JULY 29, 1997

                                 POLICY REPORT
                              TRAFFIC AND TRANSIT

                                           Date: July 4, 1997
                                           Dept. File No.4101
                                           CC File No.: 5500

   TO:       Standing Committee on Transportation and Traffic

   FROM:     General Manager of Engineering Services

   SUBJECT:  Funding and Governance of the Regional Transportation System


        A.   THAT the statement of principles for transportation governance
             and funding, as shown in Appendix B, be endorsed.

        B.   THAT the Greater Vancouver Regional District (GVRD) be
             requested to develop further the co-operative model of

        C.   THAT the GVRD be requested to give a higher priority to
             communicating with the general public in its consultation


       Vancouver, unlike other municipalities in British Columbia,  owns
        its own street rights-of-way outright
       Council policy with respect to the organization of a Regional
        Transit system is extensive and listed in Appendix A. The
        consistent policy direction is that the system should be locally
        controlled and supported by adequate funding.
       Council approved the regional Transportation Plan, 'Transport
        2021', in principle. This plan described the principle of the
        collection of fees from the users of the local transportation
        system which would be spent on the maintenance and development of
        that system irrespective of mode.


   The GVRD has entered into negotiations with the Province on the funding
   and governance of the regional transportation network for all modes. The
   purpose of this report is:

       to document the historical development of Council policy on this
       to document the negotiating principles
       to provide the status of the current negotiations
       to propose certain models for discussion


   There is a long history of negotiations with the Province on the funding
   and governance of the local transit system which is documented in
   Appendix A. These discussions date back from the time when BC Hydro
   passed the responsibility to operate the local system to the Province.
   Council has consistently recommended  that the Vancouver Transit system
   come under local control and that adequate funding be identified.

   With respect to roads, the City has been much more self sufficient.
   Larger projects, such as the Cambie Bridge, were funded with the assent
   of the voters, from long-term borrowing. Minor capital projects such as
   left-turn bays and street reconstruction are similarly funded from
   borrowed capital or annual operating sources. In the past, the Province
   assisted in minor capital work through Revenue Sharing, but this source
   has since disappeared. Other, smaller projects, such as sidewalks or
   local lane construction where benefits are more locally targeted, are
   shared by adjacent property owners.

   More recently, the Province and the Regional District have entered into
   negotiations on the funding and governance of the local transportation
   system. These negotiations are in progress. They  will encompass all
   aspects of planning, development, financing, administration, and
   operation of roads, cycling and pedestrian facilities, transit services
   and Transportation Demand Management. 


   It is now almost four years since the regional transportation plan
   'Transport 2021' was completed. Limited progress has been achieved. The
   intent was that two new LRT lines would be operating by 2006 and that
   the bus fleet would double. Instead, the planning for the first LRT line
   has not yet begun and there have been few additions to the bus fleet. In
   the meantime, the population of the City has increased by 30,000 to
   522,000 and the Region has increased by over 140,000 to 1,880,000.

   Transport 2021 introduced the concept of user-pay as a new source of
   revenues.  Changes would be applied to auto drivers so they would pay a
   greater share of the true cost of operating a car, and fund transit. 
   These sources, including additional gas taxation, parking taxation
   applied on a regional basis and tolling were forecast to fund the $10
   Billion required in the Regional Plan had they been gradually
   implemented when the plan was approved in 1993.

   Revenues would be collected by a Regional Transportation Authority.
   These funds, together with transit fares, existing levies and Provincial
   contributions, would finance the Authority, support transit, and
   maintain a system of regional roads.

   Past studies indicated there is public support for this dedicated method
   of funding if:

       all funds collected are spent on the transportation system
       tolling and other user fees are collected on a system-wide basis so
        that no geographic bias is introduced  


   The negotiating principles, mutually agreed by the Province and the
   GVRD, are described in Appendix B. The  objective is to reform the
   governance of the regional transportation system in such a way as to:

       improve customer service
       increase transportation choices
       discourage dependance on the automobile
       support the regional land use strategy
       support regional air quality and greenhouse gas objectives


       provide an integrated decision-making process
       provide adequate and appropriate funding
       provide accessible and accountable governance
       provide good management
       provide fair treatment for existing employees 

   These negotiating principles would appear to cover the range of issues
   that need to be addressed in the development of two new governance and
   funding structure.

