Funding/Governance

POLICY REPORT

Traffic and Transit
Date: January 26, 1998
Author/Local: W. Pledger/7346
CC File No. 5562
TO: Vancouver City Council
FROM:City Manager, General Manager of Engineering Services and Director of Finance
SUBJECT: Review of the Proposed Funding and Governance for the
Greater Vancouver Transportation Authority (GVTA)
RECOMMENDATION
A.THAT Council recommend to the GVRD Board that it endorse the Recommended Agreement on Transportation Governance and Funding for Greater Vancouver for implementation.
B.THAT Council recommend that the GVRD and Province address the following issues in negotiating the details of implementation:
1.Greater reallocation of funding from the Province to reduce the projected funding shortfalls arising from the proposed service expansion.
2.The ability to use Provincial administrative structures (ICBC) to collect vehicle charges.
3.More explicit commitment to GVTA-Province cooperation on the implementation of tolls.
4.A commitment to cost sharing for future major transit and roadway projects.
5.Prescribed management arrangements between the GVTA, municipalities, and the Province.
CITY MANAGER’S COMMENTS
Considerable concern has been expressed by municipal officials about the political and financial risk for local governments inherent in the proposed arrangements. It is certainly true that along with providing decision making authority over transit services and taxation, the GVTA structure makes local governments directly responsible through GVRD appointments of locally elected officials to the GVTA Board. Council and the GVRD have both set out the need for local control for effective transportation and land use planning; the assumption of this risk would seem to be an inherent part of any new arrangement.
At the same time, some municipal officials have commented that the Province is "getting a good deal". If true, the fact that the Province is getting a good deal does not necessarily mean that it is a bad deal for the GVRD. Sensible governance for transit and transportation is a key objective for the GVRD and implementation of the Livable Region Plan. The proposed arrangement may well be a good solution for both parties.
The Director of Finance has pointed out that the projected future deficit is significant and may require that a part of future transit costs have to be funded by property taxes. This encroachment into property taxation would be undesirable. However, it is equally true that the present arrangement might require either that necessary growth in transit services be curtailed, or that some transit costs be funded through property tax. The GVTA will at least have the ability to make this decision based on local rather than provincial criteria.
The proposed arrangements may not be perfect from a municipal perspective, but they are better than what exists, and financially they are more attractive than those existing elsewhere in Canada. The elements addressed in recommendation B address some of the concerns, and it should be possible to address most of these issues during implementation discussions.
The City Manager RECOMMENDS approval of the foregoing recommendations.

COUNCIL POLICY

The basic directions for transportation in the city were set with Council’s adoption of CityPlan and the Livable Region Plan in 1995 and the Regional Transportation Plan (Transport 2021), in 1994 (this is an extract from the Vancouver Transportation Plan).

Council supports a governance and finance structure for transit which would be more responsive to the needs of the City and Region, for example, which would provide aguaranteed source of revenue for acquisition of buses and LRT vehicles, and for operating the system in a timely way in response to increases in demand for service - Action Item T12 of the Transportation Plan.
PURPOSE
To assess and make recommendations about the recently negotiated agreement between the Province and the GVRD for the proposed Greater Vancouver Transportation Authority (GVTA).
INTRODUCTION
This report assesses the agreement that has been negotiated between the GVRD and the provincial government that creates the Greater Vancouver Transportation Authority (GVTA).
Benefits and risks associated with the proposed agreement are compared to those associated with the status quo. Under the status quo, local transportation goals will not be met, and local governments will likely have to contribute considerable funding to expansion of services.
While the proposed agreement achieves the major objective of obtaining local control over transportation spending, it transfers significant financial and political risk to local governments.
