FROM THE CEO: TTC Special Board Highlights

Season’s Greetings everyone.

I’d like to begin my final weekly message of 2023 with something that can’t be said enough – thank you. When I reflect back on all that we’ve achieved this past year, it’s clear to me just how much your dedication fuels our success. Together, we implemented programs to increase service and safety, introduced open payments, and continued the greening of our fleet – just to name a few. I look forward to seeing the incredible impact we’ll continue to make together in 2024.

A big thank you as well for your kind and generous spirit, especially during this time of year. This season, TTC Recreation Councils led events and initiatives across the city to raise over 10,000 toys, 12,000 cans of soup, and many more donations to help those in need. Thank you also to those who have donated to our TTC/United Way campaign. I look forward to sharing the fundraising total with you in the new year.

Free rides on New Year’s Eve
​This year, we’re once again encouraging Torontonians to celebrate the holidays responsibly and leave the driving to us. Bus, streetcar, subway and Wheel-Trans service will be free from 7 p.m. on December 31 until 8 a.m. on January 1. Late evening bus, streetcar, and subway service will continue until 3 a.m., with the Blue Night Network operating until regular service begins at 8 a.m.

2024 Budgets approved
​At the special TTC Board meeting yesterday, Commissioners approved the 2024 Budgets, which includes a fare freeze for next year, and received an update on the next 5-Year Corporate Plan. Please see below for more highlights of Commission decisions approved on December 20. The Board’s first meeting in 2024 will take place on Thursday, January 25.

Richard J. Leary
​Chief Executive Officer
​December 22, 2023 

TTC Board Highlights
​TTC Special Board Meeting December 20, 2023

TTC Board approves TTC 2024 Budgets
​After receiving presentations from TTC staff and members of the University of Toronto’s Mobility Network, the Board approved the TTC’s 2024 Operating, Wheel-Trans and Capital Budgets. The budgets will be forwarded to the City Budget Committee and the City Manager as the official submissions for the TTC. Here is what was approved:

• 2024 Operating Budget totalling $2.568 billion in gross expenditures, $1.337 billion in revenues and net funding requirement of $1.231 billion for the TTC comprising the following services:

- 2024 TTC Conventional Operating Service Budget of $2.404 billion in gross expenditures, $1.329 billion in revenues and a net funding requirement of $1.076 billion; and

- 2024 Wheel-Trans Operating Budget of $163.6 million in gross expenditures, $7.9 million in revenues and a net funding requirement of $155.7 million.

• 2024 year-end workforce complement of 17,508 positions, comprised of 14,422 operating positions and 3,086 capital positions, reflecting an increase of 367 operating positions and 176 capital positions.

• 2024 Capital Budget of $1.369 billion and future year planned estimates of $11.029 billion for a total TTC 2024-2033 Capital Budget and Plan of $12.398 billion, comprising the following:

- A 2024 Capital Budget of $1.319 billion and future year planned estimates of $10.970 billion, for a total TTC 2024-2033 Base Capital Budget and Plan of $12.289 billion; and

- A TTC 2024 Capital Budget of $50.02 million and future year planned estimates of $58.89 million, for a total TTC 2024-2033 Capital Budget and Plan of $108.91 million for Transit-Expansion-Related Projects.

Board members also approved the following motions:

• The TTC Board requests the TTC CEO to report to the Board in Q3 2024 on the service crowding standard change made in the 2023 budget, including the impacts on riders and TTC finances, and the cost and service implications of reversing that decision in the 2025 budget.

• TTC Board resolve to closely monitor the 2024 financial performance and the resulting draws of the TTC Stabilization Reserve Fund, and commit to making in-year adjustments to reduce reliance on the Reserve Fund as a first priority should there be favourable variances to financial performance.

• That TTC staff report back in Q2 2024 on the establishment of a Budget Committee.

• That staff advise the TTC Board of their specific requests to the City in relation to traffic, on-street parking and City Building Fund.

