Release of the report of the think tank on tramway funding
Montréal, October 16, 2012 – The Board of Trade of Metropolitan Montreal submitted the report of the think tank on tramway funding to Montréal Mayor Gérald Tremblay today. This report evaluates the different approaches to financing the investment cost of a tramway in Montréal. The think tank was formed at the Mayor’s request, who wanted the Board of Trade to study tramway funding.
“The tramway is an efficient mode of public transit, one that would re-energize the urban network and increase urban density,” says Michel Leblanc, President and CEO of the Board of Trade of Metropolitan Montreal. “However, the state of public finances could make it difficult to complete all of the region’s public transit projects. The Metropolitan Land Use and Development Plan features a list of projects that total $23 billion, including the tramway. So our mandate was not to offer an opinion on the value of building a tramway or to choose one plan over another. Rather we were to analyze the different tools and sources of financing for the project.”
Aside from current sources of funding for public transit, the think tank identified different methods used in North America and Europe to finance urban public transit projects. What emerges from the analysis is that financing tools make it possible to harness the increased land value generated by the construction of a tramway. Unlike other transit projects, the tramway promotes urban development and generates increased land value along its lines of deployment.
The international benchmarking also concluded that no other tramway project is self-financing and that financial contributions from urban agglomerations are always accompanied by contributions from higher levels of government. “If the Ville de Montréal were to finance this project alone, it would put enormous strain on its finances,” Mr. Leblanc says.
To ensure the success of a possible tramway project, the think tank recommends putting into place sound, flexible and efficient project governance so that the project is completed according to well-defined schedules and parameters. Mitigation measures drawn from best international practices must be put in place to communicate downstream with resident and merchants. The think tank also recommends implementing compensation mechanisms similar to those used in Europe.
“This report shows how important fluid transit is for the Board of Trade and the business community,” Michel Leblanc says. “I would like to thank the members of the think tank for their expertise and exemplary commitment during this exercise.”
While there was broad consensus within the group, the conclusions of the report may not be considered as a unanimous commitment or bind the think tank member’s organizations.
Recommendations of the think tank
Recommendation 1: That the Ville de Montréal consider the avenues explored to fund the first line of the Montréal tramway and confirm the financial participation of the different partners.
Recommendation 2: That the Ville de Montréal make the administrative and legislative changes necessary for the tramway to have its own source of financing.
Recommendation 3: That the Government of Québec consider a minimum contribution equal to the investment that it would make in the bus network if the tramway were not built.
Recommendation 4: That the partners define how the project will be completed to allow for more effective sharing of risks and responsibilities between parties and resource optimization for the public sector and, if applicable, that they undertake efforts with PPP Canada.
Recommendation 5: That the partners create the conditions necessary for sound, flexible and effective project management governance.
Recommendation 6: That the Ville de Montréal put in place communication, support and mitigation measures upstream from the project to ensure its success.
Link to the report: www.ccmm.qc.ca/rapport_tramway (in French only)
About the Board of Trade of Metropolitan Montreal The Board of Trade of Metropolitan Montreal is made up of some 7,000 members. Its mission is to represent the interests of the business community of Greater Montréal and to provide individuals, merchants, and local businesses of all sizes with a variety of specialized services to help them achieve their full potential in terms of innovation, productivity, and competitiveness. The Board of Trade is Quebec's leading private economic development organization.
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