Under the proposed agreement, the provincial contribution is fixed, and responsibility for funding shortfalls becomes entirely local. Establishing the fiscal neutrality of the proposed agreement is difficult, as (a) provincial funding under the status quo is not known with certainty, and (b) levels of actual provincial transfer of revenues to the GVTA may vary from projections (parking sales tax, fuel tax, West Coast Express revenues). Conclusions about the fiscal neutrality of the agreement range from a $107 million net benefit to the local taxpayers, to a $64 million annual shift onto local taxpayers by 2010, depending upon assumptions made regarding provincial funding under the status quo.
In order to ascertain whether or not the proposed agreement is acceptable, the following questions must be answered. This report provides the background Council requires to answer these questions.
·Does the proposed agreement set out a funding and governance structure that sufficiently achieves the desired local control of regional transportation services?
·Is the transfer of political and financial risk to local governments inherent in the proposed agreement adequately offset by the accompanying benefits to local governments - primarily, anticipated control over local transportation services and enhanced predictability of revenue sources?
·What is the most likely future scenario with respect to provincial transit and transportation funding, if no GVTA were formed (to be used as a comparison against which to assess the proposal)?
·Are there any changes, additions or deletions that should be made to the proposed agreement in order to improve the GVTA structure and funding?
BACKGROUND
In 1995, the GVRD adopted a regional land use strategy (Livable Region Strategic Plan) and in 1994, a long range transportation strategy (Transport 2021). The purpose of these inter-related plans is to provide policies that will slow suburban sprawl by containing population growth to a defined area of the Region and by focussing improved transit and other transportation facilities to serve this area.
The difficulty in implementing the Regional plans is that the GVRD has very limited authority to plan and implement transportation policy in a way that is consistent with its transportation and land use strategies. In fact, there is no one body or mechanism that brings together the various transportation elements (transit, roads, and pricing mechanisms to pay for facilities and operating costs). Instead, the Region relies on the Province, through BC Transit, the Ministry of Transportation and Highways (MOTH), and the Transportation Financing Authority and individual municipalities to provide the necessary planning and resources.
This has created a number of difficulties:
1.The Region has a plan to deal with regional sprawl and associated transportation responses but there is limited local decision making on transportation needs and funding priorities;
2.Decision-making on regional transportation policies is fragmented between a number of provincial and municipal authorities resulting in less than optimal coordination of transportation services;
3.The Province largely controls the provision of all transportation resources in the Region. However, Provincial priorities are health and education. The Province has also adopted a debt management plan which limits the level of capital funding available to the various ministries and Crown Corporations. This plan does not allow sufficient funding to provide the necessary capital transportation improvements or sufficient operating funding for transit in the Region. For example, Transport 2021 suggests 1840 buses (along with the appropriate level of operating and maintenance budgets) should be provided in the Region by the year 2010, but BC Transit’s 10 year plan only provides for 1300 buses, to be consistent with the Province’s debt management plan.
4.There is insufficient transit service to meet today’s needs.
5.Provincial transportation decisions in the Region (roads, bridges, rapid transit) are made in the context of Province-wide transportation needs. As a result major Provincial transportation investments such the new Vancouver Island highway leave insufficient capital for major local GVRD transportation needs.
Both the Province and the Region recognize the existing way of providing transportation in the Region is not working. Yet, there is a need to start making major transportation improvements in the region now if it is to succeed in containing sprawl. New rapid transit lines, many more buses, a significant increase in the number of transit service hours, TDM, and certain road improvements are needed.
As well, there needs to be a way to pay for all of this that is acceptable and affordable to the Province and the Region and in a manner that provides a long term, stable source of funding sufficient to provide the necessary transportation facilities. As a result, the Province and the Region agreed to negotiate a new way of providing the necessary transportation facilities in the Region (the Governance part) and a new way of paying for them (the Funding part).
These negotiations are complete and a new arrangement has been developed that is acceptable to the Province and Regional negotiators and meets the principles the GVRD adopted around which an agreement could be acceptable.
PROPOSED AGREEMENT
The full "Recommended Agreement on Transportation Governance and Funding for Greater Vancouver" is contained in Appendix A. The following is a summary of the main points.
