New study shows the problems and solutions to Canada’s transit woes

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Good morning,

Today’s story is an interesting one. We’re covering a massive new report on transit funding programs across the country.

 We’re writing this for our readers in Ottawa and here in Vancouver, so the Lookout community can understand the broader problem beyond just what’s going on in Vancouver.

We’re hoping to do more of these in the future, so I’m keen to hear if you enjoy it. Let me know!

— Geoff Sharpe, Vancity Lookout editor

PS - If you find this newsletter valuable, please consider forwarding it to your friends. New to the Lookout? Sign-up for free.

WEATHER

Monday: 22 🌡️ 14 | 🌧️

Tuesday: 18 🌡️ 13 | 🌧️

Wednesday: 21 🌡️ 12 | 🌤️

ANALYSIS

Problems and solutions to Canada’s transit woes

Transit operators in major cities across Canada are facing massive financial challenges, with operational funding shortfalls potentially leading to service cuts across the board. 

Now, a new report from Leading Mobility called This is the End of the Line: Reconstructing Transit Operating Funding in Canada, lays out a host of solutions, tailored to each city, for how politicians can shore up the funding gaps. Today we’re breaking down this report, covering the two cities the Lookout operates in — Ottawa and Vancouver — so residents across the country can understand the scale and breadth of these challenges. 

What’s going on: The report outlines how post-COVID declining ridership and fares, the ongoing decline in certain types of commuting from remote work, and inflationary pressures on existing cost inputs, have created deficits for operational transit budgets. 

• For example, fewer people are purchasing monthly passes since they don’t have to go to work, a boon for families who hate commutes, but a problem for funding transit services.

As cities expand transit capital costs like building LRT or SkyTrains, and different levels of government chip in to fund those capital costs, operating costs also rise, and the existing taxation tools used by cities are not enough to cover these new costs. Senior levels of government are also less willing to fund those operational costs — it’s much more splashy for a province to fund an LRT or SkyTrain expansion than cover the maintenance costs and salaries for those transit workers. The report calls this the “Underfunding Trap”.

• As we’ve covered previously, if these problems aren’t dealt with, then the system may collapse into a transit death spiral, where fewer people use the system as route services decline.  

Canadian transit funding is very susceptible to demand changes. Prior to COVID, an average of 51% of transit operating costs in Canadian cities were funded by fares, compared to 39% in the US. Ridership dropped 85% across the country after COVID, causing part of the problem we see today. 

City funding formulas: Each city is somewhat different in terms of how they fund transit. Since the Lookout covers Vancouver and Ottawa, we’re breaking out each below.

• For Vancouver, the city uses a very small percentage of property taxes to fund transit, and varies by municipality. In Vancouver, it’s around 10%, while in Surrey, it’s 4.4%. The fuel tax covers 18% of funding, while fares cover 29%. It’s worth noting that property taxes are quite low in Metro Vancouver cities compared to similar-sized jurisdictions. 

• For Ottawa, fares cover only 23% of operating costs, with 55% from property taxes. It’s also worth noting that the system covers one city, while TransLink in Vancouver covers 21 municipalities of varying sizes. 

International examples: I’m a huge nerd when it comes to comparing how other cities operate compared to Canadian cities. Each place is different, but I’ve summarized the most interesting findings from the report’s analysis.

In the UK, private operators run routes, tendered by the government, with 59% of revenue derived from fares. The Mayor of London was recently given more power, allowing them to implement congestion pricing. Cities in Canada have less power to enact policies like that. 

For Germany, funding is more equitably distributed among different jurisdictions. In 2022, German adults were able to purchase a monthly transit pass for €9 per month, with around half of all German adults participating. After the trial ended, the government was pressured to reintroduce something similar, and a new €49 per month pass was implemented, costing €6 billion annually. 

You might think the United States would be more capitalistic. You’d be wrong. All levels of government provide around 75% of funding for transit, with the federal government covering 25% of that. Sales taxes are a primary mechanism.

Solutions: The biggest solution proposed by the report is the addition of operating funding as part of the Permanent Transit Fund, not just new capital projects. The report notes that unlike other countries in the report — Germany, UK and the US — we are the only national government that doesn’t provide operations funding. New routes require time to generate fare revenue. 

For municipalities, the report argues transit operators need more flexible forms of taxation and funding mechanisms, creating enabling legislation for them to act, though most agencies said the federal government would need to be involved with funding in a big capacity.  

