Table of Contents 1. Executive Summary Financial and Operating Summary... 6 Key Performance Indicators and Drivers... 8

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2 Table of Contents 1. Executive Summary Financial and Operating Summary Key Performance Indicators and Drivers... 8 Financial Indicators... 8 Operating Indicators... 9 Key Drivers Assumptions Consolidated Revenues Budget Comparison to 2016 Q2 Forecast Consolidated Expenses by Segment Bus Operations Rail Operations Police Operations Corporate Operations Investment in Capital Assets New Capital Program Active and Approval in Principle (AIP) Projects Underway Capital Infrastructure Contributions Changes in Financial Position Financial Assets Liabilities Non-Financial Assets Liquidity and Capital Resources Cash Flows and Liquidity Restricted Funds Net Debt Appendix I Consolidated Financial Statements Consolidated Statement of Financial Position Consolidated Statement of Operations Consolidated Statement of Changes in Net Debt Consolidated Statement of Cash Flows Appendix II Allocated Costs between Divisions... 47

3 Caution Regarding Forward-Looking Statements From time to time, TransLink makes written and/or oral forward looking statements, including in this document, and in other communications, in addition, representatives of TransLink may make forwardlooking statements orally to analysts, investors, the media and others. Forward-looking statements, by their nature, require TransLink to make assumptions and are subject to inherent risk and uncertainties. In light of uncertainty related to financial, economic, and regulatory environments, such risks and uncertainties, many of which are beyond TransLink s control, and the effects of which can be difficult to predict, may cause actual results to differ materially from the expectations expressed in the forward-looking statements. Page 2

4 1. Executive Summary A PLAN FOR MORE TRANSIT AND BETTER ROADS TransLink is a large, complex organization with a wide-ranging mandate. Of the world s major cities and regions, only Metro Vancouver, London and Paris integrate public transit and road planning under one central authority with its own streams of revenue. TransLink delivers a wide range of services and programs to plan and provide for the transportation needs of Metro Vancouver residents and businesses. This includes bus, SeaBus, HandyDART, three rapid transit lines (SkyTrain), and a commuter rail service. TransLink also owns and maintains a subset of the region s bridges, and shares responsibility for the region s Major Road Network with local municipalities. It is the largest transit service area in Canada, spanning 23 municipalities/electoral districts/first Nations areas in Metro Vancouver. Metro Vancouver is known for its livability, including a highly functional, integrated transportation network. But our region faces challenges, including overcrowding on our transit system, congestion on our roads, and another one million new residents expected to move to Metro Vancouver over the next 30 years. To meet the challenges of growth and congestion in a way that is affordable and fair, in June 2014 the Mayors Council on Regional Transportation developed the 10-Year Vision for Metro Vancouver Transit and Transportation (10-Year Vision). Founded on years of planning, the Vision identifies the new transportation services the region will need over the coming decade. Phase One of the 10-Year Vision is focused on increasing transit services and improving roads, cycling and walking infrastructure across the entire region. This Plan is the largest transit service expansion in the region since This is an important first step in creating the transportation system our growing region will need to meet future demand. The 2017 budget represents the first year of Phase One of the 10-Year Vision. With guiding principles to maximize ridership and encourage long-term ridership growth, the investments in the 2017 Business Plan, Operating and Capital Budget are supported by three priorities with the aim of increasing customer satisfaction, safety and service reliability. Investments are needed to support our aging system and maintain our reliable service; to prepare for population growth to ensure a livable region and to keep improving on our customer s experience. PRIORITY ONE: ENSURE STATE OF GOOD REPAIR TransLink will proactively manage and maintain all assets in a state of good repair to ensure safety and reliability, optimize lifecycle costs, and enhance the customer experience. Objective 1: Continually improve the current record of safe and secure operations We will proactively manage our assets and activities in order to ensure safe, secure and resilient operations for our customers and employees. Initiatives: 1. Implement an Asset Management (EAM) system for the enterprise 2. Develop and implement CMBC Safety Management System 3. Develop and implement an Enterprise Emergency Response Plan (EERP) Page 3

5 4. Design, procure and build a new Pattullo Bridge in accordance with the Mayors Vision 5. Replace rail on Expo and Millennium Lines Objective 2: Investing in the future of Rail Services We will focus resources on the continuous improvement of our people, business tools and structure to ensure a safe and reliable system. Initiatives: 1. Implement the remainder of the recommendations of the 2014 Independent Review of SkyTrain 2. Modernize systems and processes 3. Develop and implement a workforce plan to enhance the capacity and skills of employees PRIORITY TWO: MOBILIZE MAYORS VISION We will successfully deliver the capital projects, service expansion and policy initiatives necessary to mobilize the Mayors Vision. Objective: Deliver regional transportation priorities We will successfully roll-out the Mayors Vision by implementing the early priorities (years 1-3) in the 2017 Investment Plan and establish the ground work for subsequent phases. Initiatives: 1. Implement the early roll-out of the 10-Year Vision, both operating (all modes) and capital (planning and delivery) 2. Initiate foundational work for the next phase of the Mayors Vision 3. Develop a Mobility Pricing Plan PRIORITY THREE: IMPROVE CUSTOMER EXPERIENCE & PUBLIC SUPPORT With a customer first approach, we will build public trust and confidence in TransLink by focusing on growing ridership, engaging stakeholders and delivering the Mayors Vision. Objective 1: Improve TransLink s Reputation We will build trust and confidence in TransLink through active customer and stakeholder engagement and a commitment to consistent, high quality service with an emphasis on safety. Initiatives: 1. Develop and implement a comprehensive external Customer Experience Strategy 2. Deliver enhanced Compass experience through delivery of the next phase 3. Implement outcomes of Access Transit Service Delivery Review 4. Develop and implement Transit Police s enhanced Public Safety and Community Outreach initiatives 5. Develop and implement a brand strategy Objective 2: Increase Ridership We will attract and serve more customers, meeting more of their mobility needs on both the existing and expanded transit system in order to support the regional objectives. Initiatives: 1. Develop and implement a comprehensive Ridership Growth Strategy 2. Complete a Fare Policy Review 3. Expand mobility options to the region through rideshare, cycling, travel planning services, and a possible pilot program for vanpooling Page 4

