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PPP Profiles: Canada Line

paulkimo90

Canada Line's driverless, automated transit

MPC Research Assistant Kate Lawrence contributed to this profile.

Location: Vancouver and Richmond, British Columbia, Canada

Project Sponsor: Canada Line Rapid Transit, Inc. (CLCO), a subsidiary of TransLink (Greater Vancouver Transportation Authority)

Private Partner: InTransitBC:  A joint venture between SNC-Lavalin (SNC), Caisse de Dépôt et Placement du Québec (CDPQ), and British Columbia Investment Management Corporation (bcIMC)

Project Delivery: Design, Build, Finance, Operate, Maintain 

Cost: C$2.051 billion (all dollar amounts are in Canadian)

Funding Sources:

  • Government of Canada: C$450 Million
    • Funding Program: Canada Strategic Infrastructure Fund
  • Province of British Columbia:  C$252 million
  • City of Vancouver:  C$30 million
  • Private Consortium (InTransitBC): C$720 million
  • Greater Vancouver Transportation Authority (TransLink):  C$333 million
  • Vancouver Airport Authority: C$259 million
  • Sale of Bridgeport Parkade (parking capacity): C$5 million
  • Net Interest:  C$2 million

Building a light rail connection between the Vancouver International Airport and the cities of Vancouver and Richmond has long been a goal of transportation planners in British Columbia (BC).  The corridor is home to one-third of the region's jobs and more than two million people, with an expected population growth of one million by 2035.  The corridor has seen growth of 20,000 cars a year;  average commuter trip times increased by 36 percent between 1996 and 2006.  The existing transportation infrastructure cannot handle demand; impacting the regional economy, environment, and quality of life. 

Though plans for a rail line between the Vancouver International Airport and the cities of Richmond and Vancouver have been in place for decades and were part of TransLink’s Transportation Plan for 2000-2005  (TransLink is Metro Vancouver’s regional transportation authority), only when Vancouver was awarded the 2010 Winter Olympic games did the project get moving.   Even with the promise of the Olympics, TransLink voted against the project twice, arguing the agency could not afford to build the line.   Eventually the urgency of the Olympics won funding commitments from the province of British Columbia, which agreed to give funds for the rail line with the condition that it was a public-private partnership (PPP).  The airport authority, cities of Vancouver, and Ottawa, as well as the federal government of Canada also committed public funds. 

In 2005, TransLink partnered with the private consortium, InTransitBC, a joint venture between SNC-Lavalin (SNC), Caisse de Dépôt et Placement du Québec (CDPQ), and British Columbia Investment Management Corporation (bcIMC), to help finance, design, build, operate and maintain the rail.  InTransitBC took on the remaining C$720 million financial burden and the risk associated with construction and ridership. 

Canada Line Rapid Transit Inc (CLCO), an independently governed subsidiary of the regional transportation authority – TransLink – is responsible for fare setting, fare collection, and operational guidelines.  CLCO was established by the agencies funding the transit line to oversee project design, procurement, construction and implementation.  

InTransitBC is obligated to construct the line for a fixed price and is responsible for any budget overrun.    During construction, InTransitBC will receive payments based on defined milestones; however these payments will be insufficient to meet the full cost of constructing the line, hence InTransitBC’s C$720 million financial commitment.  They will recover this commitment over the 35-year operation and maintenance period during which they will receive performance payments from TransLink and the Province of BC.  The payments will cover operating and maintenance costs and provide a return on InTransitBC’s financial commitment. 

Performance payments to InTransitBC during the operation period are based on arrival times, ridership, and quality of operations.  This is where the risk comes in.  InTransitBC must meet performance metrics, or payments will be reduced, impacting their profits:

  • 70 percent of each payment  is based on availability. 
    • InTransitBC is required to operate an average of approximately 40 trains per hour.
  • 20 percent is based on quality of the service delivered
    • Trains must be accessible, comfortable and convenient.  General repair and cleanliness of vehicles and stations, and vehicle and station safety is also a factor
  • 10 percent is based on achievement of ridership forecasts
    • Established every five years, forecasts may be changed once per year.

CLCO will collect and retain fare revenues from the system and make payments to InTransitBC.   Forecasts show the net new revenues generated by the line will cover the availability payments and performance payments during the operating period. 

