Phase 1: Surrey-Newton-Guildford LRT Project

Transcription

1 Phase 1: Surrey-Newton-Guildford LRT Project Business Case March 2018

2 TABLE OF CONTENTS Surrey-Newton-Guildford LRT Project Business Case Page i 1 Executive Summary 1 Introduction 1 Metro Vancouver Region and the South of Fraser Sub-Region Are Growing 1 Current Transit Cannot Meet Demand in the South of Fraser Sub-Region 2 Surrey-Newton-Guildford LRT Project is an Effective Solution 3 Proposed Scope of Surrey-Newton-Guildford LRT Project 4 Benefits of Surrey-Newton-Guildford LRT Project for the Province and Region 5 Procurement Assessment and Project Delivery 5 Project Schedule and Costs 6 Recommendation 7 2 Report Purpose and Structure 9 PART A RATIONALE FOR RAPID TRANSIT IN SOUTH OF FRASER SUB-REGION 10 3 Strategic Context 10 Province of British Columbia 10 Metro Vancouver Region 12 TransLink 14 South of Fraser Sub-Region 16 4 Existing and Future Challenges 18 Population Growth 18 Corridor Congestion 19 Changing Regional Travel Patterns 21 Access to Transit 23 Summary 25 5 Project Objectives 26 PART B PROJECT DELIVERY 27 6 Options Assessment 27 Introduction 27 Due Diligence 31 7 Project Scope 34 Overview 34 Physical Asset Scope 35 Operation, Maintenance & Rehabilitation Scope 37 8 Project Assessment 40 Introduction 40 Transportation Effects 41 Economic Effects 44 Urban Development Effects 45

3 Surrey-Newton-Guildford LRT Project Business Case Page ii Environmental Effects 45 Social, Community and Safety Effects 46 Capital Costs 48 Operations, Maintenance and Lifecycle Costs 50 Quantified User Benefits, Relative to Costs 51 Sensitivity Analysis 53 Measurement of Project Objectives 55 9 Project Status 58 Consultation with Stakeholders & the Public 58 Environmental Review & Permitting 60 Procurement Plan 61 PART C PROCUREMENT OPTION ANALYSIS Procurement Options Analysis 62 Approach 62 Procurement Options Identification 62 Procurement Options Analysis Overview 64 Procurement Options Analysis DBV Versus DBVFOMR 65 Multiple Criteria Analysis 65 Risk Analysis 66 Value for Money Calculation 70 Market Sounding Recommended Procurement Option 81 PART D PROCUREMENT & FUNDING PLAN Procurement Plan 82 Recommended Procurement Process 82 Project Schedule 83 Project Governance 84 Project Delivery 84 Communications and Consultation Funding 87 Project Costs 87 Sources of Funding 89 Project Funding Requirement Summary 91 Affordability Ceiling 92 Funding Analysis 93 Financial Statement Impacts (TransLink) 93 PART E RECOMMENDATION 95

4 Surrey-Newton-Guildford LRT Project Business Case Page iii LIST OF FIGURES Figure 1 Proposed LRT at Newton Transit Exchange...3 Figure 2 Rendering of LRT on 104 Avenue...4 Figure 3 Preliminary Project Schedule...6 Figure 4 50 Years of Transportation Planning Figure 5 Regional Population Density Map (2011 vs. 2041)... Figure 6 TransLink's Areas of Responsibility... Figure 7 TransLink Rapid Transit Network Map Figure 8 South of Fraser Sub-Region Figure 9 Metro Vancouver Population Projections ( ) Figure 10 Level of Road Congestion (2011) Figure 11 Level of Road Congestion (2045) Figure 12 Average Transit Service Speed (2011) Figure 13 Average Transit Service Speed (2045) Figure B-Line Average Run Time Figure 15 South of Fraser Trip Breakdown Figure 16 Options Assessment Overview... Figure 17 - LRT1 (Phased Approach) Figure 18 Project Map Figure 19 Typical Cross-Section on 104 Avenue Figure 20 Typical Cross-Section on King George Boulevard Figure 21 Rendering of Newton Transit Exchange Figure 22 - Surrey-Newton-Guildford LRT Peak Load Figure 23 Travel Time (Project vs. 96 B-Line) Figure 24 - LRT vs. Bus Accident Rate (per 10,000 km) Figure 25 LRT Annual Operating & Lifecycle Cost Profile Figure 26 - Preferred Procurement Options Figure 27 - Top 5 DBV Capital Risks Figure 28 - Top 5 DBVFOMR Capital Risks... 69

5 Surrey-Newton-Guildford LRT Project Business Case Page iv Figure 29 - Overview of VFM Approach... Figure 30 - Comparison of NPV under DBV & DBVFOMR Figure 31 - Project Schedule... 83

6 Surrey-Newton-Guildford LRT Project Business Case Page v LIST OF TABLES Table 1 Capital Cost Estimate ($ Millions)...7 Table 2 - Capital Project Funding Allocation by source (Nominal $ million)...8 Table 3-96 B-Line Service Performance ( ) Table 4 - Percentage Growth in Population and Mode Share ( ) Table 5 South of Fraser Existing SkyTrain Stations Population Catchment Table 6 South of Fraser Existing SkyTrain Stations Employment Catchment Table 7 - Project Objectives Table 8 - Multiple Account Evaluation - Account Level Objectives and Criteria Table 9 Phase 2 Final MAE Alternatives Table 10 - MAE Assessment Scale Table 11 - MAE Analysis Table 12 LRT Operation Service Frequencies (Minutes) Table 13 LRT Travel Time Estimates Table 14 Mode Share and Transit Trips Table 15 SNG LRT Ridership Forecasts Table 16 LRT Ridership Comparison Table 17 Mode Share and VKT Removed Table 18 Capital Cost Estimate ($ million, nominal) Table 19 Annual LRT Operating Cost (30m Vehicles, 2016$) Table 20 Project Benefits Summary (PV, $2016) Table 21 Project Costs, Benefits and Benefit Cost Ratio Table 22 Sensitivity Analysis Table 23 - Project Specific and Measurable Objectives Table 24 - Qualitative Procurement Options Assessment Criteria Table 25 - Qualitative Assessment Scoring Framework Table 26 - MCA Results Table 27 - Summary Risk Allocation Matrix Table 28 - Summary of Risk Values (DBV vs. DBVFOMR)... 68

