Tuesday, October 14, 2014

LRT: The Big Issue in this Fall’s Election in Hamilton


 

 
Vincent J. Curtis


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.

-30- 

 

 

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