October 4, 2012

TTC, Metrolinx reach operating agreement

Metrolinx and the Toronto Transit Commission (TTC) reached an agreement on the operations and maintenance of Toronto's four new provincially-funded light rail transit (LRT) lines.

Under this arrangement, the TTC will operate the four Toronto LRT lines under contract with Metrolinx, while Metrolinx's private sector partner maintains the assets.

Metrolinx will use the Alternative Financing and Procurement (AFP) framework managed by Infrastructure Ontario (IO) to deliver the projects, subject to the completion of positive value for money analysis. The purpose of using the AFP model will be to achieve maximum value for the Province's investment, while delivering safe, effective and integrated transit services for the people of the City of Toronto and the broader region.

In applying the AFP approach, Metrolinx and IO will adopt a Design Build Finance Maintain (DBFM) model to deliver efficient and effective LRT services. Operations will be delivered by the TTC, on behalf of Metrolinx, over an initial 10-year operating agreement, which could be extended by mutual agreement. Under this arrangement, the TTC will, under contract with Metrolinx, operate the four LRT lines, while Metrolinx's agent maintains the assets.

Metrolinx, TTC and IO will establish a dedicated team to document standards and requirements for the purposes of including appropriate provisions in the AFP procurement documents. This will include provisions to manage the interface between the maintainer (Metrolinx's agent) and the operator (TTC), to minimize the risk of any lack of coordination between the TTC and the maintainer.

The agreement will include a mechanism to ensure expeditious resolution of interface issues during operations.  The objective will be to deliver clear and specific direction on the roles and responsibilities of the parties in maintenance and operations, the interaction between these activities and the ultimate oversight by Metrolinx.  The objective will be to have these standards and requirements in place by the end of 2012 in order to inform subsequent procurement activities.

Over the longer term, it will also be required that Metrolinx, the City of Toronto and the TTC enter into a second operating agreement under the Master Agreement. This second operating agreement will include:

•    a methodology to estimate the number of riders that board the four Metrolinx transit lines and transfer onto the TTC, and board the TTC and transfer onto the four Metrolinx transit lines, in order to appropriately share fare box revenue,

•    description of the broader commercial arrangements,

•    the treatment of any savings in the provision of existing TTC services along the four Metrolinx transit lines,

•    the setting of fares, and

•    the treatment of any required operating subsidies on the four Metrolinx transit lines.

The terms of the second operating agreement will be finalized at least two years in advance of the launch of revenue service for any of the Metrolinx projects.

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