6 Objective 3: Develop Employees We will empower our workforce to meet our customer service standard and corporate objectives. Initiatives: 1. Develop and implement a consistent customer service program across the enterprise 2. Implement growth and development opportunities for potential successors through succession planning 3. Develop and implement an enterprise wide E-Learning strategy To deliver the priorities set in the 2017 budget, additional funding will be obtained through; Public Transit Infrastructure Fund (PTIF) funding, increased transit fares, increased property taxes, and the gain on sale of surplus property. The risk associated with these much needed funding sources include; timing of PTIF funding, higher than expected elasticity resulting from the planned fare increase, as well as our capacity to deliver on service expansion and capital projects. Page 5

7 Financial and Operating Summary TransLink receives approximately 31.1 per cent of its revenue from continuing operations from transit fares, with the remainder coming primarily from fuel and property taxes. This means that as TransLink expands its services, an increasing amount of funding from fares, taxation and other sources are necessary. Operating costs include expenditures related to the day to day delivery of bus, rail, SeaBus and Access Transit services; as well as maintenance and administration of our multi-modal transportation system. Expenditures include labour, contracted services, fuel, maintenance and materials, and administrative expenses. CONSOLIDATED REVENUES AND EXPENSES Twelve months ending December Change ($ thousands) ACTUAL Q2 FORECAST BUDGET Incr/(Decr) % Revenue Taxation 772, , ,028 27, % Transit 511, , ,910 22, % Government transfers 228, , ,904 59, % Golden Ears Bridge tolling 48,444 52,197 55,744 3, % Investment Income 34,381 39,054 37,712 (1,342) (3.4%) Amortization of deferred concessionaire credit 23,273 23,401 23,337 (64) (0.3%) Miscellaneous 6,102 5,535 5,464 (71) (1.3%) Sub Total Continuing Operations 1,625,310 1,684,555 1,796, , % Gain on disposal 2,340 17, , , % Total Revenue 1,627,650 1,701,703 1,945, , % Expenditures Bus Division 643, , ,289 37, % Rail Division 268, , ,010 34, % Transit Police 33,136 33,630 36,921 3, % Corporate operations 80,866 91, ,158 9, % Roads & Bridges 71,246 74, ,244 28, % Amortization of Capital Assets* 168, , ,286 24, % Interest* 167, , ,301 5, % Sub Total Continuing Operations 1,433,235 1,475,454 1,618, , % Corporate - onetime 32,053 37,150 19,290 (17,860) (48.1%) Total Expenditures 1,465,288 1,512,604 1,637, , % Surplus for the year 162, , , , % * Amortization and Interest shown separately to facilitate analysis The 2017 budget results in a $308.3 million surplus on a Public Sector Accounting Board (PSAB) basis. Excluding gain on disposal, the surplus is budgeted to be $158.6 million. While total revenues are expected to increase by 14.3 per cent over the second quarter forecast of 2016, the funding generated from government transfers and proceeds from sale of surplus property are largely restricted for capital infrastructure investments. Operating revenues are expected to increase as a result of anticipated growth in ridership, tolled bridge crossings, a planned fare increase in July, property tax increases and fuel sale volumes. Total expenses are expected to increase $124.9 million (8.3 per cent) over 2016 second quarter forecast mainly due to higher operating costs resulting from bus and rail service expansion including the Page 6

8 Evergreen Extension. Also included in the 2017 Budget are costs related to contractual labour increases, inflation, state of good repair improvements, and costs related to investment in our key priorities. Page 7

9 3. Key Performance Indicators and Drivers Financial Indicators FINANCIAL INDICATORS ($ thousands) ACTUAL Q2 FORECAST BUDGET Change % Unrestricted cash and investments 1 310, , ,564 34, % Capital assets 4,606,623 4,906,331 5,273, , % Net direct debt 2 (1,989,934) (2,144,905) (2,319,640) (174,735) (8.1%) Indirect P3 debt 3 (1,623,309) (1,597,898) (1,571,097) 26, % Total net direct debt and indirect P3 debt (3,613,243) (3,742,803) (3,890,737) (147,934) (4.0%) Gross interest cost as a % of operating revenue % 12.0% 12.0% (0.0%) (0.3%) 1 This represents the accumulated funding resources as calculated under the SCBCTA Act and is the amount of resources available to fund future operations. 2 Includes Translink's direct debt, net of TransLink sinking funds and debt reserve deposits 3 Includes Deferred concessionaire credit for Canada Line and Contractor liability for Golden Ears Bridge 4 Operating revenue includes transit, taxation, GEB toll revenue, operating transfers from Provincial government and miscellaneous income. TransLink s unrestricted cash and investment balances reflecting accumulated funding resources available for supporting operations, are budgeted to increase by $35 million compared to the 2016 second quarter forecast. Planned capital spending during 2017 will result in a net increase of $367.2 million (7.5 per cent) in capital assets. Significant projects include conventional bus replacements, rail fleet expansion, station upgrades, rail infrastructure projects, and procurement readiness work for the Millennium Line Broadway Extension and the South of Fraser Light Rapid Transit (LRT) rapid transit projects. Net direct debt increases by $174.7 million (8.1 per cent) in 2017 to $2.3 billion due to increased longterm borrowing to finance capital assets including bus fleet replacements, SkyTrain fleet expansion and Station upgrades. Indirect P3 debt relating to the Canada Line and the Golden Ears Bridge contractor liability decreases by $26.8 million due to amortization and principal payments. The gross interest cost as a percentage of operating revenues remains consistent with the 2016 forecast, and is well below our policy level of 20 per cent. Page 8

