What Happened?
When Vancouver hosted the Olympic Games in 2010, the city implemented The Canada Line light rail to support the increased demand for public transit without investing too heavily in temporary infrastructure improvements or additions. By leveraging a public-private partnership (P3), Vancouver was able to take advantage of hosting the Olympic Games to adopt a more sustainable business model for public transit moving forward.
An Olympics Goal
The Atlantic Cities reported The Canada Line is a light rail system running from Richmond into Vancouver, as well as to the nearby airport. During the Olympics, the rail accommodated about 112,000 passengers daily and nearly 40 million annually. Because the system was created from a public-private funding platform, it was sustainable well after the Olympic Games tourists left town.
A private firm was recruited to design, build and take on some financing responsibility of The Canada Line. Until 2040, the private entity must also maintain the infrastructure and services of the 12-mile line. Unlike previous transit public-private partnerships, the Vancouver model allocates significantly more responsibilities onto the shoulders of the private firm. Despite initial doubts, the line was able to seamlessly integrate with existing railways to offer more convenient and efficient transit to residents.
Deeper Look At The P3
The private entity involved in The Canada Line’s development is a consortium of organizations called InTransitBC with a subcontractor manning the future maintenance and operational management. The consortium of partners invested $720 million Canadian dollars, or 40 percent of the total cost of the project, with the remaining funds provided by federal, provincial and city governments as well as TransLink and the Vancouver Airport Authority.
Because InTransitBC paid its portion upfront, TransLink pays the consortium regular debt repayments and operational and maintenance fees each year. These payments are based on service performance demonstrated by the consortium. To ensure the line is meeting the needs of the public, performance metrics are in place to gauge efficacy.
InTransitBC also invested in the development of the line and manages it in the long term, giving it the majority of the risk if the project goes awry. The public sector, on the other hand, is still responsible for generating ridership to ensure the line is sustainable and is the sole owner of the line as an asset.
Following Suit
Following the success of The Canada Line, many other cities are experimenting with their own P3s to develop and innovate mass transit options. The Maryland Transit Administration is working with a private consortium to build and operate a Purple Line to connect Bethesda and New Carrollton. Similar to Vancouver’s model, the Purple Line would be a light rail system once estimated to cost $2.2 billion.
Once the P3 was selected, participants would take responsibility for the design, construction, financing, operations and maintenance of the Purple Line project. The private sector will absorb most of the risk, while the state of Maryland will focus on preserving and supporting the infrastructure as well as drive ridership. The state of Maryland will use availability payments to pay back the consortium throughout the lifecycle of the project.
Purple Line construction finally began in 2017, after years of political debate over funding.
Keep On Treckin’
Gov1 has monitored a variety of transit innovations from the implementation of mobile apps to widespread free transportation.
Editor’s Note: Updated February 7, 2018.