Raise the Hammer

Lack of Transparency in Hamilton LRT Study

A business case analysis is of key importance in the evaluation of the viability of major transportation projects and is usually cited as justification for the selection of one transportation alternative over another. A benefit cost value of greater than 1 is an indication that benefits exceed cost; a benefit cost value of less than one indicates that costs exceed benefits. The current published benefit cost ratio for the Hamilton LRT project is a low 1.1 Ref: [1]

The business case or cost benefit analysis for the Hamilton LRT proposal would involve hundreds of calculations, including a host of variables and assumptions for each individual year of the project’s 25 to 30 year proposed life cycle.

Without full disclosure and transparency, business case analyses could take on all the appearances of a “black box” into which undisclosed data and assumptions have been entered and the outcomes presented without opportunities for independent review of either the data going in, or the data coming out.

The Hamilton LRT project’s website includes the “Hamilton King-Main Benefits Case” report, The report includes an Appendix A entitled “Input Variables and Assumptions“ Ref: [2] but key variables and assumptions are not listed. Further, there appear to be no published appendices to the report on the website that include all the assumptions, tables and calculations that were used for determining the business case for the Hamilton LRT (or the BRT alternatives).

These missing tables are typically comprised of spreadsheets that include a year-by-year breakdown of: current and projected transit and LRT ridership in the corridor; revenue forecasts; capital and operating cash flows; non-transit vehicle travel; ridership and vehicle occupancy - to name but a few. Also included would be the references for capital and operating costs, fare box revenues, corridor travel times and all other variables that were used in the calculations of the business case and benefit cost value.

The information needs to be published in sufficient detail that the assumptions, calculations and results of the business case analysis can be independently reviewed. At least one other Canadian jurisdiction readily made such information available to the public by publishing it on its LRT project website.

In one case in Canada, an LRT study reported a benefit cost ratio of 1.6, however, upon close examination; the benefit cost ratio was determined to be about 0.3 with actual LRT project costs coming in at over 3 times its benefits.

Light Rail Transit is an important and effective means of public transportation in cities with populations in excess of 750,000 and with downtown core employment in excess of 50,000. Other complimentary demographic conditions are also needed to warrant the implementation of LRT. For smaller cities, LRT is not viable and LRT’s alleged benefits can experience difficulty withstanding close scrutiny. The risks are: onerous on-going operating deficits; business and residential tax increases; and conventional transit service reductions to support a system that is not the best transit solution for the municipality.

[1] Page 4, Hamilton King-Main Benefits Case, February 2010 [2] Page 54, ibid