7 Surrey-Newton-Guildford LRT Project Business Case Page vi Table 29 - Capital Risk Reserve Amounts Table 30 - Project Variable Assumptions Table 31 - Summary of Financing Assumptions Table 32 - Value for Money Assessment (DBV vs. DBVFOMR) ($ millions) Table 33 - Discount Rates Used in VFM Sensitivity Analysis Table 34 - Interest Rates Used in VFM Sensitivity Analysis Table 35 Construction Cost Allocation $ millions (nominal) Table 36 - Cashflow by Cost Category and Calendar Year - $ millions (nominal) Table 37 - Cashflow by Cost Category and Provincial Fiscal Year - $ millions (nominal) Table 38 Funding Allocation by Source ($million, nominal) Table 39 Funding Required by Source by Calendar Year - $ millions (nominal) Table 40 - Funding Required by Source by Provincial Fiscal Year - $ millions (nominal) Table 41 - Affordability Ceiling Calculation... 92

8 Surrey-Newton-Guildford LRT Project Business Case Page vii GLOSSARY OF TERMS Affordability Ceiling: Annual Service Payment (ASP): BAU: BC Environmental Assessment Act (BCEAA): BCR: Bus Rapid Transit (BRT): CAMF Canadian Environmental Assessment Act (CEAA): Closed-circuit Television (CCTV): DBV: DBVFOMR: DDP: Discount Rate: Environmental Assessment Office (EAO): ESR: GHG: IDC: ISO 31000:2009 Risk Management Principles and Guidelines: The upper limit of the total amount that the public sector can pay the private partner for the provision of a new project over the term of the concession period. The performance-based payments made by TransLink to the contractor over the 7-year operating period in a DBVFOMR. Business As Usual. The mechanism for reviewing major projects to assess their potential impacts and to ensure they meet the goals of environmental, economic and social sustainability. Benefit Cost Ratio. Driver-operated bus technology that provides faster, more frequent and more reliable service than conventional bus service such as B-Line or frequent bus service. Capital Asset Management Framework. The legislative basis for the federal practice of environmental assessments in Canada. A system in which signals are not publicly distributed but are monitored, primarily for surveillance and security purposes. Design-Build-Vehicle. Design-Build-Vehicle-Finance-Operate-Maintain-Rehabilitate. Due Diligence Panel. The real rate of interest (nominal interest rate minus inflation) prescribed by the BC Ministry of Finance as 6% in calculating the benefit-cost ratio. The agency that manages the review of proposed major projects in British Columbia, as required by the Environmental Assessment Act. Environmental and Socio-economic Review. Greenhouse Gas. Interest During Construction. The principles and generic guidelines for risk management.

9 Surrey-Newton-Guildford LRT Project Business Case Page viii Light Rail Transit (LRT): Long Range Financial Model (LRFM): Metro Vancouver: Metro Vancouver Region (the Region): Multiple Account Evaluation (MAE): Multiple Criteria Analysis (MCA): MLBE MoTI MR: Net Present Value (also referred to as Net Present Cost): O&M OCP: OMF: OpenTrack: PA: Preferred Proponent: PPP: Public Realm: Public Sector Comparator (PSC): A driver-operated rail technology using trains that utilize unique vehicle and stop design to help the system integrate into communities. TransLink s multi-purpose and interactive model used to produce financial statements. The federation of 21 municipalities, one Electoral Area and one Treaty First Nation that collaboratively plans for and delivers regional-scale services. The geographic territory encompassing 21 municipalities, one Electoral Area and one Treaty First Nation. The multi-criteria decision matrix tool used to compare options within a project. The process, which provides a framework for evaluating both quantitative and qualitative factors and presents the advantages and disadvantages of each option in a form that can easily be assimilated by decision-makers. Millennium Line Broadway Extension. Ministry of Transportation and Infrastructure. Maintenance and Rehabilitation. Present value of a series of cash flows that occur over time, discounted at a specific discount rate to a specific date. It is a tool used to compare cash flows of different amounts occurring over the same time period. Operations and Maintenance. Official Community Plan. Operations and Maintenance Facility. A rail simulation software package used to model light rail operations. Project Agreement. The Proponent selected through a procurement process to enter into negotiations for a contract. Public Private Partnership. Any publicly owned streets, pathways, right of ways, parks, publicly accessible open spaces and any public and civic building and facilities. The delivery model if the Project is procured through a traditional, nonpartnership procurement.

10 Surrey-Newton-Guildford LRT Project Business Case Page ix Public Transit Infrastructure Fund (PTIF): PV: Rail Rapid Transit (RRT): The Region: Regional Transportation Model (RTM): Regional Trip Diary: RFP: RFQ: RTS: SNG: SoFRT: The Sub-Region: SPV: TOD: Value for Money (VFM): Vehicle Kilometres Travelled (VKT): VISSIM: The federal funding program designed to support infrastructure projects. Present Value. A driver-operated or driverless rail technology that has a high passenger capacity and operates completely separated from other traffic. The Metro Vancouver Region. TransLink s transportation forecasting tool for municipalities/districts in Metro Vancouver. TransLink s data collection and analytics program to monitor and report on the use and performance of Metro Vancouver s multi-modal transportation system. Request for Proposals. Request for Qualifications. Regional Transportation Strategy. Surrey-Newton-Guildford. South of Fraser Rapid Transit. The South of Fraser Sub-Region including the City of Surrey, City of Langley, Township of Langley, Corporation of Delta, City of White Rock and Tsawwassen First Nation. Special Purpose Vehicle. Transit Oriented Development. The value established by calculating the estimated net present cost (NPC, also referred to as net present value, or NPV) of a project based on a particular delivery model and comparing it to the estimated NPC if the project were delivered entirely by the public sector using a traditional model. A measurement of traffic flow in the Regional Transportation Model that combines the number of vehicles and distance travelled. A micro simulation traffic software that can be used to access traffic patterns and driving behavior for a variety of modes including motorized transport, rail, pedestrians and cyclists.