10 Operating Indicators OPERATING INDICATORS Change Twelve months ending December 31 ACTUAL Q2 FORECAST BUDGET Incr/(Decr) % Scheduled Transit Service Overall Performance Rating (out of 10) % Service Hours 6,254,648 6,351,577 6,723, , % Cost Recovery Ratio 51.8% 52.5% 51.8% (0.7%) (1.3%) Operating Cost per Capacity Km 1 $0.084 $0.086 $0.083 ($0.003) (3.5%) Complaints per million Boarded Passengers (6.0) (7.4%) Access Transit Service Number of Trips 1,204,788 1,243,889 1,287,500 43, % Operating Cost per Trip $40.64 $40.10 $39.81 ($0.29) (0.7%) Number of Trips Denied 1,613 1,763 1,500 (263) (14.9%) Operator Complaints as a percentage of trips 0.04% 0.04% 0.05% 0.01% 24.3% Service Complaints as a percentage of trips 0.07% 0.07% 0.07% - - Golden Ears Bridge Crossings (thousands) 12, , , % Average Toll per Crossing % Ridership (thousands) Boarded Passengers 364, , ,753 11, % Journeys 2 n/a 233, ,469 7, % Average Fare per Journey 2 n/a $2.30 $2.32 $ % 1 Includes operating costs of Bus, SeaBus, Expo & Millennium line, Canada Line, West Coast Express and Police, and excludes depreciation and interest expense 2 In 2016, a new ridership estimation methodology was introduced, therefore comparative historic figures are not available Scheduled Transit Service The targeted overall performance rating is to reach 8.0 within three years with improvements of 0.1 per year. Conventional system service hours are projected to increase 372 thousand hours. This includes the impact of the Evergreen Extension and bus and rail expansion service to reduce overcrowding and improve service reliability. The cost recovery ratio is expected to decrease by 1.3 per cent due to the cost of expansion service that takes time to achieve full ridership. The operating cost per capacity kilometre is expected to decrease 3.5 per cent due to increased service capacity resulting from Evergreen Extension and additional service expansion. Access Transit Service Access Transit trips are planned to increase by 44 thousand trips (3.5 per cent) to provide increased service for passengers unable to use conventional public transit without assistance. Page 9

11 Golden Ears Bridge Golden Ears Bridge crossings are expected to increase 7.3 per cent over the second quarter forecast due to increased Vehicle Kilometres Travelled (VKT s) in the region. The average toll rate per crossing is expected to increase 0.8 per cent due to a bylaw inflationary increase in July. Ridership With Compass data now available, Journeys replaced revenue passengers as the new ridership metric; therefore comparative 2015 actual figures are not available. A journey is considered to be a complete transit trip using Compass fare media or other proof of payment, regardless of the number of transfers. Journeys are considered a better metric than Revenue Passengers due to improved actual data (Compass) and reduced dependence on assumptions in the new ridership estimation methodology. The average fare per journey is expected to increase from the 2016 forecast by approximately 0.9 per cent from $2.30 to $2.32, due to a planned fare increase on certain products in July Page 10

12 Key Drivers Ridership Ridership is assumed to grow 3.1 per cent based on increased service hours, elasticity impacts of fare increases, fuel prices and employment growth. Evergreen Extension ridership expectations for 2017 and beyond are expected to increase over the first five years. In 2017, the Evergreen Extension contributes approximately 1.5 per cent of the 3.1 per cent growth anticipated in Households Household projections are based on estimates from BC Stats. BC Stats provides annual household estimates for the Metro Vancouver region. The number of households in the Metro Vancouver region is expected to grow by 1.7 per cent in 2017 when compared to Household growth impacts both fare revenues, and taxation revenues. Interest rates Interest rates for the budget are based on forecasts from major Canadian chartered banks and TransLink credit spread and issue costs. The 2017 short term and long term interest rates are similar to the 2016 second quarter forecast. Inflation Consumer Price index (CPI) growth assumption for the 2017 budget is 2.0 per cent based on the BC Ministry of Finance. Taxable fuel consumption Fuel consumption volumes are used to estimate fuel tax revenue. Fuel volume projections are developed using a Provincial forecast modified for specific characteristics in the Region. Fuel volumes are forecasted to grow by 2.3 per cent over the 2016 second quarter forecast. Current low prices in combination with a weak Canadian dollar and a surge in automobile ownership are believed to be driving a short-term increase in regional consumption. Hydro cost Electricity rates increased by 4 per cent in April 2016 per BC Hydro, and will increase by 3.5 per cent in April 2017 for an annualized rate of 3.63 per cent in Hydro costs impact propulsion power for SkyTrain and Trolley Buses along with facility utility costs. Rate increases take effect in April of every year. Gasoline and Diesel prices Fuel prices affect operating costs for buses as well as West Coast Express Trains. Fuel prices are estimated using US Energy Information Administration forecasts adjusted for Canadian prices, taxes and price differentials. Fuel cost includes the futures volumes and rates locked in through April Revenue Vehicle insurance Bus fleet insurance rates are expected to increase by 5.5 per cent on April 1, 2017 based on the expected annual increase from ICBC. Page 11

