TTC: Sheppard Subway Expansion (Speculative)

[tkip]

If the previous post is correct, and it would require detailed design before going to PPP, then there's a lot of work to do. Presumably you have to do all the word to nail down the costs to the point that you aren't constantly surprised by "high water tables" (which is of course, BS. The location of the water table is well known across the entire GTA - and the surprised are only an indication of the ignorance of whoever did the predesign, rather than reality; this is the kind of thing you get when you award design contracts to the lowest bidder).

My first reaction is that Ford wouldn't go for this, as it wouldn't give him his Sheppard subway. But then I thought about it for a minute ... Rob Ford appears to have quite a low intelligence quotient, and there's little evidence he even knows quite where Scarborough is ... so as long as we call it the Sheppard subway, and perhaps open a station at Bathurst and a station at Victoria Park ...

You know nfitz, for someone that supposedly believes in fairness and hates discrimination, you never pass up an opportunity to insult Ford's intelligence, his personality or anything the man does.

 

[hina.roes@gmail.com]

The Sheppard line runs between Yonge and Don Mills

 

[rbt]

That said, on the surface, I'd be surprised if Gordon Chong's estimate of it costing between $250 and $300 million to do all of the analysis for the extension is accurate. No doubt that the cost of these analyses always seem inflated,

Someone (a stranger, not a friend) comes along and asks you for a business loan of a minimum $150,000 to expand an existing hotel restaurant. You, as the lender, are on the hook for any cost overages during construction. You, as the lender, will need to borrow this money by mortgaging part of your house and will need to pay back that loan regardless of how well the restaurant does. The repayment is 10% of revenues earned by new hotel stays, estimated valued at $300,000 over 10 years.

You know that hotel restaurants are typically subsidized by hotel stays. You also know that some people will stay at a hotel because of its restaurant quality, but those are few. They will avoid a hotel which has poor food options or management though. They also stay away when the hotel has issues that may not be under control of the hotel (SARS, economic activity, etc.).

What details are you going to require from the hotel/restaurant owner before giving them the loan?

This essentially the P3 offer. The city wants another organization to loan them $1B or more (funds that firm will almost always borrow) on future revenues not directly related to the project; and for that organization to be on the hook for any unexpected costs (fixed price design/build contract).

Now, what level of detail does the city require to ensure that it comes out cheaper than the regular way (design in-house & tender chunks)? Voters would be pretty damned angry if they believe they are paying more than 'the regular way' as a result of this experiment.

 

[BMO]

****I summarized the articles****

Sheppard subway cost soars
Toronto Star
Sat Jun 25 2011
Byline: Paul Moloney Toronto Star
File: Transit City (Sheppard-Eglinton)

The price tag for the Sheppard subway plan is going up/ Pegged at $4.2 billion initially, the estimated cost has risen by $500 million, according to the head of the company created to make the business case for a publicly and privately funded subway extension.

“The Sheppard project is projected to be around $4.7 billion” Gordon Chong said.

A TTIL working group needs 12 to 18 months to come up with a more detailed look at the scope, design and cost of the Sheppard subway extensions the mayor wants to build to determine if it’s feasible.

He said that consultant KPMG has been retained and a report on progress will go to city council after Labour Day.

The information will include refined cost estimates “as accurate as we can get it at that point.”

TTIL, which started out as a dormant arm of an old TTC company when it was formed earlier this year, had a budget of about $161, 000. A financial statement shows it has spent about $97, 000 since March, including $24, 000 to pay Chong, $28, 000 on Joanne Kennelly, the project manager Chong hired, and $45, 000 in legal expenses.

 

[BMO]

****I summarized the Articles****

City needs $7.5-million to plan Sheppard subway expansion
The Globe and Mail
Sat Jun 25 2011
Byline: Elizabeth Church
File: Transit City (Now Sheppard-Eglinton)

It will take up to 18 months and $7.5-million to plan the expansion of the Sheppard subway line, says the man in charge of the job.

Gordon Chong said “The existing budget is woefully inadequate to complete thet asks of the working group.” In a report updating the status of his work.

The office has applied for $250, 000 in federal funding for “soft costs” to run his office.

A financial report for TTIL, shows it has spent about $97, 000 since March on salaries for Dr. Chong, a project manager and professional services.

Dr. Chong estimates it will take between $250million and $300million to do the required analysis and justifications for the $4.2 billion subway expansion, but stressed those funds will come from the private sector and the federal and provincial governments.