Purpose and Powers
The Authority will be responsible for providing a transportation infrastructure and set of services and programs which support the region’s growth strategy, transportation and air quality objectives. Specifically the Authority will be responsible for and improve the quality and availability of transit service and transportation demand management (TDM) programs in the region as a way to increase transportation choices and reduce the reliance on single occupant vehicles. Integral to this, the Authority will also coordinate and fund a major road network to assure mobility and be responsible for Air Care to achieve air quality objectives.
To pay for this the Authority will be able to raise revenues through user fees, tolls, vehicle charges and taxes, borrow and hold debt and negotiate cost sharing agreements with the Province for major new or replacement transportation infrastructure projects.
Ratification
The GVRD will vote on ratification of the Agreement by February 28, 1998 after consultation with and advice from the local municipal Councils. The Provincial Cabinet will also decide by February 28, 1998.
If ratified, the Agreement will be implemented no later than April 1, 1999.
Governance
The Authority will be governed by a 15 member board (12 appointed by the GVRD and 3 appointed by the Province). The GVRD appointees will be mayors within the GVRD or GVRD Board members with the following sub-regional representation:
Vancouver3 members
Bby/New West/NE sector3 members
North Shore1 member
South of the Fraser4 members
At-Large1 member
The three Provincial appointees will be MLA’s whose constituencies lie within the GVRD or Ministers responsible for municipal affairs, transportation or other matters related to activities of the Authority.
Accountability
The strategic, capital and major service plans of the Authority will conform with the regional growth strategy.
Public consultation is required in the development of strategic, capital and major service plans and prior to increasing fees or implementing tolls.
Consultation with the municipalities, GVRD, and the Province is required during the preparation of its strategic, capital and major service plans and will consider their comments prior to finalizing the plans.
The Authority will refer any increases in vehicle charges, property and other tax rates to the municipalities for their consideration and for ratification by the GVRD Board.
The Authority and the Province will make best efforts to establish common policy on tolling and use of high occupancy lanes and other matters affecting both the Provincially designated highways in the Region and the Authority’s major road network.
Infrastructure and Service Delivery (Transit)
The Authority will coordinate transit services presently provided by BC Transit and/or its contractors (including West Vancouver) including regular bus service , SkyTrain, Westcoast Express, and Handydart.
A municipality may provide transit within its boundaries to meet specific local needs either by contract or using its own forces and provided it funds, from its own sources, any deficit and provided the Authority determines the service would not materially reduce the effectiveness of the integrated transit system.
The Authority and the Province will build the Broadway/Lougheed/Coquitlam/New Westminster LRT by 2008.
Infrastructure and Service Delivery (Major Road Network)
A preliminary hierarchy of roads in the Region has been proposed. Provincial Highways would connect the region to other destinations in the Province and provide linkages across the Region. A Major Road Network would provide connections between municipalities within the Region. Local municipal roads would provide for trips within municipalities. Clearly though, there is significant overlap in the role many roads play. Oak Street and Broadway, for example, are the "end points" of Provincial Highways, are "major roads" as they connect Vancouver with other cities in the Region, are major transit routes, and provide "local access" to adjacent land uses and for trip within Vancouver.
The Major Road Network component of the Agreement is incomplete and, subject to ratification of the Agreement, will require ratification later in the year. To this end, the Regional Engineers Advisory Committee (REAC) has developed an initial set of draftprinciples, not covered in the Agreement, for the administration of the Major Road Network (MRN). These principles provide a balance between the need for municipal authority over its road system and the need for regional coordination and integration of the Network.
The major provisions of the recommended Agreement and supporting REAC proposals are:
1.The Major Road Network consists of the devolved Provincial highways and bridges and other municipal roads designated by municipal Councils and approved by the Authority. A proposed network, Attachment B of Appendix A, was included in the negotiated agreement. However, these need to be refined, leading to an October 1, 1998 deadline for municipalities to submit their proposed designated network.