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19 Surrey-Newton-Guildford LRT Project Business Case Page 9 2 REPORT PURPOSE AND STRUCTURE This Business Case for the SNG LRT project (the Project) establishes the need for investing in rapid transit in the Sub-Region and highlights how the Project would contribute to local, regional and provincial policy objectives. The main purpose of this Business Case is to: Demonstrate the need for the Project; Describe the scope and status of the Project; Describe in detail the procurement analysis conducted for the Project; Recommend a procurement approach; and Recommend an implementation plan. The document has been structured into the following five main sections: Part A - Rationale for Rapid Transit in South of Fraser Sub-Region: Describes the need for rapid transit improvements in the Sub-Region and the relationship of these improvements to local, regional and provincial policy objectives. Part B - Delivery of the Project: Outlines the options assessment process and describes the Project in terms of the physical scope, benefits, costs and current status. Part C - Procurement Decision: Analyses and compares the procurement methods considered. This section uses qualitative and quantitative analysis based on the results of financial modelling, risk quantification, risk analysis, and a Multiple Criteria Analysis (MCA) of the procurement options, to ensure the Project goals and procurement objectives are satisfied. Part D Implementation Plan and Funding Analysis: Describes the procurement process to implement the Project, discusses funding sources and provides a preliminary schedule for implementation. Part E - Recommendation: Summarizes the recommendation to proceed with the Project.

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21 Surrey-Newton-Guildford LRT Project Business Case Page 11 In response, the Province has prioritized housing affordability challenges in the Region by developing six principles 15 for addressing housing affordability, which includes smart transit expansion Climate Change Transportation accounts for 37 per cent of British Columbia s total emissions. 16 The Province is undertaking multiple strategies to address climate change and reduce greenhouse gas emissions, including the development of new 2030 climate change targets. 17 Investing in new rapid transit in the Region will support the achievement of the Province s climate change target Transportation A Catalyst for Change The Province has identified its support for Metro Vancouver s vision for transportation improvements. 18 In recent mandate letters to the Minister of Municipal Affairs and Housing and the Minister of Transportation and Infrastructure, the Premier highlighted the development of transit improvements and the implementation of the Mayors Council Investment Vision, as priorities for the Ministry of Transportation and Infrastructure and Ministry of Municipal Affairs and Housing. 19 The Province and its federal partners signed a bilateral funding agreement (June 2016) under the PTIF to commit more than $314 million in Provincial funds and $460 million in federal funds towards transit investment in the Region and British Columbia. These commitments include funds towards the development of the Project. This agreement specifically recognizes that funding rapid transit would create new opportunities to build housing for people that is affordable, with lower carbon footprints, in stronger communities that are connected to the places people need to access for work, school, shopping, and recreation. 20 Further, the agreement reaffirms the Province s and the Government of Canada s commitment to action through transit and rapid transit expansion to reduce traffic congestion, air pollution, and GHG emissions while continuing to grow the regional and provincial economy accessed September British Columbia s Climate Leadership Plan August Premier John Horgan, Mandate Letter to Minister of Environment and Climate Change Strategy, July 18, Premier John Horgan, Mandate Letter to Minister of Municipal Affairs and Housing, July 18, Premier John Horgan, Mandate Letters to Minister of Transportation and Infrastructure and Minister of Municipal Affairs and Housing, July 18, British Columbia-TransLink Public Transit Infrastructure Fund Contribution Agreement 21 British Columbia-TransLink Public Transit Infrastructure Fund Contribution Agreement

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25 Surrey-Newton-Guildford LRT Project Business Case Page 15 An intricate network of express bus, local bus and HandyDART (Paratransit) services, a commuter rail service (the West Coast Express) extending east to Mission and a SeaBus passenger ferry service to the North Shore supplement the rapid transit network. Taken together, TransLink s service area covers more than 1,800 square kilometres, the largest in Canada. Figure 7 shows the key regional transit connections. Figure 7 TransLink Rapid Transit Network Map In its current form, the public transit network provides a convenient, affordable and reliable service to large areas of the Region. Despite one of the highest growth rates in North America and not having any rapid transit prior to 1986, the Region now has the fourth highest per capita transit ridership in North America, behind only New York, Toronto and Montréal. However, there are still major residential and commercial areas in the Region that are underserved, and represent significant gaps within the regional transportation system. To address these challenges and others outlined in Metro Vancouver 2040, TransLink developed the Regional Transportation Strategy Strategic Framework 23 (2013), which sets out the vision, goals, principles and strategies to help guide transportation decisions in the Region for the next 30 years. This framework identified rapid transit investments on key corridors in the Sub-Region and along Vancouver s Broadway corridor as regional priorities. This Business Case focuses on rapid transit investment for the Sub-Region. 23 Regional Transportation Strategy Strategic Framework

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27 Surrey-Newton-Guildford LRT Project Business Case Page 17 To sustainably manage long-term population and economic growth, the City has developed a series of strategic city-shaping plans with investment in rapid transit identified as a top priority. Of particular importance, the City has revised their Official Community Plan 24 (OCP) to concentrate urban development in Surrey Metro Centre, in five Town Centres and along the corridors that link these urban centres together. The vision outlined in the OCP focuses on rapid transit as a means of linking communities to focus and intensify development, creating synergies between them. This vision is grounded by nine interconnected building blocks identified as the following essential components: greener, more complete, more compact and connected community, resilient, safer, inclusive, healthier and more beautiful City of Langley & Township of Langley The City of Langley and Township of Langley have made similar provisions in their land use and infrastructure plans to accommodate and support future rapid transit along Fraser Highway. Both the City of Langley Community Plan 25 and Township s Official Community Plan 26 (2005) include policies that concentrate growth within the Langley Regional City Centre area, which encompasses a roughly 1 km radius of Fraser Highway. The City s Master Transportation Plan 27 (2014) includes a transit strategy that emphasizes the need for rapid transit along Fraser Highway to provide enhanced regional/intermunicipal connections and includes supportive policy directions, including: a new downtown transit exchange on Fraser Highway, supportive pedestrian and cycling facilities, and related road network connectivity improvements. 24 Official Community Plan 25 City of Langley Community Plan 26 Township s Official Community Plan 27 City s Master Transportation Plan