13 Assumptions The following table highlights the financial impact of changes in key assumptions used to develop the 2017 budget: ASSUMPTIONS SENSITIVITIES RATE / Impact VOLUME Change ($ millions) Revenue Regional Fuel Consumption millions of litres 2,262 1 per cent +/- 3.8 Ridership millions of journeys per cent +/- 5.6 Golden Ears Bridge Crossings millions of crossings per cent +/- 0.5 Expense Diesel cost dollars per litre 1.08 $0.10 +/- 4.0 Operational Diesel Use millions of litres per cent +/- 0.4 Interest rate Short term 1.5% 0.5 per cent +/- 0.9 Long term 3.5% 0.5 per cent +/- 1.5 Inflation General 2.00% 0.5 per cent +/- 0.3 Materials 2.00% 0.5 per cent +/- 0.4 Electricity 3.63% 0.5 per cent +/- 0.1 Collective Agreements Unifor 1 per cent COPE 1 per cent CUPE 1 per cent TPPA 1 per cent Page 12

14 4. Consolidated Revenues TransLink receives its revenue mainly through taxation, user fees and government transfers. Total consolidated revenues for 2017 are expected to be $1.9 billion, an increase of $244.1 million over the 2016 forecast. This increase is mainly due to sale of surplus property and government transfers, which are largely restricted for investment in capital infrastructure. Taxation, transit, and toll revenues are expected to increase by $53.6 million over the second quarter forecast. CONSOLIDATED REVENUES Twelve months ending December Change ($ thousands) ACTUAL Q2 FORECAST BUDGET Incr/(Decr) % Taxation Fuel 356, , ,564 8, % Property & Replacement 332, , ,333 15, % Parking Rights 63,334 67,359 70,387 3, % Hydro Levy 20,065 20,399 20, % Transit 511, , ,910 22, % Government transfers 228, , ,904 59, % Golden Ears Bridge tolling 48,444 52,197 55,744 3, % Investment Income 34,381 39,054 37,712 (1,342) (3.4%) Amortization of deferred concessionaire credit 23,273 23,401 23,337 (64) (0.3%) Miscellaneous 6,102 5,535 5,464 (71) (1.3%) Revenue Before Gain/(Loss) on Disposals 1,625,310 1,684,555 1,796, , % Gain on disposal 2,340 17, , , % Total Revenue 1,627,650 1,701,703 1,945, , % 2017 Budget Comparison to 2016 Q2 Forecast Taxation Taxation Revenues is comprised of fuel tax, property and replacement tax, parking rights tax and hydro levy. It accounts for 46.4 per cent of total revenues before gain on disposal. Fuel tax revenues for 2017 are estimated to increase $8.6 million (2.3 per cent) due to an anticipated increase in Vehicle Kilometres Travelled (VKT), offset by more fuel efficient vehicles and fuel leakage outside of the region. This growth trend is consistent with information from third-party retail sources. Property tax revenues are expected to increase 4.6 per cent. Revenues include an annual 3.0 per cent increase in property tax revenue from existing properties as well as property tax revenue from development and construction growth estimated at 1.9 per cent. The replacement tax portion remains at $18.0 million. Parking Rights taxation revenue for 2017 is budgeted to increase $3.0 million (4.5 per cent) over the 2016 forecast, reflecting increased VKT within the Metro Vancouver region, driving parking volume increases. Page 13

15 Transit Transit Revenue makes up 31.1 per cent of total revenues before gain on disposal; which includes fare revenue, program revenue and other transit revenue. Fare revenue consists of cash fares, discounted Stored Value purchases, as well as Day and Monthly Pass products. Program revenue includes Government of BC Bus Pass and U-Pass BC revenue. Other transit revenue includes advertising, rental, parking lot fees and fare infraction. Total transit revenue is expected to increase by $22.3 million (4.2 per cent) from the 2016 forecast. Fare revenues are expected to increase due to an increase in ridership from service expansion, the full year impact of fares gate closures which had a positive impact on fare revenue collected, and a planned increase in fares in July 2017 which have not been raised since The fare increase is 5 to 10 cents for single use products, 25 cents for day passes and $1.00 to $2.00 for monthly passes. Transfers from Government Transfers from government include funds received from Greater Vancouver Regional Fund (GVRF), Canada Line funding, Building Canada Fund, Public Transit Infrastructure Fund, and other miscellaneous programs. The total revenue from these funds is expected to increase $59.4 million (26.7 per cent) compared to the 2016 forecast mainly due to increased expenditures eligible for GVRF being undertaken during 2017 and the new Public Transit Infrastructure Fund. Golden Ears Bridge Tolls TransLink receives tolling revenue from vehicles crossing the Golden Ears Bridge. Tolling revenues for 2017 are budgeted to increase $3.5 million (6.8 per cent) over the 2016 forecast due to increased volumes and an inflation increase in July The increase is determined by the value of the all items consumer price index for Canada which is expected to be 2.1 per cent. Crossing volumes are expected to increase by 7.3 per cent based on historical observations of volume growth, vehicle registration data and economic trends. Investment Income The lower investment income is due to lower expected returns on sinking funds and unrestricted investment balances, although this is somewhat tempered by higher sinking fund balances. Risks and Challenges Risks related to transit fares include achieving ridership targets and customer behaviour for purchase of various fare products. With the proposed fare increase in July, there is a risk of higher elasticity resulting from; price and service quality with customers expecting more frequent and reliable service. Fuel tax volumes are unpredictable, as suppliers have up to 48 months to recover tax paid on exempt volumes or fuel resold outside the transit region. Market change in the price of crude oil, the USD/CAD exchange rate and the cost of transportation can also impact the amount of fuel tax collected and remitted to TransLink. The property tax budget includes new revenue from development and construction growth; the rate for 2017 is estimated at 1.9 per cent. If the 2017 actual rate is lower, a lesser amount of incremental property tax revenue will be received. Page 14