2.Each municipality would retain ownership for the Major Road Network that lies within its boundaries and would be responsible for maintaining, operating and improving those roads. The municipalities would retain responsibility for land use decisions.
3.The ownership of the Pattullo, Knight and Westham Island Bridges and the Albion Ferry would be the responsibility of the Authority. The Authority's capital responsibility for seismic upgrading and rehabilitation for the bridges is capped at $38 Million. The cost of totally replacing any of these bridges will ultimately be negotiated with the Province.
4.A Major Road Management Executive (MRME) has been proposed that would be responsible for administration of the MRN with all policy decisions to be referred to the GVTA Board. The MRME would recommend standards, TDM measures, capital planning criteria and priorities and other policy matters. The MRME would operate on the basis of consensus and, where consensus could not be achieved, mechanisms are provided for third party dispute resolution.
5.The Authority would provide, directly to the municipalities, funding for the operation, maintenance and rehabilitation of the Major Road Network: 100% funding is provided for the devolved Provincial highways and for the municipally-designed portion of MRN; 70% funding is provided in 1999, rising to 100% in 2002. Funds have not been identified for capital upgrading of the MRN, although a mechanism has been proposed to distribute funding through the establishment of criteria and priorities amongst competing projects.
There are many outstanding issues that need further discussion and resolution between the municipalities and the Authority. Of particular importance, is the need to determine the operating, maintenance and rehabilitation funding needs which would be distributed to the municipalities under the current proposals.
Assets and Debt
The Authority will own and assume debt responsibility for all BC Transit vehicles (including SkyTrain vehicles and Westcoast Express cars) and property.
The Province will own and assume debt responsibility for the SkyTrain Guideway and Bridge and the Westcoast Express locomotives and infrastructure. (See Attachment D of Appendix A).
Funding
Transit
Transit services account for approximately 97% of the total projected GVTA expenditures (excluding new MRN roadway facilities). Existing transit funding is provided through a set of cost sharing formulae between the Province and the Vancouver Regional Transit Commission. However, the amount of transit service provided is typically determined by the amount the Province has been willing or able to pay. Subsequent application of the formulae, then determines the Transit Commission’s share, unless the Commission chooses to pay 100% of the cost, as it has done in the case of the Broadway #99 B-line service. This has resulted in chronic underfunding of the transit system.
A new funding arrangement was negotiated based on forecasted transportation costs and revenues to 2010, at a "mid-point" level of transit service and road infrastructure, halfway between the current BC Transit Ten Year Plan and the Transport 2021 regional transportation plan. BC Transit’s 10 year transit plan was considered insufficient to meet increases in transportation demand resulting from regional population growth. The more extensive transit and road requirements of Transport 2021, particularly the proposed rapid transit lines to the NE Sector, to Richmond and further south and east in Surrey were not considered achievable in the 12 year time frame. Only the Broadway/Lougheed/New Westminster LRT is included in this midpoint scenario.
The actual level of transportation service provided over time will ultimately be determined by the Authority, should it be implemented. The midpoint scenario, while realistic, is for financial estimating purposes only.
The negotiators agreed to the following breakdown of financial responsibility between the Province and the Authority:
The Province will:
-assume the debt associated with SkyTrain and Westcoast Express (associated debt charges of approximately $118 million at 2000). The Province will also assume the debt for any Provincial roads that become part of the MRN.
-pay 60% of the Broadway LRT, with the Authority paying the other 40% (Provincial share of capital estimated to be approximately $920 million of the $1.53 billion total).
-assume responsibility for the Greater Vancouver Regional Hospital District’s share of hospital costs (currently $51m). The Authority will use this created room in the property tax to collect an equivalent amount, replacing the existing hospital levy with a regional transportation levy.