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30 Surrey-Newton-Guildford LRT Project Business Case Page 20 Increasing congestion will not only impact general traffic, but also the existing transit services in Surrey, making transit slower and less reliable. Figure 12 and 13 depict 2011 and projected 2045 average transit speeds, the red line representing less than 15 km/hr, showing a considerable reduction in speeds without rapid transit investment. Figure 12 Average Transit Service Speed (2011) Figure 13 Average Transit Service Speed (2045) To address some of these concerns in the short-term, TransLink operates an express bus service the 96 B-Line that services exchanges in Newton and Guildford and operates along King George Boulevard and 104 Avenue, two of the busier corridors in the Sub-Region. The average end-to-end runtime for the 96 B-Line is approximately 29 minutes, however, with substantial planned growth and development expected along both corridors, congestion is expected to significantly impact the 96 B-Line travel time reliability. Figure 14, highlights the average journey time for the 96 B-Line during a single day of operations. The red line cutting through the middle indicates the average 29-minute end-to-end journey. The blue dots represent individual observed trips and highlight the journey time variability. In some cases, as indicated in the graph, it takes longer than 50 minutes to complete the journey. Figure B-Line Average Run Time

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38 Surrey-Newton-Guildford LRT Project Business Case Page Phase 1 Shortlist Identification As part of the shortlist identification ( Phase 1 ), over one thousand combinations of potential network options were identified. Rapid transit technologies included bus rapid transit (BRT), LRT, and rail rapid transit (RRT), also known as SkyTrain 37. These options underwent a screening process using a Multiple Account Evaluation (MAE) framework to assess which options best met the project objectives. Phase 1 concluded by recommending a shortlist of 12 network alternatives for more detailed analysis against a BAU scenario. The BAU scenario assumed the Study Area would continue to be served by buses consistent with TransLink s South of Fraser Area Transit Plan (SOFATP) with service increases consistent with past trends and forecast population and employment growth, but without rapid transit investment Phase 2 Alternatives Development and Evaluation The purpose of the evaluation of alternatives ( Phase 2 ) was to assess the shortlisted set of rapid transit options from Phase 1 against the project objectives, based on application of a technical evaluation while considering stakeholder and public input. As part of the evaluation process, an MAE methodology was applied using a series of accounts to evaluate costs, benefits, and impacts of each alternative. TransLink and its advisory team identified seven accounts aligned with the BC MoTI Benefit Cost Analysis Guidebook as indicated in Table ibid 38

39 Surrey-Newton-Guildford LRT Project Business Case Page 29 Table 8 - Multiple Account Evaluation - Account Level Objectives and Criteria 39 Application of the MAE resulted in 13 alternatives being evaluated further. The full analysis is contained within the Surrey Rapid Transit Study Alternatives Analysis Phase 2 Evaluation Final Report (August 2012). Based on these results of the further analysis, TransLink and its advisors identified four of the alternatives, shown below, for consideration within a regional investment planning process. 39 Surrey Rapid Transit Alternatives Analysis Phase 2 Evaluation (IBI Group in association with Hatch Mott Macdonald, Golder Associates, A. Steadman, and Coriolis, August 2012).

40 Surrey-Newton-Guildford LRT Project Business Case Page 30 Table 9 Phase 2 Final MAE Alternatives Alternative 1 (BRT1): Alternative 2 (LRT5A): Alternative 3 (LRT1): Alternative 4 (RRT1A): LRT on Fraser Highway, and BRT on King George Boulevard and on 104 Avenue. LRT on Fraser Highway, BRT King George Boulevard, and BRT on 104 Avenue. LRT on Fraser Highway, LRT on King George Boulevard south to Newton with BRT continuing to White Rock, and LRT on 104 Avenue. RRT on Fraser Highway, and BRT on King George Boulevard and on 104 Avenue. TransLink and its Municipal and Provincial partners concluded that all four alternatives would be advanced for further consideration as part of TransLink s RTS the strategic framework setting the vision, goals, principles, strategies and key initiatives for transportation investment in the Metro Vancouver over the next 30 years Phase 3 - Regional Transportation Strategy and Mayors Council Vision The RTS strategic framework 40 was prepared by TransLink with input from stakeholders to develop a comprehensive 30-year transportation strategy for Metro Vancouver. An important action from this framework included the completion of high priority rapid transit projects including Surrey (104 Avenue, Fraser Highway, and King George Boulevard). 41 In February 2014, MoTI requested that the Mayor s Council confirm its transportation vision including clarification around technology and timing for the major projects recommended within the RTS. In response, the Mayors Council formed a subcommittee with support from TransLink, Metro Vancouver and staff from municipalities throughout the region to define this vision, resulting in the Regional Transportation Investments: A Vision for Metro Vancouver 42 ( the Mayors Council Vision ). In developing the Mayor s Council Vision, the subcommittee considered the four alternatives that were put forward following Phase 2 and recommended the implementation of LRT in Surrey (Alternative 3 LRT1). Implementation would be undertaken using a phased approach with the first phase including construction of LRT along the Surrey-Newton-Guildford corridor, followed by LRT connecting Surrey City Centre to Langley Town Centre along the Fraser Highway. The BRT component to White Rock was redefined as a separate initiative to be analyzed independent of this network. 40 TransLink Regional Transportation Strategy 41 TransLink Regional Transportation Strategy 42 TransLink 10 Year Vision

