King-Victoria Transit Hub

[tomh009]

Point taken, yes, it's actually the Region, but I expect that they will still be looking for a private-sector partner.

[MidTowner]

Point taken, yes, it's actually the Region, but I expect that they will still be looking for a private-sector partner.

Progress reports have laid out several different possible arrangements with private-sector partners.

As far as the provincial debt load goes, a relatively high (I agree with you: not crushing yet) debt load has not stopped them from incurring more debt so far...

Supposedly we will see documents for a request for proposals/qualifications sometime this month, and they will deal with at least the portion of the site east of Waterloo not being used for equipment for the overpass project. Again supposedly, that portion of the site could be developed by 2017. I am very curious about what the RFP/RFQ documentation says exactly- I would have guessed it would have to include proposed partnership arrangements. I may be assuming these documents will include more detail than they really will...

[KevinL]

Going by the plans, the area east of Waterloo Street includes the intercity bus platforms, passenger dropoff and taxi rank. It of course also includes the old Rumpel Felt building which will be partially retained for its heritage features. If that gets built along with basic train-station access, the main block towards King can gradually be developed as passenger numbers increase. Looks doable to me.

[tomh009]

I agree, this is unlikely to be a big-bang project, all in one phase.

My guess is that the RFP may lay out some parameters for the private sector partnering arrangements, but will allow the companies some flexibility in terms of the partnering model they propose.

[BuildingScout]

I agree, this is unlikely to be a big-bang project, all in one phase. 

I don't know. All they need to do is contact one of the big boys, like Brookfield Property Management (formerly Brascan), to invest a big chunk of change in that terminal. Between office space, commercial development and condos I'm pretty sure they could recover their investment many times over.

The proposition would be to build the next generation Technology hub connected to Toronto on the other side. They could even extract a promise from the province to run more trains, faster and more often in exchange for building that (like Canary Wharf got a promised subway for developing the docklands in London, England).

[numberguy]

What sort of ROI would a BPM or similarly blue chip property developer and management company want?

I can't imagine the Region wanting to jump quickly into another large P3 project with ION not operational yet. The current P3 projects and feedback from Infrastructure Ontario shows a strong upward trend in operational costs with P3 projects -- the labour escalation in many seem to create a disincentive to negotiate in a hard nosed fashion, leaving the public partner to shoulder the high costs.

I may be prudent to see what happens with the P3 operational costs with ION before making any large commitments for another P3 project.

The province isn't Greece or California, but debt repayment is the third or fourth (depending on what unfunded liabilities one counts) biggest item on the budget. Healthcare isn't going to get any cheaper with our aging population, and I can't see the current majority government rolling back Education. With the focus on GTA infrastructure improvement, I don't see any sudden gifts of provincial largesse anytime soon for this project.

[tomh009]

I've said before, and I'll say it again: P3 (public-private partnership) isn't inherently evil or inherently good, it all depends on what terms you negotiate. But I just can't see the Region getting into the property development business.

At this time, with the provincial budget in the red, I don't think "debt repayment" is even a line item on the budget. Interest on the debt, yes, that would be a big one.

P.S. I'm old enough to remember the federal debt issue from the 1979 election, when the debt had run up in the (Pierre) Trudeau years to around 20% of GDP, and a $6B deficit. Joe Clark got elected with a minority, but got tossed out after proposing (what we would now call) an austerity budget. More Trudeau, then Mulroney, until Jean Chretien (and probably more so Paul Martin) achieved a surplus 15 years ago, with the debt by then up to 70% of GDP. With surpluses and economic growth the debt dropped rapidly to the 30% range, although for the last five years the debt has been growing again. With the right management, there is no reason to doubt Ontario's ability to recover from the current situation as well (who would count as "the right management" is left as an exercise for the reader, though).

[numberguy]

Maybe a growing economy can happen again. I am pessimistic of that, however. In the 80s, Canadians still had kids > 2.1 per couple and population was growing. Right now, our demographic growth resembles Europe and Japan more. Without young people, its difficult to grow one's economy, as Abe is finding out. This goes beyond prudent fiscal management. 1-2% growth is the new normal, the economy will not grow 5-6% like in the 70-80s, those days have come and gone.

Interest payments is the third biggest line item on Ontario's budget, bigger than transportation, bigger than everything except for health and education. I'd say that is not a good thing.

Empirically, P3s have been very rewarding in Ontario for the private partners and expensive for the public partners. Those are the experienced facts. Steps are being taken to change that in the future and to mitigate current arrangements. That's neither good nor evil, it just is.

I don't see the intermodal hub proceeding quickly, given the state of the Province's economy and the fact that the Region is currently engaged in a major P3 (ION) already. Having said that, perhaps the right major development player can come along if they see enough value add proposition for them. The Municipal Act precludes direct incentives, but perhaps some creative means can be found.

[rangersfan]

All I know is that this project is very important for both the City, Region and the success of rapid transit in the region that I don't want anyone to rush any decisions or details in the planning and execution stages.