Ridership greater than projected

Construction of the Canada Line began in October 2005.  It officially opened on Aug. 17, 2009, three months ahead of schedule.  The 16-station, 11.8-mile line uses an automated, driverless rapid transit system that operates both below and above ground.  It has 16 stations, two bridges, and connects with the existing Expo and Millennium transit lines to serve the region as part of the SkyTrain metro network. Currently, trains run every four to eight minutes during peak hours, with the ride from either endpoints, taking about 25 minutes. 

Canada Line's seamless passenger cars.

Oran Viriyincy

Ridership has been greater than projected.  The original ridership goal of 100,000 passengers per day by 2013 was reached in May 2010.  During the 2010 Winter Olympics in February 2010, an average of 228,190 people used the train line each day.   This was 118 percent more than anticipated.  Ridership is currently running at around 110,000 passengers per day. In 2010, total ridership was 38.4 million. 

To meet transportation needs while Canada Line planning was underway, a bus rapid transit service was put into operation along the corridor in 2001.  This service, which carried approximately 20,000 passengers a day, ceased operation when the Canada Line began operation in the fall of 2009.

The Canada Line is the largest PPP implemented in Canada and the first rail rapid transit PPP in the continent.

It has met a considerable amount of praise.  It received the Gold Award for Infrastructure from the Canadian Council for Public-Private Partnerships in 2009 and was named one of the 100 most innovative and socially significant infrastructure projects around the world by Infrastructure Journal.

Lessons Learned

P3 Canada Fund

Though federal funding came from the Canadian Strategic Infrastructure Fund, the federal government of Canada has taken a national approprach to PPPs by forming the P3 Canada Fund, operated by PPP Canada.  PPP Canada was formed in 2008 and operates with an independent Board of Directors reporting through the Minister of Finance to Parliament.  The P3 Canada Fund is a C$1.2 billion federal fund to improve the delivery of public infrastructure through PPPs.  The fund receives applications from provincial and territorial governments and awards grants on a merit-based system with the objective of supporting PPP infrastructure projects across 16 categories , that generate significant public benefits, including water and transportation infrastructure.  Each infrastructure project considered by the P3 Canada Fund must contribute to one of: fostering economic growth; supporting a cleaner environment; and/or promoting stronger communities.   Read More »The amount of the funding support, in combination with any other direct federal assistance, may not exceed 25 percent of the project's direct construction costs. The P3 Canada Fund is part of the Building Canada Plan and Canada’s Economic Action Plan.   

Improved environment

The ridership capacity of the Canada Line is equivalent to that of 10 major road lanes. According to the British Columbia Ministry of Transportation and Infrastructure, the Canada Line will eliminate 14,000 tons of greenhouse gas emissions annually when running at capacity.  Any trees removed must be replaced with approved trees of a certain species and diameter.

Property values

According to Landcor Data Corporation, the Canada Line will increase residential property values. If property values generally increase, homes closest to the stations (500-800 meters) will see values increase by 10 to 20 percent.  If overall property values decline, those homes closest to transportation improvements will decline 10 to 20 percent less.

Land use coordination

The Canada Line was developed with transit-oriented development (TOD) as one of the guiding principles.  That said the rail is intended to serve, and not shape, land use while encouraging mixed-use development and livability. The Canada Line is expected to spur housing development in areas along the line.  The City of Vancouver has adopted the EcoDensity principle and is planning for higher densities around certain station locations. The EcoDensity Charter, commits the City to make environmental sustainability a primary goal in all city planning decisions-in ways that also support housing affordability and livability. 

Value for Money

During the competitive bidding process of the Canada Line, CLCO was required to complete a value for money assessment, comparing the cost of building the system to what it would have cost the public sector or Public Sector Comparator (PSC).  The PSC is a hypothetical concept based on realistic assumptions. 

The evaluation considers the differing amounts of incremental ridership revenues generated relative to the revenues that would be generated if the system was built with a PSC. This was done by comparing the net cost of the proposals (gross cost less their forecast incremental ridership revenue) over the 35-year term. For example, a system that cost $1,600 million and that generated $300 million of incremental ridership revenue would have a net cost of $1,300 million. This proposal would be preferred to a system that cost less to build and operate at $1,550 million but only generated $200 million of incremental ridership revenue, resulting in a net cost of $1,350 million, $50 million more than the first system. 

Analysis shows that InTransitBC was able to build the Canada Line for $92 million less than what it could have cost the PSC to build.  The expected ridership revenue of the InTransitBC build is $148 million greater than with the PSC. The higher forecast ridership revenue for the project is due to more accessible station designs, train design, and more frequent train service.

 

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