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42 Surrey-Newton-Guildford LRT Project Business Case Page 32 The purpose of the due diligence review was to ensure that the need for investment, as well as the scope, technology and cost of rapid transit in the City, were supported by a rigorous review. While the review found that work done in Phase 2 was generally complete and robust 44, the Working Group noted that the transportation model used for Phase 2 could be refined Updated Ridership Forecasts Following a review described above in section 6.2.1, the RTM was updated in 2016 to reflect new information including updated land use planning assumptions, additional model zones and re-calibration of the model along the South of Fraser and Broadway areas using actual ridership data. The revised RTM became the basis for forecasting and evaluation work 45. With respect to considering each corridor as a stand-alone option, the Surrey Rapid Transit Independent Technology Evaluation Final Report concluded that LRT was the preferred technology for the SNG Line. Its superior capacity and expandability indicated it would serve a greater portion of the corridor users. Because of the RTM update, the revised ridership figures revealed the need for greater transit capacity in the medium to long term for the SNG corridor, in particular for the PM peak Due Diligence Further due diligence was undertaken early in 2017 based on more advanced development on a reference case for the Project, resulting in additional recommendations for consideration by the Project team. Key recommendations included: Developing a bottom up operating cost estimate; Additional ridership sensitivities; Corridor development commitments from the City; Design optimization and deferral of urban scope elements; Constructability review (assess construction cost vs. traffic impacts); Further traffic impact analysis; Development of comprehensive incident management plan; and Phased LRT approach (construct BRT then convert to LRT when ridership increases), All the recommendations are in the process of being addressed by the Project team. The recommendation to consider a phased LRT approach (BRT later converted to LRT) was assessed and is not being adopted to due to limitations of the BRT to provide sufficient capacity at peak times, as well as the additional cost and disruption of converting to LRT at a later date. This is discussed further in the Strategic Options Review described below. 44 Surrey Rapid Transit Independent Technology Evaluation Final Report (June 11, 2-15) CH2M Hill 45 See Newton-Guildford Line Ridership Forecast memo (October 2016) for assumptions and ridership results

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46 Surrey-Newton-Guildford LRT Project Business Case Page 36 Surrey City Centre to Newton Town Centre The line connecting Surrey City Centre to Newton Centre is approximately 7 km along King George Boulevard. The LRT alignment runs along the east side of King George Boulevard for the King George Station portion of the corridor from the future 101 Avenue road link to 97A Avenue. King George Boulevard is reduced from three to two lanes in both directions for this portion of the alignment. At 97A Avenue the alignment transitions to centre running, and continues in the same configuration all the way to 71 Avenue. Two traffic lanes are provided in each direction, widening at intersections for left turn bays. Beyond that, boulevards, bike lanes, pedestrian buffers and sidewalks are provided. Track centres of 4.2 metres are also continued through this segment. Track centres are maintained at 4.2 metres to allow for centre poles that support the overhead wires. (See Figure 20). Figure 20 Typical Cross-Section on King George Boulevard Stops 46 The Project will provide 11 LRT stops along the 10.5 km route. Stops will provide vital connections to the local bus network and the existing rapid transit network. All 11 stops are designed to serve the unique characteristics and potential of each neighbourhood. The 40 m long stop platforms will provide universal accessibility to the modern low floor LRT vehicles. The platforms can be extended to 60 m to accommodate future growth if necessary. The SNG LRT Project will be designed to meet the TransLink Building Code Criteria, where applicable the relevant sections of the Surrey Building By-Law, other Provincial Code Criteria and Standards as they apply to rapid transit facilities as well as CSA Standard B Accessibility for the Built Environment. The CSA Standard will be applied for at least colour contrasting tactile markings at edge of the platform, at the top of stairs, and for wayfinding purposes. The southern terminus for the Project will include a new Newton Transit Exchange. The stop has adjacent side-loading platforms with direct bus integration to the south to allow quick and convenient transfers between LRT and bus services, particularly to routes serving South Surrey and White Rock. The new transit exchange and LRT terminus will anchor the ongoing development within the Newton Town Centre, the City s second largest town centre after Guildford (See Figure 21). 46 The stop terminology is used to distinguish LRT stops from the much larger and more expensive elevated SkyTrain stations

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49 Surrey-Newton-Guildford LRT Project Business Case Page Maintenance The maintenance of the Project s infrastructure will include track-work, stops, electrical power system, and supervisory and control systems. The maintenance of the Project s vehicle fleet will include daily, time based and mileage based servicing of the vehicles. This will include tasks such as daily interior cleaning and checks, periodic vehicle washing, wheel turning to maintain the wheel profiles and ride quality, and the mileage based maintenance checks and part replacement. Additionally, vehicle maintenance will include vehicle fault rectification and associated part replacement and parts repair as appropriate.

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53 Surrey-Newton-Guildford LRT Project Business Case Page 43 wait time and in-vehicle time. These savings are estimated by the difference between average transit trips compared to the BAU scenario. The current 96 B-Line has an average end-to-end travel time of 29 minutes. As traffic in Surrey continues to grow, worsening traffic congestion will result in an increase in bus travel times. Figure 23 shows forecasted 96 B-Line travel time in 2030 and 2045 compared to the Project. Operating in its own rightof-way, the Project will not only provide a faster service than the bus today, as congestion increases, the LRT will continue to provide the same, consistent journey time well into the future. Figure 23 Travel Time (Project vs. 96 B-Line) The Project will also provide a more reliable travel time than either car or bus alternatives. There is a high level of travel time variability on the current 96 B-Line rapid bus as outlined in Section 3.2. Congestion not only affects the average journey time but also reduces travel reliability by increasing travel time variability for transit passengers. This lack of consistent travel time on the current system often results in missed connections, further lengthening the overall journey and providing a disincentive to using transit. With forecasted traffic growth within the Region, bus travel times are forecast to become even longer with increasing variability due to increased congestion Travel Time Savings Travel time savings were calculated from TransLink s Regional Transportation Model (RTM) Phase 2.2 outputs for the 2030 and 2045 AM peak hour (7:30AM-8:30AM) by comparing the travel times in the BAU and the LRT scenario. Only benefits for trips to and from Surrey and trips within Surrey should gain a dis-benefit or benefit from the SNG Line, so the data outputs are limited to those areas. The resulting logsum method benefits are 694,700 daily user-minute and 880,300 daily user-minute in 2030 and 2045 respectively. Journey time savings accounts for most of total benefits as the SNG time provides a faster journey time which results in benefit of present value savings of $625M in present value ($2016) Auto Operating Cost Savings These cost savings were derived from the reduction in vehicle kilometres travelled (VKT). VKT removed were converted to dollar values using auto operating cost values derived from a range of sources. These have been estimated as a present value of $49M in present value ($2016).

