Business Case Analysis – Executive Summary

1. Executive Summary

Problem Statement

With the construction of the Mississauga Transitway Bus Rapid Transit (BRT) system from Winston Churchill Boulevard to Renforth Drive and the Line 5 Eglinton Light Rail Transit (LRT) line from Kennedy Station to Mount Dennis (Weston Road), a gap emerges in the regional rapid transit network along the Eglinton Avenue West corridor through western Toronto that limits transit access to a major employment hub at Toronto Pearson International Airport and surrounding employment zone.

Providing additional transportation options and capacity to move people will be needed to accommodate expected growth, especially when considering the significant traffic congestion currently seen on the highways and local road networks in the area. Rapid transit along the Eglinton West corridor would therefore serve a number of local and regional transportation objectives.

Objectives include:

  • Providing a missing link in the rapid transit network by connecting the western terminus of both Line 5 and SmartTrack at Mount Dennis Station to the eastern terminus of the Mississauga Transitway BRT system at Renforth Station;
  • Providing a high-capacity link connecting the Mississauga Airport Corporate Centre employment area south of the airport to Mount Dennis, downtown Toronto and midtown Toronto;
  • Supporting components of Toronto's Official Plan and Metrolinx's 2041 Regional Transportation Plan;
  • Providing improved rapid transit connectivity and travel choices for people in Etobicoke and western Toronto to get to school, work, businesses and other key destinations, including both communities along the corridor and users of intersecting local transit routes;
  • Improving the capacity, comfort, and reliability of transit services along the corridor, allowing more people to travel; and
  • Limiting impacts to local vehicular traffic in an area that experiences significant levels of congestion.

Options Considered

The Eglinton West LRT can be divided into two segments — the "Toronto Segment" from Mount Dennis to the City of Toronto's boundary with the City of Mississauga at Renforth Station, and the "Airport Segment" running through Mississauga between Renforth Station and Pearson Airport.

Four options for the Toronto Segment have been developed for this analysis to reflect the evolution of the project and in consultation with a Community Working Group (CWG) of local stakeholders:

  • Option 1: 10-stop surface-running concept as recommended to City Council in July 2016, based on the findings of the IBC, and December 2017 based on the review of targeted grade separations to alleviate perceived traffic impacts.
  • Option 2: 10-stop underground concept, developed in response to the need to provide transit connectivity to the community, and a strong community desire to build the LRT underground to reduce impacts to automobile traffic.
  • Option 3: a 3-stop elevated and underground concept, previously considered in the July 2016 Initial Business Case (IBC) jointly authored by the City and Metrolinx.
  • Option 4: 7-stop elevated and underground concept, developed by the CWG and, similar to Option 2, reflects a desire to minimize impacts to automobile traffic. A common conceptual Airport Segment alignment was developed by Metrolinx staff based on preliminary alignment work, and added to each Toronto Segment concept to complete the project scope for modelling purposes

Strategic Case

  • Options 1 (10-stop surface-running) and 2 (10-stop underground) would provide the highest level of rapid transit connectivity for communities along the Eglinton Avenue West corridor due to the greater number of stops/stations found in these options, followed by Option 4 (Seven-stop elevated and underground). Option 3 (Three-stop elevated and underground) would provide limited benefit to communities along Eglinton Avenue West given the limited number of stops/stations.
  • Similarly, Options 1, 2, and 4 would improve rapid transit connections for users of busy north-south bus routes along the Eglinton West corridor, providing an alternative route to the Line 2 Bloor-Danforth subway, while Option 3 offers limited opportunities for those users.
  • All options for the Eglinton West LRT extension would improve the capacity, comfort, and reliability of transit services along the corridor, providing additional choice about how to move around the city and the region in the future.
  • The grade-separated options (Options 2, 3, and 4) are not expected to have any impacts to local vehicular traffic, while surface-running LRT (Option 1) is expected to have minimal impact on automobile traffic operations. Option 1 is expected to increase automobile travel times of less than 3 minutes along the 9.5-kilometre length of the corridor by 2041.
  • All options close the gap in the higher order transit network between Line 5 Eglinton and the Mississauga Transitway, creating a single high-capacity link between the Mississauga Airport Corporate Centre, Mount Dennis, Midtown Toronto, and Scarborough.
  • The Eglinton West LRT extension supports a key component of Toronto's Official Plan and Metrolinx's Regional Transportation Plan.
  • If the Airport Segment is added to the Toronto segment, the project may also support the GTAA's plans to develop Toronto Pearson International Airport as a multi-modal transportation hub, connecting air travel and regional transit to local services. The EWLRT may provide good alternatives for accessing the airport for journeys originating in the region west of Toronto and in Central Etobicoke, although these benefits are likely to be small for other Torontonians given the service provided by the UP Express from the future Mt. Dennis Station to the airport. Options 1, 2, and 4 broadly support the local project objectives of improving local transit connectivity; Options 1 and 2 provide the greatest local connectivity, while all three of the aforementioned options provide similar connections to the TTC's bus network. Options 1 and 2 are preferred, while Option 3 is least preferred.

Economic Case

The Economic Case seeks to assess the investment options in terms of their benefits and costs to society, and is based on the estimation of consumer surplus, defined as the difference between what people are willing to pay for a good (in this case, for time or comfort) and the actual cost incurred.