[tomh009]

Maybe a growing economy can happen again.   I am pessimistic of that, however.   In the 80s, Canadians still had kids > 2.1 per couple and population was growing.   Right now, our demographic growth resembles Europe and Japan more.   Without young people, its difficult to grow one's economy, as Abe is finding out.

There is one key difference between Canada and Japan: immigration.  Unless we were to stop immigration, our economy will indeed continue to grow as the population grows.  Our population growth has been steady at more than 1% per year for at least the last 15 years, while the Japanese population is actually shrinking.

I don't see the intermodal hub proceeding quickly, given the state of the Province's economy and the fact that the Region is currently engaged in a major P3 (ION) already.   Having said that, perhaps the right major development player can come along if they see enough value add proposition for them.   The Municipal Act precludes direct incentives, but perhaps some creative means can be found.

There are many ways to do it without violating the Municipal Act. I believe that the transit centre is critical for the success of the transit initiative, and we will find a way to do it. But let's see whether an RFP is actually issued, and we can then argue more on this.

[Spokes]

Check Kitchener or the Region's capital plans.   There isn't any money there.   And the province is in massive debt and facing total (public/Catholic/elementary/high school) strike in September.

Technically the Ontario debt is less than 50% of GDP, which I would consider manageable, especially as we can expect continued GDP growth in the future (given future population growth).  It's the current deficit that's a bigger problem.

But an elementary school strike should save the government some money. 

Anyway, to get back on topic, I expect Kitchener is looking for a private-sector partner to build this anyway, I'm sure this will not be a government-funded complex.

I always assumed that in the past.

Would this happen, where a developer would be given the land for next to nothing in exchange for building the transit hub, but then being able to own the residential/commercial?

[numberguy]

Anyway, to get back on topic, I expect Kitchener is looking for a private-sector partner to build this anyway, I'm sure this will not be a government-funded complex.

I always assumed that in the past.

Would this happen, where a developer would be given the land for next to nothing in exchange for building the transit hub, but then being able to own the residential/commercial?

That's an interesting scenario. I haven't seen anything to that end published on any Regional or Provincial website. Again, I wonder what ROI the bigger developers would want before proceeding. I'd love to see some cost benefit analysis around the various scenarios, if and when serious partners can be engaged in discussions.

The existing examples in the recent past seem to have a mixed track record, vis a vis furthering the public good (in of itself a scary item to evaluate). I'll see if I can dig up some items that I can share, without disclosing any NDAs.

[numberguy]

There is one key difference between Canada and Japan: immigration.  Unless we were to stop immigration, our economy will indeed continue to grow as the population grows.  Our population growth has been steady at more than 1% per year for at least the last 15 years, while the Japanese population is actually shrinking.

Agreed, I am stating that we will not see a return to 4-7% annual growth, as in the halcyon days of the 60s-80s. 1-2% growth is the new norm, given only immigration is growing our population. Ergo, growing back to a balanced budget will be much more difficult, organic revenue growth will be a much lower rate. Hence, real funding cuts and choices will likely have to be made if going back into the black will be done within the promised five years by the Wynne government.

[chutten]

Is it an understood maxim that economic growth (measured by GDP, I presume?) is tied to population growth? It would seem to me that rising wages, or rising efficiency (increased automation), or lower cost of debt (spurring an increase in expenditures) would also move that number up.

That being said, I'm not sure economic growth should be the only goal. I would be okay with stagnant GDP (in real terms, to keep this statement slightly less controversial) if it meant an increase in the social safety net, better ecological protection, and all those other hard-to-measure non-monetary factors in standard of living. With those at acceptable levels, we can then reach out and help other nations.

[Viewfromthe42]

Is it an understood maxim that economic growth (measured by GDP, I presume?) is tied to population growth? It would seem to me that rising wages, or rising efficiency (increased automation), or lower cost of debt (spurring an increase in expenditures) would also move that number up.

Automation is a risky source of growth. In Canada, it's enabled us to hold onto jobs for the time being, ones which would otherwise be done exclusively in developing nations, manually, for far cheaper than Canadians could ever compete with. But where does the excess capacity go?

When 95% of the population was needed for the labour of creating food to sustain itself, it had most people employed, as they were needed, and we had no choice but to obtain what they generated (our food). Then farming became less labour intensive, and much of that population shifted into assembly lines, with us absorbing the products we made, the remaining farmers getting enough to still get by and take part in commerce. Now, with automation, and on a national level with outsourcing, we haven't found a way to employ the freed up labour that used to be needed for the tasks we have automated or outsourced. Those employed in automated labour, or the outsourced workers, haven't had the money, or the desire to spend it, in such a way that a new job is available for the freed up labour to fill. Nor have the things which we have automated the production of become so cheap as to free up enough disposable income of the buyers of those products to let them buy (and create demand and jobs for) new industries and things.