TransLink must find remaining $765 million for Broadway Subway and Surrey LRT: federal budget

Changes to how the federal government funds public transit projects across the country will greatly benefit TransLink.

The Liberal government’s first budget yesterday increases the federal government ceiling on public transit funding from 33% to 50%, with ridership levels also taken into consideration. This steps away from the federal government’s usual one-third model for funding these projects, leaving the provincial government to fund one-third and municipal levels of government to cover the remaining one-third.

But the big multi-billion dollar federal commitments will not begin to arrive until 2021, when the second phase of infrastructure funding kicks in. Only $3.38 billion has been allocated for public transit inves in the first phase’s budget, of which $370 million will be claimed by Metro Vancouver.

Under the old model, TransLink would have been required to find $1.5 billion of the $4.5 billion needed to build the Broadway subway and Surrey light rail projects. The most recent construction cost estimates peg the six-kilometre-long underground SkyTrain extension of the Millennium Line under Broadway, from VCC-Clark Station to Arbutus Street, at $1.9 billion while the 27-kilometre light rail transit network in Surrey is $2.6 billion.

If both projects receive the maximum 50% cap, this amounts to $2.25 billion from the federal government. It would leave the provincial government with $1.485 billion for its 33% share.

For TransLink, it could theoretically be responsible for finding at least $765 million – half the amount under the original model. With senior governments covering 83%, the public transit authority would take on 17%, assuming the provincial government is unwilling to budge on taking on a greater contribution beyond one-third.

Of course, these figures assume that construction costs will not increase. But as with most major infrastructure projects, costs always climb upwards as planning work becomes more advanced. For instance, earlier this month, the City of Surrey said construction costs for its LRT proposal had increased from $2.14 billion to $2.6 billion.

Some of the funding from the federal budget’s first phase of infrastructure commitments will go towards accelerating planning work for both projects, so that the projects can be shovel-ready in 2021.

On the other hand, rising public costs during the construction phase are unlikely given that the private contractor is usually responsible for covering any and all cost overruns experienced during the construction phase. This is the case with the Evergreen Line, which experienced a year-long delay from issues with tunnel boring.

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Projected ridership, a key element for the overall impact and benefit of a transit project, could be a core factor in determining which projects reach the 50% ceiling in federal funding.

If the expansions were to open in 2021, the Broadway SkyTrain extension to Arbutus would attract 150,000 riders per day while Surrey LRT will see just 69,000 riders per day, despite being the most expensive project. It remains to be seen whether the senior governments will conduct their own business case study of the Surrey project, comparing light rail with an extension of existing SkyTrain technology.

Additionally, how TransLink will fulfill it share – whether it be 17%, 33% or somewhere in between – could be a decision left up to the provincial government. The Ministry of Transportation has previously hinted that another plebiscite would be required to introduce tolls or a vehicle levy.