   Governance Models

   A number of models have been generated to meet the above objectives.
   Each has advantages and disadvantages. Indeed, there may be no 'right'
   way. Regardless, governance should be local and accountable, and
   adequate and secure funding sources should be identified.

   Three governance options have been identified:


   The "regional" authority centralizes control. Representation could be
   one of:

       nominated elected municipal politicians (similar to the GVRD
        Board), OR 
       non-elected appointees OR
       a separately elected political body

   The "municipal" models have each city independently pursuing its own
   transportation objectives. 

   The "co-operative" model is a combination of regional and municipal
   governance whereby the regional body provides co-ordination and
   planning, and distributes funding according to agreed formulae. The
   municipalities would continue to own, control and execute projects. 


   Existing Organization

   The Vancouver Transit system is managed locally through both the BC
   Transit Board of provincially nominated appointees and the Vancouver
   Regional Transit Commission of nominated elected municipal politicians. 

   The BC Transit Board obtains and controls the Provincial funding
   contributions and is responsible for labour bargaining. The Vancouver
   Regional Transit Commission allocates the service within the constraints
   of the funding that is available.

   Several problems with the existing framework have been observed over the

       The staff of BC Transit ultimately report to the BC Transit Board
        and are guided by Provincial policy objectives.

       There is the problem of balancing service allocations.  Recently
        the Five Year plan favoured building on Transit s ability to better
        serve the more densely populated inner cities. In the past, this
        has not been the case as service expanded to keep pace with
        regional growth, mostly in low-density environments, which
        exacerbated Transit s cost recovery problems

       The existing transit funding formula was re-negotiated between the
        Province and the Transit Commission in 1988.  The Transit
        Commission negotiated to obtain greater responsibility (and
        financial risk) of the local bus system in exchange for the
        Province taking on greater responsibility for rail transit.
        However, the Commission has still not been able to achieve many of
        its objectives (except by paying 100% of the cost) because the
        Province has been unwilling to provide its more limited share of
        the cost.

   Governance Models

   Alternative models are shown in Appendix C. Of the three options, the
   idea of each municipality running its own transit system has been
   dismissed as infeasible.  Many elements of the present, successfully
    integrated  transit system could be lost.  As well, capital
   requirements for transit are so great that economies of scale can only
   be achieved through sharing.

   The resulting choice is between a regional authority with full
   responsibility for delivering all transit services or the looser,
   "co-operative" model of a regional agency which oversees the significant
   elements of the system but allocates funding to municipal or
   sub-regional boards along with the responsibility of providing more
   localized services.

   A regional authority could be modelled after the Toronto Transit
   Commission, for example. It would combine the functions of the existing
   BC Transit Board and the Regional Transit Commission. This model would
   have the advantage of centralized and quicker decision-making. However,
   it would also be required to make decisions on local issues, perhaps
   without full knowledge of the implications. It would still be required
   to rule on such politically sensitive and technically complex issues
   such as how to balance service between the suburbs and the core
   metropolitan area.  (This is where service design guidelines are so

   The co-operative model has some advantages in the Vancouver context.
   Clearly, a regional authority would still have responsibility for
   delivering regional services such as Sea Bus, SkyTrain, any future LRT
   additions and certain express routes. Beyond this, the regional
   authority could allocate funds to individual municipalities, (as West
   Vancouver) or sub-regional boards for the delivery of basic local
   transit service, and transportation demand strategies,etc. 

   One arrangement is to have Vancouver City manage the trolleys and other
   services within its jurisdiction or set the level of service for these
   routes.  Another is that Vancouver join Burnaby and New Westminster to
   administer the core of the existing system.

   Individual cities or sub-regional boards could allocate transit service 
   according to their own priorities.  For example, they could 'top up'
   basic levels of service provided by the regional authority, by tapping
   their own tax bases. Such an arrangement could foster experimentation in
   providing different types of service.

   Transit Funding

   The existing transit cost-sharing arrangement is shown in Appendix F.
   Costs are shared between the Province and the local Vancouver Regional
   Transit Commission. Overall, the Transit Commission pays about 65% of
   the day to day operating costs and 31% of the capital cost.  SkyTrain
   debt is over one quarter of the budget. New LRT lines will be expensive:
   approximately $1 Billion per line.