• Counterpoint: The challenge with this is obviously politics. Both Ottawa and Metro Vancouver are suburban heavy cities, which require balancing the needs of both communities. 

The report argues that municipalities and transit agencies should increase public transparency about what happens when funding isn’t met, and the cuts that that could entail. TransLink has done something like this with the huge report that 50% of bus routes could be cut without new operational funding. 

The report identifies different funding models for each city, and is calculated based on a range of criteria, including equity and implementation.

Vancouver: TransLink faces a $600 million funding gap after 2025. The report’s main recommendation is a Vehicle Levy, which is a tax or surcharge on a vehicle registration. In Montreal where this is already implemented, this fee is expected to generate $125 million this year. 

TransLink also has the legislative authority to implement this, though councils and the provincial government opposed it in the past. Other tools include a Vehicle Kilometres Travelled Tax or an Electric Vehicle Charging Tax, similar to the Motor Fuel Tax already implemented in Metro Vancouver. 

Ottawa: OC Transpo’s budget gap is $140 million per year, according to CTV. An Off-Street Parking Tax is the main recommendation, which would target privately owned parking spaces, and could generate $101.7 million per year. This tax is already implemented in places like Vancouver and Montreal.

• Other tools include a Vehicle Levy. Gatineau is in talks with Quebec to implement one of its own. The last tool would be the Transportation Network Company Fee, to target ride-hailing companies like Uber on a per-ride basis.

What it all means: Should we add transit funding problems, next to maple syrup and beavers, as a national Canadian symbol? It sure feels that way after reading this report. Rather than playing a game of hot potato, each level of government has a role to play. It may even require (gasp) tough political decisions by our leaders. 

Further reading: You can read about transit death spirals in our members-only story here.

SPONSORED BY DOWNTOWN VAN

The Granville Block Party returns this weekend!

Join us at the intersection of Granville x Robson on August 24th and 25th from 1 PM - 7 PM.

What to Expect:

Live Music: We’ve got an amazing lineup across three stages! Plus, don’t miss curated stage takeovers by Public Disco, Van Vogue Jam, and Locals Lounge.

Delicious Eats & Drinks: Satisfy your taste buds with a variety of restaurants located right on Granville Street. Plus, enjoy beverages from two on-site bars managed by Red Truck Beer Company.

Local Market: Browse unique, handmade goods at the VHS Markets and support local artisans.

Family Fun: Keep the kids entertained with mini golf, arts and crafts workshops, and roving street performers.

Official Afterparty: Continue the festivities from 7 PM onwards at Donnellan’s Irish Pub with drink specials, live music, and more.

For the latest updates and event details, visit here and follow us on Instagram.

Free and open to the public!

VANCOUVER NUMBERS

⚡ 20,000: This number of BC Hydro customers that lost power after the storm on Saturday night. [CityNews]

📈 $2 billion: No, that’s not the cost of the Surrey to Langley SkyTrain extension, that’s the overrun costs… The old construction price was $3.9 billion and the new price is now $5.9 billion. [Times Colonist]

🏢 10.4%: That’s the office vacancy rate in Metro Vancouver in Q2 2024. In Vancouver, the rate jumped from 12.5% to 12.8%. [Business in Vancouver]

🔥 1.5: The distance in kilometers that embers blew from a home fire in Dunbar Street. It shows the potential dangers of urban forest fires in the region. [Vancouver Sun]

NEW JOBS

Discover a new job in Vancouver:

• Building operator at Avison Young

• Mortgage fulfillment specialist at Capital West Mortgages

• Senior manager, global marketing and trade initiatives at Destination Canada

• Senior communications advisor (temporary, 12 months) at ICBC

• Multiple jobs at TransLink

THE AGENDA

🧑‍🚒 Firefighter Ron Hegedus, who died from occupational cancer, was remembered this week by the firefighting community. Said the union, “His commitment to protecting our community and supporting his fellow firefighters was unwavering, and his loss is felt deeply by all who had the privilege of working alongside him.” [Vancouver is Awesome]

🪧Protestors rallied at the Vancouver Art Gallery this weekend to speak out against violence against Bangladesh’s Hindu minority. The violence has killed scores of people. [CBC]

🔥 An East Vancouver apartment with a history of fires is in the process of being torn down as of Friday. The fire at the building located at East 10th and Guelph displaced 70 people last summer, and the building's owners were fined for fire code violations. [Global News]

⚾ The Vancouver Canadians were too much to handle for the Spokane Indians, with the team winning 5-4. With that win, the Canadians are now 28-19, and second in the Northwest League behind Spokane. 

