CITY OF HAMILTON PUBLIC WORKS DEPARTMENT Transit Division

Transcription

1 CITY OF HAMILTON PUBLIC WORKS DEPARTMENT Transit Division TO: Mayor and Members General Issues Committee COMMITTEE DATE: March 23, 2017 SUBJECT/REPORT NO: WARD(S) AFFECTED: PREPARED BY: Ten Year Local Transit Strategy 2017 Budget Update (PW17029) (City Wide) City Wide Debbie Dalle Vedove (905) , Extension 1860 SUBMITTED BY: Christine Lee-Morrison (905) , Extension 6390 Nancy Purser (905) , Extension 1876 Dan McKinnon General Manager Public Works Department SIGNATURE: RECOMMENDATION (a) That year three of the Hamilton 10 Year Local Transit Strategy be deferred for one year until 2018; (b) That the 2017 conventional transit preliminary budget be reduced by $2,065,000. EXECUTIVE SUMMARY At the General Issues Committee (GIC) meeting of January 27, 2017 the following motion was passed regarding Transit Operating Costs: That staff be directed to report to the General Issues Committee, during the 2017 Operating budget process, with a summary of future operating increases related to PTIF (rounds 1 and 2), the 10-Year Local Transit Strategy, DARTS, the LRT Operating and Maintenance costs, the A-Line Operating and Maintenance costs, current unfunded capital projects, and any other transit initiatives that might have an impact on the tax levy, with that report to include: (i) Information with a summary of all staff increases related to the initiatives above; and,

2 (PW17029) (City Wide) - Page 2 of 8 (ii) A mitigation strategy, in consultation with Finance staff, to end the multiyear trend of unfavourable year-end variances (estimated to be 34 million dollars from ). That staff be directed to report back to the General Issues Committee, during the 2017 Operating budget process, illustrating 1% and 3%Transit Operating budget options for It should be noted that staff understand the estimated year-end variance to be $3 Million - $4 Million dollars, not $34Million. Also, it is also understood the direction to be a 1.8% target not 1%. Since this direction staff developed the information contained in this report respecting the motion noted above. Additionally, staff continue to monitor the ongoing schedule impacts associated with the Public Transit Infrastructure Fund (PTIF) application undertaken by the City in the fall of To date there has not been an announcement of a decision related to the City s application to PTIF and with the passage of time the City s ability to deliver the projects identified in the application by the specified deadline has been seriously jeopardized unless an extension is granted. The PTIF submission included, among other projects, the purchase of buses to support years 3 and 4 of the City s Ten Year Local Transit Strategy (the Strategy) approved by Council in In view of the current financial constraints on the Hamilton budget, proceeding with year 3 of the Strategy in the absence of confirmed financial assistance from senior government, is not recommended. Staff remain hopeful that a positive announcement respecting PTIF will occur however, extending the substantial completion deadlines is required to ensure successful delivery of the capital projects, likely well into As a result staff propose the above recommendations. Alternatives for Consideration See Page 7 FINANCIAL STAFFING LEGAL IMPLICATIONS (for recommendation(s) only) Financial: The recommendations in this report reduce the 2017 Transit preliminary budget by $2,065,000 which represents a decrease of 3.4%. Staffing: As a result of deferring year 3 of the Strategy there is no request to add the additional 29 staff in Legal: report. There are no legal implications as a result of the recommendations in this

3 (PW17029) (City Wide) - Page 3 of 8 HISTORICAL BACKGROUND Ten Year Local Transit Strategy (Year One and Two Update) The Strategy was approved by Council on March 11, 2015 (PW14015a). The focus of year one and two was to address capacity and reliability of the system. Funding to implement the first two years of the Strategy was provided solely by Hamilton (including the City s Provincial Gas Tax Reserve), and included: $6M annualized operating budget increases Over 66,300 annual service hours and 50 FTEs added incrementally in fall 2015, spring 2016 and fall additional buses Base fare increases (15 cents in September of 2015 and 2016 and 10 cents in September of 2017 and 2018, to align with service improvements, and inflationary increases thereafter. Seniors Monthly Transit Pass to be increased by $3.00 each year until it reaches $50.50 per month) This investment has resulted in positive change for our customers by meeting the objective of improved capacity and reliability. The number of reported pass-bys has decreased and buses are better able to stay on schedule for those routes that received additional service. While the City embarked on the Strategy on its own there was an understanding that the significant capital investment associated with it would require assistance from senior levels of government and in the fall of 2016 the City of Hamilton applied to PTIF with an application that supported the capital components of the Strategy. While staff are anticipating an announcement on the application, with the passage of time staff believe that the projects can no longer be delivered within the deadlines contained in the program. Considering the current situation with PTIF and the significant budget constraints that exist in Hamilton staff recommend deferring year 3 of the Strategy until Additionally, staff have provided information within the analysis section of this report in response to the motion that was given as described above. POLICY IMPLICATIONS AND LEGISLATED REQUIREMENTS The Strategy aligns with a number of key policy documents, including: Hamilton Transportation Master Plan (2007) The Big Move Regional Transportation Plan (2008); Improving Health By Design in The Greater Toronto-Hamilton Area - A Report of Medical Officers of Health In The GTHA (2014); and,

