand years ago – and Samuel Pepys complained about what happened to central London when sedan chairs were replaced by coaches (though he later bought one for himself) cities work best when people can mingle and move around in large numbers. If a few insist on encasing themselves in a tonne or more of steel and machinery – and try to get across town as quickly as they can – then the majority suffer, and the economy of the city declines. If freeways were good for cities Detroit would be a great success today.
Designing cities for cars has produced some of the worst urban environments – Brasilia for instance. The “war on the car” is being won, fortunately, in most places – even in North America. Manhattan, New York being one of the leaders in the field, once it realized that far more people were riding trains and walking than driving cars.
I had thought that Vancouver was going to follow this trend, when the city realized that the remnant of our urban freeway was quite unnecessary and could be eliminated quite quickly, only for the Mayor to almost immediately backtrack. Sometimes the instinct to find a middle way to a compromise is actually counterproductive. Barack Obama’s first term being a sad example of snatching failure from the jaws of victory.
Delanoë promised his new scheme would “give Parisians back their river”, “profoundly change” the city and provide “an opportunity for happiness” for residents. But the mayor, who will not stand for re-election in 2014, also has an eye on his legacy, seeking to be remembered as the man who finally ended Parisian reverence to the car. He has expanded cycle routes and introduced the city’s famous short-term bike-hire and car-hire schemes. (Emphasis added)