18 August 2014
A billion dollar boondoggle is going to be the major issue
in this fall’s municipal election. In a
worshipful gesture to the green movement, the Ontario government dangled a
Light Rapid Transit line before Hamilton’s city council – for free! And all the city has to do is implement the
proposal. Oh, and pay for its
operation. City Councillors are swimming
around the bait like hungry trout.
Support for the proposal is a mile wide and an inch
deep. It is a mile wide because it is
bad political optics to turn down a freebie like this. It is an inch deep because everybody knows
nothing is free and there has to be a catch somewhere. Hamilton does not have the financial
resources to carry a massive white elephant.
And white elephant is what it will prove to be, based on
this short financial analysis.
The capital cost of the line is projected to be north of
$800 million, but I’m going to assume that the final cost of installing the
line is $1 Billion. Depreciated over
forty years, at a meagre 3 % bond interest rate, the line will have to bring in
roughly $120,000 a day, every day for forty years, just to cover the mortgage. Presently, about 13,000 people a day use
public transit along the route of the LRT.
Those people would have to pay $9.23 in fares per day, every day, for
forty years just to cover the cost of paying the bond.
But the line will have operating costs as well. There will be labour and overhead,
maintenance, and the cost of electricity to power the line. Since the LRT is a gesture to the green
movement, it would incongruous to power the line with electricity other than
that from wind and solar, the most expensive electricity in Ontario. Added to the cost of paying for the bond,
income from fares, I’m guessing, will have to top $200,000 a day every day for
forty years in order that the LRT be a paying proposition.
That works out to $15.38 per ride from 13,000 people. Right now, $5.00 will get you a good parking
spot in downtown Hamilton for a day. So,
why would a good environmentalist pay $15.38 in fares when he can park for a
third of that?
In order for the fare to be comparable to parking, the
number of riders of the LRT will have rise to 40,000 a day, more than triple
the current ridership along the route.
That would bring the fare down the $5.00. But notice what happens as a consequence.
The line will run roughly from Stoney Creek to
Westdale. For ridership to more than
triple, the population of Stoney Creek is going to have to increase comparably,
while the jobs and entertainment of these new masses in Stoney Creek will have
to be in Westdale! To carry that
passenger load, there will have to be parking along the route. The cost of parking will be a further charge
to the passengers over and above their fares.
Economically, it could still make more sense to drive.
Nobody in city government is making plans for the population
of Stoney Creek to triple by the time the LRT is ready to go, or for that
necessary massive expansion of commercial activity in Westdale for all those
people to need to use the LRT.
Folks in Flamborough, the Mountain, Ancaster, and Dundas (FMAD)
will get no service whatsoever from the LRT.
But like all other Hamilton taxpayers, they will be on the hook to cover
the financial losses. For FMAD, the LRT
is all risk and no reward. That much is
guaranteed.
The boosters of the LRT say that the line will bring
additional commerce along the line. What
these boosters fail to answer is where will this additional commerce will be
coming from? More commerce will have to
come from either more wealth or more population, and none of the boosters are
offering hard numbers on either score.
“If you build it, they will come,” seems to be their mantra.
It’s not their money the boosters of the LRT are placing at
risk. It is taxpayer’s money. I have no faith in the wisdom of risking a
billion or two upon an altar of environmentalism.
I am going to support candidates that are adamantly opposed
to the LRT and aren’t foolish enough to be tempted by freebies.
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