-transfer a share of the existing fuel tax it receives, to the Authority, according to a fixed schedule (6¢/litre by 2005). This will be added to the existing 4¢/l the Authority inherits from the Vancouver Regional Transit Commission.
-transfer to the Authority the West Coast Express revenues and the parking sales taxes collected within the Authority’s boundaries.
The Authority will:
- receive all the revenues currently collected by the Vancouver Regional Transit Commission including all transit fares, 4¢/litre gas tax, $1.90 charge per residential Hydro account, taxes collected through the existing non-residential property tax, and the Commission’s existing $50 million (approximate) surplus.
-have the ability to raise funds from (I) vehicle charges (after October 1, 2001), (ii) tolls on Authority facilities (but not on Provincial facilities such as the Lions Gate, Second Narrows, Oak Street Bridges, etc), (iii) property taxes on a benefitting area basis, (iv) a regional transit property levy and (v) parking taxes.
Any funding shortfall would need to be made up by the Authority through application of its available revenue sources. For example, transit fares could be increased beyond the 1% annual increase assumed in the financial analysis, a surcharge could be applied to the $16 Air Care charge, the non-residential or residential property tax could be increased, tolls or other road pricing measures could be implemented, or any combination of the above.
Appendix B provides a pro forma operating statement for the GVTA using the midpoint scenario for 2000 and 2010, along with comparisons should the service expansions follow either the B.C. Transit 10-Year Plan, or the Transport 2021 Plan .
DISCUSSION
Governance
The proposed Agreement integrates the various, existing Provincially controlled transportation elements and decision making authorities into one, locally controlled and funded transportation authority.
The Agreement allows the Region to implement a regional transportation strategy consistent with its regional land use strategy in a time frame and to a level of transportation service it decides and not tied to other competing Provincial ministerial and funding priorities.
In particular, the Agreement allows for locally based decisions on mixing and matching various transportation improvements and funding sources and provides:
1.Greater political accountability in that decisions are locally based rather than from the Province through Cabinet, the Treasury Board, BC Transit, Ministry of Highways, or the Transportation Financing Authority;
2.A source of known revenue sources that can be estimated with confidence and not tied to the Province;
3.Significantly better integration of transportation decisions with land use decisions and objectives;
4.Local municipal participation in providing enhanced transit services.
All of this would appear to be consistent with Council’s Transportation Plan policy on increased local control of the transit system and discussions that have taken place by Council on transportation in general. As such, staff recommend that Council endorse the proposed Agreement, but also follow up on certain issues as part of implementation.
Notwithstanding, the proposed Agreement does raise some concerns and observations:
1.City of Vancouver representation on the Board (3 of 15 or 20%) is less than the City’s representation on the Regional Transit Commission (2 of 7 or 29%) and does not recognize that ~50% of the transit ridership and ~40% of the transit service hours are within Vancouver.
Continuing population growth and economic prosperity both within and outside the City translates into an ever increasing number of person trips. The opportunity does not exist in the City to build additional roads to accommodate mobility growth as exists in other areas of the Region. The City must meet this increased demand for mobility both within and from outside by providing alternatives to the automobile, the most important being transit. It is important, therefore, for the City to be comfortable that its level of political representation on the new Authority will be sufficient to achieve its transportation, particularly transit, objectives.
2.The accountability of the Transportation Authority Board members may be questioned given they are not directly elected but rather are appointed from the GVRD Board which, as well, is an appointed body, albeit of elected officials.
3.The Authority Board members will be faced with making decisions that will require balancing between competing interests at the local, neighbourhood level, city-wide level, and regional level, as well as dealing with suburban vs urban issues and differing requirements from inside and outside the Growth Concentration Area.
4.There will be political risks for local governments, associated with decisions that will inevitably be unpopular including labour issues, financing issues (tolls, transit fare increases, new taxes, etc), levels and allocation of transit service, etc.