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57 Surrey-Newton-Guildford LRT Project Business Case Page 47 currently provided through a combination of the grade separated SkyTrain system and in-street bus services. Therefore, the introduction of LRT will present the potential for conflict between the LRT vehicles and other road users, for which mitigation measures will have to be employed. As a first step, the Project is being designed to limit these potential conflicts by providing a dedicated right-of-way for LRT operations and traffic signal priority along the corridor, which will reduce the risk of collision. In addition to these design initiatives, a public education and safety campaign will be undertaken prior to the introduction of LRT on the corridor. This campaign will target vehicle operators, cyclists, and pedestrians to raise awareness and provide guidance with respect to safe behaviour along the LRT line. It is anticipated that this campaign will specifically focus on residents, businesses, and schools along the corridor, as well as other areas with high pedestrian and cycling activity. While this campaign is considered necessary to provide specific information regarding the new transit technology, it is recognized that residents have become accustomed to bus and truck activity along the corridor and are aware of the need to exercise caution. LRT technology offers a safe solution for travellers particularly when compared to travelling by either bus or car particularly given the proposed dedicated right of way and traffic signal priority for the LRT service, both of which will help to reduce the risks of collisions. Furthermore, based on experiences in other LRT jurisdictions around the world, LRT operations are found to be safer than the bus alternative, resulting in fewer incidents. As shown in Figure 24, data collected from LRT systems operating in France, reveal the accident rate for LRT systems was consistently around half that of buses. Figure 24 - LRT vs. Bus Accident Rate (per 10,000 km) The introduction of a reliable rail-based rapid transit system is expected to reduce the auto VKT along the corridor as drivers are given an attractive alternative to the car as identified in Table 17. Project forecasts indicate a reduction of 36 million VKT in 2030 and 26 million VKT in 2045, with a total forecast saving of 890 million in VKT across the evaluation period. VKT removed were converted to

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69 Surrey-Newton-Guildford LRT Project Business Case Page Surrey-Newton Guildford LRT Project Pre-consultation Phase In December 2015, TransLink and the City jointly conducted focus groups with Surrey and Langley residents and other potential transit users to provide the foundation for a renewed consultation program in support of continued Project development. While recruiting for the focus group respondents a random sample of just over 600 Surrey and Langley adults were surveyed about their awareness and opinions of various transportation initiatives including this Project. The screening survey identified high awareness of the Project (36 per cent unaided and 88 per cent aided). The focus groups found strong support for continued Project development, including among non-transit users. Most focus group participants anticipated that they would use the LRT system, including several self-described non-transit users. They also identified high support for the following key benefits: Fast, frequent and reliable service; Cost-effective system; and Increased transit use and reduced GHG emissions. In January 2016, the City retained Ipsos to conduct a telephone public opinion poll of 600 Surrey residents. Results indicated that 58 per cent of Surrey residents are very or somewhat familiar with the proposed plans to bring LRT to Surrey and 80 per cent strongly or somewhat support doing so. Key top of mind benefits included convenience/efficiency, and reduced congestion. A substantial majority (at least 77 per cent) agreed with various statements about the community benefits that the Project would provide. Re-Engagement Phase From December 2016 through February 2017, the Project Team launched the next stage of stakeholder and public engagement. The purpose of this stage was to re-engage stakeholders and interested members of the public regarding project status and work, identify areas for further discussion, and gauge public awareness and support of the project vision scope as proposed. This stage of engagement included two stakeholder workshops, three drop-in style open houses, an online feedback form and a statistically valid public opinion poll. Approximately 500 people participated in the workshops and open houses, 3,176 people completed a feedback form and 905 people participated in the poll. The engagement confirmed high awareness of LRT, and high support for the project as proposed (82 per cent of the public and 72 per cent of Surrey residents). Key areas of interest for continued project planning were: More information on how LRT will work in Surrey including supporting roadway improvements, safety measures, and traffic impacts during and post-construction More detailed information about specific stop locations and changes in access to local business and residential areas Information about how LRT will integrate with the broader transit and cycling network

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73 Figure 26 - Preferred Procurement Options Surrey-Newton-Guildford LRT Project Business Case Page Service delivery options for operations include: 1) through existing TransLink subsidiary, 2) new subsidiary for LRT operations, or 3) contracted to third party. In all cases, TransLink would require an operator-advisor to assist in, but not limited to specification development, design reivew, operations start-up and training. 2. Includes minor rehabilitation only

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79 Surrey-Newton-Guildford LRT Project Business Case Page 69 Figure 27 - Top 5 DBV Capital Risks Figure 28 presents the tornado graph for the total DBVFOMR Capital Risks (nominal values). The risk exposure for the DBVFOMR differs from the DBV as reflected by the different order of risks and different sized bars. Figure 28 - Top 5 DBVFOMR Capital Risks The key differential risks between the DBV and DBVFOMR include: Scope changes initiated by TransLink; Procurement delays due to operations and maintenance specification development; Delays in commissioning; Reduced competition for operation and maintenance providers;

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81 Surrey-Newton-Guildford LRT Project Business Case Page 71 Figure 29 - Overview of VFM Approach VFM is expressed quantitatively as the difference in net present cost (NPC) between the PSC and the proposed SB option. The results of this quantitative comparison between the PSC and the SB, together with the qualitative criteria, are used to determine the procurement method that provides the best overall value for money. The following subsections describe the assumptions and cost inputs into the financial model, along with a summary of the VFM estimate.

