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TransLink, hit by falling revenues from gas tax, plans to sell properties to help pay for operating costs

May 23rd, 2012 · 20 Comments

Unbeknownst to most in the media, TransLink’s mayors’ council had a section that was open to the public at the beginning of its meeting Tuesday. That’s where CEO Ian Jarvis made a presentation on the latest belt-tightening news from the agency.

Which is: gas-tax revenues are tapped out, with the result that new gas taxes aren’t bringing in any more money because people are cutting down on their gas purchases t compensate for the higher prices.

So that means TransLink is now facing:

– $30-40 million a year less than projected for the next three years because of those lower gas-tax revenues

– $30-million a year missing for expansions of service because of the province refusing to consider new fees or levies and mayors refusing to add more onto property taxes

– $20-million a year missing that was supposed to come from fare increases that Transportation Commissioner Martin Crilly nixed for at least this year.

As a result, as Jarvis told the meeting, the already existing plan to sell the Oakridge bus barn will use the sale proceeds just to help pay for the system’s operating costs, instead of to finance other needed capital projects down the road. Although TransLink had envisioned back in 2009 possibly having to use the sale proceeds to finance operating costs, that  plan faded to the background as new revenue streams were anticipated to come in.

But with the financial picture looking bad again, Jarvis reminded mayors that the money from the sale of Oakridge, along with other properties, will be needed for the basic operating budget just to prevent TransLink from depleting its surplus and going into a negative position by 2014.

Mayors were dismayed by that news, to say the least, as I report here.

If you want to look at a really sad graphic that explains it all, check out Jarvis’s Appendix A presentation to the board here.

Facing plummeting gas-tax revenues and other financial woes, TransLink says it will likely be forced to sell off some of its property holdings just to cover operating costs over the next three years.

TransLink CEO Ian Jarvis startled mayors at their monthly meeting Tuesday with the news. It’s an option that the mayors see as a last resort, akin to burning down your own house to stay warm.

But, they say, they can see the regional transportation agency is in an impossible position.

“In municipal operations, you usually can’t fund operations by selling assets, by cannibalizing yourself,” said TransLink council chair Richard Walton, District of North Vancouver mayor. “When organizations in the private or public sector have to do this, it’s a bad sign.”

But he said he can understand why TransLink is looking to sell off the former Oakridge bus garage and other properties, expected to bring in around $200-million, just to pay the operating bills.

Vice-chair Peter Fassbender, City of Langley mayor, said it’s a “slippery slope” for TransLink to head down, selling its assets to pay the bills for running buses and SkyTrain.

But he, too, agrees the agency is in a no-win position until TransLink, the mayors, the board and the province can agree on a long-term, sustainable funding formula that everyone can support.

As it is, the region’s beleaguered transportation agency is facing drastic revenue shortages for a number of reasons.

Mr. Jarvis pointed out that gas-tax revenues are going to be about $120-million less over the next three years than what TransLink had projected when it devised its three-year plan last summer.

Gas-tax revenue shows all signs of being tapped out, he said – one of the biggest shocks to the TransLink system.

The last two-cent-a-litre tax increase that went into effect in April isn’t bringing in any new revenue because people are buying less gas: they’re riding the bus, carpooling, buying more fuel-efficient vehicles, or driving out of the region to buy gas.

“This takes gas off the table as a future revenue source,” said Mr. Walton.

As well, in the past two months, TransLink has had the door shut in its face on three other revenue sources.

Premier Christy Clark said she wouldn’t support a vehicle levy or other new tax to come up with the $30-million a year needed to pay for big rapid-bus improvements in the region’s suburbs south of the Fraser River.

Instead, she ordered an audit to find efficiencies, which she said might cover that $30-million bill.

Then, the mayors said they would not allow a property-tax increase to find the money if the audit could not uncover enough savings.

And finally, in April , the province’s transportation commissioner, Martin Crilly, turned down a request for a substantial fare increase that was supposed to bring in another $20-million a year.

The province and Mr. Crilly said the agency should become more efficient. But Mr. Jarvis pointed out in his presentation to mayors that the agency’s budgets for the next three years had already factored in $86-million in savings through more efficient operations.

Mr. Jarvis said the agency has been planning since 2009 to sell the Oakridge bus garage, currently assessed at $70-million but likely worth much more if the agency can get the city to rezone the land.

However, under better circumstances, that money would have gone to building new facilities, not simply paying for operations, he said.