4 (PW17029) (City Wide) - Page 4 of 8 Urban Hamilton Official Plan (2009). RELEVANT CONSULTATION Staff from the Corporate Services Department have reviewed the report and are in agreement. ANALYSIS AND RATIONALE FOR RECOMMENDATION Staff provide the following analysis in support of the recommendations in this report as well as follow up to the motion given at the January 27 th, 2017 GIC meeting. Notwithstanding the improvements in service as described above two major challenges remain that may adversely affect future budgets: 1. Lower than budgeted ridership Reduced revenue from fares drives down the revenue to cost ratio, which results in an unfavourable year end variance Reduced revenue resulting from fare evasion Possible impact on our provincial gas tax allocation 2. Absenteeism Resulting in increased overtime costs in order to maintain service levels. To mitigate these challenges the following measures have been taken or are in progress: 1. Lower than budgeted ridership In consideration of ridership, projected revenues were reduced by $860,000 in the 2017 preliminary budget to adjust for growth that did not materialize. Improved the security features of paper transfers as well as increased training for operators to reduce fare evasion. Staff are reviewing all of our fare media products with the goal of accelerating the shift away from printed fare media. 2. Absenteeism As a result of the GIC February 24, 2017 motion related to overtime, staff are working on a mitigation plan related to discretionary overtime costs. Part of this will include a process improvement review.

5 (PW17029) (City Wide) - Page 5 of 8 Staff are also addressing management practices related to complement control and absenteeism and staff are optimistic this will play a major role towards minimizing our unfavourable budget variance. To mitigate year-end overtime variances, the preliminary budget includes an increase of $500,000. There are two components; $280,000 to address changes as a result of the current collective bargaining agreement (i.e. requirement to pay overtime rates for school extras) and $220,000 to address overtime built into the service schedules Ten Year Local Transit Strategy (Beyond Year Two) The original Strategy identified $300M in unfunded capital; the two major components being buses to support the BLAST network and a second maintenance and storage facility (MSF). It was recognized that given the City s financial challenges, senior government support would be required. In 2016, the unfunded capital was updated to $250M primarily as a result of lower land costs and reduced design costs for the facility. Year three of the Strategy (2017) recommends the procurement of 5 additional buses and 29 FTEs to accommodate growth and address gaps in service standards (a total of approximately 34,000 service hours). Year four of the Strategy (2018) recommends the procurement of 11 additional buses and 30 FTEs to accommodate growth and promote modal split (a total of approximately 39,000 service hours). Ten cent fare increases were also approved for September of 2017 and The Public Transit Infrastructure Fund (PTIF) submission included, among other projects, the purchase of the 16 buses to support years three and four of the Strategy and the planning and design of the MSF (FCS16083). Over and above the PTIF investment, there still remains approximately $206 million in unfunded capital to support the remainder of the Strategy. The PTIF decision was initially expected to come early in 2017, however, as of the writing of this report, we are still awaiting an announcement. Without a reconsideration of deadlines, the City s ability to deliver the full roster of projects identified in the submission is negatively impacted and there is a strong likelihood that many of the projects will not be completed on time. Once an announcement is made staff will report back to Council with an update and any recommended changes to the plan for Council approval. Given the delay of the PTIF announcement, the 2017 service enhancements will not be operationalized until Therefore, the operating costs associated with year 3 of the Strategy would be moved to 2018, extending the overall time horizon for completion of the 10 year plan beyond This deferral includes the 2017 service improvements, staffing and fare increase. In order to proceed with the PTIF program, the associated capital budget for municipal contribution needs to be approved in 2017.