16 5. Consolidated Expenses by Segment TransLink is responsible for delivering transit services, owns and operates five bridges, and provides operating and capital funding for the Major Road Network (MRN) and cycling in Metro Vancouver. With the anticipated increase in service across all modes, operating costs will increase accordingly. Total expenses are expected to increase $124.9 million over the 2016 second quarter forecast mainly related to bus and rail service expansion as outlined in the 2017 Phase One of the 10-year Vision, integration of the Evergreen Extension; road, public infrastructure and state of good repair improvements; and contractual labour and inflation increases. CONSOLIDATED EXPENSES BY SEGMENT Twelve months ending December Change ($ thousands) ACTUAL Q2 FORECAST BUDGET Incr/(Decr) % Bus Division 643, , ,289 37, % Rail Division 268, , ,010 34, % Transit Police 33,136 33,630 36,921 3, % Corporate operations 80,866 91, ,158 9, % Roads & Bridges 71,246 74, ,244 28, % Amortization of Capital Assets* 168, , ,286 24, % Interest* 167, , ,301 5, % Sub Total Continuing Operations 1,433,235 1,475,454 1,618, , % Corporate - onetime 32,053 37,150 19,290 (17,860) (48.1%) Total Expenses by Segment 1,465,288 1,512,604 1,637, , % * Amortization and Interest shown separately to facilitate analysis Bus Operations Coast Mountain Bus Company (CMBC) oversees the operations of Conventional and Community bus service, SeaBus and Access Transit. CMBC currently operates a fleet of 1,450 Conventional and Community vehicles. SeaBus is also a key component of Metro Vancouver s transportation system carrying over 6 million passengers per year or on average 23,000 passengers per day. Within the Bus Division, CMBC administers the contracts for HandyDART, West Vancouver Blue Bus and the contracted community shuttle operators. Initiatives: Ensure state of good repair In 2017, CMBC will undertake the following initiatives to ensure safe and secure operations and keep our transit infrastructure in a state of good repair: Continue to develop the Safety Management System (SMS) through 2017 and into early 2018, at which time it will be fully implemented across CMBC. Implementation in the Maintenance Division is expected to be complete by June 2017, after which the focus will shift to the Operations Division and remaining corporate areas. SeaBus successfully implemented SMS in 2015 as part of their regulatory requirements. Page 15

17 Following up on the 2015/2016 transit operator barrier pilot involving several protection barrier designs, CMBC and other stakeholders will evaluate the feasibility of barriers from safety, maintenance and customer service perspectives. Complete safety reviews at five major bus loops/exchanges. Undertake ongoing Power Smart initiatives to reduce costs, extend facility life and provide better staff working conditions. CMBC will continue to evaluate its operations for energy and cost savings opportunities and where feasible and cost-effective, retrofit projects such as LED lighting and waste heat capture will be pursued cooperatively with BC Hydro and FortisBC. Replace the existing outdated electronic fareboxes with more cost efficient technology. Replace key operational equipment such as trolley poles and wires, buses, hoists, facility roofs and support vehicles subject to capital program approvals and GVRF funding where available. Carry out SeaBus facility and infrastructure retrofits. Implement CNG fueling at Surrey Transit Centre and take delivery of more fuel cost-efficient CNG buses to replace retiring diesel buses. Participate in and support key business system upgrades including: Operator holiday signup system replacement Daily Operations Management System (bus operator tracking and payroll) replacement Transit Management and Communications bus radio system replacement MyTime payroll data collection upgrade. Mobilize Mayors Vision Through the Mayors Vision and investment plan, 2017 will see the first phase of the transit service increases with the implementation of annual service expansion for Conventional bus, Community Shuttle, SeaBus, West Vancouver, Contract Community Shuttle and Access Transit services. For Conventional bus and Community Shuttle, the Bus division will implement over 200,000 annual service hours in phases over This will alleviate overcrowding and pass-ups and provide for improvements of bus service across the network. The 2017 budget provides for the following preparations: Expanded service requires the doubling of transit operator recruitment and training efforts. Aside from the average annual attrition of approximately 150 operators, an additional 100+ operators will be required with seasonal sheet changes through Short term use and deferred retirement of older buses to increase the bus fleet for expanded service. This involves the costs of storing, handling and maintaining these vehicles to keep them in service until they can be retired and replaced over the next 12 to 18 months. Acquisition of additional vehicle onboard equipment for the expanded fleet including radios, Compass validators and fareboxes. The procurement must take into account the time from ordering through delivery and final installation on the fleet. Hiring of additional support staff such as mechanics, service people, other associated trades and supervisory and administrative staff to support the expanded service. Improved SeaBus service to deliver 15-minute/two boat service on Sundays year-round starts January 2017 and expanded hours of 15-minute service every day starts in September The fall increase will require additional crewing staff, repair inventories and safety training. The increase of 1,200 annual service hours equates to an 11 per cent increase in service levels. Access Transit services will increase by 45,000 hours, equating to approximately 85.5 thousand additional trips over 2016 budget levels. Page 16