 

[GraphicMatt]

So 18 months and $7.5-million for planning, then $250-million to $300-million for analysis and justification?

 

[nfitz]

So 18 months and $7.5-million for planning, then $250-million to $300-million for analysis and justification?

Sounds like 18-months to complete the EA and pre-design (say 25% design), and then the rest to do enough design to complete the PPP (95% design?). How long would that second stage take ... 24 to 36 months at least, surely. So if we start in September ... we might be ready to seek the PPP in ... late 2015, early 2016? Oh, but then, the local, provincial, and federal governments could well have changed yet again ... and there's another $400 million down the toilet while we start a new EA on Monorails or Personal transporters.

 

[GraphicMatt]

Yeah, at this rate this seems the equivalent of shoving a bunch of money into a black hole. Government change will kill this plan more than anything else.

Reasonable timeline from now until completion of a privately-built Sheppard extension would put us at, what, 2030?

Worth noting, I guess, that people would have been riding the Sheppard East LRT before the end of this council term in 2014.

 

[BMO]

Yeah, at this rate this seems the equivalent of shoving a bunch of money into a black hole. Government change will kill this plan more than anything else.

Reasonable timeline from now until completion of a privately-built Sheppard extension would put us at, what, 2030?

Worth noting, I guess, that people would have been riding the Sheppard East LRT before the end of this council term in 2014.

I think the subway can be ready around 2021-22. If the design work and EA stuff gets done it shouldn't take more than 7-8 years to construct.

 

[gweed123]

So 18 months and $7.5-million for planning, then $250-million to $300-million for analysis and justification?

Maybe 'justification' means "how much can we slip you under the table so that this line is actually profitable for you"?

Seriously, something about that just doesn't sit well with me. I have a feeling that a deal is going to be reached that is going to fleece the public and be a complete windfall for someone's buddy's company.

 

[BMO]

Maybe 'justification' means "how much can we slip you under the table so that this line is actually profitable for you"?

Seriously, something about that just doesn't sit well with me. I have a feeling that a deal is going to be reached that is going to fleece the public and be a complete windfall for someone's buddy's company.

I think the amount of money that is being spent so that the plan and all the associated costs are as accurate as possible, looking at EVERYTHING. The city is going to go to developers asking them for money. They need to have a really comprehensive and good business plan if they expect to get loans or funding from developers. I believe this is why the costs are so high.

 

[GraphicMatt]

The way I'd play it politically if I was working for Team Ford would be to strike up an awful-looking deal with a Chinese company -- it's already rumoured that a Chinese firm has expressed interest -- then let it go before council where it will be rejected.

Ford can then spend the next election raging against lefty councillors who prevented him from delivering the subways that the people want.

 

[gweed123]

The way I'd play it politically if I was working for Team Ford would be to strike up an awful-looking deal with a Chinese company -- it's already rumoured that a Chinese firm has expressed interest -- then let it go before council where it will be rejected.

Ford can then spend the next election raging against lefty councillors who prevented him from delivering the subways that the people want.

That would be the cop-out option. However I think the more likely option is that he creates an on-the-level deal that no business in their right mind would go for, which forces him to create a 'sweetened deal' which ends up going to a buddy's company. This deal is filled with loopholes and little hidden expense streams that will allow this buddy to get a really good deal at the expense of the taxpayers. Basically the 407 all over again.

 

[gweed123]

I think the amount of money that is being spent so that the plan and all the associated costs are as accurate as possible, looking at EVERYTHING. The city is going to go to developers asking them for money. They need to have a really comprehensive and good business plan if they expect to get loans or funding from developers. I believe this is why the costs are so high.

It's not the developers the City needs to worry about, it's the engineering and planning companies that are going to be bidding to actually build the thing. If there isn't a way for them to make money, they aren't going to want in.

 

[Mapleson]

Does anyone remember a tender for 'legal services' or was KPMG sole-sourced/"hand-picked" like everything else to do with TTIL? If they wanted to keep cost under wraps for this pie-in-the-sky conception, they should try something truly innovative like an open-sourced, group-sourced design (basic parameters of what can or can't be done are set, but otherwise people chip in a bit of time to suggest an alignment is a specific area. Preliminary votes are by the public and final choice between options is sent to Council). I'm not saying that it'd work, but if you have no money of your own to spend, maybe try a different tactic of begging off your impoverished neighbours.