6 (PW17029) (City Wide) - Page 6 of 8 This deferral of year three of the Strategy, including the Accessible Transit Services (ATS) expenditures as set out in report PW17019, results in a $1.83M reduction in Transit s preliminary budget. This translates to a 1% Transit Budget increase and satisfies the above referenced Council Motion. Unknowns and Other Considerations Phase 2 PTIF - It is our expectation that there will be a Phase 2 PTIF of which program details have yet to be announced. We anticipate that there will be a similar requirement for 50% municipal contribution. MSF - Phase 2 PTIF would be a potential funding source for the second MSF. Preliminary operating impacts associated with the MSF have been identified in 2019 as $2.8M annually and an associated 15 FTEs. Based on what we know today, the earliest completion and commissioning of a second MSF is The operating costs will be allocated accordingly as plans progress. The following table summarizes the transit budget impacts on the municipal levy. City Net Levy Impact from PTIF Phase 1 City Net Levy Impact from PTIF Phase 2 (Note*) City Net Levy Impact from Operating Total City Net Levy Impact % N/A N/A 0.20% 0.25% N/A 0.1% 0.5% 0.8% 0.9% 0.7% 0.1% 1.15% 1.05% 0.9% 0.7% Note * - PTIF Phase 2 exact impact remains unknown, assumption based on current understanding of guideline Provincial Gas Tax On January 27, 2017 the Province announced a phased increase of the Provincial Gas Tax funds provided to Transit agencies beginning 2019 with a doubling by Should everything remain proportionately equal (population and ridership) Hamilton s share should grow from $10.7M to $21.4M. This will provide a funding opportunity for operating and/or capital costs associated with the Strategy. It is expected that receipt of this new gas tax revenue will be coordinated with a successful PRESTO agreement. The risk is that the additional transfer will not begin until 2019 which is after the next Provincial election.

7 (PW17029) (City Wide) - Page 7 of 8 LRT Operating and Maintenance Costs - Details related to LRT are not yet known, therefore, impacts cannot be included in the summary. BRT (A-Line) Operating and Maintenance Costs - Details of the A-Line BRT announcement are not yet known. Notwithstanding, the A-Line components of the Ten Year Local Transit Strategy have been highlighted in the summary table (Appendix A). PRESTO The current adoption rate is 21%. The expectation under the Metrolinx proposed ten year agreement would see adoption rates grow to 80% by As adoption rates grow, so will the City s financial obligation to PRESTO. The proposed pricing structure is phased through year one to four with a final rate of 9% of revenues collected via PRESTO. It is anticipated that the cost of PRESTO is likely to increase as per Appendix A from $0.4M annually to $3.4M annually by 2024 and finally to $4.1M by DARTS - The year over year impact of the costs associated with the service provided by DARTS is included in Appendix A as denoted by ATS Levy Change (DARTS-000 s). As per PW17019, the City net levy impact of DARTS is forecast to be %, % and %. The Transit Division will be conducting a review of our charter services and related opportunities to increase revenues. Fuel Costs - In terms of fuel, Transit has made significant progress in the goal of greening our fleet by our Compressed Natural Gas (CNG) conversion strategy (report PW12017). We have gone from a fleet make up of 23.5% in 2015 to 33% of our fleet now being CNG. This is expected to provide savings in the future in regards to fuel costs. Annual Service Reviews - Moving forward staff will be completing annual service reviews as outlined in the Strategy to confirm service improvements and associated capital and operating requirements. This will include a review of ridership and revenue forecasts. It should be noted that the acquisition of automated passenger counters (APCs), as included in the PTIF submission, will provide more complete and meaningful data from which to do this analysis and make decisions. ALTERNATIVES FOR CONSIDERATION An alternative to the recommendations in this report include proceeding with year 3 of the transit strategy however, this is not recommended as it will add significant operating and capital budget pressures in the absence of an announced approved application to PTIF.

8 (PW17029) (City Wide) - Page 8 of 8 ALIGNMENT TO THE STRATEGIC PLAN Economic Prosperity and Growth Hamilton has a prosperous and diverse local economy where people have opportunities to grow and develop. Clean & Green Hamilton is environmentally sustainable with a healthy balance of natural and urban spaces. Built Environment & Infrastructure Hamilton is supported by state of the art infrastructure, transportation options, buildings and public spaces that create a dynamic City. APPENDICES AND SCHEDULES ATTACHED Appendix A: Transit Operating and Capital Summary 2017 to 2024