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83 Surrey-Newton-Guildford LRT Project Business Case Page 73 Special Purpose Vehicle (SPV) The DBVFOMR will carry additional costs to recognize the special purpose vehicle (SPV) costs required to setup and operate the Project company that will manage the contract. SPV costs for construction have been estimated at $ million. Annual SPV costs during operations are estimated at $ million (in real 2016 dollars) Efficiency Factors The integration of the design and construction team with the multi-year operations and maintenance providers in a DBVFOMR is expected to generate efficiencies in the construction phase. An efficiency of $ million for the Project against the contractor s construction costs and an efficiency of $ million for operations start-up were applied in the financial model. Key areas of construction efficiency are in the design and construction of the operational maintenance facility. As a conservative assumption, no efficiency factors were applied to the operations term. Partial Compensation for Unsuccessful Proponents Under both procurement options, it is anticipated that partial compensation will be offered to unsuccessful proponents that have submitted compliant proposals during the competitive selection process, though these costs will be higher under DBVFOMR procurement due to the inclusion of operational scope in the proposal as well as the involvement of private financing, and the resulting additional proposal and contractual complexity. It has been assumed in the analysis that $ million will be paid to each of two unsuccessful proponents providing bona fide proposals, for a total cost of $ million under both the DBV and DBVFOMR. This assumes that three bidders would be shortlisted and qualified for the Request for Proposal (RFP) stage under each delivery model Income Taxes Under a DBVFOMR, the SPV set up by the contractor must pay income taxes to both the Province and the Federal Government on taxable income generated from the Project totaling approximately $ million in nominal terms. The tax rates assumed in the financial model are 15 per cent Federal income tax and 12 per cent provincial income tax. This level of tax does not apply to the DBV Competitive Neutrality Adjustments As part of the VFM analysis, a competitive neutrality adjustment is made under the DBV model to reflect that incremental corporate income taxes are paid by the SPV to the Province and Federal Government under the DBVFOMR model, but not under a DBV model. Therefore, these foregone taxes represent an economic cost of the DBV and an adjustment is made to account for them in the VFM analysis. Partnerships BC methodology is that 50 per cent of federal taxes payable and 100 per cent of provincial taxes payable over the Project term should be discounted back to a NPC and added to the DBV model. Because of this adjustment, the competitive neutrality for the taxation adjustment is $ million in NPC terms Operating Period Costs The total nominal operations and maintenance cost before risk adjustment is $ million.

84 Surrey-Newton-Guildford LRT Project Business Case Page 74 For discussion of quantified operating period risks and comparative VFM cost analysis under each procurement option, refer to sections 10.6 and Financing Assumptions Under the DBV, federal contributions are assumed with TransLink funding the balance. No financing assumptions are included as financing costs are computed in the discount rate applied. Under the DBVFOMR, the Project will be financed using a combination of regional and federal contributions, private equity funding and debt funding. For the purposes of this analysis, the financing assumptions shown in Table 31 have been developed based on Ministry of Finance input and recent projects.

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86 Amount and Timing of Private Financing Surrey-Newton-Guildford LRT Project Business Case Page 76 The private financing component of the DBVFOMR brings lender discipline and effective risk transfer through the contractor s and lenders financial exposure. It is important, however, to consider the advantages of private sector (contractor) financing in balance with the cost of that financing, and to determine the appropriate amount of private capital needed to optimize the value of the risk transfer. It has been assumed that a portion of the total private finance amount (approximately $200 million) is invested into the Project first without any public contribution invested simultaneously to provide sufficient security in the form of unfunded value in the ground in the event construction challenges are encountered prior to substantial completion. After achieving this threshold, the Project starts to receive monthly progress payments based on approximately 80 percent of the total capital costs incurred and, at substantial completion date, the total amount of private finance totals $373 million 69. Given the types of risks during a 7-year OMR term, it was determined that around $250 million of private financing provides sufficient capacity for performance deductions and security for handback requirements while taking into account operating leverage and resiliency testing. Therefore, the construction period private financing is stepped down by around $140 million to $250 million at substantial completion. The $250 million is recovered through performance-based availability payments over the operating period Discount Rate The discount rate reflects the time value of money. Discounting enables nominal project cash flows from the PSC and SB models that differ in timing and amount to be discounted back to a common reference date. The approach by which the discount rate is calculated is aligned with recent precedent projects where the Project s pre-tax internal rate of return (Project IRR) of the privately financed procurement option (DBVFOMR for this Project) is used. The Project IRR of the DBVFOMR model is 7.0 per cent. December 2019 is the base date to which the Project s nominal cash flows are discounted. The base date is the projected date of Financial Close for the Project, and the first date from which contractor cash flows are included in the financial model Value for Money In financial terms, the value for taxpayers money is established by calculating and comparing the estimated NPC of a project based on the DBVFOMR model to the established NPC based on the traditional model of DBV. With respect to the DBVFOMR model, the construction and operations period costs for the contractor are captured by the following payments: Progress Payments represent public sector contributions during construction, contributed pro-rata based on a defined proportion of eligible construction costs on a monthly basis. The public sector contributes funds during construction to reduce the financial impact associated with the incremental cost of private financing relative to public financing. The portion of capital costs not funded by Progress Payments is privately financed, and repaid through Capital Payments. 69 Excludes $18M reserve account

87 Surrey-Newton-Guildford LRT Project Business Case Page 77 Capital Payments represent the portion of the Annual Service Payments (ASP) structured to fund the portion of capital costs that are privately financed, and cover the cost of this long term private finance (generally interest and dividends), as well as repayment of principal, over the OMR period. These payments do not vary from year to year. Substantial Completion Payment represents the public sector contributions made at the end of construction reducing the level of private financing during the seven-year operating term. OMR Payments represent the portion of Service Payments structured to fund the OMR works completed by the contractor from commissioning until the end of the contract. These payments may fluctuate in real terms based on the projected profile of OMR costs as determined by the contractor in its RFP financial submission and confirmed at Financial Close, and are also indexed to allow for cost inflation. The comparison of the NPC under DBV and DBVFOMR procurement relating to the Project, and the resulting VFM outcome, are summarized in Table 32 and Figure 30.