Funding
Transit services account for approximately 97% of the total projected GVTA expenditures. The funding structure proposed for the GVTA is fundamentally different than that in place for current transit services.
·Existing transit revenues would remain in place, becoming GVTA revenues (fares, non-residential property tax, existing transfer of fuel tax and residential BC Hydro levy).
·The current provincial contributions to transit, made via a set of cost-sharing formulae, would be eliminated.
·Provincial contributions would be comprised of three elements:
(i)The Province would assume an agreed-upon share of existing debt charges (associated with SkyTrain guideway and bridge, West Coast Express infrastructure and locomotive capital, 60% of Broadway LRT capital costs), which would be a fixed amount, decreasing over time as the debt is retired,
(ii)the Province would transfer a set of provincial taxes collected locally (an additional share of the fuel tax collected in the region, the sales tax collected on parking in the region, and West Coast Express revenues), and
(iii)the Province would provide property tax room by removing the Greater Vancouver Regional Hospital District levy from the local tax bill, which would then be replaced with a GVTA levy.
There are three reports (on file with the Director of Finance) which have assessed the proposed agreement from a financial perspective:
·"Proposed Provincial-Regional Agreement on Transportation and Governance and Funding: A Regional Finance Perspective," Regional Finance Advisory Committee (RFAC) - This report is a comprehensive assessment of the proposed agreement, and compares the likely status quo to the GVTA, comparing relative risks and benefits.
·"Review of Transportation Costs and Revenues to be Assumed by the Greater Vancouver Transportation Authority Under the Proposed Agreement." Marvin Shaffer and Associates - This report is primarily an assessment and sensitivity analysis of the projected revenue and expenditure figures (transit, road and other) used as the basis for negotiations.
·A report prepared by RBC Dominion Securities for the GVRD - This report is concerned with the specific questions of fiscal neutrality, financeability, credit considerations and financing cost considerations of the proposed agreement.
The conclusions of the RFAC work are summarized as follows:
1.Funding Structure - The new arrangement results in a fundamental shift in funding structure, from provincial cost sharing to a set of transfers of locally collected Provincial taxes. Insofar as these revenue sources do not have to be negotiated from year to year, they provide more certainty for provincial funding of local transportation. Under this funding structure, provincial contributions do not vary with costs (unlike the current cost-sharing formulae). Because of this, the GVTA assumes full responsibility for funding future shortfalls, as well as the risks associated with any unexpected decreases in revenues and/or increases in expenditures. While the proposed Provincial revenue sources would be legislated, there still exists the risk that future governments may reduce or change these. It is noted that this risk exists under the status quo as well as the proposed GVTA.
2.New Revenue Sources - Planned vehicle charge mechanisms (tolls and AirCare surcharge) and other new revenue sources may not be feasible for political, economic, administrative or legislative reasons. There has not been sufficient time to undertake a feasibility analysis of these proposed new revenue sources. However, it is noted that B.C. Transit did engage KPMG in 1994 to conduct an examination of the new revenue sources to evaluate:
-relation between tax burden and benefits
-progressivity of the tax
-accountability and administration of the tax
-degree to which the tax promoted an efficient allocation of resources
That study pointed out several issues and concerns which might constrain the GVTA in implementing these new revenue sources. In particular, the study advocated that vehicle changes be applied as a surcharge to ICBC, as opposed to an AirCare surcharge, to enable "differential rates to reflect varying degrees of benefit enjoyed by motor vehicle users". Staff recommend the GVRD and Province discuss opportunities for the Province to allow use of its administrative structures (e.g., within ICBC or the Motor Vehicle Branch) to collect vehicle charges, as opposed to the proposed AirCare surcharge.
Tolls are problematic because of the public’s general distaste for them and the difficulty in applying tolls equitably throughout the region. As well, the Authority will not have access to tolling the Provincial Highway system, particularly the Provincial bridges (eg Oak, Alex Fraser, Second Narrows, etc) or the Massey Tunnel. Staff recommend that there be further discussions with the Province to ensure full cooperation on the implementation of tolls.