Meanwhile, the Tuesday meeting also saw division on the mayors’ council over the province’s decision to put two Metro Vancouver mayors on TransLink’s appointed board of directors. That was hailed by some civic leaders as an important step in fostering accountability. Others, however, saw it as a divide-and-conquer strategy intended to cripple a united council.

The appointment of Mr. Walton and Mr. Fassbender is intended to help improve communication and strike a balance between TransLink and the mayors’ council, said Transportation Minister Blair Lekstrom after the meeting.

“[The mayors’ council] asked for an opportunity to have more input on the board,” Mr. Lekstrom said. “This is a very good step toward that, having both the chair and the vice-chair from the mayors’ council – who were elected by the mayors around that table – to go sit on the board.”

Mr. Fassbender said their presence would bring “a whole different lens to the discussions,” and he would work to open closed-door talks to the public.

But Burnaby Mayor Derek Corrigan views the move as a strategic attack on the council by the province.

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  • boohoo

    Stupid, short sighted plan. So you have some more money now and then….???

    Translink doesn’t work. The province doesn’t let it. The public hates it. Blow it up.

    Cities are crying out for transit, buses are flying by full all the time and what do we get? Cut service, plans in the garbage etc. It’s so frustrating watching the opportunity for such a great network flounder away because of political bullshit, indecisiveness and failure and fear from all our politicians.

    It’s pathetic.

  • jesse

    Land prices are attractive, maybe some liquidation is the right thing to do here.

  • Agustin

    Translink doesn’t work. The province doesn’t let it. The public hates it. Blow it up.

    Seems like you have a better argument for the Province letting TransLink work than you do for blowing it up.

    Why throw the baby out with the bath water?

    Regarding declining gas tax revenues:

    This is highlighting the missing piece of the puzzle. Public transit is more efficient in providing mobility to citizens than private automobiles, but the effect is mitigated if we don’t internalize the efficiencies!

    For instance, a significant portion of savings from our population driving less is decreased health care costs. But the province isn’t taking any of that money saved and giving it to TransLink, right?

    Or, how about instead of spending billions on new roads, the Province helps TransLink invest in public transit? Why are we building new roads if driving is decreasing?

  • boohoo

    Yes those are good questions. It boggles the mind that there are these claims of no money yet we have a new sea to sky, new golden ears, new south fraser perimeter road, new port mann bridge, widened hwy 1 and on and on it goes.

  • spartikus

    It’s my personal theory that the Province – BC Liberal or BC NDP run – doesn’t let Translink (or predecessors) work deliberately. Work meaning being independent, self-financing and democratically accountable to the constituency it serves.

    Transportation infrastructure projects are a major carrot Victoria can dangle to influence Lower Mainland governments and voters.

    Take that away and….well….who really needs Victoria.

  • Michael Geller

    Translink has known since its inception that there would be declining gas revenues and other revenue sources would have to be found. Indeed, this was the first issue to be addressed when I was interviewed for the original Translink Board in fall 2008. At the time we discussed generating revenues through land acquisition around stations, rezoning and sale/partnerships; vehicle levies and tolls.

    But sadly, there has not been the political will to allow Translink to generate revenue from land acquisition/rezoning/benefitting tax and the other measures have been abandoned due to public outcry.

    As I write from Korea where I have experienced excellent public transit with a very elaborate, sophisticated subway system in Seoul, and excellent bus and train service around the country, I think it is time politicians showed some leadership and made some decisions that would allow the necessary funds for operating and capital improvements.

    As I said on the CKNW Civic Affairs Panel last Tuesday….much to the chagrin of Bill Good, Lesli Boldt and perhaps Frances…don’t always listen to the public…the public is often stupid (Good suggested I might have said ‘ill-informed) when it comes to many matters (eg: the health dangers of smart meters, the negative impacts of townhousing on neighbourhood property values, etc.)

    We need politicians who will make unpopular decisions because they will turn out to be right in the longer term. I think Christy Clark and others are absolutely wrong to think Translink can find the necessary revenues from an audit. This is nonesense. We need an overhaul of Translink funding, even if it won’t be popular at first.

    Vehicle levies would be a good start. The cost would be miniscule compared to what people seem willing to pay for the various options offered by the dealers!

  • Robert R

    If they sell the Oakridge property where will they put the Commnuity Shuttle buses that were moved there because of overcrowding at the other depots,they also plan to close the North Van depot in 2015.
    Are there plans for a new facility somewhere? Does Translink have a capital plan?

  • mezzanine

    Geller FTW!