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91 Surrey-Newton-Guildford LRT Project Business Case Page 81 generally positive and specific feedback relating to timing, contract term and structure, and procurement approaches will be taken into consideration as the procurement develops. 11 RECOMMENDED PROCUREMENT OPTION Based on this qualitative and quantitative analysis, a DBVFOMR with $ million in private financing is recommended for the Project. The analysis shows that the DBVFOMR model will best: Manage and mitigate key Project risks; Maximize competition, providing innovation and efficiencies; Maximize cost and schedule certainty; and Provide VFM (expected to be approximately $58 million, NPC 2019). A 7-year term is recommended for the operations phase and was determined based on balancing TransLink s desire to operate and integrate the new LRT system, with the need to meet timelines available to undertake the Project, develop internal capacity at TransLink, and ensure system flexibility over the long term. The 7-year term also takes into consideration achieving optimal risk allocation, asset performance, and addressing market conditions. 71 Excludes $18M reserve account

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96 Surrey-Newton-Guildford LRT Project Business Case Page 86 Safety; Managing impacts during construction (noise, traffic, etc.); Long-term traffic pattern changes; Project benefits; Project (environmental) effects and mitigation measures; Urban integration to ensure that development in the City progresses in a way that supports intended LRT ridership; and Aspects of the broader public realm in Surrey, including streetscapes, sidewalks, cycle tracks, landscaping, and public plazas. This engagement will continue through procurement readiness, to support finalizing the project scope and development of contract requirements. The engagement approach is built based on best practices, including: Provide a variety of online and in-person opportunities to engage and encourage people to participate, to achieve timely and meaningful input from a broad range of groups; Seek input only where input can influence decisions; Ask for and document feedback, using a risk management approach to identify and address emerging issues; and Clearly communicate how input will be considered, and provide consultation summary reports to demonstrate transparency and accountability. Engagement tactics include: Stakeholder Workshops by initiation, these meetings provide an opportunity for more detailed discussion of specific areas of interest such as emergency response, environmental management, business access, etc. Public Information Sessions--drop-in style open houses Feedback forms to collect input and feedback on specific aspects of project design and the environmental review Public opinion polls to measure broader public interest and expectations, beyond that of those who opt to attend a public event, to ensure that project planning considers the needs of all potential users Business liaison program to develop strong relationships with businesses, business associations and merchants associations that will assist in developing construction mitigation measures and communications plans Community liaison program to engage with individual property owners, residential groups and transportation associations in developing noise and traffic mitigation measures Presentations on request Project update notifications through a project website, paid advertising, media relations and responding to enquiries The coordinated engagement and consultation program will continue to provide information to the public and other stakeholders with information with respect to the scope, benefits and impacts of the Project consistent with the requirements of the federal and provincial environmental review processes. Similarly, a key aspect of the consultation will include notification and/or consultation with affected First Nations.

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100 Surrey-Newton-Guildford LRT Project Business Case Page 90 assumed the federal contribution is received as progress payments throughout the construction phase of the Project. A 10% holdback is assumed, which would be released at construction completion TransLink Funding The Regional capital share, including Phase 1 Regional funding, is estimated at $ million and is expected to be financed by the contractor and TransLink through operational funding and long-term debt. Under its governing legislation, the South Coast British Columbia Transportation Authority Act (SCBCTA Act), TransLink is required to prepare a fully-funded 10-Year Investment Plan (the Investment Plan) at least once every three years. The Investment Plan must set out, for each year, planned service levels, major capital projects, and key initiatives. Operating and capital expenditures must be funded through either established funding sources and within existing borrowing limits, or through new or modified funding resources or increased borrowing limits. Once approved, the Investment Plan serves as TransLink s strategic and financial plan for the applicable years, until a successor Investment Plan is approved. Under the SCBCTA Act, an Investment Plan must be approved by both the TransLink Board and the Mayors Council on Regional Transportation. As discussed previously, the Project is identified as a regional investment priority in the Mayors Council Vision, which includes both the Millennium Line Broadway Extension (MLBE) and the Project. In fall 2014, the TransLink Board endorsed the Mayors Council Vision as the blueprint to guide the preparation of future investment plans. The Mayors Council Vision is expected to be implemented through a series of Investment Plans. A first step to achieve that vision, the 2017 Investment Plan was approved by the TransLink Board and Mayors Council in November The Update to Phase One 2017 Investment Plan was subsequently approved in July TransLink is currently working with the Province to secure senior government funding and to confirm new regional revenues for the Rapid Transit Implementation Investment Plan, which is expected to include the MLBE and the Project. This Business Case assumes the regional share of the funding will be available when needed following the approval of Rapid Transit Implementation Investment Plan, including the Project, which is anticipated in mid City of Surrey Contribution The City has undertaken actions to reduce Project costs and remove or reduce Project risks. These actions include: Strategic acquisition of property along the corridor: The City will provide access rights for these properties, as required by the Project either temporarily or permanently, subject to a Municipal Master Agreement to be executed between the City and TransLink; Statutory rights of way and other covenants: The City has acquired various rights through development and rezoning conditions; access rights will be provided, as required by the Project, subject to the Municipal Master Agreement; Use of street right of way during construction: The City plans to waive certain fees typically charged to construction projects; Direct costs: The City has paid various direct costs to support Project planning and design development, including staff costs to support the establishment of a Project office;

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