Ultimately, it is increased property taxes and/or transit fares that would have to offset GVTA shortfalls if these other revenue sources are not feasible. If Council wished to mitigate the future impacts on property taxes, staff recommend the GVRD further discuss with the Province to obtain additional financial contributions or taxation room -such as the ability to increase the gas tax in the region.
3.Sensitivity of Revenue and Expenditure Forecasts - The shortfall to the GVTA in 2010 under the midpoint scenario is forecast to be $183m. The accuracy of this estimate is subject to the accuracy of the assumptions on costs and revenues and as such may vary widely in reality. The sensitivity analysis prepared by Marvin Shaffer and Associates concluded that the 2010 funding shortfall under the midpoint service scenario could be as low as $74 million and as high as $300 million.
4.Fiscal Neutrality - Whether the proposed agreement is fiscally neutral is an important question. Will the region receive less provincial funds for transportation under the proposal than it otherwise would, if there were no GVTA in place? This is a difficult question to answer, as the level of provincial funding under the status quo is speculative, with no firm commitments in place. Provincial cost-sharing is based on negotiated levels of service, and the Province is already demonstrating that it is not prepared to fund major, positive initiatives, such as the #99 B-line along Broadway (for which the Transit Commission pays 100%).
Appendix C shows an assessment of the fiscal neutrality of the agreement, under the different assumptions regarding status quo funding. The range of this analysis, which is done using the midpoint service scenario at year 2010, is as follows:
-Using a pessimistic assumption regarding provincial funding under the status quo, the proposed agreement can be seen as providing increased provincial transportation funding of $107 million per year, compared to a (pessimistic) status quo.
-Using an optimistic assumption regarding status quo provincial funding, the proposal can be seen as a resulting in a net decrease of $64 million in provincial funding, compared to an (optimistic) status quo.
Given the possibility for the new funding agreement to result in either increased or decreased provincial funding, compared to the (unknown) status quo, it is concluded that the proposal is within a reasonable range of fiscal neutrality. According to a recent GVRD report, "Financial neutrality was not one of the objectives given to the GVRD negotiator. It was recognized that new investment in transit was essential and that the current financial situation at the Province was frustrating this. New and appropriate sources of revenue needed to be found if pressure on property taxes was to be avoided and it was not only inevitable, but even appropriate that these be regional rather than provincial in origin." ("Financial Implications of the Recommended Agreement on Transportation Governance and Funding for Greater Vancouver", January 6, 1998).
5.Future Major Capital Spending - The proposed agreement does not include future capital and operating expenses for :
-Major planned new transit facilities after the 12 year planning horizon, including Richmond Rapid Transit, SkyTrain extensions and replacement, etc.
-Revisions or additions to the MRN. These costs are significant but have not been estimated and no proposals for cost sharing exist at this time,

-Increases in Broadway/Lougheed LRT costs beyond the minimum system that has been estimated, eg. including costs for extra undergrounding, alternate alignments, or extensions (e.g., to UBC or the Downtown)
The proposal allows for major capital spending to be negotiated in good faith, but does not delineate any specific guidelines nor formulae with respect to future cost-sharing. It is recommended that this be added to the proposed agreement.
Transit Service Delivery
The local BC Transit responsibilities will be integrated into the new Authority. As well, the Agreement allows for these responsibilities to be broken into separate operating companies. For example, the West Van "blue bus" service and the BC Rapid Transit Co. Ltd (which provides the SkyTrain service) will likely remain as separate operating companies under contract to the Authority. This similar arrangement could also exist in Vancouver where a subsidiary could be created to provide the local trolley service within Vancouver or, more generally all transit service, both trolley and diesel, within Vancouver.
This concept of local subsidiaries would result in smaller operating companies and possibly loss of some efficiencies that exist with large operations but, at the same time, could result in more streamlined and locally accountable operations.