    I like your blog posts about Korea. IMO there’s a lot we can learn from them.

  • tf

    You sound surprised that Translink will sell land. Why? This was discussed when the Canada Line was first introduced. Raise revenue by selling the land.

    The developers have been waiting in the wings since then. With developer-backed Vision Vancouver real estate takes centre stage. Ta da! No surprise.

  • brilliant

    Another case of social engineering gone awry. I wonder how many more tonnes of carbon are spewed into the atmosphere by Canadians idling at Pt Roberts and Peace Arch to avoid the tax grab?

  • Richard

    @Michael Geller

    More like politicians shouldn’t listen to the very vocal minority of anti-tax people. The majority of people will most likely support higher taxes for better transit. Even in cities with much lower transit usage than us like LA, people often approve ballet measures for higher taxes that fund transit.

  • Richard

    @brilliant

    Agreed, the social engineering by the auto, tire and oil companies to build a entire society around the automobile where people are forced to driver because there are no other reasonable choices has turned into a real expensive mess.

  • T Ian McLeod

    I understand that individual mayors are concerned, but as a body TransLink’s Council of Mayors has failed to send any coherent signal on what an accountable model of governance would look like, or where they would like the system to go. They complain that TransLink fails to provide them with any resources to do their job; in my view they could scrounge resources together as many other groups do — a spare office here, an NGO ally there — to draft and agree on a rationale for investment and revised governance designed to win public support and act as a roadmap for the next provincial government. Do the mayors have the will to reach or even seek an agreement based on substantive proposals?

  • Richard

    @T Ian McLeod

    Agreed. If each municipality kicked in a few dollars + office + staff time, they could implement a strategy to move forward and gain gain public support.

  • Bill

    We put a Carbon Tax on gasoline to discourage people from using their cars and perhaps seek alternatives like transit yet when the spike in gas prices seem to have the desired effect – reduced gasoline consumption – we have a revenue shortfall for transit.

    As for selling the Oakridge property it is very bad policy to sell a capital asset to fund current operations instead of funding future long lived capital assets. Its like burning the house down to stay warm. After the fire goes out, you’re still without heat and have no house.

    Add this to issues like the excessive overtime paid to transit police so they can write tickets that no one was collecting only demonstrates that there are serious management deficiencies from the Board level down through senior management.

  • Andrew Browne

    I’m all for selling capital assets to pivot toward other capital assets (new rolling stock, new train lines, et al) but doing so to fund operations is really dire. The graph that Frances linked is pretty stunning as it shows 2014 as a pretty distinct cliff, under even rosy scenarios.

  • Bill

    @Michael Geller #6

    “don’t always listen to the public…the public is often stupid (Good suggested I might have said ‘ill-informed) when it comes to many matters”

    “We need politicians who will make unpopular decisions because they will turn out to be right in the longer term.”

    I don’t disagree with you and, in fact, you have identified an inherent weakness in democracy. The people who are stupid (perhaps blinded by perceived self interest is gentler) on many issues are the same ones that choose the politicians that we expect to make unpopular decisions. So you need politicians who perhaps deceive the electorate at election time and then implement the good but unpopular measures after the election. Ask Gordon Campbell how well that works out.

    It will be very interesting how the Greeks vote next month and the fall out if they vote hard left as is predicated.

  • Neil

    Drivers are the biggest marginal cost in operating transit.

    In case your readers haven’t been following the state of technology, here’s my cobbled together presentation on self-driving vehicles http://goo.gl/ZKYSO Make sure you check out Google’s Steve Mahan video here http://ideas.4brad.com/topic/robocars

    The hardware now costs less than two years’ bus driver’s salary; software costs trend downwards pretty quick.

    While this doesn’t fix the short-term problem, Translink must have someone working with Bombardier and Siemens to bring this to market by the end of the decade.

    Combined with municipalities dedicating arterial lanes to transit, and zoning for gastown-style mid-rise mixed-use at intersections, Translink has a route to profitability.

    On-street robots would still be slower than the skytrain grade-separated ones, but as Jarret says frequency is freedom. Many smaller vehicles, more frequently.

  • Norman

    I’d like to see a report on what Metro Vancouver would be like if Mayor Corrigan had his way. I guess we’d all be walking.

  • Raingurl

    This subject is nauseating. I know how much the employees get paid. I know there is a pension plan. I know there is sick time and vacation time and benefits and…….and……..and…….Downsize Translink. Cut the large wages. Get on the program. *gagging*