18 The Mayors plan for additional future service increases requires initiation efforts in 2017 to acquire new fleet to replace the vehicles with deferred retirements and acquire a new third SeaBus. There is a time lag of up to 18 months to order and receive new buses and over two years for a new SeaBus. Improve customer experience and public support In 2017, CMBC will undertake the following initiatives in support of the customer experience: Improve wayfinding signage and schedules to provide customers with quicker and easier information access. CMBC will work toward displaying route name and numbers at all bus stops system-wide, as well as providing enhanced schedule information through Transit Information Panels at key bus stops, loops and exchanges. Fine tune the integration of bus service with the Evergreen Extension. Assess the viability of double decker buses and fully electric buses. Complete a Bus Service Performance Analysis to more reliably deliver bus performance measurement and KPIs. Continue the revised policy of installing Automatic Passenger Counters (APC) on all new replacement and expansion buses and deriving better information to further compliment the compass data. Pilot luggage racks on buses that serve BC Ferries terminals. Conduct regular bus and SeaBus interior cleaning inspection programs to ensure appropriate conditions for employees and customers. Fully implement a Resiliency Plan to provide alternate fueling facilities and facilitate the movement of buses and staff in the event of a major event or service disruption. Deliver a revised employee recognition program for length of service, safety and performance. A modern and flexible online points-based rewards service will form the basis of CMBC s Employee Recognition Program, allowing for timely and meaningful positive reinforcement of corporate goals. Conduct a comprehensive Access Transit Policy and Service Delivery Model review to identify opportunities to improve accessible or custom transit service delivery. Access Transit will review the customer complaint process, provide more training to taxi operators, review Trip Denials and implement an account-based Compass card for HandyDART customers. Risks and Challenges Service expansion will increase workforce planning, recruitment and training to fulfil new staffing requirements in addition to offsetting retirements and other attrition. The expanded service introduced through the year will require more transit operators, maintenance staff and SeaBus crewing at the appropriate times plus have impacts on maintenance and service support areas for running a larger fleet with more kilometres. Difficulties in hiring certain key positions and skillsets continue to be a risk. The early rollout plan requires using retired or scheduled to be retired buses in the short term to provide the required fleet and the timely procurement of additional on board equipment. CMBC has a diesel fuel management strategy to attempt to mitigate market price changes and achieve budget stability by locking in up to 75 per cent of expected monthly fuel volumes for future months. West Vancouver purchases their fuel through the city and their municipal fuel supply arrangements. The other transit contractors participate in our fuel supply arrangement. Natural gas price supply agreements including locked-in volumes are currently in the procurement process. CMBC will be Page 17

19 operating new CNG replacement buses in 2017, lowering diesel fuel demand and generating fuel cost savings over The known BC Hydro electricity rate increases for 2017 are built into the budget. Abnormal inclement winter weather conditions and weather pattern variability could result in snow clearing, salting and other vehicle maintenance costs significantly beyond planned expenditures, which are based on long range average costs. CMBC s locations include 35 loops, seven transit centre lots, SeaBus administration and three HandyDART locations. Each snow day can cost $125,000 for salting and snow clearing against an annual budget of $600,000. Service Assumptions Change CONVENTIONAL TRANSIT ACTUAL BUDGET Q2 FORECAST BUDGET Incr / (Decr) % SERVICE HOURS CMBC Operations 4,687,022 4,770,418 4,770,442 4,901, , % Conventional Bus 4,187,049 4,264,474 4,273,498 4,378, , % Community Shuttle 489, , , ,199 26, % SeaBus 10,933 10,961 10,991 11, % Contracted Transit Services 236, , , ,237 6, % West Vancouver 134, , , ,792 4, % Contract Community Shuttle 102, , , ,446 2, % Conventional Transit 4,923,932 5,009,077 5,008,428 5,146, , % SERVICE KILOMETRES CMBC Operations 92,044,250 93,758,835 93,503,531 96,178,226 2,674, % Conventional Bus 81,960,814 83,308,088 83,340,835 85,420,886 2,080, % Community Shuttle 9,935,644 10,302,562 10,014,122 10,600, , % SeaBus 147, , , ,526 7, % Contracted Transit Services 5,122,037 5,196,644 5,176,326 5,280, , % West Vancouver 2,748,359 2,802,432 2,794,652 2,877,200 82, % Contract Community Shuttle 2,373,678 2,394,212 2,381,674 2,402,800 21, % Conventional Transit 97,166,287 98,955,479 98,679, ,458,226 2,778, % Change ACCESS TRANSIT ACTUAL BUDGET Q2 FORECAST BUDGET Incr / (Decr) % Service Hours 557, , , ,000 30, % Service Kilometres 8,868,485 8,745,500 8,991,574 9,520, , % Total Trips 1,204,788 1,202,000 1,243,889 1,287,500 43, % Trips - HandyDART 1,104,937 1,100,000 1,119,938 1,185,500 65, % Trips - Taxi Supplement 99, , , ,000 (21,951) (17.7%) The 2017 budget includes the first phase of the transit service increases of the Mayors Vision and Investment Plan. The 2017 service increase is over 200,000 annual service hours for conventional transit services including SeaBus and Contracted transit services and will require approximately 80 revenue vehicles. The 2017 service hour change of 138 thousand shown in the schedule above represents the Page 18