The Agreement also allows for new "custom-designed" or more innovative services to be provided. However, the existing collective agreement with the transit operators does limit flexibility and the opportunity for productivity and service improvements and these issues will have to be addressed.
Finally, the City could more easily become a partner, should it want to, with any local Vancouver subsidiary.
Major Road Network Benefits and Drawbacks
The Major Road Network will be very important to the Authority as it will be used to move people and goods by transit, truck and other vehicles between and within the local regional municipalities.
A Major Road Network will benefit the City to the extent that funding is available to finance the operations, maintenance and rehabilitation of our major arterials. Unlike other municipalities in the Province, the City has historically not received Provincial funding for its major road operations. The GVTA proposal addresses this inequity by placing us in the same financial position as other Lower Mainland municipalities.
The City also benefits by having a regionally-coordinated major road network. This will facilitate the improvement of regionally-based goods movement as well as the introduction of TDM measures and H.O.V. facilities. Even basic issues such as data collection, coordination of traffic signal systems and system monitoring can be improved.
The largest potential down side to the Major Road Network is the loss of municipal autonomy in the administration of their road system. The REAC proposal outlined earlier provides a framework for ensuring municipal interests are protected while enabling a greater degree of regional coordination. Nonetheless, there is a risk that regional responsibilities may expand over time at a loss to local decision-making.
Air Care and Transportation Demand Management
Transportation Demand Management (TDM) is an important part of the Region’s strategy to control the growth in Single Occupant Vehicle use and as a way to provide priority measures for transit. TDM can be a physical measure such as a Queue-jumper at a bridgehead or an HOV lane on a street or highway. By default, some TDM measures can also create congestion, which in itself is a TDM measure. TDM can also be vehicle pricing mechanisms such as tolls or vehicle surcharges (add-ons to the cost of car insurance or, in the case of the proposed Authority, an increase in the cost of Air Care).
Air Care will become an increasingly more important component of the region’s air quality policy. Air Care will allow the region to control and adjust the quality and quantity of vehicle emissions over time and in response to changes to technology and quality of the environment.
CONCLUSIONS
The negotiated Agreement between the Province and the GVRD integrates the various, existing Provincially controlled transportation elements and decision making authorities into one, locally controlled and funded Transportation Authority.
The Agreement allows the Region to implement a regional transportation strategy consistent with its regional land use strategy in a time frame and to a level of transportation service it decides and not tied to other competing Provincial ministerial and funding priorities.
As such, it is recommended the proposed Agreement be endorsed for implementation.
However, a number of concerns exist that Council may wish to pass on to the GVRD in the form of motions. These include:
1.Greater certainty to a reasonable cost sharing arrangement between the Province and the Authority on future, major capital road and transit expenditures.
2.Resolution of a significant number of outstanding issues and details associated with the new Authority (eg. the management structure, relationships between municipal, Regional and Authority staffs, political/staff relationships, etc). It is uncertain what Vancouver City staff involvement will be in resolving these issues. Nevertheless, staff will keep Council apprised.
Further, Director of Finance concludes that the additional revenue sources will likely not be sufficient to cover the funding shortfalls, which, for the year 2009/2010 are estimated to be in the range of $120 - $218 million (Appendix C). The probability is that an additional contribution from the property tax base will be required. To strenghten the financial position of the proposed Authority, the following should be pursued during implementation discussions with the Province.
3.A greater reallocation of funding or taxation room from the Province to reduce the projected funding shortfalls of the Authority arising from the proposed service expansions.
4.The ability to use Provincial administrative structures (for example ICBC or the Motor Vehicle Branch) to collect vehicle charges to ensure greater incentives and equity relating to the benefits enjoyed by motor vehicle users.
5. Greater cooperation between the GVTA and the Province on implementing tolling to
fund the GVTA, including the potential use of Provincial roads and bridges to collect
tolls.
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