Thursday, June 25, 2015

Golden Ears Bridge hemorrhaging cash from TransLink

Throughout this week, I have been looking at various figures from TransLink’s 2014 Statutory Annual Report which was released last week. Today, I want to highlight the Golden Ears Bridge.

While old-time transportation planners and out-of-touch politicians will tell you that bigger roads and massive bridges are needed to reduce congestion, there are three inconvenient truths about building these highway mega projects.

The first truth is that you can’t build your way out of congestion. When you build a toll-free road or bridge, it will quickly fill up. I forget who said it, but it was “show me the amount of highways you have in your region, and I’ll tell you the amount of congestion you have.”

The second truth about trying to build your way out of congestion is that it will cost a ton of money. The provincial government spent $3.3 billion on the Port Mann/Highway 1 project, and TransLink spent $808 million on the Golden Ears Bridge project. Because these projects are so costly, tolls are used to help pay for the costs.

The third truth is that tolls cause people to drive less. Unfortunately, the traffic models used to build the business cases for massive highway projects routinely over-estimate the projected traffic levels as they don’t accurately capture the congestion-reducing ability of tolling.

The only cost effective way to reduce congestion is to introduce tolling (or road pricing), using that revenue to pay for keeping roads and bridges in a state of good repair. Though that is a topic for a different post.

Because of these failed traffic models, the Port Mann Bridge is hemorrhaging money from the provincial government while the Golden Ears Bridge is hemorrhaging money from TransLink.

How much money is the Golden Ears Bridge costing TransLink? How much did they over-predict traffic volumes and revenue?

The following table looks at not only information from the 2014 Statuary Annual Report, but also the Golden Ears Bridge Reference Case Report which was released in 2005. The predicted values have been inflation adjusted.

Golden Ears Bridge predicted revenue, actual revenue, and expenses from 2010 to 2014. Select graph to enlarge.

Two things become clear. First, the Golden Ears Bridge would have been a money loser even if TransLink’s original predictions were correct. Second, TransLink predicted that there would be linear revenue growth. The reality is that while expenditures have been growing linearly, revenue has essentially flat-lined.

The second graph shows cost recovery. This is the percentage of the Golden Ears Bridge and transit service expenses that are pay for by direct users fees like tolls and fares. While the Golden Ears Bridge has become increasingly more subsidized by taxpayers, transit has become less reliant on taxpayer subsidy. This is backwards if we are trying to promote healthy travel options.

Comparing transit and Golden Ear Bridge cost recovery from 2010 to 2014. Select graph to enlarge.

The provincial government is going to spend billions of dollars on a new Massey Tunnel replacement while TransLink is looking a replacing the Pattullo Bridge. Both of these crossings will likely be tolled. The high cost of the Golden Ears Bridge should be a cautionary tale for both TransLink and the provincial government.


Stephen Rees said...

The graphs are the wrong way round. Time on the x axis should be plotted from 2010 on the left to 2014 on the right.

To make the impact clearer show how the obligation on Translink to support this P3 project reduces funds for transit. The sums involved are not trivial.

Also look at how little impact running the Albion Ferry had on anything, and why building a huge bridge could only encourage growth outside the Growth Concentration Area (contrary to the Regional Growth Strategy)

Patrick Johnstone said...

Agree with Stephen that the graphs are more effective with the future to the right. However, thank you for these posts.

One thing is clear, we need the Provincial Government to examine what went wrong with their previous models, and not start building another bridge until we know if the same mistake is being made.

Ugh... even as I write that, it looks so hopelessly naive...

Nathan Pachal said...

Thank you both for the feedback.