2024 Revenue Ridership Forecast
​TTC Conventional ridership stabilized by fall 2023, with future ridership growth restricted by hybrid work policies. As a result, ridership growth incorporated into the 2024 TTC Conventional ridership budget is expected to be gradual throughout 2024, driven only by a general anticipated 1%-2% population increase in the city of Toronto. Most employers have now accommodated a hybrid model of work allowing a partial work-from-home of their employees. Hybrid work practices are expected to stay at fall 2023 levels throughout 2024, averaging approximately 2.5 days per week in-office, as understood by 2023 employer surveys and the Strategic Regional Research Alliance occupancy index. Attendance levels at events and in-person class settings for post-secondary institutions and schools are also expected remain at current levels.

Forecasted 2024 ridership levels assume:

• Ridership patterns have stabilized with no further COVID recovery.

• Maintain similar behaviour of office workers, with in-office days staying at fall 2023 levels, averaging approximately 2.5 in-office days a week.

• A gradual ridership increase from an anticipated 1%-2% population increase in the city of Toronto.

• Discretionary travel, including attendance at special events, similar to pre-COVID levels.

• In-person class settings at post-secondary institutions and schools comparable to 2023 levels.

For 2024, the TTC is expecting approximately 422.4 million revenue rides, which represents 79% of pre-COVID normal levels, starting the year at 78% in January and ending the year at 80% in December.

To support the accessibility to and affordability of transit to all riders, fares will be frozen at 2023 rates, resulting in 2024 TTC Conventional budgeted passenger revenue of $998.2 million ($953.8 million net of PRESTO fees).

No Fare Increase for 2024
​For 2024, TTC fares will be frozen at 2023 rates. This decision stems from a commitment to safeguard the financial accessibility of transit services following the 10-cent fare increase implemented in 2023. While the 2023 fare adjustment helped to fund crucial system safety, cleanliness, and accessibility investments, it is acknowledged that it also had an undue hardship on those riders who depended on transit the most. This action is necessary to minimize the impact on TTC riders given current economic conditions.

Wheel-Trans Service Demand
​The 2024 Operating Budget for Wheel-Trans service is based on a forecast of continued Wheel-Trans ridership growth from projected levels due to increasing ridership recovery mainly as a result of increased registrant growth. As a result, Wheel-Trans service demand is expected to average 81% of pre-pandemic levels for 2024 and end the year at approximately 84% of pre-pandemic levels.

2024-2033 Staff Recommended Capital Budget and Plan Overview
​While the delivery of high-quality service clearly relies on sustainable operating funding to meet current and future demand, service reliability is also dependent on a steady investment in asset state of good repair. The TTC has an expansive asset inventory valued at more than $25 billion that is required for the delivery of transit service. The TTC’s infrastructure, facilities and fleet relied upon to deliver service range in age from one year old to more than 100 years old.

Subway trains operating on Line 2 are nearly 30 years old, and a large part of the subway network is approaching 70 years old, with aging infrastructure, facilities and systems. The TTC’s fleet needs to be replaced and existing fleet maintained to ensure service reliability. Facilities need to be rehabilitated to extend their useful life, accommodate new standards and requirements, and systems need to be modernized. Concurrently, the TTC needs to ensure it is able increase future service capacity to accommodate growth projected to 2041 and network expansion.

The recommended 2024-2033 Capital Budget and Plan totalling $12.398 billion aims to strike a balance between ensuring its assets are maintained in a state of good repair while also optimizing the TTC’s operational capacity through future service capacity and modernization capital works. Key investments in capacity enhancement programs, vehicles procurements and overhaul programs, buildings and structure improvements, and various track and signal systems works will ensure alignment with the TTC’s long-term ability to deliver reliable service.

As approved by the Board in the New Subway Train Procurement and Implications for Line 2 Modernization and Future Growth report, this 10-Year Capital Plan reflects the estimates for the subway train procurement Scenario 1 planning assumptions, which assumes full funding commitments are made to advance the subway train procurement in 2024. To implement Line 2 modernization, the TTC’s one-third matching funding for Line 2 subway trains is fully funded as well as the $4.836 million for risk mitigation planning activities for Line 2.

