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HomeMy WebLinkAboutEGD-060-04 CI!Jlmgton REPORT ENGINEERING SERVICES DEPARTMENT Meeting: COUNCIL Date: Monday, December 13, 2004 Resolution #: Report #: EGD-60-04 File#: By-law #: Subject: DURHAM REGION BUSINESS CASE ANALYSIS FOR POTENTIAL TRANSFER OF TRANSIT SERVICES RECOMMENDATIONS: It is respectfully recommended: 1. THAT Staff Report EGD-60-04 be received; 2. THAT the Municipality supports, in principle, the recommendations outlined in the Durham Region Business Case Analysis for the Potential Transfer of Lower Tier Municipal Transit Services to the Regional Municipality of Durham prepared by Totten Sims Hubicki (October 2004); 3. THAT the property tax allocation issue be referred back to the Regional Traffic Implementation Committee for a detailed review and a recommended property tax allocation strategy; 4. THAT the recommended strategy for property tax allocation be referred to the local Councils for endorsement; and 5. THAT the Municipality inform the Region of its support for the Business Case Analysis. CORPORATION OF THE MUNICIPALITY OF CLARINGTON 40 TEMPERANCE STREET. BOWMANVILLE, ONTARIO L 1C 3A6 T 905-623-3379 F 905-623-9282 Report #EGD-60-04 Page 2 Respectfully by, ~4-- Submitted by: AS. Cannella, C.E.T. Director of Engineering Services o~~~ Reviewed by: Franklin Wu Chief Administrative Officer ASC/jo December 6, 2004 Report #EGD-60-04 Page 3 1.0 BACKGROUND 1.1 On January 12, 2004 Clarington Council adopted the following resolution: NOW THEREFORE BE IT RESOLVED THAT as it would be a requirement under the Municipal Act, 2001 for a triple majority in order for the upper tier to assume full responsibility for transit, the Council of the Municipality of Clarington supports the Regional Municipality of Durham assuming full authority over bus passenger transportation systems currently provided at the lower tier effective July 1st, 2004; THAT all transit capital such as transit buildings, buses and materials be transferred to the Durham Region; THAT Durham Region commits to maintaining and enhancing current service levels; and THAT a copy of the resolution be forwarded to all municipalities and transit providers within the Region of Durham to be endorsed and forwarded back to Durham Region no later than February 28, 2004, FORTHWITH. Ultimately, the lower tier municipalities requested that the Region undertake a business case analysis to "assess whether the transfer of responsibility for the delivery of conventional and specialized transit services to the Region from the area municipalities is in the best interest of the residents of Durham Region." 1.2 The business case analysis was completed by Totten Sims Hubicki on October 27,2004 and submitted to the Region. The report was circulated to the local municipalities shortly thereafter, and was discussed at the November 3'd Regional Transit Implementation Committee meeting. On November 10th, Regional Council passed the following resolution: THAT Report #2004-RTIC-7 of the Commissioners of Planning, Finance and Works, titled 'Business Case Analysis for the Potential Transfer of Lower-Tier Municipal Transit Services to the Regional Municipality of Durham', be deferred until the Regional Council meeting of December 15, 2004 in order to give an opportunity for local Councils to review the business case and have discussions in their own municipalities. " Report #EGD-60-04 Page 4 2.0 BUSINESS CASE 2.1 The business case analysis included four phases: . Defining existing conditions, problems and opportunities and establishing a policy framework; . Establishing a vision for transit and setting strategic goals; . Defining the need for integration and amalgamation; and . Assessing the cost and implications of amalgamation. 2.2 The consultant, transit staff and Regional staff also met with representatives from the Region of York and from the Region of Waterloo, each of whom has gone through a similar transit amalgamation in recent years. 2.3 The business case makes a number of recommendations including (among others): 1. The transfer of the transit responsibilities of Pickering, Ajax, Whitby, Oshawa, Clarington and Handi Transit Inc. to the Region of Durham by January 1, 2006. 2. The Region will maintain the existing levels of service in each area that were in operation as of May 1, 2004. 3. All physical assets associated with public transit will be transferred to the Region without compensation (e.g. vehicles, equipment, lands, garages, terminals, shelters, etc.) 4. Transit related development charges, reserves and reserve funds will be transferred to the Region. 5. All permanent employees, union and non-union, who are exclusively employed in transit as of the effective date of the transfer shall become employees of the Region on that date. 6. Handi Transit shall be dissolved as of the effective date, and specialized services shall be performed by the Region. Report #EGD-60-04 Page 5 3.0 STAFF COMMENTS ON BUSINESS CASE 3.1 The business case is lengthy and somewhat complex. For the purposes of this report, comments will be confined to those directly affecting the Municipality of Clarington. 3.2 Business cases are usually completed in the context of "for profit." Municipal transit services, historically, have never been operated for profit and do not use financial information solely in its assessment of need and success. Specific to Clarington, it can be said that there will be benefits to our riders in terms of: · More seamless travel across the Region; · Lower cost to travel across the Region; . Less time to travel to and from destination; · Improved integration with GO Transit which has been a goal of Clarington's for some time. 3.3 Further, the business case proposes an identified expansion of service along Taunton Road in Clarington in 2009. It is also suggested that specialized services will be improved in Clarington due to the acquisition of new specialized vehicles. 4.0 CONCLUSIONS 4.1 The Municipality of Clarington supports the transfer of the transit service to the Region, since it is expected that transit mobility will be improved and many long term objectives will be met. Since the existing Clarington Transit has been operated at no cost to the taxpayer on the local level, there will be no financial impacts to the local portion of the tax levy. The implications are on the upper tier portion of the tax bill. Since the former GO transit funding retained by the Region has fully funded Clarington's service, and the continuation of this source of funding is not guaranteed, funding could shift from the Region to the local levy. Council, however, should remain mindful that the Region has yet to finalize the usage parameters and accordingly the allocation for the municipality's share of Report #EGD-60-04 Page 6 the Regional transit tax levy, due to the priority being to investigate the transfer of services. If the service is not transferred and the existing regional funding is directed to capital only (as was previously indicated), then the local levy will have to increase by the current net operating costs without any offsetting reduction on the regional levy. This is estimated at approximately $36 per household. 4.2 The TSH proposals include service enhancements and harmonization, not just the status quo. As a result, it would be expected that there would be a cost implication to taxpayers as there would be if the local municipalities tried to accomplish the service enhancements. Also, a substantial investment is referenced as being necessary from a capital perspective. This would also be true for the local transit service providers in the future if the service was continued at the lower tier. 4.3 The Business Case Analysis Report (2004-RTIC-7) provided by TSH and the Region indicates that, if transit remained at the local level, the impact from 2004 to 2006 for Clarington taxpayers is estimated at an increase of $5 per household. This assumes transferring tax levy room from the upper tier which has not been offered to date. If that is not the case, there would also be the additional $36 per household referred to above. If the service is transferred to the Region, the cost per household for 2006 is $118 over 2004. If the Region adopts an alternate allocation approach in the initial years, this would be reduced to $66 per household. Due to transit being a relatively new service in Clarington, the Municipality does not have the same complexity with respect to transition measures that those municipalities with mature transit systems may encounter. 4.4 This report has been reviewed by the Director of Finance and concurs with the recommendations contained herein.