Key findings of the Economic Case are outlined in Table i below:

Table i: Summary of the benefits and costs of Options 1–4 ($ thousands)

Option 1 Option 2 Option 3 Option 4
10-stop surface 10-stop underground 3-stop combined 3-stop combined
Present Value of Benefits (PVB)
   User Benefits $476,000 $770,000 $757,000 $991,000
   Producer Benefits $78,000 $117,000 $121,000 $140,000
   External Benefits $73,000 $111,000 $105,000 $133,000
   Other User Benefits $233,000 $393,000 $361,000 $361,000
Total Present Value of Benefits (PVB) $860,000 $1,391,000 $1,344,000 $1,625,000
Present Value of Costs (PVC)
   Capital Costs $2,388,000 $4,793,000 $3,076,000 $3,818,000
   O&M Costs $811,000 $699,000 $767,000 $740,000
    Rehabilitation Costs $192,000 $268,000 $151,000 $206,000
Total Present Value of Costs (PVC) $3,391,000 $5,760,000 $3,993,000 $4,764,000
Net present value (NPV)
(PVB - PVC)
-$2,531,000 -$4,369,000 -$2,649,000 -$3,139,000
Benefit Cost Ratio (BCR)

(PVB / PVC)

0.25 0.24 0.34 0.34

The Benefit to Cost Ratios (BCR) are less than 1.0 in all cases, suggesting that economic benefits are not expected to exceed costs for any of the options. Option 4 is the strongest performer (BCR of 0.34), with Option 2 narrowly emerging as the weakest option (BCR of 0.24) with regard to the BCR. Given that all options have costs that exceed benefits, the resulting Net Present Value (NPV) of the options suggests that Option 1 is the strongest performer economically speaking, as it has the lowest net costs.

Based on all of the outputs of the Economic Case, Option 2 (10-stop underground) is the weakest performer, given its high net costs.

The NPV and BCR results indicate that Options 1 and 4 are the strongest. The travel time benefits attained with Option 4 suggest that a seven stop LRT may generate a significant amount of travel time benefit, however the overall magnitude of benefits are unlikely to justify, from an economic appraisal perspective, a fully grade-separated option.

Financial Case

The Financial Case evaluation assesses the costs associated with each Toronto Segment option. Airport Segment costs are not considered in this analysis because Metrolinx is still refining the Airport Segment concept, and consistent with current cost sharing agreements, the City would not be responsible for any costs of the Airport Segment.

From a financial case perspective, Option 1 is the preferred option. The capital cost estimate for Option 1 is consistent with the estimate on which the 2017–2026 Capital Program was developed, while Options 3, 4 and 2 represent increases in approximately $1 billion, $2 billion, and $3 billion respectively. A planned increase to capital program expenditures for any option other than Option 1 would erode the City’s ability to invest in other important transit and infrastructure projects.

Deliverability Case

Additional factors that influence the deliverability and operations of the project must be considered, as some options may face barriers to implementation.

Major risks or challenges to implementation include:

  • Public acceptability and support, particularly strong community support for grade-separated alignments to minimize traffic impacts and related opposition to surface LRT;
  • Clarifying and formalizing the respective roles of institutional partners involved in the Eglinton West LRT, including the City of Toronto, Toronto Transit Commission (TTC), Metrolinx, City of Mississauga, and Greater Toronto Airport Authority (GTAA) in project design, implementation, and operations;
  • Integrating the Eglinton West LRT extension with Line 5 Eglinton east of Mount Dennis;
  • Labour market considerations and available capacity for the market to deliver infrastructure;
  • Impacts to the Humber River Valley, Eglinton Flats, and associated floodplains, including impacts of elevated structures and/or bridges on the valley's natural areas, and flood mitigation measures for that part of Option 2 that runs underground through the river's floodplains. The Deliverability Case does not identify significant technical challenges in delivering Option 1, 3, and 4, though notes that each option is at a conceptual level of design and thus subject to a significant amount of additional design and engineering work. Option 2, however, may present significant technical challenges to implement, given the risk of flooding of underground infrastructure through the Humber River valley and associated floodplains.

Conclusions & Recommendations

All four LRT options would support the regional objectives for the project by improving the capacity, comfort, and reliability of transit services along the corridor and allowing more people to move along the avenue, as well as linking the Mississauga Airport Corporate Centre to Mount Dennis, Midtown Toronto, and Scarborough with a single, high-quality rapid transit connection.

Options 1, 2, and 4 broadly support the local project objectives of improving local transit connectivity; Options 1 and 2 provide the greatest local connectivity, while all three of the aforementioned options provide similar connections to the TTC's bus network. Options 2, 3, and 4 would not be expected to have any traffic impacts, while Option 1 would have some minor impacts to traffic.

Option 3 (Three-stop elevated and underground) would provide limited benefit to communities along Eglinton Avenue West given the limited number of stops and more limited transfer opportunities to and from the TTC bus network and so does not support local connectivity objectives. Option 3 is therefore not recommended on that basis.

The Economic Case indicates that none of the four options offers economic benefits greater than the costs of building, operating, and maintaining any of the options. The Benefit to Cost Ratio (BCR) suggests that Option 4, with a BCR of 0.38, is the strongest performer. However, Option 1 has the highest NPV (-$2.4 billion over 60 years) and is overall the strongest performer economically speaking.

The Financial Case clearly demonstrates that of all four options, Option 1 is estimated to have the lowest capital cost, lifecycle capital cost and operating cost, with Option 2 having the highest associated costs.

The Deliverability Case does not identify significant technical challenges in delivering Option 1, 3, and 4, though notes that each option is at a conceptual level of design and thus subject to a significant amount of additional design and engineering work. Option 2, however, may present significant technical challenges to implement, given the risk of flooding of underground infrastructure through the Humber River valley and associated floodplains.

Option 1 is therefore the preferred concept for the Toronto Segment of the EWLRT because it is has the lowest cost while meeting all of the City and TTC’s project objectives and policy objectives for transit connectivity.

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