The 2024-2033 Capital Budget and Plan funds the TTC’s capital priorities in the first 10 years of the Capital Investment Plan, based on available sources of funding. The Capital Plan also:

• Reprioritizes $500 million in approved funding to address critical priorities, fully funding escalations for in-flight projects while staying within the existing funding projections.

• Maintains and/or improves steady state funding for essential SOGR capital work to ensure safety and reliability of our system, addressing key risks on Line 2 state of good repair.

• With the recent funding commitment announced by the Provincial government, the 10-year Capital Plan reflects the City/TTC’s updated one-third share for the subway car procurement to ensure readiness to proceed with the NST should the TTC be successful in securing the remaining one-third funding required from the Federal government.

• Continues funding to deliver 60 new streetcars and upgrade the Hillcrest Facility, with funding support from other orders of government, as well as renew the Russell Carhouse to support the maintenance and storage of the new 60 streetcars.

• Continues funding for 336 Hybrid Buses, 340 eBuses and charging infrastructure based on revised delivery schedules.

• Advances work on major capacity improvement projects (Bloor-Yonge, Line 1 and Line 2).

• Completes the close-out phase of Automatic Train Control (ATC) signalling on Line 1 and fully funds ATC on Line 2 over the 10-year period.

• Establishes a steady state cybersecurity SOGR program.

• Continues business modernization, such as SAP, Maximo, Vision, Wheel-Trans and Stations Transformation.

There is a continued need for increased funding for state of good repair as $8.243 billion remains unfunded in the 10-Year CIP and the SOGR backlog continues to grow for both vehicles and infrastructure as discussed below. Increased funding is required for critical investments on Line 2, for our facilities and for our fleet overhauls as identified in the CIP.

Provincial New Deal Funding Agreement
​On November 27, 2023, the City of Toronto and the Government of Ontario announced a new deal aimed at addressing the City’s operating and capital deficits. This Agreement charts a course toward long-term financial sustainability and growth for Toronto, emphasizing population growth, increased housing, enhanced frontline service delivery, and revenue from a thriving economy as crucial elements for the City’s future success.

TTC’s 2024-2038 Capital Investment Plan: A Review of Unfunded Capital Needs
​Commissioners endorsed the TTC’s 2024-2038 Capital Investment Plan: A Review of Unfunded Capital Needs, and the 2024-2038 Real Estate Investment Plan.

The 2024-2038 Capital Investment Plan (CIP) totals $47.855 billion in base capital needs over 15 years. The CIP lays out lays out a 15-year outlook of the TTC’s funded and unfunded capital needs in relation to the recommended 10-Year Capital Budget and Plan. The REIP is also a 15-year outlook and includes an implementation action plan that is structured to include all TTC programs and initiatives that have a direct impact on the TTC’s real estate portfolio.

Commissioners also approved the following motions:

• TTC staff report back to the TTC Board in Q2 2024 with a review of the CIP that:

- Identifies unfunded capital needs that are required under legislation and/or direction from Council versus those that are aspirational;

- Prioritizes the unfunded capital needs, with an explanation of the rationale for prioritization within both these categories; and

- Provides a breakdown of initiatives related to TransformTO.

• The Province of Ontario fund the cost of building the Scarborough Busway.

Update on the TTC’s Next 5-Year Corporate Plan 2024-2028
​Board members received an interim report outlining the process undertaken to date to refresh the next iteration of the 5-Year Corporate Plan. The report provides an overview of the draft directions, currently being validated, and was presented to the Board to enable input prior to a final plan being recommended in Q1 2024. The Corporate Plan will be reviewed annually, to assess progress, respond to emerging priority directions, and to align recommendations for allocation of resources through the budget process.

The emerging strategic directions of the next 5-Year Corporate Plan have informed priority actions in the recommended 2024 Operating Budget and 2024-2033 Capital Budget and Plan. In particular, this is reflected in key actions related to people, safety, and service to align to customer needs.

The current draft structure of the Corporate Plan is organized as follows:

• People: Foster a highly engaged, diverse and skilled workforce to serve Toronto’s diverse communities.

• Customer and Service: Deliver safe, frequent, reliable service responsive to customer needs

• Assets: Enable sustainable growth long-term by leveraging the TTC’s mass transit network as the backbone of the mobility network.