20 current year fiscal impact which is lower due to the timing of when the actual service will be implemented. The other major impacts to service levels include: The additional deadhead (pull in/pull out) for the full year of 2017 as a result of the opening of Hamilton Transit Centre (HTC) and the closure of North Vancouver and Oakridge Transit Centres in September 2016, and the reassignment of service to HTC and other depots. Annual service variations are based on the number of weekdays, Saturdays and Sundays in a calendar year, with scheduled service levels differing based on the day of the week has one less day than 2016 (a leap year) and one less Saturday, partially offset by one extra Sunday, a net result of less total service. Other non-expansion service adjustments for 2017 which contributed to the increased service levels include the reconfiguration of Burnaby s Metrotown Loop and bus movements plus additional running time for general traffic congestion Budget versus 2016 second quarter forecast BUS OPERATIONS BY CATEGORY Twelve months ending December Change ($ thousands) ACTUAL Q2 FORECAST BUDGET Incr/(Decr) % Administration 13,692 15,992 14,948 (1,044) (6.5%) Contracted Services 68,407 69,757 72,382 2, % Fuel and Power 50,181 44,791 50,169 5, % Insurance 13,529 14,649 15, % Maintenance, Materials and Utilities 58,824 61,252 69,346 8, % Professional and Legal 2,226 2,474 2, % Rentals, Leases and Property Tax 12,840 13,208 13,176 (32) (0.2%) Salaries, Wages and Benefits 423, , ,118 21, % Total Expenses by Category 643, , ,289 37, % The 2017 Bus Division budget overall is $37.2 million higher than 2016 second quarter forecast; CMBC Operating is $33.6 million higher, the other contracted bus services is $1.5 million higher, Access Transit is $1.3 million higher and corporate allocated costs is $0.9 million higher. For CMBC Operating the 2017 budget increase is a result of economic increases relative to the existing service as well as the costs of the expansion service. Contractual labour increases, higher employer-paid benefit costs, higher vehicle insurance rates and predicted fuel costs and applicable general and parts inflation equates to a $15 million increase. The expansion service accounts for another $15 million increase over the second quarter 2016 Forecast including the one-time vehicle road worthy repair costs, operator and other employee recruitment and training and additional maintenance, insurance and fuel for the added service kilometres. Wages, salaries and benefits increased $21.2 million, which includes: o $9.4 million of contractual increases for Unifor and MoveUP (COPE) and other step and merit pay progression increases o $1.7 million related to the full annual cost of deadhead and operator travel time from the opening of Hamilton Transit Centre (HTC) in September 2016 o ($3.2) million decrease in overtime related to one-time route training in 2016 for the opening of HTC. o $8.4 million for additional operator and other staff wages and salaries related to service expansion. Page 19

21 o $4.0 million for higher employer-paid benefits as a result of contractual increases and service expansion. Materials and Services costs are $7.2 million higher due to work-plan major bus component life cycle increases, parts inflation and the extra service kilometres. The budget has a one-time $4.9 million repair cost to ensure the road worthiness of buses due for retirement that are being held short term for service expansion. Vehicle insurance is higher as a result of increased insurance rates for 2017 plus the additional service kilometres. Fuel costs increased $5.4 million due to expected higher 2017 fuel prices and the additional service kilometres. For all Contracted Transit Services the overall 2017 budget is $2.8 million higher than the 2016 second quarter forecast. Access Transit is higher by $0.9 million due to contractual operator labour and maintenance increases plus the net financial impact of 2017 s additional services hours over the 2016 forecast service. Contracted Community Shuttle s $0.3 million and West Vancouver s $1.1 million increases are due to agreed contractor labour rate changes plus the expansion service hours impacting labour and vehicle maintenance costs. Key Performance Indicators PERFORMANCE INDICATORS ACTUAL BUDGET Q2 FORECAST BUDGET Cost Per Service Hour excl Fuel CMBC Operations Contracted Transit Services Cost Per Trip excl Fuel & Taxi Savers Access Transit Cost Per Revenue Hour excl Fuel CMBC Operations Cost Per Service Kilometres excl Fuel CMBC Operations Contracted Transit Services Page 20

22 Rail Operations British Columbia Rapid Transit Company Ltd. (BCRTC), on behalf of TransLink, maintains and operates two of the three SkyTrain lines in Metro Vancouver the Expo Line and the Millennium Line/Evergreen Extension (E&M), as well as the West Coast Express commuter rail service. In addition, BCRTC also manages the agreement with InTransit BC for the operation and maintenance of the Canada Line. The Expo and Millennium lines primarily operate out of BCRTC's Operations and Maintenance Centre in Burnaby. There is more than 900 dedicated staff who work in the areas of administration, engineering, maintenance, field and train operations to deliver this service. The Expo and Millennium lines connect downtown Vancouver with the cities of Burnaby, New Westminster, Surrey, Port Moody and Coquitlam. The Canada Line connects downtown Vancouver to the Vancouver International Airport (YVR) and the city of Richmond. The West Coast Express commuter rail service delivers trains that connect the cities of Mission, Maple Ridge, Pitt Meadows, Port Coquitlam, Coquitlam and Port Moody with Vancouver. The Rail division of TransLink currently provides 400,000 trips per day on 139 km of track, with a 95 per cent on-time performance rate. Ongoing investment in the rail network over the coming years will enable us to continue to meet the needs and expectations of our customers. With the Evergreen Extension to the Millennium Line opening before Christmas 2016, 2017 will be the first full year of operations with the new Expo & extended Millennium Line service pattern, making this the world s largest automated train system. Initiatives The Rail division is committed to its employees, the ongoing improvement of customer service, and supporting TransLink s critical role of planning and managing the region s transportation network. Over the next few years, BCRTC will complete the ongoing investments in existing rail services, successfully integrate the Evergreen Extension and prepare for additional service expansions in Vancouver and Surrey to better meet the needs of our customers. The rail division has aligned its 2017 focus areas and objectives in its Business Plan with those of TransLink to support an integrated approach to meet the ever expanding needs of people in the Metro Vancouver region. Ensure State of Good Repair In 2017, BCRTC will focus on the following areas to continually improve the current record of safe and secure operations and invest in the future of rail services: Continually improve the record of safe and secure operations. o Develop and implement formal annual maintenance plans. o Implement asset management systems by the end of o Develop a ten year asset management plan for rail. o Improve and document maintenance standard operating procedures. o Improve performance reporting. o Update and transform safety management system to a comprehensive integrated management system framework. Page 21