🤝 First Nation elders from across BC gathered in Vancouver last week. It was the 48th anniversary of the event, with 1,960 elders participating from 63 different First Nations. [Ha-Shilth-Sa]

👮 A man was arrested after firing shots near Granville and Helmcken on Friday night. There were no injuries and charges are currently pending. [CityNews]

EVENT GUIDE

Bard on the Beach Shakespeare Festival | Until Sept. 21 | Shows include Hamlet, Twelfth Night, The Comedy of Errors and Measure for Measure | Tickets

Bachman-Turner Overdrive | PNE, Pacific Coliseum | Aug. 20, 8 pm | Come see the musical band live at the PNE | Tickets $40

Lost In The Shuffle | Rio Theatre | Aug. 22, 6 pm | Come see renowned magician Shawn Farquhar’s documentary Lost in the Shuffle exploring art and magic | Tickets $25

Advance Tickets Eastside Tattoo Convention | 79 W 3rd Ave. | Aug. 23-25 | 90+ local artists, with walk-ups available for artists who are normally booked | Tickets $12

21st Annual Richmond Maritime Festival | Aug. 24-25, 11 am-6 pm | Free music, maritime kids activities and visit wooden ships | Free

Garry Dee | PNE, Pacific Coliseum | Aug. 24, 8 pm | Comedia Gary Dee performs a standup special | Tickets

The 2024 Strong Sessions Concert | Roundhouse Community Arts and Recreation Centre | Aug. 25 5:30 pm | Musical performances from local musicians with disabilities | Suggested donation $10

Critter Crawl | Container Brewing | Aug. 26, 7 pm | Come see musical performers jed and the valentine and Brianna Lizotte | Tickets $23

Black Block Party | Vancouver Art Gallery North Plaza | Aug. 27, 1 pm-9 pm | Join vendors, artists and musicians celebrating black culture | Tickets

Light Up Chinatown! 2024 | 500 block of Columbia St. Aug. 24-25 | Food and musical performances to celebrate the heritage and diverse history of Vancouver’s Chinatown | Free

FOOD PREVIEW

The burger renaissance

I asked Insider members over the weekend whether I should feature a less-than-positive review of a burger joint. Many were enthusiastic that yes, I should include it because people should know about mediocre places.

I don’t believe in punching down, so I save my reviews like this for popular, or well-financed businesses, not small mom-and-pop shops struggling to make a living. 

The story has evolved into something more, a look at what I think is the burger renaissance that seems to be happening in America and how it’s sort of evolved up here by looking at two burger spots in Vancouver and the type of burger place I wish this city had. (And before you ask, no, it wasn’t a review of Whitespot).

To get this review sent to your inbox, subscribe to our Vancouver food and drink newsletter instantly by clicking this link. 

GOOD NEWS MONDAY

Start your Monday off with some good news:

The Cityreach Care Society is helping Vancouver families facing financial difficulties by giving away 1,000 backpacks full of school supplies in preparation for the school year. Those picking up backpacks can even get a free haircut. Families say this has a big impact on many of them. You can also donate to support Cityreach’s work here. [CityNews]

COMMUNITY HIGHLIGHTS

• You can get a Vancouver home for $3.5 million, or you can get this massive, 700-acre ranch in the middle of BC for the same price. Of course, it’s almost a five-hour drive from Vancouver… [Castanet]

• The VIFF Centre's back open with an upgraded cinema and a line-up of films that just have to be seen on the big screen... Get Tickets.

• Want a sneak peek of the restaurants and bars on our radar that we may review at the Lookout? Insider members can read our new Watch List. [Vancity Lookout]

• The new PNE Amphitheatre officially has a name, the Freedom Mobile Arch. [Urbanized]

• If you’re a dog lover, this set of photos from over 100 years ago will have you wagging your (non-existent) tail. [Vancouver is Awesome]

• Want to have your announcement featured? Learn how here.

VIDEO OF THE DAY

There’s a whole lot of rhetoric out there about luxury housing, especially when it comes to big towers. Luckily Uytae Lee breaks down this issue in a well-articulated, thoughtful video, bringing in a range of facts and data about what causes rental prices to skyrocket in new developments. Even if you don’t agree with the entire video, it’s a worthwhile watch.