   The local share of the system in 1997/98 is $289.7 Million of a total of
   $550 Million. The total cost, according to the Transit Five Year plan,
   will rise to $625 Million in 2002. To achieve the targets spelled out in
   Transport 2021, the total funding requirement would need to be $721
   Million by 2002.
   The Vancouver Regional Transit Commission relies on fares and other
   non-user sources of funding to meet the local obligations to operate the
   system, as described in Appendix F. The gas levy, at $.04/litre, also
   encourages a change from the auto mode.  However, the effect is
   diminished by the proximity of cheap gas in the United States.   The
   hydro levy and non-residential property tax are not related to the
   transportation system, although the property tax is a common way of
   paying for transit in other jurisdictions.

   The additional funding required to meet Transport 2021 targets would
   come from the existing transit funding sources and other sources
   identified by the Region (parking tax, tolls, etc.).


   Existing Organization

   Unlike other municipalities in the Greater Vancouver Regional District,
   Vancouver owns all its own roads and funds maintenance and improvements
   through traditional sources. Last year the Provincial Government
   proposed declassifying several provincial highways in other
   municipalities. Although this proposal was later withdrawn and referred
   to the governance discussions, it had an immediate effect on the
   neighbouring municipalities of focusing on the cost implications and
   what the nature of a regional road network would look like.

   To support the governance process, the Regional Engineers Advisory
   Committee of the GVRD began to explore the notion of a major regional
   road network. The committee defined criteria for the selection of such
   roads, which are presented in Appendix D. Applying these criteria
   produced a map of 'regionally significant' roads as shown in Appendix E
   (only Vancouver shown).

   This network does not have any immediate implications for Vancouver. 
   The streets shown are a subset of those previously approved by Council
   in the Transportation Plan, and their designation does not require any
   further development or change of use.  However, a framework of regional
   roads may prove useful since forthcoming traffic management projects
   like Richmond Rapidbus in the near term and the emergence of the
   "Intelligent Highway System" in the longer term will require a certain
   amount of regional co-ordination. 

   Governance Models

   The different governance  models described above could be used  to
   administer the major regional roads. First, a regional authority could
   be appointed or elected.  This body would receive the necessary funding
   to maintain and operate major roads throughout the region, including
   Vancouver.  The body could also retain certain planning and construction
   functions as well as control of access to abutting land uses.  

   A second model is to have municipalities individually maintain and
   operate these roads, such as Vancouver does now. This would be a concern
   of smaller outlying municipalities if the Province proceeded to
   declassify roads and no new funding sources were available to them.   

   The third, or co-operative model would be have the cities continue to
   own and develop roads as individual Councils wish, but also participate   in projects of regional significance.  This would seem to be the most
   advantageous to the City of Vancouver.


   The cost of maintaining a system of Regional roads is still being
   refined, but it is estimated to be in the order of $12,500 per
   lane-kilometre annually for a twenty-five year cycle. The total cost
   would be about $40 Million per year.  A modest program of regional
   roadway improvements would cost in the order of $100 Million per year,
   including roads in developing areas, left-turn bays, etc.

   New funding sources for this network will be discussed as part of the
   governance and funding negotiations.


   Local municipalities only have the property tax as a revenue source to
   pay for major transportation improvements.  All other major revenue
   sources, including the gas tax, tolls, and other road pricing sources,
   are Provincial and require Provincial approval.

   Additional Regional transportation responsibilities will mean additional
   funding responsibilities.  The Region is unable to assume any additional
   transportation responsibilities without the commensurate funding sources
   (tolls, etc.) from the Province.  Should the Province be unwilling to
   provide such funding sources then the Regional municipalities have no
   recourse other than the property tax.  It is unlikely the municipalities
   would be prepared to use the property tax to this extent, unless the
   Province reduces the burden on the property tax by assuming an
   equivalent responsibility (say school or hospital funding).


   The negotiations on funding and governance are now well underway. 
   Although they are not yet ready to be finalized, it is appropriate for
   Council to begin indicating its preferences for the direction of the

   In terms of general principles, it is suggested that the governance
   structure should:

       be accessible and accountable to the public
       have secure, long-term funding
       derive its revenues from transportation sources to the greatest
        extent possible

   These principles are embodied in the GVRD s statement of principles, and
   it is recommended they be endorsed.

   In terms of specific structures for governing the transit and road
   systems, the GVRD has outlined a range of options, which are not yet
   fuly developed, but appear to outline the range of possibilities.  There
   are inherent concerns over systems that are too centralized (e.g., the
   existing transit system) or too dispersed (which can lead to lack of
   co-ordination and parochial decisions).  The co-operative model, though
   not yet fully developed, attempts to avoid these extremes, and is worthy
   of further development.

   Finally, in terms of communication, the pulic is generally unaware of
   the negotiations underway.  The GVRD has just released a program of
   public communication, which should be supported.

   However, this program gives relatively low priority to dealing with the
   public directly.  (It describes them as a 'tertiary audience'.)  A more
   comprehensive program of communicating with the public should be
                               *   *   *   *   *

   Appendix A

             Council Decisions with respect to Transit Governance

   In a Manager's report dated July 5, 1988 the previous decisions of
   Council were summarized: 

   1.   A primary objective of the organization should be to provide the 
        best possible transit service at the lowest cost to users and
        government. The organization should be relatively immune to other
        political pressures, such as provision of welfare services, land
        use planning, and numerous other governmental functions, which
        could detract from efficient and cost-effective transit service.

   2.   There should be a single authority which is perceived by the public
        to be clearly responsible for all transit functions. Shared
        responsibility between several authorities, as is the case now,
        should be eliminated.

   3.   The organization should be responsible for a clearly definable part
        of the Vancouver Region only - not the entire Province with its
        great diversity of needs...

   4.   Members of a board or commission controlling the organization
        should be drawn only from this area, so that they will be
        knowledgeable of local needs and competent to deal with them.
        Exceptions could be board members representing the Province

   5.   Representation on the controlling board or commission should be
        commensurate with financial contribution of each municipality 
        involved, both in terms of fares and of taxation.

   6.   The organization should be given authority to plan, operate and
        maintain all aspects of the system, including provision of rolling

   7.   The authority should be given adequate revenue-rasing powers for
        this purpose and these should include fares, gasoline tax, hydro
        surcharge and property tax ...

   8.   The organization must have its own staff to carry out its
        responsibilities, including planning, operations and
        union/management relations.  The current arrangement of staff
        serving three entities is not effective.

   9.   There must be a mechanism (such as an effective technical
        committee) to permit ongoing interface with municipal Councils and
        to provide technical assistance to the organization relfecting
        local government needs.

   On July 8, 1988, in consideration of the above history, Council approved
   these the following recommendation:

   THAT Council reaffirm its previous endorsement of a single transit
        authority for this region. [and]

   THAT this single authority take the form of a board/commission, with
        representation from all municipalities over 10,000 population, with
        weighted voting reflecting funding contribution and ridership. The
        representatives should be the Mayor of each municipality, or
        his/her designate, and the Chairman should be an elected
        representative, preferably appointed by the board itself.

   On November 22, 1991, in consideration of a GVRD report on transit
   organization Council approved the following recommendations:

   THAT Vancouver City Council endorse the proposal contained in the GVRD
        report entitled "Vancouver Regional transit System: A Proposal for
        Improving the Structure and Accountability of the Transit
        Service",[October 1991](Transit as a GVRD Function), and encourage
        discussion with the new Provincial Government to bring about the
        proposed changes. [and]

   THAT the Provincial Government be requested to establish a Regional
        Transit Authority, with a mandate to develop a Regional Transit

   APPENDICES B and C on file in City Clerk's Office


                     Criteria for Selecting Regional Roads

   The following criteria are considered in defining a network of regional
   significant roads:

       Access from Gateways
        International Airport, Port facilities, bus and train terminals

       Access to Activity centres
        the downtown, major industrial areas, major educational institutes

       Inter-municipal travel
        connect municipalities
        carries minimum of 70 percent of trips overs 10 km AND has a volume
        of greater than 800 vehicles per hour

       Transit corridor
        minimum of ten through buses per peak hour-direction

       Goods movement
        minimum of 800 trucks per day

       Emergency response
        key element of the Greater Vancouver Emergency Routers Plan

       Network Continuity

   APPENDICES E AND F on file in City Clerk's Office

                                   * * * * *