23 Invest in the future of rail services by focusing resources on the continuous improvement of our people, business tools and structure to ensure a safe and reliable rail service. o Update existing information technology platforms to support core business processes. o Develop knowledge transfer options for rail. o Develop a long term space optimization and upgrade plan. o Review current product lines and management thereof. o Develop an internal apprenticeship program. Mobilize Mayors Vision Provide the rail elements required to deliver the regional transportation priorities. Develop and update annual service plans for the rail group for 2017 service adjustments. Procure and successfully commission MKIII vehicles. Procure and successfully commission West Coast Express vehicles. Work with Canada Line to define, procure and commission additional rail vehicles. Support planning and design of identified, future line extensions and stations upgrades. Improve customer experience and public support In 2017, BCRTC will focus on the following areas in support of the customer experience: Improve the TransLink reputation through delivering consistent high-quality rail services with an emphasis on reliability, safety and customer service. o Appoint the Director of Customer Experience and Performance to the executive leadership team. o Contribute to the revision of the Customer Service Charter. o Develop and implement a benchmarking program. o Develop a quarterly report on customer complaints, compliments and comments. o Create a performance reporting unit to integrate the rail group performance. o Develop and implement a meet the manager program. o Establish and implement customer service performance indicators for rail. o Implement an enhanced public safety and community outreach programs. o Review front line staff uniforms. Increase ridership by running a reliable, effective and efficient rail system that supports a great passenger experience. o Using Compass data, access and alter service plans for off peak services for SkyTrain. o Debrief on all major service delays to identify issues and improvements to optimize future service. o Explore creative and different options to bring non-users to the system. Develop our employees to meet our customer service standards and objectives. o Conduct a training review to design and develop a model and change management plan. o Implement inter-departmental Customer First working groups. o Develop a consistent customer service plan for all staff. o Develop succession plans. o Develop service level agreements with TransLink for certain shared services. Risks and Challenges A full assessment of the life cycle impact on fleet and rail from the increased services is not complete. Additional maintenance or expedited capital funding may be required. In the 2017 budget, additional staff were added to support vehicle and rail maintenance, including planners and schedulers. In future years, and with the enterprise asset management (EAM) system, the impacts from service level changes should be better measured and understood to allow more accurate life cycle costing and forecasting. Page 22

24 Due to the aging infrastructure, random asset failures may occur resulting in service disruptions, higher maintenance costs and additional overtime. The maintenance response team, planning and scheduling team, as well as additional maintenance staff will manage maintenance activities associated with such failures to minimize service disruptions. Cost to operate and maintain new assets associated with the Evergreen Extension could differ from those budgeted. BCRTC will ensure effective warranty management of newly acquired assets and manage its overall budget. BC Hydro s 2015 Rate Design Application filed with the BC Utilities Commission, if approved, would result in changes in Large and Medium General Service accounts. As a result, hydro costs, including the Canada Line performance payment, could differ from budget. Service Assumptions Effective October 22, 2016, there were system-wide changes to the E&M Lines service patterns, headways and train types as part of preparations to open the Evergreen Extension to the Millennium Line in December Evergreen Extension service changes result in an increase of 6.6 million car-km (a 14.7 per cent increase) or 137,000 service hours and 817 million capacity-km, to the E&M Lines in The 2017 service plans for the rail division result in an increase in rail service of approximately 17 per cent compared to 2016 budget. The service kilometres and hours for each of the lines are as follows: SERVICE HOURS Change ACTUAL BUDGET BUDGET Incr/(Decr) % Expo & Millennium Lines 1,095,946 1,111,634 1,335, , % Canada Line 194, , ,668 6, % WCE 39,892 42,504 37,862 (4,642) (10.9%) Rail Division 1,330,718 1,351,529 1,577, , % SERVICE KILOMETRES* Expo & Millennium Lines 44,166,622 44,798,879 53,837,212 9,038, % Canada Line 6,275,136 6,355,984 6,558, , % WCE 1,576,858 1,586,413 1,411,511 (174,902) (11.0%) Rail Division 52,018,616 52,741,276 61,806,813 9,065, % *Service Kilometres are total (Revenue and Non-Revenue) car kilometres With the approval of the Mayors Vision, service level changes using the existing fleet will be implemented for all SkyTrain Lines in early This will be the first year since 2005 that customers will benefit from service expansion using the existing fleet: Effective January 2017, Expo & Millennium Line customers will see an increase in peak service operation by a total of one hour and 15 minutes per weekday as well as improved weekend midday and early evening service. These changes result in an additional 2.7 million car-km in 2017 (annualized 2.8 million car-km). Page 23