• Business Process and Systems: Transform and modernize the organization to adapt to a changing environment.

• Financial: Address the TTC’s fiscal challenge to realize the benefits of high-quality transit service.

The TTC Corporate Plan seeks to align the broader policy vision of the City with the Board’s priorities, guiding the TTC as an agency in the provision of mass transit services to meet the needs of Canada’s largest city.

Contract for sale and disposal of TTC buses
​Board members approved the award of a contract worth $5,673,283.65 in revenue proceeds, inclusive of HST, to Langille’s Scrap & Cores Inc. for the sale and disposal of up to 915 TTC buses for a five-year term. Commissioners also passed the following motions:

Board members approved the award of a contract worth $5,673,283.65 in revenue proceeds, inclusive of HST, to Langille’s Scrap & Cores Inc. for the sale and disposal of up to 915 TTC buses for a five-year term. Commissioners also passed the following motions:

• Before selling the Nova buses under this contract, request staff to issue a publicly advertised Request for Expression of Interest to identify potential parties who will re-use, repair and/or refurbish TTC decommissioned buses, in order to prolong the useful life of these assets and their contribution to the circular economy, on terms that allow potential parties to acquire various bus quantities.

• Authorize staff to sell remaining decommissioned TTC buses for recycling/scrap only after making reasonable efforts to identify parties that will re-use, repair and/or refurbish the buses under the Langille’s contract.

• The TTC Board request staff to retain one Orion bus for historical purposes, and reach out to the Halton Railway Museum to determine their interest in obtaining a bus.

• The TTC Board direct the Chief Executive Officer, in consultation with the General Manager, Shelter, Support, and Housing Administration at the City of Toronto, to explore the feasibility of utilizing decommissioned buses on a temporary basis as mobile warming and/or cooling centres before they are disposed of, with operating costs to be borne by Shelter, Support and Housing Administration and report back to the TTC Board in Q2 2024.

Declaration of Surplus Property
​Commissioners approved a report to declare 21 Pleasant Boulevard as surplus property, with the following amended recommendations:

• Declare the property at 21 Pleasant Boulevard, owned by the TTC and currently leased to Toronto Parking Authority for the purposes of operating a five-storey public parking structure, as surplus to the operational needs of the TTC, subject to the retention of a stratified fee simple interest for the Line 1 subway infrastructure.

• Authorize the release of the property to the City of Toronto for redevelopment by CreateTO, on the following conditions:

- TTC, Toronto Parking Authority and CreateTO, or one of its corporate entities enter into a new agreement for the continued, interim use of the property for a public parking structure and that TTC continues to receive rent revenue in the amount of $0.196 million from Toronto Parking Authority until operation of the parking structure is deemed impractical due to either the condition of the structure or the impact of redevelopment activities;

- TTC is not responsible for the cost of maintenance, security or demolition of the structure or any other costs associated with the redevelopment;

- The development is subject to the TTC Technical Review process and all requirements arising from this process, including but not limited to the dedication of a negative support easement, TTC capital upgrades and obligations to protect existing TTC infrastructure;

- TTC will have an option for any future development of the property to include a facility to support TTC’s bus electrification or other TTC initiatives; and

- TTC to receive compensation (indexed to inflation) from the City to compensate for any lost rental income and for property value from 21 Pleasant Boulevard.

- All terms and conditions are satisfactory to TTC’s General Counsel.

Financial and Major Projects Update for the Period Ended September 30, 2023
​Commissioners received a status update of the TTC’s major capital projects for the period ended September 30, 2023, with the following recommendations:

• Approve the 2023 Capital Budget in-year budget adjustments to offset projects that have had accelerated spending by $61.5 million with projects that have experienced delays and lower spending by $61.2 million with no debt impact.

• Authorize the recommended budget adjustments noted above, and in TTC’s 2023-2033 Capital Budget and Plan, be included in the TTC’s Capital Variance Report submission for the nine months ended September 30, 2023 for City Council consideration and approval.

Next meeting of the TTC Board
​The next scheduled TTC Board meeting will be